UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.___)
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Daktronics, Inc.
(Name of Registrant as Specified in its Charter)
____________________________
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DAKTRONICS, INC.
201 Daktronics Drive
Brookings, South Dakota 57006
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Time | |||
4:30 p.m. Central Daylight Time on Wednesday, September | |||
Place | Daktronics, Inc. | ||
201 Daktronics Drive | |||
Brookings, South Dakota 57006 | |||
Items of Business | 1. | To elect | |
2. | To conduct an advisory (non-binding) approval of the Company's executive compensation; and | ||
3. | To ratify the appointment by the Audit Committee of the Board of Directors of Deloitte & Touche, LLP as our independent registered public accounting firm for the Company for fiscal | ||
Record Date | You are entitled to vote if you were a shareholder of record at the close of business on June | ||
Annual Meeting | All shareholders are invited to attend the Annual Meeting in | ||
Voting by Proxy | Even if you plan to attend the Annual Meeting, please submit a proxy as soon as possible so that your shares can be voted at the Annual Meeting in accordance with your instructions. Shareholders may vote their shares: | ||
1. | over the Internet; | ||
2. | by telephone; or | ||
3. | by mail. | ||
For specific instructions, refer to the procedural matters section of the Proxy Statement or to the voting instructions on the proxy card, both of which accompany this notice. | |||
THIS PROXY STATEMENT AND PROXY CARD ARE BEING DISTRIBUTED ON OR ABOUT JULY 16, 2020.
By Order of the Board of Directors, | |
Carla S. Gatzke | |
Secretary |
IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS FOR THE DAKTRONICS, INC. ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON
SEPTEMBERThis notice and the accompanying Proxy Statement, proxy card and our Fiscal
Table of Contents
Pages | ||
PROXY STATEMENT
PROCEDURAL MATTERS
General
The enclosed proxy is solicited by and on behalf of the Board of Directors of Daktronics, Inc., a South Dakota corporation, for use at our Annual Meeting of Shareholders to be held on Wednesday,
SeptemberAll shareholders are invited to attend the Annual Meeting in person; however, we expect to follow an abbreviated format for the Annual Meeting to keep attendees safe in lightperson with proof of COVID-19.ownership, such as your last broker or EQ Shareholder Services statement. We expect only a limited number of Daktronics representatives to attend the Annual Meeting and we will follow social distancing guidelines as expressed by the U.S. Centers for Disease Control and Prevention.
In this Proxy Statement, "Daktronics", "Company", "registrant", "we", "us" and "our" refer to Daktronics, Inc.
Shareholders Entitled to Vote; Record Date
Only shareholders of record at the close of business on
JuneNotice of Internet Availability of Proxy Materials
We are making proxy materials for the Annual Meeting available over the Internet. Therefore, we are mailing to the majority of our shareholders a notice about the Internet availability of the proxy materials instead of a paper copy of the proxy materials. The notice is entitled "Notice of Internet Availability of Proxy Materials." All shareholders receiving the notice will have the ability to access the proxy materials over the Internet and to request to receive a paper copy of the proxy materials by mail. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found on the notice. Our proxy materials may also be accessed on our website at
www.daktronics.com by selectingVoting at the Annual Meeting; Vote Requirements
The holders of a majority of the shares of common stock issued and outstanding and entitled to vote at the Annual Meeting, present in person or represented by proxy, will constitute a quorum for the transaction of business. If a quorum is not present, the Annual Meeting may be adjourned from time to time until a quorum is present. Abstentions and broker non-votes will be treated as shares that are present and entitled to vote for purposes of determining the presence of a quorum. Each share is entitled to one vote on all matters submitted to a vote. However, with respect to only the election of Directors, every shareholder will have the right to cast a number of votes equal to the number of Directors to be elected at the Annual Meeting multiplied by the number of shares the shareholder is entitled to vote. Shareholders may cast all votes for one nominee or divide the votes as they choose among two or more nominees. Shares abstaining will be treated as not voted.
A plurality of the votes cast is required for the election of Directors. This means that the Director nominee with the most votes for a particular slot is elected for that slot. Only votes "for" or "withheld" affect the outcome. Abstentions are not counted for purposes of the election of Directors. The affirmative vote of a majority of the shares of common stock represented at the Annual Meeting, either in person or by proxy, assuming a quorum is present, is required to approve the other proposals. If an executed proxy is returned and the shareholder has abstained from voting on any matter, the shares represented by such proxy will be considered present at the Annual Meeting for purposes of determining a quorum and for purposes of calculating the vote, but they will not be considered to have been voted in favor of such matter. If a signed proxy is returned by a broker holding shares in "street name," and it indicates that the broker does not have discretionary authority to vote certain shares on one or more matters, such shares will be considered present at the Annual Meeting for purposes of determining a quorum but will not be considered to be represented at the Annual Meeting for purposes of calculating the vote with respect to such matter.
Counting Votes
The inspector of election appointed for the Annual Meeting will count the votes cast by proxy or in person at the Annual Meeting.
Brokers who hold shares in street name for customers will not be able to vote the shares without instructions from their customers with respect to any of the proposals, other than the proposal to ratify the selection of our auditors (Proposal Three of this Proxy Statement). Shares for which brokers have not received instructions, and which therefore are not voted, with respect to a particular proposal are referred to as "broker non-votes" with respect to that proposal. Abstentions from voting on a proposal described in this Proxy Statement and broker non-votes will not affect the outcome of the vote on that proposal.
How Votes are Submitted
If the shares of our common stock are held directly in the name of the shareholder, he or she can vote on matters to come before the Annual Meeting:
by completing, dating and signing the proxy card and returning it to us in the postage-paid envelope provided for that purpose, if the shareholder has received a paper copy of a proxy card;
by written ballot at the Annual Meeting;
by telephone, by calling 1-800-690-6903; or
by Internet, at www.proxyvote.com.
Shareholders whose shares of our common stock are held in "street name" must either direct the record holder of their shares as to how to vote their shares of common stock or obtain a proxy from the record holder to vote at the Annual Meeting. "Street name" shareholders should check the voting instruction cards used by their brokers or nominees for specific instructions on methods of voting, including by telephone or using the Internet.
Participants in the Daktronics, Inc. 401(k) Plan (the "401(k) Plan") who hold our common stock in the 401(k) Plan are entitled to instruct the trustee of the 401(k) Plan as to how to vote their shares. Each participant will receive a Notice of Internet Availability of Proxy Materials, similar to the notice received by the registered holders described above. Each participant will have the ability to access the proxy materials over the Internet and to request to receive a paper copy of the proxy materials by mail. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found on the notice as described above. The participants can vote on matters as described above. The votes will then be tabulated and submitted for vote by the trustee for the 401(k) Plan. If a participant does not timely vote, the trustee will vote the shares allocated to that participant in the same proportion as the shares that are voted by all other participants under the 401(k) Plan.
Proxies
All shares entitled to vote and represented by properly submitted proxies received before the Annual Meeting will be voted at the Annual Meeting in accordance with the instructions indicated on those proxies if they are not revoked before the vote as described below. If no instructions are indicated on a properly submitted proxy, the shares represented by that proxy will be voted as recommended by the Board of Directors. If any other matters are properly presented for consideration at the Annual Meeting, the proxy holders will have discretion to vote on those matters in accordance with their best judgment.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before it is voted. A proxy may be revoked by:
delivering a written notice of revocation to the Secretary of the Company;
submitting another proxy bearing a later date;
voting by telephone or via the Internet after a prior telephone or Internet vote; or
attending the Annual Meeting and voting in person (although attendance at the Annual Meeting alone will not itself revoke a proxy).
Expenses of Solicitation
All expenses of this solicitation, including the cost of preparing and mailing this Proxy Statement, will be borne by us. We may reimburse brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners of stock for their reasonable expenses in forwarding solicitation material to such beneficial owners. Our Directors, officers and employees may also solicit proxies in person or by telephone, email, letter or facsimile. Such Directors, officers and employees will not be additionally compensated, but they may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation.
Procedure for Submitting Shareholder Proposals
Shareholders may present proper proposals for inclusion in our proxy materials for consideration at the next annual meeting of our shareholders by submitting their proposals to us in a timely manner. In order to be included in our proxy materials for the next annual meeting, shareholder proposals must be received by us no later than March 18, 202117, 2022 and must otherwise comply with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934. If a shareholder wants to nominate a Director or bring other business before
At the date of this Proxy Statement, management knows of no other business that may be presented at the Annual Meeting. However, if any other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed proxies to vote the proxy in accordance with their best judgment.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial ownership of common stock as of June 29, 2020,28, 2021, the Record Date, by each of our Directors and atwo Director nominee;nominees; by each executive officer named in the Summary Compensation Table; by all Directors, the two Director nominee,nominees, and all executive officers as a group; and by each shareholder who is known by us to own beneficially more than five percent of our outstanding common stock.
