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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant ☒
Filed by a party other than the registrant ☐
Check the appropriate box:
 ☐

Preliminary Proxy Statement
 ☐

Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2))
☒

Definitive proxy statement
 ☐

Definitive additional materials
 ☐

Soliciting material pursuant to § 240.14a-11(c) of § 240.14a-12
COMPASS DIVERSIFIED HOLDINGS

(Exact name of registrant as specified in its charter)
COMPASS GROUP DIVERSIFIED HOLDINGS LLC

(Exact name of registrant as specified in its charter)
N/A

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒
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No fee required.
 ☐
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Fee paid previously with preliminary materials.
 ☐
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

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​Letter from Our Chairman of the Board
April 12, 20222023
Compass Diversified Holdings
Compass Group Diversified Holdings LLC
Notice of Annual Meeting of Shareholders
A Message from the Chair of our Board
Dear Fellow Shareholders,Shareholders:
In 2021Thank you for your support of Compass Diversified. The company had another record-breaking year, with Adjusted EBITDA increasing by 20% versus the prior year period and Adjusted Earnings increasing by 17% versus the prior year. During 2022, we continued to execute our mission, which is to create enduring value by: partnering with middle-market businesses with superior long-term prospects; backing world-class management teams as they accelerate marketplace success; managing financial risk in a responsible way; and cultivating an environment where people can achieve their potential. We established our core values of Integrity, Passion, Accountability, Collaboration and Humility in order to create a “people-first” organization that can stand firmly behind our mission.
Our outstanding performance in 2022 can be attributed to our partnership with leading middle-market businesses with superior long-term growth prospects, as our current subsidiaries continued to outperform their competitors and deliver differentiated products and services.
We again delivered record-setting financial results forrelied upon our shareholders, alongside continued advancements to drive value for allworld-class management teams, as our stakeholders. This was all while navigating significant socioeconomic challenges includingsubsidiaries grew their businesses against a backdrop of supply chain disruptions, labor shortagesinventory destocking trends, deteriorating macro-economic conditions and wage increases,other headwinds.
During the year, we also published our environmental, social and inflationary pressures, duegovernance (ESG) framework, formalized our ESG policy and memorialized the key elements in our corporate citizenship statement, all of which can be found at www.compassdiversified.com/esg/. This groundwork supports our belief that ESG factors should be viewed as potential long-term drivers of value and will be utilized as we continue to integrate ESG in our acquisition decisions, as well as the lingering aftermath of the COVID-19 pandemic.
On the financial side, we reported 35% consolidated revenue growth in 2021. We also continued to make strides to lower our cost of capital, refinancing our entire debt package and moving our cost of debt down to approximately 5.2%.
Using our strong balance sheet, at the platform level, we acquired Lugano Diamonds & Jewelry Inc. and consummated three add-on acquisitions: Ramco Electric Motors, Inc. into Arnold Magnetic Technologies, Inc., Lizard Skins into Marucci Sports, LLC, and Plymouth Foam into Altor Solutions, Inc. These transactions contributed to the acceleration in the core growth ratemanagement of our company.subsidiaries. We are hopeful that the ESG initiatives we have established to support the health and well-being of our organization’s employees will further cultivate an environment where our people can achieve their potential.
We also continuedbelieve we are heading into 2023 with our questbranded consumer and niche industrial subsidiaries poised to seize growth opportunities and position us well for the eventual return of making CODI easiereconomic stability. We will continue to own. We reclassified the Trust from a pass-through entity to a C corporation for U.S. federal income tax purposes, removing certain administrative requirements for shareholders and improving the likelihood of index inclusion. We would expect both of these to improve our longer-term trading volume and share ownership. Both metrics have already experienced a strong uptick.
Of course, we also continued to prioritize actions that define CODI as a good corporate citizen. The environment, the social factors and the extent to which companies have good governance affect their license to operate as a business.
During 2021 we continued to sustainably invest in our businessessubsidiaries for long-term growth and success, while managing risk in a responsible way.
Finally, on behalf of the long-term,board and our entire organization, I would like to take this opportunity to express our sincere gratitude to Sally McCoy for her service as we supported our local communities, added human capital in key positions, and retained our highly skilled employees. In fact, CODI’s Manager has retained 95% of its managerial employeesa director over the past fivesix years.
We have alsowish Sally much continued to diversifysuccess in her personal and refresh our board of directors. Mr. Alex Bhathal joined our board in January of 2022, and in February of 2022 we approved the declassification of our board so that all directors are up for re-election annually rather than staggered three-year terms. We expect to continue to make strides in this area and intend to add another female or a racially or ethnically diverse member to our board before the 2023 annual meeting.professional endeavors.

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On behalf of the board, I also want to acknowledge director D. Eugene Ewing (“Gene”), who served CODI with distinction from the time of our organization’s initial public offering in 2006 until his death at the beginning of 2022. It was a privilege to know him and work alongside of him.Thank you again for your support as an investor. We miss his leadership, counsel and friendship.
As the chairman of CODI’s board of directors, I am pleased tocordially invite you to participate in our virtualCompass Diversified’s 2023 Annual Meeting of Shareholders, which will be held on Thursday, May 25, 2022,2023, at 12:00 p.m., Eastern time. At the meeting, I am requesting yourDaylight Time. Please note that this year's Annual Meeting will be held virtually, which means that you will be able to register and vote in support of the items laid out in this proxy statement so that we can continue to maximize the value of your shareholder dollars. On behalf of the board, we thank you for your support.online by visiting www.virtualshareholdermeeting.com/CODI2023.
Sincerely,

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C. Sean Day
Larry L. Enterline
Board Chair

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Notice of Annual Meeting

of Shareholders
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WEDNESDAY
THURSDAY
May 25, 2022
2023
12:00 P.M. ET
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Virtual Meeting

With live audio webcast
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virtualshareholdermeeting.com/CODI2022CODI2023
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Compass Diversified Holdings' 2022Holdings’ 2023 Annual Meeting of Shareholders (the “Annual Meeting”) will be held on Wednesday,Thursday, May 25, 20222023 at 12:00 p.m., Eastern Time. In light of the ongoing and evolving nature of COVID-19 (Coronavirus) and continuing public health concerns, theThe Annual Meeting will be a completely virtual meeting, which will be conducted via live audio webcast. You will be able to attend the Annual Meeting online, vote your shares electronically and submit your questions during the Annual Meeting via a live audio webcast by visiting www.virtualshareholdermeeting.com/CODI2022CODI2023.
The Annual Meeting is being held for the following purposes:
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to elect seven (7)eight (8) directors named in the proxy statementProxy Statement to serve for a one-year term expiring at the 20232024 Annual Meeting of Shareholders;
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to approve, on a non-binding and advisory basis, the resolution approving the compensation of our named executive officersofficer(s) as disclosed in the proxy statement;Proxy Statement (“Say-on-Pay Vote”);
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to conduct an advisory vote on whether the shareholder advisory vote on executive compensation should occur every one, two or three years (“Frequency of Say-on-Pay Vote”);
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to ratify the appointment of Grant Thornton LLP to serve as the independent auditor for Compass Diversified Holdings and Compass Group Diversified Holdings LLC for the fiscal year ending December 31, 2022;2023; and
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to transact such other matters as may properly come before the meeting and any postponement(s) or adjournment(s) thereof.
These matters are more fully described in the enclosed proxy statement. The board of directors recommends that you vote FOR ALL the director nominees to be elected, FOR the resolution approving, on a non-binding and advisory basis, the compensationSay-on-Pay Vote, for 1 YEAR for the Frequency of our named executive officersSay-on-Pay Vote, and FOR the ratification of the independent auditor.
Shareholders of record at the close of business on March 28, 20222023 will be entitled to notice of, and to vote at, the Annual Meeting and at any subsequent adjournment(s) or postponement(s) thereof. The share register will not be closed between the record date and the date of the Annual Meeting. A list of shareholders entitled to vote at the Annual Meeting will be available for inspection for the 10 days prior to the Annual Meeting at our principal executive offices located at 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880. In addition, the list of shareholders will also be available during the Annual Meeting through the meeting website for those shareholders who choose to attend. The notice of Annual Meeting,annual meeting, Proxy Statement and Proxyproxy are first being mailed or provided to shareholders on or about April 12, 2022.2023.
There will not be a traditional in-person meeting. To be sure that your shares are properly represented at the meeting, whether or not you electronically attend, please submit your vote by telephone or online or, if you received paper copies of the Proxy Materials, promptly complete, sign, date and return the enclosed proxy card in the accompanying pre-addressed envelope. We must receive your proxy no later than 11:59 p.m., Eastern Time, on May 24, 2022.2023.
Please read carefully the sections in the proxy statementProxy Statement on attending via live audio webcast and voting at the Annual Meeting to ensure that you comply with these requirements.

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Important Notice Regarding Availability of Proxy Materials for the Annual Meeting.We are pleased to save costs and help protect the environment by using the Notice and Access method of delivery. Instead of receiving paper copies of our Proxy Materials in the mail, many shareholders will receive a Notice of Internet Availability of Proxy Materials which provides an internet website address where shareholders can access electronic copies of Proxy Materials and vote. This website also has instructions for voting by telephone and for requesting paper copies of the Proxy Materials and proxy card. Our 2022 proxy statement2023 Proxy Statement and annual reportAnnual Report for the year ended December 31, 20212022 are available free of charge at www.proxyvote.com.www.proxyvote.com. We encourage you to access and review such materials before voting.
By order of the board of directors.
Sincerely,
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Carrie W. Ryan

General Counsel & Secretary

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Notice for Annual Meeting of Shareholders
1
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PROPOSAL 1:

Election of Directors
2
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Our Board
811
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Board of Directors, Executive Officers and
Committees
1519
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Corporate Governance
1620
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Certain Relationships and Related Party
Transactions
1924
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Director Compensation
2126
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PROPOSAL 2:

Advisory Vote Regarding Executive
Compensation
2227
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Our Pay
2328
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PROPOSAL 3:
Frequency of Advisory Vote Regarding Executive Compensation
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Compensation Discussion and Analysis
38
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Pay Versus Performance
42
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Compensation Committee Report
3143
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PROPOSAL 3:
4:
Ratification of Appointment of
Independent Auditor
3244
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Our Auditors
3346
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Audit Committee Report
3447
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Our Shareholders
3447
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Share Ownership of Directors, Executive
Officers and Principal Shareholders
3649
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Shareholder Proposals for the 20232024 Annual
Meeting of Shareholders
3649
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United States Securities and Exchange
Commission Reports
3649
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Other Matters
3650
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Delivery of Documents to Shareholders
Sharing an Address
3851
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Information Regarding Annual Meeting
51
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Purpose of Meeting
3851
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Attending and Voting at the Annual Meeting
3952
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Appointment of Proxy
4053
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Approval of Proposals and Solicitation
Compass Diversified Holdings, a Delaware statutory trust, which we refer to as the Trust, owns its businesses and investments through Compass Group Diversified Holdings LLC, a Delaware limited liability company, which we refer to as the Company. Except where the context indicates otherwise, “we,” “us,” and “our” refer to the Company and the Trust. References to “shareholders” refer to shareholders of the Trust. This Proxy Statement and the accompanying materials contain “forward-looking” statements regarding the Company and the Trust within the meaning of the applicable securities laws and regulations. Forward-looking statements generally are identified by words such as “may,” “might,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “likely,” “potential” or “continue” or other similar terms or expressions. All statements other than statements of historical fact could be forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond our control and are difficult to predict. These risks and uncertainties include, but are not limited to, the factors and risks detailed in our filings with the Securities and Exchange Commission, including the sections entitled “Statement Regarding Forward-Looking Disclosure” and “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.2022. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our expectations, objectives or plans will be achieved in the timeframe anticipated or at all. Investors are cautioned not to place undue reliance on our forward-looking statements and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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1 COMPASS DIVERSIFIED
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Our Board

BOARD COMPOSITIONBoard Composition
Our business and affairs are managed under the direction of our Board. We currently have nine directors. As previously disclosed, on March 23 2023, Ms. Sarah G. McCoy, a current director, notified us of her intention to not stand for re-election at the 2023 Annual Meeting, at which time her term as a director will expire. On March 24, 2023, the Board consists of eight directors, six of whom arenominated Ms. Nancy B. Mahon to fill the Company’s independent directors. All ofnewly created vacancy resulting from Ms. McCoy’s departure, with Ms. Mahon to serve as a director effective upon her election and qualification at the directors serving on our standing committees are independent.2023 Annual Meeting. Our Board has the ability to decrease or increase its size to no less than five or up to thirteen directors, respectively. Pursuant to the Company’s Sixth Amended and Restated Operating Agreement dated as of August 3, 2021, as amended by the First Amendment dated as of February 11, 2022, which we refer to herein as the “LLC Agreement”, the Company’s Allocation Member has the right to appoint director(s) to the Board based on itsoverall Board size and any such appointed directors are not required to stand for election by our shareholders. For our 20222023 Annual Meeting, eight directors, seven directorsof whom are independent, have been nominated for election by our shareholders and Mr. Sabo, our Chief Executive Officer, is currently serving as a director appointed by the Allocation Member.
Our Board haswas historically been divided into three classes serving staggered three-year terms. As part of a continued emphasis on strong corporate governance practices, onin February 10,of 2022, the Board approved an amendment to the LLC Agreement to declassify the Board immediately prior to the 2022 Annual Meeting of Shareholders. Therefore, beginning with thisat each year’s Annual Meeting, each director (other than any director appointed by the Allocation Member of the Company) will be elected for a term of office to expire at the next Annual Meetingannual meeting following his or her election. To further expand its diversity,
Director Independence
Our stock is listed on the New York Stock Exchange, or NYSE, under the symbol “CODI.” Under the rules of the NYSE, independent directors must comprise a majority of our Board. In addition, the rules of the NYSE require that, subject to specified exceptions, each member of a listed company’s audit, compensation, and nominating and governance committees be independent. Audit committee and compensation committee members must also satisfy the independence criteria set forth in Rule 10A-3 and Rule 10C-1, respectively, under the Securities Exchange Act of 1934, as amended. Under the rules of the NYSE, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the Board, currently intendsor any other board committee: (i) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or (ii) be an affiliated person of the listed company or any of its subsidiaries. In determining independence of a member of the compensation committee, the following factors must be considered pursuant to add another femaleRule 10C-1: (i) the source of compensation of the director, including any consulting, advisory or other compensatory fee paid by the issuer to such director and (ii) whether the director is affiliated with the issuer, a raciallysubsidiary of the issuer or ethnically diverse member beforean affiliate of a subsidiary of the 2023 Annual Meeting of Shareholders.
DIRECTOR INDEPENDENCEissuer
Pursuant to our governing documents, our Board will always consist of at least a majority of independent directors.directors and all directors serving on our standing committees will also be independent. Our Board has evaluated information requested from and provided by each director and director nominee concerning his or her background, employment, and affiliations, including family relationships, and reviewed the materiality of any relationship that each of our directors has with the Trust or the Company, either directly or indirectly. Based on this review, the Board has determined that the following directors and director nominees are “independent directors” as defined by the New York Stock Exchange (“NYSE”):NYSE: Messrs. Bhathal, Bottiglieri, Burns, Edwards and Enterline, and Mses. Mahon, McCoy (who is not standing for re-election) and Ms. McCoy. Additionally, theShaffer. Our Board previouslyhas also determined that Mr. D. Eugene Ewing,those directors who servedserve on our audit committee, compensation committee and nominating and corporate governance committee, as well as Ms. Mahon, the director until he passed awaynominee who is expected to serve on January 9, 2022, was independent. In consideration of whether Ms. McCoy is an “independent director” as definedour nominating and corporate governance committee if elected by our shareholders, satisfy the independence standards for those committees established by the NYSE, the Board considered certain historical transactions and relationships Ms. McCoy had with the Company. In particular, Ms. McCoy served as the former chief executive officer of CamelBak Products, LLC, a former subsidiaryrules of the Company. CamelBak, however, was sold in 2015NYSE and has not been a subsidiarythe applicable SEC rules.
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2023 PROXY STATEMENT 2
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Election of the Company, and Ms. McCoy has not served as its chief executive officer, for more than six years. In addition, Ms. McCoy provided certain consulting services to the Company’s Manager during fiscal year 2018; however she has not had any consulting relationship with our Manager, the Company, or any of its subsidiaries for more than three years. The Board has determined that none of the foregoing relationships constitute a material relationship with the Company nor do they impair the ability of Ms. McCoy to act independently.Directors
ELECTION OF DIRECTORS
SevenEight directors will be elected at the Annual Meeting and each will serve for a one-year term that expires at our 20232024 Annual Meeting of Shareholders. Each of Mr. Alexander S. Bhathal, Mr. James J. Bottiglieri, Mr. Gordon M. Burns, Mr. C. Sean Day, James J. Bottiglieri, Alexander S. Bhathal, Gordon M. Burns,Mr. Larry L. Enterline, Mr. Harold S. Edwards, Ms. Nancy B. Mahon, and Sarah G. McCoyMs. Teri R. Shaffer was nominated by the Board for election by our shareholders upon the recommendation of the Board’s nominating and corporate governance committee. Proxies cannot be voted for a greater number of persons than the number of nominees named.
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2021 PROXY STATEMENT 23 COMPASS DIVERSIFIED
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Board Diversity Metrics
Our nominating and corporate governance committee considers multiple aspects of diversity among directors and director nominees, including professional skills and experiences, industry knowledge, subject matter expertise, gender, ethnicity and age. We believe that diversity of viewpoints, backgrounds and experiences can improve the Board's ability to engage with management, our shareholders and other stakeholders.
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Board Diversity Matrix (As of March 28, 2023)(1)
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Total Number of Directors/Nominees
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9
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Female
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Male
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Non-
Binary
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Did Not
Disclose
Gender
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Part I: Gender Identity
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Directors/Nominees
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2
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7
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0
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0
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Part II: Demographic Background
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African American or Black
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0
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0
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0
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0
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Alaskan Native or Native American
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0
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0
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0
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0
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Asian
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0
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0
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0
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0
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Hispanic or Latinx
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0
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0
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0
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0
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Native Hawaiian or Pacific Islander
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0
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0
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0
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0
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White
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2
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6
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0
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0
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Two or More Races or Ethnicities
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0
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1
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0
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0
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LGBTQ-I-
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1
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Did Not Disclose Demographic Background
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0
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Directors/Nominees who are military veterans: 1
(1)
Does not include Ms. McCoy who is not standing for re-election.
Corporate Governance Highlights
Our director nomination process allows for the Board to design recruitment procedures that meet the Board's and the Company's strategic priorities at a given point in time. Our annual Board self-evaluation process serves as an effective mechanism for monitoring the need for Board refreshment, while maintaining a balance of tenure at the Board. Over the past few years, we have been implementing incremental changes to our Board structure and overall director composition, as highlighted by the following key changes:
Created Role of and Appointed Independent Lead Director
Appointed Independent Chair of our Board
Declassified our Board and Eliminated Staggered Terms for Directors
Added 3 Gender/Ethnically Diverse Directors/Nominees Over Past 2 Years
Adopted Share Ownership Guidelines for Non-Management Directors
Amended our Corporate Governance Guidelines to (among other things):
Implement Mandatory Minimum Meeting Attendance Standards for Directors
Include Diversity in Board Membership Criteria for Selecting, Evaluating and Recommending Director Candidates
Amended our Nominating and Corporate Governance Committee Charter to Address Oversight of certain ESG Functions
Appointed Female Director to Board Leadership Position (Audit Committee Chair)
Decreased Average Board Tenure Versus Fiscal Year 2022
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2023 PROXY STATEMENT 4
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2023 Directors and Director Nominees
The following describes the business experience and education of each of the directors and nominees to be voted on for re-election.election at the 2023 Annual Meeting.
 
