Proxy Statement – Form DEF 14A
INFORMATION
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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 Pursuant to
§240.14a-11(c)
or §240.14a-12
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No fee required.
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Fee computed on table below per Exchange Act Rules
14a-6(i)(1)
and 
0-11.
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held
To the Shareholders of
NOTICE IS HEREBY GIVENthat the 2024 Annual Meeting of Shareholders (the "Annual Meeting") of
1. To elect six (6) directors of the Company, as specifically set forth in the attached proxy statement, to serve until the 2025 Annual Meeting of Shareholders or until their successors are elected and qualified;
2. To ratify the appointment of
3. To approve, in a non-bindingvote, the compensation of the Company's named executive officers; and
4. To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.
The foregoing items of business are more fully described in the proxy statement which is attached and made a part hereof (the "Proxy Statement").
The Board of Directors of the Company has fixed the close of business on
I M P O R T A N T
We are holding the Annual Meeting as a virtual meeting (via live audio webcast) format only. On behalf of the Board of Directors and management of the Company, we cordially invite you to attend the Annual Meeting by virtual presence by logging into our live webcast at: www.proxydocs.com/MGRC. Through this webcast, shareholders and proxyholders will be deemed to be present in person for purposes of conducting a vote at such meeting. In order to attend this webcast, you must register in advance at www.proxydocs.com/MGRC prior to the deadline of
In accordance with rules established by the
Whether or not you expect to attend the Annual Meeting via virtual presence, please vote your shares by following the instructions on the Notice, your proxy card or your voting instruction form, as applicable, as promptly as possible in order to ensure your representation at the Annual Meeting. Even if you have voted by proxy, you may still vote online if you attend the Annual Meeting via virtual presence. Please note, however, that if your shares are held of record by a broker, bank, or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy card issued in your name from such broker, bank, or other nominee and register for the Annual Meeting in advance through our transfer agent,
If you hold your shares in a brokerage account, your shares will not be voted in the election of directors or the non-binding,advisory vote on the compensation of the Company's named executive officers unless you provide explicit instructions to your broker as to how you wish to vote your shares. Under the
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By Order of the Board of Directors, |
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| Vice President, General Counsel and Corporate Secretary |
PROXY STATEMENT
FOR 2024 ANNUAL MEETING OF SHAREHOLDERS
General Information
This proxy statement (this "Proxy Statement") is made available to the shareholders of
This year, we are using the Internet as the primary means of delivery of proxy materials to our shareholders. We are sending a Notice of Internet Availability of Proxy Materials (the "Notice") to our shareholders of record with instructions on how to access the proxy materials online at www.proxydocs.com/MGRC. The Company expects to mail the Notice to shareholders on or about
The rules of the
Important Notice Regarding the Availability of Proxy Materials
for the Shareholder Meeting to be held on
Our Proxy Statement and 2023 Annual Report to Shareholders are available at
The following questions and answers provide important information about the Annual Meeting and this Proxy Statement:
When is the Annual Meeting?
The Annual Meeting will be held on
How do I participate in the virtual Annual Meeting?
You will not be able to attend the Annual Meeting physically. You or your proxyholder may participate, vote, and ask questions at the Annual Meeting by visiting www.proxydocs.com/MGRC and using your 12-digitcontrol number found on your Notice.
To be admitted to the virtual Annual Meeting, you will need the 12-digitcontrol number included on your Notice, or the instructions that accompanied your proxy materials, as applicable. The Annual Meeting will begin promptly at
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If you hold shares through an intermediary, such as a bank, broker or other nominee, you will need to contact such bank, broker or other nominee to request a legal proxy and register for the Annual Meeting in advance through our transfer agent,
This year's shareholders' question and answer session will include questions submitted live during the Annual Meeting. You may submit a question in advance of the Annual Meeting by sending it via electronic mail to [email protected]. Questions may be submitted during the Annual Meeting through www.proxydocs.com/MGRC. We expect to respond to appropriate questions during the Annual Meeting, and may also respond to questions on an individual basis or by posting answers on our Investor Relations website after the meeting.
What matters will be considered at the Annual Meeting?
Shareholders will vote on the following items at the Annual Meeting:
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To elect six (6) directors of the Company, as specifically set forth in this Proxy Statement, to serve until the 2025 Annual Meeting of Shareholders or until their successors are elected and qualified (Proposal No. 1); |
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To ratify the appointment of |
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To approve, in a non-bindingvote, the compensation of the Company's named executive officers (Proposal No. 3); and |
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To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof. |
How does the Board of Directors recommend that shareholders vote on these matters?
The Board of Directors believes that the election of the nominated directors, the ratification of the appointment of
How are proxy materials being made available to shareholders?
The
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the full set delivery option; or |
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the notice only option. |
Full Set Delivery Option
Under the full set delivery option, a company delivers all proxy materials to its shareholders as it would have done prior to the change in the rules. This can be by mail or, if a shareholder has previously agreed, by e-mail.In addition to delivering proxy materials to shareholders, a company must post all proxy materials on a publicly-accessible website and provide information to shareholders about how to access that website. The Company's proxy materials are available on the following website: www.proxydocs.com/MGRC.
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Notice Only Option
Under the notice only delivery option, a company must post all of its proxy materials on a publicly accessible website. However, instead of delivering its proxy materials to shareholders, the company instead delivers a one-pagenotice of internet availability of proxy materials which includes, among other matters:
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information regarding the date, time, and location of the Annual Meeting of Shareholders as well as the items to be considered at the meeting; |
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information regarding the website where the proxy materials are posted; and |
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various means by which a shareholder may request paper or e-mailcopies of the proxy materials. |
A company may use a single method for all of its shareholders or use full set delivery for some while adopting the notice only option for others. The Company is required to comply with these Notice and Access rules in connection with its Annual Meeting and has elected to provide access to our proxy materials over the Internet. Accordingly, we have sent you a Notice of Internet Availability of Proxy Materials (the "Notice") because the Board of Directors is soliciting your proxy to vote at the Annual Meeting, including at any adjournments or postponements of the Annual Meeting. All shareholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice.
We intend to mail the Notice on or about
What is the difference between a shareholder of record and a beneficial owner of shares held in street name?
Shareholder of Record. If your shares are registered directly in your name with the Company's transfer agent,
Beneficial Owner of Shares Held in Street Name. If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the beneficial owner of shares held in "street name," and the Notice was forwarded to you by that organization. The organization holding your account is considered the shareholder of record for purposes of voting at the Annual Meeting. As a beneficial owner, you have the right to direct that organization on how to vote the shares held in your account.
How do I vote?
To vote through the internet, go to www.proxydocs.com/MGRC to complete an electronic proxy card. You will be asked to provide the company number and control number from the Notice. You must cast your vote by
To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered and retuit promptly in the envelope provided. If you retuyour signed proxy card to us before the Annual Meeting, we will vote your shares as you direct.
To vote over the telephone, dial toll-free 866.390.5401 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the Notice. You must cast your telephone vote by
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What does it mean if I received more than one Notice?
If you received more than one Notice, it may mean that you hold shares registered in more than one account. Please follow the voting instructions on the Notices to ensure that all of your shares are voted. If you have any questions regarding your share information or address appearing on the Notice, you may call
Can I change my vote after I have voted?
You may revoke your proxy and change your vote at any time before the final vote at the Annual Meeting. You may vote again on a later date by signing and returning a new proxy card with a later date or by attending the Annual Meeting and voting via online presence at our virtual meeting. However, your attendance at the Annual Meeting via online presence will not automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request that your prior proxy be revoked by delivering a written notice of revocation to the Company's Corporate Secretary at
Who is entitled to vote?
The close of business on
What constitutes a quorum?
As of the close of business on the Record Date, there were 24,551,184 shares of Common Stock outstanding and entitled to vote at the Annual Meeting. The presence at the Annual Meeting of a majority of these shares of Common Stock, either in person by online presence or by proxy, will constitute a quorum for the transaction of business at the Annual Meeting.
How are votes counted and who will count the votes?
Each outstanding share of Common Stock on the Record Date is entitled to one vote on each matter properly brought before the Annual Meeting. However, in compliance with the General Corporation Law of the
It is intended that shares represented by proxies in the accompanying form will be voted for the election of persons nominated by management. If votes are cast for any candidates other than those nominated by the Board of Directors, the persons authorized to vote shares represented by executed proxies in the enclosed form (if authority to vote for the election of Directors or for any particular nominee is not withheld) will have full discretion and authority to vote cumulatively and allocate votes among any or all of the nominees of the Board of Directors in such order and in such numbers as they may determine in their sole discretion, provided all the above-listed requirements for cumulative voting are met.
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An automated system administered by BetaNXT will tabulate votes cast by proxy and
Is my vote confidential?
Proxy instructions, ballots, and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote will not be disclosed either within the Company or to third parties, except:
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as necessary to meet applicable legal requirements; |
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to allow for the tabulation and certification of votes; and |
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to facilitate a successful proxy solicitation. |
Occasionally, shareholders provide written comments on their proxy cards, which may be forwarded to the Company's management and the Board of Directors.
How are abstentions and broker "non-votes"treated?
Under the General Corporation Law of the
What is the voting requirement to approve each of the proposals?
With respect to Proposal No. 1 of this Proxy Statement, a plurality of the votes cast is required for the election of directors. This means that the director nominee with the most votes for a particular slot is elected for that slot. You may vote "FOR" or "WITHHELD" with respect to the election of directors, unless prior to the vote on the election of directors a shareholder has validly given notice of its intent to cumulate votes, in which case you may allocate votes (six per share of Common Stock held) among all director nominees. In the absence of cumulative voting, only votes "FOR" or "WITHHELD" are counted in determining whether a plurality has been cast in favor of a director. Abstentions and broker "non-votes,"if any, will have no effect on this proposal. Brokerage firms, banks, broker-dealers, and other nominees holding shares for holders who have not given specific voting instructions are not permitted to vote in their discretion with respect to Proposal No. 1. If you do not instruct your broker how to vote, your broker may not vote with respect to this proposal and these votes will be counted as broker "non-votes,"as is described in "What happens if I do not give specific voting instructions?" below. Our Corporate Governance Guidelines set forth our procedures if a director-nominee is elected, but receives a majority of "WITHHELD" votes. In an uncontested election, any director nominee who receives a greater number of votes "WITHHELD" from his or her election than votes "FOR" such election is required to tender his or her resignation following certification of the shareholder vote.
With respect to Proposal No. 2 of this Proxy Statement, the affirmative vote of a majority of the shares of Common Stock present or represented and entitled to vote at the Annual Meeting is required. You may vote
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"FOR" or "AGAINST" with respect to the appointment of
With respect to Proposal No. 3 of this Proxy Statement, the affirmative vote of a majority of the shares of Common Stock present or represented and entitled to vote at the Annual Meeting is required for approval, on an advisory basis, of the compensation of the Company's named executive officers. You may vote "FOR" or "AGAINST" with respect to approval of the compensation of the Company's named executive officers. Abstentions will have the same effect as voting against this proposal. Broker "non-votes,"if any, will have no effect on this proposal.
What happens if I do not give specific voting instructions?
For Shares Directly Registered in the
For Shares Registered in the
May I vote my shares via online presence at the virtual Annual Meeting?
For Shares Directly Registered in the
For Shares Registered in the
Your online attendance at the Annual Meeting in and of itself will not automatically revoke a proxy that was submitted earlier by mail.
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Where can I find the voting results of the Annual Meeting?
The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the inspector of elections and reported in a current report on Form 8-Kto be filed by the Company within four business days following the date of the Annual Meeting.
Who pays for this proxy solicitation?
The Company will bear the entire cost of soliciting proxies, including the costs of preparing, assembling, printing, and mailing this Proxy Statement, the proxy, and any additional soliciting material furnished to shareholders by the Company. Arrangements will be made with brokerage firms, banks, broker-dealers, nominees, and fiduciaries to send proxies and proxy materials to the beneficial owners of our Common Stock, and these entities may be reimbursed by the Company for their expenses. Proxies may be solicited by directors, officers, or employees of the Company in person or by telephone, e-mail,or other means. No additional compensation will be paid to such individuals for these services.
What is the deadline for receipt of shareholder proposals?
Our Annual Meeting is being held later in calendar year 2024 than prior years as a result of our previously announced merger with
Pursuant to Rule 14a-8under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), shareholders may present proper proposals for inclusion in our proxy statement and for consideration at our next annual meeting of shareholders. As we expect our 2025 Annual Meeting to convene more than 30 days before the anniversary of the Annual Meeting, to be eligible for inclusion in our 2025 proxy statement, a shareholder's proposal received by us must otherwise comply with Rule 14a-8under the Exchange Act, and must be received by us by a reasonable time before we begin to print and send our proxy materials for the 2025 Annual Meeting. While our Board of Directors will consider shareholder proposals that are properly brought before the 2025 Annual Meeting, we reserve the right to omit from our 2025 proxy statement shareholder proposals that we are not required to include under the Exchange Act, including Rule 14a-8thereunder. We will announce the specific date by which such proposals must be received by us in a Quarterly Report on Form 10-Qor a Current Report on Form 8-K.
