| 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 | |
| Payment of Filing Fee (Check all boxes that apply): | ||||
| ☒ | No fee required. | |||
| ☐ | Fee paid previously with preliminary materials. | |||
| ☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION
Dated March 27, 2024
March 23, 2022[●], 2024
Dear Fellow Stockholders:
As chairman of MRC Global’s Board of Directors, I am proud of the Company’s strong commitment to its investors, customers, employees and sound governance. On behalf of the MRC Global Board of Directors, I thank you for your investment in our Company and your continued support.
We are pleased to invite you to the 20222024 Annual Meeting of Stockholders that will be conducted virtually on Thursday, May 5, 2022,[●], 2024, starting at 10:00 a.m.[●] Houston, Texas time. Stockholders will be able to listen, vote and submit questions from any remote location with internet connectivity. Information on how to participate in this year’s virtual meeting can be found on page 1. A notice of the meeting and a Proxy Statement containing information about the matters to be acted upon are attached to this letter. Information on how to participate in this year’s virtual meeting can be found on page 1. Our Board of Directors recommends that you vote in accordance with our Board’s recommendations on all proposals using the WHITE proxy card.
In March of this year, we added David A. Hager to the Board as a new independent director. During his tenure as CEO and Executive Chairman of Devon Energy, Dave led the execution of a strategy that drove impressive returns for Devon’s shareholders. His breadth and depth of board and business experience, particularly in energy, will bring valuable perspectives to our board as MRC Global continues to invest in our growth drivers, serve our customers and drive to generate significant value for our shareholders. Also in March our Board determined to not re-nominate Barbara J. Duganier for re-election at the 2024 Annual Meeting of Stockholders as she had notified the Board of her desire to not stand for re-election. We want to thank Barbara for her many years of contribution to the Company and wish her the best in all of her future endeavors.
Engine Capital LP (together with its affiliates and related persons, “Engine Capital”) has nominated Bradley T. Favreau and Daniel B. Silvers (collectively, the “Engine Capital Nominees”) for election as directors at the Annual Meeting in opposition to the nominees recommended by our Board of Directors. As a result, you may receive solicitation materials from Engine Capital, including proxy statements and proxy cards, seeking your proxy to vote for Engine Capital’s nominees.
Our Board of Directors does not endorse the Engine Capital Nominees and unanimously recommends that you vote “FOR” the election of the eight nominees proposed by our Board:
| Deborah G. Adams | Ronald L. Jadin | |
| Leonard M. Anthony | Dr. Anne McEntee | |
| George J. Damiris | Robert J. Saltiel, Jr. | |
| David A. Hager | Robert L. Wood |
and “FOR” the other proposals recommended by our Board using the WHITE proxy card. You may receive solicitation materials from Engine Capital, including proxy statements and blue proxy cards. MRC Global is not responsible for the accuracy or completeness of any information
provided by or relating to Engine Capital or its nominees in solicitation materials filed or disseminated by or on behalf of Engine Capital or any other statements Engine Capital may make.
Our Board strongly urges you to discard and NOT to vote using any blue proxy card sent to you by Engine Capital. If you have already submitted a blue proxy card, you can revoke the proxy and vote for our Board’s nominees and on the other matters to be voted on at the Annual Meeting by marking, signing and dating the enclosed WHITE proxy card and returning it in the enclosed postage-paid envelope or by voting via Internet by following the instructions on your WHITE proxy card, WHITE voting instruction form or notice. Only your latest validly executed proxy will count, and any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in the accompanying proxy statement.
PLEASE NOTE THAT THIS YEAR, YOUR WHITE PROXY CARD LOOKS DIFFERENT. RECENTLY ADOPTED NEW PROXY RULES REQUIRE THE COMPANY’S WHITE PROXY CARD TO LIST THE ENGINE CAPITAL NOMINEES IN ADDITION TO OUR BOARD’S NOMINEES. PLEASE MARK YOUR WHITE PROXY CARD CAREFULLY AND VOTE “FOR” ONLY THE EIGHT NOMINEES AND PROPOSALS THAT OUR BOARD RECOMMENDS.
Your vote is extremely important to us.no matter how many shares you own. Whether or not you planexpect to attend the meeting, please promptly use your WHITE proxy card to vote by proxy over the Internet or by mail. If you have any questions or require any assistance with voting your shares, by submitting yourplease call MRC Global’s proxy by internet or telephone or by completing, signing, dating and returning your Proxy Card or voting instruction form. If you decide to attend the Annual Meeting, you will be able to vote virtually, even if you have previously submitted your proxy.solicitor:
Morrow Sodali LLC
430 Park Ave., 14th Floor
New York, NY 10022
Telephone: (203) 658-9400
Email: MRC@info.morrowsodali.com
Thank you for being a stockholder and for the trust and continued interest you have in MRC Global Inc.
Best regards,
/s/ Rhys J. BestRobert L. Wood
Rhys J. BestRobert L. Wood
Chairman of the Board
Notice of
Date and Time
Virtual Only Meeting No physical meeting location; See Voting Instructions for Stockholders on page 1.
Items to be Voted On | ||
1. | ||
2. | Consider and act upon an advisory approval of a non-binding resolution approving the Company’s named executive officer compensation. | |
3. | ||
| Consider and act upon the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for | |
4. | Approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation. | |
5. | Act on any other business that may properly come before the Annual Meeting or any reconvened meeting after adjournment. | |
How to Vote in Advance
Your vote is very important. Even if you intend to be present virtually at the Annual Meeting, please promptly vote in one of the following ways so that your shares may be represented and voted at the Annual Meeting:
Advance Voting Methods
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| Internet –Follow online instructions on your Proxy Card and vote at | |
| Mail -Complete, sign, date and return your proxy card or voting instruction form.
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MRC Global’s proxy materials including the Proxy Statement and
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Who Can VoteVote?
You can vote and attendat the virtual Annual Meeting if you were a holder of record of the Company’s common or preferred stock at the close of business on March 11, 2022.25, 2024.
Changes to Board Composition
In March 2024, the Company added David A. Hager to the Board. Also in March 2024, the Board determined to not re-nominate Barbara J. Duganier for re-election at the 2024 Annual Meeting of Stockholders as she had notified the Board of her desire to not stand for re-election at the 2024 Annual Meeting of Stockholders. Effective as of the end of Ms. Duganier’s term of office, the Board has decreased the size of the Board from ten to nine directors.
Voting Instructions
If you plan to participate in the Virtualvirtual 2024 Annual Meeting of Stockholders, please see the instructions on page 1 of the Proxy Statement.
Voting by telephone or internet or by returning your proxy card or voting instruction form in advance of the 20222024 Annual Meeting of Stockholders does not deprive you of your right to attend the virtual meeting.
By Order of the Board of Directors,
/s/ Daniel J. Churay
Daniel J. Churay
Executive Vice President – Corporate Affairs,
General Counsel and Corporate Secretary
March 23, 2022[●], 2024
MRC Global Inc.
1301 McKinney Street, Suite 2300
Houston, Texas 77010
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Knowledge, Skills and Experience of Nominees Plus our Designated Director | |||||||
Director Designated by the Holder of the Company’s Preferred Stock | |||||||
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Board Annual Self-Assessment | |||||||
Director Attendance at Meetings of the Board, Committees and Annual Meeting of Stockholders | |||||||
Board Oversight of Cybersecurity and Information Security Risk | |||||||
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| i | 2024 Proxy Statement |
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| ii |
INSTRUCTIONS FOR THE VIRTUAL ANNUAL MEETING
Our 20222024 Annual Meeting of Stockholders, or the Annual Meeting, will be a completely virtual meeting. There will be no physical meeting location.
How Can I Participate in the Virtual Annual Meeting?
To access the virtual onlyThe Annual Meeting please click the Virtual Shareholder Meeting link or type https://www.meetnow.global/MA9SWK7 into your computer’s browser window. To log into the virtual meeting you have two options: Join aswill be held online via a “Guest” or Join as a “Shareholder”live webcast at [●].
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Stockholders that desire either or both You are entitled to ask questions atparticipate in the Annual Meeting or vote during the Annual Meeting should join as a “Shareholder”. Registered and beneficial stockholders may join as a “Shareholder”. If you join as “Shareholder” you will be required to have a control number.
Registered Stockholders: Ifonly if you were a registered stockholderholder of Common or Preferred Stock as of the close of business on the record dateRecord Date, or your authorized representative or you hold a valid proxy for the Annual Meeting, March 11, 2022, andMeeting. Stockholders must pre-register to attend or vote by ballot at the Annual Meeting.
You may only participate in the virtual meeting by registering in advance at [●] prior to the deadline of [●] a.m. Central Time on [●], 2024. Please have your voting instruction form, proxy card or other communication containing your control number available and follow the instructions to complete your registration request.
If you may use this control number. This control number can be found onare a beneficial holder, you must obtain a “legal proxy” from your proxy cardbroker, bank or notice or e-mail that registered stockholders receive. Registered stockholders who have not yet voted or wishother nominee in order to change a vote may vote duringat the Annual MeetingMeeting. Upon completing registration, participants will receive further instructions via e-mail, including unique links that will allow them to access the meeting. Beneficial holders do not require a “legal proxy” to attend the meeting (but not vote at the meeting) and can do so by following the instructions available on the meeting website during the meeting.above.
Beneficial Stockholders: If you hold your shares through an intermediary, such as a bank or broker,have any difficulty following the registration process, please email Morrow Sodali at MRC@info.morrowsodali.com.
Even if you are a beneficial stockholder and must register in advanceplan to attend the virtual Annual Meeting, as a “Shareholder”. To registerwe recommend you must submit proofalso vote by proxy in advance of your proxy power (legal proxy) reflecting your MRC Global Inc. holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on Monday, May 2, 2022. You will receive a confirmation email from Computershare of your registration.
By mail:
Requests for beneficial stockholder registration should be directed to Computershare at the following address:
Computershare
MRC Global Inc. Legal Proxy
P. O. Box 43001
Providence, RI 02940-3001
OR
By email:
Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com. If you do not have your control number, you may not attend or ask questions at the virtual meeting as a “Shareholder”.
The list of our registered stockholders as of the close of business on the record date for the Annual Meeting March 11, 2022,so that your vote will be available onlinecounted if you later are unable or decide not to attend the virtual Annual Meeting.
Contested Election
Engine Capital has nominated Bradley T. Favreau and Daniel B. Silvers (collectively, the “Engine Capital Nominees”) for inspection by “Shareholders” during the meeting.
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Either guests or stockholders may joinelection as a “Guest”. Guests and stockholders that join as a “Guest” will be able to listen todirectors at the Annual Meeting butin opposition to the nominees that our Board of Directors recommends. In accordance with our bylaws, all director nominees will be elected by a plurality of votes cast and the eight director nominees who receive the greatest number of votes will be elected to our Board at the Annual Meeting. Any shares not voted “FOR” a particular director nominee as a result of a “WITHHOLD” vote or a broker non-vote will not be counted in that director nominee’s favor and will not otherwise affect the outcome of the election (except to the extent they otherwise reduce the number of shares voted “FOR” such director nominee).
All director nominees that our Board recommends have given their consent to be named as nominees for election and have indicated their intention to serve if they are elected. Our Board does not anticipate that any of our director nominees will be unable to askserve as a director. If, at the time of the Annual Meeting, any nominee is unable to serve as a director, the discretionary authority provided in the enclosed proxy will be exercised to vote for a substitute candidate that our Board designates, unless the Board chooses to reduce its size.
We encourage you to vote by proxy using your WHITE proxy card or WHITE voting instruction form as promptly as possible, even if you plan to attend our Annual Meeting. If you have any questions about voting by proxy using your WHITE proxy card or WHITE voting instruction form, please contact Morrow Sodali LLC, our proxy solicitation firm, at MRC@info.morrowsodali.com or (203) 658-9400. Our Board unanimously recommends that you use the WHITE proxy card or WHITE voting instruction form to vote shares during“FOR” only each of our Board’s eight director nominees.
As a result, you may receive solicitation materials from Engine Capital, including proxy statements and proxy cards, seeking your proxy to vote for the meeting or change previous votes cast prior to the meeting.Engine Capital Nominees.
| 1 |
| 2 | 2024 Proxy Statement |
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FROM GAAP VS. NON-GAAP MEASURES
In this Proxy Statement, we present certain financial measures that deviate from measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These non-GAAP measures are not necessarily better than the nearest GAAP measure but provide additional information as described below. For more complete information on the 20212023 financial and operating performance of MRC Global Inc. (“MRC Global”, the “Company”, “we”, “us” or “our”), please review the Company’s Annual Report on Form 10-K for the year ended December 31, 20212023 (the “Form“Form 10-K”) that was filed with the U.S. Securities and Exchange Commission (the “SEC”) and can be found on the internet at www.edocumentview.com/MRC.www.viewourmaterial.com/mrc. This annual report provides a complete reconciliation of certain of the non-GAAP measures as described below.
Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure, and we define adjusted EBITDA as net income plus interest, income taxes, depreciation and amortization, amortization of intangibles and certain other expenses, including non-cash expenses (such as equity-based compensation, severance and restructuring, changes in the fair value of derivative instruments, long-lived asset impairments, including goodwill and intangible assets), inventory-related charges incremental to normal operations and plus or minus the impact of our last-in, first-out (“LIFO”) inventory costing methodology. We believe adjusted EBITDA provides investors a helpful measure for comparing our operating performance with the performance of other companies that may have different financing and capital structures or tax rates. We believe it is a useful indicator of our operating performance without regard to items, such as amortization of intangibles, which can vary substantially from company to company depending upon the nature and extent of acquisitions. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. We use adjusted EBITDA as a key performance indicator in managing our business and in incenting executive performance. We believe that net income is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to adjusted EBITDA. See page 35 of our Annual Report on Form 10-K for the year ended December 31, 2021, that has been filed with the SECfollowing table for a detailed reconciliation of net income to adjusted EBITDA.
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| Year Ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
Net Income (loss) | $ | (14 | ) | $ | 75 | $ | 114 | |||||
Income tax expense | — | 35 | 39 | |||||||||
Interest expense | 23 | 24 | 32 | |||||||||
Depreciation and amortization | 19 | 18 | 19 | |||||||||
Amortization of intangibles | 24 | 21 | 21 | |||||||||
Facility closures | 1 | — | — | |||||||||
Severance and restructuring | 1 | 1 | — | |||||||||
Employee separation | 1 | — | — | |||||||||
Non-recurring IT related professional fees | — | — | 1 | |||||||||
Increase in LIFO reserve | 77 | 66 | 2 | |||||||||
Equity-based compensation expense | 12 | 13 | 14 | |||||||||
Customer settlement | — | — | 3 | |||||||||
Activism response legal and consulting costs | — | — | 1 | |||||||||
Asset disposal | — | — | 1 | |||||||||
Foreign currency losses | 2 | 8 | 3 | |||||||||
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Adjusted EBITDA | $ | 146 | $ | 261 | $ | 250 | ||||||
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| 3 | 2024 Proxy Statement |
Adjusted Gross Profit. Adjusted gross profit is a non-GAAP financial measure. We define adjusted gross profit as sales, less cost of sales, plus depreciation and amortization, plus amortization of intangibles plus inventory-related charges incremental to normal operations, and plus or minus the impact of our LIFO inventory costing methodology. We present adjusted gross profit because we believe it is a useful indicator of our operating performance without regard to items, such as amortization of intangibles, thatwhich can vary substantially from company to company depending upon the nature and extent of acquisitions. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. We use adjusted gross profit as a key performance indicator in managing our business. We believe that gross profit is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to adjusted gross profit. See page 33 of our Annual Report on Form 10-K for the year ended December 31, 2021, that has been filed with the SECfollowing table for a detailed reconciliation of adjusted gross profit to adjusted gross profit.
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| Year Ended December 31, | ||||||||||||||||||||||||
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| 2021 | Revenue | 2022 | Revenue* | 2023 | Revenue* | |||||||||||||||||||
Gross profit, as reported | $ | 417 | 15.6 | % | $ | 610 | 18.1 | % | $ | 690 | 20.2 | % | ||||||||||||
Depreciation and amortization | 19 | 0.7 | % | 18 | 0.5 | % | 19 | 0.6 | % | |||||||||||||||
Amortization of intangibles | 24 | 0.9 | % | 21 | 0.6 | % | 21 | 0.6 | % | |||||||||||||||
Increase in LIFO reserve | 77 | 2.9 | % | 66 | 2.0 | % | 2 | 0.1 | % | |||||||||||||||
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Adjusted Gross Profit | $ | 537 | 20.1 | % | $ | 715 | 21.3 | % | $ | 732 | 21.5 | % | ||||||||||||
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| * | Does not foot due to rounding |
Net Debt. Net debt and related leverage metrics may be considered non-GAAP measures. We define net debt as total long-term debt, including the current portion, minus cash. We define our leverage ratio as net debt divided by adjusted EBITDA (as defined above). We believe net debt is an indicator of the extent to which the Company’s outstanding debt obligations could be satisfied by cash on hand and a useful metric for investors to evaluate the Company’s leverage position. We believe the leverage ratio is a commonly used metric that management and investors use to assess the borrowing capacity of the Company. We believe total long-term debt (including the current portion) is the financial measure calculated and presented in accordance with U.S. generally accepted accounting principlesGAAP that is most directly comparable to net debt.
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The following table reconciles total long-term debt (including the current portion), as derived from our consolidated financial statements, with net debt (in millions) and shows the calculation of our leverage ratio:
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| Year Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
| 2019 | 2020 | 2021 | 2021 | 2022 | 2023 | |||||||||||||||||||||
Long-term debt, net | $ | 547 | $ | 379 | $ | 295 | ||||||||||||||||||||
Long-term debt, net | ||||||||||||||||||||||||||
Long-term debt, net | ||||||||||||||||||||||||||
Long-term debt, net | $ | 295 | $ | 337 | $ | 9 | ||||||||||||||||||||
Plus: current portion of long-term debt | 4 | 4 | 2 | |||||||||||||||||||||||
Plus: current portion of debt | ||||||||||||||||||||||||||
Plus: current portion of debt | ||||||||||||||||||||||||||
Plus: current portion of debt | ||||||||||||||||||||||||||
Plus: current portion of debt | 2 | 3 | 292 | |||||||||||||||||||||||
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Total Long-term debt | 551 | 383 | 297 | |||||||||||||||||||||||
Total debt | ||||||||||||||||||||||||||
Total debt | ||||||||||||||||||||||||||
Total debt | ||||||||||||||||||||||||||
Total debt | 297 | 340 | 301 | |||||||||||||||||||||||
Less: Cash | ||||||||||||||||||||||||||
Less: Cash | ||||||||||||||||||||||||||
Less: Cash | ||||||||||||||||||||||||||
Less: Cash | 32 | 119 | 48 | 48 | 32 | 131 | ||||||||||||||||||||
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Net Debt | $ | 519 | $ | 264 | $ | 249 | ||||||||||||||||||||
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Net Debt | ||||||||||||||||||||||||||
Net Debt | $ | 249 | $ | 308 | $ | 170 | ||||||||||||||||||||
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Adjusted EBITDA | $ | 97 | $ | 146 | ||||||||||||||||||||||
Adjusted EBITDA | ||||||||||||||||||||||||||
Adjusted EBITDA | ||||||||||||||||||||||||||
Adjusted EBITDA | $ | 146 | $ | 261 | $ | 250 | ||||||||||||||||||||
Leverage ratio (net debt : adjusted EBITDA) | 2.7x | 1.7x | ||||||||||||||||||||||||
Leverage ratio (net debt : adjusted EBITDA) | ||||||||||||||||||||||||||
Leverage ratio (net debt : adjusted EBITDA) | ||||||||||||||||||||||||||
Leverage ratio (net debt : adjusted EBITDA) | 1.7x | 1.2x | 0.7x | |||||||||||||||||||||||
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RANCE Adjusted for LIFO. Return on average net capital employed (“RANCE”) adjusted for LIFO is a Non-GAAPnon-GAAP measure. We define RANCE adjusted for LIFO as RANCE, plus or minus the impact of the
| 4 | 2024 Proxy Statement |
benefit or expense of our LIFO accounting. We believe that RANCE, calculated in accordance with GAAP without the adjustment, is the nearestfinancial measure calculated and presented in accordance with GAAP number.that is most directly comparable to RANCE adjusted without the impacts offor LIFO. RANCE adjusted for LIFO expense or benefit is not necessarily a better measure of return. However, we believe that it provides a good measure of our return without the impact of our LIFO accounting for inventory. Inflationary and deflationary conditions, which are beyond management’s control, create swings in LIFO expense or benefit. The following table reconciles RANCE to RANCE adjusted for LIFO.
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| 2019 | 2020 | 2021 | 2021 | 2022 | 2023 | 2020–23 | ||||||||||||||||||||||||
Net Income (Loss) before Preferred | $ | 39,198 | $ | (274,733 | ) | $ | (14,100 | ) | ||||||||||||||||||||||
Net Income (Loss) before Preferred | ||||||||||||||||||||||||||||||
Net Income (Loss) before Preferred | ||||||||||||||||||||||||||||||
Net Income (Loss) before Preferred | $ | (14,100 | ) | $ | 74,853 | $ | 113,587 | $ | 174,340 | |||||||||||||||||||||
Interest | 39,725 | 28,376 | 23,205 | |||||||||||||||||||||||||||
Interest | ||||||||||||||||||||||||||||||
Interest | ||||||||||||||||||||||||||||||
Interest | 23,205 | 23,982 | 32,565 | $ | 79,752 | |||||||||||||||||||||||||
Interest, net tax | ||||||||||||||||||||||||||||||
Interest, net tax | ||||||||||||||||||||||||||||||
Interest, net tax | ||||||||||||||||||||||||||||||
Interest, net tax | 31,383 | 22,417 | 18,332 | 18,332 | 18,946 | 25,727 | $ | 63,005 | ||||||||||||||||||||||
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NOPAT before Preferred | $ | 70,581 | $ | (252,316 | ) | $ | 4,232 | |||||||||||||||||||||||
NOPAT before Preferred | ||||||||||||||||||||||||||||||
NOPAT before Preferred | ||||||||||||||||||||||||||||||
NOPAT before Preferred | $ | 4,232 | $ | 93,799 | $ | 139,314 | $ | 237,345 | ||||||||||||||||||||||
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Debt | $ | 550,755 | $ | 383,350 | $ | 297,347 | ||||||||||||||||||||||||
Debt | ||||||||||||||||||||||||||||||
Debt | ||||||||||||||||||||||||||||||
Debt | $ | 297,347 | $ | 339,974 | $ | 300,965 | $ | 330,409 | ||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||||||||
Equity | 997,709 | 705,080 | 678,407 | 678,407 | 741,477 | 843,077 | 742,013 | |||||||||||||||||||||||
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Net Capital | $ | 1,548,464 | $ | 1,088,430 | $ | 975,754 | ||||||||||||||||||||||||
Net Capital | ||||||||||||||||||||||||||||||
Net Capital | ||||||||||||||||||||||||||||||
Net Capital | $ | 975,754 | $ | 1,081,451 | $ | 1,144,042 | $ | 1,072,422 | ||||||||||||||||||||||
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Annual RANCE % | ||||||||||||||||||||||||||||||
Annual RANCE % | ||||||||||||||||||||||||||||||
Annual RANCE % | 4.3 | % | -19.1 | % | 0.4 | % | 0.4 | % | 9.1 | % | 12.5 | % | 7.4 | % | ||||||||||||||||
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LIFO | $ | (1,939 | ) | $ | (18,853 | ) | $ | 76,893 | ||||||||||||||||||||||
LIFO | ||||||||||||||||||||||||||||||
LIFO | ||||||||||||||||||||||||||||||
LIFO | $ | 76,893 | $ | 66,335 | $ | 2,193 | $ | 145,423 | ||||||||||||||||||||||
LIFO, net tax | ||||||||||||||||||||||||||||||
LIFO, net tax | ||||||||||||||||||||||||||||||
LIFO, net tax | ||||||||||||||||||||||||||||||
LIFO, net tax | (1,532 | ) | (14,894 | ) | 60,745 | 60,745 | 52,405 | 1,732 | 114,884 | |||||||||||||||||||||
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NOPAT before Preferred adj. for LIFO | $ | 69,049 | $ | (267,210 | ) | $ | 64,977 | |||||||||||||||||||||||
NOPAT before Preferred adj. for LIFO | ||||||||||||||||||||||||||||||
NOPAT before Preferred adj. for LIFO | ||||||||||||||||||||||||||||||
NOPAT before Preferred adj. for LIFO | $ | 64,977 | $ | 146,204 | $ | 141,046 | $ | 352,229 | ||||||||||||||||||||||
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Annual RANCE adj. % for LIFO | 4.2 | % | -20.4 | % | 6.3 | % | ||||||||||||||||||||||||
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RANCE % adj. for LIFO | ||||||||||||||||||||||||||||||
RANCE % adj. for LIFO | ||||||||||||||||||||||||||||||
RANCE % adj. for LIFO | 6.2 | % | 13.5 | % | 12.4 | % | 10.7 | % | ||||||||||||||||||||||
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This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information on the 20212023 financial and operating performance of MRC Global Inc. (“MRC Global”, the “Company”, “we”, “us” or “our”), please review the Company’s Annual Report on Form 10-K for the year ended December 31, 20212023 (the “Form 10-K”) that was filed with the U.S. Securities and Exchange Commission (the “SEC”)SEC and can be found on the internet at www.edocumentview.com/MRC.www.viewourmaterial.com/mrc.
Time of Virtual Annual Meeting
Thursday, May 5, 2022[●], 2024
10:00 a.m.[●] Houston, Texas time
We will hold a virtual meeting of stockholders. Stockholders may participate virtually by typing https://www.meetingnow.global/MA9SWK7[•] into your computer’s browser window. Please see Instructions for the Virtualvirtual Annual Meeting on page 1.
Voting Matters
Stockholders are being asked to vote on the following matters at the 20222024 Annual Meeting of Stockholders:
Item
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| Item III |
| Page 96 | |||
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Company Director Nominees
| Name | Age at Annual Meeting | Director Since | Professional Background | Independent | Current Committee Membership and Positions | Committee Membership and Positions after Annual | ||||||
Deborah G. Adams | 61 | 2017 | Former Senior Vice President of Phillips 66
| ✓ | Audit Compensation | Compensation (Chair) Governance | ||||||
Leonard M. Anthony | 67 | 2008 | Former CEO of WCI Steel, Inc. and former Chief Financial Officer of Dresser-Rand Group, Inc.
| ✓ | Governance (Chair) Audit | Governance (Chair) Audit | ||||||
George J. Damiris | 62 | 2021 | Former CEO of HollyFrontier Corporation and Holly Energy Partners
| ✓ | Compensation Governance | Compensation Governance | ||||||
Barbara J. Duganier | 63 | 2015 | Former Global Chief Strategy Officer of Accenture and former Global Chief Financial Officer of Andersen Worldwide
| ✓ | Audit (Chair) Governance | Audit (Chair) Governance | ||||||
Ronald L. Jadin | 61 | 2021 | Former Chief Financial Officer of W.W. Grainger, Inc.
| ✓ | Audit Governance | Audit Compensation | ||||||
Dr. Cornelis A. Linse | 72 | 2010 | Former Chairman of the Netherlands Commission for Environmental Impact Assessment and former Shell executive
| ✓ | Audit Compensation | Audit Compensation | ||||||
Robert J. Saltiel, Jr. | 59 | 2021 | President & CEO of MRC Global, Former CEO of Key Energy Services, Inc. and Atwood Oceanics, Inc.
| CEO | CEO |
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| Name | Age at Annual Meeting | Director Since | Professional Background | Independent | Current Committee Membership and Positions | Committee Membership and Positions after Annual
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Robert L. Wood | 68 | 2015 | Former Chairman, President and CEO of Chemtura Corporation
| ✓ | Compensation (Chair) Governance | Chairman of the Board |
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| Name | Age at Annual Meeting | Director Since | Professional Background | Independent | Committee Membership & Positions | |||||
Robert L. Wood | 70 | 2015 | Former Chairman, President & CEO of Chemtura Corporation
| ✓ | Chairman of the Board | |||||
Deborah G. Adams | 63 | 2017 | Former Senior Vice President of Phillips 66
| ✓ | Compensation (Chair) Governance | |||||
Leonard M. Anthony | 69 | 2008 | Former CEO of WCI Steel, Inc. & former CFO of Dresser-Rand Group, Inc.
| ✓ | Audit Compensation | |||||
George J. Damiris | 64 | 2021 | Former CEO of HollyFrontier Corporation and Holly Energy Partners
| ✓ | Compensation Governance (Chair) | |||||
David A. Hager | 67 | 2024 | Former CEO & Executive Chairman of Devon Energy Corporation
| ✓ | Audit Governance | |||||
Ronald L. Jadin | 63 | 2021 | Former CFO of W.W. Grainger, Inc.
| ✓ | Audit (Chair) Governance | |||||
Anne McEntee | 53 | 2022 | Managing Director - Asset Management with Wren House Infrastructure Management Ltd., Former CEO of General Electric Company’s Digital Services unit of GE Renewable Energy
| ✓ | Audit Compensation | |||||
Robert J. Saltiel, Jr. | 61 | 2021 | President & CEO of MRC Global, Former CEO of Key Energy Services, Inc. and Atwood Oceanics, Inc.
| CEO |
In the chart above, “Compensation” refers to the Board’s Compensation & Human Capital Committee, and “Governance” refers to the Board’s Environmental, Social, Governance & Enterprise Risk Committee.Committee
Preferred Stock Designated Director
Henry Cornell | 66 | 2018 | Founder and Senior Partner of Cornell Capital LLC and former Vice Chairman of the Merchant Banking Division of Goldman Sachs & Co.
| ✓ |
Henry Cornell | 68 | 2018 | Founder & Senior Partner of Cornell Capital LLC and former Vice Chairman of the Merchant Banking Division of Goldman Sachs Co.
| Independent Director |
| 7 | 2024 Proxy Statement |
Key Statistics about our Director Nominees
Independence | Leadership | Board Refreshment | CEO Experience | Board Refreshment | ||||||
88% | 50% | 2 | 63% | 5 | ||||||
7 of 8 Director Nominees are | 4 of 8 Director Nominees are Current or Former CEOs | New Directors Have Been Added Since 2021 | 5 of 8 Director Nominees are Current or Former CEOs | New Directors have been added since 2021 | ||||||
Gender Diversity | Diversity | Tenure | Overall Diversity | Average Tenure | ||||||
25% | 38% | 75% | 38% | 4.6 Years | ||||||
2 of 8 Director Nominees | 3 of 8 Director Nominees are Women or Racial/Ethnic Minority | 6 of 8 Director Nominees Have a Tenure of Less Than 7 Years | ||||||||
| 75% | ||||||||||
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| 3 of 4 Board Leadership Positions (including the Chairman of the Board) will be Women or Racial/Ethnic Minority immediately following re-election |
| 2 of 4 Board Leadership Positions (including the Chairman of the Board) are Women or from a Minority Group |
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Governance Highlights
Our Board of Directors (the “Board”) oversees the development and execution of MRC Global’s strategy. Some examples of the robust corporate governance practices and procedures that the Board hasand MRC Global through its Executive Leadership Team have adopted are listed below.
| Board Structure |
✓ |
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Each of the Audit, Compensation & Human Capital and Environmental, Social, Governance & Enterprise Risk (“ESG & Enterprise Risk”) Committees is comprised entirely of independent
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| ✓ |
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The directors regularly hold executive sessionsat each Board and committee meeting.
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| ✓ | We have a mandatory retirement policy for directors.
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| ✓ | Annually, we review our committee charters and Corporate Governance Guidelines.
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| ✓ | Our non-executiveChairman is independent and separate from our CEO.
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| ✓ | All directors
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| ✓ | The Board and each committee annually conduct a thorough self-assessment process focused on Board or committee performance, respectively.
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| ✓ | We are committed to Board
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| ✓ | Our Board is committed to diversity of backgrounds, experience and perspectives. As Ms. Duganier leaves the Board, the Board expects to consider additional female candidates for the Board. | |||||||||||||||
| ✓ | Our Board and committees actively review risks and oversee risk management, including enterprise, environmental, social and governance (“ESG”) and cyber security risks.
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| ✓ | Our Board is actively engaged in overseeing talent and long-term succession planning for senior leadership and directors.
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Corporate Responsibility | ✓ | We have a comprehensive ethics program with standards of business conduct that help guide and promote good governance, responsible business practices and the highest standards of integrity.
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| ✓ | Our Board and our ESG & Enterprise Risk Committee oversee management’s implementation of our ESG policies, programs and
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| Stock Ownership | ✓ | |||||||||||||||
We have stock ownership guidelines of 5x the annual cash retainer for our
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| ✓ | We have stock ownership guidelines of 5x base salary for the CEO and 3x base salary for other named executive officers (“NEOs”).
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| ✓ | We prohibit hedging and pledging of our Company securities by directors and executive officers.
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20212023 Financial and Operational Highlights
MRC Global is the leading global distributor of pipe, valves, fittings (PVF)(“PVF”) and other infrastructure products and services to diversified energy, industrial and gas utility end-markets. We provide innovative supply chain solutions, technical product expertise and a robust digital platform to customers globally through our leading position across each of our diversified end-markets including the following sectors:
| ● | Gas Utilities:gas utilities (storage and distribution of natural gas) |
| ● | DIET: downstream, industrial and energy transition (crude oil refining, petrochemical and chemical processing, general industrials and |
| ● |
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Financial and operational highlights from fiscal year 20212023 include:
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Adjusted EBITDA of | Adjusted gross profit percentage of 21.5% of sales - two consecutive years above 21% | ||||||||
Total debt of $301 million, and net debt of $170 million (both as of December 31, 2023) — the lowest net debt since the Company’s | |||||||||
| — the lowest since the Company’s IPO in 2012 | ||||||||
Generated 44% of the Company’s revenue through MRCGO™ digital platform/e- commerce | 96% of 2023 valve sales were | ||||||||
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| * | See |
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20212023 Executive Compensation Highlights
“Pay for Performance” Executive Compensation Strategy
MRC Global’s executive compensation program is designed to attract, motivate and retain our executives, including our named executive officers (NEOs)(“NEOs”), who are critical to the Company’s long-term success. Our executive compensation strategy is “pay for performance” and is focused on:
| ● | motivating executive officers to increase the economic value of the Company by strengthening our position as a leading global |
| ● | aligning our executive officers’ interests and actions with the interests of our stockholders and key stakeholders. |
We provide our executive officers with a compensation package that consists primarily of:
| ● | a base salary, |
| ● | short-term incentive (“STI”) in the form of annual cash payments based upon achievement of certain performance metrics, and |
| ● | long-term incentive (“LTI”) in the form of time-vested restricted stock units (“RSUs”) and performance share units (“PSUs”), which pay out based upon achievement of certain performance metrics over a three-year performance period. |
Our Compensation & Human Capital Committee, which is composed solely of independent directors, believes in a pay for performance philosophy. While our Compensation & Human Capital Committee sets target compensation for the executive officers each year based on market practices and internal considerations, the executive officers’ realized compensation is strongly dependent on the Company’s performance relative to pre-determined and measurable financial and safety metrics and stock price performance.
| ● | As illustrated in the following graphic, a substantial portion of our target compensation for executive officers is at risk. |
| ● |
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| ● |
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| ● | 12.5% on two safety targets. |
| ● |
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The |
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| 1 | The |
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Target Compensation
The following illustration represents the elements of our 2021 base2023 compensation package at target to reflect the CEO’s compensation and an average for the other active NEOs.
The CEO’s Compensation at Risk has increased from 84% in 2022 to 85% in 2023, and the average Compensation at Risk for the other NEOs has increased from 66% to 71% from 2022 to 2023.
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Key Features of Our Executive Compensation Program
What We Do | ||
✓ |
We pay for performance –
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✓ |
We benchmark pay relative to the market and review the peer group used for market benchmarking on an annual basis.
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✓ |
We set objectives for our annual STI plan that are measurable, determined in advance and aligned with stockholder interests. Our
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✓ |
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Our LTI equity compensation plan is designed to be strongly tied to Company performance. We award PSUs to tie payouts to our relative TSR
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✓ |
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✓ |
Beginning in 2022, we added a Russell 2000 ETF to the companies used in the relative TSR calculation for PSUs to better reflect our performance against the broader market and acknowledge the broader competition for investor capital.In 2023, we replaced the OSX with the OIH in our comparator group that is used to calculate relative TSR for our PSUs to better reflect our markets for investor capital.
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✓ |
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✓ |
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We have equity ownership guidelines that provide for significant executive officer equity ownership.
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✓ |
We have adopted a
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✓ |
We have a fully independent Compensation & Human Capital Committee.
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✓ |
Our Compensation & Human Capital Committee engages a compensation consultant that is independent of management and the Company.
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✓ |
We have an annual Say-on-Pay vote.
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| What We Don’t Do | ||
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No guaranteed minimum incentives
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No excise tax gross ups
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No re-pricing of stock options or stock appreciation rights permitted without approval from stockholders
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No hedging or derivative transactions with respect to our shares by executive officers or directors permitted
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No pledging of MRC Global securities by executive officers or directors permitted
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We provide additional detail about our executive compensation in our “Compensation Discussion and Analysis”.SAY-ON-PAY
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SAY-ON-PAY
APPROVAL | Stockholders showed |
Environmental and Social Responsibility
Our environmental and social responsibility focus is an integral part of our business and helps us identify goals as we pursue business opportunities and manage our Company’s risk. Our ESG Management Committee is spearheaded by our VP – ESG and sponsored by our EVP – Corporate Affairs and is comprised of executives representing various functions within our Company including operations, finance, quality, safety, corporate services, marketing, human resources, investor relations and supply chain management leaders. We believe that proper management of ESG factors ultimately leads to greater returns and contributes to more engaged employees, resulting in a more effective organization. The ESG Management Committee identifies and discusses ESG issues material to MRC Global’s business, including our human capital management practices and product offerings. The EVP – Corporate Affairs and VP-ESG report quarterly to our Board through the Board’s ESG & Enterprise Risk Committee and oversees disclosure to investors and stakeholders through our annual ESG Report, filings with the SEC and on our Company’s website. The ESG & Enterprise Risk Committee of the Board is comprised of non-executive directors providing oversight of governance, enterprise risk management and ESG matters. Members of the ESG & Enterprise Risk Committee assist the full Board in its oversight of the Company’s efforts on ESG matters and reports to the Board on a quarterly basis. Environmental and social responsibility highlights for 2021 include:
|
| 2024 Proxy Statement |
See “Environmental and Social Responsibility” below and our 2021 Environmental, Social Responsibility & Governance Report on our website at https://www.mrcglobal.com, by clicking on “Company”, then “Corporate Social Responsibility”. Our 2022 ESG report will also be published at this link when available.
Deadlines for Submitting Stockholder Proposals for 20232025 Annual Meeting of Stockholders
The Corporate Secretary of the Company must receive proposals for inclusion in our Proxy Statement for our 20232025 annual meeting of stockholders in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), no later than November 23, 2022.[●], 2024.
The Corporate Secretary of the Company must receive notice of a stockholder nomination for candidates for the Board or any other business to be considered at our 20232025 annual meeting of stockholders no earlier than the close of business on January 5, 2023,[●], 2025, and no later than the close of business on February 6, 2023.[●], 2025. Changes to the date of our annual meeting and the date of the first announcement of such meeting may change these dates, as set forth in our Bylawsbylaws and further discussed below. Copies of our bylaws are available on our website at https://www.mrcglobal.com, by clicking on “Investors” in the menu, then “Corporate Governance”, then “Documents and Charters”.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Why am I receiving these materials?
We are furnishing this Proxy Statement to you as part of a solicitation by the Board of Directors (the “Board”) of MRC Global Inc., a Delaware corporation, for use at our 2022 Virtual2024 virtual Annual Meeting of Stockholders (the “Annual Meeting”) and at any reconvened meeting after an adjournment or postponement of the Annual Meeting. We will hold the Annual Meeting online only. There will be no physical meeting location. The Annual Meeting will be held on Thursday, May 5, 2022,[●], 2024, at 10:00[●] a.m. Houston, Texas time. Please see Instructions for the Virtualvirtual Annual Meeting on page 1.
We have two classes of stock: common stock, $.01 par value per share (“common stock”), and 6.5% Series A Convertible Perpetual Preferred Stock (“preferred stock”, and together with the common stock, “stock”). You are receiving these materials because, at the close of business on March 11, 202225, 2024 (the “Record Date”), you owned shares of stock. All stockholders of record on the Record Date are entitled to attend and vote at the Annual Meeting. Each common stockholder will have one vote on each matter for every share of common stock owned on the Record Date. On the Record Date, we had a total of 107,774,169105,508,677 shares of common stock, of which 24,216,330 shares are held in treasury, resulting in 83,557,83985,206,668 shares of common stock entitled to vote at the meeting. Any shares held in our treasury on the Record Date are not considered outstanding and will not be voted or considered present at the meeting. On the Record Date, we had a total of 363,000 shares of preferred stock outstanding entitled to 20,302,009 votes at the Annual Meeting, which number is equal to the number of shares of common stock into which the shares of preferred stock could be converted on the Record Date, rounded to the nearest share. Holders of the common stock and the preferred stock vote (on an as-converted basis) together on all matters as a single class.
How is MRC Global distributing proxy materials? Is MRC Global using the SEC’s “Notice and Access” rule?
Under SEC rules, we are furnishing proxy materials to our stockholders. On or about March 23, 2022, weWe expect to mail our stockholders (other than those who previously requested electronic or paper delivery) a Notice Regarding the Availability of Proxy Materials (the “Notice”) containing instructions on how to access the proxy materials online, and to make the materials available as of that date on www.edocumentview.com/MRC. If you receive a Notice by mail, you will not receive a printed copy of the proxy materials in the mail. Instead, the Notice instructs you on how to access and review all of the important information contained in the proxy materials. The Notice also instructs you on how you may submit your proxy via the internet. If you received a Notice by mail and would like to receive a copy of our proxy materials follow the instructions contained on the Notice about how you may request to receive a copy electronically or in printed form on a one-time or ongoing basis. We encourage stockholders to take advantage of the availability of the proxy materials on the internet as we believe electronic delivery will expedite the receipt of materials while lowering costs and reducing the environmental impact of our Annual Meeting by reducing printing and mailing of full sets of materials.
