Simpson Manufacturing (SSD) DEF 14ADefinitive proxy

The Proxy Statement, Annual Report to Stockholders and Annual Report on Form 10-K are available on the Internet at www.proxyvote.com.

Please see the “Compensation Discussion & Analysis” section in this Proxy Statement for a detailed description of our NEO compensation programs.

The Compensation and Leadership Development Committee also has oversight over the Company’s responsibility to review significant Company compensation policies and procedures, including the incentives that they create, to assess risk. At the Compensation and Leadership Development Committee’s direction, the Company’s Human Resources Department, in partnership with Meridian, the Compensation and Leadership Development Committee’s independent consultant, annually conducts a risk assessment of the Company’s compensation programs. Based on the most recent assessment, management has concluded that the compensation policies and practices of the Company and its subsidiaries for employees do not create risks that are reasonably likely to have a material adverse effect on the Company and management has presented the results of its assessment to the Compensation and Leadership Development Committee.

The Nominating and Governance Committee also considers it desirable that candidates contribute positively to the collaborative culture among Board members and possess professional and personal experiences and expertise relevant to our business and industry. The Nominating and Governance Committee solicits ideas for possible candidates from a number of sources, including independent director candidate search firms, such as The Ellig Group, members of the Board and our senior-level executives.

Once a prospective candidate has come to the Nominating and Governance Committee’s attention, including candidates recommended by its advisors or suggested by stockholders, the Nominating and Governance Committee evaluates the candidate’s qualifications and skills, against the desired director attributes, and makes an initial determination as to whether to conduct a full evaluation. In making this determination, the Nominating and Governance Committee takes into account the information provided to it with the recommendation of the candidate, as well as the Nominating and Governance Committee’s own knowledge and information obtained through inquiries to third parties to the extent the Nominating and Governance Committee deems appropriate. The preliminary determination is based primarily on the current need for additional Board members and the likelihood that the prospective candidate can satisfy the criteria that the Nominating and Governance Committee has established. If the Nominating and Governance Committee determines, in consultation with the Chair of the Board and other directors, as appropriate, that additional consideration is warranted, it may request a third party to gather additional information about the prospective candidate’s background and experience and to report its findings to the Nominating and Governance Committee. The Nominating and Governance Committee may then evaluate the prospective candidate against the Board selection criteria that it has developed.

The Board recognizes the benefits of a diversified board and believes that any search for potential director candidates should consider diversity as to gender, race, ethnic background and personal and professional experiences.

Based on these independence standards, our Board has affirmatively determined that the following directors are independent and meet our categorical independence standards:

At the forefront of these values is doing what is right for our employees’ safety and well-being, as well as for our customers, communities and environment. We honor the Nine Principles of Business through our involvement in our local communities and efforts to help protect our environment.

You can find additional details regarding our sustainability and environmental and social responsibility efforts and other related programs in our Sustainability, Environmental and Social Responsibility Report on our website at www.ir.simpsonmfg.com/sustainability.

We do not have a policy that requires our directors to attend annual meetings of stockholders, but 100% of our current directors attended the 2021 Annual Meeting of Stockholders (with the exception of Mr. Knight who was not appointed to the Board until after the 2021 Annual Meeting of Stockholders).

Meridian was engaged by the Compensation and Leadership Development Committee to provide services including:

The Compensation and Leadership Development Committee has considered the required independence factors outlined by the SEC and NYSE rules in assessing the independence of the compensation consultants. Consideration was also given by the Compensation and Leadership

The Chair of the Board also receives an additional grant of vested shares with a value of approximately $25,000 along with the Additional Board Chair cash retainer.

The table below summarizes the compensation earned by or paid to our nonemployee directors during the year ended December 31, 2021.

For the reasons discussed in the “Compensation Discussion & Analysis,” accompanying compensation tables and related narrative disclosures in this Proxy Statement, the Board unanimously recommends that stockholders vote “FOR” the following resolution:

“RESOLVED, that the compensation paid to the NEOs, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion & Analysis, compensation tables and accompanying narrative discussion in Simpson‘s Proxy Statement relating to its 2022 Annual Meeting of Stockholders, is hereby APPROVED.”

Although the resolution is non-binding, the Board and Compensation and Leadership Development Committee expect to consider the outcome of the vote when making future compensation decisions.

The nature of our industry demands that we adhere to a focused strategy to build stockholder long-term value over time. During 2021, our management team continued to execute against the strategic goals set by the Board, which resulted in increases in net sales and return on invested capital (“ROIC”) for our stockholders. Our key 2021 performance highlights are set forth below:

The following chart shows the Company’s performance against the S&P 500, the Dow Jones U.S. Building Materials & Fixtures Index and our compensation peer group (as identified below) in terms of total stockholder returns (“TSR”) delivered to our stockholders in 2021.

