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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A 

(RULE 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. _____)

Check the appropriate box: 

Payment of Filing Fee (Check the appropriate box):

Notice of Annual Meeting of ShareholdersShareholders

WHEN

May 15, 201817, 2021

3:11:00 p.m.a.m. Eastern Time

WHERE

Overlook III Conference CenterInterface, Inc.

2859 Paces Ferry Road1280 West Peachtree Street NW

Atlanta, Georgia 3033930309

CHANGES IN THE DATE, TIME OR LOCATION OF THE MEETING

On March 13, 2020, the staff of the Division of Corporation Finance and the Division of Investment Management of the U.S. Securities and Exchange Commission (“SEC”) released Staff Guidance to assist issuers’ compliance with federal proxy and annual meeting rules given the public health and economic effects of the coronavirus (COVID-19). Specifically, the guidance covers the procedure for changing the date, time, or location of an annual meeting; the process for holding virtual shareholder meetings; and guidance for shareholders that are unable to attend annual meetings to present proposals. In the event the Company changes the date, time or location of the Annual Meeting pursuant to the guidance, the Company will inform shareholders in a manner as prescribed by the guidance (or any subsequent updates thereto). If you plan to attend our meeting in person, we recommend you check our website (www.interface.com) the week before to see if we have provided any update on the meeting logistics.

ITEMS OF BUSINESS

RECORD DATE

The Board of Directors set March 9, 201819, 2021 as the record date for the meeting. This means that only shareholders of record at the close of business on March 9, 201819, 2021 will be entitled to receive notice of and to vote at the meeting or any adjournments of the meeting.

April 2, 2018

7, 2021

PLEASE PROMPTLY COMPLETE AND RETURN A PROXY CARD

OR USE TELEPHONE OR INTERNET VOTING PRIOR TO THE MEETING SO THAT YOUR VOTE

MAY BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.

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TABLE OF CONTENTS

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PROXY STATEMENT SUMMARY

The Board of Directors ("Board") of Interface, Inc. (the "Company," "we," "us," "our" or "Interface") is furnishing this Proxy Statement and soliciting proxies in connection with the proposals to be voted on at the Interface, Inc. 20182021 Annual Meeting of Shareholders ("Annual Meeting") and any postponements or adjournments thereof. This summary highlights certain information contained in this Proxy Statement, but does not contain all of the information you should consider when voting your shares. Please read the entire Proxy Statement carefully before voting.

In the event the Company changes the date, time or location of the Annual Meeting pursuant to the guidance issued by the SEC discussed above, the Company will inform shareholders in a manner as prescribed by such guidance.

Voting Itemsand and Vote Recommendation

Vote in Advance of the Meeting				Vote in Person
Internet	Telephone	Mail
Using the Internet and voting at the website listed on the proxy card and the Notice.	Using the toll-free phone number listed on the proxy card and the Notice.	Signing, dating and mailing a proxy card.		See page 53 for details on attending the Annual Meeting in person.

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Our Company

Who We Are

We are a worldwide leader in design, production and sales of modular carpet, also knowncommercial flooring such as carpet tile, and we recently expanded into modular resilient flooring with a new line of luxury vinyl tile.tile, and rubber tiles and sheet products. Our hardflooring systems help customers create beautiful interior spaces while positively impacting those who use them and soft tiles are designed to work together in an integrated flooring system.our planet. We are committed to sustainability and minimizing our impact on the environment while enhancing shareholder value. This commitment is exemplified by Mission Zeroo®, which represents ourur mission to eliminate any negative impact our companies may have on the environment by the year 2020. Our mission also includes a bold new effort called Climate Take Back™, in which we seek to lead the industry in designing and making products in ways that will maintain a climate fit for life.

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Our Global Sales and Manufacturing Platform

Note: The above figures are percentages of 2017 net sales.

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Our Growth and Value Creation Strategy

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Our Performance

We made significant progress in 2017 toward our ambition to become the world’s most valuable interior products and services company. In addition to the financial highlights shown below, the Compensation Discussion and Analysis section of this Proxy Statement contains important measures of our 2017 financial progress.

(Note: Please see Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures and an explanation of why we believe non-GAAP measures provide useful information to shareholders and the additional purposes for which we use non-GAAP measures.)

NET SALES ($ in millions)		ORGANIC SALES (NON-GAAP) ($ in millions)
GROSS MARGIN (Gross Profit as a % of Net Sales)		SG&A % OF NET SALES (SG&A Expense as a % of Net Sales)

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Our Capital Structure

We believe we have a strong capital structure and the financial resources to deliver on our strategic initiatives.

YEAR END CASH BALANCE ($ in millions)		YEAR END TOTAL DEBT ($ in millions)
YEAR END NET DEBT (NON-GAAP) ($ in millions)		YEAR END NET DEBT / TOTAL CAPITAL (NON-GAAP)

(Note: Total capital is the sum of total debt plus total shareholders’ equity)

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Our Mission

We are a purpose-driven company that is galvanized around a common sustainability mission. In 1994, we commenced a sustainability strategy within our business that we now call Mission Zero, aimed at reducing waste, environmental footprint and costs. This mission also includes our Climate Take Back initiative, in which we seek to lead industry in designing and making products in ways that will maintain a climate fit for life. We believe Interface has for decades been the most environmentally conscious company in the global flooring industry and we remain committed to leading the industry in sustainability, design and innovation.

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Our Global Sales and Manufacturing Platform

Our Growth and Value Creation Strategy

Our Performance

While we made significant progress in 2019 toward our ambition to become the world’s most valuable interior products and services company, our performance in 2020 was negatively impacted by the COVID-19 pandemic, resulting in lower sales and profitability. In addition to the financial data shown below, the Compensation Discussion and Analysis section of this Proxy Statement contains important measures of our 2020 financial performance.

NET SALES ($ in millions)		GROSS PROFIT and ADJUSTED GROSS PROFIT (NON-GAAP)* ($ in millions)
OPERATING INCOME (LOSS) and ADJUSTED OPERATING INCOME (NON-GAAP)* ($ in millions)		DIULTED EPS and ADJUSTED DILUTED EPS (NON-GAAP) *

*Please see Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures and an explanation of why we believe non-GAAP measures provide useful information to shareholders and the additional purposes for which we use non-GAAP measures.

Our Capital Structure

We believe we have a strong capital structure and the financial resources to deliver on our strategic initiatives. During 2020, we generated strong cash flows and reduced our debt, ending the year with total debt of $577 million and net debt of $474 million.

YEAR END TOTAL DEBT ($ in millions)		YEAR END NET DEBT (NON-GAAP)* ($ in millions)
NET INCOME (LOSS) and ADJUSTED EBITDA (NON-GAAP)* ($ in millions)		YEAR END NET DEBT / ADJUSTED EBITDA (NON-GAAP)*

*See Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

Our Corporate Responsibilities – Environmental, Social and Governance

We believe that sound corporate citizenship and environmental sustainability are critical to our long-term success. We are committed to operating in an ethical and sustainable manner that benefits all stakeholders including customers, employees, our communities and our planet. As good corporate citizens, Corporate Responsibility drives the Company’s business strategy. Integrity, environmental stewardship, diversity and inclusion, health and safety of our workforce, the recruitment, development and retention of our workforce, and community engagement are among our top priorities. We regularly consult with stakeholders and third-party experts to develop and improve our social and environmental sustainability initiatives. Through these engagements we have advanced our development of various projects and initiatives. You can learn more about our sustainability commitment and current environmental, social and governance (“ESG”) initiatives on our website at interface.com.  

Our Environmental Sustainability Mission

We are a purpose-driven company that is galvanized around a common environmental sustainability mission. In 1994, we commenced a sustainability strategy within our business that we now call Mission Zero, in which we seek to eliminate any negative impact our Company may have on the environment. In 2016, we went even further by announcing our intent to go from doing no harm to having a positive impact through Climate Take Back, summarized in the graphic below. With this broader initiative, we seek to lead industry in designing and making products in ways that will maintain a climate fit for life. We also have called upon and influenced others to do the same, bringing a voice of aspiration and optimism to global warming.

Interface is a signatory to the UN Global Compact. Our sustainability goals and activities are aligned with the UN Sustainable Development Goals (SDGs). Interface is regularly recognized for our leadership in sustainability, design and innovation. Recent accolades and achievements include:

In 2020, we achieved a substantial milestone in our journey toward becoming a sustainable enterprise. We introduced in the Americas our first ever “cradle-to-gate” carbon negative carpet tile products in three unique styles: Shishu Stitch™, Tokyo Texture™, and Zen Stitch™. These pioneering products, which are part of our Embodied Beauty™ collection, are created with a combination of our new CQuestBioX carpet backing (featuring new bio-based materials and more recycled content), specialty yarns and tufting processes that create a carpet tile with a net negative value of “embodied carbon”. Embodied carbon is the carbon footprint (meaning the global warming potential of emissions of greenhouse gases measured in carbon dioxide equivalents) of a product from raw material creation, growth and extraction (the “cradle”) through processing until it is packaged and ready to be shipped from our factory (the “gate”), thus referred to as “cradle-to-gate” in the life cycle assessment of a product. Embodied carbon is distinct from operational carbon, which refers to the carbon footprint of everything that happens after the product leaves our factory, such as shipment, customer use, and end of life.

In 2018, as part of Climate Take Back, we launched an industry first: every flooring product that we sell globally is carbon neutral across the entire product lifecycle, a program we call Carbon Neutral Floors™.

Measuring Our Progress

Our sustainability mission is made more focused by measuring our progress. Highlights include:In the 25+ years that we have been on our sustainability journey, we have made meaningful progress in eliminating our Company’s negative impact on the environment. Our EcoMetrics™ measurement system is designed to quantify the “metabolism” of our operations. In other words, measuring how much we take, in terms of materials and energy, how much we make, in terms of product, and how much we waste, in terms of wastes and emissions. Some of our sustainability highlights are described below. Additional detailed information including Total Energy Use and Scope 1 Emissions, and measurements of our progress on sustainability can be found in our Climate Disclosure document located on our corporate website, www.interface.com.

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Our Governance Highlights

Our Board of Directors is committed to maintaining strong corporate governance, which promotes the long-term interests of shareholders, strengthens Board and management accountability, and helps build trust in the Company. The Corporate Governance section of this Proxy Statement describes several aspects of our governance framework, which includes the following highlights.

✓	Annual Election of All Directors	✓	Annual Shareholder Engagement Efforts
✓	Resignation Policy for Directors who Fail to Receive Majority Vote	✓	Stock Ownership Guidelines for Executives and Directors
✓	7 of 8 CurrentDirectors are Independent	✓	Prohibition on Pledging and Hedging Company Stock
✓	All Key Committees Comprised Solely of Independent Directors	✓	Code of Business Conduct and Ethics Applicable to Employees and Directors
✓	Executive Sessions of Independent Directors Held Regularly	✓	Annual CEO and Management Succession Planning
✓	Enterprise Risk Management Program Overseen by Audit Committee	✓	Annual Board of Directors Self-Assessment
✓	Lead Independent Director	✓	Annual “Say on Pay” Advisory Vote
✓	Diversity of Experience, Skills and Gender Among Directors	✓	No Poison Pill

 

Our 2017 Stock Price AppreciationSocial Responsibility

 

Interface is a purpose-driven company with a passionate team that shares a unique set of values. Our performance during 2017 delivered substantial shareholder value, as our stock price increased 36% and outperformed bothcore values represent who we are, how we see the Nasdaq composite indexworld, how we treat each other and our self-determined peer group.

Notes:

1.

Chart is based on stock prices from 12/30/16 through 12/29/17.

2.

Self-determined peer group is comprised of the companies listed on page 26, with the exclusion of BE Aerospace, Inc. which was acquired by a third party in April 2017, and data represents an average of the returns of those companies.

external customers and stakeholders, and how we approach our work every day. These core values are:

 

 

 

 

 

 

 

In 2020, we established a global diversity, equity and inclusion (“DEI”) task force to develop our long-term DEI strategy. We are seeking input from our employees to identify specific areas of opportunity to enhance DEI at our Company, while also engaging in dialogue and making sure that underrepresented voices are being heard. Our goal is to create a more diverse and inclusive company where every employee feels they belong and that they can thrive.

 

Additional information on our social responsibility initiatives can be found on the investor relations section of our website.

 

 

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Summary ofItem 1 - Election ofof Directors

Our Board of Directors currently consists of ten members, each of whom is elected annually. One of our current directors (Mr. Carl Gable) is retiring at the end of his current term, at which time the number of directors serving on our Board will be reduced from ten to nine. In this proposal, shareholders are asked to vote "FOR" each of the following nineeight nominees.

Summary ofItem 2 - Advisory Vote toto Approve Executive Compensation

We provide our shareholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with the rules of the Securities and Exchange Commission ("SEC"). The vote on this resolution is not intended to address any specific element of compensation; rather, the advisory vote relates to the overall compensation of our named executive officers, as well as the philosophy, policies and practices, all as described in this Proxy Statement. The vote is advisory, and therefore it is not binding on the Company, the Compensation Committee or our Board of Directors. We recommend that our shareholders vote "FOR" approval of our executive compensation as described in this Proxy Statement.

Our executive compensation program is generally designed to:

We believe that motivating and rewarding exceptional performance is the overriding principle of our executive compensation program.

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The following sets forth the primary objectives addressed by each component of our executive compensation program:

Competitive base salary		Assists with attraction and retention of highly-qualified executives, and promotes management stability
Annual cash bonuses based on achievement of established goals		Aligns individual interests with overall short term (typically annual) objectives, and reinforces “pay for performance” program goals
Long-term incentives		Aligns individual interests with the long- term investment interests of shareholders, and assists with retention of highly-qualified executives

For more information regarding our compensation, please see our Compensation Discussion and Analysis beginning on page 24.26.

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Summary of Item 3 - Ratify Appointment of BDO USA, LLPof BDO USA, LLP as Independent Auditors

BDO USA, LLP, an independent registered public accounting firm, served as our auditors for 2017.2020. Our Audit Committee has selected BDO USA, LLP to audit our financial statements for 2018.2021. Although it is not required to do so, the Board is submitting the Audit Committee's selection of our independent registered public accounting firm for ratification by the shareholders at the Annual Meeting in order to ascertain the view of our shareholders regarding such selection. Below is summary information about BDO USA, LLP's fees for services during 20172020 and 2016:2019:

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NOMINATION AND ELECTION OF DIRECTORS

(ITEM 1)

The Bylaws of the Company provide that the Board of Directors shall consist of a maximum of 15 directors, with the exact number of directors being established by action of the Board taken from time to time. Commencing as of the 2018 Annual Meeting, theThe Board of Directors has set the number of directors at 9.eight. The term of office for each director continues until the next annual meeting of shareholders and until his or her successor, if there is to be one, has been elected and has qualified.

In the event that any nominee for director withdraws or for any reason is not able to serve as a director, each Proxy that is properly executed and returned will be voted for such other person as may be designated as a substitute nominee by the Board of Directors. Each nominee is an incumbent director standing for re-election, and each nominee has consented to being named herein and to serve or continue serving as a director if elected or re-elected.

Certain information relating to each nominee proposed by the Board is set forth below. Directors are required to submit an offer of resignation upon experiencing a job change.

Nominees

	Experience: Since 1997, Mr. Burke has been Chief Executive Officer of Trek Bicycle Corporation, one of the world’s largest manufacturers of bicycles, and a company with a mission to help the world use the bicycle as a simple solution to complex problems. He served as chairman of President George W. Bush’s President’s Council on Physical Fitness & Sports, and is a founding board member of the Bikes Belong Coalition. Mr. Burke also serves on the board of Trek Bicycle Corporation.
John P. Burke	QualificationsQualifications and skills: Executive level business experience at a manufacturing company that is focused primarily on sales in the consumer channel and with an emphasis on sustainability and innovation.
Age: 5659 Director since 2013   Chief Executive Officer, Trek Bicycle Corporation
	Experience:Since 2001, Mr. Cogan has beenGibson was elected as a director in September 2019. He serves as the Chief ExecutiveCommercial Officer of Knoll,for SPX FLOW, Inc., a leading designerglobal provider of process solutions and manufacturercomponents across a variety of branded office furniture productssanitary and textiles recognized for innovation and modern design. He previouslyindustrial market applications. Previously, he served as Chief Operating OfficerPresident, Food & Beverage and Industrial Segments (May 2019 to May 2020) and President, Food & Beverage Segment (June 2016 to May 2019) for SPX FLOW. Prior to joining SPX FLOW, Mr. Gibson spent 11 years at HVAC manufacturer Ingersoll Rand, most recently leading significant growth initiatives as President of Knoll and held several positions in Knoll’s design and marketing group worldwide, including Executive Vice President - Marketing and Product Development and Senior Vice President. Mr. Cogan is a director of Knoll and cabinet manufacturer American Woodmark Corporation, as well as two nonprofit organizations.Strategic Initiatives for the company’s climate segment.
Andrew B. CoganDwight Gibson	QualificationsQualifications and skills:Executive levelMr. Gibson brings to the Board experience at an internationalin driving growth for purpose-driven global manufacturing companycompanies, particularly in the commercial interiors industry,areas of sales, operations, strategy and an extensive background in design and marketing.executive management.
Age: 5546 Director since 20132019   Chief ExecutiveCommercial Officer, Knoll,SPX FLOW, Inc.

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	Experience: Mr. Gould joined the Company as Executive Vice President and Chief Operating Officer in 2015, was promoted to President and Chief Operating Officer in 2016, and was promoted to Chief Executive Officer in March 2017. From 2012 to 2015, Mr. Gould was the Chief Executive Officer of American Standard Brands, a kitchen and bath products company. Prior to American Standard, Mr. Gould held senior executive roles at Newell Rubbermaid Inc., a global marketer of consumer and commercial products, serving as President of its Home & Family business group (2008-2012) and President of its Parenting Essentials business group (2006-2008). He previously held executive level positions at The Campbell Soup Company (2002-2006) and The Coca-Cola Company (1995-2002).
Jay D. Gould	Qualifications and skills:A broad range of executive level experience at international companies with distribution into both the commercial and consumer channels, with particular expertise in sales, marketing, brand management, strategy and operations.
Age: 58 Director since 2016 Chief Executive Officer, Interface, Inc.
	Experience:Experience: Mr. Hendrix joined the Company in 1983 after having worked previously for a national accounting firm. He was promoted to Treasurer of the Company in 1984, Chief Financial Officer in 1985, Vice President-Finance in 1986, Senior Vice President-Finance in 1995, Executive Vice President in 2000, and President and Chief Executive Officer in July 2001. He was elected to the Board in October 1996, and was elected Chairman of the Board in October 2011. In March 2017, Mr. Hendrix retired from the role of Chief Executive Officer, but continuescontinued to serve as non-executive Chairman. In January 2020, Mr. Hendrix was reappointed as President and Chief Executive Officer of the Company. Mr. Hendrix has served as a director of cabinet maker American Woodmark Corporation since May 2005, and serves as a director of one private company.2005.
Daniel T. Hendrix	QualificationsQualifications and skills:  Knowledge extending to virtually all aspects of the Company’s business, with a particular emphasis on strategic planning and financial matters, giving him a unique understanding of our strategies and operations. TenureHis tenure provides consistent leadership to the Board and facilitates the interrelationship between the Board and the Company’s executive leadership team.
Age: 6366 Director since 1996   Non-Executive Chairman and Chief Executive Officer, Interface, Inc.
	Experience:Experience: Mr. Kennedy is the Chairman of real estate development company Joseph P. Kennedy Enterprises, Inc., and a Managing Member of real estate development company Wolf Point Management LLC. He was the President of MMPI (Merchandise Mart Properties, Inc., a subsidiary of Vornado Realty Trust based in Chicago, Illinois) from 2000 to 2012. He has served on the board of trustees of Ariel Mutual Funds since 1994, and has served on the board of directors of Knoll, Inc. (a leading designer and manufacturer of branded office furniture and textiles) since November 2014. Mr. Kennedy also serves on the boards of two nonprofitnon-profit organizations and one charitable foundation, and three private companies, and is active in several educational and civic organizations. From 2009 to 2015, Mr. Kennedy served on the board of trustees of the University of Illinois.
Christopher G. Kennedy	QualificationsQualifications and skills:SubstantialBroad understanding of the fundamentals of our business, having managed more than 10 million square feet of commercial real estate and developed thousands of multi-family residential units, and currently oversees, on behalf of the Kennedy family, the billion-dollar Wolf Point real estate development in Chicago. Insight into our industry sector in his former role as the chief executive level experienceof one of the leading tradeshow producers in North America gave him responsibility for industry events that is particularly beneficialare critical to the go-to-market strategy for the Company. His contacts with leading architectural and design firms as well as the commercial real estate sector require engagement in submarkets that are important to our strategies and sales and marketing efforts in the corporate office and retail market segments. Insight into governmental and economic affairs and civic involvement also are valuable to the Board.operations.
Age: 5457 Director since 2000   Lead Independent Director   Chairman, Joseph P. Kennedy Enterprises, Inc.
	Experience: Mr. Keough was elected as a director in September 2019. He serves as Chairman and Chief Executive Officer of Wood Partners. Wood Partners is one of the nation’s largest multi-family (apartment) real estate companies. Prior to serving as Chief Executive Officer, he served as both Chief Financial Officer and President of Wood Partners. Mr. Keough began his career in consulting, and was a Principal at The Boston Consulting Group, an international strategic consulting firm. He also served as Chief Operating Officer of Fuqua Capital, the vertically integrated family office of the Fuqua family.
Joseph Keough	Qualifications and skills: Extensive executive level experience in the multi-family residential building industry, including leadership in the areas of finance, accounting, capital markets, real estate development, strategy and operations management.
Age: 51 Director since 2019 Chairman and Chief Executive Officer, Wood Partners

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	Experience: Ms. Kilbane retired in 2017 as Senior Vice President of The Sherwin-Williams Company, a Fortune 500 global leader in paints and coatings. She joined Sherwin-Williams in 2013 as Senior Vice President, General Counsel and Secretary. Prior to that, Ms. Kilbane was Senior Vice President and General Counsel from 2003 to 2012 at American Greetings Corporation, one of the world’s largest manufacturers of social expression products. From 1987 to 2003, she was a partner in the general business group at Baker & Hostetler LLP in Cleveland, Ohio. Ms. Kilbane is a director of The Andersons, Inc. (where she also serves as lead independent director), a Fortune 500 diversified agribusiness company in the grain, ethanol, plant nutrient, and rail sectors, and The Davey Tree Expert Company, a provider of residential and commercial tree care services. She also is a member of the board of directors of the Cleveland Clinic Foundation.
Catherine M. Kilbane	Qualifications and skills: Over thirty years of experience in corporate law, extensive experience in mergers and acquisitions, including large, multinational transactions, a solid understanding of ensuring shareholder value through her fourteen years of experience with two publicly traded companies and board member experience with for-profit and non-profit organizations.
Age: 57 Director since 2018 Retired Senior Vice President and General Counsel, The Sherwin-Williams Company
	Experience: Since April 2015, Mr. Kohler has served as the President and Chief Executive Officer for Kohler Co., a manufacturer of kitchen and bath products, interior furnishings, engines and power generation systems, and an owner and operator of golf and resort destinations. His previous positions at Kohler include President and Chief Operating Officer (2009-2015), Executive Vice President (2007-2009) and Group President of the Kitchen and Bath Group (1999-2007). He has served as a member of the board of Kohler Co. since 1999, and also is a director of ceramic tile and natural stone manufacturer and distributor Internacional de Cerámica, S.A.B. de C.V., a public company traded on the Mexican Stock Market. Mr. Kohler also serves as a director of the non-profit corporation Green Bay Packers, Inc.
K. David Kohler	QualificationsQualifications and skills: Extensive business experience from his service in executive positions at a manufacturing company with international operations and distribution into both commercial and consumer channels.
Age: 5154 Director since 2006   President and Chief Executive Officer, Kohler Co.
	Experience: Since February 2016, Ms. Matts has served as the North America Chief Executive Officer of Annalect, Inc., a provider of data driven marketing strategy. (Annalect, Inc. is the data and digital media division of Omnicom Media Group, which in turn is a division of Omnicom Group Inc.) Ms. Matts previously held leadership roles in agency, publishing and branding at global companies, including prior service as Senior Vice President and Chief Marketing Officer at Glam Media and global director of digital connections at Anheuser-Busch InBev.
Erin A. Matts	Qualifications and skills:A sophisticated view on data as a driver of business-to-business marketing, as well as experience in marketing, advertising, and translating market data into growth opportunities.
Age: 41 Director since 2016 North America Chief Executive Officer, Annalect, Inc.