In addition toincluding this Proxy Statement, our WHITE proxy card and Notice, our proxy materials include our 20212023 Annual Report (the “Annual Report”) (which includes the Form 10-K).
, to first be mailed on or about [●] and to first be made available to stockholders at that time. Copies of the Form 10-K, as well as other periodic filings by the Company with the SEC, are also available on our website at https://www.mrcglobal.com[●] by clicking on “Investor Relations”“INVESTOR” and “SEC Filings”. The information included in our website is not incorporated herein by reference.
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A copy ofMRC Global is not using the proxy materials, including theSEC’s “Notice and Access” rule with respect to this year’s Annual Report, will be furnished to you free of charge upon request to our Corporate Secretary or proxy solicitor at, respectively:Meeting.
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What information is contained in this Proxy Statement?
This Proxy Statement includes information about the nominees for director and other matters to be voted on at the Annual Meeting. It also:
| (i) | explains the voting process and requirements; |
| (ii) | describes the Company’s nominees and the compensation of our directors; |
| (iii) | describes the compensation of our principal executive officer, our principal financial officer and at least our three other most highly compensated officers (collectively referred to as our “named executive officers” or “NEOs”); |
|
| (iv) | provides information regarding our |
| (v) | provides certain other information that SEC rules require. |
| 15 | 2024 Proxy Statement |
What matters am I voting on, how may I vote on each matter and how does the Board recommend that I vote on each matter?
The following table sets forth each of the proposals you are being asked to vote on, how you may vote on each proposal and how the Board recommends that you vote on each proposal:
Company Proposals | How may I vote?
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How does the Board
| ||||
I. Election of |
You may: (i) vote FOR the election of (ii)WITHHOLDauthority to vote for
| FOR each of the | ||||
II. Approve on an advisory basis the Company’s named executive officer compensation | You may:
(ii) indicate that you wish to ABSTAINfrom voting on the matter. | FOR the approval of a non-binding, advisory resolution approving the Company’s named executive officer compensation | ||||
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| You may:
the ratification of the appointment of Ernst & Young LLP as our
(ii) you may indicate that you wish to ABSTAINfrom voting on the matter. | FOR the ratification of Ernst & Young LLP as our registered public accounting firm for | ||||
IV. Approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation | You may: (i) vote FOR or AGAINST the approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation; or (ii) you may indicate that you wish to ABSTAIN from voting on this matter. | FOR the approval of an Amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation | ||||
We are not aware of any matter to be presented at the Annual Meeting that is not included in this Proxy Statement. However, your proxy authorizes the person named on the proxy card to take action on additional matters that may properly arise. These individuals will exercise their best judgment to vote on any other matter, including a question of adjourning the Annual Meeting.
What is the difference between a stockholder of record and a stockholder who holds stock in street name?
If your shares are registered in your name with our transfer agent, Computershare Trust Company,
N.A. (“Computershare”), you are a stockholder of record.
If you hold your shares with a broker or in an account at a bank, then you are a beneficial owner of shares held in “street name”. Your broker or bank is considered the stockholder of record for purposes of voting at the Annual Meeting. Your broker or bank should provide you with instructions for directing the broker or bank how to vote your shares.
| 16 | 2024 Proxy Statement |
How do I vote if I am a stockholder of record?
As a stockholder of record, you may vote your shares in any one of the following ways:
 | Vote online at the Virtual Annual Meeting |   | Vote | |||
 | If you receive a paper copy of the proxy materials, complete, sign, date and return the proxy card or voting instruction form | |||||
Unless you or your representative attend and vote online at the Virtualvirtual Annual Meeting, for your vote to count the Company must receive your vote, either by telephone, internet, proxy card or voting instruction form by 11:59 p.m., Houston, Texas timeEastern Daylight Time on May 4, 2022.[●], 2024. Internet and telephone voting facilities will close at 11:59 p.m., Houston, Texas timeEastern Daylight Time on May 4, 2022.[●], 2024.
If I hold shares in street name, does my broker need instructions to vote my shares?
Under rules of the New York Stock Exchange (the “NYSE”), if you hold shares of stock in street name and do not submit specific voting instructions to your brokers, banks or other nominees, they generally will have discretion to vote your shares on routine matters such as Proposal IV,III but will not have the discretion to vote your shares on non-routine matters, such as Proposals I, II and III.IV. When the broker, bank or other nominee is unable to vote on a proposal because the proposal is not routine, and you do not provide any voting instructions, a broker non-vote occurs and, as a result, your shares will not be voted on these proposals.
|
Therefore:Additionally, brokers are not allowed to exercise their voting discretion with respect to matters which the NYSE rules would otherwise determine to be “routine” to the extent that the broker has provided the applicable beneficial owner with competing proxy materials (in addition to the Company’s proxy materials). Consequently, if Engine Capital provides a beneficial owner with competing proxy materials (in addition to the Company’s proxy materials), the broker will not have discretionary authority as to any matter. Thus, beneficial owners of shares held in broker accounts are advised that, if Engine Capital provides the owner with competing proxy materials (in addition to the Company’s proxy materials) and beneficial owners do not timely provide instructions to their broker, their shares will not be voted at the Annual Meeting in connection with any of the proposals, including the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2024 (Proposal III). If a quorum is not established, we will not be permitted to conduct business at the Annual Meeting. We strongly encourage you to use the WHITE proxy card to authorize a proxy to votey our shares or provide voting instructions to your broker so that your vote will contribute toward establishing a quorum and permit the conduct of business at the Annual Meeting.
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How do I vote my shares?
If you are a stockholder of record, you can cast your vote during the online meeting, by calling the toll-free telephone number or by using the internet as described in the instructions in the Notice. If you receive a paper copy of the proxy materials, you may also vote your shares by proxy without attending the Annual Meeting. We encourage stockholders to submit their proxies in advance of the Annual Meeting. You can ensure that your shares are voted by completing, signing dating and returning yourthe WHITE proxy card or voting instruction form. Your vote will be cast in accordance withyour shares over the Internet pursuant to the instructions authorized by telephone or internet or includedprovided on a properly signed and datedthe WHITE proxy card or voting instruction form, as applicable.card. If you are a stockholdervoting over the Internet, you will need to provide the control number that is printed on the WHITE proxy card that you receive. Voting your shares by proxy by any of record, you canthese methods will not affect your right to attend and vote at the Virtual Annual Meeting virtually and vote. Ifor by executing a proxy designating a representative to vote for you do not vote by telephone or internet, return a signed proxy card or voting instruction form or attendat the virtual meeting and vote, no vote will be cast on your behalf.Annual Meeting.
You are urged to follow the instructions on your Notice,WHITE proxy card or voting instruction form to indicate how your vote is to be cast. Please see the Instructions for the Virtualvirtual Annual Meeting on page 1 if you wish to attend the virtual meeting.
| 17 | 2024 Proxy Statement |
Pursuant to Section 212(c) of Delaware Law, stockholders may validly grant proxies over the internet. Your internet vote authorizes the proxies designated by the Company to vote your shares in the same manner as if you had returned a proxy card or voting instruction form. To vote over the internet, follow the instructions provided on your Notice. If you hold shares in street name, you are encouraged to contact your bank or broker to obtain and return the appropriate voting instruction form.
Other Candidates Nominated for Election as Directors at the Annual Meeting in Opposition to the Board’s Nominees
Engine Capital has notified the Company of its intent to nominate a slate of two alternative nominees for election as directors at the Annual Meeting (the “Engine Capital Nominees”) in opposition to the nominees recommended by the Board. The Board does NOT endorse any of the Engine Capital Nominees and strongly urges you to discard and NOT sign or return any proxy card that may be sent to you by Engine Capital. The Board unanimously recommends that you vote “FOR ALL” the nominees proposed by the Board on the WHITE proxy card.
If you have previously submitted a proxy card sent to you by Engine Capital, you can revoke that proxy and vote for the Board’s recommended nominees and on the other matters to be voted on at the Annual Meeting by:
| ● | completing, signing and returning the WHITE proxy card, |
| ● | voting over the Internet pursuant to the instructions provided on the WHITE proxy card or |
| ● | voting at the meeting. |
Only your latest dated proxy will count, and any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in this Proxy Statement. We are not responsible for the accuracy of any information that may be provided by or relating to Engine Capital or the Engine Capital Nominees contained in any solicitation materials that may be filed or disseminated by or on behalf of Engine Capital or any other statements Engine Capital may make.
It will NOT help elect the nominees recommended by the Board if you sign and return proxy cards sent by Engine Capital, even if you vote to “WITHHOLD” your vote with respect to their nominees using the Engine Capital proxy card. In fact, doing so will cancel any previous vote cast by you on the Company’s proxy card. The only way to support the Board’s recommended nominees is to vote “FOR” the Board’s recommended nominees by using the enclosed WHITE proxy card. Only the last proxy received will be counted.
Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. We encourage you to promptly vote in advance of the Annual Meeting by completing, signing and returning the WHITE proxy card or voting your shares over the Internet pursuant to the instructions provided on the WHITE proxy card. If you attend the Annual Meeting, you can vote even if you previously submitted your proxy.
If Engine Capital proceeds with its previously announced alternative director nominations, we may conduct multiple mailings of the Proxy Statement and the accompanying proxy materials prior to the Annual Meeting date so that stockholders have our latest proxy information and materials to vote. We will send you a new WHITE proxy card with each mailing, regardless of whether you have previously voted. The latest-dated proxy you submit will be counted, and, if you wish to vote as recommended by the Board, then you should only submit WHITE proxy cards.
| 18 | 2024 Proxy Statement |
What if I return my proxy card or vote by internet or telephone but do not specify how I want to vote?
If you are a stockholder of record and correctly sign, date and return your WHITE proxy card or complete the internet or telephone voting procedures, but do not specify how you want to vote your shares, we will vote them as follows:
| I. | FOR the election of the 8 Company director |
| II. | FOR the approval, on an advisory basis, of a non-binding advisory resolution approving the Company’s named executive officer compensation |
| III. | FOR |
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| IV. | FOR the approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation. |
What can I do if I change my mind after I vote my shares?
Attendance virtually in the Virtualvirtual Annual Meeting will not in and of itself constitute revocation of a proxy. Any stockholder of record who authorizes his or her vote by telephone or by internet or executes and returns a proxy card may revoke the proxy before it is voted by:
| ● | notifying in writing the Corporate Secretary of MRC Global Inc. at 1301 McKinney Street, Suite 2300, Houston, Texas 77010, Attention: Corporate Secretary; |
| ● | executing and returning a subsequent proxy; |
|
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| ● | appearing online and voting at the Annual Meeting. |
For shares you hold in street name, you may change your vote by submitting new voting instructions to your broker, bank or other nominee or by obtaining a legal proxy from your broker, bank or other nominee giving you the right to vote your shares at the Annual Meeting.
What shares are included on my proxy card?
You will receive one proxy card for all the shares of MRC Global that you hold as a stockholder of record (in certificate form or in book-entry form). If you hold your shares of MRC Global in street name, you will receive voting instructions for each account you have with a broker or bank.
How may I obtain instructions on how to attend the Annual Meeting online?
Please see Instructions for the Virtualvirtual Annual Meeting on page 1. If you need assistance with these directions, please call us at 713-655-1005 or 877-294-7574 or write us at MRC Global Inc., 1301 McKinney Street, Suite 2300, Houston, Texas 77010, Attn: Corporate Secretary.
What is the quorum requirement for the Annual Meeting?
There must be a quorum to take action at the Annual Meeting (other than action to adjourn or postpone the Annual Meeting for lack of a quorum). A quorum will exist at the Annual Meeting if stockholders holding a majority of the voting powers of all of the shares entitled to vote at the Annual Meeting are present virtually or by proxy. Stockholders of record who return a proxy or vote virtually at the Annual Meeting will be considered part of the quorum. Abstentions and “broker non-votes” are counted as present and entitled to vote for purposes of determining a quorum.
| 19 | 2024 Proxy Statement |
What is the voting requirement to approve each of the proposals?
The following table sets forth the voting requirement with respect to each of the proposals:
Proposal
|
Voting Requirement
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I.Election of the 8 Company director nominees | Each director must be elected by a plurality of the votes cast. Any director who receives a greater number of “WITHHOLD” votes than “FOR” votes is expected to tender to the Board the director’s resignation promptly following the certification of election results pursuant to the Company’s Corporate Governance Guidelines. Pursuant to these guidelines, the Board must accept or reject the resignation within 90 days following the certification of election results and publicly disclose its decision.
| |
II.Approve, on an advisory basis, a non-binding advisory resolution approving the Company’s executive officer compensation |
| |
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| |
| To be approved, this proposal must be approved by a majority of the votes cast by the stockholders present in person or represented by proxy, meaning that the votes cast by the stockholders “FOR” the approval of the proposal must exceed the number of votes cast “AGAINST” the approval of the proposal.
| |
| To be approved, this proposal must be approved by a majority of the votes cast by the stockholders present in person or represented by proxy, meaning that the votes cast by the stockholders “FOR” the approval of the proposal must exceed the number of votes cast
| |
IV.Approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation. | To be approved, this proposal must be approved by the affirmative vote of the holders of at least 75% of the voting power of the Company’s issued and outstanding stock entitled to vote thereon, voting together as a single class. | |
Other matters that may properly come before the Annual Meeting may or may not require more than a majority vote under our bylaws, our Amended and Restated Certificate of Incorporation, the laws of Delaware or other applicable laws, depending on the nature of the matter.
Who will count the votes?
A representative of ComputershareFirst Coast Results, Inc. will act as the inspector of elections and count the votes.
Where can I find the voting results of the Annual Meeting?
We will announce the preliminary voting results at the Annual Meeting. We also will disclose the final voting results in a Form 8-K filed with the SEC within four business days after the Annual Meeting.
May I propose actions for consideration at the 2023 annual meeting2025 Annual Meeting of stockholders?
Yes. For your proposal to be considered for inclusion in our Proxy Statement for the 20232025 annual meeting of stockholders, we must receive your written proposal no later than November 23, 2022.[●], 2024. If we change the date of the 20232025 annual meeting of stockholders by more than 30 days from the anniversary of the date of this year’s Annual Meeting, then the deadline to submit proposals will be a reasonable time
| 20 | 2024 Proxy Statement |
before we begin to print and mail our proxy materials. Your proposal, including the manner in which you submit it, must comply with SEC regulations regarding stockholder proposals.
If you wish to raise a proposal (including a director nomination) from the floor during our 20232025 annual meeting of stockholders, we must receive a written notice of the proposal no earlier than the close of business on January 5, 2023,[●], and no later than the close of business on February 6, 2023.[●], 2025. If our first announcement of the date of the 20232025 annual meeting of stockholders is less than 100 days prior to the meeting, then in accordance with the Bylaws, the Corporate Secretary of the Company must receive the notice by the 10th day following the announcement. If the date of the 20232025 annual meeting is more than 30 days before or more than 30 days after the anniversary of the date of this year’s Annual Meeting, you must deliver the notice not earlier than the close of business on the 120th day prior to the date of the 20232025 annual meeting and not later than the close of business on the later of the 90th day prior to the date of the 20232025 annual meeting. Your submission must contain the additional information that our bylaws require. Proposals should be addressed to our Corporate Secretary at 1301 McKinney Street, Suite 2300, Houston, Texas 77010.
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Who is paying for this proxy solicitation?
Our Board is soliciting your proxy. We expect to solicit proxies in person, by telephone or by other electronic means. We have retained Morrow Sodali LLC, 470 West Ave, Stamford, CT 06902430 Park Ave., 14th Floor, New York, NY 10022 to assist in this solicitation. We expect to pay Morrow Sodali LLC an estimated $7,500 in fees,[●], plus expenses and disbursements. Morrow Sodali expects that approximately 45 of its employees will assist in the solicitation.
We will pay the expenses of this proxy solicitation, including the cost of preparing, printing and mailing the Notice, this Proxy Statement and related proxy materials. These expenses may include the charges and expenses of banks, brokerage firms and other custodians, nominees or fiduciaries for forwarding proxy materials to beneficial owners of MRC Global shares. Our aggregate expenses, including those of Morrow Sodali, other outside advisors, related to our solicitation of proxies in excess of expenses normally spent for an annual meeting of stockholders in which there is not a proxy contest are expected to be approximately $[●], of which approximately $[●] has been incurred as of the date of this Proxy Statement.
Are you “householding” for stockholders sharing the same address?
The SEC has adopted rules that allow a company to deliver a single Notice or set of proxy materials to an address shared by two or more of its stockholders. This method of delivery, known as “householding”, permits us to realize cost savings and reduces the amount of duplicate information stockholders receive. In accordance with notices sent to stockholders sharing a single address, we are sending only one Notice (or, if requested, one set of proxy materials)materials to that address unless we have received contrary instructions from a stockholder at that address. Any stockholders who object to or wish to begin householding may notify the Corporate Secretary of the Company orally or in writing at the telephone number or address, as applicable, set forth above. We will deliver promptly an individual copy of the Notice and, if requested, proxy materials to any stockholder who revokes its consent to householding upon our receipt of such revocation.
If you would like to receive a copy of this Proxy Statement and our 20212023 Annual Report, we will promptly send you a copy upon request directed to our transfer agent, Computershare. You can call Computershare toll free at 1-800-962-4284. You can call the same phone number to notify us that you wish to receive a separate 2023 Annual Report or Proxy Statement in the future or to request delivery of a single copy of any materials if you are receiving multiple copies now.
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SECURITY OWNERSHIPBACKGROUND TO THE SOLICITATION
The summary below details the significant contacts between the Company and Engine Capital beginning on June 6, 2022 through the date of this proxy statement. This summary does not purport to catalogue every conversation of or between members of the Board, the Company’s management and the Company’s advisors, on the one hand, and representatives of Engine Capital and their advisors, on the other hand. Engine Capital LP is a stockholder which, together with its affiliates and related persons, purportedly was the owner of an aggregate of [3,866,886 shares of our common stock, or approximately 4.6% of the outstanding shares of our common stock, as of February 14, 2024]. In addition to the meetings described below, members of the Board received regular updates and met with management and the Company’s advisors regarding Engine Capital throughout the period leading up to the date of this proxy statement.
The Board and the Environmental, Social, Governance & Enterprise Risk Committee (the “ESG & Enterprise Risk Committee”) are committed to maintaining a Board with the skills, experience and capabilities desirable in light of the Company’s business and strategy, including customer or end market experience, leadership experience and experience in the areas of ESG and digital technology. The ESG & Enterprise Risk Committee annually assesses new candidates for the Board and welcomes suggestions regarding Board composition from the Company’s shareholders.
On June 6, 2022, Engine Capital introduced itself as a interested potential shareholder to a member of the Company’s investor relations team and had its first virtual meeting with members of the Company’s executive management team on August 18, 2022. From August 2022 through September 2023, the Company engaged periodically in constructive dialogue with Engine Capital with respect to the various questions relating to the strategic direction of the Company and other related topics.
On September 18, 2023, Rob Saltiel, the Company’s President and Chief Executive Officer, and Kelly Youngblood, the Company’s Executive Vice President and Chief Financial Officer, had a call with Arnaud Ajdler, a managing partner at Engine Capital, and Brad Favreau, a partner at Engine Capital. During this call, Messrs. Ajdler and Favreau stated that Engine Capital owned 2.5% of the Company’s common stock. They then previewed the contents of a letter Engine Capital intended to send to the Board and provided the Company with Engine Capital’s views as follows:
| ● | The Company had done a good job in right-sizing and diversifying its business. In particular, the Company’s Gas Utility end sector business has less cyclicality risk. |
| ● | Engine Capital believes the Company’s increased gross profit margins are sustainable. |
| ● | The Company is producing good cash flow generation. |
| ● | Management has done an excellent job in running the Company. |
| ● | The Company’s common stock was “deeply undervalued”. |
| ● | The Company could benefit from a private buyer that is less concerned about volatility and mark-to-market risks. |
| ● | The Company should entertain a strategic review, including a sale to a private buyer. |
On September 18, 2023, Engine Capital e-mailed a letter to the Board setting forth Engine Capital’s 2.5% ownership of the Company’s outstanding common stock, its favorable views of the Company’s management and its belief that the Company should pursue strategic alternatives to increase the Company’s stock price (the “September 18, 2023 Letter”).
On September 22, 2023, Engine Capital e-mailed the Company to state that it had increased its ownership of the Company’s outstanding common stock from 2.5% to closer to 4%.
On September 24, 2023, the Board met and, together with management and the Company’s advisors, discussed Engine Capital’s interactions with the Company, the September 18, 2023 Letter and response options.
| 22 | 2024 Proxy Statement |
On October 3, 2023, the Company e-mailed Engine Capital to thank Engine Capital for its continued interest and support and to advise that the Company had shared the letter with its Board and was in the process of reviewing Engine Capital’s suggestions and questions.
On October 4, 2023, Engine Capital replied by e-mail and requested that the Company implement its suggestions in the September 18, 2023 Letter “with a sense of urgency.”
On October 16, 2023, pre-market open, Bloomberg News published an article disclosing certain details contained in the September 18, 2023 Letter, including Engine Capital’s request that the Company explore a sale and that Engine Capital owned an approximately 4% stake of the Company.
On October 17, 2023, Engine Capital e-mailed the Company and wrote, with respect to the Bloomberg News article, that it was “unfortunate as we were hoping to keep [the September 18, 2023 Letter] private for now,” and requested a conversation with the Company about next steps.
On October 20, 2023, at the request and direction of the Board, representatives from J.P. Morgan (“JPM”), the Company’s financial advisor, telephonically met with Engine Capital in an effort to better understand Engine Capital’s thesis and intentions with the Company.
On October 27, 2023, Robert L. Wood, Chairman of the Board, and Leonard M. Anthony, a member of the Board, met virtually with Messrs. Ajdler and Favreau to discuss Engine Capital’s views on strategic alternatives available to the Company.
On October 31, 2023, Mr. Ajdler sent an e-mail to Mr. Wood and Mr. Anthony requesting that the Company:
| ● | consider appointing an individual selected by Engine Capital to the Board, to give Engine Capital Board representation and “to help with the sale of the company, or to help with capital allocation if the company remains a standalone entity in the public markets,” |
| ● | reach out to strategic players in addition to private equity if the Company was indeed pursuing a sale and |
| ● | incentivize management with a bonus for a successful sale of the Company. |
On November 3, 2023, the Board met and, together with management and the Company’s advisors, discussed Engine Capital’s recent communications. Separately, on November 3, 2023, upon the recommendation of the ESG & Enterprise Risk Committee, as part of its annual governance review the Board approved and adopted changes to the Company’s bylaws and Corporate Governance Guidelines focused on mechanics related to universal proxy changes and other standard market practices for director nominations.
On November 8, 2023, members of the Company’s management conducted its third-quarter earnings call, during which, among other things, they spoke about the Company’s plans for growth in the future, including possible M&A to grow the Company.
On November 9, 2023, Mr. Ajdler e-mailed Messrs. Saltiel, Youngblood, Wood and Anthony with Engine Capital’s feedback on the earnings call. In his e-mail, Mr. Ajdler stated his belief that the Company should be taken private and should not attempt to grow through acquisitions. Later that day, Mr. Youngblood and a member of the Company’s investor relations team, met telephonically with Engine Capital to discuss the earnings call, as well Engine Capital’s thesis and its request to add an individual selected by Engine Capital to the Board.
On November 12, 2023, Mr. Wood responded to Mr. Ajdler’s October 31, 2023 e-mail and advised that the Board is open to receive names of qualified directors with needed skill sets, including skill sets in technology (enterprise systems technology) and cyber security.
On November 14, 2023, Mr. Ajdler e-mailed Mr. Wood, copying certain other members of the Board, and saying that Engine Capital wants a director with “an investor mindset in the boardroom,” because it will be “important in the context of evaluating a potential sale” and that Engine Capital, as a “large shareholder,” would like to have “a seat at the table.”
| 23 | 2024 Proxy Statement |
On November 17, 2023, at the request and direction of the Board, Daniel Churay, General Counsel and Corporate Secretary of the Company, e-mailed Engine Capital to request the name of its proposed nominee to the Board.
On November 29, 2023, Engine Capital e-mailed Mr. Churay and advised that Engine Capital proposed that Mr. Favreau be added to the Board.
Between December 5, 2023 and December 13, 2023, the Company exchanged e-mails and coordinated with Engine Capital to schedule an interview of Mr. Favreau with members of the ESG & Enterprise Risk Committee.
On December 15, 2023, the Board met and, among other things, Mr. Churay provided the Board with an update on discussions with Engine Capital and noted that an interview of Mr. Favreau would be held in January to discuss his candidacy. Further, it was noted that the ESG & Enterprise Risk Committee was scheduled to meet on December 18, 2023 to discuss the current composition, profile and skills of the Board to provide a view as to the qualifications and profile of a new director that the Board might consider, if any.
On December 18, 2023, the ESG & Enterprise Risk Committee met and, among other things, discussed the current composition, profile and skills of the Board, to identify the current needs of the Board.
On January 8, 2024, Mr. Favreau met in person at the Company’s corporate headquarters with each of Barbara J. Duganier and Deborah G. Adams, members of the ESG & Enterprise Risk Committee, as well as with Messrs. Saltiel, Youngblood and Churay.
On January 23, 2024, in line with the Company’s standard process, Mr. Churay sent to Mr. Favreau a director and officer questionnaire and asked that it be completed by Mr. Favreau in connection with the ESG & Enterprise Risk Committee’s evaluation of him as a Board candidate.
On January 25, 2024, Messrs. Ajdler and Favreau met virtually with Messrs. Wood, Anthony, Churay and Youngblood and Ms. Duganier, and reviewed written materials to reiterate Engine Capital’s position that the Company should consider a sale of the Company or, alternatively, consider stock repurchases and add Mr. Favreau to the Board. The Board met the same day to review and discuss Engine Capital’s written presentation and the request to add Mr. Favreau to the Board.
On January 25, 2024, the Board met and, among other things, discussed the skill sets and qualifications of the current members of the Board of directors and of Mr. Favreau. Additionally, the ESG & Enterprise Risk Committee authorized the retention of the Heidrick & Struggles (“Heidrick”) to assist the committee to identify qualified director candidates.
On February 2, 2024, Engine Capital delivered a written notice formally nominating three individuals, Marjorie L. Bowen, Bradley T. Favreau, and Daniel B. Silvers, as stockholder nominees to be elected to the Board at the Annual Meeting. On the same day, Mr. Ajdler e-mailed Messrs. Saltiel, Youngblood, Anthony and Wood to apprise them of Engine Capital’s nominations, its reasons for making the nominations and its desire to keep the nominations private.
On February 7, 2024, the Board met and discussed, among other things, the date of the Annual Meeting and proposed slate of directors to be elected at the meeting.
During the month of February 2024, at the request and direction of the Board and the ESG & Enterprise Risk Committee, Mr. Churay coordinated interviews of 10 potential director candidates, including nominees identified by Heidrick and Engine Capital’s nominees.
On February 19, 2024, the Board met and received a report from members of the ESG & Enterprise Risk Committee relating to director candidate interviews that had been conducted through that date and to review biographical background, including skill sets and experience of select candidates.
| 24 | 2024 Proxy Statement |
On February 23, 2024, Mr. Churay requested that Engine Capital provide contact information for each of Ms. Bowen and Mr. Silvers to schedule interviews with members of the ESG & Enterprise Risk Committee. On February 24, 2024, Mr. Ajdler replied to the Company’s e-mail and declined to provide the requested contact information unless and until the Company and Engine Capital discuss and agree upon terms of a potential settlement agreement.
On February 26, 2024, at the request and direction of the ESG & Enterprise Risk Committee, Mr. Churay e-mailed Engine Capital to again request contact information for each of Ms. Bowen and Mr. Silvers and to apprise Engine Capital that, consistent with the Board’s past practice, prior to appointment or nomination of any new director, interviews with nominees need to be conducted.
On February 26, 2024, Mr. Jadin and Ms. Duganier, members of the ESG & Enterprise Risk Committee, and Mr. Wood met virtually with David A. Hager, a board candidate that Heidrick identified, to discuss his background and qualifications to serve on the Board.
On February 27, 2024, Mr. Ajdler responded via e-mail that Engine Capital needed to understand the context of interviews and asked the Company to acknowledge that the interviews of its proposed candidates would be conducted in good faith.
On February 28, 2024, Messrs. Wood, and Anthony met virtually with Messrs. Ajdler and Favreau. Mr. Wood apprised Engine Capital of the Company’s process for identifying new directors to the Board and noted that the Board has a responsibility to its shareholders to have all board candidates, including Engine Capital’s nominees, undergo substantially similar vetting processes. Mr. Ajdler responded that Engine Capital “wants and earned representation” on the Board.
On February 28, 2024, Dr. McEntee met virtually with Mr. Hager to discuss his background and qualifications to serve on the Board.
On February 29, 2024, Mr. Ajdler e-mailed Mr. Churay the contact information for Ms. Bowen and Mr. Silvers, and Mr. Churay organized interviews with each of them.
On March 1, 2024, Ms. Adams and Mr. Anthony met virtually with Mr. Hager to discuss his background and qualifications to serve on the Board.
On March 4, 2024, Barbara Duganier, Deborah Adams and George Damiris, members of the ESG & Enterprise Risk Committee along with Mr. Saltiel met virtually with Ms. Bowen to discuss her background and qualifications to serve on the Board.
Also, on March 4, 2024, Ms. Adams and Messrs. Damiris and Saltiel, met virtually with Mr. Silvers to discuss his background and qualifications to serve on the Board.
On each of March 4, 2024 and March 6, 2024, the Board met, together with members of management and the Company’s advisor, and discussed, among other things, the interviews conducted by members of the ESG & Enterprise Risk Committee and the skills sets and experience of select candidates, including those of Ms. Bowers, Mr. Favreau, Mr. Silvers and Mr. Hager, as well as Board diversity.
On March 11, 2024, the ESG & Enterprise Risk Committee and the Board, together with members of management and the Company’s advisors, met to consider and approve a proposed slate of directors for election at the Annual Meeting, as well as consider and approve a proposal to increase the size of the Board. At the meeting, the Board determined to increase the size of the Board from nine to 10 directors and to appoint David A. Hager as a member of the Board as of March 11, 2024. In deciding to appoint Mr. Hager, the Board considered Mr. Hager’s breadth and depth of board and business experience, his transactional experience, his financial literacy, his knowledge of upstream and midstream markets and the North America energy business and his independence per the rules and regulations of the New York Stock Exchange and the Securities and Exchange Commission (“SEC”). In addition, at the meeting Barbara J. Duganier announced her desire to not run for re-election at the
| 25 | 2024 Proxy Statement |
Annual Meeting, and the Board determined to recommend the following persons as the slate of directors nominated to be elected at the Annual Meeting: Ms. Adams, Dr. McEntee and Messrs. Anthony, Damaris, Hager, Jadin, Saltiel and Wood.
On March 11, 2024, Messrs. Wood and Anthony met virtually with Messrs. Ajdler and Favreau to notify them that the Board had determined to not recommend any of Engine Capital’s nominees to the slate of directors for election at the Company’s 2024 annual meeting of stockholders.
On March 14, 2024, Engine Capital delivered a written notice formally withdrawing their nomination of Marjorie L. Bowen as a stockholder nominee. The letter stated that Engine Capital’s nomination of Bradley T. Favreau and Daniel B. Silvers remained in full force and effect.
On March 15, 2022, the Company filed a preliminary proxy statement with the SEC.
On March 27, 2024, the Company filed this revised preliminary prospectus statement with the SEC.
| 26 | 2024 Proxy Statement |
SECURITY OWNERSHIP
Directors and Executive OwnersOfficers
The following table shows, as of FebruaryMarch 15, 2022,2024, the number of shares of our common stock that each of our directors, each of our named executive officers (NEOs) and all of our executive officers and directors as a group beneficially own.
The rules of the SEC generally determine beneficial ownership, which generally includes voting or investment power with respect to securities. Unless indicated below, to our knowledge, the persons and entities that the table names have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares of common stock subject to options that are currently exercisable or exercisable within 60 days of FebruaryMarch 15, 2022,2024, are deemed to be outstanding and to be beneficially owned by the person holding the options for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unvested restricted stock units (RSUs) and performance share units (PSUs) are not included to the extent they will not definitively vest within 60 days of FebruaryMarch 15, 2022.2024. Except as otherwise indicated, the business address for each of our beneficial owners is c/o MRC Global Inc., 1301 McKinney Street, Suite 2300, Houston, Texas 77010.
| Name | Total Shares of Common Stock Beneficially Owned | Percent of Common Stock Outstanding | Shares of Unvested Restricted Stock Included in Total | Options Exercisable Included in Total | ||||
Robert J. Saltiel, Jr. | 62,892 | * | — | — | ||||
Andrew R. Lane(1) | 1,725,213 | 2.0% | — | 642,909 | ||||
Kelly D. Youngblood | 91,500 | * | — | — | ||||
Daniel J Churay(2) | 175,782 | * | — | 108,061 | ||||
Grant Bates(3) | 113,195 | * | — | 56,476 | ||||
Karl Witt(4) | 89,211 | * | — | 9,112 | ||||
John Bowhay(5) | 81,032 | * | — | 6,892 | ||||
Deborah G. Adams | 60,084 | * | 13,383 | — | ||||
Leonard M. Anthony | 122,530 | * | 13,383 | 19,130 | ||||
Rhys J. Best(6) | 193,531 | * | 24,090 | 19,130 | ||||
Henry Cornell(7) | 20,370,084 | 19.6% | 13,383 | 9,415 | ||||
George J. Damiris | 7,697 | * | 7,697 | — | ||||
Barbara Duganier | 67,709 | * | 13,383 | — | ||||
Ronald L. Jadin | 7,697 | * | 7,697 | — | ||||
Dr. Cornelis A. Linse | 94,211 | * | 13,383 | 19,130 | ||||
Robert L. Wood(8) | 72,863 | * | 13,383 | — | ||||
All directors and executive officers, including former NEOs, as a group (20 persons) | 23,406,471 | 22.3% | ||||||
All directors and executive officers, as a group, excluding former NEOs, as a group (17 persons) | 21,511,015 | 20.5% | ||||||
| Name | Total Shares of Common Stock Beneficially Owned | Percent of Common Stock Outstanding | Shares of Unvested Restricted Stock or RSUs included in Total | Options Exercisable Included in Total | ||||
Robert J Saltiel, Jr. | 397,160 | * | — | — | ||||
Kelly Youngblood | 237,545 | * | 9,017 | — | ||||
Daniel J. Churay(1) | 171,054 | * | 7,665 | 25,109 | ||||
Grant R. Bates(2) | 116,094 | * | 6,313 | 4,046 | ||||
Rance C. Long | 70,366 | * | — | 2,636 | ||||
Deborah G. Adams | 85,608 | * | 15,295 | — | ||||
Leonard M. Anthony | 128,924 | * | 15,295 | 0 | ||||
Henry Cornell(3) | 20,386,193 | 19.3% | 15,295 | 9,415 | ||||
George J. Damiris | 33,221 | * | 15,295 | — | ||||
Barbara Duganier | 93,233 | * | 15,295 | — | ||||
David A. Hager | 12,414 | * | — | — | ||||
Ronald L. Jadin | 33,221 | * | 15,295 | — | ||||
Anne McEntee | 22,310 | * | 15,295 | — | ||||
Robert L. Wood(4) | 119,229 | * | 27,954 | — | ||||
All directors and executive officers, as a group (19 persons) | 22,033,708 | 20.9% | ||||||
*Less than 1% |
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| (1) |
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Mr. Churay owns 550 shares of our common stock through an Individual Retirement Account. |
Mr. Bates indirectly owns |
|
| 27 | 2024 Proxy Statement |
|
|
Mr. Cornell directly owns |
Mr. Wood owns 3,000 shares of our common stock indirectly through Robert Wood TTE. |
As of FebruaryMarch 15, 2022,2024, the Company’s directors and executive officers excluding former NEOs, beneficially owned 20.5%20.9% of our outstanding common stock (assuming conversion of all preferred stock to common stock). The percentage beneficially owned was calculated based on 83,549,70285,135,649 shares of common stock and preferred stock convertible into 20,302,009 shares of common stock for a total of 103,851,711105,437,658 shares outstanding on FebruaryMarch 15, 2022.2024.
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The following table sets forth information regarding persons or groups known to the Company to be beneficial owners of more than 5% of our outstanding preferred stock or common stock as of February 15, 2022,2024, including the business address of each.
| Name and Address of Beneficial Owner | Number of Shares of Common Stock
| Percent of Common Stock Outstanding | ||
Mario Investments LLC(1) c/o Cornell Capital GP II LP 499 Park Avenue, 21st Floor New York, NY 10022
| 20,302,009 | 19.5% | ||
FMR LLC(2) 245 Summer Street
Boston, MA 02210
| 9,421,995 | 11.3% | ||
The Vanguard Group(3) 100 Vanguard Blvd. Malvern, PA 19355
| 7,257,500 | 8.7% | ||
BlackRock, Inc.(4) 55 East 52nd Street New York, NY 10055
| 6,114,666 | 7.3% | ||
Prenza Investment Management, LLC(5) 320 Park Avenue, 8th Floor New York, New York 10022
| 4,518,807 | 5.4% | ||
Fuller & Thaler Asset Management, Inc.(6) 411 Borel Avenue, Suite 300 San Mateo, CA 94402
| 4,374,937 | 5.2% | ||
| Names and Address of Beneficial Owner | Number of Shares of Common Stock
| Percent of Common Stock Outstanding | ||
Mario Investments LLC(1) c/o Cornell Capital GP II LP 499 Park Avenue, 21st Floor New York, NY 10022
| 20,302,009 | 19.3% | ||
The Vanguard Group(2) 100 Vanguard Blvd. Malvern, PA 19355
| 9,003,975 | 8.5% | ||
Pzena Investment Management, LLC(3) 320 Park Avenue, 8th Floor New York, NY 10022
| 7,001,859 | 6.6% | ||
BlackRock, Inc.(4) 50 Hudson Yards New York, NY 10001
| 6,560,977 | 6.2% | ||
Frontier Capital Management Co., LLC(5) 99 Summer Street Boston, MA 02110
| 6,005,201 | 5.7% | ||
| (1) | On |
| (2) | Based on the Schedule 13G/A filed with the SEC on February |
| 28 | 2024 Proxy Statement |
| (3) | Based on the Schedule 13G/A filed with the SEC on February |
| (4) | Based on the Schedule 13G/A filed with the SEC on |
| (5) | Based on the Schedule 13G filed with the SEC on |
|
|
In June 2015, we filed with the Secretary of State of the State of Delaware a Certificate of Designations, Preferences, Rights and Limitations of Series A Convertible Perpetual Preferred Stock (the “Certificate of Designations”) creating the Series A Convertible Perpetual Preferred Stock, par value $0.01 per share (the “preferred stock”), and establishing the designations, preferences, and other rights of the preferred stock. On June 10, 2015, we issued 363,000 shares of preferred stock and received gross proceeds of $363 million. In connection with the issuance, we entered into a shareholders’ agreement (the “Shareholders’ Agreement”) with Mario Investments LLC, the initial holder of the preferred stock (the “Initial Holder”). The following description is qualified in its entirety by reference to the full text of the Certificate of Designations and the Shareholders’ Agreement, each of which were filed as exhibits to our Current Report on Form 8-K, which was filed with the U.S. Securities and Exchange CommissionSEC on June 11, 2015. Capitalized terms used in this “Preferred Stock Issuance” description that are not defined in this Proxy Statement shall have the terms that the Certificate of Designations assigns to those terms.
Voting and Other Rights
The preferred stock ranks senior to our common stock with respect to dividend rights and rights on liquidation, winding-up and dissolution. The preferred stock has a stated value of $1,000 per share, and holders of the preferred stock are entitled to cumulative dividends payable quarterly in cash at a rate of 6.50% per annum.
The Preferred Stockpreferred stock does not create a dual class voting structure as it is does not constitute a second class of common stock with special voting rights. Holders of the preferred stock are entitled to vote together with the holders of the common stock as a single class, in each case, on an as-converted basis, except in rare instances when the law requires a separate class vote of the common stockholders. The Preferred Stock holderspreferred stockholders also have certain rights regarding the issuance of stock that is Parity Stock or Senior Stock (as each of those terms are defined in the Certificate of Designations). A vote of two-thirds of the Preferred Stockpreferred stock is required to:
| ● | amend or alter the Company’s certificate of incorporation to create or increase any class or series of Parity Stock or Senior Stock or adversely affect the rights of the |
| ● | amend, alter or repeal any provision of the Company’s certificate of incorporation so as to adversely affect the rights, preferences, privileges or voting powers of the |
| ● | to consummate a share exchange, reclassification, merger or consolidation where: |
| ● | the shares of the |
| ● | the |
or, in either case, certain additional requirements are not met.
Pursuant to the Shareholders’ Agreement, the Initial Holder and certain related parties if the preferred stock is transferred to those parties (collectively, the “Original Holder’s Group”) are entitled to vote their shares in their discretion. Holders of the preferred stock have certain limited special approval rights, including with respect to the issuance of pari passu or senior equity securities of the Company.
| 29 | 2024 Proxy Statement |
Lapse of Certain Voting Requirements
Prior to June 10, 2020, the Original Holder’s Group agreed to vote their shares in favor of director nominees that the Board nominates. This provision has lapsed, and the Original Holder’s Group is no longer required to vote their shares in favor of director nominees that the Board nominates.
Sunset Provisions
The Preferred Stockpreferred stock is convertible at the option of the holders into shares of common stock at an initial conversion rate of 55.9284 shares of common stock for each share of Preferred Stock,preferred stock, which represents an initial conversion price of $17.88 per share of common stock, subject to adjustment. The Company currently has the option to redeem, in whole but not in part, all the outstanding shares of Preferred Stock at 105% of par value, subject to certain redemption price adjustments. On or after
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June 10, 2022, the Company will have the option to redeem, in whole but not in part, all of the outstanding shares of Preferred Stockpreferred stock at par value, subject to certain redemption price adjustments. We may elect to convert the Preferred Stock,preferred stock, in whole but not in part, into the relevant number of shares of common stock if the last reported sale price of the common stock has been at least 150% of the conversion price then in effect for a specified period. The conversion rate is subject to customary anti-dilution and other adjustments.
