Form DEF 14A APOGEE ENTERPRISES, INC. For: Jun 23

May 11, 2021 4:07 PM EDT

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant                                Filed by a Party other than the Registrant  

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to § 240.14a-12

Apogee Enterprises, Inc.

(Name of Registrant as Specified In Its Charter)

Not Applicable

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

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LOGO

 

4400 West 78th Street, Suite 520

Minneapolis, Minnesota 55435

  

Notice of 2021

Annual Meeting

of Shareholders

Wednesday, June 23, 2021

8:00 a.m. Central Time

The 2021 Annual Meeting of Shareholders of Apogee Enterprises, Inc. (the “Annual Meeting”) will be held at 8:00 a.m. Central Time on Wednesday, June 23, 2021. In order to expand access to the Annual Meeting, and to reduce the public health risk from the COVID-19 pandemic, we are hosting a virtual-only meeting. It is our goal to approximate an in-person experience for our shareholders. You may attend the virtual meeting and vote your shares electronically during the meeting via the Internet by visiting www.virtualshareholdermeeting.com/APOG2021.

The purpose of the Annual Meeting is to consider and take action on the following:

 

  1.

Election of three Class II directors for terms expiring at our 2024 Annual Meeting of Shareholders;

 

  2.

Advisory vote to approve Apogee’s executive compensation;

 

  3.

Approval of the Apogee Enterprises, Inc. 2019 Stock Incentive Plan, as Amended and Restated (2021) to increase the number of shares authorized for awards from 1,150,000 to 2,150,000;

 

  4.

Advisory vote to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending February 26, 2022; and

 

  5.

Transaction of such other business as may properly be brought before the Annual Meeting.

The Board of Directors has fixed the close of business on April 28, 2021, as the record date for the determination of shareholders entitled to receive notice of and to vote at the Annual Meeting. Your vote is important. Whether or not you plan to attend the virtual meeting, you are encouraged to vote your shares as soon as possible pursuant to the instructions in the Notice of Internet Availability of Proxy Materials and in the accompanying Proxy Statement.

By Order of the Board of Directors,

 

 

LOGO

Meghan M. Elliott

Vice President, General Counsel and Secretary

Minneapolis, Minnesota

May 11, 2021

 

 

 

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be held on June 23, 2021: Our 2021 Proxy Statement and our Fiscal 2021 Annual Report on Form 10-K to Shareholders are available at www.proxyvote.com.

 


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TABLE OF CONTENTS

 

Notice of 2021 Annual Meeting of Shareholders

    i  

Proxy Statement Summary

    1  

Security Ownership of Certain Beneficial Owners

    8  

Security Ownership of Directors and Management

    10  

Proposal 1: Election of Directors

    13  

Corporate Governance

    19  

Corporate Governance Resources

    19  

Code of Business Ethics and Conduct

    19  

Corporate Governance Guidelines

    19  

Communications with our Board of Directors

    19  

Director Independence

    20  

Board Leadership Structure

    20  

Cooperation Agreement with Engaged Capital, LLC

    20  

Criteria for Membership on Our Board of Directors

    21  

Procedure for Evaluating Director Nominees

    21  

Board Refreshment and Retirement Policy

    21  

Stock Ownership Guidelines for Non-Employee Directors

    21  

Board Meetings and 2020 Annual Meeting of Shareholders

    22  

Board Committee Responsibilities, Meetings and Membership

    22  

Risk Oversight by Our Board of Directors

    23  

Sustainability and Human Capital

    24  

Certain Relationships and Related Transactions

    26  

Non-Employee Director Compensation

    27  

Non-Employee Director Compensation Arrangements During Fiscal 2021

    27  

Restricted Stock Awards and Restricted Stock Unit Awards

    28  

Director Deferred Compensation Arrangements

    28  

Charitable Matching Contributions Program for Non-Employee Directors

    29  

Fiscal 2021 Non-Employee Director Compensation Table

    29  

Executive Compensation

    32  

Compensation Committee Report

    32  

Compensation Discussion and Analysis

    32  

Executive Stock Ownership Guidelines

    51  

Anti-Hedging and Anti-Pledging Policies

    51  

Clawback Policy

    51  

Tax Considerations

    51  

Compensation Risk Analysis

    52  

Summary Compensation Table

    53  

Grants of Plan-Based Awards

    57  

Outstanding Equity Awards at Fiscal Year-End

    59  

Option Exercises and Stock Vested

    60  

Non-Qualified Deferred Compensation

    60  

Potential Payments Upon Termination or Following a Change-in-Control

    62  

CEO Pay Ratio Disclosure

    67  

Proposal 2: Advisory Approval of Apogee’s Executive Compensation

    69  
Proposal 3: Approval of The Apogee Enterprises, Inc. 2019 Stock Incentive Plan, as Amended and Restated (2021)     71  

Background and Purpose

    71  

Proposed Amendment to the 2019 Stock Plan

    71  

Key Features of the 2019 Stock Plan

    71  

Determination of Number of Shares for the 2019 Stock Plan

    72  

New Plan Benefits

    74  

Description of 2019 Stock Plan

    74  

Federal Income Tax Consequences

    77  

 

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Equity Compensation Plan Information

    79  
Proposal 4: Ratification of Appointment of Independent Registered Public Accounting Firm     80  

Audit Committee Report

    81  

Fees Paid to Independent Registered Public Accounting Firm

    82  

Audit Fees, Audit-Related Fees, Tax Fees and All Other Fees

    82  

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services

    82  

Frequently Asked Questions

    83  

Who is entitled to vote at the meeting?

    83  

What are my voting rights?

    83  

How many shares must be present to hold the meeting?

    83  

How can I attend the meeting?

    83  

What am I voting on, what vote is required to approve each proposal and how does the Board recommend I vote?

    84  

How can I ask questions during the Annual Meeting?

    85  

How do I cast my vote?

    85  

How do I vote if my shares are held in the 401(k) Retirement Plan, Employee Stock Purchase Plan or other plans of Apogee?

    85  

What does it mean if I receive more than one proxy card?

    86  

How are votes counted?

    86  

Who will count the vote?

    87  

What if I do not specify how I want my shares voted?

    87  

Can I change my vote after submitting my proxy or voting instructions?

    87  

How can I get a copy of the Company’s 2021 Annual Report on Form 10-K?

    88  

How do I get electronic access to the proxy materials?

    88  

What is a proxy?

    88  

What is the difference between a shareholder of record and a “street name” holder?

    88  

Who pays for the cost of proxy preparation and solicitation?

    88  

How can I recommend or nominate a director candidate?

    89  

How can I present a proposal at the 2022 Annual Meeting of Shareholders?

    89  

What is “householding” of proxy materials?

    89  

APPENDIX A

    A-1  

 

 

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Proxy Statement Summary

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider, and you should read the entire proxy statement carefully before voting.

2021 Annual Meeting of Shareholders

 

       

LOGO

 

Date and Time

 

Wednesday, June 23, 2021,

at 8:00 a.m. Central Time

 

LOGO

 

Location

 

www.virtualshareholdermeeting.com/APOG2021

  

LOGO

 

Mailing Date

 

May 11, 2021

    

LOGO

 

Record Date

 

April 28, 2021

Items of Business

 

  Item    Board’s
Recommendation
   Details        

Proposal 1: Election of three Class II directors for terms expiring at our 2024 Annual Meeting of Shareholders

 

   FOR, each
Director Nominee
   page 13        

Proposal 2: Advisory approval of executive compensation

 

   FOR    page 69        

Proposal 3: Approval of the Apogee Enterprises, Inc. 2019 Stock Incentive Plan, as Amended and Restated (2021) to increase the number of shares authorized for awards from 1,150,000 to 2,150,000

 

   FOR    page 71        

Proposal 4: Advisory vote to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending February 26, 2022

 

   FOR    page 80        


 

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Fiscal 2021 Financial Results

We are a leader in architectural products and services, providing architectural glass, aluminum framing systems and installation services for buildings, as well as value-added glass and acrylic for custom picture framing and displays. Fiscal 2021 was a difficult year for our business and the broader non-residential construction industry. Apogee’s team rose to the challenge, adapting our business to protect the health of employees and serve our customers, while making significant progress on cost initiatives to deliver earnings and record full-year cash flow. We also advanced our strategies to diversify net sales streams and position our Company to deliver shareholder value throughout the commercial construction economic cycle.

Summary of Fiscal 2021 Financial Results

 

Net Sales

  

•   We had net sales of $1.23 billion compared to $1.39 billion in fiscal 2020, a decrease of 11%, reflecting disruptions to our business and customers caused by the COVID-19 pandemic and related challenges in the overall economy and our end markets.

Earnings

  

•   We had earnings per diluted share of $0.59 compared to $2.34 in fiscal 2020.

Operational Performance

  

•   Operating income was $25.5 million compared to $87.8 million in fiscal 2020.

 

•   Operating margin was 2.1% compared to operating margin of 6.3% in fiscal 2020.

 

•   We had record operating cash flow of $141.9 million, an increase of 32.3% over fiscal 2020.

 

•   We continued effective management of our working capital requirements with days working capital of approximately 49.2 days as of the end of fiscal 2021.

Shareholder Return

  

•   We repurchased 1,177,704 shares of our common stock during fiscal 2021 at a total cost of $32.9 million.

 

•   We paid dividends totaling $19.6 million during fiscal 2021 and increased our quarterly cash dividend 6.7% to $0.20 per share during the fourth quarter of fiscal 2021, our eighth consecutive year with a dividend increase.

 

•   We delivered annualized total shareholder return (TSR) of 27.65%, 0.71% and 12.24% over the past one-year, five-years and ten-years, respectively.



 

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Executive Compensation Program

Our compensation programs are designed to attract, motivate and retain executive talent to achieve success in both the short- and long-term for our Company; pay for sustainable performance in an ever-changing environment; and align the interests of our executive officers with our shareholders. We continue to refine our executive compensation program to reflect changes in our business strategy and evolving executive compensation practices.

Executive Compensation Highlights

 

   

We seek alignment of pay and performance each year. A significant portion of our compensation program is performance-based through the use of our short-term and long-term incentive plans that have multiple financial performance metrics.

 

   

We annually disclose Company performance against the established performance metrics for our annual cash incentive in our proxy statement.

 

   

Our new long-term incentive compensation program adopted for fiscal 2022 consists of restricted stock awards that vest over three years and performance awards that are settled 50% in shares and 50% in cash with a three-year performance period.

 

   

We deliver a significant portion of potential total compensation to our executive officers in the form of equity.

 

   

We have stock ownership guidelines for our executive officers that require our Chief Executive Officer to achieve an ownership level of five times his annual base salary and each other Named Executive Officer to achieve an ownership level of three times his or her annual base salary. All of our Named Executive Officers are still within the applicable grace period for achieving these ownership levels.

 

   

We have a “clawback” policy that applies to executive performance-based incentive compensation awards.

 

   

We have a hedging policy that prohibits all employees and directors from engaging in hedging transactions in our Company’s securities. We also have an anti-pledging policy that prohibits executive officers and directors of the Company from, directly or indirectly, pledging, hypothecating, or otherwise encumbering shares of the Company’s common stock as collateral for indebtedness. None of our executive officers have pledged any shares of our common stock as security or collateral on a personal loan.

 

   

Our “double-trigger” change-in-control agreements do not provide for any excise tax “gross-ups,” and we do not provide any tax “gross-ups” on any benefits for our executive officers, other than annual executive health physicals.

Fiscal 2021 Executive Compensation Actions

 

   

Base Salaries. For fiscal 2021, none of our Named Executive Officers received a base salary increase. For the period from April 26, 2020 through October 25, 2020, the Company implemented temporary base salary reductions of 25% for Joseph F. Puishys, our former Chief Executive Officer who retired at the end of fiscal 2021, and 20% for certain Other Named Executive Officers due to the disruption and uncertainties created by the COVID-19 pandemic.



 

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Annual Cash Incentive Payouts. Our annual cash incentive awards are designed to reward achievement of financial goals established in our annual operating plan. Our goals were established at a time when the full impact of the COVID-19 pandemic on the economy and our end-markets was unknown, and we maintained these goals notwithstanding the subsequent adverse impact of the pandemic on our business performance and financial results. Our Named Executive Officers’ payouts would have ranged between 10% to 21% of salary as originally calculated based on these goals. The Compensation Committee used its discretion to increase these payouts to between approximately 48% to 58% of salary in recognition of the Named Executive Officers’ achievements in protecting the health of employees and serving our customers, while making significant progress on cost initiatives to deliver earnings and record full-year cash flow. See “Fiscal 2021 Annual Cash Incentive Payouts” beginning on page 43 for a discussion of the metrics, goals and amounts paid to our Named Executive Officers for our annual cash incentive awards in fiscal 2021.

 

   

Long-Term Incentive Awards. Our long-term incentive program is designed to align the interests of executives with shareholders and to focus executives on the achievement of long-term sustained performance, entrepreneurship, and delivery of quality products and services, while creating appropriate retention incentives through the use of multi-year vesting schedules.

The mix of long-term incentive instruments is determined annually by the Compensation Committee, and in past years, the instruments were composed of restricted stock awards and two-year performance awards. Due to the economic uncertainties resulting from the COVID-19 pandemic, the Committee determined that the Company would not be able to establish effective long-term financial performance goals in fiscal 2021. Based on this determination, the Committee elected to issue stock options in fiscal 2021 in lieu of granting two-year performance awards. The stock options were intended to approximate the annual value of, and the maximum potential gain available from, the performance awards traditionally granted by the Company, and accordingly, the options cap the maximum gain upon exercise. The maximum gain also avoids a windfall to our executive officers resulting from our relatively low stock price at the time of grant. Restricted stock awards and stock options constituted 40% and 60%, respectively, of total target value of long-term incentive compensation in fiscal 2021.

 

   

Restricted Stock Awards. The Committee awarded restricted stock awards to our Named Executive Officers based on a market-competitive analysis of grants to officers in comparable roles at our peer companies. All restricted stock awards vest ratably over three years. Mr. Puishys received an award valued at $673,565 and Messrs. Dobler, Sachs, Porter and Jewell and Ms. Hayes received awards with values ranging from $190,155 to $362,200. Our incoming Chief Executive Officer Ty R. Silberhorn received a restricted stock award valued at $1,399,997 when he joined our Company on January 4, 2021, and our incoming Chief Financial Officer Nisheet Gupta received a restricted stock award valued at $464,800 when he joined our Company on June 15, 2020.

 

   

Stock Options. The Committee awarded stock option awards to our Named Executive Officers (excluding Messrs. Silberhorn and Porter). The stock options vest in equal installments on the second and third anniversaries of the date of the grant. Mr. Puishys received a stock option award valued at $1,080,156 and Messrs. Gupta, Dobler, Sachs and Jewell and Ms. Hayes received awards with values ranging from $155,310 to $274,548. No stock options may be exercised for a gain of more than $12.66 per



 

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share (i.e., the difference between the exercise price ($23.04) per share and the maximum share price ($35.70)). The maximum share price limitation is subject to equitable adjustment in the event of a stock split or other similar transaction in accordance with the 2019 Stock Incentive Plan.

 

   

Chief Executive Officer Evaluation Incentive. Pursuant to the terms of his Transition Agreement, Mr. Puishys was paid $210,375 under the fiscal 2021 CEO evaluation incentive program, based upon his fiscal 2020 annual CEO performance evaluation rating of 90% of target.



 

5


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Board Composition and Diversity Highlights

The composition of our Board of Directors features a majority of independent directors and a diversity of background and experiences that facilitate effective oversight and that enrich Board deliberations on strategic planning, operations, risk management and other critical topics. The following charts reflect the composition of our Board of Directors as of May 11, 2021.

 

 

LOGO    LOGO

 

 

                             LOGO



 

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Each member of our Board of Directors brings a diversity of skills and experiences to his or her service on our Board. Core qualifications and areas of expertise that are represented on our Board of Directors as of May 11, 2021 are shown below. ( Indicates directors with described qualifications and expertise.)

 

 

LOGO

Active Shareholder Engagement Program

Shareholder engagement is a key part of our commitment to good governance. We regularly engage with our shareholders to discuss our business and to gain insights on the issues that are most important to them. In fiscal 2021, we continued our shareholder engagement practices, despite the pandemic, utilizing a combination of virtual meeting formats to stay connected with our shareholders. During the fiscal year, members of our management team participated in five virtual investor conferences and met with investors in numerous other virtual meetings and conference calls. The feedback from our engagement with investors is regularly shared with our Board of Directors.

In response to feedback from our shareholders, our Board of Directors recommended, and our shareholders approved at our 2020 Annual Meeting of Shareholders, the following amendments to the Company’s Articles of Incorporation (“Articles”):

 

   

An amendment to establish a majority vote standard for the election of directors in uncontested elections, further strengthening the right of a majority of shareholders to elect the directors. Prior to this amendment, the voting standard applicable to the Company under the Minnesota Business Corporation Act was a plurality, which means the nominees who had received the highest number of votes for election, up to the number of director positions subject to election, would have been elected to the Board.

 

   

Amendments to establish a majority vote standard for the removal of directors for cause and for the amendment of the director removal provision. Prior to these amendments, the voting requirement to remove a director for cause or to amend the director removal provision was 80% of the outstanding shares.

 

   

An amendment to remove the “anti-greenmail provision” formerly contained in the Articles, reducing the shareholder vote required to approve a purchase of shares by certain interested shareholders, including more than 5% shareholders, from 80 percent of all votes entitled to be cast to a majority of the voting power of all shares entitled to vote, consistent with the voting standard in the Minnesota Business Corporation Act.



 

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Security Ownership of Certain Beneficial Owners

The following table sets forth information concerning beneficial ownership of our common stock outstanding as of April 28, 2021, by persons known to us to own more than 5% of our common stock. Unless otherwise indicated, the named holders have sole voting and investment power with respect to the shares beneficially owned by them. As of April 28, 2021, there were 25,667,469 shares of common stock outstanding.

 

Name and Address of

Beneficial Owner

     Amount and Nature  
of Beneficial
Ownership (#)
      Percent of Class (%)    

BlackRock, Inc.

