DEF 14A of Lindsay Corp
Filed Nov 21, 2023 · FY20230001193125-23-281509
Proposal 1 Election of Directors
Proposal 1 Election of Directors The Company’s Certificate of Incorporation requires that the Board of Directors be divided into three classes that are elected to the Board on a staggered basis for three-year terms. At the Annual Meeting, the terms of two directors will terminate and stockholders will be voting on nominees to fill these two positions on the Board. Accordingly, the Board of Directors, upon recommendations made by the Corporate Governance and Nominating Committee, has nominated Robert E. Brunner and Randy A. Wood to serve as directors for terms ending at the Fiscal 2027 Annual Meeting. Messrs. Brunner and Wood are current directors of the Company serving for terms that will expire as of the date of the Annual Meeting. Each of Messrs. Brunner and Wood has expressed an intention to serve, if elected. The Board of Directors knows of no reason why any of them might be unavailable to continue to serve, if elected. There are no arrangements or understandings between Messrs. Brunner or Wood, on the one hand, and any other person, on the other hand, pursuant to which they were nominated to serve on the Board of Directors. The election of a director requires the affirmative vote of a plurality of the votes cast virtually or by proxy by persons entitled to vote at the Annual Meeting. Consequently, votes withheld and broker non-votes with respect to the election of directors will have no impact on the election of directors. If Mr. Brunner or Mr. Wood is unable to serve, the shares represented by all valid proxies will be voted for the election of such substitute nominee as the Corporate Governance and Nominating Committee may recommend to the Board of Directors. Proxies cannot be voted for a greater number of persons than the two director nominees named in this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF MESSRS. BRUNNER AND WOOD AS DIRECTORS OF THE COMPANY WITH
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF MESSRS. BRUNNER AND WOOD AS DIRECTORS OF THE COMPANY WITH TERMS ENDING AT THE FISCAL 2027 ANNUAL MEETING.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF MESSRS. BRUNNER AND WOOD AS DIRECTORS OF THE COMPANY WITH
| | PROPOSAL 1 ELECTION OF DIRECTORS |
Board of Directors and Committees
Board of Directors and Committees The following sets forth certain information regarding the directors and director nominees of the Company, including the two persons who have been nominated to serve for new terms expiring at the Fiscal 2027 Annual Meeting. Information is also provided concerning each director’s and director nominee’s specific experience, qualifications, attributes or skills that led the Board of Directors to conclude that each of them should serve as a director of the Company. The Board of Directors has determined that each of the non-employee directors, Messrs. Brunner, Christodolou, Di Si, Gokcen and Rayburn and Mses. Lindsey and Madere, are independent directors of the Company under the listing standards adopted by the New York Stock Exchange (“NYSE”).
Director Qualifications, Skills, and Background
Director Qualifications, Skills, and Background The following matrix highlights the Board of Directors’ broad range of qualifications, skills, and perspectives, producing a balanced and well-informed mix that facilitates the Board’s oversight of management and the Board’s ability to address the Company’s strategic opportunities and risks. The matrix sets forth the primary factors which the Board of Directors believes are important to the Company’s business and industry and which the Corporate Governance and Nominating Committee considers in connection with identifying and recommending nominees to serve as directors. While marked qualifications, skills, and experiences indicate strong expertise or experience in the applicable category or categories, the matrix does not encompass all of the directors’ abilities. The matrix also presents additional information regarding each director and director nominee’s background attributes. With an average age of 60 (with ages ranging from 45 to 75) and an average tenure of 8 years of service on the Board of Directors (with tenures ranging from 2 years to 24 years), each director brings a unique viewpoint as evidenced in part in the matrix below. While certain diversity characteristics, such as gender, race, and ethnicity, are important factors considered by the Corporate Governance and Nominating Committee when identifying, reviewing, and recommending nominees to serve as directors, neither the Board of Directors nor the Corporate Governance and Nominating Committee have a formal policy with regard to consideration of such factors. Directors, nominees, and prospective nominees are not discriminated against on the basis of gender, race, religion, national origin, sexual orientation, disability, or any other basis prescribed by law.
Director Qualifications, Skills, and Background
| | Brunner | Christodolou | Gokcen | Lindsey | Madere | Di Si | Rayburn | Wood | | Qualifications, Skills, & Experience | | | | | | | | | | Ag/Infrastructure/Energy Industry Experience | | ● | ● | | ● | ● | | ● | | Global Business Experience | ● | | ● | ● | ● | ● | ● | ● | | Public Company Senior Executive Leadership | ● | | ● | ● | ● | ● | ● | ● | | Financial/Capital Markets | ● | ● | | ● | | ● | | | | Innovation/Technology | ● | | ● | | ● | ● | ● | ● | | Corporate Governance/Risk/Legal/Regulatory | ● | ● | | ● | ● | | ● | | | Operations/Manufacturing/Supply Chain | ● | | | | ● | ● | ● | | | Strategy | ● | | ● | | ● | ● | ● | ● | | M&A | ● | ● | | ● | | ● | ● | | | Cybersecurity | | | ● | | | | | | | HR/Talent Management | ● | | | | ● | | ● | | | Public Board | ● | ● | | ● | ● | | ● | | | Background | | | | | | | | | | Age | 66 | 61 | 45 | 68 | 63 | 54 | 75 | 51 | | Board Tenure | 10 | 24 | 3 | 5 | 6 | 2 | 9 | 3 | | Gender | M | M | M | F | F | M | M | M | | Non-U.S. or Dual Citizenship | | | ● | | | ● | | ● | | Race/Ethnicity | | | | | | | | | | White/Caucasian | ● | ● | | ● | | | ● | ● | | Hispanic/Latin American | | | | | ● | ● | | | | Middle Eastern | | | ● | | | | | |
Director Qualifications, Skills, and Background
| | PROPOSAL 1 ELECTION OF DIRECTORS |
NOMINEES FOR ELECTION – Terms to expire at the Fiscal 2027 Annual Meeting
NOMINEES FOR ELECTION – Terms to expire at the Fiscal 2027 Annual Meeting
NOMINEES FOR ELECTION – Terms to expire at the Fiscal 2027 Annual Meeting
| Robert E. Brunner Age: 66 Director Since: 2013 Independent Key skills and experience • Business management and development • International operations • Mergers and acquisitions • Accounting principles, internal controls and audit committee functions | Board Committee Membership • Human Resources and Compensation Committee Other Current Directorships • Leggett & Platt, Inc. |
NOMINEES FOR ELECTION – Terms to expire at the Fiscal 2027 Annual Meeting
Robert E. Brunner, age 66, was an Executive Vice President of Illinois Tools Works, Inc., a diversified manufacturer of advanced industrial technology, from 2006 until his retirement in 2012. Prior to that position, Mr. Brunner was President, Global Automotive Fasteners from 2005 to 2006 and President, North American Automotive Fasteners from 2003 to 2005. Prior to that, Mr. Brunner held a variety of positions within Illinois Tools Works, Inc., including general management, operations management and sales and marketing. Mr. Brunner currently serves as the Lead Director on the Board of Directors of Leggett & Platt, Inc., a publicly held diversified manufacturer of engineered components and products, where he also serves as a member of the Human Resources and Compensation Committee and the Nominating, Governance and Sustainability Committee. From 2012 to 2023, Mr. Brunner served on the Board of Directors of NN, Inc., a diversified industrial company that designs and manufactures high-precision components and assemblies on a global basis, where he served as a member of the Compensation Committee and the Governance Committee. Mr. Brunner has been a director of the Company since 2013 and also serves as the Chairperson of the Board of Directors and as a member of the Company’s Human Resources and Compensation Committee. Mr. Brunner’s extensive experience in business management and development, international operations and mergers and acquisitions provide him with the relevant experience to serve on the Company’s Board of Directors.
NOMINEES FOR ELECTION – Terms to expire at the Fiscal 2027 Annual Meeting
| Randy A. Wood Age: 51 Director Since: 2021 Key skills and experience • Experience in leading domestic and international irrigation businesses • Building capabilities through innovation and technology | Board Committee Membership • None Other Current Directorships • None |
NOMINEES FOR ELECTION – Terms to expire at the Fiscal 2027 Annual Meeting
Randy A. Wood, age 51, is President and Chief Executive Officer of the Company and has held such position since January 2021. Mr. Wood has also been a director of the Company since January 2021 and he is the only executive officer of the Company serving on the Board of Directors. Between September 2020 and December 2020, Mr. Wood served as Chief Operating Officer of the Company. Between May 2016 and August 2020, Mr. Wood served as the Company’s President – Irrigation. Between October 2013 and May 2016, Mr. Wood served as President – International Irrigation of the Company. Between February 2012 and October 2013, Mr. Wood served as Vice President – Americas / ANZ Sales and Marketing. Previously he was Vice President – North America Irrigation Sales of the Company and held such position from March 2008, when he joined the Company. Prior to March 2008, Mr. Wood spent 11 years with Case Corporation / CNH Global including roles as the Senior Director of Marketing, Case IH Tractors, and Senior Director of Sales and Marketing, Parts and Service. Mr. Wood’s extensive experience in leading domestic and international irrigation businesses enables him to provide the Board of Directors with expert advice on a wide range of issues in the industries in which the Company operates. As an experienced Company executive who now serves as the Company’s President and Chief Executive Officer, Mr. Wood will continue to provide the Board of Directors with valuable insight into the Company’s day-to-day operations and achievements.
NOMINEES FOR ELECTION – Terms to expire at the Fiscal 2027 Annual Meeting
| | PROPOSAL 1 ELECTION OF DIRECTORS |
DIRECTORS CONTINUING IN OFFICE
DIRECTORS CONTINUING IN OFFICE
DIRECTORS CONTINUING IN OFFICE
| Michael N. Christodolou Age: 61 Director Since: 1999 Independent Key skills and experience • Investment management • Corporate strategy • Capital allocation • Mergers and acquisitions • Capital markets • Accounting principles, internal controls and audit committee functions | Board Committee Membership • Audit Committee (financial expert) • Corporate Governance and Nominating Committee Other Current Directorships • NETSTREIT Corp. Current Board Term Ends • Fiscal 2026 Annual Meeting |
DIRECTORS CONTINUING IN OFFICE
Michael N. Christodolou, age 61 (current term to expire at the Fiscal 2026 Annual Meeting), is the Manager of Inwood Capital Management, LLC, an investment management firm he founded in 2000. From 1988 to 1999, Mr. Christodolou was employed by Bass Brothers/Taylor & Company, an investment firm associated with the Bass family of Fort Worth, Texas. Since 2020, Mr. Christodolou has served as a member of the Board of Directors of NETSTREIT Corp., a publicly-traded REIT that acquires, owns, and manages single-tenant triple net lease e-commerce resistant retail commercial real estate, where he serves as a member of the Audit Committee and the Investment Committee. From 2016 until it was acquired in December 2017, Mr. Christodolou served on the Board of Directors of Omega Protein Corporation, a nutritional products company. From 2015 to 2016, Mr. Christodolou served on the Board of Directors of Farmland Partners, Inc., a publicly-traded REIT that acquires and owns high-quality North American farmland. Mr. Christodolou also previously served on the Board of Directors of XTRA Corporation from 1998 until 2001 when it was acquired by Berkshire Hathaway Inc. Mr. Christodolou has been a director of the Company since 1999 and served as Chairman of the Board from 2003 to January 2015. He currently serves as a member of each of the Company’s Audit Committee and Corporate Governance and Nominating Committee. Mr. Christodolou has over 35 years of experience in investment management and working with the management teams and boards of public companies on matters including corporate strategy, capital allocation, and mergers and acquisitions. His knowledge of the investment and capital markets and his experience as a director of public companies provide him with the relevant experience to serve on the Company’s Board of Directors. These experiences have given Mr. Christodolou an understanding of accounting principles, internal controls and audit committee functions; as a result, the Board has determined that he qualifies as an audit committee financial expert.