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C. SEAN
Larry L.
DAY
Enterline
ChairmanChair of our Board since

April 2006July 2022
Director since
July 2019
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Independent

Experience:

• President of Seagin International (1999 to 2022)
• Chairman of our Manager’s predecessor (1999 to 2006)
• Was with Navios Corporation and Citicorp Venture Capital

Other Boards:
• Kirby Corporation (NYSE:KEX) (present)
• Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P. (NYSE:TGP) (2004 to 2022)
• Chairman, Teekay Tankers Ltd. (NYSE:TNK) (2007 to 2013); Teekay LNG LLC (2004 to 2015); Teekay Offshore Partners L.P. (NYSE:TOO) (2006 to 2017), Teekay Corporation (NYSE:TK) (1999 to 2017)

Education:
• Graduate of the University of Capetown and Oxford University

Qualifications:
• Operating executive and investor experience
• Substantial experience as a director of other companies, both public and private
• Valuable insight on governance practices and risk management
• Knowledge of global investment decisions and related risks
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LARRY L.
ENTERLINE
Lead Independent Director since
October 2021
Director since
July 2019
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Committees: Audit; Nominating & Corporate Governance
Independent

Experience:
•    Chief Executive Officer of Vulcan Holdings Inc., a private investment holding and consulting services company (April 2010 to present)

•    Chief Executive Officer of Fox Factory Holding Corp., a former subsidiary of the Company (March 2011 to June 2019)

•    Chief Executive Officer of COMSYS IT Partners Inc., an IT staffing and solutions company (February 2006 to April 2010)

•    Served in various management roles earlier in his career, including Senior Vice President of Worldwide Sales and Service Organization at Scientific-Atlanta Inc., a Georgia-based manufacturer of cable television, telecommunications and broadband equipment


Other Boards:

•    Greentech Environmental, a private air purifications systems provider, Executive ChairmanChair (August 2021 to present)
December 2022)
•    Fox Factory Holding Corp. (NASDAQ:FOXF) (2013 to 2021); Executive ChairmanChair (June 2019 to April 2021)



Education:

•    Graduate of Case Western Reserve University and The Monte Ahuja College of Business at Cleveland State University



Qualifications:

•    Significant insight regarding operations, supply chain optimization and continuous improvement

•    Unique perspective due to having led a business through a significant growth transition and eventual initial public offering

•    Capabilities in the areas of strategic planning and organizational development
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35 COMPASS DIVERSIFIED
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Alexander S.
Bhathal
Director since
January 2022
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Committees: Compensation; Nominating & Corporate Governance
Independent

Experience:
•    Managing Partner of RAJ Capital Management and its affiliates (2006 to present)
•    Co-owner and executive director of Sacramento Basketball Holdings, which owns, among other things, the Sacramento Kings franchise of the National Basketball Association (2013 to present)
•    Senior Operating partner for Rx3 Growth Partners, a consumer growth fund (present)
•    Previously, Chief Executive Officer of RAJ Swim, a designer manufacturer, and marketer of designer and private label swimwear under nationally recognized brands
Other Boards:
•    Raj Capital Management and its affiliates (2006 to present)
•    Revitate, a diversified investment management platform supporting strategies in real estate, sports, and consumer brands that seek to deliver positive economic and social impact, Founder and Executive Chair (July 2021 to present)
•    Mark IV Capital (2021 to present)
•    Aspyr Holdings (Orange Theory Fitness franchises) (2020 to present)
Education:
•    Graduate of University of California Los Angeles and the USC Marshall School of Business at the University of Southern California
•     Harvard Business School Presidents Program in Leadership (2015 to 2021)
Qualifications:
•    Experience leading organizations with established ESG goals committed to positive economic and social impact
•    Asset management experience in a variety of sectors
•    Extensive understanding of investment activities
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2023 PROXY STATEMENT 6
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HAROLD S.
James J.
EDWARDS
Bottiglieri
Director since
April 2006
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Committees: Compensation (Chair); Audit
Independent

Experience:
• President and Chief Executive Officer of Limoneira Company (November 2003 to present)
• President of Puritan Medical Products, a division of Airgas Inc.
• Held management positions with Fisher Scientific International, Inc., Cargill, Inc., Agribrands International and the Ralston Purina Company

Other Boards:
• Limoneira Company (NASDAQ:LMNR) (2009 to present)
• Calavo Growers, Inc. (NASDAQ:CVGW) (2005 to 2022)
• Inventure Foods, Inc. (NASDAQ:SNAK) (2014 to 2017)

Education:
• Graduate of Lewis and Clark College and The Thunderbird School of Global Management at Arizona State University

Qualifications:
• Hands-on management perspective, particularly in the areas of operations, executive compensation, succession planning and issues confronting a diversified array of companies
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SARAH G.
MCCOY
Director since
January 2017
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Independent

Experience:
• President and Chief Executive Officer of CamelBak Products, LLC, a former subsidiary of the Company (November 2006 to January 2016)
• Co-Founder of Silver Steep Partners, a leading investment banking firm catering exclusively to companies in the outdoor and active lifestyle industries
• President of Sierra Designs and Ultimate Direction
• Vice President at The North Face

Other Boards:
• The Outdoor Foundation, a nonprofit foundation established by Outdoor Industry Association to inspire and grow future generations of outdoor enthusiasts (present)
• Sea to Summit, a private adventure equipment manufacturer, Executive Chair (November 2020 to present)
• Helinox, a private manufacturer of portable outdoor furniture, Executive Chair (2017 to present)
• Zumiez Inc. (NASDAQ:ZUMZ) (2010 to 2021)

Education:
• Graduate of Dartmouth College

Qualifications:
• Distinguished track record of building strong businesses and growing iconic brands
• Specific experience and knowledge of the complex business issues unique to consumer products companies, including consumer behavior, retail relationships and international distribution
• Unique perspective on investing in small and middle market companies
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JAMES J.
BOTTIGLIERI
Director since

December 2005
​​
Committees: Audit (Chair);Audit; Nominating & Corporate Governance

Independent



Experience:

•    Chief Financial Officer of the Company and an Executive Vice President of the Company’s Manager (2005 to 2013)

•    Senior Vice President and Controller of WebMD Health Corporation

•    Previously with Star Gas Corporation and a predecessor firm to KPMG LLP

Other Boards:

•    Horizon Technology Finance Corporation (NASDAQ:HRZN) (2010 to present)

Education:

•    Graduate of Pace University

Qualifications:

•    Intimate understanding of our business and operations and the business and operations of our subsidiaries

•    Substantial expertise in accounting, tax and other financial matters
•    “Financial expert” as defined by applicable SEC and NYSE listing rules and regulations
 
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graphic

 
GORDONGordon M.

BURNS
Burns
Director since

May 2008
​​
Committees: Nominating & Corporate Governance (Chair); Compensation

Independent


Experience:

•    Private investor (1998 to present)

•    Previously responsible for investment banking at UBS Securities

•    Managing Director at Salomon Brothers Inc.

Other Boards:

•    Aztar Corporation (NYSE:AZR) (1998 through 2007)

Education:

•    Graduate of Yale University and the Harvard Business School

Qualifications:

•    Extensive knowledge of and significant experience in investment and financing activities

•    Insights gleaned from having been involved with several public and private companies as they have gone through important transitions, including mergers and acquisitions, divestitures and management succession
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graphic
 
C. Sean
Day
Director since
April 2006
​​
Experience:
•    Chair of our Board (April 2006 to July 2022)
•    President of Seagin International (1999 to 2022)
•    Chair of our Manager's predecessor (1999 to 2006)
•    Previously with Navios Corporation and Citicorp Venture Capital
Other Boards:
•    Kirby Corporation (NYSE:KEX) (1996 to 2022)
•    Teekay GP L.L.C., the general partner of Teekay LNG Partners L.P. (NYSE:TGP) (2004 to 2022)
•    Chair, Teekay Tankers Ltd. (NYSE:TNK) (2007 to 2013); Teekay LNG LLC (2004 to 2015); Teekay Offshore Partners L.P. (NYSE:TOO) (2006 to 2017), Teekay Corporation (NYSE:TK) (1999 to 2017)

Education:
•    Graduate of the University of Capetown and Oxford University

Qualifications:
•    Operating executive and investor experience
•    Substantial experience as a director of other companies, both public and private
•    Valuable insight on governance practices and risk management
•    Knowledge of global investment decisions and related risks
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graphic
 
Harold S.
Edwards
Director since
April 2006
​​
Committees: Compensation (Chair); Audit
Independent

Experience:
•    President and Chief Executive Officer of Limoneira Company (November 2003 to present)
•    President of Puritan Medical Products, a division of Airgas Inc.
•    Held management positions with Fisher Scientific International, Inc., Cargill, Inc., Agribrands International, the Ralston Purina Company, and Mission Produce, Inc.
Other Boards:
•    Limoneira Company (NASDAQ:LMNR) (2009 to present)
•    Calavo Growers, Inc. (NASDAQ:CVGW) (2005 to 2022)
•     Inventure Foods, Inc. (NASDAQ:SNAK) (2014 to 2017

Education:
•    Graduate of Lewis and Clark College and The Thunderbird School of Global Management at Arizona State University

Qualifications:
•    Hands-on management perspective, particularly in the areas of operations, executive compensation, succession planning and issues confronting a diversified array of companies
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graphic
 
ALEXANDER S.
Nancy B. Mahon
BHATHAL
Director since
January 2022Nominee
​​
Committees: Compensation
Expected Committees (if elected by our shareholders): Nominating & Corporate Governance
Independent

Experience:

Experience:
•    Managing PartnerChief Sustainability Officer of RAJ Capital Management and its affiliates (2006The Estée Lauder Companies Inc. (January 2023 to present)

•    Co-ownerSenior Vice President, Global Corporate Citizenship and executive directorSustainability at Estée Lauder (April 2016 to January 2023)
•    Senior Vice President, Social Initiatives, MAC Cosmetics, Bobbi Brown & La Mer (July 2011 to March 2016)
Other Boards:
•    Board of Sacramento Basketball Holdings, which owns, among other things, the Sacramento Kings franchiseTrustees New York University School of Law Foundation (October 2018 to present)
•    TPG Pace Beneficial Finance Corporations I and II (NYSE: TPGY-UN and YTPG) (October 2020 to April 2023)
•    Chairperson of The Presidential Advisory Council on HIV/AIDS (PACHA) of the National Basketball Association (2013U.S. Department of Health and Human Services (December 2011 to present)
• Senior Operating partner for Rx3 Growth Partners a consumer growth fund (present)
• Previously, Chief Executive Officer of RAJ Swim, a designer, manufacturer, and marketer of designer and private label swimwear under nationally recognized brands
Other Boards:
• Raj Capital Management and its affiliates (2006 to present)
• Revitate, a diversified investment management platform supporting strategies in real estate, sports, and consumer brands that seek to deliver positive economic and social impact, Founder and Executive Chairman (July 2021 to present)
• Mark IV Capital (2021 to present)
• Aspyr Holdings (Orange Theory Fitness franchises) (2020 to present)
December 2016)
Education:

•    Graduate of Yale University and the New York University School of Law
Qualifications:
•    Rock Center for Corporate Governance Directors’ College executive education program at Stanford Law School
•    Certification in Brand Marketing from The Wharton School
•    Yale School of Management Certification as Woman on Boards
•    Admitted to the State Bar of California, Los Angelesthe United States Court of Appeals for the Ninth Circuit, and the USC Marshall SchoolUnited States District Court for the Northern District of Business at the University of Southern California
Qualifications:
• Experience leading organizations with established ESG goals committed to positive economic and social impact
• Asset management experience in a variety of sectors

•    Extensive understanding of investment activitiesProven executive leader with demonstrated expertise in ESG issues, branded consumer products and enterprise strategy
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graphic 
Teri R.
Shaffer
Director since
July 2022
​​
Committees: Audit (Chair)
Independent

Experience:
•    Americas and Regional Financial Audit Information Technology Leader for Ernst & Young (2016 to 2022)
•    Previously served in various other leadership roles at Ernst & Young since 1984
Education:
•    Graduate of Oklahoma State University and the Hult International Business School
Qualifications:
•    National Association of Corporate Directors (NACD) Certified Director
•    Certified Public Accountant
•    Risk management experience and expertise
•    Certified Information Security Manager; holds the CERT Cybersecurity Governance Certification from Carnegie Mellon
•     “Financial expert” as defined by applicable SEC and NYSE listing rules and regulations
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graphic
 
ELIASElias J.

SABO
Sabo
Chief Executive Officer

of the Company



Director since
May
May 2018
​​
Appointed Director not upNot Standing for Re-election

Election

Experience:

•    Chief Executive Officer (May 3, 2018(2018 to present)

•    Founding partner of the Company’s Manager in 1998

•    Investment Committee Member of the Company’s Manager (1998 to present)

•    Central role in directing the Company’s strategy

• Currently serves as a director and as Chairman of the Company’s Advanced Circuits, Inc., subsidiary
•    Served as the ChairmanChair of Fox Factory Holding Corp. (NASDAQ:FOXF), a former Company subsidiary (2007 to 2017)

•    Worked in the acquisition department of Colony Capital, LLC, a Los Angeles-based real estate private equity firm (1992 to 1996)

•    Healthcare investment banker for CIBC World Markets, formerly Oppenheimer & Co. (1996 to 1998)


Education:
Education:
•    Graduate of Rensselaer Polytechnic Institute


Qualifications:
Qualifications:
•    Leadership experience

•    Extensive understanding of investment activities

•    Public company experience with respect to governance and risk management

•    Deep understanding of the operations, history, and culture of the Company and its subsidiaries, as
well as historic knowledge that provides continuity to our Board
Recommendation of the Board
Our Board recommends that you vote FOR ALL the director nominees listed to be elected to our Board, in each case, for a one-year term ending at our 2024 Annual Meeting of Shareholders.
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Board of Directors, Executive

Officers and Committees
Certain Information Regarding our Directors and Executive Officers

The name and age of each director, nominee and executive officer and the positions held by each of them as of March 31, 202228, 2023 are as follows:
​
Director
​
Age
​
Serving as Officer or Director Since
​
Position
​
Director
​
Age
​
Serving as Officer or Director Since
​
Position(s)
​
​
Alexander S. Bhathal
​
46
​
2022
​
Director
​
Larry L. Enterline
​
70
​
2019
​
Chair/Director
​
​
James J. Bottiglieri
​
66
​
2005
​
Director
​
Alexander S. Bhathal
​
47
​
2022
​
Director
​
​
Gordon M. Burns
​
69
​
2008
​
Director
​
James J. Bottiglieri
​
67
​
2005
​
Director
​
​
C. Sean Day
​
72
​
2006
​
Chair/Director
​
Gordon M. Burns
​
70
​
2008
​
Director
​
​
Harold S. Edwards
​
56
​
2006
​
Director
​
C. Sean Day
​
73
​
2006
​
Director
​
​
Larry L. Enterline
​
69
​
2019
​
Independent Lead Director/Director
​
Harold S. Edwards
​
57
​
2006
​
Director
​
​
Sarah G. McCoy
​
61
​
2017
​
Director
​
Nancy B. Mahon
​
58
​
N/A
​
Director Nominee
​
​
Elias J. Sabo
​
51
​
2018
​
Director / Chief Executive Officer
​
Sarah G. McCoy(1)
​
62
​
2017
​
Director
​
​
Teri R. Shaffer
​
61
​
2022
​
Director
​
​
Elias J. Sabo
​
52
​
2018
​
Director/Chief Executive Officer
​
​
Ryan J. Faulkingham
​
46
​
2013
​
Chief Financial Officer/Co-Compliance Officer
​
(1)
Ms. McCoy is not standing for re-election at the 2023 Annual Meeting.
Ryan J. Faulkingham has served as Chief Financial Officer and Co-Compliance Officer of the Company since November 2013. He also serves on the Investment Committee of the Company’s Manager.Manager, as well as the organization’s ESG Committee. Mr. Faulkingham joined the Company in 2008 and previously was the Company’s Director of Financial Reporting. Prior to joining us in 2008, Mr. Faulkingham served as a Vice President at Merrill Lynch & Co., a financial management and advisory company, where he prepared regulatory filings, performed technical accounting research and implemented policies to ensure compliance with internal control standards. From 2003 to 2006, he served as Manager, Accounting and External Reporting at WebMD Health Corp., a medical information company, serving as a key contributor to the company’s 2005 initial public offering and lead finance member for numerous mergers and acquisitions. Prior to that, Mr. Faulkingham had a career in public accounting first at Arthur Andersen LLP and later at KPMG LLP, both public accounting firms. He received a BS in Accounting from Lehigh University and an MBA from Fordham University. Mr. Faulkingham serves as a director for our Velocity Outdoor Inc. subsidiary and as an observer to the boards of directors of all our other subsidiary companies.
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Board Leadership Structure and Role in Risk Oversight

GENERALLY
The LLC Agreement provides that the chairpersonchair of the Board is elected by a majority of the Board and must also be a member of the Board. The chairpersonchair is not required to be an employee of the Company. Likewise, the LLC Agreement provides that, so long as the Sixth Amended and Restated Management Services Agreement entered into by and between the Company and the Manager effective as of September 30, 2014, as amended through the date hereof, which we refer to as the “Management Services Agreement”, is in effect, the Company’s Manager shall second personnel to serve as the chief executive officer and chief financial officer of the Company, subject to the formal election of such individuals by the Company’s Board. Although there is no requirement that the chief executive officer and the chairpersonchair be separate positions, the Board has currently chosen to separate the chief executive officer and chairpersonchair positions. Mr. Larry L. Enterline, an independent director, was appointed as Chair of the Board effective as of July 2, 2022. The Board believes the current separation of these roles helps to ensure good Board governance and fosters independent oversight to protect the
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long-term interests of the Company’s private and institutional shareholders. In addition, the Board believes this separation is presently appropriate as it allows our chief executive officer to focus primarily on leading the Company’s day-to-day business and affairs while the Board’s chairpersonchair can focus on leading the Board in its consideration of strategic issues and monitoring corporate governance and shareholder matters. In furtherance of its dedication to strong corporate governance, the Board created the new positionin February of independent lead director in July 2019. In addition, on February 10, 2022, the Board approved amendments to the LLC Agreement to declassify the Board, which was previously divided into three classes serving staggered three-year terms. AtAccordingly, at each Annual Meeting, beginning with this year’s Annual Meeting,annual meeting of shareholders each director (other than any director appointed by the Allocation Member of the Company) will be elected for a term of office to expire at the next Annual Meetingannual meeting following his or her election. In addition, in March of 2023, the Board appointed a female director, Ms. Teri R. Shaffer, to a Board leadership position, as Chair of the Board’s audit committee.
RISK OVERSIGHT
The Company’s Board has overall responsibility for risk oversight. In furtherance of this responsibility, during 2022, the Board added a director with risk oversight, and specifically, cybersecurity experience. The Company’s general counsel presents, and the Board assesses, at least annually, an assessment of the critical legal and regulatory risks associated with the businesses of the Company and each of its subsidiaries, the overall risk environment for the Company’s business, as well as the steps
taken by the appropriate management team, if any, to mitigate any such risks. The Board also performs a majoritysignificant portion of its role in risk oversight through the audit committee. The audit committee charter provides that the audit committee shall assist the Board in fulfilling its oversight responsibility relating to the evaluation of enterprise risk issues. In addition, the audit committee, pursuant to its charter, discusses with management, counsel, the vice president of internal audit and internal audit service providers, as the case may be, and the independent auditors, the Company’s major risk exposures (whether financial, operational or both) and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies. The Company’s internal audit department supervises the day-to-day risk management responsibilities of the Company through its internal audit review processes which are performed at the Company level, as well as at each Company subsidiary. The internal audit department tailors its review to provide enhanced evaluations in specific areas which have included, without limitation, fraud, cybersecurity, adequacy of insurance, gift and entertainment and other spending.spending, and business continuity. Our internal audit team reports directly to the audit committee, which is comprised solely of independent directors. In addition, during each quarterly meeting of the audit committee, the members of the audit committee meet with the Company’s vice president of internal audit and independent auditors, in each case, without management present, to discuss the specific areas of risk identified during the quarter, if any. The audit committee is authorized to utilize outside lawyers, internal staff, independent
experts, and other consultants to assist and advise the committee in connection with its responsibilities, including the evaluation of the Company’s major risk exposures. The Company’s management team, including Company counsel, regularly evaluates the risks inherent to the businesses of the Company’s subsidiaries and reports the results of such evaluations to the full Board for consideration at least annually and more frequently if the particular facts and circumstances dictate. The Board also oversees environmental, social and governance (ESG)ESG matters generally as part of its oversight of our business strategy and risk management, and the Board’s standing committees each oversee specific ESG matters that fall within their respective areas of responsibility. For example, the audit committee has oversight responsibility forof compliance matterswith the organization’s periodic reporting and disclosure obligations and the nominating and corporate governance committee has responsibility for overseeing the organization’s policies with respect to corporate social responsibility and global corporate citizenship, as well as ensuring that the Company maintains strong governance practices. The Board and its standing committees regularly discuss with management a variety of ESG topics that are significant to our business and stakeholders. The Board believes that the foregoing processes for overseeing risk ensures that
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independent directors are aware of the Company’s major risk exposures. The Company’s chief compliance officer reports directly to the CEO and briefs the board regularly on matters of ethics and compliance. In addition, if there are particular areas of exposure or applicable emerging areas of risk, for which directors do not already have expertise or familiarity, the Company leverages the expertise of management and/or outside advisors to provide training sessions to the Board. During fiscal year 2022, for example, our Board received specific training on the SEC’s proposed rules regarding the Enhancement and Standardization of Climate-Related Disclosures for Investors.
Board Meetings and Committees

