DEF 14A 1 tile20210402_def14a.htm FORM DEF 14A

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(RULE 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. _____)

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☒ | Definitive Proxy Statement
☐ | Definitive Additional Materials
☐ | Soliciting Material Pursuant to §240.14a-12

Interface, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Notice of Annual Meeting of Shareholders

WHEN

May 17, 2021

11:00 a.m. Eastern Time

WHERE

Interface, Inc.

1280 West Peachtree Street NW

Atlanta, Georgia 30309

CHANGES IN THE DATE, TIME OR LOCATION OF THE MEETING

On March 13, 2020, the staff of the Division of Corporation Finance and the Division of Investment Management of the U.S. Securities and Exchange Commission (“SEC”) released Staff Guidance to assist issuers’ compliance with federal proxy and annual meeting rules given the public health and economic effects of the coronavirus (COVID-19). Specifically, the guidance covers the procedure for changing the date, time, or location of an annual meeting; the process for holding virtual shareholder meetings; and guidance for shareholders that are unable to attend annual meetings to present proposals. In the event the Company changes the date, time or location of the Annual Meeting pursuant to the guidance, the Company will inform shareholders in a manner as prescribed by the guidance (or any subsequent updates thereto). If you plan to attend our meeting in person, we recommend you check our website (www.interface.com) the week before to see if we have provided any update on the meeting logistics.

ITEMS OF BUSINESS

| 1. | To elect eight members of the Board of Directors.

| 2. | To approve, on an advisory basis, executive compensation, often referred to as “say on pay”.

| 3. | To ratify the appointment of BDO USA, LLP as independent auditors for 2021.

| 4. | Such other matters as may properly come before the meeting and at any adjournments of the meeting.

RECORD DATE

The Board of Directors set March 19, 2021 as the record date for the meeting. This means that only shareholders of record at the close of business on March 19, 2021 will be entitled to receive notice of and to vote at the meeting or any adjournments of the meeting.

| By Order of the Board of Directors |
| /s/ David B. Foshee |
| David B. Foshee |
| Secretary |

April 7, 2021

PLEASE PROMPTLY COMPLETE AND RETURN A PROXY CARD

OR USE TELEPHONE OR INTERNET VOTING PRIOR TO THE MEETING SO THAT YOUR VOTE

MAY BE RECORDED AT THE MEETING IF YOU DO NOT ATTEND PERSONALLY.

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TABLE OF CONTENTS

| Page
PROXY STATEMENT SUMMARY | 4
NOMINATION AND ELECTION OF DIRECTORS (ITEM 1) | 16
Nominees | 16
Director Independence | 19
Corporate Governance | 19
Principal Shareholders and Management Stock Ownership | 23
APPROVAL OF EXECUTIVE COMPENSATION (ITEM 2) | 25
Compensation Discussion and Analysis | 26
Compensation Committee Report | 37
Compensation Committee Interlocks and Insider Participation | 37
Executive Compensation and Related Items | 38
Equity Compensation Plan Information | 46
Potential Payments Upon Termination or Change In Control | 46
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS (ITEM 3) | 50
Audit Committee Report | 51
OTHER INFORMATION | 52
General Meeting Information | 52
Certain Relationships and Related Transactions | 53
Delinquent Section 16(a) Reporting | 54
Prohibition on Pledging and Hedging | 54
Lawsuit by Former CEO in Connection with Termination | 54
Shareholder Proposals | 54
Communicating with the Board | 54
“Householding” of Proxy Materials | 54
Safe Harbor Statement for Forward-Looking Statements | 55
Other Matters That May Come Before the Meeting | 55
APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES | 56

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PROXY STATEMENT SUMMARY

The Board of Directors ("Board") of Interface, Inc. (the "Company," "we," "us," "our" or "Interface") is furnishing this Proxy Statement and soliciting proxies in connection with the proposals to be voted on at the Interface, Inc. 2021 Annual Meeting of Shareholders ("Annual Meeting") and any postponements or adjournments thereof. This summary highlights certain information contained in this Proxy Statement, but does not contain all of the information you should consider when voting your shares. Please read the entire Proxy Statement carefully before voting.

2021 Annual Meeting Information
Date | Monday, May 17, 2021
Time | 11:00 a.m. Eastern Time
Location | Interface, Inc. 1280 West Peachtree Street NW Atlanta, Georgia 30309
Record Date | Friday, March 19, 2021
Stock Symbol | TILE
Stock Exchange | NASDAQ
Corporate Website | www.interface.com

In the event the Company changes the date, time or location of the Annual Meeting pursuant to the guidance issued by the SEC discussed above, the Company will inform shareholders in a manner as prescribed by such guidance.

Voting Items and Vote Recommendation

232Item | Board Recommendation | Reasons for Recommendation | More Information
1. To elect eight members of the Board of Directors. | FOR | The Board and the Nominating & Governance Committee believe our nominees possess the skills, experience and qualifications to effectively monitor performance, provide oversight and support management's execution of the Company's long-term strategy. | Page 16
2. To approve, on an advisory basis, executive compensation, often referred to as a “say on pay”. | FOR | Our executive compensation program incorporates several compensation governance best practices and reflects our commitment to align pay with performance. | Page 25
3. To ratify the appointment of BDO USA, LLP as independent auditors for 2021. | FOR | Based on its assessment, the Audit Committee believes that the re-appointment of BDO USA, LLP is in the best interests of Interface and our shareholders. | Page 50

Vote in Advance of the Meeting |  | Vote in Person
Internet | Telephone | Mail |  |
Using the Internet and voting at the website listed on the proxy card and the Notice. | Using the toll-free phone number listed on the proxy card and the Notice. | Signing, dating and mailing a proxy card. |  | See page 53 for details on attending the Annual Meeting in person.

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Our Company

Who We Are

We are a worldwide leader in design, production and sales of commercial flooring such as carpet tile, luxury vinyl tile, and rubber tiles and sheet products. Our flooring systems help customers create beautiful interior spaces while positively impacting those who use them and our planet. We are committed to sustainability and minimizing our impact on the environment while enhancing shareholder value. This commitment is exemplified by our mission called Climate Take Back™, in which we seek to lead industry in designing and making products in ways that will maintain a climate fit for life. We believe Interface has for decades been the most environmentally conscious company in the global flooring industry and we remain committed to leading the industry in sustainability, design and innovation.

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Our Global Sales and Manufacturing Platform

● Sales and marketing offices in over 70 locations across 28 countries ● Global account management | ● Seven manufacturing locations on four continents ● Global supply chain management ● Unique blend of efficiency and custom capabilities

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Our Growth and Value Creation Strategy

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Our Performance

While we made significant progress in 2019 toward our ambition to become the world’s most valuable interior products and services company, our performance in 2020 was negatively impacted by the COVID-19 pandemic, resulting in lower sales and profitability. In addition to the financial data shown below, the Compensation Discussion and Analysis section of this Proxy Statement contains important measures of our 2020 financial performance.

NET SALES ($ in millions) |  | GROSS PROFIT and ADJUSTED GROSS PROFIT (NON-GAAP)* ($ in millions)
OPERATING INCOME (LOSS) and ADJUSTED OPERATING INCOME (NON-GAAP)* ($ in millions) |  | DIULTED EPS and ADJUSTED DILUTED EPS (NON-GAAP) *

*Please see Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures and an explanation of why we believe non-GAAP measures provide useful information to shareholders and the additional purposes for which we use non-GAAP measures.

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Our Capital Structure

We believe we have a strong capital structure and the financial resources to deliver on our strategic initiatives. During 2020, we generated strong cash flows and reduced our debt, ending the year with total debt of $577 million and net debt of $474 million.

YEAR END TOTAL DEBT ($ in millions) |  | YEAR END NET DEBT (NON-GAAP)* ($ in millions)
NET INCOME (LOSS) and ADJUSTED EBITDA (NON-GAAP)* ($ in millions) |  | YEAR END NET DEBT / ADJUSTED EBITDA (NON-GAAP)*

*See Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

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Our Corporate Responsibilities – Environmental, Social and Governance

We believe that sound corporate citizenship and environmental sustainability are critical to our long-term success. We are committed to operating in an ethical and sustainable manner that benefits all stakeholders including customers, employees, our communities and our planet. As good corporate citizens, Corporate Responsibility drives the Company’s business strategy. Integrity, environmental stewardship, diversity and inclusion, health and safety of our workforce, the recruitment, development and retention of our workforce, and community engagement are among our top priorities. We regularly consult with stakeholders and third-party experts to develop and improve our social and environmental sustainability initiatives. Through these engagements we have advanced our development of various projects and initiatives. You can learn more about our sustainability commitment and current environmental, social and governance (“ESG”) initiatives on our website at interface.com.

Our Environmental Sustainability Mission

We are a purpose-driven company that is galvanized around a common environmental sustainability mission. In 1994, we commenced a sustainability strategy within our business that we now call Mission Zero, in which we seek to eliminate any negative impact our Company may have on the environment. In 2016, we went even further by announcing our intent to go from doing no harm to having a positive impact through Climate Take Back, summarized in the graphic below. With this broader initiative, we seek to lead industry in designing and making products in ways that will maintain a climate fit for life. We also have called upon and influenced others to do the same, bringing a voice of aspiration and optimism to global warming.

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Interface is a signatory to the UN Global Compact. Our sustainability goals and activities are aligned with the UN Sustainable Development Goals (SDGs). Interface is regularly recognized for our leadership in sustainability, design and innovation. Recent accolades and achievements include:

| ● | GlobeScan SustainAbility Leaders Report - Top 4 Leader (1998-2020)

| ● | UN Global Climate Action Award Winner, Climate Neutral Now Category (2020)

| ● | Fast Company Top 10 Most Innovative Energy Companies (2020)

| ● | #1 Green Leader - Floor Focus Top 250 Design Leaders (2020)

| ● | Floor Covering Weekly’s GreenStep Pinnacle Award Winner (2019)

| ● | Sustainable Business Awards (Singapore) Winner, Climate Changes & Best Flagship Initiative (2019)

| ● | Fast Company Timeless Design Award Winner (2018)

In 2020, we achieved a substantial milestone in our journey toward becoming a sustainable enterprise. We introduced in the Americas our first ever “cradle-to-gate” carbon negative carpet tile products in three unique styles: Shishu Stitch™, Tokyo Texture™, and Zen Stitch™. These pioneering products, which are part of our Embodied Beauty™ collection, are created with a combination of our new CQuestBioX carpet backing (featuring new bio-based materials and more recycled content), specialty yarns and tufting processes that create a carpet tile with a net negative value of “embodied carbon”. Embodied carbon is the carbon footprint (meaning the global warming potential of emissions of greenhouse gases measured in carbon dioxide equivalents) of a product from raw material creation, growth and extraction (the “cradle”) through processing until it is packaged and ready to be shipped from our factory (the “gate”), thus referred to as “cradle-to-gate” in the life cycle assessment of a product. Embodied carbon is distinct from operational carbon, which refers to the carbon footprint of everything that happens after the product leaves our factory, such as shipment, customer use, and end of life.

In 2018, as part of Climate Take Back, we launched an industry first: every flooring product that we sell globally is carbon neutral across the entire product lifecycle, a program we call Carbon Neutral Floors™.

Measuring Our Progress

Our sustainability mission is made more focused by measuring our progress. In the 25+ years that we have been on our sustainability journey, we have made meaningful progress in eliminating our Company’s negative impact on the environment. Our EcoMetrics™ measurement system is designed to quantify the “metabolism” of our operations. In other words, measuring how much we take, in terms of materials and energy, how much we make, in terms of product, and how much we waste, in terms of wastes and emissions. Some of our sustainability highlights are described below. Additional detailed information including Total Energy Use and Scope 1 Emissions, and measurements of our progress on sustainability can be found in our Climate Disclosure document located on our corporate website, www.interface.com.

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Our Governance Highlights

Our Board of Directors is committed to maintaining strong corporate governance, which promotes the long-term interests of shareholders, strengthens Board and management accountability, and helps build trust in the Company. The Corporate Governance section of this Proxy Statement describes several aspects of our governance framework, which includes the following highlights.

✓ | Annual Election of All Directors | ✓ | Annual Shareholder Engagement Efforts
✓ | Resignation Policy for Directors who Fail to Receive Majority Vote | ✓ | Stock Ownership Guidelines for Executives and Directors
✓ | 7 of 8 Current Directors are Independent | ✓ | Prohibition on Pledging and Hedging Company Stock
✓ | All Key Committees Comprised Solely of Independent Directors | ✓ | Code of Business Conduct and Ethics Applicable to Employees and Directors
✓ | Executive Sessions of Independent Directors Held Regularly | ✓ | Annual CEO and Management Succession Planning
✓ | Enterprise Risk Management Program Overseen by Audit Committee | ✓ | Annual Board of Directors Self-Assessment
✓ | Lead Independent Director | ✓ | Annual “Say on Pay” Advisory Vote
✓ | Diversity of Experience, Skills and Gender Among Directors | ✓ | No Poison Pill

Our Social Responsibility

Interface is a purpose-driven company with a passionate team that shares a unique set of values. Our core values represent who we are, how we see the world, how we treat each other and our external customers and stakeholders, and how we approach our work every day. These core values are:

In 2020, we established a global diversity, equity and inclusion (“DEI”) task force to develop our long-term DEI strategy. We are seeking input from our employees to identify specific areas of opportunity to enhance DEI at our Company, while also engaging in dialogue and making sure that underrepresented voices are being heard. Our goal is to create a more diverse and inclusive company where every employee feels they belong and that they can thrive.

Additional information on our social responsibility initiatives can be found on the investor relations section of our website.

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Summary of Item 1 - Election of Directors

In this proposal, shareholders are asked to vote "FOR" each of the following eight nominees.

Nominee Name | Director Since | Independent? | Audit Committee | Compensation Committee | Nominating & Governance Committee
John P. Burke | 2013 | Yes |  |  | ✓
Dwight Gibson | 2019 | Yes |  | ✓ |
Daniel T. Hendrix | 1996 | No |  |  |
Christopher G. Kennedy | 2000 | Yes |  |  | Chair
Joseph Keough | 2019 | Yes | Chair | ✓ |
Catherine M. Kilbane | 2018 | Yes | ✓ |  | ✓
K. David Kohler | 2006 | Yes |  |  | ✓
Sheryl D. Palmer | 2015 | Yes | ✓ | Chair |

Summary of Item 2 - Advisory Vote to Approve Executive Compensation

We provide our shareholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with the rules of the Securities and Exchange Commission ("SEC"). The vote on this resolution is not intended to address any specific element of compensation; rather, the advisory vote relates to the overall compensation of our named executive officers, as well as the philosophy, policies and practices, all as described in this Proxy Statement. The vote is advisory, and therefore it is not binding on the Company, the Compensation Committee or our Board of Directors. We recommend that our shareholders vote "FOR" approval of our executive compensation as described in this Proxy Statement.

Our executive compensation program is generally designed to:

We believe that motivating and rewarding exceptional performance is the overriding principle of our executive compensation program.

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We Do: |  |  | We Do Not:
✔ | Provide a significant portion of our named executive officers’ total compensation in the form of awards tied to our long-term strategy and our performance. |  |  | X | Provide supplemental retirement benefits to our executive officers (other than a legacy arrangement with Mr. Hendrix from his previous tenure as CEO, dating back to 1986).
✔ | Require compliance with our Stock Ownership Guidelines, which require that our executive officers own a specified value of shares of the Company’s common stock. |  |  | X | Time the grants of equity awards to coordinate with the release of material non-public information, or time the release of material non-public information for the purpose of affecting the value of any named executive officer compensation.
✔ | Have a Compensation Committee comprised entirely of independent directors who use an independent consultant retained by the Compensation Committee. |  |  | X | Provide tax gross-ups for our named executives.
✔ | Have a clawback policy that permits the Company to recover from executives any excess incentive-based compensation resulting from an accounting restatement. |  |  | X | Provide excessive perquisites to executives.
✔ | Have ongoing consideration and oversight by the Compensation Committee with respect to any potential risks associated with our incentive compensation programs. |  |  | X | Have a shareholder rights plan (i.e., poison pill).
✔ | Prohibit our associates through our Insider Trading Policy from engaging in hedging transactions in our stock. |  |  | X | Pay dividends on unvested performance-based equity awards.
✔ | Utilize “double trigger” change-in-control provisions in our equity award agreements. |  |  |  |

The following sets forth the primary objectives addressed by each component of our executive compensation program:

For more information regarding our compensation, please see our Compensation Discussion and Analysis beginning on page 26.

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Summary of Item 3 - Ratify Appointment of BDO USA, LLP as Independent Auditors

BDO USA, LLP, an independent registered public accounting firm, served as our auditors for 2020. Our Audit Committee has selected BDO USA, LLP to audit our financial statements for 2021. Although it is not required to do so, the Board is submitting the Audit Committee's selection of our independent registered public accounting firm for ratification by the shareholders at the Annual Meeting in order to ascertain the view of our shareholders regarding such selection. Below is summary information about BDO USA, LLP's fees for services during 2020 and 2019:

|  | 2020 |  |  | 2019 |
Audit Fees |  | $ | 3,061,000 |  |  | $ | 2,554,000 |
Audit-Related Fees |  |  | 78,000 |  |  |  | 26,000 |
Tax Fees |  |  | 126,000 |  |  |  | 176,000 |
All Other Fees |  |  | -- |  |  |  | -- |
Total |  | $ | 3,265,000 |  |  | $ | 2,756,000 |

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NOMINATION AND ELECTION OF DIRECTORS

(ITEM 1)

The Bylaws of the Company provide that the Board of Directors shall consist of a maximum of 15 directors, with the exact number of directors being established by action of the Board taken from time to time. The Board of Directors has set the number of directors at eight. The term of office for each director continues until the next annual meeting of shareholders and until his or her successor, if there is to be one, has been elected and has qualified.

In the event that any nominee for director withdraws or for any reason is not able to serve as a director, each Proxy that is properly executed and returned will be voted for such other person as may be designated as a substitute nominee by the Board of Directors. Each nominee is an incumbent director standing for re-election, and each nominee has consented to being named herein and to serve or continue serving as a director if elected or re-elected.

