UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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☒ | Definitive Proxy Statement | |
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☐ | Soliciting Material under §240.14a-12 |
STANDEX INTERNATIONAL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Standex 2018 Proxy Statement Partner Solve Deliver Food services Hydraulics Engraving Electronices Enginnering
Guide to Standex’s Proxy Statement
2 | Invitation to 2018 Annual Meeting of Shareholders | INDEX OF FREQUENTLY REQUESTED INFORMATION | ||||
3 | Notice of Annual Meeting of Shareholders | |||||
4 | Proxy Statement Summary | |||||
10 | Proposal One: Election of Directors | 24 | Auditor’s Fees | |||
16 | Proposal Two: 2018 Omnibus Incentive Plan | 26 | Board Leadership Structure | |||
22 | Proposal Three: Advisory Vote on Executive Compensation | 48 | CEO Pay Ratio | |||
23 | Proposal Four: Ratification of Independent Auditor | 49 | Clawback Provision | |||
25 | Governance | 39 | Compensation Consultant | |||
25 | 26 | Director Attendance | ||||
26 | 10 | Directors | ||||
27 | 26 | Director Independence | ||||
28 | 49 | Hedging Policy | ||||
28 | 33 | Management Stock Ownership | ||||
28 | 39 | Peer Group | ||||
47 | Perquisites | |||||
29 | 49 | Pledging Policy | ||||
29 | 27 | Risk Oversight | ||||
30 | 60 48 | Shareholder Proposals Stock Ownership Guidelines | ||||
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32 | ||||||
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INDEX OF COMMONLY USED ACRONYMS | |||||
35 | Compensation Discussion & Analysis | |||||
35 | ||||||
37 | BPP | Balanced Performance Plan | ||||
39 | CHRO | Chief Human Resources Officer | ||||
40 | CIC | Change in Control | ||||
48 | CLO | Chief Legal Officer | ||||
50 | DE | Dividend Equivalents | ||||
50 | EBIT | Earnings Before Income Tax | ||||
51 51 | EBITDA | Earnings Before Income Tax, Depreciation & Amortization | ||||
53 | EPS | Earnings Per Share | ||||
54 | GAAP | Generally Accepted Accounting Principles | ||||
55 | IRC | Internal Revenue Code | ||||
55 | IRS | Internal Revenue Service | ||||
55 | LTIP | Long-Term Incentive Plan | ||||
56 | MSPP | Management Stock Purchase Plan | ||||
59 | Other Information | N&CG | Nominating & Corporate Governance | |||
59 | NEO | Named Executive Officer | ||||
60 | NYSE | New York Stock Exchange | ||||
60 | OIP | 2018 Omnibus Incentive Plan | ||||
61 61 | PCAOB | Public Company Accounting Oversight Board | ||||
64 | Appendix A – 2018 Standex Omnibus Incentive Plan | PSUs | Performance Share Units | |||
ROIC | Return on Invested Capital | |||||
RSAs | Awards of Restricted Stock | |||||
RSUs | Restricted Stock Units | |||||
SARs | Stock Appreciation Rights | |||||
SEC | Securities and Exchange Commission | |||||
TSR | Total Shareholder Return |
2 | Invitation to 2019 Annual Meeting of Shareholders | INDEX OF FREQUENTLY REQUESTED INFORMATION | ||||
3 | Notice of Annual Meeting of Shareholders | |||||
4 | Proxy Statement Summary | |||||
9 | Proposal One: Election of Directors | 17 | Auditor’s Fees | |||
15 | Proposal Two: Advisory Vote on Executive Compensation | 19 | Board Leadership Structure | |||
16 | Proposal Three: Ratification of Independent Auditor | 45 | CEO Pay Ratio | |||
18 | Governance | 46 | Clawback Provision | |||
18 | 34 | Compensation Consultant | ||||
19 | 19 | Director Attendance | ||||
19 | 9 | Directors | ||||
19 | 19 | Director Independence | ||||
19 | 46 | Hedging Policy | ||||
20 | 28 | Stock Ownership | ||||
20 | 34 | Peer Group | ||||
20 | 44 | Perquisites | ||||
21 | 46 | Pledging Policy | ||||
22 | 21 | Risk Oversight | ||||
23 | 57 | Shareholder Proposals | ||||
23 | Compensation Committee Interlocks and Insider Participation in Compensation Decisions | 45 | Stock Ownership Guidelines | |||
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INDEX OF COMMONLY USED ACRONYMS | |||||
24 | ||||||
25 | BPP | Balanced Performance Plan | ||||
25 | CHRO | Chief Human Resources Officer | ||||
27 | CIC | Change in Control | ||||
28 | CLO | Chief Legal Officer | ||||
30 | Compensation Discussion & Analysis | EBIT | Earnings Before Income Tax | |||
30 31 | EBITDA | Earnings Before Income Tax, Depreciation & Amortization | ||||
34 | EPS | Earnings Per Share | ||||
35 | GAAP | Generally Accepted Accounting Principles | ||||
45 | IRC | Internal Revenue Code | ||||
47 | IRR | Internal Rate of Return | ||||
48 | Compensation Tables | IRS | Internal Revenue Service | |||
48 | LTIP | Long-Term Incentive Plan | ||||
50 | MSPP | Management Stock Purchase Plan | ||||
51 | N&CG | Nominating & Corporate Governance | ||||
51 | NEO | Named Executive Officer | ||||
52 | NYSE | New York Stock Exchange | ||||
52 | OIP | 2018 Omnibus Incentive Plan | ||||
53 | PCAOB | Public Company Accounting Oversight Board | ||||
56 | PSUs | Performance Share Units | ||||
56 | ROIC | Return on Invested Capital | ||||
57 | RSAs | Restricted Stock Awards | ||||
57 | RSUs | Restricted Stock Units | ||||
58 | SEC | Securities and Exchange Commission | ||||
58 | TSR | Total Shareholder Return | ||||
60 | TRIR | Total Recordable Incident Rate |
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Invitation to 20182019 Annual Meeting of Shareholders
Tuesday, October 23, 201822, 2019
9:00 a.m., local time
Standex International Corporation Corporate Headquarters
11 Keewaydin Drive, Suite 300, Salem, New Hampshire 03079
Dear Shareholder,
We cordially invite you to attend Standex’s Annual Meeting of Shareholders. We hope that you will join me, our Board of Directors, and other shareholders at the meeting. The attached Notice of Annual Meeting of Shareholders and Proxy Statement contain information about the business that will be conducted at the meeting. Following the meeting, I will present information on Standex’s operations and welcome any questions from shareholders.
