DEF 14A 1 def14a.htm DEF 14A bld_Current Folio_2018_DEF14A

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

Filed by the Registrant 

Filed by a Party other than the Registrant 

Check the appropriate box:

 

 

 

 

 

 

Preliminary Proxy Statement

Confidential, For Use of the Commission Only (as permitted by Rule 14a‑6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Under Rule 14a‑12

 

TopBuild Corp.

 

 

(Name of Registrant as Specified in Its Charter)

 

 

 

 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant

 

 

 

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Fee paid previously with preliminary materials.

Check box if any part of the fee is offset as provided by Exchange Act Rule 0‑11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

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(4)

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Picture 18

 

 

 


 

Picture 1

March 21, 2018

Dear Shareholders:

It is my pleasure to invite you to the TopBuild Corp. 2018 Annual Meeting of Shareholders. The Annual Meeting will be held on Monday, April 30, 2018, at 10:00 AM Eastern Time, at the Hyatt Regency Orlando International Airport, 9300 Jeff Fuqua Boulevard, Orlando, Florida 32827.

We are furnishing proxy materials to our shareholders via the Internet, which we believe expedites shareholders' receipt of proxy materials while also lowering our costs and reducing the environmental impact of our Annual Meeting. The Notice of Internet Availability of Proxy Materials, referred to as the Notice, that you received in the mail provides instructions on how to access and review this Proxy Statement and our 2017 Annual Report, as well as how to vote via the Internet. If you would still like to receive a printed copy of our proxy materials, please follow the instructions for requesting these materials included in the Notice.

Details regarding admission to the Annual Meeting and the business to be conducted are more fully described in the accompanying Notice of 2018 Annual Meeting of Shareholders and Proxy Statement. The proxy materials also provide information about TopBuild that you should consider when voting your shares.

If your shares are held in “street name,” meaning that they are held of record by your brokerage firm, bank, broker-dealer or other intermediary, then you will receive voting instructions from the holder of record. You must follow those instructions in order for your shares to be voted. Your broker is required to vote your shares in accordance with your instructions.

We hope you will be able to attend our Annual Meeting. If you cannot attend, it is important that your shares be represented. Your vote is very important to us. We urge you to read the accompanying Proxy Statement carefully and vote for the Board's nominees and in accordance with the Board's recommendations on the other proposals. Whether or not you are planning to attend the Annual Meeting, please vote your shares as soon as possible by telephone or Internet, or, if you requested to receive printed proxy materials, by signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. Further instructions are provided in the Notice, the proxy card or the voting instruction form provided by your broker. Please vote promptly.

Thank you for your continued support. If you have any questions, please contact our investor relations department at (386) 763‑8801.

Sincerely yours,

Picture 5

Jerry Volas

Chief Executive Officer and Director

 

 


 

Table of Contents

 

 

NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS 

1

PROXY SUMMARY 

2

PROXY STATEMENT 

5

GENERAL INFORMATION ABOUT THE MEETING AND VOTING 

5

CORPORATE GOVERNANCE 

11

PROPOSAL 1 ELECTION OF DIRECTORS 

14

BOARD OF DIRECTORS AND COMMITTEES 

18

COMMITTEES OF THE BOARD 

18

DIRECTOR COMPENSATION 

20

AUDIT COMMITTEE REPORT 

22

COMMON STOCK OWNERSHIP OF OFFICERS, DIRECTORS AND SIGNIFICANT SHAREHOLDERS 

23

Directors and Executive Officers 

23

Certain Other Shareholders 

24

COMPENSATION COMMITTEE REPORT 

25

COMPENSATION OF EXECUTIVE OFFICERS 

25

Executive Officers 

25

Compensation Discussion and Analysis 

26

TopBuild Compensation Practices 

27

Stock Ownership Guidelines 

27

Executive Compensation Approach 

27

PROPOSAL 2 AMENDMENT OF ARTICLE 6 OF OUR AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO ELIMINATE THE CLASSIFICATION OF OUR BOARD OF DIRECTORS AND IMPLEMENT THE ANNUAL ELECTION OF DIRECTORS 

41

PROPOSAL 3 AMENDMENT OF ARTICLE 5 OF OUR CERTIFICATE OF INCORPORATION TO REDUCE FROM 80% TO 66 ⅔% THE AFFIRMATIVE VOTE REQUIRED TO AMEND OUR BYLAWS 

42

PROPOSAL 4 PROPOSAL TO AMEND ARTICLE 11 OF OUR CERTIFICATE OF INCORPORATION TO REDUCE FROM 80% TO 66 ⅔% THE AFFIRMATIVE VOTE REQUIRED TO AMEND CERTAIN PROVISIONS OF OUR CERTIFICATE OF INCORPORATION 

43

PROPOSAL 5 RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 

44

PROPOSAL 6 ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS 

45

EQUITY COMPENSATION PLAN INFORMATION 

46

OTHER MATTERS 

46

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 

46

ANNUAL REPORT 

46

SHAREHOLDER PROPOSALS FOR 2019 ANNUAL MEETING 

47

EXPENSES OF SOLICITATION 

47

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 30, 2018 

48

Appendix A 

51

Appendix B 

52

Appendix C 

53

 

 

 

 

 


 

 

TopBuild Corp.
475 North Williamson Boulevard
Daytona Beach, Florida 32114‑7101

NOTICE OF 2018 ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of TopBuild Corp.:

The 2018 Annual Meeting of Shareholders of TopBuild Corp. will be held at the Hyatt Regency Orlando International Airport, 9300 Jeff Fuqua Boulevard, Orlando, Florida 32827 on Monday, April 30, 2018, at 10:00 AM Eastern Time, for the following purposes:

(a)

To vote on a proposal to elect Gerald Volas, Carl T. Camden and Joseph S. Cantie as Class III Directors to hold office for a term of three (3) years or until their respective successors have been duly elected and qualified;

(b)

To vote on a proposal to amend our Amended and Restated Certificate of Incorporation to eliminate the classification of our Board of Directors and implement the annual election of Directors;

(c)

To vote on a proposal to amend our Amended and Restated Certificate of Incorporation to reduce the affirmative vote of holders of our outstanding securities, voting as a single class, required to adopt, amend or repeal our Bylaws from 80% to 66 2/3%;

(d)

To vote on a proposal to amend our Amended and Restated Certificate of Incorporation to reduce the affirmative vote of holders of our outstanding voting securities, voting as a single class, required to adopt, amend or repeal certain provisions of our Amended and Restated Certificate of Incorporation from 80% to 66 2/3%;

(e)

To vote on a proposal to ratify the appointment by the Audit Committee of our Board of Directors of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018;

(f)

To vote on a proposal to approve, on an advisory basis, the compensation of our named executive officers; and

(g)

To transact such other business as may properly come before the meeting and any adjournments or postponements thereof.

Only shareholders of record at the close of business on March 2, 2018, may vote at the meeting.

On or about March 21, 2018, we began mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to all shareholders of record as of March 2, 2018, and posted our proxy materials on the website referenced in the Notice (www.proxyvote.com). As more fully described in the Notice, all shareholders may choose to access our proxy materials on the website referred to in the Notice or may request a printed set of our proxy materials. In addition, the Notice and website provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.

Your vote is very important. Shareholders may vote their shares (1) in person at the Annual Meeting, (2) by telephone, (3) through the Internet or (4) by completing and mailing a proxy card if you receive your proxy materials by mail. Specific instructions for voting by telephone or through the Internet (including voting deadlines) are included in the Notice and in the proxy card. For specific instructions on how to vote your shares, please refer to the instructions on the Notice in the section titled “GENERAL INFORMATION ABOUT THE MEETING AND VOTING” of this proxy statement or, if you requested to receive printed proxy materials on the enclosed proxy card.

 

By order of the Board of Directors.

 

Picture 4

 

W. Joe Jacumin, Jr.
Assistant General Counsel and Assistant Secretary

Note:  The Board of Directors solicits votes by use of the Company's telephone or internet voting procedures or, if you requested to receive printed proxy materials, the execution and prompt return of the accompanying proxy card in the enclosed return envelope.

 

 

 

TopBuild Corp. - Proxy Statement 1

 


 

PROXY SUMMARY

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information that you should consider before voting your shares, and you should read this entire proxy statement carefully before voting. Page references are supplied to help you find additional information in this proxy statement.

Annual Meeting of Shareholders

·

Date and Time: Monday, April 30, 2018, at 10:00 AM Eastern Time

·

Location:  Hyatt Regency Orlando International Airport, 9300 Jeff Fuqua Boulevard, Orlando, Florida 32827

·

Record Date: March 2, 2018

Who May Vote

You may vote if you were a shareholder of record at the close of business on the record date. The proxy materials are being sent on or about March 21, 2018, to those persons who are entitled to vote at the Annual Meeting.

How to Cast Your Vote

You can vote by any of the following methods:

Picture 18  Internet (www.proxyvote.com) until 11:59pm Eastern Time on April 29, 2018;

Picture 19    Telephone (1‑800‑690‑6903) until 11:59pm Eastern Time on April 29, 2018;

Picture 20  Complete, sign and return your proxy by mail by April 29, 2018; or

·

In person, at the Annual Meeting: If you are a shareholder of record, your admission card will serve as proof of ownership. If you hold your shares through a broker, nominee or other intermediary, you must bring proof of ownership to the meeting.

Board and Governance Highlights (page 18)

·

All directors and nominees are independent (except our Chief Executive Officer)

·

None of our directors serve on more than two other public company boards

·

Independent Chair of the Board

·

Code of Ethics for all employees and directors

·

Share ownership requirements for officers and directors

·

Majority voting policy for uncontested elections of directors

Voting Matters

We are asking you to vote on the following proposals at the Annual Meeting:

Proposal

    

Board Recommendation

    

Page

 

Election of Directors

 

FOR each Director Nominee

 

14 

 

Proposal to Amend Article 6 of our Certificate of Incorporation to Eliminate the Classification of our Board and Implement the Annual Election of Directors

 

FOR

 

41 

 

Proposal to Amend Article 5 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the Affirmative Vote Required to Amend our Bylaws

 

FOR

 

42 

 

Proposal to Amend Article 11 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the Affirmative Vote Required to Amend Certain Provisions of our Certificate of Incorporation

 

FOR

 

43 

 

Ratification of Auditor Appointment

 

FOR

 

44 

 

Advisory Vote on Executive Compensation

 

FOR

 

45 

 

 

 

TopBuild Corp. - Proxy Statement 2

 


 

Board Nominees (page 14)

The Board has nominated Gerald Volas, Carl T. Camden and Joseph S. Cantie as Class III Directors, to hold office for a term of three years or until their respective successors have been duly elected and qualified.

The following table provides summary information about each director nominee.

Name

    

Age

    

Director
Since

    

Occupation

    

Independent

    

Committee
Memberships

    

Other Public Company
Boards

 

Gerald Volas

 

63 

 

2015 

 

Chief Executive Officer of the Company

 

No

 

None

 

Trex Company, Inc.

 

Carl T. Camden

 

63 

 

2015 

 

Retired, Former Chief Executive Officer of Kelly Services

 

Yes

 

Audit

Compensation

Governance

 

 

Joseph S. Cantie

 

54 

 

2015 

 

Retired, Former Executive Vice President and Chief Financial Officer of TRW Automotive Holdings Corp.

 

Yes

 

Audit (Chair)

Compensation

Governance

 

Delphi Technologies PLC

Summit Materials, Inc.

 

 

Proposal to Amend Article 6 of our Certificate of Incorporation to Eliminate the Classification of our Board and Implement the Annual Election of Directors (page 41)

Article 6 of our Amended and Restated Certificate of Incorporation currently divides our Board of Directors into three classes, each class consisting, as nearly as may be practicable, of one-third of the total number of directors constituting the entire Board of Directors, and members of each class are elected to serve for staggered three-year terms.

After careful consideration, our Board of Directors has unanimously approved, and recommends that our shareholders approve, an amendment to our Amended and Restated Certificate of Incorporation to declassify our Board of Directors and provide for the annual election of all directors.  We refer to this as the “Declassification Amendment.”  If the Declassification Amendment is approved by shareholders, then, beginning with our 2019 annual meeting, all of our directors will stand for election for one-year terms.

