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Table of ContentsUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Soliciting Material under §240.14a-12
Quanex Building Products Corporation
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Definitive Additional Materials |
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Table of Contents
| | |
| QUANEX BUILDING PRODUCTS CORPORATION | | | January 26, 201825, 2022 | |
| 1800 West Loop South
Suite 1500
Houston, Texas 77027
(713) 961-4600 |
|
| Dear Fellow Stockholder:
| |
| | You are cordially invited to attend the Company's Annual Meeting of Stockholders to be held at 8:008 a.m., C.S.T., on Thursday, March 1, 2018,Tuesday, February 22, 2022, at the Company's principal executive officesPost Oak Hotel located at 18001600 West Loop South, Suite 1500, Houston, Texas.Texas 77027. | |
|
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| | This year you will be asked to vote in favor of the election of fournine directors, in favor of an advisory vote approving the Company'sCompany’s named executive officer compensation, and in favor of a resolution ratifying the Company'sCompany’s appointment of its independent auditor for the 20182022 fiscal year. These proposals are more fully explained in the attached Proxy Statement, which you are encouraged to read. | |
|
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| | THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH PROPOSAL OUTLINED IN THE ATTACHED PROXY. THE BOARD FURTHER URGES YOU TO VOTE AT YOUR EARLIEST CONVENIENCE, WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. | |
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| | Thank you for your continued support. | |
|
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| | Sincerely, | |
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 | | | |
| | | | | William C. Griffiths |
| |
Chairman of the Board | |
Table of Contents
TABLE OF CONTENTS
TABLE OF CONTENTS
| Item | | | Page | |
| Item
| | Page |
|---|
Notice of Annual Meeting of Stockholders | | | | | 1 | | |
| | | | | 12 | | |
Matters to Come Before the Meeting | | | | | 25 | | |
Proposal No. 1: Election of Directors | | | | | 25 | | |
Proposal No. 2: Advisory Vote Approving Named Executive Officer Compensation | | | | | 711 | | |
Proposal No. 3: Ratification of Appointment of Independent Audit Firm | | | | | 812 | | |
| | | | | 913 | | |
Director and Officer Compensation | | | | | 1115 | | |
| | | | | 1115 | | |
Compensation Discussion and Analysis | | | | | 1418 | | |
| | | | | 1418 | | |
| | | | | 1418 | | |
| | 17 |
Compensation Objectives
| | 17 |
Competitive Positioning
| | 19 | | |
| | | | | 20 | | |
| | | | | 20 | | |
| | | | | 20 | | |
| | | | | 22 | | |
| | | | | 22 | | |
| | | | | 2325 | | |
Processes and Procedures for Determining Executive Compensation in Fiscal 2021 | | | | | 28 | | |
| | | | | 31 | | |
Employment Agreements and Potential Payments upon Termination or Change in Control | | | | | 3332 | | |
Post-Employment Compensation Table | | | | | 3736 | | |
| | | | | 37 | | |
| | | | | 38 | | |
Grants of Plan-Based Awards | | | | | 4041 | | |
Outstanding Equity Awards | | | | | 42 | | |
Option Exercises and Stock Vested in Fiscal 2017 2021 | | | | | 4443 | | |
| | | | | 44 | | |
Qualified Defined Contribution Plans
| | 49 |
Stock Purchase Plans | | | | | 5045 | | |
Nonqualified Defined Benefit and Other Nonqualified Deferred Compensation Plans
| | | | | 5247 | | |
| | | | | 5550 | | |
Delinquent Section 16(a) Beneficial Ownership Reporting Compliance Reports | | | | | 5550 | | |
| | | | | 5651 | | |
Ongoing Governance Initiative—Board Declassification
| | 56 |
Corporate Governance Guidelines | | | | | 5651 | | |
Communications with the Company | | | | | 6257 | | |
Structure and Committees of the Board of Directors | | | | | 6559 | | |
| | | | | 6560 | | |
Compensation & Management Development Committee | | | | | 6861 | | |
Nominating & Corporate Governance Committee | | | | | 6962 | | |
| | | | | 7064 | | |
| | | | | 7064 | | |
| | | | | 7166 | | |
| | | | | 7166 | | |
Other Matters, Stockholder Nominations, and Stockholder Proposals | | | | | 7266 | | |
| | | | | 68 | | |
| | | | | A-1 | | |
Table of Contents
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 1, 2018February 22, 2022
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Quanex Building Products Corporation, a Delaware corporation (the
"Company"“Company” or
"Quanex"“Quanex”), will be held at the
principal executive offices of the Company, 1800Post Oak Hotel located at 1600 West Loop South,
Suite 1500, Houston, Texas 77027, on
Thursday, March 1, 2018,Tuesday, February 22, 2022, at 8:00 a.m., C.S.T., for the following purposes:
(1)
To elect fournine directors to serve until the Annual Meeting of Stockholders in 2019;2023;
(2)
(2)To approve an advisory resolution approving the compensation of the Company'sCompany’s named executive officers;
(3)
(3)To approve a resolution ratifying the appointment of the Company'sCompany’s independent auditor for fiscal 2018;2022; and
(4)
(4)To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof.
Information with respect to the above matters is set forth in the Proxy Statement that accompanies this Notice.
The Board of Directors of the Company (the
"Board“Board of
Directors"Directors” or
"Board"“Board”) has fixed the close of business on January
10, 2018,5, 2022, as the record date for determining stockholders entitled to notice of and to vote at the meeting. A complete list of the stockholders entitled to vote at the meeting will be maintained at the
Company'sCompany’s principal executive offices, will be open to the examination of any stockholder for any purpose germane to the meeting during ordinary business hours for a period of ten days prior to the meeting, and will be made available at the time and place of the meeting during the whole time thereof.
Please execute your vote promptly. Your designation of a proxy is revocable and will not affect your right to vote in person if you find it convenient to attend the meeting and wish to vote in person.
The
Company'sCompany’s Annual Report to Stockholders for the fiscal year ended October 31,
2017,2021, accompanies this Notice.
| | |
| | By order of the Board of Directors, |
|
|
 |
| | Kevin P. Delaney
Senior Vice President—General Counsel and Secretary |
Houston, Texas
January 26, 2018
Table of Contents
PROXY STATEMENT
Annual Meeting of Stockholders
To Be Held March 1, 2018
This Proxy Statement and the accompanying form of proxymaterials are first being made available or mailed to be first mailedour stockholders on or about January 26, 2018,25, 2022.
We are actively monitoring public health and travel concerns relating to all holdersthe coronavirus (COVID-19) and the protocols and restrictions imposed by federal, state, and local governments. We are focused on the health and well-being of recordour employees, shareholders and other stakeholders. If public health developments warrant, we will be prepared to impose additional procedures or limitations on January 10, 2018 (the "Record Date"),meeting attendees, such as holding the shareholder meeting by means of remote communications (a “virtual” meeting) or other changes necessary to protect the health and safety of attendees. Any such change will be announced via press release and the filing of additional soliciting materials with the Securities and Exchange Commission. If you are planning to attend the Annual Meeting, please monitor the Investor Relations page on our website (www.quanex.com) for updated information. As always, we encourage you to vote your shares prior to the Annual Meeting.
By order of the Board of Directors,
Paul B. Cornett
Senior Vice President — General Counsel and Secretary
Houston, Texas
January 25, 2022
PROXY
STATEMENT
Annual Meeting of Stockholders
To Be Held February 22, 2022
1.Why am I receiving these proxy materials?
You are receiving these proxy materials because you held shares of common stock $.01 par value (the "Common Stock"), of Quanex Building Products Corporation a Delaware corporationon January 5, 2022 (the "Company"“Record Date”). These materials are furnished in connection with the solicitation, which entitles you to notice of, proxies by the Board of Directors of the Companyand to be usedvote at, theQuanex’s 2022 Annual Meeting of Stockholders to be held at the Company's principal executive offices, 1800 West Loop South, Suite 1500, Houston, Texas, 77027, at 8:00 a.m., C.S.T., on Thursday, March 1, 2018,February 22, 2022, and at any adjournment or adjournmentspostponement thereof. SharesThe proxy materials include our Notice of Common Stock representedInternet Availability, Notice of Annual Meeting of Shareholders, Proxy Statement and Annual Report on Form 10-K for the year ended October 31, 2021. The proxy materials also include the proxy card for the 2022 Annual Meeting. The proxy materials contain detailed information about the matters to be voted on at the 2022 Annual Meeting and provide updated information about Quanex to assist you in making an informed decision when voting your shares. The enclosed proxy for the 2022 Annual Meeting is being solicited by any un-revokedour Board.
2.What does it mean if I receive more than one proxy card on or about the same time?
It means that your shares are registered differently or are held in more than one account. In order to vote all of your shares, please sign, date and return each proxy card or, if you vote via the Internet or telephone, vote once for each proxy card you receive.
3.Who may vote at the meeting?
Owners of our common stock as of the close of business on the Record Date are entitled to vote at the 2022 Annual Meeting. The shares owned include shares you held on that date (i) directly in your name as the shareholder of record (registered shareholder) and (ii) in the enclosed form, if such proxyname of a broker, bank or other holder of record where the shares were held for you as the beneficial owner (in street name). Each share of common stock is properly executedentitled to one vote on each matter. As of the Record Date, there were 33,388,735 shares of our common stock outstanding and is receivedentitled to vote. There are no other outstanding voting securities of Quanex entitled to vote at the 2022 Annual Meeting. A complete list of shareholders entitled to vote at the 2022 Annual Meeting will be open to the examination of any shareholder during normal business hours for ten days prior to the meeting,2022 Annual Meeting at Quanex’s Houston office and during the 2022 Annual Meeting.
4.How do I vote my shares?
If you are a registered shareholder of record as of the Record Date, you may vote by any of the following methods:
•
Voting by Mail. If you choose to vote by mail, simply complete the enclosed proxy card, date and sign it, and return it in the postage-paid envelope provided. Your shares will be voted in accordance with the specifications madeinstructions on such proxy. Proxiesyour proxy card.
•
Voting by Internet. You may vote through the Internet by signing on which no specificationsto the website identified on your proxy card and following the procedures described on the website. Internet voting is available 24 hours a day, and the procedures are designed to authenticate votes cast by using a personal identification number located on your proxy card. The procedures permit you to give a proxy to vote your shares and to confirm that your instructions have been properly recorded. If you vote by Internet, you should not return your proxy card.
•
Voting by Telephone. You may vote your shares by telephone by calling the toll-free telephone number provided on your proxy card. Telephone voting is available 24 hours a day, and the procedures are designed to authenticate votes cast by using a personal identification number located on your proxy card. The procedures permit you to give a proxy to vote your shares and to confirm that your instructions have been properly recorded. If you vote by telephone, you should not return your proxy card.
•
Voting at the Meeting. For stockholders with shares registered in the name of a brokerage firm or bank or other similar organization, you will need to obtain a legal proxy from the broker, bank, trustee or other nominee that holds your shares before you can vote your shares in person at the Annual Meeting. For stockholders with shares registered directly in their names, you may vote your shares in person at the Annual Meeting.
If you hold your shares in street name, you may vote by instructing your broker:
•
Your broker or other nominee will send you a proxy card to use to direct them how to vote your shares and may also provide additional voting instructions. Please instruct your broker or other nominee how to vote your shares using the form of proxy you received from them or otherwise in accordance with the voting instructions you receive.
•
Please return your completed proxy to your broker or other nominee or contact the person responsible for your account so that your vote can be counted.
•
Your broker or other nominee may permit you to submit voting instructions via the Internet or by telephone as well.
5.May I revoke my proxy or change my vote?
Yes. You may revoke your proxy or change your vote before the 2022 Annual Meeting by filing a revocation with the Senior Vice President, General Counsel and Corporate Secretary of Quanex, by granting a new proxy bearing a later date (which automatically revokes the earlier proxy) whether made via the Internet, by telephone or by mail, or by attending the 2022 Annual Meeting and voting in person during the meeting.
If you hold your shares in street name, you may change your vote by contacting your broker or other nominee and following their instructions.
6.How can I attend the shareholder meeting?
You may participate in the 2022 Annual Meeting only if you were a shareholder as of the Record Date or if you hold a valid proxy.
Check-in will begin at 7:30 a.m., Central Time, and you should allow ample time for the check-in procedures.
7.What constitutes a quorum at the annual meeting?
A majority of all outstanding shares entitled to vote at the 2022 Annual Meeting will constitute a quorum, which is the minimum number of shares that must be present or represented by proxy at the meeting to transact business. Abstentions and broker non-votes will be counted for purposes of determining whether a quorum is present.
8.How many votes are required to approve each of the proposals?
Proposal 1 will be subject to a majority voting standard because the Company’s By-laws provide that in an uncontested election, directors are elected by the majority of votes cast with respect to such director, meaning that the number of votes cast “FOR” a director must exceed the number of votes cast “AGAINST” that director. Your broker may not vote your shares on this proposal unless you give voting instructions. Abstentions and broker non-votes have no effect on the vote.
Proposals 2 and 3 require the affirmative vote of a majority of the shares present in person or by proxy at the 2022 Annual Meeting and entitled to vote on the subject matter. You may vote “FOR” or “AGAINST”
or “ABSTAIN” from voting for each of these proposals. Abstentions will have the same effect as votes cast “AGAINST” each such proposal. Broker non-votes have no effect on the vote for Proposal 2 and will not arise and have no effect on Proposal 3.
9.How will my shares be voted if I do not submit voting instructions?
Shareholders of Record. If you are a shareholder of record and you either: (a) Vote on the internet and leave all voting options blank and click “Submit,” or (b) Sign and return a proxy card without giving specific voting instructions, then the proxies will vote your shares in the manner recommended by the Board on all matters presented in this proxy statement and as the proxies may determine in their discretion with respect to any other matters properly presented for a vote at the annual meeting.
This means that such proxies will be voted FOR the election as director of theall nominees listed herein, FOR approval of the compensation of the Company’s named executive officers, FOR ratification of the appointment of the Company'sCompany’s independent auditor for fiscal 2018,2022, and FOR each other proposal included herein. Proxies
If you are
revocable by written notice to the Secretary of the Company at the address of the Company set forth below, or by delivery of a later dated proxy, at any time prior to their exercise. Proxies may also be revoked by a stockholder
attendingof record and
votingdo not vote by telephone, through the Internet, by completing and returning by mail a proxy card, or in person at the
meeting. The Common Stock isAnnual Meeting, your shares will not be voted.
Beneficial Owners of Shares Held in Street Name. If you are a beneficial owner of shares held in street name and do not provide specific voting instructions, your shares will be voted in accordance with the only classrules of various national and regional securities exchanges. In such case, the organization that holds your shares may generally vote your shares on routine matters, but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, it will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares.
This means that under NYSE rules, if you do not provide specific voting instructions, your broker can vote your shares on Proposal 3 (with respect to the ratification of the Companyselection of the independent auditor) but not with respect to Proposals 1 and 2 (with respect to the election of directors and advisory vote on compensation) recommended to be adopted by the Board.
10.What is a broker non-vote?
A broker non-vote occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power for that isparticular item and has not received instructions from the beneficial owner. Under the NYSE rules that govern brokers who are voting with respect to shares held in street name, brokers ordinarily have the discretion to vote on “routine” matters (e.g., ratification of the selection of independent public accountants) but not on non-routine matters (e.g., election of directors and advisory votes on executive compensation). Accordingly, broker non-votes will have no effect on the outcome of Proposals 1 and 2 because they are treated as not entitled to vote at the meeting. As of the close of business on the Record Date, the date for determining stockholders who are entitled to receive notice of andsuch matters. Because brokers or nominees have discretion to vote on Proposal 3 as a routine matter, broker non-votes will not arise in connection with, and thus will have no effect on, Proposal 3. Broker non-votes will be treated as shares present for quorum purposes.
11.Who do I contact if I have questions or I need additional proxy materials?
If you have any questions, please contact the Corporate Secretary at
the meeting, there were 35,070,482 shares of Common Stock outstanding. Each share is entitled to one vote. The presence at the meeting, in person(713) 877-5339 or by
proxy, of the holders of a majority of shares of Common Stock is necessary to constitute a quorum. Abstentions and broker non-votes are counted as present in determining whether the quorum requirement is satisfied. The cost of soliciting proxies will be borne by the Company. Solicitation may be made personally or by mail, telephone or electronic data transfer by officers, directors and regular employees of the Company (who will not receive any additional compensation for any solicitation of proxies), or by the firm of Morrow Sodali, LLC, which has been retained by the Company to assist in the solicitation for a fee of approximately $7,500 plus expenses. The Company will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable expenses for sending proxy materials to the beneficial owners of Common Stock. The mailing address of the Company's principal executive office is 1800 West Loop South, Suite 1500, Houston, Texas, 77027.
email at paul.cornett@quanex.com.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALSFOR THE ANNUAL MEETING TO BE HELD ON MARCH 1, 2018:FEBRUARY 22, 2022:Our Proxy Statement and
20172021 Annual Report are available online at the following web address:
http://www.quanex.com/
2017AR2021AR
In accordance with Securities and Exchange Commission rules, this website provides complete anonymity with respect to any stockholder accessing it.
MATTERS TO COME BEFORE THE MEETINGPROPOSAL NO. 1
ELECTION OF DIRECTORS
Four
Nine directors are to be elected at the meeting. Prior to March 2016, the Company's Certificate of Incorporation and Amended and Restated Bylaws provided that the Board of Directors would be divided into three classes as nearly equal in number as possible, with the terms of office of the classes expiring at different times. Class III directors will standnominated for election at the Company's annual stockholder meeting to be held in 2019, and Class I and Class II directorsmeeting. All nominees are standing for electionterms of one year, to expire at the Company’s annual meeting of shareholders in 2023.
Current director Joseph D. Rupp elected not to which this proxy relates. However,stand for re-election as a director in accordance with amendments approved at the Company's 2016 Annual Meeting of Stockholders,2022. Instead, the Board has nominated Mr. Bradley E. Hughes to stand for election as a director. Mr. Hughes previously served as the President and Chief Executive officer of Directors is currentlyCooper Tire & Rubber Company until it was sold in 2021. In selecting Mr. Hughes to stand for election, the Board engaged in a diligent and thorough search process that involved consideration of declassifying,a number of highly qualified candidates. The Board strongly believes that Mr. Hughes will prove to be a tremendous asset to the Company based on his executive capabilities, his public company finance and each director will nowaccounting expertise, and his extensive experience in domestic and international strategy development and operational oversight. More information about Mr. Hughes’ background and qualifications may be electedfound on page 7 of this Proxy Statement.
In addition to
a term of only one year. CurrentMr. Hughes’ nomination, current directors Robert R. Buck, Susan F. Davis, JosephWilliam C. Griffiths, Jason D. Rupp andLippert, Donald R. Maier, Meredith W. Mendes, Curtis M. Stevens, William E. Waltz, Jr., and George L. Wilson are the directors currently standing for election. Ms. Davisre-election. All director nominees other than Messrs. Lippert and Mr. StevensHughes were each elected by the stockholders in 2017 to a term ending in 2018, while Messrs. Buck and Rupp were each elected by the stockholders in 2015 to a term ending in 2018. Each of these directors are standing for re-electionshareholders for a one year term expiring at the 2019 Annual Meeting. Messrs.Company’s 2021 annual meeting of shareholders. Mr. Lippert was appointed to the Board effective November 2, 2021, and Mr. Hughes is not currently a director. William C. Griffiths and Nosbaum were electedwill retire as Executive Chairman of the Board, effective February 21, 2022, but plans to a term ending in 2019 atcontinue serving as Non-Executive Chairman of the 2016 Annual Meeting.
Board after that date.
In reviewing the information contained in this Proxy Statement that relates to our directors,
and officers, it is important to note that
Quanex Building Products Corporationthe Company was initially created on December 12, 2007, in connection with the April 2008 spin-off of the building products business of Quanex Corporation, and the related merger of Quanex Corporation with Gerdau S.A. In connection with these transactions, the directors
and officers of Quanex Corporation became the directors
and officers of Quanex Building Products Corporation. As such, we have listed these
"carryover"“carryover” directors
and officers as beginning with the Company in 2007 despite the fact that they may have served in similar positions with Quanex Corporation prior to that time. For information related to the transaction, the origins of Quanex Building Products Corporation, and any pre-transaction service as a director
or officer of Quanex Corporation, please see (a) the
Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended October 31, 2008, (b) the Information Statement attached as Exhibit 99.1 to the
Company'sCompany’s Registration Statement on Form 10, filed April 4, 2008 and effective April 9, 2008, and (c) Quanex
Corporation'sCorporation’s Annual Report on Form 10-K, as amended by Form 10-K/A, for the fiscal year ended October 31, 2007.
| | | | | | |
Nominees for election to a term that will
expire at the 2019 Annual Meeting
(formerly Class I and Class II Directors) | | Principal Occupation | | Age | | Director
Since |
|---|
| Robert R. Buck | | Chairman of the Board of Beacon Roofing Supply, Inc., a leading distributor of roofing materials (Herndon, Virginia). | | 70 | | 2011 |
Susan F. Davis |
|
Retired Executive Vice President—Asia Pacific of Johnson Controls, Inc., a global leader in automotive systems, building efficiency and power solutions (Milwaukee, Wisconsin). |
|
64 |
|
2007 |
Joseph D. Rupp |
|
Retired Chairman of the Board of Olin Corporation, a basic materials company concentrated in chemicals and ammunition (Clayton, Missouri). |
|
67 |
|
2007 |
Curtis M. Stevens |
|
Retired Chief Executive Officer of Louisiana-Pacific Corporation, a leading building materials manufacturer (Nashville, Tennessee). |
|
65 |
|
2010 |
5
Table of Contents
| | | | | | |
Directors whose terms expire
at the 2019 Annual Meeting
(formerly Class III Directors) | | Principal Occupation | | Age | | Director
Since |
|---|
| William C. Griffiths | | Chairman, President and Chief Executive Officer, Quanex Building Products Corporation (Houston, Texas). | | 66 | | 2009 |
LeRoy D. Nosbaum |
|
Retired President and Chief Executive Officer of Itron, Inc., a leading technology provider to the global energy and water industries and a leading provider of intelligent metering, data collection and utility software solutions (Liberty Lake, Washington). |
|
71 |
|
2010 |
| | Nominees for election to a
term that will expire at
the 2023 Annual Meeting | | | Principal Occupation | | | Age | | | Director
Since | |
| | Susan F. Davis | | | Retired Executive Vice President — Asia Pacific of Johnson Controls, Inc., a global leader in automotive systems, building efficiency and power solutions (Milwaukee, Wisconsin). | | | 68 | | | 2007 | |
| | William C. Griffiths | | | Executive Chairman of the Board, Quanex Building Products Corporation (Houston, Texas). | | | 70 | | | 2009 | |
| | Bradley E. Hughes | | | Retired President and Chief Executive Officer of Cooper Tire & Rubber Co. (Findlay, Ohio). | | | 60 | | | N/A | |
| | Jason D. Lippert | | | Chief Executive Officer of LCI Industries (Elkhart, Indiana). | | | 49 | | | 2021 | |
| | Donald R. Maier | | | Executive Consultant to Alto Pharmacy, an online pharmacy service company (San Francisco, California). | | | 57 | | | 2019 | |
| | Meredith W. Mendes | | | Chief Operating Officer and Partner of Gresham Partners, LLC, a wealth management firm (Chicago, Illinois). | | | 63 | | | 2019 | |
| | Curtis M. Stevens | | | Retired Chief Executive Officer of Louisiana-Pacific Corporation, a leading building materials manufacturer (Nashville, Tennessee). | | | 69 | | | 2010 | |
| | William E. Waltz, Jr. | | | President and Chief Executive Officer of Atkore, Inc. (Harvey, Illinois). | | | 57 | | | 2020 | |
| | George L. Wilson | | | President and Chief Executive Officer, Quanex Building Products Corporation (Houston, Texas). | | | 53 | | | 2020 | |
Director
Nominee Biographies, Key Attributes, and Skills
ROBERT BUCK, age 70
Biography: Mr. Buck is the Chairman of the Board of Beacon Roofing Supply, Inc., a NASDAQ-traded roofing materials distributor with approximately $7 billion in revenue. Prior to becoming Chairman in early 2011, Mr. Buck served as Chairman and CEO of Beacon from 2007 to 2011; as Chairman, President, and CEO in 2007; and as President and CEO from 2003 to 2007. Prior to joining Beacon in 2003, Mr. Buck spent 21 years with Cintas Corporation in various executive positions. Mr. Buck holds a B.S. in Finance from the University of Cincinnati.
Key Attributes, Experience, and Skills: During his time at Beacon Roofing and Cintas Corporation, Mr. Buck developed extensive executive leadership, finance and accounting expertise. Mr. Buck also participated in numerous mergers and acquisitions and has strong corporate governance experience. In addition, Mr. Buck's tenure at Beacon Roofing has provided him substantial experience in the building products industry. Mr. Buck has also amassed a good deal of public company board experience through his service on the boards of Beacon Roofing Supply, Multi-Color Corporation, and Kendle International.
Other Directorships Since 2012: Mr. Buck currently serves on the boards of Beacon Roofing Supply, Inc., and Multi-Color Corporation. Mr. Buck also serves on the board of privately held Elkay Manufacturing Co.
SUSAN F. DAVIS, age 64
68
Biography: Ms. Davis retired in 2016 from Johnson Controls, Inc., a global leader in automotive systems, building efficiency and power solutions. Prior to her retirement, Ms. Davis served as the Executive Vice President—President — Asia Pacific for Johnson Controls, beginning in 2015. Prior to her appointment to that position, Ms. Davis served as the chief human resources officer of Johnson Controls from 1994 to 2015, holding the positions of Executive Vice President and Chief Human Resources Officer from 2014 to 2015, Executive Vice President of Human Resources from 2006 to 2014, and Vice President of Human Resources from 1994 to 2006. Prior to that time, she served in various other positions with Johnson Controls, which she originally joined in 1983. Ms. Davis received an MBA degree from the University of Michigan, and received both Master'sMaster’s and Bachelor'sBachelor’s degrees from Beloit College. Key Attributes, Experience, and Skills: As the executive leader of Human Resources forat Johnson Controls from 1994 to 2015, and through her role as Executive Vice President—Asia Pacific from 2015 to 2016,for over twenty years, Ms. Davis acquired extensive management, corporate governance, public company, and international business expertise. She has also worked extensively with executive compensation and management development issues. Further, Ms. Davis'Davis’ time as a director for Butler Manufacturing, and Cooper Tire & Rubber Company, and Johnson Controls'Controls’ status as a global leader in building efficiency
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products and controls, hashave provided Ms. Davis with the opportunity to accumulate extensive experience in the building products industry and with manufacturing processes, both of which are very valuable in her service as a director of the Company. Ms. Davis also gained public company board experience as a result of her prior service as a director for Butler Manufacturing, Quanex Corporation, and Quanex Corporation.
Cooper Tire & Rubber Company.
Other Directorships Since 2012:2016: Ms. Davis currently servesserved on the board of Cooper Tire & Rubber Company, which she joined in 2016.a NYSE-traded manufacturer of car, motorcycle, truck, and racing tires, from 2016 to 2021. WILLIAM C. GRIFFITHS, age 66
70 Biography: Mr. Griffiths was namedis currently the Company’s Executive Chairman of the Board. He served as Chairman, President, and Chief Executive Officer of the Company in Julyfrom 2013 after serving as an independent director of the Company beginning in 2009.until January 2020. Prior to joining the Company, as President and CEO, Mr. Griffiths served as the Managing Director and a member of the board of directors
of Sealine (International) Ltd., a privately held manufacturer of yachts and other marine vessels based in the United Kingdom. Prior to joining Sealine in January 2012, Mr. Griffiths served as Chairman of the Board, President and CEO of Champion Enterprises, Inc., a NYSE-traded producer of modular and manufactured housing until 2010. He joined Champion as a Director, and as President and Chief Executive Officer, in August 2004, and was named Chairman of the Board in 2006.
Champion filed for Chapter 11 bankruptcy on November 15, 2009. From 2001 to 2004, Mr. Griffiths was
President—President — Fluid Systems Division at SPX Corporation, a global multi-industry company located in Charlotte, North Carolina. Mr. Griffiths graduated from the University of London with a BS with Honors in Mining Engineering. In addition, Mr. Griffiths is a graduate of the Harvard Business
School'sSchool’s PMD executive education program.
Key Attributes, Experience, and Skills: During his tenure as CEO of Champion Enterprises, Mr. Griffiths gained extensive experience with manufacturing processes, corporate governance, and public company issues. Champion also provided Mr. Griffiths with valuable expertise and insight into the building products industry, which he has continued to build during his tenure at Quanex Building Products Corporation.Products. In addition, Mr. Griffiths'Griffiths’ time as a senior leader at SPX Corporation provided him with extensive and wide-reaching expertise in international operations management and international business in general. It also allowed him to build a great deal of experience in mergers and acquisitions, both international and domestic. LEROY NOSBAUM,BRADLEY E. HUGHES, age 71
60Biography: Mr. Nosbaum isHughes served as President & Chief Executive Officer of Cooper Tire & Rubber Co., an NYSE-traded manufacturer of car, motorcycle, truck, and racing tires, from 2016 until it was sold in 2021. He previously served as Cooper’s Senior Vice President and Chief Operating Officer from January 2015 to September 2016; Senior Vice President and President-International Tire Operations from July 2014 to January 2015; Senior Vice President and Chief Financial Officer from July 2014 to December 2014; and as Vice President and Chief Financial Officer from November 2009 to July 2014. Mr. Hughes has a BS in business from Miami University and an MBA from the retired Chairman,University of Michigan.
Key Attributes, Experience, and Skills: Through his many positions of increasing responsibility at Cooper Tire, Mr. Hughes amassed a wealth of executive knowledge and public company accounting and finance experience. He also built an extensive understanding of domestic and international operational processes, strategy development, mergers and acquisitions, and corporate governance.
Other Directorships Since 2016: Mr. Hughes served on the board of directors of Cooper Tire & Rubber Company from 2016 to 2021.
JASON D. LIPPERT, age 49
Biography: Mr. Lippert has served since 2013 as Chief Executive Officer of LCI Industries (NYSE: LCII), a manufacturer and supplier of highly engineered, high quality components to the RV, marine, and automotive industries. Mr. Lippert was also appointed President of the Company in May 2019, and has been Chief Executive Officer of Lippert Components since February 2003. Mr. Lippert has over 25 years of experience with LCI and its subsidiaries, beginning his career with the company as a Management Trainee and subsequently serving in a wide range of leadership positions since that time. Under his leadership, LCI has grown its annual revenue from $100 million to $4 billion and now employs more than 15,000 team members. Mr. Lippert earned a BS in Business Administration, Accounting & Business Management from Miami University in Oxford, Ohio.
Key Attributes, Experience, and Skills: Mr. Lippert has gained significant domestic and international operational and manufacturing process expertise in the building products industry through his various positions with LCI and its subsidiaries. Mr. Lippert has also built extensive strategic and M&A experience by leading Lippert Components through more than 75 acquisitions during his tenure as CEO. He has further amassed extensive public company executive leadership and corporate governance experience through his service in various roles for LCI Industries and Drew Industries, both of which were publicly listed companies at the time of his employment.
Other Directorships Since 2016: Mr. Lippert has served on the board of directors of LCI Industries since 2007.
DONALD R. MAIER, age 57
Biography: Mr. Maier has been providing executive consulting services to Alto Pharmacy, an online pharmacy service company, since May 2020. From 2016 to 2019, Mr. Maier served as the President and Chief Executive Officer of Itron,Armstrong Flooring, Inc., a NASDAQ-traded leading technology provideran NYSE-traded global producer of flooring products for use primarily in the construction and renovation of commercial, residential and institutional buildings. Prior to the global energy and water industries and a leading provider of intelligent metering, data collection and utility software solutions.assuming that role, Mr. Nosbaum joined Itron in 1996, was promoted to the role ofMaier served as Executive Vice President and CEO in 2000,of the Flooring Products division of Armstrong World Industries, Inc. from 2014 to 2016, and was elected as Chairman in 2002. He retiredSenior Vice President, Global Operations Excellence of Armstrong World Industries, Inc. from Itron in 2009, but returned2010 to 2014. Mr. Maier also served as PresidentSenior Advisor of TPG Capital Advisors from 2007 to 2010, and Chief Executive Officer in 2011, before retiring again in December 2012. Prior to his employment with Itron, Mr. Nosbaum served in various positionssenior leadership, strategic, marketing, business development, and engineering roles at Metricom, Inc.Hillenbrand Industries and its subsidiaries Hill-Rom and Batesville Casket Company from 19891987 to 1996, and at Schlumberger Limited from 1977 to 1989. Mr. Nosbaum holds a B.S. in Electrical Engineering from Valparaiso University.2007. Key Attributes, Experience, and Skills: Mr. Nosbaum brings to the board strong sales,Maier has extensive manufacturing, engineering, marketing and technology expertise, which he gained during his serviceoperational experience. In addition, Mr. Maier’s experience as the Executive VPa director and chief executive officer of Marketinga global and Sales for Metricom, Inc. In his various roles at Itron, Mr. Nosbaum also builtpublicly-traded company has provided him with extensive corporate governance, international business, and public company finance, strategic development, acquisition, technology and manufacturing process expertise. Further, Mr. Nosbaum gained international experience at Itron, which conducts operations throughout Europe, South America, and Asia. In addition, he has built corporate governance expertise both through his role as CEO of Itron, and through his service on the Nominating and Corporate Governance Committees of Esterline Technologies and Quanex Building Products Corporation.
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Other Directorships Since 2012:2016: Mr. NosbaumMaier served on Armstrong Flooring’s board of directors from 2016 until 2019.
MEREDITH W. MENDES, age 63
Biography: Ms. Mendes is the Chief Operating Officer and a Partner of Gresham Partners, LLC, an independent investment and wealth management firm. From 2005 to 2020, she served as directorExecutive Director and Chief Operating Officer of Itron from 2000 to 2002Jenner & Block, an international law firm, and as Chairman from 2002 to 2009. After a brief interval, Mr. Nosbaum againbeginning in 2015, also served as Compliance Officer for Finance and Administration of Jenner & Block London. From 1999 to 2005, Ms. Mendes was the Executive Vice President, Worldwide Chief Financial Officer, of Edelman, a director of Itron from 2011 until his retirement in December 2012. JOSEPH RUPP, age 67
Mr. Rupp is the retired Chairman of the Board of Olin Corporation, an NYSE traded basic materials company concentrated in chemicals and ammunition. Mr. Ruppglobal communications marketing firm. Prior to 1999, Ms. Mendes served as the Chairman of the Board of Olin Corporation from May 2016 to April 2017. Prior to May 2016, Mr. Rupp served as Chairman, President and Chief ExecutiveFinancial Officer of Olin since 2005. Prior to his electionHartford Computer Group, a value-added reseller, and Medline Industries, a global manufacturer and distributor of medical products. She was also an investment banker at First Chicago Capital Markets and began her career as Chairman, Mr. Rupp was Presidenta practicing lawyer in finance at Mintz, Levin, Cohen, Ferris, Glovsky and Chief Executive Officer of Olin from 2002 to 2005. Prior to 2002, Mr. Rupp servedPopeo in various positionsBoston, Massachusetts. Ms. Mendes is an Illinois licensed CPA and holds an MBA with Olin, which he originally joined in 1972. Mr. Rupp holds a bachelor's degree in metallurgical engineeringfinance concentration from the University of Missouri, Rolla.
Chicago Booth School of Business, a JD from Harvard Law School, and an AB (Magna Cum Laude) from Brown University. Ms. Mendes is NACD Directorship Certified.
Key Attributes, Experience, and Skills: As the CEOMs. Mendes is a senior executive leader and public company director with extensive expertise in global finance and accounting, technology and cybersecurity, operations, real estate, sales and marketing, and law. Her breadth of Olin, Mr. Rupp amassed strong corporate governance expertise,experience across multiple industries has given her a deep understanding of finance and accounting, public company management, experience,corporate governance issues, strategy and solid financial acumen. HeM&A, and international business.
Other Directorships since 2016: Ms. Mendes has served since 2018 as an independent director and member of the Audit Committees of Kronos Worldwide, Inc., a NYSE-listed manufacturer of titanium dioxide pigments, and NL Industries, Inc., an NYSE-listed diversified holding company. Ms. Mendes also brings a wealth of experience in operations management, lean manufacturing processes, and mergers and acquisitions. In addition, he has gained extensive public board experienceserved from 2016 to 2018 as a director and member of Olinthe Audit Committee of Inland Residential Properties Trust, a public non-traded multifamily Real Estate Investment Trust (“REIT”); and from 20022014 to 2017 and2016 as a director and member of Quanex Building Products since 2008. Other Directorships Since 2012: Mr. Rupp served asthe Audit Committee (and Compensation Committee in 2015) of Inland Real Estate Corporation, a director of Olin Corporation from 2002 to 2005, and as Chairman of Olin's board from 2005 until his retirement in 2017. Mr. Rupp also currently servesshopping center REIT listed on the Boards of Cass Information Systems and Owens-Illinois, Inc.NYSE until it was taken private.
CURTIS M. STEVENS, age 65
69 Biography: Mr. Stevens retired in June 2017 from Louisiana-Pacific Corporation, an NYSE traded building materials manufacturer. Prior to his retirement, Mr. Stevens served as the Chief Executive Officer and a director of Louisiana-Pacific from 2012 to June 2017. Prior to becoming CEO in May 2012, Mr. Stevens served as Louisiana-Pacific'sLouisiana-Pacific’s Chief Operating Officer and Executive Vice President beginning in December 2011. Prior to assuming the role of Chief Operating Officer, Mr. Stevens served as Chief Financial Officer of Louisiana-Pacific since 1997, and as Executive Vice President, Administration, since 2002.
Before joining Louisiana-Pacific, Mr. Stevens served for 14 years in various financial and operational positions at Planar Systems, a flat-panel display products manufacturer. Mr. Stevens holds a
B.A.BA in Economics and an
M.B.AMBA with a concentration in Finance from the University of California at Los Angeles.
Key Attributes, Experience, and Skills: Through his various roles at Louisiana-Pacific, Mr. Stevens acquired broad experience in the building products industry. He also possesses a strong background in accounting and finance, as well as extensive expertise in information technology and supply chain management, strategy development, and public company issues. Further, Louisiana-Pacific'sLouisiana-Pacific’s international operations have provided Mr. Stevens with strong international business experience. Other Directorships Since 2012:2016: Mr. Stevens served on the board of Louisiana-Pacific from 2012 until his retirement in 2017. The Board2017, and has served since 2018 on the board and Audit Committee of DirectorsInterfor Corporation, a lumber producer whose stock is listed on the Toronto Stock Exchange.
WILLIAM E. WALTZ, JR. age 57
Biography: Since 2018, Mr. Waltz has affirmatively determinedserved as the President and Chief Executive Officer and a Director of Atkore, Inc. Prior to that, Ms. Davishe served in several other executive roles, including Chief Operating Officer and eachGroup President of Messrs. Buck, Nosbaum, Rupp,the Atkore Electrical Raceway reporting segment. From 2009 until joining Atkore in 2013, Mr. Waltz was Chairman and Stevens have no material relationship with theChief Executive Officer at Strategic Materials, Inc., North America’s largest glass recycling company. Prior to that, he spent 15 years in various divisions of Pentair plc, including President-Pentair Flow Technologies. Mr. Waltz began his career at General Electric Company and have satisfiedas a Deloitte Management consultant. Mr. Waltz earned an MBA from Northwestern University, Kellogg Graduate School of Management, a Masters of Science in Computer Science from Villanova University, a Bachelor of Science in Industrial Engineering from Pennsylvania State University, and was a graduate of General Electric’s Information Systems Management Program. Mr. Waltz also has served as a Governor for the independence requirements of the New York Stock Exchange. In assessing director independence, the Board of Directors considered the relationships (as a customer or supplier or otherwise) of the Company with various companies with which such directors may be affiliatedNational Electrical Manufacturers Association (NEMA).