Fundamental Change
If a Fundamental Change occurs, each holder of the preferred stock has the right, at the holder’s option, to require the Company to repurchase all or part of the holder’s shares of preferred stock for cash. Among other things, as described as follows, an all-cash acquisition of the Company would constitute a Fundamental Change, but a stock-for-stock merger of the Company would not so long as the shares received in exchange for Company common stock were quoted or listed on a major U.S. stock market. A “Fundamental Change” occurs when:
| (i) | (except as described in clause (ii) below) the acquisition by a “person” or “group” within the meaning of Section 13(d) of the Exchange Act (other than the current holder of the preferred stock, the Company, the Company’s Wholly Owned Subsidiaries and the employee benefit plans of the Company and its Wholly Owned Subsidiaries) of the “beneficial ownership,” as defined in Rule 13d-3 under the Exchange Act, of more than 50% of the voting power in the aggregate of all classes of the Company’s Common Equity (i.e. the Company’s common stock); |
| (ii) | the consummation of: |
| (A) | any recapitalization, reclassification or change of the Company’s common stock (other than changes resulting from a subdivision or combination) as a result of which the common stock is converted into, or exchanged for, stock, other securities, other property or assets; |
| (B) | any share exchange, consolidation or merger of the Company pursuant to which the Company’s common stock is converted into cash, securities or other property or assets; or |
| (C) | any sale, lease or other transfer of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any person or entity other than one of the Company’s Wholly Owned Subsidiaries; |
provided, that any transaction described in clause (B) above in which the holders of all classes of the Company’s Common Equity immediately prior to such transaction(s) own, directly or indirectly, more than 50% of all classes of Common Equity of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction(s) in substantially the same proportions as such ownership immediately prior to such transaction(s) will not be a Fundamental Change;
| (iii) | the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or |
| (iv) | the Company’s common stock (or other common stock underlying the Preferred Stock, such as after a stock-for-stock merger) ceases to be listed or quoted on a major U.S. stock market; |
provided, that:
| (x) | transaction(s) described in clause (ii) above will not be a Fundamental Change, if at least 90% of the consideration received the common stockholders of the Company (excluding cash payments for fractional shares) in connection with the transaction(s) consist of shares |
| 30 | 2024 Proxy Statement |
of common stock that are listed or quoted on a major U.S. stock market and as a result of the transaction(s) the preferred stock becomes convertible into that consideration; and |
| (y) | transactions described in clause (i) above will not constitute a Fundamental Change, if the holders of the preferred stock transfer to any transferee shares of preferred stock that would cause a Fundamental Change to occur described in clause (i) above and the holders of the preferred stock know or have good reason to know that the consummation of the transfer to the transferee would cause a Fundamental Change to occur. |
Board Representation Rights
Pursuant to the Shareholders’ Agreement, for so long as the Original Holder’s Group maintainedmaintains at least 33% of their original investment (whether in preferred stock or shares of common stock issued upon conversion of the preferred stock), the Original Holder’s Group has the right to appoint a single representative, in a non-voting observer capacity, to attend all meetings of the Board, subject to certain exceptions.
Pursuant to the Certificate of Designations and the Shareholders’ Agreement, on June 10, 2018, the Original Holder’s Group had the right to designate one person to serve as a director on the Board if the Original Holder’s Group maintained at least 33% of their original investment and shares of the preferred stock remained outstanding. The Original Holder’s Group met such requirementsrequirement, and the Company was required to increase the size of the Board to accommodate the appointment of Henry Cornell, as a director designated by the Original Holder’s Group on June 10, 2018. The holders of the preferred stock also have certain Board representation rights if dividends payable on the preferred stock are in arrears for six or more quarterly periods, but in no event may the holders of the preferred stock appoint more than two directors. Also, pursuant to the Shareholders’ Agreement, if no shares of the preferred stock remain outstanding but the Original Holder’s Group maintains at least 33% of their original investment through their shares of common stock received upon conversion of the preferred stock, the Original Holder’s Group may designate one nominee to serve as a director on the Board (the “Investor Designee”), subject to the Investor Designee’s satisfaction of all applicable requirements regarding service as a director of the Company under applicable law, regulation or stock exchange rules and such other criteria and qualifications the Company maintained that is applicable to all directors as of the date of the issuance of the preferred stock. The Company is required to increase the size of the Board by one director and fill the vacancy with the Investor Designee. Thereafter, the Company is required to nominate the Investor Designee for election by the Company’s stockholders and recommend that the Company’s stockholders vote in favor of the election of the Investor Designee.
If for any reason the director that the Original Holder’s Group appointed or designated is no longer serving as a director, the Original Holder’s Group may appoint or designate a new person to fill the vacancy. At such time as the Original Holder’s Group owns less than 33% of their original investment, pursuant to the Shareholders’ Agreement, the rights of the Original Holder’s Group terminate, and the Investor Designee must resign.
Registration RightsCertain Other Provisions
Pursuant to the Shareholders’ Agreement, the Original Holder’s Group has certain registration rights, including customary demand and piggyback registration rights in respect of the shares of preferred stock and any shares of common stock issued upon conversion of the preferred stock.
Preemptive Rights
Pursuant to the Shareholders’ Agreement, for so long as the Original Holder’s Group maintains at least 33% of their original investment (whether in preferred stock or shares of common stock issued upon conversion of the preferred stock), the Company is required to, prior to the issuance of equity securities to a third party (subject to certain exceptions), offer the Original Holder’s Group the right to acquire its pro rata portion of such equity securities.
LapseMRC Global Inc. may not enter into any new, or amend, or modify any existing agreement or arrangement that by its terms restricts, limits, prohibits or prevents MRC Global Inc. from paying dividends on the Preferred Stock, redeeming or repurchasing the Preferred Stock or effecting the conversion of Standstill Obligations
The Original Holders’ Group was subject to certain standstill obligations until June 10, 2020. These obligations have now lapsed, and the standstill obligations are no longer effective.Preferred Stock. Any such agreement, amendment or modification would require the consent of the holder of the Preferred Stock.
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PROPOSAL I: ELECTION OF DIRECTORS
The directors of the Company are elected by the stockholders annually. TheAs of the date of this proxy statement, the Board currently consists of 10 members but will be reduced to nine members immediately after the Annual Meeting.ten members. Eight directors will stand for re-election and be elected by holders of our common stock and preferred stock, voting together, and the holder of the Company’s preferred stock has designated and will designate the other director.
Each director’s term of office expires when his or her successor is elected and qualified at the Annual Meeting. At the Annual Meeting, our stockholders will elect the eight directors named below to hold office until the 20232025 annual meeting of stockholders (the “2023“2025 Annual Meeting of Stockholders”), or until their successors are elected and qualified, or their earlier retirement, removal or death. Each director has served continuously since the date of his or her appointment. All nominees have consented to being named in this Proxy Statement and to serve if elected. If any nominee should be unable or unwilling to stand for election as a director, it is intended that the common stock represented by proxies will be voted for the election of a substitute director that the Board may nominate.
As set forth in the Company’s Certificate of Designations and the Shareholders’ Agreement, the Original Holder’s Group has the right to designate one person to serve as a director on the Board. The Original Holder’s Group designated Henry Cornell to serve as a director on the Board effective June 10, 2018. The Original Holder’s Group, as holders of the preferred stock, have indicated to the Company their intent to continue to designate Mr. Cornell. Because the holders of the preferred stock designate Mr. Cornell, the holders of our common stock will not vote to elect him.
As described under “Corporate Governance Matters—Process for Identifying and Adding New Directors” below, the Board seeks a diverse group of candidates who possess the background, skills and expertise to make a significant contribution to the Board and the Company. The structure and composition of the Board are intended to leverage diverse perspectives of the Board members and promote effective oversight.
As described under “Background to the Solicitation” above, based upon the Company’s criteria for nominations of directors to the Board and the unanimous recommendation of the ESG & Enterprise Risk Committee, the Board unanimously determined to nominate Deborah G. Adams, Leonard M. Anthony, George J. Damiris, David A. Hager, Ronald L. Jadin, Dr. Anne McEntee, Robert J. Saltiel, Jr. and Robert L. Wood to serve until the 2025 Annual Meeting. See the section of this proxy statement titled “—Certain Information Regarding Nominees” below for more information about the skills, qualifications, attributes and experiences upon which the Board based its determination that its nominees should serve as directors.
As described previously, Engine Capital has nominated Bradley T. Favreau and Daniel B. Silvers (collectively, the “Engine Capital Nominees”) for election as directors at the Annual Meeting in opposition to the nominees recommended by the Board.
The Board does not endorse the Engine Capital Nominees, and unanimously recommends that you use the WHITE proxy card to vote “FOR” ONLY the election of the eight nominees proposed by the Board of Directors:
| Deborah G. Adams | Ronald L. Jadin | |
| Leonard M. Anthony | Dr. Anne McEntee | |
| George J. Damiris | Robert J. Saltiel, Jr. | |
| David A. Hager | Robert L. Wood |
The Board strongly urges you to discard and NOT to vote using any blue proxy card that may be sent to you by Engine Capital. If you have already voted using a blue proxy card sent to you by Engine Capital, you have every right to change your vote and we strongly urge you to revoke that proxy by using the
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WHITE proxy card to vote in favor of ONLY the eight nominees that the Board recommends—by internet or by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided. Only the latest validly executed proxy that you submit will be counted—any proxy may be revoked at any time prior to its exercise at the Annual Meeting. If you have any questions or require any assistance with voting your shares, please contact Morrow Sodali LLC, our proxy solicitation firm, at (203) 658-9400.
If Engine Capital withdraws its nominees, abandons its solicitation or fails to comply with the universal proxy rules, any votes cast in favor of any Engine Capital Nominee will be disregarded and not be counted, whether the vote is provided on the Company’s WHITE proxy card or the Engine Capital blue proxy card.
Although the Company is required to include all nominees for election on its proxy card, for additional information regarding the Engine Capital Nominees and any other related information, please refer to the Engine Capital proxy statement. You may receive solicitation materials from Engine Capital, including proxy statements and blue proxy cards. The Company is not responsible for the accuracy or completeness of any information provided by or relating to Engine Capital or its nominees contained in solicitation materials filed or disseminated by or on behalf of Engine Capital or any other statements Engine Capital may make. Shareholders will be able to obtain, free of charge, copies of all proxy statements, any amendments or supplements thereto and any other documents (including the WHITE proxy card) when filed by the applicable party with the SEC in connection with the Annual Meeting at the SEC’s website (http://www.sec.gov).
If you are a registered holder and submit a validly executed WHITE proxy card but do not specify how you want to vote your shares with respect to the election of directors, then your shares will be voted in line with the Board’s recommendation with respect to the proposal, i.e., “FOR” the eight nominees that the Board proposes as set forth in this proxy statement. You are permitted to vote for fewer than eight nominees. If you vote for fewer than eight nominees, your shares will only be voted “FOR” with respect to those nominees you have so marked. However, if you are a registered holder and submit a validly executed WHITE proxy card but vote “FOR” more than eight nominees, all of your votes with respect to the election of directors will be invalid and will not be counted. It is, therefore, important that you do not vote “FOR” more than eight nominees, so that your vote with respect to this item is counted.
If you are a beneficial holder and properly mark, sign and return your WHITE voting instruction form or use your WHITE voting instruction form or notice to vote via internet, your shares will be voted as you direct your bank or broker. However, if you sign and return your WHITE voting instruction form but do not specify how you want your shares voted with respect to the election of directors, they will be voted in line with the Board’s recommendation with respect to the proposal, i.e., “FOR” the eight nominees that the Board proposes as set forth in this proxy statement, depending on the bank or broker through which you hold your shares. You are permitted to vote for fewer than eight nominees. If you vote for fewer than eight nominees, your shares will only be voted “FOR” with respect to those nominees you have so marked. If you are a beneficial holder and you vote “FOR” more than eight nominees on your WHITE voting instruction form, all of your votes with respect to the election of directors will be invalid and will not be counted. It is therefore important that you provide specific instructions to your broker or bank regarding the election of Directors so that your vote with respect to this item is counted.
Each nominee has consented to serve if elected. If any nominee becomes unavailable to serve as a Director before the Annual Meeting, the Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee that the Board designates. At this time, the Board knows of no reason why any of the Board’s nominees would not be able to serve as a director if elected.
| 33 | 2024 Proxy Statement |
Knowledge, Skills and Experience of Nominees Plus our Designated Director
The chart below summarizes the number of Board nominees plus the designated director that possess knowledge, skills and experiences covering areas we believe are important to our sustainable success and certain demographic information.
| DIRECTOR | Deborah Adams | Leonard Anthony | Henry Cornell | George Damiris | Barbara Duganier | Ronald Jadin | Cornelis Linse | Robert Saltiel | Robert Wood | |||||||||
Independence | ||||||||||||||||||
Independent Director | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||
Competencies | ||||||||||||||||||
CEO/Former CEO | ● | ● | ● | ● | ● | |||||||||||||
Former CFO | ● | ● | ● | |||||||||||||||
Financial Acumen/Expert | ● | ● | ● | ● | ● | ● | ||||||||||||
COO/Operations Leadership | ● | ● | ● | ● | ||||||||||||||
Global/International Exposure/Experience | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||
PVF/Industrial Distribution Experience | ● | ● | ● | |||||||||||||||
Customer Experience ● Gas Utilities ● Downstream, Industrial & Energy Transition ● Upstream Production ● Midstream Pipeline | ● | ● | ● | ● | ● | ● | ||||||||||||
Oilfield Services/Equipment Sales Experience | ● | ● | ● | |||||||||||||||
Supplier Experience/Supply Chain | ● | ● | ● | |||||||||||||||
Technology Information Systems | ● | ● | ● | ● | ||||||||||||||
Personal/Demographics | ||||||||||||||||||
Other Public Board Commitments | 1 | 0 | 0 | 1 | 1 | 0 | 0 | 0 | 2 | |||||||||
Tenure (years) | 4.1 | 9.6 | 6.5 | <1 | 6.6 | <1 | 9.6 | 1 | 6.2 | |||||||||
Age | 61 | 67 | 66 | 62 | 63 | 61 | 72 | 59 | 68 | |||||||||
Gender Diversity | ● | ● | ||||||||||||||||
Racial or Ethnic Diversity | ● | |||||||||||||||||
| DIRECTOR | Deborah Adams | Leonard Anthony | Henry Cornell | David Hager | George Damiris | Ronald Jadin | Anne McEntee | Robert Saltiel | Robert Wood | |||||||||
Independence | ||||||||||||||||||
Independent Director | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||
Management Roles | ||||||||||||||||||
CEO/Former CEO | ● | ● | ● | ● | ● | |||||||||||||
CFO/Former CFO | ● | ● | ||||||||||||||||
COO/Operations/HSE/Operating Risks | ● | ● | ● | ● | ● | |||||||||||||
Global/Intenational Exposure/Experience | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||
Financial Acumen/Financial Expert/Financial Risks | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||
Industry Experience | ||||||||||||||||||
PVF/Industrial Distribution Experience/Related Risks | ● | ● | ● | ● | ● | |||||||||||||
Oilfield Services/Equipment Sales Experience | ● | ● | ● | |||||||||||||||
Supplier/Supply Chain Experience/Related Risks | ● | ● | ● | ● | ||||||||||||||
Customer End Sectors | ||||||||||||||||||
Gas Utilities | ||||||||||||||||||
Downstream, Industrial & Energy Transition | ● | ● | ● | ● | ● | ● | ||||||||||||
Production & Transmission Infrastructure | ● | ● | ● | |||||||||||||||
Information Technology Experience | ||||||||||||||||||
IT Systems | ● | ● | ● | |||||||||||||||
Cyber & Information Security/Related Risks | ● | |||||||||||||||||
Emerging IT Risks | ● | |||||||||||||||||
IT Systems Implementation Risks | ● | ● | ● | ● | ||||||||||||||
Environment & Climate | ||||||||||||||||||
Environmental & Climate/Related Risks | ● | ● | ● | ● | ||||||||||||||
Transactional Experience | ||||||||||||||||||
Public Company M&A | ● | ● | ● | ● | ● | ● | ● | |||||||||||
Public Company Divestitures | ● | ● | ● | ● | ● | ● | ● | |||||||||||
Capital Markets Experience | ● | ● | ● | |||||||||||||||
Board Service | ||||||||||||||||||
Other Public Boards | 2 | 0 | 0 | 0 | 1 | 0 | 0 | 0 | 1 | |||||||||
Prior Public Boards | 1 | 2 | 5 | 2 | 2 | 0 | 0 | 2 | 3 | |||||||||
Personal/Demographics | ||||||||||||||||||
Tenure | 6.6 | 11.6 | 5.0 | 0.1 | 2.6 | 2.6 | 1.6 | 3.2 | 8.8 | |||||||||
Age | 63 | 69 | 68 | 67 | 64 | 63 | 53 | 61 | 70 | |||||||||
Gender (Male or Female) | F | M | M | M | M | M | F | M | M | |||||||||
Racially or Ethnically Diverse | ● | |||||||||||||||||
Note: Tenure is based on years as a director while MRC Global was a public company. Mr. Anthony has been a director since 2008, prior to the Company’s initial public offering.
| 34 | 2024 Proxy Statement |
Certain Information Regarding Nominees
Set forth below for each individual nominated for election as a director of the Company is biographical information and information regarding the business experience, qualifications and skills of each director nominee, including the information and qualifications that led the Board to conclude that the director nominee is qualified to serve on our Board. Current boardBoard committees and leadership roles are listed for the 20212024 – 2022 term as well as expected committee and roles to commence immediately after the 2022 annual meeting for the 2022 – 2023 term,2025, subject to the re-election of each director.
Director Since:2015 Age: 70 Chairman of the Board Independent | Robert L. Wood Background. Since 2019, Mr. Wood has been a partner in the consulting firm The McChrystal Group, specializing in leadership development for business organizations. From 2004 to 2008, Mr. Wood was chairman, president and CEO of Crompton Corporation (which merged with Great Lakes Chemical to become Chemtura Corporation in 2005), a global, specialty chemicals company. Mr. Wood spent 27 years in a variety of sales, marketing and management roles within the Dow Chemical organization and ultimately became the business group president of Thermosets and Dow Automotive Group. In this role, he was named to Dow’s Corporate operating board, which was charged with setting corporate strategy and establishing corporate policies. Prior to that, Mr. Wood was the global vice president of Polyurethanes and global vice president of Engineered Plastics. In addition to the public company listed below, he served on the board of directors of Univar Solutions, Inc., a chemical distribution company, from 2016 through September 2023. Mr. Wood graduated from the University of Michigan with a Bachelor of Arts in 1976. Other Active Public Company Boards. In addition to serving on our Board, Mr. Wood serves on the boards of directors of the following public companies: | |||||
| Company | Business | |||||
Linde plc (NYSE: LIN) | Gas distribution | |||||
| Key Skills, Qualifications and Experience. Mr. Wood brings to the Board executive leadership experience through his more than 25 years of public company experience, including his leadership as CEO of Crompton. He also has significant expertise and insight into our downstream customer needs and desires because of his 30 years of global chemical industry experience, a prime market in the downstream sector for the Company’s products and services. Mr. Wood has worked in serving multiple international markets, including many of those that the Company services, and Mr. Wood has experience with global suppliers. Mr. Wood has served on a number of public and non-profit boards and has deep experience in governance. He is lead independent director of Linde plc. Mr. Wood has experience in public market transactions, having served as a chairman of the board and CEO of Crompton in its merger with Great Lakes Chemical, as a director of Praxair Distribution, Inc., which merged with Linde plc, and as a director of Univar, which was sold to a private equity fund managed by Apollo Global Management Inc. He has served our Board as Chairman of our Compensation & Human Capital Committee and his over seven years of experience on our Board has provided him the experience regarding the issues that our business faces. | ||||||
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Director Since:2017 Age: Committees:
Compensation & Human Capital (chair) ESG & Enterprise Risk Independent
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Deborah G. Adams
Background.From 2014 until her retirement in 2016, Ms. Adams served on the executive leadership team at Phillips 66 as senior vice president of health, safety and environmental, projects and procurement. From 2008 – 2014, she led the midstream operations of Phillips 66 and ConocoPhillips as the division president of transportation. She has also held various leadership posts including leading the international refining business for ConocoPhillips, serving as general manager of global downstream IT systems and serving on several of ConocoPhillips’ joint venture boards. In addition to the public companies listed below, Ms. Adams served on the board of directors of Gulf Port Energy, an oil and gas production development company, from March 2018 through May 2021. She currently serves on the board of directors of Austin Industries, a
Other Active Public Company | |||||||
| Company | Business | |||||||
EnLink Midstream LLC (NYSE: ENLC) | Midstream energy services | |||||||
Amplify Energy Corp (NYSE: AMPY) | Oil and gas production and development | |||||||
| Key Skills, Qualifications and Experience. Ms. Adams has extensive leadership experience in | ||||||||
|
Director Since:2008 Age: Committees:
Independent |
Leonard M. Anthony
|
Background. Mr. Anthony served as the president and CEO of WCI Steel, Inc., an integrated producer of custom steel products, from December 2007 to October 2008. He was also a member of the board of directors of WCI Steel from December 2007 to October 2008. Mr. Anthony retired in October 2008. He served as an executive vice president and chief financial officer of Dresser-Rand Group, Inc. from April 2005 to August 24, 2007. Mr. Anthony has more than 25 years of financial and operational management experience with various corporations, including oilfield equipment firms and steel producers. He
Other Active Public Company Boards. None.
Key Skills, Qualifications and Experience. Mr. Anthony has extensive experience at multiple levels of financial control, planning and reporting and risk management for large corporate enterprises. Mr. Anthony has public company leadership experience with an oilfield equipment | ||||||||
| 37 | 2024 Proxy Statement |
Director Since:2021 Age: Committees:
Compensation & Human Capital ESG & Enterprise Risk
Independent |
George J. Damiris
Background. Mr. Damiris previously served as the president and chief executive officer of both HollyFrontier Corporation and Holly Energy Partners from 2016 until his retirement in 2019. From 2007 until 2015, he served in various leadership roles with HollyFrontier, and before that, with Koch Industries. He holds a B.S. in Chemical Engineering and an MBA from Case Western Reserve University.
Other Active Public Company Boards. In addition to serving on our Board, Mr. Damiris serves on the board of directors of the following public company: | |||||||
| Company | Business | |||||||
Eagle Materials, Inc. (NYSE: EXP) | Building materials company | |||||||
Key Skills, Qualifications and Experience. Mr. Damiris has extensive public company leadership experience in the refining and pipeline transportation a director of HollyFrontier and Holly Energy Partners, Mr. Damiris has deep business leadership experience, having addressed the demands of investors and other stakeholders in a public company. Mr. Damiris has served on a number of public, private and non-profit company boards, providing him with deep governance experience. | ||||||||
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Director Since: Age: Committees:
Independent |
David A. Hager
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Other Active Public Company Key Skills, Qualifications and Experience. Mr. Hager has 40 years of experience in the oil and gas industry, from the very beginning of his career in 1979, which provides him with profound knowledge of the Company’s customer base in that sector. While with Devon Energy, Mr. Hager led it to | ||||||||
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Director Since:2021 Age: Committees:
ESG & Enterprise Risk
Independent
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Ronald L. Jadin
Background. Mr. Jadin previously served as the chief financial officer of W.W. Grainger, Inc. from 2008 until his retirement in 2018. From 1998 until 2008, he served in various finance and leadership roles with Grainger, and before that, with General Electric Company. He holds a B.A. in Economics from Yale University and an MBA from the University of Wisconsin
Other Active Public Company Boards. None.
Key Skills, Qualifications and Experience. As a prior chief financial officer of a public company and finance professional, Mr. Jadin has extensive experience at multiple levels of financial control, planning and reporting and risk management for large corporate enterprises. | ||||||
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Director Since: Age: Committees:
Compensation & Human Capital
Independent
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Dr.
Background. Other Active Public Company Boards. None. Key Skills, Qualifications and Experience. Dr. McEntee has extensive experience in renewable energy, working across GE’s broader portfolio of on-and
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| 40 | 2024 Proxy Statement |
Position: President & CEO Director Since:2021 Age:
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Robert J. Saltiel, Jr.
Background.
Other Active Public Company Boards. None.
Key Skills, Qualifications and Experience. Mr. Saltiel is uniquely qualified to serve as one of our directors due to his extensive executive and leadership experience in the oil and natural gas industry, including oilfield services, his global experience and his experience leading publicly traded companies. |
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The Company’s bylaws provide that for a director nominee to be elected, the director must receive a plurality of the votes cast by the stockholders present in person or represented by proxy voting together as a single class with respect to that director nominee’s election at the Annual Meeting.
AbstentionAbstentions and broker non-votes will not be treated as either “WITHHOLD” or “FOR” votes cast for any nominee, and therefore will have no effect on the outcome of Proposal I — Election of Directors. Any director who receives a greater number of “WITHHOLD” votes than “FOR” votes in an uncontested election is expected to tender to the Board the director’s resignation as a director promptly following the certification of election results pursuant to the Company’s Corporate Governance Guidelines. Pursuant to these guidelines, the Board must accept or reject such resignation within 90 days following the certification of election results and publicly disclose its decision.
THEOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH, OR “FOR ALL”, OF THE ELECTION OF THE ABOVE NOMINEES.
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Director Designated by the Holder of the Company’s Preferred Stock
Director Since:2018 Age: Independent |
Henry Cornell
Background. Mr. Cornell is the founder and senior partner of Cornell Capital LLC, a private investment firm formed in 2013 and previously served as a director of the Company from 2007 until he resigned from the board in 2015. From 1984 until May 2013, Mr. Cornell was employed by Goldman, Sachs & Co., where he was the vice-chairman of Goldman Sachs’ Merchant Banking Division. Mr. Cornell has over 40 years of experience across all aspects of private equity investing in a broad array of industries. He began his career as an attorney with Davis Polk & Wardwell before joining Goldman Sachs’ Investment Banking Division in 1984. He founded Goldman Sachs’ principal investment business in Asia. Under his leadership, Goldman Sachs made numerous landmark investments in the region. Mr. Cornell returned to New York in 2000 as the head of Private Equity Americas and Asia, and as a member of the Global Investment Committee. Mr. Cornell
Other Active Public Company Boards. None.
Experience. Mr. Cornell led Goldman Sachs’ acquisitions of its interest in the Company’s predecessor companies, including (among others) McJunkin Corporation, Red Man Pipe and Supply, Transmark and Midfield Supply, beginning in 2007. These companies were merged to form MRC Global before Goldman Sachs subsequently sold its entire interest through the Company’s initial public offering and subsequent follow-on offerings. As a result, he has deep knowledge regarding the Company, its markets and its business and operations. Given his career at Goldman Sachs, Mr. Cornell brings extensive experience in financial matters relating to both public and private companies. He has deep experience in capital markets and capital raising issues. He also has extensive prior experience serving on boards of directors of other significant companies including multi-national companies in the energy industry, which has provided him with relevant experience in a variety of industries and on a variety of corporate governance matters. Mr. |
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Director Since:2015 Age:65 Committees: ESG & Enterprise Risk (Chair) Audit Independent | Barbara J. Duganier* Background. From 2004 to 2013, Ms. Duganier was a managing director at Accenture, a multinational professional services company that provides services in strategy, consulting, digital technology and operations. She held various leadership and management positions in Accenture’s outsourcing business, including as global chief strategy officer, during which time she consulted for numerous clients in the energy, chemicals, mining and utilities industries. Prior to joining Accenture, Ms. Duganier, a certified public accountant, was an auditor and a consultant at Arthur Andersen, where she became a partner and held various leadership and management roles, including as global chief financial officer of Andersen Worldwide. She earned a B.S.B.A. in accounting from John Carroll University in 1979. Ms. Duganier is a director of privately held McDermott International, a multinational engineering, procurement and construction company, and privately held Pattern Energy, a renewable energy company. Ms. Duganier was previously a director of the general partner of Buckeye Partners, L.P., a midstream pipeline operator, and Noble Energy, an oil and natural gas exploration and production company. Other Active Public Company Boards. In addition to serving on our Board, Ms. Duganier serves on the board of directors of the following public company: | |||||
| Company | Business | |||||
Texas Pacific Land Corporation (NYSE: TPL) | Land resource management and water services company | |||||
Key Skills, Qualifications and Experience. Ms. Duganier’s training and extensive experience as a certified public accountant, her track record of leading large organizations, her business experience both within and outside of the energy industry, her information technology systems experience and her diversified board experience make her well-qualified to serve on our Board. Her service on the Pattern Energy board provides insight to the Company regarding energy transition projects, and her service on the McDermott board provides the Company with insights into engineering, procurement and construction firms, many of whom are Company customers. Ms. Duganier has experience in public market transactions, having served as a director with HCC Insurance Holdings, Inc. during its acquisition by Tokio Marine Holdings, Inc., as a director of the general partner of Buckeye Partners, L.P., during its sale to a private equity fund operated by IFM Investors plc and as a director of Noble Energy, Inc. during its sale to Chevron Corporation. She has been designated as a financial expert on our Audit Committee. Ms. Duganier earned her CERT Certificate in Cybersecurity Oversight through NACD by completing the Cyber-Risk Oversight Program. In 2020, the NACD named her to the NACD’s Directorship 100. She received her NACD Directorship Certification in 2021. * Ms. Duganier notified the board of her desire not to stand for re-election at the 2024 Annual Meeting of Stockholders and accordingly the Board determined to not re-nominate Barbara J. Duganier for re-election at the 2024 Annual Meeting of Stockholders. Effective as of the end of Ms. Duganier’s term of office, the Board has decreased the size of the Board from ten to nine directors. | ||||||
| 43 | 2024 Proxy Statement |
CORPORATE GOVERNANCE MATTERS
The primary responsibility of our Board is to foster the long-term success of the Company by promoting the interests of our stockholders. Our Board believes that strong corporate governance is critical to achieving our performance goals and to maintaining the trust and confidence of investors, employees, customers, suppliers, business partners, regulatory agencies and other stakeholders.
Corporate Governance Guidelines
The Board has adopted Corporate Governance Guidelines to help guide and promote our good corporate governance and responsible business practices. The Corporate Governance Guidelines provide a framework for the effective governance of MRC Global as a whole and also address the operation, structure, and practice of the Board and its committees. The Board’s ESG & Enterprise Risk Committee reviews these guidelines at least annually at a minimum.annually. Our Corporate Governance Guidelines can be found on the Company’s website at www.mrcglobal.com.
During the year, the Board meets with management to discuss and approve our strategic plans, financial goals and capital spending,allocation, taking into account potential or existing disruptive forces, innovation, macroeconomic factors, energycustomer end market trends, the competitive landscape and other factors critical to successful performance. The Board also conducts quarterly reviews of progress on objectives and strategies. During Board meetings, directors review key issues and financial performance. The Board meets privately with the CEO at least four times per year and meets in executive session without the CEO at each regular Board meeting and additionally as required. Further, the CEO communicates regularly with the Board on important business opportunities and developments. The Board and the CEO also annually discuss and collaborate to set the CEO’s performance goals and objectives. The Board meets at least annually in executive session to assess the CEO’s performance.
The Board maintains a process for planning orderly succession for the CEO and other executive officer positions and oversees executive officer development. The Compensation & Human Capital Committee assists the Board with oversight of the planning for orderly succession as described in further detail below under the caption “CEO and Senior Management Succession Planning.”
Board Membership and Qualifications
The Board regularly considers the long-term make-up of our Board, leadership structure and how the members of our Board change over time. The entire Board selects nominees for the Board in accordance with the procedures and criteria set forth in our Corporate Governance Guidelines. The Board will also consider director candidates from stockholders that have been properly nominated in accordance with our Corporate Governance Guidelines.Guidelines and as further detailed under Deadlines for Submitting Stockholder Proposals for 2025 Annual Meeting of Stockholders on page 14. The Board will consider these stockholder nominees in the same manner and by the same criteria as Board nominees. The Board strives to maintain an engaged, independent Board with broad and diverse experience and judgment that is committed to representing the long-term interests of our stockholders. The Board seeks a diverse group of candidates who possess the background, skills and expertise to make a significant contribution to the Board and the Company. The structure and composition of the Board are intended to leverage diverse perspectives of the Board members and promote effective oversight.
When reviewing director candidates, the Board considers each candidate’s qualifications for membership on the Board, including the enhanced independence, financial literacy and financial expertise standards that Audit Committee membership may require and assesses the performance of current directors who are proposed to be renominated to the Board.
The Board considers qualified candidates for membership on the Board without regard to race, color, religion, sex, ancestry, sexual orientation, national origin or disability. While the Board does not have a
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formal policy onBoard Diversity
Our Board is committed to diversity of experience, backgrounds and perspectives to provide effective oversight of the Company’s strategies and risks. The Board believes its members must be willing and able to devote adequate time and effort to Board responsibilities. Our Corporate Governance Guidelines, which were amended in assemblingNovember 2023, provide that the ESG & Enterprise Risk Committee and the Board, in identifying Board candidates, will consider candidates who possess the background, skills and expertise to make significant contributions to our Board, including business experience, thought, style, culture, gender, geographic background, race, visible minorities, national origin, indigenous persons, religion, gender identity and expression, sexual orientation, disability, service in the armed forces, age and other personal characteristics. Currently, 44% (4 of 9) of our objectivedirectors (which excludes the preferred stock designated director) are women or ethnically/racially diverse; three of our current Board members are women, and one director is to have wide diversity in terms of business experiences, functional skills, gender,a race ethnicityother than white and cultural backgrounds.50% (2 of 4) of the directors that hold our Board leadership positions (including the Chairman of our Board) are women or of a race other than white. 38% (3 of 8) of our director nominees (which excludes the preferred stock designated director) are women or ethnicallyethnically/racially diverse. TwoIn light of ourMs. Duganier’s decision in March 2024 to not stand for re-election at the Annual Meeting, when seeking new director candidates, the ESG & Enterprise Risk Committee and the Board members are women, and we have one director who is of a race other than white.expect to consider additional female candidates.
Process for Identifying and Adding New Directors
The Board has added five new directors in recent years. In March of 2024, the board added one new director, David Hager. In September of 2022, the board added one new director, Dr. Anne McEntee. In November of 2021, the Board added two new directors.directors, George Damiris and Ronald Jadin. In February of 2021, the Board added our CEO who is also a director, Robert Saltiel. The ESG & Enterprise Risk Committee, which acts as our nominating and governance committee, identified, screened and recommended director candidates for nomination to the Board. The candidates were evaluated in light of the then-existing composition of the Board and the background and areas of expertise of existing directors and potential nominees. Throughout the process, the ESG & Enterprise Risk Committee and the Board were aided by an independent search firm that the Board engaged. The process for identifying and adding new directors is as follows:
Evaluate Board Composition. The ESG & Enterprise Risk Committee evaluates Board composition annually and identifies skills, experience and capabilities desirable for new directors in light of the Company’s business and strategy, including (among others) customer or end market experience, leadership experience, and experience in the areas of ESG and digital technology.
Identify a Diverse Pool of Candidates. A diverse pool of potential director candidates is identified using multiple sources such as independent search firms and director recommendations. The Board does not have a specific director diversity policy, but it fully recognizes that having a variety of points of view improves the quality of dialogue, contributes to a more effective decision-making process, and enhances overall culture in the boardroom.
Review Candidates.Candidates. Potential candidates are comprehensively reviewed and are the subject of rigorous discussion during the ESG & Enterprise Risk Committee meetings and Board meetings. The candidates that emerge from this process are interviewed by members of the ESG & Enterprise Risk Committee and other Board members, including the Chairman.Chairman and the CEO. During these meetings, directors assess candidates on the basis of their skills and experience, their personal attributes, and their expected contribution to the current mix of competencies and diversity of the Board. At the same time due diligence is conducted, the Chairman, as well as the ESG & Enterprise Risk Committee, solicits feedback from other directors and persons outside the Company.
Recommend Potential Director for Approval.Approval. The ESG & Enterprise Risk Committee recommends potential directors to the Board for approval. If a director is appointed between annual meetings of stockholders, the Board will approve the director’s appointment to an open position on the Board. Stockholders vote on director nominees at the Annual Meeting.
| 45 | 2024 Proxy Statement |
Onboard the New Director. For each new director, we conduct a comprehensive onboarding process to ensure that he or she has a full understanding of the business and to allow the director to make meaningful contributions quickly, which includes a combination of one-on-one sessions with management and other boardBoard members, facility site visits, written materials and training.
Board Annual Self-Assessment Orientation and Continuing Education
The Board and each committee perform an annual self-assessment to evaluate its effectiveness in fulfilling its obligations. The ESG & Enterprise Risk Committee leads the Board in the self-assessment. Each year, our ESG & Enterprise Risk Committee discusses and considers the appropriate approach and approves the form of evaluation. Members of our Board and each of our Board committees participate in the formal evaluation process, responding to questions designed to elicit information to be used in improving Board and committee effectiveness. In response to feedback from the evaluation process, our Board and committees work with management to take steps to improve policies, processes and procedures to further Board and committee effectiveness.
As in past years, in 2021,2023, the ESG & Enterprise Risk Committee retained outside counsel and the Company’s general counsel to assist the committee in tailoring a self-assessment survey to meet the needs of the Board. The outside counsel administered the self-assessment as an independent person to foster frank feedback regarding Board and committee performance. Outside counsel then collated the results of the survey and reviewed the results to provide legal advice to the Board regarding any areas of improvement. The Chair of the ESG & Enterprise Risk Committee discussed the results of the self-assessment and any legal advice, and the Board and each Committeecommittee implemented improvement steps or changes as needed.
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During these assessments, the Board reviews the background and qualifications of each of their respective members, as well as an assessment of the Board’s and each of its committees’ composition in light of their respective needs and objectives after considering issues of judgment, diversity, age, skills, background and experience. In addition, theOur Board also assesses its overall succession planning process and committee composition.
The Company provides membership in the National Association of Corporate Directors (NACD) to Board members, as well as the opportunity to attend director education programs at other institutions, to assist them in remaining current with exemplary board and committee practices and developments in corporate governance.
Any stockholder or other interested person may communicate with our Board, individually or as a group, by contacting our Corporate Secretary or the Chairman of the Board. This contact information is maintained on the Investor RelationsInvestors tab of our website at www.mrcglobal.com.
The current contact information for either the Corporate Secretary or the Chairman of the Board is as follows and should be addressed to either of their attention, as applicable:
MRC Global Inc.
Attention: Corporate Secretary
1301 McKinney Street, Suite 2300
Houston, TX 77010
E-mail: gc@mrcglobal.com
Communications to directors at this address will be forwarded to the relevant director(s) except for solicitations or other matters not related to MRC Global.
| 46 | 2024 Proxy Statement |
Code of Ethics
We have adopted a Code of Ethics that applies to our directors, officers and employees. The Code of Ethics sets forth guidelines for deterring wrongdoing and promoting conduct in accordance with ethical standards. Our Code of Ethics can be found on our Company’s website at www.mrcglobal.com. If we amend or waive provisions of this Code of Ethics, we intend to also disclose the same on our website. We have also adopted a Code of Ethics for Principal Executive and Senior Financial Officers that applies to the principal executive officer, the principal financial officer, the principal accounting officer and the controller, or other persons performing similar functions for the Company. The Code of Ethics for Principal Executive and Senior Financial Officers is intended to supplement the Code of Ethics with additional applicable policies, procedures, and guidelines. The Code of Ethics for Principal Executive and Senior Financial Officers can be found at www.mrcglobal.com. If we amend or waive provisions of the Code of Ethics for Principal Executive and Senior Financial Officers, we intend to also disclose the same on our website.
The New York Stock Exchange (“NYSE”) listing standards and the Company’s Corporate Governance Guidelines require that a majority of our directors be independent. Additionally, all members of the Audit Committee, Compensation & Human Capital Committee and ESG & Enterprise Risk Committee (acting as our nomination and governance committee) are required to be independent. The NYSE listing standards include objective tests that can disqualify a director from being treated as independent, as well as a subjective element, under which the Board must affirmatively determine that each independent director has no material relationship with the Company or management. The Board and the ESG & Enterprise Risk Committee broadly considers all relevant facts and circumstances and apply the standards listed in Annex A of the Company’s Corporate Governance Guidelines in making independence determinations.
The Board has determined that each of our directors, other than Mr. Saltiel, qualifies as an independent director within the meaning of Section 303A.02 of the NYSE Listed Company Manual and under the independence requirements that our Board has adopted as set forth in our Corporate Governance Guidelines.
Rhys Best has served as our independent, non-executive chairman of the Board. Mr. Best is 75 years old. Pursuant to the Company’s Corporate Governance Guidelines, he was originally scheduled to
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retire from the Board effective as of the Company’s Annual Meeting of Stockholders held in May 2020. To provide for a smooth succession in the Company’s CEO and Board leadership, the Board waived the Corporate Governance Guidelines for two years in a row. In March 2021, the Company named Robert Saltiel as its new CEO upon Andrew Lane’s retirement. The Board has now named Robert Wood as its new independent, is our non-executive chairman to take office immediately following the 2022 Annual Meeting, subject to his re-election to the Board. As these leadership transitions have now occurred, Mr. Best will retire from the Board after 14 years of dedicated service to the Company and its stockholders.
The chairman of the Board presides over all meetings of the Board and stockholders, reviews and approves meeting agendas, meeting schedules and other information, acts as a liaison between the outside directors and management, consults on stockholder engagement and governance matters and performs such other duties as the Board requires from time to time. The CEO is responsible for working with the Board in setting the Company’s strategic direction and day-to-day leadership and performance. Having an independent non-executive chairman allows management to deepen its focus on customers, growing the business, cost control, operational excellence and delivering stockholder value. The Board believes that having an independent, non-executive chairman:
| (1) | increases the independent oversight of the Company and enhances the Board’s objective evaluation of our CEO; |
| (2) | provides our CEO with an experienced sounding board in the chairman; and |
| (3) | provides an independent spokesperson for the Company. |
Our Compensation & Human Capital, Audit and ESG & Enterprise Risk Committees are currently comprised entirely of independent directors. The Board believes that having an independent, non-executive chairman of the Board and independent Compensation & Human Capital, Audit and
| 47 | 2024 Proxy Statement |
ESG & Enterprise Risk Committees provides a structure for strong independent oversight of our management. Each committee chair presides over the chair’s committee meetings and reviews and approves meeting agendas, schedules and other information for the committee. We believe that the Board’s leadership structure, including its independent chair, majority of independent directors, and allocation of oversight responsibilities to appropriate committees, provides effective board-level risk oversight.