	Experience:Since 1979, Mr. Miller has served as Chairman and Chief Executive Officer of Fidelity Southern Corporation, the holding company for Fidelity Bank. He also has served in various capacities at Fidelity Southern Corporation’s affiliated companies, including as Chief Executive Officer of Fidelity Bank (1977-1997, and 2003-2017), Chairman of Fidelity Bank (1998-present), and Chairman of LionMark Insurance Company (since 2004). Prior to his banking experience, Mr. Miller practiced law. Mr. Miller has served on the board of supply chain management and enterprise software solutions provider American Software, Inc. since 2002, and currently serves on the boards of three private companies and five nonprofit organizations.
James B. Miller, Jr.	Qualifications and skills:Extensive executive level experience at a publicly traded company, particularly in the areas of banking, capital markets, corporate finance and accounting.
Age: 77 Director since 2000 Chairman and Chief Executive Officer, Fidelity Southern Corporation

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	Experience: Since 2007, Ms. Palmer has served as President, Chief Executive Officer and a director, and since 2017 has served as Chairman, of Taylor Morrison Home Corporation, a publicly traded leading North American home builder and developer, after previously serving as Executive Vice President for the West Region of Morrison Homes. Her previous experience includes senior leadership roles at Blackhawk Corp. and Pulte Homes/Del Webb Corporation, each homebuilders and developers of retirement communities, where she last held the title of Nevada Area President at Pulte/Del Webb Corporation.
Sheryl D. Palmer	QualificationsQualifications and skills: Extensive executive level experience in the residential building industry, including leadership in the areas of sales and marketing, building development, strategy and operations management.
Age: 5659 Director since 2015   Chairman, President and Chief Executive Officer, Taylor Morrison Home Corporation

Vote Required andand Recommendation of Board

Under the Company’s Bylaws, election of each of the nominees requires a plurality of the votes cast by the Company’s outstanding Common Stock entitled to vote and represented (in person or by proxy) at the meeting. As noted below, however, in an uncontested election, any nominee who does not receive a majority affirmative vote must submit a resignation (which may be conditional) to the Board or its Chair. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE, AND PROXIES EXECUTED AND RETURNED OR VOTED BY TELEPHONE OR INTERNET WILL BE VOTED FOR EACH OF THE NOMINEES UNLESS CONTRARY INSTRUCTIONS ARE INDICATED.

DIRECTOR INDEPENDENCE

For each director, the Board makes a determination of whether the director is “independent” under the criteria established by the Nasdaq Stock Market and other governing laws and regulations. In its review of director independence, the Board considers all commercial, banking, consulting, legal, accounting, charitable or other business relationships any director may have with the Company. The current directors are John P. Burke, Andrew B. Cogan, Carl I. Gable, Jay D. Gould,Dwight Gibson, Daniel T. Hendrix, Christopher G. Kennedy, Joseph Keough, Catherine M. Kilbane, K. David Kohler, Erin A. Matts, James B. Miller, Jr., and Sheryl D. Palmer. As a result of its review, the Board has determined that all of the current directors, with the exceptionsexception of Daniel T. Hendrix and Jay D. Gould (who are employees)is an employee), are independent.

CORPORATE GOVERNANCE

Board Leadership Structure

We currently have a Lead Independent Director, and a separatecombined Chairman and Chief Executive Officer. Mr. Kennedy serves as Lead Independent Director, and Mr. Hendrix serves as Chairman and Mr. Gould serves as Chief Executive Officer. Because each of our Chairman and Chief Executive Officer is an employee of the Company and therefore not considered “independent” under applicable standards, the Board has appointed Mr. Kennedy to serve as Lead Independent Director. The Board considers it to be useful and appropriate at the current time to have an independent director serve in a lead capacity to promote corporate governance, coordinate the activities of the other independent directors, and perform such other duties and responsibilities as the Board may determine. The specific responsibilities of the Lead Independent Director are as follows:

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Meetings and Committees of the Board

The Board of Directors held fiveeight meetings during 2017.2020. All of the incumbent directors attended at least 75% of the total number of meetings of the Board and any committees of which he or she was a member.

The independent directors meet in regularly scheduled executive sessions without Messrs.Mr. Hendrix or Gould or other members of management present. In 2017,2020, the independent directors met fivefour times in executive session.

The Board of Directors has the following standing committees that assist the Board in carrying out its duties: the Executive Committee, the Audit Committee, the Compensation Committee, and the Nominating & Governance Committee. The following table lists the current members of each committee:

Executive Committee. The Executive Committee met one time and acted by unanimous written consent three timesdid not meet during 2017.2020. Except for duties reserved to the other Board committees and for certain other exceptions, the Executive Committee may exercise all the power and authority of the Board of Directors in the management of the business and affairs of the Company.

Audit Committee. The Audit Committee met foureight times and acted by unanimous written consent once during 2017.2020. The function of the Audit Committee is to (i) serve as an independent and objective party to review the Company’s financial statements, financial reporting process and internal control system, (ii) review and evaluate the performance of the Company’s independent auditors and internal financial management, and (iii) provide an open avenue of communication among the Company’s independent auditors, management (including internal financial management) and the Board. The Board of Directors has determined that all three members of the Audit Committee are “independent” in accordance with applicable law, including the rules and regulations of the Securities and Exchange Commission and the rules of the Nasdaq Stock Market, and that each of Ms. Palmer and Messrs. Gable and MillerMr. Keough is an “audit committee financial expert” as defined by the rules and regulations of the Securities and Exchange Commission. The Audit Committee operates pursuant to an Audit Committee Charter which was adopted by the Board of Directors. The Audit Committee CharterDirectors and may be viewed on the Company’sInvestor Relations section of our website, www.interfaceglobal.com/Investor-Relations/Corporate-Governance/Audit-Committee-Charter.aspxhttps://investors.interface.com/investor-relations/default.aspx.

Compensation Committee. The Compensation Committee met two times and acted by unanimous written consent twofour times during 2017.2020. The function of the Compensation Committee is to (i) evaluate the performance of the Company’s Chief Executive Officer and other senior executives, (ii) determine compensation arrangements for such executives, (iii) administer the Company’s stock and other incentive plans for key employees, and (iv) review the administration of the Company’s employee benefit plans. The Board of Directors has determined that each member of the Compensation Committee is “independent” in accordance with applicable law, including the rules and regulations of the Securities and Exchange Commission and the rules of the Nasdaq Stock Market. The Compensation Committee operates pursuant to a Compensation Committee Charter that was adopted by the Board of Directors. The Compensation Committee CharterDirectors and may be viewed on the Company’sInvestor Relations section of our website, www.interfaceglobal.com/Investor-Relations/Corporate-Governance/Compensation-Committee-Charter.aspxhttps://investors.interface.com/investor-relations/default.aspx. The Compensation Committee’s policies and philosophy are described in more detail below in this Proxy Statement under the heading “Compensation Discussion and Analysis.”

Nominating & Governance Committee. The Nominating & Governance Committee met twice in 2017.one time during 2020. The Nominating & Governance Committee assists the Board in establishing qualifications for Board membership and in identifying, evaluating and selecting qualified candidates to be nominated for election to the Board.Board, and monitoring the Company’s activities and practices regarding ESG matters that are significant to the Company. The Nominating & Governance Committee also assists the Board in reviewing and analyzing, and makes recommendations regarding, corporate governance matters, and it also recommends committee assignments for Board members. The Board of Directors has determined that each member of the Nominating & Governance Committee is “independent” in accordance with applicable law, including the rules of the Nasdaq Stock Market. The Nominating & Governance Committee operates pursuant to a Nominating & Governance Committee Charter that was adopted by the Board of Directors. The Nominating & Governance Committee CharterDirectors and may be viewed on the Company’sInvestor Relations section of our website,www.interfaceglobal.com/Investor-Relations/Corporate-Governance/Nominating---Governance-Charter-(1).aspx https://investors.interface.com/investor-relations/default.aspx.

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Nominations for Board Service

In the event of a vacancy on the Board, the Nominating & Governance Committee develops a pool of potential director candidates for consideration. The Nominating & Governance Committee seeks candidates for election and appointment with excellent decision-making ability, valuable and varied business experience and knowledge, and impeccable personal integrity and reputations. The Committee does not have a specific diversity policy, but considers diversity of race, ethnicity, gender, age, cultural background and professional experience in evaluating candidates for Board membership, in an effort to obtain a variety of viewpoints in the Board’s proceedings. The Nominating & Governance Committee considers whether candidates are free of constraints or conflicts which might interfere with the exercise of independent judgment regarding the types of matters likely to come before the Board, and have the time required for preparation, participation and attendance at Board and committee meetings. Other factors considered by the Nominating & Governance Committee in identifying and selecting candidates include the needs of the Company and the range of talent and experience already represented on the Board. The Nominating & Governance Committee solicits suggestions from other members of the Board, Company management, and occasionally outside search firms, regarding persons to be considered as possible nominees. Shareholders who wish the Nominating & Governance Committee to consider their recommendations for director candidates should submit their recommendations in writing to the Nominating & Governance Committee, in care of the office of the Chairman of the Board, Interface, Inc., 2859 Paces Ferry Road, Suite 2000,1280 West Peachtree Street NW, Atlanta, GA 30339.30309. Recommendations should include the information which would be required for a “Shareholder Proposal” as set forth in Article II, Section 9 of the Company’s Bylaws. Director candidates who are recommended by shareholders in accordance with these procedures will be evaluated by the Nominating & Governance Committee in the same manner as director candidates recommended by the Company’s directors, management and outside search firms.

Shareholder Outreach Programs

During 2017,In each of the past three years, we have conducted two separateone or more shareholder outreach programs – one during proxy seasonper year, with the most recent taking place in May, and one outside of proxy season in November. For eachlate 2020. In that program, we requested conference calls with each of our top 3025 shareholders, representing approximately 69%68% of outstanding shares. In the May programshares, and we held conference calls with shareholderseach shareholder that accepted our request, representing 27%9% of shares, and in the November program we held conference calls with shareholders representing 38% ofoutstanding shares. During the outreach programs,program, which werewas led by the Company’s non-executive Chairman Dan Hendrix, we discussed with shareholders various proxy and Company related issues and other areas of shareholder interest – such as the Company’s corporate governance practices, executive compensation philosophy and practices, and environmental and social sustainabilityESG initiatives.

Much of our discussions centered around the advisory say-on-pay vote at the Company’s 2017 annual meeting. As anticipated, we found that our shareholders care deeply about good corporate governance and the alignment of executive compensation with Company performance, and greatly appreciate increased dialogue on these proxy and governance issues. We also found that our shareholders generally understood that the Company’s 2016 executive compensation (which was the subject of that advisory vote) was somewhat impacted by the planned and then-pending (and now-completed) succession of our Chief Executive Officer, and that our compensation program is highly tailored to strike an appropriate balance among motivating management, rewarding good performance, and accounting for the cyclicality in our industry.

Following the outreach programs, our shareholders’ feedback was shared with Company management and the Compensation Committee of the Board of Directors. As a result, we have committed to continued shareholder outreach efforts, enhanced proxy design and disclosure (as reflected in this Proxy Statement), including with respect to alignment of pay with performance, and a detailed review of the Company’s compensation peer group and practices (which is ongoing this year).

Majority Vote Resignation Policy forfor Director Elections

Pursuant to governing law and documents, including the Company’s Bylaws as noted above, in most cases the Company's directors are elected by a plurality of the votes cast. Although nominees who receive the most votes for the available positions will generally continue to be duly elected, on February 22,in 2017 the Board of Directors adopted a resignation policy applicable to nominees who fail to receive the affirmative vote of a majority of the votes cast in an uncontested election for directors. (The adoption of this policy does not alter the applicable legal standards.) The policy requires that a nominee who does not receive a majority affirmative vote in an uncontested election promptly will tender, to the Board or its Chair, their resignation from the Board and committees on which the director serves. The resignation may be conditioned upon Board acceptance. If it is not so conditioned, the resignation must specify that it is effective immediately on delivery.

A “majority affirmative vote” means that the votes cast “for” a nominee’s election exceed those voted "withhold", with broker and other non-votes not being considered “votes cast.”  You have been provided with options to vote “for” or “withhold” from each Director nominee. However, neither a “withhold” vote nor declining to vote for directors (assuming the presence of a quorum) affects whether a director nominee in an uncontested election is legally elected under the plurality vote standard (provided such nominee receives at least one “for” vote).  But a “withhold” vote is considered in determining whether a director who is legally elected has received a “majority affirmative vote” for purposes of the resignation policy.

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The Nominating & Governance Committee of the Board will consider any resignation conditioned upon Board acceptance, including any information provided by the Director, and within 60 days of the shareholder meeting at which the Director failed to receive a majority affirmative vote, will recommend to the full Board what action to take on the Director’s resignation. The Nominating & Governance Committee may recommend, among other things, acceptance or rejection of the resignation, delayed acceptance pending the recruitment and election of a new director or rejection of the resignation in order to address the underlying reasons for the Director’s failure to receive the majority affirmative vote of the shareholders. The policy provides for the Board to act on the Nominating & Governance Committee’s recommendation within 90 days following the shareholder meeting.

In considering a conditional resignation, the Nominating & Governance Committee and the Board may consider those factors it deems relevant to its recommendation, including but not limited to the underlying reasons for the failure of the Director to receive a majority affirmative vote, the tenure and qualifications of the Director, the Director’s past and expected future contributions, other policies and the overall composition of the Board, including whether accepting the resignation would cause the Company to fail to meet legal or stock market requirements.

Following the Board’s decision, the Company will publicly announce the Board’s decision regarding any conditional resignation. A resigning Director cannot participate in committee or Board decisions regarding their resignations,resignation, except in certain cases where multiple directors have failed to receive majority affirmative votes, which circumstances are described in the full policy posted in the Investor Relations section of our website, at www.interfaceglobal.com.https://investors.interface.com/investor-relations/default.aspx. The preceding summary of the policy is qualified in its entirety by reference to the full policy.

Enterprise Risk Management

In 2019, the Company substantially enhanced and formalized its Enterprise Risk Management (“ERM”) program. The Company’s ERM program is based on the Enterprise Risk Management – Integrated Framework defined by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), although tailored to the Company’s specific risk profile and needs. The Company’s ERM program is managed by a risk committee comprised of executive officers and other senior managers, is administered by the Company’s Director of Internal Audit, and is overseen by the Audit Committee pursuant to authority delegated by the Board of Directors in the Audit Committee Charter. The Company’s program includes a continuous process of identifying, assessing, addressing, monitoring and reporting on the risks that pose the greatest threats to the Company. As part of that process, the management risk committee conducts an annual survey of the Company’s top global leaders to assess the likelihood, potential impact and velocity of a large number of potential risks and to help identify emerging risks. The management risk committee meets quarterly to monitor the key identified risks and how they are being addressed, which may include, depending on the circumstances, mitigating, sharing, accepting or avoiding the risk. The management risk committee and Director of Internal Audit report to the Audit Committee quarterly on significant developments and key elements of the program.

The

In addition, the Board receives quarterly reports on other elements of risk that may potentially affect the Company, as identified and presented by management. The Board also assists in the Company’s risk oversight through its various committees described above. For example, the Audit Committee assists in overseeing risk as it relatesthe specific risks that relate to the Company’s financial statements, financial reporting process and internal control system. In that regard, the Company’s Director of Internal Audit and outside auditors report directly to the Audit Committee. The Nominating & Governance Committee assists in overseeing risk related to the Company’s corporate governance practices as well as the performance of individual Board members and committees, while the Compensation Committee assists in overseeing risk as it relates to the Company’s executive compensation program and practices.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines that provide the framework for the governance of the Company. Our Corporate Governance Guidelines are available on the Investor Relations section of our website, at https://www.interface.com/US/en-US/about/investors.interface.com/investor-relations/corporate-governance-guidelines-en_USdefault.aspx and will also be made available to shareholders without charge upon request in writing to our corporate Secretary at Interface, Inc., 2859 Paces Ferry Road, Suite 2000,1280 West Peachtree Street NW, Atlanta, Georgia 30339.30309. The information contained on our website is not included as part of, or incorporated by reference into, this Proxy Statement.

Code of Business Conduct & Ethics

The Board has adopted a Code of Business Conduct & Ethics that applies to all of our directors, officers and employees, including our Chief Executive Officer, Chief Financial Officer and Chief Financial and Accounting Officers.Officer. The Code is publicly available on the Investor Relations section of our website, at https://www.interface.com/US/en-US/about/investors.interface.com/investor-relations/interface-code-of-business-conduct-ethics-en_USdefault.aspx and will also be made available without charge to any person upon request in writing to our corporate Secretary at Interface, Inc., 2859 Paces Ferry Road, Suite 2000,1280 West Peachtree Street NW, Atlanta, Georgia 30339.30309. We intend to disclose amendments to, or waivers from, provisions of the Code that apply to any director or principal executive, financial or accounting officers on our website at www.interface.com, in lieu of disclosing such matters in Current Reports on Form 8-K.

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Principal Shareholders and Management Stock OwnershipPRINCIPAL SHAREHOLDERS AND MANAGEMENT STOCK OWNERSHIP

The following table sets forth, as of March 1, 201819, 2021 (unless otherwise indicated), beneficial ownership of the Company’s Common Stock by: (i) each person, including any “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, known by the Company to be the beneficial owner of more than 5% of any class of the Company’s voting securities, (ii) each director and nominee for director, (iii) each person who served as the Company’s Chief Executive Officer or Chief Financial Officer, and the next three most highly compensated executive officers, during 20172020 (the “Named Executive Officers”), and (iv) all executive officers and directors of the Company as a group. Due to the nature of the awards, performance shares awarded to the Company’s executive officers are not included in beneficial ownership of Common Stock. Unless otherwise noted, the business address for each beneficial owner is the Company’s corporate headquarters located at 2859 Paces Ferry Road, Suite 2000,1280 West Peachtree Street NW, Atlanta, Georgia 30339.30309.

Beneficial Owner (and Business Address of 5% Owners)		Title of Class		Amount and Nature of Beneficial Ownership			Percent of Class(1)
BlackRock, Inc. 55 East 52nd Street New York, New York 10022		Common Stock		7,806,387	(2)(3)		13.1	%
FMR LLC and Abigail P. Johnson 245 Summer Street Boston, Massachusetts 02210		Common Stock		3,969,285	(2)(4)		6.7	%
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, Pennsylvania 19355		Common Stock		5,587,898	(2)(5)		9.4	%
John P. Burke		Common Stock		21,297	(6)		*
Andrew B. Cogan		Common Stock		23,297	(7)		*
Robert A. Coombs		Common Stock		114,460	(8)		*
Carl I. Gable		Common Stock		27,063	(9)		*
Jay D. Gould		Common Stock		217,737	(10)		*
Bruce A. Hausmann		Common Stock		60,385	(11)		*
Daniel T. Hendrix		Common Stock		130,028	(12)		*
Christopher G. Kennedy		Common Stock		82,020	(13)		*
K. David Kohler		Common Stock		47,297	(14)		*
Erin A. Matts		Common Stock		7,511	(15)		*
James B. Miller, Jr.		Common Stock		61,297	(16)		*
Matthew J. Miller		Common Stock		43,247	(17)		*
Sheryl D. Palmer		Common Stock		12,247	(18)		*
J. Chadwick Scales		Common Stock		29,024	(19)		*
All executive officers and directors (17 persons)		Common Stock		992,124	(20)		1.7	%

Beneficial Owner (and Business Address of 5% Owners)		Title of Class		Amount and Nature of Beneficial Ownership				Percent of Class(1)
BlackRock, Inc. 55 East 52nd Street New York, New York 10055		Common Stock			9,107,924	(2)(3)			15.5	%
Frontier Capital Management Co., LLC 99 Summer Street Boston, Massachusetts 02110		Common Stock			4,656,205	(2)(4)			7.9	%
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, Pennsylvania 19355		Common Stock			5,954,059	(2)(5)			10.2	%
John P. Burke		Common Stock			42,506	(6)			*
David Foshee		Common Stock			120,475	(7)			*
Dwight Gibson		Common Stock			19,473	(8)			*
Jay D. Gould		Common Stock			199,087	(9)			*
Bruce A. Hausmann		Common Stock			136,057	(10)			*
Daniel T. Hendrix		Common Stock			279,994	(11)			*
Christopher G. Kennedy		Common Stock			152,229	(12)			*
Joseph Keough		Common Stock			19,473	(13)			*
Catherine M. Kilbane		Common Stock			23,023	(14)			*
K. David Kohler		Common Stock			68,506	(15)			*
Sheryl D. Palmer		Common Stock			33,456	(16)			*
James Poppens		Common Stock			32,133	(17)			*
Nigel Stansfield		Common Stock			110,273	(18)			*
All executive officers and directors (12 persons)		Common Stock			1,037,598	(19)			1.8	%

__________

*         Less than 1%.

