ITEM 1 ELECTION OF DIRECTORS
The Board of Directors of the Company (the Board or Board of Directors) is currently comprised of seven members and is
divided into three classes, with each class holding office for staggered three-year terms. At the Annual Meeting, Jon P. Vrabely, Patrick L. Larmon, and James F. Hibberd, if elected, will hold office until the 2025 Annual Meeting of stockholders. If
properly voted prior to the Annual Meeting, and not revoked, the enclosed proxy will be voted for the election of these directors unless a stockholder indicates that a vote should be withheld with respect to any or all of such nominees. The election
of each nominee has been recommended by the Board of Directors. Each of the nominees has consented to being named in this Proxy Statement and has indicated his willingness to serve if elected. If any of the nominees shall, prior to the meeting,
become unavailable for election as a director, the persons named in the accompanying form of proxy will vote for such replacement nominee, if any, as may be recommended by the Board of Directors.
The Board unanimously recommends a vote FOR the election of Jon P. Vrabely, Patrick L. Larmon, and James F. Hibberd as directors for a
three-year term expiring in 2025.
Please review the following information regarding Jon P. Vrabely, Patrick L. Larmon, and James F.
Hibberd, and the other directors continuing in office.
Director Nominees for Election at the Annual Meeting
JON P. VRABELY
Age 57. Director since 2007. President and Chief Executive Officer of the Company since 2007. Vice President, Chief Operating Officer
of the Company from 2005 to 2007. Mr. Vrabelys qualifications to serve on the Board include his extensive knowledge of the Companys operations, strategy and financial position through his service as our President and Chief Executive
Officer, as well as through his prior positions in his 20 years of service with the Company.
PATRICK L. LARMON
Age 69. Director since 2015. Retired. President and Chief Executive Officer of Bunzl North America from 2004 to 2018. Executive
Director of Bunzl plc (an international distribution and outsourcing group headquartered in London) from 2005 until December 2018. Currently a director of Box Partners, Inc. (a wholesaler of packing, shipping and industrial supplies) since 2021,
Libbey Glass, Inc. (a glass manufacturer) since 2020; Diversified Foodservice Systems, Inc. (a private equity firm) since 2019; and Bodycote, plc (a metal heat treating company) since 2016. Previously a director of Pestell Distribution, Inc. (a
private equity firm) from December 2019 through July 2021. Mr. Larmon was Executive Vice President and part owner of Packaging Products Corporation from 1984 to 1990 when it was acquired by Bunzl. Mr. Larmon held various other
management positions at Bunzl from 1990 to 2003 until he was named President and Chief Executive Officer. Mr. Larmons qualifications to serve on the Board include his executive experience in a large public company in the distribution
industry, his financial expertise, and his experience on another public company board.
JAMES F. HIBBERD
Age 57. Director since 2015. Operating partner of Emerald Lake Capital Management (a private equity firm) since January 2019. Board
member of City Ventures and Electrical Source Holdings from 2019 to present. Chief Executive Officer of Basic Electric Solutions Team from 2017 until December 2019. Executive Advisor for Ares Management from 2017 through 2018. Senior Vice President
Strategy, Business Transformation and Mergers & Acquisitions for Rexel North America (distributor of electrical and communications products) from January 2016 to March 2017. Senior Vice President and Chief Executive Officer of Gexpro
Electrical Distribution, a division of Rexel Holdings USA Corp. from 2012 to 2016. Mr. Hibberd held various leadership positions at General Electric Supply and other General Electric
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affiliates prior to joining Rexel in 2006. Mr. Hibberds qualifications to serve on the Board include his executive experience in a large international distribution company and his
experience as a chief executive officer.
Directors Whose Terms Expire in 2023
GINA G. HOAGLAND
Age 57.
Director since January 2016. Chairperson of Collaborative Strategies, Inc., a consulting firm that provides board development, strategy and succession planning services, since 2017 and, previously, Chief Executive Officer since 1993. Former
President and owner of Trademark Wines (a Missouri-based distributor of alcoholic beverages) from July 2016 to December 2019. Ms. Hoaglands qualifications to serve on the Board include her experience serving as Chairperson of the Board of
Directors of Triad Bank and her extensive experience as an advisory member of the Board of Directors of the following distribution, manufacturing and construction companies: Major Eagle Inc. / Eagle Brands, Inc., G.M. Johnson Companies, Inc., Duke
Manufacturing Company, Essex Industries Inc., ATRO Engineered Systems, Inc., Anova Furnishings, Inc., Morgan Distributing, Paramount Apparel International, MTM, Empire Comfort Systems, Swank Motion Pictures, MTM, Keeley Companies, Hoffman Bros. and
Booksource.
J. KEITH MATHENEY
Age 73. Director since 2004. Managing member of Matheney and Matheney, CPAs PLLC (accounting and tax consulting) since 2004. Executive
Vice President of Louisiana Pacific Corporation (forest products manufacturer) from 2002 to 2003 and Vice President from 1997 to 2002. Formerly a director of Pope & Talbot, Inc. (a forest products company). Mr. Matheneys
qualifications to serve on the Board include his executive experience in a large public company in the building products industry, his financial expertise and his experience on another public company board, including audit committee experience.
Directors Whose Terms Expire in 2024
DONALD L. GLASS
Age 73.
Director since 2004. Retired. President and Chief Executive Officer of The Timber Company (timber producer) from 1997 to 2001. Executive Vice President of Georgia-Pacific Corporation (building products manufacturer) from 1996 to 2001.
Mr. Glasss qualifications to serve on the Board include his executive experience with a large public company in the building products industry, including his experience as the chief executive officer of one of its operating units.
DELBERT H. TANNER
Age 70.
Chairperson. Director since 2001. Retired. Chief Executive Officer of Anderson Group, Inc. (manufacturer of welding equipment and industrial fans) from 2005 to 2007. President and Chief Executive Officer of RMC Industries Corporation (ready-mix concrete and building materials producer) from 2002 to 2005. Chief Operating Officer and Executive Vice President of RMC Industries Corporation in 2002 and Senior Vice President of RMC Industries
Corporation from 1998 to 2002. Mr. Tanners qualifications to serve on the Board include his experience as the chief executive officer of a multi-national equipment manufacturer and of a large cement and buildings material producer.
There are no arrangements or understandings between any director or director nominee and any other persons pursuant to which he or she was
selected as a director or nominee. None of our directors are a party to any agreement or arrangement that would require disclosure pursuant to Stock Market Rule 5250(b)(3) of The NASDAQ Market LLC (NASDAQ), where the Companys
Common Stock is listed.
Directors will be elected by a plurality of the votes cast by holders of shares of Common Stock present in person
or represented by proxy and entitled to vote at the Annual Meeting. Votes may be cast in favor of a
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director nominee or withheld, and the nominees receiving the highest number of favorable votes will be elected as directors of the Company. Because at this years Annual Meeting, there are
as many nominees (three) as there are directors to be elected (three), a director nominee is assured of being elected if he or she receives any For votes, regardless of how many withheld votes are cast for that director.
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS
Board of Directors
The Board of Directors
is currently comprised of seven directors. The Board of Directors held 6 meetings and 8 regular Committee meetings in 2021. For their respective terms on the Board, each director attended all fiscal year 2021 meetings of the Board and each Committee
on which he or she served. The Companys directors are encouraged to attend the Annual Meeting. All of the Companys directors attended the 2021 Annual Meeting of Stockholders.
Director Independence
On an annual
basis, and at other appropriate times when a change in circumstances could potentially impact the independence or effectiveness of one or more of the directors, the Board of Directors evaluates the independence of the directors and determines if
each director qualifies as an independent director as defined under the listing requirements of NASDAQ on which the Companys Common Stock is listed. After carefully considering all relevant facts and circumstances, the Board of
Directors has affirmatively determined that six of the Companys seven directors, Ms. Hoagland and Messrs. Glass, Hibberd, Larmon, Matheney and Tanner, are independent in accordance with the standards established by NASDAQ. The Board
has made a determination as to each independent director that no relationship exists which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Mr. Vrabely
does not meet the NASDAQ independence standards for a director because he is an executive officer of the Company.
The Board of Directors
has also affirmatively determined that:
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each member of the Audit Committee qualifies as independent under the provisions of Section 10A
of the Securities Exchange Act of 1934, as amended, and the rules of the SEC thereunder, as well as NASDAQs independence rules relating to audit committees; and |
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each member of the Management Organization and Compensation Committee meets the independence requirements of the
SEC and NASDAQs corporate governance listing standards. |
Corporate Governance
The Company has adopted Corporate Governance Guidelines, as well as a Code of Business Conduct and Ethics applicable to all directors, officers
and employees. The Corporate Governance Guidelines and the Code of Business Conduct and Ethics are available on the Companys website at www.huttig.com. Information on, or accessible through, the Companys website is not a part
of, and is not incorporated into, this Proxy Statement. The Company intends to post on its website any amendments to, or waivers from, its Code of Business Conduct and Ethics within four business days of such amendment or waiver.