CEO and Senior Management Succession Planning
Our Board oversees management succession planning and talent development. At each meeting duringDuring the year, the Compensation & Human Capital Committee is engaged on the topics related to leadership and talent development, with one meeting dedicated to an in-depth review of succession planning for key executive officer roles, including the CEO. The succession plans are reviewed with the full Board at least annually. The Board also reviews succession planning in the context of our overall business strategy. Potential leaders are visible to Board members through formal presentations and informal events to allow directors to personally assess candidates.
Our Board also establishes steps to address emergency CEO succession planning in extraordinary circumstances. Our emergency CEO succession planning is intended to enable our Company to respond to unexpected emergencies and minimize potential disruption or loss of continuity to our Company’s business and operations.
In 2020, shortly after Andrew Lane announced his plan to retire as the Company’s CEO, the Board formed a CEO Succession Committee to assist the Board in evaluating both internal and external candidates for a new CEO, and in March 2021, the Board elected Robert Saltiel as the Company’s new President and CEO.
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Director Attendance at Meetings of the Board, Committees and Annual Meeting of Stockholders
Our Board Members are expected to attend our 20222024 Annual Meeting of Stockholders.
All Board members standing for re-election who were then Board members at our 20212023 Annual Meeting of Stockholders attended that meeting.
During 2021,2023, the Board held 7ten meetings. AllEach of our nominees who were directors in 2023 attended 100%at least 75% of the aggregate of the total number of meetings of theour Board and meetings of the committees of the Board on which the person served.served during 2023.
The directors of the Board meet in regularly scheduled executive sessions at times and for reasons as they desire and set, with at least four executive sessions per year. During the sessions, the chairman presides.
The Board’s Role in the Oversight of Risk Management
The Board, as a whole, is responsible for overseeing our risk exposure as part of determining a business strategy that generates long-term stockholder value. The Board shapes our enterprise-wide risk policies, desire for risk taking and acceptable risk tolerance levels that provide the foundation for our overall business strategy. The Board recognizes that risk mitigation not only preserves value, but, when managed appropriately, can create value and opportunity for the Company.
The Board recognizes that purposeful and appropriate risk-taking in certain areas is important for the Company to be competitive and to achieve our long-term goals. Accordingly, the Board has established an enterprise risk management (“ERM”) framework through which it regularly identifies key risks that face the Company and carefully considers our appetite for each risk. This ERM framework is designed to identify, assess, prioritize, address, manage, monitor and communicate risks across the Company’s operations and foster a corporate culture of integrity and risk awareness.
As part of the Company’s strategic planning process, the Company maintains a Risk Management Committee that assists the Board in identifying key risks and the Board’s oversight responsibilities over
| 48 | 2024 Proxy Statement |
risk management. Our Risk Management Committee is comprised of the following members of our management:
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| ● | Vice President, Tax |
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| ● | Senior Director, Corporate Accounting |
| ● | Senior Director, Information Security |
| ● | Senior Director, Risk Management |
| ● | Director, Financial Reporting |
The principal responsibilities of the Risk Management Committee are to review, assess and monitor any material risks or exposures associated with the conduct of our business, our corporate culture, the internal risk management processes or systems implemented to identify, mitigate, monitor or manage these risks or exposures and the Company’s policies and procedures for risk management.
Consistent with this approach, one of the Board’s primary responsibilities is overseeing and interacting with senior management with respect to key aspects of the Company’s business, including risk assessment, monitoring, managing and risk mitigation of the Company’s top risks. Our Board meets
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with senior management at regular Board meetings and, if necessary, at other times to discuss the strategy and success in addressing our identified key risks and any potential disruptive forces along with any other risks that we may face.
In addition to the foregoing, the Board has tasked designated committees of the Board to assist with the oversight of certain categories of risk management, and the committees report to the Board regularly on these matters. All committees play significant roles in carrying out the risk oversight function that typically focuses in their areas of expertise. In general, the committees oversee the following risks:
| ● | Audit Committee: reviews and assesses the guidelines and policies governing the Company’s financial and accounting risk management and oversight processes and assists with the Board’s oversight of financial and accounting matters, including compliance with legal and regulatory requirements, and the Company’s financial reporting and internal control |
| ● | Compensation & Human Capital Committee: reviews the Company’s employee compensation policies and human capital practices to assess whether such policies and practices encourage long-term focus, support the recruitment, retention and development of executive talent and discourage excessive risk-taking |
| ● | ESG & Enterprise Risk Committee: reviews and assesses enterprise risks and opportunities that may be applicable to the Company from time to time, including (among others) risks from cyber incidents, health and safety risks, reputational risks, ESG issues (including climate-related risks) and the risks set forth in our Annual Report on Form 10-K for the year ended December 31, |
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Although these committees assist the full Board with risk oversight, ultimately the full Board oversees the Company’s enterprise risk management and our corporate culture with regular presentation and discussion.
In addition, throughout the year, the Board and the relevant committees receive updates from management with respect to various enterprise risk management issues, including (among others) market conditions, supply chains, geopolitical factors, health and safety, cybersecurity, company culture, ESG and other matters, and dedicate a portion of their meetings to reviewing and discussing specific risk topics in greater detail. The Company’s senior management engages with and reports to the Company’s Board and the relevant committees on a regular basis to address high-priority risks.
The Company believes that the Board’s leadership structure supports the risk oversight function of the Board by providing for open communication between management and the Board. In addition, strong independent directors chair the various committees involved in assisting with risk oversight, and all directors are involved in the risk oversight function.
Board Oversight of Cybersecurity and Information Security Risk
Our Board appreciates the importance of maintaining the confidence and trust of our customers, suppliers and employees. As part of the Board’s role as independent oversight of the key risks facing our Company, the Board devotes regular and thorough attention to our data, information technology (“IT”) systems and their development (including the Company’s e-commerce strategy and its implementation) and protection of our data and IT systems, including business resilience, compliance, cybersecurity and information security risk.
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Cybersecurity Governance Highlights
✓ Risk and posture reporting to our Board and ESG & Enterprise Risk and Audit Committees in response to key developments ✓ Cross-functional approach to addressing cybersecurity risk, with operations, legal, risk, finance, information technology, human resources, and corporate audit functions participating in and presenting on key topics ✓ Global presence, with technical operations coverage and visibility
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Enterprise RiskThe presentations and reports also include regulatory developments, policies and practices, and information on security resources and organization.
We have established a Cybersecurity Committee has engaged withled by our general counsel, consisting of our head of information security, chief information security officer onand chief financial officer. Our general counsel, Daniel Churay, has earned a CERT certificate in cybersecurity from Carnegie Mellon and information security risks and industry trends. In addition, our Auditbegan his career as a computer programmer/analyst. The Cybersecurity Committee has received reports on the Company’s digitization, e-commerce and IT efforts and the impact of those efforts on the Company’s financial condition and results of operations.
Our ESG and Enterprise Risk Committee and Risk Management Committee reviews cybersecurity, digitization and information security risks. The Risk Management Committee has established a Data and Cybersecurity Council which takes steps to understand and mitigate information security risks by completing regular reviews and approvals of our information security program. The members of the Cybersecurity Committee are also members of the Risk Management Committee.
Each quarter, the ESG & Enterprise Risk Committee has received a report from a member of the Cybersecurity Committee, including reports from our head of information security, providing information on cybersecurity and information security risks, protective measures and controls, table top exercise, penetration testing and phishing test results and industry trends. In addition, our Audit Committee has received reports on the Company’s digitization, e-commerce and IT efforts and the impact of those
| 50 | 2024 Proxy Statement |
efforts on the Company’s financial condition and results of operations. The Audit Committee has worked with the ESG & Enterprise Risk Committee to engage external auditors or consultants from time to time to review various aspects of the Company’s cybersecurity policies and programs and recommend updates or changes. In 2023, the Audit Committee received reports from KPMG LLP, the Company’s outsourced internal auditor, on a review of IT security policies and data loss prevention processes. With respect to cybersecurity, the Company’s policies are aligned with standards promulgated by the National Institute of Standards and Technology (NIST).
Our Company has a team of information security employees and vendors who monitor and respond to security incidents, maintain oversight of third parties and guide the business in disaster recovery and resiliency planning for cybersecurity risks. Each of our employees receives education and multi-media reminders on responsible information security practices through our security awareness program.
See page 14pages 10-11 and 15-16 of our Annual Report on Form 10-K for the year ended December 31, 2021,2023, that has been filed with the SEC for detailed information on cybersecurity risks related to our business.business and our cybersecurity programs.
Our effective management of ESG factors is of long-term significance to our stockholders, employees and communities and is critical to our Company’s success. Our Board has tasked its ESG & Enterprise Risk Committee with assisting the full Board in its oversight of the Company’s efforts on ESG matters.matters including the impacts of climate change on our business and our reporting on our emissions as well as our health and safety programs for our employees and others engaged our business. Our Board reviews these matters on a quarterly basis. In addition, the Company has appointed a senior vice president – ESGsustainability (SVP – Sustainability) and has an ESG Committee, comprised of members of management, thatwhich reports to the ESG & Enterprise Risk Committee. The management ESG Committee is responsible for monitoring, assessing and improving all relevant issues with respect to ESG. Our EVPSVP – Corporate AffairsSustainability chairs the ESG Committee, which is comprised of the VP – ESG and executives representing various functions within our Company including operations, quality, safety, corporate services, marketing, human resources, legal, quality, investor relations and supply chain management leaders.chain. In addition, our SVP – Sustainability oversees the Company’s health and safety function and programs. The Audit Committee has worked with the ESG & Enterprise Risk Committee to engage external auditors or consultants from time to time to review various aspects of the Company’s climate change reporting and programs and recommend updates or changes. In 2023, the Audit Committee received reports from KPMG LLP, the Company’s outsourced internal auditor, on a review of the validation of the Company’s energy transition data reporting.
Information on Standing Committees of the Board
The Company currently has three standing Board committees: an Audit Committee, a Compensation & Human Capital Committee, and an ESG & Enterprise Risk Committee (which acts as the Board’s nominating and governance committee). Each committee’s functions are described in detail in its respective charter, which is available on the Company’s website at www.mrcglobal.com.
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Audit Committee
The Audit Committee met sevenfive times during 2021.2023. As described in its charter, the Audit Committee’s primary duties and responsibilities are to assist Board oversight of:
Chair:
Members: Leonard M. Anthony
David A. Hager Dr.
Independent: 4
Financial Experts: |
| O the integrity of the Company’s financial statements
O the integrity and adequacy of the Company’s auditing, accounting and financial reporting processes and systems of internal controls for financial reporting
O the Company’s compliance with legal and regulatory requirements, including internal controls designed for that purpose
O the independence, qualifications, engagement, compensation and performance of the Company’s independent auditor and other accounting and auditing firms that provide attestation services
O performance of the Company’s internal audit function
O the review of significant financial statement, control and compliance risks
O other financial accounting firms that provide attestation services
O related party transactions
O the application of the Company’s codes of business conduct and ethics |
| * |
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Compensation & Human Capital Committee
The Compensation & Human Capital Committee met four times during 2021. John A. Perkins served on the committee until his retirement at the 2021 Annual Meeting on May 6, 2021.2023. As described in its charter, the Compensation & Human Capital Committee’s primary functions include:
Chair: Deborah G. Adams
Members: Leonard M. Anthony George J. Damiris
Dr.
Independent: 4 |
| O establishing policies and periodically determining matters involving executive compensation
O reviewing compensation of non-employee Board members
O recommending changes in employee benefit programs
O granting or recommending the grant of restricted stock
O assessing risk in compensation programs
O providing counsel regarding key personnel selection
O overseeing executive development and succession O overseeing the Company’s human capital practices O overseeing the Company’s diversity, equity and inclusion practices and programs |
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ESG & Enterprise Risk Committee
The ESG & Enterprise Risk Committee (which is the Company’s nominating and governance committee) met five times during 2021. John A. Perkins served on the committee until his retirement at the 2021 Annual Meeting on May 6, 2021.2023. As described in its charter, the ESG & Enterprise Risk Committee’s primary functions include:
Chair:
Members: Barbara J. Duganier* Deborah G. Adams
Ronald L. Jadin
Independent:4 |
| O identifying individuals qualified to become members of the Board consistent with any criteria the Board approves from time to time
O recommending to the Board director candidates for election at the annual meetings of stockholders or to fill vacancies pursuant to the bylaws
O recommending to the Board director nominees for each Board committee
O developing, annually reviewing and recommending to the Board a set of corporate governance guidelines for the Company
O assisting the Board in assessing the independence of the members of the Board
O leading the Board and other Board committees in their annual evaluation process
O assisting the Board in evaluating any proposed changes to the Company’s charter, bylaws, or other governance issues
O overseeing the Company’s enterprise risk management framework, policies and procedures, including (among other things) assisting the full Board with its oversight of cyber security
O overseeing the Company’s efforts on ESG matters | ||
| * |
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To the best of our knowledge, there is no material proceeding to which any director, director nominee, or executive officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or any associate of such director, nominated director, officer, affiliate of the Company, or security holder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.
Non-Employee Director Compensation Table
As compensation for their services on the Board, we paid each non-employee director an annual cash retainer of $75,000.$75,000, which was raised to $90,000 as of May 2023. We paid the chair of the Audit Committee an additional annual cash retainer of $25,000, the chair of the Compensation & Human Capital Committee $20,000, and the chair of the ESG & Enterprise Risk Committee $15,000. Each committee member (other than the chairs) received a $2,000 annual retainer for each committee membership. For all, retainers were paid on a pro-rata basis based on the time of service. The Company also granted restricted stock awards to each non-employee director. The number of shares of which pursuantPursuant to the Director Compensation Plan, the number of shares so granted is determined by dividing $125,000,$145,000, or in the case of the non-executive chairman $225,000,$265,000, by the
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20-day volume weighted average price (“VWAP”) as of the date immediately preceding the grant date. In 2023, these amounts were increased for non-employee directors from $125,000 and for the non-executive chairman from $225,000 in annual grants. All directors are also reimbursed for travel expenses and other out-of-pocket costs incurred in connection with their attendance at meetings.
In 2020, the Board created a CEO Succession Committee comprised of Deborah Adams, Rhys Best, Barbara Duganier and Henry Cornell to assist the Board with the identification and evaluation of CEO candidates. Each CEO Succession Committee member received $5,000 per quarter served. The CEO Succession Committee completed its work in March 2021 with the appointment of Robert Saltiel as the Company’s new CEO and the retirement of Andrew Lane as CEO.
Our non-employee director compensation program is intended to be competitive to attract qualified directors to join our boardBoard and to align directors with stockholders’ interests. We also design the program so that the majority of a director’s compensation is in the form of Company stock. To that end, we
| 53 | 2024 Proxy Statement |
our compensation consultant, Meridian Compensation Partners, annually benchmarkbenchmarks our director compensation program against the same peer group used for executive compensation benchmarking (as described in “Compensation Discussion and Analysis”). We also designOur Compensation Committee then reviews this analysis and recommends any changes to the program soBoard for approval. The changes to director compensation made in May 2023 followed this process and were the first changes to director compensation that the majority of a director’s compensation isBoard has made since 2018. The increases in cash retainers and annual grants were made to reflect changes in market amounts over the form of Company stock.past five years.
Total Director Compensation for 20212023
| Name | Fees Earned or | Stock Awards | Total ($) | |||||||||
Deborah G. Adams(2) | 84,000 | 147,347 | 231,347 | |||||||||
Leonard M. Anthony | 92,000 | 147,347 | 239,347 | |||||||||
Rhys J. Best(2) | 80,000 | 265,231 | 345,231 | |||||||||
Henry Cornell(2) | 80,000 | 147,347 | 227,347 | |||||||||
George J. Damiris | 19,750 | 65,117 | 84,867 | |||||||||
Barbara Duganier(2) | 107,000 | 147,347 | 254,347 | |||||||||
Ronald L. Jadin | 19,750 | 65,117 | 84,867 | |||||||||
Dr. Cornelis A. Linse | 79,000 | 147,347 | 226,347 | |||||||||
John A. Perkins(3) | 27,564 | — | 27,564 | |||||||||
Robert L. Wood | 97,000 | 147,347 | 244,347 | |||||||||
| Name | Fees Earned or | Stock Awards (1) | Total ($) | ||||||||||||
Deborah G. Adams | 103,125 | 138,114 | 241,239 | ||||||||||||
Leonard M. Anthony | 90,506 | 138,114 | 228,620 | ||||||||||||
Henry Cornell | 81,125 | 138,114 | 219,239 | ||||||||||||
George J. Damiris | 85,125 | 138,114 | 223,239 | ||||||||||||
Barbara Duganier | 102,264 | 138,114 | 240,378 | ||||||||||||
David A. Hager(2) | — | — | — | ||||||||||||
Ronald L. Jadin | 98,606 | 138,114 | 236,720 | ||||||||||||
Cornelis A. Linse(3) | 46,742 | — | 46,742 | ||||||||||||
Anne McEntee | 84,705 | 138,114 | 222,819 | ||||||||||||
Robert L. Wood | 81,125 | 252,425 | 333,550 | ||||||||||||
| (1) | Grants awarded on May |
| (2) |
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| (3) |
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The following table indicates the aggregate number of shares of our common stock subject to outstanding option and unvested stock awards that our non-employee directors held as of December 31, 2021:2023:
| Name | Stock Options (#) | Stock Awards (#) | ||
Deborah G. Adams | — | 13,383 | ||
Leonard M. Anthony | 19,130 | 13,383 | ||
Rhys J. Best | 19,130 | 24,090 | ||
Henry Cornell | 9,415 | 13,383 | ||
George J. Damiris | — | 7,697 | ||
Barbara J. Duganier | — | 13,383 | ||
Ronald L. Jadin | — | 7,697 | ||
Dr. Cornelis A. Linse | 19,130 | 13,383 | ||
John A. Perkins | — | — | ||
Robert L. Wood | — | 13,383 | ||
| Name | Stock Options (#) | Stock Awards (#) | ||
Deborah G. Adams | — | 15,295 | ||
Leonard M. Anthony | — | 15,295 | ||
Henry Cornell | — | 15,295 | ||
George J. Damiris | — | 15,295 | ||
Barbara Duganier | — | 15,295 | ||
David A. Hager(1) | — | — | ||
Ronald L. Jadin | — | 15,295 | ||
Cornelis A. Linse | — | 15,295 | ||
Anne McEntee | — | 15,295 | ||
Robert L. Wood | — | 27,954 | ||
| (1) | David Hager joined the Board in March 2024, and owned no Company stock options or common stock as of December 31, 2023. |
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COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes the objectives and design of MRC Global’s compensation program for our 20212023 named executive officers (NEOs), who are as follows:
| Executive Officer | Age | Position (as of December 31, | ||
Robert J. Saltiel, Jr. |
| President and Chief Executive Officer (CEO)
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Kelly Youngblood |
| Executive Vice President and Chief Financial Officer (CFO) 2020 – present | ||
Daniel J. Churay |
| Executive Vice President – Corporate Affairs, General Counsel and Corporate Secretary (GC) 2011 – present | ||
Grant R. Bates |
| Senior Vice President – North American Operations & E – Commerce 2016 – present* | ||
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| Senior Vice President –
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*Mr. Lane retired on March 14, 2021; Mr. Witt separated from service on November 30, 2021; and Mr. Bowhay separated from service on December 31, 2021.
**Dates for Messrs. Bates Bowhay and WittLong reflect dates of service as a senior vice president of the Company with varying responsibilities from time to time.
MRC Global is the leading global distributor of pipe, valves, fittings (PVF)(“PVF”) and other infrastructure products and services to diversified energy, industrial and gas utility end-markets. We provide innovative supply chain solutions, technical product expertise and a robust digital platform to customers globally through our leading position across each of our diversified end-markets including the following sectors:
| ● | Gas Utilities: gas utilities (storage and distribution of natural gas) |
| ● | DIET: downstream, industrial and energy transition (crude oil refining, petrochemical and chemical processing, general industrials and energy transition projects) |
| ● |
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MRC Global’s executive compensation program is designed to attract, motivate and retain our executives, including our NEOs,named executive officers (NEOs), who are critical to the Company’s long-term success. Our executive compensation strategy is “pay for performance” and is focused on:
| ● | motivating executive officers to increase the economic value of the Company by strengthening our position as a leading global |
| ● | aligning our executive officers’ interests and actions with the interests of our stockholders and key stakeholders. |
| 55 | 2024 Proxy Statement |
We provide our executive officers with a compensation package that consists primarily of:
| ● | a base salary, |
| ● | short-term incentive (STI) in the form of annual cash payments based upon achievement of certain performance metrics, and |
| ● | long-term incentive (LTI) in the form of time-vested restricted stock units (RSUs) and performance share units (PSUs), which pay out based upon achievement of certain performance metrics over a three-year performance period. |
20212023 Company Performance Highlights
Our compensation programs are designed to align management’s incentives with
shareholder objectives with 83% of CEO target compensation and
an average of 67% of the 2021 target compensation of our other active NEOs at risk.
We believe we have a strong management team and employee base that has consistently delivered positive results versus its peers even in a challenging environment. The selling, general and administrative expenses (“SG&A”) actions, including compensation actions, we implemented in 2020 to reduce operating costs, the cost structure we maintained in 2021 and a continued focus on creating business efficiencies and increasing profitability has contributed to improved 2023 performance across several metrics including:
Cash provided by operations of $181 million A 76% increase in net income attributable to common stockholders Two years of adjusted gross profit percentage in excess of 21% The lowest net debt and leverage ratio since our long-term business strategy continue to position us well for future growth and success. We believe our compensation actionsIPO in 2021 allowed us to address2012
In 2023, we delivered the continuing difficult and evolving operating environment and position us for recovery as the world continues to address the COVID-19 pandemic and the world economy continues to recover.following:
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As a result of the Company’s continued focus on SG&A expense, including compensation and tailored changes to address the changing market, the Company was able to deliver the following in 2021:
Cash flow provided by operations of $181 million | ||||
Adjusted EBITDA of $250 million, 7.3% of sales
| Gross profit percentage of Adjusted gross profit percentage of
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— the lowest net debt since the Company’s initial public offering (“IPO”) in 2012
| Ended the year with a leverage ratio of 0.7x — the lowest since the Company’s IPO in 2012 | |||
Generated | ||||
| 96% of
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| * | See |
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The following graphs further illustrate the Company’s 20212023 performance compared to the last twothree years.
See “Note on GAAP vs. “Reconciliation of Non-GAAP Measures” Financial Measures From GAAP” above for information about the non-GAAP measures: adjusted gross profit percentage, adjusted EBITDA, RANCE adjusted for LIFO, net debt and leverage ratio.
Leadership Transition
In March 2021, we transitioned the leadership of the Company to a new CEO. Robert Saltiel joined the Company after an extensive search; and Andrew Lane retired. The Compensation & Human Capital Committee (the “Committee”) and the Board benchmarked CEO compensation and set Mr. Saltiel’s target compensation below that of Mr. Lane’s. To induce Mr. Saltiel to accept the position as our new CEO and enter into an employment agreement, the Board provided Mr. Saltiel with a one-time grant of RSUs, equal to approximately $500,000. The RSUs cliff vest on the third anniversary of the date of grant.
After reviewing the Company’s business and operations, Mr. Saltiel reorganized the Company’s management structure to be more efficient and focused in the areas of operations, business development and sales, supply chain and International operations. As part of this internal reorganization, the Company reduced its executive positions from nine to eight positions, which reduced overall senior executive compensation expense on a run rate basis. The roles and responsibilities of Messrs. Bowhay and Witt were significantly impacted, and each of them separated from service with the Company following this management realignment.
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20212023 Executive Compensation Decisions
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In 2020,We have shaped our executive compensation to meet the beginningchanging demands of our business over the past three years. Two major events have impacted our Company in this period: the recovery from and remaining impacts of the COVID-19 pandemic dramatically and, negatively impactedsecond, our business. Demandorganizational focus on efficiency and improvement in profitability. This has occurred during a competitive market for oiltalent, tightened labor constraints and gas was drastically reduced as countries implemented various levels of lock downs in response to the pandemic. In addition, the Organization of Petroleum Countries plus Russia (“OPEC+”) maintained supply levels of oil and gas above demand levels. Oil and gas commodity prices decreased, causing our customers to experience reduced revenue levels. This caused our customers to reduce their operating and capital expenditures for our products, which negatively impacted our revenue and profitability. As a result, we implemented a number of steps in 2020 to reduce our selling, general and administrative (SG&A) expenses, including compensation expense, to match the dramatically reduced level of business that we experienced from our end marketan inflationary environment.
2021
As 2021 began, it was unclear whether and at what rate business would recover.recover from the negative impact of the COVID-19 pandemic. Given the uncertainty of the business outlook, MRC Global focused on maintaining the lower selling, general and administrative (“SG&A&A”) cost base that it achieved in 2020 while eliminating at the beginning of 2021 the prior year’s furlough of one unpaid day, every two weeks, for its employees, including our NEOs.COVID-19 furlough. Our compensation arrangements remained generally static.static, although in October 2021, we restored one-half of the prior Company match for employee contributions to our North American defined contribution retirement plans. During 2021:
| ● | We reduced the size of long-term incentive (LTI) equity award grants for management as a percentage of salary, including for executive officers. |
| ● | We did not implement an annual merit raise process, and our |
| ● | We maintained reduced STI and LTI targets for eligible employees, including our |
| ● | We reduced 2021 payouts under our annual STI plan by 50% |
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Our STI targets for our NEOs were designed with a strong cash flow from operations component (37.5%) asIn March 2021, we believed that muted demand for our products required continued cash discipline. The other components of STI for NEOs were 50% on adjusted EBITDA and 12.5% on safety measures. Adjusted EBITDA has long been a primary driver of our business, and we implementedtransitioned the safety measures during 2020 to further incentivize management to maintain a safe workplace, even in lightleadership of the pandemic. Finally, as we setCompany to a new CEO, Robert Saltiel, and our STI plans, we implemented a reduction factorprior CEO retired. The Board, with the assistance of 50% of any final payouts underits Compensation & Human Capital Committee (the “Committee”), negotiated Mr. Saltiel’s starting compensation package with the plans for all eligible employees, including the NEOs.
As COVID-19 vaccines became more widely distributed in 2021, demand for transportation fuels and oil and gas products grew dramatically from 2020 lows. Oil and gas prices increased, spurring additional production by the Company’s customers and demand for our products and services. In addition, gas utility customers became more comfortable allowing their customers’ crews on site to install equipment. As a result, our gas utility business dramatically increased from 2020 lows as well. As a distributor, it is necessary to build inventory in a growing market to support sales and EBITDA growth, which, in turn, drive the Company’s shareholder returns. As the market changed from pandemic lows to growth, it became clear that the Company needed to increase its inventory position to support its growth while lowering its cash flow targets. The Committee determined that it was appropriate to adjust the performanceassistance of the cash flow from operations to exclude inventory purchases in excess of the Company’s original inventory plan for 2021. In making this decision,Committee’s compensation consultant, Meridian Compensation Partners, LLC (“Meridian”). The Board and the Committee consideredbenchmarked the extraordinary supply chain challenges experienced inpackage against CEO compensation for the market and its desire to incentivize the NEOs to proactively respond to the changing market conditions.Committee’s then chosen peer group as well as general industry surveys. Mr. Saltiel’s 2021 STI payouts were also reduced by 50%.
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In September 2021, we reopened our offices for our office staff under appropriate safety measures. Our warehouse and field employees have continuously worked throughout the pandemic under strict safety measures as MRC Global has been deemed an essential business in every jurisdiction in which we operate. In the latter part of the year, we have been experiencing an uptick in voluntary attrition consistent with labor shortages that other businesses are experiencing. In 2020, as part of our cost reduction and cash conservation measures, we suspended the defined contribution pension plan match in our North American operations. We partially restored this match in the fourth quarter of 2021. We have also addressed specific compensation issues in certain roles and locations to address the competitive labor market.
The Company utilizes a last-in, first-out (“LIFO”) inventory costing methodology, which few companies utilize. Under this methodology, during inflationary cycles, the cost of our goods sold rises as the most expensive items are sold first, and during deflationary cycles, our cost of goods sold decreases as less expensive items are sold first. This has the impact of increasing our expense in inflationary cycles and decreasing our expense in deflationary cycles. To assist investors with their comparisons against companies that do not utilize LIFO costing, we present certain adjusted measures. See “Note on GAAP vs. Non-GAAP Measures” above.
In 2021, we have been experiencing sharp inflation, particularly in steel and other metals. As most of our inventory is made of steel and other metals, this inflation has caused a dramatic increase in the cost of our inventory under our LIFO costing methodology. The RANCE1 component of the PSUs that were granted in February 2021 was determined using net income calculated in accordance with GAAP with no adjustments. Because of this dramatic inflation, the incremental expense included in net income due to LIFO was materially and adversely impacting any potential payouts with respect to the RANCE component of the 2021 PSUs. This inflation was outside of the control of management and was negating the incentive to achieve the shareholder returns for which the RANCE component was designed. The Committee decided to amend the 2021 PSUs to remove the positive or negative impacts of the Company’s LIFO inventory costing methodology on net income when determining RANCE. At the time of the amendment, these PSUs still had over two years remaining in the performance period.
As the year concluded, the 2019 – 2021 performance cycle concluded for the PSUs that were issued to executives in 2019. As neither the relative TSR nor the RANCE component met the threshold for payouts, the recipient executives, including the NEOs, received no payout for this cycle, and the shares were forfeited.
In 2021, our business began to recover, and our revenue increased to $2.666 billion, a 4% increase from 2020. In 2021, MRC Global reduced net debt by 6% to $249 million, ended the year with a leverage ratio of 1.7x, and generated positive adjusted EBITDA of $146 million, a 51% increase from 2020.
2022
2022 was a year of strong recovery in MRC Global’s markets, balanced by on-going inflationary pressures in a tight market for talent and labor, including executive talent. MRC Global anticipated a strong recovery at the beginning of the year and set stretch STI targets for its NEOs as a result. Our 2022 adjusted EBITDA target was $190 million compared to 2021 adjusted EBITDA of $146 million, a 30% increase, and the 2022 safety targets were the same targets as the 2021 targets.
Our gas utilities sector continued to increase sales driven primarily by customer integrity spending as our customers replaced aging infrastructure. Likewise, our downstream and industrial sector also
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increased as customers increased maintenance turnarounds in their plants and started new projects that were previously delayed during the COVID-19 pandemic. Energy transition projects increased as customers invested in biofuels and new offshore wind energy projects. Our upstream and midstream business grew dramatically as economies opened up from COVID-19 restrictions and consumed more energy. In addition, the Russian invasion of Ukraine dramatically impacted the need for oil and natural gas production as countries sanctioned Russia, and Russia retaliated by curtailing oil and gas sales, particularly natural gas sales to Europe. This resulted in increased customer activity to supply Western oil and gas markets.
Given this market growth, the Company actively managed the attraction and retention of talent to meet the growing opportunity. To remain competitive, we increased employee compensation for most of our employees through merit and cost of living adjustments and restored the remaining Company match to our defined contribution retirement plans in North America that we had cut during the 2020 COVID-19 downturn. With respect to the NEOs, the Company adjusted base salaries upwards for Messrs. Bates and Long and increased contingent compensation opportunity for all the NEOs by increasing their target annual, short-term incentive (STI) percentage for 2022. In particular, the STI target payout percentages for Messrs. Youngblood and Churay were restored to their pre-pandemic levels. Prior to taking these actions, the compensation of these executives was below the market median of benchmarked compensation.
2023
2023 was a year of continued recovery and expected growth, and we set stretch STI targets for our NEOs as a result.
The weighting of our STI goals for our NEOs in 2023 remained the same as in 2022: 87.5% on adjusted EBITDA and 12.5% on safety measures. We elected to continue the use of adjusted EBITDA as the key financial metric for performance for our NEOs and cascaded adjusted EBITDA as a metric for STI payments for the broader organization. We retained total recordable incident rate (“TRIR”) and lost time incident rate (“LTIR”) safety metrics for the STI program for our NEOs with revised targets. Additionally, we cascaded a global safety metric to all operations-based roles in the STI program
To reflect the expected growth in our business, our 2023 adjusted EBITDA target was $300 million compared to a 2022 adjusted EBITDA target of $190 million, a 58% increase, and 2022 actual adjusted EBITDA of $261 million, a 15% increase. Our 2023 safety targets were also more stringent to underscore our commitment to a safe workplace and our desire to continually focus on and improve upon our safety results.
The Company continued to actively manage the attraction and retention of talent in 2023. To remain competitive, we increased employee compensation for our employees through merit and cost of living adjustments. After reviewing peer group and market compensation data with Meridian, the Committee adjusted base salaries upwards for all of our NEOs, increased contingent compensation opportunity by increasing the target annual, short-term incentive (STI) percentage for Messrs. Churay and Youngblood and increased the LTI grant value for all NEOs. The Board, on the Committee’s recommendation, ratified the actions with respect to Mr. Saltiel.
The first half of 2023 met our expectations for the expected growth of our business. However, year-over-year 2023 sales compared to 2022 began to decline in the third quarter and declined further in the fourth quarter. As a result our 2023 revenue modestly increased 1% over 2022. Our Gas Utilities customers have indicated to us that during the supply chain shortages of 2021-22, they over-purchased PVF and other gas utilities products due to fears of not being able to get product due to the shortages. In 2023, many of these customers have slowed their purchases from us to work off the excess product that they have in their inventories. Our DIET and PTI sectors grew modestly during 2023. As a result, we did not meet our adjusted EBITDA target of $300 million and ended the year with $250 million in adjusted EBITDA. We did slightly overachieve on the safety metrics in the STI plan. Our adjusted EBITDA and safety performance resulted in an STI payout to the NEOs of 80.4% of target.
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Even in light of moderating sales, we were able to maintain our adjusted gross profit percentage above 21% for the second year in a row. In addition, we generated $181 million in cash flow from operations, well exceeding the Company’s business plan at the beginning of the year of $120 million. This cash flow generation was a result of management’s efforts to control SG&A, measures to increase working capital and inventory efficiency and the reduced need for inventory in the second half of the year. This cash generation, in turn, resulted at the end of 2023 with the Company having net debt of $170 million and a leverage ratio of 0.7x, both public company records for the Company.
2024
In light of expected slowing market conditions entering 2024, management recommended, and the Committee approved, holding NEO total target compensation flat for 2024.
Overview of the Company’s Executive Compensation Design
In addition to base salary, our 2021Compensation Philosophy and Objectives
Our executive compensation was comprisedprograms are structured to reward the achievement of STIour specific annual cash incentives and LTI equity awards as well as certain benefitsstrategic performance goals and perquisites. Consistent with our pay-for-performancelong-term objective of increasing shareholder value. Accordingly, the executive compensation philosophy of the table below summarizes how performance in 2021 impacted pay in 2021.Compensation & Human Capital Committee is threefold:
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| ● | To provide performance-based cash and |
Pay for Performance Program
Our Compensation & Human Capital Committee, which is composed solely of independent directors, believes in a pay for performance philosophy. While the Committee sets target compensation for the executive officers each year based on market practices and internal considerations, the executive officers’ realized compensation is strongly dependent on the Company’s performance relative to pre-determined and measurable financial metrics and stock price performance.
| ● | As illustrated in the graphic below, a substantial portion of the |
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Under our |
| ● | There would not be a payout relative to each of the performance metrics in the STI plan unless the threshold for payout was achieved for each respective metric. |
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The |
| 60 | 2024 Proxy Statement |
three-year period, 2023-25. The |
Target Compensation
The following illustration represents the elements of our 2021 base2023 compensation package at target to reflect the CEO’s compensation and an average for the other active NEOs.
The CEO’s Compensation at Risk has increased from 84% in 2022 to 85% in 2023, and the average Compensation at Risk for the other NEOs has increased from 66% to 71% from 2022 to 2023.
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Key Features of our Executive Compensation Program
| What We Do | ||
✓ | We pay for performance – | |
✓ | We benchmark pay relative to the market and review the peer group used for market benchmarking on an annual basis. | |
✓ | We set objectives for our annual STI plan that are measurable, determined in advance and aligned with stockholder interests. Our | |
✓ | ||
| Our LTI equity compensation plan is designed to be strongly tied to Company performance. We award PSUs to tie payouts to our relative TSR | |
✓ | ||
✓ | Beginning in 2022, we added a Russell 2000 ETF to the companies used in the relative TSR calculation for PSUsto better reflect our performance against the broader market and acknowledge the broader competition for investor capital. In 2023, we replaced the OSX with the OIH in our comparator group that is used to calculate relative TSR for our PSUs to better reflect our markets for investor capital. | |
✓ | ||
✓ | ||
| We have equity ownership guidelines that provide for significant executive officer equity ownership. | |
✓ | We have adopted a | |
✓ | We have a fully independent Compensation & Human Capital Committee. | |
✓ | Our Compensation & Human Capital Committee engages a compensation consultant that is independent of management and the Company. | |
✓ | We have an annual Say-on-Pay vote. | |
| What We Don’t Do | ||
| No guaranteed minimum incentives | |
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No | |
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No | |
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No hedging or derivative transactions with respect to our shares by executive officers or directors permitted | |
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No pledging of MRC Global securities by executive officers or directors permitted
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Peer Group
We benchmark our executive compensation against a selected group of peers as well as industry surveys.
In August 2023, the Compensation & Human Capital Committee performed its annual review of our compensation peer group with the assistance of its compensation consultant, Meridian, and made no changes to the existing peer group for 2024.
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We have a long history since our initial public offering in 2012 of engaging with current and prospective stockholders. In 2021, we had interactions with investors in the following ways:
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During these discussions, some investors have engaged with us regarding our executive compensation, and investors have been supportive of our compensation practices with 96% of votes cast approving our 2021 Say-On-Pay proposal. We have also had discussions with investment managers, sell-side analysts and governance analysts.
Participants in the Compensation Process
Role of the Compensation & Human Capital Committee
The Compensation & Human Capital Committee establishes policies and has decision-making authority with respect to compensation matters for executive officers (other than the CEO), including determination of the compensation and benefits and LTI grants. With respect to the CEO, the Committee recommends compensation decisions, including the grant of LTI compensation, to the full Board, which then makes decisions regarding CEO compensation.
Pursuant to the Committee’s charter, its duties include:
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Role of Compensation Consultant
Pursuant to the Compensation & Human Capital Committee’s charter, the Committee has the authority to retain or terminate compensation consultants and engage other advisors. Since 2010, the Compensation & Human Capital Committee has engaged Meridian Compensation Partners, LLC (“Meridian”), an independent consultant specializing in executive compensation, to formulate a report and make recommendations to the Committee regarding executive and director compensation based on peer group, other market data, industry trends and current practices. In 2021, the Company paid $150,881 to Meridian for its services.
The Compensation & Human Capital Committee evaluated the SEC’s and NYSE’s six independence factors to determine that the service Meridian provided to the Committee was free of any actual or perceived conflicts of interest. Meridian does not provide any other services to the Company or its executive leadership team.
Role of Executive Officers
Our CEO, GC and senior vice president – human resources (SVP-HR) provide support and information as the Compensation & Human Capital Committee requests. They make quarterly presentations to the Committee with respect to issues and developments regarding compensation and our compensation programs. They develop current and historical summary compensation data (including each element of compensation) for our executive officers and provide this data on a regular basis to the Committee.
Our CEO provides the Compensation & Human Capital Committee with an evaluation of the annual performance of each of the executive officers that report to the CEO and makes preliminary recommendations for base salary and incentive target levels for them. Recommendations for base salary, annual performance, incentive target levels and incentive payouts for the CEO are left entirely to the Committee’s discretion.
The Committee then determines appropriate changes in compensation for the upcoming year. Each year, the Committee approves the executive officers’ annual STI awards (expressed in each case as a
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percentage of base salary) and the performance metrics and goals for annual STI awards that the Company would pay in respect of performance during the year. The Committee makes decisions with respect to LTI equity-based compensation awards that the Company grants to our executive officers. With respect to CEO compensation decisions, the Committee makes its recommendations to the entire Board for final approval.
Peer Group
In August 2020, the Compensation & Human Capital Committee reviewed our compensation peer group and decided to continue with the existing peer group in 2021, except that the Committee removed Anixter International Inc., which had been acquired, and Forum Energy Technologies, Inc. and Superior Energy Services Inc., which were both distressed. The Committee also added Herc Holdings Inc., Kennametal Inc. and Liberty Oilfield Services Inc.