Certain information relating to each nominee proposed by the Board is set forth below. Directors are required to submit an offer of resignation upon experiencing a job change.

Nominees

| Experience: Since 1997, Mr. Burke has been Chief Executive Officer of Trek Bicycle Corporation, one of the world’s largest manufacturers of bicycles, and a company with a mission to help the world use the bicycle as a simple solution to complex problems. He served as chairman of President George W. Bush’s President’s Council on Physical Fitness & Sports, and is a founding board member of the Bikes Belong Coalition. Mr. Burke also serves on the board of Trek Bicycle Corporation.
John P. Burke | Qualifications and skills: Executive level business experience at a manufacturing company that is focused primarily on sales in the consumer channel and with an emphasis on sustainability and innovation.
Age: 59 Director since 2013 Chief Executive Officer, Trek Bicycle Corporation |
| Experience: Mr. Gibson was elected as a director in September 2019. He serves as the Chief Commercial Officer for SPX FLOW, Inc., a leading global provider of process solutions and components across a variety of sanitary and industrial market applications. Previously, he served as President, Food & Beverage and Industrial Segments (May 2019 to May 2020) and President, Food & Beverage Segment (June 2016 to May 2019) for SPX FLOW. Prior to joining SPX FLOW, Mr. Gibson spent 11 years at HVAC manufacturer Ingersoll Rand, most recently leading significant growth initiatives as President of Strategic Initiatives for the company’s climate segment.
Dwight Gibson | Qualifications and skills: Mr. Gibson brings to the Board experience in driving growth for purpose-driven global manufacturing companies, particularly in the areas of sales, operations, strategy and executive management.
Age: 46 Director since 2019 Chief Commercial Officer, SPX FLOW, Inc. |

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| Experience: Mr. Hendrix joined the Company in 1983 after having worked previously for a national accounting firm. He was promoted to Treasurer of the Company in 1984, Chief Financial Officer in 1985, Vice President-Finance in 1986, Senior Vice President-Finance in 1995, Executive Vice President in 2000, and President and Chief Executive Officer in July 2001. He was elected to the Board in October 1996, and was elected Chairman of the Board in October 2011. In March 2017, Mr. Hendrix retired from the role of Chief Executive Officer, but continued to serve as non-executive Chairman. In January 2020, Mr. Hendrix was reappointed as President and Chief Executive Officer of the Company. Mr. Hendrix has served as a director of cabinet maker American Woodmark Corporation since May 2005.
Daniel T. Hendrix | Qualifications and skills: Knowledge extending to virtually all aspects of the Company’s business, with a particular emphasis on strategic planning and financial matters, giving him a unique understanding of our strategies and operations. His tenure provides consistent leadership to the Board and facilitates the interrelationship between the Board and the Company’s executive leadership team.
Age: 66 Director since 1996 Chairman and Chief Executive Officer, Interface, Inc. |
| Experience: Mr. Kennedy is the Chairman of real estate development company Joseph P. Kennedy Enterprises, Inc., and a Managing Member of real estate development company Wolf Point Management LLC. He has served on the board of trustees of Ariel Mutual Funds since 1994, and has served on the board of directors of Knoll, Inc. (a leading designer and manufacturer of branded office furniture and textiles) since November 2014. Mr. Kennedy also serves on the boards of two non-profit organizations and one charitable foundation, and is active in several educational and civic organizations.
Christopher G. Kennedy | Qualifications and skills: Broad understanding of the fundamentals of our business, having managed more than 10 million square feet of commercial real estate and developed thousands of multi-family residential units, and currently oversees, on behalf of the Kennedy family, the billion-dollar Wolf Point real estate development in Chicago. Insight into our industry sector in his former role as the chief executive of one of the leading tradeshow producers in North America gave him responsibility for industry events that are critical to the go-to-market strategy for the Company. His contacts with leading architectural and design firms as well as the commercial real estate sector require engagement in submarkets that are important to our operations.
Age: 57 Director since 2000 Lead Independent Director Chairman, Joseph P. Kennedy Enterprises, Inc. |
| Experience: Mr. Keough was elected as a director in September 2019. He serves as Chairman and Chief Executive Officer of Wood Partners. Wood Partners is one of the nation’s largest multi-family (apartment) real estate companies. Prior to serving as Chief Executive Officer, he served as both Chief Financial Officer and President of Wood Partners. Mr. Keough began his career in consulting, and was a Principal at The Boston Consulting Group, an international strategic consulting firm. He also served as Chief Operating Officer of Fuqua Capital, the vertically integrated family office of the Fuqua family.
Joseph Keough | Qualifications and skills: Extensive executive level experience in the multi-family residential building industry, including leadership in the areas of finance, accounting, capital markets, real estate development, strategy and operations management.
Age: 51 Director since 2019 Chairman and Chief Executive Officer, Wood Partners |

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| Experience: Ms. Kilbane retired in 2017 as Senior Vice President of The Sherwin-Williams Company, a Fortune 500 global leader in paints and coatings. She joined Sherwin-Williams in 2013 as Senior Vice President, General Counsel and Secretary. Prior to that, Ms. Kilbane was Senior Vice President and General Counsel from 2003 to 2012 at American Greetings Corporation, one of the world’s largest manufacturers of social expression products. From 1987 to 2003, she was a partner in the general business group at Baker & Hostetler LLP in Cleveland, Ohio. Ms. Kilbane is a director of The Andersons, Inc. (where she also serves as lead independent director), a Fortune 500 diversified agribusiness company in the grain, ethanol, plant nutrient, and rail sectors, and The Davey Tree Expert Company, a provider of residential and commercial tree care services. She also is a member of the board of directors of the Cleveland Clinic Foundation.
Catherine M. Kilbane | Qualifications and skills: Over thirty years of experience in corporate law, extensive experience in mergers and acquisitions, including large, multinational transactions, a solid understanding of ensuring shareholder value through her fourteen years of experience with two publicly traded companies and board member experience with for-profit and non-profit organizations.
Age: 57 Director since 2018 Retired Senior Vice President and General Counsel, The Sherwin-Williams Company |
| Experience: Since 2015, Mr. Kohler has served as the President and Chief Executive Officer for Kohler Co., a manufacturer of kitchen and bath products, interior furnishings, engines and power generation systems, and an owner and operator of golf and resort destinations. His previous positions at Kohler include President and Chief Operating Officer (2009-2015), Executive Vice President (2007-2009) and Group President of the Kitchen and Bath Group (1999-2007). He has served as a member of the board of Kohler Co. since 1999, and also is a director of ceramic tile and natural stone manufacturer and distributor Internacional de Cerámica, S.A.B. de C.V., a public company traded on the Mexican Stock Market. Mr. Kohler also serves as a director of the non-profit corporation Green Bay Packers, Inc.
K. David Kohler | Qualifications and skills: Extensive business experience from his service in executive positions at a manufacturing company with international operations and distribution into both commercial and consumer channels.
Age: 54 Director since 2006 President and Chief Executive Officer, Kohler Co. |
| Experience: Since 2007, Ms. Palmer has served as President, Chief Executive Officer and a director, and since 2017 has served as Chairman, of Taylor Morrison Home Corporation, a publicly traded leading North American home builder and developer, after previously serving as Executive Vice President for the West Region of Morrison Homes. Her previous experience includes senior leadership roles at Blackhawk Corp. and Pulte Homes/Del Webb Corporation, each homebuilders and developers of retirement communities, where she last held the title of Nevada Area President at Pulte/Del Webb Corporation.
Sheryl D. Palmer | Qualifications and skills: Extensive executive level experience in the residential building industry, including leadership in the areas of sales and marketing, building development, strategy and operations management.
Age: 59 Director since 2015 Chairman, President and Chief Executive Officer, Taylor Morrison Home Corporation |

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Vote Required and Recommendation of Board

Under the Company’s Bylaws, election of each of the nominees requires a plurality of the votes cast by the Company’s outstanding Common Stock entitled to vote and represented (in person or by proxy) at the meeting. As noted below, however, in an uncontested election, any nominee who does not receive a majority affirmative vote must submit a resignation (which may be conditional) to the Board or its Chair. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE, AND PROXIES EXECUTED AND RETURNED OR VOTED BY TELEPHONE OR INTERNET WILL BE VOTED FOR EACH OF THE NOMINEES UNLESS CONTRARY INSTRUCTIONS ARE INDICATED.

DIRECTOR INDEPENDENCE

For each director, the Board makes a determination of whether the director is “independent” under the criteria established by the Nasdaq Stock Market and other governing laws and regulations. In its review of director independence, the Board considers all commercial, banking, consulting, legal, accounting, charitable or other business relationships any director may have with the Company. The current directors are John P. Burke, Dwight Gibson, Daniel T. Hendrix, Christopher G. Kennedy, Joseph Keough, Catherine M. Kilbane, K. David Kohler, and Sheryl D. Palmer. As a result of its review, the Board has determined that all the current directors, with the exception of Daniel T. Hendrix (who is an employee), are independent.

CORPORATE GOVERNANCE

Board Leadership Structure

We currently have a Lead Independent Director, and a combined Chairman and Chief Executive Officer. Mr. Kennedy serves as Lead Independent Director, and Mr. Hendrix serves as Chairman and Chief Executive Officer. Because our Chairman and Chief Executive Officer is an employee of the Company and therefore not considered “independent” under applicable standards, the Board has appointed Mr. Kennedy to serve as Lead Independent Director. The Board considers it to be useful and appropriate at the current time to have an independent director serve in a lead capacity to promote corporate governance, coordinate the activities of the other independent directors, and perform such other duties and responsibilities as the Board may determine. The specific responsibilities of the Lead Independent Director are as follows:

| ● | Preside at Executive Sessions. Presides at all meetings of the Board at which the Chairman is not present, including executive sessions of the independent directors.

| ● | Call Meetings of Independent Directors. Has the authority to call meetings of the independent directors.

| ● | Function as Liaison with the Chairman. Serves as the principal liaison on Board-wide issues between the independent directors, and the Chairman and Chief Executive Officer.

| ● | Participate in Flow of Information to the Board such as Board Meeting Agendas and Schedules. Provides the Chairman and Chief Executive Officer with input as to meeting agenda items, advises the Chairman and Chief Executive Officer as to the quality, quantity and timeliness of information sent to the Board, and approves meeting schedules to assure there is sufficient time for discussion of all agenda items.

| ● | Recommends Outside Advisors and Consultants. Recommends the retention of outside advisors and consultants who report directly to the Board.

| ● | Shareholder Communication. Ensures that he is available, if requested by shareholders and when appropriate, for consultation and direct communication.

Meetings and Committees of the Board

The Board of Directors held eight meetings during 2020. All the incumbent directors attended at least 75% of the total number of meetings of the Board and any committees of which he or she was a member.

The independent directors meet in regularly scheduled executive sessions without Mr. Hendrix or other members of management present. In 2020, the independent directors met four times in executive session.

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The Board of Directors has the following standing committees that assist the Board in carrying out its duties: the Executive Committee, the Audit Committee, the Compensation Committee, and the Nominating & Governance Committee. The following table lists the current members of each committee:

Executive Committee | Audit Committee | Compensation Committee | Nominating & Governance Committee
Daniel T. Hendrix (Chair) | Joseph Keough (Chair) | Sheryl D. Palmer (Chair) | Christopher G. Kennedy (Chair)
Christopher G. Kennedy | Catherine M. Kilbane | Dwight Gibson | John P. Burke
Sheryl D. Palmer | Sheryl D. Palmer | Joseph Keough | Catherine M. Kilbane
|  |  | K. David Kohler

Executive Committee. The Executive Committee did not meet during 2020. Except for duties reserved to the other Board committees and for certain other exceptions, the Executive Committee may exercise all the power and authority of the Board of Directors in the management of the business and affairs of the Company.

Audit Committee. The Audit Committee met eight times during 2020. The function of the Audit Committee is to (i) serve as an independent and objective party to review the Company’s financial statements, financial reporting process and internal control system, (ii) review and evaluate the performance of the Company’s independent auditors and internal financial management, and (iii) provide an open avenue of communication among the Company’s independent auditors, management (including internal financial management) and the Board. The Board of Directors has determined that all three members of the Audit Committee are “independent” in accordance with applicable law, including the rules and regulations of the Securities and Exchange Commission and the rules of the Nasdaq Stock Market, and that each of Ms. Palmer and Mr. Keough is an “audit committee financial expert” as defined by the rules and regulations of the Securities and Exchange Commission. The Audit Committee operates pursuant to an Audit Committee Charter which was adopted by the Board of Directors and may be viewed on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx.

Compensation Committee. The Compensation Committee met four times during 2020. The function of the Compensation Committee is to (i) evaluate the performance of the Company’s Chief Executive Officer and other senior executives, (ii) determine compensation arrangements for such executives, (iii) administer the Company’s stock and other incentive plans for key employees, and (iv) review the administration of the Company’s employee benefit plans. The Board of Directors has determined that each member of the Compensation Committee is “independent” in accordance with applicable law, including the rules and regulations of the Securities and Exchange Commission and the rules of the Nasdaq Stock Market. The Compensation Committee operates pursuant to a Compensation Committee Charter that was adopted by the Board of Directors and may be viewed on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx. The Compensation Committee’s policies and philosophy are described in more detail below in this Proxy Statement under the heading “Compensation Discussion and Analysis.”

Nominating & Governance Committee. The Nominating & Governance Committee met one time during 2020. The Nominating & Governance Committee assists the Board in establishing qualifications for Board membership and in identifying, evaluating and selecting qualified candidates to be nominated for election to the Board, and monitoring the Company’s activities and practices regarding ESG matters that are significant to the Company. The Nominating & Governance Committee also assists the Board in reviewing and analyzing, and makes recommendations regarding, corporate governance matters, and it also recommends committee assignments for Board members. The Board of Directors has determined that each member of the Nominating & Governance Committee is “independent” in accordance with applicable law, including the rules of the Nasdaq Stock Market. The Nominating & Governance Committee operates pursuant to a Nominating & Governance Committee Charter that was adopted by the Board of Directors and may be viewed on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx.

Nominations for Board Service

In the event of a vacancy on the Board, the Nominating & Governance Committee develops a pool of potential director candidates for consideration. The Nominating & Governance Committee seeks candidates for election and appointment with excellent decision-making ability, valuable and varied business experience and knowledge, and impeccable personal integrity and reputations. The Committee does not have a specific diversity policy, but considers diversity of race, ethnicity, gender, age, cultural background and professional experience in evaluating candidates for Board membership, in an effort to obtain a variety of viewpoints in the Board’s proceedings. The Nominating & Governance Committee considers whether candidates are free of constraints or conflicts which might interfere with the exercise of independent judgment regarding the types of matters likely to come before the Board, and have the time required for preparation, participation and attendance at Board and committee meetings. Other factors considered by the Nominating & Governance Committee in identifying and selecting candidates include the needs of the Company and the range of talent and experience already represented on the Board. The Nominating & Governance Committee solicits suggestions from other members of the Board, Company management, and occasionally outside search firms, regarding persons to be considered as possible nominees. Shareholders who wish the Nominating & Governance Committee to consider their recommendations for director candidates should submit their recommendations in writing to the Nominating & Governance Committee, in care of the office of the Chairman of the Board, Interface, Inc., 1280 West Peachtree Street NW, Atlanta, GA 30309. Recommendations should include the information which would be required for a “Shareholder Proposal” as set forth in Article II, Section 9 of the Company’s Bylaws. Director candidates who are recommended by shareholders in accordance with these procedures will be evaluated by the Nominating & Governance Committee in the same manner as director candidates recommended by the Company’s directors, management and outside search firms.

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Shareholder Outreach Programs

In each of the past three years, we have conducted one or more shareholder outreach programs per year, with the most recent taking place in late 2020. In that program, we requested conference calls with each of our top 25 shareholders, representing approximately 68% of outstanding shares, and we held conference calls with each shareholder that accepted our request, representing 9% of outstanding shares. During the outreach program, which was led by the Company’s Chairman Dan Hendrix, we discussed with shareholders various proxy and Company related issues and areas of shareholder interest – such as the Company’s corporate governance practices, executive compensation philosophy and practices, and ESG initiatives.

Majority Vote Resignation Policy for Director Elections

Pursuant to governing law and documents, including the Company’s Bylaws as noted above, in most cases the Company's directors are elected by a plurality of the votes cast. Although nominees who receive the most votes for the available positions will generally continue to be duly elected, in 2017 the Board of Directors adopted a resignation policy applicable to nominees who fail to receive the affirmative vote of a majority of the votes cast in an uncontested election for directors. (The adoption of this policy does not alter the applicable legal standards.) The policy requires that a nominee who does not receive a majority affirmative vote in an uncontested election promptly will tender, to the Board or its Chair, their resignation from the Board and committees on which the director serves. The resignation may be conditioned upon Board acceptance. If it is not so conditioned, the resignation must specify that it is effective immediately on delivery.

A “majority affirmative vote” means that the votes cast “for” a nominee’s election exceed those voted "withhold", with broker and other non-votes not being considered “votes cast.” You have been provided with options to vote “for” or “withhold” from each Director nominee. However, neither a “withhold” vote nor declining to vote for directors (assuming the presence of a quorum) affects whether a director nominee in an uncontested election is legally elected under the plurality vote standard (provided such nominee receives at least one “for” vote). But a “withhold” vote is considered in determining whether a director who is legally elected has received a “majority affirmative vote” for purposes of the resignation policy.

The Nominating & Governance Committee of the Board will consider any resignation conditioned upon Board acceptance, including any information provided by the Director, and within 60 days of the shareholder meeting at which the Director failed to receive a majority affirmative vote, will recommend to the full Board what action to take on the Director’s resignation. The Nominating & Governance Committee may recommend, among other things, acceptance or rejection of the resignation, delayed acceptance pending the recruitment and election of a new director or rejection of the resignation in order to address the underlying reasons for the Director’s failure to receive the majority affirmative vote of the shareholders. The policy provides for the Board to act on the Nominating & Governance Committee’s recommendation within 90 days following the shareholder meeting.