The Nominating and Governance Committee is responsible for reviewing the Corporate Governance Guidelines from time to time and reporting and
making recommendations to the Board concerning corporate governance matters. Each year, the Nominating and Governance Committee reviews the Companys corporate governance practices to ensure that (a) they comply with applicable laws,
(b) they continue to reflect what the Nominating and Governance Committee believes are best practices, and (c) they promote the best interests of the Company and its stockholders. Although the Company does not currently have a policy which
prohibits the hedging of Company securities by its directors and employees, there are no hedging arrangements currently in place by our directors or executive officers.
6
Board Leadership Structure
The Board has chosen to separate the positions of Chairperson of the Board and Chief Executive Officer at this time. Mr. Delbert H.
Tanner, a non-employee independent director, serves as Chairperson, and Mr. Jon P. Vrabely serves as the President and Chief Executive Officer. Separating the Chair position and the Chief Executive
Officer position allows the Chief Executive Officer to focus on setting the strategic direction of the Company and on our day-to-day business, and allows the Chairperson
to lead the Board in its fundamental role of providing advice to and independent oversight of management. While the Companys Amended and Restated By-laws (bylaws) and Corporate Governance
Guidelines do not require that our Chairperson and Chief Executive Officer positions be separate, the Board believes that having separate positions and having an independent outside director serve as Chairperson is the appropriate leadership
structure for the Company at this time. The Board retains the discretion to assess whether the positions should be combined or separated at any given time based upon its evaluation of, among other things, the composition of the Board and the
circumstances facing the Company.
Board Role in Risk Oversight
The Board believes that an important part of its responsibilities is to review the Companys assessment of the major risks the Company
faces and its policies for monitoring and controlling these risks. The Audit Committee has specific responsibility for oversight of risks associated with financial accounting and audits, as well as internal control over financial reporting.
Management regularly reports to the Audit Committee on the Companys risk assessment and management policies, the Companys major financial and operational risk exposure, including, cybersecurity risk, and the steps taken by management to
monitor and mitigate such exposure. The Management Organization and Compensation Committee oversees the risks relating to the Companys compensation policies and practices, as well as management development and leadership succession. It
believes it has allocated executive compensation among base salary and short- and long-term compensation target opportunities in such a way as to not encourage excessive risk-taking. The Board, as a whole, examines specific business risks as part of
its regular strategic reviews. In addition, management periodically reviews with the Board matters of particular importance or concern, including any significant areas of risk that warrant Board attention. In particular, the Board has taken an
active role in oversight related to the COVID-19 pandemic. The Board receives regular briefings about the pandemic and the potential risks it poses to the Company, its operations and its financial condition.
The Board has used this information to guide and oversee the implementation of the Companys response to COVID-19.
Board Committees
The Board of Directors
has four standing Committees: (1) Executive, (2) Audit, (3) Management Organization and Compensation, and (4) Nominating and Governance. The Board may from time to time designate one or more ad hoc committees with respect to
certain matters. The Executive Committee meets when a quorum of the full Board of Directors cannot be readily obtained. In 2021, the Executive Committee did not hold any meetings.
Except for the Executive Committee, which operates under the authority set forth in our bylaws, each of the standing Committees operates under
a written charter adopted by the Board of Directors. All of the Committee charters are available on the Companys website at www.huttig.com. Information on, or accessible through, the Companys website is not a part of, and is not
incorporated into, this Proxy Statement.
7
The current memberships of the four standing committees of the Board of Directors follow:
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Executive Committee |
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Audit Committee |
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Management Organization & Compensation Committee |
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Nominating &
Governance Committee |
Jon P. Vrabely* |
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Patrick L. Larmon* |
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James F. Hibberd* |
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Gina G. Hoagland* |
Donald L. Glass |
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James F. Hibberd |
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Donald L. Glass |
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Patrick L. Larmon |
J. Keith Matheney |
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Gina G. Hoagland |
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Gina G. Hoagland |
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J. Keith Matheney |
Delbert H. Tanner |
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J. Keith Matheney |
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Delbert H. Tanner |
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Delbert H. Tanner |
Audit Committee
The Audit
Committee assists the Board in fulfilling the Boards oversight responsibility with respect to the integrity of the Companys financial statements, the qualification and independence of the Companys independent auditors, the
performance of the Companys internal audit function and its internal auditors, the Companys compliance with legal and regulatory requirements and the Companys risk assessment and risk management policies. The Audit Committee
assesses financial, credit and liquidity, legal and regulatory risk, cybersecurity threats and operational risks and reviews managements processes and procedures to manage and mitigate such risks. The Audit Committee regularly informs the
Board through committee reports about such risks.
The Audit Committee has the sole authority to select, evaluate and, where appropriate,
replace the independent auditors. The Audit Committee meets periodically with representatives from the Companys internal auditors and independent auditors separate from management. The Audit Committee is also responsible for reviewing
compliance with the Companys Code of Business Conduct and Ethics and for administering and enforcing the Companys accounting and auditing compliance procedures adopted in accordance with Section 301 of the Sarbanes-Oxley Act of
2002. In discharging its oversight responsibility as to the audit process, the Audit Committee obtained from the independent auditors a formal written statement confirming the absence of any relationships between the auditors and the Company that
might bear on the auditors independence, consistent with applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountants communications with the audit committee concerning independence. The
Audit Committee discussed with the independent auditors any activities that may impact their objectivity and independence, including fees for non-audit services, and satisfied itself as to the auditors
independence. The Audit Committee also received a report on the quality control procedures of the independent auditors, as well as the most recent peer review conducted under guidelines of the American Institute of Certified Public Accountants. The
Audit Committee also discussed with management, the internal auditors and the independent auditors the quality and adequacy of the Companys internal controls and the internal audit functions organization, responsibilities, budget and
staffing, and results of the internal audit examinations. The Audit Committee reviewed with the independent auditors and the internal auditors their audit plan and audit scope and the independent auditors examination of the financial
statements.
The Board of Directors has determined that Messrs. Matheney and Larmon meet the requirements of an audit committee
financial expert as defined in regulations of the SEC. During 2021, the Audit Committee held 4 meetings.
The report of the
Audit Committee is included under Report of the Audit Committee in this Proxy Statement.
Management Organization and
Compensation Committee
The Management Organization and Compensation Committee (the Compensation Committee) oversees
the Companys compensation plans and practices, including its executive compensation plans and director
8
compensation plans, reviews and evaluates the performance of the Chief Executive Officer, reviews with the Chief Executive Officer his evaluation of the performance of other members of senior
management, administers the Companys restricted stock and other stock-based compensation plans and programs, reviews management development and succession planning policies and produces the annual report on executive compensation for inclusion
in the Companys annual proxy statement. During 2021, the Compensation Committee held 3 meetings.
Nominating and Governance
Committee
The Nominating and Governance Committees duties include assisting the Board by identifying individuals qualified
to become members of the Board, recommending to the Board the director nominees for election at the next annual meeting of stockholders of the Company, advising the Board with respect to Board composition and procedures, advising the Board with
respect to corporate governance principles and overseeing the evaluation of the Board. During 2021, the Nominating and Governance Committee held one meeting.
Director Qualifications and Nominating Procedures
The Companys Corporate Governance Guidelines provide that the Board should generally have between seven and eleven directors, a
substantial majority of whom must qualify as independent directors as defined under the listing standards of NASDAQ. The Corporate Governance Guidelines provide that a director who serves as the Companys Chief Executive Officer should not
serve on more than two other public company boards, other directors should not serve on more than four other public company boards and members of the Audit Committee should not serve on more than two other public company audit committees.
The Board seeks to identify and recruit the best available director candidates to sustain and enhance the composition of the Board with the
appropriate balance of knowledge, experience, skills, expertise and diversity. Characteristics required for service on the Companys Board include integrity, an understanding of the workings of large business organizations such as the Company,
senior level executive experience, the ability to make independent, analytical judgments, the ability to be an effective communicator, and the ability and willingness to devote the time and effort to be an effective and contributing member of the
Board. The Board also reviews diversity of experience, expertise and perspectives when considering potential candidates. The Board will consider potential director candidates proposed by other members of the Board and management and those potential
director candidates properly proposed by our stockholders. From time to time, the Nominating and Governance Committee may retain search firms or other advisors to assist it in recruiting the best available director candidates for the Company.
Although the Company does not have a formal written diversity policy for the Board, the Board determines the most appropriate mix of
characteristics, skills and experiences for the Board as a whole to possess at any given time, with the objective of having a Board with adequately diverse backgrounds and experiences in light of the circumstances existing at that time. The Board
evaluates each individual in the context of that individuals potential contribution to the Board as a whole with the objective of recommending a collective group that can best promote the success of the Companys business, represent
stockholder interests through the exercise of sound judgment and allow the Board as a whole to benefit from the groups varying backgrounds and experiences. The Board applies the same criteria to all candidates that it considers, including any
candidates properly submitted by our stockholders.
As noted, the Board values diversity. The NASDAQ diversity matrix is set forth below
as required under the listing requirements of NASDAQ.
