Document

DEF 14A 1 a2021proxy.htm POOL 2021 PROXY STATEMENT Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

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Pool Corporation

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POOL CORPORATION

_____________________

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

Pool Corporation (the Company, we, us or our) cordially invites you to electronically attend its 2021 annual meeting of stockholders (the Annual Meeting) on Tuesday, May 4, 2021, at 9:00 a.m. Central Time. As part of our precautions regarding the coronavirus (COVID-19) pandemic and to support the health and well-being of our employees, directors, partners and stockholders, the Annual Meeting will be held in a virtual meeting format only. You will not be able to physically attend the Annual Meeting. You will be able to virtually attend the Annual Meeting, vote and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/POOL2021, entering the 16-digit control number included on your proxy card, and following the instructions for participation and voting.

At the Annual Meeting, you will be asked to:

1.elect eight directors, each to serve a one-year term or until their successors have been elected and qualified;

2.ratify the retention of Ernst & Young LLP, certified public accountants, as our independent registered public accounting firm for the 2021 fiscal year;

3.cast a non-binding advisory vote to approve the compensation of our named executive officers as disclosed in the attached Proxy Statement (the say-on-pay vote); and

4.consider any other business which may properly arise at the Annual Meeting.

The accompanying Proxy Statement describes the matters being voted on and contains other information relating to Pool Corporation.

The Board of Directors has set March 16, 2021 as the record date for the Annual Meeting. This means that only record owners of the Company’s common stock at the close of business on that date are entitled to notice of, and to vote at, the Annual Meeting and at any adjournment or postponement of the Annual Meeting.

By Order of the Board of Directors,

Jennifer M. Neil

Corporate Secretary

Covington, Louisiana

March 30, 2021

Every stockholder’s vote is important. Please sign, date and return the enclosed proxy card, or authorize your proxy by telephone or via the internet. See “Frequently Asked Questions Regarding Attendance and Voting” for information about voting by telephone or internet.

POOL CORPORATION

TABLE OF CONTENTS


			Page
Frequently Asked Questions Regarding Attendance and Voting			1
Election of Directors (Proposal 1)			5
Principal Stockholders			16
Equity Compensation Plan Information			18
Compensation Discussion and Analysis			19
Executive Summary			19
Compensation Philosophy and Objectives			23
Process of Setting Compensation			24
Components of Compensation			26
Report of the Compensation Committee			34
Executive Compensation			35
Director Compensation			43
Certain Relationships and Related Transactions			44
Report of the Audit Committee			45
Proposal to Ratify the Retention of Independent Registered Public Accounting Firm (Proposal 2)			46
Advisory Vote to Approve Named Executive Officer Compensation (Proposal 3)			47
Stockholder Proposals and Board Nominations			48

POOL CORPORATION

109 Northpark Boulevard

Covington, Louisiana 70433

PROXY STATEMENT

Frequently Asked Questions Regarding Attendance and Voting

Q: Why am I receiving these materials?

A: The Board of Directors (the Board) of Pool Corporation (the Company, we, us or our) is providing these proxy materials to you in connection with its solicitation of proxies for use at the 2021 annual meeting of our stockholders (the Annual Meeting). Stockholders at the close of business on March 16, 2021, the record date, are entitled to vote at the Annual Meeting. The Annual Meeting is scheduled to be held on Tuesday, May 4, 2021, at 9:00 a.m. Central Time via live webcast on the internet.

Q: Who may vote?

A: With respect to the election of directors, each stockholder is entitled to one vote for every share of common stock, $0.001 par value (Common Stock) owned on the record date for each position to be filled. For all other matters, each stockholder is entitled to one vote on each matter presented for each share of our Common Stock owned on the record date. On March 16, 2021, there were approximately 40,156,100 shares of our Common Stock outstanding. This Proxy Statement is being mailed to stockholders on or about March 30, 2021.

Q: When and where will the Annual Meeting be held?

A: The Annual Meeting will be held on Tuesday, May 4, 2021, at 9:00 a.m. Central Time and will be a virtual meeting held via live webcast on the internet.

Q: What proposals will be voted upon at the Annual Meeting?

A: At the Annual Meeting, you will be asked to:

(1)elect eight directors to the Board of Directors, each to serve a one-year term or until their successors have been elected and qualified;

(2)ratify the retention of Ernst & Young LLP, certified public accountants, as our independent registered public accounting firm for the 2021 fiscal year; and

(3)cast a non-binding advisory vote to approve the compensation of our named executive officers as disclosed in this Proxy Statement (the say-on-pay vote).

The Board does not know of any additional matters to be presented at our Annual Meeting other than those described in this Proxy Statement.

Q: What are the Board’s voting recommendations?

A: The Board unanimously recommends that you vote your shares FOR the election of each of the director nominees and FOR proposals 2 and 3 described above.

Q: How can I vote my shares without attending the Annual Meeting?

A: If you are a holder of record (that is, if your shares are registered in your own name with our transfer agent), you may vote using the enclosed proxy card. You can also vote by telephone or the internet. Voting instructions are provided on the proxy card included in the proxy materials.

If you are a street name holder (that is, if you hold your shares through a bank, broker or other holder of record), you must vote in accordance with the voting instruction form provided by your bank, broker or other holder of record. The availability of telephone or internet voting will depend on the voting process of your bank, broker or other holder of record.

Q: How can I vote my shares in person and participate in the Annual Meeting?

A: Due to the public health impact of the coronavirus outbreak (COVID-19) and to support the health and well-being of our employees, directors, partners and stockholders, the Annual Meeting will be held in a virtual meeting format only. You will be able to attend the Annual Meeting, vote and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/POOL2021, entering the 16-digit control number included on your proxy card, and following the instructions for participation and voting. You may vote your shares electronically if you are the holder of record. You may also vote electronically if you are the street name holder if you obtain a legal proxy from your broker, bank or other nominee. However, even if you plan to virtually attend the Annual Meeting, we recommend that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the Annual Meeting.

Q: What will I need in order to attend the Annual Meeting?

A: You are entitled to attend the virtual Annual Meeting only if you are a stockholder of record as of March 16, 2021, the record date. You may virtually attend the Annual Meeting, vote and submit a question during the Annual Meeting by visiting www.virtualshareholdermeeting.com/POOL2021 and using your 16-digit control number to enter the meeting.

The Annual Meeting live audio webcast will begin promptly at 9:00 a.m. Central Time on Tuesday, May 4, 2021. We encourage you to access the meeting prior to the start time. Online check-in will begin at 8:45 a.m. Central Time, and you should allow ample time for the check-in procedures.

Q: What if I have technical difficulties during the check-in time or during the Annual Meeting?

A: If you encounter any difficulties accessing the virtual meeting during the check-in or meeting time, please call the technical support number that will be posted on the login page at www.virtualshareholdermeeting.com/POOL2021. Please be sure to check in by 8:45 a.m. Central Time on Tuesday, May 4, 2021, the day of the Annual Meeting, so we may address any technical difficulties before the Annual Meeting live webcast begins.

Q: How many votes must be represented to hold the Annual Meeting?

A: In order to carry on the business of the Annual Meeting, a quorum must be present. This means at least a majority of the outstanding shares eligible to vote must be represented at the Annual Meeting either virtually or by proxy. If you submit your proxy instructions or if you attend the Annual Meeting virtually, your shares will be counted for the purpose of determining a quorum, even if you abstain from voting on some or all matters introduced at the Annual Meeting. Also, if you hold your shares in street name, your shares will be counted in determining a quorum if your bank, broker or other holder of record votes your shares on any matter.

Q: Could other matters be decided at the Annual Meeting?

A: We are not aware of any matters to be presented other than those described in this Proxy Statement. By signing and returning a proxy card, however, you will give to the persons named as proxies discretionary voting authority with respect to any other matter that may properly come before the Annual Meeting, and they intend to vote on any such matter as recommended by the Board of Directors.

Q: What if I do not indicate my voting instructions for one or more of the matters on my proxy card?

A: If you execute and return your proxy but do not give voting instructions, your shares will be voted as recommended by the Board. This means that unless your proxy is otherwise marked, properly executed proxies will be voted FOR the election of each of the director nominees and FOR proposals 2 and 3 (the ratification of the retention of the independent registered public accounting firm for fiscal year 2021 and the say-on-pay vote).

Q: What happens if I do not return my proxy? What is discretionary voting authority, and what is a broker non-vote?

A: If you are a holder of record and do not return a proxy, your shares will not be voted.

If you are a street name holder and do not provide voting instructions to your broker, your shares may be voted on any matter on which your broker has discretionary authority to vote. Under the rules of the New York Stock Exchange (NYSE), brokers generally have discretionary authority to vote on “routine” matters but not on “non-routine” matters. A “broker non-vote” occurs when a broker holding shares for a street name holder returns a valid proxy, but does not vote on a particular proposal because it does not have discretionary authority to vote on the matter and has not received voting instructions from the stockholder for whom it is holding shares. Broker non-votes will be treated as present for purposes of determining the existence of a quorum at the Annual Meeting.

The ratification of the retention of the independent registered public accounting firm is considered a routine matter; the remaining proposals listed in this Proxy Statement (the election of directors and the say-on-pay vote) are classified as non-routine matters under the NYSE rules. Therefore, if you are a street name holder and do not provide voting instructions to your broker, your broker may only cast a vote with regard to the ratification of the retention of the independent registered public accounting firm.

Q: What is the vote required, and how will my vote be counted, to elect the director nominees and to approve the other proposals discussed in this proxy statement?

Proposal

Voting Options

Vote Required to Adopt the Proposal

Effect of Abstentions

Effect of Broker Non-Votes

No. 1 - Elect eight directors

For, against or abstain on each director nominee

Affirmative vote of a majority of the votes cast

N/A

No effect

No. 2 - Ratify retention of independent registered public accounting firm

For, against or abstain

Affirmative vote of a majority of the shares of Common Stock present virtually or by proxy and entitled to vote

Treated as votes against

N/A

No. 3 - Say-on-pay vote

For, against, or abstain

Affirmative vote of a majority of the shares of Common Stock present virtually or by proxy and entitled to vote

Treated as votes against

No effect

In uncontested elections, our directors are elected by the affirmative vote of the holders of a majority of the shares of our Common Stock voted. In contested elections (where the number of director nominees exceeds the number of directors to be elected), our directors are elected by a plurality of shares of our Common Stock voted. Under our Bylaws, all other matters require the affirmative vote of the holders of a majority of the shares of our Common Stock present virtually or by proxy and entitled to vote, except as otherwise provided by statute, our Certificate of Incorporation or our Bylaws.

Q: Can I change or revoke my proxy?

A: Yes. To change or revoke your proxy at any time before the shares are voted at the Annual Meeting, you must either:

a)mail (i) a new proxy card with a later date or (ii) a written revocation addressed to:

Pool Corporation

Jennifer M. Neil, Corporate Secretary

109 Northpark Boulevard

Covington, LA 70433-5001

b)virtually attend the Annual Meeting and vote electronically.

If you hold your shares in street name, you may submit new voting instructions by contacting your broker, bank or other nominee. You may also vote in person at the Annual Meeting if you obtain a legal proxy from your broker, bank or other nominee.