Proposal to Amend Article 5 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the Affirmative Vote Required to Amend our Bylaws (page 42)

Article 5 of our Amended and Restated Certificate of Incorporation currently provides that our shareholders may adopt, amend or repeal our Bylaws only with the affirmative vote of the holders of not less than 80% of the voting power of all of our outstanding securities generally entitled to vote in the election of directors, voting together as a single class.

After careful consideration, our Board of Directors has unanimously approved, and recommends that our shareholders approve an amendment to our Amended and Restated Certificate of Incorporation to reduce the above-described voting threshold from 80% to 66 ⅔%.

Proposal to Amend Article 11 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the Affirmative Vote Required to Amend Certain Provisions of our Certificate of Incorporation (page 43)

Article 11 of our Amended and Restated Certificate of Incorporation currently requires the affirmative vote of the holders of not less than 80% of the voting power of all of our outstanding securities generally entitled to vote in the election of directors, voting together as a single class, to amend or repeal, or otherwise modify or circumvent, the provisions of our Amended and Restated Certificate of Incorporation related to the issuance of “blank check” preferred stock, our Bylaws, our Board of Directors, meetings of our shareholders, and the provision governing the foregoing matters.

 

TopBuild Corp. - Proxy Statement 3

 


 

After careful consideration, our Board of Directors has unanimously approved, and recommends that our shareholders approve, an amendment to our Amended and Restated Certificate of Incorporation to reduce the above-described voting threshold from 80% to 66 ⅔%.

Auditor (page 44)

We are asking our shareholders to approve the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018. Below is summary information about fees billed to us by PricewaterhouseCoopers LLP for services provided in the years ended December 31, 2016 and 2017:

 

    

Year Ended
December 31, 2016 ($)

    

Year Ended
December 31, 2017 ($)

 

Audit Fees

 

2,079,500 

 

2,050,975 

 

Audit-Related Fees

 

—  

 

—  

 

Tax Fees

 

— 

 

—  

 

All Other Fees

 

1,800 

 

3,398 

 

TOTAL

 

2,081,300 

 

2,054,373 

 

 

Executive Compensation (page 25)

Our compensation programs are designed to attract, retain and incentivize executive officers to focus on critical business objectives, to appropriately balance risks and rewards and to effectively lead our business. The fundamental principles of our compensation programs are to reward executive officers based on company performance, both in achieving performance goals and by making effective strategic decisions, and to align executive officers' interests with the long-term interests of our shareholders.

We believe that having a significant ownership interest in our stock is critical to aligning the interests of executive officers with the long-term interests of our shareholders. Accordingly, equity awards in the form of restricted stock and stock options with extended vesting periods, as well as awards that vest only upon the achievement of performance goals, are an important component of compensation for our executive officers. The value ultimately realized from equity awards depends on the long-term performance of our common stock.

Advisory Vote to Approve Executive Compensation (page 45)

We are asking our shareholders to approve, on an advisory basis, the compensation of our named executive officers. We believe our compensation programs and practices are appropriate and effective in implementing our compensation philosophy, as they support achieving our goals with appropriate levels of risk and are aligned with shareholder interests, including:

·

long-term equity incentive awards with performance-based vesting;

·

a balanced mix of long-term incentives including stock options and restricted stock awards to motivate long-term performance and reward executives for gains in the stock price;

·

very limited perquisites;

·

stock ownership requirements for officers; and

·

annual incentive compensation bonuses tied directly to performance and capped at varying percentages of base salary, limiting excessive awards for short-term performance.

 

TopBuild Corp. - Proxy Statement 4

 


 

PROXY STATEMENT

2018 Annual Meeting

The 2018 Annual Meeting of Shareholders of TopBuild Corp. (the “Annual Meeting”) will be held at 10:00 AM Eastern Time on April 30, 2018 for the purposes set forth in the accompanying Notice of 2018 Annual Meeting of Shareholders. This Proxy Statement is being furnished to shareholders of record as of March 2, 2018, of TopBuild Corp. in connection with the solicitation of proxies by the Board of Directors of the Company (the “Board”) for the Annual Meeting and at any adjournments or postponements of the Annual Meeting. We will refer to TopBuild Corp. in this Proxy Statement as “we,” “us,” “our,” the “Company” or “TopBuild.”

About TopBuild

We are the leading purchaser, installer and distributor of insulation products to the U.S. construction industry, based on revenue. We provide insulation installation services nationwide through our TruTeam contractor services business, which has over 175 installation branches located in 41 states. We distribute insulation and other building products including rain gutters, fireplaces, closet shelving, and roofing materials through our Service Partners business, which has over 70 branches in 32 states. Further, through our Home Services subsidiary and our Environments For Living® program, we offer a number of services and tools designed to assist builders with applying the principles of building science to new home construction.

Our principal executive office is located at 475 North Williamson Boulevard, Daytona Beach, Florida 32114‑7101. Our telephone number is (386) 304‑2200 and our website is www.topbuild.com. Our common stock trades on the NYSE under the symbol “BLD”. Our internet website and the information thereon or connected thereto is not incorporated into or made a part of this Proxy Statement.

GENERAL INFORMATION ABOUT THE MEETING AND VOTING

Q:

Why is TopBuild distributing this Proxy Statement?

 

 

A:

The Board is soliciting your proxy to vote at the Annual Meeting (to be held on April 30, 2018) and at any postponements or adjournments of the Annual Meeting. This Proxy Statement summarizes information that is intended to assist you in making an informed vote on the proposals described in this Proxy Statement.

 

 

Q:

Why did I receive a Notice of Internet Availability of Proxy Materials?

 

 

A:

We have elected to take advantage of the U.S. Securities and Exchange Commission (the “SEC”) rules that allow companies to furnish proxy materials to shareholders via the Internet. If you received a Notice by mail, you will not receive a printed copy of the proxy materials unless you specifically request one. The Notice instructs you on how to access and review this proxy statement and our 2017 Annual Report as well as how to vote by Internet. If you received the Notice and would still like to receive a printed copy of our proxy materials, you should follow the instructions for requesting these materials included in the Notice. As stated in the Notice, the request should be made on or before April 17, 2018, to facilitate timely delivery.

 

 

 

We commenced mailing the Notice to certain shareholders on or about March 21, 2018. We will also mail a printed copy of this proxy statement and form of proxy to certain shareholders, and we commenced mailing on or about March 21, 2018.

 

 

Q:

Who is entitled to vote at the Annual Meeting?

 

 

A:

Only shareholders of record as of the close of business on March 2, 2018 (the “Record Date”), are entitled to vote at the Annual Meeting. On that date, there were 35,610,656 shares of our common stock outstanding and entitled to vote.

 

 

Q:

How many shares must be present to conduct the Annual Meeting?

 

 

 

TopBuild Corp. - Proxy Statement 5

 


 

A:

We must have a “quorum” present in person or by proxy to hold the Annual Meeting. A quorum is achieved through the presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the total voting power of all outstanding common stock of the Company entitled to vote at the Annual Meeting. Abstentions and broker non-votes (defined below) will be counted for the purpose of determining the existence of a quorum.

 

 

Q:

What am I voting on?

 

 

A:

Six (6) proposals are scheduled for a vote at the Annual Meeting:

 

 

 

 Election of Gerald Volas, Carl T. Camden and Joseph S. Cantie as Class III Directors to the Company's Board of Directors;

 

 Proposal to Amend Article 6 of our Certificate of Incorporation to Eliminate the Classification of our Board and Implement the Annual Election of Directors;

 

 Proposal to Amend Article 5 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the Affirmative Vote Required to Amend our Bylaws;

 

 Proposal to Amend Article 11 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the Affirmative Vote Required to Amend Certain Provisions of our Certificate of Incorporation;

 

 Ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018; and

 

 Approval, on an advisory basis, of the compensation of the Company's named executive officers.

 

 

 

As of the date of this proxy statement, our Board does not know of any other business to be presented at the Annual Meeting.

 

 

Q:

How does the Board recommend that I vote?

 

 

A:

The Board's recommendation for each proposal is set forth in this proxy statement together with the description of each proposal. In summary, the Board recommends a vote:

 

 

 

 FOR the election of each of Gerald Volas, Carl T. Camden and Joseph S. Cantie as Class III Directors;

 FOR the proposal to Amend Article 6 of our Certificate of Incorporation to Eliminate the Classification of our Board and Implement the Annual Election of Directors;

 FOR the proposal to Amend Article 5 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the Affirmative Vote Required to Amend our Bylaws;

 FOR the proposal to Amend Article 11 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the Affirmative Vote Required to Amend Certain Provisions of our Certificate of Incorporation;

 FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018; and

 FOR the approval, on an advisory basis, of the compensation of the Company's named executive officers.

 

 

Q:

How do I vote before the Annual Meeting?

 

 

A:

You may vote your shares before the Annual Meeting (1) by telephone, (2) through the Internet, or (3) by completing and mailing a proxy card if you received your proxy materials by mail. If you vote by telephone or via the Internet, you do not need to return your proxy card or voting instruction form. With respect to the election of directors, you may vote “FOR” all of the nominees to the Board, you may withhold authority to vote for any nominee you specify or you may withhold authority to vote for all of the nominees as a group. For all other proposals described in this proxy statement, you may vote “FOR” or “AGAINST” or abstain from voting.

 

 

Q:

May I vote in person at the Annual Meeting?

 

TopBuild Corp. - Proxy Statement 6

 


 

 

 

A:

Yes, you may vote your shares at the Annual Meeting if you attend in person. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy or voting instructions as described above, or as directed by your broker if you hold your shares through a broker, so that your vote will be counted if you later decide not to attend the Annual Meeting.

 

 

Q:

What is the difference between holding shares as a shareholder of record and as a beneficial owner?

 

 

A:

If your shares are registered in your name on the Company's books and records or with our transfer agent, Computershare, you are the “shareholder of record” of those shares, and this Notice of Annual Meeting and Proxy Statement and any accompanying documents have been provided directly to you by us. In contrast, if you purchased your shares through a brokerage or other financial intermediary, the brokerage or other financial intermediary will be the “shareholder of record” of those shares. Generally, when this occurs, the brokerage or other financial intermediary will automatically put your shares into “street name,” which means that the brokerage or other financial intermediary will hold your shares in its name or another nominee's name and not in your name, but will keep records showing you as the real or “beneficial owner.” If you hold shares beneficially in street name, this Notice of Annual Meeting and Proxy Statement and any accompanying documents will have been forwarded to you by your broker, bank or other holder of record.

 

 

Q:

How do I vote if my bank or broker holds my shares in “street name”?

 

 

A:

If you hold shares beneficially, you may vote by submitting the voting instruction form you received from your broker. Telephone and Internet voting may also be available – please refer to the voting instruction card provided by your broker.

 

 

Q:

How many votes do I have?

 

 

A:

Each share of common stock that you own as of the close of business on the Record Date (March 2, 2018) entitles you to one (1) vote on each matter to be voted upon at the Annual Meeting. As of the close of business on the Record Date, there were 35,610,656 shares of our common stock outstanding.

 

 

Q:

May I change my vote?

 

 

A:

Yes, you may change your vote or revoke your proxy at any time before the vote at the Annual Meeting. You may change your vote prior to the Annual Meeting by executing a valid proxy card bearing a later date and delivering it to us prior to the Annual Meeting at TopBuild Corp., Attention: W. Joe Jacumin, Jr., Assistant Secretary, 475 North Williamson Boulevard, Daytona Beach, Florida 32114‑7101. Submitting a proxy card will revoke votes you may have made with a previous proxy card. You may withdraw your vote at the Annual Meeting and vote in person by giving written notice to our Assistant Secretary (the “Assistant Secretary”). You may also revoke your vote without voting by sending written notice of revocation by April 29, 2018, to the Assistant Secretary at the above address. Attendance at the meeting will not by itself revoke a previously granted proxy.

 

 

Q:

How are my shares voted if I submit a proxy card but do not specify how I want to vote?

 

 

A:

If you submit a properly executed proxy card but do not specify how you want to vote, your shares will be voted “FOR” the election of each of the Company's nominees for director; “FOR” the proposal to amend Article 6 of our Certificate of Incorporation to eliminate the classification of our Board and implement the annual election of directors; “FOR” the proposal to amend Article 5 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the affirmative vote required to amend our bylaws; “FOR” the proposal to Amend Article 11 of our Certificate of Incorporation to reduce from 80% to 66 ⅔% the affirmative vote required to amend certain provisions of our Certificate of Incorporation; “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018; and “FOR” advisory approval of the compensation of the Company's named executive officers.

