DEF 14A of Standex International Corp/De/
Filed Sep 6, 2024 · FY20240001437749-24-028595
Proxy Statement Summary
| | Actual Salary | Stock Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | Named Executive Officer | ($) | ($) | ($) | ($) | ($) | | David Dunbar President & CEO | 927,432 | 3,318,267 | 342,665 | 145,544 | 4,993,485 | | Ademir Sarcevic Vice President, CFO & Treasurer | 504,956 | 2,292,086 | 278,530 | 28,795 | 3,111,437 | | Alan Glass Vice President, CLO & Secretary | 401,204 | 515,651 | 75,242 | 49,263 | 1,055,337 | | Annemarie Bell Vice President, Chief Human Resources Officer | 332,571 | 268,375 | 128,729 | 21,489 | 751,450 | | Max Arets Vice President, Chief Information Officer | 83,351 | 169,844 | 28,809 | 67,226 | 349,230 |
Demographics of 2024 Director Nominees and Continuing Directors
Demographics of 2024 Director Nominees and Continuing Directors
Demographics of 2024 Director Nominees and Continuing Directors
| | | |
Demographics of 2024 Director Nominees and Continuing Directors
| | |
Demographics of 2024 Director Nominees and Continuing Directors
| 2024 Director Nominees |
Demographics of 2024 Director Nominees and Continuing Directors
The following is biographical information for each director nominee and each continuing director. The information includes names, ages, principal occupations for at least the past five years, the year in which each director joined our Board and certain other information. The information is current as of September 6, 2024, except for each director’s age, which is current as of October 22, 2024. Class I Directors - Term Expiring 2024:
Demographics of 2024 Director Nominees and Continuing Directors
| | Robin J. Davenport Independent | | | | Director Since: 2021 Age: 62 Committees: Audit (Chair), Compensation | Ms. Davenport is a highly accomplished and respected executive with comprehensive financial and global industry expertise in the manufacturing sector. Additionally, she served on Parker Hannifin’s Disclosure Committee from 2014 until her retirement in 2022. Her professional areas of focus — M&A, capital allocation and corporate strategy — are of great assistance to the Board. This experience and track record of success has provided substantial value as the Board continues to explore short and long term growth strategies. | | Business Experience | | Current Board Memberships | | » Vice President of Corporate Finance, Parker Hannifin Corporation (2014-2022) | | » None | | » Vice President, Business Planning & Development, Parker Hannifin Corporation (2004-2014) | | Past Board Memberships | | » Vice President, Business Planning & Development, CNH Capital (1996-2003) | | » None |
Demographics of 2024 Director Nominees and Continuing Directors
| | B. Joanne Edwards Independent | | | | Director Since: 2018 Age: 68 Committees: Compensation, N&CG (Chair) | Ms. Edwards’ distinguished career as a senior executive in various global diversified manufacturing companies is of great benefit to our Board. Prior to her retirement, Ms. Edwards had increasingly responsible roles with strategic, financial and operational reach. She provides a wealth of insight into profit and growth strategies, both in the short term and the long term, which is beneficial to the Board as Standex continues to execute on its growth strategies and initiatives. Ms. Edwards’ decades of leadership and management experience adds value to the Board’s deliberations. | | Business Experience | | Current Board Memberships | | » Senior Vice President & General Manager, Residential & Wiring Device Division, Eaton (2013-2017) | | » Atkore Inc. » Amsted Industries | | » Vice President & General Manager, Residential Products, Eaton (2011-2013) | | Past Board Memberships | | » Senior Business Unit Manager, Residential Products, Eaton (2007-2011) | | » Hexion, Inc. | | » President, Veris Industries LLC (2002-2007) | | |
Demographics of 2024 Director Nominees and Continuing Directors
| | Jeffrey S. Edwards Independent | | | | Director Since: 2014 Age: 62 Committees: Compensation, N&CG | Mr. Edwards’ successful and lengthy history of leading a global manufacturing business has enabled him to advise the Board in a myriad of ways, including how to address operational and growth challenges and how to execute both short and long-term performance strategies. Mr. Edwards contributes his management acumen, knowledge of global manufacturing and insight into peer practices to the Board. | | Business Experience | | Current Board Memberships | | » Chairman, Cooper Standard (since 2013) | | » Cooper Standard Holdings, Inc. | | » CEO, Cooper Standard (since 2012) | | » Cooper Standard Foundation, Inc. (privately held) | | » Corporate Vice President, Group Vice President and General Manager of the Automotive Experience Asia Group & North America, Johnson Controls, Inc. (2002-2012) | | Past Board Memberships | | » Various managerial & executive positions, Johnson Controls, Inc. (1984-2002) | | » None |
Demographics of 2024 Director Nominees and Continuing Directors
Our By-Laws require that, in an uncontested election, each director be elected by a majority of the votes cast. A majority of votes cast means that the number of votes cast “FOR” a director’s election exceeds the number of votes cast “AGAINST” that director. Shareholders that either mark “ABSTAIN” on the proxy card or otherwise abstain from voting will not be counted as either “FOR” or “AGAINST.” Broker non-votes will not be counted as either “FOR” or “AGAINST.” In the event that there is a contested election, each director will be elected by a plurality of the votes cast, which means the directors receiving the largest number of “FOR” votes will be elected to the open positions. In the event that any nominee becomes unavailable, the Board may either choose a substitute or postpone filling the vacancy until a qualified candidate is identified. If there is a substitute, the individuals acting under your proxy may vote for the election of a substitute. The nominees have indicated their willingness to serve as directors and we have no reason to believe that any of the nominees will become unavailable. The Board of Directors recommends that you vote “FOR” the election of each nominee.
