2018
2019
Proxy Statement and Notice of
Annual Meeting of Stockholders
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
| ☐ | Preliminary Proxy Statement | |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ☒ | Definitive Proxy Statement | |
| ☐ | Definitive Additional Materials | |
| ☐ | Soliciting Material Pursuant to § 240.14a-12 | |
EAGLE MATERIALS INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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2018
2019
Proxy Statement and Notice of
Annual Meeting of Stockholders
3811 Turtle Creek Blvd,5960 Berkshire Ln., Suite 1100900
Dallas, Texas 75219-448775225
June 22, 201827, 2019
Dear Fellow Stockholder:
It is myour pleasure to invite you to our Annual Meeting of Stockholders, which will be held on Thursday,Tuesday, August 2, 2018,6, 2019, at Arlington Hall at Oak Lawn Park, 3333 Turtle Creek Blvd., Dallas, Texas 75219, at 8:00 a.m., local time. We hope that you will attend the meeting, but we encourage you to vote by proxy whether or not you plan to attend the meeting in person.
This year we are again taking advantage of the Securities and Exchange Commission rules that allow companies to furnish their proxy materials over the Internet. As a result, beginning on June 22, 2018,27, 2019, we are mailing to many of our stockholders a Notice Regarding the Availability of Proxy Materials, or Notice, to many of our stockholders instead of a paper copy of the materials for the Annual Meeting. The Notice contains instructions on how to access the proxy materials over the Internet and vote online, as well as how stockholders can elect to receive paper copies of the materials. We believe that this process should expediteexpedites stockholders’ receipt of proxy materials and provideprovides stockholders with the information they need, while being consistent with our objective ofalso conserving our natural resources and reducing the costs of printing and distributing our proxy materials.
If you attend the Annual Meeting and desire to vote your shares personally rather than by proxy, you may withdraw your proxy at any time before it is exercised.Your vote is very important, whether you own one share or many.
Thank you for your continued support and interest in Eagle.
Sincerely,
DAVID B. POWERS
President and Chief Executive Officer
MICHAEL R. HAACK
President and Chief Operating Officer
EAGLE MATERIALS INC.
3811 Turtle Creek Blvd,5960 Berkshire Ln., Suite 1100900
Dallas, Texas 75219-448775225
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 2, 20186, 2019
To the Stockholders of Eagle Materials Inc.:
The annual meeting of stockholders of Eagle Materials Inc., which we refer to as the “Company,” will be held at Arlington Hall at Oak Lawn Park, 3333 Turtle Creek Blvd., Dallas, Texas 75219, at 8:00 a.m., local time, on Thursday,Tuesday, August 2, 2018.6, 2019. At the meeting, stockholders will vote on:
| (1) | Election of the three Class |
| (2) | Approval of an advisory resolution regarding the compensation of our named executive officers. |
| (3) | Approval of the expected appointment of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending March 31, |
| (4) | Any other matters properly brought before the annual meeting, or any adjournment thereof. |
The Company’s Board of Directors has fixed the close of business on June 5, 201820, 2019 as the record date for the determination of stockholders entitled to notice of and to vote at the meeting or any adjournment thereof. Only record holders of the Company’s common stock, par value $0.01 per share, which we refer to as our “Common Stock,” at the close of business on the record date are entitled to notice of and to vote at the annual meeting. A list of holders of Common Stock will be available for examination by any stockholder at the meeting and, during theten-day period preceding the meeting date at the executive offices of the Company located at 3811 Turtle Creek Blvd.5960 Berkshire Ln., Suite 1100,900, Dallas, Texas 75219-4487.75225.
For further information regarding the matters to be acted upon at the annual meeting, I urge you to carefully read
the accompanying proxy statement.If you have questions about these proposals or would like additional copies of the proxy statement, please contact: Eagle Materials Inc., Attention: James H. Graass, Secretary, 3811 Turtle Creek Blvd.5960 Berkshire Ln., Suite 1100,900, Dallas, Texas 75219-448775225 (telephone: (214)432-2000).
You are cordially invited to attend the annual meeting. Your vote is important. Whether or not you expect to attend the annual meeting in person, please vote through the Internet (as described in the Notice) or by telephone or fill in, sign, date and promptly return the accompanying form of proxy in the enclosed postage-paid envelope so that your shares may be represented and voted at the annual meeting. This will not limit your right to attend or vote in person at the annual meeting. Your proxy will be returned to you if you choose to attend the annual meeting and request that it be returned. Shares will be voted in accordance with the instructions contained in your proxy, but if any proxies that are signed and returned to us do not specify a vote on any proposal, such proxies will be voted in the manner, if any, recommended by the Board.
By Order of the Board of Directors
JAMES H. GRAASS
Executive Vice President,
General Counsel and
Secretary
Dallas, Texas
June 22, 201827, 2019
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 2, 2018.6, 2019.
Our proxy statement and 20182019 annual report to stockholders are available
to you on the Internet at www.proxyvote.com.
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Proposal No. 3: Approval of Expected Appointment of Independent Auditors | 57 | |||
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Other Matters Which May be Presented for Action at the Meeting | 60 | |||
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EAGLE MATERIALS INC.
3811 Turtle Creek Blvd.5960 Berkshire Ln., Suite 1100900
Dallas, Texas 75219-448775225
PROXY STATEMENT
The accompanying proxy, mailed or provided online, together with this proxy statement, is solicited by and on behalf of the Board of Directors of Eagle Materials Inc., which we refer to as the “Company,” for use at the annual meeting of stockholders of the Company and at any adjournment or postponement thereof. References in this proxy statement to “we,” “us,” “our” or like terms also refer to the Company. References to our “Board of Directors” or “Board” refer to the Boardboard of Directorsdirectors of the Company. The Notice Regarding the Availability of Proxy Materials, this proxy statement and accompanying proxy were first mailed to our stockholders on or about June 22, 2018.27, 2019.
Date, Time and Place of the Annual Meeting
The 20182019 annual meeting of our stockholders will be held at Arlington Hall at Oak Lawn Park, 3333 Turtle Creek Blvd., Dallas, Texas 75219, at 8:00 a.m., local time, on Thursday,Tuesday, August 2, 2018.6, 2019.
Purposes of the Annual Meeting and Recommendations of our Board of Directors
At the meeting, action will be taken upon the following matters:
| (1) | Election of Directors. Stockholders will be asked to elect the three Class |
Our Board of Directors recommends that you vote “FOR” the election of its three nominees for director named in this proxy statement.
| (2) | Advisory Vote on Compensation of our Named Executive Officers.We are asking you to approve anon-binding advisory resolution regarding the compensation of our named executive officers as reported in this proxy statement. |
Our Board of Directors recommends that you vote “FOR” thenon-binding advisory resolution approving the compensation of our named executive officers.
| (3) | Approval of the Expected Appointment of Ernst & Young LLP. We are asking you to approve the expected appointment by our Audit Committee of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending March 31, |
Our Board of Directors recommends that you vote “FOR” the approval of the expected appointment of Ernst & Young LLP as the Company’s independent auditors for the fiscal year ending March 31, 2019.2020.
| (4) | Other Business. In addition, you may be asked to vote upon such other matters, if any, as properly come before the annual meeting, or any adjournment thereof. |
Our Board of Directors does not know of any matters to be acted upon at the meeting other than the matters set forth in items (1) through (3) above.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
AUGUST 2, 2018.
Our proxy statement and 2018 annual report to
stockholders are available to you on the Internet at
www.proxyvote.com.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 6, 2019. Our proxy statement and 2019 annual report to stockholders are available to you on the Internet at www.proxyvote.com. |
The record date for the determination of holders of the Company’s Common Stock, par value $0.01 per share, which we refer to as our “Common Stock,” entitled to notice of and to vote at the meeting, or any adjournment or postponement of the meeting, is the close of business on June 5, 2018.20, 2019. In this proxy statement, we refer to this date as the “record date.” As of the record date, there were 48,007,33743,206,186 shares of our Common Stock issued and outstanding and entitled to vote at the meeting. Our stock transfer books will not be closed in connection with the meeting. Our Common Stock is listed on the New York Stock Exchange, or “NYSE,” under the symbol “EXP.”
Shares represented by valid proxies will be voted at the meeting in accordance with the directions given. If the enclosed proxy card is signed and returned without any direction given, the shares will be voted in the manner, if any, recommended by the Board. The Board does not intend to present, and has no information indicating that others will present, any business at the annual meeting other than as set forth in the attached Notice of Annual Meeting of Stockholders. However, if other matters requiring the vote of our stockholders properly come before the meeting, it is the intention of the persons named
in the accompanying form of proxy to vote the proxies held by them in accordance with their best judgment in such matters.
You have the unconditional right to revoke your proxy at any time prior to the voting thereof by submitting a later-dated proxy, by attending the meeting and voting in person, or by written notice to us addressed to: Eagle Materials Inc., Attention: James H. Graass, Secretary, 3811 Turtle Creek Blvd.5960 Berkshire Ln., Suite 1100,900, Dallas, Texas 75219-4487.75225. No such revocation shall be effective, however, unless and until received by the Company at or prior to the meeting.
The presence at the meeting, in person or represented by proxy, of the holders of a majority of the voting power of the shares of our capital stock entitled to vote on any matter shall constitute a quorum for purposes of such matter. Abstentions and brokernon-votes will be included in determining the presence of a quorum at the meeting. The holders of Common Stock will be entitled to one vote per share on each matter that may properly be brought before the meeting or any adjournment thereof. There is no cumulative voting.
Proposal | Required Vote | Effect of Abstentions and BrokerNon-Votes | ||
Election of Directors | Majority of votes cast by the shares present in person or represented by proxy at the meeting | No effect on outcome of vote | ||
Advisory vote on compensation of our named executive officers | Majority of votes cast by the shares present in person or represented by proxy at the meeting | No effect on outcome of vote | ||
Approval of the expected appointment of Ernst & Young LLP as our independent auditors for the fiscal year ending March 31, | Affirmative vote of a majority of the shares | Same effect as votes against proposal | ||
Pursuant to the rules of the NYSE, brokers do not have discretionary authority to vote in the election of directors if they did not receive instructions from the beneficial owner because the election of directors is not considered a “routine” matter. The advisory vote regarding executive compensation is also not considered “routine,” and brokers may not vote your shares with respect to such matter without instructions from you.
Expenses of Soliciting Proxies
The cost of soliciting proxies for the meeting will be borne by the Company. Solicitations may be made on behalf of our Board by mail, personal interview, telephone or other electronic means by officers and other employees of the Company, who will receive no additional compensation therefor. To aid in the solicitation of proxies, we have retained the firm of Okapi Partners,Innisfree M&A Incorporated, which will receive a fee of approximately $9,500,$20,000, in addition to the reimbursement ofout-of-pocket expenses.
We will request banks, brokers, custodians, nominees, fiduciaries and other record holders to forward copies of this proxy statement to persons on whose behalf they hold shares of Common Stock and to request authority for the exercise of proxies by the record holders on behalf of those persons. In compliance with the regulations of the Securities and Exchange Commission, or “SEC,” and the NYSE, we will reimburse such persons for reasonable expenses incurred by them in forwarding proxy materials to the beneficial owners of our Common Stock.
You can vote your shares at the meeting, by telephone, over the Internet or by completing, signing, dating and returning your proxy in the enclosed envelope.
PROPOSAL NO. 1: ELECTION OF DIRECTORS AND RELATED MATTERS
Our Board of Directors is the ultimate decision-making body of the Company, except with respect to those matters reserved to our stockholders. The primary responsibilities of our Board include:
| ● | the selection, compensation and evaluation of our Chief Executive Officer and oversight over succession planning; |
| ● | oversight of our strategic planning; |
| ● | approval of all our material transactions and financings; |
| ● | oversight of processes that are in place to promote compliance with law and high standards of business ethics; |
| ● | advising management on major issues that may arise; and |
| ● | evaluating the performance of the Board and its committees, and making appropriate changes where necessary. |
Members of our Board of Directors are divided into three classes based on their term of office (Class I, II and III). The directors in each such class hold office for staggered terms of three years each. At present, each class has three directors, except for class III, which has four directors. The following table shows the composition of our Board after the annual meeting, assuming the election of the proposed slate of Class IIII director nominees:
Class | Term Expires | Directors | ||
I | George J. Damiris Martin M. Ellen David B. Powers | |||
II | 2020 | Margot L. Carter Michael R. Nicolais Richard R. Stewart | ||
III | 2021 | F. William Barnett Richard Beckwitt Ed H. Bowman Michael R. Haack | ||
NYSE corporate governance rules require that our Board of Directors be comprised of a majority of independent directors. Our Board of Directors has determined, upon the recommendation of our Corporate Governance and Nominating Committee, which we refer to as our “Governance Committee,” that all members of our Board of Directors, other than Mr. Powers, are “independent” within the meaning of the specific provisions of the Securities Exchange Act of 1934, as amended, which we refer
to as the “Exchange Act,” and the corporate governance rules of the NYSE.
In determining that eight of our nineten directors are “independent,” our Board of Directors considered that Ms. Margot L. Carter and Messrs. F. William Barnett, Richard Beckwitt, Ed H. Bowman, George J. Damiris, Martin M. Ellen, Michael R. Nicolais and Richard R. Stewart have no relationship with the Company that potentially affects their independence.
Our Board includes a diverse group of leaders in their respective fields. The diagram below illustrates some of the key skills and qualifications that our directors bring to the Board:
Each of the nominees listed below is currently a member of our Board of Directors. Each of these nominees has been recommended for nomination by our Governance Committee after considering the criteria described below under the heading “Corporate Governance and Nominating Committee.” We have no reason to believe that any of the listed nominees will become unavailable for election, but if for any reason that should be the case, proxies may be voted for substitute nominees.
Because this is an uncontested election of directors, a majority of votes cast by the holders of our Common Stock (number of shares voted “for” a director nominee must exceed the number of votes cast “against” the director nominee) will be required to elect the nominees for director in accordance with our Bylaws and our Corporate Governance Guidelines. (A plurality voting standard would apply in a contested election.) If an incumbent director is notre-elected, such director will promptly tender his or her resignation to the Chairman of the Board, and a special committee of independent directors will
consider the resignation and make a recommendation to the Board as to whether to accept or reject such resignation. The Board will
then publicly disclose its decision regarding the resignation and the rationale behind the decision.
Although eachOur Corporate Governance Guidelines generally require directors to retire at the first annual meeting that occurs after the director’s 72nd birthday unless the Board (other than the affected director) waives the requirement upon the recommendation of the nominees is standingGovernance Committee. The Board has approved such a waiver for election to a three-year term,two years for Messrs. Barnett and Bowman, may (if elected)who otherwise would be required to retire fromat the Board before the completion ofAnnual Meeting. Messrs. Barnett and Bowman would therefore be required to retire at our 2021 Annual Meeting, assuming their full term in accordance with the Company’s director retirement policy.continued service as directors until that time.
Our Board of Directors recommends that holders of Common Stock vote “FOR” the election of the three nominees listed below to serve as Class IIII directors for a three-year term ending at our 20212022 annual meeting of stockholders:
F. William BarnettGeorge J. Damiris
Richard BeckwittMartin M. Ellen
Ed H. BowmanDavid B. Powers
Set forth below is information about the nominees standing for election at our 20182019 annual meeting, as well as our continuing directors whose terms of office do not expire at such annual meeting. The biographical information appearing below regarding
the nominees for director and continuing directors has been furnished to us by the respective nominees and directors. Also included below is a brief description of how each individual’s experience qualifies him or her to serve as a director of the Company.
Nominees Whose Terms Expire at our 2019 Annual Meeting
(Class I Directors)
| George J. Damiris | ||||
| Director Since: | 2016 | |||
| Age: | 59 | |||
| Committees: | Compensation | |||
| Other Public Boards: | HollyFrontier Corporation | |||
Holly Energy Partners, L.P. | ||||
Career Highlights: Mr. Damiris has served as Chief Executive Officer and President of HollyFrontier Corporation since January 2016 and as a director since December 2015. He previously served as Executive Vice President and Chief Operating Officer from September 2014 to January 2016 and as Senior Vice President, Supply and Marketing from January 2008 until September 2014. Mr. Damiris has also served as a director of Holly Logistics Services, L.L.C., the general partner of the general partner of Holly Energy Partners, L.P., since February 2016, as CEO since November 2016 and as President since February 2017.
Skills and Qualifications: Mr. Damiris brings to the Board and the Compensation Committee his extensive management and operational experience gained from his time as a senior executive at a large, public industrial company.
| Martin M. Ellen | ||||||
| Director Since: | 2013 | |||||
| Age: | 65 | |||||
| Committees: | Audit (Chair) | |||||
Career Highlights: Mr. Ellen retired as Chief Financial Officer and Executive Vice President at Dr Pepper Snapple Group, Inc. in July 2018, having served in that capacity since April 2010. Mr. Ellen also served as the Chief Financial Officer and Senior
Vice President - Finance ofSnap-on Inc. from November 2002 to March 2010.
Skills and Qualifications: Mr. Ellen brings to the Board and the Audit Committee his extensive management, finance and audit experience gained from over 25 years serving as chief financial officer with public and private companies and prior experience with a major public accounting firm.
| David B. Powers | ||||
| Director Since: | 2016 | |||
| Age: | 69 | |||
| Committees: | Executive | |||
Career Highlights: Mr. Powers was appointed the Company’s President and Chief Executive Officer on March 31, 2016, at which time he was also appointed to the Board. Prior to his promotion to President and Chief Executive Officer of the Company, Mr. Powers served as Executive Vice President – Gypsum of the Company and as President of American Gypsum Company LLC, a subsidiary of the Company (“American Gypsum”), since January 2005. Mr. Powers previously served as Executive Vice President – Marketing, Sales and Distribution of American Gypsum, beginning in June 2002. Mr. Powers is expected to retire from his position as an executive at the Company on July 1, 2019.
Skills and Qualifications: Mr. Powers brings to the Board his extensive executive and operations experience in the construction products industry, including over 35 years of experience in the gypsum industry.
Directors Whose Terms Expire at our 2020 Annual Meeting
(Class II Directors)
| Margot L. Carter | ||||
| Director Since: | 2017 | |||
| Age: | 51 | |||
| Committees: | Audit Compensation Governance | |||
| Other Public Boards: | Installed Building | |||
Career Highlights: Ms. Carter has been a director of Installed Building Products, Inc., an installer of insulation and complementary building products, since 2014. She serves as IBP’s lead independent director, the Chair of its Nominating and Governance Committee and a member of the Audit Committee. From 2010 to 2015, Ms. Carter served as Executive Vice President, Chief Legal Officer and Secretary for RealPage, Inc. Since 1998, Ms. Carter has served as the President and founder of Living Mountain Capital, L.L.C., a business advisory firm. She also sits on the executive board of NACD North Texas.
Skills and Qualifications: Ms. Carter brings to the Board and the committees on which she serves her proven leadership and business experience gained as a general counsel and director at other public companies. Ms. Carter also brings strategy, business development, M&A experience and corporate governance and finance knowledge gained from over 20 years of executive and board experience at other public companies.
Michael R. Nicolais (Chairman of the Board) | ||||
Director Since: | 2001 | |||
Age: | 61 | |||
Committees: | Executive | |||
Compensation | ||||
Career Highlights: In January 2017, Mr. Nicolais became Vice Chairman and Chief Executive Officer of Highlander Partners L.P., an investment partnership. From April 2004 through December 2016, Mr. Nicolais served as President of Highlander Partners, L.P. From August 2002 until March 2004, Mr. Nicolais served as Managing Director of Stephens, Inc., an investment banking firm. Prior to joining
Stephens, Inc., he was a partner in the private investment firm of Olivhan Investments, L.P. from March 2001 until August 2002. From August 1986 to December 2000, he was employed by Donaldson, Lufkin & Jenrette Securities Corporation’s Investment Banking Division, most recently in the position of Managing Director andco-head of that firm’s Dallas office.
Skills and Qualifications: Mr. Nicolais brings to the Board and the committees on which he serves his extensive knowledge of capital markets, mergers and acquisitions and financial analysis and financial oversight experience gained through his work as an investment banker and investment manager.
| Richard R. Stewart | ||||
| Director Since: | 2006 | |||
| Age: | 69 | |||
| Committees: | Executive | |||
| Other Public Boards: | Kirby Corporation | |||
Career Highlights: From 1998 until 2006 Mr. Stewart served as President and CEO of GE Aero Energy, a division of GE Power Systems and as an officer of General Electric Company. Mr. Stewart retired from General Electric in 2006. Mr. Stewart’s career at General Electric began in 1998 as a result of General Electric’s acquisition of the gas turbine business of Stewart & Stevenson Services, Inc. Mr. Stewart began his career at Stewart & Stevenson in 1972 and while at Stewart & Stevenson served in various positions including as Group President and member of the board of directors. Mr. Stewart also served as a director of Plug Power Inc. from July of 2003 to March of 2006. Mr. Stewart was a director of Lufkin Industries, Inc. from 2009 until its acquisition by GE Oil & Gas in 2013 and served a director of Exterran Corp. from 2015 to 2018.
Skills and Qualifications: Mr. Stewart brings to the Board and the committees on which he serves his proven leadership and business experience as the former CEO of a manufacturing company. Mr. Stewart also brings corporate governance experience gained from membership on the boards of other public companies and as an officer with General Electric.
Continuing Directors Whose Terms Expire at our 2021 Annual Meeting
(Class III Directors)
F. William Barnett
Director Since: 2003
Age: 71
Committees: Governance (Chair)
Compensation
| F. William Barnett | ||
| Director Since: | 2003 | |
| Age: | 72 | |
Committees: | Governance (Chair) | |
Career Highlights: Mr. Barnett retired in 2003 from his position as a Director in the Dallas office of McKinsey & Company, Inc., an international consulting firm, after 23 years of employment, where he led the firm’s Strategy Practice. Mr. Barnett has previously served as an Adjunct Professortaught MBA students at the Yale School of Management and currently teaches at the Jesse H. Jones Graduate School of Business at Rice University. Mr. Barnett’s book,The Strategic Career: Let Business Principles Guide You, was released in 2015.
Skills and Qualifications: Mr. Barnett brings to the Board and the committees on which he serves his corporate governance and strategy development and implementation experience gained from his long career in management consulting.
Richard Beckwitt
Director Since: 2014
Age: 59
Committees: Audit
Governance
Other Public Boards: Lennar Corporation
Five Point Holdings LLC
| Richard Beckwitt | ||
| Director Since: | 2014 | |
| Age: | 60 | |
| Committees: | Audit Governance | |
| Other Public Boards: | Lennar Corporation Five Point Holdings LLC | |
Career Highlights: Mr. Beckwitt is the Chief Executive Officer of Lennar Corporation. He also serves on the Lennar Board of Directors. He joined Lennar in March 2006 as an Executive Vice President, became President in April 2011 and was promoted to CEO in April 2018. Mr. Beckwitt served
on the Board of Directors of D.R. Horton, Inc. from 1993 to November 2003. From 1993 to March 2000, he held various executive officer positions at D.R. Horton, including President of the Company. From March 2000 to April 2003, Mr. Beckwitt was the owner and principal of EVP Capital, L.P., a venture capital and real estate advisory company. From 1986 to 1993, Mr. Beckwitt worked in the Mergers and Acquisitions and Corporate Finance Departments at Lehman Brothers.
