UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☒
Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ | | | Preliminary Proxy Statement |
☐ | | | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
☒ | | | Definitive Proxy Statement |
☐ | | | Definitive Additional Materials |
☐ | | | Soliciting Material Pursuant to §.240.14a-12 |
FLEXSTEEL INDUSTRIES, INC. |
(Name of Registrant as Specified in its Charter) |
|
|
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
FLEXSTEEL INDUSTRIES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ | | | No fee required. |
☐ | | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
| | |
1) | 1) | | | Title of each class of securities to which transaction applies: |
| | | |
| | |
2) | 2) | | | Aggregate number of securities to which transaction applies: |
| | | |
| | |
3) | 3) | | | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| | | |
| | |
4) | 4) | | | Proposed maximum aggregate value of transaction: |
| | | |
| | |
5) | 5) | | | Total fee paid: |
| | | |
| | |
| | ☐ | ☐ | | Fee paid previously with preliminary materials: |
| | | |
☐ | | ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. |
| | | |
| | | 1) | | | Amount previously paid: |
| | | | | | |
| | | | |
| | | 2) | 2) | | Form, Schedule or Registration Statement No.: |
| | | | | | |
| | | | | | 3) | | | Filing Party: |
| | | 3) | Filing Party: | | |
| | | | | | 4) | | | Date Filed: |
| | | | |
| | | | 4) | Date Filed: |
| | | | |
FLEXSTEEL INDUSTRIES, INC.
P.O. Box 877
October
25, 2017Office of the Chair of the Board
26, 2021
You are cordially invited to attend the
Annual Shareholders’ Meetingannual meeting of shareholders of Flexsteel Industries, Inc.
to be held virtually via live webcast on
Monday,Wednesday, December
4, 2017,8, 2021, at
2:10:00
p.m. We welcomea.m. Central Time, at www.virtualshareholdermeeting.com/FLXS2021. Given the
opportunitypublic health impact of the COVID-19 pandemic and our desire to
meet with thosesupport the health and well-being of
you who find it convenientour shareholders, employees, and directors, we have decided to
attend.Timehold this year’s annual meeting in a virtual format only. Instructions regarding virtual meeting attendance are set forth in the Notice below.
Shareholders at the close of business on Tuesday, October 12, 2021, will be
provided for shareholderable to participate in the virtual meeting online, vote shares electronically, and submit questions
regardingin the
affairs ofvirtual meeting forum before and during the
Company and for discussion of the businessmeeting. Prior to
be considered at the meeting,
as explained inyou may vote your shares and submit pre-meeting questions online by visiting www.proxyvote.com and following the
notice andinstructions on your proxy
statement which follow. Directors and other Company executives expect to be available to talk individually with shareholders after the meeting. No admission tickets or other credentials are currently required for attendance at the meeting, but we may request to see some identification to establish that you are a shareholder of the Company.card.
We have elected to take advantage of the “notice and access” rules of the Securities and Exchange Commission to furnish most of our shareholders with proxy materials over the
Internet.internet. These rules allow us to provide you with the information you need, while reducing printing and delivery costs.
Your vote on the proposals is important. Whether or not you attend the meeting, we encourage you to vote your shares in order to make certain that you are represented at the meeting. You may vote over the
Internet,internet, as well as by telephone, or if you requested to receive printed proxy materials, by mailing a proxy or voting instruction card.
| | | Sincerely, |
|  | | |
| Eric S. Rangen | | Thomas M. Levine |
| Chair | | Chairman of the Board |
| | | Record Date: | | | Tuesday, October 10, 201712, 2021 |
| | | Date of Meeting: | | | Wednesday, December 4, 20178, 2021 |
Time: | | 2: | Time: | | | 10:00 p.m.a.m. Central Time |
Place: | | Flexsteel Global Headquarters | Place: | | | Held virtually online via live webcast at |
| | 385 Bell St. |
| | | Dubuque, IA 52001 | | www.virtualshareholdermeeting.com/FLXS2021 |
Whether you own one share or many, each shareholder is urged to vote by
Internetinternet or telephone, or if you received paper copies of our proxy materials, you can also mark, date, sign and promptly mail the accompanying proxy card in the enclosed envelope so that your shares will be represented at the meeting.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy StatementIn accordance with rules and Form 10-Kregulations adopted by the Securities and Exchange Commission, we are furnishing our proxy materials on the Internet. “Proxy materials” means this proxy statement, our 2021 Annual Report and any amendments or updates to these documents. Our proxy materials are available on the Internet to the general public atwww.proxyvote.com http://materials.proxyvote.com/FLXS2021.
FLEXSTEEL INDUSTRIES, INC.
P.O. Box 877
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held December
4, 20178, 2021
The Annual Meetingannual meeting of Shareholdersshareholders of Flexsteel Industries, Inc. will be held virtually via live webcast on Wednesday, December 8, 2021, at Flexsteel Global Headquarters, 385 Bell Street, Dubuque, Iowa 52001,10:00 a.m. Central Time, or at any adjournment or postponement thereof. You will be able to attend the annual meeting online, listen to the meeting live, submit questions and vote by visiting www.virtualshareholdermeeting.com/FLXS2021 and entering the 16-digit control number included in our Notice Regarding the Availability of Proxy Materials or on Monday, December 4, 2017 at 2:00 p.m.your proxy card (if you received a printed copy of the proxy materials).
The meeting will be held for the following purposes:
| 1.
| To elect three (3) Class III Directors to serve until the year 2020 Annual Meeting2024 annual meeting and until their respective successors have been elected and qualified or until their earlier director class reassignment, resignation, removal, retirement or termination. |
2.
| 2.To consider and vote upon an advisory proposal concerning our executive compensation program. |
3.
| To consider a proposal to amend Article V, Section 3 of the Amended and Restated Bylaws to provide thatincrease from 72 to 75 the age a person must be less than age 72 to be elected or appointed as a director. |
| 3.4.
| To transactconsider such other business as may properly come before the meeting or any adjournmentsadjournment or postponements of the meeting.postponement thereof. |
October
10, 201712, 2021 has been fixed as the record date for the determination of common shareholders entitled to notice of, and to vote at, the
virtual annual meeting. Only holders of record at the close of business on that date will be entitled to vote at the meeting or any adjournments or postponements of the meeting.
Whether or not you plan to attend the meeting, please vote by
Internetinternet or telephone, or if you received paper copies of our proxy materials, you can also mark, date, sign and promptly mail the accompanying proxy card in the enclosed envelope so that your shares will be represented at the meeting.
| | | BY ORDER OF THE BOARD OF DIRECTORS |
| | | |
| |  | Derek P. Schmidt |
| | Timothy E. Hall |
| | | Secretary |
Please vote by
Internetinternet or telephone, or if you received paper copies of our proxy materials, you can also mark, date, sign and promptly mail the accompanying proxy card in the enclosed envelope so that your shares will be represented at the meeting.
FLEXSTEEL INDUSTRIES, INC.
P.O. Box 877
PROXY STATEMENT
Annual Meeting of Shareholders to be Held December
4, 20178, 2021
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
This proxy statement and the proxy are solicited on behalf of the Board of Directors
referred to as the “Board”,(the “Board”) of Flexsteel Industries, Inc. to be used at the
Annual Meetingannual meeting of
Shareholdersshareholders to be held
virtually on
Monday,Wednesday, December
4, 2017,8, 2021, and any adjournments or postponements
of the meeting,thereof, for the purposes set forth in the notice of meeting accompanying this proxy statement. The Company will pay the cost of the solicitation of proxies.
The mailing address of the corporate office and principal executive office of the Company is P.O. Box 877, Dubuque,
IAIowa 52004-0877. The approximate date on which this proxy statement and accompanying proxy card are first available to shareholders is October
25, 2017.26, 2021.
At the meeting, shareholders will elect three
(3) Class
I directors, Karel K. Czanderna, Thomas M. LevineII Directors, Mary C. Bottie, Kathryn P. Dickson, and
Robert J. MaricichEric S. Rangen, for three-year terms expiring at the
shareholdersshareholders’ meeting in
2020. We are2024. In addition, the Board is asking
the shareholders to
approve the compensation of our named executive officers by advisory vote and consider a proposal to amend Article V, Section 3 of our Amended and Restated Bylaws to
provideincrease from 72 to 75 the age that a person must be less than
age 72 to be elected or appointed as a director. We do not expect that any other business, except for routine or
proceduresprocedural matters, will be brought up at the meeting. If any other business is properly brought up at the meeting, the persons named in the enclosed proxy will have authority to vote on these matters at their discretion.
Proxy Materials Available on Internet
In an effort to reduce the cost of delivering the proxy materials to our shareholders, we are making the materials available to our shareholders on the
Internet.internet. On
or about October
25, 2017,26, 2021, we sent shareholders a one-page “Notice of Internet Availability of Proxy Materials,” which included instructions on how to access our proxy materials on the Internet. The proxy materials, consisting of this proxy statement and our fiscal
20172021 annual report to shareholders, are available at
www.proxyvote.com. www.proxyvote.com. The Notice of Internet Availability of Proxy Materials also provides instructions on how to vote your shares. By making the materials available through the
Internet,internet, we expect to reduce our costs, conserve natural resources, and expedite the delivery of the proxy materials. However, if you prefer to receive hard copies of the proxy materials, please follow the instructions included on the Notice of Internet Availability of Proxy Materials.
Only shareholders of record at the close of business on October
10, 2017,12, 2021, the record date, will be eligible to vote. There is only one class of stock entitled to vote at the meeting, our common stock, $1.00 par value, of which there were
7,845,2696,797,024 shares outstanding on the record date. A quorum, which is a majority of the outstanding shares, is needed to conduct a meeting. Each share is entitled to one vote for each director position; cumulative voting is not available. We encourage you to vote by telephone or on the
Internet.internet. If your shares are held in your name, you can vote by telephone or on the
Internetinternet by following the instructions on the proxy card or as explained in the Notice of Internet Availability of Proxy Materials. If you are a beneficial holder with your shares held in the name of your broker, bank, or other financial institution, you will receive telephone or
Internetinternet voting instructions from the institution. If you received a paper copy of the proxy materials, you may vote your shares by signing and dating each proxy card you received and returning the cards in the enclosed envelope. The proxies will be voted according to your directions on the proxy card. If you return a signed card without specifying your vote, your shares will be voted:
| ● | FORthe election of Karel K. Czanderna, Thomas M. Levine, and Robert J. Maricich (Proposal I). |
| ● | FORapproval to amend Article V, Section 3 of our Amended and Restated Bylaws to provide that a person must be less than age 72 to be elected or appointed as a director (Proposal II). |
FOR the election of Mary C. Bottie, Kathryn P. Dickson, and Eric S. Rangen (Proposal I);
FOR approval, on an advisory basis, of the compensation of the named executive officers (Proposal II); and
FOR approval to amend Article V, Section 3 of our Amended and Restated Bylaws to increase from 72 to 75 the age a person must be less than to be elected or appointed as a director. (Proposal III).
If you sign and return your proxy card, your shares will be voted on any other business that properly comes before the meeting as determined by the persons named in the proxy. We urge you to sign, date, and return your proxy card promptly, or vote by telephone or on the
Internet,internet, even if you plan to attend the
virtual meeting
in person.via live webcast. If you do attend
in person,the virtual meeting, you will be able to vote your shares at the meeting even if you previously signed a proxy card or voted by telephone or on the
Internet.internet. However, if you hold your shares in street name you must request a legal proxy from your broker or nominee to vote in person at the
Annual Meeting.virtual meeting.
If you hold your shares through a broker, bank, or other financial institution, you will receive your proxy materials and voting instructions from the institution.
Under New York Stock Exchange rules, yourYour broker, bank, or financial institution will not vote your shares for any of the proposals without your specific instructions. To ensure your vote is counted, you must provide directions to your broker, bank, or financial institution by following its instructions.
If you wish to change your vote, you may do so by submitting a new vote by proxy, telephone,
Internet, or
in person at the meeting.internet. A later vote will cancel an earlier vote. For example, if you vote by
Internetinternet and later vote by telephone, the telephone vote will count, and the
Internetinternet vote will be canceled. If you wish to change your vote by mail, you should request a new proxy card from our Secretary at P.O. Box 877, Dubuque, Iowa 52004-0877. Your last vote received before the meeting will be the only one counted. You may also change your vote by voting
in person atvia internet during the meeting. Your vote
atduring the meeting will count and cancel any previous vote.
Votes cast by proxy or in person will be counted by the inspector of election appointed for the meeting, who will be present at the meeting.
TheWith respect to Proposal I, the affirmative vote of a plurality of the shares of common stock present in person or represented by proxy at the meeting and entitled to vote is required for the election of the director nominees named in this proxy statement. In determining a quorum, a “WITHHELD” vote will be counted, but will not be voted in favor of the nominee with respect to whom authority has been withheld. The three nominees that receive the highest number of “FOR” votes will be elected.
To be approved, amending Article V, Section 3
With respect to Proposal II and Proposal III, the affirmative vote of
our Amended and Restated Bylaws to provide that a person must be less than age 72 to be elected or appointed as a director, requires a majority
of shares present in person or represented by proxy at the annual meeting and entitled to vote
from shareholders.on the matter is required. Accordingly, an abstention on Proposal II or Proposal III will have the same effect as voting “against” the matter.
While the Board knows of no other matter to be presented at the meeting or any adjournment or postponement of the meeting, all proxies returned to the Company will be voted on any such matter in accordance with the judgment of the proxies.
Number of Copies Sent to Household
For two or more shareholders sharing the same address that do not participate in the electronic delivery of proxy materials, we only send your household a single copy of our annual report and proxy statement unless you previously withheld your consent to “householding” or instruct us otherwise. Householding saves us the expense of mailing duplicate documents to your home and conserves our natural resources, and we hope that receiving one copy rather than multiple copies is more convenient for you. However, we will promptly provide additional copies of our fiscal
20172021 annual report or this proxy statement to the other shareholders in your household if you send a written request to: Office of the Secretary, Flexsteel Industries, Inc., P.O. Box 877, Dubuque, Iowa 52004-0877, or you may call us at
563-585-8392563-556-7730 to request additional copies. Copies of the annual report, proxy statement, and other reports we file with the SEC are also available on our website at
http: https://www.flexsteel.com/content/investorsir.flexsteel.com/financial-information/sec-filings or through the SEC’s website at
www.sec.gov. www.sec.gov.
You may revoke your consent to householding at any time by contacting Broadridge Financial Solutions, Inc., either by calling toll-free 866-540-7095, or by writing to Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
More Information about Voting Your Shares
Information regarding the proxy process is available from the SEC on its website at:https://www.sec.gov/spotlight/proxyprocess.htm
Our Amended and Restated Articles of Incorporation permit the election of
thirteen Directors.13 directors. The Board currently consists of
eightseven persons divided into three classes. At each
Annual Meetingannual meeting, the terms of one class of
Directorsdirectors expire and persons are elected to that class for terms of three years or until their respective successors are duly qualified and elected or until their earlier
director class reassignment, resignation, removal,
retirement or termination. The Nominating and Governance Committee believes that as a group, the nominees below bring a diverse range of backgrounds, experiences and perspectives to the Board’s deliberations.
Set forth below is information with respect to all Board members, including the nominees, their recent employment or principal occupation, a summary of their specific experience, qualifications, attributes or skills that led to the conclusion that they are qualified to serve as a director, the names of other public companies for which they currently serve as a director or have served as a director within the past five years, their period of service as a Flexsteel director and their age as of
September 30, 2017.October 26, 2021.
The Board
of Directors believes that the directors listed below come from a wide variety of business backgrounds, possess highly ethical standards, uncompromising integrity, operate in the best interest of the shareholders, and the majority are independent as defined by the
NASDAQNasdaq Stock Market listing standards.
