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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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No fee required.
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Fee paid previously with preliminary materials
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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April 4, 2022
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Tracy D. Graham Chairman, Lippert Board of Directors |
Dear Fellow Stakeholders:
You are cordially invited to join us for our 2022 Annual Meeting of Stockholders, which will be held in a virtual format only on May 19, 2022, at 9:00 A.M. ET.
The Notice of Annual Meeting of Stockholders and the Proxy Statement that follow describe the business to be conducted at the annual meeting. Members of our Board of Directors and executive officer team plan to be present at the meeting and available to answer questions regarding the Company.
Your vote is very important. Whether or not you expect to attend the meeting, we encourage you to submit your proxy through the Internet or by mail. This will ensure that your shares are represented at the meeting. Even if you submit a proxy, you may revoke it at any time before it is voted. If you attend the meeting and wish to vote via the online platform, you will be able to do so even if you have previously submitted a proxy through the Internet or by mail.
We appreciate your continued support of our Company.
| Sincerely, | |
| TRACY D. GRAHAM |
| Chairman of the Board |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 3
LCI INDUSTRIES
3501 County Road 6 East
Elkhart, Indiana 46514
Notice of Annual Meeting of Stockholders to be held May 19, 2022
NOTICE IS HEREBY GIVEN to the holders of common stock of LCI Industries that the Annual Meeting of Stockholders of LCI Industries (the “Company”) will be held in a virtual format only on May 19, 2022, at 9:00 A.M. ET, for the following purposes:
| (1) | To elect ten Directors to serve until the next Annual Meeting of Stockholders, each as recommended by the Board of Directors; | |
| (2) | To approve, in a non-binding advisory vote, the compensation of the Company’s named executive officers as described in the accompanying Proxy Statement; | |
| (3) | To ratify the appointment of KPMG LLP as independent auditor for the Company for the year ending December 31, 2022; and | |
| (4) | To transact such other corporate business as may properly come before the meeting or any adjournment or postponement thereof. |
The Board of Directors has fixed March 25, 2022, as the record date for the meeting, and only holders of record of the Company’s common stock at the close of business on that date will be entitled to vote on all matters to be considered at the meeting or any adjournment or postponement thereof.
A list of all stockholders entitled to vote at the meeting will be available for inspection for ten days prior to the meeting at the office of the Company and will be available for inspection online during the meeting.
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By Order of the Board of Directors,
ANDREW J. NAMENYE Executive Vice President, Chief Legal Officer, and Corporate Secretary |
Dated: April 4, 2022
Elkhart, IN
NOTICE TO HOLDERS OF COMMON STOCK
| YOUR PROXY IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE VOTE YOUR SHARES THROUGH THE INTERNET OR, IF YOU RECEIVED A PRINTED COPY OF THE PROXY CARD BY MAIL, BY SIGNING, DATING, AND MAILING THE PROXY CARD IN THE ENVELOPE PROVIDED. | ||
| IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL STOCKHOLDER MEETING TO BE HELD ON MAY 19, 2022. | ||
| THIS NOTICE OF ANNUAL MEETING, PROXY STATEMENT, AND OUR 2021 ANNUAL REPORT TO STOCKHOLDERS, INCLUDING OUR 2021 ANNUAL REPORT ON FORM 10-K, ARE AVAILABLE AT HTTP://WWW.PROXYVOTE.COM. |
4 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
TABLE OF CONTENTS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The statements included in this Proxy Statement regarding future performance and results, expectations, plans, strategies, priorities, commitments, and other statements that are not historical facts are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are based upon current beliefs, expectations, and assumptions and are subject to significant risks, uncertainties, and changes in circumstances that could cause actual results to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. Readers of this Proxy Statement are cautioned not to place undue reliance on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 5
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all the information you should consider, and you should read the entire Proxy Statement and our 2021 Annual Report carefully before voting.
2022 ANNUAL MEETING OF STOCKHOLDERS
| Date and Time: | May 19, 2022, at 9:00 A.M. ET |
| Place: | www.virtualshareholdermeeting.com/LCII2022 |
| Record Date: | March 25, 2022 |
VOTING MATTERS AND BOARD RECOMMENDATION
| Voting Matter | Board Recommendation |
Page Number with More Information |
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| Proposal 1: | Election of ten Directors | FOR each nominee | 17 |
| Proposal 2: | Advisory vote to approve the compensation of the Company’s named executive officers | FOR | 62 |
| Proposal 3: | To ratify the appointment of KPMG LLP as independent auditor for the Company for the year ending December 31, 2022 | FOR | 63 |
DIRECTOR NOMINEES
| A - Audit C - Compensation CGNS - Corporate Governance, Nominating, and Sustainability | For more information, visit page 19. |
R - Risk SACD - Strategy, Acquisition, and Capital Deployment
* - Chairman of the Board
6 NOTI CE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 7
CORPORATE GOVERNANCE HIGHLIGHTS
| ✓ | 9 of 10 Director Nominees are Independent |
| ✓ | Independent Chairman of the Board |
| ✓ | Annual Election of All Directors |
| ✓ | Directors Elected by Majority Vote in Uncontested Director Elections |
| ✓ | Annual Board and Committee Evaluations |
| ✓ | Extensive Board Oversight of Risk Management, Including Separate Risk Committee |
| ✓ | Non-Employee Directors Regularly Meet Without Management Present |
| ✓ | Single Class Voting Structure (One Share, One Vote) |
| ✓ | Guidelines for Business Conduct Applicable to All Team Members and Directors |
| ✓ | Code of Ethics for Senior Financial Officers |
| ✓ | No Supermajority Voting Requirements |
| ✓ | No Shareholder Rights Plan (Poison Pill) |
| ✓ | Board Oversight of Environmental, Sustainability, and Social Matters |
2021 COMPENSATION
SUMMARY COMPENSATION TABLE
| Name Principal Position |
Year | Salary | Bonus | Stock Awards |
Non-Equity Incentive Plan Compensation |
All Other Compensation |
Total | |||||||||||||||||||||
| Jason D. Lippert President and Chief Executive Officer |
2021 | $ | 1,085,620 | $ | -- | $ | 5,245,239 | $ | 4,500,000 | $ | 162,891 | $ | 10,993,750 | |||||||||||||||
| 2020 | $ | 1,013,462 | $ | -- | $ | 5,316,527 | $ | 2,990,184 | $ | 189,578 | $ | 9,509,751 | ||||||||||||||||
| 2019 | $ | 1,004,250 | $ | -- | $ | 7,567,765 | $ | 1,226,253 | $ | 297,369 | $ | 10,095,637 | ||||||||||||||||
| Brian M. Hall Executive Vice President and Chief Financial Officer |
2021 | $ | 500,000 | $ | -- | $ | 1,078,559 | $ | 1,050,000 | $ | 60,588 | $ | 2,689,147 | |||||||||||||||
| 2020 | $ | 465,231 | $ | -- | $ | 912,109 | $ | 623,085 | $ | 57,737 | $ | 2,058,162 | ||||||||||||||||
| 2019 | $ | 450,000 | $ | -- | $ | 789,224 | $ | 274,739 | $ | 56,817 | $ | 1,570,780 | ||||||||||||||||
| Ryan R. Smith Group President – North America |
2021 | $ | 750,000 | $ | -- | $ | 1,225,688 | $ | 4,375,000 | $ | 78,504 | $ | 6,429,192 | |||||||||||||||
| 2020 | $ | 576,923 | $ | -- | $ | 389,097 | $ | 2,179,414 | $ | 44,024 | $ | 3,189,458 | ||||||||||||||||
| Jamie M. Schnur Group President – Aftermarket |
2021 | $ | 600,000 | $ | -- | $ | 1,333,487 | $ | 2,100,000 | $ | 67,737 | $ | 4,101,224 | |||||||||||||||
| 2020 | $ | 492,308 | $ | -- | $ | 847,323 | $ | 923,085 | $ | 63,902 | $ | 2,326,618 | ||||||||||||||||
| 2019 | $ | 450,000 | $ | 200,000 | $ | 1,267,413 | $ | 305,266 | $ | 76,545 | $ | 2,299,224 | ||||||||||||||||
| Andrew J. Namenye Executive Vice President, Chief Legal Officer, and Corporate Secretary |
2021 | $ | 445,578 | $ | -- | $ | 710,954 | $ | 743,750 | $ | 51,525 | $ | 1,951,807 | |||||||||||||||
| 2020 | $ | 425,945 | $ | -- | $ | 682,995 | $ | 461,308 | $ | 52,878 | $ | 1,623,126 | ||||||||||||||||
| 2019 | $ | 412,000 | $ | -- | $ | 763,712 | $ | 207,581 | $ | 54,269 | $ | 1,437,562 | ||||||||||||||||
For more information, visit page 48.
EXECUTIVE COMPENSATION HIGHLIGHTS
| ✓ | Pay for performance |
| ✓ | Establish challenging performance goals in incentive plans |
| ✓ | Maintain robust stock ownership guidelines for Named Executive Officers and Directors |
| ✓ | Require termination of employment in addition to a change in control for accelerated equity vesting (double trigger) |
| ✓ | Require non-competition agreement for receipt of equity awards |
| ✓ | Subject executives’ cash and equity-based incentives to clawback |
| ✓ | Limit executive perquisites |
| ✓ | Do not provide excise tax gross-ups |
| 8 | NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES |
LCI released its inaugural Corporate Social Responsibility (CSR) Report in January 2022. The CSR Report elaborates on the Company’s commitments, such as reducing its environmental footprint, updating policies, and enhancing procedures and standards relating to team members’ health and safety. The CSR Report is available on the Company’s website at www.lci1.com/sustainability.
ENVIRONMENTAL
The Company’s approach to sustainability is guided by our passion to protect and invest in the communities that we call home. We integrate sustainability into our everyday actions by conscious resource selection and process improvements that aim to lessen our environmental footprint. Our teams embrace lean initiatives, and we continuously invest in comprehensive training, advanced machinery, and eco-friendly energy alternatives to provide safer processes and a healthier environment.
| ECO-FRIENDLY OPERATIONS | |||
| 400 TONS of Toxic Chemicals Eliminated |
We eliminate nearly 400 tons of dangerous Volatile Organic Compounds (VOC) every year by powder-coating our products instead of using coatings comprised of harmful materials. | ||
| 8.75GwH Produced from our Solar Solutions |
By replacing conventional energy sources with the solar energy produced at our 7 solar operations, we have saved: • the equivalent CO2 emissions produced by 697,758 gallons of gasoline; and • the equivalent greenhouse gas emissions of 1,349 passenger vehicles driven for a year. |
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| 1,000+ TONS of Plastic Scraps Reground |
We regrind more than 1,000 tons (2,293,057 lbs.) of ABS plastic scraps annually from two thermoforming plants and send them back to our supplier to recycle and reuse. |
| NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES | 9 |
OUR CORE VALUES
Our core values define us. Our Company culture and shared values drive our attitudes, behaviors, and actions, every day, at every facility. The Company has a Leadership Development Team dedicated to bringing the Company’s core values to life through transformative company culture initiatives and numerous learning opportunities for our team members.
SOCIAL RESPONSIBILITY
People are our priority, and community is our core. We’re striving to make lives better through meaningful relationships with our co-workers, our customers, and our communities. The Company’s team members feel a deeper sense of purpose at work, and we continue to build a better work environment by aligning our cultural and business strategies with the needs of our many team members. One way we measure success is by how we touch the lives of people inside and outside our walls. Our team members drive our social impact
philosophy with their passionate hearts and minds. Since 2017, our team members have collectively spent more than 500,000 hours volunteering at over 2,000 non-profit organizations, supporting charitable fundraising events, and caring for our fellow team members in need. Through monetary donations, product donations, and company-wide fundraising events, the Company gives back over $1 million every year to support the needs of our communities.
2021 SOCIAL IMPACT
| 10 | NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES |
| NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES | 11 |
LCI INDUSTRIES
3501 County Road 6 East
Elkhart, Indiana 46514
PROXY STATEMENT - 2022 ANNUAL MEETING OF STOCKHOLDERS
The Board of Directors of LCI Industries, a Delaware corporation (the “Company,” “we,” “us,” or “our”), is soliciting proxies for use at the Annual Meeting of Stockholders to be held in a virtual format on May 19, 2022, at 9:00 A.M. ET, or any adjournment or postponement thereof, at which holders of record of the Company’s Common Stock, par value $0.01 per share (the “Common Stock”), at the close of business on March 25, 2022 (the “Record Date”) shall be entitled to vote on all matters considered at the meeting. You may access the Annual Meeting of Stockholders via the Internet through www.virtualshareholdermeeting.com/LCII2022.
The Company’s stockholders will receive a Notice of Internet Availability of Proxy Materials (the “Notice”), which was or will be sent to stockholders on or about April 4, 2022, containing information on the availability of the proxy materials on the Internet. Stockholders will not receive a printed copy of the proxy materials unless previously requested or requested in the manner described in the Notice. The Notice explains how to access and review this Proxy Statement and our 2021 Annual Report to Stockholders, and how you may vote by proxy.
All valid proxies received by the Company (whether by mail or via the Internet) in time for the Annual Meeting will be voted in the manner indicated on the proxies and, if no voting instructions are indicated, “FOR” the Directors named in Proposal 1, and “FOR” Proposals 2 and 3. If specific instructions are indicated, the proxies will be voted in accordance with such instructions. Each proxy may be revoked at any time after it is submitted, except as to matters upon which, prior to such revocation, a vote shall have been cast pursuant to the authority conferred by such proxy. A proxy may be revoked by giving written notice of revocation to the Secretary of the Company, by giving a proxy with a later date, or by attending the Annual Meeting and voting virtually. Attendance at the Annual Meeting alone will not revoke a proxy.
If you are the record holder of your shares (that is, you hold shares of the Company’s Common Stock in your own name and not through your broker or another nominee), you may choose to submit your proxy via the Internet. The website to submit your proxy via the Internet is www.proxyvote.com. You may submit your proxy via the Internet 24 hours a day until 11:59 P.M. Eastern Time, on May 18, 2022. You will be able to confirm that your instructions have been properly recorded. If your shares are held in “street name” (that is, in the name of a bank, broker, or other holder of record), you will receive instructions from the holder of record that you must follow in order for your shares to be voted. Submitting your proxy via the Internet also will be available to stockholders owning shares held in “street name.” If you submit your proxy via the Internet, you do not need to return a proxy card.
The cost of solicitation by the Company, including postage, printing, and handling, and the expenses incurred by brokerage firms, custodians, nominees, and fiduciaries in forwarding proxy material to beneficial owners, will be borne by the Company. The solicitation is to be made primarily by mail, but may be supplemented by telephone calls, emails, and personal solicitation. Management may also use the services of Directors and team members of the Company to solicit proxies, without additional compensation.
THE COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2021, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS), IS PART OF THE ANNUAL REPORT TO STOCKHOLDERS THAT ACCOMPANIES THIS PROXY STATEMENT. ADDITIONAL COPIES WILL BE FURNISHED TO ANY STOCKHOLDER WITHOUT CHARGE UPON REQUEST TO THE COMPANY AT 3501 COUNTY ROAD 6 EAST, ELKHART, INDIANA 46514, TELEPHONE (574) 535-1125, E-MAIL LCII@LCI1.COM. THE ANNUAL REPORT ON FORM 10-K IS ALSO AVAILABLE THROUGH LINKS ON THE COMPANY’S WEBSITE AT WWW.LCI1.COM/INVESTORS AND AT WWW.PROXYVOTE.COM.
| 12 | NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES |
The Company’s Common Stock trades on the New York Stock Exchange (“NYSE”) under the symbol “LCII.”
Stockholders of record will be entitled to one vote on each matter for each share of Common Stock held on the Record Date. At the close of business on the Record Date, there were 25,411,470 shares of our Common Stock outstanding and eligible to vote at the Annual Meeting. A majority in voting power of the outstanding shares of Common Stock entitled to vote at the meeting must be present or represented by proxy at the meeting in order to have a quorum for the transaction of business. Abstentions and broker non-votes will be treated as shares present for the purpose of determining the presence of a quorum.
“Broker non-votes” means shares held of record by a broker for which the broker has not received voting instructions from the beneficial owner of the shares and lacks the authority to vote the shares in its discretion. Proposals 1 and 2 fall within this category. Accordingly, if you hold your shares in “street name” and wish your shares to be voted on Proposals 1 and 2, you must give your broker voting instructions. Proposal 3 is considered to be a discretionary item, and your broker will be able to vote on this proposal even if it does not receive instructions from you.
If the persons present or represented by proxy at the meeting constitute the holders of less than a majority in voting power of the outstanding shares of Common Stock as of the Record Date, the Annual Meeting may be adjourned by the stockholders who are present, by a majority in voting power thereof, to a subsequent date for the purpose of obtaining a quorum. Votes will be tabulated by the inspector of election appointed for the meeting, who will separately tabulate affirmative and negative votes, abstentions, and, if applicable, broker non-votes.
The votes required to approve each of the proposals, and the impact of abstentions and broker non-votes, if any, on each of the proposals, are as follows:
| Proposal Number | Subject | Vote Required | Impact of Abstentions and Broker Non-Votes, if any |
| Proposal 1: | Election of Directors | A nominee must receive a majority of the votes cast with respect to his or her election, which means that the number of votes cast “for” a nominee must exceed the number of votes cast “against” that nominee. | Abstentions and broker non-votes will not affect the outcome of this proposal. |
| Proposal 2: | Advisory vote on executive compensation | Approval by the affirmative vote of the holders of a majority in voting power of the outstanding shares of Common Stock that are present virtually or by proxy at the meeting and entitled to vote thereon. | Abstentions will have the same effect as votes cast against this proposal. Broker non-votes will not affect the outcome of this proposal. |
| Proposal 3: | Ratification of appointment of independent auditor | Approval by the affirmative vote of the holders of a majority in voting power of the outstanding shares of Common Stock that are present virtually or by proxy at the meeting and entitled to vote thereon. | Abstentions will have the same effect as votes cast against this proposal. Broker non-votes will not affect the outcome of this proposal. |
We are not currently aware of any other business to be acted upon at the Annual Meeting. If, however, other matters are properly brought before the meeting, or any adjournment or postponement of the meeting, your proxy includes a grant of discretionary authority to the individuals appointed to vote your Common Stock or act on those matters according to their best judgment, including to adjourn the Annual Meeting.
| NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES | 13 |
PRINCIPAL HOLDERS OF VOTING SECURITIES
Set forth below is information with respect to each person known to the Company on March 24, 2022, to be the beneficial owner of more than five percent of any class of the Company’s voting securities. Unless otherwise noted, the stockholders listed in the table have sole voting and investment power with respect to the shares of Common Stock owned by them.
| Name Location |
Amount and Nature of Beneficial Ownership(1) |
Approximate Percent of Class(1) |
||
| BlackRock, Inc. (2) 55 East 52nd Street New York, NY 10055 |
4,243,113 | 16.7% | ||
| The Vanguard Group (3) 100 Vanguard Boulevard Malvern, PA 19355 |
2,695,475 | 10.6% | ||
| Neuberger Berman Group LLC (4) Neuberger Berman Investment Advisers LLC 1290 Avenue of the Americas New York, NY 10104 |
1,350,063 | 5.3% | ||
| Kayne Anderson Rudnick Investment Management, LLC.(5) 1800 Avenue of the Stars, 2nd Floor Los Angeles, CA 90067 |
1,284,973 | 5.1% |
| (1) | Beneficial ownership is determined in accordance with rules of the Securities and Exchange Commission (“SEC”) and includes general voting power and/or investment power with respect to securities. The approximate percent of class is determined based on the number of outstanding shares of the Company’s Common Stock on March 24, 2022. |
| (2) | Based on information reported to the SEC in an amended Schedule 13G filed by BlackRock, Inc. (“BlackRock”) on February 8, 2022, reflecting beneficial ownership as of December 31, 2021. BlackRock had sole voting power over 4,161,698 shares and sole dispositive power over 4,243,113 shares. |
| (3) | Based on information reported to the SEC in an amended Schedule 13G filed by The Vanguard Group (“Vanguard”) on February 10, 2022, reflecting beneficial ownership as of December 31, 2021. Vanguard had sole dispositive power over 2,625,815 shares, shared voting power over 47,081 shares, and shared dispositive power over 69,660 shares. |
| (4) | Based on information reported to the SEC in an amended Schedule 13G filed by Neuberger Berman Group LLC (“Neuberger”) on February 14, 2022, reflecting beneficial ownership as of December 31, 2021. Neuberger and its affiliates may be deemed to be beneficial owners of securities because they or certain affiliated persons have shared power to retain, dispose of, or vote the securities of unrelated clients. Neuberger and its affiliates had shared voting power over 1,336,778 shares and shared dispositive power over 1,350,063 shares. Neuberger or its affiliated persons do not, however, have any economic interest in the securities of those clients. The clients have the sole right to receive and the power to direct the receipt of dividends from or proceeds from the sale of such securities. No one client has an interest of more than 5% of the Company. |
| (5) | Based on information reported to the SEC in a Schedule 13G filed by Kayne Anderson Rudnick Investment Management, LLC (“Kayne”) on February 11, 2022, reflecting beneficial ownership as of December 31, 2021. Kayne had sole voting power over 907,642 shares, shared voting and dispositive power over 289,028 shares, and sole dispositive power over 995,945 shares. |
| 14 | NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES |
Security Ownership of Certain Beneficial Owners and Management
Set forth below is information with respect to beneficial ownership on March 24, 2022, of the Company’s voting securities by each Director, each of whom is a nominee for election except for Mr. Fenech, by each of our executive officers named in the Summary Compensation Table herein, and by all current Directors and executive officers of the Company as a group. Unless otherwise noted, the stockholders listed in the table have sole voting and investment power with respect to the shares of Common Stock owned by them, and their address is c/o LCI Industries, 3501 County Road 6 East, Elkhart, Indiana 46514.
| Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) |
Approximate Percent of Class(1) |
| Frank J. Crespo | 14,167(2) | * |
| Brendan J. Deely | 12,891(3) | * |
| Ronald J. Fenech | 27,587(4) | * |
| James F. Gero | 305,228(5) | 1.2% |
| Tracy D. Graham | 11,408(3) | * |
| Virginia L. Henkels | 10,067(6) | * |
| Jason D. Lippert | 289,727(7) | 1.0% |
| Stephanie K. Mains | 1,235(3) | * |
| Kieran M. O’Sullivan | 18,703(3) | * |
| David A. Reed | 13,672(8) | * |
| John A. Sirpilla | 4,275(3) | * |
| Brian M. Hall | 19,528(7) | * |
| Andrew J. Namenye | 9,706(7) | * |
| Jamie M. Schnur | 16,932(7) | * |
| Ryan R. Smith | 8,520(7) | * |
| All current Directors and executive officers as a group (16 persons) | 767,243 | 3.0% |
* Represents less than 1% of the outstanding shares of Common Stock.
| (1) | Beneficial ownership is determined in accordance with rules of the SEC, and includes general voting power and/or investment power with respect to securities. Shares of Common Stock subject to deferred stock units (“DSUs”), restricted stock units (“RSUs”), and performance stock units (“PSUs”) that vest within 60 days of March 24, 2022, are deemed to be outstanding for the purpose of computing the amount of beneficial ownership and percentage ownership of the person holding such equity units, but are not deemed outstanding for computing the percentage ownership of any other person. |
| (2) | Includes 1,036 RSUs, which represents RSUs granted in May 2021, plus dividend equivalents thereon, that are scheduled to vest within 60 days of March 24, 2022. Excludes 3,370 DSUs, plus dividend equivalents thereon, not issuable within 60 days. |
| (3) | Includes 1,036 RSUs, which represents RSUs granted in May 2021, plus dividend equivalents thereon, that are scheduled to vest within 60 days of March 24, 2022. |
| (4) | Includes 1,036 RSUs, which represents RSUs granted in May 2021, plus dividend equivalents thereon, that are scheduled to vest within 60 days of March 24, 2022. Excludes 3,956 DSUs, plus dividend equivalents thereon, not issuable within 60 days. |
| (5) | Includes 1,036 RSUs, which represents RSUs granted in May 2021, plus dividend equivalents thereon, that are scheduled to
vest within 60 days of March 24, 2022. Excludes 6,888 DSUs, plus dividend equivalents thereon, not issuable within 60 days
and sole dispositive power over 995,945 shares. |
| (6) | Includes 1,036 RSUs, which represents RSUs granted in May 2021, plus dividend equivalents thereon, that are scheduled to vest within 60 days of March 24, 2022. Excludes 4,623 DSUs, plus dividend equivalents thereon, not issuable within 60 days. |
| (7) | Excludes the following respective equity units that are not issuable within 60 days. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 15
| RSUs | PSUs | |
| Jason D. Lippert | 34,554 | 88,472 |
| Brian M. Hall | 6,985 | 15,966 |
| Ryan R. Smith | 13,470 | 15,618 |
| Jamie M. Schnur | 8,545 | 20,184 |
| Andrew J. Namenye | 7,015 | 12,809 |
| (8) | Includes 12,636 shares held indirectly by trust. Includes 1,036 RSUs, which represents RSUs granted in May 2021, plus dividend equivalents thereon, that are scheduled to vest within 60 days of March 24, 2022. Excludes 2,010 DSUs, plus dividend equivalents thereon, not issuable within 60 days. |
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s officers and directors, and persons who beneficially own more than ten percent of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC.
Based on its review of the copies of such forms and representations from its directors and executive officers, the Company believes during 2021 all such filing requirements were satisfied, except that a Form 4 to report one transaction for Mr. Schnur was not timely filed.
16 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
Proposal 1. ELECTION OF DIRECTORS
The business and affairs of the Company are managed under the direction of our Board of Directors. The Company’s Restated Certificate of Incorporation currently provides that the number of directors shall consist of not less than three nor more than twelve persons. Our bylaws provide that the number of directors, not less than three nor more than twelve persons, shall be determined from time to time by resolution of the Board. The Board of Directors currently consists of eleven Directors. As discussed further below, it is proposed that, at the 2022 Annual Meeting, the stockholders elect a Board of ten Directors to serve for a term of one year or until their successors are elected and qualify. The Board has resolved that, effective at the 2022 Annual Meeting, the number of directors of the Company will be reduced to ten. Proxies cannot be voted for a greater number of persons than ten, which is the number of nominees named in this Proxy Statement. Following discussions with the eleventh director, Mr. Ronald Fenech, regarding his anticipated availability during the upcoming year, the Board of Directors did not nominate Mr. Fenech to stand for re-election at the 2022 Annual Meeting. The Board of Directors thanks Mr. Fenech for his years of service and dedication to the Board and his many contributions to the Company.
The Company’s bylaws require Directors to be elected under a majority voting standard in uncontested elections. In any contested election, Directors will be elected by a plurality vote. In an uncontested election, which the election of directors at the 2022 Annual Meeting will be, each of the nominees, as an incumbent director, was required to submit an irrevocable resignation, contingent on (i) that person not receiving a majority of the votes cast in his or her election, and (ii) acceptance of that resignation by the Board of Directors in accordance with the policies and procedures adopted by the Board of Directors for such purpose. In the event a nominee in an uncontested election fails to receive a majority of the votes cast, the Corporate Governance, Nominating, and Sustainability Committee will make a recommendation to the Board of Directors as to whether to accept or reject the resignation of such incumbent Director, or whether other action should
be taken. The Board of Directors will act on the resignation, taking into account the Committee’s recommendation, and publicly disclose (by a press release and filing an appropriate disclosure with the SEC) its decision regarding the resignation and, if such resignation is rejected, the rationale behind the decision, within 90 days following certification of the election results. The Corporate Governance, Nominating, and Sustainability Committee, in making its recommendation, and the Board of Directors, in making its decision, each may consider any factors and other information that they consider appropriate and relevant. If the Board of Directors accepts a Director’s resignation pursuant to this process, the Board of Directors may fill the resulting vacancy.
Director Qualifications and Selection Process
The Corporate Governance, Nominating, and Sustainability Committee of the Board leads the search for individuals qualified to become Directors and selects nominees to be presented for stockholder approval at each Annual Meeting. The Committee considers candidates for Board membership suggested by members of the Committee and Directors, as well as by Management and stockholders. In this regard, the Corporate Governance, Nominating, and Sustainability Committee considers the composition of the Board with respect to experience, balance of professional interests, required expertise, and other factors. In addition, the Committee will endeavor to include candidates who reflect diverse backgrounds, including diversity of race, ethnicity, and gender, when assembling an initial pool of qualified candidates from which to fill Board vacancies. The objective of the Committee will be to identify and recommend the most capable candidates who have experience in the areas of expertise needed at that time and meet the criteria for nomination.
The Corporate Governance, Nominating, and Sustainability Committee uses the same criteria for evaluating candidates suggested by stockholders as it does for those proposed by Directors or Management. To be considered for membership on the Board, a candidate must meet the following criteria, which are also set forth in the Company’s Governance Principles: (a) should possess the highest personal and professional ethics, integrity, and values, and be committed to representing the long-term interests of the stockholders; (b) should have an inquisitive and objective perspective, practical wisdom, and mature judgment; (c) must be willing to devote sufficient time to carry out his or her duties and responsibilities effectively; (d) should be committed to serving on the Board for an extended period of time; (e) should be prepared to resign in the event of any significant change in his or her personal circumstances which may impair his or her ability to effectively serve on the Board; (f) Directors who also serve as CEOs or in equivalent positions should not serve on more than two boards of public companies in addition to the Company’s Board; and (g) Directors who are not CEOs or equivalent should not serve on more than four boards of public companies in addition to the Company’s Board.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 17
The Corporate Governance, Nominating, and Sustainability Committee seeks candidates who have demonstrated exceptional ability and judgment and who can, in conjunction with other Directors, most effectively serve the long-term interests of our stockholders. The particular experience, qualifications, and skills of each nominee described on pages 19 through 22 of this Proxy Statement reflect that our Board, taken as a whole, provides a broad diversity of knowledge of our Company and industry, expertise in finance and investment, experience with technology-based and growth-oriented companies and global markets, competence in accounting and financial reporting, and leadership in business and with socially-responsible organizations.
The Corporate Governance, Nominating, and Sustainability Committee recommended to the Board each of the nominees for election as Directors as set forth herein. No candidates for Director nominees were submitted to the Committee by any stockholder in connection with the 2022 Annual Meeting.
Stockholders may propose nominees for consideration by the Corporate Governance, Nominating, and Sustainability Committee by submitting the names of such nominees and supporting information to:
Corporate Secretary
LCI Industries
3501 County Road 6 East
Elkhart, Indiana 46514
The proposed nominee must meet the qualifications for Directors described above and in the Company’s Governance Principles.
In addition, any stockholder who wishes to nominate a Director candidate at an annual meeting may do so by following the procedures and providing the information set forth under “Stockholder Proposals for the 2023 Annual Meeting” and in Section 1.13 of the Company’s bylaws.
18 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
Following the recommendation of the Corporate Governance, Nominating, and Sustainability Committee, the Board of Directors has nominated the ten persons named below for election to the Board of Directors at the Annual Meeting. Each of the nominees was elected to his or her present term of office at the Annual Meeting of Stockholders held on May 20, 2021.
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Tracy D. Graham
Mr. Graham, 48, Chairman of the Board of Directors, has been a member of our Board of Directors since 2016. Mr. Graham is Chief Executive Officer and Managing Principal of Graham-Allen Partners, a private investment firm focused on investing in technology and technology-enabled companies. Prior to forming Graham-Allen Partners in 2009, he served as Vice President of SMB Technology Services for Cincinnati Bell, one of the nation’s leading regionally-focused local exchange, wireless, and data center providers. Mr. Graham also successfully built and sold three technology companies over a 12-year period, including GramTel USA, Inc., a provider of managed data center and related services to mid-sized businesses, which was sold to Cincinnati Bell. Mr. Graham is a director of 1st Source Bank and a director of 1st Source Corporation, a publicly-owned bank holding company headquartered in South Bend, Indiana. He also serves on the board of directors of The Horton Group, a national insurance, employee benefits, and risk advisory firm.
Mr. Graham has over 20 years of executive and leadership experience with technology-based and growth-oriented companies, as well as a multifaceted understanding of the data technology and cybersecurity issues facing businesses today.
Committees: Audit; Corporate Governance, Nominating, and Sustainability |
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Frank J. Crespo
Mr. Crespo, 60, has been a member of our Board of Directors since 2015. Mr. Crespo most recently was Senior Vice President and Chief Supply Chain Officer of Indigo Agriculture, Inc., a privately owned agricultural technology company that works to improve grower profitability, environmental sustainability, and consumer health through the use of natural microbiology and digital technologies, a role he held from April 2018 to May 2021. Prior to joining Indigo Agriculture, he served as Vice President and Chief Procurement Officer of Caterpillar, Inc., a publicly-owned manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives, from 2010 to 2018, and served as Vice President and Chief Procurement Officer of Honeywell International, Inc., a global diversified technology and manufacturing company, from 2007 to 2010.
Mr. Crespo has over 30 years of executive and leadership experience in procurement, supply chain, and logistics in global electronics, high technology, and industrial markets for marquee and publicly-owned corporations, as well as with the U.S. Navy.
Committees: Compensation (chair); Risk |
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NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 19
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Brendan J. Deely
Mr. Deely, 56, has been a member of our Board of Directors since 2011. Mr. Deely has been the President and Chief Executive Officer of Banner Solutions, a leading wholesaler of commercial, residential, and electronic access control door hardware and security products, since April 2018. From 2016 to March 2018, he was an independent director and then President and Chief Executive Officer of A.H. Harris Construction Supplies, a leading distributor of construction supplies and equipment. From 2004 until December 2014, Mr. Deely was President and Chief Executive Officer of L&W Supply Corporation, a subsidiary of USG Corporation, and from 2008 until November 2014, he was Senior Vice President of USG Corporation, a publicly-owned manufacturer and distributor of high-performance building systems. For more than five years prior thereto, Mr. Deely held various executive positions with USG Corporation and its subsidiaries. He is a current Board member of Dayton Superior Corporation, a leading single-source provider of concrete accessories, chemicals, and forming products for the non-residential construction industry.
Mr. Deely has extensive experience with respect to corporate management, operations, and compensation matters, and extensive experience with socially-responsible organizations.
Committees: Compensation; Corporate Governance, Nominating, and Sustainability (chair); Strategy, Acquisition, and Capital Deployment |
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James F. Gero
Mr. Gero, 77, has been a member of our Board of Directors since 1992. Mr. Gero is a private investor and served as Chairman of the Board of Orthofix International, N.V., a publicly-owned international supplier of orthopedic devices for bone fixation and stimulation, from 2004 to December 2013. Mr. Gero also serves as a director of Intrusion, Inc., a publicly-owned supplier of security software.
Mr. Gero has extensive experience with respect to corporate management and leadership, strategic planning, and compensation matters, and has public company board experience.
Committees: Audit; Corporate Governance, Nominating, and Sustainability |
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Virginia L. Henkels
Ms. Henkels, 53, has been a member of our Board of Directors since 2017. Ms. Henkels is Chief Financial Officer and Secretary of Empowerment & Inclusion Capital I Corp., a special purpose acquisition company (SPAC). From 2008 to 2017, Ms. Henkels served as Executive Vice President, Chief Financial Officer, and Treasurer of Swift Transportation Company, a then publicly-traded transportation services company, where she led numerous capital market transactions, including its 2010 initial public offering. She also held various finance and accounting leadership positions with increasing responsibilities since 2004 at Swift Transportation and from 1990 to 2002 at Honeywell International, Inc., a global diversified technology and manufacturing company, including as Worldwide Revenue Chain and Finance Six Sigma Leader and Director of Financial Planning and Analysis at Honeywell International’s Industry Solutions division. Ms. Henkels is currently a member of the National Association of Corporate Directors and the Women’s Corporate Director organizations. Ms. Henkels also serves on the board of directors of Viad Corp., a publicly traded full-service live events and travel experience company. Previously, Ms. Henkels served on the board of directors of Echo Global Logistics, Inc., a provider of technology-enabled transportation and supply chain management solutions from 2018 until it was acquired by The Jordan Companies in November 2021.
Formerly a CPA, Ms. Henkels has extensive experience with finance, accounting, capital markets, and investor relations, as well as experience in strategy development, risk management, mergers and acquisitions, audit, corporate culture, and corporate governance.
Committees: Audit (chair); Compensation |
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Jason D. Lippert
Mr. Lippert, 49, has been a member of our Board of Directors since 2007. Mr. Lippert became Chief Executive Officer of the Company in May 2013, was also appointed President of the Company in May 2019, and has been Chief Executive Officer of Lippert Components since February 2003. Mr. Lippert has over 20 years of experience with the Company and its subsidiaries, and has served in a wide range of leadership positions. Since November 1, 2021, Mr. Lippert also serves on the board of directors of Quanex Building Products Corporation, a publicly traded manufacturer of components sold to Original Equipment Manufacturers (OEMs) in the building products industry.
Mr. Lippert has particular knowledge of the industries and customers to which we sell our products, as well as extensive experience with strategic planning, acquisitions, marketing, manufacturing, and the sale of our products. |
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20 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
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Stephanie K. Mains
Ms. Mains, 54, has been a member of our Board of Directors since March 2021. Ms. Mains has served as Chief Executive Officer of LSC Communications MCL, LLC, a portfolio company of Atlas Holdings, since April 2021. Ms. Mains has over 30 years of experience across diverse industry segments, including aviation, energy, and transportation, and in the last 15 years, building and expanding global service businesses serving industrial, oil and gas, utility, distributed power, and electrification spaces. Prior to her current role, she held the interim Chief Executive Officer role for GE Power Conversion, a $1B advanced electrification and digital solutions business, leading the business to a profitable turnaround through COVID-19 in 2020. From 2015-2019, she served as the President and Chief Executive Officer of Industrial Solutions, a GE and later ABB company. She led Industrial Solutions, a $2.7B GE business delivering technologies that distribute, protect and control electricity, through a transformation and divestiture to ABB. From 2013-2015, Ms. Mains served as President and Chief Executive Officer of GE Distributed Power Global Services, where she integrated and grew a $2.2B global business platform, servicing technologies that provide at the point of use power to the oil and gas, utilities, mining, and industrial segments. From 2006 until 2013, she held positions of increasing responsibility in GE Energy from General Manager to Vice President. During this time, she led the global build-out and transformation of a $4B service operation providing power equipment and services to utility and oil and gas customers. Prior to joining GE Energy, she spent 16 years across multiple GE businesses in financial and leadership positions, including Chief Financial Officer of GE Aviation Services-Contractual Services and Material Solutions, a $4B aviation material services business. Ms. Mains also serves on the board of directors of Diamondback Energy, Inc., an independent oil and natural gas company; Gates Industrial Corporation plc, a global manufacturer of innovative, highly engineered power transmission and fluid power solutions; and Stryten Manufacturing, a manufacturer of premium battery solutions, which is a private portfolio company of Atlas Holdings.
Ms. Mains has extensive experience building and leading global businesses across multiple industrial and services segments. She has expertise in strategy and portfolio development, financial management, acquisitions and integrations, digital transformation, global expansion, manufacturing and service capability development, customer engagement models, organization talent development, and global cultural evolution.
Committees: Audit; Compensation |
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Kieran M. O’Sullivan
Mr. O’Sullivan, 60, has been a member of our Board of Directors since 2015. Mr. O’Sullivan is President, Chief Executive Officer, and Chairman of the Board of CTS Corporation, a publicly-owned designer and manufacturer of electronic components and sensors to original equipment manufacturers in the automotive, communications, medical, defense and aerospace, industrial, and computer markets. Prior to joining CTS in 2013, he served as Executive Vice President of Continental AG’s Global Infotainment and Connectivity Business and led the NAFTA Interior Division, having joined Continental AG, a global automotive supplier, in 2006.
Mr. O’Sullivan has over 25 years of leadership experience in operations, strategy, mergers and acquisitions, and finance roles in the manufacturing services, electronics, and automotive business segments, experience in global markets, as well as experience as a sitting President and Chief Executive Officer of a publicly-owned corporation.
Committees: Audit; Corporate Governance, Nominating, and Sustainability; Risk (chair) |
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David A. Reed
Mr. Reed, 74, has been a member of our Board of Directors since 2003. Mr. Reed is President of a privately-held family investment management company. Mr. Reed retired as Senior Vice Chair for Ernst & Young LLP in 2000 where he held several senior U.S. and global operating, administrative, and marketing roles in his 26-year tenure with the firm. He served on Ernst & Young LLP’s Management Committee and Global Executive Council from 1991 to 2000. His experience includes service as a director for several publicly-owned, venture capital, and private equity-based companies since 2000.
