DEF 14A of Mesa Laboratories Inc /Co/
Filed Jul 14, 2023 · FY20230001437749-23-019920
Overview of Our Director Nominees
Overview of Our Director Nominees Each of the six nominees to our Board of Directors (the “Board”) has extensive leadership and business experience and relevant expertise. All of our director nominees currently serve as directors for Mesa. For more information about our Board nominees, please see “Proposal 1 - Election of Directors.” Following Mr. Schmieder's retirement from the Board of directors effective August 25, 2023, our committee composition will be as follows.
Overview of Our Director Nominees
| | | | | Current Committee Memberships | | | | Director's Name and Principal Occupation | Age (1) | Director Since | Independent | Audit | Compensation | Nominating and Governance(2) | | John J. Sullivan, Chairperson Retired President and CEO, Mesa Laboratories, Inc. | 70 | 2009 | | | | | | Gary M. Owens President and Chief Executive Officer, Mesa Laboratories, Inc. | 55 | 2017 | | | | | | Shannon M. Hall Co-Founder and Chief Operating Officer, Pow.Bio | 54 | 2020 | X | | Chair | ✔ | | Jennifer S. Alltoft SVP - Business Development and Commercialization, Sumitovant Biopharma, Ltd. | 55 | 2019 | X | ✔ | | Chair | | Shiraz S. Ladiwala, Lead Independent Director Retired SVP - Strategy and Corporate Development, Thermo Fisher Scientific | 57 | 2021 | X | | ✔ | | | R. Tony Tripeny Retired Chief Financial Officer, Corning Incorporated | 64 | 2022 | X | Chair | ✔ | |
Overview of Our Director Nominees
(1) Age as of the date of the Annual Meeting. (2) As allowable under Nasdaq Rule 5605, the Board has reduced the minimum committee membership on the Nominating and Governance Committee to two members. Mr. Schmieder decided not to stand for re-election. Ms. Alltoft has been appointed as chair of the Nominating and Governance committee effective August 26, 2023. Under Nasdaq Rule 5605, we are allowed 180 days from when a committee member vacates the Audit Committee to appoint a new committee member. The Nominating and Governance Committee is searching for a seventh Board member. Once that Board member has been identified, we will evaluate and disclose our committee composition. We believe we have the right Board to continue executing Mesa's strategy, including our goal to grow through acquisitions. It is paramount to the Nominating and Governance Committee and the full Board that Mesa has a Board composed of directors who bring diverse viewpoints and perspectives, exhibit a variety of skills, and have appropriate professional experience, all of which enable them to effectively represent the long-term interests of our shareholders. The Board undergoes a formalized annual self-assessment and review to ensure that it has a balanced mix of skills and attributes to best oversee its business. In addition, each of the committees of the Board evaluate performance and effectiveness on an ongoing basis. Results of the committee assessments are discussed as needed at Board meetings, and improvements identified are incorporated. The following critical skills and attributes are represented among our Board members: The Board recognizes the need for refreshment to bring new perspectives and believes that we have a healthy mix of new and more seasoned directors, with four of the six members joining the Board within the last five years.
Governance Highlights
Governance Highlights Strong corporate governance contributes to long-term shareholder value. Therefore, we regularly adjust our practices to ensure that they are in line with industry standards, while still allowing for the efficient operation of our niche business.
Governance Highlights
| New in Fiscal Year 2023 | | As part of its commitment to enhancing corporate governance practices, the Board took notable governance actions since the 2022 Annual Meeting: ✔ Conducted shareholder outreach with investors ✔ Adopted share ownership requirements for named executive officers ("NEOs") ✔ Appointed Shiraz Ladiwala as Lead Independent Director ✔ Modified several components of our executive compensation program ✔ Provided oversight to management's ESG program |
Governance Highlights
The following represent key elements of our corporate governance programs:
Governance Highlights
| Board Composition | - We appointed a Lead Independent Director during fiscal year 2023 - 50% of our director nominees are diverse in terms of gender and/or ethnicity - All Committee members are independent | | Board Governance Practices | - We conduct annual Board and committee evaluations as well as director self-assessments - All directors and officers are subject to our Code of Business Conduct and Ethics - All directors attended 100%* of Board and committee meetings held during fiscal year 2023 - The Chairperson and CEO roles are held by separate individuals - Executive sessions of independent directors are held at each Board meeting | | Shareholder Rights | - All directors are elected annually by Shareholders - Shareholders have the right to call special meetings - Shareholders are entitled to fill vacancies on our Board - Shareholders may propose amendments to Articles of Incorporation without Board approval | | Risk Oversight | - Our full Board has responsibility for risk oversight at the Company and receives an annual enterprise-wide risk assessment to help inform management’s decision making - Our full Board has oversight of our ESG program and is updated at least twice per year by management - Our Audit Committee has oversight of cyber security risk and receives quarterly updates from the Company’s information technology department to understand our risk profile and strategy in this area | | Compensation Practices/Policies | - We have stock ownership guidelines for all directors and NEOs - Our executive compensation program links pay with corporate and individual performance - A significant portion of target compensation is at risk through short-term and long-term incentive awards - We have anti-hedging, anti-pledging, and anti-short sales policies |
Governance Highlights
*Mr. Tripeny joined our Board in June 2022 and attended all Board and committee meetings subsequent to his appointment.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
Director Nominees
Director Nominees There are six nominees for director, all of whom are current directors of Mesa that have been nominated by the Nominating and Governance Committee and the Board for re-election. Information about the Board and each director nominee is included in this section. If elected, each of the director nominees will hold office until the 2024 Annual Meeting of Shareholders and until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal.
Director Nominees
| Nominee's Name | Year First Elected Director | Position(s) with the Company | | John J. Sullivan | 2009 | Director, Chairperson of the Board | | Gary M. Owens | 2017 | Director, President and Chief Executive Officer | | Shannon M. Hall | 2020 | Director | | Jennifer S. Alltoft | 2019 | Director | | Shiraz S. Ladiwala | 2021 | Director | | R. Tony Tripeny | 2022 | Director |
Director Nominees
After consideration of the individual qualifications, skills and experience of each of our director nominees and his or her prior contributions to the Board, if applicable, management believes its Board will be well-balanced and effective. Shares represented by properly executed proxies will be voted, in the absence of contrary indication or revocation by the shareholder granting such proxy, in favor of the election of the persons named above as directors. The person named as proxy in the included proxy card has been designated by management and intends to vote for the election to the Board of the persons named above, each of whom is now a director of the Company. If any such nominee is unable to serve as a director, it is intended that the shares represented by the proxies will be voted, in the absence of contrary indication, for any substitute nominee that the Nominating and Governance Committee may designate. Management knows of no reason any nominee would be unable to serve. The information presented herein with respect to the nominees was obtained in part from the nominee and in part from the records of the Company. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH of the nominees for election as directors of the Company.
Board Biographies
Board Biographies The table below sets forth biographical information and the qualifications of all of our director nominees and the positions held by each as of March 31, 2023. The age of each director is as of August 25, 2023, the date of the Annual Meeting. In addition to the specific qualifications, skills and experience described below, each incumbent director has demonstrated a strong work ethic and dedication to Mesa, including preparing for meetings, supporting our strategic vision while asking constructive questions and productively challenging Management, and otherwise providing valuable oversight of our business on behalf of our shareholders. We also believe that each director, through their personal accomplishments and in their service to Mesa, has demonstrated high integrity, strong intellectual acumen, solid business judgment, and strategic vision.
Board Biographies
| Directors Standing for Re-Election | | | | | | John J. Sullivan | | | Background: | Qualifications: | | Chairman of the Board of Directors | | | John J. Sullivan, Ph.D. was appointed Chairman of the Board upon his retirement from his position as Mesa's Chief Executive Officer and President in September 2017. Dr. Sullivan joined us in October 2004 in the role of Vice President of Sales and Marketing and was promoted to the positions of President and Chief Operating Officer in 2009. Previously, Dr. Sullivan held leadership positions in Research and Development, Sales and Marketing Management, and Business Development at Varian, Inc., a major analytical instrument manufacturer, in addition to serving as a research scientist at the U.S. Food and Drug Administration and as an analytical chemist at BioMed Research Labs. Dr. Sullivan received his Bachelor of Science degree in Biology from Western Washington University in 1976 and a Ph.D. degree in Food Science from the University of Washington in 1982. | Dr. Sullivan's leadership has resulted in many accomplishments during his 14-year tenure at the Company, such as expanding revenues and profits, acquisitions of new product lines, entering multiple new markets, and expanding our international reach. Dr. Sullivan's keen leadership continues to be a driving force behind our company's innovations and expansion. | | Age: | 70 | | | | | Director Since: | 2009 | | | | | Gary M. Owens | | | Background: | Qualifications: | | President and Chief Executive Officer | | | Gary M. Owens joined us in April of 2017 as Chief Operating Officer and was promoted to the position of Chief Executive Officer and President in September 2017. Mr. Owens joined us in March 2017 as our Chief Operating Officer. From 2006 through March 2017, Mr. Owens served in various leadership positions at Danaher Corporation and its subsidiaries. From 1998 to 2006, Mr. Owens served in various product management, sales and business development roles for Canon Incorporated and Trilogy Software. From 1994 to 1998, Mr. Owens was a team leader for Bain & Company. Mr. Owens received his BSE in Mechanical Engineering from Tulane University in 1990 and his Master of Business Administration degree from Columbia Business School in 1994. | Mr. Owens has extensive experience in business development (including acquisitions and subsequent integrations), business management, and championing continuous improvement and lean initiatives, while driving operational improvements. He provides the Board with significant experience in driving improvements in Mesa's existing business, implementing the Mesa Way, and in maturing our business development program. | | Age: | 55 | | | | | Director Since: | 2017 | | | | | Shiraz Ladiwala | | | Background: | Qualifications: | | Lead Independent Director | | | During his 24-year career with Thermo Fisher Scientific, Mr. Ladiwala held various progressive leadership roles in the areas of corporate strategy and development and business operations, including as Senior Vice President of Strategy and Corporate Development and General Manager of Asia-Pacific. He received a bachelor’s degree in commerce from the University of Bombay and a Master of