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:

 

Great Lakes Dredge & Dock Corporation

(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):

 

 

---

 

 

NOTICE OF 2020 ANNUAL MEETING OF STOCKHOLDERS

 

---

 

 

 

 

March 24, 2020

 

Dear Fellow Stockholder:

Our Board of Directors joins me in extending to you a cordial invitation to attend the 2020 Annual Meeting of Stockholders of Great Lakes Dredge & Dock Corporation. The meeting will be held on Wednesday, May 6, 2020, beginning at 1:00 P.M. Central Time at the Le Méridien Hotel Chicago – Oak Brook Center, 2100 Spring Road, Grand Salon I, Oak Brook, Illinois 60523. Please refer to the accompanying Notice of 2020 Annual Meeting of Stockholders and Proxy Statement for detailed information on the meeting and each of the proposals to be considered and acted upon at the meeting.

In accordance with U.S. Securities and Exchange Commission’s rules, we have elected to deliver our proxy materials over the internet to most stockholders. This allows stockholders to receive information on a more timely basis, while lowering printing and mailing costs and reducing the environmental impact of the 2020 Annual Meeting of Stockholders.

YOUR VOTE IS IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. On behalf of the Board of Directors, I urge you to vote your shares by proxy as soon as possible to ensure your vote is recorded at the 2020 Annual Meeting of Stockholders. You may vote in person at the 2020 Annual Meeting of Stockholders, by telephone, over the internet or, if you have requested paper copies of our proxy materials by mail, by signing, dating and returning the proxy card in the envelope provided.

Our Board of Directors appreciates your continued support of Great Lakes Dredge & Dock Corporation.

Sincerely,

Lawrence R. Dickerson

Chairman of the Board of Directors

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

---

 

TABLE OF CONTENTS  

 

---

 

PROXY STATEMENT

 

 

 

 

 

GREAT LAKES DREDGE & DOCK CORPORATION

2122 York Road

Oak Brook, Illinois 60523

 

 

2020 ANNUAL MEETING OF STOCKHOLDERS

PROXY STATEMENT

 

This Proxy Statement is being furnished in connection with the solicitation of proxies by the Board of Directors of Great Lakes Dredge & Dock Corporation, a Delaware corporation, to be voted at the 2020 Annual Meeting of Stockholders, which we refer to as the “Annual Meeting,” the “2020 Annual Meeting” or the “2020 Meeting,” and any adjournment or postponement of the meeting. Throughout this Proxy Statement when the terms “Great Lakes,” the “Company,” “we,” “our,” “ours” or “us” are used, they refer to Great Lakes Dredge & Dock Corporation and its subsidiaries. We sometimes refer to our Board of Directors as the “Board.” The meeting will be held at the Le Méridien Hotel Chicago – Oak Brook Center, 2100 Spring Road, Grand Salon I, Oak Brook, Illinois 60523, on Wednesday, May 6, 2020, at 1:00 pm Central Time, for the purposes contained in the accompanying Notice of Annual Meeting of Stockholders and as set forth in this proxy statement.

On March 24, 2020, we made this Proxy Statement and form of proxy available online and mailed to our stockholders a Notice of Internet Availability (the “Notice”) containing instructions on how to access this Proxy Statement and our annual report to stockholders of record as of March 10, 2020 (the “record date”), as permitted by the U.S. Securities and Exchange Commission’s (the “SEC”) rules. We will also mail this Proxy Statement, and the materials accompanying it, to stockholders who have requested paper copies. If you would like to receive a printed copy of our proxy materials by mail, you should follow the instructions for requesting those materials included in the Notice that we mailed to you.

Important Notice: The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com. (All website addresses given in this document are for informational purposes only and are not intended to be active link or to incorporate any website information into this document).

 

 

 

As part of our precautions regarding the novel coronavirus or COVID-19, we are planning for the possibility that the Annual Meeting may be held primarily or solely by means of remote communication. If we take this step, we will announce the decision to do so in advance, and we will issue a press release that includes details on how to participate, which will be available at https://investor.gldd.com. The press release will also be filed with the SEC as additional soliciting material. If you are planning to attend the Annual Meeting, please check our website prior to the meeting date. As always, you are encouraged to vote your shares prior to the Annual Meeting.

 

 

---

 

2020 PROXY SUMMARY

This summary highlights information contained in this proxy statement. This summary does not contain all of the information you should consider, and you should carefully read the entire Proxy Statement before voting.

ANNUAL MEETING OF STOCKHOLDERS

AGENDA ITEMS AND BOARD RECOMMENDATIONS

 

ELECTION OF DIRECTORS

The nominees for director for a three-year term will be elected provided that they receive the affirmative vote of a plurality of shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. This means that, if a quorum is present, the two persons receiving the greatest numbers of votes at the Annual Meeting will be elected to serve as directors. Withholding authority to vote for a director nominee will not affect the outcome of the election of directors. Broker non-votes will have no effect on the election of directors.

 

ADVISORY VOTE TO RATIFY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deloitte & Touche LLP will be ratified as our independent registered public accounting firm for the year ending December 31, 2020, provided the proposal receives the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will be treated as being present and entitled to vote on the matter and, therefore, will have the effect of votes against the proposal.

ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS

 

2 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

2020 PROXY SUMMARY

The advisory resolution to approve the compensation of our named executive officers will be approved, provided the proposal receives the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will be treated as being present and entitled to vote on the matter and, therefore, will have the effect of votes against the proposed resolution. A broker non-vote is treated as not being entitled to vote on the matter and, therefore, is not counted for purposes of determining whether the proposal has been approved.

CORPORATE GOVERNANCE HIGHLIGHTS

Commitment to Board Refreshment. In January 2020, Dr. Dorward-King joined the Board as an Independent Director. More than half of our directors have joined the Board since 2016.

Stockholder Engagement Efforts. The Board views stockholder outreach as an area of priority. In fiscal 2019, the Board oversaw the enhancement of the Company’s engagement program, including outreach to over 50% of our stockholders and a specific focus on executive compensation and environmental, social and governance matters.

Strong Independent Board. The Board understands that maintaining qualified independent and non-management directors on the Board is an integral part of effective corporate governance. The Board believes its current, refreshed leadership strikes an appropriate balance between independent directors and directors affiliated with the Company. This allows the Board to represent effectively the best interests of the Company and its stockholders.

Continually Updating Key Governance Policies. Annually, our Board reviews the charters of each of its standing committees. During 2019, our Board amended all three of its standing committee charters to promote corporate governance best practices.

CORPORATE GOVERNANCE PRACTICES

EXECUTIVE COMPENSATION HIGHLIGHTS

Consistent with our pay for performance philosophy, the majority of our named executive officers’ target total compensation for 2019 (i.e. the sum of annualized base salary, target short-term incentive award and target long-term incentive awards, excluding stock-settled restricted stock units granted under the Special Incentive Program described below) is equity-based or “at-risk,” meaning it is only earned if specific financial goals are achieved. For 2020, the percentage of at-risk compensation will increase from 42% to 50% for our CEO and 40% to 43% for the other named executive officers.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 3

---

2020 PROXY SUMMARY

EXECUTIVE COMPENSATION PRACTICES

Our executive compensation program is designed to support our financial and strategic goals, align executive pay with stockholder value creation, and discourage unnecessary and excessive risk-taking. Our Compensation Committee regularly reviews our executive compensation program to incorporate commonly viewed best practices as it deems appropriate, examples of which include:

BOARD OF DIRECTORS

 

 

The above chart shows the Committee composition as of the record date.

 

4 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

 

CORPORATE GOVERNANCE

governance framework

Our Company is committed to the values of effective corporate governance and high ethical standards. These values are important to driving long-term performance, and the Board reevaluates our policies on an ongoing basis to ensure they sufficiently meet the Company’s needs. We believe our key corporate governance and ethics policies enable us to manage our business in accordance with the highest standards of business practice and in the best interests of our stockholders.

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 5

---

CORPORATE GOVERNANCE

The Board of Directors and its Committees

Our Board has three standing committees:  the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each committee has a written charter that is reviewed at least annually to reflect the activities of each of the respective committees, changes in applicable law or other relevant considerations, with any changes approved by the full Board as recommended by each individual committee. Each committee is composed entirely of directors deemed to be, in the judgment of the Board, independent in accordance within the meaning of the NASDAQ Marketplace Rules. Our Board met seven (7) times in 2019. Each director attended at least 75% of the total number of meetings of the Board and the Board committees of which he or she was a member in 2019. While we do not have a formal policy requiring members of the Board to attend the Annual Meeting, we encourage all directors to attend. All of our directors then in office except one attended the Annual Meeting in 2019.

6 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

CORPORATE GOVERNANCE

The following lists the members, number of meetings held and primary functions with respect to each committee:

 

 

 

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 7

---

CORPORATE GOVERNANCE

 

 

Leadership Structure of the Board of Directors

The Board is led by an independent Board Chair. Pursuant to the Company’s Bylaws, the Board is permitted to either separate or combine the positions of Chief Executive Officer and Board Chair as it deems appropriate from time to time. We currently separate the roles of Chief Executive Officer and Board Chair in recognition of the differences between the two roles as they are presently defined. At present, the Board believes that separation of the positions of Chief Executive Officer and Board Chair improves the ability of the Board to exercise its oversight role over management, provides multiple opportunities for discussion and evaluation of management decisions and the direction of the Company and ensures a significant role for the Board’s non-management directors in the oversight and leadership of the Company.

The Board understands that maintaining qualified independent and non-management directors on the Board is an integral part of effective corporate governance. The Company continues to take active steps to refresh the Board with highly qualified and experienced directors, including by adding a new independent director, Dr. Dorward-King, in January 2020. There are presently seven directors who are independent within the meaning of the NASDAQ Marketplace Rules (Dr. Dorward-King, Ms. Shanahan and Messrs. Dickerson, Levenson, Steger, Steuert and Walsh), and one director who serves as Chief Executive Officer (Mr. Petterson). The Board also determined that Carl A. Albert, who served during a portion of fiscal year 2019, is independent within the meaning of the NASDAQ Marketplace Rules. The Board believes its current leadership structure strikes an appropriate balance between independent directors and directors affiliated with the Company, which allows the Board to effectively represent the best interests of the Company and its stockholder base.

The position of the independent Board Chair, or the Lead Director when the Chief Executive Officer is concurrently serving as the Board Chair, is intended to provide a check and balance on the role and responsibilities of the Chief

8 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

CORPORATE GOVERNANCE

 

Executive Officer. The Board believes that the independent Board Chair is a strategic role that continues to add value to the Company.

 

Governance Documents

Committee Charters

Each committee operates under a written charter, copies of which are available on our website at www.gldd.com or may be obtained by writing to our Corporate Secretary at our principal executive office.

Code of Ethics

We have a written Code of Business Conduct and Ethics (the “Code”) that applies to all members of the Board and our employees, including our principal executive officer, principal financial officer, controller and persons performing similar functions. The Code is reviewed and updated on a regular basis and the Board adopted a new version of the Code in May 2019. All of our salaried employees have reviewed and certified compliance with the Code. In addition, on an annual basis, all of our directors and salaried employees receive training on the Code. Senior management, as well as individuals with responsibility for foreign operations or purchasing, receives additional training on the Foreign Corrupt Practices Act and other international compliance topics.

Our Code can be found on our website at www.gldd.com. We will post on our website any amendments to or waivers of the Code for executive officers or directors, in accordance with applicable laws, regulations and listing standards. A copy also may be obtained by writing to our Corporate Secretary at our principal executive office.

The Board OF DIRECTORs’ Role in ENTERPRISE Risk Management

As part of our risk management process, senior management discusses and identifies major areas of risk on an ongoing basis and periodically reviews these risks with the Board. The Company’s management process is designed to enable the Board to best determine our risk management profile and oversee our risk management strategies. The Board delegated oversight of this enterprise risk management process to the Audit Committee. This process employs a framework for identifying and assessing key strategic, operational, financial and compliance risks based upon guidelines of the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company has adopted the COSO 2013 framework for internal controls and is moving towards adapting our processes to the new COSO 2017 framework, which integrates enterprise risk management with strategy and performance. The 2013 framework has allowed the Company to enhance its internal control environment, which is an integral part of enterprise risk management. The product of this process is a risk management overview that is shared with the Audit Committee. As part of the Audit Committee’s regular review of the enterprise risk management framework, the Audit Committee reviews risks relating to cybersecurity and other information technology risks, controls and procedures as well as the Company’s plans to mitigate such risks. With respect to cybersecurity risks, the Audit Committee engages regularly with the Chief Financial Officer, Information Technology management and Internal Audit to understand the internal and external cybersecurity threats to the Company’s information and technology systems.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 9

---

CORPORATE GOVERNANCE

Assessment of Risks in our Executive Compensation Program

We do not believe risks arising from our executive and broad-based compensation policies and practices are reasonably likely to have a material adverse effect on the Company or our business, nor do we believe that the executive compensation programs encourage unnecessary or excessive risk-taking.

The Compensation Committee reviews and approves corporate goals relating to our Chief Executive Officer’s compensation and approves total compensation for our senior executives. In addition, as part of our risk management process, senior management periodically identifies and discusses major areas of risk with the Board. As part of its regular reports to the Board, the Compensation Committee discusses the potential for unnecessary or excessive risk-taking. For more detail on the process by which executive compensation is set, see “Compensation Philosophy and Objectives,” page 28.

