DEF 14A 1 hvtdefa2017.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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HAVERTY FURNITURE COMPANIES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)

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780 Johnson Ferry Road, Suite 800
Atlanta, GA  30342

NOTICE OF 2017 ANNUAL MEETING OF STOCKHOLDERS
 
 
Time and Date:
 
 
 
10:00 a.m., Monday, May 8, 2017
 
         
Place:
 
Marriott SpringHill, 120 East Redwood Street, Baltimore, Maryland
 
         
Items of Business:
 
1.
Election of Directors:
     Holders of Class A common stock to elect six directors.
     Holders of common stock to elect three directors.
 
   
2.
Approval of the Director Compensation Plan, as amended and restated.
 
   
3.
Advisory vote on our named executives' compensation.
 
   
4.
Advisory vote on the frequency of the stockholder vote on our named executives' compensation.
 
   
5.
Ratification of the appointment of Grant Thornton LLP as our independent auditor.
 
   
6.
Transact such other business as may properly come before the annual meeting or any adjournments.
 
 
Who May Vote:
 
You may vote if you owned shares of our common stock or Class A common stock at the close of business on March 10, 2017.
       
Proxy Voting:
 
Your vote is very important!  Please vote in one of these ways:
   
1.
Visit the website listed on your proxy or vote instruction card;
   
2.
Use the toll-free telephone number shown on the enclosed proxy or vote instruction card; or
   
3.
Mark, sign, date and promptly return the enclosed proxy or vote instruction card in the postage-paid envelope provided.
       
Date of Availability:
 
On or about March 29, 2017, we will mail to certain stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy statement and 2016 annual report and how to vote online.


By Order of the Board of Directors
Jenny Hill Parker
Senior Vice President, Finance,
  Secretary and Treasurer



TABLE OF CONTENTS
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5
                 Nominees for Election by Holders of Common Stock
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8
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14
 
15
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A-1
B-1

GENERAL INFORMATION

Our board of directors is furnishing you this proxy statement to solicit proxies on its behalf in connection with the 2017 annual meeting of stockholders of Haverty Furniture Companies, Inc.  The meeting will be held on May 8, 2017 at the Marriott SpringHill, 120 East Redwood Street, Baltimore, Maryland, beginning promptly at 10:00 a.m. Eastern Time.

Who may vote?
You may vote if you were a holder of record of Haverty Furniture Companies, Inc. as of the close of business on March 10, 2017.

Why did I receive a Notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
We are providing access to our proxy materials over the Internet.  As a result, we have sent to most of our stockholders a Notice instead of a paper copy of the proxy materials.  The Notice contains instructions on how to access the proxy materials over the Internet and how to request a paper copy.  In addition, stockholders may request to receive future proxy materials in printed form by mail or electronically by email.  A stockholder's election to receive proxy materials by mail or email will remain in effect until the stockholder terminates it.

How can I access the proxy materials over the Internet?
Your Notice or proxy card will contain certain instructions on how to view our proxy materials for the annual meeting.

Why should I vote?
Your vote is very important regardless of the amount of stock you hold.  The board strongly encourages you to exercise your right to vote as a stockholder of the Company.

How do I vote?
You may vote using any of the following methods:
 
Visit the website listed on your Notice or proxy card to vote VIA THE INTERNET.
 
 
Call the telephone number on your Notice or proxy card to vote BY TELEPHONE.
 
 
Sign, date and return your Notice or proxy card form in the enclosed envelope to vote BY MAIL.
 

If I vote using the Internet, telephone or mail, may I still attend the annual meeting?
Yes. The board recommends that you vote using one of the methods discussed above, as it is not practical for most stockholders to attend and vote at the annual meeting.  Using another method to vote will not limit your right to vote at or attend the annual meeting. However, if your shares are held in street name you must obtain a proxy, executed in your favor, from your bank, broker or other holder of record to be able to vote at the annual meeting.
We have historically received proxies representing approximately 90% of eligible shares and had no stockholders in attendance at our annual meetings. Accordingly, this is a very brief meeting conducted by our corporate secretary and not attended by our directors.

Can I change my mind after I vote?
You may change your vote at any time before the polls close at the meeting. You may do this by: (1) signing another proxy with a later date and returning it to us prior to the meeting, or (2) voting again by telephone or over the Internet prior to 11:59 p.m. (EDT) on May 7, 2017, or (3) voting again at the meeting.


1

GENERAL INFORMATION

How do I vote shares that are held by my broker?
If you have shares held by a broker or other nominee, you may instruct your broker or other nominee to vote your shares by following instructions that the broker or nominee provides to you.  Most brokers offer voting my mail, by telephone and the Internet.

How will a quorum be determined?
A majority of the outstanding shares of the combined classes of common stock present or represented by proxy constitutes a quorum for the annual meeting.  As of the record date, we had 19,304,024 shares of common stock and 1,815,649 shares of Class A common stock.

What am I voting on, what is the vote required for each proposal to pass and what is the effect of abstentions and uninstructed shares on the proposal?
 
Proposals
Board Voting Recommendation
Votes Required
For Approval
 
Abstentions
Uninstructed shares
Election of Directors –
Class A Common Stock Holders
Common Holders
 
FOR
FOR
 
Plurality – the most affirmative votes
 
No effect
 
No effect
Approval of the Director Compensation Plan, as amended and restated
 
     FOR
Combined majority of votes cast in person or by proxy
Counts as a vote against
No effect
Advisory vote on our named executives' compensation
     FOR
Combined majority of votes cast in person or by proxy
Counts as a vote against
No effect
Advisory vote on the frequency of stockholder vote of our named executives' compensation
     FOR
Combined majority of votes cast in person or by proxy
Counts as a vote against
No effect
Ratification of the appointment of Grant Thornton LLP as our independent auditor
 
     FOR
Combined majority of votes cast in person or by proxy
Counts as a vote against
Discretionary voting by broker permitted
The owners of Class A common stock and common stock vote as separate classes in the election of directors.  Holders of Class A common stock will elect six directors and holders of common stock will elect three directors.  On all other matters the owners of common stock are entitled to one vote for each share held and the owners of Class A common stock are entitled to ten votes per share held.
The election of directors requires a plurality or the most affirmative votes for approval.  A "withhold vote" or "abstention" will have no effect on the vote's outcome, because the candidates who receive the highest number of "for" votes are elected. The remaining proposals require a combined majority of votes cast in person or by proxy for approval.
Abstentions are counted for purposes of quorum and have the effect of a vote "against" any matter as to which they are specified.
Proxies submitted by brokers that do not indicate a vote for some or all of the proposals because they do not have discretionary voting authority and have not received instructions as to how to vote on those proposals (so-called "broker non-votes") are not considered "shares present" and will not affect the outcome of the vote.
2


GENERAL INFORMATION

What is the effect of an "advisory" vote?
Because your vote with respect to approval of our executive compensation and frequency of the vote is advisory, it will not be binding upon the board.  However, our Employee Benefits and Executive Compensation Committee (the "Compensation Committee") and the board will carefully consider the outcome of the vote when reviewing future compensation arrangements for our executive officers.

Could other matters be decided at the annual meeting?
We are not aware of any matters that will be considered at the annual meeting other than those set forth in this proxy statement.  However, if any other matters arise at the annual meeting, the persons named in your proxy will vote in accordance with their best judgment and only with respect to shares you own as a stockholder of record.

Who tabulates the votes?
Broadridge Financial Solutions, Inc., an independent third party, will count the votes.

Where can I find the voting results of the annual meeting?
We will announce voting results at the annual meeting and we will publish the final results in a Form 8-K to be filed with the SEC on or before May 12, 2017. You may access or obtain a copy of this and other reports free of charge on our website at havertys.com, or by contacting our corporate secretary.

What if I want to receive a paper copy of the annual report and proxy statement?
If you wish to receive a paper copy of the 2016 annual report and 2017 proxy statement, or future annual reports and proxy statements, please call 1-800-241-4599 or write to: Corporate Secretary, Haverty Furniture Companies, Inc., 780 Johnson Ferry Road, Suite 800, Atlanta, GA 30342.   We will deliver the requested documents to you promptly upon your request.

If I share my residence with another stockholder, how many copies of the Notice regarding Internet availability of proxy materials or of the printed proxy materials will I receive?
In accordance with SEC rules, we are sending only a single Notice of Internet availability of proxy materials or set of the printed proxy materials to any household at which two or more stockholders reside if they share the same last name or we reasonably believe they are members of the same family, unless we have received instructions to the contrary from any stockholder at that address.  This practice, known as "householding," reduces the volume of duplicate information received at your household and helps us reduce costs.
Each stockholder subject to householding that requests printed proxy materials will receive a separate proxy card or voting instruction card.  We will deliver promptly, upon written requests, a separate copy of the annual report or proxy statement, as applicable, to a stockholder at a shared address to which a single copy of the document was previously delivered.  If you received a single set of these documents for the year, but you would prefer to receive your own copy, you may direct requests for separate copies to:  Corporate Secretary, Haverty Furniture Companies, Inc., 780 Johnson Ferry Road, Suite 800, Atlanta, GA  30342.  If you are a stockholder who receives multiple copies of our proxy materials, you may request householding by contacting us in the same manner and requesting a householding consent form.
3


OUR BOARD OF DIRECTORS


The board of directors currently consists of nine members.  At this annual meeting, six directors will be elected by the holders of Class A common stock and three directors will be elected by the holders of common stock to hold office until the next annual meeting.  The election of our directors requires a plurality of votes cast at the meeting by the holders of the respective classes of common stock.

The nominees for election at the 2017 annual meeting were approved for nomination by the Nominating and Corporate Governance Committee (the "Governance Committee") of the board. All of the nominees are currently directors of Havertys.

 We expect that each of the nominees will be available for election, but if any of them is unable to serve at the time the election occurs, it is intended that the proxies will vote for the election of another nominee to be designated by the Governance Committee and the board.


Experience and Skills

The board believes that it is necessary for each of our directors to possess many qualities and skills.  As discussed in more detail on page 11 of this proxy statement, the board considers several qualifications, attributes, skills, characteristics and other factors when evaluating individual directors, as well as the composition of the board as a whole to determine that the person should serve as a director of the Company.

The biographies of each of the nominees contain information regarding the person's experience and director positions held currently or at any time during the last five years.  The fact that an icon is not shown does not mean the individual does not possess the experience, qualification or skill.

 
Class A Common Stock Nominees
Common Stock Nominees
 
 
Glover
Haverty
Humann
Mangum
Smith
Trujillo
Dukes
Palmer
Schuermann
Current/Former CEO
 
   
Corporate/Public Company
 
Consumer Focused
 
Consumer Marketing/Brand Building
 
   
Corporate Finance and Reporting 
 
 
Finance   
 
 
Furniture Industry  
 
   
     
Global  
     
 
Management/Corporate  
Risk Assessment 
Sales 
     
   
 
 
4


Proposal 1: Nominees for Election by Holders of Class A Common Stock

John T. Glover Independent Director since 1996
Age 70
 
Principal Occupation:  Retired, Vice Chairman of Post Properties, Inc., a real estate investment trust that develops and operates upscale multifamily apartment communities, from March 2000 to February 2003; President of Post Properties, Inc. from 1994 to 2000.
 
Directorships: Member of the Board of Trustees of Emory University,
a Director of Emory Healthcare, Inc. and Trustee Emeritus of The Lovett School.
 
Experience:           
 
 
Rawson Haverty, Jr. Management Director since 1992
Age 60
 
Principal Occupation: Senior Vice President, Real Estate and Development of Havertys since 1998.  Over 32 years with Havertys in various positions.
 
Directorships: StarPound Technologies and World Children's Center and a member of the Advisory Board of the Center for Ethics at Emory University.
 
Experience:       
 
L. Phillip Humann
Age 71
Independent Director since 1992
Chairman of the Board from 2010 to 2012
Lead Director since 2012
 
Principal Occupation:  Retired, former Chairman of the Board of SunTrust Bank, Inc. ("SunTrust") from 1998 to 2008.  Chief Executive Officer of SunTrust from 1998 to 2007 and President from 1998 to 2004.
 
Directorships: Coca-Cola Enterprises Inc. and Equifax, Inc.
 
Experience:            
 

5


Nominees for Election by Holders of Class A Common Stock

Mylle H. Mangum Independent Director since 1999
Age 68
 
Principal Occupation:  Chief Executive Officer of IBT Enterprises, LLC, a provider of design, construction and consultant services for the retail banking and specialty retail industries since 2003.
 
Directorships: Barnes Group, Inc., Express, Inc., PRGX Global, Inc. and
     The Shopping Center Group.
 
Experience:             
 
Clarence H. Smith
Age 66
Management Director since 1989
Chairman of the Board since 2012
Principal Occupation:  President and Chief Executive Officer of Havertys since 2003.  Over 43 years with Havertys in various positions.
 