Shareholders may propose director candidates for consideration by our
Shareholders are advised to review our bylaws, which contain additional requirements with respect to advance notice of shareholder proposals and director nominations.
In addition to satisfying the requirements under our bylaws, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than those nominated by us must provide timely notice in the manner prescribed by, and that sets forth the information required by, Rule 14a-19under the Exchange Act.
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Householding of Annual Meeting Materials
To the extent we deliver paper copies of our annual report to security holders, Proxy Statement, or Notice, as applicable, the
We will promptly deliver, upon oral or written request, a separate copy of our annual report to security holders, proxy statement, or Notice to any shareholder residing at the same address as another shareholder and currently receiving only one copy of such proxy materials who wishes to receive his or her own copy. Similarly, multiple shareholders residing at the same residence that are currently receiving separate copies of our annual report to security holders, proxy statement or Notice may request that a single copy of such proxy materials be delivered. We will promptly deliver a separate copy of these documents without charge to you upon written request to
Financial and Other Information
We are required to file annual, quarterly, and current reports, proxy statements and other reports with the
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's bylaws authorize the number of directors to be not less than five (5) and not more than nine (9). The Board of Directors is currently fixed at six (6) directors and composed of the following directors whose terms will expire upon the election and qualification of directors at the Annual Meeting:
At the 2024 Annual Meeting, the shareholders will elect six (6) directors. Messrs. Anderson, Dawson, Hanna, and Shuster and Mses. Box and Conjeevaram each have been nominated to serve a one-yearterm, until the Annual Meeting of Shareholders to be held in 2025, until their successors are elected or appointed and qualified, or until their earlier death, resignation, or removal. The Board of Directors has no reason to believe that any of Messrs. Anderson, Dawson, Hanna, or Shuster or Mses. Box or Conjeevaram will be unable or unwilling to serve as a nominee or as a director if elected.
Nominees
The names of the nominees and certain information about them as of
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Age |
Principal Occupation |
Director Since |
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40 | Managing Partner of |
2022 | |||||
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64 | Former President and Chief Executive Officer of |
2018 | |||||
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63 | Former Chief Financial Officer of |
2021 | |||||
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70 | Former Chief Financial Officer of |
1998 | |||||
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61 | Chief Executive Officer and President of the Company | 2017 | |||||
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69 | Chairman of the Board of Directors of the Company and Executive Chairman and Chairman of the Board of |
2017 |
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As an experienced public company independent director, chief executive, private equity investor, and entrepreneur,
With her diverse cross-industry experience in the information technology and healthcare industries,
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three public equity offerings for the Company, beginning with its initial public offering in 1984.
With his wealth of experience in financial and strategic transactions, as well as his experiences in the transportation, technology, and energy industries, and as Chief Financial Officer of publicly traded companies,
With his extensive experience in the financial sector, as well as his experiences as Executive Chairman and as a senior executive of various publicly traded companies,
Required Vote
The nominees will be elected by a plurality of the votes cast. Abstentions and broker "non-votes,"if any, will not be counted toward the nominees' total. However, under our Corporate Governance Guidelines, in an uncontested election, any nominee for director who receives a greater number of votes "WITHHELD" from his
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or her election than votes "FOR" such election (a "Majority Withheld Vote") is required to tender his or her resignation following certification of the shareholder vote.
If prior to the vote on the election of directors a shareholder has validly given notice of its intent to cumulate votes, you will have six votes per share of Common Stock held which you may allocate among the director nominees. In such an event, the six nominees receiving the highest number of votes "FOR" will be elected to the Board.
If a nominee for director is required to tender his or her resignation pursuant to our Corporate Governance Guidelines, then the
Any director who tenders his or her resignation pursuant to this provision shall not participate in the
If all members of the
Each nominee elected as a director will continue in office until his or her successor has been elected and qualified, or until his or her earlier death, resignation, or retirement.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FORTHE ELECTION OF EACH OF THE NOMINEES NAMED ABOVE.
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EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information with respect to the executive officers and directors of the Company as of
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Position Held with the Company |
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61 | Chief Executive Officer, President and Director | ||||
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61 | Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary | ||||
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60 | Vice President, Principal Accounting Officer and Corporate Controller | ||||
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50 | Vice President, Human Resources | ||||
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56 | Vice President, General Counsel and Corporate Secretary | ||||
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55 | Senior Vice President, Chief Strategy Officer | ||||
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49 | Senior Vice President, Mobile Modular | ||||
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58 | Vice President, TRS-RenTelco | ||||
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60 | Vice President, Portable Storage | ||||
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40 | Director | ||||
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64 | Director | ||||
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63 | Director | ||||
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70 | Director | ||||
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69 | Chairman of the Board of Directors |
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Member of the Compensation Committee |
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Member of the Audit Committee |
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Member of the |
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Each executive officer of the Company serves at the pleasure of the Board of Directors.
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Characteristics of Director Nominees
The chart below details our Board of Directors' diversity composition by various characteristics as defined by the
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Board Diversity Matrix as of |
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Total Number of Directors |
6 |
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Female |
Male |
Non-Binary |
Did Not Disclose Gender |
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Part I: Gender Identity |
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Directors |
2 | 4 | ||||||||||
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Part II: Demographic Background |
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1 | |||||||||||
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Asian |
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Hispanic or Latinx |
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Native Hawaiian or Pacific Islander |
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White |
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Two or More Races or Ethnicities |
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LGBTQ |
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Did Not Disclose Demographic Background |
Corporate Governance Overview
Our Board of Directors is committed to strong and effective corporate governance, and, as a result, it regularly monitors our corporate governance policies and practices to ensure compliance with applicable laws, regulations, and rules, as well as best practices.
Our corporate governance program features the following:
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We have an independent Chairman of the Board of Directors; |
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All of our directors, other than our Chief Executive Officer, are independent; |
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All of our directors are up for re-electionannually; |
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Two of our six director nominees are women; additionally, two of our nominees are diverse representatives from under-represented communities (as those communities are defined pursuant to |
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Each director attended at least 75% of the aggregate total number of Board meetings and the total number of meetings of Board committees on which such director served during the time he or she served on the Board or committees in 2023; |
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We have no shareholder rights plan in place; |
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Our Board committees regularly review and update, as necessary, the committee charters, which clearly establish the roles and responsibilities of each such committee, and such charters are posted on our website for review; |
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Our Board generally has an executive session among our non-employeeand independent directors after every board meeting; |
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The majority of our Audit Committee members qualify as Audit Committee financial experts; |
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Our Board enjoys unrestricted access to the Company's management, employees, and professional advisers; |
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We have a code of business conduct and ethics that is reviewed regularly for best practices and is posted on our website for review; |
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We have a clear set of corporate governance guidelines that are reviewed regularly for best practices and posted on our website for review; |
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We are committed to corporate and social responsibility; |
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We have no supermajority voting provisions in our charter documents; |
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We have a compensation recoupment policy; |
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Our insider trading policy prohibits hedging, pledging or engaging in derivative actions relating to our stock by all employees, officers, and directors; |
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Our Board performs an annual self-assessment to evaluate its effectiveness in fulfilling its obligations; |
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We conduct an annual say-on-payvote; |
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Board and Chief Executive Officer succession planning is a focus and continual Board discussion topic; |
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Our corporate governance documents do not contain a supermajority standard for the approval of a merger or a business combination, which transaction requires the affirmative vote of a majority of the outstanding shares; |
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We had no related party transactions as defined by the |
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We have a stock ownership and holdback requirement to ensure that our executive officers remain aligned with the interests of the Company and our shareholders. |
Director Independence
The Board of Directors has determined that the five (5) non-employeedirectors on the Board of Directors, consisting of Messrs. Anderson, Dawson, and Shuster and Mses. Box and Conjeevaram, are "independent," as defined in the listing standards of the
Leadership Structure of the Board of Directors
Our Board of Directors is currently comprised of five (5) independent directors and one (1) management director. Our Corporate Governance Guidelines state that the Board of Directors should remain free to decide whether the Chairman and Chief Executive Officer positions should be held by the same person. This allows the Board of Directors to determine the best arrangement for the Company and its shareholders, given changing circumstances of the Company and the composition of the Board of Directors. Currently, the positions are separated.
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of directors and board committees. Additionally, he is experienced in the fields of mergers and acquisitions; finance, accounting, and investments; business development and operations; strategic and corporate development; stockholder engagement; and is an Audit Committee Financial Expert per the listing standards of the
Board Succession
Our Board of Directors is committed to adding new directors to infuse new ideas and fresh perspectives in the boardroom. As part of our board's succession planning, the
Board Tenure
Our Board of Directors recognizes that its current members have served on the Board of Directors for various tenures, with the shortest tenure being approximately two years but with other directors serving for greater than 10 years. Our Board of Directors believes that the Board represents a balance of industry, technical and financial experiences, which provide effective guidance and oversight to management. Our governance policies reflect our belief that directors should not be subject to term limits. While term limits could facilitate fresh ideas and viewpoints being consistently brought to the Board of Directors, we believe they are counterbalanced by the disadvantage of causing the loss of a director who, over a period of time, has developed insight into our strategies, operations, and risks and continues to provide valuable contributions to board deliberations. Nonetheless, our Board of Directors is committed to adding new directors to infuse new ideas and fresh perspectives in the boardroom. In the past several years, four new directors have joined our Board of Directors, with the latest,
Shareholder Engagement
Our Board of Directors and management focus on creating long-term, sustainable shareholder value. Key to this goal is shareholder engagement at conferences and in one-on-onemeetings to discuss our financial performance, corporate governance practices, executive compensation programs, and other matters. Our conversations with shareholders allow us to better understand our shareholders' perspectives and provide us with useful feedback to calibrate our priorities.
Meetings and Committees of the Board of Directors
The Board of Directors met five (5) times in 2023. No director attended fewer than 75% of either (i) the total number of meetings of the Board of Directors held in 2023, or (ii) the total number of meetings of the committees of the Board of Directors held in 2023 on which he or she served. All then in office attended the 2023 Annual Meeting of Shareholders via virtual participation. The standing committees of the Board of Directors currently consist of the Compensation Committee, the Audit Committee, and the
Compensation Committee
The Compensation Committee held four (4) meetings in 2023. The Compensation Committee currently consists of Messrs. Anderson, Dawson, and Shuster and
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served effective
The Board of Directors adopted and approved a charter for the Compensation Committee. A copy of this charter is posted on our website at www.mgrc.com under the Investors section. The functions of the Compensation Committee, which are discussed in detail in its charter, are to (a) evaluate executive officer and director compensation policies, goals, plans, and programs; (b) determine the cash and non-cashcompensation of the executive officers of the Company; (c) review and oversee the Company's equity-based and other incentive compensation plans for employees; (d) evaluate the performance of the Company's executive officers; and (e) direct and review the production of any reports required by the applicable rules and regulations of the
Compensation decisions for the executive officers of the Company are made by the Compensation Committee after the review by the Board of Directors. The Compensation Committee directs the Chief Executive Officer to develop the incentive compensation guidelines for the other executive officers and to recommend the incentive compensation bonuses for each of the other executive officers, subject to approval by the Compensation Committee. Compensation decisions for directors are made by the Board of Directors based on recommendations from the Compensation Committee.
Audit Committee
The Audit Committee held five (5) meetings in 2023. The Audit Committee currently consists of Messrs. Anderson and Dawson and
The Board of Directors adopted and approved a charter for the Audit Committee. A copy of this charter is posted on our website at www.mgrc.com under the Investors section. The functions of the Audit Committee, which are discussed in detail in its charter, are to (a) oversee the engagement, replacement, compensation, qualification, independence, and performance of the Company's independent auditors; (b) oversee the conduct of the Company's accounting and financial reporting processes and the integrity of the Company's audited financial statements and other financial reports; (c) oversee the performance of the Company's internal accounting,
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financial, and disclosure controls function; and (d) oversee the Company's compliance with its policies and other legal requirements as such compliance relates to the integrity of the Company's financial reporting. The Audit Committee has also established procedures for (a) the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters, and (b) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters. The Audit Committee also oversees the preparation of a report for inclusion in our annual proxy statements and is charged with the other duties and responsibilities listed in its charter. For details, see "Report of the Audit Committee of the Board of Directors" in this Proxy Statement. The Audit Committee is a separately designated standing audit committee as defined in Section 3(a)(58)(A) of the Exchange Act.
