INFORMATION Check the appropriate box:Washington, D.C.(Amendment No. ) Partyparty other than the Registrant o☐o☐ o☐ o☐ o☐ Pursuant tounder §240.14a-12
METHODE ELECTRONICS, INC.
INFORMATION Check the appropriate box:Washington, D.C.(Amendment No. ) Partyparty other than the Registrant o☐o☐ o☐ o☐ o☐ Pursuant tounder §240.14a-12
METHODE ELECTRONICS, INC.
☒ | | | No fee |
☐ | | | Fee paid previously with preliminary materials |
| | Fee computed on table | |
SHAREHOLDERSSTOCKHOLDERS12, 201914, 2022the Shareholdersour Stockholders::Notice is hereby given that (“Methode” or the annual meeting of shareholders of Methode Electronics, Inc.“Company”) will be held on Thursday,Wednesday, September 12, 201914, 2022, at 11:00 a.m., Central Daylight Time, at Methode’s offices at 7447 West Wilson Avenue, Chicago, Illinois, 60706 forTime. The 2022 Annual Meeting will be a virtual meeting conducted via live webcast. You will be able to attend the Annual Meeting as well as vote and submit your questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/MEI2022 and entering the 16-digit control number included in the Notice of Internet Availability of Proxy Materials, on your proxy card or in the instructions that accompanied your proxy materials.purposes:matters, each as more fully described in the accompanying proxy statement:1. To elect each director nominee to hold office until the Company’s 2023 Annual Meeting of Stockholders or until such director’s earlier resignation, or a Board of Directors;respective successor is duly elected and appointed;2. 2.To approve the Methode Electronics, Inc. 2022 Omnibus Incentive Plan;3. To ratify the Audit Committee’s selection of Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending May 2, 2020;April 29, 2023;3.4.To provideapprove, on a non-binding, advisory approvalbasis, the compensation of Methode’s named executive officer compensation;officers; and4.5.To transact such other business as may properly come before the annual meetingAnnual Meeting or any adjournment or postponement thereof.
Our Board of Directors has fixed the close of business on July 18, 2019 as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting and at any adjournment or postponement thereof.
We are furnishing materials for our annual meeting on the Internet. You may vote your shares in person by attending our annual meeting, or by proxy. To vote by proxy, you may vote using the Internet, by toll-free telephone number or, if you request and receive a paper copy of the proxy card by mail, by signing, dating and mailing the proxy card in the self-addressed, postage-paid envelope provided. Information regarding voting by using the Internet or by telephone is contained in the Notice of Internet Availability of Proxy Materials. Instructions regarding voting by mail are contained on the proxy card.
It is important that your shares be represented and voted at the annual meeting. Whether or not you plan to attend the annual meeting, please vote on the matters to be considered. Thank you for your interest and cooperation.
Chicago, IllinoisJuly 26, 2019
METHODE ELECTRONICS, INC.8750 West Bryn Mawr Avenue, Suite 1000Chicago, Illinois 60631(708) 867-6777PROXY STATEMENTANNUAL MEETING OF SHAREHOLDERSSeptember 12, 2019GENERAL INFORMATION
We are furnishing this proxy statement to you in connection with the solicitation of proxies on behalf of Methode Electronics, Inc. (“Methode” or the “Company”) for use at our annual meeting of shareholders to be held on Thursday, September 12, 2019 at 11:00 a.m.2022 Incentive Plan (Proposal 2), Central Daylight Time, at Methode’s offices at 7447 West Wilson Avenue, Chicago, Illinois, 60706 and at any adjournment or postponement of the annual meeting. On July 26, 2019, we mailed our Notice of Internet Availability of Proxy Materials, which contains instructions for our shareholders to access our proxy statement and annual report over the Internet or request a paper copy of the proxy materials.
At the annual meeting, we will ask our shareholders to (i) elect our Board of Directors, (ii) ratify the Audit Committee’s selection of Ernst & Young LLP (“EY”) to serve as our independent registered public accounting firm for fiscal 2020, (iii) provide advisory approval of Methode’s named executive officer compensation, and (iv) consider and vote upon any other business which properly comes before the annual meeting.
The Board of Directors recommends that you vote “FOR” each of Methode’s nominees for director, “FOR” the ratification of EY as our independent registered public accounting firm and(Proposal 3) and “FOR” advisory approval of Methode’s named executive officer compensation.
You may vote your shares in person, by attending our annual meeting, or by proxy. To vote by proxy,the Say-on-Pay Proposal (Proposal 4).
It is important thatwithout indicating your shares be represented and voted at the annual meeting. Whether or not you plan to attend the annual meeting in person, please vote on any matter, the mattersdesignated proxies will vote in favor of all four proposals.
Record Date; Shares Outstanding
Our Board of Directors has fixed the close of business on July 18, 2019 as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting and at any adjournment or postponement thereof. Asapprove each of the record date, there were 37,061,487 sharesproposals?
Quorum; Votes Required
In deciding all questions, assuming a quorum isvoting power present a holder of Methode’s common stock is entitled to one vote, in person or represented by proxy at the Annual Meeting is required to approve each proposal. Broker non-votes will not be counted for each sharepurposes of determining the number of votes present in person or represented by proxy with respect to the election of directors (Proposal 1), the approval of the 2022 Incentive Plan (Proposal 2) and the Say-on-Pay Proposal (Proposal 4). Abstentions will be considered as present but will not be considered as votes in favor of any proposal. Consequently, abstentions have the effect of voting against all proposals, while broker non-votes have no effect as to voting for or against Proposal 1, Proposal 2 or Proposal 4.
With respect to the election of directors, the ratification of the selection of EY as our independent registered public accounting firm and providing advisory approval of our executive compensation, shareholders may vote (1) “for,” (2) “against,” or (3) to “abstain” from voting on each matter and each such matter requires approval by a majority of the shares of common stock representedbe properly presented at the meeting and entitledAnnual Meeting other than those referred to vote. Both abstentions and broker non-votes will be considered as present but will not be considered as votes in favor of any matter. Broker non-votes
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are excluded from the “for,” “against” and “abstain” counts, and instead are reported as simply “broker non-votes.” Consequently, abstentions have the effect of voting against these matters, while broker non-votes have no effect as to voting for or against any such matter.
Under New York Stock Exchange rules, the proposal to ratify the selection of EY is considered a routine item. Therefore, brokers may vote in their discretion on this matter on behalf of clients who have not furnished voting instructions to the broker. In contrast, all other proposals set forth in this proxy statementstatement. If other matters are considered non-routine items, and brokers who have not received voting instructions from their clients may not vote on these proposals.
All properly executed and timely delivered proxies will be voted in accordance with the instructions provided. Unless contrary instructions are indicated, proxies will be voted “FOR” each of Methode’s nominees for director, “FOR” the ratification of the selection of EY and “FOR” advisory approval of Methode’s named executive officer compensation. The Board of Directors knows of no other business that will be presented for consideration at the annual meeting. If any other matter is properly presented, it is the intentionAnnual Meeting, and you are a stockholder of record and have authorized a proxy to vote your shares, the persons named inas proxies will have the discretion to vote on those matters for you.
Voting Procedures
It is important that your shares be represented at the annual meeting. You may vote your shares in person, by attending our annual meeting, or by proxy. To vote by proxy, you may vote using the Internet, by toll-free telephone number or, if you request and receive a paper copy of the proxy card by mail, by signing, dating and mailing the proxy card in the self-addressed, postage-paid envelope provided. Information regarding voting by using the Internet or by telephone is contained in the Notice of Internet Availability of Proxy Materials. Instructions regarding voting by mail are contained on the proxy card. Please do not submit a proxy card if you have voted by telephone or the Internet. You may revoke your proxy as described below.
Revoking Your Proxy
If you decide to change your vote, you may revoke your proxy at any time before the annual meeting.my shares?
Proxy Solicitation Expenses
The proxy is being solicited on behalf of Methode.previously authorized by you. We will bearhonor the entire costproxy card or authorization with the latest date.
We will authorize brokers, dealers, banks, voting trustees
Householding of Annual Meeting Materials
how does it affect me?
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stockholders.
NYSE for service on those committees.
| Committee | | | Members | | | Principal Functions | | | Number of Meetings in Fiscal | | |||
| Audit | | | Therese M. Bobek Janie Goddard* Angelo V. Pantaleo Mark D. Schwabero Lawrence B. Skatoff | | | • | | | Oversees accounting and financial reporting processes, and audits of financial statements. | | | 10 | |
| • | | | Monitors performance of internal audit function and our system of internal | | |||||||||
| • | | | Monitors performance, qualifications and independence of our independent registered public accounting firm, | | |||||||||
| • | | | Monitors compliance with legal and regulatory requirements pertaining to financial statements. | | |||||||||
| • | | | Reviews our financial press releases and certain SEC filings. | | |||||||||
| • | | | Discusses with management major financial risk exposures and the steps taken to monitor and control such exposures, and discusses guidelines and policies by which risk assessment and risk management is undertaken. | | |||||||||
| • | | | Regularly reviews with management the Company’s cybersecurity and information technology (IT) practices and policies. | | |||||||||
| • | | | If applicable, reviews related party transactions and potential conflict of interest situations. | |
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| Committee | | | Members | | | Principal Functions | | | Number of Meetings in Fiscal | | |||
| Compensation | | | Walter J. Aspatore David P. Blom* Brian J. Cadwallader Darren M. | | | • | | | Oversees our executive compensation policies and plans. | | | 6 | |
| • | | | Approves goals and incentives for the compensation of our Chief Executive Officer and, with the advice of the Chief Executive Officer, the other executive officers. | | |||||||||
| • | | | Approves grants under our stock plan. | | |||||||||
| • | | | Makes decisions regarding the retention, compensation and termination of any Committee compensation consultant, and monitors their independence. | | |||||||||
| • | | | Evaluates whether risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect. | | |||||||||
| Nominating and Governance | | | Brian J. Cadwallader (Chair) Walter J. Therese M. Bobek Darren M. Mark D. Schwabero Lawrence B. Skatoff | | | • | | | Recommends director candidates for election to our | | | 4 | |
| • | | | Recommends Board committee assignments. | | |||||||||
| • | | | Recommends compensation and benefits for directors. | | |||||||||
| • | | | Oversees our Enterprise Risk Management (ERM) program. | | |||||||||
| • | | | Reviews succession planning for our executive officers. | | |||||||||
| • | | | Reviews and recommends revisions to our Corporate Governance Guidelines. | | |||||||||
| • | | | Oversees an annual evaluation by the independent directors of the performance of the CEO. | | |||||||||
| • | | | Conducts an annual assessment of Board and committee | | |||||||||
Technology | | | Darren M. Dawson (Chair) David P. Blom** Janie Goddard Angelo V. Pantaleo | | | • | | | Reviews with management our technology assets and future needs. | | | 4 | | |
| • | | | Reviews technology research and development activities and possible acquisitions of technology. | | |||||||||
| Medical Products | | | David P. Blom (Chair) Bruce K. Crowther Donald W. Duda Janie Goddard** Mary A. Lindsey | | | • | | | Reviews with management our business strategies for developing and marketing our medical device products. | | | 3 | |
| • | | | Evaluates industry and market trends that may affect our medical device business. | |
* | As of June 16, 2022 |
** | Through June 16, 2022 |
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During the 2019 fiscal year,2022, our Board of Directors held fourteenfive meetings, and no director attended less than 75% of the aggregate of the total number of meetings of our Board and the total number of meetings held by the respective committees on which he or she served. Under our Corporate Governance Guidelines, our directors are expected to attend Board and shareholderstockholder meetings and meetings of committees on which they serve. Our directors are expected to meet as frequently as necessary to properly discharge their responsibilities.
