Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
As previously disclosed, on August 26, 2020, BMC Stock Holdings, Inc., a
Delaware corporation ("BMC"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") by and among Builders FirstSource, Inc., a Delaware
corporation ("Builders FirstSource"), and Boston Merger Sub I Inc., a Delaware
corporation and a direct, wholly owned subsidiary of Builders FirstSource
("Merger Sub"). Subject to the terms and conditions of the Merger Agreement,
Merger Sub will be merged with and into BMC and BMC will survive the merger as a
wholly owned subsidiary of Builders FirstSource (the "Merger").
On December 14, 2020, the BMC board of directors took actions to preserve
compensation-related corporate income tax deductions for BMC that might
otherwise be disallowed through the operation of Sections 280G and 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), in connection with the
Merger. Specifically, the BMC board of directors approved the vesting of equity
awards and the accelerated payment of short-term cash incentive compensation for
BMC's named executive officers, David E. Flitman, President and Chief Executive
Officer, James F. Major, Jr., Executive Vice President, Chief Financial Officer
and Treasurer, Mike Farmer, Executive Vice President, Operational Excellence,
People and Growth, Timothy D. Johnson, Executive Vice President, General Counsel
and Secretary, and other employees who are not executive officers, as further
described below. These actions will mitigate or eliminate the amount of excise
tax that may be payable by Messrs. Flitman, Major, Farmer and Johnson pursuant
to Sections 280G and 4999 of the Code in certain circumstances.
The BMC board of directors approved the accelerated payment of $1,031,250 for
Mr. Flitman and $337,500 for Mr. Johnson, in each case, which (i) amount will be
paid to the applicable named executive officer on or before December 31, 2020
and (ii) represents payment of a portion of the named executive officer's
respective bonus under the BMC annual bonus plan in respect of the 2020 fiscal
year (the "2020 Bonus") at approximately 65% of the amount that BMC presently
expects would otherwise be paid in early 2021. Any remaining amount of the 2020
Bonus will be paid in the first quarter of 2021.
With respect to Mr. Flitman, the BMC board of directors approved the accelerated
vesting and settlement, as of December 15, 2020, of 116,667 performance-based
restricted stock units ("PSUs") granted on September 26, 2018 to Mr. Flitman
("September PSUs"), which number of September PSUs was determined by assuming
the applicable performance goals were achieved at target-level performance.
Prior to the action by the BMC board of directors, the September PSUs were
scheduled to vest on December 31, 2021.
The BMC board of directors approved the accelerated vesting and settlement, as
of December 15, 2020, of all PSUs granted on March 1 and March 15, 2018 to all
employees who received such grants (including to BMC's named executive officers,
other than Mr. Flitman and Mr. Johnson) ("March PSUs"), which number of March
PSUs was determined assuming the applicable performance goals were achieved at
an estimated level of actual performance on December 31, 2020, as reasonably
determined by the Board, of 200% of target performance, with 25,000 March PSUs
held by Mr. Major vesting and settling and 12,256 March PSUs held by Mr. Farmer
vesting and settling. Prior to the action by the BMC board of directors, the
March PSUs were otherwise scheduled to vest on March 1 or March 15, 2021.
* * *
Cautionary Notice Regarding Forward-Looking Statements
This report, in addition to historical information, contains "forward-looking
statements" (as defined in the Private Securities Litigation Reform Act of 1995)
regarding, among other things, future events or the future financial performance
of BMC Stock Holdings, Inc. ("BMC") and Builders FirstSource, Inc. ("Builders
FirstSource"). Words such as "may," "will," "should," "plans," "estimates,"
"predicts," "potential," "anticipate," "expect," "project," "intend," "believe,"
or the negative of these terms, and words and terms of similar substance used in
connection with any discussion of future plans, actions or events identify
forward-looking statements. Any forward-looking statements involve risks and
uncertainties that are difficult to predict or quantify, and such risks and
uncertainties could cause actual events or results to differ materially from the
events or results described in the forward-looking statements, including risks,
or uncertainties related to the novel coronavirus disease 2019 (also known as
"COVID-19") pandemic and its impact on the business operations of BMC and
Builders FirstSource and on local, national and global economies, the growth
strategies of BMC and Builders FirstSource, fluctuations of commodity prices and
prices of the products of BMC and Builders FirstSource as a result of national
and international economic and other conditions, or the significant dependence
of both companies' revenues and operating results on, among other things, the
state of the homebuilding industry and repair and remodeling activity, lumber
prices and the economy. Neither BMC nor Builders FirstSource may succeed in
addressing these and other risks or uncertainties.