The Board of Directors adopted and approved a charter for the
Environmental, Social and Governance Matters
We believe that sound corporate citizenship and attention to environmental, social, and governance ("ESG") principles are essential to our success. Wherever possible, the products, services, and practices of the Company are designed to promote the ESG principles. We are committed to operating with integrity, contributing to the local communities surrounding our offices and facilities, promoting diversity, developing our employees, focusing on sustainability, and being thoughtful environmental stewards.
Our Board provides oversight of management's efforts around these ESG topics, including risk oversight of ESG-relatedmatters, and is committed to supporting the Company's efforts to operate as a sound corporate citizen. Company management provides updates to the Board on the Company's work in ESG during each quarterly Board meeting and the Board discusses the same. Additionally, the Charter for our
We believe that an integrated approach to business strategy, corporate governance, and corporate citizenship creates long-term value. Among the ways in which we have demonstrated our commitment to ESG matters are the following:
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Commitment to minimizing adverse impacts on the environment through energy management programs, including high-efficiency HVAC and energy systems, responsible use of limited available land, and use of natural light. |
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When possible, the Company uses recycled building materials and construction components that can be further recycled on its modular building products. |
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Creation of a strong corporate culture that promotes the highest standards of ethics and compliance for our business, including a Code of Business Conduct and Ethics that sets forth principles to guide employee, designated executive, and non-employeedirector conduct. |
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Company and employee commitment to the local communities where our facilities are located, including supporting various non-profits,charities, and other community programs, and, from time to time, providing support through the McGrath Cares fund. |
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Equal employment opportunity hiring practices, policies, and management of employees. |
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Anti-harassment policy that prohibits hostility or aversion towards individuals in protected categories, prohibits sexual harassment in any form, details how to report and respond to harassment issues, and strictly prohibits retaliation against any employee for reporting harassment. |
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Commitment to fostering and promoting a diverse workforce and a collaborative work environment. |
The Role of the Board of Directors in the Oversight of Risk
While Company management is primarily responsible for managing risk, the Board of Directors and each of its committees play a role in overseeing the Company's risk management practices. The full Board of Directors is ultimately responsible for risk oversight, and it discharges this responsibility by, among other things, receiving regular reports from Company management concerning the Company's business and the material risks facing the Company. Each of the Board's committees also plays a role in risk oversight as follows:
Audit Committee. Under its charter, the Audit Committee plays a key role in the Board of Directors' risk oversight process. The Audit Committee's duties include discussing the Company's guidelines and policies with respect to risk assessment and risk management with Company management and the Company's independent auditors. The Audit Committee also receives regular reports from Company management and discusses with management the steps taken to monitor and control risk exposures. In addition, the Audit Committee reviews all of the Company's quarterly financial reports, including any disclosure therein of risk factors affecting the Company and its businesses. The Audit Committee regularly receives reports from, among others, the Company's Chief Financial Officer, Principal Accounting Officer, and its Compliance Officer. The Audit Committee provides regular reports to the full Board of Directors on its risk oversight activities and any issues identified.
Compensation Committee. Under its charter, the Compensation Committee reviews with its independent compensation consultant and management, as appropriate, the Company's compensation and succession plans, policies, and practices. The Compensation Committee also sets performance goals under the Company's annual bonus and long-term incentive plans. In setting the performance targets and overseeing the Company's compensation plans, policies, and practices, the Compensation Committee considers whether such plans, policies, and practices are consistent with the long-term interests of the Company's shareholders. The Compensation Committee also considers risks that may be created and whether any such risks are reasonably likely to have a material adverse impact on the Company. The Compensation Committee considers the overall mix of compensation for all employees as well as the various risk control and mitigation features of its compensation plans, including appropriate performance measures and targets and incentive plan payout maximums. The Compensation Committee provides regular reports to the full Board of Directors on the Company's compensation plans, policies, and practices and the Compensation Committee's oversight of compensation-related risks.
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Directors a set of effective corporate governance guidelines and procedures designed to assure compliance with applicable governance standards.
The Board of Directors oversees the management of risks from cybersecurity threats, including the policies, standards, processes and practices that the Company's management implements to address risks from cybersecurity threats. The Board of Directors receives reports on the Company's technology and cybersecurity functions, including vulnerability assessments, any third-party and independent reviews, the threat environment, and other information security considerations.
Through the activities of the Audit, Compensation, and Corporate Governance and Nominating Committees, as well as the full Board of Directors' interactions with management concerning the Company's business and the material risks that may impact the Company, the independent directors on the Board of Directors are able to monitor the Company's risk management process and offer critical insights to Company management.
Qualifications of Directors and Assessment of Diversity
When evaluating candidates, the
The Board of Directors' recommendations for inclusion in the slate of directors at an annual or special meeting of shareholders, or for appointment by the Board of Directors to fill a vacancy, are based on its determination, after reviewing recommendations from the
Director Nomination Process
Continuing Directors
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director for re-electionto another term. Directors may not be re-nominatedannually as a matter of course. Once the
New Directors
Generally, once a need to add a new member to the Board of Directors is identified, the
After a slate of possible candidates is identified, certain members of the
A description of the procedure to be followed by security holders in submitting director recommendations is set forth in the "Shareholder Recommendations for Membership on our Board of Directors" in this Proxy Statement. The director candidate selection criteria will be equally applied to both continuing directors and shareholder-submitted director candidates.
Director Compensation
Our Compensation Committee periodically seeks input from independent compensation consultants on a range of external market factors, including evolving compensation trends, appropriate peer companies, and market survey data. The Compensation Committee reviews non-employeedirector compensation every two years. In
The 2023 compensation described below was approved by the Board of Directors based on the previous compensation consultant,
For 2023, each non-employeedirector of the Company was compensated for his or her services as a director with an annual retainer of
For fiscal year 2024, based on Semler Brossy's
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For fiscal year 2024, each non-employeedirector of the Company will receive an annual retainer of
In addition to cash compensation, each of the non-employeedirectors of the Company has historically received an annual Restricted Stock Unit ("RSU") equity grant denominated as a fair value and then converted to shares rounded to the nearest 100 at the date of grant. Based on Pearl Meyer's analysis conducted in 2022, the Compensation Committee recommended, and the Board of Directors approved, the fair value of the 2023 equity grant of approximately
Based on Semler Brossy's analysis, the Compensation Committee recommended, and the Board of Directors approved, no change to the fair value of the 2024 equity grant of approximately
The table below summarizes the compensation paid by the Company to its non-employeedirectors for the fiscal year ended
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2023 NON-EMPLOYEEDIRECTOR COMPENSATION TABLE
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$ | 102,500 | $ | 125,112 | $ | 227,612 | ||||||
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$ | 106,475 | $ | 125,112 | $ | 231,587 | ||||||
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$ | 103,047 | $ | 125,112 | $ | 228,159 | ||||||
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$ | 117,500 | $ | 125,112 | $ | 242,612 | ||||||
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$ | 107,275 | $ | 125,112 | $ | 232,387 | ||||||
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$ | 173,000 | $ | 125,112 | $ | 298,112 | ||||||
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$ | 44,492 | $ | 29,553 | $ | 74,045 | ||||||
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$ | 42,538 | $ | 29,553 | $ | 72,091 |
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Messrs. Smith and Stradford retired from the Board of Directors effective |
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Pursuant to the Director Award Agreements, awards vest in full immediately prior to the specified effective date of a Change In Control or a Corporate Transaction. |
Director Stock Ownership
The Board of Directors believes that, in order to align the interests of directors and shareholders, directors should have a significant financial (equity) stake in the Company. Each director has a target ownership level of 5,000 shares of Common Stock to be achieved by each director within five years of joining the Board of Directors or as soon thereafter as practicable. In evaluating whether the Common Stock value ownership guideline has been met, all Common Stock owned is considered. As of
Director Annual Evaluation
It is important to the Company that the Board and its committees are performing effectively and in the best interests of the Company and its shareholders. The Board performs an annual self-assessment, led by the Chair of the
No Political Contributions
It is the Company's policy that no Company funds or assets will be used to make a contribution to any political party, political campaign, political candidate, or public official in
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
Compensation Discussion and Analysis
In this Proxy Statement, we refer to Messrs. Hanna, Pratt, and Hawkins, and Mses. Malek and Van Trease collectively as our named executive officers or NEOs.
2023 Business Performance Highlights and Alignment with Compensation
Our full-year 2023 revenue and profit growth reflect a strategic focusing of the McGrath portfolio on Mobile Modular through the Vesta Modular acquisition and
The annual incentive bonus amounts in respect of 2023 for the executive officers were based on the Company's Adjusted EBITDA for corporate officers and division-specific Adjusted EBITDA for division officers (defined as the Company's net income before interest expense, provision for income taxes, depreciation, amortization, non-cashimpairment costs, share-based compensation and transaction costs). Adjusted EBITDA accounted for 100% of the annual profitability bonus target in compensation plans for amounts paid out in 2023. The metric used to determine the achievement of long-term performance-based restricted stock units ("RSUs") granted during 2023 is the achievement of three-year
Proposed Acquisition by
As previously disclosed, on
In consideration of the pending merger with WillScot, the Compensation Committee, in consultation with the Board of Directors, approved certain equity awards to executive officers in 2024 that deviated from historical practices. The Compensation Committee intends to generally revert to its historical approach on equity grants to executive officers subsequent to termination of the Merger Agreement and the Company continuing to operate as a standalone company.
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Executive Compensation Program Design
The Compensation Committee has the responsibility for establishing, implementing, and continually monitoring the compensation of the Company's executive officers. The Compensation Committee oversees and approves the design of the executive compensation program to ensure that the total compensation paid to our executive officers is fair, reasonable, competitive, and aligned with the goals and objectives of the Company. For the fiscal year ended
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Annual base salary; |
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Non-equityannual performance-based incentive compensation ("Annual Cash Bonus") pursuant to the Non-EquityPerformance-Based Incentive Plan (the "Cash Bonus Plan"); and |
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Long-term equity incentive compensation. |
The Compensation Committee determined that these three elements, with a significant percentage of total compensation allocated to "at-risk"performance-based incentives, best align the interests of our executive officers with our shareholders and achieve our overall goals for executive compensation. The Annual Cash Bonus rewards achievement of annual incentive goals and the long-term equity incentive compensation rewards achievement of long-term growth in shareholder value and sustained financial health of the Company. There is no pre-establishedpolicy or target for the allocation between either cash and non-cashor short-term and long-term incentive compensation. Rather, the Compensation Committee reviews relevant market compensation data from its compensation consultant and other sources and uses its judgment to determine the appropriate level and mix of incentive compensation on an annual basis.
Elements of 2023 Executive Compensation Program
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Program Features |
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Annual Base Salary |
• Fixed component of annual cash compensation. • Influenced by competitive market pay trends and individual performance while considering each NEOs experience and scope of responsibilities. |
• Offers • Ensures McGrath remains competitive with the market to ensure the Company attracts and retains top talent. |
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Annual Incentive Compensation ("Annual Cash Bonus") |
• Variable compensation paid to NEOs subject to pre-establishedfinancial "Profitability Bonus" targets as well as individual "Personal Annual Priorities" performance. • Each NEO is granted a target award (as a percentage of the NEO's base salary) based upon job responsibilities, performance in role, and market competitiveness. • In 2023, the Profitability Bonus Plan metric was changed to a consistent metric of company Adjusted EBITDA for corporate officers and divisional Adjusted EBITDA for division VPs. In the prior year, pre-taxincome was used for corporate officers and division EBIT was used for division VPs. |
• In 2023, Adjusted EBITDA was the only metric in the "Profitability Bonus" portion of the program, weighted 75% of the total Annual Cash Bonus. Based on Adjusted EBITDA performance, payouts can range from 50% at threshold to 200% at maximum, with linear interpolation between performance levels. • The remaining 25% of the Annual Cash Bonus was dedicated to "Personal Annual Priorities" comprised of a maximum of four (4) items deemed to be the most critical priorities for each NEO for the year. Individual priorities payout opportunity is capped at 100% of target. |
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Compensation Element |
Description |
Program Features |
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Long-Term Equity Incentives |
• The Compensation Committee granted a mix of performance-based restricted stock units ("PSUs) and time-based RSUs in 2023 to retain key talent and build an ownership mentality for executive officers. • A target equity award is granted to each NEO commensurate with job responsibilities, market competitiveness, experience, and qualitative and quantitative performance factors. • PSUs utilize a multi-year performance period to link realized compensation to achievement of long-term financial performance. • In 2023, company wide ROIC and revenue achievement goals were used to measure performance achievement. RSUs align the executives with stockholder interests on increasing share value. |
• In 2023, 50% was granted in the form of PSUs with performance measured by achievement of three-year Company ROIC and revenue growth targets, each weighted equally, providing a balanced focus on both returns and growth over the three-year performance period. The PSUs cliff vest three years after grant, subject to continued service and achievement of the performance goals. • The remaining 50% was granted as time-based RSUs vesting in three equal annual installments over three years based on continued service. • We believe this provides a balanced focus on both returns and growth over the three-year performance period. |
Executive Compensation Practices at a Glance
We strive to have compensation programs that serve to attract and retain our best people, align the interests of our employees with that of our shareholders by focusing incentive compensation on pay for performance, and at the same time assure good corporate governance. Over the years, always with a focus on enhancing long-term shareholder value, we have implemented many changes, including granting RSUs with longer-term targets, stock ownership guidelines, a compensation recoupment policy, a risk-hedging policy, change in control arrangements, limited perquisites, net settlement features in equity grants to reduce the effect of dilution, and setting realistic stretch targets specifically focused on our rental industry metrics.