In considering a conditional resignation, the Nominating & Governance Committee and the Board may consider those factors it deems relevant to its recommendation, including but not limited to the underlying reasons for the failure of the Director to receive a majority affirmative vote, the tenure and qualifications of the Director, the Director’s past and expected future contributions, other policies and the overall composition of the Board, including whether accepting the resignation would cause the Company to fail to meet legal or stock market requirements.

Following the Board’s decision, the Company will publicly announce the Board’s decision regarding any conditional resignation. A resigning Director cannot participate in committee or Board decisions regarding their resignation, except in certain cases where multiple directors have failed to receive majority affirmative votes, which circumstances are described in the full policy posted in the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx. The preceding summary of the policy is qualified in its entirety by reference to the full policy.

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Enterprise Risk Management

In 2019, the Company substantially enhanced and formalized its Enterprise Risk Management (“ERM”) program. The Company’s ERM program is based on the Enterprise Risk Management – Integrated Framework defined by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), although tailored to the Company’s specific risk profile and needs. The Company’s ERM program is managed by a risk committee comprised of executive officers and other senior managers, is administered by the Company’s Director of Internal Audit, and is overseen by the Audit Committee pursuant to authority delegated by the Board of Directors in the Audit Committee Charter. The Company’s program includes a continuous process of identifying, assessing, addressing, monitoring and reporting on the risks that pose the greatest threats to the Company. As part of that process, the management risk committee conducts an annual survey of the Company’s top global leaders to assess the likelihood, potential impact and velocity of a large number of potential risks and to help identify emerging risks. The management risk committee meets quarterly to monitor the key identified risks and how they are being addressed, which may include, depending on the circumstances, mitigating, sharing, accepting or avoiding the risk. The management risk committee and Director of Internal Audit report to the Audit Committee quarterly on significant developments and key elements of the program.

In addition, the Board receives quarterly reports on other elements of risk that may potentially affect the Company, as identified and presented by management. The Board also assists in the Company’s risk oversight through its various committees described above. For example, the Audit Committee assists in overseeing the specific risks that relate to the Company’s financial statements, financial reporting process and internal control system. In that regard, the Company’s Director of Internal Audit and outside auditors report directly to the Audit Committee. The Nominating & Governance Committee assists in overseeing risk related to the Company’s corporate governance practices as well as the performance of individual Board members and committees, while the Compensation Committee assists in overseeing risk as it relates to the Company’s executive compensation program and practices.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines that provide the framework for the governance of the Company. Our Corporate Governance Guidelines are available on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx and will also be made available to shareholders without charge upon request in writing to our corporate Secretary at Interface, Inc., 1280 West Peachtree Street NW, Atlanta, Georgia 30309. The information contained on our website is not included as part of, or incorporated by reference into, this Proxy Statement.

Code of Business Conduct & Ethics

The Board has adopted a Code of Business Conduct & Ethics that applies to all of our directors, officers and employees, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. The Code is publicly available on the Investor Relations section of our website, https://investors.interface.com/investor-relations/default.aspx and will also be made available without charge to any person upon request in writing to our corporate Secretary at Interface, Inc., 1280 West Peachtree Street NW, Atlanta, Georgia 30309. We intend to disclose amendments to, or waivers from, provisions of the Code that apply to any director or principal executive, financial or accounting officers on our website at www.interface.com, in lieu of disclosing such matters in Current Reports on Form 8-K.

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PRINCIPAL SHAREHOLDERS AND MANAGEMENT STOCK OWNERSHIP

The following table sets forth, as of March 19, 2021 (unless otherwise indicated), beneficial ownership of the Company’s Common Stock by: (i) each person, including any “group” as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, known by the Company to be the beneficial owner of more than 5% of any class of the Company’s voting securities, (ii) each director and nominee for director, (iii) each person who served as the Company’s Chief Executive Officer or Chief Financial Officer, and the next three most highly compensated executive officers, during 2020 (the “Named Executive Officers”), and (iv) all executive officers and directors of the Company as a group. Due to the nature of the awards, performance shares awarded to the Company’s executive officers are not included in beneficial ownership of Common Stock. Unless otherwise noted, the business address for each beneficial owner is the Company’s corporate headquarters located at 1280 West Peachtree Street NW, Atlanta, Georgia 30309.

Beneficial Owner (and Business Address of 5% Owners) |  | Title of Class |  | Amount and Nature of Beneficial Ownership |  |  | Percent of Class(1) |
BlackRock, Inc. 55 East 52nd Street New York, New York 10055 |  | Common Stock |  |  | 9,107,924 | (2)(3) |  |  | 15.5 | %
Frontier Capital Management Co., LLC 99 Summer Street Boston, Massachusetts 02110 |  | Common Stock |  |  | 4,656,205 | (2)(4) |  |  | 7.9 | %
The Vanguard Group, Inc. 100 Vanguard Boulevard Malvern, Pennsylvania 19355 |  | Common Stock |  |  | 5,954,059 | (2)(5) |  |  | 10.2 | %
John P. Burke |  | Common Stock |  |  | 42,506 | (6) |  |  | * |
David Foshee |  | Common Stock |  |  | 120,475 | (7) |  |  | * |
Dwight Gibson |  | Common Stock |  |  | 19,473 | (8) |  |  | * |
Jay D. Gould |  | Common Stock |  |  | 199,087 | (9) |  |  | * |
Bruce A. Hausmann |  | Common Stock |  |  | 136,057 | (10) |  |  | * |
Daniel T. Hendrix |  | Common Stock |  |  | 279,994 | (11) |  |  | * |
Christopher G. Kennedy |  | Common Stock |  |  | 152,229 | (12) |  |  | * |
Joseph Keough |  | Common Stock |  |  | 19,473 | (13) |  |  | * |
Catherine M. Kilbane |  | Common Stock |  |  | 23,023 | (14) |  |  | * |
K. David Kohler |  | Common Stock |  |  | 68,506 | (15) |  |  | * |
Sheryl D. Palmer |  | Common Stock |  |  | 33,456 | (16) |  |  | * |
James Poppens |  | Common Stock |  |  | 32,133 | (17) |  |  | * |
Nigel Stansfield |  | Common Stock |  |  | 110,273 | (18) |  |  | * |
All executive officers and directors (12 persons) |  | Common Stock |  |  | 1,037,598 | (19) |  |  | 1.8 | %

__________

* Less than 1%.

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| (1) | Percent of class is based on 58,640,045 shares outstanding on March 19, 2021 and is calculated assuming that the beneficial owner or group of beneficial owners has exercised any conversion rights, options or other rights to subscribe held by such beneficial owner that are exercisable within 60 days of March 19, 2021, and that no other conversion rights, options or rights to subscribe have been exercised by anyone else.

| (2) | Based upon information included in statements as of December 31, 2020 provided to the Company and filed with the Securities and Exchange Commission by such beneficial owners.

| (3) | According to BlackRock, various persons have the right to receive or the power to direct the receipt of dividends from or the proceeds from the sale of such shares, and no one person’s interests in such shares exceeds 5% of the total outstanding shares of Common Stock. It states that it has sole voting power with respect to 9,013,041 of such shares, and sole dispositive power with respect to all such shares.

| (4) | Frontier Capital Management Co., LLC is an investment advisor, and states that it has sole voting power with respect to 2,004,158 of such shares and sole dispositive power with respect to all such shares.

| (5) | The Vanguard Group, Inc. is an investment advisor, and states that it has shared voting power with respect to 78,597 of such shares, sole dispositive power with respect to 5,827,753 of such shares, and shared dispositive power with respect to 126,306 of such shares.

| (6) | Includes 15,508 restricted shares.

| (7) | Includes 48,225 restricted shares.

| (8) | Includes 15,508 restricted shares.

| (9) | Mr. Gould is no longer employed by the Company. Beneficial ownership information is based on the last Form 4 filed by Mr. Gould on February 21, 2019, less restricted shares forfeited upon termination of employment.

| (10) | Includes 67,837 restricted shares.

| (11) | Includes 138,496 restricted shares, 4,908 shares held indirectly through the Company’s 401(k) plan, and 35,072 shares held indirectly by family trusts.

| (12) | Includes 15,508 restricted shares. Mr. Kennedy serves on the Board of Trustees of Ariel Mutual Funds, for which Ariel Investments, LLC serves as investment advisor and performs services which include buying and selling securities on behalf of the Ariel Mutual Funds. Mr. Kennedy disclaims beneficial ownership of all shares held by Ariel Investments, LLC as investment advisor for Ariel Mutual Funds.

| (13) | Includes 15,508 restricted shares.

| (14) | Includes 15,508 restricted shares.

| (15) | Includes 15,508 restricted shares.

| (16) | Includes 15,508 restricted shares

| (17) | Includes 30,981 restricted shares.

| (18) | Includes 64,341 restricted shares.

| (19) | Includes 458,436 restricted shares. Excludes Mr. Gould, whose employment with the Company ended January 19, 2020.

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APPROVAL OF EXECUTIVE COMPENSATION

(ITEM 2)

Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the Company is asking its shareholders to vote, on an advisory basis, to approve the compensation of its Named Executive Officers as described in this Proxy Statement. This proposal, commonly known as a “say-on-pay” proposal, gives the Company’s shareholders the opportunity to express their views on the compensation of the Company’s Named Executive Officers. At the 2017 annual meeting of shareholders, the Company’s shareholders voted, on an advisory basis, to hold a say on pay vote every year. The Board of Directors subsequently determined that the Company will hold say on pay votes every year until the next required advisory vote on the frequency of say on pay votes occurs or until the Board of Directors otherwise determines that a different frequency for say on pay votes is in the best interests of the shareholders.

Our executive compensation program is designed to attract, reward and retain key employees, including our Named Executive Officers, who are critical to the Company’s long-term success. Shareholders are urged to read the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this Proxy Statement for greater detail about the Company’s executive compensation programs, including information about the fiscal year 2020 compensation of the Named Executive Officers.

The Company is asking the shareholders to indicate their support for the compensation of the Company’s Named Executive Officers as described in this Proxy Statement by voting in favor of the following resolution:

“RESOLVED, that the shareholders approve, on an advisory, non-binding basis, the compensation paid to the Company’s Named Executive Officers as disclosed in the “Compensation Discussion and Analysis” and “Executive Compensation” sections, and the related compensation tables, notes, and narrative in this Proxy Statement.”

Even though this say-on-pay vote is advisory and therefore will not be binding on the Company, the Compensation Committee and the Board value the opinions of the Company’s shareholders. Accordingly, to the extent there is a significant vote against the compensation of the Named Executive Officers, the Board will consider the shareholders’ concerns and the Compensation Committee will evaluate what actions may be necessary or appropriate to address those concerns.

You may vote “for,” “against,” or “abstain” from the proposal to approve on an advisory basis the compensation of our Named Executive Officers.

Vote Required and Recommendation of the Board

Under the Company’s Bylaws, the compensation of the Named Executive Officers is approved on an advisory basis if the affirmative votes cast by the holders of the Company’s outstanding shares of Common Stock entitled to vote and represented (in person or by proxy) at the meeting exceed the negative votes. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF EXECUTIVE COMPENSATION, AS DISCLOSED IN THIS PROXY STATEMENT, AND THE PROXY SUBMITTED BY TELEPHONE OR INTERNET OR PROXY CARD WILL BE VOTED IN THIS MANNER UNLESS THE SHAREHOLDER SUBMITTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY (OR ABSTAINS).

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis describes the compensation program for the Company’s Named Executive Officers. For 2020, these individuals were:

Name | Title
Jay D. Gould | Former President and Chief Executive Officer. Mr. Gould served as the Company's President and Chief Executive Officer from March 3, 2017 to January 19, 2020
Daniel T. Hendrix | President, Chief Executive Officer and Chairman
David B. Foshee | Vice President, General Counsel and Secretary
Bruce A. Hausmann | Vice President and Chief Financial Officer
James Poppens | Vice President (Division President – Americas)
Nigel Stansfield | Vice President (Division President – Europe, Asia, Australia and Africa (EAAA))

Impact of COVID-19 on our 2020 Performance and Executive Compensation Program

In 2020, the COVID-19 pandemic had material adverse effects on the Company’s business, results of operations, and financial condition, including lower revenues and profits across all of our geographic regions. Management implemented various programs to mitigate the effects on the Company’s business, including reductions in employees (voluntary and involuntary), labor costs, marketing expenses, consulting expenses, travel costs, various other costs, and capital expenditures. The Company also reduced the amount of the cash dividend paid on common stock, suspended and reduced shifts in production facilities, temporarily furloughed employees, suspended merit-based salary increases as well as its 401(k) and Non-Qualified Savings Plan (NSP) matching contributions, and implemented other cost reduction or avoidance initiatives. Because of changes in macroeconomic conditions related to the COVID-19 pandemic, the Company recognized a non-cash charge of $121.3 million for the impairment of goodwill and certain intangible assets. In addition, our salesforce and administrative employees largely worked remotely in accordance with the Company’s ongoing safety measures, as well as any local government orders and “shelter in place” directives in place from time to time.

Below are the Company’s 2020 financial data that most significantly impacted our Executive Compensation Program. The non-GAAP financial measures of adjusted operating income, adjusted EBITDA and adjusted EPS were utilized as 2020 performance criteria for our annual bonus plan and long-term equity incentives as discussed further below.

(Note: Please see Appendix A for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures and an explanation of why we believe non-GAAP measures provide useful information to shareholders and the additional purposes for which we use non-GAAP measures.)

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The 2020 performance metrics and targets discussed below were established by the Compensation Committee prior to the onset of the COVID-19 pandemic and its macroeconomic consequences. As the pandemic spread across the globe in early 2020, the established performance targets became unlikely to be achieved, not just for the year 2020 targets but also with respect to performance-based long-term incentive targets that were established at the time awards were made in years 2018 and 2019, which generally required strong compound annual growth over the term of those awards. The Committee monitored the elements of the executive compensation program throughout the year, including the impacts of many uncertainties and challenges faced by the Company and its management due to the pandemic. While management is commended for its substantial efforts throughout the year to reduce costs and protect the Company’s profitability and the interests of its shareholders in response to the pandemic, after consultation with members of the executive leadership team the Committee decided not to adjust any of the performance metrics or previously established targets applicable to 2020 (or otherwise award discretionary bonuses or other amounts to the Company’s executives). As described below, due to the pandemic impacts, none of the 2020 performance-based targets were achieved and management received no performance-based payouts with respect to 2020.

Overall Philosophy and Objectives

The Company’s compensation program is designed in a manner intended to both attract and retain a highly qualified, motivated and engaged management team whose focus is on enhancing shareholder value. The Company believes a straightforward program that is readily understood and endorsed by its participants best serves these goals, and has constructed a program that contains (1) multiple financial elements, (2) clear and definitive targets, (3) challenging but attainable objectives, and (4) specified performance metrics. More specifically, the objectives of the Company’s management compensation program include:

Program Design and Administration

The Compensation Committee of the Board of Directors, which is composed entirely of independent directors, has developed and administers the Company’s executive pay program to provide compensation commensurate with the level of financial performance achieved, the responsibilities undertaken by the executives, and the compensation packages offered by comparable companies. The program currently consists of four principal components, each of which is designed to drive a specific behavioral focus, which in turn helps to provide specific benefits to the Company:

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The Company strives to structure various elements of these program components so that a large portion of executive compensation is directly linked to advancing the Company’s financial performance and the interests of shareholders. For 2020, those elements were mostly performance-based, as shown below (and based on target level achievement):

Mr. Poppens was appointed to his executive position on November 1, 2020, and thus the elements of his 2020 executive compensation are not directly comparable to the information in the above tables.

Former CEO Mr. Gould was terminated on January 19, 2020, before the Committee granted performance-based awards for 2020 (although his annual bonus opportunity was 150% of his base salary as of his termination).

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Compensation Decision-Making

The Committee establishes base salaries for the executive officers, including the Named Executive Officers listed in the “Summary Compensation Table” included in this Proxy Statement. The Committee also administers the annual bonus program, the long-term incentive program, retirement benefits, deferred compensation arrangements, and, when applicable, special incentive programs.

The Company benchmarks its compensation practices against its peer group. In selecting the peer group, the Committee directly engaged Pearl Meyer & Partners, a nationally recognized, independent compensation consultant, to provide input on compensation matters. The Committee considered various factors including the potential peer's industry, business model, size and complexity. The Committee ultimately chose a peer group that provides a robust sample size with minimal revenue dispersion and includes companies with a significant international presence that are also focused on sustainability. The peer group selected by the Committee is comprised of:

Acuity Brands, Inc. | Albany International Corp.
Apogee Enterprises, Inc. | Armstrong Flooring, Inc.
Armstrong World Industries, Inc. | Caesarstone Ltd.
FLIR Systems, Inc. | Gentherm Incorporated
H. B. Fuller Company | Harsco Corporation
Herman Miller, Inc. | HNI Corporation
Kimball International, Inc. | Knoll, Inc.
Masonite International Corporation | Materion Corporation
P. H. Glatfelter Company | Steelcase Inc.
Unifi, Inc. | Welbilt, Inc.

In 2018-2020, Pearl Meyer has assisted the Compensation Committee in benchmarking the Company's compensation practices against the peer group. The work of Pearl Meyer to date has not raised any conflict of interest.

The Committee also seeks compensation input from the Company’s Chairman, Chief Executive Officer and Chief Human Resources Officer. In addition, the Committee takes into account publicly available data relating to the compensation practices and policies of other companies within and outside the Company’s industry. Furthermore, the policies and programs described below are subject to change as the Committee deems necessary from time to time to respond to economic conditions, meet competitive standards and serve the objectives of the Company and its shareholders.

Compensation Risk Assessment

The Board, in conjunction with management, has reviewed our compensation policies and practices as generally applicable to our employees and determined that they do not encourage excessive risk or unnecessary risk taking and do not otherwise create risks that are reasonably likely to have a material adverse effect on the Company.