Directorships:  Oxford Industries, Inc. and member of the Board of Trustees
of Marist School.
 
Experience:            
 
 
 
Al Trujillo Independent Director since 2003
Age 57
 
Principal Occupation: President and Chief Operating Officer of the Georgia Tech Foundation since 2013. Investment Funds Advisor from 2007 to 2013.  Former President and Chief Executive Officer of Recall Corporation, a global information management company until 2007. Various positions with Brambles Industries, Ltd, parent company of Recall Corporation from 1996 until 2007.
 
Directorships: SCANA Corporation and a member of the Board of Trustees
of Marist School.
 
Experience:             
 
Clarence H. Smith and Rawson Haverty, Jr. are first cousins and officers of Havertys.

6


Nominees for Election by Holders of Common Stock
 

 
 
 
L. Allison Dukes Independent Director since 2016
Age 41
 
Principal Occupation:  President, Chairman and CEO of the Atlanta Division of SunTrust Banks, Inc. since 2015.  Executive Vice President and Private Wealth Management Line of Business Executive from 2013 until 2014.  Chief Financial Officer of Consumer Banking and Private Wealth Management in 2012.  Balance Sheet Manager from 2010 until 2011 and Managing Director and Head of Syndicated Finance Originations at SunTrust Robinson Humphrey from 2008 until 2009.
 
Directorships: Member of the Executive Board of Junior Achievement of Georgia.
 
Experience:           
 
 
 
Vicki R. Palmer Independent Director since 2001
Age 62
 
Principal Occupation:  Retired, former Executive Vice President, Financial Services and Administration for Coca‑Cola Enterprises Inc. from 2004 until 2009.  Senior Vice President, Treasurer and Special Assistant to the CEO of Coca-Cola Enterprises Inc. from 1999 to 2004.
 
Directorships:  First Horizon National Corporation and a member of the Board of Governors of the Woodruff Arts Center.
 
Experience:         
 
 
 
 
Fred L. Schuermann Independent Director since 2001
Age 70
 
Principal Occupation:  Retired, former President and Chief Executive Officer of LADD Furniture Inc. ("LADD") from 1996 until 2001.  Chairman of LADD from 1998 until 2000.
 
Experience:               





Our Board of Directors recommends a vote "FOR" each of the Director Nominees.
7


 CORPORATE GOVERNANCE - BOARD OF DIRECTORS

The following sections provide an overview of our corporate governance structure and processes as it relates specifically to our board of directors.


Director Independence

Our Corporate Governance Guidelines ("Governance Guidelines") state that a majority of the directors must be non-management directors who meet the "independence" requirements of the New York Stock Exchange (the "NYSE"). The Governance Committee conducts an annual review of the independence of the members of the board and its committees and the board affirmatively determines the independence of each director. Based on the standards contained in our Governance Guidelines, the NYSE corporate governance requirements and the recommendations of the Governance Committee, the board has determined that each of the following non-employee director nominees is independent and has no material relationship with the Company that could impair their independence.

· Allison Dukes
 
· Vicki Palmer
· John Glover
 
· Fred Schuermann
· Phil Humann
 
· Al Trujillo
· Mylle Mangum
   

For more information regarding our policy on Transactions with Related Persons, please see page 13 of this proxy statement.


Board Leadership Structure

Our company is led by Clarence Smith, who has served as chief executive officer since 2003 and chairman of the board since August 2012.  Our current board is composed of seven independent directors and two management directors. Our independent directors meet in executive session at each board meeting.

Chairman/CEO:  We believe that having a combined chairman/CEO, independent chairs for each of our board committees, and an independent lead director helps provide strong, unified leadership for our management team and board of directors and is currently the right structure for our company.  We have one individual who is seen by employees, business partners, and stockholders as providing leadership for Havertys and we have experienced independent directors providing oversight of company operations.  Although the board believes that separate positions are not appropriate in the current circumstances, our Governance Guidelines do not establish this approach as policy. The board believes that it should have the flexibility to make these determinations at any given point based on what it considers is the appropriate leadership structure for Havertys at the time.

Lead Director:  Under our Governance Guidelines, in the absence of an independent chairman, the independent directors select one independent director as the board's lead director. The lead director chairs the executive sessions and facilitates communications between the chairman/CEO and other directors.  Our lead director helps the Company maintain a corporate governance structure with appropriate independence and balance.  Phil Humann currently serves as lead director.

8


CORPORATE GOVERNANCE - BOARD OF DIRECTORS

Risk Oversight

In its oversight role, the board reviews our strategic planning and projections, which address, among other things, the risks and opportunities we face. While the board has the ultimate oversight responsibility for the risk management process, various committees of the board assist the board and have specific areas of focus for risk management. In particular, and in accordance with NYSE requirements and our committee charters, the Audit Committee is responsible for overseeing risk management with a focus on financial risk, including internal controls, and reviews annual risk assessments with our internal auditors and other members of management.  The Executive and Employee Benefits Committee ("Compensation Committee") assists the board in fulfilling its oversight responsibility with respect to our executive compensation programs, benefit matters and succession planning for senior management.  Finally, the Governance Committee is responsible for establishing, implementing and monitoring policies and processes regarding principles of corporate governance and ensures we are in compliance with all applicable regulations and requirements.

Committees of the Board

Our board has four standing committees: Audit Committee, Compensation Committee, Governance Committee and Executive Committee.  The table below shows the current membership, the principal functions and the number of meetings held in 2016:

Name, Meetings and Members
 
Principal Functions
 
Audit Committee
Meetings:  5
 
Members:
John Glover - Chair
Allison Dukes
Vicki Palmer
Fred Schuermann
Al Trujillo
 
 
 
·  Represents and assists the board in fulfilling its oversight responsibility relating to the quality and integrity of our annual and interim external consolidated financial statements.
·  Reviews and discusses with management the Company's risk assessment framework and management policies, including the framework with respect to significant financial risk exposures.
·  Monitors the qualifications, independence and performance of the Company's internal audit function and independent auditor and meets periodically with management, internal audit and the independent auditor in separate executive sessions.
·  Other matters as the board deems appropriate.
·  Each member has been designated by the board as "an audit committee financial expert" as defined by the SEC and meets the independence requirements of the NYSE, SEC and our Governance Guidelines.
 
Compensation Committee
Meetings:  3
 
Members:
Mylle Mangum - Chair
Phil Humann
Al Trujillo
 
 
·  Translates our compensation objectives into a compensation strategy that reinforces alignment of the interests of our executives with that of our stockholders.
·  Succession planning.
·  Evaluates performance and approves the compensation and benefits of the chief executive officer and other executive officers.
·  Reviews and administers our executives' compensation, equity-based compensation plans, and employee benefit plans.
·  Each member meets the independence requirements of the NYSE, SEC and our Governance Guidelines.
 
Governance Committee
Meetings:  2
 
Members:
Fred Schuermann - Chair
Phil Humann
Vicki Palmer
 
 
·  Reviews and makes recommendations for composition and structure of the board and policies relating to the recruitment of board members.
·  Oversees director compensation
·  Reviews and recommends corporate governance policies and issues.
·  Each member meets the independence requirements of the NYSE, SEC and our Governance Guidelines.
 
Executive Committee
Meetings:  0
 
Members:
Phil Humann – Chair
John Glover
Mylle Mangum
Clarence Smith
 
·  In accordance with bylaws, acts with the power and authority of the board in the management of our business and affairs in the interim between meetings of the board.
·  Generally holds meetings to approve specific terms of financings or other transactions after these items have previously been presented to the board.
·   Not an independent committee however, the majority of the members are independent directors.


9

CORPORATE GOVERNANCE - BOARD OF DIRECTORS

Attendance

During 2016, the board met four times and the committees met as indicated in the table outlining committee members and functions. Board members attended 89% of all of the board meetings and meetings of the committees on which they served during 2016.

We do not have a policy regarding director attendance at the annual meeting of stockholders. We have historically received proxies representing approximately 90% of eligible shares and had no stockholders in attendance at our annual meetings.  No directors attended the 2016 annual meeting and none are expected to attend the 2017 annual meeting.

Compensation Committee Interlocks and Insider Participation

All members of the Compensation Committee are independent directors, and no member was an employee or former employee of Havertys. During 2016, none of our executive officers served on the compensation committee or board of directors of another entity whose executive officer served on our Compensation Committee or board. Therefore, there is no relationship that requires disclosure as a Compensation Committee interlock.
 
Director Compensation

Non-employee directors receive a combination of cash and stock-based compensation designed to attract and retain qualified candidates to serve on the board and further align their interest with that of our stockholders.  In setting director compensation, the Governance Committee, which is responsible for determining the type and amount of compensation for non-employee directors, considers among other things, the significant amount of time that directors spend fulfilling their duties to Havertys and our stockholders.

Retainer Fees.  Non-employee directors receive an annual retainer, of which two-thirds is required to be paid in shares of common stock.  We do not pay meeting fees for attendance at board and committee meetings but attendance expenses are reimbursed.  The following is a schedule of current annual retainers for non-employee directors:

Type of Fee
 
Amounts
Annual Board Retainer (1/3 cash - 2/3 stock)
 
$ 75,000
Additional Annual Retainer to Independent Lead Director
 
$ 10,000
Additional Annual Retainer to Chair of Audit and Compensation Committee
 
$ 10,000
Additional Annual Retainer to Chair of Governance Committee
 
$   7,500
Directors' Deferred Compensation Plan.  Non-employee directors may elect to defer receipt of the cash or common stock payment of their retainer, and may elect to defer 100% of their annual retainer fee in shares of common stock under the Directors' Deferred Compensation Plan ("Deferred Plan").  Under the Deferred Plan, deferred fees, plus any accrued interest (at a rate determined annually in accordance with the Deferred Plan which is not above market), shall be distributed in the future to a director in one lump sum or in no more than ten equal annual installments, or in accordance with the terms of the Deferred Plan. Two directors participated in the Deferred Plan in 2016 and three will participate in 2017.

Other Compensation.  Directors receive the same discounts as employees on our products.  We do not provide any pension or other benefits to our non-employee directors.

Director Stock Ownership Guidelines.  The board has implemented stock ownership guidelines for non‑employee directors.  Each director is required to own or hold at least 20,000 shares of our stock.  Currently, all non-employee directors exceed the stock ownership requirements.  New directors have five years from date of their election to reach compliance.
10


CORPORATE GOVERNANCE - BOARD OF DIRECTORS


Director Compensation Table

The following table sets forth information concerning total non-employee director compensation earned during 2016 by each director. Messrs. Haverty and Smith, as management directors, do not receive any compensation for serving on the board. See "Summary Compensation Table" regarding Mr. Smith since he is a Named Executive Officer ("NEO"). Mr. Haverty is also an executive officer, but not a NEO.
Name
 
Fees Earned or
Paid in Cash ($)
   
Fees Earned
or Paid in
Stock ($)
   
Total ($)
 
Allison Dukes
 
$
25,000
   
$
50,000
   
$
75,000
 
John Glover
   
35,000
     
50,000
     
85,000
 
Phil Humann(1)
   
10,000
     
75,000
     
85,000
 
Mylle Mangum
   
35,000
     
50,000
     
85,000
 
Frank McGaughey(2)
   
32,500
     
50,000
     
82,500
 
Vicki Palmer
   
25,000
     
50,000
     
75,000
 
Fred Schuermann
   
32,500
     
50,000
     
82,500
 
Al Trujillo
   
25,000
     
50,000
     
75,000
 
 
(1)
Mr. Humann elected to obtain his annual board retainer fees in all stock.
(2)
Mr. McGaughey was paid fees earned prior to his death.




CORPORATE GOVERNANCE – GOVERNANCE POLICIES

Our board recognizes that excellence in corporate governance is essential in carrying out its responsibilities to our stockholders, employees, customers, suppliers and communities and we expect all directors, officers and employees to conduct business in compliance with our Code of Conduct (the "Code"). The board has adopted a number of policies to support our values and good corporate governance and practices, including the Governance Guidelines, board committee charters, and a Related Party Transaction Policy. All of our corporate governance policies are reviewed for compliance on an annual basis.  These governance policies include:

Director Nominations.  When searching for new candidates, the Governance Committee, who has the responsibility of reviewing qualifications of candidates for board membership, considers the evolving needs of the board and searches for candidates that fill any current or anticipated future need.  Nominees may be suggested by directors, members of management, stockholders, or, in some cases, by a third-party search firm. The Governance Committee will consider recommendations for directors submitted by stockholders. Stockholders should submit their recommendations in writing to the Governance Committee (See, "Communications with Directors"). The proponent should submit evidence that he or she is a stockholder of Havertys, together with a statement of the proposed nominee's qualifications to be a director. There is no difference in the manner in which the Governance Committee evaluates proposed nominees based upon whether the proposed nominee is recommended by a stockholder.