Continuing Directors
Continuing Directors Class III Directors - Term Expiring 2025:
Continuing Directors
| | Thomas E. Chorman Independent | | | | Director Since: 2004 Age: 70 Committees: Audit, N&CG, I&T (Chair) | Mr. Chorman is a seasoned financial professional, with experience as a financial executive, an entrepreneur and a private equity investor. Mr. Chorman has been involved in the day to day financial reporting obligations of established, publicly traded, global companies as well as smaller start-ups. Mr. Chorman’s financial background provides a significant benefit to the Board when analyzing acquisition opportunities and when evaluating both the current financial results and long range strategic plans of Standex. | | Business Experience | | Past Board Memberships | | » CEO, Solar LED Innovations, LLC (since 2006) | | » Symmetry Medical, Inc. | | » CEO & President, Foamex (2001-2006) | | » Foamex | | » CFO, Ansell Healthcare (2000-2001) | | | | » CFO, Armstrong World Industries (1997-2000) | | | | » Various managerial and executive roles including international and corporate new ventures, P&G (1984-1997) | | | | Current Board Memberships | | | | » None | | |
Continuing Directors
| | Thomas J. Hansen Independent | | | | Director Since: 2013 Age: 75 Committees: Audit | Prior to his retirement, Mr. Hansen had a long and distinguished career with a global manufacturing company that has similar diversified aspects to Standex. Mr. Hansen’s broad end-market knowledge and acquisition experience, as well as his service on other global manufacturers’ boards, provide valuable insight to the Board. Mr. Hansen’s integrity and independent judgment make him especially well-suited for the role of Lead Independent Director, which he has held since 2016. | | Business Experience | | Past Board Memberships | | » Vice Chairman, ITW (2006-2012) | | » ITW | | » Executive Vice President, ITW (1998-2006) | | » CDW Corporation | | » Various managerial and executive roles, ITW (1980-1998) | | » Gill Industries | | Current Board Memberships | | » Terex Corporation | | » Mueller Water Products, Inc. | | |
Continuing Directors
Class II Directors - Term Expiring 2026:
Continuing Directors
| | David Dunbar | | | | Director Since: 2014, Chair Age: 63 Committees: N/A | Mr. Dunbar has decades of executive experience with global manufacturing companies. His diverse background at various operational levels, coupled with his technical engineering education, provides a broad perspective to the Board. As President and CEO, Mr. Dunbar is uniquely positioned to report to the Board on Company activities and guide discussions regarding the Company’s strategic growth priorities. | | Business Experience | | Current Board Memberships | | » Chair, Standex (since 2016) | | » Watts Water Technologies, Inc. | | » President & CEO, Standex (since 2014) | | | | » President of Valves and Controls, Pentair Ltd., (2012-2014) | | Past Board Memberships | | » President of Valves and Controls, Tyco Flow Control (2009-2012) | | » None | | » Various managerial and executive roles, Emerson Electric (2004-2009) | | |
Continuing Directors
| | Michael A. Hickey Independent | | | | Director Since: 2017 Age: 63 Committees: Compensation (Chair), N&CG, I&T | Prior to Mr. Hickey’s retirement in February 2020, he enjoyed a distinguished career at Ecolab Inc., where he served in managerial and executive roles of increasing responsibility since 1984. Mr. Hickey’s track record of leading a solutions- driven business with an intimate customer focus, together with his mergers and acquisitions, marketing and sales, and operations experience provides a dynamic voice to the Board. | | Business Experience | | Current Board Memberships | | » President of Global Institutional, Ecolab Inc. (2012-2020) | | » National Restaurant Association | | » Executive Vice President of Institutional Sector North America, Ecolab Inc. (2011-2012) | | » St. Bonaventure University | | » Executive Vice President of the Global Service Sector, Ecolab Inc. (2010-2011) | | Past Board Memberships | | » Various executive and managerial roles, Ecolab Inc. (1985-2010) | | » None |
Continuing Directors
| | Charles H. Cannon, Jr. Independent | | | | Director Since: 2004 Age: 72 Committees: Audit, N&CG | Mr. Cannon retired from JBT after several decades of senior executive experience. His leadership at a company that operates in some of the same industries as our Company provides excellent insight to the Board. Mr. Cannon contributes his demonstrated executive leadership skills, as well as his knowledge of corporate organization, finance and operations to the Board. Mr. Cannon’s technical and business education, coupled with his global perspective, provide a unique voice to our Board. | | Business Experience | | Current Board Memberships | | » Executive Chairman, JBT Corporation (2013-2014) | | » U.S. Naval Academy Foundation | | » Chairman and CEO, JBT Corporation (2008-2013) | | | | » Vice President and Senior Vice President, FMC Technologies (2001-2008) | | Past Board Memberships | | » Various managerial and executive positions, FMC Technologies (1994-2001) | | » JBT Corporation |
Continuing Directors
| Item 2 | Omnibus Incentive Plan Amendment » What am I voting on? We are asking shareholders to vote on an amendment to the Amended and Restated 2018 Omnibus Incentive Plan. The amendment would increase the number of shares authorized for issuance under the OIP by 450,000. » Voting recommendation: FOR the amendment to the Amended and Restated 2018 Omnibus Incentive Plan. |
Continuing Directors
The Compensation Committee recommended, and our Board has approved, subject to shareholder approval, an amendment to the Amended and Restated 2018 Omnibus Incentive Plan (“OIP”). The amendment to the OIP would increase the number of shares authorized for grants under the OIP by 450,000 to 1,350,000 shares of our Common Stock. A copy of the OIP, as amended, is attached as “Appendix A” to this Proxy Statement. This is the second time we have requested approval to increase the number of shares authorized for issuance under the OIP. The first time we requested approval was in 2021, when we requested and received approval to increase the number of shares authorized for issuance to 900,000 shares of our Common Stock. Our Board recommends that shareholders approve the amendment to the OIP because it will allow the Company to successfully attract and retain the best possible candidates. We previously believed that the additional 400,000 authorized shares in 2021 would be sufficient to cover our anticipated needs for a period of five years. However, we now believe that the currently authorized shares will be sufficient for anticipated grants during FY 2025, but will likely not be sufficient for grants in FY 2026. For these reasons, the Board recommends that shareholders approve an amendment to the OIP to increase the number of shares of Common Stock authorized for future awards to be granted under the OIP. As of June 30, 2024, the number of shares of Common Stock that remained available for future grants was 242,954. If this proposal is approved, the combined 692,954 shares available under the OIP would represent approximately 6% of fully diluted Common Stock outstanding as of June 30, 2024. As of this filing, an additional 55,734 shares of stock have been granted as part of the FY25 annual grants under the OIP, leaving a combined 637,220 shares of stock available, if the amendment is approved. The Board believes that this number of shares represents a reasonable amount of potential equity dilution in light of the purposes of the OIP, as described below. If the amendment to the OIP is approved and we issue awards in amounts consistent with the three-year average burn rate described below, it is anticipated that the available shares will meet our needs for approximately four to five years. Assuming shareholders approve this proposal, we will file a Registration Statement on Form S-8 to register the additional Common Stock available for issuance.
Director Compensation
Director Compensation The compensation elements and amounts are established by the Board after a review of data prepared by the Compensation Committee’s independent compensation consultant. The data and report show competitive director compensation levels for peer companies and the Company’s peer group. More information about the Compensation Committee’s independent consultant report and the methods for determining competitive compensation can be found under “Basis for Determining Executive Compensation” on page 64. In FY 2024, the Compensation Committee undertook a review of the compensation paid to our non-employee directors relative to the Company’s peer group, consistent with the Committee’s typical review of director compensation every two years. As a result of the review, the Committee increased the annual equity stock grant from $120,000 to $130,000, effective as of the FY 2024 grants. No other changes were made as a result of the review.
Director Compensation
| Director Compensation Elements The FY 2024 compensation elements are shown in the adjacent table. | FY 2024 Non-Employee Director Compensation | | | 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 56. The equity portion of non-employee director compensation was granted in the form of shares of restricted stock having a $130,000 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, 2024, 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 43. None of the directors have engaged in any of the prohibited transactions during FY 2024 or any prior periods. | Compensation Element | Value | | | Board Membership | | | | Annual Cash Retainer | $70,000 | | | Annual Equity Stock Grant | $130,000 | | | 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 | $25,000 |
Director Compensation
| Highlights of Director Compensation Program | | | ► | Emphasis on equity: ties the majority of director compensation to shareholder interests through stock grants. | | ► | Long term focus: equity grants vest after three years incentivizing directors to focus on the long-term. | | ► | Market competitive: adjustments to director compensation are based on peer group median levels and the work required of directors serving a diverse company such as ours. | | ► | Anti-hedging and anti-pledging: includes features that prohibit certain transactions involving our Company’s stock. | | ► | Stock ownership requirements: all directors must maintain equity ownership levels of at least five times the annual cash retainer and are required to retain at least 50% of the stock they are awarded until they reach the requisite number of shares. |
Director Compensation Table
Director Compensation Table The following table sets forth certain information with respect to our non-employee director compensation for FY 2024. Compensation information for Mr. Dunbar is detailed in the Compensation Discussion & Analysis and Compensation Tables sections of this Proxy Statement. Mr. Dunbar did not receive any compensation solely for his service as a director.
