PROPOSAL FOUR:

NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF NON-BINDING ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION

The Dodd-Frank Act enables our stockholders to indicate how frequently they believe we should seek a non-binding advisory vote on the compensation of our named executive officers. We are seeking a non-binding, advisory determination from our stockholders as to the frequency with which stockholders would have an opportunity to provide a non-binding, advisory vote of the compensation of our named executive officers. We are providing stockholders the option of selecting a frequency of every year (“1 YEAR” on the proxy card), every two years (“2 YEARS” on the proxy card) or every three years (“3 YEARS” on the proxy card), or to abstain from voting on the matter.

After careful consideration, our Board recommends that a non-binding advisory vote on executive compensation should be held every year. Annual votes will provide the Board and compensation committee with clearer feedback regarding the compensation of our named executive officers. The primary focus of the disclosure of the compensation of our named executive officers required to be included in our proxy statements is compensation granted in or for the prior fiscal year. Accordingly, an annual executive compensation advisory vote will complement the annual focus of our proxy statement disclosure and provide the Board and compensation committee with the clearest and most timely feedback of the three frequency options. Additionally, an annual executive compensation advisory vote is consistent with our policy of reviewing our compensation programs annually, as well as considering input from our stockholders on corporate governance and executive compensation matters. This feedback may then be considered by the Board and compensation committee in their annual decision-making process. For these reasons, we believe an annual vote would be the best governance practice for our company at this time.

The following resolution will be submitted for a stockholder vote at the Annual Meeting:

“BE IT RESOLVED THAT the Company’s stockholders hereby approve, on a non-binding advisory basis, that the option of once every three years, two years, or one year that receives a majority of the number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold a non-binding advisory stockholder vote to approve the compensation of our named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables.”

This vote is advisory, and therefore not binding on our Board or compensation committee. However, our Board and compensation committee value the opinions of our stockholders and intend to take into account the outcome of the vote when considering the frequency of holding future advisory votes on the compensation of our named executive officers.

The non-binding advisory approval of the frequency of future non-binding stockholder advisory votes on the compensation of our named executive officers as being held every one year, two years or three years in Proposal Four requires a majority of the votes properly cast. With respect to Proposal Four, you may vote “1 year”, “2 years” or “3 years” or “abstain” from voting on this proposal. If you “abstain” from voting with respect to this proposal, your vote will have no effect on this proposal. Broker non-votes will have no effect on the vote for this proposal.

The Board recommends that stockholders vote, on a non-binding advisory basis, for every year (“1 YEAR” on the proxy card) as the frequency for future non-binding, advisory stockholder votes regarding the compensation of our named executive officers.

TRANSACTION OF OTHER BUSINESS

The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, the persons appointed in the accompanying proxy intend to vote the shares represented thereby in accordance with their best judgment on such matters, under applicable laws.

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CORPORATE GOVERNANCE

Our Board, which is elected by our stockholders, is responsible for directing and overseeing our business and affairs. In carrying out its responsibilities, our Board selects and monitors our top management, provides oversight of our financial reporting processes and determines and implements our corporate governance policies. A copy of our corporate governance guidelines can be found on our website at:

www.tpicomposites.com/English/investors/Corporate-Governance/Governance-Documents/default.aspx.

Our Board and management are committed to good corporate governance to ensure that we are managed for the long-term benefit of our stockholders, and we have a variety of policies and procedures to promote such goals. To that end, during the past year, our management periodically reviewed our corporate governance policies and practices to ensure that they remain consistent with the requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), SEC rules and the listing standards of NASDAQ.

Besides verifying the independence of the members of our Board and committees (which is discussed in the section titled “Independence of the Board of Directors” below), at the direction of our Board, we also:

In addition, we have adopted a set of corporate governance guidelines. The nominating and corporate governance committee is responsible for reviewing our corporate governance guidelines from time to time and reporting and making recommendations to the Board concerning corporate governance matters. Our corporate governance guidelines address such matters as:

Meetings of the Board of Directors

In 2019, our Board held four formal board meetings and also held multiple telephonic update calls with respect to various operational and strategic matters although no formal actions were taken during these calls. Each director attended at least 75% of all meetings of the Board and the committees on which they served that were held during fiscal year 2019. Under our corporate governance guidelines, directors are expected to spend the time needed and meet as frequently as our Board deems necessary or appropriate to discharge their responsibilities. Directors are also expected to make efforts to attend our annual meeting of stockholders, all meetings of the Board and all meetings of the committees on which they serve. All of our directors attended our 2019 Annual Meeting of Stockholders.

Code of Business Conduct and Ethics

Our Board has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer, and other executive and senior financial officers. A copy of our code of business conduct and ethics is available on our website at www.tpicomposites.com/English/investors/Corporate-Governance/Governance-Documents/default.aspx and may also be obtained, without charge, by contacting our Secretary at TPI Composites, Inc., 8501 N. Scottsdale Rd., Gainey Center II, Suite 100, Scottsdale, AZ 85253. We intend to disclose any amendments to our code of business conduct and ethics, or waivers of its requirements, on our website or in filings under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as required by the applicable rules and exchange requirements. During fiscal year 2019, no waivers were granted from any provision of the code of business conduct and ethics.

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Independence of the Board of Directors

Our Board has undertaken a review of the independence of each director. Based on information provided by each director concerning his or her background, employment and affiliations, our Board has determined that Messrs. Giovacchini, Bransfield, DeRosa, Deutch, Henry, Hughes, Jordan, Weiss and Ms. Desai do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under the applicable rules and regulations of the SEC, and the listing standards of NASDAQ. In making these determinations, our Board considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.  

Board’s Role in Risk Oversight

Our Board’s role in overseeing the management of our risks is conducted primarily through committees of our Board, as disclosed in the descriptions of each of the committees below and in the charters of each of the committees. Our full Board (or the appropriate board committee in the case of risks that are under the purview of a particular committee) discusses with management our major risk exposures, their potential impact on our company, and the steps we take to manage them. When a board committee is responsible for evaluating and overseeing the management of a particular risk or risks, the chairperson of the relevant committee reports on the discussion to the full Board during the committee reports portion of the next Board meeting. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.

