ITEM 1: BOARD OF DIRECTORS AND ELECTION OF DIRECTORS
The Company's board of directors is currently composed of eleven members. Following the April stockholder meeting, the board will consist of ten
members. The board is divided into three classes and each class serves for three years on a staggered term basis.
Five
directors have terms of office that expire at the 2020 annual meeting: Mogens Bay, Walter Scott, Jr., Clark Randt, Jr., Donna Milrod and Richard Lanoha. Ms. Milrod is not
standing for reelection. The remaining four individuals have been nominated by the board of directors, upon recommendation of the Governance and Nominating Committee, for re-election to three-year
terms.
The
Company bylaws provide that directors are elected by the affirmative vote of a majority of the votes cast with respect to the director at the meeting, unless the number of nominees
exceeds the number of directors to be elected (a contested election), in which case directors will be elected by the vote of a plurality of the shares present and entitled to vote at the meeting. If a
nominee is not elected and the nominee is an incumbent director, the director is required to promptly tender his resignation to the board. The Governance and Nominating Committee will consider the
tendered resignation and recommend to the board whether to accept or reject the resignation or whether other action should be taken. The board will act on the tendered resignation and publicly
disclose its decision within 90 days from the certification of the election results. The director who tenders his resignation will not
participate in the Committee's recommendation or the board action regarding whether to accept or reject the tendered resignation.
The
Company's policy on director retirement, as expressed in the Corporate Governance Principles as revised in February 2020, provides that a director will not be nominated to a new term
if he or she would be over age 75 at the time of election. The board evaluated its skill needs and concluded not to apply the policy to Mr. Scott, a highly-experienced director who is Chairman
of the Audit Committee, for the 2020 director election.
The
shares represented by the enclosed proxy will be voted for the election of the nominees named above. In the event any of such nominees becomes unavailable for election, the proxy
holders will have discretionary authority to vote the proxies for a substitute. The board of directors has no reason to believe that any such nominee will be unavailable to serve.
The
following discussion provides information about the four nominees, and the six directors whose terms expire in 2021 and 2022, including ages, years of service, business experience,
and service on other boards of directors within the past five years. Information is also provided concerning each person's specific experience, qualifications, attributes or skills that led the board
to conclude that the person should serve as a director of the Company.
NOMINEES FOR ELECTIONTerms Expire 2023
Mogens C. Bay, age 71, has been non-executive Chairman of the Company since January 2019. He
served as Executive Chairman of the Company during 2018. He was Chairman and Chief Executive Officer of the Company from January 1997 through December 2017, and President and Chief Executive Officer
of the Company from August 1993 through December 1996. Mr. Bay previously served as a director of Peter Kiewit Sons', Inc. and of ConAgra Foods, Inc. Mr. Bay's
40 years of experience with Valmont provides an extensive knowledge of Valmont's operating companies and its lines of business, its long-term strategies and domestic and international growth
opportunities. Mr. Bay has served as a director of the Company since October 1993.
Walter Scott, Jr., age 88, previously served as Chairman of the Board and President of Peter Kiewit Sons', Inc. Mr. Scott
was Chairman of Level 3 Communications from 1998-2014. Mr. Scott is a director of Berkshire Hathaway, Inc. and Berkshire Hathaway Energy. He previously served as a director of
Commonwealth Telephone Enterprises and Burlington Resources. Mr. Scott is a civil
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engineer
with management experience of infrastructure construction operations at Kiewit. His extensive board experience provides a valuable resource of strategic and oversight input to the Valmont
board of directors. He has served as a director of the Company since April 1981.
Clark T. Randt, Jr., age 74, is currently President of Randt & Co. LLC (business consulting) and lived and worked in
Asia for more than thirty-five years. Ambassador Randt served as the United States Ambassador to the People's Republic of China from July 2001 to January 2009. He currently serves as a director of
United Parcel Service, Inc., Qualcomm Incorporated and Wynn Resorts Ltd. Ambassador Randt was formerly a partner with the international law firm of Shearman & Sterling in Hong
Kong where he headed the firm's China practice. Ambassador Randt is a member of the New York bar association and was admitted to the Hong Kong bar association and has over 25 years of
experience in cross-border corporate and finance transactions. He is a member of the Council on Foreign Relations. His international experience and knowledge of Asian business operations and
experience with U.S. investment in China serves the Company well as it expands its operations in Asia. Ambassador Randt has served as a director of the Company since February 2009.
Richard A. Lanoha, age 52, has been President and Chief Executive Officer of Peter Kiewit Sons' Inc. and Kiewit Corporation since
January 2020. President and Chief Operating Officer of Kiewit 2016-2019. He was President of Kiewit Energy Group 2012-2016 and Executive Vice President of Kiewit Industrial Group responsible for
Kiewit Energy and Kiewit Power divisions of Kiewit 2010-2012. Mr. Lanoha has management experience of infrastructure construction operations at Kiewit and his experience provides a valuable
resource of strategic and oversight input to the Valmont board of directors. He has served as a director of the Company since October 2019.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ABOVE NOMINEES.
CONTINUING DIRECTORSTerms Expire in 2021
Daniel P. Neary, age 68, is a member of the board of directors of Mutual of Omaha (full service
and multi-line provider of insurance and financial services). Mr. Neary served as CEO of Mutual from 2004-2015 and as Chairman until January 2018. Mutual of Omaha's revenues were in excess of
$7 billion in 2019. He was previously President of the Group Insurance business unit of Mutual of Omaha. Mr. Neary's training as an actuary and knowledge of the financial services
industry provides valuable background for board oversight of the Company's accounting matters. His experience in strategic development and risk assessment for the Mutual of Omaha insurance companies
are well
suited to membership on Valmont's board of directors. Mr. Neary has been a director of the Company since December 2005.
Theo Freye, age 70, retired in October 2014 as CEO of CLAAS KgaA, a $4.5 billion family owned agricultural machinery firm
headquartered in Germany. Mr. Freye, a native of Germany, has more than 30 years of international machinery experience. He holds a Master's Degree in Mechanical Engineering and a Ph.D.
in Agricultural Science. His extensive international business experience and engineering background provides value to the Valmont board of directors. Mr. Freye has served as a director of the
Company since June 2015.
Stephen G. Kaniewski, age 48, has been Chief Executive Officer of the Company since January 2018. He was President and Chief Operating
Officer of the Company from October 2016 through December 2017. Prior to that he was Group President of Valmont's Utility Support Structures Segment. Mr. Kaniewski joined Valmont in 2010 as
Vice President, Information Technology and also has held the position of Vice President, Global Operations for the Irrigation Segment. Mr. Kaniewski's duties in various Company operating
positions provides valuable knowledge and experience of the Company's operations and strategies. Mr. Kaniewski has served as a director of the Company since January 2018.
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CONTINUING DIRECTORSTerms Expire in 2022
Kaj den Daas, age 70, was CEO of Quality Light Source until March 2018. He transitioned into a
non-executive position in the holding company QL Light Source Company Ltd. (manufacturer and marketer of LED lamps) in April 2018. He was CEO of Quality Light Source, LLC from October
2017 to March 2018; CEO of TCP International Holdings, Ltd. from July 2015 to October 2016. Mr. den Daas retired in 2009 as Executive Vice President of Philips Lighting B.V. of
the Netherlands (manufacturer of lighting fixtures and related components) and Chairman of its North American Lighting Operations. Mr. den Daas was responsible for oversight of the
manufacturing, distribution, sales and marketing of Philips products in the United States, Canada and Mexico, with prior Philips experience in the Asia Pacific area. He previously served on the board
of directors of Lighting Science Group Corp. Mr. den Daas, a native of the Netherlands, has more than 35 years of international experience in the lighting industry. His extensive
international business experience provides value to the Valmont board of directors. Mr. den Daas has been a director of the Company since October 2004.
James B. Milliken, age 63, is Chancellor of the University of Texas System which enrolls over 235,000 students and has an annual budget of
over $20 billion. He was Chancellor of the City University of New York from June 2014 to May 2018. Mr. Milliken was President of the University of Nebraska from August 2004 to May 2014.
Mr. Milliken has a law degree from New York University and practiced law on Wall Street before his academic career. He has led the development of research and education programs in China,
India, Brazil and other countries. He is a member of the Council on Foreign Relations and the Executive Committee on the Council on Competitiveness. He has chaired commissions on innovation and
economic competitiveness for the Association of Public and Land-grant universities and the Council on Competitiveness. Mr. Milliken's experience in managing large organizations which work
closely with business and industry and in countries around the world provides value to the Valmont board of directors as the Company grows internationally. Mr. Milliken has served as a director
of the Company since December 2011.
Catherine James Paglia, age 67, has been a director of Enterprise Asset Management, Inc., a New York based privately-held real
estate and asset management company since September 1998. Ms. Paglia previously spent eight years as a managing director at Morgan Stanley, ten years as a managing director of Interlaken
Capital, and served as chief financial officer of two public corporations. Ms. Paglia serves on the board of directors of the Columbia Funds and is a member of the board of trustees of the
Carnegie Endowment for International Peace. Her extensive Wall Street experience and prior service as a chief financial officer of public companies provide an excellent background for membership on
Valmont's Audit Committee. Ms. Paglia has served as a director of the Company since February 2012.
Board Committees
The Board has the following standing committees: Audit, Human Resources, and Governance and Nominating.