In 2021, our CEO was granted equity awards with a target grant date total value of approximately $2,400,000, and our other NEOs were granted equity awards with target grant date values from approximately $215,000 to approximately $715,000. Approximately 35% of the target equity award value was delivered in the form of time-based restricted stock units (“RSUs”) and the other approximately 65% of the target equity award value was delivered in the form of performance-based restricted stock units (“PSUs”). These PSUs are fully “at-risk” and will vest only on achievement of revenue growth and ROIC performance metrics in a 2021-2023 measurement period. For 2021-2023 PSUs, we altered our approach to setting the goals for the performance metrics applicable to these PSUs. Annual revenue growth and ROIC performance goals are set at the beginning of each year in the 3-year measurement period (as opposed to setting cumulative 3-year goals or setting all three years of goals at the beginning of the measurement period), and the 3-year average results determine the number of PSUs that vest. The awards are forfeited if the threshold performance goals are not met, and the maximum amount of shares that may potentially vest under these PSUs (if and when the highest-tier performance goals are met) are capped at 200% of the target shares. The RSUs are generally subject to a three-year vesting period with the RSUs vesting in equal annual installments on the first, second and third anniversaries of the vesting start date (as determined by the CLDC), respectively.

Please refer to the “2021 Summary Compensation Table,” “NEO Compensation Program Design” and “Executive Compensation Analysis” subsections below for a more detailed disclosure of our CEO and the other NEOs’ 2021 total compensation programs and values.

Following the 2021 Annual Meeting of Stockholders, we again continued to actively engage with numerous stockholders on matters of corporate governance, executive compensation and related matters. These efforts were led by the Chair of our Board and our CFO to help ensure a direct line of communication between the Board and our stockholders. We also continue to work with Meridian to monitor changes in executive compensation to keep our executive compensation program aligned with both our business strategy and best practices in our competitive market.

We are also committed to maintaining strong compensation risk management practices that support our pay for performance philosophy, mitigate risk, and align interests of our executives and our stockholders:

After carefully evaluating the aforementioned factors and incorporating inputs from its independent compensation consultant and our management, the CLDC approves the performance goals for our NEOs.

The performance goals for NEOs’ 2021 EOCPS and performance-based equity awards and their alignment with our strategies are set forth below:

Each element of our compensation programs possesses characteristics intended to motivate our NEOs and other employees in different ways. We believe that coordinated compensation elements work best to help us to retain their services and to motivate them to achieve results that increase stockholder value.

If the operating income achievement is less than the threshold goal in any quarter, our NEOs receive no EOCPS award payment for such quarter. If the annual operating income achievement is less than the annual threshold goal for the year, our NEOs receive no EOCPS award payments for the annual portion of the award, but may still receive one or more quarterly EOCPS payments during the year. If the operating income achievement is less than the threshold goal in each quarter and for the full year, our NEOs receive no EOCPS award payouts for that year. Our CLDC

Operating income of Simpson Strong-Tie Company Inc. is generally calculated as follows:

In early 2022, the CLDC reviewed the CEO and other NEO’s pre-established MBO goals and the level of achievement. The CLDC did not make an adjustment to the EOCPS payouts based on the MBO modifier, due to the NEOs achieving the maximum payout level based on the operating income results.

RSUs accounted for 35% of the 2021 target equity awards of our NEOs while PSUs accounted for the remaining 65%. In terms of target equity award values, the CEO and other NEOs’ target award values were

The 2021 PSU awards incorporate annual performance goals established at the beginning of each year in the 3-year performance period due to the heightened uncertainty caused by the COVID-19 pandemic and the challenge with setting 3-year cumulative goals in early 2021. The target PSUs in the table above reflects the total target PSUs for the full 3-year period, which were allocated in substantially equal amounts for each of the 2021, 2022 and 2023 performance periods.

For the 2022 PSU award, the Company will revert back to 3-year performance goals set at the beginning of the 3-year measurement period.

Threshold, target and maximum levels for these performance metrics were as follows:

Actual performance results for the 2019-2021 performance period were 13.4% compounded annual revenue growth (earning 200.0% of the target PSUs for this metric) and 19.1% average ROIC (earning

The 2011 Incentive Plan provides that, on a change in control of the Company, if the surviving or resulting entity refuses to continue the PSU or RSU awards and does not substitute similar awards, and if the nature and terms of employment or engagement, including compensation and benefits, of a recipient will change significantly as a result of the change in control, then the awards will vest ahead of schedule. Individual grant agreements may alter this default arrangement.

See “Potential Payments on Termination or Change in Control” below for a more detailed discussion on early vesting of our NEOs’ PSU and RSU awards.

Our CEO, CFO and Vice President of Human Resources are currently trustees of the profit sharing trust plan. All of our participating employees under the plan, including our NEOs, are entitled to proportionate shares of forfeited contributions from employees who terminate their employment with us before such contributions fully vest. The plan also includes a 401(k) feature that allows our employees, including our NEOs, to contribute their pre-tax and/or Roth IRA earnings in addition to the amounts that we contribute to their accounts. We generally view our contributions to employees’ profit sharing trust accounts as serving a similar objective as salaries. The table below sets forth, for each of our NEOs, the Company contribution that was made to his or her respective profit sharing trust account for 2021, as compared to his or her 2020 profit sharing trust contribution:

The following 15 companies in the building products or construction material industries were considered our peer companies in the process of setting compensation for our NEOs for 2021. These 15 companies and the Company, ranked based on their 2020 revenues, are set forth below:

A Covered Period means (1) the three completed fiscal years preceding the date on which the Company is