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| | Tamara L. Lundgren Chairman, President and Chief Executive Officer |
| | DATE Tuesday, January | | | | | TIME 8:00 A.M. Pacific | | | | | PLACE Online via audio webcast | | | | | RECORD DATE |
1 | | | ELECT |
2 | | | APPROVE, by non-binding vote, executive compensation |
3 | | | DETERMINE, by non-binding vote, the frequency of future shareholder advisory votes on executive compensation |
4 | | | RATIFY our independent registered public accounting firm for fiscal |
5 | | | APPROVE the Radius Recycling, Inc. 2024 Omnibus Incentive Plan (the “2024 Omnibus Incentive Plan”) |
6 | | | APPROVE an amendment to our Articles of Incorporation to change our corporate name to Radius Recycling, Inc. |
7 | | | CONDUCT any other business that properly comes before the meeting or any adjournment or postponement thereof |
2 2023 PROXY STATEMENT |
Meeting Details | |
DATE Tuesday, January 30, 2024 | |
TIME 8:00 A.M. Pacific | |
PLACE Online via audio webcast | |
RECORD DATE December 4, 2023 | |
How to Vote | |
MAIL Return the proxy card by mail | |
PHONE 1-800-690-6903 | |
ONLINE www.proxyvote.com |
Proposals | | | | | | Board Recommendation | | | Page Reference |
1 | | | Election of Directors | | | FOR | | | 24 |
2 | | | Advisory Vote on Executive Compensation | | | FOR | | | |
3 | | | Frequency of Future Shareholder Advisory Votes on Executive Compensation | | | EVERY YEAR | | | |
4 | | | Ratification of Selection of Independent Registered Public Accounting Firm | | | FOR | | | 80 |
5 | | | 2024 Omnibus Incentive Plan | | | APPROVE | | | |
6 | | | Amendment to the Articles of Incorporation to Change Our Corporate Name | | | APPROVE | | |
▶ | Acquire, process, and recycle millions of tons of ferrous and nonferrous metal from end-of-life vehicles, rail cars, home appliances, industrial machinery, manufacturing activities, and construction and demolition projects at our 104 recycling facilities located in the U.S., Canada, and Puerto Rico |
▶ | Sell our processed recycled metals to steel mills, copper and aluminum smelters, and other metal manufacturers across the globe |
▶ | Manufacture finished steel products, such as reinforcing bar, merchant bar, and wire rod, at our electric arc furnace steel mill using recycled scrap metal primarily sourced from our own metals recycling operations |
▶ | Sell millions of serviceable used parts from end-of-life vehicles at our 50 retail self-service auto parts stores that receive over 4 million annual retail visits |
▶ | Provide a variety of recycling and related services including scrap brokerage, certified destruction, automotive parts recycling, railcar dismantling, and reverse logistics |
4 2023 PROXY STATEMENT |
Proxy Summary | |
| | SAFETY: | |
| | SUSTAINABILITY: | |
We work every day to ensure a sustainable future for generations to come. |
| | INTEGRITY: | |
We hold ourselves to the highest standards of ethical behavior. |
| |
| |
| | ||
| | 2023 PROXY STATEMENT 5 |
Proxy Summary | | | |
| | | | | | ||||
Continuous Improvement We regularly explore and pursue practices that promote sustainable operations. | | | Technology & Innovation We deploy technologies and innovation to protect the | | | Work with Purpose We seek to positively impact our communities and foster a | | | Eliminate Waste We create sustainable value through responsible operating practices and operational efficiencies that minimize waste. |
▶ | 58% less CO2e emissions for steel |
▶ | 65% less CO2e emissions for copper |
▶ | 92% less CO2e emissions for aluminum |
| |
Proxy Summary | |
Goal | | | | |||||
| FY 2023 Progress | |||||||
Reduce Scope 1 and 2 GHG emissions from recycling operations by 25% | | | FY 2025 | | | We surpassed our goal by achieving a reduction in emissions at our recycling operations of more than 27% versus our 2019 baseline. Nearly two years ahead of schedule, this accomplishment reflects the success of our emissions reduction strategy, and our ability to capture, control, and eliminate emissions at our major metal shredding operations. It illustrates a dedication to environmental leadership in the metals recycling industry and a commitment to responsible operation within our communities. | ||
Reduce Scope 1 and 2 GHG emissions from recycling operations by 35% | | | FY 2028 | | | In light of our progress, we have updated our GHG emissions reduction goal versus our 2019 baseline to reflect our continued reduction efforts. | ||
Maintain 100% net carbon-free electricity use every year | | | Maintain annually | | | We are maintaining our goal by utilizing carbon-free hydroelectricity at our Cascade Steel Rolling Mills, participating in community-focused green power purchase programs, prioritizing on-site energy efficiency upgrades, and expanding implementation of carbon-free energy options. | ||
Incorporate all Company facilities within our ISO 14001 certified EMS | | | 50% by End of FY 2024 | | | In fiscal 2023, we certified 24 additional facilities within our ISO 14001 certified EMS. We now have 30 facilities under ISO Certification, representing 27% of our facilities. | ||
Achieve a 1.00 total case incident rate (TCIR) | | | End of | | | |||
off (VTO) | | | End of | | | |||
| | End of FY 2025 | | | In fiscal 2023, we reached 15% employee participation in our wellness programs which aim to promote healthy lifestyle choices. This participation represents 60% achievement of our multi-year goal. | |||
| | End of FY 2028 | | |
| | ||||
7 |
Proxy Summary | | | ||||
1 | ADVANCING THE CIRCULAR |
2 |
3 |
| |
| | | WORLD’S MOST ETHICAL COMPANIES |
| For the | ||
| | GREAT PLACE TO WORK-CERTIFIEDTM | |
| |||
| | CORPORATE KNIGHTS | |
| |||
| | MSCI ESG RATINGS | |
| |||
| | CDP | |
| Since 2017, | ||
In March 2023, we were recognized by CDP as a Supplier Engagement Leader. Our recognition by CDP as a Supplier Engagement Leader means we rank among the top 8% of companies assessed for corporate supply chain engagement on climate issues. This is an increasingly relevant topic as global climate commitments are requiring companies to better understand the environmental impacts of their supply chains and to seek out the most sustainable materials available to achieve their carbon reduction targets. |
| | 2023 PROXY STATEMENT 9 |
Proxy Summary | | | ||||
Six of Seven Directors Independent |
▶ | Board Diversity: 4 women = 57% of Board |
▶ | Lead Independent Director |
▶ | All Standing Board Committees Composed Entirely of Independent Directors |
▶ | All members of the Audit Committee are Financial Experts |
▶ | Regular Executive Sessions of Independent Directors |
▶ | Robust Stock Ownership Requirements for Directors and Officers |
▶ | Active Shareholder Outreach with Regular Board Updates |
▶ | Board Participation in Shareholder Engagement |
▶ | Shareholder Ratification of Selection of External Audit Firm |
▶ | Board Refreshment: 57% of Board < 8 Years |
▶ | Director Term Limit and Overboarding Policies |
▶ | Strong Oversight of Culture, Human Capital Management, and Leadership Development Programs and Strategies |
▶ | Code of Conduct for Directors, Officers, and Employees |
▶ | Strong Oversight of DEI, Sustainability and Public Policy Issues Impacting our Business |
▶ | Annual Board and Committee Self-Evaluations |
▶ | Anti-Hedging and Anti-Pledging Policies and Prohibition on Derivative Transactions applicable to Company stock |
▶ | Emphasis on performance-based compensation: more than 80% of the CEO’s target compensation and 70% of other named executive officers’ (“NEOs”) target compensation are “at-risk” |
▶ | Caps on incentive compensation |
▶ | The use of a variety of distinct performance metrics (earnings before interest, taxes, depreciation and amortization (“EBITDA”) as adjusted, earnings per share (“EPS”) as adjusted, operating cash flow as adjusted, environmental, health, and safety (“EH&S”) performance, and management and strategic objectives in the annual incentive compensation plans for the CEO and other NEOs which are intended to drive long-term shareholder value |
10 2023 PROXY STATEMENT | | |
Proxy Summary | |
▶ | Performance share awards, which represent 50% of the Company’s long-term incentive grant, vest following the end of a three-year performance period based on Company performance during the period. For performance share awards granted in fiscal 2023, the metrics are based 50% on ferrous and nonferrous sales volume growth (“Volume Growth”) and 50% on return on capital employed (“ROCE”), with the Company’s relative total shareholder return (“TSR”) performance as compared to its peers applied as a +/- 20% modifier to each metric. |
▶ | Restricted Stock Units (“RSUs”), which represent 50% of the Company’s long-term incentive grant, vest ratably over five years and, beginning with grants in fiscal 2020, include a two-year service requirement and continued vesting feature for retirement-eligible employees |
▶ | Minimum stock ownership requirements for the CEO and other NEOs, which reinforce our focus on shareholder alignment |
▶ | Double-trigger for cash severance payments and benefits in change-in-control agreements |
▶ | No excise tax gross-up provisions in any new or modified change-in-control agreements |
▶ | Annual review of executive compensation design, market competitiveness, and best practices |
▶ | Retention of an independent compensation consultant to provide guidance and support to the Compensation and Human Resources Committee |
▶ | “No Fault” Clawback Policy |
| | 2023 PROXY STATEMENT 11 |
Proxy Summary | | | |
| |
Proxy Summary | |
| | Fiscal | |
| |||
| Implemented $60 million in Productivity Initiatives. During fiscal 2023, we successfully implemented $60 million in annual productivity initiatives, focused on reducing production and selling, general, and administrative (“SG&A”) costs and increasing operating efficiencies. These initiatives helped to mitigate inflationary and other cost pressures. | ||
| Generated $139 million of Operating Cash Flow.Our strong working capital management | ||
| 11 of 13 AMRTS Operational or in Commissioning Phase.We continued to | ||
| Launched our 3PR™ Brand, Covering Third-Party Recycling Services. We launched our integrated third-party recycling services activities under our trademarked 3PR™ brand. Our 3PR™ activities reflect a rapidly growing and important service and supply chain solution for customers that enable greater recycling rates and value recovery, improved manufacturing and retail efficiency, reductions in material going to landfill, an improved carbon footprint, and enhanced sustainability reporting. We also |
| | 2023 PROXY STATEMENT 13 |
Proxy Summary | | | |
14 2023 PROXY STATEMENT | | |
Proxy Summary | |
| | Program | | | Purpose | | | Relevant Performance Metrics | |||
Annual | | | Base Salary | | | To provide a competitive foundation and fixed rate of pay for the position and associated level of responsibility | | | Not Applicable | ||
| Annual Incentive | | | To incentivize achievement of operating, financial, and management goals | | | Adjusted EPS Adjusted EBITDA Adjusted Operating Cash Flow Strategic Objectives | ||||
Long-Term | | | Restricted Stock Units | | | To incentivize long-term shareholder value creation | | | Absolute share price appreciation | ||
| Performance Share Awards | | | To incentivize achievement of specific long-term strategic financial goals and long-term shareholder value creation | | | Volume Growth ROCE |
1 | Reflects Total Case Incident Rate (“TCIR”), Days Away, Restricted, or Transferred (“DART”), and multiple environmental and safety performance activities. |
2 | Each of the Volume Growth and ROCE metrics is subject to a relative TSR modifier that can increase or decrease the final payout by 20%, based on the relative ranking of the Company’s three-year TSR performance compared to that of its fiscal |
| | 2023 PROXY STATEMENT 15 |
Questions and Answers About These Proxy Materials and Voting | |
▶ | Registered directly in your name with our transfer agent (also referred to as a “shareholder of record”); |
▶ | Held for you in an account with a broker, bank, or other nominee (shares held in “street name”). |
| | 2023 PROXY STATEMENT 17 |
Questions and Answers About These Proxy Materials and Voting | | | |
▶ | By Internet: If you have Internet access, you may submit your proxy by going to www.proxyvote.com and by following the instructions on how to complete an electronic proxy card. You will need the 16-digit number included on your Notice or your proxy card in order to vote by Internet. |
▶ | By Telephone: If you have access to a touch-tone telephone, you may submit your proxy by dialing 1-800-690-6903 and by following the recorded instructions. You will need the 16-digit number included on your Notice or your proxy card in order to vote by telephone. |
▶ | By Mail: You may vote by mail by requesting a proxy card from us, indicating your vote by completing, signing, and dating the card where indicated and by mailing or otherwise returning the card in the envelope that will be provided to you. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney, or officer of a corporation), you should indicate your name and title or capacity. |
▶ | Online During the Virtual Annual Meeting: You may cast your vote online at the virtual Annual Meeting during the window when the polls are open. Even if you plan to attend the virtual meeting, we encourage you to vote by Internet, telephone, or mail in advance of the meeting so your vote will be counted if you later decide not to or cannot attend the virtual meeting. |
18 2023 PROXY STATEMENT | | |
Questions and Answers About These Proxy Materials and Voting | |
| | 2023 PROXY STATEMENT 19 |
Questions and Answers About These Proxy Materials and Voting | | | |
▶ | You may submit another properly completed proxy card with a later date that is received prior to the taking of the vote at the Annual Meeting. |
▶ | You may vote again on the Internet or by telephone before the closing of those voting facilities at 11:59 p.m. (Eastern time) on January 29, 2024 (only your latest Internet or telephone proxy submitted prior to the Annual Meeting will be counted). |
▶ | You may provide a written notice that you are revoking your proxy to the Company’s Corporate Secretary at Radius Recycling, 299 SW Clay Street, Suite 400, Portland, Oregon 97201, Attention: Corporate Secretary. |
▶ | You may vote online during the virtual Annual Meeting by entering the 16-digit control number found on your proxy card, voting instruction form, or Notice, as applicable. Simply attending the virtual Annual Meeting will not, by itself, revoke your proxy. |
▶ | Remember that if you are a beneficial owner of Company shares holding shares in a street name, you may submit new voting instructions by contacting your bank, broker, or other nominee. You may also change your vote or revoke your proxy online during the virtual Annual Meeting after you log-in by entering the 16-digit control number found on your Notice, voter instruction form, or proxy card at www.virtualshareholdermeeting.com/RDUS2024. |
| |
21 |
Name of Beneficial Owner or Number of Persons in Group | | | Common Stock Beneficially Owned | |||
| Number | | | Percent | ||
BlackRock, Inc. | | | 2,949,3381 | | | 10.6% |
The Vanguard Group, Inc. | | | 2,587,4032 | | | 9.3% |
Dimensional Fund Advisors, L.P. | | | 2,201,3093 | | | 7.9% |
Gregory R. Friedman | | | 4,3724 | | | * |
Rhonda D. Hunter | | | 29,3375 | | | * |
David L. Jahnke | | | 66,3316 | | | * |
Glenda J. Minor | | | 12,2297 | | | * |
Leslie L. Shoemaker | | | 5,5748 | | | * |
Michael W. Sutherlin | | | 52,3229 | | | * |
Tamara L. Lundgren | | | 1,011,010 | | | 3.6% |
Richard D. Peach | | | 202,658 | | | * |
Steven G. Heiskell | | | 103,618 | | | * |
Stefano R. Gaggini | | | 43,281 | | | * |
James Matthew Vaughn | | | 570 | | | * |
Michael R. Henderson | | | 89,39610 | | | * |
All current directors and executive officers as a group (14 persons) | | | 1,577,400 | | | 5.7% |
Voting Securities and Principal Shareholders | |
| Name of Beneficial Owner or Number of Persons in Group | | | Common Stock Beneficially Owned | | |||
| Number | | | Percent | | |||
| Tamara L. Lundgren | | | 913,529 | | | 3.3% | |
| Richard D. Peach | | | 170,002 | | | * | |
| Michael R. Henderson | | | 87,703 | | | * | |
| Steven G. Heiskell | | | 86,500 | | | * | |
| Stefano R. Gaggini | | | 34,985 | | | * | |
| All current directors and executive officers as a group (16 persons) | | | 1,663,614 | | | 6.1% | |
* | Less than 1% |
1 | Beneficial ownership as of |
2 | Beneficial ownership as of |
3 | Beneficial ownership as of December |
4 | Includes |
5 | Includes |
6 | Includes |
7 | Includes |
8 | Includes |
9 | Includes |
10 |
| | 2023 PROXY STATEMENT 23 |
| | VOTE “FOR” EACH LISTED NOMINEE | |
The Board of Directors recommends that shareholders vote “FOR” the election of each of the nominees named below. | |||
Glenda J. Minor Michael W. Sutherlin |
| |
PROPOSAL ONE | |
Glenda J. Minor INDEPENDENT DIRECTOR COMPANY BOARD COMMITTEES: Audit, Chair; Nominating and Corporate Governance OTHER PUBLIC COMPANY DIRECTORSHIPS: Curtiss-Wright Corporation, Member of the Audit Committee and the Committee on Directors and Governance; Ablemarle Corporation, Member of the Audit & Finance and Nominating & Governance Committees DIRECTOR SINCE: 2020 AGE: 67 | | | |
| QUALIFICATIONS AND SKILLS TO SERVE AS A DIRECTOR: ▪ Former Chief Financial Officer of a leading steel manufacturer ▪ In-depth understanding of the preparation and analysis of financial statements, experience in financial reporting and internal controls ▪ Experience in steel manufacturing, metals recycling, and commodities, capital market transactions, investor relations, mergers and acquisitions, and international business ▪ Public company board and committee experience | ||
|
Michael W. Sutherlin INDEPENDENT DIRECTOR COMPANY BOARD COMMITTEES: Governance, Chair OTHER PUBLIC COMPANY DIRECTORSHIPS: Peabody Energy Corporation (2014-2021) DIRECTOR SINCE: 2015 AGE: 77 | | | Mr. Sutherlin served as President and Chief Executive Officer and Director of Joy Global, Inc., a manufacturer and servicer of mining equipment for the extraction of minerals and ores, from 2006 until 2013. He was Executive Vice President, President and Chief Operating Officer of Joy Mining Machinery from 2003 to 2006. Prior to that time, Mr. Sutherlin held positions of increasing responsibility for Varco International, Inc., including President and Chief Operating Officer and Division President. Mr. Sutherlin holds a B.B.A. from the Texas Tech University and an M.B.A. from the University of Texas at Austin. |
