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.           )

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material under §240.14a-12

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PRIMORIS SERVICES CORPORATION

 

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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A Message from Our Chairman

DEAR STOCKHOLDERS:​

On behalf of the Board of Directors, I am pleased to invite you to attend the 2021 Annual Meeting of Stockholders of Primoris Services Corporation, a Delaware corporation (Nasdaq:PRIM), to be held on Tuesday, May 4, 2021, at 9:00 a.m. Central Time, on the 8th floor of our office building at 2300 N. Field Street, Dallas, Texas 75201. Masks and other COVID-19 safety protocols will be required at the event.

To accommodate ongoing public health issues surrounding the COVID-19 virus, we are also providing virtual access to the meeting. To participate virtually, register at https://www.viewproxy.com/Primoris/2021/ by 11:59 p.m. Central Time on April 30, 2021. Enter your name, phone number, the control number from your proxy card, and email address as part of the registration process, following which you will receive an email confirming your registration and providing your password to attend the meeting.

As always, we encourage you to vote your shares prior to the annual meeting by completing and returning the enclosed proxy card.

As we vote on the election of new board members, I want to thank our two retiring board members, Tom Tucker, who joined our board in 2008, and Pete Brown, who joined in 2009. Their wisdom and contribution over more than a decade have been invaluable.

During the Annual Meeting, we will discuss each item of business described in the accompanying Notice of the 2021 Annual Meeting of Stockholders and Proxy Statement. We encourage you to read these materials and the Annual Report to Stockholders on SEC Form 10-K carefully. A copy of the Annual Report is included in this mailing. These materials are also available on our website at www.primoriscorp.com.

Your vote is important to ensure the presence of a quorum, whether or not you plan to attend the meeting. I hope you will make certain that your shares are represented and voted by signing, dating and promptly mailing your enclosed proxy card. If you attend the Annual Meeting of Stockholders in person or virtually, you will have the right to vote during the meeting if you so desire. If you hold your shares through an account with a broker, nominee, fiduciary or other custodian, please follow the instructions you receive from them to vote your shares.

Thank you for your ongoing support of and continued interest in Primoris Services Corporation.

By Order of the Board of Directors,​

David L. King
Chairman of the Board

 

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Notice of the 2021
Annual Meeting of Stockholders

March 25, 2021

To Our Stockholders:

The 2021 Annual Meeting of Stockholders of Primoris Services Corporation, a Delaware corporation, will be held on Tuesday, May 4, 2021, at 9:00 a.m., Central Time, on the 8th floor of our office building at 2300 N. Field Street, Dallas, Texas 75201. To accommodate ongoing public health issues surrounding the COVID-19 virus, we are also providing virtual access to the meeting.

Only stockholders that owned shares of our common stock at the close of business on March 15, 2021 are entitled to vote at the Annual Meeting. A list of our stockholders will be made available at our principal executive offices at 2300 N. Field Street, Suite 1900, Dallas, Texas 75201 during ordinary business hours for ten days prior to the Annual Meeting and will also be available at the Annual Meeting.

At the Annual Meeting, we will consider the following proposals, which are described in detail in the accompanying Proxy Statement:

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to elect nine directors to hold office for a one-year term expiring at the Annual Meeting of Stockholders to be held in 2022 or until a successor is elected and qualified;

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to ratify the appointment of Moss Adams LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and

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to transact such other business as may properly come before the Annual Meeting and all adjournments or postponements thereof.

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Attending the Annual Meeting Virtually

We have created and implemented the virtual format in order to facilitate stockholder attendance and participation by enabling stockholders to participate fully, and equally, from any location around the world, at no cost. However, you will bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies. A virtual Annual Meeting makes it possible for more stockholders (regardless of size, resources or physical location) to have direct access to information more quickly, while saving the company and our stockholders time and money, especially as physical attendance at meetings has dwindled. We also believe that the online tools we have selected will increase stockholder communication. For example, the virtual format allows stockholders to communicate with us in advance of, and during, the Annual Meeting so they can ask questions of our Board of Directors or management. During the live Q&A session of the Annual Meeting, we may answer questions as they come in and address those asked in advance, to the extent relevant to the business of the Annual Meeting, as time permits.

Both stockholders of record and stockholders who hold their shares in “street name” will need to register to be able to attend the Annual Meeting via live audio webcast, submit their questions, and vote their shares electronically at the Annual Meeting by following the instructions below. Questions by stockholders can be submitted via the meeting website either in advance of or during the Annual Meeting.

 

 

If you are a stockholder of record, you must:

If your shares are held in a “street name”, you must:

Technical Difficulties

We will have technicians ready to assist you with any technical difficulties you may have accessing the Annual Meeting live audio webcast. Please be sure to check in by 8:30 a.m. Central Time on May 4, 2021, the day of the Annual Meeting, so we may address any technical difficulties before the Annual Meeting live audio webcast begins. If you encounter any difficulties accessing the Annual Meeting live audio webcast during the check-in or meeting time, please email VirtualMeeting@viewproxy.com or call 866-612-8937.

PLEASE VOTE PROMPTLY—YOUR PROXY IS REVOCABLE AND YOU MAY VOTE IN PERSON AT THE MEETING IF YOU WISH.

References to “Primoris”, the “Company”, “we”, “us” or “our” in this Notice and the accompanying Proxy Statement refer to Primoris Services Corporation and its subsidiaries and affiliates, unless otherwise indicated.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 4, 2021: This Proxy Statement and our Annual Report are available free of charge at https://www.cstproxy.com/Primoris/​2021, a site that does not have “cookies” that identify visitors to the site.

 

TABLE OF CONTENTS

 

 

PROXY STATEMENT SUMMARY

 

Voting Matters, Vote Recommendations and Rationale

How to Vote

 

Proxy Statement Summary

Who We Are

OUR CORE VALUES

 

Proxy Statement Summary

 

Proxy Statement Summary

2020 Business Highlights

 

Proxy Statement Summary

Our Compensation Highlights

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What We Do Have

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​	​	•	​	​	Performance-based cash and equity incentives	​
​	​	•	​	​	Significant portion of executive compensation is at risk based on corporate performance	​
​	​	•	​	​	Ability to clawback compensation in the event of an accounting restatement which resulted from gross negligence or misconduct	​
​	​	•	​	​	Stock ownership guidelines for executive officers and directors	​
​	​	•	​	​	Independent compensation consultant engaged by the Compensation Committee	​
​	​	•	​	​	All directors on the Compensation Committee are independent	​

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What We Don’t Have

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​	​	•	​	​	No additional retirement benefits are afforded our executives that are not provided to all employees	​
​	​	•	​	​	No speculative transactions are allowed amongst directors and executive officers	​
​	​	•	​	​	No excessive perquisites	​
​	​	•	​	​	No strict benchmarking of compensation to a specific percentile of our peer group	​
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Incentive Compensation Plan

The Company’s incentive compensation plan for senior leadership and executives is designed to provide annual awards payable in 75% cash and 25% equity in the form of Restricted Stock Units (“RSUs”). The total annual award earned is comprised of two components:

Performance Award Formula

 

Proxy Statement Summary

Corporate Governance Highlights

We believe that good corporate governance practices enable us to meet financial, operational, and strategic objectives, while advancing the long-term interests of our stockholders and promoting accountability and responsiveness amongst the Board and corporate management team.