Board Leadership Structure

We believe that the structure of our Board and its committees provides strong overall management of our company. The positions of Chairperson of our Board and Chief Executive Officer roles are held by separate individuals. This structure enables each person to focus on different aspects of company leadership. Our Chief Executive Officer is responsible for setting the strategic direction of our company, the general management and operation of the business and the guidance and oversight of senior management. By contrast, the Chairperson of our Board oversees Board governance practices, monitors the content, quality and timeliness of information sent to our Board and is available for consultation with our Board regarding the oversight of our business affairs. Mr. Lockard and Mr. Giovacchini will continue to serve as our Chief Executive Officer and Chairman, respectively, through our Annual meeting.  Effective immediately following the Annual meeting, Mr. Lockard will cease serving as our Chief Executive Officer and will become our Chairman assuming he is reelected.  As Mr. Lockard transitions from an executive to a non-executive role, our Board believes that our corporate governance structure will benefit from the appointment of a lead independent director.  Our Board has appointed Mr. Giovacchini to serve as our lead independent director, effective immediately following the Annual Meeting. As lead independent director, Mr. Giovacchini will preside over periodic meetings of our independent directors, will serve as a liaison between our Chairperson of the Board and the independent directors, and will perform such additional duties as our Board may otherwise determine and delegate.

We believe this structure of a separate Chairperson of our Board, Chief Executive Officer and lead independent director, reinforces the independence of our Board as a whole and results in an effective balancing of responsibilities, experience and independent perspective that meets the current corporate governance needs and oversight responsibilities of our Board.

Committees of the Board of Directors

Our Board has established an audit committee, a compensation committee, and a nominating and corporate governance committee. The composition and responsibilities of each committee are described below. Members serve on these committees until their resignation or until otherwise determined by our Board. Each of the audit, compensation, and nominating and corporate governance committees operates pursuant to a separate written charter adopted by our Board that is available on our website at www.tpicomposites.com/English/investors/Corporate-Governance/Governance-Documents/default.aspx.

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Audit Committee

Our audit committee consists of Messrs. Henry and Hughes and Ms. Desai, with Mr. Henry serving as Chairman. Under NASDAQ listing standards and applicable SEC rules, we are required to have three members on the audit committee. Subject to phase-in rules, NASDAQ and Rule 10A-3 of the Exchange Act requires that the audit committee of a listed company be comprised solely of independent directors. The composition of our audit committee meets the requirements for independence under the listing standards of NASDAQ and SEC rules and regulations. Each member of our audit committee meets the financial literacy requirements under the listing standards of NASDAQ. Each of Mr. Henry, Mr. Hughes, and Ms. Desai is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the 1933 Securities Act, as amended, (the “Securities Act”). Our audit committee, among other things:

Our audit committee operates under a written charter that satisfies the applicable rules of the SEC and the listing standards of NASDAQ. Our audit committee held eight meetings during fiscal year 2019.

Compensation Committee

Our compensation committee currently consists of Messrs. Giovacchini, DeRosa and Bransfield, with Mr. Giovacchini serving as Chairman. In March 2020, Mr. Bransfield notified the Board that he would not be standing for reelection as a director, and both Mr. Bransfield and Mr. DeRosa notified the Board that they intended to resign from the Board effective as of May 20, 2020, the date of the Annual Meeting. After the conclusion of the Annual Meeting, our compensation committee will consist of Messrs. Giovacchini and Weiss and Ms. Desai, with Mr. Giovacchini serving as Chairman. The composition of our compensation committee meets the requirements for independence under the listing standards of NASDAQ and SEC rules and regulations. Each member of the compensation committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code (the “Code”). The purpose of our compensation committee is to discharge the responsibilities of our Board relating to the compensation of our directors and executive officers. Our compensation committee, among other things:

Our compensation committee operates under a written charter that satisfies the applicable rules of the SEC and the listing standards of NASDAQ. Our compensation committee held five meetings during fiscal year 2019.

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Nominating and Corporate Governance Committee

Our nominating and corporate governance committee currently consists of Messrs. Weiss, Deutch and Bransfield, with Mr. Weiss serving as Chairman. In March 2020, Mr. Bransfield notified the Board that he would he would not be standing for reelection as a director and would be resigning from the Board effective as of May 20, 2020, the date of the Annual Meeting. After the conclusion of the Annual Meeting, our Nominating and Corporate Governance Committee will consist of Messrs. Weiss, Deutch and Jordan, with Mr. Weiss serving as Chairman. The composition of our nominating and corporate governance committee meets the requirements for independence under the listing standards of NASDAQ and SEC rules and regulations. Our nominating and corporate governance committee, among other things:

The nominating and corporate governance committee operates under a written charter that satisfies the applicable listing requirements and rules of NASDAQ. Our nominating and corporate governance committee held one meeting in 2019 and various nominating and corporate governance matters were discussed at certain meetings of the Board. 

Technology Committee

The Board has agreed to establish a technology committee effective as of May 20, 2020.   Our technology committee, will, among other things:

The Board has elected Messrs. Lockard, Deutch and Jordan to serve as the initial members of the technology committee with Mr. Lockard serving as the Chairman of the technology committee.

Identifying and Evaluating Director Nominees

The Board has delegated to the nominating and corporate governance committee the responsibility of identifying suitable candidates for nomination to the Board (including candidates to fill any vacancies that may occur) and assessing their qualifications in light of the policies and principles in these corporate governance guidelines and the committee’s charter. The nominating and corporate governance committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the nominating and corporate governance committee deems to be appropriate in the evaluation process. The nominating and corporate governance committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of the Board. Based on the results of the evaluation process, the nominating and corporate governance committee recommends candidates for the Board’s approval as director nominees for election to the Board.

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Minimum Qualifications

Our nominating and corporate governance committee uses a variety of methods for identifying and evaluating director nominees and will consider all facts and circumstances that it deems appropriate or advisable. In its identification and evaluation of director candidates, our nominating and corporate governance committee will consider the current size and composition of our Board and the needs of our Board and the respective committees of our Board. Some of the qualifications that our nominating and corporate governance committee considers include, without limitation, issues of character, ethics, integrity, judgment, diversity of experience, independence, skills, education, expertise, business acumen, length of service, understanding of our business and industry, potential conflicts of interest and other commitments. Nominees must also have proven achievement and competence in their field, the ability to offer advice and guidance to our management team, the ability to make significant contributions to our success, and an understanding of the fiduciary responsibilities that are required of a director. Director candidates must have sufficient time available in the judgment of our nominating and corporate governance committee to perform all board of director and committee responsibilities. Members of our Board are expected to prepare for, attend, and participate in all board of director and applicable committee meetings. Other than the foregoing, there are no stated minimum criteria for director nominees, although our nominating and corporate governance committee may also consider such other factors as it may deem, from time to time, are in our and our stockholders’ best interests.

