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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
 
 
Filed by the Registrant 
        Filed by a Party other than the Registrant 
Check the appropriate box:
 
  Preliminary Proxy Statement
 
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12
MRC GLOBAL INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
 
Payment of Filing Fee (Check all boxes that apply):
  No fee required.
  Fee paid previously with preliminary materials.
  Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
 
 


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PRELIMINARY PROXY STATEMENT SUBJECT TO COMPLETION

Dated March 27, 2024

 

 

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LOGO

[], 2024

Dear Fellow Stockholders:

As chairman of MRC Global’s Board of Directors, I am proud of the Company’s strong commitment to its investors, customers, employees and sound governance. On behalf of the MRC Global Board of Directors, I thank you for your investment in our Company and your continued support.

We are pleased to invite you to the 2024 Annual Meeting of Stockholders that will be conducted virtually on [], 2024, starting at [] Houston, Texas time. Stockholders will be able to listen, vote and submit questions from any remote location with internet connectivity. A notice of the meeting and a Proxy Statement containing information about the matters to be acted upon are attached to this letter. Information on how to participate in this year’s virtual meeting can be found on page 1. Our Board of Directors recommends that you vote in accordance with our Board’s recommendations on all proposals using the WHITE proxy card.

In March of this year, we added David A. Hager to the Board as a new independent director. During his tenure as CEO and Executive Chairman of Devon Energy, Dave led the execution of a strategy that drove impressive returns for Devon’s shareholders. His breadth and depth of board and business experience, particularly in energy, will bring valuable perspectives to our board as MRC Global continues to invest in our growth drivers, serve our customers and drive to generate significant value for our shareholders. Also in March our Board determined to not re-nominate Barbara J. Duganier for re-election at the 2024 Annual Meeting of Stockholders as she had notified the Board of her desire to not stand for re-election. We want to thank Barbara for her many years of contribution to the Company and wish her the best in all of her future endeavors.

Engine Capital LP (together with its affiliates and related persons, “Engine Capital”) has nominated Bradley T. Favreau and Daniel B. Silvers (collectively, the “Engine Capital Nominees”) for election as directors at the Annual Meeting in opposition to the nominees recommended by our Board of Directors. As a result, you may receive solicitation materials from Engine Capital, including proxy statements and proxy cards, seeking your proxy to vote for Engine Capital’s nominees.

Our Board of Directors does not endorse the Engine Capital Nominees and unanimously recommends that you vote “FOR” the election of the eight nominees proposed by our Board:

 

Deborah G. Adams    Ronald L. Jadin
Leonard M. Anthony    Dr. Anne McEntee
George J. Damiris    Robert J. Saltiel, Jr.
David A. Hager    Robert L. Wood

and “FOR” the other proposals recommended by our Board using the WHITE proxy card. You may receive solicitation materials from Engine Capital, including proxy statements and blue proxy cards. MRC Global is not responsible for the accuracy or completeness of any information


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provided by or relating to Engine Capital or its nominees in solicitation materials filed or disseminated by or on behalf of Engine Capital or any other statements Engine Capital may make.

Our Board strongly urges you to discard and NOT to vote using any blue proxy card sent to you by Engine Capital. If you have already submitted a blue proxy card, you can revoke the proxy and vote for our Board’s nominees and on the other matters to be voted on at the Annual Meeting by marking, signing and dating the enclosed WHITE proxy card and returning it in the enclosed postage-paid envelope or by voting via Internet by following the instructions on your WHITE proxy card, WHITE voting instruction form or notice. Only your latest validly executed proxy will count, and any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in the accompanying proxy statement.

PLEASE NOTE THAT THIS YEAR, YOUR WHITE PROXY CARD LOOKS DIFFERENT. RECENTLY ADOPTED NEW PROXY RULES REQUIRE THE COMPANY’S WHITE PROXY CARD TO LIST THE ENGINE CAPITAL NOMINEES IN ADDITION TO OUR BOARD’S NOMINEES. PLEASE MARK YOUR WHITE PROXY CARD CAREFULLY AND VOTE “FOR” ONLY THE EIGHT NOMINEES AND PROPOSALS THAT OUR BOARD RECOMMENDS.

Your vote is extremely important no matter how many shares you own. Whether or not you expect to attend the meeting, please promptly use your WHITE proxy card to vote by proxy over the Internet or by mail. If you have any questions or require any assistance with voting your shares, please call MRC Global’s proxy solicitor:

Morrow Sodali LLC

430 Park Ave., 14th Floor

New York, NY 10022

Telephone: (203) 658-9400

Email: MRC@info.morrowsodali.com

Thank you for being a stockholder and for the trust and continued interest you have in MRC Global Inc.

Best regards,

/s/ Robert L. Wood

Robert L. Wood

Chairman of the Board

 

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Notice of 2024 Virtual Annual Meeting of Stockholders

 

Date and Time

[], 2024

[] Houston, Texas time

 

Virtual Only Meeting

No physical meeting location; See Voting Instructions for Stockholders on page 1.

 

Items to be Voted On

1.

  Election of 8 Company director nominees: Deborah G. Adams, Leonard M. Anthony, George J. Damiris, David A. Hager, Ronald L. Jadin, Dr. Anne McEntee, Robert J. Saltiel, Jr. and Robert L. Wood

2.

  Consider and act upon an advisory approval of a non-binding resolution approving the Company’s named executive officer compensation.

3.

  Consider and act upon the ratification of the appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for 2024.

4.

  Approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation.

5.

  Act on any other business that may properly come before the Annual Meeting or any reconvened meeting after adjournment.

 

How to Vote in Advance

 

Your vote is very important. Even if you intend to be present virtually at the Annual Meeting, please promptly vote in one of the following ways so that your shares may be represented and voted at the Annual Meeting:

 

Advance Voting Methods

 

   

LOGO

   Internet – Follow online instructions on your Proxy Card and vote at []
   

LOGO

  

Mail - Complete, sign, date and return your proxy card or voting instruction form.

 

 

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be Held on [], 2024.

 

MRC Global’s proxy materials including the Proxy Statement and 2023 Annual Report for the fiscal year ended December 31, 2023, are available and all future soliciting materials will be available, at www.viewourmaterial.com/mrc.

 

 

 

Who Can Vote?

You can vote at the virtual Annual Meeting if you were a holder of record of the Company’s common or preferred stock at the close of business on March 25, 2024.

Changes to Board Composition

In March 2024, the Company added David A. Hager to the Board. Also in March 2024, the Board determined to not re-nominate Barbara J. Duganier for re-election at the 2024 Annual Meeting of Stockholders as she had notified the Board of her desire to not stand for re-election at the 2024 Annual Meeting of Stockholders. Effective as of the end of Ms. Duganier’s term of office, the Board has decreased the size of the Board from ten to nine directors.

Voting Instructions

If you plan to participate in the virtual 2024 Annual Meeting of Stockholders, please see the instructions on page 1 of the Proxy Statement.


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Voting by internet or by returning your proxy card or voting instruction form in advance of the 2024 Annual Meeting of Stockholders does not deprive you of your right to attend the virtual meeting.

By Order of the Board of Directors,

/s/ Daniel J. Churay

Daniel J. Churay

Executive Vice President – Corporate Affairs,

General Counsel and Corporate Secretary

[], 2024

MRC Global Inc.

1301 McKinney Street, Suite 2300

Houston, Texas 77010

 

 

 

 

 

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TABLE OF CONTENTS

 

 

 

     Page  

INSTRUCTIONS FOR THE VIRTUAL ANNUAL MEETING

     1  

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FROM GAAP

     3  

PROXY SUMMARY

     6  

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

     15  

BACKGROUND TO THE SOLICITATION

     22  

SECURITY OWNERSHIP

     27  

Directors and Executive Officers

     27  

Certain Beneficial Owners

     28  

Preferred Stock Issuance

     29  

PROPOSAL I: ELECTION OF DIRECTORS

     32  

Knowledge, Skills and Experience of Nominees Plus our Designated Director

     34  

Certain Information Regarding Nominees

     35  

Director Designated by the Holder of the Company’s Preferred Stock

     42  

Director Not Standing for Election

     43  

CORPORATE GOVERNANCE MATTERS

     44  

Corporate Governance Guidelines

     44  

Strategic Planning

     44  

Board Membership and Qualifications

     44  

Board Diversity

     45  

Process for Identifying and Adding New Directors

     45  

Board Annual Self-Assessment and Continuing Education

     46  

Communications with Directors

     46  

Code of Ethics

     47  

Director Independence

     47  

Board Leadership Structure

     47  

CEO and Senior Management Succession Planning

     48  

Director Attendance at Meetings of the Board, Committees and Annual Meeting of Stockholders

     48  

The Board’s Role in the Oversight of Risk Management

     48  

Board Oversight of Cybersecurity and Information Security Risk

     50  

Board Oversight of ESG Risk

     51  

Information on Standing Committees of the Board

     51  

No Legal Proceedings

     53  

Non-Employee Director Compensation Table

     53  

COMPENSATION DISCUSSION AND ANALYSIS

     55  

Executive Summary

     55  

2023 Company Performance Highlights

     56  

2023 Executive Compensation Decisions

     58  

Overview of the Company’s Executive Compensation Design

     60  

Participants in the Compensation Process

     64  

 

 

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   i    2024 Proxy Statement


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2023 Executive Compensation Program

     65  

Realized Pay

     72  

Other Matters Related to Compensation

     73  

Compensation & Human Capital Committee Report

     76  
PROPOSAL II: ADVISORY APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION      77  

Summary Compensation Table for 2023

     78  

Grants of Plan-Based Awards in Fiscal Year 2023

     79  

Outstanding Equity Awards at 2023 Fiscal Year-End

     80  

Option Exercises and Stock Vested During 2023

     81  

CEO PAY RATIO

     81  

PAY VERSUS PERFORMANCE DISCLOSURE

     82  

Employment and Other Agreements

     84  

Potential Payments upon Termination or Change in Control

     85  

Change in Control

     89  

Certain Relationships and Related Transactions

     91  

Related Party Transaction Policy

     91  
REPORT OF THE AUDIT COMMITTEE      92  

Principal Accounting Fees and Services

     94  

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

     94  
PROPOSAL III: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM      96  
PROPOSAL IV: AMEND THE COMPANY’S AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO REFLECT NEW DELAWARE LAW PROVISIONS REGARDING OFFICER EXCULPATION      97  

SUSTAINABILITY AND SOCIAL RESPONSIBILITY

     99  

INCORPORATION BY REFERENCE

     102  

OTHER MATTERS

     102  

ACCESS TO REPORTS AND OTHER INFORMATION

     102  

 

 

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   ii    2024 Proxy Statement


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INSTRUCTIONS FOR THE VIRTUAL ANNUAL MEETING

 

 

Our 2024 Annual Meeting of Stockholders, or the Annual Meeting, will be a completely virtual meeting. There will be no physical meeting location.

How Can I Participate in the Virtual Annual Meeting?

The Annual Meeting will be held online via a live webcast at []. You are entitled to participate in the Annual Meeting only if you were a holder of Common or Preferred Stock as of the close of business on the Record Date, or your authorized representative or you hold a valid proxy for the Annual Meeting. Stockholders must pre-register to attend or vote by ballot at the Annual Meeting.

You may only participate in the virtual meeting by registering in advance at [] prior to the deadline of [] a.m. Central Time on [], 2024. Please have your voting instruction form, proxy card or other communication containing your control number available and follow the instructions to complete your registration request.

If you are a beneficial holder, you must obtain a “legal proxy” from your broker, bank or other nominee in order to vote at the Annual Meeting. Upon completing registration, participants will receive further instructions via e-mail, including unique links that will allow them to access the meeting. Beneficial holders do not require a “legal proxy” to attend the meeting (but not vote at the meeting) and can do so by following the instructions above.

If you have any difficulty following the registration process, please email Morrow Sodali at MRC@info.morrowsodali.com.

Even if you plan to attend the virtual Annual Meeting, we recommend you also vote by proxy in advance of the Annual Meeting so that your vote will be counted if you later are unable or decide not to attend the virtual Annual Meeting.

Contested Election

Engine Capital has nominated Bradley T. Favreau and Daniel B. Silvers (collectively, the “Engine Capital Nominees”) for election as directors at the Annual Meeting in opposition to the nominees that our Board of Directors recommends. In accordance with our bylaws, all director nominees will be elected by a plurality of votes cast and the eight director nominees who receive the greatest number of votes will be elected to our Board at the Annual Meeting. Any shares not voted “FOR” a particular director nominee as a result of a “WITHHOLD” vote or a broker non-vote will not be counted in that director nominee’s favor and will not otherwise affect the outcome of the election (except to the extent they otherwise reduce the number of shares voted “FOR” such director nominee).

All director nominees that our Board recommends have given their consent to be named as nominees for election and have indicated their intention to serve if they are elected. Our Board does not anticipate that any of our director nominees will be unable to serve as a director. If, at the time of the Annual Meeting, any nominee is unable to serve as a director, the discretionary authority provided in the enclosed proxy will be exercised to vote for a substitute candidate that our Board designates, unless the Board chooses to reduce its size.

We encourage you to vote by proxy using your WHITE proxy card or WHITE voting instruction form as promptly as possible, even if you plan to attend our Annual Meeting. If you have any questions about voting by proxy using your WHITE proxy card or WHITE voting instruction form, please contact Morrow Sodali LLC, our proxy solicitation firm, at MRC@info.morrowsodali.com or (203) 658-9400. Our Board unanimously recommends that you use the WHITE proxy card or WHITE voting instruction form to vote “FOR” only each of our Board’s eight director nominees.

As a result, you may receive solicitation materials from Engine Capital, including proxy statements and proxy cards, seeking your proxy to vote for the Engine Capital Nominees.

 

 

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   1    2024 Proxy Statement


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Our Board does NOT endorse any of the Engine Capital Nominees and unanimously recommends that you disregard any materials, including any blue proxy card, that may be sent to you by Engine Capital. Importantly, voting on a blue proxy card to “withhold” with respect to any of the Engine Capital Nominees is NOT the same as voting “FOR” our Board’s director nominees. This is because a vote on a blue proxy card to “withhold” with respect to any of the Engine Capital Nominees will revoke any WHITE proxy card or WHITE voting instruction form you may have previously submitted. To support our Board’s director nominees, you should use the WHITE proxy card or WHITE voting instruction form to vote “FOR” only each of our Board’s eight director nominees.

 

 

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   2    2024 Proxy Statement


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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES FROM GAAP

 

 

In this Proxy Statement, we present certain financial measures that deviate from measures calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). These non-GAAP measures are not necessarily better than the nearest GAAP measure but provide additional information as described below. For more complete information on the 2023 financial and operating performance of MRC Global Inc. (“MRC Global”, the “Company”, “we”, “us” or “our”), please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”) that was filed with the U.S. Securities and Exchange Commission (the “SEC”) and can be found on the internet at www.viewourmaterial.com/mrc. This annual report provides a complete reconciliation of certain of the non-GAAP measures as described below.

Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure, and we define adjusted EBITDA as net income plus interest, income taxes, depreciation and amortization, amortization of intangibles and certain other expenses, including non-cash expenses (such as equity-based compensation, severance and restructuring, changes in the fair value of derivative instruments, long-lived asset impairments, including goodwill and intangible assets), inventory-related charges incremental to normal operations and plus or minus the impact of our last-in, first-out (“LIFO”) inventory costing methodology. We believe adjusted EBITDA provides investors a helpful measure for comparing our operating performance with the performance of other companies that may have different financing and capital structures or tax rates. We believe it is a useful indicator of our operating performance without regard to items, such as amortization of intangibles, which can vary substantially from company to company depending upon the nature and extent of acquisitions. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. We believe that net income is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to adjusted EBITDA. See the following table for a detailed reconciliation of net income to adjusted EBITDA.

 

     ($ in millions)  
     Year Ended December 31,  
     2021     2022      2023  

 Net Income (loss)

   $ (14   $ 75      $ 114  

 Income tax expense

     —        35        39  

 Interest expense

     23       24        32  

 Depreciation and amortization

     19       18        19  

 Amortization of intangibles

     24       21        21  

 Facility closures

     1       —         —   

 Severance and restructuring

     1       1        —   

 Employee separation

     1       —         —   

 Non-recurring IT related professional fees

     —        —         1  

 Increase in LIFO reserve

     77       66        2  

 Equity-based compensation expense

     12       13        14  

 Customer settlement

     —        —         3  

 Activism response legal and consulting costs

     —        —         1  

 Asset disposal

     —        —         1  

 Foreign currency losses

     2       8        3  
  

 

 

   

 

 

    

 

 

 

 Adjusted EBITDA

   $ 146     $ 261      $ 250  
  

 

 

   

 

 

    

 

 

 

 

 

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   3    2024 Proxy Statement


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Adjusted Gross Profit. Adjusted gross profit is a non-GAAP financial measure. We define adjusted gross profit as sales, less cost of sales, plus depreciation and amortization, plus amortization of intangibles plus inventory-related charges incremental to normal operations, and plus or minus the impact of our LIFO inventory costing methodology. We present adjusted gross profit because we believe it is a useful indicator of our operating performance without regard to items, such as amortization of intangibles, which can vary substantially from company to company depending upon the nature and extent of acquisitions. Similarly, the impact of the LIFO inventory costing method can cause results to vary substantially from company to company depending upon whether they elect to utilize LIFO and depending upon which method they may elect. We use adjusted gross profit as a key performance indicator in managing our business. We believe that gross profit is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to adjusted gross profit. See the following table for a detailed reconciliation of gross profit to adjusted gross profit.

 

     ($ in millions)  
     Year Ended December 31,  
            % of            % of            % of  
     2021      Revenue     2022      Revenue*     2023      Revenue*  

 Gross profit, as reported

   $ 417        15.6   $ 610        18.1   $ 690        20.2

 Depreciation and amortization

     19        0.7     18        0.5     19        0.6

 Amortization of intangibles

     24        0.9     21        0.6     21        0.6

 Increase in LIFO reserve

     77        2.9     66        2.0     2        0.1
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 Adjusted Gross Profit

   $ 537        20.1   $ 715        21.3   $ 732        21.5
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

 

*

Does not foot due to rounding

Net Debt. Net debt and related leverage metrics may be considered non-GAAP measures. We define net debt as total long-term debt, including the current portion, minus cash. We define our leverage ratio as net debt divided by adjusted EBITDA (as defined above). We believe net debt is an indicator of the extent to which the Company’s outstanding debt obligations could be satisfied by cash on hand and a useful metric for investors to evaluate the Company’s leverage position. We believe the leverage ratio is a commonly used metric that management and investors use to assess the borrowing capacity of the Company. We believe total long-term debt (including the current portion) is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to net debt.

The following table reconciles total long-term debt (including the current portion), as derived from our consolidated financial statements, with net debt (in millions) and shows the calculation of our leverage ratio:

 

     ($ in millions)  
     Year Ended December 31,  
     2021      2022      2023  

 Long-term debt, net

   $ 295      $ 337      $ 9  

 Plus: current portion of debt

     2        3        292  
  

 

 

    

 

 

    

 

 

 

 Total debt

     297        340        301  

 Less: Cash

     48        32        131  
  

 

 

    

 

 

    

 

 

 

 Net Debt

   $ 249      $ 308      $ 170  
  

 

 

    

 

 

    

 

 

 

 Adjusted EBITDA

   $ 146      $ 261      $ 250  

 Leverage ratio (net debt : adjusted EBITDA)

     1.7x        1.2x        0.7x  
  

 

 

    

 

 

    

 

 

 

RANCE Adjusted for LIFO. Return on average net capital employed (“RANCE”) adjusted for LIFO is a non-GAAP measure. We define RANCE adjusted for LIFO as RANCE, plus or minus the impact of the

 

 

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benefit or expense of our LIFO accounting. We believe that RANCE, calculated in accordance with GAAP without the adjustment, is the financial measure calculated and presented in accordance with GAAP that is most directly comparable to RANCE adjusted for LIFO. RANCE adjusted for LIFO is not necessarily a better measure of return. However, we believe that it provides a good measure of our return without the impact of our LIFO accounting for inventory. Inflationary and deflationary conditions, which are beyond management’s control, create swings in LIFO expense or benefit. The following table reconciles RANCE to RANCE adjusted for LIFO.

 

     ($ in thousands)  
     2021     2022     2023     2020–23  

 Net Income (Loss) before Preferred

   $ (14,100   $ 74,853     $ 113,587     $ 174,340  

 Interest

     23,205       23,982       32,565     $ 79,752  

 Interest, net tax

     18,332       18,946       25,727     $ 63,005  
  

 

 

   

 

 

   

 

 

   

 

 

 

 NOPAT before Preferred

   $ 4,232     $ 93,799     $ 139,314     $ 237,345  
  

 

 

   

 

 

   

 

 

   

 

 

 

 Debt

   $ 297,347     $ 339,974     $ 300,965     $ 330,409  

 Equity

     678,407       741,477       843,077       742,013  
  

 

 

   

 

 

   

 

 

   

 

 

 

 Net Capital

   $ 975,754     $ 1,081,451     $ 1,144,042     $ 1,072,422  
  

 

 

   

 

 

   

 

 

   

 

 

 

 Annual RANCE %

     0.4     9.1     12.5     7.4
  

 

 

   

 

 

   

 

 

   

 

 

 

 LIFO

   $ 76,893     $ 66,335     $ 2,193     $ 145,423  

 LIFO, net tax

     60,745       52,405       1,732       114,884  
  

 

 

   

 

 

   

 

 

   

 

 

 

 NOPAT before Preferred adj. for LIFO

   $ 64,977     $ 146,204     $ 141,046     $ 352,229  
  

 

 

   

 

 

   

 

 

   

 

 

 

 RANCE % adj. for LIFO

     6.2     13.5     12.4     10.7
  

 

 

   

 

 

   

 

 

   

 

 

 

 

 

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PROXY SUMMARY

 

 

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement before voting. For more complete information on the 2023 financial and operating performance of MRC Global Inc. (“MRC Global”, the “Company”, “we”, “us” or “our”), please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “Form 10-K”) that was filed with the SEC and can be found on the internet at www.viewourmaterial.com/mrc.

