DEF 14A of Flexsteel Industries Inc, Oct 26, 2023

DEF 14A of Flexsteel Industries Inc

Filed Oct 26, 2023 · FY20230001140361-23-049719

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS Our Amended and Restated Articles of Incorporation permit the election of 13 directors. The Board currently consists of eight persons divided into three classes. At each annual meeting, the terms of one class of directors expire and persons are elected to that class for terms of three years or until their respective successors are duly qualified and elected or until their earlier director class reassignment, resignation, removal, retirement or termination. The Nominating and Governance Committee believes that as a group, the nominees below bring a diverse range of backgrounds, experiences and perspectives to the Board’s deliberations. Set forth below is information with respect to all Board members, including the nominees, their recent employment or principal occupation, a summary of their specific experience, qualifications, attributes or skills that led to the conclusion that they are qualified to serve as a director, the names of other public companies for which they currently serve as a director or have served as a director within the past five years, their period of service as a Flexsteel director and their age as of October 26, 2023. The Board believes that the directors listed below come from a wide variety of business backgrounds, possess highly ethical standards, uncompromising integrity, operate in the best interest of the shareholders, and the majority are independent as defined by the Nasdaq Stock Market listing standards. On October 9, 2023, Mary C. Bottie gave the Board notice that she would resign from the Board effective after the December 13, 2023, Board meeting. The Board has determined that with respect to the election of directors at the 2023 annual meeting, the Board will, after the effectiveness of Ms. Bottie’s resignation, consist of seven members and has nominated, based on the recommendation of the Nominating and Governance Committee, Matthew A. Kaness, Thomas M. Levine and Jeanne McGovern for election as Class I Directors of the Company. The Class I Directors’ next term expires at the 2026 annual meeting or upon their respective successors being elected and qualified or until their earlier director class reassignment, resignation, removal, retirement or termination. It is the intention of the proxies named herein to vote FOR these nominees unless otherwise directed in the proxy.

  2. DIRECTORS NOMINATED FOR ELECTION, CLASS I

    DIRECTORS NOMINATED FOR ELECTION, CLASS I

  3. DIRECTORS NOMINATED FOR ELECTION, CLASS I

    | Matthew A. Kaness Age 50 Director since 2019 | Mr. Kaness, since September 2022, has been the Chief Executive Officer of Goodwillfinds eCommerce, Inc., a social enterprise comprised of a re-commerce technology platform and secondhand marketplace under license from Goodwill Industries International, Inc. Previously, he was a member of the US Advisory Board of Afterpay, Ltd., a global technology-driven payments company (and now a subsidiary of Block Inc.), from 2018 to 2022. Mr. Kaness served as interim Chief Executive Officer of Lucky Brand Dungarees, Inc., a clothing manufacturer and marketer, from September 2019 to July 2020 and as Executive Chairman from January 2020 to July 2020. On July 3, 2020, Lucky Brand filed for protection under Chapter 11 of the federal bankruptcy laws, and on August 12, 2020, the U.S. Bankruptcy Court for the District of Delaware approved the purchase of Lucky Brand by SPARC Group LLC. Mr. Kaness was the President and Chief Executive Officer of ModCloth, Inc., a fashion e-commerce company, from 2015 to 2017, which was sold to Walmart. From 2017 to 2018, he was an officer in Walmart’s US e-commerce division. Previously, he was the Chief Strategy Officer at Urban Outfitters, Inc., an international fashion and lifestyle omni-channel retailer. Mr. Kaness holds a Bachelor of Science degree in Mechanical Engineering from the Catholic University of America and an MBA from the Darden Graduate School of Business at the University of Virginia. Mr. Kaness brings experience in corporate development, general management, e-commerce, and digital transformation to the Board. | | Thomas M. Levine Age 74 Director since 2010 | Mr. Levine has been an Independent Management Advisor from 1995 to present. Previously at Fostin Capital Corp., a venture capital investment management company, he held the position of Executive Vice President from 1982 to 1999. Prior experience includes Vice President of Foster Industries, Inc., a private investment company, from 1982 to 1994, and the corporate law firm of Berkman Ruslander Pohl Lieber & Engel from 1974 to 1982, where he was a Partner of the firm from 1980 to 1982. |

