DEF 14A of Strattec Security Corp
Filed Sep 20, 2024 · FY20240000950170-24-108458
PROPOSAL 2: ELECTION OF DIRECTORS
PROPOSAL 2: ELECTION OF DIRECTORS Our Board currently consists of seven members. Prior to the adoption of the amendment to our Articles described in Proposal 1, our Articles provide that our Board be divided into three classes having staggered terms of three years each. If the shareholders approve the proposal to amend our Articles to declassify our Board of Directors, the Board has established that the number of directors to be elected at the 2024 Annual Meeting be fixed at six and that the persons named in the enclosed proxy will vote to elect all six of the following nominees as directors for terms ending at the 2025 Annual Meeting of Shareholders, unless you withhold authority to vote for any or all of the nominees by marking the proxy to that effect or so voting in person: Tina Chang, Thomas W. Florsheim, Jr., F. Jack Liebau, Jr., Bruce M. Lisman, Jennifer L. Slater, and Matteo Anversa. The directors who would be subject to re-election in 2025 and 2026, except for David R. Zimmer, have agreed to resign and to stand for re-election in 2024 if Proposal 1 is approved. Mr. Zimmer, whose term otherwise would expire in 2026, is retiring from the Board of Directors at the Annual Meeting and the Board has nominated Matteo Anversa for election to the director position being vacated by Mr. Zimmer. If the shareholders do not approve Proposal 1 and the related amendment to our Articles, the term of office of the 2024 class of directors will expire at the 2024 Annual Meeting and the terms of office for the 2025 and 2026 classes of directors, other than Mr. Zimmer, will expire at the 2025 and 2026 Annual Meetings, respectively. In that event, the persons named in the enclosed proxy will vote to elect the following director nominees, in the respective classes, unless authority is withheld to vote for any or all of the nominees: (1) for terms expiring in 2027, Thomas W. Florsheim, Jr. and Jennifer L. Slater; and (2) for a term expiring in 2025, Matteo Anversa. The following directors would continue to serve for terms expiring in the years noted: (1) Bruce M. Lisman and F. Jack Liebau, Jr., 2026, and (2) Tina Chang, 2025. Harold M. Stratton II, one of our incumbent directors whose term is expiring at the 2024 Annual Meeting, is retiring from the Board of Directors and is not standing for re-election at the Annual Meeting. Mr. Stratton has served as a director since 1994 and is currently a member of our Audit and Compensation Committees. Mr. Stratton’s service on these committees will end in connection with the Annual Meeting. Mr. Stratton also formerly served as Chairman of our Board of Directors and as the first President of the Corporation. David M. Zimmer, one of our incumbent directors whose term would otherwise expire at the 2026 Annual Meeting, is also retiring from the Board of Directors and, even if Proposal 1 is approved, is not standing for re-election at the Annual Meeting. Mr. Zimmer has served as a director since 2006 and currently is the Chairman of our Audit and a member of the Compensation Committee. Mr. Zimmer’s service on these committees will end in connection with the Annual Meeting. We want to express our deep gratitude for the years of dedicated service that Mr. Stratton and Mr. Zimmer have provided to STRATTEC.
Director Qualifications and Selection Criteria
Director Qualifications and Selection Criteria Our Board of Directors, at the recommendation of our Nominating and Corporate Governance Committee, has adopted Director Selection Criteria which are available under the Investor Relations tab of our website at https://investors.strattec.com/corporate-governance/highlights. These criteria are periodically reviewed by our Nominating and Corporate Governance Committee. The criteria require independence and an absence of material conflicts of interest of all independent and non-management directors. The criteria also describe the personal attributes and the broad mix of skills and experience of directors sought by STRATTEC in order to enhance the diversity of perspectives, professional experience, education and other relevant attributes, and the overall strength of the composition of the Board. The table below the section “Board of Directors Recommendation” provides specific information as of the date of this Proxy Statement about each nominee for election to our Board of Directors at the Annual Meeting. The information presented includes information each director nominee has provided us about his or her age, principal occupation, business experience for the past five years, and the names of other publicly-held companies of which he or she currently serves as a director or has served as a director during the past five years. Our Nominating and Corporate Governance Committee regularly evaluates the mix of experience, qualifications, attributes and skills of our directors using a matrix of areas that this Committee considers important for our business, which experience, qualifications, attributes and skills that we consider most important for membership on the Board include a background in the items set forth in our Director Selection Criteria. In addition to the information presented below regarding the nominee’s or incumbent’s specific experience, qualifications, attributes and skills that led our Nominating and Corporate Governance Committee to the conclusion that such person should serve as a director of STRATTEC, our Nominating and Corporate Governance Committee also considered the qualifications and criteria described below under “Director Skills Matrix” and “Corporate Governance Matters – Director Nominations” with the objective of creating a complementary mix of directors.
Director Skills Matrix
Director Skills Matrix We believe our director nominees and incumbent directors are talented individuals with diverse skill sets and backgrounds, as reflected in their biographies set forth below. Many of the directors have extensive and direct automotive industry experience and/or experience in various industries that impact key functional areas of our business, such as in electronics, financial and technology matters. The directors also have varying educational backgrounds, levels of schooling and public board experience, including a mix of college, post-graduate and multiple public board and committee experience that brings strengths and diversity to the STRATTEC Board. In addition to having a diverse Board, many of our officers have diverse backgrounds. One officer is Hispanic and another is of Middle Eastern descent. The Director Skills Matrix shown below summarizes the key skills and expertise that we consider important for our directors considering our business strategy. Specifically, the following matrix highlights the key skills, experiences, qualifications and attributes that our Nominating and Corporate Governance Committee considers in evaluating the strength and diversity of the Board and which the directors bring to the Board to maintain effective oversight. A mark indicates a specific area of focus or expertise on which the Board particularly relies. Not having a mark does not mean the incumbent or nominee director does not possess that qualification or skill. Although the matrix below also summarizes certain background information with respect to each incumbent or nominee director, please review our director biographies set forth below which describe each such person’s specific background and relevant experience in more detail.