Audit Committee
The members of the Audit Committee during 2019 were directors Scott (Chairman), den Daas, Neary, Paglia and Milrod. All members of the Audit
Committee are independent within the meaning of the Company's Corporate Governance Principles and the listing standards of the NYSE. The board has determined that all members of the Audit Committee
are qualified as audit committee financial experts within the meaning of SEC regulations. The Audit Committee acts under a written charter, adopted by the board of directors, a copy of which is
available on the Company's website. The report of the Audit Committee is included in this proxy statement.
The
Audit Committee met six times during 2019. The Audit Committee assists the board by reviewing the integrity of the financial statements of the Company; the qualifications,
independence
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and
performance of the Company's independent auditors and internal auditing department; and compliance by the Company with legal and regulatory requirements. The Committee also oversees the Company's
risk with respect to operational, compliance and financial matters including legal, insurance and cybersecurity matters. The Audit Committee has sole authority to retain, compensate, oversee and
terminate the independent auditor. The Audit Committee reviews the Company's annual audited financial statements, quarterly financial statements, and filings with the Securities and Exchange
Commission. The Audit Committee reviews reports on various matters, including critical accounting policies of the Company, significant changes in the Company's selection or application of accounting
principles, and the Company's internal control processes. The Audit Committee pre-approves all audit and non-audit services performed by the independent auditor. The Audit Committee has a written
policy with respect to its review and approval or ratification of transactions between the Company and a director, executive officer or related person. The Audit Committee reviews and approves or
disapproves any material related person transaction, i.e., a transaction in which the Company is a participant, the amount involved exceeds $120,000, and a director, executive officer or
related person has a direct or indirect material interest. The Audit Committee reports to the board of directors any such material related person transaction that it approves or does not approve.
Human Resources Committee
The members of the Human Resources Committee during 2019 were directors Neary (Chairman), Paglia, and Milrod. All members of the Human Resources
Committee are independent within the meaning of the Company's Corporate Governance Principles and the listing standards of the NYSE. The Human Resources Committee acts under a written charter, adopted
by the board of directors, a copy of which is available on the Company's website. The report of the Human Resources Committee is included in this proxy statement.
The
Human Resources Committee met four times during 2019. The Human Resources Committee assists the board in fulfilling its responsibilities relating to compensation of the Company's
directors, executive officers and other selected employees. The Committee has responsibility for reviewing, evaluating and approving compensation plans, policies and programs for such persons. The
Committee oversees the Company's risk with respect to compensation matters. The Human Resources Committee annually reviews and approves corporate goals and objectives for the chief executive officer's
compensation and evaluates the chief executive officer's performance in light of those goals and objectives. The Human Resources Committee, together with the other independent directors,
determines the chief executive officer's compensation. The Committee also approves incentive compensation plans and equity-based plans for executive officers and other selected employees. The
Committee reviews the Company's management level organization and programs for management development and succession planning and reviews reports from management on human resources topics as
determined by the Committee. The Human Resources Committee has established stock ownership and retention guidelines for company officers, which are described in this proxy statement in Corporate
GovernanceGovernance Actions. The board, upon recommendation of the Human Resources Committee, has established stock ownership guidelines for Company directors, which are described in
this proxy statement in Corporate GovernanceGovernance Actions.
The
Human Resources Committee has the authority to retain the services of independent consultants and other experts to assist in fulfilling its responsibilities. The Committee has
engaged the services of Frederic W. Cook & Co., Inc. (FW Cook), a national executive compensation consulting firm, to review and provide recommendations concerning all of the
components of the Company's executive compensation program. FW Cook performs services solely on behalf of the Committee and does not perform any services for the Company. The Committee has assessed
the independence of FW Cook pursuant to SEC rules and concluded that no conflict of interest exists that would prevent FW Cook from independently representing the Committee.
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Governance and Nominating Committee
The members of the Governance and Nominating Committee during 2019 were directors Randt (Chairman), Milliken and Freye. All members of the
Governance and Nominating Committee are independent within the meaning of the Company's Corporate Governance Principles and the listing standards of the NYSE. The Governance and Nominating Committee
acts under a written charter, adopted by the board of directors, a copy of which is available on the Company's website.
The
Governance and Nominating Committee met four times during 2019. The Governance and Nominating Committee assists the board by (1) recommending to the board Corporate Governance
Principles for the Company, and (2) identifying qualified candidates for membership on the board, proposing to the board a slate of directors for election by the shareholders at each annual
meeting, and proposing to the board candidates to fill vacancies on the board. The Committee oversees the Company's risk with respect to governance structure and related matters, including stockholder
engagement and sustainability. The Governance and Nominating Committee coordinates the annual self-evaluation by the directors of the board's performance and the CEO's performance and the annual
performance evaluation by each committee of the board. The Governance and Nominating Committee oversees the Company's process for consideration of nominees to the Company's board of directors. The
process is described in Director Nomination Process.
Corporate Governance
Valmont is committed to having strong corporate governance principles. The board of directors believes such principles are essential to the
effective operation of Valmont's businesses and to maintaining Valmont's integrity in the marketplace.
Overview
The board of directors has adopted corporate governance principles which are set out in the "Investor Relations" section of the Company's
website at www.valmont.com. The following corporate governance documents also appear on the Company's website and these documents and the Company's
Corporate Governance Principles are available in print to any shareholder upon request to the Corporate Secretary:
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Code of Business Conduct
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Code of Ethics for Senior Officers
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Audit Committee Charter
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Human Resources Committee Charter
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Governance and Nominating Committee Charter
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Procedures for bringing concerns or complaints to the attention of the Audit Committee
The
board met five times over seven days during 2019. All directors attended at least 75% of all board meetings and all meetings of Committees on which the director served. Directors are
encouraged to attend the annual shareholders' meeting and all Company directors attended the 2019 annual shareholders' meeting. The board of directors periodically reviews the Corporate Governance
Principles and any changes are communicated to shareholders by posting them on the Company's website.
Board Leadership Structure and Risk Oversight
The board's leadership structure in 2019 consisted of a Non-Executive Chairman and a Lead Director. Mr. Bay became non-executive Chairman
in 2019. All board members have substantial business experience and all board members, with the exception of the Chief Executive Officer and the
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Non-executive
Chairman, are independent within the meaning of the Company's corporate governance principles and the NYSE Listing Standards. The Company's independent directors meet in executive
session without management present at every board meeting. The Chief Executive Officer periodically updates the board on succession planning for key officers and the board reviews CEO succession
planning in detail annually at its July meeting.
The
board has established the position of Lead Director. The position is currently filled by independent director Catherine James Paglia. The lead director presides at executive sessions
of the independent
directors, approves director meeting agendas, has the ability to call meetings of the independent directors, advises the chair on membership of board committees, and serves as a liaison between the
independent directors and the Chief Executive Officer. Interested parties who wish to contact the board of directors or the lead director may communicate through the Lead Director by writing to: Lead
Director of Valmont Board of Directors, Valmont Industries, Inc., One Valmont Plaza, Suite 601, Omaha, Nebraska, 68154-5215.
The
board has oversight responsibility for risks affecting the Company. The board has delegated risk oversight with respect to operational, compliance and financial matters including
legal, insurance and cybersecurity risk, to the Audit Committee, has delegated risk oversight with respect to compensation matters to the Human Resources Committee and has delegated risk oversight
with respect to governance structure related matters, including stockholder engagement and sustainability, to the Governance and Nominating Committee.
Governance Actions
The board of directors and board committees have taken a number of corporate governance actions. The more significant actions
include:
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The board of directors has approved bylaws which adopt a majority voting system for the election of directors.
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The board of directors has adopted director stock ownership guidelines. The guidelines provide that directors should own Valmont common stock
with a value at least equal to five times the director's annual retainer. Directors have five years after joining the board to meet the guidelines.
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The board of directors has adopted stock ownership and retention guidelines for senior management. The guidelines require an equity position
having a value of 6.0 times base salary for the Chief Executive Officer, 2.5 times base salary for the Chief Financial Officer and Group Presidents, and 1.5 times base salary for Senior Vice
Presidents, and 1.0 times base salary for other corporate officers. The officers are required to retain 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted
stock until the stock ownership guidelines have been attained and maintained. The Company also has a policy prohibiting stock hedging and stock pledges applicable to directors and officers.
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The board of directors has adopted an executive compensation recoupment policy. The policy generally provides that if Valmont is required to
restate its financial statements, due to material noncompliance with any financial reporting requirements, the board of directors may require reimbursement of all or any part of any cash or stock
award based on an incentive plan that relates to the performance of Valmont, if the employee engaged in certain conduct which caused or contributed to the need for the restatement. The board of
directors has the right to apply the recoupment policy in all cases to the Chief Executive Officer, Chief Financial Officer and Group President (if the conduct occurred in the Group) if an employee
engaged in the designated conduct.
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The Human Resources Committee has engaged Frederick W. Cook & Co. (FW Cook) as its independent executive compensation consulting
firm. The Company does not engage FW Cook for any services beyond their support of the Human Resources Committee.
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The board of directors in December 2005 permitted the Company's Shareholder Rights Plan to expire, effectively terminating the Shareholder
Rights Plan.
Board Independence
The board of directors is composed of a majority of independent directors. The board has established independence standards for Valmont's
directors. These standards are set forth below and are contained in the Company's Corporate Governance Principles and follow the director independence standards established by the New York Stock
Exchange:
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A director will not be independent if, within the preceding three years (1) the director was employed by Valmont or an immediate family
member of the director was an executive officer of Valmont, (2) a Valmont executive officer was on the compensation committee of the board of directors of a company which employed the Valmont
director as an executive officer or which employed an immediate family member of the director as an executive officer, or (3) the director or the director's immediate family member received
more than $120,000 during any twelve-month period in direct compensation from Valmont (other than director and committee fees).
