Executive Compensation and Other Information
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5.
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Reflects awards of performance-based vesting RSUs under the 2014 Incentive Plan. Half of the award vests on March 1, 2022 if the Corporations earnings before interest, taxes, depreciation, and amortization
for the year ended December 31, 2021 (2021 Adjusted EBITDA) equals or exceeds $650 million. The other half of the award vests on March 1, 2022 if the Corporations ratio of net debt to 2021 Adjusted EBITDA on
December 31, 2021 is equal to or less than 3.0:1. There are no threshold or maximum payout amounts. For more information regarding the performance-based RSUs, see the discussion under Long-Term Equity Incentives in the
Compensation Discussion and Analysis section above.
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Employment Agreements
We have employment agreements with Messrs. Crow, Sherman, Jackson, Tolly, and McAleenan that include the terms described below. Additional information regarding
the severance benefits provided under the employment agreements may be found under Potential Payments Upon Termination or Change in Control.
Mr.
Sherman
Mr. Shermans employment agreement was entered into on
September 1, 2001 and amended on June 1, 2005, October 29, 2008, May 19, 2017, and January 1, 2018. Prior to the 2018 amendment, his agreement had a
two-year
term, with automatic
renewals each year commencing on the first anniversary of the effective date of the employment agreement, unless either party provided at least 90 days notice of
non-renewal.
Mr. Shermans
base salary was $975,000 at the start of 2017 and was increased to $1,000,000 effective as of March 25, 2017. Prior to the 2018 amendment, Mr. Shermans employment agreement also provided that he was eligible for an annual cash
incentive bonus of up to 133% of his base salary, as determined by the Board of Directors. The Board of Directors could increase the amount of Mr. Shermans bonus if it deemed such an increase appropriate. Pursuant to his employment
agreement, Mr. Sherman is entitled to fully participate in all (i) health and dental benefits and insurance programs, (ii) life and short- and long-term disability benefits and insurance programs, and (iii) defined contribution
and equity compensation programs, all as available to senior executive officers of the Corporation generally. Mr. Shermans employment agreement was amended on January 1, 2018 to reflect his retirement as an executive officer at the
end of 2017 and his transition to being a
non-executive
employee consultant until March 31, 2019.
Messrs.
Crow, Jackson, Tolly, and McAleenan
The employment agreement with Mr. Crow was entered into on February 23, 2010 and amended on May 19, 2017 and December 29, 2017.
Mr. Jacksons employment agreement was entered into on November 14, 2016 and amended on May 19, 2017. The employment agreements with Messrs. Tolly and McAleenan were entered into on January 15, 2004 and amended on
October 29, 2008 and May 19, 2017. Each of these agreements has a
one-year
term, with automatic
one-year
renewals commencing on the first anniversary of the
effective date of the employment agreement, unless either party provides at least 90 days notice of
non-renewal.
For 2017, the base salaries of Messrs. Crow, Tolly, and McAleenan were $650,000, $500,000, and $430,000, respectively, at the start of the year and were increased
to $687,500, $530,000, and $470,000, respectively, effective as of March 25, 2017. For 2017, Mr. Jacksons base salary was $425,000. The employment agreements provide for the payment of an annual cash incentive bonus with a minimum
target of 100% of base salary for each of Messrs. Crow, Tolly, and McAleenan and 75% of base salary for Mr. Jackson. The employment agreements also provide that the executives are entitled to fully participate in all (i) health and
dental benefits and insurance programs, (ii) life and short- and long-term disability benefits and insurance programs, and (iii) defined contribution and equity compensation programs, all as available to senior executive officers of the
Corporation generally. Mr. Jacksons agreement also provided that (i) he would receive a sign on bonus of $350,000, payable in two installments during the first six months of his employment, and (ii) he will receive equity
compensation during each fiscal year beginning in 2017 that has a grant date fair market value of approximately $425,000.
Mr. Crows employment agreement
was amended on December 29, 2017 to reflect his promotion to chief executive officer and increase his annual base salary to $950,000. This amendment did not affect his compensation in 2017.
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Builders FirstSource,
Inc.
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