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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION
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:
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Builders FirstSource, 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 all boxes that apply):
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Notice of Annual
Meeting
of Stockholders and
2022 Proxy Statement
The Annual Meeting of Stockholders
of Builders FirstSource, Inc. will be held:
Tuesday, June 14, 2022 at 1:00 p.m. local time
Sheraton Dallas Hotel
400 Olive Street
Dallas, Texas 75201
A MESSAGE TO OUR STOCKHOLDERS
To
our Fellow Stockholders,
You are cordially invited to attend the annual meeting of stockholders of Builders FirstSource, Inc., which will take place at the
Sheraton Dallas Hotel, 400 Olive Street, Dallas, Texas 75201 on Tuesday, June 14, 2022, at 1:00 p.m., local time. Details of the business to be conducted at the annual meeting are given in the Notice of Annual Meeting of Stockholders, Proxy
Statement, Notice Regarding the Availability of Proxy Materials, and form of proxy.
2021 was an exceptional year for our company. We delivered record financial
performance by helping our customers become more productive, managing supply chain constraints and strengthening our geographic positions around the nation. Our integration of BMC Stock Holdings, Inc. (BMC) following the completion of
the merger on January 1, 2021 outpaced our early targets and realized our planed cost synergy and productivity savings over two years ahead of our initial expectations. It has become increasingly clear that the BMC merger has brought us closer
to our mission to be the leading supplier of building materials and services to homebuilders by promoting a people-first culture that delivers exceptional customer service and innovative solutions to help build more efficiently, thereby creating
superior value for stakeholders. We want to thank our more than 28,000 team members for an incredible year and we are extremely proud of their outstanding results.
We are also excited about our recent investments in our digital strategy. In August 2021, we acquired WTS Paradigm, LLC (Paradigm), a software solutions and
services provider for the building products industry. The acquisition is an important step forward in our strategy to invest in innovative digital solutions that will help our customers build more efficiently. Our management team is committed to
streamlining the home buying experience and providing the digital tools to better align and integrate the homebuilding project lifecycle for our customers and supply partners.
Delivering long-term value to our stockholders remains a top priority for our Board of Directors and our management team. We completed over $1.2 billion worth of
acquisitions in 2021. We also repurchased $2.0 billion of our common stock through the beginning of 2022, and our Board of Directors recently authorized the repurchase of an additional $1.0 billion of our common stock on February 17,
2022, demonstrating the financial strength of our company and our continued commitment to deploy our robust free cash flow.
Your vote is important to us. Even if
you intend to join us in person, we encourage you to vote in advance so we will know we have a quorum of stockholders for the meeting. When you vote in advance, please indicate your intention to personally attend the annual meeting. Please see the
Question and Answer section on page 3 of the Proxy Statement for instructions if you plan to personally attend the annual meeting.
On behalf of the Board of
Directors and the executive management team, we would like to express our appreciation for your continued interest in the affairs of Builders FirstSource, Inc.
Sincerely, | Sincerely, | |
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2001 Bryan Street, Suite 1600, Dallas, Texas 75201
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To
our Stockholders:
The annual meeting of stockholders of Builders FirstSource, Inc. will take place at the Sheraton Dallas Hotel, 400 Olive Street, Dallas,
Texas 75201
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on Tuesday, June 14, 2022, at 1:00 p.m., local time, for the purpose of considering and acting upon the following:
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Only stockholders of record at the close of business on April 22, 2022 will be entitled to vote at the meeting.
Directions to be able to attend the meeting and vote in person may be obtained by contacting the Corporations legal department at (214)
880-3500.
By Order of the Board of Directors,
Timothy D. Johnson
Corporate Secretary
April 28, 2022
Important Notice Regarding the
Availability of Proxy Materials for the Stockholder Meeting to be held on June 14, 2022: The Proxy Statement and the 2021 Annual Report on Form
10-K
are available at www.proxydocs.com/BLDR and at
www.bldr.com.
IMPORTANT:
Please see the Question and Answer section on page 3 of this Proxy Statement for instructions on what you need to do to attend the annual meeting in person. Please
note that the doors to the annual meeting will open at 12:30 p.m. and will close promptly at 1:00 p.m. Whether or not you expect to personally attend, we urge you to vote your shares at your earliest convenience to ensure the presence
of a quorum at the meeting. Promptly voting your shares via the internet, by telephone via toll-free number, or, if you elect to receive your proxy materials by mail, by completing, signing, dating, and returning the enclosed proxy card in the
postage-paid envelope provided, will save us the expense and extra work of additional proxy solicitation. Because your proxy is revocable at your option, submitting your proxy now will not prevent you from voting your shares at the meeting if you
desire to do so. Please refer to the voting instructions included on the Notice Regarding the Availability of Proxy Materials, proxy card, or voting instructions forwarded by your bank, broker, or other stockholder of record, as applicable.
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Table of Contents
Builders
FirstSource, Inc.
| 2022 Proxy Statement
i
2001 Bryan Street, Suite 1600, Dallas, Texas 75201
PROXY STATEMENT
Annual Meeting of Stockholders
June 14, 2022
This Proxy Statement is being furnished by Builders FirstSource, Inc. (the Corporation, the Company, or Builders FirstSource) in
connection with a solicitation of proxies by its Board of Directors (the Board of Directors or the Board) to be voted at the annual meeting of the Corporations stockholders to be held on June 14, 2022 (the
annual meeting or meeting). Whether or not you personally attend, it is important that your shares be represented and voted at the annual meeting. Most stockholders have a choice of voting over the internet, by using a
toll-free telephone number, or, for stockholders who elect to receive their proxy materials by mail, by completing a proxy card and mailing it in the postage-paid envelope provided. Check the Notice Regarding the Availability of Proxy Materials,
your proxy card, or the information forwarded by your bank, broker, or other stockholder of record, as applicable, to determine which voting options are available to you. The internet voting and telephone voting facilities for stockholders of record
will be available until 12:00 p.m. Central Time on June 14, 2022. The Notice Regarding the Availability of Proxy Materials will first be mailed on or about May 5, 2022.