Proposed Board Overview

The following table provides summary information about each director nominee.

C = Chair

M = Member

 

Proxy Statement Summary​

Environmental Social Governance Highlights

Primoris is proud of our record on environmental, social and governance issues. We formalized our focus on these areas in 2020 with the formation of an Environmental, Social & Governance (ESG) Committee with the support of our Board of Directors and management team. During the year, we also made progress in each area.

 

PROPOSAL 1 – ELECTION OF DIRECTORS​

 

General Information

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What am I being asked to vote on?

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You are being asked to vote to elect nine directors to hold office for a one-year term. The experience and qualifications of each director nominee is included in the biographies in this section.

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We currently have a declassified Board consisting of ten members. Our Directors have historically been divided into three classes (Class A, Class B and Class C). Previously, directors in each class were elected to serve for three-year terms that expired in successive years. In 2018, Primoris stockholders voted to approve the Company’s proposal to declassify its Board. The Board will be fully declassified at the 2021 annual meeting of the stockholders, with each director elected thereat serving a one-year term. Eight of our current Directors are independent Directors as determined under Nasdaq listing rules.

The Company has a mandatory retirement policy in its Corporate Governance Guidelines which requires that no person older than 75 years may be appointed to or nominated for a Director position. The Company has two members who meet this criteria and are not standing for re-election at the 2021 annual meeting of the stockholders, Peter C. Brown and Thomas E. Tucker. Therefore, each of Messrs. Brown’s and Tucker’s terms will end at the conclusion of the Annual Meeting. The Board engaged a third-party firm to search for candidates to fill vacancies and has nominated Jose R. Rodriguez to fill one of the vacancies and will decrease the authorized number of Directors of the Company to nine members at the conclusion of the Annual Meeting. Seven of these nine will be independent Directors as determined under Nasdaq listing rules.

The Board of Directors’ Nominating and Corporate Governance Committee recommended to the Board the nomination of each of the director nominees, for election as directors for one-year terms expiring at the 2022 Annual Meeting, or until their successors are elected and qualified or their earlier death, resignation or removal. These recommendations were adopted unanimously by the Board. If the nominees become unavailable for any reason, or if any vacancy occurs before the election at the 2022 Annual Meeting (although we know of no reason to anticipate that this will occur), the proxies may be voted for such substitute nominees as the Board may designate.

Each nominee has consented to being named in this Proxy Statement and has agreed to serve if elected. If a quorum is present and entitled to vote on the election of directors, the nominees receiving a plurality of the votes cast will be elected as directors. Abstentions and broker non-votes have no effect on the result of the vote; however, abstentions and broker non-votes will be counted as shares present for purposes of determining the presence of a quorum.

Recommendation of the Board of Directors

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Our Board of Directors recommends a vote FOR the election of each of the nine director nominees as directors to hold office until our annual meeting of stockholders to be held in 2022 or until their respective successors are duly elected and qualified or upon their earlier death, resignation or removal.

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Proposal 1 – Election of Directors​

Information Regarding Director Nominees

The following table sets forth information regarding each Director nominee up for election at the Annual Meeting. There are no family relationships among any Directors, nominees or named executive officers of the Company. To our knowledge, there are no material proceedings to which any Director or executive officer is a party adverse to the Company or has a material interest adverse to the Company.

The person named in the enclosed proxy card will vote to elect each of the Director nominees as directors, unless you withhold this authority to vote for the election of any or all of the nominees by marking the proxy to that effect.

Director Nominee Highlights

 

Proposal 1 – Election of Directors

Director Nominees’ Skills and Experience

Our Board selected the nominees based on their diverse set of skills and experiences, which align with our business strategy and contribute to the effective oversight of Primoris.

Core Qualifications Possessed by all Director Nominees

Director Biographies and Special Skills

 

Proposal 1 – Election of Directors

 

Proposal 1 – Election of Directors

 

Proposal 1 – Election of Directors

 

Proposal 1 – Election of Directors

 

Proposal 1 – Election of Directors

 

 

PROPOSAL 2 – RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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What am I being asked to vote on?

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You are being asked to vote to approve the Audit Committee’s selection of Moss Adams LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

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We are asking the stockholders to ratify the Audit Committee’s selection of Moss Adams LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021. The firm is a registered public accounting firm with the Public Company Accounting Oversight Board (“PCAOB”), as required by the Sarbanes-Oxley Act of 2002 and the rules of the PCAOB and has served as our auditor since 2006. In the event the stockholders fail to ratify the appointment, the Audit Committee will reconsider this appointment. 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 our stockholders.

A Moss Adams LLP representative is expected to attend the 2021 Annual Meeting of the Stockholders. The representative will have an opportunity to make a statement if he or she desires to do so and will be available to respond to appropriate stockholder questions.

The affirmative vote of a majority of the shares of Common Stock present, in person or by proxy, entitled to vote at the Annual Meeting is required to approve the ratification of the appointment of Moss Adams LLP as our independent registered public accounting firm for 2021.

Recommendation of the Board of Directors

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Our Board of Directors recommends a vote FOR the ratification of the appointment of Moss Adams LLP as our independent registered public accounting firm for 2021.

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CORPORATE GOVERNANCE

 

We believe that effective corporate governance is an important element of our long-term success and ability to create value for our stockholders. Our Board periodically reviews our existing corporate governance policies and practices, as well as related provisions of the Sarbanes-Oxley Act of 2002, current and proposed rules of the SEC, and the corporate governance requirements of Nasdaq. Based on its review, the Board has approved charters, policies, procedures and controls that we believe promote and enhance our corporate governance, accountability and responsibility and promote a culture of honesty and integrity.

Charters for our Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, and Strategy and Risk Committee, as well as our Corporate Governance Guidelines, are available on the Investor Relations section of our website at www.primoriscorp.com, and copies are available free of charge upon request to our Secretary at Primoris Services Corporation, 2300 N. Field Street, Suite 1900, Dallas, Texas 75201.

