DEF 14A of Osi Systems Inc
Filed Oct 25, 2024 · FY20240001104659-24-111456
BUSINESS EXPERIENCE
BUSINESS EXPERIENCE
BUSINESS EXPERIENCE
| Deepak Chopra | Chairman of the Board since 1992 Director since 1987 | | | BOARD COMMITTEES ▪ None | CAREER HIGHLIGHTS Mr. Chopra is our founder and has served as President, Chief Executive Officer and has been a member of our Board since our inception in May 1987. He has served as our Chairman of the Board since February 1992. Mr. Chopra also serves as the Chief Executive Officer of several of our major subsidiaries. From 1976 to 1979 and from 1980 to 1987, Mr. Chopra held various positions with ILC, a publicly held manufacturer of lighting products, including serving as Chairman of the Board of Directors, Chief Executive Officer, President and Chief Operating Officer of its United Detector Technology division. In 1990, we acquired certain assets of ILC’s United Detector Technology division. | Mr. Chopra has also held various positions with Intel Corporation, TRW Semiconductors and RCA Semiconductors. EDUCATION Mr. Chopra holds a Bachelor of Science degree in Electronics from Punjab Engineering College in Chandigarh, Punjab, India and a Master of Science degree in Semiconductor Electronics from the University of Massachusetts, Amherst. QUALIFICATIONS Among other reasons, Mr. Chopra was selected to serve as a director because of his expertise in the field of electrical engineering as well as his long-standing experience in successfully managing our Company. |
BUSINESS EXPERIENCE
| William F. Ballhaus, Jr. | Lead Independent Director Director since May 2010 | | | BOARD COMMITTEES ▪ Audit ▪ Compensation and Benefits ▪ Technology (Chair) | CAREER HIGHLIGHTS From 2000 to 2007, Dr. Ballhaus, now retired, served as President and then also as Chief Executive Officer of Aerospace Corporation, an organization dedicated to the application of science and technology to the solution of critical issues in the nation’s space program. Between 1990 and 2000, Dr. Ballhaus’ career included positions within the aerospace industry, including Corporate Vice President, Engineering and Technology for Lockheed Martin Corporation and President, Aero and Naval Systems and President, Civil Space & Communications, both for Martin Marietta. Between 1971 and 1989, Dr. Ballhaus worked for the National Aeronautics and Space Administration (NASA), including as Director of its Ames Research Center. | Dr. Ballhaus has extensive risk management experience gained through the various executive and board positions that he has held. EDUCATION Dr. Ballhaus, who has published more than 40 papers on computational aerodynamics, obtained a Ph.D. in Engineering in 1971 and a BS and MS in Mechanical Engineering in 1967 and 1968, all from the University of California at Berkeley. QUALIFICATIONS Among other reasons, Dr. Ballhaus was selected to serve as a director because of his experience in managing providers of technology and technical services to government agencies. |
BUSINESS EXPERIENCE
| Kelli Bernard | Independent Director Director since December 2019 | | | BOARD COMMITTEES ▪ Nominating and Governance ▪ Risk Management (Co-Chair) | CAREER HIGHLIGHTS Ms. Bernard is currently the Managing Partner for the Los Angeles office of Lighthouse Public Affairs, a public affairs consultancy in California. Prior to this role, from June 2016 to December 2021, Ms. Bernard has served as an Executive Vice President and National Cities Leader for AECOM, a fully integrated global infrastructure firm. Prior to joining AECOM, from July 2013 through June 2016, Ms. Bernard was Deputy Mayor of Economic Development for Los Angeles Mayor Eric Garcetti. Ms. Bernard is the current vice chair of Homeboy Industries. | EDUCATION She holds a BA in Sociology from University of California, Berkeley and a Master’s degree in Urban Planning from University of California, Los Angeles. QUALIFICATIONS Among other reasons, Ms. Bernard was selected to serve as a director because of her business and economic development and international trade experience. |
BUSINESS EXPERIENCE
| Gerald Chizever | Independent Director Director since October 2016 | | | BOARD COMMITTEES ▪ Risk Management (Co-Chair) ▪ Technology | CAREER HIGHLIGHTS Mr. Chizever has been a partner at the law firm of Loeb & Loeb LLP since 2004. Mr. Chizever’s practice includes mergers and acquisitions, corporate finance, public and private securities offerings, general corporate representation and strategic alliances. Mr. Chizever serves as general corporate counsel for public and private companies, advising them in all matters, including business transactions, corporate governance and compliance with governmental regulations. | EDUCATION He holds a B.B.A. degree in Accounting and a Juris Doctorate from George Washington University. QUALIFICATIONS Among other reasons, Mr. Chizever was selected to serve as a director because of his corporate governance and compliance experience, including his experience in highly regulated industries. |
BUSINESS EXPERIENCE
| James B. Hawkins | Independent Director Director since December 2015 | | | BOARD COMMITTEES ▪ Audit (Chair) ▪ Compensation and Benefits ▪ Nominating and Governance ▪ Technology OTHER CURRENT PUBLIC COMPANY BOARDS ▪ Iradimed (Nasdaq: IRMD) | CAREER HIGHLIGHTS From 2004 through July 2018, Mr. Hawkins was the President, Chief Executive Officer and member of the Board of Directors of Natus Medical Incorporated, a leading manufacturer of medical devices and software and a service provider for the newborn care, neurology, sleep, hearing and balance markets. Prior to joining Natus, Mr. Hawkins was President, Chief Executive Officer, and a director of Invivo Corporation, a provider of MRI-safe patient monitoring, and Chief Executive Officer and Chief Financial Officer of Sensor Control Corporation. Mr. Hawkins currently serves as a director of Iradimed Corporation. | Mr. Hawkins has extensive risk management experience gained through the various executive and board positions that he has held. EDUCATION He earned his undergraduate degree in Business Commerce from Santa Clara University and holds a Masters of Business Administration degree in Finance from San Francisco State University. QUALIFICATIONS Among other reasons, Mr. Hawkins was selected to serve as a director because of his direct management experience in the medical device area. |
BUSINESS EXPERIENCE
| Meyer Luskin | Independent Director Director since February 1990 | | | BOARD COMMITTEES ▪ Audit ▪ Compensation and Benefits (Chair) ▪ Nominating and Governance (Chair) ▪ Risk Management | CAREER HIGHLIGHTS Since 1958, Mr. Luskin has served as a Director of Scope Industries, which is engaged principally in the business of recycling and processing food waste products into animal feed, and has also served as its President, Chief Executive Officer and Chairman since 1961. He currently serves as a Director on the Advisory Board of the UCLA Luskin School of Public Affairs. Mr. Luskin was formerly Chairman of the Board of the Santa Monica—UCLA Medical Center and Orthopaedic Hospital, Chairman of the Board of the Orthopaedic Institute for Children (previously known as the Los Angeles Orthopaedic Hospital), a Director of the UCLA Foundation and a Director of the Alliance for College-Ready Public Schools. | Mr. Luskin also served as a Director of Myricom, Inc., a computer and network infrastructure company. Mr. Luskin has extensive risk management experience gained through the various executive and board positions that he has held. EDUCATION Mr. Luskin holds a Bachelor of Arts degree in Economics from the University of California, Los Angeles and a Masters in Business Administration from Stanford University QUALIFICATIONS Among other reasons, Mr. Luskin was selected to serve as a director because of his long-standing experience managing complex business operations. |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION All of our non-employee directors are paid an annual cash retainer and receive restricted stock unit (“RSU”) awards. A supplemental annual cash retainer is also paid to certain committee chairs, and committee members may receive additional compensation. Directors who are officers or employees do not receive any compensation as directors or for attending meetings of the Board or its committees. The principal features of the compensation received by our non-employee directors for fiscal year ended June 30, 2024 are described below.
