DEF 14A 1 nc10006522x1_def14a.htm DEF14A

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (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
Simpson Manufacturing Co., Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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LETTER TO STOCKHOLDERS
To Our Fellow Stockholders:
Thank you for your continued investment in Simpson Manufacturing Co., Inc. (the “Company”, “Simpson”, “we” or “us”). We cordially invite you to attend Simpson’s 2021 Annual Meeting of Stockholders (the “Annual Meeting”), to be held virtually, via live webcast at www.virtualshareholdermeeting.com/SSD2021, at 2:00 p.m., Pacific Daylight Time, on Tuesday, May 4, 2021. We continue to embrace the latest technology to provide expanded access, improved communication and cost savings. We believe hosting a virtual meeting enables increased stockholder attendance and participation from locations around the world. Stockholders attending the virtual meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. Further information on attending, voting, and submitting questions at the Annual Meeting are included in the accompanying Notice of Annual Meeting and Proxy Statement.
Despite the unique challenges presented by the COVID-19 pandemic in 2020, we are pleased to report a year of strong performance for our stockholders, customers and employees. We remain committed to positioning Simpson for long-term, sustainable and increasing profitable growth. To this end, in 2020 we achieved consolidated full-year net sales of approximately $1.27 billion, up 11.6% from $1.14 billion in 2019, and produced strong earnings of $4.27 per diluted share, an increase of 43.3% year-over-year. In addition, we delivered on nearly every target we had set as part of our 2020 Plan goals and strengthened our position in Europe and in the software space.
Our Proxy Statement is an opportunity to reflect on the Company’s performance, highlight the strengths and efforts of our Board and provide transparency into our corporate governance, sustainability and executive compensation practices. Our Board has a long-standing history of being overseen by independent directors with a diverse set of skills and experiences. We are very proud that 6 out of 7 directors will be independent and 57% of our directors will be female if all of the Board nominees are elected at the Annual Meeting.
The accompanying Proxy Statement further highlights key activities and accomplishments in 2020 and contains information on the matters that we are seeking your vote at the Annual Meeting. On behalf of the Board, our executive management team, and the entire Simpson organization, thank you for your continued interest and support.
Sincerely yours,

Karen Colonias
President and Chief Executive Officer

James Andrasick
Independent Chair of the Board
March 23, 2021
YOUR VOTE IS IMPORTANT.
Whether or not you plan to attend the meeting, please take a few minutes now to vote your shares.

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NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS
DATE
Tuesday, May 4, 2021
TIME
2:00 p.m., Pacific Daylight Time
PLACE
www.virtualshareholdermeeting.com/SSD2021
RECORD DATE
March 9, 2021
Record Date and Voting
You are entitled to vote at the Simpson Manufacturing Co., Inc. (the “Company,” “Simpson,” “we” or “us”) 2021 Annual Meeting of Stockholders (the “Annual Meeting”) if you were a stockholder of record at the close of business on March 9, 2021 (the “Record Date”). Each share of common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on at the Annual Meeting. There were 43,430,766 shares of our common stock outstanding on the Record Date.
Items of Business
1
To elect seven members to our Board of Directors, for terms expiring in 2022.
2
To approve, on an advisory basis, named executive officer compensation.
3
To ratify our Audit and Finance Committee’s appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2021.
4
To transact such other business that properly comes before the meeting or any adjournment thereof.
Notice and Access
Instead of mailing a printed copy of our proxy materials, including our Annual Report to Stockholders and Annual Report on Form 10-K, to each stockholder of record, we are providing access to these materials via the Internet. This reduces the amount of paper necessary to produce these materials, as well as the costs associated with mailing these materials to all stockholders. Accordingly, on March 23, 2021, we will begin mailing a Notice of Internet Availability of Proxy Materials (the “Notice”) to all stockholders of record as of the Record Date, and post our proxy materials on the website referenced in the Notice (www.proxyvote.com). As more fully described in the Notice, all stockholders may choose to access our proxy materials on the website referred to in the Notice and/or may request a printed set of our proxy materials. In addition, the Notice and website
provide information regarding how you may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
Attending the Annual Meeting
See page 65 “Questions and Answers About the Annual Meeting of Stockholders and Voting” for details.
Proxy Voting
Whether or not you plan to attend the meeting, it is important that your shares are represented and voted. We encourage you to vote before the meeting by returning your proxy card or voting via the internet or by telephone.
By Internet
www.proxyvote.com

By Telephone
Toll-free 1-800-690-6903

By Mail
Follow instructions on your proxy card

The Proxy Statement, Annual Report to Stockholders and Annual Report on Form 10-K are available on the Internet at www.proxyvote.com.
The following information applicable to the Annual Meeting may be found in the Proxy Statement and accompanying proxy card:
• The date, time and location of the Annual Meeting;
• A list of the matters intended to be acted on and our board’s recommendations regarding those matters;
• Any control/identification numbers that you need to access your proxy card; and
• Information about attending and voting at the Annual Meeting.
By Order of the Board of Directors,

Terry Hammons
Secretary
March 23, 2021
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on May 4, 2021.
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1
CORPORATE GOVERNANCE AND BOARD HIGHLIGHTS
2
THE BOARD’S ROLE AND RESPONSIBILITIES
3
EXECUTIVE COMPENSATION
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PROXY SUMMARY
This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully. As used in this Proxy Statement, unless the context otherwise indicates or requires, references to “Simpson,” the “Company,” “we,” “us,” and “our” mean Simpson Manufacturing
Co., Inc. and its consolidated subsidiaries. We will first send and/or make available this Proxy Statement and the form of proxy for our 2021 Annual Meeting of Stockholders (the “Annual Meeting”) to our stockholders on or about March 23, 2021.
ITEM 1
ELECTION OF DIRECTORS
The Board of Directors (the “Board”) has nominated seven candidates, for one year terms expiring in 2022, and recommends
that stockholders vote for each nominee based on their specific background, experience, qualifications, attributes and skills.
The Board recommends a vote FOR each director nominee.
Page 12
Directors Skills and Expertise
The Board is comprised of directors with strong professional reputations, skills and experience in established companies and other organizations of comparable status and size to us and/or in areas or industries relevant to our business, strategy and operations. Core skills, experiences, and statistics for each of our current directors are included in the summary graphics below. In connection with our
engagement of The Ellig Group, as discussed below in the “Board Composition Changes” section, the core skills and experiences have been revised to better represent the strengths of our director nominees. Further discussion on the qualifications and experience of director nominees is included in the “2021 Director Nominees” section of this Proxy Statement.

The current composition of the Board and its director nominees reflect director-selection criteria developed by the Nominating and Governance Committee to address our needs and priorities.
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DIRECTOR NOMINEES
 
Age
Director
Since
Committees
Other Current
Public
Company Boards
James S. Andrasick, Independent Non-Executive Chair of the Board, Former Chief Executive Officer
of Matson Navigation Company, Inc.
76
2012
Audit and Finance
None
Compensation and Leadership Development
Corporate Strategy
and Acquisitions
Nominating and Governance
Jennifer A. Chatman, Independent
Paul J. Cortese Professor of Management, Haas School of Business, University of California Berkeley
61
2004
Compensation and Leadership Development
None
Nominating and Governance (Chair)
Karen Colonias,
President, Chief Executive Officer, Simpson Manufacturing Company, Inc.
63
2013
Corporate Strategy and Acquisitions
Reliance Steel and Aluminum Co.
Gary M. Cusumano, Independent
Retired Chairman, Chief Executive Officer and President of The Newhall Land and Farming Company
77
2007
Compensation and Leadership Development (Chair)
None
Corporate Strategy
and Acquisitions
Philip E. Donaldson, Independent
Executive Vice President & Chief Financial Officer of Andersen Corporation
59
2018
Audit and Finance (Chair)
None
Corporate Strategy
and Acquisitions
Celeste Volz Ford, Independent
Board Chair and Founder of Stellar Solutions
64
2014
Audit and Finance
None
Corporate Strategy
and Acquisitions (Chair)
Nominating and Governance
Robin G. MacGillivray, Independent
Former Senior Vice President – One AT&T Integration, AT&T
66
2004
Compensation and Leadership Development
None
Nominating and Governance
Our Board is appropriately refreshed, and our directors bring a balance of experience and fresh perspectives.
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CORPORATE GOVERNANCE HIGHLIGHTS
Our Board has implemented policies and structures that we believe are among the best practices in corporate governance. The Corporate Governance
section of this Proxy Statement beginning on page 11 describes our governance framework, which includes the following:
CURRENT BOARD AND GOVERNANCE INFORMATION
 
 
 
 
8
7
6
100%
Size of Board
Number of Independent Directors
Board Meetings Held in 2020
Attendance
at all Board and
Committee Meetings
Held in 2020
Board Composition Changes
In response to stockholder feedback regarding Mr. Bless’ position as the CEO of a public company and his service as a non-executive director of another public company, the Company and Mr. Bless concluded that it would be in the best interest of the Company if Mr. Bless did not stand for re-election. Mr. Bless’ term as director will end at this year’s Annual Meeting. The Board has not yet identified a replacement for Mr. Bless and is not making a nomination for an eighth director at this time, which will result in a vacancy on the Board once his term expires. The Nominating and Governance Committee has engaged The Ellig Group, an executive search firm, to assist in finding a candidate to fill the vacancy created
by the fact that Mr. Bless is not standing for re-election. The Nominating and Governance Committee intends to fill the resulting vacancy as soon as it identifies an appropriate candidate who qualifies as an independent director under New York Stock Exchange (“NYSE”) rules and is prioritizing the selection of a diverse director that meets the requirements of California Assembly Bill 979 (“AB 979”), which will require every public company with securities listed on a U.S. Stock Exchange that has its principal executive office in California, to have at least one director from an underrepresented community on its board by December 31, 2021.
Our Corporate Governance Policies Are Among Best Practices
We are committed to maintaining the highest standards of corporate governance. The Board has built a strong and effective governance framework,
which has been designed to promote the long-term interests of stockholders and support Board management accountability.
Majority Vote Standard for Uncontested
Directors Elections
Annual Board and Committee Self-Evaluations and Review of Director Qualifications
Annual Election of All Directors
Executive Sessions of Independent Directors Held at Each Regularly Scheduled Board Meeting, and Directors Meet Periodically Throughout the Year with Individual Members of Management
Separation of Chair and CEO
100% Attendance of Incumbent Directors at Board and Committee Meetings
Six of Seven Director Nominees Are Independent
Audit and Finance, Compensation and Leadership Development, and Nominating and Governance Committee Members Are All Independent
SUSTAINABILITY AND ENVIRONMENTAL AND SOCIAL RESPONSIBILITY HIGHLIGHTS
Sustainability and environmental and social responsibility is an integral component of our business
strategy. As part of Simpson’s vision, we have established deeply rooted core values that continue to
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define our business today. At the forefront of these values is doing what is right for our employees’ safety and well-being, as well as for our customers, communities and environment.
Human Capital Management
The board believes that attracting, developing and retaining employees is vital to Simpson’s continued success. Our board is actively involved in our human capital management (“HCM”) in its oversight of our long-term strategy and through its committees and
engagement with management. Our focus on talent management stretches from the board level to our 3,500+ associates through programs overseen by management and reported on to the board that are designed to identify, train and grow future leaders.
EMPLOYEE SAFETY AND WELL BEING
Our people are the most vital part of our business, and providing a safe, healthy and sustainable working environment is of fundamental
importance. We value the safety of all employees, and we continually work to minimize employee exposure to potential risk.
SUSTAINABILITY
At Simpson, we look at four key aspects of sustainability:

MANUFACTURING PROCESSES
We strive to minimize the amount of waste generated by our manufacturing processes through companywide lean practices.
Our Research & Development engineers are focused on material efficiencies and innovative product features that minimize waste in our steel connector, anchor and fastener designs.
RECYCLING
We do not manufacture steel and we do not use recycled steel.
We recycle the scrap steel resulting from our manufacturing process at all facilities around the world.
In addition to steel, we recycle many of the materials that we use to reduce our impact on the environment, including cardboard, plastic and glass bottles, aluminum cans, paper, wood pallets, electronic waste, water, oils, coolants and lubricants and stretch film / wrap — low density polyethylene.
ENERGY CONSERVATION
We work hard to improve energy efficiencies at our facilities to ensure eco-friendly, cost-effective operations.
Energy-efficient lighting, heating and cooling systems further reduce our impact on the environment, including reducing our carbon emissions.
SUSTAINABLE BUILDING PRACTICES
We support sustainable building practices, such as those established by the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Green Building Rating System™, NAHB Green, and state and city specific green building codes. Our support includes use of green building technology, advanced framing techniques and use of non-toxic materials.
ACCOUNTABILITY STANDARDS
We hold ourselves accountable to conducting our business with integrity through adherence to a strict set of standards and policies which are
intended to create a safe, sustainable, respectful and healthy work environment, including policies around ethics, data privacy, and more.
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ITEM 2
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
We recommend that you review our Compensation Discussion & Analysis beginning on page 35, which explains in greater detail the philosophy of the Compensation and Leadership Development Committee and its actions and decisions in 2020 regarding our named executive officer compensation
programs. While the outcome of this proposal is non-binding, the Board and Compensation and Leadership Development Committee expect to consider the outcome of the vote when making future compensation decisions.
The Board recommends a vote FOR this proposal.
Page 32
 2020 EXECUTIVE COMPENSATION HIGHLIGHTS
Below we highlight certain of our executive compensation policies and practices, including both those which we utilize to drive performance and those
which we prohibit because we do not believe they would serve our stockholders’ long-term interests.
EXECUTIVE COMPENSATION SUMMARY
Compensation Philosophy
Simpson’s executive compensation philosophy emphasizes pay-for-performance. Our philosophy is to provide executive compensation opportunities that are competitively positioned in light of appropriate comparative market data for companies similar to us in terms of revenue size and industry. Our incentive plans are designed to reward strong performance, with greater compensation paid when performance exceeds expectations and less compensation paid when performance falls below expectations. Thus, the actual compensation realized by our Named Executive Officers (“NEOs”) will be commensurate with the Company’s actual performance.
Our Compensation and Leadership Development Committee regulary reviews our executive compensation program’s components, targets and payouts to support the strength of our pay-for-performance alignment. Our performance is evaluated against both short-term goals, which support Simpson’s business strategy, and long-term goals, which measure the creation of sustainable stockholder value.
Executive Compensation Key Policies and Practices
Position Target Total Compensation at Market Competitive Levels
Executive Officer Stock Ownership
Guidelines and Stock Holding Policy
Independent Consultant Retained by the Compensation and Leadership Development Committee
Executive Compensation Clawback Policy
“Double-Trigger” Change-in-Control Treatment for Long-Term Compensation Awards
Directors and Executive Officers Prohibited from Hedging or Pledging of Common Stock
Payout Caps on Incentive Awards
Annual Review of Risk Related to Compensation Programs
Assessment of Relative
Pay-for-Performance Alignment
Annual Say on Pay Vote
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At our 2020 Annual Meeting of Stockholders, Simpson again received strong support for its NEO compensation programs, with approximately 99% of votes cast approving, on an advisory basis, our NEO compensation. In 2020, as in prior years, the Compensation and Leadership Development Committee considered input from our stockholders
and other stakeholders as part of its annual review of Simpson’s executive compensation program.
Please see the “Compensation Discussion & Analysis” section in this Proxy Statement for a detailed description of our NEO compensation programs.
Compensation Risk Assessment
As part of its oversight of the Company’s executive compensation program, the Compensation and Leadership Development Committee reviews and considers any potential risk implications created by compensation. The Compensation and Leadership Development Committee believes that the executive compensation program is designed with the appropriate balance of risk and reward in relation to the Company’s overall business strategy and that the balance of compensation elements does not encourage excessive risk taking. The Compensation and Leadership Development Committee will continue to consider compensation risk implications, as appropriate, in designing any new executive compensation components. In connection with its ongoing risk assessment, the Compensation and Leadership Development Committee notes the following attributes of the executive compensation program:
the balance between fixed and variable compensation, short- and long-term compensation, and cash and equity payouts;
the alignment of long-term incentives with selected performance measures that consider peer median performance expectations and reflect the Company’s business plan and its financial and operational goals;
the placement of a significant portion of executive pay “at risk” and dependent upon the achievement of specific corporate performance goals with verifiable results, with pre-established threshold, target and maximum payment levels;
the Company’s compensation recoupment policy, which applies to performance-based cash and performance-based equity compensation paid to executive officers and other recipients;
the balance between risks and benefits of compensation as related to attracting and retaining executives and other senior leaders;
the Company’s executive stock ownership guidelines, which align the interests of the executive officers with those of the Company’s stockholders; and
regular review of the executive compensation program by an independent compensation consultant.
The Compensation and Leadership Development Committee also has oversight over the Company’s responsibility to review significant Company compensation policies and procedures, including the incentives that they create, to assess risk. At the Compensation and Leadership Development Committee’s direction, the Company’s Human Resources Department, in partnership with Meridian, the Compensation and Leadership Development Committee’s independent consultant, annually conduct a risk assessment of the Company’s compensation programs. Based on the most recent assessment, management has concluded that the compensation policies and practices of the Company and its subsidiaries for employees do not create risks that are reasonably likely to have a material adverse effect on the Company and management has presented the results of its assessment to the Compensation and Leadership Development Committee.
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ITEM 3
RATIFICATION OF APPOINTMENT OF GRANT THORNTON LLP AS AUDITORS
Our Board has ratified our Audit and Finance Committee’s appointment of Grant Thornton LLP as Simpson’s independent registered public accounting
firm for the year ending December 31, 2021, and, as a matter of good governance, we are seeking stockholder ratification of that appointment.
The Board recommends a vote FOR this proposal.
Page 59
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CORPORATE GOVERNANCE
INTRODUCTION
 
Our Board maintains a strong commitment to corporate governance and has implemented policies and procedures that we believe are among the best practices in corporate governance.
We maintain a corporate governance section on our website which contains copies of our principal governance documents. The corporate governance section, which may be found at www.ir.simpsonmfg.com under “Investor Relations - Corporate Governance,” contains the following documents:
Anti Hedging and Anti Pledging Policy
Audit and Finance Committee Charter
Code of Business Conduct and Ethics
Compensation and Leadership Development Committee Charter
Compensation Recovery Policy
Corporate Governance Guidelines
Corporate Strategy and Acquisitions Committee Charter
Nominating and Governance Committee Charter

*
Statistics above are for current directors, including Mr. Bless, who is not a director nominee.
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ITEM 1
ELECTION OF DIRECTORS
Unless otherwise directed, the persons named as proxies on the enclosed proxy card intend to vote “FOR” the election of each of the nominees. If any nominee should become unavailable for election,
the shares will be voted for such substitute nominee as may be proposed by our Board. However, we are not aware of any circumstances that would prevent any of the nominees from serving.
Our Board of Directors recommends that stockholders vote “FOR” each of the nominees named below.
 ELECTION PROCESS
Our Certificate of Incorporation provides that, at each annual meeting of stockholders, all directors shall be elected annually for a term expiring at the next succeeding annual meeting of stockholders or until their respective successors are duly elected and qualified. Accordingly, on the recommendation of our Nominating and Governance Committee, our Board nominates James S. Andrasick, Jennifer A. Chatman,
Karen Colonias, Gary M. Cusumano, Philip E. Donaldson, Celeste V. Ford and Robin G. MacGillivray who will stand for reelection as directors at this year’s Annual Meeting, each for a term extending until our 2022 Annual Meeting of Stockholders. Michael A. Bless will not stand for re-election at the Annual Meeting.
 2021 NOMINEES
In nominating individuals to become members of the Board, the Nominating and Governance Committee considers the experience, qualifications, attributes and skills of each potential member. Each nominee brings a strong and unique background and set of skills to the Board, giving the Board, as a whole, competence and experience in a wide variety of areas.
The Nominating and Governance Committee and the Board considered the following information, including the specific experience, qualifications, attributes or skills of each individual, in concluding each was an appropriate nominee to serve as a member of our Board for the term commencing at the Annual Meeting (ages are as of March 23, 2021).
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Former CEO Matson Navigation

Age: 76
Director Since: 2012
Committee Assignments:
• Audit and Finance Committee
• Corporate Strategy and Acquisitions Committee
• Nominating and Governance Committee
• Compensation and Leadership Development Committee
James Andrasick
Professional Highlights:
Mr. Andrasick joined the Board in 2012 and became Chair of the Board on January 1, 2019. He was the Chairman of Matson Navigation Company Inc.’s (“Matson”) board of directors, until his retirement in 2009, and was its President and Chief Executive Officer from 2002 through 2008. Prior to his positions at Matson, he was the Chief Financial Officer of Alexander & Baldwin, Inc., the parent company of Matson, and was responsible for all business development activity. Prior to that, Mr. Andrasick was President for 8 years of C. Brewer & Company, Ltd., a privately-held international agribusiness, transportation and real estate development company based in Honolulu. He recently served as a Trustee and Chair of the finance committee of Mills College and is presently a Trustee of the U.S. Coast Guard Foundation and a Trustee and Chairman of the Big Sur Land Trust. He also previously served as a director and the Chairman of the Board of the American Red Cross, Hawaii State Chapter, as well as served on the boards of the Aloha United Way, Arthritis Foundation and Hawaii Maritime Center. He was the Chairman and a Trustee of the University of Hawaii Foundation.
Contribution to and function on the Board:
Mr. Andrasick brings to the Board a balanced perspective and his consensus-building style along with his business acumen stemming from his 40 years of business experience, including international experience. He also brings his financial and capital allocation and management expertise, and a strong understanding of developing markets. His experience in developing the China market for Matson, in real estate development for Alexander & Baldwin, Inc. and in mergers and acquisitions gives him a unique understanding of the Company’s current opportunities, and his strong financial and operations background adds depth to the Board’s understanding of our business.
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Paul J. Cortese Professor of Management Haas School of Business
UC Berkeley

Age: 61
Director Since: 2004
Committee Assignments:
• Nominating and Governance Committee (Chair)
• Compensation and Leadership Development Committee
Jennifer Chatman
Professional Highlights:
Ms. Chatman joined the Board in 2004. She is the Paul J. Cortese Distinguished Professor of Management at the Haas School of Business, University of California, Berkeley, the Berkeley Haas Associate Dean for Learning Strategies, the Co-Founder and Co-Director of the Berkeley Haas Culture Initiative, and the Co-Editor-in-Chief of the premier research series, Research in Organizational Behavior. Before joining the Berkeley faculty in 1993, she was a professor of the Kellogg Graduate School of Management, Northwestern University. She received her Ph.D. from Berkeley in 1988. She is a Trustee of Prospect Sierra School. In addition to her research and teaching at Berkeley, she consults with a wide range of organizations and is the faculty director of the Berkeley Executive Leader Program.
Contribution to and function on the Board:
Ms. Chatman brings to the Board a deep understanding of organizational structure, leadership and compensation that gives us an objective perspective in interpreting and leveraging our unique culture to achieve our strategic objectives. She also brings insights into the Company’s strategy and process of formulating a sound, realistic strategy. She is able to focus on the organizational culture and its significance to the Company along with important considerations as the Company grows and changes. She brings her expertise in human resources along with a balanced perspective and her academic knowledge from a research perspective of business.



President and CEO
Simpson Manufacturing

Age: 63
Director Since: 2013
Committee Assignments:
• Corporate Strategy and Acquisitions Committee
Karen Colonias
Professional Highlights:
Ms. Colonias has been our Chief Executive Officer since January 2012 and a member of the Board since her appointment in 2013. From 2009 - 2012, she was our Chief Financial Officer, Secretary and Treasurer. Prior to that, she held the position of Vice President of our global structural product solutions subsidiary, Simpson Strong-Tie Company Inc. and, in that capacity from 2004 to 2009, served as the Branch Manager of Simpson Strong-Tie’s manufacturing facility in Stockton, California. She joined Simpson Strong-Tie in 1984 as an engineer in the research and development department, where she was responsible for the design and testing of new products and code development. In 1998 she was promoted to Vice President of Engineering, responsible for Simpson Strong-Tie’s research and development efforts. Before joining Simpson Strong-Tie, she worked as a civil engineer for the Bechtel Corporation, a global engineering, construction and project management company.
Current Public Company Directorships:
 Reliance Steel and Aluminum Co.
Contribution to and function on the Board:
Ms. Colonias brings to the Board her deep industry knowledge and her dedication to the ongoing success of the Company. She is our management’s only representative on the Board. She actively shapes the Company’s strategic objectives and brings her extensive knowledge and understanding to the Company culture, its operations, its employees, customers, suppliers, investors and other stakeholders. She has demonstrated a commitment to integrity in all aspects of the Company’s business and transparency in her leadership of the Company.
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Retired Chairman,
CEO & President
The Newhall Land
and Farming Company

Age: 77
Director Since: 2007
Committee Assignments:
• Compensation and Leadership Development Committee (Chair)
• Corporate Strategy and Acquisitions Committee
Gary Cusumano
Professional Highlights:
Mr. Cusumano joined the Board in 2007. He was with the Newhall Land and Farming Company for more than 35 years, most recently as the Chairman of its board of directors, until his retirement in 2006. He is a director of Forest Lawn Memorial Park and was a director of Granite Construction, Inc., Sunkist Growers, Inc., Watkins-Johnson Company and Zero Corporation and has served on the boards of many not-for-profit and community service organizations.
Contribution to and function on the Board:
Mr. Cusumano brings to the Board his deep understanding of real estate development, his business acumen and his industry knowledge, which give him the ability to constructively challenge management in a positive manner. He also brings to the Board a balanced perspective from both the management and board member perspectives given his extensive leadership abilities and significant boardroom experience.



Executive Vice President & CFO Andersen Corporation

Age: 59
Director Since: 2018
Committee Assignments:
• Audit and Finance Committee (Chair)
• Corporate Strategy and Acquisitions Committee
Philip Donaldson
Professional Highlights:
Mr. Donaldson joined the Board in 2018. He has been the Chief Financial Officer at Andersen Corporation since 2004 and serves as its Executive Vice President, a member of its Executive Committee, and on its Board of Directors. Andersen Corporation is a leading maker of windows and doors for residential and commercial markets with 12,000 employees in locations across North America and sales worldwide. Prior to joining Andersen Corporation in 1999, Mr. Donaldson spent sixteen years at Armstrong World Industries, Inc. in various management roles in sales and marketing, quality management, manufacturing and general management. Mr. Donaldson also serves on the Board of Directors of HealthPartners, Inc., and previously served, from 2010 to 2020, as a Board Member, and from 2018 to 2020, as the Chairman of the Window and Door Manufacturer’s Association.
Contribution to and function on the Board:
Mr. Donaldson has extensive industry, operational and financial management experience and brings to the Board his strong focus on driving stockholder value as well as expertise in capital markets financing, acquisitions and integration, information systems and technology, and sales and marketing.
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Founder & CEO
Stellar Solutions

Age: 64
Director Since: 2014
Committee Assignments:
• Corporate Strategy and Acquisitions Committee (Chair)
• Audit and Finance Committee
• Nominating and
Governance Committee
Celeste Volz Ford
Professional Highlights:
Ms. Ford joined the Board in 2014. She was the Chief Executive Officer of Stellar Solutions, Inc., from the time she founded the company in 1995 until 2018, when she transitioned to board chair. Stellar Solutions is a global provider of systems engineering expertise and a recognized leader in government and commercial aerospace programs. She is a proven leader of the Stellar companies, including Stellar Solutions, Inc., which provides engineering services, Stellar Solutions Aerospace Ltd. their UK-based affiliate, Stellar Solutions Aerospace France, QuakeFinder, the humanitarian R&D division of Stellar Solutions, and the Stellar Solutions Foundation, a division focused on charitable giving to promote community involvement and outreach efforts. Ms. Ford currently serves on the boards of CHG Group, Inc. a subsidiary of Chemring Group, PLC, a provider of advanced technology products and services to the aerospace, defense and security markets; and IRIS automation, a safety avionics technology company. Ms. Ford previously has served, from 2015 to 2017, on the board of Seagate Government Solutions, which is a business unit of Seagate Technology Public Limited Company. She is also a part of the University of Notre Dame Board of Trustees, the American Conservatory Theater and the Business Advisory Counsel of Illuminate Ventures.
Former Public Company Directorships:
 Heritage Commerce Corporation
Contribution to and function on the Board:
Ms. Ford brings to the Board her proven record of leadership and entrepreneurial spirit as well as her deep understanding of and experience with cyber, technology and software. She also brings her deep knowledge of strategic planning, a significant focus of the Company, and risk management, as well as her valuable insights regarding activities in Europe.