Director Skills Matrix
| | Tina Chang | Thomas Florsheim | F. Jack Liebau, Jr. | Bruce Lisman | Jennifer Slater | Matteo Anversa | | CORPORATE SKILLS EXPERIENCE: | | | | | | | | President /CEO/Executive Mgmt | X | X | X | X | X | X | | CFO / Audit / Controller | | | | | | X | | Automotive Industry | | | | | X | X | | Strategic Planning | X | X | X | X | X | X | | Mergers & Acquisitions | | X | X | X | X | X | | International Business | X | X | | X | X | X | | Corporate Governance | X | X | X | X | X | X | | Public Company Boards | X | X | X | X | X | X | | Private Company Boards | X | | X | X | X | X | | FUNCTIONAL SKILLS EXPERIENCE: | | | | | | | | Engineering | | | | | X | | | Financial | X | X | X | X | X | X | | Information Technology | X | X | | | X | X | | Sales / Marketing | | X | | X | X | | | Electronics | | | | | | | | Operations | X | X | | | X | | | Risk Management | X | X | X | X | X | X | | Public Relations | X | | | | | | | Human Resources | X | | | | | | | Compensation | X | X | X | X | X | | | Legal | X | | | | | | | E-commerce | X | X | | | X | | | Distribution | | X | X | X | X | X | | PERSONAL HISTORY | | | | | | | | STRATTEC Board tenure | 2 | 12 | 1 | 1 | — | — | | Age | 52 | 66 | 60 | 77 | 50 | 52 | | Career status | Full Time | Full Time | Full Time | Retired | Full Time | Full Time |
Director Skills Matrix
We believe that the diversity of experience, qualifications, attributes and skills of our directors is important to our success. We expect that our Nominating and Corporate Governance Committee will on an annual basis review and reevaluate the above matrix to confirm that it aligns with our corporate strategies and oversight needs.
Board of Directors Recommendation
Board of Directors Recommendation The Board of Directors recommends that shareholders vote FOR the election of the following nominees as directors of STRATTEC to serve for a one year term expiring at the 2025 Annual Meeting of Shareholders, provided that Proposal 1 is approved by shareholders: Tina Chang, Thomas W. Florsheim, Jr., F. Jack Liebau, Jr., Bruce M. Lisman, Jennifer L. Slater, and Matteo Anversa.
Board of Directors Recommendation
| Name, Principal Occupation for Past Five Years and Directorships | Age | Director Since | | Nominees for election at the Annual Meeting: | | | | TINA CHANG | 52 | 2022 | | Since 1996, Ms. Chang has served as Chairman of the Board and Chief Executive Officer of SysLogic, Inc. (an information systems consulting and services firm). Ms. Chang is also an owner (either directly or indirectly through SysLogic, Inc.) of SysSpark, LLC, a product innovation company, Cyberspect, LLC, a cybersecurity software and SaaS company, and WillBridge Ltd., a social benefit corporation. Ms. Chang has served on the boards of Central States Manufacturing, Inc., since 2019, and Delta Dental of Wisconsin, since January 2022. She has also served as a Director of Weyco Group, Inc. (a company engaged in the business of the design and distribution of quality and innovative footwear) since 2007. Ms. Chang is a member of the Executive, Audit, Corporate Governance and Compensation Committees for Weyco Group, Inc. (NASDAQ: WEYS). Previously, Ms. Chang served as a Director and Advisor of The Private Bank — Wisconsin from 2004 to 2013. Ms. Chang is also a private real estate investor and owns and manages mixed-use residential and commercial real estate in the Milwaukee, Wisconsin area. Ms. Chang brings to the Board a strong background in business, technology and process development in the information technology and cybersecurity areas. With technology and cybersecurity issues being an ever increasing component of STRATTEC’s business, Ms. Chang’s experience is valuable to the Board as part of its risk oversight duties. She is also strongly involved in the local business community and with charitable organizations, and brings to the Board these varied experiences. This business and career experience led to the conclusion that she should continue to serve as a director of STRATTEC. | | | | THOMAS W. FLORSHEIM, JR. | 66 | 2012 | | Chairman of the Board and Chief Executive Officer of the Weyco Group, Inc. (NASDAQ: WEYS), a company engaged in the business of the design and distribution of quality and innovative footwear, since 2002. Prior to that, Mr. Florsheim was President and Chief Executive Officer of the Weyco Group, Inc. from 1999 to 2002, President and Chief Operating Officer from 1996 to 1999, and Vice President from 1988 to 1996. Chairman and a director of Weyco Group, Inc. Mr. Florsheim is a chairman and chief executive officer of a public company. His skill sets include significant experience in mergers and acquisitions, financial oversight, compensation matters and organizational development. His career in the consumer goods industry has exposed him to manufacturing, marketing and engineering solutions on a global basis. This business and career experience led to the conclusion that he should continue to serve as a director of STRATTEC. | | |
Board of Directors Recommendation
| Name, Principal Occupation for Past Five Years and Directorships | Age | Director Since | | BRUCE M. LISMAN | 77 | 2023 | | Mr. Lisman is a private investor. He serves on the boards of two other public companies — Myers Industries (NYSE: MYE) since 2015 and Associated Capital Group (NYSE: AC) since 2015, and two private companies — National Life Group, a mutual life insurance company since 2004 and Bank of Burlington since 2022. Prior board service includes an electric utility, an electricity transmission company, a regional banking company, an aftermarket automotive supply company, and an engineering and construction company (as Executive Chair). Other past board service includes the University of Vermont (Chair), and American Forests (Chair), the nation’s oldest conservation organization.He was Chairman of JP Morgan’s Global Equity Division (2008-2009), and Head or Co-Head of Bear Stearns Global Equity Division from 1987 to 2008. Earlier, he was the Director of Research (1984-1987) at Bear Stearns, and before that was a research analyst covering a broad range of industries. In his capacity as a board member, Mr. Lisman has served as Board Chairman, a member of all relevant committees and has chaired Compensation, Governance, and Audit Committees. The Board believes that Mr. Lisman’s