Your vote is important to us! If you plan on attending the meeting, you may vote your shares in person. If you cannot vote in person, we urge you to vote via your proxy card, over the phone or on the Internet prior to the meeting. Detailed instructions on how to vote are found on page 59.56.
Standex’s Board and senior leadership have received feedback from shareholders on the Proxy Statement. In response, we have created this new format to simplify and streamline the information that shareholders need to know. Thank you in advance for voting your shares, and thank you for your continued support of Standex.
Sincerely,
David Dunbar, President/CEO Chair, Board of Directors |
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Notice of Annual Meeting of Shareholders
The 20182019 Annual Meeting of Shareholders (the “Annual Meeting”) of Standex International Corporation (the “Company” or “Standex”) will be held on Tuesday, October 23, 201822, 2019 at 9:00 a.m., local time, at the Company’s Corporate Headquarters, located at 11 Keewaydin Drive, Suite 300, Salem, New Hampshire 03079.
You are receiving these proxy materials in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Standex International Corporation, a Delaware corporation, to be voted at the 20182019 Annual Meeting and any continuation, adjournment or postponement thereof.
Shareholders of record at the close of business on August 31, 201830, 2019 are entitled to vote at the meeting, either in person or by proxy, on the following matters, as well as the transaction of any other business properly presented at the Annual Meeting:
Item 4 Ratification of the appointment of Grant Thornton LLP as the Company’s independent auditor for FY 2019. Item 3 An advisory vote on the Company’s executive compensation; Item 2 Approval of the 2018 Omnibus Incentive Plan to replace the 2008 Long Term Incentive Plan, which was amended and restated in 2011; Item 1 The election of threetwo directors to hold office for three-year terms ending on the date of the annual meeting in 2021;2022; Item 2 An advisory vote on the Company’s executive compensation;Item 3 Ratification of the appointment of Grant Thornton LLP as the Company’s independent auditor for FY 2020.
On September 12, 2018,11, 2019, we began to mail our shareholders either a notice containing instructions on how to access this Proxy Statement and our Annual Report through the Internet, or a printed copy of these materials. We have provided each shareholder with a Notice of Internet Availability of Proxy Materials (the “Notice”), which encourages shareholders to review all proxy materials and our annual report and vote online atwww.envisionreports.com/sxi. We believe that reviewing materials online reduces our costs, eliminates surplus printed materials and generally reduces the environmental impact of our Annual Meeting. If you would like to receive a printed copy of our proxy materials, please follow the instructions contained in the Notice.
All proxy solicitation costs are paid by the Company. In addition to proxy solicitations made by mail, the Company’s directors and officers may solicit proxies in person or by telephone.
Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope that you will vote your shares as soon as possible. We encourage you to vote via the Internet, since it is convenient and significantly reduces postage and processing costs. You may also vote via telephone or by mail if you received paper copies of the proxy materials. Instructions regarding the methods of voting are included in the Notice, the proxy card and the Proxy Statement.
By Order of the Board of Directors,
Alan J. Glass,Secretary |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON OCTOBER
As permitted by the SEC, the
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This summary contains a general overview of this Proxy Statement. It highlights information contained elsewhere in this Proxy Statement and is meant to be used as a quick reference. This summary does NOT contain all of the information that you should consider before voting. You should read the entire Proxy Statement carefully before voting.
20182019 Annual Meeting
Date & Time October | Location Standex International Corporation 11 Keewaydin Drive, Suite 300 Salem, NH 03079 | Who Can Vote Holders of our Common Stock as of the record date:August |
You are receiving these proxy materials in connection with the solicitation of proxies by the Board of Directors of Standex International Corporation, a Delaware corporation, to be voted at the 20182019 Annual Meeting and any continuation, adjournment or postponement thereof.
On September 12, 2018,11, 2019, we began to mail our shareholders either a notice containing instructions on how to access this Proxy Statement and our Annual Report through the Internet, or a printed copy of these materials. The Notice explains how you may access and review the proxy materials and how you may submit your proxy onvia the Internet. If you would like to receive a printed copy of our proxy materials, please follow the instructions contained in the Notice.
All proxy solicitation costs are paid by the Company. In addition to proxy solicitations made by mail, the Company’s directors and officers may solicit proxies in person or by telephone.
Agenda and Voting Recommendations
Item | Proposals | Board Vote Recommendation | ||
1 | Election of Directors | FOR each Director Nominee | ||
2 |
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| Advisory Vote on Executive Compensation | FOR | ||
| Ratification of Auditors | FOR |
How to Vote If you hold shares as of the Record Date (Aug. 30, 2019), you can vote your shares using any of the following methods: By telephone at By completing, By appearing in person and either delivering By internet at 1-800-652-VOTE signing and returning a completed proxy card or voting by ballot at www.envisionreports.com/sxi (8683) your proxy card the Annual Meeting
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Board Nominees and Members | OUR BOARD RECOMMENDS YOU VOTE “FOR” EACH DIRECTOR NOMINEE |
Class & Term Expiration | Name | Age | Director Since | Independence | Committee Memberships | |||||||||
Audit | Comp. | N&CG** | ||||||||||||
Class I Nominee – 2021 | Charles H. Cannon, Jr. | 66 | 2004 | Independent Director | ● | ● | ||||||||
Class I Nominee – 2021 | Jeffrey S. Edwards* | 56 | 2014 | Independent Director | Chair | ● | ||||||||
Class I Nominee – 2021 | B. Joanne Edwards* | 62 | new nominee | Independent Director | ||||||||||
Class III – 2019 | Thomas E. Chorman | 64 | 2004 | Independent Director | ● | ● | Chair | |||||||
Class III – 2019 | Thomas J. Hansen | 69 | 2013 | Lead Independent Director | Chair | |||||||||
Class II – 2020 | David Dunbar | 57 | 2014 | Standex CEO/ Not independent | ||||||||||
Class II – 2020 | Michael A. Hickey | 57 | 2017 | Independent Director | ● | |||||||||
Class II – 2020 | Daniel B. Hogan | 75 | 1983 | Independent Director | ● |
Class & Term Expiration | Name | Age | Director Since | Independence | Committee Memberships | |||||||||
Audit | Comp. | N&CG* | ||||||||||||
Class III Nominee – 2019 | Thomas E. Chorman | 65 | 2004 | Independent Director | ● | ● | Chair | |||||||
Class III Nominee – 2019 | Thomas J. Hansen | 70 | 2013 | Lead Independent Director | Chair | |||||||||
Class II – 2020 | David Dunbar | 58 | 2014 | Standex CEO/ Not Independent | ||||||||||
Class II – 2020 | Michael A. Hickey | 58 | 2017 | Independent Director | ● | |||||||||
Class II – 2020 | Daniel B. Hogan | 76 | 1983 | Independent Director | ● | |||||||||
Class I – 2021 | Charles H. Cannon, Jr. | 67 | 2004 | Independent Director | ● | ● | ||||||||
Class I – 2021 | Jeffrey S. Edwards** | 57 | 2014 | Independent Director | Chair | ● | ||||||||
Class I – 2021 | B. Joanne Edwards** | 63 | 2018 | Independent Director | ● | ● |
