DEF 14A of Standex International Corp/De/
Filed Sep 8, 2023 · FY20230001437749-23-025475
Proxy Statement Summary
| Named Executive Officer | Actual Salary ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | David Dunbar President & CEO | 892,597 | 3,405,266 | 471,302 | 164,853 | 5,098,597 | | Ademir Sarcevic Vice President, CFO & Treasurer | 465,330 | 799,455 | 255,564 | 46,848 | 1,570,539 | | Alan Glass Vice President, CLO & Secretary | 388,967 | 536,910 | 96,789 | 52,462 | 1,082,635 | | Annemarie Bell Chief Human Resources Officer | 311,512 | 225,923 | 177,054 | 19,689 | 734,304 | | Sean Valashinas Chief Accounting Officer & Assistant Treasurer | 275,783 | 154,791 | 68,018 | 18,140 | 516,731 | | Paul Burns Former Vice President, Business Development & Strategy | 285,088 | 392,302 | - | 24,155 | 881,233 | | Flavio Maschera Former Chief Innovation & Technology Officer | 292,824 | 245,835 | - | 1,312,086 | 1,850,745 |
View The Company’s Governance Materials
| Director Compensation |
DIRECTOR COMPENSATION ELEMENTS
DIRECTOR COMPENSATION ELEMENTS The FY 2023 compensation elements are shown in the adjacent table. Directors may choose to defer up to 100% of their annual cash retainer into the MSPP, which is described in detail under “Management Stock Purchase Plan” on page 44. The equity portion of non-employee director compensation was granted in the form of shares of restricted stock having a $120,000 fair market value at the time of grant, which was established using the closing price of the Company’s stock on the date of the annual meeting. These shares of restricted stock vest 3 years after the grant date, are considered beneficially owned by the director and accrue dividend equivalents, which are paid upon vesting. Upon the retirement of a director or a change in control of the Company, all unvested shares of restricted stock are subject to acceleration and immediate vesting. Directors do not receive fees for attending Board or committee meetings. Directors also do not receive benefits under Standex retirement plans or any perquisites. Under the Company’s Corporate Governance Guidelines, all non- employee directors are expected to accumulate shares of Company stock with a value of at least five times the value of their annual cash retainer. Until a director has the requisite number of shares, they are required to retain at least 50% of the share units they are awarded. As of June 30, 2023, all non-employee directors were in compliance with this requirement. Additionally, the Company has a policy concerning transactions involving Company securities. The policy is explained under “Anti-Hedging and Anti-Pledging Policies” on page 31. None of the directors have engaged in any of the prohibited transactions during FY 2023 or any prior periods.
DIRECTOR COMPENSATION ELEMENTS
| FY 2023 Non-Employee Director Compensation | | | Compensation Element | Value | | Board Membership | | | Annual Cash Retainer | $70,000 | | Annual Equity Stock Grant | $120,000 | | Committee Chair Fees | | | Audit Chair | $20,000 | | Compensation Chair | $15,000 | | N&CG Chair | $10,000 | | I&T Chair | $15,000 | | Committee Non-Chair Fees | | | Audit Non-Chair | $10,000 | | Compensation Non-Chair | $7,500 | | N&CG Non-Chair | $5,000 | | I&T Non-Chair | $7,500 | | Lead Independent Director | $25,000 |
DIRECTOR COMPENSATION ELEMENTS
| Highlights of Director Compensation Program |
DIRECTOR COMPENSATION ELEMENTS
| ► | Emphasis on equity: ties the majority of director compensation to shareholder interests through stock grants. | | ► | Long term focus: equity grants vest after three years incentivizing directors to focus on the long-term. | | ► | Market competitive: adjustments to director compensation are based on peer group median levels and the work required of directors serving a diverse company such as ours. | | ► | Anti-hedging and anti-pledging: includes features that prohibit certain transactions involving our Company’s stock. | | ► | Stock ownership requirements: all directors must maintain equity ownership levels of at least five times the annual cash retainer and are required to retain at least 50% of the stock they are awarded until they reach the requisite number of shares. |
Director Compensation Table
Director Compensation Table The following table sets forth certain information with respect to our non-employee director compensation for FY 2023. Compensation information for Mr. Dunbar is detailed in the Compensation Discussion & Analysis and Compensation Tables sections of this Proxy Statement. Mr. Dunbar did not receive any compensation solely for his service as a director.
Director Compensation Table
| Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | All Other Compensation ($)(3) | Total ($) | | Charles H. Cannon, Jr. | 86,250 | 120,000 | 4,104 | 210,354 | | Thomas E. Chorman | 102,500 | 120,000 | 4,104 | 226,604 | | Robin J. Davenport | 91,250 | 120,000 | - | 211,250 | | B. Joanne Edwards | 82,500 | 120,000 | 4,104 | 206,604 | | Jeffrey S. Edwards | 84,375 | 120,000 | 4,104 | 208,479 | | Thomas J. Hansen | 37,500 | 224,584 | 7,476 | 269,560 | | Michael A. Hickey | 96,250 | 120,000 | 7,476 | 223,726 |
Director Compensation Table
| 1 | This column includes the annual cash retainer and fees earned for serving as Lead Independent Director, Chair or member of any committee, less the portion of the annual cash retainer that the director elected to defer pursuant to the MSPP. |
Director Compensation Table
| 2 | This column includes the aggregate grant date fair value of the annual equity stock grant and the RSUs granted under a director’s deferment election under the MSPP. The annual equity stock grants were made on October 25, 2022, valued at $92.60 per share, the closing price of our common stock on the grant date. The MSPP RSU grants were certified on August 15, 2023 and granted on August 23, 2023, valued at $106.10 per share, the closing price of our common stock on June 30, 2023 discounted by 25% under the terms of the MSPP. Totals have been calculated in accordance with FASB ASC 718. |
Director Compensation Table
| 3 | This column consists of dividend equivalents paid in FY 2023 that had accrued during the 3-year vesting period for the director’s previous stock awards. |
Director Compensation Table
As of June 30, 2023, the aggregate number of unvested shares or share units held by each director was as follows:
Director Compensation Table
| Name | Unvested Stock (#) | Name | Unvested Stock (#) | | Charles H. Cannon, Jr. | 4,074 | Thomas E. Chorman | 4,074 | | Robin J. Davenport | 2,413 | B. Joanne Edwards | 4,807 | | Jeffrey S. Edwards | 4,074 | Thomas J. Hansen | 7,748 | | Michael A. Hickey | 5,651 | | |
Director Compensation Table
| Director Independence |
Director Compensation Table
Under our Corporate Governance Guidelines, the Board requires that at least a majority of directors either meet or exceed the independence requirements of the NYSE. These rules provide that, in order to be considered independent, each director or nominee does not have a material relationship with the Company, either directly or as a partner, shareholder, or officer of an organization that has a relationship with the Company. Furthermore, directors and nominees cannot have any prohibited relationships, such as certain employment relationships, with the Company, its independent auditors or another organization that has an affiliated relationship with the Company. The Board undertakes an annual evaluation of director independence. At its meeting on July 27, 2023, the Board affirmatively determined that each member of the Board and each nominee, (other than David Dunbar, the Company’s President and CEO), meets the independence standards. In addition, all members of the Audit Committee satisfy the enhanced independence criteria required for members of audit committees, and all members of the Compensation Committee satisfy the enhanced independence criteria required for members of compensation committees.
