DEF 14A of Stoneridge Inc
Filed Apr 4, 2024 · FY20230001043337-24-000076
Director Nominees
Director Nominees Below is a summary of the director nominees, who are elected for one-year terms. Additional information about each director nominee and his or her qualifications may be found beginning on page 6.
Director Nominees
| | | | | Committee Memberships | | | | | | Name | Age | Director Since | Primary Occupation | Independent | AC | CC | NCGC | CEC | | James Zizelman | 63 | 2023 | President and CEO of Stoneridge, Inc. | | | | | | | Ira C. Kaplan | 70 | 2009 | Executive Chairman of Benesch, Friedlander, Coplan & Aronoff LLP | ✔ | | ✔ | ✔ | ✔ | | Kim Korth | 69 | 2006 | President and CEO of 6th Avenue Group | ✔ | | C | ✔ | | | William M. Lasky | 76 | 2004 | Retired, Former President and CEO and Board Chair of Accuride Corporation and Former President and CEO and Board Chair of JLG Industries, Inc. | ✔* | ✔ | ✔ | C | | | George S. Mayes, Jr. | 65 | 2012 | Self-employed business consultant | ✔ | | | ✔ | C | | Carsten J. Reinhardt | 56 | 2023 | Self-employed business consultant | ✔ | ✔ | | ✔ | | | Sheila Rutt | 55 | 2023 | Chief Human Resources Officer of Hexion Inc. | ✔ | | ✔ | | ✔ | | Paul J. Schlather | 71 | 2009 | Self-employed business consultant | ✔ | ✔ | | | ✔ | | Frank S. Sklarsky | 67 | 2021 | Retired, Former Executive Vice President and Chief Financial Officer of PPG Industries, Inc. | ✔ | C | | | ✔ |
Director Nominees
| AC | Audit Committee | C | Committee Chairperson | | CC | Compensation Committee | * | Lead Independent Director | | NCGC | Nominating and Corporate Governance Committee | | | | CEC | Compliance and Ethics Committee | | |
PROPOSAL ONE: ELECTION OF DIRECTORS
PROPOSAL ONE: ELECTION OF DIRECTORS In accordance with the Company’s Amended and Restated Code of Regulations, the number of directors at the date of this Proxy Statement is fixed at nine. At the Annual Meeting, shareholders will elect nine directors to hold office until our next Annual Meeting of Shareholders and until their successors are elected and qualified. The Board proposes that the nine nominees identified below be elected to the Board. At our Annual Meeting, the common shares represented by proxies, unless otherwise specified, will be voted for the election of the nine nominees hereinafter named. Directors are elected by a plurality of the votes cast at the Annual Meeting. Plurality means that the nominees who receive the most votes cast “For” their election are elected as directors. Votes withheld and broker non-votes will not affect the election of directors. Broker non-votes will be counted as “Present” for purposes of determining whether a quorum has been achieved at the Annual Meeting, but will not be counted as “For” or “Withheld” from any nominee. The maximum number of nominees to be elected is nine and the proxies cannot be voted for a greater number of persons than the number of nominees named. Shares not voted will have no impact on the election of directors. At our Annual Meeting, the common shares represented by proxies, unless otherwise specified, will be voted “For” the election of the nine nominees hereinafter named.
Nominees to Serve for a One-Year Term Expiring in 2025
Nominees to Serve for a One-Year Term Expiring in 2025
Nominees to Serve for a One-Year Term Expiring in 2025
| Ira C. Kaplan | Mr. Kaplan, 70, has served as a director since 2009. Since January 2015 he has served as the Executive Chairman of Benesch, Friedlander, Coplan & Aronoff LLP, a national law firm, and served as the Managing Partner from 2008 until 2014. He is a member of the firm’s Executive Committee and has been a partner with the firm since 1987. Mr. Kaplan focuses his practice on mergers and acquisitions as well as public and private debt and equity financings. Mr. Kaplan counsels clients in governance and business matters in his role at the law firm. In addition to his legal and management experience described above, the Company believes that Mr. Kaplan should serve as a director because he brings thoughtful analysis, sound judgment and insight on best practices to the Board, in addition to his professional experiences, which strengthen the Board’s collective qualifications, skills and experience. | | Kim Korth | Ms. Korth, 69, has served as a director since 2006. Since July 2022, Ms. Korth has served as the Chief Executive Officer of Engauge Workforce Solutions LLC, a staffing and contract manufacturing firm. Since June 2017, Ms. Korth has served as the President and Chief Executive Officer of 6th Avenue Group, a firm focused on improving the sustainability and adaptability of small to medium manufacturing and distribution firms. Prior to that, from December 2012 until May 2017, Ms. Korth was the President and Chief Executive Officer and a director of Techniplas LLC, a privately held international group of plastics-focused manufacturing businesses. Prior to that, she served as President, Chief Executive Officer and as a director of Supreme Corporation, a manufacturer of truck and van bodies, from 2011 to 2012. Ms. Korth was the founder and owner of IRN Inc. from 1983 to 2014, a well-known firm focused on automotive supplier strategy issues. Ms. Korth has also served on a variety of corporate boards (5 public companies and 12 private companies) over the course of her career, including Burke E. Porter Machinery Company, Shape Corp., Unique Fabricating, Autocam, and Unwired Technology. Ms. Korth currently serves on the Boards of Engauge Workforce Solutions LLC and she is Vice Chair of Garyline Inc’s Board of Directors. Ms. Korth has several decades of experience in corporate governance issues, organizational design, and development of strategies for growth and improved financial performance for automotive suppliers. In addition to the knowledge and experience described above, the Company believes that Ms. Korth should serve as a director because she provides insight on industry trends and expectations to the Board, which strengthens the Board’s collective qualifications, skills and experience. |
Nominees to Serve for a One-Year Term Expiring in 2025
| William M. Lasky | Mr. Lasky, 76, has served as a director since 2004. Mr. Lasky served as President and Chief Executive Officer of Accuride Corporation (“Accuride”), a manufacturer and supplier of commercial vehicle components, from 2008 until his retirement in 2011. He served as the Chairman of the Board of Accuride from 2009 to 2012. Mr. Lasky served as President and Chief Executive Officer of JLG Industries, Inc., a diversified construction and industrial equipment manufacturer, from 1999 through 2006 and served as Chairman of the Board from 2001 through 2006. Mr. Lasky has served on the Board of Directors of NUARI since 2019. NUARI is a federally chartered 501(c)(3) non-profit that serves the national public interest through the interdisciplinary study of critical national security issues including rapid research, development, and education in cybersecurity, defense technologies, and information advantage. From 2011 through 2016, Mr. Lasky also served as a director of Affinia Group, Inc., a designer, manufacturer and distributor of industrial grade replacement parts and services for automotive and heavy-duty vehicles. In addition to his professional experience described above, the Company believes that Mr. Lasky should serve as a director because he provides in-depth industry knowledge, business acumen and leadership to the Board, which strengthen the Board’s collective qualifications, skills and experience. | | George S. Mayes, Jr. | Mr. Mayes, 65, has served as a director since 2012. Mr. Mayes currently provides independent business consulting services. Previously, Mr. Mayes served as Executive Vice President and Chief Operating Officer of Diebold, Inc., a provider of integrated self-service delivery and security systems and services, from 2013 to 2015. Prior to that, he served as Executive Vice President of Operations from 2008, as Senior Vice President, Supply Chain Management from 2006 to 2008, and as Vice President, Global Manufacturing upon joining Diebold, Inc. in 2005. Since March 2021, Mr. Mayes has been a member of the board of directors of Forward Air Corporation (NASDAQ: FWRD), a leading asset-light freight and logistics company that provides services across the United States and Canada. On February 7, 2024, Mr. Mayes was appointed as the independent Chairman of the Board of Forward Air Corporation. Mr. Mayes has extensive experience in global and lean manufacturing and Six Sigma processes and has managed manufacturing facilities in Canada, Mexico, France, Hungary, Brazil, China, Poland, Italy and the United States. He is a proven leader with a distinguished record of service and deep experience with global supply chain design and strategic development. Mr. Mayes is certified by the National Association of Corporate Directors in cyber security oversight risk management. The Company believes that Mr. Mayes should serve as a director because he provides in-depth knowledge of manufacturing and operations, business acumen and leadership to the Board, which strengthen the Board’s collective qualifications, skills and experience. |
Nominees to Serve for a One-Year Term Expiring in 2025