| Name and Address of Beneficial Owners | Note | Amount and Nature of Beneficial Ownership(1) | Percentage of Outstanding Shares(2) | |||||
| 5% Beneficial Owners: | (15) | |||||||
| BlackRock, Inc. | (16) | 6,213,868 | 13.9 | % | ||||
| 55 East 52nd Street | ||||||||
| New York, NY 10055 | ||||||||
| Dimensional Fund Advisors LP | (17) | 2,985,525 | 6.7 | % | ||||
| Building One, 6300 Bee Cave Road | ||||||||
| Austin, TX 78746 | ||||||||
| Vanguard Group Inc. | (18) | 2,797,727 | 6.3 | % | ||||
| 100 Vanguard Blvd | ||||||||
| Malvern, PA 19355 | ||||||||
| Dr. Aelred J. Kurtenbach | (19) | 2,473,132 | 5.5 | % | ||||
| Daktronics, Inc. 401(k) Plan | (20) | 2,535,114 | 5.7 | % | ||||
| Named Executive Officers and Directors: | ||||||||
| Reece A. Kurtenbach | (3) | 615,049 | 1.4 | % | ||||
| James B. Morgan | (4) | 1,337,145 | 3.0 | % | ||||
| Byron J. Anderson | (5) | 76,090 | * | |||||
| Robert G. Dutcher | (6) | 84,916 | * | |||||
| Nancy D. Frame | (7) | 107,472 | * | |||||
| Kevin P. McDermott | (8) | 54,466 | * | |||||
| John P. Friel | (9) | 49,818 | * | |||||
| Dr. José-Marie Griffiths | (10) | — | * | |||||
| Sheila M. Anderson | (11) | 85,059 | * | |||||
| Bradley T. Wiemann | (12) | 170,270 | * | |||||
| Matthew J. Kurtenbach | (13) | 333,986 | * | |||||
| Carla S. Gatzke | (14) | 807,367 | 1.8 | % | ||||
| All Directors, a Director nominee, and executive officers as a group | ||||||||
| (12 persons, consisting of those named above) | 3,721,638 | 8.3 | % | |||||
Name and Address of Beneficial Owners | Note | Amount and Nature of Beneficial Ownership(1) | Percentage of Outstanding Shares(2) | |||||||||
5% Beneficial Owners: | (16 | ) | ||||||||||
BlackRock, Inc. | (17 | ) | 5,840,695 | 12.9 | % | |||||||
55 East 52nd Street | ||||||||||||
New York, NY 10055 | ||||||||||||
Dimensional Fund Advisors LP | (18 | ) | 2,639,679 | 5.9 | % | |||||||
Building One, 6300 Bee Cave Road | ||||||||||||
Austin, TX 78746 | ||||||||||||
Vanguard Group Inc. | (19 | ) | 2,538,397 | 5.6 | % | |||||||
100 Vanguard Blvd | ||||||||||||
Malvern, PA 19355 | ||||||||||||
Dr. Aelred J. Kurtenbach | (20 | ) | 2,473,132 | 5.5 | % | |||||||
Daktronics, Inc. 401(k) Plan | (21 | ) | 2,383,999 | 5.3 | % | |||||||
Named Executive Officers and Directors: | ||||||||||||
Reece A. Kurtenbach | (3 | ) | 638,423 | 1.4 | % | |||||||
James B. Morgan | (4 | ) | 1,345,805 | 3.0 | % | |||||||
Byron J. Anderson | (5 | ) | 84,750 | * | ||||||||
Robert G. Dutcher | (6 | ) | 93,576 | * | ||||||||
Kevin P. McDermott | (7 | ) | 68,456 | * | ||||||||
John P. Friel | (8 | ) | 63,808 | * | ||||||||
Dr. José-Marie Griffiths | (9 | ) | 13,990 | * | ||||||||
Shereta Williams | (10 | ) | — | * | ||||||||
Lance D. Bultena | (11 | ) | — | * | ||||||||
Sheila M. Anderson | (12 | ) | 93,057 | * | ||||||||
Bradley T. Wiemann | (13 | ) | 172,056 | * | ||||||||
Matthew J. Kurtenbach | (14 | ) | 326,640 | * | ||||||||
Carla S. Gatzke | (15 | ) | 811,949 | 1.8 | % | |||||||
All Directors, Director nominees, and executive officers as a group (13 persons, consisting of those named above) | 3,712,510 | 8.2 | % | |||||||||
* Less than one percent
(1) | Each person has sole voting and sole dispositive power with respect to all outstanding shares, except as noted. The individuals holding restricted shares have the power to vote but not the power to dispose of such shares. |
(2) | Applicable percentage ownership is based on |
(3) | Includes |
(4) | Includes 22,598 shares subject to exercisable options and 13,990 shares of restricted stock which vest on August 23, 2021. |
(5) | Includes 22,598 shares subject to exercisable options and 13,990 shares of restricted stock which vest on August 23, 2021. Mr. Anderson is retiring from the Board of Directors, effective September 1, 2021. |
(6) | Includes 22,598 shares subject to exercisable options and 13,990 shares of restricted stock which vest on August 23, 2021. Mr. Dutcher is retiring form the Board of Directors, effective September 1, 2021. |
(7) | Includes 17,496 shares subject to exercisable options and 13,990 shares of restricted stock which vest on August 23, 2021. |
(8) | Includes 17,496 shares subject to exercisable options and 13,990 shares of restricted stock which vest on August 23, 2021. |
(9) | Includes 13,990 shares of restricted stock which vest on August 23, 2021. |
(10) | Ms. Williams is not currently a Director of the Company. On May 27, 2021, the Board of Directors nominated her as a Director. |
(11) | Mr. Bultena is not currently a Director of the Company. On May 27, 2021, the Board of Directors nominated him as a Director. |
(12) | Includes 58,120 shares subject to options, 8,555 shares held through the 401(k) Plan and 2,700 shares of restricted stock which vest within 60 days from June 28, 2021. |
(13) | Includes 66,050 shares subject to options, 597 shares held by his spouse and 2,700 shares of restricted stock which vest within 60 days from June 28, 2021. |
(14) | Includes 65,750 shares subject to options, 16,142 shares held through 401(k) Plan, 39,100 shares held by his children and 2,700 shares of restricted stock which vest within 60 days from June 28, 2021. |
(15) | Includes 62,226 shares subject to options, 163,578 shares held through the 401(k) Plan, 90,000 shares held by her spouse, 15,005 shares held by her child and 2,600 shares of restricted stock with which vest within 60 days from June |
(16) |
To the Company's knowledge, except as noted in the table above, no person or entity is the beneficial owner of more than five percent of the outstanding shares of the Company's common stock. |
(17) | Data based on an Amendment to Schedule 13G/A filed by the shareholder with the Securities and Exchange Commission (the "SEC") on February |
(18) | Data based on an Amendment to Schedule 13G/A filed by the shareholder with the SEC on February 12, |
(19) | Data based on an Amendment to Schedule 13G/A filed by the shareholder with the SEC on February |
(20) | Includes 888,769 shares held by his spouse, Irene Kurtenbach, and 601,675 shares held in Medary Creek LLLP. Medary Creek LLLP is a limited liability limited partnership of which Aelred and Irene Kurtenbach are the general partners. The address for Aelred and Irene Kurtenbach and Medary Creek LLLP is 47209 220th Street, Brookings, SD |
| 57006. | ||
| (21) | The common stock held by the 401(k) Plan and allocated to the 401(k) Plan participants are voted by the trustee of the 401(k) Plan according to the instructions of the 401(k) Plan participants. The address of the 401(k) Plan is 201 Daktronics Drive, Brookings, South Dakota 57006. |
ELECTION OF DIRECTORS
General
Our Board of Directors consists of seven individuals divided into three classes serving staggered three-year terms of office. There is one Director (Robert G. Dutcher)are two Directors (John P. Friel and Reece A Kurtenbach) whose term will expire at the 20202021 Annual Meeting; three Directors (Byron J. Anderson, John P. Friel, and Reece A. Kurtenbach) whose terms will expire in 2021; and two Directors (James B. Morgan and Kevin P. McDermott) whose terms will expire in 2022. 2022; and one Director (Dr. José-Marie Griffiths) whose term will expire in 2023.
The Nominating and Corporate Governance Committee has recommended to the Board of Directors that Robert G. DutcherJohn P. Friel and Reece A. Kurtenbach be nominated for re-election at the
All nominees have consented to being named as a nominee in this Proxy Statement and have indicated a willingness to serve if elected. However, if any nominee becomes unable to serve before the election, the shares represented by proxies may be voted for a substitute designated by the Board, unless a contrary instruction is indicated on the proxy.
Vote Required
See "Procedural Matters – Voting at the Annual Meeting: Vote Requirements" for a description of the votes required for the election of Directors.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTORS NAMED BELOW.
Directors and Nominees for Director
The following table sets forth the name, age and certain other information about each nominee for Director as of the Record Date:
Name | Age | Principal Occupation | Committees Served On | |||
John P. Friel | 67 | Director at Preservation Technologies LLC; Director at Blue Water Growth LLC; Board Member at Vascor, Inc.; Board Member and Chief Strategy Officer at Magvation LLC; and Senior Partner at Mikan Group. | Audit Committee; Compensation Committee | |||
| 56 | President and Chief Executive Officer at Daktronics, Inc. | |||||
| Shereta Williams | ||||||
John P. Friel (67)has been a Director ofsince September 2015 and has served on the CompanyAudit Committee since 2002September 2015 and chairperson ofon the Compensation Committee since 2005. Before his retirement, from April 2009 until March 2011, heOctober 2016. Mr. Friel served as Strategic Advisor Lead Member offor 30 years in various capacities at MEDRAD, Inc., a global company that designs, develops, manufactures, sells, and supports medical devices. MEDRAD is an affiliate of Bayer, AG. From April 2008 through March 2009, he wasHe joined MEDRAD in the accounting area and earned a promotion to Treasurer and Vice President of Corporate Planning in 1986 and Vice President of Business Development area in 1987. He then served as Executive Vice President of Sales and Marketing from 1989 to 1995, Senior Vice President and General Manager from 1995 to 1998, and as President and Chief Executive Officer from 1998 to 2010. MEDRAD received the Malcolm Baldrige National Quality Award twice during his tenure, once in 2004 and again in 2010. Mr. Friel retired as CEO of Vascor, Inc. in December 2019, but he remains as a member of the Cardiovascular DivisionBoard of MEDRAD, Inc. From 1993 until April 2008, he Directors. Vascor is a pre-clinical medical device development company. He also is currently the Managing Director at Preservation Technologies L.P. and a Director of the medical device industry segment at Blue Water Growth LLC. Mr. Friel is the Principal and Founder of Five Radicals, which focuses on Baldrige Performance Excellence, strategic planning, general business consulting to entrepreneurial medical device companies, and private equity business development opportunity search efforts. Mr. Friel is a director and Chief Strategy Officer of Magvation, LLC, a medical device development company. Mr. Friel is a Senior Partner of the Mikan Group, a general management consulting company. He holds a Master of Arts in Law and Diplomacy from Tufts University and a Bachelor of Arts in Political Science and Bachelor of Science in Accounting from Pennsylvania State University. Mr. Friel brings to the Board extensive global general management knowledge and practice. He has strong experience in building and growing businesses, especially in technical product development and global expansions, which align with many of the Company's initiatives and strategies.
Reece A. Kurtenbach (56) was theappointed as President and Chief Executive Officer of Possis Medical, Inc.,and a publicly-held medical device company located in Minneapolis, Minnesota, which was acquired by MEDRAD, Inc. in April 2008. From December 2001 until April 2008, heDirector effective on September 1, 2013 and has served as Chairman of the Board since September 2014. He served as Executive Vice President from 2012 until September 2013, Vice President for Live Events and International from 2007 to 2012, Vice President for Video Systems from 2004 until 2007, and manager for video products engineering from 1994 until 2004. Mr. Kurtenbach joined the Company in 1991 as an applications engineer focusing on large display projects. Mr. Kurtenbach also worked as a student employee with various responsibilities from 1983 to 1987. Mr. Kurtenbach holds a Bachelor of Possis Medical,Science degree from South Dakota State University in Electrical Engineering, with minors in Mathematics and Computer Science. Mr. Kurtenbach is the son of Dr. Aelred Kurtenbach and brother of Matthew J. Kurtenbach and Carla S. Gatzke. The Board believes that Mr. Kurtenbach is an appropriate representative of management on the Board, given his position as a senior executive officer and his over 30 years of experience with the Company. In addition, Mr. Kurtenbach brings a wealth of industry experience to the Board.
Shereta Williams (47) is Vice President Business Development on the strategy and corporate development team of Cox Enterprises, Inc. Before joining Possis Medicalbased in 1985, he was with Medtronic,Atlanta, Georgia and has served in such capacity since 2020. She has held a variety of strategy, corporate development and business development roles within the Cox Enterprise, Inc. subsidiaries and groups, including President of Videa, LLC from 2014 through 2020; Vice President of Corporation Development for 12 years, most recently asCox Media Group from 2010 to 2013; and Director of ResearchDevelopment and Development. He previously workedDigital Services for Cox Television from 2001 through 2006. In between the roles at Cox, from 2006 through 2009, she was the managing director of the currency division for Maven Funds, a startup hedge fund in Atlanta where she was responsible for managing traders, implementation of automated trading systems, risk management and operations. She began her career working in investment banking as an engineering capacityanalyst for Control Data Corporationmergers and Honeywell, Inc. Mr. Dutcheracquisitions for Lazard Freres & Co, LLC from 1996 through 1998. She holds a Bachelor of Science degree in electrical engineering from South Dakota State University andElectrical Engineering, with a Master of Science degreeconcentration in electrical engineeringEconomics, from the UniversityMassachusetts Institute of Minnesota. Mr. DutcherTechnology. Ms. Williams brings to the Board extensive knowledge in driving profitable growthcorporate development, strategy, and mergers and acquisitions, as well as operational leadership in technology-driven industriesthe digital communications industry.
Lance D. Bultena (58) is the Global Director of Thought Leadership for Mobility and Transportation at Hogan Lovells, a global law firm, where he is currently a senior counsel after serving as a partner for many years. He has been at the firm (and its predecessor Hogan & Hartson) since 1999. He was Counsel to the U.S. Senate Committee on Commerce, Science, and Transportation from 1995 to 1999. He received a doctorate (D. Phil) in Politics and a masters (M. Phil) in Economics from Oxford University which he attended as a Rhodes Scholar. He received a law degree (J.D.) from Harvard Law School and did his undergraduate study at the University of South Dakota. Dr. Bultena brings to the board significant experience in leading researchhelping businesses evaluate and development at Medtronicaddress the challenges of technological change and public policy developments.
The identity of the remaining Directors and certain information about them as Chief Executive Officer of Possis Medical.