DIRECTORS CONTINUING IN OFFICE
| Pablo Di Si Age: 54 Director Since: 2022 Independent Key skills and experience • International operations • Business management and development • Knowledge of corporate finance, taxation and accounting • Accounting principles, internal controls and audit committee functions | Board Committee Membership • Audit Committee (financial expert) • Human Resources and Compensation Committee Other Current Directorships • Copersucar • JHSF Participações, S.A. and JHSF International Current Board Term Ends • Fiscal 2025 Annual Meeting |
DIRECTORS CONTINUING IN OFFICE
Pablo Di Si, age 54 (current term to expire at the Fiscal 2025 Annual Meeting), is the President and Chief Executive Officer of Volkswagen Group of America and the Chief Executive Officer of Volkswagen North American Region. Mr. Di Si joined Volkswagen, a multinational automotive manufacturing company, in 2014 as Chief Operating Officer and Chief Financial Officer of Argentina and was subsequently appointed as President and Chief Executive Officer of Argentina in 2016, as President and Chief Executive Officer of Latin America in 2017, and to his current positions in 2022. Prior to joining Volkswagen, Mr. Di Si held various key positions in finance, business development, and project management with CNH Global, Fiat Industrial S.p.A., Kimberly-Clark Corporation, Monsanto, and Abbott Laboratories. Since 2021, Mr. Di Si has served as a member of the Board of Directors of Copersucar, a global trader of sugar and ethanol. Since 2023, Mr. Di Si has served as an independent member of the Boards of Directors of JHSF Participações (Brazil’s Bovespa “JHSF”) and its parent company JHSF International. JHSF is a Brazilian luxury real estate and hotel conglomerate. Since 2023, Mr. Di Si has served as Chairman of Autos Drive America, a trade association that represents international automakers with presences in the United States. Mr. Di Si has completed the Managing Efficient Boards program at Harvard University and the CEO Global Program at Wharton, IESE and CEIBS Business School. Mr. Di Si has been a director of the Company since 2022 and he is also a member of the Company’s Audit Committee and the Company’s Human Resources and Compensation Committee. Mr. Di Si’s experience in international operations and business management and development, as well as his knowledge of corporate finance, taxation and accounting, provide him with the relevant experience to serve on the Company’s Board of Directors. These experiences have given Mr. Di Si an understanding of accounting principles, internal controls and audit committee functions; as a result, the Board has determined that he qualifies as an audit committee financial expert.
DIRECTORS CONTINUING IN OFFICE
| | PROPOSAL 1 ELECTION OF DIRECTORS |
DIRECTORS CONTINUING IN OFFICE
| Ibrahim Gokcen Age: 45 Director Since: 2021 Independent Key skills and experience • Artificial intelligence • Machine learning • Industrial internet of things • NACD Directorship Certified(TM) | Board Committee Membership • Audit Committee • Corporate Governance and Nominating Committee Other Current Directorships • Maersk Tankers • PNO • ZeroNorth Current Board Term Ends • Fiscal 2026 Annual Meeting |
DIRECTORS CONTINUING IN OFFICE
Ibrahim Gokcen, age 45 (current term to expire at the Fiscal 2026 Annual Meeting), has served as the Chief Data & Analytics Officer for Aon plc, a leading global professional services firm providing advice and solutions in risk, retirement and health, since May 2023. From October 2020 until he joined Aon in May 2023, Mr. Gokcen was the Founder and Managing Partner of Velocis Digital LLC, an interim executive services and management and execution consulting firm. From 2021 to 2023, Mr. Gokcen was also Strategic Advisor for NEO Holdings International, LLC, a blockchain company focused on transforming commodity trading for which he also previously served as Chief Technology Officer during 2021. Mr. Gokcen was the President and Chief Revenue Officer for Open Insights LLC, a data advisory and services company, during 2021. Prior to that, Mr. Gokcen was the Senior Vice President and Digital Chief Technology Officer for Schneider Electric, an energy management and automation company, from 2018 to 2020. Prior to that, Mr. Gokcen served as the Chief Digital Officer for A.P. Moller Maersk, an integrated transport and logistics company, from 2016 to 2018. Mr. Gokcen also previously held senior product, information technology, and research and development leadership roles at General Electric. Mr. Gokcen is NACD Directorship Certified(TM). Mr. Gokcen currently serves as an independent director for Maersk Tankers, a service company that provides commercial management solutions for shipowners in the tanker industry, ZeroNorth, a software and infrastructure security company that is the security industry’s first provider of orchestrated risk management, and PNO, a company with the Nordics’ largest range of short and long-term trailer rentals. Mr. Gokcen also serves as a member of the Board of Trustees of AnitaB.org, an organization that helps women and nonbinary people succeed in technology. Mr. Gokcen has been a director of the Company since 2021 and currently serves as a member of the Company’s Audit Committee and the Company’s Corporate Governance and Nominating Committee. Mr. Gokcen’s strong background in international markets and transforming businesses in a number of industries with technology provides him with the relevant experience to serve on the Company’s Board of Directors.
DIRECTORS CONTINUING IN OFFICE
| Mary A. Lindsey Age: 68 Director Since: 2018 Independent Key skills and experience • Investor relations • International and domestic M&A • Knowledge of corporate finance, capital and debt markets, taxation and accounting • Legal experience • Accounting principles, internal controls and audit committee functions | Board Committee Membership • Audit Committee (Chair; financial expert) • Corporate Governance and Nominating Committee Other Current Directorships • Methode Electronics, Inc. • Orion Engineered Carbons S.A. Current Board Term Ends • Fiscal 2025 Annual Meeting |
DIRECTORS CONTINUING IN OFFICE
Mary A. Lindsey, age 68 (current term to expire at the Fiscal 2025 Annual Meeting), is the retired Senior Vice President and Chief Financial Officer of Commercial Metals Company, a global manufacturer and recycler of steel and other metals. Ms. Lindsey joined Commercial Metals Company in September 2009 as Vice President-Tax. She was subsequently appointed Commercial Metals Company’s Vice President-Tax and Investor Relations in June 2015, Vice President and Chief Financial Officer in January 2016, and Senior Vice President and Chief Financial Officer in September 2017. In connection with Ms. Lindsey’s planned retirement from Commercial Metals Company, Ms. Lindsey stepped down as Senior Vice President and Chief Financial Officer in August 2019. Prior to joining Commercial Metals Company, Ms. Lindsey served as Vice President Tax and Tax Counsel for Albany International Corp., a global advanced textiles and materials processing company, from March 2006 to September 2009, and from January 2005 to March 2006, Ms. Lindsey was an attorney at Baker & Hostetler LLP, a national law firm. In addition, Ms. Lindsey served in various roles, including Vice President Tax and Tax Counsel, Legal Counsel responsible for global M&A and intellectual property, and General Manager of Corporate M&A, at The Timken Company, a global manufacturer of bearings, transmissions, gearboxes, and related components, from January 1985 to January 2005. Since 2020, Ms. Lindsey has served as a member of the Boards of Directors and the Audit Committees of Methode Electronics, Inc. and Orion Engineered Carbons S.A. Ms. Lindsey serves as the Chair of the Audit Committee of Methode Electronics, Inc. Ms. Lindsey has been a director of the Company since 2018 and currently serves as Chairperson of the Company’s Audit Committee and as a member of the Company’s Corporate Governance and Nominating Committee. Ms. Lindsey’s experience in investor relations and international M&A, as well as her knowledge of corporate finance, taxation and accounting, provide her with the relevant experience to serve on the Company’s Board of Directors. These experiences have given Ms. Lindsey an understanding of accounting principles, internal controls and audit committee functions; as a result, the Board has determined that she qualifies as an audit committee financial expert.
DIRECTORS CONTINUING IN OFFICE
| | PROPOSAL 1 ELECTION OF DIRECTORS |
DIRECTORS CONTINUING IN OFFICE
| Consuelo E. Madere Age: 63 Director Since: 2018 Independent Key skills and experience • Global ag industry experience • Management consulting and executive coaching • Domestic and global experience spanning manufacturing, strategy, technology, business development, profit and loss responsibility, and general management • Public company director experience | Board Committee Membership • Corporate Governance and Nominating Committee (Chair) • Human Resources and Compensation Committee Other Current Directorships • Nutrien Current Board Term Ends • Fiscal 2025 Annual Meeting |
DIRECTORS CONTINUING IN OFFICE
Consuelo E. Madere, age 63 (current term to expire at the Fiscal 2025 Annual Meeting), is the President of Proven Leader Advisory, LLC, a management consulting and executive coaching firm she founded in 2014. She is a former executive officer of Monsanto Company, a leading global provider of innovative, sustainable agricultural solutions. She retired from Monsanto in 2013 as Vice President of the company’s Global Vegetables and Asia commercial businesses and was a member of the Chief Executive Officer’s executive leadership team. Ms. Madere currently serves as a member of the Board of Directors of Nutrien, a publicly traded Canadian company listed on the New York Stock Exchange, where she chairs the Nominations and Governance Committee and is a member of the Audit Committee. From 2018 to 2022, Ms. Madere served as a member of the Board of Directors of S&W Seed Company, a Nasdaq-listed agricultural seed biotechnology company, where she chaired the Nominations and Governance Committee and was a member of the Compensation Committee. From 2014 to 2018, Ms. Madere served as a member of the Board of Directors of PotashCorp and was a member of its Audit Committee and its Safety, Health and Environment Committee. Ms. Madere is a NACD Board Leadership Fellow and holds a CERT certificate in Cybersecurity Oversight from the Software Engineering Institute at Carnegie Mellon University. Ms. Madere has been a director of the Company since 2018 and currently serves as Chairperson of the Company’s Corporate Governance and Nominating Committee and as a member of the Company’s Human Resources and Compensation Committee. Ms. Madere’s 30-plus years of domestic and global experience at Monsanto, spanning manufacturing, strategy, technology, business development, profit and loss responsibility and general management, along with her service as a director of public companies, provide her with the relevant experience to serve on the Company’s Board of Directors.