| Carsten J. Reinhardt | Mr. Reinhardt, 56, was elected to the Board of Directors in February 2023. Mr. Reinhardt currently provides independent business consulting services that support enterprise strategy, operations improvement, sales growth, product management, human capital development, and mergers and acquisitions to various public and private companies in Europe and North America. From 2012 to 2016, Mr. Reinhardt served as President and Chief Executive Officer of Voith Turbo and as a member of the Board of Management of Voith Group, Heidenheim, Germany. Prior to that, from 2006 to 2011, Mr. Reinhardt served as an officer at Meritor Inc. as President of Commercial Vehicle Systems (2006 to 2009) and as Chief Operating Officer (2009 to 2011), with global responsibility for Meritor’s business segments including commercial truck, industrial/off-highway and aftermarket/trailer as well as manufacturing, research and development, purchasing and quality. From 1993 to 2006, Mr. Reinhardt served in various capacities at Daimler AG with increasing levels of responsibilities, concluding as President and Chief Executive Officer of Detroit Diesel Corporation from 2003 to 2006. From October 2016 to present, Mr. Reinhardt has served as the Vice Chairman of the Board of Grundfos Holding A/S, Bjerringbro, Denmark, a privately-held global market leader providing fluid management and water treatment solutions. From 2017 to present, Mr. Reinhardt has served as a member of the Supervisory Board of SAF-Holland SE, Bessenbach, Germany, where he was a member of the Audit committee from 2017 to 2023, and a member of the Nomination and Compensation Committee from 2023 to present. SAF-Holland is a publicly traded company in Germany and a leading Tier 1 supplier to the commercial vehicle industry. Mr. Reinhardt also serves as chairman of the advisory board for tmax Holding GmbH, Mannheim, Germany, a specialty supplier of high-temperature insulation technologies, and is a member of the advisory board for Beinbauer Automotive GmbH, Buechlberg, Germany, a machining supplier to commercial vehicle and off-highway OEMs. From January 2024 until present, Mr. Reinhardt has been a member of the supervisory board of Samson AG, a privately held manufacturer of industrial valve and controls technology, based in Frankfurt, Germany. The Company believes that Mr. Reinhardt should serve as a director because he has 30 years of experience in the global commercial vehicle industry (17 years in the USA and 13 years in Europe) and provides in-depth industry knowledge in the Company’s business, especially the commercial vehicle industry, business acumen and leadership to the Board as a result of his three decades of experience in the commercial vehicle and automotive industries, including executive leadership roles with some of the world’s leading commercial vehicle manufacturers and suppliers. Mr. Reinhardt’s background and experience strengthen the Board’s collective qualifications, skills and experience. |
Nominees to Serve for a One-Year Term Expiring in 2025
| Sheila Rutt | Ms. Rutt, 55, was elected to the Board of Directors in March 2023. Ms. Rutt has been the Chief Human Resources Officer of Hexion Inc., an advanced specialty chemical company, since July 2023. Ms. Rutt served as the Chief Human Resources Officer of Culligan International, a water treatment and filtration company, from May 2021 to July 2023. From 2017 to 2020, Ms. Rutt was Executive Vice President, Chief Human Resources Officer of RR Donnelley (NYSE: RRD), a Fortune 500 global integrated communication company providing marketing solutions, multichannel business communications, commercial printing and related services. Prior to that from 2000 to 2017, Ms. Rutt spent 17 years with Diebold Nixdorf Incorporated (NYSE: DBD), a company that automates, digitizes and transforms the way people bank and shop, serving in a variety of management roles, ultimately serving as the Chief Human Resources Officer (2005-2017). Ms. Rutt has a master’s degree in business administration from Walsh University (2004) and a PhD in industrial/organizational psychology from the University of Akron (1996). The Company believes that Ms. Rutt should serve as a director because she is a recognized leader in human resource management, in structuring transforming organizations, as well as elevating and enhancing a company’s corporate culture. The Board believes that Ms. Rutt’s experience will help the Company continue to foster a performance-based and inclusive culture focused on accountability and collaboration and that her background and experience will assist the Board with the Company’s transformation and long-term strategy. Ms. Rutt’s background and experience strengthen the Board’s collective qualifications, skills and experience. | | Paul J. Schlather | Mr. Schlather, 71, has served as a director since 2009. Mr. Schlather currently provides independent business consulting services. Mr. Schlather was a partner at PricewaterhouseCoopers LLP, serving as co-head to the Private Client Service group from August 2002 until his retirement in 2008. Mr. Schlather also serves on the boards of five closely held businesses. Mr. Schlather qualifies as an audit committee financial expert due to his extensive background in accounting and finance built through his career in public accounting. In addition to his professional and accounting experience described above, the Company believes that Mr. Schlather should serve as a director because he provides financial analysis and business acumen to the Board, which strengthen the Board’s collective qualifications, skills and experience. |
Nominees to Serve for a One-Year Term Expiring in 2025
| Frank S. Sklarsky | Mr. Sklarsky, 67, has served as a director since 2021. Mr. Sklarsky is currently a member of the board of trustees and a member of the executive committee and chairman of the investment committee at Rochester Institute of Technology. From 2019 to 2024, Mr. Sklarsky served on the board of directors of the privately held company, Nexa3d, Inc. From 2018 to 2022, Mr. Sklarsky was a director and chairman of the audit committee at the privately held company Cenveo Worldwide Ltd. From 2012 to 2017, Mr. Sklarsky was a director and a member of the audit and compensation committees of Harman International (NYSE: HAR). From 2013 to 2017, Mr. Sklarsky served as Executive Vice President and Chief Financial Officer of PPG Industries, Inc. (NYSE: PPG). From 2010 to 2012, he was Executive Vice President and Chief Financial Officer of Tyco International. From 2006 to 2010 he was Executive Vice President and Chief Financial Officer of Eastman Kodak Company (NYSE: KODK). From 2004 to 2006, he was Executive Vice President and Chief Financial Officer of Conagra Foods, Inc (NYSE: CAG). Earlier in his career, Mr. Sklarsky spent 20 years with Chrysler and DaimlerChrysler, serving in a series of management roles, ultimately rising to the position of vice president, Finance – Product Quality, Cost Management and Procurement. He also served in executive finance positions with Dell, Inc. He started his career as a CPA at Ernst & Young LLP. Mr. Sklarsky qualifies as an audit committee financial expert due to his extensive accounting and financial background built through his experience in public accounting and his service as CFO at several large public companies. In his prior chief financial officer positions at four fortune 200 companies, Mr. Sklarsky was intimately involved in oversight and discussions with the firms’ IT departments related to cybersecurity matters. In addition to his professional, accounting and finance experience described above, the Company believes that Mr. Sklarsky should serve as a director because he provides vast experience in CFO roles, as well as the comprehensive management and leadership experience he has gained as a senior executive at multiple global corporations, which strengthen the Board’s collective qualifications, skills and experience. | | James Zizelman | Mr. Zizelman, 63, is the President and Chief Executive Officer (“CEO”) of the Company and has served in this role since January 2023. Prior to that Mr. Zizelman served as President of the Control Devices Division since April 2020. Previously, Mr. Zizelman served as the Vice President of Engineering and Program Management for Aptiv from December 2017 to March 2019. Mr. Zizelman was employed at Delphi for more than 20 years, where he was last a Vice President of Engineering from 2016 to 2017. The Company believes that Mr. Zizelman should serve as a director because he provides services as the Company’s President and Chief Executive Officer and because his extensive career in the automotive industry has spanned all phases of engineering, operations leadership, corporate strategy and business leadership. He brings expertise related to development and production of products and technologies. He provides valuable insight to the Board and strengthens the Board’s collective qualifications, skills and experience. |
Total Target Compensation
Total Target Compensation Total target compensation is the value of the compensation package that is intended to be delivered if performance goals are met. Actual compensation depends on the payouts realized under the annual and long-term incentive plans, as determined by results on the performance metrics. For awards under the long-term incentive plan, the value is also based on the price of our common shares. The following charts show the weighting of each element of 2023 total target annualized compensation for the CEO (Mr. Zizelman), and average for the other NEOs. This demonstrates our pay-for-performance philosophy, showing that annual and long-term incentive-based compensation comprises the majority of total target compensation.
Compensation Policies and Best Practices
Compensation Policies and Best Practices To achieve the goals of aligning executive compensation with Company performance while maintaining strong corporate governance and minimizing risk, the Committee and the Company review and adopt policies and best practices that they believe are in the best interest of the Company and our shareholders. Following are some of the practices that have been adopted over time that we believe help us to achieve these goals: •Significant emphasis on performance-based compensation •Use of an independent compensation consultant whose firm does no other work for the Company •Annual benchmarking of compensation mix and levels for executive officers to ensure competitiveness •Use of the TSR metric in the long-term incentive plan to align executive and shareholder interests •Include caps on both the annual incentive plan and the long-term incentive plan •Provide limited perquisites to executive officers •Maintain stock ownership guidelines for our executive officers and non-employee Directors •Established anti-hedging and anti-pledging policies •Recoupment of compensation set forth in a newly adopted NYSE compliant Recovery Policy (which replaced the Company’s existing Clawback Policy) •Conduct an annual compensation risk assessment
Independent Compensation Consultant
Independent Compensation Consultant The Committee retains the services of an independent compensation consultant to assist the Committee with the following: •Appraising relevant trends and compensation developments in the market •Providing advice regarding issues such as long-term incentives and change in control arrangements and other topics as needed •Providing Comparator Group analysis •Providing market data for the CEO position and other executive officers In 2023, the Committee’s compensation consultant was Total Rewards Strategies, LLC (“TRS”).