* Nominating & Corporate Governance Committee
** Jeffrey S. Edwards and B. Joanne Edwards are not related.
** Nominating & Corporate Governance Committee
Director Snapshot
10.4 years 64 5 directors Average director tenure 11.4 YEARS Average age of directors 65 Tenure of fewer than 5 years 2 DIRECTORS 7 of our 8 directors are independent
Corporate Governance Highlights
We are committed to strong corporate governance practices, which promote the long-term interests of shareholders, strengthen financial integrity and hold our Board and management accountable. The highlights of our corporate governance practices include the following:
7 out of 8 of our directors are independent |
Regular executive sessions of independent directors |
Audit, Compensation and Nominating and Corporate Governance committees are comprised solely of independent directors |
Annual board and committee self-evaluations |
Risk oversight by the full board and committees |
| 62.5% of the directors are new since 2013 |
Ongoing review of optimal Board composition |
Board members participate in our Company-wide compliance and ethics training programs |
Independent compensation consultant reports directly to the Compensation Committee |
Lead Independent Director |
· | Corporate Governance Guidelines |
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Stock ownership guidelines for directors and executive officers |
Policy against hedging and pledging of Company stock |
Code of Conduct applies to directors & all employees |
Annual advisory approval of executive compensation |
Board and committees may engage outside advisors independently of management |
· | Oversight of whistleblower hotline |
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Our Long Term Incentive Plan (“LTIP”) is scheduled to terminate on October 28, 2018. We are asking shareholders to approve the Standex 2018 Omnibus Incentive Plan, which the Compensation Committee and the Board have adopted, subject to shareholder approval, to enable the Company to continue making equity awards to executives and other eligible participants. The following is an overview* of the key provisions of the OIP. Please see “Proposal Two: 2018 Omnibus Incentive Plan” starting on page 16 for the full summary of the OIP.
Term: 10 Years
Share Pool: 500,000
Eligibility: Any employee, Third-Party Advisor orNon-Employee Director, as selected by the Committee
Plan Administration: Compensation Committee of the Board
Key Plan Administration Powers:
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Permitted Award Types:
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Share Counting:
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Equity Restructuring: In the event of an equity restructuring, the Administrator shall make appropriate adjustments in:
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Transferability of Awards: Generally, Awards are not transferable other than by will or the laws of descent and distribution. The Compensation Committee, in its discretion, may approve the transfer of an Award by gift to certain allowable transferees.
Dividends and Dividend Equivalents (“DEs”):
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Amendment and Termination:
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Change in Control (“CIC”):
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Director Compensation Limits: The OIP limits the aggregate annual compensation forNon-Employee Directors to $400,000, subject to certain exceptions.
* Capitalized terms have the definitions set forth in the OIP. See Appendix A, beginning on page 64 for the full text of the OIP.
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Executive Compensation | OUR BOARD RECOMMENDS YOU VOTE “FOR” OUR “SAY ON PAY” PROPOSAL |
Objectives | Principles | |||||||
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Checklist of Compensation Practices What we do What we don’t do Executive compensation is tied to performance Caps on incentive payouts Strategic performance metrics Compensation Committee has the right to “claw back” awards Benchmarks determined based on peers of comparable size, complexity & industry Encourage long range planning No excise tax gross-up provisions No single-trigger change in control severance benefits No hedging or pledging of shares Our incentive programs do not encourage excessive risk taking No |
Compensation Program Design
Category | Compensation Element | Purpose | Description | |||
| Base Salary | Attract and retain executives | Fixed cash compensation based on responsibilities of the position | |||
Short-Term Incentives | Annual Incentive Opportunity | Attract and retain executives Reward short-term performance | Variable annual cash incentive for achievement ofpre-determined performance goals and metrics | |||
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Long-Term Incentives | Restricted Stock Awards | Attract and retain executives Align interests with shareholders | Grants of restricted stock, which cliff vest at the end of a3-year period | |||
Performance Share Units | Attract and retain executives Reward long term performance Align interests with shareholders | Cliff vest at the end of a3-year period at between 0% and 200% of award value based onpre-determined financial performance metrics | ||||
Management Stock Purchase Plan | Attract and retain executives Align interests with shareholders | Optional deferral of up to 50% of the annual incentive opportunity into the receipt of discounted restricted stock units | ||||
Retirement | Standex Deferred Compensation Plan | Attract and retain executives | Unfunded,non-qualified deferred compensation plan, available to executive officers and other U.S. employees based on salary level | |||
401(k) Plan | Attract and retain executives | Qualified 401(k) plan available to U.S. employees | ||||
Other | Employment Agreements | Attract and retain executives Manage risk | Caps severance pay in the event of termination and enforcesnon-competition | |||
Other Benefits | Attract and retain executives | Certain executives receive an automobile allowance and/or tax preparation services; no other perquisites offered |
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Compensation Mix
CEO COMPENSATION MIX [PERCENTAGE] [PERCENTAGE] [PERCENTAGE] [PERCENTAGE]AVERAGE NEO COMPENSATION MIX 20% 17% 24% 19% 42% 30% 26% At Risk 75% 20% 25% 30% 19% 38% 21% 22% At Risk 63%58% 76% 22% Base Salary Annual Incentive LTIP PSU LTIP RSA GuaranteedRSU Fixed Pay At Risk
20182019 Compensation Summary
Name & Principal Position | Salary ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Value & Non-Qualified | All Other Compensation ($) | Total ($) | Salary ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Value & Non-Qualified | All Other Compensation ($) | Total ($) | ||||||||||||
David Dunbar President & CEO
| 797,327
| 2,120,875
| 357,814
| 40,012
| 112,340
| 3,428,368
| 821,246
| 2,042,329
| 240,177
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| 144,820
| 3,246,298
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Thomas D. DeByle Vice President, CFO & Treasurer | 408,530 | 790,571 | 120,505 | 33,668 | 58,870 | 1,412,144 | 420,786 | 838,916 | 82,040 | 11,514 | 68,456 | 1,421,712 | ||||||||||||
Alan J. Glass Vice President, CLO & Secretary | 337,297 | 451,045 | 77,383 | - | 22,303 | 888,028 | 347,443 | 426,772 | 53,226 | 231 | 14,787 | 842,460 | ||||||||||||
Paul C. Burns Vice President of Strategy & Business Development | 315,953 | 487,082 | 134,577 | 177 | 16,723 | 954,512 | 342,068 | 609,530 | 165,088 | 527 | 22,337 | 1,139,550 | ||||||||||||
Annemarie Bell Vice President of Human Resources | 207,240 | 21,443 | 29,646 | - | 7,474 | 265,803 | ||||||||||||||||||
Ross McGovern Vice President & CHRO
| 283,800
| 246,547
| 90,267
| 6,101
| 15,939
| 642,654
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Ross McGovern Former Vice President & CHRO | 296,934 | 209,378 | - | (1,033) | 6,259 | 511,538 |
Note: | This table provides the summary compensation information for FY |
More than 97% of the votes cast on our were in favor of our executive compensation program and policies
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Audit |
OUR BOARD RECOMMENDS YOU VOTE “FOR” THE RATIFICAION
OUR BOARD RECOMMENDS YOU VOTE “FOR” THE RATIFICATION OF GRANT THORNTON LLP
The following are the aggregate audit andnon-audit fees billed to Standex by Grant Thornton LLP.LLP (“Grant Thornton”) for FYs 20172018 and 2018.2019. A full explanation of the types of fees and Grant Thornton’s role is contained in “Proposal Four:Three: Ratification of Independent Auditor” on starting on page 23.16.