SOLICITATION AND RATIFICATION OF PROXIES
If a proxy card is signed and returned, it will be voted as specified on the proxy card, or, if no vote is specified, it will be voted FOR all nominees
presented in Proposal 1, FOR Proposals 2 and 3, and ABSTAIN for Proposal 4. At any time before it is exercised, you may revoke your proxy by timely delivery of written notice to the Corporate Secretary, by timely delivery of
a properly executed, later-dated proxy (including by internet or telephone vote), or by voting via ballot at the annual meeting. Voting in advance of the annual meeting will not limit your right to vote at the annual meeting if you decide to attend
in person. If you are a beneficial owner, and your shares are registered in the name of a bank, broker, or other stockholder of record, to be able to vote in person at the annual meeting you must obtain, from the stockholder of record, a legal proxy
and submit it together with your ballot at the meeting. See Questions and Answers about the Meeting and Voting in this Proxy Statement for an explanation of the term beneficial owner.
The proxy accompanying this Proxy Statement is being solicited by the Board of Directors. The Corporation will bear the entire cost of this solicitation, including the
preparation and delivery of this Proxy Statement, the proxy, and any additional information furnished to stockholders. The Corporation has retained Innisfree M&A Incorporated (Innisfree) to perform various proxy solicitation services
in connection with the solicitation of proxies for the annual meeting. The Corporation will pay Innisfree a fee not to exceed $25,000, plus out-of-pocket expenses, for such services. In addition to using the mail and the internet, proxies may be
solicited by directors, executive officers, and other employees of Builders FirstSource or its subsidiaries, in person or by telephone. No additional compensation will be paid to directors, executive officers, or other employees for their services
in this regard. Builders FirstSource will also request banks, brokers, and other stockholders of record to forward proxy materials, at the Corporations expense, to the beneficial owners of the Corporations shares.
If you have questions or need assistance voting your shares, please contact our proxy solicitor:
Innisfree M&A Incorporated
501 Madison Avenue,
20th floor
New York, New York 10022
Stockholders
may call toll free: (877) 825-8964
Banks and Brokers may call collect: (212) 750-5833
Builders
FirstSource, Inc.
| 2022 Proxy Statement
1
General Information about Proxies and Voting
GENERAL INFORMATION ABOUT PROXIES AND VOTING
The stockholders of record of Builders FirstSource, Inc. Common
Stock (Common Stock) at the close of business on April 22, 2022 will be entitled to vote in person or by proxy at the annual meeting. At that time, the Corporation had 173,987,893 outstanding shares of its Common Stock. Each
stockholder will be entitled to one vote in person or by proxy for each share of Common Stock held. A quorum for the transaction of business shall be constituted by the presence at the annual meeting, in person or by proxy, of a majority of the
outstanding shares of Common Stock entitled to vote thereat. All shares for which proxies or voting instructions are returned are counted as present for purposes of determining the existence of a quorum at the annual meeting.
Internet Availability of Proxy Materials
As permitted by federal securities laws, Builders FirstSource
is making this Proxy Statement and 2021 Annual Report on Form
10-K
(the 2021 Annual Report) available to its stockholders primarily via the internet instead of mailing printed copies of these
materials to each stockholder. On or about May 5, 2022, we will mail to our stockholders (other than those who previously requested electronic or paper delivery) a Notice Regarding Internet Availability of Proxy Materials (the
Notice) containing instructions on how to access the Proxy Statement and accompanying 2021 Annual Report. These proxy materials will be made available to our stockholders on or about May 5, 2022. The Notice provides instructions
regarding how to vote through the internet. The Proxy Statement and 2021 Annual Report are also available on our website at www.bldr.com.
If you received a Notice
by mail, you will not receive a printed copy of the proxy materials by mail unless you request printed materials. If you wish to receive printed proxy materials, you should follow the instructions for requesting such materials contained on the
Notice.
If you receive more than one Notice, it means your shares are registered differently and are held in more than one account. To ensure all shares are voted,
please either vote each account over the internet or by telephone or sign and return by mail all proxy cards.
Voting Matters and Board
Recommendations
At this years annual meeting, we are asking our stockholders to vote on the following matters:
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| FOR each nominee | 7 | |||
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| FOR | 51 | |||
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| FOR | 59 | |||
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| NO RECOMMENDATION | 61 |
NO PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THE DELIVERY OF THIS PROXY STATEMENT SHALL, UNDER
NO CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE CORPORATION SINCE THE DATE OF THIS PROXY STATEMENT.
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Builders FirstSource,
Inc.
| 2022 Proxy Statement
Questions and Answers about the Meeting and Voting
QUESTIONS AND ANSWERS ABOUT THE MEETING AND
VOTING
What is a proxy?
A proxy is your legal
designation of another person, called a proxy holder, to vote the shares that you own. We designated Timothy D. Johnson, our Executive Vice President, General Counsel, and Corporate Secretary, and Peter M. Jackson, our Executive Vice President and
Chief Financial Officer, to act as proxy holders at the annual meeting as to all shares for which proxy cards are returned or voting instructions are provided by internet or telephone.
What is a proxy statement?
A proxy statement is
a document that the Securities and Exchange Commission (the SEC) regulations require us to give you when we ask you to provide a proxy (by voting by phone or internet or, if applicable, by returning a proxy card by mail) designating the
proxy holders described above to vote on your behalf.