Skills and Qualifications: Mr. Beckwitt brings to the Board and the committees on which he serves his extensive executive experience gained through his service as the President and executive officer of public companies within the homebuilding industry, as well as finance-related experience with a major investment banking firm.
Ed H. Bowman
Director Since: 2011
Age: 71
Committees: Compensation (Chair)
| Ed H. Bowman | ||
| Director Since: | 2011 | |
| Age: | 72 | |
Committees: | Compensation (Chair) | |
Career Highlights: Mr. Bowman served as Chief Executive Officer, President and a director of SOURCECORP from 1996 until 2011. Prior to 1996, Mr. Bowman was a senior executive at First Data Corporation. Mr. Bowman serves as an Executive Partner with Teakwood Capital and on the board of iiPay, LTD.
Skills and Experience: Mr. Bowman brings to the Board and the Compensation Committee his proven leadership and business experience as the retired CEO of an expanding company. Mr. Bowman also brings corporate governance, finance and compensation knowledge gained from his experience at other public companies.
Continuing Directors Whose Terms Expire at our 2019 Annual Meeting
(Class I Directors)
George J. Damiris
Director Since: 2016
Age: 58
Committees: Compensation
Other Public Boards: HollyFrontier Corporation
Holly Energy Partners, L.P.
| Michael R. Haack | ||
| Director Since: | 2019 | |
| Age: | 46 | |
Committees: | Executive | |
Career Highlights: Mr. DamirisHaack has been appointed the Company’s President and Chief Executive Officer effective July 1, 2019. Prior to that time, he has served as President and Chief ExecutiveOperating Officer since August 2018 and President of HollyFrontier Corporation since January 2016 and as a director since December 2015. He previously served aswas Executive Vice President and Chief Operating Officer from SeptemberDecember 2014 through August 2018. Mr. Haack was employed at Halliburton Energy Services for the 17 years prior to January 2016 andjoining the Company, most recently as Senior Vice President, Supply and Marketing from January 2008 until September 2014. Mr. Damiris has also served as a director of Holly Logistics Services, L.L.C., the general partner of the general partner of Holly Energy Partners, L.P., since February 2016, as CEO since November 2016 and as President since February 2017.Global Operations Manager at Halliburton’s Sperry Drilling division).
Skills and Qualifications: Mr. Damiris brings to the Board and the Compensation Committee his extensive management and operational experience gained from his time as a senior executive at a large, public industrial company.
Martin M. Ellen
Director Since: 2013
Age: 64
Committees: Audit (Chair)
Career Highlights: Mr. Ellen has served as Chief Financial Officer and Executive Vice President at Dr Pepper Snapple Group, Inc. since April 2010.
Mr. Ellen also served as the Chief Financial Officer and Senior Vice President—Finance ofSnap-on Inc. from November 2002 to March 2010.
Skills and Qualifications: Mr. Ellen brings to the Board and the Audit Committee his extensive management, finance and audit experience gained from over 25 years serving as chief financial officer with public and private companies and prior experience with a major public accounting firm.
David B. Powers
Director Since: 2016
Age: 68
Committees: Executive
Career Highlights: Mr. Powers was appointed the Company’s President and Chief Executive Officer on March 31, 2016, at which time he was also appointed to the Board. Prior to his promotion to President and Chief Executive Officer of the Company, Mr. Powers served as Executive Vice President – Gypsum of the Company and as President of American Gypsum Company LLC, a subsidiary of the Company (“American Gypsum”), since January 2005. Mr. Powers previously served as Executive Vice President – Marketing, Sales and Distribution of American Gypsum, beginning in June 2002.
Skills and Qualifications: Mr. PowersHaack brings to the Board his extensive knowledge of the Company’s operations, as well as his executive and operations experience gained in heavy industry over the construction products industry, including over 35 years of experience in the gypsum industry.
Directors Whose Terms Expire at our 2020 Annual Meeting
(Class II Directors)previous 20 years.
Margot L. Carter
Director Since: 2017
Age: 50
Committees: Audit
Governance
Other Public Boards: Installed Building
Products, Inc.
Career Highlights: Since 2014, Ms. Carter has been a director of Installed Building Products, Inc., an installer of insulation and complementary building products. She currently serves as IBP’s lead independent director, the Chair of its Nominating and Governance Committee and a member of the Audit Committee. Ms. Carter is also a director of Freeman Company, a brand experience business. From 2010 to 2015, Ms. Carter served as Executive Vice President, Chief Legal Officer and Secretary for RealPage, Inc.
Skills and Qualifications: Ms. Carter brings to the Board and the committees on which she serves her proven leadership and business experience gained as a general counsel and director at other public companies. Ms. Carter also brings strategy development and implementation experience and corporate governance and finance knowledge gained from over 20 years of experience at other public companies.
Michael R. Nicolais
(Vice Chairman of the Board)
Director Since: 2001
Age: 60
Committees: Executive
Compensation
Career Highlights: In January 2017, Mr. Nicolais became Vice Chairman and Chief Executive Officer of Highlander Partners L.P., an investment partnership. From April 2004 through December 2016, Mr. Nicolais served as President of Highlander Partners, L.P. From August 2002 until March 2004, Mr. Nicolais served as Managing Director of Stephens, Inc., an investment banking firm. Prior to joining Stephens, Inc., he was a partner in the private investment firm of Olivhan Investments, L.P. from
March 2001 until August 2002. From August 1986 to December 2000, he was employed by Donaldson, Lufkin & Jenrette Securities Corporation’s Investment Banking Division, most recently in the position of Managing Director andco-head of that firm’s Dallas office.
Skills and Qualifications: Mr. Nicolais brings to the Board and the committees on which he serves his extensive knowledge of capital markets, mergers and acquisitions and financial analysis and financial oversight experience gained through his work as an investment banker and investment manager.
Richard R. Stewart
(Chairman of the Board)
Director Since: 2006
Age: 68
Committees: Executive
Other Public Boards: Kirby Corporation
Career Highlights: From 1998 until 2006 Mr. Stewart served as President and CEO of GE Aero Energy, a division of GE Power Systems and as an officer of General Electric Company. Mr. Stewart retired from General Electric in 2006. Mr. Stewart’s career at General Electric began in 1998 as a result of General Electric’s acquisition of the gas turbine business of Stewart & Stevenson Services, Inc. Mr. Stewart began his career at Stewart & Stevenson in 1972 and while at Stewart & Stevenson served in various positions including as Group President and member of the board of directors. Mr. Stewart also served as a director of Plug Power Inc. from July of 2003 to March of 2006. Mr. Stewart was a director of Lufkin Industries, Inc. from 2009 until its acquisition by GE Oil & Gas in 2013 and served a director of Exterran Corp. from 2015 to 2018.
Skills and Qualifications: Mr. Stewart brings to the Board and the committees on which he serves his proven leadership and business experience as the former CEO of a manufacturing company. Mr. Stewart also brings corporate governance experience gained from membership on the boards of other public companies and as an officer with General Electric.
Board Meetings and Attendance Records
During the Company’s fiscal year ended March 31, 2018,2019, our Board of Directors held four regularly scheduled meetings and twoone special meetings.meeting. During such fiscal year, all of the incumbent directors attended at least 75% of the meetings of the Board and the committees of the Board on which they served. In accordance with our informal policy, we anticipate that all continuing directors and
nominees will attend our 20182019 annual stockholders meeting. All of our then-current directors attended our 20172018 annual meeting. We strongly encourage all directors to attend our stockholder meetings. Ournon-employee directors (which currently constitute all our directors, except for Mr. Powers)Messrs. Powers and Haack) meet immediately after all Board meetings without management present. The Chairman presides at all executive sessions of thenon-employee directors.
Board compensation for the12-month period from August 20172018 through July 20182019 was approved by our Board of Directors in August 2017.2018. The Board adopted a director compensation structure in which directors who are not employees of the Company or any of our subsidiaries received compensation for their services during the12-month period from August 20172018 through July 20182019 by electing one of the following two compensation package alternatives:
| (1) | total compensation valued at |
| (2) | an equity grant valued at |
The grant date value of the equity grant under either alternative is allocated between restricted stock and options to purchase Common Stock (based upon the recommendation of the Compensation Committee) with respect to eachnon-employee director.
In accordance with the terms of the Eagle Materials Inc. Amended and Restated Incentive Plan, which we refer to as our “Incentive Plan,” the exercise price of stock options is set at the closing price of the Common Stock on the NYSE on the date of grant. The number of option shares granted is determined as of the date of grant by using the Black-Scholes method. All the options granted to directors in August 20172018 were fully exercisable when granted and have aten-year term.
The number of shares of restricted stock is determined as of the date of grant using the closing price of the Common Stock on the NYSE on the date of grant. The restricted stock granted to directors in August 20172018 was earned at the time of grant; however, the shares did not become fully vested
(unrestricted) until the earliest to occur of (i) February 3, 2018;2, 2019; (ii) the recipient’s retirement from the Board in accordance with the Company’s director retirement policy, or under such circumstances as are approved by the Compensation Committee; or (iii) the recipient’s death. During the restriction period the director will have the right to vote the shares. In addition, the director will also be entitled to cash dividends as and when the Company issues a cash dividend on the Common Stock.
Non-employee directors who chair committees of the Board of Directors receive additional annual compensation. The Governance Committee Chair receives a fee of $15,000 per year. The chairs of the Audit Committee and the Compensation Committee each receive a fee of $20,000 per year. The Vice Chairman of the Board receives a fee of $50,000 per year, and the Chairman of the Board receives a fee of $125,000 per year. Chairpersons who choose compensation package alternative one (part equity and part cash) receive this additional compensation in the form of cash. Chairpersons who choose compensation package alternative two (all equity) receive this additional compensation in the form of equity, in which case a 30% premium is added to such fees when valuing the equity to be received by such chairperson.
Ifnon-employee directors hold unvested restricted stock units, which we refer to as “RSUs,” granted as part of director compensation in prior fiscal years (which currently includes Messrs. Barnett andMr. Nicolais), these directors will receive dividend equivalent units as and when the Company pays a cash dividend on the Common Stock in accordance with the terms of the RSUs.
All directors are reimbursed for reasonable expenses of attending meetings.
Non-Employee Director Compensation for Fiscal Year 20182019
The table below summarizes the compensation paid by the Company to ournon-employee directors for the fiscal year ended March 31, 2018.2019.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(3) | Total ($) | |||||||||||||||||||||
F. William Barnett(4) | — | $ | 234,529 | — | — | — | $ | 4,667 | $ | 239,196 | ||||||||||||||||||
Richard Beckwitt(5) | — | 215,085 | — | — | — | 2,225 | 217,310 | |||||||||||||||||||||
Ed H. Bowman(6) | — | 241,041 | — | — | — | 4,713 | 245,754 | |||||||||||||||||||||
Margot L. Carter(7) | $ | 46,750 | — | — | — | — | — | 46,750 | ||||||||||||||||||||
George Damiris(8)(9) | 124,667 | 93,588 | — | — | — | 202 | 218,457 | |||||||||||||||||||||
Martin M. Ellen (9)(10) | 113,501 | 93,588 | — | — | — | 942 | 208,031 | |||||||||||||||||||||
Laurence E. Hirsch(11) | — | — | — | — | — | 1,332 | (12) | 1,332 | ||||||||||||||||||||
Michael R. Nicolais(13) | — | 140,010 | $ | 140,009 | — | — | 2,449 | 282,468 | ||||||||||||||||||||
Richard R. Stewart(9)(14) | 218,501 | 46,794 | 46,752 | — | — | 1,521 | 313,568 | |||||||||||||||||||||
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)(3) | Total ($) | |||||||||||||||||
F. William Barnett(4) | – | $ | 241,171 | – | – | – | $ | 125,931 | $ | 367,102 | ||||||||||||||
Richard Beckwitt(5) | – | 221,596 | – | – | – | 2,208 | 223,804 | |||||||||||||||||
Ed H. Bowman(6) | – | 247,631 | – | – | – | 4,693 | 252,324 | |||||||||||||||||
Margot L. Carter(5)(7) | $ | 62,334 | 221,596 | – | – | – | 446 | 284,376 | ||||||||||||||||
George J. Damiris(5)(7) | 31,167 | 221,596 | – | – | – | 446 | 253,209 | |||||||||||||||||
Martin M. Ellen (7)(8) | 113,500 | 100,066 | – | – | – | 943 | 214,509 | |||||||||||||||||
Michael R. Nicolais(9) | – | 231,234 | $ | 55,398 | – | – | 2,613 | 289,245 | ||||||||||||||||
Richard R. Stewart(7)(10) | 218,500 | 100,066 | – | – | – | 1,622 | 320,188 | |||||||||||||||||
| (1) | The amounts in this column reflect the value of restricted stock awards made to the directors in the fiscal year ended March 31, |
| (2) | The amounts in this column reflect the value of option awards made to the directors in the fiscal year ended March 31, |
| (3) | The amounts in this column represent dividend payments made in fiscal |
time we pay a cash dividend on our Common Stock. In fiscal 2019, Mr. Barnett was paid Common Stock for dividend equivalent units valued at $121,283. Dividend equivalent units credited to other directors |
| (4) | Mr. Barnett is the Chair of the Governance Committee. He elected to receive 100% of his |
| director compensation in the form of equity (including his chairperson fee). |
| (5) | Ms. Carter and Messrs. Beckwitt and Damiris elected to receive 100% of |
| (6) | Mr. Bowman is the Chair of the Compensation Committee. He elected to receive 100% of his director compensation in the form of equity (including his chairperson fee). |
| (7) |
A portion of the cash received by Ms. Carter and Messrs. Damiris, Ellen and Stewart relates to director compensation for the prior board year ended July |
Mr. Ellen is Chair of the Audit Committee. He selected the compensation package where he receives a portion of his director compensation in the form of equity and a portion in cash. Mr. Ellen received his |
Mr. Nicolais |
Mr. Stewart |
The following chart shows the number of outstanding stock options, RSUs and shares of restricted stock held by eachnon-employee director as of March 31, 2018.2019.
Name | Stock Options(1) | RSUs(2) | Restricted Stock(3) | Stock Options(1) | RSUs(2) | Restricted Stock(3) | ||||||||||||||||
F. William Barnett | 33,821 | 8,743 | 10,405 | 33,821 | – | 10,405 | ||||||||||||||||
Richard Beckwitt | 2,070 | — | 4,405 | 2,070 | – | 4,405 | ||||||||||||||||
Ed H. Bowman | 6,293 | — | 10,485 | 6,293 | – | 10,485 | ||||||||||||||||
Margot L. Carter | — | — | — | – | – | – | ||||||||||||||||
George Damiris | — | — | — | |||||||||||||||||||
George J. Damiris | – | – | – | |||||||||||||||||||
Martin M. Ellen | 6,917 | — | 1,852 | 6,917 | – | 1,852 | ||||||||||||||||
Michael R. Nicolais | 15,526 | 3,845 | 5,368 | 17,267 | 3,864 | 5,368 | ||||||||||||||||
Richard R. Stewart | 9,942 | — | 3,550 | 9,942 | – | 3,550 | ||||||||||||||||
| (1) | All of these stock options were fully exercisable as of March 31, |
| (2) | The RSUs granted tonon-employee directors (and any accrued dividend equivalent RSUs) are not payable until thenon-employee director’s service on the board terminates because of the director’s death or the director’s retirement in accordance with the Company’s director retirement policy, or under such circumstances as are approved by the Compensation Committee. The number of RSUs reflected in this column includes the following aggregate dividend equivalent units, which are accrued by holders of our |
RSUs at any time we pay a cash dividend on our |
| Common Stock: Mr. |
| (3) | The restrictions on |
Board Leadership Structure and Role in Risk Oversight
The positions of Chairman of the Board and CEO are performed by two different persons. Mr. Powers, our CEO, focuses on theday-to-day operation of the Company’s businesses and participates in both operational and long-term strategy and development. It is expected that Mr. Stewart,Haack will fill a similar role upon assuming the CEO position on July 1, 2019. Mr. Nicolais, our Chairman, oversees the Company’s general strategic direction and leads and manages the Board. Mr. Nicolais, our Vice Chairman, fulfills the Chairman’s duties in the event that Mr. Stewart is unavailable.
As part of its primary risk management function, the Audit Committee oversees the preparation by management of a risk report on a quarterly basis. However, our entire Board of Directors is also charged with, and is actively involved in, identifying, evaluating and managing risks on behalf of the Company, and the Board undertakes to hold discussions on these topics with management and the Audit Committee throughout the year. Further, the independent directors address risk management in executive sessions without management present. As appropriate in the context of their chartered roles, the Board’s other committees also perform risk management and oversight activities during the year. For example, the Governance Committee is responsible for overseeing governance issues that may create governance risks, such as board composition, director selection and other
governance policies and practices that are critical to the success of the Company.
Risk Assessment in Compensation Programs
Consistent with SEC disclosure requirements, management, the Compensation Committee and the Board have assessed the Company’s compensation programs. Based upon all of the facts and circumstances available to the Company at the time of the filing of this Proxy Statement, the Board has concluded that risks arising from the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company or encourage unnecessary and excessive risk-taking.
This assessment was overseen by the Compensation Committee, in consultation with management. The Board reviewed the compensation policies and practices in effect for our executive officers, senior management and other employees and assessed the features the Company has built into the compensation programs to discourage excessive risk-taking. These features include, among other things, a balance between different elements of compensation, use of different time periods and performance metrics for different elements of compensation, restrictions on pricing authority, review and approval of material contracts, and stock ownership guidelines for senior management.
The standing committees of our Board of Directors include the Audit Committee, the Compensation Committee, the Governance Committee and the
Executive Committee. The following table lists the chairperson and members of each committee as of March 31, 2018,2019, and the number of meetings held by each committee during the fiscal year ended March 31, 2018:2019:
| Director | Audit | Compensation | Governance | Executive | Audit
| Compensation
| Governance
| Executive
| ||||||||
F. William Barnett | • | Chair | Chair
| |||||||||||||
Richard Beckwitt | • | • | 🌑
| 🌑
| ||||||||||||
Ed H. Bowman | Chair | Chair
| ||||||||||||||
Margot L. Carter | • | • | 🌑
| 🌑
| 🌑
| |||||||||||
George Damiris | • | |||||||||||||||
George J. Damiris
| 🌑
| |||||||||||||||
Martin M. Ellen | Chair | Chair
| ||||||||||||||
Michael R. Nicolais | • | • | 🌑
| 🌑
| ||||||||||||
David B. Powers | • | 🌑
| ||||||||||||||
Richard R. Stewart | Chair | Chair
| ||||||||||||||
Number of Meetings in Fiscal 2018 | 6 | 6 | 5 | 0 | ||||||||||||
Number of Meetings in Fiscal 2019 | 8 | 6 | 4 | 0 | ||||||||||||
Audit Committee
Our Board has a standing Audit Committee, composed of at least three independent directors. Our Audit Committee assists the Board in fulfilling its responsibility to oversee the integrity of our financial statements, our compliance with legal and regulatory requirements, the qualifications and independence and appointment of our independent auditors and the performance of our internal audit function and independent auditors. Our Audit Committee is governed by an amended and restated Audit Committee charter, a copy of which may be viewed on our website atwww.eaglematerials.com and will be provided free of charge upon written request to our Secretary at our principal executive office.
Our Board has determined that each member of our Audit Committee is independent within the meaning of applicable (1) corporate governance rules of the NYSE and (2) requirements set forth in the Exchange Act and the applicable SEC rules. In addition, our Board has determined that each member of our Audit Committee satisfies applicable NYSE standards for financial literacy and that, based on his auditing and financial experience, including over 25 years of experience as a chief financial officer with public and private companies and prior experience with a major public accounting firm, Mr. Ellen is an “audit committee financial expert” within the meaning of the rules of the SEC.
Unless otherwise determined by the Board, no member of our Audit Committee may serve as a member of an audit committee of more than two other public companies.
Certain key functions and responsibilities of our Audit Committee are to:
| ● | select, appoint, compensate, evaluate, retain and oversee the independent auditors engaged for purposes of preparing or issuing an audit report or related work or performing other audit, review, or attestation services for us; |
| ● | obtain and review, at least annually, a formal written statement from our independent auditors describing all relationships between our auditors and the Company and engage in a dialogue with our auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the auditors and to recommend appropriate action in response to the reports to our Board; |
| ● | pre-approve all audit engagement fees and terms and all permissiblenon-audit services provided to us by our independent auditors, in accordance with the committee’s policies and procedures forpre-approving audit andnon-audit services; |
| ● | establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters; |
| ● | discuss our annual audited financial statements, quarterly financial statements and other significant financial disclosures with management and our independent auditors; |
| ● | discuss with management the types of information to be disclosed and the types of presentations to be made in our earnings press releases, as well as the financial information and earnings guidance we provide to analysts and rating agencies; |
| ● | annually review and assess the performance of the Audit Committee and the adequacy of its charter; |
| ● | discuss policies with respect to risk assessment and risk management; and |
| ● | prepare the report that is required to be included in our annual proxy statement regarding review of financial statements and auditor independence. |
Our Audit Committee’s report on our financial statements for the fiscal year ended March 31, 20182019 is presented below under the heading “Audit Committee Report.”
Our Audit Committee meets separately with our independent auditors and with members of our internal audit staff outside the presence of the Company’s management or other employees to discuss matters of concern, to receive recommendations or suggestions for change and to exchange relevant views and information.
Compensation Committee
Our Board’s Compensation Committee is composed of independent directors who meet the corporate governance standards of the NYSE including the enhanced NYSE independence requirements for directors serving on compensation committees, qualify as“non-employee directors” within the meaning of Rule16b-3(b)(3) of the Exchange Act and as “outside directors” within the meaning of the Internal Revenue Code.
Under its amended and restated charter, which you may review on our web site atwww.eaglematerials.com (and a copy of which will be provided to you free of charge upon written request to our Secretary at our principal executive office), the primary purposes of our Compensation Committee are to assist the Board in discharging its responsibilities relating to compensation of our Chief Executive Officer and other senior executives and to direct the preparation of the reports regarding executive compensation that the rules of the SEC require to be included in our annual proxy statement.
The Compensation Committee is authorized to hire outside advisers after taking into account all factors relevant to the adviser’s independence from management. For additional information regarding outside advisers engaged by the Compensation Committee, please see “Compensation Discussion and Analysis” beginning on page 21 of this proxy statement.
