COMMERCIAL METALS Co
For the period ended Jan 15, 2025. Filed Nov 26, 2024.
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Jan 15, 2025 · Filed Nov 26, 2024
Contents
Pay Versus Performance
Pay Versus Performance Disclosure
In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and non-PEO NEOs for the fiscal years listed below and certain measures of Company performance for such periods. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
| AverageSummary · Average · Value of Initial Fixed$100 InvestmentBased on:(4) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Year | SummaryCompensationTable Total forPEO 1(1)($) | SummaryCompensationTable Total forPEO 2(1)(2)(3)($) | CompensationActuallyPaid toPEO 1(1)(2)(3)($) | CompensationActuallyPaid toPEO 2(1)(2)(3)($) | CompensationTable Total forNon-PEONEOs(1) ($) | CompensationActually Paidto Non-PEONEOs(1)(2)(3) ($) | TSR($) | PeerGroupTSR($) | NetIncome($ Millions) | AdjustedEBITDA (Comp)(5)($ Millions) |
| 2024 | — | 6,579,555 | — | 6,816,253 | 2,576,388 | 3,248,664 | 273.02 | 361.68 | 482.6 | 964 |
| 2023 | 9,603,625 | — | 20,834,770 | — | 2,648,855 | 4,195,063 | 282.94 | 376.11 | 859.8 | 1,367 |
| 2022 | 10,207,641 | — | 20,007,324 | — | 2,768,137 | 4,201,966 | 201.02 | 305.08 | 1,217.3 | 1,472 |
| 2021 | 9,054,252 | — | 19,888,683 | — | 2,357,005 | 3,608,516 | 159.38 | 265.38 | 412.9 | 762 |
(1)
Barbara R. Smith was our PEO for fiscal years 2021 through 2023 (“PEO 1”). Peter R. Matt is our PEO beginning with fiscal year 2024 (“PEO 2”). The individuals comprising the non-PEO NEOs for each year presented are listed below.
| 2021 | 2022 | 2023 | 2024 |
| Paul J. Lawrence | Paul J. Lawrence | Peter R. Matt | Barbara R. Smith |
| Jody K. Absher | Ty L. Garrison | Paul J. Lawrence | Paul J. Lawrence |
| Jennifer J. Durbin | Jody K. Absher | Ty L. Garrison | Ty L. Garrison |
| Tracy L. Porter | Jennifer J. Durbin | Jody K. Absher | Jody K. Absher |
| Tracy L. Porter | Jennifer J. Durbin | Jennifer J. Durbin |
(2)
The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below.
(3)
Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the amounts from the Stock Awards column set forth in the Summary Compensation Table.
| Year | SummaryCompensationTable Total forPEO 2($) | Exclusion ofStock Awardsfor PEO 2($) | Inclusion ofEquity Valuesfor PEO 2($) | CompensationActually Paidto PEO 2($) |
|---|---|---|---|---|
| 2024 | 6,579,555 | (4,517,044) | 4,753,742 | 6,816,253 |
| Year | AverageSummaryCompensationTable Totalfor Non-PEONEOs($) | AverageExclusion ofStock Awardsfor Non-PEONEOs($) | AverageInclusion ofEquityValues forNon-PEONEOs($) | AverageCompensationActually Paidto Non-PEONEOs($) |
|---|---|---|---|---|
| 2024 | 2,576,388 | (1,455,659) | 2,127,935 | 3,248,664 |
66 COMMERCIAL METALS COMPANY
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
| Year | Year-End FairValue ofEquity AwardsGrantedDuring YearThatRemainedUnvested asof Last Day ofYear for PEO 2($) | Change inFair Valuefrom LastDay of PriorYear to LastDay of Yearof UnvestedEquityAwards forPEO 2($) | Vesting-DateFair Value ofEquity AwardsGrantedDuring Yearthat VestedDuring Yearfor PEO 2($) | Change in FairValue fromLast Day ofPrior Year toVesting Dateof UnvestedEquity Awardsthat VestedDuring Yearfor PEO 2($) | FairValue atLast Dayof PriorYear ofEquityAwardsForfeitedDuringYear forPEO 2($) | Value ofDividendsor OtherEarningsPaid onEquityAwards NotOtherwiseIncludedfor PEO 2($) | Total -Inclusionof EquityValues forPEO 2($) |
|---|---|---|---|---|---|---|---|
| 2024 | 5,038,311 | (308,308) | — | 23,739 | — | — | 4,753,742 |
| Year | AverageYear-End FairValue ofEquity AwardsGrantedDuring YearThatRemainedUnvested asof Last Day ofYear forNon-PEONEOs($) | AverageChange in FairValue fromLast Day ofPrior Year toLast Day ofYear ofUnvestedEquity Awardsfor Non-PEONEOs($) | AverageVesting-DateFair Value ofEquity AwardsGrantedDuring Yearthat VestedDuring Yearfor Non-PEONEOs($) | AverageChange in FairValue fromLast Day ofPrior Year toVesting Dateof UnvestedEquity Awardsthat VestedDuring Yearfor Non-PEONEOs($) | AverageFairValue atLast Dayof PriorYear ofEquityAwardsForfeitedDuringYear forNon-PEONEOs($) | AverageValue ofDividendsor OtherEarningsPaid onEquityAwardsNotOtherwiseIncludedforNon-PEONEOs($) | Total -AverageInclusion ofEquityValues forNon-PEONEOs($) |
|---|---|---|---|---|---|---|---|
| 2024 | 1,624,860 | (215,189) | — | 718,264 | — | — | 2,127,935 |
(4)
The Peer Group TSR set forth in this table utilizes the S&P 500 Steel Index which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K. The comparison assumes $100 was invested for the period starting August 31, 2020, through the end of the listed year in the Company and in the S&P 500 Steel Index, respectively. Historical stock performance is not necessarily indicative of future stock performance.