​	​	Recent Updates to Corporate Governance	​	​
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​	​		​	​	Declassification of the Board	​	​
​	​		​	​	Created Mandatory Retirement Age	​	​
​	​		​	​	Created Director Stock Ownership requirement	​	​
​	​		​	​	Prohibited hedging and short-selling with Primoris stock	​	​
​	​		​	​	Published Corporate Governance Guidelines and Code of Conduct	​	​

   

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What We Do

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​	​	•	​	​	Annual self-evaluation of directors	​
​	​	•	​	​	Independent Lead Director	​
​	​	•	​	​	Fully independent Audit, Compensation, Nominating & Corporate Governance, and Strategy and Risk Committees	​
​	​	•	​	​	Annual election of directors	​
​	​	•	​	​	Mandatory retirement age of 75	​
​	​	•	​	​	Stock ownership requirement for directors	​
​	​	•	​	​	Clawback Policy for executive bonus compensation	​
​	​	•	​	​	Published Code of Conduct that applies to all directors, officers, and employees	​
​	​	•	​	​	Published Corporate Governance Guidelines	​
​	​	•	​	​	Anti-bribery policy clearly outlined in Code of Conduct and Employee Handbook	​

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What We Don’t Do

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​	​	•	​	​	No Poison Pill	​
​	​	•	​	​	Anti-hedging policy prohibits hedging or short sale of Primoris stock	​
​	​	•	​	​	No gross-up of excise taxes	​
​	​	•	​	​	No defined benefit plan	​
​	​	•	​	​	No guaranteed minimum annual cash incentive payment	​
​	​	•	​	​	No excessive perquisites	​
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Corporate Governance

Board Independence

The listing standards of Nasdaq require that companies have a board of directors with at least a majority of independent directors. Determining director independence requires that the Board affirmatively determine that the director has no material relationship with us, either directly or as a partner, stockholder or officer of an organization that has a relationship with us which, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

To assist it in making independence determinations, the Board has adopted independence standards, which include the standards required by Nasdaq for independent directors. Under these standards, a director is not independent if:

On the basis of the Board independence standards identified above, and such other factors as the Board may consider from time to time, the Board has affirmatively determined that Messrs. Brown, Cook, McCallister, Rodriguez, Schauerman, Tucker and Tinstman and Mss. Mashinski and Wagner are independent.

Board Structure and Committee Composition

The Board has: (i) an Audit Committee, (ii) a Compensation Committee, (iii) a Nominating and Corporate Governance Committee and (iv) a Strategy and Risk Committee. The Board and its Committees meet throughout the year on a set schedule and also hold special meetings, both telephonically and in person, and act by written consent from time to time, as appropriate. During 2020, the Board held a total of 12 meetings, the Audit Committee held four meetings, the Compensation Committee held four meetings, the Nominating and Corporate Governance Committee held five meetings, and the Strategy and Risk Committee held five meetings. The independent Directors meet in executive session at meetings of the Board and Committees as necessary. All of the independent Directors met in executive session without any management members four times during 2020.

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Separate Chairman and CEO Roles

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The Board has separate roles of Chairman and CEO, with Mr. King serving as our Non-Executive Chairman of the Board since November 2019, when Mr. McCormick became our CEO. In May 2010, Mr. Cook was appointed by the Board as the Lead Director, responsible for chairing the Board meetings in the absence of the Chairman, chairing executive sessions of independent Directors, acting as the principal liaison between the Chairman and the independent Directors and serving as the contact Director for stockholders. The Board believes it should have the flexibility to establish a leadership structure that works best for the Company at a particular time, and it reviews that structure from time to time, including in the context of changes in leadership. The Board is of the view that its current leadership structure best serves the objective of effective Board oversight of management at this time and allows Mr. McCormick to focus primarily on the operations and management of the Company, while leveraging Mr. King’s experience to lead the Board.

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The Board and the Compensation Committee do not make decisions regarding an executive officer’s compensation in the presence of such executive officer. The compensation of our Chief Executive Officer and all other executive officers is recommended to the Board of Directors for approval by the Compensation Committee. The Board of Directors act on the recommendations in a vote in which only independent Directors participate and which takes place during executive sessions of independent Board members.

 

Corporate Governance​

Director nominees are identified and recommended for the Board of Directors’ selection by the Nominating and Corporate Governance Committee. The Board of Directors act on the recommendation in a vote in which only independent Directors participate and which takes place during executive sessions of independent Board members.

Each director attended at least 75% of the meetings of the Board and the committees of the Board, if any, on which they served during the periods for which they served as a director.

On July 1, 2020, the Company appointed two new directors to the Board, Terry D. McCallister and Patricia K. Wagner. On September 21, 2020, Mr. McCallister was appointed to the Nominating and Governance Committee and the Strategy and Risk Committee and Ms. Wagner was appointed to the Compensation Committee and the Strategy and Risk Committee. Both directors meet the Nasdaq rules for independence and therefore are independent Directors.

The Company has a mandatory retirement policy in its Corporate Governance Guidelines which requires that no person older than 75 years may be appointed to or nominated for a Director position. The Company has two members who meet this criteria and are not standing for re-election, Messrs. Brown and Tucker. Mr. Tucker joined the Company’s Board in 2008, and Mr. Brown joined in 2009.

On February 18, 2021, in anticipation of Messrs. Brown and Tucker’s retirement, the following Committee members’ responsibilities changed: Ms. Mashinski replaced Mr. Brown as Chairperson of the Audit Committee and Mr. McCallister replaced Mr. Tucker as Chairperson of the Nominating and Corporate Governance Committee. Additional changes included Ms. Wagner replacing Mr. Tinstman as Chairperson of the Compensation Committee.

The Audit, Compensation, Nominating and Corporate Governance, and Strategy and Risk committees operate under written charters adopted by the Board.

The current members of the Board committees are identified in the following table:

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1

Messrs. Brown, Cook, McCallister, Schauerman, Tinstman, and Tucker, and Mss. Mashinski and Wagner are independent Directors.

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C = Chair

M = Member

 

Corporate Governance

Committees of the Board

 

Corporate Governance​

The Compensation Committee has the power to form subcommittees for any purpose that it deems appropriate and may delegate to such subcommittee such power and authority as the Compensation Committee may deem appropriate, provided it does not delegate to a subcommittee any power or authority required by any law, regulation or listing standard to be exercised by the Compensation Committee as a whole. The Compensation Committee may consider the recommendations of our Chief Executive Officer in determining the level of compensation of the executive officers of the Company and its subsidiaries. The Compensation Committee has the authority to retain such independent consultants or advisers as it deems necessary and appropriate, including compensation consultants, to advise it with respect to amounts or forms of executive or Director compensation, and may rely on the integrity and advice of any such advisers. The Compensation Committee also has the sole authority to retain a compensation consultant to assist it in carrying out its responsibilities, including the sole authority to approve the consultant’s fees and other retention terms, such fees to be borne by us, and to terminate any such consultant.

The Compensation Committee engaged Pay Governance, LLC (“Pay Governance”) as its independent advisor beginning in 2012. Prior to their engagement, Pay Governance did not perform any services for the Company. The Compensation Committee considered independence factors under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) and Nasdaq rules and concluded that the work performed by Pay Governance did not present any conflicts of interest. As requested by the Compensation Committee, from time to time Pay Governance has advised and consulted with the Compensation Committee on compensation issues, compensation design and trends, and has kept the Compensation Committee apprised of regulatory, legislative, and accounting developments and competitive practices related to executive compensation. Pay Governance reviews compensation levels, trends and practices at the discretion of the Compensation Committee. Pay Governance does not determine the exact amount or form of executive compensation for any executive officers. See “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis”. Pay Governance reports directly to the Compensation Committee, and a representative of Pay Governance, when requested, attends meetings of the Compensation Committee, is available to participate in executive sessions and communicates directly with the Compensation Committee Chair or its members outside of meetings. Pay Governance does no other work for the Company.

 

Corporate Governance

Compensation Committee Interlocks and Insider Participation

No interlocking relationship exists between any member of our Board and any member of the board of directors or compensation committee of any other companies, nor have such interlocking relationships existed in the past.