Although our Board does not maintain a specific policy with respect to board diversity, our Board believes that our Board should be a diverse body and expects to add further diversity to our Board. Our nominating and corporate governance committee considers a broad range of backgrounds and experiences.. In making determinations regarding nominations of directors, our nominating and corporate governance committee takes into account the benefits of diverse viewpoints. Our nominating and corporate governance committee also considers these and other factors as it oversees the annual Board and committee evaluations. After completing its review and evaluation of director candidates, our nominating and corporate governance committee recommends to our full Board the director nominees for selection.

Stockholder Recommendations

Stockholders may submit recommendations for director candidates to the nominating and corporate governance committee by sending the individual’s name and qualifications to our Secretary at TPI Composites, Inc., 8501 N. Scottsdale Rd., Gainey Center II, Suite 100, Scottsdale, AZ 85253, who will forward all recommendations to the nominating and corporate governance committee. The nominating and corporate governance committee will evaluate any candidates recommended by stockholders against the same criteria and pursuant to the same policies and procedures applicable to the evaluation of candidates proposed by directors or management.

Stockholder Communications

The Board provides to every stockholder the ability to communicate with the Board as a whole, the non-employee directors as a group, and with individual directors on the Board through an established process for stockholder communication. For a stockholder communication directed to the Board as a whole, stockholders and other interested parties may send such communication to our Chief Executive Officer at TPI Composites, Inc., 8501 N. Scottsdale Rd., Gainey Center II, Suite 100, Scottsdale, AZ 85253, Attn: Board of Directors, Attn: Chief Executive Officer.

For a stockholder communication directed to an individual director in his or her capacity as a member of the Board, stockholders and other interested parties may send such communication to the attention of the individual director via U.S. Mail or Expedited Delivery Service to: TPI Composites, Inc., 8501 N. Scottsdale Rd., Gainey Center II, Suite 100, Scottsdale, AZ 85253, Attn: [Name of Individual Director].

The Company shall review all incoming communications and forward such communications to the appropriate member(s) of the Board as well as the Chairperson of the Board, in his or her capacity as a representative of the Board. The Chief Executive Officer will generally not forward communications that are unrelated to the duties and responsibilities of the Board, including communications that the Chief Executive Officer determines to be primarily commercial in nature, product complaints or inquires, and materials that are patently offensive or otherwise inappropriate.

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COMPENSATION DISCUSSION AND ANALYSIS

Overview

This Compensation Discussion and Analysis describes our executive compensation program as it relates to the following “named executive officers.”

The following discussion should be read together with the compensation tables and related disclosures set forth below.

Executive Promotions and Appointments in 2019

In 2019, we had several executive promotions and appointments as described below:  

Executive Summary

2019 Performance Overview

During 2019, we continued to grow revenue, expand our global manufacturing footprint and diversify our business.

2019 Executive Compensation Program Overview

With respect to 2019, we did not achieve our financial goals with respect to net sales and Adjusted EBITDA targets.  As a result, we believe our business and operational performance has been reflected in our executive pay outcomes and decisions made by our compensation committee in 2019, which are consistent with our pay for performance culture.  For example:

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The other elements of our executive compensation program are severance and change in control benefits, broad-based health and welfare benefits, 401(k) plan available to all U.S. employees and limited perquisites, each of which are described in more detail below.

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Pay for Performance Philosophy

We believe our executive compensation program is reasonable and competitive, and appropriately balances the goals of attracting, motivating, rewarding and retaining our executive officers with the goal of aligning their interests with those of our stockholders. The annual compensation of our executive officers, including our named executive officers, varies from year to year based on our corporate financial and operational results and individual performance. While we do not determine either “variable” or “fixed” pay for each named executive officer with reference to a specific percentage of target total direct compensation, consistent with our “pay-for-performance” philosophy, our executive compensation program emphasizes “variable” pay over “fixed” pay.

In 2019, the majority of the target total direct compensation of our Chief Executive Officer consisted of variable pay in the form of long-term incentive compensation opportunities. Fixed pay, primarily consisting of base salary, made up only 21% of our Chief Executive Officer’s target total direct compensation, while contingent (“variable”) pay, consisting of short term cash incentive bonus pay and long-term incentive compensation in the form of equity awards, made up 79% of his target total direct compensation. Similarly, for our other named executive officers, variable pay was emphasized over fixed pay and delivered using the same vehicles as those that were used for our Chief Executive Officer.  The following charts show the percentages of target variable pay versus target fixed pay for our Chief Executive Officer and our other named executive officers in 2019:

We believe that this approach provides balanced incentives for our executive officers to drive our financial performance and long-term growth.

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Say-on-Pay Vote on Executive Compensation

In prior years, we were an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 and were not required to hold a non-binding, advisory vote on the compensation of our named executive officers (a "Say-on-Pay vote"). At the  Annual Meeting, we will be conducting our first Say-on-Pay vote as described in Proposal Three of this proxy statement. Because we value the opinions of our stockholders, our Board and our compensation committee will consider on an advisory basis the outcome of the Say-on-Pay vote, as well as feedback received throughout the year, when making compensation decisions for our named executive officers in the future.

Setting Executive Compensation

Role of the Compensation Committee

Our compensation committee is primarily responsible for developing and implementing our compensation policies and establishing and approving the compensation for all of our executive officers. Our compensation committee may establish and delegate authority to one or more subcommittees consisting of one or more of its members, when the compensation committee deems it appropriate to do so in order to carry out its responsibilities.  In 2019, our compensation committee did not delegate such authority. Our compensation committee oversees our compensation and benefit plans and policies, administers our equity incentive plans and reviews and approves annually all compensation decisions relating to all of our executive officers, including our Chief Executive Officer. When formulating its recommendations for the amount of each compensation element and approving each compensation element and the target total direct compensation opportunity for our executive officers, our compensation committee considers the following factors:

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These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single factor is determinative in setting pay levels, nor was the impact of any factor on the determination of pay levels quantifiable. Our compensation committee reviews the base salary levels, cash incentive bonuses, and long-term incentive compensation opportunities of our executive officers, including our named executive officers, each fiscal year at the beginning of the year, or more frequently as warranted. Long-term incentive compensation is granted on a regularly-scheduled basis, as described in “Individual Compensation Elements – Long Term Incentives” below.

