Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement
Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
| ☑ |
Filed by the Registrant |
☐ |
Filed by a party other
than the Registrant |
|
| CHECK THE APPROPRIATE BOX: |
| ☐ |
|
Preliminary Proxy Statement |
| ☐ |
|
Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)) |
| ☑ |
|
Definitive Proxy Statement |
| ☐ |
|
Definitive Additional Materials |
| ☐ |
|
Soliciting Material under §240.14a-12 |
Comfort Systems USA, Inc.
(Name of Registrant as Specified In Its
Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
| PAYMENT OF FILING FEE (CHECK ALL BOXES THAT APPLY): |
| ☑ |
|
No fee required |
| ☐ |
|
Fee paid previously with preliminary materials |
| ☐ |
|
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
Table of Contents
Table of Contents
|
ANNUAL
STOCKHOLDER MEETING
FRIDAY,
May 16, 2025
11:00AM
CENTRAL TIME
THE
ST. REGIS HOUSTON
1919 Briar
Oaks Lane, HOUSTON, TEXAS 77027
We build
legacies.
Comfort
Systems USA is composed of more than 45 operating companies in approximately 180 locations across the United States. We are a
leading building and service provider for mechanical, electrical, and plumbing building systems. Our national footprint provides
us the ability to meet your objectives to build and maintain safe, comfortable, and efficient facilities.
Across
the United States, companies turn to Comfort Systems USA for our unparalleled expertise in mechanical and electrical services,
process piping, modular construction, controls, energy efficiency, and countless other nonresidential building renovation and
service needs. We focus on a long-term approach by emphasizing safety and sustainability in everything we do. You can count on
Comfort Systems USA to integrate planning, engineering, and implementation to provide you with a customized approach to all of
your complex building needs.
WE
BUILD LEGACIES
WITH OUR
CUSTOMERS
by
safely installing and maintaining their most critical building systems
PEOPLE
by
providing the tools and paths for individual career achievement
ACQUISITIONS
by
preserving and advancing their life’s work
OUR
VALUES
Be safe.
Be honest.
Be respectful.
Be innovative.
Be collaborative.
Our
values define, inform, and guide the way we operate on a daily basis, both within the company and in the communities where we
do business. |
Table of Contents
Comfort Systems USA, Inc.
675 Bering Drive, Suite 400
Houston, Texas 77057
Message from
our Chair and CEO
Franklin Myers I
Brian E. Lane I
April 7, 2025
To our Stockholders:
You are cordially invited
to attend the Annual Meeting of the Stockholders of Comfort Systems USA, Inc., which will be held on Friday, May 16, 2025 at 11:00
a.m. Central Time.
Information about the meeting
is presented on the following pages. At this meeting, you are being asked to elect the ten directors nominated by the board to
serve until the next annual meeting; to ratify the appointment of Deloitte & Touche LLP, independent auditors, as the Company’s
auditors for 2025; and to approve, by stockholder non-binding advisory vote, the compensation paid by the Company to its named
executive officers, commonly referred to as a “Say on Pay” proposal.
Please read the proxy statement,
which presents important information about the Company and each of the items being presented for stockholder vote. Whether or
not you intend to be present in person, when you have finished reading the statement, please submit your vote promptly by telephone
or internet, which saves the Company money, or by marking, signing, and returning your proxy card in the enclosed envelope so
that your shares will be represented.
We hope that many of you
will be able to attend the meeting in person. We look forward to seeing you there.
Sincerely yours,
 |
 |
Franklin
Myers
Chair of the Board |
Brian
E. Lane
President and Chief Executive Officer |
April 7, 2025
Whether
or not you intend to be present in person, please vote as soon as possible so that your shares will
be represented.
Please read the proxy
statement, which presents important information about the Company and each of the items being presented for stockholder
vote. |
|
Important
Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held
on May 16, 2025.
This proxy statement
and the 2024 Annual Report are available at http://proxy.comfortsystemsusa.com. |
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| 2025 Proxy
Statement |
1 |
Table of Contents
Friday,
May 16, 2025
11:00 a.m. Central
Time
The St. Regis Houston
1919 Briar Oaks Lane
Houston, Texas 77027 |
|
NOTICE
of Annual Meeting of Stockholders |
| |
| NOTICE
IS HEREBY GIVEN that the 2025 Annual Meeting of Stockholders (the “Annual Meeting”) of Comfort Systems USA,
Inc., a Delaware corporation (the “Company”), will be held: |
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Friday,
May 16, 2025
11:00 a.m. Central Time |
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The
St. Regis Houston
1919 Briar Oaks Lane
Houston, Texas 77027 |
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Stockholders
of record at the close of business on March 17, 2025 are entitled to notice of, and to vote at, the Annual Meeting. |
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By
Order of the Board of Directors, |
|
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| Laura
Howell |
| Corporate
Secretary |
| Houston,
Texas |
| April
7, 2025 |
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|
ITEMS OF BUSINESS
| 1 |
To
elect the following ten (10) directors nominated by the Board of Directors (the “Board”) to serve until the 2026
Annual Meeting of Stockholders |
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● |
Darcy
G. Anderson |
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Herman E. Bulls |
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Rhoman J. Hardy |
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Gaurav Kapoor |
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Brian E. Lane |
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Pablo G. Mercado |
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Franklin Myers |
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William J. Sandbrook |
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Constance E. Skidmore |
● |
Cindy L. Wallis-Lage |
| 2 |
To ratify the appointment
of Deloitte & Touche LLP, independent auditors, as the Company’s auditors for 2025 |
| 3 |
To hold a non-binding
advisory vote on the compensation paid by the Company to its named executive officers for 2024 (the “Named Executive
Officers”), commonly referred to as a “Say on Pay” proposal |
| 4 |
To transact any other
business that may properly come before the Annual Meeting or any adjournment or postponement thereof |
We are not aware of any other business to come
before the Annual Meeting. Any action may be taken on any one of the foregoing proposals at the Annual Meeting on the date specified
above, or on any date or dates to which the Annual Meeting may be adjourned or postponed. Stockholders of record at the close
of business on March 17, 2025 are entitled to notice of, and to vote at, the Annual Meeting. In the event that there are not enough
votes for a quorum or to approve or ratify any of the foregoing proposals at the time of the Annual Meeting, the Annual Meeting
may be adjourned or postponed in order to permit our further solicitation of proxies.
| TO
ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE EITHER FOLLOW THE DIRECTIONS FOR PHONE OR INTERNET VOTING ON YOUR PROXY
CARD OR SIGN, DATE, AND RETURN YOUR PROXY AS PROMPTLY AS POSSIBLE. AN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES, IS ENCLOSED FOR THIS PURPOSE. |
| REVIEW
YOUR PROXY STATEMENT AND VOTE IN
ONE OF FOUR WAYS: |
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| Please refer to the enclosed proxy materials or
the information forwarded by your bank, broker, or other intermediary to see which voting methods are available to you. |
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INTERNET
Visit the website
on your proxy card |
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BY TELEPHONE
Call the telephone number on your proxy card |
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BY MAIL
Sign, date, and return your proxy card in the enclosed envelope |
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IN PERSON
Attend the annual meeting in Houston, Texas |
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| 2 |
|
| 2025 Proxy
Statement |
Table of Contents
Table of Contents
Proxy Summary
2025 Annual Meeting
of Stockholders
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| TIME AND DATE |
LOCATION |
RECORD DATE |
Friday, May 16, 2025
11:00 a.m. Central Time |
The St. Regis Houston
1919 Briar Oaks Lane
Houston, Texas 77027 |
Stockholders of record at the close of business on March 17, 2025 are
entitled to notice of, and to vote at, the Annual Meeting |
Voting Matters and our
Board’s Recommendations
| Proposal |
Board’s
Recommendation |
See Page |
| 1 |
Election of the ten director nominees for a one-year term |
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FOR each director nominee |
14 |
| 2 |
Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent
registered public accounting firm for the year ending December 31, 2025 |
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FOR |
29 |
| 3 |
Advisory vote to approve the compensation of the Company’s Named Executive Officers |
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FOR |
30 |
In addition to these matters,
stockholders may be asked to vote on such other business as may properly come before our 2025 annual meeting of stockholders.
How to Vote
Stockholders of Record
| Have your proxy card available and follow the instructions. |
|
Beneficial Owners |
 |
By Telephone |
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Call toll-free 1-800-PROXIES (1-800-776-9437) in the U.S. or 1-201-299-4446 from outside the country |
|
If you are a beneficial owner and your shares are held by a bank, broker, or other intermediary,
you should follow the instructions provided to you by that firm. Although most banks and brokers now offer voting by mail, telephone,
and on the internet, availability and specific procedures will depend on their voting arrangements. |
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By Internet |
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Visit, 24/7, www.voteproxy.com |
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By Mail |
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Complete, date, and sign your proxy card and send by mail in the enclosed postage-paid envelope |
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By Mobile Device |
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Scan the QR code |
|
The deadline to vote by
phone or by internet is 10:59 p.m. Central Time on May 15, 2025. If you vote by phone or electronically, you do not need to return a
proxy card.
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| 4 |
|
| 2025 Proxy
Statement |
Table of Contents
Proxy
Summary
Governance Overview
Governance Overview
Director Nominees
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Committee Membership |
| Name & Principal Occupation |
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Age |
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Director
Since |
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Independent |
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Other Current
Public Company
Boards |
|
Audit |
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Compensation &
Human Capital |
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Nominating,
Governance, &
Sustainability |
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DARCY G. ANDERSON
Vice Chairman,
Hillwood Management |
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68 |
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2008 |
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0 |
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HERMAN E. BULLS
Vice Chairman, Americas and International Director,
JLL |
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69 |
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2001 |
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2 |
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RHOMAN J. HARDY
Former Sr. Vice President,
Shell USA, Inc. |
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56 |
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2023 |
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1 |
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GAURAV KAPOOR
Chief Financial & Operations Officer,
AECOM |
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47 |
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2024 |
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0 |
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BRIAN E. LANE
President and CEO,
Comfort Systems USA |
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68 |
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2010 |
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1 |
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PABLO G. MERCADO
CFO,
S&S Activewear |
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48 |
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2018 |
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0 |
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FRANKLIN MYERS
Former CFO,
Cameron International
CHAIR OF THE BOARD
SINCE 2014 |
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72 |
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2005 |
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1 |
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WILLIAM J. SANDBROOK
Executive Chairman,
Andretti Acquisition Corp. II |
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67 |
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2018 |
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2 |
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CONSTANCE E. SKIDMORE
Former Managing Partner and Board Member,
PwC |
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73 |
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2012 |
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1 |
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CINDY L. WALLIS-LAGE
Former Executive Director,
Sustainability
& Resilience,
Black & Veatch |
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62 |
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2021 |
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1 |
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Committee chair |
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Committee member |
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Audit Committee financial expert |
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| 2025 Proxy
Statement |
5 |
Table of Contents
Proxy
Summary
Governance Overview
Snapshot of Director Nominees
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INDEPENDENCE |
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DIVERSITY |
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AGE |
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TENURE |
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Board Qualifications Matrix
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Senior Leadership Experience |
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Other Public Company Board Experience |
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Finance / Accounting Experience |
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Commercial Building / Industrial Construction / Service Experience |
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Marketing / Business Development / M&A Experience |
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Human Capital Management / Compensation Experience |
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Technology / Cybersecurity / Innovation Experience |
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Legal / Compliance Experience |
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Corporate Governance Experience |
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Diversity* |
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| * |
2 female directors and 4 directors who self-identify as racially / ethnically
diverse |
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| 6 |
|
| 2025 Proxy
Statement |
Table of Contents
Proxy
Summary
Governance Overview
Our Governance Practices
| CORPORATE GOVERNANCE HIGHLIGHTS |
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9 of our 10 continuing directors are independent |
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Active oversight of strategic and risk management issues |
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All committees are solely comprised of independent board members |
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Stock ownership guidelines for directors and executives |
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Annual elections of the Board |
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Annual review and succession planning |
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Our Board balances fresh thinking and new perspectives with institutional knowledge and stability |
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No overboarding |
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Annual Board self-evaluations to evaluate performance and effectiveness |
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Focus on creating long-term value for our stockholders |
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Regular investor outreach and engagement to discuss our performance, governance policies, and other
topics: during 2024, executive officers held more than 200 meetings, including those held during the course of eleven investor conferences
and ten roadshows |
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New director orientation and ongoing education |
|
Policy to address the resignation of a director nominee who receives more votes “withheld”
than votes “for” his or her election in an uncontested election |
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Mandatory retirement policy following a director’s 75th birthday |
Sustainability and Corporate
Responsibility
Our commitment to sustainability
Everyone at Comfort Systems
USA shares a responsibility for doing business ethically and in a sustainable manner, preserving our good name. We ensure that this responsibility
applies at every level in our organization, and everyone, from corporate officers to members of our Board of Directors to our field personnel,
is responsible for overseeing these efforts. We are committed to promoting sustainable business practices.
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| INDUSTRY COMPLIANCE |
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OSHA COMPLIANCE |
9 CERTIFICATIONS
● LEED® Accredited
● Six Sigma Methodology
● Refrigerant Handling
● Medical Certification |
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● ASSE 6010 Certified Medical Gas Installers
● Certified Cross Connection Control Testers
● ASME and NB Accredited |
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● ASHE Healthcare Construction
● Certificate — National Environmental Balancing Bureau |
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0.97 OSHA Recordable Rate
In 2024, our Occupational Safety and Health Administration (“OSHA”)
recordable rate was 58% better than the most recently published rate for our industry as of our 2024 Form 10-K filing date. |
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| 2025 Proxy
Statement |
7 |
Table of Contents
Proxy
Summary
Overview of Audit Matters
 |
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| SAFETY |
|
HUMAN CAPITAL |
| We focus on company-wide accident prevention, not just OSHA compliance. We believe safety has more
to do with what is in the minds of our workers and the hearts of our management. Our employees receive comprehensive training and
certification in OSHA 10-Hour Safety. Managers and supervisors receive OSHA 30-hour safety training. We also provide our employees
with the safety equipment they need to perform their work. Our Think 5 x 5 initiative increases worker awareness and enhances the
company culture to “Safely take 5 seconds and 5 steps back” to think about their surroundings and work area to make sure
it is a safe environment. We strictly adhere to all federal, state, and local regulations. |
|
We provide opportunities for personal and professional growth and development and invest in leadership training, mentoring, and succession planning initiatives to equip our future leaders for generations to come.
We have created in-house training courses specific to leadership, communication, relationship management, diversity and inclusion, ethics and conduct in the workplace, and many more key competencies for our employees’ development. |
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| ENVIRONMENT |
|
CONTINUOUS IMPROVEMENT |
| We believe that the work we perform to optimize and upgrade systems and to enable wise controls
allows our customers to reduce their energy use, which in turn reduces our nation’s carbon footprint. Our emphasis on environmental
stewardship and improving productivity drives our effort to become more energy efficient. We strive to minimize our environmental
impacts through Board oversight, regulatory compliance, ongoing improvement investments, local specialists, and community group involvement.
Our Board supplies high-level oversight of our corporate sustainability performance and material sustainability issues, as applicable,
through the Nominating, Governance, and Sustainability Committee, which reviews and advises on updates from our internal Sustainability
Committee, made up of a diverse set of corporate leadership, on at least a bi-annual basis. |
|
We have invested in the experts, training, and internal and external knowledge transfer to ensure
that we are properly scaling, achieving true buildability, and fundamentally and continuously improving our design capabilities to
meet our customers’ evolving requirements. We are improving productivity by increasing use of innovative techniques in prefabrication,
project design, and planning, as well as in coordination and production methods. Our investments in design and building information
modeling enable us to collaborate with our customers to achieve reliable and energy efficient construction outcomes and to eliminate
unnecessary waste. We work to identify, develop, and implement new materials, products, and methods that can achieve greater productivity
and more efficient and sustainable outcomes. |
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| OUR COMMUNITIES |
|
DIVERSITY AND INCLUSION |
We believe in making a positive difference in people’s lives and maintaining the health and welfare of the communities where we live and work.
We promote, encourage, and support a diverse range of corporate social responsibility activities. Our employees’ involvement in the many initiatives we support is integral to the success of our impact in the communities where we operate. |
|
We are an equal opportunity employer, and we welcome and celebrate our teams’ differences,
experiences, and beliefs. We expect all employees to be treated with dignity and respect in an environment free from discrimination
and harassment regardless of race, color, religion, sex, sexual orientation, gender identity or expression, national origin, age,
disability, veteran status, genetic information, or any other protected class. Supporting our employees and representing the communities
we serve are important to our leadership team. Diversity and inclusion is a competitive advantage that helps drive growth and innovation.
The Compensation and Human Capital Committee of our Board of Directors provides oversight on our diversity and inclusion strategy. |
Overview of Audit Matters
The Audit Committee has
re-appointed Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December
31, 2025.
| 8 |
|
| 2025 Proxy
Statement |
Table of Contents
Proxy
Summary
Stockholder Engagement and Compensation Overview
Stockholder Engagement
and Compensation Overview
Stockholder Engagement
Throughout the year, we
meet regularly with investors and actively seek their input on topics related to our performance and our compensation and governance
policies, as well as a wide variety of other topics on which they may have feedback, so that we may address any questions or concerns
of our stockholders. We value our stockholders’ input and welcome feedback through our ongoing engagement practices. Our stockholders
are generally supportive of our executive compensation program, which is summarized below, as evidenced by our historically high levels
of support for say-on-pay proposals.
| 2024
Outreach |
| 200+
meetings |
Including
those held at
11 investor conferences and 10 roadshows |
| HISTORICAL
SAY-ON-PAY APPROVAL |
 |
Compensation Objectives
| ● |
Provide competitive total compensation consistent with job scope, experience,
and related skills |
| ● |
Link bonus opportunities to the Company’s performance |
| ● |
Grant equity compensation at competitive levels, a significant portion of which is performance-based |
| ● |
Avoid unnecessary and imprudent risks |
| ● |
Attract and motivate talented executive officers and minimize turnover of senior-level Company employees,
which contributes to the stability and continuity of senior leadership |
Compensation Highlights
| COMPENSATION PRACTICES |
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A majority of each executive officer’s compensation is at-risk (i.e., variable and not fixed).* |
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Executive officers and directors are subject to stock ownership requirements. |
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A majority of each executive officer’s compensation is tied to the Company’s financial
performance and/or stock price.* |
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The Company has adopted a compensation clawback policy and an anti-hedging/pledging policy that
apply to all executive officers. |
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50% of each executive officer’s equity awards are subject to the Company achieving specific
performance goals over a 3-year time horizon.* |
|
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The Compensation and Human Capital Committee and management routinely engage with independent third
parties, including an independent compensation consultant and the Company’s stockholders, to advise and provide feedback on
executive compensation matters. |
| * |
Assuming target performance is achieved, when applicable, and based on
grant date values of annual equity awards. |
Pay-For-Performance
Total
Target Compensation Mix
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| 2025 Proxy
Statement |
9 |
Table of Contents
General Meeting Information
 |
 |
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| TIME AND DATE |
LOCATION |
RECORD DATE |
| |
|
|
Friday, May 16, 2025
11:00 a.m. Central Time |
The St. Regis Houston
1919 Briar Oaks Lane
Houston, Texas 77027 |
Stockholders of record at the close of business on March 17, 2025
are entitled to notice of, and to vote at, the Annual Meeting. |
Why am I receiving this Proxy Statement?
The enclosed
proxy is solicited by the Board of Directors (the “Board”) of Comfort Systems USA, Inc. (the “Company”)
for the 2025 Annual Meeting of Stockholders (the “Annual Meeting”), to be voted at the Annual Meeting. This proxy
statement and the enclosed proxy are first being provided to stockholders on or about April 7, 2025.
When and where is the 2025 Annual Meeting of
Stockholders?
The Annual
Meeting will be held at The St. Regis Houston, 1919 Briar Oaks Lane, Houston, Texas 77027, at 11:00 a.m. Central Time on Friday,
May 16, 2025, and at any reconvened meetings after any adjournments or postponements thereof.
Who can vote?
The holders
of record of shares of the Company’s common stock, $.01 par value per share (“Common Stock”), at the close of business
on March 17, 2025 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting.
How do I vote?
If you are
a record stockholder, you may vote in person at the Annual Meeting or by proxy. You may submit your vote by proxy by providing
your voting instructions by internet or telephone or by signing, dating, and returning a proxy card. The instructions for each
method of voting are on the proxy card. If you wish to vote in person at the meeting, be sure to bring a form of personal picture
identification with you.
What are the voting rights of holders of Common
Stock?
Each share of Common Stock is entitled
to one vote on each matter before the Annual Meeting.
What are my voting choices and what is the
required vote?
By giving
us your proxy, you authorize the persons named on the proxy card to vote your shares in the manner you indicate at the Annual
Meeting or at any adjournments or postponements thereof.
| 10 |
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| 2025 Proxy
Statement |
Table of Contents
General Meeting Information
| Proposal |
|
Voting
Choices |
|
Board
Recommendation |
|
Voting
Details and
Applicable Policies |
|
Withholding,
Abstaining,
and Broker Non-Votes |
1
Election of Directors
In the vote on the election of director nominees
nominated by the Board of Directors to serve until
the 2026 Annual Meeting, stockholders may:
|
|
● Vote for all nominees
● Withhold authority from
the proxy holders to vote for all nominees
● Vote for all nominees
except those specified
|
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FOR
all
nominees |
|
The Board recommends a vote FOR all nominees. If a quorum
is present, the ten nominees for election as directors receiving the greatest
number of votes properly cast at the Annual Meeting, or at any adjournments or
postponements thereof, will be elected. The Company has a
policy to address the resignation of an incumbent director who receives
more votes “withheld” than votes “for” his or her election. See
the subsection titled “Director Resignation Policy” below. |
|
Votes withheld from any director are counted for
purposes of determining the presence or absence of
a quorum for the transaction of business. Broker non-votes
will be counted toward a quorum, but will not be
taken into account in determining the outcome of
the election. |
2
Ratification of Auditors
In the vote on whether to ratify the selection of
Deloitte & Touche LLP as independent auditors
for the Company for the year ending December 31,
2025, stockholders may:
|
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● Vote for ratification
● Vote against ratification
● Abstain from voting
on ratification
|
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FOR |
|
The Board recommends a vote FOR ratification. If the
stockholders do not ratify the selection, the Audit Committee will reconsider whether
to retain Deloitte & Touche LLP, but still may retain them. Even if the selection
is ratified, the Audit Committee, in its discretion, may
change the appointment at any time during the year if it determines that such a
change would be in the best interests of the Company and
its stockholders. The affirmative vote of a majority of the votes cast by stockholders
represented at the Annual Meeting and entitled to vote on this proposal will
be required to ratify the appointment of the independent auditors. |
|
Abstentions will be counted toward a quorum,
but will not be taken into account in determining
the outcome of this vote. |
3
“Say on Pay” Vote
In the non-binding advisory vote on whether
to approve the compensation paid by the Company
to its named executive officers, stockholders
may:
|
|
● Vote for approval
● Vote against approval
● Abstain from voting
on the approval
|
|
FOR |
|
The Board recommends a vote FOR approval. The affirmative
vote of a majority of the votes cast by stockholders represented at the Annual
Meeting and entitled to vote on this proposal will constitute the stockholders’
non-binding approval with respect to the Company’s executive compensation program.
The Board and the Compensation and Human Capital Committee will review the voting results
and take them into consideration when making future decisions regarding executive
compensation. |
|
Abstentions and broker non-votes will be counted
toward a quorum, but will not be taken into account
in determining the outcome of this vote. |
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| 2025 Proxy
Statement |
11 |
Table of Contents
General Meeting Information
What constitutes a quorum?
A quorum is
the minimum number of shares required to hold a meeting. Consistent with Delaware law and the Company’s Bylaws, the holders
of a majority in number of the total outstanding shares of stock of the Company entitled to vote at the meeting, present in person
or represented by proxy, constitutes a quorum as to that matter. As of the Record Date, 35,328,058 shares of Common Stock, representing
the same number of votes, were outstanding. Therefore, the presence of holders of Common Stock representing at least 17,664,030
votes will be required to establish a quorum.
What is the difference between holding shares
as a stockholder of record and as a beneficial owner of shares held in street name?
If your shares
are registered directly in your name with our transfer agent, Equiniti Trust Company (formerly American Stock Transfer &
Trust Company), you are considered the stockholder of record with respect to those shares, and the accompanying Notice of Annual
Meeting was sent directly to you by the Company.
If your shares
are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the beneficial owner
of shares held in “street name,” and the Notice of Annual Meeting was forwarded to you by your bank, broker, or other
intermediary. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual
Meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account.
What happens if I do not give specific voting
instructions?
If you are
a stockholder of record and you sign and return a proxy card without giving specific voting instructions, then the proxy holders
will vote your shares FOR the nominees listed in Proposal 1, FOR the ratification of the appointment of Deloitte & Touche
LLP as the Company’s auditors for 2025 in Proposal 2, and FOR approval with respect to the Company’s executive compensation
program in Proposal 3.
If you are
a beneficial owner of shares held in street name and do not provide the organization that holds your shares with specific voting
instructions, under New York Stock Exchange (“NYSE”) rules, the organization that holds your shares may generally
vote on routine matters but cannot vote on non-routine matters (including uncontested director elections and “Say on Pay”).
If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine
matter (including uncontested director elections and “Say on Pay”), the organization that holds your shares will inform
our election inspectors that it does not have the authority to vote on this matter with respect to your shares and your shares
will not be voted. This is generally referred to as a “broker non-vote.” When our election inspectors tabulate the
votes for any particular matter, broker non-votes will be counted for purposes of determining whether a quorum is present but
will not otherwise be counted. We encourage you to provide voting instructions to the organization that holds your shares.