55 East 52nd Street

New York, NY 10055

     4,083,292 (1)      15.91

The Vanguard Group, Inc.

100 Vanguard Boulevard

Malvern, PA 19355

     2,643,443 (2)      10.30

Barrow, Hanley, Mewhinney &

Strauss, LLC

2200 Ross Avenue, 31st Floor

Dallas, TX 75201-2761

     1,973,490 (3)      7.69

Dimensional Fund Advisors LP

Building One

6300 Bee Cave Road

Austin, TX 78746

     1,512,499 (4)      5.89

Franklin Mutual Advisers, LLC

101 John F. Kennedy Parkway

Short Hills, NJ 07078-2789

     1,322,047 (5)      5.15

 

  (1)

We have relied upon the information provided by BlackRock, Inc. (“BlackRock”) in a Schedule 13G filed on January 25, 2021 and reporting information as of December 31, 2020. The Schedule 13G was filed by BlackRock in its capacity as a parent holding company or control person and indicates that BlackRock has sole investment power over 4,083,292 shares and sole voting power over 4,038,757 shares. BlackRock Fund Advisors, a subsidiary of BlackRock, beneficially owns 5% or greater of the outstanding shares of the security class reported on the Schedule 13G.

 

  (2)

We have relied upon the information provided by The Vanguard Group, Inc., an investment advisor (“Vanguard”), in a Schedule 13G/A filed on February 10, 2021 and reporting information as of December 31, 2020. Of the shares reported, Vanguard has sole investment power over 2,585,819 shares, shared investment power over 57,624 shares, and shared voting power over 34,346 shares.

 

  (3)

We have relied upon the information provided by Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow”), in a Schedule 13G filed on February 11, 2021 and reporting information as of December 31, 2020. Of the shares reported, Barrow has sole investment power over 1,973,490 shares, sole voting power over 1,376,035 shares and shared voting power over 597,455 shares.

 

  (4)

We have relied upon the information provided by Dimensional Fund Advisors LP (“Dimensional Advisors”) in a Schedule 13G/A filed on February 12, 2021 and reporting information as of December 31, 2020. Dimensional Advisors furnishes investment advice to four investment companies and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies,

 

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trusts and accounts are collectively referred to as the “Funds”). Subsidiaries of Dimensional Advisors may act as advisor or sub-advisor to certain Funds. All of the 1,512,499 shares listed are owned by the Funds. In its role as investment advisor, sub-advisor and/or manager, Dimensional Advisors or its subsidiaries (collectively “Dimensional”) may possess sole investment power over 1,512,499 shares and sole voting power over 1,434,160 shares held by the Funds. The Funds have the right to receive, or power to direct the receipt of dividends from, or the proceeds from the sale, of the securities held in their respective accounts. In its role as investment advisor, sub-advisor and/or manager, Dimensional may be deemed to be a beneficial owner of the shares; however, Dimensional disclaims beneficial ownership of such shares. To the knowledge of Dimensional, the interest of any one such Fund does not exceed 5% of the class of securities.

 

  (5)

We have relied upon the information provided by Franklin Mutual Advisers, LLC (“Franklin”) in a Schedule 13G filed on February 4, 2021 and reporting information as of December 31, 2020. Of the shares reported, Franklin has sole investment power over 1,322,047 shares and sole voting power over 1,229,312 shares. All of the 1,322,047 shares are beneficially-owned by one or more open-end investment companies or other managed accounts that are investment management clients of Franklin Mutual Advisers, LLC, an indirect wholly-owned subsidiary of Franklin Resources, Inc.

 

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Security Ownership of Directors and Management

Except as otherwise noted, the following table sets forth the number of shares of our common stock beneficially owned as of April 28, 2021, by each of our directors, each of our executive officers named in the Summary Compensation Table (our “Named Executive Officers”) and by all of our current directors and executive officers as a group. As of April 28, 2021, there were 25,667,469 shares of common stock outstanding.

 

Name of Beneficial Owner

   Amount and
Nature

of  Beneficial
Ownership (#)(1)(2)
  Percent
of Class
(%)
   Phantom Stock,
Restricted Stock
Units and
Performance
Share Units (#)(3)
   Total
Stock-
Based
Ownership
(#)(4)

Non-Employee Directors

                  

Bernard P. Aldrich

       15,652       *        51,839        67,491

Christina M. Alvord

       6,392       *               6,392

Frank G. Heard

             *        6,392        6,392

Lloyd E. Johnson

       26,860 (5)        *        10,399        37,259

Elizabeth M. Lilly

       6,392       *               6,392

Donald A. Nolan

       5,326       *        25,490        30,816

Herbert K. Parker

       28,461       *               28,461

Mark A. Pompa

             *        17,669        17,669

Patricia K. Wagner

       14,827       *               14,827

Named Executive Officers

                  

Ty R. Silberhorn

       68,710       *        17,286        85,996

Nisheet Gupta

       32,360       *        5,618        37,978

Curtis J. Dobler

       28,475       *        3,397        31,872

Gregory J. Sachs

       24,325       *        2,593        26,918

Maureen A. Hayes

       32,711       *        2,377        35,088

Brent C. Jewell

       47,598       *        3,630        51,228

Joseph F. Puishys

       177,795 (6)        *               177,795

James S. Porter(7)

       129,098       *               129,098

All directors and executive officers as a group (16 persons)(8)

       353,886       1.38        147,139        501,025

 

* Indicates less than 1%.

 

(1)

Unless otherwise indicated, the individuals listed in the table have sole voting and investment power with respect to the shares owned by them, and such shares are not subject to any pledge.

 

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(2)

For our non-employee directors, the number indicated includes the following shares of restricted stock issued to the named individual pursuant to our 2009 Non-Employee Director Stock Incentive Plan, as amended (2014) (the “2009 Director Stock Plan”) and 2019 Non-Employee Director Stock Plan (the “2019 Director Stock Plan”).

 

Director

   Shares of Restricted Stock

Bernard P. Aldrich

       8,782

Christina M. Alvord

       6,392

Frank G. Heard

      

Lloyd E. Johnson

      

Elizabeth M. Lilly

       6,392

Donald A. Nolan

      

Herbert K. Parker

       8,908

Mark A. Pompa

      

Patricia K. Wagner

       8,782
All directors and executive officers as a group (16 persons)        253,113

All shares of restricted stock held pursuant to our 2009 Director Stock Plan and 2019 Director Stock Plan are subject to future vesting conditions, and holders of such shares have no investment power over such shares.

For our executive officers, the number of shares indicated includes the following shares issued to the named individual pursuant to our 2009 Stock Incentive Plan, as amended and restated (2011) (the “2009 Stock Incentive Plan”), our 2019 Stock Incentive Plan, our Employee Stock Purchase Plan, and our 401(k) Retirement Plan.

 

Named Executive Officers

   Shares of Restricted
Stock
    Shares Held in Employee 
Stock Purchase Plan and
401(k) Retirement Plan

Ty R. Silberhorn

       68,710       

Nisheet Gupta

       32,360       

Curtis J. Dobler

       24,806       

Gregory J. Sachs

       22,353        455

Maureen A. Hayes

       20,621        1,218

Brent C. Jewell

       38,712       

Joseph F. Puishys

             

James S. Porter

              1,875

All directors and executive officers as a group (16 persons)

       253,113        1,673

All shares of restricted stock held pursuant to our 2009 Stock Incentive Plan and 2019 Stock Incentive Plan are subject to future vesting conditions, and the holders of such shares have no investment power over such shares.

 

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(3)

For our non-employee directors, the number indicated includes (i) restricted stock units, each representing the right to receive one share of our common stock, that are issued pursuant to our 2009 Director Stock Plan and 2019 Director Stock Plan, which are described under the heading “Restricted Stock Awards and Restricted Stock Unit Awards”; (ii) deferred restricted stock units, each representing the right to receive one share of our common stock, that are issued pursuant to Restricted Stock Deferral Programs adopted under each of our 2009 Director Stock Plan and 2019 Director Stock Plan, which are described under the heading “Non-Employee Director Compensation—Director Deferred Compensation Arrangements”; and, (iii) phantom stock units, each representing the value of one share of our common stock, that are attributable to deferred stock accounts in our Deferred Compensation Plan for Non-Employee Directors, which is described under the heading “Director Deferred Compensation Arrangements.” The number of units held by each of our non-employee directors is set forth below.

 

Director

  Restricted
  Stock Units  
  Deferred
Restricted
  Stock Units  
  Phantom
  Stock Units  

Bernard P. Aldrich

                  51,839

Christina M. Alvord

                 

Frank G. Heard

      6,392            

Lloyd E. Johnson

            10,399      

Elizabeth M. Lilly

                 

Donald A. Nolan

            15,923       9,567

Herbert K. Parker

                 

Mark A. Pompa

            10,186       7,483

Patricia K. Wagner

                 

All directors and executive
officers as a group (16 persons)

      6,392       36,508       68,889

For our executive officers, the number of shares indicated includes unvested performance share units that will not be settled in common stock within 60 days. The executive officers do not have voting or investment power over any shares of the Company’s common stock that may be issued pursuant to the performance share units prior to issuance of such shares.

 

(4)

The amounts in this column are derived by adding the amounts in the “Amount and Nature of Beneficial Ownership” and the “Phantom Stock, Restricted Stock Units and Performance Share Units” columns of the table.

 

(5)

Includes 22,540 shares held by the Johnson Family Trust for which Mr. Johnson serves as trustee and 2,600 shares held by Mr. Johnson’s individual retirement account.

 

(6)

Includes 113,698 shares held by the Puishys Family Trust for which Mr. Puishys serves as trustee.

 

(7)

Mr. Porter resigned as Executive Vice President and Chief Financial Officer of the Company on June 15, 2020, and his employment with the Company ended on June 19, 2020. Mr. Porter’s ownership reflects amounts owned as of April 30, 2020, as reported in the Form 4 filed by Mr. Porter on May 1, 2020.

 

(8)

Includes all directors and executive officers of the Company serving in such capacity as of April 28, 2021.

 

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Proposal 1: Election of Directors

Our Articles provide that our Board of Directors will be divided into three classes of directors of as nearly equal size as possible and the term of each class of directors is three years. The term of one class expires each year in rotation. Currently, we have ten directors, with three directors serving in each of Classes I and III and four directors serving in Class II. At our Annual Meeting, the terms of our four Class II directors will expire. On March 2, 2021, Class II director Bernard P. Aldrich informed the Board that he would retire from the Board and would not stand for re-election at the Annual Meeting. Mr. Aldrich will continue to serve on the Board until the Annual Meeting. Immediately following the certification of the vote for election of directors at the Annual Meeting, the size of our Board will be reduced to nine directors, with three directors in each class.

Christina M. Alvord, Herbert K. Parker and Ty R. Silberhorn have been nominated for re-election to our Board as Class II directors. Class II directors elected at the Annual Meeting will serve until our 2024 Annual Meeting of Shareholders and until their successors are duly elected and qualified or until their earlier resignation or removal. Each of the nominees has agreed to serve as a director, if elected.

If any of the nominees becomes unable or unwilling to serve as a director prior to the Annual Meeting, proxies will be voted for a substitute nominee or nominees designated by the Board. Alternatively, at the Board’s discretion, the proxies may be voted for a fewer number of nominees.

Information about the background and qualifications of the Board nominees for election at the Annual Meeting and the directors continuing to serve after the Annual Meeting who are not subject to re-election at the Annual Meeting is provided below.

Board Recommendation

Our Board of Directors recommends that you vote FOR the three Class II director nominees. Unless a contrary instruction is indicated on the proxy, proxies will be voted FOR the election of the three Class II nominees.

 

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Class II Director Nominees – Terms Expiring 2024

 

LOGO  

 

Christina M. Alvord

 

Age: 54

 

Director since: 2020

 

Independent

 

Audit Committee Financial Expert

 

  

 

Apogee Committees:

•  Nominating and Corporate Governance

•  Audit

  

Ms. Alvord served as President, Central Division of Vulcan Materials Company, a producer of construction aggregates and aggregates-based construction materials and member of the S&P 500 Index from 2019 until 2021. She joined Vulcan in 2016 and served as President of the Southern & Gulf Coast Division from 2017 to 2019 and Vice President, Performance Management from 2016 to 2017. Ms. Alvord held various executive management positions with GE Aviation, including General Manager of Engine Component Repair from 2012 to 2015 and General Manager of Turbine Airfoils Center of Excellence from 2010 to 2012, Government Relations Executive from 2009 to 2010, President of GE Aviation-Unison Industries from 2005 to 2009; President of GE Aviation-Middle River Aircraft Systems from 2003 to 2005. Earlier in her career, Ms. Alvord held management positions in the GE Corporation Initiatives Group and McKinsey Company, Inc.

 

Skills & Qualifications:

   

•  Executive Leadership

•  Manufacturing Operations

•  Business Operations

 

•  Financial Management

•  Enterprise Risk Management

•  Construction Industry

 

•  Strategy Development and Execution

•  Leadership Development

 

LOGO  

 

Herbert K. Parker

 

Age: 63

 

Director since: 2018

 

Independent

  

 

Apogee Committees:

•  Nominating and Corporate Governance, Chair

  

 

Public Directorships:

•  TriMas Corporation
(2015 – Present)

•  nVent Electric PLC
(2018 – Present)

•  American Axle & Manufacturing
Holdings, Inc.
(2018 – Present)

 

Mr. Parker is the retired Executive Vice President - Operational Excellence of Harman International Industries, Inc., a worldwide leader in the development, manufacture, and marketing of high quality, high-fidelity audio products, lighting solutions, and electronic systems. He joined Harman International in June 2008 as Executive Vice President and Chief Financial Officer and served in that capacity to 2015. He served as Executive Vice President - Operational Excellence from 2015 to 2017. Prior to joining Harman International Industries, Inc., Mr. Parker served in various senior financial positions with ABB Ltd. (known as ABB Group), a global power and technology company, from 1980 to 2006, including as the Chief Financial Officer of the Global Automation Division from 2002 to 2005 and the Americas Region from 2006 to 2008.

 

Skills & Qualifications:

   

•  Executive Leadership

•  Accounting and Audit

•  Financial and Asset Management

•  Mergers and Acquisitions

•  Investor Relations

 

•  Property and Asset Acquisition and Management

•  Operations

•  Enterprise Risk Management

•  Leadership Development

 

•  Sarbanes-Oxley Compliance

•  International Business

•  Corporate Governance

•  Public Company Board Experience

 

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Table of Contents

Class II Director Nominees – Terms Expiring 2024 (continued)

 

LOGO  

 

Ty R. Silberhorn

 

Age: 53

 

Director since: 2021

 

Not Independent

 

Chief Executive Officer

    and President

 

  

 

Apogee Committees:

•  N/A

  

Mr. Silberhorn has served as our Chief Executive Officer and President since January 2021. Prior to joining our Company, he served for over twenty years in various roles for 3M, a diversified global manufacturer and technology company, most recently as Senior Vice President of 3M’s Transformation, Technology and Services from 2019 to 2020. Prior to this position, and since 2001, he held several 3M global business unit leadership roles, serving as Vice President and General Manager for divisions within Safety & Industrial, Transportation & Electronics, and Consumer business groups.

 

Skills & Qualifications:

   

•  Executive Leadership and Talent Management

•  Financial Management

•  Business Operations

 

•  Strategy Development and Execution

•  Building Products Industry

•  Portfolio Management

 

•  Capital Allocation

•  Global Operations

•  Enterprise Risk Management

Class III Directors – Terms Expiring in 2022

 

LOGO  

 

Frank G. Heard

 

Age: 62

 

Director since: 2020

 

Independent

 

Audit Committee Financial Expert

 

  

 

Apogee Committees:

•  Audit

•  Nominating and Corporate Governance

  

 

Public Directorships:

•  Gibraltar Industries, Inc.
(2015 – 2020)

Mr. Heard served as a director of Gibraltar Industries, Inc., a leading manufacturer and distributor of building products for the renewable energy, conservation, residential, industrial and infrastructure markets, from 2015 to 2020, including as Vice Chair of the Board from 2019 - 2020. He served as Chief Executive Officer of Gibraltar Industries from 2015 to 2019. Mr. Heard retired as Vice Chair of the Board and as a director of Gibraltar Industries, Inc. in March 2020. Prior to joining Gibraltar Industries in 2014 as President and Chief Operating Officer, he served as President of the Building Components Group, a division of Illinois Tool Works, Inc., from 2008 to 2013 and in various executive management roles for Illinois Tool Works from 1990 to 2008.

 

Skills & Qualifications:

   

•  Executive Leadership and Talent Management

•  Investor Relations

•  Public Company Board Experience

•  Financial Management

 

•  Business Operations

•  Strategy Development and Execution

•  Building Products Industry

•  Portfolio Management

 

•  Global Operations

•  Capital Allocation

•  Enterprise Risk Management

 

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Table of Contents

Class III Directors – Terms Expiring in 2022 (continued)

 

LOGO  

 

Elizabeth M. Lilly

 

Age: 58

 

Director since: 2020

 

Independent

  

 

Apogee Committees:

•  Compensation

•  Nominating and
Corporate
Governance

Ms. Lilly has served as Chief Investment Officer and Executive Vice President for The Pohlad Companies, a privately-owned business based in Minneapolis, Minnesota that holds a diverse group of businesses and business interests, since 2018. She oversees the public and private investments for the Pohlad family and provides leadership and management of the investment team of The Pohlad Companies. Ms. Lilly has over 30 years in portfolio and investment management experience. She founded Crocus Hill Partners, a small capitalization portfolio firm, in 2017 and served as President from 2017 to 2018. She served as Senior Vice President and Portfolio Manager for Gabelli Asset Management from 2002 to 2017. She was a co-founder of Woodland Partners, LLC in 1997 and served as Managing Director from 1997 to 2002, when the firm was acquired by Gabelli Asset Management. Earlier in her career, Ms. Lilly served in various portfolio management and analyst positions for First Asset Management, Fund American Companies and Goldman, Sachs and Company.