Q: Will I be able to participate in the virtual Annual Meeting in the same way that I would be able to participate in an in-person meeting?

A: Yes. We have taken steps to ensure that the format of the virtual Annual Meeting affords stockholders the same rights and opportunities to participate as they would at an in-person meeting. You can access the rules of conduct for the meeting on the meeting website at www.virtualshareholdermeeting.com/POOL2021. We have also enhanced stockholder access, participation and communication by providing stockholders the ability to submit questions in advance of the meeting.

You may submit a question in advance of the meeting at www.proxyvote.com after logging in with your control number found on your Proxy Card, voting instruction form or Notice of Availability. Questions may also be submitted during the Annual Meeting through www.virtualshareholdermeeting.com/POOL2021. The Company will respond to as many inquiries at the Annual Meeting as time allows, although questions may be limited on a per stockholder basis due to time constraints. Off-topic, personal or other inappropriate questions will not be answered.

Q: Who will pay the expenses incurred in connection with the solicitation of my vote?

A: We pay the cost of preparing proxy materials and soliciting your vote. We will, upon request, reimburse brokers and other nominees for the cost of mailing materials to beneficial owners. Some of our employees, who will receive no additional compensation, may solicit proxies by telephone, facsimile or electronic mail. We also pay all Annual Meeting expenses.

Q: What happens if the Annual Meeting is postponed or adjourned?

A: Unless a new record date is fixed, your proxy will still be good and may be voted at the postponed or adjourned Annual Meeting. You will still be able to change or revoke your proxy at any time until it is voted.

Important notice regarding the availability of proxy materials for the Annual Meeting to be held on May 4, 2021:

The Company’s 2021 Proxy Statement and Annual Report to Stockholders for the fiscal year ended December 31, 2020 are available at http://ir.poolcorp.com/proxy-statements-annual-reports.

ELECTION OF DIRECTORS

(Proposal 1)

General

Our Bylaws provide that the size of our Board may be increased or decreased from time to time by resolution of the Board. The Board currently consists of nine directors. However, on February 23, 2021, Andrew W. Code notified the Board that he will retire from service on the Board effective immediately on the date of the Annual Meeting and, accordingly, will not stand for re-election at the 2021 Annual Meeting. Thus, as of the Annual Meeting, the Board will consist of eight directors.

The Board, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated each of our eight remaining directors to serve another one-year term. Each of the nominees was previously elected a director of the Company by our stockholders, and each of the nominees has indicated his or her intention to serve if elected. However, if any director nominee is unable or unwilling to take office at the Annual Meeting, your proxy may be voted in favor of another person or other persons nominated by the Board. Once elected, each director will hold office until his or her successor has been elected and qualified or until the director’s earlier resignation or removal.

Our Bylaws include a majority voting standard in uncontested director elections. This means that if the number of shares voted for the election of any sitting director is less than the number of votes withheld or against election with respect to that director, that director must submit a letter to the Board offering to resign. The Board, after considering the recommendation of the Nominating and Corporate Governance Committee, must make a decision whether to accept, reject or take other action with respect to the resignation within 90 days from certification of the election results.

Information about our Director Nominees

Our Board is comprised of a diverse group of individuals of varying backgrounds and experiences. Below is biographical information about each of our director nominees, including information regarding tenure as a director, business experience and qualifications, education and other company directorships. The summaries are not comprehensive, but describe the primary experiences, attributes and skills that led the Nominating and Corporate Governance Committee and our Board to determine that these individuals should serve as directors of our Company. In addition to the qualifications referred to below, we believe each individual has a reputation for demonstrating integrity, honesty, high ethical standards and sound business judgment.

Peter D. Arvan (55)

Director since: 2019

Business experience:

Mr. Arvan has served as our president and chief executive officer since January 2019. He served as our executive vice

president from January 2017 to January 2019 and as our chief operating officer from August 2017 to January 2019. Prior to joining Pool Corporation, he served as chief executive officer of Roofing Supply Group from 2013 to 2015 and as president of GE/SABIC Polymershapes from 2004 to 2013.

Other directorships:

Mr. Arvan serves as a director of Plaskolite, a manufacturer of thermoplastic sheet, coatings and polymers.

Other qualifications:

Mr. Arvan graduated cum laude from the State University of New York at Utica with a Bachelor of Professional Studies in

Business Administration. Among other qualifications, Mr. Arvan brings to the Board senior leadership experience, strong

operating expertise and marketing and strategic planning knowledge.

Areas of experience include:

•Operations

•Management

•Marketing

•Strategic planning

Timothy M. Graven (69)

Director since: 2015

Business experience:

Mr. Graven is a co-founder and managing member of Triad Investment Company, LLC, a private investment company, since 1994. From 1990 to 1994, he served as president, chief operating officer and director of Steel Technologies, Inc., a former Nasdaq-listed steel processing company, where he also served in various positions including executive vice president, chief financial officer, vice president of finance and corporate controller, from 1979 to 1990.

Other directorships:

From 1993 to 2008, Mr. Graven was a director of Performance Food Group Company (PFG), a foodservice distribution company, serving on its audit, compensation and corporate governance committees. From 1981 to 1994, he served as a director of Steel Technologies, Inc. and from 1988 to 1994 as a director of Processing Technologies, Inc., a joint venture of LTV Steel, Mitsui Steel Development Company and Steel Technologies, Inc.

Other qualifications:

Mr. Graven received a Bachelor of Science from Murray State University and is a certified public accountant. Among other qualifications, Mr. Graven brings to the Board broad leadership and corporate governance experience as well as comprehensive experience in financial and risk management matters.

Areas of experience include:

•Finance

•Management

•Compensation

•Corporate governance

•Audit

Debra S. Oler (66)

Director since: 2018

Business experience:

From 2017 to 2019, Mrs. Oler served as senior vice president/president, North American sales and service of W.W. Grainger, Inc. (Grainger), a distributor of maintenance, repair and operating supplies used by businesses and institutions, gaining strong expertise in business turnarounds and leading transformational initiatives, including a Canadian business turnaround, sales end market segmentation and new pricing models. She joined Grainger as regional sales vice president in 2002 and held several roles with increasing responsibility. Prior to joining Grainger, Mrs. Oler gained extensive sales and leadership experience with Alliant FoodService, Inc. from 1996 to 2002, Kraft Foods from 1986 to 1996 and I. Feldman & Company from 1973 to 1986.

Other directorships:

Mrs. Oler serves as a director of Horizon Global Corporation, a leading manufacturer of branded towing and trailering equipment and OMNIA Partners, a procurement and supply chain management company.

Other qualifications:

Mrs. Oler holds a Bachelor of Science from the University of Maryland. Among other qualifications, Mrs. Oler brings to the Board extensive leadership and general management experience, a strong history of strategic go-to-market and sales team development, a proven track record of driving revenue growth, and significant customer service experience.

Areas of experience include:

•Business development

•Management

•Turnarounds and business transformation

•Finance

•Distribution knowledge

Manuel J. Perez de la Mesa (64)

Director since: 2001

Business experience:

Mr. Perez de la Mesa served as our president and chief executive officer from 2001 until his retirement at the end of 2018; he served as our president and chief operating officer from 1999 to 2001. Prior to leading Pool Corporation, he gained extensive general, financial and operations management experience with Watsco, Inc. from 1994 to 1999, Fresh Del Monte Produce B.V. from 1987 to 1994, International Business Machines Corp. from 1982 to 1987, and Sea-Land Service Inc./R.J. Reynolds, Inc. from 1977 to 1982.

Other directorships:

Mr. Perez de la Mesa serves as a director of Advanced Drainage Systems, Inc., a publicly traded manufacturer of pipe and related waterworks products in North America, and as a director of Morsco, the U.S. subsidiary of Reece, Ltd., an Australian publicly traded distributor of plumbing, HVAC and waterworks products. Mr. Perez de la Mesa also serves as a director for several private companies, and he currently is lead director of Imperial Dade, lead director of US LBM, and chairman of ORS Medco. He previously served as a director of ARC Document Solutions, a leading reprographics company.

Other qualifications:

Mr. Perez de la Mesa, who was born in Cuba and is Hispanic, holds a Bachelor of Business Administration from Florida International University and a Master of Business Administration from St. John’s University. Among other qualifications, Mr. Perez de la Mesa brings to the Board extensive management experience, more than 20 years of industry knowledge, a broad strategic vision for the Company and a strong financial acumen.

Areas of experience include:

•Management

•Strategic planning

•International operations

•Finance

•Industry knowledge

Harlan F. Seymour (71)

Director since: 2003

Business experience:

Since 2000, Mr. Seymour has conducted personal investments in both public and private companies and provided business advisory services through HFS LLC, particularly in the area of strategic planning services for companies in a wide variety of industries. He previously served as executive vice president of Envoy Corporation, a publicly traded provider of EDI and transaction processing services for the healthcare market, from 1997 to 1999 when it merged with Quintiles Transnational. Mr. Seymour has previous general, financial and operations management experience with Jefferson Capital Partners from 1996 to 1997, Trigon Blue Cross Blue Shield from 1994 to 1996, and First Financial Management Corporation from 1983 to 1994, serving from 1990 to 1994 as president and chief executive officer of its subsidiary, First Health Services Corporation, and previously as senior vice president, corporate development.

Other directorships:

Mr. Seymour serves as a member of various private boards of directors, including Rx Innovation, a company that provides technology solutions to pharmacies and utilizes pharmacy transactions data to improve patient outcomes, and the advisory board of Calvert Street Capital Partners, a private equity firm. He was previously a director of Envoy Corporation and chairman of ACI Worldwide, Inc. (ACI), a global provider of software for electronic payments and electronic commerce.

Other qualifications:

Mr. Seymour earned a Bachelor of Arts from the University of Missouri and a Master of Business Administration from Keller Graduate School of Management. Among other qualifications, Mr. Seymour brings to the Board senior leadership experience, information technology knowledge, strategic planning, operating and acquisition expertise.

Areas of experience include:

•Strategic planning

•Business development

•Operations

•Information technology

•Finance

Robert C. Sledd (68)

Director since: 1996

Business experience:

Mr. Sledd served as interim president and chief executive officer of Owens and Minor, Inc., a distributor of medical and surgical supplies, from November 2018 to March 2019. Since 2001, Mr. Sledd is the managing partner of Pinnacle Ventures, LLC, a venture capital firm, and Sledd Properties, LLC, an investment company. He previously served as chief executive officer of PFG from 1987 to 2001 and from 2004 to 2006.

Other directorships:

Mr. Sledd is a director of Owens & Minor, Inc.; he is also a director of Universal Corporation, a diversified agriculture business, and serves on its audit, finance and pension investment committees. Mr. Sledd was chairman of Performance Food Group from 1995 to 2008 and a director from 1987 to 2008.

Other qualifications:

Mr. Sledd graduated from the University of Tennessee with a Bachelor of Science in Business Administration. Among other qualifications, he brings to the Board executive leadership experience, including his past service as a chief executive officer of a public company, along with extensive strategic planning, brand marketing experience and financial expertise.