Evaluations
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The Committee has adopted a process for identifying new director candidates. Recommendations may be received by the Committee from various sources, including directors and Company contacts. In the event theThe Committee deems it appropriate to engagehas used a search firm itto assist with the independent director recruitment process and has sole authority to retain and terminate any such search firm and approve the search firm’s fees. In June 2018, the Committee retained a search firm to assist with the independent director recruitment process.
| Skills and Experience | | | Aspatore | | | Blom | | | Bobek | | | Cadwallader | | | Crowther | | | Dawson | | | Duda | | | Goddard | | | Lindsey | | | Pantaleo | | | Schwabero | | | Skatoff | |
| Leadership and Strategy | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | |
| Financial/Accounting | | | ✔ | | | | | ✔ | | | | | | | | | ✔ | | | ✔ | | | ✔ | | | | | ✔ | | | ✔ | | |||||
| Mergers and Acquisitions | | | ✔ | | | ✔ | | | | | ✔ | | | | | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | |||
| Cybersecurity/IT Systems | | | | | | | ✔ | | | ✔ | | | | | | | ✔ | | | ✔ | | | ✔ | | | | | ✔ | | | | ||||||
| International Business | | | ✔ | | | | | | | ✔ | | | | | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | ||||
| Technology/Innovation | | | | | ✔ | | | | | ✔ | | | | | ✔ | | | ✔ | | | ✔ | | | | | ✔ | | | ✔ | | | | |||||
| Industry Experience | | | ✔ | | | ✔ | | | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | ✔ | | | | | | | ✔ | | | ✔ | | |||
| Public Company Board Service | | | ✔ | | | ✔ | | | | | | | ✔ | | | ✔ | | | ✔ | | | | | ✔ | | | | | ✔ | | | ✔ | | ||||
| Manufacturing/Operations | | | ✔ | | | ✔ | | | | | | | | | ✔ | | | ✔ | | | ✔ | | | | | ✔ | | | ✔ | | | |
Our annual meeting of shareholders
2022 Annual Meeting.
Director
Our Compensation Committee considers
| Title | | | Guideline | |
| Chief Executive Officer | | | Six times salary | |
| Chief Operating Officer | | | Three times salary | |
| Other Executive Officers | | | Two times salary | |
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For the fiscal year ended April 27, 2019,2022, our non-employee directors received an annual cash retainer, of $44,000meeting fees and an attendance fee of $1,000 per committee meetingannual stock award with immediate vesting. Our Chairman, Vice Chairman and Committee Chairs received additional cash retainers for each board meeting other than the regularly scheduled quarterly meetings. In addition,their service in July 2018, the Compensation Committee, upon the recommendation of thethese capacities.
amounts for fiscal 2022.
| Compensation Component | | | Amount | | |||
| Annual Cash Retainer | | | $80,000 | | |||
| Additional Annual Cash Retainer for the Chairman | | | $80,000 | | |||
| Additional Annual Cash Retainer for the Vice Chairman | | | $12,000 | | |||
| Additional Annual Cash Retainer for the Committee Chairs | | | | ||||
| • | | | Audit Committee | | | $24,000 | |
| • | | | Compensation Committee | | | $24,000 | |
| • | | | Nominating and Governance Committee | | | $12,000 | |
| • | | | Technology Committee | | | $12,000 | |
| • | | | Medical Products Committee | | | $12,000 | |
| Fee for Each Committee and Special Board Meeting | | | $1,500 | | |||
| Annual Stock Grant | | | Shares valued at $140,000 | |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | ||||||
Martha Goldberg Aronson | 88,000 | 116,250 | 204,250 | ||||||
Walter J. Aspatore | 119,000 | 116,250 | 235,250 | ||||||
Brian J. Cadwallader | 75,000 | 116,250 | 191,200 | ||||||
Darren M. Dawson | 90,000 | 116,250 | 206,250 | ||||||
Isabelle C. Goossen | 108,000 | 116,250 | 224,250 | ||||||
Christopher J. Hornung | 80,000 | 116,250 | 196,250 | ||||||
Paul G. Shelton | 90,000 | 116,250 | 206,250 | ||||||
Lawrence B. Skatoff | 78,000 | 116,250 | 194,250 |
| Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Total ($) | |
| Walter J. Aspatore | | | 172,500 | | | 140,037 | | | 312,537 | |
| David P. Blom | | | 106,500 | | | 140,037 | | | 246,537 | |
| Therese M. Bobek | | | 104,000 | | | 140,037 | | | 244,037 | |
| Brian J. Cadwallader | | | 110,000 | | | 140,037 | | | 250,037 | |
| Bruce K. Crowther | | | 120,500 | | | 140,037 | | | 260,537 | |
| Darren M. Dawson | | | 110,000 | | | 140,037 | | | 250,037 | |
| Janie Goddard | | | 93,500 | | | 140,037 | | | 233,537 | |
| Mary A. Lindsey | | | 126,500 | | | 140,037 | | | 266,537 | |
| Angelo V. Pantaleo | | | 101,000 | | | 140,037 | | | 241,037 | |
| Mark D. Schwabero | | | 104,000 | | | 140,037 | | | 244,037 | |
| Lawrence B. Skatoff | | | 113,500 | | | 140,037 | | | 253,537 | |
(1) | The reported amounts reflect the fair value at the date of grant calculated in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718. Details of the assumptions used in valuing these awards are set forth in Note |
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Stockholders
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class (%) | ||||
BlackRock, Inc.(1) 55 East 52nd Street New York, New York 10055 | 5,403,585 | 14.6 | ||||
The Vanguard Group(2) 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 3,727,168 | 10.1 | ||||
Dimensional Fund Advisors LP(3) Building One 6300 Bee Cave Road Austin, TX 78746 | 2,044,384 | 5.5 |
| Name and Address of Beneficial Owner | | | Amount and Nature of Beneficial Ownership | | | Percent of Class (%) | |
| BlackRock, Inc.(1) 55 East 52nd Street New York, New York 10055 | | | 6,125,706 | | | 16.4 | |
| The Vanguard Group(2) 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | | | 4,017,116 | | | 10.8 | |
| FMR LLC(3) Abigail P. Johnson 245 Summer Street Boston, MA 02210 | | | 2,479,721 | | | 6.7 | |
| Dimensional Fund Advisors LP(4) Building One 6300 Bee Cave Road Austin, TX 78746 | | | 1,980,388 | | | 5.3 | |
(1) | Information is based on a Schedule 13G/A filed with the Securities and Exchange Commission (“SEC”) on January |
(2) | Information is based on a Schedule 13G/A filed with the SEC on |
(3) | Information is based on a Schedule 13G filed with the SEC on February 9, 2022. In the Schedule 13G, FMR LLC reported that Abigail P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. As of December 31, 2021, FMR LLC reported that it had sole voting power with respect to |
Information is based on a Schedule 13G/A filed with the SEC on February 8, |
Name of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) | Percent of Class (%) | ||
Martha Goldberg Aronson | 12,000 | (2) | * | |
Walter J. Aspatore | 33,000 | (3) | * | |
Brian J. Cadwallader | 6,000 | * | ||
Bruce K. Crowther | 3,000 | * | ||
Darren M. Dawson | 16,000 | * | ||
Donald W. Duda | 809,882 | (4) | 2.1 | |
Isabelle C. Goossen | 43,450 | * | ||
Christopher J. Hornung | 52,050 | * | ||
Mark D. Schwabero | 3,000 | * | ||
Paul G. Shelton | 47,850 | * | ||
Lawrence B. Skatoff | 44,350 | (5) | * | |
Michael Brotherton | 82,444 | (6) | * | |
Joseph E. Khoury | 283,500 | (7) | * | |
Anil Shetty | 84,306 | (8) | * | |
Ronald L.G. Tsoumas | 108,801 | (9) | * | |
All current directors and executive officers as a group | 1,700,012 | (10) | 4.4 |
| Name of Beneficial Owner | | | Amount and Nature of Beneficial Ownership(1) | | | Percent of Class (%) | |
| Walter J. Aspatore | | | 33,877(2)(3) | | | * | |
| David P. Blom | | | 9,840 | | | * | |
| Therese M. Bobek | | | 9,877(3) | | | * | |
| Brian J. Cadwallader | | | 15,877(3) | | | * | |
| Bruce K. Crowther | | | 13,740(4) | | | * | |
| Darren M. Dawson | | | 16,877(3) | | | * | |
| Donald W. Duda | | | 830,055(5) | | | 2.3 | |
| Janie Goddard | | | 6,840(6) | | | * | |
| Mary A. Lindsey | | | 9,877(3) | | | * | |
| Angelo V. Pantaleo | | | 9,840 | | | * | |
| Mark D. Schwabero | | | 12,877(3) | | | * | |
| Lawrence B. Skatoff | | | 41,435(7) | | | * | |
| Andrea J. Barry | | | 66,023(8) | | | * | |
| Joseph E. Khoury | | | 264,420(9) | | | * | |
| Kevin M. Martin | | | 50,500(10) | | | * | |
| Ronald L.G. Tsoumas | | | 141,589(11) | | | * | |
| All current directors and executive officers as a group (18 persons) | | | 1,649,054(12) | | | 4.5 | |
* | Percentage represents less than 1% of the total shares of common stock outstanding. |
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(1) | Beneficial ownership arises from sole voting and dispositive power unless otherwise indicated by footnote. |
(2) |
(3) | Includes 6,877 shares of phantom stock held in the Company’s Deferred Compensation Plan. |
(4) | Shares are held in a trust pursuant to which |
Includes |
(6) | Includes 3,885 shares of |
Shares are held in a trust pursuant to which Mr. Skatoff shares voting and investment power with his wife. |
Includes |
Includes options to purchase 12,000 shares of common stock exercisable within 60 days, |
(10) |
Includes options to purchase 8,000 shares of common stock exercisable within 60 days, |
Includes |
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Annual Meeting.