| QUALIFICATIONS AND SKILLS TO SERVE AS A DIRECTOR: ▪ Experience as public company Chief Executive Officer and public company Board Chairman ▪ Commodities, and manufacturing and mining sector experience ▪ Core operations, executive leadership, international business, and executive compensation experience ▪ Public company board and committee experience | ||
|
| | 2023 PROXY STATEMENT 25 |
PROPOSAL ONE | | | |
Rhonda D. Hunter INDEPENDENT DIRECTOR COMPANY BOARD COMMITTEES: Compensation and Human Resources, Chair; Nominating and Corporate Governance OTHER PUBLIC COMPANY DIRECTORSHIPS: Interfor Corporation, Member of the Management Resources & Compensation Committee and Chair of the Corporate Governance, Responsibility & Nominating Committee DIRECTOR SINCE: 2017 AGE: 61 | | | Ms. Hunter was Senior Vice President, Timberlands, of Weyerhaeuser Company, a North American timberland company, from 2014 until her retirement in March 2018. Ms. Hunter was Vice President, Southern Timberlands, of Weyerhaeuser from 2010 to 2014. Ms. Hunter previously held a number of financial and operational leadership positions within Weyerhaeuser with increasing P&L responsibility. Ms. Hunter joined Weyerhaeuser in 1987 as an accountant. Ms. Hunter holds a B.S. in Accounting from Henderson State University and has completed executive education at Harvard Business School and Duke University. |
| QUALIFICATIONS AND SKILLS TO SERVE AS A DIRECTOR: ▪ Experience as a senior executive at a commodities-based public company ▪ Manufacturing sector experience ▪ Expertise in inventory and planning, environmental and work systems, finance and accounting, international business, strategic planning, growth management, operational integration, and operations ▪ Public company board and committee experience | ||
|
26 2023 PROXY STATEMENT | | |
PROPOSAL ONE | |
David L. Jahnke INDEPENDENT DIRECTOR COMPANY BOARD COMMITTEES: Lead Director; Audit; Compensation and Human Resources OTHER PUBLIC COMPANY DIRECTORSHIPS: First Interstate BancSystem Inc., Chair of Board; Member of the Governance & Nominating Committee DIRECTOR SINCE: 2013 AGE: 70 | | | Mr. Jahnke held various positions at KPMG, the international accounting firm, from 1975 until 2010. From 2005 to 2010, he was the Global Lead Partner for a major KPMG client based in KPMG’s Zurich, Switzerland office. Prior to that time, he held positions of increasing responsibility at KPMG, including Office Managing Partner and Audit Partner in Charge of the Minneapolis office from 1999 to 2004. He is a director of Swiss Re America Holding Corporation where he serves as Chair of its Audit Committee and is a member of its Executive Committee. Mr. Jahnke holds a B.S. in Accounting from the University of Minnesota-Twin Cities. |
| QUALIFICATIONS AND SKILLS TO SERVE AS A DIRECTOR: ▪ Public accounting, financial reporting, and internal controls experience ▪ Experience in complex financial transactions, international business, and executive compensation ▪ Public company board and committee experience | ||
|
Leslie L. Shoemaker INDEPENDENT DIRECTOR COMPANY BOARD COMMITTEES: Nominating and Corporate Governance DIRECTOR SINCE: 2022 AGE: 66 | | | Dr. Shoemaker has served as the Chief Sustainability and Leadership Development Officer of Tetra Tech since October 2022, a leading, global provider of consulting and engineering services in the areas of water, environment, infrastructure, resource management, energy, and international development. Dr. Shoemaker joined Tetra Tech in 1991 and has served in various technical and operational capacities of increasing responsibility, including President and Chief Sustainability Officer from 2019 until October 2022, Executive Vice President/Group President from 2016 until 2019, Chief Strategy Officer, and Growth Initiatives Leader. Dr. Shoemaker holds a BA in Mathematics from Hamilton College, an MEng from Cornell University, and a PhD in Agricultural Engineering from the University of Maryland. Dr. Shoemaker is a member of the National Academy of Engineering. |
| QUALIFICATIONS AND SKILLS TO SERVE AS A DIRECTOR: ▪ Experience as a public company senior executive at a leading, global provider of consulting and engineering services ▪ Expertise in water, environmental, sustainable infrastructure, and renewable energy projects ▪ Operations, executive leadership, strategic planning, and sustainability experience | ||
|
| |
PROPOSAL ONE | | | |
Gregory R. Friedman INDEPENDENT DIRECTOR COMPANY BOARD COMMITTEES: Human Resources DIRECTOR SINCE: 2022 AGE: 56 | | | Mr. Friedman has served as the Chief Financial Officer of Mura Technology, a plastics recycling technology company, since 2021. Prior to joining Mura Technology, from 2018 through 2021, Mr. Friedman served as Executive Vice President and Chief Financial Officer of Corteva Agriscience™, a spin-off of DowDuPont. From 2000 through 2018, Mr. Friedman held various financial leadership positions at DuPont across a broad product range with responsibility for financial risk management and controls, financial accounting, financial planning and analysis, as well as capital markets activities, including debt, equity, and investor relations. Mr. Friedman holds a BS in Accounting from the University of Southern California and an MBA from the Anderson School of Management at the University of California, Los Angeles. |
| QUALIFICATIONS AND SKILLS TO SERVE AS A DIRECTOR: ▪ Experience as a public company Chief Financial Officer and a senior executive at a plastics recycling company |
|
Tamara L. Lundgren COMPANY BOARD COMMITTEES: Board Chairman OTHER PUBLIC COMPANY DIRECTORSHIPS: Ryder System, Inc., Member of Audit and Corporate Governance & Nominating Committees DIRECTOR SINCE: 2008 AGE: 66 | | | |
Ms. Lundgren has served as President, Chief Executive Officer and a Director of the Company since December 2008 and as Chairman of the Board since March 2020. Ms. Lundgren joined the Company in September 2005 as Vice President and Chief Strategy Officer and held positions of increasing responsibility including President of Shared Services and Executive Vice President and Chief Operating Officer. Prior to joining the Company, Ms. Lundgren was a managing director in investment banking at JPMorgan Chase, which she joined in 2001. From 1996 until 2001, Ms. Lundgren was a managing director of Deutsche Bank AG in New York and London. Prior to joining Deutsche Bank, Ms. Lundgren was a partner at the law firm of Hogan Lovells (formerly Hogan & Hartson, LLP) in Washington, D.C. Ms. Lundgren also currently serves as Chair of the Board of Directors of the Federal Reserve Bank of San Francisco. She earned her B.A. from Wellesley College and her J.D. from the Northwestern University School of Law. | |||
| QUALIFICATIONS AND SKILLS TO SERVE AS A DIRECTOR: ▪ Chief Executive Officer of Radius Recycling | ||
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28 2023 PROXY STATEMENT | | |
Director | | | Board | ||||||||
| Audit | | | Compensation & Human Resources | | | Nominating & Corporate Governance | ||||
Gregory R. Friedman | | | | | | | | ||||
Rhonda D. Hunter | | | | | | | ▪ | ||||
David L. Jahnke | | | | | | | | ||||
Leslie L. Shoemaker | | | | | | | | | |||
Glenda J. Minor | | | | | | | | ||||
Michael W. Sutherlin | | | | | | | |
| | 2023 PROXY STATEMENT 29 |
PROPOSAL ONE | | | |
Audit Committee CHAIR: Glenda J. Minor ADDITIONAL MEMBERS: Gregory R. Friedman, David L. Jahnke, and Michael W. Sutherlin MEETINGS HELD IN | | | INDEPENDENCE: Our Board has determined that each member of the Audit Committee meets all additional independence requirements for Audit Committee members under applicable SEC regulations and NASDAQ rules. AUDIT COMMITTEE FINANCIAL LITERACY AND EXPERTISE: Our Board also has determined that each member of the Audit Committee is financially literate under applicable SEC and NASDAQ rules and is an “audit committee financial expert” as defined in regulations adopted by the SEC. RESPONSIBILITES: The Audit Committee represents and assists the Board in oversight of our accounting and financial reporting processes and the audits of our financial statements; appointing, approving the compensation of, and overseeing the independent auditors; reviewing and approving all audit and non-audit services performed by the independent auditors; reviewing the scope and discussing the results of the audit with the independent auditors; reviewing management’s assessment of the Company’s internal controls over financial reporting; overseeing the Company’s compliance program; overseeing the Company’s internal audit function; reviewing with management the Company’s major financial risks and legal risks that could have a significant impact on the Company’s financial statements; and reviewing and approving, as appropriate, transactions of the Company with related persons (see “Certain Transactions”). | |
|
| |
PROPOSAL ONE | |
Resources Committee CHAIR: Rhonda D. Hunter ADDITIONAL MEMBERS: Gregory R. Friedman and David L. Jahnke MEETINGS HELD IN | | | INDEPENDENCE: Our Board has determined that each member of the Compensation and Human Resources Committee meets the additional independence standards for Compensation Committee members under the NASDAQ rules and qualifies as a non-employee director under Rule 16b-3 under the Securities Exchange Act of 1934. COMPENSATION AND HUMAN RESOURCES COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION: No members of the Compensation and Human Resources Committee who served during RESPONSIBILITIES: The Compensation and Human Resources Committee has overall responsibility for the administration of the Company’s executive and director compensation plans and equity-based plans; overseeing and evaluating the performance of the CEO and determining the CEO’s compensation; administering and interpreting executive compensation plans, the Company’s stock plans, and all other equity-based plans from time to time adopted by the Company, including our 1993 Amended and Restated Stock Incentive Plan (“SIP”); reviewing and assessing the risks related to the design of the Company’s compensation programs and arrangements | |
|
| | 2023 PROXY STATEMENT 31 |
PROPOSAL ONE | | | |
Nominating and Corporate Governance (“N&CG”) Committee CHAIR: Michael W. Sutherlin ADDITIONAL MEMBERS: Rhonda D. Hunter, Glenda J. Minor, and Leslie L. Shoemaker MEETINGS HELD IN | | | INDEPENDENCE: Our Board has determined that each member of the N&CG Committee is independent under applicable SEC regulations and NASDAQ rules. The N&CG Committee has responsibility for identifying, selecting, and recommending to the Board individuals proposed to be nominated for election as directors by the shareholders or elected as directors by the Board to fill vacancies; working with the Chairman of the Board and the Lead Director, seeking to ensure that the Board’s committee structure, committee assignments, and committee chair assignments are appropriate and effective; developing and recommending to the Board for approval, and reviewing from time to time, a set of corporate governance guidelines for the Company, which includes a process for the evaluation of the Board, its committees, and management; reviewing and evaluating risks related to corporate governance practices and leadership succession; evaluating the orientation and training needs of directors; and monitoring compliance with the corporate governance guidelines adopted by the Board. ASSESSMENT OF DIRECTOR QUALIFICATIONS: The N&CG Committee uses a Board composition matrix to inventory, on at least an annual basis, the expertise, skills, and experience of each director to ensure that the overall Board maintains a balance of knowledge and relevant experience. The Committee carefully reviews all director candidates, including current directors, based on the current and anticipated composition of the Board, our current and anticipated strategy and operating requirements, and the long-term interests of shareholders. In assessing current directors and potential candidates, the N&CG Committee considers the Board composition matrix, as well as the character, background, and professional experience of each current director and potential candidate. In its evaluation of potential candidates, the N&CG Committee applies the criteria set forth in our N&CG Committee Charter and considers the following factors from our Corporate Governance Guidelines: ▪ director In considering the re-nomination of incumbent directors, the N&CG Committee also considers the performance of such persons as directors, including the number of meetings attended and the level and quality of participation, as well as the value of continuity and knowledge of the Company gained through Board service. DIVERSITY: The N&CG Committee strives to achieve diversity on the Board by considering skills, experience, education, length of service on the Board, and such other factors as it deems appropriate. The N&CG Committee and the Board define diversity broadly to include the background, professional experience, skills, and viewpoints necessary to achieve a balance and mix of perspectives. In evaluating potential director candidates, the N&CG Committee and the Board place particular emphasis on diversity. Confirming our commitment to diversity at the Board level, our director candidate search process prioritizes the inclusion of women and minorities in the initial pool of candidates when we select new director nominees (aka “the Rooney Rule”). Our Board recognizes the value of diversity and considers how a candidate may contribute to the Board in a way that can enhance perspective and judgment through diversity in gender, age, ethnic background, geographic origin, and professional experience. | |
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| |
PROPOSAL ONE | |
| | 2023 PROXY STATEMENT 33 |
PROPOSAL ONE | | | |
34 2023 PROXY STATEMENT | | |
PROPOSAL ONE | |
The following are the key risk oversight responsibilities of our Board and its committees: | |||||
| | Full Board: enterprise-wide strategic risks related to our long-term strategies, including, but not limited to, capital expenditures, Sustainability, ESG, cybersecurity, | |||
| | Audit Committee: financial risks (including, but not limited to, risks associated with accounting, financial reporting, disclosure, and internal controls over financial reporting), our compliance programs, and legal risks | |||
| | Compensation and Human Resources Committee: compensation and human resources risks | |||
| | N&CG Committee: governance risks |
▶ | Mix between short-term and long-term incentives |
▶ | Caps on incentives |
▶ | Use of multiple performance measures |
▶ | A portfolio of varied long-term incentives |
| | 2023 PROXY STATEMENT 35 |
PROPOSAL ONE | | | |
▶ | Committee discretion in payment of short-term incentives |
▶ | Use of stock ownership guidelines |
▶ | Anti-hedging and anti-pledging policies and prohibition on derivative transactions for Company stock |
| |
PROPOSAL ONE | |
▶ | Fairly compensate directors for their responsibilities and time commitments. |
▶ | Attract and retain highly qualified directors by offering a compensation program consistent with those at companies of similar size, scope, and complexity. |
▶ | Align the interests of directors with our shareholders by providing a significant portion of compensation in equity and setting an expectation pursuant to our Corporate Governance Guidelines that directors acquire and continue to own our common stock with a value equal to five times the director’s annual cash retainer. Directors are expected to achieve this stock ownership level within a period of five years. |
| Name(1) | | | Fees Earned or Paid in Cash ($)(2) | | | Stock Awards ($)(3) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | | | Total ($) | |
| Wayland R. Hicks | | | 112,465 | | | 119,978 | | | 839 | | | 233,282 | |
| Rhonda D. Hunter | | | 100,451 | | | 119,978 | | | | | 220,429 | | |
| David L. Jahnke | | | 119,479 | | | 119,978 | | | 4,484 | | | 243,941 | |
| Judith A. Johansen | | | 110,986 | | | 119,978 | | | | | 230,964 | | |
| William D. Larsson(5) | | | 40,556 | | | | | 2,443 | | | 42,999 | | |
| Glenda J. Minor | | | 98,958 | | | 119,978 | | | | | 218,936 | | |
| Leslie L. Shoemaker | | | 33,043 | | | 90,202 | | | | | 123,245 | | |
| Michael W. Sutherlin | | | 101,944 | | | 119,978 | | | | | 221,922 | |
Name | | | Fees Earned or Paid in Cash ($)1 | | | Stock Awards ($)2 | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)3 | | | Total ($) |
Gregory R. Friedman | | | 86,532 | | | 144,754 | | | — | | | 231,286 |
Wayland R. Hicks4 | | | 47,653 | | | — | | | 3,153 | | | 50,806 |
Rhonda D. Hunter | | | 110,833 | | | 119,981 | | | — | | | 230,814 |
David L. Jahnke | | | 122,819 | | | 119,981 | | | 15,300 | | | 258,100 |
Judith A. Johansen4 | | | 45,828 | | | — | | | — | | | 45,828 |
Glenda J. Minor | | | 113,986 | | | 119,981 | | | — | | | 233,967 |
Leslie L. Shoemaker | | | 95,000 | | | 119,981 | | | — | | | 214,981 |
Michael W. Sutherlin | | | 110,000 | | | 119,981 | | | — | | | 229,981 |
1 | Fees earned includes amounts deferred at the election of a director under the Deferred Compensation Plan for Non-Employee Directors, which is described below. |
2 | Represents the aggregate grant date fair value of awards computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. These amounts reflect the grant date fair value and may not correspond to the actual value that will be realized by the directors. Stock awards consist of DSUs valued using the closing market price of the Company’s Class A common stock on the NASDAQ Global Select Market on the grant date. On January 25, |
| | 2023 |
PROPOSAL ONE | | | |
| At August 31, 2023, each of the unvested DSUs. |
3 | With respect to Messrs. Hicks |
4. | Mr. |
| |
Name | | | Title | ||
Tamara L. Lundgren | | | Chairman, President and Chief Executive Officer (“CEO”) | ||
Richard D. Peach | | | Executive Vice President | ||
Steven G. Heiskell | | | Senior Vice President and President, Recycling Services | ||
Stefano R. Gaggini | | | Senior Vice President | ||
James Matthew Vaughn | | | Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary | ||
Michael R. Henderson | | | Former Senior Vice President and President, Operations(1) |
1 | Effective July 21, 2023, Mr. |
39 |
Compensation Discussion and Analysis | | | |
The Company values investor feedback and will continue to seek feedback through engagement initiatives to align our executive compensation programs with shareholder expectations. Shareholder feedback has influenced a number of changes to our executive compensation program in recent years, | |||||
| | We revised our performance share awards to | |||
