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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Universal Forest Products, Inc.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Universal Forest Products, Inc.
2801 East Beltline NE
Grand Rapids, MI 49525
Notice of Annual Meeting
The Annual Meeting of Shareholders of Universal Forest Products, Inc. will be held at the Company’s Technology and Training Building, 2880 East Beltline Lane NE, Grand Rapids, MI 49525, on Wednesday, April 17, 2013, at 8:30 a.m. local time (registration begins at 8:00 a.m.) for the following purposes:
(1) | Election of three directors for three year terms expiring in 2016. |
(2) | Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal 2013. |
(3) | To consider an advisory vote on executive compensation. |
(4) | To consider a shareholder proposal to amend our equal employment opportunity policy. |
(5) | The transaction of such other business as may properly come before the meeting or any adjournment thereof. |
Shareholders of record at the close of business on February 19, 2013, are entitled to notice of and to vote at the meeting. To vote by telephone, shareholders of record may call toll free on a touch-tone telephone, 1-800-690-6903, enter the control number located on their Notice, and follow the recorded instructions. To vote on the Internet, shareholders of record may go to the Internet address http://www.proxyvote.com, enter the control number located on their Notice, and follow the instructions provided.
BY ORDER OF THE BOARD OF DIRECTORS | |
David A. Tutas, General Counsel and Secretary |
March 4, 2013
Your vote is important. Even if you plan to attend the meeting,
PLEASE VOTE YOUR PROXY PROMPTLY.
Universal Forest Products, Inc.
2801 East Beltline NE
Grand Rapids, MI 49525
Annual Meeting of Shareholders
April 17, 2013
Proxy Statement
SOLICITATION OF PROXIES
This Proxy Statement and the enclosed proxy are being furnished to holders of common stock, no par value, of Universal Forest Products, Inc. (the "Company"). Our Board of Directors (the "Board") is soliciting proxies for use at our Annual Meeting of Shareholders to be held on April 17, 2013, and at any adjournment of that meeting, at our Technology and Training Building, 2880 East Beltline Lane NE, Grand Rapids, MI 49525, at 8:30 a.m. local time. Registration for the meeting begins at 8:00 a.m.
VOTING AT THE MEETING
If the enclosed Proxy is properly signed and returned, the shares represented by the proxy will be voted at our Annual Meeting of Shareholders and at any adjournment of the meeting. If a shareholder specifies a choice, the proxy will be voted as specified. If no choice is specified, the shares represented by the proxy will be voted for the election of all nominees named in the Proxy Statement, for the ratification of the appointment of our independent registered public accounting firm, for the proposal to approve our executive compensation (on an advisory basis), against the proposal to amend our equal employment opportunity policy, and in accordance with the judgment of the persons named as proxies with respect to any other matter which may come before the meeting.
In accordance with the rules promulgated by the Securities and Exchange Commission, we have elected to use the Internet as our primary means of providing our proxy materials to our shareholders. Unless requested, shareholders will not receive paper copies of our proxy materials. Instead, we will mail our shareholders a Notice of Internet Availability of Proxy Materials with instructions for accessing our proxy materials and for voting via the Internet or telephone. The Notice of Internet Availability of Proxy Materials will also provide information on how shareholders may obtain paper copies of proxy materials free of charge, if they so choose.
Returning your completed proxy will not prevent you from voting in person at our Annual Meeting of Shareholders, if you wish to do so. In addition, you may revoke your proxy at any time before it is voted, by written notice to our secretary prior to our Annual Meeting of Shareholders, by submission of a later-dated proxy, or by the withdrawal of your proxy and voting in person at our Annual Meeting of Shareholders.
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The cost of the solicitation of proxies will be paid by our Company. In addition to the use of the United States Postal Service, proxies may be solicited personally, by telephone, by facsimile, or by electronic mail by our employees who will not receive additional compensation for soliciting proxies. We do not intend to pay any compensation for the solicitation of proxies, except that we will reimburse brokers, nominees, custodians, and other fiduciaries for their expenses in connection with sending materials to beneficial owners and obtaining their proxies.
VOTING SECURITIES
Holders of record of common stock at the close of business on February 19, 2013, will be entitled to vote at our Annual Meeting of Shareholders. As of February 19, 2013, there were 19,801,075 shares of common stock outstanding. The presence in person or by proxy of at least 51% of such shares constitutes a quorum. A shareholder is entitled to one vote for each share of common stock registered in the shareholder's name at the close of business on February 19, 2013. Under Michigan law, abstentions are treated as present and entitled to vote and therefore count in determining the presence of a quorum. A broker non-vote on a matter is considered not entitled to vote on that matter and, therefore, is not counted in determining (1) the existence of a quorum, or (2) whether a matter requiring approval of a majority of the shares present and entitled to vote has been approved. A broker non-vote occurs when a broker or similar holder has not received voting instructions from the beneficial holder of these shares and is barred from exercising its discretionary authority to vote the shares because the proposal is “non-routine.” Votes cast at the meeting or submitted by proxy will be counted by inspectors of the meeting appointed by our Company. There is no right to cumulative voting on any matter.
ELECTION OF DIRECTORS
Our Board presently consists of nine members. These members are divided into three classes, as equal in number as possible, with the classes to hold office for staggered terms of three years each. Our Board has nominated incumbent directors William G. Currie, John M. Engler, and Bruce A. Merino to three-year terms expiring at our 2016 Annual Meeting of Shareholders.
The persons named as proxy holders in the accompanying proxy will vote for the above-named nominees, unless a shareholder directs them differently by proxy. If a nominee is not available for election as a director at the time of the Annual Meeting of Shareholders (a situation which is not now anticipated), the Board may designate a substitute nominee, and the accompanying proxy will be voted for the substituted nominee.
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A plurality of the votes cast at the Annual Meeting of Shareholders is required to elect the nominees as directors. Accordingly, the three individuals who receive the greatest number of votes cast at the meeting will be elected as directors. Shares not voted at the meeting, whether by abstention, broker non-vote, or otherwise, will not be treated as votes cast at the meeting.
The Board of Directors recommends a vote FOR the election of each person nominated by the Board.
The following table provides certain biographical information for each person who is nominated for election as a director at our Annual Meeting of Shareholders and for each person who is continuing as an incumbent director.
Names, (Ages), Positions, and Backgrounds of Directors and Nominees | Service as a Director |
Nominees for Terms Expiring in 2016
William G. Currie (65) is Chairman of the Board of our Company. | Director since 1978. |
He joined our Company in 1971, serving as a salesman, general | |
manager, vice president, and executive vice president. He was the | |
Chief Executive Officer of our Company from 1989 to 2006, and | |
on January 1, 2000, also became Vice Chairman of the Board. | |
On April 19, 2006, he was named Chairman of the Board and | |
served as an employee with the title of Executive Chairman until | |
he retired from our Company on July 20, 2009. Mr. Currie has | |
been on the board of Forestar Real Estate Group Inc. since 2008 | |
and serves on its Audit Committee and Management Development | |
and Executive Compensation Committee. | |
During his tenure with our Company, Mr. Currie created and, to | |
this day, maintains extremely valuable relationships with many in | |
the lumber and building materials industries. He has an in-depth | |
understanding of our Company’s supply chain and customer base, | |
which makes him an important asset to management in assessing | |
growth opportunities and strategic objectives. | |
John M. Engler (64) became President of the Business Round- | Director since 2003. |
table on January 15, 2011. He was President and Chief Executive | Member of Nominating and |
Officer of the National Association of Manufacturers from October | Corporate Governance |
2004 until he took over as head of the Business Roundtable. | Committee. |
He was President of State and Local Government Business and | Member of Personnel and |
Vice President of Government Solutions for North America for | Compensation Committee. |
EDS in Herndon, Virginia from February 2003 to September 2004. | |
He served as Governor of the State of Michigan from 1991 to 2003. | |
Mr. Engler has served on the board of Munder Capital Management | |
since 2003 and on the board of K-12 Inc. since November 2012. | |
He served on the board of Delta Airlines from 2008 until 2012, and | |
on the board of Northwest Airlines from 2003 until 2008. | |
Mr. Engler's law degree, coupled with his experience in successfully | |
leading the State of Michigan for 12 years, gives him a unique | |
capacity to understand complex issues and to simplify them in an | |
efficient and effective manner. As President of the Business | |
Roundtable, Mr. Engler leads an association of chief executive | |
officers of leading U.S. companies with over $7 trillion in annual | |
revenue and more than 16 million employees. His work on issues | |
ranging from tax and trade to corporate governance and | |
regulatory policy allows him be a key contributor as a director. |
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Bruce A. Merino (59) retired from The Home Depot in 2009, after | Director since 2009. |
25 years with the company. At the time of his retirement, he was | Chairman of Personnel and |
Senior Vice President of Merchandising and President of The | Compensation Committee. |
Home Depot's Expo Design Center. Mr. Merino sits on the City | Member of Nominating and |
of Hope's Home Improvement Board Council and is its chair. | Corporate Governance |
Committee. | |
Mr. Merino has been able to utilize his 38 years of experience in the | |
home improvement industry to assist our Company in strategy and | |
operations for our DIY market. Mr. Merino understands the | |
procurement and marketing operations of big box retailers, which | |
is very valuable to our Company. |
Incumbent Directors - Terms Expiring in 2015
Matthew J. Missad (52) is Chief Executive Officer of our | Director since 2011. |
Company,a position to which he was appointed on July 13, 2011. | |
From 1996 to 2011, he was Executive Vice President, General | |
Counsel, and Secretary, in addition to serving on the boards of | |
subsidiary entities, including international partnerships. | |
Mr. Missad’s experience and exposure to nearly all facets of our | |
business is integral to the growth of our Company. Having led, at | |
various times, the human resources, insurance, marketing, wood | |
preservation, engineering, transportation, and compliance teams, | |
and serving on our executive leadership team, he has an ability to | |
understand and motivate people and teams, a capacity to simplify | |
complex issues for sound decision-making, and a well-rounded | |
and deep understanding of our Company’s business, people, | |
markets, and opportunities. | |
Thomas W. Rhodes (51) is President and Chief Executive Officer | Director since 2012. |
of TWR Enterprises, Inc. of Corona, CA, a company he formed in | Member of Audit |
1984, which is the largest framing contractor in Southern California. | Committee. |
Mr. Rhodes serves as a board member of the California Framing | Member of Personnel and |
Contractors Association, Building Industry Association, Orange | Compensation Committee. |
County, and the California Professional Association of Specialty | |
Contractors, Orange County/Inland Empire. | |
Mr. Rhodes has spent over 27 years building his business while | |
establishing and developing relationships in the residential building | |
and commercial construction industry. Mr. Rhodes’ experience in | |
the site-built construction business and his career as a framing | |
contractor and an entrepreneur provides our Board and manage- | |
ment with meaningful insight into this market and its prospects. His | |
creative and strategic-thinking skills enabled him to branch out into | |
other ventures, including real estate, hotel development, and | |
insurance. These experiences provide a unique benefit to his | |
service on our Board. |
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Louis A. Smith (73) is President of the law firm of Smith and | Director since 1993. |
Johnson, Attorneys, P.C., of Traverse City, Michigan and | Lead Director. |
serves as a member of the Advisory Council for the University | Member of Audit |
of Notre Dame Law School. Mr. Smith served on The State | Committee. |
Board of Law Examiners, upon nomination by the Michigan | Member of Personnel and |
Supreme Court and by gubernatorial appointment. | Compensation Committee. |
Mr. Smith utilizes his 48 years in the active practice of law to | |
assist our Company’s evaluation of legal and strategic risks. | |