Clawback Policy

In February 2020, the Committee adopted a Clawback Policy which authorizes the Committee to recover from executive officers certain incentive-based compensation, including both cash and equity, due to a restatement of the Company’s financial statements. Pursuant to the Clawback Policy, in the event the Company is required to prepare an accounting restatement due to the Company’s material noncompliance with any financial reporting requirement under the U.S. federal securities laws (a “Restatement”), regardless of individual fault, the Committee may require the forfeiture or reimbursement, subject to the terms of the Clawback Policy, from any current or former “Covered Executive” (meaning, any officer of the Company covered by Section 16(a) of the Securities Exchange Act) of the Company any excess incentive-based compensation awarded during the thirty-six (36) months preceding the date on which the Company is required to prepare a Restatement. Excess incentive-based compensation, as defined in the Clawback Policy, essentially means the amount or value of incentive-based compensation granted, earned or vested (“Awarded”) in excess of what would have been Awarded to that Covered Executive based on the Restatement.

Discussion of Principal Elements of Compensation Program

Base Salaries

The Committee generally strives to set base salaries at the market median (50th percentile) of salaries offered by other employers in our industry and other publicly traded companies with characteristics similar to the Company (size, growth rate, etc.), based, by and large, on information provided by independent third party advisors while also considering internal equalization policies of the Company. Some of the companies considered from time to time are included in the list of companies comprising the “self-determined peer group” index used by our independent compensation consultant and used to create the stock performance graph included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2021.

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In addition, the Committee may consider other factors when setting individual salary levels, which may result in salaries somewhat above or below the targeted amount. These factors include the executive’s level of responsibility, achievement of goals and objectives, tenure with the Company, and specific background or experience, as well as external factors such as the availability of talent, the recruiting requirements of the particular situation, and general economic conditions and rates of inflation.

Base salary adjustments for executive officers generally are made (if at all) annually and are dependent on the factors described above. The changes in base salaries for the Named Executive Officers, and the rationale for those changes, is described below.

Name | 2019 Base Salary | 2020 Base Salary | % Change | Rationale
Daniel Hendrix | $0 | $927,000 | N/A | CEO Appointment 1/19/20
David Foshee | $385,175 | $385,175 | 0% | COVID-19 Impact
Bruce Hausmann | $445,578 | $445,578 | 0% | COVID-19 Impact
Nigel Stansfield | £309,873 | £309,873 | 0% | COVID-19 Impact

Mr. Gould’s base salary was $927,000 at the time of his termination on January 19, 2020. Mr. Poppens was promoted to his executive position on November 1, 2020, at which time has base salary was increased from $300,000 to $400,000. Please see the “Summary Compensation Table” included in this Proxy Statement for the base salaries actually paid to the Named Executive Officers in 2020.

Annual Bonus Opportunities

The Committee administers the shareholder-approved Executive Bonus Plan, which provides bonus opportunities for Company executives. The bonus opportunities provide an incentive for executives to earn cash compensation based on the achievement of important corporate or business unit (division or subsidiary) financial performance. In determining the appropriate bonus opportunities, the Committee seeks to establish potential awards that, when combined with annual salary, place the total overall cash compensation opportunity for the Company’s executives at the market 50th percentile for comparable companies, provided that the performance objectives are substantially achieved.

For 2020, each executive officer of the Company was assigned a bonus potential, expressed as a percentage of base salary. The 2020 bonus potential for each Named Executive Officer is described below.

Name | 2020 Bonus Potential (as a percentage of base salary)
Daniel T. Hendrix | 150%
David Foshee | 75%
Bruce Hausmann | 90%
Nigel Stansfield | 90%

Mr. Poppens’ bonus potential was increased from 75% to 90% upon his promotion to an executive position on November 1, 2020.

Mr. Gould’s bonus potential was 150% of base salary at the time of his termination on January 19, 2020.

Actual awards could range from 0% to 175% of the bonus potential, depending on the degree to which the established financial objectives were achieved, and are paid on an annual basis approximately 60 days following the end of the year.

In 2020, 100% of the bonus potential for the Chief Executive Officer, Chief Financial Officer and each of the other Named Executive Officers was based on measurable financial objectives. For Messrs. Hendrix, Foshee and Hausmann, these objectives consisted of adjusted operating income and cash flow from operations, and the relative weights assigned to these financial objectives were 75% and 25%, respectively. For Messrs. Poppens and Stansfield (who managed the Company’s Americas and EAAA divisions, respectively), the objectives and relative weights assigned were divisional adjusted operating income (50%), consolidated adjusted operating income (25%) and divisional cash flow from operations (25%). Mr. Gould was terminated in January 2020, prior to the Committee’s establishment of performance objectives for 2020.

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For each financial objective, the Committee establishes a threshold amount, a goal amount, and a maximum amount. The threshold amount must be achieved in order for any bonus amount to be earned with respect to that objective (and no bonus is payable whatsoever if the threshold amount for adjusted operating income is not exceeded). A pro rata bonus amount is earned based upon (i) the degree to which the threshold amount (resulting in a “cut in” payout equal to 25% of the bonus potential for that criterion) is exceeded, up to the goal amount (resulting in a payout equal to 100% of the bonus potential for that criterion), or (ii) the degree to which the goal amount (resulting in a payout equal to 100% of the bonus potential for that criterion) is exceeded, up to the maximum amount (resulting in a payout equal to 175% of the bonus potential for that criterion). The approach to goal setting involves a process of reviewing, among other things, our prior year’s financial performance, our annual operating plan, and our short-term and long-term strategic objectives. We also take into account the need for setting goals that are challenging yet reasonably achievable so as to provide a competitive pay package necessary for the retention of our talent. With respect to cash flow in particular, the Committee sets the targets, in its discretion, taking into account anticipated growth initiatives, capital expenditures, research and development costs, debt maturities, and other cash uses that the Committee deems relevant. Consideration of these factors may result in a cash flow target that is above or below the previous year's cash flow target. Given this methodology, the Committee believes that the threshold level, while challenging, is reasonably likely to be achieved in normalized market conditions, the goal amount is achievable with strong management performance, and the maximum amount would encourage and reward outstanding performance.

For example, the Company’s 2020 annual thresholds, goals and maximums that were applicable for Messrs. Hendrix, Foshee and Hausmann were as follows:

Criteria |  | Weighting |  | Threshold |  | Goal |  | Maximum
Adjusted Operating Income |  | 75% |  | $123,000,000 |  | $164,000,000 |  | $188,600,000
Cash Flow from Operations |  | 25% |  | $95,475,000 |  | $127,300,000 |  | $146,395,000

For 2020, adjusted operating income (see Appendix A) was $110 million, and thus was less than the above-stated threshold. Although cash flow from operations was $119 million, no bonus was earned with respect to this criterion because the threshold for adjusted operating income was not met. For this reason, no bonus was earned for 2020, as shown below:

Name | 2020 Actual Bonus
Daniel T. Hendrix | $0
David Foshee | $0
Bruce Hausmann | $0
James Poppens | $0
Nigel Stansfield | $0

Long-Term Incentives

The Committee administers the shareholder-approved Interface, Inc. Omnibus Stock Incentive Plan (the “Omnibus Stock Plan”), which is an equity-based plan that allows for long-term incentive awards such as restricted stock, performance shares and stock options. The Omnibus Stock Plan provides for the grant to key employees and directors of the Company and its subsidiaries of restricted stock, incentive stock options (which qualify for certain favorable tax treatment), nonqualified stock options, stock appreciation rights, deferred shares, performance shares and performance units. The size of the awards made to individual officers is based on an evaluation of several factors, including the officer’s level of responsibility, the officer’s base salary, benchmark data and the Company’s overall compensation objectives. The amount and nature of prior equity incentive awards also are generally considered in determining new Omnibus Stock Plan awards for executive officers.

Long-term incentives are intended to attract and retain outstanding executive talent, create a direct link between shareholder and executive interests by focusing executive attention on increasing shareholder value, and motivate executives to achieve specific performance objectives. For instance, stock options (when granted) have an exercise price equal to at least 100% of the market price of the underlying Common Stock on the date of grant. Thus, the stock options only have value if the market price of the Company’s stock rises after the grant date. Additionally, restricted stock and performance share awards generally vest, in whole or in part, over a period of multiple years (three years for grants made in recent years), giving the executive an incentive to remain employed with the Company for a significant time period to have the opportunity to vest in an award. Moreover, awards of performance shares that were granted prior to 2020 may vest earlier if specific performance criteria designed to drive shareholder value are met. All equity awards (whether restricted stock, performance shares or otherwise) will have a minimum vesting period or minimum performance period of at least one year.

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Description of Available Awards

Restricted Shares

Awards of restricted shares under the Omnibus Stock Plan generally vest over a period of multiple years following the date of award. The Committee may, in its discretion, also establish performance criteria for these awards, and the restricted shares may vest earlier if such performance criteria are satisfied. Unvested awards are also subject to forfeiture under certain circumstances. All restricted shares awarded to date have been made without consideration from the participant (although the Omnibus Stock Plan authorizes the Committee, in connection with any award, to require payment by the participant of consideration, which can be less than the fair market value of the award on the date of grant). Awards of restricted stock generally will not be transferable by the participant other than by will or applicable laws of descent and distribution.

Performance Shares

Performance shares are awards reflected in a bookkeeping entry that records the equivalent of one share of Common Stock that may subsequently be earned and payable (and issued) to the participant if specified performance criteria established by the Committee are satisfied. Awards of performance shares may be settled in Common Stock, cash, or a combination thereof, at the Company’s election. Grants of performance shares may provide for the payment to the participant of dividend equivalents on a current, deferred or contingent basis; provided, in all of our past awards of performance shares, we have accrued dividend equivalents that are paid only if and when the underlying performance shares vest. Awards of performance shares generally will not be transferable by the participant other than by will or applicable laws of descent and distribution.

Stock Options

Options granted under the Omnibus Stock Plan may be incentive stock options (as defined in Section 422 of the Internal Revenue Code of 1986, as amended), nonqualified stock options or a combination of the foregoing, although only employees are eligible to receive incentive stock options. All options under the Omnibus Stock Plan will be granted at an exercise price per share equal to not less than 100% of the fair market value of the Common Stock on the date the option is granted. Options may be structured to vest over a period of multiple years. Options granted under the Omnibus Stock Plan expire following a pre-determined period of time after the date of grant (which may not be more than 10 years after the grant date), and generally will terminate on the date three months following the date that a participant’s employment with the Company terminates.

The Company receives no consideration upon the granting of an option. Full payment of the option exercise price must be made when an option is exercised. The exercise price may be paid in cash or in such other form as the Committee may approve, including shares of Common Stock valued at their fair market value on the date of option exercise. Options generally will not be transferable by the holder thereof other than by will or applicable laws of descent and distribution.

The Committee has not granted stock options to any executive officer in the past three years.

Other Potential Awards

The Omnibus Stock Plan also provides for the award of stock appreciation rights, deferred shares and performance units. The Committee has not granted any of these other types of awards to any executive officer.

Omnibus Stock Plan Awards in 2018

One-third of the 2018 awards were granted as time-based restricted stock, and the shares would vest 100% on the third anniversary of the grant date, if the executive remained employed with the Company until that date. The executive also had the right to receive any cash dividends paid on this time-based restricted stock, throughout the three-year term.

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The other two-thirds were granted in a single award of performance shares with two separate, independent vesting criteria: adjusted earnings per share (“EPS”) and Total Shareholder Return (“TSR") during the years 2018 to 2020. The first one-third of this subpart was eligible to vest based on the Company’s adjusted EPS in 2018, the second one-third of this subpart was eligible to vest based on the Company’s adjusted EPS in 2019, and all shares (to the extent not previously vested) were eligible to vest based on the Company’s adjusted EPS in 2020. The amount of performance shares that vested based on adjusted EPS was determined pro rata based upon (i) the degree to which an applicable EPS threshold level was achieved (at which point 25% of the performance shares would vest) or exceeded up to an applicable EPS target level (at which point 100% of the performance shares would vest), or (ii) the degree to which the applicable EPS target level was exceeded up to an applicable EPS maximum level (at which point two times the nominal performance shares would vest). There was no “time vesting” opportunity for this subpart. The Company does not pay dividends on unvested performance shares. Rather, “dividend equivalents” accrue on these awards of performance shares and are paid only if and when the related performance shares vest. The second vesting criterion for this portion of the 2018 awards was based on the Company’s TSR compared with its peer group during the three-year performance period of 2018 to 2020 with the following vesting opportunities (less any shares vested under the EPS criteria described above):

TSR Percentile 2018-2020 |  | Amount Vests (% of Nominal Award)
Less than 50th |  | 0%
50th to 75th |  | Pro rata 50% to 100%
Greater than 75th |  | 100%

The 2018 time-based restricted stock awards also included a “double trigger” change-in-control vesting provision. In other words, these awards would not vest based solely on the occurrence of a change in control alone; rather, there must be “second trigger” of either (i) an involuntary separation from service or (ii) a separation from service for “Good Reason” (essentially, resignation in the face of negative changes in executive’s employment relationship with the Company).

For the 2018 awards of performance shares, the Compensation Committee retained authority in the event of a change-in-control to alter or amend the terms in any manner it deemed equitable and necessary or advisable to take into account the effect of the change-in-control. Such modifications may include, without limitation, (i) providing for payment in the form of cash or other securities in lieu of shares, (ii) vesting of all or a portion of the performance shares based on the attainment of the performance criteria determined as of the date of the change-in-control, (iii) accelerating the vesting of the performance shares in full or on a pro rata basis, (iv) converting some or all of the shares to time-based vesting, or (v) making appropriate adjustments to the performance criteria. However, in the event of a “double trigger” change-in-control and termination of employment as described above, the employee would vest in the nominal number of outstanding performance shares reduced by the number of performance shares previously vested under the performance criteria.

The threshold, goal and maximum achievement levels for this award required approximately 6%, 12% and 18% compound growth, respectively, each year, which yielded the following targets for the portion of this award that was eligible to vest based on 2020 EPS:

Criteria |  | Threshold |  | Goal |  | Maximum
Adjusted EPS |  | $1.39 |  | $1.64 |  | $1.92

For 2020, adjusted EPS (see Appendix A) was $1.15. Because this amount was less than the above-stated threshold, no portion of this award vested based on 2020 adjusted EPS.

Omnibus Stock Plan Awards in 2019

The 2019 equity awards were structured in a manner similar to the 2018 awards. One-third of the 2019 awards were granted as time-based restricted stock with the same vesting and dividend provisions described above. The other two-thirds were granted in a single award of performance shares with two separate, independent vesting criteria. The first vesting criterion is the Company’s adjusted EPS during the years 2019 to 2021, structured in the same way described above with respect to the 2018 awards. The second vesting criterion is based on the Company’s TSR compared with its peer group during the three-year performance period of 2019 to 2021, structured in the same way described above with respect to the 2018 awards. The 2019 awards also include change-in-control vesting provisions in the same way as the 2018 awards.

The threshold, goal and maximum achievement levels for this award required approximately 5%, 10% and 18% compound growth, respectively, each year, which yielded the following targets for the portion of this award that was eligible to vest based on 2020 EPS:

Criteria |  | Threshold |  | Goal |  | Maximum
Adjusted EPS |  | $1.64 |  | $1.76 |  | $2.07

The Company’s 2020 EPS performance for the 2019 equity awards was calculated for compensation purposes in the same manner as for the 2018 equity awards, and thus was less than the above-stated threshold. As a result, no portion of this award vested based on 2020 adjusted EPS.

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Omnibus Stock Plan Awards in 2020

The Committee made several changes in the features of the Omnibus Stock Incentive Plan awards granted in 2020. After reviewing peer and benchmark data compiled by its independent consultant, the Committee (i) eliminated the alternative TSR vesting criteria described above (which some shareholders had viewed negatively as a “catch up” feature), (ii) eliminated the opportunity in the third year of the performance period to vest in shares that had not previously vested in the first two years of the performance period (which some shareholders had viewed negatively as a “catch up” feature); (iii) maintained the mix of 1/3 time-based and 2/3 performance-based awards but changed from having one performance metric (adjusted EPS) to two performance metrics – adjusted EBITDA (75% weighting) and three-year cumulative return on invested capital (25% weighting), and (iv) eliminated the opportunity to vest in performance-based shares prior to the end of the three-year performance period. Regarding item (iv) in the preceding sentence, the 2020 awards provide an opportunity for grantees to earn shares based on adjusted EBITDA achievement during each year of the three-year performance plan, but the vesting of those earned shares is deferred until the Committee’s certification of attainment of all performance measures following the end of the three-year performance period.

The threshold, goal and maximum achievement levels for this award required were set based upon the Company’s three-year strategic plan, which required targeted adjusted EBITDA growth (based on goal amounts) of approximately 10%, 7.5% and 6% compound growth for years 2020, 2021 and 2022, respectively, yielding the following targets for the portion of this award that was eligible to vest based on 2020 adjusted EBITDA (in millions):

Criteria |  | Threshold |  | Goal |  | Maximum
Adjusted EBITDA |  | $152.0 |  | $217.1 |  | $249.7

For 2020, adjusted EBITDA (see Appendix A) was $146 million, and thus was less than the above-stated threshold. As a result, no portion of this award vested based on 2020 adjusted EBITDA.

As demonstrated above, the Committee believes the structure of the performance-based equity awards is appropriately designed to pay for performance, and that the structure strikes a proper balance among motivating management, rewarding strong management performance, and accounting for the regular cyclicality of our industry that is outside of management’s control.

Changes in Executive Compensation in 2021

The Committee carefully considered the unique set of challenges created by the ongoing COVID-19 pandemic in connection with our 2021 compensation program so that we can continue to retain and incentivize our leadership team during this unprecedented time. For the 2021 bonus potential, the Committee has added a performance metric for SG&A expenses, such that the bonus criteria applicable to the CEO, CFO and other corporate employees are adjusted operating income (50% weighting), cash from operating activities (25% weighting) and SG&A expenses (25% weighting). The Committee also eliminated the requirement to achieve the adjusted operating income threshold target, such that a bonus now may be earned for achieving targets for cash from operating activities and SG&A expenses independently. The Committee believes these changes are appropriate because they incentivize management to focus on key financial metrics that are likely to drive earnings growth and enhance shareholder value even while the pandemic is ongoing.