Time of Virtual Annual Meeting

[], 2024

[] Houston, Texas time

We will hold a virtual meeting of stockholders. Stockholders may participate virtually by typing [•] into your computer’s browser window. Please see Instructions for the virtual Annual Meeting on page 1.

Voting Matters

Stockholders are being asked to vote on the following matters at the 2024 Annual Meeting of Stockholders:

 

 

 Item I

 

    

 

The election of 8 Company director nominees:

 

  

 

Page 32   

 

    

Board Recommendation: FOR each of the Company’s nominees

 

  
 Item II     

Approval, on an advisory basis, of the Company’s Named Executive Officer Compensation

 

   Page 77   
     Board Recommendation: FOR   
 Item III     

Ratification of the appointment of Ernst & Young LLP as independent auditors for 2024

 

   Page 96   
     Board Recommendation: FOR   
 Item IV     

Amendment of the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation

 

   Page 97   
    

Board Recommendation: FOR

 

  

 

 

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  Company Director Nominees

 

 Name   Age at
Annual
Meeting
  Director
Since
 

Professional

Background

  Independent   Committee
Membership &
Positions

 Robert L. Wood

  70   2015  

Former Chairman, President & CEO of Chemtura Corporation

 

    Chairman of the Board

 Deborah G. Adams

  63   2017  

Former Senior Vice President of Phillips 66

 

    Compensation (Chair) Governance

 Leonard M. Anthony

  69   2008  

Former CEO of WCI Steel, Inc. & former CFO of Dresser-Rand Group, Inc.

 

    Audit Compensation

 George J. Damiris

  64   2021  

Former CEO of HollyFrontier Corporation and Holly Energy Partners

 

    Compensation Governance (Chair)

 David A. Hager

  67   2024  

Former CEO & Executive Chairman of Devon Energy Corporation

 

    Audit Governance

 Ronald L. Jadin

  63   2021  

Former CFO of W.W. Grainger, Inc.

 

    Audit
(Chair) Governance

 Anne McEntee

  53   2022  

Managing Director - Asset Management with Wren House Infrastructure Management Ltd., Former CEO of General Electric Company’s Digital Services unit of GE Renewable Energy

 

    Audit Compensation

 Robert J. Saltiel, Jr.

  61   2021  

President & CEO of MRC Global, Former CEO of Key Energy Services, Inc. and Atwood Oceanics, Inc.

 

    CEO

In the chart above, “Compensation” refers to the Board’s Compensation & Human Capital Committee, and “Governance” refers to the Board’s Environmental, Social, Governance & Enterprise Risk Committee

  Preferred Stock Designated Director

 

 Henry Cornell

  68   2018  

Founder & Senior Partner of Cornell Capital LLC and former Vice Chairman of the Merchant Banking Division of Goldman Sachs Co.

 

    Independent Director  

 

 

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Key Statistics about our Director Nominees

 

   

Independence

  CEO Experience   Board Refreshment

88%

  63%   5

7 of 8 Director Nominees are
Independent, including our
Chairman of the Board

  5 of 8 Director Nominees are
Current or Former CEOs
  New Directors have been
added since 2021
   

Gender Diversity

  Overall Diversity   Average Tenure

25%

  38%   4.6 Years

2 of 8 Director Nominees
are Females

  3 of 8 Director Nominees are
Women or from a Minority Group
 
   
    50%  
 

 

  2 of 4 Board Leadership Positions (including the Chairman of the Board)
are
Women or from a Minority Group
 

 

 

 

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Governance Highlights

Our Board of Directors (the “Board”) oversees the development and execution of MRC Global’s strategy. Some examples of the robust corporate governance practices and procedures that the Board and MRC Global through its Executive Leadership Team have adopted are listed below.

 

Board   Structure &   Governance        

 

 

 

 

 

 

Nine of our directors and seven of our eight director nominees are independent.

 

     

 

 

 

 

 

 

Each of the Audit, Compensation & Human Capital and Environmental, Social, Governance & Enterprise Risk (“ESG & Enterprise Risk”) Committees is comprised entirely of independent directors.

 

         

The directors regularly hold executive sessions at each Board and committee meeting.

 

         

We have a mandatory retirement policy for directors.

 

         

Annually, we review our committee charters and Corporate Governance Guidelines.

 

         

Our non-executive Chairman is independent and separate from our CEO.

 

         

All directors are elected annually based on a plurality of the votes cast in uncontested elections, with a director resignation policy requiring a letter of resignation from a director if a director receives a greater number of “withhold” votes than “for” votes in the director’s election other than the one director designated by the holder of the Company’s preferred stock as described below in “Security Ownership—Preferred Stock Issuance—Board Representation Rights.”

 

         

The Board and each committee annually conduct a thorough self-assessment process focused on Board or committee performance, respectively.

 

         

We are committed to Board refreshment. Since 2021, we have added five new independent directors.

 

         

Our Board is committed to diversity of backgrounds, experience and perspectives. As Ms. Duganier leaves the Board, the Board expects to consider additional female candidates for the Board.

 

         

Our Board and committees actively review risks and oversee risk management, including enterprise, environmental, social and governance (“ESG”) and cyber security risks.

 

         

Our Board is actively engaged in overseeing talent and long-term succession planning for senior leadership and directors.

 

       

Corporate  

Responsibility  

         

We have a comprehensive ethics program with standards of business conduct that help guide and promote good governance, responsible business practices and the highest standards of integrity.

 

         

Our Board and our ESG & Enterprise Risk Committee oversee management’s implementation of our ESG policies, programs and standards and there is a dedicated Sustainability Leader on the Executive Leadership Team.

 

       
Stock   Ownership            

We have stock ownership guidelines of 5x the annual cash retainer for our nonemployee directors.

 

         

We have stock ownership guidelines of 5x base salary for the CEO and 3x base salary for other named executive officers (“NEOs”).

 

         

We prohibit hedging and pledging of our Company securities by directors and executive officers.

 

 

 

 

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2023 Financial and Operational Highlights

MRC Global is the leading global distributor of pipe, valves, fittings (“PVF”) and other infrastructure products and services to diversified energy, industrial and gas utility end-markets. We provide innovative supply chain solutions, technical product expertise and a robust digital platform to customers globally through our leading position across each of our diversified end-markets including the following sectors:

 

 

Gas Utilities: gas utilities (storage and distribution of natural gas)

 

 

DIET: downstream, industrial and energy transition (crude oil refining, petrochemical and chemical processing, general industrials and energy transition projects)

 

 

PTI: production and transmission infrastructure (exploration, production and extraction, gathering, processing and transmission of oil and gas)

Financial and operational highlights from fiscal year 2023 include:

 

   Sales of $3.41 billion, compared to $3.36 billion in 2022

          

   Cash flow provided by operations of $181 million

   Net income attributable to common stockholders of $90 million, a 76% increase over $51 million in 2022

 

   Adjusted EBITDA of $250 million, 7.3% of sales

          

   Gross profit percentage of 20.2% of sales

 

   Adjusted gross profit percentage of 21.5% of sales - two consecutive years above 21%

   Total debt of $301 million, and net debt of $170 million (both as of December 31, 2023)

 

   — the lowest net debt since the Company’s initial public offering (“IPO”) in 2012

          

   Ended the year with a leverage ratio of 0.7x

 

   — the lowest since the Company’s IPO in 2012

   Generated 44% of the Company’s revenue through MRCGO digital platform/e- commerce

          

   96% of 2023 valve sales were “Low-E” valves, dramatically reducing fugitive emissions of methane and other greenhouse gases.

 

*

See “Reconciliation of Non-GAAP Financial Measures From GAAP” above for information about the non-GAAP measures: adjusted gross profit percentage, adjusted EBITDA, net debt and leverage ratio.

 

 

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2023 Executive Compensation Highlights

“Pay for Performance” Executive Compensation Strategy

MRC Global’s executive compensation program is designed to attract, motivate and retain our executives, including our named executive officers (“NEOs”), who are critical to the Company’s long-term success. Our executive compensation strategy is “pay for performance” and is focused on:

 

 

motivating executive officers to increase the economic value of the Company by strengthening our position as a leading global distributor of infrastructure products and value-added services provider and by aggressively pursuing profitable growth; and

 

 

aligning our executive officers’ interests and actions with the interests of our stockholders and key stakeholders.

We provide our executive officers with a compensation package that consists primarily of:

 

 

a base salary,

 

 

short-term incentive (“STI”) in the form of annual cash payments based upon achievement of certain performance metrics, and

 

 

long-term incentive (“LTI”) in the form of time-vested restricted stock units (“RSUs”) and performance share units (“PSUs”), which pay out based upon achievement of certain performance metrics over a three-year performance period.

Our Compensation & Human Capital Committee, which is composed solely of independent directors, believes in a pay for performance philosophy. While our Compensation & Human Capital Committee sets target compensation for the executive officers each year based on market practices and internal considerations, the executive officers’ realized compensation is strongly dependent on the Company’s performance relative to pre-determined and measurable financial and safety metrics and stock price performance.

 

 

As illustrated in the following graphic, a substantial portion of our target compensation for executive officers is at risk.

 

 

The 2023 STI payments for our NEOs were based on the achievement of the following performance metrics:

 

   

87.5% on the Company’s adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) and

 

   

12.5% on two safety targets.

 

 

The 2023 LTI equity grant consisted of time vested RSUs and PSUs for NEOs. Vesting of the PSUs depends on performance based upon the Company’s total shareholder return (“TSR”) relative to companies in the OIH1 index plus DNOW Inc. plus the Russell 2000 (IWM – iShares Russell 2000 ETF) for each year in the three-year period ended December 31, 2025 as well as the full three-year period. The time vested RSUs provide retention value, and the value of the units is also tied to performance because it increases or decreases depending on our stock price at vesting. See “Pay Versus Performance Disclosure”. The time vested RSUs vest ratably on each anniversary of the grant date over a three-year period.

 

1 

The OIH Index is the Van Eck Oil Services ETF.

 

 

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Target Compensation

The following illustration represents the elements of our 2023 compensation package at target to reflect the CEO’s compensation and an average for the other active NEOs.

 

 

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The CEO’s Compensation at Risk has increased from 84% in 2022 to 85% in 2023, and the average Compensation at Risk for the other NEOs has increased from 66% to 71% from 2022 to 2023.

 

 

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Key Features of Our Executive Compensation Program

 

 

What We Do

 

 

 

We pay for performance – 85% of CEO ongoing pay and an average of 71% of other active NEOs’ 2023 target compensation is at risk, and target total direct compensation is achieved only when performance objectives are achieved.

 

 

 

 

We benchmark pay relative to the market and review the peer group used for market benchmarking on an annual basis.

 

 

 

 

We set objectives for our annual STI plan that are measurable, determined in advance and aligned with stockholder interests. Our 2023 STI targets were stretch targets; our 2023 adjusted EBITDA target was $300 million compared to 2022 actual results of $261 million, a 15% increase, and the 2023 safety targets were more stringent than our 2022 targets.

 

 

 

 

Our LTI equity compensation plan is designed to be strongly tied to Company performance. We award PSUs to tie payouts to our relative TSR versus other comparator companies. We award RSUs to tie realized value to stock price and to provide retention value.

 

 

 

 

We have a 100% cap on PSU payouts based on relative TSR if the Company’s TSR is negative.

 

 

 

 

Beginning in 2022, we added a Russell 2000 ETF to the companies used in the relative TSR calculation for PSUs to better reflect our performance against the broader market and acknowledge the broader competition for investor capital. In 2023, we replaced the OSX with the OIH in our comparator group that is used to calculate relative TSR for our PSUs to better reflect our markets for investor capital.

 

 

 

 

Beginning in 2024, our RSUs and PSUs will no longer vest solely upon a Change in Control. Our agreements for the awards have been modified to reflect “double-trigger” vesting.

 

 

 

 

We have equity ownership guidelines that provide for significant executive officer equity ownership.

 

 

 

 

We have adopted a new Compensation Clawback Policy to align with new New York Stock Exchange and SEC rules, which replaces our prior longstanding policy.

 

 

 

 

We have a fully independent Compensation & Human Capital Committee.

 

 

 

 

Our Compensation & Human Capital Committee engages a compensation consultant that is independent of management and the Company.

 

 

 

 

We have an annual Say-on-Pay vote.

 

 

What We Don’t Do

 

 

LOGO

 

 

 

 

No guaranteed minimum incentives

 

 

LOGO

 

 

 

 

No excise tax gross ups

 

 

LOGO

 

 

 

 

No re-pricing of stock options or stock appreciation rights permitted without approval from stockholders

 

 

LOGO

 

 

 

 

No hedging or derivative transactions with respect to our shares by executive officers or directors permitted

 

 

LOGO

 

 

 

 

No pledging of MRC Global securities by executive officers or directors permitted

 

SAY-ON-PAY

 

81%

APPROVAL

  Stockholders showed support of our executive compensation programs, with 81% of the votes cast for the approval of the “say-on-pay” proposal at our 2023 annual meeting of stockholders.

 

 

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Deadlines for Submitting Stockholder Proposals for 2025 Annual Meeting of Stockholders

The Corporate Secretary of the Company must receive proposals for inclusion in our Proxy Statement for our 2025 annual meeting of stockholders in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), no later than [], 2024.

The Corporate Secretary of the Company must receive notice of a stockholder nomination for candidates for the Board or any other business to be considered at our 2025 annual meeting of stockholders no earlier than the close of business on [], 2025, and no later than the close of business on [], 2025. Changes to the date of our annual meeting and the date of the first announcement of such meeting may change these dates, as set forth in our bylaws and further discussed below. Copies of our bylaws are available on our website at https://www.mrcglobal.com, by clicking on “Investors” in the menu, then “Corporate Governance”, then “Documents and Charters”.

 

 

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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING

 

 

Why am I receiving these materials?

 

 

We are furnishing this Proxy Statement to you as part of a solicitation by the Board of Directors of MRC Global Inc., a Delaware corporation, for use at our 2024 virtual Annual Meeting of Stockholders (the “Annual Meeting”) and at any reconvened meeting after an adjournment or postponement of the Annual Meeting. We will hold the Annual Meeting online only. There will be no physical meeting location. The Annual Meeting will be held on [], 2024, at [] a.m. Houston, Texas time. Please see Instructions for the virtual Annual Meeting on page 1.

We have two classes of stock: common stock, $.01 par value per share (“common stock”), and 6.5% Series A Convertible Perpetual Preferred Stock (“preferred stock”, and together with the common stock, “stock”). You are receiving these materials because, at the close of business on March 25, 2024 (the “Record Date”), you owned shares of stock. All stockholders of record on the Record Date are entitled to attend and vote at the Annual Meeting. Each common stockholder will have one vote on each matter for every share of common stock owned on the Record Date. On the Record Date, we had a total of 105,508,677 shares of common stock, of which 24,216,330 shares are held in treasury, resulting in 85,206,668 shares of common stock entitled to vote at the meeting. Any shares held in our treasury on the Record Date are not considered outstanding and will not be voted or considered present at the meeting. On the Record Date, we had a total of 363,000 shares of preferred stock outstanding entitled to 20,302,009 votes at the Annual Meeting, which number is equal to the number of shares of common stock into which the shares of preferred stock could be converted on the Record Date, rounded to the nearest share. Holders of the common stock and the preferred stock vote (on an as-converted basis) together on all matters as a single class.

How is MRC Global distributing proxy materials? Is MRC Global using the SEC’s “Notice and Access” rule?

 

 

We expect our proxy materials including this Proxy Statement, our WHITE proxy card and our 2023 Annual Report (the “Annual Report”) (which includes the Form 10-K), to first be mailed on or about [] and to first be made available to stockholders at that time. Copies of the Form 10-K, as well as other periodic filings by the Company with the SEC, are also available on our website at [] by clicking on “INVESTOR” and “SEC Filings”. The information included in our website is not incorporated herein by reference.

MRC Global is not using the SEC’s “Notice and Access” rule with respect to this year’s Annual Meeting.

What information is contained in this Proxy Statement?

 

 

This Proxy Statement includes information about the nominees for director and other matters to be voted on at the Annual Meeting. It also:

 

  (i)

explains the voting process and requirements;

  (ii)

describes the Company’s nominees and the compensation of our directors;

  (iii)

describes the compensation of our principal executive officer, our principal financial officer and at least our three other most highly compensated officers (collectively referred to as our “named executive officers” or “NEOs”);

  (iv)

provides information regarding our independent registered accounting firm, and

  (v)

provides certain other information that SEC rules require.

 

 

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What matters am I voting on, how may I vote on each matter and how does the Board recommend that I vote on each matter?

 

 

The following table sets forth each of the proposals you are being asked to vote on, how you may vote on each proposal and how the Board recommends that you vote on each proposal:

 

   

 

Company Proposals

 

How may I vote?

 

 

 

How does the Board
recommend that I vote?

 

 

I.  Election of 8 Company director nominees

 

 

You may:

(i)  vote FOR the election of each nominee; or

(ii)   WITHHOLD authority to vote for each nominee.

  FOR each of the Company’s 8 director nominees
 

II.   Approve on an advisory basis the Company’s named executive officer compensation

 

You may:

(i)  vote FOR or AGAINST the non-binding, advisory resolution approving named executive officer compensation; or

(ii)   indicate that you wish to ABSTAIN from voting on the matter.

 

 

FOR the approval of a non-binding, advisory resolution approving the Company’s named executive officer compensation

 

 

III.  Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2024

 

You may:

(i)  vote FOR or AGAINST the ratification of the appointment of Ernst & Young LLP as our Independent registered accounting firm for 2024; or

(ii)   you may indicate that you wish to ABSTAIN from voting on the matter.

 

  FOR the ratification of Ernst & Young LLP as our registered public accounting firm for 2024
 

IV. Approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation

 

You may:

(i)  vote FOR or AGAINST the approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation; or

(ii)   you may indicate that you wish to ABSTAIN from voting on this matter.

  FOR the approval of an Amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation

We are not aware of any matter to be presented at the Annual Meeting that is not included in this Proxy Statement. However, your proxy authorizes the person named on the proxy card to take action on additional matters that may properly arise. These individuals will exercise their best judgment to vote on any other matter, including a question of adjourning the Annual Meeting.

What is the difference between a stockholder of record and a stockholder who holds stock in street name?

 

 

If your shares are registered in your name with our transfer agent, Computershare Trust Company, N.A. (“Computershare”), you are a stockholder of record.

If you hold your shares with a broker or in an account at a bank, then you are a beneficial owner of shares held in “street name”. Your broker or bank is considered the stockholder of record for purposes of voting at the Annual Meeting. Your broker or bank should provide you with instructions for directing the broker or bank how to vote your shares.

 

 

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How do I vote if I am a stockholder of record?

 

 

As a stockholder of record, you may vote your shares in any one of the following ways:

 

LOGO    Vote online at the Virtual Annual Meeting    LOGO    Vote online at []
LOGO    If you receive a paper copy of the proxy materials, complete, sign, date and return the proxy card or voting instruction form      

Unless you or your representative attend and vote online at the virtual Annual Meeting, for your vote to count the Company must receive your vote, either by internet, proxy card or voting instruction form by 11:59 p.m., Eastern Daylight Time on [], 2024. Internet voting will close at 11:59 p.m., Eastern Daylight Time on [], 2024.

If I hold shares in street name, does my broker need instructions to vote my shares?

 

 

Under rules of the New York Stock Exchange (the “NYSE”), if you hold shares of stock in street name and do not submit specific voting instructions to your brokers, banks or other nominees, they generally will have discretion to vote your shares on routine matters such as Proposal III but will not have the discretion to vote your shares on non-routine matters, such as Proposals I, II and IV. When the broker, bank or other nominee is unable to vote on a proposal because the proposal is not routine, and you do not provide any voting instructions, a broker non-vote occurs and, as a result, your shares will not be voted on these proposals.

Additionally, brokers are not allowed to exercise their voting discretion with respect to matters which the NYSE rules would otherwise determine to be “routine” to the extent that the broker has provided the applicable beneficial owner with competing proxy materials (in addition to the Company’s proxy materials). Consequently, if Engine Capital provides a beneficial owner with competing proxy materials (in addition to the Company’s proxy materials), the broker will not have discretionary authority as to any matter. Thus, beneficial owners of shares held in broker accounts are advised that, if Engine Capital provides the owner with competing proxy materials (in addition to the Company’s proxy materials) and beneficial owners do not timely provide instructions to their broker, their shares will not be voted at the Annual Meeting in connection with any of the proposals, including the proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2024 (Proposal III). If a quorum is not established, we will not be permitted to conduct business at the Annual Meeting. We strongly encourage you to use the WHITE proxy card to authorize a proxy to votey our shares or provide voting instructions to your broker so that your vote will contribute toward establishing a quorum and permit the conduct of business at the Annual Meeting.

How do I vote my shares?

 

 

If you are a stockholder of record, you may vote your shares by proxy without attending the Annual Meeting. We encourage stockholders to submit their proxies in advance of the Annual Meeting. You can ensure that your shares are voted by completing, signing and returning the WHITE proxy card or voting your shares over the Internet pursuant to the instructions provided on the WHITE proxy card. If you are voting over the Internet, you will need to provide the control number that is printed on the WHITE proxy card that you receive. Voting your shares by proxy by any of these methods will not affect your right to attend and vote at the Annual Meeting or by executing a proxy designating a representative to vote for you at the Annual Meeting.

You are urged to follow the instructions on your WHITE proxy card or voting instruction form to indicate how your vote is to be cast. Please see the Instructions for the virtual Annual Meeting on page 1 if you wish to attend the virtual meeting.

 

 

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Pursuant to Section 212(c) of Delaware Law, stockholders may validly grant proxies over the internet. Your internet vote authorizes the proxies designated by the Company to vote your shares in the same manner as if you had returned a proxy card or voting instruction form. To vote over the internet, follow the instructions provided on your Notice. If you hold shares in street name, you are encouraged to contact your bank or broker to obtain and return the appropriate voting instruction form.

Other Candidates Nominated for Election as Directors at the Annual Meeting in Opposition to the Board’s Nominees

 

 

Engine Capital has notified the Company of its intent to nominate a slate of two alternative nominees for election as directors at the Annual Meeting (the “Engine Capital Nominees”) in opposition to the nominees recommended by the Board. The Board does NOT endorse any of the Engine Capital Nominees and strongly urges you to discard and NOT sign or return any proxy card that may be sent to you by Engine Capital. The Board unanimously recommends that you vote “FOR ALL” the nominees proposed by the Board on the WHITE proxy card.

