DEF 14A of Twin Disc Inc, Sep 8, 2023

DEF 14A of Twin Disc Inc

Filed Sep 8, 2023 · FY20230001437749-23-025448

Open on EDGAR

  1. PRINCIPAL SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS

    PRINCIPAL SHAREHOLDERS, DIRECTORS AND EXECUTIVE OFFICERS

  2. PRINCIPAL SHAREHOLDERS

    PRINCIPAL SHAREHOLDERS Based upon the records of the Corporation, filings with the Securities and Exchange Commission as of August 11, 2023 and additional information obtained by the Corporation, the following table sets forth the persons or group of persons having beneficial ownership (as defined by the Securities and Exchange Commission) of more than 5% of the issued and outstanding common stock of the Corporation.

  3. PRINCIPAL SHAREHOLDERS

    | Name | Address | Nature of Beneficial Ownership | Amount Owned | Percent of Class | | John H. Batten | 704 Waters Edge Rd. | Power to vote | 2,163,953 (1) | 15.5% | | | Racine, WI | Beneficial | 386,050 | 2.8% | | GAMCO Investors, Inc. | One Corporate Center | Power to vote & | 2,175,856 (2) | 15.6% | | | Rye, NY | dispose of stock | | | | Juniper Investment Company, LLC | 555 Madison Avenue | Power to vote & | 1,035,073 | 7.4% | | | New York, NY | dispose of stock | | | | AMH Equity, Ltd. | 370 Lexington Avenue | Power to vote & | 825,500 | 5.9% | | | New York, NY | dispose of stock | | |

  4. PRINCIPAL SHAREHOLDERS

    | (1) Held as trustee under various trusts and as guardian for a non-immediate family member. | | (2) Represents shares held by various entities which are directly or indirectly controlled by Mario J. Gabelli and for which he acts as chief investment officer. |

  5. DIRECTORS AND EXECUTIVE OFFICERS

    DIRECTORS AND EXECUTIVE OFFICERS Based upon the records of the Corporation, filings with the Securities and Exchange Commission as of August 11, 2023 and additional information obtained by the Corporation, the following table sets forth the number of shares of common stock of the Corporation beneficially owned by each of the Directors of the Corporation, each of the executive officers named in the Summary Compensation Table and the number of shares beneficially owned by all Directors and executive officers of the Corporation as a group.

  6. DIRECTORS AND EXECUTIVE OFFICERS

    | Name of Beneficial Owner | Amount and Nature of Beneficial Ownership (1) | Percent of Class | | John H. Batten | 2,550,003(2) | 18.3% | | Jeffrey S. Knutson | 129,097(3) | * | | Michael Doar | 98,760(4) | * | | Janet P. Giesselman | 45,089(4) | * | | David W. Johnson | 52,961(4) | * | | Michael C. Smiley | 57,224(4) | * | | Juliann Larimer | 11,085(4) | * | | Kevin M. Olsen | 8,544(4) | * | | All Directors and Executive Officers as a group (8 persons) | 2,952,763(4) | 21.2% |

  7. DIRECTORS AND EXECUTIVE OFFICERS

    | * Denotes ownership of less than one percent of shares outstanding. |

  8. DIRECTORS AND EXECUTIVE OFFICERS

    | (1) Shares listed include any shares owned by a spouse, minor children and immediate relatives who share the same household as a Director or officer. Inclusion of any such shares is not to be considered an admission of beneficial ownership. | | (2) Includes 2,163,953 shares held by Mr. Batten as trustee under various family trusts and as guardian for non- immediate family member. Also includes restricted stock grants of 48,251 shares that vest in fiscal 2026 and 32,933 shares that vest in fiscal 2027. | | (3) Includes restricted stock grants of 23,691 shares that vest in fiscal 2026 and 16,170 shares that vest in fiscal 2027. | | (4) Included above are unvested restricted shares as follows: Mr. Doar 12,217, Ms. Giesselman 6,443, Mr. Johnson 9,330, Mr. Smiley 6,443, Ms. Larimer 6,443 and Mr. Olsen 6,443. |

  9. PROPOSAL 1: ELECTION OF DIRECTORS

    PROPOSAL 1: ELECTION OF DIRECTORS The Board of Directors has nominated the following persons to serve as Directors for the Corporation, each for a term to expire at the Annual Meeting of Shareholders following the fiscal year ending June 30, 2026, as indicated below. Shares of common stock represented by properly executed proxy appointments will be voted for the two nominees listed unless authority to do so is withheld.

  10. PROPOSAL 1: ELECTION OF DIRECTORS

    | Name and Current Age | Principal Occupation and Other Public Company Directorships Held Within Past Five Years | Skills and Qualifications | Served as Director Continuously Since | | TERMS EXPIRE IN 2023: | | | | | Michael Doar Age 68 | Executive Chairman and former Chairman and Chief Executive Officer, Hurco Companies, Inc., Indianapolis, Indiana (A global manufacturer of machine tools) | Mr. Doar is Executive Chairman and former CEO of a public company. His experience includes strategic planning, financial oversight, compensation and organizational competencies. | October 2008 | | Michael C. Smiley Age 64 | Former Chief Financial Officer, Zebra Technologies Corp., Lincolnshire, Illinois (A global provider of enterprise asset intelligence solutions to identify, track and manage the deployment of critical assets for improved business efficiency). Mr. Smiley was previously a Director of the Corporation from 2010-2018. | Mr. Smiley is a former CFO of a public company. His competencies include strategic planning, financial oversight, mergers and acquisitions, extensive domestic and international experience in complex manufacturing and engineered and technology products. | August 2019 |

  11. PROPOSAL 1: ELECTION OF DIRECTORS

    THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF ELECTING THE NOMINEES LISTED ABOVE AS DIRECTORS. UNLESS YOU INDICATE OTHERWISE ON YOUR PROXY, YOUR SHARES WILL BE VOTED “FOR” THE ELECTION OF EACH OF THESE NOMINEES AS DIRECTORS. The Directors whose terms are continuing, and the classes to which they have been elected, are set forth below. Each Director whose term is continuing was elected to his or her present term of office by a vote of shareholders at a meeting for which proxies were solicited.

