DEF 14A of American Superconductor Corp /De/
Filed Jun 28, 2023 · FY20220001193125-23-177510
Members of the Board
Members of the Board Set forth below, for each director, are his or her name and age, his or her positions (if any) with us, his or her principal occupation and business experience during at least the past five years, the names of other public companies of which he or she has served as a director during at least the past five years and the year of the commencement of his or her term as a director of AMSC. Each of the individuals named below is a nominee for election to our Board at the Annual Meeting. There are no family relationships among any of our directors and executive officers. Laura A. Dambier, age 64, has been President of Insurance Capital Consulting LLC, a Connecticut limited liability company, an expert witness and consulting firm specializing in insurance operations, since July 2022. Ms. Dambier also has served as an independent consultant since January 2017. From January 1997 to April 2015, she worked at Lincoln Financial Group, which has over $200 billion in assets under management and operates multiple insurance and investment management businesses through subsidiary companies, where she held a series of positions of increasing responsibility culminating as Senior Vice President, Partner Solutions for Life, Claims and Distribution, and a member of the firm’s corporate leadership group. Ms. Dambier led Lincoln Financial’s Partner Solutions, a corporate shared services organization located across four operating locations. Prior to Lincoln Financial, Ms. Dambier also previously served in positions at the U.S. Senate and the American Embassy in Germany. We believe Ms. Dambier’s qualifications to sit on our Board include her broad experience in operations, strategic planning, merger and acquisition integration, financial management, risk management and technology, and her extensive leadership in business, government and not-for-profit organizations. Ms. Dambier has been a director of our company since June 2022. Arthur H. House, age 80, has been a partner at Cybersecurity Risk Associates, LLC, a Connecticut limited liability company, that advises clients on improving their cybersecurity, compliance and privacy programs, since May 2020. Mr. House also has served as an adjunct professor at the University of Connecticut since March 2020. From April 2020 to December 2020, he served as a cybersecurity policy advisor to the Secretary of State of the State of Connecticut. From October 2016 to October 2019, Mr. House served as Chief Cybersecurity Risk Officer for the State of Connecticut. From June 2012 until October 2016, he was chairman of the Connecticut Public Utilities Regulatory Authority. From January 2009 until May 2012, Mr. House served as Director of Communications of the Office of the Director of National Intelligence and as head of internal and external communications for the National Geospatial-Intelligence Agency, a combat support agency for the U.S. Department of Defense. From January 2002 until January 2009, he served as Senior Vice President of Public Affairs at Connecticut-based Webster Bank, a bank that provides business and consumer banking, mortgage, insurance, trust and investment services. Mr. House has also previously served in various positions at the World Bank, the National Security Council and the U.S. Senate. We believe Mr. House’s qualifications to sit on our Board include his extensive experience in the utility and cybersecurity industries, his international business and government relations experience and work in both internal and external corporate communications. Mr. House has been a director of our company since September 2016. Margaret D. Klein, age 66, has been a professor of ethical leadership at the Naval War College since June 2017. From June 2017 to December 2022, she served as Dean of the College of Leadership and Ethics at the Naval War College. From 1981 to 2017, Ms. Klein served in the United States Navy and held the rank of Rear Admiral at the time of her retirement. As Rear Admiral Klein, she served as the Secretary of Defense’s Advisor for Military Professionalism. She served as Chief of Staff for U.S. Cyber Command and in 2008 served as Director of Operations for the Navy’s Network Warfare Command. In 2011, Ms. Klein commanded an American military force of five ships, 30 aircraft and over 3,300 Sailors and Marines in combat operations in the Mediterranean Sea. She served as the 82nd Commandant of Midshipmen at the U.S. Naval Academy, where she was responsible for 4,400 Navy and Marine Corps officer candidates. Ms. Klein also commanded an aviation squadron and wing. We believe Ms, Klein’s qualifications to sit on our Board include her extensive leadership and management experience gained while serving as a senior officer in the United States Navy and in government and not-for-profit organizations. Ms. Klein has been a director of our company since June 2022. Barbara G. Littlefield, age 65, has been Chairwoman and Lead Operating Director at Resilient Infrastructure Group, a developer of a full range of distributed water and wastewater solutions as a service for private and municipal clients that solve site-specific treatment needs, since February 2021. From August 2014 to May 2020, she served as chief financial officer of Poseidon Water LLC, a leading developer of water infrastructure projects in North America. From September 2013 until August 2014, Ms. Littlefield served as senior vice president, strategy and corporate development, of Poseidon Water LLC. From February 2011 until May 2013, she was senior vice president of corporate development and a board member of Drax Biomass International Inc., an enterprise securing upstream biomass supply for large British electricity generators. From 2006 to 2010, Ms. Littlefield was an executive vice president and chief financial officer of Verenium Corporation, a joint venture company formed to commercialize second generation biofuels technology. We believe Ms. Littlefield’s qualifications to sit on our Board include her extensive financial and strategic management experience and her particular knowledge of large infrastructure projects. Ms. Littlefield has been a director of our company since May 2019. Daniel P. McGahn, age 51, has been our chairman of the Board since July 2018, chief executive officer since June 2011 and president since December 2009. Mr. McGahn also served as our chief operating officer from December 2009 until May 2011, as senior vice president and general manager of our AMSC Superconductors business unit from May 2008 until December 2009 and vice president of our AMSC Superconductors business unit from January 2008 to May 2008. Previously, Mr. McGahn was our vice president of strategic planning and development from December 2006 to January 2008. From 2003 to 2006, Mr. McGahn served as executive vice president and chief marketing officer of Konarka Technologies, which develops and commercializes Konarka Power Plastic®, a material that converts light to electricity. We believe Mr. McGahn’s qualifications to sit on our Board include his extensive experience with our company, including serving as our president since December 2009 and our chief executive officer since June 2011, experience in the power electronics industry and with technology companies, and strategic planning expertise gained while working in senior management and as a consultant for other public and private companies. Mr. McGahn has been a director of our company since June 2011.
Members of the Board
David R. Oliver, Jr., age 81, is currently an independent consultant. He served as a strategic advisor, mergers and acquisitions, for European Aeronautic Defense and Space Company North America (EADS NA), a European aerospace corporation, from January 2012 until July 2013. From January 2008 until December 2011, Mr. Oliver served as executive vice president and chief operating officer for EADS NA. Mr. Oliver also served as chief executive officer of the defense division of EADS NA for most of the four years preceding January 2008 except when he was running the EADS NA portion of the capture effort for the Air Force Tanker program. Before joining EADS NA, Mr. Oliver was stationed in Baghdad as Director of Management and Budget for the Coalition Forces. Prior to that, he served as the United States’ Principal Deputy Undersecretary of Defense for Acquisition and Technology. Mr. Oliver also previously held management positions at both Westinghouse Electric and Northrop Grumman. In the Navy, he commanded diesel and nuclear submarines as well as two submarine groups during the Cold War. His last Navy appointment was as Principal Deputy to the Assistant Secretary of the Navy for Research, Development and Acquisition. Rear Admiral (retired) Oliver’s military decorations include the Defense and Navy Distinguished Service Medals as well as six awards of the Legion of Merit. We believe Mr. Oliver’s qualifications to sit on our Board include his extensive leadership, management and budgeting experience gained while serving as a senior officer in the United States Navy and at EADS, NA, and his valuable corporate governance experience gained while serving as a director for other public and private companies. Mr. Oliver has been a director of our company since September 2006.