While it is understood that practical considerations may limit a director from attending each Board meeting and each meeting for those committees on which he or she serves, it is expected that each of our directors will endeavor to attend substantially all of such meetings and to attend in person whenever possible. In addition, to ensure compliance with Item 407(b) of Regulation S-K, it is expected that each director will, at an absolute minimum, for each fiscal year of such director's service, attend at least 75% of the aggregate of (i) the total number of meetings of the Board (held during the period for which such director served as a director), and (ii) the total number of meetings held by all committees of the Board on which such director served (during the periods that such director served). Directors are also encouraged to attend meetings held by all committees of the Board, whether or not serving on such committee. Our Board met fifteenten times during 2021.2022. All directors attended over 95%90% of the combined Board and committee meetings on which they served in 2021.2022. Although we have no formal policy regarding director attendance at the Annual Meeting of Shareholders, directors are encouraged to attend. All of the Company’s directors attended the 20212022 Annual Meeting of Shareholders.
The LLC Agreement gives our Board the authority to delegate its powers to committees appointed by the Board. All of our standing committees are composed solely of independent directors, as defined by the applicable NYSE committee membership independence standards. Our committees are required to conduct meetings and take action in accordance with the directions of the Board, the provisions of our LLC Agreement and the terms of the respective committee charters. We have three standing committees: the audit committee, the compensation committee and the nominating and corporate governance committee. Each of the audit committee, compensation committee andThe nominating and corporate governance committee may not delegate any of its authority to subcommittees, but each of the audit committee and compensation committee may not do so, unless otherwise authorized by the Board. Copies of all current
committee charters are available on our website at www.compassdiversified.com, and in print from us without charge upon request by writing to Investor Relations at our principal executive offices located at 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880. The information on our website is not, and shall not be
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deemed to be, incorporated by reference into this proxy statement or incorporated into any other filings that the Company or the Trust makes with the SEC.
AUDIT COMMITTEE
The audit committee is comprised entirely of independent directors who meet the independence requirements of the NYSE and Rule 10A-3 of the Exchange Act and includes at least one “audittwo “audit committee financial expert,experts,” asalthough only one such expert is required by applicable SEC regulations. Our standing audit committee, iswhich has been established in accordance with Section 3(a)(58)(A) of the Exchange Act. The audit committeeAct, is responsible for, among other things:
retaining and overseeing our independent accountants;
assisting the Board in its oversight of the integrity of our financial statements, the qualifications, independence and performance of our independent auditors and our compliance with legal and regulatory requirements;
reviewing and approving the plan and scope of theour internal and external audit;
pre-approving any audit and non-audit services provided by our independent auditors;
approving the fees to be paid to our independent auditors;
reviewing with our chief executive officer, and chief financial officer and independent auditors the adequacy and effectiveness of our internal controls;
reviewing and approving the calculation of the profit allocation payments, if any, to be made to the Allocation Member;
preparing the audit committee report to be filed with the SEC;
reviewing hedging transactions; and
reviewing and assessing annually the audit committee’scommittee's performance and the adequacy of its charter.
Messrs. Ewing, Bottiglieri, Enterline, and EnterlineEdwards served on our audit committee from January 1, 20212022 through October 21, 2021. Mr. Ewing served as chairman of our audit committee up and through October 21, 2021.July 2, 2022. Effective as of October 21, 2021, Mr. Bottiglieri was appointed as chairman of our audit committee in the place and stead of Mr. Ewing and Mr. EdwardsJuly 2, 2022, Ms. Shaffer was appointed to the Audit Committee in January 2022 to replace Mr. Ewing.Enterline. The current audit committee members are Messrs. Bottiglieri, EnterlineEdwards, and Edwards.Ms. Shaffer. Mr. Bottiglieri served as chair of our audit committee for all of fiscal year 2022 and up and through April 1, 2023. Ms. Shaffer was appointed as chair of our audit
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committee effective as of April 1, 2023. The Board has determined that each of Mr. Bottiglieri the audit committee chairman,and Ms. Shaffer, qualifies as an audit committee financial expert, as defined by the SEC. The audit committee met six times during 2021.2022. All audit committee members attended 100% of the committee’s meetings during 2022.
COMPENSATION COMMITTEE
The compensation committee is comprised entirely of independent directors who meet the compensation committee independence requirements of the NYSE. In accordance with the compensation committee charter, the members are “outside directors”“outside directors” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended, and “non-employee directors”“non-employee directors” within the meaning of Section 16 of the Exchange Act. The responsibilities of the compensation committee include, among other things:
reviewing our Manager’s performance of its obligations under the Management Services Agreement;
reviewing the remuneration of our Manager and approving the remuneration paid to our Manager as reimbursement for the compensation paid by our Manager to our chief financial officer and the chief financial officer’s staff;
determining the compensation of our independent directors;
granting rights to indemnification and reimbursement of expenses to the Manager and any seconded individuals; and
making recommendations to the Board regarding equity-based and incentive compensation plans, policies and programs.
In early 2022,2023, consistent with prior years, the Company conducted a survey of the director compensation practices of other companies that it considered reasonably comparable to the Company. At that time, the compensation committee also engaged Mercer (USA) Inc., to perform a review of the Company’s non-management director compensation relative to the compensation paid to non-management directors by certain entities identified as being within the Company’s peer group. Mercer (USA) Inc. provided a peer analysis but did not make specific compensation recommendations. The compensation committee targets cash and equity compensation for the Company’s directors at the average of its peer group. The compensation committee also considered the time commitment, responsibilities, and related burdens of Board service over the Company’s history. Based upon this review, the compensation committee recommended to the full Board that the annual compensation paid to non-management directors, including the chairmanchair of the Board, not be increased for fiscal year 2022.2023. The full Board ratified the compensation committee’s recommendation on February 16, 2023. For a discussion of director compensation see the section titled “DIRECTOR COMPENSATION.” The full Board ratified the compensation committee’s recommendation on February 10, 2022.
The Company’s Manager is responsible for establishing the form and amount of compensation paid to our chief financial officer and histhe chief financial officer’s staff by our Manager.
The Company’s compensation committee is responsible for approving the
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remuneration paid to our Manager as reimbursement for the compensation paid by our Manager to our chief financial officer and his staff. Mr. Sabo, our chief executive officer, in his capacity as the managing member of our Manager, participates in the establishment of the form and amount of compensation paid to our chief financial officer and his staff by our Manager. Mercer (USA) Inc., a third-party consulting firm, was engaged by the Company in early 2023 to provide executive compensation benchmarking services with respect to the compensation of our chief financial officer and his staff. Mercer provided a peer analysis but did not make specific compensation recommendations. The compensation committee typically engages a third party to perform a review of non-management director compensation every other year. Mercer (USA) Inc. did not provide any additional services to the Company in 2022 beyond executive compensation benchmarking services with respect to the compensation of our chief financial officer and his staff. Messrs. Edwards, as compensation committee chairman, Ewingchair, and Burns served on our compensation committee from January 1, 2021 through December 31, 2021.for all of 2022. Mr. Bhathal joined our compensation committee in February of 2022. Mr. Edwards, as chairman,chair, and Messrs. Burns and Bhathal currently serve in such roles. The compensation committee met two times during 2021.2022.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
The nominating and corporate governance committee is comprised entirely of independent directors who meet the independence requirements of the NYSE. The nominating and corporate governance committee is responsible for, among other things:
recommending the number of directors to comprise the Board and recommending candidates for membership on each committee of the Board;
identifying and evaluating individuals qualified to become members of the Board, other than the Allocation Member’s appointed director and his or her alternate, and soliciting recommendations for director nominees from the chairman and chief executive officer of the Company;alternate;
recommending to the Board the director nominees for each annual shareholders’shareholders' meeting, other than the Allocation Member’s appointed director;
recommending to the Board the candidates for filling vacancies that may occur between annual shareholders’shareholders' meetings, other than the Allocation Member’s appointed director;
reviewing independent director compensation and Board processes, self-evaluations and policies;
monitoring the performance of the Board and its individual members;
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reviewing and approving related party transactions, including transactions with the Manager and its affiliates;
overseeing compliance with our code of ethics, anti-corruption policy, and conduct by our officers and directors; and
monitoring developments in the law and practice of corporate governance.
governance;
subject to the Management Services Agreement, overseeing the annual evaluation of the individuals seconded to the Company by the Manager, including, the chief financial officer and his/her staff;
recommending for election by the full Board an acting successor chair, in the event of the death, incapacity, resignation or other absence (temporary or permanent) of the Board’s chair; and
assisting management in developing, and maintaining the Company’s ESG policies.
Messrs. Burns, as nominating and corporate governance committee chairman,chair, Bottiglieri, Edwards, and Enterline served on our nominating and corporate governance committee during 2021from January 1, 2022 through July 2, 2022. Ms. McCoy (who is not standing for re-election at our Annual Meeting), and Mr. Bhathal were each appointed to our nominating and corporate governance committee on July 2, 2022 and Mr. Enterline stepped down from such committee concurrent with these appointments. Mr. Burns, as chairman,chair, and Messrs. Bottiglieri, Bhathal and EnterlineMs. McCoy currently serve in such roles. Subject to the formal election of Ms. Mahon during our Annual Meeting, the Board expects to appoint Ms. Mahon to our nominating and corporate governance committee, effective as of May 25, 2023, in the place and stead of Ms. McCoy. Mr. Bhathal serves as the Board’s liaison to the Company’s management team with respect to ESG matters. The nominating and corporate governance committee met threefour times during 2021.2022. All nominating and corporate governance committee members attended 100% of the committee’s meetings during 2022.
INDEPENDENT LEAD DIRECTOR
DIRECTOR.The independent lead director position ensureswas created to ensure that the Board of Directors has a director in a leadership position that is “independent”“independent” under all applicable rules of the NYSE and the SEC. The independent lead director is elected by the Board’s independent directors. The Company’s independent directors initially appointed Mr. EwingLarry L. Enterline served as the independent lead director of the Company’s Board in July 2019 and he served in such role up and untilfrom October 21, 2021. As of that date,2021 through July 2, 2022. Mr. Larry L. Enterline was appointed by the Company’s independent directorsresigned his position as the Company’s independent lead director in the place and stead of Mr. Ewing, to serve at the pleasureconcurrent with his appointment as chair of the Board. Currently, there is no director serving as independent directors, or until his earlier resignation or removal.lead director of the Company, as the chair of the Company’s
Board has been deemed independent by our directors. The specific responsibilities of the independent lead director are as follows:
chair the meetings of the independent directors when the Chairmanchair of the Board is not present or unable to preside due to conflicts of interest;
ensure the full participation and engagement of all Board members in deliberations;
lead the Board in all deliberations involving any matter for which a conflict of interest exists with the Chairman;chair of the Board;
encourage all directors to engage the Chairmanchair of the Board with interests and concerns;
work with the Chairmanchair of the Board to develop the Board and Committeecommittee agendas and approve the final agendas; and
be available for consultation and direct communication with major shareholders if and when the Chairmanchair of the Board is unavailable.
Compensation Committee Interlocks and Insider Participation

None of the members of our compensation committee, Messrs. Edwards, Burns, Edwards, and Bhathal, are, or have been, an officer or employee of the Company. During 2021,2022, no member of our compensation committee, consisting of Messrs. Edwards, Burns, and Ewing,Bhathal, had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K. None of our executive officers serves on a board of
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directors or compensation committee of a company that has an executive officer serving on our Board or compensation committee.
Material Legal Proceedings Involving Directors and Executive Officers

Currently, there are no material proceedings to which any of our directors, director nominees, officers, affiliates, any owners of record or beneficially of more than five percent of any class of voting securities, or any associate of any such director, director nominee, officer, affiliate, or security holder is a party adverse to us or any of our subsidiaries or has a material interest adverse to us or any of our subsidiaries.
Executive Sessions of our Board

Our corporate governance guidelines provide that the non-management directors will meet without management directors in regularly scheduled executive sessions at least quarterly and at such other times as they deem appropriate. The
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To the extent that any non-management directors are not independent directors, alsothe independent directors will meet in regularly scheduled executive sessionsessions at least quarterly.once annually. In accordance with our corporate governance guidelines, the chairpersonchair of the Board, audit committee, nominating and corporate governance committee, compensation committee, or the independent lead director will preside at these executive sessions of the non-management directors and independent directors, as determined by the independent directors based upon the subject matter to be discussed. Mr. Day presided and continues to preside, over sessions of the non-management directors. Updirectors up and until October 21, 2021, Mr. Ewing presided over sessions of the independent directors. Effective as of October 21, 2021,July 2, 2022. Mr. Enterline presided over executive sessions of independent directors during fiscal year 2022, and over executive sessions of non-management directors and independent directors beginning on July 2, 2022. Mr. Enterline continues to preside over executive sessions of the non-management and independent directors. Our non-management directors met eightfive times during 2021.2022 and our independent directors met one time during 2022.
Nominations of Directors

As provided in its charter, the nominating and corporate governance committee will identifyidentifies and recommendmakes recommendations to the Board with respect to nominees for election or re-election to the Board.Board at our annual meetings of shareholders. The nominating and corporate governance committee casts a wide net in seeking director candidates, including, reviewing candidates for the Board recommended by executivewhen necessary, engaging external director search firms, as well as the Company’s existing Board and management team, who know the Company best, as well asand considering candidates recommended by investors, shareholders, and others, allto engage in accordance with the following criteriaa thorough and as discussed in the section titled “Shareholder Nominations of Directors” below.exhaustive search for candidates.
The nominating and corporate governance committee, in making its recommendations regarding Board nominees, may consider some or all of the following factors, criteria and qualifications, among others:
(a) possess fundamental qualities of intelligence, honesty, perceptiveness, good judgment, maturity, high ethics and standards, integrity, fairness and responsibility; (b) have a genuine interest in the candidate’s judgment, skill,Company and experience witha recognition that, as a member of the Board, each director is accountable to the stockholders of the Company; (c) have a background that demonstrates an understanding of business and financial affairs of other organizations of comparable or larger purpose, complexity and size, and subject to similar or greater legal restrictions and oversight;
the relationship of the candidate’s experience to the experience of other Board members;
the extent to which the candidate would (d) be a valuable addition to the Board and any committees thereof;
whether or not the person has any relationships that might impair his or her independence, including any business, financial or family relationships with the Manager or the Company; and
the candidate’s abilityable to contribute to the effective managementoversight of the Company, taking into account the needs of the Company and such factors as the individual’s experience, perspective, skills and knowledge of the industries in which the Company operates.and its subsidiaries operate; (e) have no conflict
of interest or legal impediment that would interfere with the duty of loyalty owed to the Company and its stockholders; (f) have no relationships that might impair his or her independence, including, but not limited to, business, financial or family relationships with the Company’s management; (g) have the ability and be willing to spend the time required to function effectively as a director; (h) possess skills necessary for service on Board committees; (i) be compatible and able to work well with other directors and executives in a team effort with a view to a long-term relationship with the Company as a director; (j) have independent opinions and be willing to state them in a constructive manner, and (k) have qualities that will strengthen the Board and contribute to the overall mix of considerations identified above. These criteria are set forth in the nominating and corporate governance committee charter. The nominating and corporate governance committee will consider director candidates recommended by Company shareholders, in accordance with the criteria and as discussed in the below section titled “Shareholder Nominations of Directors.”
The nominating and corporate governance committee also evaluates annually the size and composition of the Board and each long-standing committee. Under the Company’s corporate governance guidelines, directors must inform the chair of the Board and the chair of the nominating and corporate governance committee in advance of accepting an invitation to serve on another public company board or any committee thereof. In recommending candidates for election as directors, the nominating and corporate governance committee will also take into consideration the need for the Board to have a majority of directors that are independent under the requirements of our governing documents, the NYSE and other applicable laws.
In addition,Diversity
The Company believes that differences in experience, knowledge skills and viewpoints, enhance the Board’s overall performance. Accordingly, the nominating and corporate governance committee will recommend candidates for election as directors based oncharter provides that the following criteria and qualifications:
Financial Literacy. Such person should be “financially literate” as such qualification is interpreted by the Board in its business judgment.
Leadership Experience. Such person should possess significant leadership experience, such as experience in business, finance/accounting, law, education or government, andcommittee shall possess qualities reflecting a proven record of accomplishment and ability to work with others.
Commitment to our Company’s Values. Such person shall be committed to promoting our financial success and preserving and enhancing our reputation and shall agree with our values as embodied in our code of ethics.
Absence of Conflicting Commitments. Such person should not have commitments that would conflict with the time commitments of a director of our Company.
Complementary Attributes. Such person shall have skills and talents which would be a valuable addition to the Board and any committees thereof and that shall complement the skills and talents of our existing directors.
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Reputation and Integrity. Such person shall be of high repute and integrity.
As a Company that has interests in many diverse operating entities, seeking leadership that is diverse in the wide array of ways in which diversity can manifest itself, including diversity of personal attributes as well as diversity of ethnicity, culture, religious beliefs, experiences, skills and age is always valuable. Each of the Company’s operating businesses, under the direction of the Company as its majority shareholder, elects its own board of directors and appoints its own executive management team. Several diverse individuals, based on gender, ethnicity, religion, nationality, and military service experience currently hold leadership positions at the Company’s subsidiaries, either as members of a subsidiary board of directors and/or within the executive management teams. At the Company level specifically, although there is no written formal policy regarding the consideration ofconsider diversity in identifyingselecting, evaluating and recommending proposed director nominees, diversity is one of the criteria evaluated wholistically throughout our organization, in conjunction with our subsidiaries and specifically by the nominating and corporate governance committee when selecting Board nominees and re-electing Board members.candidates. The nominating and corporate governance committee regularly engages in active discussions regarding diversity among directors and director nominees, including diversity of attributes, such as race, gender, ethnicity, sexual orientation, as well as diversity of viewpoint, experiences, skills, ages, cultural beliefs and backgrounds. The nominating and corporate governance committee charter provides that the committee endeavor to solicit as director candidates individuals possessing skills and talents which would complement the skills and talents of the Company’s existing directors. In addition, before recommending that the Board nominate each new director candidate or re-nominate each incumbent director, the nominating and corporate governance committee assesses to what extent such individual’s contributions will enhance the effectiveness of the Board and its committees given its overall current composition. Each year, the Board assesses the effectiveness of its diversity efforts, among other items, during its annual self-evaluation process. Over the past two years, the Board has nominated two female directors, as well as two directors
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who self-identify as being a member of an underrepresented ethnic/racial or LGBT+ community to further enhance the diversity among its members. The Board also supports and sets expectations to drive equity in representation of senior leadership and critical roles held by women, historically ethnic/racial minorities, and other underrepresented groups across the organization.
As an organization that owns subsidiaries in a wide array of industries, seeking leadership that is diverse, including diversity of personal attributes as well as diversity of ethnicity, culture, religious beliefs, experiences, skills, age is always valuable. Several diverse individuals, based on gender, religion, military service experience or who self-identify as being a member of an underrepresented ethnic/racial or LGBT+ community currently intends to add another female or a racially or ethnically diverse member before the 2023 Annual Meeting of Shareholders. The nominating and corporate governance committee evaluates annually the composition of the Board and each long-standing committee. Underhold leadership positions at the Company’s corporate governance guidelines,subsidiaries, either as members of a subsidiary board of directors must informand/or within the chairman of the Boardexecutive management teams.
During 2022, and the chairman of the nominating and corporate governance committeeagain in advance of accepting an invitation to serve on another public company board or any committee thereof.
During 2021,2023, the nominating and corporate governance committee, on behalf of the Company and at the Company’s cost and expense, engaged SpencerStuart, a third-party executive search firm to identify, evaluate, and assist with the recruitment of potential director nominee candidates and to evaluate and screen any director nominee candidates identified by the Company’s executive management team, current board members or others. Diversity was one of the specific criteria established by the Board with respect to such recruitment process.
Shareholder Nominations of Directors

The Board understands that shareholders have a financial stake in the success of the Company and therefore the Board takes seriously any director suggestion or nomination coming from a shareholder. To make a director nomination, a shareholder must give written notice to our Secretary at our principal executive offices located at 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880, Attention: Investor Relations.General Counsel and Secretary. In order for a notice to be timely, it must be delivered to our Secretary at the principal executive office described in the preceding sentence not less than 120 days or more than 150 days prior to the first anniversary of the preceding year’s Annual Meeting.annual meeting. In the event that the date of the Annual Meetingannual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by a shareholder must be so delivered not earlier than the close of business on the 120th day prior to such Annual Meetingannual meeting and not later than the 90th day prior to such Annual Meetingannual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made by the Trust.
When directors, other than directors appointed by the Allocation Member, are to be elected at a special meeting, such notice must be given not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which a public announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting.
In addition to any other requirements, for a shareholder to properly bring a nomination for director before either an annual or special meeting, the shareholder must be a shareholder of record on both the date of the shareholder’sshareholder's notice of nomination and the record date relating to the meeting.
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The shareholder submitting the recommendation must submit:
the shareholder’s name and address as they appear on the share register of the Trust, as well as the name and address of the beneficial owner, if any, on whose behalf the nomination is made;
the class and number of shares of Trust which are owned beneficially and of record by such shareholder and a representation that such shareholder will notify the Trust in writing of the class and number of such shares owned of record and beneficially as of the record date for the meeting within five business days after the record date for such meeting;
a description of any agreement or arrangement with respect to such nomination, and a representation that the proposing shareholder will notify the Trust in writing of any such agreement or arrangement in effect as of the record date for the meeting within five business days after the record date for such meeting;
a description of any agreement or arrangement by or on behalf of the proposing shareholder, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of such person or any of their affiliates or associates with respect to shares of the Trust, and a representation that the proposing shareholder will notify the Trust in writing of any such agreement or arrangement in effect as of the record date for the meeting within five business days after the record date for such meeting;
a representation that such shareholder is a holder of record of shares of the Trust entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice;
a representation whether the proposing shareholder intends to deliver a proxy statement and/or form of proxy
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to holders of at least the percentage of the outstanding shares required to approve the nomination and/or otherwise to solicit proxies from shareholders in support of the nomination; and
any other information relating to such shareholder and beneficial owner, if any, required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in an election contest pursuant to and in accordance with Regulation 14A under the Exchange Act.Act (including Rule 14a-19).
In addition, any such notice from a shareholder recommending a director nominee must include the following information:
the candidate’s name, age, business address and residence address;
the candidate’s principal occupation or employment;
the number of shares of Trust common stock that are beneficially owned by the candidate; candidate;
any other information relating to such candidate that would be required to be disclosed in solicitations of proxies for election of directors under the federal securities laws, including Regulation 14A of the Exchange Act; and
a written statement and agreement executed by each such candidate acknowledging that such person (i) person:
consents to being named in the proxy statement as a nominee and to serving as a director if elected, (ii) elected;
intends to serve as a director for the full term for which such person is standing for election; and (iii) 
makes the following representations: (x) 
that the candidate is not and will not become a party to any agreement, arrangement or understanding with, and has not given any assurance to, or made any commitment to, any person or entity as to how such person, if elected as a director, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed or any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected, as a director, with such person’s fiduciary or other duties; and (y)
that the candidate is not and will not become a party to any agreement, arrangement or understanding with any person or entity with respect to any direct or indirect compensation, reimbursement or indemnification in connection with such person’s nomination for director or service as a director that has not been disclosed.
We may require any proposed nominee to furnish any additional information that we reasonably require to enable our nominating and corporate governance committee to determine the eligibility of the proposed nominee to serve as a director. Candidates are evaluated based on the standards, guidelines and criteria discussed above as well as other factors contained in the nominating and corporate governance committee’s charter, our corporate governance guidelines, our other policies and guidelines and the current needs of the Board.
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Corporate Governance
Corporate Governance Guidelines and Code of Ethics

Our Board has adopted corporate governance guidelines that set forth our corporate governance objectives and policies and govern the functioning of the Board. Our corporate governance guidelines are available on our website at www.compassdiversified.comand in print from us without charge upon request by writing to Investor Relations at Compass Group Diversified Holdings LLC, 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880.
We have also adopted a code of ethics that sets forth our commitment to ethical business practices. Our code of ethics applies to our directors officers and employees,officers, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions; it also applies to the officers and employees of our Manager involved in the oversight of the day-to-day operations of the Company and its subsidiaries. Our code of ethics is available on our website at www.compassdiversified.com and in print from us without charge upon request by writing to Investor Relations at Compass Group Diversified Holdings LLC, 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880. We intend to disclose any amendments to, or waivers from, our code of ethics by posting such information on our website listed above or by filing with the SEC a Current Report on Form 8-K, in each case, if such disclosure is required by rules of the SEC or the NYSE.
Communications with our Board

Our Board knows that the caliber of the information it collects is important to the caliber of the work it does. The Board therefore has created numerous practices to enable it to stay informed, and information from shareholders comprises an important part of this mix.
Our Board has therefore created numerous ways to receive shareholder input. Our ChairmanChair and, as applicable, Independent Lead Director have shareholder engagement roles and are available for appropriate engagement. Shareholders can interact with our directors at our Annual Meeting.annual meeting. Shareholders and others can use our confidential and anonymous financial reporting hotline,hotline: https://www.whistleblowerservices.com/codiwb/, and if information provided is of a type that the Board needs to consider, it will be sent to them. Shareholders can send emails to the Board via BOD@compassdiversified.com. In addition, communications to our Board, to non-management directors as a group or to any director individually may be made by writing to the following address:
Attention: [Board of Directors] [Board Member]

c/o Carrie W. Ryan, General Counsel & Secretary

301 Riverside Avenue, Second Floor

Westport, Connecticut 06880

Communications sent to the physical mailing address are forwarded to the relevant director, if addressed to an individual director, or to the ChairmanChair of our Board andand/or, as applicable, our Independent Lead Director, if addressed to the Board.
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Certain Relationships and