The Committee also made changes to the 2021 long-term incentive plan awards, particularly due to the challenges involved in setting multi-year performance targets during the uncertainty created by the COVID-19 pandemic. The 2021 Omnibus Stock Incentive Plan awards are one-half (rather than one-third) time-based restricted stock, and one-half (rather than two-thirds) performance shares. The performance metrics for the portion granted as performance shares are adjusted EBITDA (75% weighting) and three-year return on invested capital during the period 2021-2023 (25% weighting). Rather than setting specific quantitative adjusted EBITDA targets for years 2022 and 2023, the targets for those years will be based on a numerical formula requiring a specified percentage of growth over the prior year’s actual adjusted EBITDA result. The Committee believes this approach recognizes the difficulty setting future year EBITDA targets in the current pandemic environment while still requiring meaningful year-over-year growth regardless of the prior year results.

The health and safety of our employees and the communities in which we operate continue to be the Company’s paramount concern, and our Board of Directors, Compensation Committee and executive leadership team will continue to monitor the impacts of COVID-19 on our business and the Company’s executive compensation program.

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Other Elements of Compensation Program

In addition to the principal compensation program elements described above, the Company has adopted a number of other elements to further its compensation program goals. They are as follows:

● | 401(k) Plan and Other Defined Contribution Plans |  | ● | Severance Agreements
● | Elective Deferred Compensation Program |  | ● | Limited Perquisites

401(k) Plan and Other Defined Contribution Plans

The Company maintains the Interface, Inc. Savings and Investment Plan (the “401(k) Plan”), a tax-qualified 401(k) plan which provides its U.S.-based employees a convenient and tax-advantaged opportunity to save for retirement. The Company’s Named Executive Officers who are based in the United States are eligible to participate in the 401(k) Plan on the same terms as other executive and non-executive employees based in the United States, and receive the same benefits afforded all other participants. Under the 401(k) Plan, all participating employees are eligible to receive matching contributions (except as described below for a portion of 2020) that are subject to vesting over time. The Company periodically evaluates the level of matching contributions afforded participant employees to ensure competitiveness in the marketplace. The Company matches 50% of the first 6% of the employee’s eligible compensation (capped by statutory limitations) that the employee contributed to the 401(k) Plan. As a cost-saving measure in response to the negative impacts of the COVID-19 pandemic, Interface discontinued its 401(k) matching contributions effective May 1, 2020. The Company subsequently resumed its matching contributions, effective January 1, 2021.

Elective Deferred Compensation Program

The Company also maintains the Interface, Inc. Nonqualified Savings Plan II (the “Nonqualified Plan”) for certain U.S.-based “highly compensated employees” (as such term is defined in applicable IRS regulations), including the Named Executive Officers who are based in the United States. The compensation level required to participate in the Nonqualified Plan was $125,000 in total annual compensation, and the Company had 109 participants in the plan (including both current and former employees) at the end of 2020. As with the Company’s 401(k) Plan, the Named Executive Officers who are based in the United States are eligible to participate in the Nonqualified Plan on the same terms as other executive and non-executive eligible employees based in the United States, and receive the same benefits afforded all other participants. Under the Nonqualified Plan, all eligible employees can elect to defer, on a pre-tax basis, a portion of their salary and/or annual bonus compensation. The Company matches 50% of the first 6% of the employee’s eligible salary and bonus (and sales commissions, if applicable) that was deferred, less any potential Company matching amounts under the 401(k) Plan. As with the 401(k) Plan, the Company discontinued the Nonqualified Plan matching contributions from May 1, 2020 to January 1, 2021.

Please see the “Non-Qualified Deferred Compensation” table included in this Proxy Statement for further details regarding the Nonqualified Plan, as well as the Company’s Named Executive Officers’ contributions, earnings and account balances applicable to the Nonqualified Plan for fiscal year 2020.

Pension/Salary Continuation Programs

Foreign Defined Benefit Plans

The Company has trustee-administered defined benefit retirement plans (“Pension Plans”) which cover certain of its overseas employees. The benefits are generally based on years of service and the employee’s average monthly compensation. As determined by their respective trustees, the investment objectives of the Pension Plans are to maximize the return on the investments without exceeding the limits of prudent pension fund investment and to ensure that the assets ultimately will be sufficient to exceed minimum funding requirements. The goal is to optimize the long-term return on plan assets at a moderate level of risk, by balancing higher-returning assets, such as equity securities, with less volatile assets, such as fixed income securities. The assets are managed by professional investment firms and performance is evaluated periodically against specific benchmarks. The Pension Plans’ net assets did not include any shares of the Company’s own stock at the end of fiscal year 2020. None of our Named Executive Officers are participants in these plans.

Salary Continuation Plan

Historically, the Company has maintained a nonqualified Salary Continuation Plan designed to induce selected employees of the Company to remain in the employ of the Company by providing them with retirement, disability and death benefits in addition to those that they may receive under the Company’s other benefit programs. Mr. Hendrix is the only employee participating in the Salary Continuation Plan (pursuant to an arrangement from his previous tenure as CEO), and the Committee has determined that the plan is closed to new participants.

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The Salary Continuation Plan entitles participants to (i) retirement benefits upon normal retirement from the Company at age 65 (or early retirement as early as age 55) after completing at least 15 years of service with the Company (unless otherwise provided in the plan), payable for the remainder of their lives (or, if elected by a participant, a reduced benefit is payable for the remainder of the participant’s life and any surviving spouse’s life) and in no event for less than 10 years under the death benefit feature; (ii) disability benefits payable for the period of any pre-retirement total disability; and (iii) death benefits payable to the designated beneficiary of the executive for a period of up to 10 years. The annual retirement benefit for retirement at age 65 is 50% of the executive’s final average earnings (defined as the average of the salary and bonus paid by the Company for the four individual calendar years of the executive’s highest compensation during the last eight full calendar years of the executive’s employment with the Company ending on or prior to the effective date of the executive’s retirement), which decreases proportionately to 30% of final average earnings for early retirement at age 55. The annual disability benefit is structured to essentially equate to 66% of current pay (salary and bonus) at the time of disability. The annual death benefit, for the 10-year payment period, is 50% of final average earnings, for a pre-retirement death, or a continuation of the actual retirement payments for the balance of the 10-year period (if any) for a post-retirement death (assuming no election of spousal survival benefits). The Company’s obligations under the Salary Continuation Plan are currently unfunded (although the Company uses insurance instruments in an irrevocable grantor (“rabbi”) trust to hedge its exposure thereunder); however, the Company is required to contribute the full present value of its obligations thereunder to a rabbi trust in the event of a “Change in Control” (as such term is defined in the Salary Continuation Plan) of the Company.

Pursuant to the Salary Continuation Plan, the Company has maintained a Salary Continuation Agreement with Mr. Hendrix since 1986. (The Company most recently amended and restated the Salary Continuation Agreement with Mr. Hendrix in January 2008, primarily to comply with Section 409A of the Internal Revenue Code of 1986, as amended. The benefits under his amended and restated agreement are substantially similar to those under his prior agreement.) The individual Salary Continuation Agreement contains essentially all of the benefit terms and conditions, and the agreement controls in the event of any conflict with the Salary Continuation Plan document. Please see the “Pension Benefits” table included in this Proxy Statement for information about the Salary Continuation Plan benefits applicable to Mr. Hendrix.

Employment and Severance Agreements

The Company has an employment agreement in effect with Mr. Stansfield, and had an employment agreement in effect with Mr. Gould until his termination in January 2020. These agreements generally provide for certain benefits (salary, bonus, medical benefits, etc.) in the event of a termination of employment without “cause” (as may be defined in the agreements), as well as certain benefits upon his resignation or a termination due to death or disability. These agreements also contain provisions placing restrictions on the individual’s ability to compete with the Company, or solicit its customers or employees, for a specified period of time following termination of employment. For Mr. Gould, the agreement also provided for certain benefits in the event of a termination of employment in connection with a “Change in Control” (as defined in the agreements) of the Company.

The Company also has a Severance Protection and Change in Control Agreement with Mr. Foshee that provides for certain severance benefits if the individual’s employment is terminated involuntarily without cause or in connection with a change in control. The agreement also contains provisions placing restrictions on the individual’s ability to compete with the Company for a period of 12 or 24 months following termination of employment, depending on the circumstances of termination.

Messrs. Hendrix, Hausmann and Poppens do not have employment agreements. In the event of a termination, they are entitled to receive only those benefits outlined in (i) the respective employment offer letters for Messrs. Hausmann and Poppens, (ii) the Company’s policies (including, without limitation, severance and benefits) applicable to similarly situated employees in the U.S., and (iii) the terms of their respective individual equity award agreements in effect at the time.

Please see the further discussion below in the “Potential Payments Upon Termination or Change of Control” section of this Proxy Statement regarding the respective employment and change in control agreements of the Company’s Named Executive Officers.

Perquisites

In order to provide a market competitive total compensation package to certain of the Company’s executive officers, including the Named Executive Officers, the Company provides a limited set of perquisites that it believes enable its Named Executive Officers to perform their responsibilities efficiently and with minimal distractions. The perquisites provided to one or more Named Executive Officers in 2020 included the following:

● | Company-provided automobile/allowance |  | ● | Long-term care and life insurance
● | Company-provided telephone |  |  |

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Please see the “Summary Compensation Table” included in this Proxy Statement (and the notes thereto) for a more detailed discussion of these perquisites and their valuation.

Special Incentive Programs

From time to time, in its discretion, the Committee may implement special incentive programs which provide executives an opportunity to earn additional compensation if specific performance objectives (such as stock price appreciation, debt reduction, cash accumulation, or attainment of a specified financial ratio) are met. No special incentive programs have been used in the past several years.

Stock Ownership and Retention Guidelines

To further tie the financial interests of Company executives to those of shareholders, the Committee has established stock ownership and retention guidelines. Pursuant to the stock ownership and retention guidelines, executives are expected to accumulate a number of shares (unrestricted) of the Company’s Common Stock having a value equaling three times base salary in the case of the Chief Executive Officer and two times base salary in the case of the other executive officers (based on salaries and the stock price at the time the new guidelines were adopted in 2016). The expectation is for executives to reach this ownership level within four years of joining the Company or otherwise becoming an executive officer. As of the end of 2020, all Named Executive Officers had met this target, except for Mr. Poppens who was appointed to his executive position in November 2020. To facilitate accomplishing the ownership targets, executive officers generally are expected to retain at least one-half of the net after-tax shares (i.e., the net shares remaining after first selling or the withholding of sufficient shares to cover the anticipated tax liability and, in the case of stock options, the exercise price) obtained upon the vesting of equity awards and the exercise of stock options.

Directors also are subject to stock ownership requirements. Directors are required to hold 2,000 unrestricted shares. Any new director is required to accumulate these shares by the second anniversary of his or her election. As a guideline, non-employee directors also are expected to retain during their tenure all of the net after-tax shares obtained upon the vesting of restricted stock and at least one-half of the net after-tax shares obtained upon the exercise of stock options. All current directors have met this stock ownership standard.

The Company has a policy that generally prohibits all of its employees, officers and directors from engaging in short sales or trading in puts, calls and other options or derivatives with respect to the securities of the Company.

Compensation Deductibility

Although the Committee considers deductibility issues when approving executive compensation elements, the Company and the Committee believe that other compensation objectives, such as attracting, retaining and providing incentives to qualified managers, are important and may supersede the goal of maintaining deductibility. Consequently, the Company and the Committee may make compensation decisions without regard to deductibility when it is deemed to be in the best interests of the Company and its shareholders to do so.

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors has reviewed and discussed with management the “Compensation Discussion and Analysis” section of this Proxy Statement. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” section be included in this 2021 Proxy Statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the year ended January 3, 2021, filed with the Securities and Exchange Commission.

THE COMPENSATION COMMITTEE
Sheryl D. Palmer (Chair)
Dwight Gibson
Joseph Keough

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

None of the executive officers of the Company served as either (1) a member of the Compensation Committee or (2) a director of any entity of which any member of the Compensation Committee is an executive officer. In addition, none of the executive officers of the Company served as a member of the compensation committee of any entity of which any member of the Board of Directors is an executive officer.

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EXECUTIVE COMPENSATION AND RELATED ITEMS

Summary Compensation Table

The following table provides information about the compensation paid by the Company and its subsidiaries to the Company’s Named Executive Officers for each of the past three fiscal years. As previously disclosed, Mr. Gould is no longer employed by the Company.

Name and Principal Position |  | Year |  |  | Salary |  |  | Bonus |  |  | Stock Awards |  |  | Option Awards |  |  | Non-Equity Incentive Plan Compensation |  |  | Change in Pension Value and Nonqualified Deferred Compensation Earnings |  |  | All Other Compensation |  |  | Total |
(a) |  | (b) |  |  | ($) (c) |  |  | ($) (d)(1) |  |  | ($) (e)(2) |  |  | ($) (f) |  |  | ($) (g)(3) |  |  | ($) (h)(4) |  |  | ($) (i)(5) |  |  | ($) (j)(6) |
Jay D. Gould, |  | 2020 |  |  |  | 52,887 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 75,581 |  |  |  | 128,468 |
Former President and |  | 2019 |  |  |  | 927,000 |  |  |  | -- |  |  |  | 2,317,490 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 155,311 |  |  |  | 3,399,801 |
CEO |  | 2018 |  |  |  | 927,000 |  |  |  | -- |  |  |  | 2,549,234 |  |  |  | -- |  |  |  | 1,522,876 |  |  |  | -- |  |  |  | 102,556 |  |  |  | 5,101,666 |
Daniel T. Hendrix, |  | 2020 |  |  |  | 888,375 |  |  |  | -- |  |  |  | 999,996 |  |  |  | -- |  |  |  | -- |  |  |  | 1,892,754 |  |  |  | 267,067 |  |  |  | 4,048,192 |
President, CEO and |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Chairman |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
David B. Foshee, |  | 2020 |  |  |  | 388,264 |  |  |  | -- |  |  |  | 499,999 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 36,704 |  |  |  | 924,967 |
Vice President, |  | 2019 |  |  |  | 385,175 |  |  |  | -- |  |  |  | 442,955 |  |  |  | -- |  |  |  | 231,475 |  |  |  | -- |  |  |  | 46,276 |  |  |  | 1,105,881 |
General Counsel and |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Secretary |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Bruce A. Hausmann, |  | 2020 |  |  |  | 446,692 |  |  |  | -- |  |  |  | 688,420 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 50,202 |  |  |  | 1,185,314 |
Vice President and CFO |  | 2019 |  |  |  | 445,578 |  |  |  | -- |  |  |  | 668,379 |  |  |  | -- |  |  |  | 401,662 |  |  |  | -- |  |  |  | 65,991 |  |  |  | 1,581,610 |
|  | 2018 |  |  |  | 432,600 |  |  |  | -- |  |  |  | 648,874 |  |  |  | -- |  |  |  | 426,405 |  |  |  | -- |  |  |  | 49,318 |  |  |  | 1,557,197 |
James Poppens, |  | 2020 |  |  |  | 313,411 |  |  |  | -- |  |  |  | 224,993 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 20,295 |  |  |  | 558,699 |
Vice President |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
(Division President) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nigel Stansfield, |  | 2020 |  |  |  | 378,045 |  |  |  | -- |  |  |  | 611,174 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 42,418 |  |  |  | 1,031,637 |
Vice President |  | 2019 |  |  |  | 396,637 |  |  |  | -- |  |  |  | 620,863 |  |  |  | -- |  |  |  | 169,563 |  |  |  | -- |  |  |  | 51,702 |  |  |  | 1,238,765 |
(Division President)* |  | 2018 |  |  |  | 342,622 |  |  |  | -- |  |  |  | 441,089 |  |  |  | -- |  |  |  | 371,078 |  |  |  | -- |  |  |  | 26,889 |  |  |  | 1,181,678 |

______

| * | Mr. Stansfield was paid in British pound sterling. In calculating the U.S. dollar equivalent for disclosure purposes, the Company has converted each payment in British pound sterling into U.S. dollars based on the exchange rate in effect as of the end of the year (£1 to $1.22 for 2020, £1 to $1.28 for 2019, and £1 to $1.34 for 2018).

| (1) | The Company paid no discretionary bonuses, or bonuses based on performance metrics that were not pre-established and communicated to the Named Executive Officers. All cash bonus awards were performance-based. These payments, which were made under the Company’s Executive Bonus Plan, are reported in the “Non-Equity Incentive Plan Compensation” column (column (g)).

| (2) | The amounts reported in the “Stock Awards” column are computed based upon the grant date fair values as of the respective grant dates. See the Note entitled “Shareholders’ Equity” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended January 3, 2021, regarding assumptions underlying valuation of equity awards. See the “Grants of Plan-Based Awards” table included in this Proxy Statement for additional information about equity awards granted in 2020, and the “Outstanding Equity Awards at Fiscal Year-End” table included in this Proxy Statement for information with respect to awards outstanding at year-end 2020. The ultimate payout value with respect to the “Stock Awards” included in column (e) may be significantly more or less than the amounts shown, and possibly zero, depending on the Company’s financial performance at the end of the performance or restricted period and the recipient’s tenure of employment. For a description of the performance criteria, please see the discussion contained in the “Compensation Discussion and Analysis” section herein.

| (3) | The amounts reported in the “Non-Equity Incentive Plan Compensation” column reflect the amounts earned by and paid to each Named Executive Officer under the Company’s Executive Bonus Plan. The material provisions of the Executive Bonus Plan are more fully described in the “Compensation Discussion and Analysis” section included herein.