Director Compensation Table
| | Fees Earned or | Stock Awards | All Other | | | Name | Paid in Cash ($) (1) | ($) (2) | Compensation ($) (3) | Total ($) | | Charles H. Cannon, Jr. | 85,000 | 130,000 | 5,182 | 220,182 | | Thomas E. Chorman | 47.500 | 208,020 | 5,182 | 260,702 | | Robin J. Davenport | 97,500 | 130,000 | - | 227,500 | | B. Joanne Edwards | 69,125 | 157,307 | 5,182 | 231,614 | | Jeffrey S. Edwards | 82,500 | 130,000 | 5,182 | 217,682 | | Thomas J. Hansen | 16,250 | 234,026 | 10,103 | 260,379 | | Michael A. Hickey | 97,500 | 130,000 | 10,103 | 237,603 |
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. | | 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 24, 2023, valued at $143.04 per share, the closing price of our common stock on the grant date. The MSPP RSU grants were certified on August 20, 2024 and granted on August 23, 2024, valued at $120.86 per share, the closing price of our common stock on June 28, 2024 discounted by 25% under the terms of the MSPP. Totals have been calculated in accordance with FASB ASC 718. | | 3 | This column consists of dividend equivalents paid in FY 2024 that had accrued during the 3-year vesting period for the director’s previous stock awards. |
Director Compensation Table
As of June 30, 2024, 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. | 3,321 | Thomas E. Chorman | 3,321 | | Robin J. Davenport | 3,321 | B. Joanne Edwards | 4,054 | | Jeffrey S. Edwards | 3,321 | Thomas J. Hansen | 6,081 | | Michael A. Hickey | 3,321 | | |
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 | |
Objectives
| ► | Provide a competitive pay opportunity |
Objectives
| ► | Promote long-term commitment to the Company via deferred equity awards and share ownership guidelines for our executives |
Principles
| ► | Incentive compensation should balance short and long- term performance |
Principles
| ► | Long term incentives should balance stock price appreciation and financial achievements |
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 2024 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 2024 mix is 40% weighted towards restricted stock awards and 60% weighted towards performance shares units. 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 2024 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. | | Annual Incentive | | | Designed to reward results in the fiscal year. Annual cash incentives based on: ► 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 |
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.
2024 Annual Incentive Formula
2024 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% | 983,258 | | Ademir Sarcevic (1) | 65% | 321,897 | | Alan Glass | 55% | 222,281 | | Annemarie Bell | 55% | 184,690 | | Max Arets | 50% | 180,094 |
Target Incentive Amounts
| 1 | Mr. Sarcevic’s target annual incentive opportunity reported here is based on his base salary and target annual incentive percentage that were effective October 1, 2023. Effective April 1, 2024, Mr. Sarcevic’s target annual incentive opportunity percentage increased to 75 % of base salary. |
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 2024, 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 13.7% 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 2024. 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.
Overall Annual Incentive Opportunity Results for NEOs
| Name | Financial Achievement Factor | Strategic Achievement Factor | Total BPP Score | Target Annual Incentive Amount ($) | Annual Incentive Amount ($) | | David Dunbar | 37.7% | 32.0% | 69.7% | 983,258 | 685,331 | | Ademir Sarcevic (1) | 37.7% | 36.0% | 73.7% | 321,897 | 278,530 | | Alan Glass | 37.7% | 30.0% | 67.7% | 222,281 | 150,484 | | Annemarie Bell | 37.7% | 32.0% | 69.7% | 184,690 | 128,729 | | Max Arets (2) | 37.7% | 32.0% | 69.7% | 180,094 | 28,809 |
Overall Annual Incentive Opportunity Results for NEOs
| 1 | Due to the change in Mr. Sarcevic's base salary and annual incentive target percentage, the actual annual incentive amount Mr. Sarcevic received was calculated as follows: new base annual salary ($560,000) at the prior target percentage (65%) for the period July 1, 2023 through March 31, 2024, and new base annual salary ($560,000) at the new target percentage (75%) for the period April 1, 2024 through June 30, 2024. |
Overall Annual Incentive Opportunity Results for NEOs
| 2 | Mr. Arets joined the Company on April 8, 2024, so his annual incentive amount was pro-rated based on his hire date. |
Management Stock Purchase Plan
Management Stock Purchase Plan The Compensation Committee believes that while the annual incentive award provides motivation for executives to meet annual performance goals, the Management Stock Purchase Plan (“MSPP”) adds an additional long-term component. Under the MSPP, management at a certain salary level can elect to defer their annual incentive awards into the receipt of restricted stock units (“RSUs”) at a 25% discount, valued at the lower of (i) the closing price of the Company’s common stock on the last business day of the fiscal year (June 28, 2024) or (ii) the closing price of the Company’s common stock on the date on which the annual incentive award is certified by the Compensation Committee (August 20, 2024). Executives must make their election prior to the beginning of the fiscal year and can defer up to 50% of their annual incentive award. These RSUs cliff vest at the end of a 3-year period and the executive receives shares of stock equal to the amount of RSUs granted. Executives accrue dividends, which are paid upon vesting, on the RSUs, but do not have voting rights until the shares underlying the RSUs are delivered. The following table details, for FY 2024, the percent each Named Executive Officer elected to defer under the MSPP, the value of that deferral and the amount of RSUs granted pursuant to the deferral.
Management Stock Purchase Plan
| Name | Annual Incentive Award Deferred (% of Award) | Amount of the Deferral ($) (1) | RSUs Granted (#) (2) | | David Dunbar | 50% | 342,665 | 2,835 | | Ademir Sarcevic | 0% | - | - | | Alan Glass | 50% | 75,242 | 622 | | Annemarie Bell | 0% | - | - | | Max Arets | 0% | - | - |
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 2024 were made in August 2023 under the OIP.