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Dr. Darren M. DawsonPresidentThe University of Alabama in Huntsville
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our Board.
67
Isabelle C. Goossen
51
Mark D. Schwabero
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Lawrence B. Skatoff18Retired Executive Vice President
Mr. Skatoff retiredshares available for issuance under future equity awards.
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Limit on Non-Employee Director Compensation. The aggregate grant date fair market value of all equity awards granted to any non-employee director during any fiscal year, plus the total cash and other compensation paid to such non-employee director for director services rendered for such fiscal year, may not exceed $750,000.
| Name and Position | | | Dollar Value ($) | | | Number of Units | |
| Non-Executive Officer Employee Group | | | 435,000 | | | 42,335 | |
| 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(1) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) | |
| Equity compensation plans approved by security holders | | | 1,942,759 | | | $37.01 | | | 112,255 | |
| Equity compensation plans not approved by security holders | | | — | | | — | | | — | |
| Total | | | 1,942,759 | | | $37.01 | | | 112,255 | |
(1) | The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock awards and restricted stock units, since recipients are not required to pay an exercise price to receive the shares subject to these awards. |
stockholders.
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Shareholders may vote for or against the following resolution, or may abstain from voting. The affirmative vote of a majority of the shares present or represented at the annual meeting and entitled to vote is required to approve the proposed resolution.
“RESOLVED, that the compensation of Methode’s named executive officers, as disclosed in Methode’s Proxy Statement for the 2022 Annual Meeting of Stockholders pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure, is hereby approved.” |
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE FOREGOING RESOLUTION.
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ThePCAOB.
| | AUDIT COMMITTEE | |
| | ||
| | ||
| | ||
| | Angelo V. Pantaleo | |
| | Mark D. Schwabero | |
| | Lawrence B. Skatoff |
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Fiscal 2019 | Fiscal 2018 | |||||
Audit Fees(1) | $ | 2,844,199 | $ | 2,669,509 | ||
Tax Fees(2) | $ | 45,326 | $ | 98,389 | ||
All Other Fees(3) | $ | — | $ | 395,929 | ||
Total | $ | 2,889,525 | $ | 3,163,827 |
| | Fiscal 2022 | | | Fiscal 2021 | |
Audit Fees(1) | | | $2,497,813 | | | $2,775,303 |
Audit-Related Fees | | | — | | | — |
Tax Fees(2) | | | $33,234 | | | $32,261 |
All Other Fees | | | — | | | — |
Total | | | $2,531,047 | | | $2,807,564 |
(1) | Audit fees represent aggregate fees billed for professional services rendered by |
(2) | Tax fees primarily include fees for consultations regarding intercompany transfer pricing. |
Pre-Approval Policy
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Overview
January 2022.
The key elementscomponents of our the fiscal 20192022 compensation program for our named executive officers are salary, an annual performance-based cash bonus, a transition award and
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| What We Do | | • | | | Provide for a significant amount of | | |
| • | | | Provide an appropriate mix of | | |||
| • | | | Utilize an independent compensation consultant | | |||
| • | | | Require significant executive officer and director stock ownership | | |||
| • | | | Maintain a | | |||
| • | | | Conduct an | | |||
| • | | | Conduct an | | |||
| • | | | Disclose EBITDA performance measures under our 2021 LTI | |
| What We Don’t Do | | | • | | | Noexcessive post-termination benefits | |
| • | | | No excise tax gross ups | | |||
| • | | | No “single trigger” change of | | |||
| • | | | No dividends or dividend equivalents on unearned stock awards | | |||
| • | | | No hedging or pledging of our stock by executives or directors | | |||
| • | | | No excessive perquisites | |
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Our Compensation Process
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Consideration of 2018 Say-on-Pay Vote Results. At our 2018 annual meeting, our shareholders approved our fiscal 2018 executive compensation, with approximately 95% of voted shares cast in favor of the say-on-pay resolution. Our Compensation Committee considered the results of the 2018 say-on-pay vote along with other factors when making executive compensation decisions.
Risk Assessment. The Compensation Committee, together with the Chief Executive Officer and its independent compensation consultant, annually considers potential risks when reviewing our compensation programs for all employees, including our executive officers. Based on this assessment, the Compensation Committee concluded that our fiscal 20192022 compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company. In making this determination, the Compensation Committee reviewed the key features of our compensation programs and policies, including the following:
| Stockholder Feedback | | | Company Response | | |||
| 2021 LTI Program Expiring in 2025 | | | | ||||
| • | | | Noted the reduced flexibility with a front-loaded, 5-year plan | | | At the time a new long-term equity program is reviewed, the Compensation Committee will consider this feedback in establishing the new program terms and conditions, including the plan term and performance metrics. | |
| • | | | Suggested the Committee consider the use of multiple metrics, including a relative metric, as opposed to a single metric | | |||
| 2021 Transition Awards | | | | ||||
| • | | | Questioned the use of a special cash award | | | The Compensation Committee reaffirmed its intention to only make special cash awards in rare, exceptional and limited circumstances as was the case with the Transition Awards. | |
| • | | | Expressed a preference for equity awards with a performance feature | | |||
| 2021 Annual Bonus New Sales Bookings Goal | | | | ||||
| • | | | Noted that the performance goal was set below the prior year performance | | | The Committee has and will continue to review the performance metrics used and target goals to be achieved under the annual bonus program and confirm that they continue to motivate performance and reward results that align with the interests of our stockholders. For fiscal 2023, the target performance goal for new sales bookings was set above fiscal 2022 actual performance. | |
| Title | | | Guideline | |
| Chief Executive Officer | | | Six times salary | |
| Chief Operating Officer | | | Three times salary | |
| Other Executive Officers | | | Two times salary | |
After considering the advice of FW Cook, the Compensation Committee approved using the fiscal 2018 peer group for fiscal 2019, subject to one modification. One former peer company, IPG Photonics Corporation, was eliminated since it is positioned well above the market capitalization range targeted for our peer companies.
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For compensation decisions affecting fiscal 20192022 compensation, the peer group included the following companies:
| | | | | Patrick Industries, Inc. | | ||
| Benchmark Electronics, Inc. | | | Gentherm Incorporated | | | Rogers Corporation | |
| | | LCI Industries | | | | ||
| | | Littelfuse, Inc. | |||||
TTM Technologies, Inc. | | |||||||
| | | OSI Systems, Inc. | | | |
In benchmarking our compensation program for fiscal 2019,2022, the Compensation Committee also reviewed information compiled by FW Cook from major third-party executive pay surveys.
above-target performance and the Transition Awards are not included as they are one-time awards made in exceptional circumstances.
Components Our annual performance-based bonuses and the RSA and Performance Unit awards under the 2021 LTI Program constitute variable compensation.
our fiscal 2022 compensation program.
| Component | | | Purpose | |
| Salary | | | Attract, retain and motivate highly qualified executives. | |
| Annual Performance-Based Bonuses | | | Provide a cash reward for contributing to the achievement of our short-term company objectives, and in certain cases, individual objectives. | |
| Transition Bonuses | | | One-time awards in exceptional circumstances during fiscal 2021 that seek to retain key members of management in a highly competitive job market over multiple years in order to transition the Company from the pre-pandemic economy through the recovery. | |
| LTI Program Awards | | | Focus the executive’s efforts on our long-term performance, encourage significant ownership of our common stock and assist in retention. | |
| Other Benefits and Perquisites | | | Provide competitive levels of health and welfare protection and retirement and savings programs. | |
his at-risk compensation.