  4. DIRECTORS NOMINATED FOR ELECTION, CLASS I

    | | Mr. Levine has a Bachelor of Arts degree from Colgate University and a Juris Doctor degree from the University of Chicago Law School. Mr. Levine brings experience in general management, business, and legal matters to the Board. | | Jeanne McGovern Age 64 Director since 2022 | Ms. McGovern is a retired partner of Deloitte & Touche LLP, an international firm that provides audit, consulting, financial advisory, risk management, and tax services. During her tenure from 1980 to 2020, she had leadership responsibilities over audits of global companies in a wide range of industries and demonstrated expertise in financial reporting and internal controls. She also has significant experience with strategic acquisitions and divestitures, initial public offerings, and debt financing and refinancing transactions. Ms. McGovern is a director and chair of the audit committee and member of the nominating and corporate governance committee of Huntsman Corporation, a Fortune 500 differentiated chemical manufacturer headquartered in Houston, Texas. Ms. McGovern has also served on several not-for-profit boards. She is a member of the American Institute of Certified Public Accountants and the Washington Society of Certified Public Accountants and is a Certified Public Accountant in Massachusetts and Washington. Ms. McGovern has a BA in Accounting from Syracuse University. Ms. McGovern brings 40 years of audit and advisory experience to the board, as well as corporate governance experience through her work with corporate boards, including audit committees. |

  5. DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE

    DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE

  6. 2024 ANNUAL MEETING, CLASS II

    | Mary C. Bottie Age 65 Director since 2003 | Ms. Bottie was formerly a Motorola Inc. Vice President holding positions in general management, marketing, and training and education. During Ms. Bottie’s tenure from 1983 to 2007, she led a division of Motorola in the North America Enterprise and Canadian Government markets, directing all sales, field engineering and system integration personnel. Ms. Bottie also led the marketing organization for a $3 billion sector of the company. She was recognized for the creation of an award-winning sector-level crisis simulation program, global ethics program and leadership resulting in the Malcolm Baldridge National Quality Award. Ms. Bottie has a Bachelor of Science degree in Education from the University of Wisconsin. Ms. Bottie brings expertise in general management, global operations, marketing, and human resources to the Board. | | Kathryn P. Dickson Age 58 Director since 2021 | Ms. Dickson served as President of Manitoba Harvest, a global company that manufactures and markets plant-based-protein foods and beverages, from 2019 to 2020. Prior to Manitoba Harvest, Ms. Dickson served as Senior Vice President for Mattel, Inc., a global learning, development, and play company, and President of its American Girl subsidiary from 2016 through 2018. Prior to Mattel, Ms. Dickson served as Chief Marketing Officer for News America Marketing, a consumer-focused marketing business, from 2015 to 2016. Prior to News America Marketing, Ms. Dickson served in increasingly responsible roles over more than 23 years at General Mills, Inc., a global manufacturer and marketer of branded consumer foods. Her leadership there included Vice President/Marketing Excellence, and Vice President/Business Unit Director for global brands including Betty Crocker, Pillsbury, and Old El Paso. Ms. Dickson is currently a member of the Board of Directors of Black Rifle Coffee Company, where she serves as interim Chair, Lead Independent Director, Chair for the Compensation Committee, and is a member of the Nominating and Governance Committee. She was a member of the Cooper Tire & Rubber Board of Directors from 2018 to June 2021. Ms. Dickson has a Bachelor of Science degree from the United States Air Force Academy, and an MBA from UCLA. She served as an officer in the U.S. Air Force, where she achieved the rank of Captain. Ms. Dickson brings expertise in driving growth through omnichannel and digital strategies, global expansion, brand revitalization and innovation to the Board. |