These peers were chosen as distributors or sellersrepresentative of industrial or energy products of a similar character to those that we sell, as companies that have similar distribution or energy product business models to our business model or as companies that serve similar end markets as we do. We competecompetition for talent withexecutive talent. Specifically, these peer companies as well as other companies not in the peer group. companies:
| ● | Are distributors or sellers of industrial or energy products of a similar character to those that we sell |
| ● | Have similar distribution or energy product business models to our business model |
| ● | Serve similar end markets as we do (e.g., gas utilities, downstream and industrial, upstream oil and gas and midstream pipelines) |
We also considered the relative size and complexity of the companies compared to MRC Global, primarily measured by revenue, enterprise value market capitalization and assets of our peer companies when selecting our peers.assets. We excluded from our peers distributors that do not sell products in our oil and gas end markets such as distributors of commercial or consumer goods, swimming pool supplies, roofing materials, office supplies and dental appliances.appliances, and companies with dramatically different size as measured by revenues, enterprise value or assets.
| (values in millions) | (values in millions) | ||||||||||||||||||||||||||||||||||||||||
Company
| Ticker
| Revenue*
| Enterprise
| Market Cap*
| Assets*
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| Company | Ticker
| Revenue*
| Enterprise
| Assets*
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Applied Industrial Technologies, Inc. | AIT | $3,246 | $2,884 | $2,136 | $2,284 | AIT | $3,645 | $3,993 | $2,384 | ||||||||||||||||||||||||||||||||
| ChampionX Corporation | CHX | $1,085 | $2,664 | $1,596 | $3,521 | CHX | $3,256 | $4,433 | $3,572 | ||||||||||||||||||||||||||||||||
Dril-Qup Inc. | DRQ | $403 | $528 | $869 | $1,148 | ||||||||||||||||||||||||||||||||||||
Dril-Quip Inc. | DRQ | $325 | $487 | $978 | |||||||||||||||||||||||||||||||||||||
DXP Enterprises Inc. | DXPE | $1,175 | $492 | $287 | $ 783 | DXPE | $1,188 | $902 | $902 | ||||||||||||||||||||||||||||||||
Flowserve Corporation | FLS | $3,884 | $4,569 | $3,552 | $4,756 | FLS | $3,505 | $4,606 | $4,703 | ||||||||||||||||||||||||||||||||
H&E Equipment Services, Inc. | HEES | $1,095 | $2,038 | $2,123 | |||||||||||||||||||||||||||||||||||||
Helix Energy Solutions Group Inc. | HLX | $744 | $752 | $362 | $2,505 | HLX | $661 | $616 | $2,307 | ||||||||||||||||||||||||||||||||
Herc Holdings Inc. | HRI | $1,801 | $3,388 | $1,155 | $3,662 | HRI | $2,336 | $5,451 | $5,310 | ||||||||||||||||||||||||||||||||
HD Supply Holdings Inc. | HDS | $5,976 | $8,944 | $6,688 | $4,751 | ||||||||||||||||||||||||||||||||||||
Kennametal Inc. | KMT | $1,885 | $2,987 | $2,409 | $3,038 | KMT | $1,998 | $2,560 | $2,660 | ||||||||||||||||||||||||||||||||
Liberty Oilfield Services Inc. | LBRT | $1,474 | $946 | $676 | $1,051 | LBRT | $2,712 | $2,455 | $2,191 | ||||||||||||||||||||||||||||||||
MSC Industrial Direct Co. Inc. | MSM | $3,287 | $4,205 | $3,517 | $2,710 | MSM | $3,501 | $5,038 | $2,619 | ||||||||||||||||||||||||||||||||
NexTier Oilfield Services, Inc. | NEX | $1,830 | $2,268 | $1,532 | |||||||||||||||||||||||||||||||||||||
NOW Inc. | DNOW | $2,364 | $297 | $497 | $1,069 | DNOW | $1,744 | $806 | $1,162 | ||||||||||||||||||||||||||||||||
Oil States International Inc. | OIS | $868 | $408 | $167 | $1,247 | ||||||||||||||||||||||||||||||||||||
RPC Inc. | RES | $862 | $449 | $561 | $ 783 | ||||||||||||||||||||||||||||||||||||
Watsco, Inc. | WSO | $4,973 | $8,687 | $8,205 | $2,648 | ||||||||||||||||||||||||||||||||||||
Wesco International Inc. | WCC | $8,303 | $7,457 | $2,203 | $11,732 | ||||||||||||||||||||||||||||||||||||
Weatherford International plc | WFRD | $3,751 | $3,068 | $4,684 | |||||||||||||||||||||||||||||||||||||
25th Percentile | $1,031 | $519 | $545 | $1,128 | $1,327 | $1,186 | $1,680 | ||||||||||||||||||||||||||||||||||
Median | $1,843 | $2,774 | $1,376 | $2,577 | $2,167 | $2,507 | $2,345 | ||||||||||||||||||||||||||||||||||
75th Percentile | $3,437 | $4,296 | $2,686 | $3,556 | $3,440 | $4,323 | $3,344 | ||||||||||||||||||||||||||||||||||
MRC Global Inc. | MRC | $3,104 | $1,351 | $351 | $1,877 | ||||||||||||||||||||||||||||||||||||
MRC Global Inc. | |||||||||||||||||||||||||||||||||||||||||
MRC Global Inc. | |||||||||||||||||||||||||||||||||||||||||
MRC Global Inc. | MRC | $2,799 | $1,690 | $1,786 | |||||||||||||||||||||||||||||||||||||
Percentile Rank | 66% | 42% | 12% | 37% | 63% | 28% | 26% | ||||||||||||||||||||||||||||||||||
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In November 20202022, Meridian made a report to the Committee on publicly disclosed executive pay data, which the Committee considered when making its 20212023 compensation decisions. Meridian used compensation peer data from the above companies for each position that our executive officers hold to the extent available.
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Meridian also provided data from the following two third-party general industry surveys for companies with revenue amounts similar to those of the Company as an additional reference point to validate the peer-company specific data:
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Meridian presented compensation at each quartile of the data (both peer-company specific data as well as third party market survey data) to the Committee with respect to total compensation and major elements of compensation (i.e., base salary, annual cash incentive and long-term equity compensation) for each of the executive officer’s positions.
| 63 | 2024 Proxy Statement |
IN AGGREGATE, THE 2021 TARGET COMPENSATION PACKAGE FOR OUR NEOs WAS BELOW THE 50TH PERCENTILE OF OUR PEER GROUP DATA.
The Compensation & Human Capital Committee used this data to determine whether its compensation decisions were within the market for each executive officer; however, the Committee did not set any compensation for any executive officer at a specific level within the peer group range for each executive officer (such as pegging the compensation to a 50th percentile level). The Committee exercised its discretion considering the following factors:
● the executive’s contributions and performance | ● market levels of compensation for positions comparable to the executive’s position
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● the executive’s roles and responsibilities, including the executive’s tenure in such role
| ● the executive’s compensation history and compensation mix, including that with prior employers
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● the Company’s need for the executive’s skills | ● the executive’s potential and readiness to contribute in the executive’s current role | |||
● the executive’s experience and management responsibilities
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2021 ExecutiveThe Committee did not necessarily weigh any particular factor more or less than any other factors.
Participants in the Compensation ProgramProcess
Compensation Philosophy and Objectives
Our executive compensation programs are structured to reward the achievement of our specific annual and strategic performance goals, and our long-term objective of increasing shareholder value. Accordingly, the executive compensation philosophyRole of the Compensation & Human Capital Committee is threefold:
The Compensation & Human Capital Committee (the “Committee”) establishes policies and has decision-making authority with respect to compensation matters for executive officers (other than the CEO), including determination of the compensation and benefits and LTI grants. With respect to the CEO, the Committee recommends compensation decisions, including the grant of LTI compensation, to the full Board, which then makes decisions regarding CEO compensation.
The Committee’s duties pursuant to its charter are set forth on page 52 above.
Role of Compensation Consultant
Pursuant to the Committee’s charter, the Committee has the authority to retain or terminate compensation consultants and engage other advisors. Since 2010, the Committee has engaged Meridian, an independent consultant specializing in executive compensation, to formulate a report and make recommendations to the Committee regarding executive and director compensation based on peer group, other market data, industry trends and current practices.
The Committee evaluated the SEC’s and NYSE’s six independence factors to determine that the service Meridian provided to the Committee was free of any actual or perceived conflicts of interest. Meridian does not provide any other services to the Company or its executive leadership team.
Role of Executive Officers
Our CEO, General Counsel and Senior Vice President – Chief Human Resources Officer (CHRO) provide support and information as the Committee requests. These officers make quarterly presentations to the Committee with respect to issues and developments regarding compensation and our compensation programs. They develop current and historical summary compensation data (including each element of compensation) for our executive officers and provide this data on a regular basis to the Committee.
Our CEO provides the Committee with an evaluation of the annual performance of each of the executive officers that report to the CEO and makes preliminary recommendations for base salary and incentive target levels for them. Recommendations for base salary, annual performance, incentive target levels and incentive payouts for the CEO are left entirely to the Committee’s discretion and are approved by the Board.
| 64 | 2024 Proxy Statement |
The Committee then determines appropriate changes in compensation (including salary, STI and LTI) for the upcoming year. Each year, the Committee approves each executive officer’s annual STI target opportunity (expressed as a percentage of base salary) as well as the performance metrics and goals for the executive to receive the STI award at target. The Committee also sets minimum and maximum STI payouts and the metrics and goals to receive those payouts and a scale of payouts in between. The Committee makes decisions with respect to LTI equity-based compensation awards that the Company grants to our executive officers and any performance parameters that executive officers must meet to receive payouts of LTI awards upon vesting. With respect to CEO compensation decisions, the Committee makes its recommendations to the entire Board for final approval.
Stockholder Engagement
81% APPROVAL | Stockholders showed support of our executive compensation programs, with 81% of the votes cast for the approval of the “say-on-pay” proposal at our 2023 annual meeting of stockholders. |
We have a long history since our IPO in 2012 of engaging with current and prospective stockholders. In 2023, we had interactions with investors in the following ways:
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| ● | Annual stockholders meeting |
| ● | Our website |
| ● | Press releases |
| ● | Our SEC filings |
| ● | Participation in various evaluations, ratings and rankings, such as the Carbon Disclosure Project (CDP) sponsored by CDP Global, an international non-profit organization, S&P Global, Sustainalytics, ISS and MSCI. |
At our 2023 Annual Meeting of Stockholders held on May 4, 2023, we received support for our Say-On-Pay Proposal from 81% of the votes cast. Since the date of 2023 Annual Meeting of Stockholders, we proactively reached out to investors holding approximately 30 million shares, or 35%, of the Company’s issued and outstanding common stock. In light of the support and favorable feedback received from shareholders, we have not made any material changes to our compensation practices or policies in the past year.
2023 Executive Compensation Program
Elements of Compensation
The principal components of compensation for our executive officers, including our NEOs, are:
| ● | Base salary; |
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| ● | STI annual cash awards; |
| ● | LTI (equity awards); and |
| ● | Benefits and perquisites – including health, welfare and retirement benefits |
| 65 | 2024 Proxy Statement |
In addition to base salary, our 2023 executive compensation was comprised of STI annual cash incentives and LTI equity awards as well as certain benefits and perquisites. Consistent with our pay-for-performance philosophy, the table below summarizes how performance in 2023 impacted pay in 2023.
Plan Measures | Performance | Component | Total | |||||
| STI | 87.5% on adjusted EBITDA 6.25% on TRIR 6.25% on LTIR | Adjusted EBITDA: 83.4% of target TRIR: 9.2% better than target LTIR: 8.3% better than target | 75.2% 118.0% 116.7% | 80.40% | ||||
| 2021-23 PSUs | TSR relative to OSX companies + DNOW Inc. 50% on relative TSR for 2021-23 50% on RANCE (adj. for LIFO) | 62% TSR (31st percentile) RANCE = 10.7% | 54% 168% | 110.50% | ||||
| 2022-23 PSUs | TSR relative to OSX companies + DNOW Inc. + Russell 2000 ETF 25% on 2022 relative TSR 25% on 2023 relative TSR 25% on 2024 relative TSR 25% on 2022-24 relative TSR | 65% TSR (76th percentile) -8% TSR (24th percentile) Performance period not completed Performance period not completed | 166% 0% — — | Minimum payout 41.5% | ||||
| 2023-25 PSUs | TSR relative to OIH companies + DNOW Inc. + Russell 2000 ETF 25% on 2023 relative TSR 25% on 2024 relative TSR 25% on 2025 relative TSR 25% on 2023-25 relative TSR | -8% TSR (30th percentile) Performance period not completed Performance period not completed Performance period not completed | 50% — — — | Minimum payout 12.5% | ||||
Return on average net capital employed (RANCE), adjusted for LIFO, is calculated as set forth in “Reconciliation of Non-GAAP Financial Measures From GAAP”.
Minimum payouts for 2022-23 and 2023-25 PSUs are based on completed performance periods and assume zero payouts for the remaining, uncompleted performance periods.
Note that the comparator groups for relative TSR have changed year over year so the payouts for the same years for different grants could be different.
Base Salary
We provide our executive officers with a base salary to compensate them for services they provide and to provide a market competitive base level of pay commensurate with the skills and experience of our executives. The Compensation & Human Capital Committee, with the CEO, reviews the base salary for each executive officer based on the CEO’s recommendations on an annual basis and approves any increaseschanges based on each executive officer’s position, responsibilities, contributions, leadership, performance, current compensation (both individually and as compared to other executives) and survey data. Increases are not automatic or guaranteed and do not always take place each year. The Committee, on a similar basis, also reviews the CEO’s salary and makes a recommendation whether to implement an increaseany changes to the full Board.
OurConsistent with our compensation process, the CEO provided the Committee with recommendations regarding the base salaries of the other NEOs. The Committee, then with advice from its independent compensation consultant, Meridian, determined that the base salaries of the other NEOs (with the exception of Mr. Saltiel, who joined the Company in March 2021,should be adjusted to reflect market conditions (based on peer and Mr. Bates) have been subject to a salary freeze from 2019 through 2021, duemarket compensation data) and performance. With respect to the downturn inCEO, the oilCommittee reviewed the market data with Meridian and gas environment and impactthe performance of the COVID-19 epidemic. Mr. Bates, an Australian citizen, received his permanent residence status inCEO with the U.S., andBoard. Then based on a recommendation of the Company phased out his expatriate benefits, includingCommittee, the cessation of contributions to his Australian superannuation fund beginning on January 1, 2021, andBoard approved the phase out of his housing and utilities allowance by the end of 2021. In connection with this change, Mr. Bates’ salary was raised at the beginning of 2021 to $350,000 to partially offset the loss of his expatriate benefits.CEO’s salary.
Name
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Robert J. Saltiel, Jr.(1) | $ | 825,000 | 0.0 | % | $ | 825,000 | ||||||||||||||
Kelly Youngblood | $ | 500,000 | 0.0 | % | $ | 500,000 | ||||||||||||||
Daniel J. Churay | $ | 425,000 | 0.0 | % | $ | 425,000 | ||||||||||||||
Grant R. Bates (2) | $ | 350,000 | 0.0 | % | $ | 350,000 | ||||||||||||||
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Andrew R. Lane | $ | 900,000 | 0.0 | % | — | |||||||||||||||
John Bowhay (3) | $ | 367,882 | 0.0 | % | — | |||||||||||||||
Karl Witt | $ | 375,000 | 0.0 | % | — | |||||||||||||||
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Based on this review, the base salaries of our NEOs effective February 6, 2023, were modified as follows:
Name
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Robert J. Saltiel, Jr. | $ | 825,000 | 4.2 | % | $ | 860,000 | ||||||||||
Kelly Youngblood | $ | 500,000 | 6.0 | % | $ | 530,000 | ||||||||||
Daniel J. Churay | $ | 425,000 | 5.9 | % | $ | 450,000 | ||||||||||
Grant R. Bates | $ | 390,000 | 5.1 | % | $ | 410,000 | ||||||||||
Rance C. Long | $ | 360,000 | 5.0 | % | $ | 378,000 | ||||||||||
No NEO base salary changes were made for 2024.
Annual STI Cash Incentive
Our annual STI plan is a performance-based plan, which provides cash compensation to eligible employees (including the executive officers), based on performance relative to certain financial and operational metrics. The STI plan is designed to motivate executive officers to achieve the Company’s annual financial and operational goals, which in turn are designed to achieve long-term profitability and value for stockholders. In 2021,2023, a majority of our salaried employees participated in the STI plan. An employee’s annual STI bonus is determined by multiplying the employee’s annual salary by the employee’s annual STI target percentage then by the performance percentage relative to performance metrics.
Annual STI Targets
The Compensation & Human Capital Committee reviews STI targets for the executive officers, including the NEOs, annually and approves annual STI target percentages for the executive officers
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based on its review of market data and other internal factors, subject to the terms of any employment agreements between the Company and the executives. In 2020,
Consistent with our compensation process, the CEO provided the Committee with recommendations regarding the STI target percentages were reduced for the CEO and other NEOs to align with business objectives, including expense reduction, in addition to capping payouts against the reduced targets as discussed below. These reduced target percentages were maintained in 2021 with no increases. Payouts for each NEO who separated from service have been prorated based on time in service during 2021.
| Name | 2020 STI Target% | 2021 STI Target% |
The annual cash incentive amount payable to each
Annual Cash Incentive =
Base Salary X STI Target % X Performance Relative to | |||||||||||
Robert J. Saltiel, Jr.
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| 100%
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Kelly Youngblood
| 75%
| 75%
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Daniel J. Churay
| 60%
| 60%
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Grant R. Bates
| 60%
| 60%
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Former NEOs:
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Andrew R. Lane
| 100%
| 100%
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John Bowhay
| 60%
| 60%
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Karl Witt
| 65%
| 65%
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2021 STI Plan Performance Metrics
As 2021 began, it was unclear whether and at what rate business would recover. Given the uncertainty of the business outlook, MRC Global focusedother NEOs. The Committee, then with advice from its independent compensation consultant, Meridian, determined that the STI targets of Messrs. Youngblood and Churay should be adjusted to reflect market conditions (based on maintainingpeer and market compensation data) and performance.
Based on this review, in 2023, the lower SG&A cost base achieved in 2020 and on generating cash flow from operations and managing the Company’s debt level. Our STI targets for our NEOs were designed with a strong cash flow from operations component (37.5%)modified as we believed that muted demandfollows:
Annual STI Targets
| Name | 2022 STI Target % | 2023 STI Target % |
The annual cash incentive amount payable to each
Annual Cash Incentive =
Base Salary x STI Target % x Performance Relative to Performance Metrics | |||||||||||
Robert J. Saltiel, Jr. |
125%
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125%
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Kelly Youngblood
| 80%
| 90%
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Daniel J. Churay
| 75%
| 80%
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Grant R. Bates
| 75%
| 75%
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Rance C. Long
| 75%
| 75%
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No NEO STI target percentage changes were made for 2024.
2023 STI Plan Performance Metrics
For 2023, our STI targets for our products required continued cash discipline. The target for the cash flow from operations was set based on the overall business plan and the Company’s anticipated inventory purchases at the outset of the year. The other components of STI for NEOs were 50%87.5% on adjusted EBITDA and 12.5% on safety measures.
| 67 | 2024 Proxy Statement |
Adjusted EBITDA has long been a primary driver of our business,business. This measure encompasses most cost and sales decisions of the Company, and we implementedfocused our management, including the NEOs, to increase adjusted EBITDA and take advantage of the market opportunities in 2023. Adjusted EBITDA has been a prime measure of our STI programs even since before we became a public company through our initial public offering in 2012. We set our 2023 adjusted EBITDA target at $300 million compared to a 2022 adjusted EBITDA target of $190 million, a 58% increase, and 2022 actual adjusted EBITDA of $261 million, a 15% increase.
In addition, safety is a core value of our Company, and we continued to include safety targets as a component of our STI program. The use of safety measures in 2020 and 2021underscores our commitment to further incentivize management to maintain a safe workplace. Although adjusted EBITDA was not a metric for the 2020 STI plan, the stretch target EBITDA of $102 million for 2021 was above the $97 million of adjusted EBITDA that the Company achieved in 2020.workplace and our desire to continually focus on and improve upon our safety results. For 2021,2023, the safety targets included a total recordable incident rate (TRIR) target of 0.900.76 or less and a lost workdaytime incident rate (LWDR)(LTIR) target of 0.24 or less. These 2023 safety targets were set taking into account the 2022 achievement of targets, including a record low LTIR, as well as three-year averages for these targets, excluding the unusual COVID-19 year of 2020. Both of 2023’s stretch safety targets were more stringent than the targets for 2022. Given the Company’s record performance with respect to LTIR in 2022 of 0.12, and the Company’s very favorable comparison against the average LTIR of 1.6 that the U.S. Bureau for Labor Statistics published for metal and mineral (except petroleum) merchant wholesalers for 2022, the Committee set the 2023 LTIR target well below the 0.34 Company three-year average (excluding the 2020 COVID-19 year) and below the 2022 target of 0.32 or less. These 2021 safety targets were stretch targets below the 2020 targets notwithstanding that the Company had the best recorded TRIR and LWDR in the Company’s recorded history in 2020. Eachto incentivize continued performance measure had a threshold target before any payout for the measure would occur and a maximum performance measure beyond which no additional payout would be given. Finally, as we set our STI plans, we implemented a reduction factor of 50% of any final payouts under the plans for all eligible employees, including the NEOs.
As COVID-19 vaccines became more widely distributed in 2021, demand for transportation fuels and oil and gas products grew dramatically from 2020 lows. In addition, oil and gas prices increased, spurring additional production by the Company’s customers and demand for our products and services. In addition, gas utility customers became more comfortable allowing their customers’ crews on site to install equipment. As a result, our gas utility business dramatically increased from 2020 lows as well. As a distributor, it is necessary to build inventory in a growing market to support sales and EBITDA growth, which, in turn, drive the Company’s shareholder returns, rather than liquidate inventory and build cash to reduce debt and preserve enterprise value during a declining market. As the market changed, it became clear that the Company needed to increase its inventory position to support its growth.improvement. The Committee determined that it was appropriatedid not want a target at a record level near zero to adjust the performance of the cash flow from operationsbe a disincentive to exclude inventory purchases in excess of the Company’s original inventory plan for 2021. In making this decision, the Committee considered the extraordinary supply chain challenges experienced in the market and its desire to incentivize the NEOs to proactively respond to the changing market conditions.continued safety improvement.
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The following table sets forth the components of the 20212023 STI plan, including the performance metrics, weighting of each, the targets at threshold, target and maximum performance, the payouts at each and the final payout calculation. Strong financial performance resulted inThe formulaic payouts of 107.8% of target; and the application of the 50%for STI reduction factor reduced each NEO’s final payout to 53.9%were 80.4% of target. These payouts are reflected under the Non-Equity Incentive Plan Compensation column in “Proposal II: Advisory Approval of Named Executive Officer Compensation—Summary Compensation Table for 2021”.
20212023 STI Plan Metrics, Performance & Payouts
(all numbers in millions except for percentages and safety metrics)
Payout %* | 25 | % | 100 | % | 125 | % | ||||||||||||||||||||||||||
| Performance Metric | Weighting | Threshold | Target | Maximum | 2021 Performance | 2021 Performance % | Payout % | Weighted Payout % | ||||||||||||||||||||||||
Adjusted EBITDA | 50.0 | % | 51.0 | 102.0 | 127.5 | 146.2 | 143 | % | 125 | % | 62.5 | % | ||||||||||||||||||||
Cash Flow from Operations | 56.0 | |||||||||||||||||||||||||||||||
Credit for Excess Inventory above Original Plan | 64.7 | |||||||||||||||||||||||||||||||
Final Cash Flow from Operations with Credit | 37.5 | % | 50.0 | 100.0 | 125.0 | 120.7 | 121 | % | 121 | % | 45.3 | % | ||||||||||||||||||||
LWDR | 6.25 | % | 0.24 | 0.32 | 0.35 | 0.48 | 0 | % | 0 | % | 0.0 | % | ||||||||||||||||||||
TRIR | 6.25 | % | 0.68 | 0.90 | 0.99 | 1.09 | 0 | % | 0 | % | 0.0 | % | ||||||||||||||||||||
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| 100.0 | % | Calculated Payout before Reduction | 107.8 | % | ||||||||||||||||||||||||||||
| Final Payout Reduced by 50% | 53.9 | % | ||||||||||||||||||||||||||||||
Payout %* | 25 | % | 100 | % | 200 | % | ||||||||||||||||||||||||||
Performance Metric | Weighting | Threshold | Target | Maximum | Performance | Performance % | Payout % | Weighted Payout % | ||||||||||||||||||||||||
Adjusted EBITDA | 87.5 | % | 150.0 | 300.0 | 450.0 | 250.0 | 83.4 | % | 75.0 | % | 65.6 | % | ||||||||||||||||||||
LTIR | 6.25 | % | 0.35 | 0.24 | 0.12 | 0.22 | 108.3 | % | 116.7 | % | 7.3 | % | ||||||||||||||||||||
TRIR | 6.25 | % | 0.99 | 0.76 | 0.38 | 0.69 | 109.2 | % | 118.0 | % | 7.4 | % | ||||||||||||||||||||
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| 100.0 | % | Final Payout | 80.4 | % | ||||||||||||||||||||||||||||
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| * | Between Threshold and Target, and Target and Maximum, payouts are interpolated on a |
There were no payouts for the safety metrics in 2021, which were stretch targets compared to 2020, the year of the best recorded safety results in Company history. Even though the Company did not meet its goals, the Company continues to compare favorably to the 2020 U.S. Bureau of Labor Statistics (“BLS”) average TRIR of 3.5 and a BLS LWDR average of 1.0, in each case, for wholesalers of metal products. The Company will continue its dedication to safety improvement in 2022.
Long-Term Incentive Compensation
Our LTI equity compensation is granted on an annual basis to our executive officers and is designed to align the interests of management with those of our stockholders. At the beginningFor 2023, our long-term incentive (LTI) grants consist of each year starting in 2018, we have granted long-term equity compensation to the executive officers in the form50% of three-year, graded vesting restricted stock units (RSUs) and performance share units (PSUs) under the Company’s 2011 Omnibus Incentive Plan, as amended. The RSUs, which comprise 50% of the total LTI award, vest 34% on the first anniversary of the grant date and 33% on each of the second and third anniversaries of the grant date. The PSUs, which comprise the remaining 50% of the total LTI award, vest at the end of a three-year performance period based on relative total shareholder return (TSR) performance in the performance period (compared to companies in the OSX index and, starting in 2020, NOW Inc., our direct competitor) as well as RANCE for the performance period compared to a long-term target that the Compensation & Human Capital Committee sets based on the Company’s annual three-year strategic plan. 50% of the target PSU award is based on the TSR metric, and 50% of the target PSU award is based on the RANCE metric. The three-year performance period for the 2019 PSU grants completed at the end of 2021. The three-year performance periods for each of the 2020, 2021 and 2022 PSU grants will not complete until the end of 2022, 2023 and 2024, respectively.
As discussed above, in March 2021, we transitioned the leadership of the Company to a new CEO. Robert Saltiel joined the Company after an extensive search, and Andrew Lane retired. In addition to Mr. Saltiel’s base compensation package, to induce Mr. Saltiel to accept the position as our new CEO and enter into an employment agreement, the Board provided Mr. Saltiel with a one-time grant of three-year cliff vested RSUs, with a grant value of $500,000. The number of RSUs was determined by dividing $500,000 by the 20-day VWAP on the date of grant. In determining the value of the inducement grant, the Board evaluated other opportunities that Mr. Saltiel was considering outside of the Company as well as the benchmarking of Mr. Saltiel’s overall package.
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Shortly after Mr. Saltiel joined the Company in March 2021, we provided each of Messrs. Youngblood, Churay and Bates with a one-time, three-year graded vesting RSU grant in the amounts of $250,000, $212,500 and $175,000, 50% of each of their respective salaries, to recognize their performance over the prior year and to ensure business continuity during the CEO transition. The number of RSUs was determined by dividing targeted award value by the 20-day VWAP on the date of grant. Each of these executives performed key roles in guiding the Company successfully through the impacts of the COVID-19 pandemic and steering the Company’s performance during the leadership transition, providing for a recovery in the Company’s adjusted EBITDA and its improvement in its balance sheet despite the difficult economic conditions in the Company’s markets. In light of the competitive market for executive talent and their individual performance, the Committee determined to provide these grants. As with all of our RSUs, if an NEO voluntarily leaves the Company before the award vests, the NEO will forfeit the unvested portion of the award.stock units (PSUs).
Alignment of LTI Compensation to Performance
Our LTI equity compensation is strongly linked to stock price performance.
| ● | The realized value of PSUs is tied to long-term performance because the value is directly related to the Company’s relative |
| 68 | 2024 Proxy Statement |
| ● | The primary purpose of the RSUs is to support retention and continuity of executive officers. The RSUs vest over a multi-year |
20212023 Long-Term Incentive Grants
The table below showsdescribes the details of 2023 grants to the grants:NEOs:
| Grant Year | RSUs | PSUs | ||||||
Weighting | 50% of grant value | |||||||
| Vesting Schedule | Vesting 34% in year one and 33% in each of years two and three | Vesting at the end of three years, percentage of stock vested depends on relative TSR performance (compared to the companies in the | ||||||
20212023 PSU Grants (Relative TSR)
Fifty percentAll of the target PSUs granted to NEOs in 20212023 are based on relative TSR compared to companies in the OSXOIH index plus NOWDNOW Inc. from January 1, 2021, until December 31, 2023. and the Russell 2000 (Total Return) Index. The performance will be weighted equally (25%) for each of four performance periods:
| ● | January 1, 2023 until December 31, 2023 |
| ● | January 1, 2024 until December 31, 2024 |
| ● | January 1, 2025 until December 31, 2025 |
| ● | January 1, 2023, until December 31, 2025 |
The number of shares awardedthat will be issued upon settlement at the end of the three-year performance period2025 is based on the scale below.below for each of the performance periods. This scale has remained the same since grants made in 2016.
The following table sets forth the percentile performance and percentage of target PSUs earned at each percentile.
BEGINNING WITH THE 2021 PSU GRANTS, THE COMPENSATION & HUMAN CAPITAL COMMITTEE CAPPED THE PSU PAYOUT FOR THE TSR COMPONENT AT 100% IF ACTUAL COMPANY TSR OVER THE PERFORMANCE PERIOD IS NEGATIVE.
BEGINNING IN 2022, WE ADDED A RUSSELL 2000 ETF TO THE COMPANIES USED IN THE RELATIVE TSR CALCULATION FOR PSUS TO BETTER REFLECT OUR PERFORMANCE AGAINST THE BROADER MARKET AND ACKNOWLEDGE THE BROADER COMPETITION FOR INVESTOR CAPITAL.
| Relative TSR | % Target PSUs Earned* | |||||
≥ 90th percentile | 200% | |||||
70th percentile | 150% | |||||
50th percentile | 100% | |||||
30th percentile | 50% | |||||
< 30th percentile | 0% | |||||
| *For any performance levels between the levels specified above, percentage of target shares earned will be interpolated on a straight- line basis. | ||||||
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We compare our TSR to companies in the OSXOIH index plus NOWDNOW Inc. and the Russell 2000 Total Return Index because investors generally compare MRC Global to companies that also have customers in the oil and gas business, with volatile spending patterns depending on commodity prices. NOWWe include DNOW Inc. was added in 2020 to the TSR comparator group because itDNOW Inc. is a direct competitor in certain of the sectors into which we sell. We often compete for talent with these companies. Each of our CEO, CFO and GC, for instance, have previously worked for oilfield service companies. Finally, many energy investors and sell-side analysts follow our Company along with these companies. Beginning in 2022, we added a Russell 2000 ETF to the Company. Based oncompanies used in the relative TSR calculation for PSUs to better reflect our performance against the broader market and acknowledge the broader competition for investor capital. In 2023, we replaced the OSX with the OIH in our comparator group that is used to calculate relative TSR for our PSUs to better reflect our markets for investor capital. The OSX included companies such as Hess Corporation, which is an oil and gas operator rather than oilfield service companies. We changed to the OIH to better align the index with oilfield service companies and because the index includes a review by Meridian,greater number of comparator companies. The following table provides a list of the Committee’scompanies in both indices:
OSX | OIH | |||||
| Total Companies | Ticker | 16 | 24 | |||
Cactus, Inc. | WHD | X | X | |||
ChampionX Corporation | CHX | X | X | |||
Core Laboratories N.V. | CLB | X | X | |||
Drill-Quip, Inc. | DRQ | X | X | |||
Golar LNG Limited | GLNG | X | ||||
Halliburton Company | HAL | X | X | |||
Helmerich & Payne, Inc. | HP | X | X | |||
Hess Corporation | HES | X | ||||
Liberty Energy, Inc. | LBRT | X | ||||
NOV, Inc. | NOV | X | X | |||
Nabors Industries Ltd. | NBR | X | X | |||
Oceaneering International, Inc. | OII | X | X | |||
Oil States International, Inc. | OIS | X | X | |||
Schlumberger Limited | SLB | X | X | |||
Transocean Ltd. | RIG | X | X | |||
USA Compression Partners, LP | USAC | X | ||||
Baker Hughes Company | BKR | X | ||||
Expro Group Holdings NV | XPRO | X | ||||
Helix Energy Solutions Group Inc. | HLX | X | ||||
TechnipFMC Plc | FTI | X | ||||
Tenaris SA | TS | X | ||||
Valaris Ltd. | VAL | X | ||||
Nextier Oilfield Solutions Inc. | NEX | X | ||||
Patterson-UTI Energy Inc. | PTEN | X | ||||
Propetro Holding Corp | PUMP | X | ||||
RPC Inc | RES | X | ||||
Select Energy Services In. | WTTR | X | ||||
US Silica Holdings Inc. | SLCA | X | ||||
Consistent with our compensation process, for 2023, the CEO provided the Committee with recommendations regarding the LTI grants for the other NEOs. The Committee, then with advice from its independent compensation consultant, TSR correlationMeridian, determined the level of companies in the OSX index plus NOW Inc. compared to the Company’s TSR is greater than other alternatives that the Committee considered.LTI grants for each NEO
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2021 PSU Grants (RANCE)
Fifty percent of the target PSUs granted to NEOs in 2021 are based on return on average net capital employed (RANCE) performance during the 2021-2023 period measured against a target that the Committee determined by reference to the Company’s 2021-23 strategic plan. The number of shares awarded at the end of the three-year performance period are based on the scale below.
| RANCE | Percentage of Target Share Units Earned* | |||||
≥ 12% | 200% | |||||
10% | 150% | |||||
6% | 100% | |||||
3% | 50% | |||||
< 1% | 0% | |||||
| *For any performance levels between the levels specified above, percentage of target shares earned will be interpolated on a straight- line basis. | ||||||
The Company utilizes a LIFO inventory costing methodology, which few other companies utilize. Under this methodology, during inflationary cycles, the cost of our goods sold rises as the most expensive items are sold first, and during deflationary cycles, our cost of goods sold decreases as less expensive items are sold first. This has the impact of increasing our expense in inflationary cycles and decreasing our expense in deflationary cycles. To assist investors with their comparisons against companies that do not utilize LIFO costing, we present certain adjusted measures. See “Note on GAAP vs. Non-GAAP Measures” above.
In 2021 and 2022, we have been experiencing sharp inflation, particularly in steel and other metals. As most of our inventory is made of steel and other metals, this inflation has caused a dramatic increase in the cost of our inventory under our LIFO costing methodology. The RANCE component of the PSUs that were granted in February 2021 was determined using net income calculated in accordance with GAAP with no adjustments. Because of this dramatic inflation, the incremental expense included in net income due to LIFO was materially and adversely impacting any potential payouts with respect to the RANCE component of the 2021 PSUs. This inflation was outside of the control of management and was negating the incentive to achieve the shareholder returns for which the RANCE component was designed. The Committee decided to amend the 2021 PSUs to remove the positive or negative
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(based on peer and market compensation data) and performance. The Board approved the CEO’s LTI grant after a recommendation from the Committee.
impacts of the Company’s LIFO inventory costing methodology on net income when determining RANCE. At the time of the amendment, these PSUs still had over two years remaining in the performance period.
The following table sets forth the number of RSUs and PSUs granted to each NEO in 2021, excluding the one-time grants for certain NEOs discussed above.2023. The Compensation & Human Capital Committee determined a dollar value amount of RSUs and PSUs that it desired to grant each NEO (or in the case of the CEO, recommend to the Board to grant). To determine the dollar value, the Committee with advice from its independent compensation consultant, Meridian, benchmarked LTI awards and total compensation for each NEO against peer and industry data. It also considered performance of each executive as well as internal equity among the executives. It then expressed the dollar value of the desired grant as a percentage of salary based on this analysis. This dollar value amount was then divided by the 20-day volume weighted average price (VWAP) VWAP of $8.15$12.68 as of the grant date in February 2021,2023, for the NEOs other than Mr. Saltiel, and the 20-day VWAP of $8.92 as of the grant date in March 2021 for Mr. Saltiel, to determine the number of units to be granted.
| Name | RSU Grant Target Value* | Number of RSUs | Total PSU Grant Target Value* | Number at Target | ||||||||||||||
Robert J Saltiel, Jr.** | $ 1,650,000 | 184,978 | $1,650,000 | 184,978 | ||||||||||||||
Kelly Youngblood | $ 437,500 | 53,681 | $ 437,500 | 53,681 | ||||||||||||||
Daniel J Churay | $ 265,625 | 32,592 | $ 265,625 | 32,592 | ||||||||||||||
Grant R Bates | $ 157,500 | 19,325 | $ 157,500 | 19,325 | ||||||||||||||
Former NEOs: | ||||||||||||||||||
Andrew R Lane | — | — | — | — | ||||||||||||||
John Bowhay | $ 163,723 | 20,089 | $ 163,723 | 20,089 | ||||||||||||||
Karl Witt | $ 187,500 | 23,006 | $ 187,500 | 23,006 | ||||||||||||||
| Name | RSU Grant Target Value* | Number of RSUs | Total PSU Grant Target Value* | Number of PSUs at Target | ||||||
Robert J. Saltiel, Jr. | $2,042,500 | 161,080 | $2,042,500 | 161,080 | ||||||
Kelly Youngblood | $ 728,750 | 57,472 | $ 728,750 | 57,472 | ||||||
Daniel J. Churay | $ 405,000 | 31,940 | $ 405,000 | 31,940 | ||||||
Grant R. Bates | $ 246,000 | 19,401 | $ 246,000 | 19,401 | ||||||
Rance C. Long | $ 226,800 | 17,886 | $ 226,800 | 17,886 | ||||||
* Grant values vary from the values in the Summary Compensation Table because grant values represent the dollar value of the grant that the Compensation & Human Capital Committee desired to award, which is divided by the 20-day VWAP on the date of grant to determine the number of shares awarded and the values in the Summary Compensation Table represent the fair market value of the award calculated by the different methodology set forth in FASB ASC Topic 718.
** Mr. Saltiel received his grant when he joinedNo changes in the Company in March 2021.target level of LTI grants were made for 2024.
20192021-2023 PSU Grant Performance
THERE WAS NO PAYOUT FOR THE PSUs GRANTED IN 2019 WHEN THE PERFORMANCE PERIOD COMPLETED AT THE END OF 2021.
The 2019-20212021-2023 PSUs granted in 2019 completed their performance period at the end of 2021.2021 vested in February 2023. The NEOs received no payout for either110.5% of the target PSUs granted. 50% of the award was based on the Company’s relative TSR measure or the RANCE measure for the 2019-2021 performance2021-2023 period ascompared to the requisite threshold performance was not received for either measure. For this performance period, NOW Inc. was not yet included with theTSR of companies in the OSX indexplus DNOW Inc. MRC Global’s TSR for this period was 61.94%, which was in determining relative TSR.the 31st percentile and resulted in a payout for this component of 54%. The other 50% of this award was based on RANCE (adjusted for LIFO expense) compared to a target. MRC Global’s RANCE (adjusted for LIFO) was 10.7%, resulting in a 168% payout on the RANCE component. See “Reconciliation of Non-GAAP Financial Measures From GAAP.” Combining the components, the PSUs payout was 110.5%.
The following tables set forth the scale for each component:
| RANCE | % Target PSUs Earned* | Relative TSR | % Target PSUs Earned* | |||||||||
≥ 12% | 200% | ≥ 90th percentile | 200% | |||||||||
10% | 150% | 70th percentile | 150% | |||||||||
6% | 100% | 50th percentile | 100% | |||||||||
3% | 50% | 30th percentile | 50% | |||||||||
≤ 1% | 0% | < 30th percentile | 0% | |||||||||
| * For any performance levels earned between the levels specified above, percentage of target shares earned will be interpolated on a straight-line basis. | ||||||||||||
| 71 | 2024 Proxy Statement |
The following table sets forth the results for each NEO:
| Name | Grant Date Target Value1 ($) | Total # of PSUs at Target2 | # of Target PSUs (relative TSR component) | # of Target PSUs (RANCE component) | Total # of Target PSUs Retained | |||||||
Robert J. Saltiel, Jr. | 1,650,000 | 184,978 | 92,489 | 92,489 | 204,401 | |||||||
Kelly Youngblood | 437,500 | 53,682 | 26,841 | 26,840 | 59,317 | |||||||
Daniel J. Churay | 265,625 | 32,592 | 16,296 | 16,296 | 36,014 | |||||||
Grant R. Bates | 157,500 | 19,325 | 9,663 | 9,662 | 21,353 | |||||||
Rance C. Long | 135,000 | 16,564 | 8,282 | 8,282 | 18,303 | |||||||
(1) Grant Date Target Values represent the value that the Compensation & Human Capital Committee desired to award.
(2) Total # of PSUs at Target Grant equal the Grant Date Target Value divided by the 20-day volume weighted average price of the Company’s common stock on the date of grant.
Benefits and Perquisites
The Compensation & Human Capital Committee reviews the benefits and perquisites provided to certain of the executive officers on an annual basis to review the reasonableness of these programs. We provide competitive health, welfare and retirement benefits to our Company’s employees. Other than as outlined below, our current NEOs do not receive any additional benefits or perquisites.
The Company provides Mr. Long, as its chief sales and marketing leader, a country club membership to entertain representatives of customers. Mr. Long may use this membership for personal use as well but must pay the related charges for personal use. Mr. Long receives an imputed benefit of the Company-paid dues for personal use in addition to the specific personal charges for which he personally pays.
Mr. Bates receives a car allowance, and Mr. Long receives use of a company vehicle that can be used for business or personal purposes.
The Company provides a paid executive physical for its executive officers, including the NEOs. In 2023, Mr. Long participated in this benefit.
Company-paid parking was provided for Messrs. Saltiel, Youngblood and Churay.
Each NEO may participate along with all other employees in Company benefits such as our employee health, dental and prescription drug plans, defined contribution pension plan and group life insurance and disability plans.
We provide our current NEOs with certain severance payments and benefits pursuant to an executive separation policy or individual employment agreements in the event of a termination of their employment under certain circumstances. We designed these agreements to promote stability and continuity of senior management. For additional information, see “Potential Payments upon Termination or Change in Control”.
Realized Pay
The Compensation & Human Capital Committee strongly believes that our executive compensation programs must demonstrate long-term alignment of pay with our performance. This requires that the amount earned by our executive officers must depend upon achieving our demanding performance objectives designed to enhance long-term stockholder value. Each year a significant portion of each NEO’s compensation is “at-risk” in the form of STI and LTI.