DIRECTOR COMPENSATION
| | ANNUAL CASH RETAINER ($) | RSU GRANT ($) | | Board Service Retainer | 60,000 | 150,000 | | Lead Director Additional Retainer | 35,000 | 35,000 | | Committee Chair Additional Retainer | | | | Audit | 25,000 | 25,000 | | Compensation Committee | 25,000 | 25,000 | | Nominating and Governance | 10,000 | — | | Technology Committee | 15,000 | 35,000 | | Risk Management Committee | 15,000 | 25,000 |
DIRECTOR COMPENSATION
Each member of the Board other than Mr. Chopra received $3,000 for each Board meeting attended. Each member of the Audit Committee received $3,000 for each Audit Committee meeting attended. Each member of the Compensation Committee received $3,000 for each Compensation Committee meeting attended. Each non-Chair member of the Compensation Committee received an RSU grant valued at $5,000. Each member of the Nominating and Governance Committee received $3,000 for each Nominating and Governance Committee meeting attended. Each member of the Technology Committee received $5,000 for the first Technology Committee meeting and $3,000 for each additional meeting attended. Each non-Chair member of the Technology Committee received $10,000 and an RSU grant valued at $20,000. Each member of the Risk Management Committee received $3,000 for each Risk Management Committee meeting attended and an RSU grant valued at $25,000. All RSU awards granted to members of the Board and its committees vest 25% annually over a period of four years from the date of grant. The directors also are reimbursed for expenses incurred in connection with the performance of their services as directors. The following table provides compensation information for the fiscal year ended June 30, 2024 for each non- employee member of our Board(1):
DIRECTOR COMPENSATION
| NAME | FEES EARNED OR PAID IN CASH ($) | STOCK AWARDS(2) ($) | TOTAL ($) | | William F. Ballhaus | 166,000 | 225,026 | 391,026 | | Kelli Bernard | 111,000 | 175,033 | 286,033 | | Gerald Chizever | 126,000 | 195,031 | 321,031 | | James B. Hawkins | 154,000 | 199,971 | 353,971 | | Meyer Luskin | 152,000 | 209,970 | 361,970 |
DIRECTOR COMPENSATION
(1) We have omitted from this table the columns titled “Option Awards,” “Non-Equity Incentive Plan Compensation,” “Change in Pension Value and Nonqualified Deferred Compensation Earnings” and “All Other Compensation” because no amounts would have been included in such columns. Amounts are calculated utilizing the accounting guidance related to stock-based compensation under accounting principles generally accepted in the United States. See Note 9 to the Consolidated Financial Statements included in our Form 10-K for the year ended June 30, 2024 for a discussion of the assumptions used in valuation of stock awards. For the fiscal year ended June 30, 2024, 1,913 RSUs were granted to Dr. Ballhaus; 1,488 RSUs were granted to Ms. Bernard; 1,658 RSUs were granted to Mr. Chizever; 1,700 RSUs were granted to Mr. Hawkins; and 1,785 RSUs were granted to Mr. Luskin, all with a fair value of $117.63. As of June 30, 2024, Mr. Luskin had 5,407 unvested stock awards outstanding; Dr. Ballhaus had 5,794 unvested stock awards outstanding; Mr. Hawkins had 5,217 unvested stock awards outstanding; Mr. Chizever had 5,021 unvested stock awards outstanding; and Ms. Bernard had 4,506 unvested stock awards outstanding.
GOVERNANCE HIGHLIGHTS
| WHAT WE DO | WHAT WE DO NOT DO | | Use 100% performance-based vesting for Named Executive Officer equity awards Have formulaic performance-based annual incentives Maintain a robust clawback policy consistent with SEC requirements and the Listing Standards Maintain share ownership and retention guidelines for executives and directors Conduct an annual say on pay vote Maintain open lines of communication with stockholders Maintain a comprehensive insider trading policy designed to promote compliance with insider trading laws, rules, and regulations and the Listing Standards | No excise tax gross-ups upon a change in control No hedging, pledging, or speculative transactions are permitted by executives and directors No re-pricing of underwater stock options No stock option grants with an exercise price less than fair market value No “single trigger” severance payments owing solely on account of the occurrence of a change in control event |
EXECUTIVE COMPENSATION PROGRAM ELEMENTS
| | | PAY ELEMENT | DESCRIPTION | | ◀ FIXED ▶ | Short-Term | BASE SALARY | Fixed cash compensation set based on the duties and scope of responsibilities of each executive officer’s position and the experience the individual brings to the position. | | ◀ AT-RISK ▶ | | ANNUAL INCENTIVES | Cash-based annual incentives that are determined formulaically for our corporate Named Executive Officers. | | | Long-Term | LONG-TERM INCENTIVES | The fiscal 2024 program with respect to the Named Executive Officers consisted of performance based RSUs, which are earned based on the achievement of pre-established revenue and operating income metrics for each of the three years following grant, as well as an aggregate three-year metric. | | ◀ OTHER ▶ | | BENEFITS | Employee Stock Purchase Plan, medical, dental, and vision health insurance plans and life and long-term disability insurance. | | | | PERQUISITES | Company car for certain Named Executive Officers. | | | | RETIREMENT | 401(k) retirement plan, which includes a Company match. Nonqualified deferred compensation plan that permits the deferral of salary and cash incentives at executive officers’ election and permits a Company match. Nonqualified defined benefit plan, in which our CEO is the only participant. |
EXECUTIVE COMPENSATION PROGRAM ELEMENTS
Variable Compensation Variable compensation provides our Named Executive Officers with the opportunity for substantial rewards for achieving successful performance and contributing toward sustainable and consistent stockholder returns and consists principally of annual incentive awards and long-term incentive compensation. Annual Incentive Awards For fiscal year 2024, all corporate Named Executive Officers (CEO, CFO and General Counsel) were eligible for an annual cash incentive pursuant to our annual incentive program. Annual incentives under this program are designed to focus our participating Named Executive Officers on annual operating achievement and near-term success. For 2024, the target and maximum annual incentives as a percentage of salary for the corporate NEOs were as follows:
EXECUTIVE COMPENSATION PROGRAM ELEMENTS
Annual incentives are calculated based on a formula tied to adjusted return on equity (“AROE”) metrics. After consideration of the strategic business plan, goals were increased from the prior fiscal year from a target performance goal of 22.25% AROE to a target performance goal of 23.35% AROE. Threshold and maximum performance goals were also increased in fiscal year 2024, as follows:
EXECUTIVE COMPENSATION PROGRAM ELEMENTS
The Compensation Committee considers AROE to be an effective annual performance measure for assessing the Company’s efficient use of capital and return to stockholders. The AROE targets were designed to be challenging yet achievable with significant effort and management skill and were established in order to provide the executives sufficient incentive to create long-term stockholder value while at the same time ensuring appropriate risk management. For fiscal 2024, we achieved 24.3% AROE. See the “Non-equity Incentive Plan Compensation” column of the Summary Compensation Table. Mr. Mehra, President, OSI Security Division, participates in an incentive program tied to the performance of our cargo scanning and solutions business (the “Cargo Incentive Program”). Incentives under the Cargo Incentive Program are awarded based on the operating income of our cargo scanning and solutions business. For fiscal year 2024 performance, Mr. Mehra was awarded an annual cash incentive of $4,675,000 under this program. The fiscal 2024 award is included in the “Non-equity Incentive Plan Compensation” column of the Summary Compensation Table. Mr. Mansouri, President of our Optoelectronics and Manufacturing division was eligible to receive a bonus based upon the performance of the Optoelectronics and Manufacturing division. For fiscal year 2024, Mr. Mansouri was awarded a cash bonus of $115,000, which is set forth in the “Bonus” column of the Summary Compensation Table. Long-Term Incentive Program In order to further promote our