SEC Filings

RELIANCE STEEL & ALUMINUM CO filed this Form DEF 14A on 04/05/2019
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performance. The Compensation Committee believes that utilizing pretax income margin as the metric for measuring performance under the annual cash incentive plan complements and achieves an appropriate balance with the ROA metric under the long-term equity incentive award program.

The table below demonstrates that based on the Company’s historical results relative to its peer group, the pretax income margin goals are (i) reasonably demanding relative to threshold and target and (ii) extremely demanding relative to maximum performance.






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For 2018, each NEO had a target cash incentive award of 150% of base salary, which would be earned if the Company achieved pretax income margin of 5.75%. However, no NEO would receive a payout under the plan if pretax income margin was less than 3%. The maximum payout under the plan of 300% of base salary would be earned if pretax income margin equaled or exceeded 8.5%, a level of performance not achieved since 2008.

For a discussion of the Company’s cash incentive compensation achievement versus the minimum, target and maximum, see “Principal Components of Our Executive Compensation Program - Annual Cash Incentive Awards” (see page 34).

The NEOs’ performance-based equity awards are tied to achieving an ROA target. The Compensation Committee has determined that ROA, which is directly influenced by management’s decisions, is the most effective metric to measure management’s long-term performance. ROA also complements and achieves an appropriate balance with the pretax income margin metric under the annual cash incentive award program. The outstanding 2017, 2018 and 2019 performance-based equity awards will vest when the Company achieves a ROA result within a specified range over the three-year performance period.

The allocation of performance-based and service-based awards is intended to balance performance and retention objectives. In striking the appropriate balance, the Compensation Committee sought to design a policy that incentivizes strong performance while also strengthening the retention aspects of the long-term equity awards since the Company does not maintain employment agreements with its officers. Accordingly, since 2016 at least 74% of our CEO’s equity awards and 60% of our other NEOs’ equity awards have been tied to performance targets. The remaining awards are service-based. Results for the performance-based equity awards granted in 2016, which vested on December 31, 2018, were determined in the first quarter of 2018 and resulted in 130% of the target number of awards vesting.