 

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(1)

Percent of class is based on 59,342,53958,640,045 shares outstanding on March 1, 201819, 2021 and is calculated assuming that the beneficial owner or group of beneficial owners has exercised any conversion rights, options or other rights to subscribe held by such beneficial owner that are exercisable within 60 days of March 1, 2018,19, 2021, and that no other conversion rights, options or rights to subscribe have been exercised by anyone else.

 

(2)

Based upon information included in statements as of December 31, 20172020 provided to the Company and filed with the Securities and Exchange Commission by such beneficial owners.

 

(3)

According to BlackRock, various persons have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of such shares, and no one person’s interests in such shares exceeds 5% of the total outstanding shares of Common Stock. It states that it has sole voting power with respect to 7,656,5209,013,041 of such shares, and sole dispositive power with respect to all of such shares.

 

(4)

FMRFrontier Capital Management Co., LLC is a parent holding company,an investment advisor, and Ms. Johnson is director, Chairman and Chief Executive Officer. Members of the Johnson family, including Ms. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of thestates that it has sole voting power with respect to 2,004,158 of FMR LLC. They state that none of them has thesuch shares and sole dispositive power with respect to vote or direct the voting of the shares, which power resides with Boards of Trustees of the various Fidelity funds.all such shares.

 

(5)

The Vanguard Group, Inc. is an investment advisor, and states that it has sole voting power with respect to 112,403 of such shares, shared voting power with respect to 17,40078,597 of such shares, sole dispositive power with respect to 5,463,3955,827,753 of such shares, and shared dispositive power with respect to 124,503126,306 of such shares.

 

(6)

Includes 5,31215,508 restricted shares.

 

(7)

Includes 5,31248,225 restricted shares.

 

(8)

Includes 27,46615,508 restricted shares.

 

(9)

Includes 5,312Mr. Gould is no longer employed by the Company. Beneficial ownership information is based on the last Form 4 filed by Mr. Gould on February 21, 2019, less restricted shares and 5,000 shares that may be acquired by Mr. Gable pursuant to exercisable stock options.forfeited upon termination of employment.

 

(10)

Includes 97,32267,837 restricted shares.

 

(11)

Includes 52,814 restricted shares.

(12)

Includes 43,039138,496 restricted shares, 4,7124,908 shares held indirectly through the Company’s 401(k) plan, and 35,072 shares held indirectly by family trusts.

 

(13)(12)

Includes 5,31215,508 restricted shares, and 5,000 shares that may be acquired by Mr. Kennedy pursuant to exercisable stock options.shares. Mr. Kennedy serves on the Board of Trustees of Ariel Mutual Funds, for which Ariel Investments, LLC serves as investment advisor and performs services which include buying and selling securities on behalf of the Ariel Mutual Funds. Mr. Kennedy disclaims beneficial ownership of all shares held by Ariel Investments, LLC as investment advisor for Ariel Mutual Funds.

 

(13)

Includes 15,508 restricted shares.

(14)

Includes 5,31215,508 restricted shares.

 

(15)

Includes 5,31215,508 restricted shares.

 

(16)

Includes 5,31215,508 restricted shares and 5,000 shares that may be acquired by Mr. Miller pursuant to exercisable stock options.

 

(17)

Includes 28,45730,981 restricted shares.

 

(18)

Includes 5,31264,341 restricted shares.

 

(19)

Includes 21,921458,436 restricted shares.

(20)

Includes 370,221 restricted shares, and 25,000 shares that may be acquired by all executive officers and directors as a group pursuant to exercisable stock options. Excludes Mr. Gould, whose employment with the Company ended January 19, 2020.

 

 

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APPROVAL oF Executive CompensationOF EXECUTIVE COMPENSATION

(ITEM 2)

 

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the Company is asking its shareholders to vote, on an advisory basis, to approve the compensation of its Named Executive Officers as described in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives the Company’s shareholders the opportunity to express their views on the compensation of the Company’s Named Executive Officers. At the 2017 annual meeting of shareholders, the Company’s shareholders voted, on an advisory basis, to hold a say on pay vote every year. The Board of Directors subsequently determined that the Company will hold say on pay votes every year until the next required advisory vote on the frequency of say on pay votes occurs or until the Board of Directors otherwise determines that a different frequency for say on pay votes is in the best interests of the shareholders.

 

Our executive compensation program is designed to attract, reward and retain key employees, including our Named Executive Officers, who are critical to the Company’s long-term success. Shareholders are urged to read the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement for greater detail about the Company’s executive compensation programs, including information about the fiscal year 20172020 compensation of the Named Executive Officers.

 

The Company is asking the shareholders to indicate their support for the compensation of the Company’s Named Executive Officers as described in this Proxy Statement by voting in favor of the following resolution:

 

“RESOLVED, that the shareholders approve, on an advisory, non-binding basis, the compensation paid to the Company’s Named Executive Officers as disclosed in the “Compensation Discussion and Analysis” and “Executive Compensation” sections, and the related compensation tables, notes, and narrative in this Proxy Statement.”

 

Even though this say-on-pay vote is advisory and therefore will not be binding on the Company, the Compensation Committee and the Board value the opinions of the Company’s shareholders. Accordingly, to the extent there is a significant vote against the compensation of the Named Executive Officers, the Board will consider the shareholders’ concerns and the Compensation Committee will evaluate what actions may be necessary or appropriate to address those concerns.

 

You may vote “for,” “against,” or “abstain” from the proposal to approve on an advisory basis the compensation of our Named Executive Officers.

 

Vote Required and Recommendation of the Board

 

Under the Company’s Bylaws, the compensation of the Named Executive Officers is approved on an advisory basis if the affirmative votes cast by the holders of the Company’s outstanding shares of Common Stock entitled to vote and represented (in person or by proxy) at the meeting exceed the negative votes. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF EXECUTIVE COMPENSATION, AS DISCLOSED IN THIS PROXY STATEMENT, AND THE PROXY SUBMITTED BY TELEPHONE OR INTERNET OR PROXY CARD WILL BE VOTED IN THIS MANNER UNLESS THE SHAREHOLDER SUBMITTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY (OR ABSTAINS).

 

 

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Compensation Discussion and AnalysisCOMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis describes the compensation program for the Company’s Named Executive Officers. For 2017,2020, these individuals were:

 

Name	Title
Jay D. Gould	TitleFormer President and Chief Executive Officer. Mr. Gould served as the Company's President and Chief Executive Officer from March 3, 2017 to January 19, 2020
Daniel T. Hendrix	Chairman and former Chief Executive Officer. Mr. Hendrix, who retired from the role ofPresident, Chief Executive Officer effective March 3, 2017, also served as the Company’s interim principal financial officer from December 15, 2016 to April 9, 2017and Chairman
Jay D. GouldDavid B. Foshee	Vice President, General Counsel and Chief Executive Officer. Mr. Gould previously served as the Company's President and Chief Operating Officer until his appointment as Chief Executive Officer on March 3, 2017Secretary
Bruce A. Hausmann	Vice President and Chief Financial Officer who joined the Company April 10, 2017
Matthew J. MillerJames Poppens	Vice President (Division President – Americas)
Robert A. CoombsNigel Stansfield	Senior Vice President (Division President – Asia-Pacific)
J. Chadwick Scales	Chief Marketing, InnovationEurope, Asia, Australia and Design OfficerAfrica (EAAA))

 

Impact of COVID-19 on our 2020 Performance and Executive Compensation Program

In 2020, the COVID-19 pandemic had material adverse effects on the Company’s business, results of operations, and financial condition, including lower revenues and profits across all of our geographic regions. Management implemented various programs to mitigate the effects on the Company’s business, including reductions in employees (voluntary and involuntary), labor costs, marketing expenses, consulting expenses, travel costs, various other costs, and capital expenditures. The Company also reduced the amount of the cash dividend paid on common stock, suspended and reduced shifts in production facilities, temporarily furloughed employees, suspended merit-based salary increases as well as its 401(k) and Non-Qualified Savings Plan (NSP) matching contributions, and implemented other cost reduction or avoidance initiatives. Because of changes in macroeconomic conditions related to the COVID-19 pandemic, the Company recognized a non-cash charge of $121.3 million for the impairment of goodwill and certain intangible assets. In addition, our salesforce and administrative employees largely worked remotely in accordance with the Company’s ongoing safety measures, as well as any local government orders and “shelter in place” directives in place from time to time.

Below are the Company’s 2020 financial data that most significantly impacted our Executive Compensation Program. The non-GAAP financial measures of adjusted operating income, adjusted EBITDA and adjusted EPS were utilized as 2020 performance criteria for our annual bonus plan and long-term equity incentives as discussed further below.

(Note: Please see Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures and an explanation of why we believe non-GAAP measures provide useful information to shareholders and the additional purposes for which we use non-GAAP measures.)

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The 2020 performance metrics and targets discussed below were established by the Compensation Committee prior to the onset of the COVID-19 pandemic and its macroeconomic consequences. As the pandemic spread across the globe in early 2020, the established performance targets became unlikely to be achieved, not just for the year 2020 targets but also with respect to performance-based long-term incentive targets that were established at the time awards were made in years 2018 and 2019, which generally required strong compound annual growth over the term of those awards. The Committee monitored the elements of the executive compensation program throughout the year, including the impacts of many uncertainties and challenges faced by the Company and its management due to the pandemic. While management is commended for its substantial efforts throughout the year to reduce costs and protect the Company’s profitability and the interests of its shareholders in response to the pandemic, after consultation with members of the executive leadership team the Committee decided not to adjust any of the performance metrics or previously established targets applicable to 2020 (or otherwise award discretionary bonuses or other amounts to the Company’s executives). As described below, due to the pandemic impacts, none of the 2020 performance-based targets were achieved and management received no performance-based payouts with respect to 2020.

Overall Philosophy andand Objectives

 

The Company’s compensation program is designed in a manner intended to both attract and retain a highly-qualified,highly qualified, motivated and engaged management team whose focus is on enhancing shareholder value. The Company believes a straightforward program that is readily understood and endorsed by its participants best serves these goals, and has constructed a program that contains (1) multiple financial elements, (2) clear and definitive targets, (3) challenging but attainable objectives, and (4) specified performance metrics. More specifically, the objectives of the Company’s management compensation program include:

 

Establishing strong links between the Company’s performance and total compensation earned – i.e., “pay for performance”

Providing incentives for executives to achieve specific performance objectives

Promoting and facilitating management stock ownership, and thereby motivating management to think and act as owners

Emphasizing the Company’s mid and long-term performance, thus enhancing shareholder value

Offering market competitive total compensation opportunities to attract and retain talented executives

 

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Program Design andand Administration

 

The Compensation Committee of the Board of Directors, which is composed entirely of independent directors, has developed and administers the Company’s executive pay program to provide compensation commensurate with the level of financial performance achieved, the responsibilities undertaken by the executives, and the compensation packages offered by comparable companies. The program currently consists of four principal components, each of which is designed to drive a specific behavioral focus, which in turn helps to provide specific benefits to the Company:

 

Program Component		Behavioral Focus		Ultimate Benefit to Company
Competitive base salary	Page 27 Table of Contents	Rewards individual competencies, performance and level of experience		Assists with attraction and retention of highly-qualified executives, and promotes management stability
Annual cash bonuses based on achievement of established goals		Rewards operational results of specific business units and Company as a whole		Aligns individual interests with overall short term (typically annual) objectives, and reinforces “pay for performance” program goals
Long-term incentives		Rewards engagement, longevity, sustained performance and actions designed to enhance overall shareholder value		Aligns individual interests with the long-term investment interests of shareholders, and assists with retention of highly-qualified executives
Other elements such as special incentives, retirement benefits and elective deferred compensation		Rewards targeted operational results, engagement and longevity, and sustained performance		Focuses enhanced efforts on a particular key objective, aligns individual interests with the long-term investment interests of shareholders, assists with the attraction and retention of highly-qualified executives, and promotes management stability

 

The Company strives to structure various elements of these program components so that a large portion of executive compensation is directly linked to advancing the Company’s financial performance and the interests of shareholders. For 2017,2020, those elements were mostly performance-based, as shown below (and based on target level achievement):

 

 

Mr. Poppens was appointed to his executive position on November 1, 2020, and thus the elements of his 2020 executive compensation are not directly comparable to the information in the above tables.

 

Former CEO Mr. Gould was terminated on January 19, 2020, before the Committee granted performance-based awards for 2020 (although his annual bonus opportunity was 150% of his base salary as of his termination).

 

 

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Compensation Decision-Making

 

The Committee establishes base salaries for the executive officers, including the Named Executive Officers listed in the “Summary Compensation Table” included in this Proxy Statement. The Committee also administers the annual bonus program, the long-term incentive program, retirement benefits, deferred compensation arrangements, and, when applicable, special incentive programs.

 

The Company benchmarks its compensation practices against its peer group. In selecting the peer group, the Committee has directly engaged Pearl Meyer & Partners, a nationally recognized, independent compensation consultant, to provide input on compensation matters. The services performed by Pearl Meyer may vary according toCommittee considered various factors including the particular needs of the engagement, but typically will consist of providingpotential peer's industry, business model, size and complexity. The Committee ultimately chose a market or peer group overview of compensation elements, including salary, bonus, long-term incentivesthat provides a robust sample size with minimal revenue dispersion and special incentives. For 2017, the corporateincludes companies with a significant international presence that are also focused on sustainability. The peer group comprised:selected by the Committee is comprised of:

 

Acuity Brands, Inc.	The Dixie Group, Inc.	Mohawk Industries, Inc.
Albany International Corp.	Herman Miller, Inc.	Steelcase, Inc.
Apogee Enterprises, Inc.	HNI Corporation	Unifi,Armstrong Flooring, Inc.
Armstrong World Industries, Inc.	Kimball International,Caesarstone Ltd.
FLIR Systems, Inc.	USG Corp.Gentherm Incorporated
BE Aerospace,H. B. Fuller Company	Harsco Corporation
Herman Miller, Inc.	HNI Corporation
Kimball International, Inc.	Knoll, Inc.
Masonite International Corporation	Materion Corporation
P. H. Glatfelter Company	Steelcase Inc.
Unifi, Inc.	Welbilt, Inc.

 

In 2018-2020, Pearl Meyer also periodically conducts a business performance review of our Company compared with other companies, to assisthas assisted the Compensation Committee in making itsbenchmarking the Company's compensation decisions.practices against the peer group. The work of Pearl Meyer to date has not raised any conflict of interest.

 

The Committee also seeks compensation input from the Company’s Chairman, Chief Executive Officer and Chief Human Resources Officer, and General Counsel.Officer. In addition, the Committee takes into account publicly available data relating to the compensation practices and policies of other companies within and outside the Company’s industry. Furthermore, the policies and programs described below are subject to change as the Committee deems necessary from time to time to respond to economic conditions, meet competitive standards and serve the objectives of the Company and its shareholders.

 

Compensation Risk Assessment

 

The Board, in conjunction with management, has reviewed our compensation policies and practices as generally applicable to our employees and determined that they do not encourage excessive risk or unnecessary risk taking and do not otherwise create risks that are reasonably likely to have a material adverse effect on the Company.

 

Clawback Policy

 

In February 2020, the Committee adopted a Clawback Policy which authorizes the Committee to recover from executive officers certain incentive-based compensation, including both cash and equity, due to a restatement of the Company’s financial statements. Pursuant to the Clawback Policy, in the event the Company is required to prepare an accounting restatement due to the Company’s material noncompliance with any financial reporting requirement under the U.S. federal securities laws (a “Restatement”), regardless of individual fault, the Committee may require the forfeiture or reimbursement, subject to the terms of the Clawback Policy, from any current or former “Covered Executive” (meaning, any officer of the Company covered by Section 16(a) of the Securities Exchange Act) of the Company any excess incentive-based compensation awarded during the thirty-six (36) months preceding the date on which the Company is required to prepare a Restatement. Excess incentive-based compensation, as defined in the Clawback Policy, essentially means the amount or value of incentive-based compensation granted, earned or vested (“Awarded”) in excess of what would have been Awarded to that Covered Executive based on the Restatement.

 

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Our Performance

As described above in the Proxy Statement Summary, the Company achieved strong performance in 2017 compared with the prior year. Highlights appear below. The non-GAAP financial measures of adjusted operating income and adjusted EPS were utilized as 2017 performance criteria for our annual bonus plan and long-term equity incentives, respectively, as discussed further below.

Net sales increased 3.9%; non-GAAP organic sales increased 5.0%

Gross margin improved 20 basis points to 38.7%

SG&A expenses as a percentage of sales declined 50 basis points to 27.0%

Operating income increased 29.3% to $110 million; non- GAAP adjusted operating income increased 11.8% to $117 million

$107 million returned to shareholders through dividends and stock repurchases

EPS grew 3.6% to $0.86; adjusted EPS grew 14.6% to a record $1.18

(Note: Please see Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures and an explanation of why we believe non-GAAP measures provide useful information to shareholders and the additional purposes for which we use non-GAAP measures.)

Discussion of Principal Elements ofof Compensation Program

 

Base Salaries

 

The Committee generally strives to set base salaries at the market median (50^th percentile) of salaries offered by other employers in our industry and other publicly traded companies with characteristics similar to the Company (size, growth rate, etc.), based, by and large, on information provided by independent third party advisors while also considering internal equalization policies of the Company. Some of the companies considered from time to time are included in the list of companies comprising the “self-determined peer group” index used by our independent compensation consultant and used to create the stock performance graph included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.January 3, 2021.

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In addition, the Committee may consider other factors when setting individual salary levels, which may result in salaries somewhat above or below the targeted amount. These factors include the executive’s level of responsibility, achievement of goals and objectives, tenure with the Company, and specific background or experience, as well as external factors such as the availability of talent, the recruiting requirements of the particular situation, and general economic conditions and rates of inflation.

 

Base salary adjustments for executive officers generally are made (if at all) annually and are dependent on the factors described above. The changes in base salaries for the Named Executive Officers, and the rationale for those changes, is set forthdescribed below.

 

Name		2016 Base Salary			2017 Base Salary			% Change			Rationale
Dan Hendrix		$1,011,000			$240,000			(76%)			Transition to non-executive Chairman
Jay Gould		$800,000			$900,000			12.5%			Promotion to CEO
Bruce Hausmann		N/A			$420,000			N/A			New Hire as CFO
Matt Miller		$400,000			$412,000			3%			Merit
Rob Coombs		AUS$483,985			AUS$498,505			3%			Merit
Chad Scales		$335,000			$350,000			4.5%			Merit and Increased Responsibilities

Name	2019 Base Salary	2020 Base Salary	% Change	Rationale
Daniel Hendrix	$0	$927,000	N/A	CEO Appointment 1/19/20
David Foshee	$385,175	$385,175	0%	COVID-19 Impact
Bruce Hausmann	$445,578	$445,578	0%	COVID-19 Impact
Nigel Stansfield	£309,873	£309,873	0%	COVID-19 Impact

 

(Note: The 2017Mr. Gould’s base salaries for Messrs. Hendrix and Gould became effective upon transitionsalary was $927,000 at the time of the CEO rolehis termination on March 3, 2017.)

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January 19, 2020. Mr. Poppens was promoted to his executive position on November 1, 2020, at which time has base salary was increased from $300,000 to $400,000. Please see the “Summary Compensation Table” included in this Proxy Statement for the base salaries actually paid to the Named Executive Officers in 2017.2020.

 

Annual BonusesBonus Opportunities

 

The Committee administers the shareholder-approved Executive Bonus Plan, which provides bonus opportunities for Company executives. The bonus opportunities provide an incentive for executives to earn cash compensation based on the achievement of important corporate or business unit (division or subsidiary) financial performance. In determining the appropriate bonus opportunities, the Committee seeks to establish potential awards that, when combined with annual salary, place the total overall cash compensation opportunity for the Company’s executives at the market 50^th percentile for comparable companies, provided that the performance objectives are substantially achieved.

 

For 2017,2020, each executive officer of the Company was assigned a bonus potential, andexpressed as a personalized setpercentage of annual financial objectives. base salary. The 2020 bonus potential for each Named Executive Officer is described below.

Name	2020 Bonus Potential (as a percentage of base salary)
Daniel T. Hendrix	150%
David Foshee	75%
Bruce Hausmann	90%
Nigel Stansfield	90%

Mr. Poppens’ bonus potential was increased from 75% to 90% upon his promotion to an executive position on November 1, 2020.

Mr. Gould’s bonus potential was 150% of base salary. The bonus potential for Messrs. Hausmann, Miller and Coombs was 90%salary at the time of base salary, and the bonus potential for Mr. Scales was 60% of base salary. (Mr. Hendrix’s bonus potential was 130% of base salary, but pro-rated for the first quarter of 2017 only, after which he became non-executive Chairman and was no longer eligible for a bonus.) his termination on January 19, 2020.

Actual awards could range from 0% to 150%175% of the bonus potential, depending on the degree to which the established financial objectives were achieved, and wereare paid on an annual basis approximately 60 days following the end of the year.

