GRIFFON CORP
For the period ended Mar 20, 2024. Filed Jan 29, 2024.
View on SEC.govAbout this filing
What shareholders are asked to vote on at a company's meeting. It is where to find what directors and top executives are paid, and who owns the most shares.
Mar 20, 2024 · Filed Jan 29, 2024
Contents
Proxy Statement Summary
This summary highlights information contained elsewhere in this Proxy Statement. It does not contain all of the information that you should consider. Please read the entire Proxy Statement carefully before voting.
AGENDA AND VOTING RECOMMENDATIONS
| Proposal | Board Vote Recommendation | Page Reference |
|---|---|---|
| 1. Election of thirteen directors for a term of one year | FOR | 15 |
| 2. Advisory vote on executive compensation | FOR | 87 |
| 3. Approval of Amendment No. 1 to the Amended and Restated 2016 Equity Incentive Plan to increase the number of shares available for future awards | FOR | 88 |
| 4. Ratification of the selection by our Audit Committee of Grant Thornton LLP to serve as our independent registered public accounting firm for fiscal year 2024 | FOR | 103 |
COMPOSITION OF BOARD OF DIRECTORS
The following table provides summary information about each nominee for election at the Annual Meeting. Each nominee is currently a director on our Board. For more detailed information about our directors, see “Proposal 1–Election of Directors” on page 15.
| Name · Age · Director Since · Principal Occupation · Independent · Committee Memberships | ||||
|---|---|---|---|---|
| Henry A. Alpert | 76 | 1995 | President, Spartan Petroleum Corp. | Nominating and Corporate Governance (NCG), Finance |
| Jerome L. Coben | 79 | 2020 | Retired Partner, Skadden, Arps, Slate, Meagher and Flom LLP | Compensation, Finance |
| Travis W. Cocke | 36 | 2023 | Founder and Chief Investment Officer of Voss Capital | NCG |
| H. C. Charles Diao | 66 | 2022 | Senior Vice President, Finance and Corporate Treasurer, Bally’s Corporation | Finance |
| Louis J. Grabowsky | 72 | 2015 | Founder and principal of Juniper Capital Management | Audit |
| Lacy M. Johnson | 71 | 2019 | Partner, Public Affairs Strategies Group, Taft Stettinius & Hollister LLP | Compensation, NCG |
| Ronald J. Kramer | 65 | 1993 | Chief Executive Officer and Chairman of the Board, Griffon Corporation | |
| General Victor Eugene Renuart | 74 | 2014 | President, The Renuart Group, LLC | Finance |
| James W. Sight | 68 | 2019 | Private Investor | Audit |
| Samanta Hegedus Stewart | 48 | 2018 | Consumer, Technology and Financial Services practice of Egon Zehnder | Compensation, NCG |
| Kevin F. Sullivan | 70 | 2013 | Retired Executive | Audit, Finance |
| Michelle L. Taylor | 55 | 2022 | New Product Quality Director, Trane Technologies | Audit |
| Cheryl L. Turnbull | 63 | 2018 | Senior Director of the Keenan Center for Entrepreneurship at The Ohio State University | Compensation |
GOVERNANCE HIGHLIGHTS
We recognize that strong corporate governance contributes to long-term shareholder value. We strive to ensure that our corporate governance reflects best practices tailored, as necessary, to our culture, goals and strategy. Our corporate governance practices include the items below:
Recent Changes
We made the following changes in 2022: • Declassified the Board, so that each director is up for election at each annual meeting of shareholders • Reduced the percentage of outstanding voting power required to call a special meeting to 25%
| Independence | Best Practices | Accountability |
|---|---|---|
| • Every member of the Board except our CEO is independent • Strong independent Lead Director with clearly delineated duties • All standing Board Committees composed entirely of independent directors • Regular executive sessions of independent directors | • Annual shareholder outreach program • Proactive Board that responded to shareholder feedback with clear actions including: - Declassification of the Board - Reduction of voting power needed to call a special meeting - Commitment to further diversify with an objective that, by 2025, 40% of independent directors will be women or persons of color • Diverse Board in terms of gender, ethnicity, and specific skills and qualifications • Regular Board refreshment (6 of 13 directors have joined the Board in the last five years) • Strategy and risk oversight by full Board and Committees • Periodic changes to membership of standing Board Committees • Long-standing commitment to sustainability and corporate social responsibility • Robust stock ownership guidelines for executive officers and nonemployee directors | • Annual Board and Committee self-evaluations, including individual Board member evaluation • A substantial portion of compensation paid to our NEOs is performance-based • Clawback policy that applies to our short and long-term incentive plans |
2023 PERFORMANCE SNAPSHOT
Our 2023 operating results continue to reflect the impact of the strategic actions taken to strengthen Griffon and position ourselves for additional growth and increased profitability, while providing the flexibility to return substantial capital to shareholders.