Specifically, the Board and the Compensation Committee control risks arising from executive compensation policies and practices (the “Executive Leadership Annual Incentive Program”) in part by controlling the mix of cash and long-term equity incentives. Executives’ base salaries are fixed in amount and thus do not encourage risk-taking. Annual incentives are capped for all named executive officers at 200% of target and annual incentives for all of our named executive officers are tied to overall corporate performance and/or individual objectives. The compensation provided to the executive officers in the form of long-term equity awards helps further align executives’ interests with those of the Company’s stockholders. The Compensation Committee believes that these awards do not encourage unnecessary or excessive risk-taking because the ultimate value of the awards is tied to the Company’s stock price and operating performance and because awards are staggered and subject to long-term vesting schedules. Our long-term equity awards in combination with our stock ownership requirements help ensure that executives have significant value tied to long-term stock price performance and therefore are cognizant of how short-term decisions impact the long-term health of the organization.

In addition, management, the Compensation Committee and the Board each consider current and emerging risks associated with accounting and reporting, project cost estimating, human capital management, information technology, compliance and safety. More specifically, the Compensation Committee retains subjective discretion in some instances to adjust short-term incentive formulas, which allows the Compensation Committee to review the results from the fiscal year and determine whether, despite achievement of financial goals, the intents and purposes of the Executive Leadership Annual Incentive Program were met. In doing so, the Compensation Committee may consider whether activities taken during that fiscal year comport with the Company’s strategic plan and align management objectives with stockholder interests. As a result, the incentive may be adjusted on an individual basis, independent of achievement of formulaic targets.

In addition, certain awards granted in 2019 under our long-term incentive plan are comprised of equity that vests over a three-year period subject to the executive’s continued employment. These equity awards were structured to induce our executive officers to focus on the long-term capital appreciation, health and viability of the Company rather than a short-term increase in stock price.

Finally, the Company has a Recoupment Policy, which requires certain compensation to be repaid to the Company if awarded as a result of misstated earnings. The Board will re-evaluate and, if necessary, revise the Recoupment Policy to align with governance best practices and applicable laws.

Selection of Nominees for Board of Directors

Nominating and Corporate Governance Nomination Process

The Nominating and Corporate Governance Committee is responsible for evaluating potential candidates to serve on our Board and for recommending nominees to be presented for election or reelection to the Board at our Annual Meeting. The Nominating and Corporate Governance Committee does not set specific minimum qualifications for director positions. In evaluating potential director candidates, including incumbent directors, the Nominating and Corporate Governance Committee considers the skills and characteristics possessed by each candidate in the context of the perceived needs of the Board in an effort to ensure there is a blend of skills and experience that will enhance the effectiveness of the Board.

 

In addition, whenever a new seat or a vacated seat on the Board is being filled, candidates who appear to best fit our needs are identified, and unless such individuals are well known to the Board, they are interviewed and further evaluated by the

 

 

10 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

CORPORATE GOVERNANCE

Nominating and Corporate Governance Committee. Candidates selected by the Nominating and Corporate Governance Committee are then recommended to the Board. After the Board approves a candidate, the Chair of the Nominating and Corporate Governance Committee extends an invitation to the candidate to join the Board.

When evaluating director candidates and considering incumbent directors for re-nomination to the Board, the Nominating and Corporate Governance Committee considers a variety of factors. Among the factors considered by the Nominating and Corporate Governance Committee are the following:

In identifying potential candidates for the Board, the Nominating and Corporate Governance Committee relies on recommendations from a number of possible sources, including current directors and officers. The Nominating and Corporate Governance Committee may also retain outside consultants or search firms to help identify potential candidates for membership on the Board. We request that any such firms retained by us include women and ethnically diverse candidates in the proposals they present to us. In 2019, Heidrick & Struggles Inc. (“H&S”), a third-party executive search firm, was retained to assist the Board with identification of potential candidates, with an emphasis on expanding the diversity of the existing Board. H&S recommended Dr. Dorward-King as a potential Board candidate.

Recommendation of Candidates by Stockholders

The Nominating and Corporate Governance Committee will consider stockholder recommendations for candidates for membership on the Board, provided that a complete description of such proposed nominee’s qualifications, experience and background, together with a statement signed by each proposed nominee in which he or she consents to act as such, accompanies the recommendations and provided further that any such recommendation must also be made according to the procedures, and within the same time deadlines, applicable under our Bylaws to director nominations. Such recommendations should be submitted in writing to the Corporate Secretary and should not include self-nominations. Director candidates recommended by stockholders will be evaluated using the same criteria as those applied to other director candidates.

CommunicatiNG with the Board of Directors

Stockholders and other interested parties wishing to communicate with our Board of Directors can send communications to one or more members of the Board by writing to the Board or to specific directors (including independent directors or committee chairs) or to a group of directors at the following address:

Great Lakes Dredge & Dock Corporation Board of Directors

c/o Corporate Secretary

Great Lakes Dredge & Dock Corporation

2122 York Road

Oak Brook, Illinois 60523

Any such communication will be promptly distributed by the Corporate Secretary to the individual director or directors named in the communication or to all directors if the communication is addressed to the entire Board of Directors. Every effort has been made to ensure that the views of stockholders are heard by the Board of Directors or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner.

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 11

---

 

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

BOARD COMPOSITION

Our Board is currently composed of eight members divided into three classes. The members of each class are elected to serve three-year terms with the term of office of each class ending in successive years. Dr. Dorward-King and Messrs. Levenson and Walsh are members of the class whose term expires at the 2020 Annual Meeting. At the 2020 Annual Meeting, this class size will be reduced to two and the size of the Board will be reduced from eight to seven, as Mr. Walsh will not be standing for re-election at the Annual Meeting. Mr. Petterson and Ms. Shanahan are members of the class whose terms expire at the 2021 Annual Meeting of Stockholders. Messrs. Dickerson, Steger and Steuert are members of the class whose term expires at the 2022 Annual Meeting of Stockholders.

The Board of Directors has nominated Dr. Dorward-King and Mr. Levenson for election at the Annual Meeting to the Board of Directors for three-year terms expiring at the 2023 Annual Meeting of Stockholders. Each director will hold office until his or her respective successor is elected and qualified or until his or her earlier death, disqualification, resignation or removal. Dr. Dorward-King and Mr. Levenson have each indicated a willingness to serve.

The persons named as proxies on the proxy card will vote the proxies received by them for the election of Dr. Dorward-King and Mr. Levenson, unless otherwise directed. In the event that a nominee becomes unavailable for election at the Annual Meeting, the persons named as proxies in the enclosed proxy card may vote for a substitute nominee at their discretion as recommended by the Board.

Vote Required and Recommendation

The nominees for director will be elected for three-year terms, provided that they receive a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. This means that, if a quorum is present, the two persons receiving the greatest number of votes at the Annual Meeting will be elected to serve as directors. As a result, withholding authority to vote for a director nominee and broker non-votes with respect to the election of directors will not affect the outcome of the election of directors. Proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement, which is two.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE FOLLOWING DIRECTORS TO THE GREAT LAKES BOARD:

 

 

 

12 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

Director Qualifications

We believe that our director nominees, individually and together with our incumbent directors as a whole, possess the requisite experience and skills necessary to carry out their duties and to serve the best interests of the Company and its stockholders.

 

The following paragraphs provide information as of the record date, including a brief biography with experience and a description of certain key qualifications and skills, about each of our director nominees and incumbent directors.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 13

---

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

director Nominees for Election at the 2020 Annual Meeting:  

 

DR. ELAINE DORWARD-KING most recently was the Executive Vice President, Sustainability and External Relations at Newmont Mining Corporation (“Newmont”) (NYSE:NEM), the world’s leading gold mining company. Dr. Dorward-King has spent the majority of her career in mining and joined Newmont in 2013.  Prior to joining Newmont, Dr. Dorward-King spent 21 years with Rio Tinto, one of the world’s largest diversified producers of metals and minerals, in general management and Environmental Health and Safety leadership roles. Dr. Dorward-King has over 25 years of leadership experience in creating and implementing sustainable development, safety, health and environmental strategy as well as programs in mining, chemical and engineering consulting sectors.  Currently Dr. Dorward-King serves on the Board of Directors of Kenmare Resources plc (LSE:KMR, ISE:KMR), one of the world’s largest producers of mineral sands products, and the Board of Directors of Bond Resources (CSE:BJB), a mineral exploration company based in Canada.

Dr. Dorward-King holds a Bachelor’s Degree from Maryville College and received a PhD in Analytical Chemistry from Colorado State University.

Key Qualifications and Skills: Dr. Dorward-King has 25 years of management and leadership in capital-intensive industries. Dr. Dorward-King has extensive experience in risk management, health, safety and environmental programs and sustainability strategies. Dr. Dorward-King also has international operations experience.  

 

RYAN J. LEVENSON is currently Principal and Portfolio Manager of Privet Fund Management LLC (“Privet Fund”). Mr. Levenson currently serves on the Board of Directors of Hardinge, Inc. (NASDAQ:HDNG). Previously, Mr. Levenson served as a director of AgJunction, Inc. (TSX: AJX) from 2016 – 2019, Frequency Electronics, Inc. (NASDAQ:FEIM) from 2016 – 2017, Cicero, Inc. (OTC:CICN) from 2015 – 2017, RELM Wireless, Inc. (NYSE:RWC) from 2013 – 2014, where he served as a member of the Audit Committee, and as a director and member of the Compensation, Organization and Corporate Governance Committee of Material Sciences Corp. (NASDAQ:MASC) from May 2013 until its sale in March 2014. Mr. Levenson also served as a member of the Board of Directors and Compensation and Audit Committees of The Middleby Corporation (NASDAQ: MIDD) from 2006 – 2012. Prior to founding Privet Fund in 2007, Mr. Levenson served as Vice President of Business Development at MSI, a privately held building products distributor and construction services company. Prior to MSI, Mr. Levenson served as a financial analyst for Cramer Rosenthal McGlynn’s long/short equity hedge fund after working at SAC Capital Advisors LLC in a similar capacity. Mr. Levenson began his career as an analyst on the sell side in small cap research for CJS Securities. Mr. Levenson earned a Bachelor of Arts from Vanderbilt University.

Key Qualifications and Skills:  Mr. Levenson has extensive background in private equity, investment and asset management, including prior service on several public boards, membership on various Audit, Compensation and Corporate Governance Committees and experience as a principal, portfolio manager and vice president of business development.

 

 

14 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

OTHER directorS:

 

LAWRENCE R. DICKERSON spent 34 years at Diamond Offshore Drilling, Inc. (NYSE:DO), a deepwater oil and gas drilling contractor, where he served as a member of the Board of Directors from 1998, and as President and Chief Executive Officer from 2008 until his retirement in 2014. Prior to his service as President and Chief Executive Officer, Mr. Dickerson served as Chief Financial Officer, during which time he helped take the company public, and as Chief Operating Officer, during which time he gained substantial operating and commercial experience. In addition to being a seasoned executive, Mr. Dickerson has significant board experience. He has been a member of the Board of Directors on the boards of Murphy Oil Corporation (NYSE:MUR), an oil and gas exploration and production company, and Oil States International (NYSE:OIS), an oilfield equipment services company, since 2014. Mr. Dickerson is a member of the Audit and Nominating and Governance Committees at Murphy Oil Corporation and is Chair of the Compensation Committee and a former member of the Audit Committee at Oil States International. Mr. Dickerson was Non-Executive Chairman of the Board of Directors of Hercules Offshore, Inc. (NASDAQ:HERO), an offshore drilling company, from 2015 – 2016, and he also served from 2008 – 2012 on the Board of Directors of Global Industries, Ltd. (NASDAQ:GLBL), a subsea construction company sold to Technip in 2011. Mr. Dickerson received a B.B.A. from the University of Texas.

Key Qualifications and Skills:  Mr. Dickerson has experience as a President, Chief Executive Officer, Chief Financial Officer and Chief Operating Officer with prior service on several public boards, including as Chair of another publicly traded company and memberships on various Audit, Nominating and Governance and Compensation Committees. Mr. Dickerson has extensive operating and commercial experience in capital-intensive businesses in deepwater oil and offshore/gas drilling industries, as well as governmental, international, public market and large-scale vessel construction experience.

 

LASSE J. Petterson was named Chief Executive Officer in May 2017 and has served as a member of our Board since December 2016. Prior to his employment with the Company, Mr. Petterson served as a private consultant to clients in the oil and gas sector, and was Chief Operating Officer and Executive Vice President at Chicago Bridge and Iron Company N.V. (NYSE:CBI) (“CB&I”), an engineering, procurement and construction company, from 2009 – 2013. Prior to CB&I, Mr. Petterson was Chief Executive Officer of Gearbulk, Ltd., a privately held company that owns and operates one of the largest fleets of gantry craned open hatch bulk vessels in the world. He was also President and Chief Operating Officer of AMEC Inc. Americas, a subsidiary of AMEC plc (NASDAQ:AMFW), a British multinational consulting, engineering and project management company. Prior to joining AMEC, Mr. Petterson served in various executive and operational positions for Aker Maritime, Inc., the deepwater division of Aker Maritime ASA of Norway, over the course of 20 years. He spent the first nine years of his career in various positions at Norwegian Contractors, an offshore oil and gas platform contractor. Mr. Petterson is a National Association of Corporate Directors (“NACD”) Board Leadership Fellow. He received a M.Sc., Engineering, from Norwegian University of Technology and a B.S. from Norwegian University of Technology.