(5)
We determined Adjusted EBITDA (Comp)to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and non-PEO NEOs in 2024. We defined Adjusted EBITDA (Comp) as the sum of the Company’s net earnings before interest expense, income taxes, depreciation and amortization expense, asset impairments, and amortization of acquired unfavorable contract backlog. Adjusted EBITDA (Comp) is a non-GAAP financial measure. Please refer to Appendix A for reconciliations and other information related to Adjusted EBITDA (Comp). This performance measure may not have been the most important financial performance measure for prior years and we may determine a different financial performance measure to be the most important financial performance measure in future years.
2025 PROXY STATEMENT 67
Relationship between PEO and Non-PEO NEO Compensation Actually Paid, Company tSR and PEER GROUP TSR
The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our non-PEO NEOs, the Company’s cumulative TSR over the four most recently completed fiscal years, and the S&P 500 Steel Index TSR over the same period.
68 COMMERCIAL METALS COMPANY
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income
The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our non-PEO NEOs, and our Net Income during the four most recently completed fiscal years.
2025 PROXY STATEMENT 69
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company-Selected Measure
The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our non-PEO NEOs, and our Company-Selected Measure during the four most recently completed fiscal years.
Tabular List of Most Important Financial Performance Measures
The following table presents the financial performance measures that the Company considers to have been the most important in linking Compensation Actually Paid to our PEO and other NEOs for 2024 to Company performance. The measures in this table are not ranked.
Adjusted EBITDA (Comp)Adjusted Earnings (Comp)ROICCRelative TSR
70 COMMERCIAL METALS COMPANY
Compensation Risk Assessment – Company-wide Compensation Policies and Programs
The Compensation Committee has established and plans to continue to refine Company-wide compensation policies and programs that reward contributions to long-term stockholder value and do not promote unnecessary or excessive risk-taking. In furtherance of this objective, the Compensation Committee undertook, during our most recently ended fiscal year, an assessment of our compensation arrangements, including those for our NEOs. In conducting this assessment, the Compensation Committee asked FW Cook, its independent compensation consultant, to perform, among other things, a review of our (i) compensation philosophy, (ii) peer group companies, (iii) compensation mix, (iv) cash and equity-based incentive plans and (v) administrative procedures. The Compensation Committee also asked FW Cook to examine our cash and equity-based compensation plans in comparison to market practices.
The considerations and findings of the assessment by the Compensation Committee included:
The Compensation Committee believes that the distribution of compensation among our core compensation elements focuses our employees on both the nearer-term and long-term performance of the Company;
Our cash incentive compensation programs include financial measures intended to be aligned with the Company’s short-, medium- and long-term business goals;
Our equity-based incentive awards provide for payouts over a multi-year period so that our NEOs remain focused on our performance beyond the immediate fiscal year;
Our cash and equity-based awards contain a range of performance levels, multiple metrics and payouts to discourage executives from taking risky actions to meet a single target with an all-or-nothing result of compensation or no compensation;
Caps on awards to certain executives, limits on maximum award size and our clawback policy also limit risk under the Company’s incentive plans;
A cap is placed on the number of shares of common stock of CMC that may be awarded to any director in any fiscal year;
Executives and directors are required to hold a meaningful number of shares of CMC’s common stock pursuant to our stock ownership guidelines; and
The target long-term incentive awards are designed to achieve, when combined with base salary and the target Annual Cash Incentive Bonus, total compensation at approximately the 50th percentile of Peer Data and, when achieving maximum performance, to reach total compensation at the upper quartile of Peer Data.
Based upon this assessment, the Compensation Committee does not believe that our Company-wide compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company.
2025 PROXY STATEMENT 71
Non-Employee Director Compensation
The compensation arrangements for non-employee directors are described below. The following table and footnotes outline the compensation paid to our non-employee directors for fiscal year 2024, as well as the outstanding equity awards held by the non-employee directors as of August 31, 2024. Ms. Smith and Mr. Matt did not receive fees for their service on our Board during fiscal year 2024.