Comparator Group
Comparator Group The Comparator Group is comprised of some of our direct competitors and a broader group of companies in the electronic and motor vehicle parts manufacturing industries that the Committee believes is representative of the labor market from which we recruit executive talent. The Committee reviews and approves the Comparator Group annually. Factors considered by the Committee in selecting Comparator Group companies include, but are not limited to, industry segment, revenue, profitability, number of employees and market capitalization. The companies in the Comparator Group in 2023 were:
Comparator Group
| Allison Transmission | Donaldson | Methode Electronics | | CalAmp | Dorman Products | Modine Manufacturing | | CIRCOR International | Franklin Electric | Rogers | | Columbus McKinnon | Gentex | Standard Motor Products | | Commercial Vehicle Group | Gentherm | Strattec Security | | Cooper-Standard | LCI Industries | Superior Industries | | CTS | Littelfuse | Visteon | | Curtiss-Wright | Martinrea International | Wabash National |
Compensation Benchmarking
Compensation Benchmarking TRS provides the Committee with the 50th and 75th percentiles of the Comparator Group for base salary, cash bonus, long-term incentives, and total direct compensation. The Committee uses as a primary reference point the 50th percentile when determining base salary, annual incentive, and long-term incentive targets; each element of pay is adjusted to reflect competitive market conditions. The goal of the executive compensation program is to target overall compensation at the 50th percentile of pay practices of the Comparator Group of companies. Actual target pay for an individual may be more or less than the referenced percentiles based on the Committee’s evaluation of the individual’s experience, performance and potential. Consistent with the Committee’s philosophy of pay-for-performance, incentive payments can exceed target levels only if overall Company financial targets are exceeded and will fall below target levels if overall financial goals are not achieved.
CEO Compensation
CEO Compensation Mr. DeGaynor resigned as CEO and President of the Company effective January 30, 2023. During the period January 1, 2023 through January 30, 2023, Mr. DeGaynor received his regular compensation in the form of salary and car allowance. Mr. DeGaynor’s salary is shown in the “Summary Compensation Table” and his car allowance is shown in the “Other Compensation” table. Mr. DeGaynor received a payment for his accrued vacation for the period January 1, 2023 through January 30, 2023 which is shown in the “Other Compensation” table. On January 30, 2023 the Board awarded 40,000 restricted stock units to Mr. DeGaynor with a vesting date of July 30, 2023 which is shown in the “All Other Stock Awards” column of the “Grant of Plan-Based Awards” table. The Board entered into a consulting agreement effective January 30, 2023 with Mr. DeGaynor which is described on page 35. Effective January 31, 2023 the Board appointed Mr. James Zizelman as CEO and President of the Company. The Board established the annual salary for Mr. Zizelman at $600,000 and the target annual incentive award at $600,000. On March 13, 2023, Mr. Zizelman was granted a $750,000 target long term incentive award consisting of restricted stock units and performance shares similar to the long-term incentive awards granted to other Stoneridge executive officers.
Annual Incentive Awards
Annual Incentive Awards Our executive officers and other key employees participate in our AIP, which provides for annual cash payments based on the achievement of specific financial goals. As described above, the Company believes that a substantial portion of each executive’s overall compensation should be directly tied to quantifiable measures of financial performance. The stated objectives of the AIP include retaining and motivating key employees and rewarding them for performance aligned with the growth and profitability of the Company. In 2023, the Company benefited from improved global macroeconomic conditions compared to the prior year primarily due to increased production volumes in our primary end markets as well as improved supply chain dynamics. However, we faced significant macroeconomic headwinds that impacted the global transportation industry in 2023, including the UAW strike and the slower-than-expected rate of penetration for electric vehicles in the North American passenger vehicle end market. To ensure the proper measurement of financial performance and incentive opportunities, the Committee established two performance periods for the 2023 AIP. For 2023, this structure allowed the Company to better address dynamic macroeconomic volatility and adjust to external factors while setting appropriate incentive-based performance targets. The performance periods were set as follows: •Performance Period 1: January 1, 2023 to June 30, 2023 •Performance Period 2: July 1, 2023 to December 31, 2023 Similar to 2022, both consolidated financial performance metrics, and, where appropriate, divisional metrics to incentivize specific performance were included in the 2023 AIP. AIP includes an individual performance metric for executive officers and other planned participants as a way to incentivize and reward specific strategic and measurable activities that are particular to each participant's area of responsibility. The individual metrics are considered critical to the achievement of the overall financial and operational metrics. The individual metric functions as a multiplier in the overall weighted average achievement and can range from 90% to 110%, but was not utilized in 2023. The consolidated and divisional financial performance metric targets were established based on our 2023 business plan. The targets were intended to be challenging but achievable based on industry conditions known at the time they were established. Under the 2023 AIP, the threshold and maximum levels for achievement on the consolidated and divisional financial metrics varied by metric. For each performance metric, specific levels of achievement for threshold, target, and maximum were established. At target, 100% payout is achieved for each element of the plan; at maximum, 200% payout is achieved; and below threshold, no payout is achieved. Threshold achievement on the Consolidated Operating Income metric is required for the other metrics to pay out above their threshold levels. The AIP incentive compensation payout earned between the threshold and maximum levels is prorated. At the March 2023 Compensation Committee meeting, the Committee approved the Company’s 2023 AIP Performance Period 1 targets and performance metrics. In August 2023, the Compensation Committee approved the Performance Period 1 achievement and payments. At the September 2023 Compensation Committee meeting, the Committee approved the Company’s AIP Performance Period 2 targets and performance metrics. The AIP targets for both Periods are expressed as a percentage of the executive officer’s base salary. The 2023 AIP metrics and weightings for Mr. Zizelman were as follows:
Annual Incentive Awards
| Metrics | 01/01/23-01/31/23 | 02/01/23-12/31/23 | | Consolidated Operating Income | 20% | 70% | | Consolidated Free Cash Flow | 10% | 30% | | Control Devices Operating Income | 40% | | | Control Devices Free Cash Flow | 30% | |
Annual Incentive Awards
The 2023 metrics and weightings for Mr. Horvath, Ms. Benedict and Mr. Orsini for 2023 were as follows:
Annual Incentive Awards
| Metrics | 01/01/23-12/31/23 | | Consolidated Operating Income | 70% | | Consolidated Free Cash Flow | 30% |
Annual Incentive Awards
The 2023 metrics and weightings for Mr. Ferraiolo for 2023 were as follows:
Annual Incentive Awards
| Metrics | 01/01/23-12/31/23 | | Consolidated Operating Income | 20% | | Consolidated Free Cash Flow | 10% | | Stoneridge Brazil Operating Income | 40% | | Stoneridge Brazil Free Cash Flow | 30% |
Annual Incentive Awards
For Performance Period 1, the Consolidated, Control Devices and Stoneridge Brazil metric results were above target, resulting in AIP payments above target. For Performance Period 2, the Consolidated Operating Income metric results were below threshold and no AIP awards were earned by NEOs. The AIP metrics, performance targets, and achievement for both periods in 2023 are summarized as follows: Performance Period 1
Annual Incentive Awards
| | Threshold ($000) | | Target ($000) | | Maximum ($000) | | Results ($000) | | Achievement | | Consolidated Metrics: | | | | | | | | | | | Operating Income | | (3,500) | | 1,000 | | 7,700 | | 10,400 | 200.0% | | Free Cash Flow | | (21,700) | | (18,300) | | (13,200) | | (21,000) | 26.8% | | Control Devices Metrics: | | | | | | | | | | | Operating Income | | 8,300 | | 9,500 | | 11,300 | | 9,500 | 100.0% | | Free Cash Flow | | 6,300 | | 7,200 | | 8,600 | | 6,000 | 0.0% | | Stoneridge Brazil Metrics: | | | | | | | | | | | Operating Income (BRL) | R$ | 7,500 | R$ | 12,500 | R$ | 16,300 | R$ | 17,100 | 200.0% | | Free Cash Flow (BRL) | R$ | 3,000 | R$ | 5,000 | R$ | 7,000 | R$ | 4,800 | 91.7% |
Annual Incentive Awards
Performance Period 2
Annual Incentive Awards
| | Threshold ($000) | | Target ($000) | | Maximum ($000) | | Results ($000) | | Achievement | | Consolidated Metrics: | | | | | | | | | | | Operating Income | | 17,200 | | 21,700 | | 28,400 | | 13,100 | 0.0% | | Free Cash Flow | | 3,600 | | 7,000 | | 12,100 | | (6,500) | 0.0% | | Stoneridge Brazil Metrics:(1) | | | | | | | | | | | Operating Income (BRL) | R$ | 13,200 | R$ | 16,600 | R$ | 23,200 | R$ | 19,300 | 141.1% | | Free Cash Flow (BRL) | R$ | 9,800 | R$ | 12,300 | R$ | 17,200 | R$ | 25,100 | 200.0% |
Annual Incentive Awards
(1)Achievement is zero since Consolidated Operating Income was below threshold for Performance Period 2. The following table provides the total 2023 AIP targets and achievement for the combined Performance Periods:
Annual Incentive Awards
| Executive Officer | Percent of Base Salary Target | Percent of Target Bonus Achieved | Target Bonus | Achieved Bonus | | James Zizelman | 97% | 68.7% | $580,000 | $398,179 | | Matthew R. Horvath | 60% | 74.0% | $247,500 | $183,150 | | Susan C. Benedict | 60% | 74.0% | $202,230 | $149,650 | | Caetano R. Ferraiolo | 50% | 68.6% | $167,137 | $114,656 | | Salvatore D. Orsini | 50% | 74.0% | $166,400 | $123,136 |
Long-Term Incentive Awards
Long-Term Incentive Awards We believe that long-term incentive awards are a valuable motivation and retention tool and provide a long-term performance incentive to management. The objective when establishing targets for performance share metrics is that they are challenging but achievable and aligned with budget expectations. Under our LTIP, executive officers may be granted share options, share units, performance shares, restricted common shares, and other equity-based awards. The long-term awards are calculated based on the fair value of the shares, shares equivalent or cash at the time of grant. In 2023, we used the following long-term incentive vehicles to provide grants to our executive officers: •Time-Based Restricted Share Units (“RSUs”): RSUs provide strong retention value by granting the recipients the right to receive common shares (on a one-for-one basis for the number of RSUs granted) after a three-year vesting period, provided that the executive officer is still employed by the Company. •Performance-Based Share Units (“Performance Shares”) - Total Shareholder Return: These awards may be earned based on our TSR over a three-year period relative to the TSR of our 2023 Peer Group, which is comprised of our 2023 Comparator Group of companies. The following table shows the payout levels associated with TSR percentile ranking. We believe the use of the TSR metric effectively aligns executive and shareholder interests. The Performance Shares earned based on the TSR metric will be paid after a three-year vesting period by the issuance on a one-for-one basis of common shares.