 

Corporate Governance​

Board Role in Risk Oversight

The Board believes that having a system in place for risk management and implementing strategies responsive to our risk profile and exposures is the best way to identify in a timely manner specific material risks, but we can give no assurances that we will be able to identify or mitigate all possible risks in advance. While the Board has the ultimate oversight responsibility for the risk management process, its Committees oversee risk in certain specified areas:

Selection of Board Nominees

The Board believes that the Board, as a whole, should include individuals with a diverse range of backgrounds and experience to give the Board both depth and breadth in the mix of skills represented for the benefit of our stockholders. The Board endeavors to have a group of directors representing a diverse background (including gender, race, ethnicity, and age) and to include in its overall composition an array of targeted skills that complement one another rather than requiring each director to possess the same skills, perspectives and interests. Accordingly, the Board and the Nominating and Corporate Governance Committee consider the qualifications of directors and director nominees both individually and in the broader context of the Board’s overall composition and the Company’s current and future needs.

The Board and Nominating and Corporate Governance Committee also understand the importance of board refreshment and aim to achieve a balance between the knowledge that comes from longer-term service on the board with the new experience, ideas and energy that can come from adding directors to the Board. To that end, our Corporate Governance Guidelines provide that directors may not stand for re-election if the election occurs after they reach the age of 75. In addition, the Board and Nominating and Corporate Governance Committee view the consistent focus on Board membership criteria, Board composition and size, as well as the anticipation of vacancies, to be integral parts of board refreshment.

Our Corporate Governance Guidelines contain Board membership criteria that apply to current directors as well as Board nominees. The Nominating and Corporate Governance Committee regularly evaluates the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. If any vacancies are

 

Corporate Governance

anticipated or arise, the Nominating and Corporate Governance Committee will consider director candidates suggested by current Board members, management, third-party search firms and others. The Nominating and Corporate Governance Committee will also consider director nominations by stockholders that are made in compliance with our bylaws. All applications, recommendations or proposed nominations for Board membership received by the Company will be referred to the Nominating and Corporate Governance Committee. The manner in which the qualifications of a nominee are evaluated does not differ if the nominee is recommended by a stockholder.

The Nominating and Corporate Governance Committee’s consideration of a candidate as a Director includes assessment of the individual’s understanding of our business, the individual’s professional and educational background, skills, expertise, potential time commitment, and other criteria established by the Nominating and Corporate Governance Committee from time to time. To provide such a contribution to us, a Director must generally possess one or more of the following, in addition to personal and professional integrity:

The Nominating and Corporate Governance Committee has adopted its own procedures for evaluating the suitability of potential Director nominees, including qualifications for a “financial expert” and financially literate members for the Audit Committee.

The Nominating and Corporate Governance Committee will consider all stockholder recommendations for candidates for the Board, which should be sent to the Nominating and Corporate Governance Committee, c/o Secretary, Primoris Services Corporation, 2300 N. Field Street, Suite 1900, Dallas, Texas 75201.

The Nominating and Corporate Governance Committee will evaluate recommendations for Director nominees submitted by Directors, management or qualifying stockholders in the same manner, by using the criteria stated above. All Directors and Director nominees will be required to submit a completed directors’ and officers’ questionnaire as part of the nominating process. At the discretion of the Nominating and Corporate Governance Committee, the process may also include interviews and additional background and reference checks for non-incumbent nominees.

 

Corporate Governance​

Annual Board and Committee Evaluations

Primoris believes that regular Board evaluations are an instrumental component of building and maintaining a strong and effective Board. Each year, the Nominating and Corporate Governance Committee, together with the Company’s Corporate Secretary, coordinates the Board performance evaluations that assist the Board in determining whether the Board, its committees, and each member of the Board are functioning effectively. This process also assists the Board in determining how it can improve its processes and effectiveness. These evaluations are conducted through a combination of formal and informal processes, including questionnaires which solicit open-ended and candid feedback on an anonymous basis, in-person interviews, and telephone interviews. The collective ratings and comments are compiled, summarized and presented to the Board and its committees and provide the Board valuable information on a range of topics, including new director searches, committee composition, and subject matter for continuing Board education. In addition, the Company periodically engages a third-party consulting firm to conduct a comprehensive Board effectiveness review.

Code of Conduct

The Company has a Code of Conduct that complies with the rules and regulations adopted by the SEC and Nasdaq listing standards and are applicable to all of our Directors, officers and employees. The Code of Conduct also includes a supplement with additional policies that are applicable to the CEO, CFO and all senior financial officers of the Company. The Code of Conduct is available on the Investor Relations/Governance section of our website at www.primoriscorp.com. We intend to post amendments to, or waivers under, if any, our Code of Conduct (to the extent applicable to our Directors or Chief Executive Officer, Principal Financial Officer, or Principal Accounting Officer) at this location on our website. Among other matters, this Code of Conduct is designed to promote:

Policy Regarding Director Attendance at Annual Meetings of Stockholders

Directors are strongly encouraged to attend our Annual Meetings of Stockholders, and we currently expect all of our Directors to be in attendance at the Annual Meeting on May 4, 2021. All the Directors were in attendance at the 2020 Annual Meeting.

Stockholder Communications with the Board of Directors

Stockholders may communicate with any of our Directors, either individually or as a group, by writing to them at Primoris Services Corporation, c/o Secretary, 2300 N. Field Street, Suite 1900, Dallas, Texas 75201. Please specify to whom your correspondence should be directed. The Secretary will promptly forward all correspondence to the Board or any specific committee member, as indicated in the correspondence, except for mass mailings, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate material. Our Secretary may forward certain correspondence, such as product-related or service-related inquiries, elsewhere within the Company for review and possible response.

 

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Our Board has adopted a written policy requiring review, approval and ratification of any material related party transaction, including those that would require disclosure under Item 404 of Regulation S-K, involving a “related person” ​(as defined in Item 404(a) of Regulation S-K, which includes security holders who beneficially own more than 5% of our common stock). All material related party transactions may be consummated and continued only if the Audit Committee has approved or ratified such transaction after a review of the relevant facts and circumstances and a determination that the terms to be obtained or consideration to be paid or received, as applicable, in connection with the transactions are comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s length transactions with independent third parties.

The Company did not enter into any material related party transactions during 2020.

 

DIRECTOR COMPENSATION

 

Directors who are also employees of the Company do not receive additional compensation for serving as Directors. Compensation for employee Directors is determined by the Board’s Compensation Committee and is discussed further in the Compensation Discussion and Analysis section of this proxy.

In February 2020, the Compensation Committee approved changes for independent Directors of the Company, which includes the following components:

•

Cash payments of  $19,000 each quarter.

​

•

Common Stock with an approximate aggregate value of  $28,500 each quarter. The Common Stock cannot be traded for a period of one year from the date of issuance. The number of shares is determined using the average of the closing prices of the Company’s Common Stock on Nasdaq for the one-month period prior to the beginning of the quarter. The shares are issued pursuant to the Primoris 2013 Equity Incentive Plan, approved by the stockholders on May 3, 2013 (“2013 Equity Plan”).