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| (4) | The amount reported in the “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column represents aggregate changes in the actuarial present value of the accumulated benefit under the Company’s Salary Continuation Plan for Mr. Hendrix. The Company maintains a defined benefit Salary Continuation Agreement with Mr. Hendrix dated as of January 1, 2008 (although earlier versions of the agreement date back to 1986). In 2020, the present value increased due a combination of $832,752 of cash payments under Salary Continuation Agreement plus an increase of $1,060,002 in the present value of the accumulated benefits (primarily due to a decrease in the discount rate used for determining present value), for an aggregate increase of $1,892,754. See the “Pension Benefits” table of this Proxy Statement for additional information about these benefits for Mr. Hendrix. The other Named Executive Officers do not participate in a Pension Plan or the Salary Continuation Plan. The Company does not pay any above-market interest (or any guaranteed interest rate) on its Nonqualified Plan.

| (5) | The amounts reported in the “All Other Compensation” column reflect, for each Named Executive Officer, the sum of (i) the incremental cost to the Company of all perquisites and other personal benefits, and (ii) amounts contributed by the Company to the 401(k) Plan or Nonqualified Plan (collectively, the “Company Retirement Plans”). The material provisions of the Company Retirement Plans are contained in the “Compensation Discussion and Analysis” section herein.

The following table outlines those perquisites and all other compensation required by SEC rules to be separately quantified that were provided to the Company’s Named Executive Officers during 2020.

Name |  | Automobile ($) |  |  | Telephone ($) |  |  | Long-Term Care and Life Insurance Premiums ($) |  |  | Other ($) |  |  | Dividends and Dividend Equivalents ($) |  |  | Company Contributions to Retirement Plans ($) |
Jay D. Gould |  |  | 812 |  |  |  | 574 |  |  |  | 115 |  |  |  | 72,922 |  |  |  | -- |  |  |  | 1,159 |
Daniel T. Hendrix |  |  | 13,916 |  |  |  | 1,866 |  |  |  | 1,111 |  |  |  | 240,000 |  |  |  | 4,323 |  |  |  | 5,850 |
David B. Foshee |  |  | 12,570 |  |  |  | 1,748 |  |  |  | 1,306 |  |  |  | -- |  |  |  | 11,309 |  |  |  | 9,771 |
Bruce A. Hausmann |  |  | 12,561 |  |  |  | 1,078 |  |  |  | 1,357 |  |  |  | -- |  |  |  | 18,666 |  |  |  | 16,539 |
James Poppens |  |  | 12,125 |  |  |  | 2,051 |  |  |  | 1,212 |  |  |  | -- |  |  |  | 801 |  |  |  | 4,106 |
Nigel Stansfield |  |  | 12,290 |  |  |  | 1,703 |  |  |  | 17,060 |  |  |  | -- |  |  |  | 11,365 |  |  |  | -- |

Automobile/Automobile Allowance. Each of the Named Executive Officers were provided with use of a company-provided automobile, or an automobile allowance, plus fuel and maintenance.

Telephone. The Company paid certain fees associated with the Named Executive Officers’ use of company-provided cellular telephones.

Long-Term Care and Life Insurance. The Company paid certain premiums associated with long-term care and life insurance policies.

Other. For Mr. Gould, the amount represents unused vacation payout ($71,308) and Company paid taxes on W-2 adjustment amounts processed after termination ($1,614). For Mr. Hendrix, the amount represents his cash retainer for his service as Chairman of the Board.

Dividends and Dividend Equivalents. In 2020, the Company paid on all outstanding Common Stock of the Company (including time-based awards of restricted stock, but not on unvested performance shares) dividends of $0.065 per share in the first quarter, and $.01 per share in the second, third and fourth quarters. Dividend equivalents accrue on awards of performance shares and are paid out only if, and to the extent, the performance shares actually vest. The amounts in the “Dividends and Dividend Equivalents” column reflect dividends paid on the time-based restricted shares, and dividend equivalents paid out on performance shares that vested, of each Named Executive Officer in 2020.

Contributions to Retirement Plans. The Company makes matching contributions, on the same terms and using the same formulas as for other participating employees, to each U.S.-based Named Executive Officer’s account under the 401(k) Plan and the Nonqualified Plan, as applicable.

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The amounts reflected below represent the contributions by the Company:

Name |  | Year |  |  | Company Contribution To 401(k) Plan ($) |  |  | Company Contribution To Nonqualified Plan ($) |
Jay D. Gould |  | 2020 |  |  | 1,043 |  |  | 116 |
|  | 2019 |  |  | 8,400 |  |  | 38,180 |
|  | 2018 |  |  | 8,250 |  |  | 38,230 |
Daniel T. Hendrix |  | 2020 |  |  | 5,850 |  |  | -- |
David B. Foshee |  | 2020 |  |  | 7,313 |  |  | 2,459 |
|  | 2019 |  |  | 7,125 |  |  | 10,727 |
Bruce A. Hausmann |  | 2020 |  |  | 8,550 |  |  | 7,989 |
|  | 2019 |  |  | 8,400 |  |  | 18,055 |
|  | 2018 |  |  | 8,250 |  |  | 14,143 |
James Poppens |  | 2020 |  |  | 4,106 |  |  | -- |

As a non-U.S. employee, Mr. Stansfield is ineligible to participate in the 401(k) Plan and the Nonqualified Plan.

| (6) | In 2020, salary as a percentage of total compensation (excluding change in pension value) for each of Messrs. Gould, Hendrix, Foshee, Hausmann, Poppens, and Stansfield was 41%, 41%, 42%, 38%, 56%, and 37%, respectively. In 2019, this percentage for each of Messrs. Gould, Foshee, Hausmann, and Stansfield was 27%, 35%, 28%, and 32%, respectively. In 2018, this percentage for each of Messrs. Gould, Hausmann, and Stansfield was 18%, 28%, and 29%, respectively.

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Grants of Plan-Based Awards in 2020

The following table provides information about awards granted to the Company’s Named Executive Officers in 2020, as well as potential future payments associated therewith.

|  |  |  |  |  | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) |  |  | Estimated Future Payouts Under Equity Incentive Plan Awards |  |  |  |  |
Name (a) |  | Grant Date (b) |  |  | Threshold ($) (c) |  |  | Target ($) (d) |  |  | Maximum ($) (e) |  |  | Threshold (#) (f) |  |  | Target (#) (g)(2) |  |  | Maximum (#) (h) |  |  | Grant Date Fair Value of Stock and Option Awards ($) (l) (3) |
Jay D. Gould |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Daniel T. Hendrix |  |  | 2-7-20 |  |  |  | 347,625 |  |  |  | 1,390,500 |  |  |  | 2,433,375 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
|  |  | 2-7-20 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 59,880 |  |  |  | 59,880 |  |  |  | 999,996 |
David B. Foshee |  |  | 2-28-20 |  |  |  | 72,220 |  |  |  | 288,881 |  |  |  | 505,542 |  |  |  | 5,426 |  |  |  | 21,702 |  |  |  | 43,404 |  |  |  | 333,343 |
|  |  | 2-28-20 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 10,850 |  |  |  | 10,850 |  |  |  | 166,656 |
Bruce A. Hausmann |  |  | 2-28-20 |  |  |  | 100,255 |  |  |  | 401,020 |  |  |  | 701,785 |  |  |  | 7,470 |  |  |  | 29,881 |  |  |  | 59,762 |  |  |  | 458,972 |
|  |  | 2-28-20 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 14,938 |  |  |  | 14,938 |  |  |  | 229,448 |
James Poppens(4) |  |  | 2-28-20 |  |  |  | 56,250 |  |  |  | 225,000 |  |  |  | 258,750 |  |  |  | 2,443 |  |  |  | 9,770 |  |  |  | 19,540 |  |  |  | 150,067 |
|  |  | 2-28-20 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 4,878 |  |  |  | 4,878 |  |  |  | 74,926 |
Nigel Stansfield* |  |  | 2-28-20 |  |  |  | 85,060 |  |  |  | 340,241 |  |  |  | 595,421 |  |  |  | 6,632 |  |  |  | 26,528 |  |  |  | 53,056 |  |  |  | 407,470 |
|  |  | 2-28-20 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 13,262 |  |  |  | 13,262 |  |  |  | 203,704 |

* | Estimated potential payments under Non-Equity Incentive Plan Awards for Mr. Stansfield were converted into U.S. dollars based on the exchange rate as of the end of fiscal year 2020.

(1) | The payment amounts reflected in columns (c), (d) and (e) represent amounts associated with awards potentially earned for fiscal 2020 by the Company’s Named Executive Officers under the Company’s Executive Bonus Plan. The total bonus opportunity under the Executive Bonus Plan (expressed as a percentage of 2020 base salary) was 150% for Mr. Hendrix, 90% for Messrs. Hausman and Stansfield, and 75% for Mr. Foshee. Up to 175% of the bonus opportunity may be earned for maximum achievement (except that the maximum achievement for Mr. Poppens prior to his promotion was 115%). Mr. Gould’s bonus potential was 150% of base salary at the time of his termination on January 19, 2020. See footnote 4 for information regarding Mr. Poppens. Certain additional material provisions of the Executive Bonus Plan are more fully described in the “Compensation Discussion and Analysis” section included herein.

(2) | The amounts reflected in column (g) represent the number of shares of restricted stock and performance shares granted to the executives in 2020 under the Omnibus Stock Plan. See the Compensation Discussion and Analysis herein for additional information on these awards. These shares of restricted stock and performance shares are included in the “Stock Awards” column (column (e)) of the Summary Compensation Table.

(3) | The amounts reflected in column (l) represent the dollar value of restricted stock and performance shares awarded to the executives, calculated by multiplying the number of shares (assuming target payout) awarded by the closing price of the Company’s Common Stock as reported by the Nasdaq Stock Market on the trading date immediately preceding the date of grant.

(4) | Effective as of his promotion on November 1, 2020, Mr. Poppens’ base salary was increased from $300,000 to $400,000 and his bonus potential was increased from 75% to 90% of base salary, and thus his estimated future payouts under non-equity incentive plan awards for threshold, target and maximum were increased to $90,000, $360,000 and $630,000, respectively.

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Outstanding Equity Awards at 2020 Fiscal Year-End

The following table provides information about the number of shares covered by exercisable and unexercisable options and unvested stock awards outstanding and held by the Company’s Named Executive Officers as of the end of fiscal year 2020.

|  | Option Awards |  | Stock Awards |
Name (a) |  | Number of Securities Underlying Unexercised Options (#) Exercisable (b) |  | Number of Securities Underlying Unexercised Options (#) Unexercisable (c) |  | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d) |  | Option Exercise Price ($) (e) |  | Option Expiration Date (f) |  | Number of Shares or Units of Stock That Have Not Vested (#) (g)(1) |  | Market Value of Shares or Units of Stock That Have Not Vested ($) (h)(2) |  | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i) |  | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j) |
Jay D. Gould |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | -- |
Daniel T. Hendrix |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 59,880 |  |  | 628,740 |  |  | -- |  |  | -- |
David B. Foshee |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | 24,563 |  |  | 257,912 |  |  | 36,456 |  |  | 382,788 |
Bruce A. Hausmann |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | 36,056 |  |  | 378,588 |  |  | 52,427 |  |  | 550,484 |
James Poppens |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | 7,396 |  |  | 77,658 |  |  | 13,127 |  |  | 137,834 |
Nigel Stansfield |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | -- |  |  | 30,782 |  |  | 323,211 |  |  | 46,074 |  |  | 483,777 |

______

| (1) | Restricted stock awards that have not yet vested are subject to forfeiture by the Named Executive Officers under certain circumstances. For a description of the related vesting criteria, please see the discussion contained in the “Compensation Discussion and Analysis” section herein. The restricted stock vesting dates for each Named Executive Officer range from 2021-2023.

| (2) | The market value referenced above is based on the closing price of $10.50 per share of the Company’s Common Stock on December 31, 2020 (the last trading day of the Company’s 2020 fiscal year), as reported by the Nasdaq Stock Market.

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Option Exercises and Stock Vested in 2020

The following table provides information about the number and corresponding value realized during 2020 with respect to (i) the exercise of stock options, and (ii) the vesting of restricted stock and performance shares for each of the Company’s Named Executive Officers.

|  | Option Awards |  |  | Stock Awards |
Name (a) |  | Number of Shares Acquired on Exercise (#) (b) |  |  | Value Realized on Exercise ($) (c) |  |  | Number of Shares Acquired on Vesting (#) (d) |  |  | Value Realized on Vesting ($) (e)(1) |
Jay D. Gould |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Daniel T. Hendrix |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
David B. Foshee |  |  | -- |  |  |  | -- |  |  |  | 23,343 |  |  |  | 372,375 |
Bruce A. Hausmann |  |  | -- |  |  |  | -- |  |  |  | 48,596 |  |  |  | 615,298 |
James Poppens |  |  | -- |  |  |  | -- |  |  |  | 1,784 |  |  |  | 28,009 |
Nigel Stansfield |  |  | -- |  |  |  | -- |  |  |  | 28,710 |  |  |  | 457,839 |

______

| (1) | The dollar amount is determined by multiplying (i) the number of shares vested by (ii) the closing price of our Common Stock on the Nasdaq Stock Market on the day preceding the vesting date.

Pension Benefits

The following table provides information about the pension benefits for each of the Company’s Named Executive Officers.

Name (a) |  | Plan Name (b)(1) |  |  | Number of Years Credited Service (#) (c) |  |  | Present Value of Accumulated Benefit ($) (d) |  |  | Payments During Last Fiscal Year ($) (e) |
Jay D. Gould |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Daniel T. Hendrix |  | Salary Continuation Plan |  |  |  | More than 15 |  |  |  | 15,636,106 |  |  |  | 832,752 |
David B. Foshee |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Bruce A. Hausmann |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
James Poppens |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Nigel Stansfield |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |

______

| (1) | The benefits for Mr. Hendrix under the Salary Continuation Plan vested upon 15 years of service and attainment of the age of 55, with maximum benefit accruing at age 65. All assumptions are the same as are used for financial reporting purposes under generally accepted accounting principles. The Compensation Committee has determined that the Salary Continuation Plan is closed to any new participants.

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2020 Non-Qualified Deferred Compensation

The following table provides information about the contributions, earnings and account balances of the Company’s applicable deferred compensation plans for each of the Company’s Named Executive Officers.

Name (a)(1) |  | Executive Contributions in Last FY ($) (b) |  |  | Company Contributions in Last FY ($) (c)(2) |  |  | Aggregate Earnings in Last FY ($) (d)(3) |  |  | Aggregate Withdrawals/ Distributions ($) (e) |  |  | Aggregate Balance at Last FYE ($) (f) |
Jay D. Gould |  |  | 3,862 |  |  |  | 38,180 |  |  |  | 124,493 |  |  |  | (72,119 | ) |  |  | 637,089 |
Daniel T. Hendrix |  |  | -- |  |  |  | -- |  |  |  | 65,144 |  |  |  | (478,874 | ) |  |  | 1,934,669 |
David B. Foshee |  |  | 37,904 |  |  |  | 10,727 |  |  |  | 10,694 |  |  |  | (43,917 | ) |  |  | 164,866 |
Bruce A. Hausmann |  |  | 50,901 |  |  |  | 18,055 |  |  |  | 7,239 |  |  |  | -- |  |  |  | 182,850 |
James Poppens |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Nigel Stansfield |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |

______

| (1) | The Company maintains the Nonqualified Plan for certain U.S.-based “highly compensated employees” (as such term is defined in applicable IRS regulations), including each of the Named Executive Officers. As with the Company’s 401(k) Plan, the Named Executive Officers are eligible to participate in the Nonqualified Plan on the same terms as other eligible executive and non-executive employees based in the United States, and receive the same benefits afforded all other participants.

|  | Under the Nonqualified Plan, all eligible employees can elect to defer, on a pre-tax basis, a portion of their salary and/or annual bonus compensation. Each participant elects when the deferred amounts will be paid out, which can be during or after employment, subject to the provisions of Section 409A of the Internal Revenue Code. The employee earns a deferred return based on deemed investments in mutual funds selected by the employee from a list provided by the Company. The investment risk is borne entirely by the employee participant. Gains and losses are credited based on the participant’s election of a variety of deemed investment choices. Participants’ accounts may or may not appreciate, and may even depreciate, depending on the performance of their deemed investment choices. None of the deemed investment choices provide interest at above-market rates (or any guaranteed interest rate). The Company has established an irrevocable grantor (“rabbi”) trust to hold, invest and reinvest deferrals and contributions under the Nonqualified Plan, and all deferrals are paid out in cash upon distribution.

| (2) | The amounts reported in column (c) reflect, for each Named Executive Officer (as applicable), the actual amounts contributed by the Company to the Nonqualified Plan during fiscal year 2020 (including contributions in 2020 with respect to compensation deferrals in 2019).

| (3) | The amounts reported in column (d) were not reported as compensation to the Named Executive Officers in the Company’s Summary Compensation Table. However, the Company’s matching contributions reported in column (c) are included in the “All Other Compensation” column of the Company’s Summary Compensation Table.

CEO Pay Ratio

As required by SEC rules and described below, we are disclosing the annual total compensation of our CEO (based on Mr. Hendrix’s annualized compensation for 2020), the annual total compensation of our median employee, and the ratio between those two amounts.

To prepare this analysis, the Company identified its median employee from its 2019 analysis and calculated the total compensation for that employee for 2020 using data for the following elements of compensation: salary, equity awards, incentive compensation, and non-equity incentive compensation, over a trailing 12-month period from payroll records.

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For purposes of reporting annual total compensation and the ratio of annual total compensation of the CEO to the median employee, both the CEO and median employee’s annual total compensation are calculated consistent with the disclosure requirements of executive compensation under Item 402(c)(2)(x) of Regulation S-K.

For 2020, the median employee’s annual total compensation was $53,966, and the total annualized compensation of our CEO was $4,086,817 (including the change in pension value disclosed in the Summary Compensation Table). Based on this information, the ratio of the total annual compensation of our CEO to the total annual compensation of our median employee was 76:1. (Excluding the change in pension value, the ratio was 41:1.) The median employee was located in the United States.

2020 Director Compensation

The following table provides information about the compensation paid to the Company’s directors in 2020 (excluding Messrs. Gould and Hendrix, each of whom was a Named Executive Officer and whose compensation is presented in the Summary Compensation Table included above).