--------------------------------------------------------------------------------
Forward-looking statements relating to the proposed business combination between
BMC and Builders FirstSource include, but are not limited to: statements about
the benefits of the proposed business combination between BMC and Builders
FirstSource, including future financial and operating results; the plans,
objectives, expectations and intentions of BMC and Builders FirstSource; the
expected timing of completion of the proposed business combination; and other
statements relating to the proposed merger that are not historical facts.
Forward-looking statements are based on information currently available to BMC
and Builders FirstSource and involve estimates, expectations and projections.
Investors are cautioned that all such forward-looking statements are subject to
risks and uncertainties, and important factors could cause actual events or
results to differ materially from those indicated by such forward-looking
statements. With respect to the proposed business combination between BMC and
Builders FirstSource, these factors could include, but are not limited to: the
risk that a condition to closing of the business combination may not be
satisfied, including as a result of the failure to obtain approval of
stockholders of BMC and Builders FirstSource on the expected terms and schedule
or at all; the length of time necessary to consummate the proposed business
combination, which may be longer than anticipated for various reasons; the risk
that the businesses will not be integrated successfully; the risk that the cost
savings, synergies and growth from the proposed business combination may not be
fully realized or may take longer to realize than expected; the assumptions on
which the parties' estimates of future results of the combined business have
been based may prove to be incorrect in a number of material ways, which could
result in an inability to realize the expected benefits of the proposed business
combination or exposure to material liabilities; the diversion of management
time on issues related to the business combination; the effect of future
regulatory or legislative actions on the companies or the industries in which
they operate; the risk that the credit ratings of the combined company may be
different from what the parties expect; economic and foreign exchange rate
volatility; changes in the general economic environment, or social or political
conditions, that could affect the businesses; the potential effect of the
announcement or consummation of the proposed business combination on
relationships with customers, suppliers, competitors, lenders, landlords,
management and other employees; the ability to attract new customers and retain
existing customers in the manner anticipated or at all; the ability to hire and
retain key personnel; reliance on and integration of information technology
systems; the risks associated with assumptions the parties make in connection
with the parties' critical accounting estimates and legal proceedings; certain
restrictions during the pendency of the business combination that may affect the
ability of BMC and Builders FirstSource to pursue certain business opportunities
or strategic transactions; and the potential of international unrest, economic
downturn or effects of anticipated tax rates, raw material costs or
availability, benefit or retirement plan costs, or other regulatory compliance
costs.
Additional information concerning other risk factors pertaining to BMC and
Builders FirstSource is also contained in the parties' respective most recently
filed Annual Reports on Form 10-K, subsequent Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and other information filed with the Securities and
Exchange Commission (the "SEC"). Many of these risks and uncertainties are
beyond BMC's or Builders FirstSource's ability to control or predict. Because of
these risks and uncertainties, you should not place undue reliance on these
forward-looking statements. It is not possible to anticipate or foresee all
risks and uncertainties, and investors should not consider any list of risks and
uncertainties to be exhaustive or complete. Furthermore, neither BMC nor
Builders FirstSource undertakes any obligation to update publicly or revise any
forward-looking statements to reflect events or circumstances that may arise
after the date of this report. Nothing in this report is intended, or is to be
construed, as a profit forecast or to be interpreted to mean that the earnings
per share of the common stock of BMC or of the common stock of Builders
FirstSource for the current or any future financial years, or the earnings per
share of the common stock of the combined company, will necessarily match or
exceed the historical published earnings per share of the common stock of BMC or
Builders FirstSource, as applicable. Annualized, pro forma, projected and
estimated numbers are used for illustrative purpose only, are not forecasts and
may not reflect actual results. All subsequent written and oral forward-looking
statements concerning BMC, Builders FirstSource, the proposed business
combination, the combined company or other matters and attributable to BMC,
Builders FirstSource or any person acting on their behalf are expressly
qualified in their entirety by the cautionary statements above.