Business Administration from the University of Michigan Ross School of Business. | Mr. Ladiwala has extensive experience building a world class life sciences company. He brings his significant corporate strategic development experience, extensive knowledge of the life sciences, bioproduction and diagnostics industries, and a background in international business operations. Mr. Ladiwala has a leadership style characterized by cultural adaptability, strong business acumen, and financial knowledge. | | Age: | 57 | | | | | Director Since: | 2021 | | | | | Jennifer S. Alltoft | | | Background: | Qualifications: | | Director | | | Ms. Alltoft had a 32-year career at Pfizer, Inc., where she held multiple positions in Research and Development, Sales and Marketing, and General Management, including Global Leadership of Pfizer Inc.'s Biosimilar Division during 2019. Ms. Alltoft led Business Development and Commercialization at Sumitovant Biopharma from 2021 to June 2023 and is currently Head of Commercial Strategy and Market Development for Sumitomo Pharma America. Ms. Alltoft received a Higher National Certificate in Applied Biology from Bromley College in 1989, and a Bachelor of Science degree in Biological Sciences from North East Surrey College of Technology in 1992. | Ms. Alltoft has extensive experience in the pharmaceutical business and brings the Board expertise in sales and marketing, business development and research and development. | | Age: | 55 | | | | | Director Since: | 2019 | | | | | Shannon M. Hall | | | Background: | Qualifications: | | Director | | | Ms. Hall currently serves on the Board of one privately held company. Additionally, she has worked as an investor and advisor to multiple early-stage startups, primarily in the life sciences industry since 2018, and she co-founded Pow.Bio in 2019. For 25 years, she worked at Bio-Rad Laboratories in progressive roles, including over ten years in executive leadership roles. She led core businesses at Bio-Rad Laboratories, creating effective leadership teams and improving sales growth and margins in her organizations. Ms. Hall received a Bachelor of Arts in Biology from the College of Saint Benedict. | Ms. Hall's 25-year tenure at Bio-Rad Labs in progressive leadership roles positions her as an invaluable member of the Board. Her experience creating growth in core product lines and contributing to key acquisitions aligns with Mesa's strategy. Additionally, she brings many years of involvement and knowledge in biopharmaceutical research and development with a strong balance of technical skills and customer insight which complement Mesa's biopharmaceutical development growth strategy. | | Age: | 54 | | | | | Director Since: | 2020 | | | | | R. Tony Tripeny | | | Background: | Qualifications: | | Director | | | Tony Tripeny was appointed as a director on June 23, 2022. Throughout his 36 years with Corning, Incorporated, Mr. Tripeny held various, progressive leadership roles in the areas of corporate accounting and finance, including Senior Vice President, Corporate Controller and Principal Accounting Officer and was appointed Senior Executive Vice President, Chief Financial Officer in 2015 and retired from that position in 2022. He received a bachelor’s degree in economics from the University of Pennsylvania’s Wharton School of Business. Mr. Tripeny was appointed to the Board of Origin Materials, a listed company, in March, 2022. | Mr. Tripeny has significant corporate accounting and finance experience, extensive knowledge of the manufacturing, engineering, and life sciences industries, and expertise in international financial operations. In addition to strong leadership and communication skills, Mr. Tripeny brings to the Board and the Audit Committee an in-depth understanding of financial reporting, auditing practices and accounting issues that come before the Board and the Audit Committee. | | Age: | 64 | | | | | Director Since: | 2022 | | | |
Director Compensation
Director Compensation Our director compensation program is designed to appropriately compensate non-employee Board members for the time, expertise and work required to serve as a director and to align their interests with the long-term interests of our shareholders. As required by its charter, the Compensation Committee is responsible for reviewing, at least annually, and making recommendations to the Board regarding all matters pertaining to board member compensation. In making compensation recommendations, the Committee considers various factors including the responsibilities of board members in general as well the added responsibilities of committee assignments, the form and amount of compensation paid to directors by comparable companies, which are further discussed in the section "Compensation Discussion and Analysis" below, as well as guidance provided by the Committee’s independent compensation consultant. During the first quarter of fiscal year 2023, the Committee reviewed the compensation of non-employee directors and determined that the following changes were necessary to ensure that the program remained competitively positioned in the market and compared to Mesa's peer group. For fiscal year 2023, the annual director cash retainer was increased from $50,000 to $60,000 and the annual RSU retainer was increased from a grant date fair value of $115,000 to $150,000. Directors who are full time employees of Mesa do not receive compensation for their services as directors. For fiscal year 2023, non-employee directors received annual cash and equity retainers for service on the Board and committees as set forth in the table below:
Director Compensation
| Non-Employee Director Compensation | Annual Retainer (1) | Annual Restricted Stock Units (2) | | Director Retainer: | $60,000 | $150,000 | | Committee Chair Retainer: | | | | Audit | 10,000 | - | | Compensation | 10,000 | - | | Nominating and Governance | 10,000 | - | | Chair of the Board | 45,000 | | | Lead Independent Director | 10,000 | - |
Director Compensation
| (1) Retainers are paid quarterly in cash, unless the director chooses to convert his or her cash retainer to an equivalent value of restricted stock units (“RSUs”). Messrs. Ladiwala and Tripeny elected to receive their retainers in RSUs for fiscal year 2023. | | (2) RSUs represent the right to receive shares of our common stock upon vesting and are granted to non-employee directors annually. The number of shares subject to the award is based on the closing price of our common stock on the grant date, less the present value of dividends expected to be paid during the vesting period. The awards typically vest in full on the first anniversary of the grant date. |
Director Compensation
Directors are also reimbursed for expenses incurred in connection with their service as directors, including travel expenses for Board and committee meetings. The compensation paid to each non-employee director who served during fiscal year 2023 is set forth below.
Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | All Other Compensation ($) | Total ($) | | (a) | (b) | (c) | (g) | (h) | | John Sullivan | 105,000 | 150,099 | - | 255,099 | | Evan C. Guillemin (2) | 15,000 | - | - | 15,000 | | John Schmieder | 70,000 | 150,099 | - | 220,099 | | Jennifer S. Alltoft | 60,000 | 150,099 | - | 210,099 | | Shannon M. Hall | 70,000 | 150,099 | - | 220,099 | | Shiraz S. Ladiwala | - | 217,550 | - | 217,550 | | R. Tony Tripeny | - | 219,972 | - | 219,972 |
Director Compensation
| (1) | Reflects the grant date fair value under FASB Topic 718 of RSUs awarded to each director. Each of Dr. Sullivan, Messrs. Schmieder, Ladiwala, Tripeny and Mses. Alltoft and Hall received an annual non-employee director RSU award covering 754 shares on August 15, 2022. Mr. Ladiwala elected to receive his Board retainer as 301 RSUs instead of cash, and Mr. Tripeny elected to receive his Board retainer and committee chair compensation as 351 shares of RSUs instead of cash. Each of these grants were made on August 15, 2022. The grant date fair value of all RSUs granted to the non-employee directors on August 15, 2022, was $199.07 per unit, the closing price of our stock on August 15, 2022, less the present value of expected dividends not received during the vesting period. The RSUs awarded on August 15, 2022 vest on the first anniversary of the grant date, subject to the director’s continued service as a director through the vesting date and may continue vesting based on the retiree clauses in our 2021 Equity Plan for directors who qualify as retirees. In addition, Mr. Ladiwala elected to receive compensation for his role as Lead Independent Director in the form of 40 RSUs instead of cash; his retainer was pro-rated for 3/4 of the year. The RSUs were granted on November 15, 2022, and the grant date fair value of the awards was $188.84. The awards vest on August 15, 2023. As of March 31, 2022, Dr. Sullivan and Mr. Schmieder each held 784 unvested RSUs, Mses. Alltoft and Hall each held 754 unvested RSUs, Mr. Ladiwala held 1,095 unvested RSUs and Mr. Tripeny held 1,105 unvested RSUs. | | (2) | Mr. Guillemin elected not to stand for re-election at the 2022 Shareholders' Meeting. He received cash compensation for serving on the Board for the first quarter of fiscal year 2023, prior to the Annual Meeting. | | Note: | No stock options were granted to members of the Board of Directors during fiscal year 2023. The aggregate number of options held by each director from previous years' grants as of March 31, 2023 was as follows: |
Director Compensation
| Name of Director | Aggregate Number of Stock Options Held as of March 31, 2023 | | John J. Sullivan | 450 | | John B. Schmieder | 450 | | Shannon Hall | - | | Jennifer S. Alltoft | - | | Shiraz S. Ladiwala | - | | R. Tony Tripeny | - |
Named Executive Officers
Named Executive Officers In addition to Gary Owens, our Chief Executive Officer, whose biography is included in the Nominees for Director section above, our executive officers as of March 31, 2023 were as follows:
Named Executive Officers
| Information about our Executive Officers | | | | John Sakys Vice President and Chief Financial Officer Age: 55 | | John Sakys joined Mesa in October 2012 as Chief Financial Officer. From 2009 through October 2012, Mr. Sakys held several positions with The Berry Company, LLC, and its predecessor company, Local Insight Regatta Holdings, Inc., most recently as its Vice President and Chief Accounting Officer. From 2001 to 2009, Mr. Sakys was the Vice President and Chief Financial Officer of Isonics Corporation, a former Nasdaq listed company based in the Denver area. From September 2000 to April 2001, Mr. Sakys was Controller of AuraServ Communications. From July 1998 to September 2000, Mr. Sakys was Director of Financial Reporting for Media One, Inc. From December 1994 to July 1998, Mr. Sakys was an audit manager at Ernst and Young LLP. Mr. Sakys received his Bachelor of Arts degree in Business Economics with an emphasis in accounting from the University of California at Santa Barbara in 1990 and is a Certified Public Accountant. | | Brian Archbold Senior Vice President of Continuous Improvement Age: 48 | | Brian Archbold joined Mesa in January 2018 as Senior Vice President, Continuous Improvement. From January 2015 to 2018, Mr. Archbold worked for Quadion LLC, a global manufacturer of medical and automotive components, as Vice President of Global Operations. From September 2012 to January 2015, Mr. Archbold was Director of Operations for Beckman Coulter, part of the Danaher Corporation. Prior to Danaher, Brian was with Thermo Fisher Scientific where he held various senior leadership positions of progressive responsibility in Operations. Mr. Archbold began his career with IBM in Supply Chain Management. Mr. Archbold has a Bachelor of Science degree from Central Michigan University and his MBA from Michigan State University. |
Named Executive Officers
In addition to Messrs. Owens, Sakys, and Archbold, Greg DiNoia, our former Senior Vice President of Commercial Operations, was also a named executive officer for fiscal year 2023. Mr. DiNoia’s last day of employment was July 8, 2023. Since his termination occurred while compensation decisions for 2023 were still being made by the Compensation Committee, he has generally been excluded from the discussion in this Compensation Discussion and Analysis, although his compensation is reported in the executive compensation tables immediately following this section.