Role of the Chief Executive Officer

In discharging its responsibilities, our compensation committee works with members of our management, including our Chief Executive Officer. Our management team assists our compensation committee by providing information on corporate and individual performance, market compensation data and management’s perspective on compensation matters. Our compensation committee solicits and reviews our Chief Executive Officer’s recommendations and proposals with respect to adjustments to annual cash compensation, long-term incentive compensation opportunities, program structures and other compensation-related matters for our executive officers (other than with respect to his own compensation).

Our compensation committee reviews and discusses these recommendations and proposals with our Chief Executive Officer and considers them as one factor in determining the compensation for our executive officers, including our other named executive officers. Our Chief Executive Officer recuses himself from all discussions and recommendations regarding his own compensation.

Role of the Compensation Consultants

Our compensation committee has the authority under its charter to engage the services of a consulting firm or other outside advisor to assist it in designing our compensation programs and in making compensation decisions. In 2019, the compensation committee retained the Rewards Solutions practice at Aon plc (“Aon”), as its independent third-party compensation consultant to advise on executive compensation matters including: overall compensation program design and the design of our performance-based equity award program, peer group development and updates, and benchmarking executive officer and board of director compensation programs. Aon reports directly to our compensation committee. We do not believe the retention of, and the work performed by, Aon creates any conflict of interest. In addition, we also retained Korn Ferry International, an independent third-party compensation consultant, to provide consulting services on compensation as well as additional services for employee engagement surveys and employee recruiting and placement. In 2019, we paid Korn Ferry International $140,100 for services relating to employee leadership assessments and employee recruiting and placement. The decision to engage Korn Ferry International was made by management and although our compensation committee was aware of the nature of the services performed by Korn Ferry International, our compensation committee neither reviewed nor approved such services, as those were reviewed and approved by management in the ordinary course of business. We do not believe the retention of, and the work performed by, Korn Ferry International creates any conflict of interest.

Defining and Comparing Compensation to Market Benchmarks

In evaluating the total compensation of our named executive officers, our compensation committee, using information provided by Aon, establishes a peer group of publicly traded companies in the industrial machinery, aerospace and defense, and electrical components and equipment industries, among others, that is selected based on a balance of the following criteria:

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Based on these criteria, our peer group for 2019, as approved by our compensation committee, was comprised of the following 25 companies:

We believe that the compensation practices of our 2019 peer group provided us with appropriate compensation data for evaluating the competitiveness of the compensation of our named executive officers during 2019.

Notwithstanding any potential similarities with the 2019 peer group, due to the nature of our business, we compete for executive talent with many public companies that are larger and more established than we are or that possess greater resources than we do, and with smaller private companies that may be able to offer greater equity compensation potential. In 2019, the primary market reference point considered by our compensation committee in establishing target total compensation for our executive officers was the 50th percentile of our 2019 peer group. Although our compensation committee and the Board target compensation as described above, they also consider other criteria, including market factors, the experience level of the executive, organizational criticality and the executive’s performance against established Company goals, in determining variations to this general target.

Individual Compensation Elements

Base Salary

Base salary represents the fixed portion of the compensation of our executive officers, including our named executive officers, and is an important element of compensation intended to attract and retain highly-talented individuals.

Using the competitive market data provided by Aon, as well as evaluating the executive officer’s responsibilities, experience and individual contributions, our compensation committee reviews and develops recommendations for adjusting the base salaries for each of our executive officers, including our named executive officers, as part of its annual executive compensation review. In addition, the base salaries of our executive officers may be adjusted by our compensation committee in the event of a promotion or significant change in responsibilities.

Generally, our compensation committee sets base salaries with reference to the 50th percentile of the competitive range of our compensation peer group and applicable executive compensation survey data.  Since our Public Offering, we have evaluated the base salaries of our executive officers in the context of establishing their total cash compensation at levels that are consistent with the target total cash compensation of executive officers holding comparable positions at a public company.

In March 2019, consistent with the recommendation of our Chief Executive Officer, our compensation committee determined to increase the base salaries of our executive officers, including our named executive officers (other than our Chief Executive Officer, whose base salary increase was determined solely by our compensation committee). In making these decisions, our compensation committee considered the current risks and challenges facing us, its objective of gradually positioning the target total cash compensation of our executive officers at levels that are more consistent with those of a public company in our industry, as well as the factors described in “Setting Executive Compensation” above.

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The base salaries of our named executive officers for 2019 were adjusted as follows:

The actual base salaries paid to our named executive officers in 2019 are set forth in the “Summary Compensation Table” below.

Short Term Cash Incentive Program

In April 2016, our board of directors adopted the Senior Executive Cash Incentive Bonus Plan, or the Bonus Plan. The Bonus Plan provides for cash bonus payments based upon the attainment of performance targets established by our compensation committee. The payment targets may be related to financial and operational measures or objectives with respect to our Company, which we refer to as corporate performance goals, as well as individual performance objectives.

Each executive officer who is selected to participate in the Bonus Plan will have a target bonus opportunity set for each performance period. Our compensation committee took into account market data, relative levels of responsibility across the Company, tenure, and other relevant factors in order to set the target performance-based incentive for each named executive officer. The corporate performance goals will be measured at the end of each performance period after our financial reports have been published or such other appropriate time as our compensation committee determines. If the corporate performance goals and individual performance objectives are met, payments will be made as soon as practicable following the end of each performance period. Subject to the rights contained in any agreement between the executive officer and us, an executive officer must be employed by us on the bonus payment date to be eligible to receive a bonus payment. The Bonus Plan also permits our compensation committee to approve additional bonuses to executive officers in its sole discretion; however, the compensation committee did not do so for 2019.

2019 Annual Cash Incentive Program Performance Objectives

In considering performance objectives for the named executive officers for 2019, the compensation committee selected a combination of performance objectives that it believed would align with creating long term stockholder value.  Our compensation committee also considered each named executive officer’s individual performance in determining his bonus payout.  Specifically, our compensation committee selected a combination of objectives relating to safety, quality, billings, profitability and growth, which were weighted as follows:

Safety (5%)

The first performance objective related to promoting safety at our manufacturing facilities. Safety is the Company’s first core value and our compensation committee believes it is imperative to promote a safer workplace for all of our associates.  The specific safety performance objectives were reducing the Company’s lost time incident rate and recordable incident rate on year over year basis from 2018 to 2019. The lost time incident rate calculates the number of incidents that result in time away from work, while the recordable incident rate is calculated by multiplying the number of recordable cases by 200,000, and then dividing that number by the total number of labor hours performed by the Company’s direct labor associates.  In addition, the final safety performance metric was increasing the number of near miss incidents and “good catches” on a year over year basis from 2018 to 2019.  We define “good catches” as identifying potential safety hazards or conditions before an incident occurs.  In order to achieve this performance objective, the Company needed to satisfy all of the specific safety objectives set forth above.