The Governance Committee seeks to maintain a board that is strong in its collective knowledge and has a diversity of skills and experience to oversee our business and a commitment to the goal of maximizing stockholder value.  In its assessment of each potential nominee the Governance Committee will review and consider, among other things, the nominee's relevant career and business operations experience, judgment, industry knowledge, independence, character, gender, race, ethnicity, age, demonstrated leadership skills, financial literacy, and experience in the context of the needs of the board at the time, given the then current mix of director attributes. The Governance Committee does not have a formal policy with respect to diversity
11

CORPORATE GOVERNANCE – GOVERNANCE POLICIES

however the board and the Governance Committee believe that it is essential that the board members represent diverse viewpoints.  In considering candidates for the board, the Governance Committee considers the entirety of each candidate's credentials in the context of these standards.  With respect to the nomination of continuing directors for re-election, the individual's contributions to the board are also considered. The Governance Committee will also take into account the ability of a nominee to devote the time and effort necessary to fulfill his or her responsibilities.

Corporate Governance Guidelines. The board adopted these guidelines to address certain governance matters including the role of the board, qualifications and responsibilities of directors, director compensation, management succession and director education.

Executive Sessions of Independent Directors. The board has a policy of scheduling an executive session of the independent directors as part of every regularly scheduled board meeting. These sessions are currently presided over by the lead director.

Code of Conduct. All of our directors and employees, including our chief executive officer and executive officers, are required to comply with our Code to help ensure that our business is conducted in accordance with the highest standards of ethical behavior.

Annual Evaluations. The board and each of its committees have conducted self-evaluations related to their performance during 2016. The performance evaluations are supervised by the Governance Committee and discussed by each committee and the board.

Mandatory Retirement and Resignation from Board. Our independent directors are subject to a mandatory retirement age and cannot stand for re-election in the calendar year following their 72nd birthday. On the recommendation of the Governance Committee, the board may waive this requirement on an annual basis.  A director is also required to submit his or her resignation from the board to the Governance Committee in the event that a director retires from or otherwise leaves his or her principal occupation or employment.  The Governance Committee can choose to accept or reject the resignation.

Communications with Directors. Stockholders and other interested parties may communicate with any director, committee or the board by writing to the following address:  Board of Directors, c/o Corporate Secretary, Haverty Furniture Companies, Inc., 780 Johnson Ferry Road, Suite 800, Atlanta, Georgia 30342. Please specify to whom your correspondence should be directed. The corporate secretary has been instructed by the board to review and promptly forward all correspondence (except advertising material and ordinary business matters) to the relevant director, committee or the full board, as indicated in the correspondence.

Hedging and Pledging Policies.  We prohibit our directors, officers and employees from hedging their ownership of Havertys stock, including purchasing or selling derivative securities relating to Havertys stock and from purchasing financial instruments that are designed to hedge or offset any decrease in the market value of Havertys securities.  Our directors and executive officers are prohibited from pledging Havertys securities as collateral for a loan and holding any Havertys securities in margin accounts.  There are no outstanding pledges or margin accounts involving Havertys securities by any of our directors or executive officers.


Where to find Corporate Governance Information

All of our corporate governance policies, including our board committee charters, Code, Governance Guidelines, Director Communication Policy and other governance documents are available on our website at havertys.com.
12


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Our board has adopted a written policy for the review, approval or ratification of certain related party transactions. The term "related party transaction" is defined as any transaction, arrangement or relationship or any series of similar transactions arrangements or relationships in which (1) the aggregate amount involved will exceed $120,000 in any calendar year, (2) we are a participant, and (3) any related party of Havertys (such as an executive officer, director, nominee for election as a director or greater than 5% beneficial owners of our stock, or their immediate family members) has or will have a direct or indirect interest.

The board has determined that the Governance Committee is best suited to review and approve related party transactions.  The Governance Committee when reviewing the material facts of related party transactions must take into account whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party's interest in the transaction.  Certain categories of transactions have standing pre-approval under the policy including: (1) certain transactions with another company in which the related party's only relationship is as an employee (other than an executive officer), director or beneficial owner of less than 10% of that company's stock; (2) certain transactions where the Related Person's interest arises solely from the ownership of our common stock and all holders of our common stock receive the same benefit on a pro rata basis (e.g. dividends, stock repurchases, rights of offerings); (3) certain banking related services in which the terms of such transactions are generally the same or similar to accounts offered to others in the ordinary course of business; and (4) transactions made on the same or similar terms available to all of our employees.

During 2016, we paid compensation of more than $120,000 to Eugene B. Edleman, our general manager in Columbia, South Carolina.  Mr. Edleman is the stepson of Frank S. McGaughey, III, who served as a director during 2016.  The board is not involved in the compensation discussions for managers and Mr. Edleman's compensation is determined in the same manner as our other employees with similar responsibilities.
13


Proposal 2:   Approval Of The Director Compensation Plan, As Amended And Restated

The purpose of the Havertys' Director Compensation Plan has been to provide directors who contribute to Havertys' success with fair and competitive compensation, while ensuring that their compensation is closely aligned with stockholders' interest and the performance of the Company. Payment of the retainer is structured to provide compensation: in cash and shares of common stock; or 100% in shares of common stock; or with the ability to defer compensation.
The current plan was approved by stockholders in 2006 and had a term of 10 years. The Governance Committee recommended and the Board of Directors adopted the Haverty Furniture Companies, Inc. Director Compensation Plan, as amended and restated (the "Compensation Plan").  We are now seeking approval of the Compensation Plan by the stockholders, and if approved, the effective date will be May 16, 2016.
The following is a general summary of the Compensation Plan and is qualified in its entirety by the full text of the Compensation Plan which is included in this proxy statement as Appendix A.  Capitalized terms not defined herein have the same meanings ascribed to such terms in the plan document.
Administration.  Subject to its terms, the Compensation Plan will be administered by the Governance Committee.  The day to day administration of the Compensation Plan shall be administered by the Administrative Committee.  The Administrative Committee will consist of the Chairman, CEO, Corporate Secretary and such other senior officers as the CEO may designate.
Participants.  Each person who is a non-employee director of Havertys will be eligible to participate in the Compensation Plan.
Shares Available for the Plan.  The Compensation Plan is amending and restating the current plan and accordingly, subject to certain adjustments, the maximum number of 500,000 shares of Common Stock which may be awarded is not changed.  The shares to be delivered under the Compensation Plan will be made available from the shares of Common Stock held in Havertys' treasury.
Compensation.  The Governance Committee will establish from time to time, the amount of each director's compensation.  For purposes of the Compensation Plan, the term "compensation" means the director's annual retainer fee, meeting fee, committee fee and committee chairman fee.  The Annual Retainer Fee will consist of cash and Common Stock of which two-thirds of each director's Annual Retainer Fee will be paid in shares of Havertys' Common Stock on the day of Havertys' Annual Meeting of Stockholders. The remaining portion of the annual fee, at the election of the director, may be paid in cash on November 1 or in shares of Common Stock on the day of the Annual Meeting.  A director may elect to receive 100% of his or her Annual Retainer Fee in shares of Havertys' Common Stock and may elect to defer receipt of his or her Compensation in accordance with the Director's Deferred Compensation Plan.
Termination and Amendment.  The Compensation Plan shall remain in effect, subject to the right of the Board to terminate the Plan, until the date immediately preceding the tenth anniversary of the Restatement Date of the Compensation Plan.  Subject to approval of the Governance Committee, the Management Committee may from time to time make such amendments to the Compensation Plan as it may deem proper and in the best interest of Havertys; provided however stockholder approval will be required to the extent required by applicable law, regulation or stock exchange.
Recommendation.  The Board of Directors believes that approval of the Compensation Plan is in the best interests of Havertys and its stockholders because the Compensation Plan will enable Havertys to compensate directors who contribute to Havertys' success.
The affirmative vote of a majority of the votes cast on the proposal is required for approval of the proposal.  Abstentions and broker non-votes are not counted as votes cast, and therefore do not affect the outcome of the proposal.
Our Board of Directors recommends that stockholders vote "FOR" the
Director Compensation Plan.
14


COMPENSATION DISCUSSION AND ANALYSIS
 
Introduction
 
The purpose of this Compensation Discussion and Analysis ("CD&A") is to provide stockholders with a description of our executive compensation philosophy, the material elements of the program and the policies and objectives which support the program.  This CD&A provides information on the program for all Havertys' executive officers but focuses on the compensation of our named executive officers for 2016.  The individuals who were subject to the SEC Section 16 reporting requirements during 2016 are referred to as the "executive officers."  The executive officers who served as our chief executive officer and chief financial officer during 2016, as well as the other individuals included in the Summary Compensation Table on page 24, are referred to as the "named executive officers" or "NEOs."
 
WHERE TO FIND IT:
   
Role of the Compensation Committee
15
 
Executive Compensation Framework
16
 
How We Make Compensation Decisions
17
 
Summary of 2016 NEO Compensation Program
19
 
Executive Compensation Components
20
 

Role of the Compensation Committee

The Compensation Committee is composed of independent directors and is responsible for the approval and oversight of compensation programs for executive officers, equity plan awards and benefit programs for all of our employees.

The Compensation Committee took the following steps to ensure that it effectively carried out its responsibilities:

Conducted an annual review of our compensation philosophy to ensure that it remains appropriate given strategic objectives;
Reviewed results from an annual review of compensation data related to our peers;
Reviewed and approved all compensation components for our chief executive officer, chief financial officer, and other NEOs;
Performed an annual evaluation of the execution of our pay-for-performance philosophy, to ensure that the actual award decisions resulted in alignment of relative pay and relative performance compared to the compensation peer group;
Scheduled an executive session, without members of management, for the purpose of discussing decisions related to the chief executive officer's performance, goal-setting, compensation level and other items deemed important by the Compensation Committee; and
Reviewed succession planning with the CEO and in executive session of the board.








 
15

CD&A
 
Executive Compensation Framework

The Company's executive compensation framework includes the following, each of which the Compensation Committee believes reinforces its philosophy and objectives.
 
What We Do:
Pay-for-performance.  A significant percentage of targeted annual compensation is delivered in the form of variable compensation that is connected to actual performance.  For 2016, variable compensation comprised approximately 62% of the targeted annual compensation for the chief executive officer and, on average, 53% of the targeted annual compensation for the other named executive officers.
Provide competitive target pay opportunities We annually benchmark our target and actual compensation levels and relative proportions of the types of compensation against our peer group.  We use informed judgment in special cases in order to offer the compensation appropriate to motivate and attract highly talented individuals to enable our long-term growth.
Linkage between performance measures and strategic objectives. Performance measures for incentive compensation are linked to both strategic and operating objectives designed to create long-term stockholder value and to hold executives accountable for their individual performance and the performance of the Company.
Future pay opportunity important component.  In 2016, all of the long-term incentive awards delivered to our named executive officer were in the form of equity-based compensation.  For 2016, long-term equity compensation comprised approximately 24% of the targeted annual compensation for the chief executive officer and 25% of the targeted annual compensation for the other named executive officers.
Mix of performance metrics.  The Company utilizes a mix of performance metrics that emphasize links between incentive compensation and the Company's strategic operating plan and financial results.
Outside compensation consultant.  The Compensation Committee retains an independent compensation consultant to review the Company's executive compensation program and practices.
Maximum payout caps for annual cash incentive compensation and PSUs.
"Clawback" Policy.  The Company may recover incentive compensation paid to an executive officer that was calculated based upon any financial result or performance metric impacted by fraud or misconduct of the executive officer.
Stock ownership guidelines.  Our chief executive officer is required to have qualified holdings equal to the lesser of a multiple of three times his base salary or 85,000 shares.  Our CEO's qualified holdings were 163,617 shares at December 31, 2016.  The other named executive officers are required to have qualified holdings equal to the lesser of a multiple of two times their base salary or 40,000 shares. Our other named executive officers' qualified holdings ranged from 46,857 shares to 184,679 shares at December 31, 2016.
Mitigate undue risk-taking in compensation programs. Our compensation programs for our executive officers contain features that are designed to mitigate undue risk-taking by our executives.
"Double trigger" in the event of a change-in-control.  In the event of a change-in-control, severance benefits are payable only upon a "double trigger."


What We Don't Do:
û
No repricing or buyout of underwater stock options.  Our equity plan does not permit the repricing or buyout of underwater stock options or stock appreciation rights without stockholder approval, except in connection with certain corporate transactions involving the Company.
û
Prohibition against margins, pledging, and hedging or similar transactions of Company securities by senior executives and directors.
û
No dividends or dividend equivalents are accrued or paid on PSUs or time-based restricted unit awards.
û
No change-in-control tax gross ups.  We do not provide change-in-control tax gross ups.
û
No significant perquisites.  We do not provide our employees, including our NEOs with significant perquisites.
 