 

Skills & Qualifications:

   

•  Executive Leadership

•  Financial Management

•  Portfolio Management

 

•  Asset Management

•  Leadership Development

 

•  Financial Markets

•  Capital Allocations

 

LOGO  

 

Mark A. Pompa

 

Age: 56

 

Director since: 2018

 

Independent

 

Audit Committee Financial Expert

 

  

 

Apogee Committees:

•  Audit

•  Compensation

  

Mr. Pompa has served as the Executive Vice President and Chief Financial Officer of EMCOR Group, Inc., a Fortune 500 leader in electrical and mechanical construction services, industrial and energy infrastructure and building services, since 2006. Previously, he was Senior Vice President and Chief Accounting Officer of EMCOR from 2003 to 2006 and Treasurer from 2003 to 2007. He joined EMCOR in 1994, serving as Vice President and Controller until 2003. Prior to joining EMCOR, Mr. Pompa was an Audit and Business Advisory Manager at Arthur Andersen LLP.

 

Skills & Qualifications:

   

•  Executive Leadership

•  Financial Management

•  Accounting and Audit

•  Non-residential Construction Industry

 

•  Business Operations

•  Mergers and Acquisitions

•  Investor Relations

•  Strategy Development and Execution

 

•  Enterprise Risk Management

•  Leadership Development

•  Executive Compensation

 

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Table of Contents

Class I Directors – Term Expiring in 2023

 

LOGO  

 

Lloyd E. Johnson

 

Age: 67

 

Director since: 2017

 

Independent

 

Audit Committee Financial Expert

 

  

 

Apogee Committees:

•  Audit, Chair

  

Mr. Johnson was the Global Managing Director, Finance and Internal Audit of Accenture Corporation, a global management consulting and professional services firm providing strategy, consulting, digital technology and operations services, from 2004 to 2015. Prior to joining Accenture Corporation, he served as Executive Director, M&A and General Auditor for Delphi Automotive PLC, a vehicle components manufacturer, from 1999 to 2004. From 1997 to 1999, he served as Corporate Vice President, Finance and Chief Audit Executive for Emerson Electric Corporation, a diversified global manufacturing company serving industrial, commercial and consumer markets. Earlier in his career, he held senior finance leadership roles at Sara Lee Knit Products, a division of Sara Lee Corporation; Shaw Food Industries, a privately-held food service supply company; and Harper, Wiggins & Johnson, CPA, a regional accounting firm. Mr. Johnson began his career with Coopers & Lybrand, a global accounting firm that became part of PricewaterhouseCoopers, a global accounting firm.

 

Skills & Qualifications:

   

•  Executive Leadership

•  Public Accounting and Audit

•  Financial Management

•  Business Operations

•  Enterprise Risk Management

 

•  Mergers and Acquisitions

•  International Business

•  Information Technology, including Cybersecurity

•  Leadership Development

 

•  Executive Compensation

•  Corporate Governance

•  Industrial Commercial and Consumer Markets

•  Public Company Board Experience

 

LOGO  

 

Donald A. Nolan

 

Age: 60

 

Director since: 2013

 

Independent

 

Non-Executive Chair

    since January 2020

 

  

 

Apogee Committees:

•  Ad hoc Member – all Board Committees

  

 

Public Directorships:

•  Kennametal Inc.
(2014 – 2016)

Mr. Nolan served as President and Chief Executive Officer of Kennametal Inc., a global industrial technology leader, present in over 60 countries, manufacturing tooling and wear-resistant solutions for customers in the aerospace, energy, and transportation industries from 2014 to 2016. Previously, Mr. Nolan was President of the Materials Group for Avery Dennison Corporation from 2008 to 2014, a global leader in packaging solutions. Prior to joining Avery Dennison Corporation, he served on the executive team at Valspar, a global leader in paint and coatings, as Senior Vice President, leading the Global Packaging and Refinish Coatings businesses. Before joining Valspar, he held leadership positions of increasing responsibility with Loctite, General Electric and Ashland Chemical. Mr. Nolan is also active in private equity, serving on several private company boards.

 

Skills & Qualifications:

   

•  Executive Leadership

•  Business Operations

•  Strategy Development and Execution

•  Marketing and Sales

 

•  Financial Management

•  International Business

•  Mergers and Acquisitions

•  Enterprise Risk Management

•  Leadership Development

 

•  Corporate Governance

•  Executive Compensation

•  Public and Private Company Board Experience

 

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Class I Directors – Term Expiring in 2023 (continued)

 

LOGO  

 

Patricia K. Wagner

 

Age: 58

 

Director since: 2016

 

Independent

  

 

Apogee Committees:

•  Compensation, Chair

  

 

Public Directorships:

•  California Water Services Group
(2019 – Present)

•  Primoris Services Corporation
(2020 – Present)

 

Ms. Wagner retired from Sempra Energy, a Fortune 500 energy services holding company, in 2019, after 24 years of service with Sempra Energy Companies. She served as Group President of U.S. Utilities, overseeing San Diego Gas & Electric, Southern California Gas Company (“SoCalGas”) and Sempra Energy’s investment in Oncor Electric Delivery Company LLC, from 2018 to 2019. She has served in several leadership positions for the Sempra Energy family of companies, including Chief Executive Officer of SoCalGas from 2017 to 2018; Executive Vice President of Sempra Energy in 2016; President and Chief Executive Officer of Sempra U.S. Gas & Power from 2014 to 2016; and other leadership positions for the Sempra Energy family of companies from 1995 to 2014. Prior to joining Sempra Energy, Ms. Wagner held management positions at Fluor Daniel, an engineering, procurement, construction and maintenance services company. Earlier in her career, Ms. Wagner held positions at McGaw Laboratories and Allergan Pharmaceuticals.

 

Skills & Qualifications:

   

•  Executive Leadership

•  Business Operations

•  Financial Management

•  Accounting and Audit

•  Strategy Development and Execution

 

•  Energy Industry

•  Enterprise Risk Management

•  Information Technology

•  Mergers and Acquisitions

•  Regulatory Compliance

 

•  Leadership Development

•  Executive Compensation

•  Corporate Governance

•  Public Company Board Experience

 

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Corporate Governance

The Board is committed to high standards of corporate governance and ethical business conduct. The following corporate governance resources reflect this commitment and provide a framework within which directors and management operate the business.

Corporate Governance Resources

Information related to our corporate governance is available on our website at www.apog.com by clicking on “Investors,” selecting “Governance” and then selecting the applicable document or information. This information includes:

 

   

Board and Committee Composition

 

   

Board Committee Charters

 

   

Our Code of Business Ethics and Conduct, including our Code of Conduct Hotline

 

   

How to Contact the Board

 

   

Our Corporate Governance Guidelines

 

   

Our Restated Articles of Incorporation, as amended

 

   

Our Amended and Restated By-laws

 

   

Our Conflict Materials Policy and related resources

Information relating to our management team is also available on our website at www.apog.com by clicking on “About Us” and then selecting “Leadership.”

Certain sections of this Proxy Statement reference or refer you to materials posted on our website, www.apog.com. These materials and our website are not incorporated by reference in, and are not part of this Proxy Statement.

Code of Business Ethics and Conduct

Our Board of Directors has adopted our Code of Business Ethics and Conduct (our “Code of Conduct”), which is a statement of our high standards for ethical behavior and legal compliance. All of our employees and all members of our Board of Directors are required to comply with our Code of Conduct.

Corporate Governance Guidelines

Our Corporate Governance Guidelines outline the role, composition, qualifications, operation and other policies applicable to our Board of Directors and are revised as necessary to continue to reflect evolving corporate governance practices.

Communications with our Board of Directors

Our stakeholders may communicate directly with our Board of Directors, our Non-Executive Chair or any other specified individual director in writing by (i) sending a letter addressed to Apogee Directors, Apogee Enterprises, Inc., 4400 West 78th Street, Suite 520, Minneapolis, Minnesota 55435, or (ii) sending an email to Directors@apog.com. Substantive communications, such as corporate

 

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governance matters or potential issues relating to accounting, internal controls or other auditing matters, are forwarded by our General Counsel to the relevant director(s) as appropriate. Communications not requiring the substantive attention of our Board, such as employment inquiries, sales solicitations, donation requests, questions about our products, and other such matters, are handled directly by our management.

Director Independence

Under our Corporate Governance Guidelines, a substantial majority of the directors on our Board, and all members of our Audit, Compensation, and Nominating and Corporate Governance Committees must be independent. Each year, in accordance with Nasdaq rules, our Board of Directors affirmatively determines the independence of each director and nominee for election as a director in accordance with guidelines it has adopted, which include all elements of independence set forth in the Nasdaq listing standards.

Our Nominating and Corporate Governance Committee reviewed the applicable legal standards for Board member and Board committee member independence and reported on its review to our Board of Directors. Based on this review, our Board of Directors has determined that the following non-employee directors are independent and have no material relationship with the Company except serving as a director and holding shares of our common stock: Bernard P. Aldrich, Christina M. Alvord, Frank G. Heard, Lloyd E. Johnson, Elizabeth M. Lilly, Donald A. Nolan, Herbert K. Parker, Mark A. Pompa and Patricia K. Wagner. Our Board of Directors has determined that Ty R. Silberhorn, who joined the Company as Chief Executive Officer and President and as a member of the Board on January  4, 2021, is not independent because he serves as an officer of the Company.

Board Leadership Structure

Mr. Nolan has served as our Non-Executive Chair since January 2020. The Non-Executive Chair of our Board chairs our annual meeting of shareholders, the meetings of our Board of Directors and executive sessions of our independent directors. In addition, the Non-Executive Chair of our Board, in consultation with our Chief Executive Officer, establishes the agenda for each meeting of our Board of Directors. The Non-Executive Chair also attends Committee meetings as an ad hoc member, who participates in discussions but does not vote on Committee matters, and who serves as the primary liaison between the senior management team and the Board. The Board believes that having a Non-Executive Chair provides independent leadership on the Board and enables our Chief Executive Officer to focus his time and energy on development of strategy, operational improvements and leadership of the management and employee team. The Board and our Chief Executive Officer believe that this division of responsibilities serves the Board, the Company and our shareholders well.

Cooperation Agreement with Engaged Capital, LLC

On November 10, 2019, we signed a Cooperation Agreement with our shareholder Engaged Capital, LLC (“Engaged Capital”), after a series of discussions on the composition of the Board and other governance matters. Pursuant to the Cooperation Agreement, we agreed to the nomination of three new, independent directors to the Board at the 2019 Annual Meeting of Shareholders. The Board subsequently nominated Ms. Alvord, Mr. Heard and Ms. Lilly to the Board (the “2019 New Directors”) and they were elected to the Board at the 2019 Annual Meeting of Shareholders held on January 14, 2020.

The 2019 New Directors are not affiliated with Engaged Capital, and they have not, and would not, receive compensation or other payments from any third parties, including Engaged Capital, in exchange for their service on our Board.

The Cooperation Agreement terminated by its terms on August 1, 2020.

 

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Table of Contents

Criteria for Membership on Our Board of Directors

Director candidates should possess the highest personal and professional ethics, integrity and values; be committed to representing the long-term interests of our stakeholders; have an inquisitive and objective perspective, practical wisdom and mature judgment; and be willing to challenge management in a constructive manner. Our Board of Directors strives for membership that is diverse in gender, ethnicity, age, geographic location, and business skills and experience at policy-making levels. In addition, director candidates must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, and should be committed to serving on our Board of Directors for an extended period of time.

Procedure for Evaluating Director Nominees

Our Nominating and Corporate Governance Committee’s procedure for reviewing the qualifications of all nominees for membership on our Board of Directors includes making a preliminary assessment of each proposed nominee, based upon resume and biographical information, willingness to serve and other background information, business experience and leadership skills. The Board believes that its membership should reflect a diversity of experience, skills, geography, gender and ethnicity, and it invites directors to annually self-identify certain diversity characteristics that may inform their perspectives and contributions to the Board. The Committee considers each of these factors when evaluating Board composition, and it considers these factors on an ongoing basis as it identifies and evaluates director candidates. All director candidates who continue in the process are then interviewed by members of our Nominating and Corporate Governance Committee and other current directors. Our Nominating and Corporate Governance Committee makes recommendations to our Board of Directors for inclusion in the slate of director nominees at a meeting of shareholders, or for appointment by our Board of Directors to fill a vacancy. Prior to recommending a director to stand for re-election for another term, our Nominating and Corporate Governance Committee applies its director candidate selection criteria, including a director’s past contributions to our Board of Directors, effectiveness as a director and desire to continue to serve as a director.

Board Refreshment and Retirement Policy

Our Company has had an active board refreshment program the past four years with planned retirements of long-tenured directors. As a mechanism to encourage director refreshment, our Board of Directors has established a policy that no individual may stand for election to our Board after his or her 72nd birthday, unless otherwise approved by a majority of our directors.

Since June, 2017, seven new directors have joined our Board: Lloyd E. Johnson in fiscal 2018, Herbert K. Parker and Mark A. Pompa in fiscal 2019; Christina M. Alvord, Frank G. Heard and Elizabeth M. Lilly in fiscal 2020 and Ty R. Silberhorn in fiscal 2021. Following the retirement of Mr. Aldrich upon the completion of our 2021 Annual Meeting of Shareholders, seven of our nine directors will have less than five years of tenure on our Board.

Stock Ownership Guidelines for Non-Employee Directors

Our Board of Directors has established director stock ownership guidelines that encourage share ownership by our directors in an amount having a market value equal to three times the annual Board retainer to be achieved within five years of first being elected as a director. For fiscal 2021, the annual Board retainer was $65,000. In calculating share ownership of our non-employee directors, we include shares of restricted stock, restricted stock units and deferred restricted stock units issued pursuant to our 2009 Director Stock Plan, 2019 Director Stock Plan and phantom stock units issued pursuant to our Deferred Compensation Plan for Non-Employee Directors. Shares are valued based on the average closing price of our common stock for the most recently completed fiscal year. As of February 27, 2021, the last trading day of fiscal 2021, all of our non-employee directors exceeded our stock ownership guidelines.

 

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Board Meetings and 2020 Annual Meeting of Shareholders

During fiscal 2021, our Board of Directors met six times and our non-employee directors met in executive session without our Chief Executive Officer or any other members of management being present six times. Each of our directors attended at least 75% of the regularly scheduled and special meetings of our Board of Directors and the Board committees on which he or she served that were held during the time he or she was a director during fiscal 2021.

All members of our Board of Directors are expected to attend our annual meeting of shareholders, and all the members of our Board of Directors attended our 2020 Annual Meeting of Shareholders telephonically.

Board Committee Responsibilities, Meetings and Membership

We currently have three standing Board Committees: Audit, Compensation, and Nominating and Corporate Governance. Each Committee operates under a written charter that is available on our website at www.apog.com by clicking on “Investors” and selecting “Governance” and then clicking on the applicable Board Committee.

 

Board Committee

 

Responsibilities

 

AUDIT COMMITTEE

 

All Members Independent

 

This Committee has oversight

responsibilities for our

independent registered public

accounting firm.

 

Each member meets the

independence and experience

requirements of the Nasdaq

listing standards and the SEC.

 

Each member is an “audit

committee financial expert”

under the rules of the SEC.

 

 

•   Directly responsible for the appointment, compensation, retention, termination, evaluation and oversight of the work of, and ascertaining the independence of, the independent registered public accounting firm.

 

•   Oversees our system of financial controls, internal audit procedures and internal audit function.

 

•   Oversees our program to ensure compliance with legal and regulatory requirements and ethical business practices.

 

•   Assesses and establishes policies and procedures to manage our financial reporting and internal control risk.

 

•   Establishes policies and procedures for the pre-approval of all services by our independent registered public accounting firm.

 

•   Establishes procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters.

 

 

COMPENSATION

COMMITTEE

 

All Members Independent

 

This Committee administers our

executive compensation

program.

 

Each member is a

“non-employee” director, as

defined in the Exchange Act,

and is an “outside director” as

defined in Section 162(m).

 

 

•   Establishes our executive compensation philosophy and compensation programs that comply with this philosophy.

 

•   Evaluates the Chief Executive Officer’s performance in light of approved goals and objectives and recommends to the Board for its approval the Chief Executive Officer’s compensation, including base salary, annual incentive compensation and long-term incentive compensation.

 

•   Determines the compensation of our executive officers (other than the Chief Executive Officer) and other members of senior management.

 

•   Responsible for annual assessment of the risk associated with our compensation programs, policies and practices.

 

•   Administers our 2009 Stock Incentive Plan and 2019 Stock Incentive Plan in which our employees participate.

 

•   Administers our annual cash and long-term incentive plans for executive officers and other members of senior management.

 

•   Directly responsible for the appointment, compensation, retention and oversight of the independent compensation consultant.

 

 

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Table of Contents

Board Committee

 

Responsibilities

 

NOMINATING AND

CORPORATE GOVERNANCE

COMMITTEE

 

All Members Independent

 

This Committee identifies and

evaluates Board candidates and oversees our corporate

governance practices.

 

 

•   Develops a Board succession plan and establishes and implements procedures to review the qualifications for membership on our Board of Directors, including nominees recommended by shareholders.

 

•   Assesses our compliance with our Corporate Governance Guidelines.

 

•   Reviews our organizational structure and senior management succession plans.

 

•   Makes recommendations to our Board of Directors regarding the composition and responsibilities of our Board committees and compensation for directors.

 

•   Administers an annual performance review of our Board committees, Board of Directors as a whole and our directors whose terms are expiring.

 

•   Administers an annual review of the performance of our Chief Executive Officer, which includes soliciting assessments from all non-employee directors.

 

•   Administers our 2009 Director Stock Plan, 2019 Director Stock Plan and Deferred Compensation Plan for Non-Employee Directors in which our non-employee directors participate.

 

The table below provides current membership and fiscal 2021 meeting information for each of our standing Board committees.