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| 2025 Proxy
Statement |
Table of Contents
General Meeting Information
Can I change my vote after I return my proxy
card?
Yes. A proxy
may be revoked by a record stockholder at any time before it is voted by (i) returning to the Company another properly signed
proxy bearing a later date, (ii) delivering a written revocation to the Secretary of the Company no later than the close of business
on May 15, 2025, or (iii) attending the Annual Meeting, or any adjourned session thereof, and voting the shares covered by the
proxy in person. If your stock is held in street name, you must follow the instructions of the broker, bank, or nominee as to
how to change your vote.
Who pays to prepare, mail, and solicit the
proxies?
The Company
will pay the expense of soliciting proxies. In addition to the solicitation of proxies by use of the mails, the Company may use
the services of its officers, directors, and regular employees as well as brokerage houses and other stockholders to solicit proxies
personally and by mail, telephone, or email communication. The Company will reimburse brokers and other persons for their reasonable
charges and expenses in forwarding soliciting materials to their principals. Officers and employees of the Company will receive
no compensation in addition to their regular salaries to solicit proxies.
Who tabulates the votes?
Votes cast
by proxy or in person at the Annual Meeting will be counted by two people appointed by the Company to act as election inspectors
for the Annual Meeting.
Could other matters be decided at the Annual
Meeting?
We do not
know of any matters that may be properly presented for action at the Annual Meeting other than Proposals 1, 2, and 3. If other
business does properly come before the Annual Meeting, the persons named in the proxy intend to act on those matters as they deem
advisable. With respect to shares held in street name, the nominee may vote on those matters, subject to the NYSE’s rules
on the exercise of discretionary authority.
What happens if the Annual Meeting is postponed
or adjourned?
Your proxy
may be voted at the postponed or adjourned Annual Meeting. You will still be able to change your proxy until it is voted.
How can I find the Company’s governance
documents, such as its corporate Governance Standards, Director Independence Guidelines, Code of Conduct, and Board committee
charters?
All these
documents can be found on our website at http://investors.comfortsystemsusa.com under the “Governance”
tab. Please note that documents and information on our website are not incorporated into this proxy statement by reference. These
documents are also available in print by writing to the Office of the General Counsel, 675 Bering Drive, Suite 400, Houston, Texas
77057.
How can I receive a copy of the Annual Report?
The Annual
Report to Stockholders, which includes the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, accompanies
this proxy statement and may also be accessed through our website—http://investors.comfortsystemsusa.com.
Where can I find the voting results of the
Annual Meeting?
We plan to
announce the preliminary voting results at the Annual Meeting and to publish the final results in a current report on Form 8-K,
which we will file with the United States Securities and Exchange Commission (the “SEC”) and make available on our
website—http://investors.comfortsystemsusa.com.
When and where will a list of stockholders
be available?
A list of
stockholders of record will be available for examination at the Company’s headquarters during ordinary business hours for
the ten days prior to the Annual Meeting.
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| 2025 Proxy
Statement |
13 |
Table of Contents
PROPOSAL 1
Election of Directors
 |
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE ELECTION OF THE TEN DIRECTOR NOMINEES. |
Board of Directors
Ten directors
will be elected at the Annual Meeting to serve for a one-year term expiring at the Annual Meeting of Stockholders expected to
be held in May 2026.
The nominees for election at the Annual Meeting
are:
| ● |
Darcy G. Anderson |
● |
Rhoman J. Hardy |
● |
Brian E. Lane |
● |
Franklin Myers |
● |
Constance E. Skidmore |
| ● |
Herman E. Bulls |
● |
Gaurav Kapoor |
● |
Pablo G. Mercado |
● |
William J. Sandbrook |
● |
Cindy L. Wallis-Lage |
(each a “Nominee”
and collectively the “Nominees”). Mr. Kapoor took office in August 2024 and is thus standing for his first election
at an annual meeting of stockholders.
If elected,
each Nominee has agreed to serve for a term of one year expiring at the 2026 Annual Meeting of Stockholders. It is expected that
all the Nominees will be able to serve, but if any Nominee is unable to serve, the proxies reserve discretion to vote, or refrain
from voting, for a substitute nominee.
Vance W. Tang
informed the Company on March 19, 2025 that he is retiring from the Board effective May 16, 2025 and, as a result, will not stand
for re-election at the 2025 Annual Meeting. The Company thanks Mr. Tang for his guidance and service to the Company and the Board.
As a result of Mr. Tang’s decision to retire, the Board will reduce the number of directors constituting the Board from 11 to
10, effective as of May 16, 2025.
Information with Respect to Nominees for Director
Key Information About
Our Nominees
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Committee Membership |
| Name |
|
Primary (or Former) Occupation |
|
Age |
|
Director
Since |
|
Independent |
|
Audit |
|
Compensation
and Human
Capital |
|
Nominating,
Governance, and
Sustainability |
| Darcy G. Anderson |
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Vice Chairman of Hillwood Management |
|
68 |
|
2008 |
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| Herman E. Bulls |
|
Vice Chairman, Americas and International Director
of JLL |
|
69 |
|
2001 |
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| Rhoman J. Hardy |
|
Former Senior Vice President of Shell USA,
Inc. |
|
56 |
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2023 |
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| Gaurav Kapoor |
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Chief Financial & Operations Officer of
AECOM |
|
47 |
|
2024 |
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| Brian E. Lane |
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President and CEO of Comfort Systems USA |
|
68 |
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2010 |
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| Pablo G. Mercado |
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CFO of S&S Activewear |
|
48 |
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2018 |
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Franklin Myers  |
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Former CFO of Cameron International |
|
72 |
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2005 |
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| William J. Sandbrook |
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Executive Chairman of Andretti Acquisition Corp.
II |
|
67 |
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2018 |
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| Constance E. Skidmore |
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Former Managing Partner and Board Member of
PwC |
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73 |
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2012 |
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| Cindy L. Wallis-Lage |
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Former Executive Director, Sustainability & Resilience
of Black & Veatch |
|
62 |
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2021 |
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| Board
Chair |
Committee
chair |
Committee
Member |
 Audit
Committee financial expert |
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| 2025 Proxy
Statement |
Table of Contents
Election
of Directors
Information
with Respect to Nominees for Director
Set forth below are the names, ages as of March 31, 2025, and principal occupations for at least the past five years of each of the
Nominees and the names of any other public companies on which each is currently serving, or has served in the past five years, as
a director:
 |
DARCY G. ANDERSON |
| Age
68 |
Committees: |
| Director |
● Audit |
| Independent |
● Compensation and Human Capital |
Darcy G. Anderson has served as a Director
of the Company since March 2008. Since April 2009, Mr. Anderson has served as Vice Chairman of Hillwood Management, a
real estate, oil and gas, and investments company. From November 2000 until April 2009, Mr. Anderson served as Chief People
Officer and Vice President for Perot Systems Corporation, an information technology services and consulting firm. Prior
to joining Perot Systems, Mr. Anderson held various positions at Hillwood Development Corporation beginning in 1987, including
Senior Vice President for Corporate Affairs and Chief Operating Officer. Mr. Anderson also served as president of Hillwood
Urban, overseeing all of the operations and development for the company’s Victory project and the new American Airlines
Center in downtown Dallas. He also served in various leadership roles for the Perot ’92 Presidential Campaign. Mr.
Anderson joined Electronic Data Systems (EDS) in 1983 working in recruiting management. Prior to his employment with EDS,
Mr. Anderson completed five years of active duty in the United States Army Corp of Engineers. He is the Vice Chairman
of the Dallas Regional Chamber of Commerce. He is a Civilian Aide to the Secretary of the Army representing North Texas.
Mr. Anderson is a graduate of the United States Military Academy at West Point.
Mr. Anderson has significant experience and
knowledge of real estate development, human resources and leadership development practices, energy efficiency, corporate facilities
management, and information technology services. |
| |
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HERMAN
E. BULLS |
| Age
69 |
Committees: |
| Director |
● Nominating, Governance, and Sustainability |
| Independent |
|
Herman
E. Bulls has served as a Director of the Company since February 2001. Mr. Bulls serves
as Vice Chairman, Americas and International Director of JLL, an international full-service
real estate firm. He is the founder of JLL’s Public Institutions division and served
as Chairman and Chief Executive Officer from January 2002 until January 2014. From September
2000 until August 2001, Mr. Bulls served as Executive Vice President and Chief Operating
Officer of one of the nation’s largest Fannie Mae multifamily lenders. From March
1998 to September 2000, Mr. Bulls was a Managing Director for JLL. From 1989 until 1998,
he held several positions with the predecessor organization, LaSalle Partners. Prior
to his employment with JLL, he served over eleven years of active duty service with the
United States Army. Mr. Bulls was the Co-Founder, President, and Chief Executive Officer
of Bulls Capital Partners, a commercial mortgage firm. He sold the firm to a Wall Street
entity in 2010. Mr. Bulls retired as a Colonel from the Army Reserve. Mr. Bulls is a
member of the Board of Directors of the West Point Association of Graduates, serves as
a member of the Real Estate Advisory Committee for New York State Teachers’ Retirement
System, and serves on the Board of Directors of Host Hotels, USAA, Collegis Education,
and Fluence Energy, where he serves as Chairman of the board. Mr. Bulls also currently
serves on the Board of Governors for the American Red Cross, the Military Bowl Foundation
(emeritus), and the Defense Policy Board. Mr. Bulls previously served on the Board of
Directors of American Campus Communities from January 2021 to August 2022, when the firm
was purchased by Blackstone, Computer Sciences Corporation (CSC) from 2015 to 2017, Exelis
Inc. from 2011 until its 2015 merger with Harris Corporation, Tyco International from
2014 until its 2016 merger with Johnson Controls International PLC, and Rasmussen College
until its sale to a private equity partner. Mr. Bulls is a graduate of the United States
Military Academy at West Point and of the Harvard Business School.
Mr. Bulls
has decades of real estate and finance experience with a particular knowledge of team-building, marketing, and strategic development.
Additionally, he is a seasoned director with vast governance experience with public, private, and not-for-profit organizations. |
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| 2025 Proxy
Statement |
15 |
Table of Contents
Election
of Directors
Information
with Respect to Nominees for Director
 |
RHOMAN
J. HARDY |
| Age
56 |
Committees: |
| Director |
● Compensation and Human Capital |
| Independent |
● Nominating, Governance, and Sustainability |
Rhoman
J. Hardy has served as a Director of the Company since October 2023. Mr. Hardy founded
HardLine Consulting LLC in July 2022, providing expertise in strategy and leadership
to companies focused on energy, technical services, and infrastructure. Prior to then,
he served in various leadership positions with Shell USA, Inc., having most recently
served as Senior Vice President, Shell Chemicals and Products, for the U.S. Gulf Coast
from December 2018 until his retirement in May 2022 and General Manager, Shell Geismar
Chemical Site, from June 2015 to December 2018. Mr. Hardy first joined Shell in 1988.
Mr. Hardy is a Director with HF Sinclair. Mr. Hardy also serves on the board of the following
non-profit organizations: Baton Rouge Area Foundation, Baton Rouge General Hospital System
and Louisiana State University Foundation. He is a graduate of Louisiana State University
with a B.S. in Electrical Engineering and Rice University with an Executive MBA.
Mr.
Hardy has a background in engineering and offers extensive technical and operational expertise as well as experience in executive
management and service as a
director on a public company board. Mr. Hardy was recommended by a non-management
director as nominee for director. |
| |
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GAURAV
KAPOOR |
| Age
47 |
Committees: |
| Director |
● Audit |
| Independent |
|
Gaurav
Kapoor has served as a Director of the Company since August 2024. Mr. Kapoor is the Chief
Financial & Operations Officer at AECOM (NYSE:ACM), a leading global infrastructure
consulting firm delivering professional services throughout the project lifecycle. In
this position, Mr. Kapoor oversees the company’s global operations and finances—including
regional operations, financial planning and analysis, financial reporting, global shared
services, internal audits, tax, treasury, and global real estate. He is also a member
of AECOM’s Executive Leadership Team. Mr. Kapoor has extensive financial leadership
experience at AECOM, having served as Chief Accounting Officer and Global Controller
since December 2016 and Treasurer since October 2019.
He previously
served in leadership roles at AECOM as Senior Vice President, Financial Planning & Analysis from January 2016 to December
2016 and Senior Vice President, Project Delivery, at Americas Design Consulting Services from
May 2015 to January 2016. Prior to joining AECOM in May 2015, Mr. Kapoor spent 15 years at
Ernst & Young LLP, where he was an audit partner and held various leadership roles. He is a graduate of California
State University-Fullerton with a B.B.A.
Mr.
Kapoor has extensive public company finance and accounting experience and a deep understanding of executive management
and corporate strategy. Mr. Kapoor was recommended to the Nominating, Governance, and Sustainability Committee of the
Board by a third-party search firm. |
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| 16 |
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| 2025 Proxy
Statement |
Table of Contents
Election
of Directors
Information
with Respect to Nominees for Director
 |
BRIAN
E. LANE |
| Age
68 |
Committees: |
| Director,
President, and Chief |
● Not applicable |
| Executive
Officer |
|
Brian
E. Lane has served as Chief Executive Officer and President of the Company since December
2011 and as a Director since November 2010. Mr. Lane served as the Company’s President
and Chief Operating Officer from March 2010 until December 2011. Mr. Lane joined the
Company in October 2003 and served as Vice President and then Senior Vice President for
Region One of the Company until he was named Executive Vice President and Chief Operating
Officer in January 2009. Prior to joining the Company, Mr. Lane spent fifteen years at
Halliburton, the global service and equipment company devoted to energy, industrial,
and government customers. During his tenure at Halliburton, he held various positions
in business development, strategy, and project initiatives. He departed as the Regional
Director of Europe and Africa. Mr. Lane’s additional experience included serving
as a Regional Director of Capstone Turbine Corporation, a distributed power manufacturer.
He also was a Vice President of Kvaerner, an international engineering and construction
company where he focused on the chemical industry. Mr. Lane is a member of the Board
of Directors of Main Street Capital Corporation and previously served as a member of
the Board of Directors of Griffin Dewatering Corporation. Mr. Lane earned a Bachelor
of Science in Chemistry from the University of Notre Dame and his MBA from Boston College.
Mr. Lane has more than thirty years
of experience in the construction and engineering industries. As the Company’s Chief Executive Officer and President,
Mr. Lane provides the Board a valuable perspective on the Company’s day-to-day operations and on current trends
and developments in the industry. |
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PABLO
G. MERCADO |
| Age
48 |
Committees: |
| Director |
● Audit |
| Independent |
● Compensation and Human Capital |
Pablo
G. Mercado has served as a Director of the Company since November 2018. Mr. Mercado has
served as Chief Financial Officer of S&S Activewear, a leading apparel distributor,
since November 2024. Previously, Mr. Mercado served as Executive Vice President and Chief
Financial Officer of Lithium Americas Corp., a lithium development company, from April
2023 to November 2024. Prior to that, he served as Executive Vice President and Chief
Financial Officer of EnLink Midstream, LLC, a midstream energy services company, from
July 2020 to December 2022 and as Senior Vice President and Chief Financial Officer of
Forum Energy Technologies, Inc. (“Forum Energy”), a global oilfield products
company, from March 2018 to July 2020. Mr. Mercado also previously held various finance
and corporate development positions at Forum Energy since joining in November 2011, including
Senior Vice President, Finance from June 2017 to March 2018 and Vice President, Operations
Finance from August 2015 to June 2017. Prior to Forum Energy, Mr. Mercado was an investment
banker with the Oil and Gas Group of Credit Suisse Securities (USA) LLC where he worked
with clients in the energy industry from 2005 to 2011. Between 1998 and 2005, Mr. Mercado
was an investment banker at UBS Investment Bank and Bank of America. Mr. Mercado holds
a B.B.A. from the Cox School of Business, a B.A. in Economics from the Dedman College
at Southern Methodist University, and an M.B.A. from The University of Chicago Booth
School of Business.
Mr.
Mercado has extensive public and private company finance and accounting experience, and he has significant experience
in corporate strategy and operations. |
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| 2025 Proxy
Statement |
17 |
Table of Contents
Election
of Directors
Information
with Respect to Nominees for Director
 |
FRANKLIN
MYERS |
| Age
72 |
Committees: |
| Director
and Board Chair |
● Audit |
| Independent |
|
Franklin
Myers has served as a Director of the Company since May 2005 and as Chair of the Board
since May 2014. Mr. Myers has been an Operating Partner of Quantum Energy Partners, a
private equity firm, since February 2013. From April 2008 until March 2009, Mr. Myers
served as Senior Advisor to Cameron International Corporation, a global provider to the
oil & gas and process industries. Mr. Myers served as the Senior Vice President of
Finance and Chief Financial Officer of Cameron International Corporation from 2003 to
2008. From 1995 to 2003, Mr. Myers served at various times as Senior Vice President and
President of a division within Cameron as well as General Counsel and Secretary. Prior
to joining Cameron in 1995, Mr. Myers served as Senior Vice President and General Counsel
of Baker Hughes Incorporated, and an attorney and partner at the law firm of Fulbright
& Jaworski, now known as Norton Rose Fulbright. Mr. Myers currently serves as Chairman
of the Board of Directors of HF Sinclair Corporation, and Mr. Myers also serves on the
boards of three small private manufacturing companies. Mr. Myers served on the Board
of Directors of Seahawk Drilling Company from 2009 until 2011; Frontier Oil Corporation—a
predecessor of HF Sinclair Corporation—from 2009 until its 2011 merger with Holly
Corporation; HollyFrontier Corporation from 2011 until its merger with HF Sinclair in
2022; Ion Geophysical Corporation from 2001 to 2019; Forum Energy Technologies from 2011
until March 2018; and NCS Multistage from 2017 to 2020. Mr. Myers holds a Bachelor of
Science, Industrial Engineering, from Mississippi State University and a J.D. degree
from the University of Mississippi.
Mr.
Myers has several decades of public company experience, with a particular knowledge of operations, financial management, and legal
affairs. Additionally, Mr. Myers has significant experience serving on other public company boards and has served as an adjunct
professor at the University of Texas School of Law where he taught a course on mergers and acquisitions. |
| |
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WILLIAM
J. SANDBROOK |
| Age
67 |
Committees: |
| Director |
● Compensation and Human Capital |
| Independent |
● Nominating, Governance, and Sustainability |
William
J. Sandbrook has served as a Director of the Company since April 2018. Mr. Sandbrook
has served as Executive Chairman and Chairman of the Board of Andretti Acquisition Corp.
II, a special purpose acquisition company formed for the purpose of effecting a business
combination, since September 2024. Mr. Sandbrook served as Chairman and Co-CEO of Andretti
Acquisition Corp. from January 2022 until April 2024. From August 2011 until his retirement
in April 2020, Mr. Sandbrook served as President and Chief Executive Officer of U.S.
Concrete, Inc., a company specializing in concrete and heavy construction aggregates,
and as the Chairman of the Board from May 2018 until April 2020. From June 2008 until
August 2011, Mr. Sandbrook was Chief Executive Officer of Oldcastle Inc.’s Products
and Distribution Group. From 2006 to June 2008, Mr. Sandbrook was Chief Executive Officer
of Oldcastle Architectural Product’s group responsible for Oldcastle’s U.S.
and Canadian Operations, as well as CRH plc’s business in South America. From 2003
to 2006, Mr. Sandbrook served as President of Oldcastle Materials West Division. From
1995 to 2002, Mr. Sandbrook served as President and Chief Executive Officer of Tilcon
New York, and as Vice President from 1992 to 1995. Prior to 1992, Mr. Sandbrook spent
thirteen years in the U.S. Army. In recognition of his efforts at Ground Zero after the
September 11th bombing of the World Trade Center, Mr. Sandbrook was named the Rockland
County, New York 2002 Business Leader of the Year, the Dominican College 2002 Man of
the Year, and the American Red Cross 2003 Man of the Year for Southern New York. In 2017,
Mr. Sandbrook was awarded the Lifetime Achievement Award by the New Jersey Concrete and
Aggregate Association. In March of 2018, he was awarded the William B. Allen Award from
the National Ready Mixed Concrete Association in recognition of his lifetime commitment
to the concrete industry. Also in March of 2018, Mr. Sandbrook was inducted into the
Pit and Quarry Magazine’s Hall of Fame. From March 2019 through March 2020, Mr.
Sandbrook held the position of Chairman of the National Ready Mix Concrete Association.
In June, 2023, he was appointed to the board of Knife River Corporation. Mr. Sandbrook
is a registered Professional Engineer and holds an MBA from Wharton, a Master of Science
in Systems Engineering from the University of Pennsylvania, a Master in Public Policy
from the Naval War College, a Master of Arts in International Relations from Salve Regina
University, and a Bachelor of Science from the United States Military Academy.
Mr. Sandbrook
has over thirty years of operations experience in the building materials and construction industries, including significant experience
as a Chief Executive Officer and experience as a public company board member.
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| 18 |
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| 2025 Proxy
Statement |
Table of Contents
Election
of Directors
Information
with Respect to Nominees for Director
 |
CONSTANCE
E. SKIDMORE |
| Age
73 |
Committees: |
| Director |
● Audit |
| Independent |
● Compensation and Human Capital |
Constance
E. Skidmore has served as a Director of the Company since December 2012. Ms. Skidmore
retired from PricewaterhouseCoopers, a public accounting firm, in 2009 after serving
for more than two decades as a partner, including a term on its governing board. Ms.
Skidmore serves on the Board of Directors and chairs the Audit Committee of Sensata Technologies
(NYSE: ST) and also serves on the boards of two other privately-held and non-profit companies:
The V Foundation for Cancer Research and Viz Kinect. Ms. Skidmore previously served on
the Board of Directors and Audit Committee of Shortel, Inc. (NASDAQ: SHOR) from 2014
until 2017, when it was acquired by Mitel Networks Corporation, and Proterra (NASDAQ:
PTRA) from 2019 until 2023. Ms. Skidmore is a graduate of Florida State University and
earned a Master of Science in Taxation from Golden Gate University.
Ms.
Skidmore has more than thirty years of experience in accounting and finance, including in the construction industry, and significant
experience and knowledge in talent management and strategic planning.
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CINDY
L. WALLIS-LAGE |
| Age
62 |
Committees: |
| Director |
● Nominating, Governance, and Sustainability |
| Independent |
|
Cindy
L. Wallis-Lage has served as a Director of the Company since May 2021. Ms. Wallis-Lage
retired from Black & Veatch, an engineering, procurement, consulting, and construction
company, on September 30, 2022. At Black & Veatch, she served as Executive Director,
Sustainability and Resilience from January 2022 until her retirement. Previously, during
her 36 years of experience at Black & Veatch, Ms. Wallis-Lage served in various roles,
including President, Water Business from January 2012 to December 2021, Executive Managing
Director of Technical Solutions from January 2010 to January 2012, and Chief of Water
Technology Group from February 2006 to January 2010. She served on the Black & Veatch
Board of Directors from March 2012 through September 2022. She currently serves on the
Board of Directors for Veralto and Metiri Group. She serves as an advisory board member
for Cambi ASA. Ms. Wallis-Lage earned her bachelor’s degree in Civil Engineering
from Kansas State University and her master’s degree in Environmental Health Engineering
from the University of Kansas.
Ms.
Wallis-Lage has extensive senior executive experience leading strategies, development, and operations of a global business and
development of sustainability practices.
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THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE DIRECTORS LISTED ABOVE IN PROPOSAL NUMBER 1. |
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| |
| 2025 Proxy
Statement |
19 |
Table of Contents
Election of Directors
Meetings of the Board and Committees
Board Qualifications Matrix
The following
matrix: (1) summarizes desired qualifications, skills and experience, which we believe are appropriate
for consideration as we propose leaders to advance our strategy and provide proper oversight, and (2) illustrates the number of
Nominees to whom each qualification applies:
Board Qualifications Matrix
| * |
2 female directors and 4 directors who self-identify as racially
/ ethnically diverse |
Meetings of the Board and Committees
During the year
ended December 31, 2024, the Board held five regular meetings and four special meetings. At each regularly scheduled meeting of
the Board, the non-employee directors, each of whom is independent, met separately from management in executive session under
the direction of Mr. Myers, the Chair of the Board. Members of the Board are encouraged to attend the Annual Meeting and all members
of the Board attended the Annual Meeting in 2024. Additional information regarding the determination of director independence
is set forth below under the subsection titled “Independence.” Each director has attended at least 75% of the aggregate
number of meetings of the Board and the Board committees of which he or she was or is a member that took place during his or her
term of office, with the exception of Mr. Kapoor. Mr. Kapoor joined the Board in August 2024 and attended fewer than 75% of
the aggregate number of meetings of the Board and the Board committees of which he was a member that took place in 2024 during
his term of office.
The Board has
several committees. Each of these committees and their members are described below. The Board has adopted a written charter for
each of these committees (with the exception of the Executive Committee), which, together with the Company’s corporate Governance
Standards and Independence Guidelines, are available:
 |
|
 |
ON OUR CORPORATE WEBSITE
http://investors.comfortsystemsusa.com
under the “Governance”
tab |
|
BY WRITING TO
Comfort Systems USA, Inc.