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Quality (10%)

The second performance objective related to a goal of implementing a global quality measuring system at all of the Company’s manufacturing facilities globally so that the Company could measure quality more uniformly across all of its manufacturing facilities.  

Total Billings (20%)

The third performance objective related to total billings, which is a non-GAAP financial measure that we define as the total amounts we have invoiced our customers for products and services for which we are entitled to payment under the terms of our long-term supply agreements or other contractual arrangements.  Our compensation committee chose total billings as one of the performance objectives because it believes that achieving top line growth is a primary objective for the Company and its stockholders and contributes to the Company’s year-over-year financial performance.  The specific total billings performance objective for 2019 was $1,540,000,000, a significant year over year increase from 2018.

Total billings is a non-GAAP financial measure.  See Appendix A to this Proxy Statement for a reconciliation of total billings to net sales as reported for purposes of GAAP from the Company’s 2019 audited financial statements.

Profitability (35%)

The fourth performance objective related to profitability as measured by Adjusted EBITDA.  We define EBITDA, a non-GAAP financial measure, as net income or loss plus interest expense (including losses on extinguishment of debt and net of interest income), income taxes and depreciation and amortization. We define Adjusted EBITDA as EBITDA plus any share-based compensation expense, plus or minus any realized gains or losses from foreign currency remeasurement, plus or minus any gains or losses from the sale of assets and impairments. Our compensation committee chose Adjusted EBITDA as a performance objective because it believes that top line growth must be achieved efficiently and with a long-term focus on achieving profitability. The specific Adjusted EBIDA performance objective for 2019 was $113,000,000.

EBITDA and Adjusted EBITDA are non-GAAP financial measures. See Appendix A for a reconciliation of EBITDA and Adjusted EBITDA to net loss as reported for purposes of GAAP from the Company’s 2019 audited financial statements.

Growth (30%)

The fifth performance objective related to growth of new business as measured by creating additional annual backlog of our supply agreements and adding one new manufacturing customer.   Our compensation committee chose growth as a performance objective because it believes that the additional contract backlog creates long term value for our stockholders and adding new customers helps to diversify our business. The specific annual backlog performance objective was $280,000,000.  

The following table set forth each performance objective, its minimum, target and maximum thresholds and the payout percentage for each performance objective:

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If the Company achieved the targets for the safety, quality, total billings, profitability and growth performance objectives, the named executive officers could potentially earn in 100% of their target bonus, and up to 150% of their target bonus if the Company exceeded its billings, profitability and growth goals.  In order for any of the total billings, profitability and growth performance objectives to be paid, the applicable minimum threshold amount listed above must be achieved. The actual amount payable under each of the total billings, profitability and growth performance objectives would increase in a linear scale assuming the minimum threshold amounts were achieved. For example, if the Company achieved $1,520,000,000 in total billings for 2019, the total payout percentage for the total billings performance objective would be 10%.

Our compensation committee determined that we achieved the safety performance objective and a substantial portion of the quality performance objective because it had substantially implemented the quality management system in 2019.  The Company, however, did not achieve the total billings, profitability and growth performance objectives for 2019.  In light of such performance, our compensation committee approved cash incentive bonuses under the 2019 Bonus Plan at 13% of target bonus levels.

Due to achievement of additional individual performance goals, cash incentive bonuses were approved for Messrs. Schumaker and Gopalakrishnan at 54% of target levels and for Mr. Fishbach at 50% of target level. Specifically, Mr. Schumaker was awarded this additional bonus for quickly assimilating into his new role as Chief Financial Officer, making an immediate impact on internal reporting structures and upgrading the corporate finance and accounting teams. Mr. Gopalakrishnan was awarded this additional bonus for his efforts in helping to stabilize the Company’s operations in Matamoros, Mexico and Yangzhou, China; and Mr. Fishbach was awarded this additional bonus for the oversight and successful resolution of multiple legal disputes.

The cash incentive bonus targets as a percentage of base salary, the target cash incentive bonus amounts in dollars, the actual cash incentive bonus amounts paid to our named executive officers with respect to 2019 and actual cash incentive bonus amounts paid as a percentage of target are set forth in the table below.

Long-term Incentives

We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our executive officers, including our named executive officers, to create value for our stockholders. Equity awards also help us retain qualified executive officers in a competitive market.

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Long-term incentive compensation opportunities in the form of equity awards are granted by our compensation committee in accord with Amended and Restated 2015 Stock Option and Incentive Plan. The amount and forms of such equity awards are determined by our compensation committee after considering the factors described in “Setting Executive Compensation” above. The amounts of the equity awards are also intended to provide competitively-sized awards and resulting target total direct compensation opportunities that are competitive with the compensation opportunities offered by the companies in our compensation peer group for similar roles and positions for each of our executive officers, taking into consideration the factors described in “Setting Executive Compensation” above.

Performance-Based Awards

Our compensation committee grants performance-based RSUs to the named executive officers, which vest only if we meet specified objective performance criteria and remain in a continued service relationship with the Company through the applicable performance period. The goals of our Board and our compensation committee in selecting metrics for the performance-based component of the long-term incentive program include: alignment with business strategy; driving achievement of our development goals; and creating stockholder value.

In March 2019, as part of its annual executive compensation review, our compensation committee approved the grant of performance-based RSU awards to the named executive officers as described in “Grant of Plan-Based Awards” below. These performance-based RSU awards represented 70% of such named executive officers annual long term incentive award opportunity. These performance-based RSUs vest as follows:

For a summary and discussion of the vesting provisions of the Stock Hurdle PSUs and Adjusted EBTIDA PSUs in the event of an executive’s termination of employment in connection with the executive’s death or disability or a change in control of the Company, please see “Employment, Severance and Change of Control Agreements” section below.

Time-Based Awards

We believe that issuing a combination of time-based restricted stock unit and stock option awards provides an appropriate balance of rewarding employees for potential growth in the market price of our common stock and providing a retention tool for our key executives.