​

•

Additional annual cash compensation as follows:

​

•

$25,000 to the Chairman of the Board;

​

•

$20,000 to the Lead Independent Director;

​

•

$20,000 to the Chairman of the Audit Committee; and

​

•

$15,000 to the non-employee chairman of any other committees established by the Board of Directors.

​

Prior to this change, compensation for independent Directors of the Company included the following components:

•

Cash payments of  $35,000 made during the second and fourth calendar quarters of each year.

​

•

Common Stock with an approximate aggregate value of  $46,667 during the first and third calendar quarters of each year, with the same restrictions and determination as above.

​

•

Additional annual cash compensation was as follows:

​

•

$25,000 to the Chairman of the Board;

​

•

$20,000 to the Chairman of the Audit Committee; and

​

•

$15,000 to the non-employee chairman of any other committees established by the Board of Directors.

​

In addition, Directors are reimbursed for expenses incurred in connection with Board and Board Committee meetings and assignments.

On January 1, 2020, the Company entered into a three-year agreement with David L. King (our former CEO) as a Strategic Advisor. The agreement provided for an annual fee of  $325,000, medical insurance benefits equal to those provided to Company employees, up to 50 hours of personal use of any Company owned or leased aircraft per year, and reimbursement of personal use of Company-paid club memberships in Dallas County, Texas. In February 2021, the Company terminated the agreement effective March 31, 2021.

In February 2021, the Compensation Committee approved an increase to the Chairman of the Board’s annual cash compensation to $120,000 effective April 1, 2021.

 

Director Compensation

The table below details the compensation earned by our non-employee Directors in 2020.

​

1

Represents the aggregate market value of the shares of Common Stock issued to each of the non-employee Directors as compensation during 2020. The shares were issued under the 2013 Equity Plan and are subject to a one-year contractual holding requirement from the date of issuance. The Company has never issued stock options as Director compensation and there were no outstanding equity awards as of March 15, 2021.

​

2

All Other Compensation amounts reflect the value of personal use of the Company aircraft by Mr. King and Mr. Pratt of  $86,090 and $52,054, respectively. The Company determined the value of personal aircraft use using the aggregate incremental cost to the Company, based on the cost of fuel, trip-related maintenance, crew travel expenses, landing fees, trip related costs and other variable costs. For tax purposes, income is imputed to the Director for non-business travel based on a multiple of the Standard Industry Fare Level (“SIFL”) rates.

​

 

STOCK OWNERSHIP

 

Security Ownership of 5% or Greater Stockholders, Directors, Director Nominees and Executive Officers

The following table sets forth information with respect to beneficial ownership of Common Stock for (a) those persons known by management of the Company to beneficially own 5% or more of our Common Stock (other than executives and Directors), (b) each Director and Director nominee, (c) the Named Executive Officers listed in the Summary Compensation Table under “Executive Compensation”, and (d) all of our executive officers and Directors as a group. The information for the officers and Directors is provided as of March 15, 2021, and the information for 5% or more institutional stockholders is as of the most recent filing with the SEC as noted in the table below. The Company is not aware of any arrangement or pledge of Common Stock that could result in a change of control of the Company.

Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities.

​

*

Indicates beneficial ownership of less than one percent of total outstanding Common Stock.

​

1

This table lists voting securities, including shares held of record, shares held by a bank, broker or nominee for the person’s interest and shares held through family trust arrangements. Unless otherwise indicated and subject to community property laws where applicable, the Named Executive Officers and Directors named in the table above have sole voting and investment power with respect to all shares of our stock shown as beneficially owned by them.

​

 

Stock Ownership

2

For each individual and group included in the table, percentage ownership is calculated by dividing the number of shares beneficially owned by such person or group plus the number of shares of Common Stock that such person or group has the right to acquire on or within 60 days after March 15, 2021 divided by the sum of the 49,223,988 shares of Common Stock outstanding on March 15, 2021, plus the number of shares of Common Stock that such person or group has the right to acquire on or within 60 days after March 15, 2021.

​

3

Based on information set forth in the Schedule 13G/A filed with the SEC on February 10, 2021, by The Vanguard Group, which has shared voting power over 84,704 shares, sole dispositive power over 3,948,415 shares, and shared dispositive power over 124,243 shares. The principal business address of The Vanguard Group is 100 Vanguard Blvd, Malvern, PA 19355.

​

4

Based on information set forth in the Schedule 13G/A filed with the SEC on February 9, 2021, by Van Berkom & Associates Inc, which has sole voting power and sole dispositive power over 3,778,411 shares. The principal business address of Van Berkom & Associates Inc. is 1130 Sherbrooke Street West, Suite 1005, Montreal, Quebec H3A2M8.

​

5

Based on information set forth in the Schedule 13G/A filed with the SEC on January 29, 2021, by BlackRock, Inc., which has sole voting power over 3,325,691 shares and sole dispositive power over 3,384,602 shares. The principal business address of Blackrock, Inc. is 55 East 52nd Street, New York, NY 10055.

​

6

Based on information set forth in the Schedule 13G jointly filed with the SEC on February 4, 2021, by Wellington Management Group LLP, a parent holding company, and three of its affiliates: Wellington Group Holdings LLP, owned by Wellington Management Group LLP; Wellington Investment Advisors Holdings LLP, owned by Wellington Group Holdings LLP; and Wellington Management Company LLP, an investment adviser controlled by Wellington Investment Advisors Holdings LLP (the four joint filers collectively, “Wellington”). Wellington reported that the shares as to which the Schedule 13G was filed are owned of record by clients of certain Wellington Investment Advisors. According to Wellington, each of the joint filers except Wellington Management Company LLP has shared voting power over 2,670,610 shares and shared dispositive power over 2,932,392 shares. Wellington Management Company LLP has shared voting power over 2,631,730 shares and shared dispositive power over 2,893,512 shares. The principal business address of Wellington is 280 Congress Street, Boston, MA 02210.

​

7

Based on information set forth in the Schedule 13G filed with the SEC on February 12, 2021, by Dimensional Fund Advisors LP, which has sole voting power over 2,409,660 shares and sole dispositive power over 2,525,777 shares. Dimensional Fund Advisors LP, an investment adviser registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager or sub-adviser to certain other commingled funds, group trusts and separate accounts (such investment companies, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an adviser or sub-adviser to certain Funds. In its role as investment advisor, sub-adviser and/or manager, Dimensional Fund Advisors LP or its subsidiaries (collectively, “Dimensional”) may possess voting and/or investment power over the securities of the Issuer that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of the Company held by the Funds. All securities reported here are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. The principal business address of Dimensional Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, TX 78746.

​

8

Consists of 306,312 shares of Common Stock owned directly by the John P. Schauerman & Claudia H. Schauerman Family Trust dated August 12, 2010 and indirectly by John P. Schauerman, as trustee of the trust.

​

9

Includes 4,593 shares of Common Stock held by the Tucker Family Trust U/A dated 12/21/1988, a revocable trust, of which Thomas E. Tucker is a trustee and beneficiary and 303 shares of Common Stock held by SaraJen Capital, LLC, a California limited liability company, of which Mr. Tucker is a one-third member and sole manager with full dispositive power over such shares.