If you have previously submitted a proxy card sent to you by Engine Capital, you can revoke that proxy and vote for the Board’s recommended nominees and on the other matters to be voted on at the Annual Meeting by:

 

 

completing, signing and returning the WHITE proxy card,

 

voting over the Internet pursuant to the instructions provided on the WHITE proxy card or

 

voting at the meeting.

Only your latest dated proxy will count, and any proxy may be revoked at any time prior to its exercise at the Annual Meeting as described in this Proxy Statement. We are not responsible for the accuracy of any information that may be provided by or relating to Engine Capital or the Engine Capital Nominees contained in any solicitation materials that may be filed or disseminated by or on behalf of Engine Capital or any other statements Engine Capital may make.

It will NOT help elect the nominees recommended by the Board if you sign and return proxy cards sent by Engine Capital, even if you vote to “WITHHOLD” your vote with respect to their nominees using the Engine Capital proxy card. In fact, doing so will cancel any previous vote cast by you on the Company’s proxy card. The only way to support the Board’s recommended nominees is to vote “FOR” the Board’s recommended nominees by using the enclosed WHITE proxy card. Only the last proxy received will be counted.

Whether or not you plan to attend the Annual Meeting, it is important that your shares be represented and voted at the Annual Meeting. We encourage you to promptly vote in advance of the Annual Meeting by completing, signing and returning the WHITE proxy card or voting your shares over the Internet pursuant to the instructions provided on the WHITE proxy card. If you attend the Annual Meeting, you can vote even if you previously submitted your proxy.

If Engine Capital proceeds with its previously announced alternative director nominations, we may conduct multiple mailings of the Proxy Statement and the accompanying proxy materials prior to the Annual Meeting date so that stockholders have our latest proxy information and materials to vote. We will send you a new WHITE proxy card with each mailing, regardless of whether you have previously voted. The latest-dated proxy you submit will be counted, and, if you wish to vote as recommended by the Board, then you should only submit WHITE proxy cards.

 

 

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What if I return my proxy card or vote by internet but do not specify how I want to vote?

 

 

If you are a stockholder of record and correctly sign, date and return your WHITE proxy card or complete the internet voting procedures, but do not specify how you want to vote your shares, we will vote them as follows:

 

    I.

FOR the election of the 8 Company director nominees: Deborah G. Adams, Leonard M. Anthony, George J. Damiris, David A. Hager, Ronald L. Jadin, Dr. Anne McEntee, Robert J. Saltiel, Jr., and Robert L. Wood

   II.

FOR the approval, on an advisory basis, of a non-binding advisory resolution approving the Company’s named executive officer compensation

  III.

FOR the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2024

  IV.

FOR the approval of an amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation.

What can I do if I change my mind after I vote my shares?

 

 

Attendance virtually in the virtual Annual Meeting will not in and of itself constitute revocation of a proxy. Any stockholder of record who authorizes his or her vote or by internet or executes and returns a proxy card may revoke the proxy before it is voted by:

 

 

notifying in writing the Corporate Secretary of MRC Global Inc. at 1301 McKinney Street, Suite 2300, Houston, Texas 77010, Attention: Corporate Secretary;

 

executing and returning a subsequent proxy; or

 

appearing online and voting at the Annual Meeting.

For shares you hold in street name, you may change your vote by submitting new voting instructions to your broker, bank or other nominee or by obtaining a legal proxy from your broker, bank or other nominee giving you the right to vote your shares at the Annual Meeting.

What shares are included on my proxy card?

 

 

You will receive one proxy card for all the shares of MRC Global that you hold as a stockholder of record (in certificate form or in book-entry form). If you hold your shares of MRC Global in street name, you will receive voting instructions for each account you have with a broker or bank.

How may I obtain instructions on how to attend the Annual Meeting online?

 

 

Please see Instructions for the virtual Annual Meeting on page 1. If you need assistance with these directions, please call us at 713-655-1005 or 877-294-7574 or write us at MRC Global Inc., 1301 McKinney Street, Suite 2300, Houston, Texas 77010, Attn: Corporate Secretary.

What is the quorum requirement for the Annual Meeting?

 

 

There must be a quorum to take action at the Annual Meeting (other than action to adjourn or postpone the Annual Meeting for lack of a quorum). A quorum will exist at the Annual Meeting if stockholders holding a majority of the voting powers of all of the shares entitled to vote at the Annual Meeting are present virtually or by proxy. Stockholders of record who return a proxy or vote virtually at the Annual Meeting will be considered part of the quorum. Abstentions and “broker non-votes” are counted as present and entitled to vote for purposes of determining a quorum.

 

 

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What is the voting requirement to approve each of the proposals?

 

 

The following table sets forth the voting requirement with respect to each of the proposals:

 

 

 

Proposal

 

  

 

Voting Requirement

 

 I.Election of the 8 Company director nominees

  

Each director must be elected by a plurality of the votes cast. Any director who receives a greater number of “WITHHOLD” votes than “FOR” votes is expected to tender to the Board the director’s resignation promptly following the certification of election results pursuant to the Company’s Corporate Governance Guidelines. Pursuant to these guidelines, the Board must accept or reject the resignation within 90 days following the certification of election results and publicly disclose its decision.

 

 

 

 II.Approve, on an advisory basis, a non-binding advisory resolution approving the Company’s executive officer compensation

  

To be approved, this proposal must be approved by a majority of the votes cast by the stockholders present in person or represented by proxy, meaning that the votes cast by the stockholders “FOR” the approval of the proposal must exceed the number of votes cast “AGAINST” the approval of the proposal.

 

 

 

 III.Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2024

  

To be approved, this proposal must be approved by a majority of the votes cast by the stockholders present in person or represented by proxy, meaning that the votes cast by the stockholders “FOR” the approval of the proposal must exceed the number of votes cast “AGAINST” the approval of the proposal.

 

 

 

 IV.Approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect new Delaware law provisions regarding officer exculpation.

  

To be approved, this proposal must be approved by the affirmative vote of the holders of at least 75% of the voting power of the Company’s issued and outstanding stock entitled to vote thereon, voting together as a single class.

 

Other matters that may properly come before the Annual Meeting may or may not require more than a majority vote under our bylaws, our Amended and Restated Certificate of Incorporation, the laws of Delaware or other applicable laws, depending on the nature of the matter.

Who will count the votes?

 

 

A representative of First Coast Results, Inc. will act as the inspector of elections and count the votes.

Where can I find the voting results of the Annual Meeting?

 

 

We will disclose the final voting results in a Form 8-K filed with the SEC within four business days after the Annual Meeting.

May I propose actions for consideration at the 2025 Annual Meeting of stockholders?

 

 

Yes. For your proposal to be considered for inclusion in our Proxy Statement for the 2025 annual meeting of stockholders, we must receive your written proposal no later than [], 2024. If we change the date of the 2025 annual meeting of stockholders by more than 30 days from the anniversary of the date of this year’s Annual Meeting, then the deadline to submit proposals will be a reasonable time

 

 

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before we begin to print and mail our proxy materials. Your proposal, including the manner in which you submit it, must comply with SEC regulations regarding stockholder proposals.

If you wish to raise a proposal (including a director nomination) from the floor during our 2025 annual meeting of stockholders, we must receive a written notice of the proposal no earlier than the close of business on [], and no later than the close of business on [], 2025. If our first announcement of the date of the 2025 annual meeting of stockholders is less than 100 days prior to the meeting, then in accordance with the Bylaws, the Corporate Secretary of the Company must receive the notice by the 10th day following the announcement. If the date of the 2025 annual meeting is more than 30 days before or more than 30 days after the anniversary of the date of this year’s Annual Meeting, you must deliver the notice not earlier than the close of business on the 120th day prior to the date of the 2025 annual meeting and not later than the close of business on the later of the 90th day prior to the date of the 2025 annual meeting. Your submission must contain the additional information that our bylaws require. Proposals should be addressed to our Corporate Secretary at 1301 McKinney Street, Suite 2300, Houston, Texas 77010.

Who is paying for this proxy solicitation?

 

 

Our Board is soliciting your proxy. We expect to solicit proxies in person, by telephone or by other electronic means. We have retained Morrow Sodali LLC, 430 Park Ave., 14th Floor, New York, NY 10022 to assist in this solicitation. We expect to pay Morrow Sodali LLC an estimated [], plus expenses and disbursements. Morrow Sodali expects that approximately 45 of its employees will assist in the solicitation.

We will pay the expenses of this proxy solicitation, including the cost of preparing, printing and mailing the Notice, this Proxy Statement and related proxy materials. These expenses may include the charges and expenses of banks, brokerage firms and other custodians, nominees or fiduciaries for forwarding proxy materials to beneficial owners of MRC Global shares. Our aggregate expenses, including those of Morrow Sodali, other outside advisors, related to our solicitation of proxies in excess of expenses normally spent for an annual meeting of stockholders in which there is not a proxy contest are expected to be approximately $[], of which approximately $[] has been incurred as of the date of this Proxy Statement.

Are you “householding” for stockholders sharing the same address?

 

 

The SEC has adopted rules that allow a company to deliver a single set of proxy materials to an address shared by two or more of its stockholders. This method of delivery, known as “householding”, permits us to realize cost savings and reduces the amount of duplicate information stockholders receive. In accordance with notices sent to stockholders sharing a single address, we are sending only one set of proxy materials to that address unless we have received contrary instructions from a stockholder at that address. Any stockholders who object to or wish to begin householding may notify the Corporate Secretary of the Company orally or in writing at the telephone number or address, as applicable, set forth above. We will deliver promptly an individual copy of the proxy materials to any stockholder who revokes its consent to householding upon our receipt of such revocation.

If you would like to receive a copy of this Proxy Statement and our 2023 Annual Report, we will promptly send you a copy upon request directed to our transfer agent, Computershare. You can call Computershare toll free at 1-800-962-4284. You can call the same phone number to notify us that you wish to receive a separate 2023 Annual Report or Proxy Statement in the future or to request delivery of a single copy of any materials if you are receiving multiple copies now.

 

 

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BACKGROUND TO THE SOLICITATION

 

 

The summary below details the significant contacts between the Company and Engine Capital beginning on June 6, 2022 through the date of this proxy statement. This summary does not purport to catalogue every conversation of or between members of the Board, the Company’s management and the Company’s advisors, on the one hand, and representatives of Engine Capital and their advisors, on the other hand. Engine Capital LP is a stockholder which, together with its affiliates and related persons, purportedly was the owner of an aggregate of [3,866,886 shares of our common stock, or approximately 4.6% of the outstanding shares of our common stock, as of February 14, 2024]. In addition to the meetings described below, members of the Board received regular updates and met with management and the Company’s advisors regarding Engine Capital throughout the period leading up to the date of this proxy statement.

The Board and the Environmental, Social, Governance & Enterprise Risk Committee (the “ESG & Enterprise Risk Committee”) are committed to maintaining a Board with the skills, experience and capabilities desirable in light of the Company’s business and strategy, including customer or end market experience, leadership experience and experience in the areas of ESG and digital technology. The ESG & Enterprise Risk Committee annually assesses new candidates for the Board and welcomes suggestions regarding Board composition from the Company’s shareholders.

On June 6, 2022, Engine Capital introduced itself as a interested potential shareholder to a member of the Company’s investor relations team and had its first virtual meeting with members of the Company’s executive management team on August 18, 2022. From August 2022 through September 2023, the Company engaged periodically in constructive dialogue with Engine Capital with respect to the various questions relating to the strategic direction of the Company and other related topics.

On September 18, 2023, Rob Saltiel, the Company’s President and Chief Executive Officer, and Kelly Youngblood, the Company’s Executive Vice President and Chief Financial Officer, had a call with Arnaud Ajdler, a managing partner at Engine Capital, and Brad Favreau, a partner at Engine Capital. During this call, Messrs. Ajdler and Favreau stated that Engine Capital owned 2.5% of the Company’s common stock. They then previewed the contents of a letter Engine Capital intended to send to the Board and provided the Company with Engine Capital’s views as follows:

 

 

The Company had done a good job in right-sizing and diversifying its business. In particular, the Company’s Gas Utility end sector business has less cyclicality risk.

 

Engine Capital believes the Company’s increased gross profit margins are sustainable.

 

The Company is producing good cash flow generation.

 

Management has done an excellent job in running the Company.

 

The Company’s common stock was “deeply undervalued”.

 

The Company could benefit from a private buyer that is less concerned about volatility and mark-to-market risks.

 

The Company should entertain a strategic review, including a sale to a private buyer.

On September 18, 2023, Engine Capital e-mailed a letter to the Board setting forth Engine Capital’s 2.5% ownership of the Company’s outstanding common stock, its favorable views of the Company’s management and its belief that the Company should pursue strategic alternatives to increase the Company’s stock price (the “September 18, 2023 Letter”). 

On September 22, 2023, Engine Capital e-mailed the Company to state that it had increased its ownership of the Company’s outstanding common stock from 2.5% to closer to 4%.

On September 24, 2023, the Board met and, together with management and the Company’s advisors, discussed Engine Capital’s interactions with the Company, the September 18, 2023 Letter and response options.

 

 

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On October 3, 2023, the Company e-mailed Engine Capital to thank Engine Capital for its continued interest and support and to advise that the Company had shared the letter with its Board and was in the process of reviewing Engine Capital’s suggestions and questions.

On October 4, 2023, Engine Capital replied by e-mail and requested that the Company implement its suggestions in the September 18, 2023 Letter “with a sense of urgency.”

On October 16, 2023, pre-market open, Bloomberg News published an article disclosing certain details contained in the September 18, 2023 Letter, including Engine Capital’s request that the Company explore a sale and that Engine Capital owned an approximately 4% stake of the Company.

On October 17, 2023, Engine Capital e-mailed the Company and wrote, with respect to the Bloomberg News article, that it was “unfortunate as we were hoping to keep [the September 18, 2023 Letter] private for now,” and requested a conversation with the Company about next steps.

On October 20, 2023, at the request and direction of the Board, representatives from J.P. Morgan (“JPM”), the Company’s financial advisor, telephonically met with Engine Capital in an effort to better understand Engine Capital’s thesis and intentions with the Company.

On October 27, 2023, Robert L. Wood, Chairman of the Board, and Leonard M. Anthony, a member of the Board, met virtually with Messrs. Ajdler and Favreau to discuss Engine Capital’s views on strategic alternatives available to the Company.

On October 31, 2023, Mr. Ajdler sent an e-mail to Mr. Wood and Mr. Anthony requesting that the Company:

 

 

consider appointing an individual selected by Engine Capital to the Board, to give Engine Capital Board representation and “to help with the sale of the company, or to help with capital allocation if the company remains a standalone entity in the public markets,”

 

reach out to strategic players in addition to private equity if the Company was indeed pursuing a sale and

 

incentivize management with a bonus for a successful sale of the Company.

On November 3, 2023, the Board met and, together with management and the Company’s advisors, discussed Engine Capital’s recent communications. Separately, on November 3, 2023, upon the recommendation of the ESG & Enterprise Risk Committee, as part of its annual governance review the Board approved and adopted changes to the Company’s bylaws and Corporate Governance Guidelines focused on mechanics related to universal proxy changes and other standard market practices for director nominations.

On November 8, 2023, members of the Company’s management conducted its third-quarter earnings call, during which, among other things, they spoke about the Company’s plans for growth in the future, including possible M&A to grow the Company.

On November 9, 2023, Mr. Ajdler e-mailed Messrs. Saltiel, Youngblood, Wood and Anthony with Engine Capital’s feedback on the earnings call. In his e-mail, Mr. Ajdler stated his belief that the Company should be taken private and should not attempt to grow through acquisitions. Later that day, Mr. Youngblood and a member of the Company’s investor relations team, met telephonically with Engine Capital to discuss the earnings call, as well Engine Capital’s thesis and its request to add an individual selected by Engine Capital to the Board.

On November 12, 2023, Mr. Wood responded to Mr. Ajdler’s October 31, 2023 e-mail and advised that the Board is open to receive names of qualified directors with needed skill sets, including skill sets in technology (enterprise systems technology) and cyber security.

On November 14, 2023, Mr. Ajdler e-mailed Mr. Wood, copying certain other members of the Board, and saying that Engine Capital wants a director with “an investor mindset in the boardroom,” because it will be “important in the context of evaluating a potential sale” and that Engine Capital, as a “large shareholder,” would like to have “a seat at the table.”

 

 

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On November 17, 2023, at the request and direction of the Board, Daniel Churay, General Counsel and Corporate Secretary of the Company, e-mailed Engine Capital to request the name of its proposed nominee to the Board.

On November 29, 2023, Engine Capital e-mailed Mr. Churay and advised that Engine Capital proposed that Mr. Favreau be added to the Board.

Between December 5, 2023 and December 13, 2023, the Company exchanged e-mails and coordinated with Engine Capital to schedule an interview of Mr. Favreau with members of the ESG & Enterprise Risk Committee.

On December 15, 2023, the Board met and, among other things, Mr. Churay provided the Board with an update on discussions with Engine Capital and noted that an interview of Mr. Favreau would be held in January to discuss his candidacy. Further, it was noted that the ESG & Enterprise Risk Committee was scheduled to meet on December 18, 2023 to discuss the current composition, profile and skills of the Board to provide a view as to the qualifications and profile of a new director that the Board might consider, if any.

On December 18, 2023, the ESG & Enterprise Risk Committee met and, among other things, discussed the current composition, profile and skills of the Board, to identify the current needs of the Board.

On January 8, 2024, Mr. Favreau met in person at the Company’s corporate headquarters with each of Barbara J. Duganier and Deborah G. Adams, members of the ESG & Enterprise Risk Committee, as well as with Messrs. Saltiel, Youngblood and Churay.

On January 23, 2024, in line with the Company’s standard process, Mr. Churay sent to Mr. Favreau a director and officer questionnaire and asked that it be completed by Mr. Favreau in connection with the ESG & Enterprise Risk Committee’s evaluation of him as a Board candidate.

On January 25, 2024, Messrs. Ajdler and Favreau met virtually with Messrs. Wood, Anthony, Churay and Youngblood and Ms. Duganier, and reviewed written materials to reiterate Engine Capital’s position that the Company should consider a sale of the Company or, alternatively, consider stock repurchases and add Mr. Favreau to the Board. The Board met the same day to review and discuss Engine Capital’s written presentation and the request to add Mr. Favreau to the Board.

On January 25, 2024, the Board met and, among other things, discussed the skill sets and qualifications of the current members of the Board of directors and of Mr. Favreau. Additionally, the ESG & Enterprise Risk Committee authorized the retention of the Heidrick & Struggles (“Heidrick”) to assist the committee to identify qualified director candidates.

On February 2, 2024, Engine Capital delivered a written notice formally nominating three individuals, Marjorie L. Bowen, Bradley T. Favreau, and Daniel B. Silvers, as stockholder nominees to be elected to the Board at the Annual Meeting. On the same day, Mr. Ajdler e-mailed Messrs. Saltiel, Youngblood, Anthony and Wood to apprise them of Engine Capital’s nominations, its reasons for making the nominations and its desire to keep the nominations private.

On February 7, 2024, the Board met and discussed, among other things, the date of the Annual Meeting and proposed slate of directors to be elected at the meeting.

During the month of February 2024, at the request and direction of the Board and the ESG & Enterprise Risk Committee, Mr. Churay coordinated interviews of 10 potential director candidates, including nominees identified by Heidrick and Engine Capital’s nominees.

On February 19, 2024, the Board met and received a report from members of the ESG & Enterprise Risk Committee relating to director candidate interviews that had been conducted through that date and to review biographical background, including skill sets and experience of select candidates.

 

 

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On February 23, 2024, Mr. Churay requested that Engine Capital provide contact information for each of Ms. Bowen and Mr. Silvers to schedule interviews with members of the ESG & Enterprise Risk Committee. On February 24, 2024, Mr. Ajdler replied to the Company’s e-mail and declined to provide the requested contact information unless and until the Company and Engine Capital discuss and agree upon terms of a potential settlement agreement.

On February 26, 2024, at the request and direction of the ESG & Enterprise Risk Committee, Mr. Churay e-mailed Engine Capital to again request contact information for each of Ms. Bowen and Mr. Silvers and to apprise Engine Capital that, consistent with the Board’s past practice, prior to appointment or nomination of any new director, interviews with nominees need to be conducted.

On February 26, 2024, Mr. Jadin and Ms. Duganier, members of the ESG & Enterprise Risk Committee, and Mr. Wood met virtually with David A. Hager, a board candidate that Heidrick identified, to discuss his background and qualifications to serve on the Board.

On February 27, 2024, Mr. Ajdler responded via e-mail that Engine Capital needed to understand the context of interviews and asked the Company to acknowledge that the interviews of its proposed candidates would be conducted in good faith.

On February 28, 2024, Messrs. Wood, and Anthony met virtually with Messrs. Ajdler and Favreau. Mr. Wood apprised Engine Capital of the Company’s process for identifying new directors to the Board and noted that the Board has a responsibility to its shareholders to have all board candidates, including Engine Capital’s nominees, undergo substantially similar vetting processes. Mr. Ajdler responded that Engine Capital “wants and earned representation” on the Board.

On February 28, 2024, Dr. McEntee met virtually with Mr. Hager to discuss his background and qualifications to serve on the Board.

On February 29, 2024, Mr. Ajdler e-mailed Mr. Churay the contact information for Ms. Bowen and Mr. Silvers, and Mr. Churay organized interviews with each of them.

On March 1, 2024, Ms. Adams and Mr. Anthony met virtually with Mr. Hager to discuss his background and qualifications to serve on the Board.

On March 4, 2024, Barbara Duganier, Deborah Adams and George Damiris, members of the ESG & Enterprise Risk Committee along with Mr. Saltiel met virtually with Ms. Bowen to discuss her background and qualifications to serve on the Board.

Also, on March 4, 2024, Ms. Adams and Messrs. Damiris and Saltiel, met virtually with Mr. Silvers to discuss his background and qualifications to serve on the Board.

