DEF 14A of Clearfield, Inc.
Filed Jan 16, 2025 · FY20240001171843-25-000278
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS Eight directors will be elected at the Annual Meeting to serve until the next Annual Meeting of Shareholders or until their successors have been elected and shall qualify. Proxies cannot be voted for a greater number of persons than the number of nominees named. Pursuant to our bylaws, the authorized number of directors is set at ten and will be reduced to eight effective as of the Annual Meeting coincident with the expiration of the current terms of Patrick F. Goepel and Roger G. Harding. The Board of Directors has nominated for election the eight persons named below. All eight nominees are currently serving as directors of Clearfield. The persons acting as proxies intend to vote the proxies held by them in favor of the nominees named below as directors, unless otherwise directed. Should any nominee for director become unable to serve as a director for any reason, the proxies have indicated they will vote for such other nominee as the Board of Directors may propose. The Board of Directors has no reason to believe that any candidate will be unable to serve if elected and each has consented to being named a nominee. We know of no arrangements or understandings between a director or nominee and any other person pursuant to which he or she has been selected as a director or nominee. There is no family relationship between any of the nominees, our directors or our executive officers except that Ms. Beranek and Mr. Hill are related through the marriage of their daughter and son, respectively.
Information Regarding Nominees
Information Regarding Nominees Set forth below is biographical and other information with respect to each nominee, as well as a discussion of the specific experience, qualifications, attributes, and skills that led to the conclusion that the nominee should serve as a director of Clearfield at this time.
Information Regarding Nominees
| Cheryl Beranek Age: 62 Director Since: December 2007 Committees: ● None | Professional Background and Experience | | | | ● | President and Chief Executive Officer, Clearfield, Inc. (2007 – present) | | | ● | President, APA Cables and Networks, Inc., a cable assembly and contract manufacturing operation and former subsidiary of Clearfield (2003 – 2007) | | | ● | President, Americable, a niche-market provider of fiber termination and distribution equipment (2002 - 2003) | | | ● | Chief Operating Officer, Americable (2001 - 2002) | | | ● | Vice President of Marketing, Transition Networks Inc., a manufacturer of networking equipment for the worldwide fiber optic premise market (1996 – 2001) | | | Qualifications | | | | Ms. Beranek is qualified to serve on the Clearfield Board of Directors because she brings to the Board a keen understanding of our business and industry developed through her tenure as our President and Chief Executive Officer and in her previous position as the President of our former subsidiary. Additionally, Ms. Beranek’s role as our President and Chief Executive Officer allows her to provide the Board with her unique insight as a member of management on our business and our operations. | | | | Other Directorships | | | | ● | Director, Key Tronic Corporation (Nasdaq: KTCC) (January 2024 – present) | | | ● | Director, CyberOptics Corporation (Nasdaq: CYBE) (May 2020 – November 2022) (CyberOptics was acquired by Nordson Corporation in November of 2022) |
Information Regarding Nominees
| Charles N. Hayssen Age: 73 Director Since: 2008 Committees: ● Audit (Chair) ● Nominating and Corporate Governance | Professional Background and Experience | | | | ● | President, Safeway Driving Schools, a privately held provider of driver’s education services (2009 – August 2021) | | | ● | Private investor (2007 – 2008) | | | ● | Chief Operating Officer, AllOver Media, Inc., a privately-held out-of-home media company (2004 – 2007) | | | ● | Chief Financial Officer, ThinkEquity Partners LLC, an equity capital markets firm (2002 – 2004) | | | Qualifications | | | | Mr. Hayssen brings strong executive management and financial management experience to the Board, as well as experience earlier in his career as a director and audit committee chair of a publicly traded company, all of which qualify him to serve as a director of Clearfield. In addition, Mr. Hayssen qualifies as an audit committee financial expert. | | | | Other Directorships | | | | ● | None |
Information Regarding Nominees
| Donald R. Hayward Age: 67 Director Since: 2007 Committees: ● Audit ● Nominating and Corporate Governance (Chair) | Professional Background and Experience | | | | ● | President, Schaffer Manufacturing, a privately held metal fabrication manufacturing company serving a variety of industries, including telecommunications (September 2017 – October 2020) | | | ● | Executive advisor, Schaffer Manufacturing (September 2016 – August 2017; November 2020 – April 2021) | | | ● | President, Engel Diversified Industries, a privately held manufacturer of fabricated metal products serving multiple industries (2006 – 2017) | | | ● | Director of Corporate Services, Minnesota Technology, Inc., a publicly funded, private non-profit in support of Minnesota’s technology community (1997 – 2006) | | | Qualifications | | | | Mr. Hayward’s executive leadership experience, his familiarity with the business and operations of a manufacturing company developed through his service at Schaffer Manufacturing and Engel Diversified Industries, and his background in technology developed through his service at Minnesota Technology, where he specialized in business growth, concentrating on strategic and leadership development, qualify him to serve as a director of Clearfield, where, among things, he concentrates on board-level matters relating to ESG, succession planning, and strategic development. | | | | Other Directorships | | | | ● | None |
Information Regarding Nominees
| Walter L. Jones, Jr. Age: 59 Director Since: December 2021 Committees: ● Compensation ● Nominating and Corporate Governance | Professional Background and Experience | | | | ● | Advisor, Harmoni Towers, an owner, operator, and builder of mission-critical communications infrastructure (August 2021 – present) | | | ● | Independent board advisor and operations consultant (2015 – present) | | | ● | Vice President of Network Transformation, Verizon Communications Inc. (NYSE: VZ), one of the world’s leading providers of communications, technology, information and entertainment products and services to consumers, businesses, and government entities (2015) | | | ● | Region President of Consumer Mass Business, Verizon Communications Inc. (2013 – 2015) | | | ● | Chief Technology Officer/West Area Vice President of Network, Verizon Wireless Inc., a subsidiary of Verizon Communications Inc. (2008 – 2013) | | | Qualifications | | | | Mr. Jones’s deep background in telecommunications operations and technology, along with his strong understanding of a Tier 1 telecommunications company, qualify him to serve as a director of Clearfield. Mr. Jones is recognized as NACD Directorship Certified by the National Association of Corporate Directors. | | | | Other Directorships | | | | ● | None |
Information Regarding Nominees
