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Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A 

(RULE 14a-101)

SCHEDULE 14A INFORMATION

 

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

Exchange Act of 1934 (Amendment No. _____)

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant 

 

Check the appropriate box: 

   

Preliminary Proxy Statement

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

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12

 

Interface, Inc.

(Name of Registrant as Specified in Its Charter)

 

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

Fee paid previously with preliminary materials.

   

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

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Notice of Annual Meeting of Shareholders

 

 

WHEN

May 13, 2024

11:00 a.m. Eastern Time

 

 

WHERE

Interface, Inc.

1280 West Peachtree Street NW

Atlanta, Georgia 30309

 

ITEMS OF BUSINESS

 

1.

To elect ten members of the Board of Directors.

 

 

2.

To approve, on an advisory basis, executive compensation, often referred to as “say on pay.”

 

 

3.

To approve the adoption of an amendment and restatement of the Interface, Inc. 2020 Omnibus Stock Incentive Plan.

 

 

4.

To ratify the appointment of BDO USA, P.C. as the Company’s Independent Registered Public Accounting Firm for 2024.

 

 

5.

Such other matters as may properly come before the meeting and at any adjournments of the meeting.

 

 

RECORD DATE

The Board of Directors set March 15, 2024 as the record date for the meeting. This means that only shareholders of record at the close of business on March 15, 2024 will be entitled to receive notice of and to vote at the meeting or any adjournments of the meeting.

 

 

  By Order of the Board of Directors
   
  /s/ David B. Foshee
  David B. Foshee
  Secretary

 

 

April 1, 2024

 

     

PLEASE PROMPTLY COMPLETE AND RETURN A PROXY CARD

OR USE TELEPHONE OR INTERNET VOTING PRIOR TO THE MEETING SO THAT YOUR VOTE

MAY BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.

 

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TABLE OF CONTENTS

 

 

Page

   

PROXY STATEMENT SUMMARY

4

   

NOMINATION AND ELECTION OF DIRECTORS (ITEM 1)

13

   

Nominees

14

Director Independence

17

Corporate Governance

18

Principal Shareholders and Management Stock Ownership

22

   

APPROVAL OF EXECUTIVE COMPENSATION (ITEM 2)

24

   

Compensation Discussion and Analysis

25

Compensation Committee Report

35

Compensation Committee Interlocks and Insider Participation

35

Executive Compensation

36

CEO Pay Ratio 

46

Pay Versus Performance

47

Director Compensation

51

Equity Compensation Plan Information

52

   

APPROVAL OF AMENDMENT AND RESTATEMENT OF THE 2020 OMNIBUS STOCK INCENTIVE PLAN (ITEM 3)

52

   

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (ITEM 4)

56

   

Audit Committee Report

57

   

OTHER INFORMATION

57

   

General Meeting Information

57

Certain Relationships and Related Transactions

58

Prohibition on Pledging and Hedging

59

Shareholder Proposals

59

Communicating with the Board

59

“Householding” of Proxy Materials

60

Safe Harbor Statement for Forward-Looking Statements

60

Other Matters That May Come Before the Meeting

60

   

APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

61

   

APPENDIX B – INTERFACE, INC. 2020 OMNIBUS STOCK INCENTIVE PLAN (AS AMENDED AND RESTATED EFFECTIVE MAY 13, 2024)

63

 

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PROXY STATEMENT SUMMARY

 

The Board of Directors ("Board") of Interface, Inc. (the "Company," "we," "us," "our" or "Interface") is furnishing this Proxy Statement and soliciting proxies in connection with the proposals to be voted on at the Interface, Inc. 2024 Annual Meeting of Shareholders ("Annual Meeting") and any postponements or adjournments thereof. This summary highlights certain information contained in this Proxy Statement, but it does not contain all of the information you should consider when voting your shares. Please read the entire Proxy Statement carefully before voting.

 

2024 Annual Meeting Information

Date

Monday, May 13, 2024

Time

11:00 a.m. Eastern Time

Location

Interface, Inc.

1280 West Peachtree Street NW

Atlanta, Georgia 30309

Record Date

Friday, March 15, 2024

Stock Symbol

TILE

Stock Exchange

NASDAQ

Corporate Website

www.interface.com

 

In the event the Company changes the date, time or location of the Annual Meeting pursuant to the guidance issued by the SEC discussed above, the Company will inform shareholders in a manner as prescribed by such guidance.

 

Voting Items and Vote Recommendation

 

Item

Board

Recommendation

Reasons for Recommendation

More Information

1. To elect ten members of the Board of Directors.

FOR

The Board and the Nominating & Governance Committee believe our nominees possess the skills, experience and qualifications to effectively monitor performance, provide oversight and support management's execution of the Company's long-term strategy.

Page 13

2. To approve, on an advisory basis, executive compensation, often referred to as a “say on pay.”

FOR

Our executive compensation program incorporates many compensation governance best practices and reflects our commitment to align pay with performance.

Page 24

3. To approve the adoption of an amendment and restatement of the Interface, Inc. 2020 Omnibus Stock Incentive Plan.

FOR

The Board and the Compensation Committee will use this plan to provide stock-based awards to attract, retain and incentivize key employees and directors.

Page 52

4. To ratify the appointment of BDO USA, P.C. as the Company’s Independent Registered Public Accounting Firm for 2024.

FOR

Based on its assessment, the Audit Committee believes that the re-appointment of BDO USA, P.C. is in the best interests of Interface and our shareholders.

Page 56

 

Vote in Advance of the Meeting

 

Vote in Person

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Internet

Telephone

Mail

   

Using the Internet and voting at the website listed on the proxy card and the Notice.

Using the toll-free phone number listed on the proxy card and the Notice.

Signing, dating and mailing a proxy card.

 

See page 58 for details on attending the Annual Meeting in person.

 

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Our Company

 

Who We Are

 

We are a worldwide leader in design, production and sales of commercial flooring, such as carpet tile, luxury vinyl tile, and rubber tile and sheet products. Our flooring systems help customers create beautiful interior spaces while positively impacting those who use them and our planet. We are committed to the pursuit of sustainability and minimizing our impact on the environment while enhancing shareholder value. This commitment is exemplified by our initiative called Climate Take Back™, in which we seek to lead industry in designing and making products in ways that will maintain a climate fit for life. We believe Interface has for decades been the most environmentally conscious company in the global flooring industry, and we remain committed to leading the industry in sustainability, design and innovation.

 

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Our Global Sales and Manufacturing Platform

 

●       Physical presence in 18 countries

 

●       Six manufacturing locations on four continents

 

●       Unique blend of efficiency and customization

●       Global account management

 

●       Global supply chain management

 

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Our Performance

 

In addition to the financial data shown below, the Compensation Discussion and Analysis section of this Proxy Statement contains important measures of our 2023 financial performance.

 

 

NET SALES

($ in millions)

 

GROSS PROFIT and

ADJUSTED GROSS PROFIT (NON-GAAP)*

($ in millions)

     
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OPERATING INCOME and

ADJUSTED OPERATING INCOME (NON-GAAP)*

($ in millions)

 

DILUTED EPS and

ADJUSTED DILUTED EPS (NON-GAAP)*

     
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*Please see Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures and an explanation of why we believe non-GAAP measures provide useful information to shareholders and the additional purposes for which we use non-GAAP measures.

 

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Our Capital Structure

 

We believe we have a strong capital structure and the financial resources to deliver on our strategic initiatives. During 2023, we generated strong cash flows and repaid $105 million of debt. We ended the year with total debt of $417 million and net debt of $307 million.

 

YEAR END TOTAL DEBT

($ in millions)

 

 

YEAR END NET DEBT (NON-GAAP)*

($ in millions)

     
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NET INCOME (LOSS) and ADJUSTED EBITDA (NON-GAAP)*

($ in millions)

 

YEAR END NET DEBT / ADJUSTED EBITDA (NON-GAAP)*

     
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*See Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

 

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Environmental, Social and Governance (ESG)

 

Interface embraces and supports core values in the areas of human rights, labor standards, environmental responsibility, and ethical practices. We have policies and actions in place that demonstrate our commitment to ESG and operating in an ethical and more sustainable manner that benefits all stakeholders – employees, customers, shareholders, and the environment. Our journey to more sustainable business practices is ongoing, guided by a purpose-driven culture and an emphasis on transparency.

 

Our Board of Directors oversees all areas of the overall ESG commitments at Interface. Our Nominating and Governance Committee, chaired by our Chairman, is responsible for monitoring and advising the Company’s management regarding environmental, social, and related governance matters that are significant to the Company. In addition, Interface has adopted an integrated, strategic approach to ensuring effective management of climate strategy and measurement, including oversight and monitoring by our Chairman.

 

Recent ESG Highlights include:

 

  ENVIRONMENTAL     SOCIAL     GOVERNANCE
               
Continued to implement our Climate Transition Plan to make progress on our verified Science-Based Targets   Completed the global rollout of Workday® for improved visibility into our people demographics; expanded the platform with launch of Workday Learning and Workday Talent & Performance   Adopted our Commitment to Human Rights, a global statement that outlines how we support human rights for all people
               
Transitioned 100% of our carpet tile product manufactured in Europe to our carbon negative CQuest™ backing   Continued to activate our global employee engagement strategy, introducing a mandatory Unconscious Bias Training course in the Americas and launching our first Inclusion Network, empowHER   Added a new female director to the Board of Directors, increasing our female representation to 30%
               
Expanded our carbon negative carpet tile offering to FLOR®, our specialty design brand, helping residential customers create beautiful and environmentally conscious homes   Introduced expanded benefits program for U.S.-based employees that support mental and physical well-being   Updated our Security Incident Response Plan and deployed new technology to support enhanced data privacy and cybersecurity
               
Conducted our first Global Employee Commuting Survey, measuring employee commuting data with information directly from employees   Launched The Home Project as part of our Reconciliation Action Plan to connect with, learn from, and collaborate with the First Nations people of Australia   Updated our Code of Conduct, creating one source of guidance and policies for our employees to follow
               
Named by the World Economic Forum as one of three “Circularity Lighthouses in the Built Environment” for our contributions to the circular economy         Appointed independent Chairman of the Board

 

 

To learn more about our progress to reduce environmental impacts, cultivate social responsibility, and operate with strong governance, please see our 2022 Impact Report. (Our ESG Report is not a part of this Proxy Statement.)

 

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Summary of Item 1 - Election of Directors

 

In this proposal, shareholders are asked to vote "FOR" each of the following ten nominees.

 

Nominee Name

Director

Since

Independent?

Audit

Committee

Compensation

Committee

Nominating &

Governance

Committee

Innovation &

Sustainability

Committee

John P. Burke

2013

Yes

   

 

Dwight Gibson

2019

Yes

 

   

Daniel T. Hendrix

1996

No

     

Chair

Laurel M. Hurd

2022

No

       

Christopher G. Kennedy

2000

Yes

   

Chair

 

Joseph Keough

2019

Yes

   

Catherine M. Kilbane

2018

Yes

 

Chair

 

K. David Kohler

2006

Yes

   

Catherine Marcus

2023

Yes

     

Robert T. O’Brien

2022

Yes

Chair

   

 

 

Summary of Item 2 - Advisory Vote to Approve Executive Compensation

 

We provide our shareholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with the rules of the SEC. The vote on this resolution is not intended to address any specific element of compensation; rather, the advisory vote relates to the overall compensation of our named executive officers, as well as the philosophy, policies and practices, all as described in this Proxy Statement. The vote is advisory, and therefore it is not binding on the Company, the Compensation Committee or our Board of Directors. We recommend that our shareholders vote "FOR" approval of our executive compensation as described in this Proxy Statement.

 

Our executive compensation program is generally designed to:

 

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We believe that motivating and rewarding exceptional performance is the overriding principle of our executive compensation program.

 

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We Do:

   

We Do Not:

           

Provide a significant portion of our named executive officers’ total compensation in the form of awards tied to our long-term strategy and our performance.

   

X

Provide supplemental retirement benefits to our executive officers (other than a legacy arrangement with Mr. Stansfield, as described below).

Require compliance with our Stock Ownership Guidelines, which require that our executive officers own a specified value of shares of the Company’s common stock.

   

X

Time the grants of equity awards to coordinate with the release of material non-public information, or time the release of material non-public information for the purpose of affecting the value of any named executive officer compensation.

Have a Compensation Committee comprised entirely of independent directors who use an independent consultant retained by the Compensation Committee.

   

X

Provide tax gross-ups for our named executives.

Have a clawback policy that requires the Company to recover from executives any excess incentive-based compensation resulting from an accounting restatement.

   

X

Provide excessive perquisites to executives.

Have ongoing consideration and oversight by the Compensation Committee with respect to any potential risks associated with our incentive compensation programs.

   

X

Have a shareholder rights plan (i.e., poison pill).

           

Prohibit our associates through our Insider Trading Policy from engaging in hedging transactions in our stock, and prohibit our officers and directors from pledging our stock as loan collateral.

   

X

Pay dividends on unvested performance-based equity awards.

           

Utilize “double trigger” change-in-control provisions in our equity award and executive severance agreements.

       

 

The following sets forth the primary objectives addressed by each component of our executive compensation program:

 

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For more information regarding our compensation, please see our Compensation Discussion and Analysis beginning on page 26.

