SEC Filings

DEF 14A
RELIANCE STEEL & ALUMINUM CO filed this Form DEF 14A on 04/05/2019
Entire Document
 

COMPENSATION DISCUSSION AND ANALYSIS 

This Compensation Discussion and Analysis describes our executive compensation philosophy and program and how it applies to our executive officers, including our named executive officers identified below (whom we sometimes refer to collectively as our “NEOs”).

 

 

 

Named Executive Officer

    

Title

James D. Hoffman(1)

 

President and Chief Executive Officer

Karla R. Lewis

 

Senior Executive Vice President and Chief Financial Officer

William K. Sales, Jr.

 

Executive Vice President, Operations

Michael P. Shanley

 

Senior Vice President, Operations

Gregg J. Mollins(2)

 

Former Chief Executive Officer and President


(1)

In accordance with the Company’s succession plan, Mr. Hoffman was promoted to President and Chief Executive Officer effective January 1, 2019 following the retirement of Mr. Mollins as the Company’s Chief Executive Officer and President. During all of 2018, Mr. Hoffman served as Executive Vice President and Chief Operating Officer.

(2)

Mr. Mollins served as the Company’s President and Chief Executive Officer through the end of 2018, when he transitioned to the non-officer role of Senior Advisor to the CEO effective January 1, 2019.

Executive Summary 

Excellent operational execution coupled with continued growth and a positive pricing environment throughout 2018 delivered record net sales, gross profit, pretax income and earnings per diluted share. 2018 financial highlights included:

·

Record net sales of $11.53 billion, an 18.7% increase from 2017;

·

Record gross profit of $3.28 billion, a 17.7% increase from 2017;

·

Our 2018 gross profit margin of 28.4% was near the high end of our estimated sustainable annual range of 27% to 29%;

·

Record pretax income of $850.6 million, a 45.7% increase from 2017; and

·

Record earnings per diluted share of $8.75 per share. Excluding the impact of tax reform, our earnings per share increased $3.27, or 59.2%, from $5.52 in 2017 to $8.79 in 2018.

 

Our record earnings, driven by higher average selling prices and shipment levels, along with our strong gross profit margin and effective working capital generated cash flow from operations of $664.6 million. We used our strong operating cash flow to further grow the Company in 2018 by completing three acquisitions and purchasing the remaining 40% noncontrolling interest of our toll processing joint venture in Mexico and investing $239.9 million in capital expenditures, while also returning value to our stockholders with $145.3 million of cash dividends and a record $484.9 million of share repurchases.

 

We believe the compensation of our NEOs in 2018 was aligned with our performance. Payments to the NEOs under our 2018 Annual Cash Incentive Plan were above target, consistent with management’s delivery of industry-leading operating results and record net sales, gross profit, pretax income and earnings per diluted share.

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