Board Committees
| • | Reviewing and making recommendations to our Board with respect to director compensation; |
INFORMATION ABOUT EXECUTIVE AND DIRECTOR COMPENSATION
INFORMATION ABOUT EXECUTIVE AND DIRECTOR COMPENSATION
Business Overview
| • | Maintained our performance-based annual cash bonus program while attempting to balance our ability to pay with our desire to use cash as an incentive payout when performance warrants compensation. |
Business Overview
| • | Managed our equity compensation program as efficiently as possible, taking into account fluctuations in the value of our company’s stock price and, in periods where the price has declined, the corresponding declining value of our equity program and our limited pool of available shares for grant. |
Business Overview
| • | Provided an overall compensation package, including bonuses (when earned) and equity awards, for each executive officer, being mindful of the balance between the need to retain critical talent to successfully navigate our company through a challenging business environment, and our company’s financial position. |
Overview of Our Executive Compensation Program
| • | Performance-based annual cash bonuses; |
Overview of Our Executive Compensation Program
| • | Long-term equity incentives; and |
Overview of Our Executive Compensation Program
| • | Severance and change-in-control benefits. |
Fiscal 2022 Compensation Programs and Decisions
| • | Performance-Based Annual Cash Bonuses. For fiscal 2022, our company continued to focus on operating cash flow, revenues and operating expenses as objectives in our annual cash bonus program. The Compensation Committee focused solely on the achievement of corporate goals for our annual bonus program for fiscal 2022 and viewed these corporate objectives as key for our company’s short-term sustainability and long-term growth. In fiscal 2022, each named executive officer received a cash bonus payment equal to 53% of target bonus opportunity based on achieving (i) between threshold- and target-level performance on the revenue objective, and (ii) between target- and maximum-level performance on the operating expenses objective. Operating cash flow performance did not meet the threshold performance level requisite for payout, and as a result, no executive officer received payout under this objective. See the section entitled “Performance-Based Annual Cash Bonuses” below for a description of these metrics. |
Fiscal 2022 Compensation Programs and Decisions
| • | Long-Term Equity Incentive. The Compensation Committee recommended, and the Board approved, annual long-term equity awards to our named executive officers in fiscal 2022 based on such factors as: (i) performance and contribution during the prior fiscal year, (ii) competitive market practices, (iii) the overall compensation package for each executive officer, and (iv) the level of difficulty our company would face if we were to have to replace any executive officer if he or she were to voluntarily leave our company. The fiscal 2022 long-term equity awards granted to our named executive officers consisted of time-based awards that will vest over three years after grant and performance-based awards that will vest based upon our attainment of a performance goal tied to cumulative organic revenues after a three year performance period. In fiscal 2022, 60% of our chief executive officer’s long-term equity awards were performance-based awards. See the section entitled “Long-Term Equity Incentives” below for a description of these long-term equity awards. |
Fiscal 2022 Compensation Programs and Decisions
| • | Attract and retain executive officers who contribute to our long-term success; |
Fiscal 2022 Compensation Programs and Decisions
| • | Align compensation with our short-and long-term business objectives; and |
Fiscal 2022 Compensation Programs and Decisions
| • | Incentivize the executive officers to provide superior performance that will build long-term stockholder value. |
Fiscal 2022 Compensation Programs and Decisions
| • | Increasing long-term stockholder value by decreasing operating cash burn; |
The Compensation Committee’s Process
The Compensation Committee’s Process The Compensation Committee has a process to help ensure that our executive compensation program meets its principal objectives. In making compensation decisions, the Compensation Committee considers a wide variety of information, including how each compensation decision ties to its total compensation philosophy, market data and recommendations provided by the Compensation Committee’s independent compensation consultant, information from our general counsel, who also manages our human resources function and the thoughts of our chief executive officer and other Board members. Role of Independent Compensation Consultant. The Compensation Committee has engaged Radford, part of the Rewards Solutions practice of Aon plc, or Radford, since October 2016 as its independent outside compensation consultant to advise it and develop an executive compensation strategy, to assess the competitiveness of our executive compensation and to provide recommendations with respect to both the levels and structure of compensation for our executives. In fiscal 2022, Radford assessed the competitiveness of executive compensation through comparisons with peer groups and survey sources while additionally assessing our performance to ensure compensation levels were appropriately tied to performance. During fiscal 2022, Radford advised the Compensation Committee on compensation matters for all officers and directors and met with the Compensation Committee in executive sessions without the presence of management, as requested by the Compensation Committee. Radford did not perform services for our company that were unrelated to Compensation Committee matters during fiscal 2022. The Compensation Committee regularly reviews the services provided by its compensation advisers and believes that Radford is independent in providing executive compensation consulting services. The Committee conducted a specific review of its relationship with Radford in fiscal 2022 and determined that its work for the Compensation Committee did not raise any conflicts of interest, consistent with the guidance provided under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and by the SEC and the Nasdaq Global Select Market. The Compensation Committee continues to monitor the independence of its compensation consultant and any conflicts of interest related to services thereby on a periodic basis. Compensation Analysis. With the assistance of Radford, in June 2022, the Compensation Committee reviewed the compensation levels of our executive officers against compensation levels at peer group companies that were selected based on the following criteria:
Peer Group Companies
Peer Group Companies
Peer Group Companies
| Allied Motion Technologies, Inc. | PAR Technology Corp. | | AZZ | Park Aerospace Corp. | | Ballard Power Systems | Plug Power Inc. | | Broadwind, Inc. | Powell Industries Inc. | | Capstone Turbine Corp. | Preformed Line Products Company | | Energy Recovery Inc. | Thermon Group Holdings, Inc. | | FuelCell Energy Inc. | Ultralife Corp. | | Iteris, Inc. | Vicor Corp. | | Orion Energy Systems, Inc. | |
Peer Group Companies
This peer group is the same peer group used for fiscal 2021 compensation decisions. The Compensation Committee determined that the peer group remained appropriate for fiscal 2022 compensation decisions and only received updated peer group company financial information and survey data from Radford. The Compensation Committee utilized the peer group to provide context for its compensation decision-making. The compensation paid by peer group companies to their respective executive officers does not factor into the Compensation Committee’s determination of the peer group. After the peer group companies were selected in April 2022, Radford prepared and presented a report to the Compensation Committee summarizing the competitive data and comparisons of our executive officers to the comparable company market data utilizing publicly available data from the comparable companies and broad survey data (reflecting companies of similar size in the general and high-technology industries). We use the broad survey data in conjunction with peer group data in evaluating our executive compensation practices. The Compensation Committee does not rely upon data from any individual company participating in any of these surveys in making compensation decisions and uses the general survey data as only a reference point for evaluating our executive compensation practices, as opposed to benchmarking our executive compensation practices against the general survey data. Each of our elements of compensation is reviewed as part of this analysis and evaluation. The above review provided the Compensation Committee with general affirmation that its compensation decisions are aligned with the marketplace and our compensation program was achieving the Compensation Committee’s objectives, as described above. The Compensation Committee may, in its discretion, review and/or modify the selection criteria for our peer group and the peer group companies from year to year as it determines appropriate, depending on, among other factors, changes in the marketplace, acquisitions, divestitures and the business focus of us and/or our peer group companies. Other Compensation Information. Our general counsel, who also manages our human resources function, regularly attended Compensation Committee meetings in fiscal 2022 to provide information regarding our executive compensation program. Among other things, he performed internal analyses of marketplace practices for executive pay, made recommendations to our chief executive officer on compensation matters for all officers (other than our chief executive officer) and compiled other relevant data at the request of the Compensation Committee. Our chief executive officer is actively involved in the executive compensation process. Our chief executive officer reviews the performance of each of the executive officers (other than his own) and makes recommendations to the Compensation Committee regarding the salary and long-term incentive awards for executive officers other than himself, as well as the executive compensation program’s impact on attracting, retaining and motivating the level of executive talent necessary to achieve and exceed our company goals. The Compensation Committee is not bound by such recommendations, but generally takes them into consideration before making final determinations about the compensation of executive officers other than our chief executive officer. The Compensation Committee reviews the compensation for our chief executive officer and makes a recommendation to the full Board. The full Board determines the compensation of our chief executive officer. The Compensation Committee also considers information relevant to each executive’s specific situation including the executive’s marketability and the availability or scarcity of other qualified candidates, inside and outside our company, who could replace the executive should he or she leave our company. In determining equity compensation, the Compensation Committee considers levels of past performance, performance potential, retention risk and the value of the equity compensation needed to keep the total compensation opportunity level competitive and consistent with our compensation philosophy.
