UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | Preliminary Proxy Statement |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material under §240.14a-12 |
WILLDAN GROUP, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | No fee required. | |
☐ | Fee paid previously with preliminary materials. | |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. | |
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Dear Willdan Stockholder:
You are cordially invited to attend our 2022 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Thursday, June 9, 2022 at 10:00 a.m. Pacific Time. We will be hosting this year’s Annual Meeting via live audiocast on the Internet. To participate, vote or submit questions during the Annual Meeting via live audiocast, please visit: meetnow.global/M2CGRW4. You will need the 15-digit control number included on your Notice of Internet Availability or your proxy card or voting instruction form (if you received a printed copy of the proxy materials) or included in the email to you (if you received the proxy materials by email) in order to be able to vote your shares or submit questions during the Annual Meeting. You will not be able to attend the Annual Meeting in person.
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| “Today, Willdan’s technical services are in high demand. We believe we are ideally positioned to provide the energy efficiency and engineering solutions that are needed in a changing energy world.” Thomas Brisbin Chairman & CEO |
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We utilize the Internet as our primary means of furnishing proxy materials to our stockholders. We will mail a Notice of Internet Availability of Proxy Materials to our stockholders of record that did not request to receive a printed copy of our proxy materials on or about April 27, 2022 with instructions for accessing the proxy materials and voting via the Internet. The Notice of Internet Availability of Proxy Materials also provides information on how stockholders can obtain paper or email copies of the proxy materials if they so choose. Internet transmission and voting are designed to be efficient, cost-effective and preserve resources.
Thank you for your continued support of Willdan. We look forward to your participation in the Annual Meeting.
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| /s/ Thomas D. Brisbin |
| Thomas D. Brisbin |
| Chairman of the Board and Chief Executive Officer |
Notice of 2022 Annual
Meeting of Stockholders
Annual Meeting of Stockholders | |
Date | Thursday, June 9, 2022 |
Time | 10:00 a.m. Pacific Time |
Place | Virtual audiocast only at meetnow.global/M2CGRW4. |
Record Date | Close of business on April 19, 2022. A list of all stockholders entitled to vote at the Annual Meeting will be available for examination at our principal executive offices at 2401 East Katella Avenue, Suite 300, Anaheim, California, for 10 days before the Annual Meeting, and during the Annual Meeting, such list will be available to registered stockholders as a link on the virtual meeting platform at meetnow.global/M2CGRW4. |
Items of Business | ||
Proposal | Board | |
Item 1 | To elect the seven directors nominated by our Board of Directors to serve a one-year term or until their successors are duly elected and qualified | FOR |
Item 2 | To ratify the appointment of Crowe LLP as our independent registered public accounting firm for fiscal year 2022 | FOR |
Item 3 | To approve, on a non-binding advisory basis, our named executive officer compensation | FOR |
Item 4 | To approve an amendment to the Company’s 2008 Performance Incentive Plan (the “2008 Plan”), including an increase in the number of shares available for grant under the 2008 Plan | FOR |
Item 5 | Consider and act on any other matter that may properly be brought before the Annual Meeting or any postponements or adjournment thereof | N/A |
HOW TO VOTE: YOUR VOTE IS VERY IMPORTANT
Dear Willdan Stockholders:
Your vote is very important. We recommend you vote by proxy ahead of the Annual Meeting even if you plan to participate in, and vote at, the virtual Annual Meeting.
If your shares are held in your name, you can vote by proxy in one of three convenient ways:
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Telephone | Internet | |
1-800-652-VOTE (8683) | www.investorvote.com/WLDN | Mark, sign, date and promptly mail the proxy card when received. |
Follow the instructions provided in the separate proxy card or voting instruction form you received. | Follow the instructions provided in the Notice, separate proxy card or voting instruction form you received. | Send your completed and signed proxy card or voting instruction form to the address on your proxy card or voting instruction form. |
Refer to "Other Information—How do I vote?" in the Meeting and Voting Information section on page 71 of the accompanying proxy statement for a description of each voting method. Any proxy may be revoked by delivery of a later dated proxy or a written notice of revocation or by attending the Annual Meeting via live audiocast and voting your shares at that time. If you hold shares through someone else, such as an account with a brokerage firm, bank or other nominee, you will receive materials from your brokerage firm, bank or other nominee instructing you how to vote.
| By Order of the Board of Directors |
| /s/ Kate M. Nguyen |
| Kate M. Nguyen |
| Secretary |
Important Notice about the Availability of Proxy Materials. The Notice of the 2022 Annual Meeting, proxy statement, and our 2021 Annual Report on Form 10-K are available at www.proxyvote.com. You are encouraged to access and review all the important information contained in our proxy materials before voting.
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Virtual Annual Meeting
The Annual Meeting will be a completely virtual meeting of stockholders conducted through a live audio webcast at meetnow.global/M2CGRW4, which will provide stockholders with the ability to participate in the Annual Meeting, vote their shares and ask questions.
Benefits of a Virtual Annual Meeting
■ | We believe a virtual-only meeting format facilitates stockholder attendance and participation by enabling all stockholders to participate fully, equally and without cost, using an Internet-connected device from any location around the world. In addition, the virtual-only meeting format increases our ability to engage with all stockholders, regardless of size, resources or physical location and enables us to protect the health and safety of all attendees, particularly in light of the coronavirus (“Covid-19”) pandemic. |
■ | Stockholders of record and beneficial owners as of April 19, 2022 (“Record Date”) will have the ability to submit questions directly to our management and Board and vote electronically at the Annual Meeting via the virtual-only meeting platform, with procedures designed to ensure the authenticity and correctness of your voting instructions. |
■ | We believe that the virtual-only meeting format will give stockholders the opportunity to exercise the same rights as if they had attended an in-person meeting and believe that these measures will enhance stockholder access and encourage participation and communication with our Board of Directors and management. |
Attendance at the Virtual Annual Meeting
■ | All stockholders of our common stock as of the Record Date may attend the Annual Meeting at meetnow.global/M2CGRW4 and vote their shares or ask questions during the Annual Meeting. Members of the public will also be permitted to attend the meeting, but will not be permitted to ask questions during the meeting. |
■ | To attend and participate in the Annual Meeting by voting or asking questions, you will need the 15-digit control number included on your Notice of Internet Availability or your proxy card or voting instruction form (if you received a printed copy of the proxy materials) or included in the email to you (if you received the proxy materials by email). |
■ | If you were a stockholder as of the Record Date, you may vote shares held in your name as the stockholder of record or shares for which you are the beneficial owner but not the stockholder of record electronically during the Annual Meeting through the online virtual annual meeting platform by following the instructions provided when you log in to the online virtual Annual Meeting platform. |
■ | On the day of the Annual Meeting, stockholders may begin to log in to the virtual-only Annual Meeting beginning at 9:30 a.m., Pacific Time. The Annual Meeting will begin promptly at 10:00 a.m., Pacific Time. Please allow ample time for online login. |
■ | We will have technicians ready to assist with any technical difficulties you may have accessing the Annual Meeting. If you encounter any difficulties accessing the virtual-only Annual Meeting platform, including any difficulties with your 15-digit control number or submitting questions, you may call the technical support number that will be posted on the Annual Meeting log-in page. |
■ | Please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. |
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Questions at the Virtual Annual Meeting
■ | Stockholders will have the opportunity to submit questions on the date of the Annual Meeting by following the instructions on the virtual-only Annual Meeting platform. |
■ | Following the presentation of all proposals at the Annual Meeting, we will spend up to 30 minutes answering as many stockholder-submitted questions that comply with the meeting rules of conduct, which will be posted on the online virtual Annual Meeting platform. We will publish appropriate questions submitted in accordance with the Annual Meeting rules of conduct with answers, including those questions which were not addressed directly during the Annual Meeting due to time constraints, on our investor relations website at https://ir.willdangroup.com soon after the Annual Meeting. If we receive substantially similar questions, we will group such questions together and provide a single response to avoid repetition. |
YOU WILL NOT BE ABLE TO ATTEND THE ANNUAL MEETING IN PERSON
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Cautionary Statement Regarding Forward-Looking Information
This Proxy Statement contains statements that constitute forward-looking statements as that term is defined by the Private Securities Litigation Reform Act of 1995, as amended. These statements concern our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition, which are subject to risks and uncertainties. All statements other than statements of historical fact included in this Proxy Statement are forward-looking statements. These statements may include words such as “aim,” “anticipate,” “assume,” “believe,” “can have,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “likely,” “may,” “objective,” “plan,” “potential,” “positioned,” “predict,” “should,” “target,” “will,” “would” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events or trends. For example, all statements we make relating to our plans and objectives for future operations, growth or initiatives and strategies are forward-looking statements.
These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management’s beliefs and assumptions. We derive many of our forward-looking statements from our own operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that predicting the impact of known factors is very difficult, and we cannot anticipate all factors that could affect our actual results.
All of our forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from our expectations. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to:
| ■ | the extent to which the Covid-19 pandemic and measures taken to contain its spread ultimately impact our business, results of operation and financial condition, including the speed with which our various direct install programs for small businesses are able to resume normal operations following government mandated shutdowns and phased re-openings; |
| ■ | our ability to adequately complete projects in a timely manner; |
| ■ | our ability to compete successfully in the highly competitive energy efficiency services market; |
| ■ | our reliance on work from our top ten clients; |
| ■ | changes in state, local and regional economies and government budgets; |
| ■ | our ability to win new contracts, to renew existing contracts and to compete effectively for contracts awarded through bidding processes; |
| ■ | our ability to successfully integrate our acquisitions and execute on our growth strategy; |
| ■ | our ability to make principal and interest payments on our outstanding debt as they come due and to comply with the financial covenants contained in our debt agreements; |
| ■ | our ability to obtain financing and to refinance our outstanding debt as it matures; and |
| ■ | our ability to attract and retain managerial, technical, and administrative talent. |
The above is not a complete list of factors or events that could cause actual results to differ from our expectations, and we cannot predict all of them. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements disclosed under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, as such disclosures may be amended, supplemented or superseded from time to time by other reports we file with the Securities and Exchange Commission (“SEC”), including subsequent Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and public communications. You should evaluate all forward-looking statements made in this Proxy Statement and otherwise in the context of these risks and uncertainties.
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Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on any forward-looking statements we make. These forward-looking statements speak only as of the date of this Proxy Statement and are not guarantees of future performance or developments and involve known and unknown risks, uncertainties and other factors that are in many cases beyond our control. Except as required by law, we undertake no obligation to update or revise any forward-looking statements publicly, whether as a result of new information, future developments or otherwise.
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Proposal 2: Ratification of the Appointment of Crowe LLP as the Company’s Independent Registered Public Accounting Firm | 31 |
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Proposal 3: Approval, on a Non-Binding Advisory Basis, of Named Executive Officer Compensation | 33 |
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This section contains summary information explained in greater detail in other parts of this proxy statement and does not contain all the information you should consider before voting. Stockholders are urged to read the entire proxy statement before voting. We will mail a Notice of Internet Availability of Proxy Materials to our stockholders of record that did not request to receive printed copy of our proxy materials on or about April 27, 2022 with instructions for accessing the proxy materials and voting via the Internet.
About Willdan
Willdan Group, Inc. (“we,” “our,” “us,” “Willdan” or the “Company”) is a provider of professional, technical and consulting services to utilities, private industry, and public agencies at all levels of government. As resource and infrastructure needs undergo continuous change, we help organizations and their communities evolve and thrive by providing a wide range of technical services for energy solutions, greenhouse gas reduction, and government infrastructure. Through engineering, program management, policy advisory, and software and data management, we plan, design and deliver trusted, comprehensive, innovative, and proven solutions to improve efficiency, resiliency, and sustainability in energy and infrastructure to our clients.
We believe our ability to provide innovation is enhanced by partnerships with our forward-thinking clients. We aim to create an environment that is diverse and inclusive, embracing the breadth of experience across our talent force with a culture of innovation and entrepreneurship. We are disciplined in our business delivering value to our clients. In supporting our clients, we seek to add value and provide long-term sustainable energy solutions, engineering, and consultation.
Items Being Voted on and Board Recommendations
Proposal | Description | Board Vote | Page Number With |
Item 1 | To elect the seven directors nominated by our Board of Directors (“Board”) to serve a one-year term or until their successors are duly elected and qualified | FOR | 24 |
Item 2 | To ratify the appointment of Crowe LLP (“Crowe”) as our independent registered public accounting firm for fiscal year 2022 | FOR | 31 |
Item 3 | To approve, on a non-binding advisory basis, our named executive officer compensation | FOR | 33 |
Item 4 | To approve an amendment to the Company’s 2008 Performance Incentive Plan (the “2008 Plan”), including an increase in the number of shares available for grant under the 2008 Plan | FOR | 34 |
Item 5 | Consider and act on any other matter that may properly be brought before the meeting or any postponements or adjournment thereof | N/A | N/A |
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What’s New?
We continue to enhance our governance, compensation and sustainability practices and disclosures. Among other items, in 2021, Willdan has:
| ◾ | Continued commitment to Board diversity with the addition of Mss. Cynthia Downes and Wanda Reder; |
| ◾ | Enhanced Board diversity disclosures; |
| ◾ | Adopted a 12-month Chief Executive Officer stock holding period; |
| ◾ | Expanded Willdan’s Clean Tech Academy, which offers free training in energy efficiency skills to disadvantaged workers in New York City, to the Los Angeles City area; |
| ◾ | Updated our Code of Ethical Conduct; |
| ◾ | Conducted a company-wide employee engagement survey which resulted in forming action committees aimed at implementing feedback received; and |
| ◾ | Published our initial Sustainability Report. |
Fiscal Year 2021 Business Highlights
In fiscal 2021, we grew diluted earnings per share (“diluted EPS”) and adjusted diluted earnings per share (“adjusted EPS”) by 44.7% and 19.2%, respectively, compared to fiscal 2020 and achieved a record high backlog even with the disruption from the continuing COVID-19 pandemic. Our authorized and funded backlog reached $1.2 billion at the end of the fourth quarter of fiscal 2021, a record for us. The record backlog is a testament to our growth model, which we believe is repeatable and durable, and we plan to continue adding complementary skills to catalyze organic growth. A large percentage of the record backlog is due to our winning of what we believe are the largest and most complex contracts in our industry. Late in 2021 we commenced work on the largest California Investor Owned Utility (“IOU”) energy efficiency contracts. We expect to ramp revenue on those contracts throughout 2022 and into 2023. Willdan serves one of the most dynamic industries in the world at one of the most exciting times. A cleaner, low carbon energy cycle is transforming our electric grid, buildings, industrial production and transportation networks. Willdan helps these clients evaluate new technical advances and implement sustainable cost effective solutions to advance and transform the delivery and consumption of energy and other government infrastructure.
Fiscal Year 2021 Performance Highlights
| ● | Generated $9.8 million of cash from operations in 2021 with capital strategically allocated to business investment and debt reduction; |
| ● | Commenced work on the largest California IOU energy efficiency contracts in second half of 2021; |
| ● | Entered 2022 with an authorized and funded backlog of $1.2 billion, a record for us; and |
| ● | Reduced debt by $12.8 million in fiscal 2021, bringing total debt reduction to $29.9 million since the end of fiscal 2019. |
Integrated Approach to Stockholder Engagement
At the 2021 Annual Meeting, approximately 85% of the votes cast approved our fiscal year end 2020 executive compensation. We value our stockholders’ opinions about our governance policies and practices and actively solicit input through our stockholder engagement program. Throughout 2021, our Chief Executive Officer (“CEO”), President, Chief Financial Officer (“CFO”), and VP of Investor Relations, proactively contacted our institutional investors to discuss and solicit their feedback on various matters including on our corporate governance and executive compensation programs. Overall, we contacted 73% of our institutional equity investor base, and spoke with stockholders representing approximately 58% of our institutional equity investor base, in addition to potential holders of our equity.
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Outcome of Stockholder Engagement
During our 2021 meetings, stockholders expressed concerns related to certain areas of executive compensation, Board Governance, and Environmental, Social, and Governance (“ESG”) reporting. These concerns and our Board’s response to the feedback of our stockholders and proxy advisors are as follows:
| ● | The Company had not adopted a stock holding policy that required net shares acquired by our CEO to be held for a certain period of time. Our Board adopted a stock holding policy (the “Stock Holding Policy”) that requires our CEO to hold 100% of net shares (i.e. shares remaining after payment of taxes) of our common stock acquired pursuant to the exercise of stock options or vesting of restricted stock until the earlier of 12 months following the exercise of stock options or vesting of restricted shares or the CEO’s termination of employment. |
| ● | We enhanced Board diversity disclosures in this year’s proxy statement, including ethnic, gender, and skillset representation of the Board. |
| ● | We developed human capital metrics, including employee gender ratios aimed at expanding our employee recruitment effort and expanding the number of universities at which we conduct recruiting activities. |
2022 Director Nominees
All of the director nominees are currently serving as directors of the Company and, with the exception of directors Mss. Downes and Reder who joined the Board during fiscal 2021, were previously elected to serve on the Board by our stockholders. Ms. Downes and Ms. Reder were recommended to our Nominating and Corporate Governance Committee by our former CFO and a non-management director on our board, respectively.
In April 2022, Ms. Coy, Mr. Holdsworth, and Mr. McEachern, each informed the Board that they will not be seeking re-election at the Annual Meeting. Our Board has recommended that all other incumbent directors be re-elected at the Annual Meeting. The Board also determined that the only changes to the existing committee structures, effective upon the expiration of the terms of Ms. Coy, Mr. Holdsworth, and Mr. McEachern at the Annual Meeting, will be Ms. Downes becoming the Chair of the Audit Committee, Mr. Cohen becoming a member of the Audit Committee, and Vice Admiral McGinn becoming a member of, and the Chair, of the Compensation Committee. The following table reflects information on the seven director nominees, including our board committee composition as it will be in effect after the Annual Meeting.
Name |
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| Director |
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| Positions Held with Willdan or Principal |
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| Independent |
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| AC |
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| CC |
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| NCG |
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| SMAC |
Thomas D. Brisbin | | | 69 | | | 2007 | | | Chairman and Chief Executive Officer | | | | | | | | | | | | | | | |
Steven A. Cohen | | | 68 | | | 2015 | | | Lead Independent Director, Senior Vice Dean & COO - School of Professional Studies at Columbia University | | | X | | | M | | | | | | M | | | C |
Cynthia A. Downes | | | 61 | | | 2021 | | | CFO at Constant and Associates | | | X | | | C | | | M | | | | | | |
Vice Admiral Dennis V. McGinn | | | 76 | | | 2017 | | | Retired, Assistant Secretary of the Navy for Energy, | | | X | | | | | | C | | | M | | | M |
Wanda K. Reder | | | 57 | | | 2021 | | | President and CEO at Grid-X Partners, LLC | | | X | | | | | | M | | | M | | | |
Keith W. Renken | | | 87 | | | 2006 | | | Managing Partner | | | X | | | M | | | | | | | | | |
Mohammad Shahidehpour | | | 66 | | | 2015 | | | Bodine Chair Professor in the Electrical & | | | X | | | | | | M | | | C | | | M |
Each of the incumbent directors attended or participated in at least 83% of the total number of meetings of the Board and of the committees of the Board on which such director served, during the period for which such director served. During 2021, there were six board meetings held and all of our directors attended our 2021 annual meeting of stockholders. | | | Meetings Held in Fiscal 2021 | | | 5 | | | 8 | | | 4 | | | 4 | |||||||||
AC = Audit Committee | NCGC = Nominating and Corporate Governance Committee | C = Chairperson |
CC = Compensation Committee | SMAC = Strategy, Mergers and Acquisitions Committee | M = Member |
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The board composition changes, including the refreshment and leadership changes of the AC, CC, and NCGC, as they will be in effect after the Annual Meeting, evidences our Board’s commitment to representing the long-term interest of shareholders through continuous effort to obtain representation of individuals from diverse backgrounds and with a range of skills, qualifications, experiences, and perspectives.
| (1) | One of our directors nominees self-identifies as Asian. |
| (2) | Dr. Brisbin is our only non-independent director as he serves as our CEO. |
Executive Officer Compensation
Our Board's CC designs our executive compensation program to motivate our executives to execute our business strategies and deliver long-term stockholder value. We pay for performance with compensation dependent on our achieving financial and business performance objectives while aligning executives with the interests of our stockholders. A schematic of our compensation approach is shown below.
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Executive Officer Group Compensation Components(1)
| (1) | See the Compensation Discussion and Analysis section below for a description of the manner in which these amounts are determined. |
Compensation Highlights
Underlying our compensation program is an emphasis on sound governance practices. These practices are summarized below and described in further detail in the Compensation Discussion and Analysis (“CD&A”) section below.
We Do | |||
| Pay for performance |
| Include clawback provisions for both cash bonuses and performance-based restricted stock units |
| Perform annual say-on-pay advisory role for stockholders |
| Minimum vesting requirements |
| Use appropriate peer group when establishing compensation |
| Balance short- and long-term incentives |
| Maintain stock ownership goals for management and all officers and non-employee directors |
| Deliver pay that is aligned with performance (below target for weak years and above target for strong years) |
| Utilize a fully independent external compensation consultant every two years whose independence is reviewed by CC | ||
We Do Not | |||
| Provide excise tax gross-up payments in connection with change in control severance benefits |
| Re-price or exchange outstanding options and performance-based restricted stock units (“PBRSUs”) |
| Provide gross-ups to cover tax liabilities associated with executive perquisites |
| Grant stock options with an exercise price less than fair market value on the date of grant |
| Allow directors, officers or employees to hedge or pledge company stock |
| Promise multiyear guarantees for bonus payouts or salary increases |
| Pay out dividends or dividend equivalents on unvested equity awards | ||
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Sustainability, Human Capital, Community Responsibility and Corporate Governance
We are dedicated to environmental sustainability and the integration of the environmental, social and governance ("ESG") framework into our business practices and decision-making. We are committed to operating responsibly and ethically and to the protection of our planet as we grow our business in the communities where we live and work. Willdan’s goal is to reduce our ecological footprint and our environmental impact, as we help our clients reduce carbon intensity to become cleaner, more sustainable organizations, and to achieve their own sustainability goals. Our ESG framework spans the following six categories:
Our technical consulting services have a low carbon intensity, as we do not manufacture or distribute products, making our environmental impact relatively small. Our main contributors to environmental impact are primarily from leased office space, business related travel costs, technology, and waste, primarily paper use.
Human Capital Management
Willdan brings together engineers, scientists, program managers and technical specialists from a wide variety of backgrounds to solve our clients’ challenges. At the end of FY 2021, we employed a total of approximately 1,560 employees, excluding contractors. Our employees include, among others, licensed electrical, mechanical, structural, geotechnical and civil engineers; land surveyors; certified building officials; certified inspectors and plans examiners; licensed architects and landscape architects; certified planners; energy sales and audit specialists; installation technicians; program managers; policy advisors and information technology specialists.
Our goal is to maintain a culture of acceptance and individuality, where all employees feel respected, included, and encouraged to bring their unique perspectives, ideas, and skills to work each day. Our culture is focused on hiring, empowering, and retaining highly talented employees and professionals with the diverse background and expertise required to solve complex challenges, as energy and infrastructure transforms and evolves.
We regularly look for ways to grow our business and better support and invest in our people. During fiscal 2021, we conducted a companywide employee engagement survey. We have analyzed the results from that survey and have begun instituting action committees aimed at implementing the feedback received. In addition, we developed human
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capital metrics, such as employee gender ratios and other demographic information, aimed at expanding our employee recruitment efforts. During fiscal 2021, we expanded the roster of universities at which we conduct recruiting activities to even-broader diversity.
Community Responsibility
To encourage more diversity and to encourage talented people to join our team, we partner with professional organizations that represent and support a diverse pool of applicants. We actively seek out and hire minority-owned subcontractors on our projects and, in conjunction with our clients, we regularly propose and achieve specific percentage content goals for the use of minority-owned and disadvantaged businesses in our projects. These partnerships offer economic opportunity to local, minority-owned, and disadvantaged business enterprises. At Willdan, we believe that we can better serve all communities by utilizing qualified employees, suppliers, and subcontractors that mirror the culture and demographics of the communities where we live and work.
In 2021, Willdan’s Diversity, Equity, and Inclusion (“DE&I”) Working Group continued to progress on goals and objectives. Amongst others, our goal is for our staff, suppliers, and subcontractors to reflect the communities where we live and work. In early 2020, we established and financed the Willdan Clean Energy Academy (“WCEA”), which offers free training in energy efficiency skills to disadvantaged workers in the New York City area. In 2021, Willdan increased the funding for this outreach effort and the WCEA expanded to the Los Angeles City Area. The WCEA supports a diverse workforce and collaborates with community-based organizations and workforce centers to support career development.
Corporate Governance
Under the direction of the Board, we have designed our corporate governance program to promote compliance with applicable laws and regulations, the rules of the Securities and Exchange Commission (“SEC”) and the listing standards of the Nasdaq Stock Market (the “Nasdaq Rules”) and to reflect best practices of other public companies.
We are committed to operating with honesty and integrity and maintaining the highest level of ethical conduct. We encourage stockholders to visit the Corporate Governance section on our website at ir.willdangroup.com/corporate-governance, which includes the following corporate governance documents:
| ■ | Code of Ethical Conduct |
| ■ | Charters for our Board’s Audit Committee (“AC”), Compensation Committee (“CC”), Nominating and Corporate Governance Committee (“NCGC”), and Strategy, Mergers and Acquisitions Committee (“SMAC”) |
| ■ | Insider Trading Policy |
| ■ | Management Stock Ownership Guidelines for Executives and Non-Employee Directors |
Information on our website is not and should not be considered part of, nor is it incorporated by reference in this proxy statement. You can receive copies of these documents, without charge, by written request mailed to our Corporate Secretary at Willdan Group, Inc., 2401 E. Katella Avenue, Suite 300 Anaheim, California 92806.
Our 24-hour hotline (“Whistleblower Policy”) is managed by an outside party that is available to all employees for the anonymous submission of complaints by telephone and internet. All complaints received from our 24-hour hotline go directly to our AC and CC chairs. During fiscal 2021, we did not receive any complaints relating to accounting, internal controls, or auditing matters.
Willdan conducts its business on the basis of the quality of its services and the integrity of its association with its clients and others. Our Code of Ethical Conduct demonstrates our commitment to ascribing to the highest standards of ethical conduct in the pursuit of our business and applies to all of our directors, officers, and employees. Our employees are trained on and affirm their commitment to complying with the policies when they first join our Company and regularly thereafter. Our Company has a written “related person transaction” policy. Under the policy, the AC reviews and approves transactions between Willdan and “related persons” (as defined in the policy). See the section “Certain Relationships and Related Person Transactions - Related Persons Transaction Policy” for more information.
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Overview
Our Board of Directors is responsible for overseeing, counseling, and directing management in serving the long-term interests of our Company and stockholders, with the goal of building long-term stockholder value and ensuring the strength of our Company for our clients, associates, employees, and other stakeholders. In this capacity, the Board’s primary responsibilities include establishing an effective corporate governance program with a board and committee structure that ensures independent oversight; overseeing our business practices, strategies, and risks; maintaining the integrity of our financial statements; evaluating the performance of our senior executives and determining their compensation; undertaking succession planning for our CEO, other senior executives and directors; and reviewing our 2008 Amended and Restated Performance Incentive Plan (“2008 Plan”) and significant strategic and operational objectives and actions.
Director Independence
The Board has determined that each of Messrs. Cohen, Holdsworth, McEachern, McGinn, Renken and Shahidehpour and Mss. Coy, Downes, and Reder are independent pursuant to the applicable independence requirements set forth in the rules of the listing standards for the Nasdaq Stock Market (the “Nasdaq Rules”) and by the SEC because they either have no relationship with the Company (other than as a director and stockholder) or because any relationship they have with the Company is immaterial. Under these standards of independence, for a director to be considered independent, the director must, among other things, not be an executive officer or employee of the Company or its subsidiaries and the director must not have a relationship which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Dr. Brisbin, due to his employment as our CEO, does not qualify as independent.
Board Leadership Structure
Our Board does not have a policy with respect to whether the roles of CEO and Chairman should be separated or combined. We currently have a combined Chairman/CEO role as well as a Lead Independent Director. We believe that the combined Chairman/CEO role is appropriate at this time because it fosters clear accountability, effective decision-making, and alignment on corporate strategy. We believe combined leadership at the top also provides the necessary flexibility for us to rapidly address the changing needs of our business.
In November 2016, the Board elected Thomas D. Brisbin, Willdan’s CEO, as Chairman of the Board. From March 2017 to March 2021, Keith W. Renken served as Lead Independent Director of the Board. In March 2021, the Board appointed Steven A. Cohen as Lead Independent Director. Although, we have in the past separated the roles of CEO and Chairman of the Board, the Board believes that having Dr. Brisbin serve in both these roles, coupled with strong independent oversight by the Board and Lead Director, is the most appropriate and effective board leadership structure for us at this time.
Board Committees
The Board has four standing committees: the AC, the CC, the NCGC and the SMAC. Each of our Board committees has a separate written charter that describes its purposes, membership, meeting structure, authority, and responsibilities. These charters, which may be found in the Corporate Governance section of our website at ir.willdangroup.com/corporate-governance, are reviewed annually by the respective committee, with any recommended changes adopted upon approval by our Board.