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bonus was set38
Executive | Target Bonus | Performance Measures and Amounts Payable* | Bonus Earned | ||||
Donald W. Duda | $ | 759,719 | (1) Achieve consolidated pre-tax income (excluding costs and earnings from the Grakon acquisition) of $124.0 million (threshold), $130.5 million (target) and $150.1 million (maximum), with $265,902, $531,803 and $1,063,606 payable at threshold, target and maximum, respectively. The Company achieved consolidated adjusted pre-tax income (excluding costs and earnings from the Grakon acquisition) below the threshold level of performance. (2) Obtain certain new business bookings of $62.0 million (threshold), $65.0 million (target) and $75.0 million (maximum), with $113,958, $227,916 and $455,832 payable of threshold, target and maximum respectively. The Company booked $78.8 million for such new business and Mr. Duda earned $455,832. | $ | 455,832 | ||
Ronald L.G. Tsoumas | $ | 264,000 | (1) Achieve consolidated pre-tax income (excluding costs and earnings from the Grakon acquisition) of $124.0 million (threshold), $130.5 million (target) and $150.1 million (maximum), with $92,400, $184,800 and $369,600 payable at threshold, target and maximum, respectively. The Company achieved consolidated adjusted pre-tax income (excluding costs and earnings from the Grakon acquisition) below the threshold level of performance. (2) Update the Company’s Enterprise Risk Management program to the satisfaction of the Audit Committee ($39,600 payable). This performance measure was not achieved as of this time. (3) Implement certain analytics reports for forecasting, account reconciliation and budget planning ($39,600 payable). This performance measure was achieved. | $ | 39,600 |
| Executive | | | Target Bonus | | | Performance Measures and Amounts Payable* | | | Bonus Earned | |
| Donald W. Duda | | | $1,056,780 | | | (1) Achieve consolidated pre-tax income of $149.0 million (threshold), $165.6 million (target) and $182.2 million (maximum), with $369,873, $739,746 and $1,479,492 payable at threshold, target and maximum, respectively. The challenges of the COVID-19 pandemic and global supply chain disruptions had a substantial negative impact on the Company’s financial results and the Company achieved pre-tax income below the threshold level of performance. (2) Secure new business bookings with a minimum pre-tax margin. The performance levels for such new business were $128.4 million (threshold), $142.7 million (target) and $157.0 million (maximum), with $158,517, $317,034 and $634,068 payable at threshold, target and maximum, respectively. The Company booked $208.4 million for such new business and Mr. Duda earned the maximum amount payable. | | | $634,068 | |
| Ronald L.G. Tsoumas | | | $339,900 | | | (1) Achieve consolidated pre-tax income of $149.0 million (threshold), $165.6 million (target) and $182.2 million (maximum), with $118,965, $237,930 and $475,860 payable at threshold, target and maximum, respectively. The challenges of the COVID-19 pandemic and global supply chain disruptions had a substantial negative impact on the Company’s financial results and the Company achieved pre-tax income below the threshold level of performance. (2) Achieve at least one of the following objectives: (a) fully implement a shared services structure in certain of the Company’s geographic areas to the satisfaction of the Chief Executive Officer and the Chair of the Audit Committee; and (b) implement Phase II of the Enterprise Risk Management (ERM) Program including development of a formal ERM policy, to the satisfaction of the Chief Executive Officer and the Nominating and Governance Committee. No bonus is earned if neither objective is achieved; the target bonus of $101,970 is earned if one of these objectives is achieved; and the maximum bonus of $203,940 is earned if both objectives are achieved. Mr. Tsoumas achieved objective (a) and earned $101,970. With respect to objective (b), although a formal ERM policy was not finalized during the period, after considering the significant progress made on developing the ERM Program, the Compensation Committee agreed that if Phase II of the ERM Program, including the development of an ERM framework, is implemented by September 2022 to the satisfaction of the Chief Executive Officer and the Nominating and Governance Committee, Mr. Tsoumas will be paid $101,970. | | | $101,970 | |
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Executive | Target Bonus | Performance Measures and Amounts Payable* | Bonus Earned | ||||
Joseph E. Khoury | $ | 294,756 | (1) Achieve consolidated pre-tax income (excluding costs and earnings from the Grakon acquisition) of $124.0 million (threshold), $130.5 million (target) and $150.1 million (maximum), with $103,165, $206,329 and $412,658 payable at threshold, target and maximum, respectively. The Company achieved consolidated adjusted pre-tax income (excluding costs and earnings from the Grakon acquisition) below the threshold level of performance. (2) Obtain certain new business bookings of $62.0 million (threshold), $65.0 million (target) and $75.0 million (maximum), with $44,214, $88,427 and $176,854 payable at threshold, target and maximum, respectively. The Company booked $78.8 million for such new business and Mr. Khoury earned $176,854. | $ | 176,854 | ||
Michael Brotherton | $ | 224,400 | (1) Achieve consolidated pre-tax income (excluding costs and earnings from the Grakon acquisition) of $124.0 million (threshold), $130.5 million (target) and $150.1 million (maximum), with $78,540, $157,080 and $314,160 payable at threshold, target and maximum, respectively. The Company achieved consolidated adjusted pre-tax income (excluding costs and earnings from the Grakon acquisition) below the threshold level of performance. (2) Achieve Grakon pre-tax income (excluding amortization and purchase accounting adjustments) of $24.8 million (threshold), $26.1 million (target) and $30.0 million (max), with $33,660, $67,320 and $134,640 payable at threshold, target and maximum, respectively. Grakon achieved adjusted pre-tax income (excluding amortization and purchase accounting adjustments) of $33.1 million and Mr. Brotherton earned $134,640. | $ | 134,640 |
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Executive | Target Bonus | Performance Measures and Amounts Payable* | Bonus Earned | ||||
Anil Shetty | $ | 245,520 | (1) Achieve consolidated pre-tax income (excluding costs and earnings from the Grakon acquisition) of $124.0 million (threshold), $130.5 million (target) and $150.1 million (maximum), with $85,932, $171,864 and $343,728 payable at threshold, target and maximum, respectively. The Company achieved consolidated adjusted pre-tax income (excluding costs and earnings from the Grakon acquisition) below the threshold level of performance. (2) Upgrade the Dabir Surfaces sales structure and salesforce to the satisfaction of the Chief Executive Officer ($36,828 payable). This performance measure was achieved. (3) Expand Dabir Surfaces sales into new hospital customers (defined as being hospitals with different addresses from existing hospital customers) that are part of multi-institutional hospital networks, with 2 such hospitals at threshold, 5 such hospitals at target and 10 such hospitals at maximum, with $18,414, $36,828 and $73,656 payable at threshold, target and maximum, respectively. Dabir Surfaces achieved maximum performance and Mr. Shetty earned $73,656. | $ | 110,484 |
| Executive | | | Target Bonus | | | Performance Measures and Amounts Payable* | | | Bonus Earned | |
| Joseph E. Khoury | | | $500,192 | | | (1) Achieve consolidated pre-tax income of $149.0 million (threshold), $165.6 million (target) and $182.2 million (maximum), with $175,067, $350,134 and $700,269 payable at threshold, target and maximum, respectively. The challenges of the COVID-19 pandemic and global supply chain disruptions had a substantial negative impact on the Company’s financial results and the Company achieved pre-tax income below the threshold level of performance. (2) Secure new business bookings with a minimum pre-tax margin. The performance levels for such new business were $128.4 million (threshold), $142.7 million (target) and $157.0 million (maximum), with $75,029, $150,058 and $300,115 payable at threshold, target and maximum, respectively. The Company booked $208.4 million for such new business and Mr. Khoury earned the maximum amount payable. | | | $300,115 | |
| Andrea J. Barry | | | $348,750 | | | (1) Achieve consolidated pre-tax income of $149.0 million (threshold), $165.6 million (target) and $182.2 million (maximum), with $122,063, $244,125 and $488,250 payable at threshold, target and maximum, respectively. The challenges of the COVID-19 pandemic and global supply chain disruptions had a substantial negative impact on the Company’s financial results and the Company achieved pre-tax income below the threshold level of performance. (2) Ensure that sales/marketing are properly staffed and sales/performance goals are appropriately set in order to position the Company to secure new business bookings with a minimum pre-tax margin. The performance levels for such new business were $128.4 million (threshold), $142.7 million (target) and $157.0 million (maximum), with $26,157, $52,313 and $104,625 payable at threshold, target and maximum, respectively. The Company booked $208.4 million for such new business and Ms. Barry earned the maximum amount payable. (3) Achieve at least one of the following objectives: (a) complete the implementation of the Workday HRIS system for all facilities in Europe and Egypt to the satisfaction of the Chief Executive Officer; and (b) implement the succession management and talent review process down to the director level on a global basis to the satisfaction of the Chief Executive Officer. No bonus is earned if neither objective is achieved; the target bonus of $52,313 is earned if one of these objectives is achieved; and the maximum bonus of $104,625 is earned if both objectives are achieved. Ms. Barry achieved both objectives and earned the maximum amount payable. | | | $209,250 | |
| Executive | | | Target Bonus | | | Performance Measures and Amounts Payable* | | | Bonus Earned | |
| Kevin M. Martin | | | $239,580 | | | (1) Secure new business bookings for certain business in North America with a minimum pre-tax margin. The performance levels for such new business were $73.0 million (threshold), $81.1 million (target) and $89.2 million (maximum), with $35,937, $71,874 and $143,748 payable at threshold, target and maximum, respectively. A total of $82.1 million of such new business was booked, and Mr. Martin earned $80,565. (2) Secure new business bookings for certain business in North America with a minimum pre-tax margin. The performance levels for such new business were $39.4 million (threshold), $43.8 million (target) and $48.2 million (maximum), with $35,937, $71,874 and $143,748 payable at threshold, target and maximum, respectively. A total of $51.7 million of such new business was booked, and Mr. Martin earned the maximum amount payable. (3) Achieve consolidated pre-tax income for the North American businesses of $116.5 million (threshold), $129.4 million (target) and $142.3 million (maximum), with $29,948, $59,895 and $119,790 payable at threshold, target and maximum, respectively. The challenges of the COVID-19 pandemic and global supply chain disruptions had a substantial negative impact on the Company’s financial results and the Company achieved pre-tax income for the North American businesses below the threshold level of performance. (4) Achieve at least one of the following objectives: (a) implement Material Resource Planning MRP/CMS/AMS at all Grakon facilities globally to the satisfaction of the Chief Operating Officer and the Chief Executive Officer; and (b) centralize Material Planning and Logistics (MP&L) into Mexico to serve North American EDI to the satisfaction of the Chief Operating Officer and the Chief Executive Officer. No bonus is earned if neither objective is achieved; the target bonus of $35,937 is earned if one of these objectives is achieved; and the maximum bonus of $71,874 is earned if both objectives are achieved. Mr. Martin achieved both objectives and earned the maximum amount payable. | | | $296,187 | |
* | Payouts are interpolated for performance falling between established performance objectives. |
PriorTransition Awards. In June 2020, after considering the need to his promotionretain management talent in a highly competitive job market in order to transition the Company from the pre-pandemic economy through the extended recovery under exceptional circumstances and to provide a bridge of unvested value for the period between the vesting of the 2015 LTI program awards and the adoption of the 2021 LTI Program, the Compensation Committee granted one-time transition awards to our named executive officers. The award is a cash opportunity equal to a multiple of the executive’s fiscal 2021 base salary as follows: Mr. Duda, 2.0 times; Mr. Khoury, 1.75 times; Mr. Tsoumas and Ms. Barry, 1.5 times; and Mr. Martin, 1.25 times. The Compensation Committee determined that a cash award was appropriate after considering the Company’s cash flow, potential dilution, share preservation, the Company’s robust stock ownership guidelines and current executive officerstock ownership levels and the hold-until-retirement restricted stock units held by certain members of senior management, including our Chief Executive Officer. Forty percent (40%) of the transition award was paid on April 30, 2022, and sixty percent (60%) will be paid on April 29, 2023, provided the executive remains employed by the Company and maintains satisfactory job performance. If the
| Executive | | | Number of Shares | | | Grant Date Market Value | | ||||||
| Target RSAs | | | RSUs | | | Target RSAs* | | | RSUs | | |||
| Donald W. Duda | | | 375,000 | | | 375,000 | | | $10,605,000 | | | $10,605,000 | |
| Ronald L.G. Tsoumas | | | 75,500 | | | 75,500 | | | $2,135,140 | | | $2,135,140 | |
| Joseph E. Khoury | | | 144,000 | | | 144,000 | | | $4,072,320 | | | $4,072,320 | |
| Andrea J. Barry | | | 52,500 | | | 52,500 | | | $1,484,700 | | | $1,484,700 | |
| Kevin M. Martin | | | 50,500 | | | 50,500 | | | $1,444,805 | | | $1,444,805 | |
* | In accordance with the accounting and SEC disclosure rules, the “Stock Awards” column of the Summary Compensation Table does not include any value attributable to the RSAs. For financial statement reporting purposes and based on the accounting rules, the Company will not record an expense for the RSAs until the Company determines with sufficient certainty that at least the threshold level of performance for fiscal 2025 EBITDA will be achieved. As noted above, the fiscal 2025 EBITDA target performance goal aligns with the Company’s targeted EBITDA compound annual growth rate of approximately 8% for organic and inorganic growth during the five-year program period and includes EBITDA from accretive acquisitions. |
| Executive | | | Maximum Number of Performance Units* | |
| Donald W. Duda | | | 187,500 | |
| Ronald L.G. Tsoumas | | | 37,750 | |
| Joseph E. Khoury | | | 72,000 | |
| Andrea J. Barry | | | 26,250 | |
| Kevin M. Martin | | | 25,250 | |
* | Only earned in the event the Company’s fiscal 2025 EBITDA exceeds the RSA target performance goal. |
| Performance Goal | | | Fiscal 2025 EBITDA, As Adjusted | | | Percentage of RSAs Earned* | |
| Threshold Performance | | | $270 million | | | 50% | |
| Target Performance | | | $300 million | | | 100% | |
* | Payouts are interpolated for performance falling between the threshold and target performance measures. |
| Performance Goal | | | Fiscal 2025 EBITDA, As Adjusted | | | Percentage of Performance Units Earned* | |
| Target Performance | | | $300 million | | | 0% | |
| Maximum Performance | | | $330 million | | | 100% | |
* | Payouts are interpolated for performance falling between the target and maximum performance measures. |
good reason within two years, all unvested RSUs will become immediately and fully vested.