  7. DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE

    DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE

  8. 2025 ANNUAL MEETING, CLASS III

    | William S. Creekmuir Age 68 Director since 2019 | Mr. Creekmuir has been a director since 2019. Mr. Creekmuir is the principal owner and President of Pinnacle Search Partners, LLC, a global executive search firm, and has served in that capacity since December 2015. Mr. Creekmuir has been the partial owner of Iconics Decor, LLC since October 2017, and became sole owner in June 2020. From March 2016 until October 12, 2023, he served as a director of Party City Holdco Inc., the leading party goods and Halloween specialty retailer by revenue in North America and the world’s largest vertically integrated supplier of decorated party goods, where he most recently served as Chair of its Audit Committee and a member of the Restructuring Committee. Mr. Creekmuir served as Executive Vice President and Chief Financial Officer of private equity-owned Simmons Bedding Company from 2000 to 2011, and publicly traded LADD Furniture, Inc., a furniture manufacturer, from 1992 to 2000. His earlier years were spent with KPMG LLP, where he was a Partner and held responsibilities in both the United States and Ireland. Mr. Creekmuir has a Bachelor of Science degree in Business Administration from The University of North Carolina at Chapel Hill. Mr. Creekmuir brings experience in corporate finance, accounting, talent management, and the home furnishings industry to the Board. | | M. Scott Culbreth Age 53 Director since 2021 | Mr. Culbreth has served as the President, Chief Executive Officer and director of American Woodmark Corporation, a publicly held cabinet manufacturer, since 2020. From 2014 to 2020, he served as American Woodmark’s Senior Vice President and Chief Financial Officer. Prior to American Woodmark, Mr. Culbreth served as the Chief Financial Officer at Piedmont Hardware Brands, a provider of home improvement and hardware products, from 2013 to 2014 and held various finance-related roles at Newell Brands, Inc., a global consumer goods company, from 2007 to 2013. Mr. Culbreth holds a bachelor’s degree in finance from Virginia Tech and an MBA from Washington University in St. Louis. Mr. Culbreth brings experience in corporate finance, accounting, and public company executive leadership to the Board. | | Jerald K. Dittmer Age 66 Director since 2018 | Mr. Dittmer joined the Board following his appointment to President and Chief Executive Officer of the Company in December 2018. During 2018, Mr. Dittmer was the Chief Executive Officer of Austin Business Furniture, a regional office furniture dealership. From 2008 to 2017, Mr. Dittmer served as Executive Vice President of HNI Corporation, a publicly traded office furniture manufacturer and the world’s leading hearth products company, and President of The HON Company, a large office furniture designer and manufacturer serving independent dealers, wholesalers and national suppliers. In these roles he drove overall strategy to transform go-to-market capabilities, including its e-commerce initiatives, which resulted in significant profitable sales growth. Previously, Mr. Dittmer held several leadership roles, including Chief Financial Officer at HNI Corporation, from 1991 to 2008. As Chief Financial Officer, he was responsible for HNI’s domestic and international finance, accounting, treasury, tax, enterprise risk management, internal audit, and information technology. He also played an instrumental role in accelerating the company’s growth rate through acquisitions in the U.S. and Canada. Mr. Dittmer is a graduate of Iowa State University, where he obtained a Bachelor of Science in Industrial Administration with an emphasis in accounting and has also completed executive education programs at the University of Michigan and Northwestern University. Mr. Dittmer brings more than 30 years of experience in the furniture industry, including top leadership positions overseeing corporate operations, planning, acquisitions, and finance to the Board. |

  9. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION Our non-executive directors received annual compensation as shown in the table below. There are no additional meeting fees. The Chairman of the Board and members of our committees receive additional compensation due to the workload and broad responsibilities of these positions. All compensation is paid quarterly. The following table sets forth the cash and non-cash compensation for fiscal 2023 awarded to or earned by each of our directors who is not also a named executive officer.

  10. DIRECTOR COMPENSATION

    | Name(1) | Fees earned or paid in cash ($)(2) | Stock awards ($)(3) | Total ($) | | Thomas M. Levine – Board Chair | 147,500 | 79,991 | 227,491 | | Mary C. Bottie | 72,000 | 79,991 | 151,991 | | William S. Creekmuir | 77,000 | 79,991 | 156,991 | | M. Scott Culbreth | 70,000 | 79,991 | 149,991 | | Kathryn P. Dickson | 67,000 | 79,991 | 146,991 | | Matthew A. Kaness | 71,500 | 79,991 | 151,491 | | Jeanne McGovern(4) | 49,375 | 62,497 | 111,872 | | Eric S. Rangen(5) | 31,250 | 34,992 | 66,242 |

  11. DIRECTOR COMPENSATION

    | (1) As of June 30, 2023, each currently serving director who is not an employee had the following stock options outstanding; Mr. Levine, 5,500. |

  12. DIRECTOR COMPENSATION

    | (2) Each non-executive director is paid a retainer at the rate of $60,000 per year ($55,000 prior to January 1, 2023). In addition, the Chairman of the Board is paid an additional retainer of $90,000 per year. The Audit and Ethics Committee Chair is paid a retainer of $15,000 per year. The Compensation Committee Chair is paid a retainer of $10,000 per year. The Nominating and Governance Committee Chair is paid a retainer of $10,000 per year ($8,000 prior to January 1, 2023). Audit and Ethics Committee members receive an additional retainer of $7,500 per year. Compensation Committee members receive an additional retainer of $5,000 per year. Nominating and Governance Committee members receive an additional retainer of $5,000 per year ($4,000 prior to January 1, 2023). |

  13. DIRECTOR COMPENSATION

    | (3) Each director receives an annual stock grant with a value of $90,000 ($70,000 prior to January 1, 2023), rounded to the nearest share and delivered in quarterly installments, with no additional vesting requirements. Directors are expected to accumulate Flexsteel shares of common stock valued at four times (three times prior to January 1, 2023) the annual Director cash compensation. |