Key Attributes, Experience, and Skills: During his time at Atkore and in his prior roles at Strategic Materials and Pentair, Mr. Waltz has determined that there are no such relationships that,gained significant leadership and operational experience in the opinion of the Board, might impact any director's independence.manufacturing sector. In making this assessment, the Board took into account the level of transactions with such companieshis various positions, Mr. Waltz has also built extensive expertise in relationship to the Company'sbuilding products, strategic planning, M&A, sales and the other parties' aggregate sales, the level of
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director involvement in such transactionsmarketing, supply chain management, and the ability of such directors to influence such transactions. Based on its review, the Board determined that no transactions occurred during the year that might affect any non-employee director's independence. During the fiscal year, the Nominating & Corporate Governance Committee determined that there were no "related person" transactions, as defined by the Securities and Exchange Commission. In addition, each of such directorsinternational management.
Other Directorships Since 2016: Mr. Waltz has met the definitions of "non-employee director" under Rule 16b-3 of the Securities Exchange Act of 1934 and "outside director" under Section 162(m) of the Internal Revenue Code of 1986. There are no arrangements or understandings between any person and any of the directors pursuant to which such director was selected as a nominee for election at the Meeting, and there are no family relationships among any of the directors or executive officers of the Company. Ms. Davis and Messrs. Buck, Rupp and Stevens have each indicated a willingness to serve if elected. If a nominee should be unable to serve or will not serve for any reason, and if any other person is nominated, the persons designatedserved on the accompanying formboard of proxy will have discretionary authority to vote or refrain from voting in accordance with their judgment on such other nominee unless authority to vote on such matter is withheld.
Atkore since 2018.
Vote Required
To be elected as a director, a director nominee must receive a majority of votes cast at the meeting with respect to such nominee (the number of shares voted "FOR" a director nominee must exceed the number of votes cast "AGAINST" that nominee). Cumulative voting is not permitted in the election of directors. Abstentions and broker non-votes will not be treated as a vote for or against any particular director nominee and will not affect the outcome of the election of directors.
Pursuant to the Company's Corporate Governance Guidelines, any current director that is nominated for election must tender his or her resignation as a director in the event that he or she receives more "AGAINST" votes than "FOR" votes. In such an event, the Governance Committee and subsequently the full Board would then review and determine whether to accept or reject the tendered resignation. The Board is required to publicly disclose its decision and the rationale behind it within ninety days from the date of the certification of the election results.
Recommendation
The Board of Directors recommends that you vote "FOR" the elections of Ms. Davis and Messrs. Buck, Rupp and Stevens.GEORGE L. WILSON, Unless you give contrary instructions in your proxy, your proxy will be voted "FOR" the elections of Ms. Davis and Messrs. Buck, Rupp and Stevens. If any nominee should become unable or unwilling to accept nomination or election, the person acting under the proxy will vote for the election of such other person as the Board of Directors may recommend. The Board has no reason, however, to believe that any nominee will be unable or unwilling to serve if elected.age 53
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PROPOSAL NO. 2
ADVISORY VOTE APPROVING NAMED EXECUTIVE OFFICER COMPENSATION
At the meeting, the stockholders will vote on an advisory resolution approving the compensation of the Company's named executive officers, as required pursuant to Section 14A of the Securities Exchange Act.
We believe that our compensation practices and procedures are competitive, focused on pay-for-performance and strongly aligned with the long-term interests of our stockholders. This advisory stockholder vote, commonly known as "Say-on-Pay," gives you as a stockholder the opportunity to express approval or withhold approval of the compensation we pay our named executive officers through voting for or against the following resolution:
"Resolved, that the stockholders approve the compensation of the Company's named executive officers as disclosed pursuant to Item 402 of Regulation S-K in the Company's 2018 Proxy Statement, which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table and the other executive compensation tables and related discussion."
The Company and the Compensation & Management Development Committee (the "Compensation Committee") remain committed to the compensation philosophy, practices, and objectives outlined under the heading "Compensation Discussion and Analysis" located on page 14 of this Proxy Statement. As always, the Compensation Committee will continue to review all elements of the executive compensation program and take any steps it deems necessary to continue to fulfill the objectives of the program.
Stockholders are encouraged to carefully review the "Compensation Discussion and Analysis" section of this Proxy Statement for a detailed discussion of the Company's executive compensation program.
Because your vote is advisory, it will not be binding upon the Company or the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
Unless the Board modifies its policy on the frequency on holding Say-on-Pay advisory votes, Say-on-Pay votes by our stockholders take place at each Annual Meeting, and the next such vote will occur at the annual meeting to which this Proxy Statement relates.
Vote Required
The affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal is necessary to approve the Say-on-Pay proposal. Abstentions will have the same effect as a vote "AGAINST" the Say-on-Pay proposal. Broker non-votes will have no effect on the Say-on-Pay proposal.
Board Recommendation
The Board recommends that you vote "FOR" the ratification of the advisory resolution approving the compensation of the Company's named executive officers.
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PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDIT FIRM
The Audit Committee has selected Grant Thornton LLP, an independent registered public accounting firm, to audit the Company's consolidated financial statements for fiscal year 2018. Grant Thornton LLP has been the Company's independent registered public accounting firm since April 2014, when it was retained by the Audit Committee after the completion of a competitive process to select an auditor for the Company's fiscal 2014 financial statements. We are asking the stockholders to ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2018. Grant Thornton LLP was appointed by the Audit Committee in accordance with its charter.
In the event stockholders fail to ratify the appointment of Grant Thornton LLP, the Audit Committee may reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent accounting firm at any time during the year if the Audit Committee determines that such a change would be in the Company's and its stockholders' best interests.
The Audit Committee has approved all services provided by Grant Thornton LLP. A representative of Grant Thornton LLP will be present at the Annual Meeting, will have the opportunity to make a statement, and will be available to respond to appropriate questions you may ask.
Vote Required
This vote requires approval by the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal. Abstentions with respect to the approval of this proposal will have the effect of a vote "AGAINST" this proposal. Broker non-votes will not be counted for the purpose of determining the number of votes necessary for approval of this proposal.
Board Recommendation
The Board recommends that you vote "FOR" the ratification of appointment of Grant Thornton LLP as the Company's independent registered public accounting firm for the fiscal year ending October 31, 2018.
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EXECUTIVE OFFICERS
Set forth below is certain information concerning the executive officers of the Company, each of whom serves at the pleasure of the Board of Directors. There is no family relationship between any of these individuals or between these individuals and any of the Company's directors. There are no arrangements or understandings between any person and any of the executive officers pursuant to which such executive officer was selected as an executive officer, except for arrangements or understandings with such executive officer acting solely in such executive officer's capacity as such.
| | |
Name and Age
| | Office and Length of Service |
|---|
William C. Griffiths, 66 | | Chairman of the Board, President and Chief Executive Officer since 2013 |
Brent L. Korb, 45 | | Senior Vice President—Finance and Chief Financial Officer since 2008 |
Kevin P. Delaney, 56 | | Senior Vice President—General Counsel and Secretary since 2007 |
George L. Wilson, 49 | | Vice President—Chief Operating Officer since 2017 |
M. Dewayne Williams, 47 | | Vice President—Controller since 2013 |
Mr. GriffithsBiography: Mr. Wilson was elected Chairman,named President and Chief Executive Officer of the Company effective July 9, 2013. Prior to joining the Company, Mr. Griffiths served as the Managing Director and a member of the board of directors of Sealine (International) Ltd., a privately held manufacturer of yachts and other marine vessels based in the United Kingdom, from 2012 until it was sold in June 2013. Prior to joining Sealine in 2012, Mr. Griffiths served as Chairman of the Board, President and CEO of Champion Enterprises, Inc., a NYSE-traded producer of modular and manufactured housing until 2010. He joined Champion as a Director, and as President and Chief Executive Officer, in August 2004, and was named Chairman of the Board in 2006. Champion filed for Chapter 11 bankruptcy on November 15, 2009. From 2001 to 2004, Mr. Griffiths was President—Fluid Systems Division at SPX Corporation, a global multi-industry company located in Charlotte, North Carolina. Mr. Griffiths graduated from the University of London with a B.S. with Honors in Mining Engineering. In addition, Mr. Griffiths is a graduate of the Harvard Business School's PMD executive education program.
Mr. Korb was named Senior Vice President—Finance and Chief Financial Officer of the Company on AugustJanuary 1, 2008. Mr. Korb was named Vice President—Controller of Quanex Corporation in 2005, and was elected to the same position with the Company upon its creation on December 12, 2007. Prior to his election as Vice President—Controller of Quanex Corporation, Mr. Korb served as Assistant Controller of Quanex Corporation from 2003 to 2005. Prior to that time, Mr. Korb was Controller & Director of Business Analysis since 2003, and Manager of Business Analysis since 2001, of Resolution Performance Products, a manufacturer of specialty chemicals. From 1996 to 2001, Mr. Korb held various positions at Service Corporation International, a provider of funeral, cremation and cemetery services, including Director International Finance & Accounting, Manager International Finance & Accounting, Manager Corporate Development, Manager Strategic Planning, and Financial Analyst.
Mr. Delaney was named Senior Vice President—General Counsel and Secretary of Quanex Corporation on February 24, 2005, and was elected to the same position with the Company upon its creation on December 12, 2007. Prior to that, he was Vice President—General Counsel of Quanex Corporation since 2003, and Secretary since 2004. Prior to that he was Chief Counsel for Trane Residential Systems, a business of American Standard Companies, a global manufacturer with market leading positions in automotive, bath and kitchen, and air conditioning systems, since 2002; Assistant General Counsel for American Standard Companies since 2001; and Group Counsel for The Trane Company's North American Unitary Products Group since 1997. Prior to that time, Mr. Delaney was Vice President—General Counsel with GS Roofing Products Company, Inc. from 1995 to 1997 and Senior Attorney with GTE Directories Corporation from 1991 to 1995.
Mr. Wilson was named Vice President—Chief Operating Officer of the Company effective August 1, 2017.2020. Prior to his appointment to that role, Mr. Wilson served as the Company’s Vice President — Chief Operating Officer since 2017. Prior to that time, Mr. Wilson served as President and General
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Manager of the Company'sCompany’s Insulating Glass Systems Division since 2011, and as General Manager of Edgetech I.G., Inc. beginning with its purchase by Quanex in March 2011 until it was consolidated with existing Quanex operations to create the Insulating Glass Systems Division. Prior to joining Quanex, Mr. Wilson served as the Vice President of Operations for Lauren Manufacturing from 2008 to 2010, and as the Vice President of Human Resources for its parent company Lauren International, a diversified manufacturer of polymers, rubbers and plastics, from 2010 to 2011. Prior to that time and beginning in 1993, Mr. Wilson served in various capacities of increasing responsibility for Federal Mogul, a Tier 1 manufacturer of various automobile components.
Mr. WilliamsWilson earned an MBA from Indiana University and a Bachelor of Science in Accounting from The University of Akron.
Key Attributes, Experience, and Skills: was named Vice President—ControllerDuring his time at the Company and in his prior roles at Lauren Manufacturing, Mr. Wilson has amassed significant leadership and operational experience in the building products industry. His experience during his three decade career has also provided Mr. Wilson with extensive and wide-ranging expertise in all areas of business, including human resources, sales and marketing, accounting, finance, supply chain management, and international management.
The Board of Directors has affirmatively determined that Mses. Davis and Mendes, and each of Messrs. Hughes, Lippert, Maier, Stevens, and Waltz have no material relationship with the Company and
have satisfied the independence requirements of the New York Stock Exchange. In assessing director and director nominee independence, the Board of Directors considered the relationships (as a customer or supplier or otherwise) of the Company effective Julywith various companies with which such directors may be affiliated and has determined that there are no such relationships that, in the opinion of the Board, might impact any director’s independence. In making this assessment, the Board took into account the level of transactions with such companies in relationship to the Company’s and the other parties’ aggregate sales, the level of director involvement in such transactions, and the ability of such directors to influence any such transactions. Based on its review, the Board determined that no transactions occurred during the year that might affect any non-employee director’s independence. During the fiscal year, the Nominating & Corporate Governance Committee determined that there were no “related person” transactions, as defined by the Securities and Exchange Commission. In addition, each director other than Messrs. Griffiths and Wilson has met the definition of “non-employee director” under Rule 16b-3 of the Securities Exchange Act of 1934.
There are no arrangements or understandings between any person and any of the director nominees pursuant to which such director nominee was selected as a nominee for election at the Meeting, and there are no family relationships among any of the director nominees or executive officers of the Company. Mses. Davis and Mendes, and Messrs. Griffiths, Hughes, Lippert, Maier, Stevens, Waltz, and Wilson have each indicated a willingness to serve if elected. If a nominee should be unable to serve or will not serve for any reason, and if any other person is nominated, the persons designated on the accompanying form of proxy will have discretionary authority to vote or refrain from voting in accordance with their judgment on such other nominee unless authority to vote on such matter is withheld.
Vote Required
To be elected as a director, a director nominee must receive a majority of votes cast at the meeting with respect to such nominee (the number of shares voted “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee). Cumulative voting is not permitted in the election of directors. Abstentions and broker non-votes will not be treated as a vote for or against any particular director nominee and will not affect the outcome of the election of directors.
Pursuant to the Company’s Corporate Governance Guidelines, any current director that is nominated for election must tender his or her resignation as a director in the event that he or she receives more “AGAINST” votes than “FOR” votes. In such an event, the Governance Committee and subsequently the full Board would then review and determine whether to accept or reject the tendered resignation. The Board is required to publicly disclose its decision and the rationale behind it within ninety days from the date of the certification of the election results.
Recommendation
The Board of Directors recommends that you vote “FOR” the elections of Mses. Davis and Mendes, and Messrs. Griffiths, Hughes, Lippert, Maier, Stevens, Waltz, and Wilson. Unless you give contrary instructions in your proxy, your proxy will be voted “FOR” the elections of all director nominees. If any nominee should become unable or unwilling to accept nomination or election, the person acting under the proxy will vote for the election of such other person as the Board of Directors may recommend. The Board has no reason, however, to believe that any nominee will be unable or unwilling to serve if elected.
PROPOSAL NO. 2
ADVISORY VOTE APPROVING NAMED EXECUTIVE OFFICER COMPENSATION
At the meeting, the stockholders will vote on an advisory resolution approving the compensation of the Company’s named executive officers (“NEOs”), as required pursuant to section 14A of the Securities Exchange Act.
We believe that our compensation practices and procedures are competitive, focused on pay-for-performance, and strongly aligned with the long-term interests of our stockholders. This advisory stockholder vote, commonly known as “Say-on-Pay,” gives you as a stockholder the opportunity to express approval or withhold approval of the compensation we pay our NEOs through voting for or against the following resolution:
“Resolved, that the stockholders hereby approve the compensation of the Company’s named executive officers as disclosed pursuant to Item 402 of Regulation S-K in the Company’s 2022 Proxy Statement, which disclosure includes the Compensation Discussion and Analysis, the Summary Compensation Table, and the other executive compensation tables and related discussion.”
The Company and the Compensation & Management Development Committee (the “Compensation Committee”) remain committed to the compensation philosophy, practices, and objectives outlined under the heading “Compensation Discussion and Analysis” located on page 18 of this Proxy Statement. As always, the Compensation Committee will continue to review all elements of the executive compensation program and take any steps it deems necessary to continue to fulfill the objectives of the program. Stockholders are encouraged to carefully review the “Compensation Discussion and Analysis” section of this Proxy Statement for a detailed discussion of the Company’s executive compensation program.
Because your vote is advisory, it will not be binding upon the Company or the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.
Unless the Board modifies its policy on the frequency of holding Say-on-Pay advisory votes, such votes are taken at each annual meeting of the Company’s stockholders. The next such vote will occur at the annual stockholder meeting to which this Proxy Statement relates.
Vote Required
The affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal is necessary to approve the Say-on-Pay proposal. Abstentions will have the same effect as a vote “AGAINST” the Say-on-Pay proposal. Broker non-votes will have no effect on the Say-on-Pay proposal.
Board Recommendation
The Board recommends that you vote “FOR” the ratification of the advisory resolution approving the compensation of the Company’s named executive officers.
PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDIT FIRM
The Audit Committee has selected Grant Thornton LLP, an independent registered public accounting firm, to audit the Company’s consolidated financial statements for fiscal year 2022. Grant Thornton LLP has been the Company’s independent registered public accounting firm since April 2014. We are asking the stockholders to ratify the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2022. Grant Thornton LLP was appointed by the Audit Committee in accordance with its charter.
In the event stockholders fail to ratify the appointment of Grant Thornton LLP, the Audit Committee may reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent accounting firm at any time during the year if the Audit Committee determines that such a change would be in the Company’s and its stockholders’ best interests.
The Audit Committee has approved all services provided by Grant Thornton LLP. A representative of Grant Thornton LLP will be present at the Annual Meeting, will have the opportunity to make a statement, and will be available to respond to appropriate questions stockholders may ask.
Vote Required
This vote requires approval by the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote on this proposal. Abstentions with respect to the approval of this proposal will have the effect of a vote “AGAINST” this proposal.
Board Recommendation
The Board recommends that you vote “FOR” the ratification of appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the fiscal year ending October 31, 2022.
EXECUTIVE OFFICERS
Set forth below is certain information concerning the named executive officers of the Company for the fiscal year ending October 31, 2021. There is no family relationship between any of these individuals or between these individuals and any of the Company’s directors. There are no arrangements or understandings between any person and any of the executive officers pursuant to which such executive officer was selected as an executive officer, except for arrangements or understandings with such executive officer acting solely in such executive officer’s capacity as such.
| | Name and Age | | | Office and Length of Service | |
| | William C. Griffiths, 70 | | | Executive Chairman effective January 1, 2020 | |
| | George L. Wilson, 53 | | | President and Chief Executive Officer effective January 1, 2020 | |
| | Scott M. Zuehlke, 45 | | | Senior Vice President – Chief Financial Officer & Treasurer effective November 1, 2019 | |
| | Paul B. Cornett, 44 | | | Senior Vice President – General Counsel & Secretary effective November 1, 2019 | |
| | Mark A. Livingston, 58 | | | Vice President – Chief Accounting Officer & Controller effective November 1, 2019 | |
Mr. Griffiths is currently the Company’s Executive Chairman of the Board. He served as Chairman, President and Chief Executive Officer of the Company from 2013 until January 1, 2013.2020. Prior to joining the Company, Mr. WilliamsGriffiths served as the Managing Director and a member of the board of directors of Sealine (International) Ltd., a privately held manufacturer of yachts and other marine vessels based in the United Kingdom, from 2012 until it was sold in June 2013. Prior to joining Sealine in 2012, Mr. Griffiths served as Chairman of the Board, President and CEO of Champion Enterprises, Inc., a NYSE-traded producer of modular and manufactured housing until 2010. He joined Champion as a Director, and as President and Chief Executive Officer, in August 2004, and was named Chairman of the Board in 2006. From 2001 to 2004, Mr. Griffiths was President — Fluid Systems Division at SPX Corporation, a global multi-industry company located in Charlotte, North Carolina. Mr. Griffiths graduated from the University of London with a Bachelor of Science with Honors in Mining Engineering. In addition, Mr. Griffiths is a graduate of the Harvard Business School’s PMD executive education program.
Mr. Wilson was named President and Chief Executive Officer of the Company effective January 1, 2020. Prior to his appointment to that role, Mr. Wilson served as the Company’s Vice President — Chief Operating Officer since 2017. Prior to that time, Mr. Wilson served as President and General Manager of the Company’s Insulating Glass Systems Division since 2011, and as General Manager of Edgetech I.G., Inc. beginning with its purchase by Quanex in March 2011 until it was consolidated with existing Quanex operations to create the Insulating Glass Systems Division. Prior to joining Quanex, Mr. Wilson served as the Vice President—President of Operations for Lauren Manufacturing from 2008 to 2010, and as the Vice President of Human Resources for its parent company Lauren International, a diversified manufacturer of polymers, rubbers and plastics, from 2010 to 2011. Prior to that time and beginning in 1993, Mr. Wilson served in various capacities of increasing responsibility for Federal Mogul, a Tier 1 manufacturer of various automobile components. Mr. Wilson earned a Masters of Business Administration from Indiana University and a Bachelor of Science in Accounting Corporate Controller,from The University of Akron.
Mr. Zuehlke was named the Company’s Senior Vice President — Chief Financial Officer and Treasurer effective November 1, 2019. Prior to that time, he served as Vice President — Investor Relations and Treasurer of the Company from 2016 to 2019, and served as the Company’s interim Chief Financial Officer from June 2019 to November 2019. Prior to joining the Company, Mr. Zuehlke served as Vice President, Investor Relations for Halcón Resources from 2011 to 2016, and as Director, Investor Relations for Geokinetics from 2010 to 2011. In those roles, Mr. Zuehlke was responsible for leading and managing the investor relations function and acting as the primary contact to the investment community. Halcón (now Battalion Oil) is an independent energy company focused on the acquisition, production, exploration and development of onshore liquids-rich assets in the United States, while Geokinetics was an international land and shallow water geophysical service company focusing on the petroleum and mining industries. Prior to joining Geokinetics, Mr. Zuehlke served as Manager, Finance and Investor Relations for Hercules Offshore from 2009 to 2010.
Mr. Zuehlke began his career at Invesco, where he was employed as an Equity Analyst and Market Data Associate from 1998 to 2009. Mr. Zuehlke holds a Bachelor of Business Administration from the University of Texas and a Master of Business Administration from the University of Houston.
Mr. Cornett was named the Company’s Senior Vice President — General Counsel and Secretary effective November 1, 2019. Prior to that time Mr. Cornett served as Vice President, Deputy General Counsel after joining the predecessor Company as a Staff Attorney in 2005 and holding various positions of increasing responsibility. From 2003 to 2005 Mr. Cornett was an associate in the international law firm of Fulbright & Jaworski (now Norton Rose Fulbright) where he advised clients on corporate and securities matters. Mr. Cornett holds a Bachelor of Arts from Rice University and a Juris Doctor from the University of Chicago Law School.
Mr. Livingston was named the Company’s Vice President — Chief Accounting Officer and Assistant Treasurer of Complete Production Services, Inc., a publicly held oilfield service provider, from 2009 until it was acquired by Superior Energy Services in 2012. In this role, Mr. Williams served as principal accounting officer and also provided cash management services, various treasury functions, and purchase accounting/transaction support.Controller effective November 1, 2019. Prior to that time, he served as AssistantVice President — Controller for Complete Production Services from 2005starting in February 2019. Prior to 2009. During the time from his 2012 departure from Complete Production Services until he joinedjoining the Company, Mr. Livingston served as the Vice President, Chief Accounting Officer and Controller of Omega Protein, a publicly traded producer of nutritional products, from 2015 until its acquisition in 2013,2018. From 2008 to 2015, Mr. Williams engagedLivingston served in consulting work primarily related to purchase transactionInternal Audit and Financial Reporting roles at the director level at Ion Geophysical. Between 1985 and 2007, Mr. Livingston served in various internal audit roles at various public companies and Big Four national accounting for several oilfield service companies.firms. Mr. Livingston holds a Bachelor of Business Administration from the University of Texas and is a Certified Public Accountant.
DIRECTOR AND OFFICER COMPENSATION
Directors who are also employees of the Company do not receive any additional compensation for serving on the Board. In fiscal
2017, Mr.2021, Messrs. Griffiths
was the only director who also served as anand Wilson were employee
directors of the Company. As such,
hethey did not receive any additional compensation for Board
service, andservice. Mr. Griffiths was a director prior to becoming an employee of the Company but he has not
received any director compensation since the date on which he became an employee.
For the fiscal year ended October 31,
2017,2021, the
Company'sCompany’s non-employee directors received the following compensation:
•
Annual Cash Retainer(1)—$55,000/70,000/year paid quarterly
•
•Committee Member Retainer(1)— —
Member of Audit Committee: $9,000/$10,000/year paid quarterly
•
•Member of Compensation & Management Development Committee: $7,500/$10,000/year paid quarterly
•
•Member of Nominating & Corporate Governance Committee: $7,500/year paid quarterly
•
•Committee Chairman Fees (paid in lieu of Committee Member Retainer listed above)(1)— —
Chairman of Audit Committee: $15,000/$20,000/year paid quarterly
(1)
•Chairman of Compensation & Management Development Committee: $10,000/year paid quarterly
•Chairman of Nominating & Corporate Governance Committee: $10,000/year paid quarterly(2)
•Lead Director Fee(1)—$20,000/year paid quarterly
•Annual Restricted Stock Unit Retainer(3)—On the first business day of each fiscal year, non-employee directors receive an annual restricted stock unit award of $80,000 in equivalent value. The restricted stock unit award vests immediately upon issuance. If the non-employee director meets the Company's director stock ownership guidelines (in shares and share equivalents), payment of the award will be deferred automatically to the director's separation from service (or, if earlier, a change in control of the Company), unless an election is made by the director to settle and pay the award on an earlier permitted specified date, and such election is made prior to the last day of the deferral election period applicable to the award under Section 409A of the Internal Revenue Code. If the non-employee director has not met the Company's applicable stock ownership guidelines, then payment of the award will automatically be deferred until the director's separation from service, and no election for an earlier payment date will be allowed. For purposes of this paragraph, the determination of whether a director meets the stock ownership guidelines will be made as of December 31st of the calendar year immediately preceding the calendar year in which the applicable restricted stock unit award is granted. With respect to the restricted stock unit awards that were granted on November 1, 2016, no director elected for an earlier payment date.
•Initial Restricted Stock Unit Grant—On the date on which a non-employee director is first elected or appointed as a director, such director will be granted an annual restricted stock unit award that is pro-rated for the time served during the current fiscal year, from the director's date of election or appointment. These grants will immediately vest and will be settled and paid upon the earlier of the director's separation from service or a change in control of the Company. The pro-rated restricted stock unit award, as well as the first full restricted stock unit
Table of Contents
(1)Non-employee directors are permitted to defer all or any part of their cash retainers and fees under the Quanex Building Products Corporation Deferred Compensation Plan (the "DC Plan"“DC Plan”). These deferrals are placed into notional accounts maintained under the DC Plan and are deemed invested in cash, units denominated in Common Stock, or any of the accounts available under the Company'sCompany’s qualified 401(k) plan, as the director elects. The number of units that are deemed invested in Company common stock units and credited to a director'sdirector’s notional account is equal to the number of shares of Common Stock that could have been purchased with the dollar amount deferred based on the closing price of the Common Stock on the New York Stock Exchange on the date the amount would have been paid for such share purchase. If a dividend or other distribution is declared and paid on Common Stock, for each notional common stock unit credited to a director'sdirector’s account a corresponding credit will be accrued in the director'sdirector’s notional matching account. All director deferrals are 100% vested. No payments may be made under the DC Plan until a distribution is permitted in accordance with the terms of the DC Plan. In the event of a "change“change in control"control” of the Company, any amount credited to a director'sdirector’s account is fully vested and is payable in cash within five days after the change in control occurs. A "change“change in control"control” is defined generally as (i) an acquisition of securities resulting in an individual or entity or group thereof becoming, directly or indirectly, the beneficial owner of 20% or more of either (a) the Company'sCompany’s then-outstanding Common Stock or (b) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors, (ii) a change in a majority of the persons who were members of the Board of Directors as of December 12, 2007 (the "Incumbent Board"“Incumbent Board”), (iii) generally, a reorganization, merger, consolidation or sale of the Company or disposition of all or substantially all of the assets of the Company, or (iv) the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. For this purpose, an individual will be treated as a member of the Incumbent Board if he or she becomes a director subsequent to December 12, 2007, and histhe election, or nomination for election by the Company'sCompany’s stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board; unless histhe director’s 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 an individual, entity or group other than the Board. All distributions under the DC Plan will be made in cash. Any deferral or payment permitted under the DC Plan is administered in a manner that is intended to comply with Section 409A of the Internal Revenue Code of 1986.
•
Chairman of Compensation & Management Development Committee: $15,000/year paid quarterly
•
Chairman of Nominating & Corporate Governance Committee: $12,000/year paid quarterly(2)
•
Lead Director Fee(1) — $20,000/year paid quarterly
•
Annual Restricted Stock Unit Retainer(3) — On the first business day of each fiscal year through 2021, non-employee directors received an annual restricted stock unit award of $80,000 in equivalent value. For fiscal years beginning on and after November 1, 2021, the equivalent value of this annual restricted stock unit award will be increased to $100,000. The restricted stock unit award vests immediately upon issuance. If the non-employee director meets the Company’s director stock ownership guidelines (in shares and share equivalents), payment of the award will be deferred automatically to the director’s separation from service (or, if earlier, a change in control of the Company), unless an election is made by the director to settle and pay the award on an earlier permitted specified date, and such election is made prior to the last day of the deferral election period applicable to the award under Section 409A of the Internal Revenue Code. If the non-employee director has not met the Company’s applicable stock ownership guidelines, then payment of the award will automatically be deferred until the director’s separation from service, and no election for an earlier payment date will be allowed. For purposes of this paragraph, the determination of whether a director meets the stock ownership guidelines will be made as of December 31st of the calendar year immediately preceding the calendar year in which the applicable restricted stock unit award is granted. With respect to the restricted stock unit awards that were granted on November 1, 2019, and 2020, Mr. Stevens elected for early payment to be made on the second anniversary of the date of grant. No other directors elected for an early payment to be made.
•
Initial Restricted Stock Unit Grant — On the date on which a non-employee director is first elected or appointed as a director, such director will be granted an annual restricted stock unit award that is pro-rated for the time served during the current fiscal year, from the director’s date of election or appointment. These grants will immediately vest and will be settled and paid upon the earlier of the director’s separation from service or a change in control of the Company. The pro-rated restricted stock unit award, as well as the first full restricted stock unit award granted to a newly appointed or elected director, is not eligible for any form of deferral or other payment timing election.
•
Expense Reimbursement — Directors are reimbursed by the Company for their expenses relating to attendance at meetings.
(2)
Joseph D. Rupp serves as Chairman of the Nominating & Corporate Governance Committee, but has chosen to decline the Committee Chairman Fee related to that position.
(3)
(3)RestrictedPrior to February 27, 2020, restricted stock unit grants arewere issued from the Quanex Building Products Corporation 2008 Omnibus Incentive Plan, as amended. Restricted stock unit grants issued to the non-employee directors on November 1, 2020, were issued from the Quanex Building Products Corporation 2020 Omnibus Incentive Plan.
The table below shows the total compensation of our non-employee directors for the fiscal year ended October 31, 2017.2021:
| | Name | | | Fees Earned
or Paid in
Cash(1)
($) | | | Restricted
Stock Unit
Awards(2)
($) | | | Option
Awards(2)
($) | | | Change in
Pension Value &
Nonqualified
Deferred
Compensation
Earnings(3)
($) | | | All Other
Compensation(4)
($) | | | Total
($) | |
| | Robert R. Buck(5) | | | | | 35,750 | | | | | | 77,377 | | | | | | — | | | | | | — | | | | | | 4,692 | | | | | | 117,819 | | |
| | Susan F. Davis | | | | | 77,500 | | | | | | 77,377 | | | | | | — | | | | | | — | | | | | | 19,080 | | | | | | 173,957 | | |
| | Donald R. Maier | | | | | 77,256 | | | | | | 77,377 | | | | | | — | | | | | | — | | | | | | 3,675 | | | | | | 158,308 | | |
| | Meredith W. Mendes | | | | | 75,500 | | | | | | 77,377 | | | | | | — | | | | | | — | | | | | | 2,787 | | | | | | 155,664 | | |
| | Joseph D. Rupp | | | | | 94,375 | | | | | | 77,377 | | | | | | — | | | | | | — | | | | | | 11,993 | | | | | | 183,745 | | |
| | Curtis M. Stevens | | | | | 82,500 | | | | | | 77,377 | | | | | | — | | | | | | — | | | | | | 14,289 | | | | | | 174,166 | | |
| | William E. Waltz Jr. | | | | | 74,619 | | | | | | 77,377 | | | | | | — | | | | | | — | | | | | | 2,037 | | | | | | 154,033 | | |
| | | | | | | | | | | | | | | | | | | |
Name | | Fees Earned
or Paid in
Cash(1)
($) | | Stock Unit
Awards(2)
($) | | Option
Awards(2)
($) | | Change in
Pension Value &
Nonqualified
Deferred
Compensation
Earnings(3)
($) | | All Other
Compensation(4)
($) | | Total
($) | |
|---|
Robert R. Buck | | | 69,500 | | | 76,873 | | | — | | | — | | | 5,035 | | | 151,408 | |
Susan F. Davis | | | 71,250 | | | 76,873 | | | — | | | — | | | 6,584 | | | 154,707 | |
LeRoy D. Nosbaum | | | 75,750 | | | 76,873 | | | — | | | — | | | 2,567 | | | 155,190 | |
Joseph D. Rupp | | | 87,500 | | | 76,873 | | | — | | | — | | | 3,255 | | | 167,628 | |
Curtis M. Stevens | | | 76,250 | | | 76,873 | | | — | | | — | | | 4,674 | | | 157,797 | |
(1)(1)- Amounts shown reflect fees earned by the directors from
Quanex Building Products Corporationthe Company during fiscal year 2017.2021. During fiscal 2017, Messrs.2021, Mr. Buck and Stevens and Ms. DavisMr. Waltz elected to defer cash compensation of $69,500, $38,125$35,750 and $17,500,$74,619, respectively, under the Quanex Building Products Corporation Deferred Compensation Plan in the form of notional units.Plan.
(2)
(2)These columns show respectively, the aggregate grant date fair value for restricted stock units
and stock options awarded in fiscal
20172021 computed in accordance with FASB ASC Topic 718. There were no grants of stock options to non-employee directors during fiscal
2017.2021. Director grants vest immediately and as such are expensed on the date of grant. A discussion of the assumptions used in computing the grant date fair values may be found in Note
15, "Stock-Based13, “Stock-Based Compensation,
"” included in the
Company's audited financial statements
including in the Company’s Annual Report on Form 10-K for the year ended October 31,
2017.2021. These values reflect the
Company'sCompany’s assumptions used to determine the accounting expense associated with these awards and do not necessarily correspond to the actual value that may be recognized by the directors.
The following table shows the grant date fair value of restricted stock units and option grants made during fiscal year 20172021 as well as the aggregate number of restricted stock units and stock option awards outstanding for each non-employee director as of October 31, 2017:2021:
| | | | | Restricted Stock Units | | | Stock Options | | | | |
| | 2021 Grants | | | Total Units
Outstanding as of
October 31, 2021
(#) | | | 2021 Grants | | | Total Stock Options
Outstanding as of
October 31, 2021
(#) | | | | |
| | Grant Date | | | Grant Date
Fair Value
($) | | | Grant Date | | | Grant Date
Fair Value
($) | | | | |
| | Name | | | | |
| | Buck | | | | | 11/2/2020 | | | | | | 77,377 | | | | | | — | | | | | | n/a | | | | | | — | | | | | | 20,876 | | | | | |
| | Davis | | | | | 11/2/2020 | | | | | | 77,377 | | | | | | 37,479 | | | | | | n/a | | | | | | — | | | | | | 15,876 | | | | | |
| | Maier | | | | | 11/2/2020 | | | | | | 77,377 | | | | | | 11,484 | | | | | | n/a | | | | | | — | | | | | | — | | | | | |
| | Mendes | | | | | 11/2/2020 | | | | | | 77,377 | | | | | | 8,708 | | | | | | n/a | | | | | | — | | | | | | — | | | | | |
| | Rupp | | | | | 11/2/2020 | | | | | | 77,377 | | | | | | 37,479 | | | | | | n/a | | | | | | — | | | | | | 24,008 | | | | | |
| | Stevens | | | | | 11/2/2020 | | | | | | 77,377 | | | | | | 23,774 | | | | | | n/a | | | | | | — | | | | | | 15,876 | | | | | |
| | Waltz | | | | | 11/2/2020 | | | | | | 77,377 | | | | | | 4,413 | | | | | | n/a | | | | | | — | | | | | | — | | | | | |
| | | | | | | | | | | | | | | | | | |
| | Restricted Stock Units | | Stock Options | |
|---|
| | 2017 Grants | |
| | 2017 Grants | |
| |
|---|
| | Total Units
Outstanding as of
October 31, 2017
(#) | | Total Stock Options
Outstanding as of
October 31, 2017
(#) | |
|---|
Name | | Grant Date | | Grant Date
Fair Value
($) | | Grant Date | | Grant Date
Fair Value
($) | |
|---|
Buck | | | 11/1/16 | | | 76,873 | | | 12,935 | | n/a | | | — | | | 20,876 | |
Davis | | | 11/1/16 | | | 76,873 | | | 20,346 | | n/a | | | — | | | 56,308 | |
Nosbaum | | | 11/1/16 | | | 76,873 | | | 16,046 | | n/a | | | — | | | 35,398 | |
Rupp | | | 11/1/16 | | | 76,873 | | | 20,346 | | n/a | | | — | | | 56,308 | |
Stevens | | | 11/1/16 | | | 76,873 | | | 16,046 | | n/a | | | — | | | 35,398 | |
(3)- The Company does not provide a pension plan for non-employee directors. None of the directors received preferential or above-market earnings on deferred compensation.
(4)
(4)Amounts shown represent (a) dividends paid during fiscal 20172021 on outstanding restricted stock units, and (b) equivalent dividends paid on phantom stock in the Deferred Compensation Plan for Ms. Davis and Messrs. Buck, Stevens, and StevensWaltz of $3,329; $2,965;$7,087, $2,287, $4,886, and $2,106,$625, respectively.
(5)
Mr. Buck retired as a director, effective February 25, 2021.
Compensation Discussion and Analysis
Introduction
Introduction
This section of the proxyProxy describes the compensation paid during (or for) fiscal 2021 to the executive officers listed in the “Summary Compensation TableTable” on page 3738 of this Proxy Statement:
•William C. Griffiths—Chairman,
George L. Wilson — President and Chief Executive Officer ("CEO"(“CEO”)
•
William C. Griffiths — Executive Chair
•
•George L. Wilson—Vice President and Chief Operating Officer ("COO")
•Brent L. Korb—Scott M. Zuehlke — Senior Vice President—Finance andPresident, Chief Financial Officer ("CFO"and Treasurer (“CFO”)
•
•Kevin P. Delaney—Paul B. Cornett — Senior Vice President—President, General Counsel and Secretary (“GC”)
•
•M. Dewayne Williams—Mark A. Livingston — Vice
President—President, Chief Accounting Officer and Controller
(“CAO”)
The compensation programs described
however,in this Compensation Discussion and Analysis (“CD&A”) apply
more broadly to other officers and management personnel at the Company, with changes as appropriate to reflect different levels and types of responsibility. The Company believes that this approach helps to align Quanex employees into a unified team committed to the
Company'sCompany’s corporate objectives.
Our Strong Performance Despite Challenging 2021 Market Conditions
Pent-up demand in our end markets and signs of worldwide progress against COVID-19 presented strong indications of a return to normalcy at the beginning of fiscal 2021. However, macro-economic headwinds and ongoing viral surges provided for a complex and challenging year. Amid the unprecedented environment caused by the COVID-19 pandemic, management took action to support our employees, consumers, and communities while simultaneously driving our business to deliver a record performance year. The dedication and resilience demonstrated by our associates resulted in revenue and earnings growth that was consistently ahead of our own expectations. Our strong top-line revenue growth, balanced with solid margin performance, drove earnings per share (“EPS”) and helped maximize returns to our shareholders.
Operationally, our purchasing and operations teams worked together to maximize production efficiency, reduce waste, and keep our workers safe while continuing to manufacture high quality products. Our sales and technical service teams endeavored to effectively serve our customers despite ongoing travel restrictions and challenging supply conditions. Our human resources team found exciting and innovative ways to attract and retain candidates even in the face of limited labor availability. Overall, we could not be more proud of the team’s performance during the year.