Areas of experience include:

•Finance

•Operations

•Marketing

•Business development

•Strategic planning

John E. Stokely (68)

Director since: 2000

Lead independent director since: 2003

Chairman since: 2017

Business experience:

From 1996 to 1999, Mr. Stokely served as president, chief executive officer and chairman of Richfood Holdings, Inc., a regional Fortune 500 wholesale food distributor and operator of retail grocery stores, prior to its acquisition by SuperValu Inc.

Other directorships:

Mr. Stokely is a director of Malibu Boats, Inc., a manufacturer of performance sports boats, and serves on its audit committee and nominating and governance committee. He was previously a director of O’Charley’s Inc., a national restaurant chain, Nash Finch Company, a wholesale food distributor, PFG, Imperial Sugar Company and ACI.

Other qualifications:

Mr. Stokely holds a Bachelor of Arts from the University of Tennessee. Among other qualifications, he brings to the Board experience in providing strategic, financial and risk management advice to companies engaged in a variety of industries, unique strategic insight, distribution and retail expertise and extensive senior leadership experience. Additionally, Mr. Stokely’s previous experience as chief executive officer of Richfood Holdings, Inc. afforded him with significant acquisition experience.

Areas of experience include:

•Finance

•Management

•Operations

•Corporate governance

•Distribution

David G. Whalen (63)

Director since: 2015

Business experience:

Mr. Whalen served as the president and chief executive officer of the A.T. Cross Company (subsequently Costa Inc.) from 1999 to 2014 when the company was sold. A.T. Cross manufactured and marketed writing instruments and personal accessories under the Cross brand name and premium sunglasses under the Costa brand name. From 1991 to 1999, Mr. Whalen held various senior positions with Bausch & Lomb Inc., including corporate vice president, president Europe, Middle East, and Africa division and president North America Ray-Ban Division. Earlier in his career, Mr. Whalen was vice president business development with G. Heileman Brewing Company and a consultant for Booz Allen Hamilton.

Other directorships:

Mr. Whalen serves as a director of Delta Apparel Inc., a diversified, branded apparel company, and is chairman of its compensation committee and a member of its audit committee. Mr. Whalen previously served as a director of Phoenix Footwear Group, Inc. and A.T. Cross Company.

Other qualifications:

Mr. Whalen graduated from Trinity College with a Bachelor of Arts with honors, and he received a Master of Business Administration from the University of Chicago. Among other qualifications, Mr. Whalen brings to the Board a background in developing and implementing operating strategies for global companies, distribution and retail expertise and extensive senior leadership experience. Additionally, Mr. Whalen’s previous success engineering a major restructuring as well as identifying and integrating a number of acquisitions affords him with unique strategic and operational insight.

Areas of experience include:

•Marketing

•Finance

•Mergers and acquisitions

•International operations

•Strategic planning

The Board of Directors unanimously recommends that our stockholders vote FOR the election of each of the director nominees.

Our Nominating and Corporate Governance Committee recommended to our full Board the foregoing nominees, and our Board has nominated them for election by our stockholders. At least annually, our Nominating and Corporate Governance Committee evaluates the effectiveness of our Board and Board committees and reviews the appropriateness of the composition and size of our Board and Board committees. In considering potential nominees, our Nominating and Corporate Governance Committee looks for candidates with the highest personal and professional ethics, integrity and values, who can commit themselves to representing the long-term interests of our stockholders. Nominees must also have an inquisitive and objective perspective, practical wisdom and mature judgment. Nominees must be willing to devote sufficient time to carrying out their duties and responsibilities effectively and should be committed to serving on our Board for an extended period of time.

In reviewing the composition of our Board and potential nominees, our Nominating and Corporate Governance Committee also considers the director independence and committee requirements of The Nasdaq Stock Market LLC (Nasdaq) listing rules and all legal requirements. Our Board seeks independent directors with a broad diversity of experience, professions, skills, geographic representation and backgrounds that will enhance the quality of the Board’s deliberations and decisions. Our Nominating and Corporate Governance Committee does not assign specific weights to particular criterion and no particular criterion is necessarily applicable to all prospective nominees. Prospective nominees are not discriminated against on the basis of gender, age, race, religion, national origin, sexual orientation, disability or any other basis proscribed by law.

Our Nominating and Corporate Governance Committee and Board believe the nominees fulfill the criteria described above. In addition, the Board has determined that six of our eight director nominees (including all committee members) are independent under Nasdaq listing rules. All four current members of our Audit Committee are “audit committee financial experts,” as defined by the Securities and Exchange Commission (SEC) rules. In addition to these attributes, each of the nominees has a strong and unique background and experience which led our Nominating and Corporate Governance Committee and Board to conclude that he or she should serve as a director of our Company. We describe these qualifications individually for each nominee above.

Our Company has grown rapidly through internal growth and acquisitions to become the world’s largest wholesale distributor of swimming pool supplies, equipment and related leisure products and one of the leading distributors of irrigation products in the United States. We currently operate in 39 states, one U.S. territory and 11 foreign countries. Accordingly, our nominees have experience in a variety of areas important to our Company, such as managing and overseeing large public and private companies, corporate governance and executive compensation, strategic planning, mergers and acquisitions, financing growing businesses, international operations, information technology and marketing, and experience in our industry. Our Nominating and Corporate Governance Committee and Board believe that these nominees together provide us with the range and depth of experience and capabilities needed to oversee the management of our Company.

Director Independence

To be considered independent under the listing rules of Nasdaq, directors must be free from any relationship with management or the Company, which, in the opinion of the Board, would interfere with the exercise of independent judgment. The Board has determined that each of our current directors, other than Mr. Arvan, our president and chief executive officer, and Mr. Perez de la Mesa, our former president and chief executive officer, meets the definition of an independent director as defined by Nasdaq listing rules. The Board’s independent directors regularly meet in executive session (without management present) at each Board and committee meeting.

Board Leadership Structure

The principal responsibility of the chief executive officer (CEO) is to manage the business. The principal responsibilities of the Board are to represent the Company’s stockholders and manage the operations of the Board and that of its committees.

Mr. Stokely currently serves as the Board’s chairman. His responsibilities in this capacity include the following:

▪assign tasks to the Board’s committees;

▪determine the appropriate schedule of Board meetings after consultation with our CEO and other Board members;

▪consult with our CEO and other Board members on the agenda of the Board;

▪assess the quality, quantity and timeliness of the flow of information from management to the Board;

▪direct the retention of consultants who report directly to the Board;

▪oversee compliance with and implementation of corporate governance policies;

▪coordinate, develop the agenda for and moderate executive sessions of the Board’s independent directors;

▪assist the chairman of the Compensation Committee in his evaluation of our CEO’s performance; and

▪perform such other functions as the Board may direct.

Director Attendance at Meetings

Our Board held seven meetings in the 2020 fiscal year. As stated in our Corporate Governance Guidelines, we encourage and expect directors to attend Board meetings and meetings of the Board committees on which they serve. In the 2020 fiscal year, each of our directors attended 75% or more of the total number of Board meetings and meetings of the Board committees on which they served.

We encourage each member of our Board to attend the annual meeting. We held the 2020 annual meeting in a virtual format due to the COVID-19 pandemic, and each of our directors attended the virtual meeting through online participation.

Board’s Role in Risk Oversight and Assessment

Our employees, managers and officers conduct our business under the direction of our CEO and the oversight of our Board to enhance our long-term value for our stockholders. The core responsibility of our Board is to exercise its fiduciary duty to act in the best interests of our Company and our stockholders. In discharging this obligation, our Board and committees perform a number of specific functions, including risk assessment, review and oversight. While management is responsible for the day-to-day management of risk, our Board is responsible for oversight of our risk management programs, ensuring that an appropriate culture of risk management exists within the Company, and assisting management in addressing specific risks, such as strategic risks, financial risks, regulatory risks and operational risks.

Our Board’s objective is to have systems and processes in place that bring material risks facing our Company to the Board’s attention and permit the Board to effectively oversee the management of these risks. As reflected in our Code of Business Conduct and Ethics, our Board seeks to establish a “tone at the top” communicating our Board’s strong commitment to ethical behavior and compliance with the law. In furtherance of these goals, our Board regularly includes agenda items at its meetings relating to its risk oversight obligations and meets with various members of management on a range of topics, including regulatory obligations, disaster recovery and business continuity planning, succession planning, safety and risk management, environmental, social and corporate governance (ESG) matters, insurance, and operations. Our Board also sets and regularly reviews quantitative and qualitative authority levels for management. Further, our Board oversees the strategic direction of our Company, and in doing so considers the potential rewards and risks of our Company’s business opportunities and challenges and monitors the development and management of risks that may impact our strategic goals.

While risk oversight is a full Board responsibility, we also empower our various Board committees to address risk oversight in their respective areas and regularly report on their activities to our full Board. For example, our Strategic Planning Committee routinely reviews with management external and internal risks that may impact our strategic goals and our Compensation Committee assesses risks related to compensation. Our Audit Committee regularly reviews our disclosure controls and procedures and internal control over financial reporting, our Code of Business Conduct and Ethics and other legal and regulatory matters affecting our Company, including compliance policies. Our Audit Committee also discusses our major financial risk exposures and steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies. The Audit Committee also assists our Board in reviewing our cybersecurity risk with management. Our director of internal audit reports to and regularly meets in executive session with our Audit Committee.

Environmental, Social and Governance (ESG)

We have always been committed to understanding and exceeding the expectations of our employees, customers, suppliers, and shareholders. As stakeholder expectations change and evolve, including around matters of corporate social responsibility, we are committed to changing and evolving with them. We have a strong foundation upon which to build, including investing in innovation, empowering and developing our employees, and supporting the communities in which our employees and customers live and work. We are committed to sustainable business practices, which, for us, includes offering eco-friendly products to our customers, closely monitoring our sourcing activities, providing a safe, inclusive work environment for our employees, and being good stewards within the communities we serve. Currently, we are taking steps to trim our carbon footprint and to improve product choices that allow our customers to reduce their environmental impact. Further, we are installing more energy-efficient systems throughout our network and ensuring that our health and wellness programs include affordable, high quality benefits to improve the lives of our employees. We are continually striving to ensure success in our business while protecting resources for future generations. Our sustainability goals include the reduction of greenhouse gases and other harmful air emissions, water conservation, energy conservation and carbon footprint minimization. We continue to improve the ways in which we handle, distribute, transport and dispose of all products, particularly the chemicals and fertilizers that we sell. We were recognized for these efforts by Investor’s Business Daily®, which ranked us as second among the Best ESG Companies in its 2020 IBD Composite Ratings.

We support various charitable activities through our stewardship committee and other endeavors, and we actively encourage our employees to volunteer in and engage with their communities. We believe these efforts will continue to create value for our customers, shareholders, employees, suppliers and communities. For more information on our ESG efforts, please visit the Responsibility tab of our website at www.poolcorp.com.