  14. DIRECTOR COMPENSATION

    | (4) Ms. McGovern was appointed to the Board on September 30, 2022. |

  15. DIRECTOR COMPENSATION

    | (5) Mr. Rangen resigned from the Board effective December 14, 2022. |

  16. Committees of the Board

    Committees of the Board Subject to our Bylaws, applicable law and regulatory requirements, the Board may establish additional or different committees from time to time. Our Board has established three standing committees: Audit and Ethics Committee, Compensation Committee, and Nominating and Governance Committee. The charters of all three committees are available at https://ir.flexsteel.com/corporate-governance/governance-overview. The principal duties of the three committees are set forth below. Audit and Ethics Committee – Appoints and confers with the independent registered public accounting firm on various matters, including the scope and results of the audit; authorizes special reviews or audits; reviews and approves quarterly and annual SEC filings; reviews internal auditing procedures and the adequacy of internal controls; and reviews policies and practices relating to compliance with laws, conflicts of interest and ethical standards of the Company. The committee held five meetings during the fiscal year ended June 30, 2023. The committee members are William S. Creekmuir - Chair, M. Scott Culbreth and Jeanne McGovern. Jeanne McGovern joined the committee on September 30, 2022. The Board has determined that William S. Creekmuir, M. Scott Culbreth and Jeanne McGovern qualify as “audit committee financial experts” within the meaning of the Securities Exchange Act of 1934, as amended, referred to as the “1934 Act.” Compensation Committee – Reviews performance, compensation and benefits of all executive officers; approves all equity compensation; develops and maintains succession planning for executive officers; and makes recommendations regarding Board compensation. The committee from time to time delegates authority to the chief executive officer to grant a limited number of awards, previously under the Omnibus Stock Plan and currently under the 2022 Equity Incentive Plan, to persons that are not executive officers. During the 2022 calendar year, the committee obtained advice from the independent consulting firm Meridian Compensation Partners, LLC, referred to as “Meridian” which was hired by the committee. The committee sought Meridian’s advice on, (i) defining the Company’s peer group for purposes of compensation benchmarking, (ii) assessing the Company’s officer compensation philosophy and defining a market-competitive total compensation package for officers, (iii) reviewing the Company’s director compensation philosophy and assessing the market competitiveness of Board compensation, and (iv) new equity incentive plan development. The committee asked Meridian with respect to its assistance with defining officer compensation, that the recommendation include the ability to establish variable pay for performance targets that incentivize desired business results and have a reasonable probability of attainment, while clearly aligning management’s interests and shareholder value. The committee held five meetings during the fiscal year ended June 30, 2023. The committee members are Mary C. Bottie – Chair, M. Scott Culbreth, Kathryn P. Dickson and Matthew A. Kaness. Nominating and Governance Committee – Identifies and reviews qualifications of new director candidates; recommends new directors and conducts new Board orientation; evaluates Board and individual director performance; develops and recommends a succession plan for the Board; recommends composition of all committees; reviews and recommends all Governance practices, policies and procedures of the Board, including environmental, social and governance (ESG); conducts ongoing education for Board members; reviews all Shareholder proposals and recommends responses. The committee held eight meetings during the fiscal year ended June 30, 2023. The committee members are Matthew A. Kaness – Chair, Mary C. Bottie, William S. Creekmuir and Kathryn P. Dickson.

  17. Stock Option, Restricted Stock Unit, and Restricted Share Granting Policy

    Stock Option, Restricted Stock Unit, and Restricted Share Granting Policy The Compensation Committee has formalized its stock option, unit and share granting practices by adopting a policy for the grant of stock options, restricted units and restricted shares. The policy reflects the Compensation Committee’s long-standing approach to grants described in the Executive Compensation section under the Omnibus Stock Plan and the 2022 Equity Incentive Plan. In addition, the policy provides, among other things, that all grants must be approved by the Compensation Committee or its designee; and the exercise price for any stock options granted will be equal to the last sale price per share of our common stock as reported on The Nasdaq Stock Market on the grant date. The policy also specifies procedures for granting stock options, restricted units or restricted shares to newly hired executive officers; and that any program, plan or practice to time or to select the grant dates of stock options, restricted units or restricted shares in coordination with the release by us of material non-public information is prohibited.

  18. Summary Compensation Table

    Summary Compensation Table During fiscal year 2023, the Company had three named executive officers. The following table sets forth the cash and non-cash compensation, for the fiscal years so indicated awarded to or earned by: (i) the individual serving as the Company’s principal executive officer (“PEO”); and (ii) the Company’s two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year.