Below is a list of some of our significant accomplishments during fiscal 2021:
| | | | | Achieved Record Revenue and Earnings •
Revenue increased by 26% •
Diluted Earnings Per Share increased by 45% | |
| | | | | Strengthened Our Balance Sheet •
Repaid $65 million of debt •
Repurchased $11.2 million of stock | |
| | | | | Delivered Strong Results to Our Shareholders •
Share price at the end of the fiscal year at $20.72 which is 13.8% higher than prior year-end •
Three-year total shareholder return of +42.8% | |
| | | | | Gave Back to Our Employees and Communities •
The Quanex Foundation donated more than $800,000 to various community organizations •
Raised wages across multiple locations and experience levels and paid an annual bonus to every Company employee | |
Alignment of our Pay and
Compensation ContextStrategic RepositioningPerformance
The Company’s annual and
Fiscal 2017 Performance Beginning in 2013, the Company embarked on a transformative strategy that beganlong-term incentive plans for fiscal 2021 remained aligned with the hiringCompany’s strategic objectives that were set at the beginning of William Griffithsthe year. The Annual Incentive Award (“AIA”) was based on Revenue (weighted 40%), Adjusted EBITDA (weighted 40%), and Working Capital as CEO. Under Mr. Griffith's leadership,a Percentage of Sales (weighted 20%). Our long-term Performance Shares were based on Return on Net Assets (“RONA”); and with ongoing oversight from our Board of Directors, the Company's executive team began implementing a strategic transformation plan to improve profitability, increase free cash flow, and adjust the Company's portfolio of businesses and products to drive long-term shareholder value. These strategic actions included:
•Divested Nichols Aluminum, a rolled aluminum sheet business;
•Acquired HL Plastics, a vinyl window and door frame business;
•Acquired Woodcraft, a supplier of hardwood and manufactured cabinet doors and components; and
•Closed four plants and redeployed or retired related assets whichPerformance Restricted Stock Units (“PRSUs”) were no longer in line with long-term financial goals.
These strategic initiatives, including the decision to become a "pure play" building products company, further added to our EBITDA, EBITDA Margin, and free cash flow and reinforced our strategy of value driven business units.
In fiscal 2017, we consciously exited over $80 million in revenue. These reduced volumes, in combination with operational inefficiencies, dampened profitability and resulted in underperformancebased on key financial goals. Despite this initial decline, cash flow continued to be strong and allowed us to reduce debt (net of capital leases) by over $45 million for the second consecutive year. Additionally,Absolute Total Shareholder Return (“TSR”).
The following graph shows the Company’s year over year performance for the year was 36%. Managing cost structure, maintaining a strong balance sheet,metrics under our 2021 AIA plan and providing meaningful returns to our shareholders are important elementsdemonstrates the rigor of our strategy. The actions takengoal-setting. Despite the challenges presented by the market, the Company had a record performance year as shown in 2017 are intended to position Quanex to further improve its profitability and cash flow in 2018. The following graphs illustrate critical scope and financial metrics over the prior four-year period. They are presented on a pro forma basis to include the results of Nichols Aluminum (excluding a one-time gain on the sale of Nichols) to provide an understandingtable below.
We did not adjust any goals under any of the Company's execution on its strategic goals.incentive plans during fiscal 2021. (1)
Table of Contents
Despite Falling Short on Targets in Fiscal 2017, the Strategic Actions taken Reflect our Focus on Investment for the Long Term.
| | |
Pro Forma Revenue and Pro Forma EBITDA
Margin Performance | | Pro Forma EBITDA, Free Cash Flow, and Pro
Forma EBITDA Margin Performance |
 |
|
 |
| |
|
While revenue in fiscal 2017 ended below desired levels, EBITDA margin performance remained strong. | | In combination with the decision to retire or redeploy assets in fiscal 2017, improvements in EBITDA and free cash flow fell short of Management's goals. |
| | | | | | | | | | | | | |
Financial Metric(1) | | Fiscal 2014(2) | | Fiscal 2015(3) | | Fiscal 2016 | | Fiscal 2017 | |
|---|
Revenue ($M) | | $ | 733 | | $ | 646 | | $ | 928 | | $ | 867 | |
Pro Forma EBITDA ($M) | | $ | 47 | | $ | 61 | | $ | 103 | | $ | 96 | |
Pro Forma EBITDA Margin | | | 6.4 | % | | 9.4 | % | | 11.1 | % | | 11.1 | % |
Free Cash Flow ($M) | | $ | (13 | ) | $ | 37 | | $ | 49 | | $ | 44 | |
(1)- For the periods presented above, a reconciliation of
Pro FormaAdjusted EBITDA to Net Income as reported by the Company and a reconciliation of Free Cash Flow to Cash Provided by Operating Activities as reported by the Company, areis included inAnnex A to this Proxy Statement. Free Cash Flow
(2)
Working Capital as a Percentage of Sales is definedcalculated as cash providedthe quarterly average of the sum of receivables and inventories less payables, divided by operations less capital expenditures.
(2)Fiscal 2014 includes $137 millionnet sales, which is the formula used to calculate the Working Capital as a Percentage of Revenue and $38 million of EBITDA attributable to Nichols Aluminum. Fiscal 2014 EBITDA excludes a one-time gain on the sale of NicholsSales goal in the amountAIA beginning in fiscal year 2020. Prior to 2020, Working Capital as a Percentage of $39 million.
(3)Fiscal 2015 includes no Revenue and $1 million of EBITDA attributable to Nichols Aluminum. Despite underperformance on key financial metricsSales was not included as a performance goal in 2017, since 2014, EBITDA has more than doubled (from $47 million to $96 million), and Free Cash Flow has grown significantly (from $(13) million to $44 million).
Realized Paythe AIA.
Realizable Compensation and Shareholder Alignment
The effect
A key objective of the strategic repositioning has meaningfully reduced realizedour compensation program is to align pay for our executives during this time frame.with performance. The following chart illustrates the relationship between the CEO'sour CEO’s target and realized pay to the Company's total shareholder return betweenrealizable compensation for fiscal 20142019, 2020, and fiscal 2017.2021, and three-year stock price performance.
(1)
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Note:
Target pay includes base salary;salary, target bonus;bonus, and the grant date value of options, restricted stock, cash-based performance units,PRSUs, and performance shares for the applicable period. Realized payperiod (fiscals 2019 – 2021). Realizable compensation includes base salary, bonus payout, in-the-money value ofrestricted stock options based ongranted, PRSUs earned (or valued at target if not yet earned),
and performance shares earned (or valued at target if not yet earned) during the applicable period (fiscals 2019 – 2021) valued using the October 31,
20172021 stock
price, the value of restricted stock granted during the period based on the October 31, 2017 stock price, and the value of cash-based performance units and performance shares paid out during the period. Revenue reflects the Company's fiscal year end revenue for each applicable year. Fiscal 2014 Revenue includes $137 million attributable to Nichols Aluminum. The following table shows the payouts (as a percentage of target) for the Company's annual incentive award program ("AIA") and performance awards under the Company's Long-Term Incentive Plan. Over the past five years, incentive plan payouts have been responsive to Company performance—on average, payouts under the AIA and long-term performance award have been approximately 51% of target and 42% of target, respectively.
price.
| | | | | | | | | | | | | | | | |
| | Payout (as a % of target) | |
|---|
Award Type | | FY2013 | | FY2014 | | FY2015 | | FY2016 | | FY2017 | |
|---|
AIA | | | 0.0 | % | | 78.5 | % | | 92.8 | % | | 81.4 | % | | 0.0 | % |
Perf. Award | | | 0.0 | % | | 0.0 | % | | 66.8 | % | | 100.0 | % | | 41.0 | % |
In fiscal 2017, we did not earn a payout under the AIA and earned below target on the long-term performance award, consistent with our performance on goals during the year. Mr. Wilson earned a pro rata payout related to his prior service as a division president.
Responding to Shareholders: our Strategy and Shareholders
Changes for 2018fiscal 2022: In line with our commitment to align pay and performance, we undertook careful analysis ofongoing strategy, the value drivers of our business in relation to our compensation arrangements. As a result, decisions were made to change ourCompensation Committee reviewed the compensation programs for fiscal 2018.2022 and made the following changes — the AIA will be based on 45% Revenue, 45% Adjusted EBITDA, and 10% Working Capital as a Percentage of Sales. No changes were made to the long-term incentive plan. The Compensation Committee believes that the decisions
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made to ourthe Company’s compensation program going forward demonstratedemonstrates our ongoing commitment to align executive compensation with stockholder interests and to encourage value creation at Quanex. Although these changes are discussed here, the full impact of these decisions will be reflected in 2018 pay and in next year's proxy statement. These recent changes include the following:
•Held target compensation levels flat for executives, with the exception of a 3% market adjustment for the VP-Controller;
•Replaced EBITDA with Modified Free Cash Flow under the AIA to reflect our commitment to stronger cash flow generation;
•Replaced stock options with Performance Restricted Stock Units ("PRSU"), resulting in an LTI mix that is 75% performance-based; and
•Changed executive LTI target values to be expressed as dollar amounts rather than a percentage of salary.
Compensation Best Practices
We use traditional compensation elements of base salary, annual incentives, long-term incentives, and employee benefits to deliver attractive and competitive compensation. We benchmark both compensation and Company performance in evaluating the appropriateness of pay. All
of our executive pay programs are administered by an independent compensation committee, with assistance from an independent consultant. Some highlights to our executive compensation program include the
following actions:following:
| | | |
| What We Do | | | | | What We Don'tDon’t Do | |
|---|
✓
| • | | | Link annual incentive compensation to the achievement of an objective pre-established performance goal.
✓
goals. | | | • | | | No tax gross ups for executive officers. | |
| | • | | | Provide 50%70% of our long-term compensation in the form of Performance-Based Long-Term Incentives.
✓
performance-based long-term incentives. | | | • | | | No hedging or pledging of Company stock. | |
| | • | | | Target the market median for all elements of compensation.
✓
| | | • | | | No “single-trigger” change in control payments. | |
| | • | | | Apply robust minimum stock ownership guidelines.
✓
| | | • | | | No excessive perquisites. | |
| | • | | | Maintain a clawback policy.
✓
| | | • | | | No liberal share recycling. | |
| | • | | | Use and review compensation tally sheets.
✓
| | | • | | | No dividends on new awards of unvested stock. | |
| | • | | | Evaluate the risk of our compensation programs.
✓
| | | | | | | |
| | • | | | Use an independent compensation consultant.
✓
Seek to optimize deductibility of performance-based compensation.
| | ✗
No tax gross ups for new executive officers.
✗
We do not allow hedging or pledging of Company stock.
✗
No "single-trigger" change in control cash payments.
✗
No excessive perquisites.
| | | | | |
We design our executive compensation program to further our corporate goal of paying for performance. Our compensation plan and pay strategy focus on and are intended to influence the
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profit margins of our businesses, cash flow generation, returns to stockholders and efficient management of our operations.
Our specific objectives and related plan features include:
| | Objectives | |
Objectives | | | | How We Meet Our Objectives | |
|---|
| | Attract and retain effective leadership | | | We provide a competitive total pay package, taking into account base salary, incentives, benefits, and perquisites for each executive. We regularly benchmark our pay programs against the competitive market, comparing both fixed and variable, at-risk compensation that is tied to short-short-term and long-term performance; we use the results of this analysis as context in making pay adjustments. Our plans includelong-term plan includes three-year performance cycles on long-term incentivefor performance-based awards and three-year vesting schedules on equity incentives, and career-weighted vesting on our supplemental retirement plan to motivate long-term retention.for time-based awards. We compete effectively for the highest caliber people who will determine our long-term success. | |
| Motivate and reward executives for achieving specific financial goals | | | We offer a compensation program that focuses on variable, performance-based compensation (through Annualthrough annual and Long-Term Incentive Awards)long-term incentive awards). Specific financial performance measures used in the incentive programs include: ••
Fiscal 2017 Annual Incentive Awards (AIA)
In fiscal 2021, the AIA used a corporate scorecard based on 40% Revenue, 40% Adjusted EBITDA, and 20% Working Capital as a Percentage of Sales. •
In fiscal 2021, the long-term incentive mix was based on 30% restricted stock, 30% PRSUs, and 40% performance shares. The PRSUs are based 100% Earnings Before Interest, Taxes, Depreciationon Absolute TSR performance and Amortization and other, net (EBITDA), taking into account operational and strategic goals, provided the Company achieves the initial performance hurdle of positive operating income (excluding any amounts attributable to corporate). Fiscal 2018 AIA replaces EBITDA with Modified Free Cash Flow.•
Performance Shareshare awards use compounded Earnings Per Share (EPS) Growth to motivate long-term focusare based on bottom-line performance, Relative Total Shareholder Return (TSR) to reward executives for performance compared to the market, and Return on Invested Capital (ROIC) to encourage effective capital deployment.
corporate RONA, each earned over a three-year period. | |
| Create a strong financial incentive to meet or exceed long-term financial goals and build long-term value | | | We link a significant part of total compensation to Quanex'sQuanex’s financial and stock price performance—performance — over 70% of our compensation mix is performance-based. We deliver 50%70% of long-term incentives in the form of performance-based equity compensation. For SVPs and above, long-term compensation opportunities are weighted to deliver more than two times the target short-term incentive opportunity, resulting in a significant portion of our total compensation delivered in the form of long-term incentives. |
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| | | |
Objectives | | How We Meet Our Objectives |
|---|
| Align executive and shareholder interests | | | In order to emphasize long-term shareholder returns, we require significant Quanex stock ownership among executives through the use of stock ownership guidelines. The ultimate value of our annual equity grants is driven by stock price performance over the grant date value. •
We use absolute TSR as the sole metric for 30% of our long-term incentive compensation, which ensures that executives do not earn certain performance-based compensation when our shareholders for that same period have suffered a loss in value. | |
The Compensation Committee annually
examinesreviews the level of competitiveness and continued appropriateness of our executive compensation program. For fiscal
2017, the Company examined the previous comparator group for benchmarking compensation and determined to transition from a reference group approach to a peer group approach comprised of the Company's direct industry peers. For fiscal 2017,2021, Quanex used comparative compensation data from a group of sixteen direct industry companies, referred to in this CD&A as the
"Peer“Peer Group,
"” as a point of reference in designing and setting its compensation levels. The Peer Group consists of companies selected on criteria including size, complexity, revenue, market capitalization, risk profile, asset intensity, margins, and industrial application of the primary business.
Changes to the peer group from 2020 were discussed in last year’s Proxy Statement. The Compensation Committee reviewed and approved the following companies to be included in the
Company'sCompany’s fiscal
20172021 peer group:
| | | | | |
AAON Inc.
American Woodmark Corp.
Apogee Enterprises Inc.
ContinentalArmstrong Flooring Inc.
Cornerstone Building ProductsBrands, Inc. | | | CSW Industrials Inc.
Gibraltar Industries Inc.
Griffon Corporation | | LCI Industries (formerly known as Drew Industries Inc.)
Louisiana-Pacific Corp.Insteel Industries Inc.
L.B. Foster Company
Masonite International Corp. | | | Mueller Water Products, Inc.
NCI Building Systems Inc.
Patrick Industries Inc. | |
PGT, Inc.
Ply Gem Holdings Inc.
Simpson Manufacturing Inc.
Trex Company, Inc.
Universal Forest Products Inc.
| |
The following 18 companies were included in the fiscal 2016 Reference Group but removed from the fiscal 2017 Peer Group: A.M. Castle & Co., Actuant Corp., Albany International Corp., Astec Industries Inc., Builders FirstSource Inc., CLARCOR Inc., Compass Minerals International Inc., Eagle Materials Inc., Encore Wire Corp., EnPro Industries Inc., Graco Inc., H&E Equipment Services Inc., Headwaters Inc., Nordson Corp., Nortek Inc., Olympic Steel Inc., Superior Industries International, and Watts Water Technologies Inc.
Frederic W. Cook & Co., Inc. ("(“FW Cook"Cook”), an independent compensation consultant to the Compensation Committee, used the Peer Group pay information, along with manufacturing and general industry survey data, to develop the appropriate range of compensation for each executive position. FW Cook also prepared an independent analysis of our key performance indicators such as profitability, growth, capital efficiency, balance sheet strength, and total return to stockholders compared to our sixteen industry peers. These results were then reported to the Compensation Committee in order to provide a thorough picture of the competitiveness of pay in the context of our performance as compared with that of our peers. While the Compensation Committee uses this analysis to help frame its decisions on compensation, it uses its collective judgment in determining executive pay. The Compensation Committee exercises discretion in making compensation decisions based on the following inputs: its understanding of market conditions, its understanding of competitive pay analysis, recommendations from the CEO regarding his direct reports, the Committee'sCommittee’s overall evaluation of the executive'sexecutive’s performance, and our overall compensation strategy.
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Changes for Fiscal 2018
2022
For fiscal
2018,2022, the Company added one company
Insteel Industries,(Tredegar Corporation) to the
peercomparator group. The
following seventeen companies
below comprise the fiscal
20182022 peer group:
| | | | | |
AAON Inc.
American Woodmark Corp.
Apogee Enterprises Inc.
ContinentalArmstrong Flooring Inc.
Cornerstone Building ProductsBrands.
CSW Industrials Inc. | | | Gibraltar Industries Inc.
Griffon Corporation | |
Insteel Industries Inc.
LCI IndustriesL.B. Foster Company
Louisiana-Pacific Corp.
Masonite International Corp.
NCI Building SystemsMueller Water Products, Inc.
| | | Patrick Industries Inc. | |
PGT, Inc.
Ply Gem Holdings Inc.
Simpson Manufacturing Inc.
Trex Company, Inc.
Universal Forest Products Inc.
Tredegar Corporation | |
Our executive compensation program is a traditional design structure that has been customized to suit the business and organizational objectives of the Company. It includes base salary, annual cash incentive compensation, long-term incentives and executive benefits. Our fiscal
20172021 long-term incentive program consisted of
stock option grants, restricted stock grants,
PRSUs, and performance share awards. The amount of pay that is performance-based for an executive is directly related to the level of responsibility held by the position; accordingly, our highest ranked executive has the most performance-based pay as a percentage of total compensation. We
attempt to set realistic but challenging goals in our annual incentive and
long-term performance
share plans. In
both cases,each case, if we fail to meet the pre-determined standards, no plan-based compensation is earned by executives.
We evaluate the various components of compensation annually relative to the competitive market for prevalence and value. By setting each of the elements against the competitive market within the parameters
of our compensation strategy, the relative weighting of each element of our total pay mix varies by individual. We do not set fixed percentages for each element of compensation. The mix may also change over time as the competitive market moves or other market conditions which affect us change. We do not have and do not anticipate establishing any policies for allocating between long-term and currently paid compensation, or between cash and non-cash compensation. We have a process of assessing the appropriate allocation
betweenamong these elements of compensation on a periodic basis and adjusting our position based on market conditions and our business strategy.
Purpose: This pay element is intended to compensate executives for their qualifications and the value of their job in the competitive market. Competitive Positioning: The Company'sCompany’s goal is to target the market median as our strategic target for base salary. We review each executive'sexecutive’s salary and performance every year to determine whether base salary should be adjusted. Along with individual performance, we also consider movement of salary in the market, as well as our financial results from the prior year to determine appropriate salary adjustments. While the Compensation Committee applies general compensation concepts when determining the competitiveness of our
executives'executives’ salaries, the Compensation Committee generally considers base salaries as being competitive when they are within
approximately 10%a reasonable range of the stated market target (in this case, the market
50th50th percentile).
In the most recent analysis using both our comparator group and general industry data, the salaries for our named executive officers ranged from 82% to 107% of the market 50th percentile.Fiscal 20172021 Review: In December 2016, the Compensation Committee decided to maintain current base salaries based on the Company's relative position to the market and overall stockholder return.
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Mr. Wilson's base salary was determined in connection with his promotion to COO in August 2017. The table below provides base salaries for fiscals 2016fiscal years 2020 and 2017:
| | | | | | | | | | |
Name and Principal Position | | Fiscal 2016
Base Salary | | Fiscal 2017
Base Salary | | Base Salary
Increase | |
|---|
William C. Griffiths
Chairman, President and CEO | | $ | 815,000 | | $ | 815,000 | | | 0 | % |
George L. Wilson(1)
Vice President and COO | |
$ |
327,000 | |
$ |
450,000 | | |
38 |
% |
Brent L. Korb
Senior Vice President—Finance and CFO | |
$ |
418,000 | |
$ |
418,000 | | |
0 |
% |
Kevin P. Delaney
Senior Vice President—General Counsel and Secretary | |
$ |
375,000 | |
$ |
375,000 | | |
0 |
% |
M. Dewayne Williams
Vice President—Controller | |
$ |
232,000 | |
$ |
232,000 | | |
0 |
% |
(1)Mr. Wilson's2021. Notable transitions occurred during fiscal 20162020. At the time of appointment, the executives were generally positioned at the 25th percentile against the market data on base salary reflects his rate as Division President priorsalaries. In order to his promotion to COO.
Changesmove the executives through the competitive range and align with our median pay strategy, we provided meaningful increases for Fiscal 2018:fiscal 2021: In October 2017, the Compensation Committee decided to maintain current base salaries, as set forth above, based on the Company's relative position to market.
| | Name and Principal Position | | | Fiscal 2020
Base Salary | | | Fiscal 2021
Base Salary | | | Base Salary
Increase | |
| | George L. Wilson
President and CEO | | | | $ | 575,000 | | | | | $ | 675,000 | | | | | | 17% | | |
| | William C. Griffiths
Executive Chairman | | | | $ | 500,000 | | | | | $ | 500,000 | | | | | | 0% | | |
| | Scott M. Zuehlke
Senior Vice President, CFO and Treasurer | | | | $ | 330,000 | | | | | $ | 370,000 | | | | | | 12% | | |
| | Paul B. Cornett
Senior Vice President, General Counsel and Secretary | | | | $ | 310,000 | | | | | $ | 350,000 | | | | | | 13% | | |
| | Mark A. Livingston
Vice President, Chief Accounting Officer and Controller | | | | $ | 240,000 | | | | | $ | 275,000 | | | | | | 15% | | |
Annual Incentive Awards (AIA)
Purpose: This element of compensation is intended to reward executives for the achievement of annual goals related to key business drivers. It is also intended to emphasize to executives the key business goals of the Company from year to year. Competitive Positioning: The Company'sCompany’s strategy is to target the market median for annual incentives for performance that meets expected levels. We have established the range of possible payouts under the plan so that our competitive position could be above or below our stated strategy based on performance outcomes. Our most recent analysis showed our named executive officers to be in a range of 81% to 108% of the market median on target total cash compensation. Plan Mechanics: The Company'sCompany’s 2020 Omnibus Incentive Plan (the “Omnibus Plan”) serves as the governing plan document for our AIA. It replaced the Company’s 2008 Omnibus Incentive Plan, as amended in 2011 and 2014, (the "Omnibus Plan") serveswhich served as the governing plan document for our AIA.AIA granted for fiscal 2020 and prior years. The AIA plan design is ageared toward goal attainment, incentive plan design thatwhich pays target award levels for expected performance results.
Fiscal 2017:2021: The AIA emphasizes earnings and informed decision making with regard to the Company'sCompany’s operational and strategic goals. To integrate the goals of the AIA throughout the Company, the annual incentive program participation includes the top leaders of all of our domestic business divisions. We believe this is necessary in order to align managers throughout the organization with this incentive structure.
Rigorous Goals: The Compensation Committee took careful consideration of the Company’s performance in order to develop the plan design requiresand goals for fiscal 2021. In line with the Company’s commitment to align incentives with strategic imperatives, the fiscal 2021 scorecard was based on 40% Revenue, 40% Adjusted EBITDA, and 20% Working Capital as a Percentage of Sales. The Compensation Committee believes the use of Revenue and Adjusted EBITDA metrics, combined with attention to Working Capital as a Percentage of Sales, balances the management team’s focus and positions the Company (excluding any amounts attributable to corporate) to have positive operating income in orderstrategically for any Annual Incentive Awards to be paid out. If the performance hurdle is met, then the bonus pool for all Annual Incentive Awards is funded at the maximum bonus opportunity level. Rigorous Goals: If funded, the Compensation Committee will assess performance against the fiscal 2017 corporate scorecard weighted 100% on EBITDA.healthy growth and profitability. The Company set rigorous performance expectations based on the forecasted results of the operating divisions and the projected markets for
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building products. The Committee established performance goals for fiscal 2017 that require the Company to at least perform at last year's levels to earn a payout.
Target Award Levels: Based on competitive market practices for annual incentives, and our compensation strategy, we set a target award opportunity for each of our executives. This is the amount of incentive compensation the executive can earn when performance meets expected results, or "target."“target.” The table below reflects the payout percentage of aeach named executive'sexecutive’s base salary at the threshold, target and maximum levels of performance for fiscal 2017.2021 (which were unchanged from fiscal 2020).
Potential AIA PayoutExpressed as a % of Salary
| | Participant | | | Title | | | Threshold | | | Target | | | Maximum | |
| | Wilson | | | CEO | | | | | 50% | | | | | | 100% | | | | | | 200% | | |
| | Griffiths | | | Executive Chair | | | | | 50% | | | | | | 100% | | | | | | 200% | | |
| | Zuehlke | | | CFO | | | | | 27.5% | | | | | | 55% | | | | | | 110% | | |
| | Cornett | | | GC | | | | | 25% | | | | | | 50% | | | | | | 100% | | |
| | Livingston | | | CAO | | | | | 25% | | | | | | 50% | | | | | | 100% | | |
| | | | | | | | | | |
Participant | | Threshold | | Target | | Maximum | |
|---|
CEO | | | 50 | % | | 100 | % | | 200 | % |
COO | | | 37.5 | % | | 75 | % | | 150 | % |
CFO | | | 32.5 | % | | 65 | % | | 130 | % |
GC | | | 30 | % | | 60 | % | | 120 | % |
VP-Controller | | | 25 | % | | 50 | % | | 100 | % |
Fiscal 20172021 Results: For fiscal 2017, the performance hurdle of positive operating income (excluding corporate) was met, with the Company having earned operating income of $34.4 million. Once the hurdle was met and the plan was funded, theThe Compensation Committee did not adjust any of the goals under the Company’s fiscal 2021 AIA and determined the Company’s incentive payouts.payouts based on actual fiscal 2021 results. The Company’s targets on the primary metric formetrics under the fiscal 2021 AIA scorecard considered by the Compensation Committee was thewere a Revenue goal of $858.5-$911.6 million, an Adjusted EBITDA goal of $105.9-112.6 million, and a Working Capital as a Percentage of Sales goal equal to 11.2%. Due to uncertainty in our industry and to enhance the rigor of our program, it was determined that a flat spot would be implemented at target for revenue and Adjusted EBITDA goals, reflecting the range from fiscal 2020 actual revenue and Adjusted EBITDA ($858.5 million and $105.9 million, respectively) to fiscal 2021 plan ($911.6 million and $112.6 million, respectively). The Working Capital as a Percentage of $111.8 million. TheSales goal for fiscal 2021 was set at 11.2% compared to last year’s actual of 10.4%. For fiscal 2021, Working Capital as a Percentage of Sales was calculated as the quarterly average of the sum of receivables and inventories less payables, divided by net sales. In calculating performance, the Committee adjusted EBITDA results by factoring in the effect of foreign exchange rates, LIFO, stock based compensation, restructuring related costs, to exclude purchase price accounting inventory step-ups, transaction and advisory fees, certain executive severance charges, gain/loss on the sale of certain fixed assets, asset impairment charges, and transaction related costs.restructuring charges. The Company achieved adjustedRevenue of $1,072.1 million, Adjusted EBITDA of $98.5$126.8 million, which resulted inand Working Capital as a Percentage of Sales of 9.7%. Together, these results produced an AIA achievement of 0%equal to 200% of target payment for theexecutive officers. Mr. Wilson earned a payout equal to 81% of target, based on his role as Division President of IG Systems for the first nine months of the fiscal year, and a 0% of target payout based on his role as COO for the last three months of the fiscal year. The AIA achievement resulted in payments to participants as follows:
| | Participant | | | Title | | | Target %
(as a % of salary) | | | Achieved %
(as a % of Target) | | | Achieved %
(as a % of salary) | |
| | Wilson | | | CEO | | | | | 100% | | | | | | 200% | | | | | | 200% | | |
| | Griffiths | | | Executive Chair | | | | | 100% | | | | | | 200% | | | | | | 200% | | |
| | Zuehlke | | | CFO | | | | | 55% | | | | | | 200% | | | | | | 110% | | |
| | Cornett | | | GC | | | | | 50% | | | | | | 200% | | | | | | 100% | | |
| | Livingston | | | CAO | | | | | 50% | | | | | | 200% | | | | | | 100% | | |
| | | | | | | |
Participant | | Target %
(as a % of salary) | | Achieved %
(as a % of salary) | |
|---|
CEO | | | 100 | % | | 0 | % |
COO | | | 60 | % | | 30 | % |
CFO | | | 65 | % | | 0 | % |
GC | | | 60 | % | | 0 | % |
VP-Controller | | | 50 | % | | 0 | % |
24
Fiscal 20182022 Changes: ForIn line with the Company’s ongoing strategic imperatives, the fiscal 2018,2022 AIA design maintains a focus on Revenue, Adjusted EBITDA, and Working Capital as a Percentage of Sales. New for fiscal 2022, the Compensation Committee replaced the EBITDA metric in the AIA with Modified Free Cash Flow. Modified Free Cash Flow is defined as EBITDA minus change in accounts receivable, inventory, and accounts payable minus capital expenditures. The fiscal 2018 scorecardweighting of Revenue will be weighted 100% on Modified Free Cash Flow. We believe thatincreased to 45%, weighting of Adjusted EBITDA will be increased to 45% and the useweighting of Working Capital as a single financial measure helps focus the management team on operational excellence and profitability. The planPercentage of Sales will continuebe reduced to use positive operating income (excluding any amounts attributable to corporate) as the initial performance hurdle.
AIA participant target payout percentages will remain the same for fiscal 2018.
10%.
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Long-Term Incentive Compensation
Purpose: We have a long-term incentive program designed to help align the interests of executive management with shareholders and reward executives for the achievement of long-term goals. Long-term incentives are also critical to the retention of key employees and provide executives an opportunity for personal capital accumulation. For these reasons we have placed more value on the long-term incentive element of compensation than on other elements. The result is that this element of compensation generally represents at least half of the named executive officers'officers’ total direct compensation. Competitive Positioning: In 2016, we evaluated theOur long-term incentive philosophy and made modifications in order to targettargets the 50th percentile of the market. In our most recent analysis versus the market, we found that the named executive officers' competitive positioning is within approximately 10% of the market 50th percentile. The individual performance of each named executive officer is not considered in the value of the long-term incentive awards granted. Since the goals are set prospectively, the Company'sCompany’s financial performance determines the ultimate value of the award. Participation: Participation in the program includes the named executive officers and certain key contributors to the business and is determined based on competitive practices as well as our assessment of which positions contribute to long-term value creation. Target Award Levels: In order to align with our market strategy of targeting the 50th percentile, we have maintained the dollar value ofFiscal 2021 target long-term incentive awards for the CEO, CFO, and GC. Target awards for our VPs arewere determined based on a percent of salary.target dollar value for our executives, which has been the practice for the executive officers since fiscal 2018. The executives had the following LTI targets were established for the executives for fiscal 2017:2021:| | Participant | | | Title | | | LTI Target | |
| | Wilson | | | CEO | | | | $ | 1,650,000 | | |
| | Griffiths* | | | Executive Chair | | | | $ | — | | |
| | Zuehlke | | | CFO | | | | $ | 470,000 | | |
| | Cornett | | | GC | | | | $ | 325,000 | | |
| | Livingston | | | CAO | | | | $ | 200,000 | | |
| | |
*
Mr. Griffiths does not receive long-term incentive compensation in his role as Executive Chair. Participant
| | LTI Target |
|---|
CEO
| | $2,145,000 |
VP—COO
| | 200% of base salary |
CFO
| | $700,000 |
GC
| | $594,000 |
VP—Controller
| | 70% of base salary |
Fiscal Year 2017 Long Term2021 Long-Term Incentive Program Design
At its December 2020 meeting, the Compensation Committee maintained its ongoing long-term incentive plan design, reflecting the Company’s continued emphasis on improving returns for its shareholders. For fiscal 2021, the performance share awards were measured by reference to one performance metric — Return on Net Assets (“RONA”) — and the PRSUs were based 100% on Absolute TSR, each as measured over a three year performance period. The Company's fiscal 2017 program consisted of a combination ofLTI mix was delivered 30% in restricted stock, options,30% in PRSUs, and 40% in performance shares and restricted stock.shares. The allocation betweenamong the long-term incentive vehicles is determined by the Compensation Committee based on market information provided by its compensation consultant, as well as input from senior management regarding the key business drivers that allow for the continuation ofwill continue to promote a results-oriented culture. The Omnibus Plan does not provide for any specific subjective individual performance component in determining the ultimate value of theany award. The following chart illustrates the fiscal 20172021 allocation of long-term incentives, by vehicle type.which is 70% performance-based.
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Stock Options
Options to purchase company stock comprised 25% of our long-term incentive target value for fiscal 2017 and provide executives the opportunity to share in the increase in stock value over time. They provide an element of compensation that varies along with changes in stock price over time. These awards also offer our executives the opportunity to accumulate value (if the Company's stock appreciates) since the growth in value occurs over a long period of time (up to 10 years), and gains from that growth are not taxed until such time as the options are exercised. Since we generally use ratable vesting over three years for each award, stock options also serve a meaningful role in the retention of our key employees.
Our stock options are granted at the fair market value closing price on the date of grant, have a term of ten years, and generally vest ratably over a three-year period.
Restricted stock represents
25%30% of
the participant'seach participant’s long-term incentive value.
WeThe Compensation Committee chose
25%30% of the total value because it provides meaningful retentive value to
our key executives, helps smooth out market volatility, and is cost efficient. The restricted stock awards vest three years after the award is granted, so long as the participant remains employed
by us.through the vesting date. We believe restricted stock awards are an effective long-term compensation vehicle through which key employees can be retained, especially through volatile periods in the market.
Performance Restricted Stock Units
PRSUs represent 30% of each participant’s long-term incentive value and are payable 100% in Company stock. The PRSUs can be earned based on the Company’s Absolute Total Shareholder Return (“TSR”) over the three-year performance period. In order for executives to receive a target payout, the Company must have Absolute TSR improvement of 20%. For fiscal 2021, the number of shares earned will be calculated based on Absolute TSR using the 10-day average stock price leading up to the start of the performance period (November 1, 2020) and the 10-day average stock price leading up to the end of the performance period (October 31, 2023) and includes the reinvestment of dividends. The table below illustrates the number of shares that would vest based on the Company’s Absolute TSR under the PRSU awards at various levels of performance. Performance will be interpolated for any results in between threshold and target or target and maximum.
| | Milestones | | | Absolute Total
Shareholder Return
Performance | | | Performance
Restricted Stock
Units Modifier | |
| | Maximum | | | | | ≥50% | | | | | | 150% | | |
| | Target | | | | | 20% | | | | | | 100% | | |
| | Threshold | | | | | –20% | | | | | | 50% | | |
Performance shares represent
50%40% of each
participant'sparticipant’s long-term incentive value. Performance shares are payable
50%100% in cash
and 50% in stock and are intended to motivate executives to achieve preset goals that are in line with critical business drivers.
These awards also provide an incentive for executives to outperform peer companies as measured by relative total shareholder return.We set target award values for each year. These target award values are used to calculate the number of performance shares granted to each executive. The final number of shares to vest is not determined until the end of a three-year performance
cycle and is based on Earnings Per Share Growth (or "EPS Growth") and Relative Total Shareholder Return (or "Relative TSR"). Each goal is weighted 50%cycle. In December 2020, the Compensation Committee maintained the design of the
total performance
share award. As part of our emphasis on performance-based long-term
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incentives, new for 2017,shares to be measured wholly by reference to the payouts under these metrics are subject to a modifier based on Return on Invested Capital ("ROIC") improvement.
EPS Growth is measured as the cumulative value of EPS over the three-year performance period, Relative TSR is expressed as the stock price appreciation plus dividends reinvested relative to appreciation of our peer group, and ROIC performance is measured as the Company's absolute improvement over the three-year performance period. ROICCompany’s RONA. RONA is defined as net operating profit after taxes divided by average invested capital. Net operating profit after taxes is definedincome over total assets (measured as earnings from continuing operationsa five quarter trailing average), minus cash, minus
current liabilities, plus after-tax interest and amortization expense. Average invested capital is defined ascurrent long-term debt. The decision to utilize a single performance metric was made to help focus the sum of the average debt and shareholders' equity for the year. ROIC excludes other comprehensive loss, goodwill impairments and non-economic accounting changes, as they are not reflective of our operating performance. Modifier payouts can range from 0% to 50% of target, but no modifier will be applied if the Company does not reach at least thresholdexecutives on exceptional performance on the EPS Growth and Relative TSR metrics. Performancereturns. The performance shares will continue to be capped at 200% of target. The goals for EPS Growth and Relative TSRRONA performance are listedshown below:
| | Milestones | | | RONA
Performance | | | Performance
Share Modifier | |
| | Maximum | | | | | 14.5% | | | | | | 200% | | |
| | Target | | | | | 12.6% | | | | | | 100% | | |
| | Threshold | | | | | 10.3% | | | | | | 75% | | |
| | | | | | | | | | | | | | | | |
| |
| |
| | Performance Share Modifier | |
|---|
| |
| | 3-Yr. Cumulative
Compounded
Annual
EPS Growth % | |
|---|
Milestones | | Relative Total
Shareholder Return
Percentile | | R-TSR
(50% Weighting) | | EPS
(50% Weighting) | | Total | |
|---|
Maximum | | | 75 | % | | 12 | % | | 100 | % | | 100 | % | | 200 | % |
Target | | | 60 | % | | 9 | % | | 50 | % | | 50 | % | | 100 | % |
Threshold | | | 30 | % | | 6 | % | | 37.5 | % | | 37.5 | % | | 75 | % |
To measure performance for the fiscal 2017 grant, the three-year cumulative compounded EPS growth will be applied to the starting value of $0.80 per share, which was derived from historical EPS, adjusted for the pro forma results of businesses acquired, restructuring and goodwill impairment charges, less certain transaction costs.
Fiscal 20172021 Long-Term Incentive Grants
The number of long-term incentive awards granted during fiscal 20172021 was determined by: (1) taking 25%30% of the participant's target award value and dividing it by the calculated Black-Scholes value of a Quanex stock option to determine the number of options, (2) taking 25% of the participant'sparticipant’s target award value and dividing it by the 10-day average closing stock price between October 18, 201619, 2020 and October 31, 201630, 2020 to determine the number of restricted stock awards, (2) taking 30% of the participant’s target value and dividing it by the calculated Monte Carlo value of the PRSUs based on the 10-day average closing stock price between October 19, 2020 and October 30, 2020 to determine the number of PRSUs, and (3) taking 50%40% of the participant'sparticipant’s target award value and dividing it by the 10-day average closing stock price between October 18, 201619, 2020 and October 31, 201630, 2020 to determine the number of performance shares. The equity grant calculations apply an average stock price based on the last 10ten trading days in October 2016.2020. For more information related to long-term incentive awards granted during fiscal 2017,2021, please see the table entitled "Grants“Grants of Plan Plan‑Based Awards"Awards” located on page 4041 of this Proxy Statement.
Previously Awarded Long-Term Incentive Grants
Fiscal 2019 Performance Shares
The performance shares awarded to our executives in December 20142018 (the "Fiscal 2015“Fiscal 2019 Performance Shares"Shares”) became payable to executives in December 2017,2021, with a final value determined by the Company'sCompany’s performance for fiscal 2019 through fiscal 2021. Performance measures for the Fiscal 2019 Performance Shares were based on consolidated RONA. RONA is defined as operating income over total assets (measured as a five quarter trailing average), minus cash, minus current liabilities, plus current long-term debt. Our performance against the pre-established RONA goal determined the payout to executives within a range from threshold to maximum. The pre-established goal and the actual performance against the goal is set forth below. The Compensation Committee did not adjust any of the goals under the Company’s fiscal 2019 performance shares and determined the Company’s payouts based on actual results for the performance period.
| | Milestones | | | RONA
Performance | | | Payout
Opportunity | |
| | Performance Measures: | | | | | | | | | | | | | |
| | Maximum | | | | | 9.6% | | | | | | 200% | | |
| | Target | | | | | 8.4% | | | | | | 100% | | |
| | Threshold | | | | | 7.1% | | | | | | 75% | | |
| | Actual Performance | | | | | 17.0% | | | | | | 200% | | |
For the Fiscal 2019 Performance Shares, the total actual payout was equal to 200% of target as a result of RONA performance. Actual payout amounts for each named executive officer were as follows:
| | Officer | | | Fiscal 2019
Performance
Shares
Granted
(#) | | | Total
Performance
Shares
Earned
(200% of
Target)
(#) | | | Total Payout
($) | |
| | Griffiths | | | | | 55,600 | | | | | | 111,200 | | | | | | 2,318,520 | | |
| | Wilson | | | | | 23,300 | | | | | | 46,600 | | | | | | 971,610 | | |
| | Zuehlke | | | | | 4,500 | | | | | | 9,000 | | | | | | 187,650 | | |
| | Cornett* | | | | | — | | | | | | — | | | | | | — | | |
| | Livingston* | | | | | — | | | | | | — | | | | | | — | | |
**
Messrs. Cornett and Livingston did not participate in the Fiscal 2019 Performance Shares.
