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Preliminary Proxy Statement
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Confidential, For Use of the Commission Only (as permitted by Rule 14a-(e)(2)
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under §240.14a-12
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Matrix Service Company
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(Name of Registrant as Specified in Its Charter)
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N/A
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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Follow the instructions on your proxy card and E-Proxy Notice; and
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Vote your shares as instructed on your proxy card and E-Proxy Notice.
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Dial 1-800-690-6903 from any touch-tone telephone at any time prior to 11:59 ET on November 2, 2020; and
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Have your proxy card in hand and follow the instructions given to you on the line.
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Mark, sign and date your proxy card; and
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Return it in the envelop provided.
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Access www.virtualshareholdermeeting.com/MTRX2020;
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If you are a registered stockholder, have your 16-digit control number located on your E-Proxy Notice or you proxy card (if you received a printed copy of the proxy materials); and
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If you hold your shares in “street name”, have your 16-digit control number provided to you by your bank or broker. If you hold your shares in “street name” and do not have your 16-digit control number, please contact your bank or broker prior to the Annual Meeting.
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Martha Z.
Carnes
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John D.
Chandler
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Carlin G.
Conner
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John R.
Hewitt
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Liane K.
Hinrichs
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James H.
Miller
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Jim W.
Mogg
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Public Company Board Experience
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Strategic Leadership
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Financial Expertise/Literacy
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Industry Experience
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Risk Management Oversight
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Environmental, Social and Governance
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International Business
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Mergers and Acquisitions
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Age: 60
Director Since:
July 2017
Committees:
• Audit (Chairman)
• Compensation
• Nominating and
Corporate
Governance
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Ms. Carnes retired from PricewaterhouseCoopers LLP (“PwC”) in June 2016, where she had a thirty-four year career with the firm. She was an assurance partner serving large, publicly traded companies in the energy industry. Ms. Carnes held a number of leadership positions with PwC including the Houston office Managing Partner. She also served as PwC's Energy and Mining leader in the United States where she led the firm's energy and mining assurance, tax, and advisory practices. Ms. Carnes also served as one of PwC's Risk Management Partners and was PwC's United States representative on the firm's Global Communities Board. She also serves on the Supervisory Board and is the Lead Independent Director and Chairman of the Audit Committee of Core Laboratories N.V., a Netherlands company that provides reservoir description and production enhancement services to the oil and gas industry. In addition, she is a member of the Board of Directors and member of the Audit Committee of SunCoke Energy, Inc., whose principal businesses are cokemaking and logistics. Ms. Carnes is also a Member Representative of Ohio Valley Midstream LLC, a member managed limited liability corporation, and she is a member of the Board of Trustees at Texas Children's Hospital and the Board of the Barbara Bush Houston Literacy Foundation. From September 2017 to June 2019, she was a member of the Board of Directors and served on both the audit and conflicts committees of SunCoke Energy Partners GP LLC, the general partner of SunCoke Energy Partners LP. Ms. Carnes received her B.B.A. in accounting from the University of Texas at Austin and is a certified public accountant.
Skills and Qualifications:
The specific experience, qualifications, attributes or skills that led to the conclusion Ms. Carnes should serve as a Director include her extensive expertise in financial oversight and financial reporting, and her broad accounting knowledge gained from working with and auditing public companies in the energy industry and her operational and leadership experience at PwC.
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Age: 50
Director Since:
June 2017
Committees:
• Audit
• Compensation
• Nominating and
Corporate
Governance
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On August 28, 2017, Mr. Chandler was appointed as Senior Vice President and Chief Financial Officer for The Williams Companies, Inc. (“Williams”). Mr. Chandler served as a director for WPZ GP LLC, the general partner of Williams Partners LP, from September 2017 to August 2018 when Williams Partners LP became a wholly-owned subsidiary of Williams. Mr. Chandler previously served as a director and as chairman of the audit committee of USA Compression GP, LLC, the general partner of USA Compression Partners, LP. He also previously served on the board of directors and the audit committee of CONE Midstream GP, LLC, the general partner of CONE Midstream Partners LP, and on the board of directors and audit committee of Green Plains Holdings LLC, the general partner of Green Plains Partners LP. From 2009 until his retirement in March 2014, Mr. Chandler served as Senior Vice President and Chief Financial Officer of Magellan GP, LLC, the general partner of Magellan Midstream Partners, LP. From 2003 until 2009, he served in the same capacities for the general partner of Magellan Midstream Holdings, L.P. From 1999 to 2002, Mr. Chandler was Director of Financial Planning and Analysis and Director of Strategic Development for a subsidiary of Williams. From 1992 to 1999, Mr. Chandler held various accounting and finance positions with MAPCO Inc. Mr. Chandler received his B.S. and B.A. in accounting and finance from the University of Tulsa.
Skills and Qualifications:
The specific experience, qualifications, attributes or skills that led to the conclusion that Mr. Chandler should serve as a Director include his long history of service in senior corporate leadership positions, his extensive experience in the energy industry, his extensive financial oversight expertise and his understanding of complex financial matters gained from his experience as a CFO of two large publicly traded companies.
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Age: 52
Director Since:
August 2020
Committees:
• Audit
• Compensation
• Nominating and
Corporate
Governance
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Since April 2020, Mr. Conner has served as senior advisor of Riverstone Holdings. He was president, chief executive officer, and a director of SemGroup Corp. (“SemGroup”), a publicly traded company engaged in gathering, transportation, storage, distribution, marketing and other midstream services primarily in the U.S. and Canada, from April 2014 until January 2020. He also served as chairman of the board of directors, president and chief executive officer of the general partner of Rose Rock Midstream, L.P. (“Rose Rock”), a publicly traded master limited partnership and subsidiary of SemGroup, which owned and operated a diversified portfolio of midstream energy assets, from 2014 until September 2016. In 2000, he joined a subsidiary of Oiltanking GmbH (“Oiltanking”), a German based independent worldwide storage provider of crude oil, refined petroleum products and liquid chemicals. During his nearly 14 years with Oiltanking and its affiliates, he focused on international business development, operations and strategy while serving in various leadership roles. From 2012 to 2014, Mr. Conner served as global managing director of Oiltanking, and he served as chairman of the board of directors of the general partner of Oiltanking Partners, L.P., a publicly traded master limited partnership engaged in independent terminaling, storage and transportation of crude oil, refined petroleum products and liquefied petroleum gas, from 2011 to 2014. From 2012 to 2014, Mr. Conner also served as an executive board member of Marquard & Bahls, AG, the parent company of Oiltanking, where he was instrumental in defining a new strategy for the energy supply, trading, and logistics business across Europe, the Americas, Asia, and Africa. Mr. Conner holds a bachelor’s degree in environmental science from McNeese State University.
Skills and Qualifications:
Mr. Conner provides the Board more than 28 years of experience in the midstream industry and executive level experience gained through his services with SemGroup and Oiltanking and their affiliates as described above. He also has substantial board experience related to management and oversight of a publicly traded master limited partnership. His industry knowledge and board experience allow him to be a valuable contributor to the Board.
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Age: 62
Director Since:
May 2011
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Mr. Hewitt has spent his entire career in the engineering, procurement, and construction industry. Prior to joining Matrix in May 2011, Mr. Hewitt worked for approximately 25 years for various operating businesses of Aker Solutions ASA (“Aker”) and its predecessor companies, which provide engineering and construction services, technology products, and integrated solutions to the energy and process industries worldwide. Up until his appointment with the Company, Mr. Hewitt served as Vice President of Aker Solutions, where he was responsible for providing executive oversight on major capital projects in the power and liquefied natural gas industries. He also served as President, United States Operations at Aker Solutions E&C US, Inc. from 2007 to 2009 where he was responsible for managing all construction services in North America. Prior to that, he served as President of Aker Construction Inc. where he had full profit and loss responsibility for a multi-disciplined direct hire industrial construction business operating throughout North America. Mr. Hewitt holds a finance degree from Stetson University and an engineering degree from the Florida Institute of Technology. Mr. Hewitt is a member of the board of directors of the Tulsa Area United Way, the Philbrook Museum of Art, the Tulsa Area Tourism Improvement District, the Tulsa Regional Chamber - Visit Tulsa, the Committee of One Hundred - Tulsa and the Tulsa Boys Home. Mr. Hewitt also serves as an executive board member of the Tulsa Regional Chamber of Commerce.
Skills and Qualifications:
As the current President and CEO of the Company, Mr. Hewitt provides a management representative on the Board with extensive knowledge of day-to-day operations. As a result, he can facilitate the Board’s access to timely and relevant information and its oversight of management’s strategy, planning and performance. In addition, Mr. Hewitt brings to the Board considerable management and leadership experience, extensive knowledge of the energy industry and our business, and significant experience with mergers and acquisitions.
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Age: 63
Director Since:
June 2018
Committees:
• Audit
• Compensation
• Nominating and
Corporate
Governance
(Chairman)
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Ms. Hinrichs served as Senior Vice President, General Counsel and Corporate Secretary for McDermott International, Inc. from October 2008 until her retirement in August 2017. Previously, she served as McDermott's Vice President, General Counsel and Corporate Secretary from January 2007 to September 2008; Corporate Secretary and Associate General Counsel, Corporate Compliance and Transactions from January 2006 to December 2006; Associate General Counsel, Corporate Compliance and Transactions, and Deputy Corporate Secretary from June 2004 to December 2005; Assistant General Counsel, Corporate Secretary and Transactions from October 2001 to May 2004; and Senior Counsel from May 1999 to September 2001. Prior to joining McDermott in 1999, she was a partner in a New Orleans law firm. Ms. Hinrichs received a Master of Law in Securities Regulation from Georgetown University Law Center, a J.D. from Tulane School of Law and a B.A. in English from Tulane University.
Skills and Qualifications:
Ms. Hinrichs brings a combination of boardroom experience, executive leadership and general counsel credentials in the engineering and construction industry. Her deep experience and expertise in governance, enterprise risk management, compliance, international issues and strategy ensure advocacy for best practices and contribute to the Board's deliberations on some of today's most critical issues.
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Age: 65
Director Since:
May 2014
Committees:
• Audit
• Compensation
• Nominating and
Corporate
Governance
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On November 1, 2017, Mr. Miller was appointed as the sole director of Kvaerner U.S. with oversight and fiduciary responsibility for all U.S.-based operations. Since October 2018, Mr. Miller has also served as a consultant for Seajay Consulting L.L.C. From June 2011 to October 31, 2017, Mr. Miller was Executive Vice President - Americas of Kvaerner U.S. From June 2008 through June 2011, Mr. Miller served as Chief Executive Officer & President of Aker Philadelphia Shipyard. From June 2011 to April 2014, Mr. Miller also served as Chairman of the Board for Aker Philadelphia Shipyard ASA (re-named Philly Shipyard ASA in 2015) and re-assumed that position from February 2016 to April 2020. He is currently the Senior Advisor and an Officer for Philly Shipyard Inc. Prior to the shipyard, Mr. Miller was President of Aker Solutions Process & Construction Americas and before that was President of Aker Construction, Inc., which was one of the largest union construction companies in North America. He previously served on the Board of Directors of San Juan Construction, a multi-disciplined full-service general contractor. Mr. Miller graduated from the University of Edinboro in Pennsylvania with a Bachelors of Arts degree.
Skills and Qualifications:
Mr. Miller's extensive progressive leadership positions with a large multi-national industrial construction contractor led to the conclusion that Mr. Miller should serve as a Director. Mr. Miller has significant operational experience and a thorough understanding of the challenges and risks that face industrial construction contractors. He is experienced with merger and acquisition activity, partnering with other companies, and the management of large multi-year construction projects. Mr. Miller is also knowledgeable in many of the Company's key markets including power generation and heavy industry projects.