 

In 2017,2020, 100% of the bonus potential for the Chief Executive Officer, Chief Financial Officer and each of the other Named Executive Officers was based on measurable financial objectives. For Messrs. Gould,Hendrix, Foshee and Hausmann, and Scales, these objectives consisted of adjusted operating income and cash flow from operations, and the relative weights assigned to these financial objectives were 75% and 25%, respectively. (Mr. Hendrix’s 2017 bonus opportunity was based on the same objectives and relative weights, but pro-rated for the first quarter only.) For Messrs. MillerPoppens and CoombsStansfield (who managemanaged the Company’s Americas and Asia-PacificEAAA divisions, respectively), the objectives and relative weights assigned were divisional adjusted operating income (50%), consolidated adjusted operating income (25%) and divisional cash flow from operations (25%). Mr. Gould was terminated in January 2020, prior to the Committee’s establishment of performance objectives for 2020.

  

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For each financial objective, the Committee establishes a threshold amount, a goal amount, and a maximum amount. The threshold amount must be achieved in order for any bonus amount to be earned with respect to that objective (and no bonus is payable whatsoever if the threshold amount for adjusted operating income is not exceeded). A pro rata bonus amount is earned based upon (i) the degree to which the threshold amount (resulting in a “cut in” payout equal to 25% of the bonus potential for that criterion) is exceeded, up to the goal amount (resulting in a payout equal to 100% of the bonus potential for that criterion), or (ii) the degree to which the goal amount (resulting in a payout equal to 100% of the bonus potential for that criterion) is exceeded, up to the maximum amount (resulting in a payout equal to 150%175% of the bonus potential for that criterion). The approach to goal setting involves a process of reviewing, among other things, our prior year’s financial performance, our annual operating plan, and our short-term and long-term strategic objectives. We also take into account the need for setting goals that are challenging yet reasonably achievable so as to provide a competitive pay package necessary for the retention of our talent. With respect to cash flow in particular, the Committee sets the targets, in its discretion, taking into account anticipated growth initiatives, capital expenditures, research and development costs, debt maturities, and other cash uses that the Committee deems relevant. Consideration of these factors may result in a cash flow target that is above or below the previous year's cash flow target. Given this methodology, the Committee believes that the threshold level, while challenging, is reasonably likely to be achieved in normalized market conditions, the goal amount is achievable with strong management performance, and the maximum amount would encourage and reward outstanding performance.

 

For example, the Company’s 20172020 annual thresholds, goals and maximums that were applicable for Messrs. Hendrix, (pro-rated for first quarter only), Gould,Foshee and Hausmann and Scales, adjusted to exclude restructuring charges, were as follows:

 

Criteria		Threshold		Goal		Maximum		Weighting		Threshold		Goal		Maximum
Adjusted Operating Income		$93,000,000		$115,000,000		$126,000,000		75%		$123,000,000		$164,000,000		$188,600,000
Cash Flow		$26,000,000		$36,000,000		$46,000,000
Cash Flow from Operations								25%		$95,475,000		$127,300,000		$146,395,000

 

For 2020, adjusted operating income (see Appendix A) was $110 million, and thus was less than the above-stated threshold. Although cash flow from operations was $119 million, no bonus was earned with respect to this criterion because the threshold for adjusted operating income was not met. For this reason, no bonus was earned for 2020, as shown below:

 

Name	Page 28 2020 Actual Bonus

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Daniel T. Hendrix	$0
David Foshee	$0
Bruce Hausmann	$0
James Poppens	$0
Nigel Stansfield	$0

 

The Company’s 2017 operating income (excluding restructuring charges) grew 11.8% to $117.1 million (see the table below and Appendix A), thus exceeding the established goal amount, and the Company’s cash flow exceeded the established maximum amount.

Strong operating income and cash flow also were achieved in the Company’s Americas division (managed by Mr. Miller) and Asia-Pacific division (managed by Mr. Coombs). Based on the Company’s performance, overall 2017 bonus achievement was approximately 120% of bonus opportunity for Messrs. Hendrix (pro-rated for first quarter only), Gould, Hausmann and Scales, 117% of bonus opportunity for Mr. Miller, and 115% of bonus opportunity for Mr. Coombs. Please see the “Summary Compensation Table” included in this Proxy Statement for the bonus amounts paid to the Named Executive Officers for 2017.

Long-Term Incentives

 

The Committee administers the shareholder-approved Interface, Inc. Omnibus Stock Incentive Plan (the “Omnibus Stock Plan”), which is an equity-based plan that allows for long-term incentive awards such as restricted stock, performance shares and stock options. The Omnibus Stock Plan provides for the grant to key employees and directors of the Company and its subsidiaries of restricted stock, incentive stock options (which qualify for certain favorable tax treatment), nonqualified stock options, stock appreciation rights, deferred shares, performance shares and performance units. The size of the awards made to individual officers is based on an evaluation of several factors, including the officer’s level of responsibility, the officer’s base salary, benchmark data and the Company’s overall compensation objectives. The amount and nature of prior equity incentive awards also are generally considered in determining new Omnibus Stock Plan awards for executive officers.

 

Long-term incentives are intended to attract and retain outstanding executive talent, create a direct link between shareholder and executive interests by focusing executive attention on increasing shareholder value, and motivate executives to achieve specific performance objectives. For instance, stock options (when granted) have an exercise price equal to at least 100% of the market price of the underlying Common Stock on the date of grant. Thus, the stock options only have value if the market price of the Company’s stock rises after the grant date. Additionally, restricted stock and performance share awards generally vest, in whole or in part, over a period of multiple years (three years for grants made in recent years), giving the executive an incentive to remain employed with the Company for a significant time period to have the opportunity to vest in an award. Moreover, awards of restricted stock and performance shares that were granted prior to 2020 may vest earlier if specific performance criteria designed to drive shareholder value are met. All equity awards (whether restricted stock, performance shares or otherwise) will have a minimum vesting period or minimum performance period of at least one year.

 

 

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Description of Available Awards

 

Restricted Shares

 

Awards of restricted shares under the Omnibus Stock Plan generally vest over a period of multiple years following the date of award. The Committee may, in its discretion, also establish performance criteria for these awards, and the restricted shares may vest earlier if such performance criteria are satisfied. Unvested awards are also subject to forfeiture under certain circumstances. All restricted shares awarded to date have been made without consideration from the participant (although the Omnibus Stock Plan authorizes the Committee, in connection with any award, to require payment by the participant of consideration, which can be less than the fair market value of the award on the date of grant). Awards of restricted stock generally will not be transferable by the participant other than by will or applicable laws of descent and distribution.

Performance Shares

Performance Shares

Performance shares are awards reflected in a bookkeeping entry that records the equivalent of one share of Common Stock that may subsequently be earned and payable (and issued) to the participant if specified performance criteria established by the Committee are satisfied. Awards of performance shares may be settled in Common Stock, cash, or a combination thereof, at the Company’s election. Grants of performance shares may provide for the payment to the participant of dividend equivalents on a current, deferred or contingent basis.basis; provided, in all of our past awards of performance shares, we have accrued dividend equivalents that are paid only if and when the underlying performance shares vest. Awards of performance shares generally will not be transferable by the participant other than by will or applicable laws of descent and distribution.

 

Stock Options

Options granted under the Omnibus Stock Plan may be incentive stock options (as defined in Section 422 of the Internal Revenue Code of 1986, as amended), nonqualified stock options or a combination of the foregoing, although only employees are eligible to receive incentive stock options. All options under the Omnibus Stock Plan will be granted at an exercise price per share equal to not less than 100% of the fair market value of the Common Stock on the date the option is granted. Options may be structured to vest over a period of multiple years. Options granted under the Omnibus Stock Plan expire following a pre-determined period of time after the date of grant (which may not be more than 10 years after the grant date), and generally will terminate on the date three months following the date that a participant’s employment with the Company terminates.

 

The Company receives no consideration upon the granting of an option. Full payment of the option exercise price must be made when an option is exercised. The exercise price may be paid in cash or in such other form as the Committee may approve, including shares of Common Stock valued at their fair market value on the date of option exercise. Options generally will not be transferable by the holder thereof other than by will or applicable laws of descent and distribution.

 

The Committee has not granted stock options to any executive officer in the past three years.

Other Potential Awards

The Omnibus Stock Plan also provides for the award of stock appreciation rights, deferred shares and performance units. Through the end of 2017, theThe Committee hadhas not granted any of these other types of awards.awards to any executive officer.

2015Omnibus Stock Plan Awards in 2018

In January 2015, eachOne-third of the Named Executive Officers (who were employed by the Company at that time) received an award of restricted stock. These2018 awards were eligible to performancegranted as time-based restricted stock, and the shares would vest to the extent that the Company’s earnings per share plus dividends reached or exceeded specified levels during the three-year performance period of 2015 to 2017 (the goal was approximately 15% compound annual growth for 2015 and 10% compound annual growth thereafter). Half of the award became eligible to vest based on results in the first year of the performance period, and all of the award was eligible to vest based on results in the second or third year. Fifty percent of any unvested shares (i.e., shares that had not performance vested) from the 2015 award would vest100% on the third anniversary of the grant date, if the executive remained employed by the Company at that time. In February 2016, the first half of these awards vested based on the Company’s level of earnings per share plus dividends achieved in 2015. The second half of these awards vested in February 2017 based on the Company’s level of earnings per share plus dividends achieved in 2016. (Mr. Gould also had a time-based award of restricted stock that vested half in January 2016 and half in January 2017.)

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2016 Omnibus Stock Plan Awards

For 2016, the Committee modified the equity award program and divided the executives’ awards (for those who were employed by the Company at that time) into three equal subparts.

The first subpart of each 2016 award was granted as restricted stock, and the shares will vest 100% on the third anniversary of the grant date, if the executive remains employed with the Company until that date. The executive also hashad the right to receive any cash dividends paid on thethis time-based restricted stock, throughout the three-year term.

 

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The second subpartother two-thirds were granted in a single award of performance shares with two separate, independent vesting criteria: adjusted earnings per share (“EPS”) and Total Shareholder Return (“TSR") during the 2016 award was granted as performance shares.years 2018 to 2020. The first one-third of this subpart was eligible to vest based on the Company’s earnings per share (“EPS”)adjusted EPS in 2016,2018, the second one-third of this subpart was eligible to vest based on the Company’s adjusted EPS in 2017,2019, and all shares (to the extent not previously vested) arewere eligible to vest based on the Company’s adjusted EPS in 2018.2020. The amount of performance shares that vest will bevested based on adjusted EPS was determined pro rata based upon (i) the degree to which an applicable EPS threshold level iswas achieved (at which point 25% of the performance shares would vest) or exceeded up to an applicable EPS target level (at which point 100% of the performance shares would vest), or (ii) the degree to which the applicable EPS target level iswas exceeded up to an applicable EPS maximum level (at which point two times the nominal performance shares would vest). There iswas no “time vesting” opportunity for this subpart. “DividendThe Company does not pay dividends on unvested performance shares. Rather, “dividend equivalents” will accrue on these awards of performance shares and beare paid only if and when the related performance shares vest.

The third subpartsecond vesting criterion for this portion of the 2016 award also2018 awards was granted as performance shares, with an opportunity for the award to vest based on the Company’s cumulative operating income during the three-year performance period of 2016-2018. The pro rata vesting structure and dividend equivalent provisions are essentially the same as those described for the second subpart above.

None of the 2016 awards have vested for any of the Named Executive Officers.

2017 Omnibus Stock Plan Awards

The 2017 equity awards are structured in a manner similar to the 2016 awards. One-third of the 2017 awards was granted as restricted stock with the same vesting and dividend provisions described above. The other two-thirds were granted in a single award of performance shares with two separate, independent vesting criteria. The first vesting criterion is the Company’s EPS during the years 2017 to 2019, structured in the same way described above with respect to the 2016 awards. The second vesting criterion is based on the Company’s total shareholder return (“TSR”)TSR compared with its peer group during the three-year performance period of 20172018 to 20192020 with the following vesting opportunities (less any shares vested under the EPS criteria described above):

 

TSR Percentile 2017-20192018-2020		Amount Vests (% of Nominal Award)
Less than 50th		0%
50th to 75th		Pro rata 50% to 100%
Greater than 75th		100%

 

The 20172018 time-based restricted stock awards also includeincluded a “double trigger” change-in-control vesting provision whereas the 2016 and earlier awards included “single trigger” change-in-control vesting provisions.provision. In other words, the 2017these awards would not vest based solely on the occurrence of a change in control alone; rather, there must be “second trigger” of either (i) an involuntary separation from service or (ii) a separation from service for “Good Reason” (essentially, resignation in the face of negative changes in executive’s employment relationship with the Company).

 

For the 2018 awards of performance shares, the Compensation Committee retained authority in the event of a change-in-control to alter or amend the terms in any manner it deemed equitable and necessary or advisable to take into account the effect of the change-in-control. Such modifications may include, without limitation, (i) providing for payment in the form of cash or other securities in lieu of shares, (ii) vesting of all or a portion of the performance shares based on the attainment of the performance criteria determined as of the date of the change-in-control, (iii) accelerating the vesting of the performance shares in full or on a pro rata basis, (iv) converting some or all of the shares to time-based vesting, or (v) making appropriate adjustments to the performance criteria. However, in the event of a “double trigger” change-in-control and termination of employment as described above, the employee would vest in the nominal number of outstanding performance shares reduced by the number of performance shares previously vested under the performance criteria.

The threshold, goal and maximum achievement levels for this award required approximately 6%, 12% and 18% compound growth, respectively, each year, which yielded the following targets for the portion of this award that was eligible to vest based on 20172020 EPS:

Criteria		Threshold		Goal		Maximum
Adjusted EPS		$1.39		$1.64		$1.92

For 2020, adjusted EPS (see Appendix A) was $1.15. Because this amount was less than the above-stated threshold, no portion of this award vested based on 2020 adjusted EPS.

Omnibus Stock Plan Awards in 2019

The 2019 equity awards were structured in a manner similar to the 2018 awards. One-third of the 2019 awards were granted as time-based restricted stock with the same vesting and dividend provisions described above. The other two-thirds were granted in a single award of performance shares with two separate, independent vesting criteria. The first vesting criterion is the Company’s adjusted EPS during the years 2019 to 2021, structured in the same way described above with respect to the 2018 awards. The second vesting criterion is based on the Company’s TSR compared with its peer group during the three-year performance period of 2019 to 2021, structured in the same way described above with respect to the 2018 awards. The 2019 awards also include change-in-control vesting provisions in the same way as the 2018 awards.

The threshold, goal and maximum achievement levels for this award required approximately 6%5%, 12%10% and 18% compound growth, respectively, as shown below:

Criteria		Threshold		Goal		Maximum
Adjusted EPS		$1.09		$1.15		$1.22

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The Company’s 2017 actual adjusted EPS (which excludes restructuring charges andeach year, which yielded the impact of the U.S. Tax Cuts and Jobs Act enacted in December 2017) grew 14% from $1.03 to $1.18 (see the table below and Appendix A), thus exceeding the established goal amount.

Based on this performance, the Named Executive Officers vested in 143% offollowing targets for the portion of this award that was eligible to vest based on 20172020 EPS:

Criteria		Threshold		Goal		Maximum
Adjusted EPS		$1.64		$1.76		$2.07

The Company’s 2020 EPS growth.performance for the 2019 equity awards was calculated for compensation purposes in the same manner as for the 2018 equity awards, and thus was less than the above-stated threshold. As a result, no portion of this award vested based on 2020 adjusted EPS.

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Omnibus Stock Plan Awards in 2020

The Committee made several changes in the features of the Omnibus Stock Incentive Plan awards granted in 2020. After reviewing peer and benchmark data compiled by its independent consultant, the Committee (i) eliminated the alternative TSR vesting criteria described above (which some shareholders had viewed negatively as a “catch up” feature), (ii) eliminated the opportunity in the third year of the performance period to vest in shares that had not previously vested in the first two years of the performance period (which some shareholders had viewed negatively as a “catch up” feature); (iii) maintained the mix of 1/3 time-based and 2/3 performance-based awards but changed from having one performance metric (adjusted EPS) to two performance metrics – adjusted EBITDA (75% weighting) and three-year cumulative return on invested capital (25% weighting), and (iv) eliminated the opportunity to vest in performance-based shares prior to the end of the three-year performance period. Regarding item (iv) in the preceding sentence, the 2020 awards provide an opportunity for grantees to earn shares based on adjusted EBITDA achievement during each year of the three-year performance plan, but the vesting of those earned shares is deferred until the Committee’s certification of attainment of all performance measures following the end of the three-year performance period.

The threshold, goal and maximum achievement levels for this award required were set based upon the Company’s three-year strategic plan, which required targeted adjusted EBITDA growth (based on goal amounts) of approximately 10%, 7.5% and 6% compound growth for years 2020, 2021 and 2022, respectively, yielding the following targets for the portion of this award that was eligible to vest based on 2020 adjusted EBITDA (in millions):

Criteria		Threshold		Goal		Maximum
Adjusted EBITDA		$152.0		$217.1		$249.7

For 2020, adjusted EBITDA (see Appendix A) was $146 million, and thus was less than the above-stated threshold. As a result, no portion of this award vested based on 2020 adjusted EBITDA.

 

As demonstrated above, the Committee believes the structure of the performance-based equity awards is appropriately designed to pay for performance, and that the structure strikes a proper balance among motivating management, rewarding strong management performance, and accounting for the regular cyclicality of our industry that is outside of management’s control.

 

Changes in Executive Compensation in 2021

The Committee carefully considered the unique set of challenges created by the ongoing COVID-19 pandemic in connection with our 2021 compensation program so that we can continue to retain and incentivize our leadership team during this unprecedented time. For the 2021 bonus potential, the Committee has added a performance metric for SG&A expenses, such that the bonus criteria applicable to the CEO, CFO and other corporate employees are adjusted operating income (50% weighting), cash from operating activities (25% weighting) and SG&A expenses (25% weighting). The Committee also eliminated the requirement to achieve the adjusted operating income threshold target, such that a bonus now may be earned for achieving targets for cash from operating activities and SG&A expenses independently. The Committee believes these changes are appropriate because they incentivize management to focus on key financial metrics that are likely to drive earnings growth and enhance shareholder value even while the pandemic is ongoing.

The Committee also made changes to the 2021 long-term incentive plan awards, particularly due to the challenges involved in setting multi-year performance targets during the uncertainty created by the COVID-19 pandemic. The 2021 Omnibus Stock Incentive Plan awards are one-half (rather than one-third) time-based restricted stock, and one-half (rather than two-thirds) performance shares. The performance metrics for the portion granted as performance shares are adjusted EBITDA (75% weighting) and three-year return on invested capital during the period 2021-2023 (25% weighting). Rather than setting specific quantitative adjusted EBITDA targets for years 2022 and 2023, the targets for those years will be based on a numerical formula requiring a specified percentage of growth over the prior year’s actual adjusted EBITDA result. The Committee believes this approach recognizes the difficulty setting future year EBITDA targets in the current pandemic environment while still requiring meaningful year-over-year growth regardless of the prior year results.

The health and safety of our employees and the communities in which we operate continue to be the Company’s paramount concern, and our Board of Directors, Compensation Committee and executive leadership team will continue to monitor the impacts of COVID-19 on our business and the Company’s executive compensation program.

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Other Elements of Compensation Program

 

In addition to the principal compensation program elements described above, the Company has adopted a number of other elements to further its compensation program goals. They are as follows:

 

●	401(k) Plan and Other Defined Contribution Plans		●	Severance Agreements
●	Elective Deferred Compensation Program		●	Limited Perquisites
●	Salary Continuation Program (Mr. Hendrix only)	●	Special Incentives

401(k) Plan and Other Defined Contribution Plans Plans

 

The Company maintains the Interface, Inc. Savings and Investment Plan (the “401(k) Plan”), a tax-qualified 401(k) plan which provides its U.S.-based employees a convenient and tax-advantaged opportunity to save for retirement. The Company’s Named Executive Officers who are based in the United States are eligible to participate in the 401(k) Plan on the same terms as other executive and non-executive employees based in the United States, and receive the same benefits afforded all other participants. Under the 401(k) Plan, all participating employees are eligible to receive matching contributions (except as described below for a portion of 2020) that are subject to vesting over time. The Company periodically evaluates the level of matching contributions afforded participant employees to ensure competitiveness in the marketplace. The Company matches 50% of the first 6% of the employee’s eligible compensation (capped by statutory limitations) that the employee contributed to the 401(k) Plan.

Mr. Coombs participates As a cost-saving measure in a defined contribution plan in Australia called a “superannuation plan”. Pursuantresponse to this plan, the negative impacts of the COVID-19 pandemic, Interface discontinued its 401(k) matching contributions effective May 1, 2020. The Company contributed $21,086 to Mr. Coombs’s account in 2017.subsequently resumed its matching contributions, effective January 1, 2021.

 

Elective Deferred Compensation Program

The Company also maintains the Interface, Inc. Nonqualified Savings Plan II (the “Nonqualified Plan”) for certain U.S.-based “highly compensated employees” (as such term is defined in applicable IRS regulations), including the Named Executive Officers who are based in the United States. The compensation level required to participate in the Nonqualified Plan was $120,000$125,000 in total annual compensation, and the Company had 117109 participants in the plan (including both current and former employees) at the end of 2017.2020. As with the Company’s 401(k) Plan, the Named Executive Officers who are based in the United States are eligible to participate in the Nonqualified Plan on the same terms as other executive and non-executive eligible employees based in the United States, and receive the same benefits afforded all other participants. Under the Nonqualified Plan, all eligible employees can elect to defer, on a pre-tax basis, a portion of their salary and/or annual bonus compensation. The Company matches 50% of the first 6% of the employee’s eligible salary and bonus (and sales commissions, if applicable) that was deferred, less any potential Company matching amounts under the 401(k) Plan.

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As with the 401(k) Plan, the Company discontinued the Nonqualified Plan matching contributions from May 1, 2020 to January 1, 2021.

 

Please see the “Non-Qualified Deferred Compensation” table included in this Proxy Statement for further details regarding the Nonqualified Plan, as well as the Company’s Named Executive Officers’ contributions, earnings and account balances applicable to the Nonqualified Plan for fiscal year 2017.2020.