philosophy of pay-for-performance and furthering our objective of aligning our executive compensation with our long-term financial goals and factors that create long-term stockholder value as well as incentivizing the desired individual performance of each Named Executive Officer, we have a long-term incentive program. The grants to our Named Executive Officers during fiscal 2024 were performance-based in their entirety. The Compensation Committee believes that this vesting structure provides an incentive for our Named Executive Officers to remain with the Company and also focus the Named Executive Officers on consistently achieving corporate performance and business objectives for the benefit of our stockholders. Our overall long-term incentive program is designed to retain our Named Executive Officers and to align the interests of our Named Executive Officers with the long-term interests of our stockholders, namely the achievement of sustainable, long-term stock price appreciation. All equity awards are made at fair market value on the date of grant (which is the date on which the Compensation Committee authorizes the grant). Under our equity incentive plan as in effect on the date of grant, fair market value is determined by the closing price of our Common Stock on such dates. The Compensation Committee has established a three-year program for long-term performance-based incentive grants to our Named Executive Officers. The program provides for yearly initial grants of RSUs. Each award is 100% performance based and vests based on the level of performance achieved for the following metrics: compound annual revenue growth and compound annual operating income growth. The Compensation Committee considers compound annual growth revenue and operating income metrics to be effective long-term performance measures for assessing the Company’s performance over multiple years. The targets are designed to be challenging yet achievable with significant effort and management skill, incentivizing management to create long-term stockholder value while at the same time ensuring appropriate risk management. Revenue and operating income figures are as reported in accordance with GAAP in our annual report on Form 10-K. Compound annual growth rate is measured as compared to our fiscal year 2017 as-reported figures. As described below, the majority of the shares that can be earned under this program is based upon three-year performance, while additional shares can be earned based upon year one and year two performance. Each initial grant would vest based upon the performance levels achieved for a three-year performance period for each metric based on the charts set forth below, which show the applicable metrics, weightings and potential vesting percentage based upon performance level achieved.
EXECUTIVE COMPENSATION PROGRAM ELEMENTS
In the event of a change of control, the initial grant would vest upon the change of control; performance for any annual periods remaining in association with a particular grant will be assumed to be achieved at the maximum payout levels for the purposes of awarding additional incentive shares or units in connection with the change of control. Our compound annual revenue growth for fiscal year 2024 was 6.96%, and our compound annual operating income growth for fiscal year 2024 was 17.82%. Therefore, our executive officers earned additional shares as follows: Mr. Chopra: 116,049 shares; Mr. Edrick, 29,674 shares; Mr. Mehra, 8,903 shares; Mr. Sze, 24,642 shares; and Mr. Mansouri, 1,484 shares. The Compensation Committee determines, after consultation with our Chief Executive Officer, the target number of equity awards to grant to our Named Executive Officers. The grant amounts for our Chief Executive Officer are determined solely by the Compensation Committee. The Compensation Committee considers individual performance, including the following quantitative and qualitative factors, as well as overall corporate performance.
BASES FOR OUR COMPENSATION POLICIES AND DECISIONS
| INDIVIDUAL AND CORPORATE PERFORMANCE FACTORS | | | QUALITATIVE FACTORS | ▪ Furtherance of long-term goals | | | ▪ Individual performance and experience | | | ▪ Demonstration of leadership skills and ability | | | ▪ Achievement of strategic targets | | | ▪ Management of unplanned events and issues emerging during the fiscal year | | QUANTITATIVE FACTORS | ▪ Compensation paid in prior years | | | ▪ Financial performance of Company/division/business unit | | | ▪ Peer group compensation and performance data | | | ▪ Compensation surveys provided by external advisors |
BASES FOR OUR COMPENSATION POLICIES AND DECISIONS
The Compensation Committee’s review included evaluating the compensation of the Named Executive Officers in light of information regarding the compensation practices and corporate financial performance of other companies. In making its determinations, the Compensation Committee reviewed information summarizing the compensation paid at peer group companies and more broad-based compensation surveys. The peer companies were developed based on similarity in size and operations within the industries in which we operate as follows:
BASES FOR OUR COMPENSATION POLICIES AND DECISIONS
| PEER GROUP | | | | ▪ AAR Corp. | ▪ Infinera Corporation | ▪ Methode Electronics, Inc. | | ▪ Avanos Medical, Inc. | ▪ IPG Photonics Corporation | ▪ Netgear, Inc. | | ▪ Cognex Corporation | ▪ Itron, Inc. | ▪ NetScout Systems, Inc. | | ▪ Enovis Corporation | ▪ Kaman Corporation | ▪ Novanta Inc. | | ▪ Extreme Networks, Inc. | ▪ Knowles Corp. | ▪ Varex Imaging Corp. | | ▪ F5, Inc. | ▪ Kratos Defense & Security Solutions, Inc. | ▪ Viasat, Inc. | | ▪ Haemonetics Corporation | ▪ Lumentum Holdings Inc. | ▪ Viavi Solutions Inc. | | ▪ Hexcel Corporation | ▪ Masimo Corporation | ▪ Vishay Intertechnology, Inc. |
BASES FOR OUR COMPENSATION POLICIES AND DECISIONS
The peer companies were selected based on a set of established criteria intended to select companies that are: ▪ similar in size, ▪ operate in similar end markets, proportional to our principal lines of business, and ▪ compete with us for executive talent. Companies were selected from the following industries, based on a range of comparable financial metrics: ▪ aerospace and defense, ▪ communications equipment, ▪ electronic equipment instruments, and components, and ▪ healthcare equipment and supplies industries. In connection with executive compensation decisions for fiscal 2024, the Compensation Committee engaged independent compensation consulting firm, Pearl Meyer. The Compensation Committee also considered compensation levels and practices for executives holding comparable positions. This review further assisted the Compensation Committee in determining the appropriate level and mix of compensation for each Named Executive Officer. In connection with its review, the Compensation Committee also considered that certain Named Executive Officers were located in the high cost of living area in the geographic location of our Company headquarters. While the Compensation Committee did not engage in formal benchmarking with pre-established targets, the Compensation Committee reviewed our actual performance taken as a whole, as well as our performance relative to our peer group and established compensation levels at the competitive level that it believed most appropriately corresponded to our comparative performance. The Compensation Committee believes that the fixed component of compensation is designed to compensate each Named Executive Officer based on the duties and scope of responsibilities of his position and the experience he brings to the position. Consistent with the Company’s pay-for-performance philosophy, the variable component of compensation, in the form of annual incentives and performance-based equity grants comprised a significant portion of total compensation. The Compensation Committee’s compensation decisions are designed to encourage performance that enhances long-term stockholder value. The Compensation Committee believes that attracting and retaining executive talent capable of achieving our long-term, strategic objectives is the best way to align executive compensation decisions with the interests of stockholders. The Compensation Committee also believes that meeting financial targets as well as near-term strategic goals demonstrates whether an executive is on track to accomplish longer-term objectives.