Type of Fees | 2017 ($) * | 2018 ($) * | 2018 ($) * | 2019 ($) * | ||||||||||||||||||||
Audit Fees | 1,303,000 | 1,560,000 | 1,560,000 | 1,713,000 | ||||||||||||||||||||
Audit-Related Fees | 336,000 | 251,000 | 251,000 | 361,000 | ||||||||||||||||||||
Tax Fees | 24,000 | 24,000 | 24,000 | 21,000 | ||||||||||||||||||||
All Other Fees | 2,000 | 2,000 | 2,000 | 2.000 | ||||||||||||||||||||
Total Fees | 1,665,000 | 1,837,000 | 1,837,000 | 2,096,000 |
* Amounts have been rounded to the nearest thousand.
What our Audit Committee considered when engaging Grant Thornton:
| ● Grant Thornton’s independence and integrity. ● The business acumen, value-added benefit, continuity and consistency, and technical and core competency provided by the Grant Thornton team. ● Grant Thornton’s efforts toward efficiency, including with respect to process improvement and fees. |
| ● The effectiveness of Grant Thornton’s processes, including its quality control, timeliness and responsiveness, and communication and interaction with management and the Board. ● Grant Thornton’s regulatory expertise and ability to provide guidance on changing laws and regulations. |
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Directors
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The Board currently consists of eight directors. We have three classes of directors, each class being as equal in size as possible. The term of each class is three years. Class terms expire on a rolling basis, so that one class of directors is elected each year. The term for the 3 director nominees will expire at the 2021 annual meeting.
The Board has nominated Charles H. Cannon, Jr., Jeffrey S. Edwards and B. Joanne Edwards as Class I directors for the three-year term expiring at the 2021 annual meeting. Please note there is no relation between Jeffrey S. Edwards and B. Joanne Edwards.
In accordance with the Board’s director retirement policy, Gerald H. Fickenscher will retire from the Board effective as of the Annual Meeting and is therefore not nominated forre-election. The Company extends its sincere thanks to Mr. Fickenscher for his 14 years of service and wishes him well in his retirement.
The Board currently consists of eight directors. We have three classes of directors, each class being as equal in size as possible. The term of each class is three years. Class terms expire on a rolling basis, so that one class of directors is elected each year. The term for the 2 director nominees will expire at the 2022 annual meeting. The Board has nominated Thomas E. Chorman and Thomas J. Hansen as Class III directors for the three-year term expiring at the 2022 annual meeting. Board of Directors The Board regularly reviews the skills, experience and background that it believes are desirable to be represented on the Board. On an annual basis, the Board reviews each director’s skills and assesses whether there are gaps that need to be filled. As a result, recruitment is an ongoing activity. The Board aims to strike a balance between the experience that comes from long-term service on the Board with the new perspective that new Board members bring. The Board also has a mandatory retirement policy, whereby no director may stand forre-election if he or she has reached the age of 75. Over the past Biographical Information
The following is biographical information for each director nominee and each continuing director. The information includes names, ages, principal occupations for at least the past five years, the year in which each director joined our Board and certain other information. The information is current as of September |
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2019 Proxy Statement | 9 |
Class III Director Nominees
| Thomas E. Chorman CEO, Solar LED Innovations, LLC, a designer, manufacturer and marketer of solar lighting products. AGE: 65 INDEPENDENT BOARD COMMITTEES: ● Audit,Financial Expert ● Compensation ● Nominating and Corporate Governance (Chair) Mr. Chorman is a seasoned financial professional, with experience as a financial executive, an entrepreneur and a private equity investor. Mr. Chorman remains involved in the day to day financial reporting obligations of established, publicly traded, global companies as well as smallerstart-ups. Mr. Chorman’s financial background provides a significant benefit to the Board when analyzing acquisition opportunities and when evaluating both the current financial results and long range strategic plans of Standex. BUSINESS EXPERIENCE ● CEO, Solar LED Innovations, LLC (since 2008) ● CEO & President, Foamex (2001-2006) ● CFO, Ansell Healthcare (2000-2001) ● CFO, Armstrong World Industries (1997-2000) CURRENT BOARD MEMBERSHIP ● None PAST BOARD MEMBERSHIP ● Symmetry Medical, Inc. ● Foamex Thomas J. Hansen Former Vice Chairman, Illinois Tool Works, Inc., (“ITW”), a global manufacturing company that produces engineered fasteners and components, equipment and consumable systems and specialty products. DIRECTOR SINCE: 2013 AGE: 70 LEAD INDEPENDENT DIRECTOR BOARD COMMITTEES: ● Audit (Chair), Financial Expert Prior to his retirement, Mr. Hansen had a long and distinguished career with a global manufacturing company that has similar diversified aspects to Standex. Mr. Hansen’s broadend-market knowledge and acquisition experience, as well as his service on other global manufacturers’ boards, provide valuable insight to the Board. Mr. Hansen’s integrity and independent judgment make him especially well-suited for the role of Lead Independent Director, which he has held since 2016. BUSINESS EXPERIENCE ● Vice Chairman, ITW (2006-2013) ● Executive Vice President, ITW (1998-2006) ● Various managerial and executive roles, ITW (1980-1998) CURRENT BOARD MEMBERSHIP ● Terex Corporation ● Mueller Water Products, Inc. PAST BOARD MEMBERSHIP ● ITW ● CDW Corporation ● Gill Industries 10 2019 Proxy Statement Class II Directors – Term Expiring 2020 David Dunbar Chair, President and CEO, Standex International Corporation. DIRECTOR SINCE: 2014 AGE: 58 CHAIR, PRESIDENT & CEO Mr. Dunbar has decades of executive experience with global manufacturing companies. His diverse background at various operational levels, coupled with his technical engineering education, provides a broad perspective to the Board. As President & CEO, Mr. Dunbar is uniquely positioned to report to the Board on Company activities and guide discussions regarding the Company’s strategic growth initiatives. BUSINESS EXPERIENCE ● Chair, Standex (since 2016) ● President & CEO, Standex (since 2014) ● President of Valves and Controls, Pentair Ltd., (2012-2014) ● President of Valves and Controls, Tyco Flow Control (2009-2012) ● Various managerial and executive roles, Emerson Electric (2004-2009) CURRENT BOARD MEMBERSHIP ● Watts Water Technologies, Inc. PAST BOARD MEMBERSHIP ● None Michael