Name (a) |  | Fees Earned or Paid in Cash ($) (b)(1) |  |  | Stock Awards ($) (c)(2) |  |  | Option Awards ($) (d) |  |  | Non-Equity Incentive Plan Compensation ($) (e) |  |  | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (f) |  |  | All Other Compensation ($) (g)(3) |  |  | Total ($) (h) |
John P. Burke |  |  | 87,500 |  |  |  | 124,994 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 581 |  |  |  | 213,075 |
Andrew B. Cogan |  |  | 23,750 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 185 |  |  |  | 23,935 |
Dwight Gibson |  |  | 87,500 |  |  |  | 124,994 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 498 |  |  |  | 212,993 |
Christopher G. Kennedy |  |  | 110,000 |  |  |  | 124,994 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 581 |  |  |  | 235,575 |
Joseph Keough |  |  | 98,750 |  |  |  | 124,994 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 498 |  |  |  | 224,243 |
Catherine M. Kilbane |  |  | 95,000 |  |  |  | 124,994 |  |  |  | -- |  |  |  | -- |  |  |  |  |  |  |  | 581 |  |  |  | 220,575 |
K. David Kohler |  |  | 87,500 |  |  |  | 124,994 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 581 |  |  |  | 213,075 |
James B. Miller, Jr. |  |  | 41,875 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 185 |  |  |  | 42,060 |
Sheryl D. Palmer |  |  | 102,500 |  |  |  | 124,994 |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 581 |  |  |  | 228,075 |

______

| (1) | For fiscal year 2020, the Company’s non-employee directors (“outside directors”) were paid an annual director’s fee of $80,000. Outside directors who serve on the Audit Committee, the Compensation Committee and the Nominating & Governance Committee were paid an additional $7,500 per year, except that the respective Chairpersons of the Audit Committee, Compensation Committee and Nominating & Governance Committee were paid an additional $15,000 per year (rather than $7,500). In addition, the lead independent director of the Board was paid an incremental $15,000 per year. Directors also were reimbursed for expenses in connection with attending Board and Committee meetings.

| (2) | The amounts reported in the “Stock Awards” column are computed based upon the aggregate grant date fair value of the respective awards. See the Note entitled “Shareholder’s Equity” to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended January 3, 2021, regarding assumptions underlying valuation of equity awards. The ultimate payout value may be significantly less than the amounts shown, and possibly zero, depending on the recipient’s tenure as a director. In 2020, each of the directors listed in the table received an award of 15,508 shares of restricted stock having a grant date fair value of $8.06 per share. As of January 3, 2021, each of these directors held an aggregate of 18,358 shares of restricted stock that had not vested, except Messrs. Gibson and Keough held 17,490 shares of restricted stock that had not vested, and Messrs. Cogan and Miller held no shares. No stock options were granted to directors in 2020 or in the past several years. As of January 3, 2021, there were no stock options held by directors.

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| (3) | In 2020, the Company paid on all outstanding Common Stock of the Company (including restricted stock) dividends of $0.065 per share in the first quarter, and $0.01 per share in the second, third and fourth quarters. The amounts in this column reflect dividends on the restricted shares of each director in 2020.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information concerning the Company’s equity compensation plans as of January 3, 2021.

Plan Category(1) |  | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights |  |  | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights |  |  | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) |
|  | (a) |  |  | (b) |  |  | (c) |
Equity Compensation Plan Approved by Security Holders: |  |  |  |  |  |  |  |  |  |  |  |
Omnibus Stock Plan |  |  | -- |  |  |  | -- |  |  |  | 3,591,444 |

| (1) | The Company does not have shares authorized for issuance under any compensation plan not approved by shareholders.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

The Company is generally obligated to provide its Named Executive Officers with certain payments or other forms of compensation when their employment with the Company is terminated. The actual amount of compensation due each of the Named Executive Officers, as well as the duration of any periodic payments, depends on both the circumstances surrounding the termination, as well as the particulars of any employment-related agreements to which the Company and the Named Executive Officer are party.

Jay D. Gould

On January 19, 2020, the Board of Directors of the Company voted to terminate for cause the employment of Mr. Gould. The Company had with Mr. Gould an employment and change in control agreement, which generally described the benefits payable at, following, or in connection with a termination with cause, as described below. (Actual amounts paid to Mr. Gould are described above in the Summary Compensation Table.)

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Upon Termination With “Cause”:

Payment, Benefit or Restrictive Covenant |  | Entitled to Receive
Base Salary |  | Executive received his then-current base salary through the effective date of termination.
Bonus |  | No benefit.
Equity Awards |  | Executive forfeited unvested restricted stock and performance share awards.
Unused Vacation |  | Executive received a cash payment for unused vacation.
Other Employee Retirement Plans |  | No additional benefit beyond those to which the executive was normally entitled under the Company’s 401(k) Plan and Nonqualified Plan following termination of employment.
Health, Life and Other Insurance Coverages |  | No additional benefits beyond those to which the executive was normally entitled under the terms of the respective medical and/or insurance plans.
Restrictive Covenants |  | Executive is prohibited from competing with the Company, or soliciting its customers or employees, for a two-year period following termination.

Daniel T. Hendrix

Mr. Hendrix does not have an employment agreement. In the event of a termination, he would be entitled to receive only those benefits outlined in (i) the Company’s policies (including, without limitation, severance and benefits) applicable to similarly situated employees in the U.S., and (ii) the terms of his respective individual equity award agreements in effect at the time.

Bruce A. Hausmann and James Poppens

Messrs. Hausmann and Poppens do not have employment agreements. In the event of a termination, they would be entitled to receive only those benefits outlined in (i) his respective employment offer letter, (ii) the Company’s policies (including, without limitation, severance and benefits) applicable to similarly situated employees in the U.S., and (iii) the terms of his respective individual equity award agreements in effect at the time. Mr. Hausmann’s employment offer letter generally requires that, in the event of a termination by the Company without cause, he is entitled to receive 12 months of his then-current base salary, as well as 12 months of cash bonus (based on the average cash bonus paid to him in the preceding two years).

David B. Foshee

The Company entered into a Severance Protection and Change in Control Agreement with Mr. Foshee that provides for certain severance benefits if his employment is terminated involuntarily under certain circumstances. In general, those benefits are: (1) In the event of a termination without cause, severance benefits of 12 months continued base salary payments, a prorated annual bonus based on the date of termination, and continued health insurance benefits at the employee's regular rate for 12 months; and (2) In the event of an involuntary separation from service or a separation from service for good reason within 24 months following a "change in control" (as defined in the Agreement), severance benefits equal to 24 months of base salary payments (payable in a lump sum), a prorated annual bonus based on the date of termination, and continued health insurance benefits at the employee's regular rate for 12 months. The agreement also contains provisions placing restrictions on his ability to compete with the Company for a period of 12 or 24 months following termination of employment, depending on the circumstances of termination.

Nigel Stansfield

The Company has entered into an employment contract with Mr. Stansfield that provides for certain benefits if Mr. Stansfield’s employment is terminated involuntarily. The Company may terminate the employment contract for any reason by providing Mr. Stansfield 12 months’ notice (or may terminate immediately for cause). During the 12-month notice period, the Company may require Mr. Stansfield to continue performing his duties, or may place him on “garden leave” during the 12 months termination notice period. Alternatively, the Company may elect to terminate his employment immediately and pay him the equivalent of his salary and benefits for such 12-month period. The agreement also contains provisions restricting Mr. Stansfield from competing with the Company for a period of 6 months or solicit the Company’s customers or employees for a period of 12 months following termination of employment.

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Payments to Named Executive Officers Upon Termination or Change in Control

The following tables summarize the benefits payable to each of the Named Executive Officers under his employment agreement (or other agreements or arrangements described above) in effect on January 1, 2021 (the last business day of the Company’s 2020 fiscal year). The tables do not include amounts payable under employee benefit plans in which Company associates are eligible to participate on a non-discriminatory basis. The amounts shown in the tables below assume that a Named Executive Officer’s employment terminated as of January 1, 2021, and that the fair market value of the Company’s Common Stock was $10.50 per share.

Daniel T. Hendrix

|  | Retirement or Resignation |  |  | Death/Disability |  |  | Termination with Cause |  |  | Termination without Cause |  |  | Termination Following Change in Control(1) |
Compensation: |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |
Base salary |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 77,250 |  |  |  | 77,250 |
Bonus |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Equity awards(2) |  |  | -- |  |  |  | 209,580 |  |  |  | -- |  |  |  | 209,580 |  |  |  | 628,740 |
Benefits and Perquisites: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Salary Continuation(3) |  |  | 832,752 |  |  | 416,376/832,752 |  |  |  | 832,752 |  |  |  | 832,752 |  |  |  | 832,752 |
Retirement plans |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Health, life and other insurance |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |

David B. Foshee

|  | Retirement or Resignation |  |  | Death/Disability |  |  | Termination with Cause |  |  | Termination without Cause |  |  | Termination Following Change in Control(1) |
Compensation: |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |
Base salary |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 385,175 |  |  |  | 770,350 |
Bonus |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Equity awards(2) |  |  | -- |  |  |  | 233,719 |  |  |  | -- |  |  |  | 233,719 |  |  |  | 606,901 |
Benefits and Perquisites: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retirement plans |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Health, life and other insurance |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 249 |  |  |  | 249 |

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Bruce A. Hausmann

|  | Retirement or Resignation |  |  | Death/Disability |  |  | Termination with Cause |  |  | Termination without Cause |  |  | Termination Following Change in Control(1) |
Compensation: |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |
Base salary |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 445,578 |  |  |  | 445,578 |
Bonus |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 200,831 |  |  |  | 200,831 |
Equity awards(2) |  |  | -- |  |  |  | 352,114 |  |  |  | -- |  |  |  | 352,114 |  |  |  | 873,275 |
Benefits and Perquisites: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retirement plans |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Health, life and other insurance |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |

James Poppens

|  | Retirement or Resignation |  |  | Death/Disability |  |  | Termination with Cause |  |  | Termination without Cause |  |  | Termination Following Change in Control(1) |
Compensation: |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |
Base salary |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 133,333 |  |  |  | 133,333 |
Bonus |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Equity awards(2) |  |  | -- |  |  |  | 58,996 |  |  |  | -- |  |  |  | 58,996 |  |  |  | 216,472 |
Benefits and Perquisites: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retirement plans |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Health, life and other insurance |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |

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Nigel Stansfield

|  | Retirement or Resignation |  |  | Death/Disability |  |  | Termination with Cause |  |  | Termination without Cause |  |  | Termination Following Change in Control(1) |
Compensation: |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |  |  | ($) |
Base salary |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | 378,045 |  |  |  | 378,045 |
Bonus |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Equity awards(2) |  |  | -- |  |  |  | 302,931 |  |  |  | -- |  |  |  | 302,931 |  |  |  | 769,705 |
Benefits and Perquisites: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Retirement plans |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |
Health, life and other insurance |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |  |  |  | -- |

| (1) | The Company does not utilize a “single trigger” concept for severance payments in its agreements. The “Change in Control” (as defined in the applicable agreements) does not, by itself, provide the Named Executive Officer with any right to resign and receive a severance benefit. Instead, there must be a “second trigger” of either (i) an “Involuntary Separation from Service” or (ii) a “Separation from Service for Good Reason” (essentially, resignation in the face of negative changes in executive’s employment relationship with the Company) that occurs within 24 months after the date of a Change in Control. The amounts included in this column thus assume that both a “Change in Control” and a subsequent termination (as described immediately above) occurred as of January 1, 2021. If a related termination did not in fact occur, no severance payments would be payable. The amounts in this column for Base Salary and Bonus would be paid in a lump sum within 30 days.

| (2) | These amounts assume each Named Executive Officer (i) sold all newly vested shares of restricted stock, and (ii) ultimately vested at target in outstanding performance shares that would have been retained for possible future vesting, each based on the fair market value of those shares as of January 1, 2021. Also includes dividend equivalents accrued through January 1, 2021 that would be paid out in connection with such assumed vesting of performance shares.

| (3) | Mr. Hendrix previously vested in, and in 2017 began receiving, benefit payments under the Salary Continuation Plan (an arrangement from his prior tenure as CEO). The amount represents the annual payment to which he is entitled under the Salary Continuation Plan in any termination event, payable for the remainder of his life. In the case of Mr. Hendrix’s death, his surviving spouse would receive one-half of the amount otherwise payable.

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

(ITEM 3)

Information Concerning the Company’s Accountants

BDO USA, LLP (“BDO USA”) acted as the Company’s independent auditor during the past fiscal year. The Audit Committee has again appointed BDO USA to act as the independent auditor of the Company for fiscal year 2021. The Board of Directors will present to the annual meeting a proposal that such appointment be ratified. Should the shareholders fail to ratify the appointment, the Audit Committee will reconsider its selection, but may continue the engagement. Even if the appointment is ratified, the Audit Committee, in its discretion, may change the appointment at any time. BDO USA has no financial interest, direct or indirect, in the Company or any subsidiary.

A representative of BDO USA is expected to be present at the annual meeting to make a statement if he or she desires to do so and to respond to appropriate questions.

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Audit and Non-Audit Fees

The following table shows the fees for professional audit and other services provided by BDO USA to the Company for fiscal years 2020 and 2019.

|  | 2020 |  |  | 2019 |
Audit Fees1 |  | $ | 3,061,000 |  |  | $ | 2,554,000 |
Audit-Related Fees2 |  |  | 78,000 |  |  |  | 26,000 |
Tax Fees3 |  |  | 126,000 |  |  |  | 176,000 |
All Other Fees4 |  |  | -- |  |  |  | -- |
Total |  | $ | 3,265,000 |  |  | $ | 2,756,000 |

_________________

| (1) | “Audit Fees” consist of fees billed or accrued for professional services rendered for the audit of the Company’s annual financial statements, audit of the Company’s effectiveness of internal control over financial reporting, review of the interim financial statements included in quarterly reports, and services that are normally provided by BDO USA in connection with statutory and regulatory filings.

| (2) | “Audit-Related Fees” consist of fees billed or accrued primarily for employee benefit plan audits and other attestation services.

| (3) | “Tax Fees” consist of fees billed or accrued for professional services rendered for tax compliance, tax advice and tax planning, both domestic and international.

| (4) | “All Other Fees” consist of fees billed or accrued for those services not captured in the audit, audit-related and tax categories. The Company generally does not request such services from the independent auditors.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Auditors

Consistent with the Securities and Exchange Commission policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the Company’s independent auditors. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and non-audit services provided by the independent auditors.

These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for and detailed as to the particular services or category of services and is generally subject to a specific budget. Of the services rendered by the independent auditors under the categories “Audit-Related Fees”, “Tax Fees” and “All Other Fees” described above, $1,390 were approved by the Audit Committee after services were rendered pursuant to the de minimis exception established by the Commission.

You may vote “for,” “against,” or “abstain” from the proposal to ratify the appointment of BDO USA to act as the Company’s independent auditors for fiscal year 2021.

Vote Required and Recommendation of the Board

Under the Company’s Bylaws, the proposal to ratify the appointment of BDO USA to act as the Company’s independent auditors for fiscal year 2021 is approved if the affirmative votes cast by the holders of the Company’s outstanding shares of Common Stock entitled to vote and represented (in person or by proxy) at the meeting exceed the negative votes. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL, AND THE PROXY SUBMITTED BY TELEPHONE OR INTERNET OR PROXY CARD WILL BE VOTED IN THIS MANNER UNLESS THE SHAREHOLDER SUBMITTING THE PROXY SPECIFICALLY VOTES TO THE CONTRARY (OR ABSTAINS).

AUDIT COMMITTEE REPORT

The Audit Committee operates pursuant to an Audit Committee Charter that was adopted by the Board of Directors. (A copy of the Audit Committee Charter may be viewed on the Company’s website, https://investors.interface.com/investor-relations/default.aspx.) The Company’s management is responsible for its internal accounting controls and the financial reporting process. The Company’s independent auditors, BDO USA, are responsible for performing an audit of the Company’s consolidated financial statements in accordance with auditing standards generally accepted in the United States. The independent accountants also are responsible for expressing opinions on the conformity of the Company’s audited financial statements with generally accepted accounting principles, and on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee’s responsibility is to monitor and oversee these processes.

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In keeping with that responsibility, the Audit Committee has reviewed and discussed the Company’s audited consolidated financial statements with management and BDO USA. In addition, the Audit Committee has discussed with BDO USA the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. In addition, the Audit Committee has received the written disclosures and the letter from BDO USA required by applicable PCAOB rules regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountants their independence. The Audit Committee has also considered whether the provision of any services discussed above in Item 3 under the caption “Ratification of Appointment of Independent Auditors – Audit and Non-Audit Fees” by BDO USA is compatible with maintaining BDO USA’s independence.

The Board of Directors, in its business judgment, has determined that all three members of the Audit Committee are “independent,” as required by applicable listing standards of the Nasdaq Stock Market as currently in effect. Although the members of the Audit Committee are not professionally engaged in the practice of auditing or accounting and are not experts in the fields of auditing or accounting (including in respect of auditor independence), the Board of Directors determined that each of Ms. Palmer and Mr. Keough does qualify as an “audit committee financial expert” as defined by Item 407(d)(5) of Regulation S-K. Members of the Audit Committee rely, without independent verification, on the information provided to them and on the representations made by management and BDO USA. Accordingly, the Audit Committee’s oversight does not provide an independent basis to determine that management has followed appropriate accounting and financial reporting principles or maintained appropriate internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. Furthermore, the Audit Committee’s considerations and discussions referred to above do not assure that the audit of the Company’s financial statements has been carried out in accordance with generally accepted auditing standards, that the financial statements are presented in accordance with generally accepted accounting principles or that the Company’s auditors are “independent.”

Based on the reports and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee Charter, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements of the Company be included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2021 for filing with the Securities and Exchange Commission.

THE AUDIT COMMITTEE
Joseph Keough (Chair)
Catherine M. Kilbane
Sheryl D. Palmer

OTHER INFORMATION:

GENERAL MEETING INFORMATION

The Board of Directors of Interface, Inc. is furnishing this Proxy Statement to solicit Proxies for the Company’s common stock, $0.10 par value per share (“Common Stock”) to be voted at the annual meeting of shareholders of the Company. The meeting will be held at 11:00 a.m. Eastern Time on May 17, 2021. The Proxies also may be voted at any adjournments of the meeting. It is anticipated that this Proxy Statement will first be sent or given to shareholders on or about April 7, 2021.