 

 

 

TopBuild Corp. - Proxy Statement 7

 


 

 

If other business is properly brought before the Annual Meeting, the persons named on the proxy card will vote on such other matters in their discretion.

 

 

 

If you hold your shares beneficially, such as through a broker, and not of record, see the question above titled “How do I vote if my bank or broker holds my shares in 'street name'?”

 

 

Q:

How many votes are needed to approve each of the proposals?

 

 

A:

Proposal

Vote Required

Broker
Discretionary
Voting Allowed

 

Election of Directors

Plurality of votes cast**

No

 

Amendment of Article 6 of our Certificate of Incorporation to eliminate the classification of our board and implement the annual election of directors

80% of the voting power of all of our outstanding common stock

No

 

Amendment of Article 5 of our Certificate of Incorporation to reduce from 80% to 66 ⅔% the affirmative vote required to amend our Bylaws

80% of the voting power of all of our outstanding common stock

No

 

Amendment of Article 11 of our Certificate of Incorporation to reduce from 80% to 66 ⅔% the affirmative vote required to amend certain provisions of our Certificate of Incorporation

80% of the voting power of all of our outstanding common stock

No

 

Ratification of Appointment of PricewaterhouseCoopers LLP

Majority of votes cast

Yes

 

Advisory Vote on Executive Compensation

Majority of votes cast

No

 

 

 

** Please see “Majority Vote Policy”, below.

 

 

 

Election of Directors. Directors will be elected on a plurality basis. This means that the three (3) candidates receiving the highest number of “FOR” votes will be elected. A properly executed proxy card marked “WITHHOLD” with respect to the election of a director nominee will be counted for purposes of determining if there is a quorum at the Annual Meeting, but will not be considered to have been voted for or against the director nominee. Withhold votes and broker non-votes will have no effect on the outcome of the election.

 

Majority Vote Policy

 

Our Corporate Governance Guidelines include a director majority vote policy. The majority vote policy is applicable solely to uncontested elections, which are those elections in which the number of nominees for election is less than or equal to the number of directors to be elected. Under the majority vote policy, any nominee for director who receives more “withheld” votes than “for” votes in an uncontested election must submit a written offer to resign as director. Any such resignation will be reviewed by the Governance Committee, and, within 90 days after the election, the independent members of the Board will determine whether to accept, reject or take other appropriate action with respect to the resignation in furtherance of the best interests of the Company and its shareholders.

 

 

 

Proposal to Amend Article 6 of our Certificate of Incorporation to Eliminate the Classification of our Board and Implement the Annual Election of Directors.  The affirmative vote of the holders of not less than 80% of the voting power of all of our outstanding common stock is required for approval of this proposal. Abstentions and broker non-votes will not be counted as votes cast, although they will have the practical effect of a vote against the proposal.

 

 

 

Proposal to Amend Article 5 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the Affirmative Vote Required to Amend our Bylaws. The affirmative vote of the holders of not less than 80% of the voting power of all of our outstanding common stock is required for approval of this proposal. Abstentions and broker non-votes will not be counted as votes cast, although they will have the practical effect of a vote against the proposal.

 

 

 

TopBuild Corp. - Proxy Statement 8

 


 

 

Proposal to Amend Article 11 of our Certificate of Incorporation to Reduce from 80% to 66 ⅔% the Affirmative Vote Required to Amend Certain Provisions of our Certificate of Incorporation. The affirmative vote of the holders of not less than 80% of the voting power of all of our outstanding common stock is required for approval of this proposal. Abstentions and broker non-votes will not be counted as votes cast, although they will have the practical effect of a vote against the proposal.

 

 

 

Ratification of the Appointment of PricewaterhouseCoopers LLP. The affirmative vote of the holders of a majority of the votes cast is required for approval of this proposal. Abstentions and broker non-votes will not be counted as votes cast, although they will have the practical effect of reducing the number of affirmative votes required to achieve a majority by reducing the total number of shares from which the majority is calculated.

 

 

 

Advisory Vote on Compensation of Named Executive Officers. The affirmative vote of the holders of a majority of the votes cast is required for approval of this proposal. Abstentions and broker non-votes will not be counted as votes cast, although they will have the practical effect of reducing the number of affirmative votes required to achieve a majority by reducing the total number of shares from which the majority is calculated.

 

 

Q:

What is the effect of an abstention?

 

 

A:

The shares of a shareholder who abstains from voting on a matter will be counted for purposes of determining whether a quorum is present at the meeting so long as the shareholder is present in person or represented by proxy. An abstention from voting on a matter by a shareholder present in person or represented by proxy at the meeting has no effect on the election of directors. In addition, abstentions will not be counted as votes cast on the proposals to ratify the appointment of PricewaterhouseCoopers LLP or to approve, on an advisory basis, the compensation of our named executive officers, although they will have the practical effect of reducing the number of affirmative votes required to achieve a majority by reducing the total number of shares from which the majority is calculated.  For proposals 2, 3 and 4 with respect to the proposed amendments to our Amended and Restated Certificate of Incorporation, abstentions will have the effect of votes against such proposals.

 

 

Q:

Will my shares be voted if I don't provide instructions to my broker?

 

 

A:

If you are the beneficial owner of shares held in “street name” by a broker, you must instruct your broker how to vote your shares. If you do not provide voting instructions at least ten (10) days prior to the Annual Meeting date, your broker will be entitled to vote the shares with respect to “routine” items but will not be permitted to vote the shares with respect to “non-routine” items (we refer to the latter case as a broker non-vote). In the case of a broker non-vote, your broker can register your shares as being present at the Annual Meeting for purposes of determining the presence of a quorum, but will not be able to vote on those matters for which specific authorization is required under the rules of the NYSE.

 

 

 

Under NYSE rules, only the proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018 is a “routine” matter, on which your broker will be allowed to vote without specific voting instructions.

All other proposals described in this proxy statement, including, without limitation, the election of directors, are “non-routine” matters on which your broker will not be allowed to vote unless you provide your broker with specific voting instructions on these proposals.

 

 

 

Your vote is important, and we strongly encourage you to vote your shares by following the instructions provided on the Notice, the proxy card or the voting instruction form provided by your broker. Please vote promptly.

 

 

Q:

Who will count the votes?

 

 

A:

Votes will be counted by representatives of Broadridge Financial Solutions, Inc.

 

 

 

TopBuild Corp. - Proxy Statement 9

 


 

Q:

Do shareholders have any appraisal or dissenters' rights on the matters to be voted on at the Annual Meeting?

 

 

A:

No, shareholders of the Company will not have rights of appraisal or similar dissenters' rights with respect to any of the matters identified in this proxy statement to be acted upon at the Annual Meeting.

 

 

Q:

What do I need for admission to the Annual Meeting?

 

 

A:

Attendance at the Annual Meeting or any adjournment or postponement thereof will be limited to record and beneficial holders of our common stock as of the Record Date, individuals holding a valid proxy from a record holder, and other persons authorized by the Company. If you are a shareholder of record, your name will be verified against the list of shareholders of record prior to your admittance to the Annual Meeting or any adjournment or postponement thereof. You should be prepared to present photo identification for admission. If you hold your shares in street name, you will need to provide proof of beneficial ownership on the Record Date, such as a brokerage account statement showing that you owned shares of our common stock as of the Record Date, a copy of a voting instruction form provided by your broker, bank or other nominee, or other similar evidence of ownership as of the Record Date, as well as your photo identification, for admission. If you do not provide photo identification or comply with the other procedures described above upon request, you will not be admitted to the Annual Meeting or any adjournment or postponement thereof.

 

 

Q:

Who pays for the Company's solicitation of proxies?

 

 

A:

The Company bears the cost of the solicitation of proxies. In addition to mail and email, proxies may be solicited personally, via the Internet, by telephone, by facsimile, or by our employees without additional compensation. We will reimburse brokers and other persons holding shares of our common stock in their names, or in the names of nominees, for their expenses (in accordance with the fee schedule approved by the NYSE) for forwarding proxy materials to principals and beneficial owners and obtaining their proxies.

 

 

Q:

How can I find out the results of the voting at the Annual Meeting?

 

 

A:

We will announce the results of the voting at the Annual Meeting promptly once they are available and will report final results in a Current Report on Form 8K filed with the SEC on or prior to the fourth business day immediately following the Annual Meeting.

 

 

Q:

What is “householding” and how does it work?

 

 

A:

SEC rules permit us to deliver only one (1) copy of our annual report and this proxy statement or the Notice to multiple shareholders who share the same address and have the same last name, unless we received contrary instructions from a shareholder. This delivery method, called “householding,” reduces our printing and mailing costs. Shareholders who participate in householding and who request to receive printed proxy materials will continue to receive separate proxy cards.

 

 

 

We will deliver promptly upon written or oral request a separate copy of our annual report and proxy statement or Notice to any shareholder who received these materials at a shared address. To receive a separate copy of the 2017 Annual Report or this proxy statement, or if you wish to receive separate copies of future annual reports and/or proxy statements, please contact our investor relations department by telephone at (386) 7638801 or in writing at 475 North Williamson Boulevard, Daytona Beach, Florida 32114‑7101.

 

 

 

If you and other shareholders of record with whom you share an address currently receive multiple copies of annual reports and/or proxy statements, or if you hold stock in more than one (1) account and, in either case, you wish to receive only a single copy of the annual report or proxy statement for your household, please contact our transfer agent, Computershare, at (866) 2300666.

 

 

 

If you are a beneficial owner, you can request additional copies of the annual report and proxy statement or you may request householding information from your bank, broker or nominee.

 

 

 

TopBuild Corp. - Proxy Statement 10

 


 

CORPORATE GOVERNANCE

Good governance is a critical part of our corporate culture. The following provides an overview of certain of our governance practices:

 

 

 

Board of Directors

 

Board Alignment with Shareholders

      Size of Board –  7

      Directors elected by plurality vote of shareholders, but subject to our Director Majority Vote Policy

      Non-CEO Chair

      All directors are expected to attend the Annual Meeting

 

      Annual equity grants align directors and executives with shareholders

      Annual advisory approval of executive compensation

      Stock ownership requirements for officers and directors

Board Composition

 

Compensation

      Number of independent directors –  6

      Diverse Board

      3 current or former Chief Executive Officers

      4 financial experts on Audit Committee

 

      No employment agreements

      Executive compensation is tied to performance

      Incentive plan claw-backs

Independent advisor hired by the Compensation Committee

Board Processes

 

Integrity and Compliance

      Independent directors meet without management present

      Annual Board and Committee self-assessments

      Board orientation/evaluation program

      Board plays active role in risk oversight

      Corporate Governance Guidelines approved by Board

 

      Code of Business Ethics

      Environmental, health and safety guidelines

      Annual training on ethical behavior

 

The Board has adopted Corporate Governance Guidelines (the “Guidelines”) that contain general principles regarding the responsibilities and function of our Board and Board Committees. The Guidelines set forth the Board's governance practices with respect to leadership structure, the Director majority vote policy, Board meetings and access to senior management, director compensation, director qualifications, Board performance, management evaluation and succession planning and enterprise risk management. The Guidelines are available at http://www.topbuild.com/Investors/Corporate-Governance/Governance-Documents/.

The Board has also adopted a Code of Business Ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other senior officers, in accordance with applicable rules and regulations of the SEC and the NYSE. Our Code of Business Ethics is available at http://www.topbuild.com/Investors/Corporate-Governance/Governance-Documents/.

Board Leadership Structure

The Board does not have a formal policy as to whether the roles of Chairman of the Board and Chief Executive Officer should be separate or combined. The Board currently separates the roles of Chairman of the Board of Directors and Chief Executive Officer. Alec C. Covington, an independent director, currently serves as the Chairman of the Board. We believe that separation of the positions of Chairman of the Board and Chief Executive Officer reinforces the independence of the Board in its oversight of our business and affairs, is more conducive to objective evaluation and oversight of management's performance, increases management accountability and improves the Board's ability to monitor whether management's actions are in the best interests of the Company and its shareholders.

The Board's independent oversight function is further enhanced by the fact that all three (3) Committees are composed entirely of independent directors, the directors have complete access to management, the Board and these Committees may retain their own advisors and the independent Compensation Committee regularly evaluates the performance of our senior executive officers against pre-determined goals.