A. Hickey Executive Vice President and President of Global Institutional, Ecolab Inc., a global provider of water, hygiene and energy technologies and solutions. DIRECTOR SINCE: 2017 AGE: 58 INDEPENDENT BOARD COMMITTEES: ● Compensation Mr. Hickey continues to enjoy a distinguished career at Ecolab Inc., where he has served in managerial and executive roles of increasing responsibility since 1984. Mr. Hickey’s track record of leading a solutions-driven business with an intimate customer focus, together with his mergers and acquisitions, marketing and sales and operational experience provides a dynamic voice to the Board. BUSINESS EXPERIENCE ● President of Global Institutional, Ecolab Inc. (since 2012) ● Executive Vice President of Institutional Sector North America, Ecolab Inc. (2011-2012) ● Executive Vice President of the Global Service Sector, Ecolab Inc. (2010-2011) ● Various executive and managerial roles, Ecolab Inc. (1985-2010) CURRENT BOARD MEMBERSHIP ● National Restaurant Association ● Women’s Food Service Foundation ● St. Catherine University PAST BOARD MEMBERSHIP ● None Daniel B. Hogan, J.D., Ph.D. Senior Advisor, Passim, a non-profit performing arts organization. DIRECTOR SINCE: 1983 AGE: 76 INDEPENDENT BOARD COMMITTEES: ● Nominating and Corporate Governance Dr. Hogan’s diverse management and leadership experience, including specialties in leadership development, team building, executive assessment and competency modeling are integral to the Board’s processes. His decades of consulting experience provides valuable guidance to the Board, particularly through his leadership of the Board’s, Committees’ and CEO’s annual evaluation processes. Dr. Hogan’s service on the Standex Board over the past 35 years provides institutional knowledge and a unique historical perspective to the Board. BUSINESS EXPERIENCE ● Senior Advisor, Passim (since 2015) ● Executive Director, Passim (2008-2015) ● Executive Director, Fathers & Families (2006-2007) ● Managing Director, Fathers and Families (2003-2006) CURRENT BOARD MEMBERSHIP ● Harvard Square Business Association (privately held) PAST BOARD MEMBERSHIP ● Passim ● East Chop Association Class I Directors – Term Expiring 2021 Charles H. Cannon, Jr. Former Executive Chairman and CEO (now retired), John Bean Technologies, (“JBT”), a NYSE-traded global technology solutions provider for the food processing and air transportation industries. DIRECTOR SINCE: 2004 AGE: 67 INDEPENDENT BOARD COMMITTEES: ● Audit,Financial Expert ● Compensation Mr. Cannon has several decades of senior executive experience at an international manufacturing company that operates in some of the same industries as our Company. Mr. Cannon contributes his demonstrated executive leadership skills, as well as his knowledge of corporate organization, finance and operations to the Board. Mr. Cannon’s technical and business education, coupled with his global perspective, provide a unique voice to our Board. BUSINESS EXPERIENCE ● Executive Chairman, JBT (2013-2014) ● Chairman and CEO, JBT (2008-2013) ● Vice President and Senior Vice President, FMC Technologies (2001-2008) ● Various managerial and executive positions, FMC Technologies (1994-2001) CURRENT BOARD MEMBERSHIP ● None PAST BOARD MEMBERSHIP ● JBT 12 2019 Proxy Statement Jeffrey S. Edwards Chairman and CEO, Cooper Standard Holdings, Inc., (“Cooper Standard”), a global manufacturer of fluid handling, body sealing and anti-vibration systems components. DIRECTOR SINCE: 2014 AGE: 57 INDEPENDENT BOARD COMMITTEES: ● Compensation (Chair) ● Nominating and Corporate Governance Mr. Edwards’ successful and lengthy history of leading a global manufacturing business has enabled him to advise the Board in a myriad of ways, including how to address operational and growth challenges and how to execute both short and long-term performance strategies. Mr. Edwards contributes his management acumen, knowledge of global manufacturing and insight into peer practices to the Board. BUSINESS EXPERIENCE ● Chairman, Cooper Standard (since 2013) ● CEO, Cooper Standard (since 2012) ● Corporate Vice President, Group Vice President and General Manager of the Automotive Experience Asia Group, Johnson Controls, Inc. (2004-2012) ● Group Vice President and General Manager of the Automotive Experience North America, Johnson Controls, Inc. (2002-2004) ● Various managerial & executive positions, Johnson Controls, Inc. (1984-2002) CURRENT BOARD MEMBERSHIP ● Cooper Standard Holdings, Inc. ● Cooper Standard Foundation, Inc. (privately held) PAST BOARD MEMBERSHIP ● None B. Joanne Edwards Former Senior Vice President & General Manager, Residential & Wiring Device Business, Eaton Corporation Plc, (“Eaton”), a global power management company. AGE: 63 INDEPENDENT BOARD COMMITTEES: ● Audit, Financial Expert ● Nominating and Corporate Governance Ms. Edwards’ distinguished career as a senior executive in various global diversified manufacturing companies is of great benefit to our Board. Prior to her retirement, Ms. Edwards had increasingly responsible roles with strategic, financial and operational reach. She provides a wealth of insight into profit and growth strategies, both in the short term and the long term, which is beneficial to the Board as Standex continues to execute on its growth strategies and initiatives. Ms. Edwards’ decades of leadership and management experience adds value to the Board’s deliberations. BUSINESS EXPERIENCE ● Senior VP & GM, Residential & Wiring Device Division, Eaton (2013-2017) ● VP & GM, Residential Products, Eaton (2011-2013) ● Senior Business Unit Manager, Residential Products, Eaton (2007-2011) ● President, Veris Industries LLC (2002-2007) CURRENT BOARD MEMBERSHIP ● Amsted Industries PAST BOARD MEMBERSHIP ● Pauline Auberle Foundation ● Self Enhancement Inc. ● Anesthesiologists, Inc. ● Terasys, Inc. Required Vote & Recommendation OurBy-Laws require that, in an uncontested election, each director be elected by a majority of the votes cast. A majority of votes cast means that the number of shares cast “FOR” a director’s election exceeds the number of votes cast “AGAINST” that director. Shareholders that either mark “ABSTAIN” on the proxy card or otherwise abstain from voting will not be counted as either “FOR” or “AGAINST.” Brokernon-votes will not be counted as either “FOR” or “AGAINST.” In the event that there is a contested election, each director will be elected by a plurality of the votes cast, which means the directors receiving the largest number of “FOR” votes will be elected to the open positions. In the event that any nominee becomes unavailable, the Board may either choose a substitute or postpone filling the vacancy until a qualified candidate is identified. If there is a substitute, the individuals acting under your proxy may vote for the election of a substitute. The nominees have indicated their willingness to serve as directors and we have no reason to believe that any nominee will become unavailable. The Board of Directors recommends that you vote “FOR” the election of each nominee and set the number of directors at 8. 