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What We Do |
What We Do Not Do |
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Pay for Performance under Our Cash Bonus Plan: We link pay to performance and shareholder interests by establishing an annual cash bonus plan based on financial metrics and personal annual priorities established in advance by the CEO and/or the Compensation Committee. Performance-Based Long Term Incentive Compensation: 50% of the RSUs granted to our executive officers have performance-based vesting subject to goals associated with corporate or divisional ROIC performance. In 2023, we also began using revenue as an additional measurement. Compensation Recoupment Policy: The policy may require an executive officer in the event of a financial restatement to reimburse the Company with respect to any incentive compensation (including cash and equity awards) received during the past three years. Capped Incentives under Our Annual Cash Bonus Plan: Bonuses under our annual cash bonus plan are capped for our executive officers - the cap is tied to their base salary for the relevant year, and in no case is it greater than 200% of their target bonus. Equity Awards Vesting: Performance-based awards vest at the end of each three-year performance period. Time-based awards are subject to a three-year vesting schedule. Stock Ownership and Holdback Guidelines: Our executive officers and directors are subject to stock ownership and holdback guidelines. Compensation Committee Independence and Experience:The Compensation Committee is comprised solely of independent directors who have extensive experience. Thorough Compensation Risk Assessment: The Compensation Committee regularly conducts a comprehensive risk assessment of the Company's executive compensation programs and practices every two years to ensure prudent risk management. Independent Compensation Advisor: The Compensation Committee utilizes its own independent advisor. Annual Stockholder Advisory Vote: We conduct an annual shareholder advisory vote on the compensation of our NEOs. |
No "Single Trigger" Change of Control Severance Payments: We generally do not have "single trigger" severance payments owing solely on account of the occurrence of a change of control event. No Guaranteed Bonuses:We do not provide guaranteed minimum bonuses or uncapped incentives under our annual cash bonus plan. No Re-Pricingof Equity Awards: Our equity plans prohibit repricing of equity awards without shareholder approval. No Special Perquisites or Retirement Benefits: We do not provide special perquisites or retirement benefits to our executive officers that are not generally made available to all of our employees except that any executive officer employed with the Company for at least 10 years may remain on the Company's health insurance policy after retiring if he or she pays 100% of the premiums. No Tax Gross-Ups:We do not provide tax gross-ups. No Hedging in No Pledging of |
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The following sections describe all features of our executive compensation in more detail.
Compensation Philosophy and Objectives
The purpose of the Company's executive compensation program is to attract and retain exceptional managerial talent and to reward performance by establishing measurable objectives to drive future performance, thus aligning our executive officers' interests with those of our shareholders. We believe the most effective compensation program is one that is designed to reward the achievement of specific annual, long-term, and strategic goals of the Company. Our primary objective is to align our executive officers' interests with the interests of our shareholders by rewarding the achievement of established goals that contribute to increased long-term shareholder value. To that end, part of our executive officers' compensation is directly tied to identifiable, objective goals by which performance can be measured. In addition, in structuring our executive compensation program, we consider the compensation of our executive officers relative to the compensation paid to similarly situated executives of our peer group companies and the broader general market.
Advisory Vote on Executive Compensation
At the 2023 Annual Meeting, 96.7% of the shares of Common Stock present and entitled to vote on the advisory vote on the executive compensation proposal were in favor of our named executive officer compensation. The result of the 2023 vote was consistent with our record over the past five years of greater than 95% support for say-on-pay.The Board of Directors and Compensation Committee reviewed these final vote results and determined that, given the significant level of support, our executive compensation policies and decisions discussed in the "Compensation Discussion and Analysis"were appropriate to achieve our objectives.
Compensation Consultant and Peer Group Selection
The Compensation Committee periodically seeks input from its outside compensation consultant on a range of external market factors, including evolving compensation trends, appropriate peer companies, and market survey data. In 2023, the Compensation Committee retained Semler Brossy to conduct a review and analysis of our current compensation program to be considered by the Compensation Committee in establishing the compensation levels and severance guidelines for our non-employeedirectors and executive officers. After consideration of several factors relating to the independence of Semler Brossy, including those guidelines set forth in the NASDAQ listing standards, the Compensation Committee determined that Semler Brossy is independent.
In late 2023, Semler Brossy provided an analysis with relevant market data and alternatives to consider when making compensation decisions for our executive officers. The analysis compared each element of total compensation against a peer group of publicly traded companies and compensation survey data (the "
Other factors were also taken into consideration when determining executive officer compensation levels, including:
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Divisional size (revenues or earnings) contribution to Company-wide results relative to other divisions. |
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Divisional business complexity relative to other divisions of the Company. |
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Stature/experience/length of service of executive officer in role relative to market comparisons. |
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Geographic location of executive officer and relative market comparisons. |
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Definition and extent of responsibilities of executive officer role by the Company versus peer group sources. |
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Divisional leadership transition or new business initiatives. |
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Appropriate weighting or relativeness of different peer group sources. |
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Other factors the Compensation Committee may deem appropriate. |
The companies comprising the 2023
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In connection with Semler Brossy's updated peer analysis in 2023, the Compensation Committee approved a revised
The Company's peer group is reviewed and selected based on companies within a similar industry, geography, and financial profile. In 2023, the Company's peers were screened to approximate one-thirdto three times the Company's revenue and market cap as of the time of review. Additional consideration is given to qualitative criteria, where companies who matched the screening criteria were holistically reviewed to determine whether they were seen as a reasonable comparator for the Company (on the basis of whether they are seen as talent competitors, have similar business characteristics, and operate adjacent to the Company's industry).
As a result, the Compensation Committee approved an increase of the size of the Company's peer group from 12 to 18 companies.
The revised
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Process of Setting and Approving Executive Compensation; Role of Chief Executive Officer
The Compensation Committee approves annual compensation levels and equity awards to all of our executive officers. The process is described below:
The five steps below describe the process of setting and approving executive compensation and the role of the Chief Executive Officer in a typical year.
1. The Compensation Committee reviews the independent compensation consultant's analysis to evaluate for each executive officer (1) a target total compensation amount; (2) the appropriate allocation of base salary, annual bonus, and long-term equity incentive compensation; (3) the risk that any compensation element could have an adverse impact on the Company; and (4) if there should be any change to the forms of compensation to better align our executive officer's interests with those of our shareholders.
2. For the Chief Executive Officer, the allocation of base salary, annual bonus, and long-term equity incentive compensation and the applicable performance target levels are determined by the Compensation Committee, in consultation with the Chairman of the Board of Directors and separately with all of the independent directors. The Chief Executive Officer has no role in setting his compensation.
3. For each of the other executive officers, the Chief Executive Officer recommends the allocation of base salaries, annual bonuses, and long-term equity incentive compensation and the applicable performance target levels. These recommendations are presented to the
4. Shortly after the end of the fiscal year, the Chief Executive Officer reviews the performance of each executive officer (other than himself) against his or her established personal objectives for the year and general management responsibilities and then determines the achievement level attained.
5. At the end of the fiscal year, the Compensation Committee reviews the Chief Executive Officer's performance. The Compensation Committee then determines, based on the market data and the Chief Executive Officer's performance, and after consultation with the Chairman of the Board of Directors and separately with all independent directors, the compensation of the Chief Executive Officer.
2023 and 2024 Annual Base Salary
The table below sets forth the annual base salary of each of our named executive officers in 2022, 2023, and 2024. Based on the performance results of 2022, the outlook for the Company in 2023 and 2024, the updated analysis conducted by the Compensation Committee's compensation consultant, and
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2022 Base Salary |
2023 Base Salary |
2024 Base Salary(3) |
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$ | 700,000 | $ | 800,000 | $ | 850,000 | ||||||
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$ | 480,000 | $ | 500,000 | $ | 520,000 | ||||||
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$ | 350,000 | $ | 380,000 | $ | 450,000 | ||||||
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$ | - | $ | 400,000 | $ | 440,000 | ||||||
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$ | 316,000 | $ | 330,000 | $ | 350,000 |
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In 2024, market adjustments to NEO base salaries were made at the recommendation of the Company's compensation consultant, Semler Brossy. |
2023 Non-EquityPerformance-Based Incentive Plan Compensation
The 2023 Cash Bonus Plan is comprised of two components. The first component compensates the executive officer for his or her efforts leading to the Company's success at meeting its annual profitability goals. Annual profitability goals are measured by Adjusted EBITDA for corporate executive officers (Messrs. Hanna and Pratt and Mses. Malek and Van Trease) and for division executive officers (
Component 1-Profitability:
The profitability goal for the corporate NEOs, Messrs. Hanna and Pratt and Mses. Malek and Van Trease, is based 100% on the Company's Adjusted EBITDA. For the division NEO,
Adjusted EBITDA is calculated from results reported on the Company's income statement, excluding one-timeacquisition-related transaction costs disclosed by the Company in its annual and quarterly reports. For a reconciliation of Adjusted EBITDA to the comparable GAAP measure, please reference the Original Annual Report.
We use a collaborative process between our Chief Executive Officer, Chief Financial Officer, and other executive officers to determine the annual profitability goal for each of the executive officers of the Company. The goals are then recommended to the Compensation Committee. The Compensation Committee then reviews each executive officer's compensation history and performance before determining final levels for profitability goals.
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The annual profitability goals for each division and the Company are established at the beginning of each fiscal year based upon a "realistic stretch" philosophy. The Company's management determines the potential annual financial performance for each division and the Company based on its outlook for the opportunity levels in the markets in which it operates, strategic and tactical initiatives, and other key factors and special circumstances, applying a "realistic stretch" view to what potentially can be accomplished. We expect that although it would take a significant amount of effort on the part of each individual, 100% of the target annual profitability level can be achieved for the year. We assume any amount in excess of the target annual profitability goal would be difficult to achieve without extraordinary effort or the occurrence of significant and unforeseen changes in the competitive landscape. Each executive officer has a designated percentage of base salary for the calendar year that can be earned for achieving 100% of his or her respective annual profitability goal. For 2023, based on input from Semler Brossy, and consistent with common practices in the market, the threshold for the 2023 Cash Bonus Plan is such that 90% achievement will result in 50% bonus eligibility. Achievement below 90% results in zero payout. At 110% achievement, the plan pays a maximum of two times the bonus target for profitability. Achievement and resulting bonus payouts for performance between Threshold and Target, and for performance between Target and Maximum, are determined based on straight-line interpolation.
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% of Bonus Earned |
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<>90% | 0 | ||||||
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90% | 50% | ||||||
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100% | 100% | ||||||
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110% | 200% |
Component 2-Personal Annual Priorities:
The second component for the Cash Bonus Plan measures each executive officer's success at accomplishing his or her personal annual priorities. Final determination of the personal annual priorities for each executive officer rests with the Chief Executive Officer (other than the personal annual priorities of the Chief Executive Officer, which are determined by the Compensation Committee, after consultation with the Chairman of the Board of Directors and separately with all independent directors). These personal annual priorities are measured periodically throughout the year and paid annually, using a collaborative process between the Chief Executive Officer or the Executive Vice President and each executive officer. The personal annual priorities generally are comprised of a maximum of four (4) items deemed to be the most critical priorities that require action to be taken for the current evaluation period. Each priority is weighted according to (1) the critical nature of the priority relative to other priorities; and (2) the amount of time and effort involved in accomplishing the priority relative to other priorities.
Listed below under "2023Cash Bonus Plan Percentages"is a schedule identifying each NEO and the percentage amounts of base salary for calendar year 2023 that could have been earned under this component for achieving a 100% rating for all personal priorities. Each personal annual priority goal represents a challenge and complete success is not always solely in the control of the executive officer. There are factors that may affect the outcome, including changes in market conditions and unanticipated variables. Each personal annual priority is measured and the overall weighted average of achievement for all personal annual priorities is multiplied by the total percentage of base salary allotted to personal annual priorities available to each executive officer. The Compensation Committee annually uses its discretion to allocate specific percentages of profitability and personal annual priorities for each executive officer.