Dr. JoséJosé-Marie Griffiths (68)
Kevin P. McDermott (66)
James B. Morgan (73)
Independent Directors
Our Nominating and Corporate Governance Committee has determined that each of Messrs. Anderson, Dutcher, Friel, Morgan, Williams, Bultena, and McDermott and Dr. José-Marie Griffiths and Ms. FrameWilliams are "independent," as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules (the "Independent Directors"). Accordingly, the Board is composed of a majority of Independent Directors as required by the Nasdaq Listing Rules. In addition, none of our Directors are a party to any agreement or arrangement that would require disclosure pursuant to Nasdaq Listing Rule 5250(b)(3) regarding the payment of compensation to directors by a third party in connection with serving as a Director of the Company.
ADVISORY (NON-BINDING) APPROVAL OF THE COMPANY'S EXECUTIVE COMPENSATION
The foundation of our executive compensation program is to pay for performance. Base compensation for our executive officers is set relatively low as compared to members of our peer group, and a meaningful portion of the compensation paid to our executive officers is based on long-term equity incentive compensation and annual non-equity incentive compensation, which is focused on the key results and strategic drivers of our business.
The Compensation Discussion and Analysis section of this Proxy Statement explains in more detail our executive compensation program.
We believe that, viewed as a whole, our executive compensation programpractices and policies are appropriate and are fair to both the Company and its executives and aligns our incentive compensation with the long-term interests of our shareholders.
As an advisory approval, this proposal is non-binding. However, the Board and our Compensation Committee, which is responsible for designing and overseeing the administration of our executive program, value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions for our Chief Executive Officer (the "CEO") and all of the other executive officers named in the Summary Compensation Table appearing later in this Proxy Statement (collectively, the "Named Executive Officers") are at-will employees consistent with applicable South Dakota state law. There are no employment agreements in place with any of the Named Executive Officers. We also do not maintain any supplemental executive retirement plans for our executive officers, and our Named Executive Officers participate in a retirement program that is open to all of our U.S. employees. We generally do not provide significant perquisites and other personal benefits. In April 2020, due to business uncertainties created by COVID-19 pandemic, the compensation of our CEO and other Named Executive Officers was reduced.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL TWO, THE ADVISORY (NON-BINDING) APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THE PROXY STATEMENT PURSUANT TO THE SEC’SSEC’S COMPENSATION DISCLOSURE RULES.
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has appointedselected Deloitte & Touche, LLP ("Deloitte") to serve as our independent registered public accounting firm (the "Independent Auditor") to perform reviewsfor the fiscal year ending April 30, 2022. Deloitte has been our Independent Auditor since fiscal 2018.
The Audit Committee recognizes the importance of maintaining the independence of the Company's Independent Auditor, both in fact and appearance. Each year, the Audit Committee evaluates the qualifications, performance and independence of our interim consolidated financial statementsIndependent Auditor and determines whether to be included inre-engage such firm. In doing so, the Audit Committee considers, among other things, the quality and efficiency of the services provided by the Independent Auditor, its capabilities and its technical expertise, its knowledge of our fiscal 2021 Quarterly Reports on Form 10-Qoperations and industry, and relevant information concerning its independence.
While not required to auditdo so, our annual consolidated financial statements andboard is submitting the selection of Deloitte for ratification to ascertain the views of our internal control over financial reporting for fiscal
Audit and Other Professional Fees
The following table presents the aggregate fees billed for professional services rendered by Deloitte, for fiscal 2020 and Deloitte and Ernst & Young LLP ("EY") for fiscal 2019:
| Fiscal Year Ended | ||||||||
| May 2, 2020 | April 27, 2019 | |||||||
Audit fees (1) | $ | 844,800 | $ | 913,100 | ||||
Audit-related fees (2) | 41,740 | 60,640 | ||||||
Tax fees (3) | 2,038 | 5,440 | ||||||
All other fees (3) | — | — | ||||||
| Totals | $ | 888,578 | $ | 979,180 | ||||
Fiscal Year Ended | ||||||||
May 1, 2021 | May 2, 2020 | |||||||
Audit fees (1) | $ | 846,452 | $ | 844,800 | ||||
Audit-related fees (2) | 61,250 | 41,740 | ||||||
Tax fees (3) | 4,937 | 2,038 | ||||||
All other fees (3) | 3,790 | — | ||||||
Totals | $ | 916,429 | $ | 888,578 | ||||
(1) | Audit fees consist of fees related to professional services rendered in connection with the audit of our annual financial statements, the audit of our internal control over financial reporting, the reviews of the interim financial statements included in our Quarterly Reports on Form 10-Q, and other professional services provided in connection with statutory and regulatory filings or engagements. |
(2) | Audit-related fees are fees for assurance and related services performed by Deloitte that are reasonably related to the performance of the audit or review of our financial statements. |
(3) | All other fees are fees for other permissible work performed by Deloitte that does not meet the above category descriptions. |
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OFDELOITTE & TOUCHE, LLP AS THEBoard Leadership Structure
The Board of Directors is committed to achieving the long-term mutual prosperity of all stakeholders while maintaining the highest standard of responsibility and integrity. The Board has adopted these corporate governance principles to provide an effective framework that reflect a set of core values and provide a foundation for Daktronics governance and management systems. Specific Board of Director responsibilities to achieve this commitment include:
Strategic and operational planning: reviewing the overall operating, financial and strategic plans and performance of Daktronics;
Management oversight: selecting and evaluating the Company’s Chief Executive Officer and approving and monitoring the selection and evaluation process of other executive officers;
Governance, compliance and risk management: overseeing appropriate policies of corporate conduct and compliance with laws; and
Financial reporting: reviewing the process by which financial and non-financial information about the Company is provided to management, the Board and the Company’s shareholders.
The Board believes that it must stay well-informed about the issues, challenges and opportunities facing Daktronics so that the Board members can properly exercise their fiduciary responsibilities to our shareholders. As part of this process, the Board is kept informed of our business,strategies, and major corporate actions through discussions with the Named Executive Officers, by reviewing material provided to them and by participating in meetings of the Board and its Committees.
The Board of Directors currently combines the roles of CEO and Chairman of the Board ("Chair"). Periodically, our Board of Directors assesses these roles and the Board leadership structure to assure that the interests of the Company and its shareholders are best served.
Our Board of Directors has determined that its current structure, with a combined Chair and CEO, is in the best interests of the Company and its shareholders at this time. In addition, the BoardKevin McDermott has also established aserved as Lead Independent Director role.since June 1, 2020. Ms. Nancy Frame, now retired, served as our Lead Independent DirectorDirect for a portion of fiscal 2021, from 2005 untilMay 3, 2020 to June 1, 2020. Kevin McDermott was named by the Board as Lead Independent Director on June 1, 2020.
The ChairmanChair conducts the Board meetings. The Chairman,Chair, after consulting with the Lead Independent Director, sets board meetings agenda, sets schedules, and distributes information to the Board. This collaborative process assures that the agenda takes into account issues and concerns of all Directors and is forward-looking and focuses on strategic matters.
The Lead Independent Director calls and presides over Independent Director meetings and provides timely feedback from each meeting to the Chairman.Chair. The Lead Independent Director is responsible to promote effective relationships and open communication among Directors and the CEO, build consensus among Board members, build an effective and complementary Board, promote the highest standards of corporate governance, participate actively in the selection of new Directors, and promote the orientation of new Directors to provide coaching and support for their development.
Our governance practices are compliant with the Nasdaq Listing Rules and the corporate governance regulations of the Sarbanes-Oxley Act of 2002. Among other things, these practices include the following:
The Nominating and Corporate Governance Committee reviews with the Board annually the composition of the Board as a whole, including the Directors’ independence, skills, experience, age, diversity, and availability of service to the Company.
The Nominating and Corporate Governance Committee recommends Director candidates for approval by the Board and election by the shareholders, taking into account the Company’s need for diverse skills, professional experiences, backgrounds, and other qualities to ensure a variety of viewpoints.
The Board conducts periodic self-evaluations facilitated by the Nominating and Corporate Governance Committee.
The Independent Directors meet in conjunction with regularly scheduled quarterly Board meetings and at other appropriate times.
The Board and all Board Committees are authorized to hire their own advisors as they deem to be necessary or advisable to fulfill their obligations, and the Company will pay the costs of such advisors.
Meetings of the Board of Directors and Committees
During fiscal
Executive Sessions of the Board
The Board has adopted a practice of meeting in executive session, and then with Independent Directors only, in conjunction with each regularly scheduled Board meeting. The Independent Directors met four times in fiscal 2020.
Annual Meeting Attendance Policy
As set forth in our Corporate Governance Guidelines, members of the Board of Directors are expected to devote sufficient time and attention to prepare for, attend and participate in Board meetings, shareholder meetings, and meetings of Committees of the Board on which they serve. However, during our annual meeting in September 2020, we do not expect all members of the
Board to be present due to the COVID-19 related social distancing recommendations.
The Board takes an active role in risk oversight both as a full Board and through its Committees. The Company's management team attends a portion of each regular Board meeting, and the Board engages management in a review of the business with respect to our strategies and risks. Such risks include those inherent in our businesses as well as the risks from external sources such as competitors, cybersecurity, the economy, credit markets, and regulatory and legislative developments. The Board has also been actively engaged with management in preparing for, responding to, and monitoring the impacts of the evolving COVID-19 novel coronavirus pandemic.pandemic and related recovery. Management is in regular communication with the Board about the assessment, management, and management ofstrategic response to the significant risks to Daktronics, Inc. and strategy decisions related to the impact of COVID-19 on our business.
The various Committees of the Board are also responsible for specific areas of risks. The Audit Committee meets regularly with management and our Independent Auditor to oversee our financial risk management processes, controls and capabilities. The Audit Committee also oversees and reviews with management certain aspects of our information systems, credit, litigation, and currency risks and other finance matters. In addition, the Audit Committee reviews and monitors our procedures regarding the receipt, retention and treatment of complaints regarding internal accounting, accounting controls or audit matters.
The Compensation Committee oversees our executive compensation arrangements and certain benefit plans. This includes the identification and management of risks that may arise from our compensation policies and practices.
The Nominating and Corporate Governance Committee has oversight of corporate governance, including practices and procedures that promote good governance and thus mitigate governance risk, and it is also responsible for reviewing the performance of the Board, its Committees and their members. These Committees report to the full Board on these topics, including risks, as they deem to be necessary or advisable.
Hedging
In accordance with our insider trading policy, officers, Directors, senior managers, market managers, and other designated employees are prohibited from engaging in hedging transactions, trading in puts and calls in and engaging in short sales of our common stock. In addition to our officers, Directors, and other designated employees, the covered persons also include family members of such Company personnel sharing the same residence. Hedging or monetization transactions are typically accomplished through a number of possible mechanisms, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds, in which all of which our covered persons are precluded from using or trading.
Code of Conduct
The Board of Directors has adopted our Code of Conduct, which applies to all of our employees, officers and Directors as described in our Annual Report to Shareholders. Included in the Code of Conduct are ethics provisions that apply to our Chief Executive Officer, Chief Financial Officer, and all other financial and accounting management employees. Copies of the Code of Conduct are available on our website at
www.daktronics.com. The Nominating and Corporate Governance Committee reviews the Code of Conduct annually and oversees its implementation.Policy and Procedures with Respect to Related Party Transactions
Our Board of Directors has adopted a written policy and procedureprocedures with respect to related party transactions, which the Audit Committee oversees. Under the policy, a "related party transaction" is generally defined as a transaction, arrangement or relationship in which the Company was, is or will be a participant; the amount involved exceeds $120,000; and in which any "related person" had, has or will have a direct or indirect material interest. The policy generally defines a "related person" as a Director, executive officer or beneficial owner of more than five percent of any class of our voting securities and any immediate family member of any of the foregoing persons.
The Audit Committee reviews and, if appropriate, approves related party transactions, including certain transactions which are deemed to be pre-approved under the policy. On an annual basis, the Audit Committee reviews any previously approved related party transaction that is ongoing.
Committees of the Board of Directors
The Board of Directors currently has three standing Committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee.
