Core & Main Inc., which is based in St. Louis, Missouri, is North America’s largest distributor of water, sewer, storm, fusible piping and fire protection infrastructure products. Established in 2017 and built on the foundation of more than 87 legacy companies, the business has grown quickly, operating approximately 300 branches nationwide. It went public in July 2021 at a price of $20 per share. Currently trading at close to $25, the company appears to be holding its own in a volatile market.
The company filed its initial definitive proxy statement this week and in reading through the Compensation Discussion and Analysis, I liked their disclosure of their clawback policy (on Page 34), particularly in light of the SEC’s current rulemaking:
In connection with our IPO, we implemented a Clawback and Forfeiture Policy, applicable to all current and former executive officers, including the Chief Executive Officer, and each other current or former employee who has received an equity grant from the Company or any of its subsidiaries (each, a “clawback covered person”). In the event of:
- a restatement of the Company’s financial results due to material noncompliance with any financial reporting requirement caused by a clawback covered person being involved in fraud, misconduct or gross negligence, this policy authorizes the Company to recover any portion of any cash bonus or incentive compensation paid or awarded to such person that was higher than the amount that would have been paid or awarded if calculated based upon the restated financial results;
- incentive compensation awards being calculated based on inaccurate financial information or other inaccurate performance criteria, this policy authorizes the Company to recover up to 100% of any cash bonus or incentive compensation paid or awarded to the clawback covered person; and
- misconduct by a clawback covered person that has or might reasonably be expected to cause reputational or other harm to the Company, or misconduct or a material error committed by a clawback covered person that causes or might reasonably be expected to cause significant financial or reputational harm to the Company, this policy authorizes the Company to recover up to 100% of any cash bonuses or equity compensation awarded to the clawback covered person.
Once final rules are adopted by the SEC regarding the clawback requirements under Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we will review this policy and make any amendments necessary to comply with the final rules.
Clear and to the point, especially the “reputational harm” clause. It will be interesting to see what changes they will need to make once the SEC has adopted its final rules under Section 954.
— Mark Borges, CompensationStandards.com, May 26, 2022