| | We revised the annual incentive plan to include an adjusted EBITDA metric, and we increased overall weighting towards financial performance metrics. | |||
| | We restructured the annual incentive plan safety metric to encompass | |||
| | We revised the selection of our performance peer group using a quantitative and qualitative approach similar to that used for selecting the compensation peer group, while also reflecting companies in our industry which are viewed as traditional peers but may not be appropriate (e.g., too large) for purposes of comparing compensation. | |||
| | We capped non-income statement metrics in annual incentive plans at 1.0x if adjusted | |||
| | We enhanced the proxy statement disclosure of our long-term incentive performance metrics, including disclosure of why we have chosen specific metrics, their alignment with shareholder interests, and disclosure of additional information on how the target levels were determined. | |||
| | We removed accelerated vesting upon retirement and included a two-year service requirement and continued vesting feature in our RSU awards for retirement-eligible employees. |
▶ | Promote creation of long-term shareholder value |
▶ | Recruit and retain qualified, high performing executive officers |
▶ | Motivate high levels of performance |
▶ | Be competitive in the market for talent |
| |
Compensation Discussion and Analysis | |
▶ | We seek and carefully consider shareholder feedback regarding our compensation practices |
▶ | We link our executive compensation to our performance |
– | More than 80% of the target compensation for the CEO and 70% of the target compensation for the NEOs other than the CEO are “at-risk.” |
– | We select metrics in our short-term annual incentive plans that are expected to drive long-term shareholder value and metrics in our long-term incentive plan (“LTIP”) that are intended to reflect creation of long-term shareholder value. |
– | For the CEO, the fiscal |
– | For NEOs other than the CEO, the fiscal |
– | For NEOs, including the CEO, the non-income statement metrics in the annual incentive plans (i.e., EH&S performance and adjusted operating cash flow) would be capped at 0.5x if adjusted EPS were negative and at 1.0x if adjusted EPS were positive, but below threshold (0.25x) |
– | 50% of the long-term equity awards are performance share awards that vest following the end of a three-year performance period based on Company performance during the period. For performance share awards granted in fiscal |
– | 50% of the long-term equity awards are time-vested RSUs which vest ratably over a five-year time period and are intended to incentivize executives to create shareholder value through stock price appreciation. The Committee recognizes that the five-year vesting period is longer than the Company’s compensation peer group average for this type of equity award and believes that this longer vesting period aligns with the Committee’s retention and incentive philosophies. |
– | Metrics and targets for incentive plans are based on the Company’s strategic and business plans and annual budgets that are reviewed by the full Board and are analyzed and tested for reasonableness before Committee approval at the beginning of the performance period. The Committee actively evaluates the appropriateness of the financial measures used in incentive plans and the degree of difficulty in achieving specific performance targets. |
– | The selection of the Company’s compensation peer group is designed to identify a mix of companies which the Committee believes provides a comparable aggregate benchmark. Quantitative and qualitative criteria are applied to reflect current market capitalization and revenue parameters and to focus on position in the value chain and exposure to international markets. |
– | For fiscal |
▶ | Stock ownership and retention requirements |
– | We have adopted stock ownership guidelines to promote long-term alignment of the interests of our shareholders and our officers, as discussed on page |
– | Once officers achieve compliance, they must also retain at least 50% of shares that vest thereafter for at least three years. |
| | 2023 PROXY STATEMENT 41 |
Compensation Discussion and Analysis | | | |
▶ | Double-trigger for cash severance payments and benefits in change-in-control agreements |
– | Our change-in-control agreements are double trigger, i.e., a change in control plus termination of the executive’s employment by the successor company without cause or by the executive for good reason are required to trigger cash severance payments and benefits. |
– | No excise tax gross-ups in any new or modified change-in-control agreements. |
▶ | Risk mitigation measures |
– | We use a mix of annual and long-term incentive awards and overlapping performance periods to drive current performance in light of long-term objectives. |
– | The complementary and diverse performance metrics across our plans are designed to drive balanced decision-making, consistent with our model of shareholder value creation. |
– | Annual incentive plans cap or limit payments when earnings results are negative or below threshold. |
– | The Committee reserves discretion in payment of short-term incentives. |
▶ | Minimal perquisites |
– | Perquisites totaled less than $50,000 in fiscal |
▶ | Independent compensation consultant |
– | The Committee directly retains Pearl Meyer as its compensation consultant. Pearl Meyer does not provide any other services to the Company. |
▶ | “No Fault” Clawback Policy |
– | We have adopted a |
Fiscal | ||||||||
| ||||||||
| ||||||||
Generated |
| |
Launched our 3PR™ Brand, Covering Third-Party Recycling Services. We launched our integrated third-party recycling services activities under our trademarked 3PR™ brand. Our 3PR™ activities reflect a rapidly growing and important service and supply chain solution for customers that enable greater recycling rates and value recovery, improved manufacturing and retail efficiency, reductions in material going to landfill, an improved carbon footprint, and enhanced sustainability reporting. We also completed the integration of ScrapSource, which we acquired at the beginning of the fiscal year. ScrapSource is an asset light business, focused on providing metals recycling management services and solutions to manufacturers, fabrication facilities, and service centers across North America. With the same core business as the Company’s National Accounts business, this lean business model is providing us with opportunities to significantly scale our national sourcing platform, enhance services to our national manufacturing and retail customers, increase supply flows to our operating regions, and create expansion opportunities in new regions. | ||||
Our executive compensation program strongly links pay to performance. The Committee sets rigorous targets for both the annual and long-term compensation programs, based on a | ||||
The overall |
▶ | Developing and making recommendations to the Board with respect to our compensation policies and programs; |
▶ | Determining the levels of all compensation to be paid to the CEO and other NEOs (including annual base salary and incentive compensation, equity incentives, and benefit plans); and |
▶ | Administering and granting stock options, performance shares, RSUs, and other awards under our SIP, which authority cannot be delegated. |
| | 2023 PROXY STATEMENT 43 |
Compensation Discussion and Analysis | | | |
▶ | Attended Committee meetings by telephone and in person, as requested, and participated in executive sessions without management present; and |
▶ | Provided input and participated in discussions related to CEO annual and LTIP goal design and metrics and other NEO annual and LTIP design and metrics for fiscal 2023. |
| |
Compensation Discussion and Analysis | |
| | 2023 PROXY STATEMENT 45 |
Compensation Discussion and Analysis | | | |
| | Fiscal 2023 Compensation Peer Group | | | Fiscal 2023 Performance Peer Group | |||
ATI Inc. | | | X | | | X | ||
Arch Resources, Inc. | | | X | | | |||
Arconic Corporation | | |||||||
| X | | | |||||
Carpenter Technology Corporation | | | X | | | |||
Century Aluminum Co. | | | X | | | X | ||
Cleveland-Cliffs Inc. | | | | | X | |||
Coeur Mining, Inc. | | | X | | | X | ||
Commercial Metals Co. | | | X | | | X | ||
Gerdau S.A. | | | | | X | |||
Hecla Mining Co. | | | X | | | X | ||
Kaiser Aluminum Corporation | | | X | | | |||
Minerals Technologies Inc. | | | X | | | X | ||
Nucor Corporation | | | | | X | |||
Ryerson Holding Corporation | | | X | | | |||
Sims Metal Management Ltd. | | | X | | | X | ||
Steel Dynamics Inc. | | | | | X | |||
SunCoke Energy Inc. | | | X | | | X | ||
TimkenSteel Corp. | | | X | | | |||
United States Steel Corporation | | | | | X | |||
Worthington Industries, Inc. | | | X | | |
| |
Compensation Discussion and Analysis | |
| | | Program | | | Purpose | | | Relevant Performance Metrics | ||
Annual | | | Base Salary | | | To provide a competitive foundation and fixed rate of pay for the position and associated level of responsibility | | | Not Applicable | ||
| Annual Performance Bonus Program (APBP) for CEO | | | To incentivize CEO achievement of annual operating, financial, management and | | | Adjusted EPS Adjusted EBITDA EH&S Adjusted Operating Cash Flow Strategic Objectives | ||||
| Annual Incentive Compensation Plan (AICP) for other NEOs | | | To incentivize achievement of annual operating, financial, and management goals | | | Adjusted EPS Adjusted EBITDA EH&S 1 Adjusted Operating Cash Flow | ||||
Long-Term | | | Restricted Stock Units | | | To focus NEOs on long-term shareholder value creation | | | Absolute share price appreciation | ||
| Performance Share Awards | | | To focus NEOs on achievement of financial goals and long-term shareholder value creation | | | Volume Growth Return on Capital Employed (ROCE) Relative TSR Modifier |
1 | Reflects |
2 | Each of the Volume Growth and ROCE metrics is subject to a relative TSR modifier that can increase or decrease the final payout by 20%, based on the relative ranking of the Company’s three-year TSR performance compared to that of its fiscal |
▶ | Volume Growth against specific targets over the three-year period (50% weighting); and |
▶ | ROCE against specific targets over the three-year performance period (50% weighting). |
▶ | fixed and at-risk pay; and |
▶ | short-term and long-term incentives. |
| | 2023 PROXY STATEMENT 47 |
Compensation Discussion and Analysis | | | |
| |
Compensation Discussion and Analysis | |
▶ | Improving the Company’s safety performance and advancing the Company’s EH&S culture by measuring leading environmental and safety performance activities, reflecting our ongoing, multi-year focus in this area. |
▶ | Achieving operating cash flow targets as a reflection of efficient working capital management. |
▶ | Executing certain strategic objectives, including among other things, optimizing the Company’s operating platform, advancing the Company’s growth strategies and investments, evolving the Company’s organizational structure, and implementing leadership development strategies and changes. The Committee determined that these objectives are strategically important for our business platform, and the focus on these metrics in the CEO’s fiscal 2023 annual bonus program reflects the vital role the CEO’s leadership plays in ensuring execution of the Company’s strategic plan. Measurement of the achievement of these strategic objectives by the Committee is based on the annual performance evaluation of the CEO. |
| | 2023 PROXY STATEMENT 49 |
Compensation Discussion and Analysis | | | |
▶ | Targets for adjusted EPS, adjusted EBITDA, and adjusted operating cash flow reflected significantly weakened and uncertain forecasted market conditions associated with the cyclicality of our business. Actual market conditions in fiscal 2023 were materially lower than the assumptions used when the targets were set. |
▶ | The EH&S metric targets were based on improvements from selected historical levels, progress toward our multi-year safety goals and industry benchmarks, and our ongoing focus on improving the scope, quality, and effectiveness of these metrics. |
▶ | The non-income statement metrics in the annual incentive plans (i.e., EH&S performance and adjusted operating cash flow) would be capped at 0.5x if adjusted EPS were negative and at 1.0x if adjusted EPS were positive, but below 0.25x of target. |
▶ | Challenging market conditions in fiscal 2023 adversely impacted the achievement of adjusted EPS and adjusted EBITDA targets. The significantly lower price environment for ferrous and nonferrous recycled metals, as well as the impact of tighter scrap metal supply flows, had a significant adverse impact on the Company’s overall financial results. The calculated multiple for the financial performance component of the APBP for fiscal 2023 was 0.27x. |
| |
Compensation Discussion and Analysis | |
▶ | Productivity Improvements that we undertake as part of our continuous improvement culture where our focus is on efficiencies in processing, procurement, and pricing. During fiscal 2023, we successfully implemented $60 million in annual productivity initiatives enabling us to partially offset inflationary and other costs. |
▶ | Technology Investments in AMRTS at the Company’s major recycling operations to enable us to extract more nonferrous metals, including copper and aluminum, from our shredding activities. Nonferrous sales volumes in fiscal 2023 were up over 7% year-over-year, including from higher recovery yields associated with our advanced nonferrous technology investments despite headwinds including supply chain disruptions on flows, operational disruptions and regulatory changes, and an overall tightness in supply due to lower prices and weaker economic conditions. |
▶ | Expansion of Recycling Services to drive top-line revenue growth and meet the increasing demand for recycled metals. In fiscal 2023, we acquired ScrapSource, an asset light business, focused on providing metals recycling management services and solutions to manufacturers, fabrication facilities, and service centers across North America. During fiscal 2023, we also launched our integrated recycling services activities under our trademarked 3PR™ brand. |
▶ | 100% Net Carbon-free Electricity Usage. We achieved 100% net carbon-free electricity usage across our operations for the third consecutive year. |
▶ | Re-Branding. Our most important communications activity in fiscal 2023 was the rebranding of our Company. We continue to receive uniformly positive feedback on our name and logo change from employees, investors, customers/suppliers, and community leaders. This strong endorsement of our new brand serves as an affirmation that we have successfully aligned our new identity with our Company's established reputation as a leader in the recycling industry. |
▶ | Ranked #1 on Corporate Knights’ 2023 100 Most Sustainable Corporations in the World. In fiscal 2023, Corporate Knights ranked us #1 on their Global 100 List of the world’s most sustainable corporations. Their 2023 Global 100 ranking evaluates companies based on their core products and services and includes a rigorous assessment of nearly 7,000 companies with more than $1 billion in revenue where performance across a range of sustainability metrics is evaluated. This is the second year that we have been ranked on their list; in fiscal 2022, we ranked #15. Great Place to Work®. We received certification for the third consecutive year as a Great Place to Work®, reflecting significantly increased employee engagement and positive employee experiences as evidenced by the results of the Trust Index Survey administered by GPTW. 2023 World’s Most Ethical Companies. The Ethisphere Institute named us one of the 2023 World’s Most Ethical Companies for the ninth consecutive year. |
▶ | Sustainability Rating and Leadership Recognition. In January 2023, MSCI upgraded our rating to AAA, citing our leading performance as compared to industry peers in safety, corporate governance, and environmental management. MSCI is a leading provider of research, data, and rating systems that help investors make important choices about how to analyze various investments and build effective portfolios. In March 2023, the Company was recognized by the Carbon Disclosure Project (CDP) as a Supplier Engagement Leader. CDP is a not-for-profit organization that provides a global disclosure system for investors, companies, cities, states, and regions to measure their environmental impacts. Our recognition by CDP as a Supplier Engagement Leader means we rank among the top 8% of companies assessed for corporate supply chain engagement on climate issues. |
▶ | Building a Brighter Future and Expanding Radius (formerly Schnitzer) Academy. Since the launch of our Building a Brighter Future learning curriculum last year, more than 2,000 courses have been completed—and 39 individuals who have participated in available course offerings have been promoted within our Company. The goal of the Building a Brighter Future initiative is to provide all our employees with access to learning and development training programs and online |
| | 2023 PROXY STATEMENT 51 |
Compensation Discussion and Analysis | | | |
| | | Financial Performance Goal and Management Objectives | | | | | Payout Multiple | | ||||||||||||||||||||
| Metric | | | 0.0x | | | 0.25x | | | 1.00x | | | 2.00x | | | 3.00x | | | Results | | | Weighting | | | Total | | |||
| Adjusted EPS(1) | | | $0 | | | $4.15 | | | $6.57 | | | $7.64 | | | $8.79 | | | $5.89 | | | .79 | | | 25% | | | | |
| Adjusted EBITDA (in millions)(2) | | | $78 | | | $245 | | | $335 | | | $375 | | | $422 | | | $304 | | | .74 | | | 25% | | | | |
| EH&S: | | | | | | | | | | | | | | | | | | | | |||||||||
| TCIR | | | 1.71 | | | 1.67 | | | 1.45 | | | 1.37 | | | 1.30 | | | 1.85 | | | | | | | | |||
| DART | | | 0.98 | | | 0.96 | | | 0.88 | | | 0.83 | | | 0.79 | | | 1.28 | | | | | | | | |||
| EH&S Scorecard | | | 65% | | | 75% | | | 90% | | | N/A | | | N/A | | | 90% | | | | | | | | |||
| EH&S Average Multiple | | | | | | | | | | | | | | | .33 | | | 15% | | | | |||||||
| Adjusted Operating Cash Flow (in millions)(3) | | | $0 | | | $132 | | | $209 | | | $240 | | | $287 | | | $259 | | | 2.4 | | | 15% | | | | |
| Strategic Objectives(4) | | | | | | | | | | | | | | | 1.00 | | | 20% | | | | |||||||
| Payout Multiple Earned | | | | | | | | | | | | | | | | | | | .99 | |
| | Financial Performance Goal and Management Objectives | | | | | Payout Multiple | | |||||||||||||||||||
Metric | | | 0.0x | | | 0.25x | | | 1.00x | | | 2.00x | | | 3.00x | | | Results | | | Weighting | | | Total | |||
