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PROXY STATEMENT TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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| Soliciting Material under §240.14a-12 |
PRIMORIS SERVICES CORPORATION | ||||
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
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2100 McKinney Avenue,2300 N. Field Street, Suite 15001900
Dallas, Texas 75201
www.prim.com
Dear Stockholder:
On behalf of the Board of Directors, I am pleased to invite you to attend the 20182019 Annual Meeting of Stockholders of Primoris Services Corporation, a Delaware corporation (NASDAQ:(Nasdaq:PRIM), to be held on Friday, May 4, 2018,3, 2019, at 9:00 a.m., Central Time, in the Maple Room at the Ritz-Carlton Hotel, located at 2121 McKinney Avenue, Dallas, Texas 75201.
During the Annual Meeting, we will discuss each item of business described in the accompanying Notice of the 20182019 Annual Meeting of Stockholders and Proxy Statement. We encourage you to carefully read these materials and the Annual Report to Stockholders on SEC Form 10-K for the fiscal year ended December 31, 2017,2018, a copy of which is included with the Notice and the Proxy Statement.
Please participate in our Annual Meeting of Stockholders by signing, dating and promptly mailing your enclosed proxy card to ensure the presence of a quorum.Your vote is important, whether or not you plan to attend. I hope you will ensure that your shares are represented and voted by completing and returning the enclosed proxy card. If you plan to attend the Annual Meeting of Stockholders, you will have the right to revoke your proxy and vote in person if you so desire. If you hold your shares through an account with a broker, nominee, fiduciary or other custodian, please follow the instructions you receive from them to vote your shares.
Thank you for your ongoing support of and continued interest in Primoris Services Corporation.
Sincerely,
Brian Pratt
Chairman of the Board
2100 McKinney Avenue,2300 N. Field Street, Suite 1500
1900 Dallas, Texas 75201
www.prim.com
PROXY STATEMENT
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2100 McKinney Avenue, Suite 1500
Dallas, Texas 75201
www.prim.com
2018
2019 ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 4, 20183, 2019
April [ ], 2018
4, 2019
To our Stockholders:
The 20182019 Annual Meeting of Stockholders of Primoris Services Corporation, a Delaware corporation, will be held on Friday, May 4, 2018,3, 2019, at 9:00 a.m., Central Time, in the Maple Room at the Ritz-Carlton Hotel, located at 2121 McKinney Avenue, Dallas, Texas 75201.
Only stockholders that owned shares of our common stock at the close of business on March 29, 20182019 are entitled to vote at the Annual Meeting. A list of our stockholders will be made available at our principal executive offices at 2100 McKinney Avenue,2300 N. Field Street, Suite 1500,1900, Dallas, Texas 75201 during ordinary business hours for ten days prior to the Annual Meeting and will also be available at the Annual Meeting.
At the Annual Meeting, we will consider the following proposals, which are described in detail in the accompanying Proxy Statement:
qualified;
3.
4.
PLEASE VOTE PROMPTLY—YOUR PROXY IS REVOCABLE AND YOU MAY VOTE IN PERSON AT THE MEETING IF YOU WISH.
References to “Primoris”"Primoris", the “Company”"Company", “we”"we", “us”"us" or “our”"our" in this Notice and the accompanying Proxy Statement refer to Primoris Services Corporation and its subsidiaries and affiliates, unless otherwise indicated.
By Order of the Board of Directors,
John M. Perisich
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2100 McKinney Avenue,2300 N. Field Street, Suite 1500
1900
Dallas, Texas 75201
www.prim.com
PROXY STATEMENT
TABLE OF CONTENTS
Page | ||
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PROPOSAL 1—ELECTION OF DIRECTORS | 5 | |
PROPOSAL 2—RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTING FIRM | 10 | |
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS | 11 | |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS | 18 | |
DIRECTOR COMPENSATION | 19 | |
STOCK OWNERSHIP | 20 | |
INFORMATION ABOUT AUDIT FEES AND SERVICES | 23 | |
EXECUTIVE OFFICER INFORMATION | 25 | |
EXECUTIVE COMPENSATION | 26 | |
STOCKHOLDER PROPOSALS FOR OUR 2020 ANNUAL MEETING | 41 | |
OTHER MATTERS | 42 |
2300 N. Field Street, Suite 1900
Dallas, Texas 75201
www.prim.com
PROXY STATEMENT
FOR THE
2018
2019 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 4, 20183, 2019
SOLICITATION
This Proxy Statement, being mailed and made available electronically (on our Company website at www.prim.com) to stockholders on or about April [ ], 2018,4, 2019, is being sent to you by the Board of Directors (the “Board”"Board") of Primoris Services Corporation in connection with our 20182019 Annual Meeting of Stockholders (the “Annual Meeting”"Annual Meeting"). The Annual Meeting will take place at 9:00 a.m. Central Time, on Friday, May 4, 2018,3, 2019, at the Ritz-Carlton Hotel, located at 2121 McKinney Avenue, Dallas, Texas 75201. You are cordially invited to attend the Annual Meeting and are requested to vote on the proposals described in this Proxy Statement.
Purpose of the Annual Meeting
At the Annual Meeting, our stockholders will vote to elect three Class A Directors, will voteStephen C. Cook and Carla S. Mashinski as directors to approve an amendmenthold office for a one-year term expiring at the Annual Meeting of the Certificate of IncorporationStockholders to declassify the Board of Directors,be held in 2020, or until a successor is elected and qualified, and will vote to ratify the appointment of Moss Adams LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.2019. In addition, management will report on our performance over the last fiscal year and, following the Annual Meeting, respond to questions from stockholders.
Materials provided
The Board sentis sending you this Proxy Statement and the enclosed proxy card in order to solicit your proxy to vote your shares at the Annual Meeting. As a stockholder, you are invited to attend the meeting and are entitled to vote on the items of business described in this Proxy Statement.
Annual Meeting attendance
All stockholders as of March 29, 20182019 (the “Record Date”"Record Date"), or their duly appointed proxies, may attend the Annual Meeting. You may need to bring personal identification. Gaining admission to the Annual Meeting depends on how your stock ownership is recorded with our transfer agent, Continental Stock Transfer & Trust Company (the “Transfer Agent”"Transfer Agent"). If your stock is held in the name of a bank, broker or other holder of record and you plan to attend the Annual Meeting, please obtain proof of ownership, such as a current brokerage account statement or certification from your broker. If your stock is registered directly in your name with our Transfer Agent, all you need is proof of identity; no proof of ownership is needed.
Voting at the Annual Meeting
Holders of our common stock (“("Common Stock”Stock") as of the close of business on the Record Date will be entitled to vote at the Annual Meeting. On the Record Date, there were [51,530,572]50,842,902 shares of Common Stock outstanding, each of which is entitled to one vote with respect to each matter to be
voted on at the Annual Meeting. There is no stockholder statutory right of appraisal or dissent with respect to any matters to be voted on at the Annual Meeting.
Quorum requirement
The presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the voting power of all outstanding shares of Common Stock entitled to vote shall constitute a quorum for the transaction of business. Proxies marked as abstaining (including proxies containing broker non-votes) on any matter to be acted upon by stockholders will be treated as present at the meeting for purposes of determining a quorum but will not be counted as votes cast on such matters.quorum.
Stockholder of record & beneficial owner
All stockholders are invited to attend the Annual Meeting. All shares that have been properly voted and not revoked will be voted at the Annual Meeting. Most of our stockholders hold their shares through a stockbroker, bank or other nominee rather than directly in their own name. As summarized below, there are distinctions between shares held of record and those owned beneficially.
Stockholder of Record
If your shares are registered directly in your name with the Transfer Agent, you are considered the stockholder of record, and these proxy materials are being sent directly to you by us. As the stockholder of record, you have the right to grant your voting proxy directly to us or to vote in person at the Annual Meeting. We have enclosed a proxy card for you to use.
Voting in person at the Annual Meeting—You may vote in person at the Annual Meeting. If you choose to do so, please bring the enclosed proxy card and proof of identification. Even if you plan to attend the Annual Meeting, we recommend that you vote your shares in advance as described below so that your vote will be counted if you later decide not to attend the Annual Meeting.
Voting without attending the Annual Meeting—Please complete and properly sign and date the accompanying proxy card and return it to the Transfer Agent in the accompanying pre-addressed envelope.
Changing your vote after returning your proxy card—You can revoke your proxy before it is exercised at the meeting by:
·
Beneficial Owner of Shares
If your shares are held in a stock brokerage account, by a bank or other nominee, you are considered the beneficial owner of shares held in “street name”"street name" and these proxy materials are being forwarded to you by your broker, bank or nominee who is considered, with respect to your shares, the stockholder of record. As the beneficial owner, you have the right to direct the stockholder of record how to vote your shares. Your broker, bank or nominee has enclosed a voting instruction card for your use.
Voting without attending the Annual Meeting—Please follow the instructions provided by your broker, bank or nominee. You may vote by mail by completing, signing and dating the voting
instruction cardscard provided by your broker, bank or nominee and mailing themthe card to such entities in the accompanying pre-addressed envelopes.
Changing your vote after returning your proxy card—You may submit new voting instructions by contacting your broker, bank or other nominee. You may also vote at the Annual Meeting in person by following the instructions in the next section below.
Voting in person at the Annual Meeting—You may vote in person at the Annual Meeting by obtaining a signed “legal proxy”"legal proxy" from the record holder (e.g., your broker, bank or nominee) prior to the meeting. Please bring your signed “legal proxy”"legal proxy" and proof of identification to the meeting.
Required votes to approve each item
Each outstanding share of Common Stock is entitled to one vote on each proposal at the Annual Meeting. All matters require the existence of a quorum at the Annual Meeting. All proposals require an affirmative vote of the majority of shares represented in person or by proxy. Election of Directors is determined by plurality voting. The individual receiving the largest number of votes for each position will be elected.
In voting on Proposal 1, the election of Directors, you may vote “FOR”"FOR" the nominee or your vote may be “WITHHELD”"WITHHELD" with respect to the nominee. In voting on Proposal 2, Ratification of Selection of Independent Public Accounting Firm, you may vote "FOR", "AGAINST", or "ABSTAIN" with respect to the proposal. A properly executed proxy marked “ABSTAIN”"ABSTAIN" with respect to any other matterProposal 2 will not be
voted, although it will be counted for purposes of determining whether there is a quorum. An abstention on any matter other than election of DirectorsProposal 2 will have the effect of a negative vote on that matter. If you are a beneficial owner, shares represented by broker non-votes (when the broker indicates they do not have their customer’scustomer's direction on how to vote, nor has discretionary authority on how to vote) will be counted in determining whether there is a quorum but will not be counted as votes cast on any matter.matter where the broker indicated they do not have discretionary voting authority.
Inspector of elections
Our Executive Vice President, General Counsel and Secretary, John M. Perisich, will act as Inspector of Elections and oversee the voting results. The Inspector of Elections will also determine the presence of a quorum.
Voting results of the Annual Meeting
We will announce preliminary voting results at the Annual Meeting and will publish final results in a Current Report on a Form 8-K filing with the Securities and Exchange Commission (“SEC”("SEC") within four business days of the Annual Meeting.
Board recommendations
The Board recommends a vote:
Annual Meeting of Stockholders to be held in 2020 or until a successor is elected and qualified.·
· FOR Proposal No. 3 to ratify the appointment of Moss Adams LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.
Unless you give other instructions on your proxy card, the individual(s) named as proxy holder on the proxy card will vote in accordance with the recommendations of the Board.
Expense of soliciting proxies
We will pay the costs for the solicitation of proxies, including the cost of preparing and mailing this Proxy Statement. Proxies are being solicited primarily by mail, but the solicitation by mail may be followed-up by solicitation in person, or by telephone or facsimile, by our regular employees without additional compensation for such proxy solicitation activity or by a proxy solicitation firm. We will reimburse brokers, banks and other custodians and nominees for their reasonable out-of-pocket expenses incurred in sending proxy materials to our stockholders.
Stockholder proposal deadline for the 2019 Annual Meeting
The rules of the SEC establish the eligibility requirements and the procedures that must be followed for inclusion of a stockholder’s proposal in a public company’s proxy materials. Under those rules, proposals submitted for inclusion in our 2019 proxy materials must be received on or before the close of business on [December 5, 2018]. Proposals for inclusion in our 2019 proxy materials must comply with the procedures set forth in Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
In addition to the requirements of the SEC, our Amended and Restated Bylaws (“Bylaws”) provide that in order for a proposal to be properly brought before an Annual Meeting of Stockholders, it must be either: (1) specified in the notice of the meeting given by us, (2) otherwise brought before the meeting by or at the direction of our Board, or (3) properly brought before the meeting by a stockholder entitled to vote at the meeting who complies with the following notice procedures: (i) the stockholder must give timely notice thereof in writing of the business to be brought before such meeting to our Secretary, and (ii) such business must be a proper matter for stockholder action under the Delaware General Corporation Law. Our Bylaws provide that to be timely, a stockholder’s notice must be delivered to our Secretary at our principal executive offices not less than 45 days prior to the first anniversary of the date on which we first mailed our proxy materials for the preceding year’s Annual Meeting. If the date of the subsequent year’s Annual Meeting of Stockholders is changed by more than 30 days from the date of the prior year’s meeting, notice by the stockholder for the subsequent year’s Annual Meeting must be delivered to our Secretary within a “reasonable time” prior to our mailing of the proxy materials for the subsequent year’s Annual Meeting of Stockholders. We expect to announce the date of the 2019 Annual Meeting of Stockholders in early 2019.
If a stockholder proposes to nominate for election or reelection a director, the stockholder’s notice must include all information relating to such director nominee that is required to be disclosed in solicitation of proxies for election of directors in an election contest, or otherwise required, in each case, pursuant to Regulation 14A and Rule 14a-11 under the Exchange Act.
For any business that a stockholder desires to bring before an annual meeting, the stockholder’s notice must comply with all applicable requirements of the Exchange Act and the rules and regulations promulgated thereunder, and must include the following:
· a brief description of the proposal and the reasons for the proposal;
· the number of shares of Common Stock which are owned beneficially and of record by such stockholder or such beneficial owner;
· a representation that the stockholder is a holder of record of Common Stock entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination; and
· a representation whether the stockholder or the beneficial owner intends or is part of a group which intends (a) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of our outstanding capital stock required to approve or adopt the proposal or elect the nominee and/or (b) otherwise to solicit proxies from stockholders in support of such proposal or nomination.
Any stockholder who intends to present a proposal at the 2019 Annual Meeting of Stockholders must send the proposal via standard mail, overnight delivery or other courier service, to Primoris Services Corporation, 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201, Attention: Secretary.
The Nominating and Corporate Governance Committee will consider all stockholder recommendations for candidates for the Board, which should be sent to the Nominating and Corporate Governance Committee, c/o Secretary, Primoris Services Corporation, 2100 McKinney Avenue, Suite 1500, Dallas, Texas 75201.
The Nominating and Corporate Governance Committee will evaluate recommendations for Director nominees submitted by Directors, management or qualifying stockholders in the same manner, by using the criteria stated above and discussed on page 13 in the section entitled “Selection of Board Nominees”. All Directors and Director nominees will be required to submit a completed directors’ and officers’ questionnaire as part of the nominating process. At the discretion of the Nominating and Corporate Governance Committee, the process may also include interviews and additional background and reference checks for non-incumbent nominees.
Information about Primoris Services Corporation
We maintain a corporate website atwww.prim.com. Visitors to the Investor Relations section of our website can view and print copies of our SEC filings, including this Proxy Statement and Forms 10-K, 10-Q and 8-K. Copies of the charters for our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee and our Code of Ethics, are also available through our website. Alternatively, stockholders may obtain, without charge, copies of all of these documents by writing to Investor Relations at the Company’sCompany's headquarters. Please note that the information contained on our website is not incorporated by reference in, nor considered to be a part of, this Proxy Statement.
Documents not incorporated by reference into this Proxy Statement
The Audit Committee Report and the Compensation Committee Report are not deemed filed with the SEC and shall not be deemed incorporated by reference into any prior or future filings made by us under the Securities Act of 1933, as amended (the “Securities Act”"Securities Act"), or the Exchange Act, except to the extent that we specifically, and in writing, incorporate such information by reference.
MATTERS TO COME BEFORE THE MEETING
PROPOSAL 1—ELECTION OF DIRECTORS
(Item 1 on Proxy Card)
General Information
We currently have a classified Board consisting of eight members. Five of our Directors are independent Directors as determined under NASDAQ listing rules. Our Directors arehave historically been divided into three classes (Class A, Class B and Class C). DirectorsPreviously, directors in each class arehave been elected to serve for three-year terms that expire in successive years. The termsterm of the Class AB Directors, Brian Pratt, Thomas E. TuckerStephen C. Cook and Peter C. BrownCarla S. Mashinski, expire at the upcoming 20182019 Annual Meeting.
In February 2018 Primoris stockholders voted to approve the Company's proposal to declassify the Board. As the Board implements the declassification, beginning with this Annual Meeting, directors elected at this Annual Meeting will serve a one-year term expiring at the following annual meeting of Directors’stockholders and until his or her respective successor is duly elected and qualified, or until his or her earlier death, resignation, or removal. The terms of the current directors whose terms do not expire at this Annual Meeting are not affected, and those directors will continue to serve the remainder of their three-year terms for which they were elected, which terms will expire at the 2020 or 2021 annual meetings of stockholders, as applicable. The Board will be fully declassified by the 2021 annual meeting of the stockholders, with each director serving a one-year term. Six of our Directors are independent Directors as determined under Nasdaq listing rules.