On June 14, 2021, the Board appointed Kathryn P. Dickson to the Board to serve as a Class II Director. The Board has determined that
with respect to the election of directors at the 2021 annual meeting, the Board shall
continue to consist of
eightseven members and has nominated, based on the recommendation of the Nominating and Governance Committee,
Karel K. Czanderna, Thomas M. LevineMary C. Bottie, Kathryn P. Dickson and
Robert J. MaricichEric S. Rangen for election as Class
III Directors of the Company.
All nominees have been previously elected by the shareholders.
The Class
III Directors’ next term expires at the
2020 Annual Meeting2024 annual meeting or upon their respective successors being elected and qualified or until their earlier
director class reassignment, resignation, removal,
retirement or termination. It is the intention of the proxies named herein to vote FOR these nominees unless otherwise directed in the proxy.
DIRECTORS NOMINATED FOR ELECTION, CLASS
IIIKarel K. Czanderna
Mary C. Bottie
| | | Ms. Bottie was formerly a Motorola Inc. Vice President holding positions in general management, marketing, and training and education. During Ms. Bottie’s tenure from 1983 to 2007, she led a division of Motorola in the North America Enterprise and Canadian Government markets, directing all sales, field engineering and system integration personnel. Ms. Bottie also led the marketing organization for a $3 billion sector of the company. She was recognized for the creation of an award-winning sector-level crisis simulation program, global ethics program and leadership resulting in the Malcolm Baldridge National Quality Award.
Ms. Bottie has a Bachelor of Science degree in Education from the University of Wisconsin. Ms. Bottie brings expertise in general management, global operations, marketing, and human resources to the Board. |
| | | |
Kathryn P. Dickson
Age 56
Director since 2021 | | | Ms. Dickson served as President of Manitoba Harvest, a global company that manufactures and markets plant-based-protein foods and beverages, from 2019 to 2020. Prior to Manitoba Harvest, Ms. Dickson served as Senior Vice President for Mattel, Inc., a global learning, development, and play company, and President of its American Girl subsidiary from 2016 through 2018. Prior to Mattel, Ms. Dickson served as Chief Marketing Officer for News America Marketing, a consumer-focused marketing business, from 2015 to 2016. Prior to News America Marketing, Ms. Dickson served in increasingly responsible roles over more than 23 years at General Mills, Inc., a global manufacturer and marketer of branded consumer foods. Her leadership there included Vice President/Marketing Excellence, and Vice President/Business Unit Director for global brands including Betty Crocker, Pillsbury, and Old El Paso. Ms. Dickson was a member of the Cooper Tire & Rubber Board of Directors from 2018 to June 7, 2021.
Ms. Dickson has a Bachelor of Science degree from the United States Air Force Academy, and an MBA from UCLA. She served as an officer in the U.S. Air Force, where she achieved the |
| | | rank of Captain. Ms. Dickson brings expertise in driving growth through omnichannel and digital strategies, global expansion, brand revitalization and innovation to the Board. |
| | | |
Eric S. Rangen
Age 64
Director since 2002 | | | Mr. Rangen has been President and Chairman of LTC Reinsurance PCC, a protected cell captive insurance company, since 2017. He previously served as Executive Vice President – Strategic Initiatives of Optum, a division of UnitedHealth Group Inc., from 2015 to 2017, and held the role of Senior Vice President and Chief Accounting Officer at UnitedHealth Group Inc. from 2006 to 2015. He served as Executive Vice President and Chief Financial Officer at Alliant Techsystems Inc., a publicly traded advanced weapons and space systems company, from 2001 to 2006, and was with Deloitte & Touche LLP, an international accounting firm, from 1983 to 2001, leaving as a Partner. Mr. Rangen is a past director of Global Defense Technology & Systems Incorporated.
Mr. Rangen has a Bachelor of Science degree in Business from the University of Minnesota.
Mr. Rangen brings experience in finance, accounting, general management, and human resources to the Board. |
DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE
2022 ANNUAL MEETING, CLASS III
William S. Creekmuir
Age 66
Director since 2019 | | | Mr. Creekmuir is the owner and President of Pinnacle Search Partners, LLC, a global executive search firm, and has served in that capacity since December 2015. Mr. Creekmuir has been a director and partial owner of Iconics Custom Signage, LLC since October 2017, and a partial owner of Our House Designs, LLC since January 2020. He is a director of Party City Holdco Inc., the leading party goods and Halloween specialty retailer by revenue in North America and the world’s largest vertically integrated supplier of decorated party goods, since March 2016; he is also Chair of its Audit Committee. Mr. Creekmuir served as Executive Vice President and Chief Financial Officer of private equity-owned Simmons Bedding Company from 2000 to 2011, and publicly traded LADD Furniture, Inc., a furniture manufacturer, from 1992 to 2000. His earlier years were spent with KPMG LLP, where he was a Partner and held responsibilities in both the United States and Ireland.
Mr. Creekmuir has a Bachelor of Science degree in Business Administration from the University of North Carolina at Chapel Hill. Mr. Creekmuir brings experience in corporate finance, accounting, talent management and the home furnishings industry to the Board. |
| | | |
Jerald K. Dittmer
Age 64
Director since 2018 | | | Mr. Dittmer joined the Board following his appointment to President and Chief Executive Officer July 2012of the Company in December 2018. During 2018, Mr. Dittmer was the Chief Executive Officer of Austin Business Furniture, a regional office furniture dealership. From 2008 to present, Flexsteel Industries, Inc.; Group2017, Mr. Dittmer served as Executive Vice President of Building Materials, 2008HNI Corporation, a publicly traded office furniture manufacturer and the world’s leading hearth products company, and President of The HON Company, a large office furniture designer and manufacturer serving independent dealers, wholesalers and national suppliers. He drove overall strategy to 2011, Owens Corning (atransform go-to-market capabilities, including its e-commerce initiatives, which resulted in significant profitable sales growth. Previously, Mr. Dittmer held several leadership roles, including Chief Financial Officer at HNI Corporation, from 1991 to 2008. As Chief Financial Officer, he was responsible for HNI’s domestic and international finance, accounting, treasury, tax, enterprise risk management, internal audit, and information technology. He also played an instrumental role in accelerating the company’s growth rate through acquisitions in the U.S. and Canada.
Mr. Dittmer is a graduate of Iowa State University, where he obtained a Bachelor of Science in Industrial Administration with an emphasis in Accounting, and has also completed executive education programs at the University of Michigan and Northwestern University. Mr. Dittmer brings more than 30 years of experience in the furniture industry, including top leadership positions overseeing corporate operations, planning, acquisitions and finance to the Board. |
DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE
2023 ANNUAL MEETING, CLASS I
Matthew A. Kaness
Age 48
Director since 2019 | | | Mr. Kaness was a member of the US Advisory Board of Afterpay, Ltd., a global producertechnology-driven payments company, from 2018 to 2021. Mr. Kaness served as interim Chief Executive Officer of building materials, glass-fiber reinforcements and engineered materials for composite systems); Vice President and General Manager of KitchenAid, Jenn-Air, cooking and refrigeration, 2002 to 2008, Whirlpool Corporation (aLucky Brand Dungarees, Inc., a clothing manufacturer and marketer, from September 2019 to July 2020 and as Executive Chairman from January 2020 to July 2020. On July 3, 2020, Lucky Brand filed for protection under Chapter 11 of home appliances).Ms. Czandernathe federal bankruptcy laws, and on August 12, 2020, the U.S. Bankruptcy Court for the District of Delaware approved the purchase of Lucky Brand by SPARC Group LLC. He was the President and Chief Executive Officer of ModCloth, Inc., a fashion e-commerce company, from 2015 to 2017, which was sold to Walmart. From 2017 to 2018, Mr. Kaness was an officer in Walmart’s US e-commerce division. Previously, he was the Chief Strategy Officer at Urban Outfitters, Inc., an international fashion and lifestyle omni-channel retailer.
Mr. Kaness holds a Bachelor of Science degree in Mechanical Engineering from the Catholic University of America and an MBA from the Darden Graduate School of Business at the University of Virginia. Mr. Kaness brings experience in marketing, productcorporate development, global supply chain, human resourcesgeneral management, e-commerce and general management.digital transformation to the Board. |
| | | |
| | | Mr. Levine has been an Independent Management Advisor from 1995 to present; Executive Vice President, 1982 to 1999,present. Previously at Fostin Capital Corp (aCorp., a venture capital investment management company);company, he held the position of Executive Vice President from 1982 to 1999. Prior experience includes Vice President of Foster Industries, Inc., a private investment company, from 1982 to 1994, Foster Industries, Inc. (a private investment company); Partner, 1980 to 1982, Associate, 1974 to 1979,and the corporate law firm of Berkman Ruslander Pohl Lieber & Engel (a corporate law firm).from 1974 to 1982, where he was a Partner of the firm from 1980 to 1982.
Mr. Levine has a Bachelor of Arts degree from Colgate University and a Juris Doctor degree from the University of Chicago Law School. Mr. Levine brings experience in general management, business and legal matters.Mr. Levine is Chair ofmatters to the Audit and Ethics Committee, and is a member of the Nominating and Governance Committee. The Board has determined that he is an “audit committee financial expert” as defined by SEC rules.
Board. |
Robert J. Maricich
Age 67
Director since 2010
| | Chief Executive Officer, May 2011 to present, International Market Centers, L. P. (owner and operator of markets and showrooms for the furniture, home décor and gift industries in High Point, NC and Las Vegas, NV); President and Chief Executive Officer, 2008 to 2011, of the predecessor company, World Market Center Ventures LLC; President and Chief Executive Officer, 2000 to 2007 and Senior Vice President, 1996 to 1999, Century Furniture Industries, Inc. (a furniture manufacturer); President, 1990 to 1996 of two operating companies of LADD Furniture Co., Inc. (a furniture manufacturer).
Mr. Maricich brings experience in engineering, manufacturing, product development, sales and marketing and general management.
Mr. Maricich is a member of the Compensation Committee and the Audit and Ethics Committee. The Board has determined that he is an “audit committee financial expert” as defined by SEC rules.
|
DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE
2018 ANNUAL MEETING, CLASS II
Mary C. Bottie
Age 59
Director since 2003
| | Retired Vice President, Motorola, Inc. Marketing and General Management (a public integrated communications and embedded electronic solutions company).
Ms. Bottie brings expertise in general management, operations, marketing, sales and human resources.
Ms. Bottie is Chair of the Compensation Committee, is a member of the Nominating and Governance Committee and has served on the Audit and Ethics Committee.
|
| | |
Eric S. Rangen
Age 60
Director since 2002
| | Retired Executive Vice President - Strategic Initiatives, 2015 to 2017, Optum (part of UnitedHealth Group), Senior Vice President and Chief Accounting Officer, 2006 to 2015, UnitedHealth Group (a public diversified health and well-being company); Executive Vice President and Chief Financial Officer, 2001 to 2006, Alliant Techsystems Inc. (a public advanced weapons and space systems company); Partner 1994 to 2001, Deloitte & Touche LLP (an international accounting firm); Director and Audit Committee Chair, 2015 to 2017, International Market Centers, L.P. (owner and operator of markets and showrooms for the furniture, home décor and gift industries in High Point, NC and Las Vegas, NV).
Mr. Rangen brings experience in finance, general management, and human resources.
Mr. Rangen is Chair of the Board. Mr. Rangen has served on the Audit and Ethics, and Compensation Committee. The Board has determined that he is an “audit committee financial expert” as defined by SEC rules.
|
| | |
DIRECTORS CONTINUING TO SERVE WHOSE TERMS EXPIRE AT THE
2019 ANNUAL MEETING, CLASS III
Jeffrey T. Bertsch
Age 62
Director since 1997
| | Retired Senior Vice President Corporate Services, 2004 to 2015, Flexsteel Industries, Inc., Vice President Corporate Services, 1989 to 2004, Flexsteel Industries, Inc.; Director, American Trust and Savings Bank (an Iowa bank).
Mr. Bertsch brings knowledge of Flexsteel culture and provides insight and perspective on operations, finance, supply-chain management and information technology.
|
Michael J. Edwards
Age 57
Director since 2016
| | Former Chief Executive Officer, 2015 to 2017, eBags.com (a leading online bag retailer owned by Samsonite); Global Chief Merchandising Officer, 2012 to 2015, Staples (an office supplies retailer); President and Chief Executive Officer, 2010 to 2011, Executive Vice President and Chief Merchandising Officer, 2009 to 2010, Borders Group, Inc. Borders Group, Inc. filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code on February 16, 2011. Multiple executive positions with various retailers.
Mr. Edwards brings experience in retailing, merchandising, general management, and digital leadership.
Mr. Edwards is a member of the Audit and Ethics, and Compensation Committees. The Board has determined that he is an “audit committee financial expert” as defined by SEC rules.
|
| | |
Nancy E. Uridil
Age 65
Director since 2010
| | Retired Senior Vice President, 2005 to 2014, Moen Incorporated (fashion plumbing and durable goods); Senior Vice President, 2000 to 2005, Estee Lauder Companies (cosmetics and hair care); Senior Vice President, 1996 to 2000, Mary Kay, Inc. (cosmetics and direct selling); Multiple positions,1974 to 1996, Procter & Gamble Co. (consumer goods manufacturer). Director, Federal Home Loan Bank of Cincinnati.
Ms. Uridil brings experience in strategic planning, building global brands, general management, operational expertise in all aspects of global supply chains, and human resources.
Ms. Uridil is the Chair of the Nominating and Governance Committee and serves on the Compensation Committee.
|
All nominees named above have consented to serve as Directorsdirectors if elected. In the event that any of the nominees should fail to stand for election, the persons named as proxynominees in the enclosed form of proxy intend to vote for substitute nominees as may be selected by the Board. The proxies cannot be voted for a greater number of persons than the number of nominees named in this proxy statement.
The Board recommends a vote FOR its Directordirector nominees named in this Proxy Statement. Proxies solicited byStatement.
PROPOSAL II
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Section 14A of the Securities Exchange Act requires public companies to conduct a separate shareholder advisory vote on executive compensation. While this advisory vote, commonly referred to as a “say-on-pay” vote, is non-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation programs. At the 2019 shareholders’ meeting, a plurality of our shareholders voted to perform a say-on-pay vote every year. After consideration of the voting results, the Board determined that the Company will conduct future shareholder advisory votes regarding compensation awarded to its named executive officers on an annual basis until the next advisory shareholder vote on the frequency of these advisory votes is held, which is currently required to be so voted unlessheld at least once every six years.
In accordance with Section 14A of the Securities Exchange Act, we are asking shareholders specify otherwiseto approve the following advisory resolution at the 2021 annual meeting:
RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the Company’s named executive officers as disclosed in
their proxies.the Executive Compensation section, including the summary compensation table and related narrative disclosure in the Proxy Statement for the Company’s 2021 annual meeting.
The Board of Directors recommends that you vote FOR adoption of the resolution approving the compensation of our named executive officers.
APPROVAL OF AMENDMENT TO THE AMENDED AND RESTATED
BYLAWS
The Company is proposing an amendment to its Amended and Restated Bylaws to provide that a person must be less than age
7275 to be elected or appointed as a director. The Amended and Restated Bylaws currently provide that a
person’s positionperson must be less than age 72 to be elected or appointed as a
director terminates automatically at age 70.director.
The Board
of Directors believes it is in the best interest of the Company to change director age eligibility to
be more consistent with current trends based on data available from the National Association of Corporate Directors and from SpencerStuart. In addition, the current age limitation could have the undesirable result of a director being terminated mid-term. The change in director age eligibility will also provide additional continuity of leadership to the Board
of Directors while minimally impacting the goal of periodic Board refreshment. The Nominating and Governance Committee considers the annual board member evaluations when making re-nomination decisions.