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A director will not be independent if (1) the director is an executive officer or an employee, or the director's immediate family member
is an executive officer, of another company and (2) the other company made payments to, or received payments from, Valmont for property or services in an amount which, in any of the last three
fiscal years, exceeds the greater of $1,000,000 or 2% of either (i) such other company's consolidated gross revenues or (ii) Valmont's consolidated gross revenues.
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A director will not be independent if (1) the director or an immediate family member is a current partner of Valmont's independent
auditor, (2) the director is an employee of Valmont's independent auditor, (3) the director has an immediate family member who is a current employee of Valmont's independent auditor who
personally works on Valmont's audit, or (4) the director or an immediate family member was within the last three years a partner or employee of Valmont's independent auditor and personally
worked on Valmont's audit within that time.
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Tax-exempt organizations to which Valmont makes contributions shall not be considered "companies" for purposes of these independence standards.
However, Valmont will disclose in its annual proxy statement any such contribution which it makes to a tax-exempt organization in which a director serves as an employed executive officer if, within
the preceding three years, contributions in any fiscal year exceeded the greater of $1,000,000 or 2% of such tax-exempt organization's consolidated gross revenues.
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For relationships not covered by the foregoing standards, the determination of whether the relationship is material or not, and therefore
whether the director would be independent or not, is made by the directors who satisfy the above independence standards. The board's determination of each director's independence is disclosed annually
in the Company's proxy statement.
The
board has determined that all directors except Mr. Kaniewski (the Company's Chief Executive Officer) and Mr. Bay (the Company's Chief Executive Officer through December
2017) have no material relationship with the Company and are independent within the meaning of the Company's Corporate Governance Principles and the NYSE listing standards. The Directors determined
that
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purchases
from a subsidiary of Peter Kiewit Sons' Inc. (a construction company with in excess of $9 billion revenue) were in the ordinary course of business and immaterial.
Director Nomination Process
The Governance and Nominating Committee considers candidates for board membership suggested by its members and other board members, as well as
management and shareholders. The Committee may also retain a third-party executive search firm to identify candidates from time to time. A shareholder who wishes to recommend a prospective nominee for
board membership should notify the Company's Corporate Secretary in writing at least 120 days before the annual shareholder meeting at which directors are to be elected and include whatever
support material the shareholder considers appropriate. The Governance and Nominating Committee will also consider nominations by a shareholder pursuant to the provisions of the Company's bylaws
relating to shareholder nominations as described in Shareholder Proposals.
The
Governance and Nominating Committee makes an initial determination as to whether to conduct a full evaluation of the candidate once it has identified a prospective nominee. This
initial determination is based on whatever information is provided to the Committee as well as other information available to or obtained by the Committee. The preliminary determination is based
primarily on the need for additional board members to fill vacancies or expand the size of the board and the likelihood that the
prospective nominee can satisfy the evaluation factors described below. If the Committee determines that additional consideration is warranted, it may request a third-party search firm or other third
parties to gather additional information about the prospective nominee.
The
Committee evaluates each prospective nominee in light of the standards and qualifications set out in the Company's Corporate Governance Principles,
including:
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Background, including demonstrated high standards of ethics and integrity, the ability to have sufficient time to effectively carry out the
duties of a director, and the ability to represent all shareholders and not a particular interest group.
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Board skill needs, taking into account the experience of current board members, the candidate's ability to work in a collaborative culture with
other board members, and the candidate's qualifications as independent and qualifications to serve on the Audit Committee, Human Resources Committee and/or Governance and Nominating Committee.
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Diversity, including gender, race, national origin.
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Business experience, which should reflect a broad experience at the policy-making level in business, government or education, both domestically
and internationally.
The
Committee also considers such other relevant factors as it deems appropriate. In connection with the evaluation, the Committee determines whether to interview the prospective
nominee, and if warranted, one or more members of the Committee interview prospective nominees in person or by telephone. After completing this evaluation process, the Committee makes a recommendation
to the full board as to the persons who should be nominated by the board, and the board determines the nominees after considering the recommendations of the Committee. The Committee assesses the
effectiveness of its policies in determining nominees for director as part of its annual performance evaluation.
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Compensation Discussion and Analysis
General. The following compensation discussion and analysis provides information which the Human Resources Committee of the board of
directors (the
Committee) believes is relevant to an assessment and understanding of Valmont's executive compensation programs. This discussion should be read in conjunction with these sections of the proxy
statement: (1) the summary compensation table and related tables, (2) the Human Resources Committee information in the corporate governance section and (3) the compensation
summary in the advisory vote on executive compensation section.
Say-On-Pay Vote. Valmont conducted its first advisory vote on executive compensation in April 2011. The compensation resolution passed
with at least
96% of the vote in each year, including 98.6% in 2019. Valmont's shareholders in April 2017 cast 86.2% of their votes in favor of an annual frequency say-on-pay vote. The board of directors and the
Human Resources Committee considered these results in determining compensation policies and decisions, and determined to hold annual say-on-pay votes and, based on the significant level of shareholder
support, to continue the current compensation objectives, strategies, processes and practices described below.
Compensation Objectives and Strategies. Valmont's executive compensation programs, policies and practices are approved by the Committee.
The
compensation programs apply to executive officers and to certain key employees who are not executive officers. The programs specifically apply to the executive officers listed in the summary
compensation table (named executive officers). The Committee has established Valmont compensation objectives pursuant to which Valmont's compensation programs are designed
to:
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provide target total compensation levels at competitive market rates to attract, retain, motivate and reward the performance of executive
officers and other key employees;
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direct management focus to the long-term growth of the Company, enhance shareholder value, and ensure that executive officers have significant
ownership without increasing dilution over acceptable levels; and
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pay for performance by providing performance-based incentive plans measured against pre-established targets, with no guaranteed minimum payment
provisions, and with actual payments above median market levels for exceeding performance targets and below median market levels if performance targets are not achieved.
The
Committee established compensation strategies designed to carry out the compensation objectives, including:
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target total compensation evaluated by position, on an annual basis, against like positions in companies of similar sales volume, according to
data provided by the Committee's independent compensation consultants; and
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base pay, annual incentives and long-term incentives targeted at median market levels, with the opportunity for annual and long-term incentives
at the 75th percentile or higher for significantly exceeding performance targets. Actual compensation will be above median if performance exceeds targets and below median when performance is
below targets.
The
Committee has engaged Frederic W. Cook & Co., Inc. (FW Cook) as the Committee's independent executive compensation consultant. FW Cook reports directly to the
Committee and provides advice to the Committee on the structure and amounts of executive and non-employee director compensation. FW Cook provides no other services to the Company.
Compensation Processes and Practices. The Committee follows certain processes and practices in connection with the structure and
implementation of
executive compensation plans.
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The elements of target total compensation are reviewed annually against general industry survey data and a peer group developed by FW Cook and
approved by the Committee. The Committee uses the survey data and peer group information to assess the competitiveness of target compensation levels and pay mix for the CEO, CFO and other executives.
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The Committee used as its primary benchmark a general industry Aon Survey of approximately 134 companies which FW Cook adjusted to provide
market compensation levels for companies within a range of Valmont's annual revenues. The adjusted revenue size range of the companies in the Aon Survey was approximately $2.80 billion.
Valmont's 2019 revenues were approximately $2.77 billion. The competitive medians referenced below for base salary, target annual incentives and long-term incentives are the competitive medians
based on the Aon Survey data.
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The Committee also used a peer group developed by FW Cook as a supplemental benchmark of CEO and CFO pay levels. FW Cook advised that, due to
differences in the jobs of the individuals reported in the proxies of the peer group companies, consistent and reliable comparable compensation information was available only for the CEO and CFO. The
peer group for 2019 compensation consisted of the following twelve companies:
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Barnes Group
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Harsco
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SPX Corporation
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Carlisle Corporation
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Hubbell
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Toro Company
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Crane
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IDEX
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Trinity Industries
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FlowServe Corporation
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Pentair
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Watts Water Technologies
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The Company's revenues approximated the median of the peer group. The peer group had median revenue of $2.81 billion. Valmont's revenues
for 2019 were approximately $2.77 billion.
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The Committee in October 2019 reviewed the Company's peer group and recommendations from FW Cook. The Committee determined to increase the
number of peers to ensure robust and stable compensation data and to diversify the industries included in the peer group to account for the evolution of Valmont's business portfolio and strategy. The
committee approved the following new peer group of nineteen companies for compensation decisions beginning in December 2019:
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Acuity Brands
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Colfax
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Pentair
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Aegion Corporation
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Crane Co.
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Qorvo
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Arcosa
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First Solar
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Regal Beloit
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Barnes Group
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FlowServe Corporation
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Rexnord
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Belden
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Harsco Corporation
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SPX Corporation
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Carlisle Companies
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Hubbell
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Toro Company
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Watts Water Technologies
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The Company's revenues approximate the median of the new peer group. The new peer group had median revenue of $2.94 billion. Valmont's
revenues for 2019 were approximately $2.77 billion.
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The Committee also reviews a tally sheet with respect to the total compensation (target and actual) of each named executive officer and each
group president. The Committee utilizes tally sheets as a reference point to ensure that the Committee has a comprehensive picture of the compensation paid and payable to each executive officer. The
Committee uses market data provided by FW Cook as one of the primary factors in executive compensation decisions and the tally sheets are not determinative with respect to any particular element of
compensation.