The record of shareholders entitled to vote at the annual meeting was taken as of the close of business on March 19, 2021. On that date, the Company had outstanding and entitled to vote 58,640,045 shares of Common Stock.

Each Proxy for Common Stock (“Proxy”) that is properly completed (whether executed in writing or submitted by telephone or Internet) by a shareholder will be voted as specified by the shareholder in the Proxy. If no specification is made, the Proxy will be voted (i) for the election of the nominees listed in this Proxy Statement under the caption “Nomination and Election of Directors,” (ii) for the resolution approving, on an advisory basis, executive compensation, and (iii) for the ratification of the appointment of BDO USA, LLP as independent auditors for 2021. A Proxy given pursuant to this solicitation may be revoked by a shareholder who attends the meeting and gives notice of his or her election to vote in person, without compliance with any other formalities. In addition, a Proxy given pursuant to this solicitation may be revoked prior to the meeting by delivering to the Secretary of the Company either an instrument revoking it or a duly executed Proxy for the same shares bearing a later date.

An automated system administered by the Company’s transfer agent tabulates the votes. Abstentions and broker non-votes are included in the determination of the number of shares present and entitled to vote for the purpose of establishing a quorum. A broker non-vote occurs when a broker or other nominee who holds shares for a customer does not have authority to vote on certain matters without instructions from their customer, such customer has not provided any voting instructions on the matter and the broker or other nominee returns a Proxy (or otherwise informs the transfer agent) that they are not voting on the matter for the foregoing reasons. Neither broker non-votes nor abstentions will affect the outcome of the vote on any matter expected to be voted upon at the annual meeting.

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If your shares of Common Stock are held by a broker, bank or other nominee (e.g., in “street name”), you should receive instructions from your nominee, which you must follow in order to have your shares voted – the instructions may appear on a special proxy card provided to you by your nominee (also called a “voting instruction form”). Your nominee may offer you different methods of voting than those available to record holders. If you do hold your shares in “street name” and plan on attending the annual meeting of shareholders, you should request a proxy from your broker or other nominee holding your shares in record name on your behalf in order to attend the annual meeting and vote at that time (your broker or other nominee may refer to it as a “legal” proxy).

The expense of this solicitation, including the cost of preparing and mailing this Proxy Statement, will be paid by the Company. Copies of solicitation material may be furnished to banks, brokerage houses and other custodians, nominees and fiduciaries for forwarding to the beneficial owners of shares of the Company’s Common Stock, and normal handling charges may be paid for the forwarding service. In addition to solicitations by mail, directors and employees of the Company may solicit Proxies in person or by telephone, fax or e-mail. The Company also has retained Georgeson LLC, a proxy solicitation firm, to assist in soliciting Proxies from record and beneficial owners of shares of the Company’s Common Stock. The fee paid by the Company for such assistance is expected to be $8,500 (plus expenses).

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Board of Directors of the Company recognizes that transactions with related persons can present a heightened risk of conflict of interests and/or improper valuation (or the perception thereof). Accordingly, as a general matter, it is the Company’s preference to avoid transactions with related persons. Nevertheless, there are circumstances where the Company may (i) obtain products or services of a nature, quantity or quality that are not readily available from alternative sources, or on terms comparable to those provided by other, unrelated parties, or (ii) provide products or services on an arm’s length basis on terms comparable to those provided to unrelated third parties or on terms provided to employees generally.

Policy Regarding Review, Approval or Ratification of Transactions Involving Related Persons

The Company has adopted a written policy with respect to the review, approval or ratification of transactions with related persons involving the Company (or its subsidiaries or controlled affiliates). In evaluating potential transactions with related persons, the Related Transactions Policy incorporates and applies the contents of Item 404(a) of Regulation S-K (including but not limited to the definitions of “related persons” and “transaction”, as well as the threshold for “direct or indirect material interest” contained therein).

Prior to entering into a transaction with the Company, the related person is required to advise a Company-designated “Compliance Officer” (currently the Company’s General Counsel), who shall determine whether the proposed transaction is a transaction with a related person under this policy. If the Compliance Officer determines that the proposed transaction is a transaction with a related person, the transaction is required to be submitted to the Audit Committee of the Board of Directors for consideration at its next meeting or, in those instances in which it is not practicable or desirable for the Company to wait until the next Audit Committee meeting, to the Chair of the Audit Committee (who possesses delegated authority to act between committee meetings). The Audit Committee (or where submitted to the Chair, the Chair) shall consider all of the available relevant facts and circumstances, including (if applicable) but not limited to: (i) the benefits to the Company; (ii) the impact on a director’s independence in the event the related person is a director, an immediate family member of a director, or an entity in which the director is a partner, equity holder or executive officer; (iii) the availability of other sources for comparable products or services; (iv) the terms of the transaction; and (v) the terms available to or from unrelated third parties or employees generally, as the case may be. After review, the Audit Committee or Chair either approves or disapproves the proposed transaction and advises the Compliance Officer, who in turn conveys the decision to the appropriate persons within the Company. No member of the Audit Committee is permitted to participate in any review, consideration, or approval of any potential transaction with a related person with respect to which such member or any of his or her immediate family members is a related person.

The policy also provides for the review of (i) transactions involving related persons entered into by the Company not previously approved or ratified under this policy, as well as (ii) any previously approved or ratified transactions with related persons that remain ongoing and have a remaining term of more than six months or remaining amounts payable to or receivable from the Company of more than $120,000. The policy also explicitly requires disclosure of all transactions that are required to be disclosed under the Securities Act of 1933, the Securities Exchange Act of 1934 and related rules and regulations.

Transactions Involving Related Persons

The Company employs John Hendrix, the son of Company Chairman and Chief Executive Officer Dan Hendrix, as its Global CRM Analyst. In 2020, John Hendrix earned salary and bonus of $107,671, and participated in certain of the Company’s benefit programs generally available to employees in the U.S. Dan Hendrix plays no part in the determination of John Hendrix’s compensation.

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DELINQUENT SECTION 16(a) REPORTS

Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the Securities and Exchange Commission and the Nasdaq Stock Market reports of ownership and changes in ownership of Common Stock and other equity securities of the Company. Directors, executive officers and greater than 10% shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

Based solely upon a review of the copies of such reports furnished to the Company or written representations that no other reports were required, the Company believes that during fiscal year 2020 all filing requirements applicable to its directors, executive officers and greater than 10% beneficial owners were met, except for a Form 4 report of a transaction exempt from liability under Section 16(b) of the Securities Exchange Act of 1934 filed on February 27, 2020 by Mr. Hausmann that inadvertently reflected an award of 21,756 shares instead of 26,188 shares.

PROHIBITION ON HEDGING AND PLEDGING

The Company’s insider trading policy generally prohibits directors, officers and employees of the Company from engaging in speculative trading with respect to the Company’s securities, including “short sales” and trading in puts, calls and other options or derivatives with respect to securities of the Company. In addition, directors, officers and employees of the Company may not pledge the Company’s securities as collateral for a loan or other obligation.

LAWSUIT BY FORMER CEO IN CONNECTION WITH TERMINATION

On January 19, 2020, the Company’s Board of Directors voted to terminate for cause the employment of Jay D. Gould, then President and Chief Executive Officer, effective immediately, for violations of the Company’s working environment policies. On February 14, 2020, Mr. Gould filed a lawsuit against the Company in the United States District Court of the Northern District of Georgia, Gould v. Interface, Inc., Case No. 1:20-cv-00695. In his lawsuit, Mr. Gould asserts several claims against the Company in connection with his termination, including that the termination was a wrongful retaliation against Mr. Gould and breached his employment contract with the Company, that public statements made by the Company in connection with his termination defamed Mr. Gould (two counts) and that the Company’s investigation into Mr. Gould’s conduct that preceded the termination was negligently performed (although the Court has since granted judgment on the pleadings in favor of the Company on Mr. Gould’s putative claim of negligent investigation). Among other unspecified relief, Mr. Gould seeks in excess of $10 million in damages for the breach of contract claim and $100 million for each of the other claims, as well as attorneys’ fees.

The Company believes the lawsuit is without merit and intends to defend vigorously against it.

SHAREHOLDER PROPOSALS

Proposals of shareholders intended to be presented at the Company’s 2022 annual meeting must be received by the Company no later than December 8, 2021, in order to be eligible for inclusion in the Company’s Proxy Statement and form of Proxy for that meeting. In addition, in accordance with Article II, Section 9, of the Bylaws of the Company, proposals of shareholders intended to be presented at the Company’s 2022 annual meeting, including in the case of a nominee for director, must be presented to the Board of Directors by no later than 90 days prior to that annual meeting, with such deadline for presentation of proposals estimated to be February 15, 2022.

COMMUNICATING WITH THE BOARD

Shareholders wishing to communicate with the Board of Directors may send communications via U.S. mail to the following address:

Chairman of the Board

Interface, Inc.

1280 West Peachtree Street NW

Atlanta, GA 30309

From time to time, the Board may change the process by which shareholders may communicate with the Board or its members. The Company’s website, www.interface.com, will reflect any changes to the process.

Attendance of Board members at annual meetings is left to the discretion of each individual Board member. One Board member attended the 2020 annual meeting.

“HOUSEHOLDING” OF PROXY MATERIALS

The Securities and Exchange Commission has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for companies. The Company and some brokers household proxy materials, delivering a single proxy statement to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, please notify your broker if your shares are held in a brokerage account or us if you hold shares as the registered holder. You can notify us by sending a written request to Interface, Inc., Attn: Secretary, 1280 West Peachtree Street NW, Atlanta, Georgia 30309.

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SAFE HARBOR STATEMENT FOR FORWARD-LOOKING STATEMENTS

This Proxy Statement contains forward-looking statements, including, without limitation, statements about Interface’s plans, strategies and prospects and the information set forth in the section titled “Our Growth and Value Creation Strategy”. These forward-looking statements are based on the Company’s current assumptions, expectations and projections about future events. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, the Company can give no assurance that these expectations will prove to be correct or that savings or other benefits anticipated in the forward-looking statements will be achieved. Important factors, some of which may be beyond the Company’s control, that could cause actual results to differ materially from management’s expectations are the risks and uncertainties associated with economic conditions in the commercial interiors industry as well as the risks and uncertainties discussed under the heading “Risk Factors” included in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2021, filed with the Securities and Exchange Commission, which discussion is hereby incorporated by reference. Forward-looking statements speak only as of the date made. The Company assumes no responsibility to update or revise forward-looking statements and cautions readers not to place undue reliance on any such statements

OTHER MATTERS THAT MAY COME BEFORE THE MEETING

The Company knows of no matters other than those stated above that are to be brought before the meeting. However, if any other matter should be properly presented for consideration and voting, it is the intention of the persons named as proxies in the enclosed Proxy to vote the Proxy in accordance with their judgment of what is in the best interest of the Company.

| By order of the Board of Directors
| /s/ David B. Foshee
| David B. Foshee
| Secretary
April 7, 2021 |

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APPENDIX A – RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

This Proxy Statement includes, as additional information for investors, the Company’s adjusted EPS, adjusted operating income, adjusted gross profit, adjusted earnings before interest taxes, depreciation and amortization (“EBITDA”), organic sales, and net debt, as well as comparative information between periods for each. These measures are not in accordance with financial measures calculated in accordance with generally accepted accounting principles in the United States (“GAAP”), and may be different from similarly titled non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be used as a substitute for, or considered superior to, GAAP financial measures.

Adjusted EPS, and adjusted operating income exclude nora purchase accounting amortization, goodwill and intangible asset impairment charges, changes in equity award forfeiture accounting, restructuring charges, asset impairment, severance and other charges and an SEC settlement fine. Adjusted EPS also excludes the loss associated with a warehouse fire, loss on the extinguishment of debt, loss on the discontinuance of interest rate swaps, and tax expenses/benefits associated with previously discontinued operations. Adjusted gross profit excludes nora purchase accounting amortization. Net debt is total debt less cash on hand. Adjusted EBITDA is GAAP net income excluding interest expense, income tax expense, depreciation and amortization, stock compensation amortization, goodwill and intangible asset impairment, restructuring charges, asset impairment, severance and other charges, and nora purchase accounting amortization and transaction and integration expenses, an SEC settlement fine and the loss associated with a warehouse fire.

The Company excludes certain effects from the Tax Act from adjusted income measures because it believes these items were a unique and/or one-time event and did not arise from or constitute normal ongoing operations. Similarly, since the Company engages in acquisitions only episodically, and not as an everyday matter, the Company believes presenting certain measures excluding the effects of acquisitions facilitates focus on normal ongoing operations.

Since the Company engages in acquisitions only episodically, and not as an everyday matter, the Company believes presenting certain measures excluding the effects of acquisitions facilitates focus on normal ongoing operations. The Company generally believes reporting its adjusted results helps investors’ understanding of historical operating trends, because it facilitates comparison to prior periods during which unique events affecting more recent results may not have occurred. The Company also believes that adjusted results provide supplemental information for comparisons to other companies which may not have experienced the same events underlying the adjustments. Furthermore, the Company uses adjusted results internally as supplemental information to evaluate its own performance, for planning purposes and in connection with its compensation programs.

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures appear in the following tables (see next page).

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(in millions, except ratios and per share amounts)

ADJUSTED GROSS PROFIT |
|  | 2019 |  |  | 2020 |
Gross Profit as Reported (GAAP) |  | $ | 533 |  |  | $ | 411 |
Purchase Accounting Amortization |  |  | 6 |  |  |  | 5 |
Adjusted Gross Profit |  | $ | 539 |  |  | $ | 416 |

ADJUSTED OPERATING INCOME |
|  | 2019 |  |  | 2020 |
Operating Income (Loss) as Reported (GAAP) |  | $ | 131 |  |  | $ | (39 | )
Purchase Accounting Amortization |  |  | 6 |  |  |  | 5 |
Goodwill and Intangible Asset Impairment |  |  | - |  |  |  | 121 |
Change in Equity Award Forfeiture Accounting |  |  | - |  |  |  | 1 |
Restructuring, Asset Impairment, Severance and Other Charges |  |  | 13 |  |  |  | 17 |
SEC Fine |  |  | - |  |  |  | 5 |
Adjusted Operating Income |  | $ | 150 |  |  | $ | 110 |

ADJUSTED DILUTED EPS |
|  | 2019 |  |  | 2020 |
Diluted Earnings per Share as Reported (GAAP) |  | $ | 1.34 |  |  | $ | (1.23 | )
Purchase Accounting Amortization |  |  | 0.08 |  |  |  | 0.07 |
Goodwill and Intangible Asset Impairment |  |  | - |  |  |  | 2.05 |
Impact of Change in Equity Award Forfeiture Accounting |  |  | - |  |  |  | 0.02 |
Restructuring, Asset Impairment, Severance and Other Charges |  |  | 0.17 |  |  |  | 0.23 |
Warehouse Fire Loss |  |  | - |  |  |  | 0.05 |
SEC Fine |  |  | - |  |  |  | 0.09 |
Loss on Extinguishment of Debt |  |  | - |  |  |  | 0.05 |
Loss on Discontinuance if Interest Rate Swaps |  |  | - |  |  |  | 0.05 |
FIN 48 Release on Discontinued Operations |  |  | - |  |  |  | (0.22 | )
Adjusted Diluted Earnings per Share * |  | $ | 1.59 |  |  | $ | 1.15 |

NET DEBT |
|  | 2016 |  |  | 2017 |  |  | 2018 |  |  | 2019 |  |  | 2020 |
Total Debt |  | $ | 270 |  |  | $ | 230 |  |  | $ | 619 |  |  | $ | 596 |  |  | $ | 577 |
Less: Cash |  |  | (166 | ) |  |  | (87 | ) |  |  | (81 | ) |  |  | (81 | ) |  |  | (103 | )
Net Debt * |  | $ | 105 |  |  | $ | 143 |  |  | $ | 538 |  |  | $ | 515 |  |  | $ | 474 |

ADJUSTED EBITDA |
|  | 2016 |  |  | 2017 |  |  | 2018 |  |  | 2019 |  |  | 2020 |
Net Income as Reported (GAAP) |  | $ | 54 |  |  | $ | 53 |  |  | $ | 50 |  |  | $ | 79 |  |  | $ | (72 | )
Income Tax Expense (Benefit) |  |  | 25 |  |  |  | 47 |  |  |  | 5 |  |  |  | 23 |  |  |  | (7 | )
Transaction Related Other Expense |  |  | - |  |  |  | - |  |  |  | 4 |  |  |  | - |  |  |  | - |
Interest Expense |  |  | 6 |  |  |  | 7 |  |  |  | 15 |  |  |  | 26 |  |  |  | 29 |
Depreciation and Amortization (excluding debt issuance cost amortization) |  |  | 30 |  |  |  | 30 |  |  |  | 38 |  |  |  | 42 |  |  |  | 44 |
Stock Compensation Amortization |  |  | 6 |  |  |  | 7 |  |  |  | 15 |  |  |  | 9 |  |  |  | (1 | )
Purchase Accounting Amortization |  |  | - |  |  |  | - |  |  |  | 32 |  |  |  | 6 |  |  |  | 5 |
Transaction and Integration Related Expenses |  |  | - |  |  |  | - |  |  |  | 5 |  |  |  | - |  |  |  | - |
Goodwill and Intangible Asset Impairment |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 121 |
Restructuring, Asset Impairment, Severance and Other Charges |  |  | 20 |  |  |  | 7 |  |  |  | 21 |  |  |  | 13 |  |  |  | 17 |
Warehouse Fire Loss |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4 |
SEC Fine |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 5 |
Adjusted EBITDA * |  | $ | 141 |  |  | $ | 152 |  |  | $ | 185 |  |  | $ | 197 |  |  | $ | 146 |
Total Debt / Net Income |  | 5.0x |  |  | 4.3x |  |  | 12.3x |  |  | 7.5x |  |  | (8.0x) |
Net Debt / Adjusted EBITDA |  | 0.7x |  |  | 0.9x |  |  | 2.9x |  |  | 2.6x |  |  | 3.2x |

* Sum of reconciling items may differ from total due to rounding of individual components

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