The Board of Directors' Nominating and Corporate Governance Committee recommended to the Board the nomination of Brian Pratt, Thomas E. TuckerStephen C. Cook and Peter C. BrownCarla S. Mashinski, who was recently appointed by the Board, for re-electionelection as Class A Directorsdirectors for three-yearone-year terms expiring at the 20212020 Annual Meeting, or until their successors are elected and qualified or their earlier death, resignation or removal. These recommendations were adopted unanimously by the Board. If the nominees become unavailable for any reason, or if any vacancy occurs before the election at the 20182019 Annual Meeting (although we know of no reason to anticipate that this will occur), the proxies may be voted for such substitute nominees as the Board may designate.
Each nominee has consented to being named in this Proxy Statement and has agreed to serve if elected. If a quorum is present and voting, the nominees receiving the highest number of votes will be elected as Class A Directors.directors. Abstentions and broker non-votes have no effect on the result of the vote; however, abstentions and broker non-votes will be counted as shares present for purposes of determining the presence of a quorum. The proposed amendment in Proposal 2, if passed, will not affect the terms of the Class A directors elected at the 2018 Annual Meeting
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR BRIAN PRATT, THOMAS E. TUCKERSTEPHEN C. COOK AND PETER C. BROWNCARLA S. MASHINSKI AS CLASS A DIRECTORS TO HOLD OFFICE UNTIL OUR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD IN 20212020 OR UNTIL THEIR RESPECTIVE SUCCESSORS ARE DULY ELECTED AND QUALIFIED OR UPON THEIR EARLIER DEATH, RESIGNATION OR REMOVAL.
Information Regarding Directors and Director Nominees
The following table sets forth information regarding our current Directors, including the Class AB Director nominees up for election at the Annual Meeting. There are no family relationships among any Directors, nominees or named executive officers of the Company. To our knowledge, there are no
material proceedings to which any Director or executive officer is a party adverse to the Company or has a material interest adverse to the Company.
Name | Position with our Company | Age | Director Since | ||||||
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Class B Directors whose terms will expire at the 2019 Annual Meeting and are renominated for terms ending at the 2020 Annual Meeting: | |||||||||
Stephen C. Cook | Independent Lead Director | 69 | 2008 | ||||||
Carla S. Mashinski | Independent Director | 56 | 2019 | ||||||
Class C Directors whose terms will expire at the 2020 Annual Meeting: |
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Robert A. Tinstman | Independent Director | 72 | 2009 | ||||||
David L. King | Director and Chief Executive Officer | 66 | 2015 | ||||||
John P. Schauerman | Independent Director | 62 | 2016 | ||||||
Class A Directors whose terms will expire at the 2021 Annual Meeting: |
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Brian Pratt | Director and Chairman of the Board | 67 | 2008 | ||||||
Thomas E. Tucker | Independent Director | 76 | 2008 | ||||||
Peter C. Brown | Independent Director | 75 | 2009 |
Name |
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Class A Directors whose terms will expire at the 2018 Annual Meeting and are re-nominated for terms ending at the 2021 Annual Meeting: |
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Brian Pratt |
| Director and Chairman of the Board |
| 66 |
| 2008 |
Thomas E. Tucker |
| Independent Director |
| 75 |
| 2008 |
Peter C. Brown |
| Independent Director |
| 74 |
| 2009 |
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Class B Directors whose term will expire at the 2019 Annual Meeting: |
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Stephen C. Cook |
| Independent Lead Director |
| 68 |
| 2008 |
Peter J. Moerbeek |
| Director, Executive Vice President, Chief Financial Officer |
| 70 |
| 2008 |
Class C Directors whose terms will expire at the 2020 Annual Meeting: |
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Robert A. Tinstman |
| Independent Director |
| 71 |
| 2009 |
David L. King |
| Director, |
| 65 |
| 2015 |
John P. Schauerman |
| Independent Director |
| 61 |
| 2016 |
The person named in the enclosed proxy card will vote to elect Brian Pratt, Thomas E. TuckerStephen C. Cook and Peter C. BrownCarla S. Mashinski as Class A Directors,directors, unless you withhold this authority to vote for the election of any or all of the nominees by marking the proxy to that effect.
Director Biographies and Special Skills
Nominee whose Term ExpiresDirectors with Terms Expiring at the 2019 Annual Meeting (Class B)
STEPHEN C. COOK has served as one of our Directors since July 2008 and in May 2010 was appointed by the Board as Lead Director of the Company. Since 1990 he has served as President and principal stockholder of Fieldstone Partners, a Houston, Texas-based investment banking firm focused primarily on corporate merger and acquisition advisory services. He has over 45 years of experience in the investment banking business, including 10 years with Rotan Mosle, Inc., a Texas-based regional investment firm and underwriter where he served as co-head of the corporate finance department and as a director of the firm. Mr. Cook received an A.B. in Economics from Princeton University and an M.B.A. from Harvard Business School. Mr. Cook also serves on the board of Alzeca Biosciences, Inc., Solid Surface Care, Inc. and BTU Research LLC, all privately held companies.
We believe that Mr. Cook's qualifications to serve on our Board include his business and investment banking experience and his wealth of knowledge of mergers and acquisitions. The Board has determined that Mr. Cook meets the Nasdaq rules for independence and is therefore an independent Director.
CARLA S. MASHINSKI was appointed a Director on March 25, 2019. Since July 2015, Ms. Mashinski has served as Chief Financial & Administrative Officer of Cameron LNG, a natural gas liquification terminal near the Gulf of Mexico. From 2014 to July 2015, she served as Chief Financial Officer and Vice President of Finance and Information Management for the North America Operation of SASOL, an international integrated energy company. From 2008 to 2014, Ms. Mashinski was employed by SBM Offshore, Inc., a provider of leased floating production systems for the offshore energy industry, serving as Vice President of Finance and Administration, U.S. Chief Financial Officer from 2008 to February 2014, and as Commercial and Contracts Manager from February to August 2014. She served as Vice President and Chief Accounting Officer and Controller of Gulfmark Offshore from 2004 to 2008. Prior to that, Ms. Mashinski held various finance and accounting positions for Duke Energy (1999-2004) and Shell Oil Company (1985-1998) or its affiliated companies. Ms. Mashinski is a certified public accountant, certified management accountant, and a certified project management professional with a B.S. degree in accounting from the University of Tennessee, Knoxville and an Executive M.B.A. from the University of Texas, Dallas.
Ms. Mashinski currently serves on the board of Unit Corporation (NYSE:UNT), a U.S. based energy company engaged in oil and gas exploration and production, contract drilling, and gas gathering and processing. She is chair of the compensation committee and sits on the audit committee. Ms. Mashinski also serves on the board of CARBO Ceramics (NYSE:CRR), a global technology company that provides products and services to the oil & gas and industrial markets, and sits on their compensation, audit, and nominating and corporate governance committees.
We believe that Ms. Mashinski's qualification to serve on our Board include her experience as a director of various public companies, her accounting and financial expertise as a certified public accountant, certified management accountant, and project management professional, her executive level experience with corporate financial, human resources, and information management activities, and her industry experience in strategic planning, risk management, compensation, mergers and acquisitions, joint ventures, and financial leadership. The Board has determined that Ms. Mashinski meets the Nasdaq rules for independence and is therefore an independent Director.
Directors with Terms Expiring at the 2020 Annual Meeting (Class C)
ROBERT A. TINSTMAN was appointed a Director on December 18, 2009. Mr. Tinstman was employed by Morrison Knudsen from 1974 to 1999 and served as its President/Chief Executive Officer for the period 1995 to 1999. Mr. Tinstman was the Executive Chairman of James Construction Group from 2002 to 2007. Mr. Tinstman is a registered Professional Engineer in the state of Idaho. He graduated from University of Wisconsin, Platteville, with a B.S., Mining Engineering in 1968.
Mr. Tinstman is also a director on the following public company boards: IDA CORP, Inc. (NYSE: IDA), where he is chairman of the board and chairman of the nominating and governance committee and Westmoreland Coal Company (OTCMKTS: WLBAQ) where he is a member of the nominating and governance committee, chairman of the compensation committee, and chairman of the operations committee.
We believe that Mr. Tinstman's qualifications to serve on our Board include his experience as President and Chief Executive Officer of one of the largest construction companies in the United States, as well as his wealth of knowledge of business systems and construction operations. The Board determined that Mr. Tinstman meets the Nasdaq rules for independence and is therefore an independent Director.
DAVID L. KING has served as our Chief Executive Officer since August 2015, has served as one of our Directors since May 2015, and also served as our President from August 2015 until April 2019. Mr. King directs and manages day-to-day operations of the Company. He is responsible for providing strategic leadership for the Company by working with the board of directors and the executive management team to establish long-range goals, strategies, plans and policies. Prior to that, Mr. King was our Executive Vice President, Chief Operating Officer since March 2014. Prior to joining Primoris, Mr. King spent several years at Chicago Bridge & Iron ("CB&I"), a large NYSE listed construction company that was recently acquired by McDermott International, most recently as President of Lummus Engineered Products from 2013 to March 2014. From 2010 to 2013 he was President of CB&I Project Engineering & Construction based in The Hague, Netherlands responsible for worldwide operations. From 2009 to 2010 he was Group Vice President for Downstream Operations for CB&I Lummus located in The Woodlands, Texas. Mr. King also managed and helped establish the Global Services Group for CB&I in 2008. He has extensive Engineering, Procurement, Fabrication and Construction industry experience in energy-related projects, liquefied natural gas, offshore, pipelines, refining, petrochemicals, gas processing, oil sands, synthesis gas and gas-to-liquids. Mr. King received his bachelor's degree in Mechanical Engineering from Texas Tech University, an MBA from the University of Texas, Tyler, and an Advanced Executive Management Degree from Insead University in Fontainebleau, France.
Mr. King has a wealth of knowledge and experience in the industry and our business and has obtained in-depth knowledge of our employees, culture, competitors and the effect on our business of various government policies. We believe that his history and experience demonstrate that Mr. King is well qualified to serve on our Board.
JOHN P. SCHAUERMAN was appointed a Director on November 15, 2016. He served as the Company's Executive Vice President of Corporate Development from February 2009 to December 2012, and was responsible for developing and integrating Primoris' overall strategic plan, including the evaluation and structuring of new business opportunities and acquisitions. Prior to that, Mr. Schauerman served as our Chief Financial Officer from February 2008 to February 2009, during which time Primoris went public through a merger with Rhapsody Acquisition Corp. He also served as a director of the Company from July 2008 to May 3, 2013 and as a director of its predecessor entity, ARB, Inc. ("ARB") from 1993 to July 2008. Mr. Schauerman joined ARB in 1993 as the Company's Senior Vice President. Previously, he served as Senior Vice President of Wedbush Morgan Securities, Inc., a regional investment bank focused on financing activities for middle market companies (n/k/a Wedbush Securities, Inc.). Mr. Schauerman served on the Boards of Directors of MYR Group (Nasdaq: MYRG) from March 2016 through November 2016; Harmony Merger Corp. (Nasdaq:HRMNU), a blank check investment company, from March 2015 through July 2017, Allegro Merger Corp (Nasdaq:ALGR), a blank check investment company from July 2018 through present, and Wedbush Securities, Inc., a leading financial services and investment firm, from August 2014 through February 2018. Mr. Schauerman is a member of the Dean's Executive Board of the UCLA School of Engineering. Mr. Schauerman holds an MBA in Finance from Columbia University, New York, and a B.S. in Electrical Engineering from the University of California, Los Angeles.
We believe that Mr. Schauerman's qualifications to serve on our Board include his experience as a director of various public companies, his experience as chief financial officer of a construction company, his wealth of knowledge of business systems and understanding of generally accepted accounting principles, experience in analyzing financial statements, understanding of internal control over financial reporting and his understanding and knowledge of public company rules and regulations. The Board determined that Mr. Schauerman meets the Nasdaq rules for independence and is therefore an independent Director.
Directors with Terms Expiring at the 2021 Annual Meeting (Class A)
BRIAN PRATT has been a Director and our Chairman since July 2008. He served as our President and Chief Executive Officer from July 2008 through July 31, 2015. He also holds the non-employee position of Senior Strategic Advisor. Since 1983, he served as the President, Chief Executive Officer and Chairman of the Board of Primoris and its predecessor entity, ARB, Inc. Prior to July 2008, Mr. Pratt was the majority owner of Primoris. Mr. Pratt has over 35 years of hands-on operations and management experience in the construction industry. Mr. Pratt completed four years of courses in Civil Engineering at California Polytechnic College in Pomona, California.
Mr. Pratt has an intimate knowledge of our business, employees, culture, competitors and the effect on our business of various government policies. We believe that his long history and experience with Primoris, his significant ownership position in the Company and his in-depth knowledge of the construction industry demonstrate that Mr. Pratt is well qualified to serve on our Board.
THOMAS E. TUCKER has served as one of our Directors since July 2008. He is currently Chairman of Pennhill Land Company, a real estate development and investment company, where he has worked since he founded the company in 1983. He served as a board member of RSI Holding Corporation, a privately held national manufacturer of cabinets for homes, from 2002 to November 2008. Prior to that, he served as an advisory board member of ORCO Block Company, a Southern
California manufacturer of block products, and Gemini Investors, a Boston based Investment Capital firm. Mr. Tucker received a B.S. in Business from the University of Southern California.
We believe that Mr. Tucker’sTucker's experience as a founder and executive officer of a large real estate development company, his expertise in the real estate development business and his directorships of large companies qualify him to serve on our Board. The Board determined that Mr. Tucker meets the NASDAQNasdaq rules for independence and is therefore an independent Director.
PETER C. BROWN joined our Board on February 6, 2009. From 1974 to 2005, he served as President at Brown Armstrong Accountancy Corporation, a regional provider of tax, audit, consulting and business services headquartered in Bakersfield, California and he is a retired partner. Mr. Brown received a B.S. in Accounting from the University of Arizona. He is a member of the American Institute of Certified Public Accountants, the California Society of Certified Public Accountants and the Colorado Society of Certified Public Accountants.
We believe that Mr. Brown’sBrown's qualifications to serve on our Board include his in-depth knowledge and understanding of generally accepted accounting principles, his background in tax regulations, experience in preparing, auditing and analyzing financials statements and understanding of the responsibilities and functions of audit committees. The Board determined that Mr. Brown meets the NASDAQNasdaq rules for independence and is therefore an independent Director.
Directors with Terms Expiring at the 2019 Annual Meeting (Class B)
STEPHEN C. COOK has served as one of our Directors since July 2008 and in May 2010 was appointed by the Board as Lead Director of the Company. Since 1990 he has served as President and principal stockholder of Fieldstone Partners, a Houston, Texas-based investment banking firm focused primarily on corporate merger and acquisition advisory services. He has over 40 years of experience in the investment banking business, including 10 years with Rotan Mosle, Inc., a Texas-based regional investment firm and underwriter where he served as co-head of the corporate finance department and as a director of the firm. Mr. Cook received an A.B. in Economics from Princeton University and an MBA from Harvard Business School.
We believe that Mr. Cook’s qualifications to serve on our Board include his business and investment banking experience and his wealth of knowledge of mergers and acquisitions. The Board has determined that Mr. Cook meets the NASDAQ rules for independence and is therefore an independent Director.
PETER J. MOERBEEK was named our Executive Vice President, Chief Financial Officer effective February 6, 2009. He has served as one of our Directors since July 2008 and was Chairman of the Audit Committee until February 2009. From 2006 through February 2009, he was the Chief Executive Officer and a founder of a private equity-funded company engaged in the acquisition and operation of water and wastewater utilities. From August 1995 to June 2006, Mr. Moerbeek held several positions with publicly traded Southwest Water Company, a California based company which provided water and wastewater services, including director from 2001 to 2006; President and Chief Operating Officer from 2004 to 2006; President of the Services Group from 1997 to 2006; Secretary from 1995 to 2004; and Chief Financial Officer from 1995 to 2002. From 1989 to 1995, Mr. Moerbeek was the Vice President of Finance and Operations for publicly traded Pico Products, Inc., a manufacturer and distributor of cable television equipment. Mr. Moerbeek received a B.S. in Electrical Engineering and an MBA from the University of Washington and is a certified public accountant.
We believe that Mr. Moerbeek’s qualifications to serve on our Board include his prior experience as the chief operating officer and the chief financial officer of a NASDAQ listed company, as well as his in-depth knowledge and understanding of
generally accepted accounting principles, experience in analyzing financial statements, understandingTable of internal control over financial reporting and his understanding and knowledge of public company rules and regulations.Contents
Directors with Terms Expiring at the 2020 Annual Meeting (Class C)
ROBERT A. TINSTMAN was appointed a Director on December 18, 2009. Mr. Tinstman was the former president of Tinstman and Associates, LLC. From 1974 to 1999, Mr. Tinstman was employed by Morrison Knudsen and served as its President/Chief Executive Officer for the period 1995 to 1999. Mr. Tinstman was the Executive Chairman of James Construction Group from 2002 to 2007. Mr. Tinstman is a registered Professional Engineer in the state of Idaho. He graduated from University of Wisconsin, Platteville, with a B.S., Mining Engineering in 1968.