Audit Committee
.During fiscalCompensation Committee
. During fiscalNominating and Corporate Governance Committee
. During fiscalThe information below describes the criteria and process that the Nominating Committee uses to evaluate future candidates to the Board of Directors:
Director Qualifications
When Board candidates are considered, they are evaluated based upon various criteria, such as their broad-based business and professional skills and experiences, experience serving as management or on the board of directors of other organizations, concern for the long-term interests of the shareholders, governance risk and compliance knowledge, innovation expertise, international business experience, technology company experience, contracting experience, acquisition experience, financial literacy, personal integrity and judgment, and willingness to be prepared and active participants at Board and Committee meetings. The Nominating Committee and the Board seek to attract and retain highly qualified and diverse Directors who have sufficient time to attend to their duties and responsibilities to the Company.
The Nominating Committee and the Board seek members who will contribute to our overall corporate goals, taking into account:
The Company’s responsibility to its key stakeholders, which include shareholders, customers, suppliers, community, and employees.
Integrity in financial reporting and business conduct. Candidates are selected based upon their potential contributions to the long-term interests of shareholders.
Diversity of a candidate’s skills and experiences.
Each candidate for Director must possess the following specific minimum qualifications:
Demonstrated integrity and ethics in his or her professional life and an established record of professional accomplishment in his or her chosen field.
Absence of any material personal, financial or professional interest in any present or potential competitor of the Company.
Ability to participate fully in activities of the Board of Directors, including active membership in at least one Committee of the Board of Directors (in the case of Independent Directors) and attendance at, and active participation in, meetings of the Board of Directors and the Committee(s) of the Board of which he or she is a member.
Shareholder Proposals for Nominees
The Nominating Committee will consider written proposals from shareholders for nominees for Director. Any such nominations must be submitted to the Nominating Committee in the care of our Corporate Secretary and should include (at a minimum) the following information: (a) all information relating to such nominee that is required to be disclosed in Schedule 14A under the Exchange Act (including
The Nominating Committee will not change the manner in which it evaluates candidates for Board nominees, including the applicable criteria set forth above, based on whether the candidate was recommended by a shareholder. To date, we have not received any shareholder proposals to nominate a Director.
Board of Directors’Directors’ Evaluation
On an ongoing basis, the Nominating Committee facilitates a process to determine whether the Board of Directors and its Committees are functioning effectively. The results of this process are reported to the Board for discussion.
How to Contact the Board of Directors
Shareholders wishing to contact our Board of Directors may do so by writing to it at the following address: Corporate Secretary, Daktronics, Inc., 201 Daktronics Drive, Brookings, South Dakota 57006. All letters received will be forwarded to the Board of Directors.
Compensation Committee Interlocks and Insider Participation
During fiscal
Director Compensation
The following table sets forth information about the compensation paid to and earned by our Directors for the fiscal year ended
MayFISCAL YEAR
Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards ($) (2) | Total Compensation ($) | |||||||||
| Byron J. Anderson | $ | 56,500 | $ | 57,497 | $ | 113,997 | ||||||
| Robert G. Dutcher | 56,500 | 57,497 | 113,997 | |||||||||
| Nancy D. Frame | 61,500 | 57,497 | 118,997 | |||||||||
| John P. Friel | 58,500 | 57,497 | 115,997 | |||||||||
| Kevin P. McDermott | 58,500 | 57,497 | 115,997 | |||||||||
| James B. Morgan | 58,500 | 57,497 | 115,997 | |||||||||
Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards ($) (2) | Total Compensation ($) | |||||||||
Byron J. Anderson | $ | 50,425 | $ | 57,499 | $ | 107,924 | ||||||
Robert G. Dutcher | 50,425 | 57,499 | 107,924 | |||||||||
Nancy D. Frame (3) | 14,606 | 57,499 | 72,105 | |||||||||
John P. Friel | 52,425 | 57,499 | 109,924 | |||||||||
Kevin P. McDermott | 56,175 | 57,499 | 113,674 | |||||||||
James B. Morgan | 54,675 | 57,499 | 112,174 | |||||||||
Dr. José-Marie Griffiths (4) | 36,319 | 57,499 | 93,818 | |||||||||
(1) | As an employee of the Company, Reece A. Kurtenbach, the President and Chief Executive Officer since September 1, 2013, was a Named Executive Officer during fiscal |
(2) | Represents September | |
| (3) | Retired as director on September 2, 2020. | |
| (4) | Joined as director on September 2, 2020. |
Independent Director Fees.
For fiscal| Chair | Other Members | |||||||
| Audit Committee | $ | 8,000 | $ | 5,000 | ||||
| Compensation Committee | 6,000 | 3,000 | ||||||
| Nominating and Corporate Governance Committee | 6,000 | 3,000 | ||||||
| Lead Independent Director | 5,000 | |||||||
Chair | Other Members | |||||||
Audit Committee | $ | 8,000 | $ | 5,000 | ||||
Compensation Committee | 6,000 | 3,000 | ||||||
Nominating and Corporate Governance Committee | 6,000 | 3,000 | ||||||
Lead Independent Director | 5,000 | |||||||
The retainers for Board and Committee service are included in the table above entitled "Fiscal Year
In response to the potential impacts of COVID-19 on the business of Daktronics, the Board elected in April 2020 to reduce the Directors' annual $40,500$40,500 cash retainer fee by 15% effective April 1, 2020.
Stock Ownership and Retention Guidelines.The Board of Directors has implemented stock ownership guidelines for Directors. Under these guidelines, each Director is expected to achieve a target of 5,000 shares owned, excluding shares subject to options. Directors have five years from the date they first become a member of the Board of Directors to achieve this level of ownership. As of the Record Date, all directorsDirectors were in compliance with these guidelines.
Executive Officers
The following discussion sets forth information as of June 29, 202028, 2021 about our executive officers who are not Directors.
Name | Positions with the Company | Age | Executive Officer Since | |||
| Sheila M. Anderson | Chief Financial Officer and Treasurer | 47 | 2012 | |||
| Bradley T. Wiemann | Executive Vice President | 57 | 2004 | |||
| Matthew J. Kurtenbach | Vice President of Manufacturing | 51 | 2014 | |||
| Carla S. Gatzke | Vice President of Human Resources and Secretary | 59 | 2015 | |||
Name | Positions with the Company | Age | Executive Officer Since | ||||||
Sheila M. Anderson | Chief Financial Officer and Treasurer | 48 | 2012 | ||||||
Bradley T. Wiemann | Executive Vice President | 58 | 2004 | ||||||
Matthew J. Kurtenbach | Vice President of Manufacturing | 52 | 2014 | ||||||
Carla S. Gatzke | Vice President of Human Resources and Secretary | 60 | 2015 | ||||||
Sheila M. Anderson
joined the Company in 2002 as a senior accountant after spending a number of years working as a certified public accountant in public accounting and auditing firms and as a senior accountant at a private company. In 2006, Ms. Anderson was named Corporate Controller and, in 2012, she was named Chief Financial Officer and Treasurer. Ms. Anderson holds a Master of Business Administration degree from the University of South Dakota and a Bachelor of Science degree in Accounting from Southwest Minnesota State University.Bradley T. Wiemann
joined the Company in 1993 as a lead design engineer after spending a number of years with Rockwell International Corporation, where he was involved in flight control systems. In 1994, he became manager of the Company's engineering groups focused on commercial and transportation product design. In 2001, his responsibilities expanded to include sales and service for commercial and transportation. In 2004, he was appointed Vice President, Commercial and Transportation and, in 2012, he was named Executive Vice President. In 2013, his responsibilities expanded to include sales and service for the High School Park and Recreation business unit. Mr. Wiemann holds a Master of Science degree inMatthew J. Kurtenbach
joined the Company in 1992 as a manager in manufacturing, and he subsequently served as a project manager for sports projects and as a project manager for the Company's process improvements and facility expansions. In 2001, he was named Manufacturing Manager and, in 2006, he was appointed Vice President of Manufacturing. Also in 2006, he was charged with leading the Company's transformation to lean manufacturing and, in 2013, he gained responsibility for repair center operations associated with after-sales services. Mr. Kurtenbach holds a Master of Science degree inCarla S. Gatzke
joined the Company in 1984 in Systems Sales Engineering where she was responsible for sales and project management for legislative voting systems. In 1988, Ms. Gatzke took anIntroduction
The following discussion should be read in conjunction with the various tables and accompanying narrative disclosure appearing in this Proxy Statement. Those tables and narrative disclosure provide more detailed information regarding the compensation and benefits awarded to, earned by, or paid to our Named Executive Officers, as well as the plans in which they are eligible to participate. At last year’s annual meeting, our shareholders provided an advisory "say-on-pay" vote indicating their overwhelming support of the Company’s compensation program for our Named Executive Officers. Our shareholders had previously voted that such say-on-pay votes be held
Executive Summary
Our executive compensation program, developed by management and approved by the Compensation Committee of the Board of Directors (the "Committee"), is intended to be simple (easily understood) and team-based, focused on a few key performance metrics, and balanced among:
employees, managers and executives;
long-term and short-term objectives;
financial and stock performance; and
cash and equity compensation.
The compensation program is designed to align the interests of the executive team with the interests of our shareholders. It uses salary, benefits, and non-equity-based and equity-based incentive plans to achieve these goals, with a focus on tying compensation to corporate performance. The retention of top talent and the achievement of corporate objectives measure the effectiveness of our compensation program.
The Company's financial performance for the fiscal year ended May 2, 20201, 2021 included an increasea decrease in orders (16.9 percent) and an increase in sales (20.8 percent) as compared to fiscal 2019. Orders increased2020. Each business unit's order volume was lower in the Live Events, High School Park and Recreation, and Transportation business units and decreased in the Commercial and International business units. The Live Events business unit orders increase was primarilyfiscal 2021 due to lower market activity from the increase inresulting economic and business impacts of the number of projects for collegeCOVID-19 pandemic and university venues, minor league sports stadiums, and professional sports venues. Transportation orders grew as demand for intelligent transportation systems increased as state transportation departments and private public partnerships continue to invest in technology to better inform travelers, manage transport systems, and collect revenues. Commercial orders decreased primarily due to a decrease of orders in our spectacular and out-of-home niches. International business unit orders were down primarily due to therelated timing of large contract orders. Each business unit's orders andwere impacted by the delay of orders due to the COVID-19 pandemic.additional week in fiscal 2020. Net sales increased in the Commercial, Live Events, High School Park and Recreation, and Transportation business units and remained relatively flat in the International business unit. This change in sales correlates to order levels and to the timing of converting orders and backlog into sales. The timingdecreased as a result of order conversion isbooking declines and delayed conversions to sales based on customer-driven deliverycustomer project schedules. Financial metrics for fiscal 20202021 included a 1.32.9 percent return on assets and a 2.66.2 percent return on beginning shareholders' equity. In fiscal 2020 comparedOperating margin improved to fiscal 2019, sales increased by 6.93.5 percent and operating income increased by 96.5 percent. In fiscal 2020, operating results were breakeven; therefore, the annual operating loss as a percent of sales was 0.0 percentfor fiscal 2021 as compared to an operating lossa breakeven as a percentagepercent of sales for fiscal 2020.
Changes to executive compensation during the current fiscal year were mainly due to maintaining the competitiveness of our compensation program. In addition, our executives' pay wasbase salaries were reduced starting April 1, 2020 in response to the uncertainty, longevity, and severity of the effects of the COVID-19 pandemic would have on Daktronics business.
Role of Compensation Committee, Philosophy and Objectives
The Compensation Committee has the responsibility for guiding our executive compensation philosophy and overseeing the design of our executive compensation programs. In arriving at the appropriate levels of pay and incentive opportunities, the Committee reviews our compensation philosophy and trends in our peer group to assure that our executive compensation program is competitive to effectively recruit and retain talented management, focus our executives to achieve short- and long-range corporate objectives, and align the interests of the executives with the interests of our shareholders.
The Committee bases its executive compensation decisions on the following philosophies:
Executive compensation should be appropriate to recruit and retain high-performing executives successfully, taking into account executive pay at comparable companies and our pay practices for non-executive employees.
