Proxy Statements That Mention ERI Data
In general, our compensation committee has determined to save our company the cost of engaging an independent compensation consultant, unless factors or circumstances change significantly. In addition, in connection with setting executive compensation levels for fiscal 2022, our compensation committee reviewed the following external reports and surveys: (i) Economic Research Institute, Executive Compensation Assessor; ii) FW Cook 2020 Aggregate Share-Based Compensation Report; (iii) FW Cook 2020 Top 250 Report; (iv) FW Cook 2019 Annual Incentive Plan Report; (v) Meridian Compensation Partners 2020 Executive Compensation Trends and Developments Survey; and (vi) ClearBridge Compensation Group 2019 Annual & Long Term Incentive Plan Design Report. In setting executive compensation for fiscal years 2021 and 2022, our compensation committee took into account its own internal reports on recent trends in executive compensation at public companies, including pay-for-performance, say-on-pay, merit increases, annual incentives, long-term incentives and perquisites.
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In making decisions regarding elements and amounts of compensation, the Committee considers the compensation paid to executive officers at similar levels and responsibilities. These are public companies in our geographical area with revenues of between $250 million and $1 billion and with a focus on manufacturing or technology.
The following list sets forth the companies comprising our peer group list: Apogee Enterprises, Inc.; Hawkins, Inc.; Badger Meter, Inc.; iMedia Brands, Inc.; Bio-Techne Corporation; Tennant Company; Winnebago Industries, Inc.; Lindsay Corporation; Raven Industries, Inc.; Enerpac Tool Group Corp.; Graco, Inc.
The Committee also considers compensation data from the Economic Research Institute, which takes into consideration company size, geography, base salary and variable cash compensation but excludes equity incentive compensation information.
The Committee believes that its executive compensation is sufficiently conservative, as well as appropriately competitive, so as not to require an external consultant opinion.
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In identifying the peer group of surveyed companies, the Committee considered market information available through both Equilar, Inc., a leading executive compensation data solutions company, and the Economic Research Institute, an industry- and region-specific compensation database, as reference points and to assemble market data on companies having similar industrial characteristics and revenues to ours. The Committee, together with management and Lockton, review the gathered data for each of our NEO and other key employee positions and adjusted that data for the scope of each employee’s responsibilities at Lifeway as compared to equivalent responsibilities of positions within companies included in the survey data.
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In establishing and evaluating fiscal 2021 compensation for our NEOs, the Company used market data from the Economic Research Institute's Executive Compensation Assessor. The Economic Research Institute data reflected compensation levels at companies of similar size engaged in aircraft parts manufacturing and applied geographic pay differentials to reflect the location of our operations. The Compensation Committee did not engage a compensation consultant during the 2021 fiscal year.
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For 2020, we increased the Named Executive Officers’ base salaries in order to, among other things, maintain their compensation at a competitive level. The committee’s independent compensation consultant provided an updated study to the committee in 2019 which included the compensation levels of each of the Named Executive Officers and those from the previously identified peer group. The independent compensation consultant also examined with the committee the pay practices from other Pennsylvania, New York, New Jersey, and Ohio based financial institutions with assets generally between $1 billion and $2 billon, with data from the Economic Research Institute used to normalize the information for Johnstown, Pennsylvania. The compensation/human resources committee also considered a number of factors in setting these new levels, including an annual review of peer compensation and the overall performance of the company.
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In 2020, Aon was also engaged to perform executive and non-employee director pay analysis based on the Company's new peer group. In addition, in fiscal year 2020, the Human Resources staff purchased subscriptions to financial and executive compensation databases to obtain market data, including a subscription to the Economic Research Institute ("ERI"), a leading third-party compensation data provider. Utilizing the data provided by ERI, the Human Resources staff reviewed the compensation of executives of peer group companies based on a number of criteria including, but not limited to: geography, revenue, growth rate, types of products, and adjusted EBITDA. During fiscal year 2020, the scope of ERI’s services to the Company was limited to providing access to its database to the Human Resources staff. The Human Resources staff also frequently monitors public sources known within the industry to keep up to date on market trends.
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The Compensation Committee assessed the independence of Willis Towers Watson pursuant to applicable SEC and Nasdaq rules and concluded that Willis Towers Watson’s work for the Compensation Committee does not raise any conflict of interest.
For 2020, we also subscribed to an on-line compensation service available through the Economic Research Institute (“ERI”). ERI compiles a robust database on job competencies, cost-of-living increases and executive compensation surveys. These three databases are used to help gauge the competitiveness of our 2020 salaries and executive compensation practices.
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The data used by L&A in its survey of compensation, which we refer to as the “compensation study,” was weighted so that 50% was from published surveys from Economic Research Institute, Mercer, Pay Factors, Kenexa and WorldatWork and 50% was from compensation disclosures included in the proxy statements of members of our peer group. At the beginning of fiscal 2021 (spring 2020), L&A reviewed the Company’s current peer group for appropriateness and provided the Compensation Committee with recommendations for any additional peers to be included. L&A analyzed the Company’s peer group and potential modifications based on (1) other similar companies within similar industries, (2) revenue, (3) asset size, (4) market capitalization, and (5) enterprise value.
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In reviewing the executive compensation peer group for 2020, the compensation committee (1) removed Enbridge Energy Partners, L.P. because of its acquisition by the parent company, (2) removed Enterprise Products Partners, L.P. because of its significantly larger financial indicators, (3) added Cheniere Energy, Inc. which fell within the parameters described above and (4) replaced EnLink Midstream Partners, L.P. with EnLink Midstream, LLC. The committee maintained the remainder of the companies from 2020 for the 2021 executive compensation peer group.
Market competitive pay for each NEO was determined by evaluating base salaries and target incentive awards from our peer group and targeting the market median. When this information was limited, we blended peer group data and third-party survey information from Aon, Economic Research Institute, L&A, Mercer and TowersWatson.
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Court Opinions
United States Tax Court: Eric G. Suder, Et Al., v. Commissioner of Internal Revenue (10/01/2014)
…Dr. Hafiz compared Mr. Suder to CEOs of companies with revenues in the $40 million range and an SIC Code of 3661, Telephone and Telegraph Apparatus Industry, in the Economic Research Institute (ERI) database... Mr. Longnecker compared Mr. Suder with CEOs in six different databases: (1) the ERI database of companies with an SIC code of 3660, Hi-Tech & Communications Equipment, in the United States; (2) the ERI database of companies with an SIC code of 3660 in Dallas, Texas…
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United States Tax Court: Aries Communications Inc. & Subs., v. Commissioner of Internal Revenue (04/10/2013)
...considered executive officer compensation and broadcaster gross income and profitability information from the National Association of Broadcasters (NAB) for the position of general manager and information from the Economic Research Institute...
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