What is the difference between a
stockholder of record and a stockholder who holds stock in street name, also called a beneficial owner?
If your shares are registered in
your name at our transfer agent, Computershare Investor Services, you are a stockholder of record.
If your shares are held through a broker, bank, trustee,
nominee, or other similar stockholder of record on your behalf, your shares are held in street name and you are the beneficial owner of the shares.
How do you obtain admission to the
annual meeting?
Stockholders of Record
.
Stockholders of record must bring a current government-issued photo identification card to
gain admission to the annual meeting.
Street Name Holders
.
To obtain admission to the annual meeting, a street name holder must (i) bring
a current government-issued photo identification card and (ii) ask his or her broker or bank for a legal proxy and must bring that legal proxy with him or her to the meeting. If you do not receive the legal proxy in time, bring your most recent
brokerage statement with you to the meeting. We can use that to verify your ownership of Common Stock and admit you to the meeting. However, you will not be able to vote your shares at the meeting without a legal proxy. Please note that if you own
shares in street name, and you are issued a legal proxy, any previously executed proxy will be revoked, and your vote will not be counted unless you appear at the meeting and vote in person.
Could
COVID-19
or related developments affect the Corporations ability to hold an
in-person
meeting?
We are actively monitoring the
COVID-19
situation. In the
event that it is inadvisable or not possible to hold our annual meeting in person, we may decide instead to hold a virtual annual meeting that is accessible only through the internet. If we decide to use that format, we will announce the decision to
do so in advance via press release, and details on how to participate will be available on the investor relations page of the Corporations website (https://investors.bldr.com).
What different methods can you use to vote?
By Written Proxy
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Stockholders who elect to receive their proxy materials by mail may vote by mailing the written proxy card.
Builders
FirstSource, Inc.
| 2022 Proxy Statement
3
Questions and Answers about the Meeting and Voting
By Telephone and Internet Proxy
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All stockholders of record may also vote by
telephone from the U.S., using the toll-free telephone number provided on the proxy card or in the website listed on the Notice, or by the internet, using the procedures and instructions described in the Notice or proxy card. Street name holders may
vote by telephone or the internet if their bank, broker, or other stockholder of record makes those methods available. If that is the case, the bank, broker, or other stockholder of record will enclose the instructions with the Proxy Statement or
other notice of the meeting. The telephone and internet voting procedures, including the use of control numbers, are designed to authenticate stockholders identities, allow stockholders to vote their shares, and confirm that their instructions
have been properly recorded.
In Person
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All stockholders may vote in person at the meeting (unless they are street name holders without a
legal proxy, as described in the foregoing question).
If you have questions or need assistance voting your shares, please contact our proxy
solicitor:
Innisfree M&A Incorporated
501
Madison Avenue, 20th floor
New York, New York 10022
Stockholders may call toll free: (877) 825-8964
Banks
and Brokers may call collect: (212) 750-5833
What is the record date and what does
it mean?
The record date for the annual meeting is April 22, 2022. The record date is established by the Board of Directors as required by Delaware
law. Stockholders of record at the close of business on the record date are entitled to receive notice of the annual meeting and to vote their shares at the meeting.
What are your voting choices for
director nominees, and what vote is needed to elect directors?
For the vote on the election of the Class II director nominees to serve until the
2025 annual meeting, stockholders may:
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At the annual meeting in 2022, directors will be elected by a majority of the votes cast in person or by proxy at the annual
meeting. Each director nominee in 2022 has submitted an irrevocable resignation that will be effective upon the occurrence of (i) the failure of such director nominee to receive a majority of the votes cast and (ii) the acceptance of that
resignation by the Board. Abstentions from voting have no effect on the outcome of such vote because the election of directors is determined on the basis of votes cast and abstentions are not counted as votes cast.
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Builders FirstSource,
Inc.
| 2022 Proxy Statement
Questions and Answers about the Meeting and Voting
What are your voting choices on the advisory vote to approve the 2021 compensation of the Corporations named executive officers, including
the Corporations compensation practices and principles and their implementation?
In the
non-binding
vote
to approve the 2021 compensation of the Corporations named executive officers, including the Corporations compensation practices and principles and their implementation, as discussed and disclosed in this Proxy Statement, stockholders
may:
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This proposal requires the affirmative vote of a majority of the votes represented and entitled to vote at the annual meeting. Accordingly, abstentions have the effect
of a vote against Proposal 2. This is an advisory vote, and, as such, is not binding on the Board or the Compensation Committee. However, the Board and the Compensation Committee will consider the results of the vote when setting
the compensation of the Corporations executive officers in the future.
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What are your voting choices on the ratification of the appointment of PricewaterhouseCoopers LLP as the Corporations independent
registered public accounting firm, and what vote is needed to ratify their appointment?
On the vote on the ratification of the appointment of
PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year 2022, stockholders may:
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The proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm will require the affirmative vote of a
majority of the shares represented and entitled to vote at the annual meeting. Accordingly, abstentions will have the effect of a vote against Proposal 3. This vote is not binding on the Board or the Audit Committee.
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What are your voting choices on the stockholder proposal, if properly presented at the meeting, requesting that the Corporation adopt greenhouse
gas emissions reduction targets?
On the vote on the stockholder proposal, if properly presented at the meeting, requesting that the Corporation adopt
greenhouse gas emissions reduction targets, stockholders may:
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The proposal to consider a stockholder proposal, if properly presented at the meeting, requesting that the Corporation adopt greenhouse gas emissions reduction targets,
will require the affirmative vote of a majority of the shares represented and entitled to vote at the annual meeting. Accordingly, abstentions will have the effect of a vote against Proposal 4.