14 2019 Proxy Statement Vote on Executive Compensation Time-Vested Restricted Shares/Units Granted MSPP Shares Granted Performance-Based Stock Units Granted (at Target) Weighted Average Basic Common Stock Outstanding ADVISORY APPROVAL OF OUR NAMED EXECUTIVES’ COMPENSATION At each annual meeting, the Board provides shareholders with the opportunity to cast an advisory vote to approve the compensation of our named executive officers. Please see the Summary Compensation Table of this Proxy Statement on page Although this vote isnon-binding, the Board values the opinions of the Company’s shareholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers. As described in more detail in the Compensation Discussion and Analysis (“CD&A”) section, we have designed our executive compensation programs to align the long-term interests of our executives with those of our shareholders, attract and retain talented individuals and reward current performance. A large portion of the compensation is tied to the Company’s performance and is paid in both performance and time-based equity that does not vest for 3 years. This closely aligns both the short-term and long-term interests of our executives with those of shareholders and drives the creation of shareholder value. We encourage shareholders to review the CD&A, which describes our philosophy and business strategy underpinning the programs, the individual elements of the compensation programs and how our compensation plans are administered. |
Required Vote & Recommendation
Approval of this advisory proposal will require the affirmative vote of a majority of the votes cast in person or represented by proxy. Abstentions will not count as votes cast on this proposal, so abstentions will have no effect on the outcome. Brokernon-votes will not be considered to have voted on this proposal, so will have no effect on the outcome.
The advisory vote on executive compensation isnon-binding, therefore, our Board will not be obligated to take any compensation actions or adjust our executive compensation programs or policies as a result of the vote. Notwithstanding, the resolution will be considered passed with the affirmative vote of the majority of the votes cast at the Annual Meeting.
The Board recommends that you vote “FOR” the followingnon-binding resolution:
RESOLVED, that the compensation of the Company’s named executive officers, as disclosed pursuant to Item 402 of RegulationS-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.
2019 Proxy Statement | 15 |
of Independent Auditor |
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The Audit Committee has approved Grant Thornton LLP (“Grant Thornton”) to serve as our independent registered public accounting firm for the 20192020 fiscal year. Grant Thornton has served as the Company’s independent auditors since 2014.
We are asking our shareholders to ratify the appointment of Grant Thornton as our independent registered public accounting firm. Although shareholder ratification is not required, the Board is submitting the proposal because we value our shareholders’ views on the Company’s independent auditor and as a matter of good corporate practice. In the event that our shareholders fail to ratify the appointment, the Audit Committee will investigate the reasons and consider selecting a different firm. Even if the selection is ratified, the Audit Committee may select a different independent auditor at any time during the year if it determines such a change would be in the best interests of the Company and its shareholders.
A representative from Grant Thornton will be available at the Annual Meeting to, as requested, to make a statement, speak with shareholders and answer any questions.
Pre-Approval Policy
All services performed in FY 20182019 werepre-approved by the Audit Committee in accordance with the Audit Committee’s charter. Thepre-approval policy requires Grant Thornton to submit an itemization of the services to be provided and fees to be incurred during the fiscal year. The Audit Committee approves the scope and timing of the external audit plan and focuses on any matters that may affect the scope of the audit or the independence of Grant Thornton. In that regard, the Audit Committee receives certain representations from Grant Thornton regarding its independence and the permissibility, under the applicable laws and regulations, of any services provided.
Once the initial audit plan has been approved, any requests for additional services or fees must be submitted to the Audit Committee for approval. These additional services may not commence until the Audit Committee reviews and approves the request.
These requests for approval are normally evaluated during regularly scheduled Audit Committee meetings. However, if a request is submitted between meeting times, the Chair of the Audit Committee may approve the request pursuant to a delegation of authority. This approval authority is limited to services valued at less than $50,000. Any requests for services exceeding $50,000 must be approved by the full Audit Committee. If the Chair has exercised its approval authority, the Chair must disclose all approval determinations to the full Audit Committee at the next regularly scheduled meeting.
RATIFICATION OF GRANT THORNTON AS OUR INDEPENDENT AUDITOR FOR FY 20192020 What are you voting on? We are asking our shareholders to ratify the selection of Grant Thornton as the independent auditor of our consolidated financial statements and our internal controls over financial reporting for FY 2019.2020. Why are we asking you to vote? Although ratification is not required by our by-laws or otherwise, the Board believes that submission of this proposal to our shareholders is a matter of good corporate practice. If the selection is not ratified, the committee will consider whether it is appropriate to select a different independent auditor. The Board of recommends that you vote “FOR” the ratification of the Audit Committee’s selection of Grant Thornton
Independent Auditor’s Fees
The following table summarizes the aggregate fees for Grant Thornton’s services incurred by the Company. The Audit Committeepre-approved all of these audit andnon-audit fees in accordance with thepre-approval policy described above.
2017 ($) * | 2018 ($)* | |||||||
Audit Fees(1) | 1,303,000 | 1,560,000 | ||||||
Audit-Related Fees(2) | 336,000 | 251,000 | ||||||
Tax Fees | 24,000 | 24,000 | ||||||
All Other Fees(3) | 2,000 | 2,000 | ||||||
TOTAL FEES | 1,665,000 | 1,837,000 |
* Amounts have been rounded to the nearest thousand.