Compensation-Related Risk

Our Compensation Committee assesses risks associated with our compensation policies and practices. We do not believe that our compensation policies or practices are reasonably likely to have a material adverse effect on our Company. While risk taking is a necessary part of growing a business, our compensation philosophy is focused on aligning compensation with the long-term interests of our stockholders as opposed to rewarding short-term management decisions that could pose long-term risks. For example:

▪our annual cash award programs are capped for all members of senior management, including our Named Executive Officers (NEOs);

▪our Share Ownership Guidelines require our NEOs to hold Company stock;

▪we maintain a clawback policy for executive compensation;

▪our Insider Trading Policy prohibits hedging, pledging or monetization transactions involving our stock (see section below titled “Hedging Policy”);

▪our long-term equity-based compensation cliff vests over a period of three to five years for all management recipients; and

▪restricted stock awards contain performance-based criteria in addition to the time-based vesting criteria discussed above.

Moreover, equity awards are granted annually, which means executives always have unvested awards that could significantly decrease in value if our business is not managed for the long term.

Access to Management and Employees

Directors have full and unrestricted access to our management and employees. Additionally, key members of management attend Board meetings from time to time to present information about the results, plans and operations within their areas of responsibility.

Communications with the Board

If you wish to communicate with the Board, you may send correspondence addressed to the full Board, a specific member of the Board or to a particular committee of the Board to 109 Northpark Boulevard, Covington, Louisiana 70433. Communications are distributed, as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Board has requested that certain items that are unrelated to the duties and responsibilities of the Board be excluded, such as junk mail, mass mailings, resumes and other forms of job inquiries and business solicitations or advertisements. In addition, material that is unduly hostile, threatening, illegal or similarly unsuitable may be excluded.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics that applies to our employees, officers (including our principal executive officer, principal financial officer and principal accounting officer) and directors. Our Code of Business Conduct and Ethics is posted on our website at www.poolcorp.com and can also be obtained free of charge by sending a request to our corporate secretary at 109 Northpark Boulevard, Covington, Louisiana 70433. As permitted by SEC and Nasdaq rules, we intend to satisfy the disclosure requirement regarding an amendment to, or a waiver from, a provision of our Code of Business Conduct and Ethics by posting such information on our website.

Anti-Hedging Policy

We do not believe that our directors, officers, employees or insiders should engage in short-term or speculative transactions involving our Common Stock. As such, our Insider Trading Policy prohibits directors, officers, employees and insiders from engaging in any of the following activities with respect to our Common Stock:

•trading in our Common Stock on a short-term basis - any Common Stock purchased in the open market must be held for a minimum of six months and ideally longer (such short-term trading by directors and executive officers is prohibited by law);

•sales of our Common Stock not owned or not delivered within 20 days of the sale, i.e. “short sales”;

•hedging or monetization transactions involving our Common Stock (including prepaid variable forward contracts, equity swaps, collars and contributing our Common Stock to an exchange fund in exchange for an interest in the fund); and

•the purchase or sale of publicly traded “equity” options in our Common Stock.

Board Committees

Board committees work on key issues in greater detail than would be possible at full Board meetings. The Board has appointed four standing committees: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Strategic Planning Committee. Each of these Board committees is comprised entirely of independent directors and operates under a written charter, which sets forth the committees’ authorities and responsibilities. The charters are posted on our website at www.poolcorp.com in the “Investors” section under the “Governance” link.

The following table lists our 2020 Board committees, the chairs of each committee, the directors who served on them following the 2020 annual meeting and the number of committee meetings held in 2020.

Audit

Committee

Compensation

Committee

Nominating and

Corporate Governance

Committee

Strategic Planning

Committee

Andrew W. Code

Timothy M. Graven

Chair

Debra S. Oler

Harlan F. Seymour

Chair

Robert C. Sledd

John E. Stokely

Chair

David G. Whalen

Meetings held in 2020

The following sections briefly describe our Board committees and outline certain of their principal functions. These descriptions are qualified in their entirety by the full text of the Board committee charters.

Audit Committee

The Audit Committee assists the Board in monitoring:

•management’s process for ensuring the integrity of our financial statements;

▪the independent registered public accounting firm’s qualifications and independence;

▪the performance of our internal audit function and independent registered public accounting firm;

▪information technology security and risk, including cyber security; and

▪management’s process for ensuring our compliance with legal and regulatory requirements.

The Board has determined that each Audit Committee member meets the requirements for independence, experience and expertise, including financial literacy, as set forth in the applicable SEC and Nasdaq rules. The Board has further determined that Messrs. Graven, Sledd, Stokely and Whalen are “audit committee financial experts” as defined in the SEC rules.

Compensation Committee

Our Compensation Committee is responsible for oversight of our executive compensation and makes recommendations to our entire Board with respect to director compensation, cash award plans for senior management and equity-based plans for all employees. All members of the Compensation Committee are independent based on the applicable definition of independence for compensation committee members in Nasdaq listing standards and Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the Exchange Act). The Compensation Committee’s specific responsibilities and duties are outlined in detail in our Compensation Committee Charter. The Compensation Committee has full and final authority in connection with the administration of our equity compensation plans and, in its sole discretion, may grant equity-based awards under such plans.

The Compensation Committee has the authority to engage the services of outside advisers, experts and others. Specifically, the Compensation Committee may periodically retain an independent compensation consultant to review the overall structure and design of our compensation programs and their suitability in meeting our compensation objectives. In addition, when the Compensation Committee considers changes to specific compensation programs, they may use an outside consultant to review the design and suitability of that specific program.

In 2019, in an effort to continue to ensure that our executive compensation remains properly aligned with the interests of our stockholders and comparable with the market, the Compensation Committee engaged Pearl Meyer & Partners, LLC (Pearl Meyer) to review our executive compensation program and our peer group composition. Also in 2019, the Compensation Committee engaged Pearl Meyer to conduct a review of non-employee director and chairman compensation. Pearl Meyer reported directly to the Compensation Committee chairman and was advised by the Compensation Committee to compare our director compensation program against our peer group. As required by SEC and Nasdaq rules, the Compensation Committee assessed the independence of Pearl Meyer, determined that Pearl Meyer is independent from management and concluded that Pearl Meyer’s work did not raise any conflict of interest.

For more information regarding the processes used by the Compensation Committee to determine executive compensation, see the section titled “Compensation Discussion and Analysis” below.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee’s primary purpose is to provide oversight on a broad range of issues surrounding the composition of the Board, including:

•identifying qualified individuals to be considered for nomination as a director;

▪recommending to the Board director nominees for the next annual meeting of stockholders;

▪assisting the Board in committee member selection;

▪evaluating the overall effectiveness of the Board and committees of the Board; and

▪reviewing and considering corporate governance practices.

The Nominating and Corporate Governance Committee has the authority to recommend to the Board candidates for Board membership. Stockholders may also make recommendations for director nominations by sending a letter to the Nominating and Corporate Governance Committee in care of our Corporate Secretary at 109 Northpark Boulevard, Covington, Louisiana 70433. Stockholders making nominations must also comply with the notice procedures set forth in our Bylaws. The Nominating and Corporate Governance Committee evaluates such candidates in the same manner as other candidates.

Strategic Planning Committee

The Strategic Planning Committee assists senior management in the analysis and preparation of our strategic plan and then reports and makes recommendations regarding our strategic plan to the Board. Our strategic planning process involves defining the Company’s strategy and making decisions on allocating resources, including capital and people, to pursue this strategy. Our strategic plan, which we update and review with the Board periodically, incorporates specific goals for growth and business development over the next three to five years.

Compensation Committee Interlocks and Insider Participation

During the last fiscal year, Messrs. Seymour, Code and Sledd and Mrs. Oler served on the Compensation Committee and none of them served at any time as officers or employees of the Company or any of its subsidiaries. None of our executive officers served in the last fiscal year as a member of the board of directors or compensation committee of another entity, one of whose executive officers served as a member of our Board or Compensation Committee.

Information about our Executive Officers

The following table presents, as of March 16, 2021, certain information about our current executive officers. On February 23, 2021, Mr. Joslin informed the Board that he will retire in 2021. Mr. Joslin has not given notice of a specific retirement date as he intends to continue in his role until later in 2021 in order to ensure a successful transition of the position to Mrs. Housey Hart, whom the Board has appointed its next CFO, effective upon Mr. Joslin’s retirement. We expect that each of the other officers will remain in his or her current position following the Annual Meeting.


Name and age			Positions and recent business experience
Peter D. Arvan (55)			President and Chief Executive Officer ▪President and Chief Executive Officer since 2019 ▪Chief Operating Officer from August 2017 to January 2019 ▪Executive Vice President from January 2017 to January 2019 ▪Chief Executive Officer of Roofing Supply Group from 2013 to 2015 ▪President of GE/SABIC Polymershapes from 2004 to 2013
Mark W. Joslin (61)			Senior Vice President, Chief Financial Officer ▪Senior Vice President, Chief Financial Officer since 2015 ▪Vice President, Chief Financial Officer from 2004 to 2015 ▪Vice President of Corporate Development of Eastman Chemical Company (Eastman) from 2002 to 2004 ▪Vice President and Controller of Eastman from 1999 to 2002
Kenneth G. St. Romain (58)			Group Vice President ▪Group Vice President since 2007 ▪General Manager from 2001 to 2007 ▪Regional Manager from 1987 to 2001
Jennifer M. Neil (47)			Vice President, Corporate Secretary, Chief Legal Officer ▪Vice President since 2018 ▪Corporate Secretary since 2005 ▪Chief Legal Officer since 2003
Jeffrey M. Clay (46)			President, Horizon Distributors, Inc. ▪President of Horizon Distributors, Inc. since March 2020 ▪Founder and President of Belltown Power Texas from 2016 to 2020 ▪Vice President of Strategy & Corporate Development at Roofing Supply Group from 2012 to 2016
David B. Collier (45)			Vice President, Operations and Supply Chain ▪Vice President since July 2020 ▪Global Vice President of Supply Chain, Operations & Services of Arrow Electronics from 2017 to 2020 ▪Vice President of Supply Chain of MSC Industrial Direct Co., Inc. from 2014 to 2016
Melanie M. Housey Hart (48)			Vice President, Corporate Controller, Chief Accounting Officer ▪Vice President since February 2019 ▪Chief Accounting Officer since 2008 ▪Corporate Controller since 2007 ▪Senior Director of Corporate Accounting from 2006 to 2007 ▪Senior Manager at Ernst & Young LLP from 2001 to 2006

PRINCIPAL STOCKHOLDERS

In accordance with Rule 13d-3 under the Exchange Act, the table below sets forth, as of March 16, 2021, certain information regarding beneficial ownership of Common Stock by (i) each of our directors, (ii) each of the executive officers listed in the Summary Compensation Table included in “Executive Compensation” (Named Executive Officers), (iii) all of our directors and executive officers as a group and (iv) each stockholder known by us to be the beneficial owner of more than 5% of our outstanding Common Stock. Based on information furnished to us by such stockholders, unless otherwise indicated, all shares indicated as beneficially owned are held with sole voting and investment power. Our executive officers and directors are prohibited from pledging the Company’s Common Stock as collateral for a loan, including through the use of traditional margin accounts with a broker.