COMPENSATION POLICIES AND PRACTICES
| We believe that our executive officers should hold a significant amount of Company equity to link their long-term economic interests directly to those of our stockholders. Accordingly, we have established requirements that executive officers own at minimum equity of the Company valued at five times their respective annual base salaries. | |
COMPENSATION POLICIES AND PRACTICES
We believe that this multiple constitutes significant amounts for our executive officers and provides a substantial link between the interests of our executive officers and those of our stockholders. Executive officers have five years from the date of appointment to attain such ownership levels. During such time that an executive officer has not attained the share ownership guideline, such officer is required to retain at least 50% of the shares acquired upon exercise of options or vesting of RSUs, net of amounts required to pay taxes and exercise price. We periodically review our minimum equity ownership guidelines. For purposes of meeting the ownership requirements, unvested RSUs are counted, but unearned performance awards and unexercised stock options are not. Each of our Named Executive Officers meets or exceeds our minimum equity ownership guidelines. Clawback Policy In October 2023, we adopted a clawback policy consistent with SEC requirements and the Listing Standards. The policy provides that if an accounting restatement is required due to material non-compliance with any financial reporting requirements, then we will seek to recover any incentive-based compensation received by any of our current or former executive officers over the prior three completed fiscal years preceding the date that the restatement is required to the extent such compensation exceeds the amount of incentive-based compensation that would have been paid based on the restated financial reporting measure, regardless of whether or not the current or former executive officer was at fault in the circumstances leading to the restatement. Each Named Executive Officer’s employment agreement also contains a clawback provision. Policy Prohibiting the Hedging or Pledging of Company Stock We have adopted a policy that prohibits our employees and directors from entering into any transaction that is designed to hedge or offset any decrease in the market value of our Common Stock or other equity securities. Our Board has determined that transactions in mutual funds or other similar type investment vehicles that contain less than 50% Company stock at the time of an employee’s or director’s initial investment is not considered a hedge for purposes of our policy. We have also adopted a policy that prohibits our executive officers and directors from holding Company stock or other equity securities in margin accounts or pledging Company stock or other equity securities as collateral for a loan. As of the date of this Proxy Statement, no shares of Company stock are pledged by any Named Executive Officer or director. Policies and Practices Related to the Grant of Certain Equity Awards Our practice is generally to not grant stock options in anticipation of the release of material nonpublic information and not time the public release of such information based on stock option grant dates. These restrictions do not apply to RSUs or other types of equity awards that do not include an exercise price related to the market price of our common stock on the date of grant. In fiscal 2024, we did not grant new awards of stock options, stock appreciation rights, or similar option-like instruments to our Named Executive Officers.
EMPLOYMENT AGREEMENTS
EMPLOYMENT AGREEMENTS We have entered into employment agreements with Messrs. Edrick, Mehra, Sze, and Mansouri. The terms of each of such agreements or arrangements are summarized below under the heading “Employment Agreements.” These types of arrangements are used to retain executives and formalize the terms of the executives’ employment. Mr. Chopra’s employment agreement expired by its terms on January 1, 2024, and Mr. Chopra does not currently have an employment agreement with the Company.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following table sets forth the compensation for our principal executive officer, principal financial officer, and our three highest paid executive officers serving as executive officers on June 30, 2024 (the “Named Executive Officers”) for the fiscal years ended June 30, 2024, 2023, and 2022:
SUMMARY COMPENSATION TABLE
| NAME AND PRINCIPAL POSITION | YEAR | SALARY ($) | BONUS(1) ($) | STOCK AWARDS(2) ($) | OPTION AWARDS ($) | NON-EQUITY INCENTIVE PLAN COMPENSATION(3) ($) | CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS(4) ($) | ALL OTHER COMPENSATION(5)(6)(7) ($) | TOTAL ($) | | Deepak Chopra Chairman, President and Chief Executive Officer | 2024 | 1,034,800 | 13,500,000 | 4,000,008 | — | 2,069,600 | (8) | 79,110 | 20,683,518 | | | 2023 | 995,000 | — | 4,833,221 | — | 1,990,000 | 204,135 | 85,392 | 8,107,748 | | | 2022 | 995,000 | — | 4,833,148 | — | 1,741,250 | 1,954,741 | 130,219 | 9,654,358 | | Alan Edrick Executive Vice President and Chief Financial Officer | 2024 | 519,120 | | 1,683,168 | — | 778,680 | — | 87,641 | 3,068,609 | | | 2023 | 503,716 | — | 1,683,126 | — | 756,000 | — | 91,133 | 3,033,975 | | | 2022 | 489,250 | — | 1,583,165 | — | 756,000 | — | 82,696 | 2,911,111 | | Ajay Mehra Executive Vice President of the Company and President, OSI Security Division | 2024 | 492,340 | — | 504,986 | — | 4,675,000 | — | 104,772 | 5,777,098 | | | 2023 | 477,721 | — | 504,947 | — | 2,925,000 | — | 92,210 | 3,999,878 | | | 2022 | 463,500 | — | 474,969 | — | 1,962,000 | — | 83,633 | 2,984,102 | | Victor S. Sze Executive Vice President, General Counsel and Secretary | 2024 | 448,050 | | 1,375,330 | — | 604,868 | — | 91,512 | 2,519,760 | | | 2023 | 434,756 | — | 1,375,310 | — | 587,250 | — | 80,694 | 2,478,010 | | | 2022 | 422,300 | — | 1,359,357 | — | 588,000 | — | 76,910 | 2,446,567 | | Manoocher Mansouri President of Optoelectronics and Manufacturing Division | 2024 | 328,570 | 115,000 | 275,019 | — | — | — | 59,883 | 778,472 | | | 2023 | 318,808 | 135,000 | 274,975 | — | — | — | 56,285 | 785,068 |
SUMMARY COMPENSATION TABLE
(1) Under the terms of Mr. Chopra’s employment agreement entered into in April 2012, and as amended effective as of July 1, 2015 and December 31, 2017, upon Mr. Chopra’s continued employment through January 1, 2024, he became entitled to and received a $13,500,000 stay bonus. As previously disclosed, Mr. Chopra has informed our Board of his plans to retire from his roles as President and Chief Executive Officer by December 31, 2024, after the appointment of a successor. Following his retirement as President and CEO, Mr. Chopra will continue to work with the Company as Executive Chairman of the Board. (2) Represents the aggregate grant date fair value computed in accordance with generally accepted accounting principles of awards granted during the applicable fiscal year. Stock Awards column includes performance-based awards granted at target values. For additional information on the maximum amounts that could be earned if all metrics are achieved at the highest levels, see the Grants of Plan-Based Awards Table below. See Note 9 to the Consolidated Financial Statements included in our Form 10-K for the fiscal year ended June 30, 2024 for a discussion of the assumptions used in valuation of stock awards. (3) Represents amounts earned by Mr. Chopra, Mr. Edrick, and Mr. Sze under the annual incentive program and Mr. Mehra under the Cargo Incentive Program. We initially adopted the Defined Benefit Plan, as amended, during fiscal year 2008. Mr. Chopra is currently the only participant in the Defined Benefit Plan. The amount included in this column for fiscal 2024 represent the aggregate change in the present value of the accumulated benefit from June 30, 2023 to June 30, 2024 based on actuarial assumptions and therefore do not reflect the Company’s liability as of June 30, 2024 under the plan or the plan’s effect on the Company’s earnings in the stated period. (5) Individual breakdowns of amounts set forth in “All Other Compensation” with respect to the fiscal year ended June 30, 2024 are as follows:
SUMMARY COMPENSATION TABLE
| NAME | MATCHING 401(K), NONQUALIFIED DEFERRED COMPENSATION(a) ($) | CAR BENEFIT ($) | HEALTH INSURANCE AND MEDICAL REIMBURSEMENT PAYMENTS ($) | LIFE AND L-T DISABILITY INSURANCE PAYMENTS ($) | TOTAL ALL OTHER COMPENSATION ($) | | Deepak Chopra | 10,099 | 3,300 | 14,679 | 51,032 | 79,110 | | Alan Edrick | 61,943 | 3,135 | 18,153 | 4,410 | 87,641 | | Ajay Mehra | 59,258 | 6,675 | 27,202 | 11,637 | 104,772 | | Victor S. Sze | 54,818 | 4,761 | 22,034 | 9,899 | 91,512 | | Manoocher Mansouri | 39,767 | 7,200 | 9,044 | 3,872 | 59,883 |
SUMMARY COMPENSATION TABLE
(a) Company matching amounts for the 401(k) Plan and Deferred Compensation Plan are subject to vesting schedules as specified in the applicable plan documents. (6) Individual breakdowns of amounts set forth in “All Other Compensation” with respect to the fiscal year ended June 30, 2023 are as follows:
SUMMARY COMPENSATION TABLE
| NAME | MATCHING 401(K), NONQUALIFIED DEFERRED COMPENSATION(a) ($) | CAR BENEFIT ($) | HEALTH INSURANCE AND MEDICAL REIMBURSEMENT PAYMENTS ($) | LIFE AND L-T DISABILITY INSURANCE PAYMENTS ($) | TOTAL ALL OTHER COMPENSATION ($) | | Deepak Chopra | 9,150 | 3,300 | 21,998 | 50,944 | 85,392 | | Alan Edrick | 59,706 | 3,135 | 23,949 | 4,343 | 91,133 | | Ajay Mehra | 57,103 | 6,675 | 16,861 | 11,571 | 92,210 | | Victor S. Sze | 52,784 | 4,761 | 13,266 | 9,883 | 80,694 | | Manoocher Mansouri | 38,213 | 7,200 | 7,087 | 3,785 | 56,285 |
SUMMARY COMPENSATION TABLE
(a) Company matching amounts for the 401(k) Plan and Deferred Compensation Plan are subject to vesting schedules as specified in the applicable plan documents. (7) Individual breakdowns of amounts set forth in “All Other Compensation” with respect to the fiscal year ended June 30, 2022 are as follows:
SUMMARY COMPENSATION TABLE
| NAME | MATCHING 401(K), NONQUALIFIED DEFERRED COMPENSATION(a) ($) | CAR BENEFIT ($) | HEALTH INSURANCE AND MEDICAL REIMBURSEMENT PAYMENTS ($) | LIFE AND L-T DISABILITY INSURANCE PAYMENTS ($) | TOTAL ALL OTHER COMPENSATION ($) | | Deepak Chopra | 9,860 | 3,300 | 11,543 | 105,516 | 130,219 | | Alan Edrick | 57,707 | 3,135 | 17,531 | 4,323 | 82,696 | | Ajay Mehra | 55,128 | 6,675 | 14,299 | 7,531 | 83,633 | | Victor S. Sze | 51,001 | 2,292 | 13,744 | 9,873 | 76,910 |
SUMMARY COMPENSATION TABLE
(a) Company matching amounts for the 401(k) Plan and Deferred Compensation Plan are subject to vesting schedules as specified in the applicable plan documents. The change in the present value of the accumulated benefit during fiscal year 2024 was $-8,751,465, and Mr. Chopra received distributions of $6,068,721 under the terms of the Defined Benefit Plan.
GRANTS OF PLAN-BASED AWARDS TABLE
GRANTS OF PLAN-BASED AWARDS TABLE The following table sets forth the plan-based awards made during the fiscal year ended June 30, 2024 to each of our Named Executive Officers(1):
GRANTS OF PLAN-BASED AWARDS TABLE
| | | ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY AWARDS | | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS(3) | | | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS (#) | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS(7) ($) | | NAME AND POSITION | GRANT DATE | THRESHOLD(2) ($) | TARGET ($) | MAXIMUM ($) | THRESHOLD(4) (#) | TARGET(5) (#) | MAXIMUM(6) (#) | | | | Deepak Chopra Chairman, President and Chief Executive Officer | 7/28/2023 | — | — | — | — | 34,005 | 95,214 | — | 4,000,008 | | | — | — | 1,034,800 | 2,069,600 | — | — | — | — | — | | Alan Edrick Executive Vice President and Chief Financial Officer | 7/28/2023 | — | — | — | — | 14,309 | 40,065 | — | 1,683,168 | | | — | — | 519,120 | 778,680 | — | — | — | — | — | | Ajay Mehra Executive Vice President of the Company and President, OSI Security Division | 7/28/2023 | — | — | — | — | 4,293 | 12,020 | — | 504,986 | | | — | — | 4,675,000 | — | — | — | — | — | — | | Victor S. Sze Executive Vice President, General Counsel and Secretary | 7/28/2023 | — | — | — | — | 11,692 | 32,738 | — | 1,375,330 | | | — | — | 448,050 | 604,868 | — | — | — | — | — | | Manoocher Mansouri President, Optoelectronics and Manufacturing Division | 7/28/2023 | — | — | — | — | 2,338 | 6,546 | — | 275,019 |
GRANTS OF PLAN-BASED AWARDS TABLE
(1) We have omitted from this table the columns titled “All Other Option Awards: Number of Securities Underlying Options,” and “Exercise or Base Price of Option Awards” because no amounts would have been included in such columns. (2) No amounts are shown in this column as our annual incentive program provides for no award under certain circumstances. (3) Performance-based awards vest upon the attainment of certain one-, two- and three-year performance targets. (4) No amounts are shown in this column as our long-term performance program provides for none of the RSUs to vest under certain circumstances, as more fully explained above in the section entitled “Long-Term Incentive Program.” (5) Represents the initial awards granted to the executives as more fully explained above in the section entitled “Long-Term Incentive Program.” (6) Represents the maximum that each executive could receive if all performance metrics are achieved at the highest levels as more fully explained above in the section entitled “Long-Term Incentive Program.” The grant date fair value of the RSUs was computed in accordance with generally accepted accounting principles and represents the total projected expense to the Company of grants made during the past fiscal year.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table sets forth the outstanding equity awards for each Named Executive Officer as of June 30, 2024(1):
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| NAME AND PRINCIPAL POSITION | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED(2) (#) | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED(3) ($) | | Deepak Chopra Chairman, President and Chief Executive Officer | 138,225 | 19,008,702 | | Alan Edrick Executive Vice President and Chief Financial Officer | 49,598 | 6,820,717 | | Ajay Mehra Executive Vice President of the Company and President, OSI Security Division | 14,880 | 2,046,298 | | Victor S. Sze Executive Vice President, General Counsel and Secretary | 41,188 | 5,664,174 | | Manoocher Mansouri President, Optoelectronics and Manufacturing Division | 8,268 | 1,137,015 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
(1) We have omitted from this table the “Option Awards” and “Stock Awards” columns because no amounts would have been included in such columns. (2) Performance based awards vest upon the attainment of certain one-, two- and three-year performance targets. The market value of RSU awards that have not yet vested is based on the number of unvested RSUs on June 30, 2024 multiplied by the closing price of our Common Stock on June 28, 2024 ($137.52 per share).