Attention:
Office of the General Counsel
675 Bering Drive, Suite 400
Houston,
Texas 77057 |
| 20 |
|
| 2025 Proxy
Statement |
Table of Contents
Election
of Directors
Meetings of the Board and Committees
Audit Committee
 |
 |
 |
 |
 |
PABLO G. MERCADO
 |
DARCY G. ANDERSON |
GAURAV KAPOOR |
FRANKLIN MYERS |
CONSTANCE E. SKIDMORE |
PRIMARY
RESPONSIBILITIES
The Audit Committee:
● reviews with management and the independent
auditors the Company’s quarterly and annual financial statements, the scope of the audit, any comments made by the
independent auditors, and such other matters as the committee deems appropriate;
● annually reviews the enterprise risk management
matrix, which addresses a wide variety of risks including, but not limited to, key cybersecurity, environmental, and social
risks affecting, or potentially affecting, the Company;
● reviews the performance and retention
of the Company’s independent auditors;
● reviews with management those matters
relating to compliance with corporate policies, as the committee deems appropriate; and
● reviews and reassesses the adequacy of
its charter every year. |
|
QUALIFICATIONS
● The Board has determined that the Audit
Committee consists entirely of directors who meet the independence requirements of the NYSE’s listing standards,
the Board’s Independence Guidelines (discussed below in the subsection titled “Independence”) and the
rules and regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
● No member is or has been an executive
officer or employee of the Company at any time.
● The Board has determined that each member
of the Audit Committee is financially literate and, based on accounting or related financial management expertise, that
each member is an audit committee financial expert.
MEETINGS IN 2024
● 8 regular
● No special |
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Statement |
21 |
Table of Contents
Election of Directors
Meetings of the Board and Committees
Compensation and Human Capital Committee
 |
 |
 |
 |
 |
CONSTANCE E. SKIDMORE
|
DARCY G. ANDERSON |
RHOMAN J. HARDY |
PABLO G. MERCADO |
WILLIAM J. SANDBROOK |
PRIMARY
RESPONSIBILITIES
The Compensation and Human Capital Committee:
● establishes and administers the Company’s
executive compensation program;
● reviews, and advises the Board with respect
to, significant organizational changes, leadership development, and leadership succession, other than the succession of
the Chief Executive Officer, which is overseen by the Nominating, Governance, and Sustainability Committee;
● establishes and regularly reviews the compensation
levels of executive officers and other key managers and approves incentive awards;
● assists the Board in its oversight of the
Company’s policies and strategies relating to human capital management, including safety, culture, and diversity
and inclusion;
● annually performs a risk assessment of the
Company’s compensation programs;
● annually reviews compliance with the Company’s
stock ownership guidelines by executive officers; and
● reviews with management reports regarding
significant conduct issues that could affect the Company’s culture and any related employee actions.
The Compensation and Human Capital Committee may delegate any of its responsibilities to a subcommittee
thereof and has the authority to hire a professional consultant to review and analyze the Company’s compensation
programs. |
|
ROLE
OF THE INDEPENDENT COMPENSATION CONSULTANT AND MANAGEMENT
● In 2024, the committee retained Compensation
Advisory Partners to advise the committee during its review of the Company’s short-term and long-term incentive
compensation programs and to provide a comprehensive analysis of executive compensation survey data and market trends.
● The committee’s work with Compensation
Advisory Partners is described in greater detail below in the subsection titled “Independent Compensation Consultant;
Use of Market Data.”
● Further, as discussed below in the section
titled “Compensation Discussion and Analysis,” the Compensation and Human Capital Committee consults with
management in developing compensation plans for the Company.
QUALIFICATIONS
● The Board has determined that the Compensation
and Human Capital Committee consists entirely of directors who meet the independence requirements of the NYSE listing
standards, the Board’s Independence Guidelines, and the rules and regulations under the Exchange Act.
● No member is or has been an executive officer
or employee of the Company at any time.
MEETINGS IN 2024
● 4 regular
● 1 special |
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| 2025 Proxy Statement |
Table of Contents
Election
of Directors
Meetings of the Board and Committees
Nominating, Governance, and Sustainability
Committee
 |
 |
 |
 |
 |
CINDY L. WALLIS-LAGE
|
HERMAN E. BULLS |
RHOMAN J. HARDY |
WILLIAM J. SANDBROOK |
VANCE W. TANG |
PRIMARY
RESPONSIBILITIES
The Nominating, Governance, and Sustainability Committee:
● evaluates the structure and membership of
the Board;
● evaluates candidates for nomination to the
Board, as appropriate;
● reviews the compensation structure for the
non-employee directors and the frequency and content of meetings;
● annually reviews compliance with the Company’s
stock ownership guidelines by non-employee directors;
● establishes and reviews the Company’s
succession plan for its Chief Executive Officer;
● reviews the Company’s sustainability
strategy, initiatives, policies, and reporting at least bi-annually and receives periodic reports from the Company’s
management responsible for these activities;
● reviews political and charitable contributions
made by the Company; and
● makes recommendations to the Board on all
such matters. |
|
COMMITTEE
CONSIDERATION OF CANDIDATES
● The committee’s diversity policy values
diversity in its broadest sense, reflecting, but not limited to, an individual’s gender, ethnicity, race, age, disability,
gender identity or expression, military veteran status, national origin, religion, sexual orientation, skills, and other
backgrounds and experiences, and endeavors to include candidates who are diverse in the qualified pool from which Board
candidates are chosen. The committee is committed to actively seeking out, and pursuant to the Company’s Governance
Standards will instruct any search firm it engages to identify, individuals who will contribute to the diversity of the
Board to be included in the pool of candidates from which nominees to the Board are selected.
● The committee periodically examines the
composition of the Board to ensure that the Board, taken as a whole, has the necessary skills and experience to steer
the Company toward its stated objectives, as well as the necessary skills and experience to set the Company’s future
strategies.
● Directors are nominated or elected by the
Board, and stockholders may nominate directors as described further in the subsection below titled “Director Nomination
by Stockholders.”
● The committee identifies Board candidates
through a variety of formal and informal channels. The committee has the authority to hire a professional search firm
to help identify candidates with specific qualifications, and the committee retained Egon Zehnder to identify potential
director candidates both in previous years and in 2024.
QUALIFICATIONS
● The Board has determined that the Nominating,
Governance, and Sustainability Committee consists entirely of directors who meet the independence requirements of the
NYSE listing standards, the Board’s Independence Guidelines, and the rules and regulations under the Exchange Act.
MEETINGS IN 2024
● 3 regular
● 1 special |
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Statement |
23 |
Table of Contents
Election of Directors
Corporate Governance
Executive Committee
PRIMARY
RESPONSIBILITIES
The Executive Committee:
● was formed in August 2019 and held no meetings
during 2024;
● was established to act in place of the Board,
and to exercise the authority and powers of the Board, while the Board is not in session; and
● operates pursuant to authority that is specifically
delegated to it by the Board, which authority may be revoked or modified by the Board and which is subject to all applicable
laws, rules, and regulations and to the Company’s Certificate of Incorporation and Bylaws, as amended. |
|
MEMBERSHIP
● The committee’s membership is subject
to change and is comprised of no less than three and no more than eight directors, including the Chair of the Board or
Lead Director, the Chief Executive Officer, and at least one other member of the Board who shall be nominated by the chair
of the committee as an interim member of the committee based on:
I the circumstances under which the committee must
take action,
II the member’s relevant experience and skills,
III the member’s availability when a meeting
is necessary, and
IV any other factor the chair reasonably considers
to be relevant and proper.
● The chair of the committee shall be the
Chair of the Board, or the Lead Director if the Chair of the Board is also the Chief Executive Officer, or another director
designated by the Chair of the Board or Lead Director. |
Corporate Governance
The Board believes
that the purpose of corporate governance is to maximize stockholder value in a manner consistent with legal requirements and the
highest standards of integrity. The Board has adopted and adheres to corporate governance practices that the Board believes promote
this purpose, are sound practices, and represent best practices, which we refer to as the Company’s “Governance Standards.”
The Board continually reviews these governance practices, Delaware law (the state where the Company is incorporated), the rules
and listing standards of the NYSE and SEC regulations, and best practices suggested by recognized governance authorities.
Our corporate governance documents
include:
● Annual
Sustainability Report
● Independence Guidelines
● Supplier Diversity Policy
● Labor & Human Rights Policy
|
|
● Committee
Charters
● Governance Standards
● Supplier Code of Conduct
● Policy for Recoupment of
● Incentive Compensation |
|
● Code
of Conduct
● Director Resignation Policy
● Environmental Policy |
Code of Conduct
The Company adopted
a Compliance Policy in 1997, the year the Company was founded. That policy, with subsequent amendments discussed, approved, and
adopted by the Board, including an amendment to change the title of the policy to our “Code of Conduct,” remains in
effect and applies to the Company’s directors, officers, and employees who are subject to disciplinary action, including
termination, for violations of the code. The code forms the basis of the Company’s ethics and compliance program and covers
a wide range of areas. Many Company policies are summarized in the Code of Conduct, including conflict of interest, insider trading,
confidentiality, human rights, and compliance with all laws and regulations applicable to the conduct of the Company’s business.
The Code of Conduct is regularly reinforced to the Company’s employees and management through periodic ethics, equal opportunity
employment, and anti-corruption trainings. Any amendments to the Code of Conduct or the grant of a waiver from a provision of
the policy requiring disclosure under applicable SEC rules will be disclosed to the public. The Code of Conduct is posted, in
both English and Spanish, under the “Governance” tab of the Company’s website at http://investors.comfortsystemsusa.com
and is also available upon request to Comfort Systems USA, Inc., Office of the General Counsel, 675 Bering Drive,
Suite 400, Houston, Texas 77057.
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Table of Contents
Election
of Directors
Corporate Governance
Independence
The Board has
adopted Independence Guidelines to assist the Board in making independence determinations relating to members of the Board. The
criteria are consistent with the NYSE listing standards regarding director independence. For a director to be considered independent,
the Board must determine that the director does not have a material relationship, directly or indirectly, with the Company. The
Independence Guidelines are published on our website, http://investors.comfortsystemsusa.com under the “Governance”
tab, and are also available by written request to Comfort Systems USA, Inc., Office of the General Counsel, 675 Bering Drive,
Suite 400, Houston, Texas 77057.
The Board has
considered the independence of its members in light of the Independence Guidelines and the rules and regulations under the Exchange
Act and NYSE, including each director’s affiliations and relationships, and has determined that Mses. Skidmore and Wallis-Lage
and Messrs. Anderson, Bulls, Hardy, Kapoor, Mercado, Myers, Sandbrook, and Tang, who together constitute a majority of the Board,
qualify as independent directors of the Company.
Retirement Policy
Under the Company’s
Governance Standards, a director shall not be a candidate for reelection after his or her seventy-fifth birthday.
The Company’s
Governance Standards, and other governance documents, are available:
| |
|
|
ON OUR CORPORATE WEBSITE
http://investors.comfortsystemsusa.com
under the “Governance” tab |
|
BY WRITING TO
Comfort Systems USA, Inc.
Attention: Office of the General Counsel
675 Bering Drive, Suite 400
Houston, Texas 77057 |
Director Nomination by Stockholders
The Board will
consider director candidates recommended by stockholders for inclusion on the slate of directors nominated by the Board. Any stockholder
may submit a candidate or candidates for consideration in conformity with the Bylaws and as set forth hereafter under the caption
“Stockholder Proposals for the 2026 Annual Meeting.” Stockholders desiring to recommend a candidate must submit the
recommendation to the Nominating, Governance, and Sustainability Committee c/o the Corporate Secretary, Comfort Systems USA, Inc.,
675 Bering Drive, Suite 400, Houston, Texas 77057. If a nominating stockholder is not a record holder, the stockholder must provide
the same evidence of eligibility as set forth in Exchange Act Rule 14a-8(b)(2).
At the time the
nominating stockholder submits the recommendation, the candidate must submit all personal information that the Company would be
required to disclose in a proxy statement in accordance with Exchange Act rules. In addition, at that time the candidate must:
| ● |
Certify that he or she meets the requirements to
be: (a) independent under the NYSE’s listing standards and the Board’s Independence Guidelines, and (b) a non-employee
director under Rule 16b-3 of the Exchange Act; |
| ● |
Consent to serve on the Board, if nominated and elected; and |
| ● |
Agree to complete, upon request, a customary director’s
questionnaire. |
In addition to
satisfying the foregoing requirements, to comply with the universal proxy rules, stockholders who intend to solicit proxies in
support of director nominees other than the Company’s nominees must deliver notice that sets forth the information required
by Rule 14a-19 under the Exchange Act no later than March 17, 2026.
The Nominating,
Governance, and Sustainability Committee will evaluate any candidate recommended by a stockholder to determine whether he or she
is highly qualified. The committee evaluates candidates recommended by stockholders in the same way it evaluates candidates proposed
from other sources. In selecting nominees, particular consideration is given to those individuals who have substantial achievement
in their personal and professional pursuits and whose talents, experience, and integrity would be expected to contribute to the
best interests of the Company and to long-term stockholder value. In evaluating candidates, the committee considers various qualities
and skills that it believes will benefit the Board and the stockholders, including, without limitation, general management experience,
specialization in the Company’s principal business activities or finance, significant experience in issues encountered by
public companies, and contribution to the diversity of the Board.
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Statement |
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Table of Contents
Election of Directors
Corporate Governance
Stockholder Engagement
Throughout the
year, we meet regularly with investors and actively seek their input on topics related to our performance and our compensation
and governance policies, as well as a wide variety of other topics on which they may have feedback, so that we may address any
questions or concerns of our stockholders. During 2024, executive officers held more than 200 meetings, including those held
during the course of eleven investor conferences and ten roadshows. This process is led by Brian Lane, President, Chief Executive
Officer, and member of the Board, and William George, Executive Vice President and Chief Financial Officer. In addition,
as appropriate, we work to clarify and expand our disclosures as we prepare our next proxy statement based on such discussions.
We value our stockholders’ input and welcome feedback through our ongoing engagement practices.
Communications With the Board
Stockholders and
other interested parties may communicate directly with the Board by writing to Comfort Systems USA, Inc., Board of Directors,
675 Bering Drive, Suite 400, Houston, Texas 77057. The Chair of the Board will review these communications and will determine
appropriate steps to address them. A stockholder wishing to communicate directly with the non-employee members of the Board may
address the communication to “Non-Employee Directors, c/o Board of Directors” at the address listed above. These communications
will be handled by the Chair of the Board, who is currently designated to preside at meetings of non-employee directors. Finally,
communications can be sent directly to individual directors by addressing letters to their individual name, c/o the Board of Directors,
at the address listed above. All communications received by the Company are sent directly to the Board or appropriate director.
Board Leadership Structure and Self-Evaluation
Process
The Board does
not have a formal policy regarding whether the position of Chair of the Board may be filled by the Company’s Chief Executive
Officer. Instead, the Board has adopted a fluid approach to the Board’s leadership structure that allows for variations
depending on the circumstances and changing needs of the Company over time.
Mr. Myers has
served as a director since 2005 and has served as the Company’s Chair of the Board since May 2014. The Board has determined
that Mr. Myers meets the independence requirements of the NYSE listing standards, the Board’s Independence Guidelines, and
the rules and regulations under the Exchange Act. The Board has carefully considered its leadership structure and determined that
currently it is in the best interests of the Company and its stockholders for the roles of Chair of the Board and Chief Executive
Officer to be filled by different individuals. This structure allows the Chief Executive Officer to focus on the Company’s
day-to-day operations.
Since the Company
has an independent, non-executive Chair of the Board, the Company has determined that the role of a Lead Director is not currently
necessary. The Board may appoint a Lead Director to coordinate the activities of the independent directors in the future at its
discretion.
Pursuant to the
Board’s policy, the Board conducts an annual self-evaluation process as follows: (i) each director evaluates the Board as
a whole; (ii) each member of the Audit Committee, the Compensation and Human Capital Committee, and the Nominating, Governance,
and Sustainability Committee evaluates the respective committee(s) on which he or she serves; and (iii) each director prepares
an individual performance-related self-evaluation of himself or herself as well as other individual members of the Board. In connection
with this annual self-evaluation, the Board considers whether the current leadership structure continues to be appropriate for
the Company. The Board believes that directors should be responsive to the Company’s evolving circumstances and objectives,
and that the Board’s leadership structure should adapt when necessary.
The Board’s Role in Risk Oversight
The Company’s
full Board is actively involved in overseeing the Company’s risk management process. These activities are aligned with the
Company’s strategy. The Audit Committee, Compensation and Human Capital Committee, and Nominating, Governance, and Sustainability
Committee consider risks that fall within their respective areas of responsibility. For example, the Nominating, Governance, and
Sustainability Committee is formally scheduled to review sustainability matters relevant to the Company and its operations bi-annually,
and the Audit Committee reviews the enterprise risk management matrix, which addresses sustainability risks, annually. Further,
in recognition of the importance of maintaining the confidence of all Company stakeholders, the Board considers information technology
and data security risk, specifically cybersecurity risk, a premier area of focus. The Company’s Chief Information Security
Officer (“CISO”) works and reports separately from the Information Technology department, an arrangement meant
to allow the CISO to advise the Company most effectively on cybersecurity and related risks, and reports directly to our executive
management team. The Board oversees information technology, data security, and cybersecurity risk management through regular reports
and presentations from the CISO and other management members. In addition, a group of the Company’s executive officers
serve on a committee (the “Risk Committee”) that is directly responsible for the Company’s risk
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| 2025 Proxy
Statement |
Table of Contents
Election
of Directors
Director Compensation for 2024
management process.
The Company’s President and Chief Executive Officer, a member of the Board, serves on the Risk Committee; however, the
Risk Committee is a committee of management, not of the Board. The Risk Committee meets at least annually to define and improve
the risk-mapping process and considers any appropriate updates at least quarterly. All members of the Risk Committee attended
at least 75% of the quarterly meetings held in 2024. Any risks that are identified through the Company’s compliance and
ethics program are included in the Risk Committee’s processes, along with operational, financial, environmental, cybersecurity,
social, governance, and strategic risks. The Risk Committee presents comprehensive reports directly to the Board at least annually
through the enterprise risk management matrix, which, as explained above, is reviewed by the Audit Committee.
Director Resignation Policy
Effective March
8, 2017, the Board adopted a Director Resignation Policy to address the situation in which a nominee for director in an uncontested
election to the Board receives more votes “withheld” than votes “for” his or her election. The policy
provides that any incumbent nominee for director in an uncontested election who receives a greater number of votes affirmatively
“withheld” with respect to his or her election than votes “for” such election (a “majority withhold
vote”) shall promptly tender his or her resignation to the Chair of the Board following certification of the stockholder
vote. The Nominating, Governance, and Sustainability Committee will promptly consider the tendered resignation and recommend to
the Board whether to accept or reject the resignation or take other action, such as rejecting the tendered resignation and addressing
the apparent underlying causes of the majority withheld vote. In making its recommendation, the committee will consider all relevant
factors, including, but not limited to, (i) the underlying reasons why stockholders withheld their votes (if ascertainable), (ii)
the length of service and qualifications of the director whose resignation has been tendered, (iii) the director’s contributions
to the Board and the Company, (iv) the overall composition of the Board and compliance with applicable laws, regulations, governing
documents, and stock exchange listing standards, (v) the availability of other qualified candidates, and (vi) whether accepting
the resignation is in the best interests of stockholders and the Company. The Board will act on the committee’s recommendation
no later than its first regularly scheduled meeting following certification of the stockholder vote, but in no case later than
120 days following the vote certification. Following the committee’s recommendation and the Board’s decision, the
Company will promptly publicly disclose its decision whether to accept or reject such tendered resignation in a periodic or current
report filed or furnished in accordance with SEC rules.
Any director who
tenders his or her resignation under the Director Resignation Policy will not participate in the committee recommendation or Board
consideration of the resignation. However, such director will otherwise remain as an active Board member unless and until the
resignation becomes effective. If a majority of the Nominating, Governance, and Sustainability Committee members receive a majority
withhold vote at the same election, then the independent directors who did not receive a majority withhold vote will appoint a
committee amongst themselves to consider the tendered resignations. If the only directors who did not receive a majority withhold
vote in the same election constitute fewer directors than a majority of the Board, then all the independent directors may participate
in the Board consideration of the tendered resignations, except that no director will participate in the vote on his or her own
resignation.
While this summary
reflects the current terms of the Director Resignation Policy, the Board retains the power to amend and administer the policy
as the Board, in its sole discretion, determines is appropriate. The Director Resignation Policy is published under the “Governance”
tab on our website, http://investors.comfortsystemsusa.com, and is also available by written request to Comfort
Systems USA, Inc., Office of the General Counsel, 675 Bering Drive, Suite 400, Houston, Texas 77057.
Director Compensation for 2024
In 2024, each
director who was not an employee of the Company or one of its subsidiaries received, in quarterly installments, an annual cash
fee for his or her service as follows: $80,000 for service on the Board; an additional $30,000 for service as the chair of the
Audit Committee; an additional $20,000 for service as the chair of the Compensation and Human Capital Committee or the Nominating,
Governance, and Sustainability Committee. For 2024, the rate of the annual cash fee for service as the chair of the Board was
increased from $100,000 to $125,000 effective as of the 2024 Annual Meeting of Stockholders, and was blended based on those two
rates for 2024. The Board approved this increase following the recommendation of the Nominating, Governance, and Sustainability
Committee, which had based its recommendation on an analysis of several factors, including the committee’s review of survey
and peer group data (based on the same peer group used for executive compensation purposes) prepared by Compensation Advisory
Partners, our compensation consultant, which indicated that the increased amount was more consistent with the market median. Directors
are also reimbursed for expenses incurred in connection with attending meetings.
Each non-employee
director who continues in office or is elected at an annual stockholder meeting receives an award of fully-vested shares of
Common Stock having a fair market value on the grant date equal to approximately $160,000. Each non-employee director who is initially
elected or appointed to serve on the Board other than at any annual stockholder meeting will be granted a prorated number of fully
vested shares of Common Stock based on the number of days between the effective date of appointment and the next annual stockholders’
meeting. In connection with Mr. Kapoor’s appointment in August 2024, Mr. Kapoor was granted fully-vested shares of Common
Stock having a fair market value on the grant date of $126,507. Pursuant to the Company’s 2017 Omnibus Incentive
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Statement |
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Table of Contents
Election of Directors
Director Compensation for 2024
Plan, the maximum
grant date fair value of awards granted to an individual non-employee director in any calendar year may not exceed $400,000. The
Board has adopted stock ownership requirements, pursuant to which each non-employee director must own shares of Common Stock (or
share equivalents) having a value equal to ten times the director’s annual cash fees for service on the Board (excluding
any additional fees for service as the chair of the Board or any committee of the Board and any other compensation or expense
reimbursement received by the director) within five years of being elected or appointed to the Board. The Nominating, Governance,
and Sustainability Committee evaluates each director’s stock ownership level on an annual basis. At the time of such evaluation,
the value of the stock owned by each director is determined by reference to the higher of: (i) the original share (or share equivalent)
purchase or issuance price, and (ii) the value of the share (or share equivalent) price at the time of determining compliance
with these stock ownership requirements. The Nominating, Governance, and Sustainability Committee may modify these stock ownership
requirements in its reasonable discretion and is authorized to make exceptions to these stock ownership requirements when special
circumstances arise. All non-employee directors are currently in compliance with these ownership requirements or are in their
initial five-year phase in period.
Directors who
are employees of the Company or one of its subsidiaries receive no additional compensation for serving as directors. The following
table discloses the compensation earned by, or paid or awarded to, as the case may be, each of the Company’s non-employee
directors for 2024.
| Name(1) |
|
Fees
Earned or
Paid in Cash(2)
($) |
|
Stock
Awards(3)
($) |
|
All
Other
Compensation(4)
($) |
|
Total
($) |
| Darcy
G. Anderson |
|
80,000 |
|
159,716 |
|
0 |
|
239,716 |
| Herman
E. Bulls |
|
80,000 |
|
159,716 |
|
0 |
|
239,716 |
| Rhoman
J. Hardy |
|
80,000 |
|
159,716 |
|
0 |
|
239,716 |
| Gaurav
Kapoor |
|
33,261 |
|
126,507 |
|
0 |
|
159,768 |
| Pablo
G. Mercado |
|
110,000 |
|
159,716 |
|
0 |
|
269,716 |
| Franklin
Myers |
|
195,591 |
|
159,716 |
|
0 |
|
355,307 |
| William
J. Sandbrook |
|
80,000 |
|
159,716 |
|
0 |
|
239,716 |
| Constance
E. Skidmore |
|
100,000 |
|
159,716 |
|
0 |
|
259,716 |
| Vance
W. Tang |
|
87,527 |
|
159,716 |
|
0 |
|
247,243 |
| Cindy
L. Wallis-Lage |
|
92,473 |
|
159,716 |
|
0 |
|
252,189 |
| (1) |
Brian E. Lane also served as a member of the
Board during 2024 but was an employee of the Company in 2024 and received no additional compensation for his service on the
Board. Mr. Lane’s compensation for his service as an employee for 2024 is disclosed in the “Summary Compensation
Table” included elsewhere in this proxy statement. |
| (2) |
Amounts in this column represent fees earned in 2024. For
Mr. Kapoor, the amount reflects a prorated portion of the annual cash fee based on his appointment to the Board on August
1, 2024. For Mr. Myers, the amount includes his annual cash fee for service as chair of the Board, which calculated on a blended
basis for 2024 to account for the increase in such annual fee effective May 17, 2024 from $100,000 per year to $125,000 per
year. Finally, Mr. Tang served as the chair of the Nominating, Governance, and Sustainability Committee until May 17, 2024,
and Ms. Wallis-Lage succeeded him for the remainder of the year. Thus, Mr. Tang and Ms. Wallis-Lage each received a prorated
additional annual fee for service as chair of the Nominating, Governance, and Sustainability in 2024, as reflected above. |
| (3) |
Represents grants of 498 fully-vested shares of Common
Stock (with the exception of Mr. Kapoor). As described above, Mr. Kapoor received 385 shares of Common Stock in connection
with his appointment in 2024. The aggregate grant date fair value of the shares was computed in accordance with FASB ASC Topic
718, disregarding the effect of estimated forfeitures, and is equal to the number of shares granted multiplied by the average
of the high and low price of the Common Stock on the date of grant. |
| (4) |
The Company maintains a visiting director’s office
for all members of the Board at its headquarters in Houston, Texas. The office is available on a first-come-first-served basis
for all directors. In accordance with SEC regulations, perquisites that in the aggregate total less than $10,000 are not required
to be disclosed. No amount is included in the table above with respect to the availability and use of this office. |
| 28 |
|
| 2025 Proxy
Statement |
Table of Contents
PROPOSAL 2
Ratification of the Selection
of Independent Auditors
 |
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE SELECTION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT AUDITORS. |
The Audit Committee has re-appointed
Deloitte & Touche LLP as the Company’s independent auditors for the year ending December 31, 2025. Deloitte & Touche
LLP was the Company’s independent auditor for the year ended December 31, 2024.