| Catherine T. Kelly Age: 63 Director Since: December 2024 Committees: ● Audit ● Nominating and Corporate Governance | Professional Background and Experience | | | | ● | Regional President and Executive Vice President, Minnesota Market, PNC Financial Services Group, Inc. (NYSE: PNC), the fifth largest commercial bank in the United States by assets (2017 – December 2023) | | | ● | President and Chief Executive Officer and investor, Minnesota Bank & Trust, a chartered community bank (2007 – 2017) | | | ● | Region President, Financial Services Director, Wealth Management Director, Bremer Trust President, Bremer Financial Corporation, a regional financial services company (2002 – 2007) | | | ● | District Manager/Vice President, Corporate Banking, US Bancorp (NYSE: USB), the fourth largest commercial bank in the United States by assets (2001 – 2002) | | | ● | Group Manager/Vice President, Corporate Banking, US Bancorp (1999 – 2001) | | | Qualifications | | | | Ms. Kelly has extensive experience as a finance executive who has led, built and turned around significant units in two large national banks, a regional community bank, and a start-up bank. She also has substantial experience in governance and community service as a former director of the Federal Reserve Bank of Minneapolis and as a current or former director of several private and non-profit organizations. These attributes qualify her to serve as a director of Clearfield. In addition, Ms. Kelly qualifies as an audit committee financial expert. | | | | Other Directorships | | | | ● | None |
Information Regarding Nominees
| Ronald G. Roth Age: 79 Director Since: 2002 Chairman Since: 2002 Committees: ● Compensation | Professional Background and Experience | | | | ● | Chairman of the Board and investor, Phillips Recycling Systems, a privately-held recycler of scrap and waste materials (1990 – 2007) | | | ● | Chairman of the Board and investor, Access Cash International LLC, a privately-held provider of ATMs and related processing and financial services (1995 to 2000) | | | ● | Chairman of the Board, CEO and investor, Waste Systems Corp., a privately-held waste hauling and disposal company (1970 – 1995) | | | Qualifications | | | | Mr. Roth is qualified to serve on the Clearfield Board of Directors because he brings to the Board a strong background in executive management, mergers and acquisitions, business development and marketing through his service for more than 35 years as a Chairman of the Board, executive and owner of several companies. | | | | Other Directorships | | | | ● | None |
Information Regarding Nominees
| Ademir Sarcevic Age: 49 Director Since: December 2024 Committees: ● Audit ● Compensation | Professional Background and Experience | | | | ● | Vice President, Chief Financial Officer and Treasurer, Standex International Corporation (NYSE: SXI), a global industrial growth company operating in electronics, cutting-edge forming technologies, engraving and scientific refrigeration (September 2019 – present) | | | ● | Senior Vice President and Chief Accounting Officer, Pentair plc (NYSE: PNR), a global manufacturer of residential and commercial water solutions, pool products and accessories, and a provider of industrial water management solutions (2018 – September 2019) | | | ● | Vice President Finance and Global Controller, Pentair plc (2017 – 2018) | | | ● | Chief Financial Officer, Pentair Valves and Controls, Pentair plc (2016 -2017) | | | ● | Vice President, Corporate Audit, Pentair plc (2012 – 2016) | | | ● | Corporate Controller, Head of Tax and Procurement, Eisai Inc., a subsidiary of Eisai Co., Ltd (TYO: 4523), a global pharmaceutical company (2010 – 2012) | | | Qualifications | | | | Mr. Sarcevic has a track record of improving financial performance and driving operational productivity across a variety of industries, cultures and economic environments. He also has extensive experience in finance and accounting, international business, manufacturing, and mergers, acquisitions and divestitures. These attributes qualify him to serve as a director of Clearfield. In addition, Mr. Sarcevic qualifies as an audit committee financial expert. | | | | Other Directorships | | | | ● | None |
Information Regarding Nominees
| Carol A. Wirsbinski Age: 61 Director Since: December 2021 Committees: ● Compensation (Chair) ● Nominating and Corporate Governance | Professional Background and Experience | | | | ● | Chief Sales Officer, Consolidated Communications Holdings, Inc. (Nasdaq: CNSL), a national internet and telecommunications service provider (2014 – 2017) | | | ● | Chief Operating Officer and Corporate Vice President, Enventis Corporation (formerly known as Hickory Tech Corporation) (Nasdaq: ENVE), an integrated communication service provider serving a five state Midwest area (2011 – 2014) | | | ● | President and Chief Executive Officer, Citilink Broadband Solutions, a wireless broadband service provider (2009 – 2010) | | | ● | Senior Vice President of Sales, CEB, Inc., a provider of consumer research and strategic advisory services (2007 – 2008) | | | ● | Senior Vice President, Minnesota and North Dakota, Integra Telecom, an infrastructure and telecommunications service provider (2000 – 2006) | | | Qualifications | | | | Ms. Wirsbinski’s substantial experience in executive management, particularly her experience leading transformational growth, and her depth of understanding of the telecommunications industry, particularly the community broadband market, qualify her to serve as a director of Clearfield. Ms. Wirsbinski is recognized as NACD Directorship Certified by the National Association of Corporate Directors. | | | | Other Directorships | | | | ● | Director, Underline Infrastructure Inc. (December 2022 – present) (private) | | | ● | Director, Somos Inc. (March 2019 – March 2022) (private) |
Information Regarding Nominees
Under Minnesota law and our bylaws, directors are elected by a plurality of the votes cast at the Annual Meeting by holders of common stock voting for the election of directors. This means that since shareholders will be electing eight directors, the eight nominees receiving the highest number of votes will be elected. However, in an uncontested election (where, as at the Annual Meeting, the number of nominees does not exceed the number of directors to be elected), any nominee for director who does not receive a majority of votes cast for his or her election is required under our Governance Guidelines to promptly tender his or her resignation following certification of the shareholder vote. Votes against a nominee’s election do not include broker non-votes. The Nominating and Corporate Governance Committee will consider the resignation offer and recommend to the Board whether to accept it. The Board will act on the Nominating and Corporate Governance Committee’s recommendation within 90 days following certification of the shareholder vote. The Board will promptly disclose its decision whether to accept the director’s resignation offer (and the reasons for rejecting the resignation offer, if applicable) in a Current Report on Form 8-K filed with the Securities and Exchange Commission. Any director who tenders his or her resignation as described above will not participate in the Nominating and Corporate Governance Committee’s recommendation or Board action regarding whether to accept the resignation offer. Proxies will be voted in favor of each nominee unless otherwise indicated. In addition, if each member of the Nominating and Corporate Governance Committee receives a majority against vote at the same election, then the independent directors who did not receive a majority against vote shall appoint a committee amongst themselves to consider the resignation offers and recommend to the Board whether to accept them.