Name of Beneficial Owner	Number of Shares Beneficially Owned (1)		Percentage of Outstanding Common Stock
Directors
Peter D. Arvan	59,683		*
Andrew W. Code	6,807	(2)	*
Timothy M. Graven	5,438		*
Debra S. Oler	1,212		*
Manuel J. Perez de la Mesa	1,187,359	(3)	3%
Harlan F. Seymour	10,073		*
Robert C. Sledd	16,095	(4)	*
John E. Stokely	12,835		*
David G. Whalen	5,593		*
Named Executive Officers (5)
Mark W. Joslin	100,195		*
A. David Cook	36,276		*
Kenneth G. St. Romain	102,737	(6)	*
Jennifer M. Neil	14,589		*

All executive officers and directors as a group (16 persons)	1,588,149	(7)	4%
Greater than 5% Beneficial Owners
BlackRock, Inc.	4,080,913	(8)	10%
Kayne Anderson Rudnick Investment Management LLC	2,185,690	(9)	5%
The Vanguard Group, Inc.	4,098,737	(10)	10%

_______________

* Less than one percent.

(1)Includes shares of unvested restricted stock for executive officers and directors as these shares convey the right to vote and receive dividends.

(2)Includes 4,832 shares held by a family trust for which Mr. Code serves as co-trustee.

(3)Includes (i) 271,625 shares that Mr. Perez de la Mesa has the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 15, 2021; (ii) 5,000 shares beneficially owned by Mr. Perez de la Mesa’s wife; (iii) 328,062 shares held by a trust for which Mr. Perez de la Mesa serves as a trustee; and (iv) 522,330 shares held in three irrevocable trusts for the benefit of Mr. Perez de la Mesa’s adult children.

(4)Includes 9,554 shares beneficially owned by Mr. Sledd’s wife and 1,654 shares that Mr. Sledd has the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 15, 2021.

(5)Information regarding shares beneficially owned by Mr. Arvan, our chief executive officer, who is an NEO, appears above under the caption “Directors.”

(6)Includes 12,500 shares that Mr. St. Romain has the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 15, 2021.

(7)Includes 297,404 shares that such persons have the right to acquire upon the exercise of presently exercisable options or the exercise of options which will become exercisable on or before May 15, 2021. Also includes 855,224 shares held in trusts and 14,554 shares held by family members of such persons.

(8)Based on the holder’s Schedule 13G/A filed with the SEC on February 10, 2021. BlackRock, Inc. has sole voting power over 3,743,495 shares and sole dispositive power with respect to all shares. The business address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.

(9)Based on the holder’s Schedule 13G filed with the SEC on February 11, 2021. Kayne Anderson Rudnick Investment Management LLC (Kayne) has sole voting and dispositive power over 1,671,548 shares and shared voting and dispositive power with respect to 514,142 shares. The business address of Kayne is 1800 Avenue of the Stars, Los Angeles, California 90067.

(10)Based on the holder’s Schedule 13G/A filed with the SEC on February 10, 2021. The Vanguard Group, Inc. (Vanguard) has shared voting power over 65,951 shares, sole dispositive power over 3,947,327 shares and shared dispositive power over 151,410 shares. The business address of Vanguard is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.

EQUITY COMPENSATION PLAN INFORMATION

All of our existing equity compensation plans were approved by our stockholders. The following table provides information about shares of Common Stock that may be issued under our existing equity compensation plans as of December 31, 2020.


Plan description		Number of shares of Common Stock to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of shares of Common Stock remaining available for future issuance under equity compensation plans
Equity Compensation Plans Approved by Stockholders:
	2007 Long-Term Incentive Plan (2007 LTIP)	884,059	$91.49	4,189,438	(1)
	Employee Stock Purchase Plan	—	—	76,822
Equity Compensation Plans Not Approved by Stockholders		—	—	—
	Total	884,059	$91.49	4,266,260

(1) Includes 971,975 shares that may be issued as restricted stock.

For a complete description of our equity compensation plans, see Note 6 in our 2020 Annual Report on Form 10-K.

COMPENSATION DISCUSSION AND ANALYSIS

This compensation discussion and analysis section (the CD&A) describes and analyzes our executive compensation philosophy and program in the context of the compensation paid during the last fiscal year to our named executive officers (collectively, our Named Executive Officers or NEOs). This list includes our chief executive officer (CEO), our chief financial officer (CFO) and our next three most highly-compensated executive officers as of December 31, 2020.

For fiscal 2020, our Named Executive Officers were:

▪Peter D. Arvan, President, Chief Executive Officer and Director;

▪Mark W. Joslin, Senior Vice President and Chief Financial Officer(1);

▪A. David Cook, Group Vice President(1);

▪Kenneth G. St. Romain, Group Vice President; and

▪Jennifer M. Neil, Vice President, Secretary and Chief Legal Officer.

(1) Mr. Cook retired from the company effective March 1, 2021, and as previously noted, Mr. Joslin notified the Board that he plans to retire during 2021.

In the discussion that follows, we will provide an Executive Summary of our actions and highlights from 2020. We next explain the principles that guide our Compensation Committee’s executive compensation decisions, our Compensation Philosophy and Objectives. We then describe the Compensation Committee’s Process of Setting Compensation, including any supporting role played by the NEOs themselves. Finally, we discuss in detail each of the Components of Compensation, which includes, for each component, a design overview as well as the actual results yielded for each NEO in 2020.

Executive Summary

Our Company is the world’s largest wholesale distributor of swimming pool supplies, equipment and related leisure products and is one of the leading distributors of irrigation and landscape products in the United States. We operate 398 sales center locations worldwide, from which our approximately 4,500 employees serve roughly 120,000 wholesale customers. For more information about our business, please see Item 1, “Business,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

Overview of Fiscal 2020

We started the year with robust growth due to strong underlying demand for our products. Then, beginning in the middle of March, when stay-at-home orders related to the COVID-19 pandemic were initially issued, we experienced sales declines across most markets. However, as stay-at-home restrictions eased in late April through early May, our business not only rebounded, but accelerated, and we quickly turned our attention to adapting our operations in a dramatically shifting landscape. Most importantly, we focused on rigorously applying evolving procedures to protect the health and well-being of our employees, their families and our customers. Our employees displayed resiliency and innovation as they remained dedicated to safely serving our customers under new operational protocols at a time of unparalleled demand.

As families spent more time at home and sought out opportunities to create or expand existing home-based outdoor living and entertainment spaces, we experienced extraordinary demand and realized broad sales gains across nearly all of our product categories and geographies. Our financial accomplishments for fiscal 2020 included the following:

▪record annual sales of $3.9 billion, up 23% over 2019;

▪record operating income of $464.0 million, up 36% over 2019;

▪record operating margin of 11.8%, a 110 basis point increase over 2019; and

▪record 2020 diluted EPS of $8.97, an increase of 40% over 2019, including tax-related benefits of $0.70 per share in 2020 and $0.57 per share in 2019.

Net sales increased 23% compared to 2019, with 22% of this increase resulting from base business sales growth. Our sales benefited from greater swimming pool usage, high demand for residential pool products and warmer weather conditions during the year. Gross profit reached $1.1 billion for the year ended December 31, 2020, a 22% increase over 2019. Gross margin declined 20 basis points compared to last year as sales of lower-margin, big-ticket items, such as pool equipment and in-ground and above-ground pools made up a larger portion of our product mix in 2020 compared to 2019. As a result of strong expense control and our ability to leverage our existing network, operating expenses as a percentage of net sales declined 130 basis points year-over-year, contributing to the 110 basis point expansion in our operating margin for the year.

Return to Stockholders

We have delivered consistent positive returns to our stockholders over time, and in 2020 we continued our long history of increasing dividends and conducting share repurchases.

2020 Executive Compensation Program Highlights

▪Our executive compensation program is designed and implemented by the Compensation Committee, which strives to incorporate compensation best practices into our program design. The following summary highlights our commitment to executive compensation practices that align the interests of our executives and stockholders:

What we do:

What we don’t do:

Our executive pay is predominantly performance-based and not guaranteed.

We do not provide excessive perquisites to our executives.

All of our variable compensation plans have caps on plan formulas.

Directors and NEOs are prohibited from pledging and hedging their shares of company stock.

Our equity plans contain “double trigger” change of control vesting provisions.

Our equity plans prohibit the repricing of underwater stock options.

We benchmark pay relative to the market and review our peer group annually.

We do not provide any change of control cash payments to our executive officers.

We maintain share ownership guidelines.

We do not have any related party transactions with our executive officers.

We maintain executive compensation clawback provisions.

The Compensation Committee, like all of our Board committees, is comprised solely of independent directors.

Our Compensation Committee periodically retains its own independent compensation consultant.

Restricted stock awards include performance-based vesting criteria.

▪A majority of each NEO’s target compensation has been and continues to be at-risk. The charts below show the 2020 plan design, or target, compensation mix by component:

▪Consistent with its long-standing policy of placing greater emphasis on the performance-based components of compensation, the Compensation Committee approved only a marginal increase in base salaries during 2020 for each NEO (roughly 3% on average), with the exception of Ms. Neil, who received a 22% increase in recognition of her performance and experience in her role as well as in consideration of the market pay for comparable executives.

▪The Compensation Committee approved an annual cash performance potential for each NEO, with 2020 plan design targeted at 100% of base salary for Mr. Arvan, 87.5% of base salary for Mr. Cook, and 75% of base salary for Messrs. Joslin and St. Romain and Ms. Neil. Each NEO received a maximum payout under the 2020 annual cash performance awards, which was 200.0% of base salary for Mr. Arvan and averaged 156.3% of base salary for our other NEOs.

▪The Compensation Committee continued to emphasize the importance of our long-term growth by providing substantial pay-for-performance compensation opportunities through the medium-term Strategic Plan Incentive Program (SPIP) and the Amended and Restated 2007 Long-Term Incentive Plan (2007 LTIP). For the 2020 SPIP grant, which is based on the diluted EPS growth in the three-year performance period from 2020 to 2022, adjusted diluted EPS at December 31, 2019 of $5.83 serves as the baseline for the performance period. Cash payments to our NEOs under the SPIP for the performance period ended December 31, 2020 were 200% of base salary, which is the maximum possible attainment under the program. These SPIP payments represented an adjusted diluted EPS CAGR of 21.1% for the 2018 to 2020 performance period.

▪The Compensation Committee determined the 2020 equity grants for all NEOs based on total compensation targets approximating the peer group median for total compensation; grants of restricted stock awards to our NEOs contain a performance-based vesting criterion (return on invested capital).

Results Compared to Peers

Our Compensation Committee designs total compensation for our executives to target or approximate the peer median for total compensation (sometimes referred to as “compensation by design”), but ultimately our executives’ total compensation varies depending on our performance. Our peer group is comprised of public companies primarily engaged in wholesale distribution and of similar size based on both revenues and market capitalization. See “Process of Setting Compensation - Benchmarking and Establishment of Peer Group” for further information on our peer group.

The table below presents compound annual growth rates (CAGR) for our EPS and stock price performance as well as our total stockholder return (TSR) performance compared to our peer group median as of December 31, 2020. In addition to our peer group, we believe it is helpful to measure our performance against the S&P 500 Index because (a) it is comprised of similar-sized public companies that represent the most likely alternative investments for investors and (b) we have no direct public company peers given the niche nature of our industry. Note that effective October 2020, the Company joined the S&P 500 Index. Given that our compensation philosophy stresses the long-term growth of stockholder value, we believe that longer-term performance data provides the most appropriate comparisons.