Mr. Reed has accounting and financial acumen, with particular knowledge of financial reporting and taxation, and has public company board experience.
Committees: Risk; Strategy, Acquisition, and Capital Deployment (chair) |
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NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 21
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John A. Sirpilla
Mr. Sirpilla, 55, has been a member of our Board of Directors since 2019. Mr. Sirpilla is Chief Executive Officer and the founder of Encourage LLC, a small family office focused on investing in retail, medical development, and health management. From 2003 to 2012, Mr. Sirpilla served as President of Camping World Accessory Stores, a 140-store nationwide retail chain serving the RV industry. In 2012, Mr. Sirpilla was promoted to Chief Business Development Officer for the parent company of Camping World and Good Sam, where he led store operations, logistics, and new business development until his retirement in 2017. Mr. Sirpilla is a current Board member of the Pro Football Hall of Fame, Aultman Health Foundation, and TecTraum Inc., and serves as Chairman of the Board for the Stark County Catholic Schools.
Mr. Sirpilla has over 30 years of executive and leadership experience in the RV industry, as well as extensive knowledge and expertise in investments and strategic planning.
Committees: Risk; Strategy, Acquisition, and Capital Deployment |
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Unless contrary instructions are indicated, the persons named as proxies in the form of proxy solicited from holders of our Common Stock will vote for the election of the nominees indicated above. If any such nominees should be unable or unwilling to serve, the persons named as proxies will vote for such other person or persons as may be proposed by the Board of Directors. The Board of Directors has no reason to believe that any of the named nominees will be unable or unwilling to serve.
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The Board of Directors recommends a vote FOR |
| election of each of the ten Director nominees. |
CORPORATE GOVERNANCE AND RELATED MATTERS
Statement Regarding Corporate Governance
The Company regularly monitors developments in the area of corporate governance, including rules promulgated by the SEC and the NYSE. The Company’s corporate governance policies and procedures are designed to comply with all laws and rules applicable to corporate governance, and the Company has continually implemented “best practices” as it deems appropriate to protect and enhance stockholders’ interests.
The Company’s Governance Principles, as well as the Charters of the Audit Committee, the Compensation Committee, the Corporate Governance, Nominating, and Sustainability Committee, the Risk Committee, and the Strategy, Acquisition, and Capital Deployment Committee, and the Key Practices of the Audit Committee, the Compensation Committee, and the Corporate Governance, Nominating, and Sustainability Committee, in addition to the Company’s Guidelines for Business Conduct, Code of Ethics for Senior Financial Officers, and Whistleblower Policy, can be accessed on the Company’s website at www.lci1.com/investors under “Governance - Governance Documents.” A copy of any corporate governance document will be furnished, without charge, upon written request to Corporate Secretary, LCI Industries, 3501 County Road 6 East, Elkhart, Indiana 46514. Information on our website is not incorporated by reference into this Proxy Statement.
Board of Directors and Director Independence
Directors are elected annually by the Company’s stockholders for one-year terms. The Board currently consists of nine independent Directors, one Director, Jason D. Lippert, who is employed by the Company as its President and Chief Executive Officer, and one Director, Ronald J. Fenech, who is affiliated with a customer of the Company.
The Board of Directors reviews, at least annually, the independence of each Director. During these reviews, the Board considers transactions and relationships between each Director (and his or her immediate family and affiliates) and the Company and Management to determine whether any such
transactions or relationships are inconsistent with a determination that the Director is independent. The review is based primarily on responses of the Directors to questions in a directors’ and officers’ questionnaire regarding employment, business, familial, compensation, and other relationships. In reviewing the independence of the Directors, the Board applies the standards that it has adopted to assist it in making determinations of independence and that are contained in the Company’s Governance Principles, which are available on the Company’s website at www.lci1.com/investors under “Governance - Governance Documents.” In March 2022, the Board determined that none of Messrs. Gero, Crespo, Deely, Graham, O’Sullivan, Reed, or Sirpilla, nor Ms. Henkels or Ms. Mains, has any material relationship with the Company or its subsidiaries. Accordingly, the Board has determined that each of these nine Directors meets the “independence” standards of the NYSE.
As part of its review of the independence of the Directors, the Board considered the fact that one of the Company’s customers is an entity that manufactures pontoon boats, Barletta Boat Company, LLC (“Barletta”). Prior to the sale of Barletta to Winnebago Industries, Inc. in August 2021, Ronald Fenech, one of our Directors, was a co-owner and director of Barletta, holding a 38% ownership interest. His brother, William Fenech, is the president of Barletta and also a former 38% owner. Although the purchases by Barletta from the Company were, and future purchases will be, entered into in the ordinary course of business on an arm’s length basis, and contained, and will contain, customary terms and conditions on substantially the same terms as comparable transactions with unrelated third parties, in 2021, Barletta paid the Company amounts that exceed the limitation in the director “independence” standards of the NYSE. As a result, the Board determined that Mr. Fenech is not an independent Director. Mr. Fenech does not serve on any of the Audit Committee, Compensation Committee, or Corporate Governance, Nominating, and Sustainability Committee.
The independent Directors have complete access to, and are encouraged to communicate with, the Company’s Chief Executive Officer and any other executives of the Company. During the year ended December 31, 2021, the Board of Directors held 9 meetings. All Directors attended at least 75% of the regularly scheduled and special meetings of the Board and the Board committees on which they served.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 23
Directors are expected to attend the Company’s annual meetings. At the Company’s 2021 Annual Meeting, all Directors standing for election attended virtually.
The Company has continuously maintained separate positions for Chairman of the Board and for Chief Executive Officer in order to provide an independent and unbiased level of review and oversight of senior Management. Tracy D. Graham currently serves as Chairman of the Board, and Jason D. Lippert serves as President and Chief Executive Officer. The Chairman of the Board coordinates the activities of the independent Directors, serves as a liaison on Board-related issues between the independent Directors and the CEO, and performs any other duties and responsibilities that the Board of Directors may determine. While the Board elects a Chairman of the Board annually, it is generally expected that he or she will serve for more than one year.
The role of the Chairman of the Board also includes:
| ● | presiding at executive sessions, with the authority to call meetings of the non-employee Directors; |
| ● | advising on the selection of committee chairs; |
| ● | approving the agenda, schedule, and information sent to the Directors for Board meetings and assuring that there is sufficient time for discussion of all items on Board meeting agendas; |
| ● | working with the CEO to prepare a schedule of strategic discussion items; and |
| ● | guiding the Board’s governance processes, including the annual Board self-evaluation and succession planning. |
The Board periodically reviews its leadership structure to evaluate whether it remains appropriate for the Company.
The non-employee Directors meet regularly in executive sessions without Management. An executive session is held in conjunction with each regularly scheduled Board meeting and is led by the Chairman of the Board. At least once a year, a meeting of only the independent Directors is held. Additional executive sessions may be called by the Chairman of the Board in his discretion or at the request of the Board.
The Company has five standing committees of the Board of Directors: the Audit Committee, the Compensation Committee, the Corporate Governance, Nominating, and Sustainability Committee, the Risk Committee, and the Strategy, Acquisition, and Capital Deployment Committee. All members of the Audit Committee, the Compensation Committee, and the Corporate Governance, Nominating, and Sustainability Committee are independent Directors who meet the independence and experience standards of the NYSE and the SEC. The Board annually selects the Directors who serve on the committees. Each committee functions pursuant to a written Charter and, other than the Risk Committee and Strategy, Acquisition, and Capital Deployment Committee, written Key Practices adopted by the Board of Directors and reviewed annually by each committee.
24 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
The following table reflects the current membership of each Board Committee:
| Name |
Audit Committee |
Compensation Committee |
Corporate Governance, Nominating, and Sustainability Committee |
Risk Committee |
Strategy, Acquisition, and Capital Deployment Committee |
| Tracy D. Graham | ● | ● | |||
| Frank J. Crespo | Chair | ● | |||
| Brendan J. Deely | ● | Chair | ● | ||
| Ronald J. Fenech | ● | ● | |||
| James F. Gero | ● | ● | |||
| Virginia L. Henkels | Chair | ● | |||
| Stephanie K. Mains | ● | ● | |||
| Kieran M. O’Sullivan | ● | ● | Chair | ||
| David A. Reed | ● | Chair | |||
| John A. Sirpilla | ● | ● |
Audit Committee
The purpose of the Audit Committee of the Board of Directors is to assist the Board in its oversight of (i) the conduct of the Company’s financial reporting processes and the integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements; (iii) the independence, qualifications, and performance of the Company’s independent auditor; (iv) the adequacy and effectiveness of the Company’s systems of internal control over financial reporting and disclosure controls and procedures, and the performance of the Company’s internal audit function; and (v) the Company’s compliance with ethical standards adopted by the Company. The Committee also prepares an annual report for inclusion in the Company’s Proxy Statement. The Audit Committee selects the Company’s independent auditor, which selection is submitted to the stockholders for ratification in this Proxy Statement. See “Proposal 3. Ratification of Appointment of Auditors.”
All of the Audit Committee members meet the independence and experience requirements of the NYSE and the SEC. Ms. Henkels serves as Chair of the Audit Committee, and each member of the Committee has been determined by the Board of Directors to be an “audit committee financial expert” as defined by the SEC. This Committee held 7 meetings during the year ended December 31, 2021.
Compensation Committee
The purpose of the Compensation Committee of the Board of Directors is (i) to assist the Board in discharging its responsibilities in respect of
compensation of the Company’s executive officers; and (ii) to prepare an annual report on executive compensation for inclusion in the Company’s Proxy Statement.
The Compensation Committee is responsible for reviewing the performance and development of the Company’s Management in achieving corporate goals, and to ensure that the Company’s senior executives are compensated consistent with the long-term objectives of the Company as well as competitive practices. This Committee provides oversight and guidance in the development of compensation and benefit programs for senior executives of the Company, determines the compensation terms for the Company’s Chief Executive Officer and other executive officers, administers the LCI Industries Equity Award and Incentive Plan, as Amended and Restated (the “2011 Plan”), and the LCI Industries 2018 Omnibus Incentive Plan (the “2018 Plan”), approves equity awards, and coordinates with the Corporate Governance, Nominating, and Sustainability Committee with respect to compensation of Directors. The Compensation Committee approved the compensation, consisting of salary, incentive bonus, equity awards, and benefits paid for 2021 to the “Named Executive Officers.” See “Executive Compensation - Compensation Discussion and Analysis.”
Mr. Crespo serves as Chairman of the Compensation Committee. All members of the Compensation Committee meet the independence requirements of the NYSE and the SEC. This Committee held 5 meetings during the year ended December 31, 2021.
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Corporate Governance, Nominating, and Sustainability Committee
The purpose of the Corporate Governance, Nominating, and Sustainability Committee of the Board of Directors is to assist the Board in (i) identifying qualified individuals to become Directors; (ii) determining the composition of the Board of Directors and its Committees; (iii) monitoring a process to assess Board effectiveness; (iv) developing and implementing the Company’s corporate governance principles and business guidelines; (v) evaluating potential candidates for executive positions; and (vi) oversight of sustainability and social responsibility matters.
The Corporate Governance, Nominating, and Sustainability Committee oversees the development of executive succession plans, coordinates with the Compensation Committee with respect to compensation of Directors, reviews and approves related person transactions, and resolves any conflicts of interest involving a Director. The Committee reviews and, if necessary, recommends revisions to the Company’s Guidelines for Business Conduct, Code of Ethics for Senior Financial Officers, and other governance policies adopted from time to time. The Committee also oversees, reviews, and reports to the Board on a periodic basis with regards to sustainability and social responsibility matters, including impacts to the Company’s business and strategy, the Company’s public reporting on these topics, and any recommendations with respect to oversight and related policies.
The Corporate Governance, Nominating, and Sustainability Committee leads the search for individuals qualified to become Directors and selects nominees to be presented for stockholder approval at each Annual Meeting of Stockholders and to fill vacancies on the Board of Directors. See “Proposal 1. Election of Directors - Director Qualifications and Selection Process.”
Mr. Deely serves as Chairman of the Corporate Governance, Nominating, and Sustainability Committee. This Committee held 2 meetings during the year ended December 31, 2021.
Risk Committee
The purpose of the Risk Committee is to provide oversight of Company-wide risk management practices to assist the Board in (i) overseeing that the executive team has identified and assessed all the risks that the organization faces and has established a risk management infrastructure
capable of addressing those risks; (ii) overseeing in conjunction with other Board-level committees or the full Board, if applicable, risk, such as strategic, financial, credit, market, liquidity, cyber and physical security, property, information technology, legal, regulatory, reputational, and other risks; (iii) overseeing the division of risk-related responsibilities to each Board committee as clearly as possible and performing a gap analysis to determine that the oversight of any risks are not missed; and (iv) in conjunction with the full Board, approving the Company’s enterprise-wide risk management framework. The Company faces a number of material risks, including financial and operational risks. Accordingly, the Company conducts regular enterprise risk management reviews to identify and assess these risks, and to implement effective plans to manage them.
Mr. O’Sullivan serves as Chairman of the Risk Committee. This Committee held 4 meetings during the year ended December 31, 2021.
Strategy, Acquisition, and Capital Deployment Committee
The purpose of the Strategy, Acquisition, and Capital Deployment Committee is to assist the Board in fulfilling its oversight responsibilities relating to the formulation and execution of strategy for the Company, risks and opportunities relating to such strategy, and strategic decisions regarding investments, acquisitions, and divestitures by the Company. The Strategy, Acquisition, and Capital Deployment Committee (i) works with Management in the development of the Company’s strategy; (ii) monitors execution of the Company’s strategic plan, both domestically and internationally, against stated goals and objectives, and provides guidance and feedback as necessary; (iii) in conjunction with Management, develops an acquisition strategy that aligns with the Company’s long-term strategic plan; (iv) reviews each proposed acquisition by the Company above an established threshold in the context of various factors, including whether to recommend approval of the acquisition; (v) from time to time, reviews and recommends to the Board of Directors whether to exit an existing business or dispose of assets; and (vi) reviews and analyzes actions and results against stated goals and objectives.
Mr. Reed serves as Chairman of the Strategy, Acquisition, and Capital Deployment Committee. This Committee held 10 meetings during the year ended December 31, 2021.
26 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
To identify risks that could be created by our compensation policies and practices, the Compensation Committee reviews enterprise risk management assessments, and evaluates our controls to determine if they adequately mitigate compensation-related risks. If appropriate, controls are modified or supplemented. The Compensation Committee assessed our executive compensation programs and concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee believes our executive compensation programs, including the design of long-term incentive plans, oversight by the Compensation Committee, and sufficiency of control features, prevent unintentional material risk. In addition, stock ownership guidelines, the long-term nature of equity awards, share retention, and incentive compensation forfeiture, taken together, motivate Management to carefully consider risk in making business decisions and evaluating growth opportunities, and mitigate excessive risk-taking to achieve short-term results.
COMPENSATION RECOUPMENT POLICY
The Board of Directors has adopted a compensation recoupment policy for executive officers that allows for the recovery of performance-based compensation amounts paid under an incentive compensation plan, including any discretionary bonus amounts and equity awards, the amount, payment, and/or vesting of which was calculated based wholly, or in part, on the application of financial performance criteria. The policy applies in the event there is a required financial restatement due to material noncompliance with any financial reporting requirements under the securities laws, as determined by the Board of Directors, which results
in performance-based compensation that would have been a lower amount if such compensation had been calculated based on such restated results. The policy is administered by the Compensation Committee, as more fully described in the policy, which is included in the Compensation Committee Key Practices.
DIRECTOR STOCK OWNERSHIP REQUIREMENTS
To help align the personal interests of non-employee Directors with the interests of stockholders, all non-employee Directors are required to hold Company Common Stock, RSUs, or DSUs equivalent to 5x each non-employee Director’s annual cash retainer (exclusive of any cash retainer for serving as a Board or Committee chair). Equity interests that count toward satisfaction of the guidelines include shares owned outright by, or held in trust for the benefit of, the individual and his or her immediate family members residing in the same household, plus RSUs, DSUs, and stock awards (whether vested or unvested). Stock options (whether vested or unvested) do not count toward satisfaction of the guidelines. Non-employee Directors are required to achieve ownership in accordance with the guidelines within five years of the date they assume their position. As of the date of this Proxy Statement, all non-employee Directors satisfy the stock ownership requirements or are within that five-year period.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 27
TEAM MEMBERS AND DIRECTORS GUIDELINES FOR BUSINESS CONDUCT
The Company has Guidelines for Business Conduct that all Management team members and Directors are required to annually sign and follow in conducting the Company’s business, and a Code of Ethics for Senior Financial Officers governing the conduct of its President and Chief Executive Officer, Chief Financial Officer, and the financial officers of the Company and its subsidiaries.
MANAGEMENT AND BOARD SUCCESSION
The Board periodically reviews with the Chief Executive Officer and maintains a succession plan for executive officers, after considering recommendations from the Corporate Governance, Nominating, and Sustainability Committee. The plan is designed to ensure an effective transition of Management of our operations to qualified executives upon the retirement of senior executives. The Board is also responsible for maintaining an emergency succession plan that is reviewed periodically with Management.
CONTACTING THE BOARD OF DIRECTORS
Any stockholder, or other interested party, who wishes to communicate with the Board of Directors, or our non-employee Directors as a group, or any member of the Board, may do so electronically by
sending an e-mail to LCII@lci1.com or by writing to any Director c/o LCI Industries, 3501 County Road 6 East, Elkhart, Indiana 46514. Communications received electronically or in writing will be distributed to the Chairman or the other members of the Board, as appropriate, depending on the facts and circumstances described in communications received. For example, communications regarding accounting, internal accounting, internal accounting controls, and auditing matters generally will be forwarded to the Chair of the Audit Committee.
PROHIBITION ON HEDGING BY DIRECTORS AND TEAM MEMBERS
The Board of Directors has adopted a Hedging Policy that prohibits the Company’s Directors, executive officers, team members, and their designees from purchasing any financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s Common Stock. This prohibition applies to all shares of the Company’s Common Stock owned directly or indirectly by such persons. The Hedging Policy does not preclude the Company’s Directors, officers, team members, and their designees from engaging in general portfolio diversification.