DIRECTORS CONTINUING IN OFFICE
| David B. Rayburn Age: 75 Director Since: 2014 Independent Key skills and experience • Manufacturing • International markets • M&A • Accounting principles, internal controls and audit committee functions | Board Committee Membership • Audit Committee (financial expert) • Human Resources and Compensation Committee (Chair) Other Current Directorships • None Current Board Term Ends • Fiscal 2026 Annual Meeting |
DIRECTORS CONTINUING IN OFFICE
David B. Rayburn, age 75 (current term to expire at the Fiscal 2026 Annual Meeting), is the retired President and Chief Executive Officer of Modine Manufacturing Company, a publicly-traded thermal management company that designs, manufactures and tests heat transfer products. Mr. Rayburn was the President and Chief Executive Officer and a Director of Modine Manufacturing Company from January 2003 until March 2008 when Mr. Rayburn retired. From 2002 to January 2003 Mr. Rayburn served as the President and Chief Operating Officer of Modine Manufacturing Company. From 1991 to 2002, he served in various executive roles at Modine Manufacturing Company including Executive Vice President, Vice President and General Manager. Mr. Rayburn previously served on the Board of Directors of Twin Disc, Inc. from 2000 to 2022, on the Board of Directors of Creative Foam Corporation from 2009 to 2017, on the Board of Directors of Jason, Inc. from 2001 to 2010, and on the Board of Directors of Unico, Inc., from 2008 to 2010. Mr. Rayburn has been a director of the Company since 2014 and he is also Chairperson of the Company’s Human Resources and Compensation Committee and a member of the Company’s Audit Committee. Mr. Rayburn’s strong background in manufacturing, international markets and acquisitions, combined with his corporate governance experience serving on public company boards, provide him with the relevant experience to serve on the Company’s Board of Directors. These experiences have given Mr. Rayburn an understanding of accounting principles, internal controls and audit committee functions; as a result, the Board has determined that he qualifies as an audit committee financial expert. Information regarding executive officers of the Company is found in the Company’s Annual Report which has been supplied with this Proxy Statement.
Compensation Discussion and Analysis
| • | Annual cash incentive awards to reward performance against short-term corporate and individual objectives; |
Compensation Discussion and Analysis
| • | Long-term equity incentive compensation to emphasize longer-term strategic objectives and align the interests of executives with those of stockholders; and |
Compensation Discussion and Analysis
| • | Annual Cash Incentive Awards. |
Compensation Discussion and Analysis
| • | Long-Term Incentive Compensation. |
Compensation Discussion and Analysis
| • | Maintained the weighting of performance stock units as 50% of the target dollar amount for the long-term incentive award, with stock options and restricted stock units each accounting for 25% of targeted dollar amounts for long-term incentive awards. |
Compensation Discussion and Analysis
| • | The Company retained its two evenly weighted performance stock unit performance measures, which align executives’ compensation with long-term value creation for stockholders. |
Compensation Discussion and Analysis
| • | The Company retained total stockholder return relative to a select peer group as a performance stock unit performance measure, which is an important indicator of the Company’s financial performance compared to the market. |
Compensation Discussion and Analysis
| • | The Company retained return on invested capital as a performance stock unit performance measure, which measures the Company’s operational efficiency in allocating capital. |
Compensation Discussion and Analysis
| • | Retained consistent three-year performance and vesting periods for all long-term incentives offered to executives. |
Compensation Discussion and Analysis
Annual Cash Incentives Earned for Fiscal 2023 Performance. For fiscal 2023, payments in connection with the Company’s annual cash incentive awards were reflective of the Company’s performance against its financial objectives and the officers’ performance against their individual goals. The financial performance component and the individual performance component accounted for 80% and 20%, respectively, of each officer’s potential annual cash incentive award. The Company exceeded the threshold level for its revenue goal and exceeded the maximum level for both its operating margin goal and its free cash flow goal. Based on these results, the overall Company financial performance component payout percentage was 147.5% of target. In addition, the officers generally achieved their individual objectives and were entitled to payouts under the individual performance component ranging from 80% to 100%. Performance Stock Units (“PSUs”) Earned for Fiscal 2021-2023 Performance. The end of fiscal 2023 marked the end of the three-year performance period for PSUs granted in fiscal 2021. For this performance period, the Company achieved three-year relative total stockholder return at the 27th percentile (resulting in a 55.2% of target payout for this component) and three-year average return on invested capital of 12.9% (resulting in a maximum 200% of target payout for this component), which equated to a cumulative payout percentage of 127.6% of target. Say on Pay. The Board of Directors and the Committee take several measures to monitor the degree of alignment between the financial interests of the Company’s executive officers and those of the Company’s stockholders, which include conducting a non-binding “say on pay” vote at each annual meeting of the Company’s stockholders. At the Company’s Fiscal 2023 Annual Meeting of Stockholders, approximately 94% of votes were cast in favor of the non-binding “say on pay” resolution – marking the 13th consecutive annual meeting in which more than 90% of votes were cast in support of the proposal. While the Committee considered the “say on pay” voting results in establishing fiscal 2023 and fiscal 2024 compensation, no specific actions were deemed necessary as the Committee believed the results of the “say on pay” votes were a confirmation that stockholders were in general agreement with the Committee’s compensation philosophy. The Committee will continue to consider the “say on pay” voting results and other feedback provided by the Company’s stockholders when making future compensation decisions concerning the Company’s executive officers. Compensation-Related Risk Assessment. The Committee has assessed the risks that could arise from the Company’s compensation program and does not believe that the terms of this program encourage excessive risk-taking that is reasonably likely to have a material adverse effect on the Company. The Committee considered the following factors as they relate to the compensation program:
Compensation Discussion and Analysis
| • | The balanced focus on both short-term and long-term financial goals; |
Compensation Discussion and Analysis
| • | Specific performance goals are reviewed and approved by the Committee; |
Compensation Discussion and Analysis
| • | The use of multiple financial performance goals so as to avoid over-emphasis on any one metric; |
Compensation Discussion and Analysis
| • | Long-term incentives have a three-year performance and vesting period; |
Compensation Discussion and Analysis
| • | The existence of caps on the potential maximum incentive payouts; |
Compensation Discussion and Analysis
The Committee’s Independent Compensation Consultant. The Committee engaged Meridian Compensation Partners, LLC (“Meridian”) in fiscal 2023 to, among other things, provide a competitive assessment of the Company’s executive compensation program and to evaluate the compensation of the Named Executive Officers in comparison to peer group proxy data and relevant survey data. Meridian was engaged directly by the Committee, but its fees were paid by the Company. Market Alignment of Executive Compensation. When evaluating the market competitiveness of executive salaries, target annual incentive opportunities, and target long-term incentive values, the Committee generally considers the market medians for comparable positions among manufacturing and general industry companies of similar size (measured by annual revenues) and complexity (measured primarily by number of distinct business lines and scope of international focus) as the Company, based on available peer group and survey data, with variation due to differences in executive skill levels and experience, the executive’s role, individual performance, organizational hierarchy, and internal fairness with other positions and roles within the Company. The Committee annually compares the Named Executive Officers’ general compensation levels against available market data and then also performs an in-depth review of the entire compensation program approximately every three years in order to comprehensively review the Company’s short and long-term compensation strategies, award mixes and performance metrics. In conducting its review and analysis, Meridian used a combination of proxy data from peer companies and survey composite data. Peer group data was used as the primary data source for establishing benchmark compensation levels for the Chief Executive Officer, Chief Financial Officer and other positions where comparable position data was available, with general industry survey data used as a supplemental data source for these positions. General industry survey data was used as the primary data source for positions where comparable position data was not sufficiently available in peer group public disclosures. The composite data was obtained from the Equilar Executive Compensation Survey and included compensation information from general industry companies with revenue between approximately one-third and three times the Company’s annual revenues. Each year, the Committee, with assistance from Meridian, reviews and considers modifications to the peer group, generally using the following selection criteria:
Compensation Discussion and Analysis
For fiscal 2023, Meridian again reviewed the peer group and recommended one change from the previous year’s membership, as Lydall, Inc. was removed because it was acquired. The resulting 22-company peer group used for fiscal 2023 pay decisions consists of the following companies (each of which was publicly traded, had updated proxy filings, remained within an appropriate size range with five-year average revenue within approximately one-third and three times the Company’s five-year average revenue, and did not have any pending mergers or acquisitions, bankruptcies, or other known current scandals that could diminish its effectiveness as a peer):
Compensation Discussion and Analysis
Annual Cash Incentive Awards. The Company provided annual cash incentive awards to its executive officers under a Management Incentive Plan for fiscal 2023 (the “2023 MIP”) that was adopted by the Committee. The Company utilized the annual cash incentive awards under the 2023 MIP primarily to encourage its executive officers to achieve specific short-term financial goals of the Company. In addition, a portion of the annual cash incentive awards was tied to individual performance objectives established for each executive officer participating in the 2023 MIP. The Committee adopted the 2023 MIP and established the financial and individual goals for executive officers under the 2023 MIP during the first quarter of fiscal 2023. The 2023 MIP established a target cash incentive amount for each Named Executive Officer (each a “Target Cash Incentive Award”). The Target Cash Incentive Awards were set as follows:
Compensation Discussion and Analysis
In each case, a Target Cash Incentive Award represents the total cash incentive a Named Executive Officer was entitled to receive if he had achieved 100% of the target levels under the financial performance component and individual performance component established for such Named Executive Officer under the 2023 MIP. The financial performance component accounted for 80% of each Named Executive Officer’s potential annual cash incentive award. This component consisted of three subcomponents: revenue, operating margin, and free cash flow. The Committee believed the use of revenue, operating margin, and free cash flow would provide a good balance of financial objectives to promote maximum stockholder value. For each Named Executive Officer, the financial performance component was based 100% on consolidated Company financial performance. For purposes of the annual cash incentive awards under the 2023 MIP, (i) revenue was defined as the Company’s fiscal 2023 operating revenues, (ii) operating margin was defined as the Company’s fiscal 2023 operating profit divided by the Company’s fiscal 2023 operating revenues, and (iii) free cash flow was defined as the Company’s fiscal 2023 free cash flow divided by the Company’s fiscal 2023 net earnings. Each of the three subcomponents was to be calculated using the Company’s Consolidated Statement of Operations for the year ended August 31, 2023. The Committee chose to use revenue, operating margin, and free cash flow as the financial performance measures for determining annual cash incentive awards under the 2023 MIP because it believed that the Named Executive Officers had significant influence over these measures, that these measures align the interests of officers with the creation of stockholder value, that these measures incentivize revenue growth as well as improving operating efficiency and profitability, and that these measures were well-understood by management and stockholders. Accordingly, each of the revenue subcomponent and the operating margin subcomponent was assigned a weighting of 37.5% by the Committee, and the free cash flow subcomponent was assigned a weighting of 25% by the Committee. In general, the Committee seeks to establish target levels for financial performance goals based on the Company’s annual budget for the relevant fiscal year as approved by the Board of Directors.