9
Board Diversity Matrix
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Board Diversity Matrix
(As of March 1, 2022) |
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Total Number of Directors |
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7 |
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Female |
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Male |
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Non-Binary |
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Did Not Disclose Gender |
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Part I: Gender Identity |
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Directors |
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1 |
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6 |
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Part II: Demographic Background |
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African American or Black |
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Alaskan Native or Native American |
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Asian |
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Hispanic or Latinx |
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Native Hawaiian or Pacific Islander |
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White |
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1 |
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6 |
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Two or More Races or Ethnicities |
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LGBTQ+ |
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Did Not Disclose Demographic Background |
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To have a candidate considered by the Board, a stockholder must submit the recommendation in writing to the
Company addressed to the Office of the Corporate Secretary at 555 Maryville University Dr., Suite 400, St. Louis, Missouri 63141 and must provide the following information, in addition to any other information required in the
Companys bylaws and applicable law:
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The candidates name, age and business and residence address; |
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The candidates principal employment or occupation; |
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The class or series and number of shares of capital stock of the Company that are owned beneficially or of record
by the candidate; |
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A description of any arrangements or understandings between the stockholder and the candidate;
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A signed confirmation of the candidates willingness to serve on the Board; |
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A representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the
candidate; |
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The class or series and number of shares of capital stock of the Company that are owned beneficially or of record
by the stockholder, and the length of time of such ownership; and |
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The stockholders name and record address. |
Stockholders may submit potential director candidates at any time pursuant to these procedures. The Board will consider such candidates in
connection with annual elections of directors or the filling of any director vacancies. Any stockholder nominations for the 2022 annual meeting of stockholders, together with the information described above, must be submitted in accordance with the
procedures described under Miscellaneous Next Annual Meeting; Stockholder Proposals in this Proxy Statement.
Stockholder
Communications with Directors
The Board has established a process to receive communications from stockholders and other interested
parties. Stockholders and other interested parties may contact any member (or all members) of the Board, any Committee or any Chairperson of any Committee by mail or electronically. To communicate with the Board of Directors, any individual director
or any group or Committee, correspondence should be addressed to the Board of Directors or any such individual director or group or Committee by either name or title. All such
10
correspondence should be sent to the Company c/o Corporate Secretary at 555 Maryville University Dr., Suite 400, St. Louis, Missouri 63141. To communicate
with any of our directors electronically, stockholders should use the following e-mail address: corporatesecretary@huttig.com.
The office of the Corporate Secretary will open all communications received as set forth in the preceding paragraph for the sole purpose of
determining whether the contents represent a message to our directors. Any contents that are not in the nature of advertising, promotions of a product or service, or patently offensive or irrelevant material will be forwarded promptly to the
addressee. To the extent that the communication involves a request for information, such as an inquiry about the Company or stock-related matters, the Corporate Secretarys office may handle the inquiry directly. In the case of communications
to the Board or any group or Committee, the Corporate Secretarys office will make sufficient copies of the contents to send to each director who is a member of the group or Committee to which the envelope or
e-mail is addressed.
Compensation of Directors
Shown below is information concerning the compensation for service as a director for each member of our Board of Directors for the year ended
December 31, 2021.
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Name |
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Fees Earned or Paid in Cash (1) |
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Stock Awards (2) |
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Total |
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Delbert H. Tanner |
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$ |
75,000 |
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$ |
110,000 |
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$ |
185,000 |
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Donald L. Glass |
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$ |
70,000 |
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$ |
70,000 |
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$ |
140,000 |
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James F. Hibberd |
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$ |
73,000 |
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$ |
85,000 |
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$ |
158,000 |
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Gina G. Hoagland |
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$ |
78,000 |
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$ |
75,000 |
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$ |
153,000 |
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Patrick L. Larmon |
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$ |
73,000 |
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$ |
90,000 |
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$ |
163,000 |
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J. Keith Matheney |
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$ |
78,000 |
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$ |
70,000 |
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$ |
148,000 |
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Jon P. Vrabely(3) |
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(1) |
Amounts in this column represent the grant date fair value of restricted stock awards granted to our non-employee directors in 2021, as computed in accordance with the provisions of Financial Accounting Standards Board Accounting Standard Codification Topic 718. Although the Boards outside compensation
consultant, Lockton, recommended increasing the Boards equity compensation as part of its review of the Boards total compensation in 2019, the Board deferred the equity increase due to the Companys low stock price in early 2020. In
2020, in accordance with the Companys pre-existing non-employee directors stock compensation program, each
non-employee director was granted an annual restricted stock award that consists of a number of shares equal to the lesser of (i) the number of shares obtained from dividing $40,000 by the average of our
high and low price of our Common Stock on the applicable date of grant, or (ii) 15,000 shares. In 2021, the Board implemented Locktons compensation recommendations, which based the cash compensation and equity compensation for each Board
member on the services provided by such Board member to the Company, with each of the Chairmans of the Board and Committees receiving a higher equity grant amount for their additional services to the Company. In 2021, each Board member received an
equity grant of $70,000. In addition, Mr. Tanner received an additional equity grant of $40,000 for his services as Chairman of the Board, Mr. Larmon received an additional equity grant of $20,000 for his services as Audit Committee
Chairman, Mr. Hibberd received an additional equity grant of $15,000 for his services as the Compensation Committee Chairman, and Ms. Hoagland received an additional equity grant of $5,000 for her services as the Nominating &
Governance Chairman. |
(2) |
On January 26, 2021, Mr. Tanner was granted 30,774 restricted shares, Mr. Glass was granted
19,583 restricted shares, Mr. Hibberd was granted 23,780 restricted shares, Ms. Hoagland was granted 20,982 restricted shares, Mr. Larmon was granted 25,178 restricted shares, and Mr. Matheney was granted 19,583 restricted
shares. The awards vest in full on the first anniversary of the grant date or upon a change of control of the Company. As of December 31, 2021, the annual restricted stock awards for 2021 were the only unvested stock awards held by our non-employee directors. |
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(3) |
Mr. Vrabely, who serves as both a director and the Companys President and Chief Executive Officer,
does not receive additional compensation for service as a director. See the Summary Compensation Table in this Proxy Statement for his compensation as an executive officer of the Company. |
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed and discussed with management the financial statements for fiscal year ended December 31, 2021 audited
by KPMG LLP, the Companys independent registered public accounting firm. The Audit Committee has discussed with KPMG LLP various matters related to the financial statements, including those matters required to be discussed by Public Company
Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees, and the SEC. The Audit Committee has also received the written disclosures and the letter from KPMG LLP required by applicable requirements of the
Public Company Accounting Oversight Board regarding the independent accountants communications with the Audit Committee concerning independence, and has discussed with KPMG LLP its independence. Management is responsible for the preparation,
presentation and integrity of the Companys financial statements, the Companys internal controls and financial reporting process and procedures designed to assure compliance with accounting standards and applicable laws and regulations.
The Companys independent auditors are responsible for performing an independent audit of the Companys financial statements, expressing an opinion as to their conformity with generally accepted accounting principles. Based upon such
review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Companys Annual Report on Form 10-K for the year ended
December 31, 2021 for filing with the SEC.
Other than Mr. Matheney, who is a practicing certified public accountant, the
members of the Audit Committee are not professionally engaged in the practice of auditing or accounting. The members of the Audit Committee are not, and do not represent themselves to be, performing the functions of auditors or accountants. Members
of the Audit Committee may rely without independent verification on the information provided to them and on representations made by management and the independent auditors. Accordingly, the Audit Committees oversight does not provide an
independent basis to determine that management has maintained appropriate accounting and financial reporting principles or appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and
regulations. Furthermore, the Audit Committees considerations and discussions referred to above do not assure that the audit of the Companys financial statements has been carried out in accordance with generally accepted auditing
standards, that the financial statements are presented in accordance with generally accepted accounting principles, or that the Companys auditors are in fact independent.
This report is not to be deemed soliciting material or deemed to be filed with the SEC or subject to Regulation 14A of
the Securities Exchange Act of 1934, as amended, or to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically requests that this report be treated as soliciting
material or specifically incorporates it by reference into a document filed with the SEC.
Submitted by:
The Audit Committee of the Board of Directors of Huttig Building Products, Inc.
Patrick L. Larmon Chairperson
James F. Hibberd
Gina G. Hoagland
J. Keith Matheney
13
EXECUTIVE OFFICERS
Huttigs executive officers as of January 1, 2022 and their respective ages and positions are set forth below:
|
|
|
|
|
Name |
|
Age |
|
Position |
Jon P. Vrabely |
|
57 |
|
President and Chief Executive Officer |
Robert Furio |
|
61 |
|
Executive Vice President and Chief Operating Officer |
Philip W. Keipp |
|
60 |
|
Vice President and Chief Financial Officer |
Brian D. Robinson |
|
60 |
|
Senior Vice President and Chief Information Officer |
The principal occupations and employment of our executive officers, including positions held with the Company,
during the past five years are set forth below:
Jon P. Vrabely was named President and Chief Executive Officer and appointed to
the Board of Directors in 2007. He served as interim Chief Financial Officer from February 2018 until September 2018 when Mr. Keipp was appointed as our Chief Financial Officer. Mr. Vrabely also served as interim Chief Financial Officer
and Secretary of the Company from June 2015 until April 2016.
Robert Furio was named Executive Vice President and Chief Operating
Officer effective January 1, 2018. He previously served as an executive at Huttig, Inc., a wholly-owned subsidiary of the Company, beginning in November 2016. Prior to that time, he spent 29 years with PrimeSource Building Products, Inc., where
he had several executive management positions, and most recently was co-chief executive officer.