 

TopBuild Corp. - Proxy Statement 11

 


 

Executive Sessions

The Board regularly meets in executive session, without management present, with Alec Covington, Chairman of the Board, presiding.

Board of Directors Majority Vote Policy

The Guidelines include a director majority vote policy. The majority vote policy is applicable solely to uncontested elections, which are those elections in which the number of nominees for election is less than or equal to the number of directors to be elected. Under the majority vote policy any nominee for director who receives more “withheld” votes than “for” votes in an uncontested election must submit a written offer to resign as director. Any such resignation will be reviewed by the Governance Committee, and, within 90 days after the election, the independent members of the Board will determine whether to accept, reject or take other appropriate action with respect to the resignation in furtherance of the best interests of the Company and its shareholders.

Certain Relationships and Related Party Transactions

The Board has adopted a related person transactions policy that requires the Board, or a designated committee thereof consisting solely of independent directors, to approve or ratify any transaction involving us in which any director, director nominee, executive officer, 5% beneficial owner of our common stock or any of their immediate family members has a direct or indirect material interest. This policy covers financial transactions, arrangements or relationships or any series of similar transactions, arrangements or relationships, including indebtedness and guarantees of indebtedness, as well as transactions involving employment and similar relationships. This policy excludes transactions determined by the Board or a committee of independent directors not to create or involve a material interest on the part of the related person, such as transactions involving the purchase or sale of products or services in the ordinary course of business in transactions of $120,000 or less, transactions in which the related person's interest is derived solely from service as a director of another entity that is a party to the transaction and transactions in which the related person's interest derives solely from his or her ownership (together with that of any other related persons) of less than 10% of the equity interests in another entity (other than a general partnership interest) which is a party to the transaction. The policy requires directors, director nominees and executive officers to provide prompt written notice to the Assistant Secretary of any related person transaction so it can be reviewed by the Board or a designated committee thereof consisting solely of independent directors to determine whether the related person has a direct or indirect material interest. If the Board or a designated committee thereof consisting solely of independent directors determines that this is the case, the Board or such committee will consider all relevant information to assess whether the transaction is in, or not inconsistent with, our best interests and the best interests of our shareholders. The Board reviews this policy annually and makes changes as appropriate.

Compensation Committee Interlocks and Insider Participation

In 2017, none of our executive officers or directors was a member of the Board of Directors of any other company where the relationship would be considered a compensation committee interlock under SEC rules.

Potential Director Candidates

The Governance Committee is responsible for screening potential director candidates and recommending qualified candidates to the full Board. We expect our Board to consist of individuals with appropriate skills and experiences to meet Board governance responsibilities and to contribute effectively to our Company. The Governance Committee seeks to ensure that the Board reflects a range of talents, ages, skills, diversity and expertise, particularly in the areas of accounting and finance, management, domestic markets, governmental/regulatory and leadership, sufficient to provide sound and prudent guidance with respect to our operations and interests. Our Board seeks to maintain a diverse membership, but does not currently have a separate policy on diversity.

 

TopBuild Corp. - Proxy Statement 12

 


 

The Governance Committee does not have a specific policy regarding consideration of any director candidates recommended by shareholders. The Governance Committee will consider director candidates recommended by shareholders, using the same criteria as for other candidates. Shareholders may submit recommendations in accordance with the procedures for nominations and proposals for other business to be brought at the Annual Meeting, as set forth in this proxy statement.

Risk Management

While our management is responsible for the day-to-day management of risks to the Company, our Board has broad oversight responsibility for our risk management programs.

Our Board exercises risk management oversight and control both directly and indirectly, the latter through various Board committees. Our Board regularly reviews information regarding the Company's credit, liquidity and operations, including the risks associated with each. The Compensation Committee is responsible for overseeing the management of risks relating to the Company's compensation policies and practices. The Audit Committee is responsible for oversight of financial risks, including the steps the Company has taken to monitor and mitigate these risks. The Governance Committee is responsible for oversight of risks related to corporate governance and, in its role of reviewing and maintaining the Company's Corporate Governance Guidelines and Code of Business Ethics, manages risks associated with the independence of the Board and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports and by the Chief Executive Officer about the known risks to the strategy and the business of the Company.

Corporate Governance Documents

Current copies of the following corporate governance documents are on our website at: http://www.topbuild.com/Investors/Corporate-Governance/Governance-Documents/:

·

Corporate Governance Guidelines

·

Code of Business Ethics

·

Audit Committee Charter

·

Compensation Committee Charter

·

Governance Committee Charter

We will provide any of these documents in print to any shareholder upon written request to TopBuild Investor Relations, 475 North Williamson Boulevard, Daytona Beach, Florida 32114‑7101.

Communications to the Board

Shareholders and other parties interested in communicating directly with the Board, an individual director, the non-management directors as a group, or a Board Committee should send such communications to the following address:

TopBuild Corp.
c/o Assistant Secretary
475 North Williamson Boulevard
Daytona Beach, Florida 32114‑7101, USA

The Assistant Secretary will receive and process all communications. The Assistant Secretary will forward all communications unless the Assistant Secretary determines that a communication is a business solicitation or advertisement, or is a request for general information about the Company.

 

TopBuild Corp. - Proxy Statement 13

 


 

PROPOSAL 1: ELECTION OF DIRECTORS

Our Board of Directors consists of seven (7) directors, six (6) of whom the Board has determined satisfy the Company's Director Independence Standards (“Categorical Standards”), which track the NYSE director independence standards.

The Company's Board has three (3) staggered classes of Directors, each of whom serves for a term of three (3) years. At the Annual Meeting, the Board's  Class III Directors will be elected to hold office for a term of three (3) years or until their respective successors are elected and qualified. Unless otherwise instructed, the shares represented by validly submitted proxy cards will be voted “FOR” the election of the below listed Board nominees to serve as Class III Directors of the Company.

Management has no reason to believe that the below listed Board nominees will not be candidates or will be unable to serve as Class III Directors. However, in the event that either of the below listed Board nominees should become unable or unwilling to serve as Class III Director(s), the proxy card will be voted for the election of such alternate person(s) as shall be designated by the Board. If any alternate person(s) is/are designated by the Board to serve as Class III Director nominee(s), the Company will publicly notify shareholders by press release and will promptly distribute to shareholders revised proxy materials (including a revised proxy card if you requested to receive printed proxy materials) that (i) identify each such substitute nominee, (ii) disclose whether such substitute nominee has consented to being named in the revised proxy statement and is willing to serve if elected and (iii) include certain other disclosures required by applicable federal proxy rules and regulations with respect to each such substitute nominee. Under our Amended and Restated Certificate of Incorporation, vacancies on the Board shall, except as otherwise required by law, be filled solely by a majority of the directors then in office or by the sole remaining director, and each director so elected shall hold office for a term that shall coincide with the term of the Class to which such director shall have been elected.

Information about Director Nominees and Continuing Directors

Nominees for election as directors with terms expiring in 2021

 

 

 

 

 

 

Gerald Volas

Picture 17

 

Director Since: 2015

Chief Executive Officer

Age: 63

Committees: None

 

Experience and Qualifications:

Mr. Volas has served as our Chief Executive Officer since June 2015. Mr. Volas was a Group President at Masco Corporation (“Masco”) from 2006 to June 2015 and prior to that, President of Liberty Hardware Mfg. Corp., a Masco operating company, from 2001 to 2005. From 1996 to 2001, he served as a Group Controller supporting a variety of Masco operating companies; and from 1982 to 1996, he served in progressive financial roles including Vice President/Controller at BrassCraft Manufacturing Company, a Masco operating company. Mr. Volas is a Certified Public Accountant. Mr. Volas is a director of Trex Company, Inc., a manufacturer of wood alternative decking and related products, serving since March 2014.

Mr. Volas' leadership positions with Masco and Masco's subsidiaries give him company-specific knowledge in all areas important to TopBuild's performance including, among others, key markets, personnel, customer and supplier relationships, operations, marketing, finance and risk management.

 

TopBuild Corp. - Proxy Statement 14

 


 

Carl T. Camden

Picture 22

 

Director Since: 2015

Former President and Chief Executive Officer, Kelly Services, Inc.

Age: 63

Independent

Committees: Audit, Compensation and Governance

Audit Committee Financial Expert

 

Experience and Qualifications:

Mr. Camden formerly served as Chief Executive Officer of Kelly Services, Inc., a global provider of outsourcing and consulting services and workforce solutions, from 2006 to 2017 and as its President from 2001 to 2017. He joined Kelly Services in 1995 and has served in various executive roles with responsibilities for sales, marketing and strategy. Prior to joining Kelly Services, Mr. Camden was Senior Vice President and Director of Corporate Marketing for KeyCorp, a financial services company. He has been a director of Temp Holdings Co., Ltd. since 2008 and Kelly Services from 2002 to 2017. From 2006 to 2013, Mr. Camden was also a director of the Federal Reserve Bank of Chicago, Detroit Branch, serving as its Chairman from 2011 to 2013.

Mr. Camden has significant experience and expertise in executive management, human resource strategies, labor dynamics, economics and marketing. His strong leadership skills as well as his considerable knowledge and experience in the factors that affect the labor market and global business operations are an asset to our Company. The Board has affirmatively determined that Mr. Camden is independent.

Joseph S. Cantie

Picture 23

 

Director Since: 2015

Former Chief Financial Officer, TRW Automotive Holdings Corp.

Age: 54

Independent

Committees: Audit (Chair), Compensation and Governance

Audit Committee Financial Expert

 

Experience and Qualifications:

Mr. Cantie is the former Executive Vice President and Chief Financial Officer of TRW Automotive Holdings Corp., a diversified global supplier of automotive systems, modules and components, a position he held from February 2003 until January 2016. From 2001 to 2003, Mr. Cantie was Vice President, Finance for the automotive business of TRW, Inc., a global aerospace, systems and automotive conglomerate. Mr. Cantie served as TRW Inc.'s Vice President, Investor Relations from 1999 until 2001. From 1996 to 1999, Mr. Cantie was employed by LucasVarity plc, serving in several executive positions, including Vice President and Controller. Prior to joining LucasVarity, Mr. Cantie was employed as a certified public accountant with the international accounting firm of KPMG. Mr. Cantie is a director of Delphi Technologies PLC, an automotive parts company, and Summit Materials, Inc., a vertically-integrated construction materials company.

Mr. Cantie has significant experience leading the finance organization of a large company. His background and expertise provides us with a deeper understanding of finance, financial operations, capital markets and investor relations. The Board has affirmatively determined that Mr. Cantie is independent.

 

The Board of Directors recommends that you vote “FOR” the election of Gerald Volas, Carl T. Camden and Joseph S. Cantie as Class III Directors.

 

 

TopBuild Corp. - Proxy Statement 15

 


 

Continuing directors with terms expiring in 2019

Dennis W. Archer

Picture 21

 

Director Since: 2015

Chairman and Chief Executive Officer of Dennis W. Archer PLLC

Chairman Emeritus of Dickinson Wright PLLC

Age: 76

Independent

Committees: Audit, Compensation and Governance

 

Experience and Qualifications:

Mr. Archer has served as Chairman and Chief Executive Officer of Dennis W. Archer PLLC since 2010. He has also served as Chairman Emeritus of Dickinson Wright PLLC since 2010, prior to which he was Chairman from 2002 to 2009. Mr. Archer was Chair of the Detroit Regional Chamber from 2006 to 2007, and President of the American Bar Association from 2003 to 2004. He served two (2) terms as Mayor of the City of Detroit, Michigan from 1994 through 2001 and was President of the National League of Cities from 2000 to 2001. He was appointed as an Associate Justice of the Michigan Supreme Court in 1985, and in 1986 was elected to an eight (8) year term. From 2002 through 2014, Mr. Archer served as a director of Johnson Controls, Inc. and Compuware Corporation. He also served as director of Masco Corporation from 2004 through 2016.

Mr. Archer's long and distinguished career as an attorney and judge provides our Board with specific expertise and a unique understanding of litigation and other legal matters. As a result of his position as Mayor of Detroit, he has broad leadership, administrative and financial experience and is also knowledgeable in the area of governmental relations. The Board has affirmatively determined that Mr. Archer is independent.