Each of these committees regularly reports to the Board as a whole. The following summaries identify the members of each committee as of the date of this Proxy Statement. The composition of each committee may change from time to time. In 2021, the composition of all four standing committees were updated and approved by the Board.
| 14 |
Board Skills, Experience, and Diversity Matrix (as of April 25, 2022)
Our amended and restated bylaws provide that the authorized number of directors of the Board shall be set by a resolution of the Board. The Board has fixed the number of directors at ten. In April 2022, Ms. Coy, Mr. Holdsworth, and Mr. McEachern, each informed the Board that they will not be seeking re-election at the Annual Meeting. As a result, the Board approved reducing the size of the Board to seven directors, effective upon the expiration of the terms of Ms. Coy, Mr. Holdsworth, and Mr. McEachern at the Annual Meeting. We believe a limited number of directors helps maintain personal and group accountability. All of our current directors, other than Ms. Coy, Mr. Holdsworth and Mr. McEachern, have been nominated for election by the Board upon recommendation by the NCGC. Although the Company does not have a formal policy regarding attendance by members of the Board at the Company's annual meeting of stockholders, the Company encourages directors to attend. The following matrix provides information regarding the members of our Board as of April 25, 2022:
Thomas D. Brisbin | Steven A. Cohen | Debra G. Coy | Cynthia A. Downes | Raymond W. Holdsworth | Douglas J. McEachern | Dennis V. McGinn | Wanda K. Reder | Keith W. Renken | Mohammad Shahidehpour | |
SKILLS AND EXPERIENCE | | | | | | | | | | |
Senior Leadership | ● | ● |
| ● | ● |
| ● | ● |
| ● |
Industry & Technical Expertise | ● | ● | ● | ● | ● |
| ● | ● |
| ● |
Client Regulatory |
| ● |
|
|
|
| ● |
|
|
|
Business Development and M&A | ● | ● | ● | ● | ● | ● | ● | ● |
| ● |
Financial Sophistication | ● | ● | ● | ● | ● | ● |
| ● | ● |
|
Talent Management & Compensation | ● |
|
|
| ● | ● | ● |
| ● | ● |
Governance & Risk Oversight | ● | ● | ● | ● |
| ● | ● |
| ● | ● |
Public Board |
|
| ● |
|
| ● |
|
| ● |
|
Innovation & Technology |
|
| ● |
|
|
| ● | ● |
| ● |
TENURE AND INDEPENDENCE | | | | | | | | | | |
Tenure (years) | 14 | 7 | 4 | < 1 | 13 | 13 | 5 | < 1 | 16 | 7 |
Independence | | ● | ● | ● | ● | ● | ● | ● | ● | ● |
DEMOGRAPHICS | ||||||||||
Age | 69 | 68 | 64 | 61 | 79 | 70 | 76 | 57 | 87 | 66 |
Gender Identity | M | M | F | F | M | M | M | F | M | M |
African American or Black | | | | | | | | | | |
Alaskan Native or Native American | | | | | | | | | | |
Asian | | | | | | | | | | ● |
Hispanic or Latinx | | | | | | | | | | |
Native Hawaiin or Pacific Islander | | | | | | | | | | |
White/Caucasian | ● | ● | ● | ● | ● | ● | ● | ● | ● |
|
LGBTQ+ | | | | | | | | | | |
Military Veteran | | | | | | | ● | | | |
*The matrix is intended to be a high-level summary and not an exhaustive list of each director’s skills or contributions to the Board.
| 15 |
Corporate Governance Policies
Our corporate governance policies are reviewed at least annually and amended from time to time to reflect the beliefs of our Board, changes in regulatory requirements, evolving best practices, and recommendations from our stockholders.
Matter |
| Description of Policy |
| | |
Board | | § Fixed Number. Our Board is currently fixed at ten directors until changed by the Board. As described above, the Board has approved reducing the size of the Board to seven directors, effective upon the expiration of the terms of Ms. Coy, Mr. Holdsworth and Mr. McEachern at the Annual Meeting. |
Director | | § Majority Independent. Ninety percent of our directors satisfy applicable Nasdaq and SEC independence standards. |
| § Regular Executive Sessions. Our independent directors meet in executive session following each meeting of the Board, each meeting of the AC, and as needed following other committee meetings. | |
Board | | § Lead Independent Director. Since our CEO is also Chairman of the Board, our directors have collectively appointed one of our independent directors to serve as Lead Independent Director with established roles and responsibilities. See the Board Leadership Structure section following this table for further details. |
| § Annual Review. The Board annually reviews its leadership structure and appoints the Chairman of the Board and determines whether the positions of Chairman of the Board and CEO will be held by one individual or separated. | |
Board | | § Independence. Board Committees are comprised only of independent directors. |
| § Governance. Board Committees act under charters evaluated annually that set forth their purposes and responsibilities. The charters allow for engagement, at our expense, of independent legal, financial, or other advisors the committee members deem necessary or appropriate. | |
| § Attendance. Directors are expected to attend all meetings of the Board and the committees on which they serve, and are strongly encouraged to attend our annual stockholder meetings. | |
Director | § Diverse and Relevant Experience. The NCGC works with the Board to determine the appropriate characteristics, skills, and experiences for the directors. We are committed to selecting qualified candidates regardless of gender, ethnicity, and national origin. | |
Board Duties | § Succession Planning. The NCGC works on a periodic basis with the CEO to review, maintain, and revise, as necessary, the Company's succession plan. The CEO reports annually to the Board on succession planning for CEO and senior management positions, including a discussion of assessments, leadership development plans and other relevant factors. | |
§ Financial Reporting, Legal Compliance, and Ethical Conduct. Our Board maintains governance and oversight functions, but our executive management maintains primary responsibility. | ||
Continuous | § New Director Orientation. All new directors participate in an orientation program to familiarize them with our Company. | |
§ Continuing Education. Directors continue their education through meetings with executive management and other managers to enhance the flow of meaningful financial and business information. They also receive presentations to assist with their continuing education. Directors also attend outside director education programs to stay informed about relevant issues. | ||
§ Annual Evaluations. The NCGC oversees an annual board performance evaluation policy that includes individual director self-assessments and an assessment of each of the Board’s four standing committees. |
| 16 |
Audit Committee | ||||
| | | | |
Meetings in FY 2021: | 5 | Average Attendance in FY 2021: | 100% | |
Chair: | | |
Douglas J. McEachern* | | § Oversee the integrity of the Company’s financial statements and financial reporting |
| | |
Members: | | § Oversee compliance with legal and regulatory requirements |
Debra G. Coy* | | |
| § Discuss policies with respect to risk assessment, monitoring and mitigation with management and independent auditor | |
| | |
All members satisfy the audit committee experience and independence standards required by the Nasdaq Rules and the Exchange Act and have been determined to be financially literate in accordance with the Nasdaq Rules. | | § Review qualifications and independence of the Company’s independent registered public accounting firm |
| | |
| § Review performance of the Company’s internal reporting and audit functions | |
| | |
Under applicable SEC regulations, at least one of our members of the Audit Committee has been determined to be an "audit committee financial expert". | | § Oversee the Company’s disclosures controls and procedures and system of internal controls regarding finance, accounting, legal compliance and ethics § Retain and oversee the independent auditor and review and approve the scope of the audit conducted by the independent auditor |
*In April 2022, Mr. McEachern and Ms. Coy each informed the Board that they will not be seeking re-election at the Annual Meeting. As a result, the Board determined that, effective upon the expiration of the terms of Mr. McEachern and Ms. Coy at the Annual Meeting, Ms. Downes will become the Chair of the Audit Committee and Mr. Cohen will join the Audit Committee.
Compensation Committee | ||||
| | | | |
Meetings in FY 2021: | 8 | Average Attendance in FY 2021: | 100% | |
Chair: | | |
Raymond W. Holdsworth* | | § Produce an annual report on executive compensation for inclusion in the Company’s proxy statement, if and as required by applicable rules and regulations § Review, evaluate and make recommendations to the full Board with respect to management’s proposals regarding the Company’s overall compensation policies, and recommend performance-based incentives that support and reinforce the Company’s long-term strategic goals, organization objectives and stockholder interests. § Annually review and approve objectives relevant to the Chief Executive Officer’s compensation, evaluate the Chief Executive Officer’s performance in light of those objectives and set the Chief Executive Officer’s compensation level based on this evaluation. |
| | |
Members: | | § Consider and approve the selection, retention and remuneration arrangements for senior executive officers and establish, review and approve compensation plans in which any executive officer is eligible to participate. |
| | |
All members satisfy the independence standards required by the Nasdaq Rules and Exchange Act. | | § Make recommendations to the Board with respect to the Company’s incentive-compensation plans and equity-based compensation plans and approve for submission to stockholders all new stock option and equity compensation plans, including amendments or supplements thereto |
| | |
| | § Administer the Company’s 2008 Plan, 2006 Stock Incentive Plan (the “2006 Plan”) and the Amended and Restated Willdan Group, Inc. 2006 Employee Stock Purchase Plan (the “ESPP”) |
All members qualify as "nonemployee directors" under Rule 16b-3 of the Securities Exchange Act of 1934, as amended. | | |
| § Authorized to retain and terminate any compensation consultant engaged to assist in the evaluation of the compensation of our senior executive officers including all NEOs (as defined below) | |
| | |
|
| 17 |
* In April 2022, Mr. Holdsworth, Ms. Coy and Mr. McEachern each informed the Board that they will not be seeking re-election at the Annual Meeting. As a result, the Board determined that, effective upon the expiration of the terms of Mr. Holdsworth, Ms. Coy and Mr. McEachern at the Annual Meeting, Vice Admiral McGinn will join and become Chair of the Compensation Committee.
Nominating & Corporate Governance Committee | ||||
Meetings in FY 2021: | 4 | Average Attendance in FY 2021: | 95% | |
* In April 2022, Mr. Holdsworth informed the Board that he will not be seeking re-election at the Annual Meeting.
Strategy, Mergers and Acquisitions Committee | ||||
Meetings in FY 2021: | 4 | Average Attendance in FY 2021: | 92% | |
Chair: | | |
Steven A. Cohen | | |
| | § Review with management, on a timely basis, significant financial matters of the Company and its subsidiaries, including matters relating to the Company’s capitalization, dividend policy and practices, credit ratings, cash flows, borrowing activities, and investments including mergers and acquisitions |
| | |
| | |
| | § In consultation with the AC, as appropriate, review periodically the Company’s risk management strategies |
| | |
| | § Be available to management as needed regarding various matters such as reviewing the relationships with the Company’s principal lending institutions and investment and strategic advisors |
Executive Sessions
Our Board believes it is important to have executive sessions without our CEO or other management being present. Executive sessions are led by our Lead Independent Director. Our independent directors have robust and candid discussions at these executive sessions during which they can critically evaluate the performance of our company, CEO, and management. An executive session is held in conjunction with each regularly scheduled quarterly Board meeting and other sessions may be called by the Lead Independent Director in his own discretion or at the request of the Board.
| 18 |
Oversight of Risk Management
The Board is involved in risk oversight through direct decision-making authority with respect to fundamental financial and business strategies and major corporate activities, including material acquisitions and financings, as well as through its oversight of management and the committees of the Board. Management is responsible for identifying the material risks facing the Company, implementing appropriate risk management strategies, and ensuring that information with respect to material risks is shared with the Board or the appropriate Board committee. In connection with this responsibility, members of management provide regular reports to the Board, with reporting in the areas of enterprise risks, cybersecurity and information security, sustainability, human capital management, other ESG matters, and succession planning.
Cybersecurity is a critical part of risk management at Willdan. The Board as a whole regularly reviews risks related to cybersecurity and the Company’s information system controls. The Company uses third-party vendors to independently tests information security risks. In 2020, the Company completed an ISO/IEC 27001:2013 certification process for some of its information security systems. This certification is audited and verified by a third-party on an annual basis. We take cyber threats very seriously and regularly audit our cyber security capabilities. These audits are a useful tool for ensuring that we maintain a robust cyber security program to protect our investors, customers, employees, and intellectual property. The Company has information security training and compliance programs which regularly tests employees and executives on items such as phishing attacks. We also maintain a cyber security insurance program which is reviewed on an annual basis. The oversight responsibility of the Board and its committees is supported by Company management and the risk management processes that are currently in place.
Policy on Hedging and Pledging
The Company recognizes that hedging against losses in Company stock is not appropriate or acceptable trading activity for individuals employed by or serving the Company. The Company has incorporated prohibitions on various hedging activities (such as prepaid variable forward sale contracts, collars, equity swaps, or exchange funds) that are designed to hedge or offset any decrease in the market value of Company securities without the full risks and rewards of ownership within its insider trading policy, which policy applies to directors, officers and employees of the Company and their family members. The policy prohibits trading in any interest or position relating to the future price of Company securities, such as put, call or short sale. This policy also applies regardless of whether such Company securities (i) were granted to the director, officer or employee as part of their compensation and (ii) are held directly or indirectly by the director, officer or employee.
| 19 |
Executive Development and Succession Planning
Our Board is involved in the identification and cultivation of our future leaders. The NCGC works on an annual basis with the CEO to review, maintain and revise, as necessary, the Company’s succession plan upon the CEO's retirement and in the event of an unexpected occurrence. The CEO reports annually to the Board on succession planning for the CEO and senior management positions, including a discussion of assessments, leadership development plans and other relevant factors. The CEO also makes available to the NCGC on a continuing basis, the CEO's recommendations regarding his successor should he become unexpectedly disabled.
Stockholder Submission of Director Nominees
The NCGC will consider director candidates recommended by stockholders. Properly communicated stockholder recommendations will be considered in the same manner and using the same criteria as used for any other director candidate. To be properly communicated, stockholders desiring to recommend candidates for consideration by the NCGC and the Board should submit their recommendations in writing to the NCGC Chair, c/o Corporate Secretary, Willdan Group, Inc. 2401 East Katella Avenue, Suite 300, Anaheim, CA 92806, together with all information about the stockholder and the candidate that would be required pursuant to Section 3.04(a)(ii) of our Bylaws if the stockholder was nominating the candidate for election to the Board. The NCGC may request additional information concerning such director candidate as it deems reasonably required to determine the eligibility and qualification of the director candidate to serve as a member of the Board. For a discussion of the factors and other criteria the NCGC and Board will consider when evaluating a director candidate, see “Proposal 1: Election of Directors.”
In addition, a stockholder who intends to solicit proxies in support of director nominees other than the Company’s nominees at the 2023 annual meeting of stockholders must deliver written notice to the Company setting forth the information required by Rule 14a-19 under the Exchange Act no later than April 10, 2023. If we change the date of the 2023 annual meeting of stockholders by more than 30 days from the date of this year’s Annual Meeting, your written notice must be received by the later of 60 days prior to the date of the 2023 annual meeting or the 10th calendar day following the day on which public announcement of the date of the 2023 annual meeting of stockholders is first made. The notice requirement under Rule 14a-19 is in addition to the applicable notice requirements under our Bylaws as described above
Please note that stockholders who wish to nominate a person for election as a director in connection with an annual meeting of stockholders (as opposed to making a recommendation to the NCGC as described above) must deliver written notice to our Secretary in the manner described in Section 3.04(a)(ii) of our Bylaws, and as further described in the Meeting and Voting Information section of this proxy statement under "Requirements for Proposals to be Considered for Inclusion in Proxy Materials and for Nomination of Director Candidates.”
| 20 |
Director Qualifications
Qualifications that are particularly desirable for our directors to possess in order to provide oversight and stewardship of our company include the following:
Qualifications | | | Descriptions | | | Value to Our Board and Stockholders |
Senior Leadership | | | Service in a senior executive position | | | Provide us with valuable external perspectives with which to assess our operations, execute our strategies, mitigate related risks, and improve our policies and procedures. |
Industry and | | | Experience in consulting and engineering services that focus on energy efficiency, the environment, sustainable infrastructure, renewable energy and energy transition | | | Allow us to better understand the needs of our clients in developing our business strategies, as well as evaluate acquisition and divestiture opportunities. |
Client | | | Service in a position that requires interaction with utilities, municipalities, and commercial clients | | | Provides us with experience and insight into working constructively with utility commissions, state and local agencies and administrators and addressing significant public policy and regulatory compliance issues in areas related to our business and operations. |
Business | | | Background in business development and in the | | | Provides us with insight into developing and implementing strategies for growing our business through combinations with other organizations, including analysis of the "fit" of a proposed acquisition with our company's strategy, the valuation of the transaction, and the management plan for integration with existing operations. |
Financial | | | Understanding of accounting, auditing, tax, banking, insurance, or investments | | | Help us to oversee our accounting, financial reporting, and internal control processes; manage our capital structure; optimize capital allocation; and undertake significant transactions. |
Talent Management | | | Practical experience developing, managing, motivating, and compensating employees | | | Provide us with insight into cultivating an inclusive culture consistent with our values and purpose, providing an engaging work environment, attracting top talent, investing in our employees, supporting their career development, and remaining competitive in the marketplace. |
Governance and Risk Oversight | | | Practical experience in risk governance, enterprise risk management framework, and knowledge, understanding of risk monitoring and mitigation | | | Help us understand enterprise risk management program structures as well as practices and policies designed to identify and manage risks and properly align risk-taking with overall governance and operations. |
Public Board | | | Prior or concurrent service on other SEC reporting company boards | | | Demonstrates understanding of the extensive and complex oversight responsibilities of directors and helps reinforce management accountability for maximizing long-term stockholder value. Also provides insights into a variety of strategic planning, compensation, finance, and governance practices. |
Innovation / | | | Practical experience with technology transformation and disruption | | | Allow us to better understand and anticipate technical trends, generate disruptive innovation, and extend and create new business models. |
| 21 |
The grid below summarizes the qualifications of our director nominees:
Number of Nominees |
|
|
|
|
|
|
|
| Qualifications of Director Nominees | |||
6 |
|
|
|
|
|
|
| Senior Leadership Experience |
| |||
6 |
|
|
|
|
|
|
| Industry and Technical Expertise |
| |||
2 |
|
| Client Regulatory Experience |
| ||||||||
6 |
|
|
|
|
|
|
|
| Business Development and M&A Experience | |||
5 |
|
|
|
|
|
|
| Financial Sophistication |
| |||
4 |
|
|
|
|
| Talent Management/Compensation Experience | ||||||
6 |
|
|
|
|
|
|
|
| Governance and Risk Oversight Experience | |||
1 |
|
|
| Public Board Experience |
| |||||||
3 |
|
|
|
| Innovation/Technology Experience | |||||||
Board Refreshment
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, 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. This practice balances the institutional knowledge of our longer-tenured directors with the fresh perspectives brought by our newer directors.
Our Board has shown an ongoing commitment to board refreshment and to having highly qualified and independent perspectives. Of our seven director nominees, two were added in 2021.
Director Diversity
Our Company recognizes the value of diversity and we endeavor to a have a diverse Board with experiences in business, technology, finance, business development, government, energy, risk management, and public board experience. Our NCGC continues to seek diverse candidates as board positions become available. Board gender and ethnic diversity has become a significant selection factor in our Board selection process. In addition to gender and ethnic diversity, the NCGC focuses on skills, expertise, and background of director nominees to complement the existing Board in light of the diverse and national nature of our businesses and operations. We substantially enhanced our gender diversity on the Board in 2021, appointing two women independent directors. As of April 25, 2022, four of our ten directors self-identify as “diverse” as such term is defined in Rule 5605(f) of The Nasdaq Stock Market LLC (“Nasdaq”).
| 22 |
Active Stockholder Engagement and Communications
Stockholder Engagement
Willdan has a philosophy of direct, open, transparent, and frequent engagement with our stockholders. We value our stockholders’ opinions about our governance policies and practices and engage in proactive outreach efforts with our stockholders. Throughout 2021, our CEO, President, CFO, and VP of Investor Relations engage with institutional investors to seek their input and perspectives and help increase their understanding of our business, our long-term growth strategy, our executive compensation philosophy and program, risk management and our commitment to corporate governance, environmental and social issues. In addition to senior management, members of our Compensation Committee are available for consultation with our major shareholders.
The Company continues to find constructive feedback from ESG investors, many of whom are European-based. These European-based funds have a particular focus on measuring our performance and related disclosure of ESG metrics. The feedback was instrumental in the Company publishing its inaugural sustainability report in January 2021. The Company’s 2020 Sustainability Report is available at www.willdan.com. The Company expects to file its 2021 sustainability report in the second quarter of fiscal 2022.
During 2021, we continued to limit our in-person stockholder events as part of our precautionary measures intended to help minimize the risk of Covid-19. Highlights from 2021 stockholder engagement include:
◾ Contacted 73% of our institutional equity investor base; ◾ Spoke with stockholders representing approximately 58% of our institutional equity investor base, in addition to potential holders of our equity; ◾ Conducted seven virtual events, an increase of 17% from 2020; ◾ Held quarterly webcast earnings calls; and ◾ Completed a broad range of phone calls, emails, and other industry events. |
|
In response to the feedback of our stockholders and proxy advisors, our Board adopted a Stock Holding Policy that requires our CEO to hold 100% of net shares (i.e. shares remaining after payment of taxes) of our common stock acquired pursuant to the exercise of stock options or vesting of restricted stock until the earlier of twelve months following the exercise of stock options or vesting of restricted shares or the CEO’s termination of employment.
Communications With the Board
Stockholders and other interested parties who wish to communicate with the Board or non-management directors of the Company can send an email to nonmanagementdirectors@willdan.com or send their correspondence to Board of Directors (or a particular subgroup or individual director), c/o Corporate Secretary, Willdan Group, Inc., 2401 E. Katella, Suite 300 Anaheim, California 92806.
| 23 |
Election of Directors
Our Board is currently fixed at ten directors, each to be elected on an annual basis, until changed by the Board. In April 2022, Ms. Coy, Mr. Holdsworth and Mr. McEachern each informed the Board that they will not be seeking re-election at the Annual Meeting. As a result, the Board approved reducing the size of the Board to seven directors, effective upon the expiration of the terms of Ms. Coy, Mr. Holdsworth and Mr. McEachern at the Annual Meeting. All of the director nominees are currently serving as directors. Each of the director nominees, if elected at the Annual Meeting, will hold office until the 2023 annual meeting of stockholders and until his or her successor has been elected and qualified, or until his or her earlier resignation or removal.
Each director nominee has consented to be nominated and to serve if elected. We have no reason to believe that any of the director nominees will be unavailable for election or unable to serve if elected. However, if any director nominee is unavailable for election or unable to serve, the proxy holders may vote for another person nominated by the Board or the Board may adopt resolutions to reduce the number of directors to be elected at the Annual Meeting.
Recommendation of Board of Directors
Our Board of Directors recommends that you vote “FOR” each of the director nominees.
The following pages provide information on each nominee for election at the Annual Meeting, including his or her age, Board leadership roles held, and business experience during at least the past five years. We also indicate the name of any other public company for which each nominee currently serves as a director or served as a director during the past five years.
The information relating to each director nominee led our Board to the conclusion that he or she should be elected as a director in light of the Company's business and structure. We believe that each of these director nominees has integrity and adheres to our high ethical standards. In addition, each nominee has demonstrated the ability to exercise sound judgment as well as a commitment to servicing the long-term interests of our stockholders.
The Company believes that the members of its Board should have a range of skills, experience, diversity and expertise that enables the Board to provide sound guidance with respect to the Company’s operations and interests. When considering a director candidate, the Board looks at the current composition of the Board and the evolving needs of the Company, in addition to such candidate’s background and accomplishments. The NCGC identifies new candidates for election to the Board, reviews their qualifications, skills, experience and other characteristics and recommends nominees for director to the Board for approval.
The Board seeks directors with strong reputations and experience in areas relevant to the strategy and operations of the Company’s businesses, particularly in energy efficiency, engineering, consulting and finance. All of the director nominees hold or have held senior executive positions in large, complex organizations and have operating experience that meets these objectives, as described below. In these positions, they have gained experience in core management skills, strategic and financial planning, public company financial reporting, corporate governance, risk management and leadership development. Additionally, a number of our directors have experience serving on the boards of directors of other public companies, which the Company believes increases their knowledge of effective corporate governance.
The Board also believes that each of the director nominees and current directors has other key attributes that are important to an effective board, including integrity and demonstrated high ethical standards, sound judgment, analytical skills, the ability to engage management and each other in a constructive and collaborative fashion, diversity of background, experience and thought and the commitment to devote significant time and energy to serve on the Board and its Committees. The following biographies provide further qualifications, attributes and other information with respect to the director nominees.
| 24 |
| | | |
Dr. Thomas D. Brisbin | Chairman and Chief Executive Officer | Director Since 2007 | ||
| | | |
| Experiences § CEO and Director since 2007. Chairman since November 2016. President from April 2007 to November 2016 § Vice President and Consultant of AECOM Technology Corporation from 2004-2007 § Chief Operating Officer and Executive VP at Tetra Tech, Inc. from 1999-2004 § Co-founder and President of PRC Environmental Management, Inc. from 1978-1995 § Research Associate at Argonne National Laboratory and Adjunct Professor - Illinois Institute of Technology (IIT) prior to PRC | ||
| |||
Age: 69 | Skills and Qualifications Senior leadership; industry & technical experience; business development and M&A; financial sophistication; talent management & compensation; governance & risk oversight § B.S. Northern Illinois University. Ph.D. Environmental Engineering Illinois State Technology § Completed Harvard Business School's Advanced Management Program | ||
Steven A. Cohen | Independent | Director Since 2015 | ||
| | | |
| Experiences § Senior Vice Dean and Chief Operating Officer of the School of Professional Studies at Columbia University (CU) Directs CU's Master of Sustainability Management Program. Professor in the Practice of Public Affairs at CU's School of International and Public Affairs. Director of CU's Master of Public Administration Program in Environmental Science and Policy § Consultant to U.S. Environmental Protection Agency for past three decades, most recent from 2005-2010 § Served on the U.S. Environmental Protection Agency’s Advisory Council on environmental Policy and Technology from 2001-2004 § Director of Columbia's Graduate Program in Public Policy and Administration from 1985 to 1998 § Former policy analyst for U.S. Environmental Protection Agency before joining CU in 1981 | ||
| |||
| |||
Age: 68 | | Skills and Qualifications | |
| Senior leadership; industry & technical expertise; client regulatory; business development and M&A; financial sophistication; governance & risk oversight § BA Political Science from Franklin College; M.A. Political Science from University of New York at Buffalo (SUNY-Buffalo) § Ph.D. Political Science from SUNY-Buffalo | ||
Current Committees: | |||
| |||
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Cynthia A. Downes | Independent | Director Since 2021 | ||
| | | |
| Experiences § Chief Financial Officer of Constant and Associates, Inc. since 2020 § Provides strategic consulting services for Fide Professions Services, which she founded in 2017 § Accounting & Finance leadership consulting services for Guidehouse, a $1B+ consulting firm, from 2018 to 2019 § Executive Vice President, Chief Financial Officer and Treasurer at Versar, Inc. (NYSE:VSR) from 2011 to 2017 § Vice President and Chief Financial Officer of Environmental Design International Inc. from 2009 to 2011 and Vice President of Finance of GDI Advanced Protection Solutions from 2008 to 2009 § Previously spent 15 years at Tetra Tech, Inc. (Nasdaq:TTEK), ultimately serving as Vice President and Chief Financial Officer of its subsidiary, Tetra Tech, EM Inc. § Current member of the Board of Trustees and Chair of the Audit Committee of Riverside Research | ||
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Age: 61 | | Skills and Qualifications | |
| Senior leadership; industry & technical expertise; business development and M&A; financial sophistication; governance & risk oversight § Active CPA license and member of the American Institute of Certified Public Accountants § B.S. Accounting and Business Management Purdue University § M.B.A. Northwestern University | ||
Current Committees: Member Audit Committee; Member Compensation Committee | |||
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Vice Admiral Dennis V. McGinn | Independent | Director Since 2017 | ||
| | | |
| Experiences § Retired as Vice Admiral of United States Navy after 35 years. Deputy Chief of Naval Operations for Warfare Requirements and Programs. Previously commanded United States Third Fleet § Assistant Secretary of the Navy for Energy, Installations, and Environment from September 2013 – January 2017 § Former President of the American Council on Renewable Energy § Past member of the Steering Committee of the Energy Future Coalition, past member of the U.S. Energy Security Council; and past member of the Bipartisan Center Energy Board § Past Co-Chairman of the CAN Military Advisory Board § Prior International Senior Fellow at the Rocky Mountain Institute § Member of the Board of Directors at Electric Power Research Institute § Member of the Board of Directors at Customer First Renewables | ||
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Age: 76 | | Skills and Qualifications | |
| Senior leadership; industry & technical expertise; client regulatory; business development and M&A; talent management & compensation; governance & risk oversight; innovation & technology § B.S. Naval Engineering from the U.S. Naval Academy § Participant, National Security Program at Harvard University's Kennedy School | ||
Current Committees: Member Nominating & Corporate Governance Committee; Member Strategy, Mergers and Acquisitions Committee | |||
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Wanda K. Reder | Independent | Director Since 2021 | ||
| | | |
| Experiences § President and Chief Executive Officer of Grid-X Partners, LLC since 2018 § Chair of the Electricity Advisory Committee of the U.S. Department of Energy, member of the Finance Committee of the National Academy of Engineering and member of the board of directors and the Strategy Committee of TechPro Power Group Inc. § Previously spent 14 years, from 2004 to 2018, at S&C Electric Company, ultimately serving as Chief Strategy Officer § Vice President of Asset Management from 2003 to 2004 and Vice President of Engineering & System Planning from 2001 to 2003 of Exelon Energy Delivery § Prior Vice President, Energy Sector of Davies Consulting, Inc. | ||
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Age: 57 | | Skills and Qualifications | |
| Senior leadership; industry & technical expertise; business development and M&A; financial sophistication; innovation & technology § Member of the National Academy of Engineering and Fellow of the Institute of Electrical and Electronics Engineers (IEEE) § B.S. Engineering South Dakota State University § M.B.A. University of St. Thomas | ||
Current Committees: Member Compensation Committee; Member Nominating & Corporate Governance Committee | |||
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Keith W. Renken | Independent | Director Since 2006 | ||
| | | |
| Experiences § Managing Partner, Renken Enterprises § Retired Senior Partner and Chairman, Executive Committee of Southern California for Deloitte and Touche in 1992 § Adjunct Professor (executive in residence) Marshall School of Business at the University of Southern California from 1992 to 2006 § Served on Board of Directors, AC and CC of East West Bancorp, Inc. from 2000-2018 § Served on Board of Directors and AC of Limoneira Company from 2009-2015 § Served on Board of Directors and AC of Whittier Trust Company since 2006 | ||
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Age: 87 | | Skills and Qualifications | |
| Financial sophistication; talent management & compensation; governance & risk oversight; public board § B.S. Business Administration from the University of Arizona; M.S. Business Administration from the University of Arizona | ||
Current Committees: Member Audit Committee | |||
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Mohammad Shahidehpour | Independent | Director Since 2015 | ||
| | | |
| Experiences § Bodine Chair Professor in the Electrical and Computer Engineering Department at IIT. Director of Robert W. Galvin Center for Electricity Innovation. University professor for over 40 years, including faculty member at IIT since 1983 and recipient of IIT's Excellence in Teaching Award § Former IIT Research Vice-President overseeing $80M in annual budget and over 200 technical projects § Principal investigator of over $60 million in grants and contracts related to electricity and modernization technological advances, mostly funded by government agencies such as the U.S. Department of Energy and U.S. Department of Defense § Founding chair of the IEEE Great Lakes Symposium on Smart Grid and the New Energy Economy § Editor-in-Chief of IEEE Transactions on Smart Grid Journal since 2009 § Elected Member of National Academy of Engineering in the U.S. § Keynote speaker in 20 International Conferences since 2007 and counseled governments on electricity and grid modernization bills globally | ||
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Age: 66 | | Skills and Qualifications | |
| Senior leadership; industry & technical expertise; business development and M&A; talent management & compensation; governance & risk oversight, innovation & technology § IEEE Distinguished Lecturer; Delivered over 100 invited lecturer on electricity restructuring and smart grid issues § Author of six books and 400 technical papers on electric power systems § B.S. Electrical Engineering from Iran's Sharif University of Technology; M.S. in Electrical in Engineering; Ph.D. from the University of Missouri | ||
Current Committees: | |||
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” EACH OF THE DIRECTOR NOMINEES.