Compensation Discussion and Analysis
Transaction costs associated with any acquisition or divestiture considered, pursued, or closed are added back to profitability in the year or years in which such costs are incurred. Thus, consistent with the terms of the 2023 MIP, actual results were adjusted to account for professional fees incurred in connection with exploring certain strategic opportunities. Also consistent with the terms of the 2023 MIP and in addition to adding related transaction costs back to profitability, actual results for the selected financial performance goals were adjusted by subtracting the Board-approved business case for the Company’s acquisition of FieldWise in the fourth quarter of fiscal 2023 for purposes of award payout calculations. In the event that there had been any divestitures made during fiscal 2023, (a) actual results for the selected financial performance goals would have been adjusted by including the Board-approved budgets (and removing actual performance results) for such divestitures for purposes of award payout calculations, unless the Committee were to approve a modification to exclude any such items, and (b) as noted above, transaction costs would have been added back to profitability. Further, if a planned divestiture was not included in the budget, its financial performance metrics would not be included in the calculation of the financial performance goals so long as the divestiture was not completed by the end of the fiscal year. As permitted by the terms of the 2023 MIP, actual results were also adjusted to exclude the impact of an impairment related to the Company’s sale of a minority investment in a connected roadway company. Under the 2023 MIP, a Named Executive Officer could earn a portion of his Target Cash Incentive Award if he achieved at least a threshold level of performance for any of the financial or individual performance components. Separate analyses were performed to determine the payout earned under the financial performance component and the individual performance component, and those two components were then added together to determine the final cash incentive awarded to a Named Executive Officer. The financial performance subcomponents are calculated according to a scale that provides varying percentage payouts for “threshold”, “intermediate”, “target” and “maximum” performance levels. If the Company fails to meet the “threshold” performance level for a specific financial performance subcomponent, then the Named Executive Officer will receive no payout under that specific subcomponent. Percentage payouts between the threshold, intermediate, target and maximum levels are linearly interpolated for each financial performance subcomponent. For fiscal 2023, the following performance levels trigger the following percentage award payouts (calculated as a percentage of the Target Cash Incentive Award available under the overall Company financial performance component weighted at 80%):
Compensation Discussion and Analysis
| | Revenue (37.5%) | Operating Margin (37.5%) | Free cash flow (25%) | Award Payout for Financial Performance Subcomponent (as a % of Target Cash Incentive Award) | | Maximum | $1,003.7 million | 14.5% | 125% | 200% | | Target | $803.0 million | 12.6% | 100% | 100% | | Intermediate | $722.7 million | 11.4% | 90% | 75% | | Threshold | $642.4 million | 10.1% | 80% | 50% | | Below Threshold | — | — | — | 0% | | Actual | $674.1 million | 15.3% | 139% | 147.5% |
Compensation Discussion and Analysis
Executive Officer who meets all of his individual performance objectives will receive a 100% award payout, with award payouts ranging from 0% for not meeting any individual performance objectives to 200% for significantly exceeding all individual performance objectives. Both the financial and individual performance component calculations offer a range of payouts for performance that exceeds or falls short of the target levels. The Committee believes that this not only provides an incentive for executives to achieve performance that exceeds expectations, but it also provides constant motivation during down business cycles which can have detrimental effects on both financial performance and organizational health. By rewarding a range of performance, the Committee strives to partially counteract the cyclical nature of the Company’s business. Likewise, the payout of an earned award under one component or subcomponent is not contingent upon meeting a certain performance standard under any of the other components or subcomponents. For example, an executive who has met all of his individual performance objectives would still be entitled to receive a payout under the individual component even if the Company failed to meet the threshold financial performance objectives. Similarly, an executive may receive a payout if the threshold level (or higher) is met for a specific financial performance subcomponent even if the executive failed to meet his individual performance objectives and/or the Company failed to meet the threshold levels for any of the other financial performance subcomponents. During fiscal 2023, for purposes of the 2023 MIP, the Company recorded revenue of $674.1 million, operating margin of 15.3%, and free cash flow percentage of 139%. Based on these results, the overall Company Financial Performance Component payout percentage was 147.5% of target based on subcomponent payout percentages of 60%, 200%, and 200% for each of the revenue (37.5%), operating margin (37.5%), and free cash flow (25.0%) subcomponents, respectively. In addition, after the conclusion of fiscal 2023, Mr. Wood recommended scores to the Committee for each Named Executive Officer (including himself) under the Individual Performance Component of the 2023 MIP. The Committee then discussed and approved those scores, determining that the Named Executive Officers generally achieved their individual objectives and were entitled to payouts under the Individual Performance Component of the 2022 MIP ranging from 80% to 100%. The table below sets forth the 2023 MIP Target Cash Incentive Awards and actual payouts to each of the Named Executive Officers based upon fiscal 2023 performance.
Compensation Discussion and Analysis
| Named Executive Officer | 2022 MIP Target Cash Incentive Award | 2022 MIP Actual Cash Incentive Award Payout | Percentage of Target Earned | | Mr. Wood | $770,000 | $1,062,292 | 138% | | Mr. Ketcham | $278,200 | $378,241 | 136% | | Mr. Oberto | $222,750 | $298,396 | 134% | | Mr. Marion | $201,850 | $278,472 | 138% |
Compensation Discussion and Analysis
Long-Term Incentive Compensation. Long-term incentive compensation is designed to reward the achievement of longer-term strategic objectives and align the financial interests of the Company’s executive officers with those of the Company’s stockholders. For fiscal 2023, the Committee approved a target dollar amount for the long-term incentive award for each of the Company’s Named Executive Officers which were allocated as follows:
Compensation Discussion and Analysis
| • | one half in the form of performance stock units (“PSUs”), |
Compensation Discussion and Analysis
| • | one fourth in the form of restricted stock units (“RSUs”) and |
Compensation Discussion and Analysis
| • | one fourth in the form of nonqualified stock options. |
Compensation Discussion and Analysis
The PSUs, RSUs and stock options were granted pursuant to the Company’s 2015 Long-Term Incentive Plan, which was approved by the stockholders at the Company’s annual stockholder meeting in January 2015. The Committee believes that this mix of PSUs, RSUs and stock options will continue to promote sustained long-term performance and retention. In determining the number of PSUs, RSUs and stock options granted to the Named Executive Officers as part of their long-term incentive compensation for fiscal 2023, the Committee first established a dollar value of the total long-term
Compensation Discussion and Analysis
incentive awards to be awarded to each Named Executive Officer assuming they achieved target performance levels for the PSUs. The Committee established total long-term incentive award amounts as follows for fiscal 2023:
Compensation Discussion and Analysis
The grant date values allocated to PSUs and RSUs were divided by the closing price of the Company’s common stock on the grant date ($156.16 as of October 24, 2022) to convert those dollar values into total numbers of stock units initially awarded to each Named Executive Officer. While the number of PSUs granted was based upon a target level, the actual number of PSUs actually earned may be as low as 0% if the Company fails to meet the threshold performance level for both performance measures. Alternatively, the number of PSUs actually earned may be as high as 200% if the Company meets or exceeds the maximum performance level for both performance measures. The dollar values allocated to stock options were converted to a number of stock options by using the Black-Scholes option pricing formula on the grant date. Under the terms of the individual award agreements, both the PSUs and RSUs awarded to Named Executive Officers for fiscal 2023 are payable in common stock and provide the Named Executive Officers with special cash dividend equivalents which entitle them to receive any special cash dividend paid by the Company while the PSUs and RSUs are outstanding; provided, however, that any special cash dividend equivalents will be converted into additional units and will not be payable until all applicable vesting and performance conditions have been met. No cash payment or dividend equivalent will be payable in connection with any regular quarterly dividends. In addition, awards under the PSUs, RSUs and stock options are subject to certain anti-dilution adjustments in the event of a stock split, stock dividend, merger or other similar corporate transaction. The Committee has adopted a policy regarding the timing of grants of PSUs, RSUs and stock options to employees which generally provides that such grants will be made on an annual basis during the first quarter or at the beginning of the second quarter of the fiscal year and at least two business days after the Company has issued its full-year earnings release for the prior fiscal year. The specific terms of the PSU, RSU and stock option grants made to the Named Executive Officers for fiscal 2023 are as follows: Performance Stock Unit (PSU) Awards. PSUs represent a right to receive a certain target number of shares of the Company’s common stock at a specified time in the future if certain performance objectives have been met during the specified performance period leading up to the payout of the PSU. PSUs are, therefore, designed to reward achievement of specific performance objectives over this period. Historically, the Committee has awarded PSUs with a threshold payout of 50% of the target number and a maximum payout of 200% of the target number. In addition to requiring satisfaction of the applicable threshold performance levels, PSUs are only payable if the recipient remains employed with the Company until payout occurs after the end of the performance period (or under certain circumstances involving a change in control, death or complete disability, as discussed in the “Termination Payments” section below). Each PSU awarded in fiscal 2023 has a three-year performance period running through the end of fiscal 2024 (i.e. August 31, 2025) with any earned PSUs cliff vesting on November 1, 2025. The Committee selected a three-year performance period because measuring performance over a long period would be less affected by cyclical variations in the Company’s business and one-time events. The Committee felt that a three-year period was commonly used by similar companies for this reason. The Committee chose total stockholder return relative to a select peer group (“Relative Total Stockholder Return”) and return on invested capital (“ROIC”), each equally weighted, as the performance measures to be used to determine PSU payouts for the three-year performance period. Ultimately, the Committee chose to base PSU payouts on Relative Total Stockholder Return and ROIC because it determined that they align executives’ potential payouts with stockholder value creation and continue to encourage the efficient use of capital. Additionally, these performance measures could be easily quantified and calculated for the purposes of determining whether the Company had met the necessary performance requirements. The Committee assigned equal weighting to Relative Total Stockholder Return and ROIC for purposes of determining PSU payouts in order to drive profitable growth and focus on appropriate asset management. Although the Committee feels that Relative Total Stockholder Return and ROIC reasonably approximate the connection between executive performance and
Compensation Discussion and Analysis
In the event a member of the above peer group experiences a bankruptcy, that entity shall remain in the peer group but shall drop to the bottom of the ranking (i.e., lowest Total Stockholder Return). In the event that a member of the above peer group is acquired or delisted, that entity shall be removed from the peer group. For purposes of PSUs awarded in fiscal 2023, “ROIC” is calculated in the following manner: Net Operating Income After Tax (Average* Invested Capital**)
Compensation Discussion and Analysis
| | Total Stockholder Return (50% weight) | ROIC (50% weight) | Payout as % of Target | | Maximum | 75th Percentile | 14% | 200% | | Target | 50th Percentile | 12% | 100% | | Threshold | 25th Percentile | 10% | 50% | | Below Threshold | — | — | 0% |
Compensation Discussion and Analysis