  19. Summary Compensation Table

    | Name and Principal Position | Year | Salary $ | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Comp ($)(3) | All Other Comp ($)(4) | Total ($) | | Jerald K. Dittmer President and Chief Executive Officer | 2023 | 735,000 | — | 1,392,227 | — | 890,820 | 43,990 | 3,062,037 | | | 2022 | 735,000 | — | 918,723 | — | 291,060 | 41,279 | 1,986,061 | | Derek P. Schmidt Chief Financial Officer and Chief Operating Officer | 2023 | 446,000 | — | 585,116 | — | 337,845 | 46,087 | 1,415,048 | | | 2022 | 437,000 | — | 371,450 | — | 108,158 | 26,476 | 943,084 | | Timothy P. Newlin Vice President of Strategic Business Development | 2023 | 315,000 | — | 260,968 | — | 190,890 | 30,742 | 797,600 |

  20. Summary Compensation Table

    | (1) The amounts shown for fiscal year 2023 include the grant date fair value of three-year performance share awards granted under the LTIP and restricted units awarded to certain named executive officers. No performance shares will be issued unless the minimum specific performance goals set by the Compensation Committee are met. The 2023 three-year performance period is July 1, 2022 – June 30, 2025. The 2022 three-year performance period is July 1, 2021 – June 30, 2024. Shares earned, if any, will be issued following each respective three-year performance period. The amounts include the grant date fair value of the performance share awards assuming achievement of the target performance goals. The grant date fair value is determined by taking total units granted for the performance period at target multiplied by the closing market price on date of grant. The maximum share award value that could be issued for Mr. Dittmer is $1,190,690 for 2023, for Mr. Schmidt is $498,172 for 2023, and for Mr. Newlin is $223,187 for 2023. The amounts shown in the table for fiscal 2023 include the grant date fair value of restricted stock units for Mr. Dittmer – $796,882; for Mr. Schmidt – $336,030; and for Mr. Newlin – $149,375. The grant date fair value is determined by taking total restricted stock and restricted stock units granted multiplied by the closing market price on date of grant. |

  21. Summary Compensation Table

    | (2) No option awards were granted in fiscal years 2023 and 2022. |

  22. Summary Compensation Table

    | (3) The amounts shown represent the cash earned under the Company’s Cash Incentive compensation plan for the fiscal year. |

  23. Summary Compensation Table

    | (4) The table below presents an itemized account of “All Other Compensation” provided in fiscal 2023 to the named executive officers: |

  24. Summary Compensation Table

    | Name | Year | Tax Preparation $ | Country Club Dues ($) | Supplemental Medical ($) | Furniture Program ($) | 401K Match ($) | Total All Other Comp ($) | | J. K. Dittmer | 2023 | — | — | 15,831 | 10,909 | 17,250 | 43,990 | | | 2022 | 2,427 | 8,908 | 15,444 | — | 14,500 | 41,279 | | D. P. Schmidt | 2023 | — | — | 8,506 | 20,971 | 16,610 | 46,087 | | | 2022 | — | — | 11,747 | 3,804 | 10,925 | 26,476 | | T. P. Newlin | 2023 | 2,260 | — | 6,441 | 5,895 | 16,146 | 30,742 |

  25. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table sets forth certain information relating to equity awards outstanding at June 30, 2023, for each of our named executive officers.

  26. Outstanding Equity Awards at Fiscal Year-End

    | | Option Award | | | | | Stock Award | | | | | Name | Option Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#)(1) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price | Option Expiration Date(2) | Number of Shares or Units of Stock That Have Not Vested (#)(3) | Market Value of Shares of Units or Stock That Have Not Vested ($)(4) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(5) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | | J. K. Dittmer | 7/1/2020 | 23,256 | | 12.77 | 7/1/2030 | 50,093 | 957,277 | 87,648 | 1,674,953 | | | 8/30/2019 | 30,000 | | 15.14 | 8/30/2029 | | | | | | | 12/28/2018 | 85,000 | | 21.96 | 12/28/2028 | | | | | | D. P. Schmidt | 7/1/2020 | 13,566 | | 12.77 | 7/1/2030 | 20,973 | 400,794 | 31,838 | 608,424 | | | 4/6/2020 | 108,884 | | 9.97 | 4/6/2030 | | | | | | T. P. Newlin | 1/15/2019 | 6,020 | | 24.98 | 1/15/2029 | 9,520 | 181,927 | 17,422 | 332,934 | | | 9/13/2018 | 2,286 | | 32.80 | 9/13/2028 | | | | | | | 9/8/2017 | 1,105 | | 45.21 | 9/8/2027 | | | | | | | 9/1/2016 | 737 | | 47.45 | 9/1/2026 | | | | | | | 7/1/2015 | 464 | | 43.09 | 7/1/2025 | | | | | | | 12/8/2014 | 500 | | 31.06 | 12/8/2024 | | | | | | | 12/9/2013 | 500 | | 27.57 | 12/9/2023 | | | | |