Key Qualifications and Skills:  For two decades, Mr. Petterson has served in various executive and operational positions, and most recently has extensive experience as Chief Executive Officer, Chief Operating Officer and President. He has particular experience in multinational consulting, engineering and project management; extensive engineering, procurement and construction experience in the oil and gas sector, including offshore oil and gas platform contracting; and operational experience with maritime companies.

 

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 15

---

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

kathleen m. shanahan is currently a Co-Chief Executive Officer of Turtle & Hughes, Inc., a private, certified women-owned business, which services the industrial, construction, commercial, electrical contracting, export and utility markets. Ms. Shanahan joined the Board of Directors of HireQuest (NASDAQ:HQI) in 2019 and currently serves on the Audit Committee. Ms. Shanahan has served as Chair of Ground Works Solutions (previously known as URETEK Holdings, Inc.), which provides foundation lifting and soil stabilization solutions, since 2011 and previously also served as Chief Executive Officer from 2011 – 2016. Ms. Shanahan also previously served as the Chair and Chief Executive Officer of WRS Infrastructure & Environment, Inc. (d/b/a WRScompass), an environmental engineering and civil construction company, as a member of the Board of Directors and Audit Committee of TRC Companies, Inc. (NYSE:TRR) from 2015 – 2017, and as a member of the Board of Directors and Chair of the Executive Compensation Committee of WCI Communities, Inc. (NYSE:WCI) from 2004 – 2007. Additionally, Ms. Shanahan has held numerous positions in government and public policy, having served on the campaigns and administrations as Chief of Staff for Florida Governor Jeb Bush and for Vice President-elect Dick Cheney; Deputy Secretary of the California Trade and Commerce Agency for California Governor Pete Wilson; special assistant to Vice President George H.W. Bush; and as staff assistant on President Ronald W. Reagan’s National Security Council. Ms. Shanahan currently serves on the boards of several private companies, including Lumia Analytics, PRISM, Tampa General Hospital, and Hillsborough Area Regional Transit. Ms. Shanahan is a member of Women Corporate Directors and the International Women’s forum. Ms. Shanahan previously served on the board of TerraSea Environmental Solutions LLC, one of the Company’s previous joint ventures.

She received a M.B.A. in Executive Business Administration from New York University’s Leonard N. Stern School of Business and a B.A. in Nutrition Biochemistry and Economics from the University of California, San Diego.

 

Key Qualifications and Skills:  Ms. Shanahan has served in various executive and operational positions, and most recently has significant experience as Chair and Chief Executive Officer of a company engaged in geotechnical construction and government contracting. She has prior service on private and public boards, including membership on various Audit and Compensation Committees. Ms. Shanahan possesses extensive skills in development, leadership and management of environmental remediation, geotechnical and civil construction operations. She also has expertise in public policy and public affairs matters, involving advisory, communication, development and implementation strategies.

16 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

 

RONALD R. STEGER currently serves on the Board of Directors of Global Eagle Entertainment Inc. (NASDAQ:ENT), where he holds the position of Audit Committee Chair. Mr. Steger previously served on the Boards of Directors of International Seaways, Inc. (NYSE:INSW) from 2016 – 2017, Overseas Shipholding Group, Inc. (NYSE:OSG) from 2014 – 2018, where he also served as Audit Committee Chair and Sentinel Energy Services Inc. (NASDAQ:STNL) from 2018 – 2020. Mr. Steger also served as an Advisory Board Member of ATREG, Inc. from 2014 – 2020. Additionally, Mr. Steger is currently a Senior Technical Advisor at Effectus Group, a boutique accounting advisory firm that specializes in serving high-growth technology companies. Until December 31, 2013, Mr. Steger worked as an Audit Partner for KPMG LLP, where he served a broad array of clients in the Fortune 1000 and middle market technology, chemical, food service and semiconductor sectors. Additionally, Mr. Steger has gained significant knowledge regarding the marine services industry through his board service. Mr. Steger is a licensed Certified Public Accountant (retired status). He received a B.S. from Villanova University.

Key Qualifications and Skills:  Mr. Steger has experience as a partner of one of the largest professional services networks in the world, with 37 years of accounting, advisory and consulting experience, including participation in Audit Committee investigations and Public Company Accounting Oversight Board (“PCAOB”) inspections and has prior service on several public boards, including as Audit Committee Chair and Corporate Governance and Risk Assessment Committee Chair. Mr. Steger has extensive experience with acquisition, divestiture, initial public offering and private equity and debt placement transactions, seconded with KPMG Munich for a three-year period, and has substantial knowledge regarding international debt and equity transactions.

 

D. MICHAEL STEUERT rejoined Fluor Corporation (NYSE:FLR), one of the world’s largest publicly traded engineering, procurement, construction, maintenance and project management companies, on June 1, 2019 as Chief Financial Officer. During his prior tenure with Fluor, Mr. Steuert served as Senior Vice President and Chief Financial Officer from 2001 until his retirement in 2012. Previously, Mr. Steuert served as SVP and CFO of Litton Industries Inc., a defense contractor acquired by Northrop Grumman Corporation in 2001 and as Senior Vice President and Chief Financial Officer of GenCorp Inc., now Aerojet Rocketdyne, a technology-based aerospace and defense company (NASDAQ:AJRD), from 1990 – 1999. Mr. Steuert started his career at TRW Inc. In addition to his extensive executive leadership experience, Mr. Steuert has substantial board experience. He has been a member of the Board of Directors of Liquefied Natural Gas Limited (ASX:LNG) since 2015 and is a member of its Audit Committee, Compensation Committee and Chairman of its Risk Committee. He has also been a member of the Board of Directors of Weyerhaeuser Co. (NYSE:WY) since 2004 and is a member and former Chairman and financial expert of the Audit Committee. Mr. Steuert received a M.S. in Industrial Administration and a B.S. in Physics from Carnegie Mellon University.

Key Qualifications and Skills:  Mr. Steuert has comprehensive experience as a Chief Financial Officer and has prior service on public boards, including as Audit Committee Chair and financial expert and as Risk Committee Chair as well as memberships on multiple Audit Committees and a Corporate Responsibility and Governance Committee. Mr. Steuert has extensive leadership experience at one of the world’s largest publicly traded engineering, procurement, construction maintenance and project management companies.

 

 

 

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 17

---

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

 

Major General Walsh USA (Ret.) is currently the President of The M-Walsh Group, LLC, and most recently served as Executive Vice President at Dewberry, a privately held engineering services firm, until his retirement in 2018. Previously, Mr. Walsh was a U.S. Army Engineer General with multiple commanding general assignments and 36 years of active duty experience.  During this time, Mr. Walsh had two operational combat commands and completed his service as the U.S. Army Corps of Engineers (“Corps”) senior General in charge of domestic water resources. His program included executing a $10 billion national water resources program annually involving 25,000 employees across 42 locations, coordinating Corps emergency response and Federal Emergency Management Agency support during Superstorm Sandy. Mr. Walsh has been awarded two Bronze Stars for actions in support of the nation’s combat operations over the course of his military career. Mr. Walsh continues to provide service as a member of the board of Service Source, a non-profit organization that supports people with disabilities, and also serves an advisory board member of the American Flood Coalition, a nonpartisan coalition that advocates for solutions to flooding and sea level rise. Mr. Walsh received a M.S. from the University of Florida, a B.S. from Brooklyn Polytechnical University, and also attended the United States Army Command and General Staff College and Army War College. Mr. Walsh is a NACD Board Leadership Fellow and is certified by NACD in cybersecurity oversight.

Key Qualifications and Skills:  Mr. Walsh has extensive experience in government contracting with a track record of leadership and provides invaluable insights into the needs and priorities of the Company’s largest client, the Corps.

 

18 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

 

2019 DIRECTOR COMPENSATION

The compensation of our directors is determined by the Compensation Committee and approved by the Board. Directors who are employees of the Company do not receive separate compensation for their Board service. The annual compensation package for our non-employee directors is designed to attract and retain highly experienced and qualified individuals to serve on the Board and promote a strong alignment of interests between the Company’s non-employee directors and its stockholders.

The Compensation Committee annually reviews the design of the annual compensation package for non-employee directors. The Company believes that the compensation of our non-employee directors fairly reflects the work and skills required for a company of our size and complexity. The compensation package was established following consultation with the Compensation Committee’s independent compensation consultant and was intended to be competitive relative to the Company’s peer group and general industry market data. No changes to our non-employee director compensation program were made during 2019.

Each of our non-employee directors currently receives an annual retainer of $155,000, payable quarterly in arrears. The retainer is generally payable 50% in cash and 50% in grants of fully vested shares of our common stock at the end of each fiscal quarter. Following the adoption of the 2017 Long-Term Incentive Plan (the “2017 LTIP”), either the Nominating and Corporate Governance Committee or the Compensation Committee may be responsible for reviewing and recommending grants of common stock to our non-employee directors. In addition to the annual retainer, our Board approved the annual retainers for committee service or committee chair service, as applicable, as set forth below.

The committee annual retainers are paid in cash to the committee members each quarter in arrears. Directors are permitted to elect to receive a greater percentage of their annual retainers in common stock rather than cash. In addition, non-employee directors are also allowed to defer their cash retainers and the equity component of their annual retainers into deferred stock units payable in shares of the Company’s common stock upon the director’s separation from the Board or such other date as selected by the director or mandated by the terms of the Great Lakes Dredge & Dock Corporation Director Deferral Plan. We also reimburse non-employee directors for out-of-pocket expenses incurred in connection with attending Board and committee meetings.

The table below summarizes the compensation paid by the Company to our non-employee directors for the fiscal year ended December 31, 2019. Dr. Dorward-King was appointed to the Board in January 2020 and did not receive any compensation with respect to 2019.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 19

---

DIRECTOR COMPENSATION

 

Stock Ownership Guidelines for Non-Employee Directors

Non-employee directors are subject to a stock retention requirement and are required to retain common stock in the amount of five times the annual cash retainer received for service as a member of the Board. For 2019, that amount was $387,500 in common stock. Until the required ownership level is achieved, non-employee directors are required to hold at least 50% of the shares received as equity compensation (after taxes). All directors have either achieved the required ownership level or are in compliance with the retention requirement.

 

 

 

 

20 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

 

PROPOSAL NO. 2 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Directors has appointed Deloitte & Touche LLP as the independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2020. During 2019, Deloitte & Touche LLP also served as our independent registered public accounting firm and, in addition, provided certain tax and other services, see “Matters Related to Independent Registered Public Accounting Firm – Professional Fees” on page 22. Representatives of Deloitte & Touche LLP are expected to attend the Annual Meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement.

Vote Required and Recommendation

Deloitte & Touche LLP will be ratified as our independent registered public accounting firm for the year ending December 31, 2020 provided this proposal receives the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon, assuming a quorum is present. Abstentions will be treated as being present and entitled to vote on the matter and, therefore, will have the effect of voting against the proposal.

Although we are not required to seek stockholder ratification of this appointment, the Audit Committee and the Board believe it to be sound corporate practice to do so. If the appointment is not ratified, the Audit Committee will reconsider the appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.

 

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 21

---

PROPOSAL NO. 2 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

MATTERS RELATED TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deloitte & Touche LLP has been appointed by the Audit Committee to be our independent registered public accounting firm for the year ending December 31, 2020. Each year, the Audit Committee evaluates the qualifications of the Company’s independent auditors and considers: (1) the quality and efficiency of the services provided; (2) the auditor’s technical expertise, knowledge of our Company’s operations and global capabilities; (3) the auditor’s communications and interactions with the Company; (4) the auditor’s independence and objectivity; (5) whether the auditor has recently been the subject of any administrative, criminal or civil investigations or been accused of violating PCAOB policies; and (6) the auditor’s fee proposal. Stockholders are being asked to ratify the appointment of Deloitte & Touche LLP at the Annual Meeting pursuant to “Proposal No. 2” on page 21 of this Proxy Statement.

Professional Fees

We paid the following professional fees to our independent registered public accounting firm, Deloitte & Touche LLP and its affiliates, for the years ended December 31, 2019 and 2018:

AUDIT COMMITTEE Pre-Approval Policy for Independent Accountant Services

The Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm. From time to time, however, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee may also pre-approve services on a case-by-case basis. The Audit Committee may delegate pre-approval authority to one or more of its members. For the year ended December 31, 2019 the Audit Committee pre-approved all such audit and non-audit services, including tax services, provided by the independent registered public accounting firm.

Report of the Audit Committee

With respect to 2019, the Audit Committee has:

22 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

PROPOSAL NO. 2 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

Based on the foregoing review and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for 2019.

 

The Audit Committee of the Board of Directors:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 23

---

 

COMPENSATION DISCUSSION AND ANALYSIS

Introduction

Our Compensation Discussion and Analysis (“CD&A”) reviews the objectives and elements of Great Lakes’ executive compensation program, describes the related processes of our Compensation Committee (the “Committee”), and discusses the 2019 compensation earned by our named executive officers. Our CD&A also explains actions the Committee took in response to the stockholder feedback received during our extensive stockholder outreach on executive compensation during fiscal 2019.