Certain key functions and responsibilities of our Compensation Committee are to:
| ● | periodically review and make recommendations to our Board as to our general compensation philosophy and structure, including reviewing the compensation programs for senior executives and all of our benefit plans to determine whether they are properly coordinated and achieve their intended purposes; |
| ● | annually review and approve corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluate his or her performance as measured against such goals and objectives and to set the salary and other cash and equity compensation for our Chief Executive Officer based on such evaluation; |
| ● | review and, after the end of the fiscal year and in consultation with our Chief Executive Officer, approve the compensation of our senior executive officers who are required to make disclosures under Section 16 of the Exchange Act, who we refer to as our “senior executive officers”; |
| ● | administer the Company’s compensation plans for which it is named as plan administrator, including our Incentive Plan; |
| ● | report on compensation policies and practices with respect to our executive officers as required by SEC rules; |
| ● | review and recommend to the Board the compensation ofnon-employee directors; |
| ● | recommend stock ownership guidelines and monitor compliance therewith; and |
| ● | review and assess the performance of the Compensation Committee and the adequacy of its charter annually and recommend any proposed changes to the Board. |
In accordance with the terms of our Incentive Plan, the Compensation Committee has delegated to the Special Situation Stock Option Committee (whose sole member is our CEO) the authority to grant time-vesting stock options in special circumstances. Under this authorization, the Special Situation Stock Option Committee may grant stock options to newly-hired employees and newly-promoted employees, under terms set by the Compensation Committee. This authority for fiscal 2019,2020, which expires on May 31, 2019,2020, is limited to an aggregate of 60,000 option shares, no one individual may
receive more than 15,000 option shares, and Section 16 reporting persons may not receive awards pursuant to this authority. Stock options granted under this delegation of authority vest 20% per year commencing on the first anniversary of the grant date. During fiscal 2018,2019, no stock options were granted to employees under this authority out of a maximum of 60,000.
Our Compensation Committee’s report for the fiscal year ended March 31, 20182019 is presented below under the heading “Compensation Committee Report” beginning on page 20 of this proxy statement.
Our Compensation Committee meets as often as it deems appropriate, but no less than twice per year.
Governance Committee
Our Board’s Governance Committee is composed of independent directors who meet the corporate governance standards of the NYSE. The primary purposes of this committee are: (1) to advise and counsel our Board and management regarding, and oversee, our governance, including our Board’s selection of directors; (2) to develop and recommend to the Board a set of corporate governance principles for the Company; and (3) to oversee the evaluation of our Board and management.
Our Governance Committee has adopted a written charter, and our Board has also adopted Corporate Governance Guidelines. Both the Governance Committee charter and the Corporate Governance Guidelines may be viewed on our web site atwww.eaglematerials.com and will be provided free of charge upon written request to our Secretary at our principal executive office.
Certain key functions and responsibilities of our Governance Committee are to:
| ● | develop, periodically review and recommend a set of corporate governance guidelines for the Company to the Board; |
| ● | periodically review corporate governance matters generally and recommend action to the Board where appropriate; |
| ● | review and assess the adequacy of its charter annually and recommend any proposed changes to our Board for approval; |
| ● | monitor the quality and sufficiency of information furnished by management to our Board; |
| ● | actively seek, recruit, screen, and interview individuals qualified to become members of the Board, and consider management’s recommendations for director candidates; |
| ● | evaluate the qualifications and performance of incumbent directors and determine whether to recommend them forre-election to the Board; |
| ● | establish and periodicallyre-evaluate criteria for Board membership; |
| ● | recommend to the Board the director nominees for each annual stockholders’ meeting; and |
| ● | recommend to the Board nominees for each committee of the Board. |
The Governance Committee initiates and oversees an annual evaluation of the effectiveness of the Board and each committee, as well as the composition, organization (including committee structure, membership and leadership) and practices of the Board. This evaluation is anonymous as to each member of the Board and its committees. Part of the Governance Committee’s self-evaluation process involves an assessment of the effectiveness of the Company’s corporate governance policies, which includes the Company’s policies surrounding diversity.
Among the criteria the Governance Committee uses in evaluating the suitability of individual nominees for director (whether such nominations are made by management, a stockholder or otherwise) are their integrity, experience, achievements, judgment, intelligence, personal character, ability to make independent analytical inquiries, willingness to devote adequate time to Board duties and the likelihood that he or she will be able to serve on the Board for a sustained period, giving due consideration to diversity in perspectives, backgrounds, business experiences, professional expertise, gender and ethnic background. Subject to its fiduciary duties and applicable laws and regulations, when searching for new directors, the Governance Committee is charged with endeavoring to identify highly qualified diverse candidates, including women and individuals from minority groups, to include in the pool of candidates from which director nominees are chosen.
Members of the Governance Committee, other members of the Board or executive officers may, from time to time, identify potential candidates for nomination to our Board. All proposed nominees, including candidates recommended for nomination by stockholders in accordance with the procedures described below, will be evaluated in light of the criteria described above and the projected needs of the Board at the time. As set forth in its charter, the Governance Committee may retain a search firm to assist in identifying potential candidates for nomination to the Board of Directors.
Our Governance Committee will consider candidates recommended by stockholders for election to our Board. A stockholder who wishes to recommend a candidate for evaluation by our Governance Committee should forward the candidate’s name, business or residence address, principal occupation or employment and a description of the candidate’s qualifications to the Chairman of the Governance Committee at the following address: Eagle Materials Inc., Attention: Secretary, 3811 Turtle Creek Boulevard,5960 Berkshire Ln., Suite 1100,900, Dallas, Texas 75219-4487.75225.
Our Bylaws provide that, to be considered at the 20192020 annual meeting, stockholder nominations for the Board of Directors must be submitted in writing and received by our Secretary at the executive offices of the Company during the period beginning on February 7, 20192020 and ending May 8, 2019,7, 2020, and must contain the information specified by and otherwise comply with the terms of our Bylaws. Any stockholder wishing to receive a copy of our Bylaws should direct a written request to our Secretary at the Company’s principal executive offices.
No nominees for election to the Board at our 20182019 annual meeting of stockholders were submitted by stockholders or groups of stockholders owning more than 5% of our Common Stock.
Executive Committee
The principal function of our Board’s Executive Committee is to exercise all of the powers of the Board to direct our business and affairs between meetings of the Board, except that the Executive Committee may not amend our Certificate of Incorporation or Bylaws, adopt an agreement of merger or consolidation under Delaware law, recommend the sale of all or substantially all of our assets or recommend the dissolution of the
Company or the revocation of a dissolution. In addition, unless authorized by resolution of our Board of Directors, the Executive Committee may not declare a dividend, authorize the issuance of stock or adopt a certificate of ownership and merger under Delaware law.
Compensation Committee Interlocks and Insider Participation
No member of our Compensation Committee had a relationship during the fiscal year ended March 31, 20182019 that requires disclosure as a Compensation Committee interlock.
Shareholders and other interested parties can communicate directly with our Board, a committee of our Board, our independent directors as a group, our Chairman of the Board or any other individual member of our Board by sending the communication to Eagle Materials Inc., 3811 Turtle Creek Blvd.5960 Berkshire Ln., Suite 1100,900, Dallas, Texas 75219-4487,75225, to the attention of the director or directors of your choice (e.g., “Attention: Chairman of the Board of Directors” or “Attention: All Independent Directors,” etc.). We will relay communications addressed in this manner as appropriate. Communications addressed to the attention of the entire Board are forwarded to the Chairman of the Board for review and further handling.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following list sets forth the names, ages as of the date of this proxy statement and principal occupations of each person who was an executive officer of the Company during the fiscal year ended March 31, 20182019 and who is not also a member of our Board. All of these persons have been elected to serve until the next annual meeting of our Board or until their earlier resignation or removal.
D. Craig Kesler
Age: 4243
Position: Executive Vice President – Finance and Administration and Chief Financial Officer (has held current office since August 2009; Vice President – Investor Relations and Corporate Development from March 2005 through August 2009; Audit Manager with Ernst & Young LLP from April 2002 through September 2004).
Michael HaackRobert S. Stewart
Age: 4565
Position: Executive Vice President – Strategy, Corporate Development and Chief Operating OfficerCommunications (has held current office since August 2009; Senior Vice President of Centex from 2000 through August 2009).
Keith W. Metcalf
Age: 61
Position: President – American Gypsum Company LLC (has held current office since April 2016; Executive Vice President of Sales & Marketing from January 2016 through March 2016; Senior Vice
President of Sales & Marketing from July 2009 through December 2014; Mr. Haack was employed at Halliburton Energy Services for the 17 years prior to joining the Company, most recently as Global Operations Manager at Halliburton’s Sperry Drilling division)2015; and Vice President of Sales, Marketing & Distribution from May 2001 through June 2009).
Gerald J. Essl
Age: 6869
Position: Executive Vice President – Cement (has held current office since April 2016; Executive Vice President – Cement/Aggregates and Concrete from January 2003 through March 2016; President of Texas Lehigh Cement Company from 1985 through December 2002).
Keith W. Metcalf
Age: 60
Position: President – American Gypsum Company LLC (has held current office since April 2016; Executive Vice President of Sales & Marketing from
January 2016 through March 2016; Senior Vice President of Sales & Marketing from July 2009 through December 2015; and Vice President of Sales, Marketing & Distribution from May 2001 through June 2009).
James H. Graass
Age: 6061
Position: Executive Vice President, General Counsel and Secretary (Executive Vice President and General Counsel since November 2000; Mr. Graass was named Secretary of the Company in July 2001).
Robert S. Stewart
Age: 64
Position: Executive Vice President – Strategy, Corporate Development and Communications (has held current office since August 2009; Senior Vice President of Centex from 2000 through August 2009).
William R. Devlin
Age: 5253
Position: Senior Vice President, Controller and Chief Accounting Officer (has held current office since August 2009; Vice President and Controller from October 2005 through August 2009; Director of Internal Audit from September 2004 through September 2005; Senior Manager with PricewaterhouseCoopers LLP from July 1999 through August 2004).
Rahul Desai
Age: 53
Position: Senior Vice President – Cement (has held current office since April 2016; Vice President – Cement from October 2013 through March 2016; Plant Manager – Sugar Creek from November 2012 through September 2013; Mr. Desai was employed in various operational roles within Lafarge, S.A. over the 16 years prior to the Company’s acquisition of the Sugar Creek plant).
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management, which has the responsibility for preparing the Compensation Discussion and Analysis. Based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
Compensation Committee
Ed H. Bowman,Chairman
F. William BarnettMargot L. Carter
George J. Damiris
Michael R. Nicolais
This report of the Compensation Committee does not constitute “soliciting material” and should not be deemed “filed” or incorporated by reference into any of the other Company filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically requests that the information be treated as soliciting material or specifically incorporates this report by reference therein.
COMPENSATION DISCUSSION AND ANALYSIS
Executive SummaryOur Year in Review
Our Strong Performance
In fiscal 2019, our businesses continued to generate strong earnings and cash flow, despite challenging weather trends that depressed sales opportunities throughout much of our fiscal year. Importantly, we continued to improve our alreadylow-cost position throughout the year, making meaningful investments to further improve our operational efficiency, while continuing to repurchase shares in line with our capital allocation strategy. In fiscal 2019, we purchased more than 3.3 million shares, or 7% of our outstanding shares, and we returned nearly $300 million to stockholders, through a combination of share repurchases and dividends.
Our executive compensation program is designed to reward performance and reflects the importance of our executive officers executing our business plans while focusing on key measures of profitability and the creation of shareholder value.
At Eagle Materials, we do not view our employees as “merely an expense” of the Company. Instead, we strive to invest in our people and their futures as a means of delivering more long-term value to our stockholders and customers.
This Compensation Discussion and Analysis is intended to provide investors with a more complete understanding of our compensation policies and decisions during fiscal 2019 for the following persons who were “Named Executive Officers” during such fiscal year:
| David B. Powers | Chief Executive Officer | |
| D. Craig Kesler | Executive Vice President – Finance and Administration and Chief Financial Officer | |
| Michael Haack | President and Chief Operating Officer | |
| Robert S. Stewart | Executive Vice President –Strategy, Corporate Development and Communications | |
| Keith W. Metcalf | President, American Gypsum Company LLC | |
Our Core Tenet: Pay for Performance
Our compensation philosophy is based on the principles that executive compensation should:
| ● | Align the interests of our executives with those of our stockholders, |
| ● | Reflect the Company’s performance as well as the executive’s individual performance, |
| ● | Motivate management to achieve the Company’s operational and strategic goals, |
| ● | Reward performance by both our executives and the Company relative to our peers’ performance in light of business conditions, and |
| ● | Be designed to attract, retain and motivate highly qualified and talented executives over time. |
Our performance-based compensation philosophy is evidenced by the charts below showing that 50% of our Chief Executive Officer’s target compensation opportunity for fiscal 2019 and 56% of our other Named Executive Officers’ target compensation opportunity for fiscal 2019 was performance-based orat-risk.
We believe that a significant portion of an executive’s compensation should be “at risk” – that is, dependent upon our operational and financial performance and the individual’s performance. The key features of our executive compensation program include the following:
| (1) | We seek to align the interests of executives with those of our stockholders by: |
| ● | Creating a direct and substantial link between the executive’s annual cash incentive bonus and our annual operating earnings, |
| ● | Structuring long-term compensation as equity awards, so that executives have an appropriate incentive to contribute to the creation of long-term stockholder value, and |
| ● | Requiring executives to meet stock ownership guidelines that will result in each executive holding a meaningful equity stake in the Company. |
| (2) | We seek to encourage improved performance by: |
| ● | Establishing our annual incentive bonus maximums based on our operating earnings, with the ability for the Committee to reduce the bonus based on individual performance goals, and |
| ● | Tying the ability to earn a substantial portion of our equity-based awards to the achievement of financial goals. |
To achieve our compensation objectives for fiscal 2019, our executive compensation program used a combination of short-term and long-term elements: (1) annual salary, (2) annual incentive bonus, and (3) long-term incentive compensation in the form of stock options and restricted stock, both time and performance vesting awards. Each element of long-term and short-term compensation is discussed more fully below under the heading “Primary Elements of Executive Compensation.”
Our Compensation Practices
Pay-for-performance is a longstanding core tenet of our compensation philosophy and one of the keys to Eagle’s long-term success. For years, our executive compensation programs have incorporatedpay-for-performance and many other compensation best practices, including the following:
Things We Don’t Do
| ● | No employment agreements currently in effect with our executives. |
| ● | No taxgross-up agreements with our executives. |
| ● | No defined benefit plans are provided to our executives. |
| ● | Our incentive plan prohibits there-pricing of options. |
| ● | Under our insider trading policy, employees and executives are prohibited from speculating in our securities or engaging in transactions designed to hedge their ownership interests. |
Things We Do
| ● | A substantial portion of our annual long-term compensation awards are performance-based. |
| ● | Our executives are provided very limited perquisites. |
| ● | The benefits provided to our executives under the defined contribution Retirement Plan are determined on the same basis as the benefits provided to all salaried employees. |
At Eagle Materials, we do not view our employees as “merely an expense” of the Company. Instead, we strive to invest in our people and their futures as a means of delivering more long-term value to our stockholders and customers.
Fiscal 2018 Compensation Highlights
The following highlights of our executive compensation program in fiscal 2018 exemplify our long-standing commitment to sound compensation practices, includingpay-for-performance.
Determining Executive Compensation
Advisory Vote on Executive Compensation; Central Role of Stockholder Engagement
We value feedback from our stockholders and regularly communicateengage in a dialogue with a significant portion of our stockholders throughout the fiscal year to better understand their opinions on our business strategy and objectives and to obtain feedback regarding other matters of investor interest, such as executive compensation. Throughout this process, the investor feedback related to compensation indicated broad support for the Company’s executive compensation program.
At the 20172018 Annual Meeting of Stockholders, the Company’s stockholders voted to approve anon-binding advisory resolution approving the compensation paid to our Named Executive Officers as disclosed in the proxy statement for the 20172018 Annual Meeting of Stockholders. This“say-on-pay” vote was 95.02% in favor, 4.93% against (with 0.03% abstaining).proposal received the approval of over 78% of the votes cast.
In light of the significant stockholder support of the executive compensation program (reflected through both the stockholder engagement feedback and the 20172018say-on-pay vote results), no substantive changes were made to the executive compensation program for fiscal 2018.2019.
The Compensation Committee is firmly committed to providing itsour executives with compensation opportunities that are tied to Company performance and stockholder value creation. We encourage youour stockholders to review the complete description of the Company’s executive compensation program prior to casting youra vote on this year’ssay-on-pay advisory vote proposal (Proposal No. 2).
This Compensation Discussion and Analysis is intended to provide investors with a more complete understanding of our compensation policies and decisions during fiscal 2018 for the following persons who were “Named Executive Officers” during such fiscal year:
Our compensation philosophy is based on the principles that executive compensation should:
We believe that a significant portion of an executive’s compensation should be “at risk” – that is, dependent upon our operational and financial performance and the individual’s performance. The key features of our executive compensation program include the following:
To achieve our compensation objectives for fiscal 2018, our executive compensation program used a combination of short-term and long-term elements: (1) annual salary, (2) annual incentive bonus, and (3) long-term incentive compensation in the form of stock options and restricted stock. Each element of long-term and short-term compensation is discussed more fully below under the heading “Elements of Executive Compensation.”
No Employment Agreements; NoChange-in-Control Agreements. We do not currently have employment agreements orchange-in-control agreements with any Named Executive Officer; however, under the terms of our award agreements, unvested equity awards become fully vested and exercisable in the event of a change in control. See “Change in Control Benefits” below.
Although a significant portion of potential compensation to our executive officers is performance-based, we do not believe that our compensation policies, principles, objectives and practices are structured to promote inappropriate risk taking by our executives. We believe that the focus of our overall compensation program encourages management to take a balanced approach that focuses on increasing and sustaining our profitability. See “Board Leadership Structure
and Role in Risk Oversight — Risk Assessment in Compensation Programs” above.
RoleAuthority of the Compensation Committee and Management in Executive Compensation
Our Compensation Committee has certain dutiesmeet regularly (six times in fiscal 2019) to oversee and responsibilities relating toadminister the compensation program of the CEO and the other senior executive officers. See “Board Committees — Compensation Committee” above. The senior executive officers include all of the Named Executive Officers. In particular, the Compensation Committee is charged with the responsibility to:
| ● | Review and make recommendations regarding our general compensation philosophy and structure, |
| ● | Annually review and approve corporate goals and objectives relevant to the compensation of our CEO, |
| ● | Evaluate our CEO’s performance in light of such goals and objectives, |
| ● | Set the salary and other cash and equity compensation for our CEO based on such evaluation, |
| ● | Review and approve the compensation of our other senior executive officers, |
| ● | Administer each of our plans for which our Compensation Committee has administrative responsibility, |
| ● | Grant cash awards (including annual incentive bonuses) under our annual bonus programs and equity awards (including options, restricted stock and restricted stock units) under our long-term Incentive Plan to our officers and other key employees, |
| ● | Review and recommend to the Board the compensation of ournon-employee directors, and |
| ● | Recommend to the Board stock ownership guidelines for our executive officers andnon-employee directors and monitor compliance therewith. |
The Compensation Committee consists solely of directors who are independent under the NYSE listing standards (including the enhanced independence requirements for compensation committee members) and Section 162(m) of the
Internal Revenue Code, and who are“non-employee directors” under Rule16b-3 of the Exchange Act. The Compensation Committee is authorized to hire such outside advisors as it deems appropriate. The Compensation Committee’s charter may be found in the “Investor Relations/Corporate Governance” section of our websitewww.eaglematerials.com.
The Compensation Committee sets compensation for the Named Executive Officerson an annual basis. In general, the process for setting compensation involves the following steps:
As early as practicable after the beginning of each fiscal year, the Compensation Committee determines:
| (1) | the salary of each Named Executive Officer for such fiscal year, |
| (2) | the overall size of the annual incentive bonus pools based on a percentage of our operating earnings in which the Named Executive Officers will have the opportunity to participate during such year and the percentage of the pool assigned to each Named Executive Officer, |
| (3) | whether the Compensation Committee will make any long-term incentive compensation awards in such fiscal year, |
| (4) | if the Compensation Committee decides to make long-term compensation awards for such fiscal year, the amount, nature of and terms applicable to such awards, including the form any such awards will take (e.g., options, restricted stock, restricted stock units and/or cash), the individual grant date fair value for awards to be made to each Named Executive Officer, the performance- or time-vesting criteria (or both) that will apply to any such awards, and the exercisability or payment schedules that will apply to any such awards if the performance criteria are satisfied, and |
| (5) | the Eagle Materials Special Situation Program for such fiscal year and the overall funding levels for such program based on operating earnings. |
For fiscal 2018,2019, the Compensation Committee made these determinations at two separate meetings held in May 2017.2018.
After the end of the fiscal year, the Compensation Committee:
| (1) | reviews and approves the annual incentive bonus pools, |
| (2) | determines the extent to which the performance criteria for the prior fiscal year applicable to any long-term incentive awards were satisfied, |
| (3) | determines the amount of the downward adjustment, if any, to be made to the annual incentive bonus payment to each Named Executive Officer based on individual performance, and |
| (4) | if applicable, makes awards under the Eagle Materials Special Situation Program. |
The Compensation Committee made these determinations for fiscal 20182019 at a meetingtwo meetings held in May 2018.2019.
Role of Management
Our CEO participates to a certainlimited extent in the administration of our compensation program for Named Executive Officers, other than himself. At the end of each fiscal year, the CEO provides input to the Compensation Committee on the performance of each of the other Named Executive Officers and recommends compensation adjustments (salary adjustments for the current fiscal year, any downward adjustments to annual incentive bonus levels for the recently completed fiscal year, and annual incentive bonus levels for the current fiscal year) and, if applicable, long-term incentive award levels for such Named Executive Officers. The CEO also provides input on the structure of our long-term incentive awards (if any) for such Named Executive Officers, including the long-term incentive award levels and the performance or other criteria that determine vesting and other terms and conditions applicable to the awards. The Compensation Committee considers the CEO’s input, along with other information presented by its compensation consultants or otherwise available to it, in making its final compensation decisions with respect to the Named Executive Officers.
Engagement of aan Independent Compensation Consultant
Late in fiscal 20172018 (January 2017)2018), the Compensation Committee again retained Longnecker & Associates (“L&A”), an independent compensation consulting firm based in Houston, Texas, to review levels and incentive components of our executives’
compensation in an effort to align the compensation of our officers competitively with the market for fiscal 2018.2019. The primary role of L&A was to provide the Compensation Committee with market data and information regarding compensation trends in our industry and to make recommendations regarding base salaries, the design of our incentive programs and executive compensation levels. Our management did not direct or oversee the retention or activities of L&A with respect to our executive compensation program. The Compensation Committee has assessed the independence of L&A pursuant to SEC and NYSE rules and concluded that no conflict of interest exists that would prevent L&A from independently advising the Compensation Committee.