​

10

Consists of 142,780 shares of Common Stock owned directly by the Perisich Family Trust dated July 11, 2007 and indirectly by John M. Perisich, as trustee of the trust.

​

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires our officers, Directors and persons who beneficially own more than ten percent (10%) of a registered class of our equity securities to file reports of securities ownership and changes in ownership with the SEC.

As of the date of this Proxy Statement, and based solely on our review of the copies of such reports furnished to us and written representations from our executive officers and Directors, we believe that all reports needed to be filed by current Section 16 reporting persons since January 1, 2020 were filed on a timely basis other than the following delayed filings: a Form 4 for Thomas E. McCormick covering a common stock disposition, two Form 4s for Peter C. Brown covering common stock acquisitions, two Form 4s for Stephen C. Cook covering common stock acquisitions, two Form 4s for David L. King covering common stock acquisitions, two Form 4s for Carla S. Mashinski covering common stock acquisitions, two Form 4s for John P. Schauerman covering common stock acquisitions, two Form 4s for Robert A. Tinstman covering common stock acquisitions, and two Form 4s for Thomas E. Tucker covering common stock acquisitions.

 

 

INFORMATION ABOUT AUDIT FEES AND SERVICES

Independent Registered Public Accounting Firm Fees and Services

The following is a summary of the fees billed for professional services for the fiscal years ended December 31, 2020 and 2019:

​

1

Fees for audit services billed for each of the last two fiscal years consist of the fees associated with the annual audit and reviews of our Quarterly Reports on Form 10-Q.

​

2

Audit related fees billed in each of the last two fiscal years include proxy filings, registration statements, employee benefit plan audit, and standalone audits for Primoris subsidiaries.

​

3

Tax fees billed in each of the last two fiscal years include professional services rendered for tax compliance (preparation and review of tax returns), tax advice and tax planning.

​

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

The Audit Committee has adopted policies and procedures regarding the pre-approval of the performance by Moss Adams LLP of audit, audit-related and tax services, except as may otherwise be permitted by law or regulation. Moss Adams LLP has also been instructed to obtain advance approval of any other services. Each pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. Moss Adams LLP and management are required to periodically report to the Audit Committee regarding the services provided by the independent auditors in accordance with this pre-approval. All services listed above and all fees were approved in advance by the Audit Committee.

 

Audit Committee Report

 

The following report of the Audit Committee does not constitute soliciting material and shall not be deemed filed or incorporated by reference into any other filing by us under the Securities Act or the Exchange Act, except to the extent we specifically incorporate this report by reference.

The primary purpose of the Audit Committee is to assist the Board in fulfilling its responsibility to oversee (i) the integrity of our financial statements, (ii) the independent registered public accounting firm’s qualifications, independence and performance, (iii) our accounting and financial reporting processes, (iv) our compliance with financial, legal and regulatory requirements, and (v) the audits of our financial statements. The Audit Committee is directly responsible for the appointment, compensation and oversight of the work of the independent registered public accounting firm. The independent registered public accounting firm reports directly to the Audit Committee.

Management has the primary responsibility for the preparation of the financial statements and the reporting process, as well as performing an evaluation and assessment of the effectiveness of the Company’s internal control over financial reporting using the control criteria framework of the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013). Our management has represented to the Audit Committee that the consolidated financial statements for the fiscal year ended December 31, 2020 were prepared in accordance with generally accepted accounting principles and that the Company’s internal control over financial reporting was effective as of December 31, 2020. In addition to its review and discussion with management of the audited consolidated financial statements and in the performance of its oversight function over internal controls, the Audit Committee reviewed and discussed with management the critical accounting policies that were applied in the preparation of our consolidated financial statements, and the process for certifications by our Chief Executive Officer and our Chief Financial Officer.

Our independent registered public accounting firm is responsible for auditing the consolidated financial statements for the fiscal year ended December 31, 2020 and issuing an opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2020. The Audit Committee discussed the results of the work of the independent registered public accounting firm. The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Securities and Exchange Commission and the Public Company Accounting Oversight Board (“PCAOB”), including PCAOB AS 1301 (Communications with Audit Committees). In addition, the Audit Committee received from the independent registered public accounting firm the written disclosures required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and discussed with them their independence from the Company and its management. The Audit Committee also evaluated whether the independent registered public accounting firm’s provision of non-audit services to us was compatible with the auditor’s independence and determined it was compatible. The members of the Audit Committee met in executive session (with no management in attendance) with the independent registered public accounting firm each quarter during the year.

The Board determined that the Audit Committee members meet the independence requirements of Rule 10A-3 of the Exchange Act and applicable Nasdaq independence rules.

In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, the inclusion of the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020 for filing with the SEC.

Carla S. Mashinski (Chair)
Peter C. Brown
Stephen C. Cook
John P. Schauerman

 

EXECUTIVE OFFICER INFORMATION

 

The executive officers of Primoris as of March 15, 2021 are as follows:

See “Proposal 1 – Election of Directors” for a description of Mr. McCormick’s business experience.

Mr. Dodgen has served as our Executive Vice President, Chief Financial Officer since November 2018. He previously served as our Senior Vice President and Corporate Controller since May 2017. Prior to that, Mr. Dodgen served as Chief Financial Officer at Baker Hill Solutions from 2016 to 2017, Chief Financial Officer at PLH Group, Inc. from 2011 to 2015, and Chief Financial Officer at Fulcrum Power Services from 2006 to 2011. From 1996 to 2006, Mr. Dodgen spent ten years in investment banking with JPMorgan and Merrill Lynch where he focused predominantly on mergers and acquisitions. Prior to investment banking, Mr. Dodgen worked for Affiliated Computer Services in Dallas, and he began his career at PricewaterhouseCoopers. Mr. Dodgen received a B.B.A. in Accounting from Texas A&M University and an M.B.A. from the Booth School of Business at The University of Chicago. He is a licensed CPA.

Mr. Moreno has served as our Executive Vice President, Chief Operating Officer since April 2019. He has over 30 years of experience in the engineering and construction industry and has extensive experience in energy-related markets. From October 2010 until March 2019, he served as President of PCL Industrial Construction Co., a private, heavy industrial construction firm. Prior to that, he held a variety of positions with PCL since 2000, including Operations Manager and General Manager. Mr. Moreno has a Bachelor of Science degree in Mechanical Engineering from Georgia Institute of Technology and an M.B.A. from the Wharton School at the University of Pennsylvania.

Mr. Perisich has served as our Executive Vice President and Chief Legal Officer since May 2013. He previously served as our Senior Vice President and General Counsel from July 2008. Prior to that, he served as Vice President and General Counsel of Primoris Corporation beginning in February 2006, and previous to that was Vice President and General Counsel of Primoris Corporation and its predecessor, ARB, Inc. Mr. Perisich joined ARB in 1995. Prior to joining ARB, Mr. Perisich practiced law at Klein, Wegis, a full service law firm based in Bakersfield, California. He received a B.A. degree from UCLA in 1987, and a J.D. from the University of Santa Clara in 1991.