	Pool Corporation
	Adjusted(1) Diluted EPS CAGR		Stock Price CAGR		TSR CAGR		Peer Group Median TSR(2) CAGR		S&P 500 Index CAGR(3)
1-year	44.4	%	75.4	%	76.5	%	25.7	%	16.3	%
3-year	25.4	%	42.2	%	42.9	%	6.3	%	12.0	%
5-year	23.8	%	35.8	%	36.4	%	13.2	%	12.9	%
10-year	22.0	%	32.4	%	32.8	%	9.5	%	11.6	%

(1)The adjusted diluted EPS CAGR amounts are based on adjusted diluted 2020 EPS of $8.42, which excludes a $0.70 per diluted share benefit from the impact of Accounting Standards Update 2016-09, Improvements to Employee Share-Based Payment Accounting (ASU 2016-09) and a non-cash goodwill impairment charge of $0.15 per diluted share.

The 1-year diluted EPS CAGR is also based on adjusted 2019 diluted EPS of $5.83, which excludes a $0.57 benefit from the impact of ASU 2016-09.

The 3-year diluted EPS CAGR is also based on adjusted 2017 diluted EPS of $4.27, which excludes a $0.24 benefit from the impact of ASU 2016-09.

(2)We calculated TSR based on changes in the market price of each company’s common stock plus dividends paid during the respective periods, if applicable, using information from company financial statements and various financial websites including www.nasdaq.com. In calculating TSR, we used stock-split adjusted amounts for both historical market prices and dividends paid.

(3)As reported by Nasdaq.

As reflected in the table below, 2020 total target compensation for our NEOs as a group was largely in-line with the peer group median. Actual compensation for our NEOs was 32% higher than the peer group median given our exceptional results compared to the peer group, as noted in the table above. See “Process of Setting Compensation - Benchmarking and Establishment of Peer Group” for more information regarding our peer group.


Total Compensation Above (Below) Peer Group Medians(1)
Position	2020 Actual		2020 Plan Design
CEO	—	%	(20)	%
All Other NEOs	60	%	22	%
All NEOs	32	%	2	%

(1)Our Compensation Committee set our compensation plan design for fiscal 2020 in February 2020. At that time, peer group compensation data for 2019 was not available. Therefore, the peer group median amounts used for comparison in the above table were calculated primarily using 2018 compensation data.

After review of all existing programs, consideration of current market and competitive conditions, and alignment with our overall compensation objectives and philosophy, we believe that the total compensation program for our executives is appropriately focused on enhancing corporate performance and increasing value for stockholders. We believe that a significant part of our executive pay is properly tied to stockholder value through our long-term equity awards and incentive performance measures.

Results of 2020 Say-on-Pay Vote

We are committed to continued engagement with shareholders through the formal annual “say-on-pay” advisory vote on executive compensation. At our 2020 annual meeting of stockholders, our stockholders approved our executive compensation by a vote of 99.6% of the votes cast (excluding broker non-votes). Because our NEO compensation is principally established in February of each year, the results of the 2020 say-on-pay vote were not taken into consideration in setting the 2020 executive officer compensation. However, the Compensation Committee did consider the strong stockholder support we received on the 2019 say-on-pay vote, which was also approved by 99.6% of the votes cast (excluding broker non-votes).

The Board and our Compensation Committee appreciate and value the views of our stockholders. Our Compensation Committee is mindful of the strong support our stockholders expressed and as a result continues to believe that our general approach to and design of executive compensation properly align the interests of our stockholders and our performance. Going forward, the Compensation Committee will continue to review stockholder advisory votes on executive compensation and take them into consideration when making future executive compensation decisions.

Compensation Philosophy and Objectives

We believe our employees are our most important asset. The primary objectives of our compensation program are to attract, motivate, reward and retain talented executives who are critical to our success. The overriding principle of our executive compensation philosophy is that compensation must be linked to continuous improvements in corporate performance and sustained increases in stockholder value. We believe that a substantial portion of executive compensation should be at-risk based on performance and that the majority of the at-risk compensation opportunity should be predicated on medium- and long-term rather than short-term results. We strive to develop our executives’ capabilities and focus them on achieving superior long-term returns for our stockholders, while assuring that our programs do not lead to unnecessary risk taking.

Our executive compensation philosophy applies to all employees, with increasingly greater proportions of total compensation being at-risk as an employee’s responsibility increases. While we place great value on long-term performance and the corresponding improvement in stockholder value, we seek to balance the relationship between total stockholder return and short-term and long-term compensation in order to complement our annual and long-term business objectives and encourage the fulfillment of those objectives through executive performance.

In pursuing these objectives, we seek to design and maintain a program that will accomplish the following:

•align total compensation by design to the median total compensation of our peer group;

•align compensation with our performance in achieving financial and non-financial objectives;

•tie compensation to individual and group performance;

•closely align incentive compensation with stockholders’ interests; and

•promote equity ownership by executives through long-term performance compensation.

While we have not established specific target percentages of total compensation for short-term and long-term compensation, we do take into consideration the individual components in relation to the total opportunity we seek to provide. Under our program, our performance impacts both short-term and long-term compensation, as superior performance will result in additional compensation through our annual cash performance program and medium-term SPIP and increased value of our equity grants over the long term. Our goal is for the portion of compensation that is at-risk (both short-term and long-term) to constitute a substantial and meaningful portion of total compensation for each executive and for sustained long-term growth to result in the greatest compensation opportunities.

Process of Setting Compensation

Our Compensation Committee is responsible for the oversight of our executive compensation. The Compensation Committee approves compensation plans for senior management and equity-based plans for all employees. In its evaluation of executive compensation, the Compensation Committee considers many factors, including the Company’s overall performance; each individual executive’s role and responsibilities, performance, tenure and experience; and peer group performance.

The Compensation Committee normally meets in February of each year to set executive compensation plans for that fiscal year. To do this, it uses the most current data available for peer group compensation, although this data is generally a year or more old.

Role of Management

The Compensation Committee also relies on data, analysis and recommendations from our CEO. While the CEO provides recommendations with respect to potential senior management compensation and the Compensation Committee reviews such recommendations, the Compensation Committee ultimately uses its collective judgment to determine senior management compensation. The CEO does not provide recommendations for his own compensation; the Compensation Committee independently determines and approves his compensation. Although the CEO attends Compensation Committee meetings at which executive compensation matters are considered, he is not present when the Compensation Committee deliberates or votes on his compensation. Our Company’s management also assists the Compensation Committee with developing the peer group analysis each year.

Role of Compensation Consultant

Our Compensation Committee periodically engages an independent compensation consultant to review and comment on executive and director compensation. In 2019, in an effort to continue to ensure that our executive compensation program properly aligns with the interests of our stockholders and remains comparable with the market, the Compensation Committee engaged Pearl Meyer & Partners, LLC (Pearl Meyer) to review our 2019 executive and non-employee director compensation program as well as our peer group composition. Based on Pearl Meyer’s findings, the Compensation Committee continues to believe that this structure and mix of pay elements successfully promotes our compensation objectives and philosophy, and accordingly, retained this structure in 2020.

Benchmarking and Establishment of Peer Group

As noted above, we believe that total target compensation for our NEOs should be closely aligned to the median total compensation of our peer group. We establish compensation targets for each executive position in the aggregate and by component based on a design that we believe will best achieve our strategic and financial objectives. The Compensation Committee compares our primary compensation components – base salary, annual cash incentive, SPIP and equity awards – individually and in the aggregate to the compensation of the most highly compensated executive officers of our “peer group” companies (the peer group is sometimes referred to as the “market”). These comparisons are based on compensation information published in the annual proxy statements of the peer group companies, except for the value of stock options. Rather than use the estimated grant date fair values as reported in the proxy statements, we estimate stock option values by multiplying the number of stock options awarded by 40% of the stock’s closing price on the grant date (assuming this price equals the exercise price). We believe this adjustment makes the estimated compensation amounts for stock options more comparable between companies by eliminating potential differences related to fair value assumptions for expected term, volatility and dividend yield.

The Compensation Committee reviews management’s evaluation of potential peer companies, approves the annual peer group and also reviews the annual executive compensation analysis that is prepared by management and, in some years, by the compensation consultant. In developing our peer group, we evaluate the following criteria:

▪organizational structure (public companies);

▪type of business (primarily wholesale distribution);

▪company size (based on revenue and market capitalization); and

▪peer group size (number of peer companies).

In performing our evaluation, we focus on public companies that we believe would provide a comparable cross-industry subset of distributors. While we evaluate companies that may have some manufacturing or retail operations, we generally exclude companies from consideration if the majority of the business is not wholesale distribution. Since our Global Industry Classification Standard (GICS) industry group (2520 - Consumer Durables & Apparel) is broad and our GICS industry (252020 - Leisure Equipment & Products) would not provide an adequate peer group size, we believe that using a cross-industry subset of wholesale distributors for our peer group provides a more meaningful executive compensation benchmarking analysis than using companies based on one of our industry sectors.

With assistance from Pearl Meyer, the Compensation Committee reviewed our 2019 peer group and made the following changes for 2020:

•removed the non-core distribution businesses (Acuity Brands, Inc., Boise Cascade Company, Helen of Troy Limited, and Steelcase Inc.) and Kaman Corporation, as it divested of its distribution business in late 2019;

•removed Wesco Aircraft Holdings, Inc. as it is no longer a public company and ScanSource, Inc. because its most recently filed proxy statement at the time reported compensation for only two executives; and

•added Foundation Building Materials, Inc., GMS Inc. and WESCO International, Inc., all of which are distribution companies with revenue and market capitalization within our criteria ranges.

Accordingly, our 2020 peer group consisted of the following companies:


⋅Applied Industrial Technologies, Inc.	⋅GMS Inc.	⋅Sally Beauty Holdings, Inc.
⋅Beacon Roofing Supply, Inc.	⋅HD Supply Holdings, Inc.	⋅SiteOne Landscape Supply, Inc.
⋅BMC Stock Holdings, Inc.	⋅MRC Global Inc.	⋅UFP Industries, Inc.
⋅Builders FirstSource, Inc.	⋅MSC Industrial Direct Company, Inc.	⋅Watsco, Inc.
⋅Fastenal Company	⋅NOW Inc.	⋅WESCO International, Inc.
⋅Foundation Building Materials, Inc.	⋅Patterson Companies, Inc.

The table below presents our revenue and market capitalization compared to the median of our 2020 peer group (based on data available in the fall of 2019 when the 2020 peer group was established).


(in millions)	Revenue		Market capitalization
POOL(1)	$	2,998	$	7,869
Peer group median(2)	4,172		2,083

(1)POOL’s revenue reflects our most recent annual net sales (fiscal year 2018) at the time of our analysis, and our market capitalization is as of October 3, 2019.

(2)The peer group median revenue represents the median annual net sales based on annual public filings available as of October 2019; the peer group median market capitalization is as of October 3, 2019.