An individual executive's compensation should be based on the executive's responsibility level, capability and performance.
The executive team's compensation should include a significant component that is based on the Company's overall financial performance to encourage the executive team to focus on the overall success of the Company.
Our executives should receive few perquisites, if any, other than those provided to all employees.
The Committee annually reviews each executive's compensation. The Committee has determined that our executives' compensation will include base salary, non-equity-based incentive compensation, and equity-based incentive pay in the form of options and restricted stock units. We view the various components of compensation as related but distinct.
We determine the appropriate level for each executive compensation component based in part, but not exclusively, on the following factors:
internal equity and consistency;
individual performance;
the executive compensation paid by other companies with which we compete for executive talent; and
Company performance.
The base salary reflects the pay the Committee believes is appropriate for each executive's responsibility, capability and performance. The non-equity-based incentive compensation is designed to focus the executive team on the Company-wide goals and objectives, which focus on growth in revenue and reductions in costs in order to achieve and sustain a target operating margin. The Committee has not adopted any formal policies or guidelines for allocating compensation between long-term and currently paid-out compensation, between cash and non-cash compensation, or among different forms of non-cash compensation, although it has a preference for a material amount of "at risk" compensation, the amount of which is based on our financial results. The equity-based compensation plan is designed to encourage executives to also own shares of common stock in the Company and thereby align executives' interests with our shareholders' interests.
The Committee considers both internal equity and market competitiveness. We compare executive pay to the compensation of other key managers and employees at the Company. As described below, we also compare overall executive compensation to comparison companies and to salary database information. The Committee believes that equitable and competitive compensation, as well as leader development and promotion-from-within, are essential to retain high-performing executives. Our currently employed Named Executive Officers have an average of 28.629.6 years of experience with Daktronics.
For fiscal
Role of Executive Officers in Compensation Decisions
Our Chief Executive Officer and Vice President of Human Resources present to the Compensation Committee their recommendations for the salary, non-equity-based incentive compensation, and equity-based compensation grants for the Named Executive Officers and selectedselect other executives. The Committee considers these recommendations and accepts or adjusts them, in whole or in part. The Chief Executive Officer and Vice President of Human Resources are not present for the discussions or determinations about their own compensation, but they generally participate in the discussions regarding other executive officers’ compensation. The Chair of the Compensation Committee presents the Committee’s findings regarding compensation for executive officers to the Board of Directors. Based on such input, the Board of Directors reviews and generally approves and adopts the Committee's recommendations regarding the executives' compensation plan.
Benchmarking
In making decisions regarding elements and amounts of compensation, the Committee considers the compensation paid to executive officers at similar levels and responsibilities. These are public companies in our geographical area (South Dakota, North Dakota, Minnesota, Iowa, and Nebraska) with revenues of between $250 million and $1 billion and with a focus on manufacturing or technology.
The following list sets forth the companies comprising our peer group list:
Apogee Enterprises, Inc. | Hawkins, Inc. |
Badger Meter, Inc. | iMedia Brands, Inc. |
Bio-Techne Corporation | Tennant Company |
Winnebago Industries, Inc. | Lindsay Corporation |
Raven Industries, Inc. | Enerpac Tool Group Corp. |
Graco, Inc. |
The Committee also considers compensation data from Salary.com and the Economic Research Institute, which takes into consideration company size, geography, base salary and variable cash compensation but excludes equity incentive compensation information.
The Committee believes that its executive compensation is sufficiently conservative, as well as appropriately competitive, so as not to require an external consultant opinion.
For fiscal 2020,2021, the principal components of our executive compensation program consisted of the following, each of which is addressed below in greater detail:
base salary;
non-equity-based incentive compensation plan;
equity-based compensation plan; and
benefits.
Base Salary
. The base salary reflects each executive's responsibility, capability and performance. Base salary is determined based on the benchmarking data for the executive's responsibilities, the executive's experience, and the executive's performance and the impact of such performance on our business results.The Committee also takes into account the Company's financial performance, and it has in the past limited executive pay changes based on business or economic conditions. The Committee also considers the recommendations of the Chief Executive Officer for other Named Executive Officers.
In April 2020, in response to the potential impacts of COVID-19 on the Company's business, Mr. Reece A. Kurtenbach and Ms. Sheila M. Anderson reduced their base salaries by 15% and the other Named Executive Officers elected to reduce their base salaries by 10%.
Non-Equity-Based Incentive Compensation Plan
. The purpose of our non-equity-based incentive compensation plan is to focus the executive team on the Company-wide goals and objectives of growth in revenue and reductions in costs in order to achieve and sustain a target operating margin. The non-equity-based incentive compensation plan is a formula-based variable cash compensation plan, with no payouts if operating margin is less than 2.5 percent, targeted payouts at a 10 percent operating margin, and maximum payouts at a 12.5 percent operating margin. The targeted level of variable cash compensation varies from an amount equal to five months of base salary to eight months of base salary for each executive officer. The maximum level of the variable cash compensation is 120 percent of the targeted level of variable cash compensation.This level of non-equity compensation takes into account other non-equity incentive compensation plans at comparable companies, as well as the Committee's preference for a material level of executive compensation that varies with the Company's performance. The Compensation Committee selected the operating margin measure for the formula because they believe it is the most appropriate indicator of performance that will drive long-term shareholder value, and it is consistent with our corporate strategies.
The various payout percentages based on operating margins are as follows:
Operating Margin | Percentage of Targeted Non-equity Incentive Compensation | |||
Less than | % | — | ||
| 2.5 to | % | 0.0 to | % | |
| 5.0 to | % | 25.0 to | % | |
| 7.5 to | % | 60.0 to | % | |
| 10.0 to | % | 100.0 to | % |
We follow applicable laws and regulations regarding the recovery of any non-equity-based compensation, other incentive-based or equity-based compensation, and profits realized from the sale of securities resulting from any misconduct on the part of an executive officer.
During fiscal
Equity-Based Compensation Program
. Grants of equity awards offer long-term incentives to our executives and align the interests of employees more closely with those of our shareholders.Each year, the Board of Directors, based on recommendations of the Compensation Committee, determines the number of shares that may be subject to equity awards for all employees, including the Named Executive Officers. The total number of shares subject to equity awards is constrained by our Board’s desire to limit dilution to shareholders to a level consistent with our historical levels, which generally approximate a dilution of one percent, and to limit the total grant date fair value of the equity awards to a targeted level. The one percent
The Committee also considers trends in equity-based compensation, the mix of the type of equity grants, and the number of our shares that are available for equity grants. The Compensation Committee and the Board of Directors also generally follow a practice of allocating similar equity grants to each of the Named Executive Officers, with some variation based on responsibilities and experience. The allocation to the Named Executive Officers is based on historical grants, the value of past grants, and the Company’s performance, all of which are subject to the objectives listed under the section of this Proxy Statement entitled "Compensation Discussion and Analysis - Role of Compensation Committee, Philosophy and Objectives."
For fiscal 20202021, the Compensation Committee determined that each Named Executive Officer would be allocated equity grants for approximately 8,75015,000 shares of common stock, with a ratio of 2.5 to 15-to-1 of incentive stock options to restricted stock units. The Committee determined that Mr. Reece A. Kurtenbach should receive a grant of approximately twice the amount of the other Named Executive Officers to facilitate his ownership of additional stock of the Company as the CEO and to reflect a ratio of grants to the CEO compared to the grant to Named Executive Officers that is more similar to the ratio in the benchmarking data. The Committee determined that the valuation of the equity grants, based on the grant date fair value as determined under ASC 718, would be limited to approximately $2.5$2.5 million for all employees, including the Named Executive Officers. The value of the restricted stock units was equal to 138.8048.10 percent of the value of the stock options for executives, as determined under the fair value provisions of ASC 718. For fiscal 20202021, all equity grants to employees were made under the Daktronics, Inc. 20152020 Stock Incentive Plan (the "2015"2020 Plan").
The Board and the Compensation Committee approve equity grants for Named Executive Officers and other employees annually in their summer meetings to coincide with the Director equity grants and the annual meeting of shareholders. Equity awards are not typically granted at other times of the year for employees, including new employees. The exercise price of all stock options granted is equal to the fair market value of the Company’s common stock as reported on The Nasdaq Global Select Market on the date of grant, which is defined in the Daktronics, Inc. 2007 Stock Incentive Plan (the "2007 Plan") and the 20152020 Plan as the closing price of the common stock as reported on The Nasdaq Global Select Market on the date of grant. All options also contain five-year vesting provisions, with 20 percent of the shares underlying the stock option vesting each year following the date of grant. The restricted stock units also contain a five-year vesting provision, with 20 percent of the restricted stock units vesting each year following the date of grant.
Benefits
. Our Named Executive Officers are eligible for all benefits generally available to our full-time employees. We do not provide pension arrangements, post-retirement health coverage, or similar benefits for our executives or employees.All employees, including the Named Executive Officers, are entitled to participate in the 401(k) Plan, which is qualified under Section 401(k) of the Internal Revenue Code (the "Code"). At the discretion of the Board of Directors, we may make matching contributions equal to a percentage of the salary deduction contributions or other discretionary amounts. For fiscal year 2021, the matching contribution program was suspended because of the COVID-19 pandemic. We paid $2.9 million in matching and discretionary contributions in fiscal
All employees, including the Named Executive Officers, are entitled to participate in the Daktronics, Inc. Employee Stock Purchase Plan, or ESPP, which is intended to qualify under Section 423 of the Code. The ESPP allows employees to purchase shares of our common stock, subject to annual limitations, at a price equal to 85 percent of the lower of the fair market value of the common stock at the beginning or the end of each six-month offering period.
Accounting and Tax Treatment
We account for equity-based compensation paid to employees under ASC 718,
Compensation-Stock Compensation, promulgated by the Financial Accounting Standards Board, which requires us to estimate and record an expense over the service period of the award. Thus, we may record an expense in one year for awards granted in earlier years. Accounting rules also require us to record cash compensation as an expense at the time the obligation is accrued.With respect to option awards, we generally can deduct the gain recognized by employees and Directors from the exercise of non-qualified options. However, to the extent that an option is an incentive stock option, we cannot deduct the gain recognized by the optionee upon exercise of the option if there is no disqualifying disposition by the optionee.
With respect to restricted stock awards, we generally can deduct the fair market value of the shares vested on the vesting date. Alternatively, if the recipient were to make an election under Section 83(b) of the Code, we would be entitled to a deduction on the date of grant equal to the value of the restricted stock on the date of grant.
Section 162(m) of the Code generally disallows a tax deduction to a public company for compensation in excess of $1 million paid to a company's chief executive officer and the four other most highly paid executive officers. Qualifying performance-based compensation will not be subject to the deduction limitation if certain requirements are met. Because the potential amount of base salary and non-equity-based incentive compensation that each of our executive officers can earn is less than $1 million, Section 162(m) has not been material to our compensation decisions.
The Compensation Committee has reviewed and discussed the section of this Proxy Statement entitled "Compensation Discussion and Analysis" with management. Based on such review and discussions, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.