Mr. Tinstman is also a director on the following public company boards: IDA CORP, Inc., where he is chairman of the board and chairman of the nominating and governance committee; Westmoreland Coal Company where he is a member of the nominating and governance committee, member of the compensation committee, and chairman of the operations committee; Home Federal Bancorp, where he was a member of the audit committee and chairman of the compensation committee until May 2014; and CNA Surety, where he was a member of the audit committee and chairman of the compensation committee until June 2011.
We believe that Mr. Tinstman’s qualifications to serve on our Board include his experience as President and Chief Executive Officer of one of the largest construction companies in the United States, as well as his wealth of knowledge of business systems and construction operations. The Board determined that Mr. Tinstman meets the NASDAQ rules for independence and is therefore an independent Director.
DAVID L. KING has served as our President and Chief Executive Officer since August 2015 and has served as one of our Directors since May 2015. Mr. King directs and manages day-to-day operations of the Company. He is responsible for providing strategic leadership for the Company by working with the board of directors and the executive management team to establish long-range goals, strategies, plans and policies. Prior to that, Mr. King was our Executive Vice President, Chief Operating Officer since March 2014. Prior to joining Primoris, Mr. King spent several years at Chicago Bridge & Iron (“CB&I”), most recently as President of Lummus Engineered Products from 2013 to March 2014. From 2010 to 2013 he was President of CB&I Project Engineering & Construction based in The Hague, Netherlands responsible for worldwide operations. From 2009 to 2010 he was Group Vice President for Downstream Operations for CB&I Lummus located in The Woodlands, Texas. Mr. King also managed and helped establish the Global Services Group for CB&I in 2008. He has extensive Engineering, Procurement, Fabrication and Construction industry experience in energy-related projects, liquefied natural gas, offshore, pipelines, refining, petrochemicals, gas processing, oil sands, synthesis gas and gas-to-liquids. Mr. King received his bachelor’s degree in Mechanical Engineering from Texas Tech University, an MBA from the University of Texas, Tyler, and an Advanced Executive Management Degree from Insead University in Fontainebleau, France.
Mr. King has a wealth of knowledge and experience in the industry and our business and has obtained in-depth knowledge of our employees, culture, competitors and the effect on our business of various government policies. We believe that his history and experience demonstrate that Mr. King is well qualified to serve on our Board.
JOHN P. SCHAUERMAN was appointed a Director on November 15, 2016. He served as the Company’s Executive Vice President of Corporate Development from February 2009 to December 2012, and was responsible for developing and integrating Primoris’ overall strategic plan, including the evaluation and structuring of new business opportunities and acquisitions. Prior to that, Mr. Schauerman served as our Chief Financial Officer from February 2008 to February 2009, during which time Primoris went public through a merger with Rhapsody Acquisition Corp. He also served as a director of the Company from July 2008 to May 3, 2013 and as a director of its predecessor entity, ARB, Inc. (“ARB”) from 1993 to July 2008. Mr. Schauerman joined ARB in 1993 as the Company’s Senior Vice President. Previously, he served as Senior Vice President of Wedbush Morgan Securities, Inc., a regional investment bank focused on financing activities for middle market companies (n/k/a Wedbush Securities, Inc.). Mr. Schauerman served on the Boards of Directors of MYR Group (NASDAQ: MYRG) from March 2016 through November 2016; Harmony Merger Corp. (NASDAQ:HRMNU), a blank check investment company, from March 2015 through July 2017, and Wedbush Securities, Inc., a leading financial services and investment firm, from August 2014 through February 2018. Mr. Schauerman is a member of the Dean’s Executive Board of the UCLA School of Engineering. Mr. Schauerman holds an MBA in Finance from Columbia University, New York, and a B.S. in Electrical Engineering from the University of California, Los Angeles.
We believe that Mr. Schauerman’s qualifications to serve on our Board include his experience as a director on various public companies, his experience as chief financial officer of a large construction company, his wealth of knowledge of business systems and understanding of generally accepted accounting principles, experience in analyzing financial statements, understanding of internal control over financial reporting and his understanding and knowledge of public company rules and regulations.
PROPOSAL 2— AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS
(Item 2 on Proxy Card)
After careful consideration, on March 10, 2018, our Board of Directors voted unanimously to approve, and to recommend to our stockholders that they approve, an amendment and restatement of our Fourth Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) to provide for a phased-in declassification of the Board of Directors and transition to annual voting beginning at the 2019 annual meeting of stockholders.
Current Classified Board Structure
Currently, our Certificate of Incorporation provides that the Board of Directors be divided into three classes, with the number of directors in each class being as nearly equal as possible. Accordingly, approximately one-third of the directors are elected annually, each serving a three-year term.
Proposed Amendment
The proposed amendment of our Certificate of Incorporation would not shorten the existing terms of the directors; therefore, the director nominees at the 2018 annual meeting of the stockholders would serve the term for which they are being elected (expiring in 2021), and all incumbent directors would complete their existing terms. If the proposed amendment is approved, the classified structure of our Board of Directors would be eliminated through the annual election of directors whose terms are expiring, beginning with the Class B directors at the 2019 annual meeting of the stockholders.
Specifically, the proposed amendment of our Certificate of Incorporation provides that each director elected at each annual meeting of stockholders, beginning with the 2019 annual meeting of stockholders, shall serve a one-year term expiring at the following annual meeting of stockholders and until his or her respective successor is duly elected and qualified, or until his or her earlier death, resignation, or removal. The proposed amendment will not change the terms of the current directors whose terms will not expire at the 2019 annual meeting of stockholders. Those directors will continue to serve the remainder of the three-year terms for which they were elected; those terms will expire at the 2020 or 2021 annual meetings of stockholders, as applicable. The Board of Directors would be fully declassified by the 2021 annual meeting of the stockholders, with each director serving a one-year term. In all cases, each director will hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation, or removal.
The text of the proposed Fifth Amended and Restated Certificate of Incorporation, marked to show the proposed deletions and insertions, is attached as Appendix A to this proxy statement. If approved by our stockholders, the amendment and restatement to our Certificate of Incorporation will become effective upon the filing of a certificate of amendment with the Secretary of State of Delaware. We would make that filing shortly after the 2018 annual meeting of the stockholders. If our stockholders do not approve this proposal, our directors will continue to be elected in three classes with staggered three-year terms and the provisions of our Certificate of Incorporation relating to the removal of directors will not be amended.
Rationale for Declassification
In determining whether to propose declassifying the Board of Directors to our stockholders, the Board of Directors and the Nominating and Corporate Governance Committee considered the arguments in favor of and against continuation of the classified board structure, and determined that it would be in the best interests of the Company and our stockholders to amend our Certificate of Incorporation to declassify the board.
The Board of Directors recognizes that a classified structure has provided several advantages, such as promoting board continuity and stability, encouraging directors to take a long-term perspective, and ensuring that a majority of the board will always have prior experience with the Company. Additionally, classified boards provide effective protection against unwanted takeovers and proxy contests, as they make it difficult for a substantial stockholder to gain control of the board of directors without the cooperation or approval of incumbent directors.
However, the Board of Directors also recognizes that a classified structure may reduce directors’ accountability to stockholders, since such a structure does not enable stockholders to express a view on each director’s performance on an annual basis. Moreover, many institutional investors believe that the election of directors is the primary means for stockholders to influence corporate governance policies and to hold management accountable for implementing those policies.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS.
PROPOSAL 3—RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Item 32 on Proxy Card)
General
We are asking the stockholders to ratify the Audit Committee’sCommittee's selection of Moss Adams LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.2019. The firm is a registered public accounting firm with the Public Company Accounting Oversight Board (“PCAOB”("PCAOB"), as required by the Sarbanes-Oxley Act of 2002 and the rules of the PCAOB. In the event the stockholders fail to ratify the appointment, the Audit Committee will reconsider this appointment. If the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and our stockholders.
A Moss Adams LLP representative is expected to attend the 20182019 Annual Meeting of the Stockholders. The representative will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate stockholder questions.
The affirmative vote of a majority of the shares of Common Stock present, in person or by proxy, entitled to vote at the Annual Meeting is required to approve the ratification of the appointment of Moss Adams LLP as our independent registered public accounting firm for 2018.2019.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF MOSS ADAMS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2018.2019.
We believe that effective corporate governance is an important element of our long-term success and ability to create value for our stockholders. Our Board periodically reviews our existing corporate governance policies and practices, as well as related provisions of the Sarbanes-Oxley Act of 2002, current and proposed rules of the SEC, and the corporate governance requirements of NASDAQ.Nasdaq. Based on its review, the Board has approved charters, policies, procedures and controls that we believe promote and enhance our corporate governance, accountability and responsibility and promote a culture of honesty and integrity.
Charters for each of our Board committeesAudit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available on the Investor Relations section of our website atwww.prim.com, and copies are available free of charge upon request to our Secretary at Primoris Services Corporation, 2100 McKinney Avenue,2300 N. Field Street, Suite 1500,1900, Dallas, Texas 75201.
Board Independence
The listing standards of NASDAQNasdaq require that companies have a board of directors with at least a majority of independent directors. Determining director independence requires that the Board affirmatively determine that the director has no material relationship with us, either directly or as a partner, stockholder or officer of an organization that has a relationship with us which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
To assist it in making independence determinations, the Board has adopted independence standards, which include the standards required by NASDAQNasdaq for independent directors. Under these standards, a director is not independent if:
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On the basis of the Board independence standards identified above, and such other factors as the Board may consider from time to time, the Board has affirmatively determined that Messrs. Brown, Cook, Schauerman, Tinstman, Tucker and TuckerMs. Mashinski are independent.
Board Structure and Committee Composition
The Board has: (i) an Audit Committee, (ii) a Compensation Committee, (iii) a Nominating and Corporate Governance Committee and (iv) a Succession Planning Committee. The Board and its Committees meet throughout the year on a set schedule and also hold special meetings, both telephonically and in person, and act by written consent from time to time, as appropriate. During 2017,2018, the Board held a total of eighttwelve meetings, the Audit Committee held sixfour meetings, the Compensation Committee held four meetings, the Nominating and Corporate Governance Committee held three meetings and the Succession Planning Committee held one meeting. The independent Directors meet in executive session at meetings of the Board and Committees as necessary. During the Board meetings, all of the independent Directors met in executive session without any management members four times during 2017.2018.
The Board has separated the roles of Chairman and CEO, with Mr. Pratt serving as our Non-Executive Chairman of the Board since August 2015, when Mr. King became our CEO. In May 2010, Mr. Cook was appointed by the Board as the Lead Director, responsible for chairing the Board meetings in the absence of the Chairman, chairing executive sessions of independent Directors, acting as the principal liaison between the Chairman and the independent Directors and serving as the contact Director for stockholders. The Board believes it should have the flexibility to establish a leadership structure that works best for the Company at a particular time, and it reviews that structure from time to time, including in the context of changes in leadership. The Board is of the view that its current leadership structure best serves the objective of effective Board oversight of management at this time and allows Mr. King to focus primarily on the operations and management of the Company, while leveraging Mr. Pratt's experience to lead the board.
The Board and the Compensation Committee do not make decisions regarding an executive officer’sofficer's compensation in the presence of such executive officer. The compensation of our Chief Executive Officer and all other executive officers is recommended to the Board of Directors for approval by the Compensation Committee. The Board of Directors act on the recommendations in a vote in which only independent Directors participate and which takes place during executive sessions of independent Board members.
Director nominees are selected or recommended for the Board of Directors’Directors' selection by the Nominating and Corporate Governance Committee. The Board of Directors act on the recommendation in a vote in which only independent Directors participate and which takes place during executive sessions of independent Board members.
Each Director attended all of the Board and Committee meetings held in 2017.2018. In addition, each Director attended all of the meetings held by all Board committees on which such person served (during the periods that such person served).
The Audit, Compensation and Nominating and Corporate Governance committees operate under written charters adopted by the Board. The Board committee charters are available on the investor relations section
Table of our website at www.prim.com.Contents
The members of the Board committees are identified in the following table:
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Director(1) | Audit Committee | Compensation | Nominating and | Succession | ||||||||||
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Brian Pratt | X | |||||||||||||
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Stephen C. Cook | X | Chair | X | X | ||||||||||
Carla S. Mashinski | ||||||||||||||
John P. Schauerman | X | |||||||||||||
Robert A. Tinstman | X | X | Chair | |||||||||||
Thomas E. Tucker |
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Audit Committee The Audit Committee consists of The Audit Committee oversees our accounting and financial reporting processes, internal control systems, independent auditor relationships and the audits of our financial statements. Among other matters, the Audit TuckerMs. Mashinski are independent Directors. Ms. Mashinski joined the board on March 25, 2019.fourthree persons, all of whom are independent under the NASDAQNasdaq listing standards. Members of the Audit Committee must also satisfy additional SEC independence requirements, which provide that they may not accept directly or indirectly any consulting, advisory or other compensatory fee from the Company other than compensation in their capacity as Director, or otherwise be an “affiliated person”"affiliated person" of us. The Board has determined that Audit Committee members Messrs. Brown (Chair), Cook, Schauerman and TuckerSchauerman all satisfy the applicable SEC independence requirements. The Board has also determined that each member of our Audit Committee qualifies as independent under Rule 10A-3 of the Exchange Act.Committee’sCommittee's responsibilities include the following:·Selecting and hiring our independent registered public accounting firm;
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without the presence of management. During these independent sessions, the Audit Committee and the auditors discuss, among other things, the acceptability of the Company’sCompany's accounting principles, critical accounting policies and sensitive accounting estimates;
Audit Committee Financial Expert. The Board has also determined that Mr. Brown and Mr. Schauerman are the Audit Committee “financial experts”"financial experts" as defined under SEC rules and regulations. Management has the primary responsibility for the preparation of the financial statements and the financial reporting processes of the Company.
The Audit Committee Report is included on page 20.24.
Compensation Committee
The members of the Compensation Committee of the Board are Messrs. Cook (Chairman), Brown, Tinstman, and Tinstman.Tucker. All of the members of the Compensation Committee meet the independence requirements of NASDAQNasdaq listing standards.
The Compensation Committee monitors and assists the Board in determining compensation for our executive officers and Directors. The Board and the Compensation Committee do not make decisions regarding an executive officer’sofficer's compensation in the presence of such executive officer. After the Compensation Committee analyzes compensation issues related to our Chief Executive Officer and other executive officers, it makes a recommendation to the Board’sBoard's independent Directors for determination by independent Directors in a vote in which only independent Directors participate. The Compensation Committee has the following authority and responsibilities, among others, with respect to our Director and executive compensation plans:
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The Compensation Committee has the power to form subcommittees for any purpose that it deems appropriate and may delegate to such subcommittee such power and authority as the Compensation Committee may deem appropriate, provided it does not delegate to a subcommittee any power or authority required by any law, regulation or listing standard to be exercised
by the Compensation Committee as a whole. The Compensation Committee may consider the recommendations of our Chief Executive Officer in determining the level of compensation of the executive officers of the Company and its subsidiaries. The Compensation Committee has the authority to retain such independent consultants or advisers as it deems necessary and appropriate, including compensation consultants, to advise it with respect to amounts or forms of executive or Director
compensation, and may rely on the integrity and advice of any such advisers. The Compensation Committee also has the sole authority to retain a compensation consultant to assist it in carrying out its responsibilities, including the sole authority to approve the consultant’sconsultant's fees and other retention terms, such fees to be borne by us, and to terminate any such consultant.
The Compensation Committee engaged Pay Governance, LLC as its independent advisor beginning in 2012. Prior to their engagement, Pay Governance did not perform any services for the Company. The Compensation Committee considered independence factors under Dodd-Frank and NASDAQNasdaq rules and concluded that the work performed by Pay Governance did not present any conflicts of interest. As requested by the Compensation Committee, Pay Governance advises and consults with the Compensation Committee on compensation issues, compensation design and trends, and keeps the Compensation Committee apprised of regulatory, legislative, and accounting developments and competitive practices related to executive compensation. Pay Governance reviews, at the direction of the Compensation Committee, compensation levels, trends and practices at the discretion of the Compensation Committee. Pay Governance does not determine the exact amount or form of executive compensation for any executive officers. See “EXECUTIVE COMPENSATION — "EXECUTIVE COMPENSATION—Compensation Discussion and Analysis”Analysis" on page 21.26. Pay Governance reports directly to the Compensation Committee, and a representative of Pay Governance, when requested, attends meetings of the Compensation Committee, is available to participate in executive sessions and communicates directly with the Compensation Committee Chair or its members outside of meetings. Pay Governance does no other work for the Company.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship exists between any member of our Board and any member of the board of directors or compensation committee of any other companies, nor has such interlocking relationships existed in the past.
Nominating and Corporate Governance Committee
The members of the Nominating and Corporate Governance Committee are Messrs. Tucker (Chairman), Cook, and Tinstman. All of the members of the Nominating and Corporate Governance Committee meet the independence requirements of NASDAQNasdaq listing standards.