Fiscal 2019 Performance Restricted Stock Units
The PRSUs awarded to our executives in December 2018 (the “Fiscal 2019 PRSUs”) became payable to executives in December 2021, with a final value determined by the Company’s performance period for fiscal
20152019 through fiscal
2017. Performance measures and goals2021. The performance measure for the Fiscal
2015 Performance Shares included EPS Growth and Relative TSR, each weighted 50% of the total performance share award. EPS Growth is measured as the cumulative value of EPS over the three-year performance period, and Relative2019 PRSUs was Absolute TSR. Absolute TSR is expressed as the
Company’s total stock price appreciation,
plus dividends reinvested relative to appreciationassuming reinvestment of
our peer group. Relativeall dividends. Absolute TSR is determined by calculating the change in the value of our stock plus the value of dividends
and comparing that value
Tableas if they were paid currently at the time of Contents
with that of our peer group.issuance by the Company. Our performance against these pre-established goalsthis goal determined the payout to executives within a range from threshold to maximum. The pre-establishedplan only permitted a payout of target if TSR increased by a minimum of 20%. During the performance period, the Company achieved Absolute TSR of 42.8%, which resulted in a payout equal to 138% of Target. The Compensation Committee did not adjust any of the goals under the Company’s fiscal 2019 PRSUs and determined the Company’s payouts based on actual results for the performance to these goals are set forth below.
period. | | Officer | | | Fiscal 2019
Performance
RSUs
Granted
(#) | | | TSR
Total
Shares
Vested
(138% of
Target)
(#) | | | Cash
Paid for
Accumulated
Dividends
during
Performance
Period
($) | |
| | Griffiths | | | | | 42,400 | | | | | | 58,520 | | | | | $ | 56,179 | | |
| | Wilson | | | | | 17,800 | | | | | | 24,568 | | | | | $ | 23,585 | | |
| | Zuehlke | | | | | 3,500 | | | | | | 4,831 | | | | | $ | 4,638 | | |
| | Cornett* | | | | | — | | | | | | — | | | | | | — | | |
| | Livingston* | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | |
| |
| | 3 yr.
EPS Growth(1) | | Performance Share Modifier | |
|---|
| | Relative
TSR
Percentile | | R-TSR
(50% weighting) | | EPS
(50% weighting) | |
| |
|---|
Milestones | | Cum. | | Percent | | Total | |
|---|
Performance Measures: | | | | | | | | | | | | | | | | | | | |
Maximum | | | 75 | % | $ | 0.83 | | | 12 | % | | 100 | % | | 100 | % | | 200 | % |
Target | | | 60 | % | $ | 0.79 | | | 9 | % | | 50 | % | | 50 | % | | 100 | % |
Threshold | | | 30 | % | $ | 0.74 | | | 6 | % | | 37.5 | % | | 37.5 | % | | 75 | % |
Actual Performance | | | 0 | % | $ | 0.75 | | | 6.7 | % | | 0 | % | | 41 | % | | 41 | % |
*(1)Three Year EPS Growth was determined by using a base year value of $0.22, which represents the fiscal 2014 reported EPS.
ForMessrs. Cornett and Livingston did not participate in the Fiscal 2015 Performance Shares, the total actual payout was equal to 41% of target as a result of earning 82% of target associated with EPS Growth and 0% of target associated with relative TSR. Actual payout amounts for each named executive officer were as follows:
2019 PRSUs.
| | | | | | | | | | | | | | | | | | | | | | | | | |
Officer | | Fiscal 2015
Performance
Shares
Granted
(#) | | EPS
Growth
Total
Payout
($) | | EPS
Growth
Total
Shares
Granted
(#) | | R-TSR
Total
Payout
($) | | R-TSR
Total
Shares
Granted
(#) | | Cash Paid for
Accumulated
Dividends during
Performance
Period
($) | | Total
Payout
($) | | Total
Shares
Granted
(#) | |
|---|
Griffiths | | | 53,600 | | | 243,494 | | | 10,988 | | | — | | | — | | | 10,549 | | | 254,043 | | | 10,988 | |
Wilson | | | 7,000 | | | 31,800 | | | 1,435 | | | — | | | — | | | 1,377 | | | 33,177 | | | 1,435 | |
Korb | | | 17,500 | | | 79,499 | | | 3,588 | | | — | | | — | | | 3,444 | | | 82,943 | | | 3,588 | |
Delaney | | | 14,800 | | | 67,233 | | | 3,034 | | | — | | | — | | | 2,913 | | | 70,146 | | | 3,034 | |
Williams | | | 3,900 | | | 17,717 | | | 800 | | | — | | | — | | | 767 | | | 18,484 | | | 800 | |
Fiscal 20182022 Long-Term Incentive Grants
At
the Compensation Committee's December 2017its October 2021 meeting, the Compensation Committee elected to
changemaintain the
Company's LTICompany’s long-term incentive plan
design from an LTI mix of 25% stock options, 25% restricted stock and 50% performance shares to 25% performance restricted stock units, 25% restricted stock and 50% performance shares. The new LTI design will be 75% performance-based. Other than the replacement of stock options with performance restricted stock units, the design of the LTI plan is the same as in fiscal 2017. The following charts illustrate the change in the allocation of long-term incentives by vehicle type for fiscal 2018.
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The fiscal 2018 performance restricted stock units (PRSU) can be earned based on absolute total shareholder return over the three-year performance period. The PRSUs will be settled 100% in equity. In order for executives to receive a target payout, the Company must have absolute TSR improvement of 20%. The table below illustrates the number of shares that will vest based on the Company's absolute TSR under the PRSU awards. Performance will be interpolated for any results in between threshold and target or target and maximum.
design.
| | | | | | | |
Milestones | | Absolute Total
Shareholder Return
Performance | | Performance
Restricted Stock
Units Modifier | |
|---|
Maximum | | | ³ 50 | % | | 150 | % |
Target | | | 20 | % | | 100 | % |
Threshold | | | –20 | % | | 50 | % |
The fiscal 2018 performance shares will continue to include EPS Growth and Relative TSR, each weighted 50%, with a modifier based on absolute ROIC improvement. Modifier payouts can range from 0% to 50% of target, but no modifier will be applied if the Company does not reach at least threshold performance on the EPS Growth and Relative TSR metrics. Performance shares will continue to be capped at 200% of target.
| | | | | | | | | | | | | | | | |
| |
| |
| | Performance Share Modifier | |
|---|
| |
| | 3-Yr. Cumulative
Compounded
Annual
EPS Growth % | |
|---|
Milestones | | Relative Total
Shareholder Return
Percentile | | R-TSR
(50% Weighting) | | EPS
(50% Weighting) | | Total | |
|---|
Maximum | | | 75 | % | | 12 | % | | 100 | % | | 100 | % | | 200 | % |
Target | | | 60 | % | | 9 | % | | 50 | % | | 50 | % | | 100 | % |
Threshold | | | 30 | % | | 6 | % | | 37.5 | % | | 37.5 | % | | 75 | % |
For fiscal 2018, the three-year cumulative compounded EPS growth will be applied to the starting value of $0.58 per share, which is the pro forma EPS for fiscal 2017, excluding transaction costs.
The foregoing goals are not intended to and do not reflect guidance by or expectations of the Company as to actual results. These goals are part of an overall compensation program designed,
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among other things, to align executive compensation with the market's reasonable expectations of performance and shareholder returns.
For fiscal 2018, we will continue to target the market median for long-term incentives. Our review of market conditions for fiscal 2018 indicated no change to target LTI values as compared to last year with the exception of the VP Controller. The Committee chose to raise the LTI value for the VP Controller to $175,000. In addition to holding target LTI values flat, we have maintained the dollar value of target awards for the VPs. This practice has been used for the CEO, CFO, and GC since fiscal 2016. The following table shows the LTI targets for the executives.
| | | | |
Participant | | LTI Target | |
|---|
CEO | | $ | 2,145,000 | |
VP—COO | | $ | 900,000 | |
CFO | | $ | 700,000 | |
GC | | $ | 594,000 | |
VP—Controller | | $ | 175,000 | |
Processes and Procedures for Determining Executive Compensation
in Fiscal 2021
Guided by the principal objectives described above, the Compensation Committee approves the structure of the executive compensation program and administers the programs for our executive officers,
including matters where approval by our independent Compensation Committee members is appropriate for tax or regulatory reasons. The following describes the roles of key participants in the process.
Our Chief Executive Officer is the only executive who works with the Compensation Committee and compensation consultant in establishing compensation levels and performance targets. Our Chief Executive Officer is responsible for reviewing the compensation and performance of the other executive officers
(other than the Executive Chairman) and, as such, makes recommendations to the Compensation Committee regarding adjustments in compensation to such executive officers. The Compensation Committee considers the Chief Executive
Officer'sOfficer’s recommendations along with the
Committee'sCompensation Committee’s own evaluation of individual and business performance and the market data provided by its compensation consultant. In making recommendations, the Chief Executive Officer relies upon his evaluation of his direct
reports'reports’ performance and competitive compensation information. The Chief Executive Officer does not recommend his own compensation. The Chief Executive Officer recommends AIA performance goals to the Compensation Committee. The Chief Executive Officer, with input from the compensation consultant, recommends performance goals for long-term incentive awards that are properly aligned with the business goals and compensation
strategy.strategy, but no senior executive is present when decisions regarding his or her compensation is discussed and determined.
Our Senior Vice
President—President — General Counsel and Secretary serves as the liaison between the compensation consultant, the Compensation Committee, and the Governance Committee. In this role, he
interfacesinteracts with the compensation consultant
as necessary and prepares materials for each Compensation Committee meeting to
carry out the duties ofassist the Compensation Committee
in its consideration and
Governance Committee.administration of executive compensation programs, plans and policies.
The Role of Independent External Advisors
To facilitate the formulation and administration of our compensation program, the Compensation Committee has retained
Frederic W.FW Cook
& Co., Inc. ("FW Cook") since July 2012 as its independent consultant on executive compensation matters. FW Cook helps the Compensation Committee assess the
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competitiveness and appropriateness of compensation programs throughout the market, including our peers, and develop a compensation program that is consistent with our objectives and market conditions. FW Cook meets with our Compensation Committee in executive sessions and advises the Compensation Committee with respect to a wide range of issues related to executive compensation. The Compensation Committee authorizes the scope of services that it desires FW Cook to provide for the Company,it, including reviewing and analyzing market data, evaluating our comparator group composition, making recommendations for incentive system designs, providing market and regulatory updates, assisting with deliberations related to CEO compensation, reviewing any relevant information and reporting to the Compensation Committee on all aspects of our compensation programs. FW Cook reports directly to, and takes its charge from, the Compensation Committee. However, the Compensation Committee does not specifically direct the manner in which FW Cook performs the scope of services it provides to the Company. Additionally, the Compensation Committee makes all final decisions regarding compensation.
The Compensation Committee reviewed the independence of FW Cook based on the NYSE rules for independence which include the following factors: (i) the provision of other services to the Company by FW Cook; (ii) the amount of fees from the Company paid to FW Cook as a percentage of FW Cook'sCook’s total revenue; (iii) the policies and procedures of FW Cook that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the individual compensation advisors who serve the Committee with any member of the Committee; (v) any stock of the Company owned by such individual compensation advisors, and (vi) any business or personal relationship of FW Cook or the individual compensation advisors who serve the Committee with an executive officer of the Company. The Compensation Committee also reviewed FW Cook'sCook’s policies for avoiding conflicts of interest. The Compensation Committee has determined, based on its analysis of the factors listed above, that the work of FW Cook and the individual compensation
consultants employed by FW Cook does not create any conflicts of interest and that FW Cook meets the NYSE standards for independence.
The Role of the Compensation & Management Development Committee
The
As of the date of this Proxy Statement, the Compensation Committee
currently comprises
threefour non-employee independent directors. The Compensation
Committee'sCommittee’s duties in administering executive compensation programs include the following:
•
Review and approve the Company'sCompany’s overall total compensation policy.
•
•Review and evaluate Company performance against pre-established performance metrics.
•
•Establish the annual total compensation paid to officers and key executives, including base salary, annual incentive, and long-term incentives.
•
•Regularly review and approve all employment agreements and severance arrangements for the executive officers.
•
•Review the
Company'sCompany’s Compensation Discussion and Analysis disclosure.
The Compensation Committee determines the Chief Executive Officer'sOfficer’s salary and incentive awards based upon an assessment of individual and Company performance, as well as market data provided by the compensation consultant. The Compensation Committee may form and delegate duties to subcommittees when appropriate. A more expansive list of the Compensation Committee'sCommittee’s responsibilities can be found in its charter, which can be viewed on our website atwww.quanex.com.
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Post-Employment Compensation
Severance and change in control benefits are provided under the employment agreementsagreement of ourone executive, and to other executives as well as under our incentive plans.plans and our Severance Policy. These benefits are discussed at greater length in the section entitled "Employment“Employment Agreements and Potential Payments upon Termination or Change in Control"Control” on page 3132 of this Proxy Statement. Since 2013,
No employees have severance benefits that provide change in control excise tax gross ups and the Company has
maintained a policy
not to
no longer provide
excise tax gross up benefits to any new executives in the event of a change in control termination.such benefits.
Deferred Compensation Plan
The Company has a nonqualified deferred compensation program that gives executives the opportunity to defer income. As with our various other plans and programs, this deferral opportunity is designed to attract and retain key executives.
The deferred compensation program is administered by the Compensation Committee. Before eligible employees can participate, they must first receive a recommendation from our senior managers and then final approval by the Compensation Committee. Participants in the program may choose to defer up to 100% of their annual and long-term incentive bonuses. Participants may choose from a variety of investment choices in which the Company will invest their deferrals over the defined deferral period.
Purpose:Purpose: The role of executive benefits is to provide financial security, enhanced employee welfare, and competitive packages that are meaningful in the markets for which we compete for executive talent. These programs provide post retirement income, and in some cases, additional benefits in place of those that would otherwise be lost due to plan limits imposed by the Internal Revenue Code.Competitive Positioning:Positioning: Our executive benefits strategy is to provide meaningful yet cost-efficient benefits to executives at a level that aligns with our desired competitive positioning of the market median. We provide executives with health and welfare benefits that are consistent with our program for exempt personnel generally. Supplemental retirement and supplemental life benefits are also provided to our officers.
•
Retirement and other benefits.benefits. OurSome of our executives participate in the Company'sCompany’s defined benefit pension plan, 401(k) defined contribution retirement plan, and supplementalan executive retirement plans.restoration plan. Executives also receive company contributions under our 401(k) plan, a 15% match under our employee stock purchase program (ESPP) and dividends on unvested restricted stock.stock granted prior to March 2020. The Company previously provided a 20% match under the deferred compensation plan, but that benefit was suspended on April 1, 2009.
•
•Life insurance benefits.benefits. Our executives participate in Company provided life insurance, the amount of which takes into consideration age and/or income. Our executives also have the opportunity to purchase supplemental life insurance.
•
•Perquisites.Perquisites. We provide our executives with certain perquisites which help us compete for executive talent, and in some cases, allow our executives to devote more attention to the business of the Company. Certain perquisites have been grandfathered and not all executives are provided the same. The various perquisites include executive life insurance, financial and tax
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planning, and automobile allowances, and club memberships. The Compensation Committee eliminatedallowances. We do not provide for tax gross-up payments on perquisites, effective December 31, 2009.
perquisites.
Clawback Provision (Recovery of Incentive Payments)
We have a policy to enable the Board, in its judgment and to the extent permitted by governing law, to require reimbursement of any cash bonus or
performance sharesperformance-based awards paid to an executive where (a) the value of the award was predicated upon the achievement of certain financial results that were subsequently the subject of a material restatement, and (b) a lower payment would have been made to the executive based on the restated financial results. In each instance, the Company may seek to recover that portion of the affected
executive'sexecutive’s annual and/or long-term incentive payments that is higher than the payment that would have originally been paid. No reimbursement will be required if such material restatement was caused by or resulted from any change in accounting policy or rules. In addition, we have
amended our
performance basedperformance-based award agreements
to facilitate a transition to new SEC and stock exchange requirements when they are finalized.
In fiscal
2017,2021, the Compensation Committee discussed and analyzed risks associated with the
Company'sCompany’s compensation policies and practices for executive officers and all employees generally. This discussion included, but was not limited to, topics such as eligibility, affordability, retention impact, corporate objectives, alignment with shareholder interests, governance, and possible unintended consequences. The Compensation Committee did not identify any risks arising from the
Company'sCompany’s compensation programs or practices that are reasonably likely to have a material adverse effect on the Company.
Executive Stock Ownership Guidelines
We encourage our executives to own our Common Stock because we believe such ownership provides strong alignment of interests between executives and shareholders. Our executive stock ownership guidelines provide that different levels of executives are expected to own a specific value of our Common Stock, expressed as a percentage of salary. The stock ownership requirement
for the current CEO is effective five years after assuming his role. For other executives, the stock ownership requirement is effective three years
for the executives after assuming their respective roles.
Stock Options and unvested performance awards do not count toward the executive’s ownership for purposes of the guidelines. The chart below shows the guidelines by executive level.
| | Level | | | Typical Executive Position | | | Stock Ownership Goal | |
Level
| | Typical Executive
Position | | Stock Ownership
Goal |
|---|
1
| 1 | | | CEO & Executive Chair | | | 4x Base Salary |
2
| | COO | | 2.5x Base Salary |
3
| 2 | | | SVP | | | 2x Base Salary | |
4
| 3 | | | VP | | | 1x Base Salary | |
All of our named executives currently are in compliance with the executive stock ownership guidelines.
Prohibition on Certain Transactions Involving Company Stock
The Company’s Corporate Governance Guidelines specifically prohibit the Company’s directors, officers and employees from hedging or pledging Company stock; maintaining margin accounts holding Company Stock, and buying or selling any puts, calls or other derivatives of
ContentsCompany stock. Please see page 56 of this Proxy Statement for the Company’s policy with regard to these activities.
Timing of Certain Committee Actions
The Compensation Committee schedules actions related to executive pay to coincide with its regularly scheduled Board meetings in October and December:
| | | |
Executive Compensation Element | | | | | Action Item | |
|---|
| | Base Salaries | | | Review and/or adjust based on market review | |
| Short-Term Incentives | | | Determine year-end results and approve payouts |
| | Set goals for upcoming year | |
| Long-Term Incentives | | | Determine performance results and approve long-term plan'splan’s payouts |
| | Set goals for long-term plan'splan’s next three-year performance cycle |
| | Determine and approve equity awards, including stock options and restricted stock awards and long-term performance based awards | |
Compensation decisions related to promotions or new hire awards are addressed on an individual basis, at the time the executive is promoted or first joins the Company.
Accounting Considerations and Tax Deductibility of Executive Compensation
In designing compensation programs, we consider the effects that accounting and taxation may have on us, the named executive officers or other employees as a group. We account for compensation arrangements in accordance with FASB ASC Topic 718. All
share basedshare-based payments to employees are measured at fair value on the date of grant and recognized in the statement of operations as compensation expense over their requisite service periods.
Section 162(m) of the Internal Revenue Code provides that we may not deduct for federal income tax purposes compensation of more than $1,000,000 paid in any year to the Chief Executive Officer or any of the three other most highly compensated executive officers, excluding the Chief Financial Officer, unless the compensation is paid solely on the attainment of one or more pre-established objective performance goals and certain other considerations are met. Under the terms of our annual cash bonus program and performance unit and performance share programs, the Compensation Committee may, in its discretion, adjust payouts to executives downward. Because the plans are intended to comply with Internal Revenue Code Section 162(m), no upward discretion in determining payouts is permitted.
Tax reform legislation that was enacted in December 2017 will be considered as the Committee administers compensation arrangements in the future.
Influence of Say on Pay Results on Executive Compensation Decisions
Management and the Compensation Committee are attentive to the outcome of the shareholder "Say“Say on Pay"Pay” vote. At the Company's 2017Company’s 2021 annual shareholder meeting, the Company received significant support for its executive compensation program, with 98.8%98.2% of the votes in favor of the "Say“Say on Pay"Pay” resolution. The Compensation Committee remains responsive to shareholder feedback and believes that the strong support from shareholders indicates satisfaction with the executive compensation program.
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Employment Agreements and Potential Payments upon Termination or Change in Control
The
On February 27, 2020, the Company
has entered into change in control agreements withadopted a severance policy that applies to certain of its named executive officers.
We believe that the change in control agreements help us attract and retain our named executive officers by reducing the personal uncertainty and anxiety that arises from the possibility of a future business combination. During a potential change in control, we do not want executives leaving to pursue other employment out of concern for the security of their jobs or being unable to concentrate on their work. To enable executives to focus on the best interest of our stockholders, we offer change in control agreements that generally provide benefits to executives whose employment terminates in connection with a change in control. In addition, to attract certain of our named executive officers to accept employment with us, we agreed to provide those officers who previously were employed by Quanex Corporation with severance agreements that will provide them certain of the protections they would have been entitled to if they had remained with Quanex Corporation following the spin-off of Quanex Building Products Corporation from Quanex Corporation in April 2008. The Company also entered into a letter agreement with its President and CEO,Executive Chair, effective July 9, 2013, which contains certain executive severance provisions. We believe that the severance policy helps us attract and retain our named executive officers. The Company entered into these arrangements because executives at this level generally require a longer timeframetime to find comparable jobs as fewer jobs at this level exist in the market. In addition, executives often have a large percentage of their personal wealth dependent on the status of their employer, given the requirement to hold a multiple of their salary in stock and the fact that a large part of their compensation is stock-based. The amount and type of benefits were based on competitive market practices for executives at this level.
In addition, in the event of a change in control, the Severance Policy reduces the personal uncertainty and anxiety that arises from the possibility of a future business combination. During a potential change in
control, we do not want executives leaving to pursue other employment out of concern for the security of their jobs or being unable to concentrate on their work. To enable executives to focus on the best interest of our stockholders, we offer change in control agreements that generally provide benefits to executives whose employment terminates in connection with a change in control.
Provisions of the severance agreementsSeverance Policy and severance letter arrangement require a termination of employment before any benefits are paid. The change in control agreements require both a change in control and a termination of employment before any benefits are paid (a "double trigger"“double trigger”). If an executive officer who is covered by both a change in control agreement and a severance agreement or letter arrangement experiences both a change in control of the Company and a termination of employment, benefits are payable under only the change in control agreement;agreement.
Severance Policy
Mr. Wilson participates in no event will the executive be able to receive payment under bothSeverance Policy as a “Tier 1 Officer” as defined therein, and each of Messrs. Zuehlke, Cornett and Livingston participates in the Severance Policy as a “Tier 2 Officer” as defined therein.
The table below sets forth the severance
agreementpay and benefits available under the Severance Policy for the participating named executive officers assuming a “Qualifying Termination” (as defined in the Severance Policy) without cause or
letter arrangement and thefor good reason within 24 months following a change in
control agreement.control.
| | Severance Policy Benefits | | | | | | | |
| | Tier | | | Qualifying Termination without
Change in Control | | | Qualifying Termination following
Change in Control | | | |
| | Tier 1
(Wilson) | | | •
2x base salary plus 2x target annual bonus at the time of Qualifying Termination, payable in installments on normal payroll schedule; and •
Pro-rata annual bonus for year of termination based on actual Company performance and number of days worked by the Executive during the fiscal year, to be paid at the same time bonuses are paid to active employees; and •
Continued health and welfare benefits, or reimbursement thereof, for eighteen (18) months for the Executive and his or her spouse and dependents, subject to earlier termination when the Executive becomes eligible for such benefits from a subsequent employer. | | | •
2.5x base salary plus 2.5x target annual bonus at the time of Qualifying Termination (or, if higher, at the time of Change in Control), payable in a lump sum within fifteen (15) days of termination; and •
Pro-rata target annual bonus for year of termination based on number of days worked by the Executive during the fiscal year, payable in a lump sum within fifteen (15) days of termination; and •
Continued health and welfare benefits, or reimbursement thereof, for eighteen (18) months for the Executive and his or her spouse and dependents, subject to earlier termination when the Executive becomes eligible for such benefits from a subsequent employer. | | | |
| | Tier 2
(Zuehlke, Cornett,
Livingston) | | | •
1.5x base salary plus 1.5x target annual bonus at the time of Qualifying Termination, payable in installments on normal payroll schedule; and •
Pro-rata annual bonus for year of termination based on actual Company performance and number of days worked by the Executive during the fiscal year, to be paid at the same time bonuses are paid to active employees; and •
Continued health and welfare benefits, or reimbursement thereof, for eighteen (18) months for the Executive and his or her spouse and dependents, subject to earlier termination when the Executive becomes eligible for such benefits from a subsequent employer. | | | •
2x base salary plus 2x target annual bonus at the time of Qualifying Termination (or, if higher, at the time of Change in Control), payable in a lump sum within fifteen (15) days of termination; and •
Pro-rata target annual bonus for year of termination based on number of days worked by the Executive during the fiscal year, payable in a lump sum within fifteen (15) days of termination; and •
Continued health and welfare benefits, or reimbursement thereof, for eighteen (18) months for the Executive and his or her spouse and dependents, subject to earlier termination when the Executive becomes eligible for such benefits from a subsequent employer. | | | |
Payments of
Certain Executives This section describes the foregoing severance agreements entered into by Quanex with the SVP—Financepay and CFO and the SVP—General Counsel and Secretary. As described above, benefits are payable under the severance agreements following a termination of employment that meets certain requirements. A termination of employment that triggers benefits under the severance agreements includes involuntary termination by the Company without Cause. "Cause" exists ifSeverance Policy are conditioned upon the executive commits gross negligence or willful misconducthaving signed and returned an effective waiver and release of claims in a form satisfactory to us and continuing to comply with all applicable restrictive covenants. A breach of such release will result in the cessation of severance pay and benefits and may result in such executive’s being required to repay certain severance pay and benefits already provided as well as certain costs and expenses. If payments pursuant to the Severance Policy are not deductible by us under Section 280G of the Internal Revenue Code, such payments shall be reduced (or repaid) in order to ensure our deduction of payments in connection with his employment; an act of fraud, embezzlement or thefta change in connection with his employment; intentional wrongful damage to Company property; intentional wrongful disclosure of our secret processes or confidential information; or an act leading to a conviction of a felony or a misdemeanor involving moral turpitude.
If the executive is entitled to benefits under the severance agreement, the executive will receive the following:
•Annual base salary and compensation for earned but unused vacation time accrued through the date of termination of employment;
•Pro-rated amount equal to the greater of the executive's (i) target performance bonus for the year of termination of employment, or (ii) performance bonus for the year immediately preceding the year of termination of employment;
control.
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•Lump sum severance equal to 18 months of the executive's base salary for the fiscal year in which the termination occurs;
•Continued participation in health and welfare plans and payment of benefit premiums for 18 months; and
•All other perquisites to which the executive is entitled pursuant to the terms of the agreements providing for such perquisites.
President and CEOExecutive Chair Severance Letter Agreement
This section describes the severance provisions contained in the letter agreement entered into by the Company and Mr. Griffiths upon his
original assumption of duties
for the Company as
the Company's Chairman, President and CEO.an executive officer. In the event that Mr.
Griffiths'Griffiths’ employment is terminated by the Board of Directors for any reason other than
"Cause,"“Cause,” as defined in the change in control agreement, or a material violation of the
Company'sCompany’s Code of Business Conduct and Ethics, the following benefits would be payable:
•
Base salary continuation for two years (at the rate in effect immediately preceding the date of termination), paid semi-monthly for 24 months;
•
•Pro-rated AIA bonus for the year of termination, as determined by the Board of Directors; and
•
•Continued participation in health and welfare plans and payment of benefit premiums (i.e., medical, dental, vision, life, disability and any other welfare plans he currently participates in) for 18 months.
The letter agreement requires Mr. Griffiths to execute a mutually satisfactory release of all claims before the expiration of the 90th day following his termination, or he shall forfeit any and all payment, reimbursements, and benefits due under the letter agreement.
Change in Control
AgreementsPayments
As described above, benefits are payable under the Severance Policy following a change in control agreements followingrequire the occurrence of both (i)(A) a change in control of the Company and (ii)(B) (i) involuntary termination of the named executive officer'sofficer’s employment with the Company without cause or (ii) voluntary termination of the named executive officer’s employment with the Company for “good reason”, in each case within twenty-four (24) months following the effective date of a Change in Control of the Company.
Each of the following events generally constitutes a change in control of the Company for purposes of the
change in control agreements:•
Any person or entity acquiring or becoming beneficial owner as defined in SEC regulations of 20% or more of (i) the then outstanding shares of our Common Stock or (ii) the combined voting power of the then outstanding voting securities of the Company;
•
•Generally, our current directors ceasing to constitute a majority of our directors;
•
•Consummation of a merger, consolidation, or recapitalization (unless the directors continue to represent a majority of the directors on the Board, more than 80%50% of the pre-spin-offpre-transaction ownership survives and,continues in the event of a recapitalization,same proportion, and no covered person owns 20% or more of (i) the then outstanding shares of our Common Stock or (ii) the combined voting power of our then outstanding voting securities)securities if the covered person did not have such an ownership threshold prior to the transaction); or
•
•The stockholders approve a complete liquidation or dissolution of the Company; or
•The sale, lease, or disposalCompany.
Treatment of
substantially all of our assets. Terminations of employment that meet the termination requirement under the changeOutstanding Equity Awards Following Change in control agreements will be similar to but broader than those required under the severance agreements. For these purposes,Control
If a
termination of employment would include a termination by the Company without
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Cause as well as the executive's resignation for "Good Reason." "Good Reason" under the change in control agreements will include (but will not be limited to):
•the executive is assigned any duties inconsistent with his/her position; there is a change in his/her position, authority, duties or responsibilities; he/she is removed from, or not re-elected or reappointed to, any duties or position previously held or assigned or there is a material diminution in such position, authority, duties or responsibilities;
•the executive's annual base salary is reduced;
•the executive's annual bonus is reduced below a certain amount;
•the executive's principal office is relocated outside of the portion of the metropolitan area of the City of Houston, Texas that is located within the highway known as "Beltway 8";
•the executive's benefits are reduced or terminated;
•any other non-contractual benefits that were provided to the executive or any material fringe benefit is reduced;
•the executive's number of paid vacation days is reduced;
•the executive's office space, related facilities and support personnel (including, but not limited to, administrative and secretarial assistance) are reduced or moved;
•the executive is required to perform a majority of his duties outside our principal executive offices for a period of more than 21 consecutive days or for more than 90 days in any calendar year; or
•any provision of any employment agreement with the executive is breached.
If thenamed executive officer is entitled to benefits under a change in control, agreement, the executive officer would receive the following:
•Annual base salary and compensation for earned but unused vacation time accrued through the date of termination of employment;
•Pro-rated amount equal to the greater of the executive officer's (i) target performance bonus for the year of termination of employment and (ii) performance bonus for the year immediately preceding the year of termination of employment;
•Lump sum severance equal to 2.99 times (for the Chief Executive Officer and Chief Operating Officer), three times (for the Senior Vice Presidents), or two times (for the Vice President—Controller) the sum of (i) base salary for the year of termination and (ii) the greater of the executive officer's (x) target performance bonus for the year of termination of employment and (y) performance bonus for the year immediately preceding the year of termination of employment;
•In the event that severance benefits under the change in control agreement result in the imposition of an excise tax, then (i) the Chief Executive Officer and Chief Operating Officer would receive either the net benefits after the excise tax is calculated, or the benefits will be cut back to the point that they do not exceed 2.99 times the base amount, whichever is greater, and (ii) the Senior Vice Presidents would receive a gross-up payment for the value of any such excise tax.
•Continued health and welfare benefits for the shorter of (i) three years from the date of termination or (ii) such time as the executive becomes fully employed; and
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•All other perquisites to which the executive is entitled pursuant to the terms of the agreements providing for such perquisites.
If an executive officer is entitled to benefits under a change in control agreement, the following would occur immediately upon the occurrence of a change in control (regardlesspursuant to grant agreements for various equity awards, regardless of whether the named executive officer'sofficer’s employment is terminated as a result of the change in control)control (beginning with awards issued in December 2020, a named executive officer is entitled to
certain equity award benefits related to a change in control only if such named executive’s employment is terminated without cause, or for good reason (i.e., double trigger)):
•
all options to acquire our Common Stock and all stock appreciation rights pertaining to Common Stock held by the named executive officer immediately prior to a change in control would become fully exercisable;
•
•if the award is not assumed or substituted by the successor, all restrictions on any restricted Common Stock granted to the named executive officer prior to the change in control would be removed and the stock would be freely transferable;
•
•all Performance Sharesperformance shares held by the named executive priorofficer as of the change in control will be paid in cash at the target level, calculated on a pro rata basis rounded up to include the nearest full current year ofoccurring in the performance period;
•
•all Performance RSUs would vest in full, with the number of earned Performance RSUs to be determined by total shareholder return based on the price per share of the
Company'sCompany’s stock to be paid in connection with the change in control.
As set forth above, a named executive officer is entitled to benefits undereither the severance agreement or the change in control agreement; under
In no circumstances canevent will a named executive officer receive paymentseverance payments under both agreements.multiple executive tiers, under multiple Qualifying Termination scenarios, or under multiple Company severance policies, Severance Agreements, or Change in Control Agreements, or any combination thereof.
Post-Employment Compensation Table
The following table describes the potential payments or benefits upon termination, other post-employment scenarios or change in control for each of the Company'sCompany’s named executive officers. The amounts in the table below show only the value of amounts payable or benefits due to enhancements in connection with each scenario, and do not reflect amounts otherwise payable or benefits otherwise due as a result of employment. In each case, the termination iswas assumed to take place on October 31, 2017.2021.
| | Name | | | Severance
Payment
($) | | | Pro-rated
Bonus
($) | | | Restricted
Stock/
RSUs (Unvested)(1)
($) | | | Performance
Shares(1)
($) | | | Performance
Restricted
Stock Units(1)
($) | | | Health &
Welfare
Benefits(2)
($) | | | Total
Benefit
($) | |
| | William C. Griffiths
Enhanced Retirement(4)
Death/Disability
Involuntary w/o Cause(5)
Change in Control(6)
Termination after Change in Control(7) | | | | | — | | | | | | 1,000,000 | | | | | | — | | | | | | 2,410,816(8) | | | | | | 1,268,714 | | | | | | — | | | | | | 4,679,530 | | |
| | | | — | | | | | | 1,000,000 | | | | | | 837,220 | | | | | | 2,410,816(8) | | | | | | 1,268,714 | | | | | | — | | | | | | 5,516,750 | | |
| | | | 1,000,000 | | | | | | 1,000,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 26,932 | | | | | | 2,026,932 | | |
| | | | — | | | | | | 500,000 | | | | | | 864,024 | | | | | | 1,205,408 | | | | | | 1,252,377 | | | | | | — | | | | | | 3,821,809 | | |
| | | | 3,530,144 | | | | | | 680,650 | | | | | | 864,024 | | | | | | 1,205,408 | | | | | | 1,252,377 | | | | | | 55,724 | | | | | | 7,588,327 | | |
| | George L. Wilson
Enhanced Retirement(4)
Death/Disability
Involuntary w/o Cause(5)
Change in Control(6)
Termination after Change in Control(7) | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | |
| | | | — | | | | | | 1,346,184 | | | | | | 1,148,773 | | | | | | 2,101,756(8) | | | | | | 1,336,032 | | | | | | — | | | | | | 5,933,347 | | |
| | | | 2,696,154 | | | | | | 1,346,184 | | | | | | — | | | | | | — | | | | | | — | | | | | | 40,870 | | | | | | 4,083,208 | | |
| | | | — | | | | | | —(9) | | | | | | 1,309,376 | | | | | | 1,594,503(9) | | | | | | 1,366,032 | | | | | | — | | | | | | 4,269,911 | | |
| | | | 3,370,193 | | | | | | 673,077 | | | | | | 1,309,376 | | | | | | 1,596,440 | | | | | | 1,366,032 | | | | | | 40,870 | | | | | | 8,355,987 | | |
| | Scott M. Zuehlke
Enhanced Retirement(4)
Death/Disability
Involuntary w/o Cause(5)
Change in Control(6)
Termination after Change in Control(7) | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | |
| | | | — | | | | | | 406,154 | | | | | | 303,551 | | | | | | 516,029(8) | | | �� | | | 340,368 | | | | | | — | | | | | | 1,566,102 | | |
| | | | 859,616 | | | | | | 406,154 | | | | | | — | | | | | | — | | | | | | — | | | | | | 24,740 | | | | | | 1,290,510 | | |
| | | | — | | | | | | 203,077 | | | | | | 352,504 | | | | | | 418,416 | | | | | | 352,212 | | | | | | — | | | | | | 1,326,209 | | |
| | | | 1,146,154 | | | | | | 203,077 | | | | | | 352,504 | | | | | | 418,416 | | | | | | 352,212 | | | | | | 24,740 | | | | | | 2,497,104 | | |
| | Paul Cornett
Enhanced Retirement(4)
Death/Disability
Involuntary w/o Cause(5)
Change in Control(6)
Termination after Change in Control(7) | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | |
| | | | — | | | | | | 349,231 | | | | | | 353,850 | | | | | | 226,447(8) | | | | | | 167,240 | | | | | | — | | | | | | 1,096,768 | | |
| | | | 786,923 | | | | | | 349,231 | | | | | | — | | | | | | — | | | | | | — | | | | | | 39,053 | | | | | | 1,175,207 | | |
| | | | — | | | | | | 174,616 | | | | | | 453,636 | | | | | | 226,408 | | | | | | 177,998 | | | | | | — | | | | | | 1,032,658 | | |
| | | | 1,049,231 | | | | | | 174,616 | | | | | | 453,636 | | | | | | 226,408 | | | | | | 177,998 | | | | | | 39,053 | | | | | | 2,120,941 | | |
| | Mark Livingston
Enhanced Retirement(4)
Death/Disability
Involuntary w/o Cause(5)
Change in Control(6)
Termination after Change in Control(7) | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | | | | | n/a | | |
| | | | — | | | | | | 274,327 | | | | | | 183,324 | | | | | | 134,702(8) | | | | | | 99,464 | | | | | | — | | | | | | 691,817 | | |
| | | | 618,245 | | | | | | 274,327 | | | | | | — | | | | | | — | | | | | | — | | | | | | 27,207 | | | | | | 919,779 | | |
| | | | — | | | | | | 137,164 | | | | | | 210,264 | | | | | | 134,680 | | | | | | 104,710 | | | | | | — | | | | | | 586,818 | | |
| | | | 824,327 | | | | | | 137,164 | | | | | | 210,264 | | | | | | 134,680 | | | | | | 104,710 | | | | | | 27,207 | | | | | | 1,438,352 | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Severance
Payment
($) | | Pro-
rated
Bonus
($) | | Options
(Un-
vested)(1)(10)
($) | | Restricted
Stock
(Un-
vested)(1)(10)
($) | | Performance
Shares(1)
($) | | Health &
Welfare
Benefits(2)
($) | | NQ
Deferred
Comp.