28 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
The following table summarizes compensation paid to non-employee Directors during fiscal 2021:
| Name | Fees
Earned or Paid in Cash(1) |
Stock Awards(2) |
All Other
Compensation(3) |
Total |
||||||||
| Tracy D. Graham | $ | 165,538 | $ | 140,045 | $ | 3,895 | $ | 309,478 | ||||
| Frank J. Crespo | $ | 121,812 | $ | 140,045 | $ | 13,792 | $ | 275,649 | ||||
| Brendan J. Deely | $ | 105,000 | $ | 140,045 | $ | 3,895 | $ | 248,940 | ||||
| Ronald J. Fenech | $ | 103,500 | $ | 140,045 | $ | 12,296 | $ | 255,841 | ||||
| James F. Gero | $ | 152,154 | $ | 140,045 | $ | 21,859 | $ | 314,058 | ||||
| Virginia L. Henkels | $ | 128,225 | $ | 140,045 | $ | 14,188 | $ | 282,458 | ||||
| Stephanie K. Mains | $ | 72,750 | $ | 167,405 | $ | 3,436 | $ | 243,591 | ||||
| Kieran M. O’Sullivan | $ | 102,231 | $ | 140,045 | $ | 3,895 | $ | 246,171 | ||||
| David A. Reed | $ | 133,400 | $ | 140,045 | $ | 5,197 | $ | 278,642 | ||||
| John A. Sirpilla | $ | 91,500 | $ | 140,045 | $ | 3,895 | $ | 235,440 | ||||
| Total | $ | 1,176,110 | $ | 1,427,810 | $ | 86,348 | $ | 2,690,268 | ||||
| (1) | Represents the Directors’ annual cash retainer amount and the additional annual cash fee paid to the Chairman of the Board and the Committee Chairs, as applicable, for the period of time they served in the respective positions in 2021, except for Messrs. Gero, Crespo, Reed, and Fenech, and Ms. Henkels, who elected to receive DSUs in lieu of their cash compensation for 2021. For those Directors, the amount shown represents the value, as of the date credited, of DSUs issued in lieu of cash compensation in payment of Directors’ fees. To encourage our Directors’ long-term ownership of the Common Stock of the Company, non-employee Directors may elect to accept DSUs in lieu of cash compensation in payment of Directors’ fees. An initial election to defer compensation for a calendar year must be made prior to December 31st of the preceding calendar year. The number of DSUs, credited at the fair market value of the stock on the date credited, is equivalent to 115 percent of the deferred fee. The DSUs are distributed in the form of shares of Common Stock of the Company at the end of the initial restriction or deferral period selected by the Director, subject to earlier distribution upon death, disability, or certain changes-in-control of the Company, and are intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Code”). Until shares representing the DSUs are distributed, the Director does not have any rights of a stockholder of the Company with respect to such shares, other than to receive dividend equivalents in DSUs with the same deferral period as the underlying units, if dividends are issued to stockholders. |
| (2) | In May 2021, each non-employee Director who was elected at the 2021 Annual Meeting was granted 1,016 RSUs, having a value of approximately $140,000, as the annual equity grant component of Director compensation. The grant date fair value of the RSUs granted to Directors in May 2021 was $137.84 per share, the closing price on the grant date. These RSUs vest in full on the earlier of the first anniversary of the grant date and the date of the annual meeting of stockholders in the following year. Additionally, in March 2021, Ms. Mains received, upon her election to the Board, a grant of 194 RSUs, having a value of $27,360. The grant date fair value was $141.03 per share, the closing price on the grant date. These RSUs vested in full on the first anniversary of the grant date. Directors do not have any rights of a stockholder of the Company with respect to RSUs, other than to receive dividend equivalents in RSUs with the same vesting period, if dividends are issued to stockholders. Non-employee Directors can also receive non-qualified stock options or other stock-based awards under the 2018 Plan. No stock options or other stock-based awards were granted in fiscal 2021 to our non-employee Directors. As of December 31, 2021, the non-employee Directors held the following number of RSUs: |
|
Name |
RSUs
Held at December 31, 2021 |
| Tracy D. Graham | 1,036 |
| Frank J. Crespo | 1,036 |
| Brendan J. Deely | 1,036 |
| Ronald J. Fenech | 1,036 |
| James F. Gero | 1,036 |
| Virginia L. Henkels | 1,036 |
| Stephanie K. Mains | 1,235 |
| Kieran M. O’Sullivan | 1,036 |
| David A. Reed | 1,036 |
| John A. Sirpilla | 1,036 |
| (3) | Represents the dollar value of dividend equivalents credited on stock awards in the applicable year when those amounts were not factored into the grant date fair value of the award. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 29
DISCUSSION OF DIRECTOR COMPENSATION
The Corporate Governance, Nominating, and Sustainability Committee has responsibility for recommending to the Board compensation and benefits for non-employee Directors. In discharging this duty, the Committee is guided by three goals: (1) compensation should fairly pay Directors for the time and service they provide; (2) compensation should align the interests of Directors with the long-term interests of stockholders; and (3) the structure of the compensation should be simple, transparent, and easy for stockholders to understand. The Corporate Governance, Nominating, and Sustainability Committee believes these goals are served by providing non-employee Directors with an annual retainer fee, fees for each meeting attended, or any combination thereof, and an annual stock-based award. Prior to determining compensation for non-employee Directors for fiscal 2021, the Corporate Governance, Nominating, and Sustainability Committee also consulted with Willis Towers Watson, the Committee’s independent compensation consultant, regarding Director compensation mix and total compensation for Board and Committee service.
For fiscal 2021, non-employee Directors received a combination of an annual cash retainer of $90,000, which covers a Director’s attendance at up to 20 Board and Committee meetings, and an annual grant of RSUs valued at approximately $140,000 on the date of grant, which occurs on the date of the Annual Meeting following their election to the Board for a one-year term. Attendance at any meetings in excess of the 20 earns additional compensation of $1,500 per meeting. The Chairman of the Board and the Chair of each of the Audit Committee, the Compensation Committee, the Corporate Governance, Nominating, and Sustainability Committee, the Risk Committee, and the Strategy, Acquisition, and Capital Deployment Committee received an additional annual fee for the additional responsibilities related to their respective positions. The following table sets forth the additional annual fees for the Board and Committee Chairs that were in effect during 2021:
| Annual Fee for Board or Committee Chair | Amount | |||
| Board of Directors | $ | 90,000 | ||
| Audit Committee | $ | 20,000 | ||
| Compensation Committee | $ | 16,500 | ||
| Corporate Governance, Nominating, and Sustainability Committee | $ | 15,000 | ||
| Risk Committee | $ | 15,000 | ||
| Strategy, Acquisition, and Capital Deployment Committee | $ | 20,000 |
Annual retainer fees, meeting attendance fees, and chair fees are paid on a quarterly basis.
Non-employee Directors who join the Board of Directors other than on the date of an Annual Meeting receive pro-rated retainer amounts and equity awards.
As described in more detail in footnote (1) to the table above, to encourage our Directors’ long-term ownership of the Common Stock of the Company, non-employee Directors may elect to accept DSUs in lieu of cash compensation in payment of Directors’ fees.
Directors who are team members of the Company do not receive additional fees or other compensation for serving as Directors.
30 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
A MESSAGE FROM OUR COMPENSATION COMMITTEE
2021 was a year of incredible growth for LCI Industries. While the ongoing COVID-19 pandemic created challenges for LCI Industries in 2020, including a period of uncertainty and temporary suspension of production for non-essential manufacturing, it also increased RV retail demand as consumers looked for affordable and safe alternative vacation options that avoided large gatherings, air travel, and hotel lodging. This record RV retail demand continued throughout 2021. Combined with the impact of six strategic acquisitions and organic growth in the Aftermarket Segment, LCI Industries achieved a 60 percent increase in consolidated net sales in 2021 compared to 2020 – ending 2021 with record net sales of $4.5 billion.
Led by our talented executive team, Lippert team members came together in 2021 to innovate across all areas of the business and to meet unprecedented demand levels. Their dedication propelled the business forward, resulting in continued growth opportunities that we believe will deliver value to both customers and stockholders in 2022 and beyond.
As the Compensation Committee, we strive to pay for performance and ensure the goals and objectives of the executive leadership team are aligned with those of stockholders, and retain and motivate Management to drive long-term success for LCI Industries. As you review the following Compensation Discussion and Analysis (“CD&A”), you will see that the strong business performance we achieved in 2021 informed our decisions related to executive compensation payouts. We also consider the market and the unique situation in Elkhart County, Indiana, where our geographic proximity to so many other RV companies means competition for talent is high. This presents a unique challenge as many of our local competitors are privately held, with largely cash-based compensation programs.
At the same time, we remain very committed to stockholder input. As a result of the 2021 say-on-pay vote, the Compensation Committee spent significant effort gathering feedback from stockholders along with that of proxy advisory firms, and incorporated that feedback into our compensation decisions. In response to stockholder concerns, we decided to forgo the use of any one-time awards in 2021. We also expanded our stock ownership guidelines to include all of our named executive officers. In addition, LCI Industries has increased its focus on environmental, social, and governance (“ESG”) factors. An overview of our stockholder input efforts and additional key themes we heard is included on page 36 of the CD&A.
The Compensation Committee of the Board of Directors oversees LCI Industries’ executive compensation philosophy and reviews and approves compensation for our named executive officers. While LCI Industries’ Management and our independent compensation consultant provide input, it is the sole responsibility of the Compensation Committee to approve our executive compensation philosophy, plans, policies, programs, and decisions.
The Compensation Committee
Frank J. Crespo, Chairman
Brendan J. Deely
Virginia L. Henkels
Stephanie K. Mains
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 31
BUSINESS PERFORMANCE HIGHLIGHTS
Despite significant ongoing operational challenges, specifically involving labor, freight, and supply chains, our executive leadership team led us to deliver record achievements in 2021. We believe this performance was the direct result of the dedication of our team members, who worked tirelessly to overcome these headwinds by leveraging our automation and continuous improvement initiatives. Some highlights from 2021:
| • | Record net sales of $4.5 billion, up 60% year-over-year. |
| • | Record net income of $287.7 million, or $11.32 per diluted share, up $129.3 million, or 82%, year-over-year. |
| • | Adjusted EBITDA1 of $511.7 million, up $183.5 million, or 56%, year-over-year. |
| • | Completed six strategic acquisitions for a combined cash purchase price of $194.1 million. |
| • | Returned $87.2 million to shareholders through payment of dividends. |
COMPENSATION DISCUSSION AND ANALYSIS
LCI Industries supplies highly engineered components primarily to the original equipment manufacturers (“OEMs”) of recreational vehicles, buses, trailers, trucks, boats, trains, manufactured housing, and their related aftermarkets. We strive to be a leading supplier for component parts manufacturing in the markets in which we compete. Executing on this strategy requires a team of highly engaged and motivated leaders, who are rewarded in line with the performance they deliver.
To ensure our leaders are driven to deliver excellence for our team members, our customers, and our stockholders, our executive compensation program is designed to link business priorities with performance.
| OUR EXECUTIVE COMPENSATION PHILOSOPHY | |
| Our executive compensation program is based on a pay-for-performance philosophy and is designed to: | |
| ● | Enable the Company to attract, motivate, and retain highly-qualified senior executives who have the skills to drive our continued profitability, growth, and success; |
| ● | Provide fair and equitable compensation that rewards executives for achieving specified financial goals and other key metrics; |
| ● | Link a substantial portion of executives’ total potential compensation to the Company’s performance on both a long-term and short-term basis; and |
| ● | Align the interests of our executives with those of our stockholders. |
This Compensation Discussion and Analysis (“CD&A”) describes the 2021 compensation of our named executive officers (“NEOs”) listed below. It also provides an overview of our executive compensation program, which we continue to refine based on stockholder feedback, competitive market practice, and Company performance.
| Named Executive Officer | Role |
| Mr. Jason D. Lippert | President and Chief Executive Officer (CEO) |
| Mr. Brian M. Hall | Executive Vice President and Chief Financial Officer (CFO) |
| Mr. Ryan R. Smith | Group President – North America |
| Mr. Jamie M. Schnur | Group President – Aftermarket |
| Mr. Andrew J. Namenye | Executive Vice President, Chief Legal Officer, and Corporate Secretary |
| (1) | Adjusted EBITDA is defined as net income before interest expense, net, provision for income taxes, depreciation and amortization expense, and other adjustments made in order to present comparable results from period to period, which consisted of the inventory fair value step-up from the acquisitions of Schaudt, Ranch Hand, and CURT during the twelve-month periods ended December 31, 2021 and 2020, respectively. Refer to Appendix A to this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure. |
32 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
SUMMARY OF OUR 2021 DECISIONS
The Compensation Committee makes decisions regarding named executive officer total compensation (base salary, annual cash incentive objectives and payments, and annual equity grants) in connection with our annual performance review process. The table below summarizes its decisions as well as updates to the compensation programs for 2021 and 2022.
|
Factors That Guide Total Compensation Decisions
|
• Our executive compensation philosophy • Degree of achievement of key strategic financial and operational goals • Recommendations of our President and CEO (other than with respect to his own compensation) • Advice of an independent compensation consultant • Stockholder input • Market pay practices • Current and historical executive compensation • Executive compensation peer group comparison
|
|
2021 Compensation
See pages 39 – 62
|
BASE SALARY |
| Effective January 1, 2021, Messrs. Lippert, Hall, and Namenye received base salary increases of 3%, 5.8%, and 3%, respectively, to more closely align their base salaries with the competitive market practice for their respective roles. Messrs. Schnur and Smith received base salary increases of 20% and 25%, respectively, reflecting the scope and increased responsibilities of their roles, and to more closely align their base salaries with the competitive market practice for such roles. | |
| ANNUAL CASH INCENTIVE | |
|
In February 2021, the Compensation Committee approved the annual Adjusted EBIT goals for the 2021 Annual Incentive Plan (the “AIP”). For 2021, the AIP was simplified to focus on one metric, Adjusted EBIT, reflecting its importance to our growth and aligning more closely with our local competitors and peer group.
Actual Adjusted EBIT results achieved in 2021 were very strong. In February 2022, the Committee met and determined the degree to which the Adjusted EBIT goal under the 2021 AIP was achieved in 2021. Adjusted EBIT in 2021 was $398 million, resulting in a 200% of target payout multiple for the CEO and a 175% of target payout multiple for the other named executive officers. Adjusted EBIT is a non-GAAP financial measure. Refer to Appendix A to this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure. |
|
| EQUITY GRANT DECISIONS | |
|
On March 1, 2021, Mr. Lippert received an annual equity grant with a target value of $5,350,000. Messrs. Hall, Namenye, Schnur, and Smith received annual equity grants with a target value ranging from $725,000 to $1,360,000. The value of the equity award granted to each NEO was based on his performance over the long term and during the prior year, his long-term potential and retention considerations, and market practices for comparable positions.
|
|
| For all of the named executive officers, these annual equity grants consisted of approximately 60% performance stock units (“PSUs”) and 40% restricted stock units (“RSUs”). These PSUs are based on return on invested capital (“ROIC”) performance measured at the end of the two-year period from 2021- 2022, and any of these PSUs that are earned will vest in March 2024, following a one-year holding period. | |
|
RSUs for all of the named executive officers vest over a three-year period, with one-third vesting each year on the anniversary of the grant date. |
|
|
In February and March 2022, the Compensation Committee discussed, reviewed, and approved executive compensation matters for 2022.
|
|
| BASE SALARY | |
|
2022 Compensation Program Changes
|
Effective January 1, 2022, the NEOs received base salary increases ranging from 1.3% to 12.2%, to more closely align their base salaries with the competitive market practice for their respective roles.
INCENTIVE PLAN
Based on feedback received from investors, a portion of the 2022 annual cash incentive available to the NEOs has been shifted to equity and incorporated into each NEO’s annual equity long-term incentive grant to better align the NEOs’ interests with those of our stockholders. Furthermore, the PSUs awarded to the NEOs in March 2022 provide that the number of units that could be earned is based on whether and to what extent ROIC performance goals for a three-year period from January 1, 2022 through December 31, 2024 are satisfied — increasing the PSU performance measurement period from two years to three years. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 33
SUPPORTING OUR PAY-FOR- PERFORMANCE PHILOSOPHY
In support of our pay-for-performance philosophy and achievement of strong Company performance, the majority of the total direct compensation opportunity that our President and CEO and other named executive officers receive is “at-risk” and dependent upon future performance.
Consistent with the Company’s overall executive compensation philosophy, named executive officers are rewarded for their strong leadership and Company performance, while providing them with equity incentives to ensure alignment of their interests with those of our stockholders. For Mr. Lippert, 88% of his total direct compensation opportunity (base salary, target annual cash incentive, and target equity grants) is at-risk, as shown below. On average, the total direct compensation opportunity at risk for our other named executive officers is 78%.
| The majority of the total direct compensation opportunity for our named executive officers — 88% for our President and CEO and, on average, 78% for our other named executive officers — is “at-risk” based on the achievement of specific performance goals and stock price performance. |
34 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
ALIGNING PAY WITH PERFORMANCE
We emphasize variable pay rather than fixed pay, with target opportunities based on market practices and payments based on performance. The structure of our executive compensation program ensures that as an executive’s scope of responsibility increases, a greater portion of his compensation comes from performance-based pay. For 2021, the performance-based components of our executive compensation program were designed as follows:
| Short-Term Incentive | Long-Term Incentive | ||
| Annual Cash Incentive | Performance-Based Equity (60%) | Time-Based Equity (40%) | |
| Objective | Reward achievement of short-term (annual) Company financial performance goals | Reward long-term financial results and drive stockholder value creation | Reinforce ownership in the Company Provide direct alignment with stockholders |
| Form | Cash | Performance Stock Units (PSUs) | Restricted Stock Units (RSUs) |
| Time Horizon | 1 year | 2-year measurement period followed by 1-year holding period | 3 years |
| Metrics | Adjusted EBIT | ROIC | Stock price appreciation Continued employment |
COMPENSATION FACTORS AND GOVERNANCE
The Compensation Committee applies a number of compensation governance features related to executive compensation, which are summarized below. We believe that these mechanisms help to align executive and stockholder interests.
|
WHAT WE DO
• Deliver executive compensation primarily through performance-based at-risk pay
• Maintain a peer group for benchmarking pay
• Set challenging short- and long-term incentive objectives
• Place a cap on the annual cash incentive payments that executives can receive
• Provide strong oversight that ensures adherence to equity grant regulations
• Maintain a clawback policy for annual cash incentive and equity compensation, as well as an anti-hedging/pledging policy
• Require stock ownership by all of our NEOs, with minimum ownership levels defined by role
• Have double-trigger change-in-control arrangements
• Conduct an annual risk assessment to mitigate any compensation program-related risk having a material adverse effect on the Company
• Offer market-competitive benefits for executives that are consistent with the benefits provided to the rest of our employees
• Consult with an independent consultant on compensation levels and practices
|
|
WHAT WE DON’T DO
• No hedging or pledging of equity
• No guarantees or minimums related to base salary increases, annual cash incentives, or equity grants
• No gross-ups upon change in control
• No excessive perquisites
• No supplemental executive retirement plans
|
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 35
Stockholder Input on Executive Compensation
We value the opinions of our stockholders and regularly solicit input on our executive compensation program. In evaluating the design of our executive compensation and the compensation decisions for each of our named executive officers, the Compensation Committee considers stockholder feedback, including the advisory “say-on-pay” vote at our annual meeting. In 2021, 23% of the votes cast approved the compensation of our named executive officers. We responded with a proactive outreach program led by our Compensation Committee Chair in place during this time, Tracy Graham.
In the spring of 2021, we reached out and solicited feedback from the holders of 71% of institutionally held shares. The following stockholder engagement activities allowed us to gather input with respect to our executive compensation program:
| ● | General investor engagement events: The Company participated in various investor engagement events that gave Management the opportunity to engage with institutional stockholders to discuss the current and forward-looking business environment. |
| - | Management attended the virtual Baird 2021 Global Consumer, Technology & Services Conference, and CL King Best Ideas Conference, among others. |
| - | The Company participated in Non-Deal Roadshows (NDRs) with the majority of our covering analysts, which attracted a high volume of investors, given the virtual environment. |
| ● | Investor outreach regarding compensation: The Company’s CFO, Brian Hall, and the Compensation Committee Chair in place during this time, Tracy Graham, participated in a series of outreach calls with some of the Company’s top stockholders in December 2020 and January 2021. The conversations with stockholders were focused on compensation, and the Company’s leadership received helpful feedback on how investors evaluate this topic, what they consider best practices, and suggestions to the Compensation Committee on how to adjust the current remuneration framework. A summary of this feedback and the Company’s response is below. |
| Stockholder Feedback | The Company’s Response | |
| Short-Term Incentives |
Stockholders expressed that the discretion applied to the 2020 AIP awards, which adjusted payouts upwards, was not favorable. | Changes made to the 2020 AIP awards were restricted to the removal of the month of April from the performance measurement period for the financial metric used. The decision to apply the Committee’s discretion was due to lockdowns imposed on certain facilities during that month. The Compensation Committee recognizes negative investor feedback to that change and refrained from making similar alterations this year. |
| Long-Term
Incentives |
Stockholders requested that the Company discontinue use of one-time LTI awards and instead use the existing compensation programs to reward executives, even in the case of acquisitions. | The Company did not grant one-time awards in 2021. While certain one-off awards granted in the past are not yet fully vested, the Company did not provide any bonus or grants which are not part of the regular Annual Incentive Plan or the LTI plan. |
| Stockholders opposed grants of PSUs linked to acquisitions instead of awards linked to executives’ performance across the board. | In the current executive compensation programs, acquisitions are no longer a metric to measure executive performance. PSUs within the LTI plan rely on ROIC as the performance metric. | |
| Stockholders requested more information about the Compensation Committee’s process to evaluate and define performance metrics used in the STI and LTI plans. | The Company provides more information about the process of evaluating metrics in the below sections “Role of the Compensation Committee” and “Role of the Independent Compensation Consultant.” |
To strengthen our pay-for-performance culture, the Compensation Committee considers the feedback obtained from our investor outreach when making decisions relating to compensation for our named executive officers. We remain committed to ongoing, proactive stockholder outreach throughout 2022 and into the future. The Board strongly believes in engagement, communication, and transparency with the Company’s stockholders. The Company regularly participates in investor conferences and holds numerous meetings with institutional stockholders to discuss our financial performance, strategy, corporate governance, ESG practices, human capital management, and executive compensation program. The Company is committed to ongoing engagement with its investors on all appropriate matters, including executive compensation and governance.