Related Party Transactions
Policy for Approval of Related Person Transactions

Our nominating and corporate governance committee, which is composed entirely of independent directors, is responsible for reviewing and approving, prior to our entry into any such transaction, all transactions in which we are a participant and in which any of the following related parties have or will have a direct or indirect material interest:
our chief executive officer and/or chief financial officer;
our directors; and
other members of the management team involved in the oversight of the day-to-day operations of the Company and its subsidiaries.
Pursuant to the written terms of our code of ethics, any transaction required to be disclosed pursuant to Item 404 of Regulation S-K (“related party transactions”transactions”) must be brought to the attention of and reviewed and approved for potential conflicts of interest by our nominating and corporate governance committee. The Company may not enter into or engage in any related party transaction with a related party without such approval. Additionally, all related party transactions are to be considered and conducted in a manner such that no preferential treatment is given to any such dealing of transactions. All related party transactions involving an acquisition from or sale to an affiliate of our Manager, including any entity managed by an affiliate of our Manager, must be submitted to the nominating and corporate governance committee for pre-approval. Details of related party transactions will be publicly disclosed as required by applicable law.
Relationships with Related Parties

OUR MANAGER
Our Manager (of which our chief executive officer serves as the managing member) manages the day-to-day operations of the Company and oversees the management and operations of our subsidiary businesses. Our relationship with our Manager is governed principally by the Management Services Agreement.
While our Manager provides management services to the Company, our Manager is also permitted to provide services, including services similar to the management services provided to us, to other entities. In this respect, the Management Services Agreement and the obligation to provide management services does not create a mutually exclusive relationship between our Manager and the Company or our businesses. As such, our Manager, and our management team, will be permitted to engage in other business endeavors. Mr. Faulkingham, as chief financial officer of the Company, devotes a substantial portion of his time to our affairs.
Our Manager receives management fees, offsetting management fees, fees under any integration services agreements, if any, and expense reimbursementsreimbursement for certain expenses it incurs on behalf of the Company related to the foregoing, and uses such proceeds to pay the compensation, overhead, out-of-pocket and certain other expenses of our Manager, to satisfy its contractual obligations and otherwise distributes such proceeds to the members of our Manager, which includes Mr. Sabo, our chief executive officer, in accordance with our Manager’s organizational documents. No other officers or directors of the Company own equity in our Manager.
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Contractual Arrangements with Related Parties

MANAGEMENT SERVICES AGREEMENT
The Company and our Manager are parties to the Management Services Agreement pursuant to which we pay our Manager a quarterly management fee equal to 0.5% (2.0% annualized) of the Company’s adjusted net assets as of the last day of each fiscal quarter in respect of the services performed by our Manager. The management fee paid to our Manager is required to be paid prior to the payment of any distributions to shareholders. Pursuant to the Management Services Agreement, the Manager is entitled to enter into off-setting management services agreements with each of our operating subsidiaries. The management fee due to our Manager by the Company under the management services agreement is offset on a dollar for dollar basis by fees paid to our Manager by our subsidiary businesses under management services agreements that our Manager entered into with, or was assigned with respect to, our businesses, which we refer to assuch offsetting management services agreements. During 2020, the Company and our Manager entered into a waiver agreement whereby the Manager agreed to waive a portion of the management fee otherwise due and owing in respect of BOA Technology through December 31, 2021, so that the Manager received a 1% annual management fee related to BOA Technology, rather than the 2% fee provided for in the Management Services Agreement. Such waiver reduced the management fee paid to the Manager for the fourth quarter of 2020 and the first through fourth quarters of 2021 by approximately $1.1 million per quarter. Additionally, during the fourth quarter of 2021, our Manager waived that portion of the management fee that would otherwise be due and owing on December 31, 2021 in respect of restricted cash held on the Company’s balance sheet. We incurred approximately $46.9$63.6 million of management fees under the Management Services Agreement during fiscal year 2021. The2022, approximately $56.6 of which were paid directly by the Company. During 2022, the Company reimbursed the Manager for expenses in the amount of approximately $5.4$6.5 million, principally for occupancy and staffing costs incurred by the Manger on behalf of the Company, during fiscal year 2022.
Waivers Under Management Services Agreement
During 2022, our Manager agreed to waive, for the year endedperiod through June 30, 2023, a portion of its management fee so that it would receive a 1% annual management fee related to PrimaLoft, Inc. rather than the 2% fee required under the Management Services Agreement. This resulted in a lower management fee at each of September 30, 2022 and December 31, 2022 than would normally have been due, and such reduction will continue through the quarter ending at June 30, 2023. During 2022, our Manager also agreed to exclude cash balances held at the Company at each of March 31, 2022 and June 30, 2022 from the calculation of the management fee for such periods.
During 2021, our Manager agreed to waive, for the period through December 31, 2021, a portion of the management fee and our Manager received a 1% annual management fee related to BOA Technology, Inc., rather than the 2% fee required under the Management Services Agreement.
This resulted in a lower management fee for fiscal year 2022 than would normally have been due. In the first quarter of 2021, our Manager agreed to waive the portion of the management fee related to the amount of the proceeds deposited with the trustee that was in excess of the amount payable related to the 2026 Senior Notes at March 31, 2021. Mr. Elias J. Sabo isAdditionally, the managing memberManager agreed to exclude cash balances held at the Company as of our Manager. No other officers or directorsDecember 31, 2021 from the calculation of CODI own equity in our Manager.the management fee for such period.
OFFSETTING MANAGEMENT SERVICES AGREEMENTS
Our Manager has entered into offsetting management services agreements with each of our subsidiaries and may, at any time in the future, enter into offsetting management services agreements directly with the businesses that we own relating to the performance by our Manager of offsetting management services for such businesses. All fees, if any, paid by the businesses that we ownour subsidiaries to our Manager pursuant to an offsetting management services agreement during any fiscal quarter offset, on a dollar-for-dollar basis, the management fee otherwise due and payable by the Company to our Manager under the Management Services Agreement for such fiscal quarter. The Manager is a party to offsetting
management services agreements with all of the Company’s subsidiaries. Offsetting management fees paid by our subsidiaries were approximately $6.2$7.0 million during fiscal year 2021.2022.
LLC AGREEMENT
The Company has two types of equity interests: trust interests and allocation interests. The Trust is the sole owner of 100% of the trust interests of the Company. Pursuant to the LLC Agreement, the Trust owns an identical number of trust interests in the Company as exist for the number of outstanding shares of stock of the Trust. Sostratus LLC, who we refer to as the Allocation Member, owns 100% of the Company’s allocation interests. ThePursuant to the LLC Agreement, sets forth the Allocation Member’s rights withMember is to entitled to receive, if it so elects, a payment representing the positive contribution based profit realized by the Company following the acquisition of a subsidiary, which we refer to as a “profit allocation payment”, upon the occurrence of a “Holding Event” (each five year anniversary of the acquisition of such subsidiary) or a “Sale Event” (a sale by the Company of a material amount of such subsidiary’s stock or assets), in each case, as defined in the LLC Agreement.
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If the Allocation Member elects to receive such payment in respect to its profit allocation interest among other things.
Theof a Holding Event or Sale Event of a subsidiary, the Company will make a profit allocation payment with respect to its businesses to the Allocation Member, upon the occurrence of certain events, if the Company’s profits with respect to a businesssuch subsidiary exceed an annualized hurdle rate of 7%, which hurdle is tied to such business’ssubsidiary’s adjusted net assets (as defined in the LLC Agreement) relative to the sum of all of our subsidiaries’ adjusted net assets. The calculation of profit allocation with respect to a particular businesssubsidiary will be based on:
such business’ssubsidiary’s contribution-based profit, which generally will be equal to such business’ssubsidiary’s aggregate contribution to the Company’s profit during the period such businesssubsidiary is owned by the Company; and
the Company’s cumulative gains and losses to date.
Generally, a profit allocation payment will be made in the event that the amount of profit allocation exceeds the annualized hurdle rate of 7% in the following manner: (i) 100% of the amount of profit allocation in excess of the hurdle rate of 7% but that is less than the hurdle rate of 8.75%, which amount is intended to provide the Allocation Member with an overall profit allocation of 20% once the hurdle rate of 7% has been surpassed; and (ii) 20% of the amount of profit allocation in excess of the hurdle rate of 8.75%. The Company’s audit committee, which is comprised solely of independent directors, approves the calculation of any profit allocation payment to be made to the Allocation Member. Certain members
Mr. Sabo, our chief executive officer and the managing partner of our Manager, as well as certain employees of our Manager, including Mr. Sabo andour chief financial officer, Mr. Faulkingham, beneficially owned (throughown (directly or indirectly) equity interests in the Allocation Member) 57.8%Member which entitles them to receive distributions from the Allocation Member when and if the Allocation Member receives a profit allocation payment from the Company. For the year ended at December 31, 2022, the foregoing individuals, as a group, were entitled to receive 62.0% of any profit allocation payment made to the allocation interestsAllocation Member and for the year ended at December 31, 2021, and 45%these individuals, as a group, were entitled to receive 57.8% of any such profit allocation payment. In addition, for the allocation interestsyears ended at December 31, 2020. Of2022 and 2021, one of the remaining 42.2% at December 31, 2021Company’s directors was entitled to receive 5.0% of any profit allocation made to the Allocation Member and 55% at December 31, 2020, approximately 5.0% was beneficially owned by CGI Diversified Holdings LP approximatelywas entitled to receive 5.0%
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was beneficially owned by the Chairman of our Board of Directors, and the remainingany such profit allocation interests were beneficially owned by thepayment. The former founding partners of the Manager (in each case, throughwere entitled to receive the remaining percent of any such profit allocation payments made during fiscal year 2022 and 2021.
There were no profit allocation payments made during the fiscal year ended December 31, 2022.
The following is a summary of the profit allocation payments made to the Allocation Member).Member during the fiscal year ended at December 31, 2021.
ProfitThe fifteen-year anniversary of the acquisition of Advanced Circuits Inc. occurred in May 2021 which constituted a Holding Event. The Company made a profit allocation payments are triggered uponpayment of $12.1 million to the occurrenceAllocation Member in July 2021 in respect of certain “Holding Events” and “Sale Events” as definedsuch Holding Event.
The Company consummated the divestiture of Liberty Safe & Security Products, Inc. in August of 2021 which constituted a Sale Event. The Company made a profit allocation payment of $16.8 million to the Company’s LLC Agreement. Allocation Member in October of 2021 in respect of such Sale Event.
The ten-year anniversary of the acquisition of Liberty Safe & Security Products, Inc. occurred in March 2020 andwhich constituted a Holding Event. The Allocation Member elected to defer the distribution of theits $3.3 million profit allocation payment that would otherwise be due and owning it until after the end of 2020.2021. The ten-year anniversary of the acquisition of The Ergo BabyErgobaby Carrier, Inc. occurred in September 2020 andwhich constituted a Holding Event. The Allocation Member elected to defer the distribution of theits $2.0 million profit allocation payment that would otherwise be due and owing it until after the end of 2020.2021. The profit allocation payments in respectpayment of $3.3 million related to the ten-yearLiberty Holding Events for eachEvent and the profit allocation payment of Liberty and Ergo$2.0 million related to the Ergobaby Holding Event were both paid to the Allocation Member in January of 2022. The fifteen-year anniversary of the acquisition of Advanced Circuits, Inc. occurred in May of 2021 and constituted a Holding Event. The Company paid the Allocation Member approximately $12.1 million in July of 2021 as a profit allocation payment in respect of the ACI Holding Event. Additionally, the Company paid to the Allocation Member approximately $16.8 million in in August of 2021 as a profit allocation payment in respect of the sale of Liberty Safe & Security Products, Inc. which occurred on August 3, 2021 and constituted a Sale Event. All of the foregoing profit allocation payments were approved by the Company’s Audit Committee which is comprised solely of independent directors.2021.
INTEGRATION SERVICES AGREEMENTS
Our Manager acts as an advisor to the Company during acquisitions. In the first year of an acquired businesses’a subsidiary’s ownership, our Manager will provide integration services to the new company. Integration services include reviewing, evaluating and otherwise familiarizing itself with the business, operations, properties, financial condition and prospects; familiarizing the management team with the Company’s periodic reporting, corporate governance and Sarbanes Oxley Act of 2002, as amended (“SOX”) obligations; familiarizing the management team with the Company’s ESG framework and establishing a baseline measurement of ESG factors identified by the Company; reviewing the new subsidiaries’ policies and procedures and, where appropriate, aligning such policies and procedures with other of the Company’s subsidiaries; and assisting in establishing a new board of
directors, including identifying and engaging outside and independent director resources, if appropriate. On September 23, 2021, the Company acquired Lugano Diamonds & Jewelry Inc. The total integration services fees due to the ManagerGenerally, payments pursuant to the integration services agreement entered into by and between Lugano and the Manager concurrent with the acquisition are $2.3 million, of which $0.6 million has been paid.
During 2020, the Company acquired Marucci Sports, LLC on April 20, 2020 and BOA Technology, Inc. on October 15, 2020. Our Manager entered into integration services agreements with Marucci and BOA concurrent with these acquisitions and received integration services fees in the amounts of $2.0 million and $4.4 million, respectively, pursuant to these agreements. For each of the foregoing, payments wereare made equally on a quarterly basis over a twelve-month period. PrimaLoft, which was acquired in July 2022, entered into an integration services agreement pursuant to which it will pay our Manager an integration services fee of $4.8 million, over the twelve-month period ending at June 30, 2023. Lugano, which was acquired in September 2021, entered into an integration services
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agreement pursuant to which it paid our Manager an integration services fee of $2.3 million, over the twelve-month period ending at December 31, 2022.
During the years ended December 31, 2022, and 2021, our Manager received $4.1 million and $4.9 million, respectively, in total integration service fees. All integration services agreements are approved by the Company’s nominating and corporate governance committee, which is comprised solely of independent directors, in accordance with our governancegoverning documents.
Other Related Party Transactions

Our Manager entered into a marketing services agreement with the Company’s Velocity Outdoor Inc. subsidiary in January of 2022 (the “Marketing Services Agreement”) pursuant to which Velocity has agreed to make payments to the Manager in the aggregate annual amount of $240,000,$240,00.00, plus reimbursement for certain expenses, in exchange for marketing services. The Marketing Services Agreement has ahad an initial term of one year subjectand was subsequently renewed for an additional one-year term, and the annual payment amounts to renewalthe Manager increased to $248,400.00, plus reimbursement for subsequent one-year terms, andcertain expense. The Marketing Services Agreement is not an offsetting management services agreement. The Company’s nominating and corporate governance committee, which is comprised solely of independent directors, approved
the terms and conditions of the Marketing Services Agreement.Agreement, as well as the subsequent renewal of such agreement.
Other

In August of 2019, the son-in-law of Mr. C. Sean Day, a director of the chairman of our BoardCompany, joined the Company’s Manager as an employee.employee and remains an employee of our Manager. He is not an executive officer of the Manager. Neither the Company nor the Trust was or is a participant in the transaction, neither the Company, nor the Trust reimburses the Manager for the compensation paid by the Manager for this individual, and neither has any input regarding the compensation payable to this individual or any other aspect of his employment with the Manager.
In July of 2022, in recognition of Mr. C. Sean Day’s retirement and long-standing service as chair of the Company’s Board, the Company and the Manager each made a charitable donation in the amount of $25,000.00 ($50,000.00 in the aggregate) to the Sean Day Scholarship Fund administered by the Lawhill Maritime Educational Trust, a tax-exempt Public Benefit Organization. The Lawhill Maritime Educational Trust supports maritime-related education in South Africa, most predominately at the Lawhill Maritime Centre at Simon’s Town School.
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Director Compensation
Our compensation committee is responsible for periodically evaluating and making recommendations to the Board concerning the total compensation package for non-management Directors and believes thatdirectors. Our 2022 non-management director compensation includes a balanced usecombination of cash and equity is effective at aligningcompensation to effectively align the interests of Directorsour directors and shareholders.
Non-Management Director Compensation Fiscal Year 2022
The following graph demonstrateselements of our historical balanced and moderateannual non-management director compensation:

Forcompensation for fiscal year 2021, our non-management directors2022 were each eligibleas follows:
​
Annual Non-Management Director cash retainer
​​
$110,000
​
​
Annual Non-Management Director equity(1) retainer
​​
$110,000
​
​
Annual Nominating & Corporate Committee chair cash retainer(2)
​​
$10,000
​
​
Annual Compensation Committee chair cash retainer(2)
​​
$10,000
​
​
Annual Audit Committee chair cash retainer(2)
​​
$40,000
​
​
Annual cash retainer for independent Chair
​​
$157,500
​
​
Annual equity retainer for independent Chair
​​
$132,500
​
(1)
Each director may elect to receive this amount in cash.
(2)
This is in addition to the annual director cash and equity retainers payable to all non-management directors.
All cash retainers of $100,000, our independent lead director was eligible to receive a cash retainer of $120,000 and our chairman was eligible to receive a cash retainer of $157,500, in each case payableare paid in equal installments, quarterly installments.
The chairperson of the audit committee, nominating and corporate governance committee and compensation committee were also eligible to receive an additional annual cash retainer of $40,000, $10,000 and $10,000, respectively, payable in equal quarterly installments, for service as a committee chairperson.
arrears. Directors do not receive additional compensation for attendance at Board or committee meetings. Directors (including the chairman)Board chair) are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of the Board or committees and for any expenses reasonably incurred in their capacity as directors.its committees. The Company also reimburses directors for all reasonable and authorized business expenses related to service to the Company by the directors, in their capacity as directors, including director training and continuing education programs, upon request,as applicable, in accordance with the policies of the Company as in effect from time to time.
OurThe annual “equity retainer” our non-management directors also receive, on or around January 1 of each year, in respect of their service for the prior fiscal year, $100,000, or $120,000 if serving as the chairman of the Board, which is strongly encouraged to be used to purchase shares of Trust common stock. Consequently, each non-management director who elects to use such award to purchase shares of Trust common stock receives that number of shares of Trust common stock that can be purchased with $100,000, or $120,000, as applicable,such amount at the market price for shares of Trust common stock on the date of purchase.
Consistent with prior years, in early 2022,2023, the Companycompensation committee conducted a survey of the director compensation practices of other companies that it considered reasonably comparable to the Company and also engaged Mercer (USA) Inc., to perform a review of the Company’s non-management director compensation relative to
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the compensation paid to non-management directors by certain entities identified as being within the Company’s peer group. Mercer (USA) Inc. provided a peer analysis but did not make specific compensation recommendations.Company. The compensation committee also considered the time commitment, responsibilities, and related burdens of Board service over the Company’s history. Based upon this review, the compensation committee recommended to the full Board that the portion of the annual compensation paidno changes be made to non-management directors (including the chairman of the Board) which is encouraged to be utilized to purchase equity in the Company, which we refer to as “equity compensation” be increased by ten percent (10%)director compensation for fiscal year 2022.2023. The full Board ratified the compensation committee’s recommendation on February 10, 2022. Accordingly, each non-management director will receive equity compensation inrecommendation.
Management Director(s)/Appointed Director(s) Compensation
Pursuant to our LLC Agreement, neither the amount equal to $110,000 and our chairman will receive equity compensation in the amount of $132,000 at or around January 1, 2023 in respect of their service during fiscal year 2022, and directors will be encouraged to utilize such payments to purchase common sharesAllocation Member’s Appointed Director, nor any executive officer of the Trust. The annual cash retainerCompany serving in a director capacity who is an employee of our Manager, may be paid compensation as a director or chair of any committee or subcommittee of the Board; provided, however, these directors may be reimbursed for their expenses, if any, incurred with respect to our directors in 2022,their attendance at each meeting of the Board, as well as any expenses reasonably incurred in their capacities as directors. Accordingly, Mr. Sabo, our chief executive officer and the additional cash retainersAllocation Member’s Appointed Director, does
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not receive compensation from the Company for servicehis role as a committee chairperson will not change.director. Mr. Sabo is reimbursed by the Company for his expenses, if any, incurred with respect to his attendance at each meeting of the Board and any expenses reasonably incurred in his capacity as a director
Compensation All Directors
The following table providessets forth the compensation paid or accrued by us for our non-management directors in 2021:2022:
​
Name
​
Fees Earned
or Paid in
Cash
($)
​
Stock
Awards(1)
($)
​
Option
Awards
($)
​
Non-Equity
Incentive Plan
Compensation
($)
​
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
​
All Other
Compensation
($)
​
Total
​
Name
​
Fees Earned
or Paid in
Cash
($)
​
Stock
Awards(1)
($)
​
Option
Awards
($)
​
Non-Equity
Incentive Plan
Compensation
($)
​
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
​
All Other
Compensation
($)
​
Total
​
​
C. Sean Day
​
$157,500
​
$120,000
​
$   —
​
$   —
​
$   —
​
$   —
​
$277,500
​
C. Sean Day(2)
​
128,750
​
121,000
​
—
​
—
​
—
​
—
​
249,750
​
​
James J. Bottiglieri
​
107,717
​
100,000
​
—
​
—
​
—
​
—
​
207,717
​
James J. Bottiglieri
​
140,000
​
110,000
​
—
​
—
​
—
​
—
​
250,000
​
​
Gordon M. Burns
​
110,000
​
100,000
​
—
​
—
​
—
​
—
​
210,000
​
Gordon M. Burns
​
110,000
​
110,000
​
—
​
—
​
—
​
—
​
220,000
​
​
Harold S. Edwards
​
110,000
​
100,000
​
—
​
—
​
—
​
—
​
210,000
​
Harold S. Edwards
​
110,000
​
110,000
​
—
​
—
​
—
​
—
​
220,000
​
​
Larry L. Enterline
​
103,859
​
100,000
​
—
​
—
​
—
​
—
​
203,859
​
Larry L. Enterline(3)
​
138,750
​
121,000
​
—
​
—
​
—
​
—
​
259,750
​
​
D. Eugene Ewing(3)
​
260,000
​
—
​
—
​
—
​
—
​
—
​
260,000
​
Alexander S. Bhathal
​
100,000
​
110,000
​
—
​
—
​
—
​
—
​
210,000
​
​
Sarah G. McCoy
​
100,000
​
100,000
​
—
​
—
​
—
​
—
​
200,000
​
Sarah G. McCoy
​
100,000
​
110,000
​
—
​
—
​
—
​
—
​
210,000
​
​
Total
​
$949,076
​
$620,000
​
$— (2)
​
$— (2)
​
$— (2)
​
$—
​
$1,569,076
​
Teri S. Shaffer
​
50,000
​
55,000
​
—
​
—
​
—
​
—
​
105,000
​
​
Elias J. Sabo
​
—0—
​
—0—
​
—
​
—
​
—
​
—
​
—0—
​
​
Totals
​
$877,500
​
$847,000
​
$   —(4)
​
$   —(4)
​
$   —(4)
​
$   —(4)
​
$1,724,500
​
(1)