Philip W. Keipp was named Vice President and Chief Financial Officer in September 2018. Mr. Keipp previously served as Chief
Financial Officer and Secretary for the Company from July 2009 to June 2015 and provided consulting services to the Company in August and September 2018 prior to being named Vice President and Chief Financial Officer.
Brian D. Robinson was named Senior Vice President and Chief Information Officer effective January 1, 2018. Prior to that he served
as our Vice President, Chief Information Officer beginning in 2006.
14
BENEFICIAL OWNERSHIP OF COMMON STOCK
BY DIRECTORS AND MANAGEMENT
The following table sets forth the number of shares of Common Stock beneficially owned, directly or indirectly, by the Companys
directors, the executive officers named in the Summary Compensation Table and all of the Companys directors and executive officers as a group, as of March 14, 2022. There were 27,328,538 shares of our Common Stock outstanding as of
March 14, 2022. Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to the Common Stock. Except as indicated in footnotes to this table, the Company believes that the stockholders
named in this table have sole voting and investment power with respect to all shares of Common Stock shown to be beneficially owned by them.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrestricted Shares Owned (1) |
|
|
Shares in 401(k) Plan |
|
|
Restricted Shares/ Restricted Stock Units |
|
|
Total Shares Beneficially Owned |
|
|
Percent of Shares Outstanding (2) |
|
Non-Employee Directors: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delbert H. Tanner |
|
|
256,975 |
(3) |
|
|
|
|
|
|
44,502 |
|
|
|
301,477 |
|
|
|
* |
|
Donald L. Glass |
|
|
204,570 |
|
|
|
|
|
|
|
44,502 |
|
|
|
249,072 |
|
|
|
* |
|
James F. Hibberd |
|
|
85,697 |
|
|
|
|
|
|
|
|
|
|
|
85,697 |
|
|
|
* |
|
Gina G. Hoagland |
|
|
70,099 |
|
|
|
|
|
|
|
|
|
|
|
70,099 |
|
|
|
* |
|
Patrick L. Larmon |
|
|
87,095 |
|
|
|
|
|
|
|
|
|
|
|
87,095 |
|
|
|
* |
|
J. Keith Matheney |
|
|
109,570 |
(4) |
|
|
|
|
|
|
44,502 |
|
|
|
154,072 |
|
|
|
* |
|
Named Executive Officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jon P. Vrabely |
|
|
929,706 |
|
|
|
8,397 |
|
|
|
57,560 |
|
|
|
995,663 |
|
|
|
3.64 |
% |
Robert Furio |
|
|
257,381 |
|
|
|
|
|
|
|
66,666 |
|
|
|
324,047 |
|
|
|
1.19 |
% |
Philip Keipp |
|
|
114,324 |
|
|
|
125,000 |
(5) |
|
|
38,332 |
|
|
|
277,657 |
|
|
|
1.02 |
% |
Directors and executive officers as a group (10 persons) (6) |
|
|
2,575,900 |
|
|
|
228,318 |
|
|
|
321,229 |
|
|
|
3,125,447 |
|
|
|
10.95 |
% |
* |
Represents holdings of less than 1%. |
(1) |
Includes previously restricted shares, the restrictions on which have lapsed. |
(2) |
Percentage of shares outstanding excludes beneficially held restricted stock units which lack voting rights at
the measurement date. |
(3) |
115,000 shares are held in OOT, LLC, a company solely owned by Mr. Tanner, and 26,500 shares are held in
the Delbert and Marthann Trust. |
(4) |
Shares are held in a Matheney family trust. |
(5) |
Shares are held in a revocable living trust. |
(6) |
Includes shares held as follows: Company 401(k), IRA, spouse IRA and Huttig Employee Stock Purchase Plan.
|
15
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following table sets forth the ownership of the Companys Common Stock by each person known by the Company to beneficially own more
than 5% of the Companys Common Stock based on the number of shares of Common Stock outstanding as of March 14, 2022. There were 27,328,538 shares of our Common Stock outstanding as of March 14, 2022. Except as indicated in footnotes
to this table, the Company believes that the stockholders named in this table have sole voting and dispositive power with respect to all shares of Common Stock shown to be beneficially owned by them.
|
|
|
|
|
|
|
|
|
Name and Address of
Beneficial Owner |
|
Amount and Nature of Beneficial Ownership |
|
|
Percent of Class |
|
JB Capital Partners LP |
|
|
2,355,317 |
(1) |
|
|
8.62 |
% |
5 Evan Place
Armonk, New York 10504 |
|
|
|
|
|
|
|
|
Phillip Hauser and Fritz Hauser |
|
|
1,468,224 |
(2) |
|
|
5.37 |
% |
Hauser Family AG, and
Hauser & Friends AG
Kaiser-Joseph-Strasse 254
79098 Freiburg im Breisgau
Germany |
|
|
|
|
|
|
|
|
22 NW Fund, LP, 22NW GP, Inc. and Aron English |
|
|
2,133,291 |
(3) |
|
|
7.81 |
% |
1455 NW Leary Way, Suite 400
Seattle, Washington 9810 |
|
|
|
|
|
|
|
|
Mill Road Capital II, L.P. |
|
|
1,788,960 |
(4) |
|
|
6.55 |
% |
382 Greenwich Avenue, Suite One
Greenwich, CT 06830 |
|
|
|
|
|
|
|
|
(1) |
This information is based solely on a Form 13F filed with the SEC on February 14, 2022.
|
(2) |
This information is based solely on a Schedule 13G/A filed jointly by Phillip Hauser, Fritz Hauser, Hauser
Family AG, and Hauser & Friends AG with the SEC on February 11, 2022. According to the filing: Phillip Hauser and Fritz Hauser beneficially own 1,468,224 shares and have sole voting and dispositive power with respect to such shares;
Hauser Family AG beneficially owns 841,706 shares and has sole voting and dispositive power with respect to such shares; and Hauser & Friends AG beneficially owns 626,518 shares and has sole voting and dispositive power with respect to such
shares. |
(3) |
This information is based solely on Schedule 13D/A filed jointly by 22NW Fund, LP (22NW Fund),
22NW, LP as the investment manager of 22NW Fund, 22NW Fund GP, LLC, as the general partner of 22NW Fund, 22NW GP, Inc., as the general partner of 22NW, LP and Aron English, as the Portfolio Manager of 22NW, LP, Manager of 22NW Fund GP, LLC and
President and sole shareholder of 22NW GP, Inc. with the SEC on October 29, 2020. According to the filing, each member of the filing group has shared voting and dispositive power with respect to all of the shares. On August 12, 2020, 22NW,
LP (on behalf of itself and its affiliates, the 22NW Group) and the Company entered into a standstill agreement (the Agreement) pursuant to which the 22NW Group was deemed an Exempt Person under the Rights
Agreement, dated May 18, 2016, by and between the Company and Computershare Trust Company, N.A., as amended, provided that the 22NW Group cannot acquire additional Shares while an Exempt Person. Further, 22NW Group agreed, among other things,
to certain standstill restrictions until the third anniversary of the Agreement. The foregoing description of the Agreement is qualified in its entirety by reference to the Agreement, which is attached as Exhibit 99.2 to Schedule 13D/A filed on
October 29, 2020. |
(4) |
This information is based solely on a Schedule 13D/A filed jointly by Thomas E. Lynch, Mill Road Capital II GP
LLC (the GP), and Mill Road Capital II, L.P. (the Fund) with the SEC on December 30, 2021. According to the filing, each member of the filing group has shared voting and dispositive power with respect to all of the
shares. The Fund directly holds, and thus has sole voting and dispositive power over, 1,788,960 shares of Common Stock. The GP, as sole general partner of the Fund, also has sole authority to
|
16
|
vote and to dispose of these shares on behalf of the Fund, and each of Mr. Lynch has shared authority to vote (or direct the vote of), and to dispose (or direct the disposal) of, these
shares on behalf of the GP. Accordingly, each of the Reporting Persons beneficially owns 1,788,960 shares and the Reporting Persons beneficially own, in the aggregate, 1,788,960 shares. |
17
EXECUTIVE COMPENSATION
We are currently considered a smaller reporting company for purposes of the SECs executive compensation and other disclosure
rules. In accordance with such rules, we are required to provide a Summary Compensation Table, an Outstanding Equity Awards at Fiscal Year-End Table and certain limited narrative disclosures. Further, our
reporting obligations generally extend only to the individuals who served as our Chief Executive Officer and our two other most highly compensated executive officers during fiscal year 2021.