Our Compensation Philosophy
| ● Performance-based compensation should constitute a significant portion of the executive’s overall compensation and be available to the executive when they individually deliver, and we as a company deliver, high performance. | | ● Base salaries should be set at levels that recognize the significant potential compensation opportunities available through performance-based compensation. | | ● Long-term incentives should be designed to align the financial interests of the executives with the interests of our shareholders in creating long-term shareholder value. | | ● Annual cash incentive pay and long-term incentives should be designed to reward a reasonable and competitive balance of short- and long-term financial and strategic business results, with an emphasis on managing the business over the long-term. | | ● Compensation packages should be competitive to attract and retain superior executive talent. | | ● The design of our compensation program should not encourage the executives to take unnecessary or undesirable risks. |
Overview of Compensation Process – Use of Compensation Consultant and Role of Management
Overview of Compensation Process – Use of Compensation Consultant and Role of Management The responsibility of the Compensation Committee is to review and approve the compensation and other terms of employment of our Chief Executive Officer and our other executive officers. The Compensation Committee has also been appointed by the Board of Directors to administer our equity compensation plans, which for fiscal 2024 consisted of the 2007 Plan and the 2022 Plan. No further awards have been or will be granted under the 2007 Plan since the 2022 Plan was approved by our shareholders in February 2023, but there are still awards outstanding under the 2007 Plan which the Compensation Committee must administer. In carrying out its duties, the Compensation Committee participates in the design and implementation and ultimately reviews and approves, or recommends to the Board for approval, specific compensation programs. In November 2023, the Compensation Committee approved the establishment of a cash incentive compensation program for fiscal 2024 (the “2024 Bonus Program”) for certain of our employees including the named executive officers. The 2024 Bonus Program is summarized below. Under the Compensation Committee’s charter, the Compensation Committee has the authority to retain, at our expense, such independent counsel or other advisors as it deems necessary to carry out its responsibilities. The compensation consultant and any other advisor retained by the Compensation Committee report to the Compensation Committee. In September 2023, the Compensation Committee engaged Compensia, a national compensation consulting firm, as its independent compensation consultant to provide advice on matters relating to the compensation of our executive officers and non-employee directors. During fiscal 2024, Compensia updated the Compensation Committee on market and regulatory trends and developments; assisted and advised the Compensation Committee in the review and analysis of the Company’s compensation philosophy, compensation program design, and compensation peer group for executive officers; conducted a market assessment of the Company’s executive and non-employee director compensation programs; advised on bonus plan and performance-based equity practices; and provided advice and recommendations on the compensation of our executive officers and non-employee directors. In determining compensation for our named executive officers for fiscal 2024, the Compensation Committee considered and assessed the performance of each of the named executive officers in fiscal 2023, as well as the competitive market data and recommendations provided by Compensia, in establishing base salaries, the 2024 Bonus Program, and equity awards. The Chief Executive Officer recommended to the Compensation Committee the financial performance goals under the 2024 Bonus Program and the PSUs granted in November 2023 based upon Clearfield’s budget for fiscal 2024 that was approved by the Board of Directors. No named executive officer, other than the Chief Executive Officer, had a role in establishing executive compensation for 2024. From time to time, the named executive officers are invited to attend meetings of the Compensation Committee. However, no named executive officer attends any executive session of the Compensation Committee or is present during deliberations or determination of such named executive officer’s compensation.
Compensation Peer Group
Compensation Peer Group The table below lists the companies that were in the Company’s peer group (the “Clearfield Peer Group”) when the Compensation Committee set fiscal 2024 compensation levels for the executive officers. The Clearfield Peer Group was developed with the assistance of Compensia in August 2022 to be used as an input in defining the competitive landscape for executive talent, along with additional data sourced from Compensia’s database.
Compensation Peer Group
| Clearfield Peer Group (Fiscal 2024 Compensation) | | | ADTRAN Holdings, Inc. (ADTN) | Inseego Corp. (INSG) | | Aviat Networks, Inc. (AVNW) | Iteris, Inc. (ITI) | | Bel Fuse Inc. (BELFA, BELFB) | KVH Industries, Inc. (KVHI) | | Calix, Inc. (CALX) | Lantronix, Inc. (LTRX) | | Cambium Networks Corporation (CMBM) | Luna Innovations Incorporated (LUNA) | | CTS Corporation (CTS) | Netlist, Inc. (NLST) | | Digi International Inc. (DGII) | nLIGHT, Inc. (LASR) | | DZS, Inc. (DZSI) | Preformed Line Products Company (PLPC) | | EMCORE Corporation (EMKR) | RF Industries Ltd. (RFIL) | | Gogo Inc. (GOGO) | Shenandoah Telecommunications Company (SHEN) | | Harmonic Inc. (HLIT) | Vicor Corporation (VICR) |
Compensation Peer Group
In May 2024, the Compensation Committee requested Compensia assist the Compensation Committee in reviewing and analyzing the Clearfield Peer Group. The Compensation Committee believes it is appropriate and necessary to review and analyze the Clearfield Peer Group periodically to ensure the group remains reasonably reflective of Clearfield in terms of size, value and market for executive talent. In reviewing and analyzing the Clearfield Peer Group, companies were evaluated against the following selection criteria:
Compensation Peer Group
| ● Revenue: ~ 0.3x to ~ 2.5x Clearfield’s revenue for the prior four quarters. | | ● Market Capitalization: ~ 0.25x to ~ 4.0x Clearfield’s market capitalization. | | ● Industry: Communications/Electronic Equipment, Electronic Manufacturing Services, and Wireless Telecommunication Services. | | ● Location: Headquartered in the U.S. | | ● Refinement Factors: Companies that (i) name Clearfield in their own peer groups, and (ii) overlap with the ISS peer group for Clearfield. |
Compensation Peer Group
Companies were not required to meet all the selection criteria listed above, but each of the companies was evaluated against all the selection criteria to identify a peer group that, taken as a whole, is reflective of Clearfield and its market for executive talent. Based on its review and analysis, Compensia recommended minimal changes to the Clearfield Peer Group (namely, the removal of three companies that no longer meet the selection criteria, and the addition of one new company that does meet the selection criteria). The Compensation Committee approved the recommended changes to the Clearfield Peer Group at its June 2024 meeting. The following table lists the companies that were in the updated Clearfield Peer Group when the Compensation Committee set fiscal 2025 compensation levels for the executive officers:
Compensation Peer Group
| Clearfield Peer Group (Fiscal 2025 Compensation) | | | ADTRAN Holdings, Inc. (ADTN) | Iteris, Inc. (ITI) | | Applied Optoelectronics, Inc. (AAOI) | KVH Industries, Inc. (KVHI) | | Aviat Networks, Inc. (AVNW) | Lantronix, Inc. (LTRX) | | Bel Fuse Inc. (BELFA, BELFB) | Luna Innovations Incorporated (LUNA) | | Cambium Networks Corporation (CMBM) | Netlist, Inc. (NLST) | | CTS Corporation (CTS) | nLIGHT, Inc. (LASR) | | Digi International Inc. (DGII) | Preformed Line Products Company (PLPC) | | DZS, Inc. (DZSI) | RF Industries Ltd. (RFIL) | | Gogo Inc. (GOGO) | Shenandoah Telecommunications Company (SHEN) | | Harmonic Inc. (HLIT) | Vicor Corporation (VICR) |
Design of and Payouts Under the 2024 Bonus Program
Design of and Payouts Under the 2024 Bonus Program Consistent with its compensation philosophy and the objectives of annual cash incentive programs generally, the Compensation Committee approved the 2024 Bonus Program and the incentive pay opportunities for the named executive officers in November 2023. Under the 2024 Bonus Program, the Compensation Committee determined target and maximum performance goals for fiscal 2024 net sales and fiscal 2024 gross profit, which were weighted 75% and 25%, respectively. Net sales and gross profit are to be determined on a consolidated basis in conformity with accounting principles generally accepted in the United States of America (GAAP). The Compensation Committee retained the discretion to include or exclude items from each of the performance metrics and to determine the achievement of the performance goals for the purposes of calculating incentive pay under the 2024 Bonus Program. The Compensation Committee also approved the cash incentive pay the executive officers could earn at the target and maximum level of achievement as a percentage of their respective annual base salaries as follows: Ms. Beranek and Mr. Hill, 60% and 200%, respectively; and Mr. Herzog, 60% and 100%, respectively. Under the 2024 Bonus Program, achievement of a performance metric at greater than target level would result in proportionately increasing incentive pay relating to that performance metric. If the target performance goal for a performance metric was not achieved, there would be no incentive pay with respect to that performance metric. The maximum incentive pay that could be earned under the 2024 Bonus Program by an executive officer would not exceed that executive officer’s bonus opportunity at the maximum level, even if actual performance exceeded the maximum level for either or both of the performance metrics. The Compensation Committee determined the maximum payout level should be set based on achievement of 125% of target. All payments, if any, to the executive officers under the 2024 Bonus Program would be subject to “clawback” under the Company’s Compensation Recoupment Policy. The following table details the Company’s fiscal 2024 net sales and gross profit target and maximum performance goals and actual results (in thousands).