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The following table provides information concerning the compensation for services of our nonemployee directors during FY 2021. Dr. Brisbin is a Named Executive Officer and his compensation is presented below under “Executive Compensation” in the Summary Compensation Table and related explanatory tables. Dr. Brisbin is not entitled to additional compensation for his services as a director.
The majority of the compensation provided to nonemployee directors is delivered in equity to align director interests with those of our stockholders.
| | Fees Earned or | | Stock | | Option | | All Other | | |
Name |
| Paid in Cash ($) |
| Awards (1), (2) ($) |
| Awards ($) |
| Compensation ($) |
| Totals ($) |
Steven A. Cohen |
| 63,000 |
| 70,018 |
| — |
| — |
| 133,018 |
Debra G. Coy | | 56,125 |
| 70,018 |
| — |
| — | | 126,143 |
Cynthia A. Downes |
| 24,500 |
| 59,479 |
| — |
| — |
| 83,979 |
Raymond W. Holdsworth |
| 57,500 |
| 70,018 |
| — |
| — |
| 127,518 |
Douglas J. McEachern |
| 66,500 |
| 70,018 |
| — |
| — |
| 136,518 |
Dennis V. McGinn | | 48,000 |
| 70,018 |
| — |
| — | | 118,018 |
Wanda K. Reder |
| 11,500 |
| 52,500 |
| — |
| — | | 64,000 |
Keith W. Renken |
| 46,500 |
| 70,018 |
| — |
| — | | 116,518 |
Mohammad Shahidehpour |
| 58,375 |
| 70,018 |
| — |
| — | | 128,393 |
| (1) | The amounts reported under “Stock Awards” above represent the aggregate grant date fair value of restricted stock awards granted to Non-Employee Directors during fiscal 2021 (disregarding any estimate of forfeitures related to service-based vesting conditions). For a discussion of the assumptions and methodologies used to calculate the amounts reported in this column, please see the discussion of restricted stock awards contained in Note 10 (Stockholders’ Equity) to our consolidated financial statements, included as part of our 2021 Annual Report filed on Form 10-K. |
| (2) | As of December 31, 2021, the following Non-Employee Directors held the following number of outstanding restricted stock awards: Messrs. Cohen, Holdsworth, McEachern, McGinn, Renken and Shahidehpour as well as Ms. Coy each held 3,310 shares of restricted stock, of which (i) 1,527 shares of restricted stock vest on June 11, 2022 and (ii) 1,783 shares of restricted stock vest in two substantially equal installments on each of June 9, 2022 and June 9, 2023. Ms. Downes held 1,469 shares of restricted stock that vest in two substantially equal installments on each of August 4, 2022 and August 4, 2023. Ms. Reder held 1,323 shares of restricted stock that vest in two substantially equal installments on each of December 6, 2022 and December 6, 2023. In recognition of their years of service to the Board, the Board determined to vest outstanding awards made up of 1,527 shares of restricted stock scheduled to vest on June 11, 2022 and 892 shares of restricted stock scheduled to vest on June 9, 2023 for each of Ms. Coy, Mr. Holdsworth, and Mr. McEachern, who informed the Board in April 2022 that they will not be seeking re-election at the Annual Meeting, in each case effective as of the date of the Annual Meeting so long as the applicable director continues to provide services to the Company until the Annual Meeting. |
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Annual Retainer and Meeting Fees
The following table sets forth the schedule of annual retainers and meeting fees for each Non-Employee Director in effect during FY 2021.
Type of Fee(1) |
| Dollar Amount |
| |
Annual Board Retainer | | $ | 36,000 | |
Additional Annual Retainer to Lead Director | | $ | 15,000 | |
Additional Annual Retainer to Chair of Audit Committee | | $ | 16,500 | |
Additional Annual Retainer to Chair of Compensation Committee | | $ | 11,000 | |
Additional Annual Retainer to Chair of Strategy, Mergers and Acquisitions Committee | | $ | 7,500 | |
Additional Annual Retainer to Chair of Nominating and Governance Committee | | $ | 7,500 | |
Additional Annual Retainer to Member of Audit Committee | | $ | 7,500 | |
Additional Annual Retainer to Member of Compensation Committee | | $ | 5,500 | |
Additional Annual Retainer to Member of Strategy, Mergers and Acquisitions Committee | | $ | 4,500 | |
Additional Annual Retainer to Member of Nominating and Governance Committee | | $ | 4,500 | |
Additional Daily Fee for Attendance at Board Meetings (2) | | $ | 1,500 | |
Additional Daily Fee for Attendance at Committee Meetings (2) | | $ | 1,000 | |
| (1) | The Willis Towers Watson report indicated that the compensation for Willdan directors is 10% below the median of the peer group. |
| (2) | Directors only receive one fee for meetings per day after a minimum of: (i) 4 Board meetings, (ii) 6 AC meetings or (iii) 5 CC, NCGC or SMAC meetings. |
Compensation for Non-Employee Directors during FY 2021 generally consisted of an annual retainer, fees for attending meetings, fees for work related to board committees and a restricted stock grant award. All Non-Employee Directors are also reimbursed for out-of-pocket expenses they incur serving as directors.
In June 2021, Messrs. Cohen, Holdsworth, McEachern, McGinn, Renken, and Shahidehpour and Ms. Coy were granted a restricted stock award of 1,783 shares under the 2008 Plan. Upon joining the Board effective August 3, 2021 and December 6, 2021, Ms. Downes and Ms. Reder were granted a restricted stock award of 1,469 shares and 1,323 shares, respectively. Each restricted stock award granted to our Non-Employee Directors in fiscal 2021 is subject to a two year vesting schedule, with 50% of the award vesting on each of the first and second anniversaries of the grant date, subject in each case to the Non-Employee Director’s continued service through the applicable vesting date.
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Ratification of the Appointment of Crowe as the Company’s
Independent Registered Public Accounting Firm
Crowe served as the Company’s independent registered public accountants during the fiscal year ended December 31, 2021 and, in that capacity, audited the Company’s consolidated financial statements for the fiscal year ended December 31, 2021. Although ratification by stockholders is not required by law, the Board has determined that it is desirable to request approval by the affirmative vote of a majority of the shares present or represented by proxy and entitled to vote on the proposal at the Annual Meeting of the appointment of Crowe as the Company’s independent registered public accountants for the fiscal year ending December 30, 2022. If stockholders do not ratify this appointment, the AC will reconsider whether or not to retain Crowe, and may decide to retain them notwithstanding the vote. Even if the appointment is ratified, the AC, in its discretion, may appoint a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and its stockholders. A representative of Crowe will be present at the Annual Meeting, will be given the opportunity to make a statement if he or she so desires and will be available to respond to appropriate questions from stockholders.
The following is a summary of the Crowe fees for professional services for the fiscal years ended December 31, 2021 and January 1, 2021.
Fee Category |
| Crowe 2021 |
| Crowe 2020 | ||
Audit Fees | | $ | 855,000 | | $ | 825,000 |
Audit-Related Fees | |
| — | |
| — |
Tax Fees | |
| — | |
| — |
All Other Fees | |
| — | |
| — |
Total Fees | | $ | 855,000 | | $ | 825,000 |
Audit Fees. Fees for audit services provided by Crowe for fiscal 2021 and 2021 consisted of professional services for the annual audit of our consolidated financial statements and for the review of our interim condensed consolidated financial statements including quarterly reports.
The Company has been advised by Crowe that neither Crowe nor any member of Crowe has any financial interest, direct or indirect, in any capacity in the Company or its subsidiaries.
Audit Committee Pre-Approval Policy
Consistent with SEC policies regarding independence, the AC has responsibility for appointing, setting compensation and overseeing the work of the Company’s independent registered public accounting firm. In recognition of this responsibility, the AC has established a policy to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm, including audit services, audit-related services, tax services and other services. In some cases, the full AC provides pre-approval for up to a year, related to a particular defined task or scope of work and subject to a specific budget. During the year, circumstances may arise when it becomes necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval categories. In those instances, the AC requires specific pre-approval before engaging the Company’s independent registered public accounting firm. The AC may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the AC at its next regularly scheduled meeting.
The AC has considered whether the provision of the services described above is compatible with maintaining the Company’s independent public accounting firm’s independence and has determined that such services have not adversely affected Crowe’s independence. Crowe did not provide any services for fiscal 2020 and fiscal 2021 that required pre-approval by the AC.
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Vote Required for Ratification of the Appointment of Crowe as the Company’s Independent Registered Public Accounting Firm
Ratification of the appointment of Crowe as the Company’s independent registered public accounting firm for the year ending December 30, 2022, requires the affirmative vote of a majority of shares present in person or represented by proxy at the Annual meeting and entitled to vote on the subject matter.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF CROWE AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 30, 2022.
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Approval, on a Non-Binding Advisory Basis, of Named
Executive Officer Compensation
In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which was amended pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), we are asking stockholders to approve a non-binding advisory resolution approving our executive compensation as reported in this Proxy Statement.
Our executive compensation decisions are made in the context of our executive compensation plan statement.
Under our executive compensation plan statement, our executive compensation philosophy is to:
| ■ | Align the interests of our executives with those of the stockholders; |
| ■ | Attract, motivate, reward, and retain the top contributors upon whom, in large part, our success depends; |
| ■ | Be competitive with compensation programs for companies of similar size and complexity with whom we compete for talent, including direct competitors; |
| ■ | Provide compensation based upon the short-term and long-term performance of both the individual executive and the Company; and |
| ■ | Strengthen the relationship between pay and performance by emphasizing variable, at-risk compensation that is dependent upon the successful achievement of specified corporate and individual goals. |
We urge stockholders to read the “Executive Compensation” section beginning on page 45 of this Proxy Statement, including the “Compensation Discussion and Analysis” section, which describes in more detail our executive compensation plan statement and the key elements of our executive compensation program. The CC and the Board believe that our executive compensation program is appropriately designed to achieve the objectives of our executive compensation philosophy.
We are asking stockholders to approve the following advisory resolution at the Annual Meeting:
RESOLVED, that the stockholders of the Company approve, on an advisory basis, the compensation of the Company’s Named Executive Officers (“NEOs”) set forth under “Executive Compensation,” including the Compensation Discussion and Analysis, Summary Compensation Table and the related compensation tables and narratives in the Proxy Statement for the Annual Meeting.
This vote is an advisory vote only and will not be binding on us, our Board or the CC and will not be construed as overruling a decision by, or creating or implying any additional fiduciary duty for, the Board or the CC. However, the CC, which is responsible for designing and administering our executive compensation program, values the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for NEOs.
The Company’s current policy is to provide stockholders with an opportunity to approve, on an advisory basis, the compensation of the NEOs each year at the annual meeting of stockholders. It is expected that the next such vote will occur at the 2023 annual meeting of stockholders.
Vote Required for Approval of the Non-Binding Advisory Resolution Approving Executive Compensation
Approval of the non-binding advisory resolution approving our executive compensation requires the affirmative vote of a majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the subject matter.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL, ON A NON-BINDING ADVISORY BASIS, OF THE COMPANY’S NAMED EXECUTIVE OFFICER COMPENSATION.
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Amendment to 2008 Performance Incentive Plan
General
The Company’s long-term incentive compensation program is implemented under the Willdan Group, Inc. 2008 Performance Incentive Plan (the “2008 Plan”). The 2008 Plan emphasizes achievement of long-term performance and stockholder value creation.
On April 18, 2022, the Company’s Board of Directors approved amending and restating the 2008 Plan, subject to approval by our stockholders. At the Annual Meeting, our stockholders will be asked to approve the following amendments set forth in the amended and restated 2008 Plan:
| ● | Increase in Aggregate Share Limits. The 2008 Plan currently limits the aggregate number of shares of Common Stock that may be delivered pursuant to all awards granted under the 2008 Plan to 3,666,167 shares (plus shares subject to options granted under the Willdan Group, Inc. 2006 Stock Incentive Plan (the “2006 Plan”) which expire or are cancelled or terminated). The proposed amendments would increase this limit by an additional 478,000 shares so that the new aggregate share limit for the 2008 Plan would be 4,144,167 shares (plus shares subject to options granted under the 2006 Plan which expire or are cancelled or terminated). The proposed amendments would also increase the limit on the number of shares that may be delivered pursuant to “incentive stock options” granted under the 2008 Plan by 450,000 shares for a new limit of 4,375,000 incentive stock options. For purposes of clarity, any shares that are delivered pursuant to incentive stock options also count against (and are not in addition to) the aggregate 2008 Plan share limit described above. |
| ● | Extension of Plan Term. The 2008 Plan is currently scheduled to expire on April 18, 2029. The proposed amendments provide for the term of the 2008 Plan to be extended until April 18, 2032, ten years from the date the plan was approved by the Board. |
As of April 1, 2022, a total of 1,043,540 shares of the Company’s Common Stock were then subject to outstanding awards granted under the 2008 Plan, and there were then 82,629 available shares for new award grants under the 2008 Plan. The proposed amendments would increase the reserved shares under the plan by 478,000 shares. Based solely on the closing price of the Company’s common stock as reported by the Nasdaq Stock Market on April 1, 2022, the maximum aggregate market value of the additional 478,000 new shares that could be issued under the 2008 Plan is $15,013,980.
The Company believes that incentives and stock-based awards focus employees on the objective of creating stockholder value and promoting the success of the Company, and that incentive compensation plans like the 2008 Plan are an important attraction, retention and motivation tool for participants in the plan. The Board believes that the number of shares currently available under the 2008 Plan does not give the Company sufficient authority and flexibility to adequately provide for future incentives. The Board believes that the additional shares give the Company greater flexibility to structure future incentives and better attract, retain, and award key employees.
If stockholders do not approve this 2008 Plan proposal, the current share limits under the 2008 Plan will continue in effect and the 2008 Plan term will not be extended.
Summary Description of the 2008 Performance Incentive Plan
The principal terms of the 2008 Plan are summarized below. The following summary is qualified in its entirety by the full text of the 2008 Plan, which appears as Exhibit A to this Proxy Statement.
Purpose. The purpose of the 2008 Plan is to promote the success of the Company and to increase stockholder value by providing an additional means for us to attract, motivate, retain and reward selected employees and other eligible
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persons through the grant of awards. Equity-based awards are also intended to further align the interests of award recipients and our stockholders.
Administration. Our Board or one or more committees appointed by our Board will administer the 2008 Plan. Our Board of Directors has delegated general administrative authority for the 2008 Plan to the Compensation Committee. A committee may delegate some or all of its authority with respect to the 2008 Plan to another committee of directors, and certain limited authority to grant awards to employees may be delegated to one or more officers of the Company. (The appropriate acting body, be it the Board of Directors, a committee within its delegated authority, or an officer within his or her delegated authority, is referred to in this proposal as the “Administrator”).
The Administrator has broad authority under the 2008 Plan, including, without limitation, the authority:
| ● | to select eligible participants and determine the type(s) of award(s) that they are to receive; |
| ● | to grant awards and determine the terms and conditions of awards, including the price (if any) to be paid for the shares or the award and, in the case of share-based awards, the number of shares to be offered or awarded; |
| ● | to determine any applicable vesting and exercise conditions for awards (including any applicable performance-based targets) and the extent to which such conditions have been satisfied, or determine that no delayed vesting or exercise is required (subject to the minimum vesting requirement described below), and to accelerate or extend the vesting or exercisability or extend the term of any or all outstanding awards; |
| ● | to cancel, modify, or waive the Company’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consents; |
| ● | subject to the other provisions of the 2008 Plan, to make certain adjustments to an outstanding award and to authorize the conversion, succession or substitution of an award; |
| ● | to determine the method of payment of any purchase price for an award or shares of the Company’s common stock delivered under the 2008 Plan, as well as any tax-related items with respect to an award, which may be in the form of cash, check, or electronic funds transfer, by the delivery of already-owned shares of the Company’s common stock or by a reduction of the number of shares deliverable pursuant to the award, by services rendered by the recipient of the award, by notice and third party payment or cashless exercise on such terms as the Administrator may authorize, or any other form permitted by law; |
| ● | to modify the terms and conditions of any award, establish sub-plans and agreements and determine different terms and conditions that the Administrator deems necessary or advisable to comply with laws in the countries where the Company or one of its subsidiaries operates or where one or more eligible participants reside or provide services; |
| ● | to approve the form of any award agreements used under the 2008 Plan; and |
| ● | to construe and interpret the 2008 Plan, make rules for the administration of the 2008 Plan, and make all other determinations necessary or advisable for the administration of the 2008 Plan. |
No Repricing. In no case (except due to an adjustment to reflect a stock split or other event referred to under “Adjustments” below, or any repricing that may be approved by stockholders) will the Administrator (1) amend an outstanding stock option or stock appreciation right to reduce the exercise price or base price of the award, (2) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for cash or other awards for the purpose of repricing the award, or (3) cancel, exchange, or surrender an outstanding stock option or stock
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appreciation right in exchange for an option or stock appreciation right with an exercise or base price that is less than the exercise or base price of the original award.
Eligibility. Persons eligible to receive awards under the 2008 Plan include officers or employees of the Company or any of its subsidiaries, directors of the Company, and certain consultants and advisors to the Company or any of its subsidiaries. As of April 1, 2022, approximately 1,518 officers and employees of the Company and its subsidiaries (including all of the Company’s NEOs), and each of the Company’s nine non-employee directors, were considered eligible under the 2008 Plan.
Minimum Vesting Requirement. All awards granted under the 2008 Plan will be subject to a minimum vesting requirement of one year, and no portion of any award may vest earlier than the first anniversary of the grant date of the award. This minimum vesting requirement will not apply to 5% of the total number of shares available under the 2008 Plan.
Authorized Shares; Limits on Awards. The maximum number of shares of the Company’s common stock that may be issued or transferred pursuant to awards under the 2008 Plan equals the sum of (1) 3,666,167 shares, plus (2) the number of any shares subject to stock options granted under the 2006 Plan and outstanding as of June 9, 2008 which expire, or for any reason are cancelled or terminated, after June 9, 2008 without being exercised. If stockholders approve this 2008 Plan proposal, the maximum number of shares of the Company’s common stock that may be issued or transferred pursuant to awards under the 2008 Plan will equal the sum of (1) 4,144,167 shares, plus (2) the number of any shares subject to stock options granted under the 2006 Plan and outstanding as of June 9, 2008 which expire, or for any reason are cancelled or terminated, after June 9, 2008 without being exercised.
The following other limits are also contained in the 2008 Plan:
| ● | The maximum number of shares that may be delivered pursuant to options qualified as incentive stock options granted under the plan is 3,925,000 shares, however if stockholders approve this 2008 Plan proposal, the maximum number of shares that may be delivered pursuant to options qualified as incentive stock options granted under the plan will be 4,375,000 shares. |
| ● | The maximum number of shares subject to those options and stock appreciation rights that are granted under the plan during any one calendar year to any one individual is 300,000 shares. |
| ● | The maximum grant date fair value for awards granted to a non-employee director under the 2008 Plan during any one calendar year is $200,000 except that this limit will be $400,000 as to (1) a non-employee director who is serving as the Independent Chair of the Board or the Lead Independent Director at the time the applicable grant is made or (2) any new non-employee director for the calendar year in which the non-employee director is first elected or appointed to the Board. For purposes of this limit, the "grant date fair value" of an award means the value of the award on the date of grant of the award determined using the equity award valuation principles applied in the Company’s financial reporting. This limit does not apply to, and will be determined without taking into account, any award granted to an individual who, on the grant date of the award, is an officer or employee of the Company or one of its subsidiaries. This limit applies on an individual basis and not on an aggregate basis to all non-employee directors as a group. |
Shares that are subject to or underlie awards which expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the 2008 Plan will not be counted against the share limit and will again be available for subsequent awards under the 2008 Plan. To the extent that shares are delivered pursuant to the exercise of an option or stock appreciation right granted under the 2008 Plan, the number of underlying shares as to which the exercise related will be counted against the share limit. (For purposes of clarity, if a stock appreciation right relates to 100,000 shares and is exercised at a time when the payment due to the participant is 15,000 shares, 100,000 shares shall be charged against the share limit with respect to such exercise.) Shares that are exchanged by a participant or withheld by the Company as full or partial payment in connection with any award granted under the 2008 Plan, as well as any shares exchanged or withheld to satisfy the tax withholding obligations related to
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any award, will be counted against the share limit and will not be available for subsequent awards under the 2008 Plan. To the extent that an award is settled in cash or a form other than shares, the shares that would have been delivered had there been no such cash or other settlement will not be counted against the share limit and will again be available for subsequent awards under the 2008 Plan. In the event that shares are delivered in respect of a dividend equivalent right, the actual number of shares delivered with respect to the award shall be counted against the share limit. (For purposes of clarity, if 1,000 dividend equivalent rights are granted and outstanding when the Company pays a dividend, and 50 shares are delivered in payment of those rights with respect to that dividend, 50 shares shall be counted against the share limit.) In addition, the 2008 Plan generally provides that shares issued in connection with awards that are granted by or become obligations of the Company through the assumption of awards (or in substitution for awards) in connection with an acquisition of another company will not count against the shares available for issuance under the 2008 Plan. The Company may not increase the applicable share limits of the 2008 Plan by repurchasing shares of common stock on the market (by using cash received through the exercise of stock options or otherwise).
Types of Awards. The 2008 Plan authorizes stock options, stock appreciation rights, and other forms of awards granted or denominated in the Company’s Common Stock or units of the Company’s Common Stock, as well as cash bonus awards. The 2008 Plan retains flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Any award may be structured to be paid or settled in cash.
A stock option is the right to purchase shares of the Company’s Common Stock at a future date at a specified price per share (the “exercise price”). The per share exercise price of an option generally may not be less than the fair market value of a share of the Company’s Common Stock on the date of grant. The maximum term of an option is ten years from the date of grant. An option may either be an incentive stock option or a nonqualified stock option. Incentive stock option benefits are taxed differently from nonqualified stock options, as described under “Federal Income Tax Consequences of Awards Under the 2008 Plan” below. Incentive stock options are also subject to more restrictive terms and are limited in amount by the U.S. Internal Revenue Code and the 2008 Plan. Incentive stock options may only be granted to employees of the Company or a subsidiary.
A stock appreciation right is the right to receive payment of an amount equal to the excess of the fair market value of a share of the Company’s Common Stock on the date of exercise of the stock appreciation right over the base price of the stock appreciation right. The base price will be established by the Administrator at the time of grant of the stock appreciation right and generally may not be less than the fair market value of a share of the Company’s Common Stock on the date of grant. Stock appreciation rights may be granted in connection with other awards or independently. The maximum term of a stock appreciation right is ten years from the date of grant.
The other types of awards that may be granted under the 2008 Plan include, without limitation, stock bonuses, restricted stock, performance stock, stock units or phantom stock (which are contractual rights to receive shares of stock, or cash based on the fair market value of a share of stock), dividend equivalents which represent the right to receive a payment based on the dividends paid on a share of stock over a stated period of time, or similar rights to purchase or acquire shares, and cash awards.
Subject to the minimum vesting requirement described above, any awards under the 2008 Plan (including awards of stock options and stock appreciation rights) may be fully-vested at grant or may be subject to time- and/or performance-based vesting requirements.
Dividend Equivalents; Deferrals. The Administrator may provide for the deferred payment of awards, and may determine the other terms applicable to deferrals. Subject to the following provisions, the Administrator may provide that awards under the 2008 Plan (other than options or stock appreciation rights), and/or deferrals, earn dividends or dividend equivalents based on the amount of dividends paid on outstanding shares of Common Stock.
Dividends on Unvested Equity Awards. If the Company pays an ordinary cash dividend, the cash dividend will not be paid on a current basis with respect to any awards granted under the 2008 Plan that are not vested as of the record date for the ordinary cash dividend. This restriction on paying ordinary cash dividends with respect to unvested equity awards does not limit or restrict the administrator’s ability (1) for restricted stock or performance stock awards, to pay the
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ordinary cash dividend upon (and subject to) the vesting of such shares subject to these awards, (2) for stock unit awards, to credit dividend equivalents in the form of additional units that are subject to the same vesting terms as the underlying units to which the dividend equivalents relate, and (3) to make equitable adjustments to preserve the intrinsic value of awards in the event of a transaction as described below.
Assumption and Termination of Awards. If an event occurs in which the Company does not survive (or does not survive as a public company in respect of its common stock), including, without limitation, a dissolution, merger, combination, consolidation, exchange of securities, or other reorganization, or a sale of all or substantially all of the business, stock or assets of the Company, awards then-outstanding under the 2008 Plan will not automatically become fully vested pursuant to the provisions of the 2008 Plan so long as such awards are assumed, substituted for or otherwise continued. However, if awards then-outstanding under the 2008 Plan are to be terminated in such circumstances (without being assumed or substituted for), such awards would generally become fully vested (with any performance goals applicable to the award in each case being deemed met at the “target” performance level, unless otherwise provided in the award agreement), subject to any exceptions that the Administrator may provide for in an applicable award agreement. The Administrator also has the discretion to establish other change in control provisions with respect to awards granted under the 2008 Plan. For example, the Administrator could provide for the acceleration of vesting or payment of an award in connection with a corporate event or in connection with a termination of the award holder’s employment. For the treatment of outstanding equity awards held by the NEOs in connection with a termination of employment and/or a change in control of the Company, please see the “Potential Payments Upon Change in Control and Termination” below in this Proxy Statement.
Transfer Restrictions. Subject to certain exceptions contained in Section 5.7 of the 2008 Plan, awards under the 2008 Plan generally are not transferable by the recipient other than by will or the laws of descent and distribution and are generally exercisable, during the recipient’s lifetime, only by the recipient. Any amounts payable or shares issuable pursuant to an award generally will be paid only to the recipient or the recipient’s beneficiary or representative. The Administrator has discretion, however, to establish written conditions and procedures for the transfer of awards to other persons or entities, provided that such transfers comply with applicable federal and state securities laws and are not made for value (other than nominal consideration, settlement of marital property rights, or for interests in an entity in which more than 50% of the voting securities are held by the award recipient or by the recipient’s family members).
Adjustments. As is customary in incentive plans of this nature, each share limit and the number and kind of shares available under the 2008 Plan and any outstanding awards, as well as the exercise or purchase prices of awards, and performance targets under certain types of performance-based awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the stockholders.
No Limit on Other Authority. The 2008 Plan does not limit the authority of the Board or any committee to grant awards or authorize any other compensation, with or without reference to the Company’s common stock, under any other plan or authority.
Discretion to Accelerate. The minimum vesting requirement under the 2008 Plan, as described above, does not limit or restrict the Administrator’s discretion to accelerate the vesting of any award in any circumstances it determines to be appropriate.
Limitation on Golden Parachute Payments. To the extent any award or payment under the 2008 Plan would trigger the golden parachute payment excise taxes provided for under Sections 280G and 4999 of the Code, the 2008 Plan provides that such award or payment will automatically be “cut back” to avoid triggering these excise taxes.
Clawback Policy. Awards granted under the 2008 Plan are generally subject to the terms of any Company clawback policy in effect from time to time.
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Termination of or Changes to the 2008 Plan. The Board may amend or terminate the 2008 Plan at any time and in any manner. Stockholder approval for an amendment will be required only to the extent then required by applicable law or deemed necessary or advisable by the Board. Unless terminated earlier by the Board and subject to any extension that may be approved by stockholders, the authority to grant new awards under the 2008 Plan will terminate on April 18, 2029. If stockholders approve this 2008 Plan proposal, the term of the 2008 Plan will be extended to April 18, 2032. Outstanding awards, as well as the Administrator’s authority with respect thereto, generally will continue following the expiration or termination of the plan. Generally speaking, outstanding awards may be amended by the Administrator (except for a repricing), but the consent of the award holder is required if the amendment (or any plan amendment) materially and adversely affects the holder.
U.S. Federal Income Tax Consequences of Awards under the 2008 Plan
The U.S. federal income tax consequences of the 2008 Plan under current federal law, which is subject to change, are summarized in the following discussion of the general tax principles applicable to the 2008 Plan. This summary is not intended to be exhaustive and, among other considerations, does not describe the deferred compensation provisions of Section 409A of the U.S. Internal Revenue Code to the extent an award is subject to and does not satisfy those rules, nor does it describe state, local, or international tax consequences.
With respect to nonqualified stock options, the Company is generally entitled to deduct and the participant recognizes taxable income in an amount equal to the difference between the option exercise price and the fair market value of the shares at the time of exercise, subject to any limitations under the U.S. Internal Revenue Code 162(m). With respect to incentive stock options, the company is generally not entitled to a deduction nor does the participant recognize income at the time of exercise, although the participant may be subject to the U.S. federal alternative minimum tax.
The current federal income tax consequences of other awards authorized under the 2008 Plan generally follow certain basic patterns: nontransferable restricted stock subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid (if any) only at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant); bonuses, stock appreciation rights, cash and stock-based performance awards, dividend equivalents, stock units, and other types of awards are generally subject to tax at the time of payment; and compensation otherwise effectively deferred is taxed when paid. In each of the foregoing cases, the Company will generally have a corresponding deduction at the time the participant recognizes income.
If an award is accelerated under the 2008 Plan in connection with a “change in control” (as this term is used under the U.S. Internal Revenue Code), the Company may not be permitted to deduct the portion of the compensation attributable to the acceleration (“parachute payments”) if it exceeds certain threshold limits under the U.S. Internal Revenue Code (and certain related excise taxes may be triggered). Furthermore, the aggregate compensation in excess of $1,000,000 in any calendar year may not be permitted to be deducted by the company in certain circumstances pursuant to Section 162(m) of the U.S. Internal Revenue Code.