What We Heard and our Response
| | What We Heard | What We Did | | Topic | Shareholder Feedback | Changes for Fiscal Year 2024 and Beyond | | Special awards to CEO | Shareholders expressed a concern with the size of a special award to our CEO outside of our annual compensation program without sufficient proxy disclosure to explain the need for such a grant. Shareholders also noted the acceleration of a previously granted award to the CEO. | The Compensation Committee considers the 2022 CEO special award as a one-time grant to address a historical gap in compensation to the peer group. The Compensation Committee will seek to avoid granting one-time awards in the future, in favor of keeping our equity awards aligned with the market based on peer group data. While not immediately foreseeable, any such awards would involve shareholder outreach, input from independent compensation consultants and robust disclosure in our Proxy Statement. | | Proxy Disclosures | Shareholders expressed a desire for enhanced goal disclosure, threshold levels and ultimate achievement of short-term incentive awards and performance based restricted stock units. Comprehensive disclosure is a focus of investors, particularly for larger awards. Additionally, shareholders requested greater disclosures about how we selected our peer group, and our target payouts as compared to peer companies. | Disclosures in this proxy statement have been enhanced to better communicate our Compensation Committee's perspective on executive compensation. We believe these disclosures add transparency that will allow our investors to better understand the Compensation Committee's thought process and decision making regarding executive compensation matters. | | Executive Compensation Plan Design | Shareholders expressed concern with the following elements of Mesa's historical executive compensation plan designs: | The Compensation Committee redesigned the executive compensation plan for fiscal year 2024 to address shareholder feedback (see the section "Fiscal Year 2024 Executive Compensation Program"): | | | 1) PSUs were not included as part of the equity award mix in fiscal year 2022. | 1) PSUs comprised 45% of the equity mix in the fiscal year 2023 compensation plan. The Compensation Committee is committed to PSUs comprising at least 50% of the total equity mix beginning with the fiscal year 2024 executive compensation plan, and beyond. | | | 2) The performance metrics used for the short-term incentive plan were the same as those used for the PSUs awarded as part of the fiscal year 2023 compensation plan. | 2) Beginning with the fiscal year 2024 executive compensation program, the short-term incentive plan and the PSU plan will have certain different performance metrics and modifiers, but will continue to be aligned with those areas that generate long-term shareholder value. | | | 3) The absence of total shareholder return as an incentive metric in the PSU design. | 3) The 2024 PSUs include a 20% relative TSR modifier based on Mesa's TSR compared to the S&P 1500 Healthcare Index. | | | 4) Performance metrics used in the PSU granted in fiscal year 2023 were measured over a one-year period. | 4) The performance period encapsulates three years with the addition of the three-year relative TSR modifier. Mesa continues to use a one-year measurement period for company financial performance metrics due to challenges in setting long-term targets given Mesa’s acquisitive nature. PSUs vest after three years of service. | | Clawback and malus provisions | Shareholders requested that the Board introduce a clawback and malus policy that would allow repayment of incentive-based compensation that is erroneously awarded, for example, because of inaccurately reported financial results. | The Board agrees that a clawback feature should be added to its incentive-based executive compensation plans. On June 9, 2023, the SEC approved a change to NASDAQ listing standards that now requires issuers to adopt compensation clawback policies. The Board intends to fully comply with these rules, which will take effect during our fiscal year 2024. | | Outreach | In light of our say-on-pay voting results, our shareholders appreciated our Board's engagement and outreach. While shareholders support our philosophy promoting pay for performance, they requested additional rigor and transparency. | The Compensation Committee carefully considered our 2022 say-on-pay result and conducted a comprehensive review of our program to identify potential areas for improvement. The Committee conducted a rigorous interview and selection process to identify a new compensation consultant and modified the long-term compensation structure for NEOs for fiscal year 2024. The Company intends to perform shareholder outreach in the future. We adopted executive share ownership guidelines in direct response to feedback from our shareholders. |
Executive Compensation Highlights
| ● | Pay for Performance - The fiscal year 2023 Performance Share Units ("PSUs") did not vest with respect to financial targets because the Company did not achieve the required level of revenues and adjusted operating income growth over the performance period. |
Executive Compensation Highlights
| ● | Continued Emphasis on Equity Awards in Pay Mix - On average, 66% of our NEOs' target compensation and 74% of our CEO's target compensation was granted in the form of equity. |
Executive Compensation Highlights
| ● | New Independent Compensation Consultant - We changed our third-party compensation consultant after a competitive bid process. |
Executive Compensation Highlights
| ● | Re-Orientation of Peer Group - The Committee made significant changes to the peer group used for comparing compensation to reflect the Company’s strategic shift away from healthcare equipment and services and into life sciences tools and services, which will impact compensation decisions beginning in fiscal year 2024. Furthermore, our Global Industry Classification Standard (GICS) code was updated to Life Sciences and Tools effective June 1, 2023. |
Our Executive Compensation Practices
| We Do | | We Don't | | ✔ | Pay for Performance: We emphasize performance-based compensation that aligns the interests of our executives with those of our shareholders through the use of both short-term cash incentive compensation that pays based on achievement of company and individual performance factors, and longer-term equity awards subject to both time and performance-based vesting.X | Hedge or Pledge: We do not allow employees to engage in hedging or pledging of our securities. | | ✔ | Benefits: We offer a competitive benefits program. The benefits offered to our executives are the same as those offered to all of our employees.X | Excess Perquisites: We do not provide perquisites to our employees, including our executive officers. | | ✔ | Benchmark: We maintain an industry-specific peer group for annual benchmarking of executive compensation. This benchmarking is a key factor among those used to determine appropriate compensation for our NEOs.X | Gross up Payments: We do not provide tax gross-up payments to our executive officers. | | ✔ | Consult: Each year, we engage an independent compensation consultant to advise on executive compensation program design.X | Executive Retirement Benefits: We do not provide supplemental executive retirement plans, nonqualified defined contribution or deferred compensation plans to our executive officers. | | | X | Guaranteed Bonuses: We do not provide guaranteed bonuses to our executive officers. |
Compensation Philosophy and Objectives of Our Compensation Program
| Philosophy | | | Pay for Performance | - We set performance targets to align with the Company’s operational and strategic plans, tying pay to performance. - We establish performance target levels that are challenging but attainable and consistent with the business plans reviewed by the Board, so that targets appropriately motivate and incentivize Management. - Performance targets and objectives include both short-term goals to focus Management on day-to-day operations, as well as long-term goals that incentivize the long-term creation of shareholder value. - In fiscal year 2023, 87% of our CEO's compensation and 76% of our other NEOs' compensation was tied to the Company's underlying performance. | | Shareholder Alignment | - Our executive compensation programs deter excessive risk taking due to the mix of compensation elements, and the variety of performance metrics, as well as PSUs structured with cliff-vesting. - The performance targets and objectives that we set align with performance that is most likely to result in attractive returns to our shareholders. - Executives are rewarded based on growth and performance separate from market factors. - The Board instituted stock ownership requirements for NEOs in June 2023. | | Talent Retention | - Our executive compensation programs should enable us to attract, motivate, retain, and reward executives whose knowledge, skills and performance are critical to our success. - Our compensation programs are competitive with companies in our peer group and broader industry trends. | | Strategy | - Our executive compensation programs should foster a shared commitment among executives by coordinating their goals to the Company's overall strategy, maximizing enterprise-wide collaboration and integration. - Our executive compensation programs should align with the Company's core values, ethics, and culture. - Our executive compensation programs should motivate our executives to manage our business to meet our short-term and long-term objectives and reward them for meeting these objectives. | | Flexibility | - Our executive compensation programs should allow for flexibility so that the Compensation Committee can address: -business needs from compensation -competitive issues -compensation trends in the industry -the broader economic environment -special situations that may be encountered in the recruitment, retention, and promotion of employees - Our executive compensation programs should allow for variation from year to year and should be customizable by person, depending on the circumstances. |
Role of Independent Compensation Consultants
Role of Independent Compensation Consultants The Compensation Committee retained Pay Governance, LLC ("Pay Governance"), an independent executive compensation consulting firm, to provide the Compensation Committee with advice regarding compensation matters for fiscal year 2023. Pay Governance was invited to attend certain Compensation Committee meetings in fiscal year 2022 to provide advice with respect to the fiscal year 2023 executive compensation program. Pay Governance assisted the Compensation Committee with review and assessment of the Company's compensation peer group, advice regarding executive compensation levels and practices, guidance on the design of our executive compensation plans, and the provision of certain market and industry compensation trends and regulatory developments. All fees paid to Pay Governance were in connection with the firm’s work on executive compensation matters on behalf of the Compensation Committee; no fees were paid to the firm for any other work. Pay Governance was retained by the Compensation Committee, and the committee determined that the firm’s services to Mesa did not and does not give rise to any conflict of interest. The Compensation Committee considers Pay Governance to have sufficient independence from our Company and executive officers to allow it to offer objective advice.
Market Data
Market Data In establishing target compensation levels, the Compensation Committee considers market practices, internal pay parity (which is based on position, responsibility, and contributions of the applicable NEO) and the Compensation Committee’s assessment of the appropriate pay mix for a particular position. In order to gauge the competitiveness of our executive compensation programs, the Compensation Committee reviews compensation practices and pay opportunities from a selection of publicly traded peer companies as well as general industry survey data. The Compensation Committee seeks to provide competitive pay opportunities to attract and retain qualified executives in the face of competitive pressures in its relevant labor markets.
Compensation Peer Group
Compensation Peer Group Mesa's strategic focus has shifted in recent years towards servicing biopharmaceutical markets as a life sciences tools company. Further, as the Company's business lines have expanded, both organically and inorganically, the complexity of the work facing the management team has increased. A critical goal for the Compensation Committee for fiscal year 2023 was to analyze and update the fiscal year 2023 compensation package for NEOs, in the context of an updated and relevant peer group. The Compensation Committee sought peer companies that had a presence in multiple countries as well as those with multiple business lines as comparators for Mesa. Further, they sought companies with multi-year growth in revenues and profitable operations. As part of a sound governance process, the Compensation Committee anticipates reviewing the list of peer companies on an annual basis to ensure continued business fit. The guiding principles for selecting members of the compensation peer group for Mesa are described below. The compensation peer group should include companies with many of the following characteristics:
Compensation Peer Group
| ● | Appropriately reflect the nature of Mesa's evolving business strategy as a life sciences tools business operating in a broad scope of areas; |
Compensation Peer Group
| ● | Consist of companies with comparably sized revenues to Mesa and generally below $1 billion; |
Compensation Peer Group
| ● | Reflect the complexity of Mesa and include companies with multiple segments; |
Compensation Peer Group
| ● | Include companies with multinational operations, including in China; | | ● | Include growth companies, particularly those focused on growth through acquisitions; and | | ● | Employ an approximately similar number of employees to Mesa. |
Compensation Peer Group
The Compensation Committee recognizes that there is a difference between the companies against which we compete for executive talent and the companies against which we compete for capital and, therefore, uses different peer groups for different external disclosure purposes. Not all companies will meet all of the criteria noted above. However, the characteristics listed above allow the Compensation Committee to identify appropriate potential matches. The peer group used for fiscal year 2023 compensation program design consists of the following:
Compensation Peer Group
| ● | Azenta, Inc. |
Compensation Peer Group
| ● | Cardiovascular Systems, Inc. |
Compensation Peer Group
| ● | Cryoport, Inc. |
Compensation Peer Group
| ● | Heska Corporation |
Compensation Peer Group
| ● | Ligand Pharmaceuticals Incorporated |
Compensation Peer Group
| ● | Meridian Bioscience, Inc. |
Compensation Peer Group
| ● | Neogen Corporation |
Compensation Peer Group
| ● | NeoGenomics, Inc. |
Compensation Peer Group
| ● | Repligen Corporation |
Compensation Peer Group
Pay Governance provided peer group comparison data for the Company’s executive officers with respect to salary, annual cash incentive bonus and equity grants, and the Compensation Committee used this data for background and context when setting total compensation and each compensation element for executive officers for fiscal year 2023. Specifically, Pay Governance provided benchmark salaries, short term incentive targets, and long-term incentive targets for positions similar to Mesa's NEO positions to provide context for our Compensation Committee's decisions. In determining executive compensation, the Compensation Committee does not solely rely on comparative data from, or target any particular level of total compensation or individual component of compensation against, the compensation peer group. Such comparative data provides helpful market information about our compensation peer group, but the Compensation Committee believes in utilizing a number of resources, such as published compensation surveys and other available proxy and compensation data, to evaluate whether our executive compensation program is competitive in the market in which we compete for talent. The Compensation Committee also considers pay for performance, individual capability, innovative thinking, leadership, potential to create value, experience and internal parity objectives in setting compensation. The Compensation Committee considers this information in the aggregate and does not place any particular weight on any one factor.