Design of and Payouts Under the 2024 Bonus Program
| Financial Measure | Target | Maximum | Actual | | Net Sales | $207,000 | $258,750 | $166,705 | | Gross Profit | $49,000 | $61,500 | $28,889 |
Design of and Payouts Under the 2024 Bonus Program
The following table shows the named executive officers’ 2024 Bonus Program opportunity as a percentage of base salary at various performance levels and the actual payout as a percentage of salary and in dollars. Given the Company’s fiscal 2024 net sales and gross profit were below the target performance goals, the Compensation Committee determined no payouts would be made to the executive officers and other participants under the 2024 Bonus Program. The payout amount is also reflected in the Summary Compensation Table under the column titled “Non-Equity Incentive Plan Compensation.” Further, the 2024 Bonus Program payouts that would have been earned if the various levels were achieved are reflected in the “Grants of Plan-Based Awards for Fiscal Year Ending September 30, 2024” table under the column titled “Estimated Future Payouts under Non-Equity Incentive Plan Awards” and associated footnotes.
Design of and Payouts Under the 2024 Bonus Program
| | Bonus Opportunity As a Percentage of Base Salary | | | | | Executive Officer | Target Level Achievement | Maximum Level Achievement | Actual 2024 Bonus Program Payout as a Percentage of Base Salary | Actual 2024 Bonus Program Payout ($) | | Cheryl Beranek | 60% | 200% | 0% | 0 | | Daniel R. Herzog | 60% | 100% | 0% | 0 | | John P. Hill | 60% | 200% | 0% | 0 |
Fiscal 2024 Discretionary Bonus
Fiscal 2024 Discretionary Bonus On November 1, 2024, the Compensation Committee approved discretionary cash bonuses to the Company’s named executive officers in recognition of their significant efforts and contributions in fiscal 2024 in: (1) establishing and building the infrastructure necessary to produce the Company’s FieldShield® fiber optic cable in the U.S. to support customers that are, or will be, subject to the Build America, Buy America Act requirements of the Broadband Equity, Access, and Deployment (BEAD) Program over the next several years; and (2) establishing inventory management processes to utilize and significantly reduce the Company’s excess inventory that contributed to positive cashflow from operations and improved liquidity while existing customer excess inventory levels are worked down during the post-pandemic environment. The Compensation Committee believes these efforts and contributions will help position the Company for future growth as the industry recovers. The amounts of the cash bonuses equal 55% of the target bonus opportunity available to the named executive officers under the 2024 Bonus Program, and were as follows: Ms. Beranek, $140,250; Mr. Herzog, $112,200; and Mr. Hill, $140,250.
Long-Term Equity Compensation
Long-Term Equity Compensation The Compensation Committee grants equity awards to executive officers for their performance during a fiscal year, typically in November of each year, although the Compensation Committee may approve equity awards outside of the normal grant cycle to select individuals in the event of extraordinary circumstances. The Compensation Committee’s policy is to grant all equity awards under shareholder approved equity compensation plans, such as the 2022 Plan, except in limited and special circumstances. The Compensation Committee believes that equity awards incentivize financial progress, sustained shareholder value creation, and the following key compensation objectives:
Long-Term Equity Compensation
| ● Focus on the importance of stock price appreciation and shareholder returns. | | ● Align executives’ interests with the shareholders’ interests in creating long-term shareholder value. | | ● Promote the achievement of financial performance over the long-term. | | ● Encourage executive retention. | | ● Promote meaningful levels of Clearfield stock ownership by executives. |
Long-Term Equity Compensation
Consistent with these principles, the Compensation Committee granted equity awards to the executive officers in November 2023. The Compensation Committee added PSUs to the executive compensation program for fiscal 2024 due to the strong alignment between performance-based equity awards and the Compensation Committee’s philosophy of emphasizing performance-based compensation. The Compensation Committee determined to keep the overall target value of the equity grants to the named executive officers flat year-over-year, but to divide the target value of the equity grants evenly between restricted stock and PSUs. Accordingly, for Ms. Beranek and Mr. Hill, the Compensation Committee targeted $500,000 in restricted stock and $500,000 in PSUs, and for Mr. Herzog, the Compensation Committee targeted $250,000 in restricted stock and $250,000 in PSUs. The resulting number of shares of restricted stock and PSUs awarded to each of Ms. Beranek, Mr. Herzog and Mr. Hill were as follows:
Long-Term Equity Compensation
| Executive Officer | Shares of Restricted Stock (#) | PSUs (#) | | Cheryl Beranek | 19,098 | 19,098 | | Daniel R. Herzog | 9,549 | 9,549 | | John P. Hill | 19,098 | 19,098 |
Long-Term Equity Compensation
The Compensation Committee determined the restricted stock would vest in equal installments on the first, second and third anniversaries of the date of grant, subject to continued employment through each such date, and that the PSUs would vest, and the restrictions on the PSUs would lapse, on the first anniversary of the date of grant, subject to continued employment through such date and the Company attaining fiscal 2024 target adjusted EBITDA of $7.84 million. Adjusted EBITDA was defined as the Company’s consolidated GAAP net income excluding items related to interest income and expense, the impact of income-based taxes, depreciation and amortization, stock-based compensation, foreign currency gains and losses, the 2024 Bonus Plan amounts, and other non-operating income and expenses. In addition, the Compensation Committee determined the PSUs would be subject to “clawback” under the Company’s Compensation Recoupment Policy. In November 2024, the Compensation Committee determined the Company did not attain fiscal 2024 target adjusted EBITDA as fiscal 2024 adjusted EBITDA, calculated in accordance with the definition above, was -$9.10 million. Accordingly, the PSUs did not vest and the shares subject to the PSU were forfeited to the Company without any consideration to the named executive officers.