In support of the extended visits to our key international facilities, Mr. Khoury is provided the use of Company owned or leased condominiums or apartments in Chicago, Illinois, Mriehel, Malta and Southfield, Michigan.
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only entitled to a severance payment if an executive is terminated without cause, or anthe executive terminates for good reason subsequent toafter a change of control. Our change of control provisions for thethese named executive officers are summarized below under “Executive Compensation − Potential Payments Upon Termination or Change of Control.”
Fiscal 2016 to 2020 Long-Term Incentive Program
During fiscal 2016, our Compensation Committee adopted a five-year, long-term incentive program consisting of a mix of 60% performance-based RSAs, at target performance, and 40% time-based RSUs (the “LTI Program”). The number of RSAs earned will vary based on performance relative to established goals for threshold, target and maximum performance. Performance will be based on the Company’s earnings before net interest, taxes, fixed asset depreciation and intangible asset amortization (“EBITDA”) for fiscal 2020, subject to certain adjustments, including adjustments for certain acquisitions and divestitures. The RSUs are subject to a vesting period based on continued service, subject to acceleration in certain limited circumstances. The Compensation Committee intends for the LTI Program to cover all long-term equity incentive grants to the participants through fiscal 2020.
A key consideration of the Compensation Committee in developing the LTI Program was the success of the prior five-year, long-term incentive program which concluded as of the end of fiscal 2015 (the “Fiscal 2011 LTI Program”). The Fiscal 2011 LTI Program included performance-based RSAs, performance-based tandem cash awards, RSUs and stock options. During the five-year period of the Fiscal 2011 LTI Program, revenues grew at an annualized rate of 18.5%, which supported annualized pre-tax profit growth and diluted earnings per share growth of 73.0% and 47.5%, respectively. In addition, we realized strong annualized total shareholder return of 34.0% during the period. During this period, our industry-leading performance reflected the introduction of numerous new products and technologies, the benefits of selective licensing and other business arrangements, the expansion of lower-cost manufacturing facilities and further vertical integration The Compensation Committee concluded that the Fiscal 2011 LTI Program succeeded in focusing our executive officers on growing the Company and appropriately rewarded our executive officers for creating value for our shareholders.
The Compensation Committee intends for the LTI Program to continue creating value for our shareholders using a long-term program that aligns pay with performance and includes a strong retention feature. In structuring the LTI Program, the Compensation Committee considered the advice of FW Cook, its independent executive compensation consultant, regarding market practices, award mix and size, possible performance criteria and alternative program structures. The Compensation Committee also considered Mr. Duda’s recommendations for officers other than himself.
The Compensation Committee considered multiple approaches for the LTI program, including the use of annual grants and alternative performance periods. After careful review, the Compensation Committee determined that the five-year program is appropriate after considering the success of the Fiscal 2011 LTI Program discussed above, as well as the lengthy sales and product development cycles and significant upfront capital requirements for many of the Company’s products. The Compensation Committee believes the term will focus our executive officers on the Company’s long-term objectives and retain our top executive talent over the period.
The LTI Program is comprised entirely of equity awards in order to directly align the interests of our executive officers with those of our shareholders. The Compensation Committee believes that the award mix of 60% performance-based RSAs, at target performance, and 40% time-vested RSUs supports the Company’s operating performance and retention objectives, respectively. Unlike the Fiscal 2011 LTI Program, stock options and performance-based tandem cash awards are not components of the LTI Program, in part due to accounting considerations, including the high costs of stock options relative to historical grants.
The Compensation Committee applied EBITDA, as adjusted, as the RSA performance metric because it is one of the primary operating metrics tracked by the Company and its shareholders. The EBITDA performance goals set forth below align with the Company’s targeted 9% to 10% annual growth rate for EBITDA for the period. The adjustments to EBITDA for acquisitions and divestitures are designed to mitigate unintended windfalls to management for certain acquisitions and also to safeguard management from unintended penalties for shareholder-friendly divestitures that negatively impact the fiscal 2020 performance results.
In general, the Compensation Committee targeted the LTI Program awards in the 50th to 75th percentile range of competitive practice, which aligned with the Company’s relative positioning in terms of revenues, net income and market capitalization versus its peer group. In making these benchmarking determinations, the Compensation Committee assumed that each executive would achieve the target level of performance under the RSAs and included
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one-fifth of the grant date fair value of these shares in these comparative calculations. In determining the size of the award to each of our executive officers, the Compensation Committee also considered other relevant factors, including the individual performance and experience of each executive, internal pay equity and consistency issues, expected future contributions of each executive, historical compensation levels and tenure.
The table below sets forth the number of target RSAs and RSUs awarded to the named executive officers (“Target Shares”).
Executive | Number of Shares | |||||
Target RSAs* | RSUs | |||||
Donald W. Duda | 180,000 | 120,000 | ||||
Ronald L.G. Tsoumas | 33,000 | 22,000 | ||||
Joseph E. Khoury | 90,000 | 60,000 | ||||
Michael Brotherton | 36,000 | 24,000 | ||||
Anil Shetty | 36,000 | 24,000 |
Performance-Based RSAs. The number of RSAs earned will vary based on performance relative to established goals for threshold performance, target performance and maximum performance. The executive will not earn any shares if threshold performance is not met. Performance will be based on the Company’s EBITDA for fiscal 2020, subject to certain adjustments. All positive EBITDA from acquisitions that close during the term of the program and that are not accretive (as defined in the respective award agreement) in fiscal 2020 will be excluded. All positive EBITDA from acquisitions that close during fiscal 2019 or fiscal 2020 that are accretive in fiscal 2020 shall be included for purposes of determining fiscal 2020 EBITDA up to the target level and shall be excluded for purposes of determining fiscal 2020 EBITDA above the target level. For any divestitures approved by the Board during the period, the final four quarters of EBITDA from the divested business will be included in fiscal 2020 EBITDA. The performance measures and corresponding percentages of the target shares earned are set forth below.
Dividends will not be paid on the RSAs until the shares have been earned. At such time, the executive will be entitled to a dividend equivalent payment based on the dividends declared during the restricted period and the number of shares earned.
In the event of an executive’s death or disability, he or she will earn all of the Target Shares. In the event of an executive’s qualified retirement, the executive will be eligible to earn a prorated number of shares based on the number of months during the 60-month performance period that have elapsed prior to retirement and Methode’s actual fiscal 2020 EBITDA result. In the event of a change of control in which the successor company does not assume the RSAs, the executive will earn a prorated number of the Target Shares based on the number of months during the 60-month performance period that have elapsed prior to the change of control. If the successor company assumes the RSAs and, if the executive is terminated without cause or resigns for good reason within a period of time after the transaction (two years for Mr. Duda and one year for our other executive officers), then the executive will earn a prorated number of the Target Shares based on the number of months during the 60-month performance period that have elapsed prior to termination of employment. The Compensation Committee believes these provisions regarding the treatment of the RSAs in the event of death, disability, retirement or a change of control reflect fair and reasonable treatment under these scenarios based on current governance best practices and competitive standards.
Time-Based RSUs. The RSUs are subject to a vesting period based on continued service, with 30% vested at the end of fiscal 2018 and fiscal 2019, and 40% vesting at the end of fiscal 2020. Following vesting, the delivery of the stock underlying the RSUs will be deferred for Messrs. Duda, Tsoumas and Khoury until the earlier of the executive’s
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termination of employment or a change of control. Dividend equivalents will not be paid on the RSUs until the units have vested. Following vesting and until the delivery of the underlying common stock, each executive will be entitled to a quarterly payment in an amount equal to the aggregate per share cash dividend paid during the quarter multiplied by the number of vested RSUs held by the executive.
In the event of an executive’s death or disability, all unvested RSUs will become immediately and fully vested. In the event of an executive’s qualified retirement, a prorated number of RSUs will vest based on the months during the 60-month vesting period that have elapsed prior to retirement. In the event of a change of control in which the successor company does not assume the RSUs, all unvested RSUs will become immediately and fully vested. If the successor company assumes the RSUs and, if the executive is terminated without cause or resigns for good reason within a period of time after the transaction (two years for Mr. Duda and one year for our other executive officers), then all unvested RSUs will become immediately and fully vested. The Compensation Committee believes these provisions regarding the treatment of the RSUs in the event of death, disability, retirement or a change of control reflect fair and reasonable treatment under these scenarios based on current governance best practices and competitive standards.
Significant Policies and Procedures
Stock Ownership Policy. Our Compensation Committee considers stock ownership by management to be an important means of linking management’s interests with those of our shareholders. After considering the importance of stock ownership, our Compensation Committee maintains stock ownership guidelines for our executive officers. Our Chief Executive Officer is expected to own stock with a value at least equal to six (6) times his base salary, our Chief Operating Officer is expected to own stock with a value at least equal to three (3) times his base salary and all other executive officers are expected to own stock with a value at least equal to two (2) times their base salary. Vested and unvested time-based RSUs are included in the calculation of stock ownership for purposes of these guidelines. The value of each executive officer’s common stock holdings is determined as of the end of each fiscal year based on the average daily closing price of Methode’s common stock for such fiscal year. All of our named executive officers were in compliance with our stock ownership guidelines for fiscal 2019, subject to the phase-in-period for new hires and promotions.