Long-Term Incentive Awards
| SRI TSR v. Peer Group | Calculation of # of Shares | Shares Earned as a % of Target Shares | | 50th - 100th percentile | SRI percentile x 2.0 | 100% - 200% | | 30th - 49th percentile | 50% + {2.5 x (SRI percentile-30)} | 50% - 99% | | < 30th percentile | n/a | 0% |
Long-Term Incentive Awards
•Performance Shares – Earnings Per Share (“EPS”) and Return on Invested Capital (“ROIC”): In 2023, we granted Performance Shares that may be earned after three years based on our average actual EPS and ROIC relative to the average budgeted EPS and ROIC over the three-year performance period. In the table below, the 2023 targets and results on each of those metrics is shown, as well as the target for the 2024 tranche of the grant. The EPS and ROIC targets for the final tranche will be set when the 2025 budget is established.
2023 LTIP Grant - EPS
2023 LTIP Grant - EPS
2023 LTIP Grant - EPS
| Average Annual EPS | Target Based on Budget | Actual Results | | 2023 EPS | $0.00 | ($0.08) | | +2024 EPS | $0.30 | TBD | | +2025 EPS | TBD | TBD |
2023 LTIP Grant - ROIC
2023 LTIP Grant - ROIC
2023 LTIP Grant - ROIC
| Average Annual ROIC | Target Based on Budget | Actual Results | | 2023 ROIC | 3.8% | 3.3% | | +2024 ROIC | 5.4% | TBD | | +2025 ROIC | TBD | TBD |
2023 LTIP Grant - ROIC
Threshold performance is achieved at 70% of target and maximum performance is achieved at 130% of target. Below the threshold, no shares will be earned. At target, 100% of the performance shares will be earned. The maximum performance shares that may be earned is 200% of target.
2023 LTIP Grant - ROIC
| | EPS & ROIC Three - Year Average Performance | | | | | | Below Threshold | Threshold | Target | Maximum | | Results as a % of Target | < 70% | 70% | 100% | 130% | | Target Shares Earned | 0% | 50% | 100% | 200% |
2023 LTIP Grant - ROIC
Provided the executive officer remains employed, and depending on performance relative to the target, the number of vested Performance Shares is prorated between the minimum and maximum amounts. The Performance Shares earned based on the TSR, EPS, and ROIC metrics will be paid after a three-year vesting period by the issuance on a one-for-one basis of common shares. The following chart shows the allocation of the LTIP awards that were granted in 2023: The Committee determines the value of the annual grant to the executive officers by considering the comparison to our Comparator Group obtained during the annual compensation review process, as well as the executives’ responsibilities, performance, and potential contributions. The targeted value of 2023 LTIP grants were established as listed in the table below.
2023 LTIP Grant - ROIC
| Executive Officer | Targeted Value 2023 Grant | | James Zizelman | $750,000 | | Matthew R. Horvath | $350,625 | | Susan C. Benedict | $286,493 | | Caetano R. Ferraiolo | $200,565 | | Salvatore D. Orsini | $166,400 |
2023 LTIP Grant - ROIC
The grant date fair value of the RSUs and Performance Shares awarded in 2023 are included in the “Stock Awards” column of the Summary Compensation Table. The RSUs awarded in 2023 are included in the “All Other Stock Awards” column of the Grants of Plan-Based Awards table, and the grant date fair value of the Performance Shares awarded are included in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns of the Grants of Plan-Based Awards table. The Committee’s practice has been to approve the long-term incentive awards at the first regular meeting of the calendar year. As a general practice, awards under the long-term incentive plans are approved once per year unless a situation arises whereby a compensation package is approved for a newly hired or promoted executive officer with equity-based compensation as a component.
2022 LTIP Grant - EPS
2022 LTIP Grant - EPS
2022 LTIP Grant - EPS
| Average Annual EPS | Target Based on Budget | Actual Results | | 2022 EPS | ($0.03) | ($0.52) | | +2023 EPS | $0.00 | ($0.08) | | +2024 EPS | $0.30 | TBD |
2022 LTIP Grant - ROIC
2022 LTIP Grant - ROIC
2022 LTIP Grant - ROIC
| Average Annual ROIC | Target Based on Budget | Actual Results | | 2022 ROIC | 1.6% | 0.5% | | +2023 ROIC | 3.8% | 0.3% | | +2024 ROIC | 5.4% | TBD |
2022 LTIP Grant - ROIC
The TSR Peer Group for the 2022 grant consisted of the following companies(1):
2022 LTIP Grant - ROIC
| Allison Transmission Holdings Inc | Dorman Products Inc | Modine Manufacturing Co | | CalAmp Corp | Franklin Electric Co Inc | Rogers Corp | | Columbus McKinnon Corp | Gentex Corp | Standard Motor Products Inc | | Commercial Vehicle Group Inc | Gentherm Inc | Strattec Security Corp | | Cooper-Standard Holdings Inc | LCI Industries | Superior Industries International Inc | | CTS Corp | Littelfuse Inc | Visteon Corp | | Curtiss-Wright Corp | Martinrea International Inc | Wabash National Corp | | Donaldson Company Inc | Methode Electronics Inc | |
2022 LTIP Grant - ROIC
(1)Altra Industrial Motion, CIRCOR International and Meritor were in the original TSR Peer Group but have been excluded because they were acquired or merged with another company during the performance period.
2021 LTIP Grant - Performance Period Results
2021 LTIP Grant - Performance Period Results
2021 LTIP Grant - Performance Period Results
| Award Type & Metric | Grant Date | Vest Date | Allocation of Shares | Performance Results (2020-2022) | Payout % of Target Shares | | Time-Based RSU | 3/8/2021 | 3/8/2024 | 45% | n/a | 100% | | Performance Shares - TSR | 3/8/2021 | 3/8/2024 | 25% | 13th percentile of Peer Group | 0% | | Performance Shares - EPS | 3/8/2021 | 3/8/2024 | 20% | (211%) of Target | 0% | | Performance Shares - ROIC | 3/8/2021 | 3/8/2024 | 10% | 13% of Target | 0% |
2021 LTIP Grant - Performance Period Results
The TSR Peer Group for the 2021 grant consisted of the following companies(1):
2021 LTIP Grant - Performance Period Results
| Allison Transmission Holdings Inc | Dorman Products Inc | Modine Manufacturing Co | | CalAmp Corp | Franklin Electric Co Inc | Rogers Corp | | Columbus McKinnon Corp | Gentex Corp | Standard Motor Products Inc | | Commercial Vehicle Group Inc | Gentherm Inc | Strattec Security Corp | | Cooper-Standard Holdings Inc | LCI Industries | Superior Industries International Inc | | CTS Corp | Littelfuse Inc | Visteon Corp | | Curtiss-Wright Corp | Martinrea International Inc | Wabash National Corp | | Donaldson Company Inc | Methode Electronics Inc | |
2021 LTIP Grant - Performance Period Results
(1)Altra Industrial Motion, CIRCOR International, Lydall and Meritor were in the original TSR Peer Group but have been excluded because they were acquired or merged with another company during the performance period.