By the Compensation Committee,
Robert G. Dutcher, Chair
Byron J. Anderson
John P. Friel
Dr. José-Marie Griffiths
For the fiscal years ended May 1, 2021, May 2, 2020 and April 27, 2019 and April 28, 2018,, the following table sets forth information about compensation awarded to, earned by or paid to our principal executive officer and principal financial officer and our next three most highly compensated executive officers whose total compensation was greater than $100,000 for the fiscal year ended
SUMMARY COMPENSATION TABLE – FISCAL
Name and Principal Position | Year | Salary($) | Stock Awards ($) (1) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation($) (3) | All Other Compensation($)(4) | Total($) | |||||||||||||||||||
| Reece A. Kurtenbach | 2020 | $ | 451,489 | $ | 34,290 | $ | 24,705 | $ | — | $ | 8,400 | $ | 518,884 | |||||||||||||
| Chief Executive Officer and | 2019 | 443,846 | 34,938 | 29,160 | — | 8,290 | 516,234 | |||||||||||||||||||
| President | 2018 | 427,692 | 48,660 | 42,300 | — | 8,100 | 526,752 | |||||||||||||||||||
| Sheila M. Anderson | 2020 | $ | 287,413 | $ | 15,875 | $ | 11,438 | $ | — | $ | 7,578 | $ | 322,304 | |||||||||||||
| Chief Financial Officer | 2019 | 279,354 | 16,175 | 13,500 | — | 7,223 | 316,252 | |||||||||||||||||||
| 2018 | 267,077 | 24,330 | 21,150 | — | 7,141 | 319,698 | ||||||||||||||||||||
| Bradley T. Wiemann | 2020 | $ | 277,802 | $ | 15,875 | $ | 11,438 | $ | — | $ | 8,334 | $ | 313,449 | |||||||||||||
| Executive Vice President | 2019 | 271,231 | 16,175 | 13,500 | — | 8,069 | 308,975 | |||||||||||||||||||
| 2018 | 262,092 | 24,330 | 21,150 | — | 7,905 | 315,477 | ||||||||||||||||||||
| Matthew J. Kurtenbach | 2020 | $ | 266,059 | $ | 15,875 | $ | 11,438 | $ | — | $ | 7,982 | $ | 301,354 | |||||||||||||
| Vice President | 2019 | 258,662 | 16,175 | 13,500 | — | 7,687 | 296,024 | |||||||||||||||||||
| 2018 | 248,554 | 24,330 | 21,150 | — | 7,496 | 301,530 | ||||||||||||||||||||
| Carla S. Gatzke | 2020 | $ | 226,599 | $ | 15,875 | $ | 11,438 | $ | — | $ | 6,798 | $ | 260,710 | |||||||||||||
| Vice President and | 2019 | 217,973 | 16,175 | 13,500 | — | 6,481 | 254,129 | |||||||||||||||||||
| Secretary | 2018 | 210,487 | 22,303 | 19,373 | — | 6,341 | 258,504 | |||||||||||||||||||
Name and Principal Position | Year | Salary($) | Stock Awards ($) (1) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation($) (3) | All Other Compensation($)(4) | Total($) | ||||||||||||||||||
Reece A. Kurtenbach | 2021 | $ | 386,658 | $ | 20,520 | $ | 42,660 | $ | — | $ | — | $ | 449,838 | ||||||||||||
Chief Executive Officer and | 2020 | 451,489 | 34,290 | 24,705 | — | 8,400 | 518,884 | ||||||||||||||||||
President | 2019 | 443,846 | 34,938 | 29,160 | — | 8,290 | 516,234 | ||||||||||||||||||
Sheila M. Anderson | 2021 | $ | 244,963 | $ | 9,500 | $ | 19,750 | $ | — | $ | — | $ | 274,213 | ||||||||||||
Chief Financial Officer | 2020 | 287,413 | 15,875 | 11,438 | — | 7,578 | 322,304 | ||||||||||||||||||
2019 | 279,354 | 16,175 | 13,500 | — | 7,223 | 316,252 | |||||||||||||||||||
Bradley T. Wiemann | 2021 | $ | 255,240 | $ | 9,500 | $ | 19,750 | $ | — | $ | — | $ | 284,490 | ||||||||||||
Executive Vice President | 2020 | 277,802 | 15,875 | 11,438 | — | 8,334 | 313,449 | ||||||||||||||||||
2019 | 271,231 | 16,175 | 13,500 | — | 8,069 | 308,975 | |||||||||||||||||||
Matthew J. Kurtenbach | 2021 | $ | 245,340 | $ | 9,500 | $ | 19,750 | $ | — | $ | — | $ | 274,590 | ||||||||||||
Vice President | 2020 | 266,059 | 15,875 | 11,438 | — | 7,982 | 301,354 | ||||||||||||||||||
2019 | 258,662 | 16,175 | 13,500 | — | 7,687 | 296,024 | |||||||||||||||||||
Carla S. Gatzke | 2021 | $ | 208,980 | $ | 9,500 | $ | 19,750 | $ | — | $ | — | $ | 238,230 | ||||||||||||
Vice President and | 2020 | 226,599 | 15,875 | 11,438 | — | 6,798 | 260,710 | ||||||||||||||||||
Secretary | 2019 | 217,973 | 16,175 | 13,500 | — | 6,481 | 254,129 | ||||||||||||||||||
(1) | Consists of restricted stock units granted under the 2015 |
(2) | Consists of stock options granted under the 2015 |
(3) | The amounts in this column reflect the total variable cash compensation paid to the Named Executive Officers under the non-equity-based incentive compensation plan. As explained earlier in this Proxy Statement, variable incentive compensation payments are based upon the achievement of certain operating margin targets for fiscal |
(4) | Consists of matching contributions made by us under the 401(k) Plan, which is intended to qualify under Section 401(k) of the Code. |
The following table sets forth information regarding grants of plan-based awards to the Named Executive Officers during fiscal 20202021:
GRANTS OF PLAN-BASED AWARDS — FISCAL
Estimated future payouts under non-equity incentive plan awards(1) | All other stock awards: number of shares of stock or units (#)(2) | All other option awards: number of securities underlying options (#) (3) | Exercise or base price of option awards ($/share)(4) | Grant date fair value of stock and option awards($) (5) | |||||||||||||||||||
| Name | Grant Date | Threshold($) | Target($) | Maximum($) | |||||||||||||||||||
| Reece A. Kurtenbach | 09/05/2019 | 77,000 | 308,000 | 369,600 | 5,400 | 13,500 | 7.47 | 58,995 | |||||||||||||||
| Sheila M. Anderson | 09/05/2019 | 33,802 | 135,208 | 162,250 | 2,500 | 6,250 | 7.47 | 27,313 | |||||||||||||||
| Bradley T. Wiemann | 09/05/2019 | 38,404 | 153,617 | 184,340 | 2,500 | 6,250 | 7.47 | 27,313 | |||||||||||||||
| Matthew J. Kurtenbach | 09/05/2019 | 36,915 | 147,658 | 177,190 | 2,500 | 6,250 | 7.47 | 27,313 | |||||||||||||||
| Carla S. Gatzke | 09/05/2019 | 24,188 | 96,750 | 116,100 | 2,500 | 6,250 | 7.47 | 27,313 | |||||||||||||||
Estimated future payouts under non-equity incentive plan awards(1) | All other stock awards: number of shares of stock or units | All other option awards: number of securities underlying options | Exercise or base price of option awards | Grant date fair value of stock and option | ||||||||||||
Name | Threshold($) | Target($) | Maximum($) | Grant Date | (#)(2) | (#) (3) | ($/share)(4) | awards($) (5) | ||||||||
Reece A. Kurtenbach | 77,000 | 308,000 | 369,600 | 9/3/2020 | 5,400 | 27,000 | 4.11 | 63,180 | ||||||||
Sheila M. Anderson | 33,802 | 135,208 | 162,250 | 9/3/2020 | 2,500 | 12,500 | 4.11 | 29,250 | ||||||||
Bradley T. Wiemann | 38,404 | 153,617 | 184,340 | 9/3/2020 | 2,500 | 12,500 | 4.11 | 29,250 | ||||||||
Matthew J. Kurtenbach | 36,915 | 147,658 | 177,190 | 9/3/2020 | 2,500 | 12,500 | 4.11 | 29,250 | ||||||||
Carla S. Gatzke | 24,188 | 96,750 | 116,100 | 9/3/2020 | 2,500 | 12,500 | 4.11 | 29,250 | ||||||||
(1) | Consists of variable cash compensation under our annual non-equity-based incentive compensation plan. The amounts reflect the minimum payment level, if an award is achieved, the target payment level, and the maximum payment level under the plan. For additional information concerning our annual non-equity-based compensation plan, see the section of this Proxy Statement entitled "Compensation Discussion and Analysis - Elements of Compensation." |
(2) | Consists of restricted stock units granted to the Named Executive Officers in fiscal |
(3) | Consists of options granted to the Named Executive Officers in fiscal |
(4) | The exercise price of all options was equal to the closing price of the common stock as quoted on The Nasdaq Global Select Market on the date of grant as provided in the |
(5) | Represents the full grant date fair value determined pursuant to ASC 718 as reflected in our financial statements, based on the |
The following table sets forth information about unexercised options and restricted stock units that have not vested that were held at May 2, 20201, 2021 by the Named Executive Officers:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END — FISCAL 2020
Option Awards(1) | Stock Awards | ||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | ||||||||||||||||||
Reece A. Kurtenbach | 12/1/2011 | 10,500 | — | 9.24 | 11/30/21 | — | — | ||||||||||||||||||
8/23/2012 | 10,800 | — | 9.51 | 08/22/22 | — | — | |||||||||||||||||||
8/22/2013 | 8,750 | — | 11.05 | 08/22/23 | — | — | |||||||||||||||||||
9/1/2013 | 25,000 | — | 10.93 | 08/22/23 | — | — | |||||||||||||||||||
9/4/2014 | 15,000 | — | 13.31 | 09/04/24 | — | — | |||||||||||||||||||
9/3/2015 | 15,000 | — | 8.51 | 09/03/25 | — | — | |||||||||||||||||||
9/1/2016 | 12,000 | 3,000 | 9.57 | 09/01/26 | — | — | |||||||||||||||||||
8/31/2017 | 9,000 | 6,000 | 9.63 | 08/31/27 | — | — | |||||||||||||||||||
9/6/2018 | 5,400 | 8,100 | 7.83 | 09/06/28 | — | — | |||||||||||||||||||
9/5/2019 | 2,700 | 10,800 | 7.47 | 09/05/29 | — | — | |||||||||||||||||||
9/3/2020 | — | 27,000 | 4.11 | 09/03/30 | — | — | |||||||||||||||||||
| — | — | — | — | 16,560 | 102,175 | ||||||||||||||||||||
Sheila M. Anderson | 12/1/2011 | 4,000 | — | 9.24 | 11/30/21 | — | — | ||||||||||||||||||
8/23/2012 | 4,000 | — | 9.51 | 08/22/22 | — | — | |||||||||||||||||||
9/12/2012 | 6,000 | — | 9.56 | 08/22/22 | — | — | |||||||||||||||||||
8/22/2013 | 6,870 | — | 11.05 | 08/22/23 | — | — | |||||||||||||||||||
9/4/2014 | 7,500 | — | 13.31 | 09/04/24 | — | — | |||||||||||||||||||
9/3/2015 | 7,500 | — | 8.51 | 09/03/25 | — | — | |||||||||||||||||||
9/1/2016 | 6,000 | 1,500 | 9.57 | 09/01/26 | — | — | |||||||||||||||||||
8/31/2017 | 4,500 | 3,000 | 9.63 | 08/31/27 | — | — | |||||||||||||||||||
9/6/2018 | 2,500 | 3,750 | 7.83 | 09/06/28 | — | — | |||||||||||||||||||
9/5/2019 | 1,250 | 5,000 | 7.47 | 09/05/29 | — | — | |||||||||||||||||||
9/3/2020 | — | 12,500 | 4.11 | 09/03/30 | — | — | |||||||||||||||||||
| — | — | — | — | 7,800 | 48,126 | ||||||||||||||||||||
Bradley T. Wiemann | 12/1/2011 | 7,155 | — | 9.24 | 11/30/21 | — | — | ||||||||||||||||||
8/23/2012 | 10,500 | — | 9.51 | 08/22/22 | — | — | |||||||||||||||||||
8/22/2013 | 10,800 | — | 11.05 | 08/22/23 | — | — | |||||||||||||||||||
9/4/2014 | 7,500 | — | 13.31 | 09/04/24 | — | — | |||||||||||||||||||
9/3/2015 | 7,500 | — | 8.51 | 09/03/25 | — | — | |||||||||||||||||||
9/1/2016 | 6,000 | 1,500 | 9.57 | 09/01/26 | — | — | |||||||||||||||||||