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2023 Cash Bonus Plan Percentages:
Based on each named executive officer's performance results in 2022, the outlook for the Company in 2023, and
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Individual |
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2023 Target Bonus $ |
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Total Payout $ |
Total |
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$ | 800,000 | 100.0 | % | $ | 800,000 | 75.0 | % | 156.4 | % | $ | 938,400 | 25.0 | % | 96.1 | % | $ | 192,200 | $ | 1,130,600 | 141.3 | % | ||||||||||||||||||||||
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$ | 500,000 | 60.0 | % | $ | 300,000 | 75.0 | % | 156.4 | % | $ | 351,900 | 25.0 | % | 100.0 | % | $ | 75,000 | $ | 426,900 | 142.3 | % | ||||||||||||||||||||||
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$ | 380,000 | 60.0 | % | $ | 228,000 | 75.0 | % | 180.0 | % | $ | 307,800 | 25.0 | % | 97.8 | % | $ | 55,746 | $ | 363,546 | 159.5 | % | ||||||||||||||||||||||
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$ | 400,000 | 50.0 | % | $ | 200,000 | 75.0 | % | 156.4 | % | $ | 183,824 | 25.0 | % | 127.6 | % | $ | 50,000 | $ | 233,824 | 149.2 | % | ||||||||||||||||||||||
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$ | 330,000 | 60.0 | % | $ | 198,000 | 75.0 | % | 156.4 | % | $ | 232,254 | 25.0 | % | 100.0 | % | $ | 49,500 | $ | 281,754 | 142.3 | % |
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Maximum payout for Adjusted EBITDA is 200% of target. |
| (2) |
Maximum payout for Individual Component is 100% of target. |
Under the terms of the 2023 Cash Bonus Plan, in the event of a named executive officer's termination by the Company without cause or a resignation for good reason, which occurs prior to the end of the fiscal year, the bonus will be prorated based on the number of days such named executive officer was employed prior to such termination for the year of termination, with the bonus amount calculated as follows: (i) for the profitability component, the target bonus amount, and (ii) for the priorities component, full satisfaction of the specified priorities. In the event of a change of control, the bonus will be prorated based on the number of days the named executive officer was employed prior to the change of control, with the bonus amount calculated as follows: (i) for the profitability component, the target bonus amount, and (ii) for the priorities component, full satisfaction of the specified priorities.
2023 Goals and Results:
With respect to annual profitability goals:
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Messrs. Hanna and Pratt and Mses. Malek and Van Trease's Company profitability goal for Adjusted EBITDA was |
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The Annual Bonus amounts under the Cash Bonus Plan paid to each of the named executive officers are also listed in column (g) in the "Summary Compensation Table"in this Proxy Statement.
Long-Term Incentive Compensation
| 2023 Long-Term Equity Incentives | ||
|
• The Company's long-term incentive program encourages a long-term focus through the use of equity compensation, the value of which is dependent on the Company's long-term financial performance as well as the performance of our common stock. • Each Company executive is granted a target value of long-term equity incentives, which is divided between two forms of equity vehicles. The numbers of shares granted to each NEO is equal to the target value of each vehicle divided by the closing share price of our common stock on the date of grant of ( • In 2023, Company executives were awarded performance based restricted stock units ("PSUs") and time-based restricted stock units ("RSUs") • Approximately half of the executive's long-term awards are in the form of PSUs contingent on the performance of three-year ROIC and revenue targets, emphasizing long-term financial performance. • The remaining half, consisting of time-based RSUs, support the retention of our management team and reward executives for sustained share price appreciation. |
Note:
35
2023 Long-Term Incentive Compensation Equity Grants
|
Target LTI $ |
Performance-Vested RSUs |
Time-Vested RSUs |
||||||||||||||||||||||||||
|
|
% |
# |
$ Value |
% |
# |
$ Value |
||||||||||||||||||||||
|
|
$ | 2,700,000 | 63% | 16,310 | $ | 1,700,000 | 37 | % | 9,590 | $ | 1,000,000 | |||||||||||||||||
|
|
$ | 750,000 | 50% | 3,600 | $ | 375,000 | 50 | % | 3,600 | $ | 375,000 | |||||||||||||||||
|
|
$ | 410,000 | 50% | 1,970 | $ | 205,000 | 50 | % | 1,970 | $ | 205,000 | |||||||||||||||||
|
|
$ | 400,000 | - | - | - | 100 | % | 4,290 | $ | 400,000 | ||||||||||||||||||
|
|
$ | 320,000 | 50% | 1,530 | $ | 160,000 | 50 | % | 1,530 | $ | 160,000 |
| (1) |
|
Performance-Based Restricted Stock Units ("PSUs"):
PSUs granted in 2023 are earned based upon achievement of a three-year corporate ROIC target (for corporate executive officers; division specific ROIC targets for divisional executive officers) and a revenue target, each weighed equally. Having each divisional officer's performance tied directly to his or her respective division's performance allows for that officer to be measured with diminished influence, positive or negative, of any other division's performance. With respect to the ROIC and revenue targets, the awards have at least a 50% payout for threshold achievement, 100% payouts for target achievement and 200% payouts for maximum achievement, with linear interpolation between performance levels. If performance is below threshold, no payout is delivered. The PSUs cliff vest following the completion of the three-year performance period, subject to continued service and achievement of the performance goals.
Restricted Stock Units ("RSUs"):
The 2023 time-based RSUs vest in three annual installments over three years based on the continued service of the executive.
2021-2023 PSU Achievement
|
|
2021-2023 Actual |
2021-2023 Target PSUs |
2021-2023 PSUs Earned |
|||||||||
|
|
200% | 8,020 | 16,040 | |||||||||
|
|
200% | 3,050 | 6,100 | |||||||||
|
|
200% | 1,920 | 3,840 | |||||||||
|
|
- | - | - | |||||||||
|
|
- | - | - |
| (1) |
|
| (2) |
|
| (3) |
|
2024 McGrath Equity Awards
In past years, including in calendar year 2023, the Compensation Committee approved long-term incentive compensation awards for the Company's executive officers that have 50% of the equity value granted as performance-based RSUs, vesting at the end of each three-year performance period, and 50% of the equity value granted as service-based RSUs vesting over three years. In
36
Agreement, the Compensation Committee had preliminarily approved the amount of long-term incentive compensation awards for the Company's executive officers for calendar year 2024, without specifying the form of such long-term incentive compensation awards. In connection with the transactions contemplated by the Merger Agreement, the Company and WillScot agreed that long-term incentive compensation awards granted in
Executive Officer Stock Ownership and Stock Holdback Guidelines
The Board of Directors believes that, in order to better align the interests of management and shareholders, executive officers should have a significant financial (equity) stake in the Company. Each executive officer has a target level of Company Common Stock value to achieve within seven (7) years of his or her date of hire. The target level of Common Stock value to be achieved is a multiple of each executive officer's base salary. The multiples of executive officer base salary are four (4) times for the Chief Executive Officer and two (2) times for all other executive officer positions. In evaluating whether the Common Stock value ownership guideline has been met, all shares of Common Stock owned, in the McGrath RentCorp Employee Stock Ownership and 401(k) Plan ("KSOP") shares and 50% of the value (market price less strike price) of all vested unexercised stock options are considered. The Board of Directors evaluates whether exceptions should be made for any executive officer on whom this requirement would impose a financial hardship.
It is the Company's policy that each executive officer has a 10% holdback provision for RSU equity grant settlements to facilitate earlier achievement of stock ownership under the Company's stock ownership guidelines.
Equity Granting Policy
In 2007, the Board of Directors adopted an equity granting methodology whereby there is one annual equity grant date, which is the date when the blackout window opens after the year-endearnings are released. All designated non-employeedirectors, executive officers, and key employees are eligible to receive an equity grant on the annual equity grant date with an exercise price (for stock options or SARs) or grant price (for RSUs), equal to the
Compensation Recoupment Policy
In 2011, the Board of Directors adopted a Compensation Recoupment Policy that applies to executive officers if the Company is required to restate its financial statements. The Board believes it is desirable and in the best interests of the Company and its shareholders to maintain and enhance a culture that is focused on integrity and accountability and believes that this policy discourages conduct detrimental to the Company's sustained
37
growth. In 2023, the Board of Directors adopted the Company's Amended and Restated Compensation Recoupment Policy (the "Policy") in accordance with the
Risk-Hedging Policies
Pursuant to the Company's Insider Trading and Blackout Policy, officers and directors of the Company are prohibited from engaging in short-term or speculative securities transactions with respect to the Company's Common Stock. These prohibited transactions can have the effect of reducing or canceling the risk of an investment in the Common Stock, particularly in the short-term. These prohibited transactions may create the appearance that the executives are trading on inside information. Additionally, certain forms of hedging or monetization transactions allow a shareholder to lock in much of the value of his or her stock holdings, often in exchange for all or part of the potential for upside appreciation in the stock. These transactions allow the holder to continue to own the covered securities but without full risks and rewards of ownership. Therefore, Company personnel are also specifically prohibited from engaging in short sales, hedging transactions, buying or selling puts or calls, buying any of the Company's securities on margin, pledging transactions, and engaging in derivative transactions related to the Company's securities (such as exchange-traded options). The Company's Insider Trading Policy further provides that Company personnel who purchase or sell Company securities in the open market may not correspondingly sell or purchase any Company securities of the same class during the six months following the purchase. The Insider Trading Policy is posted on our website at www.mgrc.com under the Investors/Corporate Governance section.
Perquisites and Other Personal Benefits
Executive officers are entitled to and eligible only for the same fringe benefits for which all of our employees are eligible. We do not have programs in place to provide personal perquisites for any employee. Our healthcare and other insurance programs, including the programs' participation costs, are the same for all eligible employees, except that any executive officer employed with the Company for at least 10 years may remain on the Company's health insurance policy after retiring from the Company, provided that such executive officer pays 100% of the premiums. Our annual matching contributions to the Company's Employee Stock Ownership and 401(k) Plan ("KSOP"), expressed as a percentage of eligible wages, up to a stated percentage of eligible wages (and any discretionary contributions that we may make to the KSOP, expressed as a percentage of eligible wages), are also the same for all eligible employees, including each named executive officer, subject to all applicable
Change in Control Arrangements
The Company maintains a "Change in Control Severance Plan" for our CEO and CFO. The Change in Control Severance Plan as approved in 2013, contained an initial two-yearterm with no automatic renewal, though the Board of Directors and the Compensation Committee has renewed it since that time and most recently made changes to the Plan in
38
management members, as well as to avoid executives departing due to limited or no remuneration protections in the event of a change in control transaction. Further, the Compensation Committee believes that stable corporate leadership exhibiting the desired management behaviors is imperative for shareholders to be in a position to realize a favorable premium in the potential sale of the Company.
Under the Change in Control Severance Plan, each of Messrs. Hanna and Pratt is entitled to severance payments and termination benefits upon a termination of their employment that is a qualifying termination under the Change in Control Severance Plan. Under the Change in Control Severance Plan, if Messrs. Hanna's or Pratt's employment is terminated without cause or for good reason within 12 months following a change in control, subject to a release of claims, they are entitled to: (i) two times annual base salary; (ii) two times target bonus for the year of termination; (c) medical benefits under COBRA for up to 24 months for
Involuntary Termination Severance Plan for Officers
The Compensation Committee established a formal Involuntary Termination Severance Plan for Officers (the "Severance Plan") to address involuntary termination severance eligibility and payments for executive officer-level positions. The Compensation Committee believes that maintaining this Severance Plan is in the best interests of shareholders in helping to ensure the Company's continuing ability to attract and retain talented senior executives. For the fiscal year ended
Under the Severance Plan, upon a termination by the Company without cause prior to a change in control or after 12 months following a change in control, subject to a release of claims, our NEOs are entitled to the following severance benefits: (a) for Messrs. Hanna and Pratt, a severance payment of up to the equivalent of 12 months of base salary, and for other NEOs, a severance payment of up to the equivalent of 6 months of base salary, (b) medical benefits under COBRA for up to 12 months, and (c) outplacement assistance in accordance with the applicable Company policies and guidelines in effect immediately prior to termination of employment. In the cases of Messrs. Hanna and Pratt, if they are eligible to receive severance benefits under the Change in Control Severance Plan, they would not also be eligible to receive severance benefits under the Severance Plan, but would instead receive the benefits described under Change in Control Severance Plan above.
Under the Severance Plan, upon a termination by the Company without cause or a resignation for good reason within 12 months after a change in control, subject to a release of claims, each NEO other than Messrs. Hanna and Pratt are entitled to receive (a) a severance payment of up to the equivalent of 6 months of base salary, (b) medical benefits under COBRA for up to 12 months, (c) full acceleration and vesting of any and all equity awards, and (d) outplacement assistance in accordance with the applicable Company policies and guidelines in effect immediately prior to termination of employment. The Severance Plan does not provide for a tax gross-up.