We expect that representatives
of Deloitte & Touche LLP will be present at the Annual Meeting to respond to appropriate questions, and they will have the
opportunity to make a statement if they desire.
The affirmative vote of holders
of a majority of the shares of Common Stock voted at the Annual Meeting is required to ratify the appointment of Deloitte &
Touche LLP as the Company’s independent auditors for 2025. If the stockholders fail to ratify the appointment, the Audit
Committee will reconsider its selection, but it still may decide to retain Deloitte & Touche LLP. Even if the appointment
is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent accounting firm at
any time during the year if the committee determines that such a change would be in the best interests of the Company and its
stockholders.
Relationship
with Independent Auditors
The Audit Committee has selected
Deloitte & Touche LLP as independent auditors for the Company for the year ending December 31, 2025.
Deloitte & Touche LLP acted as independent
auditors for the Company for the year ended December 31, 2024. Fees disbursed by the Company and its subsidiaries for professional
services rendered by Deloitte & Touche LLP during 2024 and 2023 were as follows:
| Description | |
2024 | | |
2023 | |
| Audit Fees | |
$ | 3,689,501 | | |
$ | 2,250,247 | |
| Audit-Related Fees | |
$ | 0 | | |
$ | 0 | |
| Tax Fees | |
$ | 0 | | |
$ | 0 | |
| All Other Fees | |
$ | 2,051 | (1) | |
$ | 2,051 | (1) |
| (1) |
This amount represents the Company’s subscription
fee for the Deloitte Accounting Research Tool (“DART”), a comprehensive web-based library of accounting and financial
disclosure literature. |
The amount of audit fees
for 2024 is based on a fees estimate determined with input from Deloitte & Touche LLP for audit services provided to us in
connection with the audit of our 2024 financial statements. The final audit fees for those services may be more or less than the
amount reflected on this table.
The Audit Committee has established
pre-approval policies and procedures applicable to all services provided by the Company’s independent auditors to the Company,
pursuant to which the committee reviews for approval each service expected to be provided by the independent auditors, and is
provided with sufficiently detailed information so that it can make well-reasoned assessments of the impact of the services on
the independence of the auditors. In 2024, all the fees paid to the Company’s auditors were approved by the Audit Committee.
Pre-approvals include pre-approved cost levels or budgeted amounts (or a range of cost levels or budgeted amounts). Any proposed
service that would exceed pre-approved cost levels or budgeted amounts also requires pre-approval. Substantive changes in terms,
conditions, or fees resulting from changes in the scope, structure, or other items regarding pre-approved services will also be
pre-approved if necessary. The pre-approvals may include services in categories of audit services (including consultation to support
such audits), audit-related services (items reasonably related to the performance of the audit or review of the financial statements),
tax services (tax compliance, tax planning, and tax advice), and other services (services permissible under the SEC’s auditor
independence rules, typically routine and recurring type services that would not impair the independence of the auditor).
|
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
PROPOSAL NUMBER 2. |
| |
| 2025 Proxy
Statement |
29 |
Table of Contents
PROPOSAL
3
Advisory Vote
to Approve the Compensation of the Named Executive Officers
|
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR
THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS. |
The Board recognizes that
executive compensation is an important matter for our stockholders. As described in detail in the “Compensation Discussion
and Analysis” (the “CD&A”) section elsewhere in this proxy statement, the Compensation and Human Capital
Committee is tasked with the implementation of our executive compensation philosophy, and the core of that philosophy has been
and continues to be to pay the Company’s executive officers based on Company performance. In particular, the Compensation
and Human Capital Committee strives to attract, retain, and motivate exceptional executive officers, to reward past performance
as measured against pre-established goals, to provide incentives for future performance, and to align executive officers’
long-term interests with the interests of our stockholders. To do so, the Compensation and Human Capital Committee uses a combination
of short- and long-term incentive compensation to reward near-term performance and to encourage our executive officers’
commitment to our long-term strategic business goals. It is the intention of the Compensation and Human Capital Committee that
our executive officers be compensated competitively and consistently with our business goals and strategy, sound corporate governance
principles, and stockholder interests and concerns. As discussed further in the CD&A, the Compensation and Human Capital Committee
retains an independent compensation consultant and reviews survey and peer group data to ensure that compensation for key positions
is properly aligned with market practices. The Company’s commitment to aligning pay with performance is evidenced by the
compensation paid to or earned by the Company’s Named Executive Officers.
As described in the CD&A,
we believe that our executive compensation program is effective, appropriate, and strongly aligned with the long-term interests
of our stockholders and that the compensation provided to the Named Executive Officers (including potential payouts upon a termination
of employment or change in control) is reasonable and not excessive. As you consider this Proposal Number 3, we urge you to read
the CD&A section of this proxy statement for additional details on our executive compensation program, including more detailed
information about our compensation philosophy and objectives and the compensation paid or awarded to the Named Executive Officers,
and to review the tabular disclosures regarding Named Executive Officer compensation together with the accompanying narrative
disclosures in the “Summary of Executive Compensation” section of this proxy statement.
Congress enacted the Dodd-Frank
Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which requires a non-binding advisory “Say on
Pay” vote and gives our stockholders the opportunity to express their views on the compensation of the Named Executive Officers.
We value the opportunity to have our stockholders provide us with such a vote on executive compensation at the Annual Meeting.
As an advisory vote and as
prescribed by Dodd-Frank, Proposal Number 3 is not binding on the Board or the Compensation and Human Capital Committee, will
not overrule any decisions made by the Board or the Compensation and Human Capital Committee, and will not require the Board or
the Compensation and Human Capital Committee to take any action. Although the vote is non-binding, the Board and the Compensation
and Human Capital Committee value the opinions of our stockholders and will consider the outcome of the vote when making future
executive compensation decisions. In particular, if there are a significant number of votes against the Named Executive Officers’
compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns, and the Board and the Compensation
and Human Capital Committee will evaluate whether any actions are necessary to address those concerns. Unless the Board modifies
its policy on the frequency of “Say on Pay” votes, the next “Say on Pay” vote will be held in 2026. The
next advisory vote on the frequency for “Say-on-Pay” stockholder votes will be held no later than at the Company’s
2029 Annual Meeting.
The Board of Directors is
asking that stockholders cast a non-binding, advisory vote FOR the following resolution:
“RESOLVED, that the
compensation paid or awarded to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation
S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby APPROVED on
an advisory basis.”
|
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR
PROPOSAL NUMBER 3. |
| 30 |
|
| 2025 Proxy
Statement |
Table of Contents
Security
Ownership of Certain Beneficial Owners and Management
The following table sets
forth information about the beneficial ownership of shares of Common Stock as of March 1, 2025: (i) individually by the Chief
Executive Officer, each of the other Named Executive Officers, and current directors and nominees for director of the Company,
(ii) by all executive officers and directors of the Company as a group, and (iii) by each person known to the Company as reported
on schedules filed with the SEC to be the beneficial owner of more than 5% of the outstanding Common Stock of the Company.
Except as noted below, each of the persons listed
has sole investment and voting power with respect to the shares indicated.
| | |
| Common
Stock Beneficially Owned |
| Name
and Address of Beneficial Owner(s)(1) | |
| Shares
Owned as of
March
1, 2025 | | |
| Shares
Subject to
Options Which Are or
Will Become Exercisable
Prior
to April 30, 2025 | | |
| Total
Beneficial
Ownership | | |
| %
of
Class(2) |
| BRIAN
LANE | |
| 204,205 | (3) | |
| 0 | | |
| 204,205 | | |
| * |
| FRANKLIN
MYERS | |
| 106,498 | | |
| 0 | | |
| 106,498 | | |
| * |
| WILLIAM
GEORGE | |
| 45,244 | (4) | |
| 29,936
| (5) | |
| 75,180 | | |
| * |
| HERMAN
BULLS | |
| 37,732 | | |
| 0 | | |
| 37,732 | | |
| * |
| DARCY
ANDERSON | |
| 37,193 | | |
| 0 | | |
| 37,193 | | |
| * |
| TRENT
MCKENNA | |
| 23,990 | (6) | |
| 0 | | |
| 23,990 | | |
| * |
| JULIE
SHAEFF | |
| 16,687
| (7) | |
| 0 | | |
| 16,687 | | |
| * |
| CONSTANCE
SKIDMORE | |
| 14,285 | | |
| 0 | | |
| 14,285 | | |
| * |
| WILLIAM
SANDBROOK | |
| 13,524
| (8) | |
| 0 | | |
| 13,524 | | |
| * |
| PABLO
MERCADO | |
| 9,036 | | |
| 0 | | |
| 9,036 | | |
| * |
| LAURA
HOWELL | |
| 7,848
| (9) | |
| 0 | | |
| 7,848 | | |
| * |
| VANCE
TANG | |
| 5,498
| (10) | |
| 0 | | |
| 5,498 | | |
| * |
| CINDY
WALLIS-LAGE | |
| 5,371
| (11) | |
| 0 | | |
| 5,371 | | |
| * |
| TERRENCE
REED | |
| 3,759 | | |
| 0 | | |
| 3,759 | | |
| * |
| RHOMAN
HARDY | |
| 1,785 | | |
| 0 | | |
| 1,785 | | |
| * |
| GAURAV
KAPOOR | |
| 385 | | |
| 0 | | |
| 385 | | |
| * |
| ALL
EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP (16 PERSONS) | |
| 533,040 | | |
| 29,936 | | |
| 562,976 | | |
| 1.59% |
BLACKROCK, INC.
50 HUDSON YARDS
NEW YORK, NEW YORK 10001 | |
| | | |
| | | |
| 4,807,189
| (12) | |
| 13.54% |
THE VANGUARD GROUP, INC.
100 VANGUARD BLVD.
MALVERN, PENNSYLVANIA 19355 | |
| | | |
| | | |
| 3,914,091 | (13) | |
| 11.03% |
CAPITAL WORLD INVESTORS
333 SOUTH HOPE STREET, 55TH FLOOR
LOS ANGELES, CALIFORNIA 90071 | |
| | | |
| | | |
| 2,277,814 | (14) | |
| 6.42% |
| * |
Less than 1%. |
| (1) |
Except as noted, the address of each person is c/o Comfort
Systems USA, Inc., 675 Bering Drive, Suite 400, Houston, Texas 77057. |
| (2) |
Calculated using total outstanding shares as of March 1,
2025, which was 35,494,462 (excluding 5,628,903 shares held in treasury). |
| (3) |
Includes 19,638 shares of Common Stock issued pursuant
to restricted stock grants that remain subject to tenure vesting. |
| (4) |
Includes 23,082 shares of Common Stock issued pursuant
to restricted stock grants that remain subject to tenure vesting. |
| (5) |
Includes 15,422 options with an exercise price of $36.25
and 14,514 options with an exercise price of $42.50. |
| (6) |
Includes 4,377 shares of Common Stock issued pursuant to
restricted stock grants that remain subject to tenure vesting. |
| (7) |
Includes 1,891 shares of Common Stock issued pursuant to
restricted stock grants that remain subject to tenure vesting. |
| |
| 2025 Proxy
Statement |
31 |
Table of Contents
Security
Ownership of Certain Beneficial Owners and Management
| (8) |
Includes 170 shares held by a member of Mr.
Sandbrook’s household. |
| (9) |
Includes 2,610 shares of Common Stock issued pursuant to
restricted stock grants that remain subject to tenure vesting. |
| (10) |
Includes 5,498 shares of Common Stock held in The Tang
Living Trust, dated October 3, 2014, for which Mr. Tang and his spouse are trustees. |
| (11) |
Includes 5,371 shares of Common Stock held in the Kent
L. Lage and Cindy L. Wallis-Lage Trust, dated December 21, 2017, for which Ms. Wallis-Lage and her spouse are trustees. |
| (12) |
As reported by BlackRock, Inc. in a Schedule 13G/A filed
with the SEC on January 23, 2024. The Schedule 13G/A states that BlackRock, Inc. has sole voting power with respect to 4,704,451
shares of Common Stock and sole dispositive power with respect to 4,807,189 shares of Common Stock. |
| (13) |
As reported by The Vanguard Group, Inc. in a Schedule 13G/A
filed with the SEC on February 13, 2024. The Schedule 13G/A states that The Vanguard Group, Inc. has shared voting power with
respect to 67,932 shares of Common Stock, sole dispositive power with respect to 3,808,024 shares of Common Stock, and shared
dispositive power with respect to 106,067 shares of Common Stock. |
| (14) |
As reported by Capital World Investors, a division of Capital
Research and Management Company, in a Schedule 13G/A filed with the SEC on November 13, 2024. The Schedule 13G/A states that
Capital World Investors has sole voting power with respect to 2,277,814 shares of Common Stock and sole dispositive power
with respect to 2,277,814 shares of Common Stock. |
| 32 |
|
| 2025 Proxy
Statement |
Table of Contents
Compensation Discussion
and Analysis
Overview
This Compensation Discussion and Analysis (the “CD&A”) provides:
| ● |
an overview and analysis of the
Company’s executive compensation program; |
| ● |
the material decisions made with respect to 2024
compensation for the Named Executive Officers; and |
| ● |
the material factors considered in making those
decisions. |
The CD&A focuses on the compensation paid
or awarded to the Named Executive Officers unless noted otherwise.
2024
Named Executive Officers
 |
| |
|
|
|
|
|
|
|
|
| BRIAN LANE |
|
WILLIAM GEORGE |
|
TRENT MCKENNA |
|
LAURA HOWELL |
|
JULIE SHAEFF |
President and Chief
Executive Officer
since December 2011
Age: 68 |
|
Executive Vice President
and Chief Financial
Officer
since May 2005
Age: 60 |
|
Executive Vice President
and Chief Operating
Officer
since January
2021*
Age: 52 |
|
Senior Vice President,
General Counsel,
and Secretary
since January
2019*
Age: 37 |
|
Senior Vice President and
Chief Accounting Officer
since May 2005
Age: 59 |
| * |
Mr. McKenna served as Senior Vice President and Chief Operating
Officer during 2021 and has served as Executive Vice President and Chief Operating Officer since January 2022. Ms. Howell
served as Vice President, General Counsel, and Secretary from January 2019 through December 2021 and has served as Senior
Vice President, General Counsel, and Secretary since January 2022. |
The Board has delegated to
the Compensation and Human Capital Committee (referred to in this CD&A simply as the “Committee”) the duty of
designing and overseeing the Company’s executive compensation program. The Committee is comprised entirely of independent
(pursuant to NYSE and SEC rules, and the Company’s own Independence Guidelines) members of the Board.
The Company’s executive
compensation program is designed to:
| ● |
provide competitive total compensation consistent with job scope, experience,
and related skills; |
| ● |
link bonus opportunities to the Company’s performance; |
| ● |
grant equity compensation at competitive levels, a significant portion of which is performance-based;
|
| ● |
avoid unnecessary and imprudent risks; and |
| ● |
attract and motivate talented executive officers and minimize turnover of senior-level Company
employees, which contributes to the stability and continuity of senior leadership. |
| |
| 2025 Proxy
Statement |
33 |
Table of Contents
Compensation Discussion
and Analysis
2024 Performance Highlights
2024 Performance Highlights
To put the Company’s 2024 compensation decisions
in context, the following summarizes the Company’s key financial and business results for 2024:
| $7.03B |
|
$5.99B* |
|
$522.4M |
| REVENUE |
|
BACKLOG |
|
NET INCOME |
| |
|
|
|
|
| $14.60 |
|
$849.1M |
|
$743.5M |
| EPS (PER DILUTED SHARE) |
|
OPERATING CASH FLOW |
|
FREE CASH FLOW |
| * |
Backlog is as of December 31, 2024. |
We finished 2024 with increased
revenue (revenue of $7.03 billion in 2024, as compared to revenue of $5.21 billion in 2023), record earnings (net income of $522.4
million, or $14.60 per diluted share, in 2024, as compared to net income of $323.4 million, or $9.01 per diluted share, in 2023),
increased cash flow (operating cash flow of $849.1 million in 2024, as compared to $639.6 million in 2023), and a notable surge
of backlog (backlog was $5.99 billion as of December 31, 2024, as compared to $5.68 billion as of September 30, 2024 and $5.16
billion as of December 31, 2023). As a result of this remarkable performance, the Named Executive Officers each received 200.0%
of their respective earnings-per-share (“EPS”) target awards and 200.0% of their respective free cash flow (“FCF”)
target awards under the corporate financial incentive portion of the Company’s 2024 annual incentive plan, as further described
below.
Compensation and Governance
Practices
Below we highlight certain of our practices that
we consider good governance features of our executive compensation program.
| COMPENSATION
PRACTICES |
 |
A majority of each executive officer’s compensation is at-risk
(i.e., variable and not fixed).* |
|
|
Executive officers and directors are subject to stock ownership
requirements. |
|
A majority of each executive officer’s compensation is tied
to the Company’s financial performance and/or stock price.* |
|
|
The Company has adopted a compensation clawback policy and
an anti-hedging/pledging policy that apply to all executive officers. |
|
50% of each executive officer’s annual equity award targets
are subject to the Company achieving specific performance goals over a 3-year time horizon.*
|
|
|
The Committee and management routinely engage independent third parties, including an independent
compensation consultant and the Company’s stockholders, to advise and provide feedback
on executive compensation matters. |
| * |
Assuming
target performance is achieved, when applicable, and based on grant date values of annual equity awards. Does not take into
account any one-time equity awards outside of the annual equity award cycle. |
| 34 |
|
| 2025 Proxy
Statement |
Table of Contents
Compensation
Discussion and Analysis
Consideration of Stockholder Advisory Vote
Consideration of Stockholder Advisory Vote
In designing the Company’s
overall executive compensation program, the Committee also values and considers stockholder input. While evaluating the Company’s
executive compensation program, the Committee considered the stockholder advisory vote on the compensation paid to the Company’s
named executive officers that was taken in 2024.
The Committee viewed the
outcome of that advisory vote—approval by more than 95% of the shares voted—as indicating that the Company’s
stockholders support the Company’s overall approach to executive compensation and made no changes to the structure of our
executive compensation program as a direct result of the vote.
HISTORICAL SAY-ON-PAY APPROVAL
Compensation Philosophy
and Objectives
The Committee evaluates each element of the overall
executive compensation program to ensure that it supports the Committee’s objectives of:
| OUR
COMPENSATION OBJECTIVES |
|
providing competitive total compensation consistent with job
scope, experience, and related skills; |
|
|
avoiding unnecessary and imprudent risks; and |
|
linking bonus opportunities to the Company’s performance; |
|
|
attracting and motivating talented executive officers and minimizing
turnover of senior-level Company employees, which contributes to the stability and continuity of senior leadership. |
|
granting equity compensation at competitive levels, a significant
portion of which is performance-based; |
|
Against that backdrop, the Company’s executive
compensation program is designed to:
| OUR
COMPENSATION PROGRAM IS DESIGNED TO |
|
pay competitive levels of compensation; |
|
|
align the interests of the Company’s executive officers with the
long-term interests of the Company’s stockholders; and |
|
link executive pay to Company performance by making a significant
portion of pay variable and not fixed; |
|
|
reward long-term results. |
To achieve
these objectives, in addition to the objectives referenced in the “Elements of Compensation” subsection below, the
Committee implements a “pay-for-performance” philosophy using the guiding principles that:
| 1 |
compensation should be incentive-driven, with a balanced short-term and long-term focus; |
| 2 |
a significant portion of pay for executive officers should be “at-risk;” |
| 3 |
a significant portion of annual incentive compensation should be tied to the overall performance of the Company; |
| 4 |
a portion of annual incentive compensation should be tied to individual performance; and |
| 5 |
a significant portion of long-term incentive awards should be contingent upon Company performance. |
| |
| 2025 Proxy
Statement |
35 |
Table of Contents
Compensation
Discussion and Analysis
Compensation Philosophy and Objectives
Role of the Chief Executive Officer
The Company’s Chief
Executive Officer makes annual recommendations to the Committee regarding the compensation arrangements of the Company’s
executive officers (except that he makes no recommendation with respect to his own compensation arrangements). The Committee considers
the recommendations during its regularly-scheduled meetings, and may choose to adopt the recommendations, in whole or in part,
at the Committee’s sole discretion. The Committee is responsible for making all decisions regarding executive compensation.
Independent Compensation
Consultant; Use of Market Data
In 2024, the Committee retained
a compensation consultant, Compensation Advisory Partners, to advise the Committee on the design and administration of the Company’s
short-term and long-term incentive compensation programs and to provide a comprehensive analysis of executive compensation survey
data and market trends. The Committee reviewed the services provided by Compensation Advisory Partners and believes that Compensation
Advisory Partners was independent in providing executive compensation consulting services to the Committee. In making this determination,
the Committee noted that during 2024:
| ● |
Compensation Advisory Partners did not provide any
services to the Company or management other than services requested by or with the approval of the Committee, and its services
were limited to advising on executive and director compensation-related matters. Specifically, Compensation Advisory Partners
did not provide, directly or indirectly through any affiliates, any non-executive employee compensation services, such as
pension consulting or human resource outsourcing; |
| ● |
Compensation Advisory Partners maintained a conflict of interest
policy, which was provided to the Committee, with specific policies and procedures designed to ensure independence; |
| ● |
Fees paid to Compensation Advisory Partners by the Company during
2024 were less than 1% of their total revenue; |
| ● |
None of the Compensation Advisory Partners consultants working
on Company matters had any business or personal relationship with Committee members; |
| ● |
None of the Compensation Advisory Partners consultants working
on Company matters had any business or personal relationship with any executive officer of the Company; and |
| ● |
None of the Compensation Advisory Partners consultants working
on Company matters owned Company stock. |
The Committee monitors the
independence of its outside consultants on a periodic basis.
During 2024, the Committee
consulted with Compensation Advisory Partners regarding the Company’s short-term and long-term incentive compensation programs,
as well as market trends and executive compensation peer group and other survey data, as described below. Compensation Advisory
Partners has provided the Committee with detailed analysis and recommendations on the structure of the Company’s short-term
and long-term incentive compensation programs in terms of design, metrics, and payout opportunities, and the Committee intends
to continue to periodically refine the Company’s short-term and long-term incentive compensation programs based on a number
of factors, including its compensation consultant’s recommendations, market trends in the Company’s industry, and
general economic conditions. In 2024 Compensation Advisory Partners also advised the Nominating, Governance, and Sustainability
Committee on non-employee director compensation.
Peer Group and the Benchmarking
Process
The Committee reviews executive
compensation levels annually using peer group and other survey data provided by its compensation consultant. The Committee does
not attempt to set executive compensation at a pre-defined percentile of the market, but the Committee does use comparative data
in an effort to be better informed in its executive compensation-related decisions.
The Committee believes that,
due to the Company’s unique position in its industry, there are no directly comparable companies in the broader market for
the purpose of determining appropriate compensation comparators for the compensation of its executive officers and, for this reason,
does not depend solely on a “peer group” to determine executive officer compensation. It does, however, review executive
compensation against compensation paid to executive officers holding similar positions in certain select “peer group”
companies. For purposes of making 2024 executive compensation decisions, this peer group was as follows:
| 36 |
|
| 2025 Proxy
Statement |
Table of Contents
Compensation
Discussion and Analysis
Use of Tally Sheets
| 2024 PEER GROUP |
| ● EMCOR Group,
Inc. |
● MasTec,
Inc. |
● KBR, Inc. |
| ● ABM Industries Incorporated |
● Tutor Perini Corporation |
● Valmont Industries,
Inc. |
| ● Granite Construction
Incorporated |
● Dycom Industries, Inc. |
● MYR Group Inc. |
| ● Primoris Services Corporation |
● Tetra Tech, Inc. |
● IES Holdings, Inc. |
| ● APi Group Corporation |
● Sterling Infrastructure,
Inc. |
● Limbach Holdings, Inc. |
| ● Ameresco, Inc. |
● Oshkosh Corporation |
● MDU Resources Group,
Inc. |
In determining the appropriateness
of the foregoing companies, the Committee, in consultation with Compensation Advisory Partners, considered factors such as historical
revenue, the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA), and total shareholder return,
in addition to the primary industry, enterprise value, and market capitalization of each company. In August 2024, this peer group
was further refined by the Committee, in consultation with Compensation Advisory Partners and considering these same factors,
to remove Ameresco, Inc. and Limbach Holdings, Inc. and to add Fluor Corporation and AECOM, as the Committee determined that such
revisions would realign the peer group to better reflect the factors as set forth above, including historical revenue and market
capitalization.
The Committee uses a combination
of the peer group and survey data from certain other industry companies to provide a general market review of the reasonableness
of total compensation levels for the Company’s executive officers; however, the Committee does not use the peer group or
survey data for any other purpose or otherwise formally benchmark the compensation of the Company’s executive officers.