 

Name

   Audit Committee    Compensation
Committee
   Nominating and
Corporate Governance  
Committee

Bernard P. Aldrich

             M/FE                M   

Christina M. Alvord

             M/FE                          M

Frank G. Heard

             M/FE                          M

Lloyd E. Johnson

             C/FE      

Elizabeth M. Lilly

                  M                       M

Donald A. Nolan

             Ad hoc                Ad hoc                       Ad hoc

Herbert K. Parker

                            C

Mark A. Pompa

             M/FE                M   

Patricia K. Wagner

                    C     

Fiscal 2021 Meetings

             7                7                       4

C = Committee Chair     M = Committee Member     FE = Audit Committee Financial Expert

Risk Oversight by Our Board of Directors

Our Board of Directors oversees our enterprise risk management processes, focusing on our business, strategic, financial, operational, information technology, cybersecurity and overall enterprise risk. Our Board determined that oversight of our Company’s strategy and overall enterprise risk management program is more effective when performed by the full Board, utilizing the skills and experiences of all Board members. The Board actively oversees the Company’s cybersecurity risks and strategy, with management providing regular reports to the Board on cybersecurity risks facing the Company and the systems management has implemented to identify and manage those risks. In addition, our Board of Directors executes its overall responsibility for risk management through its Committees, as follows:

 

   

Our Audit Committee has primary responsibility for risk management relating to the reliability of our financial reporting processes, system of internal controls and corporate compliance

 

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program. Our Audit Committee receives quarterly reports from management, our independent registered public accounting firm and internal audit partner regarding our financial reporting processes, internal controls and public filings. It also receives quarterly updates from management regarding Code of Conduct issues, litigation and legal claims, and other compliance matters.

 

   

Our Compensation Committee, with assistance from its independent compensation consultant, oversees risk management associated with our compensation programs, policies and practices with respect to both executive compensation and compensation in general.

 

   

Our Nominating and Corporate Governance Committee oversees risk management associated with succession planning, non-employee director compensation, overall Board of Directors and Board Committee performance, and corporate governance practices.

Sustainability and Human Capital

At Apogee, we are committed to sustainable business practices and to developing, supporting and ensuring the safety and wellness of our employees. Our efforts include developing environmentally friendly products and services, incorporating sustainable practices in our business operations and investing in our human capital and the communities in which we operate. Our human capital management practices include extensive safety, health and wellness programs, promoting diversity in our hiring practices, ensuring an inclusive workplace environment, and devoting considerable resources to hiring, training and developing our employees to consistently deliver innovative products and services, technical expertise, and dependable customer service.

Additional information related to our sustainability efforts, human capital management and environmental responsibility efforts is available on our website at www.apog.com by clicking “Sustainability.”

Sustainability Focus

Our Company-wide commitment to sustainable business practices is focused on long-term profitable growth, while carefully stewarding the resources entrusted to us and delivering products and services that address our customers’ increasing focus on energy efficiency and reducing their carbon footprint. Apogee’s Core Values are the foundation of our culture and reflect our commitment to sustainability. Our Core Values are integrity, customer-focus, employee involvement and ownership, accountability, safe work environment, one team and respect for the individual.

Our commitment to sustainability begins with our people. We are continually focused on strengthening our team to ensure that we have the capabilities in place to consistently deliver for our customers. Apogee has an enterprise-wide talent management program in place to hire, train, and develop a diverse team of employees and leaders. We are also committed to our employees’ safety and wellness, with a robust workplace safety program, a comprehensive benefits package, and wellness initiatives to promote healthy lifestyles.

Our architectural products and services are key enablers to green building and sustainable design. We have long been at the forefront of developing innovative products and services that conserve resources and help architects and building owners achieve their sustainability goals. Our high-performance thermal framing systems, custom architectural glass coatings and other products help improve building energy efficiency, reduce greenhouse gas emissions, and increase security and comfort for building occupants.

 

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Our commitment to sustainability and environmental stewardship also extends to our own operations. Through our company-wide Lean Enterprise initiative we are continually focused on eliminating waste and minimizing resource consumption. As a leader in our industry, we are committed to environmentally sustainable manufacturing practices and we have policies in place to comply with applicable environmental laws and regulations.

Finally, we strive to make a difference in the communities where we operate. Apogee and our business units have a long legacy of giving back to the communities where we do business through volunteerism, donations and financial support. We also work to strengthen the communities where we operate by investing in our business and creating good jobs.

Human Capital Resources

Competition for qualified employees in the markets and industries in which we operate is intense, and the success of our Company depends on our ability to attract, select, develop and retain a productive and engaged workforce. Investing in our employees and their well-being, offering competitive compensation and benefits, promoting diversity and inclusion, and adopting positive human capital management practices are critical components of our corporate strategy.

Health, Wellness and Safety

The safety of our employees is integral to our Company. Providing a safe and secure work environment is one of our highest priorities and we devote significant time and resources to workplace safety. Our safety program is directed by our Risk Roundtable, comprised of safety leaders from across our Company. This group meets quarterly to review safety performance, share best practices, set goals and objectives for the organization, and plan safety culture assessments. In support of our safety efforts, we identify, assess and investigate incidents and injury data, and each year set goals to improve key safety performance indicators. We train, promote, consult, and communicate with our workforce during this process.

We offer a comprehensive health and wellness program for our employees. In addition to standard health programs including medical insurance and preventive care, we have a variety of resources available to employees relating to physical and mental wellness.

The COVID-19 pandemic has magnified the importance of keeping our employees safe and healthy. In response to the pandemic, we have taken actions consistent with the Centers for Disease Control and Prevention to protect our workforce and we will continue to emphasize the health and safety of our employees going forward.

Diversity, Equity and Inclusion

Our diversity, equity and inclusion program promotes a workplace where each employee’s abilities are recognized, respected, and utilized to further the Company’s goals. Our aim is to create an environment where people feel included as a part of a team because of their diversity of outlooks, perspectives, and characteristics, which ultimately adds value for our company. We strive to create a culture of inclusion, reduce bias in our talent practices, and invest in and engage with our communities. We conduct diversity and code of conduct training with employees and managers to make clear our views on diversity and promote an inclusive and diverse workplace, where all individuals feel respected and part of a team regardless of their race, national origin, ethnicity, gender, age, religion, disability, sexual orientation or gender identity.

 

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Talent Management and Development

Our talent management program is focused on developing employees and leaders to meet the Company’s evolving needs. Managers actively engage with their employees to provide coaching and feedback and identify training and development opportunities to improve performance in the employee’s current role and to position the employee for future growth. Training and development opportunities include new-hire training, job specific training, stretch assignments, and safety training. The Company also offers leadership development opportunities, such as our Apogee Leadership Program, along with technical training for engineers, designers and sales staff. In addition, the Company offers an education assistance program in which certain eligible employees receive tuition reimbursement to help defray the costs associated with their continuing education. Our executive leadership and Human Resources teams regularly conduct talent reviews and succession planning to assist with meeting critical talent and leadership needs.

Certain Relationships and Related Transactions

We have established written policies and procedures (the “Related Person Transaction Policy”) to assist us in reviewing transactions in excess of $120,000 involving our Company and our subsidiaries and Related Persons (“Related Persons Transactions”). A Related Person includes our Company’s directors, director nominees, executive officers and beneficial owners of 5% or more of our Company’s common stock and their respective Immediate Family Members (as defined in our Related Person Transaction Policy). Our Related Person Transaction Policy supplements our Code of Business Ethics and Conduct Conflict of Interest Policy, which applies to all of our employees and directors.

Our Related Person Transaction Policy requires any Related Person Transaction to be promptly reported to the Chair of our Nominating and Corporate Governance Committee. In approving, ratifying or rejecting a Related Person Transaction, our Nominating and Corporate Governance Committee will consider such information as it deems important to determine if the Related Person Transaction is fair to our Company. Our Conflict of Interest Policy requires our employees and directors to report to our General Counsel any potential conflict of interest situations involving any employee or director, or their Immediate Family Members. During fiscal 2021, there were no Related Party Transactions involving a Related Person, as defined in the policy.

 

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Non-Employee Director Compensation

Non-Employee Director Compensation Arrangements During Fiscal 2021

We structure director compensation to attract and retain qualified non-employee directors and to further align the interests of directors with the interests of shareholders.

Our Board of Directors approves the compensation for members of our Board of Directors and Board committees based on the recommendations of our Nominating and Corporate Governance Committee. We target compensation for service on our Board of Directors and Board committees generally at the 50th percentile for board service at companies in our peer group of companies, using the same peer group used for executive compensation purposes and described under the heading “Peer Group” on page 41. Generally, our Nominating and Corporate Governance Committee reviews and discusses the compensation data and analysis provided by management with reference to a third-party compensation database. Our Chief Executive Officer participates in the discussions on compensation for members of our Board of Directors. Directors who are employees receive no additional compensation for serving on our Board of Directors.

The following table describes the compensation arrangements with our non-employee directors as of the end of fiscal 2021.

 

Compensation

   Fiscal 2021      

Annual Cash Retainers:

  

Non-Executive Chair of the Board

        $135,000(1)  

Board Member

            65,000(1)  

Audit Committee Chair

         30,000  

Audit Committee Member

         15,000  

Compensation Committee Chair

         25,000  

Compensation Committee Member

         10,000  

Nominating and Corporate Governance Committee Chair

         25,000  

Nominating and Corporate Governance Committee Member

         10,000  

CEO Search Committee Member(2)

         20,000  

Annual Equity Grant

          105,000(3)  

Charitable Matching Contributions Program

     $2,000 maximum aggregate annual match  

 

(1)

Effective for the period April 26, 2020 through October 25, 2020, our Board reduced the Non-Executive Chair and Board Member retainer fees by 25% due to the disruption and uncertainties created by the COVID-19 pandemic.

 

(2)

The Board established the CEO Search Committee for purposes of identifying and evaluating candidates to succeed Mr. Puishys. It was not a standing Board Committee. Each member of the CEO Search Committee, other than the Non-Executive Board Chair, earned $20,000 in fiscal 2021 for service on such committee. The Committee completed its work on December 15, 2020.

 

(3)

On June 24, 2020, we granted a restricted stock award of 4,920 shares, having a value of approximately $105,000 on the date of grant. The award vests over three years in equal annual installments on the anniversaries of the grant date. See “Fiscal 2021 Non-Employee Director Compensation Table” on page 29 for additional details.

 

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Restricted Stock Awards and Restricted Stock Unit Awards

Restricted stock awards to non-employee directors are issued pursuant to our 2019 Director Stock Plan. Each non-employee director receives a prorated restricted stock award on the date he or she is first elected to our Board and annually on the date of our annual meeting of shareholders if his or her term continues after such meeting. The dollar value of the restricted stock award is determined by our Board of Directors, after recommendation by our Nominating and Corporate Governance Committee and in consideration of various factors, including market data and trends. We target the equity-based compensation received by non-employee directors at approximately the 50th percentile of our peer group of companies. Generally, our Board of Directors determines the dollar value of the annual restricted stock awards in June of each year and prorates the dollar value of the restricted stock award for any director elected or appointed to our Board at a time other than an annual meeting of shareholders. Restricted stock awards generally vest in three equal annual installments over a three-year vesting period. Upon issuance of the restricted stock, each holder is entitled to the rights of a shareholder, including the right to vote the shares of restricted stock. Generally, we will issue restricted stock unit awards (instead of a restricted stock award) to our non-employee directors who are not residents of the United States. For restricted stock awards and restricted stock unit awards made pursuant to our 2019 Director Stock Plan, dividends or other distributions (whether cash, stock or otherwise) will accrue during the vesting period and will be paid only upon vesting. Restricted stock awards will be forfeited upon the termination of a director’s service, unless the director is terminated by the Company due to retirement, death or disability, in which case restricted stock will accelerate and vest. If a change-in-control (as defined in the 2019 Director Stock Plan) occurs, any restricted stock shall vest immediately.

Director Deferred Compensation Arrangements

Deferral of Equity Awards

In lieu of receiving a restricted stock award or restricted stock unit award, non-employee directors have the option to receive a deferred restricted stock unit award, pursuant to Restricted Stock Deferral Program adopted under our 2019 Director Stock Plan. By electing to receive a deferred restricted stock unit award, a director can defer receipt of all or a portion of any award. Each non-employee director who receives a deferred restricted stock unit award in lieu of an award receives a credit of shares of our common stock in an amount equal to the number of shares or units he or she would have received pursuant to the award. The account is also credited, as of the crediting date, with an amount equal to the dividend paid on one share of our common stock multiplied by the number of shares or units credited to each account. Non-employee directors receiving a deferred restricted stock unit award may elect to receive the amounts credited to their account at a fixed date, at age 70, or following death or retirement from our Board of Directors. The deferred restricted stock unit awards and related accumulated dividends are paid out in the form of shares of our common stock (plus cash in lieu of fractional shares) either in a lump sum or in installments, at the participating director’s election. This is an unfunded book-entry, “phantom stock unit” plan, as no trust or other vehicle has been established to hold any shares of our common stock.

Deferral of Cash Retainers

Our Deferred Compensation Plan for Non-Employee Directors was adopted by our Board of Directors to encourage our non-employee directors to increase their ownership of shares of our common stock, thereby aligning their interests in the long-term success of Apogee with that of our other shareholders. Under the plan, participants may elect to defer all or a portion of their annual cash retainer into deferred stock accounts. There is no Company match on amounts deferred by our non-employee directors under such plan. Each participating director receives a credit of shares of our common stock in an amount equal to the amount of annual cash retainer deferred divided by the fair market value of

 

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one share of our common stock as of the crediting date. These accounts also are credited, as of the crediting date, with an amount equal to the dividend paid on one share of our common stock multiplied by the number of shares credited to each account. Participating directors may elect to receive the amounts credited to their accounts at a fixed date, at age 70, or following death or retirement from our Board of Directors. The deferred amounts are paid out in the form of shares of our common stock (plus cash in lieu of fractional shares) either in a lump sum or in installments, at the participating director’s election. This plan is an unfunded, book-entry, “phantom stock unit” plan, as no trust or other vehicle has been established to hold any shares of our common stock.

Charitable Matching Contributions Program for Non-Employee Directors

Under our Charitable Matching Contributions Program for Non-Employee Directors, we match cash or publicly-traded stock contributions made by our non-employee directors to charitable organizations that are exempt from federal income tax up to a maximum aggregate amount of $2,000 per eligible non-employee director per calendar year.

Fiscal 2021 Non-Employee Director Compensation Table

The following table shows the compensation paid to our non-employee directors for fiscal 2021.

 

Name

  Fees Earned or
 Paid in Cash ($)(1) 
  Stock
    Awards ($)(2)    
  All Other
 Compensation ($)(3) 
      Total ($)    

Bernard P. Aldrich(4)

      81,875       104,993       46,924       233,792

Christina M. Alvord

      76,875       104,993       5,701       187,569

Frank G. Heard

      81,875       104,993             186,868

Lloyd E. Johnson

      86,875       104,993       7,000       198,868

Elizabeth M. Lilly

      76,875       104,993       3,951       185,819

Donald A. Nolan

      118,125       104,993       18,223       241,341

Herbert K. Parker

      101,875       104,993       7,992       214,860

Mark A. Pompa

      81,875       104,993       11,063       197,931

Patricia K. Wagner

      101,875       104,993       6,003       212,871

 

(1)

Includes cash retainers, including any retainers deferred by non-employee directors under our Deferred Compensation Plan for Non-Employee Directors. During fiscal 2021, Mr. Pompa was our only non-employee director to defer all or a portion of his annual cash retainer pursuant to our Deferred Compensation Plan for Non-Employee Directors. For Mr. Parker and Ms. Wagner, in addition to their other retainers, this column includes a one-time payment in the amount of $20,000 each for their service on the CEO Search Committee.

 

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(2)

The amounts in this column are calculated based on the fair market value of our common stock on the date the award was made in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”). On June 24, 2020, each of our non-employee directors received a restricted stock award or restricted stock unit award or, if a director elected to defer receipt of all or a portion of his or her restricted stock award, a deferred restricted stock unit award, of 4,920 shares. The closing price of our common stock on the Nasdaq Global Select Market on June 24, 2020, the date of grant, was $21.34. The table below sets forth certain information with respect to the aggregate number of shares of unvested restricted stock, restricted stock units, and deferred restricted stock units, including shares from dividends credited to the account, held by our non-employee directors as of February 27, 2021, the end of fiscal 2021.

 

Name

  Aggregate
 Number of Shares 
of Restricted

Stock (#)
  Aggregate
Number of
Deferred
  Restricted Stock  
Units (#)
  Aggregate Number
 of Restricted Stock 
Units (#)

Bernard P. Aldrich

      8,782            

Christina M. Alvord

      6,392            

Frank G. Heard

                  6,392

Lloyd E. Johnson

            10,399      

Elizabeth M. Lilly

      6,392            

Donald A. Nolan

            15,923      

Herbert K. Parker

      8,908            

Mark A. Pompa

            10,186      

Patricia K. Wagner

      8,782            

 

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(3)

This column includes dividends and dividend equivalents paid or accrued on shares of restricted stock and deferred restricted stock unit awards issued pursuant to our 2009 Director Stock Plan; dividends and dividend equivalents accrued on shares of restricted stock, restricted stock units and deferred restricted stock units, issued pursuant to our 2019 Director Stock Plan; dividend equivalents paid on phantom stock units issued pursuant to our Deferred Compensation Plan for Non-Employee Directors; and matching contributions pursuant to our Charitable Matching Contributions Program for Non-Employee Directors. The table below sets forth the amounts contributed or paid by the Company for our non-employee directors pursuant to such plans with respect to fiscal 2021.

 

Name

  Dividends
Paid or
Accrued
on Shares
of
 Restricted 
Stock

($)
  Dividend
 Equivalents 
Paid or
Accrued on
Deferred
Restricted
Stock Units
($)
  Dividend
 Equivalents 
Paid on
Phantom
Stock Units

($)
  Matching
 Contributions 
under our
Charitable
Matching
Contributions
Program for

Non-
Employee
Directors

($)
  Total
 All Other 
Compen-
sation

($)

Bernard P. Aldrich

      6,003             38,921       2,000       46,924

Christina M. Alvord

      3,951                   1,750       5,701

Frank G. Heard

                             

Lloyd E. Johnson

      107       6,893                   7,000

Elizabeth M. Lilly

      3,951                         3,951

Donald A. Nolan

            11,040       7,183             18,223

Herbert K. Parker

      5,992                   2,000       7,992

Mark A. Pompa

            6,732       4,331             11,063

Patricia K. Wagner

      6,003                         6,003

 

(4)

On March 2, 2021, Class II director Bernard P. Aldrich informed the Board that he would retire from the Board and would not stand for re-election at the Annual Meeting.