The Nominating and Corporate Governance Committee assists the Board by identifying individuals qualified to become Directors consistent with criteria established by the Board. After the Nominating and Corporate Governance Committee identifies qualified individuals, it makes a recommendation to the Board’sBoard's independent Directors. Director nominees are selected by a majority of the Board’sBoard's independent Directors in a vote in which only independent Directors participate. Among other matters, the Committee’sNominating and Corporate Governance Committee's responsibilities include the following:
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Selection of Board Nominees
In identifying Board nominees, we may consider individuals who are known to our officers or Directors, or individuals with significant industry or other relevant experience. The Nominating and Corporate Governance Committee’sCommittee's consideration of a candidate as a Director includes assessment of the individual’sindividual's understanding of our business, the individual’sindividual's professional and educational background, skills, expertise, potential time commitment, and other criteria established by the Nominating and Corporate Governance Committee from time to time.
To provide such a contribution to us, a Director must generally possess one or more of the following, in addition to personal and professional integrity:
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The Nominating and Corporate Governance Committee has adopted its own procedures for evaluating the suitability of potential Director nominees, including qualifications for a “financial expert”"financial expert" and financially literate members for the Audit Committee.
Succession Planning Committee
In May 2011, the Board of Directors established a Succession Planning Committee and appointed Mr. Tinstman as Succession Planning Committee Chair with Mr. Pratt, our Chairman, and Mr. Cook, our independent Lead Director, as members. The purpose of the Succession Planning Committee is to coordinate the efforts of the Board and executive management in establishing the processes, procedures and practices that the Board and management will use to meet their succession planning responsibilities, including succession with respect to the position of CEO. In addition, the Succession Planning Committee has established contingency plans for the departure, death or disability of our CEO.
Board Role in Risk Oversight
Our Board is responsible for oversight of our Company’sCompany's risks. As with all companies, and especially with construction companies, we face a variety of risks in our business. Many of these risks are discussed in Item 1A, “"Risk Factors”" in our most recent Annual Report on Form 10-K, which was filed with the SEC on February 26, 2018.28, 2019.
The Board believes that having a system in place for risk management and implementing strategies responsive to our risk profile and exposures is the best way to identify in a timely manner specific material risks, but we can give no assurances that we will be able to identify or mitigate all possible risks in advance. In order to more efficiently provide oversight of these material risks, the Board has designated certain risk oversight responsibilities to relevant Board committees. The Audit Committee has the direct responsibility for risk oversight relating to accounting matters, financial reporting, enterprise, cybersecurity, legal and compliance risks. To assist in this risk oversight function, the Audit Committee obtains assistance from the following: (1) our Chief Financial Officer, who is responsible for managing our risk management function, (2) our General Counsel, who is responsible for the Company’sCompany's third party insurance programs and (3) our independent registered public accounting firm. The Audit Committee meets periodically with management and the independent auditors to review
financial exposures. The Compensation Committee is responsible for risks related to employment policies and our compensation and benefits systems. The Nominating and Corporate Governance Committee oversees risks associated with our Code of Conduct, including compliance with listing standards for independent Directors and committee assignments. As necessary, the committee chairmen report any risk-related matters to the full Board at Board of Directors meetings.
While the Board is responsible for risk oversight, the day-to-day risk management is the responsibility of the operating management and executive officers. Our executive officers maintain a significant ownership interest which results in an increased level of awareness of the need of risk management and risk oversight for the long-term benefit of the Company.
Code of Ethics
The Company has a Code of Ethics that complies with the rules and regulations adopted by the SEC and NASDAQNasdaq listing standards and are applicable to all of our Directors, officers and employees. The Code of Ethics also includes a supplement with additional policies that are applicable to the CEO, CFO and all senior financial officers of the Company. The Code of Ethics is available on the Investor Relations/Governance section of our website atwww.prim.com. We intend to post
amendments to, or waivers under, if any, from our Code of Ethics (to the extent applicable to our Directors or Chief Executive Officer, Principal Financial Officer, or Principal Accounting Officer) at this location on our website. Among other matters, this Code of Ethics is designed to promote:
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Policy Regarding Director Attendance at Annual Meetings of Stockholders
Directors are strongly encouraged to attend our Annual Meetings of Stockholders, and we currently expect all of our Directors to be in attendance at the Annual Meeting on May 4, 2018.3, 2019. All the Directors were in attendance at the 20172018 Annual Meeting.
Stockholder Communications with the Board of Directors
Stockholders may communicate with any of our Directors, either individually or as a group, by writing to them at Primoris Services Corporation, c/o Secretary, 2100 McKinney Avenue,2300 N. Field Street, Suite 1500,1900, Dallas, Texas 75201. Please specify to whom your correspondence should be directed. The Secretary will promptly forward all correspondence to the Board or any specific committee member, as indicated in the correspondence, except for mass mailings, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate material. Our Secretary may forward certain correspondence, such as product-related or service-related inquiries, elsewhere within the Company for review and possible response.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Our Board has adopted a written policy requiring review, approval and ratification of any material related party transaction.transaction, including those that would require disclosure under Item 404 of Regulation S-K. All material related party transactions may be consummated and continued only if the Audit Committee has approved or ratified such transaction after a review of the relevant facts and circumstances.
The following is a description of related party transactions to which we have been a party, in which the amount involved exceeded $120,000, other than compensation and employment arrangements described elsewhere in this Proxy Statement. The descriptions are for the annual period of 2017.2018. We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’sarm's length transactions with independent third parties. In addition, any new leases, extensions of lease terms and changes in lease terms or amounts must be approved in advance by the independent directors of the Audit Committee.
Prior to March 2017, we leased three properties in California from Stockdale Investment Group, Inc. (“SIGI”). Our Chairman of the Board of Directors, who is our largest stockholder, and his family hold a majority interest of SIGI. In March 2017, we exercised a right of first refusal and purchased the SIGI properties. The purchase was approved by our Board of Directors for $12.8 million. We assumed three mortgage notes totaling $4.2 million with the remainder paid in cash. During the year ended December 31, 2017, we paid $212,000 in lease payments to SIGI for the use of these properties.
The Company did not enter into any other material related party transactions during 2017.2018.
Directors who also are employees of the Company do not receive additional compensation for serving as Directors. Compensation for employee Directors is determined by the Board’sBoard's Compensation Committee and is discussed further in the Compensation Discussion and Analysis section of this proxy.
Current compensation for independent Directors of the Company includes the following components:
·
In addition, Directors are reimbursed for expenses incurred in connection with Board and Board Committee meetings and assignments.
On August 5, 2015, the Board of Directors approved a four year agreement for Brian Pratt (our former CEO) as a Senior Strategic Advisor. The agreement provides for an annual fee of $325,000, medical insurance benefits equal to those provided to Company employees, Company-provided automobile insurance coverage, up to 100 hours of personal use of any Company owned or leased aircraft per year, and reimbursement of personal use of Company-paid club memberships in Dallas County, Texas and Orange County, California.
The table below details the compensation earned by our non-employee Directors in 2017.
Non-Employee Director |
| Fees |
| Stock Awards (1) |
| All Other |
| Total |
| ||||
Peter C. Brown |
| $ | 90,000 |
| $ | 93,334 |
| $ | — |
| $ | 183,334 |
|
Stephen C. Cook |
| 85,000 |
| 93,334 |
| — |
| 178,334 |
| ||||
Brian Pratt |
| 420,000 |
| 93,334 |
| 41,389 |
| 554,723 |
| ||||
John P. Schauerman |
| 70,000 |
| 93,334 |
| — |
| 163,334 |
| ||||
Robert A. Tinstman |
| 85,000 |
| 93,334 |
| — |
| 178,334 |
| ||||
Thomas E. Tucker |
| 85,000 |
| 93,334 |
| — |
| 178,334 |
| ||||
2018.
Non-Employee Director | Fees Earned or Paid in Cash | Stock Awards(1) | All Other Compensation(2) | Total | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter C. Brown | $ | 90,000 | $ | 93,334 | $ | — | $ | 183,334 | |||||
Stephen C. Cook | 85,000 | 93,334 | — | 178,334 | |||||||||
Brian Pratt | 420,000 | 93,334 | 65,737 | 579,071 | |||||||||
John P. Schauerman | 70,000 | 93,334 | — | 163,334 | |||||||||
Robert A. Tinstman | 85,000 | 93,334 | — | 178,334 | |||||||||
Thomas E. Tucker | 85,000 | 93,334 | — | 178,334 |
Security Ownership of 5% or Greater Stockholders, Directors, Director Nominees and Executive Officers The following table sets forth information with respect to beneficial ownership of Common Stock for (a) those persons known by management of the Company to beneficially own 5% or more of our Common Stock (other than executives and Directors), (b) each Director and Director nominee, (c) the Named Executive Officers listed in the Summary Compensation Table under Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. To our knowledge, the persons named in the table have "sole voting and investment Name Amount and Percentage of 5% or Greater Stockholders (other than executives and Directors): The Vanguard Group (3) 3,627,375 7.0 % Named Executive Officers and Directors: Brian Pratt (4) 7,989,508 15.5 % John P. Schauerman (5) 430,349 * Thomas E. Tucker (6) 30,274 * Peter C. Brown 25,103 * Robert A. Tinstman 30,103 * Stephen C. Cook 12,179 * David L. King (7) [63,430] * Peter J. Moerbeek (8) [130,991] * Thomas E. McCormick (9) [55,350] * John M. Perisich (10) 145,996 * Scott Summers 742,993 1.4 % All Directors, nominees and executive officers as a group (13 individuals) [10,103,348] [19.5] % 5% or Greater Stockholders (other than executives and Directors): The Vanguard Group(3) Blackrock, Inc.(4) Van Berkom & Associates Inc.(5) Named Executive Officers and Directors: Brian Pratt(6) Peter C. Brown Stephen C. Cook Carla S. Mashinski John P. Schauerman(7) Robert A. Tinstman Thomas E. Tucker(8) David L. King Kenneth M. Dodgen Thomas E. McCormick John M. Perisich(9) Peter J. Moerbeek All Directors, nominees and executive officers as a group (13 individuals) Unless otherwise indicated and subject to community property laws where applicable, the individuals and entities named in the table above have sole voting and investment power with respect to all shares of our stock shown as beneficially owned by them. 29, 2019. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our officers, Directors and persons who beneficially own more than ten percent (10%) of a registered class of our equity securities to file reports of securities ownership and changes in ownership with the SEC. As of the date of this Proxy Statement, and based solely on our review of the copies of such reports furnished to us and written representations from our executive officers and Directors, we believe that all reports needed to be filed by current Section 16 reporting persons since January 1, Independent Registered Public Accounting Firm Fees and Services The following is a summary of the fees billed for professional services for the fiscal years ended December 31, Fee Category Calendar Year Calendar Year Audit Fees (1) $ 1,131,657 $ 1,180,120 Audit Related Fees (2) 306,965 157,057 Tax Fees (3) 389,347 315,848 Total Fees $ 1,827,969 $ 1,653,025 2017: Audit Fees(1) Audit Related Fees(2) Tax Fees(3) Total Fees Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm The Audit Committee has adopted policies and procedures regarding the pre-approval of the performance by Moss Adams LLP of audit, audit-related and tax services, except as may otherwise be The following report of the Audit Committee does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing by us under the Securities Act or the Exchange Act, except to the extent we specifically incorporate this report by reference. The primary purpose of the Audit Committee is to assist the Board in fulfilling its responsibility to oversee (i) the integrity of our financial statements, (ii) the independent registered public accounting Management has the primary responsibility for the preparation of the financial statements and the reporting process, as well as performing an evaluation and assessment of the effectiveness of the Our independent registered public accounting firm is responsible for auditing the consolidated financial statements for the fiscal year ended December 31, The Board determined that the Audit Committee members meet the independence requirements of Rule 10A-3 of the Exchange Act and applicable In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, the inclusion of the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, Peter C. Brown (Chairman) The executive officers of Primoris as of April 4, 2019 are as follows: See "Proposal 1—Election of Directors" for a description of Mr. King's business experience. Mr. Dodgen was named our Executive Vice President, Chief Financial Officer, effective November 7, 2018. Mr. Dodgen has served as our Senior Vice President and Corporate Controller since May 2017. Prior to that, Mr. Dodgen served as Chief Financial Officer at Baker Hill Solutions from 2016 to 2017, Chief Financial Officer at PLH Group, Inc. from 2011 to 2015, and Chief Financial Officer at Fulcrum Power Services from 2006 to 2011. From 1996 to 2006, Mr. Dodgen spent ten years in investment banking with JPMorgan and Merrill Lynch where he focused predominantly on mergers and acquisitions. Prior to investment banking, Mr. Dodgen worked for Affiliated Computer Services in Dallas, and he began his career at PricewaterhouseCoopers. Mr. Dodgen received a B.B.A. in Accounting from Texas A&M University and an M.B.A. from the Booth School of Business at The University of Chicago. He is a licensed CPA. Mr. McCormick was named as our President effective April 1, 2019. He previously served as our Executive Vice President, Chief Operating Officer from April 2016. He has extensive engineering & construction industry experience in projects for many energy-related end markets, including pipelines, refining, petrochemicals, gas processing, LNG, oil sands and industrial gases. Since February 2007, he has held a variety of executive positions with CB&I. Such positions included President for Oil & Gas, Senior Vice President—Gas Processing & Oil Sands, Global Vice President—Downstream Operations, and Vice President Operations. Prior to 2007, Mr. McCormick worked for more than 17 years at BE&K Engineering on a variety of heavy civil projects. Mr. McCormick has a Bachelor of Science degree in Civil Engineering from Florida State University and an Advanced Executive Management Degree from Insead University in Fontainebleau, France. Mr. Perisich has served as our Executive Vice President and General Counsel effective May 3, 2013. He previously served as our Senior Vice President and General Counsel from July 2008. Prior to that, he served as Vice President and General Counsel of Primoris Corporation beginning in February 2006, and previous to that was Vice President and General Counsel of Primoris Corporation and its predecessor, ARB, Inc. Mr. Perisich joined ARB in 1995. Prior to joining ARB, Mr. Perisich practiced law at Klein, Wegis, a full service law firm based in Bakersfield, California. He received a B.A. degree from UCLA in 1987, and a J.D. from the University of Santa Clara in 1991. Mr.Moreno was named our Executive Vice President, Chief Operating Officer, effective April 1, 2019. He has over twenty-five years' experience in the engineering and construction industry and has extensive experience in energy-related markets. Since October 2010, he has served as President of PCL Industrial Construction Co., a private, heavy industrial construction firm. Prior to that, he held a variety of positions with PCL since 2000, including Operations Manager and General Manager. Mr. Moreno has a Bachelor of Science degree in Mechanical Engineering from Georgia Institute of Technology and an M.B.A. from the Wharton School at the University of Pennsylvania. This section discusses the oversight of our executive compensation program by the Compensation Committee of the Board of Directors and provides a discussion of the compensation earned in Officer;1,9641,677 shares of Common Stock in February 20172018 and 1,9081,682 shares in August 2017.2018. The shares were issued under the 2013 Equity Plan and are subject to a one-year contractual holding requirement. The aggregate market value of the shares on the date received was $97,542$85,728 for 2017.2018. The Company has never issued stock options as Director compensation and there were no outstanding equity awards as of March [22], 2018.29, 2019.Pratt.Pratt, in the amount of $59,377. The Company determined the value of personal aircraft use using the aggregate incremental cost to the Company, based on the cost of fuel, trip-related maintenance, crew travel expenses, landing fees, trip related costs and smaller variable costs. For tax purposes, income is imputed to the Director for non-business travel based on a multiple of the Standard Industry Fare Level (SIFL) rates.Company’sCompany's medical plan.“Executive Compensation”"Executive Compensation", and (d) all of our executive officers and Directors as a group. The information for the officers and Directors is provided as of March [22], 201829, 2019 and the information for 5% or more stockholders is as of the most recent filing with the SEC. The Company is not aware of any arrangement or pledge of Common Stock that could result in a change of control of the Company. “solepower” and “sharedpower" and/or "shared voting and investment power”power", with respect to all shares of Common Stock beneficially owned, subject to community property laws where applicable.