 
16

CD&A

How We Make Compensation Decisions

The Committee has overall responsibility for approving and evaluating the Company's executive officer compensation plans, policies and programs.  The Committee is also responsible for providing a Compensation Committee report reviewing the Company's CD&A.  The Committee uses several different tools and resources in reviewing elements of executive compensation and making compensation decisions.  These decisions, however are not purely formulaic and the Committee exercises judgment and discretion in making them.

Compensation Consultants.  The Committee retained Meridian Compensation Partners, LLC ("Meridian") as an independent consultant to provide advice on executive compensation matters.  Meridian serves as a resource for market data on pay practices and trends and provides independent advice to the Committee for setting executive compensation.  Meridian reports directly and exclusively to the Committee Chair.  However, at the Committee's direction, Meridian works with management to review or prepare materials for the Committee's consideration.  Meridian provided no additional services to Havertys outside of the scope of the agreement with the Committee.

During 2016, the Committee reviewed Meridian's independence and determined that there were no conflicts of interest as a result of the Committee's engagement of Meridian. The Committee did not engage any consultant other than Meridian during 2016 to provide compensation consulting services.

Peer Group:

American Woodmark Corporation
Ethan Allen Interiors Inc.
Oxford Industries, Inc.
Big 5 Sporting Goods Corporation
Flexsteel Industries, Inc.
Select Comfort Corporation
Bassett Furniture Industries Incorporated
Hibbett Sports, Inc.
Shoe Carnival, Inc.
Conn's, Inc.
Kirkland's, Inc.
West Marine, Inc.
Culp, Inc.
Knoll, Inc.
Zumiez, Inc.
Dixie Group, Inc.
La-Z-Boy Inc.
 


Compensation Analysis. In determining appropriate compensation opportunities for our named executive officers, the Committee received input from Meridian.  We reviewed and analyzed competitive market data to be used as background for 2016 pay decisions and to obtain a general understanding of current compensation practices. This data was referenced when targeting the positioning for compensation discussed below. Data sources included public company proxy statements, broad-based, published compensation surveys and other sources. We compared compensation opportunities for our named executive officers with pay opportunities available to executive officers in comparable positions at similar companies (our "peer group"). The peer group included companies from the retail furniture industry, retailers of big ticket postponable items, and specialty retailers.  The peer group is re-evaluated annually to take into account changes in their operations and our own. The peer group companies used in 2016 are shown below.

Role of CEO.    The compensation of every Havertys employee, including each named executive officer, is influenced in large part by the responsibilities of the position and the need to ensure that employees having similar job responsibilities are paid equitably, with consideration for individual performance. During early 2016, Mr. Smith provided recommendations to the Compensation Committee with respect to the base salary amounts, performance targets for the annual and long-term incentive programs, and any equity awards for each executive officer. These recommendations were based on the data reviewed by the Committee and Mr. Smith's assessment of the executive's relative experience, overall performance, and impact on the accomplishment of Havertys' financial goals and strategic objectives during the prior year. While the Compensation Committee took Mr. Smith's recommendations under advisement, it independently evaluated the pay recommendations for each executive and made all final compensation decisions in accordance with its formal responsibilities as defined in its Charter.

17


CD&A

Competitive Positioning of Executive Compensation Levels. For 2016, the Committee established base salary, annual incentive opportunities and long-term incentive equity grants for our NEOs primarily with reference to the peer group and other public company data from 2015 proxy filings (which details 2014 compensation) included in the analysis prepared by Meridian (the "Peer Group Data").  The following compares compensation components for 2016 to the median of the Peer Group Data:
Target annual cash compensation (base salary plus target annual incentive compensation):
·
CEO Smith was approximately 8% above;
·
NEOs as a group were approximately 14% above.
The Committee held the 2016 targeted annual cash compensation at the 2015 levels for the NEOs and did not raise them for 2017.
Long-term target equity incentive:
·
CEO Smith was approximately 32% below;
·
NEOs as a group were approximately 22% below.
We include performance-based incentive awards with multi-year vesting which provide a     direct connection to Company performance and long-term stockholder value.  The Committee reviews the types and level of equity incentive awards made to the NEOs taking into consideration the peer group information and the stock ownership levels of the NEOs.
Total target compensation:
·
CEO Smith was virtually at the median;
·
NEOs as a group were approximately 4% above.

Summary of 2016 NEO Compensation Program

The following table summarizes the compensation elements provided for our NEOs in 2016, as well as the rationale for the key actions and decisions made by the Compensation Committee with respect to each element.  NEOs' compensation consisted primarily of the following components in addition to limited perquisites and the retirement, health and welfare plans and programs in which all of our full-time employees participate.  More information is provided about each compensation element later in this CD&A.
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CD&A
 
Summary of 2016 NEO Compensation Program
 
Total Direct Compensation
 
Fixed Pay
Base Salary
Key Features
·   Fixed annual cash amount.
·     Base pay increases considered on a calendar year basis or at time of promotion to align with the median range of our peer group (as described on page 17 of this CD&A).  Actual positioning varies to reflect each executive's skills, experience and contribution to our success.
Purpose
·  Provide a fixed amount of cash compensation to attract and retain talented executives.
·    Differentiate scope and complexity of executives' positions as well as individual performance over time.
2016 Actions
·    Base salaries were not increased for our named executive officers in 2016 except in the case of our CIO.
 
 
Variable "At Risk" Compensation
 
Cash Awards under Management Incentive Plans
Key Features
 
 
 
 
 
 
·    Individual MIP opportunities are expressed as a percent of base salary and can vary for executives based on their positions.  Target MIP award opportunities are generally established so that total annual cash compensation (base salary plus target MIPs) approximates the median of our peer group.
·    Performance-based cash incentive pay is comprised of two plans:  MIP-I is tied to the Company achieving certain pre-tax earnings levels during the year (80% of total target cash incentive pay) and MIP-II is based on successfully meeting individual goals (20% of total target cash incentive pay).
·    The pre-tax earnings goals for 2016 for MIP I were (in millions):
 
Ø$9.5 for Q-1    Ø$7.5 for Q-2    Ø$13.5 for Q-3   Ø$15.5 for Q-4   Ø$46.0 for 2016 year
 
 The range of potential payout for actual results relative to these goals is zero to 175 percent of target.
·    MIP amounts are earned based on the results achieved as determined by the Committee after evaluating Company and individual performance against pre-established goals.
Purpose
·    Motivate and reward achieving or exceeding Company and individual performance objectives, reinforcing pay-for-performance.
·    Align performance measures for NEOs on key business objectives to lead the organization to achieve short-term financial and operational goals.
·    Ensure alignment of short-term and long-term strategies of the Company.
2016 Actions
·    Actual performance in 2016 resulted in total MIP-I earned at 98.4% of its target and MIP-II earned at 82% to 90% of its target for the NEOs.
 
 
Long-Term Equity Incentive Compensation
Key Features
·    Awards granted annually based on competitive market grant levels.
·    Awards to NEOs are in the form of performance restricted stock units (PRSU) based on EBITDA or sales and restricted stock units.
·    Vesting:  The EBITDA based PRSUs granted in 2016 that are earned will cliff vest in February 2019 and are forfeitable upon termination of employment, except in the cases of death, disability or normal retirement. The restricted stock units vest in equal increments over a four-year period and the sales based PRSUs cliff vest in May following the measurement year.  These grants are forfeitable upon termination of employment, except in the cases of death or disability.
Purpose
·    Stock-based compensation links executive compensation directly to stockholder interests.
·    PRSUs provide a direct connection to Company performance and executives' goals.
·    Multi-year vesting creates a retention mechanism and provides incentives for long-term creation of stockholder value.
2016 Actions
·    2016 awards to NEOs were comparable to 2015 grants as a percentage of total target compensation.

 
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CD&A
 
Executive Compensation Components

Although there is no pre-established policy or target for the allocation between specific compensation components, a significant portion of an executive officer's annual total target compensation is determined by Company performance as compared to goals established for our annual cash incentive plan and the ultimate value of long-term incentive plans. We believe this approach reflects our executive compensation philosophy and objectives.
 
The table below illustrates how total compensation for our named executive officers for 2016 was allocated between performance-based and fixed components, how performance-based compensation is allocated between annual and long-term incentive components and how total compensation is allocated between cash and equity components.  These percentages are based on annualized total target compensation values and do not necessarily correspond to, and are not a substitute for, the values disclosed in the "Summary Compensation Table" and supplemental tables provided later in this Proxy Statement. 
 
2016 Total Targeted Compensation Mix Table(a)(b)
 
 
 
Percentage of Total Target
Compensation that is:
   
Percentage of Performance-
Based Total that is:
   
Percentage of Total Target
Compensation that is:
 
Name
 
Performance-
Based
   
Fixed
   
Annual
   
Long-Term
   
Cash
   
Equity
 
Smith
   
62
%
   
38
%
   
61
%
   
39
%
   
76
%
   
24
%
Fink
   
54
%
   
46
%
   
55
%
   
45
%
   
75
%
   
25
%
Burdette
   
53
%
   
47
%
   
53
%
   
47
%
   
75
%
   
25
%
Gallagher
   
53
%
   
47
%
   
53
%
   
47
%
   
75
%
   
25
%
Clary
   
53
%
   
47
%
   
53
%
   
47
%
   
75
%
   
25
%

 
 
(a)  
Only amounts for base salary, target annual cash incentive compensation and grant date value of long-term incentive compensation (PRSUs and restricted stock) were included in calculating the percentages in this table.  Other forms of compensation shown in the "Summary Compensation Table" are not included.
 
(b)
Our annual cash incentive plan and equity grants are included as performance–based compensation in this table.

Base Salary.    The Committee reviews the information regarding executives' base salary levels compared to the base salaries of executives of companies in our peer group.  The Committee also considers the chief executive officer's assessment of each executive's individual performance and responsibilities to determine appropriate compensation for each executive.  The Committee has determined that, in order to enable the Company to attract and retain the executive talent important to our long-term growth, the compensation strategy should generally aim to position base salaries between the 25th and 75th percentile of the median of the peer group data as described in the "Competitive Positioning of Executive Compensation Levels" section above.
In determining base salaries for executives, as well as in determining incentive compensation opportunities, the Committee evaluates each executive's individual performance on both an objective and subjective basis.   The Committee considers the chief executive officer's evaluation of an executive's performance along with the scope of responsibilities and individual seasonings and experience.  Further, the Committee reviews the competitive compensation data and exercises its judgment regarding base salary decisions for each executive.  
 Management Incentive Plans Cash Award. Our compensation philosophy connects our executives' potential annual earnings to the achievement of performance.  Our 2016 Long-Term Incentive Plan (the "2016 LTIP") provides for the payment of cash under two plans (the "MIPs").  MIP-I is based upon Company performance in relation to predetermined financial goals established during the first month of the year and MIP‑II is based on achieving individual goals (MIP-II). We established incentive targets so that total annual cash compensation at the target level would approximate the peer group median, with the opportunity for higher total annual cash compensation for correspondingly higher performance.  The target amount for the

20

CD&A

combined MIPs as a percent of base salary for our named executive officers was 60 percent except for Mr. Fink which was 65 percent and Mr. Smith which was 100 percent. The range of potential MIP-I payouts for 2016 ranged from zero to 175 percent of each executive officer's MIP-I incentive target amount, so that executives could earn above-target payouts when performance significantly exceeded our financial goals
The Committee approved our executives' 2016 MIPs' designs and targets and financial and individual goals in January 2016 as part of the annual compensation setting process.  The Committee approved the combined MIP total target amount for 2016 with MIP-I as 80 percent and MIP-II as 20 percent of the combined target, respectively.
 
The pre-tax earnings goals and the actual amounts achieved under the MIP-I plan for each measurement period are noted below:
 
Pre-tax Earnings (in thousands)
 
   
2014 Achieved(1)
   
2015 Achieved(2)
   
2016 Goal
   
2016 Achieved
 
 
Q-1
 
$
9,956
   
$
9,928
   
$
9,500
   
$
7,587
 
 
Q-2
   
7,812
     
7,027
     
7,500
     
8,762
 
 
Q-3
   
12,468
     
12,414
     
13,500
     
12,125
 
 
Q-4
   
16,645
     
15,093
     
15,500
     
17,347
 
           YTD
   
46,880
     
44,462
     
46,000
     
45,821
 
 
(1) The pre-tax earnings in 2014 for Q-4 and YTD were adjusted $21.6 million for the non-cash pension settlement expense.
(2) The Company's pre-tax earnings in 2015 for Q-2 and YTD were adjusted $0.8 million for proceeds from the settlement of credit card litigation.

The earnings based MIP-I structure provided for a 3% change in the incentive earned of the target for every 1% increase or decrease in pre-tax earnings versus the goal starting at 40% of the target at 80% of the goal with a maximum of 175% when pre-tax earnings is 125% of the goal.