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Builders
FirstSource, Inc.
| 2022 Proxy Statement
5
Questions and Answers about the Meeting and Voting
What if a stockholder does not specify a choice for a matter when returning a proxy card?
Stockholders should specify their choice for each proposal described on the proxy card, if they receive one. However, proxy cards that are signed and returned, but for
which no specific instruction is given, will be voted FOR all the director candidates listed in Proposal 1, FOR Proposals 2 and 3, and ABSTAIN for Proposal 4.
If any matters not specifically set forth in this Proxy Statement properly come to a vote at the meeting, either of the members of the Proxy Committee, comprised of
Timothy D. Johnson and Peter M. Jackson, will vote regarding those matters in accordance with their best judgments.
What are broker
non-votes
and how are they counted?
Although your broker is the record holder of any shares that you hold in street
name, it must vote those shares pursuant to your instructions. If you do not provide instructions, your broker may exercise discretionary voting power over your shares for routine items but not for
non-routine
items. All matters described in this Proxy Statement, except for the ratification of the appointment of our independent auditor, are considered to be
non-routine
matters. Broker
non-votes
occur with respect to a
non-routine
matter when shares held of record by a
broker are not voted on such matter because the beneficial owner has not provided voting instructions and the broker either lacks or declines to exercise the authority to vote the shares in its discretion.
Broker
non-votes
will be counted as present for purposes of establishing a quorum. Broker
non-votes
will not have any effect on Proposal 1, since broker
non-votes
are not votes cast. Broker
non-votes
will have the
effect of a vote AGAINST on Proposal 2 and Proposal 4, since broker
non-votes
are entitled to vote at the annual meeting but are not entitled to vote on
non-routine
items. Brokers have discretionary authority to vote on Proposal 3.
Can I change my mind and revoke or
change my proxy?
Yes. A stockholder of record may revoke a proxy or change its vote prior to its exercise at the annual meeting by:
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Note that attendance at the annual meeting, by itself, will not revoke your proxy.
A street name holder may revoke a proxy given pursuant to this solicitation by following the instructions of the bank, broker, trustee, or other nominee who holds his
or her shares.
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Builders FirstSource,
Inc.
| 2022 Proxy Statement
Proposal 1 Election of Directors
PROPOSAL 1 ELECTION OF DIRECTORS
On January 1, 2021 (the Merger Effective Date), the Corporation completed its previously announced all stock merger transaction with
BMC Stock Holdings, Inc., a Delaware corporation (BMC). The merger between the Corporation and BMC is referred to as the Merger throughout this Proxy Statement.
Pursuant to the Corporations
By-laws,
the Board is classified, which means it is divided into three classes of
directors based on the expiration of their terms. Under the classified Board arrangement, directors are elected to terms that expire on the annual meeting date three years following the annual meeting at which they were elected and the terms are
staggered so that the terms of approximately
one-third
of the directors expire each year.
There are currently
12 members of the Board of Directors. Three of the 12 directors, Daniel Agroskin, David Bullock, and Floyd Sherman, whose terms all expire in 2022, are retiring from the Board and not standing for election at the annual meeting. Only one of the
three vacancies will be filled at the annual meeting, and, as a result, the size of the Board will be reduced from 12 to 10 directors and the number of Class II directors will be reduced from four to two. Accordingly, Proposal 1 seeks the
election of two directors to fill the continuing directorships whose terms expire in 2022.
The term of the other Class II director, Mark A. Alexander, will
expire at the annual meeting in 2022. The Board of Directors has nominated Mark A. Alexander and Dirkson R. Charles for election to a term that will expire at the annual meeting in 2025.
| Age | Position Held | Independent | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | ||||||||||||||||||||||||
| 63 | Director | X | X | ||||||||||||||||||||||||||
| 58 | Director | X |
Unless otherwise indicated, all proxies that authorize the proxy holders to vote for the election of directors will be voted
FOR the election of the nominees listed below. If a nominee becomes unavailable for election as a result of unforeseen circumstances, it is the intention of the proxy holders to vote for the election of such substitute nominee, if any,
as the Board of Directors may propose. As of the date of this Proxy Statement, each of the nominees has consented to serve and the Board is not aware of any circumstances that would cause a nominee to be unable to serve as a director.
Builders
FirstSource, Inc.
| 2022 Proxy Statement
7
Proposal 1 Election of Directors
The background and business affiliations of the director nominees, as well as the qualifications
that led the Board to conclude that each nominee should serve as a director of the Corporation, are set forth below:
Class II
Directors with Terms Expiring in 2022
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Builders FirstSource,
Inc.
| 2022 Proxy Statement
Continuing Directors
The background and business affiliations of the Corporations other directors, whose terms of service continue beyond 2022, as well as the qualifications that led
the Board to conclude that such directors should serve as a director of the Corporation, are set forth below:
Class I
Directors with Terms Expiring in 2024
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Builders
FirstSource, Inc.
| 2022 Proxy Statement
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Continuing Directors
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Builders FirstSource,
Inc.
| 2022 Proxy Statement
Continuing Directors
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Class III Directors with Terms Expiring in 2023
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Builders
FirstSource, Inc.
| 2022 Proxy Statement
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Continuing Directors
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Builders FirstSource,
Inc.
| 2022 Proxy Statement
Continuing Directors
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Builders
FirstSource, Inc.
| 2022 Proxy Statement
13
Director Compensation
The following table sets forth the cash and other compensation
paid by the Corporation to the members of the Board of Directors of the Corporation for all services in all capacities during 2021.