Risk Considerations in our Compensation Program
| • | The multiple elements and mix of our compensation packages, including base salary, annual bonus programs and, for many of our employees, equity awards vesting over multiple years, that are intended to motivate employees to take a long-term view of our business; |
Risk Considerations in our Compensation Program
| • | The structure of our annual cash bonus program, which (i) is based on a number of different performance measures (including operating cash flow, revenues and operating expenses) to avoid employees placing undue emphasis on any particular performance metric at the expense of other aspects of our business, (ii) is based on performance targets that we believe are somewhat aggressive yet reasonable and should not require undue risk-taking to achieve, and (iii) includes caps on the maximum payouts eligible under the program; and |
Compensation Mix
| Compensation Component | Principal Contributions to Compensation Objectives | Comments | | Base salary | • Attracts and retains talented executives with annual salary that reflects the executive’s performance, skill set and opportunities in the marketplace. | • Only component of compensation that is guaranteed. • Comprised 27% to 37% of total compensation for our named executive officers in fiscal 2022. | | Performance-based annual cash bonuses | • Focuses executives on annual financial and operating results. • Aligns compensation with our short-term business objectives and builds longer-term stockholder value by rewarding successful execution of our business plan. • Enables total cash compensation to remain competitive within the marketplace for executive talent. | • Payout target for named executive officers ranges from 55% to 100% of base salary and depends upon performance against company goals relating to operating cash flow, revenues and operating expenses. • 0% to 200% of target payout can be achieved. | | | | • Total cash compensation (base salary plus performance-based annual cash bonus) comprised 41% to 47% of total compensation for our named executive officers in fiscal 2022. • Performance-based annual cash bonus brings “at risk” fiscal 2022 cash compensation to a range of 11% to 14% of total compensation for our named executive officers. |
Compensation Mix
| Compensation Component | Principal Contributions to Compensation Objectives | Comments | | Long-term equity incentives | • Retains critical talent needed to successfully navigate our company through a challenging business environment. • Aligns compensation with our long-term business objectives and builds long-term stockholder value by rewarding successful execution of our business plan. | • Time-based and performance-based restricted stock awards were granted in fiscal 2022. • 60% of our chief executive officer’s long-term equity incentives were performance-based restricted stock awards in fiscal 2022. | | | | • Long-term equity incentives comprised 51% to 58% of total compensation for our named executive officers in fiscal 2022. • Long-term equity incentives combined with performance-based annual cash bonus brings “at risk” fiscal 2022 total compensation to a range of 62% to 72% of total compensation for the named executive officers. | | Severance and change-in-control benefits | • Helps to attract and retain talented executives with benefits that are comparable to those offered by companies with whom we compete for talent. • Incentivizes management to maximize stockholder value. | • Each severance agreement provides for certain severance benefits, primarily salary, health benefits and, in certain cases, prorated cash bonus, in the event that the executive’s employment is terminated under certain circumstances. The severance periods range from 18 months to 24 months. • The restricted stock awards granted to our executive officers provide for full acceleration of vesting upon a change in control of our company. |
Performance-Based Annual Cash Bonuses
Performance-Based Annual Cash Bonuses The Compensation Committee believes cash bonuses are an important factor in rewarding and motivating our executive officers. The Compensation Committee establishes a cash incentive plan for our executive officers on an annual basis, typically early in the fiscal year. On June 7, 2022, the Compensation Committee and the Board (in the case of our chief executive officer) approved an executive incentive plan for fiscal 2022 covering all of our executive officers. Under our executive incentive plan for fiscal 2022, the Compensation Committee continued to use operating cash flow and other financial objectives relating to revenues and operating expenses as the performance metrics for the payment of cash bonus awards for fiscal 2022. For each executive officer, the Compensation Committee assigned the following weighting to each such metric:
Performance-Based Annual Cash Bonuses
| • | Our company’s operating cash flow for fiscal 2022 as compared to the established target — 50%; |
Performance-Based Annual Cash Bonuses
| • | Our company’s revenues for fiscal 2022 as compared to the established target – 25%; and |
Performance-Based Annual Cash Bonuses
| • | Our company’s operating expenses for fiscal 2022 as compared to the established target – 25%. |
Performance-Based Annual Cash Bonuses
Under the terms of the fiscal 2022 executive incentive plan, the Compensation Committee and the Board (in the case of our chief executive officer) designated for each named executive officer a target cash bonus amount at 55% of base salary for Mr. Kosiba and 100% of base salary for Mr. McGahn. The amount of the target cash bonus award paid to each named executive officer could have been less than or greater than the executive’s target cash bonus incentive, with the amount capped at 200% of the target cash bonus amount. If less than the threshold performance level was achieved for a particular quantitative objective, no payment was received with respect to that objective in the bonus plan. The following table sets forth each named executive officer’s annual cash bonus award opportunities for fiscal 2022 at minimum, threshold, target and maximum:
Performance-Based Annual Cash Bonuses
| | Annual Cash Bonus Award Opportunity | | | | Annual Cash Bonus Award Opportunity ($) | | | | | Name | Minimum | Threshold (% of Target) | Target (% of Base Salary) | Maximum (% of Target) | Minimum | Threshold | Target | Maximum | | Daniel P. McGahn | 0% | 30% | 100% | 200% | $0 | $157,500 | $525,000 | $1,050,000 | | John W. Kosiba | 0% | 30% | 55% | 200% | $0 | $60,225 | $200,750 | $401,500 |
Performance-Based Annual Cash Bonuses
The Compensation Committee is responsible for determining the cash payout under the plan to each executive officer other than the chief executive officer. Our Board determines the cash payout under the plan for the chief executive officer, taking into account the recommendation of the Compensation Committee. The following summarizes the cash bonus opportunity for the named executive officers under each performance metric under the fiscal 2022 executive incentive plan. Milestones and achievement for the operating cash flow (50%) bonus measure: All of the named executive officers were subject to the same operating cash flow threshold that had to be met before payout could be earned. The fiscal 2022 milestones and achievement levels for our company’s operating cash flow measure are shown below. An executive’s payout on this measure was determined through a numerical calculation based on our company’s operating cash flow so the Compensation Committee (or, in the case of our chief executive officer, our Board) did not apply discretion.