He has significant business ownership expertise, including | |
in-depth experience with regulated industries such as banking | |
and oil and gas. He has tremendous institutional knowledge | |
and experience based on his 19 years as a member of our Board. |
Incumbent Directors - Terms Expiring in 2014
John W. Garside (73) is President and Treasurer of Woodruff | Director since 1993. |
Coal Company of Kalamazoo, Michigan. Mr. Garside is a former | Member of Personnel and |
commissioner for the Michigan Department of Transportation. | Compensation Committee. |
Member of Nominating and | |
Mr. Garside has nearly 52 years of business and management | Corporate Governance |
experience with full bottom-line responsibilities. He has dealt | Committee. |
extensively with transportation issues in both the private and | |
public sectors. He has a unique understanding and perception | |
of energy costs, energy policy, and resource management. | |
Mr. Garside's institutional knowledge and experience, based on | |
his 19 years as a member of our Company’s Board, is a valuable | |
asset to our Company. | |
Gary F. Goode (68) retired from Arthur Andersen LLP in March | Director since 2003. |
2001 after 29 years. Since his retirement, Mr. Goode has | Chairman of Audit |
worked as an independent consultant, and has served as | Committee. |
Chairman of Titan Sales and Consulting LLC since January | |
2004. Mr. Goode has been on the Board of Directors of Gentex | |
Corporation since 2003 and serves on its Audit, Compensation, | |
and Nominating Committees. | |
Mr. Goode is a financial expert, as defined by the SEC. As a | |
result of 29 years as a Certified Public Accountant, he gained | |
valuable insight into a wide variety of businesses. His financial | |
acumen, coupled with these varied business experiences, provides | |
a great frame of reference for successful business practices at | |
other companies. His working career also gives him extensive | |
experience working with companies whose securities are registered | |
with the SEC. |
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Mark A. Murray (58) serves as Co-CEO and Vice Chairman of the | Director since 2004. |
Board of Meijer Inc., a regional retail chain. He has been in | Chairman of Nominating |
executive leadership at Meijer since 2006. From 2001 to 2006, | and Corporate |
he was the President of Grand Valley State University. He also | Governance Committee. |
served as Treasurer for the State of Michigan from 1999 to 2001 | Member of Audit |
and Vice President of Finance and Administration for Michigan | Committee. |
State University from 1998 to 1999. Mr. Murray received his B.S. | |
in economics and his M.S. in labor and industrial relations from | |
Michigan State University. In addition to his service on our Board, | |
he is a director for DTE Energy and serves on its Finance | |
Committee and Public Relations Committee, and a director or | |
trustee of many community and professional organizations. |
Mr. Murray is a financial expert, as defined by the SEC. His | |
qualifications to sit on our Board include his experience as | |
president of a major Michigan-based corporation and his | |
experience as a university president and a State of Michigan | |
government official. He also has extensive experience in | |
financial accounting matters for complex organizations, strategic | |
planning and corporate development, combined with strong | |
skills in corporate finance, sales and marketing, and government | |
relations and public policy. He also has experience serving | |
as a director of another publicly-traded corporation. |
CORPORATE GOVERNANCE AND BOARD MATTERS
For many years, our Board has been committed to sound and effective corporate governance practices. The Board has documented those practices in our Corporate Governance Principles. These Principles address director qualifications, director responsibilities, periodic performance evaluations, stock ownership guidelines, and a variety of other corporate governance matters. These Principles also require the Board to have an Audit Committee, Nominating and Corporate Governance Committee, and a Personnel and Compensation Committee. Our Corporate Governance Principles, along with the charters of each of these committees, are available for review on our website at www.ufpi.com under the tab “Investor Relations.”
Code of Business Conduct and Ethics and Code of Ethics for Senior Financial Officers
We have adopted a Code of Business Conduct and Ethics that applies to our employees, officers, and directors. We have also adopted a Code of Ethics for Senior Financial Officers. Each Code is posted on our website, and any changes or waiver to either code will be disclosed on our website at www.ufpi.com under the tab “Investor Relations.”
Affirmative Determination Regarding Director Independence and Other Matters
As required by our Corporate Governance Principles, our Board has determined each of the following directors to be an "independent director," under the Nasdaq Stock Market Rules (the "Nasdaq Standard"): John M. Engler, John W. Garside, Gary F. Goode, Bruce A. Merino, Mark A. Murray, Thomas W. Rhodes, and Louis A. Smith. There are no family relationships between or among the directors and our executive officers.
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To assist our Board, the Nominating and Corporate Governance Committee reviewed the applicable legal standards for director and board committee independence, as well as the criteria applied to determine "audit committee financial expert" status and the answers to annual questionnaires completed by each of the directors. On the basis of this review, the Nominating and Corporate Governance Committee delivered a report to the full Board, and the Board made its independence and "audit committee financial expert" determinations based upon that report and each member's review of the information made available to the Nominating and Corporate Governance Committee.
The effectiveness of each of our directors is monitored through the use of an annual assessment. Our Board does not have a mandatory retirement age policy. We believe that the ability of a Board member to add value to our Company is not dependent on age; rather, it is based on the director's actual performance. As a result, we expect that some directors will not serve until a typical retirement age, while others may serve longer.
Committees
Audit Committee. Each member of the Audit Committee is "independent" under the Nasdaq Standard as well as the applicable rules of the Securities and Exchange Commission for audit committee membership. Our Board has determined that Mr. Goode and Mr. Murray each qualify as an "audit committee financial expert," as defined in Item 407(d) of Regulation S-K of the Securities Exchange Act of 1934 (the "Exchange Act"). The full responsibilities of the Audit Committee are set forth in the Audit Committee Charter. In general, the primary purpose of this Committee is to assist the Board in overseeing management's conduct of our financial reporting processes and system of internal controls regarding finance, accounting, legal compliance, and ethics. During 2012, the Audit Committee held five meetings.
Personnel and Compensation Committee. Each member of this Committee is “independent” under the Nasdaq Standard. The Committee is responsible for reviewing and recommending to the Board the timing and amount of compensation for key employees, including salaries, bonuses, and other benefits, as well as director compensation. This Committee is also responsible for administering our equity-based incentive plans and for reviewing compensation plans and awards as they relate to key employees. The Committee has the authority to retain consultants and third-party advisors for assistance. The Committee has the ultimate authority to determine matters of executive compensation; however, it may rely upon recommendations of our Chief Executive Officer for matters of compensation for officers and Named Executives, other than the Chief Executive Officer. Additional information on the Committee's role and practices involving executive compensation is described in the Compensation Discussion and Analysis in this Proxy Statement. The full responsibilities of the Personnel and Compensation Committee are set forth in its Charter. During 2012, the Personnel and Compensation Committee held three meetings.
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Nominating and Corporate Governance Committee. Each member of the Nominating and Corporate Governance Committee is "independent" under the Nasdaq Standard. The Nominating and Corporate Governance Committee considers and proposes director nominees to the Board for election by our shareholders, selects candidates to fill Board vacancies as they may occur, makes recommendations to the Board regarding Board committee memberships, reviews succession planning for the Chief Executive Officer, generally monitors our corporate governance system, and performs any other functions or duties deemed appropriate by our Board. The full responsibilities of the Nominating and Corporate Governance Committee are set forth in its Charter. The Committee and Board adopted a Policy Governing Director Qualifications and Nominations, the details of which are described below, which include certain minimum qualification and board composition standards. During 2012, the Nominating and Corporate Governance Committee held four meetings.
Shareholder Nominees for Director. Our Articles of Incorporation contain certain procedural requirements applicable to shareholder nominations of directors. A shareholder who wishes to nominate a person to serve as a director must provide us with written notice. The notice must include: (1) the name and address of both the shareholder who intends to make the nomination and the person or persons nominated; (2) a representation that the shareholder is a current holder of record, will continue to hold those shares through the date of the meeting, and intends to appear in person or by proxy at the meeting; (3) a description of all arrangements between the shareholder and each nominee; (4) the information regarding each nominee as would be required to be included in a proxy statement filed under Regulation 14A of the Exchange Act had the nominee been nominated by the Board; and (5) the consent of each nominee to serve as director. The nominee's written consent to the nomination and sufficient background information on the candidate must be included to enable the Nominating and Corporate Governance Committee to make proper assessments as to his or her qualifications. Nominations must be addressed to the Chairman of the Nominating and Corporate Governance Committee at our headquarters, and must be received no fewer than 60 days but not more than 90 days prior to our Annual Meeting of Shareholders.
Director Qualifications and Requirements. Our Board has adopted a Policy Governing Director Qualifications and Nominations (the “Policy”). The Policy is included in the Committee’s Charter, which is available on our Company’s website. The Policy sets forth the general process the Committee is required to follow for identifying and evaluating director nominees, including nominees recommended by shareholders. Under the Policy, the Committee has the authority to seek director candidates from any source deemed appropriate, including recommendations of candidates submitted by shareholders. The Policy requires the Committee to evaluate all proposed director candidates in the same manner, irrespective of the source of the initial recommendation of the proposed candidate.
The Policy includes minimum qualification standards, Board composition standards, and additional qualification criteria. With respect to the former, the Policy requires that the Committee be satisfied that each recommended nominee meet the following qualifications:
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(1) | Integrity. The candidate must exhibit high standards of personal integrity and ethical character. |
(2) | Absence of Conflicts of Interest. The candidate must not have any interests that would impair his or her ability to (i) exercise independent judgment, or (ii) otherwise discharge the fiduciary duties owed as a director to our Company and its shareholders. |
(3) | Fair and Equal Representation. The candidate must be able to represent fairly and equally all shareholders of our Company, without favoring or advancing any particular shareholder or other constituency. |
(4) | Experience. The candidate must have experience at a strategic, policy making, or senior management level in a business, government, non-profit, or academic organization of high standing. |
(5) | Business Understanding. The candidate must have a general appreciation regarding major issues facing public companies of a size and operational scope similar to the Company, including contemporary governance concerns, regulatory obligations of a public issuer, strategic business planning, and basic concepts of corporate finance. |
(6) | Available Time. The candidate must have, and be prepared to devote, adequate time to our Board and its committees. |
In addition to these minimum qualification criteria, the Committee is required to recommend Board candidates to help ensure that a majority of our Board is independent, that each of the Audit, Personnel and Compensation, and Nominating and Corporate Governance Committees is comprised entirely of independent directors, and that at least one member of the Audit Committee qualifies as an Audit Committee financial expert. The Committee and our Board also consider diversity in their identification of director candidates. Diversity in business and professional experience, education, and background benefit our Company by increasing the range of skills and perspectives available to our Board. Director nominees are selected without regard to race, gender, religious belief, or national origin. Our Board believes that adherence to these principles will provide an environment and practices that will yield the best return for our shareholders.