OPTION EXERCISES AND STOCK VESTED TABLE
OPTION EXERCISES AND STOCK VESTED TABLE The following table sets forth information regarding the exercise of options by and the vesting of RSUs held by each of our Named Executive Officers during fiscal year ended June 30, 2024:
OPTION EXERCISES AND STOCK VESTED TABLE
| NAME AND PRINCIPAL POSITION | OPTION AWARDS | | STOCK AWARDS | | | | NUMBER OF SHARES ACQUIRED ON EXERCISE (#) | VALUE REALIZED ON EXERCISE ($) | NUMBER OF SHARES ACQUIRED ON VESTING(1) (#) | VALUE REALIZED ON VESTINGS(2) ($) | | Deepak Chopra Chairman, President and Chief Executive Officer | — | — | 214,124 | 29,446,332 | | Alan Edrick Executive Vice President and Chief Financial Officer | — | — | 52,545 | 7,225,988 | | Ajay Mehra Executive Vice President of the Company and President, OSI Security Division | — | — | 15,763 | 2,167,728 | | Victor S. Sze Executive Vice President, General Counsel and Secretary | — | — | 44,703 | 6,147,557 | | Manoocher Mansouri President, Optoelectronics and Manufacturing Division | — | — | 6,587 | 905,844 |
OPTION EXERCISES AND STOCK VESTED TABLE
(1) Includes shares acquired from the vesting of performance-based RSU awards based upon performance in fiscal years 2021, 2022 and 2023. (2) Represents the number of RSU awards that vested multiplied by the fair market price of our Common Stock on the date of vesting.
PAY RATIO
PAY RATIO Pursuant to the Dodd Frank Act, the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the annual total compensation of our Chief Executive Officer. The compensation for our Chief Executive Officer in fiscal year 2024 was approximately 1,027 times the median pay of our employees. Median employee total annual compensation (excluding the CEO’s total annual compensation): $20,146 (figure converted to United States dollars (USD) from Malaysian ringgit (MYR) at 1 USD to 4.71734 MYR, the June 28, 2024 exchange rate as published by Oanda.com). CEO total annual compensation: $20,683,518 Ratio of CEO to median employee compensation: 1,027 to 1 Ratio of CEO to median employee compensation excluding CEO stay bonus: 357 to 1 With respect to the annual total compensation of our Chief Executive Officer, we used the amount reported in the “Total” column of the Summary Compensation Table above. We identified the median employee by reviewing the fiscal year 2024 annual base pay for all individuals, excluding our Chief Executive Officer, who were employed by us on June 30, 2024. We included all employees globally, including for example Indonesia, India, Malaysia, Mexico, and Guatemala, among others, without regard to location, whether employed on a full-time, part-time, or seasonal basis. We did not make any assumptions, adjustments or estimates with respect to compensation other than annualizing the compensation for any full-time employees that were not employed by us for all of fiscal 2024. Using this methodology, we determined that the median employee was a full-time salaried employee located in Malaysia. A significant percentage of our employees are located in countries where the cost of living and wages are substantially lower than in the United States. Compensation rates are set to be market-competitive in the country in which the jobs are performed. Accordingly, the resulting CEO to median employee pay ratio is substantially higher than it would have been if the cost of living and wages in those countries were comparable to the United States. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, presented below is the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning our variable pay-for-performance philosophy and how we align executive compensation with our performance, refer to “Executive Compensation—Compensation Discussion and Analysis.”
PAY VERSUS PERFORMANCE
| YEAR | SUMMARY COMPENSATION TABLE TOTAL FOR CEO ($) | COMPENSATION ACTUALLY PAID TO CEO ($)(1) | AVERAGE SUMMARY COMPENSATION TABLE TOTAL FOR NON-CEO NEO(2) ($) | AVERAGE COMPENSATION ACTUALLY PAID TO NON-CEO NEOS(3) ($) | VALUE OF INITIAL FIXED $100 INVESTMENT BASED ON: | | NET INCOME ($) | OPERATING INCOME ($) | | | | | | | TOTAL STOCKHOLDER RETURN ($) | PEER GROUP TOTAL STOCKHOLDER RETURN(4) ($) | | | | 2024 | 20,683,518 | 36,160,052 | 3,035,985 | 5,431,096 | 184.24 | 148.38 | 128,154,000 | 189,061,000 | | 2023 | 8,107,748 | 32,360,845 | 2,574,233 | 5,678,095 | 157.86 | 116.39 | 91,778,000 | 135,279,000 | | 2022 | 9,654,358 | 16,864,015 | 2,281,438 | 2,891,868 | 114.47 | 99.56 | 115,347,000 | 121,749,000 | | 2021 | 9,567,617 | 25,897,229 | 2,395,117 | 4,987,273 | 136.17 | 112.85 | 74,049,000 | 115,371,000 |
PAY VERSUS PERFORMANCE
(1) The dollar amounts reported represent the amount of compensation actually paid to Mr. Chopra, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Chopra during the applicable year. (2) Mr. Edrick, Mr. Mehra, Mr. Sze, and Mr. Mansouri were our non-CEO NEOs for 2023 and 2024; Mr. Edrick, Mr. Mehra, Mr. Sze, and Mr. Maginnis were our non-CEO NEOs for 2022 and 2021. (3) The dollar amounts reported represent the average amount of compensation actually paid to the NEOs as a group (excluding Mr. Chopra), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Chopra) during the applicable year. (4) The peer group as reported in our Form 10-K includes Leidos Holdings Inc., Smiths Group Plc, and Conmed Corp. The following table reconciles the total compensation shown in the Summary Compensation Table to the compensation actually paid to NEOs shown in the Pay Versus Performance Table above.