Alec C. Covington

Picture 25

 

Director Since: 2015

Managing Director, Haynes Park Capital, LLC

Age: 61

Independent/Chairman of the Board

Committees: Audit, Compensation and Governance (Chair)

Audit Committee Financial Expert

 

Experience and Qualifications:

Mr. Covington has served as Managing Director of Haynes Park Capital, LLC, a private investment and business consulting firm, since forming the company late in 2013. Mr. Covington served as the President and Chief Executive Officer of Nash-Finch Company, a food distribution company, from 2006 until the company merged with Spartan Stores, Inc. in 2013. From 2004 to 2006, he served as both President and Chief Executive Officer of Tree of Life, Inc., a specialty food distributor, and as a member of the Executive Board of Tree of Life's parent corporation, Royal Wessanen NV, a corporation based in the Netherlands. From 2001 to 2004, Mr. Covington was Chief Executive Officer of AmeriCold Logistics, LLC, a company that specializes in temperature-controlled warehousing and logistics for the food industry. Prior to that time, Mr. Covington was the President of Richfood Inc. and Executive Vice President of Supervalu Inc.

Mr. Covington has a strong background in distribution, supply chain operations and logistics. His significant leadership, executive management experience and expertise in the areas of management, operations and business development provide us with a broad-based understanding of areas important to our growth and operations. The Board has affirmatively determined that Mr. Covington is independent.

 

TopBuild Corp. - Proxy Statement 16

 


 

Continuing directors with terms expiring in 2020

Mark A. Petrarca

Picture 13

 

Director Since: 2015

Senior Vice President of Human Resources and Public Affairs, A. O. Smith Corporation

Age: 54

Independent

Committees: Audit, Compensation (Chair) and Governance

 

Experience and Qualifications:

Mr. Petrarca has served as the Senior Vice President of Human Resources and Public Affairs of A. O. Smith Corporation, a global manufacturer of residential and commercial water heating equipment, since 2005. In this role, he is responsible for all human resource activities, including policy and strategy development, performance management, employee relations, compensation and benefits and organizational development and succession planning, as well as public affairs and communications. Mr. Petrarca joined A. O. Smith Corporation in 1999, serving as Vice President-Human Resources for its Water Products Company until 2005. Mr. Petrarca was previously employed as Director of Human Resources for Strike Weapon Systems, a division of Raytheon Systems Company, and in various manufacturing and human resources positions at the Defense Systems and Electronics Group of Texas Instruments.

Mr. Petrarca brings strong expertise in domestic and international human resources and insight into employee relations issues, public affairs and communications. He provides us with valuable experience in policy and strategy development, performance management, organizational development, succession planning, executive compensation and mergers and acquisitions. He also has a deep understanding of the building products industry. The Board has affirmatively determined that Mr. Petrarca is independent.

Margaret M. Whelan

Picture 16

 

Director Since: 2015

Chief Executive Officer, Whelan Advisory, LLC

Age: 45

Independent

Committees: Audit, Compensation and Governance

Audit Committee Financial Expert

 

Experience and Qualifications:

Ms. Whelan has served as Chief Executive Officer of Whelan Advisory, LLC since 2014, providing strategic and financial counsel to leaders of both public and private companies in the U.S. and internationally. Previously, she served as the Chief Financial Officer of Tricon Capital Group, an asset manager and investor in the North American residential real estate industry, from 2013 to 2014. From 2007 to 2013 she served as the Managing Director—Real Estate & Lodging Investment Banking Group of J.P. Morgan. In that role, Ms. Whelan managed the key relationships and risk associated with public and private homebuilders, residential real estate developers and financial sponsors. From 1997 to 2007 she was employed by UBS Investment Bank as the Managing Director—Builder & Building Products Equity Analyst, Global Head of House Research. She was previously employed by Merrill Lynch as an Equity Research Associate.  In 2017, Ms. Whelan joined the board of Mattamy Homes.

Ms. Whelan's extensive knowledge of the building industry, gained through her experience as an analyst, together with her financial experience, provides us with strategic insight and a valuable perspective of the housing market and its key participants and dynamics. Further, her investment banking experience assists us as we evaluate growth opportunities. The Board has affirmatively determined that Ms. Whelan is independent.

 

TopBuild Corp. - Proxy Statement 17

 


 

BOARD OF DIRECTORS AND COMMITTEES

Board Meetings and Committees

Our business is managed under the direction of the Board. The Board has established the following standing committees: Audit; Compensation; and Governance. The membership and function of each committee is described herein.

In fiscal 2017, the Board held five (5) regularly scheduled meetings and met telephonically three (3) times. All of the directors attended 100% of the meetings of the Board and the Committees on which they served. Directors are expected to attend the Annual Meeting. All of the directors attended the 2017 Annual Meeting of shareholders.

COMMITTEES OF THE BOARD

Each Committee has a written charter that sets forth in detail the duties and responsibilities of the Committee. Current copies of each of the Committee charters are available on our website at: http://www.topbuild.com/ Investors/Corporate-Governance/Governance-Documents/.

Audit Committee

 

 

Roles and responsibilities:

Fiscal 2017 Membership

      Appointing and overseeing a firm to serve as the independent registered public accounting firm to audit our financial statements;

      Ensuring the independence of the independent registered public accounting firm;

      Discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and that firm, our interim and year-end financial results;

      Reviewing and reassessing the adequacy of our Code of Business Ethics;

      Establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters;

      Measuring the adequacy of our internal controls and internal audit function; and

      Approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.

Joseph S. Cantie (Chair)
Dennis W. Archer
Carl T. Camden
Alec C. Covington
Mark A. Petrarca
Margaret M. Whelan

Number of Meetings in FY 2017:

Four (4)

Independence:

      All members of the Audit Committee meet the independence standards and requirements of the NYSE and the SEC

      The Board has determined that Messrs. Cantie, Camden, Covington and Ms. Whelan qualify as “audit committee financial experts” as defined by SEC rules

 

Governance Committee

B

 

Roles and responsibilities:

Fiscal 2017 Membership

      Identifying and recommending candidates for officers and membership on our Board of Directors and recommending directors for appointment to the committees of our board of directors;

      Reviewing the adequacy of our Code of Business Ethics as it relates to directors and executive officers, and overseeing compliance with the Code of Business Ethics by directors;

      Overseeing the process of evaluating the performance of the Board and management;

      Overseeing an orientation and continuing education program for directors; and

      Assisting the Board on corporate governance matters, including reviewing and recommending any proposed changes to our Corporate Governance Guidelines, Code of Business Ethics, Amended and Restated Bylaws and Amended and Restated Certificate of Incorporation.

Alec C. Covington (Chair)
Dennis W. Archer
Carl T. Camden
Joseph S. Cantie
Mark A. Petrarca
Margaret M. Whelan

No. of Meetings in FY 2017:

Four (4)

Independence:

      All members meet the independence standards and requirements of the NYSE

 

TopBuild Corp. - Proxy Statement 18

 


 

 

Compensation Committee

Roles and responsibilities:

Fiscal 2017 Membership

      Reviewing and approving the Company's compensation and benefits policies generally (subject, if applicable, to shareholder ratification), including reviewing and approving incentive compensation plans and equity-based plans of the Company;

      Making recommendations to the Board with respect to incentive compensation plans and equity-based plans;

      Approving and ratifying the grant of awards under the Company's incentive compensation and equity-based plans, including amendments to the awards made under any such plans, and reviewing and monitoring awards under such plans;

      Reviewing and approving corporate goals and objectives relevant to executive compensation for each of the Company's senior corporate executives, evaluating each executive's performance in light of such goals and objectives, and setting each executive's compensation based on such evaluation and other factors as the Committee deems appropriate and in the best interests of the Company; and

      Determining the long-term incentive compensation component of senior corporate executives' compensation by considering such factors as the Committee deems appropriate and in the best interests of the Company.

Committee Advisors:

      Role of Executive Officers. The Chief Executive Officer (“CEO”) and certain other executives assist the Compensation Committee with its review of the compensation of our officers. At the Compensation Committee's request, the CEO provides input for the Compensation Committee to consider regarding the performance and appropriate compensation of the named executive officers other than himself. The CEO does not participate in the Compensation Committee's deliberations or decisions with regard to his own compensation. The Compensation Committee gives considerable weight to the CEO's evaluation of the other named executive officers because of his direct knowledge of each executive.

      Role of Compensation Consultants. Our Compensation Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser. In accordance with this authority, in March 2016, the Compensation Committee engaged Willis Towers Watson as its independent compensation consultant to provide it with objective and expert analyses, advice and information with respect to executive compensation. All executive compensation services provided by Willis Towers Watson will be directed or approved by the Compensation Committee. See “Compensation Discussion and Analysis” below.

Mark A. Petrarca (Chair)
Dennis W. Archer
Carl T. Camden
Joseph S. Cantie
Alec C. Covington
Margaret M. Whelan

No. of Meetings in FY 2017:

Five (5)

Independence:

      All members of the Committee are independent directors as defined by the NYSE and are not eligible to participate in any of our compensation plans or programs, except our Non-Employee Directors Equity Program

      All members are “non-employee directors” (within the meaning of Rule 16b3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and “outside directors” (within the meaning of Section 162(m) of the Code)

 

 

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Director Independence

Our Corporate Governance Guidelines and the rules of the NYSE require that a majority of the members of the Board be independent directors. Our Board has adopted its own director independence standards to assist it in assessing director independence (“Categorical Standards”). These Categorical Standards are available on our website at: http://www.topbuild.com/Investors/Corporate-Governance/Governance-Documents/. The Categorical Standards have been designed to comply with the NYSE standards for director independence. For a director to be independent, the Board must affirmatively determine that the director has no direct or indirect material relationship with the Company. When assessing materiality, the Board considers all relevant facts and circumstances including, without limitation, transactions between the Company and the director directly, immediate family members of the director, or organizations with which the director is affiliated, and the frequency and dollar amounts associated with these transactions. The Board further considers whether the transactions were at arm's length in the ordinary course of business and whether the transactions were consummated on terms and conditions similar to those of unrelated parties.

Until May 2017, one of our directors, Mr. Carl Camden, served as the President and Chief Executive Officer of Kelly Services, Inc., a temporary staffing company. We paid Kelly Services $51,300 for services in the year ended December 31, 2017. These services consisted of temporary field and insulation installation construction labor. The Board considered these payments in connection with its assessment of Mr. Camden's status as an independent director, including for purposes of membership on our Audit and Compensation Committees.

The Board also considered the nature of the services provided by Kelly Services to the Company, the fact that the Company's relationship with Kelly Services predated Mr. Camden's appointment to our Board and the fact that the payments by the Company comprised significantly less than one (1) percent of Kelly Services' 2017 revenue.

After considering our Categorical Standards, as well as the NYSE independence standards and the transactions described above, the Board determined that none of the current directors or director nominees, other than Mr. Volas (who is a current employee of the Company), has a material relationship with the Company, and that each of these directors (other than Mr. Volas) is independent.

The Board has also determined that all members of the Audit Committee meet the independence and financial literacy standards and requirements of the NYSE and the SEC. The Board has also determined that all members of the Compensation Committee meet the independence standards of the NYSE, and that all members of the Compensation Committee are “non-employee directors” (within the meaning of Rule 16b3 of the Exchange Act) and “outside directors” (within the meaning of Section 162(m) of the Code).

Summary

We have provided certain information about the capabilities, experience and other qualifications of our directors in their biographies and as set forth above. The Board considered these qualifications in particular in concluding that each current director and director nominee is qualified to serve as a director of the Company. In addition, the Board has determined that each director and director nominee possess the skills, judgment, experience, reputation and commitment to make a constructive contribution to the Board.

DIRECTOR COMPENSATION

As compensation for their service on our Board, each of our non-employee directors receive an annual retainer of $200,000, of which $80,000 is paid in cash and $120,000 is paid in the form of restricted stock. Additionally, our Chairman of the Board receives an annual cash retainer of $150,000 for service in this position. The additional annual retainers for serving as Chair of the Audit Committee, Compensation Committee and Governance Committee are $20,000, $15,000 and $10,000, respectively. Alec C. Covington declined receipt of the $10,000 annual retainer for serving as Chair of the Governance Committee. Our non-employee directors do not receive any perquisites. Mr. Gerald Volas, who is a director and Chief Executive Officer of our company, does not receive additional compensation for service as a director. The table below shows compensation for the year ended December 31, 2017.