(Unvested)
($) | | Retirement
(SERP &
Restoration)(3)
($) | | Tax
Gross-
Up(4)
($) | | Total
Benefit ($) | |
|---|
William C. Griffiths | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Enhanced Retirement(5) | | | — | | | — | | | — | | | — | | | 1,333,814 | (11) | | — | | | — | | | — | | | n/a | | | 1,333,814 | |
Death/Disability | | | — | | | — | | | — | | | 1,193,625 | | | 1,333,814 | (11) | | — | | | — | | | — | | | n/a | | | 2,527,440 | |
Involuntary w/o Cause(6) | | | 1,630,000 | | | — | (9) | | — | | | — | | | — | | | 21,475 | | | — | | | — | | | n/a | | | 1,651,475 | |
Change in Control(7) | | | — | | | 815,000 | | | — | | | 1,938,185 | | | 2,040,447 | | | — | | | — | | | — | | | n/a | | | 4,793,632 | |
Termination after Change in Control(8) | | | 4,873,700 | | | 815,000 | | | — | | | 1,938,185 | | | 2,040,447 | | | 49,151 | | | — | | | — | | | n/a | | | 9,716,482 | |
George L. Wilson | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Enhanced Retirement(5) | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | |
Death/Disability | | | — | | | 109,108 | | | 71,601 | | | 178,918 | | | 288,338 | (11) | | — | | | — | | | — | | | n/a | | | 647,966 | |
Involuntary w/o Cause(6) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | n/a | | | — | |
Change in Control(7) | | | — | | | 219,263 | | | 71,601 | | | 302,910 | | | 380,608 | | | — | | | — | | | — | | | n/a | | | 974,382 | |
Termination after Change in Control(8) | | | 1,017,898 | (12) | | 219,263 | | | 71,601 | | | 302,910 | | | 380,608 | | | 54,631 | | | — | | | — | | | n/a | | | 2,046,910 | |
Brent L. Korb | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Enhanced Retirement(5) | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | |
Death/Disability | | | — | | | — | | | 141,327 | | | 387,836 | | | 596,418 | (11) | | — | | | — | | | 2,953,493 | (13) | | n/a | | | 4,079,073 | |
Involuntary w/o Cause(6) | | | 627,000 | | | 271,700 | | | — | | | — | | | — | | | 31,257 | | | — | | | — | | | n/a | | | 929,957 | |
Change in Control(7) | | | — | | | 271,700 | | | 141,327 | | | 629,965 | | | 827,128 | | | — | | | — | | | — | | | — | | | 1,870,120 | |
Termination after Change in Control(8) | | | 2,069,100 | | | 271,700 | | | 141,327 | | | 629,965 | | | 827,128 | | | 73,474 | | | — | | | 4,537,465 | | | 2,989,348 | | | 11,539,506 | |
Kevin P. Delaney | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Enhanced Retirement(5) | | | — | | | — | | | — | | | — | | | 368,818 | (11) | | — | | | — | | | — | | | n/a | | | 368,818 | |
Death/Disability | | | — | | | — | | | — | | | 329,731 | | | 368,818 | (11) | | — | | | — | | | n/a | (14) | | n/a | | | 698,549 | |
Involuntary w/o Cause(6) | | | 562,500 | | | 225,000 | | | — | | | — | | | — | | | 31,257 | | | — | | | — | | | n/a | | | 818,757 | |
Change in Control(7) | | | — | | | 225,000 | | | — | | | 535,580 | | | 563,933 | | | — | | | — | | | — | | | — | | | 1,324,513 | |
Termination after Change in Control(8) | | | 1,800,000 | | | 225,000 | | | — | | | 535,580 | | | 563,933 | | | 79,328 | | | — | | | 1,182,594 | | | 1,668,082 | | | 6,054,517 | |
M. Dewayne Williams | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Enhanced Retirement(5) | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | | | n/a | |
Death/Disability | | | — | | | — | | | 32,641 | | | 90,299 | | | 136,753 | (11) | | — | | | — | | | — | | | n/a | | | 259,693 | |
Involuntary w/o Cause(6) | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | n/a | | | — | |
Change in Control(7) | | | — | | | 116,000 | | | 32,641 | | | 147,065 | | | 188,168 | | | — | | | — | | | — | | | n/a | | | 483,873 | |
Termination after Change in Control(8) | | | 696,000 | | | 116,000 | | | 32,641 | | | 147,065 | | | 188,168 | | | 74,202 | | | — | | | — | | | n/a | | | 1,254,076 | |
Unvested stock options, restricted shares, andrestricted stock units, performance shares, and PRSUs (including accrued dividends) granted under the Quanex Building Products 2008 Omnibus Incentive Plan are forfeited except upon death, Disability, retirement (except restricted stock) or Change in Control. The fair market value of Company stock on the date of separation from service was $20.72.
(2)
(2)Health & Welfare Benefits paid upon involuntary termination without Cause include company paid COBRA premiums. Health & Welfare Benefits paid upon termination afterwith or without a Change in Control include continuation of all health & welfare benefits.benefits (except for Mr. Griffiths following termination not in connection with a Change in Control, where he is entitled to receive COBRA premiums for medical, dental, and vision insurance).
(3)
(3)See Narrative to "Pension“Pension Benefit Table"Table” for further description of the SERP and Restoration Plan.
(4)
(4)Tax Gross-Up was calculated using the tax rates in effect on the last day of the Company's fiscal year (October 31, 2017).
(5)Messrs. Wilson, Korb,Zuehlke, Cornett, and WilliamsLivingston have not reached the minimum retirement requirement of 65 years of age or 55 years of age with five years of service with the Company, but Messrs.Mr. Griffiths and Delaney havehad as of October 31, 2017.2021.
(5)
(6)These benefits would be provided upon termination by the Company without Cause.
(6)
(7)These benefits would be provided upon a Change in Control without termination of employment.
(7)
These benefits would be provided upon termination by the Company without Cause, as well as resignation for Good Reason in connection with a Change in Control.
(8)
(9)Mr. Griffiths' prorata bonus paid upon involuntary termination without Cause absent a Change in Control is determined by the Board of Directors pursuant to his Offer Letter. We assumed the Board of Directors would award Mr. Griffiths with his actual 2017 bonus if he were terminated on the last day of the fiscal year. Mr. Griffiths' actual 2017 bonus was $0.
(10)The fair market value of Company stock on the date of separation from service was $21.95.
(11)Executives are entitled to a proratapro rata portion of their performance shares based on actual performance for the full performance period upon their termination due to Retirement, death, or Disability. With respect to the 20162020 and 20172021 awards, since actual performance for the full performance period is unknown, target performance level was used for purposes of these calculations. Messrs.Mr. Griffiths and Delaney areis the only ExecutivesExecutive eligible for Retirement as of October 31, 2021 and therefore entitled to this benefit in thatthe Retirement scenario.
(9)
(12)Severance payment isThese benefits are shown net of required scaleback.
(13)The amount representsscale back.
CEO Pay Ratio
We have calculated a ratio of our CEO’s pay as compared to our median employee, in accordance with the present valuerequirements of Item 402(u) of Regulation S-K. To identify our median employee, we relied on our payroll records to examine the fiscal 2021 total taxable wages for all full-time, part-time and seasonal employees of the Retirement BenefitCompany and its subsidiaries as of October 31, 2017.
(14)Mr. Delaney is retirement eligible2021, other than those workers employed at our facility in Germany. On the determination date, our 112 German employees comprised less than five percent of our total workforce of 3,860, and so isthose German employees were thus excluded from the median employee calculation. We did not entitledmake any assumptions, adjustments, or estimates with respect to SERP disability benefits.the calculation of total employee compensation, and did not annualize base salary pay for any employees that were employed for only a portion of the year. For employees located in the United Kingdom, we converted compensation amounts to United States Dollars using the actual foreign exchange rate on the determination date.
TableFor fiscal 2021, we calculated annual total compensation for our median employee using the same methodology that we used in calculating the total annual compensation of Contents
our Named Executive Officers as set forth in our Summary Compensation Table. Based on that calculation, our substitute median employee’s 2021 total compensation was $46,167 and our CEO’s 2021 total compensation was $4,082,121, which resulted in a pay ratio of approximately 88 to 1.
Summary Compensation Table
The following table provides information about the compensation of the Company'sCompany’s Chief Executive Officer, its Chief Financial Officer, and the three most highly compensated officers during the fiscal yearyears ending October 31, 2017. George L. Wilson2021, 2020 and 2019. Paul B. Cornett became Senior Vice President — General Counsel and Secretary and Mark A. Livingston became Vice President — Chief OperatingAccounting Officer and Controller on AugustNovember 1, 2017, and served as President of the Company's Insulating Glass Systems division since fiscal 2011. Amounts presented below for Mr. Wilson for fiscal 2017 include service in these capacities.2019. No amounts are presented for Mr. WilsonMessrs. Cornett or Livingston for the periods prior to assuming an executive officer role.
| | Name/Principal Position | | | Year | | | Salary
($) | | | Bonus
($) | | | Stock
Awards(1)
($) | | | Option
Awards(1)
($) | | | Non-Equity
Incentive
Plan
Compensation(2)
($) | | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(3)
($) | | | All Other
Compensation(4)
($) | | | Total
($) | |
| | William C. Griffiths
Executive Chairman of the Board | | | | | 2021 | | | | | | 500,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,425,272 | | | | | | 6,826 | | | | | | 43,382 | | | | | | 3,975,480 | | |
| | | | 2020 | | | | | | 552,500 | | | | | | — | | | | | | — | | | | | | — | | | | | | 680,650 | | | | | | 28,880 | | | | | | 52,609 | | | | | | 1,314,639 | | |
| | | | 2019 | | | | | | 815,000 | | | | | | — | | | | | | 1,146,283 | | | | | | — | | | | | | 838,795 | | | | | | 63,473 | | | | | | 60,140 | | | | | | 2,923,691 | | |
| | George L. Wilson
President — Chief Executive Officer | | | | | 2021 | | | | | | 675,000 | | | | | | — | | | | | | 1,023,660 | | | | | | — | | | | | | 2,362,500 | | | | | | (3,822) | | | | | | 49,783 | | | | | | 4,107,121 | | |
| | | | 2020 | | | | | | 562,000 | | | | | | — | | | | | | 791,520 | | | | | | — | | | | | | 642,485 | | | | | | 24,734 | | | | | | 87,171 | | | | | | 2,107,910 | | |
| | | | 2019 | | | | | | 495,000 | | | | | | — | | | | | | 481,139 | | | | | | — | | | | | | 306,025 | | | | | | 71,704 | | | | | | 39,355 | | | | | | 1,393,223 | | |
| | Scott M. Zuehlke
Senior Vice President — Chief Financial Officer & Treasurer | | | | | 2021 | | | | | | 370,000 | | | | | | — | | | | | | 291,588 | | | | | | — | | | | | | 602,444 | | | | | | (2,095) | | | | | | 21,653 | | | | | | 1,283,590 | | |
| | | | 2020 | | | | | | 330,000 | | | | | | — | | | | | | 246,380 | | | | | | — | | | | | | 216,153 | | | | | | 11,869 | | | | | | 19,015 | | | | | | 823,417 | | |
| | | | 2019 | | | | | | 250,000 | | | | | | — | | | | | | 94,047 | | | | | | — | | | | | | 110,051 | | | | | | 27,832 | | | | | | 9,490 | | | | | | 491,420 | | |
| | Paul B. Cornett
Senior Vice President — General Counsel & Secretary | | | | | 2021 | | | | | | 350,000 | | | | | | — | | | | | | 200,596 | | | | | | — | | | | | | 349,231 | | | | | | 36,353 | | | | | | 22,313 | | | | | | 958,493 | | |
| | | | 2020 | | | | | | 310,000 | | | | | | — | | | | | | 180,420 | | | | | | — | | | | | | 184,153 | | | | | | 112,694 | | | | | | 20,727 | | | | | | 807,994 | | |
| | | | 2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Mark A. Livingston
Vice President — Chief Accounting Officer & Controller | | | | | 2021 | | | | | | 275,000 | | | | | | — | | | | | | 124,080 | | | | | | — | | | | | | 274,327 | | | | | | — | | | | | | 14,974 | | | | | | 688,381 | | |
| | | | 2020 | | | | | | 240,000 | | | | | | — | | | | | | 100,880 | | | | | | — | | | | | | 143,773 | | | | | | — | | | | | | 16,477 | | | | | | 501,130 | | |
| | | | 2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name/Principal Position | | Year | | Salary
($) | | Bonus
($) | | Stock
Awards(1)
($) | | Option
Awards(1)
($) | | Non-Equity
Incentive
Plan
Compensation(2)
($) | | Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(3)
($) | | All Other
Compensation(4)
($) | | Total
($) | |
|---|
William C. Griffiths | | | 2017 | | | 815,000 | | | — | | | 1,398,744 | | | 569,905 | | | 254,043 | | | 109,202 | | | 41,907 | | | 3,188,801 | |
Chairman of the Board, | | | 2016 | | | 813,654 | | | — | | | 1,103,567 | | | 575,904 | | | 1,192,359 | | | 113,099 | | | 31,982 | | | 3,830,565 | |
President & Chief | | | 2015 | | | 780,000 | | | — | | | 1,163,790 | | | 448,224 | | | 1,077,821 | | | 86,016 | | | 37,209 | | | 3,593,060 | |
Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
George L. Wilson | | |
2017 | | |
352,546 | | |
— | | |
233,641 | | |
95,589 | | |
142,285 | | |
40,684 | | |
30,768 | | |
895,513 | |
Vice President—Chief | | | 2016 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Operating Officer | | | 2015 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Brent L. Korb | | |
2017 | | |
418,000 | | |
— | | |
455,688 | | |
221,445 | | |
82,943 | | |
165,149 | | |
36,939 | | |
1,380,164 | |
Senior Vice | | | 2016 | | | 417,308 | | | — | | | 359,166 | | | 188,160 | | | 393,986 | | | 457,552 | | | 35,688 | | | 1,851,860 | |
President—Finance & | | | 2015 | | | 400,000 | | | — | | | 378,955 | | | 146,624 | | | 431,274 | | | — | | | 34,483 | | | 1,391,336 | |
Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Kevin P. Delaney | | |
2017 | | |
375,000 | | |
— | | |
386,566 | | |
188,195 | | |
70,146 | | |
206,398 | | |
46,758 | | |
1,273,063 | |
Senior Vice President— | | | 2016 | | | 374,423 | | | — | | | 305,098 | | | 159,264 | | | 329,790 | | | 555,736 | | | 44,182 | | | 1,768,493 | |
General Counsel & | | | 2015 | | | 360,000 | | | — | | | 321,345 | | | 129,042 | | | 350,443 | | | — | | | 44,532 | | | 1,205,362 | |
Secretary | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
M. Dewayne Williams | | |
2017 | | |
232,000 | | |
— | | |
106,201 | | |
51,205 | | |
18,484 | | |
19,919 | | |
25,789 | | |
453,598 | |
Vice President— | | | 2016 | | | 231,731 | | | — | | | 83,999 | | | 43,680 | | | 114,803 | | | 24,258 | | | 23,171 | | | 521,642 | |
Controller | | | 2015 | | | 225,000 | | | — | | | 85,693 | | | 33,705 | | | 84,166 | | | 18,315 | | | 22,727 | | | 469,606 | |
These columns show, respectively, the aggregate grant date fair value of the equity incentive plan compensation for: (a) restricted stock and the equity portion of performance share awardsPRSUs (assuming the sharesPRSUs will settle at 100%) and (b) stock options computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in computing the grant date fair values may be found in Note 15, "Stock-Based Compensation"13, “Stock-Based Compensation” included in Quanex Building Products Corporation'sthe audited financial statements contained in the Company’s Annual Report on Form 10-K for the year ended October 31, 2017. Performance share awards2021. PRSUs are expected to settle at target (100%). However, the performance share awards, however, PRSUs could potentially settle at maximum (200%)of 150%. If these performance share awardsthe PRSUs were to vest at maximum, the fair value for the equity portion of these awardsthis award and restricted stock granted during fiscal 20172021 for Messrs. Griffiths, Wilson, Korb, DelaneyZuehlke, Cornett, and WilliamsLivingston would be $2,157,583; $360,307; $703,261; $596,137;$1,271,820; $361,900; $249,194; and $163,777,$154,066, respectively. These values reflect the Company'sCompany’s assumptions to determine the accounting expense for these awards and do not necessarily correspond to the actual value that may be recognized by the named executive officers. For information regarding the restricted stock, performance shares, and option awards granted in fiscal 2017,2021, please see the "“Grants of Plan-Based Awards"” table located on page 4041 of this Proxy Statement.
(2)
(2)"2017"“2021” amounts represent payments made in December 20172021 for (a) performance from November 1, 2020 to October 31, 2021 for Annual Incentive Awards (AIA), and (b) performance from November 1, 2018 to October 31, 2021 for performance share grants in December 2018 (settled in cash (100%), including dividends accrued on all performance share equivalents earned (100%) for the performance period). “2020” amounts represent payments made in December 2020 for (a) performance from November 1, 2019 to October 31, 2020 for AIA, and (b) performance from November 1, 2017 to October 31, 2020 for performance share grants in December 2017 (portion settled in cash (50%),
including dividends accrued on all performance share equivalents earned (100%) for the performance period). The December 2017 performance share grants did not result in a cash settlement or share issuance. “2019” amounts represent payments made in December 2019 for (a) performance from November 1, 2018 to October 31, 2019 for AIA, and (b) performance from November 1, 2016 to October 31, 20172019 for Annual Incentive Awards (AIA), for which only Mr. Wilson received a payment for service as President of IG Systems for the period November 1, 2016 to July 31, 2017, and (b) performance from November 1, 2014 to October 31, 2017 for Performance Shareshare grants in December 20142016 (portion settled in cash (50%), including dividends accrued on all performance share equivalents earned (100%) for the performance period). "2016" amounts represent payments made in December 2016 for (a) performance from November 1, 2015 to October 31, 2016 for Annual Incentive Awards (AIA), and (b) performance from November 1, 2013 to October 31, 2016 for Performance Share grants in December 2013 (portion settled in cash (50%), including dividends accrued on all performance share equivalents earned (100%) for the performance period). "2015" amounts represent payments made in December 2015 for (a) performance from November 1, 2014 to October 31, 2015 for Annual Incentive Awards (AIA), and (b) performance from November 1, 2012 to October 31, 2015 for Performance Units granted in December 2012.
The AIA, Performance Unit payouts and Performance Share payouts would include the dollar value of such amounts deferred under the Quanex Building Products Corporation or Quanex Corporation Deferred Compensation ("DC") Plan, as applicable. Under the terms of each DC Plan, participants may elect to defer a portion of their incentive bonus to a mix of cash, or notional common stock units or investment accounts. None of the named executive officers deferred amounts pursuant to these awards for the periods presented.
Table of Contents
- The amounts paid for the AIA,
Performance Unitsperformance units and Performance Shares,the cash-portion of performance shares, along with any respective deferred amounts, are as follows:
| | | | | | | | | | | Annual Incentive | | | Performance Unit
Payout | | | Performance Share
Payout | | | Total | |
| | Name | | | Year | | | Total
($) | | | Deferred
($) | | | Total
($) | | | Deferred
($) | | | Total
($) | | | Deferred
($) | | | Total
($) | | | Deferred
($) | |
| | Griffiths | | | | | 2021 | | | | | | 1,000,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,425,272 | | | | | | — | | | | | | 3,425,272 | | | | | | — | | |
| | | | 2020 | | | | | | 680,650 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 680,650 | | | | | | — | | |
| | | | 2019 | | | | | | 578,426 | | | | | | — | | | | | | — | | | | | | — | | | | | | 260,369 | | | | | | — | | | | | | 838,795 | | | | | | — | | |
| | Wilson | | | | | 2021 | | | | | | 1,346,154 | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,016,346 | | | | | | — | | | | | | 2,362,500 | | | | | | — | | |
| | | | 2020 | | | | | | 642,485 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 642,485 | | | | | | — | | |
| | | | 2019 | | | | | | 262,564 | | | | | | — | | | | | | — | | | | | | — | | | | | | 43,461 | | | | | | — | | | | | | 306,025 | | | | | | — | | |
| | Zuehlke | | | | | 2021 | | | | | | 406,154 | | | | | | — | | | | | | — | | | | | | — | | | | | | 196,290 | | | | | | — | | | | | | 602,444 | | | | | | — | | |
| | | | 2020 | | | | | | 216,153 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 216,153 | | | | | | — | | |
| | | | 2019 | | | | | | 88,716 | | | | | | — | | | | | | — | | | | | | — | | | | | | 21,335 | | | | | | — | | | | | | 110,051 | | | | | | — | | |
| | Cornett | | | | | 2021 | | | | | | 349,231 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 349,231 | | | | | | — | | |
| | | | 2020 | | | | | | 184,153 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 184,153 | | | | | | — | | |
| | | | 2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Livingston | | | | | 2021 | | | | | | 274,327 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 274,327 | | | | | | — | | |
| | | | 2020 | | | | | | 143,773 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 143,773 | | | | | | — | | |
| | | | 2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| | Annual Incentive | | Performance Unit
Payout | | Performance Share
Payout | | Total | |
|---|
Name | | Year | | Total
($) | | Deferred
($) | | Total
($) | | Deferred
($) | | Total
($) | | Deferred
($) | | Total
($) | | Deferred
($) | |
|---|
Griffiths | | | 2017 | | | — | | | — | | | — | | | — | | | 254,043 | | | — | | | 254,043 | | | — | |
| | | 2016 | | | 663,018 | | | — | | | — | | | — | | | 529,341 | | | — | | | 1,192,359 | | | — | |
| | | 2015 | | | 723,821 | | | — | | | 354,000 | | | — | | | — | | | — | | | 1,077,821 | | | — | |
Wilson | | |
2017 | | |
109,108 | | |
— | | |
— | | |
— | | |
33,177 | | |
— | | |
142,285 | | |
— | |
| | | 2016 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | 2015 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Korb | | |
2017 | | |
— | | |
— | | |
— | | |
— | | |
82,943 | | |
— | | |
82,943 | | |
— | |
| | | 2016 | | | 221,033 | | | — | | | — | | | — | | | 172,953 | | | — | | | 393,986 | | | — | |
| | | 2015 | | | 241,274 | | | — | | | 190,000 | | | — | | | — | | | — | | | 431,274 | | | — | |
Delaney | | |
2017 | | |
— | | |
— | | |
— | | |
— | | |
70,146 | | |
— | | |
70 146 | | |
— | |
| | | 2016 | | | 183,042 | | | — | | | — | | | — | | | 146,748 | | | — | | | 329,790 | | | — | |
| | | 2015 | | | 200,443 | | | — | | | 150,000 | | | — | | | — | | | — | | | 350,443 | | | — | |
Williams | | |
2017 | | |
— | | |
— | | |
— | | |
— | | |
18,484 | | |
— | | |
18,484 | | |
— | |
| | | 2016 | | | 75,495 | | | — | | | — | | | — | | | 39,308 | | | — | | | 114,803 | | | — | |
| | | 2015 | | | 84,166 | | | — | | | — | | | — | | | — | | | — | | | 84,166 | | | — | |
Any deferred amounts noted above would have been deferred pursuant to the Quanex Building Products Corporation Deferred Compensation Plan. Please see the "“Compensation Discussion and Analysis"” section on page 18 for a detailed discussion of the performance measures and related outcomes for payments of the awards.
(3)
(3)The amounts in this column represent the change in actuarial present value of each individual'sindividual’s accumulated benefit under all defined benefit pension plans. The change in pension value reflects the difference in the present value of accumulated benefits determined as of the end of the current reporting period compared to the end of the previous reporting period. For instance, the change for fiscal 20172021 would represent the difference between the value at October 31, 20162020 and October 31, 2017.2021. The key assumptions used to calculate the change in value are shown with the "“Pension Benefits"” table located on page 44 of this Proxy.Proxy Statement. If aggregate changes in pension value during a fiscal year are negative, such amounts are excluded from the Summary Compensation Table.
No named executive officer received preferential or above-market earnings on deferred compensation.
(4)
(4)The named executives receive various perquisites and benefits provided by or paid for by the Company. These perquisites and benefits can include life insurance, financial planning, auto allowances, personal use of automobiles, memberships in social and professional clubs,cell phones, and relocation reimbursement. Also included are the Company'sCompany’s contributions under its 401(k) plan, a 15% match under its Employee Stock Purchase Program (ESPP), and dividends on unvested restricted stock and restricted stock units. Effective December 31, 2009, the Compensation Committee eliminated tax gross-up payments on perquisites, except as permitted under the relocation reimbursement guidelines.
The amounts reported in Other Annual Compensation for the named executives are set forth below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Year | | Life
Insurance
($) | | Financial
Planning
($) | | Auto-
mobile
($) | | Annual Club
Membership
($) | | Relocation
Reimbursement
($) | | 401K
Match
($) | | ESPP
15%
Stock
Match
($) | | Unvested
Restricted
Stock
and RSU
Dividends*
($) | | Total
($) | |
|---|
Griffiths | | | 2017 | | | 17,520 | | | 1,790 | | | — | | | — | | | — | | | 6,304 | | | — | | | 16,293 | | | 41,907 | |
| | | 2016 | | | 8,862 | | | 1,830 | | | — | | | — | | | — | | | 6,625 | | | — | | | 14,665 | | | 31,982 | |
| | | 2015 | | | 8,870 | | | — | | | — | | | — | | | — | | | 6,250 | | | — | | | 22,089 | | | 37,209 | |
Wilson | | |
2017 | | |
965 | | |
— | | |
12,000 | | |
— | | |
7,701 | | |
6,388 | | |
1,350 | | |
2,364 | | |
30,768 | |
| | | 2016 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | 2015 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
Korb | | |
2017 | | |
3,826 | | |
789 | | |
14,400 | | |
6,186 | | |
— | | |
6,750 | | |
— | | |
4,988 | | |
36,939 | |
| | | 2016 | | | 3,518 | | | 650 | | | 14,400 | | | 6,031 | | | — | | | 6,625 | | | — | | | 4,464 | | | 35,688 | |
| | | 2015 | | | 3,519 | | | 600 | | | 14,954 | | | 4,776 | | | — | | | 6,154 | | | — | | | 4,480 | | | 34,483 | |
Delaney | | |
2017 | | |
7,519 | | |
7,500 | | |
14,400 | | |
6,349 | | |
— | | |
6,750 | | |
— | | |
4,240 | | |
46,758 | |
| | | 2016 | | | 6,273 | | | 6,892 | | | 14,400 | | | 6,200 | | | — | | | 6,625 | | | — | | | 3,792 | | | 44,182 | |
| | | 2015 | | | 6,276 | | | 6,766 | | | 14,954 | | | 6,561 | | | — | | | 6,231 | | | — | | | 3,744 | | | 44,532 | |
Williams | | |
2017 | | |
4,460 | | |
— | | |
14,814 | | |
— | | |
— | | |
5,355 | | |
— | | |
1,160 | | |
25,789 | |
| | | 2016 | | | 4,439 | | | — | | | 12,361 | | | — | | | — | | | 5,347 | | | — | | | 1,024 | | | 23,171 | |
| | | 2015 | | | 4,437 | | | — | | | 12,642 | | | — | | | — | | | 4,816 | | | — | | | 832 | | | 22,727 | |
| | | | | Year | | | Life
Insurance
($) | | | Financial
Planning
($) | | | Automobile
($) | | | Housing &
Relocation
($) | | | 401K
Match
($) | | | Health
Assess-ment
($) | | | Unvested
Restricted
Stock
and RSU
Dividends*
($) | | | Cell Phone
Stipend
($) | | | Total
($) | |
| | Griffiths | | | | | 2021 | | | | | | 15,618 | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,420 | | | | | | — | | | | | | 13,344 | | | | | | — | | | | | | 43,382 | | |
| | | | 2020 | | | | | | 13,851 | | | | | | 1,811 | | | | | | — | | | | | | — | | | | | | 13,954 | | | | | | — | | | | | | 22,993 | | | | | | — | | | | | | 52,609 | | |
| | | | 2019 | | | | | | 17,877 | | | | | | 1,750 | | | | | | — | | | | | | — | | | | | | 6,992 | | | | | | — | | | | | | 33,521 | | | | | | — | | | | | | 60,140 | | |
| | Wilson | | | | | 2021 | | | | | | 3,187 | | | | | | — | | | | | | 12,000 | | | | | | — | | | | | | 14,500 | | | | | | — | | | | | | 20,096 | | | | | | — | | | | | | 49,783 | | |
| | | | 2020 | | | | | | 2,883 | | | | | | — | | | | | | 12,000 | | | | | | 42,838 | | | | | | 14,250 | | | | | | — | | | | | | 15,200 | | | | | | — | | | | | | 87,171 | | |
| | | | 2019 | | | | | | 2,415 | | | | | | — | | | | | | 12,000 | | | | | | 4,500 | | | | | | 7,666 | | | | | | 2,150 | | | | | | 10,624 | | | | | | — | | | | | | 39,355 | | |
| | Zuehlke | | | | | 2021 | | | | | | 822 | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,423 | | | | | | — | | | | | | 5,408 | | | | | | — | | | | | | 21,653 | | |
| | | | 2020 | | | | | | 499 | | | | | | — | | | | | | — | | | | | | — | | | | | | 13,327 | | | | | | — | | | | | | 5,189 | | | | | | — | | | | | | 19,015 | | |
| | | | 2019 | | | | | | 390 | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,769 | | | | | | — | | | | | | 3,331 | | | | | | — | | | | | | 9,490 | | |
| | Cornett | | | | | 2021 | | | | | | 82 | | | | | | — | | | | | | — | | | | | | — | | | | | | 15,250 | | | | | | — | | | | | | 6,981 | | | | | | — | | | | | | 22,313 | | |
| | | | 2020 | | | | | | 397 | | | | | | — | | | | | | — | | | | | | — | | | | | | 14,469 | | | | | | — | | | | | | 5,861 | | | | | | — | | | | | | 20,727 | | |
| | | | 2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Livingston | | | | | 2021 | | | | | | 1,780 | | | | | | — | | | | | | — | | | | | | — | | | | | | 9,385 | | | | | | — | | | | | | 3,232 | | | | | | 577 | | | | | | 14,974 | | |
| | | | 2020 | | | | | | 1,617 | | | | | | — | | | | | | — | | | | | | — | | | | | | 11,997 | | | | | | — | | | | | | 2,240 | | | | | | 623 | | | | | | 16,477 | | |
| | | | 2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
*
Cash dividends are paid on unvested restricted stock shares and unvested restricted stock units.units granted prior to March 2020. The dividend rate is not preferential and is equal to the rate paid on the Company'sCompany’s common stock as disclosed in Part II, Item 58 of the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended October 31, 2017.2021.
Grants of Plan-Based Awards
The following table discloses the estimated range of payouts that were possible for the fiscal year
20172021 Annual Incentive Awards along with the potential estimated range of payouts that will be possible with respect to
Performance Sharesperformance shares and PRSUs granted in
December 2016.fiscal 2021. The table also shows the actual number of
stock options and restricted stock awards granted during fiscal
20172021 and their respective grant date fair value, as well as the number of
Performance Sharesperformance shares and PRSUs granted in fiscal
2017.
Grants of Plan-Based Awards
2021.| | Name | | | Grant
Date | | | Non-
Equity
Incentive
Plan
Awards
(#) | | | Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(4)
(#) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options(5)
(#) | | | Exercise
or Base
Price of
Option
Awards(5)
($/Sh) | | | Grant Date
Fair Value
of Stock
Awards(6)
($) | | | Grant Date
Fair Value
of Option
Awards(5)
($) | |
| | Threshold
($) | | | Target
($) | | | Maximum
($) | |
| | Griffiths | | | | | 2021 | | | | | | — | | | | | | 250,000(2) | | | | | | 500,000(2) | | | | | | 1,000,000(2) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | 12/2/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | Wilson | | | | | 2021 | | | | | | — | | | | | | 337,500(2) | | | | | | 675,000(2) | | | | | | 1,350,000(2) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | 12/2/2020 | | | | | | 34,000(1) | | | | | | 527,340(3) | | | | | | 703,120(3) | | | | | | 1,406,240(3) | | | | | | 49,500 | | | | | | — | | | | | | — | | | | | | 1,023,660 | | | | | | — | | |
| | Zuehlke | | | | | 2021 | | | | | | — | | | | | | 103,600(2) | | | | | | 203,500(2) | | | | | | 407,000(2) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | 12/2/2020 | | | | | | 9,700(1) | | | | | | 150,447(3) | | | | | | 200,596(3) | | | | | | 401,192(3) | | | | | | 14,100 | | | | | | — | | | | | | — | | | | | | 291,588 | | | | | | — | | |
| | Cornett | | | | | 2021 | | | | | | — | | | | | | 87,500(2) | | | | | | 175,000(2) | | | | | | 350,000(2) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | 12/2/2020 | | | | | | 6,700(1) | | | | | | 103,917(3) | | | | | | 138,556(3) | | | | | | 277,112(3) | | | | | | 9,700 | | | | | | — | | | | | | — | | | | | | 200,596 | | | | | | — | | |
| | Livingston | | | | | 2021 | | | | | | — | | | | | | 68,750(2) | | | | | | 137,500(2) | | | | | | 275,000(2) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | 12/2/2020 | | | | | | 4,100(1) | | | | | | 63,591(3) | | | | | | 84,788(3) | | | | | | 169,576(3) | | | | | | 6,000 | | | | | | — | | | | | | — | | | | | | 124,080 | | | | | | — | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| |
| |
| |
| |
| | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units(4)
(#) | | All Other
Option
Awards:
Number of
Securities
Underlying
Options(4)
(#) | |
| |
| |
| |
|---|
| |
| |
| | Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards | | Exercise
or Base
Price of
Option
Awards
($/Sh) | |
| |
| |
|---|
| |
| | Non-Equity
Incentive
Plan
Awards(1)
(#) | | Grant Date
Fair Value
of Stock
Awards(5)
($) | | Grant Date
Fair Value
of Option
Awards(5)
($) | |
|---|
Name | | Grant Date | | Threshold
($) | | Target
($) | | Maximum
($) | |
|---|
Griffiths | | | 2017 | | | — | | | 407,500 | (2) | | 815,000 | (2) | | 1,630,000 | (2) | | — | | | — | | | — | | | — | | | — | |
| | | 11/30/16 | | | 32,950 | | | 284,565 | (3) | | 758,839 | (3) | | 1,517,678 | (3) | | 65,850 | | | 102,100 | | $ | 19.45 | | | 1,398,744 | | | 569,905 | |
Wilson | | | 2017 | | | — | | | 109,631 | (2) | | 219,263 | (2) | | 438,525 | (2) | | — | | | — | | | — | | | — | | | — | |
| | | 11/30/16 | | | 5,500 | | | 47,500 | (3) | | 126,666 | (3) | | 253,332 | (3) | | 11,000 | | | 17,100 | | $ | 19.45 | | | 233,641 | | | 95,589 | |
Korb | | | 2017 | | | — | | | 135,850 | (2) | | 271,700 | (2) | | 543,400 | (2) | | — | | | — | | | — | | | — | | | — | |
| | | 11/30/16 | | | 10,750 | | | 92,840 | (3) | | 247,573 | (3) | | 495,146 | (3) | | 21,450 | | | 33,300 | | $ | 19.45 | | | 455,688 | | | 221,445 | |
Delaney | | | 2017 | | | — | | | 112,500 | (2) | | 225,000 | (2) | | 450,000 | (2) | | — | | | — | | | — | | | — | | | — | |
| | | 11/30/16 | | | 9,100 | | | 78,589 | (3) | | 209,571 | (3) | | 419,142 | (3) | | 18,200 | | | 28,300 | | $ | 19.45 | | | 386,566 | | | 188,195 | |
Williams | | | 2017 | | | — | | | 58,000 | (2) | | 116,000 | (2) | | 232,000 | (2) | | — | | | — | | | — | | | — | | | — | |
| | | 11/30/16 | | | 2,500 | | | 21,591 | (3) | | 57,576 | (3) | | 115,152 | (3) | | 5,000 | | | 7,700 | | $ | 19.45 | | | 106,201 | | | 51,205 | |
The figures shown reflect the non-equity component of Performance Sharesperformance shares granted in December 20162020 under the Omnibus Plan. TheBeginning in fiscal 2019, the performance shares are earned based upon a market condition (relative total shareholder return) and an internal performance condition (earnings per share)(return on net assets). The grant date fair value related to the market condition was based on a Monte Carlo simulation. The grant date fair value related to the internal performance condition was based on the closing price of the Company'sCompany’s common stock on the date of grant. The awards settle 50%100% in cash and 50% in shares, and the participants can
Table of Contents
earn from 0% to 200% of the awards granted (Threshold—(Threshold — 75%; Target—Target — 100%; Maximum—Maximum — 200%). Threshold can be achieved for each of the performance measures independently. Therefore, threshold as presented above is calculated at 37.5% (50% of 75% of Target). The award includes an enhancement based upon achievement of a designated return on invested capital (ROIC), but the maximum cannot exceed 200% (even if the enhancement is achieved). Achievement of the enhancement was not assumed for purposes of this presentation. The figures presented in this item represent the non-equity portion (amount expected to settle in cash). The portion expected to settle in shares has been included in item (4). This presentation assumes that the shares will settle at 100% (Target).
(2)
These amounts reflect possible Annual Incentive Award (AIA) payments under the Omnibus Plan for fiscal year 2017,2021, under which the named executive officers were eligible to receive a cash bonus based on a target percentage of base salary. The results for Mr. Wilson were calculated pursuant to the terms of his compensation agreements as President of IG Systems for the period from November 1, 2016 through July 1, 2017, and as Chief Operating Officer for the period from August 1, 2017 to October 31, 2017.
Please see the "“Compensation Discussion and Analysis"” section for more information regarding this program, performance shares and PRSUs granted thereunder, the related performance measures and the actual performance results.
(3)
These amounts reflect possible payments with regard to the Performance Sharesperformance shares granted under the Omnibus Plan in December 20162020, which are expected to settle in cash. The amount of cash which is ultimately paid will be determined by the Company'sCompany’s performance over the performance period from November 1, 20162020 through October 31, 2019.
2023. Please see the "“Compensation Discussion and Analysis"” section for more information regarding this program, performance shares granted thereunder, and the related performance measures.
(4)
The amounts shown reflect: (a)reflect grants of restricted stock, and the equity-portiongrants of performance share awardsPRSUs (assuming sharesPRSUs settle at 100%) and (b)granted under the Omnibus Plan.
(5)
There were no grants of stock options made underduring the Omnibus Plan. The stock options are granted at fair market value based on the closing share price as of the grant date.year ended October 31, 2021.
(6)
(5)The fair value shown in these columns was calculated in accordance with FASB ASC Topic 718. A discussion of the assumptions used in calculating these values may be found in Note 15, "Stock-Based Compensation"13, “Stock-Based Compensation” to the Company's audited financial statements contained in the Company’s Annual Report on Form 10-K for the year ended October 31, 2017.2021.