Nature of
Beneficial
Ownership (1)
Common Stock
Outstanding(2) Amount and
Nature of
Beneficial
Ownership(1) Percentage of
Common Stock
Outstanding(2) 3,818,245 7.5 % 2,839,156 5.6 % 2,696,283 5.3 %
6,304,345 12.4 % 28,998 * 14,110 * — * 397,742 * 33,998 * 34,169 * 15,171 * 3,163 * 16,213 * 141,158 * 28,863 * 7,017,930 13.8 % person’sperson's interest and shares held through family trust arrangements.[22], 201829, 2019 divided by the sum of the [51,530,572]50,842,902 shares of Common Stock outstanding on March [22], 2018,29, 2019, plus the number of shares of Common Stock that such person or group has the right to acquire on or within 60 days after March [22], 2018.12, 2018.11, 2019, by The Vanguard Group, which has sole voting power over 71,027 shares, shared voting power over 15,034 shares, sole dispositive power over 3,735,650 shares, and shared dispositive power over 82,595 shares. The principal business address of The Vanguard Group is 100 Vanguard Blvd, Malvern, PA 19355.7,891,6982,162,824 shares of Common Stock held directly by Brian Pratt and indirectly by Barbara Pratt, as the spouse of Mr. Pratt, and 97,810 shares of Common Stock owned directly by Ms. Pratt and indirectly by Mr. Pratt.(5) Represents 430,349 Includes 847,428 shares of Common Stock held by the BLP 2018-1 Retained Annuity Trust, 847,428 shares of Common Stock held by the BLP 2018-2 Retained Annuity Trust, 926,191 shares of Common Stock held by the BLP 2018-3 Retained Annuity Trust, 926,190 shares of Common Stock held by the BLP 2018-4 Retained Annuity Trust, 321,968 shares of Common Stock held by the BLP 2018-5 Retained Annuity Trust, and 487,208 shares of Common Stock held by the BLP 2018-6 Retained Annuity Trust, each of which Mr. Pratt is the trustee.(6)(7) Includes vested RSU Units as follows: 48,512 vested Units and [810] vested Dividend Equivalent Units (as provided for under the 2013 Equity Plan).(8) Includes vested RSU Units as follows: 100,000 vested Units and [2,128] vested Dividend Equivalent Units (as provided for under the 2013 Equity Plan). Includes RSU Units as follows: 23,080 vested Units, 23,080 Units that will vest on April 5, 2018, and [145] vested Dividend Equivalent Units (as provided for under the 2013 Equity Plan).(10) Represents 145,99620172018 were filed on a timely basis other than (i)the following delayed filings: a Form 4 for John P. Schauerman covering shares of stock gifted; a Form 3 for Travis L. Stricker; a Form 4 for David L. King covering 9,077 sharesa common stock acquisition, a grant of Restricted Stock Units ("Units"), and 15 accruals of Dividend Equivalent Units ("DERs"); a Form 4 for Kenneth M. Dodgen covering a common stock sold that was inadvertently filed late on December 15, 2017, (ii)acquisition, two grants of Units, and four accruals of DERs; a Form 4 for Thomas E. McCormick covering a common stock acquisition, a grant of Units, and eight accruals of DERs; a Form 4 for John P. SchauermanM. Perisich covering 40,000 sharesa common stock acquisition and a grant of stock sold that was inadvertently filed late on January 5, 2018 , and (iii)Units; a Form 4 for John P. SchauermanTravis L. Stricker covering 10,000 sharesa common stock acquisition and a grant of stock gifted that was inadvertently filed late on January 5, 2018.Units; and a Form 4 for Peter J. Moerbeek covering a grant of Units and 18 accruals of DERs.
INFORMATION ABOUT AUDIT FEES AND SERVICES20172018 and 2016:
2017 Fees
2016 Fees Calendar Year
2018 Fees Calendar Year
2017 Fees $ 1,460,893 $ 1,131,657 170,808 306,965 469,728 389,347 $ 2,101,429 $ 1,827,969 for quarterly SAS 100 reviews and reviews of our Quarterly Reports on Form 10-Q.providedpermitted by law or regulation. Moss Adams LLP has also been instructed to obtain advance approval of any other services. Each pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Moss Adams LLP and management are required to periodically report to the Audit Committee regarding the services provided by the independent auditors in accordance with this pre-approval. All services listed above and all fees were approved in advance by the Audit Committee.firm’sfirm's qualifications, independence and performance, (iii) our accounting and financial reporting processes, (iv) our compliance with financial legal and regulatory requirements, and (v) the audits of our financial statements. The Audit Committee is directly responsible for the appointment, compensation and oversight of the work of the independent registered public accounting firm. The independent registered public accounting firm reports directly to the Audit Committee.Company’sCompany's internal control over financial reporting using the control criteria framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013). Our management has represented to the Audit Committee that the consolidated financial statements for the fiscal year ended December 31, 20172018 were prepared in accordance with generally accepted accounting principles and that the Company’sCompany's internal control over financial reporting was effective as of December 31, 2017.2018. In addition to its review and discussion with management of the audited consolidated financial statements and in the performance of its oversight function over internal controls, the Audit Committee reviewed and discussed with management the critical accounting policies that were applied in the preparation of our consolidated financial statements, and the process for certifications by our Chief Executive Officer and our Chief Financial Officer.20172018 and issuing an opinion on the effectiveness of the Company’sCompany's internal control over financial reporting as of December 31, 2017.2018. The Audit Committee discussed the results of the work of the independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No.16PCAOB AS 1301 (Communications with Audit Committees). In addition, the Audit Committee received from the independent registered public accounting firm the written disclosures required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’saccountant's communications with the Audit Committee concerning independence, and discussed with them their independence from the Company and its management. The Audit Committee also evaluated whether the independent registered public accounting firm’sfirm's provision of non-audit services to us was compatible with the auditor’sauditor's independence and determined it was compatible. The members of the Audit Committee met in executive session (with no management in attendance) with the independent registered public accounting firm each quarter during the year.NASDAQNasdaq independence rules.20172018 for filing with the SEC.
Stephen C. CookThomas E. Tucker
John P. Schauerman
Compensation Discussion and Analysis20172018 by our named executive officers (“NEOs”("NEOs"). Our NEOs for 20172018 include the following:·David L. King, 65, President and Chief Executive Officer (CEO);· Peter J. Moerbeek, 70,
Officer;
President;
Overview
· Scott Summers, 59, Co-President, ARB, Inc. (Underground).
Overview
Our management compensation programs apply broadly to all officers and management persons at the Company with modifications to reflect the different management levels, experience levels and types of responsibilities. The Company’sCompany's goal is to align compensation so that the entire management team is committed to the Company’sCompany's corporate objectives of achieving both near- andnear-and long-term profitable growth.
In overseeing the executive compensation policies and practices for the Company, the Compensation Committee recognizes two unique cultural elements associated with (1) the transition in July 2008 from a successful privately owned company to a successful publicly traded company, and (2) the major acquisitions made since becoming a publicly traded company. At the time that we became a publicly traded company, ownership was held by 42 employees, directors and associates, all of whom had purchased their ownership interest. The 2008 transaction provided many of these former owners with a significant number of shares of the publicly traded company. Similarly, our acquisitions of James Construction Group in 2009 and Rockford in 2010 involved the issuance of a significant amount of Company stock to a number of executives and managers. Many of these former owners have remained as executives and managers, and a significant portion of their personal wealth results from their ownership of our stock. This ownership has helped align the interests of many of the Company’sCompany's executives and managers with those of our stockholders.
To help maintain the ownership culture, the Compensation Committee has approved our Long-term Retention Plan (“("LTR Plan”Plan") which includes the offering of discounted shares to executives and managers.
With minor exceptions, the Company has not had a program to grant awards of equity through either grants of stock or stock options. At the time of his hiring in 2014, our CEO received a grant of 48,512 Restricted Stock Units (“Units”) vesting over a three-year period, and at the time of his hiring in 2016, our COO received a grant of 92,321 Units vesting over a three-year period. For long-term retention purposes, our CFO received a grant of 100,000 Units in 2013 vesting over a four-year period.
Prior to becoming a public company, it was our practice to provide annual discretionary bonus awards based both on overall financial and non-financial performance. These discretionary awards were not tied to attaining a specific financial result; that is, there was no mathematical formula for determining bonus amounts. To date, the Compensation Committee has generally retained this practice. The Compensation Committee believes that, based on the history and culture of the Company, the discretionary approach has served to recognize performance and motivate the executive management team. The largest annual discretionary bonus amount awarded since 2008 has been $700,000.
At the time of David L. King’sKing's promotion to CEO in August 2015, the Compensation Committee separated his total annual bonus into two parts: a performance-based formula and a discretionary amount. At the time of hiring Thomas McCormick as COOChief Operating Officer in April 2016, the Compensation Committee also separated his total annual bonus into a performance-based formula and a discretionary amount.
The Compensation Committee has determined that, as some executives’executives' roles change and as new executives are recruited, we need to make changes that will more closely align our practices with those typically utilized by other publicly traded companies. As a result,During 2018, the Company expanded its use of equity awards within the total compensation structure for executive and senior level roles. The Compensation Committee and management are workingcontinuing to work on further enhancements to our compensation
practices that we expect to go into effect in 2019, such as the establishment of a more formulaic annual incentive calculation, a more formulaic total bonus amount, and an increased emphasis on equity awards within the total compensation structure.
Based on our overall financial performance since becoming a public company and the fact that there has been minimal turn-over at the senior and executive management levels of the Company, we believe that our current compensation practices and ownership culture have served our stockholders well.
Shareholder “Say-on-Pay”"Say-on-Pay" Vote
At our Annual Meeting of Stockholders in May 2017, 92.3% of votes cast on our advisory vote on executive compensation (say-on-pay proposal) were voted in favor of the proposal.proposal, which our Compensation Committee has considered in designing and granting compensation to our NEOs. Consistent with the vote of our shareholders at our 2017 Annual Meeting on the proposed frequency for seeking advisory votes on executive compensation, we submit a say-on-pay proposal to a shareholder vote every three years.
Compensation Philosophy
Compensation Philosophy
Our goal is to create an executive compensation program that will appropriately reward our executives for their roles in creating both near-term and long-term value for our stockholders without encouraging or rewarding excessive risk. The Compensation Committee is charged with reviewing our executive officers’officers' cash compensation and equity holdings to determine whether these provide adequate incentives and motivation to our executive officers and whether they adequately compensate the executive officers relative to comparable officers in other companies within our industry in light of our performance. Our goal is to be competitive with other similarly situated companies in our industry and to attract, retain and motivate key executives.
Processes and Procedures for Determining Executive Compensation
The following describes the roles of the key participants and sources of information in the process of setting compensation.
The Role of the Compensation Committee
The Compensation Committee reviews and approves compensation and benefit policies and objectives, determines whether our officers, directors and employees are generally compensated in accordance with these objectives, and carries out certain of the Board’sBoard's responsibilities relating to the compensation of our executives. The Compensation Committee operates under a charter approved by the Board. All of the Compensation Committee members meet the NASDAQNasdaq independence standards, are “Non-employee”"Non-employee" Directors as defined by the Exchange Act and are “outside Directors”"outside Directors" as defined by Section 162(m) of the Internal Revenue Code.
For our executive’sexecutives' compensation, the Compensation Committee approves the structure of the compensation program. In addition, the Compensation Committee, in coordination with the recommendations by the CEO (excluding his own), directly sets the compensation for the Company’sCompany's senior officers, including all NEOs. The Compensation Committee is involved in all matters where approval is appropriate for tax or regulatory reasons.
The Role of the Board of Directors
The Board provides final approval of Compensation Committee recommendations for compensation changes for the executive officers. This approval is obtained at an independent Director session without the presence of management Directors.
The Role of Executives
Our CEO is responsible for reviewing the compensation and performance of all the executive officers.officers, other than himself. He makes recommendations to the Compensation Committee for adjustments in compensation, for annual short-term bonus amounts and for any other compensation changes. The Compensation Committee uses the CEO’sCEO's recommendations and its evaluation of current individual and business performance and historical individual and business performance to review and approve annual bonus amounts. Our CEO is not present during and does not participate in the discussion of any elements of his compensation with the Compensation Committee.
Our CFO facilitates the sharing of information among the Company, the compensation consultant and the Compensation Committee. In this role, he communicates with the compensation consultant at the direction of the Compensation Committee.
The Role of External Advisors
The Compensation Committee has engaged Pay Governance, LLC as an independent consulting resource to help it with its responsibilities. When requested, information and advice provided by Pay Governance may include reviews and critique of our executive compensation philosophy and strategies; a competitive analyses of competition program design; and presentations updatingto update market trends. Pay Governance attends Compensation Committee meetings as requested by the Compensation Committee and conducts private meetings with the Compensation Committee without management representatives at the Committee’sCommittee's request.
The Role of Benchmarking
We believe that it is helpful when making compensation-related decisions to be aware of current practices at similarly situated publicly held companies in engineering, construction, and related industries. The Compensation Committee periodically considers the compensation levels at other companies in our industry. We do not view benchmarking as a stand-alone tool for setting compensation due to the aspects of our business and objectives that may be unique to us. In using its collective judgment in setting executive pay, the Compensation Committee may use benchmarking as one consideration. However, at this time the Compensation Committee’sCommittee's decisions are based primarily on recommendations from our CEO, the Compensation Committee’sCommittee's evaluation of the executive’sexecutive's performance, the overall Company performance and our compensation strategy. We reviewed the most recent proxy information available for the following 10eight publicly traded engineering and construction companies (primarily 2016fiscal year 2017 information): Chicago Bridge & Iron Company, EMCOR Group, Inc., Fluor Corporation, Granite Construction, Inc., KBR, MasTec, Inc., Matrix Service Company, Quanta Services, Inc., and Sterling Construction Company, Inc. Two companies previously included in our benchmarking group were not included in our 2018 group because of acquisition activity (Chicago Bridge & Iron Company was acquired by McDermott International, and our company acquired Willbros Group, Inc.). We found that our CEO’sCEO's total 20172018 compensation was in the lower third of the peer companies’companies' CEOs on an absolute basis and in the lower third when total compensation was normalized for annual revenue.
Components of NEO Compensation
The primary elements of our NEO compensation program are base salary and an annual short-term bonus. While the two primary components of NEO compensation are related, each is a
distinct part of overall compensation. The NEOs also participate in the Company’sCompany's LTR Plan through which each executive can accumulate equity at a discounted price.
·
The LTR Plan combines elements of an annual bonus and a longer-term equity opportunity with the intent to provide an incentive for continuing employment. Under terms of the LTR Plan, annual bonus amounts are paid over a two-year period with one-half of the amount payable immediately and one-half deferred for one year. The deferred amount is a general obligation of the Company, but provides no interest or other income to the participants. Except in the case of death, disability or involuntary separation from service, the deferred compensation is generally vested to the participant only if employed by the Company on the payment date of bonus amounts the following year. The amount of compensation deferred under this plan is calculated each year based on 50% of the current year bonus amount. Participation in the LTR Plan is based on the recommendation of a senior manager and approval of the CEO and is elective to each participant. Participants can voluntarily resignwithdraw from the plan prior to the end of each calendar year.
For the 20172018 participants, the LTR Plan allows each participant the opportunity to designate 1/6 (16.67%) of their annual bonus to purchase Company Common Stock at a 25% discount to the average market price of the Company’sCompany's shares for the month of December 2017,2018, which was $27.83$21.08 per share, resulting in LTR Plan shares available for purchase at $20.87$15.81 per share. The designation must have been made prior to the end of December 2017.2018. Discounted shares purchased cannot be sold for six months after issuance. Shares are issued under the provisions of our 2013 Long-term Incentive Equity Plan (“2013 Equity Plan”) which was approved by our stockholders and adopted by the
Company on May 3, 2013. For 2017,2018, all the NEOs designated the maximum number of shares allowed under the Plan.
·
2018 Performance Highlights
2017 Performance Highlights
To put the compensation decisions in context, the following summarizes the Company’sCompany's financial results for 2017:2018:
·
for the increase in operating income and diluted earnings per share was year over yearincremental growth from acquisitions, as well as organic growth in allour Utilities, Power, and Pipeline segments. Strong revenue growth and the favorable performance on the two large pipeline projects in Florida drove significant improvement. Also benefiting 2017 were higher revenues for the Power segment and better performance from the Civil segment.
·Total stockholder return for the year 2017 increased2018 decreased by 20.3%29.6%. During 2017,2018, our share price increaseddecreased from $22.78 per share at December 31, 2016 to $27.19 per share at December 31, 2017.
2017 to $19.13 per share at December 31, 2018. This 29.6% price decline compared to a decline of 40.9% during the same period for the eight companies identified in the "Role of Benchmarking" section above.·
· Total backlog decreased by $198.5 million to2018 from $2.6 billion at December 31, 2017 from $2.8 billion at December 31, 2016.
· Tangible net worth increased by $21.0 million to $358.3 million.
Compensation Committee Pay Decisions
20172018 Base Salary Amounts
In accordance with Company practices, base salaries for all employees are reviewed annually in July.annually. For the NEOs, with the exception of the CEO, the Committee reviewed the recommendations from Mr. King. The following table shows changes approved by the Compensation Committee, effective June 19, 2017:18, 2018:
Name | 2018 Base Salary | 2017 Base Salary | $ increase | |||||||
---|---|---|---|---|---|---|---|---|---|---|
David L. King | $ | 712,400 | $ | 712,400 | $ | — | ||||
Kenneth M. Dodgen(1) | 375,000 | 300,000 | 75,000 | |||||||
Thomas E. McCormick | 567,778 | 551,250 | 16,528 | |||||||
John M. Perisich | 454,230 | 441,000 | 13,230 | |||||||
Peter J. Moerbeek | 533,025 | 517,500 | 15,525 |
Name |
| 2017 Base Salary |
| 2016 Base Salary |
| $ increase |
| |||
David L. King |
| $ | 712,400 |
| $ | 685,000 |
| $ | 27,400 |
|
Peter J. Moerbeek |
| 517,500 |
| 500,000 |
| 17,500 |
| |||
Thomas E. McCormick |
| 551,250 |
| 525,000 |
| 26,250 |
| |||
John M. Perisich |
| 441,000 |
| 420,000 |
| 21,000 |
| |||
Scott Summers |
| 473,616 |
| 455,400 |
| 18,216 |
| |||
20172018 Annual Short-Term Bonus Amounts
Measurable Performance Amounts
As noted earlier, the annual bonus amounts for both Mr. King and Mr. McCormick included both a measurable performance amount and a discretionary amount. For each executive, the measurable performance amount provided a potential bonus of up to 75% of his salary. The Compensation Committee approved Mr. King’sKing's and Mr. McCormick’s 2017McCormick's 2018 targets on February 20, 2017.21, 2018.