Compensation Peers
The data used by L&A in its survey of compensation, which we refer to as the “compensation study,” was weighted so that 50% was from published surveys from Towers Watson, Economic Research Institute, Mercer, Pay Factors, Kenexa and WorldatWork and 50% was from disclosure in compensation peer group proxy statements. At the beginning of fiscal 20172019 (spring of 2016)2018), L&A reviewed the Company’s current peer group for appropriateness and provided the Compensation Committee with recommendations for any additional peers to be included. L&A analyzed the Company’s peer group and potential additional companiesmodifications based on (1) other similar companies within similar industries, (2) revenue, (3) market capitalization, (4) enterprise value, (5) asset size (6) net income, (7) EBITDA and(8) one-year, three-year and three-yearfive-year total shareholder return (“TSR”).
Based on this analysis, L&A recommended removal of one peer used in fiscal 2018: Headwaters Incorporated, which had been acquired. L&A recommended the Company maintain its fiscal 2017 compensationaddition of one company to the peer group in analyzing fiscal 2018 compensation.group: Masonite International Corporation. Based on L&A’s recommendation, the Compensation Committee therefore utilized the following15-company peer group in analyzing fiscal 20182019 compensation (“compensation peer group”):
Armstrong Worldwide Industries, Inc. Continental Building Products, Inc. EnPro Industries, Inc.
James Hardie Industries plc KapStone Paper and Packaging Corporation Lennox International Inc. Louisiana-Pacific Corp. Martin Marietta Materials Inc. Masonite International Corporation Silgan Holdings, Inc. Summit Materials, Inc. USG Corporation U.S. Concrete, Inc. U.S. Silica Holdings, Inc. Vulcan Materials Company
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L&A delivered its compensation peer analysis report to the Compensation Committee in April 2018, utilizing trailing 12 months financials for revenue, net income and EBITDA; asset value as of the latest quarterly report on Form10-Q filed by the company; and market capitalization, enterprise value and TSR as of April 30, 2018. The Company’s ranking within the compensation peer group in each of the categories utilized by L&A was as follows:
| Category | Company Percentile Rank | |||
Revenue | 32nd | |||
Assets | 50th | |||
Market Capitalization | 66th | |||
Enterprise Value | 62nd | |||
Net Income | 58th | |||
EBITDA | 49th | |||
One-year TSR | 48th | |||
Three-year TSR | 32nd | |||
Five-year TSR | 37th | |||
OVERALL AVERAGE | 48th |
We are aware that institutional shareholder advisors, such as Institutional Shareholder Services, Glass Lewis and others, utilize methodologies to determine “peer groups” that may differ from our process. We believe that the methodologies they use may result in a peer group that does not provide a close “fit” for Eagle. For example, if the institutional shareholder advisor relies upon GICS codes to identify potential peers, the resulting peer group would include many companies whose operations we view as sufficiently dissimilar to ours as to make comparisons significantly less meaningful. Additionally, if the institutional shareholder advisor constructs a peer group based solely on revenues, the resulting peer group can create a poor fit for two reasons. First, because of accounting rules we are unable to include our 50/50 Texas Lehigh joint venture’s revenues in our revenue line item—we instead account for that entity in a separate line item valuing the equity interest in an unconsolidated joint venture. As a result, in our view, our revenue is, in effect, understated. Second, in our industry, with largeup-front capital projects, we believe that cash flow and operating earnings are more important than revenues when evaluating peers.
For these reasons and in light of the peer analysis described above, we believe that the compensation peer group identified by our Compensation Committee for fiscal 2019 provides a more appropriate and meaningful basis for assessing our executive compensation.
Primary Elements of Executive Compensation
The primary elements of our executive compensation program are the following:
| ● | Base salary |
| ● | Annual incentive bonus |
| ● | Long-term incentive compensation |
Base Salary
Salaries of the Named Executive Officers are reviewed annually as well as at the time of a promotion or significant change in responsibilities. As described above, the Compensation Committee engaged L&A to conduct the compensation study at the beginning of fiscal 2019. L&A’s compensation study was delivered to the Compensation Committee in May 2018.
The fiscal 2019 base salaries for the Named Executive Officers were set as follows:
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We are aware that institutional shareholder advisors, such as Institutional Shareholder Services, Glass Lewis and others, utilize methodologies to determine “peer groups” that may differ from our process. We believe that the methodologies they use may result in a peer group that does not provide a close “fit” for Eagle. For example, if the institutional shareholder advisor relies upon GICS codes to identify potential peers, the resulting peer group would include many companies whose operations we view as sufficiently dissimilar to ours
as to make comparisons significantly less meaningful. Additionally, if the institutional shareholder advisor constructs a peer group based solely on revenues, the resulting peer group can create a poor fit for two reasons. First, because of accounting rules we are unable to include our 50/50 Texas Lehigh joint venture’s revenues in our revenue line item—we instead account for that entity in a separate line item valuing the equity interest in an unconsolidated joint venture. Our revenue is, in effect, understated. Second, in our industry, with largeup-front capital projects, we believe that cash flow and earnings are more important than revenues when evaluating peers.
For these reasons and in light of the peer analysis described above, we believe that the compensation peer group identified by our Compensation Committee for fiscal 2018 provides a more appropriate and meaningful basis for assessing our executive compensation.
Elements of Executive Compensation
Name David B. Powers D. Craig Kesler Michael Haack Robert S. Stewart Keith W. Metcalf In addition to the health benefit plans and programs generally available to all employees, our executive compensation program includes the following elements: Base
Salary Percent
Increase $920,000 8.2 $460,000 6.0 $575,000 5.3 $455,000 4.8 $393,000 3.1
Considerations that may influence the salary level for a Named Executive Officer include individual performance, the Named Executive Officer’s skills or experience, our operating performance and the nature and responsibilities of the position.
Annual Incentive Bonus
The Compensation Committee is responsible for approving the annual incentive bonus for our CEO and the other Named Executive Officers. Annual incentive bonuses paid to our Named Executive Officers for fiscal 2019 (other than Mr. Metcalf) were
made under the Eagle Materials Inc. Salaried Incentive Compensation Program for Fiscal Year 2019, which we refer to as the “Eagle Annual Incentive Program.” The Eagle Annual Incentive Program and the Company’s other incentive programs for fiscal 2019 were structured to create financial incentives and rewards that are directly related to corporate performance and the participating Named Executive Officer’s individual performance during the fiscal year.
The Compensation Committee believes these programs are consistent with ourpay-for-performance compensation philosophy in that they place a significant portion of the executive’s compensation “at risk.” Generally, under these programs, a significant portion of the executive’s total compensation is dependent upon the performance of the Company as well as the individual’s performance. The Company’s annual incentive bonus programs also reflect the Committee’s philosophy of aligning the interests of our executives with those of the stockholders. These programs create this alignment by providing that an officer’s annual bonus potential varies directly with our operating earnings. Although individual performance and achievement of goals (as discussed in more detail below under “Approving the Annual Incentive Bonus”) may affect the actual incentive bonus amount, our programs are structured in such a way that the executive officer’s incentive bonus potential can vary considerably as operating earnings change from year to year. The Committee believes that operating earnings is an appropriate metric for annual incentive bonuses because it is tied closely to operations, can be directly impacted by the efforts of the pool participants, and is a measure that our stockholders have indicated they track and value.
Eagle Annual Incentive Program
For fiscal 2019, Messrs. Powers, Kesler, Haack and Stewart were participants in the Eagle Annual Incentive Program. Under this program, during the first quarter of the fiscal year, a percentage of our operating earnings is designated by the Compensation Committee as a pool for bonuses, and each participating Named Executive Officer is assigned a share of such pool, representing the executive’s maximum bonus opportunity. At the end of the fiscal year, the size of the pool is determined, based on the amount of operating
earnings generated during such fiscal year, and annual incentive bonuses are paid to each participating executive in the form of a lump sum cash payment reflecting each executive’s share of the pool, subject to the exercise of “negative discretion” by the Compensation Committee to reduce (but not increase) the amount of the cash payment based on the executive’s individual performance during the fiscal year. The amount of the annual incentive bonus paid to an executive is based on the level of our operating earnings, the share of the pool designated for such executive, and an assessment of such executive’s individual performance.
The Eagle Annual Incentive Program for Fiscal 2019 was adopted by the Compensation Committee in May 2018, and it mirrored the structure of the fiscal 2018 program. The program was to be funded with 1.4% of the Company’s operating earnings for fiscal 2019. The Compensation Committee has maintained the funding rate of 1.4% since 2016 and as a result the compensation pool only increases if operating earnings increase.
The bonus pool itself is not subject to a separate cap or maximum, but is merely a function of multiplying thepre-determined percentage by our operating earnings for the applicable fiscal year; however, our Incentive Plan does provide an absolute cap on cash that any employee may receive in any fiscal year under such programs ($5 million). In setting the percentage of operating earnings which would fund the pool for the Eagle Annual Incentive Program, the Compensation Committee considered several factors, including our compensation philosophy that a significant portion of the executive’s compensation should be “at risk” and subject to the Company’s success (level of operating earnings), as well as the anticipated operating earnings for fiscal 2019.
In allocating each Named Executive Officer’s opportunity under the pool, the Compensation Committee considered the amount of annual incentive bonus compensation opportunities of executives in other companies who fulfill similar roles as illustrated in the compensation study prepared by L&A, the share of the pool historically allocated to officers in such roles by the Company, the recommendation of Mr. Powers for each participant, as well as the Compensation Committee’s assessment of the executive’s importance and contribution to the organization, the
executive’s importance in driving the achievement of Company goals and profitability, the executive’s level of responsibility, and the anticipated operating earnings for fiscal 2019. The Compensation Committee set the bonus potential for the Named Executive Officers as follows:
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Also at the beginning of fiscal 2019, the Compensation Committee worked with Mr. Powers to develop individual annual incentive goal categories by plan and position throughout the Company, including with respect to the Named Executive Officers. For participants in the Eagle Annual Incentive Program, the participants’ individual performance against the goals would be evaluated by the Committee in the exercise of “negative discretion” to reduce (but not increase) the amount of the portion of the pool that would be paid to the participant at the end of the fiscal year.
At the end of fiscal 2019, the Compensation Committee determined that the aggregate amount available for the Eagle Annual Incentive Program pool for fiscal 2019 was $4,597,239, based on the Company’s operating earnings of $328,374,186, as adjusted for certain extraordinary items that the Committee believes are not reflective of operating performance, namely thenon-cash impairment of various assets in our oil and gas proppants segment.
This pool amount was not quantifiable until the end of fiscal 2019. For comparison purposes, the equivalent pool amount in fiscal 2018 was $4,825,766 based on operating earnings of $344,697,591 (as adjusted).
Divisional Annual Incentive Program
For certain employees who do not participate in the Eagle Annual Incentive Program, the Company maintains divisional annual incentive plans, which the Committee believes better tie such employees’ annual incentive compensation to metrics that they
can directly influence than a Company-wide program. For fiscal 2019, Mr. Metcalf participated in a Divisional Annual Incentive Bonus Program. Under these programs, a percentage of a division’s operating earnings is allocated to the bonus pool and each participating employee is assigned a share of the pool, representing the employee’s maximum bonus opportunity. At the end of the fiscal year, the size of the pool is determined and annual bonuses are paid to participating employees in the form of a lump sum cash payment in accordance with their shares of the pool, subject to the exercise of negative discretion by our CEO (or, in the case of bonuses paid to Named Executive Officers, the Compensation Committee) based on the employee’s individual performance during the fiscal year.
Mr. Metcalf participated in the American Gypsum Company Salaried Incentive Compensation Program for Fiscal Year 2019. Under this program, the bonus pool equaled 2.0% of American Gypsum’s operating earnings for fiscal 2019, which is the same percentage the Compensation Committee has set for the past two years. In deciding to keep the percentage of operating earnings which would fund these bonus pools the same as the prior year, the Compensation Committee considered several factors, including our compensation philosophy that a significant portion of the executive’s compensation should be “at risk” and subject to the Company’s success (level of earnings).
The divisional bonus pools are not subject to a separate cap or maximum, but are merely a function of multiplying thepre-determined percentage by the applicable operating earnings for the applicable fiscal year. The aggregate amounts available for the American Gypsum program for fiscal 2019 was $4,033,691, which was not quantifiable until the end of fiscal 2019 and includes amounts available for payment to officers and employees other than the Named Executive Officers. For comparison purposes, the equivalent amount in fiscal 2018 was $3,588,260.
In May 2018, the Compensation Committee set the annual incentive bonus potential for Mr. Metcalf under the American Gypsum Divisional Annual Incentive Bonus Program. In determining Mr. Metcalf’s allocation of the pool, the Compensation Committee considered the recommendation of Mr. Powers, the amount of annual incentive bonus compensation payable to executives in other
companies who fulfill similar roles as illustrated in the compensation study prepared by L&A, the portion of the pool historically allocated to his position and the Compensation Committee’s assessment of his importance and contribution to his division’s performance, his importance as an officer within his division in driving the achievement of divisional goals and profitability and his level of responsibility. The Compensation Committee set Mr. Metcalf’s incentive bonus potential at 21% of his divisional bonus pool.
Fiscal 2019 Special Situation Program
In the first quarter of fiscal 2019 (May 2018), the Compensation Committee approved the Eagle Materials Inc. Special Situation Program for Fiscal Year 2019, which we refer to as the “SSP,” which is a special annual incentive program intended to recognize outstanding individual performance during the fiscal year. The SSP also provides flexibility to reward performance when special circumstances arise in which our CEO determines that an individual has performed well but not been adequately compensated pursuant to other components of compensation, including without limitation instances where an individual’s compensation has been adversely affected by market conditions such as a cyclical downturn or in recognition of transactions and events not contemplated at the time the Compensation Committee set compensation for the applicable year.
SSP awards are made by our CEO, except that awards to executive officers require Compensation Committee approval. Awards under the SSP are not predetermined for any individuals at the beginning of the fiscal year. All full-time employees of Eagle Materials Inc. or any of our subsidiaries are eligible to receive awards under this program. At the beginning of fiscal 2019, the Compensation Committee determined that 0.20% of the Company’s EBITDA for the ensuing fiscal year would fund the SSP, along with the portions of the Eagle and divisional incentive compensation plans and divisional long-term cash compensation plans not paid out. In setting the percentage of EBITDA which would fund the SSP, the Compensation Committee considered several factors, including the anticipated EBITDA for fiscal 2019. All of our Named Executive Officers are eligible to participate in the SSP.
Approving the Annual Incentive Bonus
In May 2019, the Compensation Committee approved the incentive bonus pool for fiscal 2019 for the Company. In addition, at the end of fiscal 2019, Mr. Powers provided performance evaluations of each Named Executive Officer (other than himself) to the Compensation Committee, which evaluations included an assessment of the achievement of their individual goals and objectives, along with his recommendation for the annual incentive bonus for each such Named Executive Officer. With respect to Mr. Powers, the Compensation Committee performed its own evaluation of his performance and the extent to which the goals and objectives established for him for fiscal 2019 had been achieved.
Mr. Powers
At the end of fiscal 2019, the Compensation Committee conducted its performance evaluation of Mr. Powers after receiving input from the entire Board. Mr. Powers also provided information used by the Compensation Committee to evaluate the achievement of his goals and objectives for fiscal 2019 under the Eagle Annual Incentive Program. Based on this evaluation, the Compensation Committee believes Mr. Powers performed at a high level during fiscal 2019 and met his goals and objectives. That evaluation resulted in Mr. Powers receiving 93% of his bonus potential for fiscal 2019. The Compensation Committee approved an annual incentive bonus for Mr. Powers under the Eagle Annual Incentive Program of $1,026,104. In making this determination, the Compensation Committee used its judgment to base salaries, would place the Named Executive Officers at slightly above the 75th percentile of actual total cash compensation (base salary plus actual annual incentive) of the L&A compensation study.
Also at the beginning of fiscal 2018, the Compensation Committee worked with Mr. Powers to develop individual annual incentive goal categories by plan and position throughout the Company, including with respect to the Named
Executive Officers. For participants in the Eagle Annual Incentive Program, the participants’ individual performance against the goals would be evaluated by the Committee in the exercise of “negative discretion” to reduce (but not increase) the amount of the portion of the pool that would be paid to the participant at the end of the fiscal year.
At the end of fiscal 2018, the Compensation Committee determined that the aggregate amount available for the Eagle Annual Incentive Program for fiscal 2018 was $4,825,766, based on the Company’s operating earnings as adjusted for certainnon-recurring items which the Committee believes are not reflective of operating performance. This pool amount was not quantifiable until the end of fiscal 2018 and includes amounts available for payment to officers and employees other than the Named Executive Officers. For comparison purposes, the equivalent pool amount in fiscal 2017 was $4,440,100. From fiscal 2017 to fiscal 2018, our operating earnings increased from $317,150,000 to $344,697,591.
Fiscal 2018 Special Situation Program
In the first quarter of fiscal 2018 (May 2017), the Compensation Committee approved the Eagle Materials Inc. Special Situation Program for Fiscal Year 2018, which we refer to as the “SSP,” which is a special annual incentive program intended to recognize outstanding individual performance during the fiscal year. The SSP also provides flexibility to reward performance when special circumstances arise in which our CEO determines that an individual has performed well but not been adequately compensated pursuant to other components of compensation, including without limitation instances where an individual’s compensation has been adversely affected by market conditions such as a cyclical downturn or in recognition of transactions and events not contemplated at the time the Compensation Committee set compensation for the applicable year.
SSP awards are made by our CEO, except that awards to executive officers require Compensation Committee approval. Awards under the SSP are not predetermined for any individuals at the beginning of the fiscal year. All full-time employees of Eagle Materials Inc. or any of our subsidiaries are eligible to receive awards under this program. At the beginning of fiscal 2018, the Compensation
Committee determined that 0.20% of the Company’s EBITDA for the ensuing fiscal year would fund the SSP, along with the portions of the Eagle and divisional incentive compensation plans and divisional long-term cash compensation plans not paid out. In setting the percentage of EBITDA which would fund the SSP, the Compensation Committee considered several factors, including the anticipated EBITDA for fiscal 2018. All of our Named Executive Officers are eligible to participate in the SSP; however, no Named Executive Officer received an SSP award in fiscal 2018.
Approving the Annual Incentive Bonus
In May 2018, the Compensation Committee approved the incentive bonus pool for fiscal 2018 for the Company. In addition, at the end of fiscal 2018, Mr. Powers provided performance evaluations of each Named Executive Officer (other than himself) to the Compensation Committee, which evaluations included an assessment of the achievement of their individual goals and objectives, along with his recommendation for the annual incentive bonus for each such Named Executive Officer. With respect to Mr. Powers himself, the Compensation Committee performed its own evaluation of his performance and the extent to which the goals and objectives established for him for fiscal 2018 had been achieved.
Mr. Powers
At the end of fiscal 2018, the Compensation Committee conducted its performance evaluation of Mr. Powers after receiving input from the entire Board. Mr. Powers also provided information used by the Compensation Committee to evaluate the achievement of his goals and objectives for fiscal 2018 under the Eagle Annual Incentive Program. Based on this evaluation, the Compensation Committee believes Mr. Powers performed at a high level during fiscal 2018 and met or exceeded his goals and objectives. That evaluation resulted in Mr. Powers receiving 96.5% of his bonus potential for fiscal 2018. The Compensation Committee approved an annual incentive bonus for Mr. Powers under the Eagle Annual Incentive Program of $1,117,647, which is reflected in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table located on page 38 of this proxy statement. In making this determination, the Compensation Committee used its judgment to
determine the appropriate award level after consideration of several factors, including his achievement of his goals related to organizational leadership development and the following areas (among others) over the past fiscal year:
| ● | success in completing manufacturing capacity utilization and expansion |
| ● | driving the launching of a capacity expansion project at the Company’s paper mill; |
| ● | balancing wallboard production with demand; |
| ● | leadership in driving talent and organizational development at both the corporate and divisional |
| ● | promotion of a safety performance culture and implementation of reporting and monitoring system enhancements. |
Mr. Kesler
At the end of fiscal 2019, Mr. Powers reviewed Mr. Kesler’s performance, finding that Mr. Kesler had achieved his goals during the fiscal year. Based in part on this review, the Compensation Committee determined that Mr. Kesler had met his goals and awarded Mr. Kesler 93% of his incentive bonus potential, approving an annual incentive bonus for Mr. Kesler under the Eagle Annual Incentive Program of $675,518. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to his areas of responsibility, the input of Mr. Powers regarding Mr. Kesler’s performance, and the following areas (among others) over the past fiscal year: Mr. Kesler’s oversight of the development of a new sales force software platform, and his completion of an analysis of the retirement plan, including investment choices, implementation of cost-saving plan improvements and efficiencies, and modernization of our investment policy statement.
In addition, the Compensation Committee approved a cash award under the SSP to Mr. Kesler in the amount of $50,000. In making this award to Mr. Kesler, the Compensation Committee took into consideration the recommendation of Mr. Powers and Mr. Kesler’s ongoing work on the Company’s strategic portfolio review, the implementation of sales force sales tools for the cement division, and an upgraded capital program, process and system.
Mr. Haack
At the end of fiscal 2019, Mr. Powers reviewed Mr. Haack’s performance, finding that Mr. Haack had achieved his goals during the fiscal year. Based in part on this review, the Compensation Committee determined that Mr. Haack had met his goals and awarded Mr. Haack 93% of his incentive bonus potential, approving an annual incentive bonus for Mr. Haack under the Eagle Annual Incentive Program of $726,823. In making this determination, the Compensation Committee used its judgment to
determine the appropriate award level after consideration of several factors, including his achievement of his goals related to his areas of responsibility, the input of Mr. Powers regarding Mr. Haack’s performance, and the following areas (among others) over the past fiscal year: Mr. Haack’s success in further enhancing the Company’s safety programs, organizational leadership development, manufacturing capacity utilization and expansion.
In addition, the Compensation Committee approved a cash award under the SSP to Mr. Haack in the amount of $100,000. In making this award to Mr. Haack, the Compensation Committee took into consideration the recommendation of Mr. Powers and Mr. Haack’s leadership on upgraded safety programs throughout the Company and the implementation of sales force sales tools for the cement division.
Mr. Stewart
At the end of fiscal 2019, Mr. Powers reviewed Mr. Stewart’s performance, finding that Mr. Stewart had achieved his goals during the fiscal year. Based in part on this review, the Compensation Committee determined that Mr. Stewart had met his goals and awarded Mr. Stewart 93% of his incentive bonus potential, approving an annual incentive bonus for Mr. Stewart under the Eagle Annual Incentive Program of $675,518. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to his areas of responsibility, the input of Mr. Powers regarding Mr. Stewart’s performance, and the following areas (among others) over the past fiscal year: Mr. Stewart’s implementation of executive transition planning, including engagement with internal constituents and external investor groups, and his ongoing investor outreach with regard to the Company’s ESG initiatives.