For fiscal 2019, our named executive officers were:

As a Company, we are committed to exceptional financial performance and responsiveness to our stockholders. The former was demonstrated in the strategic initiative we took in 2017 to implement a comprehensive two-year restructuring plan. Since we announced our restructuring plan on October 6, 2017, our stock price has more than doubled – increasing from $5.00 on October 5, 2017 to $11.33 on December 31, 2019, and has outperformed our Peer Group and the NASDAQ composite index as shown below.

Over this same time, we took a closer look at our executive compensation program and increased the focus and intensity of our stockholder engagement in direct response to the lower levels of say-on-pay support we received at our 2018 and

24 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

COMPENSATION DISCUSSION AND ANALYSIS

2019 annual stockholder meetings. Through these exchanges, we gained greater appreciation for our stockholders’ views on plan design, annual incentives, long-term incentives and performance metrics. We are committed to having a compensation program that is tied to our strategic objectives and responds to our stockholders’ priorities, while mitigating any avoidable disruption to the business.

Engagement Timeline At-A-Glance

 

Stockholder Outreach Initiative

“Say-on-Pay” Advisory Vote on Executive Compensation

At the 2019 Annual Meeting of Stockholders, approximately 56% of voting stockholders cast an advisory vote in support of the Company’s executive compensation program. The Committee considered this vote during its annual examination of the executive compensation program as one of many factors in deciding the Company’s ongoing executive compensation policies and procedures. Following the advisory vote, the Committee determined to engage in specific stockholder outreach regarding our executive compensation program.

Extent of Outreach

During our outreach campaign, we invited over 25 of our top 30 stockholders, representing over 55% of our outstanding shares, and two proxy advisory firms to discuss their views and proxy voting guidelines with respect to our executive compensation program and disclosures. As a result, we held discussions with stockholders that represented approximately 30% of our shares outstanding and two proxy advisors. The participants in the outreach team included our Board Chair, Committee Chair, Chief Financial Officer, Chief Legal Officer and Corporate Secretary, Vice President of Human Resources and Manager of Investor Relations. The Committee members reviewed summaries of the feedback received during the process and the Committee Chair provided regular updates to the full Board of Directors. As part of the process, the Committee retained a new independent compensation consultant, Pearl Meyer, to take a fresh look at the Company’s executive compensation program, with focus on evaluating whether our approach effectively balances competitive market practices, strategic goals and stockholder expectations.

What We Heard and How We Responded

We heard a range of different perspectives on our executive compensation program from stockholders during our outreach initiative, all of which were considered by the Committee. We received considerable positive feedback from our stockholders regarding the restructuring program and very favorable feedback about our recent financial and stock price performance. However, we also heard some common concerns about our long-term incentive program design, discussed below, as well as comments cautioning us against using formulaic or prescriptive program designs or metrics.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 25

---

COMPENSATION DISCUSSION AND ANALYSIS

The Company and the Committee considered the results of the “say-on-pay” voting, outreach conducted in connection with our 2019 Annual Meeting of Stockholders and the feedback from the stockholder engagement process described above in assessing whether there was a need for modifications or enhancements to our executive compensation program and other governance issues. Based on feedback, and considering the program as a whole as well as the strategic goals of the Company, the Committee took the following actions:

26 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

COMPENSATION DISCUSSION AND ANALYSIS

2019 Business Overview

In 2019, we executed successfully on our business plan and strategic initiatives, driven by a strong domestic dredging market and the continued effectiveness of our 2017 asset rationalization and cost reduction program. We continued to strengthen our relationships with key clients and stakeholders by providing innovative solutions and by delivering cost-effective and time-efficient project completions. At the same time, we delivered improved financial results and continued a trend of exceptional safety performance. We strive to create the safest project and facility sites in the dredging industry and, in 2019, we saw a 30% year-over-year reduction in our total recordable injury rate. Our total recordable injury rate and our lost time incident rate are the lowest in recorded Company history, with the last five years of our safety progress shown below:

*A TRIR of 1.0 means that for every 100 employees working a full year, one employee incurred a recordable injury.

We believe that these achievements have positioned the Company for future investments and positive growth for our stockholders. Notable financial achievements include:

*A reconciliation of Adjusted EBITDA from Continuing Operations is provided in Appendix A.

We delivered superior value to our stockholders in 2019, both on an absolute basis and relative to our peers. In 2019, we had a 71.1% total shareholder return as compared to an average of 17.3% total stockholder return for our Peer Group and increased our market capitalization from $414 million to $728 million.

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 27

---

COMPENSATION DISCUSSION AND ANALYSIS

What Guides Our Program

 

Compensation Philosophy and Objectives

The Company’s executive compensation program is designed to attract and retain highly skilled, performance-oriented executives and closely align compensation paid to our named executive officers with our operating and financial goals. The Committee regularly discusses the general principles that form the basis of our executive compensation program. The objectives, which guided the Committee’s executive compensation decisions in 2019, are discussed below.

 

Emphasis on Performance

As discussed in more detail below, a primary goal of our executive compensation program is to achieve accountability for performance by linking elements of executive compensation to achievement of measurable performance objectives that reflect our strategic plan. Because the majority of total direct compensation is in the form of performance-based variable pay awards (annual incentive awards and long-term incentive equity awards), the aggregate total direct compensation of our executives is designed to increase when the Company’s performance exceeds and to decrease when the Company’s performance falls short of our strategic and financial goals. Total direct compensation for each of our executives can also increase or decrease based on individual performance.

 

 

 

28 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

COMPENSATION DISCUSSION AND ANALYSIS

Key Compensation Elements

The primary elements of our compensation program for named executive officers are base salary, an annual incentive opportunity and long-term incentive awards. Each component is designed to contribute to a total executive compensation package that is competitive, performance-based and supportive of our financial and strategic goals. In determining the total compensation of the named executive officers, the Committee considers our operating and financial performance as a whole as well as each executive’s execution of the responsibilities associated with his or her respective position. The following table outlines the framework of the main elements of our executive compensation program for our named executive officers.

 

In addition, in May 2019, the Committee formalized a performance and equity-based program, which was additive to the annual performance-based programs, to align the CEO’s compensation package with that of the other named executive officers in the achievement of financial results above the regular operating plan. This program was structured based on the performance and equity-based program implemented in 2018 (the “Special Incentive Program” or “SIP”) for our other named executive officers. See “CEO Program” on page 39.

Pay Mix

The majority of our CEO’s and named executive officers’ total direct compensation opportunity is equity-based, at-risk, and/or long-term. The following charts illustrate the relative value of compensation components for our 2019 and 2020 total direct compensation program (base salary, annual incentive awards and long-term incentive equity awards) as a percentage of total direct compensation. The below percentages do not include the performance-based awards granted under the Special Incentive Program or the CEO Program described on pages 39 – 40. For 2020, the percentage of at-risk compensation will increase from 42% to 50% for our CEO and an average of 35% to 42% for the other named executive officers.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 29

---

COMPENSATION DISCUSSION AND ANALYSIS

 

 

 

 

 

 

 

 

 

 

30 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

COMPENSATION DISCUSSION AND ANALYSIS

Good Compensation Governance Practices

The Committee regularly reviews our executive compensation program and incorporates commonly viewed best practices as it deems appropriate; examples of best practices that we have adopted include:

Role of the Compensation Committee

The Committee, composed entirely of independent directors, oversees the executive compensation program for our named executive officers. As part of its annual process, the Committee works closely with executive management and its independent compensation consultant.

Generally, in the first and fourth quarters of each year, the Committee reviews our historical pay, Company and individual performance information, including our performance relative to the objectives set forth in the prior year’s incentive program. Based on our performance, as well as recommendations from our CEO for executive officers other than himself, the Committee approves annual incentive awards for executive officers. The Committee also determines the executive compensation program for the current year. As part of this process, the Committee reviews the aggregate value of the total compensation opportunities provided to each of the executive officers. Following the review, the Committee determines annual base salaries, target annual incentive compensation, and long-term incentive opportunities for each executive officer. The Committee also approves the goals and performance metrics for our annual incentive compensation and the performance-based component of our long-term incentives. In the first quarter of 2019, the Committee set performance goals for the annual incentive compensation and long-term incentive programs. When calculating achievement of performance goals, budgeted and actual incentive pay is excluded from the calculation due to circular reference.

Throughout the year, the Committee discusses the philosophy for the overall executive compensation packages and decides whether changes should be made in the design of the program. As part of regular Committee meetings, Committee members generally meet in executive session, during which members of management are not present.

From time to time, the Committee considers the effect of one-time or unusual items, if any, that may impact reported financial results. To more accurately reflect the operating performance of our business, the Committee reviews a pre-determined framework of potential adjustments to our reported financial results for incentive program purposes. Generally, any adjustments are intended to exclude one-time or unusual items and external factors that are inconsistent with the assumptions reflected in our financial plans. Any adjustments under the formulaic framework may vary from year to year and may have either a positive or a negative impact on the performance-based compensation program results. Standard adjustments may be made: for accounting-related changes or changes in laws or regulations not included in our annual operating plan, such as changes related to U.S. tax reform; to exclude integration costs or make other adjustments related to unbudgeted merger and acquisition activity; and for other items not considered representative of the results of operations for the period, as approved by the Committee. When designing the

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 31

---

COMPENSATION DISCUSSION AND ANALYSIS

compensation program for 2019, the Committee decided to exclude the results of discontinued operations from the program, but did not make any adjustments for one-time or unusual items.

Role of Management in Establishing Compensation

At the direction of the Committee Chair, management generally prepares materials for the Committee in advance of its meetings. During the annual evaluation process, the CEO evaluates the performance of our named executive officers (other than himself) and provides a recommendation to the Committee with respect to changes to base salary, annual performance incentives and long-term incentive equity awards. Our CEO provides recommendations regarding the compensation of the other named executive officers but is not involved in setting his own compensation.

Role of Compensation Consultants

Pursuant to its charter, the Committee has the independent authority to engage the services of outside advisors and experts, including executive compensation consultants. The role of the compensation consultant is to provide independent, expert advice to the Committee on the design of the Company’s compensation programs and the level of compensation paid to our senior executives. The compensation consultants report directly to the Committee and were not utilized to perform any other services for the Company. The Committee has assessed the independence of the compensation consultants that performed services for the Committee during 2019 and concluded that their work is independent of management and does not raise any conflicts of interest. The Committee has the authority to hire and dismiss the compensation consultants, as well as to establish new engagements. If requested by the Committee, a representative of the compensation consultants may participate in Committee meetings.

The Committee engaged Frederic W. Cook & Co. (“FW Cook”) as its compensation consultant with respect to 2019 executive compensation matters, including an assessment of the reasonableness of executive compensation levels and the appropriateness of the Company’s executive program structure in supporting the Company’s business objectives.

In May 2019, the Committee retained Pearl Meyer to serve as the Company’s independent executive compensation consultant for the 2020 program, at which time Pearl Meyer worked with the Committee to review the executive compensation program, consider the feedback of stockholders and make recommendations for improvements to the program for 2020.

Management did not engage a separate executive compensation consultant during 2019.

 

Role of Benchmarking and Peer Companies

The Committee considers salary, annual incentive compensation and long-term incentive compensation for the named executive officers against competitive market information. For purposes of setting 2019 compensation, the peer group consisted of the following 16 companies (“Peer Group”):

The Committee selected this Peer Group with the assistance of its compensation consultant, after considering U.S.-based public companies in the same and similar Global Industry Classification System (GICS) Industry Group with comparable revenues, total assets and enterprise value. The compensation consultant considered companies with similar lines of business as the Company, namely asset-intensive companies that provide infrastructure and engineering services and are of similar size to Great Lakes. The compensation consultant recommended maintaining a similar peer group as utilized for 2018 executive compensation decisions, but removing Primoris Services and adding Logistec Corporation and Willdan Group. Primoris Services was removed because following acquisition activity, the combined company exceeded the upper end of the Peer Group’s size range criteria. Logistec Corporation and Willdan Group were added to the Peer Group to maintain a reasonable sample size and position the Company closer to the Peer Group median. Select comparative financial measures for the Peer Group are summarized below:

 

32 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

COMPENSATION DISCUSSION AND ANALYSIS

 

Median/Percentiles determined by FW Cook using Standard & Poor’s Capital IQ Service and Peer Group company information. The financial information referenced above was derived from data as of September 30, 2018.

The Committee utilizes the Peer Group as a reference point for decisions relating to our executive compensation program involving our named executive officers. Executive compensation data from the Peer Group is aggregated by the compensation consultant and presented to the Committee in summary form. The Committee reviews the aggregated data to obtain a general understanding of current executive compensation practices utilized by our Peer Group. The Committee also utilizes the data as a market check that the Company’s pay practices are generally competitive and fulfill the Committee’s stated goal of attracting and retaining its named executive officers. The Committee does not target specific levels of executive compensation as compared to the Peer Group.