Assuming Mr. Levine and Mr. Maricich are re-elected to the Board under Proposal I, if this Proposal II is approved, they would be able to complete their entire term and be eligible for re-election for a final term thereafter.
Any
Any future change to director age eligibility will continue to be subject to the approval of two-thirds of the entire Board
of Directors and, as required by Minnesota law, the approval of shareholders.
Our Board recommends that the first sentence of Article V, Section 3 of the Amended and Restated Bylaws be amended to read as follows:
“No person may be elected or appointed to serve as a Director of the company unless that person is less than
seventy-twoseventy-five years of age.
This provision may be altered, amended, modified or repealed only by the affirmative vote of two-thirds of the entire Board of Directors.”
The Board recommends a vote FOR the proposal to approve the amendments to the Amended and Restated Bylaws. Unless otherwise specified, the proxies solicited by the Board will be voted FOR the proposal.
DIRECTOR COMPENSATION
Annual Compensation
Our non-executive directors received annual compensation as shown in the table below. There are no additional meeting fees. The
Chairman of the Board
Chair and members of our committees receive additional compensation due to the workload and broad responsibilities of these positions. All compensation is paid quarterly.
The following table sets forth the cash and non-cash compensation for fiscal
20172021 awarded to or earned by each of our directors who is not also a named executive officer.
| Name (1) | | Fees Earned or
Paid in Cash
($)(2) | | Equity
Awards
($)(3) | | Total
($) |
| Lynn J. Davis – Board Chair (4) | | | 37,500 | | | | 25,019 | | | | 62,519 | |
| Eric S. Rangen – Board Chair (4) | | | 65,000 | | | | 50,029 | | | | 115,029 | |
| Jeffrey T. Bertsch | | | 40,000 | | | | 49,921 | | | | 89,921 | |
| Mary C. Bottie | | | 51,500 | | | | 50,029 | | | | 101,529 | |
| Michael J. Edwards (4) | | | 35,750 | | | | 37,486 | | | | 73,236 | |
| Thomas M. Levine | | | 55,250 | | | | 50,029 | | | | 105,279 | |
| Robert J. Maricich | | | 51,500 | | | | 50,029 | | | | 101,529 | |
| Nancy E. Uridil | | | 51,500 | | | | 50,029 | | | | 101,529 | |
Thomas M. Levine – Board Chair | | | 116,813 | | | 59,969 | | | 176,782 |
Mary C. Bottie | | | 55,125 | | | 59,969 | | | 115,094 |
William S. Creekmuir | | | 59,125 | | | 59,969 | | | 119,094 |
Kathryn P. Dickson | | | 15,000 | | | 17,464 | | | 32,464 |
Matthew A. Kaness | | | 54,563 | | | 59,969 | | | 114,532 |
Eric S. Rangen | | | 53,063 | | | 59,969 | | | 113,032 |
(1)
| As of June 30, 2017,2021, each Directordirector who is not an employee had the following stock options outstanding; Mr. Davis, 18,000 options; Mr. Levine, 5,500 options; Mr. Maricich, 5,500 options;5,500; and Mr. Rangen, 18,000 options; and Ms. Uridil, 13,000 options.10,500. |
| |
(2)
| Each non-executive Directordirector is paid a retainer at the rate of $40,000$55,000 per year. In addition, the ChairChairman of the Board is paid an additional retainer of $35,000$90,000 per year. The Audit &and Ethics Committee Chair is paid a retainer of $15,000.$15,000 per year. The Compensation Committee Chair and the Nominating and Governance Chair are eachis paid a retainer of $7,500.$10,000 per year. The Nominating and Governance Committee Chair is paid a retainer of $8,000 per year. Audit and Ethics Committee members are paid areceive an additional retainer of $7,500.$7,500 per year. Compensation Committee andmembers receive an additional retainer of $5,000 per year. Nominating and Governance Committee members are paid areceive an additional retainer of $4,000.$4,000 per year. Due to COVID-19 expense management, director cash compensation fees were reduced by 50% from June 1, 2020 through October 1, 2020. |
| |
(3)
| Each Directordirector receives a quarterly stock grant with a value of $12,500,$17,500, rounded to the nearest share, with no additional vesting requirements. Directors are expected to accumulate Flexsteel shares of common stock valued at three times the annual Director cash compensation. |
| |
(4) | Mr. Davis served a partial year as Board Chair from July 1, 2016 through December 2016. Mr. Rangen served a partial year as Board Chair from December 2016 through June 30, 2017. Mr. Edwards served a partial year as a Board member. |
| | | |
CORPORATE GOVERNANCE
Board of Directors
Director Independence
Our Board of Directors is currently comprised of eight members. seven members including one executive director. The Board has determined that the following directors, which constitute a majority of the Board of Directors, are independent directors as defined by The Nasdaq Stock Market listing standards: Mary C. Bottie, William S. Creekmuir, Kathryn P. Dickson, Matthew A. Kaness, Thomas M. Levine, and Eric S. Rangen. The independent directors meet periodically in executive session as part of a Board meeting.
Board Meeting Attendance
During the fiscal year ended June 30,
2017, four2021, ten meetings of the Board were held. All of the directors of the Company attended 100% of the meetings of the Board and
75% or more100% of the committee meetings on which they served. The Company does not have a formal policy regarding attendance by Board members at the Company’s annual meeting, but the Board encourages all its members to attend the annual meeting of shareholders. All
the serving members of the Board of Directors attended the prior year’s annual meeting.
Committees of the Board
Subject to our Bylaws, applicable law and regulatory requirements, the Board may establish additional or different committees from time to time. Our Board has established three standing committees: Audit and Ethics Committee, Compensation Committee, and Nominating and Governance Committee. The charters of all three committees are available at https://ir.flexsteel.com/corporate-governance/governance-overview. The principal duties of the three committees are set forth below.
Audit and Ethics Committee – Appoints and confers with the independent registered public accounting firm on various matters, including the scope and results of the audit; authorizes special reviews or audits; reviews and approves quarterly and annual SEC filings; reviews internal auditing procedures and the adequacy of internal controls; and reviews policies and practices relating to compliance with laws, conflicts of interest and ethical standards of the Company. The committee held four meetings during the fiscal year ended June 30, 2021. The Committee members are William S. Creekmuir - Chair, Matthew A. Kaness, and Eric S. Rangen. The Board has determined that William S. Creekmuir, Matthew A. Kaness and Eric S. Rangen qualify as “audit committee financial experts” within the following directors, which constitute a majoritymeaning of the Securities Exchange Act of 1934, as amended, referred to as the “1934 Act.”
Compensation Committee – Reviews performance, compensation and benefits of all executive officers; approves all equity compensation; develops and maintains succession planning policies and criteria for executive officers; and makes recommendations regarding Board compensation. The committee from time to time delegates authority to the chief executive officer to grant a limited number of Directors,awards under the Omnibus Stock Plan to persons that are not executive officers. For fiscal 2021, the committee obtained advice from the independent directorsconsulting firm Meridian Compensation Partners, LLC, referred to as defined“Meridian” which was hired by the committee. The NASDAQcommittee sought Meridian’s advice on adjustments to executive compensation and award grants due to the implications of COVID-19, director compensation benchmarks and components and increasing the number of shares authorized and amending award terms, under the Omnibus Stock Market listing standards:Plan. The committee held nine meetings during the fiscal year ended June 30, 2021. The committee members are Mary C. Bottie Michael J. Edwards, Thomas M. Levine, Robert J. Maricich,– Chair, Kathryn P. Dickson and Eric S. RangenRangen.
Nominating and
Nancy E. Uridil.Governance Committee – Recommends directors and reviews qualifications of director candidates; evaluates Board and individual director performance; develops and recommends a succession plan for the Board; reviews and recommends the practices, policies and procedures of the Board; conducts new Board member orientation and ongoing education for Board members; and reviews corporate responsibility, diversity and sustainability. The independent directors meet periodically in executive session as part of a Board meeting.committee held twelve meetings during the fiscal year ended June 30, 2021. The Committee members are Matthew A. Kaness – Chair, Mary C. Bottie and William S. Creekmuir.
Board Leadership Structure
The Board elected an independent director, Mr. Rangen,Levine, to serve as Chair of the Board. Our Bylaws provide that the Chair of the Board may be an independent director or the Chief Executive Officer of the Company. In making leadership determinations, the Board considers many factors including the specific needs of the business and what is in the best interest of our shareholders. The Board believes that presently it is in the best interest of the Company
that the positions of Chair of the Board and Chief Executive Officer are separate. The Board believes that this separation is presently appropriate as it allows the Chief Executive Officer to focus primarily on strategy, leadership and execution of operations, while the Chair of the Board can focus on leading the Board.
Ability of Shareholders to Communicate with the Board of Directors
The Board has provided the means by which shareholders may send communications to the Board or to individual members of the Board. Such communications, whether by letter, email or telephone, should be directed to the Secretary of the Company
who will forward them to the intended recipients.at P.O. Box 877, Dubuque, Iowa 52004-0877, or telephone number of (563) 556-7730 or email investors@flexsteel.com. Unsolicited advertisements or invitations to conferences or promotional material,
inat the discretion of the Secretary, may not be forwarded to the directors.
The Board of Directors is responsible for consideration and oversight of risks facing Flexsteel. Together with the Board’s standing committees, the Board is responsible for ensuring that material risks are identified and managed appropriately. The Board and its committees regularly review strategic, operational, financial, compensation and compliance risks with senior management. The Audit and Ethics Committee establishes, reviews and periodically updates the Guidelines for Business Conduct to ensure compliance with all applicable rules and regulations, and that management has established a system of enforcement. The Audit and Ethics Committee regularly evaluates financial and accounting risk exposures,
and the controls management has
implemented.implemented, and reviews our insurance programs. The Compensation Committee considers risks in the design of compensation programs for our
executives.executive officers. The Nominating and Governance Committee is responsible for identification, monitoring, and disclosure of enterprise
risks and reviewing insurance programs.Committees of the Board
Subject to our Bylaws, applicable law and regulatory requirements, the Board may establish additional or different committees from time to time. Our Board of Directors has established three standing committees: Audit and Ethics Committee, Compensation Committee, and Nominating and Governance Committee. The charters of all three committees are available atwww.flexsteel.com in the Investors section. The principal duties of the three committees are set forth below.
Audit and Ethics Committee –Appoints and confers with the independent registered public accounting firm on various matters, including the scope and results of the audit; authorizes special reviews or audits; reviews and approves quarterly and annual SEC filings; reviews internal auditing procedures and the adequacy of internal controls; and reviews policies and practices relating to compliance with laws, conflicts of interest and ethical standards of the Company. The Committee held four meetings during the fiscal year ended June 30, 2017. The Committee members are Thomas M. Levine - Chair, Michael J. Edwards and Robert J. Maricich. The Board has determined that all three members of the Audit and Ethics Committee qualify as “audit committee financial experts” within the meaning of the Securities Exchange Act of 1934, as amended, referred to as the “1934 Act”.
risks.
Compensation Committee –Reviews performance, compensation and benefits of all executive officers; approves all equity compensation; develops and maintains succession planning policies and criteria for executive officers; and makes recommendations regarding Board compensation. The Committee held two meetings during the fiscal year ended June 30, 2017. The Committee members are Mary C. Bottie - Chair, Michael J. Edwards, Robert J. Maricich and Nancy E. Uridil.
Nominating and Governance Committee– Recommends directors and reviews qualifications of director candidates; evaluates Board and individual Director performance; develops and recommends a succession plan for the Board; reviews and recommends the practices, policies and procedures of the Board; conducts new Board member orientation and ongoing education for Board members; and reviews corporate responsibility, diversity and sustainability. The Committee held four meetings during the fiscal year ended June 30, 2017. The Committee members are Nancy E. Uridil - Chair, Mary C. Bottie and Thomas M. Levine.
Code of Ethics
The Company has a written code of ethics titled
Guidelines for Business Conduct. The code of ethics applies to the Company’s directors and
employees including the Chief Executive Officer, Chief Financial Officer and Principal Accounting Officer.employees. The code of ethics includes guidelines relating to the ethical handling of actual or potential conflicts of interest, compliance with laws, accurate financial reporting, and procedures for promoting compliance with, and reporting violations of, the code of ethics. The
Guidelines for Business Conduct is available on the Company’s website at
http: https://www.flexsteel.com/content/investorsin the Corporate Governance section.ir.flexsteel.com/corporate-governance/governance-overview. The Company intends to post any amendments to
or waivers of its code of ethics
(to the extent applicable to the Company’s Chief Executive Officer, Chief Financial Officer or Principal Accounting Officer) at this location on its website.
Related Party Transaction Policy
The Audit and Ethics Committee of the Board of Directors has adopted a written policy regarding transactions with related parties. In accordance with the policy, the Audit and Ethics Committee is responsible for the review and approval of all transactions with related persons that are required to be disclosed under the rules of the Securities and Exchange Commission. Under the policy, a “related person” includes any of the Flexsteel directors or executive officers, certain shareholders and any of their respective immediate family members. The policy applies to transactions in which Flexsteel is a participant, the amount involved exceeds $120,000 and a related person has a direct or indirect material interest. Under the policy, all material information related to any covered transaction is to be disclosed to the Audit and Ethics Committee. The Audit and Ethics Committee may use any process and review any information that it determines is reasonable under the circumstances in order to determine whether the covered transaction is fair and reasonable, on terms no less favorable to Flexsteel than could be obtained in a comparable arms-length transaction with an unrelated third party and in the best interests of Flexsteel.
Compensation Committee Interlocks There were no reportable transactions during the fiscal year ended June 30, 2021.
Environmental, Social and InsiderGovernance (“ESG”) Practices
As a leading furniture manufacturer in the U.S., the Company is committed to conducting business in a manner that incorporates effective environmental, social, and governance (ESG) practices to improve our long-term sustainability and results. Our governance efforts are described throughout this Proxy Statement and our environmental and social practices are summarized below.
The Company recently engaged Nasdaq’s ESG Advisory Practice to help develop an effective ESG program that is reflective of stakeholder expectations, and the Board of Directors is reviewing committee charters to expressly integrate responsibility over sustainability programs and initiatives into the appropriate committees.
Environmental and Sustainability Matters
All Company stakeholders hold responsibility to protect and improve our environment. Together, we are committed to leading initiatives across the company focused on reducing the impact our operations and products have on the environment and natural resources.
Our current practices include initiatives to reduce solid waste generation, volatile organic compound emissions, and hazardous waste materials. We actively review product content for sustainable materials and supply chain processes. Participation
in sustainable forestry practices is encouraged by suppliers of wood products where appropriate. Additionally, responsible recycling practices and energy efficiency programs are championed throughout the organization to reduce our consumption of valuable resources. In the past year, the Company has joined the Sustainable Furnishings Council to identify and promote additional best practices to advance our sustainability. The current members of the Company’s Compensation Committee are Mary C. Bottie - Chair, Michael J. Edwards and Nancy E. Uridil, none of whichCompany also is or has been, an officer of the Company. Robert J. Maricich is also a member of the Compensation CommitteeAmerican Home Furnishings Alliance, the premier authority and served asadvocate on all health, safety, and environmental information related to home furnishings.
We have resources employed to ensure compliance with all applicable local, state and federal environmental and safety laws and regulations, and we require all of our suppliers to comply with applicable environmental and safety laws and regulations. We monitor our performance under these programs through both internal and supplier audits.
In fiscal 2022 and beyond, we plan to further enhance our environmental and sustainability efforts by:
Establishing an officerinternal working team to advance our improvement efforts related to sustainability and our environmental impact;
Establishing quantifiable goals to support our environmental improvement efforts and developing internal scorecards to measure progress against our goals;
Developing a long-term vision for environmental sustainability; and
Increasing the amount of environmental and sustainability information we share with the public and investment community.