Employment Agreements
Employment Agreements We use employment agreements in limited situations. Mr. DeGaynor Employment Agreement In 2015, we entered into an Employment Agreement (the “DeGaynor Employment Agreement”) with Mr. DeGaynor, which was then amended in February 2021. The amended DeGaynor Employment Agreement provides for a minimum annual base salary of $500,000; participation in the annual incentive plan; a monthly auto allowance; participation in the Company’s customary benefit plans including an annual executive physical and participation in the long-term incentive plan. In addition, if Mr. DeGaynor was terminated without cause, we were obligated to pay him the sum of his annual base salary and target annual incentive as well as health and welfare benefits for one year, and if the termination occurred in the last six months of the fiscal year, he would have been paid a prorated annual incentive. The DeGaynor Employment Agreement was automatically renewable annually unless notice of termination was delivered by either party before the end of the then current term. The DeGaynor Employment Agreement was terminated by mutual agreement on January 30, 2023. Mr. DeGaynor stepped down as President and Chief Executive Officer and as a member of the Board of Directors of the Company. In connection with Mr. DeGaynor’s resignation, Mr. DeGaynor and the Company entered into a Consulting Services Agreement (the “Consulting Agreement”). Pursuant to the Consulting Agreement, Mr. DeGaynor provided transition-related consulting and advisory services to the Company (the “Consulting Services”) following his resignation for a period of six months (the “Consulting Period”). Pursuant to the Consulting Agreement, Mr. DeGaynor received (1) a monthly car allowance of $1,200 for the duration of the Consulting Period, (2) $15,000 in legal fees, (3) $27,033 in Company paid COBRA coverage under the Company’s healthcare plan for twelve months, (4) $33,595 in reimbursement for continued coverage under a life insurance policy provided through the Company, (5) a monthly consulting fee of $243,750, (6) vesting of any unvested equity awards held by Mr. DeGaynor pursuant to the 2020 Performance Share Grant Agreement, dated March 9, 2020, by and between Mr. DeGaynor and the Company as of his resignation though March 9, 2023, and (7) the vesting of a grant of restricted stock units relating to 40,000 Company common shares made to Mr. DeGaynor under the Company’s 2016 Long-Term Incentive Plan on January 30, 2023 prior to his resignation. Mr. Zizelman Employment Agreement On April 13, 2023, the Company and Mr. Zizelman entered into an Employment Agreement (the “Zizelman Employment Agreement”). The Zizelman Employment Agreement has an initial term of 11 months ending on December 31, 2023, and will be automatically renewed for one year every year thereafter unless notice of termination is delivered by either party at least 90 days before the end of the then current term. The Zizelman Employment Agreement provides for an annual base salary of $600,000; participation in the Company’s AIP at a target of 100% of base salary; a monthly car allowance; and participation in the Company’s customary benefit plans for senior executive officers. In addition, under the Zizelman Employment Agreement the Company has agreed to grant Mr. Zizelman certain share-based awards under the Company’s current LTIP, equal in value on the grant date to 125% of his then current base salary. If Mr. Zizelman is terminated by the Company without cause, or he terminates the Zizelman Employment Agreement and his employment for good reason, the Company (following receipt of a general release) shall be obligated to pay him severance equal to his annual base salary and target annual incentive. In addition, upon a termination without cause (or good reason termination), the Company must continue to cover his health and welfare benefits for a period of twelve months following such termination, and if the termination occurs in the last six months of the fiscal year, he would be paid a prorated annual incentive. Under the Zizelman Employment Agreement, Mr. Zizelman is entitled to be nominated for election to serve on the Company’s Board of Directors as long as the Zizelman Employment Agreement remains in effect. Mr. Zizelman is a nominee for election to the Board of Directors at the 2024 Annual Meeting of Shareholders. Mr. Ferraiolo Administrative Services Agreement Mr. Ferraiolo has an administrative services agreement (the “ASA”) governed under Brazilian law, with PST Electronica, LTDA, a subsidiary of the Company (“PST”), which is sometimes referred to as Stoneridge Brazil in the Company’s SEC filings, dated December 15, 2015, which provides that Mr. Ferraiolo will provide services to PST as operations director for the remuneration (in Brazilian reals) of monthly pay of R$81,166.67. In addition, pursuant to the ASA Mr. Ferraiolo is provided with health insurance, dental insurance, life insurance and a board standard automobile and is entitled to 30 vacation days annually. There are no other employment agreements in effect with any other NEO.
Severance Plan
Severance Plan The Company provides executive severance through the Officers’ and Key Employees’ Severance Plan (the “Severance Plan”). The NEOs covered under the Severance Plan include Mr. Horvath, Ms. Benedict, Mr. Ferraiolo and Mr. Orsini. If a covered executive is terminated by us without cause, we will be obligated under the Severance Plan to pay the executive’s salary for twelve months and continue health and welfare benefits coverage over the same period of time. Severance protection for Mr. Zizelman is provided in his employment agreement, as described above. Severance protection for Mr. DeGaynor was provided in his employment agreement, as described above, which has been terminated.
Termination and Change in Control Payments
Termination and Change in Control Payments We have entered into change in control agreements with Mr. Horvath, Ms. Benedict, Mr. Ferraiolo, Mr. Orsini and certain other senior management employees. Change in control for Mr. Zizelman is provided in his employment agreement, as described above. These agreements are designed to promote stability and continuity of senior management, both of which are in the best interest of the Company and our shareholders. Our termination and change in control provisions for the NEOs are summarized below in the “Potential Payments Upon Termination or Change in Control” table.
Summary Compensation Table
Summary Compensation Table The following table provides information regarding the compensation of our NEOs for 2023.
Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards(1)(2) | Non-Equity Incentive Plan Compensation | All Other Compensation(2) | Total | | James Zizelman | 2023 | $585,533 | $— | $741,678 | $398,179 | $27,984 | $1,753,374 | | President & Chief Executive Officer | 2022 | $410,000 | $— | $699,752 | $— | $13,784 | $1,123,536 | | | 2021 | $389,167 | $25,000 | $471,508 | $— | $11,870 | $897,545 | | Jonathan B. DeGaynor | 2023 | $75,483 | $— | $962,400 | $— | $4,884 | $1,042,767 | | Former President & Chief Executive Officer | 2022 | $925,000 | $— | $2,953,782 | $— | $31,502 | $3,910,284 | | | 2021 | $900,000 | $25,000 | $2,913,022 | $— | $30,902 | $3,868,924 | | Matthew R. Horvath | 2023 | $412,500 | $— | $868,258 | $183,150 | $13,416 | $1,477,324 | | Chief Financial Officer & Treasurer | 2022 | $356,833 | $— | $398,554 | $— | $12,416 | $767,803 | | | 2021 | $269,333 | $165,000 | $256,121 | $— | $11,312 | $701,766 | | Susan C. Benedict | 2023 | $337,050 | $— | $804,824 | $149,650 | $14,232 | $1,305,756 | | Chief Human Resources Officer & Assistant General Counsel | 2022 | $315,000 | $— | $304,124 | $— | $11,401 | $630,525 | | | 2021 | $283,333 | $25,000 | $356,844 | $— | $8,135 | $673,312 | | Caetano R. Ferraiolo | 2023 | $334,275 | $— | $450,780 | $114,656 | $4,314 | $904,025 | | President, Stoneridge Brazil | | | | | | | | | Salvatore D. Orsini | 2023 | $332,800 | $— | $373,139 | $123,136 | $12,546 | $841,621 | | Chief Procurement Officer | | | | | | | |
Summary Compensation Table
(1)The amounts included in the “Stock Awards” column represent the grant date fair value of time-based RSUs and Performance Shares computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. In 2023, RSUs, Performance Share awards and Phantom Share awards (which are settled in cash upon vesting) were granted to our NEOs. The Performance Share awards were expected to be earned at the target level when granted. The grant date fair value of the Performance Share awards, assuming the maximum level of performance would be achieved, is $824,927 for Mr. Zizelman, $385,656 for Mr. Horvath, $315,100 for Ms. Benedict, $211,356 for Mr. Ferraiolo and $182,980 for Mr. Orsini. Please see the “Grants of Plan-Based Awards for 2023” table for more information regarding the RSUs, Performance Shares and Phantom Shares granted in 2023. (2)The Performance Share awards granted under the Company LTIP were reviewed and recalculated in 2024. Due to these calculations it was determined that the amounts of the grant date fair market values previously disclosed for 2021 and 2022 were less than the amounts calculated under FASB ASC Topic 718. The increase in the grant date fair value market value of the performance shares is included in the Stock Awards column. The increases in respective amounts in 2021 and 2022 for Mr. Zizelman are $42,588 and $30,410, for Mr. DeGaynor are $263,111 and $185,425, for Mr. Horvath are $9,579 and $17,697, and for Ms. Benedict are $23,197 and $18,049. These changes are also included in the Total Compensation column for 2021 and 2022. (3)The amounts shown for 2023 in the “All Other Compensation” column are comprised of the following:
Summary Compensation Table
| Executive Officer | Auto Allowance | 401(k) Match | Group Term Life Ins | Other(1) | Total | | James Zizelman | $13,200 | $13,200 | $1,584 | $— | $27,984 | | Jonathon B. DeGaynor | $1,200 | $— | $— | $3,684 | $4,884 | | Matthew R. Horvath | $— | $13,200 | $216 | $— | $13,416 | | Susan C. Benedict | $— | $13,200 | $1,032 | $— | $14,232 | | Caetano R. Ferraiolo | $— | $— | $— | $4,314 | $4,314 | | Salvatore D. Orsini | $— | $11,994 | $552 | $— | $12,546 |
Summary Compensation Table
(1)For Mr. DeGaynor, the amount represents the payment of his accrued vacation benefits from January 1, 2023 through January 31, 2023. For Mr. Ferraiolo the amount represents the cost of company paid benefits in 2023.