36 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
Role of the Compensation Committee
The Compensation Committee administers the executive compensation program for all named executive officers as well as other executives within the Company. While Company Management provides input, it is the responsibility of the Compensation Committee to evaluate and approve our executive compensation philosophy, plans, policies, programs, and decisions.
The following table provides the steps the Compensation Committee follows to ensure the total compensation for our named executive officers is competitive, appropriately tied to performance, and does not promote undue risk taking.
| STEP
1: Input on Compensation |
STEP 2: Compensation Committee Decisions |
STEP 3: Performance Goals |
|
At the beginning of each year, Management, including the President and CEO, provides recommendations to the Compensation Committee on the compensation of the named executive officers. The CEO does not make recommendations on his own pay.
These recommendations take into consideration the competitive market pay data provided by the Compensation Committee’s independent consultant and applicable to the RV industry in Elkhart County, Indiana, as well as an evaluation of the named executive officer’s role, contributions and performance in achieving Company performance, and long-term potential.
(See more below on the Compensation Committee’s independent compensation consultant.)
|
The Compensation Committee considers these recommendations together with the input of its independent compensation consultant and subsequently the Compensation Committee determines the named executive officers’ compensation, ensuring that it is aligned with our compensation philosophy.
All aspects of the CEO’s compensation are determined solely by the Compensation Committee, with input from its independent compensation consultant.
For the coming year, the Compensation Committee reviews and approves: ● Variable pay target opportunities for annual cash incentive compensation and long-term equity incentives ● Performance metrics for the annual cash incentive and equity grants
|
The Compensation Committee ensures that performance metrics are consistent with the financial, operational, and strategic goals set by the Board, that the performance goals are sufficiently ambitious, and that amounts paid (when specified performance levels are achieved) are consistent with our executive compensation philosophy.
|
Role of the Independent Compensation Consultant
Though the Compensation Committee has ultimate responsibility for compensation-related decisions, it retains Willis Towers Watson as a consultant on executive compensation matters. Willis Towers Watson provides market analyses and input that inform the Committee’s decisions, provides updates on market trends and the regulatory environment as it relates to executive compensation, reviews various executive compensation proposals presented by Management to the Compensation Committee, and works with the Compensation Committee to validate and strengthen the pay-for-performance relationship and alignment with stockholders.
Pursuant to the rules of the SEC, the Committee has reviewed the SEC’s independence factors for compensation advisers and concluded that no conflict of interest exists that would prevent Willis Towers Watson from independently representing the Committee.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 37
Role of the Executive
Compensation Peer Group
To help ensure we provide our named executive officers with fair and market-competitive compensation and to support retention of our key leaders, we annually review the compensation we offer our executives against executives within our peer group of companies.
In 2021, this peer group consisted of companies determined to be:
| ● | Similar in size (revenue and market capitalization), complexity, and global reach to LCI Industries; |
| ● | In the auto parts and equipment industry or a similar industry; and |
| ● | In competition with LCI Industries for executive talent. |
We design our total compensation packages to provide pay for performance, tracking when our results exceed or fall short of our financial and operational goals. |
Challenges We Face in
the RV Industry
Defining our executive compensation peer group is a challenge given the complexity of our business as well as our concentrated geographic footprint. The Compensation Committee considers the unique situation in Elkhart County, Indiana, where our geographic proximity to so many other RV companies means competition for talent is high. Attracting talent to Elkhart County is an ever-present challenge as well. Thus, while many of our competitors are not publicly-traded companies, and therefore do not disclose their compensation practices for benchmarking, we must consider local pay practices as we make decisions about executive compensation. We look at market data alongside our decades of industry experience and knowledge of local RV industry pay practices and models to help ensure the Company can incentivize and engage our talented senior leadership team and broader workforce who are key to our continued business success.
Our peer group is regularly reviewed by the Compensation Committee with consideration given to our strategy and the advice of its independent compensation consultant. The Compensation Committee used the peer group on the right in making 2021 executive compensation decisions.
|
2021 PEER GROUP A. O. Smith American Axle & Manufacturing Brunswick Carlisle Companies Dana Donaldson Graco Hubbell, Inc. ITT, Inc. Lincoln Electric Holdings Meritor Modine Manufacturing Patrick Industries Terex Corp Thor Industries Visteon Watts Water Technologies Winnebago Industries |
38 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
ELEMENTS OF THE EXECUTIVE COMPENSATION PROGRAM
Our executive compensation consists of fixed pay and variable pay, including cash and non-cash components. The table below summarizes the various elements of executive compensation and their objectives:
| Objective | Type of Compensation | Key Features | |
| Base Salary | Provide competitive fixed pay that is tied to the market and allows us to attract, retain, and motivate executives within the auto parts and equipment industry and broader market | Cash |
● Reflects individual skills, experience, responsibilities, and performance over time
● Influences annual cash and long-term incentive opportunities
|
| Short-Term Incentive — Annual Cash Incentive | Encourage focus on short-term business performance | Cash |
● Performance-based reward tied to achievement of short-term (annual) financial performance goal
● Pays only if threshold performance levels are met or exceeded
|
| Long-Term Incentive — Performance Stock Units (PSUs) | Increase multi-year profitability and stock price | Equity |
● Performance-based rewards tied to achievement of long-term performance goals
● Vests only if threshold performance levels are met or exceeded
● Links value to stock price
|
| Long-Term Incentive — Restricted Stock Units (RSUs) | Closely align executive and stockholder interests and aid in retention | Equity |
● Promotes retention and enhances executive stock ownership
● Links value to stock price
|
| Other Benefits | Aid in attracting and retaining executive talent | Benefit |
● Severance provisions to protect Company and NEOs from certain termination events
● Broad-based benefits available to all team members
● A Deferred Compensation Program |
Analysis of 2021 Compensation Decisions
Base Salary
We establish base salaries for named executive officers that reflect each executive’s experience, expertise, and the complexity of their role, as well as current competitive compensation data. The Compensation Committee reviews base salaries of our named executive officers annually, and it approves any increases after considering factors such as performance, market competitiveness, and affordability.
2021 Base Salary Decisions
Effective January 1, 2021, Messrs. Lippert, Hall, and Namenye received base salary increases of 3%, 5.8%, and 3%, respectively, to more closely align their base salaries with the competitive market practice for their respective roles. Messrs. Schnur and Smith received base salary increases of 20% and 25%, respectively, reflecting the scope and increased responsibilities of their roles, and to more closely align their base salaries with the competitive market practice for such roles.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 39
| Name | 2020 Approved Salary(1) | 2021 Approved Salary | Percent Change | |||||||||
| Mr. Jason D. Lippert | $ | 1,054,000 | $ | 1,085,620 | 3.0 | % | ||||||
| Mr. Brian M. Hall | $ | 472,500 | $ | 500,000 | 5.8 | % | ||||||
| Mr. Ryan R. Smith | $ | 600,000 | $ | 750,000 | 25.0 | % | ||||||
| Mr. Jamie M. Schnur | $ | 500,000 | $ | 600,000 | 20.0 | % | ||||||
| Mr. Andrew J. Namenye | $ | 432,600 | $ | 445,578 | 3.0 | % | ||||||
| (1) | Actual salary in 2020 was less than approved salary, as the NEOs voluntarily reduced their base salaries by 10%-25% for an eight-week period from April through June 2020 to support cost savings as a result of the uncertainties created by the COVID-19 pandemic. |
2022 Base Salary Decisions
The NEOs received base salary increases effective January 1, 2022. These increases more closely align the NEOs’ base salaries with the competitive market practice for their respective roles.
| Name | 2021 Approved Salary | 2022 Approved Salary | Percent Change | |||||||||
| Mr. Jason D. Lippert | $ | 1,085,620 | $ | 1,100,000 | 1.3 | % | ||||||
| Mr. Brian M. Hall | $ | 500,000 | $ | 525,000 | 5.0 | % | ||||||
| Mr. Ryan R. Smith | $ | 750,000 | $ | 800,000 | 6.7 | % | ||||||
| Mr. Jamie M. Schnur | $ | 600,000 | $ | 620,000 | 3.3 | % | ||||||
| Mr. Andrew J. Namenye | $ | 445,578 | $ | 500,000 | 12.2 | % | ||||||
Annual Cash Incentive
Under our 2021 AIP, we provide named executive officers with the opportunity to earn a cash incentive award when they deliver strong annual Company financial performance. Annual cash incentives are paid based on the Company’s achievement of annual performance goals determined by the Compensation Committee within the first 90 days of each year.
Annual Incentive Plan
In February 2021, the Compensation Committee approved the annual performance metrics, goals, and payout structure for the 2021 AIP. For 2021, the AIP was simplified to focus on one metric, Adjusted EBIT, as it is a key indicator of the strength of our business, it aligns with our local competitors and peer groups, and the Compensation Committee believes that it drives long-term stockholder return.
The 2021 Adjusted EBIT target goal was set at $265 million, a 19% increase over the prior year. Each named executive officer has the opportunity to earn a predetermined target cash incentive amount (“Target Incentive”) if the Company achieves the Adjusted EBIT target goal for the year. The actual payout can range from 0% to 200% of the Target Incentive for the CEO and 0% to 175% of the Target Incentives defined for the other NEOs depending on the Company’s level of achievement of the Adjusted EBIT goal as shown in the table below:
| 2021 Adjusted EBIT Goals | Incentive Payout
(CEO) |
Incentive Payout
(Other NEOs) |
||||||
| Below Threshold | $ | -- | 0% of Target Incentive | 0% of Target Incentive | ||||
| Threshold | $ | 225,250,000 | 50% of Target Incentive | 50% of Target Incentive | ||||
| Target | $ | 265,000,000 | 100% of Target Incentive | 100% of Target Incentive | ||||
| Maximum | $ | 362,250,000 | 200% of Target Incentive | 175% of Target Incentive | ||||
Under the 2021 AIP, to the extent the overall threshold for Adjusted EBIT of $225,250,000 is achieved or exceeded, the payment amount for each participant would be calculated by multiplying the participant’s Target Incentive amount by the applicable incentive payout percentage as set forth in the table above. When Adjusted EBIT performance is between inflection points set forth above, linear interpolation is used to determine the payout amount.
For purposes of the 2021 AIP, Adjusted EBIT means the Company’s 2021 consolidated net income before interest and taxes, as adjusted by the Committee for events that are unusual in nature or infrequently occurring, including without limitation, a change in control, acquisitions, divestitures, restructuring activities, or asset write-downs, or for changes in applicable tax laws or accounting principles.
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2021 Annual Incentive Plan Payouts (paid in March 2022)
In February 2022, the Committee met and determined the degree to which the Adjusted EBIT goal under the 2021 AIP was achieved. Actual Adjusted EBIT results in 2021 were very strong at $398 million, resulting in a payout level of 200% of the Target Incentive amount for the CEO and 175% of the respective Target Incentive amounts for the other named executive officers. Adjusted EBIT is a non-GAAP financial measure. Refer to Appendix A to this Proxy Statement for a reconciliation of this non-GAAP financial measure to the corresponding GAAP measure.
As a result of the Compensation Committee’s determinations as described above, the following table sets forth the cash incentive payment amount to each named executive officer under the 2021 AIP:
| Name | 2021 Target Incentive | Cash Payout Under 2021 AIP | Actual as a % of Target | |||||||||
| Mr. Jason D. Lippert | $ | 2,500,000 | $ | 4,500,000 | (1) | 180 | %(1) | |||||
| Mr. Brian M. Hall | $ | 600,000 | $ | 1,050,000 | 175 | % | ||||||
| Mr. Ryan R. Smith | $ | 2,500,000 | $ | 4,375,000 | 175 | % | ||||||
| Mr. Jamie M. Schnur | $ | 1,200,000 | $ | 2,100,000 | 175 | % | ||||||
| Mr. Andrew J. Namenye | $ | 425,000 | $ | 743,750 | 175 | % | ||||||
| (1) | In determining the final cash incentive payment amount to the Mr. Lippert under the 2021 AIP, the Board of Directors elected to exercise negative discretion to reduce his cash payout based on Company policy infractions related to the use of Company email. |
Equity Grants
Equity grants help to align executive interests with those of our stockholders. The Compensation Committee uses both PSUs and RSUs in our annual equity long-term incentive grants to retain and motivate our executives to achieve long-term performance.
Annual Equity Long-Term Incentive Grants
Annual equity grants are typically made in March of each year.
The following criteria are evaluated for each of our named executive officers when determining the value of their annual equity award:
| ● | Performance over the long term; |
| ● | Performance during the prior year; |
| ● | Long-term potential; |
| ● | Retention considerations; and |
| ● | Market practices for comparable positions. |
In February 2021, the Compensation Committee approved the amounts, terms, and conditions for the equity grants to be awarded in March 2021 of PSUs and RSUs for the Company’s senior officers, including the named executive officers, pursuant to the 2018 Plan. For each of the named executive officers, a total dollar value for the equity grant was established based on the criteria listed above (“Equity Value”). That Equity Value is converted to units based on the 15-day average trading price through the date of grant. For 2021, the Equity Value was allocated based on a mix of 60% PSUs and 40% RSUs.
| 2021 Annual Performance Stock Units (PSUs) | 2021 Annual Restricted Stock Units (RSUs) | |
| Definition | Notional units that will be settled in shares of LCII common stock on a one-for-one basis, if and to the extent certain performance metrics are achieved and subject to any additional vesting period | Notional units that will be settled in shares of LCII common stock following the applicable vesting dates |
| % of Annual Equity Grant | 60% | 40% |
| Performance Metric | ROIC | Time/Service |
| Vesting | Two-year measurement period (2021-2022) with number of PSUs earned based on achievement of performance goals; followed by one-year holding period prior to vesting (March 2024) | Annually over three years |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 41
Performance Stock Units: 2021 ROIC PSUs
The PSUs awarded to the named executive officers consisted of PSUs based on the Company’s ROIC (as hereinafter defined) for the two-year period from 2021-2022 followed by a one-year holding period prior to vesting in March 2024 (the “2021 ROIC PSUs”). The ROIC performance goal for the two-year period was set at 20.8% (“Target”). The 2021 ROIC PSUs provide that the number of PSUs that could be earned range from 0% to 200% of the Equity Value allocated and converted to PSUs at the ROIC Target (“ROIC PSUs Target Number”) based on whether and to what extent the ROIC performance goal is met as shown in the table below:
| ROIC Performance | Multiple
of ROIC PSUs Target Number |
| <16.60% | 0.00x |
| 16.60% (Threshold) | 0.50x |
| 18.70% | 0.75x |
| 20.80% (Target) | 1.00x |
| 21.85% | 1.50x |
| 22.90% (Maximum) | 2.00x |
If ROIC performance is between inflection points, linear interpolation will be used to determine the number of earned 2021 ROIC PSUs.
The term “ROIC,” or “Return on Invested Capital,” means Operating Profit divided by Average Invested Capital, where: (i) “Operating Profit” is the Company’s fiscal year consolidated operating
profit, as detailed in the Company’s financial statements filed with the SEC; and (ii) “Average Invested Capital” is the average of the prior year end and current year quarterly (Total Stockholders Equity + Indebtedness) – (Cash, Cash Equivalents, and Short-Term Investments).
“Total Stockholders’ Equity” is the Company’s total stockholders’ equity as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC.
“Indebtedness” is the Company’s indebtedness as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC.
“Cash, Cash Equivalents, and Short-Term Investments” is the sum of the cash, cash equivalents, and short-term investments as of the particular measurement date, as detailed in the Company’s financial statements filed with the SEC.
In addition, the Committee may adjust ROIC to exclude the impact of the following: (i) accretion expense; (ii) goodwill impairment; (iii) charges for reorganizing or restructuring; (iv) charges from asset write-downs; (v) acquisitions or divestitures; (vi) foreign exchange gains or losses; and (vii) extraordinary, unusual, transition, one-time, and/ or non-recurring items as determined by the Committee from time to time.
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Restricted Stock Units
The annual RSUs granted in 2021 to the named executive officers vest over a three-year period, with one-third vesting each year on the anniversary of the grant date. The Compensation Committee believes the RSUs granted to our executives and team members constitute an effective incentive to achieving long-term Company success and are an important compensation component to our executives and team members. The number of RSUs granted to each named executive officer in 2021 was value-based after consideration by the Compensation Committee of factors and events relative to the Company’s performance, the expense related to the RSUs, resulting dilution, the element of motivation that equity awards provide, and other factors.
2021 Equity Long-Term Incentive Grant
The Equity Value awarded to each of the named executive officers, the amount allocated to PSUs and RSUs, and the conversions to number of units for PSUs at Target and RSUs based on the 15-day average trading value price of $146.41 through the date of grant, are as follows:
| Name | ROIC PSUs Target Number |
ROIC PSUs Target Value |
RSUs Number |
RSUs Value |
Target Value of Equity Grants |
|||||||||||||||
| Mr. Jason D. Lippert | 21,925 | $ | 3,210,000 | 14,617 | $ | 2,140,000 | $ | 5,350,000 | ||||||||||||
| Mr. Brian M. Hall | 4,508 | $ | 660,000 | 3,006 | $ | 440,000 | $ | 1,100,000 | ||||||||||||
| Mr. Ryan R. Smith | 5,123 | $ | 750,000 | 3,416 | $ | 500,000 | $ | 1,250,000 | ||||||||||||
| Mr. Jamie M. Schnur | 5,574 | $ | 816,000 | 3,716 | $ | 544,000 | $ | 1,360,000 | ||||||||||||
| Mr. Andrew J. Namenye | 2,972 | $ | 435,000 | 1,981 | $ | 290,000 | $ | 725,000 | ||||||||||||
Performance Results for 2019 ROIC & Diversification PSUs
The PSUs granted in 2019 (“2019 PSUs”) provided that the number of PSUs that could be earned was based on whether and to what extent ROIC performance goals for 2021 were satisfied, as well as whether and to what extent the diversification goals for 2021 were satisfied. In early 2022, the Compensation Committee determined that ROIC was achieved at 24%, resulting in performance at 148.6% of target, and that the diversification goals were not achieved, resulting in performance at 0% of target. The 2019 PSUs earned based on ROIC performance (“2019 ROIC PSUs”) are displayed below.
| 2019 ROIC PSUs (Granted at $82.16) |
2019 ROIC PSUs Target Value |
2019 ROIC PSUs
Earned at 148.6% of Target(2) |
||||||||||
| Mr. Jason D. Lippert | 31,646 | $ | 2,600,000 | 51,093 | ||||||||
| Mr. Brian M. Hall | 3,652 | $ | 300,000 | 5,896 | ||||||||
| Mr. Ryan R. Smith(1) | N/A | N/A | N/A | |||||||||
| Mr. Jamie M. Schnur | 4,017 | $ | 330,000 | 6,485 | ||||||||
| Mr. Andrew J. Namenye | 3,360 | $ | 276,000 | 5,425 | ||||||||
| (1) | Mr. Smith did not receive a 2019 ROIC PSU grant. |
| (2) | Includes dividends earned. |
The earned 2019 ROIC PSUs vested on March 7, 2022.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 43
Performance Results for 2020 ROIC PSUs
The ROIC PSUs granted in 2020 (“2020 ROIC PSUs”) provided that the number of PSUs that could be earned was based on whether and to what extent ROIC performance goals for the two-year period from January 1, 2020 through December 31, 2021 were satisfied. In early 2022, the Compensation Committee determined that ROIC was achieved at 24%, resulting in performance at 200% of target. The 2020 ROIC PSUs earned are displayed below.
| 2020 ROIC PSUs (Granted at $111.69) |
2020 ROIC PSUs Target Value |
2020 ROIC PSUs Earned at 200% of Target(2) |
||||||||||
| Mr. Jason D. Lippert | 28,741 | $ | 3,210,000 | 60,716 | ||||||||
| Mr. Brian M. Hall | 4,701 | $ | 525,000 | 9,930 | ||||||||
| Mr. Ryan R. Smith(1) | N/A | N/A | N/A | |||||||||
| Mr. Jamie M. Schnur | 4,191 | $ | 468,000 | 8,854 | ||||||||
| Mr. Andrew J. Namenye | 3,492 | $ | 390,000 | 7,376 | ||||||||
| (1) | Mr. Smith did not receive a 2020 ROIC PSU grant. |
| (2) | Includes dividends earned. |
The earned 2020 ROIC PSUs will vest on March 1, 2023, following a one-year holding period.