  27. Outstanding Equity Awards at Fiscal Year-End

    | (1) Options include both incentive stock options and non-statutory stock options. |

  28. Outstanding Equity Awards at Fiscal Year-End

    | (2) Options expire on the tenth anniversary of the grant date. |

  29. Outstanding Equity Awards at Fiscal Year-End

    | (3) Mr. Dittmer’s unvested restricted stock units vest as follows: 29,451 vest on June 30, 2024; and 20,642 vest on June 30, 2025. Mr. Schmidt’s unvested restricted stock units vest as follows: 12,337 vest on June 30, 2024; and 8,636 vest on June 30, 2025. Mr. Newlin’s unvested restricted stock units vest as follows: 5,651 vest on June 30, 2024; and 3,869 shares vest on June 30, 2025. |

  30. Outstanding Equity Awards at Fiscal Year-End

    | (4) The market value of unvested stock awards is based on the closing stock price on June 30, 2023, which was $19.11. |

  31. Outstanding Equity Awards at Fiscal Year-End

    | (5) The amounts shown represent the potential three-year performance share unit awards under the Long-Term Incentive Plan during the three, three-year performance periods in effect during fiscal year 2023. No shares will be issued unless the minimum specific performance goals set by the Compensation Committee are met. Shares earned, if any, will be issued following each respective three-year performance period. Mr. Dittmer, Mr. Schmidt and Mr. Newlin participated in the fiscal year 2023 – 2025, 2022 – 2024 and 2021 - 2023 performance plan periods. Unearned performance shares are shown below assuming target performance for grants made in fiscal years 2023, 2022, and 2021: |

  32. Outstanding Equity Awards at Fiscal Year-End

    | Name | Fiscal Year 2023(a) | Fiscal Year 2022(b) | Fiscal Year 2021(c) | Total | | J. K. Dittmer | 30,964 | 12,970 | 43,714 | 87,648 | | D. P. Schmidt | 12,955 | 5,244 | 13,639 | 31,838 | | T. P. Newlin | 5,804 | 2,625 | 8,993 | 17,422 |

  33. Outstanding Equity Awards at Fiscal Year-End

    | (a) Three-year performance period ends June 30, 2025 |

  34. Outstanding Equity Awards at Fiscal Year-End

    | (b) Three-year performance period ends June 30, 2024 |

  35. Outstanding Equity Awards at Fiscal Year-End

    | (c) Three-year performance period ended June 30, 2023 |

  36. Termination or Change in Control

    Termination or Change in Control Severance Plan for Management Employees. The Severance Plan for Management Employees (the “Severance Plan”) provides for the payment of severance to eligible employees in the event of an involuntary termination of an eligible employee’s employment initiated by the Company (a “Qualifying Termination”). An eligible employee is an employee of the Company or its affiliates who is either (i) an executive reporting directly to the Chief Executive Officer of the Company on other than an interim or temporary basis, or (ii) an individual designated as an eligible employee by the plan administrator or its delegate, within its sole discretion (an “Eligible Employee”). A Qualifying Termination does not include (i) termination for cause, (ii) an Eligible Employee’s voluntary resignation or retirement from the Company, (iii) an Eligible Employee’s termination as a result of the Eligible Employee’s death or disability, or (iv) an Eligible Employee’s failure to return to work within the time required following an approved leave of absence. Subject to the terms and conditions of the Severance Plan, an Eligible Employee will receive severance payments of:

  37. Termination or Change in Control

    | • | the Eligible Employee’s base salary continuation for 12 months; |

  38. Termination or Change in Control

    | • | a lump sum payment equal to the COBRA premiums necessary to continue the Eligible Employee’s and his or her dependents’ health insurance coverage in effect on the Eligible Employee’s termination date for a period of 12 months, without regard to whether the Eligible Employee or his or her dependents elect continuation coverage under COBRA; and |

  39. Termination or Change in Control

    | • | a lump sum payment equal to the amount of cash compensation that would be payable to the Eligible Employee under the CIP for the fiscal year during which the termination date occurs if the Eligible Employee’s employment had continued through the end of such fiscal year, computed assuming that the “target” level of performance had been achieved, without regard to any discretionary adjustments that would have the effect of reducing the amount of the annual incentive bonus (other than discretionary adjustments applicable to all similarly-situated employees who did not terminate employment). |