Social Matters
The Company and its subsidiaries are committed leaders in social responsibility, actively promoting an environment where each employee is valued and treated with respect, creating a safe, equitable and inclusive environment for all employees, and addressing community needs. These values are embedded in the day-to-day operation of our business and outlined in our Guidelines for Business Conduct and supporting policies.
Our Employees -- We are committed to providing an inclusive environment focused on the safety, personal welfare, and professional development of all employees. Corporate and local policies ensure that employees enjoy a safe and clean workplace free of harassment, discrimination, and violence. Employee engagement and contributions are recognized with competitive compensation and benefits and ongoing growth opportunities within the organization. The Company provides for equal employment opportunity.
Our Communities -- We believe in making the communities around us stronger. By partnering with community outreach and development organizations, we share our business and operational knowledge to improve growth opportunities for others outside of the Company from May 1, 1989Company. It is through the contributions of employee time and charitable giving that we work to July 12, 1989. No executive officerstrengthen the communities around us.
Our Suppliers -- We actively partner with suppliers that align with our business and social values. We expect suppliers to meet all legal requirements, offer a safe working environment free of the Company served as a director of another entity that had an executive officer servingharassment and violence to employees, engage in ethical employment practices, actively work to minimize negative impacts on the Company’s compensation committee. No executive officerenvironment, and support the communities in which they operate. These expectations are documented in our Supplier Code of the Company served as a member of the compensation committee of another entity which had an executive officerConduct.
In fiscal 2022 and beyond, we intend to continue to strengthen our social responsibility and implement related initiatives, such as:
Establishing quantifiable goals to support improvement efforts related to our social impact and developing internal scorecards to measure progress against our goals;
Continue leveraging our recruiting practices and internal evaluation systems, to identify, recruit and develop employees who served as aare gender, racially and ethnically diverse for internal advancement opportunities; and
Continue utilizing structured evaluation methods to identify qualified candidates who are gender, racially and ethnically diverse for Board director
of the Company.roles.
Stock Option,
Restricted Stock Unit, and Restricted Share Granting Policy
The Compensation Committee has formalized its stock option,
unit and share granting practices by adopting a policy for the grant of stock
options.options, restricted units and restricted shares. The policy reflects the Compensation Committee’s long-standing approach to
stock option grants described in the
Executive Compensation
Discussion & Analysis section under
the Omnibus Stock Plan. In addition, the policy provides, among other things, that all grants
of stock options must be approved by the Compensation Committee or its designee;
stock optionsthe grants may not be
grantedawarded to a current director, officer or employee during any quarterly or other blackout period as defined in our insider trading policy;
and the exercise price for
theany stock
optionoptions granted will be equal to the last sale price per share of our common stock as reported on The
NASDAQNasdaq Stock Market on the grant
date;date. The policy also specifies procedures for granting stock options,
restricted units or restricted shares to newly hired
executives;executive officers; and that any program, plan or practice to time or
to select the grant dates of stock options,
restricted units or restricted shares in coordination with the release by us of material non-public information is prohibited.
Stock Ownership Guidelines
The Board adopted Stock Ownership Guidelines for its Section 16 executive officers,
non-employeenonemployee directors of the Board, officers of the Company, and all other employees that receive
stock basedstock-based compensation. These individuals are expected to accumulate Flexsteel shares of common stock valued in the following amounts:
| ● | | • | | | Directors: | | | Three times annual director cash compensation |
| ● | | • | | | Chief Executive Officer: | | | Four times base salary |
| | | • | | | Executive Officers: | | | Two times base salary |
| ● | | • | | | Officers: | | | Base salary |
| ● | | • | | | Key Associates: | | | One-half of base salary |
Ownership includes direct ownership, joint ownership by participant or their spouse, and indirect ownership through a trust, partnership, limited liability company or other entity for the benefit of the participant or spouse. In addition, ownership includes restricted stock awards and intrinsic value of unexercised stock options acquired under Flexsteel’s equity plans.
Policy on Securities Trading - Hedging and Pledging
As part of its
Policy Statement on Securities Trading and Communications with Outsiders (Regulation FD), Flexsteel prohibits
Directorsdirectors and officers from using any strategies or products (including “put” or “call” options or “selling short” techniques) to hedge against potential changes in the value of Flexsteel common stock. In addition,
Directorsdirectors and officers may not pledge Flexsteel common stock as collateral.
The Nominating and Governance Committee of the Board of Directors is responsible for making recommendations to the Board concerning nominees for election as directors and nominees for Board vacancies. When assessing a director candidate’s qualifications, the Nominating and Governance Committee considers current and future strategic needs of the
companyCompany and the candidate’s expertise in finance, general management, human resources, legal,
traditional and digital marketing,
e-commerce, sales, operations, manufacturing, supply-chain, company culture, and their independence, high ethical standards, and uncompromising integrity. In addition, the Nominating and Governance Committee looks at the overall composition of the Board and how a candidate would contribute to the overall synergy and collaborative process of the Board. The Nominating and Governance Committee has not established specific minimum eligibility requirements for candidates other than high ethical standards, uncompromising integrity, commitment to act in the best interests of the shareholders, requirements relating to age, and ensuring that a majority of the
boardBoard remains independent.
In addition to the considerations described above, our Nominating and Governance Committee considers diversity in its evaluation of candidates for Board membership. Although the Company has no formal diversity policy, the Board believes that diversity with respect to factors such as background, experience, skills, race, gender and national origin is an important consideration in
boardBoard composition. The Nominating and Governance Committee discusses diversity considerations in connection with each candidate as well as on a periodic basis in connection with the composition of the Board as a whole.
If the Nominating and Governance Committee approves a candidate for further review following an initial screening, the Nominating and Governance Committee will establish an interview process for the candidate. Generally, the candidate will meet with the members of the Nominating and Governance Committee,
along withall of the other members of the Board, the Chief Executive
Officer.Officer, the Chief Financial Officer/Chief Operating Officer, and the Vice President of Human Resources. Contemporaneously with the interview process, the Nominating and Governance Committee will conduct a comprehensive conflicts-of-interest assessment of the candidate. The Nominating and Governance Committee will also take into consideration the candidate’s personal attributes, including integrity, loyalty to and concern for the success and welfare of the Company and its shareholders, willingness to apply sound and independent business judgment, awareness of a director’s role in good corporate citizenship and image, time available for meetings and Company matters, and willingness to assume fiduciary
responsibility.responsibilities. The Nominating and Governance Committee will conduct a background check and consider all available information in determining whether to recommend the candidate to the full Board.
Recommendations for candidates to be considered for election to the Board at our annual shareholder meetings may be submitted to the Nominating and Governance Committee by our shareholders. Candidates recommended by our shareholders will be considered under the same standards as candidates that are identified by the Nominating and Governance Committee. Any nominations for director to be made at an annual meeting of shareholders must be made in accordance with the requirements described in the section of this Proxy Statement entitled Proposals“Proposals by Shareholders.” To enable the committee to evaluate the candidate’s qualifications, shareholder recommendations must include the following information:
| ● | The name, age, business address and, if known, residence address of each nominee proposed in such notice; |
| ● | The principal occupation or employment of each such nominee; and |
| ● | The number of shares of stock of the Company, which are beneficially owned by each such nominee. |
The name, age, business address and, if known, residence address of each nominee proposed in such notice;
The principal occupation or employment of each such nominee; and
The number of shares of stock of the Company which are beneficially owned by each such nominee.
Delinquent Section 16(a)
Beneficial Ownership Reporting ComplianceReports
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and certain officers and persons who own more than
ten percent10% of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC.
Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based on its review of the copies of such reports
received by it,filed with the SEC, the Company believes that, during fiscal year
2017,2021, all filing requirements applicable to
its executiveour directors, certain officers,
directors and owners of more than 10% of the Company’s common stock have been
met.met, except one Form 4 was filed late for Eric S. Rangen.
Audit and Ethics Committee Report
The Audit and Ethics Committee has reviewed and discussed the audited financial statements with management. The Audit and Ethics Committee has discussed with Deloitte & Touche LLP, the Company’s independent registered public accounting firm, the matters required to be discussed by
Auditing Standard No. 16, Communications with Audit Committees, as adopted bythe applicable requirements of the Public Company Accounting Oversight Board. The Audit and Ethics Committee has received the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Deloitte & Touche LLP’s communications with the Audit and Ethics Committee concerning independence and has discussed with Deloitte & Touche LLP the firm’s independence. Based on the review and discussions referred to above in this report, the Audit and Ethics Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the last fiscal year for filing with the SEC.
This report has been prepared by members of the Audit and Ethics Committee. Members of this Committee are:
Thomas M. Levine,William S. Creekmuir, Chair | Robert J. Maricich | | Matthew A. Kaness | | | Eric S. Rangen |
EXECUTIVE OFFICERS
The following individuals are executive officers of the Company:
Jerald K. Dittmer
Age 64
President & Chief Executive Officer | | | See biographical information set forth under Proposal I, Election of Directors. |
| | | |
Derek P. Schmidt
Age 48
Chief Financial Officer,
Chief Operating Officer and Secretary | | | Derek Schmidt joined the Company as Chief Financial Officer and Chief Operating Officer in April 2020, and was subsequently appointed Secretary and Treasurer in May 2020. Mr. Schmidt has over 25 years of broad financial leadership and general management experience driving profitable growth across multiple industries, including over eight years in the furniture industry.
Prior to Flexsteel, Mr. Schmidt was CFO of Crescent Electric Supply Co., one of the nation’s largest electrical distributors. Prior to that, Mr. Schmidt held multiple executive positions with HNI Corporation, a leading global office furniture manufacturer. From 2016 – 2018, Schmidt held the position of Vice President & General Manager, Transactional - The HON Company, an HNI operating company. In this role, Schmidt had oversight for business development, product management, marketing and sales across national accounts, wholesalers, dealers and e-tailers, and was successful in turning around a sales decline driven by changing market needs. From 2014 – 2016, Mr. Schmidt held the position of Vice President, Finance for The HON Company and had executive responsibility for strategic & financial planning, mergers and acquisitions, accounting, credit, contracts, IT and pricing. In this role, he supported a significant increase in revenue growth and an over 27% profit increase within the business. From 2013 – 2014, Mr. Schmidt held the position of Vice President, Finance – HNI Leveraged Furniture Operations and was charged to improve the performance of new operations with financial oversight for manufacturing, distribution and global sourcing operations. From 2011 – 2013, Mr. Schmidt held the position of Treasurer and Vice President, Corporate Finance and led M&A, treasury, investor relations and corporate planning.
Prior to joining HNI, Mr. Schmidt held financial leadership positions with companies such as Silgan Plastics Corporation, MasterBrand Cabinets, Inc., and General Mills Inc.
Mr. Schmidt is a graduate of the University of Wisconsin with a Bachelor of Business Administration in accounting and finance. He also earned a Master of Business Administration with an emphasis in finance and strategic management from the University of Minnesota Carlson School of Management. He is a Certified Public Accountant (CPA) - Inactive, Certified Management Accountant (CMA) and Certified Financial Manager (CFM). |
| | | |
Michael J. EdwardsMcClaflin
Age 58
Chief Information and Technology Officer | | | Mike McClaflin joined the Company in March 2019 as Chief Information & Technology Officer. Mr. McClaflin is responsible for empowering business performance across Flexsteel’s enterprise through strategic technology and information management investments for both internal systems and external go-to-market capabilities. In addition to over 25 years of experience in ERP systems, eBusiness, business intelligence and IT operations, Mr. McClaflin is a versatile executive leader with significant cross-functional expertise in process and performance improvements.
|
| | | Prior to Flexsteel, Mr. McClaflin was the Director of Acquisition Strategy and Integration for the Birmingham-based Industrial Parts division of the Genuine Parts Corporation. Prior to that, Mr. McClaflin spent 12 years in the furniture industry where he held various technology leadership positions, including serving as Vice President of eBusiness and IT, for the HON Company.
Mr. McClaflin is a graduate of Upper Iowa University, where he received a Bachelor of Arts degree in Accounting and General Management. He also earned a Master of Business Administration with an emphasis in marketing from the University of Iowa Henry B. Tippie College of Business. |
| | | |
David E. Crimmins
Age 40
Vice President,
Sales | | | Dave Crimmins joined the Company in September 2019 as Vice President, Sales. He has more than 12 years of experience in the furniture industry, including sales and marketing leadership positions across multiple brands and market segments.
Prior to Flexsteel, Mr. Crimmins was the Vice President of Sales and Marketing for the UK-based North American division of The Senator Group, representing both the Allermuir and Senator brands. His responsibilities included building sales and marketing capabilities, developing and executing go-to-market strategies, and driving improved financial performance across operations in North America. Mr. Crimmins also held multiple sales and general management related roles of increasing responsibility within HNI Corporation across multiple operating companies.
Mr. Crimmins is a graduate of The University of Northern Iowa where he studied marketing. He also earned a Master of Business Administration from the University of Baltimore. |
| | | |
Carl Anthony Hayden
Age 59
Vice President,
Operations | | | Carl “Tony” Hayden joined the Company in February 2019 as Vice President, Manufacturing and was named Vice President, Operations in August 2019. He has more than 25 years of experience in furniture manufacturing operations, including lean manufacturing implementation along with leading the procurement, sourcing and logistics functions.
Prior to Flexsteel, Mr. Hayden served as Vice President, Operations for the Wood Group at HNI Inc., a large commercial office furniture manufacturing and distribution company. His experience at HNI also included increasing levels of responsibility in the roles of General Manager, Group Vice President and Vice President, International Operations. His responsibilities included managing domestic operations for three different HNI divisions, its operations in China and India and completing due-diligence analysis for international acquisitions.
Mr. Hayden is a graduate of The University of Iowa with a Bachelor of Business Administration. |
| | | |
Stacy M. Kammes
Age 41
Vice President,
Human Resources | | | Stacy Kammes joined the Company in 2014 as Director, Human Resources and was named Vice President, Human Resources in 2017. Ms. Kammes was appointed Assistant Secretary in May 2020. With 19 years of HR experience, she is responsible for leading the Human Resources function and providing expertise on organizational development, talent acquisition and development, compensation, benefits and labor relations.
Prior to Flexsteel, Ms. Kammes served as an HR Leader-Organizational Effectiveness Talent, Global Supply Chain and OnHighway Business for Cummins Emission Solutions, a global leader in designing, manufacturing and integrating |
| | | exhaust aftertreatment solutions. In these roles, she drove talent acquisition, performance management, training and development, succession planning and labor relations across multiple global manufacturing, distribution and corporate locations. Earlier in her career, Ms. Kammes held several plant HR positions within Cummins Emission Solutions and Federal Mogul.
Ms. Kammes is a graduate of the University of Wisconsin-Platteville, where she studied Business Administration with an emphasis in General Management and Human Resource Management. She also earned a Master of Business Administration from Upper Iowa University. |
| | | |
Timothy P. Newlin
Age 51
Vice President,
Product Management | | | Tim Newlin has 15 years of experience in leadership roles at the Company. In 2019 he was named Vice President, Marketing & Product Management and in 2021 his role was modified to Vice President, Product Management. He is responsible for all aspects of the product portfolio including appearance, functionality, performance, profitability and life cycle management; for the physical innovation, design, engineering and development of product; and for the product merchandising and messaging supporting all sales channels.
Prior to 2019, he was Vice President, Home Furnishings, where he provided the strategic direction for the business with full P&L responsibility and was head of the functions of Merchandising, Sales, Retail Development, and Design. Immediately prior, Mr. Newlin was National Sales Director, having risen through the sales channel from territory sales, regional sales management to the top position in national sales over the course of eight years. He has over 25 years in the furniture business.