Business Highlights
| Checklist of Compensation Practices | | | | In addition to the principles and objectives discussed below, the Compensation Committee strives to design the Company’s compensation program to include what is considered good practices in the industry. Much like our corporate governance practices, we believe that good compensation practices increase shareholder value, strengthen our business and encourage us to manage risk properly. This checklist provides a highlight of our compensation practices: | | | | | Executive compensation is tied to performancex | Our incentive programs do not encourage excessive risk taking | | | Caps on incentive payoutsx | No hedging or pledging of Company shares | | | Strategic performance metricsx | No single-trigger change in control severance benefits | | | Benchmarks determined based on peers of comparable size, complexity & industryx | No excise tax gross-up provisions | | | SEC compliant clawback policyx | No excessive perquisites | | | Independent compensation consultant | | | | Stock ownership guidelines | | | | Encourage long-range planning and execution | | | | Compensation Committee is comprised solely of independent directors | |
Business Highlights
| Our Compensation Objectives and Principles | | | | | These principles have been established by the Compensation Committee to further the objectives and guide the design and administration of specific plans, agreements and arrangements for our executives, including the Named Executive Officers. | | | | | Objectives | | Principles | | | ► | Align the interests of our executives with the interests of our shareholders | ► | Incentive compensation should be performance-based | | ► | Attract, retain and motivate highly qualified executives | ► | Incentive compensation should represent the majority of total target compensation | | ► | Pay for performance by rewarding current performance and driving future performance | ► | Incentive compensation should balance short and long- term performance | | ► | Appropriately manage risk | ► | Incentive compensation should discourage excessive risk- taking | | ► | Provide a competitive pay opportunity | ► | Long term incentives should balance stock price appreciation and financial achievements | | ► | Promote long-term commitment to the Company via deferred equity awards and share ownership guidelines for our executives | ► | Compensation levels should be competitive | | | | ► | Executive compensation should be reviewed annually |
Incentive Compensation Should Balance Short-Term and Long-Term Performance
Incentive Compensation Should Balance Short-Term and Long-Term Performance The Compensation Committee believes that driving sustained shareholder value creation requires that executive incentive compensation be appropriately balanced between short and long-term objectives. In addition, the Compensation Committee believes that such balancing discourages excessive risk taking that otherwise could drive short-term results at the expense of sustained long-term performance. Our executive compensation program promotes this objective by balancing the long-term incentive components in the form of equity-based awards, such as restricted stock awards and contingent performance shares, with short-term annual cash incentive opportunities. The value of long-term incentive components is tied, in part, to our stock price, thereby aligning executives’ interests with those of shareholders. However, the Compensation Committee recognizes that our share price is an incomplete measure of Company performance in the short term, as other factors may significantly impact stock prices. Accordingly, the annual cash incentive opportunity component of executive compensation emphasizes current or short-term corporate performance and the realization of short-term defined business and financial objectives. The Compensation Committee has determined that the balance between annual cash incentive opportunities and long-term equity incentives encourages our Named Executive Officers to focus on creating short and long-term shareholder value, while fulfilling business objectives and strategic goals. Long-Term Incentives Should Balance Stock Price Appreciation and Business/Financial-Based Achievements as well as Shareholder Return Relative to Other Industrial Manufacturing Companies Our FY 2023 long-term incentive awards for NEOs other than the CEO are equally weighted between restricted stock awards and contingent performance shares. For our CEO, the FY 2023 mix is 40% weighted towards restricted stock awards and 60% weighted towards contingent performance shares. The restricted stock awards component will vest on a pro-rata basis over three years. The contingent performance shares vest at the end of a 3-year performance period based on achievement against pre- established financial performance criteria. With respect to FY 2023 PSU awards, ultimate award payouts will be adjusted by a relative TSR measure over the 3-year performance period to reflect performance relative to other industrial companies in the S&P 600 Capital Goods Index. The Compensation Committee has determined that this long-term incentive mix appropriately encourages long-term equity ownership, promotes a balance between stock price appreciation and financial-based achievement, aligns the interests of our Named Executive Officers with shareholders and aids in retention of our Named Executive Officers.
Overview
| | CEO | Average Named Executive Officer | Description | | | Base Salary | | | Fixed cash compensation based on the market- competitive value of the skills and knowledge required for each role. Reviewed and adjusted when appropriate to maintain market competitiveness. | | | | | | Designed to reward results in the fiscal year. Annual cash incentives based on: | | | Annual Incentive | | | ► | Achievement of Company financial metrics | | | | | ► | Individual performance on pre-established strategic goals | | Long-Term Incentives | | | Forward-looking equity awards intended to drive future growth and align the interests of NEOs and shareholders. Grants awarded in the form of restricted stock awards and performance share units. Current performance measures include the following metrics and payouts are subject to a relative TSR modifier: | | | | | | ► | ROIC |
Base Salary
| 1 | Ms. Bell received an above-market raise to bring her compensation in line with comparable positions in the Company’s peer group and due to her performance. |
Annual Incentive Opportunity
Annual Incentive Opportunity The Compensation Committee establishes the annual cash incentive opportunity for executives including our Named Executive Officers through a detailed performance planning process called the Balanced Performance Plan (“BPP”). During the BPP process, the Compensation Committee establishes (i) the target incentive amounts; (ii) the respective weight of the financial performance measures and strategic goals; (iii) the Company financial performance goals at “threshold,” “target,” and “superior” levels; and (iv) the strategic goals for each Named Executive Officer. The financial metrics and each strategic goal are reviewed and discussed during the course of two Compensation Committee meetings through the first quarter of each fiscal year before being approved.
2023 Annual Incentive Formula
2023 Annual Incentive Formula * These factors are calculated by taking the goal weight and multiplying it by the goal achievement percentage. For example, if the weight of financial goals totals 75%, and the financial achievement percentage is 100%, the financial achievement factor would be 75%; if the weight of financial goals totals 75% and the financial achievement percentage is 200%, the financial achievement factor would be 150%.
Target Incentive Amounts
| Name | Target Annual Incentive (% of Base Salary) | Target Annual Incentive Amount ($) | | David Dunbar | 105 % | 945,440 | | Ademir Sarcevic | 65 % | 305,115 | | Alan Glass | 55 % | 215,807 | | Annemarie Bell | 55 % | 177,587 | | Sean Valashinas | 35 % | 97,461 | | Paul Burns | 55 % | 215,807 | | Flavio Maschera (1) | 55 % | 211,574 |
Target Incentive Amounts
| 1 | Mr. Maschera’s target annual incentive amount was based on his FY 2023 base salary of €352,466 as converted from EUR to USD using the June 30, 2023 exchange rate of 1.0914. |
Goal Weight within Target Incentive
| ► | 75% of the annual incentive opportunity would be based on the achievement of financial performance goals, and |
Goal Weight within Target Incentive
| ► | 25% of the annual incentive opportunity would be based on individual achievement of strategic goals. |
Setting Financial Performance Measures
Setting Financial Performance Measures The Compensation Committee, working with the CEO, evaluates and establishes financial objectives that correlate to the creation of shareholder value, are aligned with the Company’s annual business plan and are appropriate measures for evaluating executive performance. For FY 2023, the Compensation Committee selected the following three financial performance measures: (i) adjusted Operating Income, (ii) adjusted EPS, and (iii) net working capital turns. The Compensation Committee selected these performance measures because it believes they are important financial factors in preserving and enhancing shareholder value in the short-term and sustaining growth and stability for the long-term. After determining the performance measures, the Compensation Committee sets “threshold,” “target,” and “superior” performance goals, which correspond to annual incentive payouts of 50%, 100% or 200% of the target incentive amount, respectively, except for “entry” for the adjusted Operating Income performance measure corresponds to a payout of 25%. If actual performance falls between two performance levels, the amount of the incentive payout would be determined through interpolation. However, no payout would be made if actual performance falls below entry for the adjusted Operating Income performance measure or below threshold for all other measures. Additionally, if adjusted Operating Income performance exceeds target, the Compensation Committee set a requirement that the adjusted operating income margin must also be at least 12.7% for payout to exceed target. The Compensation Committee included this requirement in order to prevent margin dilution. The Compensation Committee sets the “entry” and “threshold” performance levels high enough so that achieving the level is not guaranteed, while setting the “superior” performance level high enough so that achieving it is difficult and represents an outstanding accomplishment. The Compensation Committee may adjust the financial performance targets to reflect the impact of special events, such as acquisitions or divestitures, during a fiscal year. These adjustments are made pursuant to established guidelines and are appropriate in light of long-term growth strategies and business operations.
Overall Annual Incentive Opportunity Results for NEOs
Overall Annual Incentive Opportunity Results for NEOs The following table shows the overall annual incentive opportunity results for FY 2023. Each executive has the opportunity to participate in the Management Stock Purchase Plan, described below, under which executives can defer a pre-selected percentage of their annual incentive awards into the receipt of RSUs at a 25% discount. Neither Mr. Burns nor Mr. Maschera received any portion of the FY 2023 annual incentive opportunity due to the terminations of their employment.
Overall Annual Incentive Opportunity Results for NEOs
| | | | | Target Annual | | | | Financial | Strategic | Total BPP | Incentive | Annual Incentive | | Name | Achievement Factor | Achievement Factor | Score | Amount ($) | Amount ($) | | David Dunbar | 59.7 % | 40.0 % | 99.7 % | 945,440 | 942,604 | | Ademir Sarcevic | 59.7 % | 45.0 % | 104.7 % | 305,115 | 319,456 | | Alan Glass | 59.7 % | 30.0 % | 89.7 % | 215,807 | 193,579 | | Annemarie Bell | 59.7 % | 40.0 % | 99.7 % | 177,587 | 177,054 | | Sean Valashinas | 59.7 % | 40.0 % | 99.7 % | 97,461 | 97,169 |
Management Stock Purchase Plan
| | Annual Incentive Award | Amount of the | RSUs Granted | | Name | Deferred (% of Award) | Deferral ($) (1) | (#) (2) | | David Dunbar | 50 % | 471,302 | 4,441 | | Ademir Sarcevic | 20 % | 63,891 | 602 | | Alan Glass | 50 % | 96,789 | 912 | | Annemarie Bell | 0 % | - | - | | Sean Valashinas | 30 % | 29,151 | 274 |
Management Stock Purchase Plan
| 1 | The amount of the deferral is the dollar value of the annual incentive award that is actually deferred into the receipt of discounted RSUs under the MSPP. |
Long-Term Incentive Plan
Long-Term Incentive Plan In 2018, the Company, with the approval of its shareholders, adopted the 2018 Omnibus Incentive Plan (“OIP”). An amended and restated OIP was also approved by shareholders in 2021. The purpose of the OIP is to align executives’ interests with those of shareholders through the annual grant of long-term equity awards. These long-term equity awards reward executives for the Company’s performance over a multi-year period. All long term incentive awards to NEOs for FY 2023 were made in August 2022 under the OIP.