On each of March 4, 2024 and March 6, 2024, the Board met, together with members of management and the Company’s advisor, and discussed, among other things, the interviews conducted by members of the ESG & Enterprise Risk Committee and the skills sets and experience of select candidates, including those of Ms. Bowers, Mr. Favreau, Mr. Silvers and Mr. Hager, as well as Board diversity.

On March 11, 2024, the ESG & Enterprise Risk Committee and the Board, together with members of management and the Company’s advisors, met to consider and approve a proposed slate of directors for election at the Annual Meeting, as well as consider and approve a proposal to increase the size of the Board. At the meeting, the Board determined to increase the size of the Board from nine to 10 directors and to appoint David A. Hager as a member of the Board as of March 11, 2024. In deciding to appoint Mr. Hager, the Board considered Mr. Hager’s breadth and depth of board and business experience, his transactional experience, his financial literacy, his knowledge of upstream and midstream markets and the North America energy business and his independence per the rules and regulations of the New York Stock Exchange and the Securities and Exchange Commission (“SEC”). In addition, at the meeting Barbara J. Duganier announced her desire to not run for re-election at the

 

 

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Annual Meeting, and the Board determined to recommend the following persons as the slate of directors nominated to be elected at the Annual Meeting: Ms. Adams, Dr. McEntee and Messrs. Anthony, Damaris, Hager, Jadin, Saltiel and Wood.

On March 11, 2024, Messrs. Wood and Anthony met virtually with Messrs. Ajdler and Favreau to notify them that the Board had determined to not recommend any of Engine Capital’s nominees to the slate of directors for election at the Company’s 2024 annual meeting of stockholders.

On March 14, 2024, Engine Capital delivered a written notice formally withdrawing their nomination of Marjorie L. Bowen as a stockholder nominee. The letter stated that Engine Capital’s nomination of Bradley T. Favreau and Daniel B. Silvers remained in full force and effect.

On March 15, 2022, the Company filed a preliminary proxy statement with the SEC.

On March 27, 2024, the Company filed this revised preliminary prospectus statement with the SEC.

 

 

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SECURITY OWNERSHIP

 

 

Directors and Executive Officers

The following table shows, as of March 15, 2024, the number of shares of our common stock that each of our directors, each of our named executive officers (NEOs) and all of our executive officers and directors as a group beneficially own.

The rules of the SEC generally determine beneficial ownership, which generally includes voting or investment power with respect to securities. Unless indicated below, to our knowledge, the persons and entities that the table names have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares of common stock subject to options that are currently exercisable or exercisable within 60 days of March 15, 2024, are deemed to be outstanding and to be beneficially owned by the person holding the options for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unvested restricted stock units (RSUs) and performance share units (PSUs) are not included to the extent they will not definitively vest within 60 days of March 15, 2024. Except as otherwise indicated, the business address for each of our beneficial owners is c/o MRC Global Inc., 1301 McKinney Street, Suite 2300, Houston, Texas 77010.

 

 Name   Total Shares of
Common Stock
Beneficially
Owned
  Percent of
Common
Stock
Outstanding
  Shares of
Unvested
Restricted Stock
or RSUs
included in Total
  Options
Exercisable
Included in Total

Robert J Saltiel, Jr.

     397,160   *    —  

Kelly Youngblood

     237,545   *   9,017  

Daniel J. Churay(1)

     171,054   *   7,665   25,109

Grant R. Bates(2)

     116,094   *   6,313    4,046

Rance C. Long

      70,366   *    —    2,636

Deborah G. Adams

      85,608   *    15,295  

Leonard M. Anthony

     128,924   *    15,295   0

Henry Cornell(3)

  20,386,193   19.3%    15,295    9,415

George J. Damiris

      33,221   *    15,295  

Barbara Duganier

      93,233   *    15,295  

David A. Hager

      12,414   *    —  

Ronald L. Jadin

      33,221   *    15,295  

Anne McEntee

      22,310   *    15,295  

Robert L. Wood(4)

     119,229   *    27,954  

All directors and executive officers, as a group (19 persons)

  22,033,708    20.9%    

*Less than 1%

 

(1)

Mr. Churay owns 550 shares of our common stock through an Individual Retirement Account.

 

(2)

Mr. Bates indirectly owns 5,004 shares of our common stock through ownership by his spouse.

 

 

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(3)

Mr. Cornell directly owns 84,174 shares of our common stock and indirectly owns 10 shares of our common stock held by his minor son. In addition, Mr. Cornell together with Mario Investments LLC, Cornell Capital Special Situations Partners II LP, Cornell Capital GP II LP and Cornell Investment Partners LLC has beneficial ownership of the outstanding Series A Convertible Perpetual Preferred Stock convertible into 20,302,009 shares of common stock. Mr. Cornell is the sole member of Cornell Investment Partners LLC, which is the general partner of Cornell Capital GP II LP, which is the general partner of Cornell Capital Special Situations Partners II LP, which is the sole member of Mario Investments LLC. Refer to “Certain Beneficial Owners” and “Preferred Stock Issuance” for additional details.

 

(4)

Mr. Wood owns 3,000 shares of our common stock indirectly through Robert Wood TTE.

As of March 15, 2024, the Company’s directors and executive officers beneficially owned 20.9% of our outstanding common stock (assuming conversion of all preferred stock to common stock). The percentage beneficially owned was calculated based on 85,135,649 shares of common stock and preferred stock convertible into 20,302,009 shares of common stock for a total of 105,437,658 shares outstanding on March 15, 2024.

Certain Beneficial Owners

The following table sets forth information regarding persons or groups known to the Company to be beneficial owners of more than 5% of our outstanding preferred stock or common stock as of February 15, 2024, including the business address of each.

 

Names and Address of Beneficial Owner   

Number of Shares of

Common Stock
Beneficially Owned

 

  

Percent of Common 

Stock Outstanding 

Mario Investments LLC(1)

c/o Cornell Capital GP II LP

499 Park Avenue, 21st Floor

New York, NY 10022

 

   20,302,009    19.3%
     

The Vanguard Group(2)

100 Vanguard Blvd.

Malvern, PA 19355

 

   9,003,975    8.5%
     

Pzena Investment Management, LLC(3)

320 Park Avenue, 8th Floor

New York, NY 10022

 

   7,001,859    6.6%
     

BlackRock, Inc.(4)

50 Hudson Yards

New York, NY 10001

 

   6,560,977    6.2%
     

Frontier Capital Management Co., LLC(5)

99 Summer Street

Boston, MA 02110

 

   6,005,201    5.7%
     

 

(1)

On April 26, 2023, Mario Investments LLC, Cornell Capital Special Situations Partners II LP, Cornell Capital GP II LP, Cornell Investment Partners LLC, and Henry Cornell filed a Schedule 13D/A reporting shared beneficial ownership of 363,000 shares of preferred stock convertible into 20,302,009 shares of common stock on an as-converted basis with shared voting and dispositive power.

 

(2)

Based on the Schedule 13G/A filed with the SEC on February 13, 2024, The Vanguard Group has sole dispositive power with respect to 8,836,179 shares of common stock, shared dispositive power with respect to 167,796 shares of common stock and shared voting power with respect to 88,600 shares of common stock.

 

 

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(3)

Based on the Schedule 13G/A filed with the SEC on February 8, 2024, Pzena Investment Management, LLC has sole dispositive power with respect to 7,001,859 shares of common stock and sole voting power with respect to 5,382,512 shares of common stock.

 

(4)

Based on the Schedule 13G/A filed with the SEC on January 26, 2024, BlackRock, Inc. has sole dispositive power with respect to 6,560,977 shares of common stock and sole voting power with respect to 6,405,529 shares of common stock.

 

(5)

Based on the Schedule 13G filed with the SEC on February 14, 2024, Frontier Capital Management Co., LLC has sole dispositive power with respect to 6,005,201 shares of common stock and sole voting power with respect to 4,380,058 shares of common stock.

Preferred Stock Issuance

In June 2015, we filed with the Secretary of State of the State of Delaware a Certificate of Designations, Preferences, Rights and Limitations of Series A Convertible Perpetual Preferred Stock (the “Certificate of Designations”) creating the Series A Convertible Perpetual Preferred Stock, par value $0.01 per share (the “preferred stock”), and establishing the designations, preferences, and other rights of the preferred stock. On June 10, 2015, we issued 363,000 shares of preferred stock and received gross proceeds of $363 million. In connection with the issuance, we entered into a shareholders’ agreement (the “Shareholders’ Agreement”) with Mario Investments LLC, the initial holder of the preferred stock (the “Initial Holder”). The following description is qualified in its entirety by reference to the full text of the Certificate of Designations and the Shareholders’ Agreement, each of which were filed as exhibits to our Current Report on Form 8-K, which was filed with the SEC on June 11, 2015. Capitalized terms used in this “Preferred Stock Issuance” description that are not defined in this Proxy Statement shall have the terms that the Certificate of Designations assigns to those terms.

Voting and Other Rights

The preferred stock ranks senior to our common stock with respect to dividend rights and rights on liquidation, winding-up and dissolution. The preferred stock has a stated value of $1,000 per share, and holders of the preferred stock are entitled to cumulative dividends payable quarterly in cash at a rate of 6.50% per annum.

The preferred stock does not create a dual class voting structure as it is does not constitute a second class of common stock with special voting rights. Holders of the preferred stock are entitled to vote together with the holders of the common stock as a single class, in each case, on an as-converted basis, except in rare instances when the law requires a separate class vote of the common stockholders. The preferred stockholders also have certain rights regarding the issuance of stock that is Parity Stock or Senior Stock (as each of those terms are defined in the Certificate of Designations). A vote of two-thirds of the preferred stock is required to:

 

 

amend or alter the Company’s certificate of incorporation to create or increase any class or series of Parity Stock or Senior Stock or adversely affect the rights of the preferred stock;

 

 

amend, alter or repeal any provision of the Company’s certificate of incorporation so as to adversely affect the rights, preferences, privileges or voting powers of the preferred stock; or

 

 

to consummate a share exchange, reclassification, merger or consolidation where:

 

 

the shares of the preferred stock do not remain outstanding, and the terms of the preferred stock are not amended or

 

 

the preferred stockholders do not receive preference securities in a transaction with the same or better terms than those in the preferred stock,

or, in either case, certain additional requirements are not met.

Pursuant to the Shareholders’ Agreement, the Initial Holder and certain related parties if the preferred stock is transferred to those parties (collectively, the “Original Holder’s Group”) are entitled to vote their shares in their discretion. Holders of the preferred stock have certain limited special approval rights, including with respect to the issuance of pari passu or senior equity securities of the Company.

 

 

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Lapse of Certain Voting Requirements

Prior to June 10, 2020, the Original Holder’s Group agreed to vote their shares in favor of director nominees that the Board nominates. This provision has lapsed, and the Original Holder’s Group is no longer required to vote their shares in favor of director nominees that the Board nominates.

Sunset Provisions

The preferred stock is convertible at the option of the holders into shares of common stock at an initial conversion rate of 55.9284 shares of common stock for each share of preferred stock, which represents an initial conversion price of $17.88 per share of common stock, subject to adjustment. The Company currently has the option to redeem, in whole but not in part, all of the outstanding shares of preferred stock at par value, subject to certain redemption price adjustments. We may elect to convert the preferred stock, in whole but not in part, into the relevant number of shares of common stock if the last reported sale price of the common stock has been at least 150% of the conversion price then in effect for a specified period. The conversion rate is subject to customary anti-dilution and other adjustments.

Fundamental Change

If a Fundamental Change occurs, each holder of the preferred stock has the right, at the holder’s option, to require the Company to repurchase all or part of the holder’s shares of preferred stock for cash. Among other things, as described as follows, an all-cash acquisition of the Company would constitute a Fundamental Change, but a stock-for-stock merger of the Company would not so long as the shares received in exchange for Company common stock were quoted or listed on a major U.S. stock market. A “Fundamental Change” occurs when:

 

  (i)

(except as described in clause (ii) below) the acquisition by a “person” or “group” within the meaning of Section 13(d) of the Exchange Act (other than the current holder of the preferred stock, the Company, the Company’s Wholly Owned Subsidiaries and the employee benefit plans of the Company and its Wholly Owned Subsidiaries) of the “beneficial ownership,” as defined in Rule 13d-3 under the Exchange Act, of more than 50% of the voting power in the aggregate of all classes of the Company’s Common Equity (i.e. the Company’s common stock);

 

  (ii)

the consummation of:

 

  (A)

any recapitalization, reclassification or change of the Company’s common stock (other than changes resulting from a subdivision or combination) as a result of which the common stock is converted into, or exchanged for, stock, other securities, other property or assets;

 

  (B)

any share exchange, consolidation or merger of the Company pursuant to which the Company’s common stock is converted into cash, securities or other property or assets; or

 

  (C)

any sale, lease or other transfer of all or substantially all of the consolidated assets of the Company and its Subsidiaries, taken as a whole, to any person or entity other than one of the Company’s Wholly Owned Subsidiaries;

provided, that any transaction described in clause (B) above in which the holders of all classes of the Company’s Common Equity immediately prior to such transaction(s) own, directly or indirectly, more than 50% of all classes of Common Equity of the continuing or surviving corporation or transferee or the parent thereof immediately after such transaction(s) in substantially the same proportions as such ownership immediately prior to such transaction(s) will not be a Fundamental Change;

 

  (iii)

the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or

 

  (iv)

the Company’s common stock (or other common stock underlying the Preferred Stock, such as after a stock-for-stock merger) ceases to be listed or quoted on a major U.S. stock market;

provided, that:

 

  (x)

transaction(s) described in clause (ii) above will not be a Fundamental Change, if at least 90% of the consideration received the common stockholders of the Company (excluding cash payments for fractional shares) in connection with the transaction(s) consist of shares

 

 

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of common stock that are listed or quoted on a major U.S. stock market and as a result of the transaction(s) the preferred stock becomes convertible into that consideration; and

 

  (y)

transactions described in clause (i) above will not constitute a Fundamental Change, if the holders of the preferred stock transfer to any transferee shares of preferred stock that would cause a Fundamental Change to occur described in clause (i) above and the holders of the preferred stock know or have good reason to know that the consummation of the transfer to the transferee would cause a Fundamental Change to occur.

Board Representation Rights

Pursuant to the Shareholders’ Agreement, for so long as the Original Holder’s Group maintains at least 33% of their original investment (whether in preferred stock or shares of common stock issued upon conversion of the preferred stock), the Original Holder’s Group has the right to appoint a single representative, in a non-voting observer capacity, to attend all meetings of the Board, subject to certain exceptions.

Pursuant to the Certificate of Designations and the Shareholders’ Agreement, on June 10, 2018, the Original Holder’s Group had the right to designate one person to serve as a director on the Board if the Original Holder’s Group maintained at least 33% of their original investment and shares of the preferred stock remained outstanding. The Original Holder’s Group met such requirement, and the Company was required to increase the size of the Board to accommodate the appointment of Henry Cornell, as a director designated by the Original Holder’s Group on June 10, 2018. The holders of the preferred stock also have certain Board representation rights if dividends payable on the preferred stock are in arrears for six or more quarterly periods, but in no event may the holders of the preferred stock appoint more than two directors. Also, pursuant to the Shareholders’ Agreement, if no shares of the preferred stock remain outstanding but the Original Holder’s Group maintains at least 33% of their original investment through their shares of common stock received upon conversion of the preferred stock, the Original Holder’s Group may designate one nominee to serve as a director on the Board (the “Investor Designee”), subject to the Investor Designee’s satisfaction of all applicable requirements regarding service as a director of the Company under applicable law, regulation or stock exchange rules and such other criteria and qualifications the Company maintained that is applicable to all directors as of the date of the issuance of the preferred stock. The Company is required to increase the size of the Board by one director and fill the vacancy with the Investor Designee. Thereafter, the Company is required to nominate the Investor Designee for election by the Company’s stockholders and recommend that the Company’s stockholders vote in favor of the election of the Investor Designee.

If for any reason the director that the Original Holder’s Group appointed or designated is no longer serving as a director, the Original Holder’s Group may appoint or designate a new person to fill the vacancy. At such time as the Original Holder’s Group owns less than 33% of their original investment, pursuant to the Shareholders’ Agreement, the rights of the Original Holder’s Group terminate, and the Investor Designee must resign.

Certain Other Provisions

Pursuant to the Shareholders’ Agreement, the Original Holder’s Group has certain registration rights, including customary demand and piggyback registration rights in respect of the shares of preferred stock and any shares of common stock issued upon conversion of the preferred stock.

Pursuant to the Shareholders’ Agreement, for so long as the Original Holder’s Group maintains at least 33% of their original investment (whether in preferred stock or shares of common stock issued upon conversion of the preferred stock), the Company is required to, prior to the issuance of equity securities to a third party (subject to certain exceptions), offer the Original Holder’s Group the right to acquire its pro rata portion of such equity securities.

MRC Global Inc. may not enter into any new, or amend, or modify any existing agreement or arrangement that by its terms restricts, limits, prohibits or prevents MRC Global Inc. from paying dividends on the Preferred Stock, redeeming or repurchasing the Preferred Stock or effecting the conversion of the Preferred Stock. Any such agreement, amendment or modification would require the consent of the holder of the Preferred Stock.

 

 

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PROPOSAL I: ELECTION OF DIRECTORS

 

 

The directors of the Company are elected by the stockholders annually. As of the date of this proxy statement, the Board consists of ten members. Eight directors will stand for re-election and be elected by holders of our common stock and preferred stock, voting together, and the holder of the Company’s preferred stock has designated and will designate the other director.

Each director’s term of office expires when his or her successor is elected and qualified at the Annual Meeting. At the Annual Meeting, our stockholders will elect the eight directors named below to hold office until the 2025 annual meeting of stockholders (the “2025 Annual Meeting of Stockholders”), or until their successors are elected and qualified, or their earlier retirement, removal or death. Each director has served continuously since the date of his or her appointment. All nominees have consented to being named in this Proxy Statement and to serve if elected. If any nominee should be unable or unwilling to stand for election as a director, it is intended that the common stock represented by proxies will be voted for the election of a substitute director that the Board may nominate.

As set forth in the Company’s Certificate of Designations and the Shareholders’ Agreement, the Original Holder’s Group has the right to designate one person to serve as a director on the Board. The Original Holder’s Group designated Henry Cornell to serve as a director on the Board effective June 10, 2018. The Original Holder’s Group, as holders of the preferred stock, have indicated to the Company their intent to continue to designate Mr. Cornell. Because the holders of the preferred stock designate Mr. Cornell, the holders of our common stock will not vote to elect him.

As described under “Corporate Governance Matters—Process for Identifying and Adding New Directors” below, the Board seeks a diverse group of candidates who possess the background, skills and expertise to make a significant contribution to the Board and the Company. The structure and composition of the Board are intended to leverage diverse perspectives of the Board members and promote effective oversight.

As described under “Background to the Solicitation” above, based upon the Company’s criteria for nominations of directors to the Board and the unanimous recommendation of the ESG & Enterprise Risk Committee, the Board unanimously determined to nominate Deborah G. Adams, Leonard M. Anthony, George J. Damiris, David A. Hager, Ronald L. Jadin, Dr. Anne McEntee, Robert J. Saltiel, Jr. and Robert L. Wood to serve until the 2025 Annual Meeting. See the section of this proxy statement titled “—Certain Information Regarding Nominees” below for more information about the skills, qualifications, attributes and experiences upon which the Board based its determination that its nominees should serve as directors.

As described previously, Engine Capital has nominated Bradley T. Favreau and Daniel B. Silvers (collectively, the “Engine Capital Nominees”) for election as directors at the Annual Meeting in opposition to the nominees recommended by the Board.

The Board does not endorse the Engine Capital Nominees, and unanimously recommends that you use the WHITE proxy card to vote “FOR” ONLY the election of the eight nominees proposed by the Board of Directors:

 

Deborah G. Adams    Ronald L. Jadin
Leonard M. Anthony    Dr. Anne McEntee
George J. Damiris    Robert J. Saltiel, Jr.
David A. Hager    Robert L. Wood

The Board strongly urges you to discard and NOT to vote using any blue proxy card that may be sent to you by Engine Capital. If you have already voted using a blue proxy card sent to you by Engine Capital, you have every right to change your vote and we strongly urge you to revoke that proxy by using the

 

 

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WHITE proxy card to vote in favor of ONLY the eight nominees that the Board recommends—by internet or by signing, dating and returning the enclosed WHITE proxy card in the postage-paid envelope provided. Only the latest validly executed proxy that you submit will be counted—any proxy may be revoked at any time prior to its exercise at the Annual Meeting. If you have any questions or require any assistance with voting your shares, please contact Morrow Sodali LLC, our proxy solicitation firm, at (203) 658-9400.

If Engine Capital withdraws its nominees, abandons its solicitation or fails to comply with the universal proxy rules after a shareholder has already granted proxy authority, shareholders can still sign and date a later submitted WHITE proxy card.

If Engine Capital withdraws its nominees, abandons its solicitation or fails to comply with the universal proxy rules, any votes cast in favor of any Engine Capital Nominee will be disregarded and not be counted, whether the vote is provided on the Company’s WHITE proxy card or the Engine Capital blue proxy card.

Although the Company is required to include all nominees for election on its proxy card, for additional information regarding the Engine Capital Nominees and any other related information, please refer to the Engine Capital proxy statement. You may receive solicitation materials from Engine Capital, including proxy statements and blue proxy cards. The Company is not responsible for the accuracy or completeness of any information provided by or relating to Engine Capital or its nominees contained in solicitation materials filed or disseminated by or on behalf of Engine Capital or any other statements Engine Capital may make. Shareholders will be able to obtain, free of charge, copies of all proxy statements, any amendments or supplements thereto and any other documents (including the WHITE proxy card) when filed by the applicable party with the SEC in connection with the Annual Meeting at the SEC’s website (http://www.sec.gov).

If you are a registered holder and submit a validly executed WHITE proxy card but do not specify how you want to vote your shares with respect to the election of directors, then your shares will be voted in line with the Board’s recommendation with respect to the proposal, i.e., “FOR” the eight nominees that the Board proposes as set forth in this proxy statement. You are permitted to vote for fewer than eight nominees. If you vote for fewer than eight nominees, your shares will only be voted “FOR” with respect to those nominees you have so marked. However, if you are a registered holder and submit a validly executed WHITE proxy card but vote “FOR” more than eight nominees, all of your votes with respect to the election of directors will be invalid and will not be counted. It is, therefore, important that you do not vote “FOR” more than eight nominees, so that your vote with respect to this item is counted.