| Fees Earned or Paid in Cash ($) |
| All Other Compensation ($) | Total ($) | ||||||
| 106,705 (2) | 149,982 | | 256,687 | ||||||
| 121,278 (2) | 217,826 | | 339,104 | ||||||
| 121,278 (2) | 217,826 | | 339,104 | ||||||
| 121,384 (3) | 217,826 | | 339,210 | ||||||
| 126,849 | 149,982 | | 276,831 | ||||||
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| 131,728 (2) | 149,982 | | 281,710 | ||||||
| 201,815 (2) | 149,982 | | 351,797 | ||||||
| 106,705 (2) | 149,982 | | 256,687 | ||||||
| 121,278 (2) | 217,826 | | 339,104 | ||||||
| 101,778 (2) | 149,982 | | 251,760 | ||||||
| 116,753 (2) | 149,982 | | 266,735 |
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The following table shows the total number of shares of Common Stock underlying restricted stock units held by the members of the Board of Directors of the
Corporation (excluding executive officers) as of December 31, 2021:
| Number of Shares Underlying Restricted Stock Units | ||||
| 3,459 | ||||
| 5,119 | ||||
| 5,119 | ||||
| 5,119 | ||||
| 3,459 | ||||
| 3,459 | ||||
| 3,459 | ||||
| 3,459 | ||||
| 5,119 | ||||
| 3,459 | ||||
| 3,459 |
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Builders FirstSource,
Inc.
| 2022 Proxy Statement
Director Compensation
Under the Amended and Restated Director Compensation Policy, directors are entitled to compensation for their service on the Board if they are not concurrently employed
in any capacity by the Corporation or any of its subsidiaries. Under the Amended and Restated Director Compensation Policy in effect during 2021, Directors who met these standards (Eligible Directors) received an annual cash retainer of
$100,000. In addition, the Chairman of the Board receives an annual cash retainer of $100,000 for service in such role, which is also payable quarterly.
In
connection with the Merger, the Amended and Restated Director Compensation Policy was amended effective January 15, 2021 to increase the annual cash retainer from $85,000 to $100,000 and the fair market value of the annual grant of restricted
stock units from $130,000 to $150,000. The annual fees for serving on the Boards committees were not changed. Because quarterly cash retainers are paid in advance, in the quarter following such amendment legacy Builders FirstSource directors
received a cash retainer
true-up
for the period of time during the prior quarter in which the increased cash retainer amount was in effect.
Directors receive annual fees for serving on the Boards committees, but do not receive separate per meeting fees for attending Board or committee meetings. The
annual fees for serving on the Boards committees are as follows:
| Chair Fee |
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| $30,000 | $5,000 | ||||||||
| $20,000 | $5,000 | ||||||||
| $10,000 | $5,000 |
Eligible Directors also receive annual grants of restricted stock units. In 2021, the number of shares underlying these awards is
determined by dividing a dollar value ($150,000 per year) by the fair market value of our Common Stock on the date of grant. These awards vest in full on the earlier of the first anniversary of the grant date or upon such directors cessation
of service due to death, disability, or retirement. If a new Eligible Director joins the Board, or if an existing directors status changes to allow him or her to qualify as an Eligible Director, that director will receive a grant of restricted
stock units on a
pro-rated
basis for the remainder of the current director compensation year, which is the year from the date of the prior annual meeting of stockholders to the date of the next annual meeting
of stockholders.
In lieu of receiving cash retainers, an Eligible Director may elect to receive fully vested shares of Common Stock having a value on the first day
of the service quarter for which they are issued approximately equal to the amount of the cash retainer payment he or she would otherwise receive. Such stock grants in lieu of cash retainer payments will be awarded on a quarterly basis at the same
time cash retainer payments would be made. The Board amended the Amended and Restated Director Compensation Policy on November 17, 2021 to clarify that directors may only elect to receive fully vested shares of Common Stock in lieu of cash
retainers during an open trading window and such election will take effect the following year.
We do not compensate directors for any period of service in which
they are not Eligible Directors.
Builders
FirstSource, Inc.
| 2022 Proxy Statement
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Information Regarding the Board and its Committees
INFORMATION REGARDING THE BOARD AND ITS
COMMITTEES
Name | Board of Directors | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | ||||||||||||||||
Paul S. Levy | Chair | |||||||||||||||||||
Daniel Agroskin | X | X | ||||||||||||||||||
Mark A. Alexander | X | X | ||||||||||||||||||
Cory J. Boydston | X | X | ||||||||||||||||||
David W. Bullock | X | X | ||||||||||||||||||
Cleveland A. Christophe | X | Chair | X | |||||||||||||||||
David E. Flitman | X | |||||||||||||||||||
W. Bradley Hayes | X | Chair | ||||||||||||||||||
Brett N. Milgrim | X | X | ||||||||||||||||||
James OLeary | X | X | ||||||||||||||||||
Floyd F. Sherman | X | |||||||||||||||||||
Craig A. Steinke | X | X | Chair |
The mission of the Board is to provide strategic guidance to
the Corporations management, to monitor the performance and ethical behavior of the Corporations management, and to maximize the long-term financial return to the Corporations stockholders, while considering and appropriately
balancing the interests of other stakeholders and constituencies. The Board currently consists of 12 directors, but will be reduced to 10 directors upon election of the director nominees at the annual meeting as described above.
The Board of Directors is comprised of one management director,
Mr. Flitman (who is the Corporations current President and CEO), Mr. Sherman (who is the Corporations former CEO and was an employee of the Corporation until March 31, 2019), and ten
non-management
directors. As part of its annual evaluation of director independence, the Board examined, among other things, whether any transactions or relationships exist currently, or existed during the
past three years, between each independent director and the Corporation or its subsidiaries or independent registered public accounting firm (the auditors). If such transactions or relationships exist, the Board reviews the nature of
those transactions or relationships, including under the relevant New York Stock Exchange Listing Standards (the NYSE Standards) and SEC standards, to determine whether those transactions or relationships would impair such
directors independence. The Board also examined whether there are, or have been within the past year, any transactions or relationships between each independent director and members of the senior management of Builders FirstSource or its
affiliates. As a result of this evaluation, the Board affirmatively determined that each of Messrs. Levy, Agroskin, Alexander, Bullock, Christophe, Hayes, Milgrim, OLeary, and Steinke, and director nominee Dirkson R. Charles, is independent
under those criteria.