To the extent the Company’s three-year absolute Total Stockholder Return is negative but relative performance is above the 50th percentile, the total percentage of PSUs to be eligible to be settled pursuant to the Relative Total Stockholder Return subcomponent shall be capped at the “target” amount. The Committee selected target performance measures that were aligned with the long-term target financial performance goals communicated by the Company to its stockholders in the 2022 Annual Report. The Committee attempted to establish maximum and threshold performance levels that would appropriately reward the Named Executive Officers for exceptional performance, while also providing them with continued motivation in the event that market factors or down periods make it impossible to meet target performance levels. Percentage payouts between the threshold, target and maximum levels are linearly interpolated for each financial performance subcomponent. A partial PSU payout can be earned by the Named Executive Officers as long as the Company achieves the threshold performance for one of the performance factors even if the Company does not achieve threshold performance for the other performance factor. The Committee also has discretion to adjust the payout calculation in order to reduce (but not increase) the number of PSUs earned to take into account any unanticipated events including, but not limited to, extraordinary or non-recurring items, changes in tax laws, changes in generally accepted accounting principles, impacts of discontinued operations and restatements of prior period financial results. If any of the Company’s financial statements are restated before the payout of PSUs as the result of errors, omissions or fraud, for any fiscal year during the three-year performance period, such restated results will be used to recalculate any PSU conversions made at the expiration of the performance period. Fiscal 2021-2023 Performance. The end of fiscal 2023 marked the end of the three-year performance period for PSUs granted in fiscal 2021. For this performance period, the Company achieved three-year Relative Total Stockholder Return in the 27th percentile (resulting in a 55.2% payout for this component) and three-year average Return on Invested Capital of 12.9% (resulting in a maximum 200% payout for this component), which equated to a cumulative payout percentage of 127.6% of target. In accordance with the terms of the PSUs earned for this performance period, Mr. Wood was issued 2,137 shares of common stock (resulting from 1,675 PSUs awarded in fiscal 2021), Mr. Ketcham was issued 2,137 shares of common stock (resulting from 1,675 PSUs awarded in fiscal 2021), Mr. Oberto was issued 1,298 shares of common stock (resulting from 1,018 PSUs awarded in fiscal 2021), and Mr. Marion was issued 1,010 shares of common stock (resulting from 792 PSUs awarded in fiscal 2021). No payouts have yet been earned with respect to the PSUs awarded in fiscal 2022 and fiscal 2023 which have three-year performance periods ending at the end of fiscal 2024 and fiscal 2025, respectively. For PSUs granted in fiscal 2021, “Relative Total Stockholder Return” and “Return on Invested Capital” or “ROIC” were calculated in the same manner as described above for PSUs granted in fiscal 2023. For purposes of calculating Relative Total Stockholder Return, two members of the originally approved peer group were acquired and thus removed from the peer group for PSUs granted in fiscal 2021. Otherwise, except for the inclusion of Art’s-Way Manufacturing Co., Inc. and Enviri Corporation f/k/a Harsco Corporation (which have since been removed from the Company’s peer group for PSUs granted in fiscal 2023) and the exclusion of 3D Systems Corporation and Trinity Industries, Inc. (which were subsequently added to the Company’s peer group for PSUs granted in fiscal 2023), the peer group for PSUs granted in fiscal 2021 was identical to the peer group identified above for PSUs granted in fiscal 2023. Restricted Stock Unit (RSU) Awards. For the previously discussed reasons, the Committee determined that one quarter of each Named Executive Officer’s long-term incentive award should consist of RSUs. RSUs represent a right to receive a certain number of shares of the Company’s common stock at a specified time in the future, but are not
Compensation Discussion and Analysis
conditioned upon achieving any specific performance objectives, and are only payable if the recipient remains employed by the Company at the end of the vesting period leading up to the payout of the RSU (or under certain circumstances involving a change in control, death or complete disability, as discussed in the “Termination Payments” section below). RSUs are designed primarily to encourage retention of executive officers and key employees. The RSUs awarded in fiscal 2023 vest according to a three-year schedule, with one-third of the RSUs vesting on November 1 of each fiscal year following the fiscal year of their award contingent upon the Named Executive Officer’s continued employment with the Company. Upon vesting, each RSU converts into a share of the Company’s common stock. Nonqualified Stock Option Awards. Nonqualified stock options represent an option to purchase shares of the Company’s common stock at an option price equal to the closing price on the New York Stock Exchange of the Company’s common stock on the grant date. Stock options have a 10-year term and, in order to be consistent with other long-term equity awards, stock options awarded in fiscal 2023 vest and become exercisable ratably over a 3-year period (one-third each year) on November 1 of the next three calendar years following the grant date contingent upon the Named Executive Officer’s continued employment with the Company (or under certain circumstances involving a change in control, death or complete disability, as discussed in the “Termination Payments” section below). The stock options are designed to motivate executives to increase stockholder value as the stock options will only have value if stockholders also benefit from increasing stock prices. The nonqualified stock options awarded in fiscal 2023 have an option price of $156.16, which is equal to the closing price on the New York Stock Exchange of the Company’s common stock on the grant date of October 24, 2022. No stock option may be exercised more than 10 years from the date of grant. Stock Ownership Guidelines. The Committee intends that annual grants of long-term incentive awards will create a layering effect that will provide constant motivation and alignment of executive and stockholder interests extending into the future and will support executive retention. In December 2014, the Board adopted formal stock ownership guidelines applicable to all members of senior management. Each Named Executive Officer is expected to reach his respective ownership guideline within seven years after the date of his appointment as an officer. In addition to shares owned by the executive, outstanding RSUs and in-the-money stock options, net of taxes and exercise price, are counted toward the ownership guideline. PSUs are not counted toward the ownership guideline until they are earned, vested and distributed to the executive. The following table sets forth the applicable stock ownership guideline for each Named Executive Officer and the current ownership multiple for such officer as of the Record Date.
Compensation Discussion and Analysis
executive physical program that provides each of them with a comprehensive health and wellness examination that goes beyond the standard physical examinations covered by most insurance programs and which reduces the risk for a significant business disruption by striving to prevent and/or timely treat executive illness. In fiscal 2022, the Company also adopted a nonqualified deferred compensation plan to allow a select group of eligible participants, including all Named Executive Officers, to elect to defer a portion of their compensation without regard to the tax code limitations applicable to tax-qualified plans. Additional information regarding the deferred compensation plan for this group is included under “Nonqualified Deferred Compensation” below. Other benefits provided to the Named Executive Officers are those which are generally available to all employees of the Company, subject to the satisfaction of certain eligibility requirements, such as participation in Company-sponsored health and dental insurance, life insurance and disability benefits, and the employee stock purchase plan. The Company and employee participants share in the cost of these programs. The Company maintains a qualified 401(k) retirement plan to which the Company makes matching contributions corresponding to employee contributions. The Company’s Named Executive Officers are eligible to participate in each of these employee benefit plans. See the Summary Compensation Table for additional information about the value of benefits and perquisites provided to Named Executive Officers in fiscal 2023. Termination Payments. The Company is party to arrangements with its Named Executive Officers that provide for termination payments under several possible scenarios, including payments that are triggered by a change in control of the Company. For all equity awards issued and outstanding under the Company’s 2015 Long-Term Incentive Plan, there will be no acceleration of vesting of RSUs and options upon a change in control unless (i) such awards are not assumed or substituted by the acquirer or (ii) the acquirer’s securities are not publicly traded in the United States, in which case, vesting would be fully accelerated. In the event of a change in control of the Company, outstanding PSUs will convert into an amount of Company common stock that is prorated to account for the amount of time the Named Executive Officers held the PSUs prior to the change in control transaction and will be paid out based on the probable or expected level of Relative Total Stockholder Return and ROIC at the time of the change in control. The Company has entered into employment agreements with each Named Executive Officer which do provide for certain additional compensation to them if their employment with the Company is terminated without cause. All termination provisions are designed to provide these executive officers with cash to provide for their living expenses in situations where their employment was not terminated voluntarily or for cause. As provided in Mr. Wood’s employment agreement, if Mr. Wood’s employment is terminated without cause other than at any time within one year following a change of control, he will receive severance compensation equal to one and one-half times the sum of his annual base salary plus target bonus. If Mr. Wood is terminated without cause within one year following a change in control, then he will receive severance compensation equal to three times the sum of his annual base salary plus target bonus. In the case of Messrs. Ketcham, Oberto, and Marion, each of them will be entitled to receive a lump sum payment equal to his annual salary if his employment is terminated without cause other than at any time within one year following a change in control or the sum of his annual salary plus target bonus if his employment is terminated without cause or if he terminates his employment for good reason within one year following a change in control. Potential Payments Upon Termination or Change in Control. The following tables set forth the estimated amount of the benefits that each of the Named Executive Officers would have received under a variety of hypothetical termination and change in control scenarios occurring on August 31, 2023. All of the information presented in the following tables is provided for illustrative purposes only.
TERMINATION SCENARIOS NOT INVOLVING A CHANGE IN CONTROL
TERMINATION SCENARIOS NOT INVOLVING A CHANGE IN CONTROL
TERMINATION SCENARIOS NOT INVOLVING A CHANGE IN CONTROL
| | Termination of NEO’s employment by the Company without Cause occurring on August 31, 2023: | | Termination of NEO’s employment by reason of the NEO’s death or disability occurring on August 31, 2023: | | | | Name | Cash Payment ($)(1) | Accelerated Equity Awards ($)(2) | Cash Payment ($) | Death/Disability Benefit ($)(3) | Accelerated Equity Awards ($)(4) | | Randy A. Wood | $2,310,000 | — | — | $1,000,000 | $1,306,829 | | Brian L. Ketcham | $428,000 | — | — | $928,000 | $408,180 | | Gustavo E. Oberto | $405,000 | — | — | $905,000 | $253,594 | | J. Scott Marion | $367,000 | — | — | $867,000 | $211,525 |
TERMINATION SCENARIOS NOT INVOLVING A CHANGE IN CONTROL
| (1) These amounts represent the payments that the Named Executive Officers (“NEOs”) would receive under their employment agreements if the Company should terminate their employment without Cause prior to a Change in Control (each as defined in the applicable employment agreement). |
TERMINATION SCENARIOS NOT INVOLVING A CHANGE IN CONTROL
| (2) The NEOs’ RSU and PSU award agreements both require that an NEO must remain employed with the Company on the scheduled RSU and PSU vesting date. In this scenario, if an NEO’s employment with the Company were to terminate on August 31, 2023, then that NEO would automatically forfeit the entirety of his previously issued and outstanding RSUs and PSUs. |
TERMINATION SCENARIOS NOT INVOLVING A CHANGE IN CONTROL
| (3) These amounts represent the amount of life insurance benefits that the NEO’s designated beneficiaries would receive upon the NEO’s death under life insurance coverage provided by the Company. The amounts do not include any additional benefits which might be paid out under supplemental coverage purchased by the NEOs on their own accord through the Company. The Company also provides disability insurance for the NEOs. In the event of a complete disability, the NEOs would first receive six months of short term disability benefits through regular payroll equal to 75% of their base salary. The disabled NEOs would then receive monthly long-term payments equal to 66.7% of their monthly base salary capped at $12,500 a month, continuing until they reach age 65. |
TERMINATION SCENARIOS NOT INVOLVING A CHANGE IN CONTROL