Mr. Metcalf
At the end of fiscal 2019, Mr. Powers reviewed the performance of Mr. Metcalf, finding that Mr. Metcalf had achieved his goals during the fiscal year. Based in part on this review, the Compensation Committee determined that Mr. Metcalf had met his goals and awarded Mr. Metcalf 94% of his incentive bonus
potential, approving an annual incentive bonus for Mr. Metcalf under the American Gypsum Salaried Incentive Compensation Program for Fiscal Year 2019 of $796,251. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to his areas of responsibility, the input of Mr. Powers regarding the performance of Mr. Metcalf, and the following areas (among others) over the past fiscal year: Mr. Metcalf’s assurance of plant reserves expansion plans in place for all wallboard plants, his continuing work on talent management and development within American Gypsum, and his oversight of the successful winding down of the Rio Grande business in Albuquerque.
At the end of fiscal 2018, Mr. Powers reviewed Mr. Kesler’s performance, finding that Mr. Kesler had achieved his goals during the fiscal year. Based in part on this review, the Compensation Committee determined that Mr. Kesler had met his goals and awarded Mr. Kesler 99.5% of his incentive bonus potential, approving an annual incentive bonus for Mr. Kesler under the Eagle Annual Incentive Program of $758,659, which is reflected in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table located on page 38 of this proxy statement. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to his areas of responsibility, the input of Mr. Powers regarding Mr. Kesler’s performance, and the following areas (among others) over the past fiscal year: Mr. Kesler’s integration of acquired businesses into the Company’s accounting and financial reporting systems, and enhancement of the Company’s financing arrangements, health and welfare benefit program management and insurance programs.
Mr. Haack
At the end of fiscal 2018, Mr. Powers reviewed Mr. Haack’s performance, finding that Mr. Haack had achieved his goals during the fiscal year. Based in part on this review, the Compensation Committee
determined that Mr. Haack had met his goals and awarded Mr. Haack 97.5% of his incentive bonus potential, approving an annual incentive bonus for Mr. Haack under the Eagle Annual Incentive Program of $799,871, which is reflected in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table located on page 38 of this proxy statement. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to safety, leadership development and operational performance, the input of Mr. Powers regarding Mr. Haack’s performance, and the following areas (among others) over the past fiscal year: Mr. Haack’s success in further enhancing the Company’s safety programs, organizational leadership development, manufacturing capacity utilization and expansion, and driving improvement in the frac sand division’s growth and profitability.
Mr. Stewart
At the end of fiscal 2018, Mr. Powers reviewed Mr. Stewart’s performance, finding that Mr. Stewart had achieved his goals during the fiscal year. Based in part on this review, the Compensation Committee determined that Mr. Stewart had met his goals and awarded Mr. Stewart 99.5% of his incentive bonus potential, approving an annual incentive bonus for Mr. Stewart under the Eagle Annual Incentive Program of $758,659, which is reflected in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table located on page 38 of this proxy statement. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to organizational leadership development, the input of Mr. Powers regarding Mr. Stewart’s performance, and the following areas (among others) over the past fiscal year: Mr. Stewart’s formulation of effective investor communication tools, and successful efforts in advancing the Company’s leadership development programs.
Mr. Graass
At the end of fiscal 2018, Mr. Powers reviewed the performance of Mr. Graass, finding that Mr. Graass had achieved his goals during the fiscal year. Based
in part on this review, the Compensation Committee determined that Mr. Graass had met his goals and awarded Mr. Graass 99.5% of his incentive bonus potential, approving an annual incentive bonus for Mr. Graass under the Eagle Annual Incentive Program of $758,659, which is reflected in the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table located on page 38 of this proxy statement. In making this determination, the Compensation Committee used its judgment to determine the appropriate award level after consideration of several factors, including his achievement of his goals related to legal compliance, the input of Mr. Powers regarding the performance of Mr. Graass, and the following areas (among others) over the past fiscal year: enhancement of the Company’s internal policies and procedures, development of certain employee training programs, and oversight of the Company’s process for negotiating and entering into material contracts.
Long-Term Incentive Compensation
Consistent with the Compensation Committee’s philosophy of linking compensation to our performance, a significant portion of our long-term incentive compensation program for fiscal 20182019 has been structured to tie the ability to earn equity awards to the achievement by the Company of specific performance levels. To enhance retention of key employees, once earned, the performance awards contain a further time-vesting component. Also, a portion of our long-term compensation program has been structured as purely time-vesting, which the Compensation Committee believes, based on the input of L&A, isin-line with the practice of our peers. A more detailed description of the fiscal 20182019 awards is found below.
Burn Rate
The Compensation Committee has been a good steward of the equity available to it for award under our Incentive Plan. Our three-year average burn rate (a measure of historical dilution) is well below our industry norms. The Company’s three-year average burn rate (which is based on the number of awards granted—or, in the case of performance awards, awards earned—in each fiscal year, divided by the weighted-average common shares outstanding for such fiscal year) is 1.03%0.94%. The 20182019 benchmark for our industry published by ISS is 2.61%2.72%.
Grant Practice
All of the Named Executive Officers participate in our long-term incentive compensation program. In fiscal 2018,2019, the Compensation Committee approved equity grants as described below. The date on which an equity award is granted is the date specified in the resolutions of the Compensation Committee authorizing the grant. The grant date must fall on or after the date on which the resolutions are adopted by the Committee. As provided in the Incentive Plan, for stock options, the exercise price is the closing price of our Common Stock on the grant date, as reported by the NYSE.
In addition, the Compensation Committee, as provided in our Incentive Plan, has delegated to the Special Situation Stock Option Committee (whose sole member is our CEO) the authority to grant stock options to newly-hired employees and newly-promoted employees, under terms set by the Compensation Committee. This authority for fiscal 2019, which expires on May 31, 2019, is limited to an aggregate of 60,000 option shares; no one individual may receive more than 15,000 option shares in a given year; and Section 16 reporting persons may not receive awards pursuant to this authority. Stock options granted under this delegation of authority vest 20% per year commencing on the first anniversary of the grant date. During fiscal 2018, no stock options were granted to employees under this authority out of a maximum of 60,000.
Fiscal 20182019 Grants
In structuring the long-term incentive program for fiscal 2018,2019, the Compensation Committee worked with our CEO, Mr. Powers, to establish a mix of performance-based and time-vesting awards. Consistent with prior years, the performance metric selected was return on equity, or “ROE,” which represents our earnings as a percentage of our stockholders’ equity, a performance metric that our stockholders have told us they find meaningful and that the Committee views as a measure of the Company’s prudent deployment of capital.
Target award amounts were allocated equally between performance-vesting and time-vesting awards, withone-half of each type being allocated to restricted stock andone-half to stock options;
provided, that the Committee could take into consideration the recipient’s age and proximity to retirement in allocating some awards 100% to restricted stock. With respect to performance-based equity awards, the Committee determined a target award value that would be received upon the achievement of a strong ROE, with up to 120% of the target value received if exceptional ROE were achieved and 80% of the target value received if
acceptable ROE were achieved. None of the performance-based equity awards would be earned if the return on equity were below this acceptable level. Both performance-based and time-vesting equity awards would vest over a four-year period to enhance the retention of these key employees.
Effective May 18, 2017,17, 2018, the Compensation Committee approved equity awards under the Incentive Plan to a group of key employees, including the Named Executive Officers, in alignment with the above structure. As part of the compensation study delivered to the Compensation Committee in May 2017,2018, L&A had provided information regarding long-term compensation as well as total direct compensation paid to the compensation peer group. In determining the value
of the equity to be granted, the Compensation Committee took into consideration the L&A compensation study, the input of Mr. Powers, the Compensation Committee’s assessment of the executive’s importance and contribution to the organization, and the executive’s level of responsibility. On average, the target Named Executive Officer long-term incentive compensation was at approximately the median of the compensation study, resulting in total direct compensation between the median and the 75th percentile of the compensation study. The target grant date fair value was allocated 50% to performance-based equity (with a Company ROE financial metric) and 50% to time-vesting equity. In general, recipients of equity awards had their target grant date fair value allocated half to restricted stock and half to stock options; however, given their age and proximity to retirement, some recipients (including Messrs. Powers, Stewart and Graass)Metcalf) had their entire award allocated to restricted stock.
The following table shows the stock options and restricted stock granted to each of the Company’s Named Executive Officers effective May 18, 2017:17, 2018:
Name | Number of Performance Vesting Stock Options | Shares of Performance Vesting Restricted Stock | Number of Time Vesting Stock Options | Shares of Time Vesting Restricted Stock | Number of Performance Vesting Stock Options | Shares of Performance Vesting Restricted Stock | Number of Time Vesting Stock Options | Shares of Time Vesting Restricted Stock | ||||||||||||||||||||||||
David B. Powers | — | 19,330 | — | 16,109 | - | 19,767 | - | 16,473 | ||||||||||||||||||||||||
D. Craig Kesler | 7,145 | 2,380 | 5,954 | 1,983 | 7,937 | 2,542 | 6,614 | 2,118 | ||||||||||||||||||||||||
Michael Haack | 8,484 | 2,826 | 7,070 | 2,355 | 9,701 | 3,107 | 8,084 | 2,589 | ||||||||||||||||||||||||
Robert S. Stewart | — | 4,759 | — | 3,966 | - | 5,083 | - | 4,236 | ||||||||||||||||||||||||
James H. Graass | — | 4,759 | — | 3,966 | ||||||||||||||||||||||||||||
Keith W. Metcalf | - | 4,236 | - | 3,530 | ||||||||||||||||||||||||||||
The Committee believes that the structure of the fiscal 20182019 long-term compensation program is consistent with the Compensation Committee’s philosophy of linking compensation to our performance.
Performance-Based Equity Awards
These awards are comprised of shares of restricted stock and stock options which are earned based upon the achievement by the Company of a certain level of average ROE for the fiscal year ended March
31, 2018,2019, with 100% of the awarded stock/options (that is, 120% of the target award value) being earned if such ROE measure was 18.0%20.0% or higher, 83.3% of the awarded stock/options (that is, 100% of the target award value) being earned if such ROE measure was 14.5%15.0%, and 66.7% of the awarded stock/options (that is, 80% of the target award value) being earned if such ROE measure was at least 11.0%10.0% (with the exact percentage of shares earned being calculated based on straight-line interpolation between the points specified above
with fractional points rounded to the nearest tenth of a percent). If the Company achieved an ROE measure of less than 11.0%10.0%, then none of the performance-based equity awards would be earned. The earned performance-based equity was to become fully vestedone-fourth promptly after the certification date andone-fourth on March 31 for each of the following three years (in each case assuming continued service through such dates).
The terms and conditions of the performance-based equity are substantially the same as prior performance-based awards, except that the performance criterion is as described above. Any performance-based equity that was not earned at the end of fiscal 20182019 was to be forfeited. As in the case of prior equity awards, the performance-based equity will also vest upon a change in control of the Company. See “Change in Control Benefits” below. In accordance with the terms of the Incentive Plan, the exercise price of the stock options is the closing price of the Company’s Common Stock on the date of grant, May 18, 201717, 2018 ($100.88)106.24).
In May 2018,2019, the Compensation Committee certified that the Company’s 17.2%16.9% average ROE for the fiscal year ended March 31, 2018 (as defined in the award agreement and as adjusted for certainnon-recurring items which the Committee believes are not reflective of operating performance)2019 satisfied the Company’s performance goal such that 96.2%89.7% of the performance-based equity granted (or 115.4%107.6% of the target number of shares/options) was earned. Any unearned performance-based equity was forfeited.In calculating the average ROE, in accordance with the award agreement, the Committee excluded the impact of certain extraordinary items not related to operating performance, namely theOne-fourthnon-cash impairment of the earned performance-based equity vested promptly after such certification date,various assets in our oil and the remaining three-fourths will vest ratably on March 31 of 2019, 2020 and 2021 (in each case assuming continued service through such dates).gas proppants segment.
Time-Vesting Equity Awards
These awards are comprised of shares of restricted stock and stock options which vest ratably over four years on March 31, 2018; March 31, 2019; March 31, 2020; March 31, 2021; and March 31, 20212022 (in each case assuming continued service through such dates). The Compensation Committee believes that including time-vesting equity as part of long-term compensation is consistent with competitive pay practices, preserves the Company’s philosophy that a significant portion of an executive’s pay should be at risk, enhances the retention of key employees,
while at the same time creating a strong incentive for management to operate the business in a manner that creates additional value for stockholders.
The terms and conditions of the time-vesting equity are substantially the same as prior time-vesting awards. As in the case of prior equity awards, the time-vesting equity will also vest upon a change in control of the Company. See “Change in Control Benefits” below. In accordance with the terms of the Incentive Plan, the exercise price of the stock options is the closing price of the Company’s Common Stock on the date of grant, May 18, 201717, 2018 ($100.88)106.24).
Profit Sharing and Other Elements of Executive Compensation
Retirement Plan
EachPrior to January 1, 2019, we maintained two qualified defined contribution plans under sections 401(a) and 401(k) of the Named Executive Officers is a participant inInternal Revenue Code of 1986 (the “Code”): our Profit Sharing and Retirement Plan, which we refer to as our “PSRP.“PSRP,” The PSRP is a qualified defined contribution plan covering substantially all salaried employees of the Company and our subsidiaries, including our Named Executive Officers; and our Hourly Profit Sharing Plan, which we refer to as our “Hourly Plan,” covering substantially all hourly employees of the Company and our subsidiaries. Participants
Effective January 1, 2019, our PSRP was merged into our Hourly Plan and in thisconnection with the plan merger our Hourly Plan was renamed our Retirement Plan. As a result, after December 31,
2018, our Named Executive Officers, along with substantially all salaried and hourly employees of the Company and our subsidiaries are covered under our Retirement Plan (formerly our Hourly Plan). As a result, in fiscal 2019 our Named Executive Officers were covered under our PSRP prior to January 1, 2019 and our Retirement Plan after December 31, 2018. For purposes of the description below, unless expressly provided otherwise, references to our “Retirement Plan” include our PSPR.
Salaried participants, including our Named Executive Officers, covered under our Retirement Plan may elect to makepre-tax contributions and/or, after December 31, 2018,after-tax Roth 401(k) contributions of up to 70% of their base salary subject to the limit under Internal Revenue Code Section 402(g) (currently $18,000)($18,500 for calendar year 2018 and $19,000 for calendar year 2019), employeeafter-tax contributions of up to 10% of base salary and, if the participant is at least age 50,“catch-up contributions” up to the statutory limit under Internal Revenue Code Section 414(v) (currently $6,000). In addition, the PSRPour Retirement Plan provides for a discretionary employer profit sharing contribution for our salaried employees, including our Named Executive Officers, that is a percentage of base salary for the year.
Participants are fully vested to the extent of theirpre-tax,after-tax Roth 401(k), andafter-tax contributions andcontributions. Prior to January 1, 2019, our salaried participants become vested in the employer profit sharing contribution over asix-year period (i.e., 20% per year beginning with the second year of service); after December 31, 2018, our salaried participants become vested in the employer profit sharing contribution over a four-year-period (i.e., 25% per year beginning with the first year of service). All of the Named Executive Officers (other than Mr. Haack, who joined the Company in December 2014) have been employed by the Company or our affiliates long enough to be fully vested. Participants are entitled to direct the investment of contributions made to the PSRPRetirement Plan on their behalf in various investment funds, including up to 15% in an Eagle Common Stock fund. Such amounts are payable upon a participant’s termination of employment, disability or death in the form of a lump sum, installments or direct rollover to an eligible retirement plan, as elected by the participant. At the participant’s election, amounts invested in the Common Stock fund are distributable in shares of our Common Stock.
Employer profit sharing contributions made to the PSRPRetirement Plan on behalf of our Named Executive Officers in fiscal 20182019 are reflected under the “All Other Compensation” column in the Summary Compensation Table located on page 3837 of this proxy statement. A list of the investment funds provided under the PSRPRetirement Plan is provided in the footnotes to the Nonqualified Deferred Compensation Table located on page 4645 of this proxy statement.
SERP
In fiscal 1995, the Board approved our Supplemental Executive Retirement Program, which we will refer to as our “SERP,” for certain employees participating in the PSRP.Retirement Plan. Internal Revenue Code Section 401(a)(17) limits the amount of annual compensation (currently $270,000) that may be considered in determining our contribution to the PSRPRetirement Plan for the account of an eligible participant.
The SERP was established to eliminate the adverse treatment that higher-salaried employees receive as a result of such limit by making a contribution for each participant in an amount substantially equal to the additional employer profit sharing contribution that he or she would have received under the PSRPRetirement Plan had 100% of his or her base salary been eligible for a profit sharing contribution. As in the case of the PSRP,Retirement Plan, annual incentive bonuses paid to participants are not included when determining the amount of contributions to the SERP. The Compensation Committee believes that the SERP therefore allows us to confer the full intended benefit of the employer profit sharing contribution under the PSRPRetirement Plan without the arbitrary limitation of the Internal Revenue Code rules noted above.
Contributions accrued under the SERP for the benefit of the higher-salaried employees vest under the same terms and conditions as under the PSRP (i.e., over asix-year period)Retirement Plan and may be invested by the participant in several of the same investment options as offered under the PSRP.Retirement Plan. Benefits under the SERP are payable upon the participant’s termination of employment in a lump sum or installments as elected by the participant in accordance with the terms of the SERP, subject to the six month delay in payment for key employees under Internal Revenue Code Section 409A to the
extent applicable.SERP. As with the PSRP,Retirement Plan, all of the Named Executive Officers (other than Mr. Haack, who joined the Company in December 2014) have been employed by the Company or our affiliates long enough to be fully vested.
Employer contributions tounder the SERP ofto our Named Executive Officers in fiscal 20172019 are reflected under the “All Other Compensation” column in the Summary Compensation Table located on page 3837 of this proxy statement. A list of the investment funds provided under the PSRPRetirement Plan is provided in the footnotes to the Nonqualified Deferred Compensation Table located on page 4645 of this proxy statement.
Salary Continuation Plan
The Named Executive Officers, along with other officers and key employees, are participants in our Salary Continuation Plan, which we refer to as the “SCP.” Under this plan, in the event of the death of a participating employee, we will pay such employee’s beneficiaries one full year of base salary in the first year following death and 50% of base salary each year thereafter until the date such employee would have reached normal Social Security retirement age, subject to a maximum amount of $1.5 million. Payments are made to the employee’s beneficiary on a semi-monthly basis.
The purpose of the plan is to provide some financial security for the families of the participating employees, which assists the Company in attracting and retaining key employees. Benefit amounts under the plan are intended to provide a basic level of support for beneficiaries. To cover these potential obligations, we pay the premiums on life insurance policies covering the life of each participating employee. Such policies are owned by the Company and proceeds from such policies would be initially paid to the Company.
Premiums paid on policies covering our Named Executive Officers in fiscal 20182019 are reflected under the “All Other Compensation” column in the Summary Compensation Table located on page 3837 of this proxy statement. Amounts potentially payable to the beneficiaries of our Named Executive Officers pursuant to the SCP are described in “Potential Payments Upon Termination or Change in Control” beginning on page 4746 of this proxy statement.
During fiscal 2019, in order to better ensure the retention of our employees in the event of a
potentially disruptive corporate transaction, we provided our employees, including our Named Executive Officers, with certainchange-in-control protections. We believe that such protections, which are consistent with the practices of our peer companies, are in the best interest of our stockholders because they enable our executive leadership team to fully focus on the benefits of a corporate transaction for stockholders, rather than the potential adverse consequences of the transaction on their careers.
Awards granted in fiscal 2019 under our Incentive Plan are generally subject to accelerated vesting upon the occurrence of a “change in control” as defined in the applicable award agreement.agreement if they are not assumed or replaced with equivalent awards in connection with such change in control. Under the award agreements or incentive program documents, a “change in control” is defined as (i) the acquisition by any person or entity of 50% or more of the outstanding shares of any single class of our Common Stock or 40% or more of outstanding shares of all classes of our Common Stock; (ii) a change in the composition of our Board such that the current members of the Board cease to constitute a majority of the Board; or (iii) the consummation of a merger, dissolution, asset disposition, consolidation or share exchange, unless (1) more than 50% of the stock following such transaction is owned by persons or entities who were stockholders of the Company prior to such transaction, (2) following such transaction, no person or entity owns 40% or more of the common stock of the corporation resulting from such transaction, and (3) at least a majority of the members of the resulting corporation’s board of directors were members of our Board.
If a change in control occurs, any unvested outstanding stock options, restricted stock, restricted stock units or cash awards would generally become immediately fully vested, and, in the case of
stock options, exercisable or, in the case of restricted stock RSUs or cash awards,RSUs, payable, unless the transaction resulting in the change in control provides that the award is to be replaced with an award of equivalent shares of the surviving parent corporation. See “Potential Payments Upon Termination or Change in Control” beginning on page 4746 of this proxy statement.
We believe the provision of these change in control benefits is generally consistent with market practice among our peers, is a valuable executive talent retention incentive and is consistent with the objectives of our overall executive compensation program. For example,
No Discriminatory Perquisites, Post-retirement Welfare Or TaxGross-Ups
The Company does not provide perquisites or post-retirement welfare benefits to the equity vesting providesNamed Executive Officers. During employment, the Named Executive Officers participate in the broad-based employee health insurance plans available to employees with the same opportunities as stockholders, who are generally free to sell their equity at the time of the change in control event and thereby realizeCompany generally. Further, the value created at the timeCompany does not provide forgross-ups of excise taxes under Section 4999 of the transaction.Code to any of the Named Executive Officers.
Other Compensation Policies and Practices
Stock Ownership Guidelines
In order to align the interests of the Named Executive Officers with our stockholders, and to promote a long-term focus for the officers, the Board of Directors has adopted executive stock ownership guidelines for the officers of the Company and our subsidiaries. The guidelines for the Named Executive Officers are expressed as a multiple of base salary as set forth below (with actual ownership reflected as of the record date for the annual meeting):
Name | Multiple of Salary Ownership Guidelines | Number of Shares of Common Stock (1) | Actual Ownership (2) | Multiple of Salary Ownership Guidelines | Number of Shares of Common Stock (1) | Actual Ownership (2) | ||||||||||||||||
David B. Powers | 5X | 56,500 | 122,225 | 5X | 56,500 | 127,716 | ||||||||||||||||
D. Craig Kesler | 3X | 26,900 | 61,349 | 3X | 26,900 | 64,444 | ||||||||||||||||
Michael Haack | 3X | 18,800 | 25,120 | 3X | 18,800 | 32,914 | ||||||||||||||||
Robert S. Stewart | 3X | 37,600 | 39,901 | 3X | 37,600 | 41,561 | ||||||||||||||||
James H. Graass | 3X | 22,200 | 56,842 | |||||||||||||||||||
Keith W. Metcalf | 3X | 15,700 | 51,096 | |||||||||||||||||||
| (1) | Our stock ownership guidelines for executives are expressed as a number of shares of our Common Stock. The number of shares is determined by multiplying the executive’s annual base salary on the date the executive becomes subject to the stock ownership guidelines by the applicable multiple and then dividing the product by the closing price of our Common Stock on the NYSE on the date the executive becomes subject to the policy. The amount is then rounded to the nearest 100 shares. |
| (2) | Types of ownership counted toward the guidelines include the following: |
Stock holdings in our PSRP;Retirement Plan;
Direct holdings;
Indirect holdings, such as shares owned by a family member residing in the same household; and
Shares represented by restricted stock.