Determination of Target Compensation
| ● | Market and survey data provided by our executive compensation consultant; |
Fiscal Year 2023 Base Salary
Fiscal Year 2023 Base Salary We pay a competitive base salary to compensate our executive officers for day-to-day services rendered during the year and to provide them with a reasonable level of fixed income regardless of our stock price performance. This helps avoid incentives to create short-term stock price fluctuations and mitigates the impact of forces beyond our control such as general economic and stock market conditions. Our Compensation Committee regularly reviews base salaries and annually engages our independent compensation consultant to conduct compensation benchmarking to assess whether the base salaries of our executive officers are market-competitive. Our Compensation Committee may also review an executive officer’s base salary from time to time during a year, including upon promotion or expansion of responsibilities. For fiscal year 2023, our Compensation Committee reviewed market and peer group data, and decided it was necessary to increase the base salaries of our NEOs as summarized below:
Fiscal Year 2023 Base Salary
The increases to our NEO's salaries were implemented effective June 1, 2022 to address a significant identified gap to market. Each of Messrs. Owens, Sakys, and Archbold earned salaries in fiscal year 2022 that were at or below the 25th percentile and about 18% below the median, relative to similar positions at our compensation peer group companies. Following the salary increases, each of our NEOs earns a salary near the 50th percentile of the peer group, which aligns with the percentile target set by the Compensation Committee.
Short-Term Incentive Plan
Short-Term Incentive Plan The Compensation Committee believes it is in the best interest of our shareholders to have a substantial component of total compensation “at-risk” and dependent upon financial performance. The Short-Term Incentive Plan, or ("bonus plan"), is our annual cash incentive program for employees at the management level and above to align executives with critical near term goals for the organization. The Company’s NEOs, other than the CEO, were eligible to receive annual cash incentive compensation based on achievement of (i) Company-wide Performance Factors (“CPF”) and (ii) performance objectives tied to individual results for their respective functional areas (Individual Performance Factors or "IPF"). As President and CEO, Mr. Owens is responsible for developing company strategy and overseeing all of the Company’s corporate functions, product development and commercial activities. As such, Mr. Owens' incentive payout is calculated based solely on the CPF to directly align his compensation with the Company’s performance. The calculation of the short term incentive plan is performed using the following formula:
Timeline for Administration of the Short-Term Incentive Plan
Timeline for Administration of the Short-Term Incentive Plan The Compensation Committee administers the plan as follows:
Timeline for Administration of the Short-Term Incentive Plan
| 1. | At the beginning of the fiscal year, the Compensation Committee determines the Target Award of all NEOs. | | 2. | At the beginning of the fiscal year, the CEO, with assistance from senior management, proposes annual financial-based Company Performance Factors, as well as company goals for NEOs, which are subject to review and approval by the Compensation Committee. |
Timeline for Administration of the Short-Term Incentive Plan
| 3. | Following completion of the fiscal year, the Company's finance team evaluates financial performance against the Company Performance Factors. |
Timeline for Administration of the Short-Term Incentive Plan
| 4. | The CEO considers how the other NEOs contributed to achievement of company goals to determine any necessary adjustment to the NEOs' IPF. Specific bonus plan award recommendations for all participants (except the CEO) are submitted by the CEO to the Compensation Committee for review and approval. | | 5. | The Compensation Committee determines the size of the bonus plan awards for individual NEOs based on the Target Awards, the Company’s performance against the CPF and, in the case of executive officers other than the CEO, achievement of company goals resulting in an IPF adjustment. |
Timeline for Administration of the Short-Term Incentive Plan
| 6. | The Compensation the Committee approves the CEO's bonus plan award based on the achievement of the company financial goals. |
Timeline for Administration of the Short-Term Incentive Plan
In a typical year, the actual annual bonus plan amount earned under the Short-Term Incentive Plan ranges from 0% - 200% of the target Bonus established for each individual, depending on CPF and the IPF performance of the individual. If our financial performance was poor, bonus plan payments could be at or near $0. In no circumstance can an executive earn more than 200% of the executive's stated Bonus target, even if the CPF results are achieved at 200%.
Target Award
Mr. Owens' bonus plan target was increased commensurate with his increase in salary. A bonus plan target of 100% of salary is typical among our peer group. Increasing Mr. Owens' bonus plan target relative to his salary ensures that his target cash compensation is near market median among Mesa's peer group. Each of Messrs. Sakys and Archbold also received an increase in their target awards to bring their bonus plan target to near market median compared to our peer group.
Company Performance Factor
(#) Adjusted revenues growth is defined as GAAP revenues, adjusted at the discretion of the Compensation Committee. The adjusted revenues growth calculation for purposes of achievement of CPF was adjusted (increased) by $9.0 million total versus our reported revenue of $219.0 million to reflect the impact of translation of revenues earned in foreign currencies, and loss of committed revenues due to geo-political crisis outside of management's control. Adjusted revenues of $228.0 million reflect an increase of 23.7% compared to fiscal year 2022, resulting in achievement of 39% of target levels. (*) AOI is a non-GAAP measure defined as: adjusted operating income, excluding the non-cash impact of amortization of intangible assets acquired in a business combination, stock-based compensation and impairment of goodwill and long-lived assets. Adjusted AOI was $44.7 million in fiscal year 2023, an increase of 17.9% compared to fiscal year 2022. There were no discretionary adjustments made to the AOI calculation for the purposes of calculating achievement of the CPF, and since the threshold target for AOI growth was 45.8%, the short term incentive was not earned with respect to AOI growth. Company performance is reflected in the chart below:
Short Term Incentive Plan Payout
Short Term Incentive Plan Payout The following table sets forth the preliminary bonus plan target, based on financial metrics used under the CPF as described above, and the total earned reflective of the IPF modifier for each NEO.
Short Term Incentive Plan Payout
| Executive | Bonus Plan Target at 100% | Company Performance Factor (%) (A) | IPF Modifier (B) | Payout percentage (A*B) | Total Bonus Plan Payout | | Gary Owens | $725,000 | 39% | 100% | 39% | $282,750 | | John Sakys | $239,000 | 39% | 100% | 39% | $93,210 | | Brian Archbold | $208,000 | 39% | 100% | 39% | $81,120 |
Long Term Equity Compensation
Long Term Equity Compensation
Annual Review of Long-Term Incentives
Annual Review of Long-Term Incentives The Compensation Committee believes that long-term equity incentives, in the form of stock options, RSUs, and PSUs, subject to vesting over time or upon achievement of performance objectives, are effective vehicles to align individual and team performance with the achievement of the Company’s strategic and financial goals over time, retain our NEOs and align the interests of our NEOs with those of our shareholders. Further, the Compensation Committee believes it is in the best interest of our shareholders to provide long-term incentives to each NEO through their ownership of our stock and through stock-based incentives since stock ownership by our NEOs and stock-based incentives directly tie their long-term compensation to the performance of our share price.
Grant Practices for Annual Equity Awards for Fiscal Year 2023
Grant Practices for Annual Equity Awards for Fiscal Year 2023 For fiscal year 2023, the Compensation Committee considered a number of factors in determining what, if any, equity incentive compensation to grant to the executive officers, including:
Grant Practices for Annual Equity Awards for Fiscal Year 2023
| ● | the performance of the Company during the fiscal year; |
Grant Practices for Annual Equity Awards for Fiscal Year 2023
| ● | the practices of our competitors in granting equity awards |
Grant Practices for Annual Equity Awards for Fiscal Year 2023
| ● | the total target compensation for each NEO |
Grant Practices for Annual Equity Awards for Fiscal Year 2023
| ● | the number of shares subject to, and exercise price of, outstanding options, both vested and unvested, held by the executive officers; |
Grant Practices for Annual Equity Awards for Fiscal Year 2023
| ● | the number of RSUs held by the executive officers; |
Grant Practices for Annual Equity Awards for Fiscal Year 2023
| ● | the vesting schedule of the unvested equity awards held by the executive officers; |
Grant Practices for Annual Equity Awards for Fiscal Year 2023
| ● | the financial statement impact of any equity award; and |
Grant Practices for Annual Equity Awards for Fiscal Year 2023
| ● | the available shares under the Company’s equity incentive plan. |
Equity Award Types
Equity Award Types Following a comprehensive review of market pay practices the Compensation Committee developed a long-term incentive plan with the intent to remain competitive in mix and performance requirements with those companies in our peer group. The mix of grants made to NEOs during fiscal year 2023 were as follows:
Equity Award Types
| Fiscal Year 2023 Equity Award | Weighting | Description | | Stock Options | 22% | Vest pro-rata over a three-year service period beginning on the first anniversary of the grant date. Exercise price equals fair market value on the grant date. | | Time-Based RSUs | 33% | Each RSU is equal in value to one share of stock. Vest pro-rata over a three-year service period beginning on the first anniversary of the grant date. Settled in shares of our common stock. | | Performance-Based RSUs (PSUs) | 45% | Each earned PSU entitles the NEO to one share of stock. Performance goals: 35% related to revenues growth, 35% related to growth in adjusted operating income, and 30% related to achievement of strategic goals measured over the one year period from April 1, 2022 until March 31, 2023. If revenues are not achieved at 97% of target, or AOI growth is not achieved at 95% then no shares vest under the financial portion of the plan. Awards vest subject to the achievement of performance goals, following three years of service to the company on March 31, 2025. Settled in shares of our common stock. |
Equity Award Types
The size of these grants was based on Compensation Committee-approved target long-term incentive levels for each of the NEOs with input from Pay Governance.
2023 Annual Equity Awards
2023 Annual Equity Awards The Compensation Committee increased the equity targets for each of our NEOs for fiscal year 2023, including targeting a significant portion of the total equity value of the grant in PSUs. In making this decision, the Compensation Committee considered the benchmarked data from Mesa’s peer group provided by Pay Governance. The target equity paid to each of the NEOs is intended to align them at the median of the market in Mesa's peer group pay for a similar position. In June, 2022, the Compensation Committee granted to the NEOs: (i) time-based stock options and (ii) RSUs that each vest ratably over a three-year period and (iii) PSUs that are earned based on the extent to which certain financial and strategic performance metrics are met by the end of a one-year performance period and that vest after three years of service. The size and percentage of each type of award was based on the Fiscal Year 2023 target annual equity award for each executive, and the 2023 weighting of equity incentive award types described above. The following table sets forth the 2023 annual equity awards to each of our named executive officers, expressed in intended dollar value.