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The compensation programs provide for both cash and equity elements. Base salary and annual incentives are paid in cash. Long-term incentives
paid for the 2017-2019 plan comprised of
14
Company
performance shares are paid in cash for executives who have met their stock ownership guidelines, and are paid 50% in cash and 50% in equity for other executives; beginning with payouts for
the 2018-2020 long-term incentive plan, payouts will be settled in equity. Stock options are settled in equity.
-
-
The Committee determines the mix of cash and equity compensation. The Committee has no pre-established policy for the allocation between either
cash and equity or short-term and long-term incentive compensation. The Committee reviews information provided by FW Cook to determine the appropriate level and mix of incentive compensation. The
Committee believes that a majority of an executive's overall compensation opportunity should be incentive-based.
-
-
The structure of all incentive compensation plans is reviewed periodically to assure their linkage to the current objectives and strategies and
performance goals.
-
-
The Committee's policy is to establish base salary, target annual incentives and long-term incentives with targets at or near the competitive
median level and potential payouts of incentives up to 200% of target for executive officers who significantly exceed performance targets. The annual incentives and long-term incentives are
established for each executive officer by using a percentage of base salary that approximates the competitive target median for the executive. There are no material differences in compensation
policies with respect to individual executive officers.
-
-
The Company's programs have been designed so that compensation paid to executive officers will generally be deductible under the Internal
Revenue Code's compensation limits for deductibility. Executive compensation generally produces ordinary income to the executive and a corresponding tax deduction for Valmont, except for amounts
deferred under Valmont's qualified and related nonqualified plans, amounts subject to future vesting, and amounts related to stock awards which are subject to special accounting and tax provisions.
Section 162(m) of the Internal Revenue Code generally places a $1 million limit on the amount of compensation a company can deduct in any one year for certain executive officers.
Previous law provided an exemption from the limitation for performance-based compensation. This exemption has been repealed for taxable years beginning after December 31, 2017. Consequently,
compensation paid to certain executive officers in excess of $1 million may not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of
November 2, 2017.
Elements of Compensation. Valmont's executive compensation is based on three components, each of which is intended to support the
overall
compensation philosophy.
-
-
The three components are base salary, annual incentives, and long-term performance incentives (which include equity incentives). For 2019, base
salary accounted for approximately 27.9% of the total compensation of the named executive officers and incentive compensation accounted for approximately 68.0% of such total compensation.
-
-
Valmont's executive officers do not have employment agreements.
-
-
Valmont's executive officers do not have agreements providing for special payments in the event of a termination of employment or a
change-of-control of Valmont. Valmont's 2018 Stock Plan provides for accelerated vesting of non-vested amounts in the event of an involuntary termination following a change-of-control. See Potential
Payments Upon Termination or Change-in-Control.
-
-
Valmont does not have a pension plan. Valmont's executive officers do participate in its 401(k) Plan and also participate in the related
non-qualified supplemental benefit plan.
15
-
-
Valmont does not maintain a perquisite program for its executive officers. Amounts relating to the limited use of Company aircraft for personal
travel are included in the summary compensation table.
-
-
Valmont has an executive compensation recoupment policy covering cash and equity described on page 10.
-
-
Valmont has policies prohibiting hedging and pledging of Company stock by directors and officers.
Base Salary. Base salary is targeted at the competitive median level. Competitive median levels are provided by FW Cook based on the
primary
benchmark survey prepared by Aon. Base salary is intended to compensate the executive for satisfying the requirements of the position. Salaries for executive officers and other key employees are
reviewed by the Committee on an annual basis and may be changed based on the individual's performance or a change in competitive pay levels in the marketplace.
The
Committee reviews with the Chief Executive Officer an annual salary plan for the Company's executive officers and other key employees (other than the Chief Executive Officer). The
annual salary plan is developed by the Company's Human Resources staff, under the ultimate direction of the Chief Executive Officer, and is based on national surveys of companies with similar
characteristics and on performance judgments as to the past and expected future contributions of the individual executive. The salary plan is modified as deemed appropriate and approved by the
Committee. The Committee reviews and establishes the base salary of the Chief Executive Officer based on competitive compensation data provided by FW Cook using data for similar sized companies and
the Committee's assessment of his past performance, his leadership in establishing performance standards in the conduct of the Company's business, and its expectation as to his future contribution in
directing the long-term success of the Company and its businesses.
The
Committee continued the Company's combined matching contribution under the Valmont Employees Retirement Savings Plan (a 401(k) plan) and related Restoration Plan (a non-qualified
plan in place since 2002 designed to restore benefits otherwise limited by IRS regulations). The Company's contributions to such plans for 2019 compensation (4.5% of covered compensation) for the
named executive officers (which matched the amounts contributed by such executive officers) are set forth in the Non-Qualified Deferred Compensation table.
Based
on the factors described above, the Committee in December 2018 reviewed the base salaries of executive officers for 2019. Mr. Kaniewski's base salary was increased 5.5% to
$950,000, Mr. Jaksich's 3% to $562,264 and Mr. Francis' 5% to $337,613. Mr. Parnell's base salary of $340,000 and Mr. Laterreur's base salary of $375,000 were established
based on FW Cook data as of their respective promotion or hire dates in 2019.
The
target direct compensation (base salary plus target annual incentive plus target long-term incentive) for Mr. Kaniewski was 85% of the survey competitive median and for
Mr. Jaksich was 98% of the survey competitive median.
The
Committee reviewed executive base salaries for 2020 in December 2019 based on the factors described above. The base salaries for Messrs. Kaniewski, Francis and Laterreur were
increased 3%, Mr. Parnell's base salary was increased 4%, and Mr. Jaksich's base salary was unchanged.
Annual Incentives. The Company's short-term incentives for 2019 were established by the Committee. The Committee determined for 2019
that the annual
incentive of executives should be based on optimizing profits and revenue growth. Accordingly, the executive officer programs provide
16
for
target performance levels based 75% on the Company's net earnings performance and 25% on revenue growth performance. Annual incentives are targeted at the competitive median level. Competitive
median levels are provided by FW Cook based on the primary benchmark survey prepared by Aon. For 2019, each named executive officer's annual incentive opportunity ranged from 0% to 200% of the
targeted incentive, depending on the level of achievement of the Company's performance goals. For executive officers' 2019 annual incentives, a target incentive was established ranging from 45% to
100% of base salary, and performance goals were set based on net earnings and revenue growth results.
2019 Target IncentivesPercentage of Base Salary
|
|
|
|
|
Mr. Kaniewski
|
|
|
100
|
%
|
Mr. Jaksich
|
|
|
75
|
%
|
Mr. Parnell
|
|
|
45
|
%
|
Mr. Francis
|
|
|
45
|
%
|
Mr. Laterreur
|
|
|
45
|
%
|
A
minimum threshold level of performance had to be attained before any incentive was earned by an executive officer. Payout under the plan to any executive officer was capped at two
times the target incentive. Participants, thresholds and specific performance levels are established by the Committee at the beginning of each fiscal year. The Committee may also award discretionary
non-incentive-based bonuses to an executive officer to recognize exceptional performance in a particular year. No discretionary awards were made to named executive officers with respect to performance
in the last three years.
The
Committee approved in February 2019 participation, including executive officers, in the short-term incentive program for 2019. The annual incentives for 2019 were based 75% on net
earnings improvement and 25% on revenue growth. Each performance measure operates independently. The Committee established the measures below to be used for the incentive threshold (payout at 50% of
target), target incentive (payout at target), and maximum incentive (payout at 2x target) for both 2019 net earnings improvement and 2019 revenue growth. Payouts are linearly interpolated for
performance between threshold/target and target/maximum performance levels.
Net Earnings Improvement (75% Weight)
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
(0.5x target)
|
|
Target
(1x target)
|
|
Maximum
(2x target)
|
|
2019
|
|
$
|
155.9 million
|
|
$
|
183.4 million
|
|
$
|
211.0 million
|
|
Revenue Growth (25% Weight)
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
(0.5x target)
|
|
Target
(1x target)
|
|
Maximum
(2x target)
|
|
2019
|
|
$
|
2,514 million
|
|
$
|
2,958 million
|
|
$
|
3,402 million
|
|
17
The
threshold, target and maximum amounts for revenue growth represent total revenue numbers. The 2019 net earnings (GAAP net earnings of $153.76 million increased by
$2.52 million for a Coatings segment non-recurring legal expense) were $156.3 million, which resulted in performance at 50.7% of target. The 2019 revenue was $2,767 million,
resulting in performance at 78.5% of target. The combination of the two factors resulted in an annual incentive payout for executive officers at 57.7% of target for 2019. Based on the 2019 results,
annual incentive payouts for 2019 were as follows:
2019 Annual Incentives
|
|
|
|
|
Mr. Kaniewski
|
|
$
|
548,150
|
|
Mr. Jaksich
|
|
|
243,320
|
|
Mr. Parnell
|
|
|
88,281
|
|
Mr. Francis
|
|
|
87,661
|
|
Mr. Laterreur (prorated based on hire date)
|
|
|
56,766
|
|
The
Committee also established an additional incentive potential payout of 20% (all or nothing) of base salary based on individual performance goals established by the Committee, for a
group including executive officers, but in no event could the total annual incentive payout exceed the 2x cap. The Committee approved payouts based on pre-established goals of $68,000 to
Mr. Parnell and $43,725 (prorated based on hire date) to Mr. Laterreur.