If you are a beneficial holder and properly mark, sign and return your WHITE voting instruction form or use your WHITE voting instruction form or notice to vote via internet, your shares will be voted as you direct your bank or broker. However, if you sign and return your WHITE voting instruction form but do not specify how you want your shares voted with respect to the election of directors, they will be voted in line with the Board’s recommendation with respect to the proposal, i.e., “FOR” the eight nominees that the Board proposes as set forth in this proxy statement, depending on the bank or broker through which you hold your shares. You are permitted to vote for fewer than eight nominees. If you vote for fewer than eight nominees, your shares will only be voted “FOR” with respect to those nominees you have so marked. If you are a beneficial holder and you vote “FOR” more than eight nominees on your WHITE voting instruction form, all of your votes with respect to the election of directors will be invalid and will not be counted. It is therefore important that you provide specific instructions to your broker or bank regarding the election of Directors so that your vote with respect to this item is counted.

Each nominee has consented to serve if elected. If any nominee becomes unavailable to serve as a Director before the Annual Meeting, the Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee that the Board designates. At this time, the Board knows of no reason why any of the Board’s nominees would not be able to serve as a director if elected.

 

 

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Knowledge, Skills and Experience of Nominees Plus our Designated Director

The chart below summarizes the number of Board nominees plus the designated director that possess knowledge, skills and experiences covering areas we believe are important to our sustainable success and certain demographic information.

 

DIRECTOR   Deborah
Adams
  Leonard
Anthony
  Henry
Cornell
  David
Hager
  George
Damiris
  Ronald
Jadin
  Anne
McEntee
  Robert
Saltiel
  Robert
Wood

 Independence

                 

 Independent Director

                 

 Management Roles

                 

 CEO/Former CEO

                 

 CFO/Former CFO

                 

 COO/Operations/HSE/Operating Risks

                 

 Global/Intenational Exposure/Experience

                 

 Financial Acumen/Financial Expert/Financial Risks

                 

 Industry Experience

                 

 PVF/Industrial Distribution Experience/Related Risks

                 

 Oilfield Services/Equipment Sales Experience

                 

 Supplier/Supply Chain Experience/Related Risks

                 

 Customer End Sectors

                 

 Gas Utilities

                 

 Downstream, Industrial & Energy Transition

                 

 Production & Transmission Infrastructure

                 

 Information Technology Experience

                 

 IT Systems

                 

 Cyber & Information Security/Related Risks

                 

 Emerging IT Risks

                 

 IT Systems Implementation Risks

                 

 Environment & Climate

                 

 Environmental & Climate/Related Risks

                 

 Transactional Experience

                 

 Public Company M&A

                 

 Public Company Divestitures

                 

 Capital Markets Experience

                 

 Board Service

                 

 Other Public Boards

  2   0   0   0   1   0   0   0   1

 Prior Public Boards

  1   2   5   2   2   0   0   2   3

 Personal/Demographics

                 

 Tenure

  6.6   11.6   5.0   0.1   2.6   2.6   1.6   3.2   8.8

 Age

  63   69   68   67   64   63   53   61   70

 Gender (Male or Female)

  F   M   M   M   M   M   F   M   M

 Racially or Ethnically Diverse

                 

Note: Tenure is based on years as a director while MRC Global was a public company. Mr. Anthony has been a director since 2008, prior to the Company’s initial public offering.

 

 

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Certain Information Regarding Nominees

Set forth below for each individual nominated for election as a director of the Company is biographical information and information regarding the business experience, qualifications and skills of each director nominee, including the information and qualifications that led the Board to conclude that the director nominee is qualified to serve on our Board. Current Board committees and leadership roles are listed for 2024 – 2025, subject to the re-election of each director.

 

 

   LOGO   

 

Director Since: 2015

Age: 70

 Chairman of the Board

 Independent

   

 

Robert L. Wood

 

Background. Since 2019, Mr. Wood has been a partner in the consulting firm The McChrystal Group, specializing in leadership development for business organizations. From 2004 to 2008, Mr. Wood was chairman, president and CEO of Crompton Corporation (which merged with Great Lakes Chemical to become Chemtura Corporation in 2005), a global, specialty chemicals company. Mr. Wood spent 27 years in a variety of sales, marketing and management roles within the Dow Chemical organization and ultimately became the business group president of Thermosets and Dow Automotive Group. In this role, he was named to Dow’s Corporate operating board, which was charged with setting corporate strategy and establishing corporate policies. Prior to that, Mr. Wood was the global vice president of Polyurethanes and global vice president of Engineered Plastics. In addition to the public company listed below, he served on the board of directors of Univar Solutions, Inc., a chemical distribution company, from 2016 through September 2023. Mr. Wood graduated from the University of Michigan with a Bachelor of Arts in 1976.

 

Other Active Public Company Boards. In addition to serving on our Board, Mr. Wood serves on the boards of directors of the following public companies:

    Company   Business
   

 

Linde plc

(NYSE: LIN)

 

 

Gas distribution

    Key Skills, Qualifications and Experience. Mr. Wood brings to the Board executive leadership experience through his more than 25 years of public company experience, including his leadership as CEO of Crompton. He also has significant expertise and insight into our downstream customer needs and desires because of his 30 years of global chemical industry experience, a prime market in the downstream sector for the Company’s products and services. Mr. Wood has worked in serving multiple international markets, including many of those that the Company services, and Mr. Wood has experience with global suppliers. Mr. Wood has served on a number of public and non-profit boards and has deep experience in governance. He is lead independent director of Linde plc. Mr. Wood has experience in public market transactions, having served as a chairman of the board and CEO of Crompton in its merger with Great Lakes Chemical, as a director of Praxair Distribution, Inc., which merged with Linde plc, and as a director of Univar, which was sold to a private equity fund managed by Apollo Global Management Inc. He has served our Board as Chairman of our Compensation & Human Capital Committee and his over seven years of experience on our Board has provided him the experience regarding the issues that our business faces.

 

 

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   LOGO

 

 Director Since: 2017

Age: 63

 Committees:

Compensation & Human

 Capital (chair)

 ESG & Enterprise Risk

 Independent

 

 

    

 

Deborah G. Adams

 

Background. From 2014 until her retirement in 2016, Ms. Adams served on the executive leadership team at Phillips 66 as senior vice president of health, safety and environmental, projects and procurement. From 2008 – 2014, she led the midstream operations of Phillips 66 and ConocoPhillips as the division president of transportation. She has also held various leadership posts including leading the international refining business for ConocoPhillips, serving as general manager of global downstream IT systems and serving on several of ConocoPhillips’ joint venture boards. In addition to the public companies listed below, Ms. Adams served on the board of directors of Gulf Port Energy, an oil and gas production development company, from March 2018 through May 2021. She currently serves on the board of directors of Austin Industries, a privately held, employee-owned construction company, which she joined in May 2018. Ms. Adams served her alma mater, Oklahoma State University, as a member of the foundation board of trustees from July 2012 until June 2020 and continues to serve on the foundation board of governors. Ms. Adams has been inducted into the Oklahoma State University College of Engineering, Architecture and Technology Hall of Fame. Since May of 2021, Ms. Adams has served as a member of the Advisory Board for the TriCities Chapter of the National Association of Corporate Directors (“NACD”).

 

Other Active Public Company Boards. In addition to serving on our Board, Ms. Adams serves on the board of directors of the following public companies:

     Company    Business
    

 

EnLink Midstream LLC

(NYSE: ENLC)

  

 

Midstream energy services

    

Amplify Energy Corp

(NYSE: AMPY)

   Oil and gas production and development
     Key Skills, Qualifications and Experience. Ms. Adams has extensive leadership experience in midstream and downstream businesses, both key end sectors for the Company’s products and services. Her expertise in the procurement function from a customer view along with her experience in information systems adds to her qualifications to serve on our Board. Ms. Adams has worked abroad and has international experience in our end markets, which provides her insight into the business of the Company’s International segment. Ms. Adams has served on a number of public, private and non-profit company boards and has deep experience in governance. She is the chair of the nominating and governance committees of the boards of directors of both Amplify and Austin Industries. Each of those committees also has oversight of those companies sustainability initiatives and risks.

 

 

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   LOGO

 

 Director Since: 2008

 Age: 69

 Committees:

Audit

Compensation &
Human Capital

 Independent

     

 

Leonard M. Anthony

 

Background. Mr. Anthony served as the president and CEO of WCI Steel, Inc., an integrated producer of custom steel products, from December 2007 to October 2008. He was also a member of the board of directors of WCI Steel from December 2007 to October 2008. Mr. Anthony retired in October 2008. He served as an executive vice president and chief financial officer of Dresser-Rand Group, Inc. from April 2005 to August 24, 2007. Mr. Anthony has more than 25 years of financial and operational management experience with various corporations, including oilfield equipment firms and steel producers. He was previously a director of privately-held The NanoSteel Company, an advanced materials company until April of 2022 and Tech Precision Corporation until April 2017. Tech Precision’s subsidiary, Rancor, Inc., provides high precision fabrication and machining. Mr. Anthony earned a bachelor of science in accounting from Pennsylvania State University and a masters of business administration from the Wharton School of the University of Pennsylvania. He also completed the Advanced Management Program (A.M.P.) from Harvard Business School.

 

Other Active Public Company Boards. None.

 

Key Skills, Qualifications and Experience. Mr. Anthony has extensive experience at multiple levels of financial control, planning and reporting and risk management for large corporate enterprises. Mr. Anthony has public company leadership experience with an oilfield equipment company, which shares the same upstream customer base as our Company. He also has experience in steel product industries. Most of the Company’s key products are made of steel, so Mr. Anthony’s steel experience provides him insight into our suppliers, products and customer product needs. Mr. Anthony has served on a number of public, private and non-profit company boards and has deep experience in governance. Mr. Anthony is the longest serving continuous director on our Board, and as such, has deep experience regarding the issues that our business faces. He has been designated as a financial expert on our Audit Committee.

 

 

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   LOGO

 

Director Since: 2021

Age: 64

 Committees:

Compensation &

 Human Capital

 ESG & Enterprise Risk

 (chair)

 Independent

    

 

George J. Damiris

 

Background. Mr. Damiris previously served as the president and chief executive officer of both HollyFrontier Corporation and Holly Energy Partners from 2016 until his retirement in 2019. From 2007 until 2015, he served in various leadership roles with HollyFrontier, and before that, with Koch Industries. He holds a B.S. in Chemical Engineering and an MBA from Case Western Reserve University.

 

Other Active Public Company Boards. In addition to serving on our Board, Mr. Damiris serves on the board of directors of the following public company:

     Company    Business
    

 

Eagle Materials, Inc.

(NYSE: EXP)

  

 

Building materials company

    

 

Key Skills, Qualifications and Experience. Mr. Damiris has extensive public company leadership experience in the refining and pipeline transportation industries, both of which are in our core customer base. His refining experience, in particular, is directly related to the downstream sectors that the Company serves. As CEO and a director of HollyFrontier and Holly Energy Partners, Mr. Damiris has deep business leadership experience, having addressed the demands of investors and other stakeholders in a public company. Mr. Damiris has served on a number of public, private and non-profit company boards, providing him with deep governance experience.

 

 

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 Director Since: 2024

 Age: 67

 Committees:

Audit

ESG & Enterprise Risk

 Independent

     

 

David A. Hager

 

Background. From 2016-2023, Dave Hager was the executive chairman of the Devon Energy Corporation. Prior to that he served in various other leadership roles from 2009 onward, including his serving as a non-executive director from 2007-2009 and as president and chief executive officer from 2015 to 2021. Mr. Hager started his career in 1979 with the Mobil Oil Corporation (now Exxon Mobil Corporation). From there he worked at the Sun Company, Inc. from 1981 to 1989. From 1989 to 1999, Mr. Hager served in various leadership roles as a part of Oryx Energy Company. He later served as executive vice president of Kerr-McGee, which was acquired by Anadarko in 2006. Mr. Hager has previously served on the boards of EnLink Midstream, LLC, a midstream energy services company, and Pride International, Inc., an oil production company. Mr. Hager received a B.S. in geophysics from Purdue University and an MBA from Southern Methodist University.

 

Other Active Public Company Boards. None.

 

Key Skills, Qualifications and Experience. Mr. Hager has 40 years of experience in the oil and gas industry, from the very beginning of his career in 1979, which provides him with profound knowledge of the Company’s customer base in that sector. While with Devon Energy, Mr. Hager led it to become a leaner and more financially strong organization that was prepared for dramatic changes in commodity prices, which will serve the Company in an ever-evolving market. Mr. Hager has experience in public market transactions, having served on the board and as CEO of Devon Energy when it merged with WPX Energy. Mr. Hager is actively involved in the broader energy industry. Mr. Hager has served on Board of Directors of the American Petroleum Institute and the American Exploration & Production Council. Mr. Hager has served on several private boards in his community including the Greater Oklahoma City Chamber of Commerce, the Oklahoma City National Memorial, the YMCA of Greater Oklahoma City and United Way of Central Oklahoma, providing him with deep leadership experience and community engagement.

 

 

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Director Since: 2021

Age: 63

 Committees:

 Audit (Chair)

 ESG & Enterprise Risk

Independent

 

 

  

    

 

 

 

  

 

Ronald L. Jadin

 

Background. Mr. Jadin previously served as the chief financial officer of W.W. Grainger, Inc. from 2008 until his retirement in 2018. From 1998 until 2008, he served in various finance and leadership roles with Grainger, and before that, with General Electric Company. He holds a B.A. in Economics from Yale University and an MBA from the University of Wisconsin – Whitewater.

 

Other Active Public Company Boards. None.

 

Key Skills, Qualifications and Experience. As a prior chief financial officer of a public company and finance professional, Mr. Jadin has extensive experience at multiple levels of financial control, planning and reporting and risk management for large corporate enterprises. W.W. Grainger is an industrial supply distribution company, and Mr. Jadin’s years of experience with W.W. Grainger provides the Company with key insights regarding other distributors and supply chain issues. Mr. Jadin has had experience in the implementation and improvement of information technology systems, which is relevant to the Company’s continued digital transformation in this area. Mr. Jadin has been designated as a financial expert on our Audit Committee.

 

 

 

 

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Director Since: 2022

Age: 53

Committees:

 Audit

 Compensation &

 Human Capital

Independent

 

 

  

    

 

 

 

  

 

Dr. Anne McEntee

 

Background. Dr. Anne McEntee currently serves as Managing Director of Asset Management on the Leadership Team of Wren House Infrastructure Management Ltd., a global infrastructure investment firm. From 2017 until 2022 she served as the chief executive officer of General Electric Company’s (“GE’s”) Digital Services unit of GE Renewable Energy from 2017 until 2023. From 2013 until 2017, she led the Onshore Wind unit of GE Renewable Energy and from 2011 until 2013 she led the Flow & Process Technologies division of GE Oil & Gas. Dr. McEntee joined GE in 1998 and has held various managerial and leadership roles at GE Power Systems and GE Energy. She holds a B.S. in Applied Mathematics, M.S. in Mathematics and PhD in Applied Mathematics, all from Rensselaer Polytechnic Institute. Dr. McEntee is a director of privately held i3 Broadband, a provider of broadband fiber optic cable connections to homes in the Midwestern U.S., and Seacube Container Leasing Limited, a leading global acquirer, seller, and lessor of international equipment.

 

Other Active Public Company Boards. None.

 

Key Skills, Qualifications and Experience. Dr. McEntee has extensive experience in renewable energy, working across GE’s broader portfolio of on- and offshore wind power generation, electric grid solutions, hybrid energy storage and hydropower businesses. These experiences provide her insight into the Company’s opportunities and role in the energy transition from carbon-generated energy into renewables. In addition, her experiences in the Flow & Process Technologies division of GE Oil & Gas are directly relevant to the Company’s products and services provided to customers in the oil and gas and downstream sectors. She has a Master Black Belt in Six Sigma training, and during her career at GE, she has led global sourcing functions. These experiences are directly relevant to provide insight to the Company regarding its business processes and supply chain function. Dr. McEntee has served on a number of public, private and non-profit company boards, providing her with deep governance experience.

 

 

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 Position: President

 & CEO

 Director Since: 2021

 Age: 61

 

 

 

  

 

 

 

 

Robert J. Saltiel, Jr.

 

Background. Rob Saltiel serves as our President and CEO and on our Board of Directors. Rob previously served as President and CEO and a member of the board of directors of Key Energy Services, Inc. from 2018 to 2019 and as President and CEO and a member of the board of directors of Atwood Oceanics, Inc. from 2009 to 2017. Rob’s earlier experience includes positions in strategy, operations and marketing at Transocean, Nabors Industries, Enron, McKinsey and ExxonMobil. Rob received a bachelor of science degree in chemical engineering from Princeton University and a masters of business administration from Northwestern University’s Kellogg School of Management.

 

Other Active Public Company Boards. None.

 

Key Skills, Qualifications and Experience. Mr. Saltiel is uniquely qualified to serve as one of our directors due to his extensive executive and leadership experience in the oil and natural gas industry, including oilfield services, his global experience and his experience leading publicly traded companies. He began his career at a petroleum refinery and his experiences have provided him insight into this important Company customer segment. Early in his career, Mr. Saltiel worked at McKinsey & Company and, as a result, he has a keen perspective on business processes, marketing and generating profits for investors. As CEO and a member of the board of Atwood Oceanics, Inc., Mr. Saltiel has experience in public market transactions when Atwood was sold to Ensco plc. He has worked in oilfield services and deeply understands the Company’s oil and gas customer base. Mr. Saltiel has lived and worked outside of the United States, which has also given him a perspective on our International segment and global business.

 

 

The Company’s bylaws provide that for a director nominee to be elected, the director must receive a plurality of the votes cast by the stockholders present in person or represented by proxy voting together as a single class with respect to that director nominee’s election at the Annual Meeting.

Abstentions and broker non-votes will not be treated as “FOR” votes cast for any nominee, and therefore will have no effect on the outcome of Proposal I — Election of Directors. Any director who receives a greater number of “WITHHOLD” votes than “FOR” votes in an uncontested election is expected to tender to the Board the director’s resignation as a director promptly following the certification of election results pursuant to the Company’s Corporate Governance Guidelines. Pursuant to these guidelines, the Board must accept or reject such resignation within 90 days following the certification of election results and publicly disclose its decision.

 

OUR BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” EACH, OR “FOR ALL”, OF THE ELECTION OF THE ABOVE NOMINEES.

 

 

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Director Designated by the Holder of the Company’s Preferred Stock

 

 

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 Director Since: 2018

 Age: 68

Independent

   

 

Henry Cornell

 

Background. Mr. Cornell is the founder and senior partner of Cornell Capital LLC, a private investment firm formed in 2013 and previously served as a director of the Company from 2007 until he resigned from the board in 2015. From 1984 until May 2013, Mr. Cornell was employed by Goldman, Sachs & Co., where he was the vice-chairman of Goldman Sachs’ Merchant Banking Division. Mr. Cornell has over 40 years of experience across all aspects of private equity investing in a broad array of industries. He began his career as an attorney with Davis Polk & Wardwell before joining Goldman Sachs’ Investment Banking Division in 1984. He founded Goldman Sachs’ principal investment business in Asia. Under his leadership, Goldman Sachs made numerous landmark investments in the region. Mr. Cornell returned to New York in 2000 as the head of Private Equity Americas and Asia, and as a member of the Global Investment Committee. Mr. Cornell earned a bachelor of arts from Grinnell College in 1976 and a juris doctorate from New York Law School in 1981. Mr. Cornell is a member of the board of trustees of Mt. Sinai Hospital, the Whitney Museum, The Asia Society and the Navy SEAL Foundation and is a member of the Council on Foreign Relations. He has previously been a member of the boards of directors of Kinder Morgan, Inc., Bill Barrett Corp., Cypress Energy Partners LP and Cobalt International Energy, Inc.

 

Other Active Public Company Boards. None.

 

Experience. Mr. Cornell led Goldman Sachs’ acquisitions of its interest in the Company’s predecessor companies, including (among others) McJunkin Corporation, Red Man Pipe and Supply, Transmark and Midfield Supply, beginning in 2007. These companies were merged to form MRC Global before Goldman Sachs subsequently sold its entire interest through the Company’s initial public offering and subsequent follow-on offerings. As a result, he has deep knowledge regarding the Company, its markets and its business and operations. Given his career at Goldman Sachs, Mr. Cornell brings extensive experience in financial matters relating to both public and private companies. He has deep experience in capital markets and capital raising issues. He also has extensive prior experience serving on boards of directors of other significant companies including multi-national companies in the energy industry, which has provided him with relevant experience in a variety of industries and on a variety of corporate governance matters. Mr. Cornell has lived and worked outside of the United States, principally in Asia, and his experience has provided the Company with deep insights regarding the Company’s global business and International segment.

 

 

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Director Not Standing for Election

 

 

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 Director Since: 2015

 Age: 65

Committees:

 ESG &

 Enterprise Risk (Chair)

 Audit

Independent

  

 

 

  

 

 

Barbara J. Duganier*

 

Background. From 2004 to 2013, Ms. Duganier was a managing director at Accenture, a multinational professional services company that provides services in strategy, consulting, digital technology and operations. She held various leadership and management positions in Accenture’s outsourcing business, including as global chief strategy officer, during which time she consulted for numerous clients in the energy, chemicals, mining and utilities industries. Prior to joining Accenture, Ms. Duganier, a certified public accountant, was an auditor and a consultant at Arthur Andersen, where she became a partner and held various leadership and management roles, including as global chief financial officer of Andersen Worldwide. She earned a B.S.B.A. in accounting from John Carroll University in 1979. Ms. Duganier is a director of privately held McDermott International, a multinational engineering, procurement and construction company, and privately held Pattern Energy, a renewable energy company. Ms. Duganier was previously a director of the general partner of Buckeye Partners, L.P., a midstream pipeline operator, and Noble Energy, an oil and natural gas exploration and production company.