Adjusted EPS1 | | | $0 | | | $1.17 | | | $3.04 | | | $4.51 | | | $5.19 | | | $1.28 | | | .29 | | | 25% | | | |
Adjusted EBITDA (in millions)2 | | | $111 | | | $160 | | | $228 | | | $296 | | | $323 | | | $160 | | | .25 | | | 25% | | | |
EH&S: | | | | | | | | | | | | | | | | | | | |||||||||
TCIR | | | 1.83 | | | 1.78 | | | 1.46 | | | 1.37 | | | 1.30 | | | 2.12 | | | | | | | |||
DART | | | 1.23 | | | 1.20 | | | 1.11 | | | 1.05 | | | 0.99 | | | 1.45 | | | | | | | |||
EH&S Scorecard | | | 65% | | | 75% | | | 90% | | | N/A | | | N/A | | | 87% | | | | | | | |||
EH&S Average Multiple | | | | | | | | | | | | | | | .29 | | | 15% | | | |||||||
Adjusted Operating Cash Flow (in millions)3 | | | $109 | | | $158 | | | $226 | | | $294 | | | $323 | | | $166 | | | .34 | | | 15% | | | |
Strategic Objectives4 | | | | | | | | | | | | | | | 2.50 | | | 20% | | | |||||||
Calculated Payout Multiple | | | | | | | | | | | | | | | | | | | .73 | ||||||||
Earned Payout Multiple5 | | | | | | | | | | | | | | | | | | | .20 |
1 | Adjusted EPS for fiscal |
2 | Adjusted EBITDA for fiscal |
3 | Adjusted operating cash flow for fiscal |
4 | See “Fiscal |
5 | Notwithstanding the CEO’s above target performance under the strategic objectives metric, our CEO requested, and the Committee agreed, to exercise discretion and reduce the CEO’s payout multiple to the same multiple as was calculated for the other NEOs. |
| |
Compensation Discussion and Analysis | |
▶ | The AICP recognizes overall Company performance and business line EH&S scorecard performance. |
▶ | Target bonuses based on a percentage of actual base salary paid during the fiscal year are established for the applicable NEO under the AICP. |
– | Target bonus percentages remained unchanged for fiscal |
– | Differences in target bonus percentages among the NEOs reflect their varying levels of responsibility, expertise, experiences, development within roles, and positions within the industry. |
| | | Performance Goals | | | | | Payout Multiple | | ||||||||||||||
| Metric | | | 0.25x | | | 1.00x | | | 2.00x | | | Results | | | Weighting | | | Total | | |||
| Adjusted EPS | | | $4.15 | | | $6.57 | | | $7.64 | | | $5.89 | | | .79 | | | 25% | | | | |
| Adjusted EBITDA (in millions) | | | $245 | | | $335 | | | $375 | | | $304 | | | .74 | | | 35% | | | | |
| EH&S: | | | | | | | | | | | | | | | | |||||||
| TCIR | | | 1.67 | | | 1.45 | | | 1.37 | | | 1.85 | | | | | | | | |||
| DART | | | 0.96 | | | 0.88 | | | 0.83 | | | 1.28 | | | | | | | | |||
| EH&S Scorecard | | | 75% | | | 90% | | | N/A | | | 90% | | | | | | | | |||
| EH&S Average Multiple | | | | | | | | | | | .33 | | | 15% | | | | |||||
| Adjusted Operating Cash Flow (in millions) | | | $132 | | | $209 | | | $240 | | | $259 | | | 2.00 | | | 25% | | | | |
| Payout Multiple Earned | | | | | | | | | | | | | | | 1.00 | |
| | Performance Goals | | | | | Payout Multiple | | |||||||||||||
Metric | | | 0.25x | | | 1.00x | | | 2.00x | | | Results | | | Weighting | | | Total | |||
Adjusted EPS | | | $1.17 | | | $3.04 | | | $4.51 | | | $1.28 | | | .29 | | | 25% | | | |
Adjusted EBITDA (in millions) | | | $160 | | | $228 | | | $296 | | | $160 | | | .00 | | | 35% | | | |
EH&S: | | | | | | | | | | | | | | | |||||||
TCIR | | | 1.67 | | | 1.45 | | | 1.37 | | | 2.12 | | | | | | | |||
DART | | | .96 | | | .88 | | | .83 | | | 1.45 | | | | | | | |||
EH&S Scorecard | | | 75% | | | 90% | | | N/A | | | 87% | | | | | | | |||
EH&S Average Multiple | | | | | | | | | | | .29 | | | 15% | | | |||||
Adjusted Operating Cash Flow (in millions) | | | $158 | | | $226 | | | $294 | | | $166 | | | .34 | | | 25% | | | |
Calculated Payout Multiple | | | | | | | | | | | | | | | .20 |
Named Executive Officer | | | Payout | ||
Richard D. Peach | | | $ | ||
Steven G. Heiskell | | | $111,967 | ||
Stefano R. Gaggini | | | $86,146 | ||
James Matthew Vaughn | | | $85,292 | ||
Michael R. Henderson | | | $ | ||
1 | These amounts are included in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” for each of these NEOs. |
| | 2023 PROXY STATEMENT 53 |
Compensation Discussion and Analysis | | | |
54 2023 PROXY STATEMENT | | |
Compensation Discussion and Analysis | |
▶ | Volume Growth against specific targets over the performance period; and |
▶ | ROCE against specific targets over the performance period. |
| | 2023 PROXY STATEMENT 55 |
Compensation Discussion and Analysis | | | |
| | Volume Growth | | | ROCE | |||
Calculation | | | The Volume Growth metric is based on the average of the Volume Growth achieved by the Company in each of the three years of the performance period. Volume Growth for each year is equal to the number of thousands of long tons of ferrous and nonferrous metal sales, inclusive of ferrous tons transferred to the Company’s steel mill, by the Company for the year expressed as a percentage change from the prior year baseline amount. Volume Growth for the last fiscal year of the performance period will be adjusted to eliminate the impacts of business acquisitions or combinations completed in that fiscal year. | | | The ROCE metric is based on the average of the ROCE achieved by the Company in each of the three years of the performance period. ROCE for each year is defined as (a) net income, excluding interest expense, divided by (b) average capital employed which is generally equal to total assets minus total liabilities other than debt and finance lease liabilities. ROCE for each fiscal year will be adjusted to eliminate the impacts of impairments of goodwill or other assets; certain environmental accruals and expenses; restructuring charges and other exit-related activities; business acquisitions or combinations completed or reviewed in fiscal | ||
Considerations | | | The Committee established the Volume Growth performance targets based on a variety of factors, including our strategic plans, recent historical performance, most recent forecasts and expected impacts of growth initiatives. In light of these factors, the Committee believes the three-year target established is challenging but achievable. | | | The Committee established the ROCE performance targets based on a variety of factors, including our projected operating budgets, recent historical performance, most recent forecasts and expected impacts of growth initiatives, expected returns on capital expenditures and other uses of capital, and the cyclical nature of our business. In light of these factors, the Committee believes the three-year target established is challenging but achievable. | ||
Payout Factor | | | The Volume Growth payout level for the fiscal | | | The ROCE payout level for the fiscal |
Three-Year Average Volume Growth Performance | | | Volume Growth Payout Factor* | | | Three-Year Average ROCE Performance | | | ROCE Payout Factor* | |||
More than | | | 0.0x | | | More than | | | 0.0x | |||
| | 0.5x | | | | | 0.5x | |||||
At target | | | 1.0x | | | At target | | | 1.0x | |||
| | 2.0x | | | | | 2.0x |
* | We consider the Volume Growth and ROCE targets for uncompleted performance periods to be confidential financial information, the disclosure of which would result in competitive harm to us because they would reveal information about our growth profile and the effects of anticipated capital expenditures and corporate acquisitions, none of which is otherwise made public. |
| |
Compensation Discussion and Analysis | |
| Average TSR Percentile Rank Targets | | | TSR Modifier Adjustment | |
| 25% or less | | | -20% | |
| 50% | | | 0% | |
| 75% or more | | | +20% | |
Average TSR Percentile Rank Targets | | | TSR Modifier Adjustment |
25% or less | | | -20% |
50% | | | 0% |
75% or more | | | +20% |
▶ | TSR relative to a peer group of companies with similar financial and operational characteristics; and |
▶ | ROCE against specific targets over the performance period. |
Average TSR Percentile Rank | | | TSR Payout Factor | | | |||
less than 25% | | | 0.0x | | | |||
25% | | | 0.5x | | | |||
50% | | | 1.0x | | | |||
90% or more | | | 2.0x | | |
Fiscal Results | | | | | Payout Factor | |||
| | | | |||||
| | | | |||||
| | | | |||||
Average: | | | | |
| | 2023 PROXY STATEMENT 57 |
Compensation Discussion and Analysis | | | |
ROCE Performance Targets | | | ROCE Payout Factor | | | |||
Below | | | 0.0x | | | |||
| | 0.5x | | | ||||
| | 1.0x | | | ||||
| | 2.0x | |
Fiscal Results | | | | | Payout Factor | |||
2021: | | | | | | |||
2022: | | | | | | |||
2023: | | |||||||
| 3.3% | | | | ||||
Average: | | | | | 2.00x |
58 2023 PROXY STATEMENT | | |
Compensation Discussion and Analysis | |
| | 2023 PROXY STATEMENT 59 |
Compensation Discussion and Analysis | | | |
| |
▶ | Reviewed and discussed the above section titled “Compensation Discussion and Analysis” with management; and |
▶ | Based on the review and discussion above, recommended to the Board that the “Compensation Discussion and Analysis” section be included in this proxy statement. |
61 |
| Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(1) | | | Non-Equity Incentive Plan Compensation Earnings ($)(2) | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | | | All Other Compensation ($)(4) | | | Total ($) | |
| Tamara L. Lundgren Chairman, President and Chief Executive Officer | | | 2022 | | | 1,200,766 | | | — | | | 4,185,969 | | | 1,776,306 | | | | | 66,841 | | | 7,229,882 | | |
| 2021 | | | 1,193,530 | | | — | | | 3,785,214 | | | 4,972,303 | | | 132,671 | | | 65,745 | | | 10,149,463 | | |||
| 2020 | | | 1,160,780 | | | — | | | 3,604,973 | | | 1,681,644 | | | 343,706 | | | 80,451 | | | 6,871,554 | | |||
| Richard D. Peach Executive Vice President & Chief Strategy Officer(5) | | | 2022 | | | 742,239 | | | — | | | 1,257,890 | | | 739,395 | | | — | | | 15,817 | | | 2,755,341 | |
| 2021 | | | 737,766 | | | — | | | 1,007,950 | | | 1,380,719 | | | — | | | 15,373 | | | 3,141,808 | | |||
| 2020 | | | 716,243 | | | — | | | 959,975 | | | 570,516 | | | — | | | 28,144 | | | 2,274,878 | | |||
| Michael R. Henderson Senior Vice President and President, Operations | | | 2022 | | | 641,186 | | | — | | | 987,437 | | | 638,729 | | | — | | | 15,245 | | | 2,282,597 | |
| 2021 | | | 637,322 | | | — | | | 787,474 | | | 1,192,740 | | | — | | | 14,835 | | | 2,632,371 | | |||
| 2020 | | | 618,729 | | | — | | | 749,975 | | | 492,842 | | | — | | | 27,886 | | | 1,889,432 | | |||
| Steven G. Heiskell Senior Vice President and President, Recycling Services | | | 2022 | | | 561,988 | | | — | | | 987,437 | | | 559,835 | | | — | | | 14,796 | | | 2,124,056 | |
| 2021 | | | 558,602 | | | — | | | 787,474 | | | 1,044,826 | | | — | | | 14,412 | | | 2,405,314 | | |||
| 2020 | | | 542,268 | | | — | | | 749,975 | | | 431,731 | | | — | | | 14,323 | | | 1,738,297 | | |||
| Stefano R. Gaggini Senior Vice President & Chief Financial Officer(6) | | | 2022 | | | 496,410 | | | — | | | 599,883 | | | 370,339 | | | — | | | 14,423 | | | 1,481,055 | |
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)1 | | | Non-Equity Incentive Plan Compensation Earnings ($)2 | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)3 | | | All Other Compensation ($)4 | | | Total ($) |
Tamara L. Lundgren Chairman, President and Chief Executive Officer | | | 2023 | | | 1,200,766 | | | — | | | 3,348,733 | | | 358,850 | | | 34,445 | | | 66,305 | | | 5,009,099 |
| 2022 | | | 1,200,766 | | | — | | | 4,185,969 | | | 1,776,306 | | | — | | | 66,841 | | | 7,229,882 | ||
| 2021 | | | 1,193,530 | | | — | | | 3,785,214 | | | 4,972,303 | | | 132,671 | | | 65,745 | | | 10,149,463 | ||
Richard D. Peach Executive Vice President and Chief Strategy Officer | | | 2023 | | | 742,239 | | | — | | | 1,006,371 | | | 147,879 | | | — | | | 16,025 | | | 1,912,514 |
| 2022 | | | 742,239 | | | — | | | 1,257,890 | | | 739,395 | | | — | | | 15,817 | | | 2,755,341 | ||
| 2021 | | | 737,766 | | | — | | | 1,007,950 | | | 1,380,719 | | | — | | | 15,373 | | | 3,141,808 | ||
Steven G. Heiskell Senior Vice President and President, Recycling Services | | | 2023 | | | 561,988 | | | — | | | 789,946 | | | 111,967 | | | — | | | 15,071 | | | 1,478,972 |
| 2022 | | | 561,988 | | | — | | | 987,437 | | | 559,835 | | | — | | | 14,796 | | | 2,124,056 | ||
| 2021 | | | 558,602 | | | — | | | 787,474 | | | 1,044,826 | | | — | | | 14,412 | | | 2,405,314 | ||
Stefano R. Gaggini Senior Vice President and Chief Financial Officer(5) | | | 2023 | | | 542,075 | | | — | | | 479,974 | | | 86,146 | | | — | | | 14,983 | | | 1,123,178 |
| 2022 | | | 496,410 | | | — | | | 599,883 | | | 370,339 | | | — | | | 14,423 | | | 1,481,055 | ||
James Matthew Vaughn Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary(5) | | | 2023 | | | 552,115 | | | 251,410 | | | 479,974 | | | 85,292 | | | — | | | 15,019 | | | 1,383,810 |
Michael R. Henderson Former Senior Vice President and President, Operations(6) | | | 2023 | | | 569,943 | | | — | | | 789,946 | | | 117,919 | | | — | | | 15,232 | | | 1,493,040 |
| 2022 | | | 641,186 | | | — | | | 987,437 | | | 638,729 | | | — | | | 15,245 | | | 2,282,597 | ||
| 2021 | | | 637,322 | | | — | | | 787,474 | | | 1,192,740 | | | — | | | 14,835 | | | 2,632,371 |
1 | Represents the aggregate grant date fair value of stock awards granted during each of the years computed in accordance with FASB ASC Topic 718. These amounts reflect the grant date fair value and may not correspond to the actual value that will be realized by the NEOs. Stock awards consist of RSUs and LTIP performance shares. The grant date fair value of the RSUs is equal to the value of the underlying shares based on the closing market price of the Company’s Class A common stock on the NASDAQ Global Select Market on the grant date. The grant date fair value of the LTIP performance share awards with a TSR market condition is estimated using a Monte-Carlo simulation model. The assumptions made in determining the values of the LTIP performance shares are disclosed in Note 14 of the Consolidated Financial Statements in our Annual Report on Form 10-K for fiscal |
2 | Non-Equity Incentive Plan Compensation in fiscal |
3 | Represents changes in the actuarial present value of accumulated benefits under the Pension Retirement Plan and the SERBP for fiscal |
4 | Includes for fiscal |
5 | Mr. |
6 | Effective July 21, 2023, Mr. |
Compensation of Executive Officers | |
| | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Shares Stock or Units (#)(3) | | Grant Date Fair Value of Stock Awards ($)(4) | | ||||||||||||||||||||||||||||||||||||||||||||
| Name | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold ($) | | Target ($) | | Maximum ($) | | ||||||||||||||||||||||||||||||||||||||||
| Tamara L. Lundgren | | | 11/5/2021 | | | | | 1,046,494 | | 2,092,988 | | 5,023,171 | | | 2,092,988 | | |||||||||||||||||||||||||||||||||||||||
| 11/5/2021 | | | | | | | | 39,950 | | 2,092,981 | | ||||||||||||||||||||||||||||||||||||||||||||
| | — | | 1,794,248 | | 5,282,744 | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
| Richard D. Peach | | | 11/5/2021 | | | | | 314,448 | | 628,895 | | 1,509,349 | | | 628,896 | | |||||||||||||||||||||||||||||||||||||||
| 11/5/2021 | | | | | | | | 12,006 | | 628,994 | | ||||||||||||||||||||||||||||||||||||||||||||
| | 184,849 | | 739,395 | | 1,478,790 | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
| Michael R. Henderson | | | 11/5/2021 | | | | | 246,857 | | 493,713 | | 1,184,912 | | | 493,713 | | |||||||||||||||||||||||||||||||||||||||
| 11/5/2021 | | | | | | | | 9,424 | | 493,724 | | ||||||||||||||||||||||||||||||||||||||||||||
| | 159,682 | | 638,729 | | 1,277,458 | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
| Steven G. Heiskell | | | 11/5/2021 | | | | | 246,857 | | 493,713 | | 1,184,912 | | | 493,713 | | |||||||||||||||||||||||||||||||||||||||
| 11/5/2021 | | | | | | | | 9,424 | | 493,724 | | ||||||||||||||||||||||||||||||||||||||||||||
| | 139,959 | | 559,835 | | 1,119,670 | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
| Stefano R. Gaggini | | | 11/5/2021 | | | | | 149,949 | | 299,898 | | 719,755 | | | 299,898 | | |||||||||||||||||||||||||||||||||||||||
| 11/5/2021 | | | | | | | | 5,726 | | 299,985 | | ||||||||||||||||||||||||||||||||||||||||||||
| | 92,585 | | 370,339 | | 740,678 | | | | | | | ||||||||||||||||||||||||||||||||||||||||||||
| | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards1 | | Estimated Future Payouts Under Equity Incentive Plan Awards2 | | | All Other Stock Awards: Shares Stock or Units (#)3 | | Grant Date Fair Value of Stock Awards ($)4 | ||||||||||||||||||||||||||||||||||||||||||||||
Name | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold ($) | | Target ($) | | Maximum ($) | | |||||||||||||||||||||||||||||||||||||||||
Tamara L. Lundgren | | | 11/11/2022 | | | | | | | | 837,168 | | 1,674,336 | | 4,018,406 | | | 1,674,336 | ||||||||||||||||||||||||||||||||||||||
| 11/11/2022 | | | | | | | | | | | | | | 52,654 | | 1,674,397 | |||||||||||||||||||||||||||||||||||||||
| | — | | 1,794,248 | | 5,382,744 | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
Richard D. Peach | | | 11/11/2022 | | | | | | | | 251,600 | | 503,200 | | 1,207,679 | | | 503,200 | ||||||||||||||||||||||||||||||||||||||
| 11/11/2022 | | | | | | | | | | | | | | 15,823 | | 503,171 | |||||||||||||||||||||||||||||||||||||||
| | 184,849 | | 739,395 | | 1,478,790 | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
Steven G. Heiskell | | | 11/11/2022 | | | | | | | | 197,479 | | 394,958 | | 947,900 | | | 394,958 | ||||||||||||||||||||||||||||||||||||||
| 11/11/2022 | | | | | | | | | | | | | | 12,421 | | 394,988 | |||||||||||||||||||||||||||||||||||||||
| | 139,959 | | 559,835 | | 1,119,670 | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
Stefano R. Gaggini | | | 11/11/2022 | | | | | | | | 119,990 | | 239,980 | | 575,951 | | | 239,980 | ||||||||||||||||||||||||||||||||||||||
| 11/11/2022 | | | | | | | | | | | | | | 7,547 | | 239,994 | |||||||||||||||||||||||||||||||||||||||
| | 107,683 | | 430,732 | | 861,464 | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
James Matthew Vaughn | | | 11/11/2022 | | | | | | | | 119,990 | | 239,980 | | 575,951 | | | 239,980 | ||||||||||||||||||||||||||||||||||||||
| 11/11/2022 | | | | | | | | | | | | | | 7,547 | | 239,994 | |||||||||||||||||||||||||||||||||||||||
| | 106,616 | | 426,462 | | 852,924 | | | | | | | | | | |||||||||||||||||||||||||||||||||||||||||
Michael R. Henderson | | | 11/11/2022 | | | | | | | | 197,479 | | 394,958 | | 947,900 | | | | 394,958 | |||||||||||||||||||||||||||||||||||||
| 11/11/2022 | | | | | | | | | | | | | | 12,421 | | 394,988 | |||||||||||||||||||||||||||||||||||||||
| | 147,399 | | 589,596 | | 1,179,192 | | | | | | | | | |
1 | All amounts reported in these columns represent the potential incentive plan payable for performance in fiscal |
2 | All amounts reported in these columns represent LTIP performance share awards granted in fiscal |