Former Senior Vice President — One AT&T Integration, AT&T

Age: 66
Director Since: 2004
Committee Assignments:
• Compensation and Leadership Development Committee
• Nominating and Governance Committee
Robin Greenway MacGillivray
Professional Highlights:
Ms. MacGillivray joined the Board in 2004. She has been an ICEO Peer Advisor and Leadership Development Coach with Lee Hecht Harrison (LHH), a talent development and transition company, since 2016. Prior to joining LHH, Ms. MacGillivray spent nearly 15 years at AT&T, Inc., in executive leadership roles. From 2010 until her retirement in 2014 she was Senior Vice President - One AT&T Integration where she led the implementation of hundreds of world-wide initiatives designed to integrate merged organizations for optimal customer service and financial performance. Prior to that, she was Senior Vice President - Regional and Local Markets, responsible for service and sales of AT&T’s small business customers nationwide. Previously, she was President of Business Communications Services for AT&T’s western region, where she served the needs of small, medium and large businesses, including government, education and health care accounts. Over the course of her 35-year career, she held leadership positions in a variety of other areas, including engineering, operations, construction, finance and human resources.
Contribution to and function on the Board:
Ms. MacGillivray brings to the Board her significant experience with mergers and acquisitions, particularly the integration of acquired entities. As a result of her accomplishments at AT&T, she also brings her substantial experience with and understanding of corporate culture, how to build teams, leadership development and change management. She also brings her dedication to corporate governance.
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DIRECTOR QUALIFICATIONS
In identifying director candidates, the Board seeks to achieve a mix of members who collectively bring significant value to the Company through their experience and personal backgrounds relevant to Simpson’s strategic priorities and the scope and complexity of our business and industry. In light of Simpson’s strategic priorities, and based on its self-assessment, the Board identified key skills and experiences for director candidates that included, but are not limited to, current public company senior executive and board experience in managing a diversified enterprise, industry experience or understanding, an appreciation of the impacts of rapidly changing technologies and experience in managing and expanding business outside of the United States, especially in Europe. To complement its oversight responsibilities, the Board also identified implementing or overseeing company growth, strategy development, mergers and acquisitions and operations experience as key Board skills. In addition, each candidate should:
have a record of integrity and ethics in his/her personal and professional life;
have a record of professional accomplishment in his/her field;
be prepared to represent the best interests of our stockholders;
not have a material personal, financial or professional interest in any competitor of ours; and
be prepared to participate fully in Board activities, including (in the case of a non-executive director) active membership on at least one Board committee and attendance at, and active participation in, meetings of the Board and the committee(s) of which he or she is a member, and not have other personal or professional commitments that would, in the Nominating and Governance Committee’s sole judgment, interfere with or limit his or her ability to do so.
Our Corporate Governance Guidelines place limits on the number of boards on which Simpson directors may serve. Such limits provide that any director who is a chief executive officer or other senior executive of a public company should serve on no more than two public company boards, and any other director should serve on no more than four public company boards, in both instances including the Simpson Board.
Additionally, any member of our Audit and Finance Committee may serve on the audit committee of no more than two other public companies.
In addition, the Nominating and Governance Committee also considers it desirable that candidates contribute positively to the collaborative culture among Board members and possess professional and personal experiences and expertise relevant to our business and industry. The Nominating and Governance Committee solicits ideas for possible candidates from a number of sources, including independent director candidate search firms, members of the Board and our senior-level executives.
Once a prospective candidate has come to the Nominating and Governance Committee’s attention, including candidates recommended by its advisors or suggested by stockholders, the Nominating and Governance Committee evaluates the candidate’s qualifications and skills, against the desired director attributes, and makes an initial determination as to whether to conduct a full evaluation. In making this determination, the Nominating and Governance Committee takes into account the information provided to it with the recommendation of the candidate, as well as the Nominating and Governance Committee’s own knowledge and information obtained through inquiries to third parties to the extent the Nominating and Governance Committee deems appropriate. The preliminary determination is based primarily on the current need for additional Board members and the likelihood that the prospective candidate can satisfy the criteria that the Nominating and Governance Committee has established. If the Nominating and Governance Committee determines, in consultation with the Chair of the Board and other directors, as appropriate, that additional consideration is warranted, it may request a third party to gather additional information about the prospective candidate’s background and experience and to report its findings to the Nominating and Governance Committee. The Nominating and Governance Committee may then evaluate the prospective candidate against the Board selection criteria that it has developed.
The Board recognizes the benefits of a diversified board and believes that any search for potential director candidates should consider diversity as to gender, race, ethnic background and personal and professional experiences.
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Board Diversity
While we do not have a formal policy with regard to diversity in identifying director nominees, the Board believes that the backgrounds and qualifications of directors, considered as a group, should provide a significant composite mix of experience, knowledge and abilities that will allow the Board to fulfill its responsibilities. The Board nominees come from a variety of backgrounds and 57% of our directors will be women if all seven Board nominees are elected to the Board at the Annual Meeting. We do not discriminate against nominees on the basis of race, color, religion, gender, gender identity or expression, sexual orientation, age, national origin, disability, covered veteran status or any other status protected by law.
In recent years, California has passed legislation requiring public companies with a principal executive office in the state to meet specific gender, ethnic/racial and sexual orientation diversity requirements on their board, California Senate Bill 826 (“SB 826”) and AB 979. SB 826 requires public companies headquartered in California to maintain minimum
female representation on their boards of directors. AB 979 requires public companies headquartered in California to maintain minimum representation on their boards of directors from members of “underrepresented communities.” A director from an “underrepresented community” means a director who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, Alaska Native, gay, lesbian, bisexual or transgender. Under SB 826, the Company is required to have at least three female Directors by December 31, 2021. Based on the current composition of our Board, we are already in compliance with, and in fact exceed the requirements of SB 826. To satisfy the requirements of AB 979, the Company is required to have at least one director from an underrepresented community by December 31, 2021 and two directors that meet this criteria by December 31, 2022. The Nominating and Governance Committee is engaged in the process of identifying diverse director candidates that meet the qualifications of our Board selection criteria and the requirements of AB 979.
Director Tenure
The Board currently believes that a robust board evaluation process - one focused on the assessment and alignment of director skills with company strategy and priorities - is more effective than relying solely on age or tenure limits to achieve board refreshment. Therefore, we do not have a fixed retirement age for directors. Under our current Corporate Governance Guidelines, no outside director who came on to the
Board prior to 2016 will be nominated for re-election after 20 years of board service, and the Board generally will not nominate outside directors who come on to the Board after 2016 for re-election after 15 years of board service. If all seven Board nominees are elected to the Board at the Annual Meeting, the average tenure of our directors will be approximately ten years.
DIRECTOR INDEPENDENCE
The NYSE listing standards require our Board to be comprised of at least a majority of independent directors. Our Corporate Governance Guidelines require that the Board be comprised substantially of independent directors. For a director to be considered independent, our Board must determine that the director does not have any direct or indirect material relationship with us. To assist it in determining director independence, and as permitted by NYSE rules then in effect, the Board previously established categorical standards which conform to, or are more exacting
than, the independence requirements in the NYSE listing standards. These standards are contained in our Corporate Governance Guidelines, which can be found on our website at www.ir.simpsonmfg.com under “Investor Relations - Corporate Governance.”
Based on these independence standards, our Board has affirmatively determined that the following directors are independent and meet our categorical independence standards:
James S. Andrasick
Michael A. Bless
Jennifer A. Chatman
Gary M. Cusumano
Philip E. Donaldson
Celeste Volz Ford
Robin G. MacGillivray
 
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In determining the independence of the directors, our Board considered ordinary course transactions between us and other entities with which the directors are associated, none of which were determined to constitute a material relationship with us. None of the above listed directors has any relationship with
Simpson, except as a director and stockholder. Our Board also considered contributions by us to charitable organizations with which the directors were associated. No director is related to any executive or significant stockholder of Simpson, nor is any director, with the exception of Ms. Colonias, a current or former employee of Simpson.
DIRECTOR NOMINATIONS
Any stockholder may nominate one or more persons for election as one of our directors at the Annual Meeting if the stockholder complies with the notice, information and consent provisions contained in our By-Laws. See “Stockholders’ Proposals” in this Proxy Statement.
The Nominating and Governance Committee will consider candidates identified through the processes described above and will evaluate the candidates, including incumbents, based on the same criteria. The
Nominating and Governance Committee also takes into account the contributions of incumbent directors as Board members and the benefits to us arising from their experience on the Board. Although the Nominating and Governance Committee will consider candidates identified by stockholders, the Nominating and Governance Committee has sole discretion whether to recommend those candidates to the Board.
VOTING
The Director nominees stand for election or reelection to the Board by our stockholders at the
Annual Meeting, each for a term extending until next year’s Annual Meeting of Stockholders.
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THE BOARD’S ROLE AND RESPONSIBILITIES
OVERVIEW
The Board’s Key Responsibilities include:

THE BOARD’S ROLE IN RISK MANAGEMENT
As part of its oversight function, the Board is actively involved in overseeing risk management. In connection with overseeing risk management, the Board exercises its oversight responsibility with respect to key external, strategic, operational and
financial risks through the committees of the Board and discusses the effectiveness of current efforts to mitigate certain focus risks as identified by senior management and the Board.
BOARD AND COMMITTEES RISK OVERSIGHT RESPONSIBILITIES
FULL BOARD
Although the Board is ultimately responsible for risk oversight, the Board is assisted in discharging its risk oversight responsibility by the Audit and Finance, the Compensation and Leadership Development, the Nominating and Governance and the Corporate Strategy and Acquisitions Committees. Each committee oversees management of risks, including, but not limited to, the areas of risk summarized below, and periodically reports to the Board on those areas of risk:


 


 


 


Audit and
Finance Committee
 
Compensation and
Leadership
Development
Committee
 
Nominating and
Governance
Committee
 
Corporate Strategy and Acquisitions Committee
Oversees management of risks related to our financial statements, the financial reporting process and cybersecurity
 
Oversees management of risks related to our compensation policies and practices, employee benefit plans and the administration of equity plans as well as succession and leadership development
 
Oversees management of risks related to governance of the company and the Board, including board and committee composition
 