 

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Summary of Item 3 Approve Adoption of Amendment and Restatement of Interface, Inc. 2020 Omnibus Stock Incentive Plan

 

The Compensation Committee of the Board of Directors has voted to adopt an amendment and restatement of the Interface, Inc. 2020 Omnibus Stock Incentive Plan effective May 13, 2024 (the “Effective Date”), subject to shareholder approval. The primary purpose of the amendment and restatement of the 2020 Omnibus Stock Incentive Plan is to continue, by making 3,200,000 additional shares available for such use, the original purpose of the plan, which is to attract and retain key employees and directors of the Company and its subsidiaries by providing such persons with stock-based incentives and rewards for performance. The 2020 Omnibus Stock Incentive Plan is also designed to promote the loyalty and retention of senior management and strengthen the mutuality of interests between senior management and the Company’s shareholders. Thus, the Company believes that it is important to have the 2020 Omnibus Stock Incentive Plan as an element of the Company’s compensation program. The material features of the proposed amendment and restatement of the 2020 Omnibus Stock Incentive Plan are described below in Item 3.

 

Summary of Item 4 - Ratify Appointment of BDO USA, P.C. as the Companys Independent Registered Public Accounting Firm

 

BDO USA, P.C. (“BDO USA”) served as the Company’s independent registered public accounting firm for 2023. Our Audit Committee has selected BDO USA to audit our financial statements for 2024. Although it is not required to do so, the Board is submitting the Audit Committee's selection of our independent registered public accounting firm for ratification by the shareholders at the Annual Meeting in order to ascertain the view of our shareholders regarding such selection. We recommend that our shareholders vote "FOR" the ratification of BDO USA as the Company’s Independent Registered Public Accounting Firm for 2024. Below is summary information about BDO USA’s fees for services during 2023 and 2022:

 

   

2023

   

2022

 

Audit Fees

  $ 2,439,012     $ 2,486,000  

Audit-Related Fees

    51,880       21,000  

Tax Fees

    107,138       31,000  

All Other Fees

    -       -  

Total

  $ 2,598,030     $ 2,538,000  

 

See Item 4 for further information regarding these fees.

 

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NOMINATION AND ELECTION OF DIRECTORS

(ITEM 1)

 

The Bylaws of the Company provide that the Board of Directors shall consist of a maximum of 15 directors, with the exact number of directors being established by action of the Board taken from time to time. The Board of Directors has set the current number of directors at ten.

 

In the event that any nominee for director withdraws or for any reason is not able to serve as a director, each Proxy that is properly executed and returned will be voted for such other person as may be designated as a substitute nominee by the Board of Directors. Each nominee is an incumbent director standing for re-election. Each nominee has consented to being named herein and to continue serving as a director, if re-elected. The term of office for each director continues until the next annual meeting of shareholders and until his or her successor, if there is to be one, has been elected and has qualified.

 

Board Skills Matrix

 

The matrix below summarizes certain of the key experience, skills and attributes that our director nominees bring to the Board to enable the effective oversight of our Company and execution of our business strategy. This matrix highlights the depth and breadth of the skills and experience of our director nominees. Additional details regarding each director nominee’s skills, experience and background are set forth in the individual biographies that follow.

 

Experience, skills and Attributes

Burke

Gibson

Hendrix

Hurd

Kennedy

Keough

Kilbane

Kohler

Marcus

OBrien

C-Suite Executive Management

 

Industry Knowledge

   

         

Accounting & Finance

   

   

   

International Business

   

Strategy Development

 

Mergers & Acquisitions

 

 

 

Sales & Marketing

 

     

 

Environmental Sustainability

 

 

   

   

Corporate Governance & Risk Management

           

 

 

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Certain information relating to each nominee proposed by the Board is set forth below. Under our Corporate Governance Guidelines, directors are required to submit an offer of resignation upon experiencing a job change.

 

Nominees

 

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Experience: Since 1997, Mr. Burke has been Chief Executive Officer of Trek Bicycle Corporation, one of the world’s largest manufacturers of bicycles, and a company with a mission to help the world use the bicycle as a simple solution to complex problems. He served as chairman of President George W. Bush’s President’s Council on Physical Fitness & Sports and is a founding board member of the Bikes Belong Coalition. Mr. Burke also serves on the board of Trek Bicycle Corporation.

 

   

John P. Burke

Qualifications and skills: Executive level business experience at a manufacturing company that is focused primarily on sales in the consumer channel and with an emphasis on sustainability and innovation.

Age: 62

Director since 2013

 

Chief Executive Officer, Trek Bicycle Corporation

   
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Experience: Since January 2024, Mr. Gibson has been an Operating Partner with Pritzker Private Capital. From June 2021 to March 2023, he served as the Chief Executive Officer and as a director of BlueLinx Holdings, Inc. (NYSE: BXC), a leading wholesale distributor of building and industrial products in the U.S. Prior to joining BlueLinx, he was the Chief Commercial Officer for SPX FLOW, Inc., a leading global provider of process solutions and components across a variety of sanitary and industrial market applications. Previously, he served as President, Food & Beverage and Industrial Segments (May 2019 to May 2020) and President, Food & Beverage Segment (June 2016 to May 2019) for SPX FLOW. Prior to joining SPX FLOW, Mr. Gibson spent 11 years at HVAC manufacturer Ingersoll Rand.

   

Dwight Gibson

Qualifications and skills: Mr. Gibson brings to the Board experience in driving growth for purpose-driven global manufacturing companies, particularly in the areas of sales, operations, strategy and executive management.

Age: 49

Director since 2019

 

Operating Partner, Pritzker Private Capital

   
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Experience: Mr. Hendrix joined the Company in 1983 after having worked previously for a national accounting firm. He was promoted to Treasurer of the Company in 1984, Chief Financial Officer in 1985, Vice President-Finance in 1986, Senior Vice President-Finance in 1995, Executive Vice President in 2000, and President and Chief Executive Officer in July 2001. He was elected to the Board in October 1996, and served as Chairman of the Board from October 2011 to March 2024. In March 2017, Mr. Hendrix retired from the role of Chief Executive Officer. In January 2020, Mr. Hendrix was reappointed as President and Chief Executive Officer of the Company. Mr. Hendrix again retired from the role of Chief Executive Officer in April 2022. Mr. Hendrix has served as a director of cabinet maker American Woodmark Corporation (NASDAQ: AMWD) since May 2005.

   

Daniel T. Hendrix

Qualifications and skills:  Knowledge extending to virtually all aspects of the Company’s business, with a particular emphasis on strategic planning and financial matters, giving him a unique understanding of our strategies and operations. His tenure provides consistent leadership to the Board and facilitates the interrelationship between the Board and the Company’s executive leadership team.

Age: 69

Director since 1996

 

Former CEO and Former Chairman of the Board, Interface, Inc.

 

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Experience: Ms. Hurd was appointed as the Company’s President and Chief Executive Officer in April 2022. From 2019 to 2022, Ms. Hurd served as Segment President, Learning and Development at global consumer goods company Newell Brands Inc., leading its Baby and Writing businesses. Previously, Ms. Hurd was the Division Chief Executive Officer for Newell Brands’ Writing division starting in February 2018. From 2016 to February 2018, she served as Chief Executive Officer of Newell Brands’ Baby division. From May 2014 until 2016, Ms. Hurd was President of the Baby and Parenting division at Newell Brands, where she oversaw the Calphalon, Goody, and Rubbermaid consumer brands. From 2012 to 2014, Ms. Hurd was Vice President, Global Development for Newell Brands, leading both Marketing and Research & Development for the Graco, Aprica, and Teutonia brands globally. Since August 2021, Ms. Hurd also has served on the board of directors of RV manufacturer Thor Industries, Inc. (NYSE: THO).

   

Laurel M. Hurd

Qualifications and skills: Extensive executive level experience in sales management, product development, strategy and brand stewardship in both the consumer-packaged goods and the consumer durables sectors.

Age: 54

Director since 2022

 

President and Chief Executive Officer, Interface, Inc.

   
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Experience: Mr. Kennedy is the Chairman Emeritus of real estate development company Joseph P. Kennedy Enterprises, Inc., and is a Managing Member of real estate development company Wolf Point Management LLC. He has served on the board of trustees of Ariel Mutual Funds since 1994, and served on the board of directors of Knoll, Inc. (a leading designer and manufacturer of branded office furniture and textiles) from 2014 to 2021. Mr. Kennedy also serves on the boards of two non-profit organizations and one charitable foundation. Effective March 13, 2024, Mr. Kennedy was elected Chairman of the Board.

   

Christopher G. Kennedy

Qualifications and skills: Broad understanding of the fundamentals of our business, having managed more than 10 million square feet of commercial real estate and developed thousands of multi-family residential units, and currently oversees, on behalf of the Kennedy family, the billion-dollar Wolf Point real estate development in Chicago. Insight into our industry sector in his former role as the chief executive of one of the leading tradeshow producers in North America gave him responsibility for industry events that are critical to the go-to-market strategy for the Company. His contacts with leading architectural and design firms, as well as the commercial real estate sector, require engagement in submarkets that are important to our operations.

Age: 60

Director since 2000

 

Chairman of the Board

 

Chairman Emeritus, Joseph P. Kennedy Enterprises, Inc.

   
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Experience: Mr. Keough serves as Chairman and Chief Executive Officer of Wood Partners. Wood Partners is one of the nation’s largest multi-family residential real estate companies. Prior to serving as Chief Executive Officer, he served as both Chief Financial Officer and President of Wood Partners. Mr. Keough began his career in consulting, and was a Principal at The Boston Consulting Group, an international strategic consulting firm, and later served as Chief Operating Officer of Fuqua Capital, the vertically integrated family office of the Fuqua family. He currently serves on the board of home builder Meritage Home Corporation (NYSE: MTH), and one private company.

   

Joseph Keough

Qualifications and skills: Extensive executive level experience in the multi-family residential building industry, including leadership in the areas of finance, accounting, capital markets, real estate development, strategy and operations management.

Age: 54

Director since 2019

 

Chairman and Chief Executive Officer, Wood Partners

 

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Experience: Ms. Kilbane retired in 2017 as Senior Vice President of The Sherwin-Williams Company, a Fortune 500 global leader in paints and coatings. She joined Sherwin-Williams in 2013 as Senior Vice President, General Counsel and Secretary. Prior to that, Ms. Kilbane was Senior Vice President and General Counsel from 2003 to 2012 at American Greetings Corporation, one of the world’s largest manufacturers of social expression products. From 1987 to 2003, she was a partner in the general business group at Baker & Hostetler LLP in Cleveland, Ohio. Ms. Kilbane is a director of The Andersons, Inc. (NASDAQ: ANDE) (where she also serves as lead independent director), a Fortune 500 diversified agribusiness company in the grain, ethanol, plant nutrient, and rail sectors, and The Davey Tree Expert Company, a provider of residential and commercial tree care services. She also is a member of the board of directors of the Cleveland Clinic Foundation.

   

Catherine M. Kilbane

Qualifications and skills: Over thirty years of experience in corporate law, extensive experience in mergers and acquisitions, including large, multinational transactions, a solid understanding of ensuring shareholder value through her fourteen years of experience with two publicly traded companies and board member experience with for-profit and non-profit organizations.

Age: 60

Director since 2018

 

Retired Senior Vice President and General Counsel, The Sherwin-Williams Company

   
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Experience: Since 2015, Mr. Kohler has served as the President and Chief Executive Officer for Kohler Co., a manufacturer of kitchen and bath products, interior furnishings, engines and power generation systems, and an owner and operator of golf and resort destinations. In 2022, he became Chair of Kohler. His previous positions at Kohler include President and Chief Operating Officer (2009-2015), Executive Vice President (2007-2009) and Group President of the Kitchen and Bath Group (1999-2007). He has served as a member of the board of Kohler Co. since 1999, and also is a director of ceramic tile and natural stone manufacturer and distributor Internacional de Cerámica, S.A.B. de C.V., a public company traded on the Mexican Stock Market. Mr. Kohler also serves as a director of the non-profit corporation Green Bay Packers, Inc.

   

K. David Kohler

Qualifications and skills: Extensive business experience from his service in executive positions at a manufacturing company with international operations and distribution into both commercial and consumer channels.

Age: 57

Director since 2006

 

Chair and Chief Executive Officer, Kohler Co.

 

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Experience: Ms. Marcus serves as the Co-CEO (since October 2023) and Chief Operating Officer (since 2014) of PGIM Real Estate, one of the world’s largest global real estate investment managers and a major profit center of PGIM, the global asset management business of Prudential Financial, Inc. (NYSE: PRU). She is responsible for global strategy and oversees PGIM Real Estate’s business and investment operations globally. Prior to assuming her current roles, Ms. Marcus held several positions with PGIM Real Estate, including head of its U.S. equity business (2014-2023) and senior portfolio manager for its flagship core equity real estate fund (2011-2014). She is also a member of the board of directors for Skanska AB (Nasdaq Stockholm: SKA B), the multinational construction company.

   

Catherine Marcus

Qualifications and skills: Extensive experience in the commercial real estate industry and a deep understanding of the corporate office segment, which is a critical area of focus and growth for Interface. She also brings years of global operating experience, understanding how to motivate and lead local teams while also driving global efficiency and consistency.

Age: 58

Director since 2023

 

Co-CEO and Chief Operating Officer,

PGIM Real Estate

   
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Experience: In May 2022, Mr. O’Brien retired from the position of Deputy Managing Partner of Growth & Offerings for Deloitte’s Audit & Assurance business. In that position, which Mr. O’Brien held since August 2019, he oversaw acquisitions, business development, client pursuits, marketing and marketplace intelligence activities. From December 2009 to March 2020, Mr. O’Brien served as Deloitte’s Global and U.S. Real Estate Sector leader, developing and executing Deloitte’s real estate sector strategy and leading its activities in consulting, advisory, tax and audit services for real estate clients. Mr. O’Brien was a partner at Deloitte from 1995 until his retirement, serving in the audit and mergers and acquisitions areas.