Additional Information and Where to Find It
In connection with the proposed business combination, Builders FirstSource
previously filed with the SEC a registration statement on Form S-4 (the
"Registration Statement") that includes a prospectus with respect to the shares
of common stock to be issued by Builders FirstSource in the business combination
and a joint proxy statement for BMC's and Builders FirstSource's respective
stockholders (the "Joint Proxy Statement"). This Registration Statement was
declared effective on November 18, 2020. Each of BMC and Builders FirstSource
commenced mailing the definitive Joint Proxy Statement to its stockholders on or
about November 18, 2020 and may file other documents regarding the business
combination with the SEC. This report is not a substitute for the Registration
Statement, the definitive Joint Proxy Statement, or any other document that BMC
or Builders FirstSource may send to its stockholders in connection with the
proposed business combination. This report is for informational purposes only
and does not constitute, or form a part of, an offer to sell or the
--------------------------------------------------------------------------------
solicitation of an offer to sell or an offer to buy or the solicitation of an
offer to buy any securities, and there shall be no sale of securities, in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities Act of 1933,
as amended, and otherwise in accordance with applicable law. INVESTORS AND
SECURITY HOLDERS OF BMC AND BUILDERS FIRSTSOURCE ARE URGED TO READ THE
REGISTRATION STATEMENT, THE DEFINITIVE JOINT PROXY STATEMENT, AND ANY OTHER
RELEVANT DOCUMENTS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) FILED WITH
THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY
CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT BMC, BUILDERS FIRSTSOURCE,
THE PROPOSED BUSINESS COMBINATION AND RELATED MATTERS. Investors and security
holders of BMC and Builders FirstSource may obtain free copies of the
Registration Statement, the definitive Joint Proxy Statement, and other
documents (including any amendments or supplements thereto) containing important
information about BMC and Builders FirstSource filed with the SEC, through the
website maintained by the SEC at www.sec.gov. BMC and Builders FirstSource make
available free of charge at ir.buildwithbmc.com and investors.bldr.com,
respectively, copies of materials they file with, or furnish to, the SEC.
Participants in the Solicitation
BMC, Builders FirstSource, and their respective directors, executive officers,
and other members of management and employees may be deemed to be participants
in the solicitation of proxies from the stockholders of BMC and Builders
FirstSource in connection with the proposed business combination.
The identity of BMC's directors and executive officers and their ownership of
BMC's common stock is set forth in BMC's Annual Report on Form 10-K for the
fiscal year ended December 31, 2019, which was filed with the SEC on
February 27, 2020, and its proxy statement for its 2020 Annual Meeting of
Stockholders, which was filed with the SEC on March 27, 2020.
The identity of Builders FirstSource's directors and executive officers and
their ownership of the common stock of Builders FirstSource is set forth in
Builders FirstSource's Annual Report on Form 10-K for the fiscal year ended
December 31, 2019, which was filed with the SEC on February 21, 2020, and its
proxy statement for its 2020 Annual Meeting of Stockholders, which was filed
with the SEC on April 28, 2020.
Investors may obtain additional information regarding the interest of such
participants and a description of their direct and indirect interests, by
security holdings or otherwise, by reading the Registration Statement, the Joint
Proxy Statement, and other materials filed with the SEC in connection with the
proposed business combination when they become available. You may obtain these
documents free of charge through the website maintained by the SEC at
www.sec.gov and from the websites of BMC or Builders FirstSource as described
above.
--------------------------------------------------------------------------------
© Edgar Online, source Glimpses