Oversees management of risks related to our corporate strategy and strategic acquisitions
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STOCKHOLDER ENGAGEMENT
In an effort to continuously improve our governance and compensation practices, our Board is firmly committed to constructive engagement with our stockholders and regularly reviews and responds to their expressed views.
The Board places considerable weight on stockholder feedback in making decisions impacting our governance processes and compensation programs. Over the past four years, this increased dialogue with our stockholders has led to meaningful changes in our corporate governance, environmental, social and executive compensation policies and practices, such as those highlighted below.
Enhancements to our practices and policies
Governance:
Maintaining a Separate Chair of the Board and CEO
Maintaining a Board comprised of all independent directors, except our CEO
Maintaining a commitment to Board refreshment
Removing rights plan/poison pill and staggered board
Sustainability and Environmental and Social Responsibility:
Increasing disclosures on our sustainability and environmental and social responsibility
Compensation:
Enhancing transparency in proxy statement disclosures regarding compensation matters, including disclosing specific targets of our compensation programs and how they tie to our strategy
Maintaining longer performance-based equity award performance periods (3 years rather than just 1) per cycle, and removal of duplicate performance metrics between short-term incentive and long-term incentive awards
Requiring double-trigger vesting of equity awards upon a change in control
Introduction of a competitor peer group for performance-based equity awards, to align incentive pay outcomes with relative company performance compared to peer companies similar to us in terms of revenue size and industry
Approving appropriate revisions to our compensation peer groups
Rigorous goal setting program
DIRECTOR ORIENTATION AND EDUCATION
New directors are oriented to our business and governance through meetings with our officers and directors and visits to our facilities. We also support,
and pay for participation in continuing education programs to assist directors in performing their Board responsibilities.
BOARD AND COMMITTEE EVALUATIONS
Our Board recognizes the critical role of annual Board and committee evaluations in ensuring the Board and each committee are functioning effectively. The Board has a regular practice of assessing its own effectiveness as well as the diversity of skill sets of its members, the alignment of areas of expertise with the Company’s strategy and priorities, and stewardship of
company performance. In addition to self-evaluation, the Board has also engaged The Ellig Group to evaluate the existing skills and experience represented on the Board as well as what additional skills and experience would add to the overall effectiveness of the Board in light of its current strategy.
SUSTAINABILITY AND ENVIRONMENTAL AND SOCIAL RESPONSIBILITY
Sustainability and environmental and social responsibility is an integral component of our business strategy. Our full Board plays an essential role in overseeing our sustainability strategy and progress. Beginning in 2019, our General Counsel has provided regular updates on sustainability performance to the
Board. Sustainability performance is managed by our Environmental, Health & Safety department which reports to senior management.
As part of Simpson’s vision, we have established deeply rooted core values that continue to define our business today. Our founder, Barclay Simpson, outlined nine essential attributes for company and
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employee success. Those “Nine Principles of Business” are our company values, and we continue to abide by them to this day.
At the forefront of these values is doing what is right for our employees’ safety and well-being, as well as for our customers, communities and environment. We honor the Nine Principles of Business through our involvement in our local communities and efforts to help protect our environment.
You can find additional details regarding our sustainability and environmental and social responsibility efforts and other related programs in our Sustainability, Environmental and Social Responsibility Report on our website at www.ir.simpsonmfg.com/sustainability.
Employee Safety and Well-Being
Ensuring our employees return home safely to their families has and will always be a top priority for our Company.
Our Health and Safety program focuses on implementing change through our employee observation feedback channels to recognize risk and continuously improve our processes.
Our risk management approach includes conducting regular risk reviews and self-audits at our manufacturing facilities around the world to explore new opportunities to reduce potential employee exposure to occupational injuries.
Importantly during 2020, our experience and continuing focus on workplace safety have enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues and workplace visitors safe during the COVID-19 pandemic.
In 2019, we introduced an expanded whistleblower program, “Speak Up Listen Up,”
adding a hotline accessible by phone or internet that allows employees across the Company to report any questions or concern. We also, based on feedback we received from our employees through our Culture and Leadership survey and focus groups conducted in 2018, rolled out the My Commitments program facilitating discussions and practices meant to enhance our values-based culture.
We foster a culture of total well-being by providing several no-cost tools and resources that educate and empower employees to improve their physical, emotional, and financial health as well as earn rewards for participation and engagement in the program.
In 2019, we launched a safe driver monitoring program to help identify safety risks, score drivers based on safe driving practices and provide support through training.
Human Capital Management
The board believes that attracting, developing and retaining employees is vital to Simpson’s continued success. Our board is actively involved in our human capital management (“HCM”) in its oversight of our long-term strategy and through its committees and
engagement with management. Our focus on talent management stretches from the board level to our 3,500+ associates through programs overseen by management and reported on to the Board that are designed to identify, train and grow future leaders.
Inclusion & Diversity
We strive to have a diverse culture of employees of various ages, genders, ethnicities and abilities. Our commitment to diversity and inclusion starts at the top with a highly skilled and diverse board. Currently,
women hold 38% of the Company’s top five executive positions and board seats, helping to pave the way for gender diversity in corporate leadership.
Talent Development
Human capital development underpins our efforts to execute our strategy and continue to develop, manufacture and market innovative products and services. The opportunity to grow and develop skills and abilities, regardless of job role, division, or
geographical location is critical to the success of Simpson as a global organization and we continually invest in our employees’ career growth and provide employees access to a wide variety of learning and development resources, including a suite of online
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courses for developing both soft and technical skills. These resources are designed to encourage a growth mindset and continuous learning. Accordingly, we also
have leadership development programs that provide employees with training, tools and experiences that are targeted to develop their full leadership potential.
Pay Equity
Simpson’s compensation philosophy is to be able to attract, retain, motivate, and differentiate employees through its rewards programs. We believe people should be paid for what they do and how they do it, regardless of their gender, race, or other personal characteristics and are committed to internal pay equity. Our Compensation and Leadership Development Committee monitors the relationship between the pay received by our executive officers and non-managerial employees. We believe our compensation philosophy and strategy are strongly aligned with our corporate strategic priorities and our vision for stockholder value creation.
In addition to our financial compensation we offer a health and wellness package to our employees, which is designed to provide employees with options for their individual and/or family needs. In addition, in an effort to continue to attract, retain, and motivate our workforce, in the United States, we offer remote and flexible work packages for positions which allow for remote work. We continue to engage our partners and benefits consultants to ensure our health and wellness package continues to meet the needs of our diverse workforce today and into the future.
Workplace Safety and Health
A vital part of our business is providing our workforce with a safe, healthy and sustainable working environment. Our Environmental, Health and Safety program focuses on implementing change through our employee observation feedback channels to recognize risk and continuously improve our processes, as well as conducting regular risk reviews and self-audits at our manufacturing facilities around
the world to explore new opportunities to reduce potential employee exposure to occupational injuries. Importantly during 2020, our experience and continuing focus on workplace safety have enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues and workplace visitors safe during the COVID-19 pandemic.
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Sustainability
At Simpson, we look at four key aspects of sustainability:

Manufacturing Processes
We strive to minimize the amount of total waste generated by our manufacturing processes through companywide lean practices.
Our production lines and facilities operate in a practical manner that does not produce regulated external emissions.
Our Research & Development engineers are focused on material efficiencies and innovative product features that minimize waste generation in our steel connector, anchor and fastener designs.
Waste Reduction and Recycling
We do not manufacture steel, instead we purchase large quantities for direct use in our manufacturing processes. We support the Circular Economy by minimizing our largest recognized waste stream and sending unused steel from our processes back upstream for reintroduction into the material supply chain.
Our metal stamping production dies and factory tooling are designed to help minimize unused steel generation, reducing waste.
We recycle the scrap steel resulting from our manufacturing process at all facilities around the world.
In addition to steel, we recycle many of the materials that we use to reduce our impact on the environment, including cardboard, plastic and glass bottles,
aluminum cans, paper, wood pallets, used electronics, water, oils, coolants and lubricants and stretch film/wrap — low density polyethylene.
Energy Conservation
We work hard to improve energy efficiencies at our facilities globally to ensure eco-friendly, cost-effective operations.
Energy-efficient lighting, heating and cooling systems further reduce our impact on the environment, including reducing our carbon footprint.
Sustainable Building Practices
We support sustainable building practices, such as those established by the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) Green Building Rating System™, NAHB Green, and state and city specific green building codes.
Many homes and buildings built today use green building technology, and we support green building systems by developing products that use or incorporate engineered wood and insulated concrete forms.
Our use of advanced framing techniques help to reduce total material usage and improve energy performance in wood-frame construction.
We use non-toxic materials for connector products that require painting.
Community Engagement
Simpson is committed to giving back to our communities through four key areas:
Construction & Building Repair
Disaster Relief
Disaster Preparedness & Resilience
Construction Trades Education
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In commemoration of our Founder, Barclay Simpson, we established Do What You Can Day in 2016 to continue his philanthropic legacy. Every year, our employees are encouraged to participate in a voluntary charitable activity in his honor.
The Simpson Strong-Tie Student Scholarship program awards 100 scholarships every year to provide financial assistance for civil/structural engineering, architecture and construction management students at participating colleges and universities throughout the United States. To date, we have awarded over 950 scholarships to aspiring students.
The Simpson Strong-Tie Put Something Back (PSB) Scholarship program awards dependent children of our employees with academic scholarships for continuing education. More than 295 scholarships worth over $2.2 million have been awarded since the program began in 1998.
Simpson Strong-Tie has been a national sponsor of Habitat for Humanity International since 2007 and is the lead sponsor of their Habitat Strong program, designed to promote the building of homes that are more durable, resilient and physically stronger.
Ethics and Compliance
At Simpson, we hold ourselves accountable to conducting our business with integrity through adherence to a strict set of standards and policies which are intended to create a safe, sustainable, respectful and healthy work environment. We also expect our suppliers to adhere to reasonable standards and operate in a socially and environmentally responsible manner consistent with our values. The following policies and procedures are made accessible to every Simpson employee through our intranet site:
Anti-Corruption
Anti Hedging and Anti Pledging
Child Labor Law
Code of Business Conduct & Ethics
Conflict Minerals
Data Privacy
Environmental Health and Safety
Equal Employment Opportunity
Global Purchasing
IT Security
Prohibition of Sexual and other Workplace Harassment
Reporting Financial Misconduct
Speak Up Listen Up/Whistleblower
Supply Chain Disclosure
Supplier Code of Business Conduct and Ethics
Position on Human Rights
Political Spending & Lobbying Policy
COMMUNICATIONS WITH THE BOARD
Stockholders or other interested persons may send written communications to the independent members of our Board, addressed to Board of Directors
(Independent Directors), c/o Simpson Manufacturing Co., Inc., 5956 W. Las Positas Blvd., Pleasanton, California 94588.
BOARD LEADERSHIP STRUCTURE
Since before our initial public offering in 1994, the roles of our Board Chair and our Chief Executive Officer have been separated. We believe that this is appropriate under current circumstances, because it allows management to make the operating decisions necessary to manage the business, while helping to keep a measure of independence between the
oversight function of the Board and operating decisions. We feel that this has provided an appropriate balance of operational focus, flexibility and oversight.
Because an independent director currently serves as Chair of our Board, we do not separately have a Lead Independent Director. Mr. Andrasick, as Chair of the Board, participates in setting the agenda of Board and committee meetings, coordinating the distribution and presentation of meeting materials, facilitating
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communications among members of the Board and management, leading the Board self-evaluation process, and maintaining the focus and punctuality of Board and committee meetings. In addition, the Chair’s role also includes leading the efforts in
evaluating our Chief Executive Officer and in succession planning, considering Board committee membership and leadership, and presiding at annual meetings of stockholders.
EXECUTIVE SESSIONS
Pursuant to the NYSE listing standards, our non-management directors meet at regularly scheduled executive sessions without members of management
present. In 2020, our current Board Chair, Mr. Andrasick, presided over these executive sessions.
BOARD OF DIRECTORS AND ITS COMMITTEES
In 2020, the Board held 6 meetings, and its committees held a total of 27 meetings, including 10 meetings of the Audit and Finance Committee, 6 meetings of the Compensation and Leadership Development Committee, 6 meetings of the Nominating and Governance Committee and 5 meetings of the Corporate Strategy and Acquisitions Committee.
In 2020, each of our directors attended 100% of the aggregate of the total number of meetings of the
Board and the total number of meetings of the Board committee(s) on which he or she served. In addition, as a group the Board members attended 100% of the total number of Board and committee meetings.
We do not have a policy that requires our directors to attend annual meetings of stockholders, but 100% of our current directors attended the 2020 Annual Meeting of Stockholders.
RESTRICTIONS ON HEDGING AND PLEDGING ARRANGEMENTS FOR ALL  EMPLOYEES AND DIRECTORS
The Board has adopted an anti-hedging and anti-pledging policy. Directors, officers, and employees of the Company or any subsidiary of the Company, as well as their designees, are generally prohibited from: (a) purchasing any financial instruments or engaging in any transactions that are designed to hedge or offset or have the effect of hedging or offsetting any decrease in the market value of our equity securities (such as our
common stock), including, without limitation, prepaid variable forward contracts, equity swaps, collars, exchange funds and transactions with economic consequences comparable to the foregoing financial instruments; and (b) further pledging our equity securities as collateral for a loan, purchasing such securities on margin, or holding such securities in a margin account.
BOARD COMMITTEES
The standing committees of our Board are the Audit and Finance Committee, the Compensation and Leadership Development Committee, the Corporate Strategy and Acquisitions Committee and the Nominating and Governance Committee. The Board appoints members of the committees and each committee
operates under a written charter approved by the Board. With the exception of the Corporate Strategy and Acquisitions Committee all of our standing committees are composed entirely of independent directors. Attendance at committee meetings is open to every director, regardless of whether he or she is a member of such committee.
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The table below sets forth our directors’ Board committee membership as of December 31, 2020:
Director
Corporate
Strategy &
Acquisitions
Audit &
Finance
Compensation &
Leadership
Development
Nominating &
Governance
Committee
James S. Andrasick
Michael A. Bless
 
 
Jennifer A. Chatman

(Chair)
Karen Colonias (CEO)
 
 
 
Gary M. Cusumano

(Chair)
Philip E. Donaldson

(Chair)
 
 
Celeste Volz Ford

(Chair)
Robin G. MacGillivray
 
 
Number of Meetings Held in 2020:
5
10
6
6
Audit and Finance
Committee
Principal Functions and Additional Information

Chair
Mr. Donaldson

Committee Members
Mr. Andrasick
Mr. Bless
Ms. Ford

Monitors our financial reporting process and internal control system.
Oversees the preparation of our financial statements.
Monitors our compliance with legal and regulatory financial requirements, including our compliance with the applicable reporting requirements established by the U.S. Securities and Exchange Commission (the “SEC”) and the requirements of audit and finances as established by the NYSE.
Evaluates the independence, qualifications, performance and compensation of our independent registered public accounting firm.
Pursuant to our Policy Regarding Compliant Procedures for Accounting and Auditing Matters, provides oversight relating to financial matters, books and records and accounting and as required by applicable statutes, rules and regulations.
Provides an open avenue of communication among our independent registered public accounting firm, financial and senior management, and the Board.
Other functions include risk management, IT/Cyber; oversight of and engagement of external auditor.