3 | Represents RSUs granted in fiscal |
4 | Represents the aggregate grant date fair value of RSUs and LTIP performance share awards computed in accordance with FASB ASC Topic 718. The grant date fair value of the RSUs is equal to the value of the underlying restricted shares based on the closing market price of the Company’s Class A common stock on the NASDAQ Global Select Market on the grant date. The grant date fair value of the LTIP performance share awards with a TSR market condition is estimated using a Monte-Carlo simulation model. |
| | 2023 PROXY STATEMENT 63 |
Compensation of Executive Officers | | | |
| | Stock Awards | ||||||||||||
Name | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||
Tamara L. Lundgren | | | | | | | — | | | — | ||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| — | | | — | | | | | ||||||
| — | | | — | | | | | ||||||
| — | | | — | | | | | ||||||
Richard D. Peach | | | | | | | — | | | — | ||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| — | | | — | | | | | ||||||
| — | | | — | | | | | ||||||
| — | | | — | | | | | ||||||
Steven G. Heiskell | | | | | | | — | | | — | ||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| — | | | — | | | | | ||||||
| — | | | — | | | | | ||||||
| — | | | — | | | | |
| |
Compensation of Executive Officers | |
| | Stock Awards | ||||||||||||
Name | | | Number of Shares or Units of Stock That Have Not Vested (#) | | | Market Value of Shares or Units of Stock That Have Not Vested ($) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||
| | | | | | — | | | — | |||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| | | | | — | | | — | ||||||
| — | | | — | | | | | ||||||
| — | | | — | | | | | ||||||
| — | | | — | | | | | ||||||
| | | | | | — | | | — | |||||
| | | — | | | 7,476 | | | ||||||
Michael R. Henderson | | | 2,7173 | | | 90,204 | | | — | | | — | ||
| 10,0814 | | | 334,689 | | | — | | | — | ||||
| | | | | — | | | — | ||||||
| — | | | — | | | | | ||||||
| — | | | — | | | | | ||||||
| — | | | — | | | | |
1 | For RSU awards granted prior to fiscal 2020 and in fiscal 2021, 2022 and |
2 | Market values of all shares are based on the closing market price of the Company’s Class A common stock on the NASDAQ Global Select Market on the last trading day of fiscal |
3 | This RSU award fully vested on October 31, |
4 | This RSU award vests as to 50% of the shares on |
5 | This RSU award vests as to 33% of the shares on |
6 | This RSU award vests as to 25% of the shares on October 31 each year in |
7 | This RSU award vests as to 20% of the shares on October 31 each year in |
8 | Reflects LTIP performance shares under awards granted in the first quarter of fiscal |
9 | Reflects LTIP performance shares under awards granted in the first quarter of fiscal 2022 that are subject to performance over the three-year performance period of fiscal 2022 through fiscal 2024. Vesting of these shares is also subject to continued employment until October 31, 2023. Share amounts in the table represent the number issuable based on actual performance through fiscal |
10 | Reflects LTIP performance shares under awards granted in the first quarter of fiscal 2023 that are subject to performance over the three-year performance period of fiscal 2023 through fiscal 2025. Vesting of these shares is also subject to continued employment until October 31, 2024. Share amounts in the table represent the number issuable based on actual performance through fiscal 2023 and target level of performance in the remainder of the performance period. |
| | 2023 PROXY STATEMENT 65 |
Compensation of Executive Officers | | | |
| | | Stock Awards | | ||||
| Name | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(1) | |
| Tamara L. Lundgren | | | 153,997 | | | 8,087,121 | |
| Richard D. Peach | | | 41,246 | | | 2,166,354 | |
| Michael R. Henderson | | | 32,224 | | | 1,692,460 | |
| Steven G. Heiskell | | | 32,224 | | | 1,692,460 | |
| Stefano R. Gaggini | | | 16,575 | | | 867,043 | |
| | Stock Awards | ||||
Name | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)1 |
Tamara L. Lundgren | | | 205,518 | | | 5,592,956 |
Richard D. Peach | | | 55,106 | | | 1,499,576 |
Steven G. Heiskell | | | 43,060 | | | 1,171,770 |
Stefano R. Gaggini | | | 25,134 | | | 684,108 |
James Matthew Vaughn | | | — | | | — |
Michael R. Henderson | | | 43,060 | | | 1,171,770 |
1 | The value realized on vesting is based on the closing market price of the Company’s Class A common stock on the NASDAQ Global Select Market on the vesting date. |
| Name | | | Age | | | Plan Name | | | Number of Years of Credited Service | | | Present Value of Accumulated Benefit ($)(1)(2) | | | Payments During Last Fiscal Year ($) | |
| Tamara L. Lundgren | | | 65 | | | Pension Retirement Plan | | | 17 | | | 64,056 | | | — | |
| | | | | Suppl. Exec. Retirement Bonus Plan | | | 17 | | | 1,969,116 | | | — | | ||
| Richard D. Peach | | | 59 | | | Pension Retirement Plan | | | — | | | — | | | — | |
| Michael R. Henderson | | | 63 | | | Pension Retirement Plan | | | — | | | — | | | — | |
| Steven G. Heiskell | | | 53 | | | Pension Retirement Plan | | | — | | | — | | | — | |
| Stefano R. Gaggini | | | 51 | | | Pension Retirement Plan | | | — | | | — | | | — | |
Name | | | Age | | | Plan Name | | | Number of Years of Credited Service | | | Present Value of Accumulated Benefit ($)1, 2 | | | Payments During Last Fiscal Year ($) |
Tamara L. Lundgren | | | 66 | | | Pension Retirement Plan | | | 18 | | | 56,546 | | | — |
| | | | | | Suppl. Exec. Retirement Bonus Plan | | | 18 | | | 2,011,071 | | | — |
Richard D. Peach | | | 60 | | | Pension Retirement Plan | | | — | | | — | | | — |
Steven G. Heiskell | | | 54 | | | Pension Retirement Plan | | | — | | | — | | | — |
Stefano R. Gaggini | | | 52 | | | Pension Retirement Plan | | | — | | | — | | | — |
James Matthew Vaughn | | | 51 | | | Pension Retirement Plan | | | — | | | — | | | — |
Michael R. Henderson | | | 64 | | | Pension Retirement Plan | | | — | | | — | | | — |
1 | The Pension Retirement Plan Present Value of Accumulated Benefit in the above table represents the actuarial present value as of August 31, |
2 | Ms. Lundgren is eligible to commence benefits under the |
| |
Compensation of Executive Officers | |
| Name | | | Executive Contributions In Last Fiscal Year ($)(1) | | | SSI Contributions in Last Fiscal Year ($) | | | Aggregate Earnings In Last Fiscal Year ($)(2) | | | Aggregate Withdrawals/ Distributions ($) | | | Net Activity in the Last Fiscal Year | |
| Tamara L. Lundgren | | | — | | | — | | | — | | | — | | | — | |
| Richard D. Peach | | | 13,408 | | | — | | | (1,238) | | | — | | | 12,170 | |
| Michael R. Henderson | | | — | | | — | | | — | | | — | | | — | |
| Steven G. Heiskell | | | — | | | — | | | — | | | — | | | — | |
| Stefano R. Gaggini | | | 62,679 | | | — | | | (10,964) | | | — | | | 51,715 | |
Name | | | Executive Contributions In Last Fiscal Year ($)1 | | | SSI Contributions in Last Fiscal Year ($) | | | Aggregate Earnings In Last Fiscal Year ($)2 | | | Aggregate Withdrawals/ Distributions ($) | | | Net Activity in the Last Fiscal Year |
Tamara L. Lundgren | | | — | | | — | | | — | | | — | | | — |
Richard D. Peach | | | 15,000 | | | — | | | 1,861 | | | — | | | 16,861 |
Steven G. Heiskell | | | 50,000 | | | — | | | 5,581 | | | — | | | 55,581 |
Stefano R. Gaggini | | | 154,155 | | | — | | | 19,608 | | | — | | | 173,763 |
James Matthew Vaughn | | | — | | | — | | | — | | | — | | | — |
Michael R. Henderson | | | — | | | — | | | — | | | — | | | — |
1 | Amounts in this column are also included in the Summary Compensation table in the “Salary” and “Non-Equity Incentive Plan Compensation Earnings” columns for fiscal |
2 | These amounts are not included in the Summary Compensation table because plan earnings were not preferential or above market. |
| | 2023 PROXY STATEMENT 67 |
Compensation of Executive Officers | | | |
▶ | the acquisition by any person of 20 percent or more of the Company’s outstanding Class A common stock; |
▶ | the nomination (and subsequent election) of a majority of the Company’s directors by persons other than the incumbent directors; or |
▶ | the consummation of a sale of all or substantially all of the Company’s assets or an acquisition of the Company through a merger or share exchange. |
| |
Compensation of Executive Officers | |
| Name | | | Cash Severance Benefit ($)(1) | | | Insurance Continuation ($)(2) | | | Restricted Stock Unit Acceleration ($)(3) | | | LTIP Performance Shares Acceleration ($)(4) | | | Tax Gross-up Payment ($)(5) | | | 280G Cut-Back ($)(5) | | | Total ($) | |
| Tamara L. Lundgren | | | 12,018,748 | | | 221,921 | | | 7,266,223 | | | 8,362,655 | | | — | | | — | | | 27,869,547 | |
| Richard D. Peach | | | 2,454,408 | | | 42,562 | | | 1,983,655 | | | 2,226,831 | | ��� | — | | | — | | | 6,707,456 | |
| Michael R. Henderson | | | 2,120,250 | | | 33,937 | | | 1,551,228 | | | 1,739,754 | | | — | | | — | | | 5,445,169 | |
| Steven G. Heiskell | | | 1,857,949 | | | 28,128 | | | 1,551,228 | | | 1,739,754 | | | — | | | — | | | 5,177,059 | |
| Stefano R. Gaggini | | | 1,391,220 | | | 25,941 | | | 915,670 | | | 1,073,272 | | | — | | | — | | | 3,406,103 | |
Name | | | Cash Severance Benefit ($)1 | | | Insurance Continuation ($)2 | | | Restricted Stock Unit Acceleration ($)3 | | | LTIP Performance Shares Acceleration ($)4 | | | Tax Gross-up Payment ($)5 | | | 280G Cut-Back ($)5 | | | Total ($) |
Tamara L. Lundgren | | | 10,695,954 | | | 221,687 | | | 6,545,048 | | | 6,829,737 | | | — | | | — | | | 24,292,426 |
Richard D. Peach | | | 2,243,090 | | | 43,201 | | | 1,839,081 | | | 1,921,716 | | | — | | | — | | | 6,047,088 |
Steven G. Heiskell | | | 1,698,067 | | | 28,063 | | | 1,439,983 | | | 1,504,722 | | | — | | | — | | | 4,670,835 |
Stefano R. Gaggini | | | 1,485,000 | | | 26,271 | | | 875,252 | | | 935,875 | | | — | | | — | | | 3,322,398 |
James Matthew Vaughn | | | 1,485,000 | | | 41,734 | | | 250,560 | | | 248,204 | | | — | | | (220,000) | | | 1,805,498 |
1 | Cash Severance Benefit. The change-in-control agreements provide for cash severance equal to a multiple (three for Ms. Lundgren and one and one-half for Messrs. Peach, |
2 | Insurance Continuation. If cash severance benefits are triggered, the change-in-control agreements also provide for continuation of Company paid life, accident, and medical insurance benefits for up to 36 months following termination of employment for Ms. Lundgren, and up to 18 months for Messrs. Peach, |
3 | RSU Acceleration. All RSUs for all current NEOs will immediately vest on a change in control of the Company, whether or not the officer’s employment is terminated in connection with the change in control. Information regarding unvested RSUs held by the NEOs is set forth in the “Outstanding Equity Awards” table. The amounts in the table above represent the number of shares subject to unvested RSUs multiplied by a stock price of |
4 | LTIP Performance Share Acceleration. Under the terms of the standard LTIP performance share award agreements, upon a Company sale, each NEO would receive a payout in an amount equal to the greater of (a) 100% of the target share amount or (b) the payout calculated as if the performance period had ended on the last day of the Company’s most recently completed fiscal quarter prior to the date of the Company sale, taking into account provisions in the award agreements for calculating performance for a shorter performance period and a partial year. The accelerated payouts would occur whether or not the officer’s employment was terminated in connection with the Company sale. The amounts in the table above represent the value of outstanding LTIP performance share awards that would vest and be paid out pursuant to the terms of the award agreements on a Company sale based on a stock price of |
5 | 280G Tax Gross-up Payment and Cut-Back. If any payments to Ms. Lundgren and Mr. Peach in connection with a change in control are subject to the 20% excise tax on “excess parachute payments” as defined in Section 280G of the Code, the Company is required under the change-in-control agreements to make a tax gross-up payment to the NEO sufficient so that the NEO will receive benefits as if no excise tax were payable. However, for Mr. Peach there is a cut-back provision that provides that if the “parachute value” is less than 110% of the Safe Harbor amount (as such terms are defined in the change-of-control agreement), no additional payment is required and the amounts payable to the NEO will be reduced to 2.99 times the NEO’s “base amount.” In 2011, the Committee approved a revised form of change-in-control agreement, which does not include any tax gross-up provisions, and this form has been used for agreements with Messrs. |
| | 2023 PROXY STATEMENT 69 |
Compensation of Executive Officers | | | |
| Name | | | Cash Severance Benefit ($)(1) | | | Insurance Continuation ($)(2) | | | Restricted Stock Unit Acceleration ($)(3) | | | LTIP Performance Shares Acceleration ($)(4) | | | Total ($) | |
| Tamara L. Lundgren | | | 12,018,748 | | | 147,947 | | | 7,266,223 | | | 6,636,580 | | | 26,069,498 | |
| Richard D. Peach | | | — | | | — | | | — | | | 1,767,144 | | | 1,767,144 | |
| Michael R. Henderson | | | — | | | — | | | — | | | 1,380,642 | | | 1,380,642 | |
| Steven G. Heiskell | | | — | | | — | | | — | | | 1,380,642 | | | 1,380,642 | |
| Stefano R. Gaggini | | | — | | | — | | | — | | | 846,914 | | | 846,914 | |
Name | | | Cash Severance Benefit ($)1 | | | Insurance Continuation ($)2 | | | Restricted Stock Unit Acceleration ($)3 | | | LTIP Performance Shares Acceleration ($)4 | | | Total ($) |
Tamara L. Lundgren | | | 10,695,954 | | | 147,792 | | | 6,545,048 | | | 3,838,252 | | | 21,227,046 |
Richard D. Peach | | | — | | | — | | | — | | | 1,029,598 | | | 1,029,598 |
Steven G. Heiskell | | | — | | | — | | | — | | | 804,602 | | | 804,602 |
Stefano R. Gaggini | | | — | | | — | | | — | | | 509,354 | | | 509,354 |
James Matthew Vaughn | | | — | | | — | | | — | | | — | | | — |
1 | Cash Severance Benefit. The CEO has entered into an employment agreement providing for, among other things, cash severance benefits if her employment is terminated by the Company without “cause” or by her for “good reason” in circumstances not involving a change in control. “Cause” and “good reason” generally have the same meaning as under the change-in-control agreements described above. The cash severance payment for the CEO is equal to three times the sum of base salary plus the greater of (1) the average of the last three annual bonuses, except that the amount taken into account for any such bonus shall not exceed three times the target bonus for such year, or (2) the most recently established target bonus. The employment agreement also provides for payment of a pro rata portion of the incentive bonus that she would have received if she had remained employed for the fiscal year in which the termination occurs (based on the portion of the year worked). The table above does not include a pro rata portion of the incentive bonus for fiscal |
2 | Insurance Continuation. If cash severance benefits are triggered under the CEO’s employment agreement, her employment agreement provides for continuation for up to 24 months of Company paid life, accident and health insurance benefits for the CEO and her spouse and dependents, and the amount in the table represents 24 months of such insurance benefit payments at the rates paid by us for the CEO as of August 31, |
3 | RSU Acceleration. If cash severance benefits are triggered under the CEO’s employment agreement, her employment agreement also provides that all RSUs will immediately vest. Information regarding unvested restricted stock units held by the CEO is set forth in the Outstanding Equity Awards table. The amount in the table above represents the number of shares subject to unvested RSUs multiplied by a stock price of |
4 | LTIP Performance Shares Acceleration. Under the terms of the standard LTIP performance share award agreements, if an NEO’s employment is terminated by the Company without “cause” in circumstances not involving a Company sale after the end of the twelfth month of the applicable performance period and prior to the completion of the performance period and vesting date, the NEO would be entitled to receive a pro-rated award to be paid following completion of the performance period, taking into account the number of performance shares that would otherwise have been issued based on the actual performance during the entire performance period and the portion of the performance period the officer had worked. The officer is required to provide a release of claims in connection with such payout. For this purpose, “cause” generally means (a) the conviction of the officer of a felony involving theft or moral turpitude or relating to the business of the Company, (b) the officer’s continued failure to perform assigned duties, (c) fraud or dishonesty by the officer in connection with employment with the Company, (d) any incident materially compromising the officer’s reputation or ability to represent the Company with the public, (e) any willful misconduct that substantially impairs the Company’s business or reputation, or (f) any other willful misconduct by the officer that is clearly inconsistent with the officer’s position or responsibilities. The amounts in the table above are calculated based on actual performance for completed performance periods and assume performance at the 100% payout level (actual performance may be more or less) for incomplete performance periods, with the resulting number of performance shares then multiplied by a stock price of |
| |
Compensation of Executive Officers | |
| Name | | | Restricted Stock Unit Acceleration ($)(1) | | | LTIP Performance Shares Acceleration ($)(2) | | | Total ($) | |
| Tamara L. Lundgren | | | 3,698,927 | | | 6,990,042 | | | 10,688,969 | |
| Richard D. Peach | | | 988,523 | | | 1,872,410 | | | 2,860,933 | |
| Michael R. Henderson | | | 772,310 | | | 1,463,242 | | | 2,235,552 | |
Name | | | Restricted Stock Unit Acceleration ($)1 | | | LTIP Performance Shares Acceleration ($)2 | | | Total ($) |
Tamara L. Lundgren | | | 3,735,863 | | | 4,245,018 | | | 7,980,881 |
Richard D. Peach | | | 994,871 | | | 1,151,808 | | | 2,146,679 |
1 | RSU Acceleration or Continued Vesting. The terms of the RSU awards granted prior to fiscal 2020 provide for accelerated vesting on retirement. The RSU awards granted during fiscal 2020, 2021 and 2022 provide for continued vesting on the original scheduled vesting dates (subject to continued compliance with the non-competition requirements set forth in the award agreements) in the event of a retirement that occurs at least two years following the grant date. The amounts in the table above represent the number of unvested RSU shares subject to accelerated and/or continued vesting, as applicable, multiplied by a stock price of |