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Relationship with Independent Registered Public Accounting Firm The Audit Committee reviews all relationships between Grant Thornton and the Company, including the provision ofnon-audit services. Grant Thornton provides limitednon-audit services to the Company, which are made up of agreed upon procedures performed in Ireland in connection with a government grant. The Audit Committee considered the effect of Grant Thornton’snon-audit services in assessing its independence. After discussion with Company management and Grant Thornton, the Audit Committee concluded that the provision of these services was permitted under the rules and regulations concerning auditor independence. Required Vote & Recommendation Approval of this advisory proposal will require the affirmative vote of a majority of the votes cast in person or represented by proxy. Abstentions will not count as votes cast on this proposal, so abstentions will have no effect on the outcome. Brokernon-votes will be considered as a vote “FOR” this proposal. The Board recommends that you vote “FOR” the ratification of the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the 2020 fiscal year.
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The purpose of corporate governance is to ensure that we maximize shareholder value consistent with both applicable law and a business model of integrity and ethical practices. As part of its duties to the Company, the Board monitors and oversees the governance practices of the CEO and senior management. In order to serve the best interests of shareholders while carrying out its purpose, the Board has established internal guidelines designed to promote effective oversight of the Company’s governance program and principles.
The Corporate Governance Guidelines set parameters for the director recruiting process and the composition of Board committees. They also determine the formal review of the CEO, individual directors and the overall Board’s performance. These guidelines further establish targets for director equity ownership and age and retirement requirements. The guidelines also include delineated duties for the Lead Independent Director. The Board reviews these guidelines, the corporate laws of Delaware, the rules and listing standards of the NYSE and SEC regulations, as well as best practices recognized by governance authorities to benchmark the standards under which it operates.
Key Governance Materials Certification of Incorporation Charter for each Board committee By-Laws Code of Business Conduct Corporate Governance Guidelines Code of Ethics for Senior Financial Management You can access these materials in the Governance section of our website at ir.standex.com in the “Governance” section. See page 60 for instructions on receiving copies of these corporate governance materials. Governance Highlights 7 out of 8 of our directors are independent Regular executive sessions of independent directors Audit, Compensation and Nominating and Corporate Governance committees are comprised solely of independent directors Annual board and committee self-evaluations Risk oversight by the full board and committees 62.5% of the directors are new since 2013 Ongoing review of optimal Board composition Board members participate in our Company-wide compliance and ethics training programs Corporate Governance Guidelines Independent compensation cnsultant reports directly to the compensation committee Lead Independent Director Stock ownership guidelines for directors and executive officers Policy against hedging and pledging of Company stock Code of Conduct applies to directors and executive officers Policy against hedging and pledging of Company stock Code of Conduct applies to directors & all employees Annual advisory approval of executive compensation Board and committees may engage outside advisors independently of management
18 | 2019 Proxy Statement | |
The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure in order to best serve shareholders’ interests. To ensure an efficient and high-functioning board, in 2016, the Board elected our President and CEO, David Dunbar, to serve as Chair of the Board. In its determination that Mr. Dunbar should serve in this role, our Board examined several factors and believed that Board independence and management oversight were effectively maintained through the Board’s composition of independent directors, the committee system and a seasoned and engaged Lead Independent Director. A combined CEO and Chair role serves as an effective bridge between the Board and senior management and also provides strong unified leadership of the Company.
Optimal Board leadership structure may change as circumstances warrant. The Board reviews its determination annually in accordance with the Corporate Governance Guidelines. This annual review allows the Board to maintain flexibility and promote the execution of the Company’s strategy, the independent oversight of senior management and the best interests of shareholders. In the event the Board determines that a different leadership structure is in the best interests of the Company and its shareholders, the Board will consider a change.
The delineated duties of the Lead Independent Director include calling and leading the executive sessions of independent directors; leading Board discussions regarding the CEO’s compensation and CEO succession planning; liaising between the Board and the CEO on particular issues brought up by the independent directors; providing feedback on information flow from management to the Board; and such other duties and responsibilities as the Board may request from time to time.
Meetings of the Board: Director Attendance
Under our Corporate Governance Guidelines, directors have a duty to attend, whenever possible, all Board meetings and all committee meetings where the director is a member. The Board held 4 regular meetings in FY 2019. Each director attended at least 75% of the meetings of the Board and each of the committees on which such director served during FY 2019. All Board members attended the Company’s 2018 annual meeting of shareholders. The Company anticipates that all of the Board members will attend the 2019 Annual Meeting.
LEAD INDEPENDENT DIRECTOR CHAIR OF THE BOARD & CEO INDEPENDENT DIRECTORS
The Company’s internal controls and financial reporting are a multi-faceted undertaking, monitored and overseen by the Audit Committee. The Company’s management has the primary responsibility for the Company’s internal controls and financial reporting process. The independent auditors are responsible for performing an independent audit of the Company’s consolidated financial statements and reporting on the Company financial statements’ conformity with generally accepted accounting principles. Additionally, the independent auditors are responsible for providing an attestation on management’s assessment of the Company’s internal controls over financial reporting. The Audit Committee’s responsibility is to monitor and oversee all of these processes on behalf of the Board. This responsibility includes engaging the independent auditors,pre-approving their annual audit plan and reviewing their annual audit report.
In this context, the Audit Committee has reviewed and discussed the consolidated financial statements with management and Grant Thornton. The Audit Committee has also reviewed management’s assessment of the effectiveness of the Company’s internal controls over financial reporting and Grant Thornton’s evaluation of these controls. The Audit Committee further discussed matters required to be discussed by standards, including PCAOB Auditing Standard No. 1301, Communications with Audit Committees. Grant Thornton has provided to the Audit Committee the written disclosures and the letter required by the PCAOB and has discussed with the Audit Committee its independence from the Company and Company management. Finally, the Audit Committee considered whether Grant Thornton’s provision ofnon-audit services to the Company was compatible with maintaining its independence.
Based on these reviews and discussions, the Audit Committee has recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form10-K for the year ended June 30, 2019 for filing with the SEC.
AUDIT COMMITTEE
Thomas J. Hansen, Chair
Charles H. Cannon, Jr.
Thomas E. Chorman
Gerald H. FickenscherB. Joanne Edwards
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NOMINATING & CORPORATE GOVERNANCE COMMITTEE
Chair: Thomas E. Chorman
Other Members:
· Jeffrey S. Edwards
Key Responsibilities:
Meetings in FY
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Report of the Nominating and Corporate Governance Committee
The duties and responsibilities of the Nominating and Corporate Governance (“N&CG”) Committee are broad. The N&CG Committee operates pursuant to the Corporate Governance Charter. In fulfilling the responsibilities and duties contained therein, the N&CG Committee actively reviews all Board principles, guidelines and charters. The N&CG Committee also maintains responsibility for overseeing senior management’s compliance with the Code of Business Conduct and Ethics. The N&CG Committee further identifies and evaluates candidates for Board membership, evaluates Board committee membership and recommends Company employees for election to Company officer roles. Lastly, the N&CG Committee establishes and maintains a Board performance review process and recommends changes to the Board based on the review.