  40. Termination or Change in Control

    The plan administrator may remove an individual as an Eligible Employee prior to a Qualifying Termination. An Eligible Employee may not be removed as an Eligible Employee from participation in the Severance Plan on or after a Qualifying Termination. The Company is entitled to clawback all Severance Payments made to an Eligible Employee under the Severance Plan in the event the Eligible Employee breaches any provision of any non-competition, non-solicitation, non-disparagement, confidentiality, or assignment of inventions covenants contained in any agreement between the Eligible Employee and the Company. To receive any severance payments, an Eligible Employee must execute and deliver a severance agreement which provides for a release of claims against the Company, a confidentiality provision and a 12-month non-competition and non-hire clause. The benefits under the Severance Plan replace and supersede all prior existing severance payments applicable to Eligible Employees, whether formal or informal, written or oral. Cash Incentive Compensation Plan and Long-Term Incentive Compensation Plan. Under the terms of the Company’s CIP and LTIP and applicable award agreements, named executive officers are entitled to receive payments as a result of a termination due to death or disability, on or after reaching age 62, or due to an involuntary termination for other than cause in the event of a change in control. The amount to be paid to a participant in such events is based on the pro rata number of days worked during the performance period. The awards will be paid in a lump sum after the end of the performance period, except under certain circumstances as determined by the Compensation Committee. The award agreements for both the CIP and the LTIP provide for the forfeiture of payments received up to six months prior to termination in the event the participant competes with the Company within two years of termination or improperly uses Company confidential information. The Company is also entitled to clawback any awards under the CIP and LTIP pursuant to the terms of the Company’s Incentive Compensation Clawback Policy. Omnibus Stock Plan. Under the terms of the Omnibus Stock Plan and applicable award agreements, the unvested restricted stock units, restricted stock and options held by a named executive officer will vest in full upon the death or disability of such person or, for the fiscal years prior to 2022 upon a change in control. Beginning with fiscal 2022, in the event of a change in control, the award will only vest due to an involuntary termination for other than cause. The award agreements for the Omnibus Stock Plan provide for the forfeiture of payments received up to six months prior to termination in the event the participant competes with the Company within two years of termination or improperly uses Company confidential information. The Company is also entitled to clawback any awards under the Omnibus Stock Plan pursuant to the terms of the Company’s Incentive Compensation Clawback Policy. 2022 Equity Incentive Plan. Under the terms of the 2022 Equity Incentive Plan (“2022 Plan”) award agreements, the unvested restricted stock units and performance share units held by an executive officer will vest upon the death or disability of such person or for a termination other than for cause, upon the individual reaching age 55 and a minimum length of service of 10 years. The amount vested in such events is based on the pro rata number of days worked during the vesting period or performance period, as applicable. Subject to the Committee’s discretion and the applicable provisions in the event of a merger or change in control, the vesting of options granted under the 2022 Plan does not accelerate upon termination of employment, including as a result of death or disability. The 2022 Plan does not provide for the automatic vesting of awards in connection with a merger or change in control where a successor corporation assumes the awards. In the event of a merger or change in control, each outstanding award will be treated as the Compensation Committee determines, except that if a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any outstanding award, then such award will fully vest, all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100% of target levels, and such award will become fully exercisable, if applicable, for a specified period prior to the transaction. In the event of a merger or change in control and the successor corporation does assume or substitute the award and the participant is involuntarily terminated without cause within 12 months of the merger or change in control, the awards will generally be treated in the same manner as if the awards had not been assumed or substituted. The 2022 Plan award agreements provide for the forfeiture of payments received up to six months prior to termination in the event the participant competes with the Company within two years of termination or improperly uses Company confidential information. The Company is also entitled to clawback any awards under the Omnibus Stock Plan pursuant to the terms of the Company’s Incentive Compensation Clawback Policy.

  41. 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, we are providing the following information about the relationship between “compensation actually paid” (or “CAP”) to our CEO as principal executive officer (or “PEO) and to our other NEOs and certain metrics of financial performance of the Company. The following table shows the total compensation for our NEOs for the past two fiscal years as set forth in the Summary Compensation Table, the CAP to our CEO as PEO, and, on an average basis, our other NEOs, and our total shareholder return (“TSR”). CAP figures do not reflect the actual amount of compensation earned by or paid to our NEOs during the applicable year as significant portions of this compensation depend on the achievement of performance criteria in subsequent fiscal periods.