For 2017,2018, the Compensation Committee established two measurable goals for each executive. For Mr. King the goals were for earnings per share (EPS) and new business taken (as determined by ending total backlog). For Mr. McCormick, the goals were for operating income and new business taken (as determined by ending total backlog). For each executive, the targets were given equal weighting. Thus, a potential amount equal to 37.5% of the executive’sexecutive's annual salary could be earned upon attainment of each goal. The Compensation Committee believed that these two measures, one for current year financial performance and one related to future financial performance, would encourage the executives to improve performance on both an annual and future basis which should lead to sustained growth and enhanced shareholder value. The measure for current year financial performance for our CEOMr. King was based on the measure most seen by investors, i.e. EPS. The measure for current year financial performance for our COOMr. McCormick was based on operating earnings,income, a target that best reflects
his overall financial focus. For both executives, ending backlog was used as the best surrogate to measure the new business taken, which will generate future earnings.
For each measure, the Compensation Committee established a minimum target, a maximum target and a target range between the two amounts. On attainment of the minimum target, 25% of the potential amount for the target would be earned by the executive. The remaining 75% of the potential amount would be earned on performance between the minimum and maximum amounts which was calculated on a pro-rata basis ratably for the target range.
In establishing the minimum and maximum targets for the operating income and EPS performance goals, the Compensation Committee used the 20172018 Plan that was approved by the Board of Directors. The minimum performance targets were established at performance at 90% of the approved financial plan amounts, and the maximum performance targets were established at 110% of the approved financial plan amounts.
To establish the minimum target for ending total backlog, the Compensation Committee used $2.5$2.6 billion. The maximum amount was established by increasing the minimum target amount by 20%.$3.0 billion.
The actual results for 20172018 were as follows. The company attained 58.3% ofdid not attain the maximum EPS target, 18.7%attained 77.4% of the maximum operating income target, and 19.8%attained 39.9% of the maximum ending backlog target.
The measurable bonus amount for Mr. King was 40.7%21% of his average base salary, or $284,975.$146,933. The measurable bonus amount for Mr. McCormick was 29.6%50% of his average base salary, or $159,378.$279,903.
Discretionary Amounts
The Compensation Committee recognizes that historically there have been no specific targets against which to calculate annual bonus amounts for most of the executives, except for the CEOMr. King and COOMr. McCormick as discussed above. At the end of the year, the CEO and the Compensation Committee review the overall performance of the Company and the contributions made by the top executives.
The Compensation Committee is responsible for recommending short-term bonus amounts for NEOs and other executives who could potentially be NEOs. In determining its recommendations for 20172018 short-term bonus amounts for the eightsix persons under its purview, the Compensation Committee considered the Company’sCompany's specific performance as summarized in the 20172018 Highlights section above, the Company’sCompany's performance in comparison to its peers and the Company’sCompany's progress toward attaining ourits strategic objectives. Consideration of the discretionary bonus amounts for each NEO, excluding the CEO, included a discussion with the CEO who made his recommendations.
Separately, the Compensation Committee reviewed Mr. King’sKing's performance for determining the discretionary part of his bonus. In addition to the financial performance of the Company, the Compensation Committee considered non-financial measures, such as the continuing improvements in the Company’sCompany's safety record during 2017,2018, the improvements in overall risk management processes and procedures, and the successful tax planning strategies implemented in 2017.2018. The Compensation Committee recommended a discretionary bonus amount of $700,000 for 2017.2018.
The Compensation Committee then met in executive session to make the NEO bonus recommendations using its professional judgment and experience and a comparison to prior performance and annual period levels. The Compensation Committee approved overall bonus amounts for the Company and recommended annual bonus amounts for the NEOs. These recommendations were approved by the independent Directors of the Board, voting in an executive session.
The following table lists the discretionary bonus amounts for 20172018 and 2016.2017.
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| 2017 Bonus |
| 2016 Bonus |
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| Discretionary |
| Discretionary |
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Name |
| Amount |
| Amount |
| $ increase |
| |||
David L. King |
| $ | 700,000 |
| $ | 500,000 |
| $ | 200,000 |
|
Peter J. Moerbeek |
| 400,000 |
| 350,000 |
| 50,000 |
| |||
Thomas E. McCormick |
| 500,000 |
| 250,000 |
| 250,000 |
| |||
John M. Perisich |
| 400,000 |
| 350,000 |
| 50,000 |
| |||
Scott Summers |
| 500,000 |
| 400,000 |
| 100,000 |
| |||
Name | 2018 Bonus Discretionary Amount | 2017 Bonus Discretionary Amount | $ increase (decrease) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
David L. King | $ | 700,000 | $ | 700,000 | $ | — | ||||
Kenneth M. Dodgen | 300,000 | 135,000 | 165,000 | |||||||
Thomas E. McCormick | 400,000 | 500,000 | (100,000 | ) | ||||||
John M. Perisich | 400,000 | 400,000 | — | |||||||
Peter J. Moerbeek | 400,000 | 400,000 | — |
Equity Awards
All of the NEOs are participants at the maximum level in the LTR Plan. The executives designated a total of $490,758$371,139 of their bonus amount to purchase 23,51523,477 shares in total, representing approximately 33%21% of the total shares purchased by all participants in the LTR Plan.
Other Compensation Items
Pay Recoupment (Clawback) Policy
We employ the following clawback policy that applies to NEOs. If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company as a result of misconduct with any financial reporting requirement under the securities laws, any participant who knowingly or through gross negligence engaged in the misconduct, or who knowingly or through gross negligence failed to prevent the misconduct, and any participant who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, shall reimburse the Company the amount of any payment in settlement of an award earned or accrued during the twelve (12) month period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document embodying such financial reporting requirement. The Board has sole discretion to make any and all decisions under this policy.
The SEC has proposed new rules that could affect the Company’sCompany's clawback policies. When the rules are finalized, the Company will update its policies to be in compliance.compliance with such rules.
Risk Assessment
The Compensation Committee considered the risks associated with the Company’sCompany's compensation policies and practices for executive officers and determined that it did not identify any risks that are reasonably likely to have a material adverse effect on the Company. This conclusion was based on the following considerations:
·
Executive Ownership Guidelines
We encourage our executives to own Company Common Stock because we believe that stock ownership provides a strong alignment of interests between executives and stockholders. Because many
of our executives were significant owners in our predecessor companies or acquired significant stock ownership at the time of an acquisition, the Compensation Committee does not believe that a specific stock ownership goal would be meaningful at this time. See “"Stock Ownership”" for the amount of stock beneficially owned by each NEO.
Tax Matters
Section 162(m) of theGenerally, Internal Revenue Code generallySection 162(m) disallows a tax deduction to public companies for compensation of certain employees over $1 million in any one year with respectyear. Amendments to itsSection 162(m) for the Tax Cuts and Jobs Act of 2017 ("Tax Act") became effective in tax years beginning on or after January 1, 2018. As amended, Section 162(m) no longer allows performance-based compensation to be exempt from the deduction limitation. Further, for tax years beginning on or after January 1, 2018, the deduction limitation applies to compensation of a public company's CEO, CFO and each of the next three most highlyhighest compensated executive officers
(excluding the CFO). Certain performance-based compensation, however, is not subject to the deduction limit.officers. The Company structured the 2013 Equity Plan with the intention that certain performance awards made under the plan would qualify for tax deductibility. The Compensation Committee recognizes that certain incentive or retention stockAs a result of changes within the Tax Act, the performance awards may not qualify for tax deductibility above the Section 162(m) $1 million limitation; however, the Committee believes that the measurable performance bonus amounts paid to Mr. King and Mr. McCormick qualify as not beingnow be subject to the deduction limit.limitation along with other compensation.
Section 162(m) was recently amended by the Tax Cuts and Jobs Act of 2017 to repeal the performance-based compensation exemption for taxable years beginning after December 31, 2017. Under a transition rule, performance-based compensation will not be subject to Section 162(m), as amended, to the extent such compensation is considered paid pursuant to a binding written contract in effect as of November 2, 2017. The Compensation Committee will continue to consider tax and accounting implications when making compensation decisions, but reserves the right to make compensation decisions based on other factors believed to be in the best interests of the Company and our shareholders.
Employment Agreements for Named Executive Officers
At the time of his selection as CEO, effective August 1, 2015, the Company entered into a five year employment agreement with David L. King, setting out his annual base salary, plus a discretionary performance bonus opportunity and a measurable performance bonus opportunity, both of which can be paid in cash or discounted stock. In the event of termination without cause, by death, disability or change of control, certain severance benefits will be paid, including a lump sum payment of 100% of base salary, a pro rata portion of a bonus, up to one year of the employee’semployee's share of the premium for CobraCOBRA medical benefits, and acceleration of any shares obtained through bonus amounts.
At the time of his hire as COO,Chief Operating Officer, effective April 5, 2016, the Company entered into a five year employment agreement with Thomas E. McCormick, setting out his annual base salary, issuance of restricted stock units plus a discretionary performance bonus opportunity and a measurable performance bonus opportunity. In the event of termination without cause, by death, disability or change of control, certain severance benefits will be paid, including a lump sum payment of 100% of base salary, a pro rata portion of a bonus, up to one year of the employee’semployee's share of the premium for CobraCOBRA medical benefits, and acceleration of any shares obtained through bonus amounts.
During the third quarter of 2016, theThe Company has also entered into a five-year employment agreement with all of its other NEOs. The agreements set out annual base salary plus a performance bonus opportunity. In the event of termination without cause, by death, disability or change of control, certain severance benefits will be paid, including a lump sum payment of 100% of base salary, a pro rata portion of a bonus, up to one year of the employee’semployee's share of the premium for CobraCOBRA medical benefits, and acceleration of any shares obtained through bonus amounts.
All of the employment agreements contain certain restrictive covenants that prohibit the executives from disclosing information that is confidential to us and our subsidiaries and generally prohibit them, during the employment term and for two years thereafter, from soliciting or hiring our employees or our subsidiary employees and from using our confidential information to divert any customer business from us, or to otherwise alter the manner in which a customer does business with us.
The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included herein and incorporated by reference into the Company’sCompany's Annual Report on Form 10-K for the year ended December 31, 2017.
2018.
Stephen C. Cook (Chairman)
Peter C. Brown
Robert A. Tinstman
Thomas E. Tucker
Summary Compensation Table. The following table and accompanying notes provide summary information with respect to total compensation earned or paid by us or our subsidiaries to our NEOs.
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| All Other |
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Name and Principal |
|
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| Salary |
| Bonus |
| Awards |
| Compensation |
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| |||||
Position |
| Year |
| (1) |
| (2) |
| (3) |
| (4) |
| Total |
| |||||
David L. King, |
| 2017 |
| $ | 711,754 |
| $ | 984,975 |
| $ | 11,057 |
| $ | 57,874 |
| $ | 1,765,660 |
|
President and Chief Executive Officer |
| 2016 |
| 693,879 |
| 656,875 |
| 5,364 |
| 74,333 |
| 1,430,451 |
| |||||
| 2015 |
| 607,486 |
| 514,271 |
| 2,669 |
| 46,036 |
| 1,170,462 |
| ||||||
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|
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|
|
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|
|
|
|
|
| |||||
Peter J. Moerbeek |
| 2017 |
| $ | 521,424 |
| $ | 400,000 |
| $ | 21,497 |
| $ | 27,845 |
| $ | 970,766 |
|
Executive Vice President, |
| 2016 |
| 507,043 |
| 350,000 |
| 15,308 |
| 41,128 |
| 913,479 |
| |||||
Chief Financial Officer |
| 2015 |
| 503,035 |
| 335,000 |
| 9,283 |
| 19,321 |
| 866,639 |
| |||||
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| |||||
Thomas E. McCormick (5) |
| 2017 |
| $ | 551,134 |
| $ | 659,378 |
| $ | 3,924 |
| $ | 40,452 |
| $ | 1,254,888 |
|
Chief Operating Officer |
| 2016 |
| 392,654 |
| 397,656 |
| 2,200,000 |
| 49,054 |
| 3,039,364 |
| |||||
|
| 2015 |
| — |
| — |
| — |
| — |
| — |
| |||||
|
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| |||||
John M. Perisich |
| 2017 |
| $ | 443,307 |
| $ | 400,000 |
| $ | — |
| $ | 31,135 |
| $ | 874,442 |
|
Executive Vice President and General Counsel |
| 2016 |
| 420,005 |
| 350,000 |
| — |
| 44,242 |
| 814,247 |
| |||||
| 2015 |
| 401,135 |
| 335,000 |
| — |
| 32,683 |
| 768,818 |
| ||||||
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| |||||
Scott Summers |
| 2017 |
| $ | 477,209 |
| $ | 500,000 |
| $ | — |
| $ | 33,720 |
| $ | 1,010,929 |
|
Co-President, ARB, Inc. |
| 2016 |
| 459,996 |
| 400,000 |
| — |
| 47,709 |
| 907,705 |
| |||||
|
| 2015 |
| 452,674 |
| 500,000 |
| — |
| 39,037 |
| 991,711 |
|
Name and Principal Position | Year | Salary(1) | Bonus(2) | Stock Awards(3) | All Other Compensation(4) | Total | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
David L. King, | 2018 | $ | 712,743 | $ | 846,933 | $ | — | $ | 127,532 | $ | 1,687,208 | ||||||||
Chief Executive Officer | 2017 | 699,754 | 984,975 | — | 80,931 | 1,765,660 | |||||||||||||
2016 | 685,000 | 656,875 | — | 88,576 | 1,430,451 | ||||||||||||||
Kenneth M. Dodgen(5) | 2018 | $ | 320,193 | $ | 300,000 | $ | 150,000 | $ | 45,580 | $ | 815,773 | ||||||||
Executive Vice President, | |||||||||||||||||||
Chief Financial Officer | |||||||||||||||||||
Thomas E. McCormick | 2018 | $ | 559,834 | $ | 679,903 | $ | — | $ | 99,161 | $ | 1,338,898 | ||||||||
President | 2017 | 539,134 | 659,378 | — | 56,376 | 1,254,888 | |||||||||||||
2016 | 383,654 | 397,656 | 2,200,000 | 58,054 | 3,039,364 | ||||||||||||||
John M. Perisich | 2018 | $ | 447,869 | $ | 400,000 | $ | — | $ | 65,243 | $ | 913,112 | ||||||||
Executive Vice President and | 2017 | 431,307 | 400,000 | — | 43,135 | 874,442 | |||||||||||||
General Counsel | 2016 | 410,384 | 350,000 | — | 53,863 | 814,247 | |||||||||||||
Peter J. Moerbeek(6) | 2018 | $ | 505,060 | $ | 400,000 | $ | — | $ | 53,301 | $ | 958,361 | ||||||||
Former Executive Vice | 2017 | 509,424 | 400,000 | — | 61,342 | 970,766 | |||||||||||||
President, Chief Financial | 2016 | 495,193 | 350,000 | — | 68,286 | 913,479 | |||||||||||||
Officer |
Non-Equity Personal Company Company Paid Incentive Use of Paid Portion Contributions Plan Company of Health to Employee Compensation Airplane Care 401(k) savings Relocation Total Other Year (a) (b) Benefits account Reimbursement Compensation David L. King 2017 $ 25,486 $ 14,839 $ 6,749 $ 10,800 $ — $ 57,874 2016 45,567 18,347 19 10,400 — 74,333 2015 19,807 15,829 — 10,400 — 46,036 Peter J. Moerbeek 2017 $ 10,352 $ — $ 6,693 $ 10,800 $ — $ 27,845 2016 24,280 — 6,448 10,400 — 41,128 2015 12,903 — 3,026 3,392 — 19,321 Thomas E. McCormick (5) 2017 $ 17,062 $ 2,607 $ 9,983 $ 10,800 $ — $ 40,452 2016 27,587 — 4,822 1,280 15,365 49,054 2015 — — — — — — John M. Perisich 2017 $ 10,352 $ — $ 9,983 $ 10,800 $ — $ 31,135 2016 24,280 — 9,562 10,400 — 44,242 2015 12,903 — 9,380 10,400 — 32,683 Scott Summers 2017 $ 12,937 $ — $ 9,983 $ 10,800 $ — $ 33,720 2016 27,747 — 9,562 10,400 — 47,709 2015 19,257 — 9,380 10,400 — 39,037 David L. King Kenneth M. Dodgen Thomas E. McCormick John M. Perisich Peter J. Moerbeek Grants of Plan-Based Awards, Outstanding Equity Awards at Fiscal Year-End, Options Exercised and Stock Grants Vested The following table sets forth information regarding the Units granted to our NEOs during Grants of Plan-Based Awards Grant Date Fair All Other Stock Awards: Value of Stock Number of Shares of Stock and Option Grant Date or Units (a) Awards (b) Thomas E. McCormick April 5, 2016 92,321 $ 2,200,000 Kenneth M. Dodgen Outstanding Equity Awards at Fiscal Year-End Stock Awards Market Value of Shares or Units Number of Shares or Units of Stock That of Stock That Have Not Have Not Vested Stock Grant Date Vested (a) (b) Thomas E. McCormick April 5, 2016 69,241 $ 1,882,663 Thomas E. McCormick Kenneth M. Dodgen Kenneth M. Dodgen On April 5, 2016, the Board granted 92,321 Units to On May 22, 2017, the Board granted 10,000 Units to Mr. Dodgen. Such Units vest in three equal installments on each of the first through third anniversaries of May 22, 2017. On October 3, 2018, the Board granted 6,161 Units to Mr. Dodgen. Such Units vest in three equal installments on each of the first through third anniversaries of October 3, 2018. Additional Units will be earned as "Dividend Equivalent Units" on vested Units. As of March 29, 2019 there were a total of 3,333 Units vested, with a total of 36 "Dividend Equivalent Units" (as defined in the 2013 Equity Plan) accrued and vested. There were no other grants of plan-based awards to the NEOs during the calendar years 2018, 2017 Stock Vested in 2018 The following table sets forth the number and value of stock awards that vested for the NEOs during 2018. Thomas E. McCormick Kenneth M. Dodgen Equity Compensation Plan Information The Company has adopted a long-term incentive plan for certain managers and senior executives. The plan provides for both the required deferral of one-half of each opportunity to purchase Company Common Stock at a 25% discount to the market price for up to one-sixth of the participants earned bonus amount. Shares are issued under provisions of the 2013 Equity Plan. The following table lists the number of shares of Common Stock purchased by the NEOs under the long-term incentive plan for each