 

Other Active Public Company Boards. In addition to serving on our Board, Ms. Duganier serves on the board of directors of the following public company:

     Company    Business
    

 

Texas Pacific Land

Corporation (NYSE: TPL)

  

 

Land resource management and water services company

    

 

Key Skills, Qualifications and Experience. Ms. Duganier’s training and extensive experience as a certified public accountant, her track record of leading large organizations, her business experience both within and outside of the energy industry, her information technology systems experience and her diversified board experience make her well-qualified to serve on our Board. Her service on the Pattern Energy board provides insight to the Company regarding energy transition projects, and her service on the McDermott board provides the Company with insights into engineering, procurement and construction firms, many of whom are Company customers. Ms. Duganier has experience in public market transactions, having served as a director with HCC Insurance Holdings, Inc. during its acquisition by Tokio Marine Holdings, Inc., as a director of the general partner of Buckeye Partners, L.P., during its sale to a private equity fund operated by IFM Investors plc and as a director of Noble Energy, Inc. during its sale to Chevron Corporation. She has been designated as a financial expert on our Audit Committee. Ms. Duganier earned her CERT Certificate in Cybersecurity Oversight through NACD by completing the Cyber-Risk Oversight Program. In 2020, the NACD named her to the NACD’s Directorship 100. She received her NACD Directorship Certification in 2021.

 

*  Ms. Duganier notified the board of her desire not to stand for re-election at the 2024 Annual Meeting of Stockholders and accordingly the Board determined to not re-nominate Barbara J. Duganier for re-election at the 2024 Annual Meeting of Stockholders. Effective as of the end of Ms. Duganier’s term of office, the Board has decreased the size of the Board from ten to nine directors.

 

 

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CORPORATE GOVERNANCE MATTERS

 

 

The primary responsibility of our Board is to foster the long-term success of the Company by promoting the interests of our stockholders. Our Board believes that strong corporate governance is critical to achieving our performance goals and to maintaining the trust and confidence of investors, employees, customers, suppliers, business partners, regulatory agencies and other stakeholders.

Corporate Governance Guidelines

The Board has adopted Corporate Governance Guidelines to help guide and promote our good corporate governance and responsible business practices. The Corporate Governance Guidelines provide a framework for the effective governance of MRC Global as a whole and also address the operation, structure, and practice of the Board and its committees. The Board’s ESG & Enterprise Risk Committee reviews these guidelines at least annually. Our Corporate Governance Guidelines can be found on the Company’s website at www.mrcglobal.com.

Strategic Planning

During the year, the Board meets with management to discuss and approve our strategic plans, financial goals and capital allocation, taking into account potential or existing disruptive forces, innovation, macroeconomic factors, customer end market trends, the competitive landscape and other factors critical to successful performance. The Board also conducts quarterly reviews of progress on objectives and strategies. During Board meetings, directors review key issues and financial performance. The Board meets privately with the CEO at least four times per year and meets in executive session without the CEO at each regular Board meeting and additionally as required. Further, the CEO communicates regularly with the Board on important business opportunities and developments. The Board and the CEO also annually discuss and collaborate to set the CEO’s performance goals and objectives. The Board meets at least annually in executive session to assess the CEO’s performance.

The Board maintains a process for planning orderly succession for the CEO and other executive officer positions and oversees executive officer development. The Compensation & Human Capital Committee assists the Board with oversight of the planning for orderly succession as described in further detail below under the caption “CEO and Senior Management Succession Planning.”

Board Membership and Qualifications

The Board regularly considers the long-term make-up of our Board, leadership structure and how the members of our Board change over time. The entire Board selects nominees for the Board in accordance with the procedures and criteria set forth in our Corporate Governance Guidelines. The Board will also consider director candidates from stockholders that have been properly nominated in accordance with our Corporate Governance Guidelines and as further detailed under Deadlines for Submitting Stockholder Proposals for 2025 Annual Meeting of Stockholders on page 14. The Board will consider these stockholder nominees in the same manner and by the same criteria as Board nominees. The Board strives to maintain an engaged, independent Board with broad and diverse experience and judgment that is committed to representing the long-term interests of our stockholders. The Board seeks a diverse group of candidates who possess the background, skills and expertise to make a significant contribution to the Board and the Company. The structure and composition of the Board are intended to leverage diverse perspectives of the Board members and promote effective oversight.

When reviewing director candidates, the Board considers each candidate’s qualifications for membership on the Board, including the enhanced independence, financial literacy and financial expertise standards that Audit Committee membership may require and assesses the performance of current directors who are proposed to be renominated to the Board.

 

 

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Board Diversity

Our Board is committed to diversity of experience, backgrounds and perspectives to provide effective oversight of the Company’s strategies and risks. The Board believes its members must be willing and able to devote adequate time and effort to Board responsibilities. Our Corporate Governance Guidelines, which were amended in November 2023, provide that the ESG & Enterprise Risk Committee and the Board, in identifying Board candidates, will consider candidates who possess the background, skills and expertise to make significant contributions to our Board, including business experience, thought, style, culture, gender, geographic background, race, visible minorities, national origin, indigenous persons, religion, gender identity and expression, sexual orientation, disability, service in the armed forces, age and other personal characteristics. Currently, 44% (4 of 9) of our directors (which excludes the preferred stock designated director) are women or ethnically/racially diverse; three of our current Board members are women, and one director is of a race other than white and 50% (2 of 4) of the directors that hold our Board leadership positions (including the Chairman of our Board) are women or of a race other than white. 38% (3 of 8) of our director nominees (which excludes the preferred stock designated director) are women or ethnically/racially diverse. In light of Ms. Duganier’s decision in March 2024 to not stand for re-election at the Annual Meeting, when seeking new director candidates, the ESG & Enterprise Risk Committee and the Board expect to consider additional female candidates.

Process for Identifying and Adding New Directors

The Board has added five new directors in recent years. In March of 2024, the board added one new director, David Hager. In September of 2022, the board added one new director, Dr. Anne McEntee. In November of 2021, the Board added two new directors, George Damiris and Ronald Jadin. In February of 2021, the Board added our CEO who is also a director, Robert Saltiel. The ESG & Enterprise Risk Committee, which acts as our nominating and governance committee, identified, screened and recommended director candidates for nomination to the Board. The candidates were evaluated in light of the then-existing composition of the Board and the background and areas of expertise of existing directors and potential nominees. Throughout the process, the ESG & Enterprise Risk Committee and the Board were aided by an independent search firm that the Board engaged. The process for identifying and adding new directors is as follows:

Evaluate Board Composition. The ESG & Enterprise Risk Committee evaluates Board composition annually and identifies skills, experience and capabilities desirable for new directors in light of the Company’s business and strategy, including (among others) customer or end market experience, leadership experience, and experience in the areas of ESG and digital technology.

Identify a Diverse Pool of Candidates. A diverse pool of potential director candidates is identified using multiple sources such as independent search firms and director recommendations. The Board does not have a specific director diversity policy, but it fully recognizes that having a variety of points of view improves the quality of dialogue, contributes to a more effective decision-making process, and enhances overall culture in the boardroom.

Review Candidates. Potential candidates are comprehensively reviewed and are the subject of rigorous discussion during the ESG & Enterprise Risk Committee meetings and Board meetings. The candidates that emerge from this process are interviewed by members of the ESG & Enterprise Risk Committee and other Board members, including the Chairman and the CEO. During these meetings, directors assess candidates on the basis of their skills and experience, their personal attributes, and their expected contribution to the current mix of competencies and diversity of the Board. At the same time due diligence is conducted, the Chairman, as well as the ESG & Enterprise Risk Committee, solicits feedback from other directors and persons outside the Company.

Recommend Potential Director for Approval. The ESG & Enterprise Risk Committee recommends potential directors to the Board for approval. If a director is appointed between annual meetings of stockholders, the Board will approve the director’s appointment to an open position on the Board. Stockholders vote on director nominees at the Annual Meeting.

 

 

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Onboard the New Director. For each new director, we conduct a comprehensive onboarding process to ensure that he or she has a full understanding of the business and to allow the director to make meaningful contributions quickly, which includes a combination of one-on-one sessions with management and other Board members, facility site visits, written materials and training.

Board Annual Self-Assessment and Continuing Education

The Board and each committee perform an annual self-assessment to evaluate its effectiveness in fulfilling its obligations. The ESG & Enterprise Risk Committee leads the Board in the self-assessment. Each year, our ESG & Enterprise Risk Committee discusses and considers the appropriate approach and approves the form of evaluation. Members of our Board and each of our Board committees participate in the formal evaluation process, responding to questions designed to elicit information to be used in improving Board and committee effectiveness. In response to feedback from the evaluation process, our Board and committees work with management to take steps to improve policies, processes and procedures to further Board and committee effectiveness.

As in past years, in 2023, the ESG & Enterprise Risk Committee retained outside counsel and the Company’s general counsel to assist the committee in tailoring a self-assessment survey to meet the needs of the Board. The outside counsel administered the self-assessment as an independent person to foster frank feedback regarding Board and committee performance. Outside counsel then collated the results of the survey and reviewed the results to provide legal advice to the Board regarding any areas of improvement. The Chair of the ESG & Enterprise Risk Committee discussed the results of the self-assessment and any legal advice, and the Board and each committee implemented improvement steps or changes as needed.

During these assessments, the Board reviews the background and qualifications of each of their respective members, as well as an assessment of the Board’s and each of its committees’ composition in light of their respective needs and objectives after considering issues of judgment, diversity, age, skills, background and experience. Our Board also assesses its overall succession planning process and committee composition.

The Company provides membership in the National Association of Corporate Directors (NACD) to Board members, as well as the opportunity to attend director education programs at other institutions, to assist them in remaining current with exemplary board and committee practices and developments in corporate governance.

Communications with Directors

Any stockholder or other interested person may communicate with our Board, individually or as a group, by contacting our Corporate Secretary or the Chairman of the Board. This contact information is maintained on the Investors tab of our website at www.mrcglobal.com.

The current contact information for either the Corporate Secretary or the Chairman of the Board is as follows and should be addressed to either of their attention, as applicable:

MRC Global Inc.

Attention: Corporate Secretary

1301 McKinney Street, Suite 2300

Houston, TX 77010

E-mail: gc@mrcglobal.com

Communications to directors at this address will be forwarded to the relevant director(s) except for solicitations or other matters not related to MRC Global.

 

 

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Code of Ethics

We have adopted a Code of Ethics that applies to our directors, officers and employees. The Code of Ethics sets forth guidelines for deterring wrongdoing and promoting conduct in accordance with ethical standards. Our Code of Ethics can be found on our Company’s website at www.mrcglobal.com. If we amend or waive provisions of this Code of Ethics, we intend to also disclose the same on our website. We have also adopted a Code of Ethics for Principal Executive and Senior Financial Officers that applies to the principal executive officer, the principal financial officer, the principal accounting officer and the controller, or other persons performing similar functions for the Company. The Code of Ethics for Principal Executive and Senior Financial Officers is intended to supplement the Code of Ethics with additional applicable policies, procedures, and guidelines. The Code of Ethics for Principal Executive and Senior Financial Officers can be found at www.mrcglobal.com. If we amend or waive provisions of the Code of Ethics for Principal Executive and Senior Financial Officers, we intend to also disclose the same on our website.

Director Independence

The New York Stock Exchange (“NYSE”) listing standards and the Company’s Corporate Governance Guidelines require that a majority of our directors be independent. Additionally, all members of the Audit Committee, Compensation & Human Capital Committee and ESG & Enterprise Risk Committee (acting as our nomination and governance committee) are required to be independent. The NYSE listing standards include objective tests that can disqualify a director from being treated as independent, as well as a subjective element, under which the Board must affirmatively determine that each independent director has no material relationship with the Company or management. The Board and the ESG & Enterprise Risk Committee broadly considers all relevant facts and circumstances and apply the standards listed in Annex A of the Company’s Corporate Governance Guidelines in making independence determinations.

 

The Board has determined that each of our directors, other than Mr. Saltiel, qualifies as an independent director within the meaning of Section 303A.02 of the NYSE Listed Company Manual and under the independence requirements that our Board has adopted as set forth in our Corporate Governance Guidelines.

Board Leadership Structure

Robert Wood is our non-executive chairman and presides over all meetings of the Board and stockholders, reviews and approves meeting agendas, meeting schedules and other information, acts as a liaison between the outside directors and management, consults on stockholder engagement and governance matters and performs such other duties as the Board requires from time to time. The CEO is responsible for working with the Board in setting the Company’s strategic direction and day-to-day leadership and performance. Having an independent non-executive chairman allows management to deepen its focus on customers, growing the business, cost control, operational excellence and delivering stockholder value. The Board believes that having an independent, non-executive chairman:

 

  (1)

increases the independent oversight of the Company and enhances the Board’s objective evaluation of our CEO;

 

  (2)

provides our CEO with an experienced sounding board in the chairman; and

 

  (3)

provides an independent spokesperson for the Company.

Our Compensation & Human Capital, Audit and ESG & Enterprise Risk Committees are currently comprised entirely of independent directors. The Board believes that having an independent, non-executive chairman of the Board and independent Compensation & Human Capital, Audit and

 

 

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ESG & Enterprise Risk Committees provides a structure for strong independent oversight of our management. Each committee chair presides over the chair’s committee meetings and reviews and approves meeting agendas, schedules and other information for the committee. We believe that the Board’s leadership structure, including its independent chair, majority of independent directors, and allocation of oversight responsibilities to appropriate committees, provides effective board-level risk oversight.

CEO and Senior Management Succession Planning

Our Board oversees management succession planning and talent development. During the year, the Compensation & Human Capital Committee is engaged on topics related to leadership and talent development, with one meeting dedicated to an in-depth review of succession planning for key executive officer roles, including the CEO. The succession plans are reviewed with the full Board at least annually. The Board also reviews succession planning in the context of our overall business strategy. Potential leaders are visible to Board members through formal presentations and informal events to allow directors to personally assess candidates.

Our Board also establishes steps to address emergency CEO succession planning in extraordinary circumstances. Our emergency CEO succession planning is intended to enable our Company to respond to unexpected emergencies and minimize potential disruption or loss of continuity to our Company’s business and operations.

Director Attendance at Meetings of the Board, Committees and Annual Meeting of Stockholders

Our Board Members are expected to attend our 2024 Annual Meeting of Stockholders.

 

All Board members standing for re-election who were then Board members at our 2023 Annual Meeting of Stockholders attended that meeting.

During 2023, the Board held ten meetings. Each of our nominees who were directors in 2023 attended at least 75% of the aggregate meetings of our Board and committees of the Board on which the person served during 2023.

The directors of the Board meet in regularly scheduled executive sessions at times and for reasons as they desire and set, with at least four executive sessions per year. During the sessions, the chairman presides.

The Board’s Role in the Oversight of Risk Management

The Board, as a whole, is responsible for overseeing our risk exposure as part of determining a business strategy that generates long-term stockholder value. The Board shapes our enterprise-wide risk policies, desire for risk taking and acceptable risk tolerance levels that provide the foundation for our overall business strategy. The Board recognizes that risk mitigation not only preserves value, but, when managed appropriately, can create value and opportunity for the Company.

The Board recognizes that purposeful and appropriate risk-taking in certain areas is important for the Company to be competitive and to achieve our long-term goals. Accordingly, the Board has established an enterprise risk management (“ERM”) framework through which it regularly identifies key risks that face the Company and carefully considers our appetite for each risk. This ERM framework is designed to identify, assess, prioritize, address, manage, monitor and communicate risks across the Company’s operations and foster a corporate culture of integrity and risk awareness.

As part of the Company’s strategic planning process, the Company maintains a Risk Management Committee that assists the Board in identifying key risks and the Board’s oversight responsibilities over

 

 

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risk management. Our Risk Management Committee is comprised of the following members of our management:

 

 

CEO

 

 

CFO

 

 

General Counsel

 

 

Senior Vice President, North America Operations and e-Commerce

 

 

Senior Vice President, Sales and Marketing

 

 

Senior Vice President, Supply Chain

 

 

Senior Vice President, Chief Human Resources Officer

 

 

Senior Vice President, International

 

 

Senior Vice President, Sustainability and Assistant General Counsel

 

 

Vice President, Chief Accounting Officer

 

 

 

Vice President, Business Systems

 

Vice President, Tax

 

 

Vice President, Corporate Development and Financial Planning & Analysis

 

 

Vice President, Chief Information Officer

 

 

Vice President, Investor Relations & Treasury

 

 

Vice President, Total Rewards and HR Operations

 

 

Assistant General Counsel and Assistant Secretary

 

 

Senior Director, Corporate Accounting

 

 

Senior Director, Information Security

 

 

Senior Director, Risk Management

 

 

Director, Financial Reporting

 

 

The principal responsibilities of the Risk Management Committee are to review, assess and monitor any material risks or exposures associated with the conduct of our business, our corporate culture, the internal risk management processes or systems implemented to identify, mitigate, monitor or manage these risks or exposures and the Company’s policies and procedures for risk management.

Consistent with this approach, one of the Board’s primary responsibilities is overseeing and interacting with senior management with respect to key aspects of the Company’s business, including risk assessment, monitoring, managing and risk mitigation of the Company’s top risks. Our Board meets with senior management at regular Board meetings and, if necessary, at other times to discuss the strategy and success in addressing our identified key risks and any potential disruptive forces along with any other risks that we may face.

In addition to the foregoing, the Board has tasked designated committees of the Board to assist with the oversight of certain categories of risk management, and the committees report to the Board regularly on these matters. All committees play significant roles in carrying out the risk oversight function that typically focuses in their areas of expertise. In general, the committees oversee the following risks:

 

 

Audit Committee: reviews and assesses the guidelines and policies governing the Company’s financial and accounting risk management and oversight processes and assists with the Board’s oversight of financial and accounting matters, including compliance with legal and regulatory requirements, and the Company’s financial reporting and internal control systems

 

 

Compensation & Human Capital Committee: reviews the Company’s employee compensation policies and human capital practices to assess whether such policies and practices encourage long-term focus, support the recruitment, retention and development of executive talent and discourage excessive risk-taking behavior

 

 

ESG & Enterprise Risk Committee: reviews and assesses enterprise risks and opportunities that may be applicable to the Company from time to time, including (among others) risks from cyber incidents, health and safety risks, reputational risks, ESG issues (including climate-related risks) and the risks set forth in our Annual Report on Form 10-K for the year ended December 31, 2023, that we filed with the SEC

 

 

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Although these committees assist the full Board with risk oversight, ultimately the full Board oversees the Company’s enterprise risk management and our corporate culture with regular presentation and discussion.

In addition, throughout the year, the Board and the relevant committees receive updates from management with respect to various enterprise risk management issues, including (among others) market conditions, supply chains, geopolitical factors, health and safety, cybersecurity, company culture, ESG and other matters, and dedicate a portion of their meetings to reviewing and discussing specific risk topics in greater detail. The Company’s senior management engages with and reports to the Company’s Board and the relevant committees on a regular basis to address high-priority risks.

The Company believes that the Board’s leadership structure supports the risk oversight function of the Board by providing for open communication between management and the Board. In addition, strong independent directors chair the various committees involved in assisting with risk oversight, and all directors are involved in the risk oversight function.

Board Oversight of Cybersecurity and Information Security Risk

Our Board appreciates the importance of maintaining the confidence and trust of our customers, suppliers and employees. As part of the Board’s role as independent oversight of the key risks facing our Company, the Board devotes regular and thorough attention to our data, information technology (“IT”) systems and their development (including the Company’s e-commerce strategy and its implementation) and protection of our data and IT systems, including business resilience, compliance, cybersecurity and information security risk.

 

The Board oversees the Company’s approach to IT and cybersecurity staffing, policies, processes and practices to gauge and address the risks associated with our data and IT systems’ protection. The Board has tasked the ESG & Enterprise Risk Committee with leading and assisting the full Board in its oversight of the Company’s efforts to protect its data and IT systems. Our Board and ESG & Enterprise Risk Committee each receive regular presentations and reports throughout the year on MRC Global’s cybersecurity threats, audits and exercises to determine the sufficiency of defenses against cybersecurity threats, training and resilience and metrics.    

 

Cybersecurity Governance Highlights

 

  Risk and posture reporting to our Board and ESG & Enterprise Risk and Audit Committees in response to key developments

  Cross-functional approach to addressing cybersecurity risk, with operations, legal, risk, finance, information technology, human resources, and corporate audit functions participating in and presenting on key topics

  Global presence, with technical operations coverage and visibility

 

The presentations and reports also include regulatory developments, policies and practices, and information on security resources and organization.

We have established a Cybersecurity Committee led by our general counsel, consisting of our head of information security, chief information officer and chief financial officer. Our general counsel, Daniel Churay, has earned a CERT certificate in cybersecurity from Carnegie Mellon and began his career as a computer programmer/analyst. The Cybersecurity Committee takes steps to understand and mitigate information security risks by completing regular reviews and approvals of our information security program. The members of the Cybersecurity Committee are also members of the Risk Management Committee.

Each quarter, the ESG & Enterprise Risk Committee has received a report from a member of the Cybersecurity Committee, including reports from our head of information security, providing information on cybersecurity and information security risks, protective measures and controls, table top exercise, penetration testing and phishing test results and industry trends. In addition, our Audit Committee has received reports on the Company’s digitization, e-commerce and IT efforts and the impact of those

 

 

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efforts on the Company’s financial condition and results of operations. The Audit Committee has worked with the ESG & Enterprise Risk Committee to engage external auditors or consultants from time to time to review various aspects of the Company’s cybersecurity policies and programs and recommend updates or changes. In 2023, the Audit Committee received reports from KPMG LLP, the Company’s outsourced internal auditor, on a review of IT security policies and data loss prevention processes. With respect to cybersecurity, the Company’s policies are aligned with standards promulgated by the National Institute of Standards and Technology (NIST).

Our Company has a team of information security employees and vendors who monitor and respond to security incidents, maintain oversight of third parties and guide the business in disaster recovery and resiliency planning for cybersecurity risks. Each of our employees receives education and multi-media reminders on responsible information security practices through our security awareness program.

See pages 10-11 and 15-16 of our Annual Report on Form 10-K for the year ended December 31, 2023, that has been filed with the SEC for detailed information on cybersecurity risks related to our business and our cybersecurity programs.