OIP Structure
OIP Structure The FY 2023 OIP awards consist of two types of equity awards: time-vested restricted stock awards (“RSAs”) and performance- based performance share units (“PSUs”). The Compensation Committee selected these equity vehicles for FY 2023 because each aligns the interests of our NEOs with those of our shareholders, enhances retention of our NEOs and provides the opportunity to meaningfully increase the level of stock ownership by our NEOs. In addition, the PSUs motivate our NEOs and reward achievement of financial metrics (and share performance) that are aligned to our long-term business strategy and build long-term shareholder value.
OIP Structure
| OIP Component | Description | | Awards of Restricted Stock (“RSAs”) | Time-based, annual pro-rata vesting over a 3-year period | | Performance Share Units (“PSUs”) | Cliff vest at the end of a 3-year period at 0% to 200% of award value based on pre-determined financial performance metrics, and further subject to increase or decrease of up to 25% of payout based on relative TSR performance over the performance period (for an ultimate payout range of 0% to 250%). |
OIP Structure
For FY 2023 RSAs, the RSAs will vest on a pro-rated basis on the 1st, 2nd and 3rd anniversaries of the grant date, provided that the RSA holder is employed continuously through the particular vest date. RSAs from FY 2020 grants vested on the 3rd anniversary of the grant, provided that the RSA holder was employed continuously through the vest date. The Compensation Committee adjusted the vesting schedule for RSAs granted after FY 2020 based on a review of peer practices and the perspective that pro- rata vesting is a more effective tool in attracting and retaining high potential employees. All RSAs will immediately vest upon death, disability or retirement or in the event of an involuntary termination in connection with a change in control. All RSAs under the OIP are considered beneficially owned by the executive, have voting rights, and earn dividend equivalents, which are paid upon vesting. Each PSU grant cliff vests at the end of a 3-year performance period based on results achieved against Compensation Committee- approved performance metrics. Payouts under the PSU grant may range from 0% to 200% of the target award and are settled in shares of common stock. Payout begins at 50% of target for achieving threshold performance goals. If threshold performance goals are not achieved by the conclusion of the performance period, the PSU award would be forfeited and no shares would be delivered under the award. As noted below, actual achievement may be further modified either upward or downward on a sliding scale of up to 25% of payout, based on the relative TSR performance over the performance period. PSUs are also subject to forfeiture upon termination of employment during the performance period for any reason other than death, disability, retirement or involuntary termination in connection with a change in control. Additionally, the Compensation Committee has the discretion to grant awards of restricted stock for a variety of reasons, including sign-on bonuses to attract talent and discretionary grants to retain and motivate executives. The Compensation Committee believes that long-term incentive compensation is essential for retaining and motivating executives. It further believes that providing our executives with long-term incentives will encourage them to operate the Company’s business with a view towards building long-term shareholder value. Based on these considerations, the Compensation Committee, in consultation with its external compensation consultant, establishes (i) the target incentive amounts, (ii) the percentage of the target award that is granted in the form of RSAs and PSUs, and (iii) the performance measures at “threshold,” “target” and “superior” levels.
FY 2023 Target Incentive Amounts
FY 2023 Target Incentive Amounts For FY 2023, the Compensation Committee set the target long-term incentive compensation for each Named Executive Officer, expressed as a percentage of the executive’s base salary based on a number of factors, including the Named Executive Officer’s role and responsibilities, internal pay equity, competitive market data and our stated executive compensation objectives and principles. Since the CEO is in the best position to drive overall Company performance, the CEO should have a larger portion of his long-term incentive award be awarded in PSUs as opposed to RSAs. The Compensation Committee set the CEO’s percentage of PSUs at 60% of the target award, while the other NEOs’ PSU grants were set at 50% of their target award. For FY 2023, the Compensation Committee established the following target long-term incentive awards, with the percentage of such award granted as PSUs for each Named Executive Officer:
FY 2023 Target Incentive Amounts
| | Target Award | | Target Award | | Name | (% of Base Salary) | Target Award Amount ($) | (% Awarded in PSUs) | | David Dunbar | 300 % | 2,701,257 | 60 % | | Ademir Sarcevic | 150 % | 704,112 | 50 % | | Alan Glass | 100 % | 392,376 | 50 % | | Annemarie Bell | 70 % | 226,020 | 50 % | | Sean Valashinas | 40 % | 111,384 | 50 % | | Paul Burns | 100 % | 392,376 | 50 % | | Flavio Maschera | 70 % | 269,277 | 50 % |
Performance Measures
Performance Measures For the FY 2021-2023 and FY 2022-2024 performance periods, the Compensation Committee set a single modified ROIC measure, as calculated using the 5-point average over the last fiscal year of the particular performance period. The modified ROIC measure is calculated by adjusting the denominator to add accumulated depreciation and accumulated amortization and remove goodwill. This ratio reflects the improved efficiency of the Company’s operating assets to generate profits while reducing distortion from the effects of divestitures and acquisitions. The Compensation Committee selected this modified ROIC measure because it reflects the Company’s efforts to improve the quality of earnings, whether they come from organic actions or through inorganic portfolio moves. The measure supports the Committee’s view that improvement in quality of earnings drives shareholder value creation. To more broadly reflect Standex value creation for shareholders relative to other industrial companies, the achievement of the measure is adjusted by a relative TSR modifier over the three-year performance period. Specifically, actual awards are modified up or down as follows:
Performance Measures
| If TSR over the three-year performance period is: | | Then: | | At or above the 75th percentile of the comparator group | | The award will be increased on a sliding scale starting from 15% to 25% | | At or above the 25th and below the 75th percentile of the comparator group | | No change to the award | | Below the 25th percentile of the comparator group | | The award will be decreased on a sliding scale starting from 15% up to 25% |
Performance Measures
For the FY 2023-2025 performance period, the Compensation Committee changed the metric from the modified ROIC measure to a traditional ROIC measure. However, the Compensation Committee retained the 5-point average over the last fiscal year component of the measurement. The Compensation Committee changed the metric to simplify the calculation without detracting from the Company’s focus on improving quality of earnings. Additionally, while keeping the relative TSR modifier, the Compensation Committee adjusted the modifier as follows:
Performance Measures
| If TSR over the three-year performance period is: | | Then: | | At or above the 66th percentile of the comparator group | | The award will be increased on a sliding scale starting from 15% to 25% | | At or above the 33rd and below the 66th percentile of the comparator group | | No change to the award | | Below the 33rd percentile of the comparator group | | The award will be decreased on a sliding scale starting from 15% up to 25% |
Performance Measures
The peer group selected for both of these relative TSR modifier is the S&P 600 Capital Goods Index which the Committee believes is a reasonable proxy to measuring a broad, and therefore consistent, group of companies that will experience similar market influences during the performance period. Our NEOs, therefore, are partially compensated based on how our performance compares to similar investment alternatives when considering total shareholder return performance.
Status of Long-Term Incentive Plan Programs
Status of Long-Term Incentive Plan Programs
Status of Long-Term Incentive Plan Programs
| Performance | | | | | | Period and | | Weighted | | | | Measure | Performance Levels | Achievement | | Status & Commentary | | FY 2021-2023 | | | ► | Results were certified in August 2023. | | | | | ► | The Modified ROIC, as calculated using a 5-point average from Q4 FY 2022 to Q4 FY 2023, was greater than the superior level. | | Modified ROIC | | | ► | Company’s 3-year TSR ranked in the 78th percentile amongst the peer group of S&P 600 Capital Goods companies, so the TSR modifier increased payout by 16.2%. | | | | | ► | Final payout was certified at 232.4% based on Company performance, and individual share payouts are in the table below. |
Status of Long-Term Incentive Plan Programs
FY 2022-2024 awards will be certified in August 2024, while FY 2023-2025 awards will be certified in August 2025. As certified by the Compensation Committee, the FY 2021-2023 performance period ended on June 30, 2023 and the PSUs granted on September 6, 2020 vested at 232.4%, for the following share payouts and value as of the date of certification. Neither Mr. Burns nor Mr. Maschera received any portion of the FY 2021-2023 PSU vesting due to the terminations of their employment.