Performance-Based Annual Cash Bonuses
| | Fiscal 2022 Milestones and Achievement for Operating Cash Flow Metric | | | | | | | Threshold (30%) | Target (100%) | Maximum (200%) | | Operating Cash Flow | Operating Cash Flow Milestones: | $(20.3M) | $(13.5M) | $0 | | | Operating Cash Flow Result: | | $(22.5M) | | | Bonus Opportunity | Achievement (% of Target): | 0% | | | | | % of Target Bonus Opportunity for Metric: | 0% | | |
Performance-Based Annual Cash Bonuses
Our company’s operating cash flow for fiscal 2022 was below threshold-level expectations, resulting in no bonus payout for this measure. Other financial objectives (50%): For fiscal 2022, the Compensation Committee (or, in the case of our chief executive officer, our Board) continued to place a greater emphasis on the achievement of the same corporate goals as opposed to individual goals for each executive officer under this measure, viewing these corporate goals as key for our company’s short-term sustainability and long-term growth. The Compensation Committee (or, in the case of our chief executive officer, our Board) awarded bonuses under this measure to each named executive officer as follows:
Performance-Based Annual Cash Bonuses
| Financial Objective (1) | Threshold | Target | Maximum | Achievement (% of Target) | Daniel P. McGahn Payout for Metric | John W. Kosiba Payout for Metric | % of Target Bonus Opportunity for Metric | | AMSC Revenues (25%) | $96.0M | $120.0M | $150.0M | 88% | $81,375 | $31,116 | 62% | | Operating Expenses (25%) | $48.0M | $40.0M | $30.0M | 112% | $194,250 | $74,278 | 148% | | Total Payout | | | | | $275,625 | $105,394 | 105% |
Performance-Based Annual Cash Bonuses
| (1) Operating expenses under the bonus plan is defined as operating expenses less (i) stock compensation expense, and (ii) restructuring and impairment expenses. |
Performance-Based Annual Cash Bonuses
Overall payout results: In June 2023, the Compensation Committee (or, in the case of our chief executive officer, our Board) approved the following payouts under the fiscal 2022 executive incentive plan:
Performance-Based Annual Cash Bonuses
| Name | Fiscal 2022 Target Cash Bonus | Fiscal 2022 Total Cash Payout | % of Target Bonus Opportunity | | Daniel P. McGahn | $525,000 | $275,625 | 53% | | John W. Kosiba | $200,750 | $105,394 | 53% |
Long-Term Equity Incentives
Long-Term Equity Incentives The Compensation Committee uses stock-based awards to retain executive officers and align their interests with those of our stockholders. For the last several years, the Compensation Committee awarded both time-based and performance-based restricted stock awards. A time-based restricted stock award typically will vest in equal annual installments over a three-year period. A performance-based restricted stock award typically will vest upon the achievement of specific objectives relating to our performance within a specified period. The Compensation Committee believes shares of restricted stock provide a more motivating form of incentive compensation than stock options, minimize stock compensation expenses and reduce the potential dilution of our shares. We generally grant shares of restricted stock to executive officers and other employees (i) upon their initial hire, (ii) in connection with a promotion, and (iii) annually based on merit. To determine the amount of stock-based awards granted to executive officers, our Compensation Committee (or, in the case of our chief executive officer, our Board) considers the performance of the individual and our company, historic stock-based awards and the awards made to those in similar positions at comparable companies. Our Board and Compensation Committee typically meet in or around May to review company performance for the prior fiscal year. At such time, the Compensation Committee (or, in the case of our chief executive officer, our Board) also reviews the performance of the executive officers over the prior fiscal year and grants equity awards, if any, to the executive officers. In fiscal 2022, the Compensation Committee and Board met in October and awarded time-based and performance-based restricted stock awards to Messrs. McGahn and Kosiba under our 2022 Stock Incentive Plan. In fiscal 2022, when considering equity grants to our executive officers, the Compensation Committee (or, in the case of our chief executive officer, our Board) considered:
Long-Term Equity Incentives
| • | Each executive officer’s performance and contribution during the prior fiscal year; |
Long-Term Equity Incentives
| • | Recommendations made by our management (except as to our chief executive officer); |
Long-Term Equity Incentives
| • | Competitive practices; |
Long-Term Equity Incentives
| • | The overall compensation package for each executive officer; |
Long-Term Equity Incentives
| • | The overall retention concerns and level of difficulty our company would face if we were to have to replace any executive officer if he or she were to voluntarily leave our company; and |
Long-Term Equity Incentives
| • | The availability of shares to grant to our employees and executive officers given our limited share pool. |
Long-Term Equity Incentives
Based on such considerations, the Compensation Committee recommended, and the Board awarded shares of time-based restricted stock and performance-based restricted stock to each executive officer. Messrs. McGahn and Kosiba received time-based restricted stock awards of 100,000 and 75,000 shares, respectively, each of which vests over three years in equal annual installments on each of June 19, 2023, May 19, 2024 and May 19, 2025, subject to the executive officer’s continued employment. Messrs. McGahn and Kosiba also received performance-based restricted stock awards of 150,000 and 50,000 shares, respectively. The performance measure on which vesting of these performance-based shares is contingent relates to cumulative organic revenues over the three fiscal year period beginning April 1, 2022 and ending March 31, 2025, or the Performance Period. Vesting of these performance-based shares is also subject to the executive officer’s continued employment through the Board’s determination of performance following the end of the Performance Period. The Compensation Committee recommended and the Board approved the application of this performance measure for the fiscal 2022-2024 performance cycle because they believe that such measure is aligned with maximizing long-term stockholder value. For these performance-based restricted stock awards, we defined cumulative organic revenues as our company’s gross revenues during the Performance Period, but excluding the effects of acquired revenues, product discontinuances and divestitures, and subject to other adjustments as deemed necessary or advisable by our Board in good faith to achieve the purposes of the award. Organic Grid revenues are calculated in the same manner for gross revenues and related adjustments in our Grid segment only. These performance-based restricted stock awards will vest based upon our attainment of the performance goal for the Performance Period. If the performance goal is met at maximum performance levels, then each executive officer will earn 100% of the performance-based shares awarded. The amount of performance shares that will vest based on threshold, target or maximum performance, as applicable, are set forth in the table below. When the result of the cumulative organic revenues performance measure lands between two goals (for example, between “target” and “maximum”), then the number of performance-based shares that will vest will be calculated on a linear basis (rounded to the nearest whole share).