We began granting PSUs as part of our LTI program in 2015. Since that date,2019, our PSUs have vested on average at 72.1%59.7% of the target opportunity granted. During this period, our business has experienced significant downturns in our oil and gas end markets during 2015 – 2016 and again during 2019 –followed by a rebound after the COVID-19 lockdown year of 2020. In the last three years,From 2020 until 2022, our PSU payouts have decreased as our
| 72 | 2024 Proxy Statement |
stock price has absorbed the impacts of these downturns. In particular, there were no payouts on the PSUs for the 2019-21 and 2020-22 grants. The payout for the 2021-23 grant has rebounded from these lows.
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We have also set stretch targets as well to reach annual STI bonus payouts. From 20172019 through 2021,2023, our STI plan has paid out at 64.7%an average of target, well76.5% of target. With the exception of 2022, these payouts have been below 100% payouts for target performance and reflective of the difficult operating environment that our Company has faced.
The following chartcharts illustrates these declining payouts for both our PSUs and our STI annual incentives.
Each of Messrs. Churay, Bowhay and WittThe following NEOs had 83,751, 1,657 and 8,287 unexercised options respectively, that were granted in 2011. In 2021, these optionsfrom 2011 to 2013 that expired without being exercised andas the executives forfeited the options as their respective strike prices wereprice was above current market. These options were terminated and forfeited.
| Expired Forfeited Options |
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| NEO | Grant Date | |||||||||||
| 2011 | 2012 | 2013 | ||||||||||
Daniel Churay | 83,751 | 48,000 | 34,952 | |||||||||
Grant Bates | — | 47,505 | 4,925 | |||||||||
Rance Long | 1,657 | 4,254 | 6,524 | |||||||||
The Compensation & Human Capital Committee believes that the Company has consistently set stretch goals for its executive officers, which have often resulted in payouts below target when those goals were not met. The Committee believes that its compensation practices are aligned with shareholder interests and stock performance and that the historic reduced payout percentages have been aligned with declines in our stock price during the Company’s cyclical downturns.
Benefits and Perquisites
The Compensation & Human Capital Committee reviews the benefits and perquisites provided to certain of the executive officers on an annual basis to ensure the reasonableness of these programs. We provide competitive health, welfare and retirement benefits to our Company’s employees. Other than as outlined below, our current NEOs do not receive any additional benefits or perquisites.
Company-paid parking was provided for Messrs. Saltiel, Lane, Youngblood, Churay and Bates.
Mr. Bates receives a car allowance of $1,000 per month. Prior to his separation from employment, Mr. Witt received use of a company vehicle. Prior to his separation as SVP-International & VAMI, Mr. Bowhay received a car allowance at the rate of £15,000 per year.
Mr. Bates, an Australian citizen who has now achieved his permanent residence status in the U.S., is phasing out of his expatriate benefits. In 2021, he received his last tax equalization payment and reimbursement of tax preparation fees for 2020. In 2021, he received a housing and utilities allowance of $87,000 and was entitled to reimbursement for the air travel expenses between the U.S. and Australia for one trip for him and his spouse. All of these expat benefits ended on December 31, 2021.
Each NEO may participate along with all other employees in Company benefits such as our employee health, dental and prescription drug plans, defined contribution pension plan and group life insurance
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and disability plans. As a citizen and resident of the United Kingdom, the Company provided Mr. Bowhay, prior to his retirement, with health, life insurance and defined contribution pension benefits by contract, which are detailed in the column “All Other Compensation” in the Summary Compensation Table.
We provide our current NEOs with certain severance payments and benefits pursuant to an executive separation policy or individual employment agreements in the event of a termination of their employment under certain circumstances. We designed these agreements to promote stability and continuity of senior management.
For additional information, see “Potential Payments upon Termination or Change in Control”.
Other Matters Related to Compensation
Equity Ownership Guidelines
The Compensation & Human Capital Committee believes that the Company’s executive officers and directors should own and hold a position in the common stock of the Company to further align their interests and actions with the interests of the Company’s stockholders. In addition, the Committee believes that the investment community values officer and director stock ownership, and that stock ownership demonstrates a commitment to and belief in the success and long-term profitability of the Company. Our active executive officers and directors owned approximately 20.5%20.9% of the Company’s outstanding common stock as of FebruaryMarch 15, 2022
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2024 (including the preferred stock that director Henry Cornell directs on an “as-converted” basis). The Committee has adopted the Equity Ownership Guidelines described below.
Position | Equity Ownership Guidelines | |
Chief Executive Officer | 5 times base salary | |
Executive Vice Presidents | 3 times base salary | |
Senior Vice Presidents | 3 times base salary | |
Non-employee Directors | 5 times annual cash Board retainer (excludes committee retainers) | |
The Committee intends for executive officers and directors who are or become subject to these guidelines to achieve the applicable ownership guideline within five years from the date of adoption of the guidelines or the date the participant becomes subject to the guidelines. If an executive officer or director becomes subject to a greater ownership amount, due to promotion or an increase in base salary (or annual cash retainer), the executive officer (or director) is expected to meet the incrementally higher ownership amount within the later of three years from the effective date of the promotion or increase in base salary or cash retainer and the end of the original five-year period. The three-year period to achieve the incremental guideline begins in January following the year of the promotion or increase in base salary or cash retainer.
If an executive officer or director is not in compliance with the guidelines, the Compensation & Human Capital Committee may determine the appropriate action to take, which may include holding requirements on new grants of shares or the payment of a portion of the annual cash incentive or cash retainer in shares of our common stock. Any additional restrictions on previous awards must be agreed to by the executive officer or director. These guidelines may be waived, at the discretion of the Committee, if compliance would create severe hardship or prevent an executive officer or director from complying with a court order, as in the case of a divorce settlement.
All our executive officers and directors met the equity ownership guidelines for 2021 as of December 31, 2021.2023.
Anti-Hedging and Anti-Pledging Policy
Pursuant to the Company’s Securities Trading and Disclosure Policy, directors and executive officers of the Company that are subject to the requirements of Section 16(b) of the Exchange Act are
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prohibited from engaging in short-term or speculative transactions involving Company securities including:
| ● | Engaging in short sales; |
| ● | Engaging in transactions in put options, call options or other derivative securities related to Company securities on an exchange or in any other organized market; |
| ● | Engaging in hedging or monetization transactions related to Company securities, including through the use of financial instruments such as prepaid variable forwards, equity swaps and collars; and |
| ● | Holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan. |
Prohibition on Re-pricing of Stock Options and Stock Appreciation Rights without Stockholder Approval
Pursuant to the terms of the 2011 Omnibus Incentive Plan, as amended, the Committee has no authority to make any adjustment (other than in connection with a change in capitalization or other transaction where an adjustment is permitted or required under the terms of the plan) or amendment and no adjustment or amendment shall be made, that reduces or would have the effect of reducing the option price of an option or the grant price of a stock appreciation right previously granted under the plan whether through amendment, cancellation or replacement grants or other means, unless the Company’s stockholders approve the adjustment or amendment.
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Executive Compensation Clawback Policy
Pursuant to the Company’s Executive Compensation Clawback Policy (the “Policy”), effective as of October 2, 2023, the Company can recoup certainCovered Compensation (defined below) from the Company’s current and former executive officers who are subject to the requirements of Section 16 of the Exchange Act and such other senior executives or employees who the Board or Compensation & Human Capital Committee may include from time to time by amendment to the Policy (the “Covered Executives”). “Covered Compensation” means Incentive Compensation (defined below) that is granted to, earned by or vested in favor of Covered Executives on or after October 2, 2023 and after the date an executive becomes a Covered Executive. Covered Compensation does not include any compensation from covered employees inthat an executive received during any three-year recoupment period described below if the event ofexecutive was not a Covered Executive during that period.
If the Company is required to prepare an accounting restatement of ourits financial statements due to theft, fraud, willful misconductthe Company’s material noncompliance with any financial reporting requirement under the securities laws, the Compensation & Human Capital Committee will require reimbursement or negligence. All employees receivingforfeiture of any short-termexcess Covered Compensation that each Covered Executive received during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement.
“Incentive Compensation” means any compensation that is granted, earned or long-term equity compensation are subject to this policy.
This policy covers all incentive and performance-based stock awards grantedvested based wholly or in part upon the attainment of a Financial Reporting Measure (defined below). Incentive Compensation is “received” for purposes of the Policy in the Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive Compensation award is attained, even if the payment or grant of such Incentive Compensation occurs after the effective dateend of that period. As of October 2, 2023, the following are examples of Incentive Compensation of the policy underCompany that are based on a Financial Reporting Measure:
| ● | annual cash short-term incentive (STI) |
| ● | PSUs |
A “Financial Reporting Measure” is (i) any Company equity incentive plan (e.g.measure that is determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measure that is derived wholly or in part from such measure, (ii) stock options, RSUsprice and PSUs) and all cash performance awards (e.g. annual bonuses and other cash incentives) granted after the effective date of the policy. (iii) total shareholder return.
The recouped amount resulting from the restatement generally will be the difference betweenexcess of the amount of covered compensation previously awarded or earned and whatCovered Compensation paid to the Covered Executive based on the erroneous data over the Covered Compensation that would have been awarded or earned underpaid to the Covered Executive had it been based on the restated financial statements.results. See the MRC Global Inc. Executive Compensation Clawback Policy filed as Exhibit 10.8 to the 2023 Form 10-K. The Company’s prior Executive Compensation Clawback Policy dated February 19, 2015 was terminated as of October 2, 2023 but shall continue to apply for compensation received prior to October 2, 2023.
Compensation & Human Capital Committee Interlocks and Insider Participation
Our Compensation & Human Capital Committee is comprised solely of independent members of the Company’s Board and includes Ms. Adams, Messrs. Damiris and WoodJadin and Dr. Linse.McEntee. No member of the Committee was an officer or employee of the Company during 2021,2023, and no member of the Committee was formerly an officer of MRC Global or any of its subsidiaries. In addition, during 2021, noneNone of our executive officers served as a member of a compensation committee or board of directors of any other company or entity,where one of our Board members is an executive officer of which served as a member of our Board.officer.
| 75 | 2024 Proxy Statement |
Compensation & Human Capital Committee Report
The Compensation & Human Capital Committee reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with Meridian, management and with the Board. Based on such review and discussion, the Committee, on behalf of the Board, has recommended that this Compensation Discussion and Analysis be included in this Proxy Statement for fiscal year 2021,2023, ended December 31, 2021.2023.
The2023-24 Compensation & Human Capital Committee
|
Deborah G. Adams, Chair |
George J. Damiris |
Ronald L. Jadin |
Dr. |
|
PROPOSAL II:
ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER
COMPENSATION
We are required by Section 14A of the Exchange Act to, and accordingly, request our stockholders to approve, on an advisory basis, a non-binding resolution approving our named executive officer (NEO) compensation as disclosed in accordance with the SEC’s rules in this Proxy Statement. This proposal is commonly known as a “Say-on-Pay”“Say-on-Pay” proposal.
As discussed in the “Compensation Discussion and Analysis” as well as in the tables, our compensation programs are designed to attract and retain the talent needed to drive stockholder value and help each of our businesses meet or exceed financial and performance targets. Our compensation programs are intended to reward our executive officers for successfully implementing our strategy to grow our business and create long-term stockholder value. We believe our programs effectively link executive pay to the financial performance of the Company while also aligning the interests of our executive officers with the interests of our stockholders. The following are some key points that demonstrate our commitment to aligning pay to performance:
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We are seeking our stockholders’ support for our NEO compensation as this Proxy Statement details. This proposal is solicited in response to SEC requirements and seeks our stockholders’ views on our NEO compensation. It is not intended to address any specific element of compensation, but rather the overall compensation provided to our NEOs including our pay philosophy, our pay principles and pay practices as this Proxy Statement describes. The Board asks for you to approve, on a non-binding basis, the following advisory resolution:
RESOLVED, that the stockholders of MRC Global Inc. (the “Company”) approve, on an advisory and non-binding basis, the compensation of the Company’s named executive officers as disclosed in the Company’s Proxy Statement pursuant to the compensation disclosure rules of the Securities Exchange Act of 1934, as amended, including the Compensation Discussion and Analysis, the compensation tables, and any related narrative discussion contained in this Proxy Statement.
Because your vote is advisory, it will not be binding on the Board and will not overrule any decision by the Board or require the Board to take any action. However, the Board will take into account the outcome of the vote when considering future executive compensation decisions for NEOs. We currently conduct annual advisory votes on executive compensation and the next advisory vote following the vote at the Annual Meeting on our compensation of our NEOs will take place at our 20232025 Annual Meeting.
To be approved, this proposal must be approved by a majority of the votes cast by the stockholders present virtually or represented by proxy, meaning that the votes cast by the stockholders “FOR” the approval of the proposal must exceed the number of votes cast “AGAINST” the approval of the proposal. Abstentions from voting on this proposal and broker non-votes will not be treated as votes cast and, therefore, will have no effect on the outcome of this proposal.
THEOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RESOLUTION APPROVING THE COMPANY’S NEO COMPENSATION.
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Risk in Relation to Compensation Programs
We have performed a review of all of our material compensation plans and have concluded that there are no plans that provide meaningful incentives for employees, including the NEOs, to take risks that would be reasonably likely to have a material adverse effect on us. Because our current compensation
| 77 | 2024 Proxy Statement |
plans have a cap on the amount of incentive compensation that can be paid under the plans, risk of excessive compensation is negligible. This limit also has the effect of not encouraging operational or strategic decisions that expose the Company to undue risk.
Summary Compensation Table for 20212023
The following table, footnotes and the narrative discussion above in “Compensation Discussion and Analysis” set forth information with respect to compensation earned during each of the fiscal years ended 2019, 20202021, 2022 and 20212023 by our NEOs.
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Non-Equity Incentive Plan Compensation ($)(1) | Stock Awards ($) (2) | All Other Compensation ($) (3) | Total ($) | |||||||||||||||||||||||||||||||||||||||||||||
| Year | Salary ($) | Non-Equity Incentive Plan Compensation ($) (1) | Stock Awards ($) (2) | All Other Compensation ($) (3) | Total ($) | |||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 856,635 | 861,445 | 4,914,551 | 21,064 | 6,653,695 | ||||||||||||||||||||||||||||||||||||||||||||||
Robert J. Saltiel, Jr. (4) | 2021 | 666,346 | — | 444,984 | 4,804,408 | 7,139 | 5,922,877 | 2022 | 825,000 | 1,787,156 | 3,578,576 | 15,287 | 6,206,019 | |||||||||||||||||||||||||||||||||||||||
President and Chief Executive Officer
| 2021 | 666,346 | | 444,984 | | 4,804,408 | 7,139 | 5,922,877 | ||||||||||||||||||||||||||||||||||||||||||||
Kelly Youngblood | 2021 | �� | 500,000 | — | 202,266 | 1,428,999 | 8,314 | 2,139,579 | 2023 | 527,116 | 381,654 | 1,706,918 | 18,442 | 2,634,130 | ||||||||||||||||||||||||||||||||||||||
| Executive Vice President and | 2020 | 488,461 | — | 281,250 | 962,043 | 14,089 | 1,745,843 | 2022 | 500,000 | 693,200 | 1,064,285 | 13,137 | 2,270,622 | |||||||||||||||||||||||||||||||||||||||
Chief Financial Officer
|
| 2019
|
|
| 48,077
|
|
| 380,000
|
|
| —
|
|
| 1,599,170
|
|
| 332
|
|
| 2,027,579
|
|
| 2021
|
|
| 500,000
|
|
| 202,266
|
|
| 1,428,999
|
|
| 8,314
|
|
| 2,139,579
|
| |||||||||||||
Daniel J. Churay | 2021 | 425,000 | — | 137,541 | 931,640 | 7,911 | 1,502,092 | 2023 | 447,596 | 288,070 | 948,618 | 21,064 | 1,705,348 | |||||||||||||||||||||||||||||||||||||||
| Executive Vice President – | 2020 | 415,192 | — | 191,250 | 613,317 | 12,819 | 1,232,578 | 2022 | 425,000 | 552,394 | 633,244 | 15,759 | 1,626,397 | |||||||||||||||||||||||||||||||||||||||
Corporate Affairs, General Counsel & Corporate Secretary
| 2019 | 425,000 | — | — | 821,456 | 16,767 | 1,263,223 | 2021 | 425,000 | 137,541 | 931,640 | 7,911 | 1,502,092 | |||||||||||||||||||||||||||||||||||||||
Grant R. Bates | 2021 | 350,000 | — | 113,269 | 604,087 | 163,604 | 1,230,960 | 2023 | 408,077 | 246,221 | 576,210 | 27,822 | 1,258,330 | |||||||||||||||||||||||||||||||||||||||
| Senior Vice President – | 2020 | 317,500 | — | 146,250 | 421,956 | 221,296 | 1,107,002 | 2022 | 380,000 | 493,905 | 456,576 | 65,465 | 1,395,946 | |||||||||||||||||||||||||||||||||||||||
North America Operations & E-Commerce
| 2019 | 325,000 | — | — | 358,949 | 357,301 | 1,041,250 | | 2021 | | | 350,000 | | | 113,269 | | | 604,087 | | | 163,604 | | | 1,230,960 | | |||||||||||||||||||||||||||
Former NEOs: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Andrew R. Lane (6) | 2021 | 173,077 | — | 97,088 | — | 797,807 | 1,067,972 | |||||||||||||||||||||||||||||||||||||||||||||
| Former President & Chief | 2020 | 879,231 | — | 675,000 | 6,862,393 | 19,649 | 8,436,273 | |||||||||||||||||||||||||||||||||||||||||||||
Executive Officer
|
| 2019
|
|
| 900,000
|
|
| —
|
|
| —
|
|
| 4,586,783
|
|
| 19,389
|
|
| 5,506,172
|
| |||||||||||||||||||||||||||||||
John Bowhay (6) (7) | 2021 | 367,882 | — | 119,056 | 436,106 | 395,439 | 1,318,483 | |||||||||||||||||||||||||||||||||||||||||||||
Former Senior Vice President
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|
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| |||||||||||||||||||||||||||||||||||||||||||||
Karl Witt (6) | 2021 | 341,827 | — | 120,307 | 499,429 | 306,911 | 1,268,474 | |||||||||||||||||||||||||||||||||||||||||||||
Former Senior Vice President
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Rance C. Long (5) | 2023 | 376,269 | 227,029 | 531,214 | 36,956 | 1,171,468 | ||||||||||||||||||||||||||||||||||||||||||||||
Senior Vice President – Sales & Marketing
| 2022 | 345,000 | 448,414 | 421,452 | 27,265 | 1,242,131 | ||||||||||||||||||||||||||||||||||||||||||||||
Notes to Summary Compensation Table for 20212023
| (1) | See “Compensation Discussion and Analysis – |
| (2) | The amounts in this column represent the grant date fair value of the RSU and PSU awards at target performance, calculated pursuant to FASB ASC Topic 718. |
|
|
For more information on the calculations used to determine stock-based compensation, please see Notes 1 and 13 of our |
The NEOs, |
| Statement for its 2022 Annual Meeting of Stockholders that has been filed with the SEC. The amount disclosed under “Stock Awards” for these modifications, made in 2021, represent the sum of the following: |
| (a) | the grant date fair value of the RSUs and PSUs granted to each executive in the ordinary course of business (computed as described in the preceding paragraph); and |
| 78 | 2024 Proxy Statement |
| (b) | the incremental fair value of certain modified awards calculated as of the modification date in accordance with FASB ASC Topic 718. |
The incremental non-cash expense of these awards resulting from the modification was $173,624 for Mr. Saltiel, $50,385 for Mr. Youngblood, $30,592 for Mr. Churay and $18,138 for Mr. Bates, $91,300 for Mr. Bowhay and $21,594 for Mr. Witt.
With respect to the retirement of each of Messrs. Lane, Bowhay and Witt, they each will vest in the PSUs that the Company granted to the executive before retirement on a prorated basis based on their service during the performance period and receive a payout based on the Company’s actual performance. Any shares that are not earned based on performance or not included in the prorated period will be forfeited. Therefore, the amounts in this column for Messrs. Bowhay and Witt, include expense for certain shares that will be forfeited.Bates.
| (3) | Amounts in this column for |
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| Name | 401(k) Match | Life Insurance > $50,000 | Car Allowance/ Personal Use of Company Car | Executive Physical | Country Club Dues | Parking | Total | |||||||||||
Robert J. Saltiel, Jr. | $13,200 | $7,524 | $340 | $21,064 | ||||||||||||||
Kelly Youngblood | $13,200 | $4,902 | $340 | $18,442 | ||||||||||||||
Daniel J. Churay | $13,200 | $7,524 | $340 | $21,064 | ||||||||||||||
Grant R. Bates | $13,200 | $2,622 | $12,000 | $27,822 | ||||||||||||||
Rance C. Long | $13,200 | $4,902 | $5,992 | $2,150 | $10,712 | $36,956 | ||||||||||||
| (4) | Mr. Saltiel’s salary paid in 2021 reflects his start date in March 2021. |
| (5) |
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Grants of Plan-Based Awards in Fiscal Year 2023
The following table summarizes grants of RSUs, PSUs and annual STI cash awards provided to NEOs in 2022. The material terms of the Company’s annual cash incentive and long-term equity compensation programs are described in the “Compensation Discussion and Analysis” of this Proxy Statement.
Estimated Future Payouts Under
|
Estimated Future Payouts
| All Other
| Grant
| |||||||||||||||||||||||||||||||
Name
| Grant
| Threshold
| Target ($)
| Maximum
| Threshold
| Target
| Maximum
| |||||||||||||||||||||||||||
Robert J. Saltiel, Jr. | 2/7/2023 | 16,731 | 1,070,794 | 2,141,588 | 161,080 | 2,118,202 | ||||||||||||||||||||||||||||
| 2/7/2023 | 40,270 | 161,080 | 322,160 | 2,796,349 | ||||||||||||||||||||||||||||||
Kelly Youngblood | 2/6/2023 | 7,413 | 474,404 | 948,809 | 57,472 | 764,378 | ||||||||||||||||||||||||||||
| 2/6/2023 | 14,368 | 57,472 | 114,944 | 942,541 | ||||||||||||||||||||||||||||||
Daniel J. Churay | 2/6/2023 | 5,595 | 358,077 | 716,154 | 31,940 | 424,802 | ||||||||||||||||||||||||||||
| 2/6/2023 | 7,985 | 31,940 | 63,880 | 523,816 | ||||||||||||||||||||||||||||||
Grant R. Bates | 2/6/2023 | 4,782 | 306,058 | 612,116 | 19,401 | 258,033 | ||||||||||||||||||||||||||||
| 2/6/2023 | 4,850 | 19,401 | 38,802 | 318,176 | ||||||||||||||||||||||||||||||
Rance C. Long | 2/6/2023 | 4,409 | 282,202 | 564,404 | 17,886 | 237,884 | ||||||||||||||||||||||||||||
| 2/6/2023 | 4,472 | 17,886 | 35,772 | 293,330 | ||||||||||||||||||||||||||||||
| (1) | Under the STI plan each NEO’s bonus |
| (2) | LTI equity grants included PSUs, which will vest at the end of three years based on relative total shareholder return performance (compared to companies in the OIH index plus DNOW Inc. and the Russell 2000 Index) in four separate performance periods, each weighted at 25%. Payouts may range from 0% to 200% of target shares. |
|
| (3) |
|
Outstanding Equity Awards at 2023 Fiscal Year-End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| Name | Grant Date | Securities Underlying Unexercised Options (#) Exercisable | Securities Unexercisable | Option Exercise Price ($) | Option Expiration Date | Shares of Stock that Have Not Vested (#) | Market Value of Shares of Stock that Have Not Vested ($)(1) | Equity Incentive Plan Awards: 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) | |||||||||||||||||||||||||||
Robert J. Saltiel, Jr. | 3/15/2021 | 117,098(2) | 1,289,249 | 184,978(3) | 2,036,608 | |||||||||||||||||||||||||||||||
| 2/8/2022 | 141,429(4) | 1,557,133 | 214,286(3) | 2,359,289 | ||||||||||||||||||||||||||||||||
| 2/7/2023 | 161,080(4) | 1,773,491 | 161,080(3) | 1,773,491 | ||||||||||||||||||||||||||||||||
Kelly Youngblood | 2/8/2021 | 17,716(4) | 195,053 | 53,681(3) | 591,028 | |||||||||||||||||||||||||||||||
| 5/5/2021 | 9,017(4) | 99,277 | ||||||||||||||||||||||||||||||||||
| 2/7/2022 | 42,858(4) | 471,867 | 64,935(3) | 714,934 | ||||||||||||||||||||||||||||||||
| 2/6/2023 | 57,472(4) | 632,767 | 57,472(3) | 632,767 | ||||||||||||||||||||||||||||||||
Daniel J. Churay | 2/18/2014 | 25,109 | — | $29.30 | 2/18/2024 | |||||||||||||||||||||||||||||||
| 2/8/2021 | 10,756(4) | 118,424 | 32,592(3) | 358,838 | ||||||||||||||||||||||||||||||||
| 5/5/2021 | 7,665(4) | 84,392 | ||||||||||||||||||||||||||||||||||
| 2/7/2022 | 25,500(4) | 280,755 | 38,636(3) | 425,382 | ||||||||||||||||||||||||||||||||
| 2/6/2023 | 31,940(4) | 351,659 | 31,940(3) | 351,659 | ||||||||||||||||||||||||||||||||
Grant R. Bates | 2/18/2014 | 4,046 | — | $29.30 | 2/18/2024 | — | — | |||||||||||||||||||||||||||||
| 2/8/2021 | 6,378(4) | 70,222 | 19,325(3) | 212,768 | ||||||||||||||||||||||||||||||||
| 5/5/2021 | 6,313(4) | 69,506 | ||||||||||||||||||||||||||||||||||
| 2/7/2022 | 18,386(4) | 202,430 | 27,857(3) | 306,706 | ||||||||||||||||||||||||||||||||
| 2/6/2023 | 19,401(4) | 213,605 | 19,401(3) | 213,605 | ||||||||||||||||||||||||||||||||
Rance C. Long | 2/18/2014 | 2,636 | — | $29.30 | 2/18/2024 | |||||||||||||||||||||||||||||||
| 2/8/2021 | 5,467(4) | 60,192 | 16,564(3) | 182,370 | ||||||||||||||||||||||||||||||||
| 2/7/2022 | 16,972(4) | 186,862 | 25,714(3) | 283,111 | ||||||||||||||||||||||||||||||||
| 2/6/2023 | 17,886(4) | 196,925 | 17,886(3) | 196,925 | ||||||||||||||||||||||||||||||||
| (1) | Closing price of |
| (2) | RSUs granted in March 2021 vest 34% on the first anniversary of |
| (3) | PSUs granted in February 2021, 2022 and 2023 and March 2021 vest after the completion of the 3-year performance period and the achievement of pre-established performance targets, upon the determination and certification by the Compensation & Human Capital Committee that such targets have been met. |
| (4) | RSUs granted in February 2021, 2022 and 2023 and May 2021 vest 34% on the first anniversary of the date of grant and 33% on each of the second and third anniversaries of the date of grant. |
| 80 | 2024 Proxy Statement |
Option Exercises and Stock Vested During 2023
Stock Awards
| ||||||||||||
| Name | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | ||||||||||
Robert J. Saltiel, Jr. | 133,899 | 1,508,728 | ||||||||||
Kelly Youngblood | 62,569 | 803,160 | ||||||||||
Daniel J. Churay | 40,328 | 508,882 | ||||||||||
Grant R. Bates | 36,640 | 463,751 | ||||||||||
Rance C. Long | 25,123 | 312,197 | ||||||||||
| (1) | Reflects value of RSUs that vested on February 7, 2023, February 8, 2023, February 10, 2023, March 15, 2023, May 5, 2023, and June 30, 2023. |
| (2) | The value realized upon vesting is based on |
No options were exercised by NEOs in 2023. |
CEO Pay Ratio
For 2021,2023, the CEO to median employee pay ratio is 84.4 : 80:1. We calculated the CEO pay ratio for MRC Global in 20212023 in accordance with the SEC disclosure requirements of executive compensation under Item 402(u) of Regulation S-K. In accordance with Item 402(u), we selected a new median employee for 2022 (which, as permitted by the rules, we used for 2023) by calculating the median for 20212022 total target cash compensation (which includes base salary or pay and annual cash incentive at target) for all full and part time employees of MRC Global as of December 31, 2021,2022, excluding our CEO. We included employees from all countries where we operate in this calculation, without exception. We believe that total target cash compensation is an appropriate measure to identify the median employee, since the use of long-term equity compensation is not widespread at MRC Global. Less than 5% of MRC Global employees receive long-term equity compensation.
We calculated 20212023 annual total compensation for both our current CEO, Robert Saltiel, and the 2022 annual total compensation for the median employee, using the same definition for total compensation as set forth in the Proxy Statement’s Summary Compensation Table (“SCT”) plus the value of benefits not reported in the SCT. However, in accordance with SEC regulations, we used Mr. Saltiel’s annualized salary of $825,000 per annum rather than his pro-rata salary for his time in office as he began his tenure with MRC Global mid-year in March 2021. The CEO pay ratio was then determined by dividing the total compensation as calculated above for the CEO by the total compensation for the median employee.
| Type of Compensation | CEO | Median Employee | ||||||||||||||
| Type of Compensation | ||||||||||||||||
| Type of Compensation | ||||||||||||||||
| Type of Compensation | CEO | Median Employee | ||||||||||||||
Base Salary or Pay | ||||||||||||||||
Base Salary or Pay | ||||||||||||||||
Base Salary or Pay | ||||||||||||||||
Base Salary or Pay | $825,000 | $51,058 | $856,635 | $53,443 | ||||||||||||
Annual Incentive Compensation | $444,984 | $395 | ||||||||||||||
Annual Incentive Compensation | ||||||||||||||||
Annual Incentive Compensation | ||||||||||||||||
Annual Incentive Compensation | $861,445 | $6,614 | ||||||||||||||
Long Term Equity Awards | ||||||||||||||||
Long Term Equity Awards | ||||||||||||||||
Long Term Equity Awards | ||||||||||||||||
Long Term Equity Awards | $4,804,408 | $0 | $4,914,551 | $0 | ||||||||||||
All Other Compensation | $7,139 | $270 | ||||||||||||||
All Other Compensation | ||||||||||||||||
All Other Compensation | ||||||||||||||||
All Other Compensation | $21,064 | $1,337 | ||||||||||||||
Benefits Not Reported in SCT* | ||||||||||||||||
Benefits Not Reported in SCT* | ||||||||||||||||
Benefits Not Reported in SCT* | ||||||||||||||||
Benefits Not Reported in SCT* | $7,098 | $20,449 | $8,767 | $21,786 | ||||||||||||
Total | $6,088,629 | $72,172 | ||||||||||||||
Total | ||||||||||||||||
Total | ||||||||||||||||
Total | $6,662,462 | $83,180 | ||||||||||||||
CEO to Median Employee Pay Ratio | 84.4:1 | |||||||||||||||
CEO to Median Employee Pay Ratio | ||||||||||||||||
CEO to Median Employee Pay Ratio | ||||||||||||||||
CEO to Median Employee Pay Ratio | ||||||||||||||||
*Benefits Not Reported in the SCT include Company contributions to the medical, dental, accidental death and dismemberment, short-term disability and long-term disability plans, and the portion of group term life insurance premium that is not imputed income.
|
Grants of Plan-Based Awards in Fiscal Year 2021
Estimated Future Payouts
|
Estimated Future Payouts
| All Other
| All Other
| Exercise
| Grant
| |||||||||||||||||||||||||||||||||||||
Name
| Grant
| Threshold
| Target
| Maximum
| Threshold
| Target
| Maximum
| |||||||||||||||||||||||||||||||||||
Robert J. Saltiel Jr. | 3/15/2021 | 6,445 | 412,500 | 515,625 | 241,032 | — | 2,405,499 | |||||||||||||||||||||||||||||||||||
| 3/15/2021 | 2,312 | 92,489 | 184,978 | 1,096,664 | ||||||||||||||||||||||||||||||||||||||
| 3/15/2021 | 46,244 | 92,489 | 184,978 | 1,302,245 | ||||||||||||||||||||||||||||||||||||||
Kelly Youngblood | 2/8/2021 | 2,930 | 187,500 | 234,375 | 53,681 | — | 487,960 | |||||||||||||||||||||||||||||||||||
| 2/8/2021 | 671 | 26,840 | 53,680 | 294,631 | ||||||||||||||||||||||||||||||||||||||
| 2/8/2021 | 13,420 | 26,841 | 53,682 | 383,021 | ||||||||||||||||||||||||||||||||||||||
| 5/5/2021 | 27,322 | 263,657 | ||||||||||||||||||||||||||||||||||||||||
Daniel J. Churay | 2/8/2021 | 1,992 | 127,500 | 159,375 | 32,592 | — | 296,261 | |||||||||||||||||||||||||||||||||||
| 2/8/2021 | 407 | 16,296 | 32,592 | 178,723 | ||||||||||||||||||||||||||||||||||||||
| 2/8/2021 | 8,148 | 16,296 | 32,592 | 232,544 | ||||||||||||||||||||||||||||||||||||||
| 5/5/2021 | 23,224 | 224,112 | ||||||||||||||||||||||||||||||||||||||||
Grant R. Bates | 2/8/2021 | 1,641 | 105,000 | 131,250 | 19,325 | — | 175,664 | |||||||||||||||||||||||||||||||||||
| 2/8/2021 | 169 | 9,662 | 19,324 | 137,891 | ||||||||||||||||||||||||||||||||||||||
| 2/8/2021 | 3,388 | 9,663 | 19,326 | 105,966 | ||||||||||||||||||||||||||||||||||||||
| 5/5/2021 | 19,126 | 184,566 | ||||||||||||||||||||||||||||||||||||||||
Former NEO’s: | ||||||||||||||||||||||||||||||||||||||||||
Andrew R. Lane | 1,406 | 90,000 | 112,500 | — | — | — | ||||||||||||||||||||||||||||||||||||
John L. Bowhay | 2/8/2021 | 1,724 | 110,365 | 137,956 | 20,089 | — | 182,609 | |||||||||||||||||||||||||||||||||||
| 2/8/2021 | 241 | 10,044 | 20,088 | 110,155 | ||||||||||||||||||||||||||||||||||||||
| 2/8/2021 | 4,831 | 10,045 | 20,090 | 143,342 | ||||||||||||||||||||||||||||||||||||||
Karl Witt | 2/8/2021 | 1,743 | 111,524 | 139,405 | 23,006 | — | 209,125 | |||||||||||||||||||||||||||||||||||
| 2/8/2021 | 287 | 11,503 | 23,006 | 126,156 | ||||||||||||||||||||||||||||||||||||||
| 2/8/2021 | 5,751 | 11,503 | 23,006 | 164,148 | ||||||||||||||||||||||||||||||||||||||
Mr. Lane retired in March 2021MRC Global’s annual Net Income and did not receive and LTI award for 2021. Messrs. Lane and Witt’s STI awards were prorated for the number of days employed in 2021.
Pay vs. Performance (1) | ||||||||||||||||||||||||||||||
Value of Fixed $100 Investment Based On: | ||||||||||||||||||||||||||||||
Year | Summary Compensation Table Total for First PEO | Summary Compensation Table Total for Second PEO | Compensation Actually Paid to First PEO (2) (4) | Compensation Actually Paid to Second PEO (3) (4) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid for Non-PEO NEOs (4) (5) | Total Shareholder Return (6) | Philadelphia Oil Services Index Total Shareholder Return (6) | Net Income | Adjusted EBITDA (7) | ||||||||||||||||||||
| 2023 | — | $6,653,695 | — | $ 3,144,397 | $1,692,319 | $1,130,373 | $81 | $107 | $ 90,000,000 | $250,000,000 | ||||||||||||||||||||
| 2022 | — | $6,206,019 | — | $11,019,566 | $1,633,774 | $2,549,179 | $85 | $107 | $ 75,000,000 | $261,000,000 | ||||||||||||||||||||
| 2021 | $1,067,972 | $5,922,877 | -$ 103,009 | $ 4,521,852 | $1,491,918 | $1,211,125 | $50 | $ 67 | -$ 14,000,000 | $146,000,000 | ||||||||||||||||||||
| 2020 | $8,436,273 | — | $2,407,746 | — | $1,113,767 | $ 175,299 | $49 | $ 57 | -$274,000,000 | $ 97,000,000 | ||||||||||||||||||||
| (1) |
MRC Global’s first principal executive officer (“PEO”) for 2020-21 was Andrew Lane. MRC Global’s second PEO for2021-23 was Robert Saltiel. MRC Global’s other NEOs for 2020 were Kelly Youngblood, Daniel Churay, Grant Bates, Robert Stein and James Braun. MRC Global’s other NEOs for 2021 2022-23 were Kelly Youngblood, Daniel Churay, Grant Bates and |
| (2) |
For MRC Global’s first PEO, Andrew Lane, 2021 year-end of -$972,078 (iii) plus the aggregate change in equity fair value up to any applicable vesting event for equity awards vesting during the fiscal year of $598,904. 2020 compensation actually paid reflects 2020 total compensation reported in Summary Compensation Table of $8,436,273 with the following modifications: (i) less the aggregate equity compensation reported in the 2020 Summary Compensation Table of $6,862,393 (ii) plus the aggregate change in equity fair value accrued for equity awards outstanding as of fiscalyear-end of $1,784,801 (iii) plus the aggregate change in equity fair value up to any applicable vesting event for equity awards vesting during the fiscal year of -$950,935. |
| (3) |
For MRC Global’s second PEO, Robert Saltiel, 2023 compensation actually paid reflects 2023 total compensation reported in Summary Compensation Table of year-end of $1,447,076 (iii) plus the aggregate change in equity fair value up to any applicable vesting event for equity awards vesting during the fiscal year of -$41,823. 2022 compensation actually paid reflects 2022 total compensation reported in Summary Compensation Table of $6,206,019 with the following modifications: (i) less the aggregate equity compensation reported in the 2022 Summary Compensation Table of $3,578,576 (ii) plus the aggregate change in equity fair value accrued for equity awards outstanding as of fiscalyear-end of $8,104,077 (iii) plus the aggregate change in equity fair value up to any applicable vesting event for equity awards vesting during the fiscal year of $288,045. 2021 compensation actually paid reflects 2021 total compensation reported in Summary Compensation Table of $5,922,877 with the following modifications: (i) less the aggregate equity compensation reported in the 2021 Summary Compensation Table of $4,804,408 (ii) plus the aggregate change in equity fair value accrued for equity awards outstanding as of fiscalyear-end of $3,403,383. |
| (4) |
|
|
| (5) | For MRC Global’s non-PEO NEOs, 2023 average total compensation reported in Summary Compensation Table of $1,692,319 with the following modifications: (i) less the average aggregate equity compensation reported in the 2023 Summary Compensation Table of $940,740 (ii) plus the aggregate change in equity fair value accrued for equity awards outstanding as of fiscalyear-end of $333,487 (iii) plus the aggregate change in equity fair value up to any applicable vesting event for equity awards vesting during the fiscal year of $45,307. 2022 average compensation actually paid reflects 2022 average total compensation reported in Summary Compensation Table of $1,633,774 with the following modifications: (i) less the average aggregate equity compensation reported in the 2022 Summary Compensation Table of $643,889 (ii) plus the aggregate change in equity fair value accrued for equity awards outstanding as of fiscalyear-end of $1,461,652 (iii) plus the aggregate change in equity fair value up to any applicable vesting event for equity awards vesting during the fiscal year of $97,642. 2021 average compensation actually paid reflects 2021 average total compensation reported in Summary Compensation Table of $1,491,918 with the following modifications: (i) less the average aggregate equity compensation reported in the 2021 year-end of $439,798 (iii) plus the aggregate change in equity fair value up to any applicable vesting event for equity awards vesting during the fiscal year of $59,462. 2020 average compensation actually paid reflects 2020 average total compensation reported in Summary Compensation Table of $1,113,767 with the following modifications: (i) less the average aggregate equity compensation reported in the 2020 Summary Compensation Table of $463,921 (ii) plus the aggregate change in equity fair value accrued for equity awards outstanding as of fiscal year end of -$341,654 (iii) plus the aggregate change in equity fair value up to any applicable vesting event for equity awards vesting during the fiscal year of -$132,893. |
 |
Outstanding Equity Awards at 2021 Fiscal Year-End
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
| Name | Grant Date | Securities Underlying Unexercised Options (#) Exercisable | Securities Unexercised | Option Exercise Price ($) | Option Expiration Date | Shares of Stock that Have Not Vested (#) | Market Value of Shares of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) | |||||||||||||||||||||||||||
Robert J. Saltiel Jr | 3/15/2021 | 241,032(1) | 1,658,300 | 184,978(2) | 1,272,649 | |||||||||||||||||||||||||||||||
Kelly Youngblood | 11/18/2019 | 37,191(1) | 255,874 | |||||||||||||||||||||||||||||||||
| 2/10/2020 | 27,523(1) | 189,358 | 41,701(2) | 286,903 | ||||||||||||||||||||||||||||||||
| 2/8/2021 | 53,681(1) | 369,325 | 53,681(2) | 369,325 | ||||||||||||||||||||||||||||||||
| 5/5/2021 | 27,322(1) | 187,975 | ||||||||||||||||||||||||||||||||||
Daniel J. Churay | 5/9/2012 | 48,000 | — | $ | 20.85 | 5/9/2022 | — | — | ||||||||||||||||||||||||||||
| 3/7/2013 | 34,952 | — | $ | 29.35 | 3/7/2023 | — | — | |||||||||||||||||||||||||||||
| 2/18/2014 | 25,109 | — | $ | 29.30 | 2/18/2024 | — | — | |||||||||||||||||||||||||||||
| 2/11/2019 | 7,878(1) | 54,201 | 23,869(2) | 164,219 | ||||||||||||||||||||||||||||||||
| 2/10/2020 | 17,547(1) | 120,723 | 26,585(2) | 182,905 | ||||||||||||||||||||||||||||||||
| 2/8/2021 | 32,592(1) | 224,233 | 32,592(2) | 224,233 | ||||||||||||||||||||||||||||||||
| 5/5/2021 | 23,224(1) | 159,781 | ||||||||||||||||||||||||||||||||||
Grant R. Bates | 5/8/2012 | 47,505 | — | $ | 21.05 | 5/8/2022 | — | — | ||||||||||||||||||||||||||||
| 3/7/2013 | 4,925 | — | $ | 29.35 | 3/7/2023 | — | — | |||||||||||||||||||||||||||||
| 2/18/2014 | 4,046 | — | $ | 29.30 | 2/18/2024 | — | — | |||||||||||||||||||||||||||||
| 2/11/2019 | 3,443(1) | 23,688 | 10,430(2) | 71,758 | ||||||||||||||||||||||||||||||||
| 2/10/2020 | 18,953(3) | 130,397 | 13,553(2) | 93,245 | ||||||||||||||||||||||||||||||||
| 2/8/2021 | 19,325(1) | 132,956 | 19,325(2) | 132,956 | ||||||||||||||||||||||||||||||||
| 5/5/2021 | 19,126(1) | 131,587 | ||||||||||||||||||||||||||||||||||
Andrew R. Lane | 5/9/2012 | 380,000 | — | $ | 29.35 | 5/9/2022 | — | — | ||||||||||||||||||||||||||||
| 3/7/2013 | 173,982 | — | $ | 29.35 | 3/7/2023 | — | — | |||||||||||||||||||||||||||||
| 2/18/2014 | 88,927 | — | $ | 29.30 | 2/18/2024 | — | — | |||||||||||||||||||||||||||||
| 2/12/2019 | 41,292(1) | 284,089 | 95,314(2) | 655,760 | ||||||||||||||||||||||||||||||||
| 2/11/2020 | 95,387(1) | 656,263 | 60,050(2) | 413,144 | ||||||||||||||||||||||||||||||||
John L. Bowhay | 3/7/2013 | 1,080 | — | $ | 20.85 | 3/7/2023 | — | — | ||||||||||||||||||||||||||||
| 9/3/2013 | 2,255 | — | $ | 26.25 | 9/3/2023 | — | — | |||||||||||||||||||||||||||||
| 2/18/2014 | 3,557 | — | $ | 29.30 | 2/18/2024 | — | — | |||||||||||||||||||||||||||||
| 2/11/2019 | 3,759(1) | 25,862 | 11,826(2) | 81,363 | ||||||||||||||||||||||||||||||||
| 2/10/2020 | 19,142(3) | 131,697 | 9,318(2) | 64,108 | ||||||||||||||||||||||||||||||||
| 2/8/2021 | 20,089(1) | 138,212 | 6,696(2) | 46,068 | ||||||||||||||||||||||||||||||||
Karl Witt | 3/7/2013 | 5,445 | — | $ | 29.35 | 3/7/2023 | — | — | ||||||||||||||||||||||||||||
| 2/18/2014 | 3,667 | — | $ | 29.30 | 2/18/2024 | — | — | |||||||||||||||||||||||||||||
| 2/11/2019 | 3,962(1) | 27,259 | 11,663(2) | 80,241 | ||||||||||||||||||||||||||||||||
| 2/10/2020 | 21,362(1) | 146,971 | 10,982(2) | 75,556 | ||||||||||||||||||||||||||||||||
| 2/8/2021 | 22,312(3) | 153,507 | 7,018(2) | 48,284 | ||||||||||||||||||||||||||||||||
|
|
|
2023 Compensation Performance Measures | ||||
Adjusted EBITDA | ||||
| TRIR | ||||
| LWDR | ||||
3-Year RANCE, adjusted for LIFO | ||||
3-Year Relative TSR | ||||
1-Year Relative TSR |
|
Stock Awards Name Number of Shares Acquired on Vesting Robert J. Saltiel Jr. Kelly Youngblood Daniel J. Churay Grant R. Bates Former NEO’s: Andrew R. Lane John L. Bowhay Karl Witt the cumulative total shareholder return of the companies in the Philadelphia Oil Services Index as well as Compensation Actually Paid as set forth in the Pay vs Performance Chart above. For further information see page 18 of the Company’s Annual Report on Form Both of Mr. Saltiel and Mr. Youngblood are subject to covenants prohibiting competition, solicitation of customers and employees and interference with business relationships during their employment and for 24 months, in the case of Mr. Saltiel, and 18 months, in the case of Mr. Youngblood, thereafter and are subject to perpetual restrictive covenants regarding confidentiality,Option ExercisesStock Vested During 2021
(#)(1) Value Realized
on Vesting
($)(2) — — 51,368 437,557 34,363 314,410 15,674 143,511 794,241 5,864,722 17,529 159,899 19,277 174,936 (1)This column reflects RSUs or PSUs that vested on February 8, 2021, February 10, 2021, February 11, 2021, February 12, 2021, February 13, 2021, November 18, 2021, December 1, 2021 and December 31, 2021.(2)The value realized upon vesting is based on the closing price of our common stock on February 8, 2021 of $9.32, February 10, 2021, of $9.30, February 11, 2021, of $9.19, February 12, 2021, of $8.65, November 18, 2021, of $8.22, December 1, 2021 of $6.79 and December 31, 2021, of $6.88 per share.No options were exercised by NEOs in 2021.