8/31/2017 | 4,500 | 3,000 | 9.63 | 08/31/27 | — | — | |||||||||||||||||||
9/6/2018 | 2,500 | 3,750 | 7.83 | 09/06/28 | — | — | |||||||||||||||||||
9/5/2019 | 1,250 | 5,000 | 7.47 | 09/05/29 | — | — | |||||||||||||||||||
9/3/2020 | — | 12,500 | 4.11 | 09/03/30 | — | — | |||||||||||||||||||
| — | — | — | — | 7,800 | 48,126 | ||||||||||||||||||||
Matthew J. Kurtenbach | 12/1/2011 | 7,155 | — | 9.24 | 11/30/21 | — | — | ||||||||||||||||||
8/23/2012 | 10,500 | — | 9.51 | 08/22/22 | — | — | |||||||||||||||||||
8/22/2013 | 10,500 | — | 11.05 | 08/22/23 | — | — | |||||||||||||||||||
9/4/2014 | 7,500 | — | 13.31 | 09/04/24 | — | — | |||||||||||||||||||
9/3/2015 | 7,500 | — | 8.51 | 09/03/25 | — | — | |||||||||||||||||||
9/1/2016 | 6,000 | 1,500 | 9.57 | 09/01/26 | — | — | |||||||||||||||||||
8/31/2017 | 4,500 | 3,000 | 9.63 | 08/31/27 | — | — | |||||||||||||||||||
9/6/2018 | 2,500 | 3,750 | 7.83 | 09/06/28 | — | — | |||||||||||||||||||
9/5/2019 | 1,250 | 5,000 | 7.47 | 09/05/29 | — | — | |||||||||||||||||||
9/3/2020 | — | 12,500 | 4.11 | 09/03/30 | — | — | |||||||||||||||||||
| — | — | — | — | 7,800 | 48,126 | ||||||||||||||||||||
Carla S. Gatzke | 12/1/2011 | 10,000 | — | 9.24 | 11/30/21 | — | — | ||||||||||||||||||
8/23/2012 | 10,500 | — | 9.51 | 08/22/22 | — | — | |||||||||||||||||||
8/22/2013 | 6,870 | — | 11.05 | 08/22/23 | — | — | |||||||||||||||||||
9/4/2014 | 6,870 | — | 13.31 | 09/04/24 | — | — | |||||||||||||||||||
9/3/2015 | 6,870 | — | 8.51 | 09/03/25 | — | — | |||||||||||||||||||
9/1/2016 | 5,496 | 1,374 | 9.57 | 09/01/26 | — | — | |||||||||||||||||||
8/31/2017 | 4,122 | 2,748 | 9.63 | 08/31/27 | — | — | |||||||||||||||||||
9/6/2018 | 2,500 | 3,750 | 7.83 | 09/06/28 | — | — | |||||||||||||||||||
9/5/2019 | 1,250 | 5,000 | 7.47 | 09/05/29 | — | — | |||||||||||||||||||
9/3/2020 | — | 12,500 | 4.11 | 09/03/30 | — | — | |||||||||||||||||||
| — | — | — | — | 7,650 | 47,201 | ||||||||||||||||||||
Option Awards(1) | Stock Awards | |||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | |||||||||||
| Reece A. Kurtenbach | 12/02/2010 | 7,155 | — | 14.37 | 12/01/2020 | — | — | |||||||||||
| 12/01/2011 | 10,500 | — | 9.24 | 11/30/2021 | — | — | ||||||||||||
| 08/23/2012 | 10,800 | — | 9.51 | 08/22/2022 | — | — | ||||||||||||
| 08/22/2013 | 8,750 | — | 11.05 | 08/22/2023 | — | — | ||||||||||||
| 09/01/2013 | 25,000 | — | 10.93 | 08/22/2023 | — | — | ||||||||||||
| 09/04/2014 | 15,000 | — | 13.31 | 09/04/2024 | — | — | ||||||||||||
| 09/03/2015 | 12,000 | 3,000 | 8.51 | 09/03/2025 | — | — | ||||||||||||
| 09/01/2016 | 9,000 | 6,000 | 9.57 | 09/01/2026 | — | — | ||||||||||||
| 08/31/2017 | 6,000 | 9,000 | 9.63 | 08/31/2027 | — | — | ||||||||||||
| 09/06/2018 | 2,700 | 10,800 | 7.83 | 09/06/2028 | — | — | ||||||||||||
| 09/05/2019 | — | 13,500 | 7.47 | 09/05/2029 | — | — | ||||||||||||
| — | — | — | — | 16,920 | 75,294 | |||||||||||||
| Sheila M. Anderson | 12/02/2010 | 2,445 | — | 14.37 | 12/01/2020 | — | — | |||||||||||
| 12/01/2011 | 4,000 | — | 9.24 | 11/30/2021 | — | — | ||||||||||||
| 08/23/2012 | 4,000 | — | 9.51 | 08/22/2022 | — | — | ||||||||||||
| 09/12/2012 | 6,000 | — | 9.56 | 08/22/2022 | — | — | ||||||||||||
| 08/22/2013 | 6,870 | — | 11.05 | 08/22/2023 | — | — | ||||||||||||
| 09/04/2014 | 7,500 | — | 13.31 | 09/04/2024 | — | — | ||||||||||||
| 09/03/2015 | 6,000 | 1,500 | 8.51 | 09/03/2025 | — | — | ||||||||||||
| 09/01/2016 | 4,500 | 3,000 | 9.57 | 09/01/2026 | — | — | ||||||||||||
| 08/31/2017 | 3,000 | 4,500 | 9.63 | 08/31/2027 | — | — | ||||||||||||
| 09/06/2018 | 1,250 | 5,000 | 7.83 | 09/06/2028 | — | — | ||||||||||||
| 09/05/2019 | — | 6,250 | 7.47 | 09/05/2029 | — | — | ||||||||||||
| — | — | — | — | 8,100 | 36,045 | |||||||||||||
Option Awards(1) | Stock Awards | ||||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | ||||||||||||
| Bradley T. Wiemann | 12/02/2010 | 10,500 | — | 14.37 | 12/01/2020 | — | — | ||||||||||||
| 12/01/2011 | 7,155 | — | 9.24 | 11/30/2021 | — | — | |||||||||||||
| 08/23/2012 | 10,500 | — | 9.51 | 08/22/2022 | — | — | |||||||||||||
| 08/22/2013 | 10,800 | — | 11.05 | 08/22/2023 | — | — | |||||||||||||
| 09/04/2014 | 7,500 | — | 13.31 | 09/04/2024 | — | — | |||||||||||||
| 09/03/2015 | 6,000 | 1,500 | 8.51 | 09/03/2025 | — | — | |||||||||||||
| 09/01/2016 | 4,500 | 3,000 | 9.57 | 09/01/2026 | — | — | |||||||||||||
| 08/31/2017 | 3,000 | 4,500 | 9.63 | 08/31/2027 | — | — | |||||||||||||
| 09/06/2018 | 1,250 | 5,000 | 7.83 | 09/06/2028 | — | — | |||||||||||||
| 09/05/2019 | — | 6,250 | 7.47 | 09/05/2029 | — | — | |||||||||||||
| — | — | — | — | 8,100 | 36,045 | ||||||||||||||
| Matthew J. Kurtenbach | 12/02/2010 | 10,500 | — | 14.37 | 12/01/2020 | — | — | ||||||||||||
| 12/01/2011 | 7,155 | — | 9.24 | 11/30/2021 | — | — | |||||||||||||
| 08/23/2012 | 10,500 | — | 9.51 | 08/22/2022 | — | — | |||||||||||||
| 08/22/2013 | 10,500 | — | 11.05 | 08/22/2023 | — | — | |||||||||||||
| 09/04/2014 | 7,500 | — | 13.31 | 09/04/2024 | — | — | |||||||||||||
| 09/03/2015 | 6,000 | 1,500 | 8.51 | 09/03/2025 | — | — | |||||||||||||
| 09/01/2016 | 4,500 | 3,000 | 9.57 | 09/01/2026 | — | — | |||||||||||||
| 08/31/2017 | 3,000 | 4,500 | 9.63 | 08/31/2027 | — | — | |||||||||||||
| 09/06/2018 | 1,250 | 5,000 | 7.83 | 09/06/2028 | — | — | |||||||||||||
| 09/05/2019 | — | 6,250 | 7.47 | 09/05/2029 | — | — | |||||||||||||
| — | — | — | — | 8,100 | 36,045 | ||||||||||||||
| Carla S. Gatzke | 12/02/2010 | 6,455 | — | 14.37 | 12/01/2020 | — | — | ||||||||||||
| 12/01/2011 | 10,000 | — | 9.24 | 11/30/2021 | — | — | |||||||||||||
| 08/23/2012 | 10,500 | — | 9.51 | 08/22/2022 | — | — | |||||||||||||
| 08/22/2013 | 6,870 | — | 11.05 | 08/22/2023 | — | — | |||||||||||||
| 09/04/2014 | 6,870 | — | 13.31 | 09/04/2024 | — | — | |||||||||||||
| 09/03/2015 | 5,496 | 1,374 | 8.51 | 09/03/2025 | — | — | |||||||||||||
| 09/01/2016 | 4,122 | 2,748 | 9.57 | 09/01/2026 | — | — | |||||||||||||
| 08/31/2017 | 2,748 | 4,122 | 9.63 | 08/31/2027 | — | — | |||||||||||||
| 09/06/2018 | 1,250 | 5,000 | 7.83 | 09/06/2028 | — | — | |||||||||||||
| 09/05/2019 | — | 6,250 | 7.47 | 09/05/2029 | — | — | |||||||||||||
| — | — | — | — | 7,800 | 34,710 | ||||||||||||||
(1) | All options vest in equal installments over five years beginning one year after the grant date, but only if the Named Executive Officer is then an employee of the Company, and expire after 10 years. |
(2) | Restricted stock units vest as to 20 percent of the shares one year after date of grant and as to an additional 20 percent in each succeeding year, but only if the Named Executive Officer is then an employee of the Company. |
(3) | Determined by multiplying the Company's |
The following table sets forth information regarding the exercise of stock options by and the vesting of restricted stock awards during fiscal
OPTION EXERCISES AND STOCK VESTED – FISCAL
| Option Awards | Stock Awards | |||||||||||
| Number of Shares Acquired on Exercise (#) | Value Realized on Exercise($)(1) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($)(2) | |||||||||
| Name | ||||||||||||
| Reece A. Kurtenbach | — | — | 5,880 | 34,986 | ||||||||
| Sheila M. Anderson | — | — | 2,900 | 17,255 | ||||||||
| Bradley T. Wiemann | — | — | 2,900 | 17,255 | ||||||||
| Matthew J. Kurtenbach | — | — | 2,900 | 17,255 | ||||||||
| Carla S. Gatzke | — | — | 2,700 | 16,065 | ||||||||
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise($)(1) | Number of Shares Acquired on Vesting(#) | Value Realized on Vesting($)(2) | ||||||||||||
Reece A. Kurtenbach | — | — | 5,760 | 21,974 | ||||||||||||
Sheila M. Anderson | — | — | 2,800 | 10,682 | ||||||||||||
Bradley T. Wiemann | — | — | 2,800 | 10,682 | ||||||||||||
Matthew J. Kurtenbach | — | — | 2,800 | 10,682 | ||||||||||||
Carla S. Gatzke | — | — | 2,650 | 10,110 | ||||||||||||
(1) | Consists of the difference between the closing price of our common stock on the date of exercise and the per share exercise price of the option multiplied by the number of shares acquired upon exercise. |
(2) | Consists of the number of shares vested multiplied by the market value of the stock as of the vesting date. |
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth certain information as of
MayEQUITY COMPENSATION PLAN INFORMATION
| Plan category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||||
| (a) | (b) | (c) | ||||||||
| Equity compensation plans approved by security holders: | ||||||||||
| 2007 Stock Incentive Plan | 1,144,633 | $ | 11.09 | — | ||||||
| 2015 Stock Incentive Plan | 976,639 | 8.63 | 1,175,811 | |||||||
Employee Stock Purchase Plan(1) | Not Applicable | Not Applicable | 979,183 | |||||||
| Total | 2,121,272 | $ | 9.96 | 2,154,994 | ||||||
Plan category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders: | ||||||||||||
2007 Stock Incentive Plan | 889,585 | $ | 10.47 | — | ||||||||
2015 Stock Incentive Plan | 928,078 | 8.62 | — | |||||||||
2020 Stock Incentive Plan | 409,300 | 4.11 | 2,867,935 | |||||||||
Employee Stock Purchase Plan(1) | Not Applicable | Not Applicable | 808,732 | |||||||||
Total | 2,226,963 | $ | 8.53 | 3,676,667 | ||||||||
(1) | Under the ESPP, shares are acquired at the time of investment by the participating employees at the applicable discount. |
Post-Employment Compensation
Potential Payments upon Termination of Employment or Change in Control
The table below reflects the compensation that would be paid to each of our Named Executive Officers in the event of termination of such executive’s employment. The amounts shown assume that such termination was effective as of
MayUnder the 20152020 Plan, all options and restricted stock units immediately vest upon a "change in control", as that term is defined in the 20152020 Plan. The 2007 Plan hasand 2015 Plan have expired, but there are awards outstanding under the 2007 Plan and 2015 Plan that are governed by its terms. Upon a termination of employment for any reason, and consistent with our employment policies which apply to all employees, we are obligated to pay for accrued and unused vacation time, which would then be payable in a lump sum.