On an annual basis, the compensation consultant provides a competitive market assessment, which includes a report on the compensation of our named executive officers, relative to a market median (developed based on an analysis of the compensation elements from the Peer Group). The Committee considers the competitive market assessment when making its final executive compensation decisions. It is the Committee’s current intention to continue annual competitive market assessments to evaluate whether our senior executives are compensated appropriately in terms of levels and design.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 33

---

COMPENSATION DISCUSSION AND ANALYSIS

2019 Executive Compensation Program in Detail

Base Salary

We seek to provide competitive base salaries that allow us to attract and retain executive talent without incurring excessive fixed costs. Accordingly, we consider a variety of factors such as:

 

 

Decisions regarding individual salary levels were based upon a review of multiple criteria including market data of our Peer Group, the individual’s performance, the Company’s performance and the advice of the compensation consultants. Effective January 1, 2019, none of our named executive officers received base salary increases because base salary is an element of fixed compensation and the Committee wanted to place additional weight on at-risk compensation.

Annual Incentive Compensation

The Company’s annual incentive compensation program is designed to be supportive of the Company’s short-term operating objectives and to provide competitive target total annual executive compensation opportunities. In 2019, the Company granted annual incentive compensation pursuant to the Executive Leadership Annual Incentive Program, which was administered under the 2017 LTIP. All of our named executive officers participated in the program.

The formula for calculating annual incentive compensation payouts is as follows:

 

 

In 2019, the Committee increased the amount of at-risk compensation for each named executive officer. Accordingly, effective January 1, 2019, the Committee raised each named executive officers’ annual incentive compensation target by 5%.

Each named executive officer has quantitative and qualitative performance goals that are established annually. For 2019, the Committee set Adjusted EBITDA from Continuing Operations (or “Adjusted EBITDA”) as the financial goal for named executive officers. The Committee established the financial target based on the Company’s budget plan for the year and set threshold and stretch goals for the Company at 70% and 130% of budget, respectively. For 2020, upon further consideration of the program design, the increase in target achievement goals, and in response to stockholder feedback, the threshold and stretch goals for the Company were narrowed to 80% and 120% of budget, respectively.

The Committee also set qualitative individual goals for each named executive officer, as described below. The qualitative goals are set at the beginning of the performance period and are designed to motivate performance with respect to other stated strategic, operational, financial and corporate objectives.

34 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

COMPENSATION DISCUSSION AND ANALYSIS

Performance for the CEO was measured based solely on the financial results of the Company as a whole. The Committee also considered, but did not assign a specific weight to, the individual qualitative goals listed below when determining whether to modify the CEO’s actual award. Performance for the other named executive officers was measured based on the financial results of the Company as a whole and on individual goals according to the weights set forth below.

 

The Committee retains subjective discretion to adjust payout results as it deems appropriate and in accordance with the terms of the 2017 LTIP. Under the Executive Leadership Annual Incentive Program, the Committee may modify calculated payouts from 0-150% based on individual performance, although individual modifications are expected to be generally +/- 10% of calculated amounts. In addition, as detailed above in Role of the Compensation Committee, adjustments may be made to mitigate the effects of events that, unless excluded, would be inconsistent with the intent of the annual incentive compensation program. In 2019, the Committee did not exercise its discretion to adjust the quantitative performance measures, other than in accordance with the standard adjustment for exclusion of budgeted and actual incentive pay when calculating achievement of performance goals.

2019 Goal Detail

Below is the summary of annual incentive compensation goals for 2019. Weighting of each goal varied based on each named executive officer’s role with the Company.

 

*Component used to assess individual performance, weighted between 10-20% for named executive officers other than the CEO.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 35

---

COMPENSATION DISCUSSION AND ANALYSIS

Financial Goal Achievement for 2019

We exceeded the financial goal for the year set by the Committee.

Performance between threshold and target and target and maximum are linearly interpolated. The performance levels disclosed above include budgeted incentive pay (excluded for calculation of achievement of performance goals).

Actual Adjusted EBITDA from Continuing Operations was $135.6 million and, after excluding the impact of budgeted and actual incentive pay, was above the maximum achievement level and funded the portion of the executive’s incentive allocation to Company performance at 200% of target. As discussed in “Role of the Compensation Committee,” at the time it approved the performance goals, the Committee determined that it would exclude the impact of budgeted and actual incentive pay when calculating achievement of performance goals.  

Individual Goal Achievement for 2019

To assess individual goals, each named executive officer submits a written self-appraisal regarding the achievement of his or her pre-established goals for the year. For the named executive officers other than the CEO, the appraisals are reviewed by the CEO. The CEO provides performance appraisals for each of the named executive officers, which are then discussed with the Committee. The self-appraisal for the CEO is discussed with the Committee. 

2019 was a year of strong overall performance, led by our team of executive officers. The Committee firmly believes that overall individual performance for the executive officer team exceeded target for the year, given the significant financial, operational and strategic successes.

Individual performance for executive officers was differentiated based on a review of actual achievement. The following factors were considered when assessing the performance of the named executive officers (other than the CEO):

Actual Payouts for 2019

Based on the financial goal achievement (for all of the named executive officers) and the assessment of qualitative goals (for named executive officers other than the CEO) for 2019, the Committee awarded annual incentive awards to each of our named executive officers as reflected in the following table:

 

36 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

COMPENSATION DISCUSSION AND ANALYSIS

Long-Term Incentive Awards

Overview

Long-term incentives are awarded pursuant to the 2017 LTIP, a stockholder-approved equity plan. Every year, the Committee reviews the mix of types of incentives and the percentage of each type of incentive granted. In 2019, the Committee chose to grant restricted stock units with a combination of performance-based and service-based vesting conditions. The Committee believes this mix of grant types motivates key executives to drive business results against the Company’s goals, further aligns management’s interests with those of our stockholders over the long-term and retains individuals deemed critical to the Company’s future success.

The aggregate value of a named executive officer’s long-term incentive equity award is determined by the Committee in conjunction with its consideration of the 2019 competitive market assessment and is based, in part, upon the contribution that the named executive officer is expected to make to the overall growth, strategic and financial performance of the Company during the vesting period. The Committee also considers equity compensation levels of our Peer Group and the annual competitive market assessment.

2019 Long-Term Incentive Grants

The Committee considers and reviews many factors in determining the appropriate mix of long-term equity incentive awards. These factors include the prevalence and composition of equity awards reported in the competitive market assessment, as well as the mix of awards deemed necessary to effectively incentivize management and reward the creation of value for stockholders and strong overall strategic and financial performance. Additional information regarding the long-term incentives selected by the Committee for 2019 is set forth in the following table:

In January of the program grant year, the Committee sets the threshold, target and maximum performance criteria for PSUs vesting in each of the performance periods in the program. The criteria are pre-determined for the full three-year performance cycle, with increasing targets for each year of the program.  It is the Committee’s policy to authorize and grant equity awards as of the date of the Committee meeting at which such awards are approved by the independent directors who serve on the Committee, based upon the fair market value of our common stock as of the grant date of the award.

The PSU program is three years in length, although each performance period is one year. The Committee continues to assess the viability of setting longer performance periods. The Committee’s decision to select one-year performance periods is influenced to a large degree by the fact that a significant portion of the Company’s revenue is based on the Corps’ budget. The Corps’ budget is set by Congress on an annual basis, and the Company has limited visibility and

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 37

---

COMPENSATION DISCUSSION AND ANALYSIS

assurances regarding future years. Accordingly, the Committee sets the first year of the performance period based on the Company’s budget and sets increased target performance for the second and third years of the grant at the time of the award. In that way, should the Corps’ budget experience negative fluctuations, a factor outside management’s control, targets for the second or third year could be impacted but the entire program will not be affected.

The total grants and grant-date fair values for the long-term incentive awards granted under the 2019 program are as follows:

Long-Term Incentive Achievement for Fiscal Year 2019

The Committee reviewed the Company’s performance for fiscal year 2019 for long-term incentives granted under both the 2018 program and the 2019 program. The table below identifies the EBIT performance criteria for the outstanding PSU grants based on fiscal year 2019 performance as well as the Company’s results:

The Committee determined that the maximum level of EBIT was achieved for each of the grants and, as a result, the named executive officers were issued PSUs from the 2018 and 2019 programs. Specifically, 2019 EBIT was $98.4 million resulting in a payout of 200% for each program.

2018 Special Incentive Program

In 2018, the Committee granted a Special Incentive Program as part of a stretch program specifically tied to our restructuring plan. The SIP was a two-year program, with individual performance periods covering 2018 and 2019. The Committee selected the performance metric Earnings Before Taxes (“EBT”) to encourage cost reduction initiatives, motivate and incentivize the efficient use of assets and divestiture of any assets that were not adding value to the Company’s financial or operational results and to incentivize debt reduction and efficient cash usage.

As with the regular program, the Committee set pre-determined performance criteria for the full two-year performance cycle. The 2018 EBT target was set above budget, at a stretch level deemed sufficient to incentivize above-average performance. The 2019 EBT target, also set in January 2018, was set at an increased target from 2018. The CEO did not participate in the SIP granted in 2018.

38 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

COMPENSATION DISCUSSION AND ANALYSIS

Additional information regarding the SIP is detailed below:

The 2018 SIPs based on fiscal year 2019 were earned but remain subject to time-vesting requirements through December 31^st of the following year. Specifically, actual EBT was $70.9 million (earning at 200% of target for the SIPs). The table below identifies the EBT performance criteria for the SIP award as well as the Company’s results:

CEO Program

In March 2019, the Committee rewarded Mr. Petterson with a discretionary cash and equity bonus for the significant overachievement of performance goals and creation of exceptional stockholder value in fiscal year 2018. In May 2019, however, following further consideration and taking into account stockholder feedback and the desire to further incentivize Mr. Petterson to achieve stretch performance, the Committee formalized a program for overachievement of fiscal year 2019 targets. The Committee granted Mr. Petterson a performance-based incentive award (the “CEO Award”), with higher targets than the 2018 SIP. This additional award will not reoccur in 2020.

Consistent with the 2018 SIP for the other named executive officers, the Committee intended the CEO Award to be additive to his regular grant of restricted stock units and performance-based stock units. The CEO Award was designed to further build on the momentum of the Company’s exceptional progress in the last two years, to provide an incentive opportunity that would encourage achievement of stretch goals over and above the business operating plan for the year and to reward for above-market performance, all of which incentivize strong stockholder value creation.

The CEO Award consisted of a cash and equity-based grant with a range of $0 to $250,000 cash and 0 to 52,000 performance-based restricted stock units. The cash portion of Mr. Petterson’s award would be earned based on previously established individual strategic objectives designed to incentive the achievement of above-market performance. The equity portion of Mr. Petterson’s award would be earned based on EBT overachievement. Because Company performance was above projections as compared to when the original SIP was granted in 2018, the Committee increased Mr. Petterson’s financial achievement requirement as compared to the original SIP and also set it as a stretch goal above 2019 budget. The grant date fair value of Mr. Petterson’s equity award, calculated based on the closing stock price on the grant date in accordance with ASC Topic 718, was $375,804.

With regard to achievement of the cash-based objective, the Committee determined that Mr. Petterson earned $250,000 of the award. In determining that Mr. Petterson earned that amount, the Committee considered the following pre-established factors and corresponding achievements:

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 39

---

COMPENSATION DISCUSSION AND ANALYSIS

 

The table below shows the EBT performance criteria for the financial portion of Mr. Petterson’s award as well as the Company’s actual result of $70.9 million EBT, which resulted in Mr. Petterson earning 100% of the equity award:

Other Compensation Practices, Policies and Related Matters

Stock Ownership and Retention Guidelines

The Company maintains guidelines for stock ownership with respect to its named executive officers, senior executives and vice presidents. The purpose of the guidelines is to encourage our senior executives and vice presidents to demonstrate a commitment to the Company and its stockholders by retaining a required value of Company stock. Each participant is provided with a reasonable period of time to attain the required ownership level. The guidelines provide that each named executive officer retain a number of eligible shares with a value at least equal to a multiple of his or her base annual salary as follows:

 

All shares of common stock are eligible shares and count towards the retention requirement, with the shares of common stock valued using an average of the closing stock price over the prior month. Each named executive officer must retain 50% of net profit shares realized upon the:  (i) exercise of stock options, (ii) settlement of performance-based restricted stock units and (iii) vesting of restricted stock units until the required retention value is attained. As of December 31, 2019, each of our named executive officers was in compliance with the guidelines through meeting the retention requirement or complying with the retention ratio of 50% of net profit shares. The Committee does not consider existing stock ownership levels of individual executives in determining the amount of long-term incentive equity awards.

Additional Benefits

The Company has adopted benefit programs that are designed to be supportive of business and human resource strategies and that provide for the delivery of equitable value to executives relative to lower level employees. The Company strives to avoid programs that do not support an identifiable business objective.

40 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

COMPENSATION DISCUSSION AND ANALYSIS

Accordingly, the named executive officers generally participate in the same benefits program that is provided to other employees, including life and medical insurance and 401(k) matching and profit sharing. Our 401(k) plan provides that we will match, dollar for dollar, up to 6% of an employee’s salary and incentive compensation that is contributed to his or her 401(k) account. We also may provide a profit sharing contribution to an employee’s 401(k) account as a percentage (between 0% and 7%) of the employee’s salary. However, the IRS limits the total annual contribution for an employee into a qualified plan. This amount was $19,000 for 2019.