  12. PROPOSAL 1: ELECTION OF DIRECTORS

    | Name and Current Age | Principal Occupation and Other Public Company Directorships Held Within Past Five Years | Skills and Qualifications | Served as Director Continuously Since | | CONTINUING DIRECTORS WHOSE TERMS EXPIRE IN 2024: | | | | | Janet P. Giesselman Age 69 | Retired President of Dow Oil & Gas, a business unit of The Dow Chemical Company, Midland, Michigan. Also Director, Ag Growth International (A global provider of grain handling and storage equipment), Director, Corteva Agriscience (The only major agriscience company dedicated to agriculture), Former Director, Avicanna, Inc. (A biopharmaceutical company), Former Director, GCP (A construction company) and Former Director, Omnova Solutions (A global provider of emulsion polymers and specialty chemicals). | Ms. Giesselman is a retired senior executive of a global public company. Her background includes strategic planning, financial oversight, sales, marketing, start-ups, mergers and acquisitions and global regulatory expertise. Ms. Giesselman has extensive international experience and a broad background in the oil and gas and the agricultural sectors. | June 2015 | | David W. Johnson Age 60 | Vice President and Chief Financial Officer, Johnson Outdoors, Inc., Racine, Wisconsin (A global provider of outdoor recreation products). | Mr. Johnson is a sitting CFO of a public company. His strengths include financial leadership, new business development, operational restructuring, cost savings and strategic analysis. | July 2016 | | TERMS EXPIRE IN 2025: | | | | | John H. Batten Age 58 | Chief Executive Officer, Twin Disc, Incorporated since May 2019; formerly President and CEO since July 2013; formerly President and Chief Operating Officer since July 2008, and Executive Vice President since October 2004. | Mr. Batten is a sitting CEO of a public company. His skill sets include strategic and operational planning, financial oversight, and organizational development as well as extensive domestic and international experience in engineered products and a complex manufacturing environment. | December 2002 | | Juliann Larimer Age 57 | Chair of the Board and retired President and Chief Executive Officer, Peak Technologies, Milwaukee, Wisconsin (A provider of end-to-end mobility and digital supply chain solutions for performance-driven organizations). | Ms. Larimer is Board Chair and former CEO of a technology company and former Vice President of Sales for a global public company, Zebra Technologies. She is skilled in strategic planning, global sales strategy and management of diverse teams. | February 2022 | | Kevin M. Olsen Age 52 | President and Chief Executive Officer, Dorman Products, Colmar Pennsylvania (A supplier of replacement parts for the global automotive aftermarket industry). | Mr. Olsen is a sitting CEO of a public company, and former CFO.His skills include executive leadership, financial management and strategic planning. | August 2022 |

  13. EXECUTIVE COMPENSATION

    In the discussion that follows, we will explain the objectives of our compensation programs, why we pay the compensation we do and how that fits with the Corporation’s commitment to provide value to our shareholders. Executive Summary Through the Board’s Compensation and Human Capital Committee (the “Committee”), the Corporation has established a compensation program that is designed to attract and retain key employees, and reward those employees for short-term and long-term performance of the Corporation. To fulfill these goals, the compensation of the Corporation’s Named Executive Officers consists of a mix of base salary, annual incentives and long-term incentives. Base salary is intended to compensate the Corporation’s Named Executive Officers for services rendered during the fiscal year, their level of responsibility and experience within the industry and the Corporation, and their sustained individual performance. Annual incentives are designed to compensate the Named Executive Officers for achieving short-term corporate, business unit and individual performance goals. Long-term incentives are intended to reward executives for sustained performance of the Corporation and are heavily weighted in favor of equity-related awards (performance stock, restricted stock and restricted stock units). A significant objective of the Corporation’s compensation philosophy is to align the interests of the Named Executive Officers with those of shareholders by paying for performance. Key elements of the Corporation’s compensation program that support the pay for performance philosophy include the following:

  14. EXECUTIVE COMPENSATION

    | ● | A significant portion of the compensation of the Corporation’s Named Executive Officers is tied to the performance of the Corporation, including annual incentives based on financial measurements that management of the Corporation considers important and long-term incentives that are heavily weighted in favor of equity-related awards (performance stock, restricted stock and restricted stock units). |

  15. EXECUTIVE COMPENSATION

    | ● | The Corporation has stock ownership guidelines for each of its Named Executive Officers, thereby aligning their long-term interests with those of shareholders. |

  16. EXECUTIVE COMPENSATION

    | ● | The Corporation promoted additional equity ownership beyond the performance period for the long- term incentive awards by including performance stock and restricted stock units with performance conditions that are payable in stock as long-term incentive awards in FY2023. |

  17. EXECUTIVE COMPENSATION

    | ● | The Corporation’s agreements with its Named Executive Officers are designed to avoid excess parachute payments under Section 280G of the Internal Revenue Code, and thus do not provide for excise tax gross-ups for excess parachute payments. |

  18. EXECUTIVE COMPENSATION

    | ● | The Corporation’s long-term incentive compensation plan (i) prohibits repricing of stock options and the repurchase of underwater options; (ii) limits the recycling of shares that may be awarded under the plan; and (iii) states that all awards are subject to the clawback requirements of any applicable law, the listing standards of the NASDAQ Stock Market, and any clawback policy adopted by the Committee, and provides mechanisms for the Corporation to enforce its recovery rights. |

  19. EXECUTIVE COMPENSATION

    | ● | The Corporation’s change in control severance agreements with its Named Executive Officers contain “double trigger” provisions (i.e., both a change in control and an involuntary termination or resignation for good reason) in order for outstanding equity awards to vest and be paid. |