Long-Term Equity Incentives
| | Below Threshold | Threshold | Target | Maximum | | Number of McGahn Performance Shares Eligible to Vest | 0 | 100,000 | 150,000 | 150,000 | | Number of Kosiba Performance Shares Eligible to Vest | 0 | 16,667 | 33,333 | 50,000 |
Board Certification in Fiscal 2022 of Achievement of Performance-Based Restricted Stock Awards
Board Certification in Fiscal 2022 of Achievement of Performance-Based Restricted Stock Awards On May 21, 2020, the Compensation Committee recommended and the Board approved performance-based restricted stock awards of 150,000 and 50,000 shares for Mr. McGahn and Mr. Kosiba, respectively. The performance measures on which vesting of these performance-based shares were contingent related to cumulative organic Grid revenues (weighted at two-thirds of each executive’s award) and cumulative organic total revenues (weighted at one-third of each executive’s award), each over the three fiscal year period beginning April 1, 2020 and ending March 31, 2023, or the Fiscal 2020-2022 Performance Period. Vesting of these awards was also subject to the executive officer’s continued employment through the Board’s determination of performance following the end of the 2020-2022 Performance Period. For these performance-based restricted stock awards, we defined (i) cumulative organic Grid revenues as our company’s gross Grid revenues during the Fiscal 2020-2022 Performance Period, excluding the effects of acquired revenues, product discontinuances and divestitures, and subject to other adjustments as deemed necessary or advisable by our Board in good faith to achieve the purposes of the award, and (ii) cumulative organic total revenues as our company’s gross total revenues during the Fiscal 2020-2022 Performance Period, excluding the effects of acquired revenues, product discontinuances and divestitures, and subject to other adjustments as deemed necessary or advisable by our Board in good faith to achieve the purposes of the award. The performance measures and goals pertaining to these performance-based restricted stock awards and the number of shares eligible to vest based on such performance measures and goals were as follows:
Board Certification in Fiscal 2022 of Achievement of Performance-Based Restricted Stock Awards
| | | | Threshold | Target | Maximum | | Cumulative Organic Grid Revenues for Fiscal 2020-2022 | < $ | 110,000,000 | $110,000,000 | $130,000,000 | $150,000,000 | | Number of McGahn Performance Shares Eligible to Vest | | 0 | 50,000 | 70,000 | 100,000 | | Number of Kosiba Performance Shares Eligible to Vest | | 0 | 16,667 | 23,333 | 33,333 |
Board Certification in Fiscal 2022 of Achievement of Performance-Based Restricted Stock Awards
| | | | Target | Maximum | | Cumulative Organic Total Revenues for Fiscal 2020-2022 | <$ | 177,500,000 | $177,500,000 | $210,000,000 | | Number of McGahn Performance Shares Eligible to Vest | | 0 | 30,000 | 50,000 | | Number of Kosiba Performance Shares Eligible to Vest | | 0 | 10,000 | 16,667 |
Board Certification in Fiscal 2022 of Achievement of Performance-Based Restricted Stock Awards
On June 15, 2023, our Board certified that (i) actual cumulative organic Grid revenues of $164,627,242 for the 2020-2022 Performance Period exceeded the maximum-level cumulative organic Grid revenues amount of $150,000,000, and as a result, (A) all 100,000 of Mr. McGahn’s performance-based shares, and (B) all 33,333 of Mr. Kosiba’s performance-based shares vested, and (ii) actual cumulative organic total revenues of $202,137,035 for the 2020-2022 Performance Period landed between target-level and maximum-level performance, and as a result, (A) 45,161 of Mr. McGahn’s performance-based shares, and (B) 15,054 of Mr. Kosiba’s performance-based shares vested. Any remaining unvested shares were forfeited to the Company.
Severance and Change-in-Control Benefits
Severance and Change-in-Control Benefits We have entered into agreements with each of our executive officers that provide them with severance benefits in the event of the termination of their employment under specified circumstances, including termination following a change in control of our company. In addition, the restricted stock awards we grant to our executive officers provide for full acceleration of vesting upon a change in control of our company. These agreements, along with estimates of the value of the benefits payable under them, are described below under the caption “Employment Agreements and Severance Agreements with Executive Officers.” We believe providing these benefits helps us compete for and retain executive talent and that our severance and change-in-control benefits are generally in line with those provided to executives by comparable companies.
Fiscal 2022 Summary Compensation Table
Fiscal 2022 Summary Compensation Table The following table contains information with respect to the compensation for fiscal 2022 of our principal executive officer and our principal financial officer.
Fiscal 2022 Summary Compensation Table
| Name and Principal Position | Fiscal Year (1) | Salary | Stock Awards (2) | Non-Equity Incentive Plan Compensation (3) | All Other Compensation (4) | Total | | Daniel P. McGahn | 2022 | $525,000 | $1,130,000 | $275,625 | $11,151 | $1,941,776 | | President and Chief Executive Officer | 2021 | 525,000 | 1,107,000 | 283,500 | 10,558 | 1,926,058 | | | 2020 | 525,000 | 1,627,500 | 782,250 | 10,558 | 2,945,308 | | John W. Kosiba | 2022 | 365,000 | 510,000 | 105,394 | 11,151 | 991,545 | | Senior Vice President, Chief Financial Officer and Treasurer | 2021 | 345,000 | 442,800 | 102,465 | 10,531 | 900,796 | | | 2020 | 325,000 | 759,502 | 266,338 | 10,393 | 1,361,233 |
Fiscal 2022 Summary Compensation Table
| (1) Refers to the fiscal years ended March 31, 2023 (fiscal 2022), March 31, 2022 (fiscal 2021) and March 31, 2021 (fiscal 2020). |
Fiscal 2022 Summary Compensation Table
| (2) The amounts shown reflect the grant date fair value of awards granted during the applicable fiscal year computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in calculating the amounts in this column may be found in Note 17 to our audited consolidated financial statements for fiscal 2022 included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, filed with the SEC on May 31, 2023. |
Fiscal 2022 Summary Compensation Table
| (3) The included amounts in this column reflect cash bonuses paid under our executive incentive plans for fiscal 2022, fiscal 2021 and fiscal 2020. See “Compensation Discussion and Analysis — Compensation Mix — Performance-Based Annual Cash Bonuses” above for a description of the plan for fiscal 2022. |
Fiscal 2022 Summary Compensation Table
| (4) All Other Compensation is comprised of the following amounts: |
Fiscal 2022 Summary Compensation Table
| Name | Fiscal Year | Life Insurance Premiums (1) | Defined Contributions for 401(k) Stock Match | | Daniel P. McGahn | 2022 | $2,001 | $9,150 | | | 2021 | 2,008 | 8,550 | | | 2020 | 2,008 | 8,550 | | John W. Kosiba | 2022 | $2,001 | $9,150 | | | 2021 | 1,843 | 8,688 | | | 2020 | 1,843 | 8,550 |
Fiscal 2022 Summary Compensation Table
| (1) The life insurance premium amounts in the table above reflect premiums paid by us for life insurance for which the named executive officer is the named beneficiary. |
Grants of Plan-Based Awards Table for Fiscal 2022
Grants of Plan-Based Awards Table for Fiscal 2022 The following table contains information concerning potential future payouts under our fiscal 2022 executive incentive plan to the named executive officers. As discussed in “Compensation Discussion and Analysis — Compensation Mix — Long Term Equity Incentives” above, we granted awards of restricted stock to our named executive officers in fiscal 2022.