Status of Long-Term Incentive Plan Programs
| | Shares granted on | Shares | Value of Shares | | Name | September 6, 2020 (#) | Vesting (#) | Vesting ($) (1) | | David Dunbar | 27,709 | 64,395 | 10,541,462 | | Ademir Sarcevic | 7,012 | 16,295 | 2,667,492 | | Alan Glass | 3,907 | 9,079 | 1,486,232 | | Annemarie Bell | 1,339 | 3,111 | 509,271 | | Sean Valashinas | 1,275 | 2,963 | 485,043 |
Status of Long-Term Incentive Plan Programs
| 1 | Based on the stock price on the date the Compensation Committee certified the award, August 15, 2023 ($163.70). |
Standex Retirement Savings Plan
| ► | 100% of the employee’s contribution for the first 3% of the employee’s total compensation (base salary plus annual incentive award); and | | ► | 50% of the employee’s contribution for the next 2%. |
Employment Agreements
Employment Agreements We have entered into employment agreements with each of the Named Executive Officers. Even though each Named Executive Officer has an employment agreement which sets out an initial term that automatically renews, the executives serve at the will of the Board because the agreements may be terminated for any reason with 30 days’ notice, except for Mr. Maschera, whose particular situation is described below. All of the provisions within the employment agreements were crafted to consider the needs of the Company and the executive’s specific circumstances. The Compensation Committee believes that the employment agreements are an important tool to attract and retain highly qualified executives in a competitive marketplace, while also protecting the Company in the event of an executive’s termination. In addition to severance provisions, our employment agreements also contain restrictive covenants including a non-compete provision, which precludes an executive from engaging, in any active capacity, in any business other than Standex while they are employed with the Company. This term is vital to ensure that an executive’s attention and focus during their employment is solely on the Company’s business. The non-compete also precludes the executives from engaging in a business that is competitive with the Company. The non-compete clause also contains a non-poaching provision, which restricts a departing executive’s ability to hire then-current employees of the Company. These terms are beneficial to the Company because they safeguard against executives, who know the most about the Company, its businesses, its employees and its markets, using their knowledge to adversely impact the Company after their employment ends. Until Mr. Maschera’s termination, he had an employment agreement with the Company that incorporated the above aspects. Additionally, Mr. Maschera is an Italian citizen and the employment relationship between Mr. Maschera and the Company was governed by the Contratto Collettivo Nazionale di Lavoro dei Dirigenti Industria (the “Italian NCBA”) and Italian law. Notice periods, severance in lieu of notice, restrictions on termination, and various termination/severance scenarios are prescribed by the Italian NCBA and Italian law. Due to Mr. Maschera’s termination of employment, a settlement agreement was entered into between Mr. Maschera and the Company on June 30, 2023. In exchange for certain payments, as described in more detail in footnote 4 to the “Summary Compensation Table” on page 56, Mr. Maschera released all claims in connection with the termination of his employment and agreed to a 2-year non-compete.
Change in Control
Change in Control Our employment agreements contain provisions governing what happens when there is a change in control. The benefits provided to the Named Executive Officers under these provisions, if payable, are in lieu of any other severance benefits. The Compensation Committee believes that these benefits are important to encourage the executives involved in any negotiation or completion of a change in control transaction to act in the best interest of shareholders, without regard for personal interest. The severance benefits also promote the financial protection and security of an executive’s long-term incentive compensation arrangements in the event of the loss of their positions following a transaction that involves a change in the ownership or control of the Company. None of the severance benefits are triggered if the executive retains their position or a substantially similar position following a change in control. With equity compensation, if the executive is granted an award that substantially mirrors their then-current award, there is no acceleration of that current equity award. This “double trigger” only provides for a payment of benefits if (i) there is a change in control and (ii) the executive is involuntarily terminated or resigns for a specified “good reason.” The Compensation Committee believes that this is appropriate because if an executive retains their position following a change in control, the impact on the executive is not significant enough to warrant the provision of benefits. The severance benefits include a lump sum payment equal to a multiple of the executive’s annual base salary and annual incentive bonus, accelerated vesting of all outstanding equity awards under the OIP and RSUs under the MSPP and a continuation of life insurance and medical plan benefits for a specified period of time. The Compensation Committee believes that these terms and amounts are customary and reasonable. The Compensation Committee, in consultation with its compensation consultant, periodically reviews these terms to evaluate both their effectiveness and competitiveness. More detailed information concerning the trigger events and the severance benefits of each Named Executive Officer is discussed below under “Potential Payments upon Termination or Change in Control” starting on page 62.
Clawback Provision
Clawback Provision In the event that the Company’s financial results for any reporting period require restatement so that the period’s financial performance measures are not met, and the restatement is necessary due to the executives’ misconduct, the OIP gives our Board the discretion and authority to “claw-back” or cancel unpaid annual and long-term incentive awards and to recover excess annual and long-term incentive awards that have been paid to any executive officer. The Compensation Committee adopted a new clawback policy in July 2023 to be in line with new SEC rules and forthcoming NYSE guidelines.
Basis for Determining Executive Compensation
Basis for Determining Executive Compensation The Compensation Committee uses a multi-faceted approach to designing the executive compensation program. The approach includes the use of the independent compensation consultant to advise the Compensation Committee on the selection of an appropriate peer group, analysis of the peer group’s practices and compensation levels and recommendations for the Compensation Committee to consider. Compensation levels for specific executives are based on various factors, including the executive’s experience, individual accomplishments and the breadth of the executive’s organizational responsibilities. The Compensation Committee discusses the program with the CEO and the Chief Human Resources Officer to determine the effectiveness of the program in terms of achieving our stated objectives, including whether the current program is achieving desired motivational effects and properly incentivizing the executives.
Executive Compensation Consultant
Executive Compensation Consultant In FY 2023, the Compensation Committee retained the same independent compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), which has assisted the Compensation Committee since 2015. Meridian is an internationally recognized executive compensation consulting firm. No other compensation consultant was engaged in FY 2023. Meridian was retained to assist the Compensation Committee in the development of a compensation peer group and to advise the Compensation Committee on our existing executive compensation program. Meridian provided research, data analyses, survey information and design expertise as part of its services. Meridian also notified the Compensation Committee of regulatory developments and market trends relating to executive compensation practices. Meridian did not determine or recommend the exact amount of compensation for any Named Executive Officer. From time to time, Meridian also performs an analysis of independent director compensation. For FY 2023, Meridian conducted a competitive assessment of our executive compensation program (including design, features and target pay opportunities) against our compensation peer group. Based on Meridian’s assessment, the Compensation Committee determined that our executive compensation program is reasonable and appropriate when compared to our peer group. The Compensation Committee, in determining whether to continue retaining Meridian for FY 2023, assessed Meridian’s independence under the NYSE’s listing standards. Meridian provided the Compensation Committee with confirmation of its independent status under the NYSE’s standards. As such, the Compensation Committee believes that Meridian is independent and that there is no conflict of interest between Meridian and the Company, the Company executives, the Compensation Committee or its members.
Peer Group
Peer Group The following selection criteria were used to establish the Company’s FY 2023 compensation peer group:
Peer Group
| ► | The company should be an industrial and technology manufacturing company; |
Peer Group
| ► | The company should have revenues between 1/3 and 3 times the Company’s revenue; |
Peer Group
| ► | The company should have multiple business units; and |
Peer Group
| ► | The company should serve global markets. |
Peer Group
Based on this selection criteria, our FY 2023 peer group consisted of the following 17 companies:
Peer Group
| Albany International Corporation | Enpro Industries, Inc. | L.B. Foster Company | | Altra Industrial Motion Corporation | ESCO Technologies, Inc. | NN, Inc. | | Barnes Group, Inc. | Franklin Electric Co., Inc. | Proto Labs, Inc. | | Chart Industries, Inc. | Helios Technologies, Inc. | RBC Bearings, Inc. | | CIRCOR International, Inc. | Hurco Companies, Inc. | TriMas Corporation | | Enerpac Tool Group Corp. | Kadant, Inc. | |
Peer Group
The Compensation Committee, with Meridian’s assistance, routinely reviews the selection criteria and the peer group companies to achieve a relative size positioning that is within a competitive range of median, that is, between the 40th and 60th percentile of the peer group companies. For FY 2023 compensation, Lydall, Inc. and Welbilt, Inc. were removed from the FY 2022 peer group due to actual or pending acquisitions. In April 2023, the Compensation Committee reviewed the peer group and, for FY 2024, removed Altra Industrial Motion Corporation, due to it being acquired, and Franklin Electric Co., Inc., due to business fit and revenue range. Since this brought the peer group down to 15 companies, 4 additional companies were then added (Astronics Corporation; Columbus McKinnon Corporation; CTS Corporation; and Vishay Precision Group, Inc.).