Outstanding Equity Awards
The following table provides information about
the outstanding equity awards held by the named executive officers as of October 31,
2017:
2021:
Outstanding Equity Awards at October 31, 2017
2021
| | | | | Option Awards | | | Stock Awards | |
| | Name | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | | Option
Exercise
Price
($) | | | Option
Expiration
Date | | | Number of Shares
or Units of Stock
That Have Not
Vested(7)
(#) | | | Market Value
of Shares or
Units of Stock
That Have
Not Vested(7)
($) | |
| | Griffiths | | | | | — | | | | | | —(1) | | | | | | — | | | | | | — | | | | | | 84,100 | | | | | | 1,743,393 | | |
| | Wilson | | | | | — | | | | | | —(1) | | | | | | — | | | | | | — | | | | | | 49,500 | | | | | | 1,026,135 | | |
| | | | | | | 17,100 | | | | | | —(2) | | | | | | 19.45 | | | | | | 11/30/2026 | | | | | | 40,800 | | | | | | 845,784 | | |
| | | | | | | 14,400 | | | | | | —(3) | | | | | | 19.31 | | | | | | 12/2/2025 | | | | | | 35,300 | | | | | | 731,769 | | |
| | | | | | | 6,300 | | | | | | —(4) | | | | | | 20.28 | | | | | | 12/3/2024 | | | | | | — | | | | | | — | | |
| | Zuehlke | | | | | — | | | | | | —(1) | | | | | | — | | | | | | — | | | | | | 14,100 | | | | | | 292,293 | | |
| | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 12,700 | | | | | | 263,271 | | |
| | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,900 | | | | | | 143,037 | | |
| | Cornett | | | | | — | | | | | | —(1) | | | | | | — | | | | | | — | | | | | | 9,700 | | | | | | 201,081 | | |
| | | | | | | 5,500 | | | | | | —(2) | | | | | | 19.45 | | | | | | 11/30/2026 | | | | | | 9,300 | | | | | | 192,789 | | |
| | | | | | | 5,500 | | | | | | —(3) | | | | | | 19.31 | | | | | | 12/2/2025 | | | | | | 4,500 | | | | | | 93,285 | | |
| | | | | | | 1,800 | | | | | | —(4) | | | | | | 20.28 | | | | | | 12/3/2024 | | | | | | — | | | | | | — | | |
| | | | | | | 2,000 | | | | | | —(5) | | | | | | 17.63 | | | | | | 12/5/2023 | | | | | | — | | | | | | — | | |
| | | | | | | 1,500 | | | | | | —(6) | | | | | | 21.11 | | | | | | 12/5/2022 | | | | | | — | | | | | | — | | |
| | Livingston | | | | | — | | | | | | —(1) | | | | | | — | | | | | | — | | | | | | 6,000 | | | | | | 124,380 | | |
| | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5,200 | | | | | | 107,796 | | |
| | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 4,500 | | | | | | 93,285 | | |
| | | | | | | | | | | | | | | | | | | |
| | Option Awards | | Stock Awards | |
|---|
Name | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number of Shares
or Units of Stock
That Have Not
Vested
(#) | | Market Value
of Shares or
Units of Stock
That Have
Not Vested(18)
($) | |
|---|
Griffiths | | | — | | | 102,100 | (1) | | 19.45 | | | 11/30/2026 | | | 65,850 | (15) | | 1,445,408 | |
| | | 28,567 | | | 57,133 | (2) | | 19.31 | | | 12/02/2025 | | | 57,150 | (16) | | 1,254,443 | |
| | | 32,200 | | | 16,100 | (3) | | 20.28 | | | 12/03/2024 | | | 53,600 | (17) | | 1,176,520 | |
| | | 55,800 | | | — | (4) | | 17.63 | | | 12/05/2023 | | | — | | | — | |
| | | 175,500 | | | — | (5) | | 16.72 | | | 7/09/2023 | | | — | | | — | |
| | | 5,987 | | | — | (6) | | 19.77 | | | 10/31/2022 | | | — | | | — | |
| | | 8,132 | | | — | (6) | | 14.75 | | | 10/31/2021 | | | — | | | — | |
| | | 6,390 | | | — | (6) | | 18.02 | | | 10/29/2020 | | | — | | | — | |
| | | 5,000 | | | — | (6) | | 15.58 | | | 2/26/2020 | | | — | | | — | |
| | | 5,489 | | | — | (6) | | 14.87 | | | 10/30/2019 | | | — | | | — | |
Wilson | | | — | | | 17,100 | (1) | | 19.45 | | | 11/30/2026 | | | 11,000 | (15) | | 241,450 | |
| | | 4,800 | | | 9,600 | (2) | | 19.31 | | | 12/02/2025 | | | 9,600 | (16) | | 210,720 | |
| | | 4,200 | | | 2,100 | (3) | | 20.28 | | | 12/03/2024 | | | 7,000 | (17) | | 153,650 | |
| | | 7,300 | | | — | (4) | | 17.63 | | | 12/05/2023 | | | — | | | — | |
| | | 14,900 | | | — | (7) | | 21.11 | | | 12/05/2022 | | | — | | | — | |
| | | 17,600 | | | — | (8) | | 15.08 | | | 11/30/2021 | | | — | | | — | |
| | | 15,000 | | | — | (9) | | 20.27 | | | 12/1/2020 | | | — | | | — | |
Korb | | | — | | | 33,300 | (1) | | 19.45 | | | 11/30/2026 | | | 21,450 | (15) | | 470,828 | |
| | | 9,333 | | | 18,667 | (2) | | 19.31 | | | 12/02/2025 | | | 18,600 | (16) | | 408,270 | |
| | | 10,533 | | | 5,267 | (3) | | 20.28 | | | 12/03/2024 | | | 17,450 | (17) | | 383,028 | |
| | | 18,200 | | | — | (4) | | 17.63 | | | 12/05/2023 | | | — | | | — | |
| | | 43,700 | | | — | (7) | | 21.11 | | | 12/05/2022 | | | — | | | — | |
| | | 54,700 | | | — | (8) | | 15.08 | | | 11/30/2021 | | | — | | | — | |
| | | 41,900 | | | — | (10) | | 16.90 | | | 12/1/2020 | | | — | | | — | |
| | | 37,500 | | | — | (11) | | 16.21 | | | 12/2/2019 | | | — | | | — | |
| | | 61,800 | | | — | (12) | | 7.83 | | | 12/3/2018 | | | — | | | — | |
| | | 100,000 | | | — | (13) | | 15.32 | | | 8/1/2018 | | | — | | | — | |
Delaney | | | — | | | 28,300 | (1) | | 19.45 | | | 11/30/2026 | | | 18,200 | (15) | | 399,490 | |
| | | 7,900 | | | 15,800 | (2) | | 19.31 | | | 12/02/2025 | | | 15,800 | (16) | | 346,810 | |
| | | 8,933 | | | 4,467 | (3) | | 20.28 | | | 12/03/2024 | | | 14,800 | (17) | | 324,860 | |
| | | 15,500 | | | — | (4) | | 17.63 | | | 12/05/2023 | | | — | | | — | |
| | | 35,400 | | | — | (7) | | 21.11 | | | 12/05/2022 | | | — | | | — | |
| | | 46,100 | | | — | (8) | | 15.08 | | | 11/30/2021 | | | — | | | — | |
| | | 35,300 | | | — | (10) | | 16.90 | | | 12/1/2020 | | | — | | | — | |
| | | 32,400 | | | — | (11) | | 16.21 | | | 12/2/2019 | | | — | | | — | |
| | | 50,400 | | | — | (12) | | 7.83 | | | 12/3/2018 | | | — | | | — | |
Williams | | | — | | | 7,700 | (1) | | 19.45 | | | 11/30/2026 | | | 5,000 | (15) | | 109,750 | |
| | | 2,167 | | | 4,333 | (2) | | 19.31 | | | 12/02/2025 | | | 4,350 | (16) | | 95,483 | |
| | | 2,333 | | | 1,167 | (3) | | 20.28 | | | 12/03/2024 | | | 3,950 | (17) | | 86,703 | |
| | | 4,100 | | | — | (4) | | 17.63 | | | 12/05/2023 | | | — | | | — | |
| | | 4,000 | | | — | (14) | | 16.94 | | | 7/01/2023 | | | — | | | — | |
(1)(1)- Stock option awards were not awarded during the fiscal years ended October 31, 2021, 2020 and 2019. Restricted stock awards, performance shares, and PRSUs were granted during these years.
(2)
Messrs. Griffiths, Wilson Korb, Delaney and Williams'Cornett’s stock option awards vestvested annually in equal installments over a three-year period. One-third of the stock options vest on November 30, 2017, with the remaining two-thirds vesting in equal installments on November 30, 2017, 2018 and 2019.
(3)
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(2)- Messrs.
Griffiths, Wilson Korb, Delaney and Williams'Cornett’s stock option awards vestvested annually in equal installments over a three-year period. One-third of the stock options vested on December 2, 2016, with the remaining two-thirds vesting in equal installments on December 2, 2016, 2017 and 2018.
(4)
(3)Messrs. Griffiths, Wilson Korb, Delaney and Williams'Cornett’s stock option awards vestvested annually in equal installments over a three-year period. One-third of the stock options vested on December 3, 2015, 2016 and one-third of the stock options vested on December 3, 2016, with the remaining one-third vesting on December 3, 2017.
(5)
(4)Messrs. Griffiths, Wilson, Korb, Delaney and Williams'Mr. Cornett’s stock option awards vested annually in equal installments on December 5, 2014, 2015 and 2016.
(6)
(5)Mr. Griffiths' stock options vested annually in equal installments on July 9, 2014, 2015 and 2016.
(6)Mr. Griffiths received these stock option awards while providing service as a non-employee member of the Board of Directors. As such, in accordance with the plan provisions, these stock options vested immediately upon grant.
(7)Messrs. Wilson, Korb and Delaney'sCornett’s stock options vested annually in equal installments on December 5, 2013, 2014 and 2015.
(7)
(8)Messrs. Wilson, KorbThe following table provides the details of the number and Delaney'svalue of the shares or units of stock optionsthat have not yet vested annually in equal installments on November 30, 2012, 2013 and 2014.as of October 31, 2021:
| | | | | | | | | | | Number of Shares or Units of
Stock That Have Not Vested | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(11)
($) | |
| | | | | Grant
Date | | | Restricted
Stock
Awards(8)
(#) | | | Performance
Shares(9)
(#) | | | Performance
Restricted
Stock
Units(10)
(#) | | | Total
Shares
(#) | |
| | Griffiths | | | | | 12/2/2020 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | 12/5/2019 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | 12/5/2018 | | | | | | 41,700 | | | | | | — | | | | | | 42,400 | | | | | | 84,100 | | | | | | 1,743,393 | | |
| | Wilson | | | | | 12/2/2020 | | | | | | 25,500 | | | | | | — | | | | | | 24,000 | | | | | | 49,500 | | | | | | 1,026,135 | | |
| | | | | | | 12/5/2019 | | | | | | 19,800 | | | | | | — | | | | | | 21,000 | | | | | | 40,800 | | | | | | 845,784 | | |
| | | | | | | 12/5/2018 | | | | | | 17,500 | | | | | | — | | | | | | 17,800 | | | | | | 35,300 | | | | | | 731,769 | | |
| | Zuehlke | | | | | 12/2/2020 | | | | | | 7,300 | | | | | | — | | | | | | 6,800 | | | | | | 14,100 | | | | | | 292,293 | | |
| | | | | | | 12/5/2019 | | | | | | 6,200 | | | | | | — | | | | | | 6,500 | | | | | | 12,700 | | | | | | 263,271 | | |
| | | | | | | 12/5/2018 | | | | | | 3,400 | | | | | | — | | | | | | 3,500 | | | | | | 6,900 | | | | | | 143,037 | | |
| | Cornett | | | | | 12/2/2020 | | | | | | 5,000 | | | | | | — | | | | | | 4,700 | | | | | | 9,700 | | | | | | 201,081 | | |
| | | | | | | 12/5/2019 | | | | | | 4,500 | | | | | | — | | | | | | 4,800 | | | | | | 9,300 | | | | | | 192,789 | | |
| | | | | | | 12/5/2018 | | | | | | 4,500 | | | | | | — | | | | | | — | | | | | | 4,500 | | | | | | 93,285 | | |
| | Livingston | | | | | 12/2/2020 | | | | | | 3,100 | | | | | | — | | | | | | 2,900 | | | | | | 6,000 | | | | | | 124,380 | | |
| | | | | | | 12/5/2019 | | | | | | 2,500 | | | | | | — | | | | | | 2,700 | | | | | | 5,200 | | | | | | 107,796 | | |
| | | | | | | 02/4/2019 | | | | | | 4,500 | | | | | | — | | | | | | — | | | | | | 4,500 | | | | | | 93,285 | | |
(8)
Restricted stock options vested annually in equal installments on April 1, 2012, 2013 and 2014.awards vest three years from date of grant.
(9)
(10)Messrs. Korb and Delaney's stock options vested annually in equal installments on December 1, 2011, 2012 and 2013.
(11)Messrs. Korb and Delaney's stock options vested annually in equal installmentsPerformance shares granted on December 2, 2010, 20112020, December 5, 2019 and 2012.
(12)Messrs. KorbDecember 5, 2018 will be settled 100% in cash, and Delaney's stock options vested annuallyare therefore not included in equal installments on December 3, 2009, 2010 and 2011.this table.
(10)
(13)Mr. Korb's stock options vested annually in equal installments on August 1, 2009, 2010 and 2011.
(14)Mr. Williams' stock options vested annually in equal installments on July 1, 2014, 2015 and 2016.
(15)Amounts include restricted stock awards for Messrs. Griffiths, Wilson, Korb, Delaney and Williams of 32,900 shares; 5,500 shares; 10,700 shares; 9,100 shares; and 2,500 shares, respectively; as well as the equity portion of performance share awards (assuming sharesassume PRSUs will settle at 100% of Target) for Messrs. Griffiths, Wilson, Korb, DelaneyTarget and Williams of 32,950 shares; 5,500 shares; 10,750 shares; 9,100 shares; and 2,500 shares, respectively. Restricted stock awards vest on November 30, 2019, three years from the date of grant andbased on performance during the equity portion of theestablished three-year performance shares vest based upon performance for the period November 1, 2016 through October 31, 2019.period.
(11)
(16)Amounts include restricted stock awards for Messrs. Griffiths, Wilson, Korb, Delaney and Williams of 28,600 shares; 4,800 shares; 9,300 shares; 7,900 shares; and 2,200 shares, respectively; as well as the equity portion of performance share awards (assuming shares settle at 100% of Target) for Messrs. Griffiths, Wilson, Korb, Delaney and Williams of 28,550 shares; 4,800 shares; 9,300 shares; 7,900 shares; and 2,150 shares, respectively. Restricted stock awards vest on December 2, 2018, three years from the date of grant, and the equity portion of the performance shares vest based upon performance for the period November 1, 2015 through October 31, 2018.
(17)Amounts include restricted stock awards for Messrs. Griffiths, Wilson, Korb, Delaney and Williams of 26,800 shares; 3,500 shares; 8,700 shares; 7,400 shares and 2,000 shares, respectively; as well as the equity portion of performance share awards (assuming shares settle at 100% of Target) for Messrs. Griffiths, Wilson, Korb, Delaney and Williams of 26,800 shares; 3,500 shares; 8,750 shares; 7,400 shares and 1,950 shares, respectively. Restricted stock awards vest on December 3, 2017, three years from the date of grant, and equity portion of the performance shares vest based upon performance for the period November 1, 2014 through October 31, 2017.
(18)This column shows the total market value of the unvested stock awards as of October 31, 2017,2021, based on the closing price per share of Quanex Building Products Corporation'sCorporation’s stock of $21.95$20.73 on October 31, 2017.2021.
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Option Exercises and Stock Vested in Fiscal
20172021
The following table provides information regarding the value realized by the named executive officers upon the exercise of options, the vesting of restricted stock awards and the vesting of the equity portion of performance shares during the fiscal year ended October 31,
2017.2021.
| | | | | Option Awards | | | Stock Awards | |
| | Name | | | Number of
Shares
Acquired on
Exercise
(#) | | | Value Realized
on Exercise(1)
($) | | | Number of
Shares
Acquired on
Vesting
(#) | | | Value Realized
on Vesting(2)
($) | |
| | Griffiths | | | | | 481,519 | | | | | | 2,690,353 | | | | | | 24,200 | | | | | | 523,688 | | |
| | Wilson | | | | | 54,800 | | | | | | 234,499 | | | | | | 10,200 | | | | | | 220,728 | | |
| | Zuehlke | | | | | 20,800 | | | | | | 113,671 | | | | | | 2,000 | | | | | | 43,280 | | |
| | Cornett | | | | | 1,500 | | | | | | 10,560 | | | | | | 1,500 | | | | | | 32,460 | | |
| | Livingston | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | | | | | | | | | | | |
| | Option Awards | | Stock Awards | |
|---|
Name | | Number of
Shares
Acquired on
Exercise
(#) | | Value Realized
on Exercise(1)
($) | | Number of
Shares
Acquired on
Vesting
(#) | | Value Realized
on Vesting(2)
($) | |
|---|
Griffiths | | | — | | | — | | | 60,600 | | | 1,228,665 | |
Wilson | | | — | | | — | | | 7,850 | | | 159,170 | |
Korb | | | — | | | — | | | 19,800 | | | 401,445 | |
Delaney | | | 104,809 | | | 656,815 | | | 16,800 | | | 340,620 | |
Williams | | | — | | | — | | | 4,450 | | | 90,235 | |
(1)
The value realized upon exercise represents the number of options exercised multiplied by the excess of the closing market price of a share of Quanex Building Products Corporation stock on the exercise date over the price on the grant date.
(2)
(2)The value realized upon vesting represents the number of shares of stock vesting multiplied by the closing market price of a share of Quanex Building Products Corporation stock on the vesting date.
Our named executive officers
other than Mark Livingston are eligible to participate in our Salaried and Nonunion Employee Pension Plan, described below, that is generally available to all our salaried and nonunion hourly employees except for
(i) employees of certain recent
acquisitions.acquisitions, (ii) employees who had not met the twelve-month eligibility requirement before the Pension Plan was frozen, and (iii) employees hired on or after January 1, 2020. The named executive officers are also eligible to participate in certain plans, also described below, which are only available to a select group of management and highly compensated employees.
| | NEOs Eligible | | | Time Frame | | | Plan Name | | | Earnings | | | Formula | | | Form of Payment | |
| | All NEOs exceptPaul Cornett and Mark Livingston | | | For salaried and non-union employees (12 month service commitment added in 2018).(1) Frozen on January 1, 2020 | | | Pension Plan
(Cash balance) | | | Salary and Bonus
(Earnings up to the tax limit are included in the Plan; benefits on the excess are accrued under the Restoration Plan) | | | 4% of Earnings + Interest at the 30-year Treasury security in effect on the first day of the fifth month of the year(2) | | | Annuity or lump sum | |
| | Paul Cornett | | | For salaried and non-union employees who began participating at Quanex Corporation. | | | Pension Plan
(Traditional) | | | Highest 5-calendar year monthly average of salary and bonus
(Earnings up to the tax limit are included in the Plan; benefits on the excess are accrued under the Restoration Plan) | | | Greater of:
(i) 1% of Pension Earnings (capped at Social Security covered compensation)
plus
1.5% of Pension Earnings in excess of Social Security covered compensation x years of service (up to January 1, 2020)
or
(ii) $9.00 x years in service
less
monthly accrued benefits under other qualified defined benefit plans that consider years of service(2) | | | Monthly single life annuity | |
| | All NEOs exceptMark Livingston(1) | | | Highly compensated individuals designated by a Committee of the Board who participate in the Pension Plan | | | Restoration Plan | | | Earnings as defined under Pension Plan (without caps) | | | Benefit under Pension plan without cap lessbenefit under Pension Plan with cap(3) | | | Lump Sum(4) | |
(1)
Mark Livingston joined the Company in February 2019 and
Nonunion Employee Pension Plan We have establishedtherefore did not meet the Salaried and Nonunion Employee Pension Plan (the "Pension Plan"), a noncontributory defined benefit pension plan intended to be a tax-qualified plan under Section 401(a) of the Internal Revenue Code, for the benefit of substantially all of our salaried and nonunion hourly employees with the exception of those employed by the Company's cabinet components division. With some exceptions, an employee hired prior to January 1, 2018, is eligible12-month eligibility requirement to participate in the Pension Plan once that employee has completed one hour of service. Employees hired afterbefore its freeze on January 1, 2018, are eligible to participate after reaching age 21 and completing one year of service.
Under the Pension Plan, two main types of benefits are available to participants, depending upon when they began participating in the Pension Plan or the Quanex Corporation Salaried Employees' Pension Plan (the "Quanex Corporation Pension Plan"). The employees who participated in the Quanex Corporation Pension Plan on or before December 31, 2006, are generally referred to as "Traditional Participants," while employees who began participating in the Quanex Corporation Pension Plan or the Pension Plan after such date are generally referred to as "Cash Balance Participants".
2020.
(2)
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Under the Pension Plan, a Traditional Participant is entitled to receive a monthly single life annuity, payable following termination of employment at or after age 65, equal to the sum of (i) and (ii), less (iii), where:
(i) is the greater of (x) 1.5% of the Traditional Participant's average monthly compensation for the five consecutive calendar years that lead to the highest monthly average multiplied by his whole and fractional years of benefit service earned with Quanex Corporation prior to November 1, 1985, or (y) the product of $9.00 and his years of benefit service earned with Quanex Corporation prior to November 1, 1985;
(ii) is the greater of (x) the sum of 1% of the Traditional Participant's average monthly compensation for the five consecutive calendar years that lead to the highest monthly average up to but not in excess of1/12 of the average of the Social Security taxable wage bases in effect for each calendar year during the 35-year period ending with the last day of the calendar year in which the Traditional Participant attains Social Security retirement age (referred to as Social Security covered compensation) and 1.5% of the Traditional Member's average monthly compensation for the five consecutive calendar years that lead to the highest monthly average in excess of1/12 of the Traditional Member's Social Security covered compensation, the total of which is then multiplied by his whole and fractional years of benefit service earned with Quanex Corporation and the Company from and after November 1, 1985 or (y) the product of $9.00 and the Traditional Member's whole and fractional years of benefit service earned with Quanex Corporation and the Company from and after November 1, 1985; and
(iii) is the Traditional Participant's monthly accrued benefit under any qualified defined benefit plan that was maintained at any time by Quanex Corporation or the Company to the extent that the Traditional Participant's service taken into account for benefit accrual purposes under such other plan is taken into account as benefit service under the Pension Plan.
Traditional Participants are eligible for early retirement benefits when they attain age 55 with five years of service. The early retirement benefit is calculated as (x) minus (y), where (x) is the sum of items (i) and (ii) immediately above, reduced by5/9 of 1% for each of the first 60 months that the early retirement benefit payment commencement date precedes the Traditional Participant's normal retirement date and further reduced by5/18 of 1% for each of the months in excess of 60 that the payment commencement date precedes the Traditional Participant's normal retirement date, and (y) is item (iii) immediately above, but determined as if the Traditional Participant's benefit under such Quanex Corporation or Company qualified defined benefit plan commences to be paid at the same time as the Pension Plan benefit, using the reduction factors used in connection with such other qualified defined benefit plan.
Under the Pension Plan, upon termination of employment with the Company, a Cash Balance Participant receives the following after at least three years of vesting:
The sum of the notional company contributions accrued under the Pension Plan through the date on which the Cash Balance Participant terminates employment, where such contribution generally equals 4% of the Cash Balance Participant's compensation for the applicable year; plus
The sum of the interest credits on those notional company contributions accrued under the Pension Plan through the date on which the Cash Balance Participant terminates employment with us, where such contribution generally equals the interest rate on the 30-year Treasury security for the fifth month prior to the first day of the applicable year.
For purposes of both Traditional Participants' benefits and Cash Balance Participants' benefits, the compensation taken into account under the Pension Plan generally comprises salary and bonus compensation for the applicable year.
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Pension Plan benefits for unmarried participants are generally payable as a single life annuity and for married participants as a 50% joint and survivor annuity, unless the participant and his spouse, if applicable, elect to receive the benefit under another optional form of payment available under the Pension Plan. If the participant receives a benefit other than a single life annuity, the benefit will be adjusted to provide the actuarial equivalence of the participant's benefit under the Pension Plan. This adjustment is designed so Pension Plan benefits will be equivalent as if the option had not been chosen.
Mr. Delaney is presently eligible to receive early retirement benefits under the Pension Plan as a Traditional Participant, and Mr. Griffiths is presently eligible to receive retirement benefits under the Pension Plan as a Cash Balance Participant.
Supplemental Employee Retirement Plan
We provide additional retirement benefits to certain of our named executive officers under the Supplemental Employee Retirement Plan (the "SERP"). Eligibility to participate in the SERP is determined by the Board of Directors. Currently the SVP—Finance and CFO, and the SVP—General Counsel and Secretary are the only participants in the SERP.
Under the SERP, an eligible participant receives a monthly single life annuity (or actuarially equivalent optional form of payment) payable at age 65 equal to:
•2.75% of the highest consecutive 36-month average of salary and bonus compensation from the last 60 months of employment,
•multiplied by the eligible executive's years of service with the Company (but not in excess of 20 years), and
•reduced by (i) any benefits payable under the Pension Plan and (ii) 50% of the executive's Social Security benefits adjusted pro rata for years of service not in excess of 20 years.
The eligible executive is required to remain employed until he or she has accumulated five years of service in order to receive a benefit under the SERP. SERP participants are eligible for early retirement benefits when they attain age 55 with five years of service. The early retirement benefit is calculated based on average compensation and service at early retirement, and reduced by 5% for each year benefit commencement precedes age 65. Mr. Delaney is presently eligible to receive early retirement benefits under the SERP.
Upon an eligible executive's termination of employment after a change in control, he or she will be eligible to receive a lump sum payment in lieu of any other benefit payable from the SERP. The lump sum is equal to the present value of the SERP life annuity, which is payable immediately without reduction for early payment, based on the executive's years of service and compensation at date of termination. The SERP is administered in a manner that is intended to comply with Section 409A of the Internal Revenue Code.
Restoration Plan
We provide additional retirement benefits to our executive officers who do not participate in the SERP under the Restoration Plan (the "Restoration Plan"). Eligibility to participate in the Restoration Plan is determined by a committee appointed by the Company's Board of Directors. Currently, the CEO, the VP—Controller, the Company's VP—Investor Relations & Treasurer, the Company's divisional leaders, certain key employees, and certain former officers and divisional leaders are the only participants in the Restoration Plan.
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Under the Restoration Plan, an eligible participant will receive a lump sum actuarial equivalent of a monthly benefit for life payable at age 65 equal to:
•the benefit payable to the eligible executive under the Pension Plan if the compensation taken into account under that plan were not capped at the amount required under Section 401(a)(17) of the Internal Revenue Code,
•reduced by the benefit payable to the executive under the Pension Plan taking into account only the amount of compensation allowed under Section 401(a)(17) of the Internal Revenue Code.
The specific elements of an executive's compensation taken into account for purposes of the Restoration Plan are the same as those items of compensation taken into account for purposes of the Pension Plan, described above.
The eligible executive must remain employed until he or she has accumulated five years of service in order to receive a benefit under the Restoration Plan. Restoration Plan participants are eligible for early retirement benefits when they attain age 55 with five years of service. The early retirement benefit is the actuarial equivalent of the participant's lump sum benefit under the Restoration Plan, determined as of his or her early retirement date. Mr. Griffiths is currently eligible to receive retirement benefits under the Restoration Plan. The Restoration Plan is administered in a manner that is intended to comply with Section 409A of the Internal Revenue Code.
Pension Benefits Table
The following table discloses the years of credited service of, present single-sum value of the accrued benefits as of October 31, 2017 for, and payments during fiscal year 2017 for the named executive officers under the SERP, the Pension Plan, and the Restoration Plan. For information related to the valuation method and material assumptions applied in quantifying the present value of the current accrued benefit, please see Note 9, "Retirement Plans" included in the financial statements in the Company's Annual Report on Form 10-K for the fiscal year ended October 31, 2017.
| | | | | | | | | | | | |
Name | | Plan Name | | Number of Years
Credited Service
(#) | | Present Value of
Accumulated Benefit
($) | | Payments During
Last Fiscal Year
($) | |
|---|
William C. Griffiths | | Restoration Plan(3) | | | 4.32 | | | 325,137 | | | — | |
| | Pension Plan(2) | | | 4.32 | | | 72,651 | | | — | |
George L. Wilson | | Restoration Plan(3) | | | 9.16 | | | 99,968 | | | — | |
| | Pension Plan(2) | | | 9.16 | | | 113,558 | | | — | |
Brent L. Korb | | SERP(1) | | | 13.95 | | | 1,414,176 | | | — | |
| | Pension Plan(2) | | | 13.95 | | | 253,011 | | | — | |
Kevin P. Delaney | | SERP(1) | | | 14.29 | | | 1,597,039 | | | — | |
| | Pension Plan(2) | | | 14.29 | | | 504,229 | | | — | |
M. Dewayne Williams | | Restoration Plan(3) | | | 4.33 | | | 11,181 | | | — | |
| | Pension Plan(2) | | | 4.33 | | | 70,976 | | | — | |
(1)The SERP provides retirement benefits for certain designated officers in addition to those provided under the Pension Plan. The purpose of the SERP is to supplement those retirement benefits that a Participant may be entitled to receive as a salaried employee of the Company. The SERP pays a retirement benefit to eligible executives following retirement or termination of employment. As noted above, the benefit formula under the SERP equals: 2.75 percent of final average earnings (defined as the highest 36 months of compensation during the last 60 months preceding retirement or termination) multiplied by years of service (not in excess of 20 years), less the sum of (1) the executive's Pension Plan benefit, and (2) one-half of the executive's Social Security benefit multiplied by a fraction (which shall not exceed one), the numerator of which is
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the executive's number of years of service and the denominator of which is 20. The definition of "compensation" under the SERP includes W-2 wages modified by excluding reimbursements or other expense allowances, fringe benefits (cash and noncash), moving expenses, deferred compensation, welfare benefits, performance shares, performance RSUs, restricted stock awards and stock options; and modified further by including elective contributions under a Company cafeteria plan and the 401(k) Plan.
Vesting in the SERP is based on five years of service. Early retirement under the SERP requires a participant to attain age 55 with five years of service. Mr. Delaney is currently eligible to receive an early retirement benefit under the SERP. If a participant retires prior to age 65, the accrued benefit is reduced 5% for each year (and fractional year) that the participant's benefit commencement precedes age 65.
Benefits under the SERP are paid under the following options:
•Single Life Annuity
•50%, 75%, or 100% Joint & Survivor Annuity
•10 Year Certain and Life
•Single Lump Sum
The SERP also pays a death benefit to the designated beneficiary if the participant has retired or terminated employment, but has not commenced payment. In addition, the SERP pays a disability benefit. Should a participant with six months of service terminate due to disability prior to early retirement, the SERP will pay a disability benefit until age 65 equal to 50% of the sum of his monthly earnings in effect at the date of his disability and the monthly equivalent of the average of his incentive awards for the prior three plan years, less the sum of (1) the participant's Pension Plan benefit; (2) the participant's Social Security benefit; (3) the participant's benefit under the Company's group long-term disability insurance plan; (4) the participant's benefit under an individual disability policy provided by the Company; and (5) the participant's benefit under the Company's wage continuation policy plan. Benefits payable from the SERP are equal to the actuarial equivalent of the accrued benefit at date of distribution employing the actuarial equivalent definition from the Pension Plan. The Company has no policy for granting additional service under the SERP. Mr. Griffiths is not participating in the SERP, and therefore participates in the Restoration Plan, described below.
(2)The Pension Plan was established to provide retirement income to the Company's non-union employees. It is an ERISA qualified pension plan. As discussed above, the Pension Plan pays a retirement benefit to eligible participants depending on whether the participant is a Traditional Participant or a Cash Balance Participant. A Traditional Participant's Pension Plan Benefit generally is equal to 1.5% of the Traditional Participant's average monthly compensation (that is, the participant's high 5 consecutive years of earnings out of the 10 years preceding termination or retirement) times years and fractional years of benefit service earned prior to November 1, 1985 plus the sum of 1% of average monthly compensation up to Social Security covered compensation and 1.5% of the Traditional Member's average monthly compensation in excess of Social Security covered compensation, the total of which is multiplied by years and fractional years of benefit service from, on and after November 1, 1985. Compensation is defined as earned income excluding deferred compensation. Compensation is limited by the compensation limits imposed under the Internal Revenue Code. For Cash Balance Participants, the Pension Plan pays the amount in the participant's account balance with interest at date of termination. The contribution is generally 4% of Pension Plan compensation plus a guaranteed rate of interest. The Pension Plan pays a death benefit prior to retirement to the participant’s spouse, or to the participant’s estate, if no spouse. The Pension Plan does not provide for a disability retirement. The Pension Plan requires 5five years of vesting service for
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Traditional Participants and 3three years of vesting service for Cash Balance Participants. Early retirement under the Pension Plan requires a Traditional Participant to have attained age 55 with 5 years of service.
(3)
Mr.
DelaneyGriffiths is currently eligible to receive
an earlya normal retirement benefit under the
PensionRestoration Plan.
Benefits commencing prior to age 65 are reduced5/9ths of 1% for each of the first 60 months, and an additional5/18ths of 1% for each month in excess of 60 that benefits commence prior to age 65. The Company has no policy for granting additional service under the Pension Plan. Mr. Delaney is a Traditional Participant, and Messrs. Griffiths, Wilson, Korb and Williams are Cash Balance Participants.(3)The Restoration Plan was established to provide a retirement pay supplement for a select group of management or highly compensated employees so as to retain their loyalty and to offer a further incentive to them to maintain and increase their standard of performance. The Restoration Plan pays a retirement benefit in the form of a lump sum to eligible employees following retirement or termination of employment. If a participant terminates employment, an actuarial equivalent lump sum of the participant's Pension Plan benefit that would be payable if the applicable limitation under section 401(a)(17) of the Code for each fiscal year of the Pension Plan commencing on or after November 1, 1994, was not limited (indexed for increases in the cost of living), less the Participant's Pension Plan benefit. Early retirement under the Restoration Plan requires a participant to have attained age 55 with 5 Years of Service. Mr. Griffiths is currently eligible to receive a retirement benefit under the Restoration Plan. None of the named executive officers is currently eligible to receive an early retirement benefit under the Restoration Plan. The Restoration Plan requires 5five years of service for vesting purposes for Traditional Participants, and three years of service for Cash Balance Participants. In addition, the Restoration Plan pays a death benefit to the designated beneficiary of a participant if the participant has retired or terminated employment, but has not commenced payment. The Restoration Plan does not provide a disability benefit. The Company has no policy for granting additional service under the Restoration Plan.
(4) Qualified Defined Contribution Plans
Salaried and Nonunion Employee 401(k) Plan
We have established
The early retirement benefit is the Salaried and Nonunion Employee 401(k) Plan (the "401(k) Plan"), a defined contribution plan intended to be a tax-qualified plan under Section 401(a)actuarial equivalent of the Internal Revenue Code,participant’s lump sum benefit under the Restoration Plan, determined as of his or her early retirement date.
Pension Benefits Table
The following table discloses the years of credited service of, present single-sum value of the accrued benefits as of October 31, 2021 for, and payments during fiscal year 2021 for, the named executive officers under the Pension Plan and the Restoration Plan. For information related to the valuation method and material assumptions applied in quantifying the present value of the current accrued benefit, of substantially all of our salariedplease see Note 9, “Retirement Plans” to the audited financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2021.
| | Name | | | Plan Name | | | Number of Years
Credited Service
(#) | | | Present Value of
Accumulated Benefit
($) | |
| | William C. Griffiths | | | Restoration Plan | | | | | 6.49 | | | | | | 388,324 | | |
| | | | | Pension Plan | | | | | 6.49 | | | | | | 77,776 | | |
| | George L. Wilson | | | Restoration Plan | | | | | 11.33 | | | | | | 143,098 | | |
| | | | | Pension Plan | | | | | 11.33 | | | | | | 117,829 | | |
| | Scott M. Zuehlke | | | Restoration Plan | | | | | 3.94 | | | | | | 17,513 | | |
| | | | | Pension Plan | | | | | 3.94 | | | | | | 58,001 | | |
| | Paul B. Cornett | | | Restoration Plan | | | | | 14.36 | | | | | | 116,332 | | |
| | | | | Pension Plan | | | | | 14.36 | | | | | | 427,882 | | |
| | Mark A. Livingston(1) | | | | | | | | — | | | | | | — | | |
(1)
Mark Livingston joined the Company in February 2019 and
nonunion hourly employees. An employee is eligibletherefore did not meet the 12-month eligibility requirement to participate in the
401(k)Pension Plan
onbefore the
later of (i) the date the Company or an affiliate which employs the employee adopts the 401(k) Plan or (ii) the date the employee completes one hour of service for the Company. Effectivefreeze on January 1,
2017, employees of the Company's cabinet components division became eligible to participate in the 401(k) Plan. Participants in the 401(k) Plan may contribute from 1% of compensation per payroll period up to a maximum percentage per payroll period to be determined by the administrative committee of the Company's plans appointed by the Board of Directors (the "Benefits Committee"). Effective January 1, 2017, certain highly compensated employees became subject to a maximum payroll contribution of 7% per payroll period. In addition, any new participants who do not affirmatively elect otherwise have 3% of their compensation per payroll period automatically contributed to the 401(k) Plan. To the extent permitted by the Benefits Committee, participants may also make after-tax contributions to the 401(k) Plan. Effective January 1, 2017, participants are also allowed to make Roth contributions to the 401(k) Plan.
Effective January 1, 2018, the Company makes matching contributions to each participant's account equal to 50% of the pre-tax contributions the participant makes to the 401(k) Plan, up to 5% of the participant's eligible compensation. Prior to January 1, 2018, participants employed by the Company's cabinet components division received matching contributions equal to 35% of pre-tax
2020.
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contributions, up to 5% of the participant's eligible compensation. The Company may, at its discretion, make profit-sharing contributions to the participants' accounts.
Participants will always be 100% vested in their pre-tax and after-tax contributions to the 401(k) Plan. Company matching and profit-sharing contributions vest 20% per year and are 100% vested after five years. In addition, a participant will be 100% vested in all amounts under the 401(k) Plan in the event of (i) disability prior to termination of employment, (ii) retirement or (iii) death prior to termination of employment.
All distributions from the 401(k) Plan will be made in a single lump sum payment.
Employee Stock Purchase Plan
The Employee Stock Purchase Plan (the
"Stock“Stock Purchase
Plan"Plan”) is designed to provide our eligible employees the opportunity to invest in our Common Stock through voluntary payroll deductions. In addition, participating employees receive a percentage match from the Company, thereby encouraging employees to share in the
Company'sCompany’s success and to remain in its service. The Stock Purchase Plan is not intended to meet the requirements of Section 423 of the Internal Revenue Code.
The Stock Purchase Plan is administered by
Wells Fargo Shareowner Services (the "Bank"Equiniti Trust Company (“Equiniti”), who may be removed at
management'smanagement’s election.
On July 12, 2017, Wells Fargo Bank N.A. announced that it had entered into an agreement to sell the Bank to Equiniti
Group plc ("Equiniti Group"). In connection with the sale of the Bank and provided that the sale closes, administration of the Stock Purchase Plan will be transferred to Equiniti Trust Company ("EQ"). Accordingly, following the closing of the sale, EQ will servealso serves as the transfer agent and registrar for Quanex Common
Stock and as administrator of the Stock Purchase Plan.Stock.
Regular full time employees of the Company or any of the
Company'sCompany’s subsidiaries are eligible to participate in the Stock Purchase Plan. Participation in the Stock Purchase Plan is voluntary.
Contributions to the Stock Purchase Plan
Contributions to the Stock Purchase Plan consist of
employees'employees’ payroll deductions and an amount from the Company equal to 15% of those deductions.
The BankEquiniti establishes an account under the Stock Purchase Plan as agent for each eligible employee electing to participate in the Stock Purchase Plan and credits the following sources of cash to each
employee'semployee’s account for the purchase of full and fractional shares of Common Stock
("(“Plan
Shares"Shares”):
•
such employee'semployee’s payroll deductions;
•
•such employee'semployee’s 15% Company contribution;
•
•cash dividends received from the Company on all shares in such employee'semployee’s Stock Purchase Plan account at the time a dividend is paid; and
•
•cash resulting from the sale of any (i) rights to purchase additional shares of the
Company'sCompany’s stock or other securities of the Company, or (ii) securities of any other issuer.
Participants generally may not add shares of Common Stock held in their name to their accounts. All shares are held in the name of the BankEquiniti or its nominee as Plan Shares subject to the terms and conditions of the Stock Purchase Plan.
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The Bank
Equiniti applies cash credited to each
participant'sparticipant’s account to the purchase of full and fractional Plan Shares and credits such Plan Shares to such
participants'participants’ accounts. The price at which
the BankEquiniti is deemed to have acquired Plan Shares for accounts is the average price, excluding brokerage and other costs of purchase, of all Plan Shares purchased by
the BankEquiniti for all participants in the Stock Purchase Plan during the calendar month.
The BankEquiniti purchases Plan Shares in negotiated transactions or on any securities exchange where the
Company'sCompany’s Common Stock is traded. The purchases are on terms as to price, delivery and other matters, and are executed through those brokers or dealers, as
the BankEquiniti may determine.
The BankEquiniti holds the Plan Shares of all participants in its name or in the name of its nominee evidenced by as many or as few certificates as the BankEquiniti determines. No certificates representing Plan Shares purchased for participants'participants’ accounts are issued to any participant unless the participant makes a request in writing or until the participant'sparticipant’s account is terminated and the participant makes the election described below under "“Termination and Withdrawal by Participants."” Certificates are not issued for fewer than ten shares unless the participant'sparticipant’s account is terminated.Voting of Plan Shares
The Bank
Equiniti will vote each
participant'sparticipant’s Plan Shares as instructed by the participant on a form to be furnished by and returned to
the BankEquiniti at least five days (or such shorter period as the law may require) before the meeting at which the Plan Shares are to be voted.
The BankEquiniti will not vote Plan Shares for which no instructions are received.
Except as otherwise described herein, participants cannot sell, pledge, or otherwise assign or transfer their accounts, any interest in their accounts or any cash or Plan Shares credited to their accounts. Any attempt to do so will be void.