  20. EXECUTIVE COMPENSATION

    | ● | The annual Corporate Incentive Plan is performance-based and has caps on bonus payments. |

  21. EXECUTIVE COMPENSATION

    | ● | The Committee determined that the Revenue and EBITDA percentage results exceeded the thresholds under the Corporate Incentive Plan, while the inventory as a percent of revenue objective was not met. In addition, the Committee determined that the two strategic objectives were not fully met. As a result, the Named Executive Officers received payments under the Corporate Incentive Plan equal to 73.3% and 75.8% of the target amounts for Mr. Batten and Mr. Knutson, respectively. |

  22. EXECUTIVE COMPENSATION

    When it established executive compensation for FY2023, the Committee engaged Pay Governance LLC, an independent compensation advisory firm, to conduct a review of competitive compensation levels for the CEO and CFO for similar positions in similar industries. For this analysis, Pay Governance referenced data from a selected peer group of companies, as well as survey data, reflecting a market sample of companies consistent with Twin Disc’s industry and size. The Committee received information on the 25th, 50th and 75th percentiles of each element of executive compensation for comparable executive positions. The Committee used this data to determine the base salaries, target annual bonus percentages, target long-term incentive pay, and target total pay for Messrs. Batten and Knutson for FY2023. The Committee did not specify targeted individual companies from among the Pay Governance peer group or survey participants. The Corporation provides executive officers with a base salary to compensate them for services rendered during the fiscal year, their level of responsibility, experience within the Corporation and time within their current role, and their sustained individual performance. Individual performance is measured through the Corporation’s annual performance evaluation process. Pay for individual performance rewards executives for achieving goals that may not be immediately evident in common financial measurements. Base salaries are reviewed each year by the Committee. As discussed above, base salary levels have historically been compared to the market median (i.e. 50th percentile), as determined by using survey data and as determined by external consultants, in order to ensure executives are paid a competitive salary, aiding in attraction and retention. Base salary adjustments, as may be appropriate, are determined annually and may be based on individual, team or Corporation performance results, as well as other factors including changes to job scope or responsibilities. In addition, market adjustments to base salary may be indicated when an incumbent is more than 15% below the market median and has been in the job longer than 2-3 years. Market adjustments may also be used to retain valuable employees in a competitive labor market. The Committee uses a performance management system to set individual objectives for each executive. This system allows for the annual evaluation of both performance goal achievement and competency development. When evaluating individual performance, the Committee considers the executive’s effort in promoting corporate values; achieving both short and longer-term objectives; improving product quality; developing relationships with customers, suppliers, and employees; demonstrating leadership abilities among coworkers; and achievement of other individualized goals set as a part of the performance management system. The Committee determines and approves base salary adjustments for the CEO, and approves base salary adjustments for the other members of the executive officer team based on the recommendations from the CEO. Generally, executive base salaries are increased at rates comparable to the increases provided at other comparable companies and are at or near market levels. Annual Incentive Compensation Executive officers and selected key management participate in an annual incentive plan called the Corporate Incentive Plan (“CIP”). This plan provides executives with the opportunity to receive annual cash incentives for achieving corporate, business unit and individual performance goals once threshold performance levels are achieved. The Committee reviews the CIP’s design annually and approves any CIP design changes or amendments. It also reviews and approves annual goals, and certifies the achievement of performance targets, based on the financial statements of the Corporation. Cash incentive payments are made after the end of each fiscal year, dependent upon corporate, business unit or individual goal achievement. In no event may the payout be more than 200% of the target. An executive’s incentive payment under the CIP may be increased or decreased by up to 20%, at the discretion of the Committee, based on the recommendations of the CEO, if the executive’s individual performance goals are either exceeded or not achieved and based on other factors deemed important by the Committee. The Committee alone makes decisions regarding adjustments to the CEO’s annual incentive award. Long-Term Incentive Compensation The Twin Disc, Incorporated 2021 Long-Term Incentive Compensation Plan (“LTI Plan”), which was approved by the Corporation’s shareholders at the annual meeting in October 2021, provides for the opportunity for executive officers and key employees of the Corporation (and its subsidiaries) to acquire common stock of the Corporation or cash payments via stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock awards, performance stock unit awards, performance unit awards or dividend equivalent awards. In keeping with the Corporation’s commitment to provide a total compensation package that includes at-risk components of pay, the Committee makes annual decisions regarding the appropriate type of long-term incentives for each executive. The granting of performance stock encourages a pay for performance approach, aligning the interests of the executive with the economic goals of the Corporation and the shareholders. The granting of restricted stock or restricted stock units is based on a number of factors that include rewarding sustained individual performance, increasing an executive’s ownership in the Corporation, and addressing retention concerns. Restricted stock or restricted stock units may also be used to incent executives in times of global economic instability when the future value of stock options, performance stock and performance stock units become more unpredictable. The composition of an executive’s long-term compensation – e.g., performance stock and restricted stock – is determined by the Committee. The executive has no role or choice whether to receive incentive compensation in the form of performance stock, restricted stock, or other forms. The Committee establishes the vesting criteria, including the performance goals that must be achieved in order for the award to vest. The LTI Plan requires a minimum vesting, restricted or performance period of at least one year for all awards made under the LTI Plan, with the exception that up to five percent of the shares available for issuance under the LTI Plan may be awarded with a shorter vesting, restricted or performance period. Grants are made at the beginning of each fiscal year, or as determined by the Committee, for the ensuing multi-year period. The Committee uses external consultants and survey information as a guideline when considering long-term incentive awards for management. The Committee reviews competitiveness of awards under the LTI Plan annually and obtains a periodic independent review. In addition, the Committee reviews and approves LTI Plan changes as necessary, and ensures the LTI Plan’s compliance with shareholder approval requirements. Benefits The Corporation believes it is necessary to also recognize the efforts of its officer group and senior management in the area of benefits. The Committee annually reviews the Corporation’s benefit programs for competitiveness and uses external consultants and surveys as a reference when necessary. It approves the addition, modification or deletion of any executive benefit program, as well as the eligibility of any specific executive for a program. Information regarding the Corporation’s benefit programs available to its Named Executive Officers follows the Outstanding Equity Awards at Fiscal Year-End table later in this Executive Compensation discussion. Other Personal Benefits and Perquisites