In addition, the Company's annual cash bonus plan for executive officers generally provides that upon such executive officer's termination of employment without cause or resignation for good reason, which occurs prior to the end of the plan term, such executive officer would receive a pro-ratedbonus based on the number of days of employment prior to such termination for the plan year, with the bonus amount calculated based on full satisfaction of the target components under the plan. If an executive officer's employment is terminated without cause or an executive officer resigns for good reason in the middle of a plan year, such executive officer would be entitled to a pro-ratedannual bonus for the year of termination.
Acceleration Under Equity Plans
The Company's existing equity compensation plans provide for full acceleration of equity awards upon a qualifying termination after a change in control for all employees of the Company.
39
The Company's existing equity compensation plans also provide for full acceleration of equity awards in the event that the equity awards are not assumed or replaced in a change in control situation. In addition, pursuant to the terms of the award agreements, in the event that a change in control occurs before the applicable performance result is determined, all outstanding 2023 PSUs will become vested, assuming achievement of target performance, on a pro-ratedbasis based on the date of such change in control.
In addition, the covered employee shall enjoy any additional rights provided under the terms of an equity compensation award, including but not limited to the terms of the Company's 2016 Stock Incentive Plan, 2007 Stock Incentive Plan, or any other Company equity plan. The Compensation Committee believes that providing this vesting acceleration assists us in attracting and retaining key employees, including our executives, and promotes stability and continuity of our key employees, which we believe is in the best interests of our shareholders. For details, see "Potential Payments upon Termination or Change in Control" in this Proxy Statement.
Tax and Accounting Implications
Deductibility of Executive Compensation
Section 162(m) of the Code generally limits our corporate tax deduction for compensation paid to certain executive officers to
The Compensation Committee intends to maximize our ability to deduct executive compensation for tax purposes to the extent structuring our executive compensation for tax purposes is in alignment with our compensation philosophy. The Compensation Committee nonetheless reserves the right to use its judgment to authorize compensation payments that may not be deductible when the committee believes that such payments are appropriate and in the best interests of our shareholders, after taking into account changing business conditions or the executive officer's performance.
Accounting for Stock-Based Compensation
We accrue our named executive officers' salaries and incentive awards as an expense when earned. For our stock-based compensation, the
Compensation Policies and Practices and Risk Management
The Compensation Committee considers potential risks when reviewing and approving the compensation programs for our executive officers and other employees. We have designed our compensation programs, including our incentive compensation plans, with specific features to address potential risks while rewarding employees for achieving long-term financial and strategic objectives through prudent business judgment and appropriate risk-taking. The following elements have been incorporated in our programs available for our executive officers:
| • |
A Balanced Mix of Compensation Components-The target compensation mix for our executive officers is composed of base salary, annual cash bonus incentives, and long-term equity awards. |
40
| • |
Multiple Performance Factors-Our incentive compensation plans use both company-wide metrics and individual annual priorities, which encourage a focus on the achievement of objectives for the overall benefit of the Company. |
| • |
Different Performance Metrics-We generally use different performance metrics between our cash bonus and performance RSU programs, providing a balance and mitigating against the potential for undue risk in meeting a single goal. |
| • |
Realistic Performance Goals-Financial performance goals in our performance-based incentive plans are set at levels that are intended to be attainable without the need to take inappropriate risks. |
| • |
Capped Incentive Awards-Payouts for both the annual cash bonus incentive awards and our performance RSUs are capped for our executive officers. |
| • |
Stock Ownership Guidelines-Our stock ownership guidelines align the interests of our executive officers with preservation and appreciation of stockholder value over time. |
| • |
Multi-Year Vesting-Equity awards vest over multiple years, requiring long-term commitment on the part of employees. |
| • |
Competitive Positioning-The Compensation Committee considers our executive compensation program structure and levels relative to our peers. The Compensation Committee generally targets total compensation to be in a market competitive range relative to our peer group and compensation survey data. |
| • |
Corporate Governance Programs-We have implemented corporate governance guidelines, a code of conduct, a compensation recoupment policy, and other corporate governance measures and internal controls. |
The Compensation Committee also reviews the key design elements of our compensation programs in relation to industry practices, as well as the means by which any potential risks may be mitigated, such as through our internal controls and oversight by management and the board. As a result of this review, the Compensation Committee concluded that, based on a combination of factors, our compensation policies and practices do not incentivize excessive risk-taking that could have a material adverse effect on the Company.
Compensation Committee Report
Notwithstanding anything to the contrary set forth in any of the Company's previous filings under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, that might incorporate future filings, including this Proxy Statement, with the
Submitted by the Compensation Committee:
41
Summary Compensation Table
The following table provides summary information concerning the compensation earned during the fiscal years ended
Summary Compensation Table(1)
|
(a) |
(b) |
(c) |
(d) |
(e) |
(f) |
(g) |
(h) |
(i) |
(j) |
|||||||||||||||||||||||||||
|
|
Year |
Salary |
Bonus |
Stock |
Option |
Non-Equity |
Nonqualified Compensation ($) |
All Other |
Total ($) |
|||||||||||||||||||||||||||
|
|
2023 | - | - | - | ||||||||||||||||||||||||||||||||
|
President and Chief Executive Officer |
2022 | - | - | - | ||||||||||||||||||||||||||||||||
| 2021 | - | - | - | |||||||||||||||||||||||||||||||||
|
|
2023 | - | - | - | ||||||||||||||||||||||||||||||||
|
Executive Vice President, Chief Financial Officer and Assistant Corporate Secretary |
2022 | - | - | - | ||||||||||||||||||||||||||||||||
| 2021 | - | - | - | |||||||||||||||||||||||||||||||||
|
|
2023 | - | - | - | ||||||||||||||||||||||||||||||||
|
Senior Vice President and Division Manager, Mobile Modular |
2022 | - | - | - | ||||||||||||||||||||||||||||||||
| 2021 | - | - | - | |||||||||||||||||||||||||||||||||
|
|
2023 | - | - | - | - | |||||||||||||||||||||||||||||||
|
Vice President, General Counsel and Corporate Secretary |
2022 | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||
| 2021 | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||
|
|
2023 | - | - | - | ||||||||||||||||||||||||||||||||
|
Senior Vice President, Chief Strategy Officer |
2022 | - | - | - | ||||||||||||||||||||||||||||||||
| 2021 | - | - | - |
| (1) |
Amounts disclosed in this and other tables may minimally vary from amounts presented within the CD&A narrative due to rounding to the nearest dollar for tabular purposes. |
| (2) |
The amounts in columns (e) and (f) reflect the aggregate grant date fair value amounts, in accordance with ASC the 718, of awards granted pursuant to the 2016 Plan. RSUs were granted to our NEOs on |
| (3) |
The amounts in column (g) reflect amounts earned by the named executive officers during the fiscal year ended |
42
| (4) |
The amounts in column (i) reflect the cash contributions allocated to each named executive officer pursuant to the provisions of the Company's Employee Stock Ownership and 401(k) Plan and dividend equivalent payouts for vested RSUs and PSUs that were not factored into the grant date fair values of such RSUs and PSUs. The table below details the amounts paid to each named executive officer. |
| (5) |
|
|
|
Year |
Employee Stock Ownership and 401(k) Plan Cash Contribution ($) |
RSU and PSU Dividend Payments ($) |
Total ($) |
||||||||||
|
|
2023 | |||||||||||||
| 2022 | ||||||||||||||
| 2021 | ||||||||||||||
|
|
2023 | |||||||||||||
| 2022 | ||||||||||||||
| 2021 | ||||||||||||||
|
|
2023 | |||||||||||||
| 2022 | ||||||||||||||
| 2021 | ||||||||||||||
|
|
2023 | - | - | - | ||||||||||
| 2022 | - | - | - | |||||||||||
| 2021 | - | - | - | |||||||||||
|
|
2023 | |||||||||||||
| 2022 | ||||||||||||||
| 2021 |
43
2023 GRANTS OF PLAN-BASED AWARDS
|
Estimated Future |
Estimated Future Payouts |
All |
All Other |
Exercise |
Grant |
||||||||||||||||||||||||||||||||||||||
|
|
Grant |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
||||||||||||||||||||||||||||||||||||
|
|
$ | 500,000 | $ | 800,000 | $ | 1,400,000 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| - | - | - | 8,155 | 16,310 | 32,620 | 9,590 | - | - | $ | 2,700,334 | |||||||||||||||||||||||||||||||||
|
|
$ | 187,500 | $ | 300,000 | $ | 525,000 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| - | - | - | 1,800 | 3,600 | 7,200 | 3,600 | - | - | $ | 750,672 | |||||||||||||||||||||||||||||||||
|
|
$ | 142,500 | $ | 228,000 | $ | 399,000 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| - | - | - | 985 | 1970 | 3,940 | 1,970 | - | - | $ | 410,784 | |||||||||||||||||||||||||||||||||
|
|
$ | 125,000 | $ | 200,000 | $ | 350,000 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| - | - | - | - | - | - | 4,290 | - | - | $ | 400,300 | |||||||||||||||||||||||||||||||||
|
|
$ | 123,750 | $ | 198,000 | $ | 346,500 | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| - | - | - | 765 | 1,530 | 3,060 | 1,530
1,540 |
- | - | $ | 479,596 |
| (1) |
The amounts listed in these columns reflect the threshold, target and maximum amounts payable to the named executive officers pursuant to the Cash Bonus Plan. See "Non-EquityPerformance-Based Incentive Plan Compensation" for additional detail. The threshold assumptions assume achieving 90% of the profitability target and no achievement of the personal annual priorities. |
| (2) |
Each named executive officer received a grant of PSUs which are subject to a performance-based vesting component at the end of a three-year performance period, except for |
| (3) |
On |
| (4) |
The amounts listed in this column reflect the maximum amount payable to the named executive officers under the terms of the PSUs. Each PSU vests and converts into no less than 50% and no more than 200% of one share of the Company's common stock amounts payable to the named executive officers. The amounts in the table above reflect the probable performance outcome of a maximum payout of 200%. See "Long-Term Incentive Compensation" for additional detail. |
44
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
Option Awards |
Stock Awards |
|||||||||||||||||||||||||||||||||||
|
Number |
Number |
Equity |
Option |
Option |
Number of |
Market |
Equity |
Equity |
||||||||||||||||||||||||||||
|
Exercisable |
Unexercisable |
|||||||||||||||||||||||||||||||||||
|
|
- | - | - | - | - | 2,674(1) | $ | 319,864 | 8,310(4) | $ | 994,042 | |||||||||||||||||||||||||
| 16,040(2) | $ | 1,918,705 | 16,310(6) | $ | 1,951,002 | |||||||||||||||||||||||||||||||
| 5,541(3) | $ | 662,814 | ||||||||||||||||||||||||||||||||||
| 9,590(5) | $ | 1,147,156 | ||||||||||||||||||||||||||||||||||
|
|
- | - | - | - | - | 1,017(1) | $ | 121,654 | 3,230(4) | $ | 386,373 | |||||||||||||||||||||||||
| 6,100(2) | $ | 729,682 | 3,600(6) | $ | 430,632 | |||||||||||||||||||||||||||||||
| 2,154(3) | $ | 257,661 | ||||||||||||||||||||||||||||||||||
| 3,600(5) | $ | 430,632 | ||||||||||||||||||||||||||||||||||
|
|
- | - | - | - | - | 641(1) | $ | 76,676 | 2,000(4) | $ | 239,240 | |||||||||||||||||||||||||
| 3,840(2) | $ | 459,341 | 1,970(6) | $ | 235,651 | |||||||||||||||||||||||||||||||
| 1,334(3) | $ | 159,573 | ||||||||||||||||||||||||||||||||||
| 1,970(5) | $ | 235,651 | ||||||||||||||||||||||||||||||||||
|
|
- | - | - | - | - | 4,290(5) | $ | 513,170 | - | - | ||||||||||||||||||||||||||
|
|
- | - | - | - | - | 514(1) | $ | 61,485 | 1,570(4) | $ | 187,803 | |||||||||||||||||||||||||
| 1,047(3) | $ | 125,242 | 1,530(6) | $ | 183,019 | |||||||||||||||||||||||||||||||
| 1,530(5) | $ | 183,019 | ||||||||||||||||||||||||||||||||||
| 1,540(7) | $ | 184,215 |
| 1) |
Represents RSUs granted on |
| 2) |
Represents PSUs granted on |
| 3) |
Represents RSUs granted on |
| 4) |
Represents PSUs granted on |
| 5) |
Represents RSUs granted on |
| 6) |
Represents PSUs granted on |
| 7) |
Represents RSUs granted on |
45
2023 OPTION EXERCISES AND STOCK VESTED
|
Option Awards |
Stock Awards |
|||||||||||||||
|
|
Number of Shares |
Value Realized |
Number of |
Value Realized |
||||||||||||
|
|
56,000 | $ | 3,721,760 | 22,268 | $ | 2,269,191 | ||||||||||
|
|
16,000 | $ | 1,058,880 | 7,160 | $ | 729,404 | ||||||||||
|
|
5,280 | $ | 351,067 | 4,259 | $ | 433,991 | ||||||||||
|
|
- | $ | - | - | $ | - | ||||||||||
|
|
5,845 | $ | 373,729 | 3,458 | $ | 352,317 |
| (1) |
The "value realized on exercise" represents the number of shares of Common Stock acquired on exercise of the applicable option multiplied by the |
Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information regarding our equity compensation plans as of
EQUITY COMPENSATION PLAN INFORMATION
|
Plan Category |
Number of securities |
Weighted-average |
Number of securities |
|||||||||
|
(a) |
(b) |
(c) |
||||||||||
|
Equity compensation plans approved by security holders |
240 | $ | 34.57 | 1,123,946 | ||||||||
|
Equity compensation plans not approved by security holders |
- | $ | - | - | ||||||||
|
Total |
240 | $ | 34.57 | 1,123,946 |
Our 2016 Stock Incentive Plan was approved by shareholders and has been filed as an exhibit to our Annual Report on Form 10-Kfor the fiscal year ended
Potential Payments upon Termination or Change-in-Control
Pursuant to the terms of the agreements for the McGrath PSU awards granted during the 2022 calendar year (each, a "2022 PSU"), in the event of a change in control of the Company and such event occurs prior to the end of the three-year performance period, at the effective time of such change-in-controlevent, each outstanding 2022 PSU would accelerate and be deemed earned based on the McGrath Board's good faith best estimate of projected actual performance through the end of the performance period. Assuming a change in control of the Company occurred on
46
Pursuant to the terms of the agreements for the McGrath PSU awards granted during the 2023 calendar year (each, a "2023 PSU"), in the event of a change in control of the Company and such event occurs prior to the end of the three-year performance period, a prorated portion of the 2023 PSUs would vest assuming target performance is achieved, with the prorated portion determined based on the number of days elapsed between the grant date and the change in control event. Assuming a change in control occurred on
|
2022 PSUs |
2023 PSUs |
|||||||||||||||
|
|
Number of |
Value of PSUs |
Number of |
Value of PSUs |
||||||||||||
|
|
16,620 | $ | 1,988,084 | 4,617 | $ | 552,328 | ||||||||||
|
|
6,460 | $ | 772,745 | 1,019 | $ | 121,911 | ||||||||||
|
|
4,000 | $ | 478,480 | 557 | $ | 66,712 | ||||||||||
|
|
- | $ | - | - | $ | - | ||||||||||
|
|
3,140 | $ | 375,607 | 433 | $ | 51,812 |
| (1) |
|
Under the terms of our Cash Bonus Plan, the 2016 Stock Incentive Plan and related equity award agreements and KSOP, as well as our Change in Control Severance Plan and Involuntary Termination Severance Plan for Officers, payments may be made to each of our named executive officers upon his or her termination of employment or a change in control (as defined in each plan) of the Company. See "Compensation Discussion and Analysis" and "Equity Compensation Plan Information" for a description of, and an explanation of, the specific circumstances that would trigger payments under each plan, agreement, or policy.