Summary Compensation Table
Shown below
is information concerning the total compensation paid to and compensatory awards received by the named executive officers of the Company during each of the relevant years.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position |
|
Year |
|
|
Salary (1) |
|
|
Bonus |
|
|
Stock Awards (2) |
|
|
Non-Equity Incentive Plan Compensation (3) |
|
|
All Other Compensation (4) |
|
|
Total |
|
Jon P. Vrabely |
|
|
2021 |
|
|
$ |
619,615 |
|
|
|
|
|
|
$ |
200,000 |
|
|
$ |
3,589,073 |
|
|
$ |
22,568 |
|
|
$ |
4,431,256 |
|
President and CEO |
|
|
2020 |
|
|
$ |
540,050 |
|
|
|
|
|
|
$ |
92,625 |
|
|
$ |
1,189,825 |
|
|
$ |
22,921 |
|
|
$ |
1,845,421 |
|
Robert Furio |
|
|
2021 |
|
|
$ |
466,346 |
|
|
|
|
|
|
$ |
268,125 |
|
|
$ |
1,929,454 |
|
|
$ |
19,541 |
|
|
$ |
2,683,466 |
|
EVP, Chief Operating Office |
|
|
2020 |
|
|
$ |
405,050 |
|
|
|
|
|
|
$ |
72,000 |
|
|
$ |
679,200 |
|
|
$ |
19,271 |
|
|
$ |
1,175,521 |
|
Philip Keipp |
|
|
2021 |
|
|
$ |
364,875 |
|
|
|
|
|
|
$ |
143,000 |
|
|
$ |
1,345,449 |
|
|
$ |
5,434 |
|
|
$ |
1,858,758 |
|
VP, Chief Financial Officer |
|
|
2020 |
|
|
$ |
315,050 |
|
|
|
|
|
|
$ |
50,400 |
|
|
$ |
453,325 |
|
|
$ |
3,332 |
|
|
$ |
822,107 |
|
(1) |
Due to the COVID-19 pandemic and as part of a cost containment measure,
Messrs. Vrabely, Furio, and Keipps 2020 base salaries were temporarily reduced by twenty percent (20%) on April 27, 2020 through January 4, 2021. Prior to the temporary salary reductions, Mr. Vrabelys base salary was $600,000,
Mr. Furios base salary was $450,000 and Mr. Keipps base salary was $350,000. Effective May 10, 2021, Mr. Vrabelys base salary was increased to $630,000, Mr. Furios base salary was increased to
$475,000 and Mr. Keipps base salary was increased to $372,750. |
(2) |
Represents the grant date fair value of restricted stock awards granted during the applicable fiscal year, as
computed in accordance with the provisions of Financial Accounting Standards Board Accounting Standard Codification Topic 718, based on the average of our high and low stock prices on the date of grant. For 2021, Mr. Vrabelys award was
granted on February 23, 2021 and the amount shown is based on a per-share fair value of $4.095. For 2021, Messrs. Furio and Keipps awards were granted on January 26, 2021 and the amount shown
is based on a per-share fair value of $3.575. |
(3) |
For 2021, all of the named executive officers participated in the Companys 2005 Executive Incentive
Compensation Plan, as amended and restated effective April 25, 2017 (the EIC Plan), which was based on economic value added (EVA) goals. In February 2022, the Compensation Committee approved a total annual cash bonus
pool of $8,731,000 for 2021, of which $5,978,976 was allocated to the named executive officers. The awards will be paid in March 2022. In addition to $2,704,073 that was earned under the EIC Plan, in 2021, Mr. Vrabely received (i) an
additional $575,000 for his achievement with respect to both of the 2021 milestones under the 2019 Cash LTI award, (ii) an additional $166,666 for his achievement with respect to both 2021 milestones under the 2020 Cash LTI award, and
(iii) an additional $143,334 for his achievement with respect to both of the 2021 milestones under the 2021 Cash LTI award. See Additional Narrative Disclosures Long Term Incentive Awards Long Term Incentive
Compensation below for more information. |
(4) |
All Other Compensation for 2021 includes the following: (i) for Mr. Vrabely, a perquisite
in the form of supplemental life insurance, the economic value of the life insurance under the DC Plan (defined below), long-term disability insurance, 401(k) matching contributions by the Company, and the use of a Company car, (ii) for Messrs.
Furio and Keipp, a perquisite in the form of life insurance and 401(k) matching contributions by the Company. Additionally, for Mr. Furio, the amount shown includes a car allowance. The Company discontinued its 401(k) matching contribution
program in March 2020 as part of the Companys |
18
|
cost containment measures due to the COVID-19 pandemic, and this match was reinstated in April 2021. Additionally, for 2021, the Company contributed
$150,000 to Mr. Vrabelys account under the Companys unfunded nonqualified deferred compensation plan (the DC Plan). Amounts contributed to the DC Plan will be included as compensation in the Summary Compensation Table in
the year of vesting. |
Additional Narrative Disclosures
Executive compensation is generally comprised of the following components: base salary; annual incentive compensation; long-term incentive
awards; defined contribution plan benefits; and perquisites and other personal benefits.
Each of these components represents a portion of
each executive officers total compensation package, although participation in the defined contribution plan is at the option of the executive officer. Our policy for allocating between short-term and long-term compensation seeks to ensure
adequate base compensation to attract and retain qualified personnel, while providing incentives to maximize long-term value for the Company and its stockholders. We do not maintain a pre-established policy or
formula for the allocation between cash and non-cash or short-term and long-term compensation.
In
setting executive compensation for 2021, the Compensation Committee considered the results of the Companys say-on-pay proposal at the 2021 annual
meeting of stockholders, which was approved by approximately 94.9% of the votes cast by the Companys stockholders.
Base
Salaries
The annual base salary for our named executive officers as of December 31, 2021 was as follows:
|
|
|
|
|
Name and Current Principal Position |
|
2021 Base Salary |
|
Jon P. Vrabely |
|
$ |
630,000 |
|
President, Chief Executive Officer |
|
|
|
|
Robert Furio |
|
$ |
475,000 |
|
Executive Vice President, Chief Operating Officer |
|
|
|
|
Philip Keipp |
|
$ |
372,750 |
|
Vice President, Chief Financial Officer |
|
|
|
|
2021 Annual Incentive Compensation
In 2021, each named executive officer was eligible to receive an annual cash bonus under the EIC Plan. The annual cash bonuses granted under
the EIC Plan are designed to link executives pay to performance and align their interests with our stockholders by rewarding the executive based on Company performance achievement. For 2021, the Board primarily used the percentage of
improvement in the EVA performance measure to determine Company performance, among other factors. EVA is a measurement of the amount by which the Companys after-tax profits, after certain adjustments,
exceed the cost of capital employed by the Company. The Company determines the percentage of absolute EVA generated for 2021 and the percentage of improvement in EVA from 2020 to 2021 to determine the annual cash bonus pool. In evaluating EVA, the
Compensation Committee used a weighted average cost of capital of 3.87%.
The Compensation Committee determined that the bonus pool would
be 6% of the 2021 EVA of $62,045,000, or $3,723,000 plus 10% of the $50,008,000 improvement in EVA from 2020 to 2021 or $5,008,000. This resulted in a total incentive cash bonus pool for 2021 of $8,731,000. The Compensation Committee reviewed the
executives performance and the achievements of the Company for 2021.
Mr. Vrabelys employment agreement provides that his
targeted annual bonus incentive is not less than 100% of his current base salary. For the other named executive officers, the payout percentages are established using the respective individuals annual STI target as a percent of the total STI
target for all participants. Per
19
Mr. Furios employment agreement, he is entitled to a target short-term cash incentive award target of 87.5% of his base salary. Mr. Keipps target is 75% of his base salary.
The Compensation Committee considered Mr. Vrabelys recommendations, the scope of each executive officers duties, prior year awards, performance in areas of leadership, and completion of key projects. The Compensation Committee
considered the Companys record financial results for 2021. Mr. Keipp continued to successfully implement cost containment measures to improve the Companys operating leverage as compared to prior years. Mr. Furio managed supply
chain disruption and the impact to vendor and customer relationships during the pandemic. Mr. Vrabely continued to manage and react quickly to market changes throughout 2021 and led the Companys strategic review process and execution
against the Companys three to five year business plan.
The following table lists the annual cash bonus awards allocated to the
named executive officers under the EIC Plan for 2021. These amounts were paid in March 2022.
|
|
|
|
|
Name |
|
2021 Annual Bonus Earned |
|
Jon P. Vrabely |
|
$ |
2,704,073 |
|
Robert Furio |
|
$ |
1,929,454 |
|
Philip Keipp |
|
$ |
1,345,449 |
|
Long Term Incentive Awards
The Company considers its long-term incentive awards program a key employee retention tool and a way to better align the interests of our named
executive officers with those of our stockholders. In making decisions regarding the size of long-term incentive awards for executive officers, the Compensation Committee considers factors such as each individuals performance and
responsibilities and Company performance.
Mr. Vrabelys employment agreement provides that on an annual basis, he is eligible
to receive a long-term incentive award with an aggregate target opportunity of at least 100% of his base salary, which award may be cash-based or stock-based and subject to time-vesting or performance-vesting as the Board shall determine in its sole
discretion. In 2021, Mr. Vrabely received a time-vesting restricted stock award of 48,840 shares (as shown in the table below) and a cash long-term performance based incentive award (the Cash LTI) based on the performance of the
Company. Mr. Furios employment agreement provides for a target long-term incentive award equal to 75% of his base salary. For 2021, Mr. Furio received a restricted stock award of 75,000 shares. For Mr. Keipp, the Company
considers factors such as the individuals performance and responsibilities. For 2021, Mr. Keipp received a restricted stock award of 40,000 shares. Each of the 2021 restricted stock awards vest ratably over three years assuming the named
executive officers continued employment or vest immediately in the event of death, permanent disability, or a change in control of the Company, and, for Messrs. Furio and Vrabely, per the terms of their respective employment agreements, the
2021 restricted stock awards also vest immediately upon termination of employment by the Company without cause (or by the named executive officer for good reason).