  23. Summary Compensation Table

    Summary Compensation Table The following table summarizes the “total compensation” of the Corporation’s Named Executive Officers for the fiscal year ended June 30, 2023. It should be noted that the total compensation as reported by the Summary Compensation Table follows specific requirements of the Securities and Exchange Commission for reporting compensation, and does not reflect the target or actual compensation for the Named Executive Officers for the fiscal year.

  24. Summary Compensation Table

    | Name and Principal Position | Year | Salary | (1) Stock Awards | (2) Non-Equity Incentive Plan Compensation | (3) Nonqualified Deferred Compensation Earnings | (4) All Other Compensation | Total | | John H. Batten | 2023 | $648,416 | $1,092,881 | $408,223 | $— | $162,044 | $2,311,564 | | President and Chief Executive Officer | 2022 | $623,625 | $1,096,472 | $631,891 | $1,691 | $129,936 | $2,483,615 | | Jeffrey S. Knutson | 2023 | $380,928 | $536,605 | $160,871 | $— | $34,796 | $1,113,200 | | Vice President – Finance, CFO, Treasurer and Sec’y | 2022 | $364,006 | $493,420 | $238,508 | $— | $34,944 | $1,130,878 |

  25. Summary Compensation Table

    | (1) Reflects the aggregate grant date fair value for each Named Executive Officer computed in accordance with Financial Accounting Standards Board ASC Topic 718, excluding the effect of estimated forfeitures. The performance awards are calculated as of the grant date, based on the most probable outcomes of the respective performance goals. The aggregate grant date fair values of the performance-based awards granted in FY2023, assuming the maximum performance goals are achieved, are as follows: Mr. Batten, $983,590; and Mr. Knutson, $482,952. These calculations are based on the closing share price on the date of grant of $9.06. |

  26. Summary Compensation Table

    The following table presents separately the compensation expense recognized in FY2023 and in FY2022 for outstanding awards of performance stock (restricted stock units with performance conditions are included in the “Performance Stock” column), restricted stock and restricted stock units for Messrs. Batten and Knutson.

  27. Summary Compensation Table

    | Name | Year | Performance Stock | Restricted Stock | Restricted Stock Units | | John H. Batten | 2023 | $668,577 | 289,269 | 100,004 | | | 2022 | $460,006 | 260,002 | 105,004 | | Jeffrey S. Knutson | 2023 | $257,167 | 119,938 | 60,001 | | | 2022 | $156,863 | 105,002 | 59,307 |

  28. Summary Compensation Table

    | (2) Reflects cash bonuses earned in connection with achievement of specific performance targets under the Corporate Incentive Plan, described in the narrative following the Summary Compensation Table. | | (3) This figure represents above-market earnings on the SERP benefits of Mr. Batten. Mr. Batten’s SERP benefit was credited with 3% in earnings, the minimum earnings rate under the SERP. Mr. Knutson does not participate in the SERP. |

  29. Summary Compensation Table

    (4) All Other Compensation consists of the following for each of the Named Executive Officers:

  30. Summary Compensation Table

    | Name | 401k Company Match | Retirement Savings Plan Contribution | Defined Contribution SERP | Life Insurance | Prerequisites and Personal Benefits | Total | | John H. Batten | $10,128 | $18,850 | $84,427 | $29,000 | $19,638 | $162,044 | | Jeffrey S. Knutson | $10,026 | | | $24,770 | | $34,796 |

  31. Summary Compensation Table

    The Corporation’s Supplemental Executive Retirement Plan (“SERP”) was restated during FY2011 to provide a defined contribution formula for the benefits of Mr. Batten. Mr. Knutson does not participate in the SERP. Messrs. Batten and Knutson participate in an endorsement split-dollar life insurance plan. Perquisites and Personal Benefits for Mr. Batten for FY2023 consist of personal use of the company plane and, supplemental long-term disability premiums. The aggregate total of perquisites and personal benefits for the remaining Named Executive Officer was less than $10,000 for FY2023, and therefore need not be disclosed or included in such Named Executive Officer’s “All Other Compensation” total.

  32. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table provides information on plan-based incentive awards granted to our Named Executive Officers during FY2023.

  33. Grants of Plan-Based Awards

    | | | Estimated Future Cash Incentive Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Share or Unit Payouts Under Equity Incentive Plan Awards | | | | | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All other Stock awards; Number of shares of stock or units | Grant Date Fair Value of Stock and Option Awards (4) | | John H. Batten | | | | | | | | | | | Cash Incentive | | $278,460 | $556,920 | $1,113,840 | | | | | | | Restricted Stock Unit Award with Performance Conditions (1) | 8/3/2022 | | | | 36,188 | 72,376 | 144,752 | | $655,727 | | Restricted Stock Award (2) | 8/3/2022 | | | | | | | 48,251 | $437,154 | | Jeffrey S. Knutson | | | | | | | | | | | Cash Incentive | | $106,116 | $212,231 | $442,463 | | | | | | | Cash Incentive Performance Stock Award (3) | 8/3/2022 | | | | 17,769 | 35,537 | 71,074 | | $321,965 | | Restricted Stock Award (2) | 8/3/2022 | | | | | | | 23,691 | $214,640 |

  34. Grants of Plan-Based Awards

    | (1) Consists of restricted stock unit awards with performance-based vesting criteria, as discussed in the “Long-Term Incentive Compensation” section of the Executive Compensation discussion; eligible for vesting in 2025. | | (2) Consists of restricted stock awards with a vesting date of August 3, 2025. These stock awards will vest if the executive remains employed through the vesting date. | | (3) Consists of performance stock awards, as discussed in the “Long-Term Incentive Compensation” section of the Executive Compensation discussion; eligible for vesting in 2025. | | (4) The grant date fair values are calculated using the closing price of Twin Disc shares on August 3, 2022 (the grant date) of $9.06. |

  35. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table summarizes the number of restricted stock, performance stock and restricted stock unit awards held by our Named Executive Officers on June 30, 2023. The Named Executive Officers had no outstanding exercisable or unexercisable options outstanding on June 30, 2023.