Insider Trading Policy. Our Insider Trading Policy prohibits our directors, executive officers and certain key employees from engaging in certain transactions involving our common stock, including options trading, short sales, derivative transactions and hedging transactions. In addition, these directors, executive officers and key employees are prohibited from holding our common stock in a margin account or otherwise pledging our common stock as collateral for a loan.
Deductibility of Compensation.
Clawback Policy. In the event we are required to restate our financial statements due to material noncompliance, our Incentive Compensation Recoupment Policy requires us to recover from our current or former executive officers certain amounts of incentive-based compensation paid within the prior three years that were erroneously paid.
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TABLES
Name and Principal Position | Fiscal Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | |||||||||||||||
RSAs(2) | RSUs(3) | ||||||||||||||||||||
Donald W. Duda President and Chief Executive Officer | 2019 | 759,719 | — | — | 455,832 | 174,027 | 1,389,578 | ||||||||||||||
2018 | 736,476 | — | — | 660,991 | 148,159 | 1,545,626 | |||||||||||||||
2017 | 716,108 | — | — | 955,541 | 138,169 | 1,809,818 | |||||||||||||||
2016 | 695,588 | 6,080,400 | 4,053,600 | 572,102 | 311,114 | 11,712,804 | |||||||||||||||
Ronald L.G. Tsoumas Chief Financial Officer and Vice President, Corporate Finance | 2019 | 420,749 | — | — | 39,600 | 28,682 | 489,031 | ||||||||||||||
2018 | 245,942 | — | — | 155,532 | 30,174 | 431,648 | |||||||||||||||
2017 | 238,703 | — | — | 210,425 | 27,017 | 476,145 | |||||||||||||||
2016 | 231,880 | 1,114,740 | 743,160 | 129,628 | 21,976 | 2,241,384 | |||||||||||||||
Joseph E. Khoury Chief Operating Officer(6) | 2019 | 446,607 | — | — | 176,854 | 22,062 | 645,523 | ||||||||||||||
2018 | 400,025 | — | — | 280,340 | 15,682 | 696,047 | |||||||||||||||
2017 | 362,518 | — | — | 320,261 | 14,482 | 697,261 | |||||||||||||||
2016 | 359,600 | 3,040,200 | 2,026,800 | 184,127 | 90,221 | 5,700,948 | |||||||||||||||
Michael Brotherton Vice President and President of Grakon(7) | 2019 | 309,996 | — | — | 184,640 | 167,549 | 662,185 | ||||||||||||||
Anil Shetty Vice President and President Dabir Surfaces(7) | 2019 | 372,000 | — | — | 110,484 | 170,014 | 652,498 |
| Name and Principal Position | | | Fiscal Year | | | Salary ($)(1) | | | Bonus ($)(2) | | | Stock Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($)(4) | | | All Other Compensation ($)(5) | | | Total ($) | |
| Donald W. Duda President and Chief Executive Officer | | | 2022 | | | 782,800 | | | 628,000 | | | — | | | 634,068 | | | 252,908 | | | 2,297,776 | |
| 2021 | | | 725,596 | | | — | | | 10,605,000 | | | 1,565,600 | | | 435,358 | | | 13,331,554 | | |||
| 2020 | | | 851,107 | | | — | | | — | | | 234,840 | | | 429,171 | | | 1,515,118 | | |||
| Ronald L.G. Tsoumas, Chief Financial Officer | | | 2022 | | | 453,200 | | | 248,000 | | | — | | | 101,970 | | | 40,254 | | | 843,424 | |
| 2021 | | | 381,893 | | | — | | | 2,135,140 | | | 543,840 | | | 77,161 | | | 3,138,034 | | |||
| 2020 | | | 467,504 | | | — | | | — | | | 81,576 | | | 80,978 | | | 630,058 | | |||
| Joseph E. Khoury Chief Operating Officer(6) | | | 2022 | | | 500,192 | | | 322,000 | | | — | | | 300,115 | | | 107,049 | | | 1,229,356 | |
| 2021 | | | 425,507 | | | — | | | 4,072,320 | | | 690,000 | | | 155,227 | | | 5,343,054 | | |||
| 2020 | | | 460,005 | | | — | | | — | | | 103,500 | | | 148,249 | | | 711,754 | | |||
| Andrea J. Barry Chief Administrative Officer | | | 2022 | | | 431,346 | | | 184,000 | | | — | | | 209,250 | | | 10,373 | | | 834,969 | |
| 2021 | | | 283,639 | | | — | | | 1,484,700 | | | 403,920 | | | 20,819 | | | 2,193,078 | | |||
| Kevin M. Martin, Vice President, North America | | | 2022 | | | 363,000 | | | 146,000 | | | — | | | 296,187 | | | 20,546 | | | 825,733 | |
| 2021 | | | 304,731 | | | — | | | 1,444,805 | | | 343,515 | | | 36,741 | | | 2,129,792 | |
(1) |
(2) |
(3) | Amounts include the grant date fair value |
(4) | Amounts reflect annual performance-based cash bonuses. |
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(5) | Amounts included in All Other Compensation reflect the following for fiscal |
| Executive | | | Vested RSU Dividend Equivalents ($) | | | 401(k) Contribution ($) | | | Life Insurance ($) | | | Car Allowance ($) | |
| Mr. Duda | | | 232,431 | | | 9,150 | | | 1,727 | | | 9,600 | |
| Mr. Tsoumas | | | 23,520 | | | 9,150 | | | 1,584 | | | 6,000 | |
| Mr. Khoury | | | 50,400 | | | 0 | | | 0 | | | 30,988 | |
| Ms. Barry | | | 0 | | | 9,150 | | | 1,223 | | | 0 | |
| Mr. Martin | | | 0 | | | 9,150 | | | 596 | | | 10,800 | |
Executive | Vested RSU Dividend Equivalents ($) | 401(k) Contribution ($) | Life Insurance ($) | Car Allowance ($) | Executive Physical ($) | ||||||||||
Mr. Duda | 145,664 | 8,467 | 3,564 | 9,600 | 6,732 | ||||||||||
Mr. Tsoumas | 11,704 | 9,949 | 1,029 | 6,000 | 0 | ||||||||||
Mr. Khoury | 21,120 | 0 | 0 | 0 | 942 | ||||||||||
Mr. Brotherton | 0 | 9,112 | 804 | 7,650 | 0 | ||||||||||
Mr. Shetty | 0 | 8,634 | 580 | 10,800 | 0 |
For Mr. Brotherton,Khoury, All Other Compensation also includes the following: (i) a monthly housing allowanceaggregate incremental cost to the Company of $7,500$25,661 for use of Company-owned condominiums in Chicago, Illinois and Mriehel, Malta and a monthly living allowance of $2,500Company-leased apartment in connection with his relocation to Seattle;Southfield, Michigan. The incremental cost includes the rental or condominium maintenance costs and (ii) a discretionary matching payment of $125,000 pursuant toexpenses for the Company’s discretionary matching program for non-executive officers. For Mr. Shetty, also includes a matching payment of $150,000 pursuant to the Company’s discretionary matching program for non-executive officers.
(6) |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | ||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | ||||||
Donald W. Duda | 7/31/2018 | 379,860 | 759,719 | 1,519,438 | ||||||
Ronald L.G. Tsoumas | 7/31/2018 | 171,600 | 264,000 | 448,800 | ||||||
Joseph E. Khoury | 7/31/2018 | 147,379 | 294,756 | 589,512 | ||||||
Michael Brotherton | 9/12/2018 | 112,200 | 224,400 | 448,800 | ||||||
Anil Shetty | 7/31/2018 | 159,588 | 245,520 | 417,384 |
| Name | | | Grant Date | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | ||||||
| Threshold ($) | | | Target ($) | | | Maximum ($) | | ||||||
| Donald W. Duda | | | 7/7/2021(1) | | | 528,390 | | | 1,056,780 | | | 2,113,560 | |
| Ronald L.G. Tsoumas | | | 7/7/2021(1) | | | 169,950 | | | 339,900 | | | 679,800 | |
| Joseph E. Khoury | | | 7/7/2021(1) | | | 250,096 | | | 500,192 | | | 1,000,384 | |
| Andrea J. Barry | | | 7/7/2021(1) | | | 174,375 | | | 348,750 | | | 697,500 | |
| Kevin M. Martin | | | 7/7/2021(1) | | | 119,790 | | | 239,580 | | | 479,160 | |
(1) | Reflects the annual performance-based cash bonus |
Alternative Summary Compensation Table
Under the SEC’s proxy statement disclosure rules, the grant date fair value200%, respectively, of the number of RSAs eligible for vestingamount payable at the target level of performance. The annual performance measures included new business bookings, financial objectives, and individual performance objectives. The amounts paid to the total number of RSUs awarded under the LTI Program has been reportednamed executive officers pursuant to these awards are included in the Summary Compensation Table aboveunder the column captioned “Non-Equity Incentive Plan Compensation.” Please see “Components of Fiscal 2022 Compensation – Annual Performance-Based Bonuses” in fiscal 2016.
The Company is presenting the following Alternative Summary Compensation Table in order to illustrate how the Compensation Committee views annualized total compensation under the LTI Program. The Compensation Committee believes that due to the front-loaded nature of the RSADiscussion and RSU awards, the compensation amounts
30
disclosed in the Summary Compensation Table for our named executive officers overstate compensation attributable to fiscal 2016 and understate compensation attributable to fiscal 2017, fiscal 2018 and fiscal 2019.
The values in this table differ from the values disclosed in the Summary Compensation Table in that the value of the RSAs and the RSUs have been annualized equally over the respective five-year periods of the programs. In both the Summary Compensation Table and the Alternative Summary Compensation Table, the values for the RSA and RSU awards reflect grant date fair values calculated in accordance with the applicable accounting rules. The Alternative Summary Compensation Table below has been revised as described and does not comply with SEC rules for the Summary Compensation Table. Shareholders should not view this alternative table as a substitute for the Summary Compensation Table and should review this Alternative Summary Compensation Table together with the Summary Compensation Table and other compensation tables contained herein that have been prepared in accordance with SEC rules.