In addition, our Board of Directors affirmatively determined that all the members of the Compensation Committee and all the members of the
Audit Committee except Ms. Boydston meet the additional independence requirements of the SEC and NYSE Standards to audit and compensation committee members. Pursuant to the NYSE Standards, Ms. Boydston may remain on the Audit Committee
until July 19, 2022. As a result, the Compensation Committee and the Nominating and Corporate Governance Committee are each comprised solely of independent directors, and the Audit Committee is in compliance with the independence requirements
of the SEC and the NYSE Standards.
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Builders FirstSource,
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| 2022 Proxy Statement
Information Regarding the Board and its Committees
Each year, the independent directors meet in regularly scheduled executive sessions outside the
presence of management representatives. Interested parties, including stockholders, may communicate with the Chairman or the independent directors as a group through the process described in this Proxy Statement under the heading Policy on
Stockholder-Director Communications.
In 2021, our Board of Directors met ten times, our Audit Committee met eight times, our Compensation Committee met three times, and our Nominating and Corporate
Governance Committee met three times, including regularly scheduled and special meetings. During 2021, each of the Corporations incumbent directors attended at least 75% of the combined meetings of the Board and any committee on which such
director served during his or her term as a director. Pursuant to the Builders FirstSource, Inc. Corporate Governance Guidelines (available on the Governance section of our website), all directors are strongly encouraged to attend the annual
meeting. Any director who is unable to attend an annual meeting of stockholders is expected to notify the Chairman of the Board in advance of such meeting. In 2021, ten members of the Board were available at our annual meeting by conference call.
Board Leadership Structure and Role in Risk Oversight
The Board is led by the Chairman of the Board, Paul Levy.
Neither David Flitman, the only employee director, nor Floyd Sherman, who was an employee of the Corporation until March 31, 2019, has any formal leadership role with the Board. Mr. Levy takes a leading role in establishing the timing,
agenda, and procedure of Board meetings. However, each of the directors actively participates in guiding the actions of the Board. The Board has determined that this leadership structure is appropriate and effective due to the Boards size, the
working relationship that has developed between the directors as a result of their length of service on the Board, and the significant experience that the members of the Board have as directors and members of senior management with other companies.
The Board reviews and guides the Corporation in the following areas, among others:
| Safety, including COVID-19 |
| Regulatory and legislative developments | |||
| Environmental, social and governance matters |
| Cybersecurity and data privacy | |||
| Business strategy and policy, including industry and economic developments |
| Human capital management and diversity and inclusion | |||
| Operations and system integrity |
| Annual budget, including capital investment plan | |||
| Litigation and other legal matters |
| Integration |
The Corporations Board of Directors recognizes that, although
day-to-day
risk management is primarily the responsibility of the Corporations management team, the Board plays a critical role in the oversight of risk
management. In that light, the Board is active, as a whole and also at the committee level, in reviewing managements assessment of the major risks facing the Corporation and managements processes for monitoring and controlling these
risks. The Board regularly receives information from senior management regarding the Corporations financial results, credit, liquidity, operations, and other matters, as well as reports from the Corporations Audit Committee and
Compensation Committee. During its review of such information, the Board discusses and analyzes risks associated with each area, as well as risks associated with new business ventures and those relating to the Corporations executive
compensation plans and arrangements. The Board assumes ultimate responsibility for ensuring that the Corporations management adequately assesses the risks facing the Corporation and appropriately manages those risks.
Builders
FirstSource, Inc.
| 2022 Proxy Statement
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Information Regarding the Board and its Committees
The Audit Committee is specifically responsible for overseeing and monitoring the quality and
integrity of the Corporations financial reports and other financial information provided to its stockholders. This includes reviewing the results of managements risk assessment and compliance with management policies as they relate to
financial reporting. The Audit Committee also monitors the Corporations compliance with legal and regulatory requirements and the risks associated therewith. On a regular basis, the Audit Committee reviews with senior management
significant areas of risk exposure, including financial reporting controls, operational risks, pending litigation, employee issues, cybersecurity, disaster recovery planning, and issues arising from complaints to the Corporations hotline and
other risk detection mechanisms.
The Board and the Audit Committee take an active role in reviewing the Corporations cybersecurity risk and actions to reduce
or mitigate it. The Corporations Chief Information Security Officer (the CISO) and Chief Information Officer (the CIO), and the Chief Financial Officer, continuously monitor internal and external cybersecurity
threats and review and revise the Corporations cybersecurity defenses on an ongoing basis. The CISO and CIO prepare reports on cybersecurity metrics for the Audit Committee on a regular basis. The Chief Financial Officer and CIO present those
reports to the Audit Committee and address any questions and concerns raised by the Audit Committee. At least annually, the Audit Committee meets with the CIO and CISO in person to discuss cybersecurity in greater detail. The Audit Committee reports
to the Board regarding cybersecurity matters, and the Board addresses cybersecurity issues either directly with management or through the Audit Committee.
The
Compensation Committee reviewed with management the design and operation of our compensation programs for all employees, including executive officers, for the purpose of determining whether such programs might encourage inappropriate risk-taking
that could have a material adverse effect on the Corporation. After conducting its evaluation, the Compensation Committee concluded that the Corporations compensation programs do not encourage employees to take risks that are reasonably likely
to have a material adverse effect on the Corporation.