 

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Director Compensation Table

 

 

 

 

 

 

 

 

Name(1)

    

Fees Earned or
Paid in Cash
($)

    

Stock
Awards
($)(2)

    

Total
($)

 

Alec C. Covington

 

230,000 

 

119,938 

 

349,938 

 

Joseph S. Cantie

 

100,000 

 

119,938 

 

219,938 

 

Mark A. Petrarca

 

95,000 

 

119,938 

 

214,938 

 

Carl T. Camden

 

80,000 

 

119,938 

 

199,938 

 

Dennis W. Archer

 

80,000 

 

119,938 

 

199,938 

 

Margaret M. Whelan

 

80,000 

 

119,938 

 

199,938 

 

 

(1) Gerald Volas, the Company's Chief Executive Officer and a director, is not included in this table as he is an employee of the Company and receives no additional compensation for his service as a director. The compensation received by Mr. Volas as an employee of the Company is shown in the Summary Compensation Table.

(2) This column reflects the grant date fair value of the entire amount of awards granted to our independent directors, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718, excluding estimated forfeitures.

Non-Employee Director Stock Ownership Guidelines

Our Governance Committee has adopted a policy requiring that our non-employee directors own five (5) times their annual cash retainer in our common stock. These guidelines become effective upon a non-employee director's election to the Board and give such directors five (5) years from the effective date to achieve the targeted ownership.  All of our non-employee directors have satisfied the guidelines or are on track to be in compliance with the guidelines within the five (5) year window.

 

TopBuild Corp. - Proxy Statement 21

 


 

The following report of the Audit Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any of TopBuild's filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such report by reference.

AUDIT COMMITTEE REPORT

The Audit Committee oversees the Company's financial reporting process on behalf of the Board. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited financial statements in the 2017 Annual Report with the Company's management and independent registered public accounting firm.

Management has the primary responsibility for the financial statements and the reporting process, including the Company's internal controls systems, and has represented to the Audit Committee that such financial statements were prepared in accordance with generally accepted accounting principles. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles.

The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees issued by the Public Company Accounting Oversight Board. In addition, the Audit Committee has discussed with the independent registered public accounting firm the independent registered public accounting firm's independence, including the matters in the written disclosures and letter which were received by the Audit Committee from the independent registered public accounting firm, as required by Independence Standard Board No. 1, Independence Discussions with Audit Committees. The Audit Committee has also considered whether the independent registered public accounting firm's provision of non-audit services to the Company is compatible with maintaining the independent registered public accounting firm's independence.

The Audit Committee discussed with the Company's internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee also met with the internal and independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of the Company's internal controls, and the overall quality of the Company's financial reporting.

Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Annual Report on Form 10K for the year ended December 31, 2017, for filing with the U.S. Securities and Exchange Commission.

Audit Committee

Joseph S. Cantie (Chair)

Dennis W. Archer

Carl T. Camden

Alec C. Covington

Mark A. Petrarca

Margaret M. Whelan

 

TopBuild Corp. - Proxy Statement 22

 


 

COMMON STOCK OWNERSHIP OF OFFICERS, DIRECTORS AND SIGNIFICANT SHAREHOLDERS

Directors and Executive Officers

The following table sets forth, as of March 2, 2018, beneficial ownership of TopBuild common stock by each executive officer named in the Summary Compensation Table in this proxy statement, each director or director nominee, and by all directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC. Except as indicated by footnote and subject to community property laws where applicable, to our knowledge, the persons named in the table below have sole voting and dispositive power with respect to all shares of common stock shown as beneficially owned by them. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options and warrants held by such person that are exercisable as of March 2, 2018 or that will become exercisable within 60 days thereafter are deemed outstanding for purposes of such person's percentage ownership but not deemed outstanding for purposes of computing the percentage ownership of any other person.

 

 

 

 

 

 

Name of Beneficial Owner(1)

    

Shares Beneficially
Owned
(#)

    

Percent of
Class
(2)

 

Gerald Volas(3)

 

285,445  

 

*

 

Robert M. Buck(4)

 

115,452  

 

*

 

John S. Peterson(5)

 

46,158  

 

*

 

Joseph S. Cantie(6)

 

16,300  

 

*

 

Dennis W. Archer

 

11,030  

 

*

 

Paul Joachimczyk(7)

 

7,699  

 

*

 

Alec C. Covington

 

7,550   

 

*

 

Mark A. Petrarca(8)

 

7,550   

 

*

 

Carl T. Camden

 

7,550   

 

*

 

Margaret M. Whelan

 

7,550   

 

*

 

All current directors and executive officers of the company as a group (10) persons

 

512,284  

 

1.4%

 

 

* Less than 1%

(1) The address for each beneficial owner listed in this table is 475 North Williamson Boulevard, Daytona Beach, Florida 32114‑7101.

(2) As of March 2, 2018, we had 35,610,656 shares of our common stock outstanding.

(3) Includes options to acquire 164,444 shares of common stock, 7,389 shares held in a revocable living trust, of which Mr. Volas is the trustee, and 294 shares held in a retirement plan.

(4) Includes options to acquire 60,691 shares of common stock.

(5) Includes options to acquire 16,294 shares of common stock.

(6) Includes 8,750 shares held in a revocable living trust, of which Mr. Cantie is the trustee.

(7) Includes options to acquire 1,846 shares of common stock.

(8) Includes 5,290 shares held in a revocable living trust, of which Mr. Petrarca is the trustee.

 

 

TopBuild Corp. - Proxy Statement 23

 


 

Certain Other Shareholders

As of March 2, 2018, the following were beneficial owners of more than 5% of our outstanding common stock. Unless otherwise indicated, each beneficial owner had sole voting and dispositive power with respect to the common stock held. In accordance with SEC rules, information with respect to each shareholder identified in the table below is derived from its most recently dated Schedule 13G or 13D, as filed by it with the SEC. We do not know, nor do we have reason to believe that such information is not complete or accurate or that a statement or amendment should have been filed and was not.

Name of Beneficial Owner

    

Shares Beneficially
Owned
(#)

    

Percent of Class(1)
(%)

 

BlackRock Inc.(2)

 

5,172,547 

 

14.5 

 

The Vanguard Group(3)

 

3,261,474 

 

9.2 

 

FMR LLC(4)

 

2,146,238 

 

6.0 

 

Wellington Management Group LLP(5)

 

2,241,678 

 

6.3 

 

Dimensional Fund Advisors LP(6)

 

2,387,449 

 

6.7 

 

 

(1) As of March 2, 2018, we had 35,610,656 shares of our common stock outstanding.

(2) BlackRock Inc. beneficially owned 5,172,547 shares of our common stock, over which it exercises sole dispositive power. The figure includes 5,089,335 shares over which it exercises sole voting power. The address of this shareholder is 55 East 52nd Street, New York, NY 10055. All information with respect to Blackrock is based on its Schedule 13G/A filed with the SEC on January 19, 2018, which additionally identifies those subsidiaries through which it beneficially owns the reported shares of common stock.

(3) Based on a Schedule 13G filed with the SEC on February 9, 2018, The Vanguard Group and certain of its subsidiaries beneficially owned 3,261,474 shares of our common stock, with sole voting power over 57,123 shares, sole dispositive power over 3,202,775 shares and shared dispositive power over 58,699 shares. The address of this shareholder is 100 Vanguard Blvd., Malvern, PA 19355.

(4) Based on a Schedule 13G filed with the SEC on February 13, 2018, FMR LLC beneficially owned 2,146,238 shares of our common stock, with sole voting power over 532,571 shares and sole dispositive power over all of the shares. The address of this shareholder is 245 Summer Street, Boston, Massachusetts 02210.

(5) Pursuant to the Schedule 13G filed with the SEC on February 8, 2018 by Wellington Management Group, LLP, the reporting persons share voting power over 1,838,402 shares and dispositive power over 2,241,678 shares. Pursuant to information contained in such Schedule 13G, all shares as to which such Schedule 13G was filed by Wellington Management Group LLP, as parent holding company of certain holding companies and the Wellington Investment Advisers, are owned of record by clients of the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP.

(6) Based on a Schedule 13G filed with the SEC on February 9, 2018, Dimensional Fund Advisors LP beneficially owned 2,387,449 shares of our common stock, with sole voting power over 2,309,591 shares and sole dispositive power over all of the shares. The address of this shareholder is Building One, 6300 Bee Cave Road, Austin, Texas 78746.

 

 

TopBuild Corp. - Proxy Statement 24

 


 

The following report of the Compensation Committee does not constitute soliciting material and should not be deemed filed or incorporated by reference into any of TopBuild's filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such report by reference. 

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis prepared by management and contained in this proxy statement. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

Compensation Committee

Mark A. Petrarca (Chair)
Dennis W. Archer
Carl T. Camden
Joseph S. Cantie
Alec C. Covington
Margaret M. Whelan

COMPENSATION OF EXECUTIVE OFFICERS

Executive Officers

Set forth below is information about our executive officers. There are no family relationships among any of the officers named below.

Gerald Volas. Mr. Volas, 63, has served as our Chief Executive Officer since June 2015. Mr. Volas was a Group President at Masco from 2006 to June 2015 and prior to that, President of Liberty Hardware Mfg. Corp., a Masco operating company, from 2001 to 2005. From 1996 to 2001, he served as a Group Controller supporting a variety of Masco operating companies; and from 1982 to 1996, he served in progressive financial roles including Vice President/Controller at BrassCraft Manufacturing Company, a Masco operating company. Mr. Volas holds a Bachelor of Business Administration degree from the University of Michigan at Ann Arbor and is a Certified Public Accountant. Mr. Volas is a director of Trex Company, Inc., a manufacturer of wood alternative decking and related products, serving since March 2014.

Robert Buck. Mr. Buck, 48, has served as our President and Chief Operating Officer since June 2015. Mr. Buck served as Group Vice President of Masco from 2014 until June 2015. In this position, Mr. Buck was responsible for the Installation and Other Services Segment consisting of both Masco Contractor Services and Service Partners. Mr. Buck served as President and Chief Executive Officer of Masco Contractor Services from 2011 until June 2015. Mr. Buck began his career with Masco in 1997 at Liberty Hardware Mfg. Corp., where he spent eight years in several operations leadership roles and worked extensively in international operations. Mr. Buck became Executive Vice President in 2005 and helped lead the merger of another Masco company with Liberty Hardware before being promoted to the office of President in 2007. Mr. Buck holds a Bachelor of Science degree in Information Systems and Operations Management, and a Masters in Business Administration from the University of North Carolina at Greensboro.

John Peterson. Mr. Peterson, 59, has served as our Vice President and Chief Financial Officer since June 2015. Mr. Peterson served as Executive Vice President, Chief Financial Officer of Masco Contractor Services from November 2010 until June 2015. From 2006 to 2010, he was the Chief Financial Officer of Masco Retail Cabinet Group, a Masco subsidiary. From 2001 to 2006, he was the Vice President-Finance for Biolab and from 1998 to 2001, he was the Vice President-Finance, Performance Chemicals Division, both subsidiaries of Great Lakes Chemical, which has since changed its name to Chemtura Corporation. Mr. Peterson holds a Bachelor of Science degree in Accounting from Pennsylvania State University and a Masters in Business Administration from the University of Indianapolis.

 

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Paul Joachimczyk. Mr. Joachimczyk, 45, has served as our Vice President, Controller since October 2016. Previously, he was the Chief Financial Officer for a division within Stanley Black and Decker. Mr. Joachimczyk also served in various Controller positions at General Electric and was a Senior Financial Analyst at We Energies and Blue Cross Blue Shield Milwaukee. Mr. Joachimczyk began his career as a financial auditor with Ernst and Young, LLP. He earned a Bachelor's degree in Business Administration from the University of Wisconsin, Milwaukee and is a Certified Public Account in the State of Wisconsin.

Compensation Discussion and Analysis

Overview

For purposes of this Compensation Discussion and Analysis and the disclosure under “Compensation of Executive Officers,” our named executive officers are identified below (collectively, our “named executive officers”). The information provided reflects summary information concerning TopBuild's executive compensation approach developed to date.