Mr. Newlin is a graduate of Miami University in Ohio, with a business degree in Marketing with a focus on merchandising. |
Summary Compensation DiscussionTable
During fiscal year 2021, the Company had three named executive officers. The following table sets forth the cash and
Analysisnon-cash compensation, for the fiscal years so indicated awarded to or earned by: (i) the individual serving as the Company’s principal executive officer (“PEOThis Compensation Discussion”); and Analysis explains(ii) the material elementsCompany’s two most highly compensated executive officers other than the PEO who were serving as executive officers at the end of the last completed fiscal year.
Jerald K. Dittmer
President and
Chief Executive Officer
| | | 2021 | | | 656,250 | | | — | | | 875,001 | | | 60,000 | | | 1,141,491 | | | 40,439 | | | 2,773,181 |
| | 2020 | | | 663,542 | | | — | | | 874,993 | | | — | | | — | | | 51,679 | | | 1,590,214 |
Derek P. Schmidt
Chief Financial Officer
and Chief Operating Officer
| | | 2021 | | | 393,750 | | | — | | | 272,999 | | | 35,000 | | | 456,200 | | | 189,227(2) | | | 1,347,176 |
| | 2020 | | | 82,923 | | | 151,920 | | | 537,441 | | | 122,000 | | | — | | | 17,654 | | | 911,938 |
Timothy P. Newlin
Vice President
Product Management
| | | 2021 | | | 300,000 | | | — | | | 180,006 | | | — | | | 253,215 | | | 24,986 | | | 758,207 |
| | 2020 | | | 272,112 | | | 84,000 | | | 667,989 | | | — | | | — | | | 34,016 | | | 1,058,117 |
(1)
| On April 8, 2020, the Compensation Committee approved a 25% temporary reduction to the base salaries of the Company’s CEO and CFO/COO through October 1, 2020. |
(2)
| The amount shown includes a $74,161 gross up of taxes for relocation benefits received by Mr. Schmidt. |
(3)
| The amounts shown for fiscal year 2021 include the grant date fair value of three-year performance share awards granted under the LTIP, restricted stock and restricted units awarded to certain named executive officers. No performance shares will be issued unless the minimum specific performance goals set by the Compensation Committee are met. The 2021 three-year performance period is July 1, 2020 – June 30, 2023. The 2020 three-year performance period is July 1, 2019 – June 30, 2022. Shares earned, if any, will be issued following each respective three-year performance period. The amounts include the grant date fair value of the performance share awards assuming achievement of the target performance goals. The grant date fair value is determined by taking total units granted for the performance period at target multiplied by the closing market price on date of grant. The maximum share award value that could be issued for Mr. Dittmer is $1,050,010 for 2021, for Mr. Schmidt is $327,609 for 2021, and for Mr. Newlin is $216,010 for 2021. The amounts shown in the table for fiscal 2021 include the grant date fair value of restricted stock and restricted stock units for Mr. Dittmer – $349,995; for Mr. Schmidt – $109,195; and for Mr. Newlin – $72,000. The grant date fair value is determined by taking total restricted stock and restricted stock units granted multiplied by the closing market price on date of grant. |
(4)
| The amounts shown represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the stock option award amount may be found in Note 11 to the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2021. The material terms of the options granted in fiscal 2021 are set forth in the Outstanding Equity Awards at Fiscal Year-End table below. |
(5)
| The amounts shown represent the cash earned under the Company’s Cash Incentive compensation plan for the fiscal year. |
(6)
| The table below presents an itemized account of “All Other Compensation” provided in fiscal 2021 to the named executive officers: |
J. K. Dittmer | | | 2021 | | | 1,529 | | | 4,828 | | | 10,034 | | | 9,548 | | | 14,500 | | | — | | | 40,439 |
| | 2020 | | | 1,637 | | | 4,725 | | | 8,606 | | | 22,913 | | | 13,798 | | | — | | | 51,679 |
D. P. Schmidt | | | 2021 | | | — | | | — | | | 5,439 | | | 34,219 | | | 14,500 | | | 135,069 | | | 189,227 |
| | 2020 | | | — | | | — | | | — | | | 16,341 | | | 1,313 | | | — | | | 17,654 |
T. P. Newlin | | | 2021 | | | — | | | 7,396 | | | 3,273 | | | 4,021 | | | 10,296 | | | — | | | 24,986 |
| | 2020 | | | 960 | | | 7,242 | | | 6,580 | | | 640 | | | 18,594 | | | — | | | 34,016 |
Jerald K. Dittmer Employment Agreement
Effective December 28, 2018, the Company named Jerald K. Dittmer President and Chief Executive Officer. In connection with Mr. Dittmer’s appointment, the Company entered into an employment agreement (the “Employment Agreement”) with him, dated December 17, 2018, as amended August 30, 2019, that provides for an annual salary of $700,000 and benefits commensurate with other executive officers of the Company’s named executive officers and describes the objectives and principles underlyingCompany
Mr. Dittmer is eligible to participate in the Company’s executive compensation program and decisions made for fiscal 2017. TheCash Incentive Plan at 115% of his base salary at target performance with a maximum funding of 200% of base salary.
Mr. Dittmer participates in the Company’s long-term incentive plan, which is established annually by the Compensation Committee of the Board, beginning with the July 1, 2019 through June 30, 2022 performance period, with his participation set at 125% of Directors, referredhis base salary at the target award level.
Mr. Dittmer participates in the Company’s Severance Plan for Management Employees, which provides for the post-termination benefits described under “Executive Compensation Termination or Change-In-Control” below. In addition, Mr. Dittmer entered into a Confidentiality and Non-Competition Agreement whereby he agreed not to compete with the Company during employment and for 12 months after termination.
Derek P. Schmidt Letter Agreement
In connection with Derek P. Schmidt’s appointment to the positions of Chief Operating Officer and Chief Financial Officer, the Company entered into a letter agreement with Mr. Schmidt, dated March 10, 2020, effective April 6, 2020 (the “Letter Agreement”). Pursuant to the Letter Agreement, Mr. Schmidt serves as the “Committee”,Company’s Chief Operating Officer and Chief Financial Officer and receives an annual base salary of $420,000. In addition to his base compensation, Mr. Schmidt is responsibleentitled to additional compensation as described below.
1.
| Mr. Schmidt received a sign-on bonus of $50,000. |
2.
| Mr. Schmidt is eligible to participate in the Company’s Cash Incentive Plan with his initial participation set at 75% of his base salary at target performance with a maximum funding of 200% of the target award. |
3.
| Mr. Schmidt is eligible to participate in the Company’s Long-Term Incentive Plan beginning with the July 1, 2019 through June 30, 2022 performance period, prorated for days employed, with his participation set at 65% of his base salary and paid in shares. |
4.
| Pursuant to the Company’s Omnibus Stock Plan, Mr. Schmidt was awarded a number of Restricted Stock Units (“RSUs”) equal to $334,000 based upon the average of the previous 10 trading days closing stock price to the grant date (his first date of employment). One half of the awarded RSU’s vested on July 1, 2020, and the second half vested on January 1, 2021. |
5.
| Pursuant to the Company’s Omnibus Stock Plan, Mr. Schmidt was awarded an option with a value of $122,000 with the number of option shares based on the Black Scholes calculation method. The option is subject to a three-year vesting schedule. |
Mr. Schmidt was reimbursed reasonable and customary closing and realtor costs for establishing the policies and programssale of his prior home. In addition, the Company reimbursed Mr. Schmidt a monthly amount equal to the lesser of his two mortgages for compensating the officers listedshorter of the following: until his prior home sold or for up to six months after his start date. If Mr. Schmidt terminates his employment prior to April 6, 2022, all relocation benefits/expenses (prorated for length of service within the two years) will be immediately reimbursed to the Company.
Mr. Schmidt participates in the
Summary Compensation Table below, referredCompany’s Severance Plan for Management Employees which provides for the post-termination benefits described under “Executive Compensation- Termination or Change-In-Control” below. In addition, Mr. Schmidt entered into a Confidentiality and Non Competition Agreement whereby he agreed not to
as “named executive officers”. The Committee is comprised of independent directors as defined in The NASDAQ Stock Market listing standards. The Committee also has oversight responsibility of our cash incentive compensation plan, stock plans, long-term incentive plan and other benefit plans for our named executive officers.
Compensation Philosophy and Objectives. We believe it is in our shareholders’ interests to attract, motivate and retain highly qualified individuals in critical positions by providing competitive compensation opportunities. Our guiding compensation principles endeavor to align executive compensation with our strategic objectives and financial performance. We believe that our compensation programs are aligned with our strategic objectives. Most importantly, we believe that our executive compensation programs appropriately link pay to performance and are well alignedcompete with the long-term interests of our shareholders. We further believe that our executive compensation principles have resulted in executive compensation decisions that have appropriately recognized executive performance which have benefited the Company during employment and our shareholders and are expected to drive long-term shareholder value. The following list provides the guiding principles of our compensation programs:
| ● | Attract, develop and retain highly competitive leaders; |
| ● | Link pay to performance; |
| ● | Incent executives to grow the business and increase shareholder value; |
| ● | Reward team and individual results; |
| ● | Make a significant level of total target compensation variable; |
| ● | Compete with our peer group; |
| ● | On aggregate, high performers base salary will be higher than the peer set; |
| ● | Our Compensation Plans will be easy to understand and administer without compromising the Plans; and |
| ● | Support the overall business objectives and strategy. |
Key compensation decisions made by the Committee include:
| ● | Salary and incentives in our executive officer compensation programs are targeted to the median of our peer group, for commensurate performance; |
| ● | Annual cash incentive and long-term incentives are based on performance, requiring the achievement of pre-determined individual financial and non-financial goals, which drive shareholder value; and |
| ● | A limited number of perquisites are offered. |
At the 2016 shareholders’ meeting, our shareholders approved an advisory (non-binding) proposal concerning our fiscal 2016 executive compensation program with approximately 95% of the votes cast in favor of the proposal. The Committee interprets this vote as an affirmation of the Company’s executive compensation program. The Committee stays current with relevant compensation practices to continuously improve compensation plans and align executive compensation with the interests of shareholders. Our shareholders also approved our recommendation to perform a say-on-pay vote every three years. The next advisory vote on executive compensation will occur at the 2019 Annual Shareholders’ Meeting.
Competitive Positioning and Compensation Consultant. The Committee regularly reviews executive compensation levels to ensure we will be able to attract and retain the caliber of executives needed to run our business and that pay for executives is reasonable and appropriate relative to market practice. The Committee periodically completes an in-depth analysis of the Company’s compensation philosophy and structure, including the level of various compensation components, such as salary, annual incentive, and long-term incentive opportunities among peer group companies assisted by an independent compensation consulting firm. The most recent survey was completed for the Committee in early 2017 with the assistance of the independent consulting firm of Meridian Compensation Partners, LLC, referred to as “Meridian,” which was hired by the Committee. Meridian benchmarked named executive officer pay opportunities against the external market and focused the analysis on pay program opportunities and structure, rather than amounts actually realized by named executives. Meridian evaluated the market competitiveness of Flexsteel executives in the following categories: base salary, target annual incentives, target total cash compensation (base salary plus target annual incentives), grant date value of long-term incentives, and target total compensation (target total cash plus long-term incentives). Flexsteel’s executive compensation was compared with size-adjusted market data from a customized group of companies. Meridian identified and the Committee approved 13 peer companies for use in executive compensation reviews as follows:
● American Woodmark Corporation
● Bassett Furniture Industries, Inc.
● Culp, Inc.
| ● Kimball International, Inc.
● Knoll, Inc.
● La-Z-Boy Incorporated
|
12 months after termination.
● Dixie Group, Inc.
● Ethan Allen Interiors Inc.
● Hooker Furniture Corporation
● Johnson Outdoors Inc.
| ● Lifetime Brands, Inc.
● Patrick Industries, Inc.
● Select Comfort Corporation
|
Role of Executives in Establishing Compensation. Our Chief Executive Officer plays an integral role in recommending compensation for named executive officers (including base salary and performance-based annual and long-term cash and equity compensation). Our Chief Executive Officer participates in Committee meetings to provide background information on our business, financial and operational objectives, and annually reviews the performance of each executive officer based on their contributions to achieving our business, financial and operational objectives and recommends compensation for our executive officers. Committee members also develop their own opinions on the annual performance of our executive officers based on their interactions with them. As required by the listing standards of The NASDAQ Stock Market LLC, our Chief Executive Officer does not participate in deliberations concerning, or vote on, the compensation arrangements for herself. The Committee approves the compensation for all executive officers.
Components of Executive Compensation.
The principal components of our executive
officer compensation program include base salary, annual cash incentive compensation and long-term incentives using our common stock and benefit programs.
Base
Salary.Salary. An individual executive’sexecutive officer’s base salary is based upon the executive’sexecutive officer’s level of responsibility, cumulative knowledge and experience, past individual performance, contributions to past corporate performance, and competitive rates of pay. The Compensation Committee reviews each executive officer’s salary annually and makes adjustments, as appropriate, based on the Chief Executive Officer’s recommendation, including any change in the executive’sexecutive officer’s responsibilities, the executive’sexecutive officer’s past performance and changes in competitive salary levels provided by the compensation consultants retained by the Compensation Committee.The base salary of Karel K. Czanderna, our Chief Executive Officer, increased from $600,000 to $630,000 in fiscal year 2017 based on company and individual performance. The base salaries of Timothy E. Hall, our Senior Vice President-Finance, Chief Financial Officer, Treasurer and Secretary, and Julia K. Bizzis, Senior Vice President-- Strategic Growth, remained the same in fiscal year 2017 as compared to fiscal year 2016. The Committee’s action not to increase the base salaries of Mr. Hall and Ms. Bizzis is consistent with the Committee’s philosophy to shift more of these named executive officers’ total compensation to incentive based compensation. The Committee believes the base salaries of the named executive officers for fiscal 2017 were at acceptable market rates.
Cash Incentive Compensation.Compensation. The purpose of our Cash Incentive Compensation Plan referred to as the “CIP,(the “CIP”) is to align incentive compensation with performance measures that drive the Company’s market value. The CIP is also designed to promote the accomplishment of corporate objectives as reflected in the Company’s annual operating plan and objectives established by management, and to recognize achievement through the payment of incentive compensation. For fiscal 2021, the awards were based on two six-month performance periods. After the completion of each performance period, the year, theCompensation Committee ratifies cash incentives based principally on the extent to which objectives have been achieved. If threshold performance levels are not met, no award is made. The incentive award levels for each six-month performance period are expressed as a percentage of the executive officer’s annual base salary for the
six-month period ranging from
50%35% to 115% based on the individual’s responsibility level and total compensation. The payouts of the individual objectives of the CIP range from threshold of 40% to a maximum of 200% of the target award. When the threshold performance is achieved, the payout percentage increases proportionately to the improvement in performance as measured against the objective. The
weighting of the objectives for
the first half of fiscal year
2017 were the same2021 for all the named executive officers
:was: 50%
diluted earnings per share, 20%for adjusted EBIT, 15% for retail net sales, 15% for e-commerce net sales and
20% for individual strategic objectives. The weighting of the objectives for the second half of fiscal year 2021 for all the named executive officers was 50% for adjusted EBIT, 30%
free cash flow,for net sales, and
as evaluated by20% for individual strategic objectives. The individual strategic objectives were established to be challenging but achievable. During fiscal year 2021 the
Committee.named executive officers achieved their individual strategic objective at the target level or above. The amount of the awards for achieving the performance objectives for fiscal 2021 is set forth in the Non-Equity Incentive Compensation column of the Summary Compensation Table.
