tile20210402_def14a.htm

DEF 14A 1 tile20210402_def14a.htm FORM DEF 14A tile20210402_def14a.htm

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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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Filed by a Party other than the Registrant ☐

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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

To elect eight members of the Board of Directors.

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

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

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 52^nd 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 (50^th 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 50^th 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:

SEC Form DEF 14A filed by Interface, Inc.