PAY VERSUS PERFORMANCE
| YEAR | SUMMARY COMPENSATION TABLE TOTAL ($) | EQUITY AWARDS INCLUDED IN SUMMARY COMPENSATION TABLE ($) | YEAR-END VALUE OF UNVESTED EQUITY AWARDS GRANTED IN YEAR ($) | CHANGE IN YEAR-END VALUE OF UNVESTED EQUITY AWARDS GRANTED IN PRIOR YEARS ($) | CHANGE IN VALUE OF UNVESTED EQUITY AWARDS GRANTED IN PRIOR YEARS THAT VESTED DURING YEAR ($) | CHANGE IN FAIR VALUE OF AWARDS THAT WERE FORFEITED DURING THE YEAR ($) | CHANGE IN THE ACTUARIAL PRESENT VALUES REPORTED UNDER THE “CHANGE IN PENSION VALUE AND NONQUALIFIED DEFERRED COMPENSATION EARNINGS” COLUMN OF THE SUMMARY COMPENSATION TABLE ($) | SERVICE COST AND, IF APPLICABLE, PRIOR SERVICE COST FOR PENSION PLANS ($) | COMPENSATION ACTUALLY PAID ($) | | CEO | | | | | | | | | | | 2024 | 20,683,518 | (4,000,008) | 7,474,212 | 9,077,301 | 2,376,772 | — | — | 548,257 | 36,160,052 | | 2023 | 8,107,748 | (4,833,221) | 12,027,821 | 15,412,481 | 519,822 | — | (204,135) | 1,330,329 | 32,360,845 | | 2022 | 9,654,358 | (4,833,148) | 7,514,030 | 5,867,194 | (498,504) | — | (1,954,741) | 1,114,826 | 16,864,015 | | 2021 | 9,567,617 | (4,833,177) | 12,820,549 | 9,346,813 | 128,528 | — | (1,754,121) | 621,020 | 25,897,229 | | NON-CEO NEOS | | | | | | | | | | | 2024 | 3,035,985 | (959,626) | 1,759,465 | 1,263,388 | 331,884 | — | — | — | 5,431,096 | | 2023 | 2,574,233 | (959,590) | 1,948,519 | 2,046,128 | 68,805 | — | — | — | 5,678,095 | | 2022 | 2,281,438 | (941,882) | 1,179,659 | 505,613 | (79,244) | (53,716) | — | — | 2,891,868 | | 2021 | 2,395,117 | (941,838) | 2,038,210 | 1,469,741 | 29,523 | (3,480) | — | — | 4,987,273 |
PAY VERSUS PERFORMANCE
The following charts reflect the compensation actually paid to our Chief Executive Officer and the average compensation actually paid to the non-CEO NEOs, respectively, as computed in accordance with Item 402(v) of Regulation S-K, and their relation to (i) our TSR, (ii) our net income and (iii) our operating income, in each case for 2021, 2022, 2023, and 2024. We also show below the relationship between our TSR and the TSR of our peer group over this period. COMPENSATION ACTUALLY PAID VS. TSR COMPENSATION ACTUALLY PAID VS. NET INCOME We do not consider net income to be one of our most important financial performance measures and, accordingly, it is not utilized in our compensation programs. We believe there is limited relationship, if any, between compensation actually paid and net income. Net income in fiscal year 2022 included a $27.4 million pre-tax gain on sale of a property in a sale-leaseback transaction. COMPENSATION ACTUALLY PAID VS. OPERATING INCOME We consider the following to be the most important financial performance measures we used to link compensation actually paid to our NEOs to company performance for fiscal year 2024.
PAY VERSUS PERFORMANCE
| FINANCIAL PERFORMANCE MEASURES | | Revenue | | Operating Income (EBIT) | | AROE |
PENSION BENEFITS
PENSION BENEFITS We maintain the Defined Benefit Plan. The Defined Benefit Plan constitutes an unsecured promise by the Company to make payments to participants upon vesting. Mr. Chopra is currently the only participant in the Defined Benefit Plan. Under the terms of his participation, Mr. Chopra is entitled to a total benefit of $14.5 million (as adjusted for certain CPI increases) payable over a multi-year period, which commenced January 1, 2024 with a final payment on April 1, 2030. The initial payment was $5.25 million and the remaining payments will be in quarterly installments. Mr. Chopra is fully vested in all benefits under the Defined Benefit Plan. In the event of Mr. Chopra’s death or disability, he or his dependents shall receive the present value of the remaining retirement benefits payable within 60 days following his death or disability, as applicable. In the event of Mr. Chopra’s Separation from Service (as defined in the Defined Benefit Plan) within 24 months following a Change in Control (as defined in the Defined Benefit Plan), Mr. Chopra shall be entitled to (i) the net present value of $6 million of his retirement benefit payable in a single lump sum within 90 days following his Separation from Service and (ii) the net present value of $4 million of his retirement benefit payable in the form of a single lump sum 90 days following the first anniversary of his Separation from Service, each subject to Section 409A of the Internal Revenue Code. In the event a Change in Control occurs after his Separation from Service during the payout of Mr. Chopra’s benefits, the present value of all remaining payments shall be paid in the form of a single lump sum within 90 days following the Change in Control. In the event of a Change in Control, whether before or after Mr. Chopra’s Separation from Service, the net present value of all remaining payments with respect to $4.5 million of his retirement benefit shall be paid in the form of a single lump sum within 90 days following the Change in Control. The following table sets forth information regarding the Defined Benefit Plan for the participating Named Executive Officer during fiscal year ended June 30, 2024(1). For a discussion of the valuation method and all material assumptions applied in quantifying the present value of the current accrued benefit, please see Note 13 to the Consolidated Financial Statements included in our Form 10-K for the year ended June 30, 2024.
PENSION BENEFITS
| NAME AND PRINCIPAL POSITION | NUMBER OF YEARS OF CREDITED SERVICE (#) | PRESENT VALUE OF ACCUMULATED BENEFIT ($) | PAYMENTS DURING LAST FISCAL YEAR ($) | | Deepak Chopra Chairman, President and Chief Executive Officer | 17 | 5,299,079 | 6,068,721 |
PENSION BENEFITS
(1) We have omitted from this table the column titled “Plan Name” because only the Defined Benefit Plan is covered by this table.
NONQUALIFIED DEFERRED COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION We adopted the Deferred Compensation Plan in May 2008, as amended and restated in April 2014. Under the Deferred Compensation Plan, a select group of our management or highly compensated employees (as designated by the Compensation Committee), including certain of our Named Executive Officers, may defer a specified percentage of their salary, bonuses and commissions and thereby defer taxation of these deferred amounts until actual payment of the deferred amounts in future years. The Named Executive Officers may elect to defer up to 80% of their base salary and up to 100% of other types of eligible compensation. The Deferred Compensation Plan also allows us to make discretionary contributions and matching contributions on behalf of eligible participants. Participating Named Executive Officers receive market-based returns on their deferred compensation amounts based on the performance of a variety of mutual fund-type investment vehicles chosen by them and which are similar to the investment vehicles made available to all employees participating in the Deferred Compensation Plan. Participants may at any time change their investment allocations among the investment vehicles made available under the Deferred Compensation Plan. The rates of return for the various investment vehicles for deferred amounts in the Deferred Compensation Plan in fiscal 2024 ranged from 2.9% to 37.7%. Distributions to participants may be made in a lump sum (or in installments if elected in accordance with the terms of the Deferred Compensation Plan) upon termination of employment, disability, a specified withdrawal date or death. The following table sets forth information regarding contributions into the Deferred Compensation Plan made by or for each of the participating Named Executive Officers during the fiscal year ended June 30, 2024:
NONQUALIFIED DEFERRED COMPENSATION
| NAME AND PRINCIPAL POSITION | EXECUTIVE CONTRIBUTIONS IN LAST FY ($) | COMPANY CONTRIBUTIONS IN LAST FY(1)(2) ($) | AGGREGATE EARNINGS IN LAST FY ($) | AGGREGATE WITHDRAWALS/ DISTRIBUTIONS ($) | AGGREGATE BALANCE AT LAST FYE ($) | | Alan Edrick Executive Vice President and Chief Financial Officer | 289,025 | 51,854 | 1,011,231 | — | 7,785,047 | | Ajay Mehra Executive Vice President of the Company and President, OSI Security Division | 49,179 | 49,179 | 353,971 | — | 2,506,966 | | Victor S. Sze Executive Vice President, General Counsel and Secretary | 44,755 | 44,755 | 401,491 | — | 2,834,665 | | Manoocher Mansouri, President, Optoelectronics and Manufacturing Division | 49,230 | 32,820 | 80,105 | — | 1,475,994 |
NONQUALIFIED DEFERRED COMPENSATION
(1) The amounts reported in the Company Contributions column are reported in the All Other Compensation column in the Summary Compensation Table above. (2) Represents matching contribution. No discretionary contributions were made in fiscal year 2024.