2 | LTIP Performance Shares Acceleration. Under the terms of the standard LTIP performance share awards, if an NEO retires prior to the vesting date, the NEO would be entitled to receive a pro-rated award to be paid following completion of the performance period, taking into account the number of performance shares that would otherwise have been issued based on the actual performance through the entire performance period and the portion of the performance period the officer had worked. The NEO is required to provide a release of claims in connection with such payout. The amounts in the table above are calculated based on actual performance for completed performance periods and assume performance at the 100% payout level (actual performance may be more or less) for incomplete performance periods, with the resulting number of performance shares then multiplied by a stock price of |
| | 2023 PROXY STATEMENT 71 |
Compensation of Executive Officers | | | |
| Name | | | Restricted Stock Unit Acceleration ($)(1) | | | LTIP Performance Shares Acceleration ($)(2) | | | Total ($) | |
| Tamara L. Lundgren | | | 7,266,223 | | | 6,636,580 | | | 13,902,803 | |
| Richard D. Peach | | | 1,983,655 | | | 1,767,144 | | | 3,750,799 | |
| Michael R. Henderson | | | 1,551,228 | | | 1,380,642 | | | 2,931,870 | |
| Steven G. Heiskell | | | 1,551,228 | | | 1,380,642 | | | 2,931,870 | |
| Stefano R. Gaggini | | | 915,670 | | | 846,914 | | | 1,762,584 | |
Name | | | Restricted Stock Unit Acceleration ($)1 | | | LTIP Performance Shares Acceleration ($)2 | | | Total ($) |
Tamara L. Lundgren | | | 6,545,048 | | | 3,616,410 | | | 10,161,458 |
Richard D. Peach | | | 1,839,081 | | | 962,966 | | | 2,802,047 |
Steven G. Heiskell | | | 1,439,983 | | | 752,312 | | | 2,192,295 |
Stefano R. Gaggini | | | 875,252 | | | 477,582 | | | 1,352,834 |
James Matthew Vaughn | | | 250,560 | | | — | | | 250,560 |
1 | RSU Acceleration. The terms of the RSU awards provide for accelerated vesting upon termination of employment as a result of disability or death. Information regarding unvested RSUs held by the NEOs is set forth in the “Outstanding Equity Awards” table above. The amounts in the table above represent the number of shares subject to unvested RSUs multiplied by a stock price of |
2 | LTIP Performance Shares Acceleration. Under the terms of the standard LTIP performance share awards, if an NEO’s employment is terminated due to death or disability prior to the vesting date, the officer (or his or her estate) would receive a payout in an amount equal to the payout calculated as if the performance period had ended on the last day of the Company’s most recently completed fiscal quarter prior to the date of employment termination, taking into account provisions in the award agreement for calculating performance for a shorter performance period and a partial year, and pro-rated for the portion of the performance period the officer had worked. The amounts in the table above represent the value of outstanding LTIP performance share awards that would vest and be paid out pursuant to the terms of the award agreements on death or disability based on a stock price of |
| |
Compensation of Executive Officers | |
| Plan category | | | (a) Number of Securities to be Issued(2) | | | (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |
| Equity compensation plans approved by shareholders(1) | | | 2,633,985 | | | 2,098,625 | |
| Equity compensation plans not approved by shareholders | | | — | | | — | |
| Total | | | 2,633,985 | | | 2,098,625 | |
Plan category | | | (a) Number of Securities to be Issued2 | | | (b) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
Equity compensation plans approved by shareholders1 | | | 2,245,334 | | | 1,974,855 |
Equity compensation plans not approved by shareholders | | | — | | | — |
Total | | | 2,245,334 | | | 1,974,855 |
1 | Consists entirely of shares of Class A common stock authorized for issuance under the Company’s SIP. |
2 | Consists of |
| | 2023 PROXY STATEMENT 73 |
Fiscal Year | | | Summary Compensation Table Total for CEO ($)1 | | | Compensation Actually Paid to CEO ($)2 | | | Average Summary Compensation Table Total for non-CEO NEO's ($)3 | | | Average Compensation Actually Paid to non-CEO NEO's ($)4 | | | Value of Initial Fixed $100 Investment Based on | | | Net (Loss) Income (000s) ($)7 | | | Company Selected Measure: Adjusted EBITDA (000s) ($)8 | |||
| Total Shareholder Return ($)5 | | | S&P Small Cap 600 - Metals & Mining Index Total Shareholder Return ($)6 | | |||||||||||||||||||
2023 | | | 5,009,099 | | | 2,133,299 | | | 1,478,303 | | | 955,686 | | | 184 | | | 234 | | | (25,438) | | | 144,327 |
2022 | | | 7,229,882 | | | (239,158) | | | 2,160,762 | | | 568,928 | | | 174 | | | 175 | | | 171,996 | | | 312,715 |
2021 | | | 10,149,463 | | | 29,712,131 | | | 2,496,179 | | | 6,515,063 | | | 246 | | | 177 | | | 169,975 | | | 289,209 |
1 | The amounts shown in this column reflect the amount reported in the Total column of the Summary Compensation Table for each applicable fiscal year. |
2 | The amounts shown in this column reflect the “compensation actually paid” as calculated under SEC rules for our CEO, Tamara L. Lundgren (our principal executive officer), for each applicable fiscal year. The following table shows those calculations. |
Calculation of “Compensation Actually Paid” Under SEC Rules - CEO | | | Fiscal Year | ||||||
| 2023 | | | 2022 | | | 2021 | ||
Amount reported in Total column of Summary Compensation Table | | | $5,009,099 | | | $7,229,882 | | | $10,149,463 |
Deduction for amount reported in Stock Awards column of Summary Compensation Table (i.e., grant date fair value of stock awards) | | | (3,348,733) | | | (4,185,969) | | | (3,785,214) |
Increase for fair value at fiscal year-end of equity awards granted during the fiscal year that remain outstanding and unvested at fiscal year-end | | | 2,931,102 | | | 2,353,327 | | | 10,100,017 |
Increase/decrease for change in fair value during the fiscal year of equity awards granted in a prior fiscal year that remain outstanding and unvested at fiscal year-end | | | (1,347,480) | | | (6,535,233) | | | 12,368,671 |
Increase/decrease for change in fair value during the fiscal year, as of the vesting date, of equity awards granted in a prior fiscal year that vested in the fiscal year | | | (1,197,352) | | | 753,282 | | | 855,642 |
Deduction for amount reported in Change in Pension Value and Nonqualified Deferred Compensation Earnings column of Summary Compensation Table a | | | (34,445) | | | — | | | (132,671) |
Increase for pension service cost attributable to services rendered in the fiscal year | | | 121,108 | | | 145,553 | | | 156,223 |
“Compensation Actually Paid” under SEC rules | | | $2,133,299 | | | $(239,158) | | | $29,712,131 |
3 | The amounts shown in this column reflect, for each applicable fiscal year, the average of the amounts reported in the Total column of the Summary Compensation Table for the Company’s named executive officers other than the CEO. The named executive officers included for this purpose for each applicable year are as follows: (i) for fiscal year 2023, Richard D. Peach, Steven G. Heiskell, Stefano R. Gaggini, James Matthew Vaughn, and Michael R. Henderson; (ii) for fiscal year 2022, Richard D. Peach, Michael R. Henderson, Steven G. Heiskell, and Stefano R. Gaggini; and (iii) for fiscal year 2021, Richard D. Peach, Michael R. Henderson, Steven G. Heiskell, and Peter Saba. |
4 | The amounts shown in this column reflect, for each applicable fiscal year, the average amount of “compensation actually paid” as calculated under SEC rules to the Company’s named executive officers other than the CEO. The following table shows those calculations. |
74 2023 PROXY STATEMENT |
Calculation of “Compensation Actually Paid” Under SEC Rules – Average for Non-CEO Named Executive Officers | | | Fiscal Year | ||||||
| 2023 | | | 2022 | | | 2021 | ||
Amount reported in Total column of Summary Compensation Table | | | $1,478,303 | | | $2,160,762 | | | $2,496,179 |
Deduction for amount reported in Stock Awards column of Summary Compensation Table (i.e., grant date fair value of stock awards) | | | (709,242) | | | (958,162) | | | (776,967) |
Increase for fair value at fiscal year-end of equity awards granted during the fiscal year that remain outstanding and unvested at fiscal year-end | | | 620,790 | | | 538,678 | | | 2,073,167 |
Increase/decrease for change in fair value during the fiscal year of equity awards granted in a prior fiscal year that remain outstanding and unvested at fiscal year-end | | | (240,300) | | | (1,321,535) | | | 2,546,148 |
Increase/decrease for change in fair value during the fiscal year, as of the vesting date, of equity awards granted in a prior fiscal year that vested in the fiscal year | | | (193,865) | | | 149,185 | | | 176,536 |
Average “Compensation Actually Paid” under SEC rules | | | $955,686 | | | $568,928 | | | $6,515,063 |
5 | The amounts shown in this column reflect the cumulative total shareholder return on our common stock during the period from August 31, 2020 through the end of the applicable fiscal year, assuming an investment of $100 in our common stock as of the market close on August 31, 2020. |
6 | The amounts shown in this column reflect the cumulative total shareholder return of the S&P Small Cap 600 Metals & Mining Index during the period from August 31, 2020 through the end of the applicable fiscal year, assuming an investment of $100 in our common stock as of the market close on August 31, 2020. |
7 | Represents the amount of net (loss) income reflected in the Company’s audited financial statements for each applicable fiscal year. |
8 | Represents the amount of Adjusted EBITDA reported by the Company for each applicable fiscal year. Adjusted EBITDA is a measure selected by the Company under SEC rules as the most important performance measure used to link CAP for the NEOs to Company performance during fiscal year 2023. Adjusted EBITDA is a non-GAAP financial measure. See Appendix A to this proxy statement for additional information on Adjusted EBITDA. |
| | 2023 PROXY STATEMENT 75 |
- | Net Income |
- | Adjusted EBITDA |
- | Adjusted EPS |
76 2023 PROXY STATEMENT | | |
The Board of Directors recommends that shareholders vote “FOR” the approval, on an advisory basis, of our executive compensation as disclosed in this proxy statement. |
| |
77 |
The Board of Directors recommends that shareholders vote “EVERY YEAR” to determine, on an advisory basis, the frequency of future shareholder advisory votes on executive compensation. |
78 2023 PROXY STATEMENT | | |
PROPOSAL THREE | |
| | 2023 PROXY STATEMENT 79 |
| |||
The Board of Directors recommends that shareholders vote “FOR” the ratification of the selection of independent registered public accounting firm. |
80 2023 PROXY STATEMENT | | |
| | | 2022 | | | 2021 | | |
| Audit Fees(1) | | | $3,028,059 | ��� | | $2,389,268 | |
| Audit Related Fees | | | — | | | — | |
| Tax Fees | | | — | | | — | |
| All Other Fees | | | 11,650 | | | 122,942 | |
| Total | | | $3,039,709 | | | $2,512,210 | |
| | 2023 | | | 2022 | |
Audit Fees1 | | | $3,260,500 | | | $3,028,059 |
Audit Related Fees | | | — | | | — |
Tax Fees | | | — | | | — |
All Other Fees | | | 900 | | | 11,650 |
Total | | | $3,261,400 | | | $3,039,709 |
1 | Professional services rendered for the integrated audit of our annual consolidated financial statements and internal control over financial reporting, reviews of the consolidated financial statements included in Form 10-Qs, consents relating to other filings with the SEC, and statutory audit requirements. |
81 |
▶ | Management is responsible for the Company’s systems of internal control and the financial reporting process. The Audit Committee reviewed the Company’s quarterly earnings press releases, annual audited consolidated financial statements, management’s report on internal control over financial reporting and related periodic reports filed with the SEC and discussed them with management. Management represented to the Audit Committee that the Company’s audited consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The Audit Committee also reviewed and discussed the annual audited consolidated financial statements with PricewaterhouseCoopers LLP (“PwC”), the Company’s independent registered public accounting firm for fiscal 2023, including a discussion of the quality, and not just the acceptability, of the accounting principles used and the reasonableness of significant judgments. |
▶ | The Audit Committee discussed with management on a quarterly basis the details of the Company’s material legal and environmental matters, certain judgmental accounting matters and other significant financial transactions occurring within each quarter, reviewing and approving, as appropriate, all transactions with related persons, the Company’s compliance program, reports received through the Company’s whistleblower hotline and other selected risk-related topics. |
▶ | The Audit Committee discussed with the Company’s internal auditor and PwC the overall scope and plans for their respective audits. The Audit Committee met quarterly with the internal auditor and PwC to discuss the results of their examinations and the overall quality of the Company’s financial reporting. |
▶ | The Audit Committee’s quarterly meetings with internal audit included reviews of the risk assessment process used to establish the annual audit plan and the progress on completion of that plan including testing of controls in connection with the Company’s compliance with Sarbanes-Oxley Act of 2002. |
▶ | The Audit Committee discussed with PwC the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the Commission. |
▶ | The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. |
▶ | PwC has served as the Company’s auditor since 1976, which includes periods before the Company became public in fiscal 1993. In determining whether to reappoint PwC, the Audit Committee takes into consideration various factors, |
82 2023 PROXY STATEMENT |
Audit Committee Report | |
– | Higher quality audit work and accounting advice, due to PwC’s institutional knowledge of our business and operations, accounting policies and financial systems, and internal control framework; and |
– | Operational efficiencies because of PwC’s history and familiarity with our business. |
▶ | Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended August 31, 2023 filed with the SEC. |
▶ | The Audit Committee also has selected PwC to be the Company’s independent registered public accounting firm for fiscal 2024, subject to shareholder ratification. |
| | 2023 PROXY STATEMENT 83 |
The Board of Directors recommends that shareholders vote “FOR” the approval of the Radius Recycling, Inc. 2024 Omnibus Incentive Plan. |
▶ | Key Role of Equity Compensation in our Compensation Program. We use equity to compensate critical talent at our Company for the express purpose of fostering an employee ownership culture. If shareholders do not approve the Omnibus Incentive Plan, we will not be able to continue granting equity awards after the remaining 1.3 million shares under the Prior Plan are exhausted. This would require us to overhaul our compensation program, including: reducing or eliminating the proportion of compensation paid to our employees in equity, thereby decreasing our employees’ long-term alignment with investors; and paying compensation entirely in cash or providing for other forms of incentive compensation to attract and retain employees that are less aligned with our shareholders’ interests. All of these alternatives would reduce our liquidity for growth opportunities, strategic investment in our business, and returning capital to our shareholders. |
▶ | Prudent Use of Shareholder Capital. The Compensation and Human Resources Committee of the Board has been a careful steward of shareholder capital as evidenced by our actual grants and the fact that this is our first share request in nearly ten years. The Compensation and Human Resources Committee thoroughly and regularly reviews our compensation strategy and share usage, and the Board as a whole acts to mitigate dilutive impact, including by returning a significant amount of capital to shareholders. The Board has a long history of equity stewardship and mitigating dilution, as evidenced by our 2.19% ten-year average burn rate (FY 2014-2023) and 2.09% five-year average burn rate (FY 2019-2023). The Company also repurchases shares when prudent, helping offset the dilutive impact of our share-based incentive program over time. |
84 2023 PROXY STATEMENT |
PROPOSAL Five | |
▶ | Shareholder-Favorable Vesting Schedule Not Reflected in Overhang Benchmarks. Our five-year vesting schedule for time-based stock awards is longer than the average three-year vesting schedule of our compensation peer group for time-based stock awards. The longer vesting schedule has resulted in a higher overhang level relative to benchmarks. Notwithstanding this higher overhang level relative to benchmarks, we believe that a longer vesting schedule is more favorable to shareholders, as it better aligns time-based stock awards with retention and the creation of long-term shareholder value. |
▶ | Shareholder-Favorable Plan Changes. The Omnibus Incentive Plan is similar to the Prior Plan, with certain changes to reflect technical updates and clarifications, changes in applicable laws and prevailing compensation and governance best practices. These changes include: |
▶ | Minimum Vesting Period. Awards under the Omnibus Incentive Plan generally must vest over a period of not less than one year from the date of grant. For the avoidance of doubt, this one-year minimum vesting period is distinct from and would not impact the continued vesting feature for retirement-eligible employees that was introduced with RSU awards granted in fiscal 2020. (The continued vesting feature for retirement eligible employees requires a minimum two-year service requirement following the award in order for vesting to begin to occur.) |
▶ | Definition of “Change in Control”. The “Change in Control” definition contained in the Omnibus Incentive Plan generally conforms to the Company’s historical practice in grant agreements for certain awards under the Prior Plan, except that the threshold at which a third-party acquisition would constitute a Change in Control has been increased from 20% to 30% of the combined voting power of our outstanding voting securities. |