The Committee has, to date, not paid any third-party fees to assist in identifying and evaluating nominees. The Committee has not received any recommended nominations from any of our shareholders in connection with our 2013 Annual Meeting of Shareholders.
Communications with the Board
Generally, shareholders who have questions or concerns regarding our Company should contact our Investor Relations Department at 800-598-9663. However, any shareholder who wishes to address questions regarding the business or affairs of our Company directly with the Board or any individual director should direct his or her questions in writing to the Secretary at 2801 East Beltline NE, Grand Rapids, MI 49525. The Secretary has been directed to promptly forward all communications to the full Board or the specific director indicated in the letter.
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Meeting Attendance
Each director is expected to make a reasonable effort to attend all meetings of our Board, applicable committee meetings, and the Annual Meeting of Shareholders. All of our directors attended our 2012 Annual Meeting of Shareholders. During the last fiscal year, there were four regular meetings of the Board, and the Board took action by unanimous written consent on four occasions. At least 75% of the directors attended all of the Board and Committee meetings for which they were eligible to attend. During fiscal 2012, the independent members of our Board met in executive session, without the presence of management, on four occasions.
Leadership Structure and the Board's Role in Risk Oversight
William G. Currie, our current chairman, was formerly our Company’s chief executive officer and currently does not qualify as an independent director. Because our Board regularly holds sessions of its meetings that are exclusively attended by independent directors, the independent members of our Board determined that Louis A. Smith would be named Lead Director, effective January 20, 2012. His role is to chair the meetings of independent directors, to communicate actions requested by the independent directors, and to serve as a liaison between the independent directors and the Chief Executive Officer. Commencing as of January 1, 2013, Mr. Smith will receive $10,000 per year for serving in this capacity. We believe that the governance of our Board, as currently constituted, is more effective by separating the offices of Chairman of the Board and our Chief Executive Officer.
Our Board of Directors, through its three committees, has an advisory role in risk oversight for our Company. Company management maintains primary responsibility for the risk management of our Company. The current trends toward increased regulation, litigation, and political volatility make it extremely difficult to predict the type and magnitude of risks facing our Company. In spite of this unpredictability, our Board relies on the representations of management, the external audit of financial information, our Company's systems of internal controls, our Company's insurance advisors, and the historically conservative practices of our Company to provide comfort on our Company's ability to manage its risks. Management's discussion of current risk factors are set forth in our Company's Annual Report on Form 10-K.
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RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2013
The Audit Committee has selected Ernst & Young LLP ("E&Y") as our independent registered public accounting firm for the fiscal year ending December 28, 2013. The services provided to our Company and our shareholders by E&Y for 2012 are described below under the caption "Independent Registered Public Accounting Firm – Disclosure of Fees."
We are asking our shareholders to ratify the selection of E&Y as our independent registered public accounting firm. Although ratification is not legally required, the Board is submitting the selection of E&Y to our shareholders for ratification as a matter of good corporate governance. Representatives of E&Y are expected to be present at our Annual Meeting of Shareholders to respond to appropriate questions and to make such statements as they may desire.
The affirmative vote of the holders of the majority of the shares represented in person or by proxy and entitled to vote on this item will be required for approval. Abstentions and broker non-votes will not be treated as votes cast in this matter. Unless otherwise instructed by you, brokers, banks, and other street-named holders will have the discretionary authority to vote your shares on this matter.
If our shareholders do not ratify the appointment, the appointment will be reconsidered by the Audit Committee and the Board. Even if the selection is ratified, the Audit Committee, at its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interest of our Company and our shareholders.
The Board of Directors recommends a vote for this proposal to ratify the appointment of E&Y as our Company's independent registered public accounting firm for fiscal 2013.
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM – DISCLOSURE OF FEES
E&Y served as our independent registered public accounting firm for the fiscal years ended December 31, 2011 and December 29, 2012. The following sets forth the fees we paid to E&Y for those years, all of which were pre-approved by the Audit Committee.
2012 | 2011 | |||||||
Audit Fees | $ | 537,000 | $ | 437,000 | ||||
Audit Related Fees | 0 | 0 | ||||||
Tax Fees(1) | 0 | 35,977 | ||||||
All Other Fees | 0 | 0 | ||||||
Total | $ | 537,000 | $ | 472,977 |
(1) | Consists primarily of U.S. federal, state, and local tax consulting and compliance advice along with tax advice and assistance regarding statutory, regulatory, or administrative developments in the United States, Canada, or Mexico, including a federal research and development tax credit study. |
Audit Committee Pre-Approval Policy. The Audit Committee has established a pre-approval policy and procedures for audit, audit-related, and tax services that can be performed by our independent registered public accounting firm. The policy sets out the specific services that must be pre-approved by the Audit Committee, and places limitations on the scope of these services while ensuring that the independence of the auditors to audit our financial statements is not impaired. The policy prohibits us from retaining E&Y for services which are proscribed by rules of the Securities and Exchange Commission. In addition, the policy requires disclosure of non-audit services performed by our auditors. The pre-approval policy does not include a delegation of the Audit Committee's responsibilities and authority under the policy.
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ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
At our Annual Meeting on April 13, 2011, our shareholders advised us that they prefer to vote, on an advisory basis, on the approval of our executive compensation each year. Accordingly, we are offering our shareholders the opportunity to vote, on an advisory basis, on the approval of the compensation of our Named Executives. Because your vote is advisory, it will not be binding on our Board. However, our Board will review the voting results and take them into consideration when making future decisions regarding executive compensation.
Our Company has had a long-standing tradition of delivering results to our shareholders. Because the compensation of our executives has been closely linked to Company performance, our executive compensation programs have played a major role in our ability to drive strong financial results and attract and retain a highly experienced, successful team to manage our Company. Even with the dramatic financial downturn in the global economy, our Company has remained profitable.
We believe our executive compensation programs are structured in the best manner possible to support our Company and business objectives, as well as to support our culture and traditions that have existed for over 55 years.
Our compensation programs are substantially tied to our key business objectives and the success of our shareholders. If the value we deliver to our shareholders declines, so does the compensation we deliver to our executives. We closely monitor the compensation programs and pay levels of executives of companies of similar size and complexity, so that we may ensure our compensation programs are within the norm of a range of market practices.
Our Committees, Chairman of the Board, and Chief Executive Officer engage in a talent review process annually to address succession and executive development for our Chief Executive Officer and other key executives.
Accordingly, our Board of Directors recommends that you vote in favor of the following resolution:
"RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the compensation tables, and related material disclosed in the Company’s proxy statement for its 2013 Annual Meeting of Shareholders, is hereby APPROVED." |
The Board of Directors recommends a vote “for” this proposal.
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PROPOSAL TO AMEND OUR EQUAL EMPLOYMENT
OPPORTUNITY POLICY
The following proposal was submitted by the New York State Common Retirement Fund, 633 Third Avenue, 31st Floor, New York, New York 10017:
Whereas: Universal Forest Products does not explicitly prohibit discrimination based on sexual orientation and gender identity in its written employment policy;
Over 89% of the Fortune 500 companies have adopted written nondiscrimination policies prohibiting harassment and discrimination on the basis of sexual orientation, as have more than 95% of Fortune 100 companies, according to the Human Rights Campaign. Nearly 70% of the Fortune 100 and 43% of the Fortune 500 now prohibit discrimination based on gender identity or expression;
We believe that corporations that prohibit discrimination on the basis of sexual orientation and gender identity have a competitive advantage in recruiting and retaining employees from the widest talent pool;
According to an October, 2009 survey by Harris Interactive and Witeck-Combs, 44% of gay and lesbian workers in the United States reported an experience with some form of job discrimination related to sexual orientation; an earlier survey found that almost one out of every ten gay or lesbian adults also stated that they had been fired or dismissed unfairly from a previous job, or pressured to quit a job because of their sexual orientation;
Twenty-one states, the District of Columbia and more than 160 cities and counties, have laws prohibiting employment discrimination based on sexual orientation; 12 states and the District of Columbia have laws prohibiting employment discrimination based on sexual orientation and gender identity;
Minneapolis, San Francisco, Seattle, and Los Angeles have adopted legislation restricting business with companies that do not guarantee equal treatment for gay and lesbian employees;
Our company has operations in, and makes sales to institutions in states and cities that prohibit discrimination on the basis of sexual orientation;
National public opinion polls consistently find more than three quarters of the American people support equal rights in the workplace for gay men, lesbians, and bisexuals; for example, in a Gallup poll conducted in May 2009, 89% of respondents favored equal opportunity in employment for gays and lesbians;
Resolved: The Shareholders request that Universal Forest Products amend its written equal employment opportunity policy to explicitly prohibit discrimination based on sexual orientation and gender identity and to substantially implement the policy.
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Supporting Statement: Employment discrimination on the basis of sexual orientation and gender identity diminishes employee morale and productivity. Because state and local laws are inconsistent with respect to employment discrimination, our company would benefit from a consistent, corporate wide policy to enhance efforts to prevent discrimination, resolve complaints internally, and ensure a respectful and supportive atmosphere for all employees. Universal Forest Products will enhance its competitive edge by joining the growing ranks of companies guaranteeing equal opportunity for all employees.
The Board of Directors recommends a vote AGAINST this proposal for the following reasons:
For many years, our Company has viewed the quality and management of our workforce as a key competitive advantage. In order to enhance and maintain that advantage, we established a work environment that fosters individual contributions and an entrepreneurial attitude and rewards those individuals for their respective skills, perseverance, and accomplishments.
Reflective of the high standards of our work environment, the average tenure of one of our employees is 7.8 years, including both hourly and salaried employees. The Board believes that the quality of our Company’s people and practices, and not its policies, have resulted in the establishment of a loyal and committed workforce, to the ultimate benefit of our shareholders.
An important element in developing such a strong workforce is the maintenance of a work environment that is free from any form of harassment or discrimination. The Board of Directors has reviewed our Company’s policies that prohibit discrimination and harassment and believes that those policies are consistent with the laws of the majority of the jurisdictions in which our Company operates. Moreover, our Company provides extensive training and ongoing communications among our employees to prevent any form of discrimination or harassment at any of our facilities. Expanding our policies, beyond their current scope, creates the risk of greater compliance costs and increased litigation expense with no perceived benefit to our Company.