Grants of Plan-Based Awards Table for Fiscal 2022
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards (10) | | Name | Grant Date | Threshold $(2) | Target $(3) | Maximum $(4) | Threshold # (5) | Target # (6) | Maximum # (7) | | | | Daniel P. McGahn | 6/7/2022 | 157,500 | 525,000 | 1,050,000 | | | | | | | | 10/31/2022 | | | | | | | 100,000(9) | $452,800 | | | 10/31/2022 | | | | 100,000(8) | 150,000(8) | 150,000(8) | | $678,000 | | John W. Kosiba | 6/7/2022 | 60,225 | 200,750 | 401,500 | | | | | | | | 10/19/2022 | | | | | | | 75,000(9) | $306,000 | | | 10/19/2022 | | | | 16,667(8) | 33,333(8) | 50,000(8) | | $204,000 |
Grants of Plan-Based Awards Table for Fiscal 2022
| (1) Reflects the threshold, target and maximum cash bonus amounts under our executive incentive plan for fiscal 2022. See “Compensation Discussion and Analysis — Compensation Mix — Performance-Based Annual Cash Bonuses” above for a description of this plan. The amounts actually paid to the named executive officers under this plan are shown above in the Non-Equity Incentive Plan Compensation column of the Fiscal 2022 Summary Compensation Table. |
Grants of Plan-Based Awards Table for Fiscal 2022
| (2) Reflects the total minimum amount that would have been earned if the minimum performance levels for all of the annual metrics had been achieved. |
Grants of Plan-Based Awards Table for Fiscal 2022
| (3) Reflects the total amount that would have been earned if the targeted annual metrics had been achieved. |
Grants of Plan-Based Awards Table for Fiscal 2022
| (4) Reflects the total maximum amount that would have been earned if the maximum performance levels for all of the annual metrics had been achieved. |
Grants of Plan-Based Awards Table for Fiscal 2022
| (5) Reflects the total minimum amount of shares that will vest if the minimum performance levels are achieved. |
Grants of Plan-Based Awards Table for Fiscal 2022
| (6) Reflects the total amount of shares that will vest if the targeted performance metrics are achieved. |
Grants of Plan-Based Awards Table for Fiscal 2022
| (7) Reflects the total maximum amount of shares that will vest if the maximum performance levels are achieved. |
Grants of Plan-Based Awards Table for Fiscal 2022
| (8) Performance-based stock award which vests upon the attainment of specified cumulative organic revenues over the three fiscal year period beginning April 1, 2022 and ending March 31, 2025, subject to the executive officer’s continued employment throughout the performance period and until the Board determines whether the performance goals have been attained. |
Grants of Plan-Based Awards Table for Fiscal 2022
| (9) Restricted stock award vests in equal annual installments over a 3-year period, and will be fully vested on May 19, 2025, subject to the executive officer’s continued employment through each applicable vesting date. |
Grants of Plan-Based Awards Table for Fiscal 2022
| (10) Grant date value represents the FASB ASC Topic 718 value of the restricted stock award as of the grant date. A discussion of the assumptions used in calculating the amounts in this column may be found in Note 17 to our audited consolidated financial statements for fiscal 2022 included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, filed with the SEC on May 31, 2023. |
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022 The following table contains information regarding unexercised stock options and unvested restricted stock awards held by our named executive officers as of March 31, 2023.
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
| | 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 of Stock That Have Not Vested (#) | Market Value of Shares of Stock That Have Not Vested ($) (9) | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares That Have Not Vested ($) (9) | | Daniel P. McGahn | 15,999(1) | — | 25.10 | 7/31/2023 | — | — | — | — | | | | | | | 40,000(2) | 196,400 | | | | | | | | | | | 145,161(3) | 712,741 | | | | | | | 20,000(4) | 98,200 | — | — | | | | | | | — | — | 45,000(5) | 220,950 | | | | | | | 100,000(6) | 491,000 | — | — | | | | | | | — | — | 150,000(7) | 736,500 | | John W. Kosiba | 3,200(1) | — | 25.10 | 7/31/2023 | — | — | — | — | | | — | — | — | — | 26,666(2) | 130,930 | — | — | | | — | — | — | — | — | — | 48,387(3) | 237,580 | | | — | — | — | — | 8,000(4) | 39,280 | — | — | | | | | | | — | — | 18,000(5) | 88,380 | | | | | | | 75,000(8) | 368,250 | — | — | | | | | | | | | 50,000(7) | 245,500 |
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
| (1) These options were granted on July 31, 2013 and were fully vested on July 31, 2016. |
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
| (2) These awards were granted on May 21, 2020. The unvested portion of the award vested on June 19, 2023. |
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
| (3) These awards were granted on May 21, 2020, vest upon the attainment of specified cumulative organic Grid revenues and cumulative organic total revenues, each over the three fiscal year period beginning April 1, 2020 and ending March 31, 2023, subject to the named executive officer’s continued employment through the Board’s determination of performance following the end of the performance period. On June 15, 2023, the Board certified that maximum-level performance was achieved with respect to the cumulative organic Grid revenues performance objective and between target-level and maximum-level performance was achieved with respect to the cumulative organic total revenues. The number of shares shown reflects the shares that vested based on achievement of such performance. |
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
| (4) These awards were granted on May 20, 2021, The unvested portion of the award will vest in equal installments on each of June 19, 2023 and May 20, 2024. |
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
| (5) These awards were granted on May 20, 2021, vest upon the attainment of specified cumulative organic Grid revenues, over the three fiscal year period beginning April 1, 2021 and ending March 31, 2024, subject to the named executive officer’s continued employment through the Board’s determination of performance following the end of the performance period. The number of shares herein reflects the total number of shares subject to these awards assuming “maximum” performance. |
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
| (6) This award was granted on October 31, 2022, and will vest in equal annual installments on each of June 19, 2023, May 19, 2024 and May 19, 2025. |
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
| (7) These awards were granted on October 31, 2022 for Mr. McGahn and October 19, 2022 for Mr. Kosiba, vest upon the attainment of specified cumulative organic total revenues, over the three fiscal year period beginning April 1, 2022 and ending March 31, 2025, subject to the named executive officer’s continued employment through the Board’s determination of performance following the end of the performance period. The number of shares herein reflects the total number of shares subject to these awards assuming “maximum” performance. |
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
| (8) This award was granted on October 19, 2022, and will vest in equal annual installments on each of June 19, 2023, May 19, 2024 and May 19, 2025. |
Outstanding Equity Awards at Fiscal Year-End Table for Fiscal 2022
| (9) Based on $4.91 per share, the closing sale price of our common stock on March 31, 2023. |
Option Exercises and Stock Vested Table for Fiscal 2022
Option Exercises and Stock Vested Table for Fiscal 2022 The following table contains information concerning the exercise of stock options and vesting of restricted stock awards for each named executive officer during fiscal 2022.