2023 Annual Equity Awards
| Executive | Performance Stock Units | Restricted Stock Units | Stock Options | Total Equity Award Value | | Gary Owens | $1,912,664 | $1,293,052 | $962,521 | $4,168,237 | | John Sakys | 608,545 | 441,285 | 306,243 | 1,356,073 | | Brian Archbold | 450,556 | 297,654 | 226,725 | 974,935 |
Fiscal Year 2023 PSUs Payout Scale
Fiscal Year 2023 PSUs Payout Scale As the Company is growing significantly year over year, and because inorganic growth continues to be important to the company's strategy, the Compensation Committee elected to award fiscal 2023 PSUs with a one-year performance target; however, these PSUs vest after three years of service, providing a longer-term incentive and a continued link to shareholders over a multi-year period. The award is comprised of a financial element and a strategic component. The financial element is weighted 70% and divided into two financial metrics: GAAP revenue targets and adjusted operating income targets. If revenues growth is not achieved at 97% of target or if adjusted operating income is not achieved at 95% of the target value, then no shares will vest with respect to the financial portion of the award. If performance is achieved above target, then shares will be vested above target, up to a maximum of 200%. The Compensation Committee chose to utilize GAAP revenues growth and AOI growth in both the 2023 Short-Term Incentive Plan and the PSU program in order to further align the interests of our NEOs with the creation of long-term shareholder value. When designing the Company’s fiscal year 2023 executive compensation program, the Compensation Committee evaluated a range of performance metrics for purposes of the Company’s incentive programs and considered input from Management, past investor input, and input from Pay Governance. Based on such review, the Compensation Committee determined that revenues growth and AOI growth are viewed as core drivers of the Company’s performance and shareholder value creation and should remain components of the 2023 Short-Term Incentive Plan as well as the PSU program. The Compensation Committee did not allow for any modifiers, including for unfavorable changes in foreign currency or geopolitical events outside of management's control. As such, the financial portion of the PSU (representative of 70% of total shares awarded) did not vest and was forfeited effective March 31, 2023. Payout under the 2023 PSU plan is summarized below: *In recognition of the Company’s use of revenues growth and AOI growth in both the annual and long-term incentive programs, the Compensation Committee elected to also measure the NEO's achievement of strategic objectives in order to strike an appropriate balance with respect to incentivizing top-line growth, profitability, non-financial business imperatives and shareholder returns over both the short-term and long-term horizons. The performance goals were designed to be challenging and to require significant effort by our executives. Strategic objectives comprise 30% of the award and were measured based on participants achieving certain strategic milestones agreed upon with the Compensation Committee. Strategic performance goals include making capital improvements; diversity and talent development; progress on environmental, social and governance; as well as success with integrating past acquisitions and consummating new acquisitions.
Fiscal Year 2023 PSUs Payout Scale
| Topic | Rationale | | Acquisition Performance | Acquisition performance, when adjusted for variables including COVID and the geopolitical landscape, is near expectations. Continued diligent efforts are required so that shareholder value is fully realized from acquired businesses. | | Capital Improvements to Facility | Management's completion of renovations to a critical facility in Lakewood, Colorado is an accomplishment that is expected to allow the business to grow for years to come. Further, management's decision to renovate the building versus demolishing and rebuilding aligns with Mesa's commitment to ESG. | | Diversity and Talent Development | The Compensation Committee encourages management to continue to invest in diversity and talent development in support of the strongest possible talent pool and the ability to attract top performers to Mesa's team. The Compensation Committee encourages management to continue to evaluate ways to bring diversity to team composition. | | Environment, Social, and Governance | Management responded quickly to the Board's request to address ESG in a way that gives consideration to the size and complexity of Mesa's business. Management conveyed Mesa's commitment to ESG goals and outcomes. The Compensation Committee expects management to consider the next appropriate steps in the Mesa’s ESG journey. |
Fiscal Year 2023 PSUs Payout Scale
While the fiscal year 2023 PSU performance period has concluded, the awards are subject to service vesting requirements until June 2025.
Payout of the Fiscal Year 2020 PSUs
Payout of the Fiscal Year 2020 PSUs In fiscal year 2020, the Compensation Committee granted PSUs to certain NEOs that were eligible to vest following a three-year performance period, beginning on April 1, 2019 and ending March 31, 2022, subject to the Company’s achievement of a certain level of 3-year cumulative revenues growth rate compared to target and a 3-year cumulative adjusted operating income growth rate compared to target. The number of shares that could be earned under the awards was determined at the end of FY 2022 by multiplying the target number of shares by the payout percentage. As described in our FY 2022 proxy statement, the awards were achieved at 126%. The awards were released in June, 2022.
2024 Annual Short Term Incentive Plan - New Metrics and Revised Weightings
2024 Annual Short Term Incentive Plan - New Metrics and Revised Weightings New under the 2024 Annual Short-Term Incentive Plan ("2024 STIP"), the Committee adopted a strategic metric with a 20% weighting as an additional corporate finance goal. For 2024, the strategic metric will be an inventory reduction goal. The addition of this metric directly addresses shareholder input and differentiates the goals we use for the STIP plan from those used in our long-term incentive plan. The diversification in our 2024 STIP is considered best practice in executive compensation and was supported by shareholders in our investor outreach meetings. Our 2024 STIP will consist of the following metrics:
2024 Annual Short Term Incentive Plan - New Metrics and Revised Weightings
| Metric | Adjusted Revenues Growth | AOI Growth | Defined Strategic Objectives | | Fiscal Year 2023 | 50% | 50% | N/A | | Fiscal Year 2024 | 40% | 40% | 20% |
2024 Annual Long Term Incentive Plan - New Total Shareholder Return Metric
2024 Annual Long Term Incentive Plan - New Total Shareholder Return Metric Consistent with feedback from Shareholders, our Compensation Committee intends to ensure that PSUs make up at least 50% of the grant date fair value of equity awards beginning in fiscal year 2024. After calculating financial performance for fiscal year 2024, a relative total shareholder return (TSR) calculation will be performed. Depending on Mesa’s TSR performance compared to the S&P 1500 Healthcare index, the number of earned share units will increase or decrease by up to 20% (multiplier). Fiscal Year 2024 financial results will also include a 5% collar for currency, allowing a payout that largely excludes impacts of changing foreign currency, which is outside of Management's control.
2024 Annual Long Term Incentive Plan - New Total Shareholder Return Metric
| Metric | Revenues Growth | AOI Growth | AOI as a Percent of Revenues | TSR Modifier | | Fiscal Year 2023 | 50% | 50% | N/A | N/A | | Fiscal Year 2024 | 50% | N/A | 50% | +/-20% |
Employment and Change-in-Control Agreements
Employment and Change-in-Control Agreements The Company uses employment agreements to retain and attract highly qualified executive officers in a competitive market and currently has employment agreements with all of our executive officers. We believe that employment agreements help ensure the continued dedication of executives in case of personal uncertainties or risk of job loss and help protect the Company in the event an executive leaves the Company. Furthermore, the Compensation Committee believes that the establishment of severance terms in advance allows NEOs to continue to focus on the business rather than on their personal circumstances in the event that a termination event occurs. The terms of our executive officers’ employment agreements are substantially similar and generally establish an initial base salary, a target incentive bonus plan amount or percentage that serves as the basis for the annual cash incentive bonus plan, an annual equity target and an equity grant upon hire. The employment agreements also include specific terms regarding severance payments and other benefits, if any, due to the executive under various employment termination circumstances, except to the extent superseded by the Executive Severance Plan. See “Potential Payments upon Termination or Change in Control” for additional information regarding the severance payments each of our NEOs could receive under their employment agreements.
Tax Considerations
Tax Considerations In designing our compensation programs, we take into account the tax, accounting and disclosure rules associated with various forms of compensation, although the design of our programs is focused primarily on attracting and retaining the top talent in our industry and incentivizing those individuals to execute on the Company’s business strategy and to increase shareholder value. For tax years beginning on or after January 1, 2018, the Tax Cuts and Jobs Act of 2017 generally eliminated the exception to the non-deductibility of compensation in excess of $1 million per year paid to certain executive officers of the Company (“covered employees”) under Section 162(m) of the Code for certain qualified performance-based compensation, and expanded the scope of “covered employees” whose compensation may be subject to this deduction limit to include the Company’s chief financial officer and former covered employees of the Company for tax years beginning after December 31, 2016. We design programs that recognize a range of performance criteria important to our success, even though compensation paid under such programs may not be deductible. Under Section 280G and Section 4999 of the Code, compensation that is granted, accelerated or enhanced upon the occurrence of a change in control may give rise, in whole or in part, to “excess parachute payments” and, to such extent, will be non-deductible by the Company and will be subject to a 20% excise tax payable by the executive. Our compensation arrangements do not provide for gross-ups for this excise tax. Section 409A of the Code prescribes various requirements regarding the timing of deferral elections, the timing of payments, and certain other matters affecting the operating of nonqualified deferred compensation plans. Failure to satisfy these requirements can expose our employees and other service providers to accelerated income tax liabilities and penalty taxes and interest on their vested compensation under such plans. We design our compensation programs with the intent that they comply with or be exempt from Section 409A of the Code, although there is no guarantee that any particular element of compensation will, in fact, be so compliant or exempt. Our compensation arrangements do not provide for gross-ups for any penalty taxes or interest that may be imposed under Section 409A of the Code.
Summary Compensation Table
Summary Compensation Table The following table lists compensation awarded to or earned by the NEOs for the years ended March 31, 2023, 2022 and 2021.