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Age: 71
Director Since:
August 2013
Chairman of the Board
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Mr. Mogg has served on the board of directors of ONEOK, Inc., a publicly traded diversified energy company, since July 2007. Mr. Mogg also served as a director of ONEOK Partners GP, L.L.C., the general partner of ONEOK Partners, L.P., a publicly traded master limited partnership that operated natural gas and natural gas liquids gathering, processing, pipelines, and fractionation assets, from August 2009 until its merger with a subsidiary of ONEOK, Inc. in June of 2017. Mr. Mogg served as Chairman of the Board of DCP Midstream GP, LLC, the general partner of DCP Midstream Partners, L.P. (“DCP Midstream”), from August 2005 to April 2007. From January 2004 to September 2006, Mr. Mogg served as Group Vice President, Chief Development Officer and advisor to the Chairman of Duke Energy Corporation. Additionally, Duke Energy affiliates, Crescent Resources and TEPPCO Partners, LP (“TEPPCO”), reported to Mr. Mogg. Mr. Mogg served as President and Chief Executive Officer of DCP Midstream, LLC from December 1994 to March 2000, and as Chairman, President and Chief Executive Officer from April 2000 through December 2003. DCP Midstream was the general partner of TEPPCO and, as a result, Mr. Mogg was Vice Chairman of TEPPCO from April 2000 to May 2002 and Chairman from May 2002 to February 2005. Mr. Mogg also serves on the board of directors of High Point Resources, an exploration and production company, where he is currently the non-executive Chairman.
Skills and Qualifications:
The specific experience, qualifications, attributes or skills that led to the conclusion Mr. Mogg should serve as a Director include his long history of service in senior executive leadership positions, including as a chief executive officer, and his significant knowledge of the energy industry. Mr. Mogg also brings financial expertise to the Board, including through his previous supervision of principal accounting officers, involvement in financing transactions, and his service on the audit committees of other companies. His current and previous directorships also provide Mr. Mogg with extensive corporate governance experience.
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•
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Mr. Miller's son is Director of Regional Operations for western Pennsylvania focused on managing proposal development and project execution for Matrix NAC's energy markets in the western Pennsylvania region, reporting to the Senior Vice President of Operations for Matrix NAC.
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Mr. Miller’s son was an employee of Kvaerner North American Construction, Inc. when the U.S. onshore business of Kvaerner ASA was acquired by Matrix Service Company in 2013. In connection with the acquisition, Matrix Service Company continued the employment of all employees of the acquired business.
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Mr. Miller's son is four levels removed from the Matrix Service Company CEO in the internal organization hierarchy of Matrix Service Company.
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Mr. Miller’s son does not serve in a policy-making role and is not in charge of a principal business unit, division or function (such as sales, administration or finance).
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Matrix NAC maintains its own separate executive officer team and human resources department.
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The compensation and terms of employment of Mr. Miller's son are not established or approved by the Matrix Service Company Board of Directors or Compensation Committee and are instead approved by his immediate supervisor on a basis consistent with the Company's human resources policies for comparable positions within the organization.
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Director
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Fiscal 2020 Committee Service
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Martha Z. Carnes, Chairman
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Served all of fiscal 2020
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John D. Chandler, Member
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Served all of fiscal 2020
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John W. Gibson, Member
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Served all of fiscal 2020
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Liane K. Hinrichs, Member
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Served all of fiscal 2020
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James H. Miller, Member
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Served all of fiscal 2020
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Carlin G. Conner, Member
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None - Appointed in the first quarter of fiscal 2021
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Director
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Fiscal 2020 Committee Service
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John W. Gibson, Chairman
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Served all of fiscal 2020
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Martha Z. Carnes, Member
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Served all of fiscal 2020
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John D. Chandler, Member
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Served all of fiscal 2020
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Liane K. Hinrichs, Member
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Served all of fiscal 2020
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James H. Miller, Member
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Served all of fiscal 2020
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Carlin G. Conner, Member
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None - Appointed in the first quarter of fiscal 2021
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Director
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Fiscal 2020 Committee Service
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Liane K. Hinrichs, Chairman
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Served all of fiscal 2020
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Martha Z. Carnes, Member
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Served all of fiscal 2020
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John D. Chandler, Member
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Served all of fiscal 2020
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John W. Gibson, Member
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Served all of fiscal 2020
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James H. Miller, Member
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Served all of fiscal 2020
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Carlin G. Conner, Member
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None - Appointed in the first quarter of fiscal 2021
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•
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is not and will not become a party to any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Company, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Company or any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director, with such person’s fiduciary duties under applicable law;
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is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Company;
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would be in compliance, if elected as a director, and will comply with, applicable law and all applicable publicly disclosed corporate governance, conflict of interest, corporate opportunities, confidentiality and stock ownership and trading policies and guidelines of the Company;
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will tender, promptly following such person’s election or re-election, an irrevocable resignation effective upon such person’s failure to receive the required vote for re-election at the next meeting at which such person would face re-election in accordance with the Board's policies or guidelines on director elections; and
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intends to serve a full term if elected as a director of the Company.
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the name and address of such stockholder, as they appear on the Company’s books, and of such beneficial owner;
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the class and number of shares of capital stock of the Company that are owned beneficially and held of record by such stockholder and such beneficial owner;
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the investment strategy or objective, if any, of such stockholder and its associated person who is not an individual and a copy of the prospectus, offering memorandum or similar document, if any, provided to investors or potential investors in such stockholder and each such associated person;
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the disclosure of any short positions or other derivative positions relating to the Company’s shares of such stockholder and such beneficial owner, such information to be updated to reflect any material change in such positions through the time of the annual meeting;
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a description of any proxy, contract, arrangement, understanding or relationship pursuant to which such stockholder or such beneficial owner has a right to vote any shares of any security of the Company;
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a representation that such stockholder is a holder of record of the Company’s stock entitled to vote at such meeting, will continue to be so through the date of the meeting and intends to appear in person or by proxy at the meeting to bring such nomination or other business before the meeting;
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•
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a representation as to whether such stockholder or beneficial owner intends or is part of a group that intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the voting power of the Company’s outstanding stock required to approve or adopt the proposal or to elect each such nominee;
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the class and number of any security of any entity that was publicly disclosed as a peer by the Company; and
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a description of any agreement, arrangement or understanding with respect to the nomination or other business between or among such stockholder, beneficial owner or any other person.
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(1)
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shares owned separately by the director or owned either jointly with, or separately by, immediate family members residing in the same household;
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(2)
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shares held in trust for the benefit of the director or his or her immediate family members;
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(3)
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shares purchased in the open market;
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(4)
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shares purchased through the Company’s Employee Stock Purchase Plan;
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(5)
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vested and unvested time-based restricted stock or restricted stock units (“RSUs”);
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(6)
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unvested performance units, or performance-based restricted stock or restricted stock units but only to the extent that the Company recognizes compensation expense with respect to such performance units, restricted stock or restricted stock units; and
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(7)
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in-the-money vested unexercised stock options.
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•
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The value of the cash retainer remained at $85,000 for each non-employee director.
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The annual equity grant would remain in the form of RSUs, the value of the grant would remain at $95,000 and the vesting period of the grant would remain unchanged at one year.
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The additional cash retainers would remain at the following amounts:
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Additional Cash Retainer
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Amount ($)
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Chairman of the Board
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75,000
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Audit Committee Chairman
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15,000
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Compensation Committee Chairman
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10,000
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Nominating and Corporate Governance Committee Chairman
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7,500
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Name(1)
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Fees
Earned
or Paid
in Cash
($)(2)
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Stock
Awards
($)(3)
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Stock
Option
Awards ($)(4)
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Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(5)
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All Other
Compensation
($)
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Total
($)
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Jim W. Mogg
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160,000(6)
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102,309
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—
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23,789
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—
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286,098
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Martha Z. Carnes
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100,000(7)
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102,309
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—
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—
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—
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202,309
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John D. Chandler
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85,000(8)
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102,309
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—
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—
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—
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187,309
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John W. Gibson
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95,000(9)
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102,309
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—
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9,590
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—
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206,899
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Liane K. Hinrichs
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92,500(10)
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102,309
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—
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—
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—
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194,809
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James H. Miller
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85,000(8)
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102,309
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—
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19,973
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—
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207,282
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Carlin G. Conner
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—(11)
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—
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—
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—
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—
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—
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(1)
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John R. Hewitt is not included in this table because he is a current employee and thus received no compensation for his service as a director. The compensation received by Mr. Hewitt as an employee is shown in the Summary Compensation Table for our Named Executive Officers under the caption “Executive Officer Compensation”.
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(2)
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Includes retainer fees earned in fiscal 2020 but paid subsequent to the completion of the fiscal year and fees earned in fiscal 2020 but deferred under the Deferred Fee Plan.
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(3)
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The amounts shown represent the grant date fair value for awards granted during fiscal 2020 determined in accordance with the applicable accounting guidance for equity-based awards. For further information on the valuation of these awards, see Notes 1 and 10 to the Consolidated Financial Statements included in our fiscal 2020 Annual Report on Form 10-K. The number of RSUs awarded in fiscal 2020 was determined by dividing the target value of $95,000 by the average share price over the 20-day period ending five days prior to the grant date multiplied by the closing share price on the grant date. For services provided as a member of the Board in fiscal 2020, Messrs. Mogg, Miller, Gibson and Chandler and Mmes. Carnes and Hinrichs each received an award of 5,290 RSUs with a grant date fair value of $102,309. As of June 30, 2020, Messrs. Mogg, Miller, Gibson and Chandler and Mmes. Carnes and Hinrichs each held 5,290 unvested RSUs.
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(4)
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No stock option awards were granted to non-employee directors in fiscal 2020 and no options were outstanding at June 30, 2020.
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(5)
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A non-employee director may defer all or part of director fees earned into the Deferred Fee Plan and earn interest on any deferred fees. The amounts shown represent interest earned under the plan in excess of a market rate. For fiscal 2020, the market rate for the deferrals was 0.924% as compared to the actual average rate earned of 6.25% for the first six months and 6.0% for the last six months.
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(6)
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Mr. Mogg's fees represent his annual retainer of $85,000, plus the additional retainer of $75,000 for his service as Chairman of the Board. Mr. Mogg deferred $85,000 of these fees.
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(7)
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Ms. Carnes' fees represent her annual retainer of $85,000, plus the additional retainer of $15,000 for her service as Chairman of the Audit Committee. Ms. Carnes' fees were paid in cash.