   

Robert T. OBrien

Qualifications and skills: Over 35 years of experience assisting public and privately held real estate, private equity, hospitality and technology companies execute transactions, grow their businesses, and enhance operations. Extensive experience in accounting and auditing, mergers and acquisitions, and corporate finance, as well as financial reporting, internal control, regulatory, risk, leadership succession and corporate governance best practices. Mr. O’Brien is also a certified public accountant.

Age: 62

Director since 2022

 

Retired Deputy Managing Partner of Growth & Offerings, Deloitte & Touche LLP

 

Vote Required and Recommendation of Board

 

Under the Company’s Bylaws, election of each of the nominees requires a plurality of the votes cast by the Company’s outstanding Common Stock entitled to vote and represented (in person or by proxy) at the meeting. As noted below, however, in an uncontested election, any nominee who does not receive a majority affirmative vote must submit a resignation (which may be conditional) to the Board or its Chair. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE, AND PROXIES EXECUTED AND RETURNED OR VOTED BY TELEPHONE OR INTERNET WILL BE VOTED FOR EACH OF THE NOMINEES UNLESS CONTRARY INSTRUCTIONS ARE INDICATED.

 

DIRECTOR INDEPENDENCE

 

For each director, the Board makes a determination of whether the director is “independent” under the criteria established by the Nasdaq Stock Market and other governing laws and regulations. In its review of director independence, the Board considers all commercial, banking, consulting, legal, accounting, charitable or other business relationships any director may have with the Company. The current directors are John P. Burke, Dwight Gibson, Daniel T. Hendrix, Laurel M. Hurd, Christopher G. Kennedy, Joseph Keough, Catherine M. Kilbane, K. David Kohler, Catherine Marcus, and Robert T. O’Brien. As a result of its review, the Board has determined that all the current directors, with the exception of Daniel T. Hendrix (who was an employee within the last 3 years) and Laurel M. Hurd (who is an employee), are independent.

 

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CORPORATE GOVERNANCE

 

Board Leadership Structure         

 

Effective March 13, 2024, we have an independent Chairman and separate Chief Executive Officer. Mr. Kennedy currently serves as Chairman and Ms. Hurd serves as Chief Executive Officer. Prior to March 13, 2024, and for all of 2023, we had a Lead Independent Director (Mr. Kennedy), a Chairman (Mr. Hendrix), and a separate Chief Executive Officer (Ms. Hurd). Because each of our Chairman and Chief Executive Officer were not considered “independent” under applicable standards, the Board had appointed Mr. Kennedy to serve as Lead Independent Director. The specific responsibilities of the Lead Independent Director were as follows:

 

 

Preside at Executive Sessions. Presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors.

 

Call Meetings of Independent Directors. Has the authority to call meetings of the independent directors.

 

Function as Liaison with the Chairman. Serves as the principal liaison on Board-wide issues between the independent directors, the Chairman, and the Chief Executive Officer.

 

Participate in Flow of Information to the Board such as Board Meeting Agendas and Schedules. Provides the Chairman and the Chief Executive Officer with input as to meeting agenda items, advises the Chairman and the Chief Executive Officer as to the quality, quantity and timeliness of information sent to the Board, and approves meeting schedules to assure there is sufficient time for discussion of all agenda items.

 

Recommends Outside Advisors and Consultants. Recommends the retention of outside advisors and consultants who report directly to the Board.

 

Shareholder Communication. Ensures that he is available, if requested by shareholders and when appropriate, for consultation and direct communication.

 

Because the current Chairman of the Board (Mr. Kennedy) is independent, we have not appointed a Lead Independent Director.

 

Meetings and Committees of the Board

 

The Board of Directors held six meetings during 2023. All the incumbent directors attended at least 75% of the total number of meetings of the Board and any committees of which he or she was a member.

 

The independent directors meet in regularly scheduled executive sessions without Mr. Hendrix or members of management present. In 2023, the independent directors met three times in executive session.

 

The Board of Directors currently has the following standing committees that assist the Board in carrying out its duties: the Executive Committee, the Audit Committee, the Compensation Committee, the Nominating & Governance Committee, and a new Innovation & Sustainability Committee. The following table lists the current members of each committee:

 

Executive Committee

Audit Committee

Compensation

Committee

Nominating &

Governance Committee

Innovation &

Sustainability

Committee

         

Laurel M. Hurd

(Chair)

Robert T. O’Brien

(Chair)

Catherine M. Kilbane

(Chair)

Christopher G. Kennedy

(Chair)

Daniel T. Hendrix

(Chair)

Daniel T. Hendrix

Joseph Keough

Dwight Gibson

John P. Burke

Catherine M. Kilbane

Christopher G. Kennedy

Robert T. O’Brien

Catherine Marcus

Joseph Keough

K. David Kohler

K. David Kohler

Robert T. O’Brien

         

 

Executive Committee. The Executive Committee did not meet during 2023. Except for duties reserved to the other Board committees and for certain other exceptions, the Executive Committee may exercise all the power and authority of the Board of Directors in the management of the business and affairs of the Company.

 

Audit Committee. The Audit Committee met eight times during 2023. The function of the Audit Committee is to (i) serve as an independent and objective party to review the Company’s financial statements, financial reporting process and internal control system, (ii) review and evaluate the performance of the Company’s Independent Registered Public Accounting Firm, financial management, and internal auditors, and (iii) provide an open avenue of communication among the Company’s Independent Registered Public Accounting Firm, financial management, internal auditors, and the Board. The Board of Directors has determined that all three members of the Audit Committee are “independent” in accordance with applicable law, including the rules and regulations of the SEC and the rules of the Nasdaq Stock Market, and that each of Messrs. Keough and O’Brien is an “audit committee financial expert” as defined by the rules and regulations of the SEC. Ms. Marcus was appointed to the Audit Committee effective March 13, 2024 (replacing Ms. Kilbane), and therefore the Board has not yet made a determination as to whether Ms. Marcus is an “audit committee financial expert”. The Audit Committee operates pursuant to an Audit Committee Charter which was adopted by the Board of Directors and may be viewed on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx.

 

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Compensation Committee. The Compensation Committee met three times during 2023. The function of the Compensation Committee is to (i) evaluate the performance of the Company’s Chief Executive Officer and other senior executives, (ii) determine compensation arrangements for such executives, (iii) administer the Company’s stock and other incentive plans for key employees, and (iv) review the administration of the Company’s employee benefit plans. The Board of Directors has determined that each member of the Compensation Committee is “independent” in accordance with applicable law, including the rules and regulations of the SEC and the rules of the Nasdaq Stock Market. The Compensation Committee operates pursuant to a Compensation Committee Charter that was adopted by the Board of Directors and may be viewed on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx. The Compensation Committee’s policies and philosophy are described in more detail below in this Proxy Statement under the heading “Compensation Discussion and Analysis.”

 

Nominating & Governance Committee. The Nominating & Governance Committee met four times during 2023. The Nominating & Governance Committee assists the Board in establishing qualifications for Board membership and in identifying, evaluating and selecting qualified candidates to be nominated for election to the Board, and monitoring the Company’s activities and practices regarding ESG matters that are significant to the Company. The Nominating & Governance Committee also assists the Board in reviewing and analyzing, and makes recommendations regarding, corporate governance matters, and it also recommends committee assignments for Board members. The Board of Directors has determined that each member of the Nominating & Governance Committee is “independent” in accordance with applicable law, including the rules of the Nasdaq Stock Market. The Nominating & Governance Committee operates pursuant to a Nominating & Governance Committee Charter that was adopted by the Board of Directors and may be viewed on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx.

 

Innovation & Sustainability Committee. Effective March 13, 2024, the Board of Directors established a new Innovation & Sustainability Committee. The Company has a long history of a strong and enduring commitment to innovation and sustainability, and the Board believes these core strengths are critical to the Company’s future success and value creation. The new Innovation & Sustainability Committee will focus on accelerating the Company’s innovation and sustainability initiatives, and institutionalizing its commitments in these areas to ensure that they endure. The charter for the new committee is currently under development.

 

Nominations for Board Service         

 

In the event of a vacancy on the Board, the Nominating & Governance Committee develops a pool of potential director candidates for consideration. The Nominating & Governance Committee seeks candidates for election and appointment with excellent decision-making ability, valuable and varied business experience and knowledge, and impeccable personal integrity and reputations. The Committee does not have a specific diversity policy, but considers diversity of race, ethnicity, gender, age, cultural background and professional experience in evaluating candidates for Board membership, in an effort to obtain a variety of viewpoints in the Board’s proceedings. The Nominating & Governance Committee considers whether candidates are free of constraints or conflicts which might interfere with the exercise of independent judgment regarding the types of matters likely to come before the Board, and have the time required for preparation, participation and attendance at Board and committee meetings. Other factors considered by the Nominating & Governance Committee in identifying and selecting candidates include the needs of the Company and the range of talent and experience already represented on the Board. The Nominating & Governance Committee solicits suggestions from other members of the Board, from Company management, and occasionally from outside search firms, regarding persons to be considered as possible nominees. Our newest director Ms. Marcus was recommended by a third-party search firm. Shareholders who wish the Nominating & Governance Committee to consider their recommendations for director candidates should submit their recommendations in writing to the Nominating & Governance Committee, in care of the office of the Chairman of the Board, Interface, Inc., 1280 West Peachtree Street NW, Atlanta, GA 30309. Recommendations should include the information which would be required for a “Shareholder Proposal” as set forth in Article II, Section 9 of the Company’s Bylaws. Director candidates who are recommended by shareholders in accordance with these procedures will be evaluated by the Nominating & Governance Committee in the same manner as director candidates recommended by the Company’s directors, management and outside search firms.

 

Majority Vote Resignation Policy for Director Elections

 

Pursuant to governing law and documents, including the Company’s Bylaws as noted above, in most cases the Company's directors are elected by a plurality of the votes cast. Although nominees who receive the most votes for the available positions will generally continue to be duly elected, the Board of Directors has adopted a resignation policy applicable to nominees who fail to receive the affirmative vote of a majority of the votes cast in an uncontested election for directors. This policy does not alter the applicable legal standards. The policy requires that a nominee who does not receive a majority affirmative vote in an uncontested election promptly will tender, to the Board or its Chair, their resignation from the Board and committees on which the director serves. The resignation may be conditioned upon Board acceptance. If it is not so conditioned, the resignation must specify that it is effective immediately on delivery.

 

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A “majority affirmative vote” means that the votes cast “for” a nominee’s election exceed those voted “withhold,” with broker and other non-votes not being considered “votes cast.” You have been provided with options to vote “for” or “withhold” from each Director nominee. However, neither a “withhold” vote nor declining to vote for directors (assuming the presence of a quorum) affects whether a director nominee in an uncontested election is legally elected under the plurality vote standard (provided such nominee receives at least one “for” vote). But a “withhold” vote is considered in determining whether a director who is legally elected has received a “majority affirmative vote” for purposes of the resignation policy.

 

The Nominating & Governance Committee of the Board will consider any resignation conditioned upon Board acceptance, including any information provided by the Director, and, within 60 days of the shareholder meeting at which the Director failed to receive a majority affirmative vote, will recommend to the full Board what action to take on the Director’s resignation. The Nominating & Governance Committee may recommend, among other things, acceptance or rejection of the resignation, delayed acceptance pending the recruitment and election of a new director or rejection of the resignation in order to address the underlying reasons for the Director’s failure to receive the majority affirmative vote of the shareholders. The policy provides for the Board to act on the Nominating & Governance Committee’s recommendation within 90 days following the shareholder meeting.

 

In considering a conditional resignation, the Nominating & Governance Committee and the Board may consider those factors it deems relevant to its recommendation, including but not limited to the underlying reasons for the failure of the Director to receive a majority affirmative vote, the tenure and qualifications of the Director, the Director’s past and expected future contributions, other policies and the overall composition of the Board, including whether accepting the resignation would cause the Company to fail to meet legal or stock market requirements.

 

Following the Board’s decision, the Company will publicly announce the Board’s decision regarding any conditional resignation. A resigning Director cannot participate in committee or Board decisions regarding their resignation, except in certain cases where multiple directors have failed to receive majority affirmative votes, which circumstances are described in the full policy posted on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx. The preceding summary of the policy is qualified in its entirety by reference to the full policy.

 

Shareholder Outreach Programs

 

In each of the past three years, we have conducted one or more shareholder outreach programs per year, with the most recent taking place in late 2023 through early 2024. In that program, we requested conference calls with each of our top 25 shareholders, representing approximately 69% of outstanding shares, and we held conference calls with each shareholder that accepted our request, representing approximately 21% of outstanding shares. During the outreach program, which was led by the Company’s Chief Executive Officer, we discussed with shareholders various proxy and Company related issues and areas of shareholder interest – such as the Company’s corporate governance practices, executive compensation philosophy and practices, and ESG initiatives.

 

Enterprise Risk Management

 

The Company maintains a formal and robust Enterprise Risk Management (“ERM”) program. The Company’s ERM program is based on the Enterprise Risk Management Integrated Framework defined by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), although tailored to the Company’s specific risk profile and needs. The Company’s ERM program is managed by a risk committee comprised of executive officers and other senior managers, is administered by the Company’s Director of Internal Audit, and is overseen by the Audit Committee pursuant to authority delegated by the Board of Directors in the Audit Committee Charter. The Company’s program includes a continuous process of identifying, assessing, addressing, monitoring and reporting on the risks that pose the greatest threats to the Company. As part of that process, the management risk committee conducts an annual survey of the Company’s top global leaders and its Board of Directors to assess the likelihood, potential impact and velocity of a large number of potential risks and to help identify emerging risks. The management risk committee meets quarterly to monitor the key identified risks and how they are being addressed, which may include, depending on the circumstances, mitigating, sharing, accepting or avoiding the risk. The management risk committee and Director of Internal Audit report to the Audit Committee quarterly on significant developments and key elements of the program.

