Messrs. Reading, McAfee and McDowell’s employment agreements may each be terminated by the Company prior to the expiration of their term. See “Executive Compensation — Post Termination/Change-in-Control Benefits” below for a detailed discussion of the termination and change in control provisions contained in these agreements.
We do not have any executive retention and severance arrangements or change in control agreements with our Named Executive Officers other than those described above.
Compensation of Named Executive Officers
Mr. Reading joined our Company in November 2003 as Chief Operating Officer and, effective November 1, 2004, was promoted to President and Chief Executive Officer. Under his employment agreement with us (see “Employment and Consulting Agreements” above), Mr. Reading’s annual base salary is subject to adjustment by the Compensation Committee. For the last three years, his annual base salary was $577,000 (during 2014), $595,000 (during 2015), $606,900 (during 2016) and further increased to $725,000 effective as of January 8, 2017. During each of 2014, 2015 and 2016, Mr. Reading participated in an executive incentive plan specific to such year that was approved by the Compensation Committee and filed with the SEC on Form 8-K. In accordance with such executive incentive plans, Mr. Reading (i) was granted 40,000 shares of restricted stock and was paid a cash bonus of $721,250 for 2014, and (ii) was granted 22,720 shares of restricted stock and was paid a cash bonus of $124,950 for 2015. As previously disclosed, for 2016, Mr. Reading was paid a cash bonus of $230,622 on April 21, 2017 and was granted 16,350 shares of restricted stock on March 24, 2017.
Mr. McAfee joined our Company in September 2003 as Chief Financial Officer and, effective November 1, 2004, was promoted to Executive Vice President. Under his employment agreement with us (see “Employment and Consulting Agreements” above), Mr. McAfee’s annual base salary is subject to adjustment by the Compensation Committee. For the last three years, his annual base salary was $420,000 (during 2014), $430,000 (during 2015), and $438,600 (during 2016), and further increased to $470,000 effective as of January 8, 2017. During each of 2014, 2015 and 2016, Mr. McAfee participated in an executive incentive plan specific to such year that was approved by the Compensation Committee and filed with the SEC on Form 8-K. In accordance with such executive incentive plans, Mr. McAfee (i) was granted 20,000 shares of restricted stock and was paid a cash bonus of $525,000 for 2014, and (ii) was granted 11,360 shares of restricted stock and was paid a cash bonus of $90,300 for 2015. As previously disclosed, for 2016, Mr. McAfee was paid a cash bonus of $166,668 on April 21, 2017 and was granted 8,175 shares of restricted stock on March 24, 2017.
Mr. McDowell joined our Company in October 2003 as Vice President of Operations overseeing the west region and, effective January 24, 2005, was promoted to Chief Operating Officer. Under his employment agreement with us (see “Employment and Consulting Agreements” above), Mr. McDowell’s annual base salary is subject to adjustment by the Compensation Committee. For the last three years, his annual base salary was $377,000 (during 2014), $400,000 (during 2015) and $408,000 (during 2016), and further increased to $470,000 effective as of January 8, 2017. During each of 2014, 2015 and 2016, Mr. McDowell participated in an executive incentive plan specific to such year that was approved by the Compensation Committee and filed with the SEC on Form 8-K. In accordance with such executive incentive plans, Mr. McDowell (i) was granted 20,000 shares of restricted stock and was paid a cash bonus of $471,250 for 2014, and (ii) was granted 11,360 shares of restricted stock and was paid a cash bonus of $84,000 for 2015. As previously disclosed, for 2016, Mr. McDowell was paid a cash bonus of $155,040 on April 21, 2017 and was granted 8,175 shares of restricted stock on March 24, 2017.
In determining the appropriate compensation for Messrs. Reading, McAfee and McDowell, the Compensation Committee evaluates our overall corporate performance under their leadership, as well as each individual contribution to key strategic, financial and development objectives. The committee utilizes a combination of quantitative measures and qualitative factors in reviewing executive performance and compensation.
Compensation Deductibility Policy
Under Section 162(m) of the Code and applicable Treasury regulations, no deduction is allowed for annual compensation in excess of $1 million paid by a publicly traded corporation to its chief executive officer and the four other most highly compensated officers. Under those provisions, however, there is no limitation on the deductibility of “qualified performance-based compensation.”
In general, our policy is to maximize the extent of tax deductibility of executive compensation under the provisions of Section 162(m) so long as doing so is compatible with the most appropriate methods and approaches for the design and delivery of compensation to our executive officers.