The following table reflects the number of shares of restricted stock granted to our named executive officers in 2021:
|
|
|
Name |
|
2021 Restricted Stock Awards (# Shares) |
Jon P. Vrabely |
|
48,840 |
Robert Furio |
|
75,000 |
Philip Keipp |
|
40,000 |
Long Term Incentive Compensation
For the 2021 Cash LTI award granted to Mr. Vrabely, the Compensation Committee set two equally weighted goals with a payout ranging from
0% to 200% of target for each goal to be earned over a three-year
20
performance period (2021-2023). The first goal is based on Huttig-Grip fastener sales as compared to 2020 baseline results, and the second goal is based on
pre-finished exterior door sales as compared to 2020 baseline results.
For each goal, the
Compensation Committee set annual milestone goals for 2021, 2022 and 2023 that could result in a partial payment of the 2021 Cash LTI award at the end of each year. The 2021 Cash LTI award had a 2021 milestone goal of 16.7% growth in
fastener warehouse sales and 16.8% growth in pre-finished exterior door sales; the Company achieved both milestones for 2021. As a result, Mr. Vrabely earned cash compensation of $143,334.
For the 2021 LTI, the following summarizes the milestone goals for 2021, 2022 and 2023:
|
|
|
|
|
|
|
|
|
Measure |
|
2021 Milestone Goal |
|
2021 Results |
|
2022 Milestone Goal |
|
2023 Milestone Goal |
Fastener Warehouse Sales Growth |
|
16.7% |
|
33.9% |
|
14.1% |
|
12.5% |
Pre-Finished Exterior Door Sales Growth |
|
16.8% |
|
37.3% |
|
14.1% |
|
12.6% |
The 2020 Cash LTI award that was previously granted to Mr. Vrabely had a 2021 milestone goal of
$30,000,000 in Adjusted EBITDA and 10.2% for the EBITDA return on average working capital for 2021. The Company achieved both milestone goals for 2021 under the 2020 Cash LTI award, and Mr. Vrabely received cash compensation of $166,666.
The 2019 Cash LTI award that was previously granted to Mr. Vrabely had a 2021 milestone goal of $35,000,000 in Adjusted EBITDA and 18%
for the EBITDA return on average working capital for 2021, with a maximum goal of $44,000,000 in Adjusted EBITDA and 20% for EBITDA return on working capital for 2021. Mr. Vrabely exceeded the maximum goal. The Company achieved both milestones
for 2021 under the 2019 Cash LTI award, and Mr. Vrabely received cash compensation of $575,000.
Retirement Plans
The Company provides retirement benefits to the named executive officers under the terms of its
tax-qualified 401(k) defined contribution plan. The Company provides matching contributions to employees who participate in the 401(k) plan. For every pre-tax dollar
contributed to the 401(k) plan, the Company made matching contributions of $0.50 for every dollar contributed to the plan, up to a total of 6% of the employees total eligible deferral amount. However, the Company suspended the matching
contribution program in March 2020 due to cost containment measures in connection with the COVID-19 pandemic. The match was reinstated on April 26, 2021. The named executive officers participate in the
401(k) plan on substantially the same terms as our other participating employees.
In 2016, as required by Mr. Vrabelys
employment agreement, the Company established the DC Plan in which only Mr. Vrabely participates. Under the DC Plan, and consistent with the terms of Mr. Vrabelys employment agreement, the Company makes an annual contribution, with
the amount to be determined by the Board in its discretion based on Company and individual performance. No elective deferrals by Mr. Vrabely are permitted. The Company contributions under the DC Plan do not become vested until January 1,
2023, subject to Mr. Vrabelys continued employment with the Company through such date, or receive accelerated vesting in the event of his death, permanent disability, termination of employment by the Company without cause or termination
of employment by Mr. Vrabely for good reason, or in the event that the DC Plan is terminated by the Company following a change of control. The Compensation Committee believes that these vesting provisions will further encourage
Mr. Vrabelys retention through the vesting date.
For 2021, the Company contributed $150,000 to Mr. Vrabelys account
under the DC Plan. The Compensation Committee considered the Company and individual performance and the recommendation from the Compensation Committees compensation consultant when making the 2021 contribution.
21
During the deferral period, balances in Mr. Vrabelys account under the DC Plan
will be adjusted with deemed investment returns based on Mr. Vrabelys investment choices, all of which are based on market rates of return. Vested balances are payable from the DC Plan in a lump sum following Mr. Vrabelys
termination of employment or his earlier disability or death. Amounts contributed to the DC Plan will be included as compensation in the Summary Compensation Table in the year of vesting.
Perquisites and Other Personal Benefits
The Company provides the named executive officers with perquisites and other personal benefits that the Company believes are reasonable and
consistent with its overall compensation program to better enable the Company to attract and retain superior employees for key positions. The Compensation Committee periodically reviews the levels of perquisites and other personal benefits provided
to the named executive officers. Mr. Vrabely receives additional supplemental life and long-term disability insurance with benefits of three times his base salary upon death and providing supplemental income in the event of his disability.
Mr. Furio is provided with a car allowance, and Mr. Vrabely has the use of a Company car.
Costs of the perquisites and personal
benefits described above for the named executive officers that meet the threshold established by applicable SEC rules are included in the preceding Summary Compensation Table under the All Other Compensation column.
Employment and Change in Control Agreements
Employment Agreements with Messrs. Vrabely and Furio. The Company maintains an employment agreement with each of Messrs. Vrabely
and Furio, which provides for certain payments in connection with a qualifying termination of employment.
Without Cause Payments and
Benefits
In the case of a termination of employment by the Company without Cause (as defined in the applicable employment
agreement), including a decision of the Company to not renew the term of the employment agreement other than for Cause, Mr. Vrabely would receive (i) all benefits described below under Death or Disability except for the pro-rated annual bonus, which is an amount equal to a pro-rated annual bonus based on the Companys actual performance through the termination date, subject to any
applicable performance formula for the year of termination, (ii) a cash severance payment equal to two times the sum of his base salary plus the average bonus (as defined in the applicable employment agreement) (payable in periodic installments
over 24 months), and (iii) two years of COBRA premiums based on the terms of Companys group health plan and the executives coverage under such plan.
In the case of a termination of employment by the Company without Cause (as defined in the applicable employment agreement),
including a decision of the Company to not renew the term of the employment agreement other than for Cause, under his employment agreement, Mr. Furio would receive (i) an amount equal to one times the executives then current base
salary, (ii) an amount equal to 12 months of COBRA premiums based on the terms of the Companys group health plan and the executives coverage under such plan, and (iii) a pro rata annual bonus for the year of termination, based
on actual performance results for the year.
Death or Disability Payments and Benefits
Under Mr. Vrabelys employment agreement, upon his termination of employment due to death or disability, he will receive a pro-rated annual bonus calculated by multiplying the average bonus paid or payable to him for the three fiscal years prior to the year of termination by a fraction, the numerator of which is the number of days in
the then-current fiscal year through the termination date, and the denominator of which is 365. Additionally, all performance-based long term incentive (LTI) awards will become vested on termination, and
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Mr. Vrabely will be paid for the full projected three-year performance of the outstanding LTI awards based on the actual performance through the date of termination instead of calculating
the outstanding LTI awards on a pro rata basis during the year of termination; and Mr. Vrabelys unvested account balance under the DC Plan shall vest.
Mr. Furio is not entitled to receive any additional payments or benefits upon his termination of employment due to death or disability
unless within the applicable change in control protected period.
Change in Control Termination Payments and Benefits
Under Mr. Vrabelys employment agreement, in case of termination of employment due to death or disability within the applicable
change in control protected period, Mr. Vrabely will receive the same benefits as described above under his employment agreement for termination due to death or disability, while Mr. Furio will be entitled to a pro-rated bonus based on his average bonus for the prior two years.
Under the employment agreements, in
case of termination of employment by the Company without Cause or by the executive for Good Reason (as defined in the applicable employment agreement) within the applicable change in control protected period, each of Messrs.
Vrabely and Furio will receive:
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A pro-rated annual bonus based on the greater of the executives
average bonus for a certain number of prior years or the bonus paid for the last fiscal year; |
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Cash severance equal to a multiple times the sum of base salary and the average bonus for
Mr. Vrabely, the multiple is three, and for Mr. Furio, the multiple is two; |
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COBRA premiums for a period of years based on the terms of the Companys group health plan and the
executives coverage under such plan as of termination for Mr. Vrabely, three years of premiums, and for Mr. Furio, two years of premiums; and |
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For Mr. Vrabely, full vesting of his Cash LTI, full vesting of any outstanding equity awards, full vesting
of his DC Plan balance and outplacement services with a value up to $25,000. |
For all performance-based Cash LTI awards
that will become vested on termination, Mr. Vrabely will be paid for the full projected three-year performance of the outstanding LTI awards based on the actual performance through the date of termination instead of calculating the outstanding
LTI awards on a pro rata basis during the year of termination.