The Compensation Committee reviews each component of our NEOs’ compensation compared to the peer group, and they also review the prior year’s total compensation for our NEOs versus the peer group. However, the Compensation Committee ultimately focuses on whether total compensation by design aligns closely with the peer group median total compensation amounts. While we compare our CEO position to the CEO positions for our peer group, we compare our other NEOs to the peer group in the aggregate as opposed to by position because we believe it affords a better comparison overall as the positions and responsibilities for this group vary from company to company.

Market medians and the ranges around them only represent beginning reference points. The Compensation Committee also uses its subjective judgment to set compensation, incorporating factors such as individual performance and skills, long-term potential, tenure in the position and retention considerations. The Compensation Committee also reviews the total annual compensation that each executive could potentially receive and, for perspective, reviews the previous year’s compensation value for each executive.

The Compensation Committee has considered the impact that paying below the median of our peers might have on attracting, retaining and motivating senior management. The Compensation Committee believes that the fundamental philosophy of emphasizing pay-for-performance is the right one for our Company, and that our core compensation program as currently designed (base salary, annual cash incentive, SPIP and equity awards) can provide competitive or superior total compensation for senior management compared to our peer group given a reasonable economic environment. The Compensation Committee continues to believe that the design of our compensation program reflects a greater weighting to performance-based and at-risk compensation than the peer group median, as evidenced by the comparisons of our compensation components to the related peer group median amounts (see tables included in the “Components of Compensation” section below). Provided that our performance meets or exceeds expectations in future years, the Compensation Committee expects our NEOs will realize total compensation comparable or superior to the peer group median over time.

Components of Compensation

Our annual executive compensation program is relatively simple in format and includes four primary components:

Compensation Component

Key Characteristics

Purpose

Base salary

Conservative level of fixed cash compensation based on responsibility, experience and tenure

Provide a fixed, baseline level of cash compensation

Annual cash incentive
(annual bonus)

Annual cash payment tied to performance during the fiscal year relative to pre-established performance goals

Reward for achieving our annual financial and business goals

Strategic Plan Incentive Program (SPIP)

Medium-term cash performance opportunity

Provide a three-year, performance-based award subject to the achievement of specified earnings objectives, signifying achievement of strategic initiatives

Long-term equity awards

Variable compensation comprised of performance-based restricted stock awards, stock options or a combination of the two

Align executive performance with stockholder interests and long-term goals

As discussed in “Compensation Philosophy and Objectives” above, we believe that employees at senior levels should have a larger proportion of total compensation delivered through pay-for-performance cash awards and long-term equity compensation. As a result, their compensation will be more significantly impacted, both positively and negatively, by our financial performance and stockholder return. Because of this correlation, the Compensation Committee believes our executives have a greater percentage of their compensation at-risk than the executives in our peer group. We discuss each compensation component in more detail below.

Base Salary

(Summary Compensation Table, Column 3)

Salaries provide executives with a base level of income and help achieve the objectives outlined above by attracting and retaining strong talent. Our plan design is for total executive compensation at comparable performance levels to be at the peer group’s median total compensation. However, because of our desire to emphasize those elements of compensation that are performance-based, our practice has generally been to set base salary levels below the market median for each executive officer. In determining an executive’s base salary, the Compensation Committee reviews Company and individual performance information and peer group executive compensation information.

Changes in our NEOs’ base salaries from year to year reflect general changes in market pay for executive talent, changes in responsibility for individual NEOs from time to time and, to a lesser extent, the individual’s job performance over time. Additionally, base salary levels for all NEOs have been substantially below market historically as compared to our peers. We do not generally provide our NEOs with automatic annual salary increases or other cost of living adjustments.

The 2020 base salary levels for our NEOs continued to remain low by design as compared to our peer group. The table below presents the percentage by which our NEOs’ 2020 base salaries are below the peer group median base salary amounts.


Base Salary (Below) Peer Group Medians (1)
Position	2020 Actual
CEO	(37)	%
All Other NEOs	(27)	%
All NEOs	(30)	%

In February 2020, the Compensation Committee increased executive officer salaries to the following amounts:


Name	Salary		Increase
Peter D. Arvan	$	500,000	4.2	%
Mark W. Joslin	318,000		4.3	%
A. David Cook	333,200		2.5	%
Kenneth G. St. Romain	325,000		2.5	%
Jennifer M. Neil	250,000		22.0	%

The average salary increase for the NEOs was 7.1%. Ms. Neil received the greatest percentage increase, 22.0%, in recognition of her performance and experience in her role as well as in consideration of the market pay for comparable executives. Even with these increases, our NEOs’ 2020 base salaries as a group were 30% below the peer group median, as shown in the table above.

Annual Incentive Plan

(Summary Compensation Table, Column 5)

(Grants of Plan-Based Awards, Columns 3-4)

We use an annual cash incentive award (annual bonus) to focus executive behavior on short-term goals for growth, financial performance and other specific financial and business improvement metrics. We offer executives the opportunity to earn goal-oriented awards that are responsive to changing internal and external business conditions from year to year. Early each year, the Compensation Committee evaluates the prior year’s performance against the applicable target goals and approves annual bonus payments for that year and reviews and approves goals for each NEO for the current year. Annual bonus payments, if any, are normally made in late February or early March after the end of the performance period in which the bonuses were earned.

Under our Pool Corporation Executive Officer Annual Incentive Plan (the AIP), the Compensation Committee has the discretion to structure the annual bonus program as it deems appropriate, including designing an “umbrella plan” under which one or more performance goals are established to fund a pool, from which individual awards, which may be subject to additional performance criteria, are then made.

2020 Plan Design

In February 2020, the Compensation Committee established the performance metrics applicable to awards under the AIP for 2020 and the maximum bonus payable to each NEO under the AIP. Similar to our 2019 plan, our Compensation Committee included return on invested capital (ROIC) as a threshold performance metric, which must be achieved in order for any payments to be made under the AIP. Under this plan design, if the Company achieved ROIC of 10% or higher for fiscal year 2020, a bonus pool would be funded to satisfy annual bonus payments to all of our executive officers, including the NEOs. The Compensation Committee then set individual bonus metrics (described below) to determine the amounts awarded to each of our NEOs.

Our ROIC calculation numerator is net income before after-tax interest and other non-operating expenses, net, and the denominator is the sum of total long-term debt (including the current portion) and stockholders’ equity at fiscal year end. Calculated in this way, our ROIC for the year ended December 31, 2020 was 35.7%. Because our 2020 ROIC was greater than 10%, the bonus pool for 2020 under the AIP was funded.

For 2020, our NEOs’ annual bonus targets were based on the following two objective performance criteria categories:

▪specific financial measures (operating income and operational cash flow); and

▪specific business objectives tailored to each NEO’s area of responsibility.

The metrics for all NEOs are designed to be challenging and encourage improvement over the status quo. For 2020, the Compensation Committee used adjusted operating income as the primary performance financial metric for annual bonuses, as set forth in the table below. The Compensation Committee may authorize adjustments to operating income as specified by our compensation plans. We believe operating income is a strong indicator of medium-term and long-term stockholder value as it has had a strong long-term correlation with our stock price over time, it is performance-based, and its use in our cash award plans supports our business goal of providing a superior return to our stockholders. Further, operating income is not impacted by tax benefits related to share-based compensation expense or changes to federal tax rates. The Compensation Committee has evaluated whether our reliance on operating income creates unnecessary risk and does not believe that it does.

The annual bonus provided Mr. Arvan an up to 200% of salary opportunity (with a plan design of 100%), Mr. Cook an up to 175% of salary opportunity (with a plan design of 87.5%), Messrs. Joslin and St. Romain and Ms. Neil an up to 150% of salary opportunity

(with a plan design of 75%). The table below details compensation opportunities available to each of our NEOs under various 2020 performance scenarios. The extent to which objectives are achieved determines the award earned.

Annual Cash Performance Opportunity

(expressed as a percentage of base salary)


	Adjusted Operating Income(1)												Operational Cash Flow(2)						Other Specific Business Objectives(3)	Maximum Opportunity
	$	330.8	$	345.8	$	360.9	$	375.9	$	385.3	$	396.6	80%	90%	100%	110%
Mr. Arvan	15.0%		30%		45.0%		60%		100%		140%		—%	10%	20%	30%			30%	200%
Mr. Joslin	12.5%		25%		37.5%		50%		75%		100%		—%	5%	10%	15%			40%	150%
Mr. Cook	10.0%		20%		30.0%		40%		60%		80%		—%	5%	10%	15%	15	%	85%	175%
Mr. St. Romain	10.0%		20%		30.0%		40%		60%		80%		—%	5%	10%	15%			60%	150%
Ms. Neil	12.5%		25%		37.5%		50%		75%		100%		N/A	N/A	N/A	N/A			50%	150%

(1)Based on our potential adjusted operating income (in millions) for the year ended December 31, 2020. The cash award earned is prorated based on operating income between $330.8 million and $396.6 million.

(2)Based on our adjusted net cash provided by operating activities as a percentage of net income for the year ended December 31, 2020. Messrs. Joslin, Cook and St. Romain have the opportunity to earn an additional 5% of base salary for operational cash flow between 100% and 110%, except that their overall bonus may not exceed 150% of base salary in the case of Messrs. Joslin and St. Romain and 175% of base salary for Mr. Cook. The cash award earned is prorated based on adjusted cash provided by operating activities as a percentage of net income between 80% and 110%.

(3)Each executive’s respective business objectives reflects operational improvements related to his or her specific responsibilities, as described below.

The table below presents the annual bonus earned by each NEO for 2020 under the AIP. We believe the 2020 actual annual bonus payouts reflect our strong performance in 2020, including 38% adjusted operating income growth and a 76.5% one-year total stockholder return. These payouts also reflect the variability of our annual cash award based on performance, which is by design given that our NEOs’ base salaries are significantly below our peer group median base salary amounts. In 2020, each of our NEOs earned the maximum award available under the AIP. All of the 2020 annual cash awards were based on actual objectives achieved and the Compensation Committee did not include any additional discretionary award amounts.


					Components as a % of Base Salary
	Annual Bonus Earned		Bonus as a Percentage of Base Salary		Operating Income(1)		Operational Cash Flow(2)		Other Specific Business Objectives(3)
Mr. Arvan	$	1,000,000	200.0	%	140.0	%	30.0	%	30.0	%
Mr. Joslin	477,000		150.0	%	100.0	%	15.0	%	35.0	%
Mr. Cook	583,100		175.0	%	80.0	%	15.0	%	80.0	%
Mr. St. Romain	487,500		150.0	%	80.0	%	15.0	%	55.0	%
Ms. Neil	375,000		150.0	%	100.0	%	N/A		50.0	%

(1)We achieved adjusted operating income of $471.0 million for the year ended December 31, 2020, which reflects operating income of $464.0 million and impairment charges of $6.9 million that we recorded in the first quarter of 2020. These impairment charges included non-cash goodwill and intangibles impairment of $4.4 million and a $2.5 million impairment from a long-term note, as collectability was impacted by the COVID-19 pandemic.