 

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Executive Compensation

Compensation Committee Report

Our Compensation Committee has reviewed and discussed the following Compensation Discussion and Analysis section with management and the Committee’s independent compensation consultant. Based on its review and discussions with management, our Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in the Company’s 2021 Proxy Statement and Annual Report on Form 10-K for the fiscal year ended February 27, 2021.

Compensation Committee of the

Board of Directors of Apogee

Patricia K. Wagner, Chair

Bernard P. Aldrich

Elizabeth M. Lilly

Mark A. Pompa

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes Apogee’s executive compensation program for fiscal 2021, and certain elements of the fiscal 2022 program. In particular, this section explains how our Compensation Committee (the “Committee”) made decisions related to compensation for our executives, including our Named Executive Officers, for fiscal 2021.

Our Named Executive Officers for fiscal 2021 were:

 

   

Ty R. Silberhorn, Chief Executive Officer and President(1)

 

   

Nisheet Gupta, Executive Vice President and Chief Financial Officer(2)

 

   

Curtis J. Dobler, Executive Vice President and Chief Human Resources Officer

 

   

Gregory J. Sachs, Chief Procurement Officer

 

   

Maureen A. Hayes, Chief Information Officer

 

   

Brent C. Jewell, President, Architectural Framing Systems segment(3)

 

   

Joseph F. Puishys, Former Chief Executive Officer and President(4)

 

   

James S. Porter, Former Executive Vice President and Chief Financial Officer(5)

Messrs. Gupta, Dobler, Sachs and Jewell and Ms. Hayes, who remained employees as of the end of the fiscal year, are collectively referred to as our “Other Named Executive Officers” in this Compensation Discussion and Analysis section.

 

 

(1)

Mr. Silberhorn joined our Company on January 4, 2021.

 

(2)

Mr. Gupta joined our Company on June 15, 2020.

 

(3)

Mr. Jewell was no longer serving as an executive officer as of the end of the fiscal year, although he remains an employee of the Company.

 

(4)

Mr. Puishys resigned as an officer and director of the Company on January 4, 2021, and his employment with the Company ended on February 27, 2021.

 

(5)

Mr. Porter resigned as an officer of the Company on June 15, 2020, and his employment with the Company ended on June 19, 2020.

 

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Executive Summary

About Apogee. Our Company is a leader in the design and development of value-added glass and metal solutions for enclosing commercial buildings and value-added glass and acrylic for picture framing and displays. We have four segments, with manufacturing and fabrication located in the U.S., Canada and Brazil. For fiscal 2021, we had net revenue of approximately $1.23 billion.

 

 

LOGO

Our Strategy. Our strategy is to diversify revenue streams within the commercial construction industry, providing revenue growth and profit generation over an economic cycle, and utilize our capabilities to enter adjacent segments. We work to diversify end markets served through growth from new geographies, new products and new market segments, while working to improve margins through productivity, integration, project selection and rigorous cost management.

In an effort to drive growth and reduce our exposure to the cyclical nature of the large-building segment of the commercial construction industry, we are working to expand our capabilities to serve small- and mid-sized projects across our architectural segments and working to expand our North American geographic reach.

Specifically, over the past fiscal year, in the Architectural Framing Systems segment, our focus was to drive margin improvement through increased productivity, cost management, integration, supply chain optimization, and new product development. In the Architectural Glass segment, we began operation of our new fabrication facility in Dallas, Texas designed to serve small-sized and quick-turn projects. In the Architectural Services segment, our emphasis is to generate consistent margins through focused project selection and execution, while continuing to deliver long-term organic growth through targeted geographic expansion.

Within the Large-Scale Optical segment, we are working to grow in new channels, markets and geographies that desire the value-added properties that our glass and acrylics products provide.



 

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Across all our segments, we regularly evaluate business development opportunities in adjacent sectors that will complement our existing portfolio. Finally, we are constantly working to improve the efficiency and productivity of our operations by implementing continuous improvement, lean manufacturing principles and automation where we can achieve solid return on investment.

Our Fiscal 2021 Performance. Fiscal 2021 was a difficult year for our business and the broader non-residential construction industry. Apogee’s team rose to the challenge, adapting our business to protect the health of employees and serve our customers, while making significant progress on cost initiatives to deliver earnings and record full-year cash flow. We also advanced our strategies to diversify net sales streams and position our Company to deliver shareholder value throughout the commercial construction economic cycle.

Summary of Fiscal 2021 Financial Results

 

Net Sales

 

• We had net sales of $1.23 billion compared to $1.39 billion in fiscal 2020, a decrease of 11%.

 

Earnings

 

• We had earnings per diluted share of $0.59 compared to $2.32 a share in fiscal 2020, a decrease of 75%.

 

Operational Performance           

 

• We had operating income of $25.5 million, a decrease of 71% from $87.8 million in fiscal 2020.

 

• We had operating margin of 2.1% compared to 6.3% in the prior year.

 

• Cash flow generated from operations was $142 million, up from $107.3 million in fiscal 2020, a 32% increase.

 

• Continued effective management of our working capital requirements with days working capital of approximately 49.2 days as of the end of fiscal 2021.

 

Shareholder Return

 

• We repurchased 1,177,704 shares of our common stock during fiscal 2021 at a total cost of $32.9 million.

 

• We paid dividends totaling $19.6 million during fiscal 2021 and increased our quarterly cash dividend 6.7% to $0.20 per share during the fourth quarter of fiscal 2021, our eighth consecutive year with a dividend increase.

 

• We delivered annualized TSR of 27.65%, 0.71% and 12.24% over the past one-year, five-years and ten-years, respectively.



 

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Executive Compensation Philosophy and Practices. Our compensation programs are designed to attract, motivate and retain executive talent to achieve success in both the short- and long-term for our Company; pay for sustainable performance in an ever-changing environment; and align the interests of our executive officers with our shareholders. We continue to refine our executive compensation program to reflect changes in our business strategy and evolving executive compensation practices.

 

Our Executive

Compensation Practices:

(What We Do)

  See
Page
 

Executive Compensation Practices

We Have Not Implemented

or Have Discontinued:

(What We Don’t Do)

  See
Page
       

We seek alignment of pay and performance each year. A significant portion of our compensation program is performance-based through the use of our short-term and long-term incentive plans.

 

We review “tally sheets” and realizable pay and performance for our Named Executive Officers and use that information as a factor in making compensation decisions.

 

37 – 38

 

40

 

Other than an employment agreement entered into with Mr. Silberhorn when he was hired, we do not have employment contracts for our Named Executive Officers.

    

 

We do not pay annual incentive compensation if our Company is not profitable for the year.

 

49 – 50

 

43

       
We mitigate undue compensation risk by utilizing caps on potential payments, multiple financial performance metrics, and different metrics for our annual cash incentives and long-term performance awards, as well as having robust Board and Board Committee processes to identify and manage risk.   52   We do not believe any of our Company’s compensation programs create risks that are reasonably likely to have a material adverse effect on our Company.   52
       

We have change-in-control severance agreements with all of our Named Executive Officers that provide benefits only upon a “double trigger.”

 

Our equity award agreements for grants made pursuant to our 2009 Stock Incentive Plan and 2019 Stock Incentive Plan have “double trigger” change-in-control provisions for all employees.

 

63 - 65

 

 

 

64

 

We do not provide for excise tax “gross-ups” or “single triggers” in our change-in-control severance agreements.

 

63 - 64

       

We have adopted share ownership guidelines, and we review compliance annually.

 

We evaluate share utilization by annually reviewing overhang and burn rates.

 

51

 

 

73

 

We do not reprice underwater stock options or stock appreciation rights.

 

We do not pay dividends during the restricted periods on unvested equity awards made pursuant to our 2019 Stock Incentive Plan.

 

 

 

 

47 – 48

       
The Committee benefits from its utilization of a compensation consulting firm that fully meets the stringent independence requirements under the final rules of the Dodd-Frank Act.   40 - 41   The Committee’s compensation consulting firm does not provide any other services to our Company other than those requested by our Compensation Committee for executive compensation.   40 - 41
       

We have a clawback policy that applies to our Named Executive Officers and certain other executives.

 

We have an anti-hedging policy that prohibits all employees and directors from engaging in hedging transactions in our Company’s securities and an anti-pledging policy that prohibits executive officers and directors from pledging our shares as collateral for indebtedness.

 

51

 

 

51

 

We do not provide tax reimbursement or tax “gross-ups” on any perquisites, other than annual executive health physicals.

 

49



 

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Our Executive Compensation Program. Total compensation for our executive officers includes a mix of short-term and long-term incentive compensation and fixed and performance-based compensation. The charts below illustrate the fiscal 2021 target mix of short-term and long-term incentives, and fixed and performance-based compensation, for Mr. Puishys (our former Chief Executive Officer) and other Named Executive Officers. This information is used by the Committee as a guideline in making compensation awards for our Named Executive Officers.

 

 

LOGO



 

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  (1)

In fiscal 2021, stock options were granted to the Named Executive Officers as a bridge between the fiscal 2020 executive compensation plan design and the new fiscal 2022 executive compensation plan design.

 

  (2)

The fiscal 2021 CEO evaluation incentive has a one-year performance period and is included at target in the chart.

The Role of Shareholder Vote on Say on Pay Proposal. Our Company provides our shareholders with the opportunity to cast an advisory vote on our Say on Pay Proposal annually. At our Company’s annual meeting of shareholders held on June 24, 2020, 95.4% of the votes cast on the Say on Pay Proposal were voted in favor of ratification of the proposal. The Committee did not make any changes to its programs in response to this vote. The Committee will continue to take into account the outcome of our Company’s Say on Pay Proposal when making future compensation decisions.

Highlights of Fiscal 2021 Compensation Actions. The following section highlights the Committee’s key compensation decisions for fiscal 2021. These decisions were made after the Committee reviewed compensation data provided by the independent compensation consultant.

 

   

Base Salaries. For fiscal 2021, none of our Named Executive Officers received a base salary increase. For the period from April 26, 2020 through October 25, 2020, the Company implemented temporary base salary reductions of 25% for Joseph F. Puishys, our former Chief Executive Officer who retired at the end of fiscal 2021, and 20% for certain Other Named Executive Officers due to the disruption and uncertainties created by the COVID-19 pandemic.

 

   

Annual Cash Incentive Payouts. Our annual cash incentive awards are designed to reward achievement of financial goals established in our annual operating plan. Our goals were established at a time when the full impact of the COVID-19 pandemic on the economy and our end-markets was unknown, and we maintained these goals notwithstanding the subsequent adverse impact of the pandemic on our business performance and financial results. Our Named Executive Officers’ payouts would have ranged between 10% to 21% of salary as originally calculated based on these goals. The Compensation Committee used its discretion to increase these payouts to between approximately 48% to 58% of salary in recognition of the Named Executive Officers’ achievements in protecting the health of employees and serving our customers, while making significant progress on cost initiatives to deliver earnings and record full-year cash flow. See “Fiscal 2021 Annual Cash Incentive Payouts” beginning on page 43 for a discussion of the metrics, goals and amounts paid to our Named Executive Officers for our annual cash incentive awards in fiscal 2021.

 

   

Long-Term Incentive Awards. Our long-term incentive program is designed to align the interests of executives with shareholders and to focus executives on the achievement of long-term sustained performance, entrepreneurship, and delivery of quality products and services, while creating appropriate retention incentives through the use of multi-year vesting schedules.

The mix of long-term incentive instruments is determined annually by the Committee, and in past years, the instruments were composed of restricted stock awards and two-year performance awards. Due to the economic uncertainties resulting from the COVID-19 pandemic, the Committee determined that the Company would not be able to establish effective long-term financial performance goals in fiscal 2021. Based on this determination, the Committee elected to issue stock options in fiscal 2021 in lieu of granting two-year performance awards. The stock options were intended to approximate the annual value of, and the maximum potential gain available from, the performance awards traditionally granted by



 

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the Company, and accordingly, the options cap the maximum gain upon exercise. The maximum gain also avoids a windfall to our executive officers resulting from our relatively low stock price at the time of grant. Restricted stock awards and stock options constituted 40% and 60%, respectively, of total target value of long-term incentive compensation in fiscal 2021.

 

   

Restricted Stock Awards. The Committee awarded restricted stock awards to our Named Executive Officers based on a market-competitive analysis of grants to officers in comparable roles at our peer companies. All restricted stock awards vest ratably over three years. Mr. Puishys received an award valued at $673,565 and Messrs. Dobler, Sachs, Porter and Jewell and Ms. Hayes received awards with values ranging from $190,155 to $362,200. Our incoming Chief Executive Officer Ty R. Silberhorn received a restricted stock award valued at $1,399,997 when he joined our Company on January 4, 2021, and our incoming Chief Financial Officer Nisheet Gupta received a restricted stock award valued at $464,800 when he joined our Company on June 15, 2020.

 

   

Stock Options. The Committee awarded stock option awards to our Named Executive Officers (excluding Messrs. Silberhorn and Porter). The stock options vest in equal installments on the second and third anniversaries of the date of the grant. Mr. Puishys received a stock option award valued at $1,080,156 and Messrs. Gupta, Dobler, Sachs and Jewell and Ms. Hayes received awards with values ranging from $155,310 to $274,548. No stock options may be exercised for a gain of more than $12.66 per share (i.e., the difference between the exercise price ($23.04) per share and the maximum price ($35.70) per share may not exceed $12.66). The maximum share price limitation is subject to equitable adjustment in the event of a stock split or other similar transaction in accordance with the 2019 Stock Incentive Plan.

 

   

Chief Executive Officer Evaluation Incentive. Pursuant to the terms of his Transition Agreement, Mr. Puishys was paid $210,375 under the fiscal 2021 CEO evaluation incentive program, based upon his fiscal 2020 annual CEO performance evaluation rating of 90% of target.

Fiscal 2022 Executive Compensation Program. During fiscal 2021 and the beginning of fiscal 2022, our Compensation Committee conducted an extensive evaluation of our short-term and long-term incentive compensation programs and approved updates to these programs to be effective for fiscal 2022, which will align our programs with objectives in our fiscal 2022 annual operating plan.

 

   

We will use the following metrics for annual cash incentive awards granted for fiscal 2022: EBIT (75% weight) and Net Sales (25% weight).

 

   

In fiscal 2022, the long-term incentive compensation program will consist of time-based restricted stock awards (50%) and performance-based awards (50%). Performance-based awards granted in fiscal 2022 will be settled 50% in shares and 50% in cash. The performance period for the awards will be three years, and payout will be determined based on the Company’s three-year average Return on Invested Capital at the end of the performance period.



 

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Overview of Primary Compensation Elements

The table below provides an overview of the three primary compensation elements of our executive compensation program in fiscal 2021.

 

Compensation
Element

 

Objective

 

How Determined

 

Market
Positioning(1)

 

How Impacted by
Performance

Base Salary and

Benefits

  Attract and retain executive officers through competitive pay and benefit programs.   Individual performance, experience, tenure, competitive market data and executive potential.   Targeted to be around the 50th percentile of base salary and benefits for comparable roles at peers.   Adjusted based on individual performance.

Annual Cash

Incentive

Compensation

(Short-Term

Incentive)(2)

  Create an incentive for achievement of pre-defined annual Company financial performance results.  

A percentage of base salary based on competitive market data and trends, and internal equity.

 

For actual bonus payouts – performance against pre-established criteria in our annual cash incentive plan.

 

Our overall performance results will yield total cash compensation levels as follows:

•  Below target performance: total cash at or below the 25th percentile.

 

•  Target performance: total cash slightly below the 50th percentile.

 

•  Above target performance: total cash above the 50th percentile.

  Payout dependent on achievement of one-year Company financial performance goals.

Long-Term Incentive Compensation:

•   Restricted Stock (40%) and

 

•   Stock Option (60%)

  Align the interests of executives with shareholders and focus executives on achieving long-term sustained performance, entrepreneurship and delivery of quality products and services, while creating appropriate retention incentives through the use of multi-year vesting schedules.  

Individual performance, company performance, market data and trends, internal equity and executive potential.

New hire, promotion and special awards. Internal equity and market data and trends.

  Targeted generally to be at or slightly above the 50th percentile for target performance and up to the 75th percentile for maximum performance.   Performance that increases our stock price increases the value of
the restricted stock awards and stock
options.

 

(1)

Actual pay levels may be above or below the targeted level depending on actual performance.

 

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(2)

Our former Chief Executive Officer, Mr. Puishys, also participated in an evaluation incentive program. All cash awards earned by Mr. Puishys pursuant to this program prior to fiscal 2021 were mandatorily deferred pursuant to our Deferred Compensation Plan until Mr. Puishys’s employment with the Company terminates.

Compensation Process

Our compensation program is evaluated annually taking into consideration changes to our business strategy and annual operating plan, the economy and our competitive marketplace, as well as evolving executive compensation practices and a robust strategic goal setting process.

During the first quarter of each fiscal year, the performance of each of our Named Executive Officers is evaluated based on a subjective assessment of (i) his or her executive leadership; and (ii) achievement of agreed-upon individual business objectives for the just-completed fiscal year. The annual performance evaluation of our Chief Executive Officer is administered by our Nominating and Corporate Governance Committee, with all non-employee directors participating in the performance evaluation, and the results of the Chief Executive Officer’s annual performance evaluation is reviewed by the Committee and our full Board. Our Chief Executive Officer conducts or participates in the annual performance evaluation of our Other Named Executive Officers and reviews the results with members of the Committee.

In establishing the elements and levels of compensation for a fiscal year, the Committee considers the annual performance evaluations of our Named Executive Officers and reviews its compensation consultant’s independent analyses of compensation based on comparable positions, using both published survey sources and company peer group data to determine our competitive positioning relative to the market. Our Chief Executive Officer makes recommendations to the Committee on compensation for our Other Named Executive Officers, but does not participate in the determination of his own compensation.