| (4) These amounts represent (i) the value of PSU and RSU awards which would convert into shares of Company common stock, and (ii) the in-the-money value of unvested stock options that would vest following the termination of an NEO’s employment as a result of the NEO’s death or complete disability. These amounts do not include the value of stock options that had already vested prior to the triggering event. Following a termination as a result of death or complete disability, (a) unvested stock options will become fully vested, (b) each outstanding RSU will automatically convert into one share of Company common stock, and (c) outstanding PSUs will convert into an amount of Company common stock that is prorated to account for the amount of time the NEOs held the PSUs prior to termination by reason of death or complete disability and will be paid out based on the probable or expected level of achievement with respect to the applicable performance measures at the time of termination by reason of death or complete disability (i.e., Relative Total Stockholder Return and ROIC). For illustrative purposes, these amounts were calculated assuming that the Company would have achieved a “target” level performance during the period prior to the termination by death or complete disability and that it would be probable and expected following the termination for the Company to continue that “target” performance for the remainder of the PSUs award period. These amounts were calculated using the $124.10 closing price of the Company’s common stock on the assumed date of termination by reason of death or complete disability of August 31, 2023. |
TERMINATION SCENARIOS NOT INVOLVING A CHANGE IN CONTROL
| | PROPOSAL 1 ELECTION OF DIRECTORS |
CHANGE IN CONTROL SCENARIOS
CHANGE IN CONTROL SCENARIOS
CHANGE IN CONTROL SCENARIOS
| | Scenario 1–The Company undergoes a Change in Control on August 31, 2023, where (i) the Company does not terminate the NEO’s employment without Cause and (ii) the NEO does not terminate his employment with Good Reason, and (iii) the NEO’s awards are assumed or substituted by an acquirer with securities that are publicly traded in the United States. | | Scenario 2–The Company undergoes a Change in Control on August 31, 2023, where (i) the Company does not terminate the NEO’s employment without Cause and (ii) the NEO does not terminate his employment with Good Reason, and (iii)(a) the NEO’s equity awards are not assumed or substituted by the acquirer and/or (b) the acquirer’s securities are not publicly traded in the United States. | | Scenario 3–The Company undergoes a Change in Control on August 31, 2023 and on that same date the Company either terminates the NEO’s employment without Cause or the NEO terminates his employment with Good Reason. | | | Name | Cash Payment ($) | Accelerated Equity Awards ($)(1) | Cash Payment ($) | Accelerated Equity Awards ($)(1) | Cash Payment ($)(2) | Accelerated Equity Awards ($)(1) | | Randy A. Wood | — | $1,293,081 | — | $1,306,829 | $4,620,000 | $1,306,829 | | Brian L. Ketcham | — | $394,431 | — | $408,180 | $706,200 | $408,180 | | Gustavo E. Oberto | — | $245,222 | — | $253,594 | $568,850 | $253,594 | | J. Scott Marion | — | $205,013 | — | $211,525 | $627,750 | $211,525 |
CHANGE IN CONTROL SCENARIOS
| (1) These amounts represent (i) the value of PSU and RSU awards which would convert into shares of Company common stock, and (ii) the in-the-money value of unvested stock options that would vest upon a Change in Control. These amounts do not include the value of stock options that had already vested prior to the triggering event. Following a Change in Control, with respect to all equity awards issued under the Company’s 2015 Long-Term Incentive Plan that are assumed or substituted by an acquirer with securities that are publicly traded in the United States, (a) there will be no acceleration of vesting of stock options or RSUs and (b) outstanding PSUs will convert into an amount of Company common stock that is prorated to account for the amount of time the NEOs held the PSUs prior to the Change in Control transaction and will be paid out, as applicable, based on the probable or expected level of achievement with respect to the applicable performance measures at the time of the Change in Control (i.e., Relative Total Stockholder Return and ROIC). Following a Change in Control, with respect to all equity awards issued under the Company’s 2015 Long-Term Incentive Plan that are not assumed or substituted by an acquirer or if an acquirer’s securities are not publicly traded in the United States: (I) unvested stock options will become fully vested, (II) each outstanding RSU will automatically convert into one share of Company common stock, and (III) outstanding PSUs will convert into an amount of Company common stock that is prorated to account for the amount of time the NEOs held the PSUs prior to the Change in Control transaction and will be paid out, as applicable, based on the probable or expected level of achievement with respect to the applicable performance measures at the time of the Change in Control (i.e., Relative Total Stockholder Return and ROIC). For illustrative purposes, these amounts were calculated assuming that the Company would have achieved a “target” level performance during the period prior to the Change in Control and that it would be probable and expected following the Change in Control for the Company to continue that “target” performance for the remainder of the PSUs award period. These amounts were calculated using the $124.10 closing price of the Company’s common stock on the assumed Change in Control date of August 31, 2023. |
CHANGE IN CONTROL SCENARIOS
| (2) These amounts represent the payments that each NEO with an effective employment agreement would receive under his employment agreement if the Company should terminate his employment without Cause or if he should terminate his employment with Good Reason (each as defined in the applicable employment agreement) within one year following a Change in Control. |
CHANGE IN CONTROL SCENARIOS
Tax Considerations. The Committee considers the impact of applicable tax laws with respect to executive compensation. Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”), imposes an annual, individual limit of $1 million on the deductibility of the Company’s compensation payments to the chief executive officer and certain other Named Executive Officers. Prior to the effectiveness of the Tax Cuts and Jobs Act of 2017, the deduction limit did not apply to performance-based compensation, provided that certain conditions were satisfied. However, the Tax Cuts and Jobs Act of 2017 eliminated the Section 162(m) provisions exempting performance-based compensation from the $1 million deduction limit, subject to an exception for remuneration pursuant to a written binding contract which was in effect on November 2, 2017. As a result, while the Committee attempted to preserve, to the extent practicable, the deductibility of all compensation payments to the Company’s executive officers until the tax law change, the Company is generally no longer able to take a deduction for any annual compensation paid to its current or former Named Executive Officers in excess of $1 million and does not limit executive compensation to amounts deductible under Section 162(m).
CHANGE IN CONTROL SCENARIOS
| | PROPOSAL 1 ELECTION OF DIRECTORS |
Pay Ratio Information
Pay Ratio Information The Company is providing the following information about the relationship of the annual total compensation of its employees and the annual total compensation of Randy A. Wood, its Chief Executive Officer for fiscal 2023. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with applicable securities regulations. This information is being provided for the purposes of compliance with the pay ratio disclosure requirement. Neither the Human Resources and Compensation Committee nor management of the Company used the pay ratio measure in making compensation decisions. Under Instruction 2 to Item 402(u) of Regulation S-K under the Exchange Act, the median employee may be identified once every three years if there is no impact to the pay ratio disclosure. As there were no changes in the Company’s employee population or to the median employee’s compensation arrangements in fiscal 2023 that the Company reasonably believes would significantly change this pay ratio disclosure, the employee representing the median employee is the same employee selected for last year’s Proxy Statement. On August 31, 2022, the date which was originally selected to identify the median employee last year (the “Pay Ratio Date”), the Company had approximately 683 U.S. employees and 579 non-U.S. employees, for a total of 1,262 employees. This population consisted of the Company’s full-time, part-time, seasonal and temporary employees. In determining the median employee, the Company excluded from its employee population all of its 31 employees then located in Italy pursuant to a de minimis exemption permitted under SEC rules. Also, as reported in last year’s Proxy Statement, to identify the median employee from the Company’s employee population, a comparison was made of the amount of base salary and wages plus target cash bonus for each employee who was employed on the Pay Ratio Date as reflected in payroll records from September 1, 2021 to August 31, 2022, excluding the Company’s Chief Executive Officer. The compensation was annualized for employees who were hired during the measurement year but did not work for the Company the entire year, excluding seasonal and temporary employees. No cost-of-living adjustments were made in identifying the median employee. The median employee originally identified last year remained a full-time employee in fiscal 2023, and such employee’s annual total compensation was calculated using the same methodology used for the Company’s Named Executive Officers as set forth in the Summary Compensation Table. For fiscal 2023, the total compensation for Mr. Wood was $3,859,697 and the annual total compensation for the median employee was $60,872.48, which resulted in a ratio of 63.4 to 1. The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. The Company believes that the calculated ratios are reasonable estimates calculated in a manner consistent with the pay ratio disclosure requirements. The pay ratios reported by other companies, including those within the Company’s peer group and industry, may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
Pay Ratio Information
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SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($) | Stock Awards ($) (1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All other Compensation ($) | Total ($) | | Randy A. Wood | 2023 | 769,171 | 1,536,658 | 481,223 | 1,062,292 | 10,353(4) | 3,859,697 | | President and Chief Executive Officer (January 2021 – Present) Chief Operating Officer (September 2020 – December 2020) | 2022 | 719,279 | 1,311,505 | 436,696 | 1,090,777 | 9,374 | 3,567,631 | | | 2021 | 567,608 | 826,466 | 264,114 | 536,440 | 8,523 | 2,203,151 | | Brian L. Ketcham | 2023 | 429,239 | 398,952 | 124,998 | 378,241 | 17,017(5) | 1,348,447 | | Senior Vice President and | 2022 | 405,336 | 318,317 | 106,091 | 395,087 | 16,241 | 1,241,072 | | Chief Financial Officer | 2021 | 389,512 | 298,986 | 92,500 | 225,777 | 11,351 | 1,018,126 | | Gustavo E. Oberto | 2023 | 404,660 | 259,319 | 81,240 | 298,396 | 3,224(6) | 1,046,839 | | President – Irrigation | 2022 | 383,322 | 168,422 | 56,181 | 316,100 | 2,767 | 926,792 | | | 2021 | 364,796 | 200,931 | 62,499 | 211,520 | 2,673 | 842,419 | | J. Scott Marion | 2023 | 366,526 | 259,319 | 81,240 | 278,472 | 14,891(7) | 1,000,448 | | President – Infrastructure | 2021 | 336,962 | 141,388 | 43,750 | 192,318 | 11,639 | 726,057 | | | 2020 | 315,375 | 136,738 | 43,737 | 267,796 | 10,174 | 773,820 |
SUMMARY COMPENSATION TABLE
| (1) These awards consist of both RSUs and PSUs granted under the Company’s 2015 Long-Term Incentive Plan. The RSUs vest one-third per year over three years and the PSUs cliff vest on November 1 following the end of their respective three-year performance periods. The amount shown reflects the aggregate grant date fair value computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”), Stock Compensation, assuming a payout at target for equity incentive plan awards. Assuming the maximum level of performance was achieved for the PSUs awarded in fiscal 2023, the grant date fair value of these awards would have been: Mr. Wood, $2,006,079; Mr. Ketcham, $520,840; Mr. Oberto, $338,546; and Mr. Marion, $338,546. |
SUMMARY COMPENSATION TABLE
| (2) These awards consist of stock option awards granted under the Company’s 2015 Long-Term Incentive Plan. Stock options vest one-third per year over three years on November 1 of each year following the date of grant. The amounts shown reflect the grant date fair value as computed in accordance with ASC 718, Stock Compensation. The assumptions used to calculate the grant date fair value of stock option awards are included in Note 19 to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2023. |
SUMMARY COMPENSATION TABLE
| (3) These amounts represent annual cash incentive awards received under the Company’s Management Incentive Plan for each fiscal year. |
SUMMARY COMPENSATION TABLE
| (4) Consists of $5,919 in matching contributions to the Company’s defined contribution profit-sharing and 401(k) plan for fiscal 2023, $1,539 in premiums for supplemental life insurance for fiscal 2023, and $2,894 in fees for participation in a concierge executive health program for fiscal 2023. |
SUMMARY COMPENSATION TABLE
| (5) Consists of $9,706 in matching contributions to the Company’s defined contribution profit-sharing and 401(k) plan for fiscal 2023, $4,417 in premiums for supplemental life insurance for fiscal 2023, and $2,894 in fees for participation in a concierge executive health program for fiscal 2023. |
SUMMARY COMPENSATION TABLE
| (6) Consists of $1,869 in matching contributions to the Company’s defined contribution profit-sharing and 401(k) plan for fiscal 2023 and $1,355 in premiums for supplemental life insurance for fiscal 2023. |
SUMMARY COMPENSATION TABLE
| (7) Consists of $9,234 in matching contributions to the Company’s defined contribution profit-sharing and 401(k) plan for fiscal 2023, $2,416 in premiums for supplemental life insurance for fiscal 2023, and $3,241 in fees for participation in a concierge executive health program for fiscal 2023. |
SUMMARY COMPENSATION TABLE
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SUMMARY COMPENSATION TABLE
The following table sets forth information concerning each grant of an award made to the Company’s Named Executive Officers during the last completed fiscal year under the Company’s 2015 Long-Term Incentive Plan and Management Incentive Plan for fiscal 2023.