Alternative Summary Compensation Table
Name and Principal Position | Fiscal Year | Salary ($) | Annualized Value of Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | |||||||||||||||
RSAs(2) | RSUs(3) | ||||||||||||||||||||
Donald W. Duda President and Chief Executive Officer | 2019 | 759,719 | 1,216,080 | 810,720 | 455,832 | 174,027 | 3,416,378 | ||||||||||||||
2018 | 736,476 | 1,216,080 | 810,720 | 660,991 | 148,159 | 3,572,426 | |||||||||||||||
2017 | 716,108 | 1,216,080 | 810,720 | 948,700 | 138,169 | 3,829,777 | |||||||||||||||
2016 | 695,598 | 1,216,080 | 810,720 | 572,102 | 311,114 | 3,605,614 | |||||||||||||||
Ronald L.G. Tsoumas Chief Financial Officer and Vice President, Corporate Finance | 2019 | 420,749 | 222,948 | 148,632 | 39,600 | 28,682 | 860,611 | ||||||||||||||
2018 | 245,942 | 222,948 | 148,632 | 155,532 | 30,174 | 803,228 | |||||||||||||||
2017 | 238,703 | 222,948 | 148,632 | 210,425 | 27,017 | 847,725 | |||||||||||||||
2016 | 231,880 | 222,948 | 148,632 | 129,628 | 21,976 | 755,064 | |||||||||||||||
Joseph E. Khoury Chief Operating Officer(6) | 2019 | 446,607 | 608,040 | 405,360 | 176,854 | 22,062 | 1,658,923 | ||||||||||||||
2018 | 400,025 | 608,040 | 405,360 | 280,340 | 15,682 | 1,717,170 | |||||||||||||||
2017 | 362,518 | 608,040 | 405,360 | 320,261 | 14,482 | 1,710,661 | |||||||||||||||
2016 | 359,600 | 608,040 | 405,360 | 184,127 | 90,221 | 1,647,348 | |||||||||||||||
Michael Brotherton Vice President and President Grakon(7) | 2019 | 309,996 | 243,216 | 162,144 | 184,640 | 167,549 | 1,067,545 | ||||||||||||||
Anil Shetty Vice President and President Dabir Surfaces(7) | 2019 | 372,000 | 243,216 | 162,144 | 110,484 | 170,014 | 1,057,858 |
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Outstanding Equity Awards at Fiscal Year-End
Name | Option Awards | Stock Awards | ||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Share of Units of Stock That Have Not Vested ($)(3) | Equity Incentive Plan Awards: Numbers of Unearned Shares, Units or Other Rights That Have Not Yet Vested (#)(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($)(3) | |||||||||||||||||
Donald W. Duda | 40,000 | — | 37.01 | 7/7/2024 | 48,000 | 1,407,840 | 180,000 | 5,279,400 | ||||||||||||||||
Ronald L.G. Tsoumas | 8,000 | — | 37.01 | 7/7/2024 | 8,800 | 258,104 | 33,000 | 967,890 | ||||||||||||||||
Joseph E. Khoury | 12,000 | — | 37.01 | 7/7/2024 | 24,000 | 703,920 | 90,000 | 2,639,700 | ||||||||||||||||
Michael Brotherton | 1,668 | — | 37.01 | 7/7/2024 | 9,600 | 281,568 | 36,000 | 1,055,880 | ||||||||||||||||
Anil Shetty | 5,000 | — | 37.01 | 7/7/2024 | 9,600 | 281,568 | 36,000 | 1,055,880 |
| | | Option Awards(1) | | | Stock Awards | | |||||||||||||||||||
| Name | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | | | Market Value of Share of Units of Stock That Have Not Vested ($)(3) | | | Equity Incentive Plan Awards: Numbers of Unearned Shares, Units or Other Rights That Have Not Yet Vested (#)(4) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Yet Vested ($)(3) | |
| Donald W. Duda | | | 40,000 | | | 0 | | | 37.01 | | | 7/7/2024 | | | 375,000 | | | 16,728,750 | | | 375,000 | | | 16,728,750 | |
| Ronald L.G. Tsoumas | | | 8,000 | | | 0 | | | 37.01 | | | 7/7/2024 | | | 75,500 | | | 3,368,055 | | | 75,500 | | | 3,368,055 | |
| Joseph E. Khoury | | | 12,000 | | | 0 | | | 37.01 | | | 7/7/2024 | | | 144,000 | | | 6,423,840 | | | 144,000 | | | 6,423,840 | |
| Andrea J. Barry | | | — | | | — | | | — | | | — | | | 52,500 | | | 2,342,025 | | | 52,500 | | | 2,342,025 | |
| Kevin M. Martin | | | — | | | — | | | — | | | — | | | 50,500 | | | 2,252,805 | | | 50,500 | | | 2,252,805 | |
(1) | These options were granted in July 2014. One-third of these options vested on each of the first, second and third anniversaries of the grant date. |
(2) | These RSUs are generally subject to a five-year vesting period based on continued service, |
(3) | Calculated based on the closing price of the Company’s common stock on April |
(4) | These |
Option Exercises and Stock Vested
The following table sets forth certain information regarding option exercises by the
Name | Option Awards | Stock Awards | ||||||||||
Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#)(2) | Value Realized on Vesting ($)(3) | |||||||||
Donald W. Duda | — | — | 36,000 | 1,055,880 | ||||||||
Ronald L.G. Tsoumas | — | — | 6,600 | 193,578 | ||||||||
Joseph E. Khoury | — | — | 18,000 | 527,940 | ||||||||
Michael Brotherton | — | — | 7,200 | 211,176 | ||||||||
Anil Shetty | — | — | 7,200 | 211,176 |
32
Nonqualified Deferred Compensation
Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals/ Distributions ($)(2) | Aggregate Balance at Last Fiscal Year-End ($) | ||||||||||
Donald W. Duda | 0 | 0 | 610 | 0 | 31,973 | ||||||||||
Ronald L.G. Tsoumas | 33,847 | 0 | 24,198 | 0 | 1,162,631 | ||||||||||
Joseph E. Khoury | 0 | 0 | 0 | 0 | 0 | ||||||||||
Michael Brotherton | 20,000 | 0 | 4,263 | 0 | 85,837 | ||||||||||
Anil Shetty | 16,000 | 0 | 733 | 0 | 16,733 |
| Name | | | Executive Contributions in Last Fiscal Year ($)(1) | | | Registrant Contributions in Last Fiscal Year ($) | | | Aggregate Earnings in Last Fiscal Year ($) | | | Aggregate Withdrawals/ Distributions ($)(2) | | | Aggregate Balance at Last Fiscal Year- End ($) | |
| Donald W. Duda | | | 0 | | | 0 | | | 5 | | | 0 | | | 32,497 | |
| Ronald L.G. Tsoumas | | | 151,569 | | | 0 | | | -727 | | | 0 | | | 1,373,943 | |
| Joseph E. Khoury | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Andrea J. Barry | | | 432,422 | | | 0 | | | -53,425 | | | 0 | | | 791,264 | |
| Kevin M. Martin | | | 0 | | | 0 | | �� | 0 | | | 0 | | | 0 | |
(1) | All executive contributions were reported as compensation in the “Summary Compensation Table” under the “Salary” and/or “Non-Equity Incentive Plan Compensation” columns, depending on the source of the executive contribution. |
(2) | Reflects distributions in accordance with the terms of each executive’s deferral election. |
The Methode Electronics, Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”) allows a select group of management and highly compensated employees to defer up to 75% of their annual base salary and/or 100% of their annual bonus, and/or 100% of their tandem cash award, if applicable, with an aggregate minimum deferral of $3,000. Directors are allowed to defer up to 100% of their director compensation paid in cash or shares of Common Stock. The minimum period of deferral is three years. Participants are immediately 100% vested.
2022.
daily.
33
Potential Payments Upon Termination or a Change of Control
The following table summarizes payments payable to our named executive officers upon a change in control or the executive’s death, disability or qualified retirement under our outstanding equity and cash bonus awards.