The Committee continuously monitors our compensation programs and annually reviews a compensation “tally sheet,” which lists total direct compensation (base salary, annual cash incentive compensation, and long-term incentive awards), perquisites, other elements of executive compensation, broad-based employee benefits and wealth accumulation through Company equity and retirement plans for our Named Executive Officers; however, the compensation tally sheets are not used to make actual pay decisions. The Committee assesses historical pay and performance to ensure continued alignment of our compensation programs.

Consulting Assistance, Peer Group and Competitive Market

Compensation Consultant Independence. In fiscal 2021, the Committee retained the services of Pearl Meyer to assist with the review of overall compensation levels for our executive officers. Pearl Meyer reports directly to the Committee, and the Committee can replace Pearl Meyer or hire additional consultants at any time. During fiscal 2021, Pearl Meyer attended five Committee meetings in person or by telephone, including executive sessions, as requested, and consulted with the Chair of the Committee between meetings.

As required under the Dodd-Frank Act, the Committee has analyzed whether the work of Pearl Meyer as its compensation consultant raises any conflict of interest, taking into consideration the following factors under the Nasdaq listing rules: (i) Pearl Meyer does not provide any other services to our Company; (ii) the amount of fees from our Company paid to Pearl Meyer is less than 1% of Pearl Meyer’s total revenue; (iii) Pearl Meyer’s policies and procedures were designed to ensure independence; (iv) neither Pearl Meyer, nor any member of its consulting team, has any business or personal relationship with any executive officer of our Company, and no member of its consulting team

 

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has any business or personal relationship with any member of the Committee; and (v) neither Pearl Meyer, nor any member of its consulting team, owns any stock of our Company. The Committee has determined, based on its analysis of the above factors, that Pearl Meyer is independent of our Company and the work of Pearl Meyer (and the individual compensation advisors employed by Pearl Meyer) as compensation consultant to the Committee has not created any conflict of interest. The Committee will continue to annually monitor the independence of its compensation consultant.

Peer Group. The selection criteria identified for determining and reviewing our Company’s peer group generally include:

 

 

Companies with revenue within a similar range (0.33 to 3.0 multiple).

 

 

Companies with market capitalization within a similar range (0.33 to 3.0 multiple).

 

 

Companies with market capitalization to revenue ratio of 0.5 or greater.

 

 

Companies in the same or similar industries.

 

 

Companies with business model similarity, which may include the following:

 

   

Coatings for special purposes (e.g., protective, UV, etc.);

 

   

Construction materials, primarily for commercial or industrial applications;

 

   

Specialized/customized product lines;

 

   

Heavy-duty manufacturing operations and project-directed manufacturing; and

 

   

Project-based businesses.

 

 

Companies in the same geographic location (to a lesser degree).

 

 

Companies included in the prior-year peer group, to help ensure year-over-year consistency (where appropriate).

The following 15 firms served as the Company’s peer group for fiscal 2021.

 

•   Aegion Corporation

  

•   Griffon Corporation

•   AZZ Inc.

  

•   H.B. Fuller Company

•   BMC Stock Holdings, Inc.

  

•   LCI Industries

•   Cornerstone Building Brands, Inc.

  

•   Masonite International Corporation

•   Eagle Materials Inc.

  

•   Quaker Chemical Corporation

•   EnPro Industries, Inc.

  

•   Quanex Building Products Corporation

•   Gibraltar Industries, Inc.

  

•   Tennant Company

•   Graco Inc.

  

 

Competitive Market. The Committee relies on its independent compensation consultant to help define the appropriate competitive market using a combination of the peer group companies and compensation surveys that contain market compensation information for similarly-sized organizations. The information on the competitive market is used by the Committee:

 

   

As an input in designing our compensation plans and philosophy;

 

   

As an input in assessing and developing base salary adjustments, annual cash incentive targets and long-term incentive ranges;

 

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To benchmark the form and mix of long-term incentive awards;

 

   

To assess the competitiveness of total direct compensation awarded to our Named Executive Officers and certain of our other executives; and

 

   

To benchmark dilution and overhang levels (dilutive impact on our shareholders of equity compensation) and annual burn rate (the aggregate shares awarded as a percentage of total outstanding shares).

Fiscal 2021 Individual Compensation Actions

Base Salary. Base salary reflects a fixed portion of the overall compensation package and is the base amount from which certain other compensation elements are determined. In making salary adjustments, the Committee considers the executive’s base salary relative to the market, our compensation philosophy and other factors, such as individual performance against business plans, leadership, initiatives, experience, knowledge and job criticality. The Committee decided not to provide any base salary increases to our Named Executive Officers for fiscal 2021. The Company also implemented temporary base salary reductions of 25% for Mr. Puishys and 20% for certain Other Named Executive Officers for the period from April 26, 2020 through October 25, 2020 due to the disruption and uncertainties created by the COVID-19 pandemic.

Below is information on the base salaries of our Named Executive Officers for fiscal 2021 and fiscal 2022, as well as temporarily reduced base salaries for fiscal 2021.

 

Base Salary

Name

  Fiscal 2021
    Base Salary    
($)
  Percent
  Increase in  
Fiscal

2021 vs
2020
(%)
    Temporarily  
Reduced
Fiscal 2021
Base
Salary
($)(1)
  Fiscal 2022
  Base Salary  
($)
  Percent
Increase in
Fiscal

  2022 vs 2021  
(%)

Ty R. Silberhorn

   

 

800,000

   

 

N/A

   

 

N/A

   

 

800,000

   

 

0.0

Nisheet Gupta

   

 

510,000

   

 

N/A

   

 

N/A

   

 

520,000

   

 

2.0

Curtis J. Dobler

   

 

385,000

   

 

0.0

   

 

308,000

   

 

393,000

   

 

2.0

Gregory J. Sachs

   

 

350,000

   

 

0.0

   

 

280,000

   

 

360,000

   

 

2.9

Maureen A. Hayes

   

 

324,500

   

 

0.0

   

 

259,600

   

 

330,000

   

 

1.7

Brent C. Jewell

   

 

410,000

   

 

0.0

   

 

328,000

   

 

420,000

   

 

2.4

Joseph F. Puishys

   

 

935,000

   

 

0.0

   

 

701,250

   

 

N/A

   

 

N/A

James S. Porter

   

 

448,000

   

 

0.0

   

 

358,400

   

 

N/A

   

 

N/A

 

(1)

Reflects temporary base salary reductions of 25% for Mr. Puishys and 20% for the other Named Executive Officers indicated in the table for the period from April 26, 2020 through October 25, 2020.

Annual Cash Incentive Compensation. Annual cash incentive awards create an incentive for achievement of annual financial performance results. These results are measured against objective financial goals set forth in the annual operating plan approved by our Board of Directors.

The awards may be earned below or above target based on the achievement of one or more additional predetermined, objective performance goals based on the annual operating plan approved by our Board of Directors. At least one of the predetermined, objective performance goals must be met at the threshold level in order for any annual cash incentive to be paid to an executive. In addition, if our

 

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Company is not profitable, no annual cash incentives will be paid even if the other goals are at or above threshold.

Generally, if the threshold performance level for all performance goals is achieved, 50% or less of the target award will be earned; if target performance level for all performance goals is achieved, 100% of the target award will be earned; and if maximum performance level for all performance goals is achieved, 200% of the target award will be earned. If the threshold performance level for only one performance goal is achieved and the threshold performance is not achieved for any of the other performance goals, less than 50% of the target award will be earned based on the weighting allocated to that specific performance goal. For any performance between these levels, awards will be interpolated.

Fiscal 2021 Annual Cash Incentive Payouts. The tables below set forth certain information with respect to the fiscal 2021 annual cash incentive award payout ranges as a percentage of fiscal 2021 salary for our Named Executive Officers.

 

Fiscal 2021 Annual Cash Incentive Compensation Ranges

Name

    Threshold Payout  
as a Percentage
of Fiscal 2021
Salary (%)(1)
  Target Payout
  as a Percentage  
of Fiscal 2021
Salary (%)(2)
    Maximum Payout  
as a Percentage
of Fiscal 2021
Salary (%)(3)

Ty R. Silberhorn

   

 

N/A

   

 

N/A

   

 

N/A

Nisheet Gupta

   

 

2.81

   

 

56.25

   

 

112.50

Curtis J. Dobler

   

 

3.00

   

 

60.00

   

 

120.00

Gregory J. Sachs

   

 

2.50

   

 

50.00

   

 

100.00

Maureen A. Hayes

   

 

2.50

   

 

50.00

   

 

100.00

Brent C. Jewell

   

 

3.00

   

 

60.00

   

 

120.00

Joseph F. Puishys

   

 

5.25

   

 

105.00

   

 

210.00

James S. Porter

   

 

N/A

   

 

N/A

   

 

N/A

 

  (1)

Assumes threshold performance level is achieved for only the performance goal with the lowest weighting and is not achieved for any other performance goals. If actual results are below threshold performance level for all performance goals or the Company is not profitable, the payout will be zero.

 

  (2)

Assumes target performance level is achieved for all performance goals.

 

  (3)

Assumes maximum performance level is achieved or exceeded for all performance goals.

 

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The following table outlines the performance goals, weighting and performance levels and actual performance achievement for the fiscal 2021 performance cycle for all Named Executive Officers except for Mr. Jewell whose goals for serving as the leader of the Architectural Framing Systems Segment are shown in the table below.

 

Fiscal 2021 Annual Cash Incentive Performance Levels and

Actual Performance – ALL NEOs Except Mr. Jewell

Performance

Goal

    Weighting  
(%)  
          Threshold                     Target                   Maximum         Actual
    Performance    
    Percentage
Performance
  Achieved (%)    

Apogee Net Sales

      25       $1,368,500,000       $1,440,600,000       $1,500,000,000       $1,230,774,000       0 %

Apogee EBT (1)

      65       $97,750,000       $106,000,000       $111,175,000       $22,611,000       0 %

Apogee DWC(2)

      10       56.1 days       53.7 days       51.7 days       49.2 days       200 %

 

(1)

Apogee EBT is Earnings before income taxes, as reported in the Consolidated Results of Operations in our fiscal 2021 Audited Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021.

 

(2)

We define “DWC,” or days working capital, as average working capital (current assets less current liabilities) multiplied by the number of days in the period and then divided by net sales in the period. We consider this a useful metric in monitoring our performance in managing working capital.

The following table outlines the performance metrics, weighting and performance levels and actual performance achievement for the fiscal 2021 performance cycle for Mr. Jewell whose annual cash incentive is based on a combination of corporate performance goals and performance goals for the Architectural Framing Systems segment.

 

Fiscal 2021 Annual Cash Incentive Performance Levels and Actual Performance – Mr. Jewell  

Performance
Goal

    Weighting  
(%)
          Threshold                         Target                          Maximum             Actual
Performance
    Percentage
Performance
  Achieved (%)  
 

Apogee Net Sales

  10     $1,368,500,000       $1,440,600,000       $1,500,000,000       $1,230,774,000       0

Apogee EBT(1)

  20     $97,750,000       $106,000,000       $111,175,000       $22,611,000       0

Apogee DWC(2)

  15     56.1 days       53.7 days       51.7 days       49.2 days       200

AFS Net Sales

  15     $667,065,000       $712,700,000       $748,335,000       $570,850,000       0

AFS Operating (Loss) Income(3)

  30     $73,000,000       $79,500,000       $83,475,000       $(44,761,000)       0

AFS Operations Excellence

  10     5%       10%       20%       0%       0%  

 

(1)

Apogee EBT is Earnings before income taxes, as reported in the Consolidated Results of Operations in our fiscal 2021 Audited Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021.

 

(2)

We define “DWC,” or days working capital, as average working capital (current assets less current liabilities) multiplied by the number of days in the period and then divided by net sales in the period. We consider this a useful metric in monitoring our performance in managing working capital.

 

(3)

AFS Operating (Loss) Income is the amount of “Operating (Loss) Income” reported for the Architectural Framing Systems Segment in Note 15, Business Segment Data, to our fiscal 2021 Audited Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021.

 

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The following table sets forth certain information with respect to the fiscal 2021 annual cash incentive compensation payouts for each of our Named Executive Officers.

 

Fiscal 2021 Annual Cash Incentive Payouts  
    Performance Goals     Target Payout
Opportunity
    Actual Payout Earned Pursuant to
Plan Formula
    Aggregate Approved
Payout Amount
 

Name

  Metric   Weighting
(%)
    Percent of
Fiscal 2021
Salary(1)
(%)
    Amount
($)
    Percent
of

Target
(%)
    Formula
Payout
Amount($)
    Percent
of

Fiscal
2021
Salary(1)
(%)
    Approved
Payout
Amount
($)
    Percent
of

Fiscal
2021
Salary(1)
(%)
 

Ty R. Silberhorn(2)

  Net Sales     25       0.0       0       0       0       0       0       0  
  EBT     65       0.0       0       0       0       0       0       0  
  DWC     10       0.0       0       0       0       0       0       0  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
        100       0.0       0       0       0       0       0       0  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Nisheet Gupta(3)

  Net Sales     25       14.06       71,706       0       0       0       0       0  
  EBT     65       36.56       186,456       0       0       0       0       0  
  DWC     10       5.63       28,713       200.00       57,375       11.25       0       0  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
      100       56.25       286,875       20.00       57,375       11.25       286,875       56.25  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Curtis J. Dobler

  Net Sales     25       15.00       57,750       0       0       0       0       0  
  EBT     65       39.00       150,150       0       0       0       0       0  
  DWC     10       6.00       23,100       200.00       46,200       12.00       0       0  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
      100       60.00       231,000       20.00       46,200       12.00       135,000       58.44  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gregory J. Sachs

  Net Sales     25       12.50       43,750       0       0       0       0       0  
  EBT     65       32.50       113,750       0       0       0       0       0  
  DWC     10       5.00       17,500       200.00       35,000       10.00       0       0  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
      100       50.00       175,000       20.00       35,000       10.00       85,000       48.57  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Maureen A. Hayes

  Net Sales     25       12.50       40,562       0       0       0       0       0  
  EBT     65       32.50       105,463       0       0       0       0       0  
  DWC     10       5.00       16,225       200.00       32,450       10.00       0       0  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
      100       50.00       162,250       20.00       32,450       10.00       80,000       49.31  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Brent C. Jewell

  Apogee Net
Sales
    10       6.00       24,600       0       0       0       0       0  
  Apogee EBT     20       12.00       49,200       0       0       0       0       0  
  Apogee DWC     15       9.00       36,900       200.00       73,800       18.00       0       0  
  AFS Net Sales     15       9.00       36,900       0       0       0       0       0  
  AFS Operating
(Loss) Income
    30       18.00       73,800       0       0       0       0       0  
  AFS Operations
Excellence
    10       6.00       24,600       0       0       0       0       0  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
      100       60.00       246,000       30.00       73,800       18.00       125,000       50.81  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Joseph F. Puishys

  Net Sales     25       26.25       245,437       0       0       0       0       0  
  EBT     65       68.25       638,138       0       0       0       0       0  
  DWC     10       0.50       98,175       200.00       196,350       21.00       0       0  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
      100       105.00       981,750       20.00       196,350           21.00       490,875           52.5  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

James S. Porter(2)

  Net Sales     25       0.00       0       0       0       0       0       0  
  EBT     65       0.00       0       0       0       0       0       0  
  DWC     10       0.00       0       0       0       0       0       0  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
      100       0.00       0       0       0       0       0       0  
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

Represents the percent of each Named Executive Officer’s base salary during the fiscal year, not including the base salary reductions from April 26, 2020 through October 25, 2020 due to the disruption and uncertainties created by the COVID-19 pandemic.

 

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(2)

Mr. Silberhorn did not participate in the fiscal 2021 annual cash incentive plan because his employment with the Company began approximately two months prior to the fiscal year end. Mr. Porter did not receive a payout under the plan because his employment terminated on June 19, 2020.

 

(3)

Mr. Gupta’s Offer Letter states that he was entitled to a minimum fiscal 2021 annual cash incentive payout at target performance level of 75%, prorated for the period of time during which he was employed by the Company during the fiscal year, which equaled $286,875. The fiscal 2021 annual cash incentive earned was $57,375, with the remaining $229,500 paid under the fiscal 2021 annual cash incentive pursuant to the terms of his Offer Letter.

On March 6, 2020, the Compensation Committee established net sales, EBT, days working capital and other goals for our fiscal 2021 annual cash incentive plan based on our annual operating plan, as approved by the Board of Directors. These goals were established at a time when the full impact of the COVID-19 pandemic on the economy and our end-markets was unknown.

During the COVID-19 pandemic, our number one priority had been the health and safety of our employees. We quickly implemented a work-from-home policy and adapted our manufacturing and field service operations to continue operating in the COVID-19 environment, while promoting healthy working conditions. We also established a COVID-19 Response Team (CRT) comprised of our senior leaders to proactively manage the impact of the COVID-19 pandemic on our businesses. The response team continuously monitored and responded to evolving health and safety considerations, operational challenges, and other critical impacts across our portfolio while continuing to execute on our strategy.

The pandemic resulted in many temporary site closures, delayed orders, and overall project slow-downs driven by our customers that extensively impacted our first and second quarters. Our operations were also impacted by quarantine-related absenteeism among our workforce, resulting in labor and capacity constraints at many of our facilities.

In June, the Committee considered the impact of the pandemic and our previously established annual cash incentive plan performance goals, and determined that due to the ongoing uncertainty caused by the pandemic, it was unrealistic to create a forecast for the remainder of the year or establish new goals that would accurately reflect the contributions of our executive officers.

At fiscal year end, it was determined that we exceeded only one of our annual cash incentive plan performance metrics – days working capital. As a result, our calculated bonuses would have been between 10% to 21% of salary for the Named Executive Officers. Our Compensation Committee used its discretion to increase payouts to between approximately 48% to 58% of salary, as reflected in the table above. The Committee believes that the adjustments were appropriate to recognize the performance results delivered for the year and the extraordinary efforts taken to navigate the challenges posed by the pandemic in order to protect our employees and serve our customers, while making significant progress on in-process cost initiatives to help deliver earnings and record full-year cash flow.