Risk in Compensation Programs
| ► | Compensation elements are mixed. The executive compensation program has a balanced mix of base salary, annual cash incentive awards and long-term equity incentive awards. The mix between the elements decreases the dependency on one form of compensation over other forms and thus provides executives with an incentive to perform at high levels, both in the short-term and long-term. |
Risk in Compensation Programs
| ► | Incentive award metrics contain both short and long-term goals. The annual incentive award is contingent upon the attainment of pre-established short-term corporate, business and financial objectives, while the long-term incentive award is based on long-term stock growth as well as the attainment of financial performance goals. This balance between short and long-term goals reduces the incentive to prioritize short-term performance at the expense of long-term growth. |
Risk in Compensation Programs
| ► | Short-term and long-term performance metrics differ. The performance metrics used to determine the amount of annual incentive awards are different than the performance metrics used to determine the amount of long-term incentive awards. This helps avoid excessive risk-taking to achieve one performance objective at the detriment of other objectives. |
Risk in Compensation Programs
| ► | Annual incentive awards are capped. The total annual incentive award is capped at 200% of target, which reduces the incentive to engage in unnecessarily risky behavior in any given year at the expense of long-term growth. |
Risk in Compensation Programs
| ► | Long-term incentives are completely equity-based. All long-term incentive awards are paid in the form of shares and are only paid if an executive remains employed with the Company at the time of vesting. This practice aligns the executive’s interests with those of shareholders and reduces the likelihood that an executive will act in a way that is detrimental to the long-term stock growth of the Company. |
Risk in Compensation Programs
| ► | Long-term performance metrics are based on corporate objectives. The performance metrics for long-term incentive awards are based on overall corporate performance rather than individual business unit performance. This reduces the risk that business unit heads will engage in conduct that inflates their business unit performance, but does not benefit the Company, as a whole, in the long-term. |
Risk in Compensation Programs
| ► | Incentives have performance thresholds. The annual incentive award and the PSUs granted under the OIP have threshold payout levels, which ensures that incentive compensation is reduced or eliminated completely if the minimum performance levels are not achieved. |
Risk in Compensation Programs
| ► | Compensation is benchmarked. The Compensation Committee benchmarks compensation against the peer group to ensure that the compensation program elements and payout levels are consistent with industry practice. |
Risk in Compensation Programs
| ► | Compensation can be recouped. The Board is empowered to “claw-back” any portion of the annual or long-term incentive compensation attributable to misconduct or financial misstatement in the event of a financial restatement. |
Summary Compensation Table
Summary Compensation Table The following table sets forth compensation information for fiscal years 2021, 2022 and 2023 for our Named Executive Officers – the individuals who served during FY 2023 as CEO and CFO and three other highly compensated executive officers of the Company. Additionally, the table contains compensation information for Mr. Burns and Mr. Maschera, who both would have been our NEOs if not for the termination of their employment prior to June 30, 2023.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (3) | All Other Compensation ($) (4) | Total ($) | | David Dunbar | 2023 | 892,597 | - | 3,405,266 | 471,302 | 164,579 | 164,853 | 5,098,597 | | President and CEO | 2022 | 869,130 | - | 3,435,322 | 675,770 | - | 155,513 | 5,135,735 | | | 2021 | 864,870 | - | 3,681,435 | 772,961 | 355,262 | 110,204 | 5,784,732 | | Ademir Sarcevic | 2023 | 465,330 | - | 799,455 | 255,565 | 3,341 | 46,848 | 1,570,539 | | Vice President, CFO | 2022 | 449,798 | - | 679,507 | 447,954 | - | 29,098 | 1,606,357 | | and Treasurer | 2021 | 433,675 | - | 894,037 | 396,649 | 949 | 26,638 | 1,751,948 | | Alan Glass | 2023 | 388,967 | - | 536,910 | 96,789 | 7,507 | 52,462 | 1,082,635 | | Vice President, CLO | 2022 | 375,984 | - | 607,643 | 148,003 | - | 51,037 | 1,182,666 | | and Secretary | 2021 | 365,907 | - | 675,728 | 171,298 | 7,470 | 33,680 | 1,254,084 | | Annemarie Bell (5) | 2023 | 311,512 | - | 225,923 | 177,054 | 126 | 19,689 | 734,304 | | Chief Human | 2022 | - | - | - | - | - | - | - | | Resources Officer | 2021 | - | - | - | - | - | - | - | | Sean Valashinas (6) | 2023 | 275,783 | - | 154,791 | 68,018 | - | 18,140 | 516,731 | | Vice President, Chief | 2022 | - | - | - | - | - | - | - | | Accounting Officer | 2021 | - | - | - | - | - | - | - | | Paul Burns (7) | 2023 | 285,088 | 175,000 (8) | 392,302 | - | 4,688 | 24,155 | 881,233 | | Former VP of Strategy and | 2022 | 375,984 | - | 451,256 | 265,769 | - | 20,164 | 1,113,173 | | Business Development | 2021 | 365,907 | - | 413,611 | 316,709 | - | 28,732 | 1,124,959 | | Flavio Maschera (9) | 2023 | 292,824 | - | 245,835 | - | - | 1,312,086 | 1,850,745 | | Former VP, Chief Innovation | 2022 | 348,312 | - | 432,713 | 123,056 | - | 14,753 | 918,834 | | & Technology Officer | 2021 | - | - | - | - | - | - | - |
Summary Compensation Table
Footnotes on following pages.
Summary Compensation Table
| 1 | This column includes the grant date fair value (calculated in accordance with FASB ASC 718) of the long-term incentive awards under the Company’s long-term incentive program (RSAs and PSUs) and RSUs that an executive received pursuant to a deferral election under the MSPP. The assumptions used in the valuation of the RSUs received pursuant to a deferral election under the MSPP were as follows: |
Summary Compensation Table
| Risk-free interest rate: | 4.519% | | Expected life of option grants: | 3 years | | Expected stock value volatility: | 29.47% | | Expected quarterly dividends: | $0.28 per share |
Summary Compensation Table
The grant date fair value of these three separate equity awards is as follows:
Summary Compensation Table
| | Grant Date Fair Value of Annual Incentive Deferred Pursuant to MSPP ($) | Grant Date Fair Value of Restricted Stock Awards under the OIP ($) | Grant Date Fair Value of Performance Share Unit Awards under the OIP ($) | Total ($) | | David Dunbar | 704,149 | 1,080,409 | 1,620,709 | 3,405,266 | | Ademir Sarcevic | 95,457 | 351,999 | 351,999 | 799,455 | | Alan Glass | 144,608 | 196,151 | 196,151 | 536,910 | | Annemarie Bell | - | 112,961 | 112,961 | 225,923 | | Sean Valashinas | 43,552 | 55,619 | 55,619 | 154,791 | | Paul Burns (a) | - | 196,151 | 196,151 | 392,302 | | Flavio Maschera (b) | - | 122,917 | 122,917 | 245,835 |
Summary Compensation Table
| a | In connection with Mr. Burns’ termination, he forfeited all unvested equity awards that he held at the time, including all previously granted RSAs and PSUs. |
Summary Compensation Table
| b | Mr. Maschera’s grants under the OIP are based on his FY 2023 base salary as converted from Euros to USD using the August 23, 2022 exchange rate of 0.9971. In connection with his termination, he forfeited all unvested equity awards that he held at the time, including all previously granted RSAs and PSUs. |
Summary Compensation Table
The value of performance-based awards is based on the probable outcome of the performance conditions as of the grant date. The payout for FY 2021 grants was 232.4% of the target levels. The payout for FY 2022 and FY 2023 grants will be determined in FY 2024 and FY 2025, respectively. The probable outcome for FY 2021, FY 2022 and FY 2023 grants of performance-based awards was estimated at the target payout level, or 100%, at the time of grant. The following table shows the grant date fair value of the performance share units granted in FY 2023 at the target level included in the Summary Compensation Table above and the potential maximum grant date fair value. As described in the Compensation Discussion and Analysis, awards have a maximum payout level of 200% and are further subject to the TSR modifier, which, at its maximum level, can increase the payout by a further 25% of payout, for a combined maximum payout level of 250% of target.