Incentive Bonus Plan
Incentive Bonus Plan On August 28, 2024, the Compensation Committee approved and adopted the Clearfield, Inc. Incentive Bonus Plan (the “Incentive Bonus Plan”) effective October 1, 2024 for incentive bonus awards granted on or after the effective date. The Incentive Bonus Plan will be the overarching plan document for future annual cash incentives, such as the 2024 Bonus Program, and fiscal 2025 incentive bonus opportunities are governed by the Incentive Bonus Plan. The Incentive Bonus Plan is designed to motivate the executive officers of the Company to improve the overall performance of the Company and to reward them when the Company achieves specific measurable results. The Incentive Bonus Plan provides cash rewards to the executive officers to encourage them to produce a strong return for the Company’s shareholders and to encourage them to remain employees of the Company. The Incentive Bonus Plan provides for a cash payment to be made to the executive officers and certain other employees of the Company selected for participation in the Incentive Bonus Plan based upon the achievement of certain financial and other performance targets established by the Compensation Committee. The Compensation Committee has the authority to designate the participants in the Incentive Bonus Plan; determine the applicable performance period; determine the amount of each bonus award; select applicable performance targets; identify the weights of applicable performance targets; determine the relationship between the degree to which performance targets have been achieved and bonus payments; and adjust bonus payments based on unusual or unique circumstances or the impact of acquisitions, divestitures or other major unusual events. Specific financial performance thresholds must be attained in order for the executive officers to earn an incentive payment. If specified performance levels are not achieved or exceeded, there is no payout. The annual incentives, to the extent earned, will typically be paid in cash in November following the fiscal year-end and will be based upon the Compensation Committee’s determination of financial performance against pre-established targets.
Compensation Decisions for Fiscal 2025
Compensation Decisions for Fiscal 2025 In September and November 2024, the Compensation Committee increased the base salaries of the named executive officers between 3.0% and 8.24%. At its November 2024 meeting, the Compensation Committee reduced the target annual cash incentive payout as a percent of base salary for the named executive officers, and granted restricted stock and PSUs to the named executive officers at the same target values as in fiscal 2024.
Employment Agreements and Change in Control Provisions
Employment Agreements and Change in Control Provisions In December 2008, we entered into employment agreements with Ms. Beranek and Mr. Hill that remained in effect throughout fiscal 2024. In November 2010, we established a Code 280G Tax Gross Up Payment Plan (the “Tax Gross Up Plan”). For fiscal 2024, Ms. Beranek and Mr. Hill were participants in the Tax Gross Up Plan. In 2017, we entered into an employment agreement with Mr. Herzog that was amended in December 2019 and continued in effect throughout fiscal 2024. Mr. Herzog is not a participant in the Tax Gross Up Plan. Since it was established in November 2010, the Tax Gross Up Plan has not been amended or modified and the participants in the Tax Gross Up Plan are limited to two executives, Ms. Beranek and Mr. Hill. In January 2023, consistent with its long-standing practice, the Compensation Committee determined that Clearfield would not approve any additional participants in the Tax Gross Up Plan and would not amend or modify the Tax Gross Up Plan to expand any benefit to any executive officer participant in the Tax Gross Up Plan. See “Executive Compensation – Employment Arrangements with Named Executive Officers” for summaries of the employment agreements with Ms. Beranek, Mr. Hill, and Mr. Herzog, as well as a summary of the Tax Gross Up Plan.
Consideration of Risk in Compensation
Consideration of Risk in Compensation Management conducted a risk assessment of Clearfield’s policies and programs relating to the compensation of employees, including those that apply to our named executive officers. In particular, management considered the following factors of our compensation policies, practices and programs: the Compensation Committee’s robust governance controls; our internal controls; our mix of long-term and short-term programs; our use of objective performance goals; regular plan design and benchmarking review by the independent executive compensation consultant; the fact that our performance goals are either calculated in accordance with GAAP, in the case of net sales and gross profit, or strictly defined parameters, in the case of adjusted EBITDA; the Compensation Committee’s review and approval of all equity grants; the cap on payouts under the 2024 Bonus Program; the clawback provisions of our 2007 Plan and our 2022 Plan that are applicable to all equity awards granted under such plans; our Compensation Recoupment Policy; our stock ownership guidelines; the fact that long-term equity awards typically vest over three years and have overlapping vesting schedules, thereby reducing an executive’s motivation to maximize performance in any one period; and the use of double trigger accelerated vesting of equity awards under the 2022 Plan. Our Compensation Recoupment Policy and stock ownership guidelines are summarized below. Management discussed the findings of the risk assessment with the Compensation Committee. Based on the assessment, we believe that our executive compensation policies and practices create an appropriate balance between our base salary compensation, short-term cash incentive compensation and long-term equity incentive compensation, thereby reducing the possibility of imprudent risk-taking, and that our executive compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on Clearfield.
Equity Granting Policy
Equity Granting Policy We maintain an equity granting policy that governs the issuance of equity awards under the Company’s stock compensation plans. The purpose of the policy is to create a consistent process for the granting and pricing of equity awards, to ensure the integrity and efficiency of the Company’s award process, and to ensure awards are made in compliance with the Company’s stock compensation plans. The policy documents the Compensation Committee’s well-established, disciplined process for granting equity awards and its long-standing practice of granting awards only at a time that directors and executive officers are not in possession of material, non-public information and during the periods of time that trading would be permitted under our trading policy, which is referred to as an “open window period” in our insider trading policy. Additionally, the Company’s policy is that no equity awards will be granted to executive officers within the period starting four business days before the filing of a periodic report on Form 10-Q or Form 10-K, or the filing or furnishing of a current report on Form 8-K that discloses material non-public information (including earnings information), and ending one business day after such filing. The equity granting policy also establishes procedures for equity awards granted by our Chief Executive Officer under authority delegated from the Compensation Committee. Upon delegation of authority from the Compensation Committee, the Chief Executive Officer may grant equity awards to newly hired employees, newly promoted employees or in recognition of the performance or achievement of an employee, provided that the employee is not an executive officer of Clearfield, the equity award does not exceed the per grant limitation, and all awards granted under delegated authority do not exceed, in the aggregate, the total amount established on an annual basis by the Compensation Committee. The equity granting policy also requires concurrent documentation and reporting to the Compensation Committee of all equity awards granted under delegated authority. Consistent with the equity granting policy’s prohibition on timing equity awards to the release of material non-public information, the grant date for a new hire grant or recognition grant to non-officer employees under delegated authority will be the second Tuesday of the month following the employee’s start date or the recognition date, or if the Nasdaq Stock Market was closed on such date, the next succeeding trading day.