The earnings performance resulted in a 98% payment factor applied to the MIP-I, the 80% portion of the combined MIP target.  The named executive officers achieved varying levels of their specific individual goals for the MIP-II, the 20% portion of the combined MIP total target.  As a result, the aggregate MIP amount earned was between 95% and 97% of the NEOs' 2016 combined MIP target levels.  The Committee certified the level of actual performance versus goals and approved payment of the awards.

See the "Summary Compensation Table," which shows the actual non-equity incentive plan compensation paid to our named executive officers for our 2016 performance.

Long-Term Equity Incentive Compensation. Our executives receive long-term equity incentive compensation intended to link their compensation to the Company's long-term financial success.  All equity awards for our executives are approved by the Committee and the 2016 annual equity award grants were set at its meeting in January 2016.  The 2016 grants were similar to the 2015 awards, a mix of PRSUs based on EBITDA, PRSUs based on sales, and restricted stock units.

 
The EBITDA based PRSU grants use adjusted EBITDA as the performance measure to determine the number of shares that will vest.  The 2016 EBITDA target was $75 million, exclusive of adjustments to eliminate the effects of unusual or non-recurring items, with a range from a threshold of $60 million and 80% of the target shares to $97.5 million and 130% of the target shares.  The EBITDA for 2016 was $77.1 million or 102.8% of the target $75 million.  Accordingly, the shares earned and subject to vesting are 105.6% of the target shares granted. The shares earned will cliff vest in February 2019.

The PRSUs linked to sales are based on exceeding sales targets in each of the years 2016 to 2019.  The number of shares achieved is solely dependent on each individual year and earned shares cliff vest in May following the measurement year.  The sales target for 2016 was $821 million and was achieved.

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CD&A

The restricted stock units vest in four equal annual installments beginning in May 2017.  

Mr. Smith and Mr. Fink were granted a mix of 70% EBITDA based PRSUs and 30% sales based PRSUs  The target shares to Messrs. Burdette, Gallagher, and Clary were an equal mix of EBITDA based PRSUs and restricted stock units.

Dividend and voting rights are not applicable to stock awards until vested and/or exercised.  Additional details regarding grants are provided in the "Grants of Plan Based Awards Table" and "Outstanding Equity Awards Value at Year-End Table."

Pension Benefits and Retirement Plans

Pension Plan.  We terminated and settled the obligations associated with our defined benefit plan (the "Pension Plan") in 2014.  The Pension Plan covered substantially all employees hired on or before December 31, 2005 and was closed to any employees hired after that date.  Effective January 1, 2007, no new benefits were earned under the Pension Plan for additional years of service after December 31, 2006.  The benefits formula provided retirement income equal to 0.6% of final average compensation plus 0.5% of final average compensation in excess of the Social Security Covered Compensation times years of service with Havertys, up to 40 years.

Supplemental Retirement Plan.  We also have a non-qualified, non-contributory supplemental executive retirement plan (the "SERP") for employees whose retirement benefits are reduced due to their annual compensation levels.  The SERP provides annual benefits amounting to 55% of final average earnings less benefits calculated under the Pension Plan and social security benefits.  The SERP limits the total annual amount that may be paid to a participant in the SERP from all sources (Pension Plan, social security and the SERP) to $125,000.  Effective December 31, 2015, no new benefits can be earned under the SERP.

Additional details regarding accumulated benefits under these plans are provided in the "Pension Benefits and Retirement Plans Table."


Regulatory Requirements

Together with the Compensation Committee, we carefully review and take into account current tax, accounting and securities regulations as they relate to the design of our compensation program and related decisions.

Section 162(m) of the Internal Revenue Code makes compensation paid to certain named executive officers in amounts in excess of $1 million not tax deductible unless the compensation is paid under a predetermined objective performance plan meeting certain requirements, or satisfies one of various other exemptions.  The 2016 LTIP, which includes the MIPs, are administered by the Compensation Committee and payments are intended to qualify as performance-based compensation and thus satisfy the performance-based requirements for tax deductible compensation.  The Compensation Committee believes that the interests of our stockholders are best served by not restricting the Compensation Committee's discretion and flexibility in crafting compensation plans and arrangements.  While the Compensation Committee intends to structure most awards to comply with Section 162(m), the Compensation Committee may approve elements of compensation for certain executive officers that are not fully deductible, and reserves the right to do so in the future in appropriate circumstances.
22


CD&A

 
COMPENSATION COMMITTEE REPORT
 
The Compensation Committee oversees Havertys' compensation program on behalf of the board and operates under a written charter adopted by the board.
 
The Compensation Committee is responsible for, among other things, reviewing and approving compensation for the executive officers, establishing the performance goals on which the compensation plans are based and setting the overall compensation principles that guide the committee's decision-making.  The Compensation Committee has reviewed the Compensation Discussion and Analysis ("CD&A") and discussed it with management.  Based on the review and discussions with management, the Compensation Committee recommended to the board of directors that the CD&A be included in the 2017 proxy statement and incorporated by reference in the Annual Report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission.
 
 
 
Mylle H. Mangum, Chair
L. Phillip Humann
Al Trujillo
 
 
 
 
 
23


EXECUTIVE COMPENSATION

Summary Compensation Table
 
The following tables and footnotes discuss the compensation paid or accrued for the last three years to (i) our chief executive officer and chief financial officer and (ii) our three most highly compensated executive officers.
Name
 
Year
 
Salary
   
Non-Equity Incentive Plan Compensation
(1)
   
Stock
Awards
(2)
   
Option
 Awards
(2)
   
Change in Pension Value (3)
   
All Other Compensation
(4)
   
Total
 
Clarence H. Smith
 
2016
 
$
650,000
   
$
622,388
   
$
409,708
     
   
$
   
$
48,632
   
$
1,730,728
 
President and CEO
 
2015
   
650,000
     
524,498
     
455,016
     
     
16,870
     
47,746
     
1,694,130
 
 
 
2014
   
625,000
     
489,482
     
374,932
     
     
145,113
     
48,248
     
1,682,775
 
Dennis L. Fink(5)
 
2016
   
390,000
     
242,731
     
210,710
     
     
15,969
     
29,862
     
889,272
 
EVP and CFO
 
2015
   
390,000
     
220,271
     
234,000
     
     
18,296
     
30,316
     
892,883
 
 
 
2014
   
380,000
     
206,094
     
227,968
     
     
137,666
     
30,757
     
982,485
 
Steven G. Burdette
 
2016
   
370,000
     
211,237
     
199,919
     
     
17,670
     
27,281
     
826,107
 
EVP, Stores
 
2015
   
370,000
     
204,000
     
222,000
     
     
     
25,954
     
821,954
 
 
 
2014
   
360,000
     
180,228
     
210,032
     
     
25,323
     
25,222
     
800,805
 
Richard D. Gallagher
 
2016
   
360,000
     
205,528
     
194,505
     
     
23,971
     
29,705
     
813,709
 
    EVP, Merchandise
 
2015
   
360,000
     
204,535
     
216,000
     
     
     
25,293
     
805,828
 
 
 
2014
   
335,000
     
168,176
     
210,032
     
     
178,672
     
23,702
     
915,582
 
J. Edward Clary
 
2016
   
355,000
     
206,082
     
191,798
     
     
26,982
     
27,637
     
807,499
 
EVP and CIO
 
2015
   
346,670
     
199,564
     
207,024
     
     
     
26,795
     
780,053
 
 
 
2014
   
335,000
     
167,712
     
210,032
     
     
186,977
     
24,604
     
924,325
 
 
 (1)
This column shows the earned portion of the MIPs awards.  For a description of the MIPs, see "Compensation Discussion and Analysis."  The aggregate MIP award earned for 2016 was between 95% and 97% of the NEO's combined MIP target levels.
(2)
These amounts reflect the aggregate grant date fair value of awards computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 718, Compensation – Stock Compensation (ASC Topic 718). Awards containing a performance-based vesting condition are included based on achieving target performance.  Assuming the highest level of performance conditions was achieved in 2016, this amount would have increased for the NEOs as follows:  Mr. Smith - $172,076; Mr. Fink $88,510; Mr. Burdette - $59,972; Mr. Gallagher - $58,355 and Mr. Clary - $57,547.  Assumptions used in the calculation of these amounts are included in Note 12 to our audited financial statements for the year ended December 31, 2016, included in our annual report on Form 10-K filed with the SEC on March 3, 2017.  The amounts reported for these awards may not represent the amounts the individuals will actually realize, as such amounts, if any, will depend on actual performance versus goals and  the change in our stock price over time.
 (3)
This column represents an estimate of the aggregate annual increase in the actuarial present value of the NEOs accrued benefit under our retirement plans for the applicable year, assuming the greater of actual age or a retirement age of 65.
(4)
These amounts are comprised of a combination, varying by NEO, of the following:  contributions to the Deferred Compensation Plan, contributions to 401(k) Plan accounts, premium costs for covering a portion of medical insurance coverage, additional life insurance, long-term disability coverage and health examinations.  None of these individual items was greater than $10,000 for 2016 except as follow: for the Company's contribution to the Deferred Compensation Plan for Mr. Smith of $27,286 and for Mr. Fink of $10,359; and contributions for insurance coverages for Mr. Fink of $10,228.
(5)
Mr. Fink has announced his intention to retire during 2017.  His decision was reported in a Form 8-K filed on July 8, 2016.

24


EXECUTIVE COMPENSATION

Grants of Plan Based Awards Table
The following table and footnotes sets forth certain information with respect to the estimated payouts which were possible under our non-equity incentive plan and the restricted stock awards granted during the year ended December 31, 2016 to our NEOs.
Name
Award Type(1)
Grant and Compensation Committee Approval Date
 
 
    
Estimated Possible Payouts
Under Non-Equity
Incentive Plan Awards ($)(2)
   
  
  
Estimated Possible Payouts
Under Equity
Incentive Plan Awards (#)(3)(4)
   
All Other Stock
Awards:
Number of
Shares of
Stock
(#)
   
Exercise
or
Base Price of Awards
$/Share(5)
   
Grant Date
Fair
Value of
Stock
Award
$(6)
 
 
Threshold
     
Target
     
Maximum
 
Threshold
     
Target
     
Maximum
Smith
ACMIP-I
1/26/2016
 
$
12,480
   
$
520,000
   
$
910,000
     
     
     
     
     
     
 
 
ACMIP-II
1/26/2016
   
26,000
     
130,000
     
130,000
     
     
     
     
     
     
 
 
PRSU
1/26/2016
   
     
     
     
9,153
     
15,255
     
24,408
     
   
$
18.80
   
$
286,794
 
 
PRSU.1
1/26/2016
   
     
     
     
0
     
6,538
     
6,538
     
     
18.80
     
122,914
 
Fink
ACMIP-I
 
1/26/2016
   
4,867
     
202,800
     
354,900
     
     
     
     
     
     
 
 
ACMIP-II
1/26/2016
   
12,675
     
50,700
     
50,700
     
     
     
     
     
     
 
 
PRSU
1/26/2016
   
     
     
     
4,708
     
7,846
     
12,554
     
     
18.80
     
147,505
 
 
PRSU.1
1/26/2016
   
     
     
     
0
     
3,362
     
3,362
     
     
18.80
     
63,206
 
 
Burdette
ACMIP-I
 
1/26/2016
   
4,262
     
177,600
     
310,800
     
     
     
     
     
     
 
 
ACMIP-II
1/26/2016
   
4,440
     
44,400
     
44,400
     
     
     
     
     
     
 
 
PRSU
1/26/2016
   
     
     
     
3,190
     
5,317
     
8,507
     
     
18.80
     
99,960
 
 
RSU
1/26/2016
   
     
     
     
     
     
     
5,317
     
18.80
     
99,960
 
Gallagher
ACMIP-I
 
1/26/2016
   
4,147
     
172,800
     
302,400
     
     
     
     
     
     
 
 
ACMIP-II
1/26/2016
   
4,320
     
43,200
     
43,200
     
     
     
     
     
     
 
 
PRSU
1/26/2016
   
     
     
     
3,104
     
5,173
     
8,277
     
     
18.80
     
97,252
 
 
RSU
1/26/2016
   
     
     
     
     
     
     
5,173
     
18.80
     
97,252
 
Clary
ACMIP-I
 
1/26/2016
   
4,090
     
170,400
     
298,200
     
     
     
     
     
     
 
 
ACMIP-II
1/26/2016
   
6,390
     
42,600
     
42,600
     
     
     
     
     
     
 
 
PRSU
1/26/2016
   
     
     
     
3,061
     
5,101
     
8,162
     
     
18.80
     
95,899
 
 
RSU
1/26/2016
   
     
     
     
     
     
     
5,101
     
18.80
     
95,899
 
 
(1)
Award Type:
ACMIP-I = Annual Cash Management Incentive Plan Compensation based on company performance
ACMIP-II = Annual Cash Management Incentive Plan Compensation based on individual performance
PRSU = Performance Restricted Stock Units contingent - EBITDA
PRSU.1 = Performance Restricted Stock Units contingent - Sales
RSU = Restricted Stock Unit
(2)
The 2016 Non-Equity Incentive Plans as discussed above provided for a target payout for 100% attainment of the goals and decreased to the payout threshold and increased to the maximum payout noted above.
(3)
The PRSU grants are based on 2016 adjusted EBITDA as discussed above.  The number of shares actually achieved were 105.6% of the target and are shown as outstanding at December 31, 2016.
(4)
The PRSU.1 grants are based on exceeding sales targets in each of the years 2016 to 2019.  The 2016 target was achieved.
(5)
The base price for the PRSUs and RSUs is the closing price of our stock on the date of grant.
(6)
The fair value for the PRSUs and RSUs was determined using the target number of shares granted multiplied by the closing stock price on the grant date.