Summary Compensation Table
| | Grant Date Fair Value of Performance Share Awards under the OIP ($) | Potential Maximum Grant Date Fair Value ($) | | David Dunbar | 1,620,709 | 4,051,772 | | Ademir Sarcevic | 351,999 | 879,998 | | Alan Glass | 196,151 | 490,377 | | Annemarie Bell | 112,961 | 282,404 | | Sean Valashinas | 55,619 | 139,048 | | Paul Burns (a) | 196,151 | 490,377 | | Flavio Maschera (b) | 122,917 | 307,293 |
Summary Compensation Table
| a | In connection with Mr. Burns’ termination, he forfeited all unvested equity awards that he held at the time, including all previously granted PSUs. |
Summary Compensation Table
| b | Mr. Maschera’s PSU grant is based on his FY 2023 base salary as converted from Euros to USD using the August 23, 2022 exchange rate of 0.9971. In connection with his termination, he forfeited all unvested equity awards that he held at the time, including all previously granted PSUs. |
Summary Compensation Table
| 2 | This column shows the amounts earned in cash under our annual incentive opportunity. Some of our Named Executive Officers elected to defer a portion of their annual incentive award under the MSPP. The values of these deferrals are contained in the stock awards column and further explained above in footnote (1). |
Summary Compensation Table
| 3 | This column includes the above-market earnings of the Named Executive Officer’s accumulated benefit under the Standex Deferred Compensation Plan. Mr. Valashinas has an accumulated benefit under the now-frozen Standex Pension Plan. The accumulated benefit is de minimus in value and thus is not included here. |
Summary Compensation Table
| 4 | This column includes the following compensation: |
Summary Compensation Table
| | 401(k) Contributions ($) | Non-qualified Deferred Compensation Contribution ($) | Life Insurance Premium ($) | Perquisites & Personal Benefits ($) (a) | Severance ($) (b) | Holiday ($) (c) | Total ($) | | David Dunbar | 16,500 | 95,707 | 16,236 | 36,410 | - | - | 164,853 | | Ademir Sarcevic | 9,336 | 23,802 | 1,710 | 12,000 | - | - | 46,848 | | Alan Glass | 15,591 | 18,658 | 6,213 | 12,000 | - | - | 52,462 | | Annemarie Bell | 11,585 | 1,892 | 6,213 | - | - | - | 19,689 | | Sean Valashinas | 15,518 | - | 2,622 | - | - | - | 18,140 | | Paul Burns | 17,047 | 3,898 | 3,210 | - | - | - | 24,155 | | Flavio Maschera | - | - | 2,714 | 14,086 | 1,262,327 | 32,959 | 1,312,086 |
Summary Compensation Table
| a | Mr. Dunbar has an automobile allowance of which he used $14,900. Mr. Dunbar also received tax preparation reimbursement in the amount of $21,510. Mr. Sarcevic and Mr. Glass have an automobile allowance of $12,000. Prior to Mr. Maschera’s termination, he received an automobile allowance in the amount of €1,811 ($1,977); travel benefits in the amount of €7,480 ($8,164) and tax preparation services in the amount of €3,615 ($3,945) (as converted from Euros to USD based on the June 30, 2023 exchange rate of 1.0914). No other Named Executive Officer received total perquisites and personal benefits exceeding $10,000. |
Summary Compensation Table
| b | Mr. Maschera received the following payments, under a settlement agreement, due to the termination of his employment: €285,528 in consideration of the 24-month post-employment non-compete covenant from his employment agreement payable in monthly installments from the date of termination — €35,691 of this was paid in FY 2023 and reported herein; €427,207 for indemnity in lieu of notice; €386,606 as an incentive to leave; and €20,000 for legal fees in connection with negotiation of the severance agreement. Mr. Maschera also received €287,109 as trattamento di fine rapporto. Trattamento di fine rapporto is an entitlement under the Italian NCBA and is accumulated via deferred salary payments, similar to a nonqualified deferred compensation plan. Mr. Maschera deferred €57,453 of his trattamento di fine rapporto into his pension fund, while the remainder was paid to Mr. Maschera directly. The value reported herein is converted from Euro to USD based on the June 30, 2023 exchange rate of 1.0914. |
Summary Compensation Table
| c | Mr. Maschera also received a payout of accrued but unused vacation time in the amount of €30,199. The value reported herein is converted from Euro to USD based on the June 30, 2023 exchange rate of 1.0914. |
Summary Compensation Table
| 5 | Compensation for Ms. Bell is provided only for FY 2023 because she was not an NEO for FY 2022 or FY 2021. |
Summary Compensation Table
| 6 | Compensation for Mr. Valashinas is provided only for FY 2023 because he was not an NEO for FY 2022 or FY 2021. |
Summary Compensation Table
| 7 | Mr. Burns’ employment with Standex terminated on March 24, 2023 and as a result, Mr. Burns ceased to participate in the Company’s annual incentive program and did not receive an FY 2023 annual incentive award. In addition, Mr. Burns forfeited all unvested equity awards he held at the time and ceased to participate in the OIP. Mr. Burns did receive the cash value of deferrals of prior annual incentive awards under the MSPP. Such values are not reported here as they were accounted for in prior fiscal years. |
Summary Compensation Table
| 8 | Mr. Burns received a one-time cash bonus for the successful divestiture of the Procon business. |
Summary Compensation Table
| 9 | Mr. Maschera was promoted to an officer of the Company on October 27, 2021, so his compensation for FY 2021 is not reported here. Mr. Maschera’s salary for FY 2023 is based on the salary he received prior to his termination, as converted from Euro to USD based on the June 30, 2023 exchange rate of 1.0914. The exchange rate used for the “Stock Awards” column is detailed in footnote (1) above. The exchange rate used for the “All Other Compensation” column is detailed in footnote (4) above. Mr. Maschera’s employment with Standex terminated on March 30, 2023 and as a result, Mr. Maschera ceased to participate in the Company’s annual incentive program and did not receive an FY 2023 annual incentive award. In addition, Mr. Maschera forfeited all unvested equity awards he held at the time and ceased to participate in the OIP. Mr. Maschera did receive the cash value of deferrals of prior annual incentive awards under the MSPP. Such values are not reported here as they were accounted for in prior fiscal years. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information with respect to FY 2023 plan-based awards granted to our Named Executive Officers for the year ended June 30, 2023.
Grants of Plan-Based Awards
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | | | Estimated Payouts Under Equity Incentive Plan Awards (3) | | | All Other Stock Awards: | | | | | | | | | | | | Number of Shares of | | | | Grant | Action | Threshold | Target | Maximum | Threshold | Target | Maximum | Stock or | Total | | Name | Date | Date (1) | ($) | ($) | ($) | (#) | (#) | (#) | Units (4) | ($) (5) | | David Dunbar | | | | | | | | | | | | Annual Incentive | | | 472,720 | 945,440 | 1,890,880 | | | | | | | OIP - PSU | 8/23/22 | | | | | 8,465 | 16,930 | 33,860 | | 1,620,709 | | OIP - RSA | 8/23/22 | | | | | | | | 11,286 | 1,080,409 | | Ademir Sarcevic | | | | | | | | | | | | Annual Incentive | | | 152,558 | 305,115 | 610,230 | | | | | | | OIP - PSU | 8/23/22 | | | | | 1,839 | 3,677 | 7,354 | | 351,999 | | OIP - RSA | 8/23/22 | | | | | | | | 3,677 | 351,999 | | Alan Glass | | | | | | | | | | | | Annual Incentive | | | 107,903 | 215,807 | 431,614 | | | | | | | OIP - PSU | 8/23/22 | | | | | 1,025 | 2,049 | 4,098 | | 196,151 | | OIP - RSA | 8/23/22 | | | | | | | | 2,049 | 196,151 | | Annemarie Bell | | | | | | | | | | | | Annual Incentive | | | 88,793 | 177,587 | 355,174 | | | | | | | OIP - PSU | 8/23/22 | | | | | 590 | 1,180 | 2,360 | | 112,961 | | OIP - RSA | 8/23/22 | | | | | | | | 1,180 | 112,961 | | Sean Valashinas | | | | | | | | | | | | Annual Incentive | | | 48,731 | 97,461 | 194,922 | | | | | | | OIP - PSU | 8/23/22 | | | | | 291 | 581 | 1,162 | | 55,619 | | OIP - RSA | 8/23/22 | | | | | | | | 581 | 55,619 | | Paul Burns | | | | | | | | | | | | Annual Incentive | | | 107,903 | 215,807 | 431,614 | | | | | | | OIP - PSU | 8/23/22 | | | | | 1,025 | 2,049 | 4,098 | | 196,151 | | OIP - RSA | 8/23/22 | | | | | | | | 2,049 | 196,151 | | Flavio Maschera | | | | | | | | | | | | Annual Incentive (6) | | | 101,542 | 203,084 | 406,168 | | | | | | | OIP - PSU (7) | 8/23/22 | | | | | 642 | 1,284 | 2,568 | | 122,917 | | OIP - RSA (8) | 8/23/22 | | | | | | | | 1,284 | 122,917 |
Grants of Plan-Based Awards
| 1 | The date on which the Compensation Committee took action for the grant of all of the plan-based awards was 8/22/2022. |
Grants of Plan-Based Awards
| 2 | The amounts in these columns indicate the threshold, target and maximum amounts payable under the annual incentive opportunity. The annual incentive opportunity amounts are based on the achievement of specific financial performance metrics and individual strategic goals. The annual incentive opportunity metrics are discussed under “Annual Incentive Opportunity” on page 40. Payouts range from 50% of target for the attainment of threshold levels to 200% of target for the attainment of superior performance levels. If threshold levels are not met, no annual incentive opportunity is paid. |
Grants of Plan-Based Awards
The amounts reported herein do not take into account any deferral elections under the MSPP. Prior to June 30, 2022, most of our Named Executive Officers elected to defer a portion of their annual incentive opportunity into the receipt of discounted shares under the MSPP. Such shares were delivered on August 23, 2023, and, for accounting purposes, are considered stock grants in FY 2024. The amount the executives actually received and the amounts they elected to defer for FY 2023 are discussed under the “Annual Incentive Opportunity” and “Management Stock Purchase Plan” sections of the CD&A.