In summary, Universal Forest Products functions as a meritocracy, with various programs and policies that are designed to attract the best people and reward those individuals for their performance and commitment to our Company. To date, those programs and policies have resulted in the establishment of a workforce that provides our Company with a competitive market advantage. For that reason, our Board believes that the adoption of the proposal is unnecessary and not in the best interest of our Company’s shareholders.
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OWNERSHIP OF COMMON STOCK
The following table sets forth information as to each shareholder known to have been the beneficial owner of more than five percent (5%) of our outstanding shares of common stock as of December 29, 2012:
Name and Address of | Amount and Nature of | Percent | ||||||
Beneficial Owner | Beneficial Ownership (1) | of Class (2) | ||||||
Franklin Resources, Inc. | 2,110,700 | (3) | 10.7 | % | ||||
One Franklin Parkway | ||||||||
San Mateo, CA 94403 | ||||||||
Heartland Advisors, Inc. | 1,704,761 | (4) | 8.6 | % | ||||
789 North Water Street | ||||||||
Milwaukee, WI 53202 | ||||||||
Dimensional Fund Advisors LP | 1,669,377 | (5) | 8.4 | % | ||||
Palisades West, Building One | ||||||||
6300 Bee Cave Road | ||||||||
Austin, TX 78746 | ||||||||
BlackRock, Inc. | 1,478,915 | (6) | 7.4 | % | ||||
40 East 52nd Street | ||||||||
New York, NY 10022 | ||||||||
T. Rowe Price Associates, Inc. | 1,425,800 | (7) | 7.2 | % | ||||
100 E. Pratt Street | ||||||||
Baltimore, MD 21202 | ||||||||
The Vanguard Group, Inc. | 1,084,609 | (8) | 5.4 | % | ||||
100 Vanguard Blvd. | ||||||||
Malvern, PA 19355 |
(1) | Except as otherwise indicated by footnote, each named person has sole voting and investment power with respect to the shares indicated. |
(2) | Shares outstanding for this calculation include 79,106 shares which are subject to options exercisable in 60 days. |
(3) | Franklin Resources, Inc., either directly or through affiliated companies, beneficially owned this number of shares, as noted on the Schedule 13G it filed with the SEC on February 11, 2013. |
(4) | Heartland Advisors, Inc., either directly or through affiliated companies, beneficially owned this number of shares, as noted on the Schedule 13G it filed with the SEC on February 7, 2013. |
(5) | Dimensional Fund Advisors LP ("Dimensional"), an investment advisor, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts (the "Funds"). All shares are owned by the Funds. Dimensional possesses investment and/or voting power over our Company's securities and may be deemed to be the beneficial owner of the shares, as noted on the Schedule 13G it filed with the SEC on February 11, 2013. Dimensional expressly disclaims beneficial ownership of such securities. |
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(6) | BlackRock, Inc., either directly or through affiliated companies, beneficially owned this number of shares, as noted on the Schedule 13G it filed with the SEC on February 8, 2013. |
(7) | These securities are owned by various individuals and institutional investors which T. Rowe Price Associates, Inc. ("Price Associates") serves as an investment advisor with power to direct investments and/or sole power to vote the securities. For purposes of the reporting requirements of the Securities Exchange Act of 1934, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities (as noted on the Schedule 13G it filed with the SEC on February 8, 2013). |
(8) | The Vanguard Group, Inc., either directly or through affiliated companies, beneficially owned this number of shares, as noted on the Schedule 13G it filed with the SEC on February 11, 2013. |
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SECURITIES OWNERSHIP OF MANAGEMENT
The following table contains information with respect to ownership of our common stock by each director, nominees for election as director, each Named Executive in the tables under the caption "Executive Compensation," and all executive officers and directors as a group. The information in this table was furnished by our officers, directors, and nominees for election of directors, and represents our understanding of circumstances in existence as of December 29, 2012.
Name of | Amount and Nature of | Percent | ||||||||
Beneficial Owner | Beneficial Ownership (1) | of Class (2) | ||||||||
Robert W. Lees | 177,508 | (4) | * | |||||||
William G. Currie | 88,401 | * | ||||||||
Matthew J. Missad | 68,882 | (3)(4) | * | |||||||
John W. Garside | 61,547 | (5) | * | |||||||
Patrick M. Webster | 59,776 | (4) | * | |||||||
Michael R. Cole | 48,567 | (3)(4) | * | |||||||
Louis A. Smith | 28,438 | (5) | * | |||||||
Gary F. Goode | 27,548 | (5) | * | |||||||
Mark A. Murray | 21,546 | (5) | * | |||||||
John M. Engler | 8,876 | (5) | * | |||||||
Allen T. Peters | 8,398 | * | ||||||||
Bruce A. Merino | 3,973 | * | ||||||||
Thomas W. Rhodes | 1,356 | (5) | * | |||||||
All directors, and executive officers as a group (18 persons) | 850,200 | (5) | 4.2 | % |
* Less than one percent (1%).
(1) | Except as otherwise indicated by footnote, each named person has sole voting and investment power with respect to the shares indicated. |
(2) | Shares outstanding for this calculation include 79,106 shares which are subject to options exercisable in 60 days. |
(3) | Includes shares which may be acquired by Messrs. Cole and Missad pursuant to options exercisable in 60 days in the amount of 16,000 shares and 16,000 shares, respectively. |
(4) | Includes shares subject to issuance under our deferred compensation plans for Messrs. Cole, Lees, Missad, and Webster in the amount of 2,369 shares, 2,239 shares, 12,209 shares, and 26,547 shares, respectively. |
(5) | Includes shares held in our Director Retainer Stock Plan for Messrs. Engler, Garside, Goode, Murray, Rhodes, and Smith who hold 1,759 shares, 15,780 shares, 20,331 shares, 14,118 shares, 1,356 shares, and 8,721 shares, respectively. |
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Compensation Philosophy and Objectives
We believe our employees are our most important asset. Our executive compensation program has been designed to motivate, reward, attract, and retain the management deemed essential to ensure our Company’s success. The program seeks to align executive compensation with Company objectives, business strategy, and financial performance. In applying these principles, we seek to:
- | Support an environment that rewards performance for achievement of Company goals; |
- | Attract and retain key executives critical to the long-term success of our Company; and |
- | Align the interests of executives with the long-term interests of shareholders through stock ownership initiatives and requirements. |
We believe the compensation of our executives should reflect the performance of the business units in which they are involved. We further believe the performance of our executives in managing our Company, considered in light of general economic and specific Company, industry, and competitive conditions, should be the basis for determining their overall compensation.
To date, our executive compensation program and its objectives have been widely supported by our shareholders. At last year’s shareholder meeting, almost 99% of the votes cast by our shareholders, on an advisory basis, approved of the compensation paid to our Named Executives.
What Our Compensation Program is Designed to Reward
Our compensation program is designed to reward overall financial performance and each person’s individual contribution to our Company. In measuring an individual’s contribution to our Company, the Personnel and Compensation Committee (the "Committee") considers numerous factors, including the individual's contribution to Company performance, individual performance relative to pre-established Company goals, and general economic conditions in the markets we serve.
Compensation Program Components
The Committee has responsibility for establishing, implementing, and monitoring adherence to our compensation philosophy and established programs. The Committee seeks to ensure that the total compensation paid to our executives is fair, reasonable, and competitive.
The principal components of our executive compensation consist of (a) base salary, (b) annual performance incentives (generally paid under our Performance Bonus Plan), and (c) long-term incentive compensation (generally payable in the form of equity-based compensation awards). Base salaries are set for our executive officers at the Committee's January meeting each year. At this meeting, the Chief Executive Officer makes compensation recommendations to the Committee with respect to our executive officers. The Committee may accept or adjust such recommendations; it makes the sole determination of the compensation for our Chief Executive Officer.
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Base Salaries. Historically, we have provided modest base salaries and have created opportunities for significant performance-based incentive compensation. The Committee has complete discretion in determining base salary amounts (including the grant and amount of any annual discretionary incentive payments or stock or option awards), regardless of whether corporate or individual performance goals are achieved.
The Committee may, but is not required to, use objective and subjective measures in exercising its discretion in setting base salaries. Although the Committee does not use the data to set salaries, the Committee has reviewed the compensation information of our peer group companies. Our current peer group companies are: BlueLinx Holdings Inc., Builders First Source, and Louisiana Pacific Corp.
The Committee also has access to publicly available compensation information from other publicly held companies to make informed decisions regarding pay and benefit practices, including base salaries. However, this information is not used to set salaries for our Named Executives. Surveys prepared by management are also used to periodically ensure that our Company is maintaining its labor market competitiveness. The Committee presently does not engage any consultant for executive and/or director compensation matters. Historically, our Company has utilized third-party data on compensation practices and base pay scales solely for purposes of clarifying that our Company's base compensation is generally competitive. To date, the Committee has not used that information for purposes of either establishing base salaries or ultimately justifying the eventual establishment of base salaries.
The Committee approved salary increases to the Named Executives, identified in the Summary Compensation Table, as follows:
Named Executive | Effective Date | New Salary | % Increase | |||||||
Matthew J. Missad | February 1, 2013 | $ | 515,600 | 1.6 | % | |||||
Michael R. Cole | February 1, 2013 | $ | 304,983 | 2.3 | % | |||||
Patrick M. Webster | February 1, 2013 | $ | 375,551 | 1.6 | % | |||||
Robert W. Lees | February 1, 2013 | $ | 280,120 | 1.1 | % | |||||
Allen T. Peters | February 1, 2013 | $ | 245,000 | 4.3 | % |
Annual Incentive Compensation. Our Company’s Performance Bonus Plan provides for the contribution of a fixed percentage of pre-bonus operating profit to each of a number of bonus pools, based upon the pre-bonus Return on Investment (“ROI”) of each plant, region, and division (each of which is referred to as a "Business Unit"), as well as a separate Corporate Business Unit bonus pool. Combined, these bonus pools are the source for our Company’s aggregate bonus awards.
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ROI is determined based upon the Business Unit's pre-bonus operating profit, less income taxes, divided by the average investment of the Business Unit. Average investment is defined as the average of inventory, plus accounts receivable, plus net property, plant and equipment, plus intangibles, less accounts payable.
At the beginning of each year, each participant is allocated a fixed percentage of his or her respective pool. If the Business Unit generates profits which result in a bonus pool, the participant receives the allocated percentage as a performance bonus. The dollar amount of that pool is based upon the Business Unit’s aggregate ROI. As ROI increases, a higher percentage of pre-bonus operating profit is contributed to the pool.
For the Corporate Business Unit, the minimum contribution percentage of 4.31% of pre-bonus operating profit occurs at the lowest level of ROI, which is 3.50%. The maximum contribution percentage of 10.47% occurs at an ROI of 25.5% and higher. In general, for every hundred basis point improvement in ROI, our Company contributes an approximate, additional 28 basis points of pre-bonus operating profit to the Corporate Business Unit bonus pool. Three of our Named Executives participated in the Corporate Business Unit bonus pool in 2012.