Grants of Plan-Based Awards in 2023
Grants of Plan-Based Awards in 2023
Grants of Plan-Based Awards in 2023
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares or Units | Grant Date Fair Value of Stock and Option Awards | | | | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Executive Officer | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(3),(4), (5),(6),(7) | ($)(8) | | James Zizelman | | $295,000 | $590,000 | $1,180,000 | | | | | | | | 3/13/2023 | | | | 11,831 | 23,664 | 47,328 | 19,363 | $741,678 | | Jonathan B. DeGaynor | 1/30/2023 | | | | | | | 40,000 | $962,400 | | Matthew R. Horvath | | $123,750 | $247,500 | $495,000 | | | | | | | | 3/13/2023 | | | | 5,530 | 11,063 | 22,126 | 9,052 | $346,732 | | | 6/20/2023 | | | | | | | 29,103 | $521,526 | | Susan C. Benedict | | $101,115 | $202,230 | $404,460 | | | | | | | | 3/13/2023 | | | | 4,518 | 9,039 | 18,078 | 7,396 | $283,298 | | | 6/20/2023 | | | | | | | 29,103 | $521,526 | | Caetano R. Ferraiolo | | $83,569 | $167,137 | $334,274 | | | | | | | | 3/13/2023 | | | | 3,031 | 6,063 | 12,126 | 4,961 | $190,026 | | | 6/20/2023 | | | | | | | 14,551 | $260,754 | | Salvatore D. Orsini | | $83,200 | $166,400 | $332,800 | | | | | | | | 3/13/2023 | | | | 2,624 | 5,249 | 10,498 | 4,296 | $164,532 | | | 6/20/2023 | | | | | | | 11,641 | $208,607 |
Grants of Plan-Based Awards in 2023
(1)The amounts shown reflect awards granted under our 2023 AIP. In March 2023, the Compensation Committee approved the 2023 target AIP awards expressed as a percentage of the executive officer’s 2023 approved base salary. The Compensation Committee established two six month performance periods for the 2023 AIP awards from January 1, 2023 to June 30, 2023 and from July 1, 2023 to December 31, 2023. In March 2023, the Compensation Committee approved Company performance metrics and targets and a +/- 10% individual performance multiplier for the purpose of determining any amount to be paid out under the AIP for each executive officer for the 6 month period ended on June 30, 2023. In September 2023, the Compensation Committee approved Company and a +/- 10% individual performance multiplier for the purpose of determining the amount paid out under the AIP for each executive officer for the 6 month period ended on December 31, 2023. Please see “Compensation Discussion and Analysis – Annual Incentive Awards” for more information regarding the Company’s 2023 awards and performance measures. (2)The amounts shown reflect grants of Performance Share awards made under our LTIP on March 13, 2023. The amount of the Performance Shares that will be earned will be determined based on our total shareholder return compared to that of a defined peer group for 25% of the awards, based on our EPS performance for 20% of the awards, and based on our ROIC performance for 10% of the awards for the performance period January 1, 2023 through December 31, 2025. The shares will vest on March 2, 2026, assuming the grantee is still employed on that date. (3)The amounts shown reflect grants of time-based RSUs made under our LTIP. These RSUs were granted on March 13, 2023. The time-based grant comprises 45% of the total LTIP award, and will vest on March 2, 2026, assuming the grantee is still employed on that date. (4)The amount shown for Mr. DeGaynor is a one-time grant of 40,000 time-based RSUs with a grant value of $962,400 received on January 30, 2023. These RSUs vested on July 30, 2023. (5)The amounts shown for Mr. Horvath and Ms. Benedict include a grant of 29,103 phantom shares with a grant value of $521,526 received on June 6, 2023. These phantom shares will vest on June 6, 2025, assuming the individual is still employed on that date. Upon vesting, the phantom shares will be paid in cash on a one-for-one basis based on the Company’s closing stock price on June 6, 2025. (6)The amount shown for Mr. Ferraiolo includes a grant of 14,551 phantom shares with a grant value of $260,754 received on June 6, 2023. These phantom shares will vest on June 6, 2025, assuming Mr. Ferraiolo is still employed on that date. Upon vesting, the phantom shares will be paid in cash on a one-for-one basis based on the Company’s closing stock price on June 6, 2025. (7)The amount shown for Mr. Orsini includes a grant of 11,641 phantom shares with a grant value of $208,607 received on June 6, 2023. These phantom shares will vest on June 6, 2025, assuming Mr. Orsini is still employed on that date. Upon vesting, the phantom shares will be paid in cash on a one-for-one basis based on the Company’s closing stock price on June 6, 2025. (8)The amounts included in “Fair Value of Awards” column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
Outstanding Equity Awards at Year-End
Outstanding Equity Awards at Year-End
Outstanding Equity Awards at Year-End
| | | | | Stock Awards | | Executive Officer | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) | | James Zizelman | 5,258(2) | $102,899 | —(10) | $— | | | 11,035(3) | $215,955 | 11,035(11) | $215,955 | | | 19,363(4) | $378,934 | 18,285(12) | $357,837 | | | 1,000(5) | $19,570 | — | $— | | Matthew R. Horvath | 1,184(2) | $23,171 | (10) | $— | | | 6,423(3) | $125,698 | 6,422(11) | $125,679 | | | 9,052(4) | $177,148 | 8,548(12) | $167,284 | | | 29,103(6) | $569,546 | — | $— | | | 6,353(7) | $124,328 | — | $— | | | 1,000(5) | $19,570 | — | $— | | | 5,438(8) | $106,422 | — | $— | | Susan C. Benedict | 2,865(2) | $56,068 | —(10) | $— | | | 6,551(3) | $128,203 | 6,549(11) | $128,164 | | | 7,396(4) | $144,740 | 6,984(12) | $136,677 | | | 29,103(6) | $569,546 | — | $— | | | 1,000(5) | $19,570 | — | $— | | Caetano R. Ferraiolo | 1,476(2) | $28,885 | —(10) | $— | | | 3,312(3) | $64,816 | 3,312(11) | $64,816 | | | 4,961(4) | $97,087 | 4,685(12) | $91,685 | | | 14,551(6) | $284,763 | — | $— | | | 1,000(5) | $19,570 | — | $— | | | 6,625(9) | $129,651 | — | $— | | Salvatore D. Orsini | 4,296(4) | $84,073 | 4,056(12) | $79,376 | | | 11,641(6) | $227,814 | — | $— |
Outstanding Equity Awards at Year-End
(1)Time-based restricted share units (RSUs) and performance shares are paid after the end of the performance period and on the vesting dates shown in the following footnotes. With regard to performance shares, the actual number of common shares earned is based on the achievement of the related performance objectives. In this column, the theoretical value of the number of outstanding RSUs and performance shares, as applicable, reported in the column to the immediate left is based on the price of our common shares on December 31, 2023 ($19.57). In calculating the number of performance shares and their value, we compare the Company’s performance through 2023 under each outstanding performance share grant against the threshold, target, and maximum performance levels for the grant and report in this column the applicable potential payout amount. If the performance is between levels, we report the potential payout at the next highest level. (2)These time-based share units vested on March 8, 2024. (3)These time-based share units vest on March 3, 2025. (4)These time-based share units vest on March 2, 2026. (5)These time-based shares vested on March 3, 2024. (6)These time-based phantom share units vest on June 20, 2025 and are paid in cash. (7)These time-based share units vest on March 3, 2025. (8)These time-based share units vest on September 1, 2024. (9)These time-based share units vest on December 22, 2024. (10)These Performance Shares vested on March 8, 2024. Performance on EPS, TSR and ROIC was below Threshold and therefore no shares were earned. Actual results are shown. (11)These performance shares are scheduled to vest on March 3, 2025 subject to achievement of specified financial performance metrics. Performance is currently forecast to be below threshold for EPS (threshold is shown). Performance is currently forecast to be between threshold and target for ROIC (target is shown). Performance is currently forecast to be above target for TSR (target is shown). (12)These performance shares are scheduled to vest on March 2, 2026 subject to achievement of specified financial performance metrics. Performance is currently forecast to be below threshold for TSR (threshold is shown). Performance is currently forecast to be between threshold and target for EPS and ROIC (target is shown).