OIP Structure
OIP Structure The FY 2024 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 2024 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 all outstanding 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. 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 2024 Target Incentive Amounts
FY 2024 Target Incentive Amounts For FY 2024, 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 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 2024, the Committee established the following target long-term incentive awards, with the percentage of such award granted as PSUs for each Named Executive Officer:
FY 2024 Target Incentive Amounts
| Name | Target Award (% of Base Salary) | Target Award Amount ($) | Target Award (% Awarded in PSUs) | | David Dunbar | 300% | 2,809,308 | 60% | | Ademir Sarcevic (1) | 160% | 792,362 | 50% | | Alan Glass | 100% | 404,147 | 50% | | Annemarie Bell | 80% | 268,640 | 50% | | Max Arets (2) | 50% | 180,094 | 50% |
Performance Measures
Performance Measures For the FY 2022-2024 performance period, 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 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% up 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 and FY 2024-2026 performance periods, the Compensation Committee changed the metric from the modified ROIC measure to a traditional ROIC measure. However, the Committee retained the 5-point average over the last fiscal year component of the measurement. The Committee changed the metric for the FY 2023-2025 performance period to simplify the calculation without detracting from the Company’s focus on improving quality of earnings. The Committee decided to continue with the change for the FY 2024-2026 performance period. Additionally, while keeping the relative TSR modifier, the 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 0% up 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 0% 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 Measure | Performance Levels | Weighted Achievement | Status & Commentary | | FY 2022-2024 | | | ►Results were certified in August 2024. | | Modified ROIC | | 152.4 % | ►The Modified ROIC, as calculated using a 5-point average from Q4 FY 2023 to Q4 FY 2024, was greater than target level, but less than the superior level. ►Company’s 3-year TSR ranked in the 74th percentile amongst the peer group of S&P 600 Capital Goods companies, so there was no TSR modifier. ►Threshold, target and superior levels were adjusted downwards by 30 bps to account for the impact of the Procon divestiture in Q3 of FY 2023, and the calculation of actual results excluded the Sanyu and SEPL acquisitions in Q4 of FY 2024. ►Final payout was certified at 152.4% based on Company performance, and individual share payouts are in the table below. |
Status of Long-Term Incentive Plan Programs
FY 2023-2025 awards will be certified in August 2025, while FY 2024-2026 awards will be certified in August 2026. As certified by the Compensation Committee, the FY 2022-2024 performance period ended on June 30, 2024 and the PSUs granted on August 23, 2021 vested at 152.4%, for the following share payouts and value as of the date of certification. Mr. Arets was not employed with the Company on the grant date, so he does not have any shares vesting.
Status of Long-Term Incentive Plan Programs
| Name | Shares granted on August 23, 2021 (#) | Shares Vesting (#) | Value of Shares Vesting ($) (1) | | David Dunbar | 14,283 | 21,767 | 3,840,352 | | Ademir Sarcevic | 3,384 | 5,157 | 909,850 | | Alan Glass | 1,886 | 2,874 | 507,060 | | Annemarie Bell | 828 | 1,261 | 222,478 | | Max Arets | - | - | - |
Status of Long-Term Incentive Plan Programs
| 1 | Based on the stock price on the date of vesting, August 23, 2024 ($176.43). |
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 |
Employment Agreements
Employment Agreements We had previously entered into Employment Agreements with each of the Named Executive Officers, except Mr. Arets. Effective at the end of FY 2024, the employment agreements with each NEO, except for Mr. Dunbar, were terminated in favor of the newly adopted Executive Severance Policy, discussed below. Mr. Dunbar’s employment agreement remains in effect and was crafted to consider the needs of the Company and the executive’s specific circumstances. The Compensation Committee believes that retaining the employment agreement with Mr. Dunbar was in the best interest of both the Company and Mr. Dunbar. Mr. Dunbar’s employment agreement sets out an initial term that automatically renews. He ultimately serves at the will of the Board because the agreement may be terminated for any reason with 30 days’ notice. In addition to severance provisions, the employment agreement also contains restrictive covenants including a non-compete provision, which precludes him from engaging, in any active capacity, in any business other than Standex while he is employed with the Company. The non-compete also precludes him from engaging in a business that is competitive with the Company. The non-compete clause also contains a non-poaching provision, which restricts his ability to hire then-current employees of the Company. These terms are beneficial to the Company because they safeguard against Mr. Dunbar, who knows the most about the Company, its businesses, its employees and its markets, using his knowledge to adversely impact the Company after his employment ends.
OIP Grant Agreements
OIP Grant Agreements For every award grant under the OIP, our Named Executive Officers receive an OIP Grant Agreement. Our OIP Grant Agreements provide for certain benefits, such as accelerated vesting or future pro-rated vesting entitlements, upon an executive’s termination of employment. For RSAs granted under the OIP, upon an executive’s termination due to death, disability or retirement, the executive shall receive accelerated vesting of the covered shares. For PSUs granted under the OIP, upon an executive’s termination due to death, disability or retirement, the executive shall not forfeit the award, instead the PSUs granted shall vest in normal course, but shall be pro-rated based on the length of the performance period during which the executive was employed prior to the executive’s termination date. For both RSAs and PSUs granted under the OIP, if the termination is due to a retirement, such retirement must be at least six months after the date of the grant in order for vesting of the covered shares to be accelerated. If the retirement is within six months of the date of the grant, the covered shares are forfeited. If the termination is due to cause, all covered shares are forfeited. If the termination is without cause, and does not fall into any other category, the covered shares are forfeited unless the Compensation Committee or its designee exercises its discretion and elects to accelerate the awards.
Executive Severance Policy
Executive Severance Policy Effective October 25, 2023, the Company established an Executive Severance Policy (the “Policy”) to provide guidelines and procedures regarding executive severance benefits for eligible executives of the Company. The Compensation Committee believes that this is an important tool to attract and retain top executive talent, encourage executives’ commitment and dedication to the Company, and ensure a smooth transition in the event of their departure. This Policy replaced and superseded the individual employment agreements with the Named Executive Officers (other than Mr. Dunbar and Mr. Arets). The following is a brief summary of the benefits payable under the Policy, and is qualified by reference to the full Policy, which may be found as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 31, 2023. Under the Policy, severance benefits are payable in the event of a Change in Control (discussed below), death, disability, retirement or without cause. No payments are made if there is a termination for cause, as defined in the Policy. Upon an executive’s death, the executive’s estate or beneficiaries would be entitled to unpaid base salary through the date of death, and any rights with respect to outstanding unvested equity awards in accordance with the award agreements, as described above. Upon an executive’s termination due to disability, as defined in the Policy, the executive would be entitled to unpaid base salary through the date of termination, continuation of base salary for a period of one year from the termination date, and any rights with respect to outstanding unvested equity awards in accordance with the award agreements, as described above. Upon an executive’s termination due to retirement, as defined in the Policy, the executive would be entitled to unpaid base salary through the date of termination, and any rights with respect to outstanding unvested equity awards, except awards granted within the preceding six months, which are forfeited, in accordance with the award agreements, as described above. Upon an executive’s termination without cause, as defined in the Policy, the executive would be entitled to unpaid base salary through the date of termination, continuation of pay for a period of one year in an annualized amount equal to the sum of the executive’s most recent base salary plus target annual bonus, and, if the executive elects to continue health insurance coverage under COBRA, the executive shall receive a monthly reimbursement of COBRA premiums for a period of up to one year.
Change in Control
Change in Control For our CEO, his employment agreement contains provisions governing what happens when there is a change in control. For the remainder of the Named Executive Officers, the Executive Severance Policy governs the severance benefits upon a change in control. The benefits provided to either the CEO or the NEOs 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. Under both the employment agreement and the Policy, the severance benefits 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” under the employment agreement or “Just Reason” under the Policy. 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 76.
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 August 2023 and further included reference to this clawback policy in the Executive Severance Policy.