Use of Tally Sheets
The Committee routinely uses
tally sheets to assist it in analyzing executive officers’ total compensation. Tally sheets provide the Committee with information
about the following components of compensation paid or granted over the preceding three-year period: cash compensation, including
salary and annual incentive compensation, and long-term incentive compensation. These tally sheets also provide an estimate of
amounts payable in the event of a voluntary or involuntary termination of employment, including by reason of death, disability,
or a change in control resulting in termination of employment. The Committee also reviews information regarding long-term incentive
awards, including statistics on share usage, analysis of current “in-the-money” values of outstanding option grants
and current values of time-vesting restricted stock unit (“RSU”) and performance-vesting restricted stock unit (“PSU”)
awards, and a summary of current and past performance results.
Chief Executive Officer
Compensation
Each year, the Committee
meets in executive session (i.e., separately from management) to evaluate the Chief Executive Officer’s performance
and determine his total compensation. The Committee conducts an assessment of the Chief Executive Officer’s performance
as well as an assessment of other relevant factors, such as the Company’s performance, individual tenure, and position tenure,
and sets the Chief Executive Officer’s compensation for each year based on the Committee’s assessment of these factors.
Although the Committee does not attempt to set the Chief Executive Officer’s target compensation at any specific percentile
of compensation for peer group companies, the Committee does use peer group and other survey data as context in reviewing the
Chief Executive Officer’s overall compensation levels and approving compensation actions, as described above. Based on this
data, the Committee determined that the Chief Executive Officer’s target compensation was below the market median in 2024.
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Statement |
37 |
Table of Contents
Compensation
Discussion and Analysis
Elements
of Compensation
Elements
of Compensation
The Company’s
executive compensation program consists of four basic elements:
| |
COMPENSATION
ELEMENT |
|
OBJECTIVE |
|
KEY
CHARACTERISTICS |
 |
|
BASE
SALARY |
|
● Provide
a fixed level of cash compensation for performing day-to-day functions
● Attract
and retain strong executive talent
|
|
● Levels
are evaluated annually by the Committee
● For
2024, base salaries were established based on a number of factors, including each executive’s performance and time in
his or her role, advice from the Committee’s independent compensation consultant, and analysis of peer group and survey
data and economic conditions |
 |
|
ANNUAL
INCENTIVE PLAN |
|
● Reward
annual financial and individual performance |
|
● Target
awards are established as a percentage of base salary
● The
majority of each award’s target opportunity is based on the achievement of objective, pre-established goals related to the
Company’s EPS and FCF performance
|
| |
LONG-TERM
INCENTIVE AWARDS |
|
● Reward
long-term Company performance
● Encourage
focus on growing stockholder value
● Align
management’s interests with stockholders’ interests
● Encourage
retention of key management employees, stability, and continuity of leadership
|
|
● Awards
are provided through a combination of time-vesting RSUs and dollar-denominated PSUs
● Dollar-denominated
PSUs are earned based on the achievement of objective, pre-established performance goals, including total shareholder return
relative to certain comparable companies and the Company’s EPS performance
● RSUs
are subject to a three-year vesting schedule; dollar-denominated PSUs that are earned based on performance cliff vest following
the end of a three-year performance period
|
| |
|
BENEFITS |
|
● Attract
and retain strong executive talent
● Provide
basic financial stability
|
|
● Participation
in health, welfare, and retirement benefit plans, generally on the same terms as all
other full-time employees of the Company |
While base
salaries, together with health, welfare, and retirement benefits, are designed to provide basic compensation and financial stability,
the purpose of annual incentive compensation is primarily to encourage the Company’s executive officers to focus on the
execution of the Company’s business strategy and plan for the current year. Long-term incentives, granted in the form of
RSUs and PSUs, are designed to:
| ● |
align executive officers’
interests with those of stockholders; |
| ● |
incentivize them to
attain longer-term Company performance goals; and |
| ● |
encourage them to remain
with the Company. |
Unlike annual
incentive compensation, which, as discussed below, tends to focus on more current Company and individual performance, long-term
incentives focus on sustained results and growing stockholder value.
Relative
Size of Major Compensation Elements
The combination
of base salary, annual incentive awards, and long-term incentive awards is referred to as the “total direct compensation.”
In setting executive officer compensation, the Committee considers the aggregate compensation payable to the executive, assuming
target performance is achieved, as well as the weighting of each compensation component. The Committee seeks to achieve the appropriate
balance between short- and long-term cash compensation and incentives for the achievement of both annual and long-term financial
and non-financial objectives.
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| 2025 Proxy
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Table of Contents
Compensation
Discussion and Analysis
Allocation
Among Compensation Elements
Allocation
Among Compensation Elements
For 2024,
the portion of the Chief Executive Officer’s and the average of each of the other Named Executive Officers’ total
target direct compensation (for annual incentive awards, assuming target performance was achieved, and, for annual equity awards,
based on grant date values at target) that was variable and at-risk is illustrated as follows:
Total
Target Compensation Mix
“Average of Other Named Executive
Officers” is based on an average of the respective compensation of Messrs. George and McKenna and Mses. Shaeff and Howell.
Because the value that a Named
Executive Officer may receive with respect to RSUs will depend on the performance of the Company’s Common Stock, and therefore
is variable, we have included these awards as an element of “Variable Pay” in the charts above.
Base
Salary
The Committee
determines base salary for our executive officers after considering several factors, including the executive’s individual
experience, performance, and individual skills. Only after weighing these factors does the Committee consider peer group and/or
survey data. The Committee uses executive officers’ performance assessments, Company performance, peer group and other survey
data, as described above, and its own analysis of the executive officer’s individual performance to determine each executive’s
base salary at least annually. Following its review of peer group and market data and the other factors described above, and taking
into account the Company’s strong performance, on December 6, 2023, the Committee approved an increase in each Named Executive
Officer’s base salary as set forth in the table below, effective January 1, 2024. The Committee believes that these increases
were appropriate to reward the Named Executive Officers and bring their base salaries more in line with the market.
| Named
Executive Officer |
|
2024
Base Salary
$ |
|
2023
Base Salary
$ |
| Brian
Lane |
|
1,100,000 |
|
1,002,000 |
| William
George |
|
750,000 |
|
633,000 |
| Trent
McKenna |
|
575,000 |
|
506,000 |
| Laura
Howell |
|
475,000 |
|
425,000 |
| Julie
Shaeff |
|
400,000 |
|
367,000 |
| |
| 2025 Proxy
Statement |
39 |
Table of Contents
Compensation
Discussion and Analysis
Allocation
Among Compensation Elements
Annual
Incentive Plan
The Named
Executive Officers are eligible to participate in a cash-based annual incentive plan and receive incentive bonuses based on actual
performance against key business and individual goals.
The annual
incentive plan consists of two distinct components: a corporate financial performance component and an individual performance
component. In 2024, consistent with previous years, the corporate financial performance component of the annual incentive plan
rewarded the achievement of EPS and FCF goals (together, the “Corporate Financial Incentive”). The Committee believes
that EPS remains an important metric for the Company because it encourages a focus on profitability. The Committee continued the
use of FCF as a metric under the annual incentive plan because it incentivizes management’s focus on increasing the Company’s
cash flow. The second, smaller, component of the annual incentive plan rewarded the achievement of specified individual performance
goals (the “Individual Performance Incentive”).
Each year,
the Committee determines the threshold, target, and maximum incentive opportunities for the Company’s executive officers,
as a percentage of the executive’s base salary. To determine these base salary percentages for each Named Executive Officer
for 2024, in addition to historical and projected Company financial performance, the Committee considered the Named Executive
Officer’s historical annual incentive levels and the degree to which a Named Executive Officer’s efforts and job function
were expected to influence and contribute to the Company’s financial performance. After assigning threshold, target, and
maximum base salary percentages for each Named Executive Officer, the Committee then used peer group and other survey data, as
described above, to assess the reasonableness of such assigned levels. Target annual incentive opportunities for the Named Executive
Officers for 2024 are summarized in the table below, which were unchanged as compared to 2023 targets:
| | |
Target
Annual Incentive Opportunity as a Percent of Base Salary |
| Named
Executive Officer | |
Target
Corporate
Financial Incentive | | |
Target
Individual
Performance Incentive | | |
Total
Target Incentive
Opportunity | |
| Brian
Lane | |
| 110 | % | |
| 10 | % | |
| 120 | % |
| William
George | |
| 90 | % | |
| 10 | % | |
| 100 | % |
| Trent
McKenna | |
| 90 | % | |
| 10 | % | |
| 100 | % |
| Laura
Howell | |
| 65 | % | |
| 10 | % | |
| 75 | % |
| Julie
Shaeff | |
| 65 | % | |
| 10 | % | |
| 75 | % |
For the Corporate
Financial Incentive, annual incentive opportunities were allocated 70% to the EPS portion and 30% to the FCF portion. For each
metric, each Named Executive Officer had a threshold opportunity of 40% of his or her target annual incentive opportunity and
a maximum annual incentive opportunity of 200% of his or her target annual incentive opportunity.
Corporate Financial Incentive
Criteria
At the beginning
of each year, the Committee sets a threshold, target, and maximum performance level for each corporate performance goal for purposes
of the Corporate Financial Incentive component of the annual incentive plan. For each of the Named Executive Officers for 2024,
consistent with prior years, the EPS portion of the Corporate Financial Incentive represented 70% of the total Corporate Financial
Incentive opportunity, and the FCF portion of the Corporate Financial Incentive represented 30% of the total Corporate Financial
Incentive opportunity. If neither the EPS nor FCF thresholds were met, then no portion of the Corporate Financial Incentive would
be paid. If only one of the EPS or FCF thresholds were met, then only that portion of the Corporate Financial Incentive would
be paid.
In setting
the EPS and FCF threshold, target, and maximum performance levels, the Committee reviews management’s recommendations and
then considers the Company’s historical financial performance as well as projections for the industry and industry historical
financial performance and projections. The Committee sets EPS and FCF at levels that it considers aggressive but attainable with
the intention that the Named Executive Officers will be encouraged to strive for continued improvement in Company performance,
ultimately benefiting the Company’s stockholders, and to continue those efforts even after the EPS and/or FCF threshold performance
levels have been achieved. The Committee believes that the added value that results from the Company’s achievement of EPS
and/or FCF goals above the threshold performance levels to the Company and its stockholders is sufficient to justify the proportionate
increases in amounts paid to the Named Executive Officers for achievement above threshold performance levels.
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| 2025 Proxy
Statement |
Table of Contents
Compensation
Discussion and Analysis
Allocation
Among Compensation Elements
The threshold,
target, and maximum performance levels for each of the corporate performance goals for 2024 annual incentives were as set forth
in the table below. For performance between threshold, target, and maximum performance levels, the amount that is earned is determined
on a straight-line basis.
2024
Corporate Financial Incentive Goals
| EPS |
|
Threshold |
|
$6.30 |
|
|
| |
|
Target |
|
$9.00 |
|
|
| |
|
Max |
|
$11.70 |
|
|
| FCF |
|
Threshold |
|
$150.5M |
|
|
| |
|
Target |
|
$215.0M |
|
|
| |
|
Max |
|
$279.5M |
|
|
For purposes
of the annual incentive plan and consistent with previous years, (i) EPS was calculated from the Company’s audited financial
statements for the year ended December 31, 2024 in accordance with U.S. generally accepted accounting principles, except that
it did not take into account: (A) goodwill impairment; (B) write-off of debt costs; (C) restructuring charges; (D) any cumulative
effect of a change in accounting principles; or (E) any other unusual or non-recurring items as determined by the Committee; and
(ii) FCF was calculated by excluding: (A) certain unusual items, as determined by the Committee; and (B) certain items related
to acquisitions or sales of businesses, including less customary capital expenditures plus the proceeds from asset sales. FCF
is defined as cash flow from operating activities less customary capital expenditures, plus the proceeds from asset sales.
In 2024, the
Committee did not make any adjustments to EPS or FCF for purposes of determining levels of achievement under the annual incentive
plans. For a further discussion of how we calculate EPS and FCF, see the “Liquidity and Capital Resources” section
and Note 14 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31,
2024.
The Company’s
EPS and FCF for calculating incentive compensation achievement levels for 2024 were $14.60 and $743.5 million, respectively. The
amounts earned by each of the Named Executive Officers in respect of the Corporate Financial Incentive under the annual incentive
plan for 2024 are set forth in the table below.
2024
CORPORATE FINANCIAL INCENTIVE ACHIEVEMENT LEVELS
| | |
| | |
EPS
Incentive Award Achievement | | |
FCF
Incentive Award Achievement | | |
Corporate
Financial
Incentive Awarded |
| Named
Executive Officer | |
Base
Salary
$ | | |
(As
a % of
Base Salary) | | |
(In
Dollars)
$ | | |
(As
a % of
Base Salary) | | |
(In
Dollars)
$ | | |
(As
a % of Base Salary) | | |
(In
Dollars)
$ |
| Brian
Lane | |
| 1,100,000 | | |
| 154.0
| % | |
| 1,694,000 | | |
| 66.0 | % | |
| 726,000 | | |
| 220.0
| % | |
| 2,420,000 |
| William
George | |
| 750,000 | | |
| 126.0 | % | |
| 945,000 | | |
| 54.0 | % | |
| 405,000 | | |
| 180.0 | % | |
| 1,350,000 |
| Trent
McKenna | |
| 575,000 | | |
| 126.0 | % | |
| 724,500 | | |
| 54.0 | % | |
| 310,500 | | |
| 180.0 | % | |
| 1,035,000 |
| Laura
Howell | |
| 475,000 | | |
| 91.0 | % | |
| 432,250 | | |
| 39.0 | % | |
| 185,250 | | |
| 130.0 | % | |
| 617,500 |
| Julie
Shaeff | |
| 400,000 | | |
| 91.0 | % | |
| 364,000 | | |
| 39.0 | % | |
| 156,000 | | |
| 130.0 | % | |
| 520,000 |
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| 2025 Proxy
Statement |
41 |
Table of Contents
Compensation
Discussion and Analysis
Allocation
Among Compensation Elements
Individual Performance Incentive
In addition
to, and independent from, the Corporate Financial Incentive portion of the annual incentive plan, for 2024 each Named Executive
Officer was eligible to receive the Individual Performance Incentive, which is annual incentive compensation based on the executive’s
achievement of individual performance goals related to the Company’s business and strategy.
At the beginning
of 2024, each Named Executive Officer, including the Chief Executive Officer, identified individual performance goals for the
upcoming year. Each Named Executive Officer’s individual performance goals were discussed and identified in consultation
with (i) the Chief Executive Officer, in the case of Messrs. George and McKenna and Ms. Howell, (ii) the Chief Financial Officer,
in the case of Ms. Shaeff, and (iii) the Committee, in the case of Mr. Lane. These goals varied depending on the roles and responsibilities
for each Named Executive Officer. For 2024, specific goals for each Named Executive Officer included:
| Executive |
2024 Individual Performance Goals |
| Brian
Lane |
|
 |
|
Accomplish
operational goals related to strategic, company-wide development |
| |
|
|
|
Advance
strategic succession planning initiatives |
| |
|
|
|
Improve
Company-wide employee safety measure(1) |
| |
|
|
|
Achieve
Company-wide talent goals |
| William
George |
|
|
|
Advance
strategic acquisition and succession planning initiatives |
| |
|
|
|
Improve
Company-wide employee safety measure(1) |
| Trent
McKenna |
|
|
|
Accomplish
enterprise strategy, professional development, and succession planning goals |
| |
|
|
|
Advance
strategic service growth initiatives |
| |
|
|
|
Improve
Company-wide employee safety measure(1) |
| |
|
|
|
Achieve
Company-wide talent goals |
| Laura
Howell |
|
|
|
Accomplish
cybersecurity strategy priorities |
| |
|
|
|
Ensure
success of additional sustainability initiative priorities |
| |
|
|
|
Improve
Company-wide employee safety measure(1) |
| |
|
|
|
Achieve
Company-wide talent goals |
| Julie
Shaeff |
|
|
|
Complete
2024 target implementations for ERP strategy |
| |
|
|
|
Accomplish
certain professional development goals |
| |
|
|
|
Improve
Company-wide employee safety measure(1) |
| (1) |
The Company-wide
employee safety measure tracks the OSHA Recordable Incident Rate (“ORIR”), which is a nationally-recognized metric
that tracks the number of employees per 100 full-time employees that have been involved in a recordable work-related injury
or illness. In addition to the ORIR performance metric, the Company’s executive officers are required to attend safety
training classes on an annual basis. No amount would be payable to the Named Executive Officers in respect of this safety
measure if there was a work-related fatality of a Company employee during the year or if a Named Executive Officer does not
attend the required safety classes. In 2024, the Company did have a work-related fatality, and no safety component credit
related to the Individual Performance Incentive was obtained in 2024 as a result. |
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| 2025 Proxy
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Table of Contents
Compensation
Discussion and Analysis
Allocation
Among Compensation Elements
Each of the
Named Executive Officers’ individual performance goals for 2024 were quantifiable and were generally composed of four levels
of attainment: Minimum (25% attainment), Meets (50% attainment), Exceeds (75% attainment) and Significantly Exceeds (100% attainment).
The goals were measured on a scale of 0-200% and were weighted to reflect each goal’s strategic importance.
The Chief
Executive Officer and/or the General Counsel presented a summary evaluation of the level of achievement of these goals for each
Named Executive Officer (other than himself or herself) to the Committee following the end of the year. In addition, each Named
Executive Officer (other than Mr. Lane) received performance feedback from his or her direct supervisor throughout the year and
a formal performance review at the end of the year, at which time the Named Executive Officer and his or her direct supervisor
evaluated the Named Executive Officer’s satisfaction of his or her individual performance goals.
In executive
session, the Committee reviewed and discussed its evaluation of Mr. Lane’s performance over the past year and the performance
summaries for each other Named Executive Officer. The Committee also considered significant individual contributions beyond the
pre-established goals and each executive’s overall effectiveness. Based on its evaluation of these factors, the Committee
then determined the Named Executive Officer’s individual performance score. For 2024, the individual performance scores
and the Individual Performance Incentive for each of the Named Executive Officers are set forth below:
2024 INDIVIDUAL
PERFORMANCE INCENTIVE DETERMINATION
| | |
| | |
Individual
Performance Incentive
Opportunity (As a % of Base Salary) | | |
| | Individual
Performance Incentive |
Named
Executive Officer | |
Base Salary
$ | | |
Threshold | | |
Target | | |
Maximum | | |
Individual
Performance Score | | |
(As
a % of Base Salary) | | |
(In Dollars)
$ |
| Brian
Lane | |
| 1,100,000 | | |
| 5 | % | |
| 10 | % | |
| 20 | % | |
| 110.0 | % | |
| 11.0 | % | |
| 121,000 |
| William
George | |
| 750,000 | | |
| 5 | % | |
| 10 | % | |
| 20 | % | |
| 160.0 | % | |
| 16.0 | % | |
| 120,000 |
| Trent
McKenna | |
| 575,000 | | |
| 5 | % | |
| 10 | % | |
| 20 | % | |
| 61.5 | % | |
| 6.15 | % | |
| 35,363 |
| Laura
Howell | |
| 475,000 | | |
| 5 | % | |
| 10 | % | |
| 20 | % | |
| 140.0 | % | |
| 14.0 | % | |
| 66,500 |
| Julie
Shaeff | |
| 400,000 | | |
| 5 | % | |
| 10 | % | |
| 20 | % | |
| 165.0 | % | |
| 16.5 | % | |
| 66,000 |
The Committee
believes that corporate financial measures such as EPS and FCF, when taken together with an additional component to reflect individual
achievement, are appropriate measures for determining annual incentive compensation. This two-part framework provided the Named
Executive Officers with incentives to both achieve key Company financial goals and sustain long-term growth for the Company and
also maintains the Committee’s flexibility to reward outstanding individual performance.
Long-Term
Incentives
In 2024, LTI
grants made to the Named Executive Officers consisted of RSUs and PSUs, the latter of which are denominated in dollar amounts
but, once earned, are settled in shares of Common Stock based on the market value of the Common Stock following the end of the
applicable performance period. The Committee designs the components and weightings of LTI awards to encourage the achievement
of key performance goals and retention and also to balance the performance metrics utilized among the Company’s performance
relative to certain comparable companies, the Company’s ongoing profitability, and the performance of the Common Stock.
The Committee believes that these awards promote a long-term view and further align the executive officers’ interests with
those of our stockholders.
From 2012
through 2018, the Company’s executive officers were generally granted PSUs, RSUs, and stock options on an annual basis.
The Committee modified the structure for LTI awards in March 2019 by removing stock options from annual LTI grants and rebalancing
the awards so that 50% of the LTI grant was in the form of RSUs and 50% was in the form of PSUs, based on grant date value and,
for PSUs, assuming target performance is achieved. This decision was based, in part, on input from its compensation consultant,
and was the first significant structural change since the previous LTI structure was adopted in 2012. The Committee believed that
removing stock options and allocating more value to the PSU and RSU awards better aligned the Company’s compensation program
with peer and broader market practices. The mix provides a balanced approach to long-term retention through the use of RSU awards
while still including a heavy emphasis on performance-based awards through the use of PSUs. The Company’s annual LTI grants
for the Named Executive Officers in March 2024 followed this 50% RSU and 50% PSU structure.
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| 2025 Proxy
Statement |
43 |
Table of Contents
Compensation
Discussion and Analysis
Allocation
Among Compensation Elements
| Award
Type |
|
Description |
|
Alignment
With and Key Benefits to Stockholders |
| RSUs |
|
● 50%
of total LTI grant value
● Vest
ratably over three years
|
|
● Value
dependent upon stock price performance
● Enhances
retention of executive talent
● Encourages
long-term stock ownership |
| PSUs |
|
● 50%
of total LTI grant value (assuming target performance)
● Vest
following the end of a three-year performance period, contingent upon achievement of specified levels of performance measured
for each year during such period
● Dollar-denominated
awards
● Settled in shares based upon stock price following the end of the performance period
● Performance
based upon: EPS performance (50%) and TSR (defined below) performance against peers (50%) |
|
● Performance-based
● EPS
performance goals reward focus on sustainable year-over-year profitability
● TSR
performance goals reward focus on producing stockholder returns in excess of those produced by comparable companies |
2024
ANNUAL LTI GRANTS*
*Based on
grant date fair value, assuming target performance.
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| 2025 Proxy
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Table of Contents
Compensation
Discussion and Analysis
Allocation
Among Compensation Elements
The Committee
believes that LTI compensation should be correlated with salary and short-term incentive compensation. As such, the Committee
uses a percentage of each executive officer’s base salary to determine the total dollar amount of the LTI compensation award
to be granted to that executive each year, based on grant date values and, for PSUs, assuming target performance is achieved.
The Committee determines these percentage levels by analyzing each executive officer’s tenure, responsibilities, and professional
experience, recommendations from its compensation consultant based on peer group and other survey data, as described above, and
the executive officer’s historical annual LTI compensation levels. For 2024, the following percentage of base salary was
used for the Named Executive Officers to determine the grant date value of annual LTI awards: Mr. Lane, 410% of base salary; Mr.
George, 190% of base salary; Mr. McKenna, 175% of base salary; Ms. Howell, 145% of base salary; and Ms. Shaeff, 105% of base
salary. Following its review of peer group and market data and the other factors described above, and taking into account the
Company’s strong performance, on December 6, 2023, the Committee approved an increase in each Named Executive Officer’s
annual LTI awards, as a percentage of his or her base salary, as set forth in the table below. The Committee believes that these
increases were appropriate to reward the Named Executive Officers, further align their interest with our stockholders, and bring
their LTI awards and compensation generally more in line with the market.
| Named
Executive Officer |
|
2024
LTI Percentage |
|
2023
LTI Percentage |
|
| Brian
Lane |
|
410 |
% |
325 |
% |
| William
George |
|
190 |
% |
170 |
% |
| Trent
McKenna |
|
175 |
% |
145 |
% |
| Laura
Howell |
|
145 |
% |
100 |
% |
| Julie
Shaeff |
|
105 |
% |
85 |
% |
Once each executive officer’s
total grant date value is determined, the number of RSUs and the value of PSUs is determined. The number of RSUs granted is determined
by dividing the total dollar amount of the RSUs to be granted by the closing price of the Company’s stock on the date of
grant, and rounding down to the nearest full RSU. PSUs are denominated in dollars.
As an illustration, Mr. Lane’s
2024 award of LTI compensation was calculated as follows:
Total Amount of Award:
410% of base salary of $1,100,000 equals $4,510,000.
RSUs Awarded: 50% of $4,510,000
equals $2,255,000 in value of RSUs. $2,255,000 divided by $314.31 (the closing price of the Common Stock on the date of grant)
equals 7,174 RSUs.
PSUs Awarded: 50% of $4,510,000
equals $2,255,000 in value of PSUs (dollar-denominated, assuming target performance).