 

In addition, the Board receives quarterly reports on other elements of risk that may potentially affect the Company, as identified and presented by management. The Board also assists in the Company’s risk oversight through its various committees described above. For example, the Audit Committee assists in overseeing the specific risks that relate to the Company’s financial statements, financial reporting process and internal control system. In that regard, the Company’s Director of Internal Audit and outside auditors report directly to the Audit Committee. The Nominating & Governance Committee assists in overseeing risk related to the Company’s corporate governance practices as well as the performance of individual Board members and committees, while the Compensation Committee assists in overseeing risk as it relates to the Company’s executive compensation program and practices.

 

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Corporate Governance Guidelines

 

The Board has adopted Corporate Governance Guidelines that provide the framework for the governance of the Company. Our Corporate Governance Guidelines are available on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx and will also be made available to shareholders without charge upon request in writing to our corporate Secretary at Interface, Inc., 1280 West Peachtree Street NW, Atlanta, Georgia 30309.

 

Code of Conduct

 

The Board has adopted a Code of Conduct that applies to all of our directors, officers and employees, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. The Code is publicly available on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx and will also be made available without charge to any person upon request in writing to our corporate Secretary at Interface, Inc., 1280 West Peachtree Street NW, Atlanta, Georgia 30309. We intend to disclose amendments to, or waivers from, provisions of the Code that apply to any director or principal executive, financial or accounting officers on our website at www.interface.com, in lieu of disclosing such matters in Current Reports on Form 8-K.

 

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PRINCIPAL SHAREHOLDERS AND MANAGEMENT STOCK OWNERSHIP

 

The following table sets forth, as of March 15, 2024 (unless otherwise indicated), beneficial ownership of the Company’s Common Stock by: (i) each person, including any “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, known by the Company to be the beneficial owner of more than 5% of any class of the Company’s voting securities, (ii) each director and nominee for director, (iii) each person who served as the Company’s Chief Executive Officer or Chief Financial Officer, and the next three most highly compensated executive officers, during 2023 (the “Named Executive Officers”), and (iv) all executive officers and directors of the Company as a group. Due to the nature of the awards, performance shares and restricted stock units awarded to the Company’s executive officers are not included in beneficial ownership of Common Stock. Unless otherwise noted, the business address for each beneficial owner is the Company’s corporate headquarters located at 1280 West Peachtree Street NW, Atlanta, Georgia 30309.

 

Beneficial Owner (and Business Address of 5% Owners)

 

Title

of Class

 

Amount and Nature of

Beneficial Ownership

   

Percent of

Class(1)

 
                     

BlackRock, Inc.

55 East 52nd Street

New York, New York 10055

 

Common Stock

    9,736,333 (2)(3)      16.7 %
                     

Frontier Capital Management Co., LLC

99 Summer Street

Boston, Massachusetts 02110

 

Common Stock

    3,037,957 (2)(4)      5.2 %
                     

The Vanguard Group, Inc.

100 Vanguard Boulevard

Malvern, Pennsylvania 19355

 

Common Stock

    5,255,552 (2)(5)      9.0 %
                     

Pzena Investment Management, LLC

320 Park Avenue, 8th Floor

New York, New York 10022

 

Common Stock

    3,490,324 (2)(6)      6.0 %
                     

John P. Burke

 

Common Stock

    73,103 (7)      *  
                     

David B. Foshee

 

Common Stock

    161,372 (8)      *  
                     

Dwight Gibson

 

Common Stock

    50,070 (9)      *  
                     

Bruce A. Hausmann

 

Common Stock

    181,699 (10)      *  
                     

Daniel T. Hendrix

 

Common Stock

    306,219 (11)      *  
                     

Laurel M. Hurd

 

Common Stock

    129,422 (12)      *  
                     

Christopher G. Kennedy

 

Common Stock

    182,826 (13)      *  
                     

Joseph Keough

 

Common Stock

    50,070 (14)      *  
                     

Catherine M. Kilbane

 

Common Stock

    54,620 (15)      *  
                     

K. David Kohler

 

Common Stock

    99,103 (16)      *  
                     

Catherine Marcus

 

Common Stock

    4,799 (17)      *  
                     

Robert T. O’Brien

 

Common Stock

    23,050 (18)      *  
                     

James L. Poppens

 

Common Stock

    76,284 (19)      *  
                     

Nigel Stansfield

 

Common Stock

    142,284 (20)      *  
                     

All executive officers and directors (14 persons)

 

Common Stock

    1,534,921 (21)      2.6 %

 

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*

Less than 1%.

 

 

(1)

Percent of class is based on 58,365,226 shares outstanding on March 15, 2024, and is calculated assuming that the beneficial owner or group of beneficial owners has exercised any conversion rights, options or other rights to subscribe held by such beneficial owner that are exercisable within 60 days of March 15, 2024, and that no other conversion rights, options or rights to subscribe have been exercised by anyone else.

 

 

(2)

Based upon information included in statements as of December 31, 2023, provided to the Company and filed with the SEC by such beneficial owners.

 

 

(3)

According to BlackRock, various persons have the right to receive, or the power to direct the receipt of, dividends from or the proceeds from the sale of such shares, and only one such person’s (iShares Core S&P Small-Cap ETF) interests in such shares exceeds 5% of the total outstanding shares of Common Stock. It states that it has sole voting power with respect to 9,544,204 of such shares, and sole dispositive power with respect to all such shares.

 

 

(4)

Frontier Capital Management Co., LLC is an investment advisor, and states that it has sole voting power with respect to 2,193,413 of such shares and sole dispositive power with respect to all such shares.

 

 

(5)

The Vanguard Group, Inc. is an investment advisor, and states that it has sole voting power with respect to none of the shares, shared voting power with respect to 43,763 of such shares, sole dispositive power with respect to 5,159,767 of such shares, and shared dispositive power with respect to 95,785 of such shares. It further states that its clients, including registered investment companies and other managed accounts, have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, the reported securities, and that no one other person’s interest in the reported securities is more than five percent of the class of stock.

 

 

(6)

Pzena Investment Management, LLC is an investment advisor, and states that it has sole voting power with respect to 2,904,688 of such shares, and sole dispositive power with respect to all such shares. It further states that its clients have the right to receive and the ultimate power to direct the receipt of dividends from, or the proceeds of sale of, the reported securities, and that no interest of any one of its clients relates to more than five percent of the class of stock.

 

 

(7)

Includes 14,608 restricted shares.

 

 

(8)

Includes 45,556 restricted shares.

 

 

(9)

Includes 14,608 restricted shares.

 

 

(10)

Includes 64,787 restricted shares.

 

 

(11)

Includes 35,072 shares held indirectly by family trusts.

 

 

(12)

Includes 69,589 restricted shares.

 

 

(13)

Includes 14,608 restricted shares. Mr. Kennedy serves on the Board of Trustees of Ariel Mutual Funds, for which Ariel Investments, LLC serves as investment advisor and performs services which include buying and selling securities on behalf of the Ariel Mutual Funds. Mr. Kennedy disclaims beneficial ownership of all shares held by Ariel Investments, LLC as investment advisor for Ariel Mutual Funds.

 

 

(14)

Includes 14,608 restricted shares.

 

 

(15)

Includes 14,608 restricted shares.

 

 

(16)

Includes 14,608 restricted shares.

 

 

(17)

All of such shares are restricted shares.

 

 

(18)

Includes 14,608 restricted shares.

 

 

(19)

Includes 44,487 restricted shares.

 

 

(20)

Includes 60,612 restricted shares.

 

 

(21)

Includes 392,086 restricted shares.

 

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APPROVAL OF EXECUTIVE COMPENSATION

(ITEM 2)

 

The Company is asking its shareholders to vote, on an advisory basis, to approve the compensation of its Named Executive Officers as described in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives the Company’s shareholders the opportunity to express their views on the compensation of the Company’s Named Executive Officers.

 

Our executive compensation program is designed to attract, reward and retain key employees, including our Named Executive Officers, who are critical to the Company’s long-term success. Shareholders are urged to read the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement for greater detail about the Company’s executive compensation programs, including information about the fiscal year 2023 compensation of the Named Executive Officers.

 

The Company is asking the shareholders to indicate their support for the compensation of the Company’s Named Executive Officers as described in this Proxy Statement by voting in favor of the following resolution:

 

“RESOLVED, that the shareholders approve, on an advisory, non-binding basis, the compensation paid to the Company’s Named Executive Officers as disclosed in the “Compensation Discussion and Analysis” and “Executive Compensation” sections, including the compensation tables, notes, and narrative in those sections.”

 

Even though this say-on-pay vote is advisory and therefore will not be binding on the Company, the Compensation Committee and the Board value the opinions of the Company’s shareholders. Accordingly, to the extent there is a significant vote against the compensation of the Named Executive Officers, the Board will consider the shareholders’ concerns and the Compensation Committee will evaluate what actions may be necessary or appropriate to address those concerns.

 

You may vote “for,” “against,” or “abstain” from the proposal to approve on an advisory basis the compensation of our Named Executive Officers.

 

Vote Required and Recommendation of the Board

 

Under the Company’s Bylaws, the compensation of the Named Executive Officers is approved on an advisory basis if the affirmative votes cast by the holders of the Company’s outstanding shares of Common Stock entitled to vote and represented (in person or by proxy) at the meeting exceed the negative votes. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF EXECUTIVE COMPENSATION, AS DISCLOSED IN THIS PROXY STATEMENT, AND THE PROXY SUBMITTED BY TELEPHONE OR INTERNET OR PROXY CARD WILL BE VOTED IN THIS MANNER UNLESS THE SHAREHOLDER SUBMITTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY (OR ABSTAINS).

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

This Compensation Discussion and Analysis describes the compensation program for the Company’s Named Executive Officers. For 2023, these individuals were:

 

Name

Title

Laurel M. Hurd

President and Chief Executive Officer

 

David B. Foshee

Vice President, General Counsel and Secretary

 

Bruce A. Hausmann

Vice President and Chief Financial Officer

 

James L. Poppens

Vice President and Chief Commercial Officer

 

Nigel Stansfield

Vice President and Chief Innovation & Sustainability Officer

 

 

As demonstrated below, the Committee believes that the Company’s performance-based compensation is appropriately designed to pay for performance, and that the structure strikes a proper balance among motivating management and rewarding strong management performance, while also accounting for macroeconomic uncertainty, the continued impact of the COVID-19 pandemic in certain geographies, as well as the regular cyclicality of our industry that is outside of management’s control.

 

Below are the Company’s 2023 financial data that most significantly impacted our Executive Compensation Program. The non-GAAP financial measures of currency neutral sales, adjusted operating income and adjusted EBITDA were utilized as 2023 performance criteria for our annual bonus plan and long-term equity incentives as discussed further below.

 

image14.jpg

 

(Note: Please see Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures and an explanation of why we believe non-GAAP measures provide useful information to shareholders and the additional purposes for which we use non-GAAP measures.)

 

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Overall Philosophy and Objectives

 

The Company’s compensation program is designed in a manner intended to both attract and retain a highly qualified, motivated and engaged management team whose focus is on enhancing shareholder value. The Company believes a straightforward program that is readily understood and endorsed by its participants best serves these goals, and has constructed a program that contains (1) multiple financial elements, (2) clear and definitive targets, (3) challenging but attainable objectives, and (4) specified performance metrics. More specifically, the objectives of the Company’s management compensation program include:

 

image15.jpg

 

Program Design and Administration

 

The Compensation Committee of the Board of Directors, which is composed entirely of independent directors, has developed and administers the Company’s executive pay program to provide compensation commensurate with the level of financial performance achieved, the responsibilities undertaken by the executives, and the compensation packages offered by comparable companies. The program currently consists of four principal components, each of which is designed to drive a specific behavioral focus, which in turn helps to provide specific benefits to the Company:

 

image16.jpg

 

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The Company strives to structure various elements of these program components so that a large portion of executive compensation is directly linked to advancing the Company’s financial performance and the interests of shareholders. For 2023, those elements were substantially performance-based, as shown below (and based on target level achievement):

 

 

Laurel Hurd, President and CEO

 

image17.jpg

 

Bruce Hausmann, VP and CFO

James Poppens, VP

Nigel Stansfield, VP

 

image18.jpg

 

David Foshee, VP and General Counsel

 

image19.jpg

 

 

Compensation Decision-Making

 

The Committee establishes base salaries for the executive officers, including the Named Executive Officers listed in the “Summary Compensation Table” included in this Proxy Statement. The Committee also administers the annual bonus program, the long-term incentive program, retirement benefits, deferred compensation arrangements, and, when applicable, special incentive programs.

 

The Company benchmarks its compensation practices against its peer group. In selecting the peer group, the Committee directly engaged Pearl Meyer & Partners, a nationally recognized, independent compensation consultant, to provide input on compensation matters. In 2023, the Company updated the self-determined peer group to exclude Kimball International, Inc., which was acquired in 2023 and no longer trades publicly, and also to incorporate other peer group changes to align with the peer group it now uses to measure executive compensation. In determining its peer group companies, the Company considered various factors, including the potential peer’s industry, business model, size and complexity. The Company chose a peer group that is a better representation of the Company’s size and market capitalization with minimal revenue dispersion, and with companies in similar industries or lines of business or subject to similar economic and business cycles, including companies with a significant international presence that are also focused on sustainability. The updated peer group selected by the Committee is comprised of:

 

ACCO Brands Corporation

MillerKnoll, Inc.