Represents 3,8676,302 fully vested shares for each of C. Sean Day and 3,224Larry L. Enterline, in respect of each of their service as the Board chair for six months during 2022, 5,727 fully vested shares for each other director excluding Mr. EwingMs. Shaffer who elected to receive all cash compensation,served for six months during 2022 and received 2,864 fully vested shares pursuant to the annual award described above. These shares were purchased by the Company on behalf of the directors on January 3, 2023.
(2)
Cash retainer and equity compensation reflect service as chair of the Board for six months during 2022.
(2)
(3)
Cash retainer and equity compensation reflect service as chair of the Board for six months during 2022.
(4)
The Company does not have any stock option, non-equity incentive or deferred compensation arrangements for any of its directors.
(3)
Mr. D. Eugene Ewing passed away on January 9, 2022, and his term as a director ended.
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graphic
 
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Our Pay

PROPOSAL 2: ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our shareholders to vote to approve, on a non-binding and advisory basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with applicable SEC rules. We are providing this vote as required pursuant to Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (15 U.S.C. 78n-1).
Our compensation policy is designed to enable us to attract, motivate, reward and retain the management talent required to achieve our objectives, and thereby increase shareholder value. Please see the section titled “EXECUTIVE COMPENSATION – Compensation Discussion and Analysis” and the related compensation tables herein for additional details about our executive compensation policy, including information about the fiscal year 20212022 compensation of our named executive officers.officer(s).
We are asking our shareholders to indicate their support for our named executive officer compensation as described in this proxy statement. This Proposal 2 gives our shareholders the opportunity to express their views on our named executive officers’officer(s)’ compensation (sometimes referred to as the “Say-on-Pay Vote”). This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officersofficer(s) and the philosophy, policies and practices described in this proxy statement. We believe that our overall compensation policy accomplishes our compensation goals of attracting and retaining a qualified and talented chief financial officer. Accordingly, we will ask our shareholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officer, as disclosed in the Company’s Proxy Statement for the 20222023 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the SEC.”
The Say-on-Pay Vote is advisory, and therefore not binding on the Company, the compensation committee or our Board. Our Board and our compensation committee value the opinions of our shareholders and to the extent there is any significant vote against the named executive officerofficer(s) compensation as disclosed in this proxy statement,Proxy Statement, we will consider the results of the vote in future compensation deliberations and evaluate whether any actions are necessary to address shareholder concerns.
The Company will include a proposal seeking shareholder approval, We currently hold our advisory vote on a non-binding andexecutive compensation annually. Thus, subject to the results of Proposal 3, we expect to hold our next advisory basis, ofvote on executive compensation at the compensation of our named executive officers in the proxy statement every year until the 20232024 Annual Meeting of Shareholders. In 2023, the Company will include a proposal seeking shareholder approval, on a non-binding and advisory basis,
Recommendation of the frequency at which the Company shall thereafter seek shareholder approval, on a non-binding and advisory basis, of the compensation of the named executive officers.
RECOMMENDATION OF THE BOARDBoard
Our Board recommends that you vote, on a non-binding and advisory basis, FOR the resolution approving the compensation of our named executive officersofficer as disclosed in this proxy statement.Proxy Statement.
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PROPOSAL 3: FREQUENCY OF ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION
As described in Proposal 2 above, our shareholders have the opportunity to cast a non-binding, advisory Say-on-Pay Vote. This Proposal 3, as required by the Dodd-Frank Act and Section 14A of the Exchange Act, enables our shareholders to cast a non-binding, advisory vote on how frequently we should seek the Say-on-Pay Vote (the “Say-on-Frequency Vote”). Currently, the Say-on-Pay Vote occurs every 1 year. By voting on this Proposal 3, shareholders may indicate whether they would prefer a Say-on-Pay Vote to occur every 1 year, every 2 years, or every 3 years, or they may abstain from voting.
Our Board has determined that a Say-on-Pay Vote that occurs every 1 year is the most appropriate alternative for our Company, and therefore our Board recommends that you vote, on a non-binding, advisory basis, that the frequency of the Say-on-Pay Vote occur every 1 year. The Board believes that a Say-on-Pay Vote that occurs every 1 year represents an appropriate balance between receiving shareholder input and the need for stability and continuity with respect to corporate policies. By holding the vote every 1 year, we can achieve our goal of attracting and retaining a qualified and talented chief financial officer while receiving frequent shareholder input into our compensation policy and objectives.
You may cast your advisory vote on this Proposal 3 to recommend conducting the Say-on-Pay Vote once every “1 Year,” “2 Years,” or “3 Years,” or “Abstain.”
While this vote is non-binding and advisory in nature, it is the intention of the Board to adopt a policy to seek a Say-on-Pay Vote with the frequency desired by our shareholders as expressed by their vote on this Proposal 3. Shareholders should be aware that they are not voting “for” or “against” the Board’s recommendation to hold an advisory vote on executive compensation every 1 year. Rather, shareholders will be casting votes to recommend a Say-on-Pay Vote to occur every 1 year, every 2 years, or every 3 years, or they may abstain entirely from voting.
Recommendation of the Board
Our Board recommends that you vote, on a non-binding and advisory basis, to hold the Say-on-Pay Vote every 1 YEAR.
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​Compensation Discussion and Analysis
Executive Summary

•
The Company had a strong year, producing net revenues of $2.3 billion, an increase of 17.2%, and 12.1% on a pro forma basis over 2021 and Adjusted EBITDA, a non-GAAP financial measure, of $369.8 million, an increase of 20.0% over 2021. See pages 126-134 of our Annual Report on Form 10-K under the heading “Reconciliation of Non-GAAP Financial Measures” for reconciliations to the most directly comparable GAAP financial measures.
•
We are externally managed and CODI has no employees of its own. Management, including the services of our chief executive officer and our chief financial officer, are seconded from our Manager. The cost of our management is instead borne through management fee payments, which are used to compensate the team managing our organization. The costs of the chief financial officer and the chief financial officer’s staff are reimbursed by the Company.
•
We expanded our business model launching a new healthcare vertical. Our Manager appointed Kurt Roth as partner and head of healthcare to work with our organization’s senior professionals to launch this initiative.
•
In July of 2022, we executed on our acquisition strategy through the purchase of PrimaLoft, Inc., a leading provider of branded, high-performance synthetic insulation and materials used primarily in consumer outerwear, and accessories, for an enterprise value of $530 million.
•
We continued to advance our key ESG initiatives. We created our ESG framework, formalized our ESG policy and memorialized the key elements of the foregoing in our corporate citizenship statement. We also implemented a customized ESG technology platform for data collection, which will enable us to consider setting time-bound targets in the future.
•
We continued our efforts to recruit new directors with diverse backgrounds, skills, and experiences, and fill leadership positions on our Board with diverse candidates to further enhance our Board. Ms. Nancy B. Mahon was nominated as a director on March 24, 2023. Ms. Terri R. Shaffer assumed the role of chair of our audit committee on April 1, 2023.
Compass Diversified hadIn January of 2023, we announced a strong year, producing net revenues of $1.8 billion, an increase of 35.5% over 2020 and adjusted EBITDA of $327.3, an increase of 60.6% over 2020.
We are externally managed and have no employees of our own. Management, including$50 million share repurchase program, the services of our CEO and our CFO, are seconded from our Manager. The cost of our management is instead borne through management fee payments, which are used to compensatefirst in the team managing Compass Diversified. The cost of the CFO and his staff are reimbursed by Compass Diversified.Company’s history.
We achieved a number of milestones that furthered our pursuit of a lower cost of capital in 2021.
Elected to be treated as C corporation rather than a pass through entity for U.S. federal income tax purposes
Refinanced our 8% bonds with $1 billion of 5.25% senior unsecured bond, maturing in April 2029
Issued new senior unsecured bonds of $300 million at 5.0% maturing in January 2032
We gave our portfolio companies additional financial flexibility to manage through the pandemic. Our Manager waived a portion of the management fees otherwise due and owning it during every quarter during fiscal year 2021.
We were able to execute on our business strategy despite the pandemic. We executed on our acquisition strategy through the purchase of Lugano Diamonds & Jewelry Inc. in September 2021 as well the add-on acquisitions of Lizard Skins, at Marucci, Ramco at Arnold, and Plymouth Foam at Altor Solutions, Inc. We believe that our ability to execute on our strategy despite difficult business conditions is a competitive advantage.
•
In February of 2023, we consummated the opportunistic divestiture of our Advanced Circuits Inc. subsidiary for an enterprise value of $220 million. We expect to realize a pre-tax gain on the sale of between $100 million to $110 million.
•
We were able to execute on our business strategy despite macro-economic headwinds impacting all businesses. We believe that our ability to execute on our strategy despite difficult business conditions is a competitive advantage.
Our Business

Compass Diversified offers shareholders a unique opportunity to own a diverse group of leading middle market businesses in the niche-industrial, and branded consumer and healthcare sectors. We are an experienced acquirer and manager of middle-market North American companies. Since 2006, we have acquired and operated twenty-two businesses.twenty-three businesses and have supported our subsidiaries who have consummated thirty-two add-on acquisitions during that same period. Currently, our subsidiary businesses include sixseven branded consumer businesses and fourthree niche industrial businesses. Symbiotically, our public company structure gives us an advantage in that our capital structure provides our subsidiaries with a much more stable funding base than other stand-alone private, leveraged entities. This funding base allows us to take longer-term views and positions us to deliver returns across a wide range of economic climates. Our shareholders have been rewarded with more than a billion dollars in realized gains since our 2006 initial public offering.
Since our Manager’s founding in 1998, and the Company’s subsequent initial public offering in 2006, our strategy and philosophy have always remained the same — we look to acquire and manage companies that we could own forever and that exhibit a clear “reason to exist.” We are passionate about partnering with outstanding management teams and supporting them with patient growth capital. Our experience shows us that a solid ESG framework is critical for assessing financial risk. As our Company has evolved, we have recognized that a hallmark of outstanding management is a recognition and understanding of the importance of ESG. We have found that companies who strategically plan for the long term have outperformed.
Sustainability and corporate responsibility have become increasingly important factors in our business. Today, ESG is embedded in all aspects of our business and we endeavor to own and manage businesses that share our goal of continuous improvement with respect to ESG.outperformed those who only focus on the short term.
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We create value for our shareholders in two ways: First, we identify, perform due diligence on, negotiate and consummate additional platform acquisitions of small to middle market businesses in attractive industry sectors in accordance with acquisition criteria established by our board of directors.Manager and our Board. Second, we focus on helping our management teamssubsidiaries grow earnings and cash flow from their businesses.flow. We believe that the scale and scope of our businesses give us a diverse base of cash flow upon which to further build.
Our subsidiaries include many brands that are household names. Those brands include Sterno, Ergobaby, Lugano, Marucci, BOA, PrimaLoft, Crosman, and 5.11, and in the past we’ve managed brands such as Camelbak, Fox, Liberty Safe, and Manitoba Harvest. Even if you have not heard of Compass Diversified, you are likely familiar with one or more of our brands.
Our Commitment to ESG
Sustainability and corporate responsibility have become increasingly important aspects of our business. As our Company has evolved, we have transitioned from building the business case for awareness of ESG trends towards executing ESG as one of our core business strategies. Consideration of ESG issues is a central part of any analysis of the potential risks and opportunities of the acquisitions we now consider, as well as an opportunity to enhance value in the businesses we manage. The three main drivers of our ESG strategy are: (1) gaining long-term value by identifying companies with strong ESG performance, (2) protecting acquisitions against ESG risks by selecting companies that are equipped to deal with turbulence, and (3) capturing ESG upside by identifying areas of potential value and executing on such opportunities.
Our ESG framework is built on two key pillars, and supported by eight priority areas, collectively underpinned by sound governance practices.
graphic
Our ESG framework allows us to apply a more holistic and adaptable approach to the acquisition and management of our subsidiaries and demonstrates that our material ESG factors are viewed as long-term drivers of value, facilitating oversight of our acquisitions and the ability to address the needs our stakeholders.
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Our Structure and Management

“Compass Diversified,” as we refer to it, is comprised of three separate, independent business entities that work closely together: Compass Group Management LLC, the privately held external manager of the organization, which we refer to as the “Manager”, Compass Diversified Trust, which we refer to as the “Trust” and Compass Group Diversified Holdings LLC, which we refer to as the “Company.” Although the shares issued to the public are technically at the Trust level (NYSE: CODI), the Trust and the Company file consolidated reports with the SEC.
The Company has access to substantial financial resources which are utilized for the acquisition and management of middle market businesses. Upon completion of an acquisition, we immediately begin to work with the acquired company’s management team to identify the most critical and time sensitive needs and opportunities and to urgently address them.
Our unique structure allows for the efficient and quick consummation of transactions, without financing contingencies, including obtaining acquisition financing on a transaction-by- transactiontransaction-by-transaction basis. In addition, companies acquired by usour subsidiaries have ongoing access to substantial growth capital. Finally, our long-term ownership perspective as a holding company is not impacted by artificial ownership timing criteria. Rather, we continuously work with our subsidiary management teamssubsidiaries to continue to achieve growth organically and through add-on on acquisitions and opportunistically evaluate strategic alternatives and assess the appropriate individual course of action for each of those companies, without regard to external and unrelated factors.
Our management services are provided by our Manager in accordance with the Sixth Amended and Restated Management Services Agreement, which we refer to as theAgreement. The Management Services Agreement, that we entered into with our Manager as of September 30, 2014. The Management
Services Agreement defines the duties and responsibilities of our Manager, its relationship with the Company, and the areas over which the Company’s Board of Directors has ultimate oversight and authority. The Manager, in exchange for a management fee, is tasked with performing the services necessary for the day-to-day business, operations and affairs of the Company’s business, as the Company currently does not have any employees and does not expect to have any employees in the foreseeable future.
The services necessary for the operation of the Company’s business are performed by employees of our Manager under the leadership of Messrs. Sabo and Faulkingham, who are also employed by our Manager and are seconded to the Company as chief executive officer and chief financial officer, respectively. This means that they have been assigned by our Manager to work for the Company during the term of the Management Services Agreement between us and our Manager. The pay ratio disclosure rules of Item 402(u) of Regulation S-K require an issuer to disclose the ratio of the total compensation of the median employee of the issuer and
its consolidated subsidiaries, if any, to the total compensation of the issuer’s chief executive officer. Because we are externally managed and have no employees,do not reimburse our Manager for our chief executive officer’s compensation, we do not believe such pay ratio disclosure would provide meaningful information to our shareholders and, therefore, do not provide a pay ratio disclosure in our proxy statement.statement
Our Performance

In 2021,2022, our business delivered for shareholders. In fact, we produced four consecutive quarters of record results during the year. Our core differentiators of actionable expertise, clear alignment and permanent capital allowed us to generate these exceptionally strong results, including:
Net revenuessales for the year ended December 31, 20212022 increased byto approximately $482.1 million or 35.5%$2.3 billion, up 17% (12% on a pro forma basis) compared to the corresponding period in 2020;2021;
Increased net income significantlyfrom continuing operations before income taxes to $126.8$87.1 million compared to $27.2$68.1 million in 2020, mainly due to the gain from the Liberty Safe sale;2021;
Reported non-GAAP Adjusted EBITDA of $327.3$369.8 million for the full year 20212022 versus $203.9$308.2 million for full year 2020;2021;
Reported Cash Provided by Operating Activitiesnet income of $134.1$51.4 million, and non-GAAP CADAdjusted Earnings of $177.4 million;$158.6 million, up 17% from 2021;
Cash flow available for distribution and reinvestmentAdjusted Earnings and Adjusted EBITDA are non-generally accepted accounting principle (“GAAP”) metrics. See pages 114-120126-131 of our Annual Report on Form 10-K under the heading “Reconciliation of Non-GAAP Financial Measures” for reconciliations to the most directly comparable GAAP financial measures.
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Response to COVID-19 Pandemic
Market Conditions
The COVID-19 pandemic impacted global commercial activity and contributed to significant volatility in the equity and debt markets during 2021. It alsoOur subsidiaries continued to impact our subsidiary businesses during 2021, thoughdemonstrate their dedication and resilience by delivering strong financial results amidst challenging market conditions, including the naturecontinued regional impacts of the impact varied by business. The COVID-19, pandemicinflation, and restrictive measures taken during the course of the pandemic to contain or mitigate its spread have caused, and are continuing to cause, business shutdowns, or the re-introduction of business shutdowns, cancellations of events and restrictions on travel, significant reductions in demand for certain goods and services, reductions in business activity and financial transactions,ongoing supply chain interruptions, labor shortages, increased inflationary pressure and overall economic and financial market instability both globally and in the U.S. Many jurisdictions, including those in which we operate, have issued orders requiring the closure of, or certain restrictions on the operation of certain businesses. Such actions and effects remain ongoing and the ultimate duration and severity of the COVID-19 pandemic, including COVID-19 variants, such as the recent Delta and Omicron variants, remain uncertain. Recurring COVID-19 outbreaks caused by different virus variants continue to lead to the re-introduction of certain restrictions impacting the global supply chain.
The COVID-19 pandemic is having a particularly adverse impact on industries in which certaindisruptions. Some of our subsidiaries operate, includingwere more impacted than others by the foodservicechanging macro-economic environment with inflation on the rise, increased interest rates, and hospitality industriesongoing uncertainty in which Sterno operates. As a result ofEurope created by the COVID-19 pandemic and other factors, supply chains worldwide have been, and continueconflict in Ukraine. Despite these challenges, our subsidiary teams were able to be, interrupted, slowed or rendered inoperable, which have also adversely impacted certain of our subsidiaries operatingdeliver strong results.
Even after COVID-19 has subsided, the U.S. economy and most other major global economies may continue to experience a recession, and our business and operations, as well as the business and operations of our subsidiaries, could be adversely affected as a result of the virus’s global economic impact and any economic impact that has occurred or may occur in the future.
During 2021, we continued to work with management at each of our businesses to mitigate the widespread impact of the COVID-19 pandemic, while implementing various measures to ensure the continued health and welfare of employees, and the continued provision of products and services to consumers despite labor shortages, supply chain disruptions, port congestion and other obstacles.
Overview of our Executive Compensation

Our Manager determines and pays the compensation of the executive officers seconded to us, as well as the employees of our Manager performing services on our behalf. We do not reimburse our Manager for the compensation paid to our chief executive officer, Elias J. Sabo. We do, however, pay our
​
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Manager a quarterly management fee and our Manager uses the proceeds from the management fee to pay employees performing services on our behalf, to cover the Manager’s operating expenses and to pay distributions to Mr. Sabo in respect of his equity ownership interest in and role as the managing member of our Manager.
During the fiscal year ended December 31, 2021,2022, we incurred approximately $46.9$63.6 million of management fees under the Management Services Agreement.Agreement, approximately $56.6 of which were paid by the Company and $7.0 million of which were paid by subsidiaries pursuant to offsetting management agreements. For a discussion of the terms of our Management Services Agreement, see the section titled “CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS – Contractual Arrangements with Related Parties – Management Services Agreement.” The Company, after due consultation with the Manager, has the right to requirerequest that the Manager replace any individual seconded to replacethe Company, including, without limitation, Mr. Sabo as the Company’s chief executive officer, subject to the terms and conditions of the Management Services Agreement with our Manager.and the LLC Agreement. We regularly communicate with our shareholders regarding our executive compensation practices.
Pursuant to the Management Services Agreement, with our Manager, we reimburse our Manager for the compensation paid to our chief financial officer, Ryan J. Faulkingham. Such reimbursement is approved by the Company’s compensation committee.committee, which is comprised solely of independent directors. The terms and conditions of Mr. Faulkingham’s employment are governed by an employment agreement between Mr. Faulkingham and our Manager. A description of Mr. Faulkingham’s compensation is set forth below. The Company’s Board and compensation committee also oversee the calculation and payment of the management fee.fee paid to our Manager.
The discussion below relates to the compensation policies and philosophy for Mr. Faulkingham only, as the compensation distributions paid toservices performed by the Company’s chief executive officer are provided at the cost of the Manager and are not reimbursed by the Company.
Shareholder Engagement

A majority of our shareholders have approved, on an advisory basis, the executive compensation of our named executive officers (Say-on-Pay), since the inception by us of an advisory vote regarding the executive compensation of our named executive officer. In 2021,2022, we received 83.5%83.77% support on our advisory Say-on-Pay vote. Over the past few years, we have steadily increased our shareholder outreach efforts on topics including executive compensation and our management
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structure, and we have initiated communications with certain
institutional shareholders to better understand the reasons behind certain votes and address any shareholder concerns. In addition, to improve our ability to reach smaller investors, we have engaged an additional third-party investor relations firm to assist with, among other things, continuing shareholder engagement. The Company intends to continue engaging directly with shareholders on these topics.
Elements of Our Executive Compensation and How Each Relates to Our Overall Compensation Objectives

Mr. Faulkingham’s employment agreement provides that his annual compensation is to be paid through a combination of a base salary and an annual cash bonus. Both elements are designed to be competitive with comparable employers in our industry and intended to provide incentives and reward Mr. Faulkingham for his contributions to the Company.
Objectives of Our Executive Compensation and What it is Designed to Reward

The primary objective of the aforementioned elements of our executive compensation is to attract and retain a qualified and talented individual to serve as chief financial officer. Through payment of a competitive base salary, we recognize particularly the experience, skills, knowledge and responsibilities required of the chief financial officer position. An annual cash bonus is designed to reward our chief financial officer’sofficer's individual performance during the year and can therefore be variable from year to year.
How We Determine the Amount of Each Element of Executive Compensation for our Chief Financial Officer