qualifications to serve on our Board include his extensive board service including leadership positions, as well as his service as a successful senior executive and his investment experience. | | | | F. JACK LIEBAU, JR. | 60 | 2023 | | Mr. Liebau is managing director of Beach Investment Counsel, Inc., an investment management company. Mr. Liebau is the former President and CEO of Roundwood Asset Management, a subsidiary managing public equities for Alleghany Corporation’s insurance companies, the former President and Founder, Liebau Asset Management Company, which managed money for individuals, foundations, and corporations, and the former Partner and Portfolio Manager for Davis Funds and Primecap Management Company, investment management firms. Mr. Liebau’s current and former directorships include: Board Chair and director of Myers Industries, Inc. (NYSE: MYE); director of Motorcar Parts of America, Inc. (Nasdaq:MPAA), a remanufacturer, manufacturer, and distributor of automotive aftermarket parts; director of BNY Mellon ETF Trust; non-Executive Board Chair and Member of Special Investigations Limited Company, a private, Virginia-based professional services company and government contractor in the information technology, cybersecurity, investigations, and intelligence sectors; director of MuxIP, unlisted software company serving media companies; director and CFO of the Edwin Gregson Foundation; former director of The Pep Boys, a nationwide auto parts retailer; former director of Herley Industries, Inc., a defense technology company; former director of Media General, Inc., then owner of newspapers and television stations; former Vice President of Andover Alumni Council; and former director of Kidspace Children’s Museum. The Board believes that Mr. Liebau’s qualifications to serve on our Board include his: (1) vast financial, strategic, executive and investment experience working with companies in a wide range of industries, including his qualification as an “audit committee financial expert”; (2) experience in corporate governance and corporate and non-profit board service; and (3) experience working effectively with management teams, analyzing strategic options, and communicating with various constituencies. | | |
Board of Directors Recommendation
| Name, Principal Occupation for Past Five Years and Directorships | Age | Director Since | | JENNIFER L. SLATER | 50 | 2024 | | Ms. Slater has served as STRATTEC's President and Chief Executive Officer since July 1, 2024. Ms. Slater had most recently served as Executive Vice President and General Manager, Performance Sensing, of Sensata Technologies, Inc. (NYSE: ST), a global industrial technology company, since April 2024, after serving as Senior Vice President, Automotive & Aftermarket, beginning April 2023. Ms. Slater also served as the Vice President and General Manager of Sensata’s Heavy Duty and Off-Road business from September 2022 through March 2023. From 2019 to September 2022, Ms. Slater served as Group Vice President and General Manager, Global OE and Products, at Clarios, LLC, a manufacturer and distributor of advanced energy storage solutions for the automotive market. Ms. Slater has served as a director of Valvoline Inc. (NYSE: VVV), an American retail automotive services company since July 2022, currently serving on its Compensation and Governance and Nominating Committees. Ms. Slater is a member of the Society of Automotive Engineers and was named a 2017 STEP Ahead winner by the Manufacturing Institute, recognizing Women in Manufacturing. Ms. Slater is our CEO, has significant experiences as an executive officer of other public companies, and serves as a director on another public company. Her extensive experience and knowledge of the automotive industry, including automotive OEMs, and her recent focus on energy storage solutions to meet evolving vehicle electrification needs, product management and strategy, engineering, finance, and sales provide her with the qualifications and skills to serve as a director of STRATTEC. | | | | MATTEO ANVERSA | 52 | -- | | Mr. Anversa serves as the Chief Financial Officer of Logitech International (SIX: LOGN) (Nasdaq: LOGI), a Swiss public company that designs software-enabled hardware solutions. He previously served as Executive Vice President of Finance, Chief Financial Officer, and Treasurer of Gentherm, Inc. (NASDAQ: THRM), a market leader in thermal and pneumatic comfort in the automotive industry, from January 2019 through August 2024, and as Executive Vice President and Chief Financial Officer of Myers Industries, Inc. (NYSE: MYE), a manufacturer of polymer-based material handling products and a distributor of tire repair and retread products, from December 2016 through December 2018. Mr. Anversa previously held executive management positions at Fiat Chrysler Automobiles N.V. since 2013, including Vice President, Group FP&A Fiat Chrysler and Chief Financial Officer for Ferrari SpA. Mr. Anversa began his career with General Electric Corporation where he held various leadership roles during his 16-year tenure. Mr. Anversa served as a director of Gabelli Value for Italy (VALU), an Italian company listed on AIM Italia, from 2018 to 2020. | | | | Mr. Anversa's extensive experience as a public company executive officer, including experience in the automotive industry, his public company financial expertise, and his experience as a director of a foreign exchange listed company, provide him with the qualifications and skills to serve as a director of STRATTEC. | | |
Board of Directors Recommendation
If the shareholders do not approve Proposal 1, the term of office of the 2024 class of directors will expire at the 2024 Annual Meeting and the terms of office for the 2025 and 2026 classes of directors, other than Mr. Zimmer, will expire at the 2025 and 2026 Annual Meetings, respectively. In that event, the persons named in the enclosed proxy will vote to elect the following director nominees, in the respective classes, unless authority is withheld to vote for any or all of the nominees: (1) for terms expiring in 2027, Thomas W. Florsheim, Jr. and Jennifer L. Slater, and (2) for a term expiring in 2025, Matteo Anversa. The following directors would continue to serve for terms expiring as noted: (1) Bruce M. Lisman and F. Jack Liebau, Jr., 2026, and (2) Tina Chang, 2025.