RETIREMENT SAVINGS PROGRAMS
In 2021, we provided retirement benefits to our named executive officers through the defined contribution retirement savings plan, which is the same plan available to all team members. We do not maintain any defined benefit retirement plans or other pension or profit-sharing plans.
In 2021, the Company matched a portion of contributions to the 401(k) plan up to the 2021 statutory maximum of $11,600 per team member. The aggregate amount of the Company’s contributions with respect to the named executive officers was $58,000 for 2021. Although our 401(k) plan permits profit-sharing contributions, the Company has not made any such contributions to the plan.
To provide a means for deferral of taxation on compensation, the Company maintains an Executive Non- Qualified Deferred Compensation Plan (the “Deferral Plan”) for certain executives, including the named executive officers. The Company does not make any contributions to the Deferral Plan, but is responsible for certain costs of Deferral Plan administration, which are not significant. Pursuant to the Deferral Plan, the named executive officers are eligible to defer all or a portion of their earned base salary and incentive compensation. Each participant is fully vested in all deferred compensation and earnings on investments credited to his or her account because the Deferral Plan participant has made all the contributions. Pursuant to the Deferral Plan, payments to the participants will be made from our general unrestricted assets, and the obligations pursuant to the Deferral Plan are unfunded and unsecured.
OTHER BENEFITS
As a competitive team member benefit, we provide team member health insurance in which the named executive officers participate, the aggregate cost of which for the named executive officers was $53,838 for 2021. We also provide other team member benefits in which the named executive officers participate, including life and disability insurance, and an automobile allowance together with related expenses. We do not provide or reimburse our executives for personal use of an airplane, or for financial planning, tax preparation, or home security.
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SEVERANCE
In February 2015, the Compensation Committee approved and adopted a form of Executive Employment Agreement for senior officers that has an initial three-year term with automatic one-year renewals and that provides severance payments or other benefits under certain circumstances following termination. The Compensation Committee believes the Executive Employment Agreements serve as appropriate retention tools for the Company’s executives by providing security in the event of an unplanned termination of employment for reasons other than cause. Furthermore, from time to time, we examine various strategic alternatives, and the provisions of the Executive Employment Agreements are important to retain these key executives whose continued employment might be at risk for reasons other than cause. The specific terms of the Executive Employment Agreements are summarized in “Potential Payments on Termination or Change-in Control” on page 55.
The 2011 Plan and the 2018 Plan, and the related award agreements, contain provisions regarding treatment of outstanding equity awards upon a change in control of the Company and upon certain terminations of employment, as further described in “Potential Payments on Termination or Change-in- Control” on page 55.
OTHER KEY FEATURES OF OUR
EXECUTIVE COMPENSATION PROGRAM
As we look to the future of the Company, we have adopted policies to help drive sustainable growth by further aligning the financial interests of our
executives and stockholders with long-term stock price performance. This will help limit excessive risk-taking and executive misconduct through stock ownership guidelines and a clawback policy, as outlined below.
Stock Ownership Guidelines
To further align the personal interests of senior executives with the interests of our stockholders, we have updated our guidelines for ownership of the Company’s common stock to include all of our NEOs, effective January 26, 2022. Stock ownership guidelines are set forth as a multiple of the executive’s cash base salary as of December 31, 2021, as displayed in the following table:
| Position |
Stock Ownership Guideline |
| CEO | 5 times base salary |
| All Other NEOs | 4 times base salary |
Equity interests that count toward satisfaction of the guidelines include shares owned outright by, or held in trust for the benefit of, the executive and his immediate family members residing in the same household, plus DSUs and RSUs (whether vested or unvested), as well as PSUs (if unearned, the target number is included, or if earned, the earned number is included, whether vested or unvested). These executives are required to achieve ownership in accordance with the guidelines within three years of the date they assume their position or the date the guidelines were updated, whichever occurs later. At December 31, 2021, all of the NEOs were in compliance with the guidelines or within the applicable three-year period.
Clawback Policy
The Dodd-Frank Act requires the SEC to adopt rules requiring companies to develop and implement a policy to recapture excess incentive compensation that was paid to certain executives if based on erroneous financial statements (“clawback”). Final rules have not yet been adopted implementing the clawback requirements. Rather than continue to wait for such rules, in 2014, the Board of Directors determined it was prudent to adopt a compensation recoupment policy for executive officers that allows for the recovery of performance-based compensation amounts paid under an incentive compensation plan, including any discretionary bonus amounts and equity awards under the 2011 Plan or 2018 Plan, or any successor plan, the amount, payment, and/or vesting of which was calculated based wholly, or in part, on the application of financial performance criteria. The policy applies in the event there is a required financial restatement due to material noncompliance with any financial reporting requirements under the securities laws, as determined by the Board of Directors, which results in performance-based compensation that would have been a lower amount if such compensation had been calculated based on such restated results. The policy is administered by the Compensation Committee, as more fully described in the policy. The Company may amend its policy when the SEC promulgates the final rules.
Additionally, all awards of incentive compensation are granted subject to the the 2018 Plan, which provides that the Compensation Committee may review any equity award if the amount, payment, or vesting of such award was based on an entry in the financial statements that is the subject of a restatement, and cancel all or any portion of such awards and require the participant to repay to the Company all or any portion of the gain realized on the exercise of equity awards and the value realized on other awards.
Impact of Tax Treatment on Compensation
Section 162(m) of the Code limits deductibility of compensation paid to certain executive officers to $1 million per covered officer in any fiscal year. The Committee believes that stockholder interests are best served if its discretion and flexibility in structuring and awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expenses to the Company. The Committee also takes into account whether components of our compensation program may be subject to the penalty tax associated with Section 409A of the Code and aims to structure the elements of compensation to be compliant with or exempt from Section 409A to avoid such potential adverse tax consequences.
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REPORT OF THE COMPENSATION COMMITTEE
We have reviewed and discussed with Management the Compensation Discussion and Analysis. Based on this review and discussion, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated into our 2021 Annual Report on Form 10-K.
Respectfully submitted,
The Compensation Committee of the Board of Directors
Frank J. Crespo, Chairman
Brendan J. Deely
Virginia L. Henkels
Stephanie K. Mains
The foregoing Compensation Committee Report shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into a filing.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 47
The following table sets forth the annual compensation awarded to or earned by our Named Executive Officers for the years ended December 31, 2021, 2020, and 2019:
SUMMARY COMPENSATION TABLE
|
Name and Principal Position |
Year | Salary(1) | Bonus(2) |
Stock Awards(3) |
Non-Equity Incentive Plan Compensation(4) |
All Other Compensation(5) |
Total | ||||||||||||||||||||
| Jason D. Lippert | 2021 | $ | 1,085,620 | $ | -- | $ | 5,245,239 | $ | 4,500,000 | $ | 162,891 | $ | 10,993,750 | ||||||||||||||
| President and Chief Executive Officer | 2020 | $ | 1,013,462 | $ | -- | $ | 5,316,527 | $ | 2,990,184 | $ | 189,578 | $ | 9,509,751 | ||||||||||||||
| 2019 | $ | 1,004,250 | $ | -- | $ | 7,567,765 | $ | 1,226,253 | $ | 297,369 | $ | 10,095,637 | |||||||||||||||
| Brian M. Hall | 2021 | $ | 500,000 | $ | -- | $ | 1,078,559 | $ | 1,050,000 | $ | 60,588 | $ | 2,689,147 | ||||||||||||||
|
Executive Vice President and Chief Financial Officer
|
2020 | $ | 465,231 | $ | -- | $ | 912,109 | $ | 623,085 | $ | 57,737 | $ | 2,058,162 | ||||||||||||||
| 2019 | $ | 450,000 | $ | -- | $ | 789,224 | $ | 274,739 | $ | 56,817 | $ | 1,570,780 | |||||||||||||||
| Ryan R. Smith(6) | 2021 | $ | 750,000 | $ | -- | $ | 1,225,688 | $ | 4,375,000 | $ | 78,504 | $ | 6,429,192 | ||||||||||||||
| Group President - North America | 2020 | $ | 576,923 | $ | -- | $ | 389,097 | $ | 2,179,414 | $ | 44,024 | $ | 3,189,458 | ||||||||||||||
| Jamie M. Schnur | 2021 | $ | 600,000 | $ | -- | $ | 1,333,487 | $ | 2,100,000 | $ | 67,737 | $ | 4,101,224 | ||||||||||||||
| Group President - Aftermarket | 2020 | $ | 492,308 | $ | -- | $ | 847,323 | $ | 923,085 | $ | 63,902 | $ | 2,326,618 | ||||||||||||||
| 2019 | $ | 450,000 | $ | 200,000 | $ | 1,267,413 | $ | 305,266 | $ | 76,545 | $ | 2,299,224 | |||||||||||||||
| Andrew J. Namenye | 2021 | $ | 445,578 | $ | -- | $ | 710,954 | $ | 743,750 | $ | 51,525 | $ | 1,951,807 | ||||||||||||||
| Executive Vice President, Chief Legal Officer, and Corporate Secretary | 2020 | $ | 425,945 | $ | -- | $ | 682,995 | $ | 461,308 | $ | 52,878 | $ | 1,623,126 | ||||||||||||||
| 2019 | $ | 412,000 | $ | -- | $ | 763,712 | $ | 207,581 | $ | 54,269 | $ | 1,437,562 | |||||||||||||||
| (1) | With respect to 2020, the amounts in this column reflect base salary for 2020 less the temporary eight-week COVID-19 reductions. |
| (2) | In March 2019, the Committee approved a special bonus to be paid to Mr. Schnur in 2019 in recognition of taking on additional responsibilities outside of his role. |
| (3) | The amounts in this column represent the aggregate grant date fair value of the stock awards granted in that year determined in accordance with Accounting Standards Codification Topic 718 (“ASC 718”). For a discussion of assumptions made in determining the grant date fair value, see Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. The stock awards consist of, as applicable: (i) with respect to 2021, the 2021 ROIC PSUs and annual awards of RSUs; (ii) with respect to 2020, the 2020 ROIC PSUs and annual awards of RSUs; and (iii) with respect to 2019, annual awards of the 2019 PSUs (including both the PSUs based on the Company’s ROIC for 2021 and the PSUs to be earned depending on the extent to which the Company’s revenues are diversified for 2021), annual awards of RSUs, and special awards of RSUs in connection with the NEO’s agreement to extend the time period of the restrictive covenants in his employment agreement by an additional 12 months (the “Extension RSUs”). |
48 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
The amounts included in the previous table for the annual equity awards that are subject to performance conditions represent the value at the grant date based on the probable outcome of the applicable performance conditions. The following table presents the grant date fair value of the performance-based stock awards included in the “Stock Awards” column and the grant date fair value of these awards assuming that the highest level of performance conditions would be achieved:
| 2021 ROIC PSUs | 2020 ROIC PSUs | 2020 EBITDA PSUs | 2019 PSUs | |||||||||||||||||||||||||||||
| Name | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | Grant Date Fair Value (Based on Probable Outcome) | Grant Date Fair Value (Based on Maximum Performance) | ||||||||||||||||||||||||
| Jason D. Lippert | $ | 3,147,115 | $ | 6,294,230 | $ | 2,774,944 | $ | 5,549,888 | $ | 691,588 | $ | 1,383,176 | $ | 2,719,087 | $ | 5,438,174 | ||||||||||||||||
| Brian M. Hall | $ | 647,078 | $ | 1,294,156 | $ | 453,882 | $ | 907,764 | $ | 155,639 | $ | 311,278 | $ | 313,768 | $ | 627,536 | ||||||||||||||||
| Ryan R. Smith | $ | 735,355 | $ | 1,470,710 | N/A | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||||||
| Jamie M. Schnur | $ | 800,092 | $ | 1,600,184 | $ | 404,641 | $ | 809,282 | $ | 172,921 | $ | 345,842 | $ | 345,168 | $ | 690,336 | ||||||||||||||||
| Andrew J. Namenye | $ | 426,601 | $ | 853,202 | $ | 337,153 | $ | 674,306 | $ | 121,074 | $ | 242,148 | $ | 288,695 | $ | 577,389 | ||||||||||||||||
The following table presents the grant date fair value of the RSU awards included in the “Stock Awards” column:
| Name | 2021 Annual RSUs |
2020 Annual RSUs |
2019 Extension RSUs |
2019 Annual RSUs |
||||||||||||
| Jason D. Lippert | $ | 2,098,124 | $ | 1,849,995 | $ | 2,376,809 | $ | 2,471,869 | ||||||||
| Brian M. Hall | $ | 431,481 | $ | 302,588 | $ | 285,258 | $ | 190,198 | ||||||||
| Ryan R. Smith(6) | $ | 490,333 | $ | 389,097 | N/A | N/A | ||||||||||
| Jamie M. Schnur | $ | 533,395 | $ | 269,761 | $ | 713,066 | $ | 209,179 | ||||||||
| Andrew J. Namenye | $ | 284,353 | $ | 224,768 | $ | 300,051 | $ | 174,966 | ||||||||
| (4) | The amounts in this column represent: (i) for 2021, bonus payment amounts earned pursuant to the 2021 AIP; (ii) for 2020, bonus payment amounts earned pursuant to the 2020 AIP, except in the case of Mr. Smith, the bonus payment amount earned pursuant to the non-NEO cash incentive program in which he participated; and (iii) for 2019, bonus payment amounts earned pursuant to the 2019 AIP. With respect to Mr. Schnur, the amount reported for 2020 includes an additional incentive of $300,000 for the achievement of certain performance goals. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 49
| (5) | Amounts shown in this column include the following payments the Company made to or on behalf of our NEOs: |
| Name | Year | Dividend Equivalent Unit Value(A) |
401(k) Matching Contribution |
Health Insurance |
Other Perquisites(B) |
Total All Other Compensation |
|||||||||||||||||
| Jason D. Lippert | 2021 | $ | 127,331 | $ | 11,600 | $ | 10,849 | $ | 13,111 | $ | 162,891 | ||||||||||||
| 2020 | $ | 156,260 | $ | 11,400 | $ | 9,323 | $ | 12,595 | $ | 189,578 | |||||||||||||
| 2019 | $ | 249,954 | $ | 11,200 | $ | 9,470 | $ | 26,745 | $ | 297,369 | |||||||||||||
| Brian M. Hall | 2021 | $ | 26,183 | $ | 11,600 | $ | 11,629 | $ | 11,176 | $ | 60,588 | ||||||||||||
| 2020 | $ | 26,808 | $ | 11,400 | $ | 10,118 | $ | 9,411 | $ | 57,737 | |||||||||||||
| 2019 | $ | 26,067 | $ | 11,200 | $ | 9,470 | $ | 10,080 | $ | 56,817 | |||||||||||||
| Ryan R. Smith | 2021 | $ | 29,754 | $ | 11,600 | $ | 8,882 | $ | 28,268 | $ | 78,504 | ||||||||||||
| 2020 | $ | 11,436 | $ | 11,400 | $ | 9,323 | $ | 11,865 | $ | 44,024 | |||||||||||||
| Jamie M. Schnur | 2021 | $ | 32,371 | $ | 11,600 | $ | 11,629 | $ | 12,137 | $ | 67,737 | ||||||||||||
| 2020 | $ | 24,904 | $ | 11,400 | $ | 10,118 | $ | 17,480 | $ | 63,902 | |||||||||||||
| 2019 | $ | 41,861 | $ | 11,200 | $ | 9,470 | $ | 14,014 | $ | 76,545 | |||||||||||||
| Andrew J. Namenye | 2021 | $ | 17,259 | $ | 11,600 | $ | 10,849 | $ | 11,817 | $ | 51,525 | ||||||||||||
| 2020 | $ | 20,074 | $ | 11,400 | $ | 10,118 | $ | 11,286 | $ | 52,878 | |||||||||||||
| 2019 | $ | 17,512 | $ | 11,200 | $ | 9,470 | $ | 16,087 | $ | 54,269 | |||||||||||||
| (A) | Represents the dollar value of dividend equivalents credited on stock awards in the applicable year, when those amounts were not factored into the grant date fair value of the award. |
| (B) | Other perquisites included automobile allowance and related expenses, costs of spousal travel for Company events, and long-term disability insurance. |
| (6) | As permitted by the SEC, because 2020 was Mr. Smith’s first year as a Named Executive Officer, the compensation paid to him prior to 2020 is not included in this table. |
50 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
Grants of Plan-Based Awards Table
The following table summarizes the RSUs and PSUs granted to the NEOs in 2021, as well potential payouts under the 2021 AIP:
GRANTS OF PLAN-BASED AWARDS IN 2021
| Estimated Possible Payouts
Under Non- Equity Incentive Plan Awards(1) |
Estimated Future Payouts Under Equity Incentive Plan Awards |
|
||||||||||||||||||
| Name | Grant Date | Date of Compensation Committee Approval |
Threshold | Target | Maximum | Threshold | Target | Maximum | All Other Stock Awards: Number of Shares of Stock or Units |
Grant
Date Fair Value of Stock and Option Awards(4) |
||||||||||
| Jason D. Lippert | 03/01/21 | 02/27/21 | -- | -- | -- | 14,617(2) | $2,098,124 | |||||||||||||
| 03/01/21 | 02/27/21 | 10,963(3) | 21,925(3) | 43,850(3) | -- | $3,147,115 | ||||||||||||||
| 02/27/21 | $1,250,000 | $2,500,000 | $5,000,000 | |||||||||||||||||
| Brian M. Hall | 03/01/21 | 02/27/21 | -- | -- | -- | 3,006(2) | $431,481 | |||||||||||||
| 03/01/21 | 02/27/21 | 2,254(3) | 4,508(3) | 9,016(3) | -- | $647,078 | ||||||||||||||
| 02/27/21 | $300,000 | $600,000 | $1,050,000 | |||||||||||||||||
| Ryan R. Smith | 03/01/21 | 02/27/21 | -- | -- | -- | 3,416(2) | $490,333 | |||||||||||||
| 03/01/21 | 02/27/21 | 2,562(3) | 5,123(3) | 10,246(3) | -- | $735,355 | ||||||||||||||
| 02/27/21 | $1,250,000 | $2,500,000 | $4,375,000 | |||||||||||||||||
| Jamie M. Schnur | 03/01/21 | 02/27/21 | -- | -- | -- | 3,716(2) | $533,395 | |||||||||||||
| 03/01/21 | 02/27/21 | 2,787(3) | 5,574(3) | 11,148(3) | -- | $800,092 | ||||||||||||||
| 02/27/21 | $600,000 | $1,200,000 | $2,100,000 | |||||||||||||||||
| Andrew J. Namenye | 03/01/21 | 02/27/21 | -- | -- | -- | 1,981(2) | $284,353 | |||||||||||||
| 03/01/21 | 02/27/21 | 1,486(3) | 2,972(3) | 5,944(3) | -- | $426,601 | ||||||||||||||
| 02/27/21 | $212,500 | $425,000 | $743,750 | |||||||||||||||||
| (1) | Amounts shown in this column represent the potential cash payout amounts under the 2021 AIP for all of the NEOs. The actual payout amounts related to 2021 performance are disclosed in the Summary Compensation Table in the “Non-Equity Incentive Plan Compensation” column. |
| (2) | Represents the annual grant of RSUs, which vest ratably each year on the first through the third anniversaries of the respective grant date. |
| (3) | Represents 2021 ROIC PSUs that would be earned depending on the level of achievement of ROIC-related performance goals over the two-year measurement period of 2021-2022. The final number of units earned could be from 50% of target for performance at the threshold level up to 200% of target for maximum performance. Earned 2021 ROIC PSUs will vest on March 1, 2024. |
| (4) | Amounts represent the grant date fair value of the awards determined in accordance with ASC 718. For a discussion of assumptions made in determining the grant date fair value, see Note 2 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2021. Amounts related to PSUs represent the value at the grant date based upon the probable outcome of the performance conditions. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 51
Grants of Plan-Based Awards
In February 2021, the Compensation Committee approved the 2021 AIP, under which participants could earn incentive compensation based on the level of achievement of certain financial performance measurements in 2021, which for 2021 was based on goals for Adjusted EBIT. In February 2021, the Compensation Committee approved the grant of the 2021 ROIC PSUs and the annual RSUs under the 2018 Plan to the named executive officers. For additional information regarding the 2021 AIP and these equity awards, see “Compensation Discussion and Analysis - Analysis of 2021 Compensation Decisions.”