Named Executive Officers

Name

    

TopBuild Title

Gerald Volas

 

Chief Executive Officer

Robert Buck

 

President and Chief Operating Officer

John Peterson

 

Vice President and Chief Financial Officer

Paul Joachimczyk

 

Vice President, Controller

Michelle Friel

 

Former Vice President, General Counsel and Secretary

 

TopBuild Compensation Programs

We recognize the importance of attracting and retaining executive officers who can effectively lead our business and make effective strategic decisions and motivating them to maximize our company's performance and create long-term value for our shareholders. We believe in rewarding our executive officers based on our performance. Our Compensation Committee continues to thoughtfully and thoroughly analyze our compensation practices and programs.

Consideration of Shareholder Vote on Executive Compensation

At our 2017 Annual Meeting, our shareholders had the opportunity to cast an advisory vote on our executive compensation, referred to as the say-on-pay proposal. At that meeting, approximately 99% of the votes cast were voted in favor of the say-on-pay proposal, suggesting that an overwhelming majority of our shareholders approve of our executive compensation programs and philosophy. The Compensation Committee considered this vote when considering and approving the 2018 compensation structure for our executives and, accordingly, made few changes to the 2018 program.

Compensation Philosophy

We believe that effective executive compensation programs are critical to our long-term success. We have developed compensation programs with the following objectives:

·

Attracting and retaining world-class executives through a total compensation opportunity that is competitive within the various markets in which we compete for talent.

·

Encouraging a pay-for-performance mentality by directly relating variable compensation elements to the achievement of financial and strategic objectives without encouraging undue risk taking. Incentive plans are designed to recognize and reward accomplishing individual goals, as well as our long-term company objectives.

·

Promoting a direct relationship between executive compensation and our shareholder interests.

Our long-term incentive opportunities link a significant portion of executive compensation to our performance through performance-based restricted stock and stock option awards. We believe that an executive's total

 

TopBuild Corp. - Proxy Statement 26

 


 

compensation opportunity should increase commensurate with his or her responsibility and capacity to influence our results. Additionally, as an executive's responsibility and accountability increase, so should the portion of that person's compensation that is at risk. Therefore, not only do base salaries increase with position and responsibility, but short-term and long-term incentive opportunities as a percentage of total compensation increase as well.

Equity grants in the form of stock awards that vest only upon the achievement of performance goals as well as stock options with extended vesting periods are an important component of compensation for executive officers. The value ultimately realized from equity awards depends on the long-term performance of TopBuild's common stock.

TopBuild Compensation Practices

TopBuild has adopted the following compensation practices:

·

a compensation mix weighted towards performance-based incentives;

·

significant portion of executive compensation tied to stock price performance;

·

no excise tax gross-ups;

·

an annual market analysis of executive compensation levels and trends;

·

no individual employment agreements;

·

limited perquisites to our executive officers; and

·

prohibiting the re-pricing of options under our equity plan.

As a guideline, we target executive compensation levels within 90%‑110% of market median. However, target pay for any individual executive may be outside this range due to experience levels, unique job qualifications, internal equity considerations or other factors considered by management and the Compensation Committee.

Our Compensation Committee believes it is in TopBuild's interest to retain flexibility in its compensation programs. Consequently, in some circumstances, TopBuild may pay compensation that is not tax deductible by TopBuild.

Stock Ownership Guidelines

Our Compensation Committee has adopted a policy requiring our executives to own a multiple of their base salary in our common stock. In the case of our Chief Executive Officer, the multiple is five (5) times base salary. In the case of our President and Chief Operating Officer and our Vice President and Chief Financial Officer, the multiple is three (3) times base salary. In the case of our Vice President, General Counsel and Secretary, and our Vice President, Chief Human Resource Officer, the multiple is two (2) times base salary. In the case of all other Vice Presidents, the multiple is one (1) times base salary. Individuals have five years from the point of being subject to the ownership guidelines to achieve the prescribed multiple.

Executive Compensation Approach

TopBuild's 2017 compensation structure was composed of the following primary components:

·

Base salary;

·

Annual cash bonuses;

·

Long-term performance-based restricted stock awards; and

·

Long-term stock option awards.

We have no employment agreements with our executive officers. Our executive officers enter into award agreements in connection with grants of equity awards. The award agreements contain certain restrictive covenants, including a non-competition covenant during employment and for one (1) year thereafter.

Equity Incentive Compensation

We believe that a combination of performance-based restricted stock and stock options are appropriate vehicles for a public company to focus executives on long-term performance and alignment with shareholder interests.

 

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Extended vesting and exercise periods further align our named executive officers with our shareholders. See “Equity Compensation Program,” below.

Market Comparison for Compensation

Just as we compete for market share in highly competitive markets, we compete for talent in equally competitive labor environments. In order to attract and retain critical leadership, we strive to provide a comprehensive and competitive total compensation package. We utilize the resources of an independent compensation consultant to aid in establishing our programs and to monitor how they compare with the marketplace. Specifically, the Compensation Committee has retained Willis Towers Watson, a leading global executive compensation consultant, to advise the Compensation Committee on market trends relative to executive compensation, to provide market data as requested and to share input and views on issues being discussed by the Compensation Committee.

The Compensation Committee has sole authority to approve the independent compensation consultant's fees and terms of engagement on executive compensation matters. The Compensation Committee annually reviews its relationship with Willis Towers Watson to ensure its independence on executive compensation matters, taking into account the independence analysis and recommendation of the Governance Committee. In making its recommendation, the Governance Committee reviewed the independence of Willis Towers Watson and the individual representatives of Willis Towers Watson who served as the Compensation Committee's advisors, considering the following specific factors: (i) other services provided to us by Willis Towers Watson; (ii) fees paid by us to Willis Towers Watson as a percentage of Willis Towers Watson's total revenue; (iii) policies and procedures maintained by Willis Towers Watson that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the individual representatives of Willis Towers Watson who advised the Compensation Committee and any member of the Compensation Committee; (v) any shares of our company's common stock owned by the individual representatives; and (vi) any business or personal relationships between our executive officers and Willis Towers Watson or the individual representatives.

The Compensation Committee concluded, based on the evaluation described above and recommendation from the Governance Committee, that these nonexecutive compensation services performed by Willis Towers Watson did not raise a conflict of interest or impair Willis Towers Watson's ability to provide independent advice to the Compensation Committee regarding executive compensation matters.

We endeavor to benchmark our executive compensation levels against similarly situated executives in comparably sized organizations within and outside the building products sector. We believe we compete for executive resources with other non-financial institutions across multiple industrial segments. With that in mind, our consultants use general industry salary surveys and size-adjust the data to organizations with a similar revenue size. We attempt to design both short-term and long-term incentives to produce rewards in excess of median market levels when Company performance is better than target.

For 2017, the Compensation Committee targeted our overall compensation and benefits programs and each element of compensation at the median level of the surveyed companies. Since a number of variables can influence the relationship of an individual executive's pay components to the survey median data, the Compensation Committee considers a range of 90%‑110% of median to be appropriate when reviewing total compensation. Although the Compensation Committee attempts to have each component of compensation in this target range, the Compensation Committee puts greater emphasis on achieving the target at the total compensation level. Variables considered include, but are not limited to, education, position tenure, previous experience, level of performance, additional responsibilities, and, as appropriate, recruitment considerations.

The Compensation Committee authorized Willis Towers Watson to perform a detailed analysis of our executive compensation levels in 2017. For 2018, we will continue to compare ourselves to the labor market median of other companies similar in revenue size to TopBuild, as well as a comparison to a building products peer group. We believe an equal weighting to these two sources creates a market median appropriate target for our total compensation program.

 

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Compensation of Named Executive Officers

The disclosure in the “Summary Compensation Table” relates to the 2016 and 2017 compensation of our named executive officers. Effective March 1, 2018, our Compensation Committee approved increases to the base salary and long-term incentive opportunity for our named executive officers. The table below summarizes our 2017 compensation levels and the changes approved effective March 1, 2018, for each of our named executive officers.

Name

    

Position

    

Base
Salary as of
December 31,
2017
($)

    

Target
Bonus as
Percentage
of Salary
(%)(2)

    

Base Salary as of
March 1,
2018
($)

    

Target
Bonus
for 2018
(%)

    

LTI Level
as of
February 20,
2018
($)(3)

 

Gerald Volas(1)

 

Chief Executive Officer

 

810,000 

 

100 

 

835,000 

 

100 

 

2,200,000 

 

Robert M. Buck

 

President and Chief Operating Officer

 

530,000 

 

75 

 

550,000 

 

75 

 

850,000 

 

John S. Peterson

 

Vice President and Chief Financial Officer

 

450,000 

 

65 

 

470,000 

 

65 

 

600,000 

 

Paul Joachimczyk

 

Vice President, Controller

 

310,000 

 

40 

 

310,000 

 

40 

 

200,000 

 

 

(1) TopBuild has entered into an agreement with Mr. Volas that would provide him severance benefits under specified termination events. This agreement does not include any “golden parachute” excise tax gross-up payments.

(2) Maximum bonus opportunity of 200% of target.

(3) Allocated 40% to stock options (Black-Scholes value) and 60% to performance-based restricted stock awards (target/maximum is 200% of target). Mr. Volas, Mr. Buck and Mr. Peterson were the only named executive officers who received an increase in long-term incentive opportunity.

 

2017 Annual Incentive Performance-Based Cash Bonus Opportunity

TopBuild provided an annual cash bonus opportunity for fiscal 2017 to our named executive officers to emphasize annual performance, provide incentive to achieve critical business objectives and align officers' interests with those of its shareholders.

The performance metrics were operating income as a percentage of sales (weighted 75%) and achievement of certain strategic objectives (weighted 25%). The threshold, target and maximum goals set for the 2017 annual performance program are set forth below. These metrics were those believed to most effectively reflect drivers of enhanced shareholder value creation. Operating income as a percentage of sales was more heavily weighted because it reflects the primary driver of our stock price performance.

The following table shows target and actual performance along with percentage attained for the 2017 annual performance program.

Annual Performance Goals and Achievements

Performance Metric

    

Threshold
(25% Payout)

    

Target (100%
Payout)

    

Maximum
(200%
Payout)

    

Actual as
Adjusted

    

Actual
Percentage
Attained
Relative to
Target

    

Weighting

    

Actual
Weighted
Performance
Percentage

 

Operating Income as a Percentage of Sales(1)

 

 

7.0% 

 

 

8.2% 

 

 

9.0% 

 

 

8.6% 

 

148.2% 

 

35.0% 

 

51.9% 

 

Operating Income, as Adjusted(1)

 

 

$129.0 

 

 

$152.0 

 

 

$167.0 

 

 

$157.6 

 

137.1% 

 

35.0% 

 

48.0% 

 

Strategic Objectives

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30.0% 

 

26.3%(2) 

 

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

126.2% 

 

 

(1) For purposes of determining achievement of the performance target, operating profit from continuing operations was adjusted to exclude the effects of certain rationalization and other special charges and other unusual non-recurring gains and losses.

(2) Strategic Objectives include attainment of discrete goals relating to sales, working capital as a percentage of sales and safety initiatives.

To determine the cash bonus to be granted to our named executive officers based on the 2017 performance achievements set forth above, the target opportunities for each executive officer were multiplied by their applicable

 

TopBuild Corp. - Proxy Statement 29

 


 

payout percentage (that is, 100% for Mr. Volas, 75% for Mr. Buck, 65% for Mr. Peterson and 40% for Mr. Joachimczyk), which was in turn multiplied by each executive officer's base salary.

Threshold, target and maximum payouts under the 2017 cash bonus program are shown in the 2017 Grants of Plan-Based Awards Table, while actual awards for 2017 are disclosed in the Summary Compensation Table.

Equity Compensation Program

On February 19, 2018, our Compensation Committee approved equity awards designed to align executive compensation with market practices, reflect our strategic priorities, create a strong link between compensation and performance, drive compensation consistency by having the same performance metrics for executives and non-executives and assist with the ability to attract and retain key employees. The February 2018 equity awards consisted of stock options (40% of targeted total equity grant value) and performance-based restricted stock (60% of total equity grant value) under TopBuild's 2015 Long Term Stock Incentive Plan.

The stock options will vest in three equal increments on approximately each of the first three anniversaries of the date of the grant (February 19, 2018) and have an exercise price of $74.50 (the closing price of our common stock on the NYSE on the date of grant).