For 2012, our Company achieved an overall ROI of 5.81%. This resulted in a contribution of $2,815,721 to the Corporate Business Unit bonus pool, which equaled 4.87% of pre-bonus operating profit. The performance bonus for each of the Named Executives (other than Messrs. Lees and Peters) was based upon our Company's total ROI. The performance bonuses for Messrs. Lees and Peters were based upon the ROI of their respective Business Unit.
For example, the bonus amount for Mr. Missad was determined by the Company's ROI, as a whole. Based upon that performance, we contributed the calculated amount of pre-bonus operating profit to the Corporate Business Unit bonus pool. Mr. Missad was eligible to receive a 20% allocation of the Corporate Business Unit bonus pool for 2012. That percentage, multiplied by the amount of that bonus pool, yielded a bonus for Mr. Missad of $563,144 for 2012.
The following table discloses and explains the determination of bonuses earned by the Named Executives under our Company’s Performance Bonus Plan for 2012.
Named Executive | ROI | Percent of Pre-Bonus Operating Profit Contributed to the Corporate Business Unit Bonus Pool (%) | Allocation of Participation in the Corporate Business Unit Bonus Pool (%) | Performance Bonus ($) | |||||||||||
Matthew J. Missad | 4.87 | % | 20.00 | % | $ | 563,144 | |||||||||
Michael R. Cole | 4.87 | 7.50 | 211,179 | ||||||||||||
Patrick M. Webster | 4.87 | 15.00 | 422,359 | ||||||||||||
Robert W. Lees | (1) | (1 | ) | (1 | ) | 269,540 | |||||||||
Allen T. Peters | (1) | (1 | ) | (1 | ) | 385,167 |
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(1) | For 2012, Messrs Lees and Peters did not participate in the Corporate Business Unit bonus pool. Rather, the incentive compensation for each of them was based upon the ROI of their respective Business Unit. |
Our Company has more than 80 bonus pools, one for each Business Unit, as well as the separate Corporate Business Unit pool.
The Committee has established a maximum cash performance bonus of 1.75 times base salary for the succeeding year.
In January 2011, the Committee increased the ROI threshold from 0% to 2.5% for 2011, and to 3.5% for 2012, for all non-site-built operations. In January 2013, the Committee increased the ROI threshold from 3.5% to 5.0% for 2013. Site-built operations continued to have an ROI threshold of 0% for 2011 and 2012.
Chief Executive Officer. The Committee annually reviews and establishes our Chief Executive Officer’s base salary. Mr. Missad’s salary is based on comparable compensation data, the Committee's assessment of his past performance, and its expectation as to his future contributions in leading our Company. Mr. Missad's base salary fell in the lower quartile of the salaries of comparable executives in our peer group. The Committee has complete discretion in setting the base salary for Mr. Missad (who does not have an employment agreement with our Company). For 2013, Mr. Missad is eligible to receive 20% of the Corporate Business Unit bonus pool.
Long-Term Stock Incentive Plan. In the past, we have provided long-term incentive compensation to our executive officers and key employees through stock options, grants of restricted shares, conditional stock grants, and other equity-based awards under the terms of our amended and restated Long Term Stock Incentive Plan ("LTSIP"). The Committee has complete discretion in determining eligibility for participation and the type and number of shares subject to awards made under the LTSIP. Due to the changes in accounting for stock options, the Committee has not granted broad-based stock options to salaried employees for the last five years.
For 2012, the long term incentive compensation element of our compensation program was paid in the form of restricted stock grants under our LTSIP to certain of our top executives. Our Chief Executive Officer recommends to the Committee, for its approval, the amount of shares that are subject to each restricted stock award based upon his subjective assessment as to the appropriate number of shares to be granted to employees. The awards to our Named Executives ranged from a high of 2,250 shares granted to our Chief Executive Officer, to a low of 750 shares granted to certain of the other Named Executives. The relative amount of shares subject to each award is based upon the employee’s role in our Company, whereby more senior level executives receive a larger grant than subordinate levels. These restricted stock grants vest fully in five years after the date of issue, or earlier upon death, disability, retirement, or a change in control. If the grantee leaves our Company prior to full vesting, the shares are forfeited.
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We encourage and promote ownership of Company stock by our employees and directors. We have a Minimum Stock Ownership Policy that sets requirements for ownership of our common stock by our key employees and independent directors, as follows:
Title | Company Stock Ownership Requirement | ||
Officers | $200,000 | ||
General Manager of Operations and Corporate Directors | $100,000 | ||
Operations Managers, Plant Managers, Sales Managers, Executive Managers and Senior Managers | $50,000 | ||
Independent Directors | 2,500 shares |
To help our key employees (other than executive officers, who are not eligible to receive a loan once they become an executive officer) reach their minimum stock ownership requirement, we established an Executive Stock Purchase Assistance Plan under which key employees were offered the right to borrow money from our Company to purchase stock with interest at the applicable federal rate. Following the adoption of the Stock Match Program (the “SMP”) in 2011, shares are no longer issued under this Plan.
We have a Deferred Compensation Plan (the “DCP”) which allows key employees to defer a portion of their salary and/or bonus. Under the DCP, if a key employee’s ownership of our common stock is not at the required level, any money the key employee defers must be used to purchase shares of our common stock. Such shares are purchased at a 15% discount from the then prevailing market price of our common stock. Each key employee receives a payout of his or her DCP account one year from the date they leave our Company, unless preceded by retirement or death, in which case the employee or his or her beneficiary will receive the distribution within 90 days.
The SMP was approved by our Board and became effective June 1, 2011. Under the SMP, our Company grants shares of Company stock based upon deferrals by certain key employees into our DCP, provided those deferrals are into Company stock. The match is funded by the award of shares by the Company at the rate of $0.85 of Company stock for each $1.00 of Company stock credited as a deferral under our DCP. The shares granted under the SMP are subject to the same vesting and distribution conditions described above for restricted stock grants under our LTSIP.
We have a shareholder approved Employee Stock Purchase Plan (the “ESPP”) which allows our employees to make a payroll deduction or lump sum contribution, or both, for the purchase of our common stock. Shares of our common stock are purchased with the money in the employee's account on the last stock trading day of the quarter, at a 15% discount from the then prevailing market price of our common stock. All eligible employees with at least one year of service may participate in the ESPP.
We have a Stock Gift Program under which eligible employees receive a modest amount of our common stock on specified service anniversaries with our Company.
Executive Retirement Plan. On October 14, 2010, the Committee approved an Executive Retirement Plan for officers with 20 or more years of service to our Company and at least 10 years of service as an officer. The Plan provides for a retirement benefit at age 62 or later of 150% of base salary paid over three years after retirement, death, or disability, plus the monthly cost of COBRA coverage.
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Impact of Restatements Retroactively Impacting Financial Goods. Our Company has not had any material restatement of prior financial results. If such restatements were to occur, the Committee and Board would review the matter and determine what, if any, adjustment to current or prior compensation might be appropriate.
Deductibility of Compensation. Our policy is to pay all earned compensation regardless of whether it exceeds the One Million Dollar ($1,000,000.00) limitation on compensation deductions set forth in Section 162(m) of the Internal Revenue Code. To ensure the maximum tax deductibility for our Company, we received shareholder approval of our Performance Bonus Plan at our 1999 Annual Meeting of Shareholders.
PERSONNEL AND COMPENSATION COMMITTEE REPORT
The primary purpose of the Personnel and Compensation Committee of our Board of Directors is to assist the Board in discharging its responsibilities related to the compensation of our Company's executives. The Committee’s responsibilities are more fully described in its Charter, which is available on our website.
The Committee reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement. Effective as of March 1, 2013, based upon that review and those discussions, the Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement
Bruce A. Merino, Chairman John M. Engler John W. Garside Thomas W. Rhodes Louis A. Smith |
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Summary Compensation Table
The following table shows certain information regarding the compensation for our Chief Executive Officer, Chief Financial Officer, and our three other most highly compensated executive officers for each of our last three fiscal years (the "Named Executives").