Equity Award and Incentive Plans
On May 24, 2018, our stockholders approved the 2018 Plan, which provides that the number of shares of our Common Stock that may be the subject of awards and issued under the 2018 Plan is 1,500,000, plus shares subject to any awards outstanding as of
May 24, 2018 under the 2011 Plan that subsequently expire, are forfeited or canceled, are settled for cash, are not issued in shares, or are tendered or withheld to pay the exercise price or satisfy any tax withholding obligations related to the award. Following our stockholders’ approval of the 2018 Plan, no further awards may be made under the 2011 Plan. Executive officers and other team members of the Company and its subsidiaries and affiliates, and non-employee Directors, consultants, and others who provide substantial services to the Company and its subsidiaries and affiliates, are eligible to be granted awards under the 2018 Plan. Under the 2018 Plan, the Compensation Committee is authorized to grant stock options, stock appreciation rights, restricted stock awards, stock unit awards, other stock-based awards, and cash incentive awards. There were 1,195,993 shares of our Common Stock available for future awards under the 2018 Plan as of December 31, 2021, which number is calculated using the target number of outstanding PSU awards.
Outstanding Equity Awards at Fiscal Year-End
The following table summarizes the number of shares of Common Stock underlying outstanding unvested equity awards held by each NEO as of December 31, 2021:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| Stock Awards | ||||||||||||||||
| Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or Other Rights That Have Not Vested | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested(1) | |||||||||||
| 03/07/19 | 11,460 |
(2) | $ | 1,786,270 | -- | -- | ||||||||||
| 03/07/19 | 11,020 |
(2) | $ | 1,717,687 | -- | -- | ||||||||||
| 03/01/20 | 13,493 |
(3) | $ | 2,103,154 | -- | -- | ||||||||||
| Jason D. Lippert | 03/01/20 | 60,716 |
(4) | $ | 9,463,803 | -- | -- | |||||||||
| 03/01/21 | 14,995 |
(5) | $ | 2,337,271 | -- | -- | ||||||||||
| 03/01/21 | -- | -- | 22,492 (6) | $ 3,505,828 | ||||||||||||
| 03/07/19 | 881 |
(2) | $ | 137,321 | -- | -- | ||||||||||
| 03/07/19 | 1,322 |
(2) | $ | 206,060 | -- | -- | ||||||||||
| 03/01/20 | 2,207 |
(3) | $ | 344,005 | -- | -- | ||||||||||
| Brian M. Hall | 03/01/20 | 9,930 |
(4) | $ | 1,547,789 | -- | -- | |||||||||
| 03/01/21 | 3,084 |
(5) | $ | 480,703 | -- | -- | ||||||||||
| 03/01/21 | -- |
-- | 4,625 (6) | $ 720,899 | ||||||||||||
| 03/07/19 | 2,007 |
(2) | $ | 312,831 | -- | -- | ||||||||||
| 03/07/19 | 3,306 |
(2) | $ | 515,306 | -- | -- | ||||||||||
| Ryan R. Smith | 03/01/20 | 2,837 |
(3) | $ | 442,203 | -- | -- | |||||||||
| 03/01/21 | 3,504 |
(5) | $ | 546,168 | -- | -- | ||||||||||
| 03/01/21 | -- |
-- | 5,255 (6) | $ 819,097 | ||||||||||||
| 03/07/19 | 969 |
(2) | $ | 151,038 | -- | -- | ||||||||||
| 03/07/19 | 3,306 |
(2) | $ | 515,306 | -- | -- | ||||||||||
| 03/01/20 | 1,967 |
(3) | $ | 306,596 | -- | -- | ||||||||||
| Jamie M. Schnur | 03/01/20 | 8,854 |
(4) | $ | 1,380,073 | -- | -- | |||||||||
| 03/01/21 | 3,812 |
(5) | $ | 594,176 | -- | -- | ||||||||||
| 03/01/21 | -- |
-- | 5,718 (6) | $ 891,265 | ||||||||||||
| 03/07/19 | 811 |
(2) | $ | 126,411 | -- | -- | ||||||||||
| 10/08/19 | 1,198 |
(7) | $ | 186,732 | -- | -- | ||||||||||
| 03/01/20 | 1,639 |
(3) | $ | 255,471 | -- | -- | ||||||||||
| Andrew J. Namenye | 03/01/20 | 7,376 |
(4) | $ | 1,149,697 | -- | -- | |||||||||
| 03/01/21 | 2,032 |
(5) | $ | 316,728 | -- | -- | ||||||||||
| 03/01/21 | -- | -- | 3,049 (6) | $ 475,248 | ||||||||||||
| (1) | Market value determined based on the closing market price of our Common Stock on December 31, 2021, of $155.87 per share, multiplied by the number of underlying shares not yet vested. |
| (2) | Represents RSU awards, including dividends thereon, where applicable, that vest ratably each year on the first through the third anniversaries of the respective March 7th following the grant date. |
| (3) | Represents RSU awards, including dividends thereon, where applicable, that vest ratably each year on the first through the third anniversaries of the respective March 1st following the grant date. |
| (4) | Represents the 2020 ROIC PSUs, including dividends thereon, where applicable, that are earned based on achievement of ROIC over the two-year measurement period of 2020-2021 and will vest on March 1, 2023. |
| (5) | Represents RSU awards, including dividends thereon, where applicable, that vest ratably each year on the first through the third anniversaries of the respective grant date. See “Executive Compensation - Compensation Discussion and Analysis - Analysis of 2021 Compensation Decisions.” |
| (6) | Represents PSU awards, including dividends thereon, where applicable, that are earned based on achievement of ROIC over the two-year measurement period of 2021-2022 and vest on March 1, 2024. See “Executive Compensation - Compensation Discussion and Analysis - Analysis of 2021 Compensation Decisions.” |
| (7) | Represents RSU awards, including dividends thereon, where applicable, that vest ratably each year on the first through the third anniversaries of the respective December 1st following the grant date. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 53
Option Exercises and Stock Vested
The following table presents the value realized by the NEOs on the vesting of stock-based awards in 2021. None of our NEOs hold any stock options, and therefore no stock options were exercised in 2021.
OPTION EXERCISES AND STOCK VESTED IN 2021
| Stock Awards | ||||||||
| Name | Number of Shares Acquired on Vesting(1) |
Value Realized on Vesting(2) |
||||||
| Jason D. Lippert | 83,687 | $ | 10,111,087 | |||||
| Brian M. Hall | 9,349 | $ | 1,126,030 | |||||
| Ryan R. Smith | 7,474 | $ | 1,043,263 | |||||
| Jamie M. Schnur | 11,927 | $ | 1,457,918 | |||||
| Andrew J. Namenye | 8,679 | $ | 1,069,896 | |||||
| (1) | Includes (a) time-based RSUs which vested in 2021; and (b) 2019 PSUs that were earned based on achievement of ROIC-related performance goals over 2021 and vested on March 7, 2022. |
| (2) | Value realized calculated by multiplying the number of shares vested by the closing price of our Common Stock as reported by the NYSE on the vesting date. |
Non-Qualified Deferred Compensation
The Company maintains an Executive Non-Qualified Deferred Compensation Plan. The Company does not make any contributions to the Deferral Plan, but is responsible for certain costs of administration, which are not significant. Pursuant to the Deferral Plan, the NEOs are eligible to defer all or a portion of their earned base salary and incentive compensation. The Deferral Plan participant is fully vested in all deferred compensation and earnings credited to the participant’s account because the participant has made all the contributions. Pursuant to the Deferral Plan, payments to the participants will be made from the Company’s general unrestricted assets, and the obligations pursuant to the Deferral Plan are unfunded and unsecured.
The Deferral Plan participant’s account is deemed invested (but is not actually invested) among various deemed investment alternatives selected by the participant. The Company has elected to invest a portion of the compensation deferred by the participant in life insurance policies for the benefit of the Company. The investments within these life insurance policies track the deemed investments selected by the participant in order to generate the funds needed to make payments to the participants. The deemed investments selected by the participant determine the amount of earnings and losses that are credited to the participant’s account.
54 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
The following table summarizes activity in the Deferral Plan by those NEOs who participated in 2021:
NON-QUALIFIED DEFERRED COMPENSATION IN 2021
| Name |
Executive Contributions in 2021(1) |
Aggregate Earnings in 2021(2) |
Aggregate Withdrawals/ Distributions in 2021 |
Aggregate Balance at December 31, 2021(3) |
||||||||||||
| Jason D. Lippert | $ | 1,196,074 | $ | 1,735,534 | $ | -- | $ | 14,966,119 | (4) | |||||||
| Brian M. Hall | $ | -- | $ | 60,837 | $ | -- | $ | 516,630 | (5) | |||||||
| Ryan R. Smith | $ | 250,000 | $ | 6,298 | $ | -- | $ | 256,298 | ||||||||
| Jamie M. Schnur | $ | 311,543 | $ | 462,114 | $ | -- | $ | 3,979,385 | (6) | |||||||
| Andrew J. Namenye | $ | -- | $ | -- | $ | -- | $ | -- | ||||||||
| (1) | The executive contributions in 2021 were withheld from each NEO’s Non-Equity Incentive Plan Compensation in the Summary Compensation Table. |
| (2) | Amounts represent earnings or losses on the executives’ contributions, and have not been included in the Summary Compensation Table. |
| (3) | Amounts reported in this column previously were reported as compensation to the NEO in the Summary Compensation Table for the previous years. |
| (4) | Includes cumulative contributions by the participant of $8,592,419, as well as cumulative earnings of $6,373,700. |
| (5) | Includes cumulative contributions by the participant of $330,752, as well as cumulative earnings of $185,878. |
| (6) | Includes cumulative contributions by the participant of $2,619,950, as well as cumulative earnings of $1,642,769, and cumulative withdrawals of $283,334. |
Potential Payments on Termination or Change-In-Control
Executive Employment Agreements
Each of the NEOs is party to an Executive Employment Agreement with the Company. The Executive Employment Agreements have an initial three-year term with automatic one-year renewals, and provide severance payments or other benefits under certain circumstances following termination.
In the event of a termination by the Company without cause (as defined in the agreement) or by the executive for good reason (as defined in the agreement), the executive (including each of the NEOs) would be entitled to: (i) an amount equivalent to two years of base salary (at the highest annualized rate in effect at any time within two years of the termination date)1, (ii) an amount equivalent to two times his or her average bonus during the prior three years (with the average capped at his or her then-current base salary)2, (iii) amounts payable under the then-current management incentive plan, (iv) accelerated vesting of time-based equity awards, (v) a lump sum amount equivalent to 12 months of COBRA premiums, and (vi) outplacement services for at least six months. The salary and bonus amounts would be paid out in equal weekly payments on the regular payroll cycle over the 24-month period following the termination.
In the event of a termination on account of death, the executive would be entitled to: (i) an amount equivalent to one year of base salary, (ii) incentive compensation (excluding equity awards) that the executive would have been entitled to receive at the end of the year, (iii) accelerated vesting of time-based equity awards, and (iv) performance stock awards remaining outstanding subject to their terms. The base salary portion would be paid out in equal weekly payments on the regular payroll cycle, and incentive compensation would be calculated and paid in accordance with the terms of the applicable plan.
1 Mr. Smith’s Executive Employment Agreement provides for an amount equivalent to three years of base salary (at the highest annualized rate in effect at any time within two years of the termination date).
2 Mr. Smith’s Executive Employment Agreement provides for an amount equivalent to three times his average bonus during the prior three years (with the average capped at his then-current base salary).
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 55
In the event of a termination on account of disability, the executive would be entitled to: (i) the difference between the executive’s base salary and the amount of disability payments received pursuant to disability insurance provided in accordance with the agreement, for a period of one year, (ii) incentive compensation (excluding equity awards) that the executive would have been entitled to receive at the end of the year, (iii) accelerated vesting of time-based equity awards, (iv) performance stock awards remaining outstanding subject to their terms, and (v) a lump sum amount equivalent to 12 months of COBRA premiums. The base salary portion would be paid out in equal weekly payments on the regular payroll cycle, and incentive compensation would be calculated and paid in accordance with the terms of the applicable plan.
Executives must sign and not revoke a general release in favor of the Company in order to receive severance or disability amounts under the Executive Employment Agreements. The Executive Employment Agreements for each of the NEOs, excluding Mr. Smith, also include restrictive covenants with respect to non-competition and non-solicitation for a 36-month period following termination of employment and with respect to confidentiality. Mr. Smith’s Executive Employment Agreement includes restrictive covenants with respect to non-competition and non-solicitation for a 48-month period following termination of employment and with respect to confidentiality.
The 2011 Plan and Award Agreements
The 2011 Plan and the related award agreements provide for accelerated vesting under certain circumstances. With respect to DSUs granted under the 2011 Plan, in the event of a termination of employment by the Company without cause, a termination by the executive for good reason, death, disability, or a change in control of the Company, all unvested DSUs would become fully vested.
With respect to RSUs granted under the 2011 Plan, which includes the RSUs granted to the NEOs in 2018, all unvested RSUs would become fully vested in the event of (i) the executive’s death or disability; (ii) a termination of employment by the Company without cause or a termination by the executive for good reason; (iii) a change in control of the Company in which the surviving or successor entity does not continue, assume, or replace unvested RSUs; and (iv) a termination of employment by the Company without cause or a termination by the executive for good reason within 24 months after a change in control of the Company in which the surviving or successor entity continues, assumes, or replaces unvested RSUs.
With respect to PSUs granted under the 2011 Plan, which includes the PSUs granted to the NEOs in 2018, in the event of: (i) an executive’s death or disability, (a) if that event occurs before the last day of the performance period, the target number of PSUs, prorated, will be deemed earned and will fully vest, and (b) if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest; (ii) a termination of employment by the Company without cause or a termination by the executive for good reason, if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest; and (iii) a change in control of the Company in which the surviving or successor entity does not continue, assume, or replace unvested PSUs or a termination of employment by the Company without cause or a termination by the executive for good reason within 24 months after a change in control of the Company in which the surviving or successor entity continues, assumes, or replaces unvested PSUs, (a) if that event occurs before the last day of the performance period, the target number of PSUs, prorated, will be deemed earned and will fully vest, and (b) if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest.
The 2018 Plan and Award Agreements
The 2018 Plan and the related award agreements provide for accelerated vesting under certain circumstances. With respect to RSUs granted under the 2018 Plan, which includes the RSUs granted to the NEOs in 2019, 2020, and 2021, all unvested RSUs would become fully vested in the event of: (i) the executive’s death or disability; (ii) an approved retirement, a termination of employment by the Company without cause, or a termination by the executive for good reason, except for RSUs with respect to which less than one year has elapsed since the grant date; (iii) a change in control of the Company in which the surviving or successor entity does not continue, assume, or replace unvested RSUs; and (iv) a termination of employment by the Company without cause or a termination by the executive for good reason within 24 months after a change in control of the Company in which the surviving or successor entity continues, assumes, or replaces unvested RSUs.
56 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
With respect to the PSUs granted under the 2018 Plan, which include all PSUs granted in 2019, 2020, and 2021, in the event of: (a) an executive’s death or disability, (1) if that event occurs before the last day of the performance period, the target number of PSUs, prorated, will be deemed earned and will fully vest, and (2) if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest; (b) an executive’s approved retirement, a termination of employment by the Company without cause, or a termination by the executive for good reason, if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest; and (c) a change in control of the Company in which the
surviving or successor entity does not continue, assume, or replace unvested PSUs or a termination of employment by the Company without cause or a termination by the executive for good reason within 24 months after a change in control of the Company in which the surviving or successor entity continues, assumes, or replaces unvested PSUs, (1) if that event occurs before the last day of the performance period, the target number of PSUs, prorated, will be deemed earned and will fully vest, and (2) if that event occurs after the conclusion of the performance period, a number of PSUs based on the actual level of achievement of the performance goals will be deemed earned and will fully vest.
Potential Payments on Termination or Change-in-Control Table
The table below reflects the estimated value of compensation and benefits payable to each of the NEOs upon the occurrence of certain events. The amounts in the table are based on a hypothetical termination or change in control date of December 31, 2021.
|
Name/Benefit |
Involuntary Termination Without Cause or for Good Reason |
Involuntary Termination Due to Disability(2) |
Involuntary Termination Due to Death |
Change in Control; Awards not Assumed or Involuntary Termination Without Cause or for Good Reason Within 24 Months after a Change in Control (3) |
||||||||||||
| Jason D. Lippert | ||||||||||||||||
| Base salary | $ | 2,171,240 | $ | 1,085,620 | $ | 1,085,620 | $ | -- | ||||||||
| Annual bonus | $ | 2,171,240 | $ | -- | $ | -- | $ | -- | ||||||||
| Current AIP | $ | 4,500,000 | $ | 4,500,000 | $ | 4,500,000 | $ | -- | ||||||||
| Other benefits | $ | 68,823 | $ | 19,248 | $ | -- | $ | -- | ||||||||
| Acceleration of unvested equity | $ | 7,944,382 | $ | 12,070,105 | $ | 12,070,105 | $ | 12,070,105 | ||||||||
| Total Benefits(1) | $ | 16,855,685 | $ | 17,674,973 | $ | 17,655,725 | $ | 12,070,105 | ||||||||
| Brian M. Hall | ||||||||||||||||
| Base salary | $ | 1,000,000 | $ | 500,000 | $ | 500,000 | $ | -- | ||||||||
| Annual bonus | $ | 1,000,000 | $ | -- | $ | -- | $ | -- | ||||||||
| Current AIP | $ | 1,050,000 | $ | 1,050,000 | $ | 1,050,000 | $ | -- | ||||||||
| Other benefits | $ | 67,675 | $ | 19,248 | $ | -- | $ | -- | ||||||||
| Acceleration of unvested equity | $ | 1,168,090 | $ | 1,890,807 | $ | 1,890,807 | $ | 1,890,807 | ||||||||
| Total Benefits(1) | $ | 4,285,765 | $ | 3,460,055 | $ | 3,440,807 | $ | 1,890,807 | ||||||||
| Ryan R. Smith | ||||||||||||||||
| Base salary | $ | 2,250,000 | $ | 750,000 | $ | 750,000 | $ | -- | ||||||||
| Annual bonus | $ | 2,250,000 | $ | -- | $ | -- | $ | -- | ||||||||
| Current AIP | $ | 4,375,000 | $ | 4,375,000 | $ | 4,375,000 | $ | -- | ||||||||
| Other benefits | $ | 73,438 | $ | 19,248 | $ | -- | $ | -- | ||||||||
| Acceleration of unvested equity | $ | 1,816,509 | $ | 2,082,683 | $ | 2,082,683 | $ | 2,082,683 | ||||||||
| Total Benefits(1) | $ | 10,764,947 | $ | 7,226,931 | $ | 7,207,683 | $ | 2,082,683 | ||||||||
| Jamie M. Schnur | ||||||||||||||||
| Base salary | $ | 1,200,000 | $ | 600,000 | $ | 600,000 | $ | -- | ||||||||
| Annual bonus | $ | 1,200,000 | $ | -- | $ | -- | $ | -- | ||||||||
| Current AIP | $ | 2,100,000 | $ | 2,100,000 | $ | 2,100,000 | $ | -- | ||||||||
| Other benefits | $ | 69,123 | $ | 19,248 | $ | -- | $ | -- | ||||||||
| Acceleration of unvested equity | $ | 1,567,117 | $ | 2,292,224 | $ | 2,292,224 | $ | 2,292,224 | ||||||||
| Total Benefits(1) | $ | 6,136,240 | $ | 5,011,472 | $ | 4,992,224 | $ | 2,292,224 | ||||||||
| Andrew J. Namenye | ||||||||||||||||
| Base salary | $ | 891,156 | $ | 445,578 | $ | 445,578 | $ | -- | ||||||||
| Annual bonus | $ | 891,156 | $ | -- | $ | -- | $ | -- | ||||||||
| Current AIP | $ | 743,750 | $ | 743,750 | $ | 743,750 | $ | -- | ||||||||
| Other benefits | $ | 67,186 | $ | 19,248 | $ | -- | $ | -- | ||||||||
| Acceleration of unvested equity | $ | 885,342 | $ | 1,402,622 | $ | 1,402,622 | $ | 1,402,622 | ||||||||
| Total Benefits | $ | 3,478,590 | $ | 2,611,198 | $ | 2,591,950 | $ | 1,402,622 | ||||||||
| (1) | Deferred compensation balances are not included above as the Deferral Plan participant is fully vested in all deferred compensation and earnings credited to the participant’s account because the participant has made all the contributions. For additional information regarding the NEOs’ deferred compensation balances under the Deferral Plan, see the Non-Qualified Deferred Compensation Table. |
| (2) | Amounts payable by the Company will be reduced by the disability payments received by the executive. |
| (3) | Upon involuntary termination without cause or for good reason the NEO would also receive the base salary, annual bonus, current AIP, and other benefits as noted in the “Involuntary Termination Without Cause or for Good Reason” column. |
58 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information regarding outstanding grants and shares available for grant under our existing equity compensation plans, including the 2011 Plan and the 2018 Plan. All information is as of December 31, 2021.