▶ | Annual Limit on Non-Employee Director Compensation. The Omnibus Incentive Plan establishes a $750,000 limit on the total compensation that non-employee directors may receive (for service as a non-employee director) during any fiscal year. |
▶ | No Dividends or Dividend Equivalents on Unearned Awards. The Omnibus Incentive Plan prohibits the current payment of dividends or dividend equivalent rights on unvested or unearned awards, including performance share unit awards. |
| | 2023 PROXY STATEMENT 85 |
PROPOSAL Five | | | |
86 2023 PROXY STATEMENT | | |
PROPOSAL Five | |
| | 2023 PROXY STATEMENT 87 |
PROPOSAL Five | | | |
88 2023 PROXY STATEMENT | | |
PROPOSAL Five | |
| | 2023 PROXY STATEMENT 89 |
PROPOSAL Five | | | |
90 2023 PROXY STATEMENT | | |
PROPOSAL Five | |
| | 2023 PROXY STATEMENT 91 |
The Board of Directors recommends that shareholders vote “FOR” |
92 2023 PROXY STATEMENT |
PROPOSAL Six | |
| | 2023 PROXY STATEMENT 93 |
PROPOSAL Six | | | |
| |
| Adjusted EBITDA ($ in thousands) | | | Fiscal Year | | |||||||||||||||
| 2022 | | | 2021 | | | 2020 | | | 2019 | | | 2018 | | | 2017 | | |||
| Net income (loss) | | | $171,996 | | | $169,975 | | | $(2,200) | | | $58,322 | | | $159,789 | | | $46,978 | |
| Loss (income) from discontinued operations, net of tax | | | 83 | | | 79 | | | 95 | | | 248 | | | (346) | | | 390 | |
| Interest expense | | | 8,538 | | | 5,285 | | | 8,669 | | | 8,266 | | | 8,983 | | | 8,081 | |
| Income tax expense (benefit) | | | 44,597 | | | 37,935 | | | 166 | | | 17,670 | | | (17,590) | | | 1,322 | |
| Depreciation and amortization | | | 75,053 | | | 58,599 | | | 58,173 | | | 53,336 | | | 49,672 | | | 49,840 | |
| Charges for legacy environmental matters, net(1) | | | 7,518 | | | 13,773 | | | 4,097 | | | 2,419 | | | 7,268 | | | 2,648 | |
| Business development costs | | | 2,693 | | | 2,155 | | | 1,619 | | | — | | | — | | | — | |
| Restructuring charges and other exit-related activities | | | 77 | | | 1,008 | | | 8,993 | | | 365 | | | (661) | | | (109) | |
| Charges related to legal settlements(2) | | | 590 | | | 400 | | | 73 | | | 2,330 | | | — | | | — | |
| Asset impairment charges (recoveries), net | | | 1,570 | | | — | | | 5,729 | | | 63 | | | (1,021) | | | (717) | |
| Recoveries related to the resale or modification of previously contracted shipments | | | — | | | — | | | — | | | — | | | (417) | | | (1,144) | |
| Adjusted EBITDA | | | $312,715 | | | $289,209 | | | $85,414 | | | $143,019 | | | $205,677 | | | $107,289 | |
| | Year Ended August 31, | |||||||
| | 2023 | | | 2022 | | | 2021 | |
Adjusted EBITDA: ($ in thousands): | | | | | | | |||
Net (loss) income | | | ($25,438) | | | $171,996 | | | $169,975 |
Loss from discontinued operations, net of tax | | | $109 | | | $83 | | | $79 |
Interest expense | | | $18,589 | | | $8,538 | | | $5,285 |
Income tax (benefit) expense | | | ($2,747) | | | $44,597 | | | $37,935 |
Depreciation and amortization | | | $89,760 | | | $75,053 | | | $58,599 |
Goodwill impairment charges | | | $39,270 | | | — | | | — |
Other asset impairment charges, net(1) | | | $11,252 | | | $1,570 | | | — |
Charges for legacy environmental matters, net(2) | | | $10,370 | | | $7,518 | | | $13,773 |
Restructuring charges and other exit-related activities | | | $2,730 | | | $77 | | | $1,008 |
Business development costs | | | $432 | | | $2,693 | | | $2,155 |
Charges related to legal settlements(3) | | | — | | | $590 | | | $400 |
Adjusted EBITDA | | | $144,327 | | | $312,715 | | | $289,209 |
(1) | For the year ended August 31, 2023, asset impairment charges included $5 million of impairment and other adjustments of an equity investment to fair value. |
(2) | Legal and environmental charges, net of recoveries, for legacy environmental matters including those related to the Portland Harbor Superfund site and to other legacy environmental loss contingencies. |
(3) | Charges related to legal settlements in fiscal 2022 and 2021 relate to a claim by a utility provider for past |
A-1 |
| Adjusted Diluted Earnings (Loss) Per Share from Continuing Operations Attributable to the Company ($ per share) | | | Fiscal Year | | |||||||||||||||
| 2022 | | | 2021 | | | 2020 | | | 2019 | | | 2018 | | | 2017 | | |||
| As reported | | | $5.72 | | | $5.66 | | | $(0.15) | | | $2.01 | | | $5.46 | | | $1.60 | |
| Charges for legacy environmental matters, net(1) | | | 0.25 | | | 0.47 | | | 0.15 | | | 0.09 | | | 0.25 | | | 0.09 | |
| Business development costs | | | 0.09 | | | 0.07 | | | 0.06 | | | — | | | — | | | — | |
| Restructuring charges and other exit-related activities | | | 0.00 | | | 0.03 | | | 0.32 | | | 0.01 | | | (0.02) | | | — | |
| Charges related to legal settlements(2) | | | 0.02 | | | 0.01 | | | — | | | 0.08 | | | — | | | — | |
| Asset impairment charges | | | 0.05 | | | — | | | 0.21 | | | — | | | (0.04) | | | (0.03) | |
| Recoveries related to the resale or modification of previously contracted shipments | | | — | | | — | | | — | | | — | | | (0.01) | | | (0.04) | |
| Income tax (benefit) expense allocated to adjustments(3) | | | (0.07) | | | (0.13) | | | (0.16) | | | (0.03) | | | — | | | — | |
| Adjusted(4) | | | $6.07 | | | $6.13 | | | $0.43 | | | $2.16 | | | $5.64 | | | $1.62 | |
B-1 |
Appendix B | | |
(iii) Any person shall, as a result of a tender or exchange offer, open market purchases or privately negotiated purchases from anyone other than the Company, have become the beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of Voting Securities representing 30% or more of the combined voting power of the then outstanding Voting Securities. |
(i) “Code” means the Internal Revenue Code of 1986, as amended, and any successor thereto. Reference in the Plan to any section of the Code shall be deemed to include any regulations or other interpretative guidance under such section, and any amendments or successor provisions to such section, regulations, or guidance. (j) “Committee” means the Compensation and Human Resources Committee of the Board or any properly delegated subcommittee thereof or, if no such Compensation and Human Resources Committee or subcommittee thereof exists, the Board. (k) “Common Stock” means the Class A common stock of the Company, par value $1.00 per share (and any stock or other securities into which such Common Stock may be converted or into which it may be exchanged). (l) “Company” means Radius Recycling, Inc., an Oregon corporation, and any successor thereto. (m) “Company Group” means, collectively, the Company and its Subsidiaries. (n) “Date of Grant” means the date on which the granting of an Award is authorized, or such other date as may be specified in such authorization. (o) “Designated Foreign Subsidiaries” means all members of the Company Group that are organized under the laws of any jurisdiction or country other than the United States of America that may be designated by the Board or the Committee from time to time. |
| |
(p) “Disability” means, as to any Participant, unless the applicable Award Agreement states otherwise, a medically determinable physical or mental condition of the Participant resulting from bodily injury, disease, or mental disorder which is likely to continue for the remainder of the Participant’s life and which renders the Participant incapable of performing the job assigned to the Participant by the Company or any substantially equivalent replacement job. (q) “Effective Date” means the date the Company’s stockholders approve the Plan. (r) “Eligible Person” means any: (i) individual employed by any member of the Company Group; provided, however, that no such employee covered by a collective bargaining agreement shall be an Eligible Person unless and to the extent that such eligibility is set forth in such collective bargaining agreement or in an agreement or instrument relating thereto; (ii) director or officer of any member of the Company Group; or (iii) consultant or advisor to any member of the Company Group who may be offered securities registrable pursuant to a registration statement on Form S-8 under the Securities Act, who, in the case of each of clauses (i) through (iii) above, has entered into an Award Agreement or who has received written notification from the Committee or its designee that they have been selected to participate in the Plan. (s) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor thereto. Reference in the Plan to any section of (or rule promulgated under) the Exchange Act shall be deemed to include any rules, regulations, or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations, or guidance. (t) “Exercise Price” has the meaning given to such term in Section 7(b) of the Plan. (u) “Fair Market Value” means, on a given date: (i) if the Common Stock is listed on a national securities exchange, the closing sales price of the Common Stock reported on the primary exchange on which the Common Stock is listed and traded on such date, or, if there are no such sales on that date, then on the last preceding date on which such sales were reported; (ii) if the Common Stock is not listed on any national securities exchange but is quoted in an inter-dealer quotation system on a last-sale basis, the average between the closing bid price and ask price reported on such date, or, if there is no such sale on that date, then on the last preceding date on which a sale was reported; or (iii) if the Common Stock is not listed on a national securities exchange or quoted in an inter-dealer quotation system on a last-sale basis, the amount determined by the Committee in good faith to be the fair market value of the Common Stock. (v) “GAAP” has the meaning given to such term in Section 7(d) of the Plan. (w) “Immediate Family Members” has the meaning given to such term in Section 13(b) of the Plan. (x) “Incentive Stock Option” means an Option which is designated by the Committee as an incentive stock option as described in Section 422 of the Code and otherwise meets the requirements set forth in the Plan. (y) “Indemnifiable Person” has the meaning given to such term in Section 4(e) of the Plan. (z) “Minimum Vesting Condition” means, with respect to any Award settled in shares of Common Stock, that vesting of (or lapsing of restrictions on) such Award does not occur earlier than the first anniversary of the Date of Grant, other than (i) in connection with a Change in Control; (ii) as a result of a Participant’s death, retirement or Disability or Termination by the Service Recipient without Cause; or (iii) with respect to any Award granted to a Non-Employee Director; provided, however, that notwithstanding the foregoing, Awards that result in the issuance of an aggregate of up to 5% of the Absolute Share Limit may be granted to any one or more Eligible Persons without regard to such Minimum Vesting Condition. The Minimum Vesting Condition will not prevent the Committee from accelerating the vesting of any Award in accordance with any of the provisions set forth in this Plan. (aa) “Non-Employee Director” means a member of the Board who is not an employee of any member of the Company Group. (bb) “Nonqualified Stock Option” means an Option which is not designated by the Committee as an Incentive Stock Option. |
| | 2023 PROXY STATEMENT B-3 |
Appendix B | | | |
(cc) “Option” means an Award granted under Section 7 of the Plan. (dd) “Option Period” has the meaning given to such term in Section 7(c) of the Plan. (ee) “Other Cash-Based Award” means an Award that is granted under Section 10 of the Plan that is denominated and/or payable in cash. (ff) “Other Equity-Based Award” means an Award that is not an Option, Stock Appreciation Right, Restricted Stock, or Restricted Stock Unit that is granted under Section 10 of the Plan and is (i) payable by delivery of Common Stock and/or (ii) measured by reference to the value of Common Stock. (gg) “Participant” means an Eligible Person who has been selected by the Committee to participate in the Plan and to receive an Award pursuant to the Plan. (hh) “Performance Targets” means the attainment of specific levels of performance of the Company (and/or one or more members of the Company Group, divisions or operational and/or business lines or units, product lines, brands, business segments, administrative departments, or any combination of the foregoing), which may be determined in accordance with GAAP or on a non-GAAP basis on the specified measures, including, but not limited to: economic profit (adjusted operating income after taxes less a capital charge), debt ratings, debt to capital ratio, issuance of new debt, retirement of debt, man hours per ton, share price, earnings per share, gross revenue, net revenue, stock price increase, total shareholder return (stock price increase plus dividends), return measures (including but not limited to return on equity, return on assets, return on capital, return on investment), revenues, gross revenue, net revenue, sales volume, production volume, cost of goods sold, pre-tax margin, net margin, gross margin, gross margin per ton (or other unit of weight or volume), operating margin, net income, pre-tax income, pre-tax pre-bonus income, operating income, operating income per ton (or other measure of weight or volume), earnings before interest and taxes (“EBIT”), earnings before interest, taxes, depreciation and amortization (“EBITDA”), working capital, attraction of new capital, establishment of new credit facilities, inventories, inventory turns, intake purchase volumes, cash flows, conversion costs, environmental, health, and/or safety metrics (including but not limited to OSHA Total Incident Rate, Lost Time Rate and Recordable Injuries), cost savings (including but not limited to labor savings, reductions in operating costs, reductions in production costs, reductions in selling, general and administrative expense) or any of the foregoing before the effect of acquisitions, divestitures, accounting changes, and restructuring and special charges (determined according to criteria established by the Committee) and subject to such adjustments as may be determined by the Committee, creation of new performance and compensation criteria for key personnel, recruiting and retaining key personnel, customer satisfaction, employee morale, hiring of strategic personnel, development and implementation of Company policies, strategies and initiatives, creation of new joint ventures, new contracts signed, increasing the Company’s public visibility and corporate reputation, development of corporate brand name, overhead cost reductions, unit deliveries or any combination of or variations on the foregoing. Any one or more of the aforementioned performance criteria may be stated as a percentage of another performance criteria, or used on an absolute or relative basis to measure the performance of one or more members of the Company Group as a whole or any divisions or operational and/or business lines or units, product lines, brands, business segments, administrative departments of the Company and/or one or more members of the Company Group or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Targets may be compared to the performance of a selected group of comparison companies, or a published or special index that the Committee, in its sole discretion, deems appropriate, or as compared to various stock market indices. Performance Targets may be based on the Participant’s attainment of business objectives with respect to any of the criteria set forth in this Section 2(hh), or implementing policies and plans, negotiating transactions, developing long-term business goals or exercising managerial responsibility. (ii) “Permitted Transferee” has the meaning given to such term in Section 13(b) of the Plan. (jj) “Person” means any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act). |
| |
(kk) “Plan” means this Radius Recycling, Inc. 2024 Omnibus Incentive Plan, as it may be amended and/or restated from time to time. (ll) “Prior Plan” means the Schnitzer Steel Industries, Inc. 1993 Stock Incentive Plan, Amended and Restated as of November 7, 2013. (mm) “Prior Plan Award” means an equity award granted under the Prior Plan which remains outstanding as of the Effective Date. (nn) “Qualifying Director” means a Person who is, with respect to actions intended to obtain an exemption from Section 16(b) of the Exchange Act pursuant to Rule 16b-3 under the Exchange Act, a “non-employee director” within the meaning of Rule 16b-3 under the Exchange Act. (oo) “Restricted Period” means the period of time determined by the Committee during which an Award is subject to restrictions, including vesting conditions. (pp) “Restricted Stock” means Common Stock, subject to certain specified restrictions (which may include, without limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of the Plan. (qq) “Restricted Stock Unit” means an unfunded and unsecured promise to deliver shares of Common Stock, cash, other securities, or other property, subject to certain restrictions (which may include, without limitation, a requirement that the Participant remain continuously employed or provide continuous services for a specified period of time), granted under Section 9 of the Plan. (rr) “SAR Period” has the meaning given to such term in Section 8(c) of the Plan. (ss) “Securities Act” means the Securities Act of 1933, as amended, and any successor thereto. Reference in the Plan to any section of (or rule promulgated under) the Securities Act shall be deemed to include any rules, regulations, or other interpretative guidance under such section or rule, and any amendments or successor provisions to such section, rules, regulations, or guidance. (tt) “Service Recipient” means, with respect to a Participant holding a given Award, the member of the Company Group by which the original recipient of such Award is, or following a Termination was most recently, principally employed or to which such original recipient provides, or following a Termination was most recently providing, services, as applicable. (uu) “Stock Appreciation Right” or “SAR” means an Award granted under Section 8 of the Plan. (vv) “Strike Price” has the meaning given to such term in Section 8(b) of the Plan. (ww) “Subsidiary” means, with respect to any specified Person: (i) any corporation, association, or other business entity of which more than 50% of the total voting power of shares of such entity’s voting securities (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (ii) any partnership (or any comparable foreign entity) (A) the sole general partner (or functional equivalent thereof) or the managing general partner of which is such Person or Subsidiary of such Person or (B) the only general partners (or functional equivalents thereof) of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). (xx) “Sub-Plans” means any sub-plan to this Plan that has been adopted by the Board or the Committee for the purpose of permitting the offering of Awards to employees of certain Designated Foreign Subsidiaries or otherwise outside the jurisdiction of the United States of America, with each such sub-plan designed to comply with local laws applicable to |