The indicated performance objectives under the cash incentive compensation plan for fiscal
20172021 were as follows:
| ● | Target: diluted earnings per share: $3.00, net sales: $518.0 million, free cash flow: $11.7 million. |
| ● | Threshold: diluted earnings per share: $2.73, net sales: $493.0 million, free cash flow: $9.6 million. |
| ● | Maximum: diluted earnings per share: $3.45, net sales: $559.7 million, free cash flow: $15.2 million. |
First Half of Fiscal 2021
Target: adjusted EBIT: -$4.5 million, retail net sales: $103.1 million, e-commerce net sales: $38.3 million.
Threshold: adjusted EBIT: -$11.5 million, retail net sales: $77.3 million, e-commerce net sales: $28.7 million.
Outstanding: adjusted EBIT: $0.5 million, retail net sales: $122.4 million, e-commerce net sales: $45.5 million.
Maximum: adjusted EBIT: $2.5 million, retail net sales: $141.8 million, e-commerce net sales: $52.7 million.
For
the first half of fiscal year
2017,2021, the Company achieved
itsthe indicated performance objectives as a percentage of target as follows:
| ● | Diluted earnings per share: 62.2%, net sales: 0%, free cash flow: 99.0% for Ms. Czanderna, Mr. Hall and Ms. Bizzis. |
Cash incentive compensation made to named executive officers 200% for adjusted EBIT, 200% for retail net sales and 74% for e-commerce net sales.
Second Half of Fiscal 2021
Target: adjusted EBIT: $15.7 million, net sales: $230 million.
Threshold: adjusted EBIT: $12.6 million net sales: $207 million.
Outstanding: adjusted EBIT: $18.1 million, net sales: $246.1 million.
Maximum: adjusted EBIT: $18.8 million, net sales: $264.5 million.
For the second half of fiscal
2017 for achievement of corporateyear 2021, the Company achieved the indicated performance objectives
are reflected in the column titled “Non-Equity Incentive Plan Compensation”as a percentage of
the Summary Compensation Table.target as follows: 79% for adjusted EBIT and 178% for retail net sales.
Long-Term
Incentives.Incentives. The purpose of the Long TermLong-Term Incentive Compensation Plan referred to as the “LTIP,(the “LTIP”) and the Omnibus Stock Plan referred to as the “Stock Plan,” is to promote the interests of the Company and its shareholders by providing key personnel of the Company with an opportunity to acquire a proprietary interest in the Company and reward them for achieving a high level of corporate performance, and thereby develop a stronger incentive to put forth maximum effort for the continued success and growth of the Company. In addition, the opportunity to acquire a proprietary interestproprietary-interest in the Company will aid in attracting and retaining key personnel of outstanding ability. The level of award opportunities, as combined under both plans, are intended to be consistent with comparable companies and reflect an individual’s level of responsibility and performance.
Long-Term Incentive Compensation
Plan.Plan. Under the LTIP, it is generally intended that the established performance goal or goalsobjectives will be measured over a three-year period. The LTIP lists 31 potential corporate performance objectives. TheCompensation Committee will also establish the weighting of each corporate performance objective for purposes of the performance calculations in advance of each performance period. The Compensation Committee selected fully-dilutedfully diluted earnings per share as the performance objective for the three-year performance period beginning on July 1, 20142018 and endingended on June 30, 2017.2021, for Mr. Newlin, the only named executive officer participant during that performance period. The performance objective was selected and applied, at that time, as the best reflectionmeasurement of our corporate performance as most relevant to our shareholders, at this time.the Company’s and the individual’s long-term performance. The specific performance targets are expressed in an aggregate amount for the three-year period.period ended June 30, 2021. The Compensation Committee endeavors to set the targets at levels that challenge our executive officers to improve operating results and enhance shareholder value.At the start of each three-year performance period, the
Compensation Committee establishes a target number of shares of our common stock that each executive
officer can earn subject to our achievement over the three-year performance period of threshold, target and maximum levels of each corporate performance objective. Threshold and maximum levels will be expressed as a multiple of the target level. For the performance period that began July 1,
20142018, the target number of shares for which each executive
officer is eligible is based on a percentage of the
executive’sexecutive officer’s base salary at the beginning of the performance period
as follows: (i) Ms. Czanderna, 115%, (ii)and was 30% for Mr.
Hall, 60%,Newlin. Mr. Dittmer and
(iii) Ms. Bizzis, 60%.Mr. Schmidt were not participants in the performance period ended June 30, 2021. The payouts of the individual objectives of the LTIP range from threshold of 40% to a maximum of 200% of the target award. When the threshold level is achieved, the payout percentage increases proportionally to the improvement in performance as measured against the objective. The beginning of each fiscal year triggers the start of another three-year performance period. This plan structure results in three active performance periods being in place at any given time. The
numberweighting of
shares for which the
named executive officers are eligibleperformance objective for the three-year
performance period
endingended on June 30,
2019 are set forth in the Grants of Plan Based Awards Table.2021 for Mr. Newlin was: 100% for fully diluted earnings per share.
For the three-year performance period endingended June 30, 2017,2021, the performance goals under the LTIP reflecting three-year totals were as follows:
Target: fully diluted earnings per share: $9.75.
Threshold: fully diluted earnings per share: $8.95.
Maximum: fully diluted earnings per share: $11.00.
During the three-year period ended June 30, 2021, the Company did not achieve the fully diluted earnings per share performance objectives reflecting three year totals,objective.
For awards under the LTIP for the
threshold, targetthree-year periods ending June 30, 2022 and
maximum levels were $7.00, $8.34, and $10.55, respectively. During this period, the Company achieved 109%2023, participants may earn one-third of the
target fully diluted earnings per share performance objectives. The number of shares earnedaward in
fiscal 2017 by each of the
named executive officersthree years based on meeting performance objectives for that year. The cumulative award payout for all three years is
made after the end of the third year. The performance objectives for the second and third years will be based on a set
forthgrowth rate of the performance objectives over the previous year’s financial results. Because of the adverse impact of the COVID-19 pandemic and continued global trade tensions on the Company’s financial results for the period ended June 30, 2020, the calculation of the performance objectives for the second year using the established growth rates in the
Option Exercisesplan would have resulted in financial goals that are not aligned to long-term shareholder value creation. As a result, performance objectives for the second and
Stock Vested Table.third years of the three-year award period ending June 30, 2022, were modified.
Omnibus Stock Plan. UnderPlan. During fiscal 2021, the Stock Plan, while the Committee may grant awards to participants in the form of restrictedCompany granted stock options, restricted stock units and restricted stock options, stock appreciation rights or performance units, the Company has only granted stock options to executive officers under the Omnibus Stock Plan. In response to industry practices and competitive forces, the Compensation Committee has determined to emphasize stock awards over options awards. The Compensation Committee also believes that stock awards are a more effective way to provide named executive officers with a proprietary interest in the Company and assist the named executive officers to meet the stock ownership guidelines established by the Board. See “Corporate Governance – Stock Ownership Guidelines.” Generally, stock awards vest annually over a three-year period.
Stock options awarded under the shareholder approved plan give executivesexecutive officers the opportunity to purchase our common stock for a term not to exceed ten10 years and at a price of no less than the closing sale price of our common stock on the date of grant. ExecutivesExecutive officers benefit from stock options only to the extent stock price appreciates after the grant of the option. The Compensation Committee recognizes that each executive officer, rather than the Compensation Committee, decides whether or not to exercise an option at any given time. For this reason, the Compensation Committee’s decision to grant a stock option to an executive officer does not take into account any gains realized by the executive officer due to a decision to exercise a pre-existing option in any given year. Historically, stock options are immediately exercisable. The Compensation Committee has not repriced stock options or replaced stock options that are underwater in the past and does not intend to engage in either practice in the future.
Stock options,
restricted stock units and restricted stock are granted at the
Compensation Committee’s regularly scheduled
meeting,meetings, based on recommendations from the Chief Executive Officer, the participant’s level of responsibility and total compensation. Most
Compensation Committee meetings are scheduled a year in advance. Scheduling decisions for
Compensation Committee meetings are made without regard to anticipated earnings or other major announcements by us. The
Compensation Committee will consider granting various types of equity to newly hired
executivesexecutive officers on a case-by-case basis.
The number of option shares granted in fiscal 2017 to each of the named executive officers is set forth in the Grants of Plan Based Awards Table.
20
Severance Benefits. Karel Czanderna, our President and Chief Executive Officer, has post-termination benefits under her employment letter dated June 29, 2012 which are described under “Executive Compensation – Potential Payments Upon Termination or Change-In-Control” below. Our notification of awards under our Incentive Compensation Plans provides that the employment requirement is satisfied in the event that the participant is terminated in connection with a change-in-control. Other than those agreements, we do not provide any special termination or change-in-control benefits to our other named executive officers.
Retirement Benefits. The Company makes available to Mr. Hall benefits under our Senior Officers Supplemental Retirement Plan, referred to as the “Supplemental Plan”. No other executive officers are eligible to participate in these retirement benefits. This plan is discussed after the Summary Compensation table.
Other Compensation and
Benefits.Benefits. We may provide the following perquisites to our executive officers:
| ● | supplemental health insurance; and |
country club dues;
tax planning services;
supplemental health insurance; and
furniture program.
These perquisites are provided to retain
executivesexecutive officers for key positions, to assist in their business development efforts and to remain competitive in the marketplace. The value of the perquisites provided to our named executive officers is set forth in the column titled “All
other compensation”Other Compensation” of the Summary Compensation Table.
Other Policies.
The Company’s CIP, Omnibus Stock Plan and LTIP provide for the right to require a participant to pay back any amount received under the plan to the extent provided by law or any “clawback” policy adopted by the Company. The award agreements under the CIP, Omnibus Stock Plan and LTIP provide for the forfeiture of awards received up to six months prior to termination in the event the participant competes with the Company within two years of termination or improperly uses Company confidential information.
Role of Executives in Establishing Compensation. Our chief executive officer plays an integral role in recommending compensation for named executive officers (including base salary and performance based annual and long-term cash and equity compensation). Our chief executive officer participates in committee meetings to provide background information on our business, financial and operational objectives, and annually reviews the performance of each executive officer based on their contributions to achieving our business, financial and operational objectives and recommends compensation for our executive officers. Compensation Committee members also develop their own opinions on the annual performance or our executive officers based on their interactions with them. As required by the listing standards of the NASDAQ Stock Market LLC, our chief executive officer does not participate in deliberations concerning, or vote on, their compensation arrangements. The Compensation Committee approves the compensation for all executive officers.
Tax
Implications. As part of its role, the Committee reviews and considers the deductibility of executive compensation under Implications. Section 162(m) of the Internal Revenue Code which providesof 1986, as amended, places a limit of $1 million on the amount of compensation that the Companywe may not deduct as a business expense in any year with respect to certain compensation of more than $1,000,000 that isour most highly paid to named executive officers. Performance-based stock awards, option grants and cash incentives awarded pursuant to the compensation plans adopted at the 2013 Annual Shareholders’ Meeting all qualify as performance-based compensation exemptHistorically, there has been an exemption from the taxthis $1 million deduction limit so longfor compensation payments that qualified as “performance-based” under applicable Internal Revenue Service (IRS) regulations. While the performance goal requirementsCompensation Committee considers the deductibility of Section 162(m) have been met. In certain situations,compensation as one factor in determining executive officer compensation, the Compensation Committee has approved andbelieves that it is in the future may approvebest interests of our shareholders to maintain flexibility in our approach to executive compensation that will not meet the 162(m) requirements in order to ensure competitive levels of total compensation for ourstructure a program that we consider to be the most effective in attracting, motivating and retaining key executive officers.Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy statement with management. Based on the review and discussions with management with respect to the Compensation Discussion and Analysis, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
The foregoing report is provided by the following directors, who constitute the Compensation Committee:
Mary C. Bottie, Chair | Michael J. Edwards | Robert J. Maricich | Nancy E. Uridil |
21
Summary Compensation Table
During fiscal year 2017, the Company had three executive officers. The following table sets forth the cash and non-cash compensation, for the fiscal years so indicated awarded to or earned by (i) the individual that served as our principal executive officer referred to as “Chief Executive Officer”, during our fiscal year ended June 30, 2017, referred to as “fiscal 2017”; (ii) the individual that served as our principal financial officer referred to as “Chief Financial Officer”, during fiscal 2017; and (iii) one other executive officer of Flexsteel. The Chief Executive Officer, the Chief Financial Officer and the one executive officer named below are collectively referred to in this proxy statement as the named executive officers.
Name and
Principal Position
| | Year
| | Salary
($)
| | Bonus
($)
| | Stock
Awards
($)(1)
| | Option Awards
($)(2)
| | Non-Equity
Incentive Plan Compensation
($)(3)
| | All Other
Compensation
($) (4)
| | Total ($)
|
| | | | | | | | | | | | | | | | |
Karel K. Czanderna
President and
Chief Executive Officer
| | 2017
2016
2015
| | 630,000
600,000
600,000
| | –
–
–
| | 535,500
510,000
480,000
| | 24,778
21,344
22,112
| | 440,500
828,000
966,280
| | 39,958
42,920
36,049
| | 1,670,736
2,002,064
2,104,441
|
| | | | | | | | | | | | | | | | |
Timothy E. Hall
Chief Financial Officer,
Senior Vice President – Finance,
Treasurer and Secretary
| | 2017
2016
2015
| | 315,000
315,000
315,000
| | –
–
–
| | 204,750
204,750
173,250
| | 21,062
13,874
14,511
| | 114,910
187,430
248,424
| | 102,841
94,367
127,353
| | 758,563
815,421
878,538
|
| | | | | | | | | | | | | | | | |
Julia K. Bizzis
Senior Vice President,
Strategic Growth
| | 2017
2016
2015
| | 295,000
295,000
285,000
| | –
–
–
| | 147,510
147,500
128,250
| | 21,062
13,874
14,511
| | 107,620
158,360
280,303
| | 37,922
32,543
23,556
| | 609,134
647,277
731,620
|
| (1) | The amounts shown represent target three-year performance stock awards granted under the long-term incentive plans during each fiscal year. No shares will be issued unless the minimum specific performance goals set by the Compensation Committee are met. The 2017 three-year performance period is July 1, 2016 – June 30, 2019. The 2016 three-year performance period is July 1, 2015 – June 30, 2018. The 2015 three-year performance period is July 1, 2014 – June 30, 2017. Shares earned, if any, will be issued following each respective three-year performance period. The amounts shown reflect the grant date fair value of the awards assuming achievement of the target performance goals. The maximum share award value that could be issued for Ms. Czanderna is $1,071,000 for 2017, $1,020,000 for 2016 and $960,000 for 2015; Mr. Hall is $409,500 for 2017, $409,500 for 2016 and $346,000 for 2015; and Ms. Bizzis is $295,020 for 2017, $295,000 for 2016 and $256,500 for 2015. |
| (2) | The amounts shown represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the stock option award amount may be found in Note 8 to the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017. The material terms of these options are set forth in the Outstanding Equity Awards at Fiscal Year-End table below. |
| (3) | The amounts shown represent the cash earned under the Company’s cash incentive compensation plan for each respective fiscal year and cash payments made under the 2007 Long-Term Management Incentive Plan for the three-year performance period ending on June 30, 2015. |
| (4) | Includes amounts paid or accrued for the following perquisites and personal benefits: tax planning services, country club dues, supplemental health insurance, furniture program, company retirement plan contributions and matching contributions to our 401(k) plan. The amounts of our contributions to the senior officer supplemental retirement plan for 2017, 2016 and 2015 for Mr. Hall were $77,000, $69,000 and $79,000, respectively. |
2007 Long-Term Management Incentive Compensation Plan
The 2007 Long-Term Management Incentive Compensation Plan (2007 Plan) provided for shares of common stock and cash to be awarded to certain officers and key employees based on performance targets set by the Compensation Committee of the Board. The Company’s shareholders approved 500,000 shares to be issued under the 2007 Plan. A total of 240,325 shares were issued from the 2007 Plan, following the final distributions in September 2015. The committee selected consolidated operating results for organic net sales (weighted 20%) and fully-diluted earnings per share (weighted 80%) for the three-year performance period ended June 30, 2015. For the three-year performance period ended on June 30, 2015 named executive officers realized rewards under the 2007 Plan at a weighted average rate of 115% of the organic net sales and fully-diluted earnings per share levels. The Committee also specified that payouts, if any, for awards earned were 60% Company common stock and 40% cash. No additional shares can be awarded under the 2007 Plan.