Active ExecutivesMr.Mr. Churay doLong are not have an activesubject to employment agreement.agreements with the Company. Messrs. Churay, Bates and BatesLong will receive certain severance payments and benefits following a termination of employment under certain circumstances pursuant to the Company’s executive separation policyExecutive Separation Policy and the terms of RSU and PSU award agreements. These benefits are described in the section titled “Potential Payments upon Termination or Change in Control”.Saltiel’s employment agreement has an initialSaltiel and Mr. Youngblood have a term of two yearsone year beginning August 4, 2023 and will be extended on each subsequent anniversary for one additional year, unless either party gives ninety days’ written notice of Mr. Youngblood’s employment agreement has an initial term of one year and will be extended on each subsequent anniversary for one additional year, unless either party gives ninety days’ written notice of non-renewal.set hisprovides for a base salary at $825,000($860,000 per year in 2023), to be reviewed annually, which theannually. The Board (or a committee of the Board) may adjust upward his base salary at its discretion, anddiscretion. Mr. Saltiel’s agreement also provides for an annual cash incentive opportunity, for each completed fiscal year, to be based upon individual or Company performance criteria that the Board establishes for each fiscal year in consultation with Mr. Saltiel, with aestablishes. His 2023 target annual incentive opportunity was 125% of 100% of the base salary with the 2021 annual bonus being reduced by 50%.salary. Mr. Youngblood’s agreement provides for an initiala base salary of $500,000($530,000 per year in 2023), to be reviewed annually, which the Board (or a committee of the Board) may adjust upward at its discretion, andannually. Mr. Youngblood’s agreement also provides for an annual cash incentive opportunity, for each completed fiscal year, to be based upon individual or Company performance criteria that the Board establishes for each fiscal year, with(or a committee of the Board) establishes. His 2023 target annual incentive opportunity was 90% of 75% ofhis base salary.
722022 Proxy StatementCertain TerminationsTo effect the planned CEO transition earlier than Mr. Lane’s expected December 31, 2021 retirement date, the Company terminated Mr. Lane’s employment early without Cause (as defined in his employment agreement) on March 14, 2021. Pursuant to Mr. Lane’s employment agreement, as amended, he received an amount equal to his forgone salary from March 15, 2021 until December 31, 2021 in the amount of $720,000, an annual STI cash incentive for 2021 payable at the same time as all other executives (based on actual performance and prorated for his 73 days of service during 2021), the payment of all accrued, but unpaid, obligations (including salary, annual cash incentive, expense reimbursement and unused vacation pay of $76,154) and the continuation of health, dental and vision benefits through reimbursement of premiums until Mr. Lane reaches age 65. Pursuant to his employment agreement, Mr. Lane meets the “retirement” treatment under his RSU and PSU awards and will continue to vest in those awards as described above; actual payouts for his PSUs will be prorated for his time in service during each performance period for each PSU.Upon Mr. Lane’s departure in March 2021, Mr. Saltiel became the Company’s CEO. After reviewing the Company’s business and operations, Mr. Saltiel reorganized the Company’s management structure to be more efficient and focused in the areas of operations, business development and sales, supply chain and International operations. As part of this internal reorganization, the Company reduced its executive positions from nine to eight positions, which reduces overall senior executive compensation expense on a run rate basis. The roles and responsibilities of Messrs. Bowhay and Witt were significantly impacted, and each of them separated from service with the Company following this management realignment.In November 2021, Mr. Witt separated from service after 41 years of service with the Company and entered into a separation agreement and complete release providing certain payments and benefits upon Mr. Witt’s separation of employment on November 30, 2021. Pursuant to the agreement, Mr. Witt was paid unpaid accrued salary and unused vacation time. The terms of this agreement also included payment of a separation benefit in the amount of $281,250, to be paid in equal installments based on the Company’s regular pay cycle through the nine months immediately following Mr. Witt’s separation date, as well as payment of the annual STI cash incentive for fiscal year 2021 based on actual performance, prorated for his time in service during the year. This benefit was less than the benefit Mr. Witt would have received under the Company’s executive separation policy. The separation agreement also provided continued health, dental and vision care coverage through premium reimbursement on the same basis as while employed, subject to the same medical benefit costs as when he was employed, until September 26, 2023. Mr. Witt met the “retirement” treatment under his RSU and PSU awards and will continue to vest in those awards as described above; actual payouts for his PSUs will be prorated for his time in service during each performance period for each PSU.As part of the July 2021 restructuring, significant portions of Mr. Bowhay’s leadership were moved to the leadership of other executive team members. Mr. Bowhay remained a leader of the International segment during a transition period until December 31, 2021. To retain Mr. Bowhay’s services through the end of the year to assure a smooth transition and then separate him, the Company and Mr. Bowhay entered into an amendment to his UK-based employment contract and an agreement regarding the treatment of his equity awards upon his separation. The contract amendment amended and restated Mr. Bowhay’s existing UK employment agreement and addressed (among other things) the customary notice of termination periods under UK law. Mr. Bowhay was separated from service from his role as senior vice president as of December 31, 2021, after 19 years of service, but will continue employment on “garden leave” under his UK employment arrangements until September 30, 2022, when he will no longer be employed. During his garden leave period, he will not actively provide services to the Company unless the Company requests specific services relating to his expertise and experience with the Company. Pursuant to his contract amendment, Mr. Bowhay was paid any unpaid accrued salary and unused vacation time through December 31, 2021; thereafter, he will be paid salary only through September 30, 2022, at the rate of £247,926 per annum, which is lower than his existing 7384 20222024 Proxy Statement
salary rate, and his related defined contribution pension contributions as well as payment
In their separation arrangements, each of Messrs. Lane, Witt and Bowhay are subject to a general release in favor of the Company as well covenants prohibiting competition, solicitation of customers and employees and interference with business relationships for 24 months for Mr. Lane, for nine months for Mr. Witt, and for 15 months for Mr. Bowhay following separation from employment, and each of them is subject to perpetual restrictive covenants regarding confidentiality, non-disparagement and proprietary rights.
| ● | Multi-year guaranteed salary increases |
| ● | Guaranteed non-performance bonuses or equity compensation |
| ● | Excise tax gross-ups |
paragraph or is entitled to vesting or continued vesting for a termination for good reason pursuant to an employment agreement or the Executive Separation Policy.
the options, RSUs and PSUs will continue to vest and become exercisable as if the current NEO remained employed with the Company; provided that the current NEO remains employed with the Company on or after the first anniversary of the date of grant unless the Company waives this requirement.
| (i) | the outstanding options would remain exercisable until the expiration date and |
| (ii) | subject to the NEO having been employed by the Company for at least one year following the date of grant (unless waived by the Company) and subject to continued adherence to the restrictive covenants in each award agreement, including those that require them to refrain from competition with the Company and to refrain from the solicitation of employment of Company employees until the award is fully vested during retirement, |
| (A) | the RSUs will continue to vest in accordance with the applicable time-based vesting schedule as if the NEO remained employed by the Company and |
| (B) | the PSUs will continue to be eligible to vest had the NEO remained employed by the Company, prorated based on the number of days the Company employed the NEO in each particular performance period prior to the NEO’s retirement. |
| 85 | 2024 Proxy Statement |
80.
|
options or RSUs that the Company granted to them and will be eligible to receive shares based onwaived;
Name
| Accrued Obligations ($)(1)
| Total ($)(2)
| ||||||
Robert J. Saltiel, Jr.
|
|
—
|
|
|
—
|
| ||
Kelly Youngblood
|
|
—
|
|
|
—
|
| ||
Daniel J. Churay
|
|
15,529
|
|
|
15,529
|
| ||
Grant R. Bates
|
|
—
|
|
|
—
|
| ||
Name | Accrued Obligations ($)(1) | |||
| Robert J. Saltiel, Jr. | 3,308 | |||
| Kelly Youngblood | — | |||
| Daniel J. Churay | 10,385 | |||
| Grant R. Bates | 788 | |||
| Rance C. Long | — | |||
| (1) | These amounts represent accrued but unused vacation time as of December 31, |
Termination without Cause or |
Termination Not for Cause and Resignation for Good Reason
| ● | All accrued, but unpaid, obligations (including salary, unpaid annual cash incentive for prior periods, expense reimbursement and vacation pay) |
| ● |
| Monthly payments equal to the sum of 1/12 th of annual base salary at the rate in effect immediately prior to termination and 1/12th target annual cash incentive for 24 months, in the case of Mr. Saltiel, and for 18 months, in the case of Mr. Youngblood, following termination |
| ● |
| Continuation of medical benefits through reimbursement of premiums for 24 months in the case of Mr. Saltiel, and for 18 months, in the case of Mr. Youngblood |
| ● | A pro-rata annual cash incentive for the fiscal year in which termination occurs based on actual performance through the end of the fiscal |
| 86 | 2024 Proxy Statement |
| ● | If the executive is not afforded “retirement” treatment as described above, |
|
defined in the policy) or if eitherany of them terminates their own employment for Good Reason (as defined)defined in the policy), the terminated executive is entitled to the following severance payments and benefits:
| ● | All accrued, but unpaid, obligations (including salary, annual cash incentive, expense reimbursement and vacation pay); |
| ● | Monthly payments equal to the sum of 1/12th of annual base salary at the rate in effect immediately prior to termination for 18 months, in the case of Mr. Churay, and 12 months, in the case of |
| ● | Continuation of health, dental and vision benefits through the reimbursement of premiums for 18 months, in the case of Mr. Churay, and 12 months, in the case of |
| ● | A pro-rata annual cash incentive for the fiscal year in which termination occurs based on actual performance through the end of the fiscal |
| ● |
| If the executive is not afforded “retirement” treatment, each of their RSUs |
| 87 | 2024 Proxy Statement |
Company are described under “– Change in Control” below.
| Name | Accrued Obligations ($)(1) | Separation Payments ($) | Pro Rata Incentive ($) | Value of Medical Benefits ($) | Value of Accelerated Equity ($)(2) | Total ($) | ||||||||||||||||||
Robert J. Saltiel, Jr. | — | 3,300,000 | 443,438 | 13,249 | — | 3,756,687 | ||||||||||||||||||
Kelly Youngblood | — | 1,312,500 | 201,563 | 32,427 | — | 1,546,490 | ||||||||||||||||||
Daniel J. Churay | 15,529 | 675,000 | 137,063 | 20,189 | — | 847,781 | ||||||||||||||||||
Grant R. Bates | — | 350,000 | 112,875 | 6,624 | — | 469,499 | ||||||||||||||||||
Name | Accrued Obligations ($)(1) | Separation Payments ($) | Pro Rata Incentive ($) | Value of Medical Benefits ($) | Value of Accelerated Equity Vesting ($)(2) | Total ($) | ||||||||||||||||||
| Robert J. Saltiel, Jr. | 3,308 | 3,870,000 | 861,445 | 12,909 | — | 4,747,662 | ||||||||||||||||||
| Kelly Youngblood | — | 1,510,500 | 381,654 | 19,668 | — | 1,911,822 | ||||||||||||||||||
| Daniel J. Churay | 10,385 | 675,000 | 288,070 | 19,668 | — | 993,123 | ||||||||||||||||||
| Grant R. Bates | 788 | 410,000 | 246,221 | 6,455 | — | 663,464 | ||||||||||||||||||
| Rance C. Long | — | 378,000 | 227,029 | 21,097 | — | 626,126 | ||||||||||||||||||
| (1) | These amounts represent accrued but unused vacation time as of December 31, |
| (2) | The Company’s equity agreements do not provide for accelerated vesting. Pursuant to the |
Name
| Accrued
| Total
| ||||||
Robert J. Saltiel, Jr.
|
| —
|
|
| —
|
| ||
Kelly Youngblood
|
|
—
|
|
|
—
|
| ||
Daniel J. Churay
|
|
15,529
|
|
|
15,529
|
| ||
Grant R. Bates
|
|
—
|
|
|
—
|
| ||
Name | Accrued Obligations ($)(1) | |||
| Robert J. Saltiel, Jr. | 3,308 | |||
| Kelly Youngblood | — | |||
| Daniel J. Churay | 10,385 | |||
| Grant R. Bates | 788 | |||
| Rance C. Long | — | |||
| (1) | These amounts represent accrued salary and accrued but unused vacation time as of December 31, | 2023. |
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would be entitled to receive a
agreement for awards granted prior to 2023 and would accelerate and vest with respect to any remaining shares subject to the award agreement for awards granted beginning in 2023.
| 88 | 2024 Proxy Statement |
| Name | Accrued Obligations ($)(1) | Pro Rata Incentive ($) | Value of Accelerated Vesting of Equity ($)(2) | Total ($) | ||||||||||||
Robert J. Saltiel, Jr. | — | 443,438 | 547,234 | 990,672 | ||||||||||||
Kelly Youngblood | — | 201,563 | 534,043 | 735,606 | ||||||||||||
Daniel J. Churay | 15,529 | 137,063 | 242,567 | 395,159 | ||||||||||||
Grant R. Bates | — | 112,875 | 163,768 | 276,643 | ||||||||||||
Name | Accrued Obligations ($)(1) | Pro Rata Incentive ($) | Value of Accelerated Equity Vesting ($)(2) | Total ($) | ||||||||||||
| Robert J. Saltiel, Jr. | 3,308 | 861,445 | 6,091,756 | 6,956,509 | ||||||||||||
| Kelly Youngblood | — | 381,654 | 1,816,100 | 2,197,754 | ||||||||||||
| Daniel J. Churay | 10,385 | 288,070 | 1,091,355 | 1,389,810 | ||||||||||||
| Grant R. Bates | 788 | 246,221 | 689,633 | 936,642 | ||||||||||||
| Rance C. Long | — | 227,029 | 552,052 | 779,081 | ||||||||||||
| (1) | These amounts represent accrued salary and accrued but unused vacation time as of December 31, |
| (2) | The amount in this column includes the value of the acceleration of the vesting of an additional 33% (for awards granted prior to 2023) and the remaining amount (for awards granted in 2023) of the unvested |
andupon upoCause,“Cause”, death or Disability,“Disability”, or by the executive for Good Reason“Good Reason” (each as defined in the employment agreements), the executiveMessrs. Saltiel and Youngblood would be entitled to the following: ● All accrued, but unpaid obligations (including, salary, unpaid annual cash incentive for completed periods, expense reimbursement and vacation pay); ● 24 months of the executive’s base salarythree times (for Mr. Saltiel) and two times (for Mr. Youngblood) the executive’ssum of base salary plus target annual cash incentive, as in effect on the date of termination; and ● ● Medical Continuation (as defined in each employment agreement) for 36 months (for Mr. Saltiel) and 24 months.months (for Mr. Youngblood).● All accrued, but unpaid obligations (including, salary, unpaid annual cash incentive for completed periods, expense reimbursement and vacation pay); 89 2024 Proxy Statement
| ● | Payment of an amount equal to two times (for Mr. Churay) or 1.5 times (for Messrs. Bates and Long) the sum of base salary plus target annual cash incentive, as in effect on the date of termination; |
| ● | A pro-rata annual cash incentive for the fiscal year in which termination occurs based on actual performance through the end of the fiscal year; and |
| ● | Medical Continuation (as defined in the Executive Separation Policy) for 24 months (for Mr. Churay) or 18 months (for Messrs. Bates and Long). |
Eachbasis;
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provided, that in determining whether
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Notwithstanding the foregoing, a Change in Control will not be deemed to occur solely because any person (the “Subject Person”) acquired Beneficial Ownership of more than the permitted amount of the then outstanding shares or voting securities as a result of the acquisition of shares or voting securities by the Company which, by reducing the number of shares or voting securities then outstanding, increases the proportional number of shares beneficially owned by the Subject Person; provided that if a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of shares or voting securities by the Company and, after such acquisition by the Company, the Subject Person becomes the beneficial owner of any additional shares or voting securities and such beneficial ownership increases the percentage of the then outstanding shares or voting securities beneficially owned by the Subject Person, then a Change in Control will occur.
A “Non-Control Acquisition” means an acquisition by:
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A “Non-Control Transaction” means a Merger in which:
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The following table sets forth what each current NEO would receive upon a Change in Control under current employment arrangements as if the Change in Control occurred on December 31, 2021. The table presents2023 and the termination payments that Messrs. Saltiel and Youngblood would receive under their employment agreement as if their employmentNEO were terminated without Cause or resigned for Good Reason upon the Change in Control. Messrs. Churay and Bates would not receive an additional cash payment specific to a Change in Control under existing awards or policies.
| Name | Accrued Obligations ($)(1) | Lump Sum Payment ($) | Value of Medical Benefits ($) | Value of Accelerated Vesting of Equity ($)(2) | Total ($) | |||||||||||||||
Robert J. Saltiel, Jr. | — | 3,300,000 | 13,249 | 2,757,545 | 6,070,794 | |||||||||||||||
Kelly Youngblood | — | 1,750,000 | 43,236 | 1,314,701 | 3,107,937 | |||||||||||||||
Daniel J. Churay | 15,529 | — | — | 752,617 | 768,146 | |||||||||||||||
Grant R. Bates | — | — | — | 528,680 | 528,680 | |||||||||||||||
Name | Accrued Obligations ($)(1) | Lump Sum Payment ($) | Pro Rata Incentive ($) | Value of Medical Benefits ($) | Value of Accelerated Equity Vesting ($)(2) | Total ($) | ||||||||||||||||||
| Robert J. Saltiel, Jr. | 3,308 | 5,805,000 | 861,445 | 19,364 | 10,400,483 | 17,089,600 | ||||||||||||||||||
| Kelly Youngblood | — | 2,014,000 | 381,654 | 26,224 | 3,193,295 | 5,615,173 | ||||||||||||||||||
| Daniel J. Churay | 10,385 | 1,620,000 | 288,070 | 26,224 | 1,892,157 | 3,836,836 | ||||||||||||||||||
| Grant R. Bates | 788 | 1,076,250 | 246,221 | 9,682 | 1,237,066 | 2,570,007 | ||||||||||||||||||
| Rance C. Long | — | 992,250 | 227,029 | 31,646 | 1,057,189 | 2,308,114 | ||||||||||||||||||
| (1) | These amounts represent accrued but unused vacation time as of December 31, |
| (2) | Equity accelerates upon a Change in Control even if the NEO is not terminated from employment. Therefore, the amounts in this column would have been payable upon a Change in Control on December 31, 1-year performance periods in 2022 and 2023, the results the shortened performance 3-year performance periods that are underway, and target for the 2024 and 20251-year performance periods. Actual results could vary |
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2023.2021.20212023 was approximately $135,000.Mr. Witt’s wife is employed in the Sales Department of the Company and had no direct reporting relationship to Mr. Witt. Her total compensation for 2021 was approximately $132,000.802022 Proxy Statement
PROPOSAL III: AMENDMENT TO THE COMPANY’S
2011 OMNIBUS INCENTIVE PLAN, AS AMENDED
We use our 2011 Omnibus Incentive Plan, as previously amended (the “Plan”), to provide long-term incentive opportunities in the form of common stock and other awards to our executives, employees and members of our Board. We make grants annually to our executives, employees and Board members. While the Plan also allows us to make grants to consultants, we have not yet utilized the Plan for this purpose. Because of our annual grant practices, over time the remaining shares that we have available for issuance under the Plan are insufficient for our incentive compensation requirements.
In 2019, the stockholders approved an amendment to the Plan that added 2,500,000 shares to the Plan, which along with the 778,272 shares remaining at the time of the approval, resulted in the Plan then having a total of 3,278,272 shares for grants. Based on historic grant practices at the time, we expected this pool of shares to be sufficient for three years, until April 2022. In fact, this pool of shares has been sufficient for most of that period; however, there are no shares remaining in the Plan as of March 1, 2022, so there are insufficient shares for future grants based on our historic grant practices even with anticipated forfeitures that may return shares to the plan. Our three-year annual burn rate (2019-2021) has been approximately 1.76%.
Because of this, we desire to amend the Plan to add 3,000,000 additional shares to the Plan, which would result in a total pool of available shares of 3,000,000 shares plus any future forfeitures that may return shares to the Plan. Based on our historical granting practices and the recent trading price of the common stock at the close of trading on March 1, 2022, of $10.27, the addition of the 3,000,000 shares is expected to be sufficient to make awards for at least three years, until April 2025.
Long-term equity compensation plays an important part of the Company’s pay-for-performance philosophy. Equity awards also help the Company remain market-competitive in retaining and attracting highly qualified employees upon whom, in large measure, the future growth and success of the Company depend.
By its terms, the Plan originally provided that it would terminate ten years from April 9, 2012, the date the Plan became effective. This termination date was originally chosen because of the requirement under the Internal Revenue Code that prohibits the grant of incentive stock options (“ISOs”) under the Plan more than 10 years after the earlier of the date the Plan was adopted by our Board and the date the Plan was approved by our stockholders. Since the inception of the Plan, no ISOs have been awarded under the Plan. The Compensation & Human Capital Committee believes the provisions of the Plan remain adequate at this time for continued use by the Company. Therefore, the Committee desires to continue to utilize the Plan and recommended eliminating the fixed termination date, subject to stockholder approval, to allow the Plan to remain in effect until such time as the Board may later terminate the Plan in accordance with its terms. In addition, to better reflect the on-going nature of the Plan, the Committee also recommended an amendment to the Plan to change the name of the Plan from the “2011 Omnibus Incentive Plan” to the “Omnibus Incentive Plan”.
On February 7, 2022, the Committee recommended to the Board that it adopt an amendment (the “Amendment”) to the Plan to do the following:
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On February 8, 2022, the Board adopted the Committee’s recommendation. As a result, the Amendment is being submitted for stockholder approval at the 2022 Annual Meeting of Stockholders. If
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approved by a majority of the votes cast by holders of the shares of common stock voting in person or by proxy at the Annual Meeting (the “Effective Date”), the 3,000,000 new shares will be added to the Plan pursuant to the Amendment and the Company may continue to make grants under Plan.
Any stockholder of the Company may obtain a copy of the Amendment and Plan documents by sending a written request to MRC Global’s Corporate Secretary at the Company’s principal executive offices. The Plan and its previous amendments are also filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2021, which may be found on the SEC’s website, www.sec.gov or the Company’s investor relations page on its website, https://investor.mrcglobal.com.
Approval of the Amendment requires that a majority of the votes cast on the proposal are cast “FOR” approval of this proposal; provided that a majority of the outstanding shares of common stock are voted on the proposal. For this proposal only, abstentions will have the same effect as votes “AGAINST” the proposal while broker non-votes will have no effect on the outcome of the proposal.
Determination of Number of Shares for the Amendment
If the Amendment is approved, the aggregate number of shares of common stock that will be available for issuance as of the Effective Date pursuant to awards under the Plan is expected to be 3,000,000 (plus any forfeitures that may return shares to the Plan). In setting the number of proposed shares to be added to the Plan, the Committee and the Board considered a number of factors. These factors, which are discussed further below, included:
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Shares Available and Outstanding Equity Awards
As of March 1, 2022, we had 83,557,839 shares of common stock issued and outstanding (not including treasury shares). Share usage under the Plan since 2019 has been as follows:
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Performance share units (PSUs) granted from 2019 through 2022 are reflected at target payout in the
table above. Historically, PSU payouts have been less than target.
While the number of shares that may be issued in the future to satisfy the vesting of annual grants of
RSUs and PSUs made in 2022 notionally exceeded the remaining Plan shares at the time of those
grants, expected forfeitures of shares that will be returned for use in the Plan are well in excess of
that notional difference. Pursuant to the Plan, these forfeitures may be used to satisfy these grants
when they ultimately vest.
Historical Equity Award Granting Practices
In setting and recommending to stockholders the number of shares authorized under the Amendment, the Committee and the Board considered the historical number of equity awards granted under the Plan in the past three years and potential dilution. In 2019 through March 2022, including the annual executive grants for 2022, the Company used on average approximately 1,447,338 shares per year.
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The Committee and the Board also considered the Company’s three-year average annual burn rate (2019-2021) of approximately 1.76%. Based on historical granting practices and the recent trading price of the Common Stock at the close of trading on March 1, 2022 of $10.27, the Amendment is expected to cover awards for at least three years. The prior amendment was sufficient to cover three years, until April 2025.
Material Terms of the Amendment
On February 8, 2022, the Board approved the Amendment, subject to stockholder approval, to increase the number of shares of our common stock authorized for issuance under the Plan by 3,000,000 shares, increasing the aggregate number of shares that are available for awards since the Plan’s inception in 2012 from 9,897,475 shares to 12,897,475 shares and extended the duration of the Plan indefinitely by eliminating the fixed termination date originally included in the Plan. If shareholder approval of the Amendment is not obtained, the Plan will terminate. The Board believes that additional shares for awards under the Plan are necessary to enable the Company to continue to attract, retain and motivate qualified and competent persons to serve as employees, members of management and directors. The Board also believes that the provisions of the Plan remain adequate at this time for continued use by the Company and sees no reason to replace the Plan at this time.
Material Terms of the 2011 Omnibus Incentive Plan
Overview. The Company adopted the Plan in November of 2011, subject to stockholder approval. The Plan became effective on April 9, 2012, when our stockholders approved it. The Plan is the primary plan pursuant to which the Company grants equity-based awards and other long-term incentive awards. The Plan was previously amended on April 29, 2015, and April 30, 2019. The following is a summary of the material terms of the Plan.
Purpose. The purpose of the Plan is to foster and promote the long-term financial success of the Company and materially increase stockholder value by:
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Authorized Shares. The Board initially authorized a total of 3,250,000 shares of the Company’s common stock for awards to be granted under the Plan. Pursuant to Board and stockholder approvals, on April 29, 2015, the Plan was amended to increase the authorized shares by 4,250,000 shares (less 102,525 remaining shares on that date), and on April 30, 2019, the Plan was amended to increase the authorized shares by 2,500,000 shares to a total of 9,897,475 shares. To the extent that the annual grants made in 2022 notionally exceeded Plan shares at the time of those grants, expected forfeitures of shares under prior grants will be available to satisfy the 2022 grants when they ultimately vest. Shares available under the Plan may include shares from awards previously granted that, prior to the Amendment:
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If certain changes in capitalization of the Company occur (such as reclassifications, recapitalizations, mergers, consolidations, reorganizations, stock splits, stock dividends and other changes in capitalization of the Company), the Committee will make appropriate adjustments to the maximum number of shares that may be delivered under the Plan. The Committee will also make appropriate adjustments to the number and class of shares of stock or securities subject to outstanding awards, the exercise prices of outstanding awards and any other terms of outstanding awards that the change in capitalization affects.
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Administration. The Committee administers the Plan unless the Board designates another committee to administer the Plan. The Committee has the discretion to determine the individuals to whom we may grant awards, what type of award we grant, when and how we grant each award and other terms and conditions of awards (including the number of shares of our common stock subject to each award and the vesting schedule or conditions of each award). The Committee is authorized to construe and interpret the Plan and awards we grant under the Plan, to establish, amend and revoke any rules and regulations relating to the Plan’s administration and to make any other determinations that it deems necessary or desirable for the administration of the Plan. All actions taken and all interpretations and determinations that the Committee makes will be final and binding upon participants, the Company and all other interested individuals.
No Repricing or Cashing Out of Underwater Options or SARs. The Committee is prohibited from directly or indirectly repricing, replacing or regranting a stock option or stock appreciation rights (“SARs”) to reduce the exercise or grant price or cashing out a stock option or SAR other than in connection with a change in capitalization or if approved by the stockholders.
Eligibility. The Committee may grant awards under the Plan to employees, directors and consultants of the Company and its subsidiaries that the Committee selects. As of March 1, 2022, we had approximately 2,600 employees and 10 directors of the Company and its subsidiaries. To date, the Company has not granted awards under the Plan to any consultants, the number of which vary from time to time.
Types of Awards. The Plan permits the grant of nonqualified stock options (“NSOs”), ISOs, SARs, restricted stock, restricted stock units (RSUs), performance shares, performance units, cash-based awards and other stock-based awards.
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Restricted stock awards consist of shares of our common stock that are transferred to a grantee subject to vesting conditions that will result in forfeiture of the shares if the specified conditions are not satisfied. Dividends paid in respect of shares of restricted stock may be paid to the grantee as and when dividends are paid to stockholders or at the time that the
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restricted stock vests, as the Committee determines. Unless the Committee determines otherwise, holders of restricted stock will have the right to vote the shares prior to vesting. RSUs provide a grantee the right to receive shares of our common stock, or cash equal to the fair market value of our shares, at a future date upon or following the attainment of certain conditions the Committee specifies.
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Vesting/Performance Criteria. Vesting of awards granted under the Plan may be subject to the satisfaction of one or more performance goals the Committee establishes. To the extent the vesting/ performance goal is time-based, the applicable time period that the Board or the Committee sets may not be less than one year. The performance goals may vary from participant to participant, group to group and period to period. Performance goals may be weighted for different factors and measures.
Transferability. Unless the Committee determines otherwise, awards granted under the Plan will generally not be transferable by grantees except in the case of NSOs and SARs pursuant to domestic relations orders.
Change in Control. The Committee will determine the treatment of awards granted under the Plan if a change in control occurs (as defined in the Plan). To date, the vesting of options, RSUs and restricted stock granted under the Plan accelerate and become fully vested upon a change in control. PSUs granted to date also vest upon a change in control but performance is measured from the beginning of a performance period until the closing of the change in control transaction rather than the original end of the performance period. If a performance period has not yet started, the PSUs with respect to that period vest at target performance.
Effect of Certain Transactions. If a liquidation, dissolution, merger or consolidation of the Company occurs (a “Transaction”), either:
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The Committee may, in its discretion and without the need for the consent of any recipient of an award, take one or more of the following actions to be effective upon the occurrence of or at any time prior to any Transaction (and any such action may be made contingent upon the occurrence of the Transaction):
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Tax Withholding. The Company has the right to withhold all amounts required to be withheld from any payment under the Plan or to require a grantee to satisfy all applicable tax withholding requirements prior to any payment or issuance or release of shares pursuant to any award. The Plan allows a participant, with respect to a payment in shares of our common stock under the Plan, to elect, subject to the approval of the Committee, to satisfy the withholding requirement, in whole or in part, by having us withhold shares of our common stock having a fair market value on the date the withholding is to be determined that is equal to the withholding amount.
Effectiveness of the Plan; Amendment and Termination. The Plan became effective on April 9, 2012, and was amended on April 29, 2015, April 30, 2019 and February 8, 2022. As the termination date of the Plan has been removed by the Amendment adopted by the Board, the Plan remains in effect. However, if the stockholders do not approve the Amendment, the Plan will terminate. The Board may amend or terminate the Plan or any outstanding awards made under the Plan at any time, except that stockholder approval will be required for any amendment to the Plan if required by applicable law or stock market requirements. Notwithstanding the foregoing, no amendment or termination of the Plan or outstanding awards under the Plan that would adversely affect the rights of a grantee under any outstanding award may be made without the relevant grantee’s consent except as expressly set forth in the Plan.
U.S. Federal Income Tax Consequences of Awards Granted Under the Plan to Participants
The following is a general summary of certain of the U.S. federal income tax consequences to participants who are either U.S. citizens or residents with respect to awards granted under the Plan.
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Incentive Stock Options
Subject to stockholder approval of the Amendment, the Committee may issue ISOs under the Plan until May 5, 2032. When the Committee grants an employee an ISO to purchase shares of our common stock under the Plan, the employee will not be required to recognize any U.S. federal taxable income as a result of the grant or as a result of the employee’s exercise of the ISO; however, the difference between the exercise price and the fair market value of the shares of our common stock at the time of exercise is an item of tax preference that may require payment of an alternative minimum tax. On the sale of the shares acquired through exercise of an ISO (assuming such sale does not occur within two years of the date of grant of the ISO or within one year from the date of exercise), any gain (or loss) will be taxed as long term capital gain (or loss), and we will not be entitled to any deduction in connection with the sale (or the grant or exercise) of the ISO. With respect to a sale of shares that occurs after the later of two years from the date of grant and one year from the date of exercise, the tax basis of the shares for the purpose of a subsequent sale includes the option price paid for the shares.
However, if the employee sells the shares acquired upon exercise of an ISO before the later of (i) two years from the date of grant and (ii) one year from the date of exercise, the employee will be treated as having received, at the time of sale, compensation taxable as ordinary income, and we will be entitled to a corresponding deduction. The amount treated as compensation income is the excess of the fair market value of the shares at the time of exercise over the exercise price, and any amount realized in excess of the fair market value of the shares at the time of exercise would be treated as long or short- term capital gain, depending on how long such shares were held. With respect to a sale of shares that occurs before the later of two years from the date of grant and one year from the date of exercise, the tax basis of the shares for the purpose of a subsequent sale includes the option price paid for the shares and the compensation income reported at the time of sale of the shares.
Nonqualified Stock Options
When the Committee grants an NSO to purchase shares of our common stock under the Plan, the recipient will not be required to recognize any U.S. federal taxable income as a result of the grant. However, the recipient will be required to recognize ordinary income on the date the recipient exercises the NSO. Generally, the measure of the income will be equal to the difference between the fair market value of the shares of our common stock acquired on the date the shares are acquired and the option price. The tax basis of the shares acquired on exercise of the NSO for the purpose of a subsequent sale includes the option price paid and the ordinary income reported on exercise of the NSO. The income reportable on exercise of the NSO by an employee is subject to federal tax withholding. Generally, we will be entitled to a deduction in the amount reportable as income by the recipient on the exercise of an NSO.
Stock Appreciation Rights
The grant of a SAR under the Plan generally will not result in the recognition of any U.S. federal taxable income by the recipient or a deduction for us, at the time of grant. However, the recipient will be required to recognize ordinary income on the date the recipient exercises the SAR equal to the appreciation in the fair market value of our common stock between the date of grant and the exercise date of the SAR (assuming the grant price was set at the fair market value of our common stock on the date of grant). Generally, the measure of the income will be equal to the amount realized on exercise of the SAR. The income reportable on exercise of the SAR by an employee is subject to federal tax withholding. Generally, we will be entitled to a deduction in the amount reportable as income by the recipient on the exercise of a SAR.
Restricted Stock Awards
The grant of a restricted stock award under the Plan generally will not result in the recognition of any U.S. federal taxable income by the recipient or a deduction for us at the time of grant unless the recipient timely makes an election under Section 83(b) of the Internal Revenue Code, as described below. Upon the expiration of the forfeiture restrictions applicable to the restricted stock award (i.e., as the shares become vested), the recipient will recognize ordinary income in an amount equal to the excess of the fair market value of those shares at that time over the amount (if any) the recipient paid
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for the shares. The income realized by an employee is subject to federal tax withholding. We will be entitled to a deduction in the amount and at the time the recipient recognizes income. If an election under Section 83(b) of the Internal Revenue Code has not been made, any dividends received with respect to any restricted shares that are not vested (i.e., the forfeiture restrictions have not yet lapsed) generally will be treated as compensation that is taxable as ordinary income to the recipient and we will be entitled to a corresponding deduction. With respect to any restricted shares that are vested (i.e., the forfeiture restrictions have lapsed), the recipient will be taxed on any dividends on such shares as the dividends are paid to the recipient (and such dividends will be characterized as dividend income and not compensation income) and we will not be entitled to deductions with respect to the dividends paid.
If a participant makes an election under Section 83(b) of the Internal Revenue Code within 30 days of the date of transfer of the restricted shares awarded under the restricted stock award, the participant will recognize ordinary income on the date the shares are awarded. The amount of ordinary income required to be recognized is an amount equal to the excess, if any, of the fair market value of the shares on the date of award over the amount, if any, paid for such shares. In such case, the participant will not be required to recognize additional ordinary income when the shares vest. However, if the shares are later forfeited, a loss can only be recognized up to the amount the participant paid, if any, for the shares.
Restricted Stock Unit Awards
The grant of an RSU award under the Plan generally will not result in the recognition of any U.S. federal taxable income by the recipient or a deduction for us at the time of grant. At the time the RSU award vests and is paid the recipient will recognize ordinary income and we will be entitled to a corresponding deduction. Generally, the measure of the income and deduction with respect to an RSU will be the fair market value of our common stock at the time the RSU is paid. The income realized under the RSU award that is reportable by an employee is subject to federal tax withholding.
Performance Share and Performance Unit Awards
Performance share awards granted under the Plan generally have the same tax consequences as restricted stock awards, as discussed above.
A recipient of a performance unit award under the Plan generally will not realize U.S. federal taxable income at the time of grant of the award, and we will not be entitled to a deduction at that time with respect to the award. When the performance goals applicable to the performance unit award are attained and amounts are paid under the award, the holder of the award will be treated as receiving compensation taxable as ordinary income, and we will be entitled to a corresponding deduction. The income realized under the award that is reportable by an employee is subject to federal tax withholding.
Other Cash-Based and Stock-Based Awards
The grant of a cash-based award under the Plan generally will not result in the recognition of any
U.S. federal taxable income by the recipient or a deduction for us at the time of grant. Generally, at the time the other cash-based award is settled in cash, the recipient will recognize ordinary income and we will be entitled to a corresponding deduction, in the amount of cash received by the recipient under the award at that time. The income realized under the award that is reportable by an employee is subject to federal tax withholding.
Other stock-based awards granted under the Plan generally have the same tax consequences as RSU awards, as described above.