| Plan Category | Number of securities
to be issued upon exercise of outstanding options, warrants and rights(1) (a) |
Weighted-average exercise price of outstanding options, warrants and rights(2) (b) |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(3) (c) |
|||||||||
| Equity compensation plans approved by security holders | 528,954 | $ | -- | 1,102,710 | ||||||||
| Equity compensation plans not approved by security holders | N/A | N/A | N/A | |||||||||
| Total | 528,954 | $ | -- | 1,102,710 | ||||||||
| (1) | Consists of DSUs, RSUs, and PSUs. The number of PSUs included in these amounts consists of (a) the actual number of PSUs earned for the completed performance periods that included 2021 and (b) the maximum number of shares which the participant is eligible to receive if applicable performance metrics are fully achieved with respect to the PSUs granted in 2021 that will be earned depending on the level of achievement of ROIC-related performance goals over the two-year measurement period of 2021-2022. The actual number of shares that will be issued under the PSUs referenced in clause (b) depends on the performance over the applicable performance period. |
| (2) | DSUs, PSUs, and RSUs do not have an exercise price and, therefore, they have been excluded from the weighted average exercise price calculation in this column. |
| (3) | Pursuant to the 2018 Plan, which was approved by stockholders in May 2018, the Company may grant stock options, stock appreciation rights, restricted stock awards, stock unit awards, other stock-based awards, and cash incentive awards. Prior to the stockholders’ approval of the 2018 Plan, the Company could grant equity-based awards, such as stock options, restricted stock, performance shares, and DSUs, pursuant to the 2011 Plan. No further awards may be made under the 2011 Plan. The number of PSUs included in the amounts in this column in the table removes from the number of securities remaining available for future issuance (a) the actual number of PSUs earned for the completed performance periods of 2021 and (b) the maximum number of shares which the participant is eligible to receive if applicable performance metrics are fully achieved with respect to the PSUs described in footnote (1) above. If the target number of unearned PSU awards was used in this calculation, instead of the maximum number used in the table above, the number of shares available for grant of new awards under the 2018 Plan was 1,195,993 as of December 31, 2021. The 2018 Plan is the Company’s only existing equity compensation plans. |
We are providing the following information about the relationship of the annual total compensation of our team members and the annual total compensation of Jason D. Lippert, our President and Chief Executive Officer (“CEO”):
For 2021, our last completed fiscal year:
| • | the annual total compensation of our median team member was $53,338; and |
| • | the annual total compensation of our CEO, as reported in the Summary Compensation Table included on page 48 of this Proxy Statement, was $10,993,750. |
Based on this information for fiscal year 2021, we reasonably estimate that the ratio of our CEO’s annual total compensation to the annual total compensation of our median team member was 206:1. We used reasonable estimates in the methodology used to identify the median team member and calculate the annual total compensation of the median team member in a manner consistent with SEC rules and guidance. Our pay ratio estimate has been calculated in a manner consistent with Item 402(u) of Regulation S-K.
As of December 31, 2021, our employee population consisted of approximately 12,336 U.S. team members and 1,656 non-U.S. team members. We elected to exclude all of our team members located in Tunisia (129 individuals total) from our determination of the median team member pursuant to the de minimis exemption permitted under SEC rules. The median employee was selected from an adjusted team member population of 13,863 employees (excluding our CEO).
We identified our median employee based on the total payroll earnings actually paid during fiscal year 2021 to the above-mentioned 13,863 members of our workforce (including full-time and part-time), other than our CEO, who were employed on December 31, 2021.
For purposes of determining the total payroll earnings actually paid, we included: the amount of base salary the team member received during the year, the amount of any cash incentives paid to the team member in the year (which include annual
cash incentives that are generally paid in January or February for performance during the prior fiscal year), and the value of any equity grants that vested during the year based on the value of the shares on the date of vesting. We did not include any adjustments for the value of benefits provided, but we did include certain adjustments for the annualization of pay for any team members who were employed by us for only part of the year.
Once we identified our median team member, we then determined that team member’s total compensation, including any perquisites and other benefits, in the same manner that we determine the total compensation of our NEOs for purposes of the Summary Compensation Table disclosed above. The elements included in the CEO’s total compensation are fully discussed above in the footnotes to the Summary Compensation Table.
TRANSACTIONS WITH RELATED PERSONS
The Company currently has nearly 14,000 team members and seeks to employ the most qualified candidates. Consequently, the Company does not preclude the hiring of family members of incumbent Directors and executive officers. The compensation of each of the following team members was established in accordance with the Company’s employment and compensation practices applicable to team members with equivalent qualifications, experience, and responsibilities.
During 2021, the Company employed Jason D. Lippert as President and Chief Executive Officer of the Company, who received total salary and incentive compensation of $10,993,750 (see “Executive Compensation - Summary Compensation Table”), and Lippert Components, Inc. employed Jarod Lippert as Vice President of Marketing and Public Relations, who received total compensation of $404,476, and Jayde Lippert as Business Development Manager, who received total compensation of $177,048. Jason D. Lippert, Jarod Lippert, and Jayde Lippert, brothers, have been employed by Lippert Components, Inc. in excess of 27, 20, and seven years, respectively.
60 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
As described earlier in this Proxy Statement, one of the Company’s customers, Barletta Boat Company, LLC (“Barletta”), is an entity that manufactures pontoon boats. Prior to the sale of Barletta to Winnebago Industries, Inc. in August, 2021, Ronald Fenech, one of our Directors, was a co-owner and director of Barletta, holding a 38% ownership interest. His brother, William Fenech, is the president of Barletta and also a former 38% owner. Between January 1, 2021, and March 23, 2022, Barletta paid the Company approximately $44,528,947 for the purchase of components. The Company anticipates that these purchases will continue during the remainder of 2022. The purchases by Barletta from the Company were, and future purchases will be, entered into in the ordinary course of business on an arm’s length basis, and contained, and will contain, customary terms and conditions on substantially the same terms as comparable transactions with unrelated third parties.
Approval of Certain Related Person Transactions
The Corporate Governance, Nominating, and Sustainability Committee is charged with reviewing and approving or ratifying any transaction between the Company and a related person, which is required to be disclosed under the rules of the SEC. For purposes of this practice, the terms “transaction” and “related person” have the meanings contained in Item 404 of Regulation S-K. In the course of its review and approval or ratification of a transaction, the Corporate Governance, Nominating, and Sustainability Committee shall consider:
| • | the nature of the related person’s interest in the transaction; |
| • | the material terms of the transaction, including without limitation, the amount and type of transaction; |
| • | the importance of the transaction to the related person; |
| • | the importance of the transaction to the Company; |
| • | whether the transaction would impair the judgment of a Director or executive officer to act in the best interest of the Company; and |
| • | any other matters the Committee deems appropriate, including any third-party fairness opinions or other expert review obtained by the Company in connection with the transaction. |
Any Corporate Governance, Nominating, and Sustainability Committee member who is a related person with respect to a transaction under review may not participate in the deliberations or vote respecting such approval or ratification; provided, however, that such Director may be counted in determining the presence of a quorum at a meeting of the Committee which considers the transaction.
Compensation Committee Interlocks and Insider Participation
During a portion or all of fiscal 2021, Messrs. Crespo, Deely, and Graham and Mses. Henkels and Mains served on the Compensation Committee of our Board of Directors, all of whom are independent, non-employee Directors. No member of this Committee has had any relationship with our Company requiring disclosure in this Proxy Statement other than service as a Director. No executive officer of the Company serves as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any other entity that has one or more of its executive officers serving as a member of our Board of Directors or Compensation Committee, and there are no “interlocks,” as defined by the SEC.
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 61
Proposal 2. ADVISORY VOTE ON EXECUTIVE COMPENSATION
SEC rules require that the Company seek a non-binding advisory vote from its stockholders to approve the compensation of our NEOs as described in this Proxy Statement.
Our executive compensation policy is designed to enable the Company to attract, motivate, and retain highly qualified senior executives who have the skills to drive our continued profitability, growth, and success by providing a competitive compensation opportunity based significantly on performance. Our intent is to provide fair and equitable compensation in a way that rewards executives for achieving specified financial goals. Our performance-related awards are structured to link a substantial portion of our executives’ total potential compensation to the Company’s performance on both a long-term and short-term basis, to recognize individual contributions, as well as overall business results, and to align executive and stockholder interests. Accordingly, we reward performance in excess of pre-established targets of, generally, Adjusted EBIT and ROIC and we avoided establishing goals that could divert our executives’ attention from the fundamentals of effective and efficient operations. A significant portion of the total compensation paid to our NEOs is in the form of long-term equity.
At the Annual Meeting of Stockholders held on May 20, 2021, in the advisory vote, 23% of the votes cast voted in favor of the 2020 compensation. We believe the compensation program changes that we have implemented this year, and have put in place going forward, help align executive and stockholder interests. Although the vote was non-binding, the Compensation Committee reviewed the results of the vote and engaged in the stockholder outreach program described beginning on page 36 of this Proxy Statement.
We are requesting stockholder advisory approval of the compensation paid to our NEOs as described in this Proxy Statement, including the disclosures under “Executive Compensation - Compensation Discussion and Analysis,” the compensation tables, and the related information and discussion. The vote is intended to address the overall compensation paid to our NEOs and the policies and practices described in this Proxy Statement.
The vote is advisory and therefore not binding on the Company, the Compensation Committee, or the Board of Directors. However, we value the opinions of our stockholders, and we will carefully consider the outcome of the advisory vote on executive compensation when making future compensation decisions.
For the reasons stated, the Board of Directors recommends a vote FOR the following non-binding resolution:
“RESOLVED, that the compensation paid to the Company’s NEOs, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, compensation tables, and related information and discussion, is hereby APPROVED.”
In connection with the stockholder preference expressed at the 2017 Annual Meeting, our Board of Directors has determined that stockholder advisory votes on executive compensation will occur on an annual basis. Therefore, the next advisory vote will occur at our 2022 Annual Meeting.
| The Board of Directors recommends that you vote FOR adoption of the resolution approving the compensation paid to our NEOs as described in this Proxy Statement. |
62 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
Proposal 3. RATIFICATION OF APPOINTMENT OF AUDITORS
It is proposed the stockholders ratify the appointment by the Audit Committee of KPMG LLP (“KPMG”) as independent auditors for the purpose of auditing and reporting on the consolidated financial statements and internal control over financial reporting of the Company for the year ending December 31, 2022. KPMG is an independent registered public accounting firm. It is expected that a representative of that firm will be present at the Annual Meeting and will be afforded the opportunity to make a statement and respond to appropriate questions from stockholders present at the meeting.
If the holders of a majority in voting power of the outstanding shares of Common Stock which are present virtually or by proxy at the meeting and entitled to vote thereon do not approve the proposal, the Audit Committee will reconsider its choice, taking into consideration the views of the stockholders, and may, but will not be required to, appoint a different independent registered public accounting firm.
The following is a summary of the fees billed to the Company by KPMG for professional services rendered for the fiscal years ended December 31, 2021 and 2020:
| 2021 | 2020 | |||||||
| Audit Fees: | ||||||||
| Consists of fees billed for professional services rendered for the annual audit of the Company’s financial statements and for the reviews of the interim financial statements included in the Company’s Quarterly Reports | $ | 1,720,000 | $ | 1,345,000 | ||||
| Audit-Related Fees: | ||||||||
| Consists primarily of fees billed for transaction-related services | $ | -- | $ | -- | ||||
| Tax Fees: | ||||||||
| Consists of fees billed for tax planning and compliance, assistance with the preparation of tax returns, tax services rendered in connection with acquisitions made by the Company, and advice on other tax-related matters | $ | -- | $ | -- | ||||
| All Other Fees: | ||||||||
| Other Services | $ | -- | $ | -- | ||||
| Total | $ | 1,720,000 | $ | 1,345,000 | ||||
As part of its duties, the Audit Committee is required to pre-approve audit and non-audit services performed by the independent auditors in order to assure that the provision of such services does not impair the auditors’ independence. The Audit Committee does not delegate to Management its responsibilities to pre-approve services performed by the independent auditors. All services performed by KPMG were approved by the Audit Committee.
| The Board of Directors recommends a vote FOR ratification of the appointment of KPMG LLP as independent auditors for the year ending December 31, 2022. |
NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES 63
The Audit Committee serves as a representative of the Company’s Board of Directors, and is responsible for providing independent, objective oversight of the Company’s (i) financial reporting processes and financial statements, (ii) compliance with legal and regulatory requirements, (iii) appointment and performance of the independent auditor, (iv) system of internal control, and (v) compliance with ethical standards. The Audit Committee operates under a written charter, a copy of which is available on the Company’s website at www.lci1.com/investors under “Governance.” The Audit Committee currently consists of Virginia L. Henkels (Chair), James F. Gero, Tracy D. Graham, Stephanie K. Mains, and Kieran M. O’Sullivan, each of whom satisfies the independence requirement of Rule 10A-3 under the Securities Exchange Act of 1934, as amended, and each of whom has been determined by the Board of Directors to be an “audit committee financial expert” as defined by the SEC.
Management is responsible for the Company’s internal controls and the financial reporting process. KPMG LLP, an independent registered public accounting firm acting as the Company’s independent auditor, is responsible for performing an audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (the “PCAOB”), and to issue a report thereon. KPMG is also responsible for issuing a report on the effectiveness of the Company’s internal control over financial reporting. As set forth in its Charter, the Committee acts only in an oversight capacity and relies on the work and assurances of Management and other advisors retained by the Company, and KPMG’s opinion on the Company’s consolidated financial statements.
The Audit Committee has reviewed and discussed with Management and KPMG the Company’s audited financial statements for the year ended December 31, 2021. Management represented to the Committee that the Company’s consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America, and the Audit Committee has reviewed and discussed with Management their assessment of the effectiveness of the Company’s internal control over financial reporting. The Audit Committee reviewed and discussed with KPMG the consolidated financial statements and KPMG’s evaluation of the Company’s internal control over financial reporting. The Audit Committee also discussed with KPMG the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. In fulfilling the Audit Committee’s oversight responsibility of the external auditor, the Audit Committee reviews the policies and procedures for the engagement of the independent registered public accounting firm, including the scope of the audit, audit fees, auditor independence matters, performance of the auditor, lead partner selection, and auditor tenure. The current lead audit partner for the Company has held that position since 2021. The Audit Committee has received the written disclosures and the letter from KPMG required by applicable requirements of the PCAOB regarding the independent auditor’s communications with the Audit Committee concerning independence and has discussed with KPMG their independence.
Based on the review and discussions referenced above, the Audit Committee recommended to the Board of Directors the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC.
| AUDIT COMMITTEE | |||
| Virginia L. Henkels, Chair | Tracy D. Graham | Kieran M. O’Sullivan | |
| James F. Gero | Stephanie K. Mains | ||
| The foregoing report of the Audit Committee shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall this information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, except to the extent that the Company specifically incorporates it by reference into a filing. | |||
| 64 | NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES | ||
As of the date of this Proxy Statement, the only business which Management intends to present, or knows that others will present, at the Annual Meeting is that set forth herein. If any other matter or matters are properly brought before the Annual Meeting, or
any adjournment or postponement thereof, it is the intention of the persons named in the proxy solicited from holders of the Common Stock to vote the proxy on such matters in accordance with their judgment, subject to NYSE rules.
STOCKHOLDER PROPOSALS FOR THE 2023 ANNUAL MEETING
In order for a stockholder proposal to be considered for inclusion in the Company’s Proxy Statement for the Annual Meeting to be held in 2023, the Company must receive the written proposal at its principal executive offices on or before December 5, 2022. The proposal must comply with SEC regulations regarding the inclusion of stockholder proposals in company-sponsored proxy materials.
Additionally, the Company’s bylaws establish an advance notice procedure relating to director nominations and stockholder proposals that are not submitted for inclusion in the Company’s Proxy Statement, but that the stockholder instead wishes to present directly at an annual meeting. To be properly brought before the Annual Meeting to be held in 2023, the stockholder must give timely written notice of the nomination or proposal to:
Corporate Secretary
LCI Industries 3501
County Road 6 East
Elkhart, Indiana 46514
To be timely, a stockholder’s notice must be delivered not later than the close of business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual meeting. For the Annual Meeting to be held in 2023, such notice must be delivered no earlier than January 19, 2023, and no later than February 18, 2023. In the event that the date of the annual meeting is advanced by more than 30 or delayed by more than 70 days from such anniversary date, notice by the stockholder must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting and the 10th day following the day on which public announcement of the date of such meeting is first made. The notice must contain specified information about each nominee or the proposed business and the stockholder making the nomination or proposal. A copy of the Company’s bylaws, including the advance notice requirements, may be obtained upon request to the Company’s Secretary at the address noted above.
In addition to satisfying the foregoing requirements under our bylaws, to comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934, as amended, no later than March 20, 2023.
By Order of the Board of Directors
ANDREW J. NAMENYE
Executive Vice President, Chief Legal Officer, and Corporate Secretary
April 4, 2022
66 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Under the Company’s 2021 AIP approved by the Compensation Committee for the Company’s senior officers, participants earn incentive compensation based on the results of Company financial performance measurements for the program year which, for 2021, was based on Adjusted EBIT, a non-GAAP measure. The Company defines Adjusted EBIT as consolidated net income before interest and taxes (labeled “Operating profit” on the Company’s Consolidated Statement of Income), as adjusted by the Committee for events that are unusual in nature or infrequently occurring, including without limitation a change in control, acquisitions, divestitures, restructuring activities, or asset write-downs, or for changes in applicable tax laws or accounting principles. Adjusted EBIT is not calculated in accordance with, nor is it a substitute for, GAAP measures. The Company considers non-GAAP Adjusted EBIT as a profitability measure in evaluating and managing the Company’s operations and in evaluating the performance of its senior officers. The determination of Adjusted EBIT may not be comparable to similarly-titled measures used by other companies. A reconciliation of Adjusted EBIT to net income, the most directly comparable financial measure calculated and presented in accordance with GAAP, is provided below.
| Year Ended | ||||
| (in thousands) | December 31, 2021 | |||
| Net income, as reported GAAP | $ | 287,739 | ||
| Add back: | ||||
| Provision for income taxes | $ | 94,305 | ||
| Interest expense, net | $ | 16,366 | ||
| Adjusted EBIT (non-GAAP) | $ | 398,410 | ||
The following table reconciles net income to EBITDA and Adjusted EBITDA.
| Year Ended | Year Ended | |||||||
| (in thousands) | December 31, 2021 | December 31, 2020 | ||||||
| Net income, as reported GAAP | $ | 287,739 | $ | 158,440 | ||||
| Add back: | ||||||||
| Provision for income taxes | $ | 94,305 | $ | 51,041 | ||||
| Interest expense, net | $ | 16,366 | $ | 13,453 | ||||
| Depreciation expense | $ | 64,755 | $ | 60,107 | ||||
| Amortiztion expense | $ | 47,565 | $ | 37,873 | ||||
| EBITDA (non-GAAP) | $ | 510,730 | $ | 320,914 | ||||
| Non-cash charge for inventory fair value step-up | $ | 993 | $ | 7,286 | ||||
| Adjusted EBITDA (non-GAAP) | $ | 511,723 | $ | 328,200 | ||||
70 NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS AND PROXY STATEMENT | LCI INDUSTRIES