Pension/Salary Continuation Programs

 

Foreign Defined Benefit Plans

The Company has trustee-administered defined benefit retirement plans (“Pension Plans”) which cover certain of its overseas employees. The benefits are generally based on years of service and the employee’s average monthly compensation. As determined by their respective trustees, the investment objectives of the Pension Plans are to maximize the return on the investments without exceeding the limits of prudent pension fund investment and to ensure that the assets ultimately will be sufficient to exceed minimum funding requirements. The goal is to optimize the long-term return on plan assets at a moderate level of risk, by balancing higher-returning assets, such as equity securities, with less volatile assets, such as fixed income securities. The assets are managed by professional investment firms and performance is evaluated periodically against specific benchmarks. The Pension Plans’ net assets did not include any shares of the Company’s own stock at December 31, 2017.the end of fiscal year 2020. None of our Named Executive Officers are participants.participants in these plans.

Salary Continuation Plan

 

Historically, the Company has maintained a nonqualified Salary Continuation Plan designed to induce selected employees of the Company to remain in the employ of the Company by providing them with retirement, disability and death benefits in addition to those that they may receive under the Company’s other benefit programs. As of the end of 2017, Mr. Hendrix wasis the only employee participating in the Salary Continuation Plan (pursuant to an arrangement from his previous tenure as CEO), and the Committee has determined that the plan is closed to new participants.

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The Salary Continuation Plan entitles participants to (i) retirement benefits upon normal retirement from the Company at age 65 (or early retirement as early as age 55) after completing at least 15 years of service with the Company (unless otherwise provided in the plan), payable for the remainder of their lives (or, if elected by a participant, a reduced benefit is payable for the remainder of the participant’s life and any surviving spouse’s life) and in no event for less than 10 years under the death benefit feature; (ii) disability benefits payable for the period of any pre-retirement total disability; and (iii) death benefits payable to the designated beneficiary of the executive for a period of up to 10 years. The annual retirement benefit for retirement at age 65 is 50% of the executive’s final average earnings (defined as the average of the salary and bonus paid by the Company for the four individual calendar years of the executive’s highest compensation during the last eight full calendar years of the executive’s employment with the Company ending on or prior to the effective date of the executive’s retirement), which decreases proportionately to 30% of final average earnings for early retirement at age 55. The annual disability benefit is structured to essentially equate to 66% of current pay (salary and bonus) at the time of disability. The annual death benefit, for the 10-year payment period, is 50% of final average earnings, for a pre-retirement death, or a continuation of the actual retirement payments for the balance of the 10-year period (if any) for a post-retirement death (assuming no election of spousal survival benefits). The Company’s obligations under the Salary Continuation Plan are currently unfunded (although the Company uses insurance instruments in an irrevocable grantor (“rabbi”) trust to hedge its exposure thereunder); however, the Company is required to contribute the full present value of its obligations thereunder to a rabbi trust in the event of a “Change in Control” (as such term is defined in the Salary Continuation Plan) of the Company.

 

Pursuant to the Salary Continuation Plan, the Company has maintained a Salary Continuation Agreement with Mr. Hendrix since 1986. (The Company most recently amended and restated the Salary Continuation Agreement with Mr. Hendrix in January 2008, primarily to comply with Section 409A of the Internal Revenue Code of 1986, as amended. The benefits under his amended and restated agreement are substantially similar to those under his prior agreement.) The individual Salary Continuation Agreement contains essentially all of the benefit terms and conditions, and the agreement controls in the event of any conflict with the Salary Continuation Plan document. Please see the “Pension Benefits” table included in this Proxy Statement for information about the Salary Continuation Plan benefits applicable to Mr. Hendrix.

 

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Employment and Severance Agreements

 

The Company has an employment agreementsagreement in effect with each of Messrs. Hendrix,Mr. Stansfield, and had an employment agreement in effect with Mr. Gould and Coombs.until his termination in January 2020. These agreements generally provide for certain benefits (salary, bonus, medical benefits, etc.) in the event of a termination of employment without “cause” (as may be defined in the agreements), as well as certain benefits upon his resignation or a termination due to death or disability. These agreements also contain provisions placing restrictions on the individual’s ability to compete with the Company, or solicit its customers or employees, for a specified period of time following termination of employment. For Messrs.Mr. Gould, and Coombs, these agreementsthe agreement also provideprovided for certain benefits in the event of a termination of employment in connection with a “Change in Control” (as defined in the agreements) of the Company.

The Company also has a Severance Protection and Change in Control Agreement with Mr. Foshee that provides for certain severance benefits if the individual’s employment is terminated involuntarily without cause or in connection with a change in control. The agreement also contains provisions placing restrictions on the individual’s ability to compete with the Company for a period of 12 or 24 months following termination of employment, depending on the circumstances of termination.

Messrs. Hendrix, Hausmann and Poppens do not have employment agreements. In the event of a termination, they are entitled to receive only those benefits outlined in (i) the respective employment offer letters for Messrs. Hausmann and Poppens, (ii) the Company’s policies (including, without limitation, severance and benefits) applicable to similarly situated employees in the U.S., and (iii) the terms of their respective individual equity award agreements in effect at the time.

 

Please see the further discussion below in the “Potential Payments Upon Termination or Change of Control” section of this Proxy Statement regarding the respective employment and change in control agreements of the Company’s Named Executive Officers.

Perquisites

 

In order to provide a market competitive total compensation package to certain of the Company’s executive officers, including the Named Executive Officers, the Company provides a limited set of perquisites that it believes enable its Named Executive Officers to perform their responsibilities efficiently and with minimal distractions. The perquisites provided to one or more Named Executive Officers in 20172020 included the following:

 

●	Company-provided automobile/allowance		●	Long-term care and life insurance
●	Company-provided telephone	●		Split dollar insurance agreement (for Mr. Hendrix only)

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Please see the “Summary Compensation Table” included in this Proxy Statement (and the notes thereto) for a more detailed discussion of these perquisites and their valuation.

 

Severance AgreementsSpecial Incentive Programs

 

From time to time, in its discretion, the Committee may implement special incentive programs which provide executives an opportunity to earn additional compensation if specific performance objectives (such as stock price appreciation, debt reduction, cash accumulation, or attainment of a specified financial ratio) are met. No special incentive programs have been used in the past several years.

 

Stock Ownership and Retention Guidelines

 

To further tie the financial interests of Company executives to those of shareholders, the Committee has established stock ownership and retention guidelines. In 2016, the Committee increasedPursuant to the stock ownership and retention guidelines, so that executives are now expected to accumulate a number of shares (unrestricted) of the Company’s Common Stock having a value equaling three times base salary in the case of the Chief Executive Officer and two times base salary in the case of the other executive officers (based on salaries and the stock price at the time the new guidelines were adopted)adopted in 2016). The expectation is for executives to reach this ownership level by March 2020 (or within four years of joining the Company).Company or otherwise becoming an executive officer. As of the end of 2017, Messrs. Gould and Coombs2020, all Named Executive Officers had met this new target, while Messrs. Miller and Scales remained on trackexcept for Mr. Poppens who was appointed to meet the guideline. (Mr. Hausmann recently joined the Companyhis executive position in April 2017, and Mr. Hendrix is no longer an executive officer.)November 2020. To facilitate accomplishing the ownership targets, executive officers generally are expected to retain at least one-half of the net after-tax shares (i.e., the net shares remaining after first selling or the withholding of sufficient shares to cover the anticipated tax liability and, in the case of stock options, the exercise price) obtained upon the vesting of equity awards and the exercise of stock options.

 

Directors also are subject to stock ownership requirements. Directors are required to hold 2,000 unrestricted shares. Any new director is required to accumulate these shares by the second anniversary of his or her election. As a guideline, non-employee directors also are expected to retain during their tenure all of the net after-tax shares obtained upon the vesting of restricted stock and at least one-half of the net after-tax shares obtained upon the exercise of stock options. All current directors have met this stock ownership standard.

 

The Company has a policy that generally prohibits all of its employees, officers and directors from engaging in short sales or trading in puts, calls and other options or derivatives with respect to the securities of the Company.

 

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Compensation Deductibility

Prior to enactment of The U.S. Tax Cuts and Jobs Act (the “Tax Act”), an income tax deduction under U.S. federal law was generally available for annual compensation in excess of $1 million paid to certain “covered employees” of a public corporation if that compensation qualified as “performance-based” compensation under Section 162(m) of the U.S. tax code. Prior to the Act, “covered employees” included the chief executive officer and the next three highest paid executive officers (excluding the chief financial officer), determined as of the end of a taxable year.  Executive compensation under the Company’s Executive Bonus Plan, described above, met these requirements and qualified for an income tax deduction under U.S. federal law prior to the Tax Act.

The Tax Act eliminates the “performance-based” deduction beginning January 1, 2018, expands the definition of “covered employees” to include the chief financial officer, and makes “covered employee” status permanent for any executive who was a “covered employee” for any taxable year beginning after December 31, 2016. However, the Tax Act provides a transition rule with respect to remuneration which is provided pursuant to a written binding contract which was in effect on November 2, 2017, and which was not materially modified after that date. As a result of the Tax Act, the Company currently expects that any compensation amounts paid in excess of $1 million to any “covered employee” in respect of fiscal 2018 and beyond will no longer be deductible. The Company’s expectation is that this change will not have a material effect on its operating results or financial condition

 

Although the Committee considers deductibility issues when approving executive compensation elements, the Company and the Committee believe that other compensation objectives, such as attracting, retaining and providing incentives to qualified managers, are important and may supersede the goal of maintaining deductibility. Consequently, the Company and the Committee may make compensation decisions without regard to deductibility when it is deemed to be in the best interests of the Company and its shareholders to do so.

 

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee of the Board of Directors has reviewed and discussed with management the “Compensation Discussion and Analysis” section of this Proxy Statement. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” section be included in this 20182021 Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2017,January 3, 2021, filed with the Securities and Exchange Commission.

 

THE COMPENSATION COMMITTEE

Andrew B. CoganSheryl D. Palmer (Chair)

Sheryl D. PalmerDwight Gibson

Joseph Keough

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

None of the executive officers of the Company served as either (1) a member of the Compensation Committee or (2) a director of any entity of which any member of the Compensation Committee is an executive officer. In addition, none of the executive officers of the Company served as a member of the compensation committee of any entity of which any member of the Board of Directors is an executive officer.

 

 

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EXECUTIVE COMPENSATION AND RELATED ITEMS

 

Summary Compensation Table

 

The following table provides information about the compensation paid by the Company and its subsidiaries to the Company’s Named Executive Officers for each of the past three fiscal years. As previously disclosed, Mr. Gould is no longer employed by the Company.

 

Name and Principal Position		Year		Salary			Bonus			Stock Awards			Option Awards			Non-Equity Incentive Plan Compensation			Change in Pension Value and Nonqualified Deferred Compensation Earnings			All Other Compensation			Total			Year			Salary				Bonus				Stock Awards				Option Awards				Non-Equity Incentive Plan Compensation				Change in Pension Value and Nonqualified Deferred Compensation Earnings				All Other Compensation				Total
(a)		(b)		($) (c)			($) (d)(1)			($) (e)(2)			($) (f)			($) (g)(3)			($) (h)(4)			($) (i)(5)			($) (j)(6)			(b)			($) (c)				($) (d)(1)				($) (e)(2)				($) (f)				($) (g)(3)				($) (h)(4)				($) (i)(5)				($) (j)(6)
Daniel T. Hendrix,		2017		432,750			--			--			--			393,666			2,542,555			147,595			3,516,566
Chairman and Former		2016		1,011,000			--			2,223,395			--			992,297			1,617,135			185,493			6,029,320
CEO		2015		981,300			--			1,635,000			--			1,912,897			1,404,405			232,887			6,166,489
Jay D. Gould,		2017		882,564			--			2,195,604			--			1,586,100			--			83,890			4,748,159			2020				52,887				--				--				--				--				--				75,581				128,468
President and		2016		800,000			--			1,189,523			--			694,600			--			68,863			2,752,986
Former President and																												2019				927,000				--				2,317,490				--				--				--				155,311				3,399,801
CEO		2015		701,923			--			1,366,762			--			1,067,375			--			61,031			3,197,091			2018				927,000				--				2,549,234				--				1,522,876				--				102,556				5,101,666
Daniel T. Hendrix,																												2020				888,375				--				999,996				--				--				1,892,754				267,067				4,048,192
President, CEO and
Chairman
David B. Foshee,																												2020				388,264				--				499,999				--				--				--				36,704				924,967
Vice President,																												2019				385,175				--				442,955				--				231,475				--				46,276				1,105,881
General Counsel and
Secretary
Bruce A. Hausmann,																												2020				446,692				--				688,420				--				--				--				50,202				1,185,314
Vice President and CFO																												2019				445,578				--				668,379				--				401,662				--				65,991				1,581,610
																												2018				432,600				--				648,874				--				426,405				--				49,318				1,557,197
Bruce A. Hausmann,		2017		306,923			100,000			1,236,922			--			452,882			--			227,960			2,224,687
VP and CFO																			--
Matthew J. Miller		2017		412,000			--			603,056			--			432,724			--			38,485			1,486,264
James Poppens,																												2020				313,411				--				224,993				--				--				--				20,295				558,699
Vice President		2016		362,083			--			414,458			--			166,724			--			32,085			975,350
(Division President)		2015		175,000			--			147,150			--			140,210			--			11,975			474,335
Robert A. Coombs		2017		401,003			--			542,671			--			400,669			--			98,003			1,442,346
Senior Vice President		2016		348,324			--			496,608			--			368,659			--			124,820			1,338,411
Nigel Stansfield,																												2020				378,045				--				611,174				--				--				--				42,418				1,031,637
Vice President																												2019				396,637				--				620,863				--				169,563				--				51,702				1,238,765
(Division President)*		2015		353,309			--			408,750			--			417,115			--			129,230			1,308,404			2018				342,622				--				441,089				--				371,078				--				26,889				1,181,678
J. Chadwick Scales		2017		350,000			--			570,272			--			251,601			--			35,591			1,207,464
VP and Chief		2016		242,446			--			415,715			--			151,755			--			16,083			825,999
Marketing, Innovation and Design Officer

______

 

*

Mr. Coombs isStansfield was paid in Australian dollars.British pound sterling. In calculating the U.S. dollar equivalent for disclosure purposes, the Company has converted each payment in Australian dollarsBritish pound sterling into U.S. dollars based on the exchange rate in effect as of the end of the year (AUS$(£1 to $0.78$1.22 for 2017, AUS$12020, £1 to $0.72$1.28 for 2016,2019, and AUS$1£1 to $0.73$1.34 for 2015)2018).

 

(1)

For Mr. Hausmann, the amount represents an employment sign-on bonus upon joining the Company in April 2017. The Company paid no other discretionary bonuses, or bonuses based on performance metrics that were not pre-established and communicated to the Named Executive Officers. All cash bonus awards were performance-based. These payments, which were made under the Company’s Executive Bonus Plan, are reported in the “Non-Equity Incentive Plan Compensation” column (column (g)).

 

(2)

The amounts reported in the “Stock Awards” column are computed based upon the grant date fair values as of the respective grant dates. See the Note entitled “Shareholders’ Equity” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017,January 3, 2021, regarding assumptions underlying valuation of equity awards. See the “Grants of Plan-Based Awards” table included in this Proxy Statement for additional information about equity awards granted in 2017,2020, and the “Outstanding Equity Awards at Fiscal Year-End” table included in this Proxy Statement for information with respect to awards outstanding at year-end 2017.2020. The ultimate payout value with respect to the “Stock Awards” included in column (e) may be significantly more or less than the amounts shown, and possibly zero, depending on the Company’s financial performance at the end of the performance or restricted period and the recipient’s tenure of employment. For a description of the performance criteria, please see the discussion contained in the “Compensation Discussion and Analysis” section herein.

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(3)

The amounts reported in the “Non-Equity Incentive Plan Compensation” column reflect the amounts earned by and paid to each Named Executive Officer under the Company’s Executive Bonus Plan. The material provisions of the Executive Bonus Plan are more fully described in the “Compensation Discussion and Analysis” section included herein.

 

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(4)

The amountsamount reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column representrepresents aggregate changes in the actuarial present value of the Named Executive Officers’ accumulated benefit under the Company’s Salary Continuation Plan for Mr. Hendrix, plusHendrix. The Company maintains a defined benefit Salary Continuation Plan benefitAgreement with Mr. Hendrix dated as of January 1, 2008 (although earlier versions of the agreement date back to 1986). In 2020, the present value increased due a combination of $832,752 of cash payments under Salary Continuation Agreement plus an increase of $1,060,002 in the present value of the accumulated benefits (primarily due to hima decrease in the discount rate used for determining present value), for an aggregate increase of $729,301 during 2017.$1,892,754. See the “Pension Benefits” table of this Proxy Statement for additional information about these benefits for Mr. Hendrix. The other Named Executive Officers do not participate in a Pension Plan or the Salary Continuation Plan. The Company does not pay any above-market interest (or any guaranteed interest rate) on its Nonqualified Plan. See the “Pension Benefits” table of this Proxy Statement for information about these benefits afforded each of the Company’s Named Executive Officers.

 

(5)

The amounts reported in the “All Other Compensation” column reflect, for each Named Executive Officer, the sum of (i) the incremental cost to the Company of all perquisites and other personal benefits, and (ii) amounts contributed by the Company to the 401(k) Plan or Nonqualified Plan or superannuation plan (collectively, the “Company Retirement Plans”). The material provisions of the Company Retirement Plans are contained in the “Compensation Discussion and Analysis” section herein.

 

The following table outlines those perquisites and all other compensation required by SEC rules to be separately quantified that were provided to the Company’s Named Executive Officers during 2017.2020.

 

Name		Automobile   ($)			Telephone   ($)			Long-Term Care and Life Insurance Premiums   ($)			Split Dollar Insurance Premiums   ($)			Other   ($)			Dividends on Restricted Stock   ($)			Company Contributions to Retirement Plans   ($)
Daniel T. Hendrix		15,000			3,755			2,847			72,032			0			10,760			43,201
Jay D. Gould		15,000			2,300			2,760			0			0			16,065			47,765
Bruce A. Hausmann		8,769			3,262			707			0			102,772			11,100			1,350
Matthew J. Miller		12,000			2,470			1,366			0			0			4,845			17,804
Robert A. Coombs		0			10,666			4,266			0			57,034			4,951			21,086
J. Chadwick Scales		12,000			2,250			1,433			0			0			4,496			15,413

Name		Automobile   ($)				Telephone   ($)				Long-Term Care and Life Insurance Premiums   ($)				Other   ($)				Dividends and Dividend Equivalents   ($)				Company Contributions to Retirement Plans   ($)
Jay D. Gould			812				574				115				72,922				--				1,159
Daniel T. Hendrix			13,916				1,866				1,111				240,000				4,323				5,850
David B. Foshee			12,570				1,748				1,306				--				11,309				9,771
Bruce A. Hausmann			12,561				1,078				1,357				--				18,666				16,539
James Poppens			12,125				2,051				1,212				--				801				4,106
Nigel Stansfield			12,290				1,703				17,060				--				11,365				--

 

Automobile/Automobile Allowance.Allowance. Each of the Named Executive Officers except Mr. Coombs were provided with use of a company-provided automobile, or an automobile allowance, plus fuel and maintenance.

 

Telephone. The Company paid certain fees associated with the Named Executive Officers’ use of company-provided cellular telephones.

 

Long-Term Care and Life Insurance. The Company paid certain premiums associated with long-term care and life insurance policies.

Split Dollar Insurance Agreement with Daniel T. Hendrix. The Company is a party to a split dollar insurance agreement (the “Hendrix Split Dollar Agreement”) with Mr. Hendrix. Pursuant to the Hendrix Split Dollar Agreement, Mr. Hendrix has obtained an insurance policy on his life, and the Company pays the premiums on such policy as an additional employment benefit for Mr. Hendrix. The annual premium is $72,032. Mr. Hendrix is the owner of the policy, and has assigned to the Company a portion of the death benefit that is equal to the greater of (i) the total amount of the unreimbursed premiums paid by the Company with respect to the policy, or (ii) the death benefit under the policy in excess of $2,000,000. The Company’s portion totaled $2,789,988 as of December 31, 2017. The balance of the death benefits ($2,000,000) will be payable to the beneficiaries of the policy designated by Mr. Hendrix.

Other. For Mr. Hausmann,Gould, the amount represents payment of a relocation package upon joining the Company.unused vacation payout ($71,308) and Company paid taxes on W-2 adjustment amounts processed after termination ($1,614). For Mr. Coombs,Hendrix, the amount represents reimbursementhis cash retainer for his service as Chairman of housing expenses.the Board.

Dividends on Restricted Stock.and Dividend Equivalents. In 2017,2020, the Company paid on all outstanding Common Stock of the Company (including time-based awards of restricted stock, but not on unvested performance shares) dividends of $0.06 per share in each of the first two quarters and $0.065 per share in eachthe first quarter, and $.01 per share in the second, third and fourth quarters. Dividend equivalents accrue on awards of performance shares and are paid out only if, and to the last two quarters.extent, the performance shares actually vest. The amounts in the “Dividends on Restricted Stock”and Dividend Equivalents” column reflect dividends paid on the time-based restricted shares, and dividend equivalents paid out on performance shares that vested, of each Named Executive Officer in 2017.

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2020.

 

Contributions to Retirement Plans. The Company makes matching contributions, on the same terms and using the same formulas as for other participating employees, to each U.S.-based Named Executive Officer’s account under the 401(k) Plan and the Nonqualified Plan, as applicable.

 

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The amounts reflected below represent the contributions by the Company:

 

Name		Year		Company Contribution To 401(k) Plan ($)				Company Contribution To Nonqualified Plan ($)
Daniel T. Hendrix		2017		8,100				35,101
		2016		7,950				58,322
		2015		7,950				50,726
Jay D. Gould		2017		8,100				39,665
		2016		7,950				25,500
		2015		7,950				0
Bruce A. Hausmann		2017		1,350				0
Matthew J. Miller		2017		8,100				9,704
		2016		7,950				6,129
		2015		780				0
J. Chadwick Scales		2017		8,100				7,313
		2016		868				0

Name		Year			Company Contribution To 401(k) Plan ($)			Company Contribution To Nonqualified Plan ($)
Jay D. Gould		2020			1,043			116
		2019			8,400			38,180
		2018			8,250			38,230
Daniel T. Hendrix		2020			5,850			--
David B. Foshee		2020			7,313			2,459
		2019			7,125			10,727
Bruce A. Hausmann		2020			8,550			7,989
		2019			8,400			18,055
		2018			8,250			14,143
James Poppens		2020			4,106			--

As a non-U.S. employee, Mr. CoombsStansfield is ineligible to participate in the 401(k) Plan and the Nonqualified Plan. Mr. Coombs does participate in a defined contribution plan in Australia, where the company’s contribution to his plan account was $21,086 in 2017, $17,993 in 2016 and, $18,250 in 2015.