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(8)
|
Fees for Messrs. Chandler and Miller represent their annual retainers of $85,000. All of Mr. Chandler's fees were paid in cash, and all of Mr. Miller's fees were deferred.
|
(9)
|
Mr. Gibson's fees represent his annual retainer of $85,000, plus the additional retainer of $10,000 for his service as Chairman of the Compensation Committee. Mr. Gibson deferred all of these fees.
|
(10)
|
Ms. Hinrichs' fees represent her annual retainer of $85,000, plus the additional retainer of $7,500 for her service as Chairman of the Nominating and Corporate Governance Committee. Ms. Hinrichs' fees were paid in cash.
|
(11)
|
Mr. Conner was appointed in August 2020 and as such did not receive any fiscal 2020 compensation.
|
•
|
reviewed and discussed with the Company’s internal auditors and independent registered public accounting firm, with and without management present, their evaluations of the Company’s internal accounting controls and the overall quality of the Company’s financial reporting;
|
•
|
reviewed and discussed with management and the independent registered public accounting firm the Company’s audited financial statements as of and for the year ended June 30, 2020;
|
•
|
discussed with the independent registered public accounting firm the matters required to be discussed by AS 1301: Communications with Audit Committees of the Public Company Accounting Oversight Board; and
|
•
|
received and reviewed the written disclosures and the letter from the independent registered public accounting firm required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence.
|
|
| |
Deloitte & Touche LLP
|
|||
|
| |
Fiscal 2020
|
| |
Fiscal 2019
|
Audit Services
|
| |
$1,196,300
|
| |
$1,465,345
|
Other Services
|
| |
—
|
| |
10,000
|
Total
|
| |
$1,196,300
|
| |
$1,475,345
|
•
|
On September 3, 2019, the Company appointed Bradley J. Rinehart to the position of President - Matrix Service Inc., the Company's largest operating subsidiary. Mr. Rinehart had previously been President - Matrix PDM Engineering.
|
•
|
On September 3, 2019, the Company appointed Glyn A. Rodgers to the position of President - Matrix PDM Engineering. Mr. Rodgers had previously been Vice President, Strategic Development - Matrix Service Inc.
|
•
|
On September 3, 2019, the Company appointed Alan R. Updyke to the interim position of President of Operations - Matrix Service Company. Mr. Updyke transitioned into the role of Chief Operating Officer upon the retirement of the prior Chief Operating Officer, Joseph F. Montalbano, who retired March 31, 2020. Mr. Updyke had previously been President - Matrix Service Inc.
|
•
|
Base Salaries: Consistent with normal practice, the Committee reviewed Named Executive Officer compensation in August 2019. In determining base salary adjustments for fiscal 2020, the Committee considered many factors, including market data provided by Meridian as well as the Company's financial and safety performance in fiscal 2019. Based on these factors, the Committee decided not to increase the base salaries of the senior executives, except for those who received promotions as of September 3, 2019.
|
•
|
Fiscal 2020 Short-Term Incentive Compensation Targets: No changes were made to the target bonus opportunity for the Named Executive Officers, with the exception of Mr. Rodgers, President - Matrix PDM Engineering, whose target increased from 40% to 75% of his base
|
•
|
Fiscal 2020 Short-Term Incentive Compensation Payout: Consolidated post-incentive operating income did not exceed 50% of the budgeted amount. Therefore, no financial incentive was earned, and no payout was made to Messrs. Hewitt, Cavanah and Turner in respect of the financial goals. However, despite the extremely challenging operating environment related to COVID-19 in the final months of fiscal 2020, the Committee recognized that the post-incentive operating income of the largest operating subsidiary, Matrix Service Inc., and the engineering operating subsidiary, Matrix PDM Engineering, substantially exceeded the 50% of budgeted operating income threshold. Accordingly, the Committee approved discretionary short-term incentives for Messrs. Updyke, Rinehart and Rodgers. The Company's safety performance was in excess of threshold amounts so the Committee approved safety payouts for all of the current NEOs, with the exception of Mr. Turner due to the performance of his operating subsidiary, Matrix NAC.
|
•
|
Fiscal 2018 Long-Term Incentive Performance Share Units (“PSUs”) Award Payout: The vesting of this award was based on the Company's relative Total Shareholder Return for fiscal 2018 through the end of fiscal 2020 in comparison to a group of peer companies. The Company's actual performance was in the 54th percentile, which was slightly above target performance; therefore, these PSUs vested at 106.7% of target on August 29, 2020.
|
•
|
Fiscal 2019 Long-Term Incentive Cash-Based Award Payout: The cash-based portion of the fiscal 2019 long-term incentive award was based on the average Return on Invested Capital for fiscal 2019 and 2020. The fiscal 2019 Return on Invested Capital was 10.6%, and the fiscal 2020 Return on Invested Capital was (13.1%). This financial performance resulted in an average Return on Invested Capital of (1.2%), which is below the threshold level; therefore, no payout was earned or paid.
|
•
|
Fiscal 2020 Long-Term Incentive Awards: No changes were made to the design of the fiscal 2020 long-term incentive award for the Named Executive Officers. The actual long-term incentive awards for fiscal 2020 were comprised of the following:
|
•
|
One-third of the award consisted of service-based RSUs. Restrictions on the RSUs lapse in four equal annual installments, subject to continued employment with us. In addition, the award agreements contain a provision that accelerates vesting for retirement eligible participants and participants that become retirement eligible during the vesting period. However, the award is forfeited if a participant retires before the first anniversary of the award. Settlement still occurs on the normal vesting schedules;
|
•
|
One-third of the award consisted of PSUs. Award recipients may receive anywhere from zero to two shares of our common stock for each PSU on the third anniversary of the date of the award depending on the Company’s relative Total Shareholder Return in comparison to the Total Shareholder Return of a peer group of companies over a performance period consisting of fiscal years 2020, 2021 and 2022; and
|
•
|
One-third of the award consisted of a cash-based long-term incentive award. The payout for the cash-based LTI award will range from zero to 150% of the target payout and is based on the Company’s average Return on Invested Capital for fiscal years 2020 and 2021.
|
•
|
Fiscal 2021 Long-Term Incentive Double-Trigger Design Change: In August 2020, the Committee approved a design change for our equity-based long-term incentive awards. Beginning with the fiscal 2021 grant, the single trigger feature in which the vesting of equity awards will automatically accelerate upon a change of control of the Company has been modified. Under the new form of award agreement, accelerated vesting of awards will occur only upon a double-trigger consisting of either (i) a change of control and one of several other occurrences, including the termination of a Named Executive Officer not for cause or if the Named Executive Officer suffers an adverse event in connection with or within two years of the change of control or (ii) a change of control in which the successor company elects not to assume or replace the award with an award of equal value.
|
•
|
Competitiveness – Our compensation programs are designed to ensure we can attract, motivate and retain the talent needed to lead and grow the business. Targets for base salary, short-term and long-term compensation are generally aligned with median (50th percentile) market levels.
|
•
|
Support Business Objectives, Strategy and Values – Ultimately our compensation program is designed to drive the achievement of short and long-term business objectives, support the creation of long-term value for our stockholders, and promote and encourage behavior consistent with our core values and guiding principles.
|
•
|
Pay for Performance – While we establish target pay levels at or near the median or 50th percentile market levels for target level performance, our plans provide the opportunity for significantly greater rewards for outstanding performance. At the same time, performance that does not meet expectations is not rewarded.
|
•
|
Individual Performance – In addition to company-wide, operating subsidiary and business unit measures, our programs emphasize individual performance and the achievement of personal objectives.
|
•
|
Integrated Approach – We look at compensation in total and strive to achieve an appropriate balance of short and long-term compensation components, with the ultimate goal of aligning executive compensation with the creation of long-term stockholder value.
|
•
|
Base Salary;
|
•
|
Annual/Short-Term Cash Incentive Compensation;
|
•
|
Long-Term Incentive Compensation;
|
•
|
Other Benefits; and
|
•
|
Change of Control/Severance Agreements.
|
Aegion Corporation
|
| |
KBR Inc.
|
Argan Inc.
|
| |
MasTec Inc.
|
Babcock & Wilcox Enterprises Inc.
|
| |
Mistras Group Inc.
|
Dycom Industries Inc.
|
| |
MYR Group Inc.
|
EMCOR Group Inc.
|
| |
Orion Group Holdings Inc.
|
Granite Construction Inc.
|
| |
Primoris Services Corporation
|
Great Lakes Dredge and Dock Corporation
|
| |
Sterling Construction Company Inc.
|
IES Holdings Inc.
|
| |
Team Inc.
|
•
|
John R. Hewitt - Chief Executive Officer: $800,000
|
•
|
Joseph F. Montalbano - Chief Operating Officer: $520,931
|
•
|
Kevin S. Cavanah - Chief Financial Officer: $475,000
|
•
|
Jason W. Turner - President, Matrix North American Construction: $415,685
|
•
|
Alan R. Updyke - Chief Operating Officer: With the promotion from President, Matrix Service Inc. to President, Operations and the eventual transition to Chief Operating Officer following Mr. Montalbano's announced retirement, Mr. Hewitt recommended a base salary increase of 20.8%, or $82,520. The Committee approved Mr. Hewitt's recommendation, and Mr. Updyke's base salary was increased from $397,480 to $480,000 effective September 3, 2019.
|
•
|
Bradley J. Rinehart - President, Matrix Service Inc.: With the promotion from President, Matrix PDM Engineering to President, Matrix Service Inc., Mr. Hewitt recommended a base salary increase of 7.8%, or $30,113. The Committee approved Mr. Hewitt's recommendation, and Mr. Rinehart's base salary was increased from $385,572 to $415,685 effective September 3, 2019.
|
•
|
Glyn A. Rodgers - President, Matrix PDM Engineering: With the promotion from Vice President, Strategic Development for Matrix Service Inc. to President, Matrix PDM Engineering, Mr. Hewitt recommended a base salary increase of 30.0%, or $86,600. The Committee approved Mr. Hewitt's recommendation, and Mr. Rodgers' base salary was increased from $288,400 to $375,000 effective September 3, 2019.
|
•
|
support and drive performance toward achieving our strategic objectives;
|
•
|
emphasize overall company and business unit performance in the structuring of reward opportunities;
|
•
|
motivate and reward superior performance; and
|
•
|
provide incentive compensation opportunities that are competitive with the industry.
|
•
|
If 50% of budgeted fiscal 2020 post-incentive operating income is not achieved, no incentives may be paid relating to financial metrics under the plan. Payouts relating to safety metrics may be paid regardless of financial performance.
|
•
|
Incentives would be weighted at 85% for performance against financial metrics and 15% for performance against safety metrics.
|
•
|
Financial incentives would be based on post-incentive operating income, and safety incentives would be based on Total Recordable Incident Rate, or “TRIR”, and DROPS/Hands Free Program Awareness and Training. These programs are designed to reduce safety incidents through training designed to prevent injuries from dropped objects and to enhance awareness of procedures that can lead to hand injuries.
|
•
|
Payout of short-term incentives attributable to post-incentive operating income and safety for Messrs. Hewitt, Cavanah and Montalbano would be based on the Company's consolidated performance. Subsequent to the adoption of the plan, as a condition to the payment of Mr. Montalbano's severance benefits in connection with his retirement on March 31, 2020, any fiscal 2020 short-term incentive opportunity was forfeited.
|
•
|
Payout of short-term incentives attributable to post-incentive operating income and safety for Mr. Updyke would be based on the greater of the bonus that he would be entitled to receive based on consolidated performance or the performance of his former operating subsidiary, Matrix Service Inc. Beginning in fiscal 2021, Mr. Updyke's short-term incentive payout will be based solely on the Company's consolidated performance.
|
•
|
Payout of short-term incentives for Messrs. Rinehart and Turner would be based on the performance of their operating subsidiaries with respect to post-incentive operating income and safety.
|
•
|
Payout of short-term incentives for Mr. Rodgers would be based on the performance of the operating subsidiary, Matrix PDM Engineering, with respect to post-incentive operating income and based on the Company's consolidated performance with respect to safety since the risk of safety incidents involving engineering personnel is low.
|
•
|
Once the Committee approved the incentive metrics, Threshold, Target and Maximum levels of performance were defined.
|
•
|
Target short-term incentive payouts for fiscal 2020 were established for each of the Named Executive Officers. Mr. Hewitt's target remained at 100% of his base salary, Messrs. Updyke's, Cavanah's, Rinehart's and Turner's targets remained at 75% of their respective base salaries, and Mr. Rodgers' target payout increased from 40% to 75% of his respective base salary.
|
•
|
Safety performance targets, which represented 15% of the total incentive opportunity.
|
|
| |
Threshold
|
| |
Target
|
| |
Maximum
|
TRIR
|
| |
0.60
|
| |
0.50
|
| |
0.40
|
•
|
The financial incentive tied to post-incentive operating income represented 85% of the total bonus opportunity for the Named Executive Officers. The specific pre-tax operating income criteria and actual results were as follows:
|
|
| |
MSI
|
| |
PDM
|
| |
Matrix NAC
|
| |
Consolidated
|
|
| |
(in millions)
|
|||||||||
Target post-incentive operating income
|
| |
$28.0
|
| |
$2.8
|
| |
$18.5
|
| |
$45.3
|
Actual post-incentive operating income
|
| |
$24.8
|
| |
$4.3
|
| |
$(65.8)
|
| |
$(36.6)
|
Restructuring & Impairment charges(a)(b)
|
| |
$2.1
|
| |
$2.1
|
| |
$45.1
|
| |
$52.5
|
Adjusted post-incentive operating income
|
| |
$26.9
|
| |
$6.4
|
| |
$(20.7)
|
| |
$15.9
|
(a)
|
The restructuring charges totaling $14.0 million were the result of the Company's decision to exit the domestic iron and steel business and lower revenues caused by the COVID-19 pandemic and uncertainties in our markets. The charges primarily related to severance and facility costs associated with the exit of operations in under-performing portions of the business.