 

EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

This section discusses the oversight of our executive compensation program by the Compensation Committee of the Board of Directors and provides a discussion of the compensation earned in 2020 by our named executive officers (“NEOs”). Our NEOs for 2020 include the following:

Overview

Our management compensation programs apply broadly to all officers and management persons at the Company with modifications to reflect the different management levels, experience levels and types of responsibilities. The Company’s goal is to align compensation so that the entire management team is committed to the Company’s corporate objectives of achieving both near- and long-term profitable growth.

Historically, it was our practice to provide annual discretionary bonus awards based both on overall financial and non-financial performance. These discretionary awards were not tied to attaining a specific financial result; that is, there was no mathematical formula for determining bonus amounts. Through 2018, the Compensation Committee generally retained this practice. During 2019, the Compensation Committee approved a new Incentive Compensation Plan that established a more formulaic annual incentive calculation and an increased emphasis on equity awards within the total compensation structure. We believe that our new compensation practice will further enhance value for our stockholders.

Shareholder “Say-on-Pay” Vote

Compensation Philosophy

 

Executive Compensation​

Processes and Procedures for Determining Executive Compensation

The following describes the roles of the key participants and sources of information in the process of setting compensation.

 

Executive Compensation

Components of NEO Compensation

The primary elements of our current compensation and benefits programs for our NEOs are summarized in the table below. Each component has a critical role in motivating and rewarding strong performance and retaining the NEOs who deliver such performance.

Compensation Committee Pay Decisions

Base Salary Amounts

In accordance with Company practices, base salaries for employees are reviewed annually. For the NEOs, with the exception of the CEO, the Compensation Committee reviewed the recommendations from Mr. McCormick at the time of the annual reviews. The following table shows changes approved by the Compensation Committee, effective September 6, 2020:

​

1

Mr. Moreno’s employment began on April 1, 2019.

​

 

Executive Compensation

Incentive Compensation Plan

The Company’s incentive compensation plan for senior leadership and executives is designed to provide annual awards payable in 75% cash and 25% equity in the form of RSUs. The total annual award earned is comprised of two components:

An eligible NEO that begins employment during the performance year will generally have to wait a year to enter the ICP, unless otherwise determined by the CEO and with the approval of the Compensation Committee. Generally, a NEO must be employed by the Company on the date any cash incentive compensation is paid. Otherwise, the NEO forfeits any and all rights to such compensation unless contractual provisions entitle the NEO to a full or pro-rated amount or otherwise determined by the CEO (other than with respect to himself) and with approval of the Compensation Committee.

Measurable Performance Awards

The measurable performance award for each NEO under the ICP is calculated as a percentage of such NEO’s base salary earned during the year (the “ICP Target”), which is then multiplied by the weighted achievement percentage associated with the Company performance metrics, as set forth in the following calculation:

 

Executive Compensation

The Compensation Committee established the following ICP Targets for each NEO for the 2020 performance year:

Earnings per Share Component

The Earnings per Share Component of the ICP is based on annual fully-diluted earnings per share. A payout occurs only if actual fully-diluted earnings per share is greater than the threshold amount and payout under this component is subject to a maximum achievement percentage. Based on the performance scale adopted by the Compensation Committee for the 2020 performance year, NEOs could earn awards for this component of the ICP as follows (when performance falls between the designated payout points above the threshold amount, the awards are determined by interpolation):

For the 2020 performance year, the Compensation Committee established a target ICP earnings per share of  $1.67. The Compensation Committee concluded that actual ICP earnings per share for the performance year was $2.13, which represents approximately 127.5% of the target and an achievement percentage of 120.0%.

The following table details the actual payouts associated with the ICP Earnings per Share component:

New Business Generated Component

The New Business Generated Component of the ICP is based on new business generated during the 2020 plan year. A payout occurs only if actual new business generated is greater than the threshold amount and payout under this component is subject to a maximum achievement percentage. Based on the performance scale adopted by the Compensation Committee for the 2020 performance year, NEOs could earn awards for this component of the ICP as follows (when performance falls between the designated payout points above the threshold amount, the awards are determined by interpolation):

 

Executive Compensation

For the 2020 performance year, the Compensation Committee established a target ICP new business generated of $3,620.6 million. The Compensation Committee concluded that actual ICP new business generated for the performance year was $3,798.0 million, which represents approximately 104.9% of the target and an achievement percentage of 79.8%.

The following table details the actual payouts associated with the ICP New Business Generated component:

Cash Management Component

The Cash Management Component of the ICP is based on the ability of the Company to manage cash during the 2020 plan year. Cash management is measured as the average days of accounts receivable outstanding plus the average days of unbilled contract revenue outstanding less the average days of deferred contract revenue outstanding. A payout occurs only if actual cash management is better than the threshold amount and payout under this component is subject to a maximum achievement percentage. Based on the performance scale adopted by the Compensation Committee for the 2020 performance year, NEOs could earn awards for this component of the ICP as follows (when performance falls between the designated payout points above the threshold amount, the awards are determined by interpolation):

For the 2020 performance year, the Compensation Committee established a target ICP cash management of 70 days. The Compensation Committee concluded that actual ICP cash management for the performance year was 51 days, which represents approximately 72.9% of the target and an achievement percentage of 120.0%.

The following table details the actual payouts associated with the ICP Cash Management component:

 

Executive Compensation

Safety Performance Component

The final component of the ICP is based on Company’s achievement of measurable safety performance goals. Performance with respect to this component is measured by the Company’s consolidated total recordable incident rate (“TRIR”) for the performance year. TRIR is defined as the number of work injuries in the performance year multiplied by 200,000 divided by reportable hours worked. A payout occurs only if actual TRIR is below the threshold amount and payout under this component is subject to a maximum achievement percentage. Based on the performance scale adopted by the Compensation Committee for the 2020 performance year, NEOs could earn awards for this component of the ICP as follows (when performance falls between the designated payout points below the threshold amount, the awards are determined by interpolation):

For the 2020 performance year, the Compensation Committee established a target ICP TRIR of 0.65. The Compensation Committee concluded that actual ICP TRIR for the performance year was 0.53, which represents approximately 81.5% of the target and an achievement percentage of 120.0%.

The following table details the actual payouts associated with the ICP Safety component:

Discretionary Amounts

Under the ICP, 25% of each NEOs total annual award is discretionary, subject to the approval of the Compensation Committee. There is not a requirement that there be a relationship between the measurable performance and the discretionary performance. For example, a discretionary bonus could be awarded even if most, or all, of the measurable performance goals were not attained. Similarly, an excellent measurable performance would not necessarily result in awarding of a maximum discretionary amount.

The following table lists the discretionary award amounts for 2020 and 2019.

​

1

Mr. Moreno’s employment began on April 1, 2019.

​

Equity Awards

Under the ICP, all of the NEOs are paid their total awards (measurable and discretionary) 75% in cash and 25% in RSUs. The RSUs generally vest over three years in equal annual installments, as long as the NEO is employed by the Company, subject to accelerated vesting upon the reporting person’s termination without cause, death, disability, or retirement from the Company. The number of RSUs are determined using a 25% discount to the average December 2020 closing price for Primoris shares.