(2)Net cash provided by operations was 108% of net income for the year ended December 31, 2020. For the purpose of determining the achievement of the operational cash flow measure, the Compensation Committee authorized the use of adjusted net cash provided by operations, which included the reversal of a timing difference benefit from inventory purchases that we included in our adjusted net cash provided by operations in 2019. We further excluded (i) a $9.8 million benefit in 2020 from deferred payroll taxes as allowed under the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) and (ii) a $37.3 million adjustment related to an investment made in support of vendor programs. Adjusted net cash provided by operations for the year ended December 31, 2020 was 114% of net income.

(3)Each of the NEO’s respective business objectives reflects our focus on continued growth and improvement in execution over our past performance. In each case, these objectives represent stretch goals that each executive may or may not be able to achieve. The table below describes each NEO’s other specific business objectives, the bonus opportunity as a percentage of base salary for each and the payout level achieved as a percentage of base salary for each.


Other Specific Business Objectives by NEO

Objective		Opportunity		Achievement
Mr. Arvan
	§ return on invested capital	10.0	%	10.0	%
	§ organizational planning and development	10.0	%	10.0	%
	§ specific tactical goals	10.0	%	10.0	%
		30.0	%	30.0	%

Mr. Joslin
	§ strategic projects	20.0	%	15.0	%
	§ expense management and profitability improvement	15.0	%	15.0	%
	§ credit and collections initiatives	5.0	%	5.0	%
		40.0	%	35.0	%

Mr. Cook
	§ group profit	65.0	%	64.5	%
	§ working capital management	10.0	%	8.0	%
	§ strategic sourcing	5.0	%	5.0	%
	§ gross margin	2.5	%	—	%
	§ group expense management	2.5	%	2.5	%
		85.0	%	80.0	%

Mr. St. Romain
	§ group profit	40.0	%	40.0	%
	§ working capital management	10.0	%	10.0	%
	§ group expense management	5.0	%	5.0	%
	§ gross margin	2.5	%	—	%
	§ employee attrition reduction	2.5	%	—	%
		60.0	%	55.0	%

Ms. Neil
	§ business development and organizational support	25.0	%	25.0	%
	§ corporate governance and compliance	10.0	%	10.0	%
	§ litigation management	10.0	%	10.0	%
	§ safety and workplace training	5.0	%	5.0	%
		50.0	%	50.0	%

The table below presents the percentage variances between our NEOs’ annual cash award amounts (2020 actual and 2020 plan design) and the peer group median annual cash award amounts, which reflect 2018 or 2019 annual cash awards based on publicly available information as of February 2020 when the Compensation Committee set our 2020 compensation. The actual cash awards for our NEOs were 29% higher than the peer group median given our exceptional results compared to the peer group, including our one-year TSR of 76.5% compared to the peer group median TSR of 25.7%.


Annual Cash Award Above (Below) Peer Group Medians
Position	2020 Actual		2020 Plan Design
CEO	8	%	(46)	%
All Other NEOs	43	%	(29)	%
All NEOs	29	%	(36)	%

Medium-Term Cash Award

(Summary Compensation Table, Column 5)

(Grants of Plan-Based Awards, Columns 3-4)

The Compensation Committee adopted the SPIP to provide senior management with an additional performance-based award contingent upon the achievement of specified earnings objectives. The SPIP is a cash-based, pay-for-performance award program that links our medium-term financial performance with the total cash compensation paid to senior management. The SPIP serves to complement our annual bonus program and the longer-term value creation potential provided by equity awards. Since the SPIP ties a large percentage of total potential compensation directly to our business results, the Compensation Committee believes this program underscores our pay-for-performance philosophy and helps focus executive attention on longer-term strategic goals.

Payouts through the SPIP are based on the three-year compound annual growth rate (CAGR) of our diluted EPS. We believe EPS growth is one of the metrics that has shown a strong correlation with our stock price growth over the long term. The Compensation Committee believes that while the SPIP targets are aggressive, they are reasonable and provide both a fair reward and strong upside potential for our executives.

Under the terms of the SPIP, our NEOs are eligible to earn a maximum cash award of up to 200% of their base salary, with minimum targets based on a three-year EPS CAGR of 10% for grants prior to 2021. The Compensation Committee may authorize EPS adjustments as specified under the SPIP. By way of example, the table below presents the award, expressed as a percentage of an NEO’s salary, to be earned for the three-year performance period beginning January 1, 2020 and ending December 31, 2022. For this 2020 grant, 2019 adjusted diluted EPS of $5.83 serves as the baseline for the performance period.


CAGR	2022 EPS		Salary %	CAGR	2022 EPS		Salary %
10%	$	7.76	50%	16%	$	9.10	120%
11%	7.97		60%	17%	9.34		140%
12%	8.19		70%	18%	9.58		160%
13%	8.41		80%	19%	9.82		180%
14%	8.64		90%	20%	10.07		200%
15%	8.87		100%

The following table presents our three-year EPS CAGR and corresponding payouts as a percentage of base salaries for each of the last three fiscal years.


Three-Year Performance Period	SPIP Payout as a Percentage of NEO Base Salaries(1)		Three-Year EPS CAGR
January 1, 2018 - December 31, 2020(2)	200.0	%	21.1	%
January 1, 2017 - December 31, 2019(3)	67.8	%	11.8	%
January 1, 2016 - December 31, 2018(4)	101.6	%	15.1	%

(1)Mr. Arvan joined our company in January 2017, and he received a pro-rated payout for the performance period ended December 31, 2018.

(2)We calculated the three-year EPS CAGR using 2020 adjusted diluted EPS of $8.42, which excludes a $0.15 impact from non-cash impairments and a $0.70 per diluted share tax benefit from ASU 2016-09.

(3)We calculated the three-year EPS CAGR using 2019 adjusted diluted EPS of $4.86, which excludes a $1.54 per diluted share benefit from the lower federal tax rate under the TCJA and the tax benefit from ASU 2016-09.

(4)We calculated the three-year EPS CAGR using 2018 adjusted diluted EPS of $4.42, which excludes a $1.20 per diluted share benefit from the lower federal tax rate under the TCJA and the tax benefit from ASU 2016-09.

The following table presents currently outstanding SPIP awards:


Grant Year	Three-Year Performance Period	Baseline EPS			EPS for Minimum Payout(4)		EPS for Target Payout(4)		EPS for Maximum Payout (4)
2019	January 1, 2019 - December 31, 2021	$	5.26	(1)	$	7.00	$	8.00	$	9.09
2020	January 1, 2020 - December 31, 2022	$	5.83	(2)	$	7.76	$	8.87	$	10.07
2021	January 1, 2021 - December 31, 2023	$	8.42	(3)	$	9.75	$	11.21	$	14.55

(1)The Compensation Committee set the baseline EPS at $5.26 per diluted share, which excludes a $0.36 per diluted share tax benefit related to ASU 2016-09.

(2)The Compensation Committee set the baseline EPS at $5.83 per diluted share, which excludes a $0.57 per diluted share tax benefit related to ASU 2016-09.

(3)The Compensation Committee set the baseline EPS at $8.42 per diluted share, which excludes a $0.70 per diluted share tax benefit related to ASU 2016-09 and a $0.15 impact from non-cash impairment charges.

(4)Prior to the 2021 SPIP grant, the minimum payout was based on three-year diluted EPS CAGR of 10%, the target payout was based on three-year diluted EPS CAGR of 15%, and the maximum payout was based on three-year diluted EPS CAGR of 20%. For the 2021 SPIP grant, the Compensation Committee considered the extraordinary earnings growth in 2020, which serves as the baseline for the 2021 grant, and reduced the three-year diluted EPS CAGR for the minimum payout to 5% and the three-year diluted EPS CAGR for the target payout to 10%. The three-year diluted EPS CAGR for the maximum payout remains unchanged at 20%. The Compensation Committee believes this adjustment provides both a fair reward and strong upside potential for our executives while maintaining the rigor of the award.

Long-Term Equity Award

(Summary Compensation Table, Column 4)

(Grants of Plan-Based Awards, Column 6)

(Outstanding Equity Awards at Fiscal Year-End)

Equity grants are a key element of our total compensation package. We offer both stock options and performance-based restricted stock awards to our NEOs, both of which provide retention value through the imposition of cliff vesting conditions and also focus our NEOs on Company performance.

The Compensation Committee determines individual equity grant awards based on relevant market data and each respective employee’s responsibility and performance. We believe that restricted stock awards reward performance because the ultimate value of the shares depends on our Company’s long-term performance. Restricted stock awards convey all the rights of a stockholder, including the right to vote and receive dividends, but recipients may not sell or transfer the shares until they are fully vested. Similarly, we believe that long-term equity awards in the form of stock options align executive performance with stockholder interests because employees have a vested interest in our stock performance and the option’s value only appreciates from stock price improvement after the grant date. The Compensation Committee believes that in times of economic volatility, restricted stock awards can play an important role in retention and motivation that stock options alone cannot.

We use the following service-based equity vesting schedules to encourage employee equity holding and employment retention:


Employee’s Length of Service to the Company						Award Vesting Schedule
Less than five years						100% vest five years after the grant date
More than five years						50% vest three years after the grant date 50% vest five years after the grant date

Restricted stock awards to our employees contain performance-based vesting criteria in addition to the service-based vesting criteria discussed above. The awards provide for a three-year performance period for the metric to be achieved. If the performance metric fails to be met, the performance period may be extended; however, if the metric is not met by the end of the extended performance period, then all shares of performance-based restricted stock will be immediately forfeited and canceled for these grants.

Under the performance-based vesting criteria for restricted stock awards granted in 2020, these shares will vest (subject to satisfaction of the service condition) based on our achievement of a three-year ROIC target of 10% established at the beginning of the performance period. We believe ROIC is an important indicator of financial health and company growth and is consistent with our

compensation philosophy that compensation must be linked to continuous improvements in corporate performance. Further, after reviewing our peer companies’ proxy statements, we noted that ROIC was among the most widely used of the financial metrics for performance-based compensation. For more information on our ROIC calculation and 2020 results, please see the “Annual Incentive Plan” section above.

In 2020, the Compensation Committee allowed each of the NEOs to elect to receive his or her equity grant in the form of performance-based restricted stock awards, stock options, or a combination of the two. The Compensation Committee believes that both stock options and restricted stock awards are closely aligned with the interests of stockholders and by offering our NEOs this choice, it serves our objectives of retention and motivation. In 2020, each of our NEOs elected to receive 100% of their respective equity awards in the form of performance-based restricted stock awards.

Based on the total grant date fair value of equity-based awards granted in 2020, the equity-based awards granted to Mr. Arvan as CEO were approximately 3.0 times the average total fair value of the equity-based awards to our other NEOs in recognition of his substantially greater responsibilities. Mr. Arvan’s duties and responsibilities encompassed all aspects of our management and operations and were greater in scope and collectively more significant in nature than those of our other NEOs. Based on the 2020 equity grants and as noted in the table below, 2020 total equity compensation for all of our NEOs was in line with the peer group median for the most recent fiscal year reported.

The table below presents the percentage variances between our 2020 actual total equity compensation amounts and the peer group median total equity compensation amounts. As previously discussed, we valued peer stock option awards based on the number of stock options awarded multiplied by 40% of the option’s exercise price.