Code of Business Conduct and Ethics
Management has the primary responsibility for creating, maintaining and administering programs to ensure employees’ compliance with the Code of Business Conduct and the Code of Ethics for Senior Financial Management, (the “Codes”), both of which are available on Standex’s website underin the “Governance” tab.section. The N&CG Committee routinely receives updates from the Corporate Governance Officer on the existing programs and any proposed programs.
Currently,During the past fiscal year, the Company utilizesutilized an online interactive compliance training program to educate employees on the Codes as well as other regulatory and workplace compliance topics. Employees are assigned training modules on a quarterly basis to promote ongoing awareness of ethics issues. The Company divisions routinely customize the modules to address ethics issues specific to their organizations.
The N&CG Committee is also responsible for evaluating and approving requests for waivers of the Codes. Any request must be submitted, in writing, to the Chair of the N&CG Committee, who then reports the submission to the whole N&CG Committee. The N&CG Committee then provides their recommendation on the request to the Board. Any waivers granted to executive officers are disclosed to shareholders as soon as practicable via the Company’s website. No waivers have been granted during FY 20182019 or during any prior period.
Additionally, a third-party global, multi-language hotline is available 24/7 at every Company location worldwide, for anonymous reporting of financial, accounting, auditing or other employee concerns. This communication tool is a beneficial outlet for employees to express concerns.
2019 Proxy Statement | 25 |
Identifying and Evaluating Candidates for Board Membership
The N&CG Committee is responsible for recommending candidates for Board membership when the N&CG Committee has identified a need to add new members or when there is a vacancy. The N&CG Committee has not established specific, minimum qualifications for director nominees. However, the N&CG Committee strives to find candidates whose skills complement the needs presented by the global, multi-sector, engineered manufacturing operations of the Company and whose skills include analytical financial expertise and strategic planning. Candidates must also possess characteristics, such as integrity and sound judgment, that would enable the Board to function cohesively and effectively. The N&CG Committee also evaluates whether a particular candidate has the capacity and desire to make a significant time commitment to serving on the Board.
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To identify such candidates, the N&CG Committee has the authority to retain a third-party search firm and to consider suggestions by directors, shareholders and management. The N&CG Committee ensures that the pool of candidates reflectreflects a range of professional experience and expertise as well as diversity of gender, race and ethnicity by instructing the search firm to seek out and present diverse candidates who may expand the perspectives of the Board. The N&CG Committee views diversity expansively and considers depth and breadth of relevant business experience, leadership performance and strategic acumen alongside other immutable characteristics that a candidate may possess.
The N&CG Committee reviews and evaluates each candidate by taking into account all available information concerning the candidate. All candidates, whether identified by a third-party search firm, the directors, management or shareholders, are evaluated based on the same criteria. The candidates must also fit within the existing composition of the Board to be recommended to the Board as a prospective nominee.
Shareholders may submit recommendations for future candidates by notifying the N&CG Committee, in writing, using the process described under “Shareholder Proposals and Nominations” on page 60.57. Please attach any appropriate supporting materials. Shareholders may submit direct nominations for inclusion in the Company’s Proxy Statement by following the process described under “Shareholder Proposals and Nominations” on page 60.
This year, utilizing this process, the N&CG Committee identified B. Joanne Edwards as the optimal candidate for Board membership. The N&CG Committee is pleased to present Ms. Edwards for election, as her skills and experience are anticipated to be of great benefit to the Board. Additionally, the Company will be pleased to welcome our first female director to the Board.57.
Board Self-Assessment
The N&CG Committee has developed and implemented a detailedprescribed self-evaluation questionnaireprocess to assess the configuration and enhance the functionality of the Board.Board and each of its committees. This questionnaire measuresprocess identifies current Board members’ attributes, expertise and experiences and creates a skills matrix, which is used to identify areas of improvement within Board structure and committee configuration. The self-evaluation is instrumental in evaluating the future needs of the Board in relation to the Company’s strategic goals and identifying the qualifications a future candidate should have to aid in the achievement of those strategic goals.
Corporate Social Responsibility & Sustainability
During the fiscal year, our corporate social responsibility program began to flourish with broader participation across U.S. locations. The program is called Standex CARES (Connect, Act, Reach, Engage, Serve) and is part of our employee engagement effort. While working at various community-basednon-profit organizations, several hundred employees were able to enjoy a paid day of service, while volunteering in teams alongside fellow employees. These efforts fostered a beneficial team building spirit among our employees, and supported local charities that directly aid the communities in which our employees live and work. We also supported numerous educational and workforce readiness programs, which both allowed our employees to inform our communities about our work and products and also encouraged potential employees to consider the Company for career opportunities. More than half of all U.S. facilities were engaged in these programs during the year, and it is our intention to continue to grow this initiative both domestically and internationally.
We also continued our efforts toward developing more sustainable workplaces. Through our Operational Excellence efforts, we continue to focus on improvements in all aspects of environmental, health and safety matters at our facilities. Recycling, reduction of waste and process improvements will lead to greater awareness and development of more sustainable facilities. Our footprint is global, and we continue to be aware of, and focus on, the change that we can affect when we focus on improvement to our facilities and work practices.
NOMINATING & CORPORATE GOVERNANCE COMMITTEE
Thomas E. Chorman, Chair
B. Joanne Edwards
Jeffrey S. Edwards
Gerald H. Fickenscher
Daniel B. Hogan
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Director Compensation Elements
The compensation elements and amounts are established by the Board after a review of data prepared by the Compensation Committee’s independent compensation consultant. The data and report show competitive director compensation levels for peer companies and the Company’s peer group. More information about the Compensation Committee’s independent consultant report and the methods for determining competitive compensation can be found under “Basis for Determining Executive Compensation” on page 39.34.
In FY 2018,2019,non-employee directors received, as applicable, the following:
Compensation Element | ||||||
Board Membership | ||||||
Annual Cash Retainer | $ 60,000 | |||||
Annual Equity Stock Grant | $ 100,000 | |||||
Audit Committee | ||||||
Non-Chair Membership | $ 8,000 | |||||
Chair | $ 16,000 | |||||
Compensation Committee | ||||||
Non-Chair Membership | $ 5,000 | |||||
Chair | $ 10,000 | |||||
Nominating and Corporate Governance | ||||||