|
(b)
|
The impairment charges totaling $38.5 million related to our decision to exit the domestic iron and steel business and the under-performance of our power delivery business within the Electrical Infrastructure segment and relate solely to Matrix NAC.
|
Name
|
| |
Safety Incentive
($)
|
| |
Discretionary
Financial Incentive
($)
|
| |
Total Incentive
($)
|
John R. Hewitt
|
| |
100,000
|
| |
—
|
| |
100,000
|
Alan R. Updyke
|
| |
50,400
|
| |
128,838
|
| |
179,238
|
Kevin S. Cavanah
|
| |
44,531
|
| |
—
|
| |
44,531
|
Bradley J. Rinehart
|
| |
42,397
|
| |
106,616
|
| |
149,013
|
Glyn A. Rodgers
|
| |
31,989
|
| |
73,194
|
| |
105,183
|
Jason W. Turner
|
| |
—
|
| |
—
|
| |
—
|
•
|
One third of the grant consisted of service-based RSUs. Vesting will continue to occur evenly over a four-year period beginning on the first anniversary of the grant date. In addition, the award agreements contain a provision that accelerates vesting for retirement eligible participants and participants that become retirement eligible during the vesting period. However, the award is forfeited if a participant retires before the first anniversary of the award. Settlement still occurs on the normal vesting schedules.
|
•
|
One third of the grant is in the form of PSUs. The PSUs cliff vest on the third anniversary of the grant. The shares of Company common stock received can vary from zero to two for each performance unit based on the relative Total Shareholder Return (“TSR”) of the Company's common stock as compared to the TSR of a group of peer companies over the performance period. The potential award levels are as follows:
|
Shareholder Return Goal
|
| |
Total Shareholder Return
|
| |
Shares of Common Stock
for Each Performance Unit
|
Threshold
|
| |
25th percentile of Peer Group
|
| |
0.25
|
Above Threshold
|
| |
35th percentile of Peer Group
|
| |
0.50
|
Target
|
| |
50th percentile of Peer Group
|
| |
1.00
|
Above Target
|
| |
75th percentile of Peer Group
|
| |
1.50
|
Maximum
|
| |
90th percentile of Peer Group
|
| |
2.00
|
Aegion Corporation
|
| |
MasTec Inc.
|
Argan Inc.
|
| |
McDermott International Inc.
|
Babcock and Wilcox Enterprises Inc.
|
| |
Mistras Group Inc.
|
Dycom Industries Inc.
|
| |
MYR Group Inc.
|
EMCOR Group Inc.
|
| |
Orion Group Holdings Inc.
|
Granite Construction Inc.
|
| |
Primoris Services Corporation
|
Great Lakes Dredge and Dock Corporation
|
| |
Quanta Services Inc.
|
IES Holdings Inc.
|
| |
Sterling Construction Company Inc.
|
Jacobs Engineering Group Inc.
|
| |
Team Inc.
|
KBR Inc.
|
| |
|
•
|
The remaining one-third of the grant was a performance-based award which is payable in cash. The award cliff vests after two years and is based on the Average Return on Invested Capital (“AROIC”) achieved by the Company over fiscal years 2020 and 2021. The threshold AROIC goal is 6%, the target AROIC goal is 9% and the maximum AROIC goal is 12%. At these performance levels, the payouts would be 50%, 100% and 150% of the target award.
|
•
|
We sponsor the Matrix Service Company 401(k) Savings Plan, which allows executive officers and other employees to contribute up to 100% of their salary (up to the annual IRS maximum). The Company’s safe harbor matching contribution is a 100% matching contribution on salary deferrals up to the first 3% of compensation and 50% on the next 2% of compensation deferred.
|
•
|
In addition to the group term life insurance policy offered to all eligible employees, we provide additional life insurance to our executive officers, at no cost to the officer. Specifically, the Company provides a term life insurance policy equal to two times base salary up to a maximum of $1.5 million. For the CEO, additional corporate term life insurance policies of $500,000 with the Company as the beneficiary and $500,000 with a designee of the CEO as the beneficiary are provided.
|
•
|
The Company provides long-term disability to all administrative employees. Under this plan, the employee may receive disability payments of up to 60% of their base salary subject to a maximum of $12,000 per month. The Company also provides a supplemental executive long-term disability plan to the Named Executive Officers. Under the plan, the Named Executive Officers may receive disability payments of up to 60% of the sum of their base salary and the average of their prior two years short-term incentive cash bonuses. The supplemental plan also increases the benefit up to a maximum of $20,000 per month.
|
•
|
To proactively support the health and wellness of our key leaders, the Compensation Committee approved the addition of Executive Physicals as a perquisite beginning in August 2019. The Cooper Clinic in Dallas, Texas is the provider for these Executive Health exams, which are offered on an annual basis for the NEOs and every other year for all other Officers. In the third quarter of fiscal 2020, the Company elected to suspend the benefit until the business environment improves.
|
•
|
any bonus, equity award, equity equivalent award or other incentive compensation has been awarded or received by an executive officer, and such compensation was based on the achievement of any financial results that were subsequently the subject of any material restatement of our financial statements filed with the SEC;
|
•
|
the executive officer engaged in grossly negligent or intentional misconduct that caused or substantially caused the material restatement; and
|
•
|
the amount of the compensation would have been less had the financial statements been correct,
|
•
|
Components of Compensation: We use a mix of compensation elements including base salary, short-term incentives and long-term incentives to avoid placing too much emphasis on any one component of compensation.
|
•
|
Short-term Incentive Compensation: Our short-term incentive compensation plan does not allow for unlimited payouts. For fiscal 2020, short-term incentive payments cannot exceed 200% of target levels.
|
•
|
Long-term Incentive Awards: Our long-term incentive awards drive a long-term perspective and vest over a period of four years. Our performance-based long-term incentive awards are capped and cannot exceed 200% of target levels.
|
•
|
Committee Oversight: The Committee reviews and administers all awards under short- and long-term incentive plans and engages a compensation consultant on a bi-annual basis to ensure that our compensation package is consistent with that of our competitors.
|
•
|
Performance Measures: Our performance goal setting process is aligned with our business strategy and the interests of our stockholders.
|
•
|
Clawback Policy: We have the ability to recover excess incentive-based compensation awarded to any of our executive officers as a result of an accounting restatement due to material non-compliance with the reporting requirements under federal securities laws in certain circumstances.
|
•
|
Stock Ownership Guidelines: Our stock ownership guidelines require our senior management to maintain a significant portion of their personal wealth in our common stock for the duration of their employment with our Company.
|
•
|
Hedging Policy: Our hedging policy requires our senior management to retain the full risks and rewards associated with owning our common stock with respect to all of the shares they are required to retain.
|
Name and
Principal Position
|
| |
Year
|
| |
Salary
($)
|
| |
Bonus
($)(1)
|
| |
Stock
Awards
($)(2)
|
| |
Option
Awards
($)(2)
|
| |
Non-Equity
Incentive Plan
Compensation
($)(3)
|
| |
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
| |
All Other
Compensation
($)
|
| |
Total
($)
|
John R. Hewitt
Chief Executive Officer
|
| |
2020
|
| |
800,000
|
| |
—
|
| |
1,602,102
|
| |
—
|
| |
100,000
|
| |
—
|
| |
39,738(4)
|
| |
2,541,840
|
|
2019
|
| |
790,385
|
| |
—
|
| |
1,942,043
|
| |
—
|
| |
486,509
|
| |
—
|
| |
32,537
|
| |
3,251,474
|
||
|
2018
|
| |
750,000
|
| |
—
|
| |
1,595,449
|
| |
—
|
| |
—
|
| |
—
|
| |
29,536
|
| |
2,374,985
|
||
Alan R. Updyke
Chief Operating Officer
|
| |
2020
|
| |
464,131(5)
|
| |
128,838
|
| |
901,036
|
| |
—
|
| |
50,400
|
| |
—
|
| |
38,318(4)
|
| |
1,582,723
|
|
2019
|
| |
395,254
|
| |
—
|
| |
400,642
|
| |
—
|
| |
299,161
|
| |
—
|
| |
26,786
|
| |
1,121,843
|
||
Kevin S. Cavanah
Chief Financial Officer
|
| |
2020
|
| |
475,000
|
| |
—
|
| |
532,676
|
| |
—
|
| |
44,531
|
| |
—
|
| |
28,913(4)
|
| |
1,081,120
|
|
2019
|
| |
467,145
|
| |
—
|
| |
659,088
|
| |
—
|
| |
216,649
|
| |
—
|
| |
25,904
|
| |
1,368,786
|
||
|
2018
|
| |
434,148
|
| |
—
|
| |
517,177
|
| |
—
|
| |
—
|
| |
—
|
| |
23,437
|
| |
974,762
|
||
Bradley J. Rinehart
President—Matrix
Service Inc.
|
| |
2020
|
| |
409,894(5)
|
| |
106,616
|
| |
332,973
|
| |
—
|
| |
42,397
|
| |
—
|
| |
31,865(4)
|
| |
923,745
|
Glyn A. Rodgers
President—Matrix PDM
Engineering
|
| |
2020
|
| |
358,346(5)
|
| |
73,194
|
| |
300,375
|
| |
—
|
| |
31,989
|
| |
—
|
| |
32,722(4)
|
| |
796,626
|
Jason W. Turner
President—Matrix North
American Construction
|
| |
2020
|
| |
415,685
|
| |
—
|
| |
332,973
|
| |
—
|
| |
—
|
| |
—
|
| |
24,723(4)
|
| |
773,381
|
|
2019
|
| |
411,878
|
| |
—
|
| |
418,070
|
| |
—
|
| |
145,070
|
| |
—
|
| |
22,420
|
| |
997,438
|
||
|
2018
|
| |
395,890
|
| |
—
|
| |
336,876
|
| |
—
|
| |
—
|
| |
—
|
| |
21,286
|
| |
754,052
|
||
Joseph F. Montalbano
Former Chief Operating
Officer
|
| |
2020
|
| |
404,723(5)
|
| |
—
|
| |
584,186(6)
|
| |
—
|
| |
—
|
| |
—
|
| |
988,408(7)
|
| |
1,977,317
|
|
2019
|
| |
516,161
|
| |
—
|
| |
725,431
|
| |
—
|
| |
237,598
|
| |
—
|
| |
35,324
|
| |
1,514,514
|
||
|
2018
|
| |
496,125
|
| |
—
|
| |
591,028
|
| |
—
|
| |
—
|
| |
—
|
| |
30,665
|
| |
1,117,818
|
(1)
|
In recognition of Messrs. Updyke's, Rinehart's and Rodgers' significant contributions to the strong financial performance of their respective operating subsidiaries in an extremely challenging operating environment, the Committee approved discretionary awards to the three NEOs under the short-term incentive plan. Further discussion is included under the caption “Annual/Short-Term Incentive Compensation” in the Compensation Discussion and Analysis.
|
(2)
|
The amounts shown represent the grant date fair value for awards of RSUs and performance units granted during the period determined in accordance with FASB Accounting Standards Codification ASC Topic 718 – Compensation – Stock Compensation (“ASC718”). A portion of the awards that were granted in fiscal years 2018, 2019, and 2020 are subject to certain market conditions; accordingly, the grant date fair value of these awards is based upon the probable outcome of those conditions. For further information on the assumptions used in the valuation of these awards see Note 1 and Note 10 included in the Notes to Consolidated Financial Statements included in our fiscal 2020 Annual Report on Form 10-K.