The table below sets forth the
2024 annual LTI awards for each of the Named Executive Officers:
| Named
Executive Officer |
|
Base
Salary
$ |
|
Salary
Percentage For
Calculating
Plan Awards |
|
Number
of RSUs
Awarded |
|
Dollar
Value of PSUs
Awarded
(At Target)
$ |
|
Value
of Awards
Under Plan
(At Target)
$ |
| Brian
Lane |
|
1,100,000 |
|
410 |
% |
7,174 |
|
2,255,000 |
|
4,510,000 |
| William
George |
|
750,000 |
|
190 |
% |
2,266 |
|
712,500 |
|
1,425,000 |
| Trent
McKenna |
|
575,000 |
|
175 |
% |
1,600 |
|
503,125 |
|
1,006,250 |
| Laura
Howell |
|
475,000 |
|
145 |
% |
1,095 |
|
344,375 |
|
688,750 |
| Julie
Shaeff |
|
400,000 |
|
105 |
% |
668 |
|
210,000 |
|
420,000 |
| |
| 2025 Proxy
Statement |
45 |
Table of Contents
Compensation
Discussion and Analysis
Allocation Among
Compensation Elements
PSU DESIGN
Upon vesting,
PSUs will be settled in shares of Common Stock, with the number of such shares determined by dividing the dollar value of vested PSUs
(which may be up to 200% of the original dollar value of such PSUs) by the market value of the Common Stock following the end of the
applicable three-year performance period. PSUs are earned based on the level of achievement of the two goals set forth in the table below,
both of which are measured on an annual basis over a three-year performance period, and earned PSUs vest in full upon determination of
the level of achievement of the performance metrics by the Committee following the end of the applicable three-year performance period,
generally subject to continued employment through the end of the three-year performance period.
| Performance
Measure |
|
Measurement |
|
Percentage
of Performance
Award Subject to Measure |
| Earnings
Per Share |
|
● Company’s
actual EPS performance relative to pre-established EPS performance goals |
|
● 50% |
| Relative
Total Shareholder Return |
|
● Company’s
performance relative to comparable companies* |
|
● 50% |
| * |
For
purposes of measuring the Company’s relative total shareholder return for awards granted in 2024, the identified group of comparable
companies consists of: Matrix Service Company; Primoris Services Corporation; Tutor Perini Corporation; Stantec Inc.; Dycom Industries
Inc.; MasTec, Inc.; Sterling Infrastructure, Inc.; EMCOR Group Inc.; MYR Group, Inc.; Quanta Services, Inc.; Tetra Tech Inc.; Great
Lakes Dredge & Dock Corporation; Granite Construction Incorporated; Limbach Holdings, Inc.; and APi Group Corporation. Based
on industry analysis and feedback from financial analysts, the Company believes these companies are the most likely to compete with
the Company for investment by institutional investors. This group of comparable companies is not used for benchmarking the compensation
of the Named Executive Officers. |
EPS
The EPS measure
compares the Company’s actual EPS performance against its pre-established EPS performance goals over a three-year performance period.
For this purpose, EPS is determined and calculated as described under “Annual Incentive Plan” above. For each year in the
performance period, the Company’s actual EPS performance is compared against these EPS goals and expressed as a percentage. The
EPS percentages for each of the three years in the performance period are then averaged together to determine the final level of EPS
achievement upon which the payout, if any, will be earned.
| 46 |
|
| 2025 Proxy
Statement |
Table of Contents
Compensation
Discussion and Analysis
Allocation
Among Compensation Elements
Relative Total Shareholder Return
(“TSR”)
The relative
TSR measure compares the Company’s TSR to the TSR of a specified group of comparable companies, and payouts are determined by the
Company’s rank relative to others in the group. For each year in the three-year performance period, TSR is calculated by determining
the difference between the average closing price of a company’s common stock during the first 30 consecutive days of the year and
the last 30 consecutive days of the year. The calculation assumes that dividends are reinvested in additional shares. The Company’s
TSR is then compared against the TSR for other companies in the group and assigned a percentile ranking. The Company’s TSR percentile
ranking for each of the three years in the performance period are then averaged together to determine the final percentile ranking upon
which the payout, if any, will be earned.
The following
chart shows the range of potential settlement of the PSUs based on the two performance measures, as a percentage of the target amount.
The number of PSUs that may be earned ranges from 0% to 200% of the target award amount.
| | |
Relative
TSR | |
EPS |
| Performance
Level | |
| Percentage
of
Target Earned | | |
Performance
Measure | |
| Percentage
of
Target Earned | | |
Performance
Measure |
| Maximum | |
| 200 | % | |
75th
Percentile or Above | |
| 200 | % | |
Over
120% of Target |
| Target | |
| 100 | % | |
50th Percentile | |
| 100 | % | |
100% of Target |
| Threshold | |
| 50 | % | |
25th Percentile | |
| 25 | % | |
70% of Target |
| Below Threshold | |
| 0 | % | |
Below 25th
Percentile | |
| 0 | % | |
Below 70%
of Target |
PSU AWARDS WITH
PERFORMANCE PERIOD ENDING IN 2024
PSU awards granted
in 2022 with a 2022-2024 performance period were settled in early 2025. The following table shows the EPS and TSR levels achieved over
such awards’ three-year performance period and the payout factor for these awards.
| | |
2022 | | |
2023 | | |
2024 | | |
3-Year
Average | | |
Payout
Factor (% of Target) | |
| EPS | |
| 117 | % | |
| 158 | % | |
| 162 | % | |
| 146 | % | |
| 200 | % |
| TSR | |
| 93 | % | |
| 87 | % | |
| 73 | % | |
| 84 | % | |
| 200 | % |
RULE OF 75
The “Rule
of 75” provides that if an executive officer retires from the Company at a time when the sum of his or her age and his or her years
of service at the Company is greater than or equal to 75, then upon the executive’s retirement, the executive will generally have
been deemed to have satisfied the continuous employment requirement for any equity award to vest (unless the award provides otherwise).
Pursuant to the Rule of 75, all performance-based equity awards will continue to be earned only if the applicable performance measures
are satisfied and only up to a maximum of target value, but the requirement that the executive be employed by the Company at the time
of vesting based on performance will be deemed to be satisfied. As of December 31, 2024, Messrs. Lane and George and Ms. Shaeff satisfied
the Rule of 75.
Health and Retirement Benefits
The Company’s
health and retirement plans include medical, dental, life, disability and accidental death and dismemberment coverage, and eligibility
to participate in the Company’s 401(k) retirement plan. The Company’s benefit programs are designed to be competitive with
those of other similarly-sized and -situated companies. The plans offered to the Company’s executive officers are broad-based plans
available to all full-time employees. Under the Company’s 401(k) retirement plan, the Company matches an employee’s pre-tax
contributions to the plan at a rate of 50% of up to 5% of an employee’s eligible pay or up to the maximum allowed contribution
pursuant to the Internal Revenue Code of 1986, as amended (the “Code”).
Perquisites
The Company generally
does not provide perquisites to its executive officers that are not provided to other employees. However, the Company does provide increased
levels of disability and life insurance coverage that are only available to executive officers of the Company. The Company pays these
increased premiums on behalf of the executive officers.
| |
| 2025 Proxy
Statement |
47 |
Table of Contents
Compensation
Discussion and Analysis
Change in Control and Severance Benefits
Change in Control and Severance
Benefits
The Named Executive
Officers and other members of senior management serve as at-will employees of the Company without any guaranteed period of employment.
However, the Committee believes that an executive severance policy paired with change in control agreements provide appropriate protections
to attract and retain qualified and talented individuals to serve as the Company’s executive officers, permit the Company’s
executive officers to focus fully on improving the Company’s operations and long-term success, and protect stockholder value by
providing continuity of management during any transition period. The severance and change in control benefits are intended to be set
at market-competitive levels and help ensure that the Company can attract and retain talented executive officers. These benefits also
help ensure that executive officers remain focused on maximizing stockholder value in the context of an actual or potential transaction
that might result in the loss or the diminution of their current positions. The Company believes that these benefits are reasonable and
ultimately benefit stockholders. The executive severance policy and change in control agreements are more fully described below under
“Potential Payments Upon Termination or Change in Control.”
Stock Ownership Requirements
The Company’s
stock ownership requirements provide that within three years of being appointed as an executive officer, or being promoted to such a
position, an executive is required to beneficially own Common Stock, taking into account all outstanding vested and unvested stock options,
RSUs, PSUs, and shares of stock, having a market value or cost basis, whichever is higher, equal to at least the following multiple of
his or her base salary (for purposes of determining an executive’s stock ownership multiple, if an executive holds more than one title
subject to a stock ownership requirement, then the title with the higher multiple will apply to such executive):
| LEVEL |
BASE
SALARY MULTIPLE |
|
| Chief Executive Officer |
 |
|
| Chief Operating Officer |
 |
|
| Chief Financial Officer |
 |
|
| General Counsel |
 |
|
| Senior Vice President |
 |
|
| Chief Accounting Officer |
 |
|
| Regional Vice President |
 |
|
For purposes
of calculating the above multiple, the actual compensation expense incurred by the Company related to the equity award is used only if
it is greater than the current market value of the Common Stock subject to the equity award. In March 2024, the Board revised the Company’s
Governance Standards to add ownership requirements for all Regional Vice Presidents, as set forth above. As of December 31, 2024, each
of our executive officers was in compliance with the stock ownership requirements.
Executive Compensation Recovery,
or “Clawback,” Policy
The Company’s
executive compensation recovery, or “clawback,” policy provides that, to the extent permitted by applicable law, the Board
may seek to recoup—or “claw back”—any cash compensation paid to executive officers and certain other employees
identified by the Board where the payment was predicated upon the achievement of certain financial results that were satisfied based
upon such individual’s intentional, fraudulent, or illegal conduct. The Board has the sole discretion to determine whether an individual’s
conduct has or has not met any particular standard of conduct. The Board may, in its sole discretion after considering the best interests
of the Company, determine not to recover such payment. In the event that a restatement of the Company’s financial statements is
required, the Company will seek to recover any compensation received by the Chief Executive Officer and Chief Financial Officer that
is required to be recovered by Section 304 of the Sarbanes-Oxley Act of 2002. In 2023, we expanded our clawback policy to address the
recovery of erroneously-awarded incentive compensation in compliance with the requirements of the Dodd-Frank Act, final SEC rules, and
applicable listing standards by adopting an additional policy, which additional policy was filed as an exhibit to our Annual Report on
Form 10-K, commencing with the Annual Report on Form 10-K for the year ended December 31, 2023.
| 48 |
|
| 2025 Proxy
Statement |
Table of Contents
Compensation
Discussion and Analysis
Anti-Hedging/Pledging Policy
Anti-Hedging/Pledging Policy
Our Insider Trading
Window Policy prohibits our directors, executive officers, and other employees from, among other things, engaging in hedging or monetization
transactions, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars, and exchange
funds, that may permit them to continue to own Company stock, but without the full risks and rewards of ownership. No categories of hedging
transactions are specifically permitted by this policy. Our Insider Trading Window Policy also prohibits our directors, executive officers,
and other employees from holding Company securities in a margin account or otherwise pledging Company securities as collateral for a
loan.
Equity Award Policy and Practices
In response to
Item 402(x)(1) of Regulation S-K, we generally do not currently grant new awards of stock options, stock appreciation rights or similar
option-like instruments. Accordingly, we have no specific policy or practice on the timing of awards of such options in relation to our
disclosure of material nonpublic information. In the event we determine to grant new awards of such options in the future, we will evaluate
the appropriate steps to take in relation to the foregoing. For fiscal year ended December 31, 2024, we did not grant stock options,
stock appreciation rights or similar option-like instruments to any Named Executive Officer.
Risk Considerations in our Compensation
Policies
The Committee
regularly reviews our various compensation programs and has concluded that they do not create risks that are reasonably likely to have
a material adverse effect on the Company or our stockholders. In reaching this conclusion, the Committee considered the following: (i)
the use of balanced performance targets; (ii) the Company’s “clawback” policies; (iii) the Company’s stock ownership
requirements; (iv) the use of EPS performance metrics that are uniformly applied to all executive officers; (v) a three-year vesting
period for LTI compensation; and (vi) the Company’s anti-hedging/pledging policy.
Impact of Accounting and Tax Treatment
on Compensation
Section 162(m)
of the Code (“Section 162(m)”) generally disallows a tax deduction for any publicly-held corporation for individual compensation
exceeding $1 million in any taxable year payable to certain executive officers, subject to certain grandfathering rules for compensation
arrangements in effect on November 2, 2017 and not materially modified thereafter. The Committee believes that its primary responsibility
is to provide a compensation program that attracts, retains, and rewards the executive officers and other key employees that are important
to the Company’s success. Accordingly, the Committee has authorized and will continue to authorize compensation payments that are
limited, in full or in part, as to tax deductibility.
The Committee
regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate
to our equity plans and programs. If accounting standards change, the Company may revise certain programs to appropriately align accounting
expenses of our equity awards with our overall executive compensation philosophy and objectives.
| |
| 2025 Proxy
Statement |
49 |
Table of Contents
Compensation
and Human Capital Committee Report
The Compensation
and Human Capital Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation
S-K with management and, based on its review and discussions, the Committee recommended to the Company’s Board of Directors the
inclusion of the Compensation Discussion and Analysis in the Company’s 2025 proxy statement. This report is provided by the following
independent directors, who comprise the Compensation and Human Capital Committee.
Members of the Compensation and
Human Capital Committee
Constance E. Skidmore (Chair)
Darcy G. Anderson
Rhoman J. Hardy
Pablo G. Mercado
William J. Sandbrook
The preceding
“Compensation and Human Capital Committee Report” shall not be deemed soliciting material or to be filed with the Securities
and Exchange Commission, nor shall any information in this report be incorporated by reference into any past or future filing under the
Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company incorporates it by reference into such filing.
| 50 |
|
| 2025 Proxy
Statement |
Table of Contents
Summary of Executive Compensation
The following
table includes information regarding the compensation paid or awarded to, or earned by, the Named Executive Officers for each of 2024,
2023, and 2022 or for such shorter period for which disclosure is required under SEC rules. For more information about the components
of compensation for 2024, please refer to the following subsections of the CD&A:
| ● |
“Base Salary”
for information about salary; |
| ● |
“Annual
Incentive Plan” for information about short-term incentives; |
| ● |
“Long-Term
Incentives” for information about equity grants; and |
| ● |
“Health
and Retirement Benefits” and “Perquisites” for information about other compensation. |
Summary
Compensation Table
| Name
and Principal Position |
|
Year |
|
Salary
($) |
|
Stock
Awards
($)(1) |
|
Bonus
($)(2) |
|
Non-Equity
Incentive Plan
Compensation
($)(3) |
|
All
Other
Compensation
($)(4) |
|
Total
($) |
Brian
Lane
President
and Chief Executive Officer
|
|
2024 |
|
1,100,000 |
|
4,509,860 |
|
— |
|
2,541,000 |
|
25,878 |
|
8,176,738 |
| |
2023 |
|
1,002,000 |
|
3,256,375 |
|
— |
|
2,354,700 |
|
22,384 |
|
6,635,459 |
| |
2022 |
|
871,200 |
|
2,613,579 |
|
87,120 |
|
1,794,520 |
|
20,289 |
|
5,386,708 |
William
George
Executive
Vice President and Chief Financial Officer
|
|
2024 |
|
750,000 |
|
1,424,726 |
|
— |
|
1,470,000 |
|
13,728 |
|
3,658,454 |
| |
2023 |
|
633,000 |
|
6,116,348 |
|
— |
|
1,231,185 |
|
11,124 |
|
7,991,657 |
| |
2022 |
|
550,000 |
|
879,938 |
|
55,000 |
|
947,966 |
|
10,597 |
|
2,443,501 |
Trent
McKenna
Executive
Vice President and Chief Operating Officer
|
|
2024 |
|
575,000 |
|
1,006,021 |
|
— |
|
1,070,363 |
|
11,564 |
|
2,662,948 |
| |
2023 |
|
506,000 |
|
733,598 |
|
— |
|
951,280 |
|
9,374 |
|
2,200,252 |
| |
2022 |
|
440,000 |
|
571,969 |
|
44,000 |
|
757,273 |
|
8,469 |
|
1,821,711 |
Laura
Howell
Senior
Vice President, General Counsel, and Secretary
|
|
2024 |
|
475,000 |
|
688,544 |
|
— |
|
684,000 |
|
9,334 |
|
1,856,878 |
| |
2023 |
|
425,000 |
|
424,895 |
|
— |
|
621,563 |
|
9,280 |
|
1,480,738 |
| |
2022 |
|
350,000 |
|
279,931 |
|
35,000 |
|
455,048 |
|
8,101 |
|
1,128,080 |
Julie
Shaeff
Senior
Vice President and Chief Accounting Officer
|
|
2024 |
|
400,000 |
|
419,959 |
|
— |
|
586,000 |
|
10,681 |
|
1,416,640 |
| |
2023 |
|
367,000 |
|
311,882 |
|
— |
|
543,160 |
|
10,511 |
|
1,232,553 |
| |
2022 |
|
333,000 |
|
266,385 |
|
33,300 |
|
432,946 |
|
8,987 |
|
1,074,618 |
| |
|
|
| |
| 2025 Proxy
Statement |
51 |
Table of Contents
Summary
of Executive Compensation
Summary Compensation Table
| (1) |
Reflects
the aggregate grant date fair value of PSUs and RSUs granted to the Named Executive Officers in the applicable year. The aggregate
grant date fair value of these awards was computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures.
See Note 15 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the years ended December 31,
2022, December 31, 2023, and December 31, 2024, as applicable, for a discussion of the relevant assumptions used in calculating the
value of these awards. For these purposes, the grant date fair value of the PSUs is computed based on performance at the target level,
the probable outcome of the performance conditions as of the date of grant, and the grant date fair value of RSUs is equal to the
number of RSUs granted multiplied by the closing stock price of the Common Stock on the date of grant. The aggregate grant date fair
value will likely vary from the actual amount the Named Executive Officers receive in respect of the PSUs and RSUs, based on a number
of factors, including stock price fluctuations and variances from valuation assumptions. |
| |
The
PSUs are denominated in dollars and, to the extent they are earned and vest, will be settled in Common Stock based on the market
value of the Common Stock following the applicable performance period. PSUs are earned if, and to the degree that, the Company meets
certain objective, pre-established performance goals relating to total shareholder return compared to a specified group of comparable
companies and EPS performance each year over a three-year performance period and generally vest only if the Named Executive Officer
remains employed by the Company through such performance period. The aggregate grant date fair value of the PSUs granted during 2024,
assuming achievement of the highest level of performance, was $4,510,000 for Mr. Lane; $1,425,000 for Mr. George; $1,006,250 for
Mr. McKenna; $688,750 for Ms. Howell; and $420,000 for Ms. Shaeff. The aggregate grant date fair value of the PSUs granted during
2023, assuming achievement of the highest level of performance, was $3,256,500 for Mr. Lane; $1,076,100 for Mr. George; $733,700
for Mr. McKenna; $425,000 for Ms. Howell; and $311,950 for Ms. Shaeff. The aggregate grant date fair value of the PSUs granted during
2022, assuming achievement of the highest level of performance, was $2,613,600 for Mr. Lane; $880,000 for Mr. George; $572,000 for
Mr. McKenna; $280,000 for Ms. Howell; and $266,400 for Ms. Shaeff. |
| |
The
RSUs are scheduled to vest over three years, generally subject to the Named Executive Officer’s continued employment with the
Company on the applicable vesting date. |
| (2) |
Reflects
a one-time payment for each Named Executive Officer equal to 10% of such Named Executive Officer’s above-listed 2022 base salary
and approved by the Committee in March 2022 to reward efforts from prior years to obtain tax credits for the Company’s research
and development efforts given that the Committee decided that positive impacts to EPS and FCF would be excluded from annual incentive
compensation calculations. |
| (3) |
Reflects
annual incentive plan awards earned in the applicable year based upon the satisfaction of specified performance goals. To avoid duplication,
the 2022 amounts specifically exclude the one-time bonus payments referenced above. For more information on the annual incentive
compensation paid to Named Executive Officers for 2024, see the subsection of the CD&A titled “Annual Incentive Plan.”
|
| (4) |
Reflects
the following amounts for 2024: |
| |
|
|
401(k)
Match
($)(a) |
|
Executive
Disability
& Group Term Life(b)
($) |
|
Fitness(c)
($) |
| |
Brian
Lane |
|
9,625 |
|
16,253 |
|
0 |
| |
William
George |
|
9,625 |
|
3,863 |
|
240 |
| |
Trent
McKenna |
|
9,625 |
|
1,699 |
|
240 |
| |
Laura
Howell |
|
8,625 |
|
709 |
|
0 |
| |
Julie
Shaeff |
|
8,625 |
|
2,056 |
|
0 |
| |
(a) |
Includes
401(k) matching contributions and 401(k) “true up” amounts related to 2023 (but received in 2024) for Messrs. Lane, George
and McKenna equal to $1000, which amounts are not included in 2023 “Other Compensation” above. |
| |
(b) |
Reflects
group term life insurance and disability premiums paid by the Company on behalf of each of the Named Executive Officers. |
| |
(c) |
Reflects
reimbursement of health-club dues pursuant to a wellness plan available to all employees in the Company’s corporate headquarters. |
| |
|
|
| 52 |
|
| 2025 Proxy
Statement |
Table of Contents
Grants
of Plan-Based Awards
The following
table provides information concerning awards granted under the Company’s annual incentive plan and equity incentive plan during
2024 for the Named Executive Officers. For further information related to grants of plan-based awards, see the subsection of the CD&A
titled “Annual Incentive Plan” and the subsection of the CD&A titled “Long-Term Incentives.”
| |
|
|
|
Estimated
Future Payouts Under
Non-Equity Incentive Plan Awards(1) |
|
Estimated
Future Payouts Under
Equity Incentive Plan Awards(2) |
|
All
Other Stock
Awards: Number
of Shares of
Stock or Units
(#)(3) |
|
Grant
Date
Fair Value
of Stock
Awards
($)(4) |
| Name |
|
Grant
Date |
|
Threshold
($) |
|
Target
($) |
|
Maximum
($) |
|
Threshold
($) |
|
Target
($) |
|
Maximum
($) |
|
|
| Brian
Lane |
|
|
|
539,000 |
|
1,320,000 |
|
2,640,000 |
|
— |
|
— |
|
— |
|
— |
|
— |
| |
3/20/24 |
|
— |
|
— |
|
— |
|
281,875 |
|
2,255,000 |
|
4,510,000 |
|
— |
|
2,255,000 |
| |
3/20/24 |
|
|
|
— |
|
— |
|
— |
|
— |
|
— |
|
7,174 |
|
2,254,860 |
| William
George |
|
|
|
307,500 |
|
750,000 |
|
1,500,000 |
|
— |
|
— |
|
— |
|
— |
|
— |
| |
3/20/24 |
|
— |
|
— |
|
— |
|
89,063 |
|
712,500 |
|
1,425,000 |
|
— |
|
712,500 |
| |
3/20/24 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
2,266 |
|
712,226 |
| Trent
McKenna |
|
|
|
235,750 |
|
575,000 |
|
1,150,000 |
|
— |
|
— |
|
— |
|
— |
|
— |
| |
3/20/24 |
|
— |
|
— |
|
— |
|
62,891 |
|
503,125 |
|
1,006,250 |
|
— |
|
503,125 |
| |
3/20/24 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1,600 |
|
502,896 |
| Laura
Howell |
|
|
|
147,250 |
|
356,250 |
|
712,500 |
|
— |
|
— |
|
— |
|
— |
|
— |
| |
3/20/24 |
|
— |
|
— |
|
— |
|
43,047 |
|
344,375 |
|
688,750 |
|
— |
|
344,375 |
| |
3/20/24 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
1,095 |
|
344,169 |
| Julie
Shaeff |
|
|
|
124,000 |
|
300,000 |
|
600,000 |
|
— |
|
— |
|
— |
|
— |
|
— |
| |
3/20/24 |
|
— |
|
— |
|
— |
|
26,250 |
|
210,000 |
|
420,000 |
|
— |
|
210,000 |
| |
3/20/24 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
668 |
|
209,959 |
| (1) |
Reflects
amounts payable under 2024 annual incentive plan awards based on individual and Company performance for 2024, which are described
in greater detail in the subsection of the CD&A titled “Annual Incentive Plan.” Goals under the Individual Performance
Incentive component of annual incentive plan awards are measured on a scale of 0% - 200% and do not have a threshold payment level.
For purposes of this table, it is assumed that each Named Executive Officer realizes (a) 40% of the Corporate Financial Incentive
at threshold, 100% at target, and 200% at maximum, and (b) 50% of the Individual Performance Incentive at threshold, 100% at target,
and 200% at maximum. |
| (2) |
Reflects
amounts payable under dollar-denominated PSUs granted as part of each Named Executive Officer’s 2024 LTI awards based on the
satisfaction of Company performance goals applicable to the PSUs. The threshold amount is calculated based on the minimum amount
that a Named Executive Officer could earn with respect to the PSUs, calculated as if the EPS performance goal were achieved at the
minimum level of performance that would result in a portion of the PSUs being earned and as if the minimum level of performance to
earn PSUs based on the relative TSR performance goal were not achieved. For additional information about the PSU awards, see footnote
1 of the Summary Compensation Table and the subsection of the CD&A titled “Long-Term Incentives.” |
| (3) |
Reflects
RSUs granted as part of each Named Executive Officer’s 2024 annual LTI awards. For additional information about the RSU awards,
see footnote 1 of the Summary Compensation Table and the subsection of the CD&A titled “Long-Term Incentives.” |
| (4) |
Reflects
the grant date fair value of LTI awards, computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures.
For the RSUs, the value is equal to the number of RSUs multiplied by the closing stock price of the Common Stock on the date of grant
($314.31). For the PSUs, the value is determined as the value at the grant date based on the probable outcome of the performance
conditions. For a discussion of valuation assumptions, see Note 15 to our consolidated financial statements included in our Annual
Report on Form 10-K for the year ended December 31, 2024, and for the maximum value of these awards at grant, see footnote 1 to the
Summary Compensation Table above. |
| |
|
|
| |
| 2025 Proxy
Statement |
53 |
Table of Contents
Equity Awards
As
discussed in further detail above, each of the Named Executive Officers was granted RSUs and PSUs in 2024. The RSUs granted
to the Named Executive Officers vest ratably in equal annual installments over three years and dollar-denominated PSUs are
earned based on the achievement of relative TSR and EPS performance goals and, to the extent earned, cliff vest after three
years, in each case, generally subject to the Named Executive Officer’s continued employment with the
Company.