In March 2019, as part of its annual executive compensation review, our compensation committee approved the grant of time-based RSU awards to the named executive officers other than Mr. Schumaker as described in “Grant of Plan-Based Awards” below. These time-based RSU awards represented 30% of such named executive officers’ long-term incentive award opportunity. 100% of these time-based RSUs vest on the third anniversary of the grant date, subject to the applicable named executive officer’s continued service with the Company through such date. We believe time-based RSUs with a three-year cliff vesting period provide a strong retention incentive for our executive officers and also provide a moderate reward for growth in the value of our common stock.

We typically issue stock options to employees when they are first hired.  Our stock options have a ten-year term and typically vest over four years with 25% vesting on the first anniversary date of the grant and 6.25% vests on each quarterly anniversary of the grant date over the remaining three years of the vesting period.  In 2019, in connection with the appointment of Mr. Schumaker as our Chief Financial Officer, our compensation committee approved granting him a time-based stock option award of 140,302 shares. We believe that time-based stock options provide a strong reward for growth in the market price of our common stock as their entire value depends on future stock price appreciation, as well as a strong incentive for our executive officers to remain employed with our Company as they require continued employment through the vesting period.

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In May 2019, in connection with the promotion of Mr. Siwek to President and Mr. Gopalakrishnan to Chief Operating Officer - Wind, our compensation committee approved the grant of a time-based RSU award of 13,630 shares to Mr. Siwek and 9,087 shares to Mr. Gopalakrishnan.  Each of these awards vests in three equal installments on the first, second and third annual anniversary of the date of the grant, respectively, subject to the executive’s continued employment.

Benefits and Other Compensation

Other compensation to our executives consists primarily of the broad-based benefits we provide to all full-time employees, including medical, dental and vision insurance, medical and dependent care flexible spending accounts, group life and disability insurance and a 401(k) plan. In designing and structuring these benefit plans, we seek to provide an aggregate level of benefits that are comparable to those provided by similar companies.

We maintain a tax-qualified retirement plan that provides all regular U.S. employees with an opportunity to save for retirement on a tax-advantaged basis. Under our 401(k) plan, participants may elect to defer a portion of their compensation on a pre-tax basis and have it contributed to the plan subject to the applicable annual limits of the Code. Pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employee elective deferrals are 100% vested at all times. The 401(k) plan allows for matching contributions to be made by us. During fiscal year 2019, we matched up to 50% of the first 8% of deferred compensation. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan and all contributions are deductible by us when made.

We generally do not provide perquisites or personal benefits to our named executive officers other than the payment for our executive officers to obtain a biannual executive physical and relocation benefits for executives who join our company. We believe offering executive physicals to our executives is beneficial because it ensures that our key executives remain in optimal health and can achieve early identification of potential health risks to our executives.

Severance and Other Termination Arrangements

We believe that having in place reasonable and competitive post-employment compensation arrangements are essential to attracting and retaining highly-qualified executive officers. We included certain provisions for payments and benefits in the event of a termination of employment, including an involuntary termination of employment in connection with a change in control of our Company, in employment agreements and equity award agreements with our named executive officers.

We believe that the severance payments and benefits provided to our executive officers under their employment agreements are appropriate in light of the post-employment compensation protections available to similarly-situated executive officers at companies in our compensation peer group and are an important component of each executive officer’s overall compensation as they help us to attract and retain our key executives who could have other job alternatives that may appear to them to be more attractive absent these protections.

We also believe that the occurrence or potential occurrence of a change in control transaction will create uncertainty regarding the continued employment of our executive officers. In order to encourage them to remain employed with us during an important time when their prospects for continued employment following the transaction are often uncertain, we provide our executive officers with the opportunity to receive additional severance protections during a change in control protection period. In addition, we provide additional payment and benefit protections if an executive officer voluntarily terminates employment with us for good reason in connection with a change in control of our Company, because we believe that a voluntary termination of employment for good reason is essentially equivalent to an involuntary termination of employment by us without cause. The primary purpose of these arrangements is to keep our executive officers focused on pursuing potential corporate transactions that are in the best interests of our stockholders regardless of whether those transactions may result in their own job loss.

We provide for the immediate acceleration of vesting and exercisability for all time-based RSU awards, as well as that  portion of an executive’s Stock Hurdle PSUs, to the extent that the applicable performance target(s) have been achieved, and a pro-rata portion of Adjusted EBITDA PSUs, to the extent that the applicable performance target(s) have been achieved, upon his or her death and disability in order to assist the executive’s family during such difficult times, as such termination provisions allow the executive’s family to receive the benefits of the executive’s existing equity incentive arrangements.

To protect the Company’s interests, our executive officers are required to sign a standard form of release prior to receiving any severance payments or benefits under the terms and conditions of their employment agreements with us.

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We do not provide excise tax payments (or “gross-ups”) relating to a change in control of our Company and have no such obligations in place with respect to any of our named executive officers.

For detailed descriptions of the post-employment compensation arrangements we maintain with our named executive officers, as well as an estimate of the potential payments and benefits payable to our named executive officers under their post-employment compensation arrangements, see “Employment, Severance and Change of Control Agreements” and “Potential Payments Upon Termination or Change in Control” below.

Tax and Accounting Considerations

Deductibility of Executive Compensation

Generally, Section 162(m) of the Code (“Section 162(m)”) disallows a federal income tax deduction for public corporations of remuneration in excess of $1 million paid in any fiscal year to certain specified executive officers. For taxable years beginning before January 1, 2018 (i) these executive officers consisted of a public corporation’s principal executive officer and up to three other executive officers (other than the principal financial officer) whose compensation is required to be disclosed to stockholders under the Exchange Act, because they are our most highly-compensated executive officers and (ii) qualifying “performance-based compensation” was not subject to this deduction limit if specified requirements are met.

Pursuant to the Tax Cuts and Jobs Act of 2017, for taxable years beginning after December 31, 2017, the remuneration of a public corporation’s principal financial officer is also subject to the deduction limit. In addition, subject to certain transition rules (which apply to remuneration provided pursuant to written binding contracts which were in effect on November 2, 2017 and which are not subsequently materially modified), for taxable years beginning after December 31, 2017, the exemption from the deduction limit for “performance-based compensation” is no longer available. Consequently, these changes will cause more of our compensation to be non-deductible under Section 162(m) for fiscal years beginning after December 31, 2017 and will eliminate the Company’s ability to structure performance-based awards to be exempt from Section 162(m).