|
(3)
|
Represents amounts payable to the Named Executive Officer under the annual/short-term incentive compensation plan for the applicable fiscal year's performance and for the cash-based portion of the long-term incentive award that was earned in the applicable fiscal year. In fiscal 2020, no amounts were earned under the cash-based portion of the long-term incentive plan. Therefore, the amounts shown for fiscal 2020 solely represent non-discretionary amounts earned under the annual/short-term incentive compensation plan.
|
(4)
|
Represents amounts paid by us on behalf of the Named Executive Officer for life insurance and disability premiums, comprehensive physical examinations and matching contributions to the Named Executive Officer’s account in our qualified 401(k) plan. Life insurance and disability premiums in fiscal 2020 totaled $28,338, $20,248, $17,713, $15,351, $19,790 and
|
(5)
|
The base salaries of Messrs. Updyke, Rinehart and Rodgers for fiscal 2020 represent 10 months of their current base salaries of $480,000, $415,685 and $375,000, respectively, and two months of their prior base salaries. The base salary of Mr. Montalbano for fiscal 2020 represents his salary for time worked through his retirement date of March 31, 2020.
|
(6)
|
Mr. Montalbano received the awards indicated above. However, as a condition of Mr. Montalbano's retirement on March 31, 2020, vesting of all share-settled service-based awards with a grant date fair value of 251,138 was forfeited. Vesting of the share-settled performance-based awards will occur on a pro-rata basis.
|
(7)
|
In accordance with his Severance Agreement, Mr. Montalbano received cash severance in the amount of $620,214, representing one year of base salary and the average of his short-term incentive bonus for the three previous years. Pursuant to his Separation Agreement and in recognition of his past service to the Company, Mr. Montalbano received additional cash severance of $260,500, representing six months of base salary and reimbursement of COBRA expenses for a period of 15 months. Also included are company-paid life insurance and disability premiums totaling $20,305, matching 401(k) contributions of $7,353, consulting fees paid to Mr. Montalbano subsequent of his retirement totaling $60,000 for his services from April 2020 to June 2020, and earned, unused Paid Time Off totaling $20,036.
|
|
| |
|
| |
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
|
| |
Estimated Future Payouts
Under Equity Incentive Plan
Awards(1)
|
| |
All
Other
Stock
Awards:
Number of
shares
of Stock
or Units
(#)(2)
|
| |
All
Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
| |
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
| |
Grant
Date
Fair
Value of
Stock and
Option
Awards
($)(3)
|
||||||||||||
Name
|
| |
Grant
Date
|
| |
Threshold
($)
|
| |
Target
($)
|
| |
Maximum
($)
|
| |
Threshold
(#)
|
| |
Target
(#)
|
| |
Maximum
(#)
|
| |||||||||||
John R. Hewitt
|
| |
8/26/2019
|
| |
400,000
|
| |
800,000
|
| |
1,600,000(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
333,330
|
| |
666,660
|
| |
999,990(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
9,043
|
| |
36,173
|
| |
72,346
|
| |
36,173
|
| |
—
|
| |
—
|
| |
1,602,102
|
Alan R. Updyke
|
| |
8/26/2019
|
| |
180,000
|
| |
360,000
|
| |
720,000(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
80,000
|
| |
160,000
|
| |
240,000(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
2,170
|
| |
8,681
|
| |
17,362
|
| |
35,811(6)
|
| |
—
|
| |
—
|
| |
901,036
|
Kevin S. Cavanah
|
| |
8/26/2019
|
| |
178,126
|
| |
356,251
|
| |
712,502(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
110,832
|
| |
221,664
|
| |
332,496(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
3,007
|
| |
12,027
|
| |
24,054
|
| |
12,027
|
| |
—
|
| |
—
|
| |
532,676
|
Bradley J. Rinehart
|
| |
8/26/2019
|
| |
155,882
|
| |
311,764
|
| |
623,528(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
69,280
|
| |
138,560
|
| |
207,840(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
1,880
|
| |
7,518
|
| |
15,036
|
| |
7,518
|
| |
—
|
| |
—
|
| |
332,973
|
Glyn A. Rodgers
|
| |
8/26/2019
|
| |
140,625
|
| |
281,250
|
| |
562,500(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
62,500
|
| |
125,000
|
| |
187,500(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
1,696
|
| |
6,782
|
| |
13,564
|
| |
6,782
|
| |
—
|
| |
—
|
| |
300,375
|
Jason W. Turner
|
| |
8/26/2019
|
| |
155,882
|
| |
311,764
|
| |
623,528(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
69,280
|
| |
138,560
|
| |
207,840(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
1,880
|
| |
7,518
|
| |
15,036
|
| |
7,518
|
| |
—
|
| |
—
|
| |
332,973
|
Joseph F. Montalbano(7)
|
| |
8/26/2019
|
| |
195,349
|
| |
390,698
|
| |
781,396(4)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
121,550
|
| |
243,099
|
| |
364,649(5)
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
| |
8/26/2019
|
| |
—
|
| |
—
|
| |
—
|
| |
3,298
|
| |
13,190
|
| |
26,380
|
| |
13,190
|
| |
—
|
| |
—
|
| |
584,186
|
(1)
|
Represents the number of shares which may be issued pursuant to fiscal 2020 performance unit awards to the Named Executive Officers that cliff vest three years after the grant date. The number of shares of common stock received upon vesting of the performance units will range between 0% and 200% of the number of performance units awarded as determined by the three-year Total Shareholder Return on the Company's common stock when compared to the Total Shareholder Return on the common stock of a group of peer companies selected by the Compensation Committee of the Board. The fiscal 2020 performance unit awards are described above under the caption “Compensation Discussion and Analysis”.
|
(2)
|
Amounts shown represent service-based RSUs granted to the Named Executive Officers in fiscal 2020. The awards vest in four equal annual installments beginning one year after the grant date subject to the Named Executive Officer's continued employment with the Company.
|
(3)
|
Amounts shown are calculated based upon the grant date fair value calculated in accordance with ASC718. The grant date fair value of the service-based RSUs is calculated by multiplying the number of RSUs awarded by the closing stock price on the date of grant. The grant date fair value of the performance units is calculated using a Monte Carlo model. The model estimated the fair value of the award based on approximately 100,000 simulations of the future prices of the Company's common stock compared to the future prices of its peer companies based on historical volatilities. The model also took into account the expected dividends over the performance period for the peer companies which pay cash dividends. See Notes 1 and 10 of the Notes to the Consolidated Financial Statements included in the Company’s fiscal 2020 Annual Report on Form 10-K for a full discussion of the Company’s stock-based compensation accounting policies. The specific grant date fair values are as follows:
|
|
| |
Service-Based Awards
|
| |
Performance-Based Awards
|
| ||||||||||||||
Name
|
| |
Time-Based
Awards (#)
|
| |
Value per
Share ($)
|
| |
Grant Date Fair
Value ($)
|
| |
Shares at
Target (#)
|
| |
Value per
Share ($)
|
| |
Grant Date Fair
Value ($)
|
| |
Total Grant Date
Fair Value ($)
|
John R. Hewitt
|
| |
36,173
|
| |
19.04
|
| |
688,734
|
| |
36,173
|
| |
25.25
|
| |
913,368
|
| |
1,602,102
|
Alan R. Updyke
|
| |
35,811(6)
|
| |
19.04
|
| |
681,841
|
| |
8,681
|
| |
25.25
|
| |
219,195
|
| |
901,036
|
Kevin S. Cavanah
|
| |
12,027
|
| |
19.04
|
| |
228,994
|
| |
12,027
|
| |
25.25
|
| |
303,682
|
| |
532,676
|
Bradley J. Rinehart
|
| |
7,518
|
| |
19.04
|
| |
143,143
|
| |
7,518
|
| |
25.25
|
| |
189,830
|
| |
332,973
|
Glyn A. Rodgers
|
| |
6,782
|
| |
19.04
|
| |
129,129
|
| |
6,782
|
| |
25.25
|
| |
171,246
|
| |
300,375
|
Jason W. Turner
|
| |
7,518
|
| |
19.04
|
| |
143,143
|
| |
7,518
|
| |
25.25
|
| |
189,830
|
| |
332,973
|
Joseph F. Montalbano(7)
|
| |
13,190
|
| |
19.04
|
| |
251,138
|
| |
13,190
|
| |
25.25
|
| |
333,048
|
| |
584,186
|
(4)
|
The amounts shown are the potential cash incentive compensation awards for each Named Executive Officer under our annual/short-term incentive compensation plan described above under the caption “Compensation Discussion and Analysis”. Actual payouts to the Named Executive Officers for the applicable fiscal year are reported in the Summary Compensation Table as a portion of the amount shown under the column “Non-Equity Incentive Plan Compensation.”
|
(5)
|
Amounts shown represent the potential cash awards for each Named Executive Officer under the cash portion of our fiscal 2020 long-term incentive award described above under the caption “Compensation Discussion and Analysis”. The actual cash payout can range from 0% to 150% of the target payout and will be based on average Return on Invested Capital for fiscal 2020 and fiscal 2021. Actual payouts for the applicable fiscal year are reported in the Summary Compensation Table as a portion of the amount shown under the column “Non-Equity Incentive Plan Compensation.”
|
(6)
|
In addition to his annual award of 8,681 service-based RSUs, upon Mr. Updyke's appointment as President of Operations, he received an additional award of 27,130 service-based RSUs all of which vest in four equal annual installments beginning one year after the grant date, subject to Mr. Updyke's continued employment with the Company.
|
(7)
|
Mr. Montalbano received the awards indicated above. However, as a condition to the payment of Mr. Montalbano's severance benefits in connection with his retirement on March 31, 2020, any fiscal 2020 short-term incentive opportunity and vesting of all fiscal 2020 service-based awards was forfeited. Vesting of the cash-settled long term incentive awards and the share-settled performance-based awards will occur on a pro-rata basis based on the number of months served in the performance period.
|
|
| |
Option Awards
|
| |
Stock Awards
|
||||||||||||||||||
Name
|
| |
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
| |
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
|
| |
Option
Exercise
Price
($)
|
| |
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
($)(1)
|
| |
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)
|
| |
Equity
Incentive
Plan
Awards:
Market
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
($)(1)
|
John R. Hewitt
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
98,776
|
| |
960,103
|
| |
130,181
|
| |
1,265,359
|
Alan R. Updyke
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
47,736
|
| |
463,994
|
| |
21,420
|
| |
208,202
|
Kevin S. Cavanah
|
| |
16,850
|
| |
—
|
| |
10.19
|
| |
11/17/2021
|
| |
32,529
|
| |
316,182
|
| |
42,780
|
| |
415,822
|
Bradley J. Rinehart
|
| |
10,600
|
| |
—
|
| |
10.19
|
| |
11/17/2021
|
| |
20,757
|
| |
201,758
|
| |
25,828
|
| |
251,048
|
Glyn A. Rodgers
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
9,489
|
| |
92,233
|
| |
10,392
|
| |
101,010
|
Jason W. Turner
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
20,652
|
| |
200,737
|
| |
27,257
|
| |
264,938
|
Joseph F. Montalbano
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
(1)
|
Based on the closing price of our common stock on June 30, 2020 of $9.72.