The following table sets forth the estimated payments that would be made to each of our named executive officers upon voluntary termination, including termination for good reason, termination not for cause, termination for cause, termination in connection with a change in control, and termination due to death or permanent disability. The payments would be made pursuant to the plans, agreements, or Company policies identified in the preceding paragraph. The information set forth in the table below assumes the termination event occurred on
47
The actual amounts to be paid out can only be determined at the time of an executive's separation from the Company and may differ materially from the amounts set forth in the table below. The amounts set forth in the table below do not reflect the withholding of applicable state and federal taxes.
|
|
Voluntary ($) |
Involuntary Termination |
Termination ($) |
Retirement, ($) |
||||||||||||||||
|
Without Cause(1) ($) |
For Cause |
|||||||||||||||||||
|
|
||||||||||||||||||||
|
Non-EquityIncentive Plan |
800,000 | 800,000 | 0 | 800,000 | 0 | |||||||||||||||
|
Accelerated Awards Under Equity Incentive Plans(2) |
0 | 0 | 0 | 6,588,962 | 0 | |||||||||||||||
|
Cash Severance |
0 | 800,000 | 0 | 3,200,000 | 0 | |||||||||||||||
|
Continuation of Medical Benefits Under COBRA (present value) |
0 | 22,354 | 0 | 44,708 | 0 | |||||||||||||||
|
Reasonable Outplacement Assistance |
0 | 15,000 | 0 | 15,000 | 0 | |||||||||||||||
|
Total |
800,000 | 1,637,354 | 0 | 9,848,670 | 0 | |||||||||||||||
|
|
||||||||||||||||||||
|
Non-EquityIncentive Plan |
300,000 | 300,000 | 0 | 300,000 | 0 | |||||||||||||||
|
Accelerated Awards Under Equity Incentive Plans(2) |
0 | 0 | 0 | 2,434,288 | 0 | |||||||||||||||
|
Cash Severance |
0 | 500,000 | 0 | 1,600,000 | 0 | |||||||||||||||
|
Continuation of Medical Benefits Under COBRA (present value) |
0 | 34,088 | 0 | 34,088 | 0 | |||||||||||||||
|
Reasonable Outplacement Assistance |
0 | 15,000 | 0 | 15,000 | 0 | |||||||||||||||
|
Total |
300,000 | 849,088 | 0 | 4,083,376 | 0 | |||||||||||||||
|
|
||||||||||||||||||||
|
Non-EquityIncentive Plan |
228,000 | 228,000 | 0 | 228,000 | 0 | |||||||||||||||
|
Accelerated Awards Under Equity Incentive Plans(2) |
0 | 0 | 0 | 1,476,436 | 0 | |||||||||||||||
|
Cash Severance |
0 | 190,000 | 0 | 190,000 | 0 | |||||||||||||||
|
Continuation of Medical Benefits Under COBRA |
0 | 31,922 | 0 | 31,922 | 0 | |||||||||||||||
|
Reasonable Outplacement Assistance |
0 | 7,500 | 0 | 7,500 | 0 | |||||||||||||||
|
Total |
228,000 | 457,422 | 0 | 1,933,858 | 0 | |||||||||||||||
|
|
||||||||||||||||||||
|
Non-EquityIncentive Plan |
200,000 | 200,000 | 0 | 200,000 | 0 | |||||||||||||||
|
Accelerated Awards Under Equity Incentive Plans(2) |
0 | 0 | 0 | 513,170 | 0 | |||||||||||||||
|
Cash Severance |
0 | 200,000 | 0 | 200,000 | 0 | |||||||||||||||
|
Continuation of Medical Benefits Under COBRA (present value) |
0 | 21,427 | 0 | 21,427 | 0 | |||||||||||||||
|
Reasonable Outplacement Assistance |
0 | 7,500 | 0 | 7,500 | 0 | |||||||||||||||
|
Total |
200,000 | 428,927 | 0 | 942,097 | 0 | |||||||||||||||
|
|
||||||||||||||||||||
|
Non-EquityIncentive Plan |
198,000 | 198,000 | 0 | 198,000 | 0 | |||||||||||||||
|
Accelerated Awards Under Equity Incentive Plans(2) |
0 | 0 | 0 | 981,381 | 0 | |||||||||||||||
|
Cash Severance |
0 | 165,000 | 0 | 165,000 | 0 | |||||||||||||||
|
Continuation of Medical Benefits Under COBRA |
0 | - | 0 | - | 0 | |||||||||||||||
|
Reasonable Outplacement Assistance |
0 | 7,500 | 0 | 7,500 | 0 | |||||||||||||||
|
Total |
198,000 | 370,500 | 0 | 351,881 | 0 |
48
| (1) |
Represents the severance payments and benefits that the NEOs would be entitled to if a termination without cause occurs prior to or after 12 months following a change in control under the Severance Plan including (i) one year of base salary for Messrs. Hanna and Pratt and six months of base salary for |
| (2) |
Assumes termination on the last day of the calendar year, with a closing |
| (3) |
Represents the severance payments and benefits that the NEOs would be entitled to under the Change in Control Severance Plan and the Severance Plan, as applicable, if a termination of employment without cause or a resignation for good reason within 12 months of a change in control of the Company, including (i) for Messrs. Hanna and Pratt, an amount equal to two times the sum of their annual base salary and annual target bonus for the year of termination, and for Mses. Malek and Van Trease and |
CEO Compensation Pay Ratio
We believe our executive compensation program must be internally consistent and equitable to motivate our employees to create shareholder value. We monitor the relationship between the compensation of our executive officers and the compensation of our non-managerialemployees. For 2023, the total compensation of
Our CEO to median employee pay ratio is calculated in accordance with the
49
Treatment of Certain Compensation Elements Upon Termination
Executive Severance Policy. We do not have employment agreements. The Compensation Committee has, however, established terms and conditions to address involuntary termination severance benefits for executive officer-level positions in connection with a change in control of the Company or otherwise. For details, see both the "Change of Control Severance Plan" and "InvoluntaryTermination Severance Plan for Officers" discussions within the "Compensation Discussion and Analysis" section of this Proxy Statement.
Retirement Plan. All employees who participate in our KSOP are entitled to their vested amounts upon termination of their employment.
Health and Welfare Benefit and Executive Benefits and Perquisites Continuation. An executive officer is not entitled to any continuation of his or her health and welfare benefits, executive benefits, or perquisites (other than pursuant to COBRA) following the termination of his or her employment, except that any executive officer employed with the Company for at least 10 years may remain on the Company's health insurance policy after he or she retires from the Company, provided he or she pays 100% of the premiums.
Long-Term Incentives. Except in the circumstances discussed above, an executive officer forfeits his or her stock options or unvested shares of restricted stock upon termination of employment and is not entitled to any continuation of vesting or acceleration of vesting with respect to his or her options or unvested restricted stock awards. The executive would be, however, entitled to exercise any vested options for a period of 90 days after termination and is entitled to continue to hold his or her shares of restricted stock that had previously vested (in the same manner as any other employee of the Company). In the event of a qualifying termination following a change in control, an executive officer is entitled to the acceleration of vesting with respect to all of his or her equity awards, consistent with the Change in Control arrangements described above.
50
in this Proxy Statement for a complete description of how executive compensation relates to Company performance and how the Compensation Committee makes its decisions.
|
Year-end value of
invested on |
||||||||||||||||||||||||||||||||
|
Year
|
Summary
Compensation Table Total for |
Compensation
Actually Paid to Joseph Hanna (1)(2)(3)
$ |
Average
Summary Compensation Table Total for Non-CEO
NEOs (4)
$ |
Average
Compensation Actually Paid to
Non-CEO
NEOs (1)(2)(3)(4)
$ |
MGRC
$ |
S&P 500
Industrials Index $ |
Net Income
(in millions) $ |
Pre-Tax
Income |
||||||||||||||||||||||||
|
2023
|
4,771,898 | 8,501,597 | 1,249,999 | 1,755,679 | 171.19 | 165.61 | 174.6 | 151.2 | ||||||||||||||||||||||||
|
2022
|
3,121,167 | 4,871,184 | 1,029,825 | 1,480,971 | 138.60 | 126.96 | 115.1 | 150.0 | ||||||||||||||||||||||||
|
2021
|
3,261,680 | 4,386,308 | 969,855 | 1,277,750 | 110.16 | 157.53 | 89.7 | 121.8 | ||||||||||||||||||||||||
|
2020
|
2,668,399 | 1,108,518 | 857,107 | 360,892 | 90.05 | 123.17 | 102.0 | 132.0 |
| (1) |
Deductions from, and additions to, total compensation in the
"Summary Compensation Table"
by year to calculate CAP include: |
|
2023
|
||||||||
|
|
Average
Non-CEO
NEOs |
|||||||
|
Total Compensation from Summary Compensation Table
|
$ | 4,771,898 | $ | 1,249,999 | ||||
|
Adjustments for Pension
|
||||||||
|
Adjustment Summary Compensation Table Pension
|
$ | - | $ | - | ||||
|
Amount added for current year service cost
|
$ | - | $ | - | ||||
|
Amount added for prior service cost impacting current year
|
$ | - | $ | - | ||||
|
Total Adjustments for Pension
|
$
|
-
|
$
|
-
|
||||
|
Adjustments for Equity Awards
|
||||||||
|
Adjustment for grant date values in the Summary Compensation Table
|
$ | 2,700,334 | $ | 510,338 | ||||
|
Year-end
fair value of unvested awards granted in the current year |
$ | 4,600,430 | $ | 762,488 | ||||
|
Year-over-year difference of
year-end
fair values for unvested awards granted in prior years |
$ | 969,825 | $ | 169,598 | ||||
|
Fair values at vest date for awards granted and vested in current year
|
$ | - | $ | - | ||||
|
Difference in fair values between prior
year-end
fair values and vest date fair values for awards granted in prior years |
$ | 709,030 | $ | 89,940 | ||||
|
Forfeitures during current year equal to prior
year-end
fair value |
$ | - | $ | 34,213 | ||||
|
Dividends or dividend equivalents not otherwise included in total compensation
|
$ | 150,748 | $ | 28,206 | ||||
|
Total Adjustments for Equity Awards
|
$
|
6,430,033
|
$
|
1,016,018
|
||||
|
Compensation Actually Paid (as calculated)
|
$
|
8,501,597 |
$
|
1,755,679 | ||||
| (2) |
The assumptions used in calculating the fair value of the equity awards did not differ in any material respect from the assumptions used to calculate the grant date fair value of the awards as reported in the Summary Compensation Table, except that as of the end of 2023, the fair value calculations of the PSUs
|
|
granted in 2021 and 2022 assumed a payout at maximum, and the PSUs granted in 2023 assumed a payout between target and maximum, in each case as compared to the grant date fair value calculations which assumed a payout at target.