Summary Compensation Table
| Name and Principal Position | Year | Salary(1) | Stock Awards(2) | Option Awards(3) | Non-Equity Incentive Plan Compensation(4) | All Other Compensation(5) | Total | | (a) | (b) | (c) | (e) | (f) | (g) | (i) | (j) | | Gary Owens | 2023 | 732,692 | 3,205,716 | 962,521 | 282,750 | 6,692 | 5,190,371 | | CEO and President | 2022 | 579,231 | 15,216,960 | 1,200,052 | 1,072,600 | 8,138 | 18,076,981 | | | 2021 | 523,846 | 880,493 | 933,383 | 211,000 | 8,996 | 2,557,718 | | John Sakys | 2023 | 443,077 | 1,049,830 | 306,243 | 93,210 | 15,115 | 1,907,475 | | VP and Chief Financial Officer | 2022 | 366,785 | 758,535 | 375,007 | 380,600 | 12,189 | 1,893,116 | | | 2021 | 342,354 | 421,293 | 267,329 | 68,040 | 10,671 | 1,109,687 | | Brian Archbold | 2023 | 387,307 | 748,210 | 226,725 | 81,120 | 17,165 | 1,460,527 | | SVP of Operations and Continuous Improvement | 2022 | 297,018 | 430,549 | 260,064 | 200,680 | 12,195 | 1,200,506 | | | 2021 | 254,898 | 277,296 | 182,482 | 50,123 | 10,831 | 775,630 | | Greg DiNoia (6) | 2023 | 105,011 | 101,692 | 164,602 | -- | 734,932 | 1,106,238 | | Former SVP Commercial | 2022 | 322,908 | 476,488 | 245,012 | 213,136 | 5,513 | 1,263,057 | | | 2021 | 312,407 | 331,206 | 204,742 | 38,395 | 10,337 | 897,087 |
Summary Compensation Table
| (1) Cash salary was temporarily decreased for fiscal year 2021 and NEOs were provided RSUs with a one-year vesting period instead. | | (2) The amounts reported in the Stock Awards column reflect the grant date fair value of stock awards determined pursuant to ASC Topic 718. The grant date fair values have been determined based on the assumptions and methodologies set forth in our Annual Report for fiscal year 2023 (Note 9. Stock Transactions and Stock-Based Compensation) for fiscal year 2023. The grant date fair value for PSUs, which were granted during fiscal year 2023 is reported based upon the probable outcome of the performance conditions at the target level on the grant date. The value of the annual PSU awards granted in fiscal year 2023, assuming achievement of the maximum performance level of 200%, would have been: Mr. Owens: $3,882,124; Mr. Sakys: $1,235,154; and Mr. Archbold: $914,489. The value of the Special Award of PSUs granted to Mr. Owens in fiscal year 2022, assuming achievement of the maximum performance level of 100%, would have been $10,187,600. | | (3) The amounts reported in the Option Awards column represent the grant date fair value of nonqualified stock option awards granted to each of the NEOs, calculated in accordance with ASC Topic 718. The grant date fair values have been determined based on the assumptions and methodologies set forth in the Company’s Form 10-K (Note 9. Stock Transactions and Stock-Based Compensation) for fiscal year 2023. | | (4) The amounts reported in the Non-Equity Incentive Plan Compensation column reflect the amounts earned by each NEO under the Company’s Short-Term Incentive Plan. Mr. DiNoia's fiscal year 2023 short term incentive plan bonus was pro-rated for the portion of the year he was employed and is included in "All Other Compensation." | | (5) The amounts reported in the All Other Compensation column reflect 401(k) matching funds for Messrs. Owens and Sakys. Mr. Archbold's other compensation for fiscal year 2023 is composed of 401(k) matching and $2,038 of employer contributions to a health savings account. Mr. DiNoia's fiscal year 2023 compensation is comprised of: Benefits paid as part of his ongoing service to Mesa: Employer matched of 401(K) contributions: $525 Separation and benefits paid pursuant to the employment agreement: Severance payment of 1 times base salary: $341,285 One year bonus at target: $154,000 Benefits continuation: $68,289 Pro-rata bonus: $41,358 Compensation paid negotiated separately: Negotiated retention bonus: $130,000 Total: $734,932 | | (6) The Company determined it would terminate Mr. DiNoia's employment on April 8, 2023, and Mr. DiNoia was employed until July 8, 2023. The salary presented for fiscal year 2023 is pro-rated for the portion of the fiscal year he was employed. Stock awards are representative of a pro-rated fiscal year 2023 equity award..Option awards presented for fiscal year 2023 represent award modifications granted to Mr. DiNoia in accordance with his employment agreement. |
Grant of Plan-based Awards in Fiscal Year 2023
Grant of Plan-based Awards in Fiscal Year 2023 The following table sets forth certain information with respect to grants of plan-based awards for fiscal year 2023 with respect to our NEOs.
Grant of Plan-based Awards in Fiscal Year 2023
| | | | Estimated future payments under non-equity incentive plan awards (1) | | | Estimated possible payouts under equity incentive plan awards | | | | | | | | Name | Grant Date | Award Description | Threshold ($) | Target ($) | Maximum ($) | Threshold (# shares) | Target (# shares) | Maximum (# shares) | All Other Stock Awards: Number of Shares of Stock or Units (2) | All Other Option Awards: Number of Securities Underlying Options (3) | Exercise or Base Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards ($) (4) | | Gary Owens | n/a | Short-term Incentive Plan | - | 725,000 | 1,450,000 | | | | | | | - | | | 6/15/2022 | Restricted Stock Units (5) | | | | | | | 6,968 | | | 1,293,052 | | | 6/15/2022 | Performance Shares (6) | | | | - | 3,138 | 6,276 | | | | 553,920 | | | 6/15/2022 | Performance Shares (7) | | | | - | 7,322 | 14,644 | | | | 1,358,744 | | | 6/15/2022 | NQ Options (8) | | | | | | | | 16,353 | 185.57 | 962,521 | | John Sakys | n/a | Short-term Incentive Plan | - | 239,000 | 478,000 | | | | | | | - | | | 6/15/2022 | Restricted Stock Units (5) | | | | | | | 2,378 | | | 441,285 | | | 6/15/2022 | Performance Shares (6) | | | | - | 998 | 1,996 | | | | 176,167 | | | 6/15/2022 | Performance Shares (7) | | | | - | 2,330 | 4,660 | | | | 432,378 | | | 6/15/2022 | NQ Options (8) | | | | | | | | 5,203 | 185.57 | 306,243 | | Brian Archbold | n/a | Short-term Incentive Plan | - | 208,000 | 416,000 | | | | | | | - | | | 6/15/2022 | Restricted Stock Units (5) | | | | | | | 1,604 | | | 297,654 | | | 6/15/2022 | Performance Shares (6) | | | | - | 739 | 1,478 | | | | 130,448 | | | 6/15/2022 | Performance Shares (7) | | | | - | 1,725 | 3,450 | | | | 320,108 | | | 6/15/2022 | NQ Options (8) | | | | | | | | 3,852 | 185.57 | 226,725 | | Greg DiNoia | n/a | Short-term Incentive Plan | | 154,000 | 308,000 | | | | | | | - | | | 6/15/2022 | Restricted Stock Units (9) | | | | | | | 548 | | | 101,692 | | | 4/8/2022 | NQ Options (10) | | | | | | | | 540 | 142.40 | 23,096 | | | 4/8/2022 | NQ Options (10) | | | | | | | | 2,348 | 203.54 | 34,774 | | | 4/8/2022 | NQ Options (10) | | | | | | | | 3,026 | 226.72 | 23,966 | | | 4/8/2022 | NQ Options (10) | | | | | | | | 3,223 | 268.85 | 82,767 |
Grant of Plan-based Awards in Fiscal Year 2023
| (1) Each executive officer was eligible for a cash award to be paid under our short-term incentive plan, described more fully in the “Short-Term Incentive Plan” discussion above. Our Short-Term Incentive Plan does not contain a formalized “threshold” level of performance that would entitle an executive to a minimum annual cash award. Amounts under Target reflect the target bonus plan, which would have been paid to the executive officer if achievement against targets resulted in a CPF of 100% with no adjustment for individual performance. Amounts under Maximum reflect the bonus plan amount which would have been payable had achievement against targets been at the maximum level. Actual bonuses paid are reflected in the “Non-Equity Incentive Plan Compensation” column of the table labeled Summary Compensation Table. | | (2) Restricted stock unit awards are reported at aggregate grant date fair value, as determined under applicable accounting standards. The holder of the restricted stock unit award does not have any voting, dividend, or other ownership rights in the shares of common stock subject to the award unless and until the award vests and the shares are issued. | | (3) All equity and option awards are denominated in shares of common stock and were granted under the 2021 Equity Plan. | | (4) Options vest ratably over a three-year period on June 15, 2023, June 15, 2024 and June 15, 2025. The options were valued pursuant to FASB Topic 718, using the Black-Scholes valuation model. The per share grant value was $58.86. The grant date fair value of nonqualified stock options is included in the “Option Awards” column of the Summary Compensation Table for each executive officer for fiscal year 2023. | | (5) The Compensation Committee of the Board of Directors granted a special award to each of Mesa’s named executive officers in recognition of excellent performance navigating the company through the complexities of COVID-19. The RSUs vest in full one year from the date of grant. The RSUs were valued at $185.57 on the date of grant pursuant to FASB topic 718. | | (6) Represents 30% of the total PSUs awarded. Achievement under this PSU is based on Management's achievement of certain strategic objectives. The PSUs were valued pursuant to FASB Topic 718 based on the assumptions and methodologies set forth in our Form 10-K (Note 9. Stock Transactions and Stock-Based Compensation) for fiscal year 2023. They vest based on performance for the period from April 1, 2022 until March 31, 2023 and based on the executive's continued service through June 15, 2025 | | (7) Represents 70% of the total PSUs awarded. Achievement under this PSU is based on Management's achievement of identified financial metrics. The PSUs were valued pursuant to FASB Topic 718 based on the assumptions and methodologies set forth in our Form 10-K (Note 9. Stock Transactions and Stock-Based Compensation) for fiscal year 2023. They vest based on performance for the period from April 1, 2022 until March 31, 2023 and based on the executive's continued service through June 15, 2025. | | (8) Options vest ratably over a three-year period on June 15, 2023, June 15, 2024 and June 15, 2025. The options were valued pursuant to FASB Topic 718, using the Black-Scholes valuation model. The per share grant value was $58.86. The grant date fair value of nonqualified stock options is included in the “Option Awards” column of the Summary Compensation Table above for each executive officer for fiscal year 2023. | | (9) Mr. Dinoia received 548 restricted stock units on June 15, 2022 that vested on June 30, 2022. The awards were negotiated separately from his employment agreement and were intended to compensate him for the portion of fiscal year 2023 for which he served as a NEO but did not receive an annual grant. | | (10) In connection with Mr. DiNoia's termination from Mesa in July 2022, and subject to the terms of his employment agreement, all options due to vest within 12 months became vested, and those options will remain outstanding and exercisable for 14 months. For accounting purposes, the vestitures and post-termination extension of vesting was treated as a re-grant of the option awards at fair value as of the date of the decision. The incremental grant date fair value associated with the modifications was calculated based on the closing stock price of our common stock of $249.39 per share on April 8, 2022, the date the Compensation Committee approved the option modifications. All option awards held by Mr. DiNoia that were not scheduled to vest by July 8, 2024 were forfeited. |
Outstanding Equity Awards at March 31, 2023
Outstanding Equity Awards at March 31, 2023 The following table sets forth certain information with respect to outstanding equity awards of our NEOs as of March 31, 2023.