|
|
| |
Number of Shares
or Units of Stock That Have Not
Vested
|
| |
Equity Incentive Plan
Awards: Number of Unearned
Shares, Units or Other Rights
That Have Not Vested
|
||||||
Name
|
| |
Shares
|
| |
Vest Date
|
| |
Shares
|
| |
Vest Date
|
John R. Hewitt
|
| |
9,158
|
| |
8/23/2020
|
| |
60,625(1)
|
| |
8/29/2020
|
|
| |
9,044
|
| |
8/26/2020
|
| |
33,383(1)
|
| |
8/27/2021
|
|
| |
8,346
|
| |
8/27/2020
|
| |
36,173(1)
|
| |
8/26/2022
|
|
| |
14,204
|
| |
8/29/2020
|
| |
|
| |
|
|
| |
9,043
|
| |
8/26/2021
|
| |
|
| |
|
|
| |
8,346
|
| |
8/27/2021
|
| |
|
| |
|
|
| |
14,204
|
| |
8/29/2021
|
| |
|
| |
|
|
| |
9,043
|
| |
8/26/2022
|
| |
|
| |
|
|
| |
8,345
|
| |
8/27/2022
|
| |
|
| |
|
|
| |
9,043
|
| |
8/26/2023
|
| |
|
| |
|
Alan R. Updyke
|
| |
1,229
|
| |
8/23/2020
|
| |
6,104(1)
|
| |
8/29/2020
|
|
| |
2,171
|
| |
8/26/2020
|
| |
6,635(1)
|
| |
8/27/2021
|
|
| |
6,783
|
| |
8/26/2020
|
| |
8,681(1)
|
| |
8/26/2022
|
|
| |
1,659
|
| |
8/27/2020
|
| |
|
| |
|
|
| |
2,860
|
| |
8/29/2020
|
| |
|
| |
|
|
| |
2,170
|
| |
8/26/2021
|
| |
|
| |
|
|
| |
6,783
|
| |
8/26/2021
|
| |
|
| |
|
|
| |
1,659
|
| |
8/27/2021
|
| |
|
| |
|
|
| |
2,860
|
| |
8/29/2021
|
| |
|
| |
|
|
| |
2,170
|
| |
8/26/2022
|
| |
|
| |
|
|
| |
6,782
|
| |
8/26/2022
|
| |
|
| |
|
|
| |
1,658
|
| |
8/27/2022
|
| |
|
| |
|
|
| |
2,170
|
| |
8/26/2023
|
| |
|
| |
|
|
| |
6,782
|
| |
8/26/2023
|
| |
|
| |
|
Kevin S. Cavanah
|
| |
2,969
|
| |
8/23/2020
|
| |
19,653(1)
|
| |
8/29/2020
|
|
| |
3,007
|
| |
8/26/2020
|
| |
11,100(1)
|
| |
8/27/2021
|
|
| |
2,775
|
| |
8/27/2020
|
| |
12,027(1)
|
| |
8/26/2022
|
|
| |
4,604
|
| |
8/29/2020
|
| |
|
| |
|
|
| |
3,007
|
| |
8/26/2021
|
| |
|
| |
|
|
| |
2,775
|
| |
8/27/2021
|
| |
|
| |
|
|
| |
4,604
|
| |
8/29/2021
|
| |
|
| |
|
|
| |
3,007
|
| |
8/26/2022
|
| |
|
| |
|
|
| |
2,775
|
| |
8/27/2022
|
| |
|
| |
|
|
| |
3,006
|
| |
8/26/2023
|
| |
|
| |
|
Bradley J. Rinehart
|
| |
1,223
|
| |
8/23/2020
|
| |
11,874(1)
|
| |
8/29/2020
|
|
| |
1,880
|
| |
8/26/2020
|
| |
6,436(1)
|
| |
8/27/2021
|
|
| |
1,609
|
| |
8/27/2020
|
| |
7,518(1)
|
| |
8/26/2022
|
|
| |
2,782
|
| |
8/29/2020
|
| |
|
| |
|
|
| |
1,625
|
| |
12/12/2020
|
| |
|
| |
|
|
| |
1,880
|
| |
8/26/2021
|
| |
|
| |
|
|
| |
1,609
|
| |
8/27/2021
|
| |
|
| |
|
|
| |
2,782
|
| |
8/29/2021
|
| |
|
| |
|
|
| |
1,879
|
| |
8/26/2022
|
| |
|
| |
|
|
| |
1,609
|
| |
8/27/2022
|
| |
|
| |
|
|
| |
1,879
|
| |
8/26/2023
|
| |
|
| |
|
Glyn A. Rodgers
|
| |
1,696
|
| |
8/26/2020
|
| |
3,610(1)
|
| |
8/27/2021
|
|
| |
903
|
| |
8/27/2020
|
| |
6,782(1)
|
| |
8/26/2022
|
|
| |
1,696
|
| |
8/26/2021
|
| |
|
| |
|
|
| |
902
|
| |
8/27/2021
|
| |
|
| |
|
|
| |
1,695
|
| |
8/26/2022
|
| |
|
| |
|
|
| |
902
|
| |
8/27/2022
|
| |
|
| |
|
|
| |
1,695
|
| |
8/26/2023
|
| |
|
| |
|
|
| |
Number of Shares
or Units of Stock That Have Not
Vested
|
| |
Equity Incentive Plan
Awards: Number of Unearned
Shares, Units or Other Rights
That Have Not Vested
|
||||||
Name
|
| |
Shares
|
| |
Vest Date
|
| |
Shares
|
| |
Vest Date
|
Jason W. Turner
|
| |
1,933
|
| |
8/23/2020
|
| |
12,801(1)
|
| |
8/29/2020
|
|
| |
1,880
|
| |
8/26/2020
|
| |
6,938(1)
|
| |
8/27/2021
|
|
| |
1,735
|
| |
8/27/2020
|
| |
7,518(1)
|
| |
8/26/2022
|
|
| |
2,999
|
| |
8/29/2020
|
| |
|
| |
|
|
| |
1,880
|
| |
8/26/2021
|
| |
|
| |
|
|
| |
1,734
|
| |
8/27/2021
|
| |
|
| |
|
|
| |
2,999
|
| |
8/29/2021
|
| |
|
| |
|
|
| |
1,879
|
| |
8/26/2022
|
| |
|
| |
|
|
| |
1,734
|
| |
8/27/2022
|
| |
|
| |
|
|
| |
1,879
|
| |
8/26/2023
|
| |
|
| |
|
(1)
|
Represents fiscal 2018, 2019 and 2020 performance unit awards to the Named Executive Officers that cliff vest three years after the grant date. If at least threshold performance is achieved, the performance units are paid out in the form of the Company's common stock upon vesting. The number of shares of common stock received for each performance unit will vary from zero to two based on the Total Shareholder Return on the Company's common stock when compared to Total Shareholder Return on common stock of peer companies selected by the Compensation Committee of the Board. The Total Shareholder Return Goals are as follows:
|
Shareholder Return Goal
|
| |
Total Shareholder Return
|
| |
Shares of Common Stock for Each
Performance Unit
|
Threshold
|
| |
25th percentile of Peer Group
|
| |
0.25
|
Above Threshold
|
| |
35th percentile of Peer Group
|
| |
0.50
|
Target
|
| |
50th percentile of Peer Group
|
| |
1.00
|
Above Target
|
| |
75th percentile of Peer Group
|
| |
1.50
|
Maximum
|
| |
90th percentile of Peer Group
|
| |
2.00
|
|
| |
Option Awards
|
| |
Stock Awards
|
||||||
Name
|
| |
Number of Shares
Acquired on
Exercise (#)
|
| |
Value Realized
on Exercise
($)(1)
|
| |
Number of Shares
Acquired on
Vesting (#)
|
| |
Value Realized
on Vesting
($)(2)
|
John R. Hewitt
|
| |
—
|
| |
—
|
| |
78,372
|
| |
1,530,416
|
Alan R. Updyke
|
| |
—
|
| |
—
|
| |
13,050
|
| |
255,377
|
Kevin S. Cavanah
|
| |
—
|
| |
—
|
| |
25,777
|
| |
502,652
|
Bradley J. Rinehart
|
| |
—
|
| |
—
|
| |
14,859
|
| |
292,953
|
Glyn A. Rodgers
|
| |
—
|
| |
—
|
| |
1,347
|
| |
24,933
|
Jason W. Turner
|
| |
—
|
| |
—
|
| |
16,944
|
| |
330,267
|
Joseph F. Montalbano
|
| |
—
|
| |
—
|
| |
66,906
|
| |
1,010,191
|
(1)
|
The value realized is the difference between the option exercise price and the sales price of the common stock on the date of exercise, multiplied by the number of shares for which the options were exercised.
|
(2)
|
The value realized is the closing sales price of the common stock on the vesting date, multiplied by the number of shares for which the restrictions lapsed. The stock awards that vested in fiscal 2020 relate to service-based and performance-based awards and were as follows:
|
|
| |
Service-Based
Awards
|
| |
Performance-Based
Awards
|
| |
Total
|
|||||||||
Name
|
| |
Shares (#)
|
| |
Value ($)
|
| |
Shares (#)
|
| |
Value ($)
|
| |
Shares (#)
|
| |
Value ($)
|
John R. Hewitt
|
| |
45,767
|
| |
909,617
|
| |
32,605
|
| |
620,799
|
| |
78,372
|
| |
1,530,416
|
Alan R. Updyke
|
| |
8,674
|
| |
172,058
|
| |
4,376
|
| |
83,319
|
| |
13,050
|
| |
255,377
|
Kevin S. Cavanah
|
| |
15,208
|
| |
301,418
|
| |
10,569
|
| |
201,234
|
| |
25,777
|
| |
502,652
|
Bradley J. Rinehart
|
| |
10,506
|
| |
210,072
|
| |
4,353
|
| |
82,881
|
| |
14,859
|
| |
292,953
|
Glyn A. Rodgers
|
| |
1,347
|
| |
24,933
|
| |
—
|
| |
—
|
| |
1,347
|
| |
24,933
|
Jason W. Turner
|
| |
10,063
|
| |
199,253
|
| |
6,881
|
| |
131,014
|
| |
16,944
|
| |
330,267
|
Joseph F. Montalbano
|
| |
26,357
|
| |
510,606
|
| |
40,549
|
| |
499,585
|
| |
66,906
|
| |
1,010,191
|
•
|
If we experience a “Change of Control” and the executive suffers an “Adverse Event” or is terminated without “Cause,” either on the date of the Change of Control or within 24 months following the Change of Control date; or
|
•
|
The executive is terminated from employment at any time for reasons other than Cause.
|
•
|
Messrs. Hewitt and Cavanah – Paid an amount equal to two years of base salary plus the average annual bonus compensation paid to the executive in the lesser of the previous three years or the number of full fiscal years the executive has been employed in the position. All forms of long-term incentive awards vest and restrictions on such benefits lapse in accordance with the change of control vesting provisions set forth in the award agreements governing such long-term incentive awards.
|
•
|
Messrs. Updyke, Rinehart, Rodgers and Turner – Paid an amount equal to one and one-half years of base salary plus the average annual bonus compensation paid to the executive in the previous three calendar years. All long-term incentive awards vest and restrictions on such benefits lapse in accordance with the change of control vesting provisions set forth in the award agreements governing such long-term incentive awards.
|
•
|
Mr. Hewitt – Paid an amount equal to one year of base salary plus bonus compensation in an amount equal to his target short-term incentive payout, which is currently 100% of base salary.
|
•
|
Messrs. Cavanah, Updyke, Rinehart, Rodgers and Turner – Paid an amount equal to one year of base salary plus the average annual bonus compensation paid to the executive in the previous three calendar years.