In designing our executive compensation program and determining the compensation of our executive officers, including our named executive officers, the compensation committee considers a variety of factors, including the potential impact of the Section 162(m) deduction limit. However, our compensation committee will not necessarily limit executive compensation to that which is or may be deductible under Section 162(m). Our compensation committee will consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent consistent with its compensation goals. Our compensation committee believes that our stockholders’ interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expense.

Taxation of “Parachute” Payments

Sections 280G and 4999 of the Code provide that certain individuals who hold significant equity interests and certain executive officers and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change in control of the Company that exceeds certain prescribed limits, and that the Company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We have not agreed to provide any executive officer, including any named executive officers, with a “gross-up” or other reimbursement payment for any tax liability that the executive officer might owe as a result of the application of Sections 280G or 4999 of the Code.

Section 409A of the Internal Revenue Code

Section 409A of the Code imposes additional significant taxes in the event that an executive officer, director or service provider receives “deferred compensation” that does not satisfy the requirements of Section 409A of the Code. Although we do not maintain a nonqualified deferred compensation plan, Section 409A of the Code may apply to certain severance arrangements, bonus arrangements and equity awards. We aim to structure all our severance arrangements, bonus arrangements and equity awards in a manner to either avoid the application of Section 409A or, to the extent doing so is not possible, to comply with the applicable requirements of Section 409A of the Code.

Accounting for Stock-Based Compensation

We follow FASB ASC 718 for our stock-based compensation awards. FASB ASC 718 requires us to measure the compensation expense for all share-based payment awards made to our employees and non-employee members of our Board, including options to purchase shares of our common stock and other stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards.

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Compensation Risk Assessment

We believe that our executive compensation program does not encourage excessive or unnecessary risk taking. As described more fully above, we structure our pay to consist of both fixed and variable compensation, particularly in connection with our pay-for-performance compensation philosophy. We believe this structure motivates our executives to produce superior short-term and long-term results that are in the best interests of our Company and stockholders in order to attain our ultimate objective of increasing stockholder value, and we have established, and our compensation committee endorses, several controls to address and mitigate compensation-related risk. As a result, we do not believe that our compensation programs are reasonably likely to have a material adverse effect on us.

“Clawback” Policy

Our Board has adopted a policy that gives the Board discretion to require that any of our Company’s executive officers, including the named executive officers, repay incentive-based compensation to our Company if the Board determines, in its sole discretion based on relevant facts and circumstances, that the executive officer’s intentional misconduct or fraud caused our Company to materially restate all or a portion of its financial statements. Our compensation committee believes that the clawback policy reflects good standards of corporate governance and reduces the potential for excessive risk taking by executive officers.

Policy Prohibiting Hedging and Pledging of Equity Securities

We have an insider trading policy that prohibits our officers, directors, employees, and certain other persons from engaging in, among other things, short sales, hedging of stock ownership positions, and transactions involving derivative securities that provide the economic equivalent of ownership of any of the Company’s securities or an opportunity, direct or indirect, to profit from any change in the value of the Company’s securities unless such transactions are approved by our Audit Committee. In addition, our insider trading policy prohibits our officers, directors, employees, and certain other persons from using our Company’s securities as collateral in a margin account or from pledging our Company’s securities as collateral for a loan unless such transactions are approved by our Audit Committee. Our insider trading policy permits our officers, directors and employees to enter into trading plans complying with Rule 10b5-1 under the Exchange Act.

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Grants of Plan-Based Awards

The following table sets forth certain information with respect to all plan-based awards granted to our named executive officers during the fiscal year ended December 31, 2019.

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Option Exercises and Stock Vested Table

The following table sets forth, for each of the named executive officers, information with respect to the exercise of stock options and the vesting of restricted stock awards during the year ended December 31, 2019.

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Employment, Severance and Change of Control Agreements

The material terms of the employment agreements with our named executive officers are summarized below.

Steven C. Lockard In 2016, we entered into an employment agreement with Mr. Lockard for the position of President and Chief Executive Officer. Mr. Lockard’s 2019 salary was $825,000, which is subject to review and adjustment in accordance with Company policy. Mr. Lockard is also eligible for an annual incentive bonus targeted at 100% of his base salary. Mr. Lockard is also eligible to participate in employee benefit plans generally available to all of our employees, subject to the terms of those plans.

William E. Siwek In May 2019, we entered into an amended and restated employment agreement with Mr. Siwek for the position of President. Mr. Siwek’s 2019 salary, effective May 8, 2019 was $600,000, which is subject to review and adjustment in accordance with Company policy. Mr. Siwek is also eligible for an annual incentive bonus targeted at 80% of his base salary. Mr. Siwek is also eligible to participate in employee benefit plans generally available to all of our employees, subject to the terms of those plans. In March 2020, we announced that Mr. Siwek was being promoted from President to President and Chief Executive Officer effective May 20, 2020.  In connection with his promotion, Mr. Siwek’s annual base salary will be increased to $800,000 and his target bonus percentage will be increased to 100% of his annual base salary (prorated for days of service in his year of appointment).

Bryan R. Schumaker In May 2019, we entered into an employment agreement with Mr. Schumaker for the position of Chief Financial Officer. Mr. Schumaker’s 2019 salary was $450,000, which is subject to review and adjustment in accordance with Company policy. Mr. Schumaker is also eligible for an annual incentive bonus targeted at 65% of his base salary. Mr. Schumaker is also eligible to participate in employee benefit plans generally available to all of our employees, subject to the terms of those plans.

Ramesh Gopalakrishnan In May 2019, we entered into an employment agreement with Mr. Gopalakrishnan for the position of Chief Operating Officer - Wind. Mr. Gopalakrishnan’s 2019 salary, effective May 1, 2019 was $440,000, which is subject to review and adjustment in accordance with Company policy. Mr. Gopalakrishnan is also eligible for an annual incentive bonus targeted at 65% of his base salary. Mr. Gopalakrishnan is also eligible to participate in employee benefit plans generally available to all of our employees, subject to the terms of those plans.

Steven G. Fishbach In 2016, we entered into an employment agreement with Mr. Fishbach for the position of General Counsel and Secretary. Mr. Fishbach’s 2019 salary was $350,000, which is subject to review and adjustment in accordance with Company policy. Mr. Fishbach is also eligible for an annual incentive bonus targeted at 60% of his base salary. Mr. Fishbach is also eligible to participate in employee benefit plans generally available to all of our employees, subject to the terms of those plans.