year: David L. King Kenneth M. Dodgen Thomas E. McCormick John M. Perisich Peter J. Moerbeek Total issued to Named Executive Officers 2017 2016 No. of Shares No. of Shares David L. King 7,866 6,242 Peter J. Moerbeek 3,195 3,326 Thomas E. McCormick 5,266 3,779 John M. Perisich 3,195 3,326 Scott Summers 3,993 3,801 Total issued to Named Executive Officers 23,515 20,474 Each of the NEOs purchased the maximum number of shares allowed under the terms of the LTR Plan in 2018 and 2017, representing Potential Payments Upon Termination The Company has an employment agreement with The following table shows amounts that would be payable to each of Health Base Care Accrued Salary (1) Equity (2) Bonus (3) Benefits (4) Vacation (5) Total David L. King $ 712,400 $ — $ 670,588 $ 17,628 $ 41,100 $ 1,441,716 Pete Moerbeek 517,500 — 329,375 13,106 29,856 889,837 Thomas E. McCormick 551,250 1,255,118 467,502 20,535 31,803 2,326,207 John M. Perisich 441,000 — 310,250 20,535 25,442 797,227 Scott E. Summers 473,616 — 368,404 20,535 27,324 889,879 David L. King Kenneth M. Dodgen Thomas E. McCormick John M. Perisich Pay Ratio Disclosure We are providing the following information to comply with Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K. For of the annual total compensation of our CEO relative to the annual total compensation of our median employee. calculated consistent with the disclosure requirement of executive compensation under the Summary Compensation Table. After applying the methodology described above, our median employee compensation using the Summary Compensation Table requirements was Retirement Plans We 2013 Equity Incentive Plan Background. The principal purpose of our 2013 Equity Plan is to provide incentives for our officers, employees and consultants, as well as the officers, employees and consultants of any of our subsidiaries. In addition to awards made to officers, employees or consultants, the 2013 Equity Plan permits us to grant options or other equity securities to our Directors. Shares Awarded or Granted to Shares Awarded to Shares remaining at end of Plan category Employees Non-employee Directors period Shares issued January 2015 to December 2015 96,828 17,916 2,163,907 Shares issued January 2016 to December 2016 188,153 22,195 1,953,559 Shares issued January 1, 2017 through December 31, 2017 76,833 23,232 1,853,494 Shares issued January 1, 2018 through March [22], 2018 [71,757] 10,062 [1,771,675] The following table gives information about our Common Stock that may be issued upon the exercise of options, warrants, and rights, or upon settlement of RSUs, all as part of the Equity compensation plans approved by security holders Equity compensation plans not approved by security holders Total The rules of the SEC establish the eligibility requirements and the procedures that must be followed for inclusion of a stockholder's proposal in a public company's proxy materials. Under those rules, proposals submitted for inclusion in our 2020 proxy materials must be received on or before the close of business on December 6, 2019. Proposals for inclusion in our 2020 proxy materials must comply with the procedures set forth in Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Our Amended and Restated Bylaws ("Bylaws") provide that in order for a proposal to be properly brought before an Annual Meeting of Stockholders, it must be either: (1) specified in the notice of the meeting given by us, (2) otherwise brought before the meeting by or at the direction of our Board, or (3) properly brought before the meeting by a stockholder entitled to vote at the meeting who complies with the following notice procedures: (i) the stockholder must give timely notice thereof in writing of the business to be brought before such meeting to our Secretary, and (ii) such business must be a proper matter for stockholder action under the Delaware General Corporation Law. Our Bylaws provide that to be timely, a stockholder's notice must be delivered to our Secretary at our principal executive offices not less than 45 days prior to the first anniversary of the date on which we first mailed our proxy materials for the preceding year's Annual Meeting. If the date of the subsequent year's Annual Meeting of Stockholders is changed by more than 30 days from the date of the prior year's meeting, notice by the stockholder for the subsequent year's Annual Meeting must be delivered to our Secretary within a "reasonable time" prior to our mailing of the proxy materials for the subsequent year's Annual Meeting of Stockholders. To be properly brought before the 2020 Annual Meeting, notice must be received no later than February 19, 2020. Any stockholder who intends to present a proposal at the 2020 Annual Meeting of Stockholders must send notice, with all required information, via standard mail, overnight delivery or other courier service, to Primoris Services Corporation, 2300 N. Field Street, Suite 1900, Dallas, Texas 75201, Attention: Secretary. The Nominating and Corporate Governance Committee will consider all stockholder recommendations for candidates for the Board, which should be sent to the Nominating and Corporate Governance Committee, c/o Secretary, Primoris Services Corporation, 2300 N. Field Street, Suite 1900, Dallas, Texas 75201. The Nominating and Corporate Governance Committee will evaluate recommendations for Director nominees submitted by Directors, management or qualifying stockholders in the same manner, by using the criteria stated above and discussed on page 16 in the section entitled "Selection of Board Nominees". All Directors and Director nominees will be required to submit a completed directors' and officers' questionnaire as part of the nominating process. At the discretion of the Nominating and Corporate Governance Committee, the process may also include interviews and additional background and reference checks for non-incumbent nominees. We are not aware of any matters other than those discussed in the foregoing materials contemplated for action at the SEC rules permit companies, brokers, banks or other intermediaries to deliver a single copy of this Proxy Statement and Annual Report to households at which two or more stockholders reside. This practice, known as Stockholders sharing an address that are receiving multiple copies of the Proxy Statement or Annual Report can request delivery of a single copy of the Proxy Statement or Annual Report by contacting their broker, bank or other intermediary or sending a written request to the Company at Primoris Services Corporation, Our Annual Report on Form 10-K for the fiscal year ended December 31, A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, Primoris Services Corporation Any stockholder or Whether you intend to be present at the Annual Meeting or not, we urge you to return your signed proxy promptly. By Order ofincludesinclude any bonus amount that has beenearned in the current year and deferred to the following year under the Company’sCompany's LTR Plan. Participants in the LTR Plan must defer 50% of the annual award. Except in case of death, disability, retirement, involuntary separation from service, or approval by a special LTR Plan committee, the deferred compensation amount is paid to the participant only if employed by the Company on the payment date of bonus amounts the following year. On May 3, 2013, the Board entered into an RSU Agreement granting 100,000 Units to Mr. Moerbeek under the 2013 Equity Plan. All Units are vested and Mr. Moerbeek made the tax deferral election under Section 409A of the Internal Revenue Code. The Units accrue “Dividend Equivalent Units” (as defined in the 2013 Equity Plan) which are reflected as additional compensation earned by Mr. Moerbeek. At March [22], 2018, there were a total of [2,128] Dividend Equivalent Units accrued and vested.On March 24, 2014, the Board entered into an RSU Agreement granting 48,512 Units to David L. King, our CEO. All Units are vested and Mr. King made the tax deferral election under Section 409A of the Internal Revenue Code. The Units accrue “Dividend Equivalent Units” (as defined in the 2013 Equity Plan) and are reflected as additional compensation earned by Mr. King. At March [22], 2018, there were a total of [810] Dividend Equivalent Units accrued and vested.On April 5, 2016, the Board entered into an RSU Agreement granting 92,321 Units to Thomas E. McCormick, our COO. Such Units vested 25% on April 5, 2017, 25% vested on April 5, 2018 and 50% vest on April 5, 2019. The vested Units accrue “Dividend Equivalent Units” (as defined in the 2013 Equity Plan) and are reflected as additional compensation earned by Mr. McCormick. As of March [22], 2018 there were a total of 23,080 Units vested. The vested Units accrue “Dividend Equivalent Units” (as defined in the 2013 Equity Plan) and are reflected as additional compensation earned by Mr. McCormick. At March [22], 2018, there were a total of [145] Dividend Equivalent Units accrued and vested. also represents the aggregate grant date fair value of the Units granted by our Board of Directors computed in accordance with FASB ASC Topic 718. The fair value on the grant date for Mr. McCormick was 23.83$23.83 per share. The fair value on the grant date for Mr. Dodgen's Units was $24.35 per share. The fair value was based on the market closing price of our stock onone day prior to the grant date. This amount reflects our accounting expense to be recognized over the vesting period of the Units awarded, and do not correspond to the actual value that will be recognized by the NEO. No Units were granted to our NEOs in 2017 or 2015. Year Auto
Allowance Personal
Use of
Company
Airplane(a) Company
Paid
Portion
of
Health
Care
Benefits Company
Paid
Contributions
to Employee
401(k) savings
account Relocation
Expense(b) Discount on
Security
Purchases(c) Dividend
Equivalent
Units(d) Total Other
Compensation 2018 $ 12,000 $ 17,598 $ 6,749 $ 11,000 $ — $ 68,307 $ 11,878 $ 127,532 2017 12,000 14,839 6,749 10,800 — 25,486 11,057 80,931 2016 8,879 18,347 19 10,400 — 45,567 5,364 88,576
2018
$
10,800
$
—
$
9,983
$
—
$
—
$
24,197
$
600
$
45,580
2018
$
12,000
$
1,594
$
9,983
$
11,000
$
—
$
54,835
$
9,749
$
99,161 2017 12,000 2,607 9,983 10,800 — 17,062 3,924 56,376 2016 9,000 — 4,822 1,280 15,365 27,587 — 58,054
2018
$
12,000
$
—
$
9,983
$
11,000
$
—
$
32,260
$
—
$
65,243 2017 12,000 — 9,983 10,800 — 10,352 — 43,135 2016 9,621 — 9,562 10,400 — 24,280 — 53,863
2018
$
11,000
$
—
$
6,693
$
11,000
$
—
$
—
$
24,608
$
53,301 2017 12,000 — 6,693 10,800 — 10,352 21,497 61,342 2016 11,850 — 6,448 10,400 — 24,280 15,308 68,286 All of the NEOs are participants in the LTR Plan and have the ability to purchase Company Stock at a 25% discount to the market price using up to one sixth of the participant’s current year earned bonus amount. Each of the NEOs purchased the maximum number of shares allowed under the terms of the LTR Plan. For 2017 participants, the discounted price was $20.87 per share based on the average closing price of the shares in December 2017. For 2016 participants, the discounted price was $17.54 per share based on the average closing price of the shares in January 2017. For 2015 participants, the discounted price was $16.75 per share based on the average closing price of the shares in December 2015. The amounts shown in this column represent the difference between the discounted purchase price and the market price on the date that the executive was issued the shares.(b)(5) Effective April 5, 2016, Mr. McCormick was hired and appointedentered intotemporary housing. As part of the arrangements negotiated to induce Mr. McCormick to accept an employment offer and reflecting the specific circumstances of his hiring, he also received assistance with the sale of his prior home. During 2018, the Company agreed to purchase his former home at a five-year employment agreement.price equal to the independent appraisal value because he was unable to sell the home within a mutually agreed upon time. The purchase of Mr. McCormick's home did not result in any additional taxable compensation to him in 2018.20152016 through 20172018 under the 2013 Equity Plan. Grant Date All Other Stock Awards:
Number of Shares of Stock
or Units(a) Grant Date Fair
Value of Stock
Awards(b) October 3, 2018 6,161 150,000 “Grant"Grant Date Fair Value of Stock and Option Awards”Awards" column represent long-term equity incentive awards granted by the Board of Directors under the 2013 Equity Plan. Excluded from this table are the Dividend Equivalent Units provided for under the RSU Agreement grant. These equity awards are disclosed in the All Other Compensation column of the Summary Compensation Table and the Outstanding Equity Awards at Fiscal Year-End table and therefore do not constitute additional compensation not otherwise reported in this Proxy Statement.onone day prior to the grant date. Stock Awards Stock Grant Date Number of Shares or Units
of Stock That Have Not
Vested(a) Market Value of
Shares or Units
of Stock That
Have Not Vested(b) April 5, 2016 46,161 $ 883,060 May 22, 2017 6,667 127,540 October 3, 2018 6,161 117,840 (a)Equity awards listed in this column represent Units awarded to the NEOs under the 2013 Equity Plan that have not vested.Thomas E.Mr. McCormick. Such Units vested 25% on April 5, 2017, 25% vested on April 5, 2018 and 50% vest on April 5, 2019. Additional Units will be earned as “Dividend"Dividend Equivalent Units”Units" on vested Units. As of March [22],29, 2018 there were a total of 23,08046,160 Units vested, with a total of [145] “Dividend697 "Dividend Equivalent Units”Units" (as defined in the 2013 Equity Plan). An additional 23,080 accrued and vested. The remaining 46,161 Units will vest on April 5, 2018.2019.29, 2017,31, 2018, which was $27.19$19.13 per share.2016 or 2015.2016. The LTR Plan provides participants an option to buy shares at a discount but does not grant shares of stock. The purchased shares are issued under the 2013 Equity Plan. Stock Awards Number of Shares
Acquired on
Vesting Value Realized on
Vesting(a) 23,080 $ 605,619 3,333 86,491 participant’sparticipant's annual earned bonus for one year and allows the participant the There were no grants of plan-based awards made in the current fiscal year. 2018
No. of Shares 2017
No. of Shares 8,929 7,866 3,163 — 7,168 5,266 4,217 3,195 — 3,195 23,477 19,522 32.7%21% and 31.3%30% of the purchases for the 20172018 and 20162017 LTR Plan years, respectively.each of the NEOs.Messrs. King, Dodgen, McCormick and Perisich, and it had an employment agreement with Mr. Moerbeek, who retired from his position as Executive Vice President, Chief Financial Officer effective November 6, 2018. The terms of the employment agreements provide that we must pay certain severance benefits in the event the NEO is terminated by us for any reason other than for “cause”"cause", including salary continuation for a twelve month period.ourthe following NEOs under the scenario that the executive is terminated without cause or leaves due to death or disability. The table assumes that the terminating event occursoccurred on June 30,December 31, 2018. Base
Salary(1) Equity(2) Bonus(3) Health
Care
Benefits(4) Accrued
Vacation(5) Total $ 712,400 $ — $ 1,339,421 $ 17,628 $ 41,100 $ 2,110,549 375,000 245,400 300,000 20,535 21,635 962,569 567,778 883,060 1,009,592 20,535 32,756 2,513,721 454,230 — 600,000 20,535 26,206 1,100,971 year’syear's base salary.June 30,December 31, 2018, of Units granted under the terms of the RSU Agreement. The value is based on the closing price of our Common Stock at December 31, 2017.2018. Other than the Units granted under the RSU Agreements, there have been no stock options or other stock compensation granted to any NEO.year in which the termination occurs, determined after the end of the calendar year, pro rata to the date of termination. For purposes of this table, it was assumed that 25% of base salary would be paid.year. In addition, for participants in the Company’sCompany's Retention Plan, includes any deferred amounts in accordance with the terms of that plan.executive’sexecutive's termination without cause or disability, he is entitled to up to one year of healthcare benefits. The amount reflects both the employee and employer portion of health care premium costs.2017,2018, our last completed fiscal year, we determined the ratioIn determiningWe are using the same median employee a ranked list was prepared of all offor our employees (other than the CEO) based on their W-22018 pay ratio as we used for 2017. In this regard, we do not reasonably believe there have been changes in our employee population or compensation as of December 31, 2017. Such employees include all full-time, part-time, seasonal, and temporary employees, including employees of companies we acquired during the year. Based on the diversity ofthat would significantly change our businesses across our service territories, W-2 earnings provide a fixed and fair representation of compensation across our enterprise and thus is an appropriate measure to determine the median employee. No other assumptions, adjustments, or estimates, including any cost-of-living adjustments, were made in identifying the median employee.pay ratio. For purposes of reporting annual total compensation and the ratio of annual total compensation of the CEO to the median employee, both the CEO’sCEO's and median employee’semployee's annual total compensation were$54,080.$49,565. Our CEO’sCEO's compensation as disclosed in the Summary Compensation Table was $1,765,660.