Outstanding Equity Awards at March 31, 2023
| | | Option Awards | | | | Stock Awards | | | | | Name | Date of Grant | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of shares or units of stock that have not vested (#) | Market value of shares of units of stock that have not vested ($) (1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units, or other Rights that have not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or other Rights that have not Vested ($) (1) | | Gary Owens | 6/15/2022 | -(2) | 16,353 | 185.57 | 6/15/2028 | | | | | | | 6/15/2022 | | | | | 6,968(3) | 1,217,519 | | | | | 6/15/2022 | | | | | | | 2,102(4) | 367,363 | | | 6/15/2022 | | | | | | | -(5) | - | | | 10/28/2021 | | | | | | | 40,000(6) | 6,989,200 | | | 9/1/2021 | 5,273(7) | 10,513 | 268.85 | 9/1/2027 | | | | | | | 9/1/2021 | | | | | 3,274(8) | 572,066 | | | | | 6/15/2020 | 9,243(9) | 4,552 | 226.72 | 6/15/2026 | | | | | | | 6/15/2020 | | | | | 684(10) | 119,515 | | | | | 6/15/2019 | | | | | 2,000(11) | 349,460 | | | | | 6/10/2019 | 7,455(12) | 2,484 | 203.54 | 6/10/2025 | | | | | | | 4/2/2018 | 4,000(13) | 1,000 | 142.40 | 4/2/2024 | | | | | | | 9/1/2017 | 2,000(14) | - | 136.42 | 9/1/2023 | | | | | | | 3/20/2017 | 18,000(15) | 3,000 | 122.98 | 3/20/2025 | | | | | | John Sakys | 6/15/2022 | -(2) | 5,203 | 185.57 | 6/15/2028 | | | | | | | 6/15/2022 | | | | | 2,378(3) | 415,508 | | | | | 6/15/2022 | | | | | | | 669(4) | 116,894 | | | 6/15/2022 | | | | | | | -(5) | - | | | 9/1/2021 | 1,648(7) | 3,285 | 268.85 | 9/1/2027 | | | | | | | 9/1/2021 | | | | | 1,023(8) | 178,749 | | | | | 6/15/2020 | 2,648(9) | 1,303 | 226.72 | 6/15/2026 | | | | | | | 6/15/2020 | | | | | 392(10) | 68,494 | | | | | 6/10/2019 | 3,066(12) | 1,021 | 203.54 | 6/10/2025 | | | | | | | 4/2/2018 | 2,000(13) | 500 | 142.40 | 4/2/2024 | | | | | | Brian Archbold | 6/15/2022 | -(2) | 3,582 | 185.57 | 6/15/2028 | | | | | | | 6/15/2022 | | | | | | | 148(4) | 25,860 | | | 6/15/2022 | | | | | | | -(5) | - | | | 6/15/2022 | | | | | 1,604(3) | 280,267 | | | | | 9/1/2021 | 1,143(7) | 2,278 | 268.85 | 9/1/2027 | | | | | | | 9/1/2021 | | | | | 709(8) | 123,884 | | | | | 6/15/2020 | 890(9) | 890 | 226.72 | 6/15/2026 | | | | | | | 6/15/2020 | | | | | 267(10) | 46,653 | | | | | 6/10/2019 | 532(12) | 532 | 203.54 | 6/10/2025 | | | | | | | 4/2/2018 | 210(13) | 210 | 142.40 | 4/2/2024 | | | | | | | 4/2/2018 | | | | | 70(16) | 12,231 | | | | | 1/8/2018 | 290(17) | - | 129.10 | 1/8/2024 | | | | | | Greg DiNoia | 4/8/2023 | 3,223(18) | -- | 268.85 | 9/8/2023 | | | | | | | 4/8/2023 | 3,026(19) | -- | 226.72 | 9/8/2023 | | | | | | | 4/8/2023 | 2,348(20) | -- | 203.54 | 9/8/2023 | | | | | | | 4/8/2023 | 540(21) | -- | 142.40 | 9/8/2023 | | | | |
Outstanding Equity Awards at March 31, 2023
| (1) The value of equity awards is based on the closing of the Company’s stock on Nasdaq on March 31, 2023, the last trading day of fiscal year 2023, which was $174.73. | | (2) Represents the annual stock option grant for fiscal year 2023. Shares vest ratably on each of June 15, 2023, June 15, 2024, and June 15, 2025, subject to the executive's continued employment. | | (3) Represents the annual restricted stock unit award grant for fiscal year 2023. Awards vest ratably on each of June 15, 2023, June 15, 2024, and June 15, 2025, subject to the executive's continued employment. | | (4) Represents a 30% portion of the performance share unit award for fiscal year 2023. The performance achievement under this award was measured for the period from April 1, 2022 until March 31, 2023 and was achieved at 67%. The awards vest on June 15, 2025, subject to the executive's continued employment. The units subject to this award are based on the Company's achievement of certain discretionary objectives discussed further under "Compensation Discussion and Analysis." | | (5) Represents a 70% portion of the performance share unit award for fiscal year 2023. The performance achievement under this award was measured for the period from April 1, 2022 until March 31, 2023 and was achieved at 0%, accordingly all share units were forfeited. | | (6) Represents one-time share units issuable under the performance share awards granted in fiscal year 2022, at the next level of achievement in excess of Management’s assessment of probable achievement of specific performance criteria for the three-year period from April 1, 2021 through March 31, 2024. Shares will vest ratably on each October 27, 2024, October 27, 2025 and October 27, 2026. | | (7) Non-qualified stock options granted on September 1, 2021. The remaining outstanding non-qualified stock options vest ratably on each of June 15, 2023, and June 15, 2024, subject to the executive's continued service through each vesting date. | | (8) Represents annual restricted stock unit granted on September 1, 2021. The remaining outstanding restricted stock vests ratably on each of June 15, 2023, and June 15, 2024, subject to the executive's continued service through each vesting date. | | (9) Represents non-qualified stock options granted on June 15, 2020. The remaining unexercisable non-qualified stock options vest on June 15, 2023 subject to the executive's continued service through each vesting date. | | (10) Represents annual restricted stock unit granted on June 15, 2020. The remaining unvested restricted stock vests on June 15, 2023, subject to the executive’s continued service through each vesting date. | | (11) Represents restricted stock units granted on June 15, 2019 as make whole awards for Mr. Owens. On each June 15, 2023 and June 15, 2024, 1,000 unvested RSUs will vest. | | (12) Represents non-qualified stock options granted on June 10, 2019. On June 10, 2023, subject to the executive's continued service through each vesting date, 2,484 of Mr. Owen's options, 1,021 of Mr. Sakys's options, and 532 of Mr. Archbold's options will vest. | | (13) Represents non-qualified stock options granted on April 2, 2018. On April 2, 2023, subject the executive's continued service through each vesting date, 1,000 of Mr. Owen's options, 500 of Mr. Sakys's options, and 210 of Mr. Archbold's options will vest. | | (14) Represents non-qualified stock options granted on September 1, 2017 as inducement awards. The non-qualified stock options vested ratably on each of the first five anniversaries of the grant date, subject Mr. Owens’ continued service as CEO through each vesting date. | | (15) Represents non-qualified stock options granted on March 20, 2017 as inducement awards in connection with acceptance of the CEO role. The 3,000 remaining unvested non-qualified stock options vest on March 20, 2024, subject Mr. Owens’ continued service as CEO through each vesting date. | | (16) Represents annual non-NEO restricted stock units granted on April 2, 2018. The 70 unvested restricted stock units vest on April 2, 2023. | | (17) Represents non-qualified stock options granted on January 8, 2018 as inducement awards. The non-qualified options vested ratably on each of the first five anniversaries of the grant date, subject to Mr. Archbold's continued service through each vesting date. | | (18) Represents non-qualified stock options originally granted on September 1, 2021, but with a modification date of April 8, 2022. The non-qualified stock options are vested and may be exercised until September 8, 2023. | | (19) Represents non-qualified stock options originally granted on June 15, 2020, but with a modification date of April 8, 2022. The non-qualified stock options are vested and may be exercised until September 8, 2023. | | (20) Represents non-qualified stock options originally granted on June 10, 2019, but with a modification date of April 8, 2022. The non-qualified stock options are vested and may be exercised until September 8, 2023. | | (21) Represents non-qualified stock options originally granted on April 2, 2018, but with a modification date of April 8, 2022. The non-qualified stock options are vested and may be exercised until September 8, 2023. |
Options Exercised and Stock Vested
Options Exercised and Stock Vested The following table sets forth the aggregate dollar value realized by the NEOs upon the exercise of stock options and the vesting of stock awards during fiscal year 2023.
Options Exercised and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) (1) | Number of shares acquired on vesting (#) (2) | Value Realized on Vesting ($) (3) | | Gary Owens | - | - | 11,408 | 2,076,456 | | John Sakys | 11,200 | 1,112,610 | 3,876 | 706,278 | | Brian Archbold | - | - | 2,186 | 398,470 | | Greg DiNoia | - | - | 4,671 | 921,674 |
Options Exercised and Stock Vested
| (1) Determined by multiplying the number of options that were exercised during fiscal year 2023 by the difference between the per share closing price of our common stock on the date of exercise and the exercise price of the options, but not including any tax impact incurred in connection with such exercise. | | (2) Reflects the number of shares of Mesa common stock acquired on vesting of restricted stock units. | | (3) Determined by multiplying the number of restricted stock units by the market value of the underlying shares on the vesting date. |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control On September 29, 2021, Mesa entered into Amended and Restated Executive Employment Agreements with each of Messrs. Owens and Sakys and into Executive Employment Agreements with each of Messrs. Archbold and DiNoia (collectively, the "Employment Agreements"). The Amended and Restated Executive Employment Agreements amend, restate and supersede the Employment Agreement between the Company and Mr. Owens dated April 7, 2017 and the Executive Employment Agreement between the Company and Mr. Sakys dated April 7, 2017. The Employment Agreements have the same severance and other terms except for salary and position description. The Employment Agreements have indefinite terms and continue until terminated by either party. In the event the Company terminates an executive officer’s employment without cause or the executive officer terminates his employment for good reason, the executive officer will receive: (i) an amount equal to one times the sum of (x) his base salary plus (y) target annual bonus, with such amount paid over the period of 12 months following the date of termination; (ii) an annual bonus for the year in which the termination of employment occurs based the greater of target or actual performance for the year, prorated to reflect the portion of the year elapsed prior to his termination of employment; (iii) payment equal to the cost for 24 months’ COBRA and continuation of group health plan coverage as of the date of his termination of employment, and his equity-based awards will be treated as follows: (a) All awards with greater than three years’ vesting schedule will become vested and exercisable for its full term pursuant to the applicable award agreement; (b) For equity with vesting schedules less than three years, (x) all restricted stock and options due to vest within the next 12 months will become vested, and options will remain outstanding and exercisable for 14 months, and (y) all performance shares will vest at the higher of actual performance or target. In the event that the executive officer is terminated during the three months before or the 24-month period following a change in control of the Company, the executive officer will receive the severance pay and benefits listed above, except that (i) the severance amount will equal two times the sum of (x) his base salary plus (y) target annual bonus and will be payable in a lump sum within 60 days following the date of termination; (ii) pro-rata bonus; and (iii) payment equal to the cost for 24 months’ continuation of COBRA and group health plan coverage as of the date of his termination of employment (which will be payable monthly and discontinued if the executive finds another position with medical insurance). In the event that a change in control of the Company occurs, all unvested equity awards held by the executive officer will immediately vest, with any performance-based awards deemed to have been earned at the higher of actual performance or target. Options will remain outstanding and exercisable for their full term. If the executive resigns voluntarily without good reason, he will receive no cash severance, and his equity-based awards will be treated as follows: (a) For equity with vesting schedules less than three years, (i) any vested options will be exercisable for the lesser of 90 days after the date of termination or the expiration of the maximum stated term of the option, and (ii) all performance-based awards that were held by executive officer for less than 12 months will be forfeited and all performance-based awards held by executive officer for more than 12 months will time-vest on the date of termination, will be pro-rated based on the number of full months during the applicable performance period through the date of termination and will be earned at the lesser of target level or actual performance at the end of the performance period. For Mr. Owens only, all unvested options held by Mr. Owens on the date of the employment agreement with seven years’ vesting schedule will vest on the date of termination. Upon termination of employment by reason of an executive’s retirement at age 65 or after (“normal retirement”), in addition to any accrued payments and benefits, the executive will receive an annual bonus for the year in which the termination of employment occurs based the greater of target or actual performance for the year, prorated to reflect the portion of the year elapsed prior to his termination of employment. “Normal retirement” generally means an employee aged 65 years or greater who has provided 90 days’ notice to the Company or a director aged 65 years or greater ceases service to the Company. In addition, all unvested equity-awards held by the executive shall continue to vest as if termination did not occur, all restrictions thereon shall lapse, and any performance-based awards shall be deemed to have been earned at actual performance as determined at the end of the applicable performance period. All equity awards that are options will be exercisable for their full remaining term under the applicable award agreement. All severance payments are subject to the executive signing and not revoking a release of claims. The Employment Agreements further provide that executive officers will be eligible to earn annual cash incentive bonuses and are eligible to participate in the employee benefit plans and programs generally available to the Company’s similarly situated senior executives. The executive officers are also eligible to receive annual long-term incentive equity grants at the discretion of the Compensation Committee.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The disclosure in this section shall not be deemed to be incorporated by reference into any prior or subsequent filing by Mesa under the Securities Act of 1933 or the Exchange Act of 1934, except to the extent Mesa specifically incorporates it by reference therein. Provided below is the Company’s “pay versus performance” disclosure as required pursuant to Item 402(v) of Regulation S-K promulgated under the Exchange Act.