Name and Principal Position | Year | Salary (1) | Bonus | Stock Awards (2) | Non-Equity Incentive Plan Compen-sation (1)(3) | All Other Compen- sation (4) | Total | |||||||||||||||||||||
Matthew J. Missad, Chief Executive Officer | 2012 2011 2010 | $ | 506,875 387,655 281,933 | $ | 0 792 499 | $ | 175,990 123,210 33,990 | $ | 563,144 200,623 180,180 | $ | 44,518 24,498 23,522 | $ | 1,290,527 736,778 520,124 | |||||||||||||||
Michael R. Cole, Chief Financial Officer | 2012 2011 2010 | 297,716 292,969 281,652 | 0 531 542 | 87,995 38,210 33,990 | 211,179 94,042 166,320 | 36,210 36,024 27,803 | 633,100 461,777 510,309 | |||||||||||||||||||||
Patrick M. Webster, President and Chief Operating Officer | 2012 2011 2010 | 369,185 363,011 347,704 | 0 792 542 | 145,660 142,315 50,985 | 422,358 235,105 415,801 | 46,272 33,963 36,806 | 983,475 775,186 851,838 | |||||||||||||||||||||
Robert W. Lees, President, UFP Eastern Division | 2012 2011 2010 | 276,779 272,372 262,704 | 0 491 266 | 72,830 80,710 33,990 | 269,540 101,404 265,659 | 34,454 23,765 15,833 | 653,603 478,743 578,452 | |||||||||||||||||||||
Allen T. Peters, President, UFP Western Division | 2012 2011 2010 | 233,333 215,000 185,467 | 0 194 306 | 32,880 28,657 25,492 | 385,167 152,706 73,915 | 36,123 24,750 147,768 | 687,503 421,307 432,949 |
(1) | Includes amounts deferred by the Named Executives under our 401(k) Plan and DCP. The 2012 amounts include deferrals under the DCP in the amount of $115,000 for Mr. Missad, $112,000 for Mr. Cole, $115,000 for Mr. Webster, $115,000 for Mr. Lees, and $3,000 for Mr. Peters. The 2011 amounts include deferrals under the DCP in the amount of $100,000 for Mr. Missad, $110,000 for Mr. Webster,and $60,000 for Mr. Lees. The 2010 amounts include deferrals under the DCP in the amount of $21,197 for Mr. Missad, $100,000 for Mr. Webster, and $66,414 for Mr. Lees. Under the DCP, a participant's deferral is used to purchase Company stock unless the participant exceeds our Company's minimum stock ownership requirement. These shares must be held by the Named Executive until his employment is terminated. |
(2) | The 2012 amounts include 2,250 shares granted to Mr. Missad, 1,125 shares granted to Mr. Cole, 1,500 shares granted to Mr. Webster, 750 shares granted to Mr. Lees, and 750 shares granted to Mr. Peters on July 19, 2012 under the LTSIP. The 2011 amounts include 1,000 shares granted to Mr. Missad, 1,000 shares granted to Mr. Cole, 1,500 shares granted to Mr. Webster, 1,000 shares granted to Mr. Lees, and 750 shares granted to Mr. Peters on February 1, 2011 under the ESGP. The 2010 amounts include 1,000 shares granted to Mr. Missad, 1,000 shares granted to Mr. Cole, 1,500 shares granted to Mr. Webster, 1,000 shares granted to Mr. Lees, and 750 shares granted to Mr. Peters on February 1, 2010 under the ESGP. The amount set forth in this column represents the aggregate fair value of the awards as of the grant date, computed in accordance with FASB ASC Topic 718, "Compensation-Stock Compensation." The assumptions used in calculating these amounts are based on a vesting period of five years, subject to acceleration upon reaching age 60. |
The 2012 amounts include the Company match under the SMP on February 28, 2013 to Messrs. Missad, Cole, Webster, Lees, and Peters in the amount of 2,146, 1,083, 2,146, 1,090, and 63 shares, respectively. The 2011 amounts include the Company match under the SMP on February 27, 2012 to Messrs. Missad, Webster, and Lees in the amount of 2,502, 2,535, and 1,251 shares, respectively. |
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(3) | Represents annual bonus payments under performance-based bonus plans tied to our operating profit and ROI, which cover substantially all salaried employees. The amounts in this column reflect the bonus earned for that year but paid in February of the subsequent year. |
(4) | The amounts in this column represent Company contributions to our Profit Sharing and 401(k) Plan for 2012 in the amount of $3,250 for Messrs. Missad and Lees, and $3,750 for Messrs. Cole, Webster, and Peters. Subject to certain requirements, including age and service requirements, all of our employees are eligible to participate in our Profit Sharing and 401(k) Plan. |
Also included in this column is personal use of corporate aircraft for 2012 in the amount of $615 for Mr. Missad. We permit limited personal use of corporate aircraft by the Named Executives, and personal use of our aircraft requires approval by our Chief Executive Officer. We calculate the incremental cost to our Company for personal use of our aircraft based on the cost of fuel and oil per hour of flight; trip-related inspections, repairs and maintenance; landing, parking and hangar fees; supplies; and other variable costs. Since our aircraft is used primarily for business travel, we do not include the fixed costs that do not change based on personal usage, such as pilots’ salaries, the purchase or leasing costs of our aircraft, and the cost of maintenance not related to specific trips. |
The amount in this column also includes the following fringe benefits, none of which exceeded the greater of $25,000 or 10% of the Named Executive's aggregate fringe benefits: automobile allowance, automobile insurance, gasoline, use of Company-owned property, life insurance premiums, an executive medical benefit, a convenience allowance, and taxes paid on behalf of the Named Executive. Included in this amount for Mr. Peters for 2010 is $135,961 related to his relocation to Colorado. |
Narrative Disclosure of Perquisites and Benefits
We provide benefit programs to executive officers and other employees. The following table generally identifies such benefit plans and those employees who may be eligible to participate:
Benefit Plan | Executive Officers | Certain Managers | Full-Time Exempt Employees | Full-time Non-Exempt Employees |
401(k) Plan | √ | √ | √ | √ |
Medical/Dental/Vision Plans | √ | √ | √ | √ |
Life and Disability Insurance | √ | √ | √ | √ |
Employee Stock Purchase Plan | √ | √ | √ | √ |
ROI Bonus Plan | √ | √ | √ | Not Offered |
Hourly Performance Bonus | Not Offered | Not Offered | Not Offered | √ |
Equity Incentive Plans | √ | √ | √ | √ |
Change in Control and Severance Plan | √ | √ | Not Offered | Not Offered |
Deferred Compensation Plan | √ | √ | Not Offered | Not Offered |
Executive Retirement Plan | √ | Not Offered | Not Offered | Not Offered |
We believe perquisites for executive officers should be limited in scope and value. As a result, we have historically provided nominal perquisites. The following table generally illustrates the perquisites we do and do not provide, and identifies those employees who may be eligible to receive them.
Type of Perquisites | Executive Officers | Certain Managers | Full-Time Employees |
Employee Discount | √ | √ | √ |
Convenience Allowance (1) | √ | Not Offered | Not Offered |
Automobile Allowance | √ | √ | Not Offered (2) |
Personal Use of Company Aircraft | Only with CEO Approval | Only with CEO Approval | Not Offered |
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(1) | We provide our officers with a limited taxable convenience allowance which they may use for household management, health and well being, and similar expenses. |
(2) | Certain sales and management personnel receive an automobile allowance. Other employees receive reimbursement, in accordance with the Internal Revenue Code, of various costs incurred in connection with the utilization of their personal vehicles in connection with business travel. |
Grants of Plan-Based Awards
The following table reflects the grant of plan-based awards in fiscal 2012 to the Named Executives, and sets forth information on possible payouts to the Named Executives under our Performance Bonus Plan for fiscal 2012.
Name | Grant Date | Estimated Future Payouts Under Non- Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | ||||||||||||||||||||||||||
Threshold ($) | Maximum (2) ($) | Threshold (#) | Maximum (#) | ||||||||||||||||||||||||||||||
Matthew J. Missad | 02/27/12 07/19/12 | 0 | $ | 902,300 | 0 | 0 | 2,502 2,250 | 0 | 0 | $ | 82,766 90,990 | ||||||||||||||||||||||
Michael R. Cole | 7/19/12 | 0 | 533,720 | 0 | 0 | 1,125 | 0 | 0 | 45,495 | ||||||||||||||||||||||||
Patrick M. Webster | 02/27/12 07/19/12 | 0 | 657,214 | 0 | 0 | 2,535 1,500 | 0 | 0 | 83,857 60,660 | ||||||||||||||||||||||||
Robert W. Lees | 02/27/12 07/19/12 | 0 | 490,210 | 0 | 0 | 1,251 750 | 0 | 0 | 41,383 30,330 | ||||||||||||||||||||||||
Allen T. Peters | 07/19/12 | 0 | 428,750 | 0 | 0 | 750 | 0 | 0 | 30,330 |
(1) | The amounts reported in these columns are not actual awards; rather, they represent the maximum awards that could have been earned by each Named Executive for fiscal 2012 under our Performance Bonus Plan. The actual amount earned by each Named Executive under this plan for fiscal 2012 is reported in the Summary Compensation Table. Amounts earned under this plan are required to be paid within 75 days after our fiscal year-end. For details regarding how awards are determined under the plan, see the "Compensation Discussion and Analysis" section of this Proxy Statement. |
(2) | This amount is 1.75 times base salary for the succeeding year. |
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Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information concerning equity awards held by the Named Executives as of December 29, 2012:
Option Awards | Stock Awards | ||||||||||||||||||||||||
Name | Grant Date | Vesting Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested (1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (1) | |||||||||||||||
Matthew J. Missad | 02/01/09 | 02/01/14 | 1,000 | $ | 37,810 | ||||||||||||||||||||
02/01/10 | 02/01/15 | 1,000 | 37,810 | ||||||||||||||||||||||
02/01/11 | 02/01/16 | 1,000 | 37,810 | ||||||||||||||||||||||
02/27/12 | 02/27/17 | 2,502 | 94,600 | ||||||||||||||||||||||
07/19/12 | 07/19/17 | 2,250 | 85,072 | ||||||||||||||||||||||
08/01/04 | 08/01/06 | 4,000 | $ | 30.64 | 08/01/14 | ||||||||||||||||||||
08/01/04 | 08/01/08 | 4,000 | 30.64 | 08/01/14 | |||||||||||||||||||||
08/01/04 | 08/01/10 | 4,000 | 30.64 | 08/01/14 | |||||||||||||||||||||
08/01/04 | 08/01/12 | 4,000 | 0 | 30.64 | 08/01/14 | ||||||||||||||||||||
08/01/04 | 08/01/14 | 4,000 | 30.64 | 08/01/15 | |||||||||||||||||||||
Michael R. Cole | 02/01/09 | 02/01/14 | 1,000 | 37,810 | |||||||||||||||||||||
02/01/10 | 02/01/15 | 1,000 | 37,810 | ||||||||||||||||||||||
02/01/11 | 02/01/16 | 1,000 | 37,810 | ||||||||||||||||||||||
07/19/12 | 07/19/17 | 1,125 | 42,536 | ||||||||||||||||||||||
01/01/00 | 04/01/15 | 0 | 5,000 | 26.49 | 04/01/16 | ||||||||||||||||||||
08/01/04 | 08/01/06 | 4,000 | 0 | 30.64 | 08/01/14 | ||||||||||||||||||||
08/01/04 | 08/01/08 | 4,000 | 0 | 30.64 | 08/01/14 | �� | |||||||||||||||||||
08/01/04 | 08/01/10 | 4,000 | 0 | 30.64 | 08/01/14 | ||||||||||||||||||||
08/01/04 | 08/01/12 | 4,000 | 0 | 30.64 | 08/01/14 | ||||||||||||||||||||
08/01/04 | 08/01/14 | 0 | 4,000 | 30.64 | 08/01/15 | ||||||||||||||||||||
Patrick M. Webster | 02/01/09 | 02/01/14 | 1,500 | 56,715 | |||||||||||||||||||||
02/01/10 | 02/01/15 | 1,500 | 56,715 | ||||||||||||||||||||||
02/01/11 | 02/01/16 | 1,500 | 56,715 | ||||||||||||||||||||||
02/27/12 | 02/27/17 | 2,535 | 95,848 | ||||||||||||||||||||||
07/19/12 | 07/19/17 | 1,500 | 56,715 | ||||||||||||||||||||||
01/01/98 | 04/01/13 | 0 | 5,000 | 24.46 | 04/30/13 | ||||||||||||||||||||
Robert W. Lees | 02/01/09 | 02/01/14 | 1,000 | 37,810 | |||||||||||||||||||||
02/01/10 | 02/01/15 | 1,000 | 37,810 | ||||||||||||||||||||||
02/01/11 | 02/01/16 | 1,000 | 37,810 | ||||||||||||||||||||||
02/27/12 | 02/27/17 | 1,251 | 47,300 | ||||||||||||||||||||||
07/19/12 | 07/19/17 | 750 | 28,357 | ||||||||||||||||||||||
Allen T. Peters | 02/01/09 | 02/01/14 | 750 | 28,357 | |||||||||||||||||||||
02/01/10 | 02/01/15 | 750 | 28,357 | ||||||||||||||||||||||
02/01/11 | 02/01/16 | 750 | 28,357 | ||||||||||||||||||||||
07/19/12 | 07/19/17 | 750 | 28,357 |
(1) | The market value of the shares in these columns is based upon the closing price of our common stock as of December 29, 2012. |
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Option Exercises and Stock Vested
The following table provides information on the number and value of options exercised and stock grants vested in 2012 by the Named Executives.