| Name | Benefit | Termination due to change in control | Termination without cause or for good reason | Termination for cause or for good reason | Death | |||||||||||||
| Reece A. Kurtenbach | Stock option vesting acceleration(1) | $ | — | $ | — | $ | — | $ | — | |||||||||
| Restricted stock unit vesting acceleration | 75,294 | — | — | — | ||||||||||||||
| Vacation pay | 34,928 | 34,928 | 34,928 | 34,928 | ||||||||||||||
| $ | 110,222 | $ | 34,928 | $ | 34,928 | $ | 34,928 | |||||||||||
| Sheila M. Anderson | Stock option vesting acceleration(1) | $ | — | $ | — | $ | — | $ | — | |||||||||
| Restricted stock unit vesting acceleration | 36,045 | — | — | — | ||||||||||||||
| Vacation pay | 14,653 | 14,653 | 14,653 | 14,653 | ||||||||||||||
| $ | 50,698 | $ | 14,653 | $ | 14,653 | $ | 14,653 | |||||||||||
| Bradley T. Wiemann | Stock option vesting acceleration(1) | $ | — | $ | — | $ | — | $ | — | |||||||||
| Restricted stock unit vesting acceleration | 36,045 | — | — | — | ||||||||||||||
| Vacation pay | 28,592 | 28,592 | 28,592 | 28,592 | ||||||||||||||
| $ | 64,637 | $ | 28,592 | $ | 28,592 | $ | 28,592 | |||||||||||
| Matthew J. Kurtenbach | Stock option vesting acceleration(1) | $ | — | $ | — | $ | — | $ | — | |||||||||
| Restricted stock unit vesting acceleration | 36,045 | — | — | — | ||||||||||||||
| Vacation pay | 33,027 | 33,027 | 33,027 | 33,027 | ||||||||||||||
| $ | 69,072 | $ | 33,027 | $ | 33,027 | $ | 33,027 | |||||||||||
| Carla S. Gatzke | Stock option vesting acceleration(1) | $ | — | $ | — | $ | — | $ | — | |||||||||
| Restricted stock unit vesting acceleration | 34,710 | — | — | — | ||||||||||||||
| Vacation pay | 28,132 | 28,132 | 28,132 | 28,132 | ||||||||||||||
| $ | 62,842 | $ | 28,132 | $ | 28,132 | $ | 28,132 | |||||||||||
Name | Benefit | Termination due to change in control | Termination without cause or for good reason | Termination for cause or for good reason | Death | ||||||||||||
Reece A. Kurtenbach | Stock option vesting acceleration(1) | $ | — | $ | — | $ | — | $ | — | ||||||||
Restricted stock unit vesting acceleration | 102,175 | — | — | — | |||||||||||||
Vacation pay | 29,364 | 29,364 | 29,364 | 29,364 | |||||||||||||
| $ | 131,539 | $ | 29,364 | $ | 29,364 | $ | 29,364 | ||||||||||
Sheila M. Anderson | Stock option vesting acceleration(1) | $ | — | $ | — | $ | — | $ | — | ||||||||
Restricted stock unit vesting acceleration | 48,126 | — | — | — | |||||||||||||
Vacation pay | 12,767 | 12,767 | 12,767 | 12,767 | |||||||||||||
| $ | 60,893 | $ | 12,767 | $ | 12,767 | $ | 12,767 | ||||||||||
Bradley T. Wiemann | Stock option vesting acceleration(1) | $ | — | $ | — | $ | — | $ | — | ||||||||
Restricted stock unit vesting acceleration | 48,126 | — | — | — | |||||||||||||
Vacation pay | 21,679 | 21,679 | 21,679 | 21,679 | |||||||||||||
| $ | 69,805 | $ | 21,679 | $ | 21,679 | $ | 21,679 | ||||||||||
Matthew J. Kurtenbach | Stock option vesting acceleration(1) | $ | — | $ | — | $ | — | $ | — | ||||||||
Restricted stock unit vesting acceleration | 48,126 | — | — | — | |||||||||||||
Vacation pay | 30,274 | 30,274 | 30,274 | 30,274 | |||||||||||||
| $ | 78,400 | $ | 30,274 | $ | 30,274 | $ | 30,274 | ||||||||||
Carla S. Gatzke | Stock option vesting acceleration(1) | $ | — | $ | — | $ | — | $ | — | ||||||||
Restricted stock unit vesting acceleration | 47,201 | — | — | — | |||||||||||||
Vacation pay | 31,258 | 31,258 | 31,258 | 31,258 | |||||||||||||
| $ | 78,459 | $ | 31,258 | $ | 31,258 | $ | 31,258 | ||||||||||
(1) | For option awards, consists of the difference between the |
Other Post-Employment Payments
We do not provide pension arrangements, post-retirement health coverage or non-qualified defined contribution plans.
Compensation Risk Analysis
The Compensation Committee has established the non-equity incentive program to be based on the same Company-wide measure for each executive. As previously described, the Committee has selected operating margin as the Company-wide measure. Basing the program on the same Company-wide measure for all the executives minimizes the risks associated with individual formulas based on individual actions. The non-equity incentive program is the only formula-based incentive-compensation program in the Company.
CEO Pay Ratio
Pursuant to Item 402(u) of Regulation S-K and Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, we are providing the following information with respect to fiscal 2020:
• | the annual total compensation of the median employee of our Company (which excludes our CEO) was $53,218; and |
• | the annual total compensation of our CEO was $449,838. |
Based on this information, a reasonable estimate of the ratio of the annual total compensations of our CEO and the median employee for fiscal 20202021 was approximately 9 to 1.
We determined our median employee that was identified in fiscal 2018. In fiscal 2018, to identify the median employee’s total annual compensation we first identified all employees worldwide as of March 9, 2018, includingJanuary 1, 2021. We included all world-wide full-time, part-time, temporary and student employees, and excluding our CEO.CEO in the median compensation calculation. We then determined a consistently applied compensation measure by calculatingcalculated each identified employee’s total compensation as the annualized value of their current base hourly rate with scheduled hours or salary rate. Compensation paid in currencies other than U.S. dollars were converted to United StatesU.S. dollars based on average exchange rates for the period ended February 24, 2018. We used this calculated annual compensation to identify the median employee.
The identified median employee received $53,430$52,520 of base pay in fiscal 2020.2021. We then calculated the median employee's annual total compensation on the same basis that we used to calculate the total compensation of our Named Executive Officers set forth in the Summary Compensation Table, which added $2,935$698 to the median employee's base pay consisting of matching contributions made by the Company under the 401(k) Plan for the 2020 fiscal year anddue to overtime. Thus, our median employee's annual total compensation was $56,365.
The pay ratio reported above is calculated in a manner consistent with SEC rules and guidance, based on our internal records and the methodology described above. In addition, the rules for identifying the "median employee" and calculating the pay ratio allow companies to apply various methodologies and assumptions. As a result, the compensation for our median employee and the pay ratio reported by us should not be used as a comparison to the information reported by other companies.
The Audit Committee is composed of three Directors who are independent as provided in Rule 5605(a)(2) of the Nasdaq Listing Rules and Rule 10A-3 under the Securities Exchange Act of 1934. The members of the Audit Committee are appointed annually by the Board of Directors. The Audit Committee members are not professional accountants or auditors, and their role is not intended to duplicate or certify the activities of our management or the Independent Auditor, nor can the Audit Committee certify that the Independent Auditor is "independent" under applicable rules. The Audit Committee serves a Board-level oversight role in which it provides advice, counsel and direction to management and the Independent Auditor on the basis of the information it receives, discussions with management and the Independent Auditor, and the experience of the Audit Committee’s members in business, financial accounting and audit matters.
The membership of the Audit Committee for fiscal 2020,2021, together with their appointment dates and attendance at meetings, is set forth below:
Members | ||
Committee Member since | Attendance/Total Meetings | |
Kevin P. McDermott | 2016 | 5/5 |
John P. Friel | 2016 | 5/5 |
James B. Morgan | 2017 | 5/5 |
The Audit Committee has reviewed and discussed with management and the Independent Auditor our audited consolidated financial statements as of and for the fiscal year ended
MayThe Audit Committee recognizes the importance of maintaining the independence of the Company's Independent Auditor, both in fact and appearance. Each year, the Audit Committee evaluates the qualifications, performance and independence of the Company's Independent Auditor and determines whether to re-engage such firm. In doing so, the Audit Committee considers, among other things,
Based on the review and discussions described above, the Audit Committee recommended to the Board of Directors that our audited consolidated financial statements for the fiscal year ended
MayBy the Audit Committee,
Kevin P. McDermott, Chair
John P. Friel
James B. Morgan
We have adopted a procedure called "householding," which has been approved by the SEC. Under this procedure, we are delivering only one copy of our Annual Report, this Proxy Statement and our Notice of Internet Availability of Proxy Materials to multiple shareholders who have requested paper copies of the Annual Report and Proxy Statement and who share the same address, unless we have received contrary instructions from one or more of the shareholders. Shareholders who participate in householding will continue to be able to access and receive separate proxy cards or voting instruction cards. In addition, some banks, brokers and other intermediaries may be participating in this practice of householding our Annual Report, this Proxy Statement and our Notice of Internet Availability of Proxy Materials. This practice benefits us and our shareholders because it reduces the volume of duplicate information received at a shareholder’s address and helps reduce our expenses. Shareholders who share an address and receive multiple copies of our Annual Report, this Proxy Statement and our Notice of Internet Availability of Proxy Materials may request only one copy of these materials by contacting their bank, broker or other nominee record holder or by contacting the Company as described in the next paragraph.
Shareholders that have previously received a single set of our Annual Report, this Proxy Statement and our Notice of Internet Availability of Proxy Materials may request their own copies this fiscal year or in future years by contacting their bank, broker or other nominee record holder or by contacting the Company as described in the next sentence. We will also deliver promptly separate paper copies of our Annual Report, this Proxy Statement and our Notice of Internet Availability of Proxy Materials to any shareholder upon written request sent to Daktronics, Inc., 201 Daktronics Drive, Brookings, South Dakota 57006, Attention: Investor Relations, or upon verbal request by calling (605) 692-0200.
The Annual Report to Shareholders for the fiscal year ended
MayThe Annual Report to Shareholders for the fiscal year ended
MayBy Order of the Board of Directors,
Carla S. Gatzke
Secretary