Pay versus Performance Table
Pay versus Performance Table In accordance with Item 402(v), we provide below the tabular disclosure for the Company’s President and Chief Executive Officer (“CEO”) (our Principal Executive Officer, or “PEO”) and the average of our NEOs other than the CEO for fiscal year 2023, 2022 and 2021.
Pay versus Performance Table
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Fiscal Year Ended March 31, | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO (1) | Average Summary Compensation Table Total for Non-PEO NEOs | Average Compensation Actually Paid to Non-PEO NEOs (2) | Total Shareholder Return (3) | Peer Group Total Shareholder Return (4) | Net Income (5) | Adjusted Operating Income (6) | | 2023 | $5,190,371 | $(3,599,238) | $1,480,753 | $544,787 | $77.93 | $117.40 | $930,000 | $44,679,000 | | 2022 | $18,076,981 | $16,814,532 | $1,452,226 | $1,785,085 | $113.28 | $148.89 | $1,871,000 | $37,899,000 | | 2021 | $2,557,718 | $9,554,025 | $927,468 | $2,393,032 | $107.96 | $174.90 | $3,274,000 | $36,139,000 |
Pay versus Performance Table
| (1) The amounts reported represent the “compensation actually paid” to Mr. Owens, computed in accordance with Item 402(v) of Regulation S-K, but do not reflect the actual amount of compensation earned by or paid to Mr. Owens in the applicable year. In accordance with Item 402(v) of Regulation S-K, the adjustments in the following table were made to the amount reported for Mr. Owens in the “Total” column of the Summary Compensation Table for each year to calculate compensation: |
Pay versus Performance Table
| Fiscal Year Ended March 31, | Summary Compensation Table Total for PEO ($) | Summary Compensation Table Value of Equity Awards ($) (a) | Equity Awards Adjustments ($) (b) | Compensation Actually Paid to PEO ($) | | 2023 | 5,190,371 | (4,168,237) | $(4,621,372) | (3,599,238) | | 2022 | 18,076,981 | (16,417,012) | $15,154,563 | 16,814,532 | | 2021 | 2,557,718 | (1,813,876) | $8,810,183 | 9,554,025 |
Pay versus Performance Table
| (a) The amounts reported represent the sum of the amounts reported in the “Stock Awards” and “Option Awards” columns of the Summary Compensation Table for the applicable year. |
Pay versus Performance Table
| (b) The amounts deducted or added in calculating the equity award adjustments are as follows and the valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of the grant: |
Pay versus Performance Table
| Fiscal Year Ended March 31, | Year End Fair Value of Equity Awards Granted in the Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $2,260,544 | $(5,202,624) | $0 | $(1,679,292) | $0 | $0 | $(4,621,372) | | 2022 | $13,533,230 | $555,610 | $0 | $1,065,723 | $0 | $0 | $15,154,563 | | 2021 | $1,955,736 | $6,731,343 | $0 | $123,104 | $0 | $0 | $8,810,183 |
Pay versus Performance Table
| (2) Non-PEO NEOs include Messrs. Sakys, Archbold, and Dinoia. The amounts reported represent the average “compensation actually paid” to the NEOs other than Mr. Owens as a group, computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual average amount of compensation earned by or paid to such NEOs as a group in the applicable year. In accordance with Item 402(v) of Regulation S-K, the following adjustments were made to the average of the amounts reported in the “Total” column of the Summary Compensation Table for the NEOs as a group (excluding Mr. Owens) for each year to determine the compensation actually paid, using the same methodology described above in footnote 1: |
Pay versus Performance Table
| Fiscal Year Ended March 31, | Summary Compensation Table Total for Non-PEO NEOs ($) | Summary Compensation Table Value of Equity Awards ($) (a) | Equity Awards Adjustments ($) (b) | Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 1,480,753 | (965,767) | $(70,198) | 544,787 | | 2022 | 1,452,226 | (848,551) | 1,181,410 | 1,785,085 | | 2021 | 927,468 | (561,449) | 2,027,013 | 2,393,032 |
Pay versus Performance Table
| (a) The amounts reported represent the average of the sum of the amounts reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table for the applicable fiscal year. |
Pay versus Performance Table
| (b) The amounts deducted or added in calculating for equity award adjustments are as follows: |
Pay versus Performance Table
| Fiscal Year Ended, | Year End Fair Value of Equity Awards Granted in the Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $424,417 | $(210,448) | $45,816 | $(329,985) | $0 | $0 | $(70,198) | | 2022 | $788,665 | $159,474 | $0 | $233,271 | $0 | $0 | $1,181,410 | | 2021 | $605,850 | $1,436,656 | $0 | $(15,493) | $0 | $0 | $2,027,013 |
Pay versus Performance Table
| (3) TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. |
Pay versus Performance Table
| (4) Represents the weighted peer group TSR. Mesa's peer group is reflective of the peer group presented in the 2022 Proxy Statement. |
Pay versus Performance Table
| (5) The dollar amounts reported represent the amount of net income reflected in the Company’s audited financial statements for the applicable fiscal year. |
Pay versus Performance Table
| (6) Adjusted Operating Income is defined as operating income as reported under U.S. GAAP, adjusted to exclude impairments of long-lived assets, stock-based compensation expense, and amortization of acquisition-related intangible assets. |
Compensation Actually Paid and Company TSR
Compensation Actually Paid and Company TSR The graph below describes the relationship between compensation actually paid to Mr. Owens and the average compensation actually paid to the Company’s other NEOs to the Company’s TSR over the three-year period from March 31, 2020 until March 31, 2023, assuming an initial investment of $100 on March 31, 2020. As the graph shows, this relationship is generally aligned in large part because a significant portion of the compensation actually paid to the Company’s NEOs is in the form of equity awards, the value of which is impacted by the stock price changes.
Compensation Actually Paid and GAAP Net Income
Compensation Actually Paid and GAAP Net Income The graph below shows the relationship between compensation actually paid to Mr. Owens and the average compensation actually paid to the Company’s other NEOs to the Company’s GAAP net income for the three years presented in the Pay versus Performance Table. Mesa does not use net income as a performance measure in its executive compensation program.
Compensation Actually Paid and Adjusted Operating Income
Compensation Actually Paid and Adjusted Operating Income The graph below shows the relationship between compensation actually paid to Mr. Owens and the average compensation actually paid to the Company’s other NEOs to the Company’s adjusted operating income for the three years presented in the Pay versus Performance Table. As described above, adjusted operating income is defined as the Company’s total operating income reported under U.S. GAAP, adjusted to exclude amortization of intangible assets acquired in a business combination, stock-based compensation expense, and any impairment expense. While the Company uses other financial and non-financial performance measures in its compensation programs, Mesa has determined that adjusted operating income is the most important performance measure used to link compensation actually paid to the Company’s NEOs for fiscal year 2023 to Company performance.
Pay Ratio Disclosure
Pay Ratio Disclosure Under Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to provide the ratio of the annual total compensation of Mr. Owens, to the annual total compensation of the median employee of the Company (the “Pay Ratio Disclosure”). For fiscal year 2023, the total annual compensation of the median employee of the Company and its subsidiaries (other than the Chief Executive Officer) was $79,653. Based upon the total compensation for fiscal year 2023 reported for Mr. Owens, our ratio of CEO to median employee pay was 65 to 1. For our fiscal year 2023 ratio, we determined the median compensated employee based on salary, bonus plan, and grant date fair value of stock options and RSUs granted during the fiscal year for all our employees except Mr. Owens as of March 31, 2023. We annualized this compensation for employees who did not work the entire year, except for employees designated as temporary.
DIRECTORS
DIRECTORS The affairs of the Corporation shall be governed by a Board of not less than three (3) nor more than nine (9) Directors as the Bylaws may determine from time to time, and who shall be elected in accordance with the Bylaws of the Corporation. The organization and conduct of the Board shall be in accordance with the following:
DIRECTORS
| 1. | Directors of the Corporation need not be residents of Colorado nor holders of shares of the Corporation’s capital stock. |
DIRECTORS
| 2. | Meetings of the Board of Directors, regular or special, may be held within or without Colorado upon such notice as may be prescribed by the Bylaws of the Corporation. Attendance of a Director at a meeting shall constitute a waiver by him of notice of such meeting unless he attends only for the express purpose of objecting to the transaction of any business thereat on the ground that the meeting is not lawfully called or convened. |
DIRECTORS
| 3. | A majority of the number of Directors at any time constituting the Board of Directors shall constitute a quorum for the transaction of business, and the act of a majority of the Directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. |
DIRECTORS
| 4. | By resolution adopted by a majority of the number of Directors at any time constituting the Board of Directors, the Board of Directors may designate two or more Directors to constitute an executive committee which shall have and may exercise, to the extent permitted by law or in such resolution, all of the authority of the Board of Directors in the management of the Corporation; but the designation of any such committee and the delegation of authority thereto shall not operate to relieve the Board of Directors or any member thereof of any responsibility imposed on it or him by law. |
DIRECTORS
| 5. | Any vacancy in the Board of Directors, however caused, may be filled by the affirmative vote of a majority of the remaining Directors, though less than a quorum of the Board of Directors. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. |
DIRECTORS
| 6. | The Board of Directors may, from time to time and to the extent permitted by law, authorize a distribution to the shareholders in partial liquidation, out of stated capital or capital surplus of the Corporation, of a portion of the corporate assets, in cash or property. |