To determine the amount of our chief financial officer’s compensation, we consider competitive market practices by reviewing publicly available information across our industry and related industries. We do not useMercer (USA) Inc., a third-party consulting firm, was engaged by the Company in early 2023 to provide executive compensation consultants currently in determiningbenchmarking services with respect to the compensation of our chief financial officer’s compensation.officer. Mercer provided a peer analysis but did not make specific compensation recommendations. When establishing Mr. Faulkingham’s 20222023 base salary, the compensation committee and management considered several factors including: his seniority, the functional role of his position, the level of his responsibility, the ability to replace him, and his base salary during the prior year. The compensation committee also considered feedback received from our shareholders who
engage in regular communications with our management team, the most recent advisory votes on executive compensation, which were supported by a majority of our
​
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shareholders in each of fiscal years 2022, 2021 2020 and 2019,2020, and whether such compensation continues to achieve the objective of appropriately rewarding our chief financial officer for his contributions to our business, including its growth and profitability.
Our chief financial officer’s compensation is reviewed on an annual basis. Factors considered in determining increases to our chief financial officer salary level are the employment market for chief financial officers of public entities comparable to the Company in size and industry, the breadth and scope of the responsibilities of the chief financial officer within our organization, his performance in prior years (as assessed by our compensation committee in accordance with the factors outlined below) and the retention of our chief financial officer. We expect the salary of our current chief financial officer, Mr. Faulkingham, to increase annually with adjustments largely reflecting additional responsibilities assumed, growth of the Company and the related increase in the complexity of the position of chief financial officer within our organization, to appropriately reward Mr. Faulkingham for his contributions to our growth and profitability, thereby retaining his services and to compensate for cost-of-living increases.
The annual cash bonus element of our executive compensation policy is determined on a discretionary basis and is largely based upon the job performance of our chief financial officer in completing his responsibilities. In determining the amount of Mr. Faulkingham’s annual cash bonus, our compensation committee assesses his performance in respect of: (i) the nature and quality of the internal and financial reporting controls; (ii) management of the Company’s financial accounting staff; (iii) the performance of the Company’s financial accounting function and its ability to perform assigned tasks on a timely basis; (iv) his and the financial accounting staff’s interactions with the Company’s outside independent auditors on the strength of the controls environment, the strength of the Company’s finance function generally and the level of cooperation received by such independent auditors in the conduct of the Company’s audit; (v) his and the financial accounting staff’s interaction with the management of the businesses in which the Company owns a controlling interest;our subsidiary businesses; and (vi) his lead role in capital raises and in investor relations. Our chief financial officer’s bonus is not based upon the performance of the Company and is unrelated to the amount of his base salary.
​
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Summary Compensation Table – Fiscal Year 20212022
The following Summary Compensation Table summarizes the total compensation accrued for our named executive officersofficer(s) in each of 2022, 2021 2020 and 20192020 and should be read in conjunction with the Compensation Discussion and Analysis.
​
 
​
 
​
Salary
​
Bonus
​
Stock
Awards
​
Option
Awards
​
Non-Equity
Incentive Plan
Compensation
​
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
​
All Other
Compensation
​
Total
​
 
​
 
​
Salary
​
Bonus
​
Stock
Awards
​
Option
Awards
​
Non-Equity
Incentive Plan
Compensation
​
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
​
All Other
Compensation
​
Total
​
​
Name & Principal Position
​
Year
​
($)
​
($)
​
($)
​
($)
​
($)
​
($)
​
($)
​
($)
​
Name & Principal Position
​
Year
​
($)
​
($)
​
($)
​
($)
​
($)
​
($)
​
($)
​
($)
​
​
Elias J. Sabo (1)(2)
Chief Executive Officer
​​
2021
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​
Elias J. Sabo(1) (2)
Chief Executive Officer
​​
2022
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​
​
2020
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​​
2021
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​
​
2019
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​​
2020
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​
—
​
​
Ryan J. Faulkingham (2)
Chief Financial Officer
​​
2021
​
450,000
​
540,000
​
—
​
—
​
—
​
—
​
53,399(3)
​
1,043,399
​
Ryan J. Faulkingham(2)
Chief Financial Officer
​​
2022
​
459,000
​
556,000
​
—
​
—
​
—
​
—
​
57,780 (3)
​
1,072,780
​
​
2020
​
450,000
​
525,000
​
—
​
—
​
—
​
—
​
51,683(3)
​
1,026,683
​​
2021
​
450,000
​
540,000
​
—
​
—
​
—
​
—
​
53,399 (3)
​
1,043,399
​
​
2019
​
425,000
​
500,000
​
—
​
—
​
—
​
—
​
57,406(3)
​
982,406
​​
2020
​
450,000
​
525,000
​
—
​
—
​
—
​
—
​
51,683 (3)
​
1,026,683
​
(1)

Mr. Sabo, who became our chief executive officer, on May 3, 2018, wasis seconded to us by our Manager and does not receive compensation for his services directly from us. We pay our Manager a quarterly management fee and Mr. Sabo, as aan equity member of our Manager, receives periodic cash distributions from our Manager periodically after payment of alloperating costs, compensation and other expenses related to our Manager’s employees.Manager's employees and its other members. The amount of such distribution is derived by the Manager and is not within our control. Concurrent withAccordingly, no compensation information for Mr. Sabo is reflected in the June 2019 sale of Clean Earth our Manager agreed to waive the management fee on cash balances held at the Company, commencing with the quarter ended June 30, 2019 and continuing until the quarter during which the Company next borrowed under the 2018 Revolving Credit Facility. In March 2020, as a proactive measure to provide the Company with additional cash liquidity in light of the COVID-19 pandemic, the Company elected to draw down $200 million on our 2018 Revolving Credit Facility. The Company and our Manager entered into a waiver agreement whereby our Manager agreed to waive the portion of the management fee attributable to the cash balances held at the Company as of March 31, 2020. In addition, due to the unprecedented uncertainty as a result of the COVID-19 pandemic, our Manager agreed to waive 50% of the management fee calculated at June 30, 2020 that was paid in July 2020. Further, for the third quarter of 2020, the Company and our Manager entered into a waiver agreement whereby our Manager agreed to waive the portion of the management fee attributable to the cash balances held at the Company as of September 30, 2020. Our Manager has also entered into a waiver for a period through December 31, 2021 to receive a 1% annual management fee related to BOA, rather than the 2% called for under the Management Services Agreement, which reduced the management fee paid for the fourth quarter of 2020, and each of the first, second, third, and fourth quarters of 2021 by approximately $1.1 million per quarter. Additionally, during the fourth quarter of 2021, our Manager waived that portion of the management fee that would otherwise be due and owing on December 31, 2021 in respect of restricted cash held on the Company’s balance sheet.above summary compensation table. We incurred approximately $46.9million, $29.4$63.6 million, $47.4 million, and $32.3$34.2 million of management fees under the Management Services Agreement during each of 2022, 2021, and 2020, and 2019, respectively, andthe payments made by the Company of such management fees in each year were reduced dollar-for-dollar by approximately $7.0 million, $6.2 million, and $5.3 million and $5.0 million ofrespectively, due to offsetting management fees paid by our subsidiaries under our offsetting management services agreements with our Manager during each of 2022, 2021, 2020, and 2019,2020, respectively. See the sections titled “CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS – Contractual Arrangements with Related Parties – Management Services Agreement” and “CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS – Contractual Arrangements with Related Parties – Offsetting Management Services Agreements” for additional information about the Management Services Agreement and our offsetting management services agreements. Accordingly, no compensation information for Mr. Sabo is reflected in the above summary compensation table.
(2)

Mr. Sabo and Mr. Faulkingham do not participate in any Company sponsored stock award, stock option, non-equity incentive or nonqualified deferred stock compensation plans.
(3)

Includes the following payments paid on behalf of Mr. Faulkingham:
​
 
​
Healthcare
Contributions
​
Insurance
Premiums
​
401-K
Contributions
​
Total
​
 
​
Healthcare
Contributions
​
Insurance
Premiums
​
401-K
Contributions
​
Total
​
​
Year
​
($)
​
($)
​
($)
​
($)
​
Year
​
($)
​
($)
​
($)
​
($)
​
​
2021
​
26,888
​
3,311
​
23,200
​
53,399
​
​2022
​
29,847
​
3,533
​
24,400
​
57,780
​
​
2020
​
25,546
​
3,337
​
22,800
​
51,683
​
2021
​
26,888
​
3,311
​
23,200
​
53,399
​
​
2019
​
31,731
​
3,275
​
22,400
​
57,406
​
2020
​
25,546
​
3,337
​
22,800
​
51,683
​
​
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Grants of Plan-Based Awards

None of our named executives participate in or have account balances in any plan-based award programs.
Employment Agreements

Employment Agreement with Ryan J. Faulkingham. During fiscal year 2013, our Manager entered into an employment agreement with Mr. Faulkingham. The Manager has seconded Mr. Faulkingham to the Company to act as its chief financial officer.
During fiscal year 2021,2022, Mr. Faulkingham received base salary in the amount of $450,000$459,000 per annum. Mr. Faulkingham’s base salary will be increased to $459,000$474,000 per annum for fiscal year 2022,2023, as recommended by the Manager and ratified and approved by the Company’s compensation committee during its February 10, 202215, 2023 meeting. The Manager has the right to increase, but not decrease, Mr. Faulkingham’s base salary during the term of his employment agreement. The employment agreement with our Manager provides that Mr. Faulkingham is entitled to receive an annual bonus as determined in the sole judgment of our Manager, subject to ratification and approval of the reimbursement of such amount by the compensation committee of our Board. The employment agreement prohibits Mr. Faulkingham from (i) competing with the Company or the Manager, and (ii) soliciting any of the Manager’s or the Company’s employees for a period of one year after the termination of his employment. The employment agreement also requires that Mr. Faulkingham protect the Company’s confidential information.
Share Ownership Guidelines
Our Board believes that non-employee directors of the Company should own meaningful amounts of the common shares of the Trust to promote a long-term perspective and confidence in the Company and to ensure alignment with shareholders, capital markets and public interests. To meet this objective, in February of 2023 the Board established Share Ownership Guidelines for non-employee directors, under which each non-employee director is expected to acquire and continue to hold during his or her term as a director of the Company common shares of the Trust having a value equal to five times such director’s annual cash retainer, rounded up to the nearest 500 shares (the “Ownership Requirement”). Non-employee directors are required to achieve the applicable Ownership Requirement within five years after their first full year of service on the Board. If the Ownership Requirement is changed or reset, the applicable non-employee directors are required to achieve the appliable
Ownership Requirement within five years of any such change to the Ownership Requirement. Shareholdings that count towards the Ownership Requirement include shares held directly by the non-employee director, shares held by his or her spouse or dependent children, and shares held in trust for the economic benefit of the non-employee director or his or her spouse or dependent children.
Our nominating and corporate governance committee oversees compliance with the Share Ownership Guidelines and the Board may amend the Share Ownership Guidelines as it deems necessary or appropriate.
Compliance with the Ownership Requirement will be measured annually beginning the first full year following adoption of the Share Ownership Guidelines.
Anti-Hedging and Anti-Pledging Policy

To prevent speculation or hedging of executive officers’ and directors’ interests in our equity, the Compass Diversified Holdings, Compass Group Diversified Holdings LLC (Including Subsidiaries) and Compass Group Management LLC Policy Regarding Insider Trading, Tipping and Other Wrongful Disclosures, which we refer to as our “Insider Trading Policy”, prohibits short sales, hedging transactions and short-term trading (unless pursuant to stock option exercises or other employee benefit plan acquisitions) of CODI stock, and the purchase or sale of options, puts, calls, exchange-traded options, or any derivative security that has similar characteristics, by our executive officers and directors. Our Insider Trading Policy also requires our executive officers and directors to obtain prior written approval from our compliance officer before holding our securities in a margin account or pledging our securities as collateral for a loan. None of our executive officers or directors hold our securities in a margin account or have pledged our securities as collateral for a loan. The 229,601 shares owned by our Manager were purchased by it on the open market and are pledged as collateral to Bank of America, N.A., pursuant to a loan agreement entered into by our Manager as of January 4, 2019, as amended, modified or restated from time to time. Mr. Sabo is the managing member of our Manager; however, Mr. Sabo disclaims beneficial ownership of the Manager’s shares, except to the extent of his pecuniary interest.
Outstanding Equity Awards at Fiscal Year-End; Option Exercises and Stock Vested

None of our named executives have ever held options to purchase interests in us or other awards with values based on the value of our interests.
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Pension Benefits

None of our named executives participate in or have account balances in qualified or nonqualified defined benefit plans sponsored by us.
Nonqualified Deferred Compensation

None of our named executives participate in or have account balances in nonqualified defined contribution plans or other deferred compensation plans maintained by us.
Potential Payments upon Termination or Change-in-Control

The following summarizes potential payments payable to our named executive officers upon termination of employment or a change-in-control.
Employment Agreement with RyanEMPLOYMENT AGREEMENT WITH RYAN J. Faulkingham.FAULKINGHAM
Pursuant to his employment agreement, if Mr. Faulkingham is terminated (i) by the Manager other than for death or disability or for “proper cause” or (ii) by Mr. Faulkingham for “good reason,” the Manager shall pay Mr. Faulkingham all amounts to which he may be entitled up to the termination date. However, conditionedConditioned upon Mr. Faulkingham’s execution (and, if applicable, non-revocation) of a full waiver and release of all claims against the Manager and its affiliates and their respective officers, directors, shareholders, employees and agents containing standard terms for such an agreement, the Manager shall, within forty-five (45) days after the date of termination, pay Mr. Faulkingham, in a lump sum, less legally required withholdings, an amount equal to the Mr. Faulkingham’s base salary rate at the termination date plus the discretionary bonus, if any, paid to Mr. Faulkingham for the immediately preceding year. Were such a circumstance and subsequent execution of a full release and waiver to occur on December 31, 2021,2023, Mr. Faulkingham would have been entitled to receive $990,000.$1,030,000.
If Mr. Faulkingham terminates his employment for other than “good reason” or if the Manager terminates his employment for “proper cause”, Mr. Faulkingham’s only rights and benefits are to receive (i) base salary compensation accrued through
​
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the termination date, and (ii) unpaid reimbursable expenses incurred for the benefit of the Manager prior to the termination date.
In Mr. Faulkingham’s employment agreement “proper cause” is defined to mean: (a) any breach by Mr. Faulkingham of any material provision of the employment agreement; (b) an act of dishonesty, gross negligence or willful misconduct, or a willful or reckless violation of a material regulatory requirement, or
of any material written policy or procedure applicable to the Company, the Manager or its affiliates by Mr. Faulkingham, if such act has a material adverse impact on the financial interests or business reputation of the Company, the Manager or its affiliates; (c) any breach of Mr. Faulkingham’s duty of loyalty or other fiduciary duties to the Company, the Manager or its affiliates; (d) a willful failure of Mr. Faulkingham to follow the reasonable directives of the managing member of the Manager or the Board of Directors of the Company pertaining to legal compliance or audits of the Company, the Manager or its affiliates; (e) Mr. Faulkingham’s conviction of, or plea of nolo contendere to, a crime which the Manager reasonably determines materially and adversely affects the reputation of the Company, the Manager or any of its affiliates or Mr. Faulkingham’s ability to perform the services required under the employment agreement; or (f) the commission of an act of fraud, embezzlement, or misappropriation by Mr. Faulkingham with respect to his relations with the Company, the Manager or any of their respective employees, customers, agents, or representatives.
“Good reason” is defined in in Mr. Faulkingham’s employment agreement to mean: (a) a breach by the Manager of any of the material provisions of the employment agreement that is not remedied; (b) a material diminution in Mr. Faulkingham’s duties, authority, and responsibilities other than changes (i) to which Mr. Faulkingham has consented; or (ii) that have been eliminated or cured; or (c) the relocation without Mr. Faulkingham’s consent of his principal place of employment more than sixty (60) miles from the Manager’s Westport, Connecticut or Costa Mesa, California locations.
CEO Pay Ratio

The Company has no employees of its own; ourOur chief executive officer and chief financial officer are employees of our Manager and have been seconded to us.us to perform services on our behalf, as more fully described in the Management Services Agreement between the Company and its Manager. The Company does not compensate its chief executive officer for the services that he provides to the Company as chief executive officer. Rather, a management fee paid is paid to our Manager quarterly in respect of the services it performs for the Company pursuant to the Management Services Agreement and the Manager allocates a portion of such management fee to cover the Manager’s operating costs, overhead and other expenses, including the costs and expenses related to the compensation of our chief executive officer and all managementof the Manager’s personnel, other than the chief financial officer and the chief financial officer’s staff. The costs and expenses related to the compensation of our chief financial officer and the chief financial officer’s staff paid by our Manager are reimbursed by the Company. Our chief executive officer, as an owner of equity of the Manager, receives certain distributions from the Manager, along with the other equity owners of the Manager, after payment by the Manager of the aforementioned costs and expenses. As the chief executive officer receives no compensation from the Company for his services, it is not possible to calculate a CEO Pay Ratio.
​
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​​
Pay Versus Performance
As required by Item 402(v) of Regulation S-K, which was mandated by Section 953(a) of the Dodd-Frank Act, we are providing the following information about the relationship between “compensation actually paid” to our principal executive officer “PEO” and “compensation actually paid” to our non-PEO named executive officers “NEOs”, and the financial performance of the Company during the years ended December 31, 2022, 2021 and 2020, respectively, in each case calculated in a manner consistent with SEC rules. This section should be read in conjunction with the Compensation Discussion and Analysis “CD&A”, which includes additional discussion of the objectives of our executive compensation for our named executive officer(s) and how it aligned with the Company’s financial and operational performance.
Included in the table below is the annual compensation paid to our named executive officer(s) and our financial performance for each of the three previous fiscal years.
​
Year
​​
Summary
compensation
table total for
PEO(1)
​​
Compensation
actually paid
to PEO(1)
​​
Average
summary
compensation
table total for
non-PEO
NEOs(2)(3)
​​
Average
compensation
actually paid
to non-PEO
NEOs(3)
​​
Value of initial fixed
$100 investment based
on:
​​
Net income in
(000’s)
​
​
Total
shareholder
return(4)
​​
Peer group
total
shareholder
return(5)
​
​
2022
​​
—
​​
—
​​
$1,072,780
​​
$1,072,780
​​
$90.35
​​
$107.05
​​
$51,438
​
​
2021
​​
—
​​
—
​​
$1,043,399
​​
$1,043,399
​​
$145.03
​​
$122.65
​​
$126,809
​
​
2020
​​
—
​​
—
​​
$1,026,683
​​
$1,026,683
​​
$84.50
​​
$97.82
​​
$27,197
​
(1)
Mr. Elias J. Sabo, our chief executive officer, is seconded to us by our Manager and does not receive compensation for his services directly from us. We pay our Manager a quarterly management fee and Mr. Sabo, as an equity member of our Manager, receives periodic cash distributions from our Manager after payment of operating costs, compensation and other expenses related to our Manager's employees and its other members. The amount of such distribution is derived by the Manager and is not within our control. Accordingly, no compensation information for Mr. Sabo is reflected in the “summary compensation table total for PEO” or the “compensation actually paid to PEO” columns.
(2)
Mr. Ryan J. Faulkingham, our chief financial officer, was the Company’s only non-PEO named executive officer for the periods reported in this table. Accordingly, the amounts reported in these columns reflect the summary compensation table totals and the compensation actually paid to Mr. Faulkingham for the years 2022, 2021, and 2020, respectively.
(3)
Mr. Faulkingham does not participate in any defined benefit or actuarial pension plans, or any Company sponsored stock award, stock option, non-equity incentive or nonqualified deferred stock compensation plans. Therefore, the compensation actually paid to Mr. Faulkingham was equal to his summary compensation table totals for each of 2022, 2021, and 2020, respectively.
(4)
Our total shareholder return assumes the investment of $100 in our common stock on the last trading day before the earliest fiscal year in the above table through and including the end of the fiscal year for which total shareholder return is depicted.
(5)
Represents total shareholder return for NYSE Financial Sector Index.
Most Important Performance Measures

For the fiscal year ended December 31, 2022, the Company did not compensate its PEO and the Company did not rely on any performance measures to link the compensation of its chief financial officer, the Company’s only non-PEO named executive officer, to the performance of the Company, as described in our CD&A on pages 30 and 31 of this Proxy Statement. Accordingly, there are no performance measures that could be included in a tabular list or from which a “company selected measure” would be determined for disclosure in the above table.
​
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Comparison of Total Shareholder Return to Peer Group Total Shareholder Return

graphic
Our Company TSR was below the TSR of our peer group for fiscal year 2020. During fiscal year 2021, our Company TSR exceeded the TSR of our peer group. Both our Company TSR and the peer group TSR for 2022 were negatively affected by the general market decline in stock prices during 2022.
​
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Relationship Between Total Shareholder Return and Compensation Actually Paid

graphic
Although the Company did not rely on any performance measures to link the compensation of its chief financial officer, the Company’s only non-PEO named executive officer, to the performance of the Company, the above table illustrates the relationship between the compensation actually paid during fiscal years 2020, 2021, and 2022, respectively, to our named executive officer versus the Company’s total shareholder returns during the same period. As described in our CD&A, during fiscal years 2020, 2021, and 2022 the Company did not compensate our PEO.
​
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Relationship Between Compensation Actually Paid and Net Income

graphic
Although the Company did not rely on any performance measures to link the compensation of its chief financial officer, the Company’s only non-PEO named executive officer, to the performance of the Company, the above table illustrates the relationship between the compensation actually paid during fiscal years 2020, 2021, and 2022, respectively, to our named executive officer versus net income during the same period. As described in our CD&A, during fiscal years 2020, 2021, and 2022 the Company did not compensate our PEO.
Relationship Between Compensation Actually Paid Versus Company Selected Measure

As noted above, for the fiscal year ended December 31, 2022, the Company did not compensate its PEO and the Company did not rely on any performance measures to link the compensation of its chief financial officer, the Company’s only other named executive officer, to the performance of the Company. Accordingly, a description regarding the relationship between the compensation actually paid versus the “company selected performance measure” is not provided. Information regarding the compensation of our named executive officer is set forth in our Compensation Discussion and Analysis on pages 30 and 31 of this Proxy Statement.
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Compensation Committee Report