Apogee Enterprises, Inc.

PGT Innovations, Inc.

Armstrong World Industries, Inc.

SP Plus Corporation

Enviri Corporation (formerly Harsco Corporation)

Steelcase Inc.

Glatfelter Corporation

Unifi, Inc.

HNI Corporation

VSE Corporation

 

For the past several years, including 2021-2023, Pearl Meyer assisted the Compensation Committee in benchmarking the Company's compensation practices against the peer group. Pearl Meyer performs no other work for the Company. The work of Pearl Meyer for the Compensation Committee to date has not raised any conflict of interest.

 

The Committee also seeks compensation input from the Company’s Chairman, Chief Executive Officer and Chief Human Resources Officer. In addition, the Committee takes into account publicly available data relating to the compensation practices and policies of other companies within and outside the Company’s industry. Furthermore, the policies and programs described below are subject to change as the Committee deems necessary from time to time to respond to economic conditions, meet competitive standards and serve the objectives of the Company and its shareholders.

 

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Compensation Risk Assessment

 

The Board, in conjunction with management, has reviewed our compensation policies and practices as generally applicable to our employees and determined that they do not encourage excessive risk or unnecessary risk taking and do not otherwise create risks that are reasonably likely to have a material adverse effect on the Company.

 

Clawback Policy

 

Pursuant to Rule 5608 of the Nasdaq Stock Market, and Section 10D of the Securities Exchange Act and Rule 10D-1 thereunder, the Committee has adopted an enhanced Clawback Policy, effective October 2, 2023, which requires the Committee to take such action as it deems necessary to recover reasonably promptly from executive officers certain incentive-based compensation, including both cash and equity, following a restatement of the Company’s financial statements. Pursuant to the Clawback Policy, in the event the Company is required to prepare an accounting restatement due to the Company’s material noncompliance with any financial reporting requirement under the U.S. federal securities laws (an “Accounting Restatement”), regardless of individual fault, the Committee must require the forfeiture or reimbursement, subject to the terms of the Clawback Policy, from any current or former “Covered Executive” (meaning, any officer of the Company covered by Section 16(a) of the Securities Exchange Act) of the Company, any excess incentive-based compensation awarded during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an Accounting Restatement. Excess incentive-based compensation, as defined in the Clawback Policy, essentially means the amount or value of incentive-based compensation granted, earned or vested (“Awarded”) in excess of what would have been Awarded to that Covered Executive based on the Accounting Restatement. The Committee or the Board of Directors shall recover such excess incentive-based compensation unless the Committee determines such recovery would be impracticable pursuant to the terms of the Clawback Policy.

 

Discussion of Principal Elements of Compensation Program

 

Base Salaries

 

The Committee generally strives to set base salaries at the market median (50th percentile) of salaries offered by other employers in our industry and other publicly traded companies with characteristics similar to the Company (size, growth rate, etc.), based, by and large, on information provided by independent third-party advisors while also considering internal equalization policies of the Company. Some of the companies considered from time to time are included in our peer group discussed above.

 

In addition, the Committee may consider other factors when setting individual salary levels, which may result in salaries somewhat above or below the targeted amount. These factors include the executive’s level of responsibility, achievement of goals and objectives, tenure with the Company, and specific background or experience, as well as external factors such as the availability of talent, the recruiting requirements of the particular situation, general economic conditions, and rates of inflation.

 

Base salary adjustments for executive officers generally are made (if at all) annually and are dependent on the factors described above. The changes in base salaries for the Named Executive Officers, and the rationale for those changes, are described below.

 

Name

 

2022 Base Salary

   

2023 Base Salary

   

% Change

 

Rationale

Laurel Hurd

  $ 825,000     $ 858,000         4%  

Merit

David Foshee

  $ 405,000     $ 425,000         5%  

Merit & Benchmark Alignment

Bruce Hausmann

  $ 500,000     $ 520,000         4%  

Merit

James Poppens

  $ 425,000     $ 468,000       10%  

New Role & Benchmark Alignment

Nigel Stansfield

  £ 325,552     £ 338,574         4%  

Merit

 

Please see the “Summary Compensation Table” included in this Proxy Statement for the base salaries actually paid to the Named Executive Officers in 2023.

 

Annual Bonus Opportunities

 

The Committee administers the shareholder-approved Executive Bonus Plan, which provides bonus opportunities for Company executives. The bonus opportunities provide an incentive for executives to earn cash compensation based on the achievement of important corporate or business unit (division or subsidiary) financial performance. In determining the appropriate bonus opportunities for 2023, the Committee sought to establish potential awards that, when combined with annual salary, place the total overall cash compensation opportunity for the Company’s executives between the 50th and 75th percentile for comparable companies, provided that the performance objectives are substantially achieved.

 

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For 2023, each executive officer of the Company was assigned a bonus potential, expressed as a percentage of base salary. The 2023 bonus potential for each Named Executive Officer is described below.

 

Name

2023 Bonus Potential

(as a percentage of base salary)

Laurel Hurd

125%

David Foshee

75%

Bruce Hausmann

90%

James Poppens

90%

Nigel Stansfield

90%

 

Actual payouts could range from 0% to 175% of the bonus potential (as described below), depending on the degree to which the established financial objectives were achieved, and are paid on an annual basis approximately 60 days following the end of the year.

 

In 2023, 100% of the bonus potential for the Chief Executive Officer, Chief Financial Officer and each of the other Named Executive Officers was based on measurable financial objectives. These objectives consisted of adjusted operating income, and currency-neutral sales, and the relative weights assigned to these financial objectives were 85% and 15%, respectively.

 

For each financial objective, the Committee establishes a threshold amount, a goal amount, and a maximum amount. The threshold amount must be achieved in order for any bonus amount to be earned with respect to that objective. A pro rata bonus amount is earned based upon (i) the degree to which the threshold amount (resulting in a “cut in” payout equal to 25% of the bonus potential for that criterion) is exceeded, up to the goal amount (resulting in a payout equal to 100% of the bonus potential for that criterion), or (ii) the degree to which the goal amount (resulting in a payout equal to 100% of the bonus potential for that criterion) is exceeded, up to the maximum amount (resulting in a payout equal to 175% of the bonus potential for that criterion). The approach to goal setting involves a process of reviewing, among other things, our prior year’s financial performance, our annual operating plan, and our short-term and long-term strategic objectives. We also take into account the need for setting goals that are challenging yet reasonably achievable so as to provide a competitive pay package necessary for the retention of our talent. Given this methodology, the Committee believes that the threshold level, while challenging, is reasonably likely to be achieved in normalized market conditions, the goal amount is achievable with strong management performance, and the maximum amount would encourage and reward outstanding performance.

 

For example, the Company’s 2023 annual thresholds, goals and maximums were as follows:

 

Criteria

 

Weighting

   

Threshold

   

Goal

   

Maximum

 

Adjusted Operating Income

    85%     $ 78,000,000     $ 120,000,000     $ 138,000,000  

Currency-Neutral Sales

    15%     $ 1,165,016,000     $ 1,273,242,000     $ 1,317,805,000  

 

For 2023, the Company’s adjusted operating income (see Appendix A) was $116.4 million, thus exceeding the established threshold amount and resulting in a payout of 93.6% for this criterion (79.5% of the executive’s bonus potential after applying the 85% weighting). The Company’s 2023 currency-neutral sales were $1,260.1 million, thus exceeding the established threshold amount and resulting in a payout of 90.9% for this criterion (13.6% of the executive’s bonus potential after applying the 15% weighting).

 

Based on the Company’s performance, overall 2023 bonus achievement was approximately 93.2% of bonus opportunity for each of the Names Executive Officers, resulting in the following cash payouts:

 

Name

 

2023 Actual Bonus

Laurel M. Hurd

  $ 999,570  

David Foshee

  $ 297,075  

Bruce Hausmann

  $ 436,176  

James Poppens

  $ 392,558  

Nigel Stansfield

  £ 283,996  

 

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Long-Term Incentives

 

The Committee administers the shareholder-approved Interface, Inc. 2020 Omnibus Stock Incentive Plan (the “Omnibus Stock Plan”), which is an equity-based plan that allows for long-term incentive awards such as restricted stock, performance shares, restricted stock units, and stock options. The Omnibus Stock Plan provides for the grant to key employees and directors of the Company and its subsidiaries of restricted stock, incentive stock options (which qualify for certain favorable tax treatment), nonqualified stock options, stock appreciation rights, restricted stock units (also known as deferred shares), performance shares and performance units. The size of the awards made to individual officers is based on an evaluation of several factors, including the officer’s level of responsibility, the officer’s base salary, benchmark data and the Company’s overall compensation objectives. The amount and nature of prior equity incentive awards also are generally considered in determining new awards for executive officers.

 

Long-term incentives are intended to attract and retain outstanding executive talent, create a direct link between shareholder and executive interests by focusing executive attention on increasing shareholder value, and motivate executives to achieve specific performance objectives. For instance, stock options (when granted) have an exercise price equal to at least 100% of the market price of the underlying Common Stock on the date of grant. Thus, the stock options only have value if the market price of the Company’s stock rises after the grant date (although no stock options have been granted in recent years). Additionally, restricted stock, restricted stock units, and performance share awards generally vest, in whole or in part, over a period of multiple years (three years for grants made in recent years), giving the executive an incentive to remain employed with the Company for a significant time period to have the opportunity to vest in an award.

 

Description of Available Awards

 

Restricted Shares

 

Awards of restricted shares under the Omnibus Stock Plan generally vest over a period of multiple years following the date of award. The Committee may, in its discretion, also establish performance criteria for these awards, and the restricted shares may vest earlier if such performance criteria are satisfied. Unvested awards are also subject to forfeiture under certain circumstances. All restricted shares awarded to date have been made without consideration from the participant (although the Omnibus Stock Plan authorizes the Committee, in connection with any award, to require payment by the participant of consideration, which can be less than the fair market value of the award on the date of grant). Awards of restricted stock generally will not be transferable by the participant other than by will or applicable laws of descent and distribution.

 

Performance Shares

 

Performance shares are awards reflected in a bookkeeping entry that records the equivalent of one share of Common Stock that may subsequently be earned and payable (and issued) to the participant if specified performance criteria established by the Committee are satisfied. Awards of performance shares may be settled in Common Stock, cash, or a combination thereof, at the Company’s election. Grants of performance shares may provide for the payment to the participant of dividend equivalents on a current, deferred or contingent basis; provided, in all of our past awards of performance shares, we have accrued dividend equivalents that are paid only if and when the underlying performance shares vest. Awards of performance shares generally will not be transferable by the participant other than by will or applicable laws of descent and distribution.

 

Stock Options

 

Options granted under the Omnibus Stock Plan may be incentive stock options (as defined in Section 422 of the Internal Revenue Code of 1986, as amended), nonqualified stock options or a combination of the foregoing, although only employees are eligible to receive incentive stock options. All options under the Omnibus Stock Plan will be granted at an exercise price per share equal to not less than 100% of the fair market value of the Common Stock on the date the option is granted. Options may be structured to vest over a period of multiple years. Options granted under the Omnibus Stock Plan expire following a pre-determined period of time after the date of grant (which may not be more than 10 years after the grant date), and generally will terminate on the date three months following the date that a participant’s employment with the Company terminates.

 

The Company receives no consideration upon the granting of an option. Full payment of the option exercise price must be made when an option is exercised. The exercise price may be paid in cash or in such other form as the Committee may approve, including shares of Common Stock valued at their fair market value on the date of option exercise. Options generally will not be transferable by the holder thereof other than by will or applicable laws of descent and distribution.

 

The Committee has not granted stock options to any executive officer in the past three years.

 

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Restricted Stock Units

 

An award of restricted stock units represents an agreement by the Company to issue or transfer shares to the participant in the future in consideration of the performance of services, subject to the fulfillment of such other conditions as the Committee may specify. When so determined by the Compensation Committee, awards of restricted stock units may specify performance objectives. Prior to the payment of the restricted stock units (and delivery of any underlying Shares), the participant has no rights of ownership in the underlying shares. Awards of restricted stock units may be settled in Common Stock, cash, or a combination thereof, at the Company’s election. Awards of restricted stock units may provide for the payment to the participant of dividend equivalents on a current, deferred or contingent basis; provided, in all of our past awards of restricted stock units, we have accrued dividend equivalents that are paid only if and when the awards vest. Awards of restricted stock units generally will not be transferable by the participant other than by will or applicable laws of descent and distribution.

 

Other Potential Awards

 

The Omnibus Stock Plan also provides for the award of stock appreciation rights and performance units. The Committee has not granted any of these other types of awards to any executive officer through the end of 2023.

 

Omnibus Stock Plan Awards in 2021

 

One-half of the 2021 awards were granted as time-based restricted stock, and the shares would vest 100% on the third anniversary of the grant date, if the executive remained employed with the Company until that date. As in prior years, the 2021 time-based restricted stock awards included a “double trigger” change-in-control vesting provision. In other words, these awards would not vest automatically based solely on the occurrence of a change in control alone; rather, there must be “second trigger” of either (i) an involuntary separation from service or (ii) a separation from service for “Good Reason” (essentially, resignation in the face of negative changes in executive’s employment relationship with the Company). The executive also had the right to receive any cash dividends paid on this time-based restricted stock, throughout the three-year term.