Summary Compensation Table
Summary Compensation Table The following table shows information concerning compensation earned for services in all capacities during the last three fiscal years for (i) Cheryl Beranek, our President and Chief Executive Officer; (ii) Daniel R. Herzog, our Chief Financial Officer; and (iii) the one other executive officer of Clearfield, John P. Hill, our Chief Operating Officer (together referred to as our “named executive officers”).
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Cheryl Beranek | 2024 | 425,000 | 140,250 | 999,971 | — | — | 20,482 | 1,585,703 | | President and | 2023 | 425,000 | — | 615,600 | — | — | 21,262 | 1,061,862 | | Chief Executive Officer | 2022 | 374,415 | — | 398,649 | 224,642 | 954,757 | 20,112 | 1,972,574 | | Daniel R. Herzog | 2024 | 340,000 | 112,200 | 499,986 | — | — | 14,816 | 967,002 | | Chief Financial Officer | 2023 | 340,000 | — | 307,800 | — | — | 18,592 | 666,392 | | | 2022 | 248,433 | — | 219,167 | 149,055 | 315,510 | 14,279 | 946,444 | | John P. Hill | 2024 | 425,000 | 140,250 | 999,971 | — | — | 20,268 | 1,585,489 | | Chief Operating Officer | 2023 | 425,000 | — | 615,600 | — | — | 21,164 | 1,061,764 | | | 2022 | 374,415 | — | 398,649 | 224,642 | 954,757 | 19,072 | 1,971,534 |
Summary Compensation Table
| (1) For 2024, represents a discretionary cash bonus approved by the Compensation Committee as more fully discussed in the Compensation Discussion and Analysis section of this proxy statement. |
Summary Compensation Table
| (2) Represents the aggregate grant date fair value of stock awards (including PSU awards) and the grant date fair value of option awards in the respective fiscal year, as computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation using the assumptions discussed in Note 2, “Shareholders’ Equity,” in the notes to financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2024. For 2022, includes the value of stock awards approved by the Compensation Committee as a discretionary increase to the cash bonus the named executive officer earned under the 2022 Bonus Program in the following amounts: Ms. Beranek, $286,364; Mr. Hill, $286,364; and Mr. Herzog, $144,643. |
Summary Compensation Table
| (3) Represents bonuses paid to the named executive officers under our cash bonus program for the year noted, which are reported for the year in which the related services were performed. See “Compensation Discussion and Analysis – Design of and Payouts Under the 2024 Bonus Program” for a description of the cash bonus program for 2024. |
Summary Compensation Table
| (4) Represents the following amounts: |
Summary Compensation Table
| Name | Year | Matching Contributions to 401(k) Plan ($) | Term Life Insurance Premiums ($)(1) | Long Term Disability ($) | | Cheryl Beranek | 2024 | 14,712 | 4,910 | 860 | | | 2023 | 15,498 | 4,904 | 860 | | | 2023 | 13,488 | 5,730 | 893 | | Daniel R. Herzog | 2024 | 13,905 | 51 | 860 | | | 2023 | 17,687 | 45 | 860 | | | 2022 | 13,341 | 45 | 893 | | John P. Hill | 2024 | 14,712 | 4,696 | 860 | | | 2023 | 15,614 | 4,690 | 860 | | | 2022 | 13,488 | 4,690 | 893 |
Summary Compensation Table
| (1) Represents amounts paid by us for term life insurance policies that have been in place since 2011. Ms. Beranek’s policy provides a $2 million benefit payable to Ms. Beranek’s estate upon her death and expires in the year 2058. Mr. Hill’s policy provides a $2 million benefit payable to Mr. Hill’s estate upon his death and expires in the year 2060. We also have corresponding term insurance policies of each of Ms. Beranek and Mr. Hill for $2 million each where the death benefit is payable to the Company. |
Grants of Plan-Based Awards in Fiscal Year 2024
Grants of Plan-Based Awards in Fiscal Year 2024 The following table sets forth certain information concerning plan-based awards granted to the named executive officers during the year ending September 30, 2024.
Grants of Plan-Based Awards in Fiscal Year 2024
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | | | | | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | | Cheryl Beranek | — | — | 255,000 | 850,000 | — | — | — | — | — | — | — | | | 11/16/23 | — | — | — | — | — | — | 19,098 | — | — | 499,986 | | | 11/16/23 | — | — | — | — | 19,098 | — | — | — | — | 499,986 | | Daniel R. Herzog | — | — | 204,000 | 340,000 | — | — | — | — | — | — | — | | | 11/16/23 | — | — | — | — | — | — | 9,594 | — | — | 249,993 | | | 11/16/23 | — | — | — | — | 9,594 | — | — | — | — | 249,993 | | John P. Hill | — | — | 255,000 | 850,000 | — | — | — | — | — | — | — | | | 11/16/23 | — | — | — | — | — | — | 19,098 | — | — | 499,986 | | | 11/16/23 | — | — | — | — | 19,098 | — | — | — | — | 499,986 |
Grants of Plan-Based Awards in Fiscal Year 2024
| (1) Represents incentive pay that may have been earned by the named executive officers under our 2024 Bonus Program. Threshold refers to the minimum amount payable upon achievement of the minimum performance levels required to earn any payment. Target refers to the amount payable if specified targets were reached. Maximum refers to the maximum payout possible under the 2024 Bonus Program. See the column entitled “Non-Equity Incentive Plan” of the Summary Compensation Table for the amounts actually paid under the 2024 Bonus Program. See “Compensation Discussion and Analysis – Design of and Payouts Under the 2024 Bonus Program” for a description of the 2024 Bonus Program. |
Grants of Plan-Based Awards in Fiscal Year 2024
| (2) Represents potential issuances of shares of common stock in settlement of PSU awards granted under the 2022 Plan in fiscal 2024. The issuance of shares was subject to the Company achieving a defined level of adjusted EBITDA for fiscal 2024 and the named executive officer’s continued employment through the first anniversary of the grant date. See “Compensation Discussion and Analysis – Long-Term Equity Compensation” for a description of the PSU awards. |
Grants of Plan-Based Awards in Fiscal Year 2024
| (3) Represents shares of restricted stock granted under the 2022 Plan that vest as to one-third of the shares on each of the first, second and third anniversaries of the grant date subject to the named executive officer’s continued employment through each such date. See “Compensation Discussion and Analysis – Long-Term Equity Compensation” for a description of the restricted stock grants. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table sets forth certain information concerning equity awards outstanding to the named executive officers at September 30, 2024.