25


EXECUTIVE COMPENSATION


Outstanding Equity Awards at Fiscal Year-End Table
The following table includes certain information with respect to the value of all unexercised and unvested awards previously granted to the NEOs at December 31, 2016. The market value of shares of stock that have not vested is based on the closing market price of $23.70 at December 30, 2016.
 
     
SSARs Awards
 
Stock Awards
 
Name
Date Awarded
   
Number of Securities Underlying Exercisable Awards (#)
   
Number of Securities
Underlying
Unexercisable
Awards (#)
   
Exercise Price ($)
 
Expiration Date
 
Number of Shares of Stock That Have Not Vested(#)
   
Market Value of Shares of Stock that Have Not Vested ($)
   
Equity Incentive Plan Awards:
Number of Unearned Shares, Units, That Have not Vested(#)
   
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, That Have Not Vested($)
 
Smith
 
1/24/13
(1) 
   
16,500
     
5,500
   
$   18.14
 
 
1/24/20
                       
 
1/24/13
(2) 
                             
3,000
     
71,100
             
 
1/17/14
(2) 
                             
6,447
     
152,794
             
 
1/17/14
(4) 
                             
970
     
22,989
     
970
   
$    22,989
 
 
1/23/15
(5) 
                             
13,152
     
311,702
                 
 
1/23/15
(4) 
                             
1,422
     
33,701
     
2,844
     
67,403
 
 
1/26/16
(6) 
                             
16,109
     
381,783
                 
 
1/26/16
(4) 
                             
1,635
     
38,750
     
4,903
     
116,201
 
 
Fink
 
1/24/13
(1) 
   
10,500
     
3,500
   
$   18.14
 
 
1/24/20
                               
 
1/24/13
(2) 
                             
1,875
     
44,438
                 
 
1/17/14
(2) 
                             
1,970
     
46,689
                 
 
1/17/14
(3) 
                             
2,797
     
66,289
                 
 
1/23/15
(2) 
                             
3,656
     
86,647
                 
 
1/23/15
(5) 
                             
4,831
     
114,495
                 
 
1/26/16
(6) 
                             
8,285
     
196,355
                 
 
1/26/16
(4) 
                             
841
     
19,932
     
2,521
     
59,748
 
 
Burdette
1/24/13
(1) 
   
6,250
     
3,125
   
 
$   18.14
 
 
1/24/20
                               
 
1/24/13
(2) 
                             
1,750
     
41,475
                 
 
1/17/14
(2) 
                             
1,815
     
43,016
                 
 
1/17/14
(3) 
                             
2,577
     
61,075
                 
 
1/23/15
(2) 
                             
3,468
     
82,192
                 
 
1/23/15
(5) 
                             
4,583
     
108,617
                 
 
1/26/16
(7) 
                             
5,317
     
126,013
                 
 
1/26/16
(6) 
                             
5,615
     
133,076
                 
 
Gallagher
1/24/13
(1) 
   
9,375
     
3,125
   
 
$   18.14
 
 
1/24/20
                               
 
1/24/13
(2) 
                             
1,750
     
41,475
                 
 
1/17/14
(2) 
                             
1,815
     
43,016
                 
 
1/17/14
(3) 
                             
2,577
     
61,075
                 
 
1/23/15
(2) 
                             
3,375
     
79,988
                 
 
1/23/15
(5) 
                             
4,459
     
105,678
                 
 
1/26/16
(7) 
                             
5,173
     
122,600
                 
 
1/26/16
(6) 
                             
5,463
     
129,473
                 
 
Clary
1/24/13
(1) 
   
9,375
     
3,125
   
 
$   18.14
 
 
1/24/20
                               
 
1/24/13
(2) 
                             
1,750
     
41,475
                 
 
1/17/14
(2) 
                             
1,815
     
43,016
                 
 
1/17/14
(3) 
                             
2,577
     
61,075
                 
 
1/23/15
(2) 
                             
3,234
     
76,646
                 
 
1/23/15
(5) 
                             
4,274
     
101,294
                 
 
1/26/16
(7) 
                             
5,101
     
120,894
                 
 
1/26/16
(6) 
                             
5,387
     
127,672
                 
 
26

 
EXECUTIVE COMPENSATION
 
 
Award Information
Vesting Rate
Vesting Dates
Conditions
 
(1)
Stock-Settled
Appreciation Rights
25% per year
May 8 each year beginning year following grant date
Continued employment or normal retirement
 through vesting date.
 
(2)
Restricted Stock Units
25% per year
May 8 each year beginning year following grant date
Continued employment or normal retirement
 through vesting date.
 
(3)
Performance Restricted Stock Units
100%
February 28, 2017
Based on 2014 EBITDA, shares achieved at
 71.0% of target.
 
(4)
Performance Restricted Stock Units
25% per year
May 8 each year beginning year following grant date
Contingent upon achieving certain level of
 annual net sales.
 
(5)
Performance Restricted Stock Units
100%
February 28, 2018
Based on 2015 EBITDA, shares achieved at
 99.1% of target.
 
(6)
Performance Restricted Stock Units
100%
February 28, 2019
Based on 2016 EBITDA, shares achieved at
105.6% of target.
 
(7)
Restricted Stock Units
25% per year
May 8 each year beginning year following grant date
Continued employment through vesting date.
 

 
Option Exercises and Stock Vested Table
The following table includes certain information with respect to the exercise of SSARs and the vesting of restricted stock awards of the NEOs for the year ended December 31, 2016.
 
 
Option and SSARs Awards
   
Stock Awards
 
Name
 
Number of Shares Acquired on
Exercise (#)(1)
   
Value Realized on Exercise ($)(2)
   
Number of Shares
Acquired
on Vesting (#)(1)
   
Value
Realized on
Vesting ($)(2)
 
Clarence Smith
   
   
 
$      —
     
9,092
   
 
$    166,293
 
Dennis Fink
   
     
     
6,229
     
113,928
 
Steve Burdette
   
     
     
5,714
     
104,509
 
Richard Gallagher
   
     
     
5,232
     
95,693
 
Ed Clary
   
     
     
5,336
     
97,595
 
 
 (1)
The number of shares acquired on exercise or vesting is the gross number, including shares surrendered to us for the payment of the exercise and/or withholding taxes.
 (2)
The value realized reflects the taxable value to the named executive officer as of the date of the exercise of the SSAR, or vesting of restricted stock units. The actual value ultimately realized by the NEO may be more or less than the value realized calculated in the above table depending on whether and when the NEO held or sold the stock associated with the exercise or vesting occurrence.
 
 
Stock Ownership Guidelines

In order to preserve the link between the interests of our executive officers and those of our stockholders, executive officers are expected to establish and maintain a significant level of direct stock ownership.  In February 2013, our Stock Ownership Guidelines were amended and now include all executive officers.  Each executive officer is expected to have minimum qualified holdings based on the lesser of the fair market value of a multiple of his or her base salary or the number of shares as indicated below.  We count unvested time-based restricted stock units, reduced by 33% representing shares withheld for taxes, towards satisfying the guidelines. Currently, all of our executive officers currently meet the ownership levels that are established at the following minimum levels.
 
Position
 
 
Guidelines
 
 
Status as of 12/31/2016
Chief Executive Officer
 
3.0x salary or 85,000 shares
 
Exceeds
Executive Vice President
 
2.0x salary or 40,000 shares
 
Exceeds
Senior Vice President
 
1.0x salary or 25,000 shares
 
Exceeds

 
27

 
EXECUTIVE COMPENSATION

Non-Qualified Deferred Compensation Plans

Top Hat Mutual Fund Option Plan.  The Top Hat Mutual Fund Option Plan (the "Top Hat Plan") was designed to accumulate retirement funds for selected employees, including the executive officers. The Top Hat Plan allowed participants to defer up to 100% of their cash incentive compensation in exchange for an option to buy selected mutual funds at a discount equal to the bonus they would have otherwise received. Deferrals under the Top Hat Plan were suspended in 2005. Participants may withdraw any or all amounts at any time but not later than fifteen years from leaving our employment.  The following table includes certain information for those NEOs in the Top Hat Plan.
 
 
Name
 
Aggregate
Earnings (Loss)
in 2016 ($)
   
Aggregate
Balance at Last
FYE ($)
   
Clarence Smith
 
 
$     64,373
   
 
$     813,643
   
Dennis Fink
   
22,414
     
291,953
   
Ed Clary
   
19,919
     
295,777
   

Deferred Compensation Plan.  In January 2011, Havertys instituted a Deferred Compensation Plan for certain employees, including the NEOs.  Under this plan participants may voluntarily defer receipt of up to 50% of their salary and 100% of their cash bonuses or non-equity plan compensation and allocate the deferred amounts among a group of investment options that mirrors the fund choices available in Havertys' 401(k) Plan. Havertys may also make a percentage contribution of excess compensation to each participant. "Excess compensation" refers to compensation above which a participant cannot receive an employer matching contribution under the existing 401(k) limits. The percentage Company contribution was 3% for 2016. In general, deferred amounts are distributed to the participant upon termination or at a specified date as elected by the participant or as required by the plan.  The following table includes information for those NEOs participating in the Deferred Compensation Plan.

 
 
 
Name
 
 
Executive Contributions in 2016 ($)(1)
   
 
Company Contributions
in 2016 ($)(2)
   
 
Aggregate Earnings (Loss) in 2016 ($)(3)
   
Aggregate
Withdrawals/
Distributions
in 2016 ($)
   
 
Aggregate Balance at Last FYE ($)(4)
 
Clarence Smith
 
$
339,310
   
$
27,286
   
$
99,686
     
   
$
1,435,116
 
Dennis Fink
   
103,457
     
10,359
     
5,628
     
     
274,459
 
Steve Burdette
   
38,130
     
9,270
     
13,980
   
$
23,153
     
111,335
 
Richard Gallagher
   
75,408
     
8,986
     
27,519
     
     
185,874
 
Ed Clary
   
53,522
     
8,687
     
13,613
     
     
116,763
 
 
(1)
Amounts included in this column have been included in the Summary Compensation Table on page 25.
(2)
Amounts included in this column have been reported in the "All Other Compensation" column of the Summary Compensation Table on page 25.
(3)
Amounts included in this column do not constitute above-market or preferential earnings and accordingly such amounts are not
reported in the "Change in Pension Value and Nonqualified Deferred Compensation Earnings" column of the Summary Compensation
Table on page 25.
(4)
All amounts included in this column have been reported in the current or prior years as either salary, non-equity incentive compensation or all other compensation in the summary compensation tables or as earnings or withdrawals in the deferred compensation tables.

28


EXECUTIVE COMPENSATION

Pension Benefits and Retirement Plans
The retirement plans are described in the CD&A.  The change in pension value can be impacted by changes in assumptions used to estimate present values.  Amounts for the SERP Plan for 2015 were impacted by the decrease in discount rates and the use of updated mortality tables.

The Pension Plan was terminated in May 2014 and distributions of the participants' plan balance were made in December 2014.  Distribution options included the purchase of an individual annuity, rollover to another qualified retirement account or cash out of the accumulated balance.

The following table provides certain information on the retirement benefits available under the SERP Plan for each NEO at December 31, 2016.
 
Name
 
Plan Name
 
Number of Years
Credited
Service (#)
   
Present Value
of Accumulated
Benefit ($)
   
 
Payments during last fiscal year ($)
 
Clarence Smith     
SERP
   
40
   
 
$     485,241
     
 
Dennis Fink     
SERP
   
23
     
643,958
   
$
17,892
 
Steve Burdette     
SERP
   
32
     
233,417
     
 
Richard Gallagher
SERP
   
27
     
327,372
     
 
Ed Clary
SERP
   
25
     
369,224
     
 

The SERP plan permits participants with 15 or more years of service to retire as early as age 55 with a reduction in the amount of their monthly benefits ranging from 50% at age 55 to 93.3% at age 64.  As of December 31, 2016, Clarence Smith was eligible for retirement with no reduction in benefits. Dennis Fink began receiving monthly benefits in August.