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New Plan Benefits
The following table sets forth benefits that our NEOs would receive in the future if stockholder approval of the Amendment is given:
| 2011 Omnibus Incentive Plan | ||||||||
Name and Position
| Dollar Value ($)
| Number of Shares Subject
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Robert J. Saltiel, Jr. | (1 | ) | (1 | ) | ||||
Director, President and CEO | ||||||||
Kelly Youngblood |
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(1 |
) |
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(1 |
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Executive Vice President and Chief Financial Officer
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Daniel J. Churay | (1 | ) | (1 | ) | ||||
Executive Vice President – Corporate Affairs, General Counsel & Corporate Secretary | ||||||||
Grant R. Bates |
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(1 |
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(1 |
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Senior Vice President – North America Operations and E- Commerce
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Former NEOs: | ||||||||
Andrew Lane |
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-0- |
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-0- |
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Former Director, President & CEO
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John Bowhay | -0- | -0- | ||||||
Former Senior Vice President | ||||||||
Karl Witt | ||||||||
Former Senior Vice President
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All current executive officers as a group | (1 | ) | (1 | ) | ||||
All current non-executive officer directors as a group
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$
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1,100,000
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(2
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)
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All employees, other than current executive officers, as a group | (1 | ) | (1 | ) | ||||
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Plan Benefits
The following table sets forth the number of shares of our common stock subject to stock options, RSUs and PSUs granted under the Plan that have been received by or allocated since the Plan’s inception on April 17, 2012, until March 1, 2022 to the following persons or groups:
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| Name & Position | RSUs (#) | Stock
| Restricted (#)
| PSUs (#) | ||||||||||||
Robert J. Saltiel, Jr. Director, President & CEO | 455,318 | — | — | 399,264 | ||||||||||||
Kelly Youngblood Executive Vice President & Chief Financial
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300,336 |
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— |
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— |
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160,317 |
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Daniel J. Churay Executive Vice President – Corporate Affairs, | 210,710 | 108,061 | 30,136 | 169,693 | ||||||||||||
Grant R. Bates(1) Senior Vice President – North America
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175,159 |
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56,476 |
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2,235 |
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95,909 |
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Former NEOs: | ||||||||||||||||
Andrew R. Lane Former Director, President & CEO
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1,480,806 |
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642,909 |
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140,362 |
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| 615,233
|
| ||||
John Bowhay Former Senior Vice President | 110,001 | 6,892 | 14,006 | 85,698 | ||||||||||||
Karl Witt Former Senior Vice President
|
|
112,778 |
|
|
9,112 |
|
|
15,025 |
|
|
57,705 |
| ||||
All current executive officers as a group | 3,100,420 | 902,553 | 753,319 | 1,684,220 | ||||||||||||
All current non-executive officer directors as a group
|
|
0
|
|
|
66,805
|
|
|
535,658
|
|
|
0
|
| ||||
All employees, other than current Executive officers as a group | 3,317,370 | 1,318,507 | 841,964 | 310,575 | ||||||||||||
Each associate of any director, executive officer or nominee
|
|
Equity Compensation Plan Information
The following table summarizes information, as of December 31, 2021, relating to our equity compensation plans pursuant to which grants of options, restricted stock, or certain other rights to acquire our shares may be granted from time to time.
| (a) | (b) | (c) | ||||||||||
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities
| |||||||||
Equity compensation plans approved by security holders:
| ||||||||||||
Stock options, restricted stock awards, restricted stock unit awards and performance share unit awards
|
| 4,188,770
|
|
| 17.10
|
|
| 1,157,259
|
| |||
Equity compensation plans not approved by security holders | 0 | N/A | 0 | |||||||||
|
|
|
| |||||||||
TOTAL
|
| 4,188,770
|
|
| 1,157,259
|
| ||||||
|
|
|
| |||||||||
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE COMPANY’S 2011 OMNIBUS INCENTIVE PLAN.
| 91 |
REPORT OF THE AUDIT COMMITTEE
The Company’s Audit Committee is composed entirely of non-management, independent directors. Our Board has determined that all of the members of the Audit Committee meet the independence and financial literacy requirements of the NYSE and additional, heightened independence criteria applicable to members of the Audit Committee under SEC and NYSE rules. In addition, the Board of Directors has determined that Mss. Duganier and Adams and Messrs. Anthony and Jadin all of its members meet the definition of “audit committee financial expert” as defined by the rules and regulations of the SEC. In 2021,2023, the Audit Committee held sevenfive meetings.
The Audit Committee has adopted, and annually reviews and assesses the adequacy of a charter outlining the practices it follows. The charter, which complies with all current regulatory requirements, can be viewed on the Company’s website, www.mrcglobal.com, by clicking on “Investor Relations”“Investors”, then “Corporate Governance”, then “Committee Charters – Audit“Documents and Charters”, then “Audit Committee”.
In 2020, the Audit Committee and the Company assessed the benefits of outsourcing the Company’s internal audit function and selected KPMG LLP (the “IA Firm”) to provide these services. At each of its regularly scheduled meetings during 2021,2023, the Audit Committee met with the senior members of the Company’s financial management team. The Audit Committee reviewed with senior members of the Company’s financial management team, the independent auditors and the IA Firm, the overall audit scope and plans, the results of internal and external audit examinations, evaluations by management and the independent auditors of the Company’s internal controls over financial reporting and the quality of the Company’s financial reporting. Additionally, the Audit Committee had, or provided the opportunity to have, separate private sessions without members of management present, during each of its regularly scheduled quarterly meetings, with the Company’s independent auditors and the IA Firm at which candid discussions regarding financial management, legal, accounting, auditing, and internal control matters took place. The Audit Committee also discussed the effectiveness of the Company’s compliance program and received status reports, including a review of hotline results onand compliance issues. Members of the Audit Committee also met in executive session during each of its regularly scheduled quarterly meetings. Finally, the Audit Committee Chair met periodically with members of management, the Company’s independent auditors and representatives of the IA Firm to review Audit Committee meeting agendas and discuss accounting and reporting matters.
The chair of the Audit Committee is also a member of the Board’s Environmental, Social, Governance (“ESG”) and Enterprise Risk Committee (the “ESG Committee”). The Board’s ESG Committee assists the Board with oversight of ESG matters and the Company’s enterprise risk framework. This includes oversight of ESG risks, such as the risks associated with climate change, and cybersecurity risks. The Audit Committee coordinates with the ESG Committee regarding these matters, and the chair of the Audit Committee participates as member of the ESG Committee in oversight of these matters. The Audit Committee has worked with the ESG Committee to engage external auditors or consultants from time to time to audit or review various aspects of the Company’s climate change reporting and cybersecurity policies and programs. In 2023, the Audit Committee received reports from KPMG LLP, the Company’s outsourced internal auditor, on a review of the validation of the Company’s energy transition data reporting, IT security policies and data loss prevention processes. With respect to cybersecurity, the Company’s policies are aligned with standards promulgated by the National Institute of Standards and Technology (NIST).
The Audit Committee is updated periodically on management’s process to assess the adequacy of the Company’s system of internal controls over financial reporting and management’s conclusions on the effectiveness of the Company’s internal controls over financial reporting. The Audit Committee has also discussed with the independent auditors their evaluation of the Company’s system of internal controls over financial reporting.
The Audit Committee reviewed with senior members of management, representatives of the IA Firm, the general counsel, and the independent auditors, significant risks and exposures that management identified, the overall adequacy and effectiveness of the Company’s legal, regulatory and ethical compliance programs.
| 92 | 2024 Proxy Statement |
During 2021,2023, the Audit Committee also discussed with the Company’s independent auditors the auditing standard report requiring external auditors to include a discussion of critical audit matters (“CAMs”) in their audit report. During those discussions, the independent auditors indicated their determination that the Company’s inventory valuation and the impact of its LIFO costing methodology on the valuation would again likely be a CAM matter for the Corporation based on the results of the 20212023 audit and expectations for matters to be addressed during the remainder of the audit.
The Audit Committee formally evaluates the performance of the Company’s independent auditors, including the senior audit engagement team members, each year and determines whether to reengage the current independent auditors or consider other audit firms. In doing so, the Audit Committee considers the quality and efficiency of the services the auditors provided, the auditors’ global
|
capabilities, the auditors’ technical expertise, tenure as the Company’s independent auditors, knowledge of the Company’s global operations and industry and reputation for integrity and competence in the fields of accounting and auditing. The Audit Committee also reviews the process that the external auditing firm uses to monitor its independence. Based on this evaluation, the Audit Committee decided to engage Ernst & Young LLP (“E&Y”) as our independent auditors for the year ended December 31, 2022.2024. Although the Audit Committee has the sole authority to appoint the independent auditors, the Audit Committee will continue its long-standing practice of recommending that the Board ask the stockholders, at their Annual Meeting, to ratify the appointment of the independent auditors (see Proposal IV)III).
The Audit Committee is directly responsible for appointing, compensating, retaining and overseeing the work of MRC Global’s independent registered public accounting firm, including reviewing and evaluating the performance of the lead audit partner responsible for the Company’s audit, overseeing the required five-year rotation of the lead audit partner and reviewing and considering the selection of the new lead audit partner. E&Y’s current lead audit partner’s five-year rotation will be completewas completed with the 2022 year-end audit. In anticipation of the need for aThe new lead audit partner in the fall of 2021 the Audit Committee, its chair and management provided input to E&Y about MRC Global priorities, discussed candidate qualifications, interviewed potential candidates put forth by E&Y and selected a new lead audit partner to begin as the lead audit partner for the 2023 audit. During 2022, the newly selected lead audit partner will shadow the currently serving lead audit partner through the discourse ofbegan his duties with respect to MRC Global in preparation for his term beginningrotation in 2023. E&Y has served as the Company’s independent registered public accounting firm continuously since 2007.
Management has reviewed and discussed the audited financial statements in the Company’s Annual Report on Form 10-K with the Audit Committee including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant accounting judgments and estimates and the clarity of disclosures in the financial statements. In addressing the quality of management’s accounting judgments, members of the Audit Committee asked for management’s representations and reviewed certifications that the chief executive officer and the chief financial officer prepared that the unaudited quarterly and audited consolidated financial statements of the Company fairly present, in all material respects, the financial condition, results of operations and cash flows of the Company, and have expressed to both management and the independent auditors their general preference for appropriate policies when a range of accounting options is available.
In its meetings with representatives of the independent auditors, the Audit Committee discussed those matters required to be discussed by the applicable requirements of the rules of the Public Company Accounting Oversight Board (the “PCAOB”), including the matters required to be discussed by Auditing Standard No. 1301, Communication with Audit Committees (AS1301). The Audit Committee received the written disclosures and the letter from the independent auditors required by applicable requirements of the PCAOB regarding the independent auditors’ communication with the Audit Committee concerning independence and has discussed with the independent auditors their independence. The Audit Committee considered with the independent auditors whether the provision of non-audit services they provided to the Company during 20212023 was compatible with their independence.
In performing all of these functions, the Audit Committee acts in an oversight capacity. The Audit Committee reviews the Company’s quarterly and annual reports on Form 10-Q and Form 10-K, respectively, prior to filing with the SEC. In its oversight role, the Audit Committee relies on the work and assurances of the Company’s management, which has the primary responsibility for establishing and maintaining adequate internal controls over financial reporting and for preparing the financial statements, and other reports, and of the independent auditors, who are engaged to audit and report
| 93 | 2024 Proxy Statement |
on the consolidated financial statements of the Company and subsidiaries and the effectiveness of the Company’s internal controls over financial reporting. The Audit Committee also relies upon the IA Firm in performing the internal audit function of testing internal controls over financial reporting.
|
In reliance on these reviews and discussions, and the reports of the independent auditors, the Audit Committee has recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021,2023, for filing with the SEC.
Barbara J. Duganier,Ronald L. Jadin, Chair
Deborah G. Adams
Leonard M. Anthony
Ronald L. JadinBarbara J. Duganier
Dr. Cornelis A. LinseAnne McEntee
(Mr. Hager, who joined the Board in March 2024, did not sign as he was not a member of the Audit Committee at the time of the report. The Board has determined that Mr. Hager is “financially literate” as defined by SEC rules and regulations.)
Principal Accounting Fees and Services
The following table presents by category of service the total fees for services rendered by E&Y during the fiscal years ended December 31, 2021,2023, and 2020.2022.
Year Ended December 31 (Dollars in thousands) | Year Ended December 31 (Dollars in thousands) | |||||||
2021
|
2020
|
2023
|
2022
| |||||
Audit Fees (1) |
$1,973 |
$2,237 |
$2,397
|
$1,982
| ||||
Audit Related Fees (2) |
71 |
48 |
—
|
43
| ||||
Tax Compliance Fees |
124 |
104 |
190
|
134
| ||||
Tax Advisory Fees (3) |
163 |
297 |
240
|
282
| ||||
All Other Fees (4) |
20 |
8 |
—
|
20
| ||||
|
|
|
| |||||
$ 2,351 |
$2,694 |
$2,827
|
$2,461
| |||||
|
|
|
| |||||
| (1) | Includes fees and expenses related to the audit of the Company’s annual consolidated financial statements, internal controls over financial reporting, statutory audit services required internationally and reviews of the Company’s quarterly financial statements. The increase in 2023 audit fees was primarily related to an annual inflationary increase in fees, timing of payments and an agreed upon increase in audit hours for the year. |
| (2) | Includes fees for the audit of the Company’s retirement plan and other assurance and related services with respect to the audit or review of the Company’s financial statements, which are not reported under Audit Fees. |
| (3) | Includes fees for planning and advice with respect to various domestic and foreign corporate tax matters. |
| (4) | Miscellaneous out-of-pocket expenditures in connection with services. |
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Auditors
The Audit Committee is responsible for appointing, setting compensation for and overseeing the work of Ernst & Young LLP (E&Y), our independent registered public accounting firm, based upon the quality and efficiency of services provided by E&Y, their global capabilities, and their knowledge of and expertise concerning our operations. The Audit Committee has established a policy regarding pre-approval of all audit and non-audit services provided by our independent registered public accounting firm.
| 94 | 2024 Proxy Statement |
On an ongoing basis, our management presents specific projects and categories of service to the Audit Committee to request advance approval. The Audit Committee reviews those requests and advises management if the Audit Committee approves the engagement of E&Y. On a periodic basis, the actual spending for these projects and services compared to the approved amounts is reported to the Audit Committee. The Audit Committee may also delegate the authority to pre-approve audit and permitted non-audit services, excluding services related to the Company’s internal control over financial
|
reporting, to the chairmanchair of the Audit Committee; provided that any pre-approvals are reported to the Audit Committee at a subsequent Audit Committee meeting. In 20202022 and 2021,2023, the Audit Committee approved all of E&Y’s services.
The Audit Committee’s pre-approval policy with respect to audit and non-audit services is an attachment to the Audit Committee Charter, which is available on our website at www.mrcglobal.com.
| 95 |
PROPOSAL IV:III: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for selecting our independent, registered public accounting firm. At a meeting held on February 7, 2022,6, 2024, the Audit Committee appointed Ernst & Young LLP (E&Y) as the independent auditors to audit our financial statements for calendar year 2022.2024. A representative of E&Y will attend the Annual Meeting and will be available to respond to appropriate questions and will have an opportunity to make a statement if they desire to do so. Stockholder approval of the appointment of E&Y is not required, but the Audit Committee and the Board are submitting the selection of E&Y for ratification to obtain our stockholders’ views. If a majority of the stockholders do not ratify the appointment of E&Y, the Audit Committee and the Board will consider the voting results and evaluate whether to select a different independent auditor.
To be approved, this proposal must be approved by a majority of the votes cast by the stockholders present virtually or represented by proxy, meaning that the votes cast by the stockholders “FOR” the approval of the proposal must exceed the number of votes cast “AGAINST” the approval of the proposal. Abstentions from voting on this proposal and broker non-votes will not be treated as votes cast and, therefore, will have no effect on the outcome of this proposal.
THEOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF ERNST & YOUNG LLP AS OUR INDEPENDENT REGISTERED ACCOUNTING FIRM FOR 2022.2024.
| 96 |
PROPOSAL IV: AMEND THE CORPORATION’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO REFLECT NEW DELAWARE LAW PROVISIONS REGARDING OFFICER EXCULPATION
The State of Delaware, which is the Company’s state of incorporation, enacted legislation that enables Delaware companies to limit the liability of certain of their officers in limited circumstances. In light of this update, we are proposing to amend the Company’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) to add a provision exculpating certain of the Company’s officers from liability in specific circumstances, as permitted by Delaware law. The new Delaware legislation only permits, and our proposed amendment would only permit, exculpation for direct claims (as opposed to derivative claims made by new stockholders on behalf of the corporation) and would not apply to breaches of the duty of loyalty, acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, or any transaction in which the officer derived an improper personal benefit. The rationale for so limiting the scope of liability is to strike a balance between stockholders’ interest in accountability and their interest in the Company being able to attract and retain quality officers to work on its behalf.
The ESG & Enterprise Risk Committee believes that there is a need for directors and officers to remain free of the risk of financial ruin as a result of an unintentional misstep. Further, the ESG & Enterprise Risk Committee noted that the proposed provision would not negatively impact stockholder rights. Therefore, taking into account the narrow class and type of claims for which officers’ liability would be exculpated, and the benefits the ESG & Enterprise Risk Committee believes would accrue to the Corporation and its stockholders in the form of an enhanced ability to attract and retain talented officers, the ESG & Enterprise Risk Committee recommended to the Board an amendment to the Certificate of Incorporation to provide such exculpation to the extent permitted by Delaware law. Based on this recommendation, the Board determined that it is in the best interests of the Company and our stockholders to amend the Certificate of Incorporation as described herein.
Accordingly, we ask our stockholders to vote on the following resolution (the “Officer Exculpation Amendment’):
“RESOLVED, that the Corporation’s stockholders approve an amendment to the Corporation’s amended and restated certificate of incorporation to add, amend and replace Article VII in its entirety, which shall read as follows:
ARTICLE VII
Section 7.1 Limited Liability of Directors and Officers. A director or officer of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability:
| (a) | for any breach of the director’s or officer’s respective duty of loyalty to the Corporation or its stockholders; |
| (b) | for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |
| (c) | of directors under Section 174 of the DGCL; or |
| (d) | for any transaction from which the director or officer derived an improper personal benefit. |
If the DGCL is amended to authorize corporation action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended. Any repeal or modification of this Article VII by the stockholders of the Corporation or otherwise shall not adversely affect any right or protection of a director or office of the Corporation existing at the time of such repeal or modification.
| 97 | 2024 Proxy Statement |
The affirmative vote of holders of at least seventy-five percent (75%) of the voting power of issued and outstanding stock of the Company entitled to vote thereon, voting together as a single class, is required under the Certificate of Incorporation to approve the Officer Exculpation Amendment. For Proposal IV, a failure to vote, a broker non-vote or an abstention will have the same effect as a vote “AGAINST” the proposal.
OUR BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE PROPOSAL TO AMEND THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO INCLUDE THE OFFICER EXCULPATION AMENDMENT.
| 98 | 2024 Proxy Statement |
SUSTAINABILITY AND SOCIAL RESPONSIBILITY
Our environmentalsustainability and social responsibility focus is an integral part of our business and helps us identify goals as we pursue business opportunities and manage our Company’s risk. Our focus, which is illustrated below by our Company’s core values, enables us to better serve our customers, communities, stakeholders and employees and deliver long-term value through sustainable results.
Safety Leadership
| Customer Satisfaction
| |||||
Our number one focus is the safety of our employees, customers and those with whom we interact. Safety is both a core value and strategy, and safety leadership is part of our culture.
| Our customers are at the center of everything we do, helping us to shape our strategic priorities. | |||||
Business Ethics
| Operational Excellence
| |||||
| As a global leader, we always strive to operate with integrity and responsibility in all aspects of our operations. | Our operational excellence strategy helps us to continually find better and more efficient ways to conduct business and provide the best services at an affordable cost for our customers.
| |||||
Employee Development
| Financial Performance
| |||||
We seek to maintain an environment that is open and diverse, provides equal opportunity and is inclusive and where our people feel valued, included and accountable. We want each person to be developed to his or her fullest potential.
| We know that by being true to our values, we will continue to achieve our goals, positively impact our industry and the communities where we live and work and deliver long-term value to our stockholders.
| |||||
Community and Charity Development
| Teamwork
| |||||
| We support our communities through MRC Global Cares initiatives and our ESG Committee, as detailed below. | MRC Global recognizes that our people are our greatest strength. We are a global team dedicated to our customers, our communities and each other.
| |||||
Our core values drive environmental, social responsibility and governance (“ESG”)(ESG) actions for all of our stakeholders and include:
Safety Performance
| ● |
|
| ● | 2023: The Company’s |
|
Compensation of our NEOs and other members of our executive management team is based in part on the Company attaining certain safety performance goals.
Sustainable Environment
| ● | As the world, including many of the Company’s major oil and gas customers, transitions from fossil fuels to fuels with lower carbon emissions, the Company is continuously reviewing its product and customer mix to enable the Company and its customers to facilitate this transition. We are participating in significant new projects involving |
|
| ● |
|
| ● |
|
| ● |
|
We have aligned our GHG emissions reporting with the GHG Protocol and continued to improve our data processes to better track, report and manage Scope 1 and 2 emissions as well as water usage. |
Supplier Quality Process (Processes, Policies & Audits)
| ● | We utilize supplier audits to increase ethical behavior in our supply chain, avoid improper labor practices and encourage sustainability. This diligence includes greater focus on climate change and fair labor factors for greater visibility into our supplier’s sustainability maturity. |
Human Capital Management
| ● | We |
| ● | We implemented a modern employee engagement survey with over 83% participation, providing actionable feedback for improved engagement. |
| ● | We pay our hourly employees in the U.S. at least $15 per hour beginning in their first year of employment and in other countries we pay prevailing wages for our |
Diversity and Inclusion
| ● | Immediately following our |
| ● | At the end of |
The Company understands the importance of proper management of ESGsustainability and social responsibility factors and how critical meeting the high ESG standards in these areas are for MRC Global’s operations. Proper management of ESGthese matters is of long-term significance to our stockholders, employees and communities. Our Board understands and appreciates that conscientious management of ESGthese factors leads to better returns for our stockholders. Therefore, the Board has tasked its ESG & Enterprise Risk Committee with assisting the full Board in its oversight of the Company’s efforts on ESGenvironmental and sustainability matters and reporting to the entire Board on a quarterly basis.
The Company’s management has formed an ESG Management Committee.Our ESG Management Committee is spearheaded by our VPSVP – ESGSustainability and sponsored by our EVP – Corporate Affairs and is comprised of executives representing various functions within our Company including operations, finance, quality, safety, corporate services, marketing, human resources, investor relations and valve supply chain management leaders. We believe that proper management of environmental, social and governance (ESG)ESG factors ultimately leads to greater returns and contributes to more engaged employees, resulting in a more effective organization. The ESG Management Committee identifies and discusses ESG issues material to MRC Global’s business, including our human capital management practices and product offerings. The EVPSVP – Corporate Affairs and VP – ESGSustainability reports quarterly to our Board of Directors through the ESG & Enterprise Risk Committee and oversees disclosure to investors and stakeholders through our annual ESG Report, filings with the SEC and on our Company’s website. The ESG & Enterprise Risk Committee of the Board is comprised of non-executive directors providing oversight of governance, enterprise risk management and ESG matters. Members of the ESG & Enterprise Risk Committee assist the full Board in its oversight of the Company’s efforts on ESG matters and report to the Board on a quarterly basis.
| 100 | 2024 Proxy Statement |
Please see our 20212023 Environmental, Social Responsibility & Governance Report on our website at https://www.mrcglobal.com, by clicking on “Company”“ESG”, then “Corporate Social Responsibility”“2023 ESG Report”. Our 20222024 ESG report will also be published at this link when available.
|
MRC Global Cares
In 2021,2023, MRC Global signed oncontinued as a platform sponsor with the American Heart Association. We are proud that our Company and employees are supporting an organization fighting against the world’s leading cause of death. Our goal is to advance health, safety and well-being for our employees, customers and communities, and this sponsorship formalizes that commitment.
In addition, MRC Global has supported numerous charities and causes in each of the communities in which we operate.
|
The Compensation & Human Capital Committee Report on Executive Compensation and the Report of the Audit Committee are not deemed filed with the SEC and shall not be deemed incorporated by reference into any prior or future filings that MRC Global makes under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that MRC Global specifically incorporates this information by reference. In addition, the website addresses contained in this Proxy Statement are intended to provide inactive, textual references only. The information on these websites is not part of this Proxy Statement.
The Board has not received valid notice of any other business that will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, all proxies that have been properly submitted will be voted in respect thereof as the proxyholders deem advisable.
It is important that proxies be returned promptly to ensure that your shares are represented at the Annual Meeting. Stockholders are urged to submit your proxy or voting instructions as soon as possible electronically over the internet, by telephone or, if you received a printed copy of the proxy materials, by completing, dating, signing and returning the enclosed proxy card or voting instruction form.
ACCESS TO REPORTS AND OTHER INFORMATION
We file our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements and other documents electronically with the SEC under the Exchange Act. You may obtain such reports from the SEC’s website atwww.sec.gov.
Our website is www.mrcglobal.com. We make available free of charge through the Investor Relations tab of our website our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Our Corporate Governance Guidelines, Code of Ethics for Senior Officers, Board committee charters, and the MRC Global Code of Ethics are also available on our website. We will provide, free of charge, a copy of any of our corporate documents listed above (i) upon written request to our Corporate Secretary at 1301 McKinney Street, Suite 2300, Houston, Texas 77010, or (ii) by emaile-mail request to our Corporate Secretary at gc@mrcglobal.com, or (iii) by calling toll free at 877-294-7574.
Houston, Texas
March 23, 2022, 2024
|
Appendix A
AMENDMENTPRELIMINARY COPY SUBJECT TO THE
MRC GLOBAL INC. 2011 OMNIBUS INCENTIVE PLAN
COMPLETION c/o Corporate Election Services P. O. Box 1150 Pittsburgh, PA 15230 VOTE B Y INTERNET Please have your WHITE universal proxy card available when you access the website www.cesvote.com and follow the simple directions that will be presented to you. VOTE B Y MA I L Please mark, sign and date your WHITE universal proxy card and return it in the postage-paid envelope provided or return it to: Corporate Election Services, P.O. Box 1150, Pittsburgh, PA 15230. IMPORTANT: PLEASE COMPLETE, SIGN, DATE AND MAIL THIS AMENDMENT is madeWHITE UNIVERSAL PROXY CARD TODAY! Control Number If submitting your WHITE universal proxy by mail, please sign and date the card below and fold and detach card at perforation before mailing. MRC Global Inc. (the “Company”),
WITNESSETH:
WHEREAS, the Company sponsors and maintains the plan now known as the “MRC Global Inc. 2011 Omnibus Incentive Plan”, as amended (the “Plan”);
WHEREAS, unless the context clearly requires the contrary, capitalized terms that this Amendment uses that this Amendment does not define shall have the meaning that the Plan ascribes to those terms; and references to Articles and Sections mean the articles and sections of the Plan;
WHEREAS, Section 20.1(a) of the Plan authorizes the amendment of the Plan at any time and Section 20.1(b) of the Plan provides that no amendment of the Plan shall be made without shareholder approval if shareholder approval is required pursuant to rules promulgated by any stock exchange on which Shares are listed;
WHEREAS, as amended, there were 9,897,475 Shares reserved and subject to issuance pursuant to the terms of the Plan;
WHEREAS, the Board and the Compensation & Human Capital Committee have determined that the Plan should be amended (i) to extend the duration of the Plan; and (ii) to increase the number of Shares by 3,000,000 Shares so that the number of Shares that may be issued under the Plan is increased to a total of 12,897,475 Shares.
NOW, THEREFORE, the Board and the Compensation & Human Capital Committee agree that, effective as set forth below, the Plan is amended as follows:
1. Effective February 8, 2022, Section 1.3 of the Plan is hereby amended and restated in its entirety to provide as follows:
1.3.Effective Date; Duration of this Plan. The effective date of the Plan shall be April 9, 2012 (the “Effective Date”). The Plan shall continue indefinitely after the Effective Date until it is terminated pursuant to Section 20.1(a). After this Plan is terminated, no Awards may be granted but Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and this Plan’s terms and conditions.
If the shareholders of the Company do not approve this amendment, the Plan will terminate.
2. Effective as of the date the shareholders of the Company approve the following amendment, and contingent upon the shareholders’ approval of the amendment, Section 4.1 of the Plan is hereby amended and restated in its entirety to provide as follows:
4.1.Number of Shares Authorized and Available for Awards. Subject to adjustment as provided under the Plan and the following provisions of this Article 4, the total number of Shares that are available for Awards under the Plan shall be equal to 12,897,475. These Shares may be authorized and unissued Shares or treasury Shares or any combination of the foregoing, as the Board or Committee may determine from time to time. Any of the authorized Shares may be used for any type of Award under the Plan, and any or all of the Shares may be allocated to Incentive Stock Options.
3. Effective as of the date the shareholders of the Company approve the preceding amendments, the name of the plan is changed to “MRC Global Inc. Omnibus Incentive Plan” and the references to the
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name of the Plan on the cover page and in the heading on page two of the Plan are revised accordingly and Sections 1.1 and 2.46 of the Plan are hereby amended and restated, respectively, in their entirety to provide as follows:
1.1.Establishment. MRC Global Inc. (formerly McJunkin Red Man Holding Corporation), a Delaware corporation, establishes an incentive compensation plan to be known as the MRC Global Inc. Omnibus Incentive Plan (hereinafter referred to as the “Plan”), as set forth in this document. This Plan permits the grant of Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units, Cash-Based Awards and Other Stock-Based Awards.
2.46 “Plan” means this MRC Global Inc. Omnibus Incentive Plan, as the same may be amended from time to time.
Approved by the Compensation & Human Capital Committee of the Board of Directors On February 7, 2022
Approved by the Board of Directors On February 8, 2022
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IMPORTANT ANNUAL MEETING INFORMATION
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Annual Meeting Proxy Card
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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Change of Address – Please print new address below.
The signer hereby revokes all proxies previously given by the signer to vote at said Annual Meeting or any adjournments
thereof. Note: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney,
executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title as such.
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MRC GLOBAL INC.
Virtual Annual Meeting of Stockholders
via the Internet at https://www.meetnow.global/MA9SWK7
May 5, 2022
10:00 a.m. Houston, Texas time
Important notice regarding the internet availability of
proxy materials for the Annual Meeting of Stockholders.
The 2022 Proxy Statement and Annual Report are available at:
www.edocumentview.com/MRC
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Proxy – MRC GLOBAL INC.
WHITE UNIVERSAL PROXY CARD Proxy Solicited on Behalf of the Board of Directors of MRC Global Inc. for the Virtual Annual Meeting of Stockholders on May 5, 2022.
["], 2024. The stockholder of MRC Global Inc. (“MRC Global”)(MRC Global) referenced on the reverse side hereofbelow hereby appoints DANIEL J. CHURAY and KELLY YOUNGBLOOD, jointly and severally with full power of substitution, as proxies to represent and to vote all of the shares of MRC GLOBAL’sGLOBALs Stock the stockholder referenced on the reverse side hereofbelow is entitled to vote at the Annual Meeting of Stockholders of MRC Global Inc. to be held on the 5th["] day of May, 2022,["], 2024, and at any and all adjournments thereof, on all matters coming before said meeting.
THIS PROXY, WHEN PROPERLY EXECUTED AND TIMELY RETURNED, WILL BE VOTED AS INDICATED. IF NO VOTING DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL LISTED COMPANY NOMINEES AND IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS ON THE OTHER MATTERS REFERENCED ON THE REVERSE SIDE HEREOF.
PLEASE SEE THE REVERSE SIDE FOR VOTING INSTRUCTIONS.
If you vote by telephone or the internet, please DO NOT mail back this proxy card.
THANK YOU FOR VOTING Signature Date Title or Authority Signature if Held Jointly NOTE: Please sign exactly as 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. (Continued and to be marked on the other side)PRELIMINARY COPY SUBJECT TO COMPLETION c/o Corporate Election Services P. O. Box 1150 Pittsburgh, PA 15230 VOTE B Y INTERNET Please have your WHITE universal proxy card available when you access the website www.cesvote.com and follow the simple directions that will be presented to you. VOTE B Y MA I L Please mark, sign and date your WHITE universal proxy card and return it in the postage-paid envelope provided or return it to: Corporate Election Services, P.O. Box 1150, Pittsburgh, PA 15230. IMPORTANT: PLEASE COMPLETE, SIGN, DATE AND MAIL THIS WHITE UNIVERSAL PROXY CARD TODAY! Control Number If submitting your WHITE universal proxy by mail, please sign and date the card below and fold and detach card at perforation before mailing. MRC Global Inc. WHITE UNIVERSAL PROXY CARD Proxy Solicited on Behalf of the Board of Directors of MRC Global Inc. for the Virtual Annual Meeting of Stockholders on May 7, 2024. The stockholder of MRC Global Inc. (MRC Global) referenced below hereby appoints DANIEL J. CHURAY and KELLY YOUNGBLOOD, jointly and severally with full power of substitution, as proxies to represent and to vote all of the shares of MRC GLOBALs Stock the stockholder referenced below is entitled to vote at the Annual Meeting of Stockholders of MRC Global Inc. to be held on the ["] day of ["], 2024, and at any and all adjournments thereof, on all matters coming before said meeting. THIS PROXY, WHEN PROPERLY EXECUTED AND TIMELY RETURNED, WILL BE VOTED AS INDICATED. IF NO VOTING DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL LISTED COMPANY NOMINEES AND IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS ON THE OTHER MATTERS REFERENCED ON THE REVERSE SIDE HEREOF. PLEASE SEE THE REVERSE SIDE FOR VOTING INSTRUCTIONS. If you vote by telephone or the internet, please DO NOT mail back this proxy card. THANK YOU FOR VOTING Signature Date Title or Authority Signature if Held Jointly NOTE: Please sign exactly as 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. (Continued and to be marked on the other side)
MRC GLOBAL INC. Virtual Annual Meeting of Stockholders via the Internet at ["] ["], 2024 ["] Houston, Texas time You may register to attend the virtual meeting by visiting ["]. To register for the virtual meeting, you must have your control number that is printed on the reverse side of this form. Important notice regarding the internet availability of proxy materials for the Annual Meeting of Stockholders. The 2024 Proxy Statement and Annual Report are available at: www.edocumentview.com/MRC If you have any questions, require assistance in voting your WHITE universal proxy card, or need additional copies of the Companys proxy materials, please contact our proxy solicitor: M O R R O W S O D A L I 430 Park Ave., 14th Floor New York, New York 10022 or Call Collect (203) 658-9400 Email: MRC@info.morrowsodali.com TO SUBMIT YOUR WHITE UNIVERSAL PROXY BY MAIL, DETACH ALONG THE PERFORATION, MARK, SIGN, DATE AND RETURN THE BOTTOM PORTION PROMPTLY USING THE ENCLOSED ENVELOPE. MRC Global Inc. WHITE Universal Proxy Card The Board of Directors recommends a vote FOR ONLY each of the following 8 Company nominees listed in Item 1 (A-H) below. 1. Election of eight Directors for a term to end as of the 2025 annual meeting. You may mark instructions with respect to any or all of the nominees, however you should mark a vote FOR only eight nominees in total. If you vote FOR more than eight nominees, all of your votes on Proposal 1 will be invalid and will not be counted. You are permitted to vote for fewer than eight nominees. If you vote FOR fewer than eight nominees, your shares will only be voted FOR those nominees you mark. Company Nominees: The Board of Directors of the Company recommends you vote FOR only the following eight Company nominees 1A through 1H: FOR WITHHOLD (1A) Deborah G. Adams (1B) Leonard M. Anthony (1C) George John Damiris (1D) David A. Hager (1E) Ronald L. Jadin (1F) Dr. Anne McEntee (1G) Robert J. Saltiel, Jr. (1H) Robert L. Wood Engine Capital Nominees Opposed by the Company: The Board of Directors of the Company recommends you vote WITHHOLD for the following two Engine Capital nominees 1I through 1J: FOR WITHHOLD (1I) Bradley T. Favreau (1J) Daniel B. Silvers The Board of Directors recommends a vote FOR Proposals 2, 3 and 4. 2. Approve a non-binding advisory resolution approving the Companys named executive officer compensation. FOR AGAINST ABSTAIN 3. Ratification of Ernst & Young LLP as our independent registered public accounting firm for 2024. FOR AGAINST ABSTAIN 4. Approve a proposal to amend the Corporations Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation. FOR AGAINST ABSTAIN NOTE: In their discretion, the proxies are authorized to vote on such other matters as may properly come before the Annual Meeting or any adjournment or postponement thereof to the extent permitted by Rule 14a-4(c) of the Exchange Act. Continued and to be signed on the reverse side MRC GLOBAL INC. Virtual Annual Meeting of Stockholders via the Internet at https://www.cesonlineservices.com/mrc24 vm May 7, 2024 10:00 a.m. Houston, Texas time You may register to attend the virtual meeting by visiting https://www.cesonlineservices.com/mrc24_vm. To register for the virtual meeting, you must have your control number that is printed on the reverse side of this form. Important notice regarding the internet availability of proxy materials for the Annual Meeting of Stockholders. The 2024 Proxy Statement and Annual Report are available at: www.edocumentview.com/MRC If you have any questions, require assistance in voting your WHITE universal proxy card, or need additional copies of the Companys proxy materials, please contact our proxy solicitor: M O R R O W S O D A L I 430 Park Ave., 14th Floor New York, New York 10022 or Call Collect (203) 658-9400 Email: MRC@info.morrowsodali.com TO SUBMIT YOUR WHITE UNIVERSAL PROXY BY MAIL, DETACH ALONG THE PERFORATION, MARK, SIGN, DATE AND RETURN THE BOTTOM PORTION PROMPTLY USING THE ENCLOSED ENVELOPE. MRC Global Inc. WHITE Universal Proxy Card The Board of Directors recommends a vote FOR ONLY each of the following 8 Company nominees listed in Item 1 (A-H) below. 1. Election of eight Directors for a term to end as of the 2025 annual meeting. You may mark instructions with respect to any or all of the nominees, however you should mark a vote FOR only eight nominees in total. If you vote FOR more than eight nominees, all of your votes on Proposal 1 will be invalid and will not be counted. You are permitted to vote for fewer than eight nominees. If you vote FOR fewer than eight nominees, your shares will only be voted FOR those nominees you mark. Company Nominees: The Board of Directors of the Company recommends you vote FOR only the following eight Company nominees 1A through 1H: FOR WITHHOLD (1A) Deborah G. Adams (1B) Leonard M. Anthony (1C) George John Damiris (1D) David A. Hager (1E) Ronald L. Jadin (1F) Dr. Anne McEntee (1G) Robert J. Saltiel, Jr. (1H) Robert L. Wood Engine Capital Nominees Opposed by the Company: The Board of Directors of the Company recommends you vote WITHHOLD for the following two Engine Capital nominees 1I through 1J: FOR WITHHOLD (1I) Bradley T. Favreau (1J) Daniel B. Silvers The Board of Directors recommends a vote FOR Proposals 2, 3 and 4. 2. Approve a non-binding advisory resolution approving the Companys named executive officer compensation. FOR AGAINST ABSTAIN 3. Ratification of Ernst & Young LLP as our independent registered public accounting firm for 2024. FOR AGAINST ABSTAIN 4. Approve a proposal to amend the Corporations Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation. FOR AGAINST ABSTAIN NOTE: In their discretion, the proxies are authorized to vote on such other matters as may properly come before the Annual Meeting or any adjournment or postponement thereof to the extent permitted by Rule 14a-4(c) of the Exchange Act. Continued and to be signed on the reverse side MRC GLOBAL INC. Virtual Annual Meeting of Stockholders via the Internet at ["] ["], 2024 ["] Houston, Texas time You may register to attend the virtual meeting by visiting ["]. To register for the virtual meeting, you must have your control number that is printed on the reverse side of this form. Important notice regarding the internet availability of proxy materials for the Annual Meeting of Stockholders. The 2024 Proxy Statement and Annual Report are available at: www.viewourmaterial.com/mrc If you have any questions, require assistance in voting your WHITE universal proxy card, or need additional copies of the Companys proxy materials, please contact our proxy solicitor: M O R R O W S O D A L I 430 Park Ave., 14th Floor New York, New York 10022 or Call Collect (203) 658-9400 Email: MRC@info.morrowsodali.com TO SUBMIT YOUR WHITE UNIVERSAL PROXY BY MAIL, DETACH ALONG THE PERFORATION, MARK, SIGN, DATE AND RETURN THE BOTTOM PORTION PROMPTLY USING THE ENCLOSED ENVELOPE. MRC Global Inc. WHITE Universal Proxy Card The Board of Directors recommends a vote FOR ONLY each of the following 8 Company nominees listed in Item 1 (A-H) below. 1. Election of eight Directors for a term to end as of the 2025 annual meeting. You may mark instructions with respect to any or all of the nominees, however you should mark a vote FOR only eight nominees in total. If you vote FOR more than eight nominees, all of your votes on Proposal 1 will be invalid and will not be counted. You are permitted to vote for fewer than eight nominees. If you vote FOR fewer than eight nominees, your shares will only be voted FOR those nominees you mark. Company Nominees: The Board of Directors of the Company recommends you vote FOR only the following eight Company nominees 1A through 1H: FOR WITHHOLD (1A) Deborah G. Adams (1B) Leonard M. Anthony (1C) George John Damiris (1D) David A. Hager (1E) Ronald L. Jadin (1F) Dr. Anne McEntee (1G) Robert J. Saltiel, Jr. (1H) Robert L. Wood Engine Capital Nominees Opposed by the Company: The Board of Directors of the Company recommends you vote WITHHOLD for the following two Engine Capital nominees 1I through 1J: FOR WITHHOLD (1I) Bradley T. Favreau (1J) Daniel B. Silvers The Board of Directors recommends a vote FOR Proposals 2, 3 and 4. 2. Approve a non-binding advisory resolution approving the Companys named executive officer compensation. FOR AGAINST ABSTAIN 3. Ratification of Ernst & Young LLP as our independent registered public accounting firm for 2024. FOR AGAINST ABSTAIN 4. Approve a proposal to amend the Corporations Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation. FOR AGAINST ABSTAIN NOTE: In their discretion, the proxies are authorized to vote on such other matters as may properly come before the Annual Meeting or any adjournment or postponement thereof to the extent permitted by Rule 14a-4(c) of the Exchange Act. Continued and to be signed on the reverse side
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