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise | Value Realized on Exercise (1) | Number of Shares Acquired on Vesting | Value Realized on Vesting (2) | ||||||||||||
Matthew J. Missad | 0 | 0 | 0 | 0 | ||||||||||||
Michael R. Cole | 0 | $ | 66,150 | 0 | 0 | |||||||||||
Patrick M. Webster | 0 | 0 | 0 | 0 | ||||||||||||
Robert W. Lees | 0 | 0 | 0 | 0 | ||||||||||||
Allen T. Peters | 0 | 0 | 0 | 0 |
(1) | Represents the difference between the exercise price and the fair market value of the common stock on the date of exercise. |
(2) | Value based upon the closing market price of our Company’s common stock on the vesting date. |
Non-Qualified Deferred Compensation
The following table provides certain information relating to each deferred compensation plan that provides for the deferral of compensation on a basis that is not tax qualified. The aggregate balance amounts are based entirely on employee deferrals and earnings on these deferrals.
Names | Executive Contributions in 2012 (1) | Company Contributions in 2012 (2) | Aggregate Earnings in 2012 (3) | Aggregate Withdrawals / Distributions in 2012 | Aggregate Balance at December 29, 2012 | |||||||||||||||
Matthew J. Missad | $ | 115,000 | $ | 20,294 | $ | 80,111 | 0 | $ | 481,330 | |||||||||||
Michael R. Cole | 112,000 | 19,764 | 15,609 | 0 | 90,137 | |||||||||||||||
Patrick M. Webster | 115,000 | 20,294 | 209,228 | 0 | 1,238,232 | |||||||||||||||
Robert W. Lees | 115,000 | 20,294 | 139,626 | 0 | 1,263,517 | |||||||||||||||
Allen T. Peters | 3,000 | 529 | 0 | 0 | 0 |
(1) | Each of the amounts reported in this column are also reported as non-equity incentive plan compensation or salary in the Summary Compensation Table. The amounts shown include deferrals under our DCP from the annual bonus earned for 2012 and monthly salary for 2012 for Mr. Missad of $100,000 and $15,000, respectively; from the annual bonus earned for 2012 and monthly salary for 2012 for Mr. Cole of $100,000 and $12,000, respectively; from the annual bonus earned for 2012 and monthly salary for 2012 for Mr. Webster of $100,000 and $15,000, respectively; from the annual bonus earned for 2012 and monthly salary for 2012 of Mr. Lees of $100,000 and $15,000, respectively; and from the annual bonus earned for 2012 of Mr. Peters of $3,000. |
(2) | The amounts shown include the Company’s 15% discount on the bonus earned for 2012 and paid in February 2013 for Messrs. Missad, Cole, Webster, Lees, and Peters in the amount of $17,647, $17,647, $17,647, $17,647, and $529, respectively. The amount for Messrs. Missad, Cole, Webster, and Lees includes $2,647, $2,117, $2,647, and $2,647, respectively, for the Company’s 15% discount for their salary deferral during 2012. |
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(3) | Amounts shown are credited to the Named Executive's deferred compensation account(s). The amounts reflect the earnings on various investments in the account(s), including investments in our common stock. |
(4) | Amounts deferred by Mr. Lees for a 1985 deferral plan was used to purchase a life insurance policy to fund the benefit. The amount in this column includes cash surrender values for Mr. Lees of $237,423 for the 1985 deferral plan. |
Our DCP allows key employees to defer a portion of their incentive bonus and base salary. The maximum amount a Named Executive can defer is $100,000 from incentive compensation and $15,000 from base salary, per year. As described in the Compensation Discussion and Analysis, amounts deferred must be invested in our common stock until certain ownership requirements are met. Payouts occur as provided at the time of employee deferral, or if not specified by the employee, upon separation from employment.
Other Post-Employment Compensation
Severance Agreements
Mr. William G. Currie retired from our Company on July 21, 2009. Under the terms of his Consulting and Non-Compete Agreement with our Company, we agreed to pay Mr. Currie $117,763 per month for his services to our Company during the three-year period that ended on July 21, 2012. This amount was based upon the average of Mr. Currie's salary and bonus during the five-year period of 2004 through 2008. He also received a stipend for the purchase of health insurance during the contract term.
On October 14, 2010, the Committee approved an Executive Retirement Plan for officers with 20 or more years of service to the Company and at least 10 years of service as an officer. The Plan provides for a retirement benefit at age 62 or later of 150% of base salary paid over three years after retirement, death, or disability, together with a stipend toward the purchase of health insurance during the three year period.
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Potential Payments upon Termination, Death, Disability, Retirement, or Change in Control
The following table quantifies the incremental amounts that would have been vested and become payable on December 29, 2012 to each Named Executive in the event of death, permanent disability, retirement, or change in control.
Benefit | Death | Disability | Retirement (1) | Change in Control (2) | |||||||||||||
Matthew J. Missad(3) | Cash Severance (4) | $ | 761,250 | $ | 761,250 | $ | 761,250 | $ | 1,522,500 | ||||||||
Equity: (5) | |||||||||||||||||
- Restricted Stock | 293,103 | 293,103 | 293,103 | 293,103 | |||||||||||||
- Unexercisable Options | 0 | 0 | 0 | 28,680 | |||||||||||||
Health and Welfare | 24,910 | 24,910 | 24,910 | 24,910 | |||||||||||||
TOTAL: | 1,079,263 | 1,079,263 | 1,079,263 | 1,869,193 | |||||||||||||
Michael R. Cole | Cash Severance (4) | 42,023 | 42,023 | 42,023 | 298,083 | ||||||||||||
Equity: (5) | |||||||||||||||||
- Restricted Stock | 155,966 | 155,966 | 155,966 | 155,966 | |||||||||||||
- Unexercisable Options | 0 | 0 | 0 | 85,280 | |||||||||||||
Health and Welfare | 24,910 | 24,910 | 24,910 | 24,910 | |||||||||||||
TOTAL: | 222,899 | 228,899 | 228,899 | 564,239 | |||||||||||||
Patrick M. Webster | Cash Severance (4) | 554,462 | 554,462 | 554,462 | 739,282 | ||||||||||||
Equity: (5) | |||||||||||||||||
- Restricted Stock | 322,708 | 322,708 | 322,708 | 322,708 | |||||||||||||
- Unexercisable Options | 0 | 0 | 0 | 66,750 | |||||||||||||
Health and Welfare | 24,910 | 24,910 | 24,910 | 24,910 | |||||||||||||
TOTAL: | 902,080 | 902,080 | 902,080 | 1,153,650 | |||||||||||||
Robert W. Lees | Cash Severance (4) | 415,680 | 415,680 | 415,680 | 554,240 | ||||||||||||
Equity: (5) | |||||||||||||||||
- Restricted Stock | 189,088 | 189,088 | 189,088 | 189,088 | |||||||||||||
- Unexercisable Options | 0 | 0 | 0 | 0 | |||||||||||||
Health and Welfare | 24,910 | 24,910 | 24,910 | 24,910 | |||||||||||||
TOTAL: | 629,677 | 629,677 | 629,677 | 768,237 | |||||||||||||
Allen T. Peters | Cash Severance (4) | 30,448 | 30,448 | 30,448 | 470,000 | ||||||||||||
Equity: (5) | |||||||||||||||||
- Restricted Stock | 113,430 | 113,430 | 113,430 | 113,430 | |||||||||||||
- Unexercisable Options | 0 | 0 | 0 | 0 | |||||||||||||
Health and Welfare | 24,910 | 24,910 | 24,910 | 24,910 | |||||||||||||
TOTAL: | 168,788 | 168,788 | 168,788 | 608,340 |
(1) | Accounts of the Named Executives in deferred compensation plans and 401(k) plans are not included. |
(2) | Our Company has a change in control policy which provides payments to certain executives who would likely be subject to job loss or significant change in job duties upon a change in control. Mr. Missad would have received three years of salary, Messrs. Webster, Lees, and Peters would have received two years of salary, and Mr. Cole would have received one year of salary. |
(3) | In accordance with our Company's practice, Mr. Missad and the Committee will determine an appropriate severance package commensurate with his service to our Company at an appropriate time. Amounts listed for Mr. Missad are based on the Executive Retirement Plan format. |
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(4) | None of our Named Executives has an employment agreement with our Company. In lieu of severance, our Board has approved an Executive Retirement Plan for officers who have been employed by our Company for 20 years and officers for 10 years. Upon death, permanent disability, or retirement at age 62 or later, Named Executives will receive three annual cash payments, with each payment equal to one-half the base salary for the period prior to the separation, plus payments for COBRA coverage or its equivalent for 36 months. The payments for COBRA are listed in the Health and Welfare line in the table. Messrs. Cole and Peters have not yet met the service requirements of the policy. The Committee retains discretion to award severance to an officer with 20 years of service and 10 years as an officer who does not meet the age requirements for retirement. |
(5) | Stock awards and stock options which are already vested are not included in the table, nor are earned but unpaid cash bonuses. Unexercisable stock options are shown at the market value on December 29, 2012, less the exercise price. |
Director Compensation
The following table sets forth certain information regarding the compensation earned by or awarded to each independent director who served on our Board in 2012.