Change in Control Agreement with
Mr. Keipp. The Company has entered into a change in control agreement with Mr. Keipp. The change in control agreement does not become effective until the occurrence of a change in control and generally
only provides benefits upon an involuntary termination or constructive termination that occurs within three years following such change in control.
Under Mr. Keipps change in control agreement, in case of termination of employment by the Company without Cause or by
the executive for Good Reason within the three-year change in control protected period, Mr. Keipp will receive:
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A pro-rated annual bonus based on the greater of the average bonus or the
bonus paid for the last fiscal year (the highest bonus); |
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Cash severance equal to two times the salary and the average bonus; and |
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A payment of two times the value of the annual COBRA premiums based on the terms of Companys group health
plan and Mr. Keipps coverage under such plan after termination. |
Mr. Keipps change in control
agreement also provides, in the case of a termination of employment due to death or disability within the three-year change in control protected period, Mr. Keipp will receive a pro-rated bonus based on
his average bonus for the prior three years.
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All payments described above are generally conditioned on the applicable named executive
officer signing a release of all claims in favor of the Company. There are no excise tax gross-ups provided under the employment agreements. Instead, if the Companys tax counsel determines that any
economic benefit or payment or distribution by the Company to the employee pursuant to the agreement is subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the Code), the Company may
reduce the aggregate payments due to the employee under the agreement and any other agreement, plan or program of the Company to an amount that is one dollar less than the maximum amount allowable without becoming subject to the excise tax. Payments
under the arrangements described above are generally made (i) in equal monthly installments (24 in the case of Mr. Vrabely and 12 in the case of Mr. Furio) for a termination of employment without Cause prior to the applicable change
in control protected period, or (ii) in a lump sum payment for a termination of employment without Cause or for Good Reason within the applicable change in control protected period or, if applicable, due to death or disability; provided that,
for Mr. Vrabely, amounts payable for a termination of employment without Cause or for Good Reason within the applicable change in control protected period may be paid in monthly installments over 36 months to the extent necessary to comply with
Section 409A of the Code.
In addition, the employment agreements and change in control agreement generally prohibit each named
executive officer from engaging in certain conduct during the term of employment and for one year following termination from employment with the Company, namely: (1) engaging in any business that is competitive with the Company,
(2) soliciting for employment any current employee of the Company or any individual who had been employed by the Company in the one year prior thereto, (3) soliciting the business of the Company or doing business with any actual or
prospective customer or supplier of the Company, and (4) taking any action which is intended, or would reasonably be expected, to harm the Company or its reputation or which would reasonably be expected to lead to unwanted or unfavorable
publicity to the Company. The employment agreements and change of control agreement also generally prohibit the officer from disclosing any confidential information of the Company at any time.
Other Arrangements. Pursuant to the terms of the restricted stock awards held by our named executive officers, all unvested
shares of restricted stock granted pursuant to such awards will vest in full upon (i) a termination of employment due to death or permanent disability, (ii) retirement at or after age 65, or (iii) a change in control of the Company;
provided, Mr. Vrabelys restricted stock awards also vest in full upon termination of employment without cause.
Accounting and Tax
Considerations
The Compensation Committee generally considers the financial accounting implications of stock awards and other
compensation to the Companys executive officers in evaluating and establishing the Companys compensation policies and practices. In addition, Section 162(m) of the Code, limits the deductibility of annual compensation paid to
certain executive officers to $1 million per employee. The Compensation Committee believes that in establishing incentive compensation programs for our named executive officers, the potential deductibility of the compensation payable should be
only one of several factors taken into consideration and not the sole governing factor. For that reason, the Compensation Committee may deem it appropriate to continue to provide one or more named executive officers with the opportunity to earn
compensation that may be in excess of the amount deductible by reason of Section 162(m) or other provisions of the Code.
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Outstanding Equity Awards at 2021 Fiscal Year-End
The following table sets forth certain information with respect to unvested shares of restricted stock held at December 31, 2021 by each
of the named executive officers (there are no other outstanding equity awards held by our named executive officers):
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Stock Awards |
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Number of Shares of Stock That Have Not Vested |
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Market Value of Shares of Stock That Have Not Vested(1) |
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Jon P. Vrabely (2) |
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115,587 |
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1,279,548 |
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Robert Furio (3) |
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124,143 |
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1,374,263 |
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Philip Keipp (4) |
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92,642 |
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1,025,547 |
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(1) |
Computed based on the closing price of $11.07 of the Companys Common Stock on December 31, 2021.
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(2) |
For Mr. Vrabely, (i) 50,241 shares of restricted stock were granted on February 28, 2019, which
vested or will vest in three equal installments on February 28 of 2020, 2021 and 2022, (ii) 75,000 shares of restricted stock were granted on February 25, 2020, which vested or will vest in three equal installments on February 25 of
2021, 2022 and 2023, and (iii) 48,840 shares of restricted stock were granted on February 23, 2021, which vested or will vest in three equal installments on February 23 of 2022, 2023 and 2024. |
(3) |
For Mr. Furio, (i) 47,435 shares of restricted stock were granted on January 29, 2019, which vested
or will vest in three equal installments on January 29 of 2020, 2021 and 2022, (ii) 50,000 shares of restricted stock were granted on January 28, 2020, which vested or will vest in three equal installments on January 28 of 2021, 2022
and 2023, and (iii) 75,000 shares of restricted stock were granted on January 26, 2021, which vested or will vest in three equal installments on January 26 of 2022, 2023 and 2024. |
(4) |
For Mr. Keipp, (i) 87,930 shares of restricted stock were granted on January 29, 2019, which vested
or will vest in three equal installments on January 29 of 2020, 2021 and 2022, (ii) 35,000 shares of restricted stock were granted on January 28, 2020, which vested or will vest in three equal installments on January 28 of 2021, 2022
and 2023, and (iii) 40,000 shares of restricted stock were granted on January 26, 2021, which vested or will vest in three equal installments on January 26 of 2022, 2023 and 2024. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Companys Audit Committee charter requires that the Audit Committee, which is comprised entirely of independent directors, review all
related party transactions and potential conflict of interest situations involving members of the Board of Directors or senior management. Current SEC rules define a related party transaction to include any transaction, arrangement or relationship
in which the Company is a participant and the related party has a direct or indirect interest. Since January 1, 2021, the beginning of the Companys last fiscal year, the Company has not had any related party transactions involving an
amount in excess of the lesser of $120,000 and one percent of the average of the Companys total assets at year-end for the last two completed fiscal years.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is comprised of Messrs. Glass, Hibberd, and Tanner and Ms. Hoagland. No member of the Compensation Committee
is or has ever been an officer or employee of the Company, and no executive officer of the Company has served as a director or member of a compensation committee of another company of which any member of the Board of Directors is an executive
officer.
PRINCIPAL ACCOUNTING FIRM SERVICES AND FEES
The following table sets forth the aggregate fees billed for the years ended December 31, 2021 and 2020 by KPMG LLP, the Companys
principal accounting firm during those years.
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2021 |
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426,500 |
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390,000 |
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30,000 |
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Total Fees |
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456,500 |
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390,000 |
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Audit fees consist of fees for the following services: (a) the audit of the Companys annual
financial statements, and (b) reviews of the Companys quarterly financial statements. |
(2) |
Audit fees for tax-related services. |
The Audit Committee has adopted a policy under which the independent auditors are prohibited from performing certain services in accordance with
Section 202 of the Sarbanes-Oxley Act of 2002. The Audit Committee pre-approves all services to be provided by the independent auditors. The Audit Committee
pre-approves the annual audit engagement terms and fees at the beginning of the year and pre-approves, if necessary, any changes in terms or fees resulting from changes
in audit scope, Company structure or other matters. For services other than the annual audit engagement, if pre-approval by the full Audit Committee at a regularly scheduled meeting is not practical due to
time limitations or otherwise, the Chairperson of the Audit Committee may pre-approve such services and shall report any such pre-approval decision to the Audit
Committee at the next regularly scheduled meeting.
ITEM 2 ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS
We are asking our stockholders to provide advisory approval of the compensation of our named executive officers, as
described in this Proxy Statement. While this vote is advisory, and not binding on the Company, it will provide information to us regarding stockholder sentiment about our core principles and objectives, which we will be able to consider when
determining executive compensation in the future. Last year, approximately 94.9% of the votes cast in our advisory vote approved the compensation of our named executive officers.
Stockholders should review the compensation information set forth in this Proxy Statement, compensation tables, and related narratives
appearing in this Proxy Statement for more information regarding the compensation of our named executive officers. As described in those sections, the primary objective of our executive compensation program is to attract and retain qualified
employees. Our compensation program is designed to reward the named executive officers for individual performance, Company performance and increases in stockholder value. Accordingly, executive compensation is based on our pay-for-performance philosophy, which emphasizes executive performance measures that correlate closely with the achievement of both shorter-term performance objectives and
longer-term stockholder value. The Compensation Committee regularly reviews our executive compensation program to assure that it continues to meet these overall objectives.
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We believe that the information we have provided in this Proxy Statement demonstrates that
our executive compensation program was designed appropriately and is working to ensure managements interests are aligned with our stockholders interests to support long-term value creation.
The Board of Directors unanimously recommends a vote FOR the following resolution:
RESOLVED, that the compensation of the named executive officers as disclosed in the Proxy Statement is approved.