34
All of our executive officers other than Mr.49
| | | Scenario | | ||||||||||
| Type of Award | | | Change in Control | | | Death or Disability | | | Termination Without Cause | | | Retirement(1) | |
| Annual Performance-Based Bonus | | | The target bonus is paid. | | | The target bonus is paid. | | | No bonus is paid. | | | A prorated bonus is paid based on the retirement date and year-end performance. | |
| Restricted Stock Units (“RSUs”) | | | All RSUs are fully vested. | | | All RSUs are fully vested. | | | If Messrs. Duda, Tsoumas or Khoury or Ms. Barry are terminated after the end of fiscal 2021, a prorated number of RSUs will vest based on the number of months elapsed since the start of fiscal 2021. | | | A prorated number of RSUs will vest based on the months elapsed since the start of fiscal 2021. If Mr. Duda retires after the end of fiscal 2023, all his RSUs will fully vest. | |
| Performance-Based Restricted Stock Awards (“RSAs”) | | | A prorated number of RSA shares will vest. For Messrs. Duda and Martin, the proration will be based on the number of months elapsed since the start of fiscal 2021. For Messrs. Tsoumas and Khoury and Ms. Barry, (A) if the termination occurs in fiscal 2021, all RSA shares are forfeited; (B) if the termination occurs in fiscal 2022 or 2023, the proration will be based on the number of months elapsed since the start of fiscal 2021; and (C) if the termination occurs in fiscal 2024 or 2025, all RSA shares will fully vest. | | | All RSA shares are fully vested. | | | If Messrs. Duda, Tsoumas or Khoury or Ms. Barry are terminated without cause after the end of fiscal 2021, a prorated number of RSA shares will be eligible for vesting based on the number of months elapsed since the start of fiscal 2021. The number of RSA shares to vest will depend on the Company’s fiscal 2025 EBITDA. | | | A prorated number of RSA shares will be eligible for vesting based on the number of months elapsed since the start of fiscal 2021. If Mr. Duda retires after fiscal 2023, all his RSA shares will be eligible for vesting. The number of RSA shares to vest will depend on the Company’s fiscal 2025 EBITDA. | |
| | | Scenario | | ||||||||||
| Type of Award | | | Change in Control | | | Death or Disability | | | Termination Without Cause | | | Retirement(1) | |
| Performance Units | | | All the Performance Units are forfeited to the Company. | | | All the Performance Units are forfeited to the Company. | | | If Messrs. Duda, Tsoumas or Khoury or Ms. Barry are terminated without cause after the end of fiscal 2021, a prorated number of Performance Units will be eligible to be earned based on the number of months elapsed since the start of fiscal 2021. The number of Performance Units to be earned will depend on the Company’s fiscal 2025 EBITDA. | | | A prorated number of Performance Units will be eligible to be earned based on the number of months elapsed since the start of fiscal 2021. If Mr. Duda retires after fiscal 2023, all his Performance Units will be eligible to be earned. The number of Performance Units to be earned will depend on the Company’s fiscal 2025 EBITDA. | |
| Transition Awards | | | Following any change in control, if an executive is terminated without cause or resigns for good reason, the unpaid portion of the transition award will be paid. | | | The unpaid portion of the transition award will be paid. | | | The unpaid portion of the transition award will be paid. | | | The executive must repay any transition award amounts previously paid. | |
(1) | An executive’s qualified retirement occurs at or after age 65, or after age 55 with our consent. Mr. Duda is 66 years old. All our other named executive officers are between 55 and 65 years old. |
Name | Termination Scenario (on 4/26/19) | Salary and Bonus Severance ($) | Payment of Annual Performance- Based Bonus ($) | Vesting of RSUs ($) | Vesting of RSAs ($)(1) | Health and Welfare Benefits ($)(2) | ||||||||||
Donald W. Duda | Upon Change of Control(3) | — | 759,719 | 1,407,840 | 5,623,200 | — | ||||||||||
Resignation for Good Reason/Termination Without Cause Following Change of Control(4) | 3,646,653 | — | — | — | 68,165 | |||||||||||
Death or Disability | — | 759,719 | 1,407,840 | 5,623,200 | — | |||||||||||
Qualified Retirement | — | 759,719 | 1,126,272 | 4,498,560 | — | |||||||||||
Ronald L.G. Tsoumas | Upon Change of Control(3) | — | 264,000 | 258,104 | 1,030,920 | — | ||||||||||
Resignation for Good Reason/Termination Without Cause Following Change of Control(4) | 920,698 | — | — | — | 29,919 | |||||||||||
Death or Disability | — | 264,000 | 258,104 | 1,030,920 | — | |||||||||||
Qualified Retirement | — | 264,000 | 206,483 | 824,726 | — |
| Name | | | Termination Scenario (On 4/292) | | | Salary and Bonus Severance ($) | | | Annual Performance -Based Bonus ($) | | | Transition Award ($) | | | Vesting of RSUs ($)(1) | | | Vesting of RSAs ($)(1)(2) | | | Vesting of Performance Units ($)(2) | | | Health and Welfare Benefits ($)(3) | |
| Mr. Duda | | | Upon Change of Control(4) | | | — | | | 1,056,780 | | | — | | | 17,062,500 | | | 11,375,000 | | | — | | | — | |
| Resignation for Good Reason/Termination Without Cause Following Change of Control(5) | | | 2,348,401 | | | — | | | 942,000 | | | — | | | — | | | — | | | 50,844 | | |||
| Death or Disability | | | — | | | 1,056,780 | | | 942,000 | | | 17,062,500 | | | 17,062,500 | | | — | | | — | | |||
| Qualified Retirement | | | — | | | 634,068 | | | 0 | | | 11,395,000 | | | 11,395,000(6) | | | 0 | | | — | | |||
| Termination Without Cause | | | — | | | — | | | 942,000 | | | 0 | | | 0 | | | 0 | | | — | |
35
Name | Termination Scenario (on 4/26/19) | Salary and Bonus Severance ($) | Payment of Annual Performance- Based Bonus ($) | Vesting of RSUs ($) | Vesting of RSAs ($)(1) | Health and Welfare Benefits ($)(2) | ||||||||||
Joseph E. Khoury | Upon Change of Control(3) | — | 294,756 | 703,920 | 2,811,600 | — | ||||||||||
Resignation for Good Reason/ Termination Without Cause Following Change of Control | — | — | — | — | — | |||||||||||
Death or Disability | — | 294,756 | 703,920 | 2,811,600 | — | |||||||||||
Qualified Retirement | — | 294,756 | 563,136 | 2,249,280 | — | |||||||||||
Michael Brotherton | Upon Change of Control(3) | — | 224,400 | 281,568 | 1,124,640 | — | ||||||||||
Resignation for Good Reason/ Termination Without Cause Following Change of Control(4) | 1,114,272 | — | — | — | 47,758 | |||||||||||
Death or Disability | — | 224,400 | 281,568 | 1,124,640 | — | |||||||||||
Qualified Retirement | — | 224,400 | 225,254 | 899,712 | — | |||||||||||
Anil Shetty | Upon Change of Control(3) | — | 245,520 | 281,568 | 1,124,640 | — | ||||||||||
Resignation for Good Reason/ Termination Without Cause Following Change of Control(4) | 1,114,968 | — | — | — | 44,702 | |||||||||||
Death, Disability | — | 245,520 | 281,568 | 1,124,640 | — | |||||||||||
Qualified Retirement | — | 245,520 | 225,254 | 899,712 | — |
| Name | | | Termination Scenario (On 4/292) | | | Salary and Bonus Severance ($) | | | Annual Performance -Based Bonus ($) | | | Transition Award ($) | | | Vesting of RSUs ($)(1) | | | Vesting of RSAs ($)(1)(2) | | | Vesting of Performance Units ($)(2) | | | Health and Welfare Benefits ($)(3) | |
| Mr. Tsoumas | | | Upon Change of Control(4) | | | — | | | 339,900 | | | — | | | 3,435,250 | | | 1,374,100 | | | — | | | — | |
| Resignation for Good Reason/Termination Without Cause Following Change of Control(5) | | | 906,401 | | | — | | | 372,000 | | | — | | | — | | | — | | | 33,896 | | |||
| Death or Disability | | | — | | | 339,900 | | | 372,000 | | | 3,435,250 | | | 3,435,250 | | | — | | | — | | |||
| Qualified Retirement | | | — | | | 101,970 | | | 0 | | | 1,374,100 | | | 1,374,100(6) | | | 0 | | | — | | |||
| Termination Without Cause | | | — | | | — | | | 372,000 | | | 0 | | | 0 | | | 0 | | | — | | |||
| Mr. Khoury | | | Upon Change of Control(4) | | | — | | | 500,192 | | | — | | | 6,522,000 | | | 2,620,800 | | | — | | | — | |
| Resignation for Good Reason/ Termination Without Cause Following Change of Control(5) | | | 1,000,384 | | | — | | | 483,000 | | | — | | | — | | | — | | | — | | |||
| Death or Disability | | | — | | | 500,192 | | | 483,000 | | | 6,552,000 | | | 6,552,000 | | | — | | | — | | |||
| Qualified Retirement | | | — | | | 300,115 | | | 0 | | | 2,620,800 | | | 2,620,800(6) | | | 0 | | | — | | |||
| Termination Without Cause | | | — | | | — | | | 483,000 | | | 0 | | | 0 | | | 0 | | | — | | |||
| Ms. Barry | | | Upon Change of Control(4) | | | — | | | 348,750 | | | — | | | 2,388,750 | | | 1,374,100 | | | — | | | — | |
| Resignation for Good Reason/ Termination Without Cause Following Change of Control(5) | | | 930,000 | | | — | | | 276,000 | | | — | | | — | | | — | | | 50,159 | | |||
| Death or Disability | | | — | | | 348,750 | | | 276,000 | | | 2,388,750 | | | 2,388,750 | | | — | | | — | | |||
| Qualified Retirement | | | — | | | 209,250 | | | 0 | | | 955,500 | | | 955,500(6) | | | 0 | | | — | | |||
| Termination Without Cause | | | — | | | — | | | 276,000 | | | 0 | | | 0 | | | 0 | | | — | | |||
| Mr. Martin | | | Upon Change of Control(4) | | | — | | | 239,580 | | | — | | | 2,297,750 | | | 919,100 | | | — | | | — | |
| Resignation for Good Reason/ Termination Without Cause Following Change of Control(5) | | | — | | | — | | | 219,000 | | | — | | | — | | | — | | | — | | |||
| Death, Disability | | | — | | | 239,580 | | | 219,000 | | | 2,297,750 | | | 2,297,750 | | | — | | | — | | |||
| Qualified Retirement | | | — | | | 296,187 | | | 0 | | | 919,100 | | | 919,100(6) | | | 0 | | | — | | |||
| Termination Without Cause | | | — | | | — | | | 219,000 | | | — | | | — | | | — | | | — | |
(1) |
(2) | For purposes of this table, we have assumed that the target performance level will be achieved with respect to the |
Reflects the estimated lump-sum present value of all future premiums which will be paid on behalf of the executive under our health and welfare benefit plans. |
(4) |
These amounts are in addition to amounts payable under the preceding row “Upon Change of Control.” For the transition awards, assumes the executive is terminated without good cause or voluntarily terminates employment for good reason within two years. |
(6) | Assumes the target level of performance is achieved. |
CEO Pay Ratio
PAY RATIO
For fiscal 2019,
To identify the median of the annual total compensation of all of our employees, we first determined our employee population as of February 1, 2019. As a global manufacturer, we have2021, which was approximately 7,200 employees in the United States, Mexico, Malta, Egypt, China, Canada,Egypt, India, Belgium, Lebanon,Canada, the United Kingdom, Germany, Italy, Lebanon, the Netherlands, Switzerland, Singapore, France and Hong Kong. As of February 1, 2019, we had 6,187 employees worldwide.
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Taiwan. For purposes of identifying the median employee, from our employee population, we considered annual base salary as of February 1, 2019,2021, plus overtime, allowances and short-term incentive compensation for the trailing twelve months, each as reported in our payroll records and adjusted to US dollars based on foreign currency exchange rates in effect as of March 12, 2019.dollars. We did not make any cost-of-living adjustments to the pay of employees living in different jurisdictions than our CEO, but we did include certain adjustments for the annualization of pay for employees who were employed for only part of the period.
Using the above methodology,
The pay ratio andall our employees (other than Mr. Duda) was $8,137. Our median annual total compensation disclosed above reflectreflects that the bulk of our employees are located in countries that have much lower prevailing wages than the United States.
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Shareholder
| | By Order of the Board of Directors, | |
| | ||
| | Walter J. Aspatore Chairman |
Number of Months Since Award Date | | | Vested Percentage |
Fewer than 12 months | | | |
At least 12 months, but less than 24 months | | | 331/3% |
At least 24 months, but less than 36 months | | | 662/3% |
36 months or more | | | 100% |
Chicago, IllinoisJuly 26, 2019
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A-8