 
We have reviewed and discussed with management the Compensation Discussion and Analysis provisions to be included in the Company’s 20222023 Proxy Statement filed pursuant to Section 14(a) of the Exchange Act. Based on the reviews and discussions referred to above, we recommend to the Board that the Compensation Discussion and Analysis referred to above be included in the Company’s 20222023 Proxy Statement.
Members of the Compensation Committee

Harold S. Edwards, Chairman
Chair
Alexander S. Bhathal

Gordon M. Burns
The information contained in the report above shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Exchange Act or the Securities Act of 1933, as amended, except to the extent that we specifically incorporate it by reference in such filing.
​
20222023 PROXY STATEMENT 3042
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​​

graphic
 
​
3143 COMPASS DIVERSIFIED
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Our Auditors
Our Auditors
PROPOSAL 4: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
GeneralGENERAL
Our Board has recommended and asks that you ratify the appointment of Grant Thornton LLP as the independent auditor for the Company and the Trust for the fiscal year ending December 31, 2022.2023. You would be so acting based on the recommendation of our audit committee.
Grant Thornton LLP was appointed by our audit committee to audit the annual financial statements of the Company and the Trust for the fiscal years ended December 31, 20212022 and December 31, 2020,2021, respectively. Based on its past performance during these audits, the audit committee of the Board has appointed Grant Thornton LLP as the independent auditor to perform the audit of our financial statements and internal control over financial reporting for fiscal year 2022.2023. Grant Thornton LLP is a registered public accounting firm. Information regarding Grant Thornton LLP can be found at: www.grantthornton.com.
The affirmative vote of a majority of the outstanding shares present in person or represented by proxy at the Annual Meeting is required to ratify the appointment of Grant Thornton LLP. If you do not ratify the appointment of Grant Thornton LLP, our Board will reconsider its appointment of Grant Thornton LLP and may, in its sole discretion, make a new proposal for independent auditor.
Representatives of Grant Thornton LLP are expected to be present at the Annual Meeting, will have the opportunity to make a statement if they desire to do so and are expected to be available to respond to appropriate questions.
FeesFEES
The chart below sets forth the total amount billed to us by Grant Thornton LLP for services performed for fiscal years 20212022 and 2020,2021, respectively, and breaks down these amounts by category of service:
​
 
​
2021
​
2020
​
 
​
2022
​
2021
​
​
Audit Fees (1)
​
$5,613,296
​
$4,869,195
​
Audit Fees(1)
​
$6,006,445
​
$5,269,551
​
​
Audit-Related Fees (2)
​
​726,805
​
—
​
Audit-Related Fees(2)
​
136,600
​
710,550
​
​
Tax Fees (3)
​
50,548
​
200,686
​
Tax Fees(3)
​
16,356
​
50,548
​
​
All Other Fees (4)
​
—
​
12,500
​
All Other Fees(4)
​
—
​
—
​
​
Total
​
$6,390,648
​
$5,082,381
​
Total
​
$6,159,401
​
$6,390,648
​
(1)

“Audit Fees” are the aggregate fees billed by Grant Thornton LLP for professional services rendered in connection with the audit of our consolidated financial statements included in our annual reports on Form 10-K and for the review of financial statements included in our quarterly reports on Form 10-Q, or for services that are normally provided by the auditors in connection with statutory and regulatory filings or engagements.
(2)

“Audit-Related Fees” are the aggregate fees billed by Grant Thornton LLP for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under “Audit Fees,” above.
(3)

“Tax Fees” are the aggregate fees billed by Grant Thornton LLP for professional services rendered in connection with tax compliance, advice and planning. The 20212022 and 20202021 fees were rendered for general tax compliance advice for one or more Company subsidiaries.
(4)
“All Other Fees” in 2020 related to executive compensation benchmarking performed by Grant Thornton LLP.
Pre-Approval Policies and ProceduresPRE-APPROVAL POLICIES AND PROCEDURES
The audit committee has established policies and procedures for its appraisal and approval of audit and non-audit services. The audit committee has also delegated to the chairmanchair of the audit committee the authority to approve additional audit and non-audit services and, subject to compliance with all applicable independence requirements, to approve the engagement of additional accounting firms to provide such services.services, with subsequent ratification and approval by the audit committee. While all other audit-related, tax and other fees may be approved by the audit committee prospectively, the audit committee or its chairmanchair has pre-approved all of the services provided by Grant Thornton LLP since its engagement.
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In making its recommendation to ratify the appointment of Grant Thornton LLP as the independent auditor for the fiscal year ending December 31, 2022,2023, the audit committee has considered whether the services provided by Grant Thornton LLP are compatible with maintaining the independence of Grant Thornton LLP and has determined that such services do not interfere with Grant Thornton LLP’s independence.
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Recommendation of the Board
Our Board recommends that you vote, based on the recommendation of the audit committee, FOR the ratification of the appointment of Grant Thornton LLP to serve as the independent auditor for the Company and the Trust for the fiscal year ending December 31, 2022.2023.
​
45 COMPASS DIVERSIFIED
​
Audit Committee Report

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​​
Audit Committee Report
Our audit committee is composed of three independent directors, all of whom are financially literate. In addition, the Board has determined that Mr. Bottiglieri, an independent director and the chairmaneach of Ms. Shaffer, chair of the audit committee, and Mr. Bottiglieri qualifies as audit committee financial expert“financial expert” as defined by the SEC. The audit committee operates under a written charter, which reflects the NYSE listing standards and Sarbanes Oxley Act of 2002, as amended, requirements regarding audit committees. A copy of the current audit committee charter is available on the Company’s website at www.compassdiversified.com.
The audit committee’s primary role is to assist the Board in fulfilling its responsibility for oversight of (1) the quality and integrity of the consolidated financial statements and related disclosures, (2) compliance with legal and regulatory requirements, (3) the independent auditor’s qualifications, independence and performance, and (4) the performance of our internal audit and control functions.
The Company’s management is responsible for the preparation of the financial statements, the financial reporting process and the system of internal controls. The independent auditors are responsible for performing an audit of the financial statements in accordance with auditing standards generally accepted in the United States and issuing an opinion as to the conformity of those audited financial statements to U.S. generally accepted accounting principles. The audit committee monitors and oversees these processes.
The audit committee has adopted a policy designed to ensure proper oversight of our independent auditor. Under the policy, the audit committee is directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing any other audit review (including resolution of disagreements among management, the Manager, and the auditor regarding financial reporting), or attestation services. In addition, the audit committee is responsible for pre-approving any non-audit services provided by the Company’s independent auditors. The audit committee’s charter also ensures that the independent auditor discusses with the audit committee important issues such as internal controls, critical accounting policies, any instances of fraud and the consistency and appropriateness of our accounting policies and practices.
The audit committee has reviewed and discussed with management and Grant Thornton LLP, the Company’s independent auditor, the audited financial statements as of and for the year ended December 31, 2021.2022. The audit committee has also discussed with Grant Thornton LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. In addition, the audit committee has received the written disclosures and the letter from the independent auditor required by applicable requirements of the PCAOB regarding the independent auditor’s communications with the audit committee concerning independence and has discussed with the independent auditor the independent auditor’s independence. The audit committee also considered whether the non-audit services provided by Grant Thornton LLP to us during 20212022 were compatible with its independence as auditor.
Based on these reviews and discussions, the audit committee has recommended to the Board, and the Board has approved, the inclusion of the audited financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.2022.
Members of the Audit Committee

Teri R. Shaffer, Chair
James J. Bottiglieri Chairman
Larry L. Enterline

Harold S. Edwards
The information contained in the report above shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Exchange Act or the Securities Act of 1933, as amended, except to the extent that we specifically incorporate it by reference in such filing.
​
33 COMPASS DIVERSIFIED2023 PROXY STATEMENT 46
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​​
Our Shareholders

 
Share Ownership of Directors, Nominees, Executive Officers and Principal Shareholders

The following table sets forth information regarding the beneficial ownership of shares of Trust common stock by each person who is known to us to be the beneficial owner of more than five percent of the outstanding shares of Trust common stock, each of our directors, nominees and executive officers, and our directors, nominees and executive officers as a group as of March 31, 2022,28, 2023, (except otherwise noted below) based on 69,450,31872,202,729 shares issued and outstanding. All holders of shares of Trust common stock are entitled to one vote per share on all matters submitted to a vote of holders of shares of Trust common stock. The voting rights attached to shares of Trust common stock held by our directors, director nominees, executive officers or major shareholders do not differ from those that attach to shares of Trust common stock held by any other holder. Under Rule 13d-3 of the Exchange Act, “beneficial ownership” includes shares for which the individual, directly or indirectly, has voting power, meaning the power to control voting decisions, or investment power, meaning the power to cause the sale of the shares, whether or not the shares are held for the individual’s benefit. The address for each director and executive officer is 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880.
​
Name and Address of Beneficial Owner
​​
Amount and Nature of

Beneficial Ownership
​​
Percent of

Shares

Outstanding
​
​
​5% Beneficial OwnersOwners:
​​
​​
​
​
CGI Diversified Holdings, LP(1)
​​
​8,264,8197,942,974
​​
​11.9%11.0%
​
​
​American Century Investment Management, Inc.(2)
​​
​5,644,6576,447,346
​​
​8.1%8.92%
​
​
​The Vanguard Group(3)
​​
​3,971,1335,052,514
​​
​5.7%6.99%
​
​
Directors, Nominees and Executive Officers:
​​
​​
​
​
C. Sean Day(4)Alexander S. Bhathal
​​
625,0805,727
​​
*
​
​
James J. Bottiglieri
​​
77,36783,094
���​​
*
​
​
Gordon M. Burns(4)
​​
75,120
​​
*
​
​
C. Sean Day(5)
​​
631,382
​​
*
​
​
Harold S. Edwards
​​
65,689
​​
*
​
​
​Alexander S. Bhathal(5)
​​
—
​​
​
​
Sarah G. McCoy
​​
27,570
​​
*
​
​
Gordon M. Burns(6)
​​
69,393
​​
*
​
​
Ryan J. Faulkingham(7)
​​
21,84171,416
​​
*
​
​
Larry L. Enterline
​​
12,20018,502
​​
*
​
​
Ryan J. Faulkingham(6)
​​
21,841
​​
*
​
​
Sarah G. McCoy(7)
​​
33,297
​​
*
​
​
Teri R. Shaffer
​​
2,864
​​
*
​
​
Elias J. Sabo(8)
​​
815,150
​​
*
​
​
Nancy B. Mahon(9)
​​
-0-
​​
*
​
​
All Directors, Nominees and Executive Officers as a Group
​​
​1,714,2901,758,393
​​
​2.5%2.4%
​
*

Less than 1%.
(1)

The Trust common shares (the “Shares”) are owned directly by CGI Magyar Holdings, LLC, which is owned by Anholt Services (USA), Inc., and CGI Diversified Hungary Kft. Anholt Services (USA), Inc. is owned by Anholt Investments Ltd. (formerly known as Compass Group Investments, Ltd.). CGI Diversified Hungary Kft. is owned by CGI Diversified Holdings, LP. CGI Diversified Holdings, LP is owned by Anholt Investments Ltd., its sole limited partner, and Navco Management, Ltd., its general partner. Anholt Investments Ltd. and Navco Management, Ltd. are wholly owned by Kattegat Limited, a Bermudian exempt company with its principal offices at Belvedere Building, 69 Pitts Bay Road, Pembroke HM 08, Bermuda. Kattegat Limited was formed for the purpose of holding and managing the endowed assets of The Kattegat Trust and is wholly owned by The Kattegat Trust. The Kattegat Trust is a Bermudian charitable trust, engaged in the principal business of distributing income for charitable purposes, with its principal offices at Wessex House, 5th Floor, 45 Reid St., Hamilton HM12. The trustee of The Kattegat Trust is Kattegat Private Trustees (Bermuda) Limited (the “Trustee”), a Bermudian trust company with its principal offices at Wessex House, 5th Floor, 45 Reid St., Hamilton HM12. Path Spirit Limited is the trust protector for The Kattegat Trust. The Trustee is wholly owned by The Lund Purpose Trust, a Bermudian purpose trust with its principal offices at Thistle House, 4 Burnaby Street, Hamilton HM 11, Bermuda.Bermuda, formed for the sole purpose of holding the shares of the Trustee. Anholt Investments Ltd., Navco Management, Ltd., Path Spirit Limited, Anholt Services (USA), Inc., CGI Diversified Hungary Kft. and CGI Magyar Holdings, LLC disclaim beneficial ownership of the Shares, except to the extent of their pecuniary interest therein. This information is based on a Form 4 filed by Anholt Investments Ltd. on March 18, 2021 and a Form 13D/A filed by CGI Diversified Holdings, LP on February 7, 2017.
​
47 COMPASS DIVERSIFIED
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Ltd., Navco Management, Ltd., Path Spirit Limited, Anholt Services (USA), Inc., CGI Diversified Hungary Kft. and CGI Magyar Holdings, LLC disclaim beneficial ownership of the Shares, except to the extent of their pecuniary interest therein. This information is based on a Form 4 filed by Anholt Investments Ltd. on March 20,2023 and a Form 13D/A filed by CGI Diversified Holdings, LP on May 5, 2022.
(2)

The address for American Century Investment Management, Inc. is 4500 Main Street 9th9th Floor, Kansas City, Missouri, 64111. This information is based on a Schedule 13G/A filed by American Century Investment Management, Inc. on February 4, 2022.8, 2023. American Century Investment Management, IncInc. has sole dispositive power over 5,664,6576,447,346 shares, shared dispositive power over 0 shares, sole voting power over 5,531,1886,322,155 shares and shared voting power over 0 shares.
​
2022 PROXY STATEMENT 34
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(3)

The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. This information is based on a Schedule 13G13G/A filed by The Vanguard Group on February 9, 2022.2023. The Vanguard Group has sole dispositive power over 3,971,1334,979,364 shares, shared dispositive power over 73,150 shares, sole voting power over 0 shares and sole or shared voting power over 042,040 shares.
(4)

468,51721,503 of these shares are beneficially owned directly by Mr. Burns, 30,000 of these shares are beneficially owned by Mr. Burns through a trust settled by Mr. Burns’ spouse and 23,617 of these shares are beneficially owned by Mr. Burns through the Gordon M. Burns 2009 Revocable Trust.
(5)
474,819 of these shares are beneficially owned directly by Mr. Day and 156,563 additional shares are beneficially owned by Mr. Day through the Day Family 2007 Irrevocable Trust.
(5)
Mr. Bhathal joined our Board in January of 2022 and has not yet purchased shares in the Company.
(6)
15,776 of these shares are beneficially owned directly by Mr. Burns, 23,617 of these shares are beneficially owned by Mr. Burns through a trust settled by Mr. Burns’ spouse and 30,000 of these shares are beneficially owned by Mr. Burns through the Gordon M. Burns 2009 Revocable Trust.
(7)

787 of these shares are beneficially owned by Mr. Faulkingham and directly by Mr. Faulkingham’s spouse.
(7)
Ms. McCoy is not standing for re-election at the 2023 Annual Meeting.
(8)

229,601 of these shares are owned by our Manager, and Mr. Sabo is the managing and controlling member of our Manager. Mr. Sabo disclaims beneficial ownership of these shares, except to the extent of his pecuniary interest. The 229,601 shares owned by our Manager were purchased by it on the open market and are pledged as collateral to Bank of America, N.A., pursuant to a loan agreement entered into by ouror Manager as of January 4, 2019, as amended, modified or restated from time to time.
(9)
Ms. Mahon is a director nominee and currently owns no shares of the Company’s stock.
Series B Preferred
The following table sets forth information regarding the beneficial ownership of our Series B Fixed-to-Floating Rate Cumulative Preferred Shares (the “Series B”) by each of our directors and executive officers, and our directors and executive officers as a group as of March 31, 2022,28, 2023, based on 4,000,000 shares of Series B issued and outstanding. The Series B is not convertible into common stock and the holders of the shares of the Series B are only entitled to limited voting rights, as provided in the share designation. The address for each director and executive officer is 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880.
​
Name and Address of Beneficial Owner
​​
Amount and Nature

of Beneficial

Ownership
​​
Percent of Shares

Outstanding
​
​
Directors, Nominees and Executive Officers:
​
​
Gordon M. Burns(1)
​​
23,297
​​
*
​
​
All Directors, Nominees and Executive Officers as a Group
​​
23,297
​​
*
​
*

Less than 1%.
(1)

All of these shares are beneficially owned by Mr. Burns through the Gordon M. Burns 2009 Revocable Trust.
Series C Preferred
The following table sets forth information regarding the beneficial ownership of our Series C Cumulative Preferred Shares (the “Series C”) by each of our directors and executive officers, and our directors and executive officers as a group as of March 31, 2022,28, 2023, based on 4,600,000 shares of Series C issued and outstanding. The Series C is not convertible into common stock and the holders of the shares of the Series C are only entitled to limited voting rights, as provided in the
share designation. The address for each director and executive officer is 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880.
​
Name and Address of Beneficial Owner
​​
Amount and Nature of

Beneficial Ownership
​​
Percent of

Shares

Outstanding
​
​
Directors, Nominees and Executive Officers:
​
​
Gordon M. Burns(1)
​​
2,500
​​
*
​
​
All Directors, Nominees and Executive Officers as a Group
​​
2,500
​​
*
​
*

Less than 1%.
(1)

All of these shares are beneficially owned by Mr. Burns through the Gordon M. Burns 2009 Revocable Trust.
Company Two Class Equity Interests
The following table sets forth certain information as of March 31, 202228, 2023 regarding the beneficial ownership of the Company’s two classes of equity interests.
​
 
​
Number of
Interests(1)
​
Percent of
Class
​
 
​
Number of
Interests(1)
​
Percent of
Class
​
​
Sostratus LLC
​
​
​
Sostratus LLC
​
​
​
​
Allocation interests(2)
​
1,000
​
100%
​
Allocation interests(2)
​
1,000
​
100%
​
​
Trust interests
​
—
​
—
​
Trust interests
​
—
​
—
​
​
Compass Diversified Holdings(3)
​
​
​
Compass Diversified Holdings(3)
​
​
​
​
Allocation interests
​
—
​
—
​
Allocation interests
​
—
​
—
​
​
Trust interests
​
69,450,318
​
100%
​
Trust interests
​
​72,202,729
​
100%
​
(1)

Compass Group Diversified Holdings LLC has two classes of equity interests: allocation interests and trust interests.
(2)

Mr. Sabo may be deemed to be the beneficial owner of approximately 17% of the allocation interests. Mr. Day may be deemed to be the beneficial owner of 5% of the allocation interests as he indirectly shares in 5% of the proceeds of the allocation interests. Mr. Faulkingham may be deemed to be the beneficial owner of approximately 3%20% of the allocation interests as he indirectly shares in approximately 3%20% of the proceeds of distributions made with respect to the allocation interests.
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Mr. Day may be deemed to be the beneficial owner of approximately 5% of the allocation interests as he indirectly shares in approximately 5% of the proceeds of distributions made with respect the allocation interests. Mr. Faulkingham may be deemed to be the beneficial owner of approximately 5% of the allocation interests as he indirectly shares in approximately 5% of the proceeds of distributions made with respect to the allocation interests.
(3)

Each beneficial interest in the Trust corresponds to one underlying trust interest of the Company. Unless the Trust is dissolved, it must always remain the sole holder of 100% of the trust interests and the Company will have outstanding the identical number of trust interests as the number of outstanding shares of stock of the Trust. As a result of the corresponding interests between shares of stock of the Trust and trust interests, each holder of shares identified in the table above relating to the Trust is deemed to beneficially own a correspondingly proportionate interest in the Company.
​
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The following table sets forth certain information as of March 31, 2022 regarding the beneficial ownership by Mr. Day of equity interests in the parent of Advanced Circuits, Inc., one of our subsidiary businesses.
​
Owner
​​
Entity
​​
Number of
Shares(1)
​​
Percent of
Class
​
​
C. Sean Day
​​
Compass AC Holdings, Inc. (sole shareholder of Advanced Circuits, Inc.), Series B Common Stock
​​
10,000
​​
0.8%
​
(1)
Mr. Day is the direct owner of 6,480 shares of Series B Common Stock and Mr. Day’s children are the owners in the aggregate of 3,520 shares of Series B Common Stock. Compass AC Holdings, Inc. has been classified as held for sale at December 31, 2021.
Securities Authorized for Issuance under Equity Compensation PlansSECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
There are no securities currently authorized for issuance under an equity compensation plan.
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires our directors and executive officers and beneficial owners of 10 percent or more of a registered class of our equity securities to file with the SEC initial reports of beneficial ownership (Form 3) and reports on changes in beneficial ownership (Form 4 or 5). SEC rules adopted pursuant to Section 16(a) require that such persons furnish us with copies of all such forms they file with the SEC. Based solely upon our review of such forms (and amendments thereto) furnished to us during fiscal year 2022, and upon representations received by us from certain of our directors, and executive officers, we believe that our directors, executive officers and beneficial owners of 10 percent or more of a registered class of our equity securities complied with all Section 16(a) filing requirements on a timely basis during fiscal year 2022.
Shareholder Proposals for the 20232024 Annual Meeting of Shareholders

To be considered for inclusion in our proxy statement for the 2023 Annual Meeting2024 annual meeting of Shareholders,shareholders, shareholder proposals must be received by the Company no later than December 13, 2022.14, 2023. In order to be included in Company-sponsored proxy materials, shareholder proposals will need to comply with Rule 14a-8 promulgated under the Exchange Act. If you do not comply with Rule 14a-8, we will not be required to include the proposal in the proxy statement and the proxy card we will mail to shareholders.
With respect to shareholder proposals not wishing to be included in Company-sponsored proxy materials, but rather to be brought as business at the Annual Meeting,annual meeting, our governing documents prescribe certain advance notice procedures independent of the notice requirement and deadline described above. To be timely, a shareholder’s notice is
required to be delivered to the Secretary not less than 120 days and no more than 150 days prior to the first anniversary of the preceding year’s Annual Meeting.annual meeting. However, in the event that the date of the Annual Meetingannual meeting is more than 30 days before or more than 70 days after such anniversary date, notice by a shareholder must be so delivered not earlier than the close of business on the 120th day prior to such Annual Meetingannual meeting and not later than the 90th day prior to such Annual Meetingannual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Therefore, to be timely under our organizationalgoverning documents, a proposal for the 2023 Annual Meeting2024 annual meeting not included by or at the direction of the Board must be received no earlier than December 26, 202227, 2023 and no later than January 25, 2023.
26, 2024. Shareholder proposals should be sent to the Secretary at Compass Group Diversified Holdings LLC, 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880, Attention: Investor Relations.
See the section titled “BOARD OF DIRECTORS, EXECUTIVE OFFICERS AND COMMITTEES – Shareholder Nominations of Directors” for a discussion of shareholders’ ability to nominate directors. In addition to satisfying the foregoing notice requirements under our governing documents, to comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than March 26, 2023.2024.
United States Securities and Exchange Commission Reports