Joseph G. Kishkill  In August 2017, we entered into an employment agreement with Mr. Kishkill for the position of Chief Commercial Officer. Mr. Kishkill’s 2019 salary was $412,000, which was subject to review and adjustment in accordance with Company policy. Mr. Kishkill was also eligible for an annual incentive bonus targeted at 65% of his base salary. Mr. Kishkill was also eligible to participate in employee benefit plans generally available to all of our employees, subject to the terms of those plans. In January 2020, Mr. Kishkill’s employment with us terminated.  Pursuant to the terms of his employment agreement, Mr. Kishkill was terminated without cause and was entitled to received base salary continuation payments for a period of 12 months (totaling $412,000) plus 12 monthly cash payments equal to our monthly contribution for his health insurance from the effective date of his termination of employment (totaling $14,762).  

Pursuant to the employment agreements, each of Messrs. Lockard, Siwek, Schumaker, Gopalakrishnan, and Fishbach are subject to standard confidentiality and nondisclosure, assignment of intellectual property work product and post-termination noncompetition and non-solicitation of employees, consultants and customers covenants.

Involuntary Termination of Employment Not in Connection with a Change of Control. With respect to 2019, pursuant to the employment agreements, in the event the applicable named executive officer is terminated by us without “cause” (as defined in such executive’s employment agreement) or the named executive officer resigns for “good reason” (as defined in such executive’s employment agreement), in each case subject to the delivery of a fully effective release of claims and continued compliance with applicable restrictive covenants, the named executive officer will be entitled to (i) a cash severance payment equal to 150%, 125%, 100%, 100% and 50% of the base salaries of Messrs. Lockard, Siwek, Schumaker, Gopalakrishnan, and Fishbach, respectively (payable in 18, 15, 12, 12 and 6 monthly installments for Messrs. Lockard, Siwek, Schumaker, Gopalakrishnan, and Fishbach, respectively) and (ii) up to 18, 15, 12, 12 and 6 monthly cash payments equal to our monthly contribution for health insurance for Messrs. Lockard, Siwek, Schumaker, Gopalakrishnan, and Fishbach, respectively.

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Involuntary Termination of Employment in Connection with a Change of Control. With respect to 2019, in the event a named executive officer is terminated by us without cause or resigns for good reason, in each case within 12 months following a change in control (as defined in such executive’s employment agreement), subject to the delivery of a fully effective release of claims and continued compliance with applicable restrictive covenants, the named executive officer will not be entitled to the severance benefits described above, but will instead be entitled to the following: (i) a lump sum cash severance payment equal to 150%, 125%, 100%, 100% and 100% of the base salaries of Messrs. Lockard, Siwek, Schumaker, Gopalakrishnan, and Fishbach, respectively, and 150%, 125%, 100%, 100% and 100% of the annual target bonuses of Messrs. Lockard, Siwek, Schumaker, Gopalakrishnan, and Fishbach, respectively, (ii) up to 18, 15, 12, 12 and 12 monthly cash payments for Messrs. Lockard, Siwek, Schumaker, Gopalakrishnan, and Fishbach, respectively, equal to our monthly contribution for health insurance for the executive, and (iii) for all outstanding and unvested equity awards of the Company subject to time-based vesting held by the executives, full accelerated vesting of such awards, with a post-termination exercise period, if applicable, of one year.

With respect to Stock Hurdle PSUs, in the event of a “change in control” (as defined in the applicable performance-based restricted stock unit award agreement), any Stock Hurdle PSUs credited as of the day prior to the change in control will become eligible to vest on the applicable vesting date; provided, that if in the change in control (i) outstanding equity awards will be assumed, substituted or continued by the Company or its successor, and the applicable named executive officer is terminated by the Company or successor without “cause” (as defined in the applicable performance-based restricted stock unit award agreement) or resigns for “good reason” (as defined in the applicable performance-based restricted stock unit award agreement), in either case within 12 months following the change in control and prior to the applicable vesting date or (ii) outstanding equity awards will not be assumed, substituted or continued by the Company or its successor, then the Stock Hurdle PSUs that were credited as of the day prior to the change in control will be deemed immediately vested on the date of such termination or change in control, as applicable.

With respect to Adjusted EBITDA PSUs, in the event of a “change in control” (as defined in the applicable performance-based restricted stock unit award agreement), 100% of the Adjusted EBITDA PSUs will be credited and will become eligible to vest on the applicable vesting date; provided, that if in the change in control (i) outstanding equity awards will be assumed, substituted or continued by the Company or its successor, and the applicable named executive officer is terminated by the Company or successor without “cause” (as defined in the applicable performance-based restricted stock unit award agreement) or resigns for “good reason” (as defined in the applicable performance-based restricted stock unit award agreement), in either case within 12 months following the change in control and prior to the applicable vesting date or (ii) outstanding equity awards will not be assumed, substituted or continued by the Company or its successor, then the Adjusted EBITDA PSUs that were credited will be deemed immediately vested on the date of such termination or change in control, as applicable.

Termination upon Death or Disability. If a named executive officer’s employment is terminated due to death or “disability” (as defined in the applicable performance-based restricted stock unit award agreement), any Stock Hurdle PSUs credited as of such date will be deemed immediately vested on such date.  Similarly, if named executive officer due to death or “disability” (as defined in the applicable performance-based restricted stock unit award agreement), a pro-rata portion of the Adjusted EBITDA PSUs assuming the target level of performance is achieved (based on days of service during the performance period) will be deemed immediately vested on such date.

The Company may terminate each named executive officer’s employment for cause by a vote of the Board at a meeting of the Board called and held for such purpose.

The payments and benefits provided under the employment agreements in connection with a change in control may not be eligible for federal income tax deduction for the Company pursuant to Section 280G of the Code. These payments and benefits may also be subject to an excise tax under Section 4999 of the Code. If the payments or benefits payable to each Named Executive Officer in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit to the executive.

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The following table presents information concerning estimated payments and benefits that would be provided in the circumstances described above for each of the named executive officers serving as of the end of the fiscal year ending December 31, 2019. The payments and benefits set forth below are estimated assuming that the termination or change in control event occurred on the last business day of our fiscal year ending December 31, 2019. Actual payments and benefits could be different if such events were to occur on any other date or at any other price or if any other assumptions are used to estimate potential payments and benefits.

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