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 2024, 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 2024. 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 2024, 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 2024, 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 2024 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 2024 peer group consisted of the following 19 companies:
Peer Group
| Albany International Corporation | Enerpac Tool Group Corp. | NN, Inc. | | Astronics Corporation | Enpro Industries, Inc. | Proto Labs, Inc. | | Barnes Group, Inc. | ESCO Technologies, Inc. | RBC Bearings, Inc. | | Chart Industries, Inc. | Helios Technologies, Inc. | TriMas Corporation | | CIRCOR International, Inc. | Hurco Companies, Inc. | Vishay Precision Group, Inc. | | Columbus McKinnon Corporation | Kadant, Inc. | | | CTS Corporation | L.B. Foster Company | |
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 of the peer group companies. For FY 2024 compensation, the following two companies were removed from the FY 2023 peer group: 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.). In April 2024, the Compensation Committee reviewed the peer group, and for FY 2025, removed CIRCOR International, Inc., due to it being acquired, and Hurco Companies, Inc., due to revenue range, while also adding Rogers Corporation, due to business fit and size characteristics.
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 2022, 2023 and 2024 for our Named Executive Officers – the individuals who served during FY 2024 as CEO and CFO and three other highly compensated executive officers of the Company.
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 President and CEO | 2024 | 927,432 | - | 3,318,267 | 342,665 | 259,577 | 145,544 | 4,993,485 | | | 2023 | 892,597 | - | 3,405,266 | 471,302 | 164,579 | 164,853 | 5,098,597 | | | 2022 | 869,130 | - | 3,435,322 | 675,770 | - | 155,513 | 5,135,735 | | Ademir Sarcevic Vice President, CFO and Treasurer | 2024 | 504,956 | - | 2,292,086 | 278,530 | 7,069 | 28,795 | 3,111,437 | | | 2023 | 465,330 | - | 799,455 | 255,565 | 3,341 | 46,848 | 1,570,539 | | | 2022 | 449,798 | - | 679,507 | 447,954 | - | 29,098 | 1,606,357 | | Alan Glass Vice President, CLO and Secretary | 2024 | 401,204 | - | 515,651 | 75,242 | 13,977 | 49,263 | 1,055,337 | | | 2023 | 388,967 | - | 536,910 | 96,789 | 7,507 | 52,462 | 1,082,635 | | | 2022 | 375,984 | - | 607,643 | 148,003 | - | 51,037 | 1,182,666 | | Annemarie Bell (5) Vice President, Chief Human Resources Officer | 2024 | 332,571 | - | 268,375 | 128,729 | 285 | 21,489 | 751,450 | | | 2023 | 311,512 | - | 225,923 | 177,054 | 126 | 19,689 | 734,304 | | | 2022 | - | - | - | - | - | - | - | | Max Arets (6) Vice President, Chief Information Officer | 2024 | 83,351 | - | 69,844 | 28,809 | - | 67,226 | 349,230 | | | 2023 | - | - | - | - | - | - | - | | | 2022 | - | - | - | - | - | - | - |
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: | 4.564% | | Expected life of option grants: | 3 years | | Expected stock value volatility: | 27.45% | | Expected quarterly dividends: | $0.30 per share |
Summary Compensation Table
The grant date fair value of these three separate equity awards is as follows:
Summary Compensation Table
| | Grant Date Fair Value of Annual Incentive Deferred Pursuant to MSPP ($) | 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 | 509,231 | 1,123,582 | 1,685,453 | 3,318,267 | | Ademir Sarcevic (a) | - | 396,044 | 396,044 | 2,292,086 | | Alan Glass | 111,816 | 201,917 | 201,917 | 515,651 | | Annemarie Bell | - | 134,188 | 134,188 | 268,375 | | Max Arets (b) | - | - | - | 169,844 |
Summary Compensation Table
| a | Mr. Sarcevic received a discretionary RSA grant in the amount of $1,499,998, which is reflected in the total here and in the Summary Compensation table above. |
Summary Compensation Table
| b | Mr. Arets received a discretionary, sign-on RSA grant in the amount of $169,844, which is reflected in the total here and in the Summary Compensation table above. |
Summary Compensation Table
The value of performance-based awards is based on the probable outcome of the performance conditions as of the grant date. The payout for FY 2022 grants was 152.4% of the target levels. The payout for FY 2023 and FY 2024 grants will be determined in FY 2025 and FY 2026, respectively. The probable outcome for FY 2022, FY 2023 and FY 2024 grants of performance-based awards was estimated at the target payout level, or 100%, at the time of grant. The following table shows the grant date fair value of the performance share units granted in FY 2024 at the target level included in the Summary Compensation Table above and the potential maximum grant date fair value. As described in the Compensation Discussion and Analysis, awards have a maximum payout level of 200% and are further subject to the TSR modifier, which, at its maximum level, can increase the payout by a further 25% of payout, for a combined maximum payout level of 250% of target.
Summary Compensation Table
| | Grant Date Fair Value of Performance Share Awards under the OIP ($) | Potential Maximum Grant Date Fair Value ($) | | David Dunbar | 1,685,453 | 4,213,632 | | Ademir Sarcevic | 396,044 | 990,110 | | Alan Glass | 201,917 | 504,793 | | Annemarie Bell | 134,188 | 335,469 | | Max Arets (a) | - | - |
Summary Compensation Table
| a | Mr. Arets joined the Company on April 8, 2024, so he did not receive an FY 2024 PSU grant. |
Summary Compensation Table
| 2 | This column shows the amounts earned in cash under our annual incentive opportunity. Some of our Named Executive Officers elected to defer a portion of their annual incentive award under the MSPP. The values of these deferrals are contained in the stock awards column and further explained above in footnote (1). |
Summary Compensation Table
| 3 | This column includes the above-market earnings of the Named Executive Officer’s accumulated benefit under the Standex Deferred Compensation Plan. |
Summary Compensation Table
| 4 | This column includes the following compensation: |
Summary Compensation Table
| | 401(k) Contributions ($) | Non-qualified Deferred Compensation Contribution ($) | Life Insurance Premium ($) | Perquisites & Personal Benefits ($) (a) | Total ($) | | David Dunbar | 17,250 | 76,252 | 16,236 | 35,807 | 145,544 | | Ademir Sarcevic | 10,432 | 4,653 | 1,710 | 12,000 | 28,795 | | Alan Glass | 16,794 | 12,945 | 7,524 | 12,000 | 49,263 | | Annemarie Bell | 12,233 | 1,732 | 7,524 | - | 21,489 | | Max Arets | 4,168 | - | 656 | 62,403 | 67,226 |
Summary Compensation Table
| a | Mr. Dunbar has an automobile allowance of which he used $14,607. Mr. Dunbar also received tax preparation reimbursement in the amount of $21,200. Mr. Sarcevic and Mr. Glass have an automobile allowance of $12,000. Mr. Arets received a grossed-up reimbursement in the amount of $62,403 in connection with a clawback for relocation expenses that was enforced by his previous employer. No other Named Executive Officer received total perquisites and personal benefits exceeding $10,000. |
Summary Compensation Table
| 5 | Compensation for Ms. Bell is provided only for FY 2024 and FY 2023 because she was not an NEO for FY 2022. |
Summary Compensation Table
| 6 | Compensation for Mr. Arets is provided only for FY 2024 because he became employed with the Company on April 8, 2024. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information with respect to FY 2024 plan-based awards granted to our Named Executive Officers for the year ended June 30, 2024.