 

(6)

In 2017,2020, salary as a percentage of total compensation (excluding change in pension value) for each of Messrs. Gould, Hendrix, Gould,Foshee, Hausmann, Miller, CoombsPoppens, and ScalesStansfield was 44%41%, 19%41%, 14%42%, 28%38%, 28%56%, and 29%37%, respectively. In 2016,2019, this percentage for each of Messrs. Hendrix, Gould, Miller, CoombsFoshee, Hausmann, and ScalesStansfield was 23%27%, 29%35%, 37%28%, 26% and 29%32%, respectively. In 2015,2018, this percentage for each of Messrs. Hendrix, Gould, MillerHausmann, and CoombsStansfield was 21%18%, 22%28%, 37% and 27%29%, respectively.

 

 

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Grants of Plan-Based Awards in 20172020

 

The following table provides information about awards granted to the Company’s Named Executive Officers in 2017,2020, as well as potential future payments associated therewith.

 

					Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)									Estimated Future Payouts Under Equity Incentive Plan Awards
Name   (a)		Grant Date     (b)			Threshold ($)   (c)			Target ($)   (d)			Maximum ($)   (e)			Threshold (#)   (f)			Target (#)   (g)(2)			Maximum (#)   (h)			Grant Date Fair Value of Stock and Option Awards ($)   (l) (3)
Daniel T. Hendrix		2-21-17			82,144			328,575			492,863			--			--			--			--
Jay D. Gould		2-21-17			330,962			1,323,846			1,985,769			20,616			82,464			164,928			1,463,736
		2-21-17			--			--			--			--			41,232			41,232			731,868
Bruce A. Hausmann		4-10-17			94,500			378,000			567,000			5,707			22,826			45,652			419,998
		4-10-17			--			--			--			--			44,398			44,398			816,923
Matthew J. Miller		2-21-17			92,700			370,800			556,200			5,663			22,650			45,300			402,038
		2-21-17			--			--			--			--			11,325			11,325			201,019
Robert A. Coombs*		2-21-17			90,226			360,902			541,354			5,096			20,382			40,764			361,781
		2-21-17			--			--			--			--			10,191			10,191			180,890
J. Chadwick Scales		2-21-17			78,750			315,000			472,500			5,355			21,418			42,836			380,170
		2-21-17			--			--			--			--			10,710			10,710			190,103

						Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1)												Estimated Future Payouts Under Equity Incentive Plan Awards
Name (a)		Grant Date     (b)				Threshold ($)   (c)				Target ($)   (d)				Maximum ($)   (e)				Threshold (#)   (f)				Target (#)   (g)(2)				Maximum (#)   (h)				Grant Date Fair Value of  Stock and Option Awards ($)   (l) (3)
Jay D. Gould			--				--				--				--				--				--				--				--
Daniel T. Hendrix			2-7-20				347,625				1,390,500				2,433,375				--				--				--				--
			2-7-20				--				--				--				--				59,880				59,880				999,996
David B. Foshee			2-28-20				72,220				288,881				505,542				5,426				21,702				43,404				333,343
			2-28-20				--				--				--				--				10,850				10,850				166,656
Bruce A. Hausmann			2-28-20				100,255				401,020				701,785				7,470				29,881				59,762				458,972
			2-28-20				--				--				--				--				14,938				14,938				229,448
James Poppens(4)			2-28-20				56,250				225,000				258,750				2,443				9,770				19,540				150,067
			2-28-20				--				--				--				--				4,878				4,878				74,926
Nigel Stansfield*			2-28-20				85,060				340,241				595,421				6,632				26,528				53,056				407,470
			2-28-20				--				--				--				--				13,262				13,262				203,704

 

*	Estimated potential payments under Non-Equity Incentive Plan Awards for Mr. Coombs areStansfield were converted into U.S. dollars based on the exchange rate as of the end of fiscal year 2017.2020.

 

(1)

The payment amounts reflected in columns (c), (d) and (e) represent amounts associated with awards potentially earned for fiscal 20172020 by the Company’s Named Executive Officers under the Company’s Executive Bonus Plan. The total bonus opportunity under the Executive Bonus Plan (expressed as a percentage of 20172020 base salary) was 130%150% for Mr. Hendrix, 115% for Mr. Gould, 90% for Messrs. Hausmann, MillerHausman and Coombs,Stansfield, and 60%75% for Mr. Scales.Foshee. Up to 150%175% of the bonus opportunity may be earned for maximum achievement.achievement (except that the maximum achievement for Mr. Poppens prior to his promotion was 115%). Mr. Gould’s bonus potential was 150% of base salary at the time of his termination on January 19, 2020. See footnote 4 for information regarding Mr. Poppens. Certain additional material provisions of the Executive Bonus Plan are more fully described in the “Compensation Discussion and Analysis” section included herein.

 

(2)

The amounts reflected in column (g) represent the number of shares of restricted stock and performance shares granted to the executives in 20172020 under the Omnibus Stock Plan. See the Compensation Discussion and Analysis herein for additional information on these awards. These shares of restricted stock and performance shares are included in the “Stock Awards” column (column (e)) of the Summary Compensation Table.

 

(3)

The amounts reflected in column (l) represent the dollar value of restricted stock and performance shares awarded to the executives, calculated by multiplying the number of shares (assuming target payout) awarded by the closing price of the Company’s Common Stock as reported by the Nasdaq Stock Market on the trading date immediately preceding the date of grant.

 

(4)

Effective as of his promotion on November 1, 2020, Mr. Poppens’ base salary was increased from $300,000 to $400,000 and his bonus potential was increased from 75% to 90% of base salary, and thus his estimated future payouts under non-equity incentive plan awards for threshold, target and maximum were increased to $90,000, $360,000 and $630,000, respectively.

 

 

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Outstanding Equity Awards at 20172020 Fiscal Year-End

 

The following table provides information about the number of shares covered by exercisable and unexercisable options and unvested restricted stock awards outstanding and held by the Company’s Named Executive Officers as of December 31, 2017.the end of fiscal year 2020.

 

		Option Awards															Stock Awards
Name   (a)		Number of Securities Underlying Unexercised Options   (#)   Exercisable   (b)			Number of Securities Underlying Unexercised Options   (#)   Unexercisable   (c)			Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options   (#)   (d)			Option Exercise Price   ($)   (e)			Option Expiration Date       (f)			Number of Shares or Units of Stock That Have Not Vested   (#)   (g)(1)			Market Value of Shares or Units of Stock That Have Not Vested   ($)   (h)(2)			Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested   (#)   (i)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested   ($)   (j)
Daniel T. Hendrix		--			--			--			--			--			43,039			1,082,431			86,078			2,164,86
Jay D. Gould		--			--			--			--			--			64,258			1,616,089			128,516			3,232,177
Bruce A. Hausmann		--			--			--			--			--			44,398			1,116,610			22,826			574,074
Matthew J. Miller		--			--			--			--			--			19,378			487,357			38,756			974,713
Robert A. Coombs		--			--			--			--			--			19,804			498,071			39,608			996,141
J. Chadwick Scales		--			--			--			--			--			16,544			416,082			33,084			832,063

		Option Awards															Stock Awards
Name (a)		Number of Securities Underlying Unexercised Options (#) Exercisable (b)			Number of Securities Underlying Unexercised Options (#) Unexercisable (c)			Equity Incentive Plan Awards: Number of Securities  Underlying Unexercised Unearned Options (#) (d)			Option Exercise Price ($) (e)			Option Expiration Date (f)			Number of Shares or Units of Stock That Have Not Vested (#) (g)(1)			Market Value of Shares or Units of Stock That Have Not Vested ($) (h)(2)			Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i)			Equity Incentive Plan Awards: Market or  Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j)
Jay D. Gould			--			--			--			--			--			--			--			--			--
Daniel T. Hendrix																		59,880			628,740			--			--
David B. Foshee			--			--			--			--			--			24,563			257,912			36,456			382,788
Bruce A. Hausmann			--			--			--			--			--			36,056			378,588			52,427			550,484
James Poppens			--			--			--			--			--			7,396			77,658			13,127			137,834
Nigel Stansfield			--			--			--			--			--			30,782			323,211			46,074			483,777

______

 

(1)

Restricted stock awards that have not yet vested are subject to forfeiture by the Named Executive Officers under certain circumstances. For a description of the related performancevesting criteria, please see the discussion contained in the “Compensation Discussion and Analysis” section herein. The restricted stock vesting dates for each Named Executive Officer range from 2018-2020.2021-2023.

 

(2)

The market value referenced above is based on the closing price of $25.15$10.50 per share of the Company’s Common Stock on December 29, 201731, 2020 (the last trading day of the Company’s 20172020 fiscal year), as reported by the Nasdaq Stock Market.

 

 

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Option Exercises and Stock Vested in 20172020

 

The following table provides information about the number and corresponding value realized during 20172020 with respect to (i) the exercise of stock options, and (ii) the vesting of restricted stock and performance shares for each of the Company’s Named Executive Officers.

 

		Option Awards						Stock Awards
Name     (a)		Number of Shares Acquired on Exercise   (#)   (b)			Value Realized on Exercise   ($)   (c)			Number of Shares Acquired on Vesting   (#)   (d)			Value Realized on Vesting   ($)   (e)(1)
Daniel T. Hendrix		--			--			50,000			892,500
Jay D. Gould		--			--			41,797			755,725
Bruce A. Hausmann		--			--			--			--
Matthew J. Miller		--			--			4,500			80,325
Robert A. Coombs		--			--			12,500			223,125
J. Chadwick Scales		--			--			6,000			111,000

		Option Awards								Stock Awards
Name (a)		Number of Shares Acquired on Exercise   (#)   (b)				Value Realized on Exercise   ($)   (c)				Number of Shares Acquired on Vesting   (#)   (d)				Value Realized on Vesting   ($)   (e)(1)
Jay D. Gould			--				--				--				--
Daniel T. Hendrix			--				--				--				--
David B. Foshee			--				--				23,343				372,375
Bruce A. Hausmann			--				--				48,596				615,298
James Poppens			--				--				1,784				28,009
Nigel Stansfield			--				--				28,710				457,839

______

 

(1)

The dollar amount is determined by multiplying (i) the number of shares vested by (ii) the closing price of our Common Stock on the Nasdaq Stock Market on the day preceding the vesting date.

 

2017Pension Benefits

 

The following table provides information about the pension benefits for each of the Company’s Named Executive Officers.

 

Name   (a)		Plan Name   (b)(1)			Number of Years Credited Service   (#)   (c)			Present Value of Accumulated Benefit   ($)   (d)			Payments During Last Fiscal Year   ($)   (e)
Daniel T. Hendrix		Salary Continuation Plan			More than 15			14,536,512			729,301
Jay D. Gould		--			--			--			--
Bruce A. Hausmann		--			--			--			--
Matthew J. Miller		--			--			--			--
Robert A. Coombs		--			--			--			--
J. Chadwick Scales		--			--			--			--

Name (a)		Plan Name   (b)(1)				Number of Years Credited Service   (#)   (c)				Present Value of Accumulated Benefit   ($)   (d)				Payments During Last Fiscal Year   ($)   (e)
Jay D. Gould			--				--				--				--
Daniel T. Hendrix		Salary Continuation Plan					More than 15				15,636,106				832,752
David B. Foshee			--				--				--				--
Bruce A. Hausmann			--				--				--				--
James Poppens			--				--				--				--
Nigel Stansfield			--				--				--				--

______

 

(1)

The benefits for Mr. Hendrix under the Salary Continuation Plan vestvested upon 15 years of service and attainment of the age of 55, with maximum benefit accruing at age 65. Mr. Hendrix is the only Named Executive Officers participating in the Salary Continuation Plan, and has reached age 55. The above values assume commencement of payment of the maximum benefit at age 65. All other assumptions are the same as are used for financial reporting purposes under generally accepted accounting principles. The Compensation Committee has determined that the Salary Continuation Plan is closed to any new participants.

 

 

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20172020 Non-Qualified Deferred Compensation

 

The following table provides information about the contributions, earnings and account balances of the Company’s applicable deferred compensation plans for each of the Company’s Named Executive Officers.

 

Name   (a)(1)		Executive Contributions in Last FY   ($)   (b)			Company Contributions in Last FY   ($)   (c)(2)			Aggregate Earnings in Last FY   ($)   (d)			Aggregate Withdrawals/ Distributions   ($)   (e)			Aggregate Balance at Last FYE   ($)   (f)(3)
Daniel T. Hendrix		360,012			58,322			51,530			--			1,966,172
Jay D. Gould		113,481			25,500			29,891			--			220,148
Bruce A. Hausmann		--			--			--			--			--
Matthew J. Miller		25,440			6,129			9,138			--			65,018
Robert A. Coombs		--			--			--			--			--
J. Chadwick Scales		21,720			--			2,271			--			23,991

Name (a)(1)		Executive Contributions in Last FY   ($)   (b)				Company Contributions in Last FY   ($)   (c)(2)				Aggregate Earnings in Last FY   ($)   (d)(3)				Aggregate Withdrawals/ Distributions   ($)   (e)				Aggregate Balance at Last FYE   ($)   (f)
Jay D. Gould			3,862				38,180				124,493				(72,119	)			637,089
Daniel T. Hendrix			--				--				65,144				(478,874	)			1,934,669
David B. Foshee			37,904				10,727				10,694				(43,917	)			164,866
Bruce A. Hausmann			50,901				18,055				7,239				--				182,850
James Poppens			--				--				--				--				--
Nigel Stansfield			--				--				--				--				--

______

 

(1)

The Company maintains the Nonqualified Plan for certain U.S.-based “highly compensated employees” (as such term is defined in applicable IRS regulations), including each of the Named Executive Officers. As with the Company’s 401(k) Plan, the Named Executive Officers are eligible to participate in the Nonqualified Plan on the same terms as other eligible executive and non-executive employees based in the United States, and receive the same benefits afforded all other participants.

 

Under the Nonqualified Plan, all eligible employees can elect to defer, on a pre-tax basis, a portion of their salary and/or annual bonus compensation. Each participant elects when the deferred amounts will be paid out, which can be during or after employment, subject to the provisions of Section 409A of the Internal Revenue Code. The employee earns a deferred return based on deemed investments in mutual funds selected by the employee from a list provided by the Company. The investment risk is borne entirely by the employee participant. Gains and losses are credited based on the participant’s election of a variety of deemed investment choices. Participants’ accounts may or may not appreciate, and may even depreciate, depending on the performance of their deemed investment choices. None of the deemed investment choices provide interest at above-market rates (or any guaranteed interest rate). The Company has established an irrevocable grantor (“rabbi”) trust to hold, invest and reinvest deferrals and contributions under the Nonqualified Plan, and all deferrals are paid out in cash upon distribution.

 

(2)

The amounts reported in column (c) reflect, for each Named Executive Officer (as applicable), the actual amounts contributed by the Company to the Nonqualified Plan during fiscal year 20172020 (including contributions in 20172020 with respect to compensation deferrals in 2016)2019).

 

(3)

The amounts reported in column (d) were not reported as compensation to the Named Executive Officers in the Company’s Summary Compensation Table. However, the Company’s matching contributions reported in column (c) are included in the “All Other Compensation” column of the Company’s Summary Compensation Table.

 

CEO Pay Ratio

 

As required by SEC rules and described below, we are disclosing the median of the annual total compensation of all employees of Interface (excluding the CEO)our CEO (based on Mr. Hendrix’s annualized compensation for 2020), the annual total compensation of the CEO,our median employee, and the ratio ofbetween those two amounts.

To prepare this analysis, the Company identified its median ofemployee from its 2019 analysis and calculated the annual total compensation of all employees to the annual total compensation of the chief executive officer.

The Company reviewed its globalfor that employee population as of December 31, 2017 to prepare the analysis. As of December 31, 2017, the date selected by the Company for purposes of choosing the median employee, the global employee population consisted of approximately 3,363 individuals, with 54% of these individuals located in the United States. The median employee was selected2020 using data for the following elements of compensation: salary, equity vests,awards, incentive compensation, and non-equity incentive compensation, over a trailing 12-month period from payroll records.

 

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For purposes of reporting annual total compensation and the ratio of annual total compensation of the CEO to the median employee, both the CEO and median employee’s annual total compensation are calculated consistent with the disclosure requirements of executive compensation under Item 402(c)(2)(x) of Regulation S-K.

 

For 2017,2020, the median employee’s annual total compensation was $50,117,$53,966, and the total annualannualized compensation of our CEO was $4,748,159.$4,086,817 (including the change in pension value disclosed in the Summary Compensation Table). Based on this information, the ratio of the total annual compensation of our CEO to the total annual compensation of our median employee for fiscal 2017 was 95:76:1. (Excluding the change in pension value, the ratio was 41:1.) The median employee was located in the United Kingdom.States.

 

The only adjustment made by the Company was using the average exchange rate for December 31, 2017 to convert international total compensation. There were no other adjustments permissible by the SEC, nor have any material assumptions or estimates been made to identify the median employee or to determine total annual compensation.

20172020 Director Compensation

 

The following table provides information about the compensation paid to the Company’s directors in 20172020 (excluding Messrs. HendrixGould and Gould,Hendrix, each of whom iswas a Named Executive Officer and does not receive additional compensation for Board or Committee service and whose compensation is presented in the Summary Compensation Table included herein)above).

 

Name (a)		Fees Earned or Paid in Cash   ($) (b)(1)			Stock Awards   ($) (c)(2)			Option Awards   ($) (d)(3)			Non-Equity Incentive Plan Compensation   ($) (e)			Change in Pension Value and Nonqualified Deferred Compensation Earnings   ($) (f)			All Other Compensation   ($) (g)(4)			Total   ($) (h)			Fees Earned or Paid in Cash   ($) (b)(1)				Stock Awards   ($) (c)(2)				Option Awards   ($) (d)				Non-Equity Incentive Plan Compensation   ($) (e)				Change in Pension Value and Nonqualified Deferred Compensation Earnings   ($) (f)				All Other Compensation   ($) (g)(3)				Total   ($) (h)
John P. Burke		85,000			78,065			--			--			--			1,692			164,757				87,500				124,994				--				--				--				581				213,075
Andrew B. Cogan		90,000			78,065			--			--			--			1,692			169,757				23,750				--				--				--				--				185				23,935
Carl I. Gable		90,000			78,065			--			--			--			1,692			169,757
Dwight Gibson																								87,500				124,994				--				--				--				498				212,993
Christopher G. Kennedy		100,000			78,065			--			--			--			1,692			179,757				110,000				124,994				--				--				--				581				235,575
Joseph Keough																								98,750				124,994				--				--				--				498				224,243
Catherine M. Kilbane																								95,000				124,994				--				--								581				220,575
K. David Kohler		85,000			78,065			--			--			--			1,692			164,757				87,500				124,994				--				--				--				581				213,075
Erin A. Matts		80,000			78,065			--			--			--			1,100			159,165
James B. Miller, Jr.		85,000			78,065			--			--			--			1,692			164,757				41,875				--				--				--				--				185				42,060
Sheryl D. Palmer		90,000			78,065			--			--			--			1,692			169,757				102,500				124,994				--				--				--				581				228,075

 

______

 

(1)

For fiscal year 2017,2020, the Company’s non-employee directors (“outside directors”) were paid an annual director’s fee of $80,000. Outside directors who serve on the Audit Committee, the Compensation Committee and the Nominating & Governance Committee were paid an additional $5,000$7,500 per year, except that the respective Chairpersons of the Audit Committee, Compensation Committee and Nominating & Governance Committee were paid an additional $10,000$15,000 per year (rather than $5,000)$7,500). In addition, the lead independent director of the Board was paid an incremental $10,000$15,000 per year. Directors also were reimbursed for expenses in connection with attending Board and Committee meetings.

 

(2)

The amounts reported in the “Stock Awards” column are computed based upon the aggregate grant date fair value of the respective awards. See the Note entitled “Shareholder’s Equity” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017,January 3, 2021, regarding assumptions underlying valuation of equity awards. The ultimate payout value may be significantly less than the amounts shown, and possibly zero, depending on the recipient’s tenure as a director. In 2017,2020, each of the directors listed in the table received an award of 4,39815,508 shares of restricted stock having a grant date fair value of $17.75$8.06 per share. As of December 31, 2017,January 3, 2021, each of these directors held an aggregate of 6,76618,358 shares of restricted stock that had not vested, except that Ms. MattsMessrs. Gibson and Keough held 4,39817,490 shares of restricted stock that had not vested.vested, and Messrs. Cogan and Miller held no shares. No stock options were granted to directors in 2020 or in the past several years. As of January 3, 2021, there were no stock options held by directors.

 

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(3)

Any amounts reported in the “Option Awards” column would have been computed based upon the aggregate grant date fair value of the respective awards. However, no stock options were granted to directors in 2017. As of December 31, 2017, each of Messrs. Gable, Kennedy and Miller held 5,000 outstanding options. The other directors held no stock options as of December 31, 2017.

(4)

In 2017,2020, the Company paid on all outstanding Common Stock of the Company (including restricted stock) dividends of $0.06 per share in each of the first two quarters and $0.065 per share in each of the last twofirst quarter, and $0.01 per share in the second, third and fourth quarters. The amounts in this column reflect dividends on the restricted shares of each director in 2017.2020.

 

EQUITY COMPENSATION PLAN INFORMATION

 

The following table sets forth information concerning the Company’s equity compensation plans as of December 31, 2017.January 3, 2021.

 

Plan Category(1)

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 Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

(a)

(b)

(c)

Equity Compensation Plan Approved by Security Holders:

Omnibus Stock Plan(2)

82,500(3)

$8.53--

3,476,211(3)

--

3,591,444

 

(1)

The Company does not have shares authorized for issuance under any compensation plan not approved by shareholders.

(2)

Each share issued under the Omnibus Stock Plan pursuant to an award other than a stock option will reduce the number of remaining shares available by 1.33 shares.

(3)

Assumes target level achievement of 669,783 unearned and unvested performance shares outstanding as of December 31, 2017.

