Item 5.02 Departure of Directors or Certain Officers; Election of Directors:
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On January 21, 2021, the Nominating, Compensation and Governance Committee (the
"NCG Committee") of the Board of Directors of Haverty Furniture Companies, Inc.
(the "Company" or "Havertys") established the annual incentive opportunities and
long-term incentive equity grants for the Company's Named Executive Officers
("NEOs") for 2021.
Annual Incentive Opportunities: The NCG Committee approved the management
incentive plans (the "Plans" or "MIP I" or "MIP II") to determine 2021 cash
incentives pursuant to the Company's 2014 Long Term Incentive Plan. The NEOs are
eligible to receive a target payout amount from the combined Plans of 60% of
their 2021 annual base salary, except that Mr. Hare's target is 65% and Mr.
Smith's target is 100% of base salary. The MIP I Plan covers 80% of the target
payout. The MIP I sets goals of pre-tax earnings on a quarterly and annual
basis. Participants will begin to earn the incentive pay once at least 80% of a
goal is met increasing up to 125% of the pre-tax goal. There is a 3% change in
the incentive pay earned for every 1% increase or decrease in actual pre-tax
earnings versus the goal with the incentive pay potential ranging from 40% to
175% of the earnings target payout amount. Pre-tax earnings for comparison to
the goal will be that amount reported in the annual Form 10-K, adjusted to
eliminate the effects of asset impairments, restructurings, acquisitions,
divestitures, store closing costs, and the cumulative effect of accounting
changes, as determined in accordance with generally accepted accounting
principles, as applicable, and any other unusual or non-recurring items. The MIP
II Plan, which does not provide for above target payouts, covers the remaining
20% of the potential target payout. The MIP II Plan is earned for achieving
additional performance criteria or specific projects or initiatives tailored to
each person as approved by the NCG Committee. The NCG Committee has discretion
in the administration of the Plan.
Long-Term Incentive Equity Grants: Pursuant to the Company's 2014 Long Term
Incentive Plan the NCG Committee authorized the following grants of Restricted
Stock Units ("RSUs") and Performance Restricted Stock Units ("PRSUs"). Each RSU
and PRSU represent a contingent right to receive one share of the Company's
common stock.
Target # of Target # of
Named Executive Officer # of RSUs PRSUs - EBITDA PRSUs - Sales
Clarence H. Smith 6,670 21,344 5,336
Richard B. Hare 3,150 5,880 1,470
Steven G. Burdette 3,015 5,628 1,407
J. Edward Clary 2,515 4,696 1,174
John L. Gill 2,515 4,696 1,174
The RSUs vest over three years in accordance with the schedule set forth in the
stock units award agreement attached hereto as Exhibit 10.1.
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PRSUs were granted with shares earned based on the Company's EBITDA (as
adjusted) for the year ended December 31, 2021. EBITDA is equal to the sum of
income before income taxes, interest expense, and depreciation and amortization
as reported in the Company's financial statements included in its annual Form
10-K. Adjustments will be made to eliminate the effects of certain items such
as, asset impairments, acquisitions, cumulative effect of accounting changes,
and unusual items. The number of units reported above represent target
performance. The actual number that become eligible for vesting is based on
achieving the level of EBITDA during the performance period in accordance with
the schedule set forth in the performance contingent restricted stock unit
agreement attached hereto as Exhibit 10.2. These grants vest in February 2024.
Also granted were PRSUs with shares earned based on achieving target levels of
annual consolidated sales percentage increases for 2021 over 2020. The number of
units reported above represent target performance. The actual number that become
eligible for vesting is based on achieving the level of consolidated sales
percentage increase during the performance period in accordance with the
schedule set forth in the performance contingent restricted stock unit agreement
attached hereto as Exhibit 10.3. These grants vest in February 2024.
Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
10.1 Form of Stock Units Award Agreement.
10.2 Form of Performance Contingent Restricted Stock Unit (EBITDA)
Agreement.
10.3 Form of Performance Contingent Restricted Stock Unit (Sales)
Agreement.
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