| | 2023 PROXY STATEMENT B-5 |
Appendix B | | |
| |
(d) Finality of Decisions. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan, any Award or any Award Agreement shall be within the sole discretion of the Committee, may be made at any time, and shall be final, conclusive, and binding upon all Persons, including, without limitation, any member of the Company Group, any Participant, any holder or beneficiary of any Award, and any stockholder of the Company. (e) Indemnification. No member of the Board, the Committee, or any employee or agent of any member of the Company Group (each such Person, an “Indemnifiable Person”) shall be liable for any action taken or omitted to be taken or any determination made with respect to the Plan or any Award hereunder (unless constituting fraud or a willful criminal act or omission). Each Indemnifiable Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability, or expense (including attorneys’ fees) that may be imposed upon or incurred by such Indemnifiable Person in connection with or resulting from any action, suit, or proceeding to which such Indemnifiable Person may be a party or in which such Indemnifiable Person may be involved by reason of any action taken or omitted to be taken or determination made with respect to the Plan or any Award hereunder and against and from any and all amounts paid by such Indemnifiable Person with the Company’s approval, in settlement thereof, or paid by such Indemnifiable Person in satisfaction of any judgment in any such action, suit, or proceeding against such Indemnifiable Person, and the Company shall advance to such Indemnifiable Person any such expenses promptly upon written request (which request shall include an undertaking by the Indemnifiable Person to repay the amount of such advance if it shall ultimately be determined, as provided below, that the Indemnifiable Person is not entitled to be indemnified); provided, that the Company shall have the right, at its own expense, to assume and defend any such action, suit, or proceeding and once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company’s choice. The foregoing right of indemnification shall not be available to an Indemnifiable Person to the extent that a final judgment or other final adjudication (in either case not subject to further appeal) binding upon such Indemnifiable Person determines that the acts, omissions, or determinations of such Indemnifiable Person giving rise to the indemnification claim resulted from such Indemnifiable Person’s fraud or willful criminal act or omission or that such right of indemnification is otherwise prohibited by law or by the organizational documents of any member of the Company Group. The foregoing right of indemnification shall not be exclusive of or otherwise supersede any other rights of indemnification to which such Indemnifiable Persons may be entitled under the organizational documents of any member of the Company Group, as a matter of law, under an individual indemnification agreement or contract, or otherwise, or any other power that the Company may have to indemnify such Indemnifiable Persons or hold such Indemnifiable Persons harmless. (f) Board Authority. Notwithstanding anything to the contrary contained in the Plan, the Board may, in its sole discretion, at any time and from time to time, grant Awards and administer the Plan with respect to such Awards. Any such actions by the Board shall be subject to the applicable rules of the securities exchange or inter-dealer quotation system on which the Common Stock is listed or quoted. In any such case, the Board shall have all the authority granted to the Committee under the Plan. 5. Grant of Awards; Shares Subject to the Plan; Limitations. (a) Grants. The Committee may, from time to time, grant Awards to one or more Eligible Persons. All Awards granted under the Plan shall vest and become exercisable in such manner and on such date or dates or upon such event or events as determined by the Committee, including, without limitation, attainment of Performance Targets, subject to the Minimum Vesting Condition. (b) Share Reserve and Limits. Other than with respect to Substitute Awards, to the extent that an Award or a Prior Plan Award expires or is canceled, forfeited, terminated, settled in cash, or otherwise is settled without delivery to the Participant of the full number of shares of Common Stock to which the Award or Prior Plan Award related, the undelivered shares will again be available for grant. Shares of Common Stock withheld in payment of the exercise price or taxes relating to an Award and shares equal to the number of shares surrendered in payment of any Exercise Price or Strike Price, or taxes relating to an Award or a Prior Plan Award, shall be deemed to constitute shares not delivered to the Participant and shall be deemed to again be available for Awards under the Plan; provided, however, that such shares shall not become available for issuance hereunder if either (i) the applicable shares are withheld or surrendered following the termination of |
| | 2023 PROXY STATEMENT B-7 |
Appendix B | | | |
the Plan or (ii) at the time the applicable shares are withheld or surrendered, it would constitute a material revision of the Plan subject to stockholder approval under any then-applicable rules of the national securities exchange on which the Common Stock is listed. (c) Share Counting and Non-Employee Director Limitation. Awards granted under the Plan shall be subject to the following limitations: (i) subject to Section 11 of the Plan, no more than 3,000,000 shares of Common Stock (the “Absolute Share Limit”) shall be available for Awards under the Plan, reduced by the number of shares of Common Stock (if any) covered by Prior Plan Awards granted between December 4, 2023 and the Effective Date; (ii) subject to Section 11 of the Plan, no more than the number of shares of Common Stock equal to the Absolute Share Limit may be delivered in the aggregate pursuant to the exercise of Incentive Stock Options granted under the Plan; and (iii) the maximum number of shares of Common Stock subject to Awards granted during a single fiscal year to any Non-Employee Director, taken together with any cash fees paid to such Non-Employee Director during the fiscal year, shall not exceed $750,000 in total value (calculating the value of any such Awards based on the grant date fair value of such Awards for financial reporting purposes and excluding, for this purpose, the value of any dividend equivalent payments paid pursuant to any Award granted in a previous fiscal year). (d) Source of Shares. Shares of Common Stock issued by the Company in settlement of Awards may be authorized and unissued shares, shares of Common Stock held in the treasury of the Company, shares of Common Stock purchased on the open market or by private purchase, or a combination of the foregoing. (e) Substitute Awards. Awards may, in the sole discretion of the Committee, be granted under the Plan in assumption of, or in substitution for, outstanding Awards previously granted by an entity directly or indirectly acquired by the Company or with which the Company combines (“Substitute Awards”). Substitute Awards shall not be counted against the Absolute Share Limit; provided, that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding Options intended to qualify as “incentive stock options” within the meaning of Section 422 of the Code shall be counted against the aggregate number of shares of Common Stock available for Awards of Incentive Stock Options under the Plan. Subject to applicable stock exchange requirements, available shares of Common Stock under a stockholder-approved plan of an entity directly or indirectly acquired by the Company or with which the Company combines (as appropriately adjusted to reflect the acquisition or combination transaction) may be used for Awards under the Plan and shall not reduce the number of shares of Common Stock available for issuance under the Plan. 6. Eligibility. Participation in the Plan shall be limited to Eligible Persons. 7. Options. (a) General. Each Option granted under the Plan shall be evidenced by an Award Agreement, which agreement need not be the same for each Participant. Each Option so granted shall be subject to the conditions set forth in this Section 7, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. All Options granted under the Plan shall be Nonqualified Stock Options unless the applicable Award Agreement expressly states that the Option is intended to be an Incentive Stock Option. Incentive Stock Options shall be granted only to Eligible Persons who are employees of a member of the Company Group, and no Incentive Stock Option shall be granted to any Eligible Person who is ineligible to receive an Incentive Stock Option under the Code. No Option shall be treated as an Incentive Stock Option unless the Plan has been approved by the stockholders of the Company in a manner intended to comply with the stockholder approval requirements of Section 422(b)(1) of the Code; provided, that any Option intended to be an Incentive Stock Option shall not fail to be effective solely on account of a failure to obtain such approval, but rather such Option shall be treated as a Nonqualified Stock Option unless and until such approval is obtained. In the case of an Incentive Stock Option, the terms and conditions of such grant shall be subject to, and comply with, such rules as may be prescribed by Section 422 of the Code. If for any reason an Option intended to be an Incentive Stock Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Option or portion thereof shall be regarded as a Nonqualified Stock Option appropriately granted under the Plan. (b) Exercise Price. Except as otherwise provided by the Committee in the case of Substitute Awards, the exercise price (“Exercise Price”) per share of Common Stock for each Option shall not be less than 100% of the Fair Market Value of such |
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Appendix B | |
(e) Notification upon Disqualifying Disposition of an Incentive Stock Option. Each Participant awarded an Incentive Stock Option under the Plan shall notify the Company in writing immediately after the date the Participant makes a disqualifying disposition of any share of Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including, without limitation, any sale) of such share of Common Stock before the later of (i) the date that is two years after the Date of Grant of the Incentive Stock Option, or (ii) the date that is one year after the date of exercise of the Incentive Stock Option. The Company may, if determined by the Committee and in accordance with procedures established by the Committee, retain possession, as agent for the applicable Participant, of any share of Common Stock acquired pursuant to the exercise of an Incentive Stock Option until the end of the period described in the preceding sentence, subject to complying with any instructions from such Participant as to the sale of such share of Common Stock. (f) Compliance With Laws, etc. Notwithstanding the foregoing, in no event shall a Participant be permitted to exercise an Option in a manner which the Committee determines would violate the Sarbanes-Oxley Act of 2002, as it may be amended |
| | 2023 PROXY STATEMENT B-9 |
Appendix B | | | |
from time to time, or any other applicable law or the applicable rules and regulations of the Securities and Exchange Commission or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which the securities of the Company are listed or traded. 8. Stock Appreciation Rights. (a) General. Each SAR granted under the Plan shall be evidenced by an Award Agreement. Each SAR so granted shall be subject to the conditions set forth in this Section 8, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. Any Option granted under the Plan may include tandem SARs. The Committee also may award SARs to Eligible Persons independent of any Option. (b) Strike Price. Except as otherwise provided by the Committee in the case of Substitute Awards, the strike price (“Strike Price”) per share of Common Stock for each SAR shall not be less than 100% of the Fair Market Value of such share (determined as of the Date of Grant). Notwithstanding the foregoing, a SAR granted in tandem with (or in substitution for) an Option previously granted shall have a Strike Price equal to the Exercise Price of the corresponding Option. (c) Vesting and Expiration; Termination. A SAR granted in connection with an Option shall become exercisable and shall expire according to the same vesting schedule and expiration provisions as the corresponding Option. A SAR granted independent of an Option shall vest and become exercisable in such manner and on such date or dates or upon such event or events as determined by the Committee including, without limitation, those set forth in Section 5(a) of the Plan; provided, however, that notwithstanding any such vesting dates or events, the Committee may, in its sole discretion, accelerate the vesting of any SAR at any time and for any reason. SARs shall expire upon a date determined by the Committee, not to exceed ten years from the Date of Grant (the “SAR Period”). The terms and conditions with respect to the treatment of SARs in the event of a Participant’s Termination shall be determined by the Committee and reflected in the applicable Award Agreement. (d) Method of Exercise. SARs which have become exercisable may be exercised by delivery of written or electronic notice of exercise to the Company in accordance with the terms of the Award, specifying the number of SARs to be exercised and the date on which such SARs were awarded. (e) Payment. Upon the exercise of a SAR, the Company shall pay to the Participant an amount equal to the number of shares subject to the SAR that is being exercised multiplied by the excess, if any, of the Fair Market Value of one share of Common Stock on the exercise date over the Strike Price, less an amount equal to any Federal, state, local, and non-U.S. income, employment, and any other applicable taxes required to be withheld. The Company shall pay such amount in cash, in shares of Common Stock valued at Fair Market Value, or any combination thereof, as determined by the Committee. Any fractional shares of Common Stock shall be settled in cash. 9. Restricted Stock and Restricted Stock Units. (a) General. Each grant of Restricted Stock and Restricted Stock Units shall be evidenced by an Award Agreement. Each Restricted Stock and Restricted Stock Unit so granted shall be subject to the conditions set forth in this Section 9, and to such other conditions not inconsistent with the Plan as may be reflected in the applicable Award Agreement. (b) Stock Certificates and Book-Entry Notation; Escrow or Similar Arrangement. Upon the grant of Restricted Stock, the Committee shall cause a stock certificate registered in the name of the Participant to be issued or shall cause share(s) of Common Stock to be registered in the name of the Participant and held in book-entry form subject to the Company’s directions and, if the Committee determines that the Restricted Stock shall be held by the Company or in escrow rather than issued to the Participant pending the release of the applicable restrictions, the Committee may require the Participant to additionally execute and deliver to the Company (i) an escrow agreement satisfactory to the Committee, if applicable, and (ii) the appropriate stock power (endorsed in blank) with respect to the Restricted Stock covered by such agreement. If a Participant shall fail to execute and deliver (in a manner permitted under Section 13(a) of the Plan or as otherwise determined by the Committee) an agreement evidencing an Award of Restricted Stock and, if applicable, an escrow agreement and blank stock power within the amount of time specified by the Committee, the Award shall be null and void. |
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Appendix B | |
(ii) Unless otherwise provided by the Committee in an Award Agreement or otherwise, upon the expiration of the Restricted Period with respect to any outstanding Restricted Stock Units, the Company shall issue to the Participant or the Participant’s beneficiary, without charge, one share of Common Stock (or other securities or other property, as applicable) for each such outstanding Restricted Stock Unit; provided, however, that the Committee may, in its sole discretion, elect to (A) pay cash or part cash and part shares of Common Stock in lieu of issuing only shares of Common Stock in respect of such Restricted Stock Units or (B) defer the issuance of shares of Common Stock (or cash or part cash and part shares of Common Stock, as the case may be) beyond the expiration of the Restricted Period if such extension would not cause adverse tax consequences under Section 409A of the Code. If a cash payment is made in lieu of issuing shares of Common Stock in respect of such Restricted Stock Units, the amount of such payment shall be equal to the Fair Market Value per share of the Common Stock as of the date on which the Restricted Period lapsed with respect to such Restricted Stock Units. (e) Legends on Restricted Stock. Each certificate, if any, or book entry representing Restricted Stock awarded under the Plan, if any, shall bear a legend or book entry notation substantially in the form of the following, in addition to any other information the Company deems appropriate, until the lapse of all restrictions with respect to such shares of Common Stock: |
10. Other Equity-Based Awards and Other Cash-Based Awards. The Committee may grant Other Equity-Based Awards and Other Cash-Based Awards under the Plan to Eligible Persons, alone or in tandem with other Awards, in such amounts and dependent on such conditions as the Committee shall from time to time in its sole discretion determine including, without limitation, those set forth in Section 5(a) of the Plan. Each Other Equity-Based Award granted under the Plan shall be evidenced by an Award Agreement and each Other Cash-Based Award granted under the Plan shall be evidenced in such form as |
| | 2023 PROXY STATEMENT B-11 |
Appendix B | | | |