The material
terms of the RSUs and PSUs granted to the Named Executive Officers are described under the subsection of the CD&A titled “Long-Term
Incentives.”
| 54 |
|
| 2025 Proxy
Statement |
Table of Contents
Outstanding Equity Awards
at Year-End
The
following table provides information concerning unexercised stock options, unvested RSUs, and unvested dollar-denominated PSUs held by
the Named Executive Officers on December 31, 2024.
| |
|
Option
Awards |
|
Stock
Awards |
| Name |
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Exercisable |
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(1) |
|
Option
Exercise
Price
($) |
|
Option
Expiration
Date |
|
Number
of
Shares or
Units of
Stock
that have
not
Vested
(#)(2) |
|
Market
Value
of Shares or
Units of Stock
that have not
Vested
($)(3) |
|
Number
of
Unearned
Shares, Units
or Other
Rights that
have not
Vested
(#)(4) |
|
Market
or
Payout Value
of Unearned
Shares, Units
or Other
Rights that
have not
Vested
($)(5) |
| Brian Lane |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
19,638 |
|
8,327,690 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
6,163 |
|
2,613,600 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
10,635 |
|
4,510,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
7,679 |
|
3,256,500 |
| William George |
|
15,422 |
|
— |
|
36.25 |
|
03/08/2027 |
|
|
|
|
|
|
|
|
| |
|
14,514 |
|
|
|
42.50 |
|
03/07/2028 |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
23,082 |
|
9,788,153 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
2,075 |
|
880,000 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
3,360 |
|
1,425,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,537 |
|
1,076,100 |
| Trent McKenna |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
4,377 |
|
1,856,111 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
1,348 |
|
572,000 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
2,372 |
|
1,006,250 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,730 |
|
733,700 |
| Laura Howell |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
2,610 |
|
1,106,797 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
660 |
|
280,000 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,624 |
|
688,750 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
1,002 |
|
425,000 |
| |
| 2025 Proxy
Statement |
55 |
Table of Contents
Outstanding Equity Awards at Year-End
| |
|
Option
Awards |
|
Stock
Awards |
| Name |
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Exercisable |
|
Number
of
Securities
Underlying
Unexercised
Options (#)
Unexercisable(1) |
|
Option
Exercise
Price
($) |
|
Option
Expiration
Date |
|
Number
of
Shares or
Units of
Stock
that have
not
Vested
(#)(2) |
|
Market
Value
of Shares or
Units of Stock
that have not
Vested
($)(3) |
|
Number
of
Unearned
Shares, Units
or Other
Rights that
have not
Vested
(#)(4) |
|
Market
or
Payout Value
of Unearned
Shares, Units
or Other
Rights that
have not
Vested
($)(5) |
| Julie Shaeff |
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
1,891 |
|
801,897 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
628 |
|
266,400 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
990 |
|
420,000 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
735 |
|
311,950 |
| (1) |
No Named Executive Officer held any unexercisable options as of December 31,
2024. |
| (2) |
Mr. Lane’s 19,638 unvested RSUs consist of 11,012 RSUs scheduled to vest on April 1st of 2025,
6,235 RSUs scheduled to vest on April 1st of 2026, and 2,391 RSUs scheduled to vest on April 1st of 2027, in each case, generally
subject to his continued employment with the Company through the applicable vesting date. |
| |
Mr. George’s 23,082 unvested RSUs consist of 3,634 RSUs scheduled to vest on April 1st of
2025, 8,334 RSUs scheduled to vest on December 1st of 2025, 2,026 RSUs scheduled to vest on April 1st of 2026, 8,333 RSUs scheduled
to vest on December 1st of 2026, and 755 RSUs scheduled to vest on April 1st of 2027, in each case, generally subject to his continued
employment with the Company through the applicable vesting date. |
| |
Mr. McKenna’s 4,377 unvested RSUs consist of 2,444 RSUs scheduled to vest on April 1st of
2025, 1,400 RSUs scheduled to vest on April 1st of 2026, and 533 RSUs scheduled to vest on April 1st of 2027, in each case, generally
subject to his continued employment with the Company through the applicable vesting date. |
| |
Ms. Howell’s 2,610 unvested RSUs consist of 1,379 RSUs scheduled to vest on April 1st of 2025,
866 RSUs scheduled to vest on April 1st of 2026, and 365 RSUs scheduled to vest on April 1st of 2027, in each case, generally subject
to her continued employment with the Company through the applicable vesting date. |
| |
Ms. Shaeff’s 1,891 unvested RSUs consist of 1,078 RSUs scheduled to vest on April 1st of 2025,
590 RSUs scheduled to vest on April 1st of 2026, and 223 RSUs scheduled to vest on April 1st of 2027, in each case, generally subject
to her continued employment with the Company through the applicable vesting date. |
| |
The number of units in the bottom most row of this column for each Named Executive Officer relates
to the PSU awards granted for the 2022-2024 performance period. The three-year average performance payout factor for the EPS component
of these awards was 200%. The three-year average performance payout factor for the relative TSR component of these awards was 200%.
For purposes of this table, the number of units has been determined by dividing the cash value of the portion of the awards earned
based on actual performance by $424.06, the closing price of a share of Common Stock on December 31, 2024. The actual number of shares
that were delivered in respect of these awards was determined by dividing the cash value of the awards earned based on actual performance
by $357.53, the closing price of a share of Common Stock on March 19, 2025, the date when the performance was determined by the Compensation
and Human Capital Committee. |
| (3) |
The market value is based on the closing price of a share of Common Stock ($424.06) as of December
31, 2024 for unvested RSUs, and is based on the actual dollar amount earned under the PSU awards for the 2022-2024 performance period,
given that these awards are dollar-denominated awards. |
| (4) |
The number of shares in this column relates to outstanding PSU awards for the 2023-2025 and 2024-2026
performance periods, with the PSU awards for the 2023-2025 performance period in the bottom most row of this column for each Named
Executive Officer. The number of shares underlying PSU awards is determined by calculating the market value of shares of Common Stock
underlying such PSU awards assuming maximum performance is achieved, as described in more detail in footnote 5 below, divided by
the closing price of a share of Common Stock ($424.06) as of December 31, 2024. The actual number of shares that will be delivered
in respect of outstanding PSU awards will depend on the performance achieved for the relevant performance periods and the market
value of shares of Common Stock on the date of delivery. |
| (5) |
PSU awards are denominated in dollar amounts and are settled by delivery of shares of Common Stock
following the end of the applicable performance period. PSU awards are subject to both time-based and performance-based vesting and
vest only to the extent that the relevant performance metrics are achieved during the applicable performance period. Thus, at any
time prior to the end of the applicable performance period, the exact number of shares of Common Stock underlying unvested PSU awards
is not readily identifiable. Instead, the Company has included the dollar value that a Named Executive Officer would earn under outstanding
PSU awards for each of the 2023-2025 and 2024-2026 performance periods assuming achievement of maximum performance, with the dollar
value for the 2023-2025 performance period in the bottom most row of this column for each Named Executive Officer. |
| 56 |
|
| 2025 Proxy
Statement |
Table of Contents
Option Exercises and
Stock Vested
The
following table provides information on option exercises and stock vested in 2024 related to the Named Executive Officers and the
resulting value realized.
| |
|
Option
Awards |
|
RSU
Awards |
|
PSU
Awards |
| Name |
|
Number
of
Shares
Acquired on
Exercise
(#) |
|
Value
Realized
on Exercise
($)(1) |
|
Number
of
Shares
Acquired on
Vesting
(#) |
|
Value
Realized on
Vesting
($)(2) |
|
Number
of
Shares
Acquired on
Vesting
(#) |
|
Value
Realized
on Vesting
($)(3) |
| Brian
Lane |
|
— |
|
— |
|
13,923 |
|
4,455,778 |
|
7,558 |
|
2,375,555 |
| William
George |
|
— |
|
— |
|
12,996 |
|
5,615,968 |
|
2,544 |
|
799,605 |
| Trent
McKenna |
|
4,000 |
|
1,781,615 |
|
2,937 |
|
939,928 |
|
1,462 |
|
459,521 |
| Laura
Howell |
|
— |
|
— |
|
1,514 |
|
484,525 |
|
714 |
|
224,417 |
| Julie
Shaeff |
|
— |
|
— |
|
1,421 |
|
454,763 |
|
806 |
|
253,334 |
| (1) |
The value realized on the exercise of stock options is the difference between
(a) the price at which the shares of Common Stock were sold upon exercise of the stock option on the date of exercise (or, if inapplicable
due to a cash exercise, the closing price of the Common Stock on the date of exercise), and (b) the exercise price of the option. |
| (2) |
The value realized on the vesting of RSU awards is determined based on the average of the
high and low price of the Common Stock on the vesting date. |
| (3) |
Represents PSUs that were earned with respect to the 2021-2023 performance period and that
were settled in early 2024. The value realized on the vesting of PSU awards is calculated based on the closing price of the Common
Stock on March 20, 2024, the date when the performance was determined by the Compensation and Human Capital Committee. |
Pension Benefits
We
currently have no defined benefit pension plans.
Nonqualified Deferred
Compensation
We
currently have no defined contribution plans that provide for the deferral of compensation on a basis that is not tax-qualified.
| |
| 2025 Proxy
Statement |
57 |
Table of Contents
Potential Payments Upon
Termination or Change in Control
The
Company maintains an Executive Severance Policy that covers the Named Executive Officers and other key employees and has entered into
change in control agreements with each Named Executive Officer, as described below. Under the Executive Severance Policy, in addition
to providing outplacement assistance of up to $50,000 and reimbursing former executive officers’ insurance premiums for continuing
COBRA coverage under the Company’s policies for up to 12 months if they do not have insurance coverage available through another
employer, the Company will pay a lump-sum amount equal to (i) the sum of the executive officer’s current base salary plus bonus
(consisting of the greater of the average annual incentive plan bonus paid during the last three years or the annual incentive plan bonus
for the year of termination of employment, determined following completion of the applicable performance period pursuant to the goals
established for such bonus), times (ii) the applicable multiplier set forth below, if an executive officer’s employment is terminated
by the Company without cause, and not due to death or disability:
| ● |
Two times such amounts for the Chief Executive Officer or the President; |
| ● |
One and one-half times such amounts for the Chief Financial Officer, Chief Operating Officer, or
an Executive Vice President; |
| ● |
One times such amounts for the Chief Accounting Officer, Chief Legal Officer or General Counsel,
and certain specified Senior Vice Presidents; and |
| ● |
One-half times such amounts for any other employees who have been subject to reporting under Section
16 of the Exchange Act while employed by the Company or who have been otherwise designated by the Compensation and Human Capital
Committee to participate in the plan, but not at a different participation level. |
In
the case of death or disability, the Executive Severance Policy provides for the Company’s payment of a one-time lump-sum amount
equal to the executive’s annual base salary reduced by any benefits payable under Company-paid life or disability insurance policies.
No amounts are paid under the policy on a voluntary termination of employment or a termination of employment by the Company for cause.
The
change in control agreements with the Named Executive Officers provide severance benefits in connection with certain qualifying terminations
following a change in control. Severance benefits under the change in control agreements are triggered in case of a termination of employment
by the Company (or its successor) without cause or by the executive for good reason, in each case, within 12 months following the change
in control event. The current change in control agreements with Messrs. Lane and George and Ms. Shaeff also provide for severance benefits
if the executive resigns from the Company (with or without good reason) within 90 days following the change in control event. As we have
previously disclosed, new change in control agreements entered into after February 2014 do not include this feature, and, as such, it
is not included in either Mr. McKenna’s or Ms. Howell’s change in control agreement. In addition to reimbursement of the
former executive officers’ insurance premiums for continuing COBRA coverage under the Company’s policies for up to 12
months if they do not have insurance coverage available through another employer, these agreements provide for the Company’s payment
of a lump-sum amount equal to (i) the sum of the officer’s current base salary plus bonus (the greater of the average incentive
plan bonus paid during the last three years or annual incentive plan bonus for the year of termination of employment, determined following
completion of the applicable performance period pursuant to the goals established for such bonus), times (ii) the applicable multiplier
set forth below, to the Named Executive Officers upon a qualifying termination of employment within 12 months following a change in
control event:
| ● |
Two times such amounts for Messrs. Lane, George, and McKenna; and |
| ● |
One times such amounts for Mses. Shaeff and Howell. |
Under
the change in control agreements, Messrs. Lane and George and Ms. Shaeff may be entitled to so-called golden parachute excise tax gross
ups in connection with change in control payments in certain circumstances. The Company eliminated the practice of providing for gross-up
payments in change in control or other agreements on a going-forward basis, starting in 2013.
Under
the change in control agreements, unvested equity awards held by the Named Executive Officers vest in full upon a change in control,
with PSUs vesting at target levels.
Regardless
of the reason for termination, the Named Executive Officers must execute a release of claims and are subject to a one-year non-compete
agreement in order to receive any severance benefits under the change in control agreements or Executive Severance Policy.
As
described above, holders of outstanding equity awards who meet the age and service requirements under the “Rule of 75” will,
upon the holder’s retirement, generally be deemed to have satisfied the continuous employment requirement for any equity award
to vest, unless the equity award specifies otherwise. Pursuant to the Rule of 75, all performance-based equity awards will continue to
be earned only if the applicable performance measures are satisfied and only up to a maximum of target value, but the requirement that
the executive be employed by the Company at the time of vesting based on performance will be deemed to have been satisfied. As of December
31, 2024, Messrs. Lane and George and Ms. Shaeff satisfied the Rule of 75.
| 58 |
|
| 2025 Proxy
Statement |
Table of Contents
Potential
Payments Upon Termination or Change in Control
Summary of Potential Payments
If
Mr. Lane had retired on December 31, 2024, he would be deemed to have satisfied the continuous employment requirement for purposes of
vesting in: (1) 19,638 RSUs, consisting of 11,012 RSUs scheduled to vest on April 1st of 2025, 6,235 RSUs scheduled to vest on April
1st of 2026, and 2,391 RSUs scheduled to vest on April 1st of 2027; and (2) if applicable performance measures are satisfied, PSUs granted
in 2022 with a target value of $1,306,800, PSUs granted in 2023 with a target value of $1,628,250, and PSUs granted in 2024 with a target
value of $2,255,000, each of which would vest in the year following the performance period, to the extent earned based on performance
and only up to target value, on the date on which the performance is determined by the Compensation and Human Capital Committee.
If
Mr. George had retired on December 31, 2024, he would be deemed to have satisfied the continuous employment requirement for purposes
of vesting in: (1) 6,415 RSUs, consisting of 3,634 RSUs scheduled to vest on April 1st of 2025, 2,026 RSUs scheduled to vest on April
1st of 2026, and 755 RSUs scheduled to vest on April 1st of 2027; and (2) if applicable performance measures are satisfied, PSUs granted
in 2022 with a target value of $440,000, PSUs granted in 2023 with a target value of $538,050, and PSUs granted in 2024 with a target
value of $712,500, each of which would vest in the year following the performance period, to the extent earned based on performance and
only up to target value, on the date on which the performance is determined by the Compensation and Human Capital Committee. Mr. George’s
one-time grant of 25,000 RSUs in November 2023 does not include any “Rule of 75” vesting provisions and, as a result, 16,667
unvested RSUs would have been forfeited upon retirement on December 31, 2024.
If
Ms. Shaeff had retired on December 31, 2024, she would be deemed to have satisfied the continuous employment requirement for purposes of
vesting in: (1) 1,891 RSUs, consisting of 1,078 RSUs scheduled to vest on April 1st of 2025, 590 RSUs scheduled to vest on April 1st
of 2026, and 223 RSUs scheduled to vest on April 1st of 2027; and (2) if applicable performance measures are satisfied, PSUs granted
in 2022 with a target value of $133,200, PSUs granted in 2023 with a target value of $155,975, and PSUs granted in 2024 with a target
value of $210,000, each of which would vest in the year following the performance period, to the extent earned based on performance and
only up to target value, on the date on which the performance is determined by the Compensation and Human Capital Committee.
Summary of Potential
Payments
The
following table provides the lump-sum payments that would have been made to each Named Executive Officer if his or her employment
had been terminated on December 31, 2024 by the Company without cause, or by reason of the Named Executive Officer’s death or
disability, in each case, other than in connection with a change in control.
| |
|
For
Cause
($) |
|
Death(1)
($) |
|
Disability(2)
($) |
|
Without
Cause(3)
($) |
| Brian
Lane |
|
0 |
|
1,100,000 |
|
1,100,000 |
|
7,329,259 |
| William
George |
|
0 |
|
750,000 |
|
750,000 |
|
3,379,323 |
| Trent
McKenna |
|
0 |
|
575,000 |
|
575,000 |
|
2,514,500 |
| Laura
Howell |
|
0 |
|
475,000 |
|
475,000 |
|
1,184,000 |
| Julie
Shaeff |
|
0 |
|
400,000 |
|
400,000 |
|
1,028,918 |
| (1) |
The Company maintains life insurance for each of the Named Executive Officers
in an amount equal to the Named Executive Officer’s annual base salary, up to a maximum of $500,000. The death benefit contained
in the Executive Severance Policy is paid net of insurance proceeds. |
| (2) |
The Company maintains disability insurance for each of the Named Executive Officers in an
amount equal to the Named Executive Officer’s annual base salary, up to a maximum of $500,000. The disability benefit contained
in the Executive Severance Policy is paid net of insurance proceeds. |
| (3) |
Consists of two times the sum of current base salary plus bonus (the greater of the average
annual incentive plan bonus paid during the last three years or the annual incentive plan bonus for the year of termination of employment,
determined following completion of the applicable performance period pursuant to the goals and objectives established for such bonus)
for Mr. Lane; one and one-half times such amounts for Messrs. George and McKenna; and one times such amounts for Mses. Howell and
Shaeff. In addition, the following amounts are included in the total for each executive as an estimate of one year of COBRA premium
reimbursements payable by the Company to the Named Executive Officer over the 12-month period following termination: Mr. Lane—$22,259;
Mr. George—$24,323; Mr. McKenna—$21,456; Ms. Howell—$0; and Ms. Shaeff—$17,918. These COBRA reimbursements
would be made by the Company to the Named Executive Officer, and they would cease if the Named Executive Officer obtained other insurance
coverage. In no event would these COBRA premium reimbursements be paid for more than 12 months. The total amount also reflects an
estimate of $25,000 for outplacement services, which services are provided for in the Executive Severance Policy in an amount not
to exceed $50,000. |
| |
| 2025 Proxy
Statement |
59 |
Table of Contents
Potential
Payments Upon Termination or Change in Control
Summary of Potential Payments
The
following table provides the value of the accelerated vesting of equity awards that would have been received by each Named Executive
Officer in connection with a change in control, and the amount of the lump-sum payout to each Named Executive Officer if his or
her employment had been terminated in a qualifying termination, as described above, in connection with a change in control, assuming
such change in control and qualifying termination occurred on December 31, 2024.
| |
|
Cash(1)
($) |
|
Value
of Early
Vesting Equity(2)
($) |
|
Excise
Tax
Gross Up(3)
($) |
|
Total
Value
($) |
| Brian
Lane |
|
7,304,259 |
|
13,517,740 |
|
0 |
|
20,821,999 |
| William
George |
|
4,464,323 |
|
11,478,703 |
|
0 |
|
15,943,026 |
| Trent
McKenna |
|
3,312,181 |
|
3,012,086 |
|
0 |
|
6,324,267 |
| Laura
Howell |
|
1,159,000 |
|
1,803,672 |
|
0 |
|
2,962,672 |
| Julie
Shaeff |
|
1,003,918 |
|
1,301,072 |
|
0 |
|
2,304,990 |
| (1) |
Consists of two times the sum of current base salary plus bonus (the greater
of the average incentive plan bonus paid during the last three years or the current annual incentive plan bonus for 2024) for Messrs.
Lane, George, and McKenna and one times such amounts for Mses. Shaeff and Howell. The amount listed also includes payments made as
reimbursements for COBRA premiums for a one-year period after the change in control event; these payments would be made as reimbursements
by the Company to the Named Executive Officer, and would cease if the Named Executive Officer obtained other insurance coverage. |
| (2) |
The value of the acceleration of unvested time-based RSUs is determined by multiplying the
number of shares underlying the award by the closing price of a share of Common Stock on December 31, 2024 ($424.06). The value of
PSUs for the 2022-2024, 2023-2025, and 2024-2026 performance periods has been determined by assuming that the awards vest and are
paid out at target levels of performance. |
| (3) |
Reflects the estimated amount of the gross-up for excise taxes imposed under Section 4999
of the Code. |
| 60 |
|
| 2025 Proxy
Statement |
Table of Contents
Equity Compensation
Plan Information
The
following table sets forth information about the Company’s equity compensation plans as of December 31, 2024.
| Plan
Category | |
Number
of
Securities
to be Issued
Upon
Exercise of
Outstanding
Options,
Warrants and
Rights
(A) | | |
Weighted
Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights
(B) | | |
Number
of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (A))
(C) |
| Equity compensation plans approved by security holders | |
283,846 | (1) | |
$ 39.28 | (2) | |
1,490,537 |
| Equity compensation plans not approved by security holders | |
— | | |
— | | |
— |
| Total | |
283,846 | | |
| | |
1,490,537(3) |
| (1) |
Includes 29,936 stock options and 157,412 shares of time-vested restricted
stock units that have been granted but remain unvested as of December 31, 2024, determined by treating each share underlying a stock
option as one share and each share underlying such time-vested restricted stock unit awards as two shares. Additionally, 96,498 shares
of Common Stock may be issued upon the achievement of certain performance conditions under outstanding PSU awards. The PSU awards
are dollar-denominated and paid in shares based on the market value of the shares following the end of the performance period for
such awards; for purposes of this table, the number of shares underlying outstanding PSU awards has been estimated based on current
estimated achievement of the performance conditions applicable to the awards and the closing market price of the Company’s
stock on December 31, 2024. The Company has no other securities to be issued upon exercise of outstanding options, warrants, or rights.
For additional information regarding our equity plans, see Note 14 to our consolidated financial statements included in our Annual
Report on Form 10-K for the year ended December 31, 2024. |
| (2) |
Restricted stock units and PSUs are not factored into this average. |
| (3) |
Reflects shares that are part of a fungible share plan, which means that each share granted
that is not an option or a SAR is counted against the plan as two (2.0) shares. |
| |
| 2025 Proxy
Statement |
61 |
Table of Contents
Ratio of Chief Executive
Officer Compensation to Median Company Employee Compensation
As
required by SEC rules, we are providing the following information about the relationship of the annual total compensation of our employees
and the annual total compensation of our Chief Executive Officer. This pay ratio is a reasonable estimate calculated in a manner consistent
with Item 402(u) of Regulation S-K. Because the SEC rules for identifying the median compensated employee and calculating the pay ratio
based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions,
and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies
may not be comparable to the pay ratio reported below.
For 2024, our last completed
fiscal year:
| ● |
The median of the annual total compensation of all employees of the Company (other
than our Chief Executive Officer) was $59,611; and |
| ● |
The annual total compensation of our Chief Executive Officer, as reported in the Summary Compensation
Table included elsewhere in this proxy statement, was $8,176,738. |
 |
Based on this information, for 2024, the ratio of annual total compensation of
our Chief Executive Officer to the median of the annual total compensation of all other employees is estimated to be 137.2 to
1. |
As
permitted by SEC rules, in determining this ratio, we used the same “median employee” that we used for purposes of calculating
our pay ratio for 2023 because there have been no changes in our employee population or employee compensation arrangements that we reasonably
believe would result in a significant change to our pay ratio disclosure. In making this determination, we took into account changes
in our employee population and compensation arrangements relating to our 2023 acquisitions of Eldeco, Inc. and DECCO, Inc., but not any
changes relating to our 2024 acquisitions of J & S Mechanical Contractors, Inc., Summit Industrial Construction, LLC and Precision
Plumbing and Service, LLC (which included approximately 1,079 employees).
For
2023, to identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation
of our median employee, we took the following steps:
| ● |
We determined that, as of December 31, 2023, our employee population consisted
of approximately 14,900 individuals, all of whom were located in the United States. This population consisted of all of our full-time,
part-time, and seasonal employees. This population does not include independent contractors or leased workers who were engaged through
an unaffiliated third-party staffing agency. We also excluded approximately 961 employees of Eldeco, Inc. and DECCO, Inc., which
are companies that we acquired during 2023 in transactions that closed on February 1, 2023 and October 2, 2023, respectively. |
| ● |
To identify the median employee from our employee population, we used the amount of salary, wages,
bonuses, commissions, and overtime pay of our employees as reflected in our payroll records as reported to the Internal Revenue Service
on Form W-2 for 2024. Because only a small portion of Company employees receive grants of equity awards, when identifying the median
employee we did not take into account any amounts reported on the employees’ Forms W-2 for 2024 with respect to stock option
exercises or the vesting of equity awards. We also did not annualize the compensation of any individuals who were employed for less
than the full calendar year. |
| ● |
We identified our median employee using this compensation measure, which was consistently applied
to all our employees who were included in the calculation. Since all our employees are located in the United States, as is our Chief
Executive Officer, we did not make any cost-of-living adjustments in identifying the median employee. |
For
2024, we calculated this same employee’s compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K,
resulting in annual total compensation of $59,611. The difference between such employee’s salary, wages, bonuses, commissions, and
overtime pay reflected in such employee’s Form W-2 and the employee’s annual total compensation represents matching contributions
by the Company to such employee’s account under the Company’s 401(k) Plan.
With
respect to the annual total compensation of our Chief Executive Officer, we used the amount reported in the “Total” column
of our 2024 Summary Compensation Table included in this proxy statement.