Compensation Process Overview
Compensation Process Overview We believe it is important to provide compensation that at a minimum reflects base levels which are competitive with executive officers in other industrial public companies of similar structure and size. We further believe that it is appropriate and desirable to have meaningful incentive plans for our executive officers to help attract and retain high performing individuals and drive positive economic performance and enhanced shareholder value. Further, we believe that these performance-based incentive plans should provide opportunities for our executive officers to significantly augment their base compensation on a short term and long term basis. This philosophy is the foundation for the following compensation objectives that we seek to promote. The objectives of our Compensation Committee in establishing compensation arrangements for our executive officers are to: (1) attract and retain qualified executive managers with a straightforward and understandable compensation program; (2) provide strong financial incentives, at reasonable cost, for positive financial performance and enhanced value of our shareholders’ investment; and (3) use cash bonus plans to recognize positive short-term performance and equity based plans to support the long-term needs and goals of STRATTEC and our shareholders. As described above under the Section “Corporate Governance Matters—The Board’s Role in Risk Oversight,” the Compensation Committee has primary oversight responsibility to ensure that STRATTEC’s compensation programs and practices do not encourage unreasonable or excessive risk-taking and that any risks are subject to appropriate controls. Compensation for our executive officers and other key employees is evaluated and determined by the Compensation Committee of our Board of Directors. Our Compensation Committee consists of four independent directors under the applicable listing standards of the NASDAQ Stock Market. Thomas W. Florsheim, Jr. is the Chair of our Compensation Committee and the other members of the Compensation Committee are Tina Chang, Jack Liebau, Jr., Harold M. Stratton II, and David R. Zimmer. Additional information regarding our Compensation Committee is disclosed under “Directors’ Meetings and Committees – Compensation Committee” in this Proxy Statement. Many key compensation decisions are made during the first quarter of the fiscal year as the Compensation Committee meets to review performance for the prior year under our incentive bonus plans (including our TIPS Bonus Plan), determine awards under our long-term incentive plan, and set compensation targets and objectives for the coming year. However, our Compensation Committee also views compensation as an ongoing process and may convene special meetings in addition to its regularly scheduled meetings throughout the year for purposes of evaluation, planning and appropriate action. As described elsewhere in this Proxy Statement under “Proposal 4: Approval and Adoption of the STRATTEC SECURITY CORPORATION 2024 Equity Incentive Plan”, we are proposing at the Annual Meeting that our shareholders approve a new omnibus long-term incentive plan to replace and supersede our Amended and Restated Stock Incentive Plan to be more consistent with customary terms of such plans. Our management assists the Compensation Committee in its oversight and determination of compensation. Management’s role includes assisting the Compensation Committee with evaluating employee performance, assisting with establishing individual and company-wide performance targets and objectives, recommending salary levels and equity incentive grants, providing financial data on company performance, providing calculations and reports on achievement of performance objectives and furnishing other information requested by the Committee. Our Chief Executive Officer works with the Compensation Committee in making recommendations regarding our overall compensation policies and plans, as well as recommending specific compensation levels for our other executive officers and key employees. Members of management who were present during portions of Compensation Committee meetings held in fiscal 2023 and 2024 to date, included the Chief Executive Officer and the Chief Financial Officer. Our Compensation Committee makes all decisions regarding the compensation of the Chief Executive Officer without the Chief Executive Officer or any other member of management present. The Compensation Committee’s charter authorizes the Committee to engage any compensation consultants and other advisers as the Committee may deem appropriate, and requires that we provide the Committee with adequate funding to engage any advisers the Committee deems appropriate to engage. During April 2022, upon the recommendation of our management, our Compensation Committee directly engaged Newport Group to assist it in reviewing our compensation practices and levels for our executive officers and directors. Newport Group did not provide any other services to STRATTEC or its affiliates during fiscal 2022 or 2021 prior to its engagement and since its engagement during April 2022 it has not provided any other services to STRATTEC. As a result, our Compensation Committee determined that the engagement of Newport Group to assist STRATTEC with reviewing its compensation practices and levels did not create any conflicts of interest. Our engagement of Newport Group and the scope of its work was similar to the work and report Newport Group prepared for our Compensation Committee during April 2019. As part of its work, Newport Group prepared for our Compensation Committee a comparative compensation report of a broad group of organizations within the durable goods manufacturing industry. Our Compensation Committee reviewed the results of Newport Group’s report and analysis during meetings held at the end of fiscal 2022 and the beginning of fiscal 2023 for purposes of establishing and setting compensation levels and targets for our fiscal 2023. We have in recent years historically engaged Newport Group (or a similar compensation consultant) approximately every other fiscal year for the purpose of assisting our Compensation Committee in reviewing our compensation practices and levels for our executive officers and non-employee directors. Our Compensation Committee did not engage Newport Group (or a similar compensation consultant) during our fiscal 2023 to assist the Committee in setting compensation levels for fiscal 2024. Instead, our Compensation Committee unanimously approved setting base salary targets for our executive officers for fiscal 2024 at their same levels as were in place at the end of fiscal 2023 except with respect to Mr. Krejci who agreed to accept a $100,000 annualized reduction in his base salary until the Corporation’s financial performance improved and stabilized. During fiscal 2024, the Compensation Committee retained PayGovernance as the independent compensation consultant to the Committee, the Board, and the Corporation with respect to reviewing our compensation practices and levels for our executive officers and non-employee directors for fiscal year 2025.
Summary Compensation Table
Summary Compensation Table The following table provides information for fiscal 2024 and 2023 concerning the compensation paid by us to each person who served as our principal executive officer during fiscal 2024 and our two other most highly compensated executive officers based on their total compensation in fiscal 2024. We refer to these executive officers as our “named executive officers” in this Proxy Statement.
Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary (1) | Bonus (2) | Stock Awards (3) | Non-Equity Incentive Plan Compensation (4) | All Other Compensation (5) | Total | | Frank J. Krejci | 2024 | $303,333 | $— | $113,016 | $— | $321,096 | $737,445 | | Former President and Chief Executive Officer (6) | 2023 | $630,635 | $— | $154,734 | $— | $17,898 | $803,267 | | Rolando J. Guillot | 2024 | $468,000 | $— | $76,452 | $227,448 | $23,976 | $795,876 | | Interim President and Chief Executive Officer Senior Vice President - Operations and Chief Operating Officer (7) | 2023 | $349,000 | $— | $100,122 | $— | $17,891 | $467,013 | | Al-Waleed H. Hamdan | 2024 | $337,000 | $— | $76,452 | $170,606 | $18,813 | $602,871 | | Vice President – Chief Commercial Officer | 2023 | $321,333 | $— | $86,469 | $— | $17,312 | $425,114 | | Richard P. Messina | 2024 | $343,000 | $— | $63,156 | $132,655 | $28,330 | $567,141 | | Vice President – Global Engineering and Chief Technology Officer | 2023 | $334,421 | $— | $86,469 | $— | $27,193 | $448,083 |
Summary Compensation Table
Explanatory Notes for Summary Compensation Table: (1) We do not provide any standard annual raises in the base salaries of our executive officers. Instead, our Compensation Committee periodically reviews the base salaries of our executive officers based on individual and company-wide performance criteria and by reference to the data analysis provided by the Newport Group comparative compensation report described above for executives with similar positions, and taking into account company performance, certain adjustments for inflation and for other discretionary factors determined by our Compensation Committee based upon an analysis of each officer’s individual performance and achievement over the prior fiscal year. Additionally, in determining base salaries, our Compensation Committee considers the executive officer’s qualifications and experience, the executive officer’s responsibilities, the executive officer’s past performance, the executive officer’s goals and objectives and salary levels for comparable positions as provided in the Newport Group report described above. Our Compensation Committee typically establishes base salaries for the new fiscal year for our executive officers at its regular meeting in August of each year where it reviews the prior fiscal years’ results and sets performance targets for the ensuing fiscal year, which new base salaries are traditionally effective as of September 1 of each fiscal year. For fiscal 2024, Mr. Krejci, Mr. Guillot, Mr. Hamdan, and Mr. Messina were paid base salaries of $640,000, $576,000, $342,000 and $348,000, respectively, which base salaries were effective as of January 1, 2024. (2) These amounts represent awards of discretionary bonus payments made by our Compensation Committee. For fiscal year 2024 and 2023, no discretionary bonus payments were made to our named executive officers. (3) We believe that equity compensation is an effective means of aligning the long-term interests of our employees, including our executive officers, with our shareholders. Our Amended and Restated Stock Incentive Plan authorizes the Compensation Committee to issue both stock options and shares of restricted stock, as well as other forms of equity incentive compensation. In recent fiscal years, awards to our executive officers under the Amended and Restated Stock Incentive Plan have consisted solely of shares of restricted stock subject to time-based vesting criteria. In determining the type and total size of equity awards, the Compensation Committee considers various factors such as the outstanding number of options and shares of restricted stock, the amount of additional shares available for issuance under our Amended and Restated Stock Incentive Plan, the financial statement impact of awards, the level of responsibility of the proposed recipient and his or her performance and the percent of the outstanding shares of our Common Stock represented by outstanding options and shares of unvested restricted stock. The amounts in this column for each fiscal year reflect the dollar value of long-term equity based compensation awards granted in the form of shares of restricted stock pursuant to the terms of our Amended and Restated Stock Incentive Plan during the fiscal years indicated in the table. These amounts equal the grant date fair value of shares of restricted stock, computed in accordance with FASB Accounting Standards Codification Topic 718, granted during such fiscal year. Assumptions used in the calculation of the grant date fair value are included under the caption “Accounting for Stock-Based Compensation” in the Notes to our Consolidated Financial Statements in the fiscal year 2024 Annual Report on Form 10-K filed with the Commission on September 5, 2024 and such information is incorporated herein by reference. With respect to fiscal 2024, on August 23, 2023, the following grants of shares of restricted stock were awarded: Mr. Krejci, 5,100 shares, Mr. Guillot, 3,450 shares, Mr. Hamdan, 3,450 shares, and Mr. Messina, 2,850 shares. These shares of restricted stock were subject to vesting one-third each year over a three year period on the anniversary of the grant date and have all the rights of our shares of Common Stock (including voting rights), other than the right to receive cash dividends while such shares are not vested. These shares of restricted stock had a grant date fair value per share of $22.16 as determined pursuant to FASB Accounting Standards Codification Topic 718. With respect to fiscal 2023, on August 22, 2022, the following grants of shares of restricted stock were awarded: Mr. Krejci, 5,100 shares, Mr. Guillot 3,300 shares, Mr. Hamdan, 2,850 shares, and Mr. Messina was 2,850 shares of restricted stock. These shares of restricted stock were subject to vesting one-third each year over a three year period on the anniversary of the grant date and have all the rights of our shares of Common Stock (including voting rights), other than the right to receive cash dividends while such shares are not vested. The shares of restricted stock had a grant date fair value per share of $30.34 as determined pursuant to FASB Accounting Standards Codification Topic 718. (4) This column discloses the dollar value of all amounts earned by the named executive officers under our TIPS Bonus Plan for performance related to the applicable fiscal year in the table, which in each case payout was tied to achievement of annual incentive performance targets. Participants in the TIPS Bonus Plan include or included our executive officers and other senior managers determined by our Compensation Committee based upon