|
|
| |
Change of Control with Adverse Event or
Termination for Reasons Other than Cause
|
| |
Termination by the Company at any
Time for Reasons Other than Cause
|
| |
Voluntary
Termination
|
| |
Retirement
|
| |
Death, Disability or
Change of Control
(No Adverse Event)
|
| |
|
|||||||||||||||||||||
Name
|
| |
Salary
Severance
($)(1)
|
| |
Annual/
Short-Term
Incentive
Plan
Severance
($) (2)
|
| |
Value of
Stock
Options
That
Would
Vest
($)(3)
|
| |
Value of
RSUs,
Performance
Units and
Cash-Based
LTI Awards
for
Which
Restrictions
Would
Lapse
($)(4)
|
| |
Salary
Severance
($)(5)
|
| |
Non-
Equity
Incentive
Plan
Severance
($)(6)
|
| |
Value
of
Stock
Options
That
Would
Vest
($)(3)
|
| |
Value of
RSUs and
Performance
Units for
Which
Restrictions
Would
Lapse
($)
|
| |
No
Contractual
Benefits
|
| |
Value of
RSUs,
Performance
Units and
Cash-Based
LTI Awards
for Which
Restrictions
Would Lapse(7)
|
| |
Value of
Stock
Options
That
Would
Vest
($)(3)
|
| |
Value of
RSUs,
Performance
Units and
Cash-Based
LTI Awards
for
Which
Restrictions
Would
Lapse
($)(4)
|
| |
Maximum
Potential
Payments
|
John R. Hewitt
|
| |
1,600,000
|
| |
195,503
|
| |
—
|
| |
3,521,778
|
| |
800,000
|
| |
800,000
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
3,521,778
|
| |
5,317,281
|
Alan R. Updyke
|
| |
720,000
|
| |
159,466
|
| |
—
|
| |
960,954
|
| |
480,000
|
| |
159,466
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
960,954
|
| |
1,840,420
|
Kevin S. Cavanah
|
| |
950,000
|
| |
87,060
|
| |
—
|
| |
1,163,327
|
| |
475,000
|
| |
87,060
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
1,163,327
|
| |
2,200,387
|
Bradley J. Rinehart
|
| |
623,528
|
| |
54,973
|
| |
—
|
| |
712,638
|
| |
415,685
|
| |
54,973
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
712,638
|
| |
1,391,139
|
Glyn A. Rodgers
|
| |
562,500
|
| |
73,650
|
| |
—
|
| |
390,341
|
| |
375,000
|
| |
73,650
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
390,341
|
| |
1,026,491
|
Jason W. Turner
|
| |
623,528
|
| |
48,357
|
| |
—
|
| |
734,981
|
| |
415,685
|
| |
48,357
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
| |
734,981
|
| |
1,406,866
|
(1)
|
Represents payment of one and one-half years of base salary for Messrs. Updyke, Rinehart, Rodgers and Turner or two years of base salary for Messrs. Hewitt and Cavanah for the event specified based on base salary as of June 30, 2020.
|
(2)
|
Represents payment of annual/short-term incentive severance for the event specified based on the average annual bonus compensation paid to the executive in the previous three calendar years.
|
(3)
|
Represents the value the Named Executive Officer would realize upon the vesting of all nonvested stock options for the specified event. The value is the difference between the option exercise price and the market price of the common stock as of the close of business on June 30, 2020, multiplied by the number of nonvested stock options at June 30, 2020.
|
(4)
|
Represents the value the Named Executive Officer would realize upon the lapsing of restrictions on RSUs, performance units and cash LTI awards due to the specified event. The value shown is the number of unvested RSUs and performance units, assuming a target performance level, at June 30, 2020 multiplied by the market price of common stock at the close of business on June 30, 2020 plus the value of the unvested cash LTI awards, which are also assumed to vest based at the target level of performance.
|
(5)
|
Represents payment of one year of base salary for the event specified based on base salary as of June 30, 2020.
|
(6)
|
Represents 100% of annual salary for Mr. Hewitt. For Messrs. Updyke, Cavanah, Rinehart, Rodgers and Turner, the amount represents payment of annual/short-term incentive severance for the event specified based on the average annual bonus compensation paid to the executive in the previous three calendar years.
|
(7)
|
Represents the value realized upon the lapsing of restrictions on RSUs, performance units and cash LTI awards due to retirement. At June 30, 2020, Messrs. Hewitt, Cavanah, Updyke, Rinehart, Rodgers and Turner were not eligible for retirement.
|
•
|
the median of the annual total compensation of all employees of Matrix Service Company (other than our CEO) was $82,145;
|
•
|
the annual total compensation of our CEO was $2,541,840; and
|
•
|
based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 31 to 1.
|
•
|
Competitiveness – Our compensation programs are designed to ensure we can attract, motivate and retain the talent needed to lead and grow the business. Targets for base salary, short-term and long-term compensation are generally based on median (50th percentile) market levels.
|
•
|
Support Business Objectives, Strategy and Values – Ultimately our compensation program is designed to drive the achievement of annual business objectives, support the creation of long-term value for our stockholders, and promote and encourage behavior consistent with our core values and guiding principles.
|
•
|
Pay for Performance – While we establish target pay levels at or near the median or 50th percentile market levels for target level performance, our plans provide the opportunity for significantly greater rewards for outstanding performance. At the same time, performance that does not meet expectations is not rewarded.
|
•
|
Individual Performance – In addition to objective company-wide, business unit and operating unit financial measures, our programs emphasize individual performance and the achievement of personal objectives.
|
•
|
Integrated Approach – We look at compensation in total and strive to achieve an appropriate balance of immediate, short-term and long-term compensation components, with the ultimate goal of aligning executive compensation with long-term stockholder value.
|
•
|
New Aggregate Share Reserve. We are requesting an aggregate share reserve of 1,725,000 shares for the 2020 Plan, subject to increase or decrease in accordance with the adjustment provisions of the 2020 Plan, as described below.
|
•
|
Change of Control. The 2020 Plan will prohibit the automatic acceleration of vesting of outstanding awards upon a change of control event solely with respect to the occurrence of the change of control unless the successor company fails to assume or replace the awards in connection with that change of control event. If the successor company does assume the awards, unless the individual award agreement provides otherwise, then vesting of the award will be accelerated in the event of an involuntary termination that occurs in connection with or following the change of control.
|
•
|
No discounted options or related Awards may be granted;
|
•
|
Except as otherwise provided in an Award agreement at the time of grant or thereafter by the Compensation Committee, Awards are generally non-transferrable, except to an Award recipient's immediate family member, pursuant to a qualified domestic relations order, by will or the laws of descent and distribution, or to a trust of which the Award recipient is and remains the sole beneficiary for his or her lifetime;
|
•
|
No automatic Award grants are made to any eligible individual;
|
•
|
Limitations on the maximum number or amount of Awards that may be granted to certain individuals during any fiscal year;
|
•
|
No repricing of stock options or stock appreciation rights without stockholder approval;
|
•
|
The total number of shares of common stock available for Awards will be reduced by the total number of stock options or stock appreciation rights that have been exercised, regardless of whether (i) any of the shares of common stock underlying such Awards are not actually issued to the participant as the result of a net settlement and (ii) any shares of common stock are used to pay any exercise price or tax withholding obligation with respect to any stock option or stock appreciation right;
|
•
|
Except under limited circumstances, all awards must include a minimum one-year vesting period; and
|
•
|
Awards are subject to potential reduction, cancellation, forfeiture, recoupment or other clawback under certain specified circumstances in accordance with our current clawback policy and any other clawback policies we may adopt.
|
•
|
The maximum number of shares that may be awarded in the form of stock options or stock appreciation rights to any employee in any fiscal year is 400,000 shares.
|
•
|
The maximum number of shares that may be awarded in the form of restricted stock or restricted stock units to any employee in any fiscal year is 400,000 shares.
|
•
|
The maximum number of shares that may be awarded in the form of performance shares or performance units to any employee in any fiscal year is 400,000 shares.
|
•
|
The maximum aggregate amount that may be awarded or credited in the form of cash-based Awards to any employee in any fiscal year is $5,000,000.
|
•
|
The maximum number of shares that may be awarded in the form of other stock-based Awards to any employee in any fiscal year is 400,000 shares.
|
•
|
For Awards settled in cash or a form other than shares, the shares that would have been delivered had there been no such cash or other settlement will not be counted against the shares available for issuance under the 2020 Plan.
|
•
|
For shares that are delivered pursuant to the exercise of a stock appreciation right or stock option, the number of underlying shares to which the exercise related shall be counted against the applicable share limits, as opposed to the number of shares actually issued. For example, if a stock option relates to 1,000 shares and is exercised on a cashless basis at a time when the payment due to the Participant is 150 shares, then 1,000 shares shall be charged against the applicable share limits.
|
•
|
Except as otherwise provided below, shares that are subject to Awards that expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the Prior Plans or the 2020 Plan will again be available for subsequent Awards under the 2020 Plan.
|
•
|
Shares that are exchanged by a Participant or withheld by us as full or partial payment in connection with any Award other than an option or stock appreciation right granted under either the Prior Plans or the 2020 Plan, as well as any shares exchanged by a Participant or withheld to satisfy the tax withholding obligations related to any such Award, will be available for subsequent Awards under the 2020 Plan. This includes shares subject to any awards that are outstanding under the Prior Plans as of the November 3, 2020 effective date of the 2020 Plan, which shares may become available for re-issuance under the 2020 Plan in the circumstances described in the preceding sentence. The number of shares subject to outstanding awards under the Prior Plans as of August 31, 2020 is 1,442,329.
|
•
|
Shares that are exchanged by a Participant or withheld by us to pay the exercise price of an option or stock appreciation right granted under the Prior Plans or the 2020 Plan, as well as any shares exchanged or withheld to satisfy the tax withholding obligations related to any option or stock appreciation right, will not be available for subsequent Awards under the 2020 Plan.
|
•
|
the tandem stock appreciation right will expire no later than the expiration of the underlying incentive stock option;
|
•
|
the value of the payout with respect to the tandem stock appreciation right will be for no more than 100 percent of the difference between the option price of the underlying incentive stock option and the fair market value of the shares subject to the underlying incentive stock option at the time the tandem stock appreciation right is exercised; and
|
•
|
the tandem stock appreciation right may be exercised only when the fair market value of the shares subject to the incentive stock option exceeds the option price of the incentive stock option.
|
•
|
the difference between the fair market value of a share of common stock on the date of exercise and the grant price; by
|
•
|
the number of shares with respect to which the stock appreciation right is exercised.
|
•
|
net earnings or net income (before or after taxes);
|
•
|
earnings per share;
|
•
|
net operating profit;
|
•
|
operating income;
|
•
|
operating income per share;
|
•
|
return measures (including, but not limited to, return on assets, return on capital, return on invested capital, and return on equity, sales or revenue);
|
•
|
cash flow (including, but not limited to, operating cash flow, free cash flow, free cash flow margin, and cash flow return on capital or investments);
|
•
|
earnings before or after taxes, interest, depreciation, and/or amortization and impairment of intangible assets;
|
•
|
share price (including, but not limited to, growth measures and total stockholder return);
|
•
|
margins (including, but not limited to, gross or operating margins);
|
•
|
operating efficiency;
|
•
|
customer satisfaction;
|
•
|
employee satisfaction;
|
•
|
working capital targets;
|
•
|
revenue or sales growth or growth in backlog;
|
•
|
growth of assets;
|
•
|
productivity ratios;
|
•
|
expense targets;
|
•
|
measures of health, safety or environment (including, but not limited to, total recordable incident rate and safety training measures);
|
•
|
market share;
|
•
|
credit quality (including, but not limited to, days sales outstanding);
|
•
|
economic value added;
|
•
|
price earnings ratio;
|
•
|
improvements in capital structure;
|
•
|
compliance with laws, regulations and policies; and
|
•
|
such other measures selected or defined by the Committee at the time such performance criteria are established.
|
•
|
any person is or becomes the beneficial owner, directly or indirectly, of securities of the Company representing more than fifty percent (50%) of the total voting power of all the then outstanding voting securities;
|
•
|
any person purchases or otherwise acquires under a tender offer, securities of the Company representing more than fifty percent (50%) of the total voting power of all the then outstanding voting securities;
|
•
|
individuals who, as of the November 3, 2020 effective date of the 2020 Plan, constitute the Board of Directors (together with any new directors whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors of the Company then still in office who either were directors on the effective date or whose election or nomination for election was previously so approved but excluding any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person other than the Board) cease for any reason to constitute a majority of the members of the Board of Directors;
|
•
|
the consummation of a merger, consolidation, recapitalization or reorganization of the Company, other than a merger, consolidation, recapitalization or reorganization which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent, either by remaining outstanding or by being converted into voting securities of the surviving entity (or if the surviving entity is a subsidiary of another entity, then of the parent entity of such surviving entity), more than fifty percent (50%) of the total voting power represented by the voting securities of the surviving entity (or parent entity) outstanding immediately after such merger, consolidation, recapitalization or reorganization; or
|
•
|
the stockholders approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company (in one transaction or a series of related transactions) of all or substantially all of the Company’s assets to any person.