Subject to the restrictions set forth below under "“Restrictions on Resale,"” each participant may request that the BankEquiniti sell: •
all or part of such participant'sparticipant’s Plan Shares at any time, if the participant is employed by the Company or in connection with a division or subsidiary of the Company immediately before the Company sells or otherwise disposes of that division or subsidiary and after such sale or other disposition the participant is no longer employed by the Company or its subsidiary; and
•
•all or any part of such
participant'sparticipant’s Plan Shares at any time after they have been held in the
participant'sparticipant’s account for at least six months.
If a participant elects to sell all of his or her Plan Shares, such participant will be deemed to have terminated participation in the Stock Purchase Plan.
Termination and Withdrawal by
a ParticipantParticipants
Participants may terminate their participation in the Stock Purchase Plan at any time by giving proper notice. Upon receipt of such notice, unless the participant has made a contrary election in written response to the Bank'sEquiniti’s notice relating to such participant'sparticipant’s account, the BankEquiniti will send the participant a certificate or certificates representing the full Plan Shares accumulated in the participant'sparticipant’s account and a check for the net proceeds of any fractional share in the participant'sparticipant’s account. After the participant'sparticipant’s withdrawal, the sale by the participant of any shares of Common Stock issued to the
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participant upon such withdrawal is subject to the restrictions below under "“Restrictions on Resale."” If a participant elects to terminate his or her participation in the Stock Purchase Plan, he or she may rejoin the Stock Purchase Plan at any time with respect to future offering periods.
The
Company'sCompany’s officers, directors and affiliates (as defined by the relevant securities laws) are subject to certain restrictions on resale that apply to sales by (i)
the BankEquiniti on their behalf of shares of Common Stock pursuant to the Stock Purchase Plan and (ii) the participant, after he or she withdraws from the Stock Purchase Plan, of shares of Common Stock issued to the participant upon his or her withdrawal from the Stock Purchase Plan.
Nonqualified Defined Benefit and Other
Nonqualified Deferred Compensation Plans
The
Company'sCompany’s directors, executive officers, key management and highly compensated employees are eligible to participate in certain non-tax qualified plans described below.
2008 Omnibus Incentive Plan, as amended
The Company recognizes the importance of aligning the interests of its directors, officers, and employees with those of its stockholders. This alignment of interests is reflected in the Omnibus Plan, which provides those persons who have substantial responsibility for the management and growth of the Company and its affiliates with additional performance incentives and an opportunity to obtain or increase their proprietary interest in the Company, thereby encouraging them to continue in their employment or affiliation with the Company and its affiliates.
The Omnibus Plan provides for the granting of stock options, stock appreciation rights (SARs), restricted stock, restricted stock units, performance share awards, performance unit awards, annual incentive awards, other stock-based awards and cash-based awards. Certain awards under the Omnibus Plan may be paid in cash or in Common Stock. Eligibility will be determined by the Compensation Committee, which has exclusive authority to select the officer and employee participants to whom awards may be granted, and may determine the type, size and terms of each award. The Compensation Committee will also make all determinations that it decides are necessary or desirable in the interpretation and administration of the Omnibus Plan.
Deferred Compensation Plan
The Company maintains the Quanex Building Products Corporation Deferred Compensation Plan (the
"Deferred“Deferred Compensation
Plan"Plan”), a plan not intended to be qualified under section 401(a) of the Internal Revenue Code, which allows certain highly compensated management personnel and directors to defer all or a portion of their
directors'directors’ fees, certain compensation under the Omnibus Plan and compensation under the Management Incentive Plan (the
"MIP"“MIP”).
None of the named executive officers maintained a deferred compensation plan account balance during the fiscal year ended October 31, 2017, and, therefore, there were no related contributions, earnings or withdrawals during fiscal 2017.
Eligibility and Participation
The individuals who are eligible to participate in the Deferred Compensation Plan are all participantskey employees in the Omnibus Plan orand the MIP, and all of the Company'sCompany’s directors, subject to additional eligibility requirements for participation in the Deferred Compensation Plan as the Compensation Committee may determine from time to time.
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A participant may elect, during the designated election periods, (1) the percentage of his bonus awarded under the MIP (an "Incentive Bonus"“Incentive Bonus”) earned during the applicable year to be deferred under the Deferred Compensation Plan; (2) the percentage of his compensation earned under the Omnibus Plan during the applicable
year
("(“Omnibus
Compensation"Compensation”) to be deferred under the Deferred Compensation Plan; (3) the percentage of
his director fees earned during the applicable year to be deferred under the Deferred Compensation Plan; (4) the percentage to be deferred in the form of deemed shares of Common Stock or other investment funds provided under the Deferred Compensation Plan; (5) the length of the period for deferral; and (6) the form of payment at the end of the period for deferral (either a lump sum, or quarterly or annual installment payments over a period of time of not less than three nor more than 20 years). All elections made are irrevocable once they are made for a given plan year, except for the election as to how the distribution is to be made or as otherwise permitted under applicable Internal Revenue Service guidance. That election can be changed if the change is made at least 12 months prior to the end of the deferral period, is not effective for at least 12 months and the scheduled payment is no earlier than five years after the date on which the payment would have otherwise have been made or commenced. If the election of the form of distribution is changed and an event causing distribution occurs within one year, the change in election will be ineffective and the original election will remain in effect.
The deferrals in the form of deemed shares of Common Stock elected by all participants in any plan year will not be allowed to exceed 3% of the shares of Common Stock outstanding on the first day of the plan year.
Previously, if a participant elected to defer a portion of his Incentive Bonus, Omnibus Compensation or director fees under the Deferred Compensation Plan in the form of deemed shares of the
Company'sCompany’s Common Stock for a period of three full years or more, the Company provided a matching award of additional deemed shares of Common Stock equal to 20% of the amount deferred, excluding deferrals of long-term incentives, in the form of deemed shares of our Common Stock. The Company suspended its matching award effective April 1, 2009.
The
Participant'sParticipant’s Account
Under the Deferred Compensation Plan, an account is established for each participant, which the Company maintains. The account reflects the amount of the obligation to the participant at any given time (comprising the amount of compensation deferred for the participant under the Deferred Compensation Plan, the Company match, if any, and the amount of income credited on each of these amounts). If the participant elects his deferral to be in the form of deemed shares of our Common Stock, the number of shares credited to his account as Common Stock will be the number of shares of our Common Stock that could have been purchased with the dollar amount deferred, without taking into account any brokerage fees, taxes or other expenses that might be incurred in such a transaction, based upon the closing quotation on the NYSE on the date the amount would have been paid had it not been deferred. In addition to the option to hold the account as deemed shares of Common Stock, the participant may choose from a variety of investment choices.
Dividends and Distributions Associated with Company Common
Stock.Stock
When dividends or other distributions are declared and paid on the
Company'sCompany’s Common Stock, those dividends and other distributions will be accrued in a
participant'sparticipant’s account based upon the shares of Common Stock deemed credited to the
participant'sparticipant’s account. Such amounts credited to a
participant'sparticipant’s account will vest at the same time the underlying deemed shares of Common Stock vest
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and will be subject to the same forfeiture restrictions. The dividends or other distributions, whether stock, property, cash or other rights, are credited to the account as additional deemed shares of the Company'sCompany’s Common Stock. For this purpose, all dividends and distributions not in the form of deemed shares of the Company'sCompany’s Common Stock or cash are valued at the fair market value as determined by the Compensation Committee.
Common Stock Conversion Election
At any time during a period commencing three years prior to the earliest time a participant could retire under the Pension Plan and ending on the participant'sparticipant’s normal retirement date as established under the Pension Plan, the participant is allowed to elect a retirement date under the Pension Plan and may elect to have all deemed shares of Common Stock in his account converted to cash and deemed to be invested in the participant's
participant’s selected investment options. At any time which is at least three years after deemed Common Stock is credited to a
participant'sparticipant’s account, the participant is allowed to elect to have such deemed Common Stock converted to cash and deemed to be invested in the
participant'sparticipant’s selected investment options.
All deferrals of the Incentive Bonus, Omnibus Compensation and director fees are 100% vested at all times, except in the event of forfeiture as described below. Company matching contributions and dividends are 100% vested after the earliest of (i) three years after the applicable deemed share of Common Stock is credited to the
participant'sparticipant’s account, (ii) the
participant'sparticipant’s death, (iii) the
participant'sparticipant’s termination of employment due to disability, or (iv) the
participant'sparticipant’s retirement.
If the Compensation Committee finds that the participant was discharged by the Company for fraud, embezzlement, theft, commission of a felony, proven dishonesty in the course of his employment by the Company that damaged the Company, for disclosing its trade secrets, or for competing directly or indirectly with the Company at any time during the first two years following his termination of employment, the entire amount credited to his account, exclusive of the total deferrals of the participant, will be forfeited. Notwithstanding the foregoing, such forfeitures will not apply to a participant discharged during the plan year in which a change of control occurs.
Distributions under the Deferred Compensation Plan
Upon a distribution or withdrawal, the balance of all amounts deemed invested in investment funds and the number of deemed shares of Common Stock credited to the participant and required to be distributed is distributed in cash, whether the distribution or withdrawal is in a lump sum or in installments. The value per deemed share of common stock will be calculated based on the closing quotation for the
Company'sCompany’s Common Stock on the NYSE. Distributions are made with respect to a
participant'sparticipant’s interest in the Deferred Compensation Plan upon the expiration of the term of deferral as was previously elected by the participant or upon the
participant'sparticipant’s earlier death or disability. A withdrawal may be made by the participant prior to an event causing distribution, in an amount needed to satisfy an emergency or in certain unforeseeable events of hardship beyond the control of the participant, as approved by the Compensation Committee.
The Deferred Compensation Plan is administered in a manner that is intended to comply with Section 409A of the Internal Revenue Code.
The table below describes the current NEO participation in the Company’s non-qualified deferred compensation plan. No contributions have been made by the company or the employee in the current fiscal year, but the accounts which are invested in deemed shares of the Company’s stock have earned dividends as the Company has paid them to shareholders.
| | Name | | | NEO
Contributions in the
last fiscal year
($) | | | Company
Contributions in the
last fiscal year
($) | | | Aggregate
Earnings in
last fiscal year
($) | | | Aggregate
withdrawals/
distributions
($) | | | Aggregate
balance at
last fiscal year end
($) | |
| | Wilson | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
| | Griffiths | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
| | Zuehlke | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
| | Cornett | | | | | — | | | | | | — | | | | | $ | 746 | | | | | $ | — | | | | | $ | 43,026 | | |
| | Livingston | | | | | — | | | | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
The following table sets forth, as of the Record Date, the number and percentage of beneficial ownership of shares of Common Stock, Restricted Stock Units, shares of Phantom Common Stock credited under the Deferred Compensation Plan, and the amount of shares obtainable upon conversion of options exercisable (or exercisable within 60 days) for each current director and nominee for director of the Company, the executive officers named in the “Summary Compensation TableTable” on page 3738 of this Proxy Statement, and all officers and directors as a group. Each of the directors and executive officers has sole voting and investment authority with respect to the securities listed by their name below. Unless otherwise indicated, the directors and current executive officers have notNo director or officer has pledged as security any of the shares beneficially owned by them.
| | | | | Common Stock
Owned of
Record | | | Restricted
Stock
Units | | | Phantom
Common Stock
Credited Under
DC Plan | | | Common Stock
Underlying
Exercisable
Options(1) | | | Total | | | Percent | |
| | William C. Griffiths | | | | | 252,619 | | | | | | 5,954 | | | | | | — | | | | | | — | | | | | | 258,573 | | | | | | * | | |
| | George L. Wilson | | | | | 148,743 | | | | | | — | | | | | | — | | | | | | 37,800 | | | | | | 186,543 | | | | | | * | | |
| | Scott M. Zuehlke | | | | | 37,531 | | | | | | — | | | | | | — | | | | | | — | | | | | | 37,531 | | | | | | * | | |
| | Paul B. Cornett | | | | | 27,973 | | | | | | 7,816 | | | | | | 2,404 | | | | | | 14,800 | | | | | | 52,993 | | | | | | * | | |
| | Mark A. Livingston | | | | | 13,600 | | | | | | — | | | | | | — | | | | | | — | | | | | | 13,600 | | | | | | * | | |
| | Susan F. Davis | | | | | — | | | | | | 42,276 | | | | | | 22,410 | | | | | | 15,876 | | | | | | 80,562 | | | | | | * | | |
| | Jason D. Lippert | | | | | 20,450 | | | | | | 4,797 | | | | | | 596 | | | | | | — | | | | | | 25,843 | | | | | | * | | |
| | Donald R. Maier | | | | | — | | | | | | 16,351 | | | | | | — | | | | | | — | | | | | | 16,351 | | | | | | * | | |
| | Meredith W. Mendes | | | | | 700 | | | | | | 13,505 | | | | | | — | | | | | | — | | | | | | 14,205 | | | | | | * | | |
| | Joseph D. Rupp | | | | | 45,910 | | | | | | 42,276 | | | | | | | | | | | | 15,876 | | | | | | 104,062 | | | | | | * | | |
| | Curtis M. Stevens | | | | | — | | | | | | 24,420 | | | | | | 15,452 | | | | | | 15,876 | | | | | | 55,748 | | | | | | * | | |
| | William E. Waltz, Jr. | | | | | — | | | | | | 9,210 | | | | | | 4,203 | | | | | | — | | | | | | 13,413 | | | | | | * | | |
| | All Officers and Directors as a group | | | | | 547,526 | | | | | | 166,605 | | | | | | 45,065 | | | | | | 100,228 | | | | | | 859,424 | | | | | | 2.57 | | |
| | | | | | | | | | | | | | | | | | | |
| | Common Stock
Owned of Record | | Restricted
Stock
Units | | Phantom
Common Stock
Credited Under
DC Plan | | Common Stock
Underlying
Exercisable
Options(1) | | Total | | Percent | |
|---|
William C. Griffiths | | | 186,350 | | | 5,954 | | | 0 | | | 401,764 | | | 594,068 | | | 1.69 | % |
George L. Wilson | | | 36,686 | | | 0 | | | 0 | | | 76,400 | | | 113,086 | | | * | |
Brent L. Korb | | | 102,805 | | | 0 | | | 0 | | | 403,366 | | | 506,171 | | | 1.44 | % |
Kevin P. Delaney | | | 109,127 | | | 0 | | | 0 | | | 203,333 | | | 312,460 | | | * | |
M. Dewayne Williams | | | 12,672 | | | 0 | | | 0 | | | 17,700 | | | 30,372 | | | * | |
Robert R. Buck | | | 0 | | | 16,545 | | | 20,839 | | | 20,876 | | | 58,260 | | | * | |
Susan F. Davis | | | 25,182 | | | 23,956 | | | 20,940 | | | 46,308 | | | 116,386 | | | * | |
LeRoy D. Nosbaum | | | 2,500 | | | 19,656 | | | 0 | | | 35,398 | | | 57,554 | | | * | |
Joseph D. Rupp | | | 0 | | | 23,956 | | | 0 | | | 56,308 | | | 80,264 | | | * | |
Curtis M. Stevens | | | 0 | | | 19,656 | | | 14,438 | | | 35,398 | | | 69,492 | | | * | |
All Officers and Directors as a group(2) | | | 485,332 | | | 109,723 | | | 56,217 | | | 1,307,950 | | | 1,959,222 | | | 5.59 | % |
*
(1)
(1)Includes all stock options exercisable within 60 days.
(2)Includes 10,109 shares and 11,099 stock options held by Scott Zuehlke, the Company's Vice President—Investor Relations and Treasurer.
Delinquent Section 16(a)
Beneficial Ownership Reporting ComplianceReports
Under SEC rules, the Company'sCompany’s directors, executive officers and beneficial owners of more than 10% of the Company'sCompany’s equity securities are required to file certain reports of their ownership, and changes in that ownership, with the SEC. Based solely on its review of copies of these reports and representations of such reporting persons, the Company believes that all such SEC filingreporting requirements by the Company’s directors, executive officers, and beneficial owners of more than 10% of the Company’s equity securities were satisfied duringcomplied with, except for the fiscal year ended October 31, 2017.following: on December 7, 2020, as a result of clerical error, Mr. Zuehlke inadvertently filed a Form 4 one day late to report a grant of 7,300 shares of restricted common stock that had occurred on December 2, 2020.
The following sections of this Proxy Statement provide an overview of the
Company'sCompany’s corporate governance structure, including our Board leadership structure, certain responsibilities and activities of the Board and its Committees, and independence and other criteria we use in selecting Director nominees. We also discuss how our stockholders and other stakeholders can communicate with the Board of Directors.
Ongoing Governance Initiative—Board Declassification
The Company takes good corporate governance extremely seriously and is committed to evolving to meet—and exceed—corporate governance best practices. To this end, following a careful review of the Company's practices, the Board adopted a number of governance reforms in 2015 and 2016, including a phased declassification of the Board to be achieved over three years. Director nominees at the 2017 Annual Meeting were nominated for terms of only one year, and the same is true for director nominees at the upcoming 2018 Annual Meeting. All future director terms will also be for terms of only one year. As a result, the Board will be fully declassified beginning with the Company's Annual Meeting to be held in 2019.
Corporate Governance Guidelines
The following corporate governance guidelines have been adopted by the Board of Directors as the framework within which directors and management can effectively pursue the
Company'sCompany’s objectives of adding to stockholder value. These guidelines reflect the practices and principles by which the Company operates. The Board periodically reviews and may update these guidelines and other corporate governance matters.
Corporate Governance Guidelines
The Board
The business of Quanex Building Products Corporation (the "Company"“Company”) shall be managed by a Board of Directors (the "Board"“Board”) who shall exercise all the powers of the Company not reserved to the shareholders by statute, the Certificate of Incorporation or the By-Laws of the Company.
2.
2.The Chief Executive Officer shall be a member of the Board.
3.
3.The size of the Board, the classification of directors, the term of office, and the process for filling vacancies shall be in accordance with the Company'sCompany’s Certificate of Incorporation and By-Laws.
4.
4.In its discretion from time to time and as vacancies may occur, the Board may choose to employ a leadership structure consisting of either (a) a joint Chairman of the Board and Chief Executive Officer with an independent Lead Director,
or (b) a non-executive Chairman of the Board, who shall serve in the role of Lead Director, with a separate Chief Executive
Officer, or (c) an executive Chairman of the Board, an independent Lead Director and a separate Chief Executive Officer.
Board Committees
The Board shall at all times maintain an Audit Committee, a Nominating & Corporate Governance Committee, an Executive Committee, and a Compensation & Management Development Committee, which shall operate in accordance with applicable laws, their respective Charters as adopted and amended from time to time by the Board, and the applicable rules of the Securities and Exchange Commission and the New York Stock Exchange.
6.
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6.The membership of the Audit Committee, the Compensation & Management Development Committee, and the Nominating & Corporate Governance Committee shall meet the independence requirements of applicable laws, the New York Stock Exchange, and if deemed appropriate from time to time, meet the definition of "non-employee director"“non-employee director” under Rule 16b-3 under the Securities Exchange Act of 1934, and "outside director" for purposes of Section 162(m) of the Internal Revenue Code of 1986.1934.
7.
7.The Board may establish such other committees as it deems appropriate and delegate to such committees such authority permitted by applicable law and the
Company'sCompany’s By-Laws as the Board sees fit.
Board Procedure
At each regular meeting of the Board, the Board shall meet in executive session, where non-management directors meet without management participation.
9.
9.The Board, in executive session, shall conduct an annual review of the performance of the Chief Executive Officer, taking into account the views and recommendations of the Chairman of the Compensation & Management Development Committee as set forth in the Committee'sCommittee’s Charter.
10.
The Board shall review policies and procedures developed by the Company and reviewed and approved by the Compensation & Management Development Committee, regarding succession to the position of Chief Executive Officer and positions of other corporate officers and key executives in the event of emergency or retirement.
11.
11.The Board shall conduct an annual Self-Assessment to determine whether it and its committees are functioning effectively.
As part of such Self-Assessment, the Board shall consider, among other things, its size, composition and leadership structure. The full Board shall discuss the evaluation to determine what, if any, action could improve Board and Board committee performance.
Board Resources
The Board shall establish methods by which interested parties may communicate directly with the Chairpersons of each Committee or with non-employee directors of the Board as a group and cause such methods to be published. While the Company values its relationships and seeks meaningful collaboration and engagement with the Company’s constituent groups (including stockholders), communications that will not be subject to such methods and accordingly not forwarded to the Board include communications determined to be primarily commercial in nature, that relate to an improper or irrelevant topic, or that request general information about the Company, its products or services.
13.
13.The Company shall provide each director with complete access to the management of the Company, subject to reasonable notice to the Company and reasonable efforts to avoid disruption to the Company'sCompany’s management, business and operations.
14.
14.The Board and Board committees, to the extent set forth in the applicable committee Charter, have the right to consult and retain independent legal and other advisors at the expense of the Company.
15.
15.The Board or the Company shall establish, or identify and provide access to, appropriate orientation programs, sessions or materials for newly-appointed directors of the Company for their benefit either prior to or within a reasonable period of time after their nomination or election as a director.
16.
16.The Board or the Company shall encourage directors to periodically pursue or obtain appropriate programs, sessions or materials as to the responsibilities of directors of publicly-traded companies.
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Director Qualifications
A majority of the members of the Board must qualify as independent directors in accordance with the applicable rules of the New York Stock Exchange.
18.
18.
No person shall be nominated by the Board to serve as a director after he or she has passed his or her 72nd birthday, unless the Nominating and Governance Committee has voted, on an annual basis, to waive the mandatory retirement age for such director.
19.
19.Directors shall promptly report changes in their business or professional affiliations or responsibilities, including retirement, to the Chairman of the Board and the Chairman of the Nominating & Corporate Governance Committee.
20.
20.A director shall offer to resign from the Board if the Nominating & Corporate Governance Committee concludes that the director (a) no longer meets the Company'sCompany’s requirements for service on the Board, or (b) has experienced a substantial reduction in responsibilities in full time employment. A director shall also offer to resign from the Board if the director has retired, been terminated, or has otherwise separated from an employer. In an uncontested election, any director who receives a greater number of against and/or withheld votes than votes for election must tender his or her resignation to the Board promptly following certification of the shareholder vote. Upon such tendered resignation, the Nominating & Corporate Governance Committee will have forty-five (45) days following certification of the shareholder vote to consider the resignation and recommend to the Board whether or not to accept such resignation. Following the recommendation
of the Nominating & Corporate Governance Committee, the Board must decide within ninety (90) days of certification of the shareholder vote whether or not to accept the tendered resignation.
21.
21.No director shall serve as a director, officer or employee of a competitor of the Company.
22.
22.Non-employee directors shall not serve in a paid consulting role for the Company.
23.
23.Directors shall advise the Chairman of the Board and the Chairman of the Nominating & Corporate Governance Committee promptly upon accepting any other public company directorship or any assignment to the audit committee or compensation committee of the board of directors of any public company of which such director is a member.
24.
24.Non-employee directors shall serve on the board of no more than three other public companies. Although our Board acknowledges the value of having directors with significant experience in other businesses and activities, the Board understands as well that effective service requires substantial commitment.
25.
25.A director who is also an officer of the Company shall not continue serving on the Board upon separation of employment with the Company, except in special instances to facilitate a transition of management.
26.
26.The Nominating & Corporate Governance Committee shall be responsible for establishing additional qualifications for directors and shall evaluate prospective nominees against the following standards and qualifications (in no particular order), and any additional qualifications it deems appropriate:
The ability of the prospective nominee to represent the interests of the shareholders of the Company;
b.
b.The prospective nominee'snominee’s standards of integrity, commitment and independence of thought and judgment;
c.
c.Whether the prospective nominee would meet the Company'sCompany’s criteria for independence as required by the New York Stock Exchange;
d.
d.The prospective
nominee'snominee’s ability to dedicate sufficient time, energy and attention to the diligent performance of his or her duties, including the prospective
nominee'snominee’s service on
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e.
The extent to which the prospective nominee contributes to the range of talent, skill and expertise appropriate for the Board,
the Company’s operating requirements and the long term interests of the Company’s stockholders and such other relevant factors as it deems appropriate, including the current composition of the Board, the need for Audit Committee expertise, and the evaluations of other prospective
nominees.nominees;
f.
The degree to which the prospective nominee will add to the diversity of the Board (including as to gender, race, ethnic background and/or geographic background) and improve decision-making.
Director Responsibilities
Directors should exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company in a manner consistent with their fiduciary duties.
28.
28.Directors are expected to attend all Board meetings and meetings of committees to which they are assigned, and at a minimum, 75 percent of such meetings each year.
29.
29.Directors are expected to prepare for all meetings of the Board or committees to which they are assigned by reviewing the materials that are sent to all directors in advance of meetings.
30.
Non-employee directors are expected to own, beneficially or otherwise, common shares or common share equivalents of the
Company'sCompany’s Common Stock valued at no less than
$220,000,500% of the annual Board Retainer set forth in Section 34, which shares or share equivalents may be accumulated over the first five years of service.
Director Compensation
The Nominating & Corporate Governance Committee shall review and recommend for Board approval the form and amount of non-employee director compensation, including cash, equity-based awards and other director compensation.
32.
32.In determining non-employee director compensation, the Nominating & Corporate Governance Committee, may consult with appropriate advisers to determine levels of director compensation similar to the compensation of directors of similar companies.
33.
33.Non-employee directors shall be paid in equity, equity equivalents and/or cash for their services, with a deferral option.
34.
34.Unless and until a recommendation is made by the Nominating & Corporate Governance Committee and approval of the Board, the amount of cash compensation for non-employee directors is as follows: Retainer—$55,000/Retainer — $70,000/year paid quarterly; Committee Member Retainer Fees—$9,000/Fees — $10,000/year paid quarterly for membership on the Audit Committeeor Compensation Committees and $7,500/year paid quarterly for membership on the Compensation or Governance Committees;Committee; Committee chair fees—$15,000/fees — $20,000/year paid quarterly for Audit Committee and $10,000/$15,000/year paid quarterly for Compensation Committee; and $12,000/year paid quarterly for the Governance Committees;Committee; Lead Director fee of $20,000/year paid quarterly; and reimbursement for all travel and living expenses associated with meeting attendance.
35.
35.Unless and until a recommendation is made by the Nominating & Corporate Governance Committee and approval of the Board, on the date on which a non-employee director is first elected or appointed as a director, such director will be granted an annual restricted stock unit award that is pro-rated for the time to be served during the current fiscal year from the director'sdirector’s date of election or appointment. These grants will immediately vest, and will be settled and paid upon the earlier of the director'sdirector’s separation from service or a change in control of the Company. This pro-rated restricted stock unit award, as well as the first restricted stock unit award granted to such newly appointed or elected director as set forth in paragraph 36 of these Guidelines, will not be eligible for any form of deferral or other payment timing election.
36.
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36.Unless and until a recommendation is made by the Nominating & Corporate Governance Committee and approval of the Board, on the first business day of each fiscal year, non-employee directors shall receive an annual restricted stock unit award of $80,000$100,000 in equivalent value. The restricted stock unit award vests immediately upon issuance. If the non-employee director meets the director stock ownership guidelines (in shares and share equivalents), payment of the award will be deferred automatically to the director'sdirector’s separation from service (or, if earlier, a change in control of the company), unless an election is made by the director to settle and pay the award on an earlier permitted specified date, and such election is made prior to the last day of the deferral election period applicable to the award under Section 409A of the Internal Revenue Code. If the non-employee director has not met the applicable stock ownership guidelines, then payment of the award will automatically be deferred until the director'sdirector’s separation from service, and no election for an earlier payment date will be allowed. For purposes of this paragraph, the determination of whether a director meets the stock ownership guidelines will be made as of December 31st of the calendar year immediately preceding the calendar year in which the applicable restricted stock unit award is granted. The restricted stock unit awards to be granted on November 1, 2015, will immediately vest, and will be paid upon the earlier of the director's separation from service or a change in control of the Company, and no election for an earlier payment date will be allowed for any director, regardless of stock ownership. For restricted stock units awarded in calendar 2016 and thereafter, the director will have an election for a deferred compensation arrangement under which directors may elect the timing of the payment in compliance with applicable regulations.
37.
37.Unless and until a recommendation is made by the Nominating & Corporate Governance Committee and approval of the Board, non-employee directors shall not receive any remuneration from the Company other than as set forth in this Director Compensation section of the Corporate Governance Guidelines.
Role of Lead Director
The Lead Director shall preside at each executive session.
39.
39.The Lead Director shall be a member of the Executive Committee and shall have the following responsibilities:
Chairing the Board in the absence of the Chairman;
b.
b.Acting as liaison between the Board and the Chairman, as requested by the Board;
c.
c.In concert with the Chairman, setting the agenda for board meetings, based on input from directors and the annual meeting plans;
d.
d.Ensuring that independent directors have adequate opportunity to meet in executive session without management present, and setting the agenda for, and moderating, all such sessions;
e.
e.Communicating to the Chief Executive Officer, as appropriate, the results of executive sessions among independent directors;
f.
f.Ensuring that the Board has adequate resources, including full, timely and relevant information, to support its decision making requirements;
g.
g.Organizing the Board'sBoard’s evaluation of the Chairman and providing the Chairman with feedback related thereto;
h.
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h.Working with the Chairman to ensure proper Committee structure and membership, including the assignment of members and Committee chairs, and appropriate succession planning related to members and Committee chairs;
i.
i.Notifying the Chairman of the retention of outside advisors and consultants who report directly to the Board;
j.
j.Participating in one-on-one discussions with individual directors, as requested by the Nominating & Corporate Governance Committee;
k.
k.Leading the Board self-assessment process, in conjunction with the Nominating & Corporate Governance Committee;
l.
l.Working with the Chairman to form Special Committees of the Board, as necessary;
m.
If requested and appropriate, be available to meet with large stockholders; and
n.
m.Carrying out other duties as requested by the Board or the Nominating & Corporate Governance Committee.
Officer Responsibilities
The Chief Executive Officer shall serve on the board of no more than one other public company.
41.
41.Other executive officers shall serve on the board of no more than one other public company.
42.
42.The Chief Executive Officer
isand Executive Chairman are each expected to own, beneficially or otherwise, common shares or common share equivalents of the
Company'sCompany’s Common Stock of at least 400% of the value of his/her base salary within three years of serving in said role. Senior officers are expected to own, beneficially or otherwise, common shares or common share equivalents of the
Company'sCompany’s Common Stock of at least 200% of their base salary, and
other officers
are expected to own 100% of their base salary under the same terms.
Incentive Recoupment
To the extent permitted by law, and as determined by the Board in its judgment, the Company may require reimbursement of a portion of any performance-based bonus, whether settled in cash
or stock, granted to any executive where (a) the performance bonus payment was predicated upon the achievement of certain financial results that were subsequently the subject of a material restatement; and (b) a lower payment would have been made to the executive(s) based upon the restated financial results. In each such instance, the Company will, to the extent practicable, seek to recover the amount by which the individual performance bonus for the relevant period exceeded the lower payment that would have been made based on the restated financial results. In addition, following any accounting restatement that the Company is required to prepare due to its material noncompliance, as a result of misconduct, with any financial reporting requirement under applicable securities laws, the Company will seek to recover any compensation received by the Chief Executive Officer and Chief Financial Officer to the extent such reimbursement is required under Section 304 of the Sarbanes-Oxley Act of 2002. No reimbursement shall be required if a material restatement was caused by or resulted from any change in accounting policy or rules.
Hedging Prohibition
Because the Company believes it is improper and inappropriate for Company employees and directors to engage in short-term or speculative transactions involving Company securities, and in order to ensure that all associates bear the full risks of ownership of Company securities, all
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a.
Buying or Selling Puts, Calls, or Derivatives.Derivatives. Short sales and the purchase or sale of options of any kind, whether puts, calls or other derivative securities, related to Company securities.
b.
b.Margin Accounts.Accounts. Company associates may not hold Company securities in margin accounts or otherwise pledge Company securities as collateral.
c.
c.Hedging and Pledging Company Securities.Securities. Company associates are not allowed to engage in hedging transactions related to any Company security they hold, and are not allowed to pledge or create any security interest in any Company security they hold.
Amendment and Waiver
The Quanex Corporate Governance Guidelines may be amended, modified, or waived by the Board and waivers of these Guidelines may also be granted by the Nominating & Corporate Governance Committee, subject to the disclosure and other provisions of the Securities Exchange Act of 1934, the rules promulgated thereunder and the applicable rules of the New York Stock Exchange.
46.
46.The Board shall perform any other activities required by applicable law, rules or regulations, including the rules of the Securities and Exchange Commission and any exchange or market on which the Company'sCompany’s capital stock is traded, and perform other activities that are consistent with these Guidelines, the Company'sCompany’s certificate of incorporation and bylaws, and governing laws, as the Board deems necessary or appropriate.
47.
47.Nothing contained in these Guidelines is intended to expand applicable standards of liability under statutory or regulatory requirements for the directors or executive officers of the Company. The purposes and responsibilities outlined in these Guidelines are meant to serve as guidelines rather than as inflexible rules and the Board may adopt such additional procedures and standards as it deems necessary or advisable from time to time to fulfill its responsibilities or comply with applicable laws, rules or regulations. In addition, the Board may amend any procedures or standards set forth in these Guidelines as it deems necessary from time to time to comply with applicable laws, rules or regulations. These Guidelines, and any amendments thereto, shall be displayed on the
Company'sCompany’s web site and a printed copy of such shall be made available to any shareholder of the Company who requests it.
Communications with the Company
Quanex invites inquiries to the Company and its Board of Directors. Interested persons may contact the appropriate individual or department by choosing one of the options below.
For Investor Relations matters or to obtain a printed copy of the Company Code of Ethics, Corporate Governance Guidelines or charters for the Audit, Compensation & Management Development, and Nominating & Corporate Governance Committees of the Board of Directors, send a request to the Company'sCompany’s principal address below or by email to inquiry@quanex.com. This material may also be obtained from the CompanyCompany’s website atwww.quanex.com in the "“Investor Relations"” section. The Company has also adopted a Code of Business Conduct & Ethics for Senior Financial Executives that applies to the Company'sCompany’s principal executive officer, principal financial officer, principal accounting
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officer or controller and persons performing similar functions. This Code can be obtained without charge in the same manner as the other material described in this paragraph.
The Company'sCompany’s required Securities Exchange Act filings such as annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free of charge through the Company'sCompany’s website, as soon as reasonably practicable after they have been filed with or furnished to the Securities and Exchange Commission ("SEC"(“SEC”) pursuant to Section 13(a) or 15(d)or15(d) of the Securities Exchange Act of 1934 (the "1934 Act"“1934 Act” or the "Exchange Act"“Exchange Act”). Forms 3, 4 and 5 filed with respect to equity securities under Section 16(a) of the 1934 Act are also available on the Company'sCompany’s website. All of these materials are located in the "“Investor Relations"” section of the Company'sCompany’s website atwww.quanex.com. They can also be obtained free of charge upon request to the Company'sCompany’s principal address or telephone number below, or by email to inquiry@quanex.com. Communications with the
Company'sCompany’s Board of Directors:
Persons wishing to communicate to the
Company'sCompany’s Board of Directors or a specified individual director may do so by sending communications in care of the Chairman of the Board of Directors at the
Company'sCompany’s principal address below, or by sending an email to chairman@quanex.com. The Chairman reviews all such messages received. If the communication is from a stockholder about a matter of stockholder interest and is addressed to a specified individual director(s), the Chairman will forward the communication as soon as practicable to such specified director(s). However, because other appropriate avenues of communication exist for matters that are not of stockholder interest, such as general business complaints or employee grievances, communications that do not relate to matters of stockholder interest may not be forwarded to specified Board members or the Board as whole. The Chairman or his delegate has the right, but not the obligation, to forward such other communications to appropriate channels within the Company.
As noted in the Corporate Governance Guidelines, the Lead Director shall preside at each executive session of non-management directors. Any stockholder wishing to send communications to such presiding director, or
to non-management directors as a group, may do so by sending them in the care of Lead Director, Quanex Building Products Corporation Board of Directors, at the
Company'sCompany’s principal executive offices.
Persons who have concerns or complaints regarding questionable accounting, internal accounting controls or auditing matters may submit them to the Senior Vice
President—Finance andPresident — Chief Financial Officer
& Treasurer at the
Company'sCompany’s principal address or by contacting the
Company'sCompany’s Alert Line by calling
(888) 475-0633888-475-0633 or visiting https://
quanex.alertline.com.Quanex.ethicspoint.com.
Such communications will be kept confidential to the fullest extent possible. If the individual is not satisfied with the response, he or she may contact the Audit Committee of the Board of Directors of the
Company by sending a communication in care of the Audit Committee
ChairmanChair at the
Company'sCompany’s principal address below. If concerns or complaints require confidentiality, then this confidentiality will be protected, subject to applicable laws.
Reporting Illegal or Unethical Behavior:
Employees, officers, and directors who suspect or know of violations of the Company Code of Business Conduct and Ethics, or illegal or unethical business or workplace conduct by employees, officers, or directors have an obligation to report it. If the individuals to whom such information is
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conveyed are not responsive, or if there is reason to believe that reporting to such individuals is inappropriate in particular cases, then the employee, officer or director may contact the Chief Compliance Officer, Chief Financial Officer, Vice President of Internal Audit Services, or any corporate officer in person, by telephone, by letter to the Company'sCompany’s principal address, or online as set forth below. Quanex also encourages persons who are not affiliated with the Company to report any suspected illegal or unethical behavior.
1)
Quanex Building Products Corporation1800 West Loop South, Suite 1500Houston, Texas 77027 2)
Toll Free ALERT LINE: (888) 475-0633
3)
https://
quanex.alertline.comquanex.ethicspoint.com
Such communications will be kept confidential to the fullest extent possible. If the individual is not satisfied with the response, he or she may contact the Nominating & Corporate Governance Committee of the Board of Directors of the Company. If concerns or complaints require confidentiality, then this confidentiality will be protected, subject to applicable laws.
STRUCTURE AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company'sCompany’s Board consistscomprises nine directors as of six directors. Allthe Record Date. Other than Messrs. Griffiths and Wilson, all directors other than Mr. Griffithsand current director nominees are independent in accordance with the independence requirements set forth in the listing standards of the New York Stock Exchange. The Company's independent directors sit on all of the three primary committees. Therefore the Audit, Compensation & Management Development, and Nominating & Corporate Governance Committees are all comprisedcomposed solely of independent directors. In addition, the Board selects a separate independent Lead Director. Currently, Mr. Rupp serves as the independent Lead Director and Mr. Griffiths serves as the Executive Chairman. Following Mr. Rupp’s departure from the Board and Mr. Griffiths’ retirement as a Company employee after the 2022 Annual Meeting, the Board currently contemplates that Ms. Davis will become the Company’s independent Lead Director and that Mr. Griffiths will remain the Company’s non-independent and non-executive Chairman of the Board.
Until recently, the Company’s Chief Executive Officer also served as the Board Chairman. As of January 1, 2020, the Company split those roles. As of that date, Mr. Griffiths assumed the role of Executive Chairman of the Board and Mr. Wilson became the Company’s Chief Executive Officer, while the chair of our Nominating and Governance Committee remained as independent Lead Director.
The Board believes that its leadershipthis structure is best for the Companymost appropriate at the current time.this time in order to provide an effective transition in leadership. The Board believes that this distribution of responsibilities continues to help maintain strong Board oversight and independence. While the CEO focuses his time and energy on managing the Company’s daily operations, he has the guidance of Mr. Griffiths who provides unique insight and advisory abilities having seen both sides of the coin based on his past experience as the Company’s CEO. At the same time, the Lead Director acts as a numberdirect conduit between the executives and the independent directors, and as an effective de facto leader of advantages are gained by combining the positions ofindependent directors. This structure provides the Company and the Board with leadership stability and continuity as Mr. Wilson continues to develop in his role as CEO and director.
In his role as Executive Chairman, and
Chief Executive Officer alongin his expected role as non-executive Chairman following the Annual Meeting, Mr. Griffiths’ primary responsibility is to provide ongoing guidance, mentorship, and support for Mr. Wilson and his executive team as they further develop their leadership skills and experience. Mr. Griffiths also plays an active role in setting and implementing the strategic direction of the Company. In addition, Mr. Griffiths presides over the Board and works with
the Lead Director to set Board Meeting agendas. Because Mr. Griffiths is not independent, the Board continues to believe that it is appropriate to maintain an
appropriately empoweredindependent Lead Director.