Our Board has determined that all members of the Audit and Finance Committee are independent and financially literate under NYSE Listed Company Manual Sections 303A.02 and 303A.07, respectively, and that Messrs. Andrasick, Bless and Donaldson each qualify as an “audit committee financial expert,” within the definition established by the SEC. For more information on the backgrounds of those directors, see their biographical information under “Election of Directors” above.
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Compensation
and Leadership
Development Committee
Principal Functions and Additional Information

Chair
Mr. Cusumano

Committee Members
Mr. Andrasick
Ms. Chatman
Ms. MacGillivray

Oversees the design of our officer compensation plans, policies and programs.
Approves and/or recommends to the Board for approval such officer and director compensation plans, policies and programs.
Evaluates employee benefit plans.
Annually reviews and approves goals and objectives relevant to Chief Executive Officer (“CEO”) compensation, evaluates the CEO’s performance in light of those goals and objectives and sets the CEO’s compensation based on that evaluation.
Oversees our disclosures relating to compensation plans, policies and programs, including overseeing the preparation of the Compensation Discussion & Analysis included in this Proxy Statement.
Acts in its sole discretion to retain or terminate any compensation consultant to be used to assist the Compensation and Leadership Development Committee in the discharge of its responsibilities. For more information about the Compensation and Leadership Development Committee’s processes and procedures for the consideration and determination of NEO compensation, including the role of executive officers and compensation consultants in determining or recommending the amount or form of executive compensation see “Compensation Consultant” below and the Compensation Discussion & Analysis section (and related tabular and narrative disclosures) of this Proxy Statement.
Nominating and
Governance Committee
Principal Functions and Additional Information

Chair
Ms. Chatman

Committee Members
Mr. Andrasick
Ms. Ford
Ms. MacGillivray

Identifies individuals qualified to become Board members and recommends to the Board each year the director nominees for the next annual meeting of stockholders.
Recommends to the Board the directors to serve on each Board committee.
Leads the Board in its annual review of the performance of the Board and its committees.
Develops, reviews and recommends to the Board any changes to our Corporate Governance Guidelines the committee deems appropriate.
Monitors compliance with our stock ownership guidelines.
Recommends to the Board the compensation of nonemployee directors. For more information about the Nominating and Governance Committee’s processes and procedures for the consideration and determination of director compensation, see the 2020 Director Compensation section of this Proxy Statement.
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Corporate Strategy and Acquisitions Committee
Principal Functions and Additional Information

Chair
Ms. Ford

Committee Members
Mr. Andrasick
Mr. Bless
Ms. Colonias
Mr. Cusumano
Mr. Donaldson

Provides guidance on and oversight of the Company’s strategic plan, including the strategic planning process.
Works with management on the identification and prioritization of strategic goals and expectations, and reviews and evaluates potential acquisitions, joint ventures, strategic alliances and divestitures.
Monitors at least annually the Company’s progress in implementing its strategic plan and recommends modifications to the plan where appropriate.
Periodically monitors the results of acquisitions, divestitures and alliances.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation and Leadership Development Committee during 2020 were Gary M. Cusumano (Chair), James S. Andrasick, Jennifer A. Chatman and Robin G. MacGillivray. All members of our Compensation and Leadership Development Committee are independent in accordance with NYSE listing standards. No member of the Compensation and Leadership Development Committee (1) was, during the year ended December 31, 2020, or had
previously been, an officer or employee of Simpson or any of its subsidiaries, or (2) had any material interest in a transaction of Simpson or a business relationship with, or any indebtedness to, Simpson. No interlocking relationship existed during the year ended December 31, 2020 between any member of the Board or the Compensation and Leadership Development Committee and an executive officer of Simpson.
COMPENSATION CONSULTANT
The Compensation and Leadership Development Committee has the authority under its charter to retain or obtain the advice of advisers, including compensation consultants, as it may deem appropriate. In accordance with this authority, the Compensation and Leadership Development Committee again engaged Meridian Compensation Partners, LLC (“Meridian”) as its independent compensation consultant to provide it with objective and expert analysis, advice and information with respect to executive compensation. Our Compensation and Leadership Development Committee regularly reviews its executive compensation consulting needs and periodically invites compensation consulting firms to discuss these executive compensation needs with the Compensation and Leadership Development Committee. This process enables the Compensation and Leadership Development Committee to reevaluate its compensation consultant and take a fresh look at our compensation practices and policies.
All executive compensation services provided by Meridian were conducted under the direction or authority of the Compensation and Leadership
Development Committee. In addition to compensation consultants, members of our Human Resources and Finance Departments support the Compensation and Leadership Development Committee in its work.
Meridian was engaged by the Compensation and Leadership Development Committee to provide services including:
identifying an updated industry peer group;
assessing the appropriateness and competitiveness of our compensation programs as compared to compensation programs maintained by the selected industry peer group;
evaluating our executive compensation, in total and by pay component; and
recommending changes to our short-term and long-term incentive programs.
We paid Meridian total fees of approximately $208,412 for these services in 2020.
The Compensation and Leadership Development Committee has considered the required independence factors outlined by the SEC and NYSE
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rules in assessing the independence of the compensation consultants. Consideration was also given by the Compensation and Leadership Development Committee under those required independence factors, plus all other relevant factors,
to whether the work performed by Meridian could give rise to a potential conflict of interest. Based on this review, the Compensation and Leadership Development Committee did not identify any conflict of interest raised by the work performed by Meridian.
RELATED-PARTY TRANSACTIONS
We have adopted a written Related Person Transaction Policy applicable to any individual transaction or series of related-person transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which:
Simpson or any of its subsidiaries is, was or will be a participant; and
any related person (as defined in Item 404 of Regulation S-K) and other members of our leadership team designated from time to time by the Board or Nominating and Governance Committee has, had or will have a direct or indirect material interest.
Pursuant to the Related Party Transactions Policy, the Nominating and Governance Committee or entire Board, as applicable, is responsible for review, approval, and ratification of transactions between the Company, its branches or subsidiaries and related persons and members of our leadership team as designated by the Nominating and Governance Committee or Board from time to time. In accordance with the Related Party Transactions Policy, except for pre-approved transactions, if a transaction involves a covered employee (or an immediate family member thereof) and is valued at less than $1 million, then a transaction review committee (the “TRC”), which serves as an advisory committee of the Company and generally includes our Chief Financial Officer, or his or her designee, and our General
Counsel (provided that if the Chief Financial Officer is a related party, he or she will be replaced by another officer of the Company), will make recommendations to the Nominating and Governance Committee and the Nominating and Governance Committee will decide whether to approve or ratify the transaction; and if a transaction involves a director or 5% stockholder (or an immediate family member thereof) or involves a covered employee (or an immediate family member thereof) but is valued at $1 million or more, the TRC will make recommendations to the Board, and the Board will decide whether to approve or ratify the transaction (provided that no director shall participate in any discussion or approval of a transaction for which he or she or any of his or her immediate family members is involved). In determining whether to approve, ratify or disapprove a related party transaction, the Nominating and Governance Committee or Board will consider, among other factors, whether the transaction is entered into on terms no less favorable to us than terms generally available to an unaffiliated third-party under the same or similar circumstances; the results of an appraisal, if any; whether there was a bidding process and the results thereof; review of the valuation methodology used and alternative approaches to valuation of the transaction; and the extent of the related person’s interest in the transaction. There were no transactions found to be directly or indirectly material to a related person required by SEC rules to be disclosed in this Proxy Statement.
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COMPENSATION OF DIRECTORS
Under our 2020 nonemployee director compensation program, cash compensation for nonemployee
directors consisted of retainers and membership fees as follows:
($)
Annual Board Member Retainer
75,000
Audit and Finance Committee Chair Retainer(1)
10,000
Audit and Finance Committee Member Fee
10,000
Compensation and Leadership Development Committee Chair Retainer(1)
10,000
Compensation and Leadership Development Committee Member Fee
10,000
Nominating and Governance Committee Chair Retainer(1)
10,000
Nominating and Governance Committee Member Fee
7,000
Corporate Strategy and Acquisitions Committee Chair Retainer(1)
10,000
Corporate Strategy and Acquisitions Committee Member Fee
7,000
Additional Retainer for Chair of the Board
56,500
(1)
Committee Chair Retainers are paid in addition to Member Fees.
The annual retainers are generally paid quarterly and the committee membership and chair fees are paid at the time of the annual meeting of stockholders. In addition to the annual board retainer, our nonemployee directors also receive a grant of vested shares with a value of approximately $95,000.
The Chair of the Board also receives an additional grant of vested shares with a value of approximately $25,000 along with the Additional Board Chair cash retainer.
The table below summarizes the compensation earned by or paid to our nonemployee directors during the year ended December 31, 2020.
2020 DIRECTOR COMPENSATION TABLE
Name
Fees Earned or
Paid in Cash
($)
Equity
Awards
($)(1)
All Other
Compensation
($)
Total
($)
James S. Andrasick
165,500
94,363
259,863
Michael A. Bless
92,000
74,692
166,692
Jennifer A. Chatman
102,000
74,692
176,692
Gary M. Cusumano
102,000
74,692
176,692
Philip E. Donaldson
102,000
74,692
176,692
Celeste Volz Ford
109,000
74,692
183,692
Robin G. MacGillivray
92,000
74,692
166,692
(1)
Reflects the value of vested shares granted on April 23, 2020, calculated by multiplying the number of shares by the fair value per share of our common stock as of the award date in accordance with FASB Accounting Standards Codification Topic 718 “Compensation - Stock Compensation.” Each nonemployee director’s equity award corresponded to the approximate amount of his or her 2020 annual stock retainer, and was valued at $58.72 per share, the closing price of our common stock reported by the NYSE at the close of trading on April 23, 2020. Mr. Andrasick’s equity award also includes his additional stock retainer for serving as the Chair of our Board. This award was valued at $58.72 per share, the closing price of our common stock reported by the NYSE at the close of trading on April 23, 2020. For a discussion of the valuation assumptions used in determining the grant date fair value of these awards, see Note 5 “Stock-Based Compensation” to the Consolidated Financial Statements included in our Annual Report to Stockholders on Form 10-K for the period ended December 31, 2020.
As of December 31, 2020, our outside directors held no unvested stock awards or outstanding option awards with respect to our common stock.
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ITEM 2
Advisory Vote To Approve Named Executive Officer Compensation
We are asking our stockholders to vote on an advisory basis to approve the compensation of our Named Executive Officers (or “NEOs”) (sometimes referred to as “Say on Pay”) as required by Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”). We conduct our Say on Pay votes annually, and, after the Annual Meeting, the next required Say on Pay vote is expected to occur at the 2022 Annual Meeting of Stockholders. The Board recommends a vote “FOR” this proposal because it believes that our compensation policies and practices are effective in achieving Simpson’s philosophy of providing compensation that:
attracts, motivates and retains well-qualified executives;
provides performance-based incentives to reward achievement of short and long-term business goals and strategic objectives, while avoiding unnecessary risk taking; and
aligns the interests of our executives with those of our stockholders.
For the reasons discussed in the “Compensation Discussion & Analysis,” accompanying compensation tables and related narrative disclosures in this Proxy Statement, the Board unanimously recommends that stockholders vote “FOR” the following resolution:
“RESOLVED, that the compensation paid to the NEOs, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion & Analysis, compensation tables and accompanying narrative discussion in Simpson‘s Proxy Statement relating to its 2021 annual meeting of stockholders, is hereby APPROVED.”
Although the resolution is non-binding, the Board and Compensation and Leadership Development Committee expect to consider the outcome of the vote when making future compensation decisions.
Our Board of Directors recommends that stockholders vote “FOR” the advisory vote to approve Named Executive Officer compensation.
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 EXECUTIVE OFFICER PROFILES
The following profiles provide the relevant experience, age and executive officer tenure with Simpson of our current executive officers. The profile for Karen
Colonias, our President and Chief Executive Officer and a director nominee, is set forth above under “2021 Nominees.”
BRIAN J. MAGSTADT Chief Financial Officer and Treasurer
 
Age
Tenure
53
9 years
Mr. Magstadt has served as our Chief Financial Officer and Treasurer since January 2012. He joined Simpson in 2004 as a Financial Reporting Specialist, and, from 2008 until 2012, served as our Financial Reporting Manager, overseeing our external reporting program and managing various other accounting and finance
functions. He is a licensed Certified Public Accountant and holds a Bachelor of Science degree in Business Administration from California State University, Chico, and a Masters of Business Administration degree from Santa Clara University.
ROGER DANKEL President of North American Sales, Simpson Strong-Tie Company Inc.
 
 
Age
Tenure
57
6 years
Mr. Dankel has been the President of North American Sales of our subsidiary, Simpson Strong-Tie Company Inc. (“Simpson Strong-Tie”) since July 2014. He has been employed with us since 1993 as a Field Sales Representative until 1997, when he was promoted to Sales Manager in McKinney, Texas, and then Branch
Sales Manager in charge of all sales functions of that branch. He has successfully integrated multiple new products, both acquired and internally developed, into Simpson Strong-Tie’s product lines. Mr. Dankel holds a Bachelor of Science degree in Business Administration from Millsaps College.
KEVIN SWARTZENDRUBER Senior Vice President of Finance
 
 
Age
Tenure
55
3 years
Mr. Swartzendruber has been our Senior Vice President of Finance since October 2017. Prior to joining Simpson he was vice president and corporate controller at Flex Ltd. from October 2005 through September 2017, where his responsibilities primarily included consolidation, external reporting to the SEC, external audit and compliance with US GAAP and SEC rules. Prior to joining Flex Ltd, Mr. Swartzendruber was a director of SEC reporting and technical accounting
with EchoStar (Dish Network) and prior to that, was a senior manager with Deloitte, serving private equity investors in its mergers and acquisitions group and also serving high tech clients as an audit professional. Mr. Swartzendruber is a Certified Public Accountant (inactive status) in Colorado and California and graduated summa cum laude from the University of Cincinnati with a Bachelor of Business Administration in accounting and finance.
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TERRY HAMMONS Senior Vice President, General Counsel and Secretary
 
 
Age
Tenure
48
2 years
Mr. Hammons has been our Senior Vice President, General Counsel since May 2019, and Secretary since July 2019. Prior to joining Simpson he was Vice President, Deputy General Counsel, Corporate, Chief Regional Counsel and Assistant Secretary at Albemarle Corporation, from August 2015 through April 2019, where he was responsible for the company’s worldwide corporate legal activities, including all strategic transactions (M&A, and venture
capital), and supporting the Lithium GBU Resources team. Prior to joining ‘Albemarle Corporation, Mr. Hammons was the Assistant General Counsel – Corporate and Commercial at Air Products and Chemicals, Inc., and prior to that he held Associate positions at Arnold & Porter and Hunton & Williams. Mr. Hammons holds a J.D. from Georgetown University Law Center and a B.A. from The College of William & Mary.
MIKE OLOSKY Chief Operating Officer
 
 
Age
Tenure
52
<1 year
Mr. Olosky has been our Chief Operating Officer since November 2020. Prior to joining Simpson, Mr. Olosky spent over 22 years in numerous leadership positions at Henkel, a global chemical and consumer goods company. He most recently served as the Regional President Henkel, North America and Head of the
Electronics and Industrial Division since 2019. Mr. Olosky has a BS in Mechanical Engineering from Michigan Technological University, an MBA from Michigan State University, and a MS in Mechanical Engineering from Oakland University.
The following profile provides the relevant experience, age and executive officer tenure with Simpson of Ricardo Arevalo, our former Chief Operating Officer of
our subsidiary, Simpson Strong-Tie Company, Inc. Mr. Arevalo retired effective February 15, 2020.
RICARDO M. AREVALO Former Chief Operating Officer, Simpson Strong-Tie Company Inc.
 