  36. Outstanding Equity Awards at Fiscal Year-End

    | Stock Awards | | | | | | Name and Grant Date | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested (6) | 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 (6) | | John H. Batten | | | | | | 8/6/2020 | 51,994 (1) | $585,452 | - (3) | — | | 8/4/2021 | 20,952 (2) | $235,920 | 48,887 (4) | $550,468 | | 8/3/2022 | 48,251 (1) | $543,306 | 72,376 (5) | $814,954 | | Jeffrey S. Knutson | | | | | | 8/6/2020 | 24,264 (1) | $273,213 | - (3) | — | | 8/4/2021 | 12,571 (2) | $141,549 | 18,857 (4) | $212,330 | | 8/3/2022 | 23,691 (1) | $266,761 | 35,537 (5) | $400,147 |

  37. Outstanding Equity Awards at Fiscal Year-End

    | (1) Reflects non-vested restricted stock awards that are scheduled to vest three years from the date of grant. | | (2) Reflects non-vested restricted stock unit awards that are scheduled to vest three years from the date of grant. | | (3) Does not include performance stock awards granted on August 6. 2020 based on the three-year performance period ending June 30, 2023. To the extent such awards vested, they vested on June 30, 2023, and were no longer outstanding as of the fiscal year ending June 30, 2023. | | (4) Reflects non-vested performance stock awards scheduled to vest on June 30, 2024 based on three-year performance period ending June 30, 2024. Figures shown are based on achieving target performance goals. | | (5) Reflects non-vested restricted stock unit awards with performance conditions scheduled to vest in FY2026 based on three-year performance period ending June 30, 2025. Figures are shown based on achieving target performance goals. | | (6) Values were calculated using $11.26 per share, the closing price of the Corporation’s common stock as of June 30, 2023, the last trading day of the fiscal year. |

  38. Retirement Benefits

    Retirement Benefits Qualified Retirement Plans The Twin Disc, Incorporated Retirement Savings Plan for Salaried Employees (“Savings Plan”) provides non-contributory retirement benefits to all Twin Disc, Incorporated salaried employees hired prior to October 1, 2003. The Savings Plan was established August 1, 2009 to provide a retirement benefit similar to the one previously provided under the Twin Disc, Incorporated Retirement Plan for Salaried Employees, discussed below, in a defined contribution format. Employer contributions under the Savings Plan are based on a percentage of annual compensation, from 4.5% to 6.5%, based on years of service. This contribution is deposited into an individual investment account, in which the individual directs his or her own investment elections, within an array of choices. The Savings Plan does not allow employee contributions. Employer contributions, which are made annually, are 100% vested. The Twin Disc, Incorporated Retirement Plan for Salaried Employees (“Retirement Plan”) provides non- contributory retirement benefits to all Twin Disc, Incorporated salaried employees hired prior to October 1, 2003. Eligibility for retirement occurs upon reaching one of the following age and service requirements: a) Age 65 with 5 years of service; b) Age 60 with 10 years of service; c) 30 years of service at any age; or d) age plus service equals 85 points. Only Mr. Batten participates in this program and he is not eligible for retirement as of June 30, 2023. Prior to January 1, 1997, Retirement Plan benefits were based upon both years of service and the employees’ highest consecutive 5-year average annual compensation during the last 10 calendar years of service. As of December 31, 1996, the then-current accrued benefits under the Retirement Plan were frozen and the Retirement Plan was amended to provide for future accruals under a cash-balance program. Mr. Batten is eligible for a benefit under the cash-balance program. Subsequently, the Retirement Plan was amended to freeze all future benefit accruals, effective August 1, 2009. The definition of compensation for purposes of calculating the pension benefit includes W-2 income, excluding any expense reimbursements or taxable fringe benefits, and is limited by the IRS maximum compensation as determined each year. In calendar years 2021, 2022, and 2023 the annual limits were $290,000, $305,000, and $330,000, respectively. Benefits under the frozen Retirement Plan are payable in a monthly annuity form, with either a single life or joint and survivor life benefit option. Benefits under the cash balance program are payable in a lump sum payment, or single life or joint and survivor annuity benefit options. The Twin Disc, Incorporated – The Accelerator 401(k) Savings Plan (“401(k) Plan”) is a tax-qualified retirement savings plan to which all Twin Disc, Incorporated employees, including the Named Executive Officers, are able to contribute up to the limit prescribed by the Internal Revenue Service on a pre-tax or after- tax (Roth) basis. The Corporation matches 50% of the first 8% of pay that is contributed to the 401(k) Plan. All contributions to the 401(k) Plan, as well as any matching contributions, are fully vested upon contribution. Supplemental Executive Retirement Plan The Corporation extends a supplemental retirement plan, called the Twin Disc, Incorporated, Supplemental Executive Retirement Plan (“SERP”), to certain qualified officers. It is the Corporation’s current practice to not add new officers to the SERP. For those eligible participants (only Mr. Batten) the SERP benefit is calculated as the additional benefit that the participant would have received at retirement under the Twin Disc, Incorporated Retirement Savings Plan for Salaried Employees and the frozen Twin Disc, Incorporated Retirement Plan for Salaried Employees, but for the limitation on compensation used in determining benefits under those plans. SERP benefits of all Named Executive Officers who are eligible participants are stated as individual accounts. The SERP benefit is payable in two lump sum payments, which are paid on or about the first and second February 1st in the years following retirement. However, if the commencement of benefits is based on the participant’s separation from service, the first payment will not be made sooner than six months after the participant’s separation. The maximum payment in any given year is $500,000 and any amounts in excess of $500,000 will be paid in the third and subsequent years following retirement. Executive Life Insurance The Corporation provides an endorsement split-dollar life insurance benefit to certain Named Executive Officers who were in their positions prior to January 1, 2015. The Corporation’s current practice is to not provide this benefit to new officers. While employed, the death benefit for an executive is generally equal to three times his or her annual base salary, although exceptions may occur due to other compensation arrangements. At the later of retirement or the 15th anniversary of the policy, the Corporation will recover its share of the total premiums paid throughout the life of the policy from the cash value. At that time, the ownership of the remaining policy and corresponding cash values are transferred to the executive. Information regarding this benefit is detailed in the “All Other Compensation” column of the Summary Compensation Table. Officers who obtained their positions on or after January 1, 2015 are eligible for a term life insurance benefit equal to approximately three times their base salary, subject to certain limitations that may apply regarding insurability or maximum insurance levels.