Supplemental Savings Plan

In addition, our named executive officers as well as other eligible employees may contribute to a Supplemental Savings Plan (“SSP”), a nonqualified deferred compensation plan that allows eligible employees to elect to defer salary and annual incentive compensation and to receive matching and profit sharing contributions in excess of the maximum amounts that they can defer or receive under the 401(k) plan due to IRS limits. Although the SSP is unfunded, participants may elect to notionally invest deferred amounts in most of the investment alternatives that are available under the qualified 401(k) plan. Participants also elect when to receive distributions of deferred amounts under the SSP. No tax gross-ups are provided to participants under the SSP. In 2019, all of the eligible named executive officers participated in the SSP.

Compensation Recoupment (“Clawback”) Policy

We have a compensation recoupment policy, which requires certain cash and equity incentive compensation to be repaid to the Company if awarded as a result of inaccurate financial data. The policy applies to current and former executive officers of the Company, as well as other employees designated by the Board or the Committee. In addition, the policy allows the Committee to recoup compensation paid to an employee as a result of any conduct justifying termination for cause of that employee.

Risk Assessment

We designed our executive compensation program to drive performance toward the achievement of our short-term and long-term goals and to increase stockholder value, while appropriately balancing risk and reward. In March 2019, the Committee conducted its annual review and risk assessment of the Company’s executive compensation policies and practices. Following this review, the Committee concluded that our executive compensation program was appropriately designed for the size and complexity of the Company and does not encourage excessive risk-taking.

Employment Agreements

As of December 31, 2019, and discussed beginning on page 49, all of our named executive officers had written employment agreements, which would entitle each executive to severance benefits depending upon the circumstances of resignation or termination. The Committee believes that these agreements provide essential protections to both the named executive officers and the Company. Agreements providing for severance and change-in-control payments assist us in attracting and retaining qualified executives who have job alternatives. At the same time, the applicable agreements preserve our valuable assets by imposing upon the executives’ non-competition and non-solicitation restrictions, confidentiality obligations and cooperation covenants.

The Board and the Committee believe that retention of key personnel is an important goal. Employment agreements are one vehicle for retaining top talent and are in our best interest as well as the best interest of our stockholders, particularly in the context of any potential transaction. The Board and Committee believe that the severance benefits agreed to in the case of these termination events are reasonable in light of the potential value delivered to stockholders in return. These agreements do not provide excise tax gross-ups. In 2019, the Committee reviewed the employment agreements with its compensation consultant, Pearl Meyer, and concluded that the agreements are generally in line with typical market practices.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 41

---

COMPENSATION DISCUSSION AND ANALYSIS

Prohibition on Hedging and Pledging

We believe that equity ownership fosters an atmosphere where directors, officers and other employees “think like owners” and are motivated to increase the long-term value of the Company by aligning their interests with those of the Company’s stockholders.  Accordingly, we prohibit directors, officers and all other employees from the trading of derivative securities related to shares of our stock, including hedging strategies, puts, calls or other types of derivative securities. Our insider trading policy also prohibits all directors, officers and employees from pledging shares of our stock.

Compensation Committee Interlocks with Insider Participation

During fiscal year 2019, the Compensation Committee was comprised of D. Michael Steuert (current Chair), Lawrence R. Dickerson, Kathleen M. Shanahan, Ryan J. Levenson and Michael J. Walsh, none of whom is an employee or current or former officer of our Company, or any of the Company’s subsidiaries, nor had any relationship with our Company requiring disclosure. The Board has determined that Messrs. Steuert, Dickerson, Levenson and Walsh and Ms. Shanahan are independent in accordance with NASDAQ Marketplace Rules. There were no interlocking relationships during the fiscal year ended December 31, 2019.

Compensation Committee Report

The Compensation Committee of the Board of Directors has reviewed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K. Based on such review and discussions with the Company’s management, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:

 

 

D. Michael Steuert, Chair

 

 

 

 

42 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

 

EXECUTIVE COMPENSATION TABLES

Summary Compensation Table for Year Ended December 31, 2019

The following table summarizes the compensation of our named executive officers for the year ended December 31, 2019:

*The tuition reimbursement reported in this column was valued on the basis of the aggregate incremental cost to the Company and represent amounts paid to the named executive officer as reimbursements for tuition expenses.

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 43

---

EXECUTIVE COMPENSATION

44 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

EXECUTIVE COMPENSATION

Grants of Plan-Based Awards in 2019

The following table provides additional information about our long-term incentive equity awards, which consist of performance-based restricted stock unit awards (“PSUs”), restricted stock unit awards (“RSUs”), and non-equity incentive plan awards, in each case, granted to our named executive officers in 2019 from the 2017 LTIP:

 

 

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 45

---

EXECUTIVE COMPENSATION

Outstanding Equity Awards at 2019 Fiscal Year-End

The following table provides information on outstanding equity awards held by our named executive officers as of December 31, 2019. The equity awards reported in the Stock Awards column consist of RSUs and PSUs and the equity awards reported in the Options Awards columns consist of non-qualified stock options.

46 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

EXECUTIVE COMPENSATION

 

Option Exercises and Stock Vested in 2019

The following table provides information on the value realized by our named executive officers with respect to stock options exercised during 2019 and with respect to RSUs and PSUs that vested during 2019:

 

*Amounts reflect the value of the vested stock based on the closing price of our stock on the vesting date.

Nonqualified Deferred Compensation in 2019

We maintain a nonqualified Supplemental Savings Plan (“SSP”) for certain of our employees on United States payroll, including each of our named executive officers. Under the SSP, participants may defer up to 50% of their salaries, including commissions and incentive compensation (other than annual incentives) and may make a separate election to defer up to 100% of any annual performance-based cash incentives (after applicable taxes) they may earn. The SSP also provides participants the opportunity to receive credits for matching contributions equal to the difference between the matching contributions that a participant could receive under the Company’s 401(k) Plan but for the contribution and compensation limitations imposed by the Internal Revenue Code, and the matching contributions allowable to the participant under the Company’s 401(k) Plan, excluding in each case any such elective deferrals that exceed 6% of such Participant’s compensation for such Plan Year, as defined in the Company’s 401(k) Plan. Participants are generally permitted to choose from among the investment funds available under the Company’s 401(k) Plan for purposes of determining the imputed earnings, gains and losses applicable to their SSP accounts. The SSP is unfunded.

Participants may specify the timing of the payment of their accounts by choosing either a specified payment date or electing payment upon separation from service (or a date up to five years following separation from service), and in either case may elect to receive their accounts in a lump sum or in annual or quarterly installments over a period of up to ten years. With respect to each year’s contributions and imputed earnings, the participant may make a separate distribution election. Subject to the requirements of Section 409A of the Internal Revenue Code, applicable Internal Revenue Service guidance, and the terms of the SSP, participants may receive an early payment in the event of a severe financial hardship and may make an election to delay the timing of their scheduled payment by a minimum of five years.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 47

---

EXECUTIVE COMPENSATION

The following table sets forth the details of the SSP:

 

 

 

48 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

EXECUTIVE COMPENSATION

Potential Payments Upon Termination or Change in Control

Overview

The following describes the estimated payments that would be made to the named executive officers pursuant to an employment agreement or other plans or individual award agreements in the event of the named executive officer’s termination of employment under the circumstances described below, assuming such termination took place on December 31, 2019.

Actual values would reflect specific circumstances at the time of any termination, the plans and provisions effective if and when a termination event occurs and any other applicable factors. Certain of the named executive officers, including Messrs. Petterson and Simonelli, are also eligible for certain payments and benefits in the event of a termination of employment due to voluntary retirement.

Payment of enhanced benefits is conditioned upon the executive’s execution of a release of claims in favor of the Company and its related entities. In addition to the release, for those executives with employment agreements, the executive must uphold certain restrictive covenants, including confidentiality of information, non-competition and non-solicitation.

The Petterson Agreement – Termination Provisions

Under Mr. Petterson’s agreement, if Mr. Petterson’s employment is terminated by the Company for “Cause” (defined below) or by Mr. Petterson other than for “Good Reason” (defined below), Mr. Petterson will be entitled to his base salary and employee benefits through the termination date.

Under Mr. Petterson’s agreement, if Mr. Petterson’s employment is terminated by the Company without Cause or Mr. Petterson’s leaves for Good Reason, he will be entitled to his base salary and employee benefits through the termination date, and also receive (i) 12 months of his base pay and target annual incentive compensation amount, less applicable withholdings, payable according to the Company’s scheduled payroll pay dates; (ii) the pro rata portion of his annual incentive compensation and the SSP benefits earned through the termination date, paid at the same time as continuing executives; (iii) 12 months of subsidized medical and dental coverage for Mr. Petterson, his wife, and eligible dependents (to the extent each has been provided with coverage on the date immediately prior to the termination date); and (iv) 18 months of vesting credit for any unvested equity awards, provided that Mr. Petterson has been employed by the Company as its Chief Executive Officer for at least two consecutive years as of the termination date.

If within 24 months of a “Change in Control,” (defined below) the Company terminates the employment of Mr. Petterson other than for Cause or if Mr. Petterson voluntarily resigns his employment for Good Reason, the Company will pay Mr. Petterson, in lieu of any cash severance payment, a change in control payment equal to: (i) two times the sum of his then current base salary plus the average of his target annual incentive over the three year period immediately preceding his termination; and (ii) the pro rata portion of his annual incentive and SSP benefits earned through the termination date. In the event of such a termination, Mr. Petterson is also entitled to continued coverage under the Company’s health plans for up to 24 months following the termination date and full vesting of any outstanding unvested equity awards (excluding performance-based equity awards, for which vesting credit may be awarded at the sole discretion of the Compensation Committee).  

If the Company elects not to renew the employment agreement for Mr. Petterson prior to the fourth anniversary of the employment agreement (i.e., April 28, 2021) , then Mr. Petterson will receive full vesting of any unvested equity awards irrespective of whether his employment is subsequently terminated. If the Company elects not to renew the employment agreement for Mr. Petterson during any renewal term and within 12 months following the end of the renewal term terminates Mr. Petterson’s employment without Cause or Mr. Petterson voluntarily resigns his employment for Good Reason, then Mr. Petterson will receive full vesting of any unvested equity awards.

If Mr. Petterson retires after serving as Chief Executive Officer for at least six consecutive years, provides the Board with at least 12 months written advance notice of his intent to retire and remains employed by the Company for at least 12 months after providing such notice, Mr. Petterson will receive full vesting of any of his outstanding equity awards as of the termination date; and Mr. Petterson will not be entitled to and will be ineligible to receive any new equity awards following the date on which Mr. Petterson notifies the Board of his retirement.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 49

---

EXECUTIVE COMPENSATION

Mr. Petterson’s employment agreement does not provide for the continuance of any compensation or benefit obligations upon death or disability; however, pursuant to Mr. Petterson’s RSU agreements, Mr. Petterson would receive full vesting of any unvested equity awards under such circumstances.

For purposes of Mr. Petterson’s agreement:

“Cause” means: (a) a material breach of the agreement or an established policy of the Company; (b) an act constituting a felony or engagement in unethical or immoral conduct that, in the reasonable judgment of the Board, could injure the integrity, character or reputation of the Company; (c) failure, refusal or inability to perform or habitual neglect of duties and responsibilities following written notice and opportunity to cure; (d) an act of material dishonesty, misconduct or fraud or violation of a fiduciary duty; or (e) failure to reasonably cooperate with any audit or investigation following written notice and opportunity to cure.                                                                                                                                                                                                      

“Change in Control” means the occurrence of one or more of the following:

A Change in Control will not be deemed to have occurred under the employment agreement and compensation plans if the named executive officer is part of a purchasing group that consummates the Change in Control transaction.

“Good Reason” means the occurrence of any of the following:

A Good Reason resignation may occur under Mr. Petterson’s employment agreement only if: (i) such voluntary resignation occurs within one hundred fifty (150) days following the initial occurrence of the event giving rise to Good Reason; (ii) Mr. Petterson provided written notice of such event to the Board within ninety (90) days of the occurrence; and (iii) the Company failed to cure the event in question within thirty (30) days of receipt of such written notice from Mr. Petterson.

Lasse J. Petterson

 

50 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

EXECUTIVE COMPENSATION

The Simonelli Agreement – Termination Provisions

Under Mr. Simonelli’s agreement, if Mr. Simonelli’s employment is terminated by the Company for “Cause” (defined below) or by the executive other than for “Good Reason” (defined below), Mr. Simonelli will be entitled to his base salary and employee benefits through the termination date. For potential payments upon voluntary resignation, termination without Cause or for Good Reason, or after a “Change in Control” (defined below), per Mr. Simonelli’s agreement, Mr. Simonelli’s payments are based upon his 2015 base salary.

If Mr. Simonelli voluntary resigns his employment, then the Company may elect to either: (a) cease all compensation and benefits upon the resignation date, in which case Mr. Simonelli would no longer be subject to the non-competition and non-solicitation covenants included in the agreement; or (b) enforce such covenants for a period of 24 months following termination and provide the executive with a cash severance benefit equal to 18 months of base salary.