|
| (3) |
Non-CEO
NEOs reflect the average "Summary Compensation Table"
total compensation and average CAP for the following executives by year: |
in this Proxy Statement.
|
Performance Measures
|
|
Pre-Tax
Income |
|
Adjusted EBITDA
|
| (1) |
the Company's cumulative TSR and the S&P 500 Industrials Index's cumulative TSR;
|
| (2) |
the Company's Net Income; and
|
| (3) |
the Company's
Pre-Tax
Income |
1, 2024. No member of the Compensation Committee is a present or former executive officer or employee of the Company or any of its subsidiaries. No executive officer of the Company has served on the board of directors or compensation committee of any entity which has one or more executive officers serving as a member of the Company's Board of Directors or Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than the indemnification agreements described below, there were no transactions in 2023 between the Company and a related person required to be reported under applicable
Indemnification Agreements
The Company has entered into indemnification agreements with each of our directors and executive officers. These agreements require the Company to indemnify our executive officers or directors against expenses and, in certain cases, judgments, settlements, or other payments incurred by an executive officer or director in suits brought by the Company, derivative actions brought by our shareholders, and suits brought by other third parties. Indemnification has been granted under these agreements to the fullest extent permitted under
Policies and Procedures Regarding Related Party Transactions
Pursuant to the Audit Committee Charter, the Audit Committee is responsible for reviewing and discussing with management any transactions or courses of dealing with related parties. The Audit Committee considers the following factors in determining whether to approve or disapprove (with referral to the Board of Directors) any such related party transaction or course of action: (i) the financial accounting accorded the transaction or course of action; (ii) whether the terms or other aspects differ from those that would likely be negotiated with independent parties; and (iii) whether the proposed disclosure of the transaction or course of dealing, if any, is in accordance with generally accepted accounting principles and
55
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to the Company with respect to beneficial ownership of our Common Stock as of
|
Beneficial Owner(1)(2) |
Shares Beneficially Owned(3) |
Percentage of Owned |
||||||
|
|
2,691,278 | 11.0% | ||||||
|
|
2,127,591 | 8.7% | ||||||
|
|
1,866,600 | 7.6% | ||||||
|
|
171,513 | * | ||||||
|
|
57,225 | * | ||||||
|
|
24,128 | * | ||||||
|
|
919 | * | ||||||
|
|
6,700 | * | ||||||
|
|
1,500 | * | ||||||
|
|
8,500 | * | ||||||
|
|
4,500 | * | ||||||
|
|
28,105 | * | ||||||
|
|
6,970 | * | ||||||
|
|
11,700 | * | ||||||
|
All executive officers and directors as a group (15 persons)(10) |
379,165 | 1.6% |
* The percentage of shares beneficially owned by this director or executive officer constitutes less than 2% of our Common Stock as of
| (1) |
Except as otherwise indicated, the address of each of the executive officers and directors is c/o |
| (2) |
To the Company's knowledge, except as set forth in the footnotes to this table, and subject to applicable community property laws, each shareholder named in this table has sole voting and investment power with respect to the shares set forth opposite such shareholder's name. |
| (3) |
Beneficial ownership is determined in accordance with the rules of the |
| (4) |
|
56
| (5) |
|
| (6) |
|
| (7) |
Includes the shares held by the KSOP for the benefit of the named individual. The number of shares included is 264 shares for |
| (8) |
|
| (9) |
|
| (10) |
See footnote (7). |
Communications with the Board of Directors
Our Board of Directors believes that full and open communication between shareholders and members of our Board of Directors is in the best interests of our shareholders. Shareholders may contact any director or committee of the Board of Directors by writing to the Compliance Officer, c/o
Shareholder Recommendations for Membership on our Board of Directors
57
beneficially owned by the prospective candidate; (4) a description of all arrangements or understandings between the shareholder and the prospective candidate pursuant to which the nomination is to be made by the shareholder if the shareholder and the prospective candidate are different individuals; (5) the candidate's signed consent to serve as a director if elected and to be named in our proxy statement; (6) a signed certificate providing the class and number of shares of our Common Stock which are beneficially owned by the shareholder; and (7) any other information that is required to be provided by the shareholder pursuant to Regulation 14A under the Exchange Act. Once the
We have not received a director nominee recommendation from any shareholder (or group of shareholders) that beneficially owns more than five percent of our Common Stock.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our directors, executive officers, and persons who own more than 10% of our Common Stock (collectively, "Reporting Persons") to file initial reports of ownership and changes in ownership of our Common Stock with the
We believe, based solely on our review of the copies of such reports submitted on EDGAR and written representations from Reporting Persons, that during the fiscal year ended
Code of Business Conduct and Ethics
Our Board of Directors adopted and approved a Code of Business Conduct and Ethics and Whistleblower Policy. This code and Whistleblower Policy apply to all of our employees and our non-employeedirectors and is posted on our website at www.mgrc.com under the Investors section. The code satisfies the "Code of Ethics" requirements under the Sarbanes-Oxley Act of 2002 as well as the "Code of Conduct" requirements under the Market Place Rules of the
58
by our Compliance Officer, who is currently
Corporate Governance Guidelines
Our Board of Directors adopted and approved a set of Corporate Governance Guidelines. The guidelines set forth the practices our Board follows with respect to, among other things, the composition of the Board and Board committees, director responsibilities, director continuing education, and performance evaluation of the Board. The guidelines are posted on our website at www.mgrc.com under the Investors section.
No Supermajority Vote on Approval of Mergers or Other Business Combinations
Our corporate governance documents do not contain a supermajority standard for the approval of a merger or a business combination. Such transactions require the affirmative vote of a majority of the outstanding shares.
59
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
A representative of
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
| 2023 | 2022 | |||||||
|
Audit Fees(1) |
$ | 2,139,669 | $ | 1,818,308 | ||||
|
Audit-Related Fees(2) |
$ | 47,883 | $ | 44,405 | ||||
|
Tax Fees |
$ | 0 | $ | 0 | ||||
|
All Other Fees |
$ | 0 | $ | 0 | ||||
|
Total |
$ | 2,187,552 | $ | 1,862,713 | ||||
| (1) |
Audit fees represent fees for the audit of the Company's consolidated financial statements and internal controls over financial reporting included in our 2023 Annual Report and the review of the Company's consolidated financial statements included in our quarterly reports on Form 10-Qand fees in connection with statutory audits and regulatory filings or engagements. |
| (2) |
Audit-Related Fees include fees associated with obtaining consents in connection with regulatory filings and audit of the Company's Employee Stock Ownership and 401(k) Plans. |
Audit and Non-AuditServices Pre-ApprovalPolicy
Under the Sarbanes-Oxley Act of 2002, all audit and non-auditservices performed by
60
services, tax services, and other services. If not pre-approvedon an annual basis, proposed services must otherwise be separately approved prior to being performed by the independent auditors. The Audit Committee may also pre-approveparticular services on a case-by-casebasis. In addition, any services that receive annual pre-approvalbut exceed the pre-approvedmaximum fee level also will require separate approval by the Audit Committee. The Audit Committee may delegate authority to pre-approveaudit and non-auditservices to any member of the Audit Committee, but may not delegate such authority to management. The Company's independent auditors and Chief Financial Officer are required to periodically report to the Audit Committee regarding the extent of services provided by the independent auditors in accordance with the pre-approvalpolicy and the fees for the services performed to date. The Audit Committee pre-approvedall of the audit, audit-related, tax, and all other services described as Audit Fees in the table above.
Report of the Audit Committee of the Board of Directors
Notwithstanding anything to the contrary set forth in any of the Company's previous filings under the Securities Act or the Exchange Act that might incorporate future filings, including this Proxy Statement, with the
The Audit Committee currently has three (3) members, consisting of three (3) independent directors,
The Audit Committee hereby reports as follows:
| 1. |
The Audit Committee has reviewed and discussed the audited consolidated financial statements for the year ended December 31, 2023, and audit of internal controls over financial reporting as of December 31, 2023, with management. |
| 2. |
The Audit Committee has discussed with |
| 3. |
The Audit Committee has received an independence letter from |
| 4. |
Based on the reviews and discussions referred to in paragraphs (1) through (3) above, the Audit Committee recommended to the Board of Directors, and the Board of Directors has approved, that the Company's audited consolidated financial statements be included in the 2023 Annual Report that was filed with the |
Submitted by the Audit Committee:
61
Required Vote
The affirmative vote of the holders of a majority of the shares of the Company's Common Stock present or represented at the Annual Meeting and entitled to vote is required to approve the ratification of the selection of
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FORTHE RATIFICATION OF THE SELECTION OF GRANT THORNTON LLP.
62
PROPOSAL NO. 3
NON-BINDING,ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY'S
NAMED EXECUTIVE OFFICERS
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("the Dodd-Frank Act") added Section 14A to the Exchange Act, which requires that we provide our shareholders with the opportunity to vote to approve, on an advisory, non-bindingbasis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with the
As described in detail under the heading "Executive Compensation and Other Information-Compensation Discussion and Analysis," our executive compensation program is designed to attract and retain exceptional talent, reward past performance, and establish and reward measurable objectives for future performance. Our primary objective is to align our executive officers' interests with the interests of our shareholders by rewarding the achievement of established goals that contribute to increased long-term shareholder value. Please read the "Compensation Discussion and Analysis" in this Proxy Statement for additional details about our executive compensation programs, including information about the fiscal year 2023 compensation of our named executive officers.
As part of designing and implementing the compensation programs for all employees, the Company considers the risks that may be created and whether any such risks may have an adverse impact on the Company, and whether, overall, the Company's compensation programs are reasonably likely to have a material adverse impact on the Company. In making this determination, the Company considers the overall mix of compensation for employees as well as the various risk control and mitigation features of our compensation plans, including appropriate performance measures and targets and incentive plan payout maximums.
The Compensation Committee continually reviews the compensation programs applicable to our named executive officers to ensure they achieve the desired goals of aligning our executive compensation structure with our shareholders' interests and current market practices.
A more complete explanation of these changes is included in the "Compensation Discussion and Analysis" section of this Proxy Statement.
We are asking our shareholders to indicate their support for our named executive officer compensation as described in this Proxy Statement. This proposal, commonly known as a "say-on-pay"proposal, gives our shareholders the opportunity to indicate whether they approve of our named executive officers' compensation. This vote is not intended to address any specific element of compensation, but rather relates to the overall compensation of our named executive officers and the philosophy, policies, and practices described in this Proxy Statement in accordance with the
"RESOLVED, that the Company's shareholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company's Proxy Statement for the 2024 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and disclosure."
The say-on-payvote is advisory, and therefore not binding on the Company, the Compensation Committee, or the Board of Directors. The Board of Directors and our Compensation Committee value the opinions of our
63
shareholders and, to the extent there is any significant vote against the named executive officer compensation as disclosed in this Proxy Statement, we will consider our shareholders' concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
Required Vote
The affirmative vote of the holders of a majority of the shares of the Company's Common Stock present or represented at the Annual Meeting and entitled to vote is required to approve, on an advisory basis, the compensation of the Company's named executive officers. Abstentions will have the same effect as a vote against this proposal and broker "non-votes,"if any, will have no effect on this proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FORTHE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SECURITIES AND EXCHANGE COMMISSION.
64
OTHER MATTERS
The Board of Directors knows of no other business which will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, it is intended that proxies in the enclosed form will be voted in respect thereof in accordance with the judgments of the persons voting the proxies.
|
By Order of the Board of Directors, |
|
|
| Vice President, General Counsel and Corporate Secretary |
October 30, 2024
65
McGRATH P.O. BOX 8016,
McGRATH McGrath RentCorp Annual Meeting of Shareholders Please make your marks like this: THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1, 2 AND 3 PROPOSAL 1. Election of Directors: Each to be elected and to serve until the 2025 Annual Meeting of Shareholders or until their successors are elected and qualified. 1.01
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