 
Age
Tenure
64
6 years
Mr. Arevalo was the Chief Operating Officer of our subsidiary, Simpson Strong-Tie, from July 2014 to February 2020. Mr. Arevalo began his career with us in 1999 at the Simpson Strong-Tie branch in Brea, California, as a Field Sales Engineer for the Wood Strong-Wall. From 2002 to 2008, he served as Simpson Strong-Tie’s Branch Engineering Manager for the Southwest United States. In 2008, he was promoted to Simpson Strong-Tie’s Vice President of Engineering, and in that capacity he organized and managed the support structure for multiple engineering groups (Connectors, Lateral systems, Fasteners, Anchors, FRP, RPS, Truss and Engineering
Services), standardized policies and modernized and expanded our research and test capabilities. Mr. Arevalo is a licensed California structural engineer and civil engineer, previously was a part-time lecturer in timber design at California Polytechnic University at Pomona and is the author of several publications on wood structures. He has represented Simpson Strong-Tie on national television promoting deck safety. Mr. Arevalo holds degrees from California Polytechnic University at San Luis Obispo and the University of California at Santa Barbara. Prior to joining Simpson Strong-Tie, he spent 19 years in private practice as a structural engineer.
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 COMPENSATION DISCUSSION & ANALYSIS
The Company’s business operations are led by its senior leadership team, which in 2020 included the executive officers whose biographies are provided above. In this section, we explain and discuss the executive compensation program that our Compensation and Leadership Development Committee (“CLDC”) designed and applied to our NEOs for 2020. This discussion is also intended to describe our compensation policies with respect to our NEOs and to provide a review of our key
compensation decisions and activities for 2020. Our goal in this discussion is to provide you with a better understanding, both in absolute terms and relative to our performance, of our executive compensation practices and the decisions made concerning the compensation payable to our NEOs, including our CEO and the other executive officers named in the “2020 Summary Compensation Table” below. Our NEOs for 2020 were the following individuals:
Name
Title
Karen Colonias
President and CEO
Brian J. Magstadt
CFO and Treasurer
Roger Dankel
President of North American Sales, Simpson Strong-Tie Company Inc.
Terry Hammons
Senior Vice President, General Counsel and Secretary
Kevin Swartzendruber
Senior Vice President, Finance
Executive Summary
2020 Performance Highlights
2020 was a challenging year due, in large part, to the impact of the COVID-19 pandemic. The Company took immediate action at the onset of this crisis to enact rigorous safety protocols in all of our facilities by improving sanitation measures, implementing mandatory social distancing, temperature screening, reducing on-site staff through staggered shifts and schedules, remote working where possible, and restricting visitor access to our locations. These actions, in addition to being deemed an essential business have enabled us to continue operating our business with minimal disruptions during the pandemic. During 2020, the Company also experienced the return of a large national home center customer as well as experienced increased sales due to increases in DIY and repair and remodel activities.
The Company focuses on designing, manufacturing, and marketing systems and products to make buildings and structures safe and secure. The Company, through its subsidiaries, designs, engineers, and manufactures structural construction products, including connectors, truss plates, anchors, fasteners and other products, and differentiates itself from competitors by designing and marketing end-to-end wood and concrete construction product lines. The Company also provides engineering services in support of some of its products and increasingly offers design and other software that facilitates the specification, selection and use of its products. The Company believes that its primary operating brand –
the Simpson Strong-Tie brand – benefits from strong brand name recognition among architects and engineers who frequently request the use of the Company’s products.
The nature of our industry demands that we adhere to a focused strategy to build stockholder long-term value over time. During 2020, our management team continued to execute against the strategic goals set by the Board, which resulted in increases in net sales and return on invested capital (“ROIC”) for our stockholders. Our key 2020 performance highlights are set forth below:
Company-wide net sales increased 11.6% to $1.27 billion, and have increased 9.1% on a compounded annual growth basis since 2017;
Gross margin was 45.5%, which we believe is industry leading;
Income from operations increased to $252.4 million and operating margins were 19.9%;
Diluted net income per share of our common stock increased to $4.27; and
ROIC increased to 20.0% from 15.3% in 2019.
Our management’s focused execution and continued commitment to a disciplined capital allocation strategy delivered strong results for our stockholders in 2020, including the following achievements:
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Net sales increased in each of 2018, 2019 and 2020. 2018 net sales increased 10.4% primarily due to increases in both sales volumes and average net sales unit prices in the United States, offset partially by sales decreases in Europe due to the sales of a portion of a European subsidiary. 2019 net sales increased 5.4% primarily due to higher sales volume and average unit price in the United States, offset partially by sales decreases in Europe due to negative foreign currency impacts. 2020 net sales increased 11.6% primarily due to increased sales volume.
Operating margins have improved since 2018, primarily due to increased gross margins, the reduction of operating expenses as a percent of revenues and gains on sales of assets in 2018 and 2019. The reduction in operating expenses as a percent of revenues have been a focus for the company as a result of the 2020 plan announced in late 2017. In 2020 the Company benefited from certain expenses that were limited by restrictions due to COVID-19.
ROIC has increased since 2018 on higher net income due to the higher operating margins as noted above as well as the reduced effective tax rate as a result of the 2017 tax law change. Invested capital has increased 14.4% from 2018 through 2020 reflecting a 13.9% compounded annual growth rate in net income offset by the company returning capital to stockholders in the form of dividends and share repurchases over the same period. Capital returned to stockholders for each of the three years 2020, 2019 and 2018 was approximately $116.6 million, $101.1 million and $150.4 million, respectively.
The following chart shows the Company’s performance against the S&P 500, the Dow Jones U.S. Building Materials & Fixtures Index and our Compensation Peer Group in terms of total stockholder returns (“TSR”) delivered to our stockholders in 2020.
2020 TSR Performance

*
The Compensation Peer Group line represents a peer group index calculated based on 2020 weighted average TSR of our peer group. See “Comparative Market Information” below for the composition of our peer group.
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2020 Leadership Changes
In January 2020, we announced that Ricardo M. Arevalo would step down as Chief Operating Officer of Simpson Strong-Tie, Inc. in February 2020. In October 2020, we announced the appointment of Michael Olosky as Chief Operating Officer.
In light of these changes to the Company’s executive leadership team, this CD&A and the Executive
Compensation Tables and disclosure that follow include compensation information for members of the executive leadership team who were employed for the full year ended December 31, 2020.
2020 NEO Compensation Mixes
Our NEOs’ compensation generally is comprised of three core components – (1) base salary, (2) short-term cash awards, and (3) long-term equity awards, which are structured to complement each other and establish a balanced and performance-based pay structure. The overarching goals of our compensation programs for 2020 were to attract, motivate and retain
our employees, including our management team, establish a strong sense of ownership, and closely align our executives’ and employees’ interests with those of our stockholders. The target compensation mixes for 2020 for our CEO and, on average, our other NEOs are set forth below:

Pay-for-Performance: Key 2020 NEO Compensation Outcomes
The 2020 compensation results for our NEOs continued to reflect the CLDC’s pay-for-performance philosophy of aligning executive compensation directly with our operational and financial performance:
Base Salaries:
The changes in base salaries listed below were based on the review of comparative compensation peer group data, and also took into account considerations such as individual performance and contribution.
CEO: Ms. Colonias, our CEO received a base salary rate increase of $25,000 from $775,000 per year to $800,000 per year;
CFO: Mr. Magstadt, our Chief Financial Officer received a base salary rate increase of $15,000 from $500,000 per year to $515,000 per year;
President, NA Sales: Mr. Dankel, our President, NA Sales, Simpson Strong-Tie Co. received a base salary rate increase of $10,000 from $460,000 per year to $470,000 per year;
Senior Vice President, General Counsel: Mr. Hammons, our Senior Vice President, General Counsel received a base salary rate increase of $20,000 from $350,000 per year to $370,000 per year; and
Senior Vice President, Finance: Mr. Swartzendruber, our Senior Vice President, Finance received a base salary rate increase of $11,600 from $288,900 per year to $300,500 per year.
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Executive Officer Cash Profit Sharing
(“EOCPS”) Awards:
CEO: Our CEO received a total 2020 EOCPS payout of $1,600,000, reflecting 200% of her target 2020 EOCPS award opportunity ($800,000), which payout was determined based on our 2020 quarterly and annual operating income achievement versus the quarterly and annual goals established by the CLDC at the beginning of 2020; and
Other NEOs: Our other NEOs received total 2020 EOCPS payouts as set forth below, reflecting 200% of each of their target 2020 EOCPS award opportunities, which payout was again determined based on our 2020 quarterly and annual operating income achievement versus the quarterly and annual goals established by the CLDC at the beginning of 2020.
All NEOs paid out at approximately 200% their target
NEO
Payout
Target
CFO
$515,000
$257,500
President of Sales
$470,000
$235,000
SVP, General Counsel
$370,000
$185,000
SVP, Finance
$300,500
$150,250
The EOCPS payouts for the CEO and other NEOs were earned, with no adjustments related to COVID-19, and with no discretionary adjustments.
Equity Awards:
In 2020, our CEO was granted equity awards with a target grant date total value of approximately $2,400,000, and our other NEOs were granted equity awards with target grant date values from approximately $215,000 to approximately $550,000. Approximately 20% of the target equity award value was delivered in the form of time-based restricted stock units (“RSUs”) and the other approximately 80% of the target equity award value was delivered in the form of performance-based restricted stock units (“PSUs”). These PSUs are fully “at-risk” and will vest only on achievement of revenue growth and ROIC performance metrics in a 2020-2022 measurement period. The awards are forfeited if the threshold performance goals are not met, and the maximum amount of shares that may potentially vest under these PSUs (if and when the highest-tier performance goals are met) are capped at 200% of the target shares. The RSUs are generally subject to three-year staggered vesting with 20%, 40% and 40% of the RSUs vesting at each of the first, second and third anniversaries of the grant date.
Please refer to the “2020 Summary Compensation Table,” “NEO Compensation Program Design” and “Executive Compensation Analysis” subsections below for a more detailed disclosure of our CEO and the other NEOs’ 2020 total compensation programs and values.
NEO Compensation Program Design
Executive Compensation Philosophy
Our overall compensation philosophy is to align the interests of our employees and stockholders and provide employees, including our management, incentives to increase stockholder value. To this end, we seek to position our NEOs’ total target compensation at market competitive levels, based on comparative market data for companies similar to us in terms of revenue size and industry. However, we use this data as a market check on our compensation decisions, and not to formally benchmark elements of NEO compensation. To motivate and retain our NEOs and other employees, we aim to compensate them fairly relative to our performance. To achieve these objectives under our pay-for-performance guiding
principal, we created compensation programs that reward achievement of specific performance goals, such as operating profit, revenue growth, ROIC and the efficient use of assets. We believe that our current compensation programs allow us to attract high-performing employees and help us retain the services of employees whose contributions are instrumental in achieving our strategies. The CLDC and the Board regularly review and refine our executive compensation programs to help ensure that such programs continue to reflect policies and practices that are aligned with our pay-for-performance philosophy and the interest of our stockholders.
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Compensation-Setting Process
Role of Compensation and Leadership Development Committee, Board and Management. The CLDC develops and updates our compensation policies and practices, oversees our compensation programs, sets performance goals relevant to such programs, evaluates our performance in light of such goals, and determines and exercises discretion over executive compensation, including reviewing and approving annual compensation to our NEOs. The CLDC does not delegate its role in determining executive compensation. Our officers do, however, participate in our annual budgeting process, which forms the basis for the CLDC to set, and determine the achievement of the performance goals under our compensation programs. The Board reviews and approves the annual budget, and based on that, the CLDC approves both cash EOCPS payouts and equity-based awards to our NEOs. Our CEO provides significant input in recommending the structure of our pay programs and recommending any
adjustments to the other NEOs’ base salary and target incentive compensation opportunities. The CLDC can accept, reject or modify the CEO’s recommendations as it sees fit, subject to the terms of any applicable program documentation.
Role of Compensation Consultants. The CLDC has engaged, and expects to continue to engage, independent advisers, including compensation consultants, from time to time to assist in carrying out its responsibilities. The specific services provided by Meridian to us in 2020 consisted of: updating our industry peer group and comparative compensation analysis, assessment of the appropriateness and competitiveness of our executive compensation program as compared to those of the selected industry peer group, recommendation of changes to our executive compensation programs, and evaluation of our executive and director compensation.
Board Responsiveness to Stockholders
In late 2020 and early 2021 we continued our annual engagement with our stockholders. This engagement gave us a basis for further evaluation of our practices in executive compensation and corporate governance. This initiative was led by the Board and senior management, by reaching out to stockholders holding 61.1% of our outstanding shares. Out of those stockholders who elected to engage with us (representing approximately 23.1% of our outstanding shares), we organized follow-up calls. This outreach reflects our commitment to understand and address key issues of importance to our stockholders. In line with the high support for our executive compensation program as expressed in the 2020 annual stockholder advisory vote to approve our NEO compensation, stockholders continued their support for our compensation program and the changes made over the past few years. This strong level of support led our CLDC to conclude that material changes in our
executive compensation design, solely due to the outcome of the Say-on-Pay vote, were not warranted for 2021.
Following the 2020 Annual Meeting of Stockholders, we again continued to actively engage with numerous stockholders on matters of corporate governance, executive compensation and related matters. These efforts were led by the Chair of our Board, our CFO and our General Counsel to help ensure a direct line of communication between the Board and our stockholders, and stockholder feedback was promptly relayed to the full Board and incorporated into our governance and compensation reviews. We also continue to work with Meridian to monitor changes in executive compensation to keep our executive compensation program aligned with both our business strategy and best practices in our competitive market.
2020 Executive Compensation Key Policies and Practices
The CLDC has continued to operate the following policies and practices to closely align our management’s compensation programs with stockholder value creation and the Company’s strategic goals:
Initially Position Target Total Compensation at Market Competitive Levels: We do not formulaically set the elements of our executive compensation to be consistent with specific market benchmarks, but instead use a general
view of market pay data to compare NEO target total compensation to the median target total compensation of the peer group (see “Comparative Market Information” below for the composition of our peer group). We also consider historical and projected peer group performance when establishing our incentive plan performance goals. This includes setting well-balanced short-term and long-term performance objectives that enable executives to generally earn actual pay
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above median for out-performing expectations, and vice versa for performance below expectations (see “Setting Performance Goals” below for further context on our goal-setting process). In this way, we use market data as a market check, and just one element of our compensation setting process;
Pay for Performance: We have created an incentive structure that places a significant portion of our NEOs’ target compensation at risk based on our short-term and long-term performance;
Performance Based Distributed Cash Awards: Our EOCPS program is based on both quarterly and annual performance measurement of our operating profits;
Equity Awards with Extended Vesting: NEOs’ awards under our equity incentive plan are performance-based awards (80%) with a 3-year performance measurement period, in addition to time-based awards (20%) that are subject to back-loaded, staggered vesting also over an extended period (for example, 20%/40%/40% over 3 years);
No Guaranteed Incentive Awards: NEOs’ EOCPS awards are 100% performance-based,
while NEOs’ outstanding performance-based equity awards are fully at-risk and contingent on achievement of revenue growth and ROIC goals; and
No Overlapping Metrics: NEOs’ EOCPS awards and performance-based equity awards
have distinct performance metrics, which are aligned with our strategy and priorities.
We are also committed to maintaining strong compensation risk management practices that support our pay for performance philosophy, mitigate risk, and align interests of our executives and our stockholders:
Annual Review: The CLDC conducts annual evaluations of NEOs’ compensation;
Caps: We cap payout amounts for the NEOs’ maximum EOCPS and performance-based equity awards;
Double Triggers: Equity awards are subject to double trigger change-in-control requirements;
Compensation Claw-Back: We maintain and operate a robust compensation recovery policy;
Ownership Guidelines: Stock ownership guidelines are in place for our NEOs and Board;
No Hedging and Pledging: We adopted robust anti-hedging and anti-pledging policies;
Limited Perquisites: We do not provide NEOs with material perquisites; and
Strategic Guidance: The CLDC retains an independent compensation consultant to provide strategic guidance to the CLDC regarding executive and director compensation.
Setting Performance Goals
A key aspect of our compensation programs focuses on the selection of performance metrics that (1) reflect our long-term strategic goals and (2) appropriately incentivize our executives to deliver sustainable performance across key areas. The CLDC sets performance goals for our NEOs’ EOCPS and performance-based equity awards prior to granting such awards and remains engaged to monitor and certify the achievement of the goals. The CLDC believes in the importance of setting challenging, but achievable, performance goals for our NEOs. The CLDC maintains a robust and collaborative performance goal setting process with its independent compensation consultant and our management. The goal setting process spans multiple CLDC meetings on both sides of the year-end process to ensure an active, healthy discussion and ability to respond and adapt the performance goals to changing company, industry or market conditions prior to finalization. In
establishing performance goals with respect to our NEOs’ EOCPS and performance-based equity awards, the CLDC reviews market-calibrated data sets that include:
historical and future projected financial performance for our peer group;
historical and future projected financial performance more broadly in our industry;
our historical financial performance and multi- year forward-looking business plans;
our external guidance, communications and the expectations of our stockholders; and
the historical realizable compensation for our executives and the alignment between their pay and performance against expectations.
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After carefully evaluating the aforementioned factors and incorporating inputs from its independent compensation consultant and our management, the CLDC approves the performance goals for our NEOs.
The performance goals for NEOs’ 2020 EOCPS and performance-based equity awards and their alignment with our strategies are set forth below:
Incentive Component
Performance Metric
Alignment with Our Strategies
EOCPS awards (STI)
1-year Operating Profit
A key measure of our profitability; supports long-term value creation; and maintains our long-standing culture of promoting sense of ownership among employees to deliver stockholder value.
Performance-based equity awards (LTI)
3-year Revenue Growth
Aligns with our ongoing focus on growing revenues across key business segments; and facilitates decisions that will drive sustainable revenue growth.
Performance-based equity awards (LTI)
3-year ROIC(1)
Reinforces our ongoing focus on maximizing our investment returns; and prompts thoughtful capital allocation strategy.
(1)
The Company’s ROIC for a fiscal year is calculated based on (a) the net income of that year as presented in the Company’s consolidated statements of operations prepared pursuant to generally accepted accounting principles in the U.S. (“GAAP”), as divided by (b) the average of the sum of the total stockholders’ equity and the total long-term debt, at the beginning of and at the end of such year, as presented in the Company’s consolidated balance sheets prepared pursuant to GAAP for that applicable year. As such, the Company’s ROIC, a ratio or statistical measure, is calculated using exclusively financial measures presented in accordance with GAAP.
Executive Compensation Analysis
2020 Compensation Program Elements
The Board believes that, to maintain a sense of unity and fairness, the forms of compensation for our NEOs generally should match those of our other employees. Under this principle, our compensation programs for our executive population, including our NEOs, include three core elements:
Base salaries and contributions to profit sharing trust accounts;
Cash profit sharing awards, such as EOCPS awards to our NEOs; and
Long-term equity awards, such as PSUs and RSUs granted to our NEOs.
Each element of our compensation programs possesses characteristics intended to motivate our NEOs and other employees in different ways. We believe that coordinated compensation elements work best to help us to retain their services and to motivate them to achieve results that increase stockholder value.
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2020 Base Salaries
A NEO’s salary is a fixed minimum amount for his or her time invested in performing the functions of the job. Salary alone, however, does not provide performance opportunity for the NEO to earn additional compensation or incentivize increasing stockholder value over time. Our NEOs’ salaries are generally determined by the CLDC based on historical salary levels for their respective positions, current compensation for similar positions at our peers, changes in the NEOs’ responsibilities and cost of living
adjustments. Based on its review of the NEOs’ base salary rates and the market data provided by the compensation consultant, the CLDC decided to increase the salary rates for the NEOs by approximately 2-6%. These increases were provided specifically as a result of peer data and employee performance. The table below sets forth the NEOs’ respective 2019 and 2020 annual salary rates, reflecting these changes:
2019
Annual Salary
2020
Annual Salary
%
Increase
Karen Colonias, President and Chief Executive Officer
$775,000
$800,000
3.2
Brian J. Magstadt, Chief Financial Officer and Treasurer
$500,000
$515,000
3.0
​Roger Dankel, President of North American Sales, Simpson Strong-Tie Company, Inc.
$460,000
$470,000
2.2
Terry Hammons, Senior Vice President, General Counsel and Secretary
$350,000
$370,000
5.7
​Kevin Swartzendruber, Senior Vice President, Finance
$288,900
$300,500
4.0
Base salaries and related payments earned by each of our NEOs with respect to each of the three years ended December 31, 2020, 2019 and 2018,
respectively, if applicable, are set forth in the “2020 Summary Compensation Table” below.
2020 Executive Officer Cash Profit Sharing (“EOCPS”) Program Design
We maintain the EOCPS Plan for our executive officers, similar to the cash profit sharing plan maintained for other qualified employees, to motivate them to achieve these short-term performance goals. We believe that both of these plans have significantly contributed to our growth.
The CLDC is responsible for administrating the EOCPS Plan. The CLDC measures our Company’s or our subsidiaries’ performance against pre-determined performance goals, which are currently based on our Company’s or our subsidiaries’ operating profits, and approves our NEOs’ individual awards. EOCPS award payouts for 2020 were based on operating income achievement versus pre-determined quarterly and annual goals.
Under the EOCPS Plan, any earned award will be paid at such time as determined by the CLDC as long as all awards with respect to periods within a fiscal year are paid by March 15 of the succeeding fiscal year. We currently pay four quarterly awards and one annual award based on our achievement versus our pre-determined operating income goals for such quarters and the full year. For the four quarters in a year, a NEO will earn an aggregate award payout based on 50% of his or her annual target award opportunity. As for the
last payment, the NEO will earn an award payout based on the remaining 50% of his or her applicable annual target award opportunity. The effect of the five payments (four quarterly and one annual) is to increase the target amount of awards made following the end of the year (the sum of the four target quarterly awards equaling the target annual award), with the year-end awards contingent on achieving the performance versus the operating income goals established for the entire year.
If the operating income achievement is less than the threshold goal in any quarter, our NEOs receive no EOCPS award payment for such quarter. If the annual operating income achievement is less than the annual threshold goal for the year, our NEOs receive no EOCPS award payments for the annual portion of the award, but may still receive one or more quarterly EOCPS payments during the year. If the operating income achievement is less than the threshold goal in each quarter and for the full year, our NEOs receive no EOCPS award payouts for that year.
We allocated EOCPS award opportunities among our NEOs as approved by the CLDC at the beginning of the year based on the officers’ levels of responsibility and contribution to the success of the Company or the
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home office operating unit. Unless the composition or responsibilities of our NEOs change, their award opportunities generally do not change substantially
from year to year, although the CLDC has discretion to make any changes that it considers appropriate.
2020 Operating Income Achievements and EOCPS Awards
The CLDC determined to use the operating income of Simpson Strong-Tie Company Inc., our primary operating subsidiary, as the performance metric for 2020 under the EOCPS Plan. Target award payouts were set for each NEO relative to base salary. The
EOCPS minimum payout hurdle was met is 80% of the pre-established target operating income goal, and payment for such minimum performance equals 50% of the NEO’s award payout target.
Operating profit of Simpson Strong-Tie Company Inc. is generally calculated as follows:

The CLDC established the 2020 quarterly and annual threshold, target and maximum operating profit goals,
all of which are tied to the 2020 budget, as follows (actual results against goals also shown):
2020 EOCPS Goals
NEO/Quarter
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
2020
Year
Threshold Operating Profit
$36,104,000
$64,904,000
$68,130,000
$45,160,000
$214,298,000
Target Operating Profit
$45,130,000
$81,130,000
$85,162,000
$56,450,000
$267,872,000
Maximum Operating Profit
$63,182,000
$113,582,000
$119,227,000
$79,030,000
$303,601,000
Actual Operating Profit
$61,524,437
$91,436,457
$113,720,512
$59,327,578
$326,008,984
Regarding these goals, threshold operating profit represented 80% of the target operating profit for the quarter or full year, while maximum qualified operating profit represented 140% of the target operating profit for the quarter or 113.34% of the target operating
profit for the full year. The goal levels were established on a subjective basis by the CLDC based on its judgment and evaluation of the seasonality of the Company’s business.
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The threshold target, and maximum annual amounts that may be paid out under the EOCPS Plan to each of our NEOs for 2020 were as follows:
2020 Threshold
Annual Payouts
2020 Target
Annual Payouts(1)
2020 Maximum
Annual Payouts
Karen Colonias
$400,000
$800,000
$1,600,000
Brian J. Magstadt
$128,750
$257,500
$515,000
Roger Dankel
$117,500
$235,000
$470,000
Terry Hammons
$92,500
$185,000
$370,000
Kevin Swartzendruber
$75,125
$150,250
$300,500
(1)
Amounts (four quarterly and one annual award) expected to be paid to the NEO for 2020 if 2020 qualified operating profit of Simpson Strong-Tie Company Inc. was $267,872,000.
Threshold payout levels represented 50% of the target payout levels, and maximum payout levels represented 200% of the target payout levels. Further, the performance goals for each quarter are established based on the seasonality of our planned profits. Our performance results for each quarter and for the full year were as follows: 136.3% for first quarter; 112.7% for second quarter; 133.5% for third quarter; 105.1% for fourth quarter; and 121.7% for the full year.
Based on actual achievement of qualified operating profit during each quarter and for the full year 2020, the NEOs earned 200% payout of full year 2020 target amounts which represents 113.3% performance achievement during the full year 2020. The 200% payout was earned, with no adjustments related to COVID, by experiencing greater operating profits primarily due to lower cost of sales and operating expenses and increased revenues.
Based on these results, the payouts for our NEOs for full year 2020 were as follows:
NEO
Payouts
Karen Colonias
$1,600,000
Brian J. Magstadt
$515,000
Roger Dankel
$470,000
Terry Hammons
$370,000
Kevin Swartzendruber
$300,500
EOCPS awards paid to each of our NEOs with respect to each of the three years ended December 31, 2020, 2019 and 2018, respectively, if applicable, are set forth in the “2020 Summary Compensation Table” below.
2020 Long-Term Equity Awards
Our NEOs’ long-term compensation is entirely equity-based. We grant equity awards to our NEOs pursuant to the Company’s current equity incentive plan, the amended and restated 2011 Incentive Plan (the “2011 Incentive Plan”).
Restricted Stock Units in General.
Our NEOs’ 2020 awards of restricted stock units were made in the following two forms:
1.
time-based restricted stock units (“RSUs”) that are subject generally to a three-year staggered vesting with 20%, 40% and 40% vesting on each of the first, second and third anniversary of the grant date, respectively; and
2.
performance-based restricted stock units (“PSUs”) that generally vest based on the achievement of both revenue growth and return on invested capital at the end of a three-year performance period.
RSUs accounted for 20% of the 2020 target equity awards of our NEOs while PSUs accounted for the remaining 80%. In terms of target equity award values: Ms. Colonias’ target award value increased by $300,000 from $2.1 million in 2019 to $2.4 million in 2020. The other NEOs target award values were unchanged from their 2019 levels which were as follows: Mr. Magstadt - $550,000; Mr. Dankel - $455,000; Mr. Hammons – $225,000; and Mr. Swartzendruber – $215,000. The CLDC evaluated
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peer group market data provided by Meridian and considered additional internal factors such as performance prior to increasing Ms. Colonias’ 2020 target award value.
Our NEOs’ 2020 RSU Awards. In 2020, the CLDC granted each of our NEOs RSUs as indicated below:
Named Executive Officer
Shares Under
2020 RSUs
Karen Colonias
5,988
Brian J. Magstadt
1,373
Roger Dankel
1,136
Terry Hammons
562
Kevin Swartzendruber
538
See “Accelerated Vesting and Payout” and “Potential Payments on Termination or Change in Control” below for a discussion of potential early vesting of such RSU awards.
Our NEOs’ 2020 PSU Awards. The CLDC set the performance goals for our NEOs’ 2020 PSU awards in early 2020, with 50% of the goals based on the Company’s 3-year revenue growth (the “Revenue Growth Goals”) and the remaining 50% based on 3-year average ROIC (the “ROIC Goals”). Our NEOs’ 2020 PSUs are measured against such goals for a three-year cliff-vesting performance period starting on January 1, 2020, and ending on December 31, 2022. The number of PSU shares that would vest in favor of a NEO under his or her 2020 PSU awards is between 0% and 200% of his or her target award opportunity, depending on the extent to which the performance goals will have been achieved at the end of 2022. The number of the target shares of our common stock and the maximum amount of shares of common stock that could potentially vest under the 2020 PSU awards granted to each of our NEOs is as follows:
Target PSU
Shares Under
2020 PSU
Awards
Maximum PSU
Shares Under
2020 PSU
Awards(1)
Karen Colonias
23,952
47,904
Brian J. Magstadt
5,488
10,976
Roger Dankel
4,540
9,080
Terry Hammons
2,244
4,488
Kevin Swartzendruber
2,144
4,288
(1)
No fractional shares will be issued pursuant to any PSU award and, therefore, any fractional shares may be forfeited or otherwise eliminated as determined by the CLDC.
Our Participating NEOs’ 2018-2020 PSU Awards. The CLDC set the performance goals for 2018 PSU awards for all NEOs except Mr. Hammons in early
2018. These PSUs were fully “at-risk” and were to vest only on achievement of compounded annual revenue growth and average ROIC performance metrics in a 2018-2020 measurement period.
Threshold, target and maximum levels for these performance metrics were as follows:
Threshold
(%)
Target
(%)
Maximum
(%)
Revenue Growth
5
8
12
Average ROIC
9
13.5
18
Actual performance results for the 2018-2020 performance period were 9.1% compounded annual revenue growth (earning approximately 126.9% of the target PSUs for this metric) and 16.0% average ROIC (earning 156.1% of the target PSUs for this metric), resulting in a total payout of approximately 141.5% for the 2018 PSU awards to the participating NEOs.
Payouts for the 2018 PSU awards for the participating NEOs were as follows:
2018 PSU Shares
Payouts(1)
Karen Colonias
30,103
Brian J. Magstadt
10,822
Roger Dankel
8,360
Kevin Swartzendruber
3,441
(1)
No fractional shares will be issued pursuant to any PSU award and, therefore, any fractional shares may be forfeited or otherwise eliminated as determined by the CLDC.
Potential Accelerated Vesting and Payout
Under the 2011 Incentive Plan, the vesting of restricted stock units may accelerate in two situations. First, when an employee ceases employment with us upon his or her retirement (depending on whether the employee meets certain age and service tenure conditions), death or disability, all of the employee’s unvested restricted stock units vest. Second, all outstanding restricted stock units held by an employee vest on a change in control that involves a substantial change in his or her terms of employment or involuntary termination. In addition, the CLDC may cause awards granted pursuant to the 2011 Incentive Plan, including awards to our NEOs, to vest earlier in certain other situations, at its discretion.
Our NEOs have entered into grant agreements with the Company with respect to their 2020 PSU and RSU awards, which agreements provide for early vesting in case of death or disability. The 2020 grant agreements also provide that, for the PSU or RSU awards to vest ahead of schedule, a recipient may retire at age 55 after having worked at the Company or its subsidiaries
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for 15 years (but for each year that the recipient delays his or her retirement after reaching age 55, he or she may work one year less and still retire). In addition, to increase the compatibility of the awards with Internal Revenue Code Section 409A and avoid potential negative tax implications for the recipient and the Company, the grant agreements for 2020 RSU awards provide that, in case the awards vest ahead of schedule and are determined by the CLDC to be subject to Section 409A, they may only be paid out in the enumerated situations as allowed under Section 409A. In particular, in case a recipient is a specified employee under Section 409A, the awards cannot be paid out until the date that is six months after the employee’s separation of service, which generally is when the employee completely stops working for the Company and its subsidiaries. Similarly, the 2020 grant agreements for PSU awards provide that, irrespective of when the PSU awards vest, they may only be paid out following the last day of the applicable vesting period after the performance period has concluded and subject to achievement of the applicable performance goals. Further, the 2020 grant agreements for PSU awards require the PSU shares that could eventually become payable in favor of the recipient following the last day of the applicable vesting period after the performance period to be prorated based on the early-vesting date and the date when the applicable vesting period is scheduled to expire.
Change in Control or Asset Sale
The 2011 Incentive Plan provides that, on a change in control of the Company, if the surviving or resulting entity refuses to continue the PSU or RSU awards and does not substitute similar awards, and if the nature and terms of employment or engagement, including compensation and benefits, of a recipient will change significantly as a result of the change in control, then
the awards will vest ahead of schedule. Individual grant agreements may alter this default arrangement.
Our NEOs’ 2020 grant agreements do not change the default rule under the 2011 Incentive Plan, but additionally provide that, in the case of an asset sale, the PSU or RSU awards will vest ahead of schedule in certain situations, including where a recipient is not subsequently employed or engaged by the surviving or resulting entity or the successor to the sold business or there is a significant change in the nature and terms of the subsequent employment or engagement of the recipient. For ease of administration, our NEOs’ 2020 grant agreements also use a broader definition, “sale event,” to encompass both change-in-control and asset-sale situations, and therefore override the 2011 Incentive Plan with respect to any change in control of the Company affecting the awards thereunder.
In addition, in order to provide a “double-trigger” accelerated vesting mechanism, our NEOs’ 2020 grant agreements for PSU and RSU awards require that for the PSU or RSU awards to vest ahead of schedule on a sale event, an NEO’s employment with the Company and its subsidiaries (or the acquiring, surviving or resulting entity) will first need to be terminated, either by the officer for good reason or by his or her employer without cause within two years from the sale event. In case of early vesting of the PSU awards because of a sale event, the PSU shares thereunder will be subject to the proration described in the “Potential Accelerated Vesting and Payout” section above.
See “Potential Payments on Termination or Change in Control” below for a more detailed discussion on early vesting of our NEOs’ PSU and RSU awards.
2020 Profit Sharing Trust Contributions
The Company and its U.S. subsidiaries maintain a defined contribution profit sharing trust plan for U.S.-based non-union employees, including our NEOs, while some of our non-U.S. subsidiaries maintain similar plans for their employees. An employee is eligible for participation in a given calendar year if he or she is an employee on the first and last days of that year and completes the minimum service requirement during that year. As of December 31, 2020, the minimum service requirement was at least 1,000 hours of service. We currently make contributions to employees’ profit sharing trust accounts in amounts equal to 7% of the employees’ qualifying salaries or wages (regular plus overtime pay), which amounts are subject to a 6-year vesting
period. We contribute an additional 3% of their qualifying salaries or wages to their profit sharing trust accounts each quarter to comply with the safe-harbor rules that govern the plan.
The safe-harbor contribution is not forfeitable and fully vests when the contribution is made. The plan limits trust contributions to amounts deductible for federal income tax purposes under Section 404(a) of Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). Under the plan, other than the 3% safe-harbor contribution, the Board has exclusive
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discretion to authorize the trust contributions and change them at any time. Subject to such discretion, we expect the current profit-sharing-trust contribution rate to continue.
Our CEO, CFO and Vice President of Human Resources are currently trustees of the profit sharing trust plan. All of our participating employees under the plan, including our NEOs, are entitled to proportionate shares of forfeited contributions from employees who terminate their employment with us before such contributions fully vest. The plan also includes a 401(k)
feature that allows our employees, including our NEOs, to contribute their pre-tax and/or Roth IRA earnings in addition to the amounts that we contribute to their accounts. We generally view our contributions to employees’ profit sharing trust accounts as serving a similar objective as salaries. The table below sets forth, for each of our NEOs, the Company contribution that was made to his or her respective profit sharing trust account for 2020, as compared to his or her 2019 profit sharing trust contribution:
Profit
Sharing Trust
Contribution for
2019
Profit
Sharing Trust
Contribution for
2020(1)
Karen Colonias, President and Chief Executive Officer
$28,000
$28,500
Brian J. Magstadt, Chief Financial Officer and Treasurer
$28,000
$28,500
​Roger Dankel, President of North American Sales, Simpson Strong-Tie Company, Inc.
$28,000
$28,500
Terry Hammons, Senior Vice President, General Counsel and Secretary
$28,500
​Kevin Swartzendruber, Senior Vice President, Finance
$28,000
$28,500
(1)
If we employed the NEO on December 31, 2020, or if he or she retires during 2021 after reaching the age of 60, we will contribute to his or her profit sharing trust account 10% of his or her salary (including the 3% safe-harbor contribution), with a contribution limit of $28,500 for 2020, plus a pro-rata share of forfeited contributions from employees who terminate their employment before such contributions fully vest. The amounts in this column reflect that no such forfeitures occurred. Of such contributions, 30% were paid quarterly in the month following each calendar quarter of 2020 and the remaining 70% is being paid in 2021.
Contributions made to each of our NEOs’ profit sharing trust accounts with respect to each of the three years ended December 31, 2020, 2019 and
2018, respectively, if applicable, are set forth in the “2020 Summary Compensation Table” below as part of “All Other Compensation.”
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Comparative Market Information in the Executive Compensation-Setting Process
Designation of Peer Companies to Help Set Executive Compensation
The Company maintains a comparative market peer group that includes certain companies in the building products or construction material industries that we consider our peer companies for comparative compensation purposes for NEOs. The peer group is evaluated on an annual basis to assess its continued appropriateness based on a number of factors including: industry, revenues, and stockholder feedback. These companies designated as peers individually had revenues between $4.5 million and
$2.3 billion in 2019, which values are approximately 0.4 to 2.1 times the Company’s 2019 revenue.
The following 16 companies in the building products or construction material industries were considered our peer companies in the process of setting compensation for our NEOs for 2020. These 16 companies and the Company, ranked based on their 2019 revenues, are set forth below:
2019 Revenues
2019 Assets
(in thousands)
Insteel Industries, Inc.
$456,000
$294,000
AAON, Inc.
470,000
372,000
Continental Building Products, Inc.
529,000
673,000
PGT Innovations, Inc.
745,000
923,000
Trex Company, Inc.
746,000
593,000
Quanex Building Products Corp.
852,000
692,000
GCP Applied Technologies Inc.
1,014,000
1,303,000
Armstrong World Industries
1,038,000
1,494,000
Gibraltar Industries, Inc.
1,048,000
985,000
Simpson Manufacturing Co., Inc.
1,137,000
1,096,000
Advanced Drainage Systems, Inc.
1,385,000
1,043,000
Eagle Materials, Inc.
1,394,000
2,170,000
Apogee Enterprises, Inc.
1,403,000
1,069,000
American Woodmark Corp.
1,646,000
1,530,000
Summit Materials, Inc.
1,725,000
4,068,000
Masonite International Corp.
2,177,000
1,937,000
Patrick Industries, Inc.
2,338,000
1,471,000
Our compensation consultant gathered data on the salary, bonus, total cash compensation, long-term incentives and total direct compensation paid in 2019 by these peer companies to support the CLDC’s compensation decisions. Following the peer group review in 2019, the CLDC removed U.S. Concrete,
Inc. and added GCP Applied Technologies Inc. based on a number of factors including industry, business operations, revenues, market capitalization, operating margin and stockholder feedback. Also, in 2020, the CLDC removed Continental Building Products from the peer group due to acquisition.
Other Compensation Considerations and Practices
The Board believes that it is in the best interests of the Company and its stockholders to create and maintain a company culture that emphasizes integrity and accountability and a compensation philosophy that focuses on pay-for-performance.
The Board has determined that an annual advisory vote by our stockholders on the compensation of our NEOs allows stockholders to provide timely, direct input on our compensation philosophy, policies and
practices. The Board continues to believe that such an annual vote is consistent with our continuing efforts to engage in an open dialogue with our stockholders on the compensation of our NEOs and related governance matters and therefore is in the best interests of our stockholders. In addition, all of our NEOs are subject to and currently in compliance with our compensation and governance guidelines and policies described in detail below.
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Stock Ownership and Retention Guidelines for NEOs
The Board seeks a strong alignment of the interests of our management and stockholders and maintains robust stock ownership guidelines for our NEOs. The guideline counts only common stock owned by our NEOs and does not include stock options or unvested RSUs and PSUs. Each continuing NEO had until 2020, or five years from becoming an NEO, to comply with his or her guideline. Until an NEO meets his or her stock ownership guideline, the NEO must hold at least
50% of any Eligible Shares, net of tax and any exercise price, acquired through stock option exercise, stock grant vesting, or payout of performance share units. As of December 31, 2020, each NEO has either complied with this guideline or is within the time allotted to comply. The guideline in effect during 2020 for stock ownership for each of our continuing NEOs is as follows:
Stock
Ownership
Guideline
Karen Colonias
$  3,000,000
Brian J. Magstadt
700,000
Roger Dankel
700,000
Terry Hammons
150,000
Kevin Swartzendruber
150,000
In January, 2021 the Board revised the Stock Ownership Guidelines to include unvested RSUs held by our NEOs as Eligible Shares and replaced the dollar amount with a multiple of each NEO’s base salary,
effectively increasing the ownership requirement for each NEO. The guideline for stock ownership for each of our continuing NEOs, as of January 2021, is as follows:
Stock Ownership Guideline
Chief Executive Officer
5x Base Salary
Chief Financial Officer
3x Base Salary
President, North American Sales
3x