Specific Benefits under the 2008 Performance Incentive Plan
The Company has not approved any awards that are conditioned upon stockholder approval of the 2008 Plan. The Company is not currently considering any other specific award grants under the 2008 Plan. If the proposed amendments to the 2008 Plan had been in existence in fiscal 2021, the Company expects that its award grants for fiscal 2021 would not have been substantially different from those actually made in that year under the 2008 Plan. For information regarding stock-based awards granted to the Company’s NEOs during fiscal 2021, see the material under the heading “Executive Compensation” below.
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Overhang as of April 1, 2022
The following paragraphs include additional information to help stockholders assess the potential dilutive impact of the Company’s equity awards and the 2008 Plan. As of the date hereof, the Company has outstanding awards under the 2008 Plan, the 2006 Plan, and the Company’s Employee Stock Purchase Plan (the “ESPP”). There are no remaining shares available for grant under the 2006 Plan. The ESPP is intended as a qualified employee share purchase plan under Section 423 of the Code. The ESPP generally provides for broad-based participation by employees of the Company (and certain of its subsidiaries) and affords employees who elect to participate an opportunity to purchase shares of the Company’s common stock at a discount. Certain information regarding the number of shares of Company common stock available for issuance under the ESPP is included under the heading “Equity Compensation Plan Information” below. The discussion that follows in this “Potential Dilution” section does not include any shares that have been purchased under, may be purchased in the current purchase period under, or that remain available for issuance or delivery under the ESPP.
“Overhang” refers to the number of shares of the Company’s common stock that are subject to outstanding awards or remain available for new award grants. The following table shows the total number of shares of the Company’s common stock that (i) were subject to outstanding restricted stock or unit awards granted under the 2008 Plan, (ii) were subject to outstanding stock options granted under the 2006 Plan and the 2008 Plan, including the weighted-average exercise price and remaining life of such outstanding stock options, and (iii) were then available for new award grants under the 2008 Plan as of December 31, 2021 and as of April 1, 2022. The number of shares subject to outstanding performance-based restricted stock units and the shares available for new award grants assume that all performance-based awards will pay out at the maximum performance level.
|
| As of December 31, 2021 |
| As of April 1, 2022 |
|
Shares subject to outstanding restricted stock and unit awards |
| 387,415 |
| 197,852 | |
| | | | | |
Shares subject to outstanding stock options |
| 849,522 |
| 845,688 | |
Weighted-average exercise price | | $19.89 | | $19.95 | |
Weighted-average remaining life | | 4.68 | | 4.44 | |
| | | | | |
Shares available for new award grants |
| 182,735 |
| 82,629 | |
The weighted-average number of shares of the Company’s common stock issued and outstanding in each of the last three fiscal years was 11,162,000 shares issued and outstanding in 2019; 11,793,000 shares issued and outstanding in 2020; and 12,458,000 shares issued and outstanding in 2021. The number of shares of the Company’s common stock issued and outstanding as of December 31, 2021 and April 1, 2022 was 12,804,000 and 13,206,000 shares, respectively.
As of December 31, 2021, the Company’s 849,522 outstanding stock options had a weighted-average exercise price of $19.89 and weighted-average remaining life of 4.68 years. As of April 1, 2022, the Company’s 845,688 outstanding stock options had a weighted-average exercise price of $19.95 and a weighted-average remaining life of 4.44 years.
“Burn rate” refers to the number of shares that are subject to awards that we grant over a particular period of time. The total number of shares of the Company’s common stock subject to awards that the Company granted under the 2008 Plan in each of the last three fiscal years, and to date (as of April 1, 2022) for 2022, are as follows:
| ● | 366,000 shares in fiscal 2019 (which was 3.3% of the weighted-average number of shares of the Company’s common stock issued and outstanding in fiscal 2019), of which 366,000 shares were subject to restricted stock; |
| ● | 512,000 shares in fiscal 2020 (which was 4.3% of the weighted-average number of shares of the Company’s common stock issued and outstanding in fiscal 2020), of which 512,000 shares were subject to restricted stock; |
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| ● | 333,000 shares in fiscal 2021 (which was 2.7% of the weighted-average number of shares of the Company’s common stock issued and outstanding in fiscal 2021), of which 333,000 shares were subject to restricted stock; and |
| ● | 100,000 shares in fiscal 2022 through April 1, 2022 (which was 0.8% of the weighted-average number of shares of the Company’s common stock issued and outstanding on April 1, 2022), of which 100,000 shares were subject to restricted stock. |
Thus, the total number of shares of the Company’s common stock subject to awards granted under the 2008 Plan per year over the last three fiscal years (2019, 2020 and 2021) has been, on average, 3.4% of the weighted-average number of shares of the Company’s common stock issued and outstanding for the corresponding year.
The total number of shares of our common stock that were subject to awards granted under the 2008 Plan or the 2006 Plan that terminated or expired, and thus became available for new award grants under the 2008 Plan, in each of the last three fiscal years, and to date (as of April 1, 2022) in 2022, are as follows: 9,000 in 2019, 18,000 in 2020, 32,000 in 2021, and none for 2022 (as of April 1, 2022).
The CC anticipates that the 478,000 additional shares requested for the 2008 Plan (together with the shares available for new award grants under the 2008 Plan on the Annual Meeting date and assuming usual levels of shares becoming available for new awards as a result of forfeitures of outstanding awards) will provide the Company with flexibility to continue to grant equity awards under the 2008 Plan through approximately the end of fiscal 2023. However, this is only an estimate, in the Company’s judgment, based on current circumstances. The total number of shares that are subject to the Company’s award grants in any one year or from year-to-year may change based on a number of variables, including, without limitation, the value of the Company’s common stock (since higher stock prices generally require that fewer shares be issued to produce awards of the same grant date fair value), changes in competitors’ compensation practices or changes in compensation practices in the market generally, changes in the number of employees, changes in the number of directors and officers, whether and the extent to which vesting conditions applicable to equity-based awards are satisfied, acquisition activity and the need to grant awards to new employees in connection with acquisitions, the need to attract, retain and incentivize key talent, the type of awards the Company grants, and how the Company chooses to balance total compensation between cash and equity-based awards.
The closing market price for a share of the Company’s common stock as of April 1, 2022 was $31.41 per share.
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Aggregate Past Grants Under the 2008 Plan
As of April 1, 2022, awards covering 4,351,172 shares of the Company’s common stock have been granted under the 2008 Plan. (This number of shares includes shares subject to awards that expired or terminated without having been exercised and paid and became available for new award grants under the 2006 Plan and the 2008 Plan.) The following table shows information regarding the distribution of all awards among the persons and groups identified below, option exercises and restricted stock and unit vesting prior to that date, and option and unvested restricted stock holdings as of that date. The number of shares subject to past option grants includes all options that were awarded, including those that may have expired prior to exercise. The number of shares subject to outstanding performance-based restricted stock units assumes that all performance-based awards will pay out at the maximum performance level.
| | Options and Stock Appreciation Rights | | Restricted Stock / Units | ||||||||||
| | | | | | | | | | Number | | | | Number of |
| | Number of | | Number | | | | | | of | | | | Shares/Units |
| | Shares | | of | | Number of Shares | | Shares/ | | Number of | | Outstanding | ||
| | Subject to | | Shares | | Underlying | | Units | | Shares/Units | | and | ||
| | Past | | Acquired | | Options/SARs as of | | Subject | | Vested as of | | Unvested as | ||
| | Option/SAR | | On | | April 1, 2022 | | to Past | | April 1, | | of April 1, | ||
Named Executive Officers: |
| Grants |
| Exercise |
| Exercisable |
| Unexercisable |
| Awards |
| 2022 | | 2022 |
Thomas D. Brisbin, |
| 565,000 |
| 225,000 |
| 325,000 |
| — |
| 446,997 |
| 404,496 |
| 42,501 |
Michael A. Bieber, |
| 241,667 |
| 22,236 |
| 219,431 |
| — |
| 282,169 |
| 264,118 |
| 18,051 |
Creighton K. Early | | 63,333 | | 22,653 | | 40,680 | | — | | 58,505 | | 52,705 | | 5,800 |
Stacy B. McLaughlin, |
| 66,667 |
| 66,667 |
| — |
| — |
| 43,976 |
| 43,976 |
| — |
Micah H. Chen | | 70,000 |
| — |
| 70,000 |
| — |
| 59,361 |
| 50,561 |
| 8,800 |
Paul M. Whitelaw | | 71,587 |
| 38,500 |
| 22,337 |
| — |
| 61,602 |
| 57,802 |
| 3,800 |
Total for All Current Executive Officers as a Group (5 persons): |
| 1,078,254 |
| 375,056 |
| 677,448 |
| — |
| 952,610 |
| 873,658 |
| 78,952 |
| | | | | | | | | | | | | | |
Steven A. Cohen |
| — |
| — |
| — |
| — |
| 19,146 |
| 15,836 |
| 3,310 |
Debra G. Coy |
| — |
| — |
| — |
| — |
| 10,287 |
| 6,977 |
| 3,310 |
Cynthia A. Downes | | — | | — | | — | | — | | 1,469 | | — | | 1,469 |
Raymond W. Holdsworth |
| 20,000 |
| 20,000 |
| — |
| — |
| 29,146 |
| 25,836 |
| 3,310 |
Douglas J. McEachern |
| 20,000 |
| 20,000 |
| — |
| — |
| 29,146 |
| 25,836 |
| 3,310 |
Dennis V. McGinn | | — |
| — |
| — |
| — |
| 11,425 |
| 8,115 |
| 3,310 |
Wanda K. Reder | | — | | — | | — | | — | | 1,323 | | — | | 1,323 |
Keith W. Renken |
| 26,000 |
| 26,000 |
| — |
| — |
| 29,146 |
| 25,836 |
| 3,310 |
Mohammad Shahidehpour |
| — |
| — |
| — |
| — |
| 19,146 |
| 15,836 |
| 3,310 |
Total for all Current Non-Executive Directors and Board Members as a Group (9 persons): |
| 66,000 |
| 66,000 |
| — |
| — |
| 150,234 |
| 124,272 |
| 25,962 |
| | | | | | | | | | | | | | |
Each other person who has received 5% or more of the options, warrants or rights under the Plan |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
All employees, including all current officers who are not executive officers or directors, as a group |
| 1,393,533 |
| 707,315 |
| 168,240 |
| — |
| 703,712 |
| 610,774 |
| 92,938 |
Total |
| 2,537,787 |
| 1,148,371 |
| 845,688 |
| — |
| 1,806,556 |
| 1,608,704 |
| 197,852 |
The non-executive directors and Dr. Brisbin are each nominees for re-election as a director at the Annual Meeting.
Vote Required for Approval of the Company’s 2008 Performance Incentive Plan
The Board believes that the adoption of the amendments to the 2008 Plan will promote the interests of the Company and its stockholders and will help the Company and its subsidiaries continue to be able to attract, retain and reward persons important to our success.
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All members of the Board and all of the Company’s executive officers are eligible for awards under the 2008 Plan and thus have a personal interest in the approval of the 2008 Plan.
Approval of the amendments to the 2008 Plan requires the affirmative vote of a majority of shares present in person or represented by proxy at the Annual Meeting and entitled to vote on the subject matter.
THE BOARD UNANIMOUSLY RECOMMENDS THAT A VOTE “FOR” APPROVAL OF AMENDMENT TO THE COMPANY’S 2008 PERFORMANCE INCENTIVE PLAN AS DESCRIBED ABOVE AND SET FORTH IN EXHIBIT A HERETO. PROXIES RECEIVED WILL BE VOTED “FOR” APPROVAL OF AMENDMENT TO THE COMPANY’S 2008 PERFORMANCE INCENTIVE PLAN UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXY.
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Compensation Discussion and Analysis
This CD&A and compensation tables and disclosures that follow focus primarily on compensation awarded to, earned by, or paid to our executive officers identified in the “Summary Compensation Table,” whom we refer to in this section as our “NEOs.” This section also describes the role and involvement of various parties in our executive compensation analysis and decisions, and provides a discussion of the process and rationale for the decisions of our CC to compensate our NEOs with specific types and amounts of compensation.
Chief Executive Officer Compensation Components
The following comparisons, derived from the Willis Towers Watson’s 2020 analysis of compensation of similarly situated executives at our peer group companies (described in the Compensation Peer Group section below), show the various balances our executive compensation mix achieved for our CEO during fiscal 2021 compared to the balances achieved by the peer group:
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Our NEOs for 2021 were:
Name |
| Age |
| Title |
Thomas D. Brisbin |
| 69 |
| Chairman of the Board and Chief Executive Officer |
Michael A. Bieber |
| 53 |
| President |
Creighton K. Early |
| 69 |
| Vice President and Chief Financial Officer |
Stacy B. McLaughlin(1) | | 40 | | Former Vice President and Chief Financial Officer |
Micah H. Chen | | 50 | | General Counsel |
Paul M. Whitelaw | | 50 | | Senior Vice President, Business Development |
| (1) | Ms. McLaughlin resigned from her position as Chief Financial Officer, effective April 16, 2021. |
| | |
| Improved diluted EPS 44.7% in fiscal 2021 Grew adjusted EPS 19.2% in fiscal 2021 Record funded backlog of $1.2 billion going into 2022 | |
| | |
In fiscal 2021, we grew diluted earnings per share (“diluted EPS”) and adjusted diluted earnings per share (“adjusted EPS”) by 44.7% and 19.2%, respectively, compared to fiscal 2020 and achieved a record high backlog even with the disruption from the continuing COVID-19 pandemic. Our authorized and funded backlog reached $1.2 billion at the end of the fourth quarter of fiscal 2021, a record for us. The record backlog is a testament to our growth model, which we believe is repeatable and durable, and we plan to continue adding complementary skills to catalyze organic growth. A large percentage of the record backlog is due to our winning of what we believe are the largest and most complex contracts in our industry. Late in 2021 we commenced work on the largest California IOU energy efficiency contracts. We expect to ramp revenue on those contracts throughout 2022 and into 2023. Willdan serves one of the most dynamic industries in the world at one of the most exciting times. A cleaner, low carbon energy cycle is transforming our electric grid, buildings, industrial production and transportation networks. Willdan helps these clients evaluate new technical advances and implement sustainable cost effective solutions to advance and transform the delivery and consumption of energy and other government infrastructure.
Fiscal Year 2021 Highlights
| ● | Generated $9.8 million of cash from operations in 2021 with capital strategically allocated to business investment and debt reduction; |
| ● | Commenced work on the largest California IOU energy efficiency contracts in second half of 2021; |
| ● | Entered 2022 with an authorized and funded backlog of $1.2 billion, a record for us; and |
| ● | Reduced debt by $12.8 million in fiscal 2021, bringing total debt reduction to $29.9 million since the end of fiscal 2019. |
2021 Say-on-Pay Vote and Executive Compensation Program
At the 2021 Annual Meeting, approximately 85% of the votes cast approved our fiscal year end 2020 executive compensation. We value our stockholders’ opinions about our governance policies and practices and actively solicit input through our stockholder engagement program. Throughout 2021, our CEO, President, CFO, and VP of Investor Relations, proactively contacted our institutional investors to discuss and solicit their feedback on various matters including on our corporate governance and executive compensation programs. In addition to senior management, members of our Compensation Committee are available for consultation with our major shareholders. Overall, we contacted 73% of our institutional equity investor base, and spoke with stockholders representing approximately 58% of our institutional equity investor base, in addition to potential holders of our equity.
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During our 2021 meetings, stockholders expressed concerns that the Company had not adopted a stock holding policy that required net shares acquired by our CEO to be held for a certain period of time. In response to the feedback of our stockholders and proxy advisors, our Board adopted a Stock Holding Policy that requires our CEO to hold 100% of net shares (i.e. shares remaining after payment of taxes) of our common stock acquired pursuant to the exercise of stock options or vesting of restricted stock until the earlier of twelve months following the exercise of stock options or vesting of restricted shares or the CEO’s termination of employment.
The Company continues to find constructive feedback from ESG investors, many of whom are European-based. These European-based funds have a particular focus on measuring our performance and related disclosure of ESG metrics. The feedback was instrumental in the Company publishing its inaugural sustainability report in January 2021. The Company’s 2020 Sustainability Report is available at www.willdan.com. The Company expects to publish its 2021 sustainability report in the second quarter of fiscal 2022.
The table below provides a recap of the actions taken as well as enhancements and additional disclosures implemented in 2020 and that continued to be in effect in 2021.
Issue | Proxy Advisor and /or Stockholder Concerns | Stockholder Feedback | Actions Implemented in 2020 |
|---|---|---|---|
Clawback Policies | No clawback policy disclosed; clawback was not applicable to both cash and equity bonus compensation | Governance best practices include disclosure of policy and clawback policy that gives company ability to claw back both cash and equity | Disclosed rigorous equity clawback policy; adopted cash bonus clawback policy due to shareholder feedback |
Annual Incentive Plan | Company is silent on metrics, goals and payout formula related to incentive plan and reasoning for changes to payout levels | Provide additional disclosure on the short-term compensation metrics to explain inconsistent payouts and reasoning for changes in annual payout levels | Disclosed metrics, goals, bonus pool payout formula to provide rigor linking pay with performance |
Change in Control | No rigorous change in control policy disclosed | Improve change in control disclosures | Disclosed our change in control policies and practices |
Stock Ownership Guidelines | No stock ownership requirements, including executive and non-employee directors | Encourage the Company to require stock ownership guidelines for executive management and non-employee directors of the Company | In 2020, the CC adopted management and non-employee director stock ownership guidelines with compliance to be within three years. Guideline includes 5x of base salary CEO; 3x base salary President; 1x base salary remaining Section 16 Officers ; and $115,000 minimum value in stock holdings for non-employee directors |
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Issue | Proxy Advisor and /or Stockholder Concerns | Stockholder Feedback | Actions Implemented in 2020 |
|---|---|---|---|
Peer Group Disclosure | No compensation peer group disclosed | Enhance disclosure around compensation peer group selected for compensation and the factors considered in their selection | Disclosed our compensation peer group which has been provided every two years by a third-party consultant hired by the CC |
Sustainability and Impact Reporting | No annual sustainability or impact report provided by the Company despite its core focus on providing energy savings and carbon mitigating measures | Provide sustainability metrics focused on environmental, social, and governance (“ESG”) factors | Published 2020 Sustainability Report in early 2021. See www.willdan.com under “Investors—Sustainability Report” |
Clawback Policy
The Company has a comprehensive clawback policy applicable to both short-term cash-based performance bonuses and long-term equity-based compensation. If our Company is required to prepare an accounting restatement due to our material noncompliance with any financial reporting requirements under the securities laws, then each executive officer must return to us, or forfeit if not yet paid, a specified amount. The amount is any payment received with respect to any short-term cash-based performance bonuses and any award under our 2008 Plan during the three-year period preceding the date on which our Company is required to prepare the accounting restatement based on the erroneous data less what would have been paid to the executive officer under the accounting restatement as determined by the Compensation Committee.
Stock Ownership Guidelines and Holding Policy
In 2020, the CC adopted management stock ownership guidelines for executives and non-employee directors to further align the interests of executives and directors with those of stockholders. All officers and non-employee directors have three years from taking their positions to comply with these guidelines. All executive officers and directors are currently in compliance with these guidelines as of the date of this Proxy Statement.
Position | Unit Measure | Factor | Years to Achieve Compliance | In Compliance as of 3/10/2022 |
CEO | Base Salary | 5x | 3 | Yes |
President | Base Salary | 3x | 3 | Yes |
Section 16 Officers | Base Salary | 1x | 3 | Yes |
Non-employee Directors | Minimum holding $115,000 in stock value | Not Applicable | By end of 3 years of service | Yes |
In addition, in response to the feedback of our stockholders and proxy advisors during 2021, our Board adopted a Stock Holding Policy that requires our CEO to hold 100% of net shares (i.e. shares remaining after payment of taxes) of our common stock acquired pursuant to the exercise of stock options or vesting of restricted stock until the earlier of twelve months following the exercise of stock options or vesting of restricted shares or the CEO’s termination of employment.
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The following table sets forth the names, ages and positions of our current executive officers, as of the date of this Proxy Statement:
|
| |
| |
| Years in |
| Years at |
Name | | Age | | Title | | Position @ | | Willdan @ |
| | | | | | FYE 2021 | | FYE 2021 |
Thomas D. Brisbin |
| 69 |
| Chairman of the Board and Chief Executive Officer |
| 14 (a) |
| 14 |
Michael A. Bieber |
| 53 |
| President |
| 5 |
| 7 |
Creighton K. Early |
| 69 |
| Vice President and Chief Financial Officer |
| 1 |
| 6 |
Micah H. Chen |
| 50 |
| General Counsel |
| 4 |
| 5 |
Paul Whitelaw |
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| Senior Vice President, Business Development |
| 4 |
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| (a) | Dr. Brisbin became CEO on 2007 and became Chairman of the Board in November 2016 |
Biographical information concerning Dr. Brisbin is set forth above under the caption “Directors”.
Michael A. Bieber was appointed as our President in November 2016. Previously, Mr. Bieber was Senior Vice President, Corporate Development from December 2014 to November 2016. Prior to that, he served as Senior Vice President at Tetra Tech, where he served in a number of leadership roles for over 18 years. From March 2007 to December 2014, Mr. Bieber managed Tetra Tech’s mergers and acquisitions and investor relations functions, overseeing over fifty acquisitions. From 2005 to 2007, Mr. Bieber managed Tetra Tech’s corporate business development group, where he was responsible for overseeing internal business development, marketing and communications. From January 2000 to December 2014, Mr. Bieber also worked in Tetra Tech’s investor relations group. From 1996 to 2000, he was a proposal manager in Tetra Tech’s corporate marketing group. From 1994 to 1996, he served at CRC, Inc., and its successor, as a strategic business development consultant to large defense, infrastructure and environmental firms. Prior to 1994, Mr. Bieber worked for IT Corporation (now CB&I) where he served as project manager and engineer on government nuclear and commercial environmental projects. Mr. Bieber holds a B.S. degree in Civil Engineering from the Tennessee Technological University.
Creighton K. Early was appointed our Vice President and Chief Financial Officer, effective April 16, 2021. Mr. Early previously served as Executive Vice President of Willdan Energy Solutions and as Chief Financial Officer of various subsidiaries of the Company from December 2015 until his appointment to Vice President and Chief Financial Officer. Mr. Early has also served as a member of the Board of Directors of H.W. Lochner, Inc., a private company, since April 2016, and has served as the Chairman of its AC since February 2021. Prior to joining us, Mr. Early served as Chief Financial Officer of both public and privately held companies, including three years with Infrastructure & Energy Alternatives LLC, a renewable energy construction company. He also previously spent 14 years at Earth Tech, Inc., a multinational infrastructure company, including serving as its Chief Financial Officer and as the President of its Global Water Management Division. Mr. Early holds a B.S. in Business Administration from Ohio State University and an M.B.A. from the University of Michigan.
Paul M. Whitelaw was appointed our Senior Vice President, Business Development in March 2018. In this capacity, Mr. Whitelaw leads our business development efforts. Mr. Whitelaw has been with us since 1996 beginning with Willdan Financial Services, and taking on increasing responsibility and managerial oversight with each promotion over the last 24 years. Prior to his role in national strategic development, Mr. Whitelaw was the Senior Vice President of Business Development for Willdan Energy Solutions’ western region from 2015 to 2017. Before focusing exclusively on business development, Mr. Whitelaw was the Regional Vice President for Willdan Energy Solutions’ western region from 2012 to 2015. Mr. Whitelaw is a member of the Board of Directors of the California Efficiency and Demand Management Council. Mr. Whitelaw holds a B.A. in Chemistry from Point Loma Nazarene University and a Master’s in Business Administration from the University of California, Irvine.
Micah H. Chen was appointed our General Counsel in March 2018. Previously, Mr. Chen was our Legal Counsel from July 2017 to March 2018. Prior to joining us, Mr. Chen held various management positions at Aon Corporation’s Construction Services Group for nearly 10 years. From January 2016 to July 2017, Mr. Chen served as Managing Director and Senior Vice President of Aon Corporation. In this role, Mr. Chen was responsible for the group’s Account Executive practice for the West Region. From November 2008 to January 2016, Mr. Chen served as Senior Vice President of Aon
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Corporation. In this role, he provided risk management consultation and assisted in the evaluation and development of comprehensive risk management programs to many Top 100 Engineering-News Record clients, general contractors and multibillion-dollar commercial construction projects. Mr. Chen received his B.A. in International Economics from the University of California, Los Angeles and his J.D. from Western State University, School of Law.
There are currently no ongoing material proceedings in which any director or executive officer is a party adverse to the Company or any of its subsidiaries, or in which any director or executive officer has a material interest adverse to the Company or any of its subsidiaries.
The Company expects that all of its directors, officers and employees will maintain a high level of integrity in their dealings with and on behalf of the Company and will act in the best interests of the Company. The Company has adopted a Code of Ethical Conduct, which provides principles of conduct and ethics for the Company’s directors, officers and employees, including employees of the Company’s subsidiaries. This Code complies with the requirements of the Sarbanes-Oxley Act of 2002 and the Nasdaq Rules. This Code of Ethical Conduct is available on the Company’s website at www.willdan.com under “Investors—Corporate Governance—Governance Documents” and is also available in print, without charge, to any stockholder who requests a copy by writing to our Secretary at 2401 East Katella Avenue, Suite 300, Anaheim, California 92806. To the extent required by rules adopted by the SEC and the Nasdaq Stock Market, we intend to promptly disclose future amendments to certain provisions of the code, or waivers of such provisions granted to executive officers and directors on our website at www.willdan.com under “Investors—Corporate Governance.” In 2021, we updated our Code of Ethical Conduct whereby all employees must review and sign on an annual basis.
Executive Compensation Program Objectives and Philosophy
| | |
| Executive pay leveraged more to performance and long-term incentives versus peer group median Align executive’s pay with long term interests of | |
| | |
Our executive compensation program’s primary objective is aligning our executives’ pay with the long-term interests of our stockholders. The program is designed to provide a lower base compensation versus the peer group median combined with a higher percentage of compensation at risk, and a higher percentage of compensation derived in equity. Cash bonuses and long-term equity incentives are the elements of our executive compensation program that are “at risk”, are designed to reward performance and align with stockholders in creating long-term value. Overall, we target to reward short and long-term financial, strategic and operational performance, while facilitating the Company’s need to attract, motivate, develop and retain highly-qualified executives who are critical to our long-term success.
Our executive compensation philosophy is to:
| ■ | Align the long-term interests of our executives with those of the stockholders; |
| ■ | Attract, motivate, reward, and retain the top contributors upon whom, in large part, our success depends; |
| ■ | Be competitive with compensation programs for companies of similar size and complexity with whom we compete for talent, including direct competitors; |
| ■ | Provide compensation based upon the short-term and long-term performance of both the individual executive and the Company; and |
| ■ | Strengthen the relationship between pay and performance by emphasizing variable, at-risk compensation that is dependent upon the successful achievement of specified corporate and individual goals. |
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In structuring our executive compensation arrangements, our CC considers how each compensation element fits within our overall philosophy of long-term shareholder value. Our compensation program is comprised of three elements:
| ■ | Base Salary – primarily intended to attract and retain top contributors. We believe that in order to attract and retain top executives, we need to provide our executive officers with compensation levels that reward their continued service and are competitive; |
| ■ | Annual Cash Bonus – the performance cash bonuses are primarily intended to motivate the NEOs to achieve our short-term performance objectives. The cash bonus pool is formula driven based on organic growth, earnings and cash flow metrics; and |
| ■ | Long-Term Equity-Based Incentive Compensation – primarily intended to align our NEOs’ long-term interests with stockholders’ long-term interests. |
Our Company’s Annual Cash Bonus pool is formula driven and has historically been funded based on the product of earnings, an organic growth factor, and a days sales outstanding factor:
Bonus Pool = [(25% of earnings > 6% of revenue) x (Organic Growth Factor) x (DSO Factor)]
| ■ | Earnings – expressed as the Company’s operating earnings before interest, taxes, amortization and bonus. |
| ■ | Organic Growth Factor –expressed as organic revenue growth year-over-year. The organic growth factor is defined as one plus/minus 2x and the organic growth rate. |
| o | For example, if organic revenue growth is 20%, the organic growth factor would be 1+(2 x 0.2) = 1.40. If organic revenue growth rate was negative 20%, the organic growth rate factor would be 1+(2 x -0.2) = 0.60 |
| ■ | Days Sales Outstanding (DSO) Factor – is calculated based on a mid-point of 70 days and is expressed as one minus the percentage lower or higher than 70 days. |
| o | For example, if the DSO was 65 days, the DSO would be 1-((65-70)/70) = 1.07. If the DSO was 85 days, the DSO factor would be 1-((85-70)/70) = 0.79. |
Our long-term equity-based incentive plan permits us to award all types of incentive awards, including incentive or nonqualified options, stock appreciation rights, stock bonuses, restricted stock, stock units, performance stock, phantom stock, dividend equivalents and other forms of awards. Our CC determined to introduce performance-based equity awards into our executive compensation program in 2018. The CC determined to move away from its historical practice of granting only time-based equity awards and introduced the PBRSUs in 2018 in order to further align the interests of our executives with those of stockholders by strengthening the relationship between executive pay and our performance against two critical performance metrics that we believe will drive value creation for our stockholders.
Starting with fiscal 2019, nearly all of the long-term equity incentive awards granted to our NEOs were granted in the form of performance-based restricted stock units (“PBRSUs”), other than to Dr. Brisbin and Mr. Chen, who were also granted time-based long-term incentive awards in fiscal 2021. In fiscal 2021, the CC awarded Dr. Brisbin a time-based long-term incentive award in connection with the signing of the largest contracts win in Company history, the $781 million California Investor-Owned Utility contracts signed in December 2020.
Consistent with prior years, the performance goals, which are established for purposes of measuring performance and dictate the vesting thresholds for performance-based equity awards, were pre-established and approved by the Board prior to the beginning of the performance period – that is, the goals for the performance-based equity awards granted in fiscal 2021 were based on a previously approved business plan. These goals are fixed and are not changed over the performance period of the award.
We also provide 401(k) retirement benefits and, in some cases, severance benefits to our executive officers, including the NEOs.
Role of the Compensation Committee
Pursuant to its charter, the CC of our Board has the authority to determine the amount of compensation given to each of the NEOs. The CC implements our executive compensation philosophy, and is responsible for administering our equity
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compensation plans, including approving grants of awards under the plans. In performing its duties, the CC is authorized to consider the recommendations of our CEO when determining the compensation of the other NEOs. All of the members of the CC are independent directors.