Under Mr. Simonelli’s agreement, if Mr. Simonelli’s employment is terminated by the Company without Cause or Mr. Simonelli leaves for Good Reason, he will receive: (i) 24 months of his base pay, less applicable withholdings, payable according to the Company’s scheduled payroll pay dates; (ii) the prior year’s annual incentive plus SSP benefits earned through the termination date, paid at the same time as continuing executives; (iii) 24 months of subsidized medical and dental coverage; (iv) full vesting credit for any unvested equity awards; and (v) payment of outplacement services of up to $15,000 provided such services are rendered within one year of Mr. Simonelli’s termination.

If Mr. Simonelli’s employment is terminated without Cause within 12 months after a Change in Control, he will receive: (i) two times his annual base pay, less applicable holdings, payable in a lump sum; (ii) the pro rata portion of the prior year’s annual incentive plus SSP benefits earned through the termination date, paid at the same time as continuing executives; (iii) 24 months of subsidized medical and dental coverage; and (iv) full vesting credit for any unvested equity awards (excluding performance-based equity awards, for which vesting credit may be awarded at the sole discretion of the Compensation Committee).

If Mr. Simonelli dies or becomes permanently disabled, he will receive full vesting credit for any unvested equity awards. In addition, if Mr. Simonelli retires, he will receive full vesting of any of his unvested equity awards.

For purposes of Mr. Simonelli’s agreement:

“Cause” means: (a) a material breach of the non-competition and confidentiality provisions of the employment agreement; (b) the commission of a criminal act, including, but not limited to, fraud, embezzlement or theft; (c) the conviction, plea of no contest or nolo contendere, deferred adjudication or unadjudicated probation for any felony or any crime involving moral turpitude; or (d) failure or refusal to carry out, or comply with, any lawful directive of our Board of Directors consistent with the terms of the employment agreement which is not remedied within 30 days after receipt of notice from us.

“Change in Control” means the occurrence of one or more of the following:

A Change in Control will not be deemed to have occurred under the employment agreement and compensation plans if the named executive officer is part of a purchasing group that consummates the Change in Control transaction.

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 51

---

EXECUTIVE COMPENSATION

“Good Reason” means the material diminution of the executive’s authority, duties or responsibilities provided that the executive provides the Company with written notice within 30 days of such diminution and the Company failed to cure such diminution within 30 days of receipt of such written notice.

David E. Simonelli

 

 

 

The Marinko and LaVoy Agreements – Termination Provisions

Our employment agreements with each of Mr. Marinko and Ms. LaVoy have similar termination provisions. Under each executive’s agreement, if the executive’s employment is terminated by the Company for “Cause” (defined below) or by the executive other than for “Good Reason” (defined below), the executive will be entitled to his or her base salary and employee benefits through the termination date.

Under each executive’s agreement, if the executive is terminated by the Company without Cause or the executive leaves for Good Reason, the executive will receive (i) continuation of base pay during a specified severance period (18 months for Mr. Marinko and 15 months for Ms. LaVoy), in each case, less applicable withholdings, payable according to the Company’s scheduled payroll pay dates; (ii) for Mr. Marinko, one and one-half times of his actual annual incentive and SSP benefits over the preceding three years, paid at the same time as continuing executives; (iii) for Mr. Marinko, the pro rata portion of his annual incentive at target; (iv) subsidized medical and dental coverage during the severance period; (v) vesting credit equal to the number of months in the severance period for any unvested equity awards; and (vi) for Ms. LaVoy, payment of outplacement services of up to $15,000, provided such services are rendered within one year of termination.

If the executive is terminated without Cause within 12 months  after a “Change in Control” (defined below), the executive will receive (i) a multiple of the sum of the executive’s annual base pay plus the average of the executive’s annual incentive over the preceding three-year period (two times actual for Mr. Marinko and 1.25 times target for Ms. LaVoy), less applicable withholdings, payable in a lump sum; (ii) the pro rata portion of the executive’s annual target incentive earned

52 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

EXECUTIVE COMPENSATION

through the termination date for the year of termination; (iii) for Mr. Marinko, the pro rata portion of his SSP benefits earned through the termination date for the year of termination; (iv) subsidized medical and dental coverage for 24 months or, in the case of Ms. LaVoy, 12 months); and (v) full vesting credit for any unvested long-term incentive awards (excluding performance-based equity awards, for which vesting credit may be awarded at the sole discretion of the Compensation Committee.

For Mr. Marinko, if the executive dies or becomes permanently disabled, he will receive full vesting credit for any unvested equity awards. In addition, for Mr. Marinko if he retires upon or after having attained age 65 years, he will receive full vesting of any unvested equity awards. Ms. LaVoy’s employment agreement does not provide for the continuance of any compensation or benefits obligations upon death or disability; however, pursuant to Ms. LaVoy’s restricted stock unit award agreements, she would receive full vesting of any unvested equity awards under such circumstances.

For purposes of Mr. Marinko and Ms. LaVoy agreements:

“Cause” means: (a) a material breach of an established policy of the Company; (b) an act constituting a felony or engagement in unethical or immoral conduct that, in the reasonable judgment of the Board, could injure the integrity, character or reputation of the Company; (c) failure, refusal or inability to perform or habitual neglect of duties and responsibilities following written notice and opportunity to cure; (d) an act of material dishonesty, misconduct or fraud or violation of a fiduciary duty; or (e) failure to reasonably cooperate with any audit or investigation following written notice and opportunity to cure.

“Change in Control” means the occurrence of one or more of the following:

A Change in Control will not be deemed to have occurred under the employment agreement and compensation plans if the named executive officer is part of a purchasing group that consummates the Change in Control transaction.

 

“Good Reason” means the material diminution of the executive’s authority, duties or responsibilities provided that the executive provides the Company with written notice within 90 days of such diminution and the Company failed to cure such diminution within 30 days of receipt of such written notice.

Mark W. Marinko  

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 53

---

EXECUTIVE COMPENSATION

 

Kathleen M. LaVoy  

 

54 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

EXECUTIVE COMPENSATION

CEO Pay Ratio

 

Background

 

Pursuant to Section 953(b) of the Dodd-Frank Wall Street Form and Consumer Protection Act, and in accordance with the adoption of Item 402(u) of Regulation S-K, the SEC requires the disclosure of our Chief Executive Officer to median employee pay ratio.

To understand this disclosure, we think it is important to give context to our operations. Our corporate headquarters are located in Oak Brook, Illinois, and we operate dredges, vessels and ancillary equipment to perform dredging projects domestically and internationally. As a global organization, approximately 12% of our employees are located outside of the United States. We strive to create a global compensation program, which is competitive in terms of both the position and the geographic location in which the employee is located. Accordingly, our pay structures vary amongst employees based on position and geographic location.

Identification of Median Employee

We selected December 31, 2019 as the date on which to determine our median employee. As of that date, we had approximately 1,160 employees. For purposes of identifying the median employee, we considered all domestic employees and international employees, whether employed on a full-time, part-time, or seasonal basis.

We identified the median employee by examining the 2019 total wages and incentives less non-taxable compensation for all individuals, excluding our CEO, who were employed by the Company on December 31, 2019, the last day of the Company’s fiscal year. To provide a more uniform comparison between domestic and international employees, we excluded from the consistently applied compensation measure allowances for housing, subsistence, safety bonuses, and transportation provided for employees working in the Middle East. Compensation paid in foreign currencies was converted to U.S. dollars based on exchange rates in effect on December 31, 2019.

Other than as described above, we did not make any assumptions, adjustments, or estimates with respect to compensation, and we did not annualize the compensation for any full-time employees that were not employed by the Company for all of 2019. In determining the annual total compensation of the median employee, we calculated such employee’s compensation in accordance with Item 402(c)(2)(x) of Regulation S-K as required pursuant to SEC executive compensation disclosure rules. This calculation is the same calculation used to determine total compensation for purposes of the Summary Compensation Table on page 43 with respect to each of the named executive officers.

 

Ratio

 

For fiscal year 2019:

Based on this information, the ratio of the annual total compensation of Mr. Petterson to the median of the annual total compensation of all employees is estimated to be 39.6 to 1. Given the different methodologies that various public companies will 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.

 

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 55

---

 

PROPOSAL NO. 3 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

In accordance with Section 14A of the Exchange Act, the Board of Directors provides stockholders with the opportunity to cast an annual advisory vote to approve executive compensation. This proposal, commonly known as a “say-on-pay” proposal, gives you the opportunity to endorse or not endorse our fiscal year 2019 executive compensation program and policies for the named executive officers, as follows:

RESOLVED, that the stockholders of Great Lakes Dredge & Dock Corporation approve, on an advisory basis, the compensation of the Company’s named executive officers, as described in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure, set forth in the Company’s 2020 Annual Meeting proxy statement.

The advisory vote on executive compensation is not a vote on our general compensation policies, compensation of our Board of Directors or our compensation policies as they relate to risk management.

We are required to hold the advisory vote on executive compensation at least once every three years. At the Company’s 2017 Annual Meeting of Stockholders, a majority of the shares cast voted, on an advisory basis, to hold future advisory votes on executive compensation on an annual basis. After consideration of the voting results, the Company’s Board of Directors determined that the Company will hold an advisory vote on executive compensation each year until the next required stockholder advisory vote on frequency of executive compensation occurs or until the Board of Directors otherwise determines that a different frequency for advisory votes on executive compensation is in the best interests of stockholders.

Our executive compensation programs are designed to attract, motivate and retain highly qualified executive officers who are able to achieve short-term and long-term corporate objectives and create stockholder value. The Compensation Committee believes our executive compensation programs reflect a strong pay-for-performance philosophy and are well aligned with our stockholders’ long-term interests.

The Compensation Committee and the Board believe our executive compensation programs are effective at incentivizing the achievement of outstanding financial performance and superior returns to stockholders. We believe that our commitment to align executive compensation with Company performance and stockholder interests is exhibited by the Company’s executive compensation decisions during the last 12 months. For example, under our Executive Leadership Annual Incentive Program, annual incentive pools are funded based on our Adjusted EBITDA from Continuing Operations. These annual incentive pools are allocated to individuals based on the Compensation Committee’s assessment of individual performance achievements. In addition, the Compensation Committee grants performance–based restricted stock units to certain executives that are only earned upon achievement of performance goals. Because these performance goals were not achieved, performance–based restricted stock units granted in 2014, 2015, 2016 and 2017 were forfeited. In 2018 and 2019, the Company performance was extraordinary and, as a result, the performance–based restricted stock units based on 2018 and 2019 financial performance earned at the maximum level.

Stockholders are urged to read the Compensation Discussion and Analysis section of this Proxy Statement, which more thoroughly discusses how our executive compensation policies and procedures implement our executive compensation philosophy.

Although the annual advisory stockholder vote on executive compensation is non-binding, the Compensation Committee has considered, and will continue to consider, the outcome of the vote each year when making executive compensation decisions for our named executive officers. The Compensation Committee, which is comprised of independent directors, values constructive dialogue with our stockholders on executive compensation and other important governance topics and encourages all stockholders to vote their shares on this matter. At our 2019 Annual Meeting of Stockholders, approximately 56% of the stockholders who voted on the “say-on-pay” proposal voted in favor of the compensation of our named executive officers. The Compensation Committee believes that this vote affirms the majority of stockholders’ support of the Company’s approach to executive compensation. Both the Board and Compensation Committee expect to take into account the outcome of this year’s vote when considering future executive compensation decisions to the extent they can determine the cause or causes of any significant negative voting results.

In 2019, as described in “Stockholder Outreach Initiative” on page 25, the Company undertook an outreach campaign designed to solicit stockholder feedback on the Company’s executive compensation policies and procedures. The

56 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

PROPOSAL NO. 3 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

outreach campaign also included conversations with two proxy advisory firms. As part of the process, the Company engaged a new executive compensation consultant to take a fresh look at the executive compensation program. The feedback from stockholders, the proxy advisory firms and the executive compensation consultant was used by the Compensation Committee to make changes to the 2020 executive compensation program, placing a greater emphasis on performance-based compensation as discussed in “Stockholder Outreach Initiative” on page 25.

Vote Required and Recommendation

Adoption of this resolution will require the affirmative vote of the majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon, assuming a quorum is present. Abstentions will be treated as being present and entitled to vote on the matter, and therefore, will have the effect of a vote against the proposed resolution.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ADOPTION OF THE RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THE COMPENSATION DISCUSSION AND ANALYSIS SECTION AND THE RELATED TABULAR AND NARRATIVE DISCLOSURE SET FORTH IN THIS PROXY STATEMENT.

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 57

---

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table is based on 64,645,427 shares of common stock outstanding as of the record date, and sets forth certain information with respect to the beneficial ownership of our common stock as of the same date by:

Unless otherwise stated, each of the persons in the table has sole voting and investment power with respect to the securities beneficially owned. 

 

 

Ø Denotes less than 1%

58 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

DELINQUENT SECTION 16(A) REPORTS

Section 16(a) of the Exchange Act requires our directors, executive officers and all persons who beneficially own more than 10% of the outstanding shares of our common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock.

Based solely on our review of filings with the SEC and/or written representations and materials furnished to us from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and persons who own more than 10% of our common stock were complied with in 2019 and 2020 to date, except for certain delinquent filings that the Company disclosed in last year’s Proxy Statement and one Form 4 for Ryan Levenson was filed one day late that reported shares of stock sold (two transactions) that were owned by Privet Fund, LP.