  39. Agreements Providing Payments Following Termination or Change in Control

    Agreements Providing Payments Following Termination or Change in Control Change in Control Agreements The Corporation has change in control severance agreements with each of its executive officers, which were most recently updated in August 2022. If a change in control occurs (as defined in the agreements) and the executive thereafter terminates employment under circumstances specified in the agreements, the executive is entitled to certain severance benefits. Severance benefits for Named Executive Officers would consist of the sum of the executive’s annual base salary (as defined in the agreements) in effect immediately prior to the circumstances giving rise to the executive’s termination, plus the greater of the executive’s annual bonus for the fiscal year preceding termination (or, if no annual bonus was paid in that year, the average of the annual bonuses for the three fiscal years preceding termination) or target annual bonus for the fiscal year of termination, times a multiple (2.5 for Mr. Batten, 2.0 for Mr. Knutson). In addition, the executive would be entitled to the cash value over the exercise price of any shares of common stock subject to unexercised stock options held by the executive, and fringe benefits would continue for 24 months following termination. The agreements are specifically designed to avoid having benefits exceed the limitations and provisions of Section 280G of the Internal Revenue Code. The performance stock and performance stock unit award agreements and the restricted stock and restricted stock unit grant agreements between the Corporation and its Named Executive Officers have certain change in control provisions. Specifically, if a change in control (as defined in the agreements) occurs and the employee thereafter terminates employment under circumstances specified in the agreements, all performance stock and performance stock units shall immediately vest as if the performance objectives had been fully achieved, all restricted shares shall become freely transferable and non-forfeitable, and all restricted stock units shall immediately vest and the related shares shall be delivered. The following information describes the payments to each Named Executive Officer in the event of a termination of employment as a result of retirement, death, disability, termination for cause, voluntary termination prior to retirement, and involuntary termination (or resignation for good cause) following a change in control. Normal or Early Retirement. For purposes of the following discussion, retirement means termination of employment after the Named Executive Officer reaches age 65, or after the Named Executive Officer reaches age 60 with 10 years of service, which is how retirement is defined in the SERP and the award agreement for performance stock. Named Executive Officers who participate in the Twin Disc, Incorporated Retirement Plan for Salaried Employees and the Twin Disc, Incorporated Retirement Savings Plan for Salaried Employees may also retire after 30 years of service at any age, or if their age plus service equals 85 points, but these definitions of retirement are not considered in the following discussion because they do not affect the amounts required to be disclosed in the tables below. None of the Named Executive Officers are currently eligible for retirement. Medical benefits are only available to Twin Disc retirees hired before October 1, 2003 and who are not yet Medicare-eligible. Eligibility for retiree medical benefits ends upon reaching Medicare eligibility. Restricted stock and restricted stock units without performance conditions are forfeited if retirement occurs before the restrictions on such shares or units have ended. Performance stock, performance stock units and restricted stock units with performance conditions will be paid after the end of the relevant performance period, but only if the performance objective is achieved. The stock or units are prorated based on actual employment during the performance period. Stock options must be exercised within 30 days of termination or they expire. A Supplemental Executive Retirement Plan (SERP) is available for certain Named Executive Officers who qualify for a retirement benefit under the Corporation’s pension plans. Mr. Batten is currently the only participant. For those executives eligible for an endorsement split-dollar life insurance policy, the ownership of the life insurance will be transferred from the Corporation to the executive at the later of retirement or the 15th anniversary of the policy. At the time of transfer, the Corporation will recover its share of the total premiums paid throughout the life of the policy from the cash value or alternatively, receive direct reimbursement from the executive. Death while Employed. In the event of death of a Named Executive Officer while actively employed, the executive’s estate would receive payment for any base salary earned, but not yet paid. In addition, any vacation accrual not used would also be paid to the estate. Restricted stock and restricted stock units vest and become payable per the terms of the individual grant agreement. The estate would receive the payment of shares. Performance stock and performance stock units will immediately vest after the Employee’s termination of employment due to death and be paid as if the maximum performance target has been achieved. The stock or units are prorated based on actual employment during the performance period. Options will fully vest and may pass to the estate, or as directed by a will, and must be exercised within one year from date of death. Disability. In the event of termination of employment due to disability, a Named Executive Officer would receive benefits under the Corporation’s short-term and long-term disability plans, generally available to full- time salaried employees. Benefits are reduced for any social security pension eligibility. Restricted stock and restricted stock units vest and become payable per the terms of the individual grant agreement. Performance stock and performance stock units will immediately vest after the Employee’s termination of employment due to disability and are paid assuming the maximum performance target has been achieved. The stock or units are prorated based on actual employment during the performance period. Termination for Cause. An executive is not eligible for any additional benefits at termination, unless the Compensation and Human Capital Committee would determine that severance payments are appropriate. Voluntary Termination Prior to Retirement. An executive is not entitled to any additional forms of severance payments in the event of a voluntary termination, prior to becoming eligible for retirement. Involuntary Termination (or Resignation for Good Cause) Following Change in Control. The Corporation has entered into Change in Control Severance Agreements with each of our Named Executive Officers. The agreements provide that if the executive experiences an involuntary termination (or resigns for good reason, as defined) within two years following a change in control of the Corporation, the executive will receive the following benefits:

  40. Agreements Providing Payments Following Termination or Change in Control

    | ● | a severance payment equal to (a) a specified multiple, times (b) the sum of (i) the executive’s annual base salary in effect immediately prior to the date of termination (or, if employment terminates for good reason due to a reduction in base salary, the executive’s annual base salary in effect immediately prior to the reduction,) plus (ii) a bonus component, equal to the greater of: (A) the annual bonus awarded to the executive under the Corporation’s annual Corporate Incentive Plan (“CIP”) for the fiscal year immediately preceding the fiscal year in which the date of termination occurs (or, if no annual bonus was received for such fiscal year, the average of the annual bonuses awarded to the executive under the CIP for the three fiscal years immediately preceding the fiscal year in which the date of termination occurs), or (B) the executive’s target annual bonus under the CIP for the fiscal year in which the date of termination occurs. In addition, the following benefits would also become payable |

  41. Agreements Providing Payments Following Termination or Change in Control

    | ● | twenty-four months of benefit continuation, |

  42. Agreements Providing Payments Following Termination or Change in Control

    | ● | current value of all outstanding stock options, |

  43. Agreements Providing Payments Following Termination or Change in Control

    | ● | restricted stock will immediately vest, |

  44. Agreements Providing Payments Following Termination or Change in Control

    | ● | restricted stock units will immediately vest and shares will be issued, and |

  45. Agreements Providing Payments Following Termination or Change in Control

    | ● | performance stock and performance units immediately vest, and stock or cash is paid under the agreements as if the maximum performance objective was achieved. The cash payment shall be equal to the number of performance stock units granted to the employee multiplied by the fair market value of the Corporation’s common stock as of the effective date of such change in control. |

  46. Pay Versus Performance

    Pay Versus Performance The following information under the “Pay Versus Performance” heading should not be deemed filed or incorporated by reference into any of the Corporation’s other filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent the Corporation specifically incorporates this report by reference therein. In accordance with rules adopted by the Securities and Exchange Commission (“SEC”), the following table presents information regarding compensation paid to our Chief Executive Officer (the “CEO”) and our other named executive officers shown in the Summary Compensation Table (collectively, the “Non-CEO NEOs”). The amounts set forth below under the headings “Compensation Actually Paid to CEO” and “Average Compensation Actually Paid to Non-CEO NEOs” have been calculated in a manner prescribed by the SEC rules and do not necessarily align with how the Corporation or the Committee views the link between our performance and pay of our named executive officers. The footnotes below set forth the adjustments from the total compensation for each of our NEOs reported in the Summary Compensation Table above. As permitted under the rules applicable to smaller reporting companies, we are including two years of data and are not including a peer group total shareholder return or company-selected measure.

  47. Pay Versus Performance

    | Fiscal Year Ended June 30 (1) | Summary Compensation Table Total for CEO ($) (1) | Compensation Actually Paid to CEO ($) (2) | Average Summary Compensation Table Total for Non-CEO NEOs ($) (1) | Average Compensation Actually Paid to Non-CEO NEOs ($) (2) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return ($) (3) | Net Income ($) (in thousands) | | 2023 | $2,311,564 | $3,097,928 | $1,111,502 | $1,368,146 | $78.36 | $10,380 | | 2022 | $2,483,615 | $866,618 | $688,426 | $278,002 | $63.05 | $10,467 |

  48. Pay Versus Performance

    | (1) The amounts reported in the “Summary Compensation Table Total for CEO” column are the amounts of total compensation reported for John H. Batten for each corresponding fiscal year in the “Total” column of the Summary Compensation Table. The amounts reported in the “Average Summary Compensation Table Total for Non-CEO NEOs” column are the amounts of total compensation reported for Jeffrey S. Knutson for fiscal 2023 and for Jeffrey S. Knutson and James E. Feiertag for fiscal 2023. in the “Total” column of the Summary Compensation Table. Mr. Feiertag was employed by the Company through October 28, 2021. |

  49. Pay Versus Performance

    | (2) The following amounts were added and deducted from the Summary Compensation Table amounts to determine the compensation actually paid to the CEO and the Non-CEO NEOs in accordance with SEC regulations: |

  50. Pay Versus Performance

    | | CEO | | Non-CEO NEO Average | | | | 2023 | 2022 | 2023 | 2022 | | Summary Compensation Table (SCT) Total | $2,311,564 | $2,483,615 | $1,111,502 | $688,426 | | Minus amounts reported under “Stock Awards” column in SCT | $1,092,881 | $1,096,472 | $536,605 | $246,710 | | Minus amounts reported under “Option Awards” column in SCT | — | — | — | — | | Plus fair value (as of fiscal year-end) of awards granted during fiscal year that remain outstanding and unvested as of fiscal year-end | $1,358,260 | $632,741 | $666,907 | $142,369 | | Plus/minus change in fair value from prior fiscal year-end to current fiscal year-end of awards granted in any prior fiscal year that are outstanding and unvested as of fiscal year-end | $326,645 | ($1,128,601) | $117,059 | ($287,922) | | Plus increase in fair value (as of vesting date) of awards granted during fiscal year that vest during the same fiscal year | — | — | — | — | | Plus/minus change in fair value (as of vesting date) from prior fiscal year-end to vesting date of awards granted in any prior fiscal year that vested during fiscal year | $194,340 | ($24,665) | $9,283 | $1,840 | | Minus fair value (as of end of prior fiscal year) of awards granted in any prior fiscal year that were forfeited during fiscal year | — | — | — | — | | Plus value of dividends or other earnings paid on stock or option awards during fiscal year prior to vesting date not included in SCT total compensation | — | — | — | — | | Total Adjustments | $786,364 | ($1,616,997) | $256,644 | ($598,567) |