Grants of Plan-Based Awards
| 3 | The amounts in these columns indicate the threshold, target and maximum amounts payable under the OIP for PSUs. The OIP PSU amounts are based on the achievement of specific financial performance metrics over a three-year performance period. Payouts range from 50% of target for the attainment of threshold levels, to 200% of target for the attainment of superior performance levels, subject to a relative TSR modifier, as explained in the CD&A, where such modifier can either increase or decrease the payout by up to 25% for a maximum payout of 250% of target. If threshold levels are not met, no shares vest. |
Grants of Plan-Based Awards
| 4 | The amounts shown in this column reflect the number of RSAs granted to each Named Executive Officer pursuant to the OIP. |
Grants of Plan-Based Awards
| 5 | These amounts represent the grant date fair value, as determined under FASB ASC Topic 718. For the PSU awards under the OIP, the fair value assumes performance and payout at the target level, and further assumes relative TSR performance at the median of the peer group and thus, does not include any modifier. |
Grants of Plan-Based Awards
| 6 | Mr. Maschera’s annual incentive opportunity values are based on his FY 2023 base salary of €352,465 as converted from Euros to USD using the June 30, 2022 exchange rate of 1.0476. |
Grants of Plan-Based Awards
| 7 | Mr. Maschera’s PSU grant is based on his FY 2023 base salary of €352,465 as converted from Euros to USD using the August 23, 2022 exchange rate of 0.9971. |
Grants of Plan-Based Awards
| 8 | Mr. Maschera’s RSA grant is based on his FY 2023 base salary of €352,465 as converted from Euros to USD using the August 23, 2022 exchange rate of 0.9971 |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table sets forth information with respect to equity awards that were outstanding as of June 30, 2023. The Company has not awarded stock options since 2003 and there are no outstanding option awards. Neither Mr. Burns nor Mr. Maschera had any outstanding equity awards on June 30, 2023 due to the termination of their employment.
Outstanding Equity Awards at Fiscal Year End
| | Stock Awards | | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) | | David Dunbar | 116,214 | 14,656,628 | 62,426 | 8,831,406 | | Ademir Sarcevic | 26,357 | 3,592,222 | 14,122 | 1,997,839 | | Alan Glass | 19,884 | 2,419,416 | 7,870 | 1,113,369 | | Annemarie Bell | 5,201 | 735,762 | 4,016 | 568,144 | | Sean Valashinas | 5,855 | 729,705 | 2,228 | 315,195 |
Outstanding Equity Awards at Fiscal Year End
| 1 | The outstanding stock awards presented in this column include: RSAs awarded under the OIP, which remain subject to service-based vesting conditions; PSUs awarded in FY 2021 under the OIP, which have been earned (and are included at the earned payout percentage) but are subject to service-based vesting conditions; RSUs granted pursuant to an MSPP deferral; and discretionary RSA grants. These awards are scheduled to vest as follows: |
Outstanding Equity Awards at Fiscal Year End
| Vest Date | David Dunbar | Ademir Sarcevic | Alan Glass | Annemarie Bell | Sean Valashinas | | 8/23/2023 | 6,936 | 2,353 | 1,312 | 669 | 371 | | 9/6/2023 | 77,095 | 19,031 | 11,844 | 3,469 | 3,709 | | 8/23/2024 | 17,794 | 3,747 | 3,718 | 669 | 927 | | 8/23/2025 | 14,389 | 1,226 | 3,010 | 394 | 848 | | Total | 116,214 | 26,357 | 19,884 | 5,201 | 5,855 |
Outstanding Equity Awards at Fiscal Year End
| 2 | The market values in this column are calculated using a price of $141.47 per share, the closing price of the Company’s common stock on June 30, 2023, less the value of an executive’s deferral under the MSPP. |
Outstanding Equity Awards at Fiscal Year End
| 3 | The shares presented in this column are performance share units granted in fiscal years 2022 and 2023 for the three-year performance periods ending on June 30, 2024 and June 30, 2025, respectively. These units will vest if certain targets are met during the applicable performance period. See “Long-Term Incentive Plan” starting on page 45 for more information. For both FY 2022 PSUs and FY 2023 PSUs, the number of shares reported in this column are based on achieving the “superior” level of performance because our financial performance for the last completed performance period (FY 2021 - FY 2023) was above superior levels. The reported number of shares assumes relative TSR performance at the median of the peer group and thus, does not include any modifier. |
Outstanding Equity Awards at Fiscal Year End
| 4 | The values shown in this column are calculated using a price of $141.47 per share, the closing price of the Company’s common stock on June 30, 2023. |
Options Exercised and Stock Vested
Options Exercised and Stock Vested The following table sets forth information about option exercises and the vesting of stock during the fiscal year. The Company has not awarded stock options since 2003, so no options are reported. The stock vested during the fiscal year represents PSUs and RSAs granted under the OIP and RSUs granted from an MSPP deferral.
Options Exercised and Stock Vested
| | | Stock Awards | | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | | David Dunbar | | 49,022 | 3,997,020 | | Ademir Sarcevic | | 13,303 | 1,152,477 | | Alan Glass | | 8,669 | 696,743 | | Annemarie Bell | | 2,024 | 176,382 | | Sean Valashinas | | 2,291 | 187,889 | | Paul Burns | | 8,436 | 688,768 | | Flavio Maschera | | 4,732 | 363,968 |
Options Exercised and Stock Vested
| 1 | The value realized on vesting for the three stock categories was calculated as follows. For PSUs and RSAs granted under the OIP that vested during the year, the number of shares that vested was multiplied by the closing price of our stock on the vest date. For RSUs issued pursuant to an MSPP deferral that vested during the year, the number of shares that vested was multiplied by the closing price of our stock on the vest date less the value the executive paid under the deferral. |
Pension Benefits
Pension Benefits The Company’s two pension plans, the Standex Retirement Plan and the Standex Supplemental Retirement Plan, were frozen as to future benefit accruals and new participants on December 31, 2007. All of our Named Executive Officers, except for Mr. Valashinas, became employed with the Company after this date or were ineligible to participate and are not accruing benefits under either of these plans. Mr. Valashinas became employed with the Company on October 22, 2007 and was eligible to participate and accrue benefits under the Standex Retirement Plan. Since the plan was frozen shortly after Mr. Valashinas’ commencement of employment, his accrued benefit under the plan is $839.30 and thus is de minimus.
NonQualified Deferred Compensation
NonQualified Deferred Compensation The following table contains compensation information relating to the Company’s nonqualified deferred compensation plan. For a description of the Standex Deferred Compensation Plan, including material factors, see “Standex Deferred Compensation Plan” on page 48.