By vesting chairmanship duties inIn that role, Mr. Rupp helps to ensure accountability of Company leadership, both through his interactions with the Chairman and the Chief Executive Officer,
and through the
Board is effectively providing a leadership role to the director who is most familiar with the Company's business and industry, most capable of effectively identifying strategic priorities, and most effective at leading the strategic discussions that will drive the Company's future. By allowing the Chief Executive Officer to lead meetings and discussions, the Board ensures that its focus remains on those items that are most important to the business and its strategic direction, while allowing independent directors to provide advice and oversight based on their own valuable experience and expertise. It also allows for a more effective flow of information between the Board and management, improving efficiency and reducing confusion about the Company's strategic and operational directions. Further, combining the roles provides for strong and stable leadership vested in a single person, thereby avoiding confusion and providing appropriate accountability for the Company's leader. The Board and the Lead Director ensure this accountability by providing oversight of the Chairman and CEO, both directly by the Lead Director through personal conversations with the Chairman andBoard’s annual CEO and
also by the Board through its annual CEO performance reviews and periodic director performance reviews.
The
Company'sCompany’s independent directors meet in regularly scheduled executive sessions at each of the
Company'sCompany’s regular Board meetings, without management present and with the Lead Director presiding. The Lead Director is actively engaged in facilitating communication with the individual directors,
the Chairman, and the
CEO,Chief Executive Officer, and provides guidance and counsel to
the CEOboth Mr. Griffiths and Mr. Wilson on behalf of the independent directors.
In addition, the Lead Director is responsible for chairing the Board in the absence of the
Chairman;Chairman, acting as liaison between the Board and the
Chairman;Chairman or Chief Executive Officer, assisting the Chairman in setting the agenda for
Board meetings;board meetings, ensuring that there are adequate opportunities for executive sessions of the directors and communicating the results of all such
sessions;sessions, participating in one-on-one discussions with individual directors as requested by the Governance
Committee;Committee, and working with the Chairman
when necessary to form Special Committees of the
Board, if necessary.Board.
During fiscal
2017,2021, the Board of Directors met
eightfive times, and the independent directors met five times in executive session with the Lead Director presiding. In addition, the Audit Committee met
fivefour times, the Compensation & Management Development Committee met three times, and the Nominating & Corporate Governance Committee met
twice.four times. The Executive Committee did not meet. All directors attended more than 75% of the combined number of Board meetings and meetings of committees of which they are members. The
Company'sCompany’s Board of Directors holds a meeting immediately following each
year'syear’s annual meeting of stockholders. Therefore, members of the
Company'sCompany’s Board of Directors generally attend the
Company'sCompany’s annual
meetings of stockholders.stockholder meetings. All Board members
who were members of the Board at the time, attended the
2017 stockholders' meeting, with Ms. Davis attending telephonically.2021 stockholders’ meeting.
The members of the Audit Committee
as of the date of this report are
Ms. Mendes and Messrs.
Buck, Nosbaum,Waltz and Stevens (Chairman)
,. All current members of the Audit Committee each
of whom satisfiessatisfy the independence requirements of the New York Stock Exchange and the 1934 Act
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and meetsmeet the definitions of "non-employee director"“non-employee director” under Rule 16b-3 of the 1934 Act and "outside director" under Section 162(m) of the Internal Revenue Code of 1986.Act. In addition, allthe current members of the Audit Committee have each been designated "audit“audit committee financial experts"experts” within the meaning of Item 407(d)(5) of Regulation S-K.
All directors who served on the Audit Committee during the fiscal year attended all meetings held during their respective periods of appointment.
The Audit Committee'sCommittee’s responsibilities to the Board are detailed in the written Audit Committee Charter adopted by the Company'sCompany’s Board of Directors, which is posted on the Company'sCompany’s website atwww.quanex.com and incorporated in this Proxy Statement by reference. The Audit Committee'sCommittee’s primary functions include monitoring the integrity of the Company'sCompany’s financial reporting process, reviewing the Company'sCompany’s system of internal financial and disclosure controls and the performance of the Company'sCompany’s internal audit function, oversight ofoverseeing the Company'sCompany’s annual independent audit and the audit firm’s and its public accountant'slead audit partner’s qualifications and independence, and reviewing compliance with applicable laws and regulations which may represent material financial exposure to the Company.Company, including enterprise risk management, data privacy, cybersecurity, legal, ethics, and compliance matters. Interested Stockholders may also obtain a copy of the Audit Committee Charter, free of charge, by contacting the Company at the address or phone number listed in the section entitled "“Communications with the Company"”.
Audit Committee Report to Stockholders
We have reviewed and discussed the
Company'sCompany’s audited financial statements for the year ended October 31,
2017,2021, with senior management and with Grant Thornton LLP,
certified public accountants and the
Company'sCompany’s independent registered public accounting firm. In addition, we have reviewed and discussed with senior management the design and effectiveness of the
Company'sCompany’s internal controls over financial reporting and have further reviewed and discussed the opinion and audit of Grant Thornton LLP regarding those controls. We have also discussed various other matters with Grant Thornton LLP related to the
Company'sCompany’s consolidated financial statements, including critical accounting policies and practices used, potential alternative treatments for material items that have been discussed with the Company, and all other material written communications between the independent registered public accounting firm and the Company.
We have reviewed and discussed with Grant Thornton LLP all communications required by
auditing standards of the Public Company Accounting Oversight Board
("PCAOB"(“PCAOB”)
, including those described in PCAOB Auditing Standard No. 16, "Communications with Audit Committees", and the
SEC'sSEC’s Rule 2-07,
"Communication“Communication with Audit
Committees"Committees” of Regulation S-X. In addition, we have received and reviewed the written disclosures and the written letter from Grant Thornton LLP regarding its independence, as required by applicable standards of the PCAOB and the New York Stock Exchange listing standards. We have also discussed with Grant Thornton LLP its independence in connection with its audit of the
Company'sCompany’s most recent financial statements, and we have reviewed and approved the non-audit services rendered by Grant Thornton LLP and approved all fees paid for audit and non-audit services. Following this review, we are satisfied with Grant Thornton
LLP'sLLP’s independence from the Company.
Based on the various reviews and discussions mentioned above, the Audit Committee recommended to the board of directors that the audited financial statements be included in the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended October 31, 2017,2021, for filing with the Securities and Exchange Commission.
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The information in the foregoing three paragraphs shall not be deemed to be soliciting material or to be filed with the SEC orand shall not be subject to Regulation 14A or 14C or to liabilities of Section 18 of the Securities Act,Act; nor shall they be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate these paragraphs by reference.
Dated January
26, 20189, 2022
Curtis M. Stevens, ChairmanRobert R. BuckMeredith W. MendesLeRoy D. NosbaumWilliam E. Waltz, Jr.
The following table reflects fees for professional audit services rendered by Grant Thornton LLP for (i) the audit of the Company'sCompany’s financial statements for the fiscal years ended October 31, 20172021 and 2016;2020 and (ii) fees billed for other services rendered by Grant Thornton LLP during these periods.
| | | | | FY 2021 | | | FY 2020 | |
| | Audit Fees(1) | | | | $ | 1,742,313 | | | | | $ | 1,635,264 | | |
| | Audit-Related Fees | | | | | — | | | | | | — | | |
| | Tax Fees(2) | | | | | — | | | | | | 66,780 | | |
| | All Other Fees | | | | | — | | | | | | — | | |
| | Total | | | | $ | 1,742,313 | | | | | $ | 1,702,044 | | |
| | | | | | | |
| | FY 2017 | | FY 2016 | |
|---|
Audit Fees(1) | | $ | 1,576,964 | | $ | 1,744,196 | |
Audit Related Fees(2) | | | — | | | 135,726 | |
Tax Fees(3) | | | 55,267 | | | 134,337 | |
All Other Fees(4) | | | 15,900 | | | — | |
| | | | | | | | |
Total | | $ | 1,648,131 | | $ | 2,014,259 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
(1)(1)- Audit Fees consist of professional services and related expenses rendered by Grant Thornton LLP for the audits of the
Company'sCompany’s annual financial statements, audits of internal controls and review of financial statements included in Forms 10-Q and Form 10-K and other statutory or regulatory filings.filings, and certain fees associated with a consent issued with regard to the Company’s Form 10-K. In addition, the fiscal 20162021 and fiscal 20172020 audit fees include $92,688$233,255 and $100,025,$116,228, respectively, associated with statutory audits of two affiliates of the Company in the United Kingdom and a German affiliate, each performed by Grant Thornton LLP.International member firms.
(2)
(2)Audit Related Fees include assurance and related services by Grant Thornton LLP that are reasonably related to the performance of the audit or review of the Company's financial statements and are not included in Audit Fees. For fiscal 2016, these fees included the audit of the predecessor financial statements of Woodcraft as of October 31, 2015, and services provided in conjunction with pro forma financial information included in a Current Report on Form 8-K.
(3)Tax Fees include professional services rendered by Grant Thornton LLP for tax return reviews and miscellaneous consulting. Results for fiscal 2016 include a transfer pricing study for the Mexican operations.
(4)All Other Fees for fiscal 2017 represents services provided by Grant Thornton LLP associated with a consent issued with regard to the Form 10-K for the fiscal year ended October 31, 2016.
Procedures for Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services
Pursuant to its charter, the Audit Committee is responsible for reviewing and approving, in advance, any audit and any permissible non-audit engagement between the Company and its independent auditors. Grant Thornton
LLP'sLLP’s engagement to conduct the audit of Quanex Building Products Corporation for fiscal
20172021 was approved by the Audit Committee on January
19, 2017.
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11, 2021. Additionally, each permissible audit and non-audit engagement or relationship between the Company and Grant Thornton LLP entered into during fiscal 20162020 and fiscal 20172021 was reviewed and approved by the Audit Committee, as provided in its charter.
We have been advised by Grant Thornton LLP that substantially all of the work done in conjunction with its audit of the
Company'sCompany’s financial statements for the most recently completed fiscal year was performed by full-time employees and partners of Grant Thornton LLP. The Audit Committee has determined that the provision of services rendered for all other fees, as described above, is compatible with maintaining independence of Grant Thornton LLP.
Compensation & Management Development Committee
The currentAs of the Record Date, the members of the Compensation & Management Development Committee are Messrs. Rupp and Nosbaum andwere Ms. Davis (Chairwoman).(Chair) and Messrs. Lippert, Maier, and Rupp. Mr. Lippert was appointed to the Compensation & Management Development Committee as of December 10, 2021, and as such was not a member of the Committee as of the date of its report below. The Compensation & Management Development Committee'sCommittee’s responsibilities to the Board are detailed in the Compensation & Management Development Committee Charter, which is available on the Company'sCompany’s website atwww.quanex.com and incorporated in this Proxy Statement by reference. In addition to oversight of compensationmatters related matters,to compensation, the committee oversees performance, development, and succession planning with respect to officers and key executives. Interested Stockholders may also obtain a copy of the Compensation & Management Development Committee Charter, free of charge, by contacting the Company at the address and phone number listed in the section entitled "“Communications with the Company"”. During the fiscal year ended October 31, 2017, each
Each of Ms. Davis and Messrs.
Lippert, Maier and Rupp
and Nosbaum satisfiedsatisfies the independence requirements of the New York Stock Exchange and
metmeet the definitions of
"non-employee director"“non-employee director” under Rule 16b-3 under the 1934
Act and "outside director" under Section 162(m) of the Internal Revenue Code of 1986.Act.
Compensation Committee Interlocks and Insider Participation
None of our employees, officers, or former officers serve (or served during the last fiscal year) as a member of our compensation committee. None of our executive officers serve (or served during the last fiscal year) as a member of the board of directors of any other company of which any member of our compensation committee or Board of Directors is an executive officer.
Compensation Committee Report
The Compensation and Management Development Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained elsewhere in this Proxy Statement. Based on this review and discussion, the Compensation and Management Development Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included herein and incorporated by reference into the
Company'sCompany’s Annual Report on Form 10-K for the year ended October 31,
2017.2021.
The information in the foregoing paragraph shall not be deemed to be soliciting material, or be filed with the SEC or subject to Regulation 14A or 14C or to liabilities of Section 18 of the Exchange Act, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate this paragraph by reference.
Dated
November 30, 2017December 9, 2021
Compensation and Management Development Committee
Susan F. Davis, Chairwoman
LeRoy D. NosbaumDonald R. Maier
Joseph D. Rupp
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Nominating & Corporate Governance Committee
All directors other than
Mr.Messrs. Griffiths
and Wilson serve as members of the Nominating & Corporate Governance Committee, with Mr. Rupp acting as
Chairman.Chair. Each member of the Nominating & Corporate Governance Committee satisfies the independence requirements of the New York Stock Exchange and the SEC.
The Nominating & Corporate Governance Committee'sCommittee’s responsibilities to the Board are detailed in the Nominating & Corporate Governance Committee Charter available on the Company'sCompany’s website atwww.quanex.com and incorporated herein by reference. Interested Stockholders may also obtain a copy of the Nominating & Corporate Governance Committee Charter, free of charge, by contacting the Company at the address or phone number listed in the section entitled "“Communications with the Company"” on page 60.57of this Proxy Statement.
The Nominating & Corporate Governance Committee develops and maintains qualification criteria and procedures for the identification and recruitment of candidates for election to serve as directors of the Company. The Nominating & Corporate Governance Committee relies on the knowledge and relationships of the Company and its officers and directors, as well as third parties when it deems necessary, to identify and evaluate nominees for director, including nominees recommended by stockholders. Although
The Board continually seeks to identify director candidates with a breadth of background, knowledge, and experience that will effectively complement the
Company has no formal policy on diversity for board members, the board considersBoard’s expertise. The Board recognizes that diversity of
experience and background inviewpoints is an
effort to ensure that the compositionimportant aspect of
our directors createshaving a strong and effective
board.board, and strives to include ethnically and gender diverse candidates in any director search. In addition, our Governance Committee has developed a set of core competencies that it believes should be reflected in our Board membership. The Company'sfollowing matrix demonstrates those core competencies and the top five skills of each of our current directors and director nominees, along with certain key characteristics that reflect our Board’s gender and ethnic diversity.
| | Pertinent Characteristic | | | Davis | | | Griffiths | | | Hughes* | | | Lippert | | | Maier | | | Mendes | | | Rupp** | | | Stevens | | | Waltz | | | Wilson | |
| | Operations / Manufacturing
Process Expertise | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Strategy Development and Implementation Expertise | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | CEO Experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | CFO and/or Audit Committee Experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Accounting Experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | IT/Cybersecurity Expertise | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | ESG/DE&I Expertise | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Risk Management Experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Building Products Experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | M&A Experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Human Resources Experience | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | International Expertise | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Ethnicity*** | | | W | | | W | | | W | | | W | | | W | | | H | | | W | | | W | | | W | | | W | |
| | Gender*** | | | F | | | M | | | M | | | M | | | M | | | F | | | M | | | M | | | M | | | M | |
*
Mr. Hughes is a director nominee at the 2022 Annual Meeting of Shareholders but is not a current member of the Board.
**
Mr. Rupp is a current member of the Board, but is not running for re-election at the 2022 Annual Meeting of Shareholders.
***
A — Asian; B — Black/African American; H — Hispanic/Latino; W — White; F — Female; M — Male
The Company’s Corporate Governance Guidelines set forth age limitations for directors and require that a majority of our directors be independent in accordance with the requirements of the New York Stock Exchange and SEC. In addition, the Corporate Governance Guidelines set forth the minimum qualifications for a director and provide that the Nominating & Corporate Governance Committee will be responsible for establishing additional qualifications for directors, taking into account the composition and skills of the entire Board. In general, persons considered for Board positions must have demonstrated leadership capabilities, be of sound mind and high moral character, have no personal or financial interest that would conflict with the interests of the Company, possess certain key attributes that benefit the Company, and be willing and able to commit the necessary time for Board and committee service.
Subject to certain exceptions as set out in its charter, the Nominating & Corporate Governance Committee is responsible for reviewing and pre-approving any financial arrangement, transaction or relationship (including indebtedness or guarantees of indebtedness), or series of similar transactions within a fiscal year, in which the Company is a participant, any related party has a direct or indirect material interest, and the amount involved is $100,000 or more. Mr. Lippert currently serves as the CEO of one of the Company’s customers and, as such, the Nominating & Corporate Governance Committee will monitor
and approve any transactions involving that company on an ongoing basis. For fiscal 2022, the Nominating & Corporate Governance Committee has determined that the level of purchases by Mr. Lippert’s company do not create a material interest, and has provided a blanket approval for any ordinary course transactions between the two companies that are conducted in accordance with standard and usual trade terms agreed by the parties in the normal course. The Nominating & Corporate Governance Committee is further responsible for providing advance approval of any charitable contribution made on behalf of a related party or to an organization where a related party is an officer or director, if the amount involved is $10,000 or more within a fiscal year, and the Company is a direct or indirect participant.
The Nominating & Corporate Governance Committee will consider director nominees recommended by stockholders of the Company in accordance with the rules and procedures set forth in the Nominating & Corporate Governance
Committee'sCommittee’s charter and the
Company'sCompany’s Amended and Restated Bylaws. Under its charter, the Nominating & Corporate Governance Committee will consider nominees for director recommended by stockholders of the Company, provided such recommendations are addressed to the chairman of the Nominating & Corporate Governance Committee at the
Company'sCompany’s principal executive office and received by the Chairman of the Nominating & Corporate Governance Committee in accordance with the time limits set forth in the
Company'sCompany’s Bylaws. The
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Company's Company’s Amended and Restated Bylaws in turn provide that, subject to certain limitations discussed below, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as director at the meeting. The Company'sCompany’s Bylaws also provide that a stockholder must give written notice of such stockholder'sstockholder’s intent to make such nomination or nominations, either by personal delivery or by United States mail, postage prepaid, which must be delivered to or mailed and received at the Company'sCompany’s principal executive offices not later than the close of business on the 90th day nor earlier than 120 days prior to the first anniversary date of the immediately preceding Annual Meeting; provided, however, that in the event that the date of the Annual Meeting is more than 60 days later than the anniversary date of the immediately preceding Annual Meeting, the notice must be received not later than the close of business on the tenth day following the earlier of the date on which a written statement setting forth the date of the Annual Meeting was mailed to stockholders or the date on which it is first disclosed to the public. Notwithstanding the foregoing, if the number of directors to be elected to the Board at an annual meeting is increased and there is no public announcement by the Company naming all of the nominees for director or specifying the size of the increased board of directors at least 100 days prior to the first anniversary of the preceding year'syear’s annual meeting, a stockholder'sstockholder’s notice shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Company at the principal executive offices of the Company not later than the close of business on the tenth day following the day on which such public announcement is first made by the Company. From time to time, the Company may engage outside director search firms to assist in identifying and recruiting appropriate director nominees.
There are no differences in the manner in which the Nominating & Corporate Governance Committee evaluates nominees for director based on whether the nominee is recommended by the Nominating & Corporate Governance Committee or by a stockholder.
The current members of the Executive Committee are Messrs. Rupp, Stevens and Griffiths, who is
Chairman.the Chair. When necessary, the Executive Committee acts on behalf of the Board between regularly scheduled meetings of the Board of Directors. Mr. Rupp currently serves as the
Board'sBoard’s Lead Director.
Our Board is responsible for oversight of the Company'sCompany’s risk assessment and management process.process, and it has empowered its committees with oversight of specific, material risks tailored to each committee’s area of focus. With respect to risks related to COVID-19 and other pandemics, the Board oversees management’s response to these types of crises. The Board delegated to the Compensation & Management Development Committee basic responsibility for oversight of management'smanagement’s compensation risk assessment, and the Committee reports to the Board on its review. The Board also delegated tasks related to risk process oversight to the Audit Committee, which
reports the results of its review to the Board. In additionManagement regularly reports to each committee regarding compliance with existing policies and procedures and to discuss changes or improvements that may be required or desirable and the committees make recommendations to the reports fromBoard based on such discussions. Specifically, the Audit and Compensation & Management Development Committees, our Board periodically discusses risk oversight. The Company'sCompany’s Vice President of Internal— Audit Services reports directly to the Audit Committee and has direct and unrestricted access to the Committee. In addition, the Audit Committee meets in executive session at each of its meetings with the Director of InternalCompany’s Vice President — Audit Services, the Company'sCompany’s Chief Financial Officer, and a representative of the Company'sCompany’s outside auditor. The Company'sCompany’s General Counsel also updates the Board at each of its quarterly meetings.
The following table contains information regarding the beneficial ownership of each person or entity that is known by the Company to be the beneficial owner of more than 5% of the Company'sCompany’s outstanding Common Stock as of the Record Date. Such information is based solely upon information provided to the Company by such owners'owners’ required SEC filings, including Schedules 13F, 13G and 13D. Beneficial ownership isownershipis measured against the Company'sCompany’s total shares outstanding as of the Record Date.
| | Name and Address | | | Amount and Nature of
Beneficial Ownership | | | Percent
(%) | |
| | BlackRock Institutional Trust Company, N.A.
400 Howard Street, San Francisco, CA 94105 | | | | | 5,460,611(1) | | | | | | 16.4% | | |
| | The Vanguard Group, Inc.
PO Box 2600, V26, Valley Forge, PA 19482-2600 | | | | | 3,630,147(2) | | | | | | 10.9% | | |
| | Allspring Global Investments, LLC
525 Market Street, 12th Floor, San Francisco, CA 94105 | | | | | 3,262,914(3) | | | | | | 9.8% | | |
| | Dimensional Fund Advisors, L.P.
6300 Bee Cave Road, Building One, Austin, TX 78746 | | | | | 2,438,552(4) | | | | | | 7.3% | | |
| | | | | | | |
Name and Address | | Amount and Nature of
Beneficial Ownership | | Percent
(%) | |
|---|
BlackRock Inc. | | | 5,120,523 | (1) | | 14.60 | |
55 East 52nd Street, New York, NY 10055 | | | | | | | |
Praesidium Investment | | |
3,419,624 |
(2) | |
9.75 | |
1411 Broadway, 29th Floor, New York, NY 10018 | | | | | | | |
The Vanguard Group, Inc. | | |
3,138,076 |
(3) | |
8.95 | |
P.O. Box 2600, V26, Valley Forge, PA 19482-2600 | | | | | | | |
Dimensional Fund Advisors LP | | |
2,891,182 |
(4) | |
8.24 | |
6300 Bee Cave Road, Building 1, Austin, TX 78746-5833 | | | | | | | |
T. Rowe Price Associates, Inc. | | |
2,564,515 |
(5) | |
7.31 | |
P.O. Box 89000, Baltimore, MD 21289 | | | | | | | |
Cook & Bieler LP | | |
2,329,147 |
(6) | |
6.64 | |
1700 Market Street, Suite 3222, Philadelphia, PA 19103-3991 | | | | | | | |
Victory Capital Management, Inc. | | |
1,964,708 |
(7) | |
5.60 | |
4900 Tiedeman Road, 4th Floor, Brooklyn, OH 44144-2338 | | | | | | | |
(1)(1)Based on its most recent Schedule 13G filed with the SEC, as of December 31, 2017, BlackRock, Inc. or its subsidiaries possess sole voting authority over 5,034,919 shares and no voting authority over 85,604 shares.
(2)- Based on its most recent Schedule 13F filed with the SEC, as of September 30,
2017, Praesidium Investment possesses2021, BlackRock, Inc. or its subsidiaries possess sole voting authority over 3,205,8135,385,223 shares and no voting authority over 213,81175,388 shares.
(2)
(3)Based on its most recent Schedule 13F filed with the SEC, as of September 30, 2017,2021, The Vanguard Group, Inc. possesses no sole voting authority over 41,448 shares, shared voting authority over 6,80048,889 shares, and no voting authority over 3,089,8283,585,258 shares.
(3)
(4)Based on its most recent Schedule 13F filed with the SEC, as of September 30, 2017, Dimensional Fund Advisors LP2021, Wells Fargo & Company (now Allspring Global Investments, LLC) possesses sole voting authority over 2,764,342529,112 shares and no voting authority over 126,8402,733,802 shares.
(4)
(5)Based on its most recent Schedule 13F filed with the SEC, as of September 30, 2017, T. Rowe Price Associates, Inc.2021, Dimensional Fund Advisors LP possesses sole voting authority over 479,6192,386,583 shares and no voting authority over 2,084,89651,969 shares.
(6)Based on its most recent Schedule 13F filed with the SEC, as of September 30, 2017, Cooke & Bieler LP. possesses sole voting authority over 2,021,686 shares and no voting authority over 307,461 shares.
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(7)Based on its most recent Schedule 13F filed with the SEC, as of September 30, 2017, Victory Capital Management, Inc. possesses sole voting authority over 1,913,008 shares and no voting authority over 51,700 shares.
Other Matters, Stockholder Nominations, and Stockholder Proposals
At the date of this Proxy Statement, management is not aware of any matters to be presented for action at the meeting other than those described above. However, if any other matters should come before the meeting, it is the intention of the persons named as proxies in the accompanying proxy card to vote in accordance with their judgment on such matters.
To be considered for inclusion in our proxy statement and form of proxy relating to our next Annual Meeting of Stockholders, stockholder proposals submitted pursuant to Rule 14a-8 of the Exchange Act must be received at 1800 West Loop South, Suite 1500, Houston, Texas 77027, Attn: Corporate Secretary, no later than September
28, 2018.27, 2022. We have not yet determined when we will hold our next Annual Meeting of Stockholders. If we determine to hold such meeting more than 30 days from the first anniversary of the date of the Annual Meeting, we will publicly announce such date to stockholders as soon as reasonably practicable.
The Company'sCompany’s Amended and Restated Bylaws provide that, for business to be properly brought before an Annual Meeting by a stockholder (including director nominations by stockholders or stockholder proposals outside the processes of Rule 14a-8), the stockholder must have given timely notice thereof in writing to the Secretary of the Company. To be timely, a stockholder'sstockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Company, not less than 90 days (which for the 20182023 meeting would be December 1, 2018)November 24, 2022) nor more than 120 days (which for the 20182023 meeting would be November 1, 2018)
October 25, 2022) prior to the anniversary date of the immediately preceding Annual Meeting; provided, however, that in the event that the date of the Annual Meeting is more than 60 days (which for the
20182023 meeting would be April
30, 2019)23, 2023) later than the anniversary date of the immediately preceding Annual Meeting, notice by the stockholder to be timely must be received not later than the close of business on the tenth day following the earlier of the date on which a written statement setting forth the date of the Annual Meeting was mailed to stockholders or the date on which it is first disclosed to the public.
To be in proper form, a
stockholder'sstockholder’s notice must set forth the following items:
(i) If the stockholder proposes to nominate a person for election as a director, the notice must set forth (A) all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (or any subsequent provisions replacing such Act, rules or regulations), (B) such
person'sperson’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected, and (C) a completed and signed questionnaire, representation and agreement as required by the
Company'sCompany’s Amended and Restated Bylaws.
(ii) If the stockholder proposes to bring any other matter before the Annual Meeting, the notice must set forth (A) a brief description of the business desired to be brought before the Annual Meeting, (B) the reasons for conducting such business at the Annual Meeting, (C) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws of the Company, the language of the proposed amendment), (D) any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and (E) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder.
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(iii) In either case, the notice must also set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made, (A) the name and address, as they appear on the Company'sCompany’s books, of such stockholder proposing such proposal, and of such beneficial owner, if any; (B)(1) the class and number of shares of the Company which are directly or indirectly owned beneficially or of record by such stockholder and by such beneficial owner, (2) the existence and material terms of any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder or beneficial owner, if any, has a right to vote any shares of any security of the Company (including, if applicable, any contract, arrangement, understanding or relationship pursuant to which any economic interest in the capital stock to be voted is beneficially owned by a person or persons other than the stockholder of record as of the record date), (3) any short interest in any security of the Company (as such term is defined in Section 3.4 of the Company'sCompany’s Amended and Restated Bylaws), in each case with respect to the information required to be included in the notice pursuant to (1) through (3) above, as of the date of such notice and including, without limitation, any such interests held by members of such stockholder'sstockholder’s or such beneficial owner'sowner’s immediate family sharing the same household; (C) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitation of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules or regulations); (D) a representation that the person is a holder of record or otherwise has the right to vote shares of stock of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination; (E) if the person does not own any stock of record, a representation as to who owns the shares of stock the person intends to vote of record and the basis upon which the person has the right to vote the shares of stock; and (F) a representation whether the stockholder or the beneficial owner, if any, intends or is part of a group that intends (1) to deliver a proxy statement or form of proxy to holders of at least the percentage of the Company'sCompany’s outstanding capital stock required to approve or adopt the proposal or elect the nominees or (2) otherwise to solicit proxies from stockholders in support of such proposal or nomination.
Proxy Statement and Annual Report Delivery
Copies of the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended October 31, 20172021 (including the financial statements, the financial statement schedules, and any exhibits), as filed with the Securities and Exchange Commission, portions of which are incorporated by reference as provided in this Proxy Statement, are available at no charge to stockholders of record upon written request to the address set forth above in the section entitled "“Communications with the Company"”. As permitted by rules of the Securities and Exchange Commission, services that deliver our communications to stockholders who hold their stock through a bank, broker or other holder of record may deliver a single copy of our Notice, Annual Report and Proxy Statement to multiple stockholders sharing the same address. Upon written or oral request, we will promptly deliver a separate copy of our Notice, Annual Report and/or Proxy Statement to any stockholder at a shared address to which a single copy of each document was delivered. Stockholders sharing an address who are currently receiving multiple copies of the Notice, Annual Report and/or Proxy Statement may also request delivery of a single copy. Stockholders may make a request by writing to the address set forth above in the section entitled “Communications with the Company.”
Houston, Texas
January 26, 201825, 2022
ANNEX A
QUANEX BUILDING PRODUCTS CORPORATIONNON-GAAP FINANCIAL MEASURE RECONCILIATION(In millions)(Unaudited)
Reconciliation of
Pro FormaAdjusted EBITDA to
Consolidated Net Income
(Loss) as reported
Adjusted EBITDA (defined as net income or loss from continuing operations before interest, taxes, depreciation and amortization, asset impairment charges, transaction and advisory fees, gains/losses on the sale of plants, restructuring charges, and other, net) is a non-GAAP financial measure that Quanex'sQuanex’s management uses to measure its operational performance and assist with financial decision making. Consolidated Pro Forma EBITDA as presented in this Proxy Statement includes the results of Nichols Aluminum, excluding a gain on the sale of Nichols. The Company believes the non-GAAP measure Adjusted EBITDA provides a consistent basis for comparison between periods, and will assist investors in understanding our financial performance when comparing our results to other investment opportunities. As used in this Proxy Statement, the Company also believes that Adjusted EBITDA (including the presentation of Consolidated Pro Forma EBITDA) will assist investors in understanding the effect of certain strategic decisions on the Company'sCompany’s decisions related to its executive pay and compensation structure. The measuresmeasure of Adjusted EBITDA as presented by the Company may not be the same as that usedcomparable to similarly titled measures reported by other companies. The Company does not intend for this information tocompanies and should be considered in isolation oraddition to, and not as a substitute for other measures preparedany amounts determined in accordance with US GAAP.
| | | | | FY 2019 | | | FY 2020 | | | FY 2021 | |
| | Adjusted EBITDA | | | | $ | 102.7 | | | | | $ | 104.5 | | | | | $ | 126.8 | | |
| | Costs of goods sold(1) | | | | | — | | | | | | — | | | | | | 0.3 | | |
| | Selling, general, and administrative adjustments(2) | | | | | 4.5 | | | | | | 1.4 | | | | | | 1.9 | | |
| | Restructuring charges | | | | | 0.4 | | | | | | 0.6 | | | | | | — | | |
| | Asset impairment charges | | | | | 74.6 | | | | | | — | | | | | | — | | |
| | Depreciation and amortization | | | | | 49.6 | | | | | | 47.2 | | | | | | 42.7 | | |
| | Interest expense | | | | | 9.6 | | | | | | 5.2 | | | | | | 2.5 | | |
| | Other, net | | | | | (0.1) | | | | | | (0.2) | | | | | | (0.7) | | |
| | Income tax expense | | | | | 10.8 | | | | | | 11.8 | | | | | | 23.1 | | |
| | Net (loss) income | | | | $ | (46.7) | | | | | $ | 38.5 | | | | | $ | 57.0 | | |
(1)
Includes an adjustment for loss on damage to a plant caused by flooding in 2021.
(2)
Includes adjustments for loss on the sale of a plant in 2021, transaction and advisory fees, executive severance charges in 2020 and 2019, and in 2019, the loss on the sale of a plant and reorganization charges.
| | | | | | | | | | | | | |
| | FY 2014 | | FY 2015 | | FY 2016 | | FY 2017 | |
|---|
Consolidated Pro Forma EBITDA | | $ | 47.0 | | $ | 60.7 | | $ | 102.7 | | $ | 96.4 | |
| | | | | | | | | | | | | | |
Consolidated Pro Forma EBITDA—discontinued operations | | | (1.6 | ) | | 0.8 | | | — | | | — | |
Consolidated Pro Forma EBITDA—continuing operations | | $ | 48.6 | | $ | 59.9 | | $ | 102.7 | | $ | 96.4 | |
Consolidated Pro Forma EBITDA—continuing operations | |
$ |
48.6 | |
$ |
59.9 | |
$ |
102.7 | |
$ |
96.4 | |
Restructuring | | | — | | | — | | | 0.5 | | | 4.5 | |
Depreciation & Amortization | | | 33.8 | | | 35.2 | | | 53.2 | | | 57.5 | |
Impairment | | | 0.5 | | | — | | | 12.6 | | | — | |
Interest | | | 0.6 | | | 1.0 | | | 36.5 | | | 9.6 | |
Other, net | | | (0.1 | ) | | 0.5 | | | 5.5 | | | (0.7 | ) |
Tax | | | 5.5 | | | 7.6 | | | (3.7 | ) | | 6.8 | |
| | | | | | | | | | | | | | |
Net income (loss)—continuing operations | | $ | 8.3 | | $ | 15.6 | | $ | (1.9 | ) | $ | 18.7 | |
| | | | | | | | | | | | | | |
Consolidated Pro Forma EBITDA—discontinued operations | | $ | (1.6 | ) | $ | 0.8 | | | — | | | — | |
Depreciation & Amortization | | | 3.0 | | | — | | | — | | | — | |
Impairment | | | 0.5 | | | — | | | — | | | — | |
Tax | | | (2.0 | ) | | 0.3 | | | — | | | — | |
| | | | | | | | | | | | | | |
Net (loss) income—discontinued operations (before gain on sale) | | $ | (3.1 | ) | $ | 0.5 | | | — | | | — | |
Gain on sale of Nichols (net of tax) | | | 24.0 | | | — | | | — | | | — | |
| | | | | | | | | | | | | | |
Net income—discontinued operations | | $ | 20.9 | | $ | 0.5 | | | — | | | — | |
| | | | | | | | | | | | | | |
Net income (loss)—as reported | | $ | 29.2 | | $ | 16.1 | | $ | (1.9 | ) | $ | 18.7 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Reconciliation of Free Cash Flow to Cash Provided by Operating ActivitiesA-1 Free Cash Flow (defined as cash provided by operations less capital expenditures) is a non-GAAP financial measure that Quanex's management uses to measure its operational and cash management performance, and to assist with financial decision making. The Company believes this non-GAAP
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measure will assist investors in understanding our financial and cash management performance. The measure of Free Cash Flow as presented by the Company may not be the same as that used by other companies. The Company does not intend for this information to be considered in isolation or as a substitute for other measures prepared in accordance with US GAAP.
| | | | | | | | | | | | | |
| | FY 2014 | | FY 2015 | | FY 2016 | | FY 2017 | |
|---|
Free Cash Flow | | $ | (13.0 | ) | $ | 37.1 | | $ | 49.2 | | $ | 44.0 | |
Capital Expenditures | | | 33.8 | | | 30.0 | | | 37.2 | | | 34.6 | |
Cash Provided by Operating Activities | | $ | 20.8 | | $ | 67.1 | | $ | 86.4 | | $ | 78.6 | |
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Shareowner Services P.O.ServicesP.O. Box 64945 St.64945St. Paul, MN 55164-0945 Vote by Internet, Telephone or Mail 24 Hours a Day, 7 Days a Week Your phone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card. Q INTERNET/MOBILE – www.proxypush.com/nx Use the Internet to vote your proxy until 11:59 p.m. (CT) on February 28, 2018. if PHONE – 1-866-883-3382 Use a touch-tone telephone to vote your proxy until 11:59 p.m. (CT) on February 28, 2018. MAIL –55164-0945Address Change? Mark box, sign, and date your proxy card and [8) return it in the postage-paid envelope provided. If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card. Theindicate changes below:TO VOTE BY INTERNET OR TELEPHONE, SEE REVERSE SIDE OF THIS PROXY CARD.The Board of Directors recommends a “for” vote for Items 1, 2 and 3. To3.To elect four9 directors to serve until the Annual Meeting of Stockholders in 2019: 1. FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN 01 Robert R. Buck 03 Joseph D. Rupp 02 Susan2023:FORAGAINSTABSTAINFORAGAINSTABSTAIN01Susan F. Davis 04Davis06 Meredith W. Mendes02William C. Griffiths07 Curtis M. Stevens 2.StevensPlease fold here – Do not separate03 Bradley E. Hughes08 William E. Waltz, Jr.04 Jason D. Lippert09 George L. Wilson05 Donald R. Maier2. To approve an advisory resolution approving the compensation of the Company’s named executive officers;officersForAgainstAbstain3. To approve a resolution ratifying the appointment of the Company’s independent auditor for fiscal 2018; and Abstain Abstain For Against 3. For Against 4. To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. Information2022ForAgainstAbstainInformation with respect to the above matters is set forth in the Proxy Statement that accompanies this Proxy Card. THISCard.THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED AS THE BOARD RECOMMENDS. Address Change? Mark box, sign, and indicate changes below: DateRECOMMENDS.Date Signature(s) in Box PleaseBoxPlease sign exactly as your name(s) appears on Proxy. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy.
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NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Quanex Building Products Corporation, a Delaware corporation (the “Company”), will be held at the principal executive offices of the Company, 1800Post Oak Hotel, 1600 West Loop South, Suite 1500, Houston, Texas,TX 77027, on March 1, 2018,February 22, 2022, at 8:00 a.m., C.S.T. NoticeC.T.Notice of Internet Availability of Proxy Materials: You can access and review the Annual Report and Proxy Statement on the Internet by going to the following Quanex Building Products Corporation website: www.quanex.com/2017AR Quanex2021ARproxyQuanex Building Products Corporation 1800 West Loop South, Suite 1500 Houston,1500Houston, TX 77027 proxy This77027This proxy is solicited by the Board of Directors for use at the Annual Meeting on March 1, 2018. TheFebruary 22, 2022.The Board of Directors has fixed the close of business on January 10, 2018,5, 2022, as the record date for determining stockholders entitled to notice of and to vote at the meeting. A complete list of the stockholders entitled to vote at the meeting will be maintained at the Company’s principal executive offices, will be open to the examination of any stockholder for any purpose germane to the meeting during ordinary business hours for a period of ten days prior to the meeting, and will be made available at the time and place of the meeting during the whole time thereof. Bythereof.By signing the proxy, you revoke all prior proxies and appoint BillWilliam Griffiths and LeRoy Nosbaum,Susan Davis, and each of them with full power
of substitution, to vote your shares on the matters shown on the reverse side and any other matters which may come before the Annual Meeting and all adjournments. Pleaseadjournments.Please execute your vote promptly. Your designation of a proxy is revocable and will not affect your right to vote in person if you find it convenient to attend the meeting and wish to vote in person. Theperson.The Company’s Annual Report to Stockholders for the fiscal year ended October 31, 2017,2021, accompanies this Proxy Card. See reverseCard.Vote by Internet, Telephone or Mail 24 Hours a Day, 7 Days a WeekYour phone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.INTERNET/MOBILEPHONEMAILwww.proxypush.com/nxUse the Internet to vote your proxy1-866-883-3382Use a touch-tone telephone toMark, sign and date your proxy card and return it in theuntil 11:59 p.m. (CT) on February 21, 2022 andFebruary 17, 2022 for voting instructions.ESPP.vote your proxy until 11:59 p.m. (CT) on February 21, 2022 andFebruary 17, 2022 for ESPP.postage-paid envelope provided.If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your Proxy Card.
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