 

Executive Compensation​

The following table shows the total RSUs earned by each of the NEOs under the ICP in 2020 and granted in March 2021:

Other Compensation Items

Stock Ownership Guidelines

In August 2019, our Nominating and Corporate Governance Committee established minimum stock ownership guidelines for executive officers, with the goal of promoting equity ownership and aligning our executive officers’ interests with our stockholders. The ownership guidelines are currently established at the following minimum levels:

Officers will have five years from adoption of these stock ownership guidelines or five years from the date of hiring or promotion to acquire the shares needed to meet the stock ownership guidelines. The Company’s Secretary will evaluate compliance on an annual basis, as of April 30 of each year, and not on a running basis. If an officer achieves compliance with these stock ownership guidelines as of April 30 of any year, the officer will not be deemed to have failed to comply with these guidelines as of April 30 of any future year as a result of a decline in the Company’s stock price if the officer has not sold any shares. The Secretary will provide a compliance report to the Nominating and Corporate Governance Committee prior to the annual election of executive officers.

The following are used in determining stock ownership for purposes of these guidelines:

Anti-Hedging Policy

The Company prohibits directors and executive officers from entering into speculative transactions in Primoris securities, such as prepaid variable forwards, forward sale contracts, short sales, equity swaps, collars, zero-cost collars and other derivative transactions. We believe these prohibitions ensure that levels of stock ownership in accordance with our stock ownership guidelines are effective in aligning each individual’s interests with those of our stockholders.

Pay Recoupment (Clawback) Policy

We employ the following clawback policy that applies to NEOs. If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company as a result of misconduct with any financial reporting requirement under the securities laws, any participant who knowingly or through gross negligence engaged in the misconduct, or who knowingly or through gross negligence failed to prevent the misconduct, and any participant who is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, shall reimburse the Company for the amount of any payment in settlement of an award earned or accrued during the twelve (12) month

 

Executive Compensation

period following the first public issuance or filing with the SEC (whichever first occurred) of the financial document embodying such financial reporting requirement. The Board has sole discretion to make any and all decisions under this policy.

The SEC has proposed new rules that could affect the Company’s clawback policies. When the rules are finalized, the Company will update its policies to be in compliance with such rules.

Risk Assessment

The Compensation Committee considered the risks associated with the Company’s compensation policies and practices for executive officers and determined that it did not identify any risks that are reasonably likely to have a material adverse effect on the Company. This conclusion was based on the following considerations:

Tax Matters

Generally, Internal Revenue Code Section 162(m) limits a tax deduction to public companies for compensation of each “covered employee” to $1 million in any one year. Amendments to Section 162(m) for the Tax Cuts and Jobs Act of 2017 (“Tax Act”) became effective in tax years beginning on or after January 1, 2018. As amended, Section 162(m) no longer allows performance-based compensation to be exempt from the deduction limitation. Further, for tax years beginning on or after January 1, 2018, the deduction limitation applies to compensation of a public company’s CEO, CFO and each of the next three highest compensated executive officers. Beginning in 2017, an employee who becomes a covered employee will remain a covered employee until separation from the Company. The Company structured the 2013 Equity Plan with the intention that certain performance awards made under the plan would qualify for tax deductibility. As a result of changes within the Tax Act, the performance awards are now subject to the deduction limitation along with other compensation.

Employment Agreements for Named Executive Officers

At the time of his selection as CEO, effective November 4, 2019, the Company entered into a five-year employment agreement with Thomas E. McCormick, setting out his annual base salary, plus a performance bonus opportunity. In the event of termination without cause, by death, disability or change of control, certain severance benefits will be paid, including a lump sum payment of 100% of base salary, a pro rata portion of a bonus, up to one year of the employee’s share of the premium for COBRA medical benefits, and accelerated vesting of any RSUs.

At the time of his hire as Chief Operating Officer, effective April 1, 2019, the Company entered into a five-year employment agreement with John F. Moreno, Jr., setting out his annual base salary, issuance of RSUs plus a performance bonus opportunity. In the event of termination without cause, by death, disability or change of control, certain severance benefits will be paid, including a lump sum payment of 100% of base salary, a pro rata portion of a bonus, up to one year of the employee’s share of the premium for COBRA medical benefits, and accelerated vesting of any RSUs.

The Company has also entered into a five-year employment agreement with all of its other NEOs. The agreements set out annual base salary plus a performance bonus opportunity. In the event of termination without cause, by death, disability

 

Executive Compensation​

or change of control, certain severance benefits will be paid, including a lump sum payment of 100% of base salary, a pro rata portion of a bonus, up to one year of the employee’s share of the premium for COBRA medical benefits, and accelerated vesting of any RSUs.

All of the employment agreements contain certain restrictive covenants that prohibit the executives from disclosing information that is confidential to us and our subsidiaries and generally prohibits them, during the employment term and for two years thereafter, from soliciting or hiring our employees or our subsidiary employees and from using our confidential information to divert any customer business from us, or to otherwise alter the manner in which a customer does business with us.

 

Compensation Committee Report

 

The Compensation Committee of the Board of Directors has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Proxy Statement. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included herein and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Patricia K. Wagner (Chair)
Peter C. Brown
Carla S. Mashinski
Robert A. Tinstman
Thomas E. Tucker

 

Compensation Tables

 

Summary Compensation Table

The following table and accompanying notes provide summary information with respect to total compensation earned or paid by us or our subsidiaries to our NEOs.

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1

Salary includes all regular wages paid to the NEO and any amount that was voluntarily deferred by the NEO pursuant to our 401(k) Plan.

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2

As discussed in the preceding section, “Compensation Discussion and Analysis—Compensation Committee Pay Decisions—​Annual Bonuses”, the Company changed its bonus program for NEOs in 2019. Bonus amounts shown in this column for 2020 and 2019 represents the discretionary cash awards earned under the Company’s ICP. Bonus amounts shown in this column for 2018 includes any bonus amount earned in the respective year and deferred to the following year under the Company’s LTR Plan. Participants in the LTR Plan must defer 50% of the annual award. Except in case of death, disability, retirement, involuntary separation from service, or approval by a special LTR Plan committee, the deferred compensation amount is paid to the participant only if employed by the Company on the bonus payment date the following year.

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3

The amount shown in this column represents the aggregate grant date fair value of the RSUs granted by our Board of Directors computed in accordance with FASB ASC Topic 718, as described in Note 17 to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020. The fair value on the grant date for the RSUs granted to Messrs. McCormick, Dodgen, Moreno, and Perisich in 2020 was $19.66 per share. The fair value on the grant date for the RSUs granted to Mr. Dodgen in 2018 was $24.35 per share. The fair value on the grant date for the RSUs granted to Mr. Moreno in 2019 was $20.68 per share. The fair value on the grant date for the RSUs granted to Mr. Perisich in 2018 was $25.64 per share. The fair value was based on the market closing price of our stock one day prior to the grant date. This amount reflects our accounting expense to be recognized over the vesting period of the RSUs awarded, and does not correspond to the actual value that will be recognized by the NEO.

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4

Amounts shown in this column reflect the measurable cash awards earned under the Company’s ICP, which is discussed in further detail in the preceding section “Compensation Discussion and Analysis—Compensation Committee Pay Decisions—​Annual Bonuses”.

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5

All other compensation for the NEOs includes the following:

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