Option Exercises and Stock Vested Table for Fiscal 2022
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting (1) | | Daniel P. McGahn | — | $— | 141,667 | $809,835 | | John W. Kosiba | — | $— | 58,833 | $322,185 |
Option Exercises and Stock Vested Table for Fiscal 2022
| (1) Value realized upon vesting is based on the closing sales price of our common stock on the Nasdaq Global Select Market on the vesting date. |
Pay Ratio Disclosure
Pay Ratio Disclosure Pursuant to Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of the annual total compensation of our principal executive officer to the annual total compensation of our median employee. During fiscal 2022, the principal executive officer of AMSC was our chairman of the Board, president and chief executive officer, Mr. Daniel P. McGahn. For fiscal 2022, the annual total compensation of Mr. McGahn, for purposes of this pay ratio disclosure, was $1,941,776, and for our median employee was $80,991 resulting in a pay ratio of approximately 24:1. We most recently calculated the median employee for purposes of providing pay ratio disclosure in fiscal 2021. For fiscal 2022, we have reviewed the changes in our employee population and employee compensation and, based on that review, determined that there was no change in our employee population or employee compensation that would significantly impact the fiscal 2022 pay ratio disclosure and require us to identify a new median employee. Therefore, we chose to use the same median employee for fiscal 2022 as used in fiscal 2021. A description of the methodology we used to identify the median employee can be found in our 2021 Proxy Statement. We calculated the annual total compensation for fiscal 2022 for such median employee using the same methodology we used for our named executive officers as set forth in the “Fiscal 2022 Summary Compensation Table” earlier in this section. We consider the pay ratio reported above to be a reasonable estimate, calculated in a manner intended to be consistent with Item 402(u) of Regulation S-K based on our internal records and the methodology described above. Item 402(u) of Regulation S-K allows companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Therefore, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure Pursuant to Section 953(a) of the Dodd-Frank Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid, or CAP, to our principal executive officer, or PEO, and non-PEO named executive officers, or the Non-PEO NEOs, and certain aspects of the financial performance of our company. Our Compensation Committee and our Board (in the case of our chief executive officer) do not utilize CAP as the basis for making compensation decisions. For further information concerning our compensation philosophy and how we align executive compensation with our performance, please see our “Compensation Discussion and Analysis” section elsewhere in this proxy.
Pay Versus Performance Table
Pay Versus Performance Table The following table sets forth information concerning the compensation of our NEOs for each of the fiscal years ended March 31, 2021, 2022 and 2023, and our financial performance for each such fiscal year:
Pay Versus Performance Table
| | | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | | Fiscal Year (a)(1) | Summary Compensation Table Total for PEO (b)(2) | Compensation Actually Paid to PEO (c)(3) | | Average Summary Compensation Table Total for Non-PEO NEOs (d)(2) | Average Compensation Actually Paid to Non-PEO NEOs (e)(4) | | Total Stockholder Return (f)(5) | Peer Group Total Stockholder Return (g)(6) | Net Income ($M) (h)(7) | | Revenues ($M) (i)(8) | | 2022 | $1,941,776 | | 1,058,766 | $991,545 | | 684,643 | $89.60 | $197.81 | ($ | 35,041) | $105,984 | | 2021 | $1,926,058 | ($ | 1,917,216) | $900,796 | ($ | 715,679) | $138.87 | $190.14 | ($ | 19,193) | $108,435 | | 2020 | $2,945,308 | | 8,014,215 | $1,361,233 | | 3,922,615 | $345.99 | $188.64 | ($ | 22,678) | $87,125 |
Pay Versus Performance Table
| (1) Daniel P. McGahn served as our PEO for the entirety of fiscal 2022, fiscal 2021 and fiscal 2020. John W. Kosiba, Jr., served as our only non-PEO NEO for the entirety of fiscal 2022, fiscal 2021 and fiscal 2020. |
Pay Versus Performance Table
| (2) Amounts reported in these columns represent (i) the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year in the case of our PEO, Mr. McGahn, and (ii) the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year for our non-PEO NEO, Mr. Kosiba. |
Pay Versus Performance Table
| (3) This figure represents compensation actually paid for our CEO, Mr. McGahn. Compensation actually paid is determined under SEC rules and represents an amount derived from the starting point of the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year, as adjusted under the methodology prescribed under the relevant rules as shown in the adjustment table below. The amounts shown do not reflect the value of vested compensation actually received by Mr. McGahn during the applicable fiscal year. |
Pay Versus Performance Table
| | Fiscal 2020 | | Fiscal 2021 | | Fiscal 2022 | | | Summary Compensation Table Total | | 2,945,308 | | 1,926,058 | | 1,941,776 | | Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | ($ | 1,627,500) | ($ | 1,107,000) | ($ | 1,130,000) | | Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | | 4,740,000 | | 570,750 | | 1,227,500 | | Adjust for Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | | 1,915,279 | ($ | 3,650,920) | ($ | 283,500) | | Adjust for Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | | 0 | | 452,538 | | 0 | | Adjust for Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | | 41,128 | ($ | 108,641) | ($ | 697,010) | | Compensation Actually Paid | | 8,014,215 | ($ | 1,917,216) | | 1,058,766 |
Pay Versus Performance Table
| (4) This figure is the compensation actually paid for our non-PEO NEO, Mr. Kosiba. Compensation actually paid is determined under SEC rules and represents an amount derived from the starting point of the “Total” compensation reported in the Summary Compensation Table for the applicable fiscal year, as adjusted under the methodology prescribed under the SEC’s rules as shown in the table below. The amounts shown do not reflect the value of vested compensation actually received by Mr. Kosiba during the applicable fiscal year. |
Pay Versus Performance Table
| | Fiscal 2020 | | Fiscal 2021 | | Fiscal 2022 | | | Summary Compensation Table Total | | 1,361,233 | | 900,796 | | 991,545 | | Subtract Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | ($ | 759,502) | ($ | 442,800) | ($ | 510,000) | | Add Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | | 2,212,006 | | 228,300 | | 613,750 | | Adjust for Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | | 920,010 | ($ | 1,492,514) | ($ | 142,198) | | Adjust for Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | | 0 | | 151,557 | | 0 | | Adjust for Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | | 188,867 | ($ | 61,018) | ($ | 268,454) | | Compensation Actually Paid | | 3,922,615 | ($ | 715,679) | | 684,643 |
Pay Versus Performance Table
| (5) Total Stockholder Return (TSR) is cumulative for the measurement periods beginning on March 31, 2020 and ending on March 31 of each of 2023, 2022 and 2021, respectively, calculated in accordance with Item 201(e) of Regulation S-K. |
Pay Versus Performance Table
| (6) The peer group used is the Nasdaq Electronic Component and Equipment Index (the “Peer Group”), as used by our company for purposes of compliance with Item 201(e) of Regulation S-K. |
Pay Versus Performance Table
| (7) The dollar amounts reported are our company’s net loss reflected in our company’s audited financial statements. |
Pay Versus Performance Table
| (8) In our company’s assessment, revenue is the financial performance measure that is the most important financial performance measure used by the company in fiscal 2022 to link compensation actually paid to performance. |
Pay Versus Performance Table
Performance Measures Used to Link Company Performance and CAP. The following is a list of performance measures, which in our assessment represent the most important performance measures used by our company to link company performance to compensation actually paid to our named executive officers for fiscal 2022. Each metric below is used for purposes of determining payouts under either our executive incentive cash bonus plan or vesting of our performance-based restricted stock. Please see our “Compensation Discussion and Analysis” section above for a further description of these metrics and how they are used in our company’s executive compensation program.