|
•
|
Upon a Change of Control, all outstanding stock options and stock appreciation rights that are not vested and as to which vesting depends solely upon the satisfaction of a service obligation by the Participant will become fully vested and immediately exercisable over the exercise period set forth in the applicable Award agreement. However, the Committee may require such vested stock options and stock appreciation rights to be settled in cash within thirty (30) days following such Change of Control.
|
•
|
Upon a Change of Control, all outstanding stock options and stock appreciation rights that are not vested and as to which vesting depends upon the satisfaction of one or more performance conditions will immediately vest and all performance conditions will be deemed satisfied at the greater of target performance or the level of achievement of the performance goals for the Award as determined by the Committee not later than the date of the Change of Control and will be exercisable over the exercise period set forth in the applicable Award Agreement. However, the Committee may require such vested Stock Options and SARs to be settled in cash within thirty (30) days following such Change of Control.
|
•
|
All Awards, other than stock options and stock appreciation rights, that are not vested and as to which vesting depends solely upon the satisfaction of a service obligation by the Participant shall become fully vested upon a Change of Control and will be paid in shares, cash or a combination thereof, as determined by the Committee, within thirty (30) days following the effective date of the Change of Control.
|
•
|
All Awards, other than stock options and stock appreciation rights, that are not vested and as to which vesting depends upon the satisfaction of one or more performance conditions will immediately vest and all performance conditions will be deemed satisfied at the greater of target performance or the level of achievement of the performance goals for the Award as determined by the Committee not later than the date of the Change of Control and will be paid in shares, cash or a combination thereof, as determined by the Committee within thirty (30) days following the effective date of a Change of Control.
|
•
|
Replacement Awards in the form of service-based stock options or stock appreciation rights shall be fully exercisable for the remainder of their respective terms.
|
•
|
Replacement Awards in the form of a performance-based stock option or performance-based stock appreciation right shall be deemed to be satisfied at the greater of target performance or the level of achievement of the performance goals for the Award as determined by the Committee, taking into account performance through the latest date preceding the termination of service as to which performance can, as a practical matter, be determined and shall be fully exercisable for the remainder of the term of the stock option or stock appreciation right, as applicable.
|
•
|
Replacement Awards in the form of performance-based Awards (other than stock options or stock appreciation rights) shall be deemed to be satisfied at the greater of target performance or the level of achievement of the performance goals for the Award as determined by the Committee, taking into account performance through the latest date preceding the termination of service as to which performance can, as a practical matter, be determined and paid upon or within thirty (30) days of such termination of service.
|
•
|
Replacement Awards in the form of service-based Awards (other than stock options or stock appreciation rights) shall be paid upon or within thirty (30) days of such termination of service.
|
•
|
without the prior approval of our stockholders, options and stock appreciation rights issued under the 2020 Plan will not be repriced, replaced or regranted through cancellation, whether in exchange for cash or another type of Award, by lowering the exercise price of a previously granted option or the grant price of a previously granted stock appreciation right or by replacing a previously granted option or stock appreciation right with a new option with a lower option price or a new stock appreciation right with a lower grant price; and
|
•
|
to the extent necessary under any applicable law, regulation or exchange requirement, no amendment shall be effective unless approved by our stockholders in accordance with applicable law, regulation or exchange requirement.
|
•
|
Matrix NAC maintains its own separate executive officer team and human resources department.
|
•
|
The compensation and terms of employment for Mr. Miller's son are not established or approved by the Matrix Service Company Board of Directors or the Compensation Committee and are instead approved by his respective immediate supervisor on a basis consistent with the Company’s human resource policies for comparable positions within the organization.
|
•
|
The son of Mr. Miller was an employee of Kvaerner North American Construction, Inc. when the U.S. onshore business of Kvaerner ASA was acquired by Matrix Service Company in 2013. In connection with the acquisition, Matrix Service Company continued the employment of all employees of the acquired business.
|
•
|
Mr. Montalbano's son was selected from a pool of qualified candidates and did not report directly to his father prior to his father’s retirement.
|
•
|
the nature of the related person’s interest in the transaction;
|
•
|
the material terms of the transaction;
|
•
|
the significance of the transaction to the related person;
|
•
|
the significance of the transaction to us;
|
•
|
whether the transaction would impair the judgment of a director or executive officer to act in our best interest; and
|
•
|
any other matters the Audit Committee deems appropriate.
|
Identity of Beneficial Owner
|
| |
Shares
Beneficially
Owned
|
| |
Calculated
Ownership %(1)
|
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
|
| |
4,614,038(2)
|
| |
17.4%
|
Dimensional Fund Advisors LP
Building One, 6300 Bee Cave Road
Austin, TX 78746
|
| |
2,089,618(3)
|
| |
7.9%
|
The Vanguard Group
100 Vanguard Boulevard
Malvern, PA 19355
|
| |
1,734,998(4)
|
| |
6.6%
|
Jim W. Mogg
|
| |
38,013
|
| |
*
|
James H. Miller
|
| |
25,128
|
| |
*
|
John W. Gibson
|
| |
19,298
|
| |
*
|
John D. Chandler
|
| |
13,283
|
| |
*
|
Martha Z. Carnes
|
| |
12,727
|
| |
*
|
Liane K. Hinrichs
|
| |
5,832
|
| |
*
|
Carlin G. Conner
|
| |
—
|
| |
*
|
John R. Hewitt
|
| |
259,861
|
| |
1.0%
|
Alan R. Updyke
|
| |
39,041
|
| |
*
|
Kevin S. Cavanah
|
| |
90,800(5)
|
| |
*
|
Bradley J. Rinehart
|
| |
57,274(5)
|
| |
*
|
Glyn A. Rodgers
|
| |
3,000
|
| |
*
|
Jason W. Turner
|
| |
49,802
|
| |
*
|
Joseph F. Montalbano
|
| |
12,550
|
| |
*
|
All directors, director nominees and executive officers as a group (17 persons)
|
| |
736,961(5)
|
| |
2.8%
|
*
|
Indicates ownership of less than one percent of the outstanding shares of common stock.
|
(1)
|
Shares of common stock which were not outstanding but which could be acquired by an executive officer upon vesting of a restricted stock unit or upon exercise of an option within 60 days of August 31, 2020 are deemed outstanding for the purpose of computing the percentage of outstanding shares beneficially owned by such person. Such shares, however, are not deemed to be outstanding for the purpose of computing the percentage of outstanding shares beneficially owned by any other person.
|
(2)
|
Information is as of December 31, 2019 and is based on the Schedule 13G/A dated February 3, 2020 filed by BlackRock, Inc. (“BlackRock”). BlackRock is a parent holding company or control person in accordance with Rule 13d-1(b)(1)(ii)(G). BlackRock has sole voting power over 4,504,206 shares and sole dispositive power over all of the shares shown.
|
(3)
|
Information is as of December 31, 2019 and is based on the Schedule 13G/A dated February 12, 2020 filed by Dimensional Fund Advisors LP (“Dimensional”). Dimensional is a registered investment adviser. Dimensional has sole voting power over 1,991,217 shares and sole dispositive power over all of the shares shown.
|
(4)
|
Information is as of December 31, 2019 and is based on the Schedule 13G/A dated February 10, 2020 filed by The Vanguard Group (“Vanguard”). Vanguard is a registered investment advisor. Vanguard has sole voting power over 26,834 shares, sole dispositive power over 1,711,171 shares, shared voting power over 1,294 shares and shared dispositive power over 23,827 shares.
|
(5)
|
Includes the following shares of common stock that are issuable upon the exercise of stock options that are currently exercisable or are exercisable within 60 days after August 31, 2020: Mr. Cavanah – 16,850 shares; Mr. Rinehart – 10,600 shares; 17 directors and executive officers as a group – 42,000 shares.
|
•
|
Amount of Ownership – Defined as a multiple of the individual’s base salary as noted below. These multiples represent the minimum amount of Company stock an executive officer should seek to acquire and maintain:
|
President/CEO
|
| |
5 times base salary
|
CFO/COO/Presidents of the three principal operating subsidiaries
|
| |
3 times base salary
|
All other executive officers
|
| |
1 times base salary
|
•
|
Timing: The executive officers have until five years after the date of their appointment as an executive officer to acquire the ownership levels discussed above. Officers who are subsequently promoted to an office level with a higher multiple of base salary will have five years from the date of promotion to acquire any additional shares needed to meet the stock ownership guidelines. Thereafter, they are expected to retain this level of ownership during their tenure with the Company. Compliance will be evaluated on an annual basis as of June 30 of each year.
|
•
|
Eligible Forms of Equity:
|
•
|
shares owned separately by the executive officer or owned either jointly with, or separately by, his or her immediate family members residing in the same household;
|
•
|
shares held in trust for the benefit of the executive officer or immediate family members;
|
•
|
shares purchased in the open market;
|
•
|
shares purchased through the Company’s Employee Stock Purchase Plan;
|
•
|
vested and unvested time-based restricted stock or RSUs;
|
•
|
vested and unvested performance units, performance-based restricted stock or performance-based RSUs but only to the extent that the Company recognizes compensation expense with respect to such performance units, performance-based restricted stock or performance-based RSUs; and
|
•
|
the in-the-money value of vested and unexercised stock options.
|
Plan Category
|
| |
Number of
securities
to be issued
upon exercise
of outstanding
options, warrants
and rights(1)
|
| |
Weighted-average
exercise price
of outstanding
options, warrants
and rights(2)
|
| |
Number of securities
remaining available for
future issuance under
equity compensation
plans
|
Equity compensation plans approved by stockholders
|
| |
1,288,618
|
| |
$10.19
|
| |
1,473,424
|
Equity compensation plans not approved by stockholders
|
| |
—
|
| |
N/A
|
| |
—
|
Total
|
| |
1,288,618
|
| |
$10.19
|
| |
1,473,424(3)
|
(1)
|
Includes 633,258 RSUs and 601,660 performance units, which have no exercise price. The amount included assumes that target level performance is achieved under outstanding performance units for which performance has not yet been determined. Also includes 53,700 share options with an exercise price of $10.19.
|
(2)
|
Excludes the shares issuable upon the vesting of RSUs and performance units for which there is no weighted-average exercise price.
|
(3)
|
Represents the total number of shares available for issuance under the Matrix Service Company 2018 Stock and Incentive Compensation Plan. Of the 1,473,424 shares available for issuance, all may be awarded as stock options, stock appreciation rights, restricted stock, RSUs, performance shares or performance units.
|
•
|
our ability to generate sufficient cash from operations, access our credit facility, or raise cash in order to meet our short and long-term capital requirements;
|
•
|
the impact to our business of changes in crude oil, natural gas and other commodity prices;
|
•
|
the impact to our business of the COVID-19 pandemic;
|
•
|
amounts and nature of future revenue and margins from each of our segments;
|
•
|
trends in the industries we serve;
|
•
|
the likely impact of new or existing regulations or market forces on the demand for our services;
|
•
|
our expectations with respect to the likelihood of a future impairment;
|
•
|
expansion and other trends of the industries we serve; and
|
•
|
our ability to comply with the covenants in our credit agreement.
|
•
|
economic, market or business conditions in general (including the length and severity of the current economic slowdown) and in the oil, natural gas, power, agricultural and mining industries in particular;
|
•
|
the transition to renewable energy sources and its impact on our current customer base;
|
•
|
the under- or over-utilization of our work force;
|
•
|
delays in the commencement or progression of major projects, whether due to COVID-19 concerns, permitting issues or other factors;
|
•
|
reduced creditworthiness of our customer base and the higher risk of non-payment of receivables due to volatility of crude oil, natural gas, and other commodity prices to which our customers' businesses are affected;
|
•
|
the inherently uncertain outcome of current and future litigation;
|
•
|
the adequacy of our reserves for claims and contingencies;
|
•
|
changes in laws or regulations, including the imposition, cancellation or delay of tariffs on imported goods; and
|
•
|
other factors, many of which are beyond our control.
|
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