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Item 5.02
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Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers;
Compensatory Arrangements of Certain Officers.
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As previously disclosed, on August 26, 2020, BMC Stock Holdings, Inc., a
Delaware corporation (“BMC”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among Builders FirstSource, Inc., a Delaware corporation (“Builders FirstSource”), and Boston Merger Sub I Inc.,
a Delaware corporation and a direct, wholly owned subsidiary of Builders FirstSource (“Merger Sub”). Subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into BMC and BMC will survive the merger
as a wholly owned subsidiary of Builders FirstSource (the “Merger”).
On December 14, 2020, the BMC board of directors took actions to
preserve compensation-related corporate income tax deductions for BMC that might otherwise be disallowed through the operation of Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended (the “Code”), in connection with the
Merger. Specifically, the BMC board of directors approved the vesting of equity awards and the accelerated payment of short-term cash incentive compensation for BMC’s named executive officers, David E. Flitman, President and Chief Executive
Officer, James F. Major, Jr., Executive Vice President, Chief Financial Officer and Treasurer, Mike Farmer, Executive Vice President, Operational Excellence, People and Growth, Timothy D. Johnson, Executive Vice President, General Counsel and
Secretary, and other employees who are not executive officers, as further described below. These actions will mitigate or eliminate the amount of excise tax that may be payable by Messrs. Flitman, Major, Farmer and Johnson pursuant to Sections 280G
and 4999 of the Code in certain circumstances.
The BMC board of directors approved the accelerated payment of $1,031,250 for Mr. Flitman and
$337,500 for Mr. Johnson, in each case, which (i) amount will be paid to the applicable named executive officer on or before December 31, 2020 and (ii) represents payment of a portion of the named executive officer’s
respective bonus under the BMC annual bonus plan in respect of the 2020 fiscal year (the “2020 Bonus”) at approximately 65% of the amount that BMC presently expects would otherwise be paid in early 2021. Any remaining amount of the 2020
Bonus will be paid in the first quarter of 2021.
With respect to Mr. Flitman, the BMC board of directors approved the accelerated vesting and
settlement, as of December 15, 2020, of 116,667 performance-based restricted stock units (“PSUs”) granted on September 26, 2018 to Mr. Flitman (“September PSUs”), which number of September PSUs was determined by
assuming the applicable performance goals were achieved at target-level performance. Prior to the action by the BMC board of directors, the September PSUs were scheduled to vest on December 31, 2021.
The BMC board of directors approved the accelerated vesting and settlement, as of December 15, 2020, of all PSUs granted on March 1 and
March 15, 2018 to all employees who received such grants (including to BMC’s named executive officers, other than Mr. Flitman and Mr. Johnson) (“March PSUs”), which number of March PSUs was determined assuming the
applicable performance goals were achieved at an estimated level of actual performance on December 31, 2020, as reasonably determined by the Board, of 200% of target performance, with 25,000 March PSUs held by Mr. Major vesting and
settling and 12,256 March PSUs held by Mr. Farmer vesting and settling. Prior to the action by the BMC board of directors, the March PSUs were otherwise scheduled to vest on March 1 or March 15, 2021.
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Cautionary Notice Regarding Forward-Looking Statements
This report, in addition to historical information, contains “forward-looking statements” (as defined in the Private Securities Litigation Reform Act
of 1995) regarding, among other things, future events or the future financial performance of BMC Stock Holdings, Inc. (“BMC”) and Builders FirstSource, Inc. (“Builders FirstSource”). Words such as “may,”
“will,” “should,” “plans,” “estimates,” “predicts,” “potential,” “anticipate,” “expect,” “project,” “intend,” “believe,” or the negative of
these terms, and words and terms of similar substance used in connection with any discussion of future plans, actions or events identify forward-looking statements. Any forward-looking statements involve risks and uncertainties that are difficult to
predict or quantify, and such risks and uncertainties could cause actual events or results to differ materially from the events or results described in the forward-looking statements, including risks, or uncertainties related to the novel
coronavirus disease 2019 (also known as “COVID-19”) pandemic and its impact on the business operations of BMC and Builders FirstSource and on local, national and global economies, the growth
strategies of BMC and Builders FirstSource, fluctuations of commodity prices and prices of the products of BMC and Builders FirstSource as a result of national and international economic and other conditions, or the significant dependence of both
companies’ revenues and operating results on, among other things, the state of the homebuilding industry and repair and remodeling activity, lumber prices and the economy. Neither BMC nor Builders FirstSource may succeed in addressing these and
other risks or uncertainties.