Non-Qualified Deferred Compensation Plan
Non-Qualified Deferred Compensation Plan The Compensation Committee approved implementation of a non-qualified deferred compensation plan for our executive officers and certain other leaders in the organization, effective June 1, 2017. The plan provides the opportunity to defer current compensation and taxes until a future date, and to receive tax deferred investment returns on deferred amounts. The Company will provide matching contributions to the extent that participants are unable to receive a full match in the 401(k) plan, due to contribution and/or compensation limits. The plan allows eligible employees to defer up to 80% of their base salary, up to 100% of AIP and up to 100% of LTIP. The minimum deferral period is three years. As of December 31, 2023 no amounts were deferred by any of the NEOs.
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control We have entered into a Change in Control Agreement (the “CIC Agreement”) with certain executive officers. There is no excise tax gross-up payment under the CIC Agreements. Our change in control agreements were designed to provide for continuity of management in the event of change in control of the Company. We think it is important for our executives to be able to react neutrally to a potential change in control and not be influenced by personal financial concerns. We believe our arrangements are consistent with market practice. For our NEOs covered under a CIC Agreement, we set the level of benefits, as described below, to remain competitive with our select peer group. All payments under the CIC Agreement are conditioned on a non-compete, non-solicitation and non-disparagement agreement. We believe that the CIC Agreements should compensate executives displaced by a change in control and not serve as an incentive to increase personal wealth. Therefore, our CIC Agreements are “double trigger” arrangements. In order for the executives to receive the payments and benefits set forth in the agreement, both of the following must occur: •a change in control of the Company; and •a triggering event: ◦the Company separates NEO from service, other than in the case of a termination for cause, within two years of the change in control; or ◦NEO separates from service for good reason (defined as material reduction in NEO’s title, responsibilities, power or authority, or assignment of duties that are materially inconsistent to previous duties, or material reduction in NEO’s compensation and benefits) within two years of the change in control. On April 13, 2023, we entered into a CIC Agreement with Mr. Zizelman as part of his employment agreement. The terms of this CIC Agreement are substantially similar to those described above. If the events listed above occur and the executive delivers a release to the Company, we will be obligated to provide the following to Mr. Zizelman, Mr. Horvath, Ms. Benedict, Mr. Ferraiolo and Mr. Orsini: •two times the greater of the NEO’s annual base salary at the time of a triggering event or at the time of the occurrence of a change in control; •two times the greater of the NEO’s target annual incentive award at the time of termination or the actual incentive award received for the fiscal year prior to termination; •an amount equal to the pro rata amount of annual incentive compensation the NEO would have been entitled to at the time of a triggering event calculated based on the performance goals that were achieved in the year in which the triggering event occurred; and •continued life and health insurance benefits for twenty-four months following termination. Upon a change in control as defined by the 2016 LTIP, time-based RSUs and Performance Shares granted under that plan remain subject to forfeiture under the original terms of the grant unless a triggering event, as described above, occurs within two years of the effective date of the change in control. Mr. Zizelman’s severance protection is provided in his employment agreement. If Mr. Zizelman is terminated without cause, we will be obligated to pay an amount equal to the sum of one year of base salary and target annual incentive, and continue health and welfare benefits coverage for twelve months. No severance is payable if the NEO’s employment is terminated for cause. Mr. Horvath, Ms. Benedict, Mr. Ferraiolo and Mr. Orsini participate in the Company Severance Plan. If we terminate a covered executive without cause, we will be obligated under the Severance Plan to pay the executive’s salary for one year and continue health and welfare benefits coverage over the same period of time. Value of Payment Presuming Hypothetical December 31, 2023 Termination Date Upon resignation, no payments are due to any NEO in the table below. Assuming the events described in the table below occurred on December 31, 2023, each NEO would be eligible for the following payments and benefits:
Potential Payments upon Termination or Change in Control
| | Termination Without Cause | Change in Control and NEO Resigns for Good Reason or is Terminated Without Cause | Disability | Death | | James Zizelman | | | | | | Base Salary | $600,000 | $1,200,000 | $150,000 | $— | | Annual Incentive Award | $600,000 | $1,160,000 | $— | $— | | Unvested and Accelerated Restricted Common Shares and Share Units | $352,299 | $717,358 | $717,358 | $717,358 | | Unvested and Accelerated Performance Shares | $408,700 | $852,802 | $852,802 | $852,802 | | Health and Welfare Benefits | $56,144 | $112,288 | $— | $— | | 280G Reduction or Excise Tax(1) | $— | $(603,778) | $— | $— | | Total | $2,017,143 | $3,438,670 | $1,720,160 | $1,570,160 | | Matthew R. Horvath | | | | | | Base Salary | $412,500 | $825,000 | $— | $— | | Annual Incentive Award | $— | $495,000 | $— | $— | | Unvested and Accelerated Restricted Common Shares and Share Units | $504,906 | $1,145,882 | $1,145,882 | $1,145,882 | | Unvested and Accelerated Performance Shares | $180,709 | $398,406 | $398,406 | $398,406 | | Health and Welfare Benefits | $37,060 | $74,119 | $— | $— | | 280G Reduction or Excise Tax(1) | $— | $(348,912) | $— | $— | | Total | $1,135,175 | $2,589,495 | $1,544,288 | $1,544,288 | | Susan C. Benedict | | | | | | Base Salary | $337,050 | $674,100 | $— | $— | | Annual Incentive Award | $— | $404,460 | $— | $— | | Unvested and Accelerated Restricted Common Shares and Share Units | $331,770 | $918,127 | $918,127 | $918,127 | | Unvested and Accelerated Performance Shares | $209,516 | $402,046 | $402,046 | $402,046 | | Health and Welfare Benefits | $14,343 | $28,687 | $— | $— | | 280G Reduction or Excise Tax(1) | $— | $(296,703) | $— | $— | | Total | $892,679 | $2,130,717 | $1,320,173 | $1,320,173 | | Caetano R. Ferraiolo | | | | | | Base Salary | $334,275 | $668,550 | $— | $— | | Annual Incentive Award | $— | $334,275 | $— | $— | | Unvested and Accelerated Restricted Common Shares and Share Units | $253,177 | $624,772 | $624,772 | $624,772 | | Unvested and Accelerated Performance Shares | $114,680 | $233,177 | $233,177 | $233,177 | | Health and Welfare Benefits | $4,314 | $8,628 | $— | $— | | Total | $706,446 | $1,869,402 | $857,949 | $857,949 | | Salvatore D. Orsini | | | | | | Base Salary | $332,800 | $665,600 | $— | $— | | Annual Incentive Award | $— | $332,800 | $— | $— | | Unvested and Accelerated Restricted Common Shares and Share Units | $80,296 | $311,887 | $311,887 | $311,887 | | Unvested and Accelerated Performance Shares | $28,533 | $102,723 | $102,723 | $102,723 | | Health and Welfare Benefits | $40,916 | $81,831 | $— | $— | | Total | $482,545 | $1,494,841 | $414,610 | $414,610 |
Potential Payments upon Termination or Change in Control
(1)Code Section 280G provides guidelines that govern payments triggered by a change in control, known as parachute payments. If such payment exceeds 2.99 times the average annual compensation (safe harbor limit) for certain individuals, the payments may result in adverse tax consequences and excise taxes. The CIC Agreements provide that the executive shall receive the greater of the safe harbor amount or the aggregate parachute value less the applicable excise tax. Mr. Zizelman is subject to a 280G reduction of $603,778 in his CIC compensation in the event of a change in control termination as of December 31, 2023. Mr. Horvath is subject to a 280G reduction of $348,912 in his CIC compensation in the event of a change in control termination as of December 31, 2023. Ms. Benedict is subject to a 280G reduction of $296,703 in her CIC compensation in the event of a change in control termination as of December 31, 2023.
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure This disclosure has been prepared in accordance with the SEC’s pay versus performance rules in Item 402(v) of Regulation S-K (“Item 402(v)”) and does not necessarily reflect value actually realized by the NEOs or how the Compensation Committee evaluates compensation decisions in light of Company or individual performance. For discussion of how the Compensation Committee seeks to align pay with performance when making compensation decisions, please review the Compensation Discussion and Analysis beginning on page 25. The following tables and related disclosures provide information about (i) the total compensation (“SCT Total”) of our principal executive officer (“PEO”), who was our President and Chief Executive Officer, and our non-PEO Named Executive Officers (collectively, the “Other NEOs”) as presented in the Summary Compensation Table on page 38, (ii) the “compensation actually paid” (“CAP”) to our PEO and our Other NEOs, as calculated pursuant to Item 402(v), (iii) certain financial performance measures, and (iv) the relationship of the CAP to those financial performance measures. The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. James Zizelman (our President & CEO) and Mr. Jon DeGaynor (our former President & CEO) for each corresponding year in the total common column of the summary compensation table. Mr. DeGaynor served as our CEO and President during 2020 through 2022. Mr. DeGaynor terminated employment on January 30, 2023. Mr. Zizelman was appointed CEO and President effective January 31, 2023.