 

The other half of the 2021 awards were granted as performance shares with two performance metrics – adjusted EBITDA (75% weighting) and three-year cumulative return on invested capital (25% weighting) – for the three-year performance period of 2021 to 2023. These awards provided an opportunity for grantees to earn shares based on adjusted EBITDA achievement during each year of the three-year performance plan, but the vesting of those earned shares was deferred until the Committee’s certification of attainment of all performance measures following the end of the three-year performance period. The amount of performance shares earned based on adjusted EBITDA achievement was determined pro rata based upon (i) the degree to which an applicable adjusted EBITDA threshold level was achieved (at which point 25% of the performance shares would be earned) or exceeded up to an applicable adjusted EBITDA target level (at which point 100% of the performance shares would be earned), or (ii) the degree to which the applicable adjusted EBITDA target level was exceeded up to an applicable adjusted EBITDA maximum level (at which point two times the nominal performance shares would vest). The same methodology applied for calculation of achievement of the portion of the award based on three-year cumulative return on invested capital. There was no “time vesting” opportunity for this part of the award. The Company does not pay dividends on unvested performance shares. Rather, “dividend equivalents” accrue on these awards of performance shares and are paid only if and when the related performance shares vest.

 

The Compensation Committee retained authority in the event of a change-in-control to alter or amend the terms of the 2021 awards of performance shares in any manner it deemed equitable and necessary or advisable to take into account the effect of the change-in-control. Such modifications may include, without limitation, (i) providing for payment in the form of cash or other securities in lieu of shares, (ii) vesting of all or a portion of the performance shares based on the attainment of the performance criteria determined as of the date of the change-in-control, (iii) accelerating the vesting of the performance shares in full or on a pro rata basis, (iv) converting some or all of the shares to time-based vesting, or (v) making appropriate adjustments to the performance criteria. However, in the event of a “double trigger” change-in-control and termination of employment as described above, the employee would vest in the nominal number of outstanding performance shares.

 

Primarily due to the challenges involved in setting multi-year performance targets during the uncertainty created by the COVID-19 pandemic, the threshold, goal and maximum achievement levels for the year 2021 were set at the time of the award based upon the Company’s 2021 annual operating plan, with the goals for years 2022 and 2023 based on a numerical formula targeting 6% growth over the prior year’s actual adjusted EBITDA result. In addition, if the actual adjusted EBITDA achieved in year 1 or year 2 of the award was less than the goal amount, any actual adjusted EBITDA achieved in the following year in excess of the goal amount would be added back to the prior year’s actual result to earn additional shares, capped at the goal amount. The Committee believes this approach recognized the difficulty setting future year EBITDA targets in the uncertain pandemic environment while still requiring meaningful year-over-year growth regardless of the prior year results.

 

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The targets for the portion of this award that was eligible for achievement (and future vesting) based on 2023 adjusted EBITDA (in millions) were:

 

Criteria

 

Threshold

 

Goal

 

Maximum

Adjusted EBITDA

 

$130.7

 

$186.7

 

$214.7

 

For 2023, adjusted EBITDA (see Appendix A) was $162.0 million, which exceeded the above-stated threshold and resulted in achievement of 67.0% of the portion of this award that was eligible to be earned based on 2023 performance.

 

The threshold, goal and maximum achievement levels for the portion of the 2021 awards based on three-year (2021-2023) cumulative return on invested capital were 8.0%, 11.5% and 12.6%, respectively. The actual three-year cumulative return on invested capital was 11.6%, which exceeded the goal and resulted in achievement of 108.2% of this portion of the award.

 

In sum, the total achievement under the 2021 long-term incentive awards (including all performance-based achievement for the years 2021-2023 as well as time-based vesting) was 99.3% of the award. The Compensation Committee certified the attainment, and these shares vested, in February 2024.

 

Omnibus Stock Plan Awards in 2022

 

The 2022 long-term incentive plan awards have the same structure as described above for awards granted in 2021, but with the threshold, goal and maximum achievement levels for the initial year 2022 were set based upon the Company’s 2022 annual operating plan, and the three-year performance period is 2022-2024. The targets for the portion of this award that was eligible for achievement (and future vesting) based on 2023 adjusted EBITDA (in millions) were:

 

Criteria

 

Threshold

 

Goal

 

Maximum

Adjusted EBITDA

 

$130.7

 

$186.7

 

$214.7

 

As discussed above, for 2023, adjusted EBITDA (see Appendix A) was $162.0 million, which exceeded the above-stated threshold and resulted in achievement of 67.0% of the portion of this award that was eligible to be earned based on 2023 performance. The earned shares will not vest until the Compensation Committee certifies attainment following the end of the three-year performance period 2022-2024.

 

Omnibus Stock Plan Awards in 2023

 

The 2023 long-term incentive plan awards are substantially similar to those described above for 2022, except for material changes described in this paragraph. The Committee made the following changes to better reflect prevailing peer practices: (i) adopted a modified “Rule of 75” (combined age and employment tenure, with minimum age of 58) retirement provision that allows for pro-rata vesting of awards upon eligible retirement; (ii) issued restricted stock units (deferred shares) instead of restricted stock to minimize unfavorable tax consequences associated with the new retirement provision; (iii) adopted ratable vesting of time-based restricted stock units (one-third each year over the three-year vesting period) rather than three-year “cliff” vesting; and (iv) adopted a single three-year (2023-2025) aggregate adjusted EBITDA goal, rather than three one-year goals with annual attainment measurement, with the three-year aggregate adjusted EBITDA goal being the sum of (a) the 2023 budgeted adjusted EBITDA target, plus (b) 106% of 2023 actual adjusted EBITDA result, plus (c) 106% of 2024 actual adjusted EBITDA result.

 

The 2023 adjusted EBITDA targets under this award (in millions) were:

 

Criteria

 

Threshold

 

Goal

 

Maximum

Adjusted EBITDA

 

$114.9

 

$164.2

 

$188.8

 

As discussed above, for 2023, adjusted EBITDA (see Appendix A) was $162.0 million. This 2023 result will be aggregated with adjusted EBITDA for years 2024 and 2025 to determine achievement against the single three-year (2023-2025) aggregate adjusted EBITDA goal formula described above. Any shares achieved against that goal (using the same pro rata determination calculations described above in the 2021 awards) will not vest until the Compensation Committee certifies attainment following the end of the three-year performance period 2023-2025.

 

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Changes in Executive Compensation in 2024

 

For 2024, the Compensation Committee maintained the same executive compensation program design as that described above for 2023, to provide year-over-year consistency and continue to align the Company’s program with its peers.

 

 

Other Elements of Compensation Program

 

In addition to the principal compensation program elements described above, the Company has adopted a number of other elements to further its compensation program goals. They are as follows:

 

●    401(k) Plan and Other Defined Contribution Plans

●    Employment and Severance Protection Agreements

   

●    Elective Deferred Compensation Program

●    Limited Perquisites

 

401(k) Plan and Other Defined Contribution Plans

 

The Company maintains the Interface, Inc. Savings and Investment Plan (the “401(k) Plan”), a tax-qualified 401(k) plan which provides its U.S.-based employees a convenient and tax-advantaged opportunity to save for retirement. The Company’s Named Executive Officers who are based in the United States are eligible to participate in the 401(k) Plan on the same terms as other executive and non-executive employees based in the United States, and receive the same benefits afforded all other participants. Under the 401(k) Plan, all participating employees are eligible to receive matching contributions that are subject to vesting over time. The Company periodically evaluates the level of matching contributions afforded participant employees to ensure competitiveness in the marketplace. The Company currently matches 50% of the first 6% of the employee’s eligible compensation (capped by statutory limitations) that the employee contributed to the 401(k) Plan.

 

Elective Deferred Compensation Program

 

The Company also maintains the Interface, Inc. Nonqualified Savings Plan II (the “Nonqualified Plan”) for certain U.S.-based “highly compensated employees” (as such term is defined in applicable IRS regulations), including the Named Executive Officers who are based in the United States. The compensation level required to participate in the Nonqualified Plan was $130,000 in total annual compensation, and the Company had 117 participants in the plan (including both current and former employees) at the end of 2023. As with the Company’s 401(k) Plan, the Named Executive Officers who are based in the United States are eligible to participate in the Nonqualified Plan on the same terms as other executive and non-executive eligible employees based in the United States, and receive the same benefits afforded all other participants. Under the Nonqualified Plan, all eligible employees can elect to defer, on a pre-tax basis, a portion of their salary and/or annual bonus compensation. The Company currently matches 50% of the first 6% of the employee’s eligible salary and bonus (and sales commissions, if applicable) that was deferred, less any potential Company matching amounts under the 401(k) Plan.

 

Please see the “Non-Qualified Deferred Compensation” table included in this Proxy Statement for further details regarding the Nonqualified Plan, as well as the Company’s Named Executive Officers’ contributions, earnings and account balances applicable to the Nonqualified Plan for fiscal year 2023.

 

Pension/Salary Continuation Programs

 

Foreign Defined Benefit Plans

 

The Company has trustee-administered defined benefit retirement plans (“Pension Plans”) which cover certain of its overseas employees. The benefits are generally based on years of service and the employee’s average monthly compensation. Mr. Stansfield is a participant in a legacy Pension Plan which existed and was frozen during the time before he became an executive officer. None of our other Named Executive Officers are participants in these plans. Please see the “Pension Benefits” table included in this Proxy Statement for information about Mr. Stansfield’s pension benefit.

 

Salary Continuation Plan

 

Pursuant to a former Salary Continuation Plan which is closed to new participants, the Company has maintained a Salary Continuation Agreement with its former employee and current director Mr. Hendrix since 1986. (The Company most recently amended and restated the Salary Continuation Agreement with Mr. Hendrix in January 2008, primarily to comply with Section 409A of the Internal Revenue Code of 1986, as amended. The benefits under his amended and restated agreement are substantially similar to those under his prior agreement.) The individual Salary Continuation Agreement contains essentially all of the benefit terms and conditions, and the agreement controls in the event of any conflict with the Salary Continuation Plan document. Please see the “2023 Director Compensation” table included in this Proxy Statement for information about the Salary Continuation Plan benefits applicable to Mr. Hendrix. No other current officers or employees of the Company participate in the Salary Continuation Plan.

 

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Employment and Severance Protection Agreements

 

The Company has Severance Protection and Change in Control Agreements with each of its current executive officers that provide for certain severance benefits if the individual’s employment is terminated involuntarily without cause or in connection with a change in control. The agreement also contains provisions placing restrictions on the individual’s ability to compete with the Company for a period of 12 or 24 months following termination of employment, depending on the circumstances of termination. (Mr. Stansfield also has a separate employment agreement addressing the basic terms of his U.K.-based employment.)

 

Please see the further discussion below in the “Potential Payments Upon Termination or Change of Control” section of this Proxy Statement regarding the respective employment and severance protection agreements of the Company’s Named Executive Officers.

 

Perquisites

 

In order to provide a market competitive total compensation package to the Company’s executive officers, including the Named Executive Officers, the Company provides a limited set of perquisites that it believes enable its Named Executive Officers to perform their responsibilities efficiently and with minimal distractions. The perquisites provided to one or more Named Executive Officers in 2023 included the following:

 

●    Company-provided automobile/allowance

●    Long-term care and life insurance

   

●    Company-provided telephone

 

 

Please see the “Summary Compensation Table” included in this Proxy Statement (and the notes thereto) for a more detailed discussion of these perquisites and their valuation.

 

Special Incentive Programs

 

From time to time, in its discretion, the Committee may implement special incentive programs which provide executives an opportunity to earn additional compensation if specific performance objectives (such as stock price appreciation, debt reduction, cash accumulation, or attainment of a specified financial ratio) are met. No special incentive programs have been used in the past several years.

 

Stock Ownership and Retention Guidelines

 

To further tie the financial interests of Company executives to those of shareholders, the Committee has established stock ownership and retention guidelines. Pursuant to the stock ownership and retention guidelines, executives are expected to accumulate a number of shares (unrestricted) of the Company’s Common Stock having a value equaling three times base salary in the case of the Chief Executive Officer and two times base salary in the case of the other executive officers (based on salaries and the stock price at the time the new guidelines were adopted in 2016). The expectation is for executives to reach this ownership level within four years of joining the Company or otherwise becoming an executive officer. As of the end of 2023, all Named Executive Officers had met this target, except for (i) Ms. Hurd, who was appointed to her position in April 2022 and (ii) Mr. Poppens, who was appointed to his executive position in November 2020. To facilitate accomplishing the ownership targets, executive officers generally are expected to retain at least one-half of the net after-tax shares (i.e., the net shares remaining after first selling or the withholding of sufficient shares to cover the anticipated tax liability and, in the case of stock options, the exercise price) obtained upon the vesting of equity awards and the exercise of stock options.

 

Directors also are subject to stock ownership requirements. Directors are required to hold 2,000 unrestricted shares. Any new director is required to accumulate these shares by the second anniversary of his or her election. As a guideline, non-employee directors also are expected to retain during their tenure all of the net after-tax shares obtained upon the vesting of restricted stock and at least one-half of the net after-tax shares obtained upon the exercise of stock options. All current directors have met this stock ownership standard, except for Ms. Marcus, who was appointed as a director in December 2023.

 

The Company has a policy that generally prohibits all of its employees, officers and directors from engaging in short sales or trading in puts, calls and other options or derivatives with respect to the securities of the Company. In addition, directors and officers of the Company are prohibited from pledging the Company’s securities as collateral for a loan or other obligation.

 

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Compensation Deductibility

 

Although the Committee considers deductibility issues when approving executive compensation elements, the Company and the Committee believe that other compensation objectives, such as attracting, retaining and providing incentives to qualified managers, are important and may supersede the goal of maintaining deductibility. Consequently, the Company and the Committee may make compensation decisions without regard to deductibility when it is deemed to be in the best interests of the Company and its shareholders to do so.