GRANTS OF PLAN-BASED AWARDS
GRANTS OF PLAN-BASED AWARDS
GRANTS OF PLAN-BASED AWARDS
| | Grant Date | Approval Date | Number of Non-Equity Incentive Plan Units Granted (#) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All other Stock Awards: Number of Shares of Stock or Units(3) (#) | All Other Option Awards: Number of Securities Under- lying Options(4) (#) | Exercise or Base Price of Option Awards ($/Sh)(5) | Grant date fair value of stock and option awards ($)(6) | | Name | | | | Thres- hold ($) | Target ($) | Maxi- mum ($) | Thres- hold (#) | Target (#) | Maxi- mum (#) | | | | | | Randy A. Wood | 10/24/22 | 10/24/22 | — | 385,000 | 770,000 | 1,540,000 | 3,081 | 6,163 | 12,326 | 3,081 | 8,666 | $156.16 | $2,017,881 | | Brian L. Ketcham | 10/24/22 | 10/24/22 | — | 139,100 | 278,200 | 556,400 | 800 | 1,600 | 3,200 | 800 | 2,251 | $156.16 | $523,950 | | Gustavo E. Oberto | 10/24/22 | 10/24/22 | — | 111,375 | 222,750 | 445,500 | 520 | 1,040 | 2,080 | 520 | 1,463 | $156.16 | $340,559 | | J. Scott Marion | 10/24/22 | 10/24/22 | — | 100,925 | 201,850 | 403,700 | 520 | 1,040 | 2,080 | 520 | 1,463 | $156.16 | $340,559 |
GRANTS OF PLAN-BASED AWARDS
| (1) Amounts reflect grants made under the Management Incentive Plan for fiscal 2023 (the 2023 MIP is discussed in the “Compensation Discussion and Analysis” section). Actual payouts earned under the program for fiscal 2023 can be found in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. |
GRANTS OF PLAN-BASED AWARDS
| (2) These awards consist of PSUs granted in fiscal 2023 under the Company’s 2015 Long-Term Incentive Plan for the fiscal 2023 to fiscal 2025 performance period. The amounts shown equal the aggregate number of shares of common stock into which the PSUs will convert if certain threshold, target and maximum performance objectives are met. |
GRANTS OF PLAN-BASED AWARDS
| (3) These awards consist of RSUs granted in fiscal 2023 under the Company’s 2015 Long-Term Incentive Plan. The amounts shown equal the aggregate number of shares of common stock into which the RSUs will convert if the grantee maintains his employment with the Company for the entire vesting period. These RSUs vest according to a three-year schedule, with one-third of the RSUs vesting on November 1 of each fiscal year following the fiscal year of the award. |
GRANTS OF PLAN-BASED AWARDS
| (4) These awards consist of stock options granted in fiscal 2023 under the Company’s 2015 Long-Term Incentive Plan. The amounts shown equal the aggregate number of shares of common stock into which the stock options will convert if the grantee maintains his employment with the Company for the entire vesting period. These options vest according to a three-year schedule, with one-third of the options vesting on November 1 of each fiscal year following the fiscal year of the award. |
GRANTS OF PLAN-BASED AWARDS
| (5) The exercise price is the closing price of the Company’s common stock on the date of grant. |
GRANTS OF PLAN-BASED AWARDS
| (6) Amounts are computed in accordance with ASC 718, Stock Compensation. PSUs are valued assuming a payout at target. The assumptions used to calculate the grant date fair value of stock option awards are included in Note 19 to the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2023. |
GRANTS OF PLAN-BASED AWARDS
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GRANTS OF PLAN-BASED AWARDS
The following table sets forth information concerning unexercised options, stock that has not vested and equity incentive plan awards for each of the Company’s Named Executive Officers that were outstanding as of the end of the last completed fiscal year.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | Option Awards | | | | | Stock Awards | | | | | | Number of Securities Underlying Unexercised Options (#) | Number of Securities Underlying Unexercised Options (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | 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 Been 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) | | Name | Exercisable | Unexercisable | | | | | | | | | Randy A. Wood | 3,809 | — | — | $78.23 | 10/21/2026 | | | | | | | 3,840 | — | — | $91.56 | 10/31/2027 | | | | | | | 3,743 | — | — | $91.82 | 10/22/2028 | | | | | | | 3,825 | — | — | $94.41 | 10/31/2029 | | | | | | | 2,010 | 1,005 | — | $110.42 | 10/26/2030 | | | | | | | 3,139 | 1,570 | — | $127.47 | 1/4/2031 | | | | | | | 3,482 | 6,965 | — | $145.93 | 10/25/2031 | | | | | | | — | 8,666 | — | $156.16 | 10/24/2032 | | | | | | | | | | | | 4,781(2) | 766,681 | | | | | | | | | | | | 16,527(3) | $2,051,001 | | Brian L. Ketcham | 3,999 | — | — | $78.23 | 10/21/2026 | | | | | | | 3,840 | — | — | $91.56 | 10/31/2027 | | | | | | | 3,743 | — | — | $91.82 | 10/22/2028 | | | | | | | 3,825 | — | — | $94.41 | 10/31/2029 | | | | | | | 2,010 | 1,005 | — | $110.42 | 10/26/2030 | | | | | | | 846 | 1,692 | — | $145.93 | 1/4/2031 | | | | | | | — | 2,251 | — | $156.16 | 10/24/2032 | | | | | | | | | | | | 1,565(2) | 194,217 | | | | | | | | | | | | 4,730(3) | $586,993 | | Gustavo E.Oberto | 2,326 | — | — | $94.41 | 10/31/2029 | | | | | | | 1,222 | 612 | — | $110.42 | 10/26/2030 | | | | | | | 114 | 57 | — | $127.47 | 1/4/2031 | | | | | | | 448 | 896 | — | $110.42 | 10/26/2030 | | | | | | | — | 1,463 | — | $156.16 | 10/24/2032 | | | | | | | | | | | | 964(2) | $119,632 | | | | | | | | | | | | 2,926(3) | $363,117 | | J. Scott Marion | 1,639 | — | — | $90.71 | 1/30/2028 | | | | | | | 1,770 | — | — | $91.82 | 10/22/2028 | | | | | | | 1,809 | — | — | $94.41 | 10/31/2029 | | | | | | | 950 | 476 | — | $110.42 | 10/26/2030 | | | | | | | 448 | 896 | — | $145.93 | 10/25/2031 | | | | | | | — | 1,463 | | $156.16 | 10/24/2032 | | | | | | | | | | | | 909(2) | 112,807 | | | | | | | | | | | | 2,602(3) | $322,908 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (1) The market value of unearned shares is calculated using $124.10 per share, which was the closing market price of the Company’s common stock on the NYSE on August 31, 2023, the last trading day of fiscal 2023. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (2) These awards consist of RSUs granted under the Company’s 2015 Long-Term Incentive Plan. These RSUs vest one-third per year, vesting ratably on each November 1 following the end of the fiscal year of their respective grant date. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (3) These awards consist of PSUs granted under the Company’s 2015 Long-Term Incentive Plan. These PSUs cliff vest on November 1 following the end of their respective three-year performance period. Each PSU converts into one share of common stock if target levels of performance are achieved, but may ultimately convert into a larger or smaller amount of stock depending upon actual performance achieved over the relevant three-year performance period. |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forth information concerning exercised options and vesting of stock awards for each of the Company’s Named Executive Officers as of the end of the last completed fiscal year.
OPTION EXERCISES AND STOCK VESTED
OPTION EXERCISES AND STOCK VESTED
OPTION EXERCISES AND STOCK VESTED
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) (1) | Value Realized on Vesting ($) | | Randy A. Wood | — | — | 5,972 | 991,352 | | Brian L. Ketcham | — | — | 4,766 | 791,156 | | Gustavo E. Oberto | — | — | 2,895 | 480,570 | | J. Scott Marion | 413 | 23,064 | 2,267 | 376,322 |
OPTION EXERCISES AND STOCK VESTED
| (1) These awards consist of the portion of RSUs granted during fiscal 2020, 2021 and 2022 that vested and converted into shares of common stock during fiscal 2023. The value realized upon vesting was calculated by multiplying the number of vesting RSUs by the $166.00 closing price of the Company’s common stock on November 1, 2022. |
Pension Benefits
Pension Benefits The Company does not provide for any defined benefit and actuarial pension plans for its Named Executive Officers. Accordingly, no tabular disclosure is being provided under this heading.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The Human Resources and Compensation Committee approved the Lindsay Corporation Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”) pursuant to an Adoption Agreement executed on April 30, 2022. The Deferred Compensation Plan, effective May 1, 2022, is an unfunded, non-qualified deferred compensation plan intended to be exempt from the vesting, funding and fiduciary requirements set forth in Title I of the Employee Retirement Income Security Act of 1974, as amended. The Deferred Compensation Plan allows a select group of eligible participants, including all Named Executive Officers, to elect to defer the receipt of up to 80% of their base salaries and up to 100% of their bonuses, and to receive such deferred compensation in the form of a lump sum or periodic annual installments at certain future dates as elected by the participant or upon the occurrence of certain events such as death or six months following separation from service, including in the event of an unforeseeable emergency, as defined in the Deferred Compensation Plan. Participant contributions will be fully vested at all times. Employer contributions will not be made under the Deferred Compensation Plan. Deferral and distribution elections are made by participants in accordance with the Deferred Compensation Plan and Section 409A of the Internal Revenue Code of 1986, as amended. Each participant’s deferred compensation account will be deemed invested in investment vehicles selected by the participant from a list made available by the Deferred Compensation Plan’s administrator from time to time. These investment alternatives will be substantially identical to the mutual fund offerings available under the Company’s 401(k) plan. The deemed investment accounts represent an unfunded, unsecured promise by the Company to pay such amounts in the future, and do not represent ownership of, or any ownership interest in, any particular assets of the Company. Payments under the Deferred Compensation Plan will be made from the assets of a trust established by the Company as a reserve for benefits payable under the Deferred Compensation Plan. The trust’s assets remain subject to the claims of the Company’s general creditors.
Nonqualified Deferred Compensation
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Nonqualified Deferred Compensation
The following table summarizes the activity within the Deferred Compensation Plan during fiscal 2023 for the Named Executive Officers.