Grants of Plan-Based Awards
| | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | | | Estimated Payouts Under Equity Incentive Plan Awards (3) | | | All Other Stock Awards: | | | Name | Grant Date | Action Date (1) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | Number of Shares of Stock or Units (4) | Total ($) (5) | | David Dunbar | | | | | | | | | | | | Annual Incentive | | | 491,629 | 983,258 | 1,966,516 | | | | | | | OIP - PSU | 8/23/23 | | | | | 5,301 | 10,601 | 21,202 | | 1,685,453 | | OIP - RSA | 8/23/23 | | | | | | | | 7,067 | 1,123,582 | | Ademir Sarcevic | | | | | | | | | | | | Annual Incentive (6) | | | 160,948 | 321,897 | 643,794 | | | | | | | OIP - PSU | 8/23/23 | | | | | 1,246 | 2,491 | 4,982 | | 396,044 | | OIP - RSA | 8/23/23 | | | | | | | | 2,491 | 396,044 | | Discretionary RSA (7) | 4/1/24 | | | | | | | | 8,665 | 1,499,998 | | Alan Glass | | | | | | | | | | | | Annual Incentive | | | 111,140 | 222,281 | 444,562 | | | | | | | OIP - PSU | 8/23/23 | | | | | 635 | 1,270 | 2,540 | | 201,917 | | OIP - RSA | 8/23/23 | | | | | | | | 1,270 | 201,917 | | Annemarie Bell | | | | | | | | | | | | Annual Incentive | | | 92,345 | 184,690 | 369,380 | | | | | | | OIP - PSU | 8/23/23 | | | | | 422 | 844 | 1,688 | | 134,188 | | OIP - RSA | 8/23/23 | | | | | | | | 844 | 134,188 | | Max Arets | | | | | | | | | | | | Annual Incentive (8) | | | 101,542 | 203,084 | 406,168 | | | | | | | Sign-On Grant (9) | 4/8/24 | | | | | | | | 967 | 169,844 |
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 8/15/2023. For Mr. Sarcevic’s discretionary grant, the Compensation Committee took action on March 14, 2024, and for Mr. Arets’ sign-on grant, the Compensation Committee took action on January 24, 2024. |
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 52. 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, 2023, 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, 2024, 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 2024 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 | At the time of annual incentive opportunity award, Mr. Sarcevic’s base salary was considered to be $495,226 and Mr. Sarcevic’s target annual incentive opportunity was 65% of his base salary. The values represented here are at time of award. Mr. Sarcevic received a base salary and annual incentive opportunity percentage increase on April 1, 2024, so actual payout of the FY 2024 annual incentive opportunity differed and is explained under “Annual Incentive Opportunity” on page 52. |
Grants of Plan-Based Awards
| 7 | Mr. Sarcevic received a discretionary plan-based RSA grant under the OIP. |
Grants of Plan-Based Awards
| 8 | Mr. Arets joined the Company on April 8, 2024, at which time he was granted an annual incentive opportunity. The amounts reflected here are the full amounts of the annual incentive opportunity, and are not pro-rated based on the length of time Mr. Arets has been with the Company. Actual award payout is pro-rated and is explained under “Annual Incentive Opportunity” on page 52. |
Grants of Plan-Based Awards
| 9 | Mr. Arets received a sign-on discretionary plan-based RSA grant under the OIP. |
Outstanding Equity Awards at Fiscal Year End
Outstanding Equity Awards at Fiscal Year End The following table sets forth information with respect to equity awards that were outstanding as of June 30, 2024. The Company has not awarded stock options since 2003 and there are no outstanding option awards.
Outstanding Equity Awards at Fiscal Year End
| | Stock Awards | | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (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 | 56,185 | 7,134,426 | 55,062 | 8,873,241 | | Ademir Sarcevic | 21,888 | 3,364,260 | 12,336 | 1,987,946 | | Alan Glass | 11,784 | 1,483,038 | 6,638 | 1,069,714 | | Annemarie Bell | 3,169 | 510,664 | 4,048 | 652,335 | | Max Arets | 967 | 155,832 | - | - |
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 2022 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 | Max Arets | | 8/23/2024 | 36,941 | 9,734 | 7,015 | 2,212 | - | | 4/1/2025 | - | 4,332 | - | - | - | | 4/8/2025 | - | - | - | - | 483 | | 8/23/2025 | 13,374 | 2,056 | 3,433 | 675 | - | | 4/1/2026 | - | 4,333 | - | - | - | | 4/8/2026 | - | - | - | - | 484 | | 8/23/2026 | 5,870 | 1,433 | 1,336 | 282 | - | | Total | 56,185 | 21,888 | 11,784 | 3,169 | 967 |
Outstanding Equity Awards at Fiscal Year End
| 2 | The market values in this column are calculated using a price of $161.15 per share, the closing price of the Company’s common stock on June 28, 2024, 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 2023 and 2024 for the three-year performance periods ending on June 30, 2025 and June 30, 2026, respectively. These units will vest if certain targets are met during the applicable performance period. See “Long-Term Incentive Plan” starting on page 57 for more information. For both FY 2023 PSUs and FY 2024 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 2022 - FY 2024) was above target 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 $161.15 per share, the closing price of the Company’s common stock on June 28, 2024. |
Options Exercised and Stock Vested
Options Exercised and Stock Vested The following table sets forth information about option exercises and the vesting of stock during the fiscal year. The Company has not awarded stock options since 2003, so no options are reported. The stock vested during the fiscal year represents PSUs and RSAs granted under the OIP and RSUs granted from an MSPP deferral.
Options Exercised and Stock Vested
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | | David Dunbar | 90,057 | 13,486,077 | | Ademir Sarcevic | 21,383 | 3,240,746 | | Alan Glass | 13,155 | 1,941,511 | | Annemarie Bell | 4,137 | 635,581 | | Max Arets | - | - |
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 became employed with the Company after this date or were ineligible to participate and are not accruing benefits under either of these plans.
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 60.
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 | 76,252 | 76,252 | 389,985 | - | 2,264,031 | | Ademir Sarcevic | - | 4,653 | 12,975 | - | 102,519 | | Alan Glass | 37,977 | 12,945 | 28,646 | - | 254,671 | | Annemarie Bell | - | 1,732 | 575 | - | 5,032 | | Max Arets | - | - | - | - | - |
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 ($) | | David Dunbar | 259,577 | | Ademir Sarcevic | 7,069 | | Alan Glass | 13,977 | | Annemarie Bell | 285 | | Max Arets | - |
NonQualified Deferred Compensation
| 4 | The aggregate balance includes amounts that were reported in previous Summary Compensation Tables as follows: |
NonQualified Deferred Compensation
| | Amounts Previously Reported ($) | | David Dunbar | 1,824,187 | | Ademir Sarcevic | 82,804 | | Alan Glass | 178,361 | | Annemarie Bell | 2,018 | | Max Arets | - |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control The following table lists the compensation and benefits that an executive would generally be provided in various scenarios involving a termination of employment. The amounts denoted in the table are for the CEO, Mr. Dunbar. Where the amounts or time periods differ between Mr. Dunbar and the other executives, the differences are explained in a footnote.