Senior Officer Supplemental Retirement Plan
We maintain a supplemental retirement plan, collectively referred to as the “Supplemental Plan”, which provides for additional annual defined contributions toward retirement benefits for Mr. Hall. The additional contribution is stipulated in the executive’s individual agreements or in the document governing the arrangements. Earnings are credited to the accumulated contributions based on the investment return of assets we designate for this obligation. The amount of the contribution for each named executive officer is reported in the Summary Compensation Table in the column titled “All Other Compensation”. Distributions begin six months after separation of service when the executive retires or in some cases when the executive terminates employment. Distributions are paid in installments or lump sums as elected by the executive. Under the Supplemental Plan, Mr. Hall is entitled to monthly payments of $5,000 until he reaches or would have reached age 65 upon termination of employment due to death or disability.
Grants of Plan-Based Award
The following table sets forth certain information relating to non-equity and equity incentive plan awards granted to our named executive officers during fiscal 2017.
| | | Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards (1) | | Estimated Future Payouts
Under Equity
Incentive Plan Awards (2) | | All Other Option
Awards: Number
of Securities
Underlying
Options (3)
(#) | | Exercise
or Base
Price of
Option
Awards
($/Sh) | | Grant
Date Fair
Value of
Stock and
Option
Awards
(4) ($) |
| Name | | Grant
Date | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | |
| | | | | | | | | | | | | | | | | | | | | |
Karel K.
Czanderna | | 07/01/16 | | 289,800 | | 724,500 | | 1,449,000 | | | | | | | | | | | | |
| | | 07/01/16 | | | | | | | | 5,406 | | 13,515 | | 27,031 | | | | | | 535,500 |
| | | 09/01/16 | | | | | | | | | | | | | | 2,107 | | 47.45 | | 24,778 |
| | | | | | | | | | | | | | | | | | | | | |
Timothy E.
Hall | | 07/01/16 | | 75,600 | | 189,000 | | 378,000 | | | | | | | | | | | | |
| | | 07/01/16 | | | | | | | | 2,067 | | 5,167 | | 10,335 | | | | | | 204,750 |
| | | 09/01/16 | | | | | | | | | | | | | | 1,791 | | 47.45 | | 21,062 |
| | | | | | | | | | | | | | | | | | | | | |
Julia K.
Bizzis | | 07/01/16 | | 70,800 | | 177,010 | | 354,020 | | | | | | | | | | | | |
| | | 07/01/16 | | | | | | | | 1,489 | | 3,723 | | 7,446 | | | | | | 147,510 |
| | | 09/01/16 | | | | | | | | | | | | | | 1,791 | | 47.45 | | 21,062 |
| (1) | These columns show the potential range of payouts for fiscal 2017 performance under our Cash Incentive Compensation Plan described in the section titled “Cash Incentive Compensation” in the “Compensation Discussion and Analysis” above. The cash incentive payments for 2017 performance are shown in the column “Non-Equity Incentive Plan Compensation” of the Summary Compensation Table above. |
| (2) | These columns show the potential range of payouts of three-year performance stock awards granted under the Long-Term Management Incentive Plan during fiscal 2017. The 2017 three-year performance period is July 1, 2016 – June 30, 2019. |
| (3) | The amounts represent stock options granted on September 1, 2016 in accordance with our Omnibus Stock Plan described in the “Compensation Discussion and Analysis” above. The options are fully vested at the time of grant and they expire on or before September 1, 2026, subject to other terms and conditions of the Omnibus Stock Plan. |
| (4) | The amounts shown represent the aggregate grant date fair value computed in accordance with FASB ASC Top 718. The assumptions used in calculating the stock option award amount may be found in Note 8 to the audited financial statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017. |
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth certain information relating to equity awards outstanding at June 30,
20172021, for each of our named executive officers.
| | | Option Awards (1) | | Stock Awards |
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#) (2) | | Market Value of Shares or Units of Stock That Have Not Vested ($) (3) | | Performance Period | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) ( 4) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (5) |
Karel K. Czanderna | | | | | | | | | | | | 07/01/2014- 06/30/2017 | | 23,028 | | 1,246,045 |
| | | | | | | | | | | | | 07/01/2015- 06/30/2018 | | 18,937 | | 1,024,681 |
| | | | | | | | | | | | | 07/01/2016- 06/30/2019 | | 21,625 | | 1,170,129 |
| | | | | | | | | 2,000 | | 108,220 | | | | | | |
| | | 10,000 | | 20.50 | | 07/02/2022 | | | | | | | | | | |
| | | 5,000 | | 19.77 | | 12/10/2022 | | | | | | | | | | |
| | | 3,600 | | 27.57 | | 12/09/2023 | | | | | | | | | | |
| | | 3,200 | | 31.06 | | 12/08/2024 | | | | | | | | | | |
| | | 2,320 | | 43.09 | | 07/01/2025 | | | | | | | | | | |
| | | 2,107 | | 47.45 | | 09/01/2026 | | | | | | | | | | |
Timothy E. Hall | | | | | | | | | | | | 07/01/2014- 06/30/2017 | | 8,312 | | 449,762 |
| | | | | | | | | | | | | 07/01/2015- 06/30/2018 | | 7,602 | | 411,344 |
| | | | | | | | | | | | | 07/01/2016- 06/30/2019 | | 8,268 | | 447,381 |
| | | 2,400 | | 27.57 | | 12/09/2023 | | | | | | | | | | |
| | | 2,100 | | 31.06 | | 12/08/2024 | | | | | | | | | | |
| | | 1,508 | | 43.09 | | 07/01/2025 | | | | | | | | | | |
| | | 1,791 | | 47.45 | | 09/01/2026 | | | | | | | | | | |
Julia K. Bizzis | | | | | | | | | | | | 07/01/2014- 06/30/2017 | | 6,153 | | 332,939 |
| | | | | | | | | | | | | 07/01/2015- 06/30/2018 | | 5,476 | | 296,306 |
| | | | | | | | | | | | | 07/01/2016- 06/30/2019 | | 5,956 | | 322,279 |
| | | 1,791 | | 47.45 | | 09/01/2026 | | | | | | | | | | |
J. K. Dittmer | | | 7/1/2020 | | | | | | 23,256 | | | 12.77 | | | 7/1/2030 | | | 74,235 | | | 2,998,352 | | | 64,460 | | | 2,603,539 |
| | 8/30/2019 | | | 30,000 | | | | | | 15.14 | | | 8/30/2029 | | | | | | | | | | | | |
| | 12/28/2018 | | | 56,668 | | | 28,332 | | | 21.96 | | | 12/28/2028 | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
D. P. Schmidt | | | 7/1/2020 | | | | | | 13,566 | | | 12.77 | | | 7/1/2030 | | | 13,907 | | | 561,704 | | | 20,101 | | | 811,879 |
| | 4/6/2020 | | | | | | 108,884 | | | 9.97 | | | 4/6/2030 | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
T. P. Newlin | | | 1/15/2019 | | | 6,020 | | | | | | 24.98 | | | 1/15/2029 | | | 12,058 | | | 487,023 | | | 12,977 | | | 524,141 |
| | 9/13/2018 | | | 2,286 | | | | | | 32.80 | | | 9/13/2028 | | | | | | | | | | | | |
| | 9/8/2017 | | | 1,105 | | | | | | 45.21 | | | 9/8/2027 | | | | | | | | | | | | |
| | 9/1/2016 | | | 737 | | | | | | 47.45 | | | 9/1/2026 | | | | | | | | | | | | |
| | 7/1/2015 | | | 464 | | | | | | 43.09 | | | 7/1/2025 | | | | | | | | | | | | |
| | 12/8/2014 | | | 500 | | | | | | 31.06 | | | 12/8/2024 | | | | | | | | | | | | |
| | 12/9/2013 | | | 500 | | | | | | 27.57 | | | 12/9/2023 | | | | | | | | | | | | |
(1)
| AllOptions include both incentive stock options and non-statutory stock options.
|
(2)
| Mr. Dittmer’s options vested on July 1 of 2021. Mr. Schmidt’s April 6, 2020 grant date option awards are fullyvests in full on April 6, 2023. His July 1, 2020 grant date option vested ason July 1 of 2021. |
(3)
| Options expire on the tenth anniversary of the date of grant date. |
(4)
| Mr. Dittmer’s unvested restricted stock and have a term of 10 years. |
(2) | Represents Restricted Stock Units; 2,000restricted stock units vest as follows: 11,062 shares thatvested on July 1, 2021; 3,895 shares vest on December 14, 2021; 20,710 shares vest on June 30, 2022; 5,531 shares vest on July 2, 2017.
1, 2022; 3,895 shares vest on December 14, 2022; and 29,142 vest on June 30, 2023. Mr. Schmidt’s unvested restricted stock and restricted stock units vest as follows: 4,815 shares vest on June 30, 2022; and 9,092 vest on June 30, 2023. Mr. Newlin’s restricted stock units vest as follows: 2,087 shares vested on July 1, 2021; 3,976 shares vest on June 30, 2022; and 5,995 vest on June 30, 2023. |
(3)(5)
| The amount shown reflects the fairmarket value of the Restricted Stock Unitsunvested stock awards is based on the June 30, 2017 closing stock price of $54.11 per share. on June 30, 2021, which was $40.39. |
(4)(6)
| The amounts shown represent the potential three-year performance stockshare unit awards granted under the Long-Term Incentive Plan during eachthe three, three-year performance period.periods in effect during fiscal year 2021. No shares will be issued unless the minimum specific performance goals set by the Compensation Committee are met. Shares earned, if any, will be issued following each respective three-year performance period. Mr. Dittmer, Mr. Schmidt and Mr. Newlin participated in the fiscal year 2021 – 2023 and 2020 - 2022 performance plan periods. Unearned performance shares are shown below assuming target performance for grants made in fiscal years 2021, 2020, and 2019: |
J. K. Dittmer | | | 43,714 | | | 20,746 | | | — | | | 64,460 |
D. P. Schmidt | | | 13,639 | | | 6,462 | | | — | | | 20,101 |
T. P. Newlin | | | 8,993 | | | 3,984 | | | — | | | 12,977 |
(5)(a)
| The amounts shown reflect the fair value of the awards based on theThree-year performance period ends June 30, 2017 closing stock price of $54.11 per share, assuming a2023 |
(b)
| Three-year performance level of 160% of target is achieved.period ends June 30, 2022 |
(c)
| Three-year performance period ended June 30, 2021 |
Termination or Change in Control
Severance Plan for Management Employees. The Severance Plan for Management Employees (the “Severance Plan”) provides for the payment of severance to eligible employees in the event of an involuntary termination of an eligible employee’s employment initiated by the Company (a “Qualifying Termination”). An eligible employee is an employee of the Company or its affiliates who is either (i) an executive reporting directly to the Chief Executive Officer of the Company on other than an interim or temporary basis, or (ii) an individual designated as an eligible employee by the plan administrator or its delegate, within its sole discretion (an “Eligible Employee”). A Qualifying
Termination does not include (i) termination for cause, (ii) an Eligible Employee’s voluntary resignation or retirement from the Company, (iii) an Eligible Employee’s termination as a result of the Eligible Employee’s death or disability, or (iv) an Eligible Employee’s failure to return to work within the time required following an approved leave of absence.
Subject to the terms and
Stock VestedThe following table sets forth certain informationconditions of the Severance Plan, an Eligible Employee will receive severance payments of:
the Eligible Employee’s base salary continuation for each12 months;
a lump sum payment equal to the COBRA premiums necessary to continue the Eligible Employee’s and his or her dependents’ health insurance coverage in effect on the Eligible Employee’s termination date for a period of our named executive officers regarding12 months, without regard to whether the exerciseEligible Employee or his or her dependents elect continuation coverage under COBRA; and
a lump sum payment equal to the amount of
stock options andcash compensation that would be payable to the
payout of performance sharesEligible Employee under the
2007 Long-Term Management Incentive Compensation Plan that were earned, and the vesting of Restricted Stock Units duringCIP for the fiscal year
ended June 30, 2017.| | | Option Awards | | Stock Awards (2) |
| | | | | | | | | |
Name | | Number of Shares
Acquired on Exercise
(#) | | Value Realized on
Exercise ($)(1) | | Number of Shares
Acquired on
Vesting (#) | | Value Realized on
Vesting ($) |
| Karel K. Czanderna | | – | | – | | 17,682 | | 793,085 |
| Timothy E. Hall | | 13,300 | | 463,527 | | 5,660 | | 257,643 |
| Julia K. Bizzis | | 10,426 | | 194,255 | | 4,190 | | 190,729 |
(1) | The value realized is calculated by multiplying the number of shares acquired and exercised by the difference between the market price of common stock at exercise and the exercise price. |
| |
(2) | Includes the payment of performance sharesduring which vested on June 30, 2017, upon subsequent confirmation by the Compensation Committee that performance goals had been achieved, and the vesting of 2,000 Restricted Stock Units valued at $39.62, held by Ms. Czanderna. The value realized was determined by multiplying the number of vested shares by the closing market price of $45.52 per share of the Company’s common stock on August 19, 2017, the date the shares were distributed. |
Nonqualified Deferred Compensation
The following information sets forth certain information relating to nonqualified deferred compensation as of June 30, 2017 for our named executive officers. For a description of the Supplemental Plan, see the discussion following the Summary Compensation Table.
Name | | Executive Contribution in
Last FY
($) | | Company Contribution in
Last FY ($) (1) | | Aggregate
Earnings in
Last FY ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate
Balance at
Last FYE ($) (2) |
| Timothy E. Hall | | | | | | | | | | |
| Supplemental Plan | | N/A | | 77,000 | | 77,240 | | – | | 772,638 |
| (1) | These amounts are included in the “All Other Compensation” column of the Summary Compensation Table above. |
| (2) | The contributions by the executive and the Company were reported as compensation in the Summary Compensation tables for previous years to the extent the person was a named executive officer. |
Potential Payments Upon Termination or Change-In-Control
Letter Agreement with Karel K. Czanderna. Effective July 1, 2012 the Company named Karel K. Czanderna, President and Chief Executive Officer. In connection with Ms. Czanderna’s appointment, the Company entered into a letter agreement with her, dated June 29, 2012.
As part of the letter agreement,termination date occurs if the Company terminates Ms. Czanderna for other than cause duringEligible Employee’s employment had continued through the first seven yearsend of her employment or Ms. Czanderna terminates for good reason,such fiscal year, computed assuming that the Company will pay eighteen months“target” level of her base salary and one and one-half timesperformance had been achieved, without regard to any discretionary adjustments that would have the effect of reducing the amount of the annual incentive bonus for(other than discretionary adjustments applicable to all similarly-situated employees who did not terminate employment).
The plan administrator may remove an individual as an Eligible Employee prior to a Qualifying Termination. An Eligible Employee may not be removed as an Eligible Employee from participation in the most recently completed fiscal yearSeverance Plan on or after a Qualifying Termination.