Once established, a participant’s ownership requirement generally does not change as a result of changes in his or her compensation or fluctuations in the price of our Common Stock but could change in the event of a promotion. Newly elected officers have five years to meet the applicable ownership requirement. Compliance with the ownership guidelines is reviewed annually by the Compensation Committee. Based on the current holdings of the Named Executive Officers, all of the Named Executive Officers have already achieved their stock ownership goal.
Under our insider trading policy, employees and executives are prohibited from speculating in our securities or engaging in transactions designed to hedge their ownership interests.
Consideration of the Tax Deductibility of Compensation
Section 162(m) of the Internal Revenue Code generally disallows a tax deduction for public corporations for compensation over $1,000,000 paid in any fiscal year to the corporation’s chief executive officer and certain other executive officers. However, historically, Section 162(m) exempted performance-based compensation from the deduction limit if certain requirements were met.
The legislation commonly referred to as the Tax Cuts and Jobs Act of 2017, or the 2017 Tax Act, made significant changes to Section 162(m) of the Code. The 2017 Tax Act expanded the executives potentially affected by the deduction limitation and repealed the “performance-based compensation” exemption to Section 162(m), subject to a transition rule for performance-based compensation paid after 2017 under certain existing compensation arrangements covered by binding contractual arrangements in effect on November 2, 2017 that are not materially modified. Beginning with the 2018 calendar year, the $1 million annual deduction limitation under Section 162(m) applies to compensation paid to any
individual who serves as the chief executive officer, chief financial officer or qualifies as one of the other three most highly compensated executive officers in 2017 or any later calendar year.
The Company is currently evaluatingcontinuing to evaluate the impact of the 2017 Tax Act on its compensation programs. The Company’s general intention is to maximize the tax deductibility of its compensation programs.
However, the Compensation Committee believes that the use ofintends to exercise its business judgment in determiningto develop compensation levels is inprograms that best serve the best interests of the Company and its stockholders. Accordingly, the Compensation Committee retains the discretion to approve amounts ofstockholders, which may include paying compensation that mayis not be fully deductible due to Section 162(m). The Compensation Committee uses its business judgment in establishing compensation policies to attract and retain qualified executives to manage the Company and to reward such executives for outstanding performance, while taking into consideration the financial impact of such actions on the Company, including the deductibility of compensation paid to our executives. Moreover, the Compensation Committee believes that the lost deduction on compensation payable in excess of the $1 million limitation for our Named Executive Officers is not material relative to the benefit of being able to attract and retain talented management.
Special Considerations Regarding ISS Pay for Performance TestingCompensation Risk
Institutional Shareholder Services (“ISS”)Although a significant portion of potential compensation to our executive officers is a corporate governance advisory firmperformance-based, we do not believe that annually issues voting recommendationsour compensation policies, principles, objectives and practices are structured to institutional investors regardingsay-on-pay votes conductedpromote inappropriate risk taking by publicly traded companies, including us. ISS’s“pay-for-performance” analysis contains a “relative degree of alignment” test over a three-year period. The analysis compares the relative alignment of our total stockholder return, as determined by ISS, and the percentile rank of our CEO compensation against that of a peer group of companies selected by ISS.
ISS’s analysis this year (which will be published after we have distributed this proxy statement) will likely include the pay of our former CEO for one of the three years of the performance period. We pay our current CEO less than we paid our former CEO. Further skewing ISS’s analysis is the fact that the SEC’s disclosure requirements necessitated the artificial inflation of our former CEO’s pay in his last year with the Company. As we explained in detail in footnotes 8 and 9 of the Summary Compensation Table in our 2016 proxy statement, we were required to include both the grant date fair value
and the revalued retirement-related value of the same awards in that year’s CEO compensation total, which we regard as double-counting.executives. We believe that any analysis which includes our former CEO’s pay from that year should exclude the effect of this double-counting.
We believe ISS should render a finding of “low concern” on its relative degree of alignment test this year. If, however, ISS finds either “medium concern” or “high concern,” we believe the mitigating factors noted above and the other positive aspectsfocus of our overall compensation program describedencourages management to take a balanced approach that focuses on increasing and sustaining our profitability. See “Board Leadership Structure and Role in this CD&A should be recognized by ISS when performing the qualitative portion of its analysis.Risk Oversight — Risk Assessment in Compensation Programs” above.
The following table summarizes all fiscal 2016, 2017, 2018 and 20182019 compensation earned by or paid to our Named Executive Officers, who consist of our Chief Executive Officer, our Chief Financial Officer and the three most highly compensated executive officers (other than the Chief Executive Officer and Chief Financial Officer) who were serving as executive officers at fiscalyear-end.
Name and Principal Position | Fiscal Year Ended March 31, | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Option Awards(4) ($) | Non-Equity Incentive Plan Compensa-tion(5) ($) | All Other Compen- sation(6) ($) | Total ($) | ||||||||||||||||||||||||
David B. Powers (7) | 2018 | $ | 850,000 | — | $ | 3,250,000 | — | $ | 1,117,647 | $ | 101,190 | $ | 5,318,837 | |||||||||||||||||||
President and Chief Executive Officer | | 2017 2016 |
| | 800,000 397,580 |
| $
| 100,000 250,000 |
| | 2,500,000 425,000 |
| $ | — 425,000 |
| | 1,044,312 720,123 |
| | 70,786 52,792 |
| | 4,515,098 2,270,495 |
| ||||||||
D. Craig Kesler | 2018 | 434,000 | — | 400,000 | 400,000 | 758,659 | 57,503 | 2,050,162 | ||||||||||||||||||||||||
Executive Vice President – Finance and Administration & CFO | | 2017 2016 |
| | 420,000 400,000 |
| | 100,000 50,000 |
| | 350,000 375,000 |
| | 350,000 375,000 |
| | 701,536 509,403 |
| | 47,464 44,275 |
| | 1,969,000 1,753,678 |
| ||||||||
Michael Haack | 2018 | 546,000 | — | 475,000 | 475,000 | 799,871 | 70,475 | 2,366,346 | ||||||||||||||||||||||||
Executive Vice President and Chief Operating Officer | | 2017 2016 |
| | 530,500 515,000 |
| | — 515,000 |
| | 450,000 500,000 |
| | 450,000 500,000 |
| | 732,172 — |
| | 57,937 237,195 |
| | 2,220,609 2,267,195 |
| ||||||||
Robert S. Stewart(8) | 2018 | 434,000 | — | 800,000 | — | 758,659 | 53,292 | 2,045,951 | ||||||||||||||||||||||||
Executive Vice President – Strategy, Corporate Development and Communications | 2017 | 420,500 | 100,000 | 700,000 | — | 701,536 | 43,717 | 1,965,953 | ||||||||||||||||||||||||
James H. Graass(8) | 2018 | 412,000 | — | 800,000 | — | 758,659 | 52,776 | 2,023,435 | ||||||||||||||||||||||||
Executive Vice President, General Counsel and Secretary | 2017 | 399,000 | 100,000 | 350,000 | 350,000 | 694,520 | 42,984 | 1,936,504 | ||||||||||||||||||||||||
Name and Principal Position | Fiscal Year Ended March 31, | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Option Awards(4) ($) | Non-Equity Incentive Plan Compensa-tion(5) ($) | All Other Compen- sation(6) ($) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
David B. Powers | 2019 | $ 920,000 | – | $ 3,500,000 | – | $1,026,104 | $ 90,910 | $ 5,537,014 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chief Executive | 2018 | 850,000 | – | 3,250,000 | – | 1,117,647 | 101,190 | 5,318,837 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Officer | 2017 | 800,000 | $100,000 | 2,500,000 | – | 1,044,312 | 70,786 | 4,515,098 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. Craig Kesler | 2019 | 460,000 | 50,000 | 450,000 | $ 450,000 | 675,518 | 51,284 | 2,136,802 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice | 2018 | 434,000 | – | 400,000 | 400,000 | 758,659 | 57,503 | 2,050,162 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
President – Finance and Administration& CFO | 2017 | 420,000 | 100,000 | 350,000 | 350,000 | 701,536 | 47,464 | 1,969,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Haack | 2019 | 575,000 | 100,000 | 550,000 | 550,000 | 726,823 | 62,214 | 2,564,037 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
President and Chief | 2018 | 546,000 | – | 475,000 | 475,000 | 799,871 | 70,475 | 2,366,346 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Officer | 2017 | 530,500 | – | 450,000 | 450,000 | 732,172 | 57,937 | 2,220,609 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert S. Stewart | 2019 | 455,000 | – | 900,000 | – | 675,518 | 46,162 | 2,076,680 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Executive Vice | 2018 | 434,000 | – | 800,000 | – | 758,659 | 53,292 | 2,045,951 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
President – Strategy, Corporate Development and Communications | 2017 | 420,500 | 100,000 | 700,000 | – | 701,536 | 43,717 | 1,965,953 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Keith W. Metcalf(7) | 2019 | 393,000 | – | 750,000 | – | 796,251 | 42,049 | 1,981,300 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
President, American Gypsum Company LLC | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Includes amounts deferred on apre-tax orafter-tax basis at the election of the executive under our |
| (2) | The amounts in this column represent payments to the Named Executive Officer under the Company’s Special Situation Program for the applicable fiscal |
| (3) | The amounts in this column reflect the value of restricted stock awards made to the Named Executive Officer in each of the fiscal years presented and are consistent with the grant date fair value of the award computed in accordance with FASB ASC Topic 718. For assumptions used in determining these values, refer to (a) footnote (I) to the Company’s audited financial statements for the fiscal year ended March 31, 2019 included in the Fiscal 2019 Form10-K; (b) footnote (J) to the Company’s audited financial statements for the fiscal year ended March 31, 2018 included in the Company’s Annual Report on Form10-K, filed with the SEC on May 23, 2018, or “Fiscal 2018 Form10-K”; and |
| (4) | The amounts in this column reflect the value of option awards made to the Named Executive Officer in each of the fiscal years presented and are consistent with the grant date fair value of the award computed in accordance with FASB ASC Topic 718. For assumptions used in determining these values, refer to (a) footnote (I) to the Company’s audited financial statements for the fiscal year ended March 31, 2019 included in the Fiscal 2019 Form10-K; (b) footnote (J) to the Company’s audited financial statements for the fiscal year ended March 31, 2018 included in the Fiscal 2018 Form10-K; |
The amounts in this column assume achievement of less than the highest level of performance conditions, and the following reflects the amounts for this award assuming the highest level of performance conditions (i.e., the maximum amounts payable): Fiscal 2019: Mr. Kesler - $495,000; and Mr. Haack - $605,000. Fiscal 2018: Mr. Kesler - $440,000; and Mr. Haack - $522,500. Fiscal 2017: Mr. Kesler - $385,000; and Mr. Haack - |
| (5) | The amounts in this column represent payments to the Named Executive Officer under the applicable annual incentive compensation program for the applicable fiscal year. |
| (6) | The amounts shown in this column represent: (1) Company profit sharing contributions to the account of the Named Executive Officer under our |
Name | Fiscal Year Ended March 31, | Profit Sharing Plan Contri- bution ($) | SERP Contri- bution ($) | Insurance Premiums under Salary Continuation Plan ($) | Well- ness Award ($) | Relo- cation ($) | Total of All Other Compen- sation ($) | |||||||||||||||||||||
David B. Powers | 2018 | $ | 32,400 | $ | 68,100 | — | $ | 690 | — | $ | 101,190 | |||||||||||||||||
| | 2017 2016 |
| | 26,500 26,500 |
| | 43,440 25,293 |
| $
| 156 999 |
| | 690 — |
| | — — |
| | 70,786 52,792 |
| ||||||||
D. Craig Kesler | 2018 | 32,400 | 19,260 | 5,274 | 569 | — | 57,503 | |||||||||||||||||||||
| | 2017 2016 |
| | 26,500 26,500 |
| | 15,000 12,575 |
| | 5,274 5,200 |
| | 690 — |
| | — — |
| | 47,464 44,275 |
| ||||||||
Michael Haack | 2018 | 32,400 | 32,663 | 5,274 | 138 | — | 70,475 | |||||||||||||||||||||
| | 2017 2016 |
| | 26,500 26,500 |
| | 26,163 24,625 |
| | 5,274 5,274 |
| | — — |
| $ | — 180,796 |
| | 57,937 237,195 |
| ||||||||
Name | Fiscal Year Ended March 31, | Profit Sharing Plan Contri- bution ($) | SERP Contri- bution ($) | Insurance Premiums under Salary Continuation Plan ($) | Well- ness Award ($) | Total of All Other Compen- sation ($) | ||||||||||||||||||||||||||||||||||||||||||||
David B. Powers | 2019 | $ | 27,500 | $ | 62,750 | – | $ | 660 | $ | 90,910 | ||||||||||||||||||||||||||||||||||||||||
|
2018 |
| 32,400 | 68,100 | – | 690 | 101,190 | |||||||||||||||||||||||||||||||||||||||||||
|
2017 |
| 26,500 | 43,440 | $ 156 | 690 | 70,786 | |||||||||||||||||||||||||||||||||||||||||||
D. Craig Kesler | 2019 | 27,500 | 17,850 | 5,274 | 660 | 51,284 | ||||||||||||||||||||||||||||||||||||||||||||
|
2018 |
| 32,400 | 19,260 | 5,274 | 569 | 57,503 | |||||||||||||||||||||||||||||||||||||||||||
|
2017 |
| 26,500 | 15,000 | 5,274 | 690 | 47,464 | |||||||||||||||||||||||||||||||||||||||||||
Michael Haack | 2019 | 27,500 | 29,275 | 5,274 | 165 | 62,214 | ||||||||||||||||||||||||||||||||||||||||||||
|
2018 |
| 32,400 | 32,663 | 5,274 | 138 | 70,475 | |||||||||||||||||||||||||||||||||||||||||||
|
2017 |
| 26,500 | 26,163 | 5,274 | – | 57,937 | |||||||||||||||||||||||||||||||||||||||||||
Name Robert S. Stewart James H. Graass Fiscal
Year
Ended
March 31, Profit
Sharing
Plan
Contri-
bution
($) SERP
Contri-
bution
($) Insurance
Premiums
under Salary
Continuation
Plan
($) Well-
ness
Award
($) Relo-
cation
($) Total of
All
Other
Compen-
sation
($) 2018 32,400 19,275 1,617 — — 53,292 2017 26,500 15,235 1,982 — — 43,717 2018 32,400 16,650 3,157 569 — 52,776 2017 26,500 13,107 3,377 — — 42,984
Name | Fiscal Year Ended March 31, | Profit Sharing Plan Contri- bution ($) | SERP Contri- bution ($) | Insurance Premiums under Salary Continuation Plan ($) | Well- ness Award ($) | Total of All Other Compen- sation ($) | ||||||||||||||||
Robert S. Stewart | 2019 | 27,500 | 17,475 | 1,187 | – | 46,162 | ||||||||||||||||
| 2018 | 32,400 | 19,275 | 1,617 | – | 53,292 | |||||||||||||||||
| 2017 | 26,500 | 15,235 | 1,982 | – | 43,717 | |||||||||||||||||
Keith W. Metcalf | 2019 | 27,500 | 11,500 | 3,049 | 569 | 42,049 | ||||||||||||||||
| (7) | Mr. |
The following table sets forth the grants of plan-based awards made during fiscal 20182019 to the Named Executive Officers.
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards(1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards(1) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Thresh- old ($) | Target ($) | Maxi-mum ($) | Thresh-old (#) | Target (#) | Maximum (#) | Grant Date | Thresh- old ($) | Target ($) | Maxi- mum ($) | Thresh- old (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
David B. Powers | | 5/15/17 5/18/17 |
| | — — |
| $
| 1,158,184 — | (2)
| | — — |
| | — — |
| | — — |
| | — 16,109 | (3) | | — — |
| $ | — 1,625,000 |
| 5/17/18 | – | $ | 1,103,337 | (2) | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||
| 5/18/17 | — | — | — | — | 16,109 | (4) | 19,330 | (4) | — | 1,625,000 | 5/17/18 | – | – | – | – | – | 16,473 | (3) | – | $ | 1,750,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/17/18 | – | – | – | – | 16,473 | (4) | 19,767 | (4) | – | 1,750,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
D. Craig Kesler | | 5/15/17 5/18/17 |
| | — — |
| | 762,471 — | (2)
| | — — |
| | — — |
| | — — |
| | — 1,983 | (3) | | — — |
| | — 200,000 |
| 5/17/18 | – | 726,364 | (2) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||
| 5/17/18 | – | – | – | – | – | 2,118 | (3) | – | 225,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/17/18 | – | – | – | – | 2,118 | (4) | 2,542 | (4) | – | 225,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/18/17 | — | — | — | — | 1,983 | (4) | 2,380 | (4) | — | 200,000 | 5/17/18 | – | – | – | – | – | 6,614 | (5) | $ | 106.24 | 225,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/18/17 | — | — | — | — | — | 5,954 | (5) | $ | 100.88 | 200,000 | 5/17/18 | – | – | – | – | 6,614 | (6) | 7,937 | (6) | 106.24 | 225,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/18/17 | — | — | — | — | 5,954 | (6) | 7,145 | (6) | 100.88 | 200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Michael Haack | | 5/15/17 5/18/17 |
| | — — |
| | 820,380 — | (2)
| | — — |
| | — — |
| | — — |
| | — 2,355 | (3) | | — — |
| | — 237,500 |
| 5/17/18 | – | 781,531 | (2) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||
| 5/18/17 | — | — | — | — | 2,355 | (4) | 2,826 | (4) | — | 237,500 | 5/17/18 | – | – | – | – | – | 2,589 | (3) | – | 275,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/18/17 | — | — | — | — | — | 7,070 | (5) | 100.88 | 237,500 | 5/17/18 | – | – | – | – | 2,589 | (4) | 3,107 | (4) | – | 275,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/18/17 | — | — | — | — | 7,070 | (6) | 8,484 | (6) | 100.88 | 237,500 | 5/17/18 | – | – | – | – | – | 8,084 | (5) | 106.24 | 275,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/17/18 | – | – | – | – | 8,084 | (6) | 9,701 | (6) | 106.24 | 275,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Robert S. Stewart | | 5/15/17 5/18/17 |
| | — — |
| | 762,471 — | (2)
| | — — |
| | — — |
| | — — |
| | — 3,966 | (3) | | — — |
| | — 400,000 |
| 5/17/18 | – | 726,364 | (2) | – | – | – | – | – | – | |||||||||||||||||||||||||||||||||||||||||||||
| 5/18/17 | — | — | — | — | 3,966 | (4) | 4,759 | (4) | — | 400,000 | 5/17/18 | – | – | – | – | – | 4,236 | (3) | – | 450,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James H. Graass | | 5/16/17 5/18/17 |
| | — — |
| | 762,471 — | (2)
| | — — |
| | — — |
| | — — |
| | — 3,966 | (3) | | — — |
| | — 400,000 |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/18/17 | — | — | — | — | 3,966 | (4) | 4,759 | (4) | — | 400,000 | 5/17/18 | – | – | – | – | 4,236 | (4) | 5,083 | (4) | – | 450,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Keith W. Metcalf | 5/17/18 | – | 847,076 | (2) | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/17/18 | – | – | – | – | – | 3,530 | (3) | – | 375,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/17/18 | – | – | – | – | 3,530 | (4) | 4,236 | (4) | – | 375,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | The amounts included in this column reflect the grant date fair value of the award computed in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in footnote |
| (2) | These amounts represent the maximum annual incentive payments potentially payable to the Named Executive Officers pursuant to the Eagle Annual Incentive Program or the Divisional Annual Incentive Bonus Programs, as applicable, for fiscal year |
There are no thresholds or maximums for these awards—they are merely a function of multiplying thepre-determined percentage by the operating earnings for the fiscal year; provided, however, our Incentive Plan does provide an absolute cap on cash that any employee may receive in any fiscal year under such programs ($5 million). The actualpay-outs to the Named Executive Officers were as follows: Mr. Powers – $1,026,104; Mr. Kesler – $675,518; Mr. Haack – $726,823; Mr. Stewart – $675,518; and Mr. Metcalf – $796,251. These incentive programs are described in greater detail under “Annual Incentive Bonus” beginning on page 26 of this proxy statement.