recommendations from our Chief Executive Officer. Under the TIPS Bonus Plan, executive officers and other full-time employees are eligible to receive annual incentive cash bonuses whereby the Board of Directors sets company financial performance goals on an annual basis. For fiscal 2024 and 2023, the Board set company profit before tax (before bonus expense and after non-controlling interest and as adjusted for unusual income or expense items) as the company financial performance goal. Subject to the exception noted below for fiscal 2023, for the STRATTEC executive officers and senior manager group one half of a participant’s bonus is based upon achieving the participant’s individual goals and objectives for the year. The other half of the participant’s bonus is based upon the level of STRATTEC’s profit before tax for the year (with the adjustments noted above). The TIPS Bonus Plan provides for a hurdle rate goal which would be the minimum level of profit before tax (with the adjustments noted above) before any bonuses are paid under either the company financial performance or individual performance component. The company financial performance component of the bonus is calculated based upon a straight-line relationship between the hurdle rate goal and the target goal. This straight line also applies to amounts above the target goal. Each individual participant’s bonus would be capped at 200% of their target bonus. For each of 2024 and 2023, the initial target bonus equals 75%, 45%, 45% and 35% of base salary for each of Mr. Krejci, Mr. Guillot, Mr. Hamdan, and Mr. Messina, respectively (although Mr. Krejci retired from the Corporation effective December 31, 2023 and became ineligible to receive a bonus at that time). If the profit before tax (with the adjustments noted above) was less than the hurdle amount established for such particular fiscal year, no bonus amount was to be paid to any eligible participant, including the bonus attributable to the individual performance component for STRATTEC executive officers and senior managers. For any profit before tax (with the adjustments noted above) falling between $6 million and $12
Summary Compensation Table
million, the actual target performance factor for the executive officers was based only upon the Corporation performance factor and not adjusted for any individual performance factor. The Compensation Committee agreed that for fiscal 2024 and fiscal 2023 the target goal of a company performance factor of 1 would equal $24 million each year, respectively, of profit before tax (with the adjustments noted above). At this level, a participant would receive 100% of his or her target bonus with respect to the company financial performance component of the bonus plan. This straight line relationship for amounts in excess of $24 million continues up to a maximum bonus equal to 200% of the participant’s target bonus for our executive officers and senior managers such that at amounts of $36 million or more in profit before tax (with the adjustments noted above) the payment would equal 200% of the target bonus. The bonus amounts earned under the TIPS Bonus Plan for fiscal 2024 are set forth in this column. For fiscal year 2024, the bonus amounts earned under the TIPS Bonus Plan resulted from a factor of 1.05 of target based on the Corporation's adjusted pre-tax income (before bonus expense and excluding non-controlling interest profit) of $24.6 million. For fiscal year 2023, no bonus amounts were earned under the TIPS Bonus Plan as STRATTEC’s profit before tax for such fiscal year (with the adjustments noted above) was less than the minimum hurdle rate amount. (5) Our named executive officers participate in other benefit plans generally available to all employees on the same terms as similarly situated employees, including participation in medical, health (including Health Savings Accounts (HSAs)), dental, disability, life insurance and 401(k) plans. In addition, our named executive officers each receive at least two times their annual base salary up to $500,000 of group term life insurance coverage. The table below shows the components of this column, which include our match for each individual’s 401(k) plan contributions, the cost of premiums paid by us for term life insurance under which the named executive officer is a beneficiary, long-term disability benefits under our long term disability plan which provides for an additional monthly benefit of $10,000 per executive, payouts under our Supplemental Executive Retirement Plan and perquisites consisting of an automobile allowance for Mr. Messina of $9,600 each fiscal year. Mr. Krejci's "All Other Compensation" includes $320,000 he received in fiscal year 2024 pursuant to the Retirement Agreement and General Release entered into effective November 29, 2023 between Mr. Krejci and STRATTEC.
Summary Compensation Table
| Name | Year | 401(k) Match | Life Insurance | LTD Benefits | SERP Payout | Perquisites | Total “All Other Compensation” | | Frank J. Krejci | 2024 | $100 | $690 | $306 | $— | $— | $321,096 | | | 2023 | $16,067 | $1,270 | $561 | $— | $— | $17,898 | | Rolando J. Guillot | 2024 | $21,983 | $1,380 | $612 | $— | $— | $23,976 | | | 2023 | $16,067 | $1,270 | $554 | $— | $— | $17,891 | | Richard P. Messina | 2024 | $16,750 | $1,380 | $600 | $— | $9,600 | $28,330 | | | 2023 | $15,787 | $1,270 | $536 | $— | $9,600 | $27,193 | | Al-Waleed H. Hamdan | 2024 | $16,833 | $1,380 | $590 | $— | $— | $18,803 | | | 2023 | $15,517 | $1,270 | $515 | $— | $— | $17,302 |
Summary Compensation Table
(6) Mr. Krejci retired from the Corporation effective December 31, 2023 so his salary for fiscal 2024 represents the annual base salary he received for the portion of fiscal 2024 that he was employed by STRATTEC. (7) Mr. Guillot served as our Interim President and Chief Executive Officer from January 1, 2024 (upon Mr. Krejci's retirement) through June 30, 2024 (upon the appointment of Jennifer L. Slater as President and Chief Executive Officer effective July 1, 2024). Mr. Guillot received a monthly stipend of $18,000 in addition to his base salary during the period in which he served as Interim President and Chief Executive Officer.
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table sets forth information on outstanding option and unvested restricted stock awards held by the named executive officers as of our fiscal year ending June 30, 2024, including the number of shares underlying both exercisable and unexercisable portions of each stock option as well as the exercise price and expiration date of each outstanding option and the number of shares of restricted stock held at the fiscal year end that have not yet vested.