VOTE REQUIRED
Assuming a quorum is
present at the Annual Meeting, this proposal will be approved if it receives the affirmative vote of a majority of votes cast by holders of shares of Common Stock present in person or represented by proxy and entitled to vote at the Annual Meeting.
ITEM 3 RATIFICATION OF APPOINTMENT OF KPMG LLP AS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE YEAR ENDING DECEMBER 31, 2022
The Audit Committee has appointed KPMG LLP as the Companys independent registered public accounting firm for the year ending
December 31, 2022. KPMG LLP served as the Companys independent registered public accounting firm for the year ended December 31, 2021. A representative of KPMG LLP will be present, in person or via telephone, at the Annual Meeting,
will have an opportunity to make a statement, if desired, and will be available to respond to appropriate questions from stockholders.
Although this appointment is not required to be submitted to a vote of stockholders, the Board of Directors believes it is appropriate to
request that the stockholders ratify the appointment of KPMG LLP as the Companys independent registered accounting firm for the year ending December 31, 2022. If the stockholders do not so ratify, the Audit Committee will investigate the
reasons for the stockholders decision, and depending on the results of such investigation, may reconsider the appointment of the independent registered public accounting firm.
The Board of Directors unanimously recommends a vote FOR ratification of the appointment of KPMG LLP as the Companys
independent registered public accounting firm for the year ending December 31, 2022.
VOTE REQUIRED
Assuming a quorum is present at the Annual Meeting, this proposal will be approved if it receives the affirmative vote of a majority of votes
cast by holders of shares of Common Stock present in person or represented by proxy and entitled to vote at the Annual Meeting.
MISCELLANEOUS
Solicitation of Proxies
This solicitation of proxies for use at the Annual Meeting is being made by the Company, and the Company will bear all of the costs of
the solicitation. In addition to the use of the Internet and mail, proxies may be solicited by personal interview, telephone and fax by directors, officers and employees of the Company, who will undertake such activities without additional
compensation. Banks, brokerage houses and other institutions, nominees and fiduciaries will be requested to forward the proxy materials to the beneficial owners of the
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Common Stock of the Company held of record by such persons and entities and will be reimbursed for their reasonable expenses in forwarding such material. The Company may in its discretion engage,
at its cost, a proxy solicitation to solicit proxies at the Annual Meeting.
Next Annual Meeting; Stockholder Proposals
The Companys bylaws provide that the annual meeting of stockholders of the Company will be held on the fourth Monday in April in each
year unless otherwise determined by the Board of Directors. Appropriate proposals of stockholders intended to be presented at the 2023 annual meeting of stockholders (the 2023 Annual Meeting) must be received by the Company for inclusion
in the Companys Proxy Statement and form of proxy relating to that meeting on or before November 30, 2022. In addition, the Companys bylaws provide that if stockholders intend to nominate directors or present proposals at the 2023
Annual Meeting other than through inclusion of such proposals in the Companys proxy materials for that meeting, then the Company must receive notice of such nominations or proposals no earlier than February 8, 2023 and no later than
March 12, 2023. If the Company does not receive notice by that date, then such proposals may not be presented at the 2023 Annual Meeting.
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Your vote matters heres how to vote!
You may vote online or by phone instead of mailing this card. |
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Votes submitted electronically must be received by
6:00am, ET, on May 10, 2022. |
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Online Go to
www.envisionreports.com/HBP or scan the QR code login details are located in the shaded bar below. |
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Phone Call toll free
1-800-652-VOTE (8683) within the USA, US territories and Canada |
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Using a black ink pen, mark your votes with an X as shown in this
example. Please do not write outside the designated areas. |
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Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/HBP
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q IF VOTING BY MAIL, SIGN,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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A |
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Proposals The Board of Directors recommend a vote FOR all the nominees listed and
FOR Proposals 2 and 3. |
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1. Election of Directors for a three-year term expiring at the 2025 Annual
Meeting of Stockholders: |
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01 - Mr. James Hibberd |
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02 - Mr. Patrick Larmon |
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03 - Mr. Jon Vrabely |
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2. To approve, by a
non-binding advisory vote, the compensation paid to our named executive officers: |
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3. To ratify the
appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022. |
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Authorized Signatures This section must be completed for your vote to count. Please date and sign below. |
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Please sign exactly as name(s) appears hereon. Joint owners
should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
Date (mm/dd/yyyy) Please print date below. |
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Signature 1 Please keep signature within the box. |
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Signature 2 Please keep signature within the box. |
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2022 Annual Meeting Admission Ticket
2022 Annual Meeting of Huttig Building Products, Inc. Stockholders
May 10, 2022, 8:00am CDT
Meadowbrooke/Forest Hills Conference Room at the St. Louis Marriott West Hotel
660 Maryville Centre Drive, St. Louis, Missouri 63141
Upon arrival, please present this admission ticket and photo identification at the registration desk.
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders.
The material is available at: www.envisionreports.com/HBP
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Small steps make an impact. |
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Help the
environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/HBP
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q IF VOTING BY MAIL, SIGN,
DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Notice of 2022 Annual Meeting of Stockholders
Proxy Solicited by Board of Directors for Annual Meeting May 10, 2022
The undersigned does hereby appoint and constitute Jon P. Vrabely and Philip Keipp, and each of them to vote, as directed on the reverse side of this card, or,
if not so directed, in accordance with the Board of Directors recommendation, all shares of Huttig Building Products, Inc. held of record by the undersigned at the close of business on March 14, 2022 at the Annual Meeting of Stockholders of
Huttig Building Products, Inc. to be held at the Meadowbrooke/Forest Hills conference room of the St. Louis Marriott West, located at 660 Maryville Centre Drive, St. Louis, MO 63141 on Tuesday, May 10, 2022 at 8 a.m., CDT, or at any
adjournment or postponement thereof, with all the powers the undersigned would possess if then and there personally present, and to vote, in their discretion, upon such other matters as may come before said meeting.
The signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments or postponements thereof.
Shares represented by this proxy will be voted by the stockholder. You are encouraged to specify your choices by marking the appropriate boxes, but you
need not mark any boxes if you wish to vote in accordance with the Board of Directors recommendations. The proxies cannot vote your shares unless you sign and return this card or use the toll-free telephone number or the Internet as instructed
on the reverse side. This Proxy, when properly executed, will be voted in the manner directed herein. If no direction is made, this proxy will be voted FOR all nominees for election as a director listed in Proposal 1, and FOR
Proposals 2 and 3.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side)
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Change of Address Please print new address below. |
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Comments Please print your comments below. |
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Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. |
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2022 Annual Meeting Proxy Card |
q IF VOTING BY MAIL, SIGN, DETACH
AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
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Proposals The Board of Directors recommend a vote FOR all the nominees listed and
FOR Proposals 2 and 3. |
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1. Election of Directors for a three-year term expiring at the 2025 Annual
Meeting of Stockholders: |
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01 - Mr. James Hibberd |
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02 - Mr. Patrick Larmon |
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03 - Mr. Jon Vrabely |
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2. To approve, by a
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3. To ratify the
appointment of KPMG LLP as our independent registered public accounting firm for the year ending December 31, 2022. |
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Authorized Signatures This section must be completed for your vote to count. Please date and sign below. |
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Please sign exactly as name(s) appears hereon. Joint owners
should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. |
Date (mm/dd/yyyy) Please print date below. |
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Signature 1 Please keep signature within the box. |
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Signature 2 Please keep signature within the box. |
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03M46C |
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Important notice regarding the Internet availability of proxy materials for the Annual
Meeting of Stockholders.
The material is available at: www.edocumentview.com/HBP
q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION
IN THE ENCLOSED ENVELOPE. q
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HUTTING BUILDING PRODUCTS, INC. |
Notice of 2022 Annual Meeting of Stockholders
Proxy Solicited by Board of Directors for Annual Meeting May 10, 2022
The undersigned does hereby appoint and constitute Jon P. Vrabely and Philip Keipp, and each of them to vote, as directed on the reverse side of this card, or,
if not so directed, in accordance with the Board of Directors recommendation, all shares of Huttig Building Products, Inc. held of record by the undersigned at the close of business on March 14, 2022 at the Annual Meeting of Stockholders of
Huttig Building Products, Inc. to be held at the Meadowbrooke/Forest Hills conference room of the St. Louis Marriott West, located at 660 Maryville Centre Drive, St. Louis, MO 63141 on Tuesday, May 10, 2022 at 8 a.m., CDT, or at any
adjournment or postponement thereof, with all the powers the undersigned would possess if then and there personally present, and to vote, in their discretion, upon such other matters as may come before said meeting.
The signer hereby revokes all proxies heretofore given by the signer to vote at said meeting or any adjournments or postponements thereof.
Shares represented by this proxy will be voted by the stockholder. You are encouraged to specify your choices by marking the appropriate boxes, but you
need not mark any boxes if you wish to vote in accordance with the Board of Directors recommendations. The proxies cannot vote your shares unless you sign and return this card or use the toll-free telephone number or the Internet as instructed
on the reverse side. This Proxy, when properly executed, will be voted in the manner directed herein. If no direction is made, this proxy will be voted FOR all nominees for election as a director listed in Proposal 1, and FOR
Proposals 2 and 3.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side)
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