Long-Term Incentive Compensation. Our long-term incentive program is designed to align the interests of executives with shareholders and to focus executives on the achievement of long-term sustained performance, entrepreneurship, and delivery of quality products and services, while creating appropriate retention incentives through the use of multi-year vesting schedules.

The mix of long-term incentive instruments is determined annually by the Committee, and in past years, the instruments were composed of restricted stock awards and two-year performance awards. Due to the economic uncertainties resulting from the COVID-19 pandemic, the Committee determined that the Company would not be able to establish effective long-term financial performance goals in fiscal 2021. Based on this determination, the Committee elected to issue stock options in fiscal 2021 in

 

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lieu of granting two-year performance awards. The stock options were intended to approximate the annual value of, and the maximum potential gain available from, the performance awards traditionally granted by the Company, and accordingly, the options cap the maximum gain upon exercise. The maximum gain also avoids a windfall to our executive officers resulting from our relatively low stock price at the time of grant. Restricted stock awards and stock options constituted 40% and 60%, respectively, of total target value of long-term incentive compensation awarded in fiscal 2021.

Restricted Stock Awards. Each year, the Committee approves a restricted stock award for each executive with a preliminary target fixed dollar value based on a percentage of base salary, after reviewing long-term incentives for comparable roles at peer companies, based on data provided by the independent compensation consultant. For our Chief Executive Officer, the Committee increases or decreases the award’s value after considering the results of the Chief Executive Officer’s most recent annual performance evaluation. For our Other Named Executive Officers, our Chief Executive Officer recommends to the Committee increases or decreases in the award’s value based on the executive’s contributions to the Company’s performance, future leadership potential, and subjective evaluation of his or her individual performance for the just completed fiscal year.

Restricted stock awards are granted under the 2019 Stock Plan, and they generally vest in three equal annual installments commencing on April 30 of the year following the date of the award. Upon issuance of the restricted stock, each holder is entitled to the rights of a shareholder, including the right to vote the shares of restricted stock. Restricted stock awards will be forfeited upon the termination of a Named Executive Officer’s employment, unless the Officer is terminated by the Company due to death or disability, in which case restricted stock will accelerate and vest. In the event the Named Executive Officer retires or is involuntarily terminated without cause, the Committee has the right to cause the remaining unvested shares to be accelerated. If a change-in-control (as defined in the 2019 Stock Plan) occurs and the Named Executive Officer’s employment is simultaneously or subsequently terminated without cause or for good reason, any restricted stock shall vest as of the date of such termination. Restricted stock awards issued pursuant to the 2019 Stock Plan accrue dividends and other distributions during the vesting period, which will be paid only if the restricted stock vests. The following table summarizes the restricted stock awards granted to each of the Named Executive Officers in fiscal 2021.

 

Fiscal 2021 Restricted Stock Awards

Name

  Restricted Stock
Awarded (#)
  Value of
  Award ($)(1)  
    Percentage of  
Fiscal 2021
Salary (%)
  Grant
    Price ($)(2)    

Ty R. Silberhorn

   

 

45,662

   

 

1,399,997

   

 

175

   

 

30.66

Nisheet Gupta

   

 

20,000

   

 

464,800

   

 

91

   

 

23.24

Curtis J. Dobler

   

 

14,000

   

 

253,540

   

 

66

   

 

18.11

Gregory J. Sachs

   

 

10,500

   

 

190,155

   

 

59

   

 

18.11

Maureen A. Hayes

   

 

13,000

   

 

235,430

   

 

67

   

 

18.11

Brent C. Jewell

   

 

20,000

   

 

362,200

   

 

88

   

 

18.11

Joseph F. Puishys

   

 

37,193

   

 

673,565

   

 

72

   

 

18.11

James S. Porter

   

 

13,500

   

 

253,125

   

 

57

   

 

18.75

 

  (1)

The value of the award was calculated by multiplying the number of shares of restricted stock awarded by the closing price of our common stock on the Nasdaq Global Select Market on the date of grant. The awards to Messrs. Dobler, Sachs, Jewell and Puishys and Ms. Hayes were made on April 23, 2020 and to Mr. Porter on April 24, 2020. Awards to Messrs. Gupta and Silberhorn were granted upon hire and appointment as an officer on June 15, 2020 and January 4, 2021, respectively.

 

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  (2)

The closing price of our common stock on the Nasdaq Global Select Market on the date of grant.

Stock Options. During fiscal 2021, our Board and the Compensation Committee considered the economic uncertainties resulting from the COVID-19 pandemic and determined that the Company would not be able to establish effective long-term financial performance goals for the Company’s 2021 and 2022 fiscal years. Based on this determination, the Compensation Committee elected to issue stock options in fiscal 2021 in lieu of granting any two-year performance-based awards.

On June 30, 2020, the Committee awarded stock options to certain Named Executive Officers under the 2019 Stock Plan. The stock options have an exercise price of $23.04 per share, the closing market price of the Company’s common stock on the date of the grant. The following table sets forth the number of stock options granted to the Named Executive Officers:

 

Fiscal 2021 Stock Options

Name

           Grant Date                Stock Options    
Awarded (#)
   Exercise
            Price  ($)            

Ty R. Silberhorn

    

 

    

 

    

 

Nisheet Gupta

    

 

June 30, 2020

    

 

54,800

    

 

$23.04

Curtis J. Dobler

    

 

June 30, 2020

    

 

44,100

    

 

$23.04

Gregory J. Sachs

    

 

June 30, 2020

    

 

33,400

    

 

$23.04

Maureen A. Hayes

    

 

June 30, 2020

    

 

31,000

    

 

$23.04

Brent C. Jewell

    

 

June 30, 2020

    

 

47,000

    

 

$23.04

Joseph F. Puishys

    

 

June 30, 2020

    

 

215,600

    

 

$23.04

James S. Porter

    

 

    

 

    

 

The stock options vest in equal installments on the second and third anniversaries of the date of the grant and have a term of 10 years. Unvested stock options will be forfeited upon the termination of a Named Executive Officer’s employment, unless the Named Executive Officer is terminated by the Company due to death or disability, in which case unvested stock options will accelerate and vest. If a change-in-control (as defined in the 2019 Stock Incentive Plan) occurs and the Named Executive Officer’s employment is simultaneously or subsequently terminated without cause or for good reason, any unvested portion of the stock options shall vest as of the date of such termination. No stock options may be exercised for a gain of more than $12.66 per share (i.e., the difference between the exercise price ($23.04) per share and the maximum price ($35.70) per share). The maximum share price limitation is subject to equitable adjustment in the event of a stock split or other similar transaction in accordance with the Plan.

2019-2020 Performance-Based Awards. Our Company granted two-year performance-based awards as a component of long-term incentive compensation from fiscal 2013 through fiscal 2020. The two-year performance-based awards were granted every other year, had two-year performance periods that did not overlap and paid out in cash in two equal annual installments after completion of the performance period.

The Committee established the fiscal 2019-2020 performance-based awards based on the following financial performance metrics: average ROIC (33-1/3%), cumulative EPS (33-1/3%) and cumulative net sales (33-1/3%). The two-year threshold metrics for this award were not met and no payout was earned by our executive officers for the 2019-2020 performance period.

 

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Chief Executive Officer Evaluation Incentive Program. Our former Chief Executive Officer, Mr. Puishys was eligible to receive an additional cash incentive award based on the Board’s evaluation of his annual performance. All cash awards earned by Mr. Puishys pursuant to this program were mandatorily deferred pursuant to our Deferred Compensation Plan until he left our Company. Mr. Silberhorn did not participate in this program.

Fiscal 2021 CEO Evaluation Incentive. Pursuant to the terms of the CEO Evaluation-Based Incentive Agreement, the amount of incentive earned was originally to be based upon the average rating Mr. Puishys received on the annual performance evaluation conducted by our Board and his achievement of his fiscal 2021 individual business objectives. Mr. Puishys’s performance criteria for fiscal 2021 were based upon the organizational design and strategy for our Architectural Framing Systems segment, the launch of the small project architectural glass fabrication business, and improvement in performance of our Architectural Glass segment.

If Mr. Puishys met or exceeded his individual business objectives, he had the potential to earn an evaluation incentive award between $233,750 at target and $467,500 at maximum. The Compensation Committee could have determined, in its sole discretion, to reduce the amount of any incentive earned or to not award any incentive, depending upon actual performance achieved.

Pursuant to the terms of Mr. Puishys’ Transition Agreement, which is described under “Puishys Transition Agreement” on page 66, Mr. Puishys was paid $210,375 under the fiscal 2021 CEO evaluation incentive program, based upon his fiscal 2020 annual CEO performance evaluation rating of 90% of target

Other Benefit Programs. Our executive officers also receive the same health and welfare benefits as those offered to all other full-time employees, with the exception that we offer enhanced long-term disability benefits to our executive officers.

Our executive officers participate in our 401(k) Retirement Plan and Employee Stock Purchase Plan on the same basis as all other eligible employees. The value of 401(k) and Employee Stock Purchase Plan matching contribution made by the Company for our Named Executive Officers is included in “All Other Compensation” in the “Summary Compensation Table” beginning on page 53. Additionally, our executive officers may participate in our voluntary non-qualified deferred compensation plan, as described under the heading “Non-Qualified Deferred Compensation” on page 60.

We have entered into change-in-control severance agreements with each of our Named Executive Officers. See “Change-in-Control Severance Agreements” on page 63 and “Payments Upon Termination and Change-in-Control” on pages 64 – 65 for more information on these arrangements.

In order to maintain market-competitive benefits and to encourage our Named Executive Officers to focus on their roles at the Company, we provide a limited number of perquisites, including the reimbursement of financial and estate planning fees of up to $2,000 annually, enhanced long-term disability benefits, payment of relocation expenses, reimbursement of annual executive health physical costs up to $3,000 annually and reimbursement of spousal travel expenses for certain Company events. We do not provide tax reimbursement or tax “gross-ups” on any perquisites, other than annual executive health physicals.

Silberhorn Employment Agreement. In connection with his assumption of the Chief Executive Officer role, Mr. Silberhorn entered into an Employment Agreement (the “Employment Agreement”) with the Company effective as of January 4, 2021 (the “Commencement Date”).

The Employment Agreement has a three-year term, ending on January 4, 2024 (the “Term”). Pursuant to the Employment Agreement, Mr. Silberhorn is entitled to:

 

   

base salary, initially in the amount of $800,000 per year;

 

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the Signing Bonus described below;

 

   

participate in the Company’s annual cash incentive plan beginning in fiscal 2022;

 

   

participate in the health and welfare benefit programs offered generally by the Company to its executive officers;

 

   

restricted stock vesting in equal annual increments over a three-year period, to be awarded with respect to fiscal 2022 performance, the target value of which shall be $800,000 and the actual award of which could be between 0% and 200% of the target award value, depending on achievement of certain business objectives for fiscal 2022; and

 

   

a performance award to be awarded with respect to the 2022-2024 fiscal year performance cycle, the target value of which shall be $1,200,000 and the actual value of the shares to be awarded pursuant to which could be between 0% and 200% of the target award value, depending on the achievement of certain business objectives over the three-year period.

To replace forfeited compensation earned by Mr. Silberhorn at his previous employer, the Employment Agreement provides that Mr. Silberhorn shall receive the following (collectively, the “Signing Bonus”):

 

   

restricted stock of the Company valued at $1,400,000, which will vest in two increments over a five-year period, with the first increment of $500,000 vesting on the second anniversary of the Commencement Date, and the second increment of $900,000 vesting on the fifth anniversary of the Commencement Date (the “Retention Grant”); and

 

   

a cash bonus in the amount of $300,000, of which $200,000 shall be payable to Mr. Silberhorn on the first Company payroll date after the Commencement Date, and of which $100,000 shall be payable to Mr. Silberhorn on the first Company payroll date after the first anniversary of the Commencement Date.

For a description of potential payments pursuant to the Employment Agreement in the event that Mr. Silberhorn’s employment is terminated, see “Payments Upon Termination and Change-in-Control” on pages 64 – 65.

The Employment Agreement prohibits Mr. Silberhorn from engaging in any business activities that are competitive with any of the businesses conducted by the Company or its affiliates during his employment with the Company and for a period of two years after termination of his employment, as well as prohibiting solicitation of employees and interference with the Company’s business relationships.

Gupta Offer Letter Agreement. In connection with Mr. Gupta’s appointment as Executive Vice President and Chief Financial Officer, the Company and Mr. Gupta entered into an Offer Letter Agreement, dated May 27, 2020 (the “Offer Letter”). Pursuant to the terms of the Offer Letter, Mr. Gupta is entitled to an initial annual base salary of $510,000 per year and a one-time sign-on bonus of $100,000 (subject to repayment if Mr. Gupta leaves the Company during the first twelve months of his employment). The effectiveness of the Offer Letter is contingent upon the satisfaction of certain customary contingencies.

The Offer Letter also provides for the grant to Mr. Gupta of 20,000 restricted shares of the Company’s common stock on June 15, 2020. Such restricted shares will be subject to a three-year vesting schedule. Assuming continued employment with the Company, one-third of the restricted shares will vest annually over three years, starting on the one-year anniversary of Mr. Gupta’s employment with the Company.

Mr. Gupta will participate in the Company’s annual cash incentive plan, with a target cash incentive of 75% of Mr. Gupta’s base salary (with a range of 0% to 200% of such target), subject to achievement of

 

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certain financial performance metrics established by the Board. Mr. Gupta’s Offer Letter states that he was entitled to a minimum fiscal 2021 annual cash incentive payout at target performance level of 75%, prorated for the period of time during which he was employed by the Company during the fiscal year, which equaled $286,875.

Executive Stock Ownership Guidelines

We have stock ownership guidelines for our executive officers that require our Chief Executive Officer to achieve an ownership level of five times his annual base salary and each other Named Executive Officer to achieve an ownership level of three times his or her annual base salary. The Committee monitors compliance with our stock ownership guidelines annually. Each executive has five years from the date he or she becomes subject to the stock ownership guidelines to meet his or her ownership guideline. If an executive is promoted and the target is increased, an additional three-year period is provided to meet the ownership guideline. For purposes of calculating stock ownership, we include unvested shares of restricted stock but do not include unexercised stock option awards. Shares owned are valued based on the average closing price of our common stock for the just completed fiscal year.

All of our Named Executive Officers are still within the applicable grace period for achieving these ownership levels.

Anti-Hedging and Anti-Pledging Policies

Our Board of Directors believes that the interests of our executive officers, employees and members of our Board of Directors should be aligned with the interests of our shareholders. As a result, we have adopted an anti-hedging policy that prohibits all employees and members of our Board of Directors from engaging in the purchase or sale of financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds) that are designed to hedge or offset any decrease in the market value of our Company’s securities. Our Board of Directors has also adopted an anti-pledging policy, which states that executive officers and directors of the Company are prohibited from, directly or indirectly, pledging, hypothecating, or otherwise encumbering shares of the Company’s common stock as collateral for indebtedness. This prohibition includes, but is not limited to, holding such shares in a margin account or any other account that could cause the Company’s common stock to be subject to a margin call or otherwise be available as collateral for a margin loan. None of our Named Executive Officers has pledged shares of our common stock as collateral for personal loans or other obligations.

Clawback Policy

Our Board of Directors adopted a policy regarding “clawbacks” for Named Executive Officers and other key executives for performance-based short-term and long-term incentive compensation plans as of March 3, 2014. The policy provides the Board the discretion to clawback incentive compensation awarded or paid during the three-year period preceding the date of a restatement of the Company’s financial statements due to material noncompliance with any financial reporting requirement under the U.S. federal securities laws.

Tax Considerations

Section 162(m) of the U.S. Internal Revenue Code (“Section 162(m)”) imposes a $1,000,000 annual deduction limit on compensation payable to certain current and former named executive officers. The Compensation Committee intends to pay competitive compensation consistent with our philosophy to attract, retain and motivate executive officers to manage our business in the best interests of the Company and our shareholders. The Compensation Committee, therefore, may choose to provide non-deductible compensation to our executive officers if it deems such compensation to be in the best interests of Apogee and our shareholders.

 

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Prior to the Tax Cuts and Jobs Act (the “Act”), Section 162(m) permitted a deduction for compensation in excess of $1,000,000 paid to a covered executive if specified requirements related to our performance were met and shareholder approval was obtained. The Act eliminated the exception to the deduction limit for qualified performance-based compensation (and broadened the application of the deduction limit to certain current and former executive officers who previously were exempt from such limit). However, the Act also included a transition provision which exempts from the above changes compensation payable under a written binding agreement that was in effect on November 2, 2017, if such agreement is not subsequently materially amended. As a result of the transition rule, certain awards (such as stock options and deferred compensation arrangements) that were outstanding as of November 2, 2017 but which may be exercised or pay out in future tax years may be fully deductible if they qualify for transition relief.

Various programs, including our benefit plans that provide for deferrals of compensation are subject to Section 409A of the Internal Revenue Code. We have reviewed such plans for compliance with Section 409A and believe that they are in compliance.

Compensation Risk Analysis

During fiscal 2021, the Committee, with the assistance of its independent compensation consultant and management, assessed risk in our compensation plans, practices and policies and determined that the Company’s compensation practices and policies do not create risks that are reasonably likely to have a material adverse effect on the Company. In performing this risk assessment, the Committee considered:

 

   

The mix of fixed and variable compensation;

 

   

The mix of short-term and long-term incentive compensation;

 

   

The extent to which performance metrics are directly reflected in our audited financial statements or other objective reports;

 

   

The relative weighting of the performance metrics;

 

   

The likelihood that achievement of performance metrics could have a material impact on our financial performance in succeeding fiscal periods;

 

   

The various compensation risk control mitigation features in our compensation plans, including balanced financial performance metrics that include net sales, earnings and operational metrics;

 

   

Multiple financial performance metrics for our annual cash incentive and long-term incentive plans;

 

   

Different financial performance metrics for our annual cash incentive and long-term incentive plans;

 

   

Appropriate maximum caps on our annual cash incentive and long-term incentive plans and annual equity awards;

 

   

Management stock ownership guidelines; and

 

   

Our clawback and hedging policies.