Board Oversight of ESG Risk

Our effective management of ESG factors is of long-term significance to our stockholders, employees and communities and is critical to our Company’s success. Our Board has tasked its ESG & Enterprise Risk Committee with assisting the full Board in its oversight of the Company’s efforts on ESG matters including the impacts of climate change on our business and our reporting on our emissions as well as our health and safety programs for our employees and others engaged our business. Our Board reviews these matters on a quarterly basis. In addition, the Company has appointed a senior vice president – sustainability (SVP – Sustainability) and has an ESG Committee, comprised of members of management, which reports to the ESG & Enterprise Risk Committee. The management ESG Committee is responsible for monitoring, assessing and improving all relevant issues with respect to ESG. Our SVP – Sustainability chairs the ESG Committee, which is comprised of the executives representing various functions within our Company including operations, quality, safety, corporate services, marketing, human resources, legal, investor relations and supply chain. In addition, our SVP – Sustainability oversees the Company’s health and safety function and programs. The Audit Committee has worked with the ESG & Enterprise Risk Committee to engage external auditors or consultants from time to time to review various aspects of the Company’s climate change reporting and programs and recommend updates or changes. In 2023, the Audit Committee received reports from KPMG LLP, the Company’s outsourced internal auditor, on a review of the validation of the Company’s energy transition data reporting.

Information on Standing Committees of the Board

The Company currently has three standing Board committees: an Audit Committee, a Compensation & Human Capital Committee, and an ESG & Enterprise Risk Committee (which acts as the Board’s nominating and governance committee). Each committee’s functions are described in detail in its respective charter, which is available on the Company’s website at www.mrcglobal.com.

 

 

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Audit Committee

The Audit Committee met five times during 2023. As described in its charter, the Audit Committee’s primary duties and responsibilities are to assist Board oversight of:

 

 

2023-24

 

Chair:

Ronald L. Jadin

 

Members:

Leonard M. Anthony

Barbara J. Duganier*

David A. Hager

Dr. Anne McEntee

 

Independent: 4

 

Financial Experts: 4

 

 

 

 

O  the integrity of the Company’s financial statements

 

O  the integrity and adequacy of the Company’s auditing, accounting and financial reporting processes and systems of internal controls for financial reporting

 

O  the Company’s compliance with legal and regulatory requirements, including internal controls designed for that purpose

 

O  the independence, qualifications, engagement, compensation and performance of the Company’s independent auditor and other accounting and auditing firms that provide attestation services

 

O  performance of the Company’s internal audit function

 

O  the review of significant financial statement, control and compliance risks

 

O  other financial accounting firms that provide attestation services

 

O  related party transactions

 

O  the application of the Company’s codes of business conduct and ethics

 

*

Ms. Duganier‘s service as a director will end at the Annual Meeting.

Compensation & Human Capital Committee

The Compensation & Human Capital Committee met four times during 2023. As described in its charter, the Compensation & Human Capital Committee’s primary functions include:

 

 

2023-24

 

Chair:

Deborah G. Adams

 

Members:

Leonard M. Anthony

George J. Damiris

Dr. Anne McEntee

 

Independent: 4

 

 

O  establishing policies and periodically determining matters involving executive compensation

 

O  reviewing compensation of non-employee Board members

 

O  recommending changes in employee benefit programs

 

O  granting or recommending the grant of restricted stock units, stock and other long-term incentive awards

 

O  assessing risk in compensation programs

 

O  providing counsel regarding key personnel selection

 

O  overseeing executive development and succession

 

O  overseeing the Company’s human capital practices

 

O  overseeing the Company’s diversity, equity and inclusion practices and programs

 

 

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ESG & Enterprise Risk Committee

The ESG & Enterprise Risk Committee (which is the Company’s nominating and governance committee) met five times during 2023. As described in its charter, the ESG & Enterprise Risk Committee’s primary functions include:

 

 

2023-24

 

Chair:

George J. Damiris

 

Members:

Barbara J. Duganier*

Deborah G. Adams

David A. Hager

Ronald L. Jadin

 

Independent: 4

 

 

O  identifying individuals qualified to become members of the Board consistent with any criteria the Board approves from time to time

 

O  recommending to the Board director candidates for election at the annual meetings of stockholders or to fill vacancies pursuant to the bylaws

 

O  recommending to the Board director nominees for each Board committee

 

O  developing, annually reviewing and recommending to the Board a set of corporate governance guidelines for the Company

 

O  assisting the Board in assessing the independence of the members of the Board

 

O  leading the Board and other Board committees in their annual evaluation process

 

O  assisting the Board in evaluating any proposed changes to the Company’s charter, bylaws, or other governance issues

 

O  overseeing the Company’s enterprise risk management framework, policies and procedures, including (among other things) assisting the full Board with its oversight of cyber security

 

O  overseeing the Company’s efforts on ESG matters

 

 

*

Ms. Duganier‘s service as a director will end at the Annual Meeting.

No Legal Proceedings

To the best of our knowledge, there is no material proceeding to which any director, director nominee, executive officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or any associate of such director, nominated director, officer, affiliate of the Company, or security holder is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

Non-Employee Director Compensation Table

As compensation for their services on the Board, we paid each non-employee director an annual cash retainer of $75,000, which was raised to $90,000 as of May 2023. We paid the chair of the Audit Committee an additional annual cash retainer of $25,000, the chair of the Compensation & Human Capital Committee $20,000, and the chair of the ESG & Enterprise Risk Committee $15,000. Each committee member (other than the chairs) received a $2,000 annual retainer for each committee membership. For all, retainers were paid on a pro-rata basis based on the time of service. The Company also granted restricted stock awards to each non-employee director. Pursuant to the Director Compensation Plan, the number of shares so granted is determined by dividing $145,000, or in the case of the non-executive chairman $265,000, by the 20-day volume weighted average price (“VWAP”) as of the date immediately preceding the grant date. In 2023, these amounts were increased for non-employee directors from $125,000 and for the non-executive chairman from $225,000 in annual grants. All directors are also reimbursed for travel expenses and other out-of-pocket costs incurred in connection with their attendance at meetings.

Our non-employee director compensation program is intended to be competitive to attract qualified directors to join our Board and to align directors with stockholders’ interests. We also design the program so that the majority of a director’s compensation is in the form of Company stock. To that end,

 

 

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our compensation consultant, Meridian Compensation Partners, annually benchmarks our director compensation program against the same peer group used for executive compensation benchmarking (as described in “Compensation Discussion and Analysis”). Our Compensation Committee then reviews this analysis and recommends any changes to the Board for approval. The changes to director compensation made in May 2023 followed this process and were the first changes to director compensation that the Board has made since 2018. The increases in cash retainers and annual grants were made to reflect changes in market amounts over the past five years.

Total Director Compensation for 2023

 

 Name     

Fees Earned or
Paid in Cash ($)

    

Stock Awards (1)
($)

    

Total 

($) 

 Deborah G. Adams

         103,125          138,114          241,239 

 Leonard M. Anthony

         90,506          138,114          228,620 

 Henry Cornell

         81,125          138,114          219,239 

 George J. Damiris

         85,125          138,114          223,239 

 Barbara Duganier

         102,264          138,114          240,378 

 David A. Hager(2)

         —           —           —  

 Ronald L. Jadin

         98,606          138,114          236,720 

 Cornelis A. Linse(3)

         46,742          —           46,742 

 Anne McEntee

         84,705          138,114          222,819 

 Robert L. Wood

         81,125          252,425          333,550 

 

  (1)

Grants awarded on May 4, 2023. The fair value of the stock awards was $9.03 per share, which was less than the 20-day VWAP of $9.48 used to determine the number of awards under the Director Compensation Plan.

 

  (2)

David Hager joined the Board in March 2024, so he received no fees or stock awards for 2023.

 

  (3)

Cornelis A. Linse retired from the Board on May 4, 2023. The fees paid include a prorated second quarter payment.

The following table indicates the aggregate number of shares of our common stock subject to outstanding option and unvested stock awards that our non-employee directors held as of December 31, 2023:

 

 Name    Stock Options (#)     Stock Awards (#) 

 Deborah G. Adams

   —     15,295

 Leonard M. Anthony

   —     15,295

 Henry Cornell

   —     15,295

 George J. Damiris

   —     15,295

 Barbara Duganier

   —     15,295

 David A. Hager(1)

   —     — 

 Ronald L. Jadin

   —     15,295

 Cornelis A. Linse

   —     15,295

 Anne McEntee

   —     15,295

 Robert L. Wood

   —     27,954

 

  (1)

David Hager joined the Board in March 2024, and owned no Company stock options or common stock as of December 31, 2023.

 

 

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COMPENSATION DISCUSSION AND ANALYSIS

 

 

This Compensation Discussion and Analysis describes the objectives and design of MRC Global’s compensation program for our 2023 named executive officers (NEOs), who are as follows:

 

  Executive Officer   Age    Position (as of December 31, 2023)

 Robert J. Saltiel, Jr.

 

61

  

President and Chief Executive Officer (CEO)

2021 – present

 Kelly Youngblood

 

58

  

Executive Vice President and Chief Financial Officer (CFO)

2020 – present

 Daniel J. Churay

 

61

  

Executive Vice President – Corporate Affairs, General Counsel and Corporate Secretary (GC)

2011 – present

 Grant R. Bates

 

52

  

Senior Vice President – North American Operations & E – Commerce

2016 – present*

 Rance C. Long

 

55

  

Senior Vice President – Sales & Marketing

2020 – present*

* Dates for Messrs. Bates and Long reflect dates of service as a senior vice president of the Company with varying responsibilities from time to time.

Executive Summary

MRC Global is the leading global distributor of pipe, valves, fittings (“PVF”) and other infrastructure products and services to diversified energy, industrial and gas utility end-markets. We provide innovative supply chain solutions, technical product expertise and a robust digital platform to customers globally through our leading position across each of our diversified end-markets including the following sectors:

 

 

Gas Utilities: gas utilities (storage and distribution of natural gas)

 

 

DIET: downstream, industrial and energy transition (crude oil refining, petrochemical and chemical processing, general industrials and energy transition projects)

 

 

PTI: production and transmission infrastructure (exploration, production and extraction, gathering, processing and transmission of oil and gas)

MRC Global’s executive compensation program is designed to attract, motivate and retain our executives, including our named executive officers (NEOs), who are critical to the Company’s long-term success. Our executive compensation strategy is “pay for performance” and is focused on:

 

 

motivating executive officers to increase the economic value of the Company by strengthening our position as a leading global distributor of infrastructure products and value-added services provider and by aggressively pursuing profitable growth; and

 

 

aligning our executive officers’ interests and actions with the interests of our stockholders and key stakeholders.

 

 

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We provide our executive officers with a compensation package that consists primarily of:

 

 

a base salary,

 

 

short-term incentive (STI) in the form of annual cash payments based upon achievement of certain performance metrics, and

 

 

long-term incentive (LTI) in the form of time-vested restricted stock units (RSUs) and performance share units (PSUs), which pay out based upon achievement of certain performance metrics over a three-year performance period.

2023 Company Performance Highlights

 

Our continued focus on creating business efficiencies and increasing profitability has contributed to improved 2023 performance across several metrics including:

Cash provided by operations of $181 million A 76% increase in net income attributable to common stockholders Two years of adjusted gross profit percentage in excess of 21% The lowest net debt and leverage ratio since our IPO in 2012

In 2023, we delivered the following:

 

 

   Sales of $3.41 billion, compared to $3.36 billion in 2022

    

 

 

   Cash flow provided by operations of $181 million

   Net income attributable to common stockholders of $90 million, a 76% increase over $51 million in 2022

 

   Adjusted EBITDA of $250 million, 7.3% of sales

 

    

   Gross profit percentage of 20.2% of sales

 

   Adjusted gross profit percentage of 21.5% of sales - two consecutive years above 21%

 

   Total debt of $301 million, and net debt of $170 million (both as of December 31, 2023)

 

   — the lowest net debt since the Company’s initial public offering (“IPO”) in 2012

 

    

   Ended the year with a leverage ratio of 0.7x

 

   — the lowest since the Company’s IPO in 2012

 

 

   Generated 44% of the Company’s revenue through MRCGOTM digital platform/
e-commerce

 

    

 

   96% of 2023 valve sales were “Low-E” valves, dramatically reducing fugitive emissions of methane and other greenhouse gases.

 

 

*

See “Reconciliation of Non-GAAP Financial Measures From GAAP” above for information about the non-GAAP measures: adjusted gross profit percentage, adjusted EBITDA, net debt and leverage ratio.

 

 

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The following graphs further illustrate the Company’s 2023 performance compared to the last three years.

 

 

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See “Reconciliation of Non-GAAP Financial Measures From GAAP” above for information about the non-GAAP measures: adjusted gross profit percentage, adjusted EBITDA, RANCE adjusted for LIFO, net debt and leverage ratio.

 

 

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2023 Executive Compensation Decisions

We have shaped our executive compensation to meet the changing demands of our business over the past three years. Two major events have impacted our Company in this period: the recovery from and remaining impacts of the COVID-19 pandemic and, second, our organizational focus on efficiency and improvement in profitability. This has occurred during a competitive market for talent, tightened labor constraints and an inflationary environment.

2021

As 2021 began, it was unclear whether and at what rate business would recover from the negative impact of the COVID-19 pandemic. Given the uncertainty of the business outlook, MRC Global focused on maintaining the lower selling, general and administrative (“SG&A”) cost base that it achieved in 2020 while eliminating at the beginning of 2021 the prior year’s COVID-19 furlough. Our compensation arrangements remained generally static, although in October 2021, we restored one-half of the prior Company match for employee contributions to our North American defined contribution retirement plans. During 2021:

 

   

We reduced the size of long-term incentive (LTI) equity award grants for management as a percentage of salary, including for executive officers.

 

   

We did not implement an annual merit raise process, and our executive officer salaries remained frozen.

 

   

We maintained reduced STI and LTI targets for eligible employees, including our executive officers.

 

   

We reduced 2021 payouts under our annual STI plan by 50%, including for our executive officers.

In March 2021, we transitioned the leadership of the Company to a new CEO, Robert Saltiel, and our prior CEO retired. The Board, with the assistance of its Compensation & Human Capital Committee (the “Committee”), negotiated Mr. Saltiel’s starting compensation package with the assistance of the Committee’s compensation consultant, Meridian Compensation Partners, LLC (“Meridian”). The Board and the Committee benchmarked the package against CEO compensation for the Committee’s then chosen peer group as well as general industry surveys. Mr. Saltiel’s 2021 STI payouts were also reduced by 50%.

As the year concluded, the 2019 – 2021 performance cycle concluded for the PSUs that were issued to executives in 2019. As neither the relative TSR nor the RANCE component met the threshold for payouts, the recipient executives, including the NEOs, received no payout for this cycle, and the shares were forfeited.

In 2021, our business began to recover, and our revenue increased to $2.666 billion, a 4% increase from 2020. In 2021, MRC Global reduced net debt by 6% to $249 million, ended the year with a leverage ratio of 1.7x, and generated positive adjusted EBITDA of $146 million, a 51% increase from 2020.

2022

2022 was a year of strong recovery in MRC Global’s markets, balanced by on-going inflationary pressures in a tight market for talent and labor, including executive talent. MRC Global anticipated a strong recovery at the beginning of the year and set stretch STI targets for its NEOs as a result. Our 2022 adjusted EBITDA target was $190 million compared to 2021 adjusted EBITDA of $146 million, a 30% increase, and the 2022 safety targets were the same targets as the 2021 targets.

Our gas utilities sector continued to increase sales driven primarily by customer integrity spending as our customers replaced aging infrastructure. Likewise, our downstream and industrial sector also

 

 

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increased as customers increased maintenance turnarounds in their plants and started new projects that were previously delayed during the COVID-19 pandemic. Energy transition projects increased as customers invested in biofuels and new offshore wind energy projects. Our upstream and midstream business grew dramatically as economies opened up from COVID-19 restrictions and consumed more energy. In addition, the Russian invasion of Ukraine dramatically impacted the need for oil and natural gas production as countries sanctioned Russia, and Russia retaliated by curtailing oil and gas sales, particularly natural gas sales to Europe. This resulted in increased customer activity to supply Western oil and gas markets.

Given this market growth, the Company actively managed the attraction and retention of talent to meet the growing opportunity. To remain competitive, we increased employee compensation for most of our employees through merit and cost of living adjustments and restored the remaining Company match to our defined contribution retirement plans in North America that we had cut during the 2020 COVID-19 downturn. With respect to the NEOs, the Company adjusted base salaries upwards for Messrs. Bates and Long and increased contingent compensation opportunity for all the NEOs by increasing their target annual, short-term incentive (STI) percentage for 2022. In particular, the STI target payout percentages for Messrs. Youngblood and Churay were restored to their pre-pandemic levels. Prior to taking these actions, the compensation of these executives was below the market median of benchmarked compensation.

2023

2023 was a year of continued recovery and expected growth, and we set stretch STI targets for our NEOs as a result.

The weighting of our STI goals for our NEOs in 2023 remained the same as in 2022: 87.5% on adjusted EBITDA and 12.5% on safety measures. We elected to continue the use of adjusted EBITDA as the key financial metric for performance for our NEOs and cascaded adjusted EBITDA as a metric for STI payments for the broader organization. We retained total recordable incident rate (“TRIR”) and lost time incident rate (“LTIR”) safety metrics for the STI program for our NEOs with revised targets. Additionally, we cascaded a global safety metric to all operations-based roles in the STI program

To reflect the expected growth in our business, our 2023 adjusted EBITDA target was $300 million compared to a 2022 adjusted EBITDA target of $190 million, a 58% increase, and 2022 actual adjusted EBITDA of $261 million, a 15% increase. Our 2023 safety targets were also more stringent to underscore our commitment to a safe workplace and our desire to continually focus on and improve upon our safety results.

The Company continued to actively manage the attraction and retention of talent in 2023. To remain competitive, we increased employee compensation for our employees through merit and cost of living adjustments. After reviewing peer group and market compensation data with Meridian, the Committee adjusted base salaries upwards for all of our NEOs, increased contingent compensation opportunity by increasing the target annual, short-term incentive (STI) percentage for Messrs. Churay and Youngblood and increased the LTI grant value for all NEOs. The Board, on the Committee’s recommendation, ratified the actions with respect to Mr. Saltiel.

The first half of 2023 met our expectations for the expected growth of our business. However, year-over-year 2023 sales compared to 2022 began to decline in the third quarter and declined further in the fourth quarter. As a result our 2023 revenue modestly increased 1% over 2022. Our Gas Utilities customers have indicated to us that during the supply chain shortages of 2021-22, they over-purchased PVF and other gas utilities products due to fears of not being able to get product due to the shortages. In 2023, many of these customers have slowed their purchases from us to work off the excess product that they have in their inventories. Our DIET and PTI sectors grew modestly during 2023. As a result, we did not meet our adjusted EBITDA target of $300 million and ended the year with $250 million in adjusted EBITDA. We did slightly overachieve on the safety metrics in the STI plan. Our adjusted EBITDA and safety performance resulted in an STI payout to the NEOs of 80.4% of target.

 

 

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Even in light of moderating sales, we were able to maintain our adjusted gross profit percentage above 21% for the second year in a row. In addition, we generated $181 million in cash flow from operations, well exceeding the Company’s business plan at the beginning of the year of $120 million. This cash flow generation was a result of management’s efforts to control SG&A, measures to increase working capital and inventory efficiency and the reduced need for inventory in the second half of the year. This cash generation, in turn, resulted at the end of 2023 with the Company having net debt of $170 million and a leverage ratio of 0.7x, both public company records for the Company.

2024

In light of expected slowing market conditions entering 2024, management recommended, and the Committee approved, holding NEO total target compensation flat for 2024.

Overview of the Company’s Executive Compensation Design

Compensation Philosophy and Objectives

Our executive compensation programs are structured to reward the achievement of our specific annual and strategic performance goals and our long-term objective of increasing shareholder value. Accordingly, the executive compensation philosophy of the Compensation & Human Capital Committee is threefold:

 

   

To attract and retain talented executive officers by providing competitive total compensation, and to motivate them to achieve the Company’s short-term and long-term financial and strategic goals and objectives;

 

   

To align the interests of our executive officers with those of our stockholders; and

 

   

To provide performance-based cash and stock incentive awards to recognize and reward executive officers who demonstrate sustained exceptional performance.

Pay for Performance Program

Our Compensation & Human Capital Committee, which is composed solely of independent directors, believes in a pay for performance philosophy. While the Committee sets target compensation for the executive officers each year based on market practices and internal considerations, the executive officers’ realized compensation is strongly dependent on the Company’s performance relative to pre-determined and measurable financial metrics and stock price performance.

 

   

As illustrated in the graphic below, a substantial portion of the 2023 target compensation for executive officers was at risk.

 

   

Under our 2023 STI plan, 87.5% of the potential payout to our NEOs was based on an adjusted EBITDA target, 6.25% was based on a total recordable incident rate (“TRIR”) safety target and 6.25% was based on a lost time incident rate (“LTIR”) safety target. Our adjusted EBITDA target was a stretch target, and our safety targets were also more rigorous. Our 2023 adjusted EBITDA target was $300 million compared to a 2022 adjusted EBITDA target of $190 million, a 58% increase, and 2022 actual adjusted EBITDA of $261 million, a 15% increase.

 

   

There would not be a payout relative to each of the performance metrics in the STI plan unless the threshold for payout was achieved for each respective metric.

 

   

The 2023 LTI equity grant consisted of time vested RSUs and PSUs for NEOs. Vesting of the PSUs depends on performance based upon the Company’s TSR relative to companies in the OIH index plus DNOW Inc. plus the Russell 2000 (IWM-iShares Russell 2000 ETF). 25% of the relative TSR performance is measured on TSR for each of 2023, 2024, 2025 as well as the

 

 

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three-year period, 2023-25. The time vested RSUs provide retention value, and the value of the units is also tied to performance because it increases or decreases depending on our stock price at vesting. The time vested RSUs vest ratably over a three-year period.

Target Compensation

The following illustration represents the elements of our 2023 compensation package at target to reflect the CEO’s compensation and an average for the other active NEOs.

 

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The CEO’s Compensation at Risk has increased from 84% in 2022 to 85% in 2023, and the average Compensation at Risk for the other NEOs has increased from 66% to 71% from 2022 to 2023.