In
February 2020, the Committee selected the participants and established the performance goals for the 2020 annual incentive program. The performance goals for named executive officers
in 2020 are based 75% on net earnings and 25% on revenue growth. The additional incentive potential payout plan referenced in the preceding paragraph was not continued in 2020.
Long-Term Performance Incentives. Long-term performance incentives for senior management in 2019 were provided in two ways: through the
long-term
performance share program, and through equity awards under the shareholder approved 2018 Stock Plan. Both long-term performance incentive programs (long-term performance share plan and equity awards)
are targeted at competitive median levels. Competitive median levels are provided by FW Cook based on the primary benchmark survey prepared by Aon. For the three-year award cycle ended in 2019, each
named executive officer's long-term incentive opportunity under the performance share program ranged from 0% to 200% of the targeted incentive, depending on the level of achievement of the Company's
performance goals.
The
current long-term performance share programs operate on three-year award cycles. The Committee selects participants, establishes target awards, and determines a performance matrix.
The Committee in February 2017 designed the matrix for the award cycle ending in 2019 to encourage both the effective use of the Company's capital and the growth of its earnings, and consequently the
matrix
was based on average return on invested capital or "ROIC" and cumulative compound operating income growth or "OIG", weighted 50% ROIC and 50% OIG, at the beginning of the award cycle. The Committee
established the following performance measures for ROIC and OIG for the award cycle ending in 2019:
|
|
|
|
|
|
|
|
|
OIG
(50% Weight)
|
|
ROIC
(50% Weight)
|
|
Cumulative Payout
as % of Target
|
Maximum
|
|
20%
|
|
11.5%
|
|
200%
|
Target
|
|
10%
|
|
9.5%
|
|
100%
|
Threshold
|
|
1%
|
|
8.0%
|
|
55%
|
Below Threshold
|
|
Below 1%
|
|
Below 9.5%
|
|
0%
|
The
Committee in February 2017 selected the participants, including executive officers, for participation in the three-year award cycle ending in 2019. Targets for the 2017-2019 award
cycle were
18
established
based on a predetermined percentage ranging from 40% to 150% of base salary, which amount was converted to performance shares valued at the Company's stock price at the beginning of the
performance period (which for the 2017-2019 performance period was a thirty-day average of $148.57). The percentage of base salary for the named executive officers was:
|
|
|
|
|
|
|
Percentage of Salary
|
|
Mr. Kaniewski
|
|
|
85
|
%*
|
Mr. Jaksich
|
|
|
80
|
%
|
Mr. Parnell (prorated)
|
|
|
40
|
%
|
Mr. Francis
|
|
|
40
|
%
|
Mr. Kaniewski's
percentage of base salary was 85% for 2017 and 150% for 2018 and 2019 (after he became CEO). Mr. Laterreur did not participate in the 2017-2019 plan due to
his May 2019 hire date.
The
performance matrix provides for the potential payouts to be increased or decreased in number based on greater or lesser levels of performance. Earned performance shares are valued at
the Company's stock price at the end of the performance period (the thirty-day average prior to fiscal year end); consequently, payouts may be higher or lower based on the Company's stock price
performance during the award cycle. Performance incentives are generally forfeited if a participant leaves the Company before the end of the performance cycle. Prorated awards may be earned based on
performance results in the event of death, disability, normal retirement, termination of employment without cause, or a change in control. Earned performance shares are capped at two times the target
number of performance shares. The Committee approves the number of performance shares to be paid following a review of results at the end of each performance cycle. Awards may be paid in cash or in
shares of common stock or any combination of cash and stock; participants who have not attained applicable stock ownership guidelines receive 50% of the award in common stock.
Based
on the above described ROIC and OIG performance goals established by the Committee, the Company's three-year average ROIC on an adjusted basis was 10.22% and the three-year
cumulative compound adjusted operating income growth was 1.00%, resulting in an earnout at 65.8% of target. The Company's calculation of return on invested capital for the three fiscal years is on
page 20 of the 2019 Form 10-K. The 2018 ROIC used an adjusted operating income and an adjusted tax expense. The 2018 adjusted operating income (GAAP operating income of
$202.3 million increased by net aggregate pre-tax adjustments of $67.1 million of non-recurring items relating to restructuring expense of $34.0 million, goodwill and intangible
asset impairments of $15.8 million, inventory and other assets impairments for plant closures of $7.9 million, non-recurring vendor quality expenses of $5.0 million and
acquisition diligence costs of $4.4 million) was $269.4 million on an adjusted basis. Using an adjusted tax rate of 24.0% (adjusted to exclude the non-deductible goodwill impairment and
certain restructuring expenses in taxing jurisdictions where the Company will not realize a tax benefit) resulted in an adjusted after-tax operating income of $204.7 million. The 2019 ROIC used
an adjusted operating income. The 2019 adjusted operating income (GAAP operating income of $237.7 million plus $5.8 million of pre-tax expense from the nonqualified deferred compensation
plan plus $3.3 million of pre-tax non-recurring legal expense) was $246.8 million.
19
The
Company's stock price during the performance period decreased from $148.57 to $144.78 which decreased the value of the earned performance shares. Consequently, long-term payments
were earned by the named executive officers as follows:
2017-2019 Long-Term Incentives
|
|
|
|
|
Mr. Kaniewski
|
|
$
|
681,528
|
|
Mr. Jaksich
|
|
|
271,792
|
|
Mr. Parnell (prorated based on promotion date)
|
|
|
28,770
|
|
Mr. Francis
|
|
|
77,070
|
|
Mr. Laterreur (did not participate in the 2017-2019 plan)
|
|
|
0
|
|
All
awards to the named executive officers were paid in cash, except 50% of the awards to Mr. Kaniewski and Mr. Parnell were paid in stock. There were no payments made for
2016 or 2017 under the 2014-2016 and 2015-2017 long-term incentive plans. Payments under the 2016-2018 long-term incentive plan were 114.3% of target.
In
February 2019, the Committee selected the participants and established the performance goals for the 2019-2021 award cycle; the performance goals for the cycle ending in 2021 are
again based on a combination of growth in operating income and return on invested capital. Targets were established for executive officers based on a percentage of base salary ranging from 40% to 165%
and performance targets established at 10% average ROIC and 10% OIG growth.
Stock Incentives and Ownership Guidelines. The board of directors, upon recommendation of the Committee, has established stock
ownership and
retention guidelines for senior management. The guidelines require an equity position having a value of 6.0 times base salary for the Chief Executive Officer, 2.5 times base salary for the Chief
Financial Officer and Group Presidents, 1.5 times base salary for senior vice presidents and 1.0 times base salary for other corporate officers. The officers are required to retain 50% of the net
shares acquired upon the exercise of stock options and the vesting of restricted stock until the stock ownership guidelines have been attained and maintained. The named executive officers currently
meet these targets, except for Mr. Kaniewski who became a named executive officer in October 2016, Mr. Parnell who became an executive officer in January 2019, and Mr. Laterreur
who became a named executive officer in May 2019.
Long-term
stock incentives are provided through grants of stock options and restricted stock units to executive officers and other key employees pursuant to the shareholder approved 2018
Stock Plan. The
stock component of compensation is intended to retain and motivate employees to improve long-term shareholder value. Such grants for executive officers were in 2017, 2018 and 2019 made at the
regularly scheduled Committee meeting in December of each year as part of the compensation for the upcoming year. Stock options are granted at the market value on the date of grant and have value only
if the Company's stock price increases. Stock options granted during 2019 vest beginning on the first anniversary of the grant in equal amounts over three years and expire seven years after the date
of grant. Employees must be employed by the Company at the time of vesting in order to exercise the options. Options granted in 2019 also vest on death, disability and involuntary termination
following a change-of-control. If an employee retires after age 62 (with five years of service), options continue to vest and be exercisable according to the original terms. The Company's stock plans
prohibit repricing. Restricted stock units granted during 2019 vest in three equal installments beginning on the first anniversary of the grant; the units also vest on death, disability and
involuntary termination following a change-of-control, and vesting is prorated if an employee retires after age 62 (with five years of service).
The
Committee establishes the number and terms of the options and restricted stock units granted under the stock plans. The Committee established the terms and provisions of such equity
grants based
20
on
industry standards as provided to the Committee by its independent compensation consultant. The Committee established the number of options and restricted stock units to each executive officer so
that the aggregate long-term incentive compensation would be targeted at competitive median levels. The value used in determining the number of stock options granted to each executive officer was
computed in accordance with FASB Accounting Standards Codification Topic 718, which is described in footnote 12 to the Company's consolidated financial statements. The Committee encourages executives
to build a substantial ownership investment in the Company's common stock. The table on page 3 reflects the ownership position of the directors and executive officers at March 6, 2020.
Outstanding performance by an individual executive officer is recognized through larger equity grants. The Committee, in determining grants of equity under the stock plans, also reviews and considers
the executive's history of retaining shares previously obtained through the exercise of prior options and restricted stock grants. In December 2019, stock options and/or restricted stock units were
granted to named executive officers with a fair market value of a percentage of base salary as follows:
|
|
|
|
|
Percentage of Base Salary
|
Mr. Kaniewski
|
|
165%
|
Mr. Jaksich
|
|
0% (due to his planned retirement)
|
Mr. Parnell
|
|
50%
|
Mr. Francis
|
|
50%
|
Mr. Laterreur
|
|
40%
|
The
amounts were established so that aggregate long-term incentive compensation would be targeted at competitive median levels. Competitive median levels are provided by FW Cook based on
the primary benchmark survey prepared by Aon.