Potential Payments upon Termination or Change in Control
| | Termination Scenario | | | | | | | Compensation Element | Death | Disability (1) | Retirement (2) | Termination with Cause (3) | Termination without Cause (4) | Termination due to Change in Control (5) | | Base Salary | Ceases immediately | Continuation for 2 years (6) | Ceases immediately | Ceases immediately | Continuation for 2 years (7) | Ceases immediately | | Severance Pay | None | None | None | None | None | Lump sum equal to 3 times base salary (8) | | Annual Incentive | None | None | None | None | None | Lump sum equal to 3 times the higher of (i) the most recent annual incentive award or (ii) the current FY’s target incentive award (9) | | Restricted Stock (10) | Awards vest immediately | Awards vest immediately | Awards vest immediately | Forfeited | Forfeited | Awards vest immediately | | PSUs (11) | Awards are prorated and vest in normal course | Awards are prorated and vest in normal course | Awards are prorated and vest in normal course | Forfeited | Forfeited | Awards vest immediately | | Deferred Compensation (12) | Payable immediately | Distributions commence after 6 months per participant’s election | Distributions commence after 6 months per participant’s election | Distributions commence after 6 months per participant’s election | Distributions commence after 6 months per participant’s election | Payable immediately | | Health, Welfare and Other Benefits | None | Medical and dental coverage for 1 year (13) | None | None | Medical and dental coverage for 1 year (14) | Life insurance and medical benefits coverage for 3 years (15) |
Potential Payments upon Termination or Change in Control
| 1 | Under Mr. Dunbar’s employment agreement, disability is defined as a condition where the executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. Under the Executive Severance Policy, disability is defined as an executive’s inability to perform their essential job functions due to a physical or mental impairment for a period of 6 consecutive months. |
Potential Payments upon Termination or Change in Control
| 2 | Retirement, under both Mr. Dunbar’s employment agreement and the Executive Severance Policy, is defined as a voluntary termination of employment when either (i) the executive has reached age 55 and has at least 10 years of service with Standex, or (ii) the executive has reached age 65. |
Potential Payments upon Termination or Change in Control
| 3 | Under Mr. Dunbar’s employment agreement, termination with cause is defined as a termination by Standex for a material breach of the employment agreement. A material breach is (i) an act of dishonesty which is intended to enrich Mr. Dunbar at the Company’s expense, or (ii) the willful, deliberate and continuous failure to perform his duties after being properly demanded to do so. Under the Executive Severance Policy, termination for cause is defined as a termination by Standex as a result of any of the following: (i) an act of dishonesty which is intended to or actually results in substantial personal enrichment at the Company’s expense; (ii) a willful, deliberate and continuous failure to materially and substantially perform the duties which results in material injury to the Company, after demand for performance has been given to the executive; (iii) a willful and deliberate failure to comply with the Company’s Code of Conduct, financial policies, or other significant, written corporate policies of the Company; or (iv) the executive, through conduct and actions, creates a threatening, intimidating, or hostile workplace environment. |
Potential Payments upon Termination or Change in Control
| 4 | Under Mr. Dunbar’s employment agreement, termination without cause is a termination by Standex where Mr. Dunbar has not committed a material breach of the employment agreement. Under the Executive Severance Policy, termination without cause is a termination by Standex for any reason other than change in control, death, disability, retirement or termination for cause. |
Potential Payments upon Termination or Change in Control
| 5 | Under Mr. Dunbar’s employment agreement, a change in control is defined as an event where (i) any person or group (as used in sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, of at least a majority of the equity securities of Standex entitled to vote for members of the Board of Directors; (ii) Standex is a party to a merger or consolidation, which results in Standex voting securities representing less than a majority of the resulting voting securities; (iii) the sale or disposition of all or substantially all of Standex’s assets; or (iv) a greater than 75% change in the composition of the Board of Directors during a consecutive 12-month period. Mr. Dunbar would be entitled to the payments described in this column after such a change in control only if, within 2 years of the change in control, either (i) he is terminated without cause,(a) or (ii) he voluntarily terminates his employment for “good cause.”(b) |
Potential Payments upon Termination or Change in Control
| (a) Termination without cause is any termination by Standex other than a termination where there is conclusive evidence of substantial and indisputable intentional personal malfeasance in office, such as a conviction for embezzlement of Standex funds. |
Potential Payments upon Termination or Change in Control
| (b) Good cause for Mr. Dunbar is defined as any of the following: (i) the assignment to any position other than President & CEO; (ii) any change in the reporting relationship such that he is no longer reporting solely to the Board of Directors; (iii) any reduction in the budget which results in him no longer having 100% control over the budget; (iv) any material diminution of base salary or incentive compensation; (v) any change in the location of employment to a location greater than 10 miles from the present location; and (vi) any other action or inaction of Standex that constitutes a material breach of the employment agreement. |
Potential Payments upon Termination or Change in Control
Under the Executive Severance Policy, a change in control is defined by reference to the OIP, which defines a change in control as an event where (i) any person or group (as used in sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rules 13d-3 and 13d- 5 of the Exchange Act), directly or indirectly, of at least a majority of the combined voting power of the Company’s then outstanding securities; (ii) Standex is a party to a merger or consolidation, subject to certain exclusions; (iii) the shareholders approve a plan of complete liquidation of the Company; or (iv) a greater than 50% change in the composition of the Board of Directors. The executives subject to the Executive Severance Policy, including the Named Executive Officers other than Mr. Dunbar, would be entitled to the payments described in this column and the footnotes related thereto only if, within 2 years of the change in control, either (i) they terminate their employment for Just Reason;(c) or (ii) their employment is terminated by the Company under any circumstance other than one involving conclusive evidence of substantial and indisputable intentional personal malfeasance.