The Audit Committee is composed of four directors, of which Messrs. Hayes, Alexander, and Steinke are independent (as that term is defined by the NYSE Standards
and SEC regulations). Mr. Hayes serves as the Chair of the Audit Committee. The Board of Directors affirmatively determined that all Audit Committee members are financially literate as defined by the NYSE Standards. All members of the Audit
Committee were also designated by the Board as audit committee financial experts under the SECs guidelines. The Board further determined that Messrs. Hayes, Alexander, and Steinke meet the independence standards of both the
SEC regulations and the NYSE Standards for audit committee members. Although Ms. Boydston does not meet the independence requirements of the NYSE Standards, she can remain on the Audit Committee until July 19, 2022, the
one-year
anniversary of the Companys listing on the NYSE, at which time she will no longer serve on the Audit Committee. A copy of the Audit Committee charter is available on the Governance section of our
website at www.bldr.com. The Audit Committee is a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the Exchange Act).
The primary function of the Audit Committee is to assist the Board of Directors of the Corporation in fulfilling its oversight responsibilities relating to (i) the
quality and integrity of the Corporations financial reports and other financial information provided by the Corporation to its stockholders, the public, and others, (ii) the Corporations compliance with legal and regulatory
requirements, (iii) the auditors qualifications, independence, performance, and compensation, and (iv) the performance of the Corporations internal audit function, including its internal control systems. The Audit
Committees functions include preparation of the audit committee report included in this Proxy Statement and the review of material related party transactions. The Audit Committee is also annually required to evaluate its performance and review
and assess the adequacy of its charter.
The Compensation Committee is composed of four independent directors, Messrs. Christophe, Agroskin, Milgrim, and OLeary. Mr. Christophe serves as the
Chair of the Compensation Committee. A copy of the Compensation Committee charter is available on the Governance section of our website at www.bldr.com.
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Builders FirstSource,
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| 2022 Proxy Statement
Information Regarding the Board and its Committees
The Compensation Committee is charged with (i) annually reviewing and recommending to the
Board, for the Boards approval, all Corporation goals and objectives relevant to the Chief Executive Officers compensation, (ii) annually evaluating the Chief Executive Officers performance in light of the Corporations
goals and objectives, (iii) annually reviewing and recommending to the Board for its approval the Chief Executive Officers base salary, incentive compensation levels, and perquisites and other personal benefits based on the Compensation
Committees evaluation of the Chief Executive Officers performance relative to the Corporations goals and objectives, (iv) annually reviewing, evaluating, and recommending to the Board for its approval the base salary level,
incentive compensation levels, and perquisites and other personal benefits of the other executive officers of the Corporation, (v) reviewing and making recommendations to the Board regarding any employment, severance, or termination
arrangements to be made with any executive officer of the Corporation, (vi) making recommendations to the Board with respect to awards under the Corporations incentive compensation plans and equity-based compensation plans,
(vii) making regular reports to the Board concerning the activities of the Compensation Committee, (viii) performing an annual performance evaluation of the Compensation Committee, and (ix) performing other activities as the
Compensation Committee or Board may deem appropriate. The Compensation Committee may delegate authority to subcommittees when appropriate. Information regarding the role of the Compensation Committee and its processes and procedures for considering
and determining executive compensation is set forth in the Compensation Discussion and Analysis section later in this Proxy Statement.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is composed of three independent directors, Messrs. Steinke, Bullock, and Christophe. Mr. Steinke serves as the
Chair of the Committee. A copy of the Nominating and Corporate Governance Committee charter is available on the Governance section of our website at www.bldr.com.
The purpose of the Nominating and Corporate Governance Committee is to (i) identify and evaluate individuals qualified to become Board members, consistent with
criteria approved by the Board, (ii) recommend to the Board the persons to be nominated for election as directors at any meeting of stockholders and the persons to be elected by the Board to fill any vacancies on the Board, (iii) recommend
to the Board the directors to be appointed to each committee of the Board, (iv) evaluate and make recommendations to the Board regarding (a) the eligibility criteria for receipt of compensation as a director and (b) the appropriate
compensation to be paid to eligible members of the Board and to members of Board committees, (v) assist the Board with general corporate governance issues, (vi) assist the Board and its committees with their internal governance issues, and
(vii) provide oversight of managements efforts on issues related to corporate social responsibility and sustainability.
The Nominating and Corporate
Governance Committee is charged with identifying potential nominees for director and considers a wide range of criteria, including skills, expertise, integrity, character, judgment, age, independence, corporate experience, length of service,
diversity of background and experience, including with respect to race, gender and ethnicity, conflicts of interest and commitments, and other qualities which the Nominating and Corporate Governance Committee believes enhances the Boards
ability to manage and direct, in an effective manner, the affairs and business of the Corporation. The Nominating and Corporate Governance Committee may, from time to time, engage firms that specialize in identifying director candidates. In
addition, the Nominating and Corporate Governance will also consider candidates recommended by stockholders.
Builders
FirstSource, Inc.
| 2022 Proxy Statement
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Information Regarding the Board and its Committees
Stock Ownership Guidelines for Executives and Directors
Under the Corporations Stock Ownership Guidelines for Executives and Directors, each executive officer of the Corporation (who has not reached the normal
retirement age of 67) and director of the Corporation is expected to acquire (within the later of five years after the adoption of the policy or appointment to office) and continue to hold shares of the Corporations Common Stock having an
aggregate market value that equals or exceeds the requirement set forth below. Unvested restricted stock units will count toward the ownership requirement. Until the required level is met, a director or executive officer is required to retain fifty
percent of the net shares of common stock received from the Corporation as compensation. Once the requirements are met, future sales are only permitted to the extent that such director or executive officer shall continue to meet the requirements
immediately following such sale. Once the target beneficial ownership level is achieved, that director or executive officer will not be required to acquire any additional shares in the event the stock price decreases, provided the underlying number
of shares remain held by such director or executive officer.
| Holding Requirement | |
| 5 times annual base salary | |
| 3 times annual base salary | |
| 5 times annual cash retainer* |
* Excluding cash retainers for serving as the chairperson of the Board or any of its committees or for serving on any of the committees.