Fiscal Year 2024 Director Compensation Table
| Name | Fees Earnedor Paid in Cash($)(1) | StockAwards($)(2) | All OtherCompensation($) | Total($) |
|---|---|---|---|---|
| Dennis Arriola(3) | $66,833 | $108,912 | $— | $175,745 |
| Vicki L. Avril-Groves(4) | $132,500 | $139,992 | $— | $272,492 |
| Lisa M. Barton | $137,500 | $139,992 | $— | $277,492 |
| Gary E. McCullough | $137,500 | $139,992 | $— | $277,492 |
| John R. McPherson | $122,500 | $139,992 | $— | $262,492 |
| Sarah E. Raiss | $157,500 | $139,992 | $— | $297,492 |
| Charles L. Szews | $147,500 | $139,992 | $— | $287,492 |
| Robert S. Wetherbee | $132,500 | $139,992 | $— | $272,492 |
(1)
One non-employee director, Mr. McCullough, elected to receive calendar year 2024 cash director fees in the form of Company common stock.
(2)
Represents the grant date fair value of equity awards granted in fiscal year 2024, calculated in accordance with FASB ASC Topic 718. Assumptions used in determining these values can be found in Note 13 to the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K, which was filed with the SEC on October 17, 2024. Five of the non-employee directors elected to receive equity compensation in the form of RSAs, one of the non-employee directors elected to receive equity compensation in the form of RSUs and two of the non-employee directors elected to receive equity compensation in the form of deferred RSUs. Except for Mr. Arriola, whose award will vest on March 19, 2025, all RSA and RSU awards will vest on January 10, 2025, in each case provided such director is still serving as a director on such date and has not had an accelerated vesting event, such as death, permanent disability or a change in control.
(3)
Mr. Arriola was elected to the Board effective March 19, 2024.
(4)
Ms. Avril-Groves retired from the Board on August 31, 2024, following which her RSA was canceled.
72 COMMERCIAL METALS COMPANY
Non-Employee Director Compensation
As of August 31, 2024, each individual who served as a non-employee director during fiscal year 2024 had outstanding the following number of deferred RSUs, RSAs or RSUs:
| Director | DeferredRestrictedStock Units | RestrictedStock/RestrictedStock Units |
|---|---|---|
| Dennis Arriola | 2,021 | — |
| Vicki L. Avril-Groves(1) | 27,792 | 2,835 |
| Lisa M. Barton | — | 2,835 |
| Gary E. McCullough | — | 2,835 |
| John R. McPherson | 8,238 | 2,835 |
| Tandra C. Perkins(2) | — | — |
| Sarah E. Raiss | 16,131 | 2,835 |
| Charles L. Szews | — | 2,835 |
| Robert S. Wetherbee | — | 2,835 |
(1)
In connection with Ms. Avril-Groves’s retirement from the Board, her deferred RSUs were distributed on September 3, 2024.
(2)
Ms. Perkins was appointed to the Board on September 1, 2024.
Director Retainers and Fees
Our non-employee directors receive annual retainer fees for Board and committee service. None of our employees receive additional compensation for serving as a director. In addition, if the Board or any committee holds more than 10 meetings in a calendar year, members of the Board and such committee are entitled to receive Board and committee meeting fees of $2,000 per additional meeting attended.
Compensation for Board and committee service is summarized below:
| Retainer($) | ||
|---|---|---|
| Annual Director Retainer (the “Annual Director Retainer”) | $275,000 | (1) |
| Chairman of the Board | $150,000 | (2) |
| Lead Director | $35,000 | |
| Audit Committee Chair | $25,000 | |
| Compensation Committee Chair | $20,000 | |
| Finance Committee Chair | $15,000 | |
| Nominating and Corporate Governance Committee Chair | $15,000 | |
(1)
In fiscal year 2024, directors received $140,000 of the Annual Director Retainer in equity and $120,000 in cash. Effective March 19, 2024, the Annual Director Retainer was increased to $275,000 of which $125,000 is in cash starting with the June 2024 cash payment and $150,000 equity portion will be implemented with the annual January 2025 equity award. The equity portion of the Annual Director Retainer was fully issued in deferred RSUs, RSAs or RSUs in the 2024 calendar year. Additionally, any director may elect to be paid the cash portion of the Annual Director Retainer or committee retainer(s) in Company common stock. CMC maintains a Non-Employee Director Deferred Compensation Program under which non-employee directors may defer all or a portion of their compensation until their separation from our Board.
(2)
In fiscal year 2024, our Board approved the payment of an annual retainer to the independent Chairman of the Board in the amount of $150,000 payable in cash, effective as of September 1, 2024.
Director Stock Ownership Guidelines
Under CMC’s stock ownership guidelines, non-employee directors are required to own Company common stock equal in value to five times such person’s annual cash retainer, and each non-employee director has five years from joining the Board to achieve this threshold.
2025 PROXY STATEMENT 73
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