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | | Cheryl Beranek (2) | 16,000 | 8,000 | 12.43 | 11/13/2025 | — | — | — | — | | Cheryl Beranek (3) | 17,776 | — | 23.74 | 11/16/2025 | — | — | — | — | | Cheryl Beranek (4) | — | — | — | — | 563 | 21,934 | — | — | | Cheryl Beranek (5) | 5,865 | 2,932 | 66.48 | 11/16/2026 | — | — | — | — | | Cheryl Beranek (6) | — | — | — | — | 6,667 | 259,733 | — | — | | Cheryl Beranek (7) | — | — | — | — | 19,098 | 744,058 | — | — | | Cheryl Beranek (8) | — | — | — | — | — | — | 19,098 | 744,058 | | Daniel R. Herzog (2) | 9,600 | 2,400 | 12.43 | 11/13/2025 | — | — | — | — | | Daniel R. Herzog (3) | 11,795 | — | 23.74 | 11/16/2025 | — | — | — | — | | Daniel R. Herzog (4) | — | — | — | — | 374 | 14,558 | — | — | | Daniel R. Herzog (5) | 3,891 | 1,946 | 66.48 | 11/16/2026 | — | — | — | — | | Daniel R. Herzog (6) | — | — | — | — | 3,333 | 129,867 | — | — | | Daniel R. Herzog (7) | — | — | — | — | 9,549 | 372,029 | — | — | | Daniel R. Herzog (8) | — | — | — | — | — | — | 9,549 | 372,029 | | John P. Hill (2) | 16,000 | 8,000 | 12.43 | 11/13/2025 | — | — | — | — | | John P. Hill (3) | 17,776 | — | 23.74 | 11/16/2025 | — | — | — | — | | John P. Hill (4) | — | — | — | — | 563 | 21,934 | — | — | | John P. Hill (5) | 5,865 | 2,932 | 66.48 | 11/16/2026 | — | — | — | — | | John P. Hill (6) | — | — | — | — | 6,667 | 259,733 | — | — | | John P. Hill (7) | — | — | — | — | 19,098 | 744,058 | — | — | | John P. Hill (8) | — | — | — | — | — | — | 19,098 | 744,058 |
Outstanding Equity Awards at Fiscal Year-End
| (1) Value based on a share price of $38.96, which was the closing sales price of our common stock on The Nasdaq Stock Market on September 30, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (2) Stock options vest as to one-fifth of the options on the first five anniversaries of the date of grant beginning November 13, 2020. |
Outstanding Equity Awards at Fiscal Year-End
| (3) Stock options vests as to one-third of the options on the first three anniversaries of the date of grant beginning November 16, 2021. |
Outstanding Equity Awards at Fiscal Year-End
| (4) Restricted stock vests as to one-third of the shares on the first three anniversaries of the date of grant beginning November 16, 2022. |
Outstanding Equity Awards at Fiscal Year-End
| (5) Stock options vests as to one-third of the options on the first three anniversaries of the date of grant beginning November 16, 2022. |
Outstanding Equity Awards at Fiscal Year-End
| (6) Restricted stock vests as to one-third of the shares on the first three anniversaries of the date beginning November 16, 2023. |
Outstanding Equity Awards at Fiscal Year-End
| (7) Restricted stock vests as to one-third of the shares on the first three anniversaries of the date beginning November 16, 2024. |
Outstanding Equity Awards at Fiscal Year-End
| (8) Performance stock units with vesting subject to the achievement of a defined level of adjusted EBITDA for fiscal 2024, which was not achieved. |
Option Exercises and Stock Vested in Fiscal 2024
Option Exercises and Stock Vested in Fiscal 2024 The following table sets forth certain information concerning options exercised and stock awards vested during fiscal 2024 for the named executive officers.
Option Exercises and Stock Vested in Fiscal 2024
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Cheryl Beranek | — | — | 9,161 | 288,285 | | Daniel R. Herzog | — | — | 4,100 | 124,438 | | John P. Hill | — | — | 9,161 | 288,285 |
Option Exercises and Stock Vested in Fiscal 2024
| (1) For option awards, represents the difference between the exercise price and the fair market value of our common stock on the respective dates of exercise and for stock awards, represents the number of shares vested multiplied by the fair market value of our stock on the vesting date. |
CEO Pay Ratio
CEO Pay Ratio We are providing the following information regarding the ratio of the median of the annual total compensation of our employees (excluding our Chief Executive Officer) and the annual total compensation of Cheryl Beranek, our President and Chief Executive Officer. For fiscal 2024:
CEO Pay Ratio
| ● | the annual total compensation of the median employee of our company (excluding Ms. Beranek) was reasonably determined to be $53,958; |
CEO Pay Ratio
| ● | the annual total compensation of Ms. Beranek was $1,585,703 as set forth in the Summary Compensation Table; and |
CEO Pay Ratio
| ● | based on this information, the ratio of the annual total compensation of our chief executive officer to the annual total compensation of our median employee is estimated to be 29 to 1. |
CEO Pay Ratio
To identify our median employee for the purposes of this analysis for fiscal 2024, we made the following assumptions:
CEO Pay Ratio
| ● | We included all individuals (excluding our Chief Executive Officer) employed by Clearfield or its consolidated subsidiaries on September 30, 2024; and |
CEO Pay Ratio
| ● | We utilized W-2, Box 5 (and foreign equivalent) payroll data for 2024 as our consistently applied compensation measure, annualizing pay for those individuals employed less than a full calendar year. |
CEO Pay Ratio
Once we identified our median employee, we added together all of the elements of such employee’s compensation for fiscal 2024 in the same way that we calculate the annual total compensation of our named executive officers in the Summary Compensation Table. To calculate our ratio, we divided Ms. Beranek’s annual total compensation, as reported in the Summary Compensation Table above, by the median employee’s annual total compensation. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules. 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. As such, 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
Pay Versus Performance Table
Pay Versus Performance Table The table below discloses for fiscal 2021, 2022, 2023 and 2024: (i) the total compensation (as reported in the Summary Compensation Table (“SCT”)) and the compensation actually paid (“CAP”) to the Company’s Chief Executive Officer; (ii) the average of the total compensation (as reported in the SCT) and the average CAP to the Company’s non-CEO Named Executive Officers (“NEOs”); (iii) the cumulative total shareholder return of the Company and the peer group; (iv) net income; and (v) net sales, which is the Company’s selected measure.