Pay Versus Performance Table
| Revenue | | Operating cash flow | | Operating expenses |
Description of Relationships Between Compensation Actually Paid and Performance
Description of Relationships Between Compensation Actually Paid and Performance Relationship between CAP and TSR. The graph below illustrates the relationship between our TSR, the Peer Group TSR, and CAP for the PEO and our Non-PEO NEO. Relationship between CAP and Net Income. The graph below reflects the relationship between our PEO and our Non-PEO NEO CAP and our Net Income. Relationship between CAP and Revenue (our company-selected measure). The graph below reflects the relationship between our PEO and Non-PEO NEO CAP and our company’s revenue.
Director Compensation
Director Compensation Our Compensation Committee is responsible for reviewing and making recommendations to our Board with respect to the compensation paid to our non-employee directors. For fiscal 2022, non-employee directors received cash compensation as follows:
Director Compensation
| • | Each non-employee director received $35,000 as an annual cash retainer and no per meeting fee; |
Director Compensation
| • | The non-employee Lead Director received an additional annual cash retainer of $12,000; |
Director Compensation
| • | The chairman of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee received an additional annual cash retainer of $20,000, $15,000 and $10,000, respectively; and |
Director Compensation
| • | The members of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee (other than the chairmen of such committees) received an additional annual cash retainer of $12,000, $9,000 and $6,000, respectively. |
Director Compensation
In addition to cash compensation, each non-employee director is granted an award of shares of common stock under the Amended and Restated 2007 Director Plan, or 2007 Director Plan, with an aggregate grant date value equal to $50,000. The annual award is granted three business days following the last day of each fiscal year, and is subject to proration for any partial fiscal year of service. Further, each non-employee director is granted an option to purchase shares of common stock under the 2007 Director Plan with an aggregate grant date value equal to $40,000 upon his or her commencement of service on the Board with an exercise price equal to the fair market value of our common stock on the date of the grant. These options vest in equal annual installments over a two-year period. Each option granted under the 2007 Director Plan becomes exercisable in full in the event of a change in control of the company. The term of each option granted under the 2007 Director Plan is 10 years, provided that, in general, an option may be exercised only while the director continues to serve as a director or within 60 days thereafter. The compensation packages for directors are intended to attract and retain high-quality individuals to provide oversight to our management team. Directors who are employees of the company receive no additional compensation for their service as directors. During fiscal 2022, we provided the following compensation to our non-employee directors:
Director Compensation
| Name* | Fees Earned or Paid in Cash | Stock Awards (1)(2) | Option Awards (1)(4) | Total | | Vikram S. Budhraja (3) | $12,093 | $58,490 | — | $70,583 | | Laura A. Dambier (3) | $37,962 | — | $40,046 | $78,008 | | Arthur H. House | $70,846 | $49,385 | — | $120,231 | | Margaret D. Klein (3) | $35,538 | — | $40,046 | $75,584 | | Barbara G. Littlefield | $54,269 | $49,385 | — | $103,654 | | David R. Oliver, Jr. | $61,000 | $49,385 | — | $110,385 |
Director Compensation
| * Excludes Mr. McGahn, who has served as our chief executive officer and as a director since June 1, 2011. Mr. McGahn received no compensation for his service as a director in fiscal 2022. Mr. McGahn’s compensation as an executive is reported in the Fiscal 2022 Summary Compensation Table included in this proxy statement. |
Director Compensation
| (1) The amounts shown reflect the grant date fair value computed in accordance with FASB ASC Topic 718 of (a) each director’s annual award of fully-vested shares of common stock, which resulted in the grant of 6,067 shares in April 2022, (b) Mr. Budhraja’s one-time award of 1,538 fully-vested shares of common stock granted in June 2022 in connection with his departure from our Board, and (c) each of Ms. Dambier’s and Ms. Klein’s one-time award of an option to purchase 10,282 shares of common stock granted in June 2022 in connection with commencing service on the Board. Each award was granted under the 2007 Director Plan. A discussion of the assumptions used in calculating the amounts in this column may be found in Note 17 to our audited consolidated financial statements for fiscal 2022 included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, filed with the SEC on May 31, 2023. |
Director Compensation
| (2) Based on stock price of $8.14 on the grant date of April 5, 2022 and $5.92 on the grant date of June 10, 2022. |
Director Compensation
| (3) Mr. Budhraja departed from our Board in June 2022. Ms. Dambier and Ms. Klein joined our Board in June 2022. |
Director Compensation
| (4) As of March 31, 2023, no non-employee director held unvested stock awards and each non-employee director held options for the following aggregate number of shares of common stock: |
Director Compensation
| Name | Number of Shares | | Vikram S. Budhraja | — | | Laura A. Dambier | 10,282 | | Arthur H. House | 9,703 | | Margaret D. Klein | 10,282 | | Barbara G. Littlefield | 5,939 | | David R. Oliver, Jr. | — |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS At the Annual Meeting, our stockholders will elect six directors to serve until our next annual meeting of stockholders, and until their respective successors are elected and qualified. The candidates listed below were nominated by the Board based on the recommendation of the Nominating and Corporate Governance Committee. The nominees must be elected by a plurality of the votes cast by the stockholders entitled to vote on the election. This means that the six nominees receiving the most affirmative votes will be elected as directors at the Annual Meeting. Votes withheld and “broker non-votes” will have no effect on the outcome of the election of directors. All of the nominees have indicated their willingness to serve, if elected, but if any of them should be unable to serve or for good cause will not serve, proxies may be voted for a substitute nominee designated by our Board, or the Board may elect to reduce the size of the Board. Information about each nominee is included under “Corporate Governance — Members of the Board” beginning on page 8 of this proxy statement. The Board recommends a vote FOR the election of Ms. Dambier, Mr. House, Ms. Klein, Ms. Littlefield, Mr. McGahn and Mr. Oliver, as directors.