 

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Summary Compensation Table

The following table sets forth the total compensation for fiscal 2021, 2020 and 2019 awarded to our Named Executive Officers.

Summary Compensation Table

 

Name and Principal

Position

 

Fiscal

Year

Salary

($)

Bonus

($)

Stock
Awards
($)(1)
Option
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation
($)(3)

All Other
Compen-

sation

($)(4)

 

Total

($)

Ty R. Silberhorn(5)

  2021   123,077   200,000 (6)    1,399,997       36,239   1,759,313

Chief Executive Officer and President

Nisheet Gupta(5)

  2021   362,855   329,500 (6)    464,800   274,548   57,375   15,635   1,504,713

Executive Vice President and Chief Financial Officer

Curtis J. Dobler(5)

  2021   346,500   88,800 (6)    253,540   220,941   46,200   36,549   992,530

Executive Vice President and Chief Human Resources Officer

  2020   340,577   216,724   373,000     14,276   93,564   1,038,141

Gregory J. Sachs(5)

  2021   315,000   150,000 (6)    190,155   167,334   35,000   22,944   880,433

Chief Procurement Officer

Maureen A. Hayes(5)

  2021   292,050   47,550 (6)    235,430   155,310   32,450   17,974   780,764

Chief Information Officer

Brent C. Jewell(7)

  2021   369,000   151,201 (6)    362,200   235,470   73,799   32,214   1,223,884

President Architectural Framing Systems segment

  2020   387,577     526,050     14,453   15,583   943,663
  2019   267,885   44,560   258,300     55,440   13,557   639,742

Joseph F. Puishys(8)

  2021   818,125   504,900 (6)    673,565   1,080,156   196,350   1,002,241   4,275,337

Former Chief Executive Officer and President

  2020   935,000     635,806     210,492   41,606   1,822,904
  2019   935,000     727,420     544,264   43,852   2,250,536

James S. Porter(9)

  2021   124,062     253,125       5,082   382,269

Former Executive Vice President and Chief Financial Officer

  2020   446,000     246,822     20,787   19,922   733,531
  2019   435,000     219,923     114,840   17,455   787,218

 

(1)

The amounts shown in this column represent the grant date fair value of the restricted stock awards granted in fiscal 2021, 2020 and 2019. These amounts are calculated in accordance with FASB ASC Topic 718 based on the closing share price of our common stock on the date of grant. See Note 12, Share-Based Compensation, to our fiscal 2021 Audited Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021 for assumptions made in the valuation.

 

(2)

The amounts shown in this column represent the grant date fair value of the option awards granted in fiscal 2021. These amounts are calculated in accordance with FASB ASC Topic 718 using the binomial lattice model and based on the assumptions set forth in Note 12, Share-Based Compensation, to our fiscal 2021 Audited Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021.

 

(3)

The amounts in this column represent the amounts earned pursuant to the formula established for the fiscal 2021 annual cash incentive awards (additional amounts paid pursuant to the fiscal 2021

 

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annual cash incentive awards, including as a result of the Compensation Committee’s exercise of discretion, are reported in the “Bonus” column).

 

(4)

The following table shows each component of the “All Other Compensation” column for each of our Named Executive Officers for fiscal 2021.

 

Name

  Perquisites
($)
  Executive
Health Physical
Reimbursement
($)
  Company
Matching
Contributions
to Defined
Contribution
Plans ($)(a)
  Dividends
Paid or
Accrued

on Stock
Awards
($)(b)
  Retirement
Payments
and
Benefits(c)
  Total All
Other
Compensation
($)

Ty R. Silberhorn

      24,338 (d)                2,769       9,132               36,239

Nisheet Gupta

      702 (e)                3,433       11,500               15,635

Curtis J. Dobler

      15,035 (f)        1,599       4,156       15,759               36,549

Gregory J. Sachs

      1,014 (e)                6,965       14,965               22,944

Maureen A. Hayes

      1,063 (e)                4,812       12,099               17,974

Brent C. Jewell

      3,140 (g)                3,762       25,312               32,214

Joseph F. Puishys

      6,096 (h)        400       4,156       40,891       950,698       1,002,241

James S. Porter

      307 (e)                1,141       3,634               5,082

 

  (a)

Includes the amounts we set aside or accrued during fiscal 2021 under our 401(k) Retirement Plan and Employee Stock Purchase Plan as matching contributions on our Named Executive Officers’ contributions to such plans. Such contribution amounts are set forth in the table below. Our Named Executive Officers are eligible to participate in our 401(k) Retirement Plan and Employee Stock Purchase Plan on the same basis as all eligible employees.

 

Name

   401(k) Retirement
Plan Matching
Contributions ($)
   Employee Stock
Purchase

Plan 15% Matching
Contributions ($)
   Total Company
Matching
Contributions ($)

Ty R. Silberhorn

       2,769                 2,769

Nisheet Gupta

       3,433                 3,433

Curtis J. Dobler

       4,156                 4,156

Gregory J. Sachs

       5,465        1,500          6,965

Maureen A. Hayes

       4,812                 4,812

Brent C. Jewell

       3,762                 3,762

Joseph F. Puishys

       4,156                 4,156

James S. Porter

       1,141                 1,141

 

  (b)

Includes dividends paid or accrued on unvested restricted stock during fiscal 2021 pursuant to our 2009 Stock Incentive Plan and our 2019 Stock Incentive Plan.

 

  (c)

For Mr. Puishys, includes $935,000 of salary continuation accrued in connection with his retirement, 50% of which is payable six months following Mr. Puishys’s retirement date, with the remaining 50% paid in equal monthly installments for the subsequent six months, and an aggregate payment of $15,698, which represents the Company’s share of group medical, dental and vision insurance costs for 18 months after the retirement date. For a summary of

 

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the payments and benefits provided to Mr. Puishys pursuant to his Transition Agreement, including accelerated stock and option awards, see “Puishys Transition Agreement” on page 66.

 

  (d)

Includes $24,250 for reimbursement of financial planning fees, $88 in premiums paid for enhanced long-term disability insurance.

 

  (e)

Consists of premiums paid for enhanced long-term disability insurance.

 

  (f)

Consists of $1,140 in premiums paid for enhanced long-term disability insurance and $13,895 for relocation costs.

 

  (g)

Includes $2,000 for reimbursement of financial planning fees, $1,140 in premiums paid for enhanced long-term disability insurance.

 

  (h) 

Includes $2,000 for reimbursement of financial planning fees, $1,096 in premiums paid for enhanced long-term disability insurance, and $3,000 for an enhanced access medical care program.

 

(5)

In fiscal 2021, Mr. Silberhorn joined our Company on January 4, 2021, and Mr. Gupta joined our Company on June 15, 2020. Messrs. Silberhorn, Gupta and Sachs and Ms. Hayes were not Named Executive Officers in fiscal years 2019 or 2020 and Mr. Dobler was not a Named Executive Officer in fiscal 2019. Accordingly, the table above includes the compensation of such individuals only for the applicable years in which they were Named Executive Officers.

 

(6)

The following table shows each component of the “Bonus” column for each of our Named Executive Officers for fiscal 2021.

 

Name

   Signing
Bonus(a)
   Fiscal 2021 Annual
Cash Incentive Award
Amounts Above
Calculated Amount
($)(b)
   Procurement
Program
Incentive
Bonus ($)(c)
   Fiscal  2021
CEO
Evaluation
Incentive
($)(d)
   Total Bonus
($)

Ty R. Silberhorn

       200,000                                   200,000

Nisheet Gupta

       100,000        229,500                          329,500

Curtis J. Dobler

                88,800                          88,800

Gregory J. Sachs

                50,000        100,000                 150,000

Maureen A. Hayes

                47,550                          47,550

Brent C. Jewell

                51,201        100,000                 151,201

Joseph F. Puishys

                294,525                 210,375        504,900

James S. Porter

                                            

 

  (a)

Consists of a signing bonus paid to Mr. Silberhorn pursuant to the terms of his Employment Agreement and to Mr. Gupta pursuant to the terms of his Offer Letter.

 

  (b)

For Named Executive Officers other than Mr. Gupta, the amounts consist of the difference between the calculated payout amount under the Fiscal 2021 Annual Cash Incentive and the amount actually awarded by the Compensation Committee. For Mr. Gupta, consists of the difference between the calculated payout amount under the Fiscal 2021 Annual Cash Incentive and the amount of his contractually agreed minimum Fiscal 2021 Annual Cash Incentive.

 

  (c)

Consists of amounts that the Compensation Committee determined to pay to the executive officers as a result of their efforts in connection with the Company’s previously announced and ongoing procurement cost savings initiative.

 

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  (d)

Consists of amounts paid to Mr. Puishys for the fiscal 2021 CEO evaluation incentive award pursuant to the terms of his Transition Agreement, which modified the terms of the fiscal 2021 CEO evaluation incentive award to stipulate that payout would be based upon his fiscal 2020 annual CEO performance evaluation rating of 90% of target.

 

(7)

Mr. Jewell was no longer serving as an executive officer as of the end of the fiscal year, although he remains an employee of the Company.

 

(8)

Mr. Puishys resigned as an officer of the Company effective as of January 4, 2021 and as an employee of the Company effective as of February 27, 2021.

 

(9)

Mr. Porter resigned as an officer of the Company on June 15, 2020, and his employment with the Company ended on June 19, 2020.

 

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Grants of Plan-Based Awards

The following table sets forth information for our Named Executive Officers concerning the following plan-based awards made during fiscal 2021: (i) estimated possible payouts for fiscal 2021 annual cash incentive awards; (ii) the grant date value of the restricted stock awards; (iii) the grant date value of the stock options; and (iv) estimated possible payouts for the fiscal 2021 CEO evaluation incentive award.

Fiscal 2021 Grants of Plan-Based Awards

 

Name

  Grant
Date
   

 

Estimated Possible Payouts under

Non-Equity Incentive Plan Awards(1)

    All  Other
Stock

Awards:
Number

of Shares of
Stock or
Units (#)(2)
    All Other
Option
Awards:
Number of
securities
underlying
options

(#)(3)
    Exercise
or base
price of
option
awards

($/Sh)
    Grant Date
Fair Value of
Stock and
Option
Awards ($)(4)
 
 

 

Threshold

        ($)        

   

 

Target

        ($)        

   

 

Maximum

        ($)        

 

Ty R. Silberhorn

               

Restricted stock

 

 

1/4/21

 

 

 

 

 

 

 

 

 

 

 

 

45,662

 

 

 

 

 

 

 

 

 

1,399,997

 

Nisheet Gupta

               

Fiscal 2021 annual

cash incentive

 

 

6/30/20

 

 

 

14,344

 

 

 

286,875

 

 

 

573,750

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock

 

 

6/15/20

 

 

 

 

 

 

 

 

 

 

 

 

20,000

 

 

 

 

 

 

 

 

 

464,800

 

Stock options

 

 

6/30/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54,800

 

 

 

23.04

 

 

 

274,548

 

Curtis J. Dobler

               

Fiscal 2021 annual

cash incentive

 

 

6/30/20

 

 

 

11,550

 

 

 

231,000

 

 

 

462,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock

 

 

4/23/20

 

 

 

 

 

 

 

 

 

 

 

 

14,000

 

 

 

 

 

 

 

 

 

253,540

 

Stock options

 

 

6/30/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

44,100

 

 

 

23.04

 

 

 

220,941

 

Gregory J. Sachs

               

Fiscal 2021 annual

cash incentive

 

 

6/30/20

 

 

 

8,750

 

 

 

175,000

 

 

 

350,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock

 

 

4/23/20

 

 

 

 

 

 

 

 

 

 

 

 

10,500

 

 

 

 

 

 

 

 

 

190,155

 

Stock options

 

 

6/30/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33,400

 

 

 

23.04

 

 

 

167,334

 

Maureen A. Hayes

               

Fiscal 2021 annual

cash incentive

 

 

6/30/20

 

 

 

8,113

 

 

 

162,250

 

 

 

324,500

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock

 

 

4/23/20

 

 

 

 

 

 

 

 

 

 

 

 

13,000

 

 

 

 

 

 

 

 

 

235,430

 

Stock options

 

 

6/30/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,000

 

 

 

23.04

 

 

 

155,310

 

Brent C. Jewell

               

Fiscal 2021 annual

cash incentive

 

 

6/30/20

 

 

 

12,300

 

 

 

246,000

 

 

 

492,000

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock

 

 

4/23/20

 

 

 

 

 

 

 

 

 

 

 

 

20,000

 

 

 

 

 

 

 

 

 

362,200

 

Stock options

 

 

6/30/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47,000

 

 

 

23.04

 

 

 

235,470

 

Joseph F. Puishys

               

Fiscal 2021 annual

cash incentive

 

 

6/30/20

 

 

 

49,088

 

 

 

981,750

 

 

 

1,963,500

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted stock

 

 

4/23/20

 

 

 

 

 

 

 

 

 

 

 

 

37,193

 

 

 

 

 

 

 

 

 

673,565

 

Stock options

 

 

6/30/20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

215,600

 

 

 

23.04

 

 

 

1,080,156

 

Fiscal 2021 CEO

evaluation incentive

 

 

6/24/20

 

 

 

(5) 

 

 

233,750

 

 

 

467,500

 

 

 

 

 

 

 

 

 

 

 

 

 

James S. Porter

               

Restricted stock

 

 

4/24/20

 

 

 

 

 

 

 

 

 

 

 

 

13,500

 

 

 

 

 

 

 

 

 

253,125

 

 

(1)

These columns show the range of possible payouts under the fiscal 2021 annual cash incentive awards and, with respect to Mr. Puishys, the fiscal 2021 CEO evaluation incentive award.

 

    

Amounts to be earned pursuant to the fiscal 2021 annual cash incentive awards are based on results achieved against financial performance goals. Pursuant to the terms of his Transition Agreement, Mr. Puishys was paid $210,375 under the fiscal 2021 CEO evaluation incentive program, based upon his fiscal 2020 annual CEO performance evaluation rating of 90% of target.

 

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Amounts shown in the “Threshold” column assume threshold performance level is achieved for only the performance goal with the lowest weighting and is not achieved for any other performance goals. Amounts shown in the “Target” and “Maximum” columns assume target and maximum performance levels, respectively, are achieved for all performance goals.

 

    

The fiscal 2021 annual cash incentive award payouts are included in the “Summary Compensation Table” beginning on page 53 in the columns titled “Non-Equity Incentive Plan Compensation” and “Bonus” and described under the heading “Fiscal 2021 Annual Cash Incentive Payouts” beginning on page 43.

 

    

The fiscal 2021 CEO evaluation incentive is included in the “Summary Compensation Table” beginning on page 53 in the column titled “Bonus” and is described under the heading “Fiscal 2021 CEO Evaluation Incentive” on page 49.

 

    

Neither Mr. Silberhorn nor Mr. Porter were granted a fiscal 2021 annual incentive award.

 

(2)

The restricted stock awards made on April 23, 2020 to Messrs. Dobler, Sachs, Jewell and Puishys and Ms. Hayes, and on April 24, 2020 to Mr. Porter were based on their performance during fiscal 2020 and vest in three equal annual installments commencing on April 23, 2021 and April 24, 2021, respectively. Mr. Gupta’s restricted stock award was made when he joined our Company on June 15, 2020 and vests in three equal annual installments commencing on June 15, 2021. The restricted stock award made to Mr. Silberhorn was made when he joined our company on January 4, 2021 and vests 16,308 shares on January 4, 2023 and 29,354 shares on January 4, 2026. Dividends or other distributions (whether cash, stock or otherwise) will accrue during the vesting period and will be paid only if the restricted shares vest. Our restricted stock program is described under “Restricted Stock Awards” on page 47.

 

(3)

Stock options have an exercise price equal to the closing market price of the Company’s common stock on the date of the grant and a term of 10 years. The stock options vest in equal installments on the second and third anniversaries of the date of the grant. No stock options may be exercised for a gain of more than $12.66 per share (i.e., the difference between the exercise price ($23.04) per share and the maximum price ($35.70) per share). The maximum share price limitation is subject to equitable adjustment in the event of a stock split or other similar transaction in accordance with the Plan. The stock options are described under “Stock Options” on page 48.

 

(4)

The grant date fair value of the restricted stock awards was calculated in accordance with FASB ASC Topic 718 by multiplying the number of restricted shares by the closing price of our common stock on the Nasdaq Global Select Market on the date of grant. The closing price of our common stock on the Nasdaq Global Select Market was $18.11 on April 23, 2020, the date of grant for Messrs. Dobler, Sachs, Jewell and Puishys and Ms. Hayes; $18.75 on April 24, 2020, the date of grant for Mr. Porter; $23.24 on June 15, 2020, the date of grant for Mr. Gupta and $30.66 on January 4, 2021, the date of the grant for Mr. Silberhorn.

 

    

The grant date fair value of the options awards were determined using the binomial lattice model and based on the assumptions set forth in Note 12, Share-Based Compensation, to our fiscal 2021 Audited Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 27, 2021.

 

(5)

There is no threshold performance level for the fiscal 2021 CEO evaluation incentive award.

 

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Outstanding Equity Awards at Fiscal Year-End

The following table summarizes the equity awards held by our Named Executive Officers as of February 27, 2021, the last day of fiscal 2021.

Outstanding Equity Awards at Fiscal 2021 Year-End

 

     Option Awards   Stock Awards

Name

   Option
Grant
Date
  Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
  Option
Exercise
Price ($)(1)
  Option
Expiration

Date
  Number of
Shares or Units
of Stock That
Have Not
Vested (#)
  Market Value of
Shares or Units of
Stock That Have
Not Vested ($)(2)

Ty R. Silberhorn

                                     45,662 (3)        1,707,759

Nisheet Gupta

       6/30/20 (4)        54,800             23.04       6/30/30            
                                     20,000 (5)        748,000

Curtis J. Dobler

       6/30/20 (4)        44,100             23.04       6/30/30            
                                     6,667 (6)        249,346

 

               &n