The
Committee granted options for an aggregate of 57,648 shares and restricted stock units for an aggregate of 69,553 shares to a total of 241 employees in December 2019, including
options and restricted stock units to named executive officers as described below. The Committee had granted restricted stock units for 8,765 shares, including restricted stock units for director
fees, prior to December 2019.
The
Committee determined that the annual equity grants to the executive officers should be 50% stock options and 50% restricted stock units (on a value basis), to reflect current market
practices as determined by FW Cook. In December 2019, the Committee granted the following stock options and restricted stock units to the named executive officers:
December 2019 Stock Grants
|
|
|
|
|
|
|
|
|
|
Stock Options
|
|
Restricted
Stock Units
|
|
Mr. Kaniewski
|
|
|
21,869
|
|
|
5,812
|
|
Mr. Jaksich
|
|
|
0
|
|
|
0
|
|
Mr. Parnell
|
|
|
2,709
|
|
|
720
|
|
Mr. Francis
|
|
|
2,220
|
|
|
590
|
|
Mr. Laterreur
|
|
|
1,973
|
|
|
524
|
|
Mr. Laterreur
also received a grant of 89 restricted stock units upon his hire in May 2019. The option grants and restricted stock unit grants vest in equal installments over
three years. The Committee determined that such grants were appropriate long-term incentives, based on market data and the Committee's review of each executive's performance.
The
Committee believes that the programs described above provide compensation that is competitive with comparable companies, link executive and shareholder interests and provide the
basis
21
for
the Company to attract and retain qualified executives. The Committee will continue to monitor the relationship among executive compensation, the Company's performance, and shareholder value.
Hedging and Pledging Policy
Valmont's policy prohibiting directors and officers from hedging or pledging Company stock has been in effect for more than ten years. The
Company reviewed and enhanced its policy in December 2019. The current policy prohibits hedging and pledging transactions by directors, executive officers, corporate officers and group presidents with
respect to any Valmont equity securities held directly or indirectly by such persons. Hedges are any transactions designed to hedge or offset any decrease in the market value of Valmont equity
securities. Such transactions include short-sales, prepaid variable forward contracts, equity swaps, collars, and exchanges.
Compensation Risk Assessment
The Human Resources Committee in February 2020 conducted a risk assessment of the Company's compensation programs which was reviewed by its
independent compensation consultant. The Committee determined that the risks arising from the Company's compensation policies and practices are not reasonably likely to have a material adverse effect
on the Company. The Committee believes the programs are designed to promote long-term value creation and do not motivate imprudent risk taking. The Company sets performance goals that are reasonable
in light of past performance and market conditions. The annual and long-term incentive plans for executives and senior management use an aggregate of three or more company-wide performance metrics
which provide for sliding scale incentives rather than an all-or-nothing approach; all such incentives have thresholds before they are paid and all are capped. The long-term incentives, consisting of
performance shares, stock options and restricted stock units, have a three-year performance period or vesting period and consequently the value to executives varies with the Company's stock price over
the period. The Company has a stock retention policy which requires retention of 50% of the net shares acquired upon the exercise of stock options and the vesting of restricted stock until stock
ownership guidelines are met. The Company has an executive clawback policy in the event of financial restatements due to fraud. The Company also has policies which prohibit the hedging or pledging of
Company stock by directors and officers.
Human Resources Committee Report
The Human Resources Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and
discussion, has recommended to the board that the Compensation Discussion and Analysis be included in this Proxy Statement.
|
|
|
|
|
HUMAN RESOURCES COMMITTEE
|
|
|
Daniel P. Neary, Chairman
Catherine James Paglia
Donna M. Milrod
|
Pay Ratio Information
We are providing the following information about the relationship of the annual total compensation of our employees and the annual total
compensation of our Chief Executive Officer (CEO) for our fiscal 2019. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with applicable securities
regulations.
22
For
our fiscal year ended December 28, 2019:
-
-
The median of the annual total compensation of all employees of our company (other than our CEO) was $46,015.
-
-
The annual total compensation of our CEO, as reported in the Summary Compensation Table, was $4,872,938.
-
-
Based on this information, for 2019 the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all
employees was 106 to 1.
To
identify the median of the annual total compensation of all our employees, we selected September 30, 2019 as the date for data gathering to identify the median employee because
it enabled us to make such determination in a reasonably efficient and economical manner. We used the total cash compensation (base salary, cash bonuses and cash incentives) of all employees globally
as reflected in payroll records. We identified our median employee using this compensation measure, which was consistently applied to all our employees included in the calculation.
We
did not use the same median employee as we did in 2018. That employee worked substantial overtime in 2019 and those changed circumstances resulted in unusually high compensation,
which would not have been representative of our typical median employee and would have resulted in a significant change in our pay ratio.
Once
we identified our median employee, we combined all elements of such employee's compensation for 2019 to arrive at such employee's total compensation in the same manner as we arrived
at our CEO's total compensation as set forth in the Summary Compensation Table.
23
Executive Compensation
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
awards
($)(1)
|
|
Option
awards
($)(2)
|
|
Non-equity
incentive
plan
compensation
($)
|
|
All other
compensation
($)(3)
|
|
Total
($)
|
|
Stephen G. Kaniewski
|
|
|
2019
|
|
|
950,000
|
|
|
0
|
|
|
2,423,665
|
|
|
827,523
|
|
|
548,150
|
|
|
123,600
|
|
|
4,872,938
|
|
President and Chief
|
|
|
2018
|
|
|
900,000
|
|
|
0
|
|
|
1,350,000
|
|
|
1,604,262
|
|
|
448,200
|
|
|
126,446
|
|
|
4,428,908
|
|
Executive Officer
|
|
|
2017
|
|
|
575,000
|
|
|
0
|
|
|
1,488,655
|
|
|
1,358,055
|
|
|
413,080
|
|
|
13,500
|
|
|
3,848,290
|
|
Mark C. Jaksich
|
|
|
2019
|
|
|
562,263
|
|
|
0
|
|
|
449,811
|
|
|
0
|
|
|
243,320
|
|
|
42,980
|
|
|
1,298,374
|
|
Executive Vice
|
|
|
2018
|
|
|
545,887
|
|
|
0
|
|
|
436,710
|
|
|
460,338
|
|
|
203,889
|
|
|
55,754
|
|
|
1,702,578
|
|
President and Chief
|
|
|
2017
|
|
|
529,988
|
|
|
0
|
|
|
423,990
|
|
|
439,290
|
|
|
333,150
|
|
|
38,792
|
|
|
1,765,210
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. Mitchell Parnell(4)
|
|
|
2019
|
|
|
337,572
|
|
|
0
|
|
|
276,056
|
|
|
102,509
|
|
|
156,281
|
|
|
17,612
|
|
|
890,030
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Human Resources
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy P. Francis(5)
|
|
|
2019
|
|
|
337,613
|
|
|
0
|
|
|
255,713
|
|
|
84,005
|
|
|
87,661
|
|
|
22,678
|
|
|
787,670
|
|
Senior Vice President
|
|
|
2018
|
|
|
321,535
|
|
|
0
|
|
|
245,164
|
|
|
208,338
|
|
|
72,056
|
|
|
20,829
|
|
|
867,922
|
|
Corporate Controller
|
|
|
2017
|
|
|
300,500
|
|
|
0
|
|
|
200,567
|
|
|
80,852
|
|
|
107,940
|
|
|
18,357
|
|
|
708,216
|
|
Claudio O. Laterreur(6)
|
|
|
2019
|
|
|
214,904
|
|
|
100,000
|
|
|
295,734
|
|
|
74,658
|
|
|
100,491
|
|
|
36,386
|
|
|
822,173
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IT and CIO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Stock
awards consist of the grant date fair value (based on the target award amount) of the performance shares which can be earned by each of the above-named
executives under the long-term incentive program with respect to grants in each fiscal year. See Compensation Discussion and Analysis for a description of these awards. The maximum award value, if
earned (exclusive of increases in performance share value based on increases in the Company's stock price) would be two times the amounts shown in this column for the performance shares. Stock awards
include the value of restricted stock units granted to Messrs. Kaniewski in 2017, to Mr. Parnell in 2019, to Mr. Francis in 2017, 2018 and 2019 and to Mr. Laterreur in
2019.
-
(2)
-
Option
awards reflects the aggregate grant date fair value of stock options computed in accordance with FASB Accounting Standards Codification Topic 718. See
footnote 12 to the Company's consolidated financial statements for the assumptions used in the valuation of these awards. The exercise price of all options granted in 2019 to the named executive
officers was $147.31.
-
(3)
-
All
Other Compensation reflects amounts contributed by the Company to its 401(k) plan and related supplemental benefit plan, which matches the amounts contributed in
2019 by executive officers in accordance with plan provisions; such Company contributions are 4.5% of the executive officer's salary, bonus and incentives that are paid in cash. Contributions to the
supplemental benefit plan are based on cash compensation, a majority of which is performance based and variable and is paid only if performance levels are met. All other compensation for
Mr. Kaniewski includes $80,850 with respect to personal use of Company aircraft in 2019 based on the Company's variable operating cost.
-
(4)
-
Mr. Parnell
became an executive officer in 2019.
-
(5)
-
Mr. Francis
became a named executive officer in 2018.
-
(6)
-
Mr. Laterreur
became an executive officer in 2019. Mr. Laterreur received a sign-on bonus of $100,000, reported in Bonus and $32,167 relocation
benefits included in All Other Compensation.