The Company is entitled to clawback all Severance Payments made to an Eligible Employee under the Severance Plan in a lump sum. Assuming Ms. Czanderna was terminated on June 30, 2017, she would be paid a lump sumthe event the Eligible Employee breaches any provision of $1,290,750any non-competition, non-solicitation, non-disparagement, confidentiality, or assignment of inventions covenants contained in any agreement between the Eligible Employee and be reimbursed for eighteen months of health insurancethe Company.
To receive any severance payments,
valued at approximately $36,000, conditioned upon the execution ofan Eligible Employee must execute and deliver a
mutually agreeable severance agreement
that includes an eighteen month non-compete provision.which provides for a release of claims against the Company, a confidentiality provision and a 12-month non-competition and non-hire clause.
The benefits under the Severance Plan replace and supersede all prior existing severance payments applicable to Eligible Employees, whether formal or informal, written or oral.
Cash Incentive Compensation Plans.Plan and Long-Term Incentive Compensation Plan. Under the terms of the Company’s CIP and LTIP and applicable award agreements, named executive officers are entitled to receive payments as a result of a termination due to death or disability, on or after reaching age 62, or due to an involuntary termination for other than for cause in the event of a change in control. The amount to be paid to a participant in such events is based on the pro rata number of days worked during the performance period. The awards will be paid in a lump sum after the end of the performance period, except under certain circumstances as determined by the Compensation Committee. The award agreements for both the CIP and the LTIP provide for the forfeiture of payments received up to six months prior to termination in the event the participant competes with the Company within 2two years of termination or improperly uses Company confidential information. Assuming
Omnibus Stock Plan. Under the terms of the Omnibus Stock Plan and applicable award agreements, the unvested restricted stock units, restricted stock and options held by a named executive officers were involuntarily terminatedofficer will vest in full upon the death or disability of such person or for other than cause asthe fiscal years prior to 2022 upon a resultchange in control. Beginning with fiscal 2022, in the event of a change in control, such persons would be entitledthe award will only vest due to receive shares underan involuntary termination for other than cause. The award agreements for the LTIP valued asOmnibus Stock Plan provide for the forfeiture of June 30, 2017 ($54.11 per share) as follows: Ms. Czanderna: $570,000; Mr. Hall: $224,000; Ms. Bizzis: $162,000 Seepayments received up to six months prior to termination in the descriptionevent the participant competes with the Company within two years of the Senior Officer Supplemental Retirement Plan Section above and the Non-qualified Deferred Compensation Table for a description and amounts payable under the Supplemental Plan.termination or improperly uses Company confidential information. OWNERSHIP OF STOCK BY
DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth the shares of the Company’s common stock beneficially owned by the Company’s directors, the named executive officers, and by all directors and executive officers as a group as of September
15, 2017.24, 2021. Unless otherwise indicated, to the best knowledge of the Company, all persons named in the table have sole voting and investment power with respect to the shares shown.
Name | | Title | | Amount of
Common Stock
Beneficially
Owned(1)(2) | | Percent
of Common
Stock
Outstanding(4) |
| Jeffrey T. Bertsch | | Director | | 213,669(3) | | 2.7% |
| Julie K. Bizzis | | Senior Vice President, Strategic Growth | | 17,113 | | 0.2% |
| Mary C. Bottie | | Director | | 9,118 | | 0.1% |
| Karel K. Czanderna | | President and Chief Executive Officer, Director | | 90,960 | | 1.2% |
| Michael J. Edwards | | Director | | 979 | | 0.0% |
| Timothy E. Hall | | Senior Vice President Finance, Chief Financial Officer, Treasurer and Secretary | | 41,571 | | 0.5% |
| Thomas M. Levine | | Director | | 15,373 | | 0.2% |
| Robert J. Maricich | | Director | | 21,703 | | 0.3% |
| Eric S. Rangen | | Director | | 27,833 | | 0.4% |
| Nancy E. Uridil | | Director | | 20,563 | | 0.3% |
| | | | | |
| All Directors and Executive Officers as a Group (12) | | 476,745 | | 6.0% |
Derek P. Schmidt | | | Chief Financial Officer, Chief Operating Officer | | | 170,128 | | | 2.5% |
Jerald K. Dittmer | | | President and Chief Executive Officer, Director | | | 163,222 | | | 2.4% |
Eric S. Rangen | | | Director | | | 36,569 | | | 0.5% |
Matthew A. Kaness | | | Director | | | 35,339 | | | 0.5% |
Thomas M. Levine | | | Director | | | 24,109 | | | 0.4% |
Mary C. Bottie | | | Director | | | 18,854 | | | 0.3% |
William S. Creekmuir | | | Director | | | 15,307 | | | 0.2% |
Kathryn P. Dickson | | | Director | | | 901 | | | 0.0% |
All Directors and Executive Officers as a Group (9) | | | 500,666 | | | 7.4% |
| (1)
| Includes the following number of shares, which may be acquired by exercise of stock options: Ms. Bizzis – 1,791; Ms. Czanderna – 28,438; Mr. Hall – 7,799; Mr. Levine – 5,500; Mr. Maricich – 5,500; Mr. Rangen – 18,000; Ms. Uridil – 13,000. |
| (2) | Includes shares, if any, owned beneficially by their respective spouses. |
| (3) | Does not include 111,053 shares held in irrevocable trusts for which trusts American Trust & Savings Bank serves as sole trustee. Under the Terms of Trust, Mr. Bertsch has a possible contingent interest in each trust. Mr. Bertsch disclaims beneficial ownership in the shares held by each such trust. |
| (4) | Shares of the Company’s common stock not outstanding but deemed beneficially owned because the respective person or group has the right to acquire the shares as of September 15, 2017,24, 2021, or within 60 days of such date are treatedby exercise of stock options: Mr. Schmidt – 13,566; Mr. Dittmer – 109,924; Mr. Rangen – 10,500; Mr. Newlin – 11,612; Mr. Levine – 5,500; All Directors and Executive Officers as outstanding for purposes of calculating the percentage of common stock outstanding for such person or group.a Group – 151,102. |
OWNERSHIP OF STOCK BY
CERTAIN BENEFICIAL OWNERS
To the best knowledge of the Company, no person owns beneficially
5%five percent or more of the outstanding common stock of the Company as of September
15, 201724, 2021 except as set forth below. Unless otherwise indicated, to the best knowledge of the Company, all persons named in the table have sole voting and investment power with respect to the shares shown.
Royce & Associates LP, LLC | | | 745 Fifth Avenue, New York, NY10151NY 10151 | | 1,164,088 | 979,500(2) | | 14.8% | 14.40% |
Dimensional Fund Advisors LP | | | 6300 Bee Cave Rd., Bldg.Road, Bldg One, Austin, TX 78746 | | 654,425 | 576,440(3) | | 8.3% |
BlackRock, Inc., 55 East 52nd St., New York, NY 10055 | | 468,862(4) | | 6.0%8.50% |
| (1)
| To the best knowledge of the Company, no beneficial owner named above has the right to acquire any additional beneficial ownership in additional shares.ownership. |
| (2)
| The number of shares beneficially owned is based on information provided in a Form 13Fschedule 13G filed with the Securities and Exchange Commission on August 7, 2017.February 12, 2021, which reflects sole investment and voting power with respect to 979,500 shares. |
| (3)
| The number of shares beneficially owned is based on information provided in a Form 13Fschedule 13G filed with the Securities and Exchange Commission on August 11, 2017,January 1, 2021, which reflects shared dispositive power for 576,440 shares, sole voting power over 630,685 shares, no voting power over 23,740 shares and shared investment power over 654,425 shares. |
| (4) | The number of shares beneficially owned is based on information provided in a Form 13F filed with the Securities and Exchange Commission on August 10, 2017, which reflects sole voting power over 461,991for 552,844 shares, and no voting power over 6,871for 23,596 shares. |
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP was the Company’s independent registered public accounting firm in fiscal
2017.2021. In addition to performing the audit of the Company’s consolidated financial statements, Deloitte & Touche LLP provided audit-related services during fiscal
20172021 and
2016.2020.
The Audit and Ethics Committee pre-approves both the type of services to be provided by Deloitte & Touche LLP and the estimated fees related to these services. The Audit and Ethics Committee reviewed professional services and the possible effect on Deloitte & Touche LLP’s independence was considered. The Audit and Ethics Committee has considered and found the provision of services for non-audit services compatible with maintaining Deloitte & Touche LLP’s independence. All services provided by Deloitte & Touche LLP during fiscal
20172021 and
20162020 were pre-approved by the Audit and Ethics Committee. It is not expected that a representative of Deloitte & Touche LLP will attend the
Annual Meetingannual meeting of Shareholders.
| (in thousands) | | | 2017 | | | | 2016 | |
| Audit Fees (1) | | $ | 452 | | | $ | 456 | |
Audit Fees(1) | | | $750 | | | $733 |
| (1)
| Professional fees and expenses for the audit of financial statements for fiscal 20172021 and fiscal 20162020 consisted of (i) an audit of the Company’sCompany's annual consolidated financial statements; (ii) reviews of the Company’sCompany's quarterly consolidated financial statements; (iii) consents and other services related to Securities and Exchange Commission matters; and (iv) consultations on financial accounting and reporting matters arising during the course of the audit and reviews. |
EQUITY COMPENSATION PLAN INFORMATION
The following table summarizes information as of June 30,
2017,2021, about the Company’s equity compensation plans, including the Company’s
stock option plans and long-term
management incentive plan.
All of these plans have been approved by shareholders. In addition, the inducement grant of restricted stock units for Karel K. Czanderna was not approved by shareholders.Plan Category | | (a)
Number of
securities to
be issued upon
exercise
of outstanding
options,
warrants and rights | | (b)
Weighted-average
exercise
price of
outstanding
options,
warrants and
rights | | (c)
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected
in column (a)) |
Equity compensation plans approved by security holders | | 187,279 | | $27.21 | | 1,024,150 |
Equity compensation plans not approved by security holders – inducement grant restricted shares | | 2,000 | | $20.50 | | – |
| Total | | 189,279 | | $27.14 | | 1,024,150 |
Equity compensation plans approved by security holders | | | 677,495(1) | | | $16.92 | | | 611,688 |
Equity compensation plans not approved by security holders | | | 133,884(2) | | | $14.90 | | | 0 |
Total | | | 811,379 | | | $31.82 | | | 611,688 |
(1)
| Includes the shares of common stock and underlying 231,860 outstanding stock options, 162,555 outstanding restricted stock units under the Omnibus Stock Plan and 283,080 outstanding performance share awards under the LTIP, assuming maximum performance. |
(2)
| Includes 133,884 stock options granted under inducement awards. |
(3)
| Represents the weighted average exercise price of outstanding stock options. Outstanding restricted stock units and performance share awards do not have an exercise price. |
(4)
| Represents the shares of common stock remaining available for future issuance under the Omnibus Stock Plan in the amount of 299,359 shares and under the Long-Term Incentive Plan at maximum performance in the amount of 312,329 shares. |
PROPOSALS BY SHAREHOLDERS
Shareholders wishing to have a proposal considered for inclusion in the Company’s proxy statement for the
20182022 annual meeting must submit the proposal in writing and direct it to the Secretary of the Company at the address shown in this proxy statement. The Company must receive it no later than June
27, 2018.28, 2022. The proposal must be in accordance with the provisions of Rule 14a-8 promulgated by the SEC under the 1934 Act. It is suggested
that the proposal be submitted by certified mail, return receipt requested. Shareholders who intend to present any other proposal or nominate a person to be elected as a director at the
20182022 annual meeting must provide the Company notice of such proposal no later than September
6, 2018.9, 2022. However, if the
20182022 annual meeting is to be held before November
5, 20187, 2022 or after February
3, 2018,6, 2023, then the proposal or nomination must be received before the later of (i) the close of business on the
10thtenth day following the day on which public disclosure of the meeting date is made and (ii) the close of business 90 days before the
20182022 annual meeting. The proposal or nomination must contain the specific information required by our bylaws. You may obtain a copy of our bylaws by writing to our Corporate Secretary. The Company reserves the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements.
The percentage total number of the outstanding shares represented at each of the last three years’ shareholders’ annual meetings was as follows:
20142018 –
70.0%75.5%;
20152019 –
71.9%75.9%; and
20162020 –
80.3%71.8%.
A copy of the Company’s Annual Report on Form 10-K for the year ended June 30,
2017,2021, other reports filed or furnished with or to the Securities and Exchange Commission, our Guidelines for Business Conduct, Audit and Ethics Committee Charter, Compensation Committee Charter and Nominating and Governance Committee Charter are available, without charge, on the Company’s website at
www.flexsteel.com or by writing to the Office of the Secretary, Flexsteel Industries, Inc., P.O. Box 877, Dubuque, Iowa 52004-0877.
The Board does not know of any other matter
whichthat may come before the meeting. However, should any other matter properly come before the meeting, the persons named in the proxy card will vote in accordance with their judgment upon such matters.
Shareholders are urged to vote by
Internetinternet or telephone, or if you received paper copies of our Proxy materials, you can also mark, date, sign and promptly mail the accompanying Proxy card in the enclosed envelope. Prompt response is helpful, and your cooperation will be appreciated.
| | | BY ORDER OF THE BOARD OF DIRECTORS |
| | | |
| | | Derek P. Schmidt |
| | | Secretary |
October 26, 2021 | | TIMOTHY E. HALL | |
| | Secretary |
Dated: | October 25, 2017 | |
| Dubuque, Iowa | |
FLEXSTEEL INDUSTRIES, INC.
P.O. BOX 877
DUBUQUE, IA 52004-0877
VOTE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| | | |
| E33575-P98046
| KEEP THIS PORTION FOR YOUR RECORDS
|
| | DETACH AND RETURN THIS PORTION ONLY
|
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
|
|
| | | | | | | | | | | | | | | |
FLEXSTEEL INDUSTRIES, INC.
| | | For
| Withhold
| For All
| | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
| | | | | |
| The Board of Directors recommends you vote FOR the following:
| | All
| All
| Except
| | | | | | |
| | | | | | | | | | | |
| | | ☐
| ☐
| ☐
| | | | | | | |
| 1.
| To elect three (3) Class I Directors to serve until the year 2020 Annual Meeting and until their respective successors have been elected and qualified or until their earlier resignation, removal or termination.
| | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | Nominees:
| | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | 01) Karel K. Czanderna
| | | | | | | | | | | | |
| | 02) Thomas M. Levine
| | | | | | | | | | | | |
| | 03) Robert J. Maricich
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | For
| Against
| Abstain
|
| | | | | | | | | | | | | | | |
| 2.
| To consider a proposal to amend Article V, Section 3 of the Amended and Restated Bylaws to provide that a person must be less than age 72 to be elected or appointed as a director.
| | ☐
| ☐
| ☐
|
| | | | | | | | | | | | | | | |
| NOTE:Such other business as may properly come before the meeting or any adjournment thereof. | | | | | |
| | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
| | | | | | | |
| | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | |
| Signature [PLEASE SIGN WITHIN BOX]
| Date
| | | | Signature (Joint Owners)
| Date
| | | |
27
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
| | |
| | |
| FLEXSTEEL INDUSTRIES, INC.
ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
| |
| | |
| | |
| The undersigned, a shareholder of Flexsteel Industries, Inc., hereby appoints Mary C. Bottie and Eric S. Rangen, and each of them, as proxies, with full power of substitution, to vote on behalf of the undersigned the same number of shares which the undersigned is then entitled to vote at the Annual Meeting of the Shareholders of Flexsteel Industries, Inc., to be held on Monday, December 4, 2017 at 2:00 p.m. at the Flexsteel Global Headquarters, 385 Bell Street, Dubuque, Iowa 52001 and at any adjournments or postponements thereof.
| |
| | |
| This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations.
| |
| | |
| | |
Continued and to be signed on reverse side
| |
| |