Our business model is delivering results
We generated record adjusted EBITDA, adjusted EPS and free cash flow in fiscal 2023. Our fiscal 2023 free cash flow of $389 million allowed us to return a record $285 million to shareholders through a combination of dividends and share repurchases while reducing debt by $99 million. This contributed to a reduction in our net debt to EBITDA leverage ratio(1) from 2.9x at the end of fiscal 2022 to 2.6x at the end of 2023. Our strong balance sheet, coupled with our solid free cash flow and proven ability to access the capital markets, provides flexibility to both pursue strategic acquisitions and return capital to shareholders.
FISCAL YEAR 2023 RESULTS OVERVIEW
| (1) | Calculated based on the applicable covenant in Griffon’s credit agreement. |
| (2) | On a continuing operations basis; excludes the results of the Telephonics business which was classified as discontinued operations in our Annual Report on Form 10-K filed on November 17, 2021. |
| (3) | For a reconciliation of Adjusted EBITDA (defined as Segment Adjusted EBITDA less Unallocated amounts, excluding depreciation) to Income (loss) before taxes from continuing operations for each of 2023, 2022, 2021 and 2020, see Appendix A to this Proxy Statement. Income (loss) before taxes from continuing operations was $112.7 million for 2023, ($270.9) million for 2022, $110.0 million for 2021, and $67.5 million for 2020. |
| (4) | For a reconciliation of Earnings (loss) per share from continuing operations to Adjusted EPS from continuing operations for each of 2023, 2022, 2021 and 2022, see Appendix A to this Proxy Statement. Earnings (loss) per share from continuing operations was $1.42 for 2023, $(5.57) for 2022, $1.32 for 2021, and $0.92 for 2020. |
| (5) | For a reconciliation of net cash from operating activities to free cash flow for each of 2023, 2022, 2021 and 2020, see Appendix A to this Proxy Statement. Net cash from operating activities was $431.8 million for 2023, $59.2 million for 2022, $69.8 million for 2021, and $106.9 million for 2020. |
EXECUTIVE COMPENSATION HIGHLIGHTS
We strive to provide incentives to senior management to achieve both short-term and long-term objectives and to reward exceptional performance. We believe our compensation practices and our overall level of executive compensation reflect our commitment to performance-based pay.
We provide highlights of our compensation program below. Please review our Compensation Discussion and Analysis and compensation-related tables beginning on page 36 of this Proxy Statement for a complete understanding of our compensation program.
Compensation program highlights
Based on shareholder feedback, - beginning in fiscal 2024, our CFO and General Counsel will receive restricted stock grants with the same performance metrics and goals as the CEO and COO - beginning in fiscal 2023, we included ESG as a performance metric for our short-term cash incentive program for our NEOs - beginning in fiscal 2022, we included free cash flow as a component of our long-term cash incentive program for our NEOs - beginning in fiscal 2022, we included return on invested capital as a performance measure for equity grants to our CEO and COO • For fiscal 2023 and fiscal 2024, we use three different performance metrics as the basis for our short-term cash program, with weightings of 75% assigned to EBITDA, 15% assigned to working capital and 10% assigned to ESG • We reduced our CEO’s total compensation by 8.2% from fiscal 2022 to fiscal 2023, and by 27.5% from fiscal 2021 to fiscal 2022, as reported in the summary compensation table, notwithstanding that the Company generated record operating results in fiscal 2023
PERFORMANCE-BASED COMPENSATION STRUCTURE
[Note: equity awards are based upon grant date value]
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.