The Nominating and Corporate Governance Committee administers compliance with this policy and has the discretion to enforce these guidelines on a
case-by-case
basis. An annual evaluation will be performed on April 1 of each year. As of April 1, 2022, all directors and executive officers were either in
compliance with the policy or subject to the grace period for reaching the required totals.
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Builders FirstSource,
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| 2022 Proxy Statement
Report of the Audit Committee
The primary responsibility of the Audit Committee is to assist the Board of Directors of the Corporation (the Board) in fulfilling its oversight
responsibilities relating to (i) the quality and integrity of the financial reporting process, (ii) compliance with legal and regulatory requirements, (iii) the performance of the Corporations internal audit function, and
(iv) the appointment of the independent registered public accounting firm. Management is responsible for the financial statements and the financial reporting process, including the implementation and maintenance of effective internal controls.
The independent registered public accounting firm, PricewaterhouseCoopers LLP (PwC), is responsible for expressing an opinion on the Corporations financial statements and its internal control over financial reporting. The Board has
concluded that (i) Messrs. Hayes, Alexander, and Steinke satisfy the applicable independence requirements set forth in the New York Stock Exchange Listing Standards (the NYSE Standards), and (ii) each of the Audit Committee
members satisfies the applicable independence requirements set forth under SEC Rule
10A-3,
and meets the financial literacy requirements for audit committee membership under the NYSE Standards and the rules
and regulations of the SEC. The Board has also designated the chair of the Audit Committee, W. Bradley Hayes, and committee members Mark A. Alexander, Cory J. Boydston, and Craig A. Steinke as Audit Committee financial experts under the
SECs guidelines. The Audit Committee has reviewed and discussed with management and PwC the Corporations audited financial statements as of and for the year ended December 31, 2021.
During 2021, the Audit Committee conducted eight meetings. The Audit Committee chair and other members of the Audit Committee reviewed and commented on the
Corporations earnings news release and interim financial statements contained in the Corporations quarterly report on SEC Form
10-Q
during each quarter, and met and discussed the Corporations
draft Annual Report on SEC Form
10-K
with the chief financial officer, general counsel, and PwC prior to the reports filing and public release. The Audit Committee considers various relevant factors
including qualifications, performance, and independence when appointing the audit firm and evaluating the audit firm annually. The Audit Committee is also involved in the selection process of the lead engagement partner when rotation is required
after five years under the SECs audit partner rotation rules or for other reasons. Due to rotational requirements, a new lead engagement partner was selected effective for the 2022 fiscal year. In addition, the Audit Committee reviewed and
ratified its Charter which is available within the Governance section of the Corporations website.
The Audit Committee discussed with PwC the matters
required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. Both the vice president of internal audit and PwC have complete and direct access to the Audit Committee, and the Audit Committee
has the same access to the vice president of internal audit and PwC. The Audit Committee met with the vice president of internal audit and PwC, with and without management present, to discuss the results of their examinations, their evaluations of
the Corporations internal controls, and the overall quality of the Corporations financial reporting process. The Audit Committee met separately with the Corporations chief financial officer and general counsel. The Audit Committee
discussed with management the status of pending litigation, taxation, and other areas of oversight relating to financial reporting and audit processes as the Committee determined to be appropriate. The Audit Committee also reviewed the
Companys Enterprise Risk Management (ERM) program, including, among other topics, specific information security risks. The Audit Committee recommended that many of these topics be addressed in presentations to the Board. The Audit Committee
has discussed the overall scope of the Corporations internal audits and approved the annual internal audit plan. The Audit Committee reports the results of these discussions to the Board on a quarterly basis.
The Audit Committee received and reviewed the written communications from PwC as required by applicable requirements of the Public Company Accounting Oversight Board
for independent auditor communications with audit committees concerning independence, and has discussed with PwC its independence. The Audit Committee has adopted procedures for
pre-approving
all audit,
audit-related, and
non-audit
services provided by PwC, which included reviewing and approving estimated fees for audit, audit-related, and permitted
non-audit
services.
The Audit Committee considers the compatibility of all services provided by PwC with its independence and has concluded the provision of the
non-audit
services is compatible with maintaining PwCs
independence. During the fiscal year ended December 31, 2021, PwC was employed principally to perform the annual audit and to render tax services. The Audit Committee reviewed the audit engagement letter and approved all fees paid to PwC for
audit, audit-related, and
non-audit
services.
Builders
FirstSource, Inc.
| 2022 Proxy Statement
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Report of the Audit Committee
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to
the Board that the audited financial statements be included in the Corporations Annual Report on SEC Form
10-K
for the year ended December 31, 2021, as filed with the SEC. The Audit Committee
appointed PwC as the Corporations independent registered public accounting firm for fiscal 2022, subject to stockholder ratification.
Submitted by the Audit Committee:
W. Bradley Hayes (Chair)
Mark A. Alexander
Cory J. Boydston
Craig A. Steinke
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Builders FirstSource,
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| 2022 Proxy Statement
Corporate Governance
Builders FirstSource is committed to conducting its business in a way that reflects best practices, as well as the highest standards of legal and ethical conduct. To
that end, the Board of Directors has approved a comprehensive system of corporate governance documents and policies. These documents and policies are reviewed periodically and updated as necessary to reflect changes in regulatory requirements and
evolving governing practices. These policies em
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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