24
Grants of
Plan-Based Awards for Fiscal 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)(1)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Option
(#)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
or Base
Price of
Options
Awards
($/share)
|
|
Grant
Date Fair
Value of
Stock and
Option
Awards($)(2)
|
|
|
|
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards ($)(1)
|
|
Estimated Future Payouts
Under Equity Incentive Plan
Awards (# of shares)(1)
|
|
|
|
Grant
Date
|
|
Name
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximzum
|
|
Stephen G. Kaniewski
|
|
|
02/25/2019
|
|
|
0
|
|
|
950,000
|
|
|
1,900,000
|
|
|
6,554
|
|
|
13,108
|
|
|
26,216
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/16/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,812
|
|
|
21,869
|
|
|
147.31
|
|
|
1,683,688
|
|
Mark C. Jaksich
|
|
|
02/25/2019
|
|
|
0
|
|
|
421,698
|
|
|
843,396
|
|
|
1,881
|
|
|
3,761
|
|
|
7,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy P. Francis
|
|
|
02/25/2019
|
|
|
0
|
|
|
151,926
|
|
|
303,852
|
|
|
706
|
|
|
1,411
|
|
|
2,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/16/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
590
|
|
|
2,220
|
|
|
147.31
|
|
|
170,917
|
|
T. Mitchell Parnell
|
|
|
02/25/2019
|
|
|
0
|
|
|
153,000
|
|
|
306,000
|
|
|
711
|
|
|
1,421
|
|
|
2,842
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/16/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
720
|
|
|
2,709
|
|
|
147.31
|
|
|
208,572
|
|
Claudio O. Laterreur
|
|
|
05/28/2019
|
|
|
0
|
|
|
98,381
|
|
|
196,762
|
|
|
540
|
|
|
1,080
|
|
|
2,160
|
|
|
89
|
|
|
|
|
|
|
|
|
10,344
|
|
|
|
|
12/16/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
524
|
|
|
1,973
|
|
|
147.31
|
|
|
151,848
|
|
-
(1)
-
Non-equity
incentive awards were made with respect to the Company's 2019 annual incentive plan. Equity incentive plan awards represent performance shares under the
Company's 2019-2021 long-term incentive plan. See Compensation Discussion and Analysis for a description of the plan. Performance shares, option awards and restricted stock unit awards are made under
the shareholder-approved 2018 Stock Plan.
-
(2)
-
See
footnote 12 to the Company's consolidated financial statements for the assumptions used in valuing these awards.
25
Outstanding Equity Awards at Fiscal Year-End
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(1)
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)(2)
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(3)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)(4)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)(5)
|
|
Stephen G. Kaniewski
|
|
|
2,869
|
|
|
0
|
|
|
0
|
|
|
145.25
|
|
|
12/09/2020
|
|
|
11,896
|
|
|
1,788,801
|
|
|
7,734
|
|
|
1,162,961
|
|
|
|
|
1,823
|
|
|
0
|
|
|
|
|
|
132.84
|
|
|
12/08/2021
|
|
|
|
|
|
|
|
|
8,133
|
|
|
1,222,959
|
|
|
|
|
4,882
|
|
|
0
|
|
|
|
|
|
104.47
|
|
|
12/16/2022
|
|
|
|
|
|
|
|
|
13,108
|
|
|
1,971,050
|
|
|
|
|
12,076
|
|
|
0
|
|
|
|
|
|
151.90
|
|
|
12/19/2023
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,727
|
|
|
10,364
|
|
|
|
|
|
164.35
|
|
|
12/18/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,539
|
|
|
35,079
|
|
|
|
|
|
112.08
|
|
|
12/17/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
21,869
|
|
|
|
|
|
147.31
|
|
|
12/16/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark C. Jaksich
|
|
|
3,177
|
|
|
0
|
|
|
0
|
|
|
145.25
|
|
|
12/09/2020
|
|
|
0
|
|
|
0
|
|
|
2,853
|
|
|
429,006
|
|
|
|
|
10,679
|
|
|
0
|
|
|
|
|
|
132.84
|
|
|
12/08/2021
|
|
|
|
|
|
|
|
|
2,631
|
|
|
395,623
|
|
|
|
|
5,238
|
|
|
0
|
|
|
|
|
|
151.90
|
|
|
12/19/2023
|
|
|
|
|
|
|
|
|
3,761
|
|
|
565,542
|
|
|
|
|
6,704
|
|
|
3,353
|
|
|
|
|
|
164.35
|
|
|
12/18/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,033
|
|
|
10,066
|
|
|
|
|
|
112.08
|
|
|
12/17/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy P. Francis
|
|
|
1,009
|
|
|
0
|
|
|
0
|
|
|
132.84
|
|
|
12/08/2021
|
|
|
1,255
|
|
|
188,714
|
|
|
809
|
|
|
121,649
|
|
|
|
|
1,485
|
|
|
0
|
|
|
|
|
|
151.90
|
|
|
12/19/2023
|
|
|
|
|
|
|
|
|
968
|
|
|
145,558
|
|
|
|
|
1,234
|
|
|
617
|
|
|
|
|
|
164.35
|
|
|
12/18/2024
|
|
|
|
|
|
|
|
|
1,411
|
|
|
212,172
|
|
|
|
|
0
|
|
|
4,000
|
|
|
|
|
|
112.08
|
|
|
12/17/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
944
|
|
|
1,889
|
|
|
|
|
|
112.08
|
|
|
12/17/2025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
2,220
|
|
|
|
|
|
147.31
|
|
|
12/16/2026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. Mitchell Parnell
|
|
|
0
|
|
|
2,709
|
|
|
0
|
|
|
147.31
|
|
|
12/16/2026
|
|
|
1,270
|
|
|
190,970
|
|
|
302
|
|
|
45,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
686
|
|
|
103,154
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,421
|
|
|
213,676
|
|
Claudio Laterreur
|
|
|
0
|
|
|
1,973
|
|
|
0
|
|
|
147.31
|
|
|
12/16/2026
|
|
|
613
|
|
|
92,177
|
|
|
476
|
|
|
71,576
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,080
|
|
|
162,400
|
|
-
(1)
-
The
options that expire on December 9, 2020 vested in equal amounts on December 9 of 2014, 2015 and 2016. The options that expire on December 8,
2021 vested in equal amounts on December 8 of 2015, 2016 and 2017. The options that expire on December 16, 2022 vested in equal amounts on December 16, 2016, 2017 and 2018. The
options that expire on December 19, 2023 vested in equal amounts on December 23 of 2017, 2018 and 2019. The options that expire on December 18, 2024 vested or vest in equal
amounts on December 18, 2018, 2019, and 2020. The options that expire on December 17, 2025 vested or vest in equal amounts on December 17, 2019, 2020, and 2021, except the 4,000
options granted to Mr. Francis that expire on December 17, 2025 vest on December 17, 2023. The options that expire on December 16, 2026 vest in equal installments on
December 16, 2020, 2021 and 2022.
-
(2)
-
Mr. Kaniewski's
restricted stock unit grants include a 6,084 restricted stock unit grant in December 2017 which vests in three equal installments beginning on
the third anniversary of the grant. The remaining awards for these named executive officers reported in this column are restricted stock units which vest in equal installments over three years
following date of grant and on vesting will be settled in an equal number of shares of common stock. Dividends are paid upon vesting of restricted shares.
-
(3)
-
Based
on the number of shares or units at the closing market price at the end of the 2019 fiscal year ($150.37 per share).
-
(4)
-
Number
shown is based on the target number of performance shares which can be earned under the long-term incentive plans for the three-year periods ending in 2019,
2020, and 2021, respectively. See Compensation Discussion and Analysis for a description of the provisions of the long-term incentive plans.
-
(5)
-
Based
on the target number of performance shares at the closing market price at the end of the 2019 fiscal year ($150.37 per share).
26
Options Exercised and Stock Vested in Fiscal 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
Value
Realized on Exercise
($)(1)
|
|
Number of
Shares Acquired
on Vesting (#)
|
|
Value Realized on
Vesting ($)(2)
|
|
Stephen Kaniewski
|
|
|
3,065
|
|
|
14,375
|
|
|
0
|
|
|
0
|
|
Mark Jaksich
|
|
|
18,714
|
|
|
583,805
|
|
|
465
|
|
|
68,954
|
|
Timothy Francis
|
|
|
4,542
|
|
|
177,956
|
|
|
1,146
|
|
|
149,975
|
|
T. Mitchell Parnell
|
|
|
0
|
|
|
0
|
|
|
482
|
|
|
71,628
|
|
-
(1)
-
Difference
between the exercise price of the options and the market price on date of exercise.
-
(2)
-
Based
on market value at vesting date of the related restricted stock units.
Nonqualified Deferred Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in Last
Fiscal Year
($)(1)
|
|
Registrant
Contributions
in Last
Fiscal Year
($)(2)
|
|
Aggregate
Earnings
in Last
Fiscal Year
($)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last Fiscal
Year End
($)(3)(4)
|
|
Stephen G. Kaniewski
|
|
|
57,000
|
|
|
30,150
|
|
|
37,919
|
|
|
0
|
|
|
207,226
|
|
Mark C. Jaksich
|
|
|
309,349
|
|
|
30,380
|
|
|
649,598
|
|
|
0
|
|
|
4,346,096
|
|
Timothy P. Francis
|
|
|
16,635
|
|
|
10,078
|
|
|
15,875
|
|
|
0
|
|
|
114,216
|
|
T. Mitchell Parnell
|
|
|
5,380
|
|
|
5,012
|
|
|
1,318
|
|
|
0
|
|
|
11,711
|
|
Claudio O. Laterreur
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
-
(1)
-
Executive
officer contributions are included in the executive compensation amounts reflected in the Summary Compensation Table as part of Salary, Bonus and
Non-equity Incentive Plan Compensation; such contributions include deferrals to the nonqualified deferred compensation plan but not amounts contributed to the qualified 401(k) plan.