 

 

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Key Features of our Executive Compensation Program

 

What We Do

   We pay for performance – 85% of CEO ongoing pay and an average of 71% of other active NEOs 2023 target compensation is at risk, and target total direct compensation is achieved only when performance objectives are achieved.

   We benchmark pay relative to the market and review the peer group used for market benchmarking on an annual basis.

   We set objectives for our annual STI plan that are measurable, determined in advance and aligned with stockholder interests. Our 2023 STI targets were stretch targets; our 2023 adjusted EBITDA target was $300 million compared to 2022 actual results of $261 million, a 15% increase, and the 2023 safety targets were more stringent than our 2022 targets.

   Our LTI equity compensation plan is designed to be strongly tied to Company performance. We award PSUs to tie payouts to our relative TSR versus other comparator companies. We award RSUs to tie realized value to stock price and to provide retention value.

   We have a 100% cap on PSU payouts based on relative TSR if the Company’s TSR is negative.

   Beginning in 2022, we added a Russell 2000 ETF to the companies used in the relative TSR calculation for PSUs to better reflect our performance against the broader market and acknowledge the broader competition for investor capital. In 2023, we replaced the OSX with the OIH in our comparator group that is used to calculate relative TSR for our PSUs to better reflect our markets for investor capital.

   Beginning in 2024, our RSUs and PSUs will no longer vest solely upon a Change in Control. Our agreements for the awards have been modified to reflect “double-trigger” vesting.

   We have equity ownership guidelines that provide for significant executive officer equity ownership.

   We have adopted a new Compensation Clawback Policy to align with new New York Stock Exchange and SEC rules, which replaces our prior longstanding policy.

   We have a fully independent Compensation & Human Capital Committee.

   Our Compensation & Human Capital Committee engages a compensation consultant that is independent of management and the Company.

   We have an annual Say-on-Pay vote.

 

What We Don’t Do

 

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No guaranteed minimum incentives

 

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No excise tax gross ups

 

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No re-pricing of stock options or stock appreciation rights permitted without approval from stockholders

 

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No hedging or derivative transactions with respect to our shares by executive officers or directors permitted

 

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No pledging of MRC Global securities by executive officers or directors permitted

 

Peer Group

We benchmark our executive compensation against a selected group of peers as well as industry surveys.

In August 2023, the Compensation & Human Capital Committee performed its annual review of our compensation peer group with the assistance of its compensation consultant, Meridian, and made no changes to the existing peer group for 2024.

 

 

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These peers were chosen as representative of our competition for executive talent. Specifically, these companies:

 

 

Are distributors or sellers of industrial or energy products of a similar character to those that we sell

 

Have similar distribution or energy product business models to our business model

 

Serve similar end markets as we do (e.g., gas utilities, downstream and industrial, upstream oil and gas and midstream pipelines)

We also considered the relative size and complexity of the companies compared to MRC Global, primarily measured by revenue, enterprise value and assets. We excluded from our peers distributors that do not sell products in our oil and gas end markets such as distributors of commercial or consumer goods, swimming pool supplies, roofing materials, office supplies and dental appliances, and companies with dramatically different size as measured by revenues, enterprise value or assets.

 

            (values in millions)  
Company  

Ticker

 

   

Revenue*

 

   

Enterprise
Value*

 

   

Assets* 

 

 

 Applied Industrial Technologies, Inc.

    AIT       $3,645       $3,993       $2,384   
 ChampionX Corporation     CHX       $3,256       $4,433       $3,572   

 Dril-Quip Inc.

    DRQ       $325       $487       $978   

 DXP Enterprises Inc.

    DXPE       $1,188       $902       $902   

 Flowserve Corporation

    FLS       $3,505       $4,606       $4,703   

 H&E Equipment Services, Inc.

    HEES       $1,095       $2,038       $2,123   

 Helix Energy Solutions Group Inc.

    HLX       $661       $616       $2,307   

 Herc Holdings Inc.

    HRI       $2,336       $5,451       $5,310   

 Kennametal Inc.

    KMT       $1,998       $2,560       $2,660   

 Liberty Oilfield Services Inc.

    LBRT       $2,712       $2,455       $2,191   

 MSC Industrial Direct Co. Inc.

    MSM       $3,501       $5,038       $2,619   

 NexTier Oilfield Services, Inc.

    NEX       $1,830       $2,268       $1,532   

 NOW Inc.

    DNOW       $1,744       $806       $1,162   

 Weatherford International plc

    WFRD       $3,751       $3,068       $4,684   

 25th Percentile

      $1,327       $1,186       $1,680   

 Median

      $2,167       $2,507       $2,345   

 75th Percentile

      $3,440       $4,323       $3,344   

 MRC Global Inc.

    MRC       $2,799       $1,690       $1,786   

 Percentile Rank

      63%       28%       26%   
  *

Enterprise Value and Market Cap are from S&P Capital IQ as of July 15, 2022, and Assets and Revenue are as of most recently reported prior to July 15, 2022.

In November 2022, Meridian made a report to the Committee on publicly disclosed executive pay data, which the Committee considered when making its 2023 compensation decisions. Meridian used compensation peer data from the above companies for each position that our executive officers hold to the extent available.

Meridian also provided data from the following two third-party general industry surveys for companies with revenue amounts similar to those of the Company as an additional reference point to validate the peer-company specific data:

 

   

Willis Towers Watson 2022 General Industry Executive Survey Report

 

   

2022 Radford Global Compensation Database

Meridian presented compensation at each quartile of the data (both peer-company specific data as well as third party market survey data) to the Committee with respect to total compensation and major elements of compensation (i.e., base salary, annual cash incentive and long-term equity compensation) for each of the executive officer’s positions.

 

 

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The Compensation & Human Capital Committee used this data to determine whether its compensation decisions were within the market for each executive officer; however, the Committee did not set any compensation for any executive officer at a specific level within the peer group range for each executive officer (such as pegging the compensation to a 50th percentile level). The Committee exercised its discretion considering the following factors:

 

  the executive’s contributions and performance

   

  market levels of compensation for positions comparable to the executive’s position

 

  the executive’s roles and responsibilities, including the executive’s tenure in such role

 

   

  the executive’s compensation history and compensation mix, including that with prior employers

 

  the Company’s need for the executive’s skills

   

  the executive’s potential and readiness to contribute in the executive’s current role

  the executive’s experience and management responsibilities

 

   

The Committee did not necessarily weigh any particular factor more or less than any other factors.

Participants in the Compensation Process

Role of the Compensation & Human Capital Committee

The Compensation & Human Capital Committee (the “Committee”) establishes policies and has decision-making authority with respect to compensation matters for executive officers (other than the CEO), including determination of the compensation and benefits and LTI grants. With respect to the CEO, the Committee recommends compensation decisions, including the grant of LTI compensation, to the full Board, which then makes decisions regarding CEO compensation.

The Committee’s duties pursuant to its charter are set forth on page 52 above.

Role of Compensation Consultant

Pursuant to the Committee’s charter, the Committee has the authority to retain or terminate compensation consultants and engage other advisors. Since 2010, the Committee has engaged Meridian, an independent consultant specializing in executive compensation, to formulate a report and make recommendations to the Committee regarding executive and director compensation based on peer group, other market data, industry trends and current practices.

The Committee evaluated the SEC’s and NYSE’s six independence factors to determine that the service Meridian provided to the Committee was free of any actual or perceived conflicts of interest. Meridian does not provide any other services to the Company or its executive leadership team.

Role of Executive Officers

Our CEO, General Counsel and Senior Vice President – Chief Human Resources Officer (CHRO) provide support and information as the Committee requests. These officers make quarterly presentations to the Committee with respect to issues and developments regarding compensation and our compensation programs. They develop current and historical summary compensation data (including each element of compensation) for our executive officers and provide this data on a regular basis to the Committee.

Our CEO provides the Committee with an evaluation of the annual performance of each of the executive officers that report to the CEO and makes preliminary recommendations for base salary and incentive target levels for them. Recommendations for base salary, annual performance, incentive target levels and incentive payouts for the CEO are left entirely to the Committee’s discretion and are approved by the Board.

 

 

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The Committee then determines appropriate changes in compensation (including salary, STI and LTI) for the upcoming year. Each year, the Committee approves each executive officer’s annual STI target opportunity (expressed as a percentage of base salary) as well as the performance metrics and goals for the executive to receive the STI award at target. The Committee also sets minimum and maximum STI payouts and the metrics and goals to receive those payouts and a scale of payouts in between. The Committee makes decisions with respect to LTI equity-based compensation awards that the Company grants to our executive officers and any performance parameters that executive officers must meet to receive payouts of LTI awards upon vesting. With respect to CEO compensation decisions, the Committee makes its recommendations to the entire Board for final approval.

Stockholder Engagement

 

 

 

81%

APPROVAL

 

 

Stockholders showed support of our executive compensation programs, with 81% of the votes cast for the approval of the “say-on-pay” proposal at our 2023 annual meeting of stockholders.

 

We have a long history since our IPO in 2012 of engaging with current and prospective stockholders. In 2023, we had interactions with investors in the following ways:

 

   

Quarterly earnings calls

   

Investor conferences and events, including discussions with both portfolio managers and ESG analysts

   

One-on-one investor discussions

   

Annual stockholders meeting

   

Our website

   

Press releases

   

Our SEC filings

   

Participation in various evaluations, ratings and rankings, such as the Carbon Disclosure Project (CDP) sponsored by CDP Global, an international non-profit organization, S&P Global, Sustainalytics, ISS and MSCI.

At our 2023 Annual Meeting of Stockholders held on May 4, 2023, we received support for our Say-On-Pay Proposal from 81% of the votes cast. Since the date of 2023 Annual Meeting of Stockholders, we proactively reached out to investors holding approximately 30 million shares, or 35%, of the Company’s issued and outstanding common stock. In light of the support and favorable feedback received from shareholders, we have not made any material changes to our compensation practices or policies in the past year.

2023 Executive Compensation Program

Elements of Compensation

The principal components of compensation for our executive officers, including our NEOs, are:

 

   

Base salary;

 

   

STI annual cash awards;

 

   

LTI (equity awards); and

 

   

Benefits and perquisites – including health, welfare and retirement benefits

 

 

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In addition to base salary, our 2023 executive compensation was comprised of STI annual cash incentives and LTI equity awards as well as certain benefits and perquisites. Consistent with our pay-for-performance philosophy, the table below summarizes how performance in 2023 impacted pay in 2023.

 

   

 

Plan Measures

 

 

 

Performance

 

 

 

Component
Payout

 

 

 

Total
Payout

 

 STI  

87.5% on adjusted EBITDA

6.25% on TRIR

6.25% on LTIR

 

Adjusted EBITDA: 83.4% of target

TRIR: 9.2% better than target

LTIR: 8.3% better than target

  75.2%

118.0%

116.7%

  80.40%
 2021-23 PSUs  

TSR relative to OSX companies + DNOW Inc.

50% on relative TSR for 2021-23

50% on RANCE (adj. for LIFO)

 

62% TSR (31st percentile)

RANCE = 10.7%

  54%

168%

  110.50%
 2022-23 PSUs  

TSR relative to OSX companies + DNOW Inc. + Russell 2000 ETF

25% on 2022 relative TSR

25% on 2023 relative TSR

25% on 2024 relative TSR

25% on 2022-24 relative TSR

 

65% TSR (76th percentile)

-8% TSR (24th percentile)

Performance period not completed

Performance period not completed

  166%

0%

  Minimum
payout
41.5%
 2023-25 PSUs  

TSR relative to OIH companies + DNOW Inc. + Russell 2000 ETF

25% on 2023 relative TSR

25% on 2024 relative TSR

25% on 2025 relative TSR

25% on 2023-25 relative TSR

 

-8% TSR (30th percentile)

Performance period not completed

Performance period not completed

Performance period not completed

  50%

  Minimum
payout
12.5%

Return on average net capital employed (RANCE), adjusted for LIFO, is calculated as set forth in “Reconciliation of Non-GAAP Financial Measures From GAAP”.

Minimum payouts for 2022-23 and 2023-25 PSUs are based on completed performance periods and assume zero payouts for the remaining, uncompleted performance periods.

Note that the comparator groups for relative TSR have changed year over year so the payouts for the same years for different grants could be different.

Base Salary

We provide our executive officers with a base salary to compensate them for services they provide and to provide a market competitive base level of pay commensurate with the skills and experience of our executives. The Compensation & Human Capital Committee, with the CEO, reviews the base salary for each executive officer based on the CEO’s recommendations on an annual basis and approves any changes based on each executive officer’s position, responsibilities, contributions, leadership, performance, current compensation (both individually and as compared to other executives) and survey data. Increases are not automatic or guaranteed and do not always take place each year. The Committee, on a similar basis, also reviews the CEO’s salary and makes a recommendation whether to implement any changes to the full Board.

Consistent with our compensation process, the CEO provided the Committee with recommendations regarding the base salaries of the other NEOs. The Committee, then with advice from its independent compensation consultant, Meridian, determined that the base salaries of the other NEOs should be adjusted to reflect market conditions (based on peer and market compensation data) and performance. With respect to the CEO, the Committee reviewed the market data with Meridian and the performance of the CEO with the Board. Then based on a recommendation of the Committee, the Board approved the CEO’s salary.

 

 

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Based on this review, the base salaries of our NEOs effective February 6, 2023, were modified as follows:

 

 Name

 

 

2022 Base Salary

 

   

Salary Increase
in 2023

 

   

Base Salary
 Effective 2/6/2023 

 

       

 Robert J. Saltiel, Jr.

  $ 825,000       4.2   $ 860,000    

 Kelly Youngblood

  $ 500,000       6.0   $ 530,000    

 Daniel J. Churay

  $ 425,000       5.9   $ 450,000    

 Grant R. Bates

  $ 390,000       5.1   $ 410,000    

 Rance C. Long

  $ 360,000       5.0   $ 378,000    

No NEO base salary changes were made for 2024.

Annual STI Cash Incentive

Our annual STI plan is a performance-based plan, which provides cash compensation to eligible employees (including the executive officers), based on performance relative to certain financial and operational metrics. The STI plan is designed to motivate executive officers to achieve the Company’s annual financial and operational goals, which in turn are designed to achieve long-term profitability and value for stockholders. In 2023, a majority of our salaried employees participated in the STI plan. An employee’s annual STI bonus is determined by multiplying the employee’s annual salary by the employee’s annual STI target percentage then by the performance percentage relative to performance metrics.

Annual STI Targets

The Compensation & Human Capital Committee reviews STI targets for the executive officers, including the NEOs, annually and approves annual STI target percentages for the executive officers based on its review of market data and other internal factors, subject to the terms of any employment agreements between the Company and the executives.

Consistent with our compensation process, the CEO provided the Committee with recommendations regarding the STI targets of the other NEOs. The Committee, then with advice from its independent compensation consultant, Meridian, determined that the STI targets of Messrs. Youngblood and Churay should be adjusted to reflect market conditions (based on peer and market compensation data) and performance.

Based on this review, in 2023, the STI targets for our NEOs were modified as follows:

Annual STI Targets

 

 Name    2022 STI 
 Target % 
   2023 STI 
 Target % 
       

 

 

The annual cash incentive amount payable to each
executive is calculated as follows:

 

Annual Cash Incentive =

 

Base Salary x STI Target % x Performance Relative to

Performance Metrics

      

 

 Robert J. Saltiel, Jr.

 

 

125%

 

 

 

125%

 

    

 Kelly Youngblood

 

  80%

 

  90%

 

 

 Daniel J. Churay

 

  75%

 

  80%

 

 

 Grant R. Bates

 

  75%

 

  75%

 

 

 Rance C. Long

 

  75%

 

  75%

 

      

No NEO STI target percentage changes were made for 2024.

2023 STI Plan Performance Metrics

For 2023, our STI targets for our NEOs were 87.5% on adjusted EBITDA and 12.5% on safety measures.

 

 

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Adjusted EBITDA has long been a primary driver of our business. This measure encompasses most cost and sales decisions of the Company, and we focused our management, including the NEOs, to increase adjusted EBITDA and take advantage of the market opportunities in 2023. Adjusted EBITDA has been a prime measure of our STI programs even since before we became a public company through our initial public offering in 2012. We set our 2023 adjusted EBITDA target at $300 million compared to a 2022 adjusted EBITDA target of $190 million, a 58% increase, and 2022 actual adjusted EBITDA of $261 million, a 15% increase.

In addition, safety is a core value of our Company, and we continued to include safety targets as a component of our STI program. The use of safety measures underscores our commitment to a safe workplace and our desire to continually focus on and improve upon our safety results. For 2023, the safety targets included a total recordable incident rate (TRIR) target of 0.76 or less and a lost time incident rate (LTIR) target of 0.24 or less. These 2023 safety targets were set taking into account the 2022 achievement of targets, including a record low LTIR, as well as three-year averages for these targets, excluding the unusual COVID-19 year of 2020. Both of 2023’s stretch safety targets were more stringent than the targets for 2022. Given the Company’s record performance with respect to LTIR in 2022 of 0.12, and the Company’s very favorable comparison against the average LTIR of 1.6 that the U.S. Bureau for Labor Statistics published for metal and mineral (except petroleum) merchant wholesalers for 2022, the Committee set the 2023 LTIR target well below the 0.34 Company three-year average (excluding the 2020 COVID-19 year) and below the 2022 target of 0.32 to incentivize continued performance improvement. The Committee did not want a target at a record level near zero to be a disincentive to continued safety improvement.

The following table sets forth the components of the 2023 STI plan, including the performance metrics, weighting of each, the targets at threshold, target and maximum performance, the payouts at each and the final payout calculation. The formulaic payouts for STI were 80.4% of target.

2023 STI Plan Metrics, Performance & Payouts

(in millions except for percentages and safety metrics)

 

Payout  %*

      25     100     200        

Performance

Metric

  Weighting     Threshold     Target     Maximum     Performance     Performance %     Payout %     Weighted
Payout %
 

Adjusted EBITDA

    87.5     150.0       300.0       450.0       250.0       83.4     75.0     65.6

LTIR

    6.25     0.35       0.24       0.12       0.22       108.3     116.7     7.3

TRIR

    6.25     0.99       0.76       0.38       0.69       109.2     118.0     7.4
 

 

 

               
 
    100.0           Final Payout       80.4
 

 

 

               

 

*

Between Threshold and Target, and Target and Maximum, payouts are interpolated on a straight-line basis.

Long-Term Incentive Compensation

Our LTI equity compensation is granted on an annual basis to our executive officers and is designed to align the interests of management with those of our stockholders. For 2023, our long-term incentive (LTI) grants consist of 50% of three-year, graded vesting restricted stock units (RSUs) and 50% of three-year cliff vesting performance stock units (PSUs).

Alignment of LTI Compensation to Performance

Our LTI equity compensation is strongly linked to stock price performance.

 

   

The realized value of PSUs is tied to long-term performance because the value is directly related to the Company’s relative TSR. Because the PSUs pay out in the form of shares, the realized value of the shares that vest are tied to stock price performance. This also aligns NEO pay with shareholder value. The PSUs also provide retention value by vesting at the end of a three-year performance period.

 

 

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The primary purpose of the RSUs is to support retention and continuity of executive officers. The RSUs vest over a multi-year period (3-year graded vesting for annual grants). The realized value of the RSUs is also tied to stock price performance because the value of RSUs increases or decreases depending on our stock price at vesting.

2023 Long-Term Incentive Grants

The table below describes the details of 2023 grants to the NEOs:

 

 Grant Year 2022    RSUs    PSUs    

 Weighting

   50% of grant value    50% of grant value  
 Vesting Schedule    Vesting 34% in year one and 33% in each of years two and three    Vesting at the end of three years, percentage of stock vested depends on relative TSR performance (compared to the companies in the OIH ETF plus DNOW Inc. and the Russell 2000) in four performance periods (2023, 2024, 2025 & 2023- 25) each equally weighted by 25%  

2023 PSU Grants

All of the target PSUs granted to NEOs in 2023 are based on relative TSR compared to companies in the OIH index plus DNOW Inc. and the Russell 2000 (Total Return) Index. The performance will be weighted equally (25%) for each of four performance periods:

 

   

January 1, 2023 until December 31, 2023

 

   

January 1, 2024 until December 31, 2024

 

   

January 1, 2025 until December 31, 2025

 

   

January 1, 2023, until December 31, 2025

The number of shares that will be issued upon settlement at the end of 2025 is based on the scale below for each of the performance periods. This scale has remained the same since grants made in 2016.

The following table sets forth the percentile performance and percentage of target PSUs earned at each percentile.

 

    Relative TSR   % Target
PSUs Earned*
   
 

90th percentile

  200%  
 

70th percentile

  150%  
 

50th percentile

  100%  
 

30th percentile

  50%  
 

< 30th percentile

  0%  
*For any performance levels between the levels specified above, percentage of target shares earned will be interpolated on a straight- line basis.  

 

 

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We compare our TSR to companies in the OIH index plus DNOW Inc. and the Russell 2000 Total Return Index because investors generally compare MRC Global to companies that also have customers in the oil and gas business, with volatile spending patterns depending on commodity prices. We include DNOW Inc. because DNOW Inc. is a direct competitor in certain of the sectors into which we sell. We often compete for talent with these companies. Each of our CEO, CFO and GC, for instance, have previously worked for oilfield service companies. Finally, many energy investors and sell-side analysts follow our Company along with these companies. Beginning in 2022, we added a Russell 2000 ETF to the companies used in the relative TSR calculation for PSUs to better reflect our performance against the broader market and acknowledge the broader competition for investor capital. In 2023, we replaced the OSX with the OIH in our comparator group that is used to calculate relative TSR for our PSUs to better reflect our markets for investor capital. The OSX included companies such as Hess Corporation, which is an oil and gas operator rather than oilfield service companies. We changed to the OIH to better align the index with oilfield service companies and because the index includes a greater number of comparator companies. The following table provides a list of the companies in both indices:

 

       

OSX

 

OIH

Total Companies   Ticker   16   24

Cactus, Inc.

  WHD   X   X

ChampionX Corporation

  CHX   X   X

Core Laboratories N.V.

  CLB   X   X

Drill-Quip, Inc.

  DRQ   X   X

Golar LNG Limited

  GLNG   X  

Halliburton Company

  HAL   X