$1,687,208. Based on this information, the estimate of the ratio of compensation for our CEO to the median employee for 20172018 was 33:34:1. This ratio is specific to our Company and may not be comparable to any ratio disclosed by another company.contribute to twosponsor multiple defined contribution plans that provide benefits to all employees.for eligible employees not covered by collective bargaining agreements. Our plans include various features such as voluntary employee pre-tax and Roth-based contributions and matching contributions made by us. The plans do not provide any benefits for any executives other than those provided to all employees.Our 401(k) Plan is qualified as an employee retirement plan under Section 401(a) and 401(k) of the Internal Revenue Code. Participation is optional for employees once they are eligible to participate.We also provide for a “Registered Retirement Saving Plan—Deferred Profit Sharing Plan” for certain Canadian employees. We make contributions based on a percentage of the amount of income deferred by the employee. No NEO is eligible for this plan.Background. In May 2013, the stockholders approved and the Company adopted the Primoris Services Corporation 2013 Equity Incentive Plan (“2013 Equity Plan”).Plan.At the time of the adoption of the 2013 Equity Plan, 2,526,275 shares of our Common Stock were reserved for issuance. On May 3, 2013, the Board granted 100,000 Units to Mr. Peter J. Moerbeek, on March 24, 2014, granted 48,512 Units to Mr. David L. King, on April 5, 2016, granted 92,321 Units to Mr. Thomas E. McCormick, and granted 8,232 and 10,000 additional Units to other employees during 2016 and 2017, respectively. Each Unit represents the right to receive one share of the Company’s Common Stock. Each grant also provides for “Dividend Equivalent Units”, which provide additional Units to the participants. Other than these Unit grants, at December 31, 2017, there were no options issued to purchase our shares, no other stock based awards granted and there were no other shares of restricted stock granted under the 2013 Equity Plan.Shares of Common Stock that are forfeited or terminated will be available for future award grants under the 2013 Equity Plan. Any surrendered shares of previously owned stock by a participant used to cover the option exercise price or their withholding tax liability associated with an option exercise, may be added to the number of reserved shares available under the 2013 Equity Plan, subject to approval by the Board or the Compensation Committee, and relevant provisions in the 2013 Equity Plan.Award Limitation. No individual may be granted awards under the 2013 Equity Plan representing more than 200,000 shares of our Common Stock in any calendar year, which would include awards of stock options or SARs, stock awards and Units or performance shares.Administration. The 2013 Equity Plan is administered by our Compensation Committee and our Board. To administer the 2013 Equity Plan, the Compensation Committee recommends to the Board, among other things:· The persons to whom awards may be granted;· The specific type of awards to be granted;· The number of shares subject to each award;· Option or share prices;· Any restrictions or limitations on the awards; and· Any vesting, exchange, deferral, surrender, cancellation, acceleration, termination, exercise or forfeiture provisions related to the awards.In the case of awards intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Compensation Committee must consist of at least two members of our Board, each of whom is an “outside independent Director” within the meaning of that section. Our Board will administer the 2013 Equity Plan with respect to awards to non-employee independent Directors.Eligibility. We may grant awards under the 2013 Equity Plan to employees, officers and Directors. In addition, we may grant awards to consultants who are deemed to have rendered, or to be able to render, significant services to us and who are deemed to have contributed, or to have the potential to contribute, to our success.Awards. The 2013 Equity Plan provides that we may grant awards of the following types of securities, among others:· “incentive” stock options, as defined in Section 422 of the Code, and options that are not qualifying incentive options;· stock appreciation rights to participants who have been, or are being, granted stock options under the 2013 Equity Plan;· restricted stock; and· other stock-based awards, subject to limitations under applicable law, that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, shares of Common Stock.Accelerated Vesting and Exercisability. The following events will cause acceleration in the vesting with respect to awards granted under the 2013 Equity Plan, subject to any limitations of Section 409A of the Internal Revenue Code:· If any one person, or more than one person acting as a group, acquires the ownership of our Common Stock that, together with the Common Stock held by such person or group, constitutes more than 50% of our total fair market value or of our combined voting power and our Board does not authorize or otherwise approve such acquisition; and/or· The Compensation Committee may accelerate such vesting if there is an acquisition by any one person or more than one person acting as a group, together with the acquisition during the 12-month period ending on the date of the most recent acquisition by such person or persons, of our assets that have a total gross fair market value equal to more than 50% of the total gross fair market value of all of our assets immediately before such acquisition or acquisitions, or if any one person or more than one person acting as a group acquires the ownership of our Common Stock that, together with the Common Stock held by such person or group, constitutes more than 50% of the total fair market value or combined voting power of our Common Stock, which has been approved by our Board.Additional Equity Compensation Plan InformationAs shown in the table that follows, we have used the 2013 Equity Plan to issue shares of Common Stock and Units to our employees, and as part of their compensation, to our non-employee Directors. Under the LTR plan, participants have the opportunity to purchase shares of Common Stock from the Company at a discount to market for up to one-sixth of their annual bonus award.Company’sCompany's 2013 Equity Plan as of March 29,December 31, 2018.Number of securitiesremaining availablefor future issuanceNumber of securities to beunderissued upon exercise ofequity compensationoutstanding options,Weighted-averageplanswarrants and rightsexercise price per share of(excluding securitiesunder equityoutstanding options,reflected inPlan category plan (1)warrants and rightscolumn (a))(a) (b)(c)Equity compensation plans approved by security holders[262,162]$—[1,771,675]Equity compensation plans not approved by security holders———Total[262,162]$—[1,771,675] Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
under equity
plan(1) Weighted-average
exercise price per share 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) 409,106 $ — 1,614,639 — — — 409,106 $ — 1,614,639
STOCKHOLDER PROPOSALS FOR OUR 2020 ANNUAL MEETING20182019 Annual Meeting. The person(s) named in your proxy will vote in accordance with the recommendation of the Board on any other matters incidental to the conduct of, or otherwise properly brought before, the Annual Meeting. Discretionary authority for them to do so is contained in the proxy.“householding,”"householding," is designed to reduce duplicate mailings and save significant printing and postage costs as well as natural resources. Stockholders sharing an address who have been previously notified by their broker, bank or other intermediary and have consented to householding will receive only one copy of our Proxy Statement and Annual Report. If you would like to opt out of this practice for future mailings and receive separate Proxy Statements and Annual Reports for each stockholder sharing the same address, please contact your broker, bank or other intermediary.2100 McKinney Avenue,2300 N. Field Street, Suite 1500,1900, Dallas, Texas 75201, Attention: Investor Relations, or by contacting us at (214) 740-5600. You may also obtain a separate Proxy Statement or Annual Report without charge by sending a written request to the above address. We will promptly send additional copies of the Proxy Statement or Annual Report upon receipt of such request.20172018 is being mailed to all stockholders of record with this Proxy Statement. The Annual Report on Form 10-K does not constitute, and should not be considered, a part of this proxy solicitation material.2017,2018, filed with the SEC is available without charge upon written request to:2100 McKinney Avenue,2300 N. Field Street, Suite 15001900
Dallas, Texas 75201
Attention: Investor Relationsstockholder’sstockholder's representative, who, because of a disability, may need special assistance or accommodation to allow him or her to participate at the Annual Meeting, may request reasonable assistance or accommodation from us by contacting Primoris Services Corporation, 2100 McKinney Avenue,2300 N. Field Street, Suite 1500,1900, Dallas, Texas 75201, or at (214) 740-5600. To provide us with sufficient time to arrange for reasonable assistance or accommodation, please submit all requests by April 27, 2018.26, 2019. the Board of Directors,John M. PerisichExecutive Vice President, General Counsel and SecretaryFOURTHFIFTH AMENDED AND RESTATEDCERTIFICATE OF INCORPORATIONOFPRIMORIS SERVICES CORPORATION.Pursuant to Sections 242 and 245 of theDelaware General Corporation LawPrimoris Services Corporation, a corporation existing under the laws of the State of Delaware (the “Corporation”), by its Secretary, hereby certifies as follows:1. The Corporation’s Certificate of Incorporation was filed in the office of the Secretary of State of the State of Delaware on April 24, 2006 under the name “Rhapsody Acquisition Corp.”2. This Fourth Fifth Amended and Restated Certificate of Incorporation restates, integrates and amends the Third Fourth Amended and Restated Certificate of Incorporation of the Corporation.3. This FourthFifth Amended and Restated Certificate of Incorporation was duly adopted by the vote of the holders of a majority of the outstanding shares of common stock of the Corporation in accordance with Section 245 and other applicable provisions of the General Corporation Law of the State of Delaware (“GCL”).4. The text of the Certificate of Incorporation of the Corporation, as heretofore amended and restated, is hereby amended and restated to read in full as follows:FIRST: The name of the corporation is Primoris Services Corporation (hereinafter sometimes referred to as the “Corporation”).SECOND: The registered office of the Corporation is located at 615 S. DuPont Hwy., Kent County, Dover, Delaware. The name of its registered agent at that address is National Corporate Research, Ltd.THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the GCL.FOURTH: The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 91,000,000 of which 90,000,000 shares shall be Common Stock of the par value of $.0001 per share and 1,000,000 shares shall be Preferred Stock of the par value of $.0001 per share.A. Preferred Stock. The Board of Directors is expressly granted authority to issue shares of the Preferred Stock, in one or more series, and to fix for each such series such voting powers, full or limited, and such designations, preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors, providing for the issue of such series (a “Preferred Stock Designation”) and as may be permitted by the GCL. The number of authorized shares of Preferred Stock, or any class or series thereof, may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock, or any class or series thereof, unless a vote of any holders of Preferred Stock, or class or series thereof, is required pursuant to any Preferred Stock Designation.B. Common Stock. Except as otherwise required by law or as otherwise provided in any Preferred Stock Designation, the holders of the Common Stock shall exclusively possess all voting power and each share of Common Stock shall have one vote.FIFTH: The Corporation’s existence shall be perpetual.
SIXTH: The Board of Directors shall be divided into three classes: Class A, Class B and Class C. The number of directors in each class shall be as nearly equal as possible. The directors in Class A shall be elected for a term expiring at the Annual Meeting of Stockholders to be held in 2009. The directors in Class B shall be elected for a term expiring at the Annual Meeting of Stockholders to be held in 2010. The directors in Class C shall be elected for a term expiring at the Annual Meeting of Stockholders to be held in 2011. Commencing at the 2009 Annual Meeting of Stockholders, and at each annual meeting thereafter, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. SIXTH: A. Prior to the 2019 annual meeting of stockholders, the directors shall be divided, with respect to the time for which they severally hold office, into three classes, designated as Class A, Class B and Class C. Commencing with the 2019 annual meeting of stockholders, the directors elected at each annual meeting of the stockholders shall hold office for a term expiring at the next annual meeting of stockholders and until their successors are duly elected and qualified, or until their earlier death, resignation, or removal; provided, however, that each director elected prior to the 2019 annual meeting of stockholders for a term expiring after the 2019 annual meeting of stockholders shall continue to serve for the remainder of the original term for which each such director was elected and until his or her successor is duly elected and qualified, or until his or her earlier death, resignation, or removal. The division of directors into classes shall terminate at the 2021 annual meeting of stockholders.
B. Except as the GCL may otherwise require, in the interim between annual meetings of stockholders or special meetings of stockholders called for the election of directors and/or the removal of one or more directors and the filling of any vacancy in that connection therewith, newly created directorships and any vacancies in the Board of Directors, including unfilled vacancies resulting from the removal of directors for cause, may be filled by the vote of a majority of the remaining directors then in office, although less than a quorum (as defined in the Corporation’s Bylaws), or by the sole remaining director. All directors shall hold office until the expiration of their respective terms of office and until their successors shall have been elected and qualified. AAny director elected in accordance with the preceding sentence to fill a vacancy resulting from the death, resignation or removal of a director shall serve for on the Board of Directors of the Corporation of any director in a class elected prior to the 2019 annual meeting of stockholders for a term expiring after the 2019 annual meeting of stockholders shall hold office for the remainder of the full term of the director whose death, resignation or removal shall have created suchclass of directors in which the vacancy occurred and thereafter until hissuch director’s successor shall have been elected and qualified.Any director elected in accordance with the first sentence of this paragraph to (i) fill a newly created directorship resulting from any increase in the authorized number of directors or (ii) fill a vacancy on the Board of Directors of the Corporation resulting from the death, resignation or removal of a director elected at or after the 2019 annual meeting of stockholders shall hold office for a term expiring at the next annual meeting of stockholders and shall remain in office until his or her successor shall be elected and qualified or until such director’s death, resignation, or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
SEVENTH: The following provisions are inserted for the management of the business and for the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders:
A. Election of directors need not be by ballot unless the by-laws of the Corporation so provide.
B. The Board of Directors shall have the power, without the assent or vote of the stockholders, to make, alter, amend, change, add to or repeal the by-laws of the Corporation as provided in the by-laws of the Corporation.
C. The directors in their discretion may submit any contract or act for approval or ratification at any annual meeting of the stockholders or at any meeting of the stockholders called for the purpose of considering any such act or contract, and any contract or act that shall be approved or be ratified by the vote of the holders of a majority of the stock of the Corporation which is represented in person or by proxy at such meeting and entitled to vote thereat (provided that a lawful quorum of stockholders be there represented in person or by proxy) shall be as valid and binding upon the Corporation and upon all the stockholders as though it had been approved or ratified by every stockholder of the Corporation, whether or not the contract or act would otherwise be open to legal attack because of directors’ interests, or for any other reason.
D. In addition to the powers and authorities hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation; subject, nevertheless, to the provisions of the statutes of Delaware, of this Certificate of Incorporation, and to any by-laws from time to time made by the stockholders; provided, however, that no by-law so made shall invalidate any prior act of the directors which would have been valid if such by-law had not been made.
EIGHTH: A. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach
of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the GCL, or (iv) for any transaction from which the director derived an improper personal benefit. If the GCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended. Any repeal or modification of this paragraph A by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation with respect to events occurring prior to the time of such repeal or modification.
B. The Corporation, to the full extent permitted by Section 145 of the GCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses (including attorneys’ fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such officer or director is not entitled to be indemnified by the Corporation as authorized hereby.
NINTH: Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under Section 291 of Title 8 of the Delaware Code or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.
IN WITNESS WHEREOF, the Corporation has caused this FourthFifth Amended and Restated Certificate of Incorporation to be signed by John M. Perisich its
Executive Vice President, General Counsel and Secretary as of the 21st day of May 2009. , 2018.
PRIMORIS SERVICES CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 4, 2018
3, 2019 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brian Pratt as Proxy holder, with the power to appoint his substitute, and herebyher eby authorizes him to represent and vote, as designated on the reverse side, all eligible shares of Common Stock of Primoris Services Corporation,Corpor ation, held of record by the undersigned as of March 29, 2018,2019, which the undersigned may be entitled to vote at the 20182019 Annual Meeting of Stockholders to be held at 9:00 a.m., Central Time, on Friday, May 4, 2018,3, 2019, at the Ritz-Carlton Hotel, located at 2121 McKinney Avenue, Dallas, Texas 75201, and any continuation(s), postponement(s) or adjournment thereof.
IMPORTANT—PLEASE SIGN AND DATE ON THE REVERSE SIDE AND RETURN PROMPTLY
(Continued (Continued and to be marked, dated and signed, on the other side)
Address Change/Comments (mark the corresponding box on the reverse side)
FOLD AND DETACH HERE
The Board of Directors recommends a vote “FOR” all proposals.
Proposal 1— Election of Class AB Directors—The Board recommends a vote “FOR”“FOR” each listed nominee as a Director for a three-yearone-year term expiring in 2021:
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2020: Nominees: 01—Stephen C. Cook FOR WITHHOLD 02—Carla S. Mashinski FOR WITHHOLD FOR AGAINST ABSTAIN Proposal 2— Ratification of Selection of Moss Adams LLP as the Company’s Independent Registered Public Accounting Firm for the year ending December 31, 2019 — The Board recommends a vote “FOR” ratification of Moss Adams LLP as the Company’s Independent Registered Public Accountant. This Proxy, when properly executed, will be voted according to your instructions. If no instructions are given but the proxy is signed, this Proxy will be voted for ALL the nominees listed in Proposal 1 FOR on Proposal 2, and FOR on Proposal 3.2. In his discretion, the Proxy holder is authorized to vote upon such other business as may properly come before the meeting or any adjournment or postponement thereof.
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thereo f. Please Mark Here for Address Change or Comments – SEE REVERSE SIDE Signature: Date: Please date this Proxy and sign it exactly as your name or names appear above. When shares are held by joint tenants, both shouldsh ould sign. When signing as an attorney, executor, administrator, trustee or guardian, please give full title as such. If shares are held by a corporation, please sign in full corporate name by the president or other authorized officer. If shares are held by a partnership, please sign in full partnership name by an authorized person.
FOLD AND DETACH HERE AND READ THE REVERSE SIDE
PROXY
PRIMORIS SERVICES CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS, MAY 4, 2018
3, 2019 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Brian Pratt as Proxy holder, with the power to appoint his substitute, and hereby authorizes him to represent and vote, as designated on the reverse side, all eligible shares of Common Stock of Primoris Services Corporation,Corpor ation, held of record by the undersigned as of March 29, 2018,2019, which the undersigned may be entitled to vote at the 20182019 Annual Meeting of Stockholders to be held at 9:00 a.m., Central Time, on May 4, 2018,3, 2019, at the Ritz-Carlton Hotel, located at 2121 McKinney Avenue, Dallas, Texas 75201, and any continuation(s), postponement(s) or adjournment thereof.
IMPORTANT—PLEASE SIGN AND DATE ON THE REVERSE SIDE AND RETURN PROMPTLY
(Continued (Continued and to be marked, dated and signed, on the other side)
Address Change/Comments (mark the corresponding box on the reverse side)