-
(2)
-
Reflects
Company contributions to match executive contributions to nonqualified deferred compensation plans but does not include Company match for executive
contributions to the 401(k) plan. Company contributions match executive contributions to the 401(k) and related nonqualified deferred compensation plans with respect to compensation and are
included in the Summary Compensation Table under All Other Compensation. Company contributions are 4.5% of the executive officer's salary, bonus and cash incentives.
-
(3)
-
The
aggregate balance includes amounts contributed after the fiscal year end with respect to fiscal 2019 compensation.
-
(4)
-
The
Company does not have a pension plan or other defined benefit plan. The Company's nonqualified deferred compensation plan is offered to allow certain Company
employees who, due to compensation and contribution ceilings established under the Internal Revenue Service regulations, are limited in making contributions to the Company's 401(k) plan. This plan is
fully funded and the related assets in the plan are reported on the Company's balance sheet and are subject to creditor claims in event of the Company's bankruptcy. The vesting provisions follow that
of the Company's 401(k) plan. Compensation that is eligible for deferral by the executive includes salary, bonus and cash incentives, and the executive may defer any percentage of eligible
compensation. Investment values and related earnings are based on quoted market prices of the investments held by the plan. Investment alternatives under the plan are selected by each employee and may
be changed based on the rules set forth by each investment fund selected by the employee. Distribution payments are made upon a specified period after separation from
27
service
in accordance with Section 409A of the Internal Revenue Code. The methods of distribution include single lump sum cash payment or annual installments for 2-10 years. In-service
withdrawals are allowed in compliance with Section 409A of the Code.
Director Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees Earned
or paid
in Cash
($)(1)
|
|
Stock
Awards
($)(1)(2)
|
|
Option
Awards
($)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
|
Mogens Bay
|
|
|
175,000
|
|
|
130,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
305,000
|
|
Walter Scott, Jr.
|
|
|
108,500
|
|
|
130,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
238,500
|
|
Kaj den Daas
|
|
|
98,500
|
|
|
130,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
228,500
|
|
Daniel P. Neary
|
|
|
115,500
|
|
|
130,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
245,500
|
|
Clark T. Randt
|
|
|
104,500
|
|
|
130,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
234,500
|
|
J. B. Milliken
|
|
|
91,000
|
|
|
130,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
221,000
|
|
Catherine J. Paglia
|
|
|
135,500
|
|
|
130,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
265,500
|
|
Theo W. Freye
|
|
|
92,000
|
|
|
130,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
222,000
|
|
Donna M. Milrod
|
|
|
97,000
|
|
|
130,000
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
227,000
|
|
Richard A. Lanoha
|
|
|
17,500
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
17,500
|
|
-
(1)
-
Non-employee
directors in 2019 received (1) an annual retainer of $75,000, (2) $2,500 for each board meeting attended ($1,000 if the participation was
via teleconference), and (3) $2,000 for each committee meeting attended ($1,000 if the participation was via teleconference). The lead director received an additional cash retainer of $30,000
for 2019 and each committee chairman received an additional $10,000 cash retainer for the year. Mr. Bay became non-executive Chairman in 2019 and received a $100,000 cash retainer in addition
to regular director fees (without per meeting fees). Director Scott has elected to receive his cash fees in the form of deferred compensation which accrues interest indexed to U.S. government bonds
compounded monthly. Non-employee directors also received a grant of restricted stock units with a value of $130,000 (based on the closing market price of the Company's common stock on the date of the
Company's annual shareholders' meeting). The equity grants are made annually on the date of and following completion of the Company's annual shareholders' meeting. The restricted stock units vest on
the first anniversary of the grant date (subject to deferral by the director). The total cash compensation and the grant date fair value of equity awards for a non-employee director may not exceed
$500,000 in a calendar year. Mr. Lanoha became a director in October 2019.
-
(2)
-
Unexercised
stock awards (consisting of unvested restricted stock units) for each director as of December 28, 2019 were as follows:
|
|
|
|
|
Name
|
|
Restricted
Stock Units
|
|
Mogens Bay
|
|
|
964
|
|
Walter Scott, Jr.
|
|
|
964
|
|
Kaj den Daas
|
|
|
964
|
|
Daniel P. Neary
|
|
|
964
|
|
Clark T. Randt
|
|
|
964
|
|
J. B. Milliken
|
|
|
964
|
|
Catherine J. Paglia
|
|
|
964
|
|
Theo W. Freye
|
|
|
964
|
|
Donna M. Milrod
|
|
|
964
|
|
Richard A. Lanoha
|
|
|
0
|
|
28
-
(3)
-
The
Human Resources Committee, with input from FW Cook, reviewed director compensation in February 2020. The Committee recommended, and the Board approved, the
following changes effective April 1, 2020: (1) the elimination of meeting fees, (2) a cash retainer of $95,000 per annum, (3) an annual equity retainer of $135,000 per
annum, (4) an increase in committee chair retainers to $15,000 per annum, (5) a non-chair audit committee member retainer of $7,500 per annum, (6) a lead director additional
retainer of $30,000 per annum and (7) an additional non-executive chairman retainer of $87,500 per annum.
Equity Compensation Plan Information
The following table provides information about the Company's common stock that may be issued upon exercise of options, warrants and rights under
existing equity compensation plans as of December 28, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights
(a)
|
|
Weighted-average
exercise price of
outstanding
options,
warrants and rights
(b)
|
|
Number of securities
remaining available for
future issuance under
equity compensation
(including securities plans
reflected in column (a))
(c)
|
|
Equity compensation plans approved by security holders
|
|
|
662,929
|
|
|
133.90
|
|
|
1,208,223
|
|
Equity compensation plans not approved by security holders
|
|
|
0
|
|
|
|
|
|
0
|
|
Total
|
|
|
662,929
|
|
|
133.90
|
|
|
1,208,223
|
|
-
(1)
-
Includes
488,560 outstanding stock options and 174,369 outstanding restricted stock units.
-
(2)
-
Weighted-average
exercise price of outstanding stock options.
Potential Payments Upon Termination or Change-In-Control
Valmont does not have employment agreements with its executive officers. Valmont also does not have special severance or change-in-control
payment agreements with its executive officers.
Valmont's
executive officers may receive severance payments upon a termination of employment under Valmont's severance plan which is generally available to all administrative employees.
The severance plan generally provides 16 weeks of salary plus one week of salary for each year of service. Valmont's executive officers would also be entitled to receive upon termination of
employment amounts accumulated in their respective deferred compensation accounts, at the times and in the manner established for their respective accounts; such amounts are described in the
Non-Qualified Deferred Compensation table.
Valmont's
2013 Stock Plan and 2018 Stock Plan provide that all outstanding options become immediately exercisable in the event of an involuntary termination following a change-in-control
and that all restrictions on restricted stock lapse in the event of such an involuntary termination following a change-in-control. A change-in-control, defined specifically in the plans, generally
occurs if: (i) a person, entity or group (excluding Valmont plans) acquires 50% or more of Valmont's common stock or total voting power of Valmont's voting securities; (ii) incumbent
directors or their replacements (whose election or nomination was approved by at least a majority of then incumbent directors) cease to constitute a majority of the board; (iii) a
reorganization, merger, consolidation, or sale of substantially all of the Company's assets occurs unless Valmont's shareholders prior to the transaction own after the transaction 50% or more of the
voting power of Valmont's securities; and (iv) Valmont is liquidated or dissolved. Options provide for continued vesting pursuant to the option terms if the
29
optionee
voluntarily retires on or after attaining age 62. If such a change-in-control (involving an involuntary termination) or retirement had occurred on the last day of fiscal 2019, the incremental
value (fair market value of company common stock on such date less exercise price) of unvested
options and unvested restricted stock and restricted stock units held by the named executed officers would have been:
|
|
|
|
|
|
|
|
|
|
Unvested
Options
|
|
Unvested
Restricted
Stock
|
|
Mr. Kaniewski
|
|
$
|
1,434,218
|
|
$
|
1,788,802
|
|
Mr. Jaksich
|
|
$
|
385,427
|
|
$
|
0
|
|
Mr. Francis
|
|
$
|
293,423
|
|
$
|
188,714
|
|
Mr. Parnell
|
|
$
|
8,290
|
|
$
|
190,970
|
|
Mr. Laterreur
|
|
$
|
6,038
|
|
$
|
92,176
|
|
The
unvested stock options for such individuals and the unvested restricted stock for such individuals are set forth in the Outstanding Equity Awards at Fiscal Year-End table. In
addition, a pro rata portion (based on period of service and full period performance results) of the performance shares awarded under the long-term incentive plan may be earned in the event of death,
disability, normal retirement, termination of employment without cause, or change-in-control. If such a change-in-control or retirement had occurred on the last day of fiscal 2019, the prorated value
of the long-term incentive awards (based on target award numbers) which would have been payable to the named executive officers would have been:
|
|
|
|
|
Mr. Kaniewski
|
|
$
|
2,635,284
|
|
Mr. Jaksich
|
|
$
|
881,269
|
|
Mr. Francis
|
|
$
|
289,411
|
|
Mr. Parnell
|
|
$
|
185,405
|
|
Mr. Laterreur
|
|
$
|
101,850
|
|
30