 

COMPENSATION COMMITTEE REPORT

 

The Compensation Committee of the Board of Directors has reviewed and discussed with management the “Compensation Discussion and Analysis” section of this Proxy Statement. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” section be included in this 2024 Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC.

 

THE COMPENSATION COMMITTEE

Catherine M. Kilbane (Chair)

Dwight Gibson

Joseph Keough

 

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

None of the executive officers of the Company served as either a member of the compensation committee or a director of any other entity of which any member of the Compensation Committee is an executive officer. In addition, none of the executive officers of the Company served as a member of the compensation committee of any entity of which any member of the Board of Directors is an executive officer.

 

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EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table provides information about the compensation paid by the Company and its subsidiaries to the Company’s Named Executive Officers for each of the past three fiscal years.

 

Name and Principal Position

 

Year

 

Salary

   

Bonus

   

Stock Awards

   

Option Awards

   

Non-Equity Incentive

Plan Compensation

   

Change in

Pension Value

and

Nonqualified Deferred

Compensation Earnings

   

All Other Compensation

   

Total

 

(a)

 

(b)

 

($)

(c)

   

($)

(d)(1)

   

($)

(e)(2)

   

($)

(f)

   

($)

(g)(3)

   

($)

(h)(4)

   

($)

(i)(5)

   

($)

(j)(6)

 

Laurel M. Hurd,

 

2023

    858,000       -       2,614,777       -       999,570       -       54,163       4,526,511  

President and CEO

 

2022

    584,375       -       3,543,485       -       941,531       -       21,919       5,091,309  
                                                                     

David B. Foshee,

 

2023

    425,000       -       736,994       -       297,075       -       37,419       1,496,488  

Vice President,

 

2022

    405,000       -       437,868       -       277,324       -       37,921       1,158,113  

General Counsel and

 

2021

    392,879       -       819,469       -       426,372       -       26,040       1,664,760  

Secretary

                                                                   
                                                                     

Bruce A. Hausmann,

 

2023

    520,000       -       1,043,916       -       436,176       -       47,184       2,047,276  

Vice President and

 

2022

    500,000       -       648,684       -       410,850       -       42,753       1,602,288  

CFO

 

2021

    454,490       -       1,137,561       -       591,882       -       28,419       2,212,352  
                                                                     

James L. Poppens,

 

2023

    468,000       -       936,668       -       392,558       -       26,522       1,823,749  

Vice President

 

2022

    425,000       -       551,382       -       444,083       -       26,192       1,446,656  
   

2021

    400,000       -       667,456       -       380,520       -       27,681       1,475,657  
                                                                     

Nigel Stansfield,

 

2023

    431,015       -       938,663       -       361,535       54,137       37,312       1,822,662  

Vice President*

 

2022

    392,557       -       562,738       -       256,144       0       31,343       1,242,782  
   

2021

    426,695       -       1,111,610       -       633,259       0       34,442       2,206,006  
                                                                     

 

 

*

Mr. Stansfield was paid in British pound sterling. In calculating the U.S. dollar equivalent for disclosure purposes, the Company has converted each payment in British pound sterling into U.S. dollars based on the exchange rate in effect as of the end of the year (£1 to $1.27 for 2023, £1 to $1.21 for 2022, and £1 to $1.35 for 2021).

 

 

(1)

The Company paid no discretionary bonuses, or bonuses based on performance metrics that were not pre-established and communicated to the Named Executive Officers. All cash bonus awards were performance-based. These payments, which were made under the Company’s Executive Bonus Plan, are reported in the “Non-Equity Incentive Plan Compensation” column (column (g)).

 

 

(2)

The amounts reported in the “Stock Awards” column are computed based upon the grant date fair values as of the respective grant dates. See the Note entitled “Shareholders’ Equity” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, regarding assumptions underlying valuation of equity awards. See the “Grants of Plan-Based Awards” table included in this Proxy Statement for additional information about equity awards granted in 2023, and the “Outstanding Equity Awards at Fiscal Year-End” table included in this Proxy Statement for information with respect to awards outstanding at year-end 2023. The ultimate payout value with respect to the “Stock Awards” included in column (e) may be significantly more or less than the amounts shown, and possibly zero, depending on the Company’s financial performance at the end of the performance or restricted period and the recipient’s tenure of employment. For a description of the performance criteria, please see the discussion contained in the “Compensation Discussion and Analysis” section herein.

 

 

(3)

The amounts reported in the “Non-Equity Incentive Plan Compensation” column reflect the amounts earned by and paid to each Named Executive Officer under the Company’s Executive Bonus Plan. The material provisions of the Executive Bonus Plan are more fully described in the “Compensation Discussion and Analysis” section included herein.

 

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(4)

The amount reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column represents the aggregate change in the actuarial present value of the accumulated benefit under the Interface Europe Pension Scheme (the “UK Plan”) for Mr. Stansfield, except where such amount is negative and in that case is shown as $0 in the table. Mr. Stansfield participates in a legacy European pension plan which existed and was frozen during the time before he became an executive officer. In 2023, the actuarial present value of the accumulated benefit for Mr. Stansfield increased by $54,137. See the “Pension Benefits” table of this Proxy Statement for additional information about these benefits for Mr. Stansfield. The other Named Executive Officers do not participate in a Pension Plan. The Company does not pay any above-market interest (or any guaranteed interest rate) on its Nonqualified Plan.

 

 

(5)

The amounts reported in the “All Other Compensation” column reflect, for each Named Executive Officer, the sum of (i) the incremental cost to the Company of all perquisites and other personal benefits, and (ii) amounts contributed by the Company to the 401(k) Plan or Nonqualified Plan (collectively, the “Company Retirement Plans”). The material provisions of the Company Retirement Plans are contained in the “Compensation Discussion and Analysis” section herein.

 

The following table outlines those perquisites and all other compensation required by SEC rules to be separately quantified that were provided to the Company’s Named Executive Officers during 2023.

 

Name

 

 

 

Automobile

 

($)

 

   

Telephone

 

($)

 

   

Dividends

and

Dividend

Equivalents

 

($)

 

   

Company

Contributions

to Retirement

Plans

 

($)

 

   

Other

 

($)

 

 

Laurel M. Hurd

    18,000       1,454       3,479       31,230       0  

David B. Foshee

    12,504       699       3,052       21,070       94  

Bruce A. Hausmann

    12,038       2,777       4,284       27,926       158  

James L. Poppens

    12,281       2,459       1,906       9,643       233  

Nigel Stansfield

    16,511       923       3,544       0       16,335  

 

Automobile/Automobile Allowance. Each of the Named Executive Officers was provided with use of a company-provided automobile, or an automobile allowance, plus fuel and maintenance.

 

Telephone. The Company paid certain fees associated with the Named Executive Officers’ use of company-provided cellular telephones.

 

Dividends and Dividend Equivalents. In 2023, the Company paid on all outstanding Common Stock of the Company (including time-based awards of restricted stock, but not on unvested performance shares) dividends of $0.01 per share in each fiscal quarter. Dividend equivalents accrue on awards of performance shares and are paid out only if, and to the extent, the performance shares actually vest. The amounts in the “Dividends and Dividend Equivalents” column reflect dividends paid on time-based restricted shares, and dividend equivalents paid on performance shares that vested, in 2023.

 

Contributions to Retirement Plans. The Company makes matching contributions, on the same terms and using the same formulas as for other participating employees, to each U.S.-based Named Executive Officer’s account under the 401(k) Plan and the Nonqualified Plan, as applicable.

 

Other. For Ms. Hurd and Messrs. Foshee, Hausmann and Poppens, the amount represents Company paid premiums for long-term care insurance. For Mr. Stansfield, the amount represents Company paid premiums for life, critical illness and private health insurance.

 

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The amounts reflected below represent the contributions to retirement plans by the Company:

 

Name

 

 

Year

 

 

Company

Contribution

To 401(k) Plan

($)

 

   

Company

Contribution

To Nonqualified Plan

($)

 

 
                     

Laurel M. Hurd

 

2023

    4,950       26,280  
   

2022

    3,688       -  
                     

David B. Foshee

 

2023

    9,900       11,170  
   

2022

    6,833       16,121  
   

2021

    6,817       3,446  

Bruce A. Hausmann

 

2023

    9,900       18,026  
   

2022

    9,150       15,000  
   

2021

    8,550       -  

James L. Poppens

 

2023

    9,643       -  
   

2022

    9,150       -  
   

2021

    8,185       -  

As a non-U.S. employee, Mr. Stansfield is ineligible to participate in the 401(k) Plan and the Nonqualified Plan.

 

 

(6)

In 2023, salary as a percentage of total compensation (excluding change in pension value) for each of Ms. Hurd and Messrs. Foshee, Hausmann, Poppens, and Stansfield was 19%, 28%, 25%, 26%, and 24%, respectively. In 2022, this percentage for each of Ms. Hurd and Messrs. Foshee, Hausmann, Poppens, and Stansfield was 12%, 35%, 31%, 29%, and 32%, respectively. In 2021, this percentage for each of Messrs. Foshee, Hausmann, Poppens, and Stansfield was 24%, 21%, 27%, and 19%, respectively.

 

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Grants of Plan-Based Awards in 2023

 

The following table provides information about awards granted to the Company’s Named Executive Officers in 2023, as well as potential future payments associated therewith.

 

           

Estimated Future Payouts

Under Non-Equity Incentive

Plan Awards (1)

   

Estimated Future Payouts

Under Equity Incentive

Plan Awards

         
                                                                 

Name

 

(a)

 

Grant Date

 

 

(b)

   

Threshold

($)

 

(c)

   

Target

($)

 

(d)

   

Maximum

($)

 

(e)

   

Threshold

(#)

 

(f)

   

Target

(#)

 

(g)(2)

   

Maximum

(#)

 

(h)

   

 

Grant Date Fair Value of

Stock and Option

Awards

($)

 

(l) (3)

 

Laurel M. Hurd

    1-12-23       268,125       1,072,500       1,876,875                                  
      1-12-23                               30,264       121,054       242,108       1,307,383  
      1-12-23                               -       121,055       121,055       1,307,394  

David B. Foshee

    1-12-23       79,688       318,750       557,813                                  
      1-12-23                               6,575       26,299       52,598       284,029  
      1-12-23                               -       26,300       26,300       284,040  
      2-27-23                               -       19,196       19,196       168,925  

Bruce A. Hausmann

    1-12-23       117,000       468,000       819,000                                  
      1-12-23                               9,654       38,614       77,228       417,031  
      1-12-23                               -       38,614       38,614       417,031  
      2-27-23                               -       23,847       23,847       209,854  

James L. Poppens

    1-12-23       105,300       421,200       737,100                                  
      1-12-23                               8,688       34,752       69,504       375,322  
      1-12-23                               -       34,753       34,753       375,332  
      2-27-23                               -       21,138       21,138       186,014  

Nigel Stansfield*

    1-12-23       96,978       387,913       678,848                                  
      1-12-23                               8,707       34,826       69,652       376,121  
      1-12-23                               -       34,827       34,827       376,132  
      2-27-23                               -       21,183       21,183       186,410  

 

 

*

Estimated potential payments under Non-Equity Incentive Plan Awards for Mr. Stansfield were converted into U.S. dollars based on the exchange rate as of the end of fiscal year 2023.

 

 

(1)

The payment amounts reflected in columns (c), (d) and (e) represent amounts associated with awards potentially earned for fiscal year 2023 by the Company’s Named Executive Officers under the Company’s Executive Bonus Plan. The total bonus opportunity under the Executive Bonus Plan (expressed as a percentage of 2023 base salary) was 125% for Ms. Hurd, 90% for Messrs. Hausmann, Poppens and Stansfield, and 75% for Mr. Foshee. Up to 175% of the bonus opportunity may be earned for maximum achievement. Certain additional material provisions of the Executive Bonus Plan are more fully described in the “Compensation Discussion and Analysis” section included herein.

 

 

(2)

The amounts reflected in column (g) represent the number of shares of restricted stock and performance shares granted to the executives in 2023 under the Omnibus Stock Plan. See the Compensation Discussion and Analysis herein for additional information on these awards.

 

 

(3)

The amounts reflected in column (l) represent the dollar value of restricted stock and performance shares awarded to the executives, calculated by multiplying the number of shares (assuming target payout) awarded by the closing price of the Company’s Common Stock as reported by the Nasdaq Stock Market on the trading date immediately preceding the date of grant. These values are included in the “Stock Awards” column (column (e)) of the Summary Compensation Table.

 

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Outstanding Equity Awards at 2023 Fiscal Year-End

 

The following table provides information about the number of shares covered by exercisable and unexercisable options and unvested stock awards outstanding and held by the Company’s Named Executive Officers as of the end of fiscal year 2023.