 

 

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 59

---

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Review, Approval or Ratification of Transactions with Related Persons

Related Party Transaction Policies and Procedures. All interested transactions with related parties are subject to our Related Party Transaction Policies and Procedures, which are set forth in writing (the “Related Party Transaction Policy”). The Audit Committee is responsible for applying the Related Party Transaction Policy. For purposes of the Related Party Transaction Policy, the terms “interested transaction” and “related parties” are defined as follows:

In determining the propriety of an interested transaction with a related party, the Audit Committee will take into account, among other factors it deems important, whether the interested transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction.

Our Board has delegated to the Chair of the Audit Committee the authority to pre-approve or ratify (as applicable) any interested transaction with a related party in which the aggregate amount involved is expected to be less than $500,000.

The Audit Committee has reviewed the following types of transactions and determined that each such type of transaction shall be deemed to be pre-approved or ratified under the terms of the Related Party Transaction Policy:

 

60 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 61

---

 

Equity Compensation Plan Information

The following table sets forth information as of December 31, 2019 regarding the number of securities which could be issued upon the exercise of outstanding options, the weighted average exercise price of those options in the 2017 LTIP, and the number of securities then remaining for future issuance under the 2017 LTIP.

 

 

 

 

62 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement                                                                                                                             

---

 

INFORMATION ABOUT THE ANNUAL MEETING AND VOTING

Shares Entitled to Vote

Only stockholders of record of our common stock, par value $0.0001 per share, at the close of business on the record date will be entitled to vote at the 2020 Annual Meeting. As of the record date, there were a total of 64,645,427 shares of our common stock outstanding, each share being entitled to one vote. There is no cumulative voting.

Quorum Requirement

The presence at the 2020 Annual Meeting, in person or by proxy, of the holders of a majority of the shares of our outstanding common stock will constitute a quorum for the transaction of business at the Annual Meeting. If a quorum is not present or represented at the Annual Meeting, holders of a majority of shares of our outstanding common stock entitled to vote at the Annual Meeting, present in person or represented by proxy, will have the power to adjourn the Annual Meeting without notice, other than the announcement at the Annual Meeting of such adjournment, until a quorum shall be present or represented.

Even if you plan to attend the Annual Meeting, in order to ensure the presence of a quorum at the Annual Meeting, please vote your shares in accordance with the instructions described below. Abstentions and broker non-votes are counted as present for purposes of establishing a quorum. A broker non-vote occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner.

Beneficial Owners

If you are the registered holder of shares, then you are the record holder of those shares, and you should vote your shares as described in the next section.

If you own shares through a broker, the registered holder of those shares is the broker or its nominee. Such shares are often referred to as being held in “street name,” and you, as the beneficial owner of those shares, do not appear in our stock register. For street name shares, there is a two-step process for distributing our proxy materials and tabulating votes. Brokers inform us as to how many of their clients own common stock in street name, and the broker forwards our proxy materials to those beneficial owners. If you receive our proxy materials from your broker, including a voting instruction form, you should vote your shares by following the procedures specified on the voting instruction form. Shortly before the Annual Meeting, your broker will tabulate the votes it has received and submit a proxy card to us reflecting the aggregate votes of the street name holders. If you plan to attend the Annual Meeting and vote your street name shares in person, you should contact your broker to obtain a broker’s proxy card and bring it to the Annual Meeting.

Discretionary Voting by Brokers

Under current rules governing registered brokers, if you do not instruct your broker on how to vote, your broker will have discretionary voting power for ratification of Deloitte & Touche LLP as our independent registered public accounting firm (Proposal 2), but would not have discretionary voting power for the election of directors (Proposal 1) or the advisory vote on executive compensation (Proposal 3).

How to Vote

You can vote at the Annual Meeting in person or by proxy. We recommend that you vote by proxy even if you plan to attend the Annual Meeting. You can always attend the Annual Meeting and revoke your proxy by voting in person.

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 63

---

INFORMATION ABOUT THE ANNUAL MEETING

There are three ways to vote by proxy:

 

 

 

 

 

 

Votes submitted by telephone or electronically over the internet must be received by 11:59 P.M., Central Time, on May 5, 2020.

By giving us your proxy, you are authorizing the individuals named on our proxy card, the proxies, to vote your shares in the manner you indicate. You may:

You may vote “FOR” or “AGAINST” or “ABSTAIN” from voting on the ratification of Deloitte & Touche LLP as our independent registered public accounting firm for the year ending December 31, 2020 and the approval of the non-binding resolution to approve the Company’s executive compensation.

Votes by Proxy

All shares that have been properly voted by proxy and not revoked will be voted at the Annual Meeting in accordance with the instructions contained in the proxy. Shares represented by proxy cards that are signed and returned but do not contain any voting instructions will be voted consistent with the Board’s recommendations:

How to Revoke Your Vote

A stockholder may revoke a proxy at any time prior to its exercise:

A stockholder may also revoke a proxy at any time prior to its exercise by telephone or electronically over the internet provided that it must be received by 11:59 P.M., Central Time, on May 5, 2020:

64 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

INFORMATION ABOUT THE ANNUAL MEETING

 

Vote Necessary to Approve Proposals

Proposal 1: The nominees for director for a three-year term will be elected provided that they receive the affirmative vote of a plurality of shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. This means that, if a quorum is present, the two persons receiving the greatest numbers of votes at the Annual Meeting will be elected to serve as directors. Withholding authority to vote for a director nominee will not affect the outcome of the election of directors. Broker non-votes will have no effect on the election of directors.

Proposal 2: Deloitte & Touche LLP will be ratified as our independent registered public accounting firm for the year ending December 31, 2020, provided the proposal receives the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will be treated as being present and entitled to vote on the matter and, therefore, will have the effect of votes against the proposal.

Proposal 3: The advisory resolution to approve the compensation of our named executive officers will be approved provided the proposal receives the affirmative vote of a majority of the shares present in person or represented by proxy at the Annual Meeting and entitled to vote thereon. Abstentions will be treated as being present and entitled to vote on the matter and, therefore, will have the effect of votes against the proposed resolution. A broker non-vote is treated as not being entitled to vote on the matter and, therefore, is not counted for purposes of determining whether the proposal has been approved. Although the outcome of this advisory vote on the compensation of our named executive officers is non-binding, the Compensation Committee and our Board will review and consider the outcome of this vote when making future compensation decisions for our named executive officers.

 

GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | 65

---

 

OTHER MATTERS

Other Business at the Annual Meeting

The Board of Directors knows of no other matters that will be presented for consideration at the 2020 Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.

Proposals for the 2021 Annual Meeting of Stockholders

Pursuant to federal securities laws, any proposal by a stockholder proposed to be included in our proxy statement for the 2021 Annual Meeting of Stockholders (“2021 Annual Meeting”) must be received at our principal executive office at One Parkview Plaza, 17W110 22nd Street, Oakbrook Terrace, Illinois 60181, no later than November 24, 2020. Proposals should be sent to the attention of our Corporate Secretary at our principal executive office. Pursuant to our Bylaws, in order for a stockholder’s nominee for election as a director or any other business to be properly brought before the 2021 Annual Meeting, the stockholder must give written notice of such stockholder’s intent to bring a matter before the 2021 Annual Meeting no earlier than November 24, 2020, and no later than December 24, 2020. If the 2021 Annual Meeting is called for a date that is not within 30 days of the anniversary of the 2020 Annual Meeting, written notice of such stockholder’s intent to bring a matter before the 2021 Annual Meeting must be received not earlier than 120 days prior to such 2021 Annual Meeting date and not later than the close of business on the later of the 90th day prior to such 2021 Annual Meeting date or the tenth day following the date on which the first public disclosure of the date of the 2021 Annual Meeting is made. Each such notice should be sent to the attention of our Corporate Secretary at our principal executive office, and must set forth certain information with respect to the stockholder who intends to bring such matter before the meeting and the business desired to be conducted, as set forth in greater detail in our Bylaws.

Householding of Proxy Materials

Some banks, brokers, and other record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one Notice, or if you requested paper copies, one copy of our Proxy Statement and 2019 Annual Report on Form 10-K may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of these documents to you if you contact the Broadridge Householding Department at the following address or phone number:

Broadridge Financial Solutions, Inc.

Householding Department

51 Mercedes Way, Edgewood, New York 11717

1-800-542-1061

If you want to receive separate copies of Notices of Internet Availability, or paper copies of our proxy statements and annual reports on Form 10-K in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker, or other record holder, or you may contact Broadridge at the address and phone number shown.

Solicitation of Proxies

We will bear the costs and expenses of preparing and mailing proxy solicitation materials for the Annual Meeting and will reimburse brokerage firms and others for their reasonable out-of-pocket expenses for forwarding proxy solicitation materials to stockholders. We have retained MacKenzie Partners, Inc. to assist in the solicitation of proxies at an anticipated approximate cost of $12,500 plus reasonable out-of-pocket expenses. Proxies may also be solicited in person, by telephone, or by facsimile by our directors, officers and employees without additional compensation being paid to these persons.

 

 

 

66 | GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement

---

 

APPENDIX A

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES  

We report our financial results in conformity with U.S. generally accepted accounting principles (“GAAP”). We use certain non-GAAP financial measures as part of our compensation program, including Adjusted EBITDA from Continuing Operations, Adjusted EBIT (or “EBIT”) and Adjusted EBT (or “EBT”).

In our “Compensation Discussion and Analysis” (“CD&A”) on page 27, we include information regarding notable financial achievements in 2019, including a non-GAAP measure, Adjusted EBITDA from Continuing Operations.  In our CD&A on page 36, we include our performance targets based on 2019 Adjusted EBITDA from Continuing Operations, Adjusted EBIT and Adjusted EBT as compared to our 2019 financial results for those measures.  We provide below a reconciliation for each of these 2019 measures.  

We use non-GAAP performance measures in our compensation program because we believe growth in these measures is important to the Company’s short and long-term success. Our non-GAAP financial measures should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP. Other companies may calculate similar non-GAAP financial measures differently than we do, limiting the usefulness of the measure for comparisons with other companies.

 

 

Appendix A – GREAT LAKES DREDGE & DOCK CORPORATION – 2020 Proxy Statement | A-1

---

 

 

  VOTE BY INTERNET - www.proxyvote.com  Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. CT on May 5, 2020. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.  ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS  If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.  VOTE BY PHONE - 1-800-690-6903  Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. CT on May 5, 2020. Have your proxy card in hand when you call and then follow the instructions.  VOTE BY MAIL  Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. GREAT LAKES DREDGE & DOCK CORPORATION  Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY D01471-P33312 1a. Dr. Elaine J. Dorward-King 1b. Ryan J. Levenson NOTE: Such other business as may properly come before the meeting or any adjournment thereof. 2. To ratify Deloitte & Touche LLP as the Company's independent registered public accounting firm for the year ending December 31, 2020; 3. To approve, on a non-binding advisory basis, the Company's executive compensation; Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. 1. Election of Directors Nominees: For Withhold ! ! ! ! GREAT LAKES DREDGE & DOCK CORPORATION The Board of Directors recommends you vote FOR the following: GREAT LAKES DREDGE & DOCK CORPORATION C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS, INC. PO BOX 1342 BRENTWOOD, NY 11717 The Board of Directors recommends you vote FOR proposals 2 and 3. For Against Abstain

C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS, INC.  PO BOX 1342  BRENTWOOD, NY 11717  D01471-P33312  GREAT LAKES DREDGE & DOCK CORPORATION  The Board of Directors recommends you vote FOR the following:  1. Election of Directors  Nominees:  For  Withhold  !  !  1a. Dr. Elaine J. Dorward-King  ! !  1b. Ryan J. Levenson  The Board of Directors recommends you vote FOR proposals 2 and 3.  For  Against  Abstain  !  !  !  2. To ratify Deloitte & Touche LLP as the Company's independent registered public accounting firm for the year ending December 31, 2020;  !  !  !  3. To approve, on a non-binding advisory basis, the Company's executive compensation;  NOTE: Such other business as may properly come before the meeting or any adjournment thereof.  Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

 

---

 

 

  Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. D01472-P33312 GREAT LAKES DREDGE & DOCK CORPORATION Annual Meeting of Stockholders May 6, 2020 at 1:00 P.M. Central Time This proxy is solicited by the Board of Directors The undersigned stockholder of Great Lakes Dredge & Dock Corporation hereby constitutes and appoints Lasse J. Petterson and Kathleen M. LaVoy, each of them acting singly, as the attorney and proxy of the undersigned, with full power of substitution and revocation, to vote for and in the name, place and stead of the undersigned at the 2020 Annual Meeting of Stockholders of Great Lakes Dredge & Dock Corporation, referred to as the “Company,” to be held at the Le Méridien Hotel Chicago-Oak Brook Center, 2100 Spring Road, Grand Salon I, Oak Brook, IL 60523 on Wednesday, May 6, 2020 at 1:00 P.M. Central Time, and at any postponements or adjournments thereof, the number of votes the undersigned would be entitled to cast if present. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE DIRECTOR NOMINEES NAMED IN PROPOSAL 1 AND FOR PROPOSALS 2 AND 3. (Continued and to be signed on reverse side)