Change in Control Benefits

Our executive officers and other employees have built Havertys into the successful enterprise that it is today, and we believe that it is important to protect them in the event of a change in control. We have entered into change in control agreements with all of our executive officers, including the NEOs.  These agreements provide for cash payments and continuation of benefits upon termination of the person's employment due to events as defined in the agreement.

The agreements, entered into with the NEOs, provide that unless the termination of the person is for cause, or by the individual without "Good Reason" as defined in the agreement, the person will be paid:  (i) a lump severance payment in cash equal to the higher of the sum of two times the individual's base salary or two times the average annual base salary for the three years immediately prior to the event upon which the notice of termination is based; (ii) the higher of two times the amount paid to individual as bonus and annual incentive compensation or two times the average amount paid in the three years preceding that in which the date of termination occurs; and (iii) an amount of any annual bonus and non-equity incentive compensation which has been allocated or awarded and has not yet been paid and a pro rata portion for the fiscal year in which the termination occurs.

Under the terms of the agreement, if a change in control occurs, we will, at the election of the individual, repurchase all equity awards held for a lump sum amount in cash equal to the product of the spread (using the per share price as defined in the agreement) times the number of shares covered by each award. We will also arrange to provide life, disability, accident and health insurance benefits similar to those which the individual was receiving immediately prior to the notice of termination for a period of 24 months after the date of termination.
29


EXECUTIVE COMPENSATION

Because of the so-called "parachute" tax imposed by Internal Revenue Code Section 280G, the agreements include a "cap."  Under this provision, all parachute payments would be reduced so that no excise tax would be imposed on any of the payments and benefits and thus the total amount of payments would never exceed three times his or her "base amount" as defined by the Internal Revenue Code.
 
Based upon the hypothetical termination date of December 31, 2016, and election to repurchase all equity awards (at a purchase price as determined per the agreement, assumed here to be $24.35), the change in control benefits for our NEOs, assuming the provision of the agreements deem payments should be made, would have been as follows:
 
Name
 
Salary times
Multiple
   
Annual Incentive times
Multiple
   
Purchase of
Equity Awards
   
Healthcare and
Other Benefits
   
Total
 
Clarence Smith
 
$
1,300,000
   
$
1,244,776
   
$
1,389,476
   
$
58,157
   
$
3,992,409
 
Dennis Fink
   
780,000
     
485,462
     
738,936
     
57,124
     
2,061,522
 
Steve Burdette
   
740,000
     
422,474
     
670,013
     
40,933
     
1,873,420
 
Richard Gallagher
   
720,000
     
411,056
     
676,927
     
74,819
     
1,882,802
 
Ed Clary
   
710,000
     
412,164
     
665,385
     
72,477
     
1,860,026
 
 
We do not have employment agreements with any of our executive officers and there are no other written agreements related to termination other than the change in control agreements.

Conclusion

The Compensation Committee reviewed various information sources in 2016 and determined that the compensation structure for our chief executive officer and other NEOs was reasonable, remained consistent with our compensation philosophy and was not excessive.

We believe the design of our executive compensation program aligns the interest of our executive officers with those of our stockholders and provides executive officers with the necessary motivation to maximize the long-term operational and financial performance of Havertys, while using sound financial controls and high standards of integrity.  We also believe that total compensation for each executive officer should be, and is, commensurate with the execution of specified short-term and long-term operational, financial and strategic objectives.
30


Proposal 3:   Advisory Vote on our Named Executives' Compensation

As discussed in our CD&A starting on page 15, we have designed our executive compensation to attract, motivate, reward and retain the senior management talent required to achieve our corporate objectives and to increase long-term stockholder value.  We believe that our executive compensation program is designed to reward results relevant to our short-term and long-term success based on both corporate and individual performance.
We are asking our stockholders to provide advisory approval for our NEO compensation as described in this proxy statement.  This proposal, commonly known as a "say-on-pay" proposal, gives you, as a stockholder, the opportunity to express your views on our executive compensation policies for our NEOs.  This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the policies and procedures described in this proxy statement.
Because this is an advisory vote, it will not be binding upon Havertys. However, the Compensation Committee will take into account the outcome of the vote in connection with its regular evaluations of our executive compensation program and in establishing our NEOs' compensation.

Our Board of Directors recommends that stockholders vote "FOR" this proposal.




Proposal 4:   Advisory Vote on the Frequency of the Stockholder Vote on our Named Executives' Compensation

In addition to the advisory vote on our executives' compensation, we are also seeking a determination from our stockholders as to their preference for having a "say on pay" vote every one, two, or three years.  This non-binding "frequency" vote is required at least once every six years.
Our compensation program objectives include establishing and supporting a performance-driven culture and motivating executives to deliver strong business results.  Accordingly, we believe that a vote of every three years would provide our stockholders with additional time to evaluate the effectiveness of our executive compensation philosophy as it relates to our performance.
As a result, after careful consideration, our board has determined that an advisory vote on executive compensation that occurs every three years is the most appropriate alternative for Havertys and therefore our board recommends that you vote for a three-year interval for the advisory vote on executive compensation.
The proxy card provides stockholders with the opportunity to choose among four options (holding the vote every one, two or three years, or abstaining) and, therefore the option that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been selected by stockholders.  However, because this vote is advisory it will not be binding on the board. However, the board will take into account the outcome of the vote and in establishing the frequency of the stockholder vote on our named executives' compensation.

Our Board of Directors recommends that you vote for the option of "Three Years" for future advisory votes on our Named Executives' Compensation.
 
31

AUDIT COMMITTEE REPORT
 
We are responsible for providing independent, objective oversight of Havertys' accounting functions and internal controls and operate pursuant to a written charter approved by Havertys' board. We are comprised entirely of five independent directors who meet independence, experience and other qualification requirements of the NYSE listing standards, Section 10A(m)(3) of the Securities Exchange Act of 1934 and the rules and regulations of the SEC. Havertys' board has determined that each member of the Audit Committee is a "financial expert," as defined by SEC rules.
 
Management is responsible for Havertys' financial reporting process, including Havertys' system of internal control, and for the preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States. Havertys' independent registered public accounting firm, or "independent accountants," is responsible for auditing its consolidated financial statements and providing an opinion as to their conformity with accounting principles generally accepted in the United States as well as attesting and reporting on the effectiveness of its internal controls over financial reporting. Our responsibility is to monitor and review these processes. It is not our duty or responsibility to conduct auditing or accounting reviews or procedures. Consequently, in carrying out our oversight responsibilities, we shall not be charged with, and are not providing, any expert or special assurance as to Havertys' financial statements, or any professional certification as to the independent accountants' work. In addition, we have relied on management's representation that the financial statements have been prepared with integrity and objectively in conformity with accounting principles generally accepted in the United States and on the representations of independent accountants included in their report on Havertys' financial statements.
 
 
We schedule our meetings to ensure we have sufficient time to devote attention to all of our tasks and during 2016 met five times.  During 2016 and subsequent to the end of the year, we:
· met with management and the independent accountants, Grant Thornton LLP ("Grant Thornton") to review and discuss Havertys' critical accounting policies and
significant estimates;
· met with management and Grant Thornton to review and approve the 2016 audit plan;
· met regularly with both Grant Thornton and the vice president internal audit outside the presence of management;
· reviewed and discussed the quarterly and annual reports prior to filing with the SEC;
· reviewed and discussed the quarterly earnings press releases and other financial press releases;
· met with the vice president internal audit to review, among other things, the audit plan, test work, findings and recommendations, and staffing;
· met with management and Grant Thornton to review the audited financial statements for the year ended December 31, 2016, and internal controls over financial reporting
as of December 31, 2016;
· reviewed with senior management significant risks and the processes by which risk is identified, assessed, and mitigated;
· selected for the stockholders' ratification, Grant Thornton as the independent registered public accounting firm for 2017;
· reviewed and reassessed the adequacy of the Audit Committee charter (attached to this proxy statement as Appendix B) and recommended no changes; and
· completed all other responsibilities under the Audit Committee charter.
 
 
 
 
 
 
32

 
 
AUDIT COMMITTEE REPORT (continued)
 
We have discussed with Grant Thornton the matters required by Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees, and SEC Rule 2-07 of Regulation S-X, which includes a review of significant accounting estimates and Havertys' accounting practices. In addition, we have received written disclosures and the letter from the independent accountants required by PCAOB Ethics and Independence Rule 3526, Communication with Audit Committees Concerning Independence, and discussed with the independent accountants their firm's independence.
Based upon our discussion with management and Grant Thornton, and our review of the representations of management and Grant Thornton, we recommended to the Board that the audited consolidated financial statements be included in Havertys' annual report on Form 10-K for the year ended December 31, 2016.
 
John T. Glover, Chair
L. Allison Dukes
Vicki R. Palmer
Fred L. Schuermann
Al Trujillo
 
This report shall not be deemed to be "soliciting material" or to be "filed" with the SEC nor shall this report be incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, and shall not otherwise be deemed filed under such acts.
 
 


33


AUDIT MATTERS

Independent Registered Public Accountants
On January 5, 2016, the Audit Committee of the Company chose not to re-engage Ernst & Young LLP ("EY") as the independent registered public accounting firm for Havertys, effective upon completion by EY of its audit of the Company's consolidated financial statements as of and for the year ending December 31, 2015 and the effectiveness of the Company's internal controls over financial reporting as of December 31, 2015 and all other procedures related to filing the Company's Annual Report on Form 10-K for the year ended December 31, 2015.

The reports of EY on the Company's consolidated financial statements for the years ended December 31, 2014 and 2015 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

During the year ended December 31, 2015, and the subsequent interim period from January 1, 2016 through March 4, 2016, (i) the Company had no disagreements with EY on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of EY, would have caused EY to make reference to the subject matter of the disagreements in connection with its report on the consolidated financial statements for such periods, and (ii) there were no "reportable events" as defined in Item 304(a)(1)(v) of Regulation S-K.

On January 5, 2016, the Audit Committee appointed Grant Thornton LLP ("Grant Thornton") as the new independent registered public accounting firm for Havertys beginning in the first quarter of 2016. During the Company's years ended December 31, 2014 and 2015, and the subsequent interim period from January 1, 2016 through March 4, 2016, Havertys did not consult Grant Thornton regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company's consolidated financial statements, or (ii) any matter that was the subject of a disagreement as defined in Item 304(a)(1)(iv) of Regulation S-K or any reportable event as described in Item 304(a)(1)(v) of Regulation S-K.

The Company provided EY and Grant Thornton with a copy of the disclosures required by Item 304(a) of Regulation S-K prior to the time this proxy statement was filed with the SEC. In the event that EY or Grant Thornton believed the disclosures were incorrect or incomplete, each was permitted to express its views in a brief statement to be included in this proxy statement. Neither submitted such a statement.
Audit Fees and Related Matters.  Grant Thornton served as independent auditors of our annual financial statements for the year ended December 31, 2016 and EY served as independent auditors of our annual financial statements for 2015.  The following table presents aggregate fees for professional services rendered during those periods.
 
 
December 31,
 
   
2016
   
2015
 
Audit – Fees paid to Grant Thornton
 
$
525,500
   
$
 
Audit – Fees paid to EY
   
     
637,000
 
Audit-related
   
38,500
     
38,500
 
Tax
   
72,875
     
120,875
 
All Other
   
6,491
     
1,995
 
Total
 
$
643,366
   
$
798,370
 

Audit Fees. These represent professional services fees for the audit of our annual financial statements, audit of our internal controls over financial reporting, review of the quarterly financial statements included in Forms 10-Q, accounting consultations and out-of-pocket expenses.

Audit-related Fees:  These are professional fees for employee benefit plan audits and other related matters.  These fees were paid to Windham Brannon, P.C.


34

AUDIT MATTERS

Tax Fees. These are fees for professional services related to tax compliance and advisory services and assistance in responding to various tax authorities.  These fees were paid to EY.

All Other Fees. These are subscription fees to on-line information, accounting and research tools.

As noted previously, we have historically received proxies representing approximately 90% of eligible shares and had no stockholders in attendance at our annual meeting.  Accordingly, our directors and representatives of Grant Thornton will not be present at the annual meeting.

Pre-Approval Policies and Procedures.  The Audit Committee has adopted a policy that requires advance approval of all audit, audit-related, tax services, and other services performed by the independent auditor. The policy provides for pre-approval by the Audit Committee of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved with respect to that year, the Audit Committee must approve the permitted service before the independent auditor is engaged to perform it. All of the fees detailed above were pre-approved.  The Audit Committee has delegated to its chairman the authority to approve permitted services provided. The chairman reports any decisions at the next scheduled Audit Committee meeting.