Outstanding Equity Awards at Fiscal Year End
| | Option Awards | | | | Stock Awards | | | Name | Number of Securities Underlying Unexercised Options (#) - Exercisable | Number of Securities Underlying Unexercised Options (#) - Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | | Frank J. Krejci (1) | — | — | — | — | — | — | | | — | — | — | — | — | — | | | — | — | — | — | — | — | | Rolando J. Guillot | 1,180 | — | 79.73 | 08/20/24(3) | 1,100(4) | 27,500 | | | — | — | — | — | 2,300(5) | 57,500 | | | — | — | — | — | 3,450(6) | 86,250 | | Richard P. Messina | 1,050 | — | 79.73 | 08/20/24(3) | 900(4) | 22,500 | | | — | — | — | — | 1,900(5) | 47,500 | | | — | — | — | — | 2,850(6) | 71,250 | | Al-Waleed H. Hamdan | — | — | 79.73 | 08/20/24(3) | 900(4) | 22,500 | | | — | — | — | — | 1,900(5) | 47,500 | | | — | — | — | — | 3,450(6) | 86,250 |
Outstanding Equity Awards at Fiscal Year End
(1) Mr. Krejci retired from the Corporation effective as of December 31, 2023 so he had no unexercised stock options or unvested shares of restricted stock at fiscal year end. (2) Market value equals the closing market price of our common stock on June 28, 2024, the last trading day prior to our fiscal year end of June 30, 2024, of $25.00, multiplied by the number of shares of restricted stock. (3) The common stock option vested on August 20, 2017, the three year anniversary of the grant date. (4) The shares of restricted stock were granted on August 17, 2021 and vest one-third each year over a three year period on the anniversary date of the grant date. (5) The shares of restricted stock were granted on August 22, 2022 and vest one-third each year over a three year period on the anniversary date of the grant date. (6) The shares of restricted stock were granted on August 23, 2023 and vest one-third each year over a three year period on the anniversary date of the grant date.
Potential Payments Upon Termination or Change of Control
Potential Payments Upon Termination or Change of Control As of the end of fiscal year 2024, we had entered into employment agreements and change of control employment agreements with each of our named executive officers (other than Mr. Krejci, who retired effective December 31, 2023) that provide for severance benefits following a termination of employment, as well as provide employment benefits in connection with a change of control (as defined in the change of control agreements). The employment agreements with our named executive officers provide that if the executive officer’s employment is terminated as a result of the death or disability of such executive officer, then the executive officer (or his or her beneficiary) is entitled to continuation of the executive officer’s then effective base salary for a period of six months after termination and continuation of health and dental coverage for such six month period after termination of employment; provided, that such period may extend up to twelve months in the event of disability under the STRATTEC self-funded short term disability plan made available to all eligible STRATTEC employees. If the executive officer’s employment is terminated by us without cause (as defined in the employment agreements), then the executive officer will be entitled to continuation (1) of the executive officer’s then effective base salary for six months after termination or a maximum of twelve months with each executive officer receiving one month credit for each year of service as an officer of STRATTEC, and (2) of health and dental coverage for such six to twelve month period, as applicable. We believe that these severance benefits are important as a recruiting and retention device and represent reasonable consideration in exchange for the noncompetition, confidentiality and other restrictions applicable to the executive officers under the employment agreements. Our named executive officers' change of control employment agreements guarantee the executive continued employment following a change of control (as defined in the agreements) on a basis equivalent to the executive's employment immediately prior to such change in terms of position, duties, compensation and benefits, as well as specified payments upon termination following a change of control. Such agreements become effective only upon a defined change of control of STRATTEC, or if the employee’s employment is terminated upon, or in anticipation of such a change of control, and automatically supersede any existing employment agreement once they become effective. Under these agreements, if during the employment term (three years from the date of the change of control), the employee is terminated other than for cause (as defined in the agreements) or if the employee voluntarily terminates his or her employment for good reason (as defined in the agreements) or during a 30-day window period one year after a change of control, then the executive officer is entitled to specified severance benefits, including (1) a lump sum payment of two times the employee’s annual base salary, (2) a payment equal to the executive officer’s highest annual bonus (which is equal to the highest cash bonus paid to the named executive officer by STRATTEC and its affiliates collectively during the ten fiscal year period immediately preceding the fiscal year during which the change of control has occurred), and (3) continuation of certain fringe and other benefits. Again, we believe that these severance benefits are important as a recruiting and retention device. The following table sets forth the compensation that each of our named executive officers would have been eligible to receive if the applicable executive officer’s employment had been terminated on the last day of, but prior to, our fiscal year end (June 30, 2024) under circumstances requiring payment of severance benefits as described above other than in connection with a change of control.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
Director Summary Compensation Table
| Name | Fees Earned or Paid in Cash | Stock Awards (1) | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | Tina Chang | $87,500 | $46,500 | $36,750 | $— | $170,750 | | Thomas W. Florsheim, Jr. | $84,500 | $46,500 | $35,490 | $— | $166,490 | | Bruce M. Lisman (2) | $67,500 | $— | $28,350 | $— | $95,850 | | F. Jack Liebau, Jr. (2) | $77,861 | $— | $32,701 | $— | $110,562 | | Harold M. Stratton II | $67,025 | $46,500 | $28,150 | $— | $141,675 |
PAY VERSUS PERFORMANCE DISCLOSURE
PAY VERSUS PERFORMANCE DISCLOSURE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Rule 402(v) of Regulation S-K, we are providing the following information regarding the relationship between executive compensation actually paid ("CAP") to our principal executive officer ("PEO") and our non-PEO named executive officers ("Non-PEO NEOs") and certain financial performance of the Corporation. For further information concerning the of our financial performance metrics for each of the past three fiscal years. Amounts included as CAP do not represent the value of cash compensation and equity awards actually received by our PEO and Non-PEO NEOs but instead are amounts calculated pursuant to Commission rules and which result in adjustments to the amounts reported above in the summary compensation table. For further information concerning the Corporation's pay-for-performance philosophy and how we seek to align executive compensation with performance, refer to “Executive Compensation.” Our Compensation Committee did not consider the following Pay Versus Performance analysis and disclosures in making compensation decisions with respect to any fiscal year shown below.
