Introduction
The Board of Directors of the Company (the “Board”) believes that fostering a culture of integrity and accountability, while reinforcing the Company’s pay-for-performance compensation philosophy, is in the best interests of the Company and its shareholders. To this end, the Board has adopted a policy that provides for the recoupment of certain executive compensation in the event of an accounting restatement due to material noncompliance with federal financial reporting requirements (the “Policy”). This Policy is designed to comply with Section 10D of the Securities Exchange Act of 1934 (the “Exchange Act”), the rules and amendments adopted by the Securities and Exchange Commission (the “SEC”), and the listing standards of the national securities exchange on which the Company’s securities are listed.
Administration
This Policy shall be administered by the Board or, if designated by the Board, by the Compensation Committee. In such cases, references to the Board in this Policy shall be understood as references to the Compensation Committee. Any determinations made by the Board shall be final and binding on all affected individuals.
Covered Executives
This Policy applies to the Company’s current and former executive officers, as determined by the Board in accordance with Section 10D of the Exchange Act and the listing standards of the national securities exchange on which the Company’s securities are listed (referred to as “Covered Executives”).
Recoupment; Accounting Restatement
In the event the Company needs to prepare an accounting restatement of its financial statements due to material noncompliance with any financial reporting requirement under securities laws, the Board will require reimbursement or forfeiture of any excess Incentive Compensation received by any Covered Executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare the restatement (the “Look-Back Period”).
This includes any required accounting restatement to correct an error in previously issued financial statements that is either (i) material to the previously issued financial statements or (ii) not material to the previously issued financial statements but would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
For the purposes of this Policy, Incentive Compensation is considered received in the Company’s fiscal period during which the financial reporting measure specified in the Incentive Compensation is attained, even if the payment or grant of the Incentive Compensation occurs after the end of that period.
The date on which the Company is required to prepare an accounting restatement is the earlier of: (i) the date the Board concludes that the Company must prepare a restatement to correct a material error, or (ii) the date a court, regulator, or other legally authorized body directs the Company to restate its previously issued financial statements to correct a material error.
Incentive Compensation
For purposes of this Policy, Incentive Compensation means any of the following; provided that, such compensation is granted, earned, or vested based wholly or in part on the attainment of a financial reporting measure:
• Annual bonuses and other short- and long-term cash incentives.
• Stock options.
• Stock appreciation rights.
• Restricted stock.
• Restricted stock units.
• Performance shares.
• Performance units.
• Financial reporting measures may include, among other things, any of the following:
• Company stock price.
• Total shareholder return.
• Revenues.
• Net income.
• Earnings before interest, taxes, depreciation, and amortization (EBITDA).
• Funds from operations.
• Liquidity measures such as working capital or operating cash flow.
• Return measures such as return on invested capital or return on assets.
• Earnings measures such as earnings per share.
Excess Incentive Compensation: Amount Subject to Recovery
The amount of Incentive Compensation subject to recovery is the excess amount received by the Covered Executive beyond what they would have been paid based on the restated results, as determined by the Board. This amount will be calculated on a pre-tax basis.
If the Board cannot directly determine the excess Incentive Compensation from the information in the accounting restatement, it will make its determination based on a reasonable estimate of the effect of the restatement on the applicable measure. In such cases, the Company will maintain documentation of this reasonable estimate.
Method of Recoupment
The Board will determine, at its sole discretion, the method for recouping Incentive Compensation, which may include, but is not limited to:
- Requiring reimbursement of previously paid cash Incentive Compensation.
- Seeking recovery of any gain realized on the vesting, exercise, settlement, sale, transfer, or other disposition of any equity-based awards.
- Offsetting the recouped amount from any compensation otherwise owed by the Company to the Covered Executive.
- Canceling outstanding vested or unvested equity awards.
- Taking any other remedial and recovery action permitted by law, as determined by the Board.
No Indemnification
The Company will not indemnify any Covered Executive for the loss of any incorrectly awarded Incentive Compensation.
Interpretation
The Board is authorized to interpret and construe this Policy and to make all necessary, appropriate, or advisable determinations for its administration. This Policy is intended to be interpreted in a manner consistent with the requirements of Section 10D of the Exchange Act and the applicable rules or standards adopted by the Securities and Exchange Commission or any national securities exchange on which the Company’s securities are listed.
Effective Date
This Policy applies to any excess Incentive Compensation received by Covered Executives during the three fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement. Notwithstanding the foregoing, this Policy shall be effective as of the date it is adopted by the Board (the “Effective Date”) and shall apply to Incentive Compensation that is approved, awarded, or granted to Covered Executives on or after that date.
Amendment; Termination
The Board may amend this Policy at its discretion and shall do so as necessary to comply with the rules and standards adopted by the SEC and the listing standards of any national securities exchange on which the Company’s securities are listed.
Other Recoupment Rights
The Board intends for this Policy to be fully compliant with the law. The Board may stipulate that any employment agreement, equity award agreement, or similar agreement entered into on or after the Effective Date must, as a condition for granting any benefit, require a Covered Executive to adhere to this Policy. Any right of recoupment under this Policy is in addition to, and not a replacement for, other remedies or rights of recoupment available to the Company under any similar policy in any employment agreement, equity award agreement, or similar agreement, as well as any other legal remedies available to the Company.
Impracticability
The Board will recover any excess Incentive Compensation in accordance with this Policy unless it determines that such recovery would be impracticable, based on Rule 10D-1 of the Exchange Act, applicable SEC rules or standards, and the listing standards of any national securities exchange on which the Company’s securities are listed.
The Company’s Compensation Committee (or, if there is no Compensation Committee, a majority of the Board’s independent directors) may, in its sole discretion, decide that repayment is not required if (i) the direct expense paid to a third party to assist with the recovery exceeds the amount of excess Incentive Compensation, or (ii) the Policy would likely cause a tax-qualified retirement plan (with broadly available employee benefits) to fail to meet the requirements of the Internal Revenue Code of 1986, as amended, Sections 401(a)(13) or 411(a), and the corresponding regulations.
Successors
This Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators, or other legal representatives.
Date Effective: July 1, 2024