INDEPENDENT AUDITOR


Proposal 5:  Ratification of the Appointment of our Independent Auditor

The Audit Committee has selected Grant Thornton as our independent auditor for the fiscal year ending December 31, 2017 and we are asking our stockholders to ratify this appointment.  Although ratification is not required by our bylaws or otherwise, the board is submitting the appointment of Grant Thornton, an independent registered public accounting firm, to our stockholders for ratification because we value our stockholders' views on our independent auditors and as a matter of good corporate practice.  In the event that our stockholders fail to ratify the appointment, the Audit Committee will consider it as a direction to evaluate the appointment of a different firm.  Even if the appointment is ratified, the Audit Committee, in its discretion, may select a different independent auditor at any time during the fiscal year if it determines that such a change would be in the best interests of our company and our stockholders.


Our Board of Directors recommends a vote "FOR" Ratification of the Appointment of
Grant Thornton, LLP as our Independent Auditor for 2017.

35


OWNERSHIP OF SECURITIES


Ownership of Company Stock by Directors and Management

The following table sets forth information regarding beneficial ownership of our common stock and/or Class A common stock by each director, each individual in the Summary Compensation Table and by our directors and executive officers as a group, all as of February 28, 2017.  An asterisk indicates less than 1% of outstanding shares of that respective class.
 
   
Common Stock
   
Class A Common Stock
 
   
Shares
Beneficially
Owned (1)
   
Acquirable
Within
60 Days (2)
   
Percent
of Class
   
Shares
Beneficially
Owned
   
Percent of
Class
 
Nominees for Holders of
Class A Common Stock
                             
John T. Glover
   
65,551
     
     
*
     
     
 
Rawson Haverty, Jr.
   
5,895
(3) 
   
1,308
     
*
     
658,195
(4)(5)(6) 
   
36.25
%
L. Phillip Humann
   
124,549
     
     
*
     
     
 
Mylle H. Mangum
   
38,273
     
     
*
     
     
 
Clarence H. Smith
   
88,433
(7)(8) 
   
3,598
     
*
     
692,483
(9)(10) 
   
38.14
%
Al Trujillo
   
45,663
     
     
*
     
     
 
Nominees for Holders of
Common Stock
                                       
L. Allison Dukes
   
2,708
     
     
*
     
     
 
Vicki R. Palmer
   
35,655
     
     
*
     
     
 
Fred L. Schuermann
   
30,006
     
     
*
     
     
 
Named Executive Officers
                                       
Dennis L. Fink
   
137,716
     
2,290
     
*
     
32,352
     
1.78
 
Steven G. Burdette
   
3,210
     
1,363
     
*
     
28,530
     
1.57
 
Richard D. Gallagher
   
9,463
     
2,044
     
*
     
25,000
     
1.38
 
J. Edward Clary
   
52,752
     
2,044
     
*
     
     
 
                                         
Executive Officers and
Directors as a group (17)
   
716,792
     
16,325
     
3.80
%
   
1,444,060
     
79.53
%

(1)
This column also includes shares of common stock beneficially owned under our directors' Deferred Plan for the following individuals:  Mr. Glover – 10,573; Mr. Humann – 68,454; Ms. Mangum – 38,273; Mr. Smith – 3,748; Mr. Trujillo – 29,591; and Mr. Schuermann – 30,006.
(2)
Represents shares of common stock resulting from the officers' vested SSARs with an exercise price of $18.14.
(3)
This amount includes 2,000 shares of common stock held in trust for the benefit of Mr. Haverty's minor children for which he is co-trustee.
(4)
According to a Schedule 13D/A filed on January 3, 2017, H5, L.P. holds shared voting and dispositive power over 479,323 shares of Class A common stock.  Rawson Haverty, Jr. is the manager of the Partnership's general partner, Pine Hill Associates, LLC.  Mr. Haverty disclaims beneficial ownership of these shares except to the extent of his partnership interest.
36


OWNERSHIP OF SECURITIES

(5)
This amount also includes 79,517 shares of Class A common stock held by the Mary E. Haverty Foundation, a charitable organization, for which Mr. Haverty has sole voting power through a revocable proxy granted to him by the Foundation.  Mr. Haverty has no pecuniary interest in the shares of the Foundation and disclaims any beneficial ownership in the Foundation's shares.
 
(6)
This amount also includes 17,024 shares of Class A common stock held in trust for the benefit of Mr. Haverty's minor children for which he is co-trustee.
(7)
This amount includes 28,338 shares of common stock held by Mr. Smith's wife.
(8)
This amount includes 7,850 shares of common stock held by a Georgia limited partnership in which Mr. Smith is a partner.  Mr. Smith disclaims beneficial ownership of these shares except to the extent of his pecuniary interest in the partnership.
(9)
According to a Schedule 13D filed on January 3, 2017, Villa Clare Partners, L.P. holds shared voting and dispositive power over 603,497 shares of Class A common stock. Clarence H. Smith is the manager of the Partnership's general partner, West Wesley Associates, LLC.  Mr. Smith disclaims beneficial ownership of these shares except to the extent of his partnership interest.
(10)
This amount also includes 1,950 shares of Class A common stock held by Mr. Smith's wife.


Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, certain officers and beneficial owners of more than 10% of a registered class of our equity securities to file reports of ownership and reports of changes in ownership with the SEC. Directors, officers and beneficial owners of more than 10% of our equity securities are also required by the SEC regulations to furnish us with copies of all such reports that they file. Based on our review of copies of such forms and amendments provided to us, we believe that all Section 16(a) filing requirements were timely complied with during the fiscal year ended December 31, 2016.
37


OWNERSHIP OF SECURITIES

Principal Stockholders

The following table shows the number of shares of our common stock and/or Class A common stock owned by persons to have beneficial ownership of more than 5% of our outstanding shares of common and/or Class A common stock as of December 31, 2016 based on information filed with the SEC.  An asterisk indicates less than 5% of outstanding shares of that respective class.
 
   
Common Stock
   
Class A Common Stock
 
   
Shares
Beneficially
Owned
   
Percent
of Class
   
Shares
Beneficially
Owned
   
Percent
of Class
 
BlackRock, Inc.
55 East 52nd Street, New York, NY
   
2,402,854
(1) 
   
12.46
%
   
     
 
Dimensional Fund Advisors LP
6300 Bee Cave Road, Austin, TX
   
1,621,798
(2) 
   
8.41
%
   
     
 
Royce & Associates, LLC
745 Fifth Avenue, New York, NY
   
1,393,600
(3) 
   
7.23
%
   
     
 
Renaissance Technologies LLC
800 Third Avenue, New York, NY
   
1,365,500
(4) 
   
7.08
%
   
     
 
The Burton Partnership, LP
P.O. Box 4643, Jackson, WY 83001
   
1,228,255
(5) 
   
6.37
%
   
     
 
NWQ Investment Management Company, LLC
2049 Century Park East, 16th Floor, Los Angeles, CA
   
1,139,626
(6) 
   
5.91
%
   
     
 
Villa Clare Partners, L.P.
158 West Wesley Road,  Atlanta, GA
   
*
     
*
     
603,497
(7) 
   
33.20
%
H5, L.P.
4414 Dunmore Road, NE,  Marietta, GA
   
*
     
*
     
479,323
(8) 
   
26.37
%
Rawson Haverty, Jr.
780 Johnson Ferry Road, Suite 800, Atlanta,
   
*
     
*
     
178,872
(9)(10) 
   
9.84
%

(1)
According to a Schedule 13G filed on January 12, 2017, BlackRock, Inc. holds sole voting power over 2,349,134 shares and sole dispositive power over 2,402,854 shares of common stock.
(2)
According to a Schedule 13G filed on February 9, 2017, Dimensional Fund Advisors LP ("Dimensional") holds sole voting over 1,575,894 shares and dispositive power over 1,621,798 shares of common stock. Dimensional is an investment advisor registered under Section 203 of the Investment Advisors Act of 1940 and furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts (the "Funds"). Dimensional possesses investment and/or voting power over the shares held by the Funds. The shares are owned by the Funds and Dimensional disclaims beneficial ownership of these securities.
(3)
According to a Schedule 13G filed on January 9, 2017, Royce & Associates, LP holds sole voting and dispositive power over 1,393,600 shares of common stock.
(4)
According to a Scheduled 13G filed on February 14, 2017, Renaissance Technologies LLC holds sole voting and dispositive power over 1,365,500 shares of common stock.
(5)
According to a Schedule 13G filed on June 1, 2016, The Burton Partnership, LP, The Burton Partnership (QP), LP and Donald W. Burton, General Partner holds sole voting and dispositive power over 1,228,255 shares of common stock.
(6)
According to a Schedule 13G filed on February 10, 2017 NWQ Investment Management Company, LLC holds sole voting and dispositive power over 1,139,626 shares of common stock.
(7)
According to a Schedule 13D/A filed on January 3, 2017, Villa Clare Partners, L.P. holds shared voting and dispositive power over 603,497 shares of Class A common stock. Clarence H. Smith is the manager of the Partnership's general partner, West Wesley Associates, LLC.  Mr. Smith disclaims beneficial ownership of these shares except to the extent of his partnership interest.
 
38


OWNERSHIP OF SECURITIES

(8)
According to a Schedule 13D/A filed on January 3, 2017, H5, L.P. holds shared voting and dispositive power over 479,323 shares of Class A common stock.  Rawson Haverty, Jr. is the manager of the Partnership's general partner, Pine Hill Associates, LLC.  Mr. Haverty disclaims beneficial ownership of these shares except to the extent of his partnership interest.
(9)
This amount includes 79,517 shares of Class A common stock held by the Mary E. Haverty Foundation, a charitable organization, for which Mr. Haverty has sole voting power through a revocable proxy granted to him by the Foundation.  Mr. Haverty has no pecuniary interest in the shares of the Foundation and disclaims any beneficial ownership in the Foundation's shares.
(10)
This amount also includes 17,024 shares of Class A common stock held in trust for the benefit of Mr. Haverty's minor children for which he is co-trustee.


EQUITY COMPENSATION PLAN INFORMATION

Information as of December 31, 2016 regarding our equity compensation plans is summarized as follows.

Plan Category
 
Number of Securities
To be issued upon
exercise of outstanding
equity awards(1)
(a)
   
Weighted-average
exercise price of
outstanding options and stock-settled stock appreciation rights (SSARs)
(b)
   
Number of securities remaining available for future issuance under
equity compensation plans (excluding securities reflected in Column (a))
(c)
   
Equity compensation plans
approved by stockholders:
                   
Long-Term Incentive Plans
   
498,195
(2) 
 
 
$   18.14
     
938,427
(3)   
Director Compensation Plans
   
180,645
(4) 
   
     
249,868
(5)   
Equity compensation plans not
approved by stockholders
   
     
     
   
Total
   
620,491
   
 
$   18.14
     
1,188,295
   
(1)
Shares issuable pursuant to outstanding equity awards under our 2014 Long-Term Incentive Plan.
(2)
This number includes 397,320 full value restricted stock or restricted units and 100,875 SSARs.
(3)
Any shares which are forfeited, expired, cancelled, or withheld for payment of taxes are made available for use under the 2014 Long-Term Incentive Plan.
(4)
Shares deferred under the Directors' Deferred Compensation Plan.  Shares are issued from those held in the Company's treasury.
(5)
Shares remaining under the Directors Compensation Plan. See Proposal 2 on page 14 for more information on the proposed Amended and Restated Director Compensation Plan.  Shares are issued from those held in the Company's treasury.

Effective with the authorization of the 2014 LTIP Plan that was approved by stockholders in May 2014, no additional grants were issued under the 2004 LTIP Plan.  The 2014 LTIP Plan is an omnibus incentive plan which provides cash and equity incentives to eligible employees. The Compensation Committee in consultation with our management designates which employees are eligible to participate, the amount of grant and the terms and conditions (not otherwise specified in the plan) of such grant. If a change in control of Havertys occurs then, at the Compensation Committee's discretion, any award may provide for the immediate vesting or lapse of all restrictions.

39


Submission of Stockholder Proposals

If you wish to submit a proposal for possible inclusion in our proxy statement relating to our 2018 Annual Stockholders' Meeting, send the proposal to:

Haverty Furniture Companies, Inc.
Corporate Secretary
780 Johnson Ferry Road, Suite 800
Atlanta, GA 30342.

Stockholder proposals intended for inclusion in our proxy statement for the 2018 Annual Stockholders' Meeting in accordance with the SEC's Rule 14a-8 under the Exchange Act must be received by our company no later than the close of business on November 29, 2017. Any stockholder proposal received by the company after that date will not be included in the company's proxy statement relating to the 2018 Annual Stockholders' Meeting. Further, all proposals submitted for inclusion in the company's proxy statement relating to the 2018 Annual Stockholders' Meeting must comply with all of the requirements of