Pay Versus Performance Table
Pay Versus Performance Table
Pay Versus Performance Table
| Fiscal Year | Summary Compensation Table Total for the PEO (1) | Compensation Actually Paid to PEO ($) (2) (3) | Average Summary Compensation Total for Non- PEO NEOs(1) (4) | Average Compensation Actually Paid to Non-PEO NEOs (3) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (TSR) (5) | Net (Loss) Income (6) | | 2024 | $766,660 | $764,113 | $585,006 | $625,550 | $131.58 | $16,313,000 | | 2023 | $803,267 | $664,603 | $635,177 | $556,471 | $41.12 | $(6,670,000) | | 2022 | $809,359 | $610,464 | $492,784 | $420,780 | $74.81 | $7,016,000 |
Pay Versus Performance Table
(1) The dollar amounts reported in this column are the amount of total compensation reported in the “Total” column of the Summary Compensation Table for the 2024, 2023 and 2022 fiscal years for the person serving as our PEO for such applicable year. The individuals included as our PEO and Non-PEOs for each applicable fiscal year are set forth in the following table (note that during fiscal year 2024, Mr. Krejci served as our PEO for six months until his retirement on December 31, 2023 and Mr. Guillot served as our interim PEO for six months from January 1, 2024 through June 30, 2024 so the information provided for our PEO for fiscal year 2024 is based on their pro rated amounts reported in the "Total" column of the Summary Compensation Table):
Pay Versus Performance Table
| Fiscal Year | PEO | Non-PEO Named Executive Officers | | 2024 | Krejci/Guillot | Richard Messina, Al-Waleed Hamdan | | 2023 | Frank Krejci | Patrick Hansen, Rolando Guillot, Richard Messina |
Pay Versus Performance Table
The dollar amounts reported in this column represent the amount of CAP for our PEO as computed in accordance with Item 402(v) of Regulation S-K. The following table provides the adjustments to the Summary Compensation Table “Total” compensation column to determine our PEO's CAP and our Non-PEO NEOs average CAP:
Pay Versus Performance Table
| | 2024 | | 2023 | | 2022 | | | | PEO ($) | Average for Non-PEO NEOs ($) | PEO ($) | Average for Non-PEO NEOs ($) | PEO ($) | Average for Non-PEO NEO ($) | | Summary Compensation Table Total: | 766,660 | 585,006 | 803,267 | 635,177 | 809,359 | 492,784 | | Adjustments: | | | | | | | | Deduction for Amounts Reported in the “Stock Awards” Column in the Summary Compensation Table: | (94,734) | (69,804) | (154,734) | (62,197) | (214,965) | (139,095) | | Increase for fair value of awards granted during the covered fiscal year that remain outstanding and unvested as of the covered fiscal year end: | 43,125 | 78,750 | 92,514 | 38,094 | 168,300 | 108,900 | | Increase (deduction) for year-over-year change in fair value at covered fiscal year end of awards granted in any prior fiscal year that were outstanding and unvested at the covered fiscal year end: | 11,662 | 19,208 | (75,786) | (44,580) | (49,995) | (33,330) | | Increase (deduction) for change in vesting date fair value of awards granted during the prior fiscal years that vested during the covered fiscal year compared to fair value of awards of prior fiscal year end: | 37,400 | 12,390 | (658) | (10,023) | (12,613) | (8,479) | | Total Adjustments: | (2,547) | 40,544 | (138,664) | (78,706) | (109,273) | (72,004) | | Compensation Actually Paid: | 764,113 | 625,550 | 664,603 | 556,471 | 610,464 | 420,780 |
Pay Versus Performance Table
(4) The dollar amounts reported in this column represent the average of the amounts reported for our Non-PEO named executive officers as a group in the “Total” column of the Summary Compensation Table in each applicable year. (5) The amounts reported in this column reflect our cumulative TSR, assuming an initial fixed $100 investment in our Common Stock starting June 27, 2021 through the end of each listed fiscal year. Cumulative TSR is calculated by dividing the sum of cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our stock price at the end and the beginning of the measurement period by our stock price at the beginning of the measurement period. No dividends were paid on our Common Stock during either fiscal 2024 or 2023. (6) The dollar amounts reported represent the amount of net (loss) income attributable to STRATTEC’s shareholders as reflected in our consolidated audited financial statements for each applicable year.
Relationship Between Compensation Actually Paid and Performance Measures
Relationship Between Compensation Actually Paid and Performance Measures As described above under “Executive Compensation,” STRATTEC generally seeks to (1) provide strong financial incentives, at reasonable cost, for positive financial performance and enhanced value of our shareholders’ investment and (2) use cash bonus plans to recognize positive short-term performance and equity based plans to support the long-term needs and goals of STRATTEC and our shareholders. We, therefore, do not specifically align our performance measures with “compensation actually paid” as determined under Item 402(v) of Regulation S-K for a particular fiscal year. Nonetheless, in accordance with such rule we are providing the following descriptions of the relationships between information presented in the above Pay Versus Performance Table. The following charts illustrate how “compensation actually paid” as determined under Item 402(v) of Regulation S-K to our PEO and the average “compensation actually paid” to our non-PEO NEOs aligns with our financial performance as measured by our TSR and our net income (loss) for the past three fiscal years: Compensation Actually Paid and Net (Loss) Income: Compensation Actually Paid and Cumulative TSR: All information provided above under the “Pay Versus Performance Disclosure” heading will not be deemed to be incorporated by reference in any filing of the Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.