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

The Company is generally obligated to provide its Named Executive Officers with certain payments or other forms of compensation when their employment with the Company is terminated. The actual amount of compensation due each of the Named Executive Officers, as well as the duration of any periodic payments, depends on both the circumstances surrounding the termination, as well as the particulars of any employment-related agreements to which the Company and the Named Executive Officer are party.

 

Employment and Change in Control Agreements

Daniel T. Hendrix Employment AgreementJay D. Gould

 

On March 31, 2017,January 19, 2020, the Board of Directors of the Company entered into a new Employment Agreement (the “Agreement”) with its Chairman Daniel T. Hendrix (age 62), who is now a non-executive employeevoted to terminate for cause the employment of the Company. The Agreement has an effective date of March 3, 2017, the day Mr. Hendrix retired from the position of Chief Executive Officer. The term of the Agreement runs until November 6, 2019, which is the day Mr. Hendrix turns 65 years of age.

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Pursuant to the Agreement, Mr. Hendrix receives an initial base salary of $240,000 per year, but he is not eligible to participate in the Company’s Executive Bonus Plan or to receive any new equity awards. While Mr. Hendrix remains an employee, he will participate in the Company’s various health and other employment benefit plans for which he is otherwise eligible in accordance with terms of the plans and policies in effect from time to time. Mr. Hendrix’s previously existing Split Dollar Insurance Agreement with the Company (as described in footnote 5 to the 2017 Summary Compensation Table) remains in effect pursuant to its terms, which require the Company to pay an annual premium of $72,032 while he remains employed, up to age 65. In addition, as a result of his reduced level of service, Mr. Hendrix began drawing the previously-vested benefits under his Salary Continuation Agreement. His Salary Continuation Plan benefit is $832,752 per year, payable for the remainder of his life and one-half of that amount is payable for the remainder of his surviving spouse’s life (with a minimum of 10 years of such payments guaranteed).    

Gould. The Company may terminate the Agreement at any time,had with or without cause, and Mr. Hendrix may voluntarily terminate the Agreement upon 90 days notice. The Agreement provides for certain benefits in the event of various termination scenarios, including voluntary termination without “Good Reason” (as defined in the Agreement), voluntary termination with Good Reason, termination without cause, termination with cause, and termination due to death or disability. In general, if Mr. Hendrix terminates his employment for Good Reason, or Interface terminates his employment without cause, Mr. Hendrix will receive, among other benefits,Gould an amount equal to all payments that would have been made to him if he had remained employed through November 6, 2019. The Agreement also contains provisions placing restrictions on Mr. Hendrix’s ability to compete with the Company for a period of two years following the later to occur of (1) the termination of the Agreement, or (2) the date Mr. Hendrix ceases to be a member of the Board. (Mr. Hendrix also is prohibited from competing with the Company while receiving Salary Continuation Plan benefits.) The Agreement does not contain any tax “gross up” provisions.

Jay D. Gould and Robert A. Coombs Employment Agreements

The Company has with each of Messrs. Gould and Coombs employment and change in control agreements,agreement, which generally describedescribed the benefits payable at, following, or in connection with various termination scenarios. Each employment and change in control agreement is for a rolling two-year term, such that the remaining term is always two years (until (i) for Mr. Gould, a specified retirement age, or (ii) for Mr. Coombs, notice from the Company that ceases the rolling renewal). The Company may terminate either of the agreements at any time, with or without cause, and each executive may voluntarily terminate his respective employment upon 90 days notice. The agreements provide for certain benefits in the event of various termination scenarios, including termination without cause, termination with cause, voluntary retirement or resignation, termination dueas described below. (Actual amounts paid to death or disability, and termination in connection with a “change in control” (as definedMr. Gould are described above in the agreements) of the Company. Each agreement also contains provisions placing restrictions on the executive’s ability to compete with the Company for a period of two years following the termination of his employment. The agreements do not contain any tax “gross up” provisions.Summary Compensation Table.)

 

In the event that either Mr. Gould or Mr. Coombs (i) retired or voluntarily resigned, (ii) died or was terminated in connection with a disability, (iii) was terminated by the Company (x) with “cause”, (y) without “cause” or (z) experienced certain terminations (without cause) in connection with a “change in control” (as applicable, and as such terms are defined in their respective agreements) on December 29, 2017 (the last business day of fiscal year 2017), he would have been entitled to receive the following types of payments and benefits, and would have been subject to the various restrictive covenants, described below.

 

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Upon Retirement or Voluntary Resignation:Termination With “Cause”:

 

Payment, Benefit or Restrictive Covenant			Entitled to Receive
Base Salary			Executive would be entitled to receivereceived his then-current base salary through the effective date of retirement or resignation.termination.
Bonus			Executive would be entitled to receive a prorated portion of his annual bonus opportunity calculated based on the date of retirement or resignation (e.g., a June 30 retirement or resignation would entitle executive to 50% of the bonus otherwise payable).No benefit.
Equity Awards			Executive would forfeit anyforfeited unvested restricted stock and performance share awards.
Unused Vacation			Executive received a cash payment for unused vacation.
Other Employee Retirement Plans			No additional benefit beyond those to which the executive normally would be entitled under the Company’s 401(k) Plan and Nonqualified Plan following termination of employment.
Health, Life and Other Insurance Coverages			No additional benefits are received beyond those to which the executive normally would be entitled under the terms of the respective medical and/or insurance plans.
Restrictive Covenants			Executive would be prohibited from competing with the Company, or soliciting its customers or employees, for a two-year period following retirement or resignation.

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Upon Death/Disability:

Payment, Benefit or Restrictive Covenant			Entitled to Receive
Base Salary			Executive would be entitled to receive his then-current base salary through the date of termination due to death/disability.
Bonus			Executive would be entitled to receive a prorated portion of his annual bonus opportunity calculated based on the date of termination due to death/disability (e.g., a June 30 termination due to death/disability would entitle executive to 50% of the bonus otherwise payable).
Equity Awards			Executive would immediately vest in a percentage of all unvested restricted stock and performance share awards, as specified in the applicable award agreement(s).
Other Employee Retirement Plans			No additional benefit beyond those to which the executive would bewas normally entitled under the Company’s 401(k) Plan and Nonqualified Plan following termination of employment.
Health, Life and Other Insurance Coverages			No additional benefits are received beyond those to which the executive would bewas normally entitled under the terms of the respective medical and/or insurance plans.
Restrictive Covenants			Executive would be prohibited from competing with the Company, or soliciting its customers or employees, for a two-year period following any termination due to disability.

Upon Termination With “Cause”:

Payment, Benefit or Restrictive Covenant		Entitled to Receive
Base Salary		Executive would be entitled to receive his then-current base salary through the effective date of termination.
Bonus		No benefit. .
Equity Awards		Executive would forfeit any unvested restricted stock and performance share awards.
Other Employee Retirement Plans		No additional benefit beyond those to which the executive would be normally entitled under the Company’s 401(k) Plan and Nonqualified Plan following termination of employment.
Health, Life and Other Insurance Coverages		No additional benefits are received beyond those to which the executive would be normally entitled under the terms of the respective medical and/or insurance plans.
Restrictive Covenants		Executive would beis prohibited from competing with the Company, or soliciting its customers or employees, for a two-year period following termination.

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Upon Termination Without “Cause”:

Payment, Benefit or Restrictive Covenant		Entitled to Receive
Base Salary		Executive would be entitled to receive his then-current base salary for two years.
Bonus		Executive would be entitled to receive bonus payments for two years as well as a prorated bonus for the year in which employment terminates, each calculated based on the average bonus (excluding special incentive plan bonuses) received by the executive during the two years prior to the effective termination date.
Equity Awards		Executive would immediately vest in a percentage of all unvested restricted stock and 2016 performance share awards, as specified in the applicable award agreement(s). For 2017 performance share awards, executive would retain a percentage of the unearned and unvested award, subject to potential future vesting based on the performance criteria.
Other Employee Retirement Plans		Executive would be entitled to an amount equal to the matching contribution he would have received under the Company’s 401(k) Plan (or, for Mr. Coombs, statutory superannuation contributions) for the two-year period following termination.
Health, Life and Other Insurance Coverages		Executive would be entitled to continue coverages for two years, with the Company paying the associated premiums.
Restrictive Covenants		Executive would be prohibited from competing with the Company, or soliciting its customers or employees, for a two-year period following termination.

Upon Termination Following “Change in Control”:

Payment, Benefit or Restrictive Covenant		Entitled to Receive
Base Salary		Executive would be entitled to receive his base salary in its then-current amount for two years. Such amount would be paid in a lump sum within 30 days after separation from service.
Bonus		Executive would receive bonus payments for two years as well as a prorated bonus for the year in which employment terminates, each calculated based on the average bonus (including any special incentive plan bonuses) received by the executive during the two years prior to the effective termination date. Such amount would be paid in a lump sum within 30 days after separation from service.
Equity Awards		Executive would immediately vest in all unvested restricted stock and performance share awards.
Other Employee Retirement Plans		Executive would be entitled to an amount equal to the matching contribution he would have received under the Company’s 401(k) Plan (or, for Mr. Coombs, statutory superannuation contributions) for the two-year period following termination.
Health, Life and Other Insurance Coverages		Executive would be entitled to continue coverages for two years with the Company paying the associated premiums.
Restrictive Covenants		Executive would be prohibited from competing with the Company, or soliciting its customers or employees, for a two year period following termination.

 

Bruce A. Hausmann, Matthew J. Miller and J. Chadwick ScalesDaniel T. Hendrix

 

Messrs. Hausmann, Miller and Scales doMr. Hendrix does not have an employment agreements.agreement. In the event of a termination, eachhe would be entitled to receive only those benefits outlined in (i) the Company’s policies (including, without limitation, severance and benefits) applicable to similarly situated employees in the U.S., and (ii) the terms of his respective individual equity award agreements in effect at the time (as described below), except as follows: For time.

Bruce A. Hausmann and James Poppens

Messrs. Hausmann and Scales,Poppens do not have employment agreements. In the event of a termination, they would be entitled to receive only those benefits outlined in (i) his respective employment offer letter, (ii) the Company’s policies (including, without limitation, severance and benefits) applicable to similarly situated employees in the U.S., and (iii) the terms of his respective individual equity award agreements in effect at the time. Mr. Hausmann’s employment offer letter generally requires that, in the event of a termination by the Company without cause, eachhe is entitled to receive 12 months of his then-current base salary, as well as 12 months of cash bonus (based on the average cash bonus paid to him in the preceding two years).

 

David B. Foshee

 

The Company entered into a Severance Protection and Change in Control Agreement with Mr. Foshee that provides for certain severance benefits if his employment is terminated involuntarily under certain circumstances.  In general, those benefits are: (1) In the event of a termination without cause, severance benefits of 12 months continued base salary payments, a prorated annual bonus based on the date of termination, and continued health insurance benefits at the employee's regular rate for 12 months; and (2) In the event of an involuntary separation from service or a separation from service for good reason within 24 months following a "change in control" (as defined in the Agreement), severance benefits equal to 24 months of base salary payments (payable in a lump sum), a prorated annual bonus based on the date of termination, and continued health insurance benefits at the employee's regular rate for 12 months. The agreement also contains provisions placing restrictions on his ability to compete with the Company for a period of 12 or 24 months following termination of employment, depending on the circumstances of termination. Nigel Stansfield The Company has entered into an employment contract with Mr. Stansfield that provides for certain benefits if Mr. Stansfield’s employment is terminated involuntarily. The Company may terminate the employment contract for any reason by providing Mr. Stansfield 12 months’ notice (or may terminate immediately for cause). During the 12-month notice period, the Company may require Mr. Stansfield to continue performing his duties, or may place him on “garden leave” during the 12 months termination notice period. Alternatively, the Company may elect to terminate his employment immediately and pay him the equivalent of his salary and benefits for such 12-month period. The agreement also contains provisions restricting Mr. Stansfield from competing with the Company for a period of 6 months or solicit the Company’s customers or employees for a period of 12 months following termination of employment. Page 47

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Payments to Named Executive Officers Upon Termination or Change in Control

 

The following tables summarize the benefits payable to each of the Named Executive Officers under his employment agreement (or other agreements or arrangements described above) in effect on December 29, 2017January 1, 2021 (the last business day of the Company’s 20172020 fiscal year). The tables do not include amounts payable under employee benefit plans in which Company associates are eligible to participate on a non-discriminatory basis. The amounts shown in the tables below assume that a Named Executive Officer’s employment terminated as of December 29, 2017,January 1, 2021, and that the fair market value of the Company’s Common Stock was $25.15$10.50 per share.

 

Daniel T. Hendrix

 

		Retirement or Resignation without Good Reason			Death/Disability			Termination with Cause			Termination without Cause; or Retirement or Resignation with Good Reason			Termination Following Change in Control(1)
																	Retirement or Resignation				Death/Disability				Termination with Cause				Termination without Cause				Termination Following Change in Control(1)
Compensation:		($)			($)			($)			($)			($)			($)				($)				($)				($)				($)
Base salary		--			0/20,000			--			445,808			445,808				--				--				--				77,250				77,250
Bonus		--			--			--			--			--				--				--				--				--				--
Equity awards(2)		--			2,164,862			--			2,164,862			3,247,293				--				209,580				--				209,580				628,740
Benefits and Perquisites:
Salary continuation(3)		832,752			416,376 / 832,752			832,752			832,752			832,752
Salary Continuation(3)																		832,752			416,376/832,752					832,752				832,752				832,752
Retirement plans		--			--			--			--			--				--				--				--				--				--
Health, life and other insurance(5)		--			--			--			43,838			43,838
Health, life and other insurance																		--				--				--				--				--

 

 

Jay D. GouldDavid B. Foshee

 

		Retirement or Resignation			Death/Disability			Termination with Cause			Termination without Cause			Termination Following Change in Control(1)
																	Retirement or Resignation				Death/Disability				Termination with Cause				Termination without Cause				Termination Following Change in Control(1)
Compensation:		($)			($)			($)			($)			($)			($)				($)				($)				($)				($)
Base salary		--			--			--			1,800,000			1,800,000				--				--				--				385,175				770,350
Bonus		1,577,385			1,577,385			--			2,638,122			2,638,122				--				--				--				--				--
Equity awards(2)		--			2,195,193			--			2,195,193			4,848,266				--				233,719				--				233,719				606,901
Benefits and Perquisites:
Retirement plans(4)		--			--			--			16,200			16,200
Health, life and other insurance(5)		--			--			--			22,354			22,354
Retirement plans																		--				--				--				--				--
Health, life and other insurance																		--				--				--				249				249

 

 

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Bruce A. Hausmann

 

		Retirement or Resignation			Death/Disability			Termination with Cause			Termination without Cause			Termination Following Change in Control(1)
																	Retirement or Resignation				Death/Disability				Termination with Cause				Termination without Cause				Termination Following Change in Control(1)
Compensation:		($)			($)			($)			($)			($)			($)				($)				($)				($)				($)
Base salary		--			--			--			420,000			420,000				--				--				--				445,578				445,578
Bonus		--			--			--			--			--				--				--				--				200,831				200,831
Equity awards(2)		--			563,737			--			563,737			1,690,684				--				352,114				--				352,114				873,275
Benefits and Perquisites:
Retirement plans		--			--			--			--			--				--				--				--				--				--
Health, life and other insurance		--			--			--			--			--
Health, life and other insurance																		--				--				--				--				--

 

 

Matthew J. Miller

		Retirement or Resignation			Death/Disability			Termination with Cause			Termination without Cause			Termination Following Change in Control(1)
Compensation:		($)			($)			($)			($)			($)
Base salary		--			--			--			206,000			206,000
Bonus		--			--			--			--			--
Equity awards(2)		--			589,290			--			589,290			1,311,170
Benefits and Perquisites:
Retirement plans		--			--			--			--			--
Health, life and other insurance		--			--			--			--			--

Robert A. Coombs

		Retirement or Resignation			Death/Disability			Termination with Cause			Termination without Cause			Termination Following Change in Control(1)
Compensation:		($)			($)			($)			($)			($)
Base salary		--			--			--			802,006			802,006
Bonus		398,468			398,468			--			1,176,503			1,176,503
Equity awards(2)		--			739,838			--			739,838			1,494,212
Benefits and Perquisites:
Retirement plans(4)		--			--			--			42,172			42,172
Health, life and other insurance(5)		--			--			--			11,984			11,984

James Poppens

 

Retirement or Resignation     Death/Disability     Termination with Cause     Termination without Cause     Termination Following Change in Control(1)                                             Compensation:   ($)     ($)     ($)     ($)     ($)   Base salary     --       --       --       133,333       133,333   Bonus     --       --       --       --       --   Equity awards(2)     --       58,996       --       58,996       216,472                                             Benefits and Perquisites:                                         Retirement plans     --       --       --       --       --   Health, life and other insurance     --       --       --       --       --   Page 49

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J. Chadwick ScalesNigel Stansfield

		Retirement or Resignation			Death/Disability			Termination with Cause			Termination without Cause			Termination Following Change in Control(1)
																	Retirement or Resignation				Death/Disability				Termination with Cause				Termination without Cause				Termination Following Change in Control(1)
Compensation:		($)			($)			($)			($)			($)			($)				($)				($)				($)				($)
Base salary		--			--			--			350,000			350,000				--				--				--				378,045				378,045
Bonus		--			--			--			413,000			413,000				--				--				--				--				--
Equity awards(2)		--			269,331			--			269,331			808,019				--				302,931				--				302,931				769,705
Benefits and Perquisites:
Retirement plans		--			--			--			--			--				--				--				--				--				--
Health, life and other insurance		--			--			--			--			--				--				--				--				--				--

 

(1)

The Company does not utilize a “single trigger” concept for severance payments in its Employment and Change in Control Agreements.agreements. The “Change in Control” (as defined in the applicable agreements) does not, by itself, provide the Named Executive Officer with any right to resign and receive a severance benefit. Instead, for severance benefits to be payable, there must be a “second trigger” of either (i) an “Involuntary Separation from Service” or (ii) a “Separation from Service for Good Reason” (essentially, resignation in the face of negative changes in executive’s employment relationship with the Company) that occurs within 24 months after the date of a Change in Control. The amounts included in this column thus assume that both a “Change in Control” and a subsequent termination (as described immediately above) occurred as of December 29, 2017.January 1, 2021. If a related termination did not in fact occur, no severance payments would be payable. The amounts in this column for Base Salary and Bonus would be paid in a lump sum within 30 days.

 

(2)

These amounts assume each Named Executive Officer (i) sold all newly vested shares of restricted stock, and (ii) ultimately vested at target in outstanding performance shares immediately upon terminationthat would have been retained for possible future vesting, each based on the fair market value of employment.those shares as of January 1, 2021. Also includes dividend equivalents accrued through January 1, 2021 that would be paid out in connection with such assumed vesting of performance shares.

 

(3)

Mr. Hendrix previously vested in, and in 2017 began receiving, benefit payments under histhe Salary Continuation Plan.Plan (an arrangement from his prior tenure as CEO). The amount represents the annual payment to which he is entitled under the Salary Continuation Plan following hisin any termination as of December 29, 2017,event, payable for the remainder of his life, with one-half of that amount payable thereafter for his surviving spouse’s life. In the case of Mr. Hendrix’s death, his surviving spouse would receive one-half of the amount otherwise payable.

 

(4)

The amounts noted represent payments required to be made by the Company to each executive in lieu of 401(k) Plan matching contributions, following termination, and assume each executive maintained the maximum level of contribution to the 401(k) Plan (or, for Mr. Coombs, a defined contribution plan in Australia) as in effect on the date of termination.

(5)

These amounts represent premiums paid by the Company on behalf of each Named Executive Officer following termination, and assume each Named Executive Officer chose to maintain his current coverages under the various medical and/or insurance plans in which he was a participant.

 

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

(ITEM3) 3)

 

Information Concerning the Company’sCompany’s Accountants

 

BDO USA, LLP (“BDO USA”) acted as the Company’s independent auditor during the past fiscal year. The Audit Committee has again appointed BDO USA to act as the independent auditor of the Company for fiscal year 2018.2021. The Board of Directors will present to the annual meeting a proposal that such appointment be ratified. Should the shareholders fail to ratify the appointment, the Audit Committee will reconsider its selection, but may continue the engagement. Even if the appointment is ratified, the Audit Committee, in its discretion, may change the appointment at any time. BDO USA has no financial interest, direct or indirect, in the Company or any subsidiary.

 

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A representative of BDO USA is expected to be present at the annual meeting to make a statement if he or she desires to do so and to respond to appropriate questions.

 

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Audit and Non-Audit Fees

 

The following table shows the fees for professional audit and other services provided by BDO USA to the Company for fiscal years 20172020 and 2016.2019.

 

		2017				2016				2020				2019
Audit Fees1		$	1,659,000			$	1,536,000			$	3,061,000			$	2,554,000
Audit-Related Fees2			22,000				20,000				78,000				26,000
Tax Fees3			59,000				58,000				126,000				176,000
All Other Fees4			--				--				--				--
Total		$	1,740,000			$	1,614,000			$	3,265,000			$	2,756,000

_________________

(1)

“Audit Fees” consist of fees billed or accrued for professional services rendered for the audit of the Company’s annual financial statements, audit of the Company’s effectiveness of internal control over financial reporting, review of the interim financial statements included in quarterly reports, and services that are normally provided by BDO USA in connection with statutory and regulatory filings.

(2)

“Audit-Related Fees” consist of fees billed or accrued primarily for employee benefit plan audits and other attestation services.

(3)

“Tax Fees” consist of fees billed or accrued for professional services rendered for tax compliance, tax advice and tax planning, both domestic and international.

(4)

“All Other Fees” consist of fees billed or accrued for those services not captured in the audit, audit-related and tax categories. The Company generally does not request such services from the independent auditors.

 

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

 

Consistent with the Securities and Exchange Commission policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the Company’s independent auditors. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and non-audit services provided by the independent auditors.

 

These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for and detailed as to the particular services or category of services and is generally subject to a specific budget. None ofOf the services rendered by the independent auditors under the categories “Audit-Related Fees”, “Tax Fees” and “All Other Fees” described above, $1,390 were approved by the Audit Committee after services were rendered pursuant to the de minimis exception established by the Commission.

 

You may vote “for,” “against,” or “abstain” from the proposal to ratify the appointment of BDO USA to act as the Company’s independent auditors for fiscal year 2018.2021.