Nonqualified Deferred Compensation
| Name | Aggregate Balance at August 31, 2022 ($) | Executive Contributions in Fiscal 2023 ($) (1) | Company Contributions in Fiscal 2023 ($) | Aggregate Earnings in Fiscal 2023 ($) (2) | Aggregate Withdrawals / Distributions ($) | Aggregate Balance at August 31, 2023 ($) | | Randy A. Wood | 100,000 | 100,000 | — | 3,808 | — | 203,808 | | Brian L. Ketcham | 123,397 | 200,000 | — | 4,699 | — | 328,096 | | Gustavo E. Oberto | 4,616 | 16,737 | — | 1,857 | — | 23,210 | | J. Scott Marion | 22,851 | 77,768 | — | 3,953 | — | 104,572 |
Nonqualified Deferred Compensation
| (1) The executive contribution amounts included in this table are derived from the Salary and Non-Equity Incentive Plan Compensation columns of the Summary Compensation Table. |
Nonqualified Deferred Compensation
| (2) Earnings (losses) are based on investment vehicles selected by the participant from a list made available by the Deferred Compensation Plan’s administrator. These investment alternatives are substantially identical to the mutual fund offerings available under the Company’s 401(k) plan. Earnings (losses) vary based on participant investment elections. These amounts are not included in the Summary Compensation Table because earnings (losses) were not preferential or above market. |
Nonqualified Deferred Compensation
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Pay Versus Performance
Pay Versus Performance The Company is providing the following information about the relationship of the “compensation actually paid” to its Chief Executive Officer and the “average compensation actually paid” to its other Named Executive Officers (“Other NEOs”), as calculated under the pay versus performance proxy rules adopted by the SEC under the Dodd-Frank Act, for fiscal 2023, fiscal 2022, and fiscal 2021 to certain financial performance measures. This information is being provided for the purposes of compliance with the pay versus performance disclosure requirement. Neither the Human Resources and Compensation Committee nor management of the Company used the pay ratio measure in making compensation decisions. For information regarding the decisions made by the Human Resources and Compensation Committee regarding Named Executive Officers’ compensation and for additional details on how the Company aligns pay with performance, see the “Compensation Discussion and Analysis” and “Executive Compensation” sections in this Proxy Statement.
Pay Versus Performance
| • | The “compensation actually paid” amounts are calculated by making SEC-required adjustments to the “Total” compensation amounts for the Named Executive Officers presented in the Summary Compensation Table. The dollar amounts for “compensation actually paid” in the table below do not reflect the actual amount of compensation earned, realized, or received by the Chief Executive Officer or any individual Named Executive Officer during the applicable fiscal years. A significant portion of the value reflected in the table remains subject to forfeiture if underlying vesting conditions for equity awards are not achieved. |
Pay Versus Performance
| • | The financial performance measures presented are Company total shareholder return (“Company TSR”), peer group total shareholder return (“Peer Group Index TSR”), net earnings, and ROIC. The peer group shown for the purposes of this pay versus performance disclosure is the S&P 600 Construction Machinery & Heavy Trucks Index, a peer group index that is presented in the Company Stock Performance graph in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
| Year (1)(2) | Summary Compensation Table Total for PEO (Wood) | Compensation Actually Paid (3) to PEO (Wood) | Summary Compensation Table Total for PEO (Hassinger) | Compensation Actually Paid (3) to PEO (Hassinger) | Average Summary Compensation Table Total for Other NEOs | Average Compensation Actually Paid (3) to Other NEOs | Value of Initial Fixed $100 Investment Based on: | | Net Earnings ($M) | ROIC (6) (%) | | | | | | | | | Company TSR (4) | Peer Group Index TSR (5) | | | | 2023 | 3,859,697 | 1,520,230 | — | — | 1,131,911 | 425,907 | 127.70 | 168.07 | 72.4 | 13.4 | | 2022 | 3,567,631 | 3,810,758 | — | — | 964,640 | 1,089,884 | 163.38 | 122.66 | 65.5 | 14.8 | | 2021 | 2,203,151 | 4,245,023 | 4,820,110 | 12,926,718 | 878,122 | 1,876,659 | 166.30 | 127.44 | 42.6 | 10.4 |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
| (1) Mr. Wood succeeded Timothy L. Hassinger as PEO on January 1, 2021; each was a PEO for part of fiscal 2021. Mr. Wood was PEO for the entirety of fiscal 2022 and fiscal 2023. |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
| (2) Other NEOs were Messrs. Ketcham, Oberto, and Marion for fiscal 2021, fiscal 2022, and fiscal 2023. |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
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PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
| (3) See following table for additional details about the calculation of the “compensation actually paid” value. |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
| | SCT Total Compensation | Less Equity Amounts Reported in SCT | | Plus Fair Value of Equity Awards Granted During the Fiscal Year | Change in Fair Value From Prior Fiscal Year of Unvested and Outstanding Awards | Change in Fair Value From Prior Fiscal Year for Awards Vesting in the Fiscal Year | Fair Value of Awards as of the Prior Fiscal Year that Failed to Meet Vesting Conditions During the Year | Compensation Actually Paid | | ($ in thousands) | | Stock Awards | Options | | | | | | | PEO (Wood) | | | | | | | | | | FY23 | 3,859,697 | (1,536,658) | (481,223) | 1,776,897 | (1,370,685) | (727,799) | — | 1,520,230 | | FY22 | 3,567,631 | (1,311,505) | (436,696) | 1,735,808 | 371,558 | (116,038) | — | 3,810,758 | | FY21 | 2,203,151 | (826,466) | (264,114) | 1,870,315 | 603,291 | 658,846 | — | 4,245,023 | | PEO (Hassinger) | | | | | | | | | | FY21 | 4,820,110 | (1,720,411) | (549,891) | 6,758,957 | 3,465,209 | 152,744 | — | 12,926,718 | | Average of Non-PEO NEOs | | | | | | | | | | FY23 | 1,131,911 | (305,863) | (95,826) | 353,726 | (353,397) | (304,644) | — | 425,907 | | FY22 | 964,640 | (209,376) | (68,674) | 289,147 | 170,698 | (56,551) | — | 1,089,884 | | FY21 | 878,122 | (212,218) | (66,245) | 561,400 | 377,848 | 337,754 | — | 1,876,659 |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
| (4) Company TSR assumes an initial $100 investment in Lindsay Corporation stock beginning on August 31, 2020. Company TSR is cumulative, with the value determined at the end of each applicable fiscal year, calculated in accordance with Item 201(e) of Regulation S-K, as modified by the pay versus performance proxy rules adopted by the SEC under the Dodd-Frank Act. |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
| (5) The peer group for the purposes of this pay versus performance disclosure is the S&P 600 Construction Machinery & Heavy Trucks Index, which is used by the Company for purposes of compliance with Item 201(e) of Regulation S-K. Peer Group Index TSR is calculated in accordance with Item 201(e) of Regulation S-K, as modified by the pay versus performance proxy rules adopted by the SEC under the Dodd-Frank Act. |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
| (6) The SEC requires disclosure of a Company-selected measure. The Company-selected measure for fiscal 2023 is ROIC, which is calculated in the following manner for each fiscal year: |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
Net Operating Income After Tax (Average* Invested Capital**)
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
| * - This average will be computed using the beginning and ending amounts of Invested Capital for the applicable fiscal year. |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
| ** - Invested Capital means Total Interest-Bearing Debt plus Shareholders’ Equity. |
PAY VERSUS PERFORMANCE TABLE – FISCAL 2023
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Compensation of Directors
Compensation of Directors In addition to the regular compensation reviews that the Committee conducts for the executive officer compensation program (as discussed in the Compensation Discussion and Analysis), the Committee also evaluates the Company’s compensation program for its Board of Directors. Based substantially upon Meridian’s compensation analysis and in order to continue to closely match the median market compensation paid to directors of similarly situated companies, the Committee recommended that no changes be made to the Board compensation program for fiscal 2023. For fiscal 2023, non-employee directors of the Company received annual cash retainers of $75,000, some or all of which they could elect to receive in the form of RSUs to be granted on the date of the Annual Meeting (along with the regular annual grant of RSUs discussed below). In addition, for fiscal 2023, the Chairperson of the Board of Directors received $70,000 for serving in that capacity, the Chairperson of the Audit Committee received $20,000 for serving as such Chairperson, the Chairperson of the Human Resources and Compensation Committee received $15,000 for serving as such Chairperson, and the Chairperson of the Corporate Governance and Nominating Committee received $15,000 for serving as such Chairperson. No additional cash retainers were paid to non-chair Board committee members for committee service. Directors are reimbursed for expenses they incur in attending meetings and are reimbursed for attending continuing education programs up to $5,000 per year or as otherwise approved by the Chairperson of the Board of Directors. Additionally, for fiscal 2023, each non-employee director received an annual grant of RSUs with an award value of $100,000 with the award being made on the date of the Annual Meeting. The number of RSUs to be awarded is based on the closing price of the Company’s common stock on the grant date, and the RSUs are payable in shares of common stock under the 2015 Long-Term Incentive Plan. Accordingly, on January 10, 2023, each continuing director received an award of 668 RSUs, all of which vested on November 1, 2023.
Compensation of Directors
| | PROPOSAL 1 ELECTION OF DIRECTORS |
Compensation of Directors
For fiscal 2023, new directors who are not employees of the Company would have received a one-time grant of RSUs with an award value equal to the prorated amount of the last annual grant of RSUs based on the amount of time the new director will serve on the Board of Directors until the next annual meeting of stockholders, with the grant being made on the date of their first regular Board meeting as a director. The number of units awarded would equal the prorated amount divided by the closing stock price on the date of grant. These RSUs vest on the earlier of November 1 following the date of grant or the date of the next annual meeting of stockholders. In addition to the cash retainers and RSUs described above, all non-employee directors were eligible to participate in the Lindsay Corporation Directors Nonqualified Deferred Compensation Plan, which was implemented during fiscal 2023 and provides non-employee directors with the ability to defer the receipt of some or all of their RSUs, whether received in lieu of their annual cash retainer or as part or all of their regular annual grant of RSUs. This program did not provide above-market or preferential earnings (as defined by SEC rules). In December 2014, the Board adopted formal stock ownership guidelines applicable to both senior management and directors. Directors are expected to maintain stock ownership equal to five times the Board annual cash retainer within five years of their election as a director. In addition to shares owned by the directors, outstanding RSUs and vested but deferred RSUs are counted toward the ownership guidelines. With the exception of Messrs. Gokcen and Di Si, who joined the Board in February 2021 and January 2022, respectively, all non-employee directors maintain stock ownership in excess of the Board’s stock ownership guidelines as of the Record Date (based on the 200-day average daily closing price of a share of the Company’s common stock on the NYSE as of such date). The following table sets forth the compensation paid to the Company’s directors in fiscal 2023. Mr. Wood also served as a director for the duration of fiscal 2023, but his compensation is discussed within the various tables included within the Compensation Discussion and Analysis contained within this Proxy Statement.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | | Robert E. Brunner | 145,000 | 100,000(3) | — | — | — | — | 245,000 | | Michael N. Christodolou | 75,000 | 100,000 | — | — | — | — | 175,000 | | Pablo Di Si | 27,292(2) | 147,708(2)(3) | — | — | — | — | 175,000 | | Ibrahim Gokcen | 75,000 | 100,000 | — | — | — | — | 175,000 | | Mary A. Lindsey | 95,000 | 100,000(3) | — | — | — | — | 195,000 | | Consuelo E. Madere | 90,000 | 100,000(3) | — | — | — | — | 190,000 | | David B. Rayburn | 90,000 | 100,000 | — | — | — | — | 190,000 |
DIRECTOR COMPENSATION
| (1) These awards consist of RSUs granted in fiscal 2023 under the Company’s 2015 Long-Term Incentive Plan. These RSUs vested on November 1, 2023. |
DIRECTOR COMPENSATION
| (2) With respect to his Board service from and after the Fiscal 2023 Annual Meeting, Mr. Di Si elected to receive his annual cash retainer in the form of RSUs. |
DIRECTOR COMPENSATION
| (3) These RSUs vested on November 1, 2023 but have been deferred pursuant to an election permitted by the Lindsay Corporation Directors Nonqualified Deferred Compensation Plan. The non-employee director shall have no voting rights with respect to the shares associated with such deferred RSUs while they remain deferred. |