Copies of our Annual Report on Form 10-K for the year ended December 31, 2021,2022, as filed with the SEC, are available to shareholders free of charge on our website at www.compassdiversified.com under the caption “CODI Investor Relations — Financials & Filings” or by writing to us at 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880, Attention: Investor Relations. Alternatively, a copy of such Annual Report on Form 10-Kwill10-K will also be available to shareholders free of charge on a website maintained by Broadridge Financial Solutions, Inc. and may be viewed at http://materials.proxyvote.com/20451Q.20451Q.
Other Matters

We know of no other business that will be brought before the Annual Meeting. If any other matter or any proposal should be properly presented and should properly come before the meeting for action, the persons named in the accompanying proxy will, at their discretion and in accordance with their best judgment, vote upon such proposal.
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Delivery of Documents to Shareholders Sharing an Address

We and some brokers have adopted “householding,” a procedure under which shareholders who have the same address will receive a single set of proxy materials,Proxy Materials, unless one or more of these shareholders provides notice that they wish to continue receiving individual copies. Shareholders who participate in householding will continue to receive separate proxy cards.
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If you participate in householding and wish to receive a separate set of these proxy materials,Proxy Materials, or if you wish to receive
separate copies of future notices, annual reports and proxy statements, please call 1-800-542-1061 or write to: Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717. We will deliver the requested documents to you promptly upon your written or verbal request.
Any shareholders of record who share the same address and currently receive multiple copies of proxy materialsProxy Materials who wish to receive only one copy of these materials per household in the future may contact Broadridge at the address or telephone number listed above. If you hold your shares through a broker, bank or other nominee, please contact your broker, bank, or other nominee to request information about householding.
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Proxy Statement forInformation Regarding Annual Meeting of Shareholders
COMPASS DIVERSIFIED HOLDINGS
COMPASS GROUP DIVERSIFIED HOLDINGS LLC
301 Riverside Avenue, Second Floor Westport, Connecticut 06880
Proxy Statement for Annual Meeting of Shareholders
This proxy statementProxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors, the “Board”, of Compass Group Diversified Holdings LLC, a Delaware limited liability company, which we refer to as the Company,“Company”, for the 20222023 Annual Meeting of Shareholders, which we refer to as the Annual Meeting,“Annual Meeting”, of Compass Diversified Holdings, which we refer to as the Trust,“Trust”, to be held on Wednesday,Thursday, May 25, 20222023 at 12:00 p.m., Eastern Time, via live audio webcast, and for any adjournment(s) or postponement(s) thereof. The notice of Annual Meeting, proxy statementProxy Statement and proxy are first being mailed or provided to shareholders on or about April 12, 2022.2023. The Annual Meeting will be a completely virtual meeting.
Purpose of Meeting

As described in more detail in this proxy statement,Proxy Statement, the Annual Meeting is being held for the following purposes:
to elect seven (7)eight (8) directors named in the proxy statementProxy Statement to serve for a one-year term expiring at the 20232024 Annual Meeting of Shareholders;
to approve, on a non-binding and advisory basis, the resolution approving the compensation of our named executive officers as disclosed in the proxy statement;Proxy Statement (“Say-on-Pay Vote”);
to conduct an advisory vote on whether the shareholder advisory vote on executive compensation should occur every one, two or three years (“Frequency of Say-on-Pay Vote”);
to ratify the appointment of Grant Thornton LLP to serve as the independent auditor for Compass Diversified Holdings and Compass Group Diversified Holdings LLC for the fiscal year ending December 31, 2022;2023; and
to transact such other matters as may properly come before the meeting and any postponement(s) or adjournment(s) thereof.
Attending and Voting at the Annual Meeting

Broadridge Financial Solutions, Inc., which we refer to as Broadridge,“Broadridge”, has been selected as our inspector of election. As part of its responsibilities, Broadridge is required to independently verify that you are a shareholder of the Trust eligible to attend the Annual Meeting, and to determine whether you may vote at the Annual Meeting. Therefore, it is very important that you follow the instructions below to gain entry to the Annual Meeting.
Notice and AccessNOTICE AND ACCESS
The Securities and Exchange Commission, which we refer to as the SEC, has adopted a “Notice and Access” rule that allows companies to deliver a Notice of Internet Availability of Proxy Materials, which we refer to as the Notice of Internet Availability, to shareholders in lieu of a paper copy of the proxy statementProxy Statement and related materials and the Company’s Annual Report to Shareholders, which we refer to as the Proxy“Proxy Materials.” The Notice of Internet Availability provides instructions as to how shareholders can access the Proxy Materials online, contains a listing of matters to be considered at the meeting and sets forth instructions as to how shares can be voted. Shares must be voted either by telephone, online or by completing and returning a proxy card. Shares cannot be voted by marking, writing on and/or returning the Notice of Internet Availability. Any Notices of Internet Availability that are returned will not be counted as votes. Instructions for requesting a paper copy of the Proxy Materials are set forth on the Notice of Internet Availability.
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Important Notice Regarding Availability of Proxy Materials for the Annual Meeting to be Held on May 25, 2022:2023:
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The Proxy Materials are available at

www.proxyvote.com.
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Enter the 16-digit control number located on the Notice

of Internet Availability or proxy card.
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Voting by ProxyVOTING BY PROXY
If at the close of business on March 28, 2022,2023, you were a shareholder of record, you may vote your shares by proxy through the Internet, by telephone or by mail, or you may vote electronically during the Annual Meeting at www.virtualshareholdermeeting.com/CODI2022CODI2023 when you enter the control number that appears on the proxy card or the Notice of Internet Availability that have been provided to you. For shares held through a broker, bank or other nominee, you may vote by submitting voting instructions to your broker, bank or other nominee. Please refer to information from your broker, bank or other nominee on how to submit voting instructions. To reduce our administrative costs and help the environment by conserving natural resources, we ask that you vote through the Internet or by telephone, both of which are available 24 hours a day. You may revoke your proxies at the times and in the manners described in this proxy statement.
If you are a shareholder of record or hold shares through a broker, bank or other nominee and are voting by proxy, your vote must be received by 11:59 p.m., Eastern Time, on May 24, 20222023 to be counted.
To vote by proxy:
BY INTERNET
Go to the website www.proxyvote.com
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Go to the website www.proxyvote.com and follow the instructions, 24 hours a day, seven days a week.
You will need the 16-digit control number included on your proxy card or Notice of Internet Availability to vote online.
BY TELEPHONE
From a touch-tone telephone, dial 1-800-690-6903 and follow the recorded instructions, 24 hours a day, seven days a week.
You will need the 16-digit control number included on your proxy card or Notice of Internet Availability in order to vote by telephone.
BY MAIL
If you received paper copies of the Proxy Materials, mark your selections on the proxy card that accompanies this proxy statement.
Date and sign your name exactly as it appears on your proxy card.
Mail the proxy card in the enclosed postage-paid envelope provided to you.
Electronically Attending the Special MeetingELECTRONICALLY ATTENDING THE SPECIAL MEETING
We are sensitive to the public health and travel concerns of our shareholders and employees and the protocols that federal, state and local governments have imposed, and may continue to impose, due to COVID-19 (Coronavirus). The Annual Meeting therefore, is being hosted via live audio webcast. There will not be a traditional in-person meeting. A summary of the information you need to attend the Annual Meeting online is provided below:
Any shareholder can attend the Annual Meeting via live audio webcast at www.virtualshareholdermeeting.com/CODI2022
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Any shareholder can attend the Annual Meeting via live audio webcast at www.virtualshareholdermeeting.com/CODI2023.
We encourage you to access the Annual Meeting online prior to its start time.
The Annual Meeting starts at 12:00 p.m., Eastern Time.Time on Thursday, May 25, 2023.
Shareholders may vote and electronically submit questions while attending the Annual Meeting on the live audio webcast.
Please have the control number that appears on the proxy card or Notice of Internet Availability that you have been provided in order to join the Annual Meeting.
Instructions on how to attend and participate via live audio webcast are posted at www.virtualshareholdermeeting.com/CODI2022
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Instructions on how to attend and participate via live audio webcast are posted at www.virtualshareholdermeeting.com/CODI2023.
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting during check-in or the meeting, please call the technical support number that will be posted on the virtual meeting platform log-in page.
Appointment of Proxy

Shareholders of Record.Record We encourage you to appoint a proxy to vote on your behalf by submitting a proxy via the Internet or telephone or, if you received paper copies of the Proxy Materials, by promptly submitting the enclosed proxy card, which is solicited by the Company’s board of directors, which we refer to as our Board or the Board, and which, when properly completed, signed, dated and returned to us, will ensure that your shares are voted as you direct. We strongly encourage you to submit a proxy regardless of whether you will electronically attend the Annual Meeting to ensure that your vote is represented at the Annual Meeting.
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Please return your proxy card to us in the accompanying envelope, or submit your vote by telephone or online, no later thanPLEASE RETURN YOUR PROXY CARD TO US IN THE ACCOMPANYING ENVELOPE, OR SUBMIT YOUR VOTE BY TELEPHONE OR ONLINE, NO LATER THAN 11:59 p.m.P.M., Eastern Time, on MayEASTERN TIME, ON MAY 24, 20222023. If we do not receive your proxy card or vote by that time, your proxy will not be valid. In this case, unless you electronically attend the annual meeting, your vote will not be represented.IF WE DO NOT RECEIVE YOUR PROXY CARD OR VOTE BY THAT TIME, YOUR PROXY WILL NOT BE VALID. IN THIS CASE, UNLESS YOU ELECTRONICALLY ATTEND THE ANNUAL MEETING, YOUR VOTE WILL NOT BE REPRESENTED.
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The persons named in the proxy card are officers of the Company and have been designated as proxies by our Board. TheThese designated proxies are officers of the Company. They will vote as directed by the completed proxy card.
If you wish to change your vote, you may do so by revoking your proxy before the Annual Meeting. Please see the section titled “Revocation of Proxy” below for more information.
Beneficial Owners. OwnersIf you hold your shares in street name, these Proxy Materials are being forwarded to you by your bank, broker or their appointed agent. If you requested printed copies of these Proxy Materials, you should also have received a voter instruction card instead of a proxy card. Your bank or broker will vote your shares as you instruct on the voter instruction card. We strongly encourage you to promptly complete and return your voter instruction card to your bank or broker in accordance with their instructions so that your shares are voted. As described above, youYou may also request a legal proxy from your bank or broker to vote electronically at the Annual Meeting.
Voting by the Designated ProxiesVOTING BY THE DESIGNATED PROXIES
The persons who are the designated proxies will vote as you direct in your proxy card or voter instruction card. Please note that proxy cards returned without voting directions, and without specifying a proxy to attend the Annual Meeting and vote on your behalf, will be voted by the proxies designated by our Boardproxies in accordance with the recommendations of our Board. Our Board recommends:
a vote FOR ALL seven director nominees to the Company’s board of directors for a one-year term ending at the 2023
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a vote FOR ALL eight director nominees to the Company’s board of directors for a one-year term ending at the 2024 Annual Meeting of Shareholders (Proposal 1);
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a vote FOR the approval, on a non-binding and advisory basis, of the resolution approving the compensation of our named executive officer(s) as disclosed in the Proxy Statement (“Say-on-Pay Vote”) (Proposal 2);
a vote FOR the approval, on a non-binding and advisory basis, of the resolution approving the compensation of our named executive officers as disclosed in the proxy statement (Proposal 2); and
a vote FOR the ratification of the appointment of Grant Thornton LLP to serve as the independent auditor for
Compass Diversified Holdings and Compass Group Diversified Holdings LLC for the fiscal year ending December 31, 2022
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a vote for the approval of the proposal that the shareholder advisory vote on executive compensation occur every 1 YEAR (“Frequency of Say-on-Pay Vote”) (Proposal 3); and
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a vote FOR the ratification of the appointment of Grant Thornton LLP to serve as the independent auditor for Compass Diversified Holdings and Compass Group Diversified Holdings LLC for the fiscal year ending December 31, 2023 (Proposal 4).
If any other matter properly comes before the Annual Meeting, your proxies will vote on that matter in their discretion.
Revocation of ProxyREVOCATION OF PROXY
You may revoke or change your proxy before the Annual Meeting by:
sending us a duly executed written notice of revocation prior to the Annual Meeting;
electronically attending and voting at the Annual Meeting; OR
ensuring that we receive from you, prior to 11:59 p.m., Eastern Time, on May 24, 2022 a new proxy card with a later date or voting at a later date via the Internet or telephone.
Any written notice of revocation must be sent to the attention of Carrie W. Ryan, Secretary, Compass Group Diversified Holdings LLC, 301 Riverside Avenue, Second Floor, Westport, Connecticut 06880 or by facsimile to (203) 221-8253.
Approval of Proposals and Solicitation

Each shareholder who owned shares of Trust common stock on March 28, 2022,2023, the record date for the determination of shareholders entitled to vote at the Annual Meeting, is entitled to one vote for each such share of Trust common stock. On March 28, 2022,2023, we had 69,450,31872,202,729 shares of Trust common stock issued and outstanding that were held by approximately 46,00045,541 beneficial holders.holders and 14 record holders
QuorumQUORUM
Under the terms of the Third Amended and Restated Trust Agreement of the Trust, dated August 3, 2021, which we refer to as the Trust“Trust Agreement” and the LLC Agreement, the shareholders present in person or by proxy holding a majority of the then outstanding voting shares of the Trust common stock entitled to vote shall constitute a quorum at a meeting of shareholders of the Trust. Under the terms of the Sixth Amended and Restated Operating Agreement of the Company, dated as of August 3, 2021, as amended by that First Amendment dated as of February 11, 2022, which we refer to as the LLC Agreement, holders of shares of Trust common stock are the only shareholders entitled to vote at the Annual Meeting..Trust’s shareholders. The Series A Trust Preferred Interests, the Series B Trust Preferred Interests and the Series C Trust Preferred Interests, which we refer to collectively as the preferred interests, are not “Votingconsidered outstanding voting shares of the Trust Interests” for purposes of the LLC Agreement. Shares represented by proxies thatAnnual Meeting. Accordingly, holders of shares of Trust common stock are marked “abstain” will be counted as shares present forthe only shareholders entitled to vote at the Annual Meeting. For purposes of determining the
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presence of a quorum. Sharesquorum, shares of Trust common stock that are represented by broker non-votes and/or represented by proxies that are marked “abstain” or “withhold” will be counted as shares present for purposes of determining the presence of a quorum. A broker non-vote occurs when the broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power to vote on that proposal without specific voting instructions from the
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beneficial owner. Proposals 1, 2 and 23 described in this proxy are non-discretionary items and Proposal 34 described in this proxy is a discretionary item. Broker non-votes will not be counted or deemed to be present in person or by proxy and entitled to vote for the purpose of determining whether our shareholders have approved a matter
If the persons present or represented by proxies at the Annual Meeting do not constitute a majority of the holders of the outstanding Trust common stockshares entitled to vote as of the record date, we will postpone the Annual Meeting to a later date.
ApprovalAPPROVAL OF PROPOSALS
Proposal 1
Assuming the presence of Proposals
For the election of directors (Proposal 1), the affirmative vote of at leasta quorum, each director nominee receiving a plurality of the votes cast on such proposal is required.at the Annual Meeting (in person or by proxy) will be elected as a director. No shareholdersshareholder shall be permitted to cumulate votes for the election of directors. The election of directors is a non-discretionary item and brokers may not vote on Proposal 1 without specific voting instructions from beneficial owners, resulting in a broker non-vote. Broker non-votes and withheld votes are not counted toward the election of directors or toward the election of the individual nominees specified on the proxy, and therefore, have no impact on Proposal 1.
Proposal 2
Assuming the presence of a quorum, the affirmative vote of a majority of the Trust common shares present (in person or by proxy) at the Annual Meeting and entitled to vote on the proposal is required to approve the shareholder advisory vote on executive compensation (Proposal 2) requires the affirmativecompensation. Proposal 2 is a non-discretionary item and brokers may not vote of at least a majority of the outstanding shares entitled to vote thereon present in person or represented by proxy at the Annual Meeting. Because your votes on Proposal 2 arewithout specific voting instructions from beneficial owners, resulting in a broker non-vote. An abstention is not counted toward the approval, and the effect of an abstention is the same as a vote “Against” the approval. Broker non-votes will have no impact on this proposal. Because the vote on Proposal 2 is advisory theyin nature, it will not be binding on the Board or the Company. However,Company; however, the Board will reviewconsider the voting results and take them into considerationoutcome of the vote, along with other factors, when making future decisions regarding the compensation of our named executive compensation. Forofficer(s).
Proposal 3
Assuming the approvalpresence of a quorum, the frequency option in Proposal 3 receiving the highest number of votes cast will be determined to be the preferred frequency with which the Company is to hold a shareholder advisory vote to approve the compensation of the proposalnamed executive officer(s). Proposal 3 is a non-discretionary item and brokers may not vote on
Proposal 3 without specific voting instructions from beneficial owners, resulting in a broker non-vote. Broker non-votes and abstentions are not counted toward the preferred frequency with which the Company is to hold a shareholder advisory vote to approve the compensation of the named executive officer(s), and, therefore, have no effect on Proposal 3. Because the vote on Proposal 3 is advisory in nature, it will not be binding on the Board or the Company; however, the Board will consider the outcome of the vote, along with other factors, when making future decisions regarding the frequency of which we solicit a shareholder advisory vote regarding the compensation of our named executive officer(s).
Proposal 4
Assuming the presence of a quorum, the affirmative vote of a majority of the Trust common shares present (in person or by proxy) at the Annual Meeting and entitled to vote is required to ratify the appointment of Grant Thornton LLP to serve as the independent auditor for the TrustCompany and the Company (Proposal 3),Trust for fiscal year 2023. An abstention is not counted toward the affirmative vote of at least a majorityratification of the outstanding shares entitledappointment of Grant Thornton LLP to vote thereon present in person or represented by proxy atserve as the Annual Meetingindependent auditor for the Company and the Trust for fiscal year 2023, and the effect of an abstention is required. An abstention will not be countedthe same as a vote cast. “Against” the ratification. Ratification of this appointment is a discretionary item upon which your bank or broker has the authority to vote uninstructed shares. Should your broker not indicate their vote relating to the ratification of the appointment of Grant Thornton LLP to serve as the independent auditor for the Company and the Trust for fiscal year 2023, but otherwise appoint the proxies, your shares will be voted “For” the ratification of the appointment of Grant Thornton LLP to serve as the independent auditor for the Company and the Trust for fiscal year 2023.
Except for certain business combinations, as such term is defined in the Trust Agreement, any other proposal that properly comes before the Annual Meeting must be approved by the affirmative vote of at least a majority of the outstanding Trust shares entitled to vote present in(in person or represented by proxyproxy) at the Annual Meeting. A broker non-vote wouldwill also not be counted as a vote cast.cast for any other proposal that properly comes before the Annual Meeting.
Broker non-votes and withheld votes are not counted towardAs required by the election of directors or toward the election of individual nominees specified on the proxy and therefore, broker non-votes and withheld votes shall have no effect on Proposal 1. Each of Proposal 2 and Proposal 3 require the affirmative vote of at least a majority of the outstanding shares entitled to vote present in person or by proxy, and therefore, an abstention is the same as a vote “Against.” A broker non-vote will be treated as not entitled to vote on Proposal 2 and therefore will have no effect on such proposal.
Proposal 3 is a discretionary item. New York Stock Exchange (“NYSE”) member brokers that do not receive instructions from beneficial owners may vote your shares in their discretion and, therefore, there will be no broker non-votes on Proposal 3. Proposals 1 and 2 are non-discretionary items and member brokers may not vote on the proposal without specific voting instructions from beneficial owners, resulting in a broker non-vote.
Under the terms of theCompany’s LLC Agreement and the Trust Agreement, with respect to those matters subject to vote by the members of the Company, the Company will act at the direction of the Trust. The LLC Agreement provides that the members are entitled, at the Annual Meeting of members of the Company, to vote for the election of all the directors other than the director(s) appointed by the Company’s Allocation Member (as defined herein). The Trust Agreement requires the Trust to vote 100% of the limited liability interests of the Company, or the LLC interests, of which it is the sole holder, in the same proportion as the vote of holders of the Trust common stock. In this way the voting rights of members of the Company will effectively be exercised by the shareholders of the Trust by proxy. At this meeting, all directors, other than the director appointed by the Allocation Member, will be elected to serve for a one-year term in accordance with the LLC Agreement. See “PROPOSAL 1: ELECTION OF DIRECTORS – Board Composition” for a description of the directors. The Trust will vote its LLC interests as directed at the Company’s annual members’ meeting promptlyimmediately following the tabulation of votes cast at thisthe Annual Meeting.Meeting, the Trust, as the sole owner of the Company’s Trust Interests, will vote such Trust Interests for the election of directors in the same proportion as the holders of Trust common stock. Consequently, each director nominee receiving a plurality of the votes cast at the Annual Meeting (in person or by proxy) will be elected by the Trust to serve as a director of the Company until the Company’s 2024 annual meeting of shareholders.
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All votes will be tabulated by Broadridge, the proxy tabulator and inspector of election appointed for the Annual Meeting. Broadridge will separately tabulate affirmative and negative votes, abstentions and broker non-votes.
Solicitation of ProxiesSOLICITATION OF PROXIES
We will bear the cost of the solicitation of proxies, including the preparation, printing and mailing of this proxy statementProxy Statement and the proxy card. We have also retained Broadridge to distribute copies of these Proxy Materials to banks, brokers,
fiduciaries and custodians, or their agents holding shares in their names on behalf of beneficial owners so that they may forward these Proxy Materials to our beneficial owners.
We may supplement the original solicitation of proxies by mail with solicitation by telephone, telegram and other means by directors, officers and/or employees of our Manager. We will not pay any additional compensation to these individuals for any such services.
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