 

   

Option Awards

   

Stock Awards

 
                                                                         
                                                                         

Name

(a)

 

Number of

Securities

Underlying

Unexercised

Options

 

(#)

 

Exercisable

 

(b)

   

Number of

Securities

Underlying

Unexercised

Options

 

(#)

 

Unexercisable

 

(c)

   

Equity

Incentive

Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options

 

(#)

 

(d)

   

Option

Exercise

Price

 

($)

 

(e)

   

Option

Expiration

Date

 

 

 

(f)

   

Number of

Shares or

Units of

Stock

That Have

Not

Vested

 

(#)

 

(g)(1)

   

Market

Value of

Shares or

Units of

Stock

That Have

Not

Vested

 

($)

 

(h)(2)

   

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares,

Units or

Other Rights

That Have

Not Vested

 

(#)

 

(i)

   

Equity

Incentive Plan

Awards:

Market or

Payout Value

of Unearned

Shares, Units

or Other Rights

That Have Not

Vested

 

($)

 

(j)(2)

 
                                                                         
                                                                         

Laurel M. Hurd

    -       -       -       -       -       224,465       2,832,748       225,437       2,845,015  
                                                                         

David B. Foshee

    -       -       -       -       -       110,947       1,400,151       53,225       671,700  
                                                                         

Bruce A. Hausmann

    -       -       -       -       -       155,241       1,959,141       77,154       973,683  
                                                                         

James L. Poppens

    -       -       -       -       -       118,378       1,493,930       62,219       785,204  
                                                                         

Nigel Stansfield

    -       -       -       -       -       143,321       1,808,711       70,464       889,256  

 


 

 

(1)

Restricted stock awards and achieved performance shares that have not yet vested are subject to forfeiture by the Named Executive Officers under certain circumstances. For a description of the related vesting criteria, please see the discussion contained in the “Compensation Discussion and Analysis” section herein. Subject to risk of forfeiture, these shares were scheduled to vest as shown below. Where vesting is noted to occur in the first quarter of a fiscal year, the vesting will occur during that quarter when the Compensation Committee certifies performance attainment through end of the prior fiscal year.

 

For Ms. Hurd, 69,589 will vest on 4/18/24, 121,055 will vest on 1/12/26, and 33,821 will vest in the first quarter of 2025.

 

For Mr. Foshee, 8,767 vested on 1/12/24, 15,861 vested on 2/26/24, 28,957 vested on 3/16/24, 8,767 will vest on 1/12/25, 16,599 will vest on 1/24/25, 8,766 will vest on 1/12/26, 19,196 will vest on 2/27/26, and 4,034 will vest in the first quarter of 2025.

 

For Mr. Hausmann, 12,872 vested on 1/12/24, 22,017 vested 2/26/24, 40,197 vested on 3/16/24, 12,871 will vest on 1/12/25, 24,590 will vest on 1/24/25, 12,871 will vest on 1/12/26, 23,847 will vest on 2/27/26, and 5,976 will vest in the first quarter of 2025.

 

For Mr. Poppens, 11,585 vested on 1/12/24, 12,920 vested on 2/26/24, 23,585 vested on 3/16/24, 11,584 will vest on 1/12/25, 20,902 will vest on 1/24/25, 11,584 will vest on 1/12/26, 21,138 will vest on 2/27/26, and 5,080 will vest in the first quarter of 2025.

 

For Mr. Stansfield, 11,609 vested on 1/12/24, 21,515 vested on 2/26/24, 39,280 vested on 3/16/24, 11,609 will vest on 1/12/25, 21,332 will vest on 1/24/25, 11,609 will vest on 1/12/26, 21,183 will vest on 2/27/26, and 5,184 will vest in the first quarter of 2025.

 

 

(2)

The market value referenced above is based on the closing price of $12.62 per share of the Company’s Common Stock on December 29, 2023 (the last trading day of the Company’s 2023 fiscal year), as reported by the Nasdaq Stock Market.

 

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Option Exercises and Stock Vested in 2023

 

The following table provides information about the number and corresponding value realized during 2023 with respect to (i) the exercise of stock options, and (ii) the vesting of restricted stock and performance shares for each of the Company’s Named Executive Officers.

 

   

Option Awards

   

Stock Awards

 
             
             

Name

(a)

 

Number of Shares

Acquired on

Exercise

 

(#)

 

(b)

   

Value Realized

on Exercise

 

($)

 

(c)

   

Number of

Shares

Acquired on

Vesting

 

(#)

 

(d)

   

Value Realized

on Vesting

 

($)

 

(e)(1)

 

Laurel M. Hurd

    -       -       69,590       552,545  

David B. Foshee

    -       -       17,875       158,458  

Bruce A. Hausmann

    -       -       24,611       218,172  

James L. Poppens

    -       -       8,040       71,273  

Nigel Stansfield

    -       -       21,850       193,696  

 


 

 

(1)

The dollar amount is determined by multiplying (i) the number of shares vested by (ii) the closing price of our Common Stock on the Nasdaq Stock Market on the day preceding the vesting date.

 

Pension Benefits

 

The following table provides information about the pension benefits for each of the Company’s Named Executive Officers.

 

Name

 

(a)

 

Plan Name

 

(b)(1)

   

Number of

Years Credited

Service

 

(#)

 

(c)

   

Present Value of

Accumulated

Benefit

 

($)

 

(d)

   

Payments During Last Fiscal Year

 

($)

 

(e)

 
                         

Laurel M. Hurd

    -       -       -       -  

David B. Foshee

    -       -       -       -  

Bruce A. Hausmann

    -       -       -       -  

James L. Poppens

    -       -       -       -  

Nigel Stansfield

 

UK Plan

      20       508,104       0  

 


 

 

(1)

The benefits for Mr. Stansfield under the UK plan previously vested. All assumptions are the same as are used for financial reporting purposes under generally accepted accounting principles. The UK Plan was frozen as of March 2010.

 

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2023 Non-Qualified Deferred Compensation

 

The following table provides information about the contributions, earnings and account balances of the Company’s applicable deferred compensation plans for each of the Company’s Named Executive Officers.

 

Name

 

(a)(1)

 

Executive

Contributions

in Last FY

 

($)

 

(b)

   

Company

Contributions

in Last FY

 

($)

 

(c)(2)

   

Aggregate Earnings

in Last FY

 

($)

 

(d)(3)

   

Aggregate

Withdrawals/

Distributions

 

($)

 

(e)

   

Aggregate Balance

at Last FYE

 

($)

 

(f)

 
                               
                                         

Laurel M. Hurd

    52,560       -       4,631       -       57,191  

David B. Foshee

    42,139       16,121       21,466       -       183,454  

Bruce A. Hausmann

    55,852       15,000       48,675       -       312,925  

James L. Poppens

    -       -       -       -       -  

Nigel Stansfield

    -       -       -       -       -  

 


 

 

(1)

The Company maintains the Nonqualified Plan for certain U.S.-based “highly compensated employees” (as such term is defined in applicable IRS regulations), including each of the U.S.-based Named Executive Officers. As with the Company’s 401(k) Plan, the U.S.-based Named Executive Officers are eligible to participate in the Nonqualified Plan on the same terms as other eligible executive and non-executive employees based in the United States, and receive the same benefits afforded all other participants. As a non-U.S. employee, Mr. Stansfield is ineligible for participation in the plan.

 

 

 

Under the Nonqualified Plan, all eligible employees can elect to defer, on a pre-tax basis, a portion of their salary and/or annual bonus compensation. Each participant elects when the deferred amounts will be paid out, which can be during or after employment, subject to the provisions of Section 409A of the Internal Revenue Code. The employee earns a deferred return based on deemed investments in mutual funds selected by the employee from a list provided by the Company. The investment risk is borne entirely by the employee participant. Gains and losses are credited based on the participant’s election of a variety of deemed investment choices. Participants’ accounts appreciate or depreciate depending on the performance of their deemed investment choices. None of the deemed investment choices provide interest at above-market rates (or any guaranteed interest rate). The Company has established an irrevocable grantor (“rabbi”) trust to hold, invest and reinvest deferrals and contributions under the Nonqualified Plan, and all deferrals are paid out in cash upon distribution.

 

 

(2)

The amounts reported in column (c) reflect, for each Named Executive Officer (as applicable), the actual amounts contributed by the Company to the Nonqualified Plan during fiscal year 2023 (including contributions in 2023 with respect to compensation deferrals in 2022).

 

 

(3)

The amounts reported in column (d) are not reported as compensation to the Named Executive Officers in the Company’s Summary Compensation Table. However, the Company’s matching contributions reported in column (c) are included in the “All Other Compensation” column of the Company’s Summary Compensation Table.

 

Potential Payments Upon Termination or Change in Control

 

The Company is generally obligated to provide its Named Executive Officers with certain payments or other forms of compensation when their employment with the Company is terminated. The actual amount of compensation due each of the Named Executive Officers, as well as the duration of any periodic payments, depends on both the circumstances surrounding the termination, as well as the particulars of any employment-related agreements to which the Company and the Named Executive Officer are party.

 

The Company has Severance Protection and Change in Control Agreements with each of the Named Executive Officers that provide for certain severance benefits if their employment is terminated involuntarily under certain circumstances.  In general, those benefits are:

 

 

In the event of a termination without cause, Ms. Hurd would be entitled to severance benefits equal to two times her annual base salary plus two times her target annual bonus (payable for and over a 24-month period), a prorated annual bonus based on the date of termination, and continued health insurance benefits at her regular rate for 24 months. The other executives would be entitled to severance benefits equal to the executive’s annual base salary plus target annual bonus (payable for and over a 12-month period), a prorated annual bonus based on the date of termination, and continued health insurance benefits at the executive’s regular rate for 12 months.

 

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In the event of an involuntary separation from service or a separation from service for good reason within 24 months following a “change in control” (as defined in the agreement), Ms. Hurd would be entitled to two and one-half times her annual base salary plus two and one-half times the greater of (i) her target annual bonus or (ii) the average bonus earned over the preceding three fiscal years (payable in a lump sum)), a prorated annual bonus based on the date of termination, and continued health insurance benefits at her regular rate for 24 months. The other executives would be entitled to severance benefits equal to two times the executive’s annual base salary plus two times the greater of (i) target annual bonus or (ii) the average bonus earned over the preceding three fiscal years (payable in a lump sum), a prorated annual bonus based on the date of termination, and continued health insurance benefits at the executive’s regular rate for 12 months.

 

In the event of a voluntary resignation or retirement, the executive is entitled to a prorated bonus for such fiscal year based on the date of resignation or retirement.

 

In the event of a termination for cause, the executive is entitled to no payment or compensation whatsoever, other than salary through the executive’s last day of employment, reimbursable expenses properly incurred through executive’s last day of employment, and such other amounts that in the ordinary course are due to be paid or delivered to the executive on or before the executive’s last day of employment.  

 

The benefits outlined in the terms of the executive’s individual equity award agreements in effect at the time.

 

The Severance Protection and Change in Control Agreements also contain provisions placing restrictions on their ability to compete with the Company for a period of 12 or 24 months following termination of employment, depending on the circumstances of termination.

 

The following tables summarize the benefits payable to each of the Named Executive Officers under their respective agreements or arrangements described above in effect on December 29, 2023 (the last business day of the Company’s 2023 fiscal year). The tables do not include amounts payable under employee benefit plans in which Company associates are eligible to participate on a non-discriminatory basis. The amounts shown in the tables below assume that a Named Executive Officer’s employment terminated as of December 29, 2023, and that the fair market value of the Company’s Common Stock was $12.62 per share.

 

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Laurel M. Hurd

 

   

Retirement or

Resignation

   

Death/Disability

   

Termination

with Cause

   

Termination

without Cause

   

Termination

Following

Change in

Control(1)

 
                               
                                         

Compensation:

 

($)

   

($)

   

($)

   

($)

   

($)

 

Base salary

    -       -       -       1,716,000       2,145,000  

Bonus

    994,078       994,078       -       3,139,078       3,675,328  

Equity awards(2)

    -       2,329,453       -       2,329,453       5,698,504  
                                         

Benefits and Perquisites:

                                       

Retirement plans

    -       -       -       -       -  

Health, life and other insurance

    -       -       -       46,364       46,364  

 

David B. Foshee

 

   

Retirement or

Resignation

   

Death/Disability

   

Termination

with Cause

   

Termination

without Cause

   

Termination

Following

Change in

Control(1)

 
                               
                                         

Compensation:

 

($)

   

($)

   

($)

   

($)

   

($)

 

Base salary

    -       -       -       425,000       850,000  

Bonus

    295,443       295,443       -       614,193       962,623  

Equity awards(2)

    -       1,061,370       -       1,061,370       2,079,682  
                                         

Benefits and Perquisites:

                                       

Retirement plans

    -       -       -       -       -  

Health, life and other insurance

    -       -       -       194       194  

 

Bruce A. Hausmann

 

   

Retirement or

Resignation

   

Death/Disability

   

Termination

with Cause

   

Termination

without Cause

   

Termination

Following

Change in

Control(1)

 
                               
                                         

Compensation:

 

($)

   

($)

   

($)

   

($)

   

($)

 

Base salary

    -       -       -       520,000       1,040,000  

Bonus

    433,779       433,779       -       901,779       1,393,051  

Equity awards(2)

    -       1,497,111       -       1,497,111       2,943,875  
                                         

Benefits and Perquisites:

                                       

Retirement plans

    -       -       -       -       -  

Health, life and other insurance

    -       -       -       23,182       23,182  

 

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James Poppens

 

   

Retirement or

Resignation

   

Death/Disability

   

Termination

with Cause

   

Termination

without Cause

   

Termination

Following

Change in

Control(1)

 
                               
                                         

Compensation:

 

($)

   

($)

   

($)

   

($)

   

($)

 

Base salary

    -       -       -       468,000       936,000  

Bonus

    390,401       390,401       -       811,601       1,201,841  

Equity awards(2)

    -       1,085,141       -       1,085,131       2,287,386  
                                         

Benefits and Perquisites:

                                       

Retirement plans

    -       -       -       -       -  

Health, life and other insurance

    -       -       -       27,538       27,538  

 

 

Nigel Stansfield

 

   

Retirement or

Resignation

   

Death/Disability

   

Termination

with Cause

   

Termination

without Cause

   

Termination

Following

Change in

Control(1)

 
                               
                                         

Compensation:

 

($)

   

($)

   

($)

   

($)

   

($)

 

Base salary

    -       -       -       431,015       862,030  

Bonus

    359,549       359,549       -       747,462       1,193,507  

Equity awards(2)

    -       1,398,453