  42. Pay Versus Performance

    | Year(1) | Summary compensation table total for PEO(2) | Compensation actually paid to PEO(3) | Average summary compensation table total for non-PEO named executive officers(2) | Average compensation actually paid to non-PEO named executive officers(3) | Value of initial fixed $100 investment based on: total shareholder return(4) | Net income | | 2023 | $3,062,037 | $2,952,955 | $1,106,324 | $1,171,216 | $50 | $14,778,000 | | 2022 | $1,986,061 | ($1,545,275) | $943,084 | ($49,524) | $46 | $1,853,000 |

  43. Pay Versus Performance

    | (1) Mr. Dittmer served as the Company’s Chief Executive Officer for the entirety of 2022 and 2023. Our non-PEO NEOs for 2022 were Mr. Schmidt and for 2023 they were Mr. Schmidt and Mr. Newlin. |

  44. Pay Versus Performance

    | (2) Amounts reported in this column represent the total compensation reported in the Summary Compensation Table for the applicable year. |

  45. Pay Versus Performance

    | (3) To calculate CAP under SEC disclosure rules, adjustments were made to the amounts reported in the Summary Compensation Table for the applicable year and the reconciliations of such adjustments are set forth in the table below. |

  46. Pay Versus Performance

    | | PEO | | NEOs - Average | | | | 2023 | 2022 | 2023 | 2022 | | Deduction for Amounts Reported under the “Stock Awards” Column in the Summary Compensation Table | ($1,392,227) | ($918,723) | ($423,042) | ($371,450) | | Deduction for Amounts Reported under the “Option Awards” Column in the Summary Compensation Table | $ — | $— | $— | $— | | Increase for Fair Value of Awards Granted during year that Remain Unvested as of Year end | $1,383,755 | $389,106 | $420,468 | $157,320 | | Increase for Fair Value of Awards Granted during year that Vest during year | $ — | $— | $— | $— | | Increase/deduction for Change in Fair Value from Prior Year-end to current Year-end of Awards Granted Prior to year that were Outstanding and Unvested as of Year-end | $72,517 | ($2,539,048) | $19,840 | ($670,670) | | Increase/deduction for Change in Fair Value from Prior Year-end to Vesting Date of Awards Granted Prior to year that Vested during year | ($16,394) | ($484,854) | $67,793 | ($107,808) | | Deduction of Fair Value of Awards Granted Prior to year that were Forfeited during year | ($198,247) | $— | ($26,314) | $— | | Increase based upon Incremental Fair Value of Awards Modified during year | $— | $— | $— | $— | | Increase based on Dividends or Other Earnings Paid during year prior to Vesting Date of Award | $41,514 | $22,183 | $6,147 | $— | | +Total Adjustments | ($109,082) | ($3,531,336) | $64,892 | ($992,608) |

  47. Pay Versus Performance

    | (4) Pursuant to rules of the SEC, the comparison assumes $100 was invested on July 1, 2021. Historic stock price performance is not necessarily indicative of future stock price performance. |

  48. DIRECTORS AND EXECUTIVE OFFICERS

    DIRECTORS AND EXECUTIVE OFFICERS The table below sets forth the shares of the Company’s common stock beneficially owned by the Company’s directors, the named executive officers, and by all directors and executive officers as a group as of October 16, 2023. Unless otherwise indicated, to the best knowledge of the Company, all persons named in the table have sole voting and investment power with respect to the shares shown.

  49. DIRECTORS AND EXECUTIVE OFFICERS

    | Name | Title | Amount of Common Stock Beneficially Owned (#)(1) | Percent of Common Stock Outstanding | | Derek P. Schmidt | Chief Operating Officer and Interim Chief Financial Officer | 318,093 | 6.0% | | Jerald K. Dittmer | President and Chief Executive Officer, Director | 266,747 | 5.0% | | Timothy P. Newlin | Vice President, Strategic Business Development | 44,322 | 0.9% | | Matthew A. Kaness | Director | 43,700 | 0.8% | | Thomas M. Levine | Director | 33,358 | 0.6% | | Mary C. Bottie | Director | 27,103 | 0.5% | | William S. Creekmuir | Director | 25,289 | 0.5% | | Kathryn P. Dickson | Director | 17,553 | 0.3% | | M. Scott Culbreth | Director | 7,689 | 0.1% | | Jeanne McGovern | Director | 4,717 | 0.1% | | All Directors and Executive Officers as a Group (13) | | 872,999 | 15.9% |

  50. DIRECTORS AND EXECUTIVE OFFICERS

    | (1) Includes the following number of shares, which may be acquired as of October 16, 2023, or within 60 days of such date by exercise of stock options: Mr. Schmidt – 122,450; Mr. Dittmer – 138,256; Mr. Newlin – 11,612; Mr. Levine – 5,500; All Directors and Executive Officers as a Group – 287,056. |