| (3) | These amounts represent grants of time-vesting restricted stock made on May |
| (4) | These amounts represent grants of performance-based restricted stock made on May |
| (5) | These amounts represent grants of time-vesting stock options to purchase shares of Common Stock made on May |
| (6) | These amounts represent grants of performance-based stock options to purchase shares of Common Stock made on May |
Outstanding Equity Awards at FiscalYear-End
The following table summarizes stock-based compensation awards outstanding at the end of fiscal 20182019 for each of the Named Executive Officers.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | |||||||||||||||||||||||||||
David B. Powers | 7,681 | — | — | $ | 67.210 | 08/12/2023 | 1,373 | (2) | $ | 141,488 | 19,330 | (3) | $ | 1,991,957 | ||||||||||||||||||||||
| 6,246 | — | — | 87.370 | 06/03/2024 | 1,973 | (4) | 203,318 | |||||||||||||||||||||||||||||
| 11,443 | 5,721 | (5) | — | 81.560 | 06/10/2025 | 12,386 | (6) | 1,276,378 | ||||||||||||||||||||||||||||
| 9,767 | (7) | 1,006,490 | ||||||||||||||||||||||||||||||||||
| 12,081 | (8) | 1,244,948 | ||||||||||||||||||||||||||||||||||
D. Craig Kesler | 21,603 | — | — | 67.210 | 08/12/2023 | 11,667 | (9) | 1,202,285 | 2,380 | (3) | 245,259 | |||||||||||||||||||||||||
| 11,711 | — | — | 87.370 | 06/03/2024 | 858 | (2) | 88,417 | |||||||||||||||||||||||||||||
| 10,097 | 5,048 | (5) | — | 81.560 | 06/10/2025 | 1,741 | (4) | 179,411 | ||||||||||||||||||||||||||||
| 1,795 | 5,384 | (10) | — | 75.690 | 05/20/2026 | 1,734 | (6) | 178,689 | ||||||||||||||||||||||||||||
| 4,246 | 4,246 | (11) | — | 75.690 | 05/20/2026 | 1,367 | (7) | 140,870 | ||||||||||||||||||||||||||||
| 1,489 | 4,465 | (12) | — | 100.880 | 05/18/2027 | 1,487 | (8) | 153,236 | ||||||||||||||||||||||||||||
| — | — | 7,145 | (13) | 100.880 | 05/18/2027 | |||||||||||||||||||||||||||||||
Michael Haack | 20,000 | 20,000 | (14) | — | 79.900 | 12/01/2024 | 4,000 | (15) | 412,200 | 2,826 | (3) | 291,220 | ||||||||||||||||||||||||
| 6,731 | 6,731 | (5) | — | 81.560 | 06/10/2025 | 2,322 | (4) | 239,283 | ||||||||||||||||||||||||||||
| 2,308 | 6,922 | (10) | — | 75.690 | 05/20/2026 | 2,229 | (6) | 229,699 | ||||||||||||||||||||||||||||
| 5,460 | 5,458 | (11) | — | 75.690 | 05/20/2026 | 1,758 | (7) | 181,162 | ||||||||||||||||||||||||||||
| 1,768 | 5,302 | (12) | — | 100.880 | 05/18/2027 | 1,766 | (8) | 181,987 | ||||||||||||||||||||||||||||
| — | — | 8,484 | (13) | 100.880 | 05/18/2027 | |||||||||||||||||||||||||||||||
Robert S. Stewart | — | 4,711 | (5) | — | 81.560 | 06/10/2025 | 11,667 | (9) | 1,202,285 | 4,759 | (3) | 490,415 | ||||||||||||||||||||||||
| 1,201 | (2) | 123,764 | ||||||||||||||||||||||||||||||||||
| 1,625 | (4) | 167,457 | ||||||||||||||||||||||||||||||||||
| 3,468 | (6) | 357,378 | ||||||||||||||||||||||||||||||||||
| 2,734 | (7) | 281,739 | ||||||||||||||||||||||||||||||||||
| 2,974 | (8) | 306,471 | ||||||||||||||||||||||||||||||||||
James H. Graass | 27,184 | — | — | 33.690 | 06/19/2022 | 858 | (2) | 88,417 | 4,759 | (3) | 490,415 | |||||||||||||||||||||||||
| 14,402 | — | — | 67.210 | 08/12/2023 | 1,741 | (4) | 179,411 | |||||||||||||||||||||||||||||
| 11,711 | — | — | 87.370 | 06/03/2024 | 1,734 | (6) | 178,689 | |||||||||||||||||||||||||||||
| 10,097 | 5,048 | (5) | — | 81.560 | 06/10/2025 | 1,367 | (7) | 140,870 | ||||||||||||||||||||||||||||
| 1,795 | 5,384 | (10) | — | 75.690 | 05/20/2026 | 2,974 | (8) | 306,471 | ||||||||||||||||||||||||||||
| 4,246 | 4,246 | (11) | — | 75.690 | 05/20/2026 | |||||||||||||||||||||||||||||||
Option Awards Stock Awards Number of Securities (#) Number of (#) Equity (#) Option ($) Number Have Not (#) Market ($)(1) Equity (#) Equity ($)(1) David B. Powers D. Craig Kesler Michael Haack Robert S. Stewart Keith W. Metcalf Name
Underlying
Unexercised
Options
Exercisable
Securities
Underlying
Unexercised
Options
Unexercisable
Incentive Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
Exercise
Price Option
Expiration
Date
of Shares
or Units
of Stock
That
Vested
Value of
Shares or
Units of
Stock That
Have Not
Vested
Incentive
Plan Awards:
Number of
Unearned
Shares, Units
or Other
Rights That
Have Not
Vested
Incentive Plan
Awards:
Market or
Payout Value
of Unearned
Shares, Units
or Other
Rights That
Have Not
Vested 7,681 – – $ 67.21 08/12/2023 986 (2) $ 83,120 19,767 (3) $ 1,666,359 6,246 – – 87.37 06/03/2024 8,257 (4) 696,066 17,164 – – 81.56 06/10/2025 4,883 (5) 411,637 8,054 (6) 678,953 9,298 (7) 783,822 12,354 (8) 1,041,443 11,603 – – 67.21 08/12/2023 11,667 (9) 983,529 2,542 (3) 214,291 11,711 – – 87.37 06/03/2024 870 (2) 73,341 15,145 – – 81.56 06/10/2025 1,156 (4) 97,451 3,590 3,589 (10) – 75.69 05/20/2026 683 (5) 57,577 6,369 2,123 (11) – 75.69 05/20/2026 991 (6) 83,542 2,978 2,976 (12) – 100.88 05/18/2027 1,144 (7) 96,440 3,438 3,436 (13) – 100.88 05/18/2027 1,588 (8) 133,869 1,654 4,960 (14) – 106.24 05/17/2028 – – 7,937 (15) 106.24 05/17/2028 30,000 10,000 (16) – 79.90 12/01/2024 2,000 (17) 168,600 3,107 (3) 261,921 13,462 – – 81.56 06/10/2025 1,161 (2) 97,873 4,616 4,614 (10) – 75.69 05/20/2026 1,486 (4) 125,270 8,189 2,729 (11) – 75.69 05/20/2026 879 (5) 74,100 3,536 3,534 (12) – 100.88 05/18/2027 1,359 (6) 114,564 4,082 4,080 (13) – 100.88 05/18/2027 1,177 (7) 99,222 2,021 6,063 (14) – 106.24 05/17/2028 1,941 (8) 163,627 – – 9,701 (15) 106.24 05/17/2028 4,711 – – 81.56 06/10/2025 812 (2) 68,452 5,083 (3) 428,497 1,367 (4) 115,239 2,312 (5) 194,902 1,982 (6) 167,083 2,289 (7) 192,963 3,177 (8) 267,822 21,960 – – 33.69 06/19/2022 696 (2) 58,673 4,236 (3) 357,095 5,761 – – 67.21 08/12/2023 1,073 (4) 90,454 4,685 – – 87.37 06/03/2024 635 (5) 53,531 12,116 – – 81.56 06/10/2025 743 (6) 62,635 9,000 6,000 (18) – 60.43 01/01/2026 859 (7) 72,330 3,334 3,332 (10) – 75.69 05/20/2026 2,647 (8) 223,143 5,915 1,917 (11) – 75.69 05/20/2026 2,234 2,232 (12) – 100.88 05/18/2027 2,578 2,578 (13) – 100.88 05/18/2027
| (1) | Based on the closing price per share of Common Stock on the NYSE on March 29, |
| (2) | Represents restricted stock granted on June |
| (3) | Represents performance-based restricted stock granted on May |
| (4) |
Represents time-vesting restricted stock granted on May 20, 2016 under our Incentive Plan. Restrictions will lapse ratably on May 20 of |
Represents performance-based restricted stock granted on May 20, 2016 under our Incentive Plan. Restrictions will lapse ratably on the remaining shares on March 31, |
Represents time-vesting restricted stock granted on May 18, 2017 under our Incentive Plan. Restrictions will lapse ratably on March 31 of 2020 and 2021. |
| (7) | Represents performance-based restricted stock granted on May 18, 2017 under our Incentive Plan. Restrictions will lapse ratably on the remaining shares on March 31 of 2020 and 2021. |
| (8) | Represents time-vesting restricted stock granted on May 17, 2018 under our Incentive Plan. Restrictions on the firstone-fourth lapsed on March 31, |
| (9) | Represents restricted stock granted on May 18, 2010 under our Incentive Plan. Restrictions will lapse upon the Named Executive Officer meeting the |
| requirements of retirement, as defined in the award agreement. |
| (10) | Represents time-vesting stock options granted on May 20, 2016 under our Incentive Plan. The remaining stock options will vest ratably on May 20 of |
| (11) | Represents performance-based stock options granted on May 20, 2016 under our Incentive Plan. The remaining earned stock options will vest ratably on March 31, |
| (12) | Represents time-vesting stock options granted on May 18, 2017 under our Incentive Plan. The |
| (13) | Represents performance-based stock options granted on May 18, 2017 under our Incentive Plan. The remaining earned stock options will vest ratably on March 31 of 2020 and 2021. |
| (14) | Represents time-vesting stock options granted on May 17, 2018 under our Incentive Plan. The firstone-fourth vested on March 31, 2019, and the remaining stock options will vest ratably on March 31 of 2020, 2021 and 2022. |
| (15) | Represents performance-based stock options granted on May 17, 2018 under our Incentive Plan. The Compensation Committee determined in May |
Represents stock options granted to Mr. Haack under our Incentive Plan in connection with his joining the Company |
Represents restricted stock granted to Mr. Haack under our Incentive Plan in connection with his joining the Company |
| (18) | Represents stock options granted to Mr. Metcalf under our Incentive Plan in connection with a promotion. The remaining stock options will vest ratably on January 1 of |
Option Exercises and Stock Vested
The following table sets forth information regarding the exercise of stock options and the vesting of restricted stock during fiscal 20182019 for each of our Named Executive Officers.
| Option Awards
| Stock Awards
| |||||||||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||
Name | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting(2) ($) | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting(2) ($) | |||||||||||||||||||||||||
David B. Powers | David B. Powers | 22,317 | $ | 1,396,420 | 22,070 | $ | 2,237,546 | – | – | 28,817 | $ 2,627,373 | |||||||||||||||||||||||
D. Craig Kesler | D. Craig Kesler | — | — | 4,730 | 482,275 | 10,000 | $ 414,900 | 5,163 | 461,392 | |||||||||||||||||||||||||
Michael Haack | Michael Haack | 16,731 | 546,085 | 6,253 | 655,507 | – | – | 7,380 | 632,002 | |||||||||||||||||||||||||
Robert S. Stewart | Robert S. Stewart | 6,534 | 118,176 | 8,462 | 861,709 | – | – | 20,545 | 1,935,313 | |||||||||||||||||||||||||
James H. Graass | 18,198 | 1,339,997 | 5,784 | 590,889 | ||||||||||||||||||||||||||||||
Keith W. Metcalf | – | – | 5,013 | 444,813 | ||||||||||||||||||||||||||||||
| (1) | All of the amounts in this column represent shares of Common Stock received by the Named Executive Officer |
| in connection with the lapsing of restrictions on restricted stock previously granted to the Named Executive Officers. |
| (2) | The amount in this column represents the dollar amount realized by the Named Executive Officer valued at the time of the vesting of such shares. |
Nonqualified Deferred Compensation
In FY 20182019
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY(1) ($) | Aggregate Earnings in Last FY(2) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE(3) ($) | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY(1) ($) | Aggregate Earnings in Last FY(2) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE(3) ($) | ||||||||||||||||||||
David B. Powers | — | $ | 68,100 | $ | 25,633 | — | $ | 316,680 | – | $ 62,750 | $ 61,562 | – | $ 440,991 | |||||||||||||||||
D. Craig Kesler | — | 19,260 | 8,707 | — | 90,357 | – | 17,850 | 8,962 | – | 117,169 | ||||||||||||||||||||
Michael Haack | — | 32,663 | 5,704 | — | 91,841 | – | 29,275 | 4,164 | – | 125,280 | ||||||||||||||||||||
Robert S. Stewart | — | 19,275 | 4,728 | — | 118,385 | – | 17,475 | 4,959 | – | 140,818 | ||||||||||||||||||||
James H. Graass | — | 16,650 | 32,149 | — | 266,420 | |||||||||||||||||||||||||
Keith W. Metcalf | – | 11,500 | 1,093 | – | 35,461 | |||||||||||||||||||||||||
| (1) | The amounts in this column represent contributions made by the Company for the account of the Named Executive Officers during fiscal |
| (2) | The Company also maintains the Eagle Materials Inc. Deferred Compensation Plan. Under this |
| earnings are not “above market,” they are not included in the Summary Compensation Table on page |
| investment options available under our |
Fund | Rate of Return | |||
| ||||
| 0.76% | |||
Northern Trust S&P 500 Index | 9.48% | |||
MFS Mid Cap Value R6 | 3.60% | |||
MassMutualSelect Mid Cap Growth I | ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| 1.68% | |||
NYL Anchor Account | 2.60% | |||
METWEST Tot Rtn BD P | 4.80% | |||
Northern Trust Aggreg Bond Index | ||||
| ||||
| ||||
| (3) | The amounts in this column represent the sum of: (i) the balance in the Named Executive Officer’s account under the SERP; and (ii) the balance in the Named Executive Officer’s account under the Company’s Deferred Compensation Plan. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The following is a summary of the potential payments payable to the Named Executive Officers upon termination of employment or a change in control of the Company under current compensation programs. Specifically, compensation payable to each Named Executive Officer upon voluntary termination, involuntary termination or in the event of death or disability and change in control is discussed below. The amounts shown in the tables below assume that such termination was effective as of March 31, 2018,2019, and are therefore estimates of the amounts which would be paid out to the executives (or their beneficiaries) upon their termination. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event, the price of our Common Stock and the executive’s age.
Payments Made UponMadeUpon Any Termination
Deferred Compensation. The amounts shown in the table below do not include distribution of plan balances under our Deferred Compensation Plan or SERP. These balances are shown in the Nonqualified Deferred Compensation in FY 20182019 Table on page 4645 of this proxy statement.
Death and Disability. A termination of employment due to death or disability does not entitle the Named Executive Officer to any payments that are not available to salaried employees generally, except for
benefits payable to the beneficiaries of the Named Executive Officers in the event of termination due to death under our Salary Continuation Plan. A description of our Salary Continuation Plan is set forth under “Salary Continuation Plan” on page 34 of this proxy statement.
Accrued Pay and Profit Sharing Plan Benefits. The amounts shown in the table below do not include payments and benefits to the extent they are provided on anon-discriminatory basis to salaried employees generally upon termination of employment or relate to equity grants that have already vested. These include:
| ● | accrued salary pay through the date of termination; |
| ● | non-equity incentive compensation earned and payable prior to the date of termination; |
| ● | option grants received under the Incentive Plan which have already vested and are exercisable prior to the date of termination (subject to the terms of the applicable Nonqualified Stock Option Agreement); |
| ● | restricted stock grants or restricted stock unit grants received under the Incentive Plan which have already vested prior to the date of termination (subject to the terms of the applicable Restricted Stock or Restricted Stock Unit Agreement); and |
| ● | unused accrued vacation pay. |
Type of Payment | Involuntary Termination or Voluntary Termination (non Change in Control) ($) | Death or Disability ($) | Change in Control(1) ($) | Involuntary ($) | Death or Disability ($) | Change in Control (1) ($)
| ||||||||||||||||||||||||
David B. Powers | ||||||||||||||||||||||||||||||
Long-Term Incentives | ||||||||||||||||||||||||||||||
Stock Options | ||||||||||||||||||||||||||||||
Unexercisable and Accelerated Awards | — | — | $ | 122,945 | (2) | – | – | – | ||||||||||||||||||||||
Restricted Stock Award | ||||||||||||||||||||||||||||||
Unvested and Accelerated Awards | — | $ | 5,864,579 | (3) | 5,864,579 | (3) | – | $ | 5,361,400(3) |
|
| 5,361,400(3) |
| |||||||||||||||||
|
|
|
| |||||||||||||||||||||||||||
POWERS TOTAL | — | 5,864,579 | 5,987,524 | – | 5,361,400 | 5,361,400 | ||||||||||||||||||||||||
Type of Payment D. Craig Kesler Long-Term Incentives Stock Options Unexercisable and Accelerated Awards Restricted Stock Award Unvested and Accelerated Awards Benefits Salary Continuation Plan Payments KESLER TOTAL Michael Haack Long-Term Incentives Stock Options Unexercisable and Accelerated Awards Restricted Stock Award Unvested and Accelerated Awards Benefits Salary Continuation Plan Payments HAACK TOTAL Robert S. Stewart Long-Term Incentives Stock Options Unexercisable and Accelerated Awards Restricted Stock Award Unvested and Accelerated Awards Benefits Salary Continuation Plan Payments STEWART TOTAL James H. Graass Long-Term Incentives Stock Options Unexercisable and Accelerated Awards Restricted Stock Award Unvested and Accelerated Awards Benefits Salary Continuation Plan Payments GRAASS TOTAL AGGREGATE TOTAL FOR NAMED EXECUTIVE OFFICERS Involuntary
Termination or
Voluntary
Termination (non
Change in Control)
($) Death or
Disability
($) Change in Control(1)
($) — — $ 397,155 (2) — $ 2,188,167 (3) 2,188,167 (3) — 1,500,000 (4) — — 3,688,167 2,585,322 — — 971,562 (2) — 1,535,551 (3) 1,535,551 (3) — 1,500,000 (4) — — 3,035,551 2,507,113 — — 101,240 (2) — 2,929,509 (3) 2,929,509 (3) — 651,000 (4) — — 3,580,509 3,030,749 — — 371,960 (2) — 1,384,273 (3) 1,384,273 (3) — 1,500,000 (4) — — 2,884,273 1,756,233 — $ 19,053,079 $ 15,866,941
Type of Payment | Involuntary Termination or Voluntary Termination (non Change in Control) ($) | Death or Disability ($) | Change in Control(1) ($)
| |||||||||
D. Craig Kesler | ||||||||||||
Long-Term Incentives | ||||||||||||
Stock Options | ||||||||||||
Unexercisable and Accelerated Awards |
| – |
| – | $ | 49,180(2) | ||||||
Restricted Stock Award | ||||||||||||
Unvested and Accelerated Awards | – | $ | 1,740,040 | (3) | 1,740,040(3) | |||||||
Benefits | ||||||||||||
Salary Continuation Plan Payments | – | 1,500,000 | (4) | – | ||||||||
|
| |||||||||||
KESLER TOTAL | – | 3,240,040 | 1,789,220 | |||||||||
Michael Haack | ||||||||||||
Long-Term Incentives | ||||||||||||
Stock Options | ||||||||||||
Unexercisable and Accelerated Awards | – | – | 107,223(2) | |||||||||
Restricted Stock Award | ||||||||||||
Unvested and Accelerated Awards | – | 1,105,177 | (3) | 1,105,177(3) | ||||||||
Benefits | ||||||||||||
Salary Continuation Plan Payments | – | 1,500,000 | (4) | – | ||||||||
|
| |||||||||||
HAACK TOTAL | – | 2,605,177 | 1,212,400 | |||||||||
Robert S. Stewart | ||||||||||||
Long-Term Incentives | ||||||||||||
Stock Options | ||||||||||||
Unexercisable and Accelerated Awards | – | – | – | |||||||||
Restricted Stock Award | ||||||||||||
Unvested and Accelerated Awards | – |
| 1,434,958 | (3) |
| 1,434,958(3) |
| |||||
Benefits | ||||||||||||
Salary Continuation Plan Payments | – | 455,000 | (4) | – | ||||||||
|
| |||||||||||
STEWART TOTAL | – | 1,889,958 | 1,434,958 | |||||||||
Keith W. Metcalf | ||||||||||||
Long-Term Incentives | ||||||||||||
Stock Options | ||||||||||||
Unexercisable and Accelerated Awards | – | – | 188,879(2) | |||||||||
Restricted Stock Award | ||||||||||||
Unvested and Accelerated Awards | – | 917,861 | (3) | 917,861(3) | ||||||||
Benefits | ||||||||||||
Salary Continuation Plan Payments | – | 1,500,000 | (4) | – | ||||||||
|
| |||||||||||
METCALF TOTAL
|
| –
|
|
| 2,417,861
|
|
| 1,106,740
|
| |||
|
| |||||||||||
AGGREGATE TOTAL FOR NAMED EXECUTIVE OFFICERS | – | $ | 15,514,396 | $ | 10,904,718 | |||||||
| (1) | The definition of “Change in Control” is described under “Change in Control Benefits” on page |
| (2) | Represents the dollar value of the unexercisable stock options that are accelerated because of a change in control based on the amount, if any, that the closing price of our Common Stock on March 29, |
| (3) | Represents the dollar value of the restricted stock for which restrictions will lapse upon death, disability or a change in control based on the closing price of our Common Stock on March 29, |
| (4) | Under the terms of our SCP, in the event of a Named Executive Officer’s death while employed by the Company, such Named Executive Officer’s beneficiaries would receive the following payments, which would be paid from the proceeds of a life insurance policy purchased by the Company covering such Named Executive Officer (calculated based on fiscal |
| a. | Kesler – |
| b. | Haack – |
| c. | Stewart – |
| d. | Metcalf – |
Pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (the “SEC”) has adopted Item 402(u) of RegulationS-K requiring annual disclosure of a reasonable estimate of the ratio of the total annual compensation of our chief executive officer to the total annual compensation of the employee of the Company or one of its subsidiaries who is determined to have the median compensation of all employees of the Company and its subsidiaries, collectively (excluding the CEO). The rule also requires annual disclosure of such median employee’s total compensation for the applicable fiscal year and the CEO’s total compensation for the applicable fiscal year, in each case as determined in accordance with the rules governing the presentation of total compensation of the named executive officers in the Summary Compensation Table presented on page 3837 of this proxy statement. This rule first became applicable with respect to thisthe proxy statement for our 2018 annual meeting of shareholders. Our CEO is Mr. Powers.
As permitted by the SEC rules, do not prescribethe median employee utilized for fiscal 2019 is the same employee identified in fiscal 2018 because there have been no changes in our employee population or employee
compensation arrangements that we reasonably believe would result in a particular method for identifying the median-compensated employee and permit companiessignificant change to use reasonable methodologies for determining the median-compensated employee for purposes of presenting this ratio.pay ratio disclosure. To identify the median-compensated employee for fiscal 2018, we examined the
total gross compensation data for calendar year 2017 of each of the Company’s and its subsidiaries’ employees who were employed as of December 31, 2017, other than our CEO, Mr. Powers, and the employees of Wildcat Minerals, a business we acquired in 2017, each of whom were excluded for purposes of determining this ratio for fiscal 2018.
2017. Based on this data, we determined the median-compensated employee andemployee. For this year’s disclosure, we calculated such employee’s total fiscal 20182019 compensation in accordance with the rules governing the presentation of the total compensation of the named executive officers in the Summary Compensation Table. Based on this methodology, the fiscal 20182019 total annual compensation for the median-compensated employee was $75,124.$79,862. As reported on page 3837 of this proxy statement, the fiscal 20182019 total annual compensation of our CEO, Mr. Powers, was $5,318,837,$5,537,014, resulting in a ratio of the CEO’s total compensation to the median-compensated employee’s total compensation of approximately 71:69:1.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above.
We encourage stock ownership by our directors, officers and employees to align their interests with your interests as stockholders. The following table shows the beneficial ownership of our Common Stock, as of the record date for the
annual meeting (June 5, 2018)20, 2019) by: (a) each director, (b) each of our current executive officers and (c) by all directors and executive officers of the Company as a group (16 persons). Except as otherwise indicated, all shares are owned directly, and the owner of
such shares has the sole voting and investment power with respect thereto.