  51. Pay Versus Performance

    | (3) Assumes $100 was invested in the Corporation for the period starting July 1, 2021, through the end of the listed fiscal year. |

  52. Relationship Between Compensation Actually Paid and TSR

    Relationship Between Compensation Actually Paid and TSR The chart below shows the relationship between the compensation actually paid to the Corporation’s CEO and the average compensation actually paid to the Corporation’s other NEOs, and Corporation’s cumulative TSR (total shareholder return, based on an initial investment of $100 on July 1, 2021) over the two most recently completed fiscal years.

  53. Relationship Between Compensation Actually Paid and Net Income

    Relationship Between Compensation Actually Paid and Net Income The chart below shows the relationship between the compensation actually paid to the Corporation’s CEO and the average compensation actually paid to the Corporation’s other NEOs, and the Corporation’s net income over the two most recently completed fiscal years.

  54. Director Compensation

    Director Compensation The following table summarizes information regarding the compensation received by each of our non-employee Directors during FY2023:

  55. Director Compensation

    | Name | Year | Fees Earned or Paid in Cash | Value of Stock Awards (1) | All Other Compensation | Total | | Michael Doar (2) | 2023 | $0 | $135,010 | | $135,010 | | Janet Giesselman | 2023 | $77,500 | $72,503 | | $150,003 | | David Johnson (2) | 2023 | $43,750 | $103,751 | | $147,501 | | Kevin Olsen | 2023 | $46,875 | $72,503 | | $119,378 | | Michael Smiley | 2023 | $99,500 | $72,503 | $62,500 (3) | $234,503 | | Juliann Larimer | 2023 | $62,500 | $72,503 | | $135,003 |

  56. Director Compensation

    Value of Stock Awards is computed as of the date of grant in accordance with Financial Accounting Standards Board ASC Topic 718. Mr. Doar held 12,776 shares of restricted stock and Mr. Johnson held 9,609 shares of restricted stock as of the end of FY2023. Each other director held 6,443 shares of restricted stock as of the end of FY2023.

  57. Director Compensation

    | (1) The value of Messrs. Doar and Johnson’s stock awards includes shares of restricted stock issued in lieu of quarterly cash retainers, pursuant to an irrevocable election made under the Twin Disc, Incorporated 2020 Stock Incentive Plan for Non-Employee Directors. Such shares will vest on the first anniversary of the date of issuance. | | (2) This amount represents a pension benefit that Mr. Smiley receives quarterly following his initial retirement from the Board in 2018. Upon his return to the Board in August 2019, he was no longer eligible to earn benefits under the director retirement plan (described below), as this retirement program had been closed effective January 2018. Mr. Smiley will continue to receive this benefit through 2026. | | (3) This amount represents a pension benefit that Mr. Smiley receives quarterly following his initial retirement from the Board in 2018. Upon his return to the Board in August 2019, he was no longer eligible to earn benefits under the director retirement plan (described below), as this retirement program has been closed effective January 2018. Mr. Smiley will continue to receive this benefit through 2026. |

  58. Director Compensation

    Director Compensation Plan Outside Directors of the Corporation (i.e. non-Corporation employees) are paid an annual retainer fee composed of both cash and restricted shares of Twin Disc stock. The restricted shares are issued under the Twin Disc, Incorporated 2020 Stock Incentive Plan for Non-Employee Directors (the “2020 Directors’ Plan”). The mix of cash and stock is determined by the Board of Directors on an annual basis. The cash portion is paid quarterly, which the stock portion of the retainer is awarded annually, at the annual shareholders meeting in October. The restricted shares awarded at a shareholders meeting will vest as of the subsequent annual shareholders meeting. Under the 2020 Directors’ Plan, Directors have the option to elect to receive all or a portion of their quarterly base cash retainer in restricted shares of Twin Disc stock. The restricted shares will vest one year after the date that the quarterly cash retainer payment would have been made. Committee chairs are paid an annual fee in addition to the annual retainer. The chair of the Audit Committee receives $20,000, the chair of the Compensation and Human Capital Committee receives $15,000 and the chair of the Governance Committee receives $10,000. The annual Chairman’s fee is $54,000. Director stock ownership guidelines are in place for the outside Directors of the Corporation. These guidelines will set a target ownership level of three times the value of the Director annual retainer fee, exclusive of committee chair fees. Directors will have a period of five years to attain their targeted ownership level. The Compensation and Human Capital Committee monitors compliance with this guideline, using its discretion to address nonattainment issues. Outside Directors who reach the age of 72 are required to retire from the Board of Directors effective as of the completion of their current term. Retired outside Directors will be entitled to an annual retirement benefit equal to the cash portion of the total annual retainer amount last paid to the Director prior to retirement, exclusive of committee chair fees. Retirement benefits will be payable for a term equal to the Director’s years of service or life, whichever is shorter. In January of 2018, the Board voted to close this retirement program to new directors, with current participants continuing in the program, as described above, until their retirement. In May of 2020, the Board voted to cap the maximum annual benefit at $62,500 and cap the maximum service years equal to 15 years. For those Directors who already had more than fifteen years of service at the time of the change, their benefit immediately freezes at their current service years, with no additional accruals.