The
Company recognizes that employees are a key asset and are vital to the Company’s continued success. In addition to the Company’s
commitment to provide fair and equitable wages and benefits to employees, the Company also periodically conducts formal and informal
surveys at all levels of the organization to gauge employee satisfaction and engagement.
| 62 |
|
| 2025 Proxy
Statement |
Table of Contents
Pay vs. Performance
Pay vs. Performance Table
As required
by Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation
actually paid, as computed under SEC rules, and certain financial performance of the Company. For more information about the Company’s
executive compensation program, refer to the CD&A starting on p. 33 and the compensation tables starting on p. 51. Note that
for our Named Executive Officers (“NEOs”) other than Mr. Lane, our principal executive officer (“PEO”),
compensation is reported as an average.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Value
of Initial Fixed $100
Investment Based on: |
|
|
|
|
Year
|
|
Summary
Compensation
Table Total for
PEO ($)(1) |
|
Compensation
Actually Paid to
PEO ($)(2) |
|
Average
Summary
Compensation
Table Total for
Non-PEO NEOs
($)(1) |
|
Average
Compensation
Actually Paid to
Non-PEO
NEOs
($)(2) |
|
Total
Shareholder
Return
($)(3) |
|
Peer
Group
Total
Shareholder
Return
($)(4) |
|
Net
Income
(thousands)
($)(5) |
|
Earnings
Per Share
($)(6) |
| (a) |
|
(b) |
|
(c) |
|
(d) |
|
(e) |
|
(f) |
|
(g) |
|
(h) |
|
(i) |
| 2024 |
|
8,176,738 |
|
14,549,444 |
|
2,398,730 |
|
5,142,103 |
|
876.81 |
|
218.59 |
|
522,433 |
|
14.60 |
| 2023 |
|
6,635,459 |
|
10,681,797 |
|
3,226,300 |
|
4,022,097 |
|
423.80 |
|
189.57 |
|
323,398 |
|
9.01 |
| 2022 |
|
5,386,708 |
|
6,948,812 |
|
1,616,978 |
|
1,907,821 |
|
235.94 |
|
137.67 |
|
245,947 |
|
6.82 |
| 2021 |
|
4,503,087 |
|
7,814,908 |
|
1,288,647 |
|
1,950,011 |
|
201.71 |
|
153.00 |
|
143,348 |
|
3.93 |
| 2020 |
|
4,060,002 |
|
4,388,659 |
|
1,061,468 |
|
1,109,474 |
|
106.73 |
|
119.84 |
|
150,139 |
|
4.09 |
| (1) |
Reflects
the amounts of total compensation reported for Mr. Lane in column (b) and the average amounts of total compensation of the
NEOs (other than Mr. Lane) in column (d), in each case, for each applicable year in the “Total” column of the
“Summary Compensation Table.” The NEOs included for purposes of calculating such amounts are William George, Trent
McKenna (2021-2024 only), Laura Howell, Julie Shaeff, and Terrence Young (2020 only). |
| (2) |
Reflects
the amount of “compensation actually paid” to Mr. Lane reported in column (c), and the average amounts of
“compensation actually paid” to non-PEO NEOs reported in column (e), for each applicable year, as computed
in accordance with Item 402(v) of Regulation S-K. The dollar amount of “compensation actually paid” is determined
under SEC rules and does not reflect the actual amount of compensation earned by or paid to Mr. Lane or our other NEOs
for the applicable year.
Under
SEC rules, the amounts shown below were deducted and added to total compensation for Mr. Lane to determine the “compensation
actually paid” for the applicable year:
|
| |
|
|
|
|
|
|
|
|
|
| |
Year |
|
Reported
Summary
Compensation Table
Total for PEO
($) |
|
Reported
Value of
Stock Awards
($)(a) |
|
Equity
Award
Adjustments
($)(b) |
|
Compensation
Actually Paid to
PEO
($) |
| |
2024 |
|
8,176,738 |
|
(4,509,860) |
|
10,882,566 |
|
14,549,444 |
| |
2023 |
|
6,635,459 |
|
(3,256,375) |
|
7,302,713 |
|
10,681,797 |
| |
2022 |
|
5,386,708 |
|
(2,613,579) |
|
4,175,683 |
|
6,948,812 |
| |
2021 |
|
4,503,087 |
|
(2,375,954) |
|
5,687,775 |
|
7,814,908 |
| |
2020 |
|
4,060,002 |
|
(1,912,479) |
|
2,241,136 |
|
4,388,659 |
| |
(a) |
Reflects
the amounts reported in the “Stock Awards” column of the Summary Compensation Table for the applicable year for
the PEO as reflected in the table above and the average of non-PEO NEOs set forth in the table below, as applicable. These
amounts reflect the aggregate grant date fair value of stock awards granted during the applicable year, as determined in accordance
with ASC Topic 718, excluding the effect of estimated forfeitures. |
| |
(b) |
The equity award adjustments
(or average equity award adjustments, as applicable) for each applicable year include the addition (or subtraction, as applicable)
of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and
unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior
year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable
year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv)
for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date
(from the end of the prior year) in fair value; (v) for awards granted in prior years that are determined to fail to meet
the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end
of the prior year; and (vi) the dollar value of any dividends or other earnings paid on stock awards in the applicable year
prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component
of total compensation for the applicable year. The amounts deducted or added in calculating the equity award adjustments are
as follows: |
| |
| 2025 Proxy
Statement |
63 |
Table of Contents
Pay vs.
Performance
Pay vs. Performance Table
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Year |
|
Fair
Value of
Outstanding
and Unvested
Equity Awards
Granted in
Same Year
($) |
|
Year
over Year
Change in Fair
Value of
Outstanding
and Unvested
Equity Awards
($) |
|
Fair
Value as of
Vesting Date of
Equity Awards
Granted and
Vested in the Year
($) |
|
Year
over Year
Change in Fair
Value of Equity
Awards Granted in
Prior Years that
Vested in the Year
($) |
|
Fair
Value at the End
of the Prior Year of
Equity Awards that
Failed to Meet
Vesting Conditions
in
the Year
($) |
|
Value
of Dividends
or other Earnings
Paid on Stock or
Option Awards not
Otherwise Reflected
in Fair Value or Total
Compensation
($) |
|
Total
Equity
Award
Adjustments
($) |
| |
2024 |
|
4,723,391 |
|
4,566,941 |
|
— |
|
1,592,234 |
|
— |
|
— |
|
10,882,566 |
| |
2023 |
|
3,676,557 |
|
3,073,436 |
|
— |
|
552,720 |
|
— |
|
— |
|
7,302,713 |
| |
2022 |
|
2,672,724 |
|
1,653,961 |
|
— |
|
(151,002) |
|
— |
|
— |
|
4,175,683 |
| |
2021 |
|
2,618,925 |
|
2,491,617 |
|
— |
|
577,233 |
|
— |
|
— |
|
5,687,775 |
| |
2020 |
|
1,766,757 |
|
817,233 |
|
— |
|
(342,854) |
|
— |
|
— |
|
2,241,136 |
Under
SEC rules, the amounts shown below were deducted and added to total compensation for non-PEO NEOs to determine the “compensation
actually paid” for the applicable year:
| |
|
|
|
|
|
|
|
|
|
| |
Year |
|
Average
Reported Summary
Compensation Table Total for
Non-PEO NEOs
($) |
|
Average
Reported
Value of Stock Awards
($)(a) above |
|
Average
Equity Award
Adjustments
($)(b) above |
|
Average
Compensation
Actually Paid to Non-PEO
NEOs ($) |
| |
2024 |
|
2,398,730 |
|
(884,813) |
|
3,628,186 |
|
5,142,103 |
| |
2023 |
|
3,226,300 |
|
(1,896,681) |
|
2,692,478 |
|
4,022,097 |
| |
2022 |
|
1,616,978 |
|
(499,556) |
|
790,399 |
|
1,907,821 |
| |
2021 |
|
1,288,647 |
|
(434,609) |
|
1,095,973 |
|
1,950,011 |
| |
2020 |
|
1,061,468 |
|
(330,632) |
|
378,638 |
|
1,109,474 |
The amounts deducted or added
in calculating the total average equity award adjustments are as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Year
($) |
|
Average
Fair
Value of
Outstanding and
Unvested Equity
Awards Granted
in Same Year
($) |
|
Year
over Year
Average Change
in Fair Value of
Outstanding and
Unvested Equity
Awards
($) |
|
Average
Fair
Value as of
Vesting Date of
Equity Awards
Granted and
Vested in
the Year
($) |
|
Year
over Year
Average Change
in Fair Value of
Equity Awards
Granted in Prior
Years that Vested
in the Year
($) |
|
Average
Fair Value
at the End of the
Prior Year of Equity
Awards that Failed
to Meet Vesting
Conditions in
the Year
($) |
|
Average
Value of
Dividends or other
Earnings Paid on
Stock or Option
Awards not
Otherwise Reflected
in Fair Value or
Total Compensation
($) |
|
Total
Average
Equity Award
Adjustments
($) |
| |
2024 |
|
926,607 |
|
1,797,928 |
|
— |
|
903,651 |
|
— |
|
— |
|
3,628,186 |
| |
2023 |
|
2,004,075 |
|
581,873 |
|
— |
|
106,530 |
|
— |
|
— |
|
2,692,478 |
| |
2022 |
|
510,773 |
|
308,871 |
|
— |
|
(29,245) |
|
— |
|
— |
|
790,399 |
| |
2021 |
|
478,976 |
|
497,219 |
|
— |
|
119,778 |
|
— |
|
— |
|
1,095,973 |
| |
2020 |
|
305,434 |
|
134,023 |
|
— |
|
(60,819) |
|
— |
|
— |
|
378,638 |
| (3) |
The
amounts reported in column (f) represent cumulative TSR of the Company under SEC rules from December 31, 2019, the last trading
day of 2019, through the last trading day for the applicable year in the table. TSR is calculated by dividing the sum of the
cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the
Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the
beginning of the measurement period. |
| (4) |
The amounts reported in
column (g) represent the peer group TSR under SEC rules, from December 31, 2019, the last trading day of 2019, through the
last trading day for the applicable year in the table, assuming reinvestment of dividends and weighted according to the respective
companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group
used for this purpose is the S&P 400 Capital Goods Index. While not directly comparable, the Company believes that the
S&P 400 Capital Good Index is an appropriate trade or line of business index. |
| (5) |
The dollar amounts reported
in column (h) represent the amount of net income reflected in the Company’s audited financial statements for the applicable
year. |
| (6) |
The amounts reported in
column (i) represent the Company’s earnings per share, which the Company has determined represents the most important
performance measure used to link compensation actually paid to our PEO and other NEOs to the Company’s performance. |
| 64 |
|
| 2025 Proxy
Statement |
Table of Contents
Pay
vs. Performance
Company-selected Measures
Company-selected Measures
| 2024
Key Performance Measures Linking Performance and Executive Compensation Actually Paid:* |
| Earnings
Per Share |
| Free
Cash Flow |
| Relative
Total Shareholder Return |
| * |
For
a further discussion of how we calculate EPS, FCF, and Relative TSR, see the “Liquidity and Capital Resources”
section and Notes 14 and 15 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year
ended December 31, 2024. |
Analysis of the Information
Presented in the Pay vs. Performance Table
Relationship between: (a)
the compensation actually paid to the Company’s PEO and (b) the average of the compensation actually paid to the Company’s
other NEOs to (i) the TSR of the Company.
PEO
and Average Non-PEO NEO Compensation Actually Paid
Versus Company TSR
| |
| 2025 Proxy
Statement |
65 |
Table of Contents
Pay vs.
Performance
Analysis of the Information Presented in the Pay
vs. Performance Table
Relationship between: (a)
the compensation actually paid to the Company’s PEO and (b) the average of the compensation actually paid to the Company’s
other NEOs to (ii) the net income of the Company over the five years presented in the table.
PEO
and Average Non-PEO NEO Compensation Actually Paid
Versus Net Income
Relationship between: (a)
the compensation actually paid to the Company’s PEO and (b) the average of the compensation actually paid to the Company’s
other NEOs to (iii) the Company’s “Company-selected Measure,” which is EPS, over the five years presented in
the table.
PEO
and Average Non-PEO NEO Compensation Actually Paid
Versus Company EPS
| 66 |
|
| 2025 Proxy
Statement |
Table of Contents
Pay
vs. Performance
Analysis of the Information
Presented in the Pay vs. Performance Table
Relationship between the
Company’s TSR and the TSR of its chosen peer group over the Company’s five fiscal years included in the Pay vs. Performance
Table.
Comparison
of Cumulative TSR of
Comfort Systems USA, Inc. and Peer Group
| |
| 2025 Proxy
Statement |
67 |
Table of Contents
Report of the Audit Committee
The Audit
Committee of the Board of Directors of the Company oversees the Company’s financial reporting process on behalf of the Board
of Directors. The committee is made up solely of independent directors, as defined in the applicable NYSE and SEC rules, and it
operates under a written charter, amended and effective as of May 2021, reviewed as of March 2025, and approved by the Board of
Directors, which is available under the “Governance” tab on the Company’s website at http://investors.comfortsystemsusa.com.
Management
has the primary responsibility for the financial statements and the reporting process, including the Company’s internal
controls. In fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed the audited financial statements
in the Annual Report with management. The discussion explored the quality, not just the acceptability, of the accounting principles,
the reasonableness of significant judgments, and the clarity of each of the key disclosures in the financial statements.
As part
of its oversight of the Company’s financial statements, the Audit Committee reviewed and discussed with management and with
the Company’s independent auditors, Deloitte & Touche LLP, the audited financial statements of the Company for the year
ended December 31, 2024. The committee discussed with Deloitte & Touche LLP, who is responsible for expressing an opinion
on the conformity of the audited financial statements with accounting principles generally accepted in the United States, such
matters as are required to be discussed by Statement on Auditing Standards No. 16, as amended (Communications with Audit Committees),
relating to the conduct of the audit. The Audit Committee also has discussed with Deloitte & Touche LLP the auditors’
independence from the Company and its management, including the matters in the written disclosures the committee received from
the independent auditors, in compliance with applicable requirements of the Public Company Accounting Oversight Board regarding
the independent accountant’s communications with the audit committee concerning independence, and the committee has considered
the compatibility of non-audit services with the auditors’ independence.
The Audit
Committee discussed with the Company’s internal and independent auditors the overall scope and plans for their respective
audits. The committee meets regularly with the external auditors, with and without management present, to discuss the results
of their examinations, their evaluations of the Company’s internal controls, and the content and quality of the Company’s
financial reporting. Based on the review and discussions above, the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2024 and for filing
with the SEC.
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Members
of the Audit Committee
Pablo G. Mercado (Chair)
Darcy G. Anderson
Gaurav Kapoor
Franklin Myers
Constance E. Skidmore
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The
preceding “Report of the Audit Committee” shall not be deemed soliciting material or to be filed with the Securities
and Exchange Commission, nor shall any information in this report be incorporated by reference into any past or future filing
under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company incorporates it by reference
into such filing.
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Other Information
Compensation and Human Capital
Committee Interlocks and Insider Participation
Messrs.
Anderson, Hardy, Mercado, and Sandbrook, and Ms. Skidmore, none of whom is or was an officer or employee of the Company or
any of our subsidiaries through 2024, served on the Compensation and Human Capital Committee during 2024. None of the Company’s
executive officers serve on the board of directors or Compensation and Human Capital Committee, or any other committee serving
an equivalent function, of another company that employs any member of the Board.
Delinquent Section 16(a)
Reports
Section
16(a) of the Exchange Act requires the Company’s directors, officers, and persons who own more than 10% of a registered
class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership
with the SEC and the NYSE. Officers, directors, and greater-than-ten-percent stockholders are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file.
To the
Company’s knowledge, based solely upon review of the copies of such reports furnished to the Company during the year ended
December 31, 2024, all directors, officers, and beneficial holders of more than 10% of any class of equity securities of the
Company complied with all filing requirements.
Householding of Stockholder
Materials
Some banks,
brokers, and other nominee record holders may be participating in the practice of “householding” proxy statements
and annual reports. This means that only one copy of the Company’s proxy statement or Annual Report to Stockholders may
have been sent to multiple stockholders in the same household unless the Company has received contrary instructions from one or
more of the stockholders. The Company will promptly deliver a separate copy of either document to any stockholder upon written
request to the Company at the following address: Comfort Systems USA, Inc., Office of the General Counsel, 675 Bering Drive,
Suite 400, Houston, Texas 77057 or upon oral request directed to the Company’s Office of the General Counsel at (713)
830-9600. Any stockholder who wants to receive separate copies of the annual report and proxy statement in the future, or who
is currently receiving multiple copies and would like to receive only one copy for his or her household, should contact the stockholder’s
bank, broker, or other intermediary, or contact the Company by writing to the above address or by oral request at the above telephone
number.
Certain Relationships and
Related Transactions
In March
2011, the Board adopted a written Related Person Transactions Policy that codifies the Company’s policies and procedures
regarding the identification, review, consideration, and approval or ratification of “related person transactions.”
For purposes of this policy only, a “related party transaction” is a transaction, arrangement, or relationship (or
any series of similar transactions, arrangements, or relationships) in which the Company and any “related person”
are, were, or will be participants in which the amount involved exceeds $120,000. Transactions involving compensation directly
paid to a Named Executive Officer or director for services provided directly to the Company in their role as an employee or
director shall not be considered related person transactions under the policy. A “related person” is any executive
officer, director, or more than 5% stockholder of the Company, including any immediate family members of such persons, and
any entity owned or controlled by such persons.
Under
the Company’s Related Person Transactions Policy, where a transaction has been identified as a potential related person
transaction, the Company’s management shall present such potential related person transaction to the Audit Committee for
review, consideration, and approval or ratification. The presentation shall include all information reasonably necessary for the
Committee to determine the benefits of the related-party transaction and whether the related-party transaction is commercially
comparable to an otherwise unrelated transaction of similar nature and management’s recommendation related thereto. This process
is to be used for both approvals as well as ratifications under the policy.
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Other Information
Interest of Certain Persons in Matters to Be Acted Upon
The Audit
Committee, in approving or rejecting the proposed related person transaction, considers all the relevant facts and circumstances
deemed relevant by and available to the Audit Committee, including, but not limited to (i) the risks, costs, and benefits to the
Company, (ii) the impact on a director’s independence in the event the related person is a director, immediate family member
of a director, or an entity with which a director is affiliated, (iii) the terms of the transaction, (iv) the availability
of other sources for comparable services or products, and (v) the terms available to or from, as the case may be, unrelated third
parties or to or from employees generally. The Audit Committee approves only those related-party transactions that, in light of
known circumstances, are in, or are not inconsistent with, the Company’s best interests and those of the Company’s
stockholders, as the Audit Committee determines in the good faith exercise of its discretion. The Audit Committee approved the
following related party transactions for fiscal year 2024: Gaurav Kapoor, a member of the Company’s Board of Directors, is the
Chief Financial & Operations Officer of AECOM, an infrastructure consulting firm delivering professional services throughout
a construction project lifecycle. The Company’s subsidiaries occasionally engage AECOM for services in the ordinary course
of business. The total for all payments to AECOM by the Company or its subsidiaries was approximately $230,000 in 2024. Mr. Kapoor
was not involved in the decision-making process for any of the transactions with the Company’s subsidiaries.
From time
to time, the Company or its subsidiaries may have employees who are related to our executive officers or directors. The Company
employed no such persons in 2024.
See the
subsection above titled “Compensation and Human Capital Committee Interlocks and Insider Participation” for other
information required to be disclosed here.
Interest of Certain Persons
in Matters to Be Acted Upon
The Named
Executive Officers and directors of the Company do not have any substantial interest in the matters to be acted upon at the
Annual Meetings, other than in their roles as officers or directors of the Company.
Stockholder Proposals for
the 2026 Annual Meeting
Stockholders
who wish to present proposals for inclusion in the Company’s proxy materials for the 2026 Annual Meeting of Stockholders
may do so by following the procedures prescribed in Rule 14a-8 under the Exchange Act. To be eligible, the stockholder proposals
must be received by the Company at its principal executive offices on or before December 8, 2025.
Under
the Company’s current Bylaws, proposals of business and nominations for directors, other than those to be included in the
Company’s proxy materials following the procedures described in Rule 14a-8, may be made by stockholders entitled to vote
at the meeting if notice is timely given and if the notice contains the information required by the Bylaws. In accordance with
the Company’s Bylaws, to be considered timely a proposal or nominations submitted for consideration at the 2026 Annual Meeting
of Stockholders must be received by the Company at its principal executive offices no later than the close of business on
the 60th day nor earlier than the close of business on the 90th day prior to the first anniversary of the 2025 Annual Meeting
of Stockholders. The Bylaws also contain procedures for regulation of the order of business and conduct of stockholder meetings,
the authority of the presiding officer, and attendance at such meetings.
Other Business
The Board
knows of no business to be brought before the Annual Meeting that is not referred to in the accompanying Notice of Annual Meeting.
Should any such matters be presented, the persons named in the proxy intend to take such action in regard to such matters as in
their judgment seems advisable, subject to the NYSE’s rules on the exercise of discretionary authority.
Form 10-K and Annual Report
to Stockholders
A copy
of the Company’s Annual Report to Stockholders, which includes the Annual Report on Form 10-K, filed with the SEC, accompanies
this proxy statement.
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ANNUAL MEETING OF STOCKHOLDERS OF COMFORT SYSTEMS USA, INC. May 16, 2025 GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via https://equiniti.com/us/ast-access to enjoy online access. NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The notice of meeting, proxy statement and proxy card are available at http://proxy.comfortsystemsusa.com Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 21030300000000000000 4 051625 A VOTE "FOR" PROPOSAL 2 AND A VOTE “FOR” PROPOSAL 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE 1. ELECTION OF TEN DIRECTORS FOR TERMS EXPIRING AT THE 2026 ANNUAL MEETING. FOR ALL NOMINEES FOR WITHHOLD ALL NOMINEES AUTHORITY FOR ALL EXCEPT (See instructions below) NOMINEES: Darcy G. Anderson Herman E. Bulls Rhoman J. Hardy Gaurav Kapoor Brian E. Lane Pablo G. Mercado Franklin Myers William J. Sandbrook Constance E. Skidmore Cindy L. Wallis-Lage INSTRUCTIONS: To withhold authority to vote for any individual nominee(s) mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: 2. RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2025. 3. ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS. FOR AGAINST ABSTAIN You hereby revoke all previous proxies given. You may revoke this proxy at any time prior to a vote thereon. Receipt of the accompanying proxy statement and the Annual Report of Comfort Systems USA, Inc., which includes the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, is hereby acknowledged. PLEASE COMPLETE, SIGN AND PROMPTLY MAIL IN THE ENCLOSED ENVELOPE. To indicate change your the new address address on your in the account address please spacecheck above. thePlease box at note right and that changes this method. to the registered name(s) on the account may not be submitted via Signature of Stockholder Date: Signature of Stockholder Date: Note: Please sign exactly as your name or names appear on this proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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ANNUAL MEETING OF STOCKHOLDERS OF COMFORT MEETING SYSTEMS STOCKHOLDERS USA, INC. May 16, 2025 PROXY VOTING INSTRUCTIONS INTERNET - Access “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. TELEPHONE - Call toll-free 1-800-PROXIES (1-800-776-9437) in the United States or 1-201-299-4446 from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call. Vote online/phone until 11:59 PM EST the day before the meeting. MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible. IN PERSON - You may vote your shares in person by attending the Annual Meeting. GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via https://equiniti.com/us/ast-access to enjoy online access. COMPANY NUMBER ACCOUNT NUMBER NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The notice of meeting, proxy statement and proxy card are available at http://proxy.comfortsystemsusa.com Please detach along perforated line and mail in the envelope provided IF you are not voting via telephone or the Internet. 21030300000000000000 4 051625 THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR ALL NOMINEES" ON PROPOSAL 1, A VOTE "FOR" PROPOSAL 2 AND A VOTE “FOR” PROPOSAL 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE 1. ELECTION OF TEN DIRECTORS FOR TERMS EXPIRING AT THE 2026 ANNUAL MEETING. NOMINEES: FOR ALL NOMINEES FOR WITHHOLD ALL NOMINEES AUTHORITY FOR ALL EXCEPT (See instructions below) Darcy G. Anderson Herman E. Bulls Rhoman J. Hardy Gaurav Kapoor Brian E. Lane Pablo G. Mercado Franklin Myers William J. Sandbrook Constance E. Skidmore Cindy L. Wallis-Lage INSTRUCTIONS: To withhold authority to vote for any individual nominee(s) mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: 2. RATIFICATION OF APPOINTMENT OF DELOITTE & TOUCHE LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2025. 3. ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS. FOR AGAINST ABSTAIN time prior to a vote thereon. Receipt of the accompanying proxy statement and the Annual Report of Comfort Systems USA, Inc., which includes the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, is hereby acknowledged. PLEASE COMPLETE, SIGN AND PROMPTLY MAIL IN THE ENCLOSED ENVELOPE. To indicate change your the new address address on your in the account address please spacecheck above. thePlease box at note right and that changes this method. to the registered name(s) on the account may not be submitted via Signature of Stockholder Date: Signature of Stockholder Date: Note: Please sign exactly as your name or names appear on this proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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COMFORT SYSTEMS USA, INC. ANNUAL MEETING OF STOCKHOLDERS Solicited by the Board of Directors of Comfort Systems USA, Inc. The undersigned hereby appoints Brian E. Lane and Laura F. Howell, and each of them individually, as proxies with full power of substitution, to vote, as designated on the reverse, all shares of Common Stock of Comfort Systems USA, Inc. that the undersigned is entitled to vote at the Annual Meeting of Stockholders thereof to be held on May 16, 2025, or at any adjournment or postponement thereof. ALL SHARES WILL BE VOTED AS DIRECTED HEREIN. IF NO SUCH DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. (Continued and to be signed on the reverse side) 1.1 14475