Amount and Nature of Beneficial Ownership(1)
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Number of Shares Beneficially Owned(2) | Percentage of Common Stock | |||
F. William Barnett | 57,927 | * | ||
Richard Beckwitt | 11,017 | * | ||
Ed H. Bowman | 19,270 | * | ||
Margot L. Carter | 2,380 | * | ||
George J. Damiris | 3,236 | * | ||
William R. Devlin | 63,040 | * | ||
Martin M. Ellen | 11,782 | * | ||
Gerald J. Essl(3) | 59,697 | * | ||
James H. Graass(4) | 127,695 | * | ||
Michael Haack(5) | 103,303 | * | ||
D. Craig Kesler(6) | 124,507 | * | ||
Keith Metcalf | 120,345 | * | ||
Michael R. Nicolais(7) | 48,740 | * | ||
David B. Powers | 158,807 | * | ||
Richard R. Stewart(8) | 22,002 | * | ||
Robert S. Stewart | 46,272 | * | ||
| All current directors, nominees and executive officers as a group (16 persons) | 980,020 | 2.2% | ||
Amount and Nature of Beneficial Ownership(1)
| Number of Shares Beneficially Owned(2) | Percentage of Common Stock | |||||||
F. William Barnett | 46,747 | * | ||||||
Richard Beckwitt | 8,787 | * | ||||||
Ed H. Bowman | 19,369 | * | ||||||
Margot L. Carter | 150 | * | ||||||
George J. Damiris | 1,006 | * | ||||||
William R. Devlin | 50,487 | * | ||||||
Martin M. Ellen | 10,775 | * | ||||||
Gerald J. Essl(3) | 48,652 | * | ||||||
James H. Graass(4) | 126,277 | * | ||||||
Michael Haack(5) | 61,387 | * | ||||||
D. Craig Kesler(6) | 102,290 | * | ||||||
Keith Metcalf | 97,728 | * | ||||||
Michael R. Nicolais(7) | 44,672 | * | ||||||
David B. Powers | 147,595 | * | ||||||
Richard R. Stewart(8) | 20,995 | * | ||||||
Robert S. Stewart | 39,901 | * | ||||||
All current directors, nominees and executive officers as a group (16 persons) | 826,818 | 1.7 | % | |||||
* Less than 1%
| (1) | For purposes of this table, “beneficial ownership” is determined in accordance with Rule13d-3 under the Exchange Act, pursuant to which a person is deemed to have “beneficial ownership” of shares of our stock that the person has the right to acquire within 60 days. For purposes of computing the percentage of outstanding shares of Common Stock held by each person or group of persons named in the table, any shares that such person or persons have the right to acquire within 60 days are |
| deemed to be outstanding, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other persons. |
| (2) | Amounts include the following shares of Common Stock that may be acquired upon exercise of stock options awarded under our Incentive Plan: Mr. Barnett – 33,821 shares; Mr. Beckwitt – 2,070 shares; Mr. Bowman – 6,293 shares; Mr. Devlin – |
| – |
| (3) | Includes 3,000 shares of Common Stock held in trust for Mr. Essl’s son. |
| (4) | Includes 543 shares of Common Stock held in an IRA owned by Mr. Graass. |
| (5) | Includes |
| (6) | Also includes 160 shares of Common Stock held in Mr. Kesler’s IRA. |
| (7) | Includes (a) 1,386 shares of Common Stock owned by the wife of Mr. Nicolais; (b) 1,550 shares of Common Stock held by the profit sharing plan of the employer of Mr. Nicolais; and (c) 3,500 shares of Common Stock held in an IRA owned by Mr. |
| (8) | Includes 7,503 shares owned by Stewart Family Trust. |
The table below provides information regarding the only persons we know of who are the beneficial owners of more than five percent of our Common Stock. The number of shares of Common Stock shown in the table as beneficially owned by each person as of the most recent practicable date, which is generally the date as of which information is
provided in the most recent beneficial ownership report filed by such person with the SEC. The percentage of our Common Stock shown in the table as owned by each person is calculated in accordance with applicable SEC rules based on the number of outstanding shares of Common Stock as of June 5, 2018,20, 2019, the record date for our annual meeting of stockholders.
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Common Stock | ||||||
FMR LLC (1) 245 Summer Street Boston, MA 02210 | 6,419,847 | 13.4 | % | |||||
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 | 4,247,685 | 8.8 | % | |||||
The Vanguard Group (3) 100 Vanguard Blvd. Malvern, PA 19355 | 3,919,944 | 8.2 | % | |||||
JPMorgan Chase & Co. (4) 270 Park Avenue New York, NY 10017 | 2,911,809 | 6.1 | % | |||||
Name and Address of Beneficial Owner | Number of Shares Beneficially Owned | Percentage of Common Stock | ||||
BlackRock, Inc.(1) 55 East 52nd Street New York, NY 10055 | 4,328,050 | 10.0% | ||||
The Vanguard Group (2) 100 Vanguard Blvd. Malvern, PA 19355 | 4,124,309 | 9.5% | ||||
Sachem Head Capital Management LP (3) 250 West 55th Street, 34th Floor New York, NY 10019 | 3,670,000 | 8.5% | ||||
Wells Fargo & Company (4) 420 Montgomery Street San Francisco, CA 94163 | 2,577,327 | 6.0% | ||||
Adage Capital Partners, L.P. (5) 200 Clarendon Street, 52nd Floor Boston, MA 02116 | 2,251,326 | 5.2% | ||||
| (1) | Based solely on the information contained in a Schedule 13G/A filed with the SEC on February |
Based solely on the information contained in a Schedule 13G/A filed with the SEC on February |
| (3) | Based solely on the information contained in a Schedule 13D filed with the SEC on March 28, 2019, a Schedule 13D/A filed with the SEC on May 8, 2019, and a Schedule 13D/A filed with the SEC on May 30, 2019. Of the shares reported in the Schedule 13Ds, Sachem Head has shared voting power with respect to 3,670,000 shares and shared dispositive power with respect to 3,670,000 shares. |
| (4) | Based solely on the information contained in a Schedule 13G filed with the SEC on January |
| (5) | Based solely on the information contained in a Schedule 13G filed with the SEC on January 18, 2019. Of the shares reported in the Schedule 13G, Adage Capital Partners, L.P. has (i) shared voting power with respect to 2,251,326 shares; and (ii) shared dispositive power with respect to 2,251,326 shares. |
Our code of conduct adopted by the Board, which we refer to as “The Eagle Way,” includes provisions addressing conflicts of interest which arise when a director, officer, or employee has an interest in a transaction in which the Company is a participant. The Eagle Way defines a conflict of interest as an activity, investment or association that interferes or might appear to interfere with the judgment or objectivity of an officer or employee in performing his or her job in the best interests of the Company and our shareholders.
Under The Eagle Way, officers or employees are encouraged to consult with their supervisors regarding any matter that may involve a conflict of interest. In addition, The Eagle Way requires that prior approval of the supervisor of an officer or employee, the president of the Eagle business unit in which such officer or employee is employed, and the Company’s general counsel before: (1) obtaining an ownership interest in, or position with, an Eagle supplier, contractor, customer or competitor, subject to certain exceptions relating to the ownership of publicly traded securities; (2) employing any relatives where there is either a direct or indirect reporting relationship or a substantial amount of interaction between the relatives on the job; or (3) establishing a business relationship between Eagle and a company in which the officer or employee or his or her relative has an ownership interest or holds a position.
In addition to the above policies included in The Eagle Way, we have implemented certain informal processes in connection with transactions with related persons. For example, the Company’s legal staff is primarily responsible for the development of processes to obtain information from the directors and executive officers with respect to related person transactions and for determining, based on the facts and circumstances, whether the related person has a direct or indirect material interest in the transaction. In addition, all of our employees, executive officers and directors are required to disclose any conflicts of interest in an annual certification reviewed by our Legal Department. After disclosure, some conflicts of interest may be resolved through implementing appropriate controls for our protection. Depending on the identity of the officer or employee involved in a transaction creating a potential conflict of interest, the conflict of interest may be resolved by the
Company’s legal staff or may be referred to the Audit Committee. Where an appropriately disclosed conflict of interest is minor and not likely to adversely impact us, we may consent to the activity. Such consent may be subject to appropriate controls intended to ensure that transaction as implemented is not adverse to the Company. In other cases where appropriate controls are not feasible, the person involved will be requested not to enter into, or to discontinue, the relevant transaction or relationship. If a potential conflict arises concerning a director or officer of the Company, the potential conflict is disclosed to the Chair of the Audit Committee of the Board for review and disposition. As required under SEC rules, transactions that are determined to be directly or indirectly material to the Company or a related person are disclosed in the annual proxy statement.
During fiscal 2019, the Company engaged KPMG to perform certain tax consulting work, paying KPMG approximately $178,000. The spouse of Mr. Kesler, our Chief Financial Officer, is a partner at KPMG. Mr. Kesler’s spouse did not work on any Company matters, and the Company’s Vice President – Tax was the project coordinator for this work. Prior approval of this engagement was obtained in accordance with our code of conduct.
Also during fiscal 2019, the Company’s Tulsa Cement operations paid ACG Materials approximately $340,000 for natural gypsum (a raw material used in the cement manufacturing process). ACG Materials has supplied natural gypsum to the Company’s Tulsa Cement operations for several years pursuant to a supply contract. In December 2018, ACG Materials was acquired by Arcosa, Inc. The son of Mr. Essl, our Executive Vice President – Cement, is the President of Construction Products at Arcosa, Inc. Neither Mr. Essl nor his son were involved in the negotiation of the supply contract nor is Mr. Essl involved in the ongoing supply relationship between Tulsa Cement and ACG Materials.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company’s directors and executive officers, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, to file initial reports of ownership, reports of changes in ownership and annual reports of ownership with the SEC and the NYSE. These persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms that they file with the SEC.
Based solely on our review of the copies of such forms we received with respect to fiscal 20182019 or written representations from certain reporting persons, the Company believes that its directors and executive officers, and persons who beneficially own more than 10% of a registered class of the Company’s equity securities, have complied with all filing requirements of Section 16(a) for fiscal 20182019 applicable to such persons.
The Company’s code of conduct, The Eagle Way, applies to all of the Company’s employees, including the Company’s officers. The Eagle Way also applies to the Board of Directors. The Company’s code of conduct is designed to deter wrongdoing and to promote:
| ● | honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
| ● | compliance with applicable governmental laws, rules and regulations; |
| ● | the prompt internal reporting of violations of the code of conduct to an appropriate person or persons identified in the code of conduct; and |
| ● | accountability for adherence to the code of conduct. |
All of the Company’s employees and directors are required to certify to the Company, on an annual
basis, that they have complied with the Company’s code of conduct without exception or, if they have not so complied, to list the exceptions. The Company has posted the text of its code of conduct on its Internet website atwww.eaglematerials.com (click on “Investor Relations”, then on “Corporate Governance”, then on “The Eagle Way” under the heading “Code of Ethics”). Additionally, the Company will provide without charge a copy of the code of conduct to any person upon written request to our Secretary at our principal executive office.
PROPOSAL NO. 2: ADVISORY VOTE ON COMPENSATION
OF OUR NAMED EXECUTIVE OFFICERS
We are seeking your advisory vote approving the compensation paid to our named executive officers as disclosed in this proxy statement. We believe the structure of our executive compensation programs promotes our business objectives and serves to motivate, attract and retain executive talent.
We urge stockholders to read our “Compensation Discussion and Analysis” beginning on page 21 of this proxy statement, which describes in more detail how our executive compensation policies and programs operate. We are seeking stockholder approval of the following advisory resolution:
RESOLVED,that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in this Proxy Statement, is hereby approved by the stockholders of the Company on an advisory basis.
RESOLVED,that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in this Proxy Statement, is hereby approved by the stockholders of the Company on an advisory basis. |
Although the vote on this proposal is advisory and nonbinding, the Compensation Committee and the Board will review the results of the vote and consider them when making future determinations regarding our executive compensation programs. The affirmative vote of a majority of the votes cast by shares entitled to vote thereon is required for the approval of the foregoing resolution. Abstentions and brokernon-votes are not counted as votes cast,
and therefore do not affect the approval of the resolution.
Our Board of Directors recommends that holders of Common Stock vote “FOR” thenon-binding advisory resolution approving the compensation paid to our named executive officers.
PROPOSAL NO. 3: APPROVAL OF EXPECTED
APPOINTMENT OF INDEPENDENT AUDITORS
General
Ernst & Young acted as our independent auditors to audit our books and records for fiscal year 2018,2019, and the Audit Committee expects to appoint Ernst & Young as our independent auditors for fiscal year 20192020 if its proposal for audit services is satisfactory.
We believe the approval of this expected appointment is good corporate practice because the audit of our books and records is a matter of importance to our stockholders. If our stockholders do not support the expected appointment, our Audit Committee will consider that fact when determining whether or not to retain Ernst & Young, but still may elect to retain them. Even if the expected appointment is approved, the Audit Committee, in its discretion, may elect not to proceed with the
appointment. Once it has appointed an auditor, our Audit Committee may elect to change the appointment at any time during the year if it determines that such a change would be in our best interests and the best interests of our stockholders.
Representatives of Ernst & Young are expected to be present for the annual meeting, with the opportunity to make a statement if they choose to do so, and will be available to respond to appropriate questions from our stockholders.
Our board unanimouslyBoard of Directors recommends a vote “FOR” the approval of the expected appointment of Ernst & Young as the Company’s auditors for the fiscal year ending March 31, 2019.2020.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Ernst & Young LLP, which we refer to as Ernst & Young, audited the Company’s financial statements for the fiscal years ended March 31, 2016, 2017, 2018 and 2018.2019.
Ernst & Young reports directly to our Audit Committee. The Audit Committee has adopted policies and procedures forpre-approving all audit and permissiblenon-audit services performed by Ernst & Young. Under these policies, the Audit Committeepre-approves the use of audit and specific permissible audit-related andnon-audit services up to certain dollar limits. Other audit and permissiblenon-audit services that exceed a $50,000 threshold must bepre-approved separately by the
Audit Committee, or, for such services that do not exceed $50,000, by a member of the Audit Committee. Any such member must report thepre-approval at the next Audit Committee meeting. In determining whether or not topre-approve services, the Audit Committee determines whether the service is a permissible service under the SEC’s rules, and, if permissible, the potential effect of such services on the independence of Ernst & Young.
The following table sets forth the various fees for services provided to the Company by Ernst & Young in the fiscal years ended March 31, 20182019 and 2017,2018, all of which services have been approved by the Audit Committee:
Fiscal Year Ended March 31, | Audit Fees(1) | Audit Related Fees | Tax Fees | All Other Fees | Total | |||||||||||||||
| 2018 | $ | 1,222,600 | $ | 85,540 | $ | 111,567 | $ | 2,000 | $ | 1,421,707 | ||||||||||
| 2017 | 1,452,750 | 15,000 | — | $ | 2,000 | 1,469,750 | ||||||||||||||
Fiscal Year Ended | Audit Fees (1) | Audit Related Fees | Tax Fees | All Other Fees | Total | |||||||||||||||
| 2019 | $ 1,400,907 | $ 105,000 | $ 112,777 | $ 2,000 | $ 1,620,684 | |||||||||||||||
| 2018 | 1,222,600 | 85,540 | 111,567 | $ 2,000 | 1,421,707 | |||||||||||||||
| (1) | Includes fees for the annual audit and quarterly reviews, accounting and financial reporting consultations regarding generally accepted accounting principles. |
To the Board of Directors of Eagle Materials Inc.:
All of the Audit Committee members are independent as defined in the current NYSE listing standards and the applicable rules of the Securities Exchange Act of 1934, and Mr. Ellen is our “audit committee financial expert” within the meaning of the rules of the SEC. The Audit Committee charter sets forth the duties and responsibilities of the Audit Committee. The Audit Committee is primarily responsible for assisting the Board in fulfilling its responsibility to oversee following: the integrity of our financial statements, our compliance with legal and regulatory requirements, the qualifications and independence and appointment of our independent auditors and the performance of our internal audit function and independent auditors. Management has primary responsibility for the preparation of the financial statements, completeness and accuracy of financial reporting and the overall system of internal control over financial reporting.
We have reviewed and discussed with management and the independent registered public accounting firm, Ernst & Young LLP, as appropriate, (1) the audited financial statements of Eagle Materials Inc. as of and for the fiscal year ended March 31, 20182019 and (2) management’s report on internal control over financial reporting and the independent registered accounting firm’s related opinions.
We have discussed with Ernst & Young LLP the required communications specified by auditing standards, together with guidelines established by the SEC and the Sarbanes-Oxley Act, including the matters required to be discussed by Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 1301,Communication with Audit Committees.
We have received and reviewed the written disclosures and the letter from Ernst & Young LLP required by the applicable requirements of the PCAOB concerning independence and have discussed with Ernst & Young LLP their independence. We have also considered whether Ernst & Young LLP’s provision ofnon-audit services to Eagle Materials Inc. and its affiliates is compatible with Ernst & Young LLP’s independence.
Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the financial statements referred to above be included in the Annual Report of Eagle Materials Inc. on Form10-K for the fiscal year ended March 31, 2018.2019. This report is furnished by the members of the Audit Committee as of May 23, 2018.2019.
Audit Committee
Martin M. Ellen,Chairman
Margot L. Carter
Richard Beckwitt
This report of the Audit Committee does not constitute “soliciting material” and should not be deemed “filed” or incorporated by reference into any of the other Company filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Company specifically requests that the information be treated as soliciting material or specifically incorporates this report by reference therein.
OTHER MATTERS WHICH MAY BE PRESENTED FOR ACTION AT THE MEETING
Our Board of Directors does not intend to present for action at this annual meeting any matter other than those specifically set forth in the Notice of Annual Meeting of Stockholders. If any other matter is properly presented for action at the meeting, it is the intention of persons named in the proxy to vote thereon in accordance with their judgment pursuant to the discretionary authority conferred by the proxy.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS
STOCKHOLDERS
Pursuant to the rules of the SEC, the Company and services that it employs to deliver communications to its stockholders are permitted to deliver to two or more stockholders sharing the same address a single copy of the proxy statement. Upon written or oral request, the Company will deliver a separate copy of the proxy statement to any stockholder at a shared address who wishes to receive separate copies of such documents in the future. Stockholders receiving multiple copies of such documents may likewise request that the Company deliver single copies of such documents in the future. Stockholders may notify the Company of their requests by calling or directing a written request to Eagle Materials Inc., Attention: James H. Graass, Secretary, 3811 Turtle Creek Blvd.5960 Berkshire Ln., Suite 1100,900, Dallas, Texas 75219-4487,75225, (214)432-2000.
STOCKHOLDER PROPOSALS
Next year’s annual meeting of stockholders is scheduled to be held on August 6, 2019.5, 2020. In order to be considered for inclusion in the Company’s proxy material for that meeting, stockholder proposals must be received at our executive offices, addressed to the attention of the Secretary, not later than February 21, 2019.27, 2020.
For any proposal that is not submitted for inclusion in our proxy material for the 20192020 annual meeting of stockholders but is instead sought to be presented directly at that meeting, Rule14a-4(c) under the Exchange Act permits the Company’s management to exercise discretionary voting authority under proxies it solicits unless the Company is notified about the proposal on or before May 8, 2019,7, 2020, and the stockholder satisfies the other requirements of Rule14a-4(c). Our Bylaws provide that, to be considered at the 20182020 annual meeting, a stockholder proposal must be submitted in writing and received by our Secretary at the executive offices of the Company during the period beginning on February 7, 20192020 and ending May 8, 2019,7, 2020, and must contain the information specified by and otherwise comply with our Bylaws. Any stockholder wishing to receive a copy of our Bylaws should direct a written request to our Secretary at the Company’s principal executive office.
FORM10-K
Stockholders entitled to vote at the meeting may obtain a copy of the Company’s Annual Report onForm 10-K for the fiscal year ended March 31, 2018,2019, including the financial statements required to be filed with the SEC, without charge, upon written or oral request to Eagle Materials Inc., Attention: James H. Graass, Secretary, 3811 Turtle Creek Blvd.5960 Berkshire Ln., Suite 1100,900, Dallas, Texas 75219-4487,75225, (214)432-2000.
By Order of the Board of Directors | ||
JAMES H. GRAASS Executive Vice President, General Counsel and Secretary | ||
Dallas, Texas
June 22, 201827, 2019
EAGLE MATERIALS INC
5960 Berkshire Lane, Suite 900
VOTE BY INTERNET - www.proxyvote.com
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Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ET on 08/05/2019 for shares held directly and by 11:59 P.M. ET on 08/01/2019 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ET on 08/05/2019 for shares held directly and by 11:59 P.M. ET on 08/01/2019 for shares held in a Plan. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:☒
KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
The Board of Directors recommends you vote FOR the following: | ||||||||||||||
| 1. | Election of Directors | |||||||||||||
| Nominees | For | Against | Abstain | |||||||||||
| 1A | ☐ | ☐ | ☐ | |||||||||||
| 1B | ☐ | ☐ | ☐ | |||||||||||
| 1C | ☐ | ☐ | ☐ | |||||||||||
| The Board of Directors recommends you vote FOR proposals 2 and 3. | For | Against | Abstain | |||||||||||
| 2. | Advisory resolution regarding the compensation of our named executive officers. | ☐ | ☐ | ☐ | ||||||||||
| 3. | To approve the expected appointment of Ernst & Young LLP as independent auditors for fiscal year | 2020. | ☐ | ☐ | ☐ | |||||||||
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NOTE:THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEMS 1, 2 AND 3. IF ANY OTHER MATTERS PROPERLY COME BEFORE THE MEETING, THE PROXIES NAMED IN THIS PROXY WILL VOTE IN THEIR DISCRETION. BY EXECUTING THIS PROXY, THE UNDERSIGNED HEREBY REVOKES PRIOR PROXIES RELATING TO THE MEETING. | ||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |  |
| Signature [PLEASE SIGN WITHIN BOX] | Date |
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Signature (Joint Owners) | Date |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice & Proxy Statement, Annual Report is/are available atwww.proxyvote.com.
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EAGLE MATERIALS INC. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS | |||||||||
| ANNUAL MEETING OF STOCKHOLDERS August
The undersigned hereby appoints James H. Graass and
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED ON THE REVERSE SIDE FOR THE BOARD OF DIRECTORS AND FOR PROPOSALS 2 AND 3. THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY OTHER MATTERS THAT PROPERLY COME BEFORE THE MEETING.
By execution of this proxy, the undersigned hereby acknowledges receipt of the Notice of Annual Meeting and Proxy Statement for the August *For address changes, please contact our transfer agent, Computershare Shareowner Services LLC, at 1-800-279-1248.
Continued and to be signed on reverse side
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