Pay Versus Performance Disclosure
| | Summary Compensation Table Total for PEO 1 Mr. DeGaynor (b) | Summary Compensation Table Total for PEO 2 Mr. Zizelman (b) | Compensation Actually Paid for PEO 1 Mr. DeGaynor (c) | Compensation Actually Paid for PEO 2 Mr. Zizelman (c) | Average Summary Compensation Table total for Non-PEO NEOs (d) | Average Compensation Actually Paid to Non-PEO NEOs (e) | Value of Initial Fixed $100 Investment as of 12/31/2019 based on | | | | | Year (a) | | | | | | | Company TSR (f) | Peer Group TSR (g) | Net Income ($000) (h) | Operating Income ($000) (i) | | 2023 | $1,042,767 | $1,753,374 | $(2,996,326) | $1,625,610 | $1,132,182 | $1,041,501 | $67 | $102 | $(5,183) | $12,836 | | 2022 | $3,910,284 | $— | $6,075,757 | $— | $883,098 | $1,558,023 | $74 | $103 | $(14,056) | $2,935 | | 2021 | $3,868,925 | $— | $(3,306,918) | $— | $1,104,040 | $296,858 | $67 | $142 | $3,406 | $15,411 | | 2020 | $3,971,305 | $— | $6,441,875 | $— | $1,209,599 | $2,285,849 | $103 | $117 | $(7,950) | $(7,664) |
Adjustments to Calculate Compensation Actually Paid to PEO (column (c)) and Average Compensation Actually Paid to Other NEOs (column (e))
Adjustments to Calculate Compensation Actually Paid to PEO (column (c)) and Average Compensation Actually Paid to Other NEOs (column (e)) The table below describes the adjustments, each of which is required by SEC rules, to calculate CAP Amounts from the SCT Total of our PEO (column (b)) and our Other NEOs (column (d)). The SCT Total and CAP Amounts do not reflect the actual amount of compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402(v).
Adjustments to Calculate Compensation Actually Paid to PEO (column (c)) and Average Compensation Actually Paid to Other NEOs (column (e))
| | PEO 1 2023 Mr. DeGaynor | PEO 2 2023 Mr. Zizelman | Other NEOs 2023 | | SCT Total Compensation | $1,042,767 | $1,753,374 | $1,132,182 | | SCT Stock Award Adjustments: Deduct Amounts reported in SCT Stock Awards column | $(962,400) | $(741,678) | $(624,250) | | Equity Awards Granted during Fiscal Year: | | | | | Add Fair Value of Unvested Awards as of Year End | $— | $762,880 | $602,868 | | Add Fair Value of Vested Awards as of Vesting Date | $797,600 | $— | $— | | Unvested Equity Awards Granted in prior Fiscal Years: Add/Subtract the Change in Fair Value from Prior Year End to Current Year End | $— | $(148,966) | $(60,721) | | Vested Equity Awards Granted in prior Fiscal Years: Add/Subtract the Change in Fair Value from Prior Year End to Vesting Date | $(134,155) | $— | $(8,578) | | Forfeited Equity Awards Granted in prior Fiscal Years: Deduct Fair Value of Awards Forfeited during Year | $(3,740,138) | $— | $— | | Compensation Actually Paid | $(2,996,326) | $1,625,610 | $1,041,501 |
Relationship Between Compensation Actually Paid and Performance
Relationship Between Compensation Actually Paid and Performance The graphs below show the relationship of compensation actually paid to our PEOs and Other NEOs to (i) the Company’s net income, (ii) the Company’s operating income, (iii) the Company’s TSR and (iv) the peer group TSR based on the Dow Jones U.S. Auto Parts Total Return Index. CAP, as calculated in accordance with Item 402(v), reflects, among others, adjustments to the fair value of equity awards during the years presented. Factors impacting the fair value of equity awards include the price of our Common Shares at year end, as well as the projected and actual achievement of performance goals that do not include net income. These adjustments contributed significantly to the change in CAP reported for 2020 through 2023. The PEO compensation actually paid for 2023 in the graphs is the total combined amount for Mr. DeGaynor and Mr. Zizelman.
CEO Pay Ratio
CEO Pay Ratio In compliance with Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K, we undertook activities to calculate the ratio of our CEO’s total annual compensation to that of our median employee. Pursuant to SEC rules, we are providing the following information about the ratio of the annual total compensation of our median employee to the annual total compensation of Mr. Zizelman, our CEO. Given the CEO transition which occurred in 2023, for purposes of the pay ratio calculation we annualized Mr. Zizelman’s compensation as if he had served as CEO for the entire year. Mr. Zizelman’s annualized 2023 compensation of $1,773,298 is based on the following: Salary: an annualized salary of $600,000, which is based on his CEO-level salary rate of $600,000 as if such rate had been in effect throughout the entire year. Annual Incentive: an annual award of $403,636, which is calculated based on annualizing his 2023 AIP award earned as CEO for the portion of the year that he served as CEO. Long Term Incentive: the full value of his long term incentive awards granted in 2023. All Other Compensation: as reported in the Summary Compensation Table. We determined that, as of December 31, 2023, our employee population consisted of approximately 4,850 individuals globally. We selected December 31, 2023, which was the last day of fiscal 2023, as the date upon which we would identify the median employee. The median employee is required to be updated only after the passage of three years or if recalculation would cause a material change in the ratio. Our median employee’s total annual compensation in 2023 was $12,153. Our CEO’s total annual compensation in 2023 for purposes of calculating the CEO pay ratio was $1,773,298. The ratio of our CEO’s total annual compensation compared to the total annual compensation of our median employee is 146 to 1. We also compared the CEO's 2023 total cash compensation to the total cash compensation of our median paid employee. The total cash compensation ratio is 85 to 1.
Director Compensation
Director Compensation Non-employee directors are compensated for their services as directors as shown in the following chart.
Director Compensation
| 2023 Schedule of Director Fees | | | Cash Compensation | | | Annual Retainer-Director | $90,000 | | Annual Retainer-Chairman | $180,000 | | Additional Compensation: | | | Audit Committee Chair | $15,000 | | Compensation Committee Chair | $15,000 | | Nominating & Corporate Governance Committee Chair | $10,000 | | Compliance & Ethics Committee Chair | $10,000 | | Equity Compensation | | | Date of grant target value | $135,000 |
Director Compensation
The Compensation Committee reviews director compensation annually relative to data of the Company’s Comparator Group provided by its independent compensation consultant, and recommends changes to the full Board for approval, as appropriate. For 2023, the annual cash retainer was increased from $85,000 to $90,000 and the annual equity grant was increased from $120,000 to $135,000. The annual cash retainer for the Board Chairman was increased from $170,000 to $180,000 and the annual cash retainer for the Compensation Committee Chair was increased from $10,000 to $15,000. Pursuant to the Directors’ Restricted Shares Plan, non-employee directors are eligible to receive awards of restricted common shares. On March 13, 2023, each director was granted 7,745 restricted common shares. The restrictions on those shares lapsed on March 1, 2024.
Director Compensation Table
Director Compensation Table
Director Compensation Table
| Non-Employee Director | 2023 Annual Cash Retainer | Committee Chair Fees | Fees Earned or Paid in Cash | Stock Awards ($)(1) | Total Compensation ($) | | Jeffrey P. Draime(2) | $45,000 | $— | $45,000 | $134,955 | $179,955 | | Ira C. Kaplan | $90,000 | $— | $90,000 | $134,955 | $224,955 | | Kim Korth | $90,000 | $15,000 | $105,000 | $134,955 | $239,955 | | William M. Lasky | $180,000 | $10,000 | $190,000 | $134,955 | $324,955 | | George S. Mayes, Jr. | $90,000 | $10,000 | $100,000 | $134,955 | $234,955 | | Carsten J. Reinhardt | $77,250 | $— | $77,250 | $134,955 | $212,205 | | Sheila Rutt | $73,500 | $— | $73,500 | $134,955 | $208,455 | | Paul J. Schlather | $90,000 | $— | $90,000 | $134,955 | $224,955 | | Frank S. Sklarsky | $90,000 | $15,000 | $105,000 | $134,955 | $239,955 |
Director Compensation Table
(1)The amounts included in the “Stock Awards” column represent fair value at grant date of restricted common share awards to directors, computed in accordance with FASB ASC Topic 718. For a discussion of the valuation assumptions, see Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. (2)Mr. Draime’s compensation reflects his service on the Board of Directors through May 16, 2023.
Maximum Annual Director Compensation Policy
Maximum Annual Director Compensation Policy The Directors’ Restricted Stock Plan has a current maximum annual limit for equity grants to any non-employee director of 10,000 shares. The Board has adopted an annual limit for total compensation paid to a non-employee director of $350,000 in 2023.