NonQualified Deferred Compensation
| Name | Executive Contributions in Last FY ($) (1) | Registrant Contributions in Last FY ($) (2) | Aggregate Earnings in Last FY ($) (3) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE ($) (4) | | David Dunbar | 95,707 | 95,707 | 247,041 | - | 1,721,542 | | Ademir Sarcevic | 44,502 | 23,802 | 7,408 | - | 84,891 | | Alan Glass | 67,358 | 18,658 | 15,895 | - | 175,103 | | Annemarie Bell | - | 1,892 | 257 | - | 2,725 | | Sean Valashinas | - | - | - | - | - | | Paul Burns | - | 3,898 | 4,924 | 43,678 | - | | Flavio Maschera | - | - | - | - | - |
NonQualified Deferred Compensation
| 1 | All amounts in this column are included in the salary and non-equity incentive plan compensation columns of the “Summary Compensation Table” above. |
NonQualified Deferred Compensation
| 2 | All amounts in this column are included in the other compensation column and detailed in footnote (4) of the “Summary Compensation Table” above. |
NonQualified Deferred Compensation
| 3 | The amount of aggregate earnings is reported in the change in pension value and nonqualified deferred compensation plans column of the “Summary Compensation Table” to the extent the aggregate earnings exceeded 120% of the applicable federal rate or a loss was reported. The reported amounts are as follows: |
NonQualified Deferred Compensation
| | Above-Market Earnings Reported in the Summary Compensation Table ($) | | David Dunbar | 164,579 | | Ademir Sarcevic | 3,341 | | Alan Glass | 7,507 | | Annemarie Bell | 126 | | Sean Valashinas | - | | Paul Burns | 4,688 | | Flavio Maschera | - |
NonQualified Deferred Compensation
| 4 | The aggregate balance includes amounts that were reported in previous Summary Compensation Tables as follows: |
NonQualified Deferred Compensation
| | Amounts Previously Reported ($) | | David Dunbar | 1,468,194 | | Ademir Sarcevic | 11,159 | | Alan Glass | 84,838 | | Annemarie Bell | - | | Sean Valashinas | - | | Paul Burns | 92,175 | | Flavio Maschera | - |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control
Quantification of Potential Payments
Quantification of Potential Payments The following table contains compensation information relating to the potential payments that an executive would receive in the various scenarios described above if the executive was terminated due to a triggering event on June 30, 2023. All such potential payments are largely based on the executive’s employment agreement with the Company, with the remaining payments based on award agreements under the OIP. Payments due to any executive upon actual termination of employment can only be determined at the time of termination. There can be no assurance that an actual termination or change in control would produce the same or similar results as those described below if it were to occur on any other date or if the actual circumstances at the time of termination were different. Potential payouts for Mr. Burns and Mr. Maschera are not included herein as their employment was terminated prior to June 30, 2023.
Quantification of Potential Payments
| Triggering | Compensation | Payout ($) (1) | | | | | | Event | Component | David Dunbar | Ademir Sarcevic | Alan Glass | Annemarie Bell | Sean Valashinas (2) | | | Annual Incentive | 942,604 | 319,456 | 193,579 | 177,054 | 97,169 | | Death | Acceleration of Outstanding Equity Awards | 14,656,628 | 3,592,222 | 2,419,416 | 735,762 | 729,705 | | | Pro-rata Performance Share Vesting (3) | 13,400,941 | 3,290,482 | 1,833,527 | 707,704 | 574,524 | | | Total | 29,000,173 | 7,202,159 | 4,446,522 | 1,620,520 | 1,402,237 | | | Termination Payment - Salary | 1,800,838 | 469,408 | 392,376 | 322,885 | 278,460 | | | Annual Incentive | 942,604 | 319,456 | 193,579 | 177,054 | 97,169 | | Disability | Acceleration of Outstanding Equity Awards | 14,656,628 | 3,592,222 | 2,419,416 | 735,762 | 729,705 | | | Pro-rata Performance Share Vesting (3) | 13,400,941 | 3,290,482 | 1,833,527 | 707,704 | 574,524 | | | Health & Welfare Benefits | 15,839 | - | - | - | - | | | Total | 30,816,850 | 7,671,567 | 4,838,898 | 1,943,405 | 1,679,858 | | | Annual Incentive | 942,604 | 319,456 | 193,579 | 177,054 | 97,169 | | Retirement | Acceleration of Outstanding Equity Awards | 14,656,628 | 3,592,222 | 2,419,416 | 735,762 | 729,705 | | | Pro-rata Performance Share Vesting (3) | 13,400,941 | 3,290,482 | 1,833,527 | 707,704 | 574,524 | | | Total | 29,000,173 | 7,202,159 | 4,446,522 | 1,620,520 | 1,402,237 | | Termination Without Cause by the Company | Termination Payment - Salary | 1,800,838 | 469,408 | 392,376 | 322,885 | 278,460 | | | Health & Welfare Benefits | 15,839 | - | - | - | 22,125 | | | Total | 1,816,677 | 469,408 | 392,376 | 322,885 | 301,424 | | | Severance Pay | 2,701,257 | 938,816 | 784,752 | 645,770 | 556,920 | | | Annual Incentive | 4,054,623 | 895,909 | 592,011 | 410,818 | 375,094 | | Change in Control (4) | Acceleration of Outstanding Equity Awards (5) | 19,072,331 | 4,591,141 | 2,976,101 | 1,019,834 | 887,303 | | | Health & Welfare Benefits | 59,612 | 48,089 | 43,181 | 29,268 | 48,089 | | | Total | 25,887,823 | 6,473,955 | 4,396,045 | 2,105,691 | 1,868,245 |
Quantification of Potential Payments
| 1 | The payout values for equity awards are based on the closing price of the Company’s stock on June 30, 2023 ($141.47). |
Quantification of Potential Payments
| 2 | In every termination scenario, Mr. Valashinas would be entitled to a lump sum payment of his accumulated benefit amount under the Standex Pension Plan in the amount of $839.30. This value is included in the totals but not listed separately in the table. |
Quantification of Potential Payments
| 3 | The pro-rata performance share vesting is based on the following: |
Quantification of Potential Payments
For FY 2021 PSU awards, the number of shares used in the calculation is based on the certified performance percentage of 232.4%. For FY 2022 PSU awards, the number of shares used in the calculation is based on achievement of superior performance and pro-rated at 2/3 since the termination event is 2/3 of the way through the performance period. For FY 2023 PSU awards, the number of shares used in the calculation is based on achievement of superior performance and pro-rated at 1/3 since the termination event is 1/3 of the way through the performance period.
Quantification of Potential Payments
| 4 | Upon a change in control, if the termination payments are triggered and exceed the amounts prescribed under IRC Section 280G such that the Company will be required to pay a tax under IRC Section 4999, the payment will be reduced to an amount such that the payment does not exceed IRC Section 280G. |
Quantification of Potential Payments
| 5 | Upon a change in control, outstanding RSAs under the OIP and RSUs awarded under the MSPP immediately vest at awarded amounts. For PSUs in general, outstanding awards vest at the higher of target or actual performance through the CIC event. For purposes of the calculation, FY 2021 PSU awards, the number of shares is based on the certified performance percentage of 232.4%, while for FY 2022 and FY 2023 PSU awards, the number of shares is based on target. |
CEO Pay Ratio Disclosure
CEO Pay Ratio Disclosure As required by the SEC rules, we are providing the following information to show the ratio between the annual total compensation of our CEO in FY 2023 and the annual total compensation of the median employee of the Company. As of June 30, 2023, Standex has approximately 3,900 employees in 57 locations across 19 countries. Approximately 68% of our employee population is located outside of the United States and approximately 66% of our global workforce is paid on an hourly basis. The median annual total compensation disclosed below is based on the Company’s global workforce and is not designed to capture the median compensation of Standex’s US employees. In order to attract and retain employees globally, we pay what we believe to be market competitive rates in each market where we operate. Our pay ratio below is a reasonable estimate that has been calculated in a manner consistent with Item 402(u) of Regulation S-K using the data and assumptions summarized below. As allowed by the SEC regulations, we have used the same median employee for the past three years. As required, for FY 2023, we have identified a new median employee for FY 2023. We used our global population as of June 30, 2023, including all global full- time, part-time and temporary employees, including newly hired employees, that were employed on that date. In determining our median employee, we used base annual salary during the period July 1, 2022 through June 30, 2023. All international employees’ base annual salaries were converted to USD from local currencies using exchange rates as of June 30, 2023. We determined that the median employee was a full-time, hourly employee in our Electronics division, located in the United Kingdom. For FY 2023, our median employee’s total compensation was £23,394, as calculated in accordance with Item 402(c)(2)(x) of Reg. S-K. This total compensation converted to USD is $31,941, using the June 30, 2023 GBP to USD exchange rate of 1.2699. Our CEO’s annual total compensation for FY 2023, as reported and detailed in the Summary Compensation Table was $5,098,597. Based on this information, the ratio of these two annual total compensations was estimated to be 160 to 1.
Pay Versus Performance
Pay Versus Performance
Relationship Between Compensation Actually Paid and Performance
Relationship Between Compensation Actually Paid and Performance The graphs below show the relationship between “compensation actually paid” to our PEO and Other NEOs to (i) TSR of both the Company and the S&P SmallCap 600 Industrial Sector Index, with the value of the initial fixed $100 investment measured as of June 30, 2020; (ii) the Company’s net income; and (iii) the Company’s adjusted EBITDA (non-GAAP).