POTENTIAL PAYMENT UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
POTENTIAL PAYMENT UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL The following tables reflect the breakdown of potential payments and benefits upon termination or a change in control required under the Named Executive Officers’ current employment arrangements. The tables therefore assume that the terms of employment to which each Named Executive Officer is currently subject had been in effect on June 30, 2024, and that employment terminated on such date. The tables also assume that the price of our Common Stock, on which certain calculations in the following tables are made, was the closing price of our Common Stock on June 28, 2024, the last business day of the fiscal year ($137.52). Please also note that regardless of the manner in which a Named Executive Officer’s employment terminates, the officer is entitled to receive amounts earned during the term of employment. These amounts, which are not included in the following tables, include: (i) regular salary accrued as of the final date of employment; (ii) bonuses accrued as of the final date of employment; (iii) vacation and paid time off accrued as of the final date of employment; (iv) business expense reimbursements not yet paid as of the final date of employment; and (v) amounts contributed under our qualified and nonqualified deferred compensation plans. All disclosed amounts in the following tables are estimates only and do not necessarily reflect the actual amounts that would be paid to the Named Executive Officers, which amounts would only be known at the time that they become eligible for such payments. Subject to the foregoing, upon a change in control, Mr. Chopra would be entitled to the accelerated vesting of his stock awards valued at $47,650,267. In addition, upon a termination of employment, Mr. Chopra would become entitled to certain payments under the Defined Benefit Plan in accordance with the terms of such plan. Additional information about this plan is summarized above under the heading “Pension Benefits.” Also subject to the foregoing, the following table reflects the breakdown of potential payments and benefits upon termination or a change in control required under the respective employment agreements of Messrs. Edrick, Mehra, Sze and Mansouri.
POTENTIAL PAYMENT UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
| NAME AND PRINCIPAL POSITION | REASON FOR TERMINATION | SALARY ($) | BONUS ($) | ACCELERATED VESTING OF STOCK AWARDS ($) | CAR ALLOWANCE ($) | OUTPLACEMENT SERVICES ($) | TOTAL ($) | | Alan Edrick Executive Vice President and Chief Financial Officer | Good Reason or Without Cause | 1,038,240 | 1,656,453 | 6,820,717 | 6,000 | 6,000 | 9,527,410 | | | Good Reason or Without Cause in Connection with a Change in Control(1) | 1,038,240 | 1,656,453 | 14,873,063 | 6,000 | 6,000 | 17,579,756 | | Ajay Mehra Executive Vice President of the Company and President, OSI Security Division | Good Reason or Without Cause | 984,680 | 9,350,000 | 2,046,298 | 6,000 | 6,000 | 12,392,978 | | | Good Reason or Without Cause in Connection with a Change in Control(1) | 984,680 | 9,350,000 | 4,461,974 | 6,000 | 6,000 | 14,808,654 | | Victor S. Sze Executive Vice President, General Counsel and Secretary | Good Reason or Without Cause | 896,100 | 1,205,245 | 5,664,174 | 6,000 | 6,000 | 7,777,519 | | | Good Reason or Without Cause in Connection with a Change in Control(1) | 896,100 | 1,205,245 | 12,298,414 | 6,000 | 6,000 | 14,411,759 | | Manoocher Mansouri, President, Optoelectronics and Manufacturing Division | Good Reason or Without Cause | 328,570 | 131,667 | 1,137,015 | 6,000 | 6,000 | 1,609,252 | | | Good Reason or Without Cause in Connection with a Change in Control(1) | 328,570 | 131,667 | 2,466,146 | 6,000 | 6,000 | 2,938,383 |
POTENTIAL PAYMENT UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
(1) Under the terms of their employment agreements, in lieu of the total compensation to which the Named Executive Officer would be entitled in the event that he terminates his employment for good reason or the Company terminates his employment without cause following a change in control, the Named Executive Officer may instead elect to receive an alternate payment amount based on a calculation method described in his employment agreement.
POTENTIAL PAYMENT UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
| COMPENSATION COMMITTEE REPORT | | | | The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis provisions to be included in this Proxy Statement. Based on the reviews and discussions referred to above, the Compensation Committee recommends to the Board that the Compensation Discussion and Analysis referred to above be included in this Proxy Statement. | | | | COMPENSATION COMMITTEE | | | | Meyer Luskin, Chair | William F. Ballhaus | James Hawkins |
POTENTIAL PAYMENT UPON TERMINATION OF EMPLOYMENT OR CHANGE IN CONTROL
Security Ownership of Certain Beneficial Owners and Management
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the amount of shares of the Company beneficially owned as of October 16, 2024, unless otherwise indicated, by each of our directors and director nominees, each Named Executive Officer, and all directors, director nominees, and executive officers as a group:
DIRECTORS AND EXECUTIVE OFFICERS
| NAME OF BENEFICIAL OWNER(1) | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OF COMMON STOCK(2) (#) | PERCENT OF CLASS OF COMMON STOCK | | Deepak Chopra(3) | 370,629 | 2.2% | | Alan Edrick | 269,557 | 1.6% | | Ajay Mehra(4) | 43,427 | * | | Victor S. Sze(5) | 46,347 | * | | Manoocher Mansouri | 76,109 | * | | William F. Ballhaus(6) | 28,186 | * | | Kelli Bernard | 6,082 | * | | Gerald Chizever(7) | 9,701 | * | | James B. Hawkins | 4,100 | * | | Meyer Luskin(8) | 7,331 | * | | All directors and executive officers as a group (14 persons) | 873,945 | 5.2% |
DIRECTORS AND EXECUTIVE OFFICERS
* Represents less than 1.0% of the outstanding shares of our Common Stock (1) The address of each stockholder is c/o OSI Systems, Inc., 12525 Chadron Avenue, Hawthorne, CA 90250. (2) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of Common Stock which are purchasable under options which are currently exercisable, or which will become exercisable no later than 60 days after October 16, 2024, are deemed outstanding for computing the percentage of the person holding such options but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them. No shares are pledged as security. (3) Includes 15,000 shares owned by The Deepika Chopra Trust UDT, dated July 17, 1987. Deepak Chopra is the co-trustee of this irrevocable trust. In addition, includes 350,629 shares held jointly by Mr. Chopra and his wife, Nandini Chopra, and 5,000 shares held in the Nandini SLAT Trust. (4) Includes 9,683 shares owned by the Mehra Family Trust dated July 12, 2008. (5) Includes 5,639 shares held by the Victor So-Mein Sze & Angela Hsin-Chi Hsu Co-ttee Sze Trust U/T/A DTD 11/25/2014. (6) Includes 28,186 shares held in the Ballhaus Trust U/A 01/25/02 Dr. William Ballhaus Jr. and Jane K. Ballhaus Trustees. (7) Includes 9,701 shares held by The G & C Chizever Family Trust. Includes 7,331 shares held by The Meyer and Doreen Luskin Family Trust.