Pay Versus Performance Table
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table Total for CEO(1) ($) | Compensation Actually Paid to CEO(2) ($) | Average Summary Compensation Table Total for Non-CEO NEOs(1) ($) | Average Compensation Actually Paid to Non-CEO NEOs(2) ($) | Total Shareholder Return ($) | Peer Group Total Shareholder Return(3) ($) | Net Income (in thousands) ($) | Net Sales (in thousands) ($) | | 2024 | 1,585,703 | 1,452,629 | 1,276,245 | 1,167,229 | 193.16 | 168.77 | (12,453) | 166,705 | | 2023 | 1,061,862 | (2,349,316) | 864,078 | (1,275,161) | 143.43 | 149.69 | 32,533 | 268,720 | | 2022 | 1,972,574 | 6,012,670 | 1,458,989 | 4,432,054 | 518.78 | 114.34 | 49,362 | 270,883 | | 2021 | 1,516,456 | 3,173,910 | 1,109,922 | 2,338,110 | 218.89 | 140.49 | 20,327 | 140,755 |
Pay Versus Performance Table
| (1) Cheryl Beranek is the Chief Executive Officer and Daniel R. Herzog and John P. Hill are the non-CEO NEOs for the years shown. |
Pay Versus Performance Table
| (2) The table below sets forth the amounts deducted from and added to SCT total compensation to calculate CAP to Ms. Beranek and average CAP to Messrs. Herzog and Hill. |
Pay Versus Performance Table
| | 2024 | | | Adjustments | CEO ($) | Average of Non-CEO NEOs ($) | | Total Compensation from SCT | 1,585,703 | 1,276,245 | | Less, value of Stock Awards and Option Awards reported in SCT | (999,971) | (749,978) | | Plus, year-end fair value of Stock Awards and Option Awards granted during year that are outstanding and unvested at year-end | 744,058 | 558,044 | | Plus, vesting date fair value of Stock Awards and Option Awards granted during the year that vested during the year | — | — | | Plus, change in year-end fair value of Stock Awards and Option Awards granted in any prior year that are outstanding and unvested at year-end | 143,346 | 99,863 | | Plus, change in fair value as of vesting date of any Stock Awards and Option Awards granted in any prior year that vested during covered year | (20,506) | (16,944) | | Less, fair value at end of prior year of Stock Awards and Option Awards that failed to meet applicable vesting conditions during year | — | — | | Compensation Actually Paid | 1,452,629 | 1,167,229 |
Pay Versus Performance Table
| (3) The peer group used in this Pay Versus Performance table is the S&P 1500 Communications Equipment Index, which is the same peer group the Company uses for purposes of the stock performance graph in our Annual Report on Form 10-K. |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
| 2024 Non-Employee Director Compensation | Amount | | Annual Equity Grant | $60,000(1) | | Annual Board Retainer | $40,000 | | Additional Retainers: | | | Annual Board Chair Retainer | $10,000 | | Annual Audit Committee Chair Retainer | $10,000 | | Annual Compensation Committee Chair Retainer | $10,000 | | Annual Nominating and Corporate Governance Committee Chair Retainer | $10,000 |
DIRECTOR COMPENSATION
| (1) Approximate economic value of annual restricted stock grant. Actual value determined by dividing $60,000 by the fair market value per share on the date of grant and rounding down to the nearest whole share. The award of restricted stock will vest and the restrictions thereon lapse one day prior to the 2025 Annual Meeting of Shareholders. |
DIRECTOR COMPENSATION
For services in fiscal year 2024, each non-employee director received a cash retainer of $40,000. The Chair of the Board and each committee chair received an additional cash retainer of $10,000. On February 23, 2024, the first business day following the 2024 Annual Meeting of Shareholders, each of the non-employee directors elected at the 2024 Annual Meeting received a restricted stock award of 2,039 shares under the 2022 Plan. The restricted stock award had a value of approximately $60,000 as of the date of the grant and the restrictions will lapse on the restricted stock one day prior to the 2025 Annual Meeting of Shareholders. In September 2024, the Compensation Committee reviewed the compensation of the Board of Directors in comparison to the peer group director compensation information provided by Compensia. The peer group selected for comparison matched the peer group identified for executive compensation for fiscal year 2025 in the Compensation Discussion and Analysis section of this proxy statement. In reviewing the peer group data, the Compensation Committee concluded that total director retainer and equity compensation fell below the 25th percentile of the peer group. The Compensation Committee also discussed and considered the workload of the Board of Directors and its committees, the complexity of the business, and the current financial condition of the business. Following its review and discussion, the Compensation Committee determined an adjustment in the retainer and equity paid to the Board of Directors was desired to achieve a level of retainer and equity compensation closer to the median of the peer group. As a result, the Board of Directors, upon recommendation of the Compensation Committee, determined that the annual retainer for non-employee directors will increase from $40,000 to $50,000 effective as of the 2025 Annual Meeting of Shareholders, and the value of the annual equity grant to non-employee directors will increase from $60,000 to $80,000 effective as of the first day following the 2025 Annual Meeting of Shareholders. The following table shows for fiscal 2024 the cash and other compensation earned or paid by us to each of our non-employee directors then serving:
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($)(1) | Restricted Stock Awards ($)(2) | Total ($) | | Patrick F. Goepel | 40,000 | 59,987 | 99,987 | | Roger G. Harding | 40,000 | 59,987 | 99,987 | | Charles N. Hayssen | 50,000 | 59,987 | 109,987 | | Donald R. Hayward | 50,000 | 59,987 | 109,987 | | Walter L. Jones, Jr. | 40,000 | 59,987 | 99,987 | | Ronald G. Roth | 50,000 | 59,987 | 109,987 | | Carol A. Wirsbinski | 50,000 | 59,987 | 109,987 |
DIRECTOR COMPENSATION
| (1) Represents cash retainers for fiscal year 2024 as described above, which have been prorated for time served in these roles. |
DIRECTOR COMPENSATION
| (2) Represents the aggregate grant date fair value of the restricted stock award described above, computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. The fair value of the restricted stock award is determined as the average price of our stock on the date of grant as discussed in Note 2, “Shareholders’ Equity,” in the notes to financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2024. |
DIRECTOR COMPENSATION
There were no stock options outstanding at September 30, 2024 held by any of our non-employee directors. At September 30, 2024, each of Messrs. Goepel, Harding, Hayssen, Hayward, Jones and Roth and Ms. Wirsbinski held 2,039 shares of unvested restricted stock that will vest one day prior to the next Annual Meeting. Cheryl Beranek, who served as our director and an executive officer in fiscal year 2024, received no compensation for Board or committee service during fiscal year 2024.