Potential Payments upon Termination or Change in Control
| (c) Just Reason is defined as, without the executive’s express written consent, (i) a material diminution of the executive’s salary; (ii) a material diminution in the executive’s benefits; (iii) a material diminution in the executive’s authority, duties or responsibilities; or (iv) a material change in the geographic location at which the executive must perform services. |
Potential Payments upon Termination or Change in Control
| 6 | Mr. Dunbar’s employment agreement provides for a continuation of base salary for a period of 2 years up to the IRS compensation limit specified in IRC Section 401(a)(17), with the excess payable immediately upon termination. The Executive Severance Policy provides for a continuation of base salary for a period of 1 year. |
Potential Payments upon Termination or Change in Control
| 7 | Mr. Dunbar’s employment agreement provides for a continuation of base salary for a period of 2 years up to the IRS compensation limit specified in IRC Section 401(a)(17), with the excess payable immediately upon termination. The Executive Severance Policy provides for a continuation of pay, in an annualized amount equal to the sum of the executive's most recent base salary plus target annual bonus, for a period of 1 year. |
Potential Payments upon Termination or Change in Control
| 8 | Mr. Dunbar’s employment agreement provides for a lump sum severance payment in the amount of 3 times his then-current base salary. The Executive Severance Policy provides for a lump sum severance payment equal to: 2 times the greater of: (a) the executive’s base salary immediately prior to the change in control or (b) the executive’s then current annual base salary plus 2 times the higher of: (x) the most recent annual bonus paid to the executive, (y) the executive’s target bonus amount, as of the date immediately prior to the change in control, or (z) the executive’s target bonus amount, as of the date of termination. |
Potential Payments upon Termination or Change in Control
| 9 | Mr. Dunbar’s employment agreement provides for an annual incentive payment equal to 3 times the greater of: (i) the most recent annual incentive award or (ii) the current FY’s target incentive award. The Executive Severance Policy provides for a lump sum payment equal to the greater of: (a) the annual incentive opportunity at target, or (b) the level of bonus accrual on the Company’s books as of the date of termination, multiplied by the percentage of the Company’s then-current fiscal year that has elapsed as of the date of termination. |
Potential Payments upon Termination or Change in Control
| 10 | Included in the restricted stock category are both RSAs that an executive received pursuant to a grant under the OIP and RSUs that an executive received pursuant to a deferral under the MSPP. |
Potential Payments upon Termination or Change in Control
| 11 | For PSUs, except in the case of a termination for cause, without cause or due to a change in control, the PSUs are converted to shares of unrestricted stock once the performance period has ended and the Compensation Committee has determined the requisite payout in accordance with the performance levels. The number of PSUs that is converted is pro-rated to the date of the executive’s termination. |
Potential Payments upon Termination or Change in Control
| 12 | See the “Standex Deferred Compensation Plan” section on page 60 for more information about the plan and distribution options. |
Potential Payments upon Termination or Change in Control
| 13 | Mr. Dunbar’s employment agreement provides for a continuation of medical and dental benefits for a period of 1 year. The Executive Severance Policy does not provide for any health or welfare benefit continuation. |
Potential Payments upon Termination or Change in Control
| 14 | Mr. Dunbar’s employment agreement provides for a continuation of medical and dental benefits for a period of 1 year. The Executive Severance Policy provides for a monthly reimbursement of COBRA premiums for a period of 1 year, if the executive elects to continue health insurance coverage under COBRA. |
Potential Payments upon Termination or Change in Control
| 15 | Mr. Dunbar’s employment agreement provides for a continuation of medical and life insurance benefits for a period of 3 years. The Executive Severance Policy provides for a continuation of medical and life insurance benefits for a period of 2 years. |
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, 2024. All such potential payments are largely based on, for Mr. Dunbar, his employment agreement with the Company, and for all of the other NEOs, the Executive Severance Policy, as well as the 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.
Quantification of Potential Payments
| Triggering | Compensation | Payout ($) (1) | | | | | | Event | Component | David Dunbar | Ademir Sarcevic | Alan Glass | Annemarie Bell | Max Arets | | | Acceleration of Outstanding Equity Awards | 3,626,627 | 2,533,175 | 1,019,850 | 307,313 | 155,832 | | Death | Pro-rata Performance Share Vesting (2) | 8,284,393 | 1,888,767 | 1,039,890 | 547,567 | - | | | Total | 11,911,020 | 4,421,941 | 2,059,740 | 854,880 | 155,832 | | | Termination Payment - Salary | 1,872,872 | 560,000 | 404,147 | 335,800 | 360,187 | | | Acceleration of Outstanding Equity Awards | 3,626,627 | 2,533,175 | 1,019,850 | 307,313 | 155,832 | | Disability | Pro-rata Performance Share Vesting (2) | 8,284,393 | 1,888,767 | 1,039,890 | 547,567 | - | | | Health & Welfare Benefits | 16,318 | - | - | - | - | | | Total | 13,800,210 | 5,003,916 | 2,483,296 | 1,199,314 | 516,019 | | | Acceleration of Outstanding Equity Awards | 3,626,627 | 2,533,175 | 1,019,850 | 307,313 | - | | Retirement | Pro-rata Performance Share Vesting (2) | 8,284,393 | 1,888,767 | 1,039,890 | 547,567 | - | | | Total | 11,911,020 | 4,421,941 | 2,059,740 | 854,880 | - | | Termination Without | Termination Payment | 1,872,872 | 980,000 | 626,428 | 520,490 | 540,281 | | Cause by the | Health & Welfare Benefits | 16,318 | 21,975 | 19,409 | 8,634 | 21,975 | | Company | Total | 1,889,190 | 1,001,975 | 645,837 | 529,124 | 562,256 | | | Severance Pay | 2,809,308 | 1,960,000 | 1,252,856 | 1,040,980 | 1,080,561 | | Change in | Annual Incentive | 2,949,773 | 420,000 | 222,281 | 184,690 | 180,094 | | Control (3) | Acceleration of Outstanding Equity Awards (4) | 11,571,047 | 4,358,233 | 2,017,895 | 836,831 | 155,832 | | | Health & Welfare Benefits | 60,315 | 48,114 | 42,982 | 21,432 | 48,114 | | | Total | 17,390,443 | 6,786,347 | 3,536,013 | 2,083,933 | 1,464,601 |
Quantification of Potential Payments
| 1 | The payout values for equity awards are based on the closing price of the Company’s stock on June 28, 2024 ($161.15). |
Quantification of Potential Payments
| 2 | The pro-rata performance share vesting is based on the following: |
Quantification of Potential Payments
For FY 2022 PSU awards, the number of shares used in the calculation is based on the certified performance percentage of 152.4%. For FY 2023 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 2024 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
| 3 | 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
| 4 | 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 this calculation, for FY 2022 PSU awards, the number of shares is based on the certified performance percentage of 152.4%, while for FY 2023 and FY 2024 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 2024 and the annual total compensation of the median employee of the Company. As of June 30, 2024, Standex has approximately 3,700 employees in 52 locations across 17 countries. Approximately 68% of our employee population is located outside of the United States and approximately 63% 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. These demographics are not substantially different than those used in our last CEO pay ratio disclosure, so we are using the same median employee for FY 2024 as we did in FY 2023. This employee is a full-time, hourly employee in our Electronics division, located in the United Kingdom. For FY 2024, our median employee’s total compensation was £25,726, as calculated in accordance with Item 402(c)(2)(x) of Reg. S-K. This total compensation converted to USD is $32,531, using the June 28, 2024 GBP to USD exchange rate of 1.2645. Our CEO’s annual total compensation for FY 2024, as reported and detailed in the Summary Compensation Table was $4,993,485. Based on this information, the ratio of these two annual total compensations was estimated to be 154 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).
Section 2. Definitions
| (h) Limitation on Non-Employee Director Compensation. Non-Employee Directors’ “aggregate annual compensation” may not exceed $400,000 (“Director Pay Limit”). Aggregate annual compensation is equal to the sum of (i) the amount of all cash fees paid to (or deferred to a later tax year by) a Non-Employee Director during a calendar year and (ii) the grant date fair value (as determined under applicable accounting standards) of all Stock-based Awards granted to a Non-Employee Director during a calendar year. The Director Pay Limit shall be increased by an additional (i) $40,000 for a Non-Employee Director serving as Chair of a committee of the Board of Directors, (ii) $40,000 for a Non-Employee Director who is serving as the lead director (iii) $125,000 for a Non-Employee Director who is serving as Chair of the Board of Directors and (iv) $20,000 for a Non-Employee Director serving as a member of a committee of the Board of Directors. For new incoming directors, their Director Pay Limit shall be increased by 25% of the then- current Director Pay Limit for such director’s initial year of service. Notwithstanding the foregoing, cash fees, which were payable to a Non-Employee Director in a particular calendar but were paid in a subsequent calendar year pursuant to a deferral election or otherwise, shall not count against the Director Pay Limit in the year paid. |