 

Vote Required and Recommendation of the Board

 

Under the Company’s Bylaws, the proposal to ratify the appointment of BDO USA to act as the Company’s independent auditors for fiscal year 20182021 is approved if the affirmative votes cast by the holders of the Company’s outstanding shares of Common Stock entitled to vote and represented (in person or by proxy) at the meeting exceed the negative votes. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL, AND THE PROXY SUBMITTED BY TELEPHONE OR INTERNET OR PROXY CARD WILL BE VOTED IN THIS MANNER UNLESS THE SHAREHOLDER SUBMITTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY (OR ABSTAINS).

 

AUDIT COMMITTEE REPORT

 

The Audit Committee operates pursuant to an Audit Committee Charter that was adopted by the Board of Directors. (A copy of the Audit Committee Charter may be viewed on the Company’s website, www.interfaceglobal.com/Investor-Relations/Corporate-Governance/Audit-Committee-Charter.aspxhttps://investors.interface.com/investor-relations/default.aspx.) The Company’s management is responsible for its internal accounting controls and the financial reporting process. The Company’s independent auditors, BDO USA, are responsible for performing an audit of the Company’s consolidated financial statements in accordance with auditing standards generally accepted in the United States. The independent accountants also are responsible for expressing opinions on the conformity of the Company’s audited financial statements with generally accepted accounting principles, and on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes.

 

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In keeping with that responsibility, the Audit Committee has reviewed and discussed the Company’s audited consolidated financial statements with management and BDO USA. In addition, the Audit Committee has discussed with BDO USA the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board’s Auditing Standard No. 16, “Communications with Audit Committees,” as currently in effect.Board (“PCAOB”) and the SEC. In addition, the Audit Committee has received the written disclosures and the letter from BDO USA required by applicable Public Company Accounting Oversight BoardPCAOB rules regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountants their independence. The Audit Committee has also considered whether the provision of any services discussed above in Item 3 under the caption “Ratification of Appointment of Independent Auditors – Audit and Non-Audit Fees” by BDO USA is compatible with maintaining BDO USA’s independence.

 

The Board of Directors, in its business judgment, has determined that all three members of the Audit Committee are “independent,” as required by applicable listing standards of the Nasdaq Stock Market as currently in effect. Although the members of the Audit Committee are not professionally engaged in the practice of auditing or accounting and are not experts in the fields of auditing or accounting (including in respect of auditor independence), the Board of Directors determined that each of Ms. Palmer and Messrs. Gable and MillerMr. Keough does qualify as an “audit committee financial expert” as defined by Item 407(d)(5) of Regulation S-K. Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and BDO USA. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has followed appropriate accounting and financial reporting principles or maintained appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are “independent.”

 

Based on the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee Charter, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017January 3, 2021 for filing with the Securities and Exchange Commission.

 

THE AUDIT COMMITTEE

Carl I. GableJoseph Keough (Chair)

James B. Miller, Jr.Catherine M. Kilbane

Sheryl D. Palmer

OTHER INFORMATION:INFORMATION:

 

GENERAL MEETING INFORMATION

 

The Board of Directors of Interface, Inc. is furnishing this Proxy Statement to solicit Proxies for the Company’s common stock, $0.10 par value per share (“Common Stock”) to be voted at the annual meeting of shareholders of the Company. The meeting will be held at 3:11:00 p.m.a.m. Eastern Time on May 15, 2018.17, 2021. The Proxies also may be voted at any adjournments of the meeting. It is anticipated that this Proxy Statement will first be sent or given to shareholders on or about April 4, 2018.7, 2021.

 

The record of shareholders entitled to vote at the annual meeting was taken as of the close of business on March 9, 2018.19, 2021. On that date, the Company had outstanding and entitled to vote 59,500,93158,640,045 shares of Common Stock.

 

Each Proxy for Common Stock (“Proxy”) that is properly completed (whether executed in writing or submitted by telephone or Internet) by a shareholder will be voted as specified by the shareholder in the Proxy. If no specification is made, the Proxy will be voted (i) for the election of the nominees listed in this Proxy Statement under the caption “Nomination and Election of Directors,” (ii) for the resolution approving, on an advisory basis, executive compensation, and (iii) for the ratification of the appointment of BDO USA, LLP as independent auditors for 2018.2021. A Proxy given pursuant to this solicitation may be revoked by a shareholder who attends the meeting and gives notice of his or her election to vote in person, without compliance with any other formalities. In addition, a Proxy given pursuant to this solicitation may be revoked prior to the meeting by delivering to the Secretary of the Company either an instrument revoking it or a duly executed Proxy for the same shares bearing a later date.

 

An automated system administered by the Company’s transfer agent tabulates the votes. Abstentions and broker non-votes are included in the determination of the number of shares present and entitled to vote for the purpose of establishing a quorum. A broker non-vote occurs when a broker or other nominee who holds shares for a customer does not have authority to vote on certain matters without instructions from their customer, such customer has not provided any voting instructions on the matter and the broker or other nominee returns a Proxy (or otherwise informs the transfer agent) that they are not voting on the matter for the foregoing reasons. Neither broker non-votes nor abstentions will affect the outcome of the vote on any matter expected to be voted upon at the annual meeting.

 

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If your shares of Common Stock are held by a broker, bank or other nominee (e.g., in “street name”), you should receive instructions from your nominee, which you must follow in order to have your shares voted – the instructions may appear on a special proxy card provided to you by your nominee (also called a “voting instruction form”). Your nominee may offer you different methods of voting than those available to record holders. If you do hold your shares in “street name” and plan on attending the annual meeting of shareholders, you should request a proxy from your broker or other nominee holding your shares in record name on your behalf in order to attend the annual meeting and vote at that time (your broker or other nominee may refer to it as a “legal” proxy).

 

The expense of this solicitation, including the cost of preparing and mailing this Proxy Statement, will be paid by the Company. Copies of solicitation material may be furnished to banks, brokerage houses and other custodians, nominees and fiduciaries for forwarding to the beneficial owners of shares of the Company’s Common Stock, and normal handling charges may be paid for the forwarding service. In addition to solicitations by mail, directors and employees of the Company may solicit Proxies in person or by telephone, fax or e-mail. The Company also has retained Georgeson LLC, a proxy solicitation firm, to assist in soliciting Proxies from record and beneficial owners of shares of the Company’s Common Stock. The fee paid by the Company for such assistance is expected to be $8,000$8,500 (plus expenses).

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

The Board of Directors of the Company recognizes that transactions with related persons can present a heightened risk of conflict of interests and/or improper valuation (or the perception thereof). Accordingly, as a general matter, it is the Company’s preference to avoid transactions with related persons. Nevertheless, there are circumstances where the Company may (i) obtain products or services of a nature, quantity or quality that are not readily available from alternative sources, or on terms comparable to those provided by other, unrelated parties, or (ii) provide products or services on an arm’s length basis on terms comparable to those provided to unrelated third parties or on terms provided to employees generally.

 

Policy Regarding Review, Approval or Ratification of Transactions Involving Related Persons

 

The Company has adopted a written policy with respect to the review, approval or ratification of transactions with related persons involving the Company (or its subsidiaries or controlled affiliates). In evaluating potential transactions with related persons, the Related Transactions Policy incorporates and applies the contents of Item 404(a) of Regulation S-K (including but not limited to the definitions of “related persons” and “transaction”, as well as the threshold for “direct or indirect material interest” contained therein).

 

Prior to entering into a transaction with the Company, the related person is required to advise a Company-designated “Compliance Officer” (currently the Company’s General Counsel), who shall determine whether the proposed transaction is a transaction with a related person under this policy. If the Compliance Officer determines that the proposed transaction is a transaction with a related person, the transaction is required to be submitted to the Audit Committee of the Board of Directors for consideration at its next meeting or, in those instances in which it is not practicable or desirable for the Company to wait until the next Audit Committee meeting, to the Chair of the Audit Committee (who possesses delegated authority to act between committee meetings). The Audit Committee (or where submitted to the Chair, the Chair) shall consider all of the available relevant facts and circumstances, including (if applicable) but not limited to: (i) the benefits to the Company; (ii) the impact on a director’s independence in the event the related person is a director, an immediate family member of a director, or an entity in which the director is a partner, equity holder or executive officer; (iii) the availability of other sources for comparable products or services; (iv) the terms of the transaction; and (v) the terms available to or from unrelated third parties or employees generally, as the case may be. After review, the Audit Committee or Chair either approves or disapproves the proposed transaction and advises the Compliance Officer, who in turn conveys the decision to the appropriate persons within the Company. No member of the Audit Committee is permitted to participate in any review, consideration, or approval of any potential transaction with a related person with respect to which such member or any of his or her immediate family members is a related person.

 

The policy also provides for the review of (i) transactions involving related persons entered into by the Company not previously approved or ratified under this policy, as well as (ii) any previously approved or ratified transactions with related persons that remain ongoing and have a remaining term of more than six months or remaining amounts payable to or receivable from the Company of more than $120,000. The policy also explicitly requires disclosure of all transactions that are required to be disclosed under the Securities Act of 1933, the Securities Exchange Act of 1934 and related rules and regulations.

 

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Transactions Involving Related Persons

 

A subsidiary of theThe Company employs John Hendrix, the son of Company non-executive Chairman and Chief Executive Officer Dan Hendrix, as its Global CRM Analyst. In 2017,2020, John Hendrix earned salary and bonus of $122,368,$107,671, and participated in certain of the Company’s benefit programs generally available to employees in the U.S. Mr.Dan Hendrix plays no part in the determination of John Hendrix’s compensation.

 

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DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE16(a) REPORTS

 

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission and the Nasdaq Stock Market reports of ownership and changes in ownership of Common Stock and other equity securities of the Company. Directors, executive officers and greater than 10% shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

 

Based solely upon a review of the copies of such reports furnished to the Company or written representations that no other reports were required, the Company believes that during fiscal 2017year 2020 all filing requirements applicable to its directors, executive officers and greater than 10% beneficial owners were met.met, except for a Form 4 report of a transaction exempt from liability under Section 16(b) of the Securities Exchange Act of 1934 filed on February 27, 2020 by Mr. Hausmann that inadvertently reflected an award of 21,756 shares instead of 26,188 shares.

PROHIBITION ON HEDGING AND PLEDGING

The Company’s insider trading policy generally prohibits directors, officers and employees of the Company from engaging in speculative trading with respect to the Company’s securities, including “short sales” and trading in puts, calls and other options or derivatives with respect to securities of the Company.  In addition, directors, officers and employees of the Company may not pledge the Company’s securities as collateral for a loan or other obligation.

LAWSUIT BY FORMER CEO IN CONNECTION WITH TERMINATION

On January 19, 2020, the Company’s Board of Directors voted to terminate for cause the employment of Jay D. Gould, then President and Chief Executive Officer, effective immediately, for violations of the Company’s working environment policies. On February 14, 2020, Mr. Gould filed a lawsuit against the Company in the United States District Court of the Northern District of Georgia, Gould v. Interface, Inc., Case No. 1:20-cv-00695. In his lawsuit, Mr. Gould asserts several claims against the Company in connection with his termination, including that the termination was a wrongful retaliation against Mr. Gould and breached his employment contract with the Company, that public statements made by the Company in connection with his termination defamed Mr. Gould (two counts) and that the Company’s investigation into Mr. Gould’s conduct that preceded the termination was negligently performed (although the Court has since granted judgment on the pleadings in favor of the Company on Mr. Gould’s putative claim of negligent investigation). Among other unspecified relief, Mr. Gould seeks in excess of $10 million in damages for the breach of contract claim and $100 million for each of the other claims, as well as attorneys’ fees.

The Company believes the lawsuit is without merit and intends to defend vigorously against it.

 

SHAREHOLDER PROPOSALS

 

Proposals of shareholders intended to be presented at the Company’s 20192022 annual meeting must be received by the Company no later than December 5, 2018,8, 2021, in order to be eligible for inclusion in the Company’s Proxy Statement and form of Proxy for that meeting. In addition, in accordance with Article II, Section 9, of the Bylaws of the Company, proposals of shareholders intended to be presented at the Company’s 20192022 annual meeting, including in the case of a nominee for director, must be presented to the Board of Directors by no later than 90 days prior to that annual meeting, with such deadline for presentation of proposals estimated to be February 13, 2019.15, 2022.

 

COMMUNICATING WITH THE BOARD

 

Shareholders wishing to communicate with the Board of Directors may send communications via U.S. mail to the following address:

 

Chairman of the Board

Interface, Inc.

2859 Paces Ferry Road

Suite 20001280 West Peachtree Street NW

Atlanta, GA 3033930309

 

From time to time, the Board may change the process by which shareholders may communicate with the Board or its members. The Company’s website, www.interface.com, will reflect any changes to the process.

 

Attendance of Board members at annual meetings is left to the discretion of each individual Board member. One Board member attended the 20172020 annual meeting.

 

“HOUSEHOLDING”HOUSEHOLDING” OF PROXY MATERIALS

 

The Securities and Exchange Commission has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for companies. The Company and some brokers household proxy materials, delivering a single proxy statement to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, please notify your broker if your shares are held in a brokerage account or us if you hold shares as the registered holder. You can notify us by sending a written request to Interface, Inc., Attn: Secretary, 2859 Paces Ferry Road, Suite 2000,1280 West Peachtree Street NW, Atlanta, Georgia 30339.30309.

 

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SAFE HARBOR STATEMENT FOR FORWARD-LOOKING STATEMENTS

 

This Proxy Statement contains forward-looking statements, including, without limitation, statements about Interface’s plans, strategies and prospects and the information set forth in the section titled “Our Growth and Value Creation Strategy”. These forward-looking statements are based on the Company’s current assumptions, expectations and projections about future events. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, the Company can give no assurance that these expectations will prove to be correct or that savings or other benefits anticipated in the forward-looking statements will be achieved. Important factors, some of which may be beyond the Company’s control, that could cause actual results to differ materially from management’s expectations are the risks and uncertainties associated with economic conditions in the commercial interiors industry as well as the risks and uncertainties discussed under the heading “Risk Factors” included in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017,January 3, 2021, filed with the Securities and Exchange Commission, which discussion is hereby incorporated by reference. Forward-looking statements speak only as of the date made. The Company assumes no responsibility to update or revise forward-looking statements and cautions readers not to place undue reliance on any such statements

 

OTHER MATTERS THAT MAY COME BEFORE THE MEETING

 

The Company knows of no matters other than those stated above that are to be brought before the meeting. However, if any other matter should be properly presented for consideration and voting, it is the intention of the persons named as proxies in the enclosed Proxy to vote the Proxy in accordance with their judgment of what is in the best interest of the Company.

 

	By order of the Board of Directors
	/s/ David B. Foshee
	David B. Foshee
	Secretary
April 2, 20187, 2021

 

 

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APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

 

This Proxy Statement includes, as additional information for investors, the Company'sCompany’s adjusted net income, adjusted diluted earnings per share,EPS, adjusted operating income, adjusted gross profit, adjusted earnings before interest taxes, depreciation and amortization (“EBITDA”), organic sales, organic sales growth, and net debt.debt, as well as comparative information between periods for each. These measures are not in accordance with financial measures calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), and may be different from similarly titled non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be used as a substitute for, or considered superior to, GAAP financial measures.

 

Adjusted EPS, and adjusted operating income exclude nora purchase accounting amortization, goodwill and intangible asset impairment charges, changes in equity award forfeiture accounting, restructuring charges, asset impairment, severance and other charges and an SEC settlement fine. Adjusted EPS also excludes the loss associated with a warehouse fire, loss on the extinguishment of debt, loss on the discontinuance of interest rate swaps, and tax expenses/benefits associated with previously discontinued operations. Adjusted gross profit excludes nora purchase accounting amortization. Net debt is total debt less cash on hand. Adjusted EBITDA is GAAP net income measures exclude: (1) restructuringexcluding interest expense, income tax expense, depreciation and amortization, stock compensation amortization, goodwill and intangible asset impairment, charges;restructuring charges, asset impairment, severance and (2) effects fromother charges, and nora purchase accounting amortization and transaction and integration expenses, an SEC settlement fine and the enactment of the U.S. Tax Cuts and Jobs Act in December 2017 (the “Tax Act”) (and, for fiscal year 2014 only, debt retirement expenses). Organic sales and organic sales growth exclude: (1) sales from the Company’s exited FLOR specialty retail business; and (2) foreign currency fluctuations.loss associated with a warehouse fire.

 

The Company excludes restructuring and asset impairment charges and the impact ofcertain effects from the Tax Act from adjusted net income measures because it believes these events areitems were a unique and/or one-time eventsevent and dodid not arise from or constitute normal ongoing operations. Similarly, since FLOR specialty retail sales willthe Company engages in acquisitions only episodically, and not be a material part of sales,as an everyday matter, the Company believes presenting organic sales information without historical FLOR specialty retail sales presents meaningful additional informationcertain measures excluding the effects of acquisitions facilitates focus on corenormal ongoing operations. Finally,

Since the Company engages in acquisitions only episodically, and not as an everyday matter, the Company believes presenting sales information absentcertain measures excluding the effecteffects of foreign currency exchange rate fluctuationsacquisitions facilitates comparison of the Company’s operational performance between periods.

focus on normal ongoing operations. The Company generally believes reporting its adjusted results helps investors’ understanding of its historical operating trends, because it facilitates comparison to prior periods during which unique events affecting more recent results may not have occurred.  The Company also believes that adjusted results provide supplemental information for comparisons to other companies which may not have experienced the same events underlying the adjustments.  Furthermore, the Company uses adjusted results internally as supplemental information to evaluate its own performance, for planning purposes and in connection with its compensation programs.

 

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures appear in the following tables (see next page).

 

 

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NET DEBT

($in millions)		2014			2015			2016			2017
Total Debt		$263.3			$213.5			$270.3			$229.9
Less: Cash		(54.9	)		(75.7	)		(165.7	)		(87.0	)
Net Debt		$208.4			$137.8			$104.7			$142.9

ORGANIC SALES

($in millions)		2016			2017
Net Sales, As Reported		$958.6			$996.4
Plus/Less: Impact of Changes in Currency		-			(5.5	)
Less: Specialty Retail Sales		(19.2	)		(4.7	)
Organic Sales		$939.4			$986.2

ADJUSTED OPERATING INCOME

($in millions)		2014			2015			2016			2017
Operating Income		$70.3			$113.6			$84.9			$109.8
Plus: Restructuring Charge (Net of Tax)		12.4			-			19.8			7.3
Adjusted Operating Income		$82.7			$113.6			$104.7			$117.1

ADJUSTED NET INCOME

($in millions)		2014			2015			2016			2017
Net Income		$24.8			$72.4			$54.2			$53.2
Plus: Restructuring Charge		8.7			-			13.1			4.7
Plus: Impact of Tax Reform		-			-			-			15.2
Plus: Debt Expenses		7.7			-			-			-
Adjusted Net Income		$41.2			$72.4			$67.3			$73.1

ADJUSTED DILUTED EPS

		2014			2015			2016			2017
Diluted EPS from Continuing Operations		$0.37			$1.10			$0.83			$0.86
Plus: Restructuring Charges		0.13			-			0.20			0.08
Plus: Impact of Tax Reform		-			-			-			0.25
Plus: Debt Expenses		0.12			-			-			-
Adjusted Diluted EPS from Continuing Operations		$0.62			$1.10			$1.03			$1.18

(in millions, except ratios and per share amounts)

 

 

ADJUSTED GROSS PROFIT
		2019				2020
Gross Profit as Reported (GAAP)		$	533			$	411
Purchase Accounting Amortization			6				5
Adjusted Gross Profit		$	539			$	416

 

ADJUSTED OPERATING INCOME
		2019				2020
Operating Income (Loss) as Reported (GAAP)		$	131			$	(39	)
Purchase Accounting Amortization			6				5
Goodwill and Intangible Asset Impairment			-				121
Change in Equity Award Forfeiture Accounting			-				1
Restructuring, Asset Impairment, Severance and Other Charges			13				17
SEC Fine			-				5
Adjusted Operating Income		$	150			$	110

ADJUSTED DILUTED EPS
		2019				2020
Diluted Earnings per Share as Reported (GAAP)		$	1.34			$	(1.23	)
Purchase Accounting Amortization			0.08				0.07
Goodwill and Intangible Asset Impairment			-				2.05
Impact of Change in Equity Award Forfeiture Accounting			-				0.02
Restructuring, Asset Impairment, Severance and Other Charges			0.17				0.23
Warehouse Fire Loss			-				0.05
SEC Fine			-				0.09
Loss on Extinguishment of Debt			-				0.05
Loss on Discontinuance if Interest Rate Swaps			-				0.05
FIN 48 Release on Discontinued Operations			-				(0.22	)
Adjusted Diluted Earnings per Share *		$	1.59			$	1.15

NET DEBT
		2016				2017				2018				2019				2020
Total Debt		$	270			$	230			$	619			$	596			$	577
Less: Cash			(166	)			(87	)			(81	)			(81	)			(103	)
Net Debt *		$	105			$	143			$	538			$	515			$	474

ADJUSTED EBITDA
		2016				2017				2018				2019				2020
Net Income as Reported (GAAP)		$	54			$	53			$	50			$	79			$	(72	)
Income Tax Expense (Benefit)			25				47				5				23				(7	)
Transaction Related Other Expense			-				-				4				-				-
Interest Expense			6				7				15				26				29
Depreciation and Amortization (excluding debt issuance cost amortization)			30				30				38				42				44
Stock Compensation Amortization			6				7				15				9				(1	)
Purchase Accounting Amortization			-				-				32				6				5
Transaction and Integration Related Expenses			-				-				5				-				-
Goodwill and Intangible Asset Impairment			-				-				-				-				121
Restructuring, Asset Impairment, Severance and Other Charges			20				7				21				13				17
Warehouse Fire Loss			-				-				-				-				4
SEC Fine			-				-				-				-				5
Adjusted EBITDA *		$	141			$	152			$	185			$	197			$	146
Total Debt / Net Income		5.0x				4.3x				12.3x				7.5x				(8.0x)
Net Debt / Adjusted EBITDA		0.7x				0.9x				2.9x				2.6x				3.2x

* Sum of reconciling items may differ from total due to rounding of individual components

 

 

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