Names | Fees Earned or Paid in Cash (1) | Stock Awards (2) | All Other Compensation | Total | ||||||||||||
William G. Currie (3) | 0 | 0 | $ | 953,687 | $ | 953,687 | ||||||||||
John M. Engler | $ | 66,550 | $ | 47,940 | 360 | 114,850 | ||||||||||
John W. Garside | 68,750 | 47,940 | 360 | 117,050 | ||||||||||||
Gary F. Goode (4) | 87,450 | 47,940 | 360 | 135,750 | ||||||||||||
Bruce A. Merino (5) | 74,250 | 46,312 | 360 | 120,922 | ||||||||||||
Mark A. Murray (5) | 75,350 | 47,940 | 360 | 123,650 | ||||||||||||
Thomas W. Rhodes | 47,987 | 0 | 360 | 48,347 | ||||||||||||
Louis A. Smith | 68,750 | 47,940 | 360 | 117,050 |
(1) | For 2012, each independent director received a $51,500 annual retainer fee, $1,000 for attendance at each regular and special meeting of the Board, and $1,000 for each committee meeting attended. For 2013, these amounts will be $52,324, $1,500, and $1,500, respectively. Each independent director may participate in the Director Retainer Stock Plan (the "DRSP"). The DRSP provides that the director may elect to receive Company stock, on a deferred basis, at a rate of 110% of their deferred annual retainer, board and committee meeting fees, and any committee chairperson fees (collectively, the “Deferred Retainer”) in lieu of cash compensation for the Deferred Retainer. The fees listed for Messrs. Engler, Garside, Goode, Murray, Rhodes, and Smith, who participate in the DRSP, are stated at 110% of the cash value actually earned. They were allocated shares of Company stock, in lieu of cash fees, in the following respective amounts during 2012: 1,359 shares, 2,182 shares, 2,698 shares, 2,313 shares, 1,356 shares, and 2,030 shares. Also, beginning in 2012, directors may elect to defer the receipt of shares earned under our Director Stock Grant Program, described in footnote (2) below. |
(2) | Under our Executive Stock Grant Program, administered as part of our LTSIP, each independent director is granted 1,000 shares of Company stock each year. Those shares are subject to vesting on the fifth anniversary of the date of grant, subject to earlier vesting upon the attainment of age 60, death, disability or a change in control. Also, under our Director Stock Grant Program, each independent director receives 100 shares of common stock for each Board meeting they attend, up to a maximum of 400 shares per year. Messrs. Engler, Garside, Goode, Merino, Murray, and Smith each received 400 shares on February 27, 2012. The amount set forth in this column represents the aggregate fair value of the awards as of the grant date, computed in accordance with FASB ASC Topic 718, "Compensation-Stock Compensation." The assumptions used in calculating these amounts are based on a vesting period of five years, subject to acceleration upon reaching age 60. |
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(3) | Mr. Currie received $831,341 pursuant to his consulting and non-compete agreement, $96,236 as a payout on a deferred compensation plan from amounts deferred in prior years, and $25,750 for serving as Chairman of the Board. |
(4) | Mr. Goode is Chairman of the Audit Committee and receives an additional $20,000 per year for serving in that capacity. |
(5) | Mr. Murray is Chairman of the Nominating and Corporate Governance Committee and receives an additional $5,000 per year for serving in that capacity. Mr. Merino is Chairman of the Personnel and Compensation Committee and receives an additional $5,000 per year for serving in that capacity. |
Each director is also entitled to reimbursement for his or her reasonable out-of-pocket expenses incurred in connection with travel to and from, and attendance at, meetings of our Board or its committees and related activities, including director education courses and materials. Each director is required to own a minimum of 2,500 shares of our Company stock within two years of joining our Board, and each of our existing directors has satisfied this requirement.
Equity Compensation Plan Information
As discussed above, we maintain certain equity compensation plans under which shares of our common stock are authorized for issuance to employees and directors in exchange for services. The following sets forth certain information regarding our equity compensation plans as of December 29, 2012.
Number of shares to be issued upon exercise of outstanding options | Weighted average exercise price of outstanding options | Number of shares remaining available for future issuance under equity compensation plans [excluding shares reflected in column (a)] (1) | ||||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders | 110,106 | $ | 30.13 | 2,907,336 | ||||||||
Equity compensation plans not approved by security holders | none |
(1) | The number of shares remaining available for future issuance under equity compensation plans, excluding outstanding options, warrants, or similar rights, as of December 29, 2012, is as follows: 140,847 shares for our Employee Stock Purchase Plan, 44,196 shares for our Directors Retainer Stock Plan, and 4,493 shares for our Stock Gift Program. In addition, the remaining 2,717,800 shares available for future issuance under our LTSIP, may be made in the form of options as well as stock appreciation rights, restricted stock, performance shares, or other stock-based awards. |
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AUDIT COMMITTEE REPORT
On February 25, 2013, the Audit Committee submitted to the Board of Directors the following report:
The Committee has reviewed and discussed with management our Company's audited financial statements as of and for the year ended December 29, 2012.
The Committee has discussed with our independent auditors the matters covered by Public Company Accounting Oversight Board (PCAOB) standards, AU Section 380 Communication with Audit Committees.
The Committee has received from E&Y the written disclosures and letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding E&Y's communications with the Audit Committee concerning independence, has discussed with E&Y their independence, and has satisfied itself as to E&Y’s independence.
Based on the reviews and discussions referred to above, the Committee recommended to the Board of Directors that the audited financial statements referred to above be included in our Company's Annual Report on Form 10-K for the year ended December 29, 2012.
Gary F. Goode, Chairman Mark A. Murray Thomas W. Rhodes Louis A. Smith |
The reports of the Audit Committee and the Personnel and Compensation Committee shall not be deemed to be soliciting material filed or by reference in any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or under the Securities Exchange Act of 1934.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires directors, executive officers, and greater than 10% beneficial owners to file reports of ownership and changes in ownership of shares of common stock with the Securities and Exchange Commission, and applicable regulations require them to furnish us with copies of all Section 16(a) reports they file. Based solely upon review of the copies of such reports furnished to us, or written representations that no such reports were required, all Section 16(a) filing requirements applicable to the reporting persons were made in compliance with the Exchange Act.
RELATED PARTY TRANSACTIONS
The Audit Committee has responsibility to review, approve, or ratify related party transactions involving directors, executive officers, and their respective affiliates and immediate family members. As a general practice, our Board has required the related party, if a Board member, to recuse himself or herself from the meeting, and the Board considers the proposed transaction on the basis of what is fair to our Company and is in the best interest of our shareholders. Our Company had no reportable related party transactions during 2012.
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AVAILABILITY OF FORM 10-K
Shares of our common stock are traded under the symbol UFPI on The Nasdaq Stock Market. Our Form 10-K filed with the Securities and Exchange Commission will be provided free of charge to any shareholder upon written request. Significant financial information is available on our website at http://www.ufpi.com. For more information, contact our Investor Relations Department at 2801 East Beltline NE, Grand Rapids, MI 49525.
SHAREHOLDER PROPOSALS
Shareholders who intend to submit a proposal for inclusion in our proxy materials for our 2013 Annual Meeting of Shareholders may do so by following the procedures described in SEC Rule 14a-8. To be eligible for inclusion, shareholder proposals must be received by our Secretary no later than November 3, 2013. Proposals of shareholders should be addressed to the attention of Secretary, 2801 East Beltline NE, Grand Rapids, MI 49525. In addition, under our Bylaws, no business may be brought before an annual meeting unless it is specified in a notice of the meeting or is otherwise brought before the meeting by or at the direction of the Board or by a shareholder who has delivered written notice to our Secretary (containing certain information specified in the Bylaws about the shareholder and the proposed action), not less than 30 days prior to the date of the originally scheduled meeting. This requirement is separate from and in addition to the Securities and Exchange Commission's requirements that a shareholder must meet in order to have a shareholder proposal included in our proxy materials. For any proposal that is not submitted for inclusion in next year's Proxy Statement, but is instead sought to be presented directly at the 2014 Annual Shareholder meeting, the SEC rules permit management to vote proxies at its discretion if we (i) receive notice of the proposal before the close of business on January 17, 2014, and advise shareholders in the 2014 Proxy Statement about the nature of the matter and how management intends to vote on such matter, subject to Rule 14a-4(c), or (ii) do not receive a notice of the proposal prior to the close of business on January 17, 2014.
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HOUSEHOLDING OF PROXY MATERIALS
Only one annual report and proxy statement are sent to multiple shareholders sharing a single address, unless we have received instructions to the contrary from one or more of such shareholders. If you prefer to receive individual copies of the proxy materials, send your request in writing to the attention of Investor Relations Department, 2801 East Beltline NE, Grand Rapids, MI 49525, or call 800-598-9663.
March 4, 2013
By Order of the Board of Directors, | |
David A. Tutas, General Counsel and Secretary |
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*** Exercise Your Right to Vote ***
Important Notice Regarding the Availability of Proxy Materials for the
Shareholder Meeting to Be Held on April 17, 2013.
Meeting Information | ||
UNIVERSAL FOREST PRODUCTS, INC. | ||
Meeting Type: Annual Meeting | ||
UNIVERSAL FOREST PRODUCTS, INC. ATTN: DAVID A. TUTAS 2801 EAST BELTLINE AVE. NE GRAND RAPIDS, MI 49525 | For holders as of: February 19, 2013 | |
Date: April 17, 2013 Time: 8:30 AM | ||
Location: Universal Forest Products, Inc. | ||
Technology and Training Bldg. | ||
2880 East Beltline Lane NE | ||
Grand Rapids, MI 49525 | ||
You are receiving this communication because you hold shares in the above named company. This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet.You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side). We encourage you to access and review all of the important information contained in the proxy materials before voting. |
See the reverse side of this notice to obtain proxy materials and voting instructions. |
Voting Items |
The Board of Directors recommends you vote
FOR the following:
1. | Election of Directors |
Nominees:
01) | William G. Currie |
02) | John M. Engler |
03) | Bruce A. Merino |
The Board of Directors recommends you vote FOR the following proposals:
2. | Ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal 2013. |
3. | To approve executive compensation. (This is an advisory vote) |
The Board of Directors recommends you vote AGAINST the following proposal:
4. | To amend the Company's equal employment opportunity policy. |
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
UNIVERSAL FOREST PRODUCTS, INC. ATTN: DAVID A. TUTAS 2801 EAST BELTLINE AVE. NE GRAND RAPIDS, MI 49525 | Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. VOTE IN PERSON For directions to the meeting location and other special instructions for attending the meeting and voting in person, please review the proxy statement (available through the means noted above). At the meeting, you will need to request a ballot to vote these shares. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
M5331 1-P34433 | KEEP THIS PORTION FOR YOUR RECORDS |
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
UNIVERSAL FOREST PRODUCTS, INC. | For | Withhold | For All | To withhold authority to vote for any individual | |||||||
All | All | Except | nominee(s), mark "For All Except" and write the | ||||||||
The Board of Directors recommends you vote | number(s) of the nominee(s) on the line below. | ||||||||||
FOR the following: | |||||||||||
1. | Election of Directors | o | o | o | |||||||
Nominees: | |||||||||||
01) | William G. Currie | ||||||||||
02) | John M. Engler | ||||||||||
03) | Bruce A. Merino | ||||||||||
The Board of Directors recommends you vote FOR the following proposal: | For | Against | Abstain | ||
2. | Ratify the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for fiscal 2013. | o | o | o | |
3. | To approve executive compensation. (This is an advisory vote) | o | o | o | |
The Board of Directors recommends you vote AGAINST the following proposal: | For | Against | Abstain | ||
4. | To amend the Company's equal employment opportunity policy. | o | o | o | |
NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | |||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. |
Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
M53312-P34433 | |
UNIVERSAL FOREST PRODUCTS, INC. Annual Meeting of Shareholders April 17, 2013, 8:30 AM This proxy is solicited by the Board of Directors The undersigned hereby appoints Matthew J. Missad and David A. Tutas as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side, all the shares of Common Stock of Universal Forest Products, Inc. held of record by the undersigned on February 19, 2013, at the Annual Meeting of Shareholders to be held April 17, 2013, and at any adjournment thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. The shares represented by this proxy will be voted in the discretion of the proxies on any other matters that may come before the meeting. Continued and to be signed on reverse side |