The performance-based restricted stock awards will vest on February 15, 2021, subject to the Company achieving certain pre-determined performance goals relating to our cumulative three (3) year earnings per share (50% of award) and our relative total shareholder return (“TSR”) (50% of award), over the three-year period ending on December 31, 2020. Partial payouts are permitted for performance that falls below target levels (in either of the two measures) and our executive officers may earn up to 200% of their target award level for performance that exceeds target performance. Partial payouts are permitted in cases where one of the performance measures is met and the other is not.

TopBuild Peer Group Established for Relative TSR Measurement

The following companies were identified as the peer group for the relative TSR measurement in the 2018‑2020 equity incentive program design. The peer group is based on similar business characteristics, including industry and revenue size between $650 million and $4.3 billion.

 

 

Toll Brothers Inc.

Beazer Homes USA Inc.

KB Home

BMC Stock Holdings Inc.

Taylor Morrison Home Corporation

Summit Materials Inc.

MSC Industrial Direct Co. Inc.

MI Homes Inc.

Universal Forest Products Inc.

Eagle Materials Inc.

Beacon Roofing Supply Inc.

Gibraltar Industries Inc.

Builders FirstSource Inc.

American Woodmark Corp.

Meritage Homes Corporation

Patrick Industries Inc.

Armstrong World Industries Inc.

Simpson Manufacturing Co. Inc.

Ply Gem Holdings Inc.

Installed Building Products Inc.

 

Summary Compensation Table for Fiscal Years 2015‑2017

Prior to June 30, 2015, the named executive officers were employed and compensated by Masco, from which TopBuild was spun-off as a newly-formed, independent company. We refer to this transaction as the Spin-Off. The following table sets forth certain information regarding compensation paid to the named executive officers of

 

TopBuild Corp. - Proxy Statement 30

 


 

TopBuild in their capacities as officers of Masco (prior to the Spin-Off) and their capacities as officers of TopBuild (after the Spin-Off).

Name of Principal
Position

    

Year(1)

    

Salary
($)(2)

    

Bonus
($)(3)

    

Stock
Awards
($)(4)

    

Option
Awards
($)(5)

    

Non-equity
Incentive Plan
Compensation
($)

    

All Other
Compensation
($)
(6)

    

Total
($)

 

Gerald Volas

 

2017 

 

802,500 

 

— 

 

1,200,071 

 

799,976 

 

1,022,200 

 

4,500 

 

3,829,247 

 

Chief Executive Officer

 

2016 

 

754,167 

 

— 

 

1,199,806 

 

799,986 

 

872,000 

 

4,500 

 

3,630,459 

 

 

 

2015 

 

611,462 

 

103,600 

 

1,596,474 

 

2,050,612 

 

1,190,200 

 

13,325 

 

5,565,673 

 

Robert M. Buck

 

2017 

 

525,000 

 

— 

 

479,875 

 

319,990 

 

501,700 

 

4,792 

 

1,831,358 

 

President and Chief Operating Officer

 

2016 

 

491,667 

 

— 

 

480,238 

 

319,974 

 

427,500 

 

4,871 

 

1,724,250 

 

 

 

2015 

 

431,077 

 

49,950 

 

787,454 

 

837,490 

 

287,500 

 

8,947 

 

2,402,418 

 

John S. Peterson

 

2017 

 

445,000 

 

— 

 

330,154 

 

220,066 

 

369,100 

 

4,500 

 

1,368,820 

 

Vice President and Chief Financial Officer

 

2016 

 

411,667 

 

— 

 

315,074 

 

210,018 

 

311,200 

 

4,500 

 

1,252,459 

 

 

 

2015 

 

349,963 

 

32,856 

 

439,230 

 

471,990 

 

189,144 

 

7,350 

 

1,490,532 

 

Paul Joachimczyk

 

2017 

 

308,333 

 

— 

 

119,777 

 

79,998 

 

124,000 

 

124,197 

 

756,305 

 

Vice President, Controller

 

2016 

 

51,154 

 

— 

 

200,155 

 

— 

 

22,900 

 

14,086 

 

288,295 

 

Michelle A. Friel

 

2017 

 

72,361 

 

— 

 

204,235 

 

136,025 

 

— 

 

1,592,464 

 

2,005,085 

 

Former Vice President, General Counsel and Secretary

 

2016 

 

333,333 

 

— 

 

204,088 

 

135,966 

 

213,200 

 

21,962 

 

908,549 

 

 

(1) Compensation information with respect to the year ended December 31, 2015 includes the aggregate of (i) compensation paid by Masco to the named executive officers in their capacities as officers of Masco prior to the Spin-Off and (ii) compensation paid by TopBuild to the named executive officers in their capacities as officers of TopBuild following the Spin-Off.

(2) This column includes amounts voluntarily deferred by each named executive officer as salary reductions under the 401(k) Savings Plan.

(3) These amounts include discretionary increases in excess of the amounts earned by the applicable executive based on the performance measures. Amounts for 2015 also include discretionary bonus payments for their strong leadership during the Spin-Off which enabled TopBuild to retain key talent, keep the organization focused on company initiatives and prevent disruption of the business.

(4) This column reports the grant date value of the restricted stock award opportunity calculated based on the closing stock price on the date of approval.  The named executive officers do not realize the value of restricted stock awards until those awards vest over the three (3) year vesting period following the grant date for awards made in 2017 and 2016; five (5) year vesting for awards granted in 2015.  Values for 2015 include the initial equity awards granted at the time of the Spin-Off (a “Founders Grant”) on July 8, 2015, and a grant on February 22, 2016 for 2015 performance.  Values for 2016 and 2017 include grants on February 22, 2016 for 2016 performance and February 21, 2017 for 2017 performance.

(5) Amounts in this column reflect the aggregate grant date fair value of stock options, calculated in accordance with FASB ASC Topic 718.The named executive officers have no assurance that these amounts will be realized. Actual gains, if any, on stock option exercises will depend on overall market conditions, the future performance of the common stock and the timing of exercise of the option. Values for 2015 include the Founders Grant made on July 8, 2015, and a grant made on February 22, 2016 for 2015 performance. Values for 2016 include the grants made on February 22, 2016 for 2016 performance. Values for 2017 include the grants made on February 21, 2017 for 2017 performance.

(6) See All Other Compensation table below.

Name of Principal
Position

 

Year

 

Misc.
($)

 

Relocation
Assistance
($)

 

Accelerated Stock
Vesting's
($)

 

Executive
Severance
($)

 

401(k) Company
Matching
($)(1)

 

Total
($)

 

Gerald Volas

    

2017 

    

— 

    

— 

    

— 

    

— 

    

4,500 

    

4,500 

 

Robert M. Buck

 

2017 

 

292 

 

— 

 

— 

 

— 

 

4,500 

 

4,792 

 

John S. Peterson

 

2017 

 

— 

 

— 

 

— 

 

— 

 

4,500 

 

4,500 

 

Paul Joachimczyk

 

2017 

 

10 

 

119,687 

 

— 

 

— 

 

4,500 

 

124,197 

 

Michelle A. Friel

 

2017 

 

— 

 

— 

 

1,588,356 

 

— 

 

4,109 

 

1,592,464 

 

 

(1)

Does not include any adjustment for non-discrimination testing of the 401(k) plan.

2017 Grants of Plan-Based Awards Table

The following table provides information about (i) the potential payouts that were available in 2017 to our named executive officers under our annual performance-based cash bonus opportunity and (ii) the actual grants of

 

TopBuild Corp. - Proxy Statement 31

 


 

restricted stock and stock options made to our named executive officers in respect of 2017 performance under the Amended and Restated TopBuild Corp. 2015 Long Term Stock Incentive Plan (the “Amended LTIP”).

 

 

 

 

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards

 

Estimated Future Payouts Under
Equity Incentive Plan Awards

 

All
Other
Stock
Awards:

 

All Other Option Awards:

 

Name

    

Grant Date

    

Threshold
($)

    

Target
($)

    

Maximum
($)

    

Threshold
($)

    

Target
($)

    

Maximum
($)

    

Number of
Shares of
Stock or
Units
(#)

    

Number of
Securities
Underlying
Options
(#)

    

Exercise
or Base
Price of
Option
Awards
($/Sh)

    

Grant
Date Fair
Value of
Stock
and
Options
Awards
($)

 

Gerald Volas

 

2/19/2018(1)

 

202,500 

 

810,000 

 

1,620,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/21/2017(2)

 

 

 

 

 

 

 

800,000 

 

2,000,000 

 

3,200,000 

 

 

 

 

 

 

 

 

 

 

 

2/21/2017(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

31,260 

 

 

 

 

 

1,382,474 

 

 

 

2/21/2017(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55,400 

 

38.39 

 

799,976 

 

Robert M. Buck

 

2/19/2018(1)

 

99,375 

 

397,500 

 

795,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/21/2017(2)

 

 

 

 

 

 

 

320,000 

 

800,000 

 

1,280,000 

 

 

 

 

 

 

 

 

 

 

 

2/21/2017(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

12,500 

 

 

 

 

 

552,813 

 

 

 

2/21/2017(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,160 

 

38.39 

 

319,990 

 

John S. Peterson

 

2/19/2018(1)

 

73,125 

 

292,500 

 

585,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/21/2017(2)

 

 

 

 

 

 

 

220,000 

 

550,000 

 

880,000 

 

 

 

 

 

 

 

 

 

 

 

2/21/2017(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

8,600 

 

 

 

 

 

380,335 

 

 

 

2/21/2017(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15,240 

 

38.39 

 

220,066 

 

Paul Joachimczyk

 

2/19/2018(1)

 

31,000 

 

124,000 

 

248,000 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/21/2017(2)

 

 

 

 

 

 

 

80,000 

 

200,000 

 

320,000 

 

 

 

 

 

 

 

 

 

 

 

2/21/2017(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

3,120 

 

 

 

 

 

137,982 

 

 

 

2/21/2017(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,540 

 

38.39 

 

79,998 

 

Michelle A. Friel

 

2/21/2017(3)

 

 

 

 

 

 

 

 

 

 

 

 

 

5,320(5)

 

 

 

 

 

235,277 

 

 

 

2/21/2017(4)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,420(6)

 

38.39 

 

136,025 

 

 

(1) The amounts shown reflect the threshold, target and maximum opportunities under the 2017 annual cash bonus program. The amounts actually paid under this program are set forth in the “Summary Compensation Table” above.

(2) The amounts shown reflect the threshold, target and maximum opportunities under the 2017 annual equity program at a ratio of 40% for options and 60% for performance-based restricted stock. In respect to performance-based restricted stock they will vest within the threshold of 0% to 200% depending on company performance. The amounts actually paid under this program are set forth in the “Summary Compensation Table” above.

(3) The amounts shown reflect the number of shares of restricted stock granted on February 21, 2017, and the grant date fair value at a per share value of $38.39. These restricted stock grants vest on February 21, 2020, three years after the grant date. Amounts disclosed are based on current estimates of future performance and attainment of specific annual performance goals; however, the ultimate payouts will be determined based on actual three-year aggregate performance, which may vary from such estimates.

(4) The amounts shown reflect the grant date fair value of TopBuild stock options granted on February 21, 2017, in respect of 2016 performance, at a per share value of $14.44. These options vest ratably in three equal installments over three years beginning on February 21, 2018, one year after the grant date.

(5) Michelle Friel was employed by TopBuild only for a portion of 2017. The amounts disclosed represent the total grant of restricted stock awarded to her on February 21, 2017. Mrs. Friel received 3,408 shares, prorated as of the date of her departure. Mrs. Friel's awards for 2017 vested in connection with her departure and severance.

(6) The amounts disclosed represent the total grant of stock options awarded to Michelle Friel on February 21, 2017. Under the Executive Severance Agreement Mrs. Friel has exercised 9,420 options.

 

TopBuild Corp. - Proxy Statement 32

 


 

2017 Outstanding Equity Awards at Fiscal Year-End

The following sets forth certain information regarding equity-based awards held by each named executive officer at December 31, 2017.

Participant
Name

    

Original
Grant
Date

    

Numbers of
Securities
Underlying
Unexercised
Options (#)
Exercisable

    

Numbers of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)

    

Option
Exercise
Price
($)

    

Option
Expiration
Date

    

Number
of
Shares
or Units
of Stock
that have
not
Vested
(#)

    

Market
Value of
Shares or
Units of
Stock that
have not
Vested
($)(3)

    

Equity
incentive
plan
awards
that have
not vested
(#)(5)

    

Equity
incentive
plan
awards
that have
not vested
($)