The elements of our executive compensation program were each approved by the CC. None of the NEOs is a member of the Compensation Committee or, except for recommendations made by our CEO with respect to the compensation of the other NEOs, had any role in determining the compensation of the Named Executive Officers.
The CC is authorized to retain and terminate any compensation consultant engaged to assist in the evaluation of the compensation of our senior executive officers (including all of the NEOs). In 2020, the CC hired Willis Towers Watson to evaluate and compare the compensation practices for executive management and the Board. The CC was directly responsible for the appointment, compensation and oversight of Willis Towers Watson and, at the time of their appointment, assessed the independence of Willis Towers Watson pursuant to applicable SEC and Nasdaq Rules and concluded that no conflict of interest existed with respect to such consultant’s services to the CC. Willis Towers Watson reported only to the CC and did not perform any other services for us.
In conjunction with their 2020 study, Willis Towers Watson advised the CC regarding the construction of our customized compensation peer group provided in the table below.
COMPENSATION PEER GROUP | |
§ Ameresco, Inc. § Charah Solutions, Inc. § Cypress Environmental Partners, L.P. § Exponent, Inc. § Hill International, Inc. | § Limbach Holdings, Inc. § NV5 Global, Inc. § RCM Technologies, Inc. § Resources Connection, Inc. |
The CC then compared the compensation of Willdan’s executive management with similarly situated executives of those companies and used this comparative compensation information as a reference point when setting compensation levels for 2021. In setting compensation levels for 2021, our CC also considered each executive’s level of responsibility and performance for the overall operations of the Company, historical Company practices, long-term market trends, internal pay equity, expectations regarding the individual’s future contributions, our own performance and budget considerations.
Role of Shareholder Say-on-Pay Votes
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| Responsive to ISS Stockholder Concerns and Feedback Minimum 12-Month CEO Stock Holding Period | |
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The Company annually offers stockholders the opportunity to cast an advisory vote on our executive compensation program. This annual vote is known as the “say-on-pay” proposal. At our annual general meeting in 2021, approximately 85% of votes cast were in favor of our executive compensation program in 2020. We value our stockholders' opinions about our governance policies and practices, and we actively solicit input through our stockholder engagement program that is described in detail above. As a direct result of stockholder feedback, we adopted a new Stock Holding Policy in 2021 and continued in effect several enhancements to our corporate governance and executive compensation program made in 2020 in response to stockholder feedback. We welcome feedback on our corporate governance program that this active and ongoing engagement with stockholders provides.
Executive Compensation Program Elements
Base Salaries
We pay each Named Executive Officer a base salary to provide each executive with a minimum, fixed level of cash compensation. Decisions regarding increases to base salaries are made at the discretion of our CC. In reviewing base salary levels for our NEOs, our Compensation Committee primarily considers and assesses the following factors: the base
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salaries paid by our peer group companies to their similarly situated executives, each NEOs’ current base salary, their job responsibilities, leadership and experience, value to our Company and the recommendations of our CEO (other than with respect to his own compensation) and our President.
Named Executive Officer |
| Base Salary at end of 2021 |
| Base Salary at end of 2020 | | ||
Thomas D. Brisbin | | $ | 505,003 | | $ | 505,003 | |
Michael A. Bieber | | $ | 440,003 | | $ | 440,003 | |
Creighton K. Early | | $ | 325,000 | | $ | 325,000 | |
Micah H. Chen | | $ | 315,016 | | $ | 315,016 | |
Paul Whitelaw | | $ | 280,010 | | $ | 280,010 | |
Stacy B. McLaughlin | | | (1) | | $ | 240,011 | |
| (1) | Ms. McLaughlin resigned as our Vice President and Chief Financial Officer, effective April 16, 2021. |
Annual Bonuses
We determined to award performance-based cash bonuses to all of our NEO’s in 2021. The CC determined the amount of each executive’s bonus at its discretion, based on peer group comparable data, past practices and individual performance. The compensation bonus pool is funded based 100% on Company performance related to business metrics and the formula outlined above.
In determining the amount of each executive’s 2021 bonus, the CC used third party benchmarking studies and primarily considered bonus pool size limitations, each executive’s level of responsibility and performance, contribution to the success of the business, strategic impact, retention risk, internal pay equity, and the recommendations of our CEO (other than with respect to his own compensation) in allocating the bonus pool. CC also evaluated each executive’s individual performance during 2021 and efforts to lead the Company through the challenges of the Covid-19 pandemic (with input from our CEO for the other NEOs).
2021 Long-Term Equity Awards
In determining the level of awards granted to each of the NEOs, our CC primarily took into account the executive’s level of responsibility and performance for the overall operations of the Company, internal pay equity, historical Company practices, each executive’s performance, and budget considerations. The CC also considered the compensation paid by our peer group companies described above to similarly situated executives.
In fiscal 2021, the CC awarded Dr. Brisbin a time-based long-term incentive award in connection with the signing of the largest contracts won in Company history - the $781 million California Investor-Owned Utility contracts signed in December 2020. The California IOUs generated a Company record of funded backlog.
Our 2021 PBRSU design is a two-year plan where (i) 50% of each award will vest based upon our Adjusted EBITDA performance over a one-year performance period (“EBITDA Units”), and the remaining 50% of each award will vest based upon our net revenue performance over a one-year performance period (“Net Revenue Units”), generally subject to the executive’s continued employment through the end of the applicable Performance Year, and (ii) a one year post-vesting holding period follows where the recipient is to hold 100% of net shares (i.e. shares remaining after payment of taxes) of our common stock acquired, for one year, following the vesting of restricted shares.
The CC temporarily opted to implement a single-year performance period in light of the dynamic business environment and the lack of predictability of the business and related financial performance during the Covid-19 pandemic, which included mandatory government shutdowns which temporarily suspended our largest program for the Los Angeles Department of Water and Power for the first half of fiscal 2021. The CC has indicated that it will not issue another single-performance period award and will be resuming multi-year performance-period awards in fiscal 2022.
The 2021 Adjusted EBITDA and Net Revenue metric goals were designed to reflect the challenges created by the Covid-19 pandemic. We believe the Adjusted EBITDA and Net Revenue metrics are critical to measuring the performance of our business, and we believe that successful management of Adjusted EBITDA and Net Revenue growth will lead to the creation of long-term value for our stockholders.
As noted above, the performance goals, which are established for purposes of measuring performance and dictate the vesting thresholds for performance-based equity awards, were pre-established and approved by the Board prior to the
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beginning of the performance period – that is, the goals for the performance-based equity awards granted in fiscal 2021 were based on a previously approved business plan. These goals are fixed and are not changed over the performance period of the award.
The chart below shows the Adjusted EBITDA goals that we must achieve in order to satisfy the threshold, target and maximum performance levels in the performance period and the corresponding percentage of the target number of EBITDA Units related to the performance period eligible to vest. Results between the performance levels in the chart will be interpolated on a linear basis. If the threshold performance level is not achieved for the performance period, all of the EBITDA Units will be forfeited.
Performance |
| Adjusted EBITDA |
| % of Target EBITDA Units | |
Threshold |
| $10 million | | 0% | |
Target |
| $15 million | | 100% | |
Maximum |
| $25 million | | 250% | |
Growth rate achieved between performance levels is interpolated on a linear basis for EBITDA Unit vesting.
For purposes of the EBITDA Units, Adjusted EBITDA means the Company’s net income (loss) for the applicable Performance Year as determined in accordance with GAAP, plus (1) interest expense (loss), (2) income tax expense (benefit), (3) stock-based compensation, (4) interest accretion, (5) depreciation and amortization, and (6) plus or minus the effect of any extraordinary item or extraordinary transaction.
For the 2021 performance period, we achieved an actual Adjusted EBITDA of $27.5 million,
which resulted in each NEO being vested 250% of the target number of EBITDA Units.
For purposes of the Net Revenue Units, Net Revenue means the Company’s consolidated contract revenue minus subcontractor services and other direct costs for the performance period.
The chart below shows the net revenue growth rate that we must achieve in order to satisfy the threshold, target and maximum performance levels for the performance period, and the corresponding percentage of the target number of Net Revenue Units related to that performance period eligible to vest. Results between the performance levels in the chart will be interpolated on a linear basis. If the threshold performance level is not achieved, all of the Net Revenue Units related to the performance period will be forfeited.
Performance |
| Net Revenue Growth Rate |
| % of Target Net Revenue Units | |
Threshold |
| -5% | | 0% | |
Target |
| 0% | | 100% | |
Maximum |
| 5% | | 250% | |
Growth rate achieved between performance levels is interpolated on a linear basis for Net Revenue Unit vesting
For the 2021 performance period, we achieved an actual Net Revenue growth rate of ~3.6%,
which resulted in each NEO being vested in 207% of the target number of Net Revenue Units - We believe this below-maximum payout—where our NEOs did not earn the full potential Net Revenue Units—demonstrates the performance-contingent nature of our PBRSU awards.
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Fiscal 2021 Vesting for Fiscal 2020 Year PBRSU Awards
Under our 2020 PBRSU design, 50% of each award will vest based upon our Adjusted EBITDA performance over a two-year performance period (“EBITDA Units”), and the remaining 50% of each award will vest based upon our earnings per share performance over a two-year performance period (“EPS Units”).
The chart below shows the adjusted EBITDA growth rate that we must achieve in order to satisfy the threshold, target and maximum performance levels for each year in the performance period (each, a “Performance Year”), and the corresponding percentage of the target number of EBITDA Units related to that Performance Year eligible to vest. Results between the points in the chart will be interpolated on a linear basis. If the threshold performance level is not achieved for any Performance Year, all of the EBITDA Units related to that Performance Year will be forfeited.
Performance |
| Adjusted EBITDA Growth Rate |
| % of Target EBITDA Units | |
Threshold |
| <10% | | 0% | |
Target |
| 20% | | 100% | |
Maximum |
| 30% | | 250% | |
Growth rate achieved between performance levels is interpolated on a linear basis for EBITDA Unit vesting.
In general, an equal number of EBITDA Units are eligible to vest based on the Company’s adjusted EBITDA growth as of the end of each Performance Year, generally subject to the executive’s continued employment through the end of the applicable Performance Year. For purposes of the EBITDA Units, adjusted EBITDA has the same meaning described above for the 2021 EBITDA Units. For purposes of setting the adjusted annual EBITDA goals, the baseline was the adjusted EBITDA forecast for 2017 of $20,100,000, compounded each year since then.
For the 2021 Performance Year, we achieved an actual Adjusted EBITDA growth rate in excess of 10% but below 20%, which resulted in each NEO being vested 19% of his or her target number of EBITDA Units for the 2021 Performance Year. We believe this below-target payout—where our NEOs did not earn a substantial portion of their potential EBITDA Units—demonstrates the performance-contingent nature of our PBRSU awards.
In general, an equal number of EPS Units are eligible to vest based on the Company’s EPS growth as of the end of each Performance Year, generally subject to the executive’s continued employment through the end of the applicable Performance Year. For purposes of the EPS Units, EPS means the Company’s trailing three year numerical average diluted earnings per share for the applicable Performance Year as determined in accordance with GAAP, before stock compensation expense net of tax, plus or minus the effect of any extraordinary item or extraordinary transaction.
The chart below shows the EPS growth rate that we must achieve in order to satisfy the threshold, target and maximum performance levels for each Performance Year, and the corresponding percentage of the target number of EPS Units related to that Performance Year eligible to vest. Results between the points in the chart will be interpolated on a linear basis. If the threshold performance level is not achieved for any Performance Year, all of the EPS Units related to that Performance Year will be forfeited.
Performance |
| EPS Growth Rate |
| % of Target EPS Units | |
Threshold |
| <10% | | 0% | |
Target |
| 20% | | 100% | |
Maximum |
| 30% | | 250% | |
Growth rate achieved between performance levels is interpolated on a linear basis for EPS Unit vesting
For the 2021 Performance Year, we achieved an actual EPS growth rate in excess of 10% but below 20%, which resulted in each NEO being vested in 75% of his or her target number of EPS Units for the 2021 Performance Year. We believe this below-target payout – where our NEOs did not earn a substantial portion of their previous year potential PBRSU EPS Unit awards eligible to vest based our 2021 performance – demonstrates the performance-contingent nature of our PBRSU awards.
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Rigorous Change in Control Definition
For purposes of long-term equity incentive and PBRSUs, a “Change in Control” of the Company shall be deemed to have occurred if a consummation of any of the following events occurs:
| (i) | Any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company (an “Acquiring Person”), is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 33 1/3% of the then outstanding voting stock of the Company; |
| (ii) | Consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least 51% of the combined voting power of the voting securities of the Company or surviving entity outstanding immediately after such merger or consolidation; |
| (iii) | Consummation of a sale or other disposition by the Company of all or substantially all of the Company’s assets; |
| (iv) | During any period of two consecutive years (beginning on or after the date of grant), individuals who at the beginning of such period constitute the Board and any new director (other than a director who is a representative or nominee of an Acquiring Person) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least a majority of the directors then still in office who either were directors at the beginning of the period or whose election or nomination was previously so approved, no longer constitute a majority of the Board; provided, however, in no event shall any acquisition of securities, a change in the composition of the Board or a merger or other consolidation pursuant to a plan of reorganization under chapter 11 of the Bankruptcy Code with respect to the Company, or a liquidation under the Bankruptcy Code, constitute a Change in Control. In addition, a Change in Control shall not be deemed to have occurred in the event of a sale or conveyance in which the Company continues as a holding company of an entity or entities that conduct the business or businesses formerly conducted by the Company, or any transaction undertaken for the purpose of reincorporating the Company under the laws of another jurisdiction, if such transaction does not materially affect the beneficial ownership of the Company’s capital stock. |
Potential Vesting Upon Change in Control
If a Change in Control occurs after the date of grant and prior to the end of any performance period, on the date of the consummation of such Change in Control, the number of PBRSUs that shall be eligible to vest (the “Contingently Vested Units”) shall be calculated as follows: (i) with respect to the pending performance period in-progress at the time of the Change in Control, the greater of (with the Net Revenue Units, EPS Units, and EBITDA Units being evaluated separately and not in the aggregate) (A) the target number of Net Revenue Units, EPS Units, or EBITDA Units associated with such performance period and (B) the number of Net Revenue Units, EPS Units, or EBITDA Units that become earned based on actual performance (assuming the last day of such performance period is the date of the consummation of such Change in Control, with the CC to make such appropriate pro-rating adjustments to the performance metrics as shall be necessary to reflect the shortened performance period), plus (ii) with respect to any performance period(s) remaining that have not commenced, the greater of (with the Net Revenue Units, EPS Units, and EBITDA Units being evaluated separately and not in the aggregate) (X) the target number of Net Revenue Units, EPS Units, or EBITDA Units associated with such performance period(s) and (Y) the average number (measured as a percentage of target) of Net Revenue Units, EPS Units, or EBITDA Units that have become earned based on actual performance for all performance periods that have been completed (and are not in-progress) as of the date of the Change in Control. Any PBRSUs that are not Contingently Vested Units as of the date of the consummation of such Change in Control shall automatically terminate without consideration as of such date.
The Contingently Vested Units shall become earned and vested on the first anniversary date of the consummation of such Change in Control, subject to the employee’s continued employment or service with us (or any successor) through such date; provided, however, that if the employee’s employment or service is terminated (i) by us (or any successor) without “cause”, (ii) by the employee for “good reason”, or (iii) due to the employee’s death or “disability”, in each case, prior to such first anniversary of the Change in Control, the Contingently Vested Units shall become earned and vested on such termination date. Any Contingently Vested Units that do not vest pursuant to the preceding sentence shall automatically terminate without consideration on such termination date.
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Severance
Dr. Brisbin is employed pursuant to an employment agreement that provides specified levels of severance benefits if his employment is terminated by us without “cause” or by Dr. Brisbin for a “good reason.” The level of Dr. Brisbin’s severance benefit was negotiated and established in connection with Dr. Brisbin’s entry into his employment agreement and has been determined to be appropriate by the CC based on Dr. Brisbin’s level of responsibility and performance for the overall operations of the Company, long-term market trends, and budget considerations. Severance benefits for Dr. Brisbin are based on a multiple of “2x” his base salary. Severance benefits for Dr. Brisbin also includes payment of Dr. Brisbin’s target bonus for the year of termination of employment.
The Company has not entered into an employment agreement or offer letter that provides for the payment of severance benefits for any type of termination of employment with Mr. Bieber, Mr. Early, Mr. Chen, or Mr. Whitelaw.
We entered into a separation agreement with Ms. McLaughlin in connection with her resignation, effective April 13, 2021 (the “Separation Agreement”). Pursuant to the Separation Agreement, for a period of six (6) months, Ms. McLaughlin provided the Company with consulting transition services. In consideration of Ms. McLaughlin’s consulting transition services and her release of claims in favor of the Company, the Company provided Ms. McLaughlin the following benefits: (i) base salary continuation for the lesser of 15 months or the date Ms. McLaughlin commences comparable full-time employment (up to $300,013.78, subject to tax withholding and other authorized deductions), beginning on the payroll date following Ms. McLaughlin’s execution of the Separation Agreement; (ii) $5,000 for legal fees incurred by Ms. McLaughlin in connection with the negotiation and drafting of the Separation Agreement; (iii) payment of Ms. McLaughlin’s healthcare premiums pursuant to the Consolidated Omnibus Budget Reconciliation Act at the same or reasonably equivalent coverage level as in effect on April 16, 2021, for the lesser of 15 months or the date Ms. McLaughlin becomes covered under a new employer’s benefit arrangements; and (iv) vesting of all of Ms. McLaughlin’s outstanding PBRSUs at target upon her April 16, 2021 separation date.
We believe it appropriate to have entered into the above separation agreement in connection Ms. McLaughlin’s voluntary resignation given her years of service to the Company, the release of claims in favor of the Company, and the comparability of current market costs related to consulting transition services.
None of our NEOs are entitled to receive any automatic “single trigger” equity acceleration, as our equity awards will only vest in connection with a change in control of the Company if they are not substituted or assumed in connection with the transaction. Please see the introductory section above for the definition of a change in control that applies to our equity awards, which we believe is a rigorous change in control definition. The treatment of PBRSUs in a change in control is also described above.
No Named Executive Officer is entitled to receive a “gross-up” or similar payment for any excise taxes that may become payable in connection with a change in control pursuant to Sections 280G and 4999 of the Code. Instead, our 2008 Performance Incentive Plan generally provides that awards or payments under the 2008 Plan are automatically “cut back” in such circumstances in order to avoid triggering these excise taxes.
Other Benefits
While they are employed with us, we provide our NEOs with retirement benefits under our 401(k) Plan, participation in our medical, dental and insurance programs and vacation and other holiday pay, all in accordance with the terms of such plans and programs in effect from time to time and substantially on the same terms as those generally offered to our other employees.
Policy with Respect to Section 162(m)
Section 162(m) of the Code generally prohibits a publicly-held company from deducting compensation paid to a current or former Named Executive Officer that exceeds $1.0 million during the tax year. Certain awards granted before November 2, 2017 that were based upon attaining pre-established performance measures that were set by the CC under a plan approved by our stockholders, as well as amounts payable to former executives pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the $1.0 million deductibility limit.
As one of the factors in its consideration of compensation matters, our Compensation Committee notes this deductibility limitation. However, our CC has the flexibility to take any compensation-related actions that it determines
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are in the best interests of the Company and our stockholders, including awarding compensation that may not be deductible for tax purposes. There can be no assurance that any compensation will in fact be deductible as a result of the limitations under Section 162(m).
Compensation Committee Interlocks and Insider Participation
The Board’s CC consists of Mss. Coy, Downes, and Reder, and Messrs. Holdsworth, McEachern and Shahidehpour. None of the members of our CC has at any time been one of our officers or employees, nor has any member of our CC had any relationship requiring disclosure under Item 404 of Regulation S-K. None of our executive officers serves, or in the past year has served, as a member of the board of directors or the CC of any entity that has one or more executive officers who serve on our Board or CC.
Compensation Committee Report
The CC of the Board has reviewed and discussed with management the disclosures contained in the Compensation Discussion and Analysis section of this Proxy Statement. Based upon this review and discussion, the CC recommended to the Board that the Compensation Discussion and Analysis section be included in this Proxy Statement.
| Compensation Committee of the Board |
| |
| Raymond W. Holdsworth (Chair) |
| Debra G. Coy Cynthia A. Downes |
| Douglas J. McEachern Wanda K. Reder |
| Mohammad Shahidehpour |
The foregoing Report of the Compensation Committee does not constitute soliciting material and shall not be deemed filed, incorporated by reference into or a part of any other filing by the Company (including any future filings) under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically incorporates such report by reference therein.
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Compensation of Named Executive Officers
Summary Compensation Table – Fiscal 2021, Fiscal 2020, and Fiscal 2019
The following table presents information regarding compensation during FY 2021, FY 2020, and FY 2019 of our NEOs. The NEOs include our principal executive officer during fiscal 2021, the individuals who served as our principal financial officer during fiscal 2021, and our three other most highly compensated executive officers at the end of fiscal 2021.
|
| |
| |
| |
| Stock |
| Option |
| All Other |
| |
Name and | | | | Salary | | Bonus | | Awards | | Awards | | Compensation | | Total |
Principal Position |
| Year |
| ($) |
| ($)(1) |
| ($)(2) |
| ($)(3) |
| ($)(4) |
| ($) |
Thomas D. Brisbin(5) |
| 2021 | | 505,003 | | 230,000 | | 2,242,045 | | — | | 13,800 | | 2,990,848 |
Chairman of the Board |
| 2020 | | 418,933 | | 575,000 | | 1,183,022 | | — | | 14,008 | | 2,190,963 |
and Chief Executive Officer |
| 2019 | | 448,473 | | 325,000 | | 1,810,985 | | — | | 13,800 | | 2,598,258 |
| | | | | | | | | | | | | | |
Michael A. Bieber |
| 2021 | | 440,003 | | 190,000 | | 852,005 | | — | | 3,750 | | 1,485,758 |
President |
| 2020 | | 364,913 | | 475,000 | | 899,093 | | — | | 3,750 | | 1,742,756 |
|
| 2019 | | 390,389 | | 250,000 | | 1,376,361 | | — | | 3,750 | | 2,020,500 |
| | | | | | | | | | | | | | |
Creighton K. Early | | | | | | | | | | | | | | |
Vice President and | | 2021 | | 325,000 | | 28,000 | | 269,040 | | — | | 4,250 | | 626,290 |
Chief Financial Officer | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Stacy B. McLaughlin(6) | | 2021 | | 73,850 | | 28,000 | | — | | — | | 177,659 | (7) | 279,509 |
Former Vice President and | | 2020 | | 217,951 | | 70,000 | | 165,633 | | — | | 4,250 | | 457,834 |
Chief Financial Officer | | 2019 | | 219,926 | | 60,000 | | 253,541 | | — | | 21,559 | | 555,026 |
| | | | | | | | | | | | | | |
Micah H. Chen | | 2021 | | 315,016 | | 30,000 | | 346,340 | | — | | 4,750 | | 696,106 |
General Counsel | | 2020 | | 282,738 | | 75,000 | | 165,633 | | — | | 11,196 | | 534,567 |
| | 2019 | | 295,006 | | 60,000 | | 253,541 | | — | | 16,096 | | 624,643 |
| | | | | | | | | | | | | | |
Paul Whitelaw | | 2021 | | 280,010 | | 170,000 | | 246,620 | | — | | 4,750 | | 701,380 |
Senior Vice President, | | 2020 | | 252,433 | | 75,000 | | 165,633 | | — | | 4,750 | | 497,816 |
Business Development | | 2019 | | 255,200 | | 60,000 | | 253,541 | | — | | 4,750 | | 573,491 |
| (1) | The amounts reported under “Bonus” for fiscal 2021, 2020, and 2019 include performance bonuses paid for fiscal 2021, 2020, and 2019. |
| (2) | The amounts reported under “Stock Awards” for fiscal 2021, 2020, and 2019 represent the aggregate grant date fair value of time based and performance based restricted stock units granted to NEOs during fiscal 2021, 2020, and 2019 (disregarding any estimate of forfeitures related to service-based vesting conditions). For a discussion of the assumptions and methodologies used to calculate the amounts reported in this column, please see the discussion of restricted stock awards and performance-based restricted stock units contained in Note 10 (Stockholders’ Equity) to our consolidated financial statements, included as part of our 2021 Annual Report filed on Form 10-K. For 2021, the EBITDA Units and Net Revenue Units are valued based on the probable outcome of the applicable performance conditions as determined on the grant date. If we achieve the highest level of performance under the EBITDA Units and Net Revenue Units, the total grant date fair value for the EBITDA Units and Net revenue Units would increase to the following amounts: Dr. Brisbin $3,923,612; Mr. Bieber $2,130,012; Mr. Early $672,600, Mr. Chen $581,750, and Mr. Whitelaw $616,550. |
| (3) | The amounts reported under “Option Awards” represent the aggregate grant date fair value of option awards granted to our NEOs (disregarding any estimate of forfeitures related to service-based vesting conditions). For a discussion of the assumptions and methodologies used to calculate the amounts reported in this column, please see the discussion of stock option awards contained in Note 10 (Stockholders’ Equity) to our consolidated financial statements, included as part of our 2021 Annual Report filed on Form 10-K. |
| (4) | Except as described below for Ms. McLaughlin, the amounts reported under “All Other Compensation” for each of fiscal 2021, 2020 and 2019 include $3,000 in matching contributions made by us for each of our NEOs and, other than Dr. Brisbin, automobile allowances paid to them or use of a company vehicle. Except as described below for Ms. McLaughlin, the remaining balance of the amounts under “All Other Compensation” for Mr. Bieber, Ms. McLaughlin, Mr. Chen, and Mr. Whitelaw for 2021 represents Health Saving Account contributions. The remaining balance of the amounts under “All Other Compensation” for Mr. Chen for 2020 and 2019 and Ms. McLaughlin for 2019 represents cashing out of accumulated paid-time-off. |
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| (5) | Dr. Brisbin served on the Board during each of fiscal 2021, 2020, and 2019. As an employee-director, Dr. Brisbin did not receive additional compensation for his services as a director. |
| (6) | Ms. McLaughlin resigned as our Vice President and Chief Financial Officer, effective April 16, 2021. |
| (7) | Includes $166,162 for base salary continuation, $5,000 for legal fees, and $4,052 for health premiums in connection with Ms. McLaughlin’s separation agreement dated April 13, 2021. |
Compensation of Named Executive Officers
The Summary Compensation Table above quantifies the value of the different forms of compensation earned by or awarded to our NEOs in each applicable fiscal year. As described in the “Compensation Discussion and Analysis” section above, the primary elements of each Named Executive Officer’s total compensation reported in the table for 2021 are base salary, performance bonus and a long-term equity incentive awards. NEOs also received the other benefits listed in the “All Other Compensation” column of the Summary Compensation Table, as further described in the footnotes above.
The Summary Compensation Table should be read in conjunction with the “Compensation Discussion and Analysis” section above and the tables and narrative descriptions that follow. A description of the material terms of each Named Executive Officer’s employment agreement, if any, is provided immediately following this paragraph.
Description of Employment Agreements, Salary and Bonus Amounts
On May 3, 2011, we entered into an amended and restated employment agreement with Dr. Brisbin. This employment agreement provides for “at-will” employment and does not include a specified term. This agreement provides for Dr. Brisbin to receive a base salary and an annual incentive bonus as determined by the CC. The annual target bonus for Dr. Brisbin under this agreement is 100% of his annual base salary. Dr. Brisbin is also entitled to participate in benefit plans made available to our employees generally.
On December 17, 2014, we entered into an offer letter with Mr. Bieber. The letter provides that Mr. Bieber’s employment is on an “at-will” basis and for his initial base salary to be $270,000 per year (which has been subsequently increased to approximately $440,003 per year).
The Company has not entered into an employment agreement or offer letter with Mr. Early, Mr. Chen, or Mr. Whitelaw. The Company did enter into a separation agreement with Ms. McLaughlin upon her resignation.
The provisions of these agreements relating to severance benefits following a termination of the Named Executive Officer’s employment are described below under “Potential Payments Upon Termination or Change in Control.”
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Grants of Plan-Based Awards in Fiscal 2021
The following table presents information regarding the equity incentive awards granted to NEOs during fiscal 2021 under the 2008 Plan. Please see the “Compensation Discussion and Analysis” section above for a description of the material terms of the awards.
| | | | | | | | | ||||
| | | | Estimated Future Payouts Under Equity | | All Other Stock | | | ||||
| | | | Incentive Plan Awards | | Awards | | Grant Date Fair Value | ||||
| | | | | | Number of Shares | | of Options Awards | ||||
| | Grant | | Threshold | | Target | | Maximum | | of Stock or Units | | and Stock Awards |
Name |
| Date |
| (#) | | (#) |
| (#) |
| (#) |
| ($) |
Thomas D. Brisbin | | 3/9/2021 | | 1 | | 25,001 | (1) | 62,503 | | — | | 1,121,045 |
| | 3/9/2021 | | 1 | | — | | — | | 25,000 | (2) | 1,121,000 |
Michael A. Bieber | | 3/9/2021 | | 1 | | 19,001 | (1) | 47,503 | | — | | 852,005 |
Creighton K. Early | | 3/9/2021 | | 1 | | 6,000 | (1) | 15,000 | | — | | 269,040 |
Stacy B. McLaughlin | | 3/9/2021 | | 1 | | — | | — | | — | | — |
Micah H. Chen | | 3/9/2021 | | 1 | | 3,500 | (1) | 8,750 | | — | | 156,940 |
| | 3/9/2021 | | 1 | | — | | — | | 5,000 | (3) | 189,400 |
Paul M. Whitelaw | | 3/9/2021 | | 1 | | 5,500 | (1) | 13,750 | | — | | 246,620 |
| (1) | Consists of 50% EBITDA Units and 50% Net Revenue Units that vest over a period of one year subject to the achievement of the applicable performance requirements. These awards are also subject to a one year post-vesting holding period |
| (2) | Dr. Brisbin was granted a time-based long term incentive award of 25,000 restricted shares vesting in equal annual installments over four years. |
| (3) | Mr. Chen was granted a time-based long term incentive award of 5,000 restricted shares vesting in equal annual installments over two years. |
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Outstanding Equity Awards at Fiscal 2021 Year-End
The following table presents information regarding the outstanding option and restricted stock or unit awards held by each Named Executive Officer as of December 31, 2021.
| | Options Awards | | Stock Awards | ||||||||||||
| | | | | | | | | | | | | | Equity | | Equity |
| | | | | | | | | | | | | | Incentive | | Incentive |
| | | | | | | | | | | | | | Plan Awards: | | Plan Awards: |
| | | | | | | | | | | | | | | | Market or |
| | | | | | | | | | | | | | Number of | | Payout Value |
| | Numbers of | | Number of | | | | | | | | | | Unearned | | of Unearned |
| | Securities | | Securities | | | | | | Number of | | Market Value | | Shares, Units | | Shares, Units |
| | Underlying | | Underlying | | | | | | Shares or Units | | of Shares or | | or Other | | or Other |
| | Unexercised | | Unexercised | | Option | | | | of Stock that | | Units of Stock | | Rights That | | Rights That |
| | Options | | Options | | Exercise | | Option | | Have Not | | That Have Not | | Have Not | | Have Not |
| | Exercisable | | Unexercisable | | Price | | Expiration | | Vested | | Vested | | Vested | | Vested |
Name |
| (#) |
| (#) |
| (#) |
| Date |
| (#) | | ($) |
| (#) | | ($) |
Thomas D. Brisbin |
| 50,000 | | — | | 7.13 | | 6/6/2024 | | — | | — | | 6,085 | | 133,508 |
|
| 50,000 | | — | | 13.91 | | 6/5/2025 | | — | | — | | 5,919 | (3) | 183,368 |
|
| 100,000 | | — | | 16.27 | | 11/3/2026 | | — | | — | | 62,503 | (4) | 2,802,612 |
|
| 125,000 | | — | | 31.73 | | 9/4/2028 | | 25,000 | (1) | 1,121,000 | | — | | — |
| | | | | | | | | | | | | | | | |
Michael A. Bieber | | 77,764 | | — | | 13.49 | | 12/31/2024 | | — | | — | | 4,129 | (2) | 90,595 |
|
| 25,000 | | — | | 13.91 | | 6/5/2025 | | — | | — | | 4,495 | (3) | 139,359 |
| | 25,000 | | — | | 9.13 | | 3/10/2026 | | — | | — | | 47,503 | (4) | 2,130,012 |
| | 50,000 | | — | | 16.27 | | 11/3/2026 | | — | | — | | — | | — |
| | 16,667 | | — | | 28.19 | | 3/8/2027 | | — | | — | | — | | — |
| | 25,000 | | — | | 31.73 | | 9/4/2028 | | — | | — | | — | | — |
| | | | | | | | | | | | | | | | |
Creighton K. Early | | 27,347 | | — | | 9.08 | | 12/7/2025 | | — | | — | | 652 | (2) | 14,305 |
| | 13,333 | | — | | 30.06 | | 10/31/2027 | | — | | — | | 2,290 | (3) | 22,002 |
| | — | | — | | — | | — | | 2,000 | (5) | 76,280 | | 15,000 | (4) | 672,600 |
| | | | | | | | | | | | | | | | |
Stacy B. McLaughlin (6) | | — | | — | | — | | — | | — | | — | | — | | — |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Micah H. Chen | | 70,000 | | — | | 32.79 | | 7/17/2027 | | — | | — | | 869 | (2) | 19,073 |
| | — | | — | | — | | — | | — | | — | | 828 | (3) | 25,673 |
| | — | | — | | — | | — | | 5,000 | (7) | 189,400 | | 8,750 | (4) | 392,350 |
| | | | | | | | | | | | | | | | |
Paul M. Whitelaw | | 9,000 | | — | | 16.09 | | 11/2/2026 | | — | | — | | 869 | (2) | 19,073 |
| | 6,670 | | — | | 28.19 | | 3/8/2027 | | — | | — | | 828 | (3) | 25,673 |
| | 6,667 | | — | | 30.06 | | 10/31/2027 | | — | | — | | 13,750 | (4) | 616,550 |
| (1) | These restricted stock awards were granted on March 9, 2021 and vest in substantially equal annual installments over four years from their grant date. |
| (2) | These performance based restricted stock units were granted on March 6, 2018 and vest in substantially equal installments over four years from their grant date. |
| (3) | These performance based restricted stock units were granted on March 2, 2020 and vest in substantially equal installments over two years from their grant date. |
| (4) | These performance based restricted stock units were granted on March 9, 2021 and vest over one year from their grant date. |
| (5) | These restricted stock awards were granted on December 11, 2020 and vest in substantially equal annual installments over two years from their grant date. |
| (6) | Ms. McLaughlin’s then-outstanding equity awards were vested upon her resignation as our Vice President and Chief Financial Officer, effective April 16, 2021. |
| (7) | These restricted stock awards were granted on May 4, 2021 and vest in substantially equal annual installments over two years from their grant date. |
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Option Exercises and Stock Vested in Fiscal 2021
The following table presents information regarding the options exercised by each Named Executive Officer and stock awards vested during fiscal 2021, if any.
| | Option Awards | | Stock Awards | ||||
| | Numbers of | | | | Numbers of | | |
| | Shares Acquired | | Value Realized | | Shares Acquired | | Value Realized |
Name | | on Exercise | | on Exercise | | on Vesting | | on Vesting |
|
| (#) |
| ($) (1) |
| (#) |
| ($) (2) |
Thomas D. Brisbin | | 25,000 | | 801,026 | | 114,651 | | 4,845,088 |
Michael A. Bieber | | 22,236 | | 553,009 | | 84,388 | | 3,569,752 |
Creighton K. Early | | — | | — | | 13,327 | | 563,737 |
Stacy B. McLaughlin | | 48,334 | | 1,173,361 | | 18,807 | | 789,706 |
Micah H. Chen | | — | | — | | 16,148 | | 682,278 |
Paul M. Whitelaw | | 16,000 | | 424,760 | | 16,148 | | 682,278 |
| (1) | The amounts reported as the “Value Realized on Exercise” (if any) are determined by multiplying (i) the number of shares of common stock to which the exercise of the option related by (ii) the difference between the per-share price of the common stock on the exercise date and exercise price of the options. |
| (2) | The amounts reported as the “Value Realized on Vesting” (if any) are determined by multiplying (i) the number of shares of common stock that vested by (ii) the per-share price of the common stock on the vesting date. |
Potential Payments Upon Termination or Change in Control
Outstanding options and restricted stock and unit awards issued under our 2008 Plan will vest immediately and become fully exercisable upon a change in control of us to the extent such outstanding awards are not substituted or assumed in connection with the transaction.
In addition, the terms of the EBITDA Units, Net Revenue Units, and EPS Units provide that in the event a change in control occurs before the end of any Performance Year, the greater of the target number of each type of units subject to the award or the number of each type of units earned based on actual performance through the date of the change in control will become eligible to vest (with the number of units earned based on actual performance for Performance Years yet to begin measured on an average basis based on actual performance in all completed Performance Years). Any EBITDA Units, Net Revenue Units, and EPS Units that become eligible to vest will vest on the first anniversary of the date of the change in control, or earlier upon a Named Executive Officer’s termination of employment by the Company without cause, by the executive for a “good reason,” or due to an executive’s death or disability. Upon a Named Executive Officer’s death or disability at any time (whether or not in connection with a change in control), the executive will become vested in the greater of the target number of each type of units subject to the award or the number of each type of units earned based on actual performance for the then in-progress Performance Year, and in the target number of each type of units for all Performance Years that have yet to begin.
The employment agreement entered into with Dr. Brisbin provides for severance benefits upon certain terminations of his employment with us. If such Named Executive Officer’s employment is terminated by us without cause or by the Named Executive Officer for good reason (as such terms are defined in his employment agreement), the Named Executive Officer will be entitled to a severance benefit equal to two times his base salary at the annualized rate then in effect, paid in 24 equal installments. In addition, the Named Executive Officer would be entitled to payment of his target bonus for the year in which such a termination of employment occurs. The Named Executive Officer’s right to receive the severance benefits described above is contingent on the executive providing a general release of claims in favor of the Company and complying with certain non-solicitation and other restrictive covenants set forth in his employment agreement.
Mr. Bieber’s offer letter does not provide for any additional severance benefits. As noted above, we have not entered into an employment agreement or offer letter that provides for the payment of severance benefits for any type of termination of employment with Mr. Bieber, Mr. Early, Mr. Chen, or Mr. Whitelaw.
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We entered into a separation agreement with Ms. McLaughlin in connection with her resignation, effective April 13, 2021 (the “Separation Agreement”). Pursuant to the Separation Agreement, for a period of six (6) months, Ms. McLaughlin will provide the Company with consulting transition services. In consideration of Ms. McLaughlin’s consulting transition services and her release of claims in favor of the Company, the Company will provide Ms. McLaughlin the following benefits: (i) base salary continuation for the lesser of 15 months or the date Ms. McLaughlin commences comparable full-time employment (up to $300,013.78, subject to tax withholding and other authorized deductions), beginning on the payroll date following Ms. McLaughlin’s execution of the Separation Agreement; (ii) $5,000 for legal fees incurred by Ms. McLaughlin in connection with the negotiation and drafting of the Separation Agreement; (iii) payment of Ms. McLaughlin’s healthcare premiums pursuant to the Consolidated Omnibus Budget Reconciliation Act at the same or reasonably equivalent coverage level as in effect on April 16, 2021, for the lesser of 15 months or the date Ms. McLaughlin becomes covered under a new employer’s benefit arrangements; and (iv) vesting of Ms. McLaughlin’s outstanding PBRSUs at target upon her April 16, 2021 separation date.
The following table sets forth the estimated payments and benefits that would be provided to each Named Executive Officer employed at the end of fiscal 2021 in the event the Named Executive Officer’s employment is terminated as described above. In accordance with applicable SEC disclosure rules, these estimates assume a termination date of December 31, 2021.
| | | | Continued Health | | Equity | | |
|
| Severance |
| Coverage |
| Acceleration (1) |
| Total |
Name | | ($) | | ($) | | ($) | | ($) |
Thomas D. Brisbin | | 1,200,000 | | — | | 3,532,285 | | 4,732,285 |
Michael A. Bieber | | — | | — | | 1,989,398 | | 1,989,398 |
Creighton K. Early | | — | | — | | 626,102 | | 626,102 |
Micah H. Chen | | — | | — | | 548,310 | | 548,310 |
Paul M. Whitelaw | | — | | — | | 533,350 | | 533,350 |
| (1) | Represents the value of the actual number of EBITDA Units, Net Revenue Units, and EPS Units earned for the 2021 Performance Year. The value of the EBITDA Units, Net Revenue Units, and EPS Units is based on the $35.20 closing price of our common stock on December 31, 2021. |
The 2021 annual total compensation of the Company’s CEO was $2,990,848. The 2021 annual total compensation of our median employee (excluding our CEO) was $57,294. The ratio between the two amounts is 52.2. The Company believes that the ratio of pay included above is a reasonable estimate calculated in a manner consistent with applicable SEC rules.
To determine the pay ratio, we took the following steps:
| ■ | We identified the median employee using our employee population consisting of 1,559 employees on December 31, 2021 (excluding our CEO). We identified the median employee based on gross wages paid in 2021 as reported on Form W-2. We did not make any assumptions, adjustments or estimates with respect to gross wages paid in 2021 despite the fact that more than 25% of our employee population works less than full time. |
| ■ | As required under the SEC rules, after identifying our median employee, we calculated annual total compensation for both our median employee and our CEO using the same methodology that we used to determine our NEOs’ annual compensation for the Summary Compensation Table above. |
This information is being provided for compliance purposes. Neither the CC nor management of the Company used the pay ratio measure in making compensation decisions. Given the different methodologies that companies use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies.
Equity Compensation Plan Information
The following table sets forth, for each of our equity compensation plans, the number of shares of common stock subject to outstanding awards, the weighted-average exercise price of outstanding options, and the number of shares remaining available for future award grants as of December 31, 2021. Our equity compensation plans consist of our
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2006 Plan, our 2008 Plan and our ESPP. The table below is presented assuming the maximum number of shares potentially issuable under the EBITDA Units, Net Revenue Units, and EPS Units become vested and payable.
|
| |
| | |
| Number of |
| | | | | | | securities |
| | | | | | | remaining available |
| | | | | | | for future issuance |
| | | | | | | under equity |
| | Number of securities | | | | | compensation |
| | to be issued upon | | Weighted-average | | plans | |
| | exercise of | | exercise price of | | (excluding | |
| | outstanding options, | | outstanding options, | | securities reflected | |
| | warrants and rights | | warrants and rights | | in column (a)) | |
Plan Category |
| (a) |
| (b) |
| (c)(1) | |
Equity compensation plans approved by security holders |
| 849,522 | | $ | 19.89 |
| 661,960 |
Equity compensation plans not approved by security holders |
| — | |
| — |
| — |
Totals |
| 849,522 | | $ | 19.89 |
| 661,960 |
| (1) | Represents 182,735 shares available for future issuance under our 2008 Plan, and 479,225 shares available for future issuance under our ESPP. Shares available under our 2008 Plan may be used for any type of award authorized in that plan (subject to certain limitations of the plan), including stock options, stock appreciation rights, stock units, restricted stock, performance-based awards, stock bonuses and other awards payable in shares of Company common stock. This column does not reflect the shares that will become available under our 2008 Plan if stockholders approve the amendment to our 2008 Plan contained in Proposal 4. |
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Management is responsible for the Company’s internal controls and financial reporting process, including our internal control over financial reporting, and for preparing our consolidated financial statements. Crowe, an independent registered public accounting firm, is responsible for performing an independent audit of our consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and for expressing an opinion on the conformity of our audited consolidated financial statements to accounting principles generally accepted in the United States of America in all material respects. In this context, the responsibility of the Audit Committee is to oversee our accounting and financial reporting processes and the independent audit of our consolidated financial statements.
In the performance of its oversight function, the Audit Committee reviewed and discussed with management and Crowe our audited consolidated financial statements as of and for the year ended December 31, 2021. The Audit Committee also discussed with Crowe the matters required to be discussed by the applicable requirements of the PCAOB and the SEC.
The Audit Committee received the written communication from Crowe under the applicable requirements of the PCAOB, which requires our independent registered public accounting firm to disclose in writing to the Audit Committee, at least annually, all relationships between them and us that, in their judgment, reasonably may be thought to bear on independence and to discuss their independence with the Audit Committee. The Audit Committee discussed with Crowe its independence and considered in advance whether the provision of any non-audit services by Crowe is compatible with maintaining its independence. The Audit Committee also received and reviewed a report by Crowe outlining communications required by Nasdaq listing standards (1) reviewing the firm’s internal quality control procedures; (2) describing any material issue raised by (a) the most recent internal quality control review of the firm, (b) peer review of the firm, or (c) any inquiry or investigation by governmental or professional authorities, within the preceding five years, with respect to one or more independent audits carried out by the firm, and any steps taken to deal with such issues; and (3) assessing Crowe’s independence, including all relationships between Crowe and the Company.
Based on the reviews and discussions of the Audit Committee described above, and in reliance on the unqualified opinion of Crowe dated March 10, 2022, regarding our audited consolidated financial statements as of and for the year ended December 31, 2021, and subject to the limitations on the responsibilities of the Audit Committee noted above and in the Audit Committee’s charter, the Audit Committee recommended to the Board, and the Board approved, that such audited and consolidated financial statements be included in our annual report on Form 10-K for the year ended December 31, 2021, that was filed with the SEC.
Members of the Audit Committee
Douglas J. McEachern (Chair)
Debra G. Coy
Cynthia A. Downes
Keith W. Renken
The preceding Report of the Audit Committee shall not be deemed filed under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent the Company specifically incorporates this Report by reference into a filing under either of such Acts. The Report shall not be deemed soliciting material, or subject to Regulation 14A or 14C or the liabilities of Section 18 of the Securities Exchange Act.
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Security Ownership Information
Except as otherwise noted, the following table sets forth information as of April 19, 2022 with respect to: (i) each person known by us to own beneficially more than 5% of the outstanding shares of our common stock, based upon Schedule 13G and Schedule 13D reports filed with the SEC, (ii) each of our directors and director nominees, (iii) each of our NEOs (as defined in Item 11. Executive Compensation) and (iv) our directors and executive officers as a group.
Unless otherwise noted below, the address of the persons listed in the table is c/o Willdan Group, Inc., 2401 East Katella Avenue, Suite 300, Anaheim, California 92806. The amounts and percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security or has the right to acquire such powers within 60 days. Under SEC rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed a beneficial owner of securities as to which that person has no economic interest. Except as otherwise noted, we believe, based on the information furnished to us, that the persons named in the table below have sole voting and investment power with respect to all shares of common stock reflected as beneficially owned, subject to applicable community property laws. All percentages in the following table are based on a total of 13,205,572 shares of common stock outstanding on April 19, 2022.
| | Amount of | Percent of |
|
| | Beneficial | Common |
|
Name and Address of Stockholder |
| Ownership | Stock |
|
5% Stockholders | | | | |
Forager Capital Management, LLC (1) | | 1,384,632 | 10.5 | % |
BlackRock, Inc. (2) | | 738,401 | 5.6 | % |
Named Executive Officers, Directors and Director Nominees | | | | |
Thomas D. Brisbin (3) |
| 717,656 | 5.4 | % |
Michael A. Bieber (4) |
| 351,618 | 2.7 | % |
Micah H. Chen (5) |
| 93,665 | * | |
Steven A. Cohen (6) | | 19,146 | * | |
Debra Coy (7) | | 10,287 | * | |
Cynthia A. Downes (8) | | 1,469 | * | |
Creighton K. Early (9) | | 84,906 | * | |
Raymond W. Holdsworth (10) | | 100,646 | * | |
Douglas J. McEachern (11) | | 100,189 | * | |
Dennis V. McGinn (12) | | 11,425 | * | |
Wanda K. Reder (13) | | 1,323 | * | |
Keith W. Renken (14) |
| 135,546 | 1.0 | % |
Mohammad Shahidehpour (15) |
| 12,036 | * | |
Paul M. Whitelaw (16) |
| 47,870 | * | |
Stacy B. McLaughlin (17) | | n/a | n/a | |
All current Directors, Director Nominees and Executive Officers as a group (14 persons) |
| 1,687,782 | 12.8 | % |
* The percentage of shares beneficially owned by this executive officer or director does not exceed one percent of the Company’s outstanding stock.
| (1) | Beneficial ownership information is given as of December 31, 2021 and was obtained from a Schedule 13G/A filed with the SEC on February 15, 2022 by Forager Capital Management, LLC. The Schedule 13G states that Forager Capital Management, LLC has sole voting power over 1,384,632 shares and sole dispositive power over 1,384,632 shares. The principal office or business address of Forager Capital Management, LLC is 2024 3rd Ave. N, Suite 201, Birmingham, AL 35203. |
| (2) | Beneficial ownership information is given as of December 31, 2021 and was obtained from a Schedule 13G/A filed with the SEC on February 3, 2022 by BlackRock, Inc. The Schedule 13G/A states that BlackRock, Inc. has sole voting power over 738,401 shares and sole dispositive power over 756,312 shares. The principal office or business address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
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| (3) | The 717,656 shares of common stock held directly by Dr. Brisbin consist of 392,656 shares of common stock and 325,000 shares of common stock subject to options exercisable on or before June 18, 2022. The 392,656 shares of common stock held directly by Dr. Brisbin, of which (i) 18,750 shares of restricted stock that vest in three substantially equal installments on each of March 9, 2023, March 9, 2024 and March 9, 2025 and (ii) 23,751 shares of restricted stock vest on March 8, 2023. |
| (4) | The 351,618 shares of common stock held directly by Mr. Bieber consist of 132,187 shares of common stock and 219,431 shares of common stock subject to options exercisable on or before June 18, 2022. The 132,187 shares of common stock held directly by Mr. Bieber, of which 18,051 shares of restricted stock vest on March 8, 2023. |
| (5) | The 93,665 shares of common stock held directly by Mr. Chen consist of 23,665 shares of common stock and 70,000 shares of common stock subject to options exercisable on or before June 18, 2022. The 23,665 shares of common stock held directly by Mr. Chen, of which (i) 5,000 shares of restricted stock that vest in two equal installments on each of May 4, 2022 and May 4, 2023 and (ii) 3,800 shares of restricted stock vest on March 8, 2023. |
| (6) | The 19,146 shares of common stock held directly by Mr. Cohen include 3,310 shares of restricted stock, of which (i) 1,527 shares of restricted stock vest on June 11, 2022 and (ii) 1,783 shares of restricted stock vest in two substantially equal installments on each of June 9, 2022 and June 9, 2023. |
| (7) | The 10,287 shares of common stock held directly by Ms. Coy include 3,310 shares of restricted stock, of which (i) 1,527 shares of restricted stock vest on June 11, 2022 and (ii) 1,783 shares of restricted stock vest in two substantially equal installments on each of June 9, 2022 and June 9, 2023. In April 2022, Ms. Coy informed the Board that she will not be seeking re-election at the Annual Meeting. In recognition of Ms. Coy’s years of service to the Board, the Board determined to vest outstanding awards made up of 1,527 shares of restricted stock scheduled to vest on June 11, 2022 and 892 shares of restricted stock scheduled to vest on June 9, 2023, effective as of the date of the Annual Meeting so long as she continues to provide services to the Company until the Annual Meeting. |
| (8) | The 1,469 shares of common stock held directly by Ms. Downes include 1,469 shares of restricted stock that vest in two substantially equal installments on each of August 4, 2022 and August 4, 2023. |
| (9) | The 84,906 shares of common stock held directly by Mr. Early consist of 44,226 shares of common stock and 40,680 shares of common stock subject to options exercisable on or before June 18, 2022. The 44,226 shares of common stock held directly by Mr. Early, of which (i) 2,000 shares of restricted stock vest on December 11, 2022 and (ii) 3,800 shares of restricted stock vest on March 8, 2023. |
| (10) | The 100,646 shares of common stock held by Mr. Holdsworth consist of 39,958 shares of common stock held directly by Mr. Holdsworth and 60,688 shares of common stock held by The Holdsworth Family Trust. Mr. Holdsworth is sole trustee and a beneficiary of The Holdsworth Family Trust and has sole voting and investment control over the shares of Willdan Group, Inc. common stock held therein. The 39,958 shares of common stock held directly by Mr. Holdsworth include 3,310 shares of restricted stock, of which (i) 1,527 shares of restricted stock vest on June 11, 2022 and (ii) 1,783 shares of restricted stock vest in two substantially equal installments on each of June 9, 2022 and June 9, 2023. In April 2022, Mr. Holdsworth informed the Board that he will not be seeking re-election at the Annual Meeting. In recognition of Mr. Holdsworth’s years of service to the Board, the Board determined to vest outstanding awards made up of 1,527 shares of restricted stock scheduled to vest on June 11, 2022 and 892 shares of restricted stock scheduled to vest on June 9, 2023, effective as of the date of the Annual Meeting so long as he continues to provide services to the Company until the Annual Meeting. |
| (11) | The 100,189 shares of common stock held by Mr. McEachern consist of 21,646 shares of common stock held directly by Mr. McEachern and 78,543 shares of common stock held by The McEachern Family Trust. Mr. McEachern and his wife are co-trustees and beneficiaries of The McEachern Family Trust and have shared voting and investment control over the shares of Willdan Group, Inc. common stock held therein. The 21,646 shares of common stock held directly by Mr. McEachern include 3,310 shares of restricted stock, of which (i) 1,527 shares of restricted stock vest on June 11, 2022 and (ii) 1,783 shares of restricted stock vest in two substantially equal installments on each of June 9, 2022 and June 9, 2023. In April 2022, Mr. McEachern informed the Board that he will not be seeking re-election at the Annual Meeting. In recognition of Mr. McEachern’s years of service to the Board, the Board determined to vest outstanding awards made up of 1,527 shares of restricted stock scheduled to vest on June 11, 2022 and 892 shares of restricted stock scheduled to vest on June 9, 2023, effective as of the date of the Annual Meeting so long as he continues to provide services to the Company until the Annual Meeting. |
| (12) | The 11,425 shares of common stock held directly by Vice Admiral McGinn include 3,310 shares of restricted stock, of which (i) 1,527 shares of restricted stock vest on June 11, 2022 and (ii) 1,783 shares of restricted stock vest in two substantially equal installments on each of June 9, 2022 and June 9, 2023. |
| (13) | The 1,323 shares of common stock held directly by Ms. Reder include 1,323 shares of restricted stock that vest in two substantially equal installments on each of December 6, 2022 and December 6, 2023. |
| (14) | The 135,546 shares of common stock held by Mr. Renken consist of 55,146 shares of common stock held directly by Mr. Renken and 80,400 shares of common stock held by the LVRJC Partnership. Mr. Renken is the managing partner of the LVRJC Partnership and has sole voting and investment control over our shares of common stock held therein. The 55,146 shares of common stock held directly by Mr. Renken include 3,310 shares of restricted stock, of which (i) 1,527 shares of restricted stock vest on June 11, 2022 and (ii) 1,783 shares of restricted stock vest in two substantially equal installments on each of June 9, 2022 and June 9, 2023. |
| (15) | The 12,036 shares of common stock held directly by Dr. Shahidehpour include 3,310 shares of restricted stock, of which (i) 1,527 shares of restricted stock vest on June 11, 2022 and (ii) 1,783 shares of restricted stock vest in two substantially equal installments on each of June 9, 2022 and June 9, 2023. |
| (16) | The 47,870 shares of common stock held directly by Mr. Whitelaw consist of 25,533 shares of common stock and 22,337 shares of common stock subject to options exercisable on or before June 18, 2022. The 25,533 shares of common stock held directly by Mr. Whitelaw, of which 3,800 shares of restricted stock vest on March 8, 2023. |
| (17) | Information not available as Ms. McLaughlin resigned as our Vice President and Chief Financial Officer, effective April 16, 2021. |
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Certain Relationships and Related Person Transactions
The following provides a description of certain relationships and related transactions since the beginning of fiscal 2021 between some of our directors, executive officers and holders of 5% or more of our common stock and us or our subsidiaries and affiliates involving an amount that exceeded or may exceed $120,000 in the aggregate.
Indemnification of Officers and Directors. We have entered into indemnification agreements with all of our current executive officers and directors. These agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us and to advance expenses reasonably incurred as a result of any proceeding against them as to which they could be indemnified. Additionally, we may enter into indemnification agreements with any future directors or executive officers. In fiscal 2021, we did not incur any indemnification related expenses as a result of indemnification agreements with our current executive officers and directors.
Related Person Transaction Policy
In March 2007, the Board adopted a policy addressing the Company’s procedures with respect to the review, approval and ratification of “related person transactions” that are required to be disclosed pursuant to Item 404(a) of Regulation S-K. The policy provides that any transaction, arrangement or relationship, or any series of similar transactions, in which the Company was, is or will be a participant, the amount involved exceeds $120,000, and a “related person” (as defined in the policy) has or will have a direct or indirect material interest (each such transaction, a “Related Person Transaction”) shall be subject to review and approval or ratification by the AC. In its review of Related Person Transactions, the AC shall review the material facts and circumstances of the transaction and shall take into account certain factors, where appropriate, based on the particular facts and circumstances, including (i) the nature of the “related person’s” interest in the transaction, (ii) the approximate dollar value of the amount involved in the Related Person Transaction, (iii) whether the transaction was taken in the Company’s ordinary course of business, (iv) whether the transaction with the “related person” is proposed to be, or was, entered into on terms no less favorable to the Company than terms that could have been reached with an unrelated third party and (v) the purpose of, and the potential benefits to the Company of, the Related Person Transaction.
No member of the AC may participate in the review, approval or ratification of a transaction with respect to which he or she is a “related person” provided that such member can be counted for purposes of a quorum and shall provide such information with respect to the transaction as may be reasonably requested by other members of the AC or the Board.
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When and where is the Annual Meeting?
The Annual Meeting will be held on June 9, 2022 at 10:00 a.m. Pacific Time, via live audiocast on the Internet. You may register to listen to and participate in the Annual Meeting by going to meetnow.global/M2CGRW4.
What am I being asked to vote on at the Annual Meeting?
At the Annual Meeting, stockholders will act on the following matters:
| 1. | Election of the seven director nominees named in this Proxy Statement to serve until the Company’s 2023 annual meeting of stockholders or until their respective successors are duly elected and qualified; |
| 2. | Ratification of the appointment of Crowe as the Company’s independent registered public accounting firm for fiscal year 2022; |
| 3. | Approval, on a non-binding advisory basis, of our named executive officer compensation; and |
| 4. | Approval of an amendment to the Company’s 2008 Performance Incentive Plan (the “2008 Plan”), including an increase in the number of shares available for grant under the 2008 Plan. |
Stockholders will also be asked to consider and transact such other business as may properly come before the Annual Meeting or any postponement or adjournment of the Annual Meeting.
How does the Board recommend that I vote?
The Board recommends that you vote your shares of our Common Stock:
| ■ | “FOR” each of the director nominees named in this Proxy Statement; |
| ■ | “FOR” the ratification of the appointment of Crowe for fiscal 2022; |
| ■ | “FOR” the approval, on a non-binding advisory basis, of our named executive officer compensation; and |
| ■ | “FOR” an amendment to the Company’s 2008 Performance Incentive Plan, including an increase in the number of shares available for grant under the Plan |
Who may vote?
Only holders of record of our common stock, at the close of business on the Record Date, are entitled to notice of and to vote at the Annual Meeting. Holders of common stock are entitled to cast one vote for each share held by them on each matter to be voted upon. As of the Record Date, there were 13,205,572 shares of Common Stock issued and outstanding. Our Common Stock is the only class of securities authorized to vote. Stockholders are not entitled to cumulative voting rights in the election of directors.
What constitutes a quorum at the Annual Meeting?
Representation by presence or by proxy, of holders of at least a majority of shares entitled to vote is necessary to constitute a quorum for the transaction of business at the Annual Meeting. As of the Record Date, 13,205,572 shares of our common stock were outstanding and entitled to vote. Abstentions and “broker non-votes” will count toward the presence of a quorum.
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What happens if a quorum is not present at the Annual Meeting?
If a quorum is not present at the scheduled time of the Annual Meeting, the Annual Meeting may be adjourned to another date or time until a quorum is present. The date and time of the adjourned meeting will be announced at the meeting when the adjournment is taken, and no other notice will be given unless the adjournment is for more than 30 days or unless after the adjournment a new record date is fixed for the adjourned meeting. Any adjournment of the Annual Meeting can be accessed at the same website listed above and you may vote at any adjournment using your same 15-digit control number.
How do I vote?
Stockholders of Record. If you are a registered stockholder as of the close of business on the Record Date, you have several ways to vote your shares:
| ■ | Via the Internet. You may submit a proxy over the Internet at www.investorvote.com/WLDN, 24 hours a day, seven days a week. You will need the 15-digit control number included on your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials) or included in the email to you (if you received the proxy materials by email). |
| ■ | By Telephone. You may submit a proxy using a touch-tone telephone by calling toll free 1-800-652-8683, 24 hours a day, seven days a week. You will need the 15-digit control number included on your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials) or included in the email to you (if you received the proxy materials by email). |
| ■ | By Mail. If you received printed proxy materials, you may direct how your shares are voted at the Annual Meeting by completing, signing, and dating each proxy card received and returning it in the prepaid envelope. Sign your name exactly as it appears on the proxy card. Proxy cards submitted by mail must be received no later than June 8, 2022 to be voted at the Annual Meeting. |
| ■ | During the Annual Meeting. Instructions on how to vote while participating in the Annual Meeting live via the Internet are listed on your proxy card. |
Beneficial Owners. If your stock is held by a broker, bank or other nominee (in “street name”), you should have received a Notice of Internet Availability or voting instruction form from the broker, bank or other nominee holding your shares. You should follow the instructions in the Notice of Internet Availability or voting instruction form in order to instruct your broker, bank or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the broker, bank or nominee.
What is the deadline for submitting my proxy?
If you are a stockholder of record, your proxy must be received by telephone or the Internet by the conclusion of the Annual Meeting in order for your shares to be voted. However, if you are a stockholder of record and you received a copy of the proxy materials by mail, you may instead mark, sign, date and return the proxy card you received in the accompanying prepaid and addressed envelope so that it is received by us no later than June 8, 2022 in order for your shares to be voted at the Annual Meeting. If you hold your shares in street name, please provide your voting instructions by the deadline specified by the bank, broker or other nominee who holds your shares.
Can I revoke or change my vote after I submit my proxy?
Yes. Even after you have submitted your proxy, you may change your vote at any time before the proxy is exercised as follows:
Stockholders of Record. If you are a stockholder of record, you may change or revoke a previously submitted proxy at any time before it is voted at the Annual Meeting by:
| ■ | delivering a duly executed proxy bearing a later date; |
| ■ | submitting a later-dated vote by telephone or via the Internet – only your latest Internet or telephone proxy received by 1:00 a.m. Pacific time on June 9, 2022, will be counted; |
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| ■ | delivering a written revocation to the Secretary of the Company at the address of the Company set forth above before the Annual Meeting; or |
| ■ | attending the Annual Meeting live via audiocast and voting your shares electronically at the Annual Meeting. Any stockholder of record as of the Record Date attending the Annual Meeting may vote, his or her shares electronically at the Annual Meeting, whether or not a proxy has been previously given, but the presence (without further action) of a stockholder at the Annual Meeting will not constitute revocation of a previously given proxy. |
Beneficial Owners. If you are a beneficial owner of your shares, you must contact the broker, bank or other nominee holding your shares and follow their instructions for revoking or changing your vote.
If I return my proxy card or voting instruction form without specifying voting instructions on it, how will my shares be voted?
Stockholders of Record. Unless you give other instructions on your proxy, the persons named as proxy holders on the proxy will vote in accordance with the recommendations of our Board. The Board’s recommendations are set forth together with the description of each matter in this Proxy Statement. In summary, the Board unanimously recommends a vote: “FOR” election of each of the seven nominees for director, “FOR” ratification of the appointment of Crowe as the Company’s independent registered public accounting firm for fiscal 2022, “FOR” the approval, on a non-binding advisory basis, of our named executive officer compensation, and “FOR” an amendment to the Company’s 2008 Performance Incentive Plan, including an increase in the number of shares available for grant under the Plan.
With respect to any other matter that properly comes before the meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is given, at the discretion of the proxy holders.
Beneficial Owners. If you hold your shares in street name through a brokerage account and you do not submit voting instructions to your broker, your broker may generally vote your shares in its discretion on routine matters. However, a broker cannot vote shares held in street name on non-routine matters unless the broker receives voting instructions from the street name holder. Proposal No. 2 (ratification of the appointment of Crowe as our independent registered public accounting firm for fiscal 2022) is considered routine under applicable rules of the New York Stock Exchange, while each of the other items to be submitted for a vote of stockholders at the Annual Meeting is considered non-routine. Accordingly, if you hold your shares in street name through a brokerage account and you do not submit voting instructions to your broker, your broker may exercise its discretion to vote on Proposal No. 2 at the Annual Meeting, but will not be permitted to vote your shares on any of the other proposals at the Annual Meeting. If your broker exercises this discretion, your shares will be voted on Proposal No. 2 in the manner directed by your broker, but your shares will constitute “broker non-votes” on each of the other items to be submitted for a vote of stockholders at the Annual Meeting.
What vote is required to approve each proposal and what effect do votes withheld, abstentions and broker non-votes have?
Election of Directors (Proposal No. 1). Once a quorum has been established, pursuant to our amended and restated bylaws, the affirmative vote of a plurality of the shares present or represented by proxy and entitled to vote on the matter at the Annual Meeting will be required for the election of each director nominee, meaning that the persons receiving the highest number of FOR votes, up to the total number of directors to be elected at the Annual Meeting, will be elected. Stockholders are not permitted to cumulate their shares for the purpose of electing directors. For purposes of Proposal No. 1 (election of directors), you may vote “FOR” any or all of the nominees or “WITHHOLD” your vote from any or all of the nominees. Shares voted WITHHOLD and broker non-votes will not be counted in determining the outcome of the director nominees’ election.
Other Items (Proposal Nos. 2, 3 and 4). Once a quorum has been established, pursuant to our amended and restated bylaws, approval of each of the other items to be submitted for a vote of stockholders at the Annual Meeting requires the affirmative vote of a majority of the shares present or represented by proxy at the Annual Meeting and entitled to vote on such proposal. Notwithstanding this vote standard required by our Bylaws, Proposal No. 2 (ratification of the appointment of Crowe as our independent registered public accounting firm for fiscal 2022) and Proposal No. 3 (approval, on a non-binding advisory basis, of our named executive officer compensation) are advisory only and are not binding on us. Our Board will consider the outcome of the vote on each of these items in considering what action, if any, should be taken in response to the vote by stockholders.
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For purposes of Proposal No. 2 (ratification of the appointment of Crowe as our independent registered public accounting firm for fiscal 2022), Proposal No. 3 (approval, on a non-binding advisory basis, of our named executive officer compensation), and Proposal No. 4 (approval of an amendment to our 2008 Plan, including an increase in the number of shares available for grant under the 2008 Plan), you may vote “FOR,” “AGAINST” or “ABSTAIN.”
In each of Proposal Nos. 2, 3 and 4, abstentions will have the same effect of a vote “AGAINST” such proposal. If you hold your shares in street name through a brokerage account and you do not instruct your nominee how to vote your shares, your nominee nonetheless will have the authority, but is not required, to vote your shares on Proposal No. 2, but will not be permitted to vote your shares on any of the other proposals at the Annual Meeting. If your nominee exercises this discretion, your shares will be voted on Proposal No. 2 in the manner directed by your nominee, but your shares will constitute broker non-votes on Proposal Nos. 1, 3 and 4, and will not be counted in determining the outcome of those items.
Who tabulates the votes?
Stockholder votes will be tabulated by Computershare Trust Company, N.A., as inspector of election for the Annual Meeting.
Where can I find the voting results of the Annual Meeting?
Our intention is to announce the preliminary voting results at the Annual Meeting and to publish the final results within four business days after the Annual Meeting on a Form 8-K to be filed with the SEC.
What do I do if I receive more than one proxy or set of voting instructions?
If you received more than one Proxy Statement or more than one proxy card or voting instruction form (if you receive your proxy materials by mail), your shares are likely registered in different names or with different addresses or are in more than one account. You must separately vote the shares shown on each Proxy Statement, proxy card or voting instruction form that you received in order for all of your shares to be voted at the Annual Meeting.
The cost of solicitation of proxies will be paid by the Company. Solicitation will include the preparation, assembly, printing and mailing of the Notice of Internet Availability of Proxy Materials, this Proxy Statement, the proxy and any additional solicitation of proxies from stockholders. Directors, officers and regular employees of the Company, without additional remuneration, may solicit proxies by telephone, e-mail, facsimile, personal interviews and other means. The Company anticipates out-of-pocket costs associated with proxy solicitation. The Company will also request persons, firms and corporations holding shares in their names or in the names of their nominees, which are beneficially owned by others, to send proxy materials to and obtain proxies from such beneficial owners. The Company will reimburse such holders for their reasonable expenses.
Householding of Stockholder Materials
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of the Notice of Internet Availability of Proxy Materials or, as applicable, the Company’s Proxy Statement or Annual Report may be sent to multiple stockholders in the same household unless the Company has received contrary instructions from one or more of the stockholders. The Company will promptly deliver a separate copy of any document to any stockholder upon request by writing to the Company at the following address: Willdan Group, Inc., 2401 East Katella Avenue, Suite 300, Anaheim, California 92806, Attn: Secretary or upon oral request directed to the Company’s Secretary at (800) 424-9144. Any stockholder who wants to receive separate copies of the Notice of Internet Availability of Proxy Materials, the Annual Report and Proxy Statement in the future, or who is currently receiving multiple copies and would like to receive only one copy for his or her household, should contact the stockholder’s bank, broker or other nominee record holder, or contact the Company by writing to the above address or by oral request at the above telephone number. Please note that if you would like to receive a paper copy of the proxy materials for purposes of this year’s Annual Meeting, you should follow the instructions included in the Notice of Internet Availability of Proxy Materials that was sent to you.
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We will mail you, without charge, a copy of our annual report on Form 10-K for the fiscal year ended December 31, 2021, including the consolidated financial statements, schedules, and list of exhibits, upon written request. Requests should be sent to: Willdan Group, Inc., 2401 East Katella Avenue, Suite 300, Anaheim, California 92806, ATTN: Investor Relations. The annual report on Form 10-K is also available at www.willdan.com.
Requirements for Proposals to be Considered for Inclusion in Proxy Materials. Stockholders interested in submitting a proposal for inclusion in the proxy materials for our 2023 annual meeting of stockholders (the “2023 Annual Meeting”) may do so by following the procedures prescribed in Rule 14a-8 under the Exchange Act. To be eligible for inclusion in our proxy statement for our 2023 annual meeting, stockholder proposals must be received no later than December 28, 2022 and must comply with our Bylaws and Rule 14a-8 under the Exchange Act regarding the inclusion of stockholder proposals in company-sponsored proxy materials. If we change the date of the 2023 Annual Meeting by more than 30 days from the anniversary of this year’s meeting, stockholder proposals must be received a reasonable time before we begin to print and mail our proxy materials for the 2023 Annual Meeting.
Requirements for Proposals Not Intended for Inclusion in Proxy Materials and for Nomination of Director Candidates. Stockholders who wish to nominate persons for election to the Board at the 2023 Annual Meeting or who wish to present a proposal at the 2023 Annual Meeting, but whose stockholder proposal will not be included in the proxy materials we distribute for such meeting, must deliver written notice of the nomination or proposal to our Secretary no earlier than February 9, 2023 and no later than the close of business on March 11, 2023. If, however, the date of the 2023 Annual Meeting is more than 30 days before or more than 60 days after June 9, 2023, stockholders must submit such nominations or proposals no earlier than the close of business on the 120th day prior to the 2023 Annual Meeting, and no later than the close of business on the later of the 90th day prior to the 2023 Annual Meeting or the 10th day following the date on which public disclosure of the date of the 2023 Annual Meeting is first made by the Company. In addition, with respect to nominations for directors, if the number of directors to be elected at the 2023 Annual Meeting is increased and there is no public announcement by us naming all of the nominees for director or specifying the size of the increased Board by March 1, 2023 (100 days prior to the first anniversary of this year’s Annual Meeting), notice will also be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered to our Secretary at our principal executive offices no later than the close of business on the 10th day following the day on which such public announcement is first made by the Company. Any proposal nominating a director candidate must also comply with the requirements under Section 3.04(a) of our Bylaws. If a stockholder’s written notice is not received between the dates specified above and does not satisfy these additional informational requirements, the notice will not be considered properly submitted and will not be acted upon at the 2023 Annual Meeting.
Our Bylaws also provide that a stockholder who wishes to nominate a director or propose other proper business to be brought before the stockholders at the Annual Meeting must be a stockholder of record of the Company at the time the notice is delivered to the Company’s Secretary and the stockholder must be entitled to vote at the Annual Meeting.
A stockholder notice to nominate a director or bring any other business before the 2023 Annual Meeting must set forth certain information specified in our Bylaws. Any stockholder proposal should be mailed to: Willdan Group, Inc., 2401 East Katella Avenue, Suite 300, Anaheim, California 92806, Attn: Secretary. Copies of the Charter and Bylaws may be obtained without charge by providing a written request to the Secretary of the Company at that address.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC and the Nasdaq Global Market. Officers, directors and greater than 10% stockholders are required by the SEC’s regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such reports furnished to us, the following officers, directors and greater than 10% stockholders failed to file certain reports required by Section 16(a) of the Exchange Act on a timely basis.
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To our knowledge, based solely on our review of the copies of such reports electronically filed with the SEC, all Section 16(a) filing requirements applicable to our executive officers, directors and greater than 10% beneficial owners were timely satisfied in fiscal 2021, with the exception of one late filing for Messrs. Brisbin, Bieber, and Whitelaw and Ms. McLaughlin who each filed one late Form 4 pertaining to one transaction, and Mr. Chen who filed two late forms pertaining to one transaction each.
The Board does not know of any matter other than those described in this Proxy Statement which will be presented for action at the Annual Meeting. If other matters are presented, proxies will be voted in accordance with the discretion of the proxy holders.
REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS IMPORTANT TO THE COMPANY. PLEASE COMPLETE, SIGN, DATE AND PROMPTLY RETURN YOUR PROXY OR VOTING INSTRUCTIONS TODAY.
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WILLDAN GROUP, INC.
AMENDED AND RESTATED 2008 PERFORMANCE INCENTIVE PLAN
1. PURPOSE OF PLAN
The purpose of this Willdan Group, Inc. Amended and Restated 2008 Performance Incentive Plan (this “Plan”) of Willdan Group, Inc., a Delaware corporation (the “Corporation”), is to promote the success of the Corporation and to increase stockholder value by providing an additional means through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons.
2. ELIGIBILITY
The Administrator (as such term is defined in Section 3.1) may grant awards under this Plan only to those persons that the Administrator determines to be Eligible Persons. An “Eligible Person” is any person who is either: (a) an officer (whether or not a director) or employee of the Corporation or one of its Subsidiaries; (b) a director of the Corporation or one of its Subsidiaries; or (c) an individual consultant or advisor who renders or has rendered bona fide services (other than services in connection with the offering or sale of securities of the Corporation or one of its Subsidiaries in a capital-raising transaction or as a market maker or promoter of securities of the Corporation or one of its Subsidiaries) to the Corporation or one of its Subsidiaries and who is selected to participate in this Plan by the Administrator; provided, however, that a person who is otherwise an Eligible Person under clause (c) above may participate in this Plan only if such participation would not adversely affect either the Corporation’s eligibility to use Form S-8 to register under the Securities Act of 1933, as amended (the “Securities Act”), the offering and sale of shares issuable under this Plan by the Corporation or the Corporation’s compliance with any other applicable laws. An Eligible Person who has been granted an award (a “participant”) may, if otherwise eligible, be granted additional awards if the Administrator shall so determine. As used herein, “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation; and “Board” means the Board of Directors of the Corporation.
3. PLAN ADMINISTRATION
3.1 The Administrator. This Plan shall be administered by and all awards under this Plan shall be authorized by the Administrator. The “Administrator” means the Board or one or more committees appointed by the Board or another committee (within its delegated authority) to administer all or certain aspects of this Plan. Any such committee shall be comprised solely of one or more directors or such number of directors as may be required under applicable law. A committee may delegate some or all of its authority to another committee so constituted. The Board or a committee comprised solely of directors may also delegate, to the extent permitted by Section 157(c) of the Delaware General Corporation Law and any other applicable law, to one or more officers of the Corporation, its powers under this Plan (a) to designate the officers and employees of the Corporation and its Subsidiaries who will receive grants of awards under this Plan, and (b) to determine the number of shares subject to, and the other terms and conditions of, such awards. The Board may delegate different levels of authority to different committees with administrative and grant authority under this Plan. Unless otherwise provided in the Bylaws of the Corporation or the applicable charter of any Administrator: (a) a majority of the members of the acting Administrator shall constitute a quorum, and (b) the vote of a majority of the members present assuming the presence of a quorum or the unanimous written consent of the members of the Administrator shall constitute action by the acting Administrator.
With respect to awards intended to satisfy the requirements for performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), this Plan shall be administered by a committee consisting solely of two or more outside directors (as this
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requirement is applied under Section 162(m) of the Code); provided, however, that the failure to satisfy such requirement shall not affect the validity of the action of any committee otherwise duly authorized and acting in the matter. Award grants, and transactions in or involving awards, intended to be exempt under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), must be duly and timely authorized by the Board or a committee consisting solely of two or more non-employee directors (as this requirement is applied under Rule 16b-3 promulgated under the Exchange Act). To the extent required by any applicable listing agency, this Plan shall be administered by a committee composed entirely of independent directors (within the meaning of the applicable listing agency).
3.2 Powers of the Administrator. Subject to the express provisions of this Plan, including, without limitation, Sections 3.6 and 3.7, the Administrator is authorized and empowered to do all things necessary or desirable in connection with the authorization of awards and the administration of this Plan (in the case of a committee or delegation to one or more officers, within the authority delegated to that committee or person(s)), including, without limitation, the authority to:
(a) determine eligibility and, from among those persons determined to be eligible, the particular Eligible Persons who will receive an award under this Plan;
(b) grant awards to Eligible Persons, determine the price (if any) at which securities will be offered or awarded and the number of securities to be offered or awarded to any of such persons (in the case of securities-based awards), determine the other specific terms and conditions awards consistent with the express limits of this Plan, establish the installments (if any) in which such awards shall become exercisable or shall vest (which may include, without limitation, performance and/or time-based schedules), or determine that no delayed exercisability or vesting is required, establish any applicable performance targets, and establish the events of termination or reversion of such awards;
(c) approve the forms of award agreements (which need not be identical either as to type of award or among participants);
(d) construe and interpret this Plan and any agreements defining the rights and obligations of the Corporation, its Subsidiaries, and participants under this Plan, further define the terms used in this Plan, and prescribe, amend and rescind rules and regulations relating to the administration of this Plan or the awards granted under this Plan;
(e) cancel, modify, or waive the Corporation’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consent under Section 8.6.5;
(f) accelerate or extend the vesting or exercisability or extend the term of any or all such outstanding awards (in the case of options or stock appreciation rights, within the maximum ten-year term of such awards) in such circumstances as the Administrator may deem appropriate (including, without limitation, in connection with a termination of employment or services or other events of a personal nature) subject to any required consent under Section 8.6.5;
(g) adjust the number of shares of Common Stock subject to any award, adjust the price of any or all outstanding awards or otherwise change previously imposed terms and conditions, in such circumstances as the Administrator may deem appropriate, in each case subject to Sections 4 and 8.6 (and subject to the no repricing provision below);
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(h) determine the date of grant of an award, which may be a designated date after but not before the date of the Administrator’s action (unless otherwise designated by the Administrator, the date of grant of an award shall be the date upon which the Administrator took the action granting an award);
(i) determine whether, and the extent to which, adjustments are required pursuant to Section 7 hereof and authorize the termination, conversion, substitution or succession of awards upon the occurrence of an event of the type described in Section 7;
(j) acquire or settle (subject to Sections 7 and 8.6) rights under awards in cash, stock of equivalent value, or other consideration (subject to the no repricing provision below); and
(k) determine the fair market value of the Common Stock or awards under this Plan from time to time and/or the manner in which such value will be determined.
Notwithstanding the foregoing and except for an adjustment pursuant to Section 7.1 or a repricing approved by stockholders, in no case may the Administrator (1) amend an outstanding stock option or SAR to reduce the exercise price or base price of the award, (2) cancel, exchange, or surrender an outstanding stock option or SAR in exchange for cash or other awards for the purpose of repricing the award, or (3) cancel, exchange, or surrender an outstanding stock option or SAR in exchange for an option or SAR with an exercise or base price that is less than the exercise or base price of the original award.
3.3 Binding Determinations. Any action taken by, or inaction of, the Corporation, any Subsidiary, or the Administrator relating or pursuant to this Plan and within its authority hereunder or under applicable law shall be within the absolute discretion of that entity or body and shall be conclusive and binding upon all persons. Neither the Board nor any Board committee, nor any member thereof or person acting at the direction thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with this Plan (or any award made under this Plan), and all such persons shall be entitled to indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including, without limitation, attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors and officers liability insurance coverage that may be in effect from time to time.
3.4 Reliance on Experts. In making any determination or in taking or not taking any action under this Plan, the Administrator may obtain and may rely upon the advice of experts, including employees and professional advisors to the Corporation. No director, officer or agent of the Corporation or any of its Subsidiaries shall be liable for any such action or determination taken or made or omitted in good faith.
3.5 Delegation. The Administrator may delegate ministerial, non-discretionary functions to individuals who are officers or employees of the Corporation or any of its Subsidiaries or to third parties
3.6 Minimum Vesting Requirement. Except as provided in the next sentence, all awards granted under this Plan shall be subject to a minimum vesting requirement of one year, and no portion of any such award may vest earlier than the first anniversary of the grant date of the award (the “Minimum Vesting Requirement”). The Minimum Vesting Requirement shall not apply to 5% of the total number of shares available under this Plan.
3.7 Dividends on Unvested Equity Awards. If the Corporation pays an ordinary cash dividend, the cash dividend shall not be paid on a current basis with respect to any awards that are not vested as of the record date for the ordinary cash dividend. Nothing in this Section 3.7 shall limit or restrict the Administrator’s ability (1) for shares of Common Stock subject to restricted stock or performance stock
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awards, to pay the amount of the ordinary cash dividend upon (and subject to) the vesting of such shares of Common Stock subject to these Awards, or (2) for stock unit awards, to credit dividend equivalents with respect to such awards in the form of additional stock units that will be subject to the same vesting terms and conditions as the underlying stock unit awards to which they relate, or (3) to make any adjustment pursuant to Section 7 of this Plan.
4. SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS
4.1 Shares Available. Subject to the provisions of Section 7.1, the capital stock that may be delivered under this Plan shall be shares of the Corporation’s authorized but unissued Common Stock and any shares of its Common Stock held as treasury shares. For purposes of this Plan, “Common Stock” shall mean the common stock of the Corporation and such other securities or property as may become the subject of awards under this Plan, or may become subject to such awards, pursuant to an adjustment made under Section 7.1.
4.2 Share Limits. The maximum number of shares of Common Stock that may be delivered pursuant to awards granted to Eligible Persons under this Plan (the “Share Limit”) is equal to the sum of the following:
(1) 4,144,167 shares of Common Stock, plus
(2) the number of shares of Common Stock subject to options granted under the Willdan Group, Inc. 2006 Stock Incentive Plan (the “2006 Plan”) and outstanding on June 9, 2008 which expire, or for any reason are cancelled or terminated, after June 9, 2008 without being exercised.
The following limits also apply with respect to awards granted under this Plan:
(a) The maximum number of shares of Common Stock that may be delivered pursuant to options qualified as incentive stock options granted under this Plan is 4,375,000 shares.
(b) The maximum number of shares of Common Stock subject to those options and stock appreciation rights that are granted during any calendar year to any individual under this Plan is 300,000 shares.
(c) Awards that are granted under this Plan during any one calendar year to any person who, on the grant date of the award, is a non-employee director are subject to the limits of this Section 4.2(c). The maximum number of shares of Common Stock subject to those awards that are granted under this Plan during any one calendar year to an individual who, on the grant date of the award, is a non-employee director is the number of shares that produce a grant date fair value for the award that, when combined with the grant date fair value of any other awards granted under this Plan during that same calendar year to that individual in his or her capacity as a non-employee director, is $200,000; provided that this limit is $400,000 as to (1) a non-employee director who is serving as the Independent Chair of the Board or the Lead Independent Director at the time the applicable grant is made or (2) any new non-employee director for the calendar year in which the non-employee director is first elected or appointed to the Board. For purposes of this Section 4.2(c), a “non-employee director” is an individual who, on the grant date of the award, is a member of the Board who is not then an officer or employee of the Corporation or one of its Subsidiaries. For purposes of this Section 4.2(c), “grant date fair value” means the value of the award as of the date of grant of the award and as determined using the equity award valuation principles applied in the Corporation’s financial reporting. The limits of this Section 4.2(c) do not apply to, and shall be determined without taking into account, any award granted to an individual who, on the
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grant date of the award, is an officer or employee of the Corporation or one of its Subsidiaries. The limits of this Section 4.2(c) apply on an individual basis and not on an aggregate basis to all non-employee directors as a group.
Each of the foregoing numerical limits is subject to adjustment as contemplated by Section 4.3, Section 7.1, and Section 8.10.
4.3 Awards Settled in Cash, Reissue of Awards and Shares. To the extent that an award granted under this Plan is settled in cash or a form other than shares of Common Stock, the shares that would have been delivered had there been no such cash or other settlement shall not be counted against the shares available for issuance under this Plan. In the event that shares of Common Stock are delivered in respect of a dividend equivalent right granted under this Plan, only the actual number of shares delivered with respect to the award shall be counted against the share limits of this Plan. To the extent that shares of Common Stock are delivered pursuant to the exercise of a stock appreciation right or stock option granted under this Plan, the number of underlying shares as to which the exercise related shall be counted against the applicable share limits under Section 4.2, as opposed to only counting the shares actually issued. (For purposes of clarity, if a stock appreciation right relates to 100,000 shares and is exercised at a time when the payment due to the participant is 15,000 shares, 100,000 shares shall be charged against the applicable share limits under Section 4.2 with respect to such exercise.) Except as provided in the next sentence, shares that are subject to or underlie awards granted under this Plan which expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under this Plan shall again be available for subsequent awards under this Plan. Shares that are exchanged by a participant or withheld by the Corporation as full or partial payment in connection with any award under this Plan, as well as any shares exchanged by a participant or withheld by the Corporation or one of its Subsidiaries to satisfy the tax withholding obligations related to any award, shall not be available for subsequent awards under this Plan. Refer to Section 8.10 for application of the foregoing share limits with respect to assumed awards. The Corporation may not increase the Share Limit by repurchasing shares of Common Stock on the market (by using cash received through the exercise of stock options or otherwise.)
4.4 Reservation of Shares; No Fractional Shares; Minimum Issue. The Corporation shall at all times reserve a number of shares of Common Stock sufficient to cover the Corporation’s obligations and contingent obligations to deliver shares with respect to awards then outstanding under this Plan (exclusive of any dividend equivalent obligations to the extent the Corporation has the right to settle such rights in cash). No fractional shares shall be delivered under this Plan. The Administrator may pay cash in lieu of any fractional shares in settlements of awards under this Plan. No fewer than 100 shares may be purchased on exercise of any award (or, in the case of stock appreciation or purchase rights, no fewer than 100 rights may be exercised at any one time) unless the total number purchased or exercised is the total number at the time available for purchase or exercise under the award.
5. AWARDS
5.1 Type and Form of Awards. The Administrator shall determine the type or types of award(s) to be made to each selected Eligible Person. Awards may be granted singly, in combination or in tandem. Awards also may be made in combination or in tandem with, in replacement of, as alternatives to, or as the payment form for grants or rights under any other employee or compensation plan of the Corporation or one of its Subsidiaries. The types of awards that may be granted under this Plan are (subject, in each case, to the no repricing provisions of Section 3.2):
5.1.1 Stock Options. A stock option is the grant of a right to purchase a specified number of shares of Common Stock during a specified period as determined by the Administrator. An option may be intended as an incentive stock option within the meaning of Section 422 of the Code (an “ISO”) or a
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nonqualified stock option (an option not intended to be an ISO). The award agreement for an option will indicate if the option is intended as an ISO; otherwise it will be deemed to be a nonqualified stock option. The maximum term of each option (ISO or nonqualified) shall be ten (10) years. The per share exercise price for each option shall be not less than 100% of the fair market value of a share of Common Stock on the date of grant of the option. When an option is exercised, the exercise price for the shares to be purchased shall be paid in full in cash or such other method permitted by the Administrator consistent with Section 5.5.
5.1.2 Additional Rules Applicable to ISOs. To the extent that the aggregate fair market value (determined at the time of grant of the applicable option) of stock with respect to which ISOs first become exercisable by a participant in any calendar year exceeds $100,000, taking into account both Common Stock subject to ISOs under this Plan and stock subject to ISOs under all other plans of the Corporation or one of its Subsidiaries (or any parent or predecessor corporation to the extent required by and within the meaning of Section 422 of the Code and the regulations promulgated thereunder), such options shall be treated as nonqualified stock options. In reducing the number of options treated as ISOs to meet the $100,000 limit, the most recently granted options shall be reduced first. To the extent a reduction of simultaneously granted options is necessary to meet the $100,000 limit, the Administrator may, in the manner and to the extent permitted by law, designate which shares of Common Stock are to be treated as shares acquired pursuant to the exercise of an ISO. ISOs may only be granted to employees of the Corporation or one of its subsidiaries (for this purpose, the term “subsidiary” is used as defined in Section 424(f) of the Code, which generally requires an unbroken chain of ownership of at least 50% of the total combined voting power of all classes of stock of each subsidiary in the chain beginning with the Corporation and ending with the subsidiary in question). There shall be imposed in any award agreement relating to ISOs such other terms and conditions as from time to time are required in order that the option be an “incentive stock option” as that term is defined in Section 422 of the Code. No ISO may be granted to any person who, at the time the option is granted, owns (or is deemed to own under Section 424(d) of the Code) shares of outstanding Common Stock possessing more than 10% of the total combined voting power of all classes of stock of the Corporation, unless the exercise price of such option is at least 110% of the fair market value of the stock subject to the option and such option by its terms is not exercisable after the expiration of five years from the date such option is granted. If an otherwise intended ISO fails to meet the applicable requirements of Section 422 of the Code, the option shall be a nonqualified stock option.
5.1.3 Stock Appreciation Rights. A stock appreciation right or “SAR” is a right to receive a payment, in cash and/or Common Stock, equal to the excess of the fair market value of a specified number of shares of Common Stock on the date the SAR is exercised over the “base price” of the award, which base price shall be set forth in the applicable award agreement and shall be not less than 100% of the fair market value of a share of Common Stock on the date of grant of the SAR. The maximum term of a SAR shall be ten (10) years.
5.1.4 Other Awards. The other types of awards that may be granted under this Plan include: (a) stock bonuses, restricted stock, performance stock, stock units, phantom stock, dividend equivalents, or similar rights to purchase or acquire shares, whether at a fixed or variable price (or no price) or ratio related to the Common Stock, and any of which may (but need not) be fully vested at grant or vest upon the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions, or any combination thereof; or (b) any similar awards with a value derived from the value of or related to the Common Stock and/or returns thereon and other cash awards.
5.2 Reserved.
5.3 Award Agreements. Each award shall be evidenced by either (1) a written award agreement in a form approved by the Administrator and executed by the Corporation by an officer duly authorized to act
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on its behalf, or (2) an electronic notice of award grant in a form approved by the Administrator and recorded by the Corporation (or its designee) in an electronic recordkeeping system used for the purpose of tracking award grants under this Plan generally (in each case, an “award agreement”), as the Administrator may provide and, in each case and if required by the Administrator, executed or otherwise electronically accepted by the recipient of the award in such form and manner as the Administrator may require. The Administrator may authorize any officer of the Corporation (other than the particular award recipient) to execute any or all award agreements on behalf of the Corporation.
5.4 Deferrals and Settlements. Payment of awards may be in the form of cash, Common Stock, other awards or combinations thereof as the Administrator shall determine, and with such restrictions as it may impose. The Administrator may also require or permit participants to elect to defer the issuance of shares or the settlement of awards in cash under such rules and procedures as it may establish under this Plan. The Administrator may also provide that deferred settlements include the payment or crediting of interest or other earnings on the deferral amounts, or the payment or crediting of dividend equivalents where the deferred amounts are denominated in shares.
5.5 Consideration for Common Stock or Awards. The purchase price for any award granted under this Plan or the Common Stock to be delivered pursuant to an award, as applicable, may be paid by means of any lawful consideration as determined by the Administrator, including, without limitation, one or a combination of the following methods:
● services rendered by the recipient of such award;
● cash, check payable to the order of the Corporation, or electronic funds transfer;
● notice and third party payment in such manner as may be authorized by the Administrator;
● the delivery of previously owned shares of Common Stock;
● by a reduction in the number of shares otherwise deliverable pursuant to the award; or
● subject to such procedures as the Administrator may adopt, pursuant to a “cashless exercise” with a third party who provides financing for the purposes of (or who otherwise facilitates) the purchase or exercise of awards.
In no event shall any shares newly-issued by the Corporation be issued for less than the minimum lawful consideration for such shares or for consideration other than consideration permitted by applicable state law. Shares of Common Stock used to satisfy the exercise price of an option shall be valued at their fair market value on the date of exercise. The Corporation will not be obligated to deliver any shares unless and until it receives full payment of the exercise or purchase price therefor and any related withholding obligations under Section 8.5 and any other conditions to exercise or purchase have been satisfied. Unless otherwise expressly provided in the applicable award agreement, the Administrator may at any time eliminate or limit a participant’s ability to pay the purchase or exercise price of any award or shares by any method other than cash payment to the Corporation.
5.6 Definition of Fair Market Value. For purposes of this Plan, “fair market value” shall mean, unless otherwise determined or provided by the Administrator in the circumstances, the last price (in regular trading) for a share of Common Stock as furnished by the National Association of Securities Dealers, Inc. (the “NASD”) through the Nasdaq Global Market Reporting System (the “Global Market”) for the date in question or, if no sales of Common Stock were reported by the NASD on the Global Market on that date, the last price (in regular trading) for a share of Common Stock as furnished by the NASD
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through the Global Market for the next preceding day on which sales of Common Stock were reported by the NASD. The Administrator may, however, provide with respect to one or more awards that the fair market value shall equal the last price (in regular trading) for a share of Common Stock as furnished by the NASD through the Global Market on the last trading day preceding the date in question or the average of the high and low trading prices of a share of Common Stock as furnished by the NASD through the Global Market for the date in question or the most recent trading day. If the Common Stock is no longer listed or is no longer actively traded on the Global Market as of the applicable date, the fair market value of the Common Stock shall be the value as reasonably determined by the Administrator for purposes of the award in the circumstances. The Administrator also may adopt a different methodology for determining fair market value with respect to one or more awards if a different methodology is necessary or advisable to secure any intended favorable tax, legal or other treatment for the particular award(s) (for example, and without limitation, the Administrator may provide that fair market value for purposes of one or more awards will be based on an average of closing prices (or the average of high and low daily trading prices) for a specified period preceding the relevant date).
5.7 Transfer Restrictions.
5.7.1 Limitations on Exercise and Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 5.7 or required by applicable law: (a) all awards are non-transferable and shall not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge; (b) awards shall be exercised only by the participant; and (c) amounts payable or shares issuable pursuant to any award shall be delivered only to (or for the account of) the participant.
5.7.2 Exceptions. The Administrator may permit awards to be exercised by and paid to, or otherwise transferred to, other persons or entities pursuant to such conditions and procedures, including limitations on subsequent transfers, as the Administrator may, in its sole discretion, establish in writing. Any permitted transfer shall be subject to compliance with applicable federal and state securities laws and shall not be for value (other than nominal consideration, settlement of marital property rights, or for interests in an entity in which more than 50% of the voting interests are held by the Eligible Person or by the Eligible Person’s family members).
5.7.3 Further Exceptions to Limits on Transfer. The exercise and transfer restrictions in Section 5.7.1 shall not apply to:
(a) transfers to the Corporation (for example, in connection with the expiration or termination of the award),
(b) the designation of a beneficiary to receive benefits in the event of the participant’s death or, if the participant has died, transfers to or exercise by the participant’s beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution,
(c) subject to any applicable limitations on ISOs, transfers to a family member (or former family member) pursuant to a domestic relations order if approved or ratified by the Administrator,
(d) if the participant has suffered a disability, permitted transfers or exercises on behalf of the participant by his or her legal representative, or
(e) the authorization by the Administrator of “cashless exercise” procedures with third parties who provide financing for the purpose of (or who otherwise facilitate) the exercise of awards consistent with applicable laws and the express authorization of the Administrator.
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5.8 International Awards. One or more awards may be granted to Eligible Persons who provide services to the Corporation or one of its Subsidiaries outside of the United States. Any awards granted to such persons may be granted pursuant to the terms and conditions of any applicable sub-plans, if any, appended to this Plan and approved by the Administrator.
6. EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE ON AWARDS
6.1 General. The Administrator shall establish the effect of a termination of employment or service on the rights and benefits under each award under this Plan and in so doing may make distinctions based upon, inter alia, the cause of termination and type of award. If the participant is not an employee of the Corporation or one of its Subsidiaries and provides other services to the Corporation or one of its Subsidiaries, the Administrator shall be the sole judge for purposes of this Plan (unless a contract or the award otherwise provides) of whether the participant continues to render services to the Corporation or one of its Subsidiaries and the date, if any, upon which such services shall be deemed to have terminated.
6.2 Events Not Deemed Terminations of Service. Unless the express policy of the Corporation or one of its Subsidiaries, or the Administrator, otherwise provides, the employment relationship shall not be considered terminated in the case of (a) sick leave, (b) military leave, or (c) any other leave of absence authorized by the Corporation or one of its Subsidiaries, or the Administrator; provided that, unless reemployment upon the expiration of such leave is guaranteed by contract or law or the Administrator otherwise provides, such leave is for a period of not more than three months. In the case of any employee of the Corporation or one of its Subsidiaries on an approved leave of absence, continued vesting of the award while on leave from the employ of the Corporation or one of its Subsidiaries may be suspended until the employee returns to service, unless the Administrator otherwise provides or applicable law otherwise requires. In no event shall an award be exercised after the expiration of the term set forth in the applicable award agreement.
6.3 Effect of Change of Subsidiary Status. For purposes of this Plan and any award, if an entity ceases to be a Subsidiary of the Corporation a termination of employment or service shall be deemed to have occurred with respect to each Eligible Person in respect of such Subsidiary who does not continue as an Eligible Person in respect of the Corporation or another Subsidiary that continues as such after giving effect to the transaction or other event giving rise to the change in status, unless the Subsidiary that is sold, spun-off or otherwise divested (or its successor or a direct or indirect parent of such Subsidiary or successor) assumes the Eligible Person’s award(s) in connection with such transaction.
7. ADJUSTMENTS; ACCELERATION
7.1 Adjustments. Subject to Section 7.2, upon (or, as may be necessary to effect the adjustment, immediately prior to): any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split; any merger, combination, consolidation, or other reorganization; any spin-off, split-up, or similar extraordinary dividend distribution in respect of the Common Stock; or any exchange of Common Stock or other securities of the Corporation, or any similar, unusual or extraordinary corporate transaction in respect of the Common Stock; then the Administrator shall equitably and proportionately adjust (1) the number and type of shares of Common Stock (or other securities) that thereafter may be made the subject of awards (including the specific share limits, maximums and numbers of shares set forth elsewhere in this Plan), (2) the number, amount and type of shares of Common Stock (or other securities or property) subject to any outstanding awards, (3) the grant, purchase, or exercise price (which term includes the base price of any SAR or similar right) of any outstanding awards, and/or (4) the securities, cash or other property deliverable upon exercise or payment of any outstanding awards, in each case to the extent necessary to preserve (but not increase) the level of incentives intended by this Plan and the then-outstanding awards.
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Unless otherwise expressly provided in the applicable award agreement, upon (or, as may be necessary to effect the adjustment, immediately prior to) any event or transaction described in the preceding paragraph or a sale of all or substantially all of the business or assets of the Corporation as an entirety, the Administrator shall equitably and proportionately adjust the performance standards and/or period applicable to any then-outstanding performance-based awards to the extent necessary to preserve (but not increase) the level of incentives intended by this Plan and the then-outstanding performance-based awards.
It is intended that, if possible, any adjustments contemplated by the preceding two paragraphs be made in a manner that satisfies applicable U.S. legal, tax (including, without limitation and as applicable in the circumstances, Section 424 of the Code, Section 409A of the Code and Section 162(m) of the Code) and accounting (so as to not trigger any charge to earnings with respect to such adjustment) requirements.
Without limiting the generality of Section 3.3, any good faith determination by the Administrator as to whether an adjustment is required in the circumstances pursuant to this Section 7.1, and the extent and nature of any such adjustment, shall be conclusive and binding on all persons.
7.2 Corporate Transactions - Assumption and Termination of Awards. Upon the occurrence of any of the following: any merger, combination, consolidation, or other reorganization; any exchange of Common Stock or other securities of the Corporation; a sale of all or substantially all the business, stock or assets of the Corporation; a dissolution of the Corporation; or any other event in which the Corporation does not survive (or does not survive as a public company in respect of its Common Stock); then the Administrator may make provision for a cash payment in settlement of, or for the assumption, substitution or exchange of any or all outstanding share-based awards or the cash, securities or property deliverable to the holder of any or all outstanding share-based awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Common Stock upon or in respect of such event. Upon the occurrence of any event described in the preceding sentence, then, unless the Administrator has made a provision for the substitution, assumption, exchange or other continuation or settlement of the award or the award would otherwise continue in accordance with its terms in the circumstances: (1) subject to Section 7.4 and unless otherwise provided in the applicable award agreement, each then-outstanding option and SAR shall become fully vested, all shares of restricted stock then outstanding shall fully vest free of restrictions, and each other award granted under this Plan that is then outstanding shall become payable to the holder of such award (with any performance goals applicable to the award in each case being deemed met, unless otherwise provided in the award agreement, at the “target” performance level); and (2) each award shall terminate upon the related event; provided that the holder of an option or SAR shall be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise his or her outstanding vested options and SARs (after giving effect to any accelerated vesting required in the circumstances) in accordance with their terms before the termination of such awards (except that in no case shall more than ten days’ notice of the impending termination be required and any acceleration of vesting and any exercise of any portion of an award that is so accelerated may be made contingent upon the actual occurrence of the event).
Without limiting the preceding paragraph, in connection with any event referred to in the preceding paragraph or any change in control event defined in any applicable award agreement, the Administrator may, in its discretion, provide for the accelerated vesting of any award or awards as and to the extent determined by the Administrator in the circumstances.
The Administrator may adopt such valuation methodologies for outstanding awards as it deems reasonable in the event of a cash or property settlement and, in the case of options, SARs or similar rights, but without limitation on other methodologies, may base such settlement solely upon the
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excess if any of the per share amount payable upon or in respect of such event over the exercise or base price of the award.
In any of the events referred to in this Section 7.2, the Administrator may take such action contemplated by this Section 7.2 prior to such event (as opposed to on the occurrence of such event) to the extent that the Administrator deems the action necessary to permit the participant to realize the benefits intended to be conveyed with respect to the underlying shares. Without limiting the generality of the foregoing, the Administrator may deem an acceleration to occur immediately prior to the applicable event and/or reinstate the original terms of the award if an event giving rise to an acceleration does not occur.
Without limiting the generality of Section 3.3, any good faith determination by the Administrator pursuant to its authority under this Section 7.2 shall be conclusive and binding on all persons.
7.3 Other Acceleration Rules. The Administrator may override the provisions of Section 7.2 and/or 7.4 by express provision in the award agreement and may accord any Eligible Person a right to refuse any acceleration, whether pursuant to the award agreement or otherwise, in such circumstances as the Administrator may approve. The portion of any ISO accelerated in connection with an event referred to in Section 7.2 (or such other circumstances as may trigger accelerated vesting of the award) shall remain exercisable as an ISO only to the extent the applicable $100,000 limitation on ISOs is not exceeded. To the extent exceeded, the accelerated portion of the option shall be exercisable as a nonqualified stock option under the Code.
7.4 Golden Parachute Limitation. Notwithstanding anything else contained in this Section 7 to the contrary, in no event shall any award or payment be accelerated under this Plan to an extent or in a manner so that such award or payment, together with any other compensation and benefits provided to, or for the benefit of, the participant under any other plan or agreement of the Corporation or any of its Subsidiaries, would not be fully deductible by the Corporation or one of its Subsidiaries for federal income tax purposes because of Section 280G of the Code. If a participant would be entitled to benefits or payments hereunder and under any other plan or program that would constitute “parachute payments” as defined in Section 280G of the Code, then the participant may by written notice to the Corporation designate the order in which such parachute payments will be reduced or modified so that the Corporation or one of its Subsidiaries is not denied federal income tax deductions for any “parachute payments” because of Section 280G of the Code.
8. OTHER PROVISIONS
8.1 Compliance with Laws. This Plan, the granting and vesting of awards under this Plan, the offer, issuance and delivery of shares of Common Stock, and/or the payment of money under this Plan or under awards are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities law and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Corporation, be necessary or advisable in connection therewith. The person acquiring any securities under this Plan will, if requested by the Corporation or one of its Subsidiaries, provide such assurances and representations to the Corporation or one of its Subsidiaries as the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements.
8.2 No Rights to Award. No person shall have any claim or rights to be granted an award (or additional awards, as the case may be) under this Plan, subject to any express contractual rights (set forth in a document other than this Plan) to the contrary.
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8.3 No Employment/Service Contract. Nothing contained in this Plan (or in any other documents under this Plan or in any award) shall confer upon any Eligible Person or other participant any right to continue in the employ or other service of the Corporation or one of its Subsidiaries, constitute any contract or agreement of employment or other service or affect an employee’s status as an employee at will, nor shall interfere in any way with the right of the Corporation or one of its Subsidiaries to change a person’s compensation or other benefits, or to terminate his or her employment or other service, with or without cause. Nothing in this Section 8.3, however, is intended to adversely affect any express independent right of such person under a separate employment or service contract other than an award agreement.
8.4 Plan Not Funded. Awards payable under this Plan shall be payable in shares or from the general assets of the Corporation, and no special or separate reserve, fund or deposit shall be made to assure payment of such awards. No participant, beneficiary or other person shall have any right, title or interest in any fund or in any specific asset (including shares of Common Stock, except as expressly otherwise provided) of the Corporation or one of its Subsidiaries by reason of any award hereunder. Neither the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between the Corporation or one of its Subsidiaries and any participant, beneficiary or other person. To the extent that a participant, beneficiary or other person acquires a right to receive payment pursuant to any award hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation.
8.5 Tax Withholding. Upon any exercise, vesting, or payment of any award or upon the disposition of shares of Common Stock acquired pursuant to the exercise of an ISO prior to satisfaction of the holding period requirements of Section 422 of the Code or upon any other tax withholding event, the Corporation or one of its Subsidiaries shall have the right at its option to:
(a) require the participant (or the participant’s personal representative or beneficiary, as the case may be) to pay or provide for payment of at least the minimum amount of any taxes which the Corporation or one of its Subsidiaries may be required to withhold with respect to such award event or payment; or
(b) deduct from any amount otherwise payable in cash to the participant (or the participant’s personal representative or beneficiary, as the case may be) the minimum amount of any taxes which the Corporation or one of its Subsidiaries may be required to withhold with respect to such cash payment.
In any case where a tax is required to be withheld in connection with the delivery of shares of Common Stock under this Plan, the Administrator may in its sole discretion (subject to Section 8.1) require or grant (either at the time of the award or thereafter) to the participant the right to elect, pursuant to such rules and subject to such conditions as the Administrator may establish, that the Corporation reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of shares, valued in a consistent manner at their fair market value or at the sales price in accordance with authorized procedures for cashless exercises, necessary to satisfy any applicable withholding obligation on exercise, vesting or payment.
8.6 Effective Date, Termination and Suspension, Amendments.
8.6.1 Effective Date. This Plan was originally effective as of June 9, 2008, the Stockholder Approval Date (the “Effective Date”). This amended version of the Plan is effective as of April 18, 2022, the date this amended version of the Plan was approved by the Board (the “Amendment Date”). This Plan shall be submitted for and subject to shareholder approval no later than twelve months after the Amendment Date. Unless earlier terminated by the Board and subject to any extension that may be
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approved by the shareholders, this Plan shall terminate at the close of business on the day before the tenth anniversary of Amendment Date. After the termination of this Plan either upon such stated expiration date or its earlier termination by the Board, no additional awards may be granted under this Plan, but previously granted awards (and the authority of the Administrator with respect thereto, including the authority to amend such awards) shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of this Plan.
8.6.2 Board Authorization. The Board may, at any time, terminate or, from time to time, amend, modify or suspend this Plan, in whole or in part. No awards may be granted during any period that the Board suspends this Plan.
8.6.3 Stockholder Approval. To the extent then required by applicable law or any applicable listing agency or required under Sections 422 or 424 of the Code to preserve the intended tax consequences of this Plan, or deemed necessary or advisable by the Board, any amendment to this Plan shall be subject to stockholder approval.
8.6.4 Amendments to Awards. Without limiting any other express authority of the Administrator under (but subject to) the express limits of this Plan, the Administrator by agreement or resolution may waive conditions of or limitations on awards to participants that the Administrator in the prior exercise of its discretion has imposed, without the consent of a participant, and (subject to the requirements of Sections 3.2 and 8.6.5) may make other changes to the terms and conditions of awards. Any amendment or other action that would constitute a repricing of an award is subject to the no repricing provision set forth in Section 3.2(g).
8.6.5 Limitations on Amendments to Plan and Awards. No amendment, suspension or termination of this Plan or amendment of any outstanding award agreement shall, without written consent of the participant, affect in any manner materially adverse to the participant any rights or benefits of the participant or obligations of the Corporation under any award granted under this Plan prior to the effective date of such change. Changes, settlements and other actions contemplated by Section 7 shall not be deemed to constitute changes or amendments for purposes of this Section 8.6.
8.7 Privileges of Stock Ownership. Except as otherwise expressly authorized by the Administrator, a participant shall not be entitled to any privilege of stock ownership as to any shares of Common Stock not actually delivered to and held of record by the participant. Except as expressly required by Section 7.1 or otherwise expressly provided by the Administrator, no adjustment will be made for dividends or other rights as a stockholder for which a record date is prior to such date of delivery.
8.8 Governing Law; Construction; Severability.
8.8.1 Choice of Law. This Plan, the awards, all documents evidencing awards and all other related documents shall be governed by, and construed in accordance with the laws of the State of Delaware.
8.8.2 Severability. If a court of competent jurisdiction holds any provision invalid and unenforceable, the remaining provisions of this Plan shall continue in effect.
8.8.3 Plan Construction.
It is the intent of the Corporation that the awards and transactions permitted by awards be interpreted in a manner that, in the case of participants who are or may be subject to Section 16 of the Exchange Act, qualify, to the maximum extent compatible with the express terms of the award, for exemption from matching liability under Rule 16b-3 promulgated under the Exchange Act. Notwithstanding the foregoing, the Corporation shall have no liability to any participant for Section 16
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consequences of awards or events under awards if an award or event does not so qualify.
8.9 Captions. Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof.
8.10 Stock-Based Awards in Substitution for Stock Options or Awards Granted by Other Corporation. Awards may be granted to Eligible Persons in substitution for or in connection with an assumption of employee stock options, SARs, restricted stock or other stock-based awards granted by other entities to persons who are or who will become Eligible Persons in respect of the Corporation or one of its Subsidiaries, in connection with a distribution, merger or other reorganization by or with the granting entity or an affiliated entity, or the acquisition by the Corporation or one of its Subsidiaries, directly or indirectly, of all or a substantial part of the stock or assets of the employing entity. The awards so granted need not comply with other specific terms of this Plan, provided the awards reflect adjustments giving effect to the assumption or substitution consistent with the conversion applicable to the Common Stock in the transaction and any change in the issuer of the security. Any shares that are delivered and any awards that are granted by, or become obligations of, the Corporation, as a result of the assumption by the Corporation of, or in substitution for, outstanding awards previously granted by an acquired company (or previously granted by a predecessor employer (or direct or indirect parent thereof) in the case of persons that become employed by the Corporation or one of its Subsidiaries in connection with a business or asset acquisition or similar transaction) shall not be counted against the Share Limit or other limits on the number of shares available for issuance under this Plan.
8.11 Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to limit the authority of the Board or the Administrator to grant awards or authorize any other compensation, with or without reference to the Common Stock, under any other plan or authority.
8.12 No Corporate Action Restriction. The existence of this Plan, the award agreements and the awards granted hereunder shall not limit, affect or restrict in any way the right or power of the Board or the stockholders of the Corporation to make or authorize: (a) any adjustment, recapitalization, reorganization or other change in the capital structure or business of the Corporation or any Subsidiary, (b) any merger, amalgamation, consolidation or change in the ownership of the Corporation or any Subsidiary, (c) any issue of bonds, debentures, capital, preferred or prior preference stock ahead of or affecting the capital stock (or the rights thereof) of the Corporation or any Subsidiary, (d) any dissolution or liquidation of the Corporation or any Subsidiary, (e) any sale or transfer of all or any part of the assets or business of the Corporation or any Subsidiary, or (f) any other corporate act or proceeding by the Corporation or any Subsidiary. No participant, beneficiary or any other person shall have any claim under any award or award agreement against any member of the Board or the Administrator, or the Corporation or any employees, officers or agents of the Corporation or any Subsidiary, as a result of any such action.
8.13 Other Company Benefit and Compensation Programs. Payments and other benefits received by a participant under an award made pursuant to this Plan shall not be deemed a part of a participant’s compensation for purposes of the determination of benefits under any other employee welfare or benefit plans or arrangements, if any, provided by the Corporation or any Subsidiary, except where the Administrator expressly otherwise provides or authorizes in writing. Awards under this Plan may be made in addition to, in combination with, as alternatives to or in payment of grants, awards or commitments under any other plans or arrangements of the Corporation or its Subsidiaries.
8.14 Administrator Discretion. Notwithstanding Section 3.6, the Minimum Vesting Requirement shall not limit or restrict the Administrator’s discretion to accelerate the vesting of any award in circumstances
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it determines to be appropriate (whether in connection with a transaction, termination of employment or for any other reason).
8.15 Clawback Policy. The awards granted under this Plan are subject to the terms of the Corporation’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of awards or any shares of Common Stock or other cash or property received with respect to the awards (including any value received from a disposition of the shares acquired upon payment of the awards).
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Willdan Group, Inc. and Subsidiaries
Reconciliation of GAAP Net Income to Adjusted Net Income and Adjusted Diluted EPS
(in thousands, except per share amounts)
(Non-GAAP Measure)
| | Year Ended | ||||
| | December 31, |
| January 1, | ||
|
| 2021 | | 2021 | ||
Net income (loss) |
| $ | (8,417) | | $ | (14,496) |
Adjustment for stock-based compensation | | | 16,563 | | | 16,113 |
Tax effect of stock-based compensation | | | (2,079) | | | (3,366) |
Adjustment for intangible amortization | | | 11,543 | | | 13,657 |
Tax effect of intangible amortization | | | (1,449) | | | (2,853) |
Adjustment for interest accretion | | | 2,333 | | | 7,707 |
Tax effect of interest accretion | | | (293) | | | (1,610) |
Adjustment for transaction costs | | | 43 | | | 179 |
Tax effect of transaction costs | | | (5) | | | (37) |
Adjustment for deferred tax valuation | | | 1,105 | | | — |
Tax effect of deferred tax valuation | | | — | | | — |
Adjusted Net Income | | $ | 19,344 | | $ | 15,294 |
| | | | | | |
Diluted weighted-average shares outstanding | | | 12,458 | | | 11,793 |
| | | | | | |
Diluted earnings (loss) per share | | $ | (0.68) | | $ | (1.23) |
Impact of adjustment: | | | | | | |
Stock-based compensation per share | | | 1.33 | | | 1.37 |
Tax effect of stock-based compensation per share | | | (0.17) | | | (0.29) |
Intangible amortization per share | | | 0.93 | | | 1.16 |
Tax effect of intangible amortization per share | | | (0.12) | | | (0.24) |
Interest accretion per share | | | 0.19 | | | 0.65 |
Tax effect of interest accretion per share | | | (0.02) | | | (0.14) |
Transaction costs per share | | | 0.00 | | | 0.02 |
Tax effect of transaction costs per share | | | (0.00) | | | — |
Deferred tax valuation per share | | | 0.09 | | | — |
Tax effect on deferred tax valuation per share | | | — | | | — |
Adjusted Diluted EPS | | $ | 1.55 | | $ | 1.30 |
| B-1 |
| MMMMMMMMMMMM MMMMMMMMMMMMMM C123456789 000004 ENDORSEMENT_LINE_SACKPACK_ 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Your vote matters – here’s how to vote! You may vote online or by phone instead of mailing this card. Online Before the Annual Meeting. Go to www.investorvote.com/WLDN or scan the QR code — login details are located in the shaded bar below. During the Annual Meeting. Go to meetnow.global/M2CGRW4. Have the number that is printed in the shaded bar below available and follow the instructions on the reverse side. Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q 1. Election of seven members of the Board of Directors, each to serve a one-year term or until their successors are duly elected and qualified: For Withhold For Withhold For Withhold 01 - Thomas D. Brisbin 04 - Dennis V. McGinn 07 - Mohammad Shahidehpour 02 - Steven A. Cohen 05 - Wanda K. Reder 03 - Cynthia A. Downes 06 - Keith W. Renken 2. Ratification of the appointment of Crowe LLP as the independent registered public accounting firm for the year ending December 30, 2022. For Against Abstain 3. Approval, on a non-binding advisory basis, of our named executive officer compensation. For Against Abstain 4. Approval of an amendment to the Company’s 2008 Performance Incentive Plan (the “2008 Plan”), including an increase in the number of shares available for grant under the 2008 Plan. Please sign exactly as name appears on this Proxy Card. Joint owners should each sign. When signing as attorney, executor, administrator, trustee, guardian or in another representative capacity, please give full title as such. Corporations and partnerships shall sign in full corporate or partnership name by an authorized person. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. C 1234567890 J N T 1 U P X 5 4 1 3 0 9 MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND 03MUOC |
| The 2022 Annual Meeting of Stockholders of WILLDAN GROUP, INC. will be held on Thursday, June 9, 2022 at 10:00 a.m. Pacific Daylight Time, virtually via the internet at meetnow.global/M2CGRW4. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Proxy Solicited on Behalf of the Board of Directors of the Company for the Annual Meeting to be held on June 9, 2022 The undersigned stockholder of Willdan Group, Inc., a Delaware corporation (the “Company”), hereby appoints Michael Bieber and Micah Chen, or either of them acting alone, as proxies for the undersigned, each with full power of substitution, to represent and vote, as designated on the reverse side of this ballot, all of the shares of common stock of the Company that the undersigned is entitled to vote at the Annual Meeting of Stockholders of the Company to be held on June 9, 2022 at 10:00 a.m. Pacific Daylight Time at meetnow.global/M2CGRW4, and at any adjournment or postponement thereof, and otherwise to represent the undersigned at the meeting with all powers possessed by the undersigned as if the undersigned was present at the meeting. The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting of Stockholders and the accompanying Proxy Statement. The Board of Directors has fixed the close of business on April 19, 2022 as the record date for determining the stockholders entitled to notice of and to vote at the Annual Meeting and at any adjournment or postponement thereof. Only stockholders of record of the Company’s common stock, $0.01 par value per share, at the close of business on that date will be entitled to notice of and to vote at the Annual Meeting and at any adjournment or postponement thereof. The votes entitled to be cast by the undersigned will be cast as instructed on the reverse side hereof. If this Proxy is executed but no instruction is given, the votes entitled to be cast by the undersigned will be cast “FOR” each of the nominees for director and “FOR” Proposals 2, 3 and 4. The votes entitled to be cast by the undersigned will be cast in the discretion of the Proxy holder on any other matter that may properly come before the Annual Meeting or any adjournment or postponement thereof. The signer hereby revokes all Proxies heretofore given by the signer with respect to said meeting or any adjournment or postponement thereof. YOUR VOTE IS IMPORTANT! PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE OR VOTE BY TELEPHONE OR INTERNET PURSUANT TO THE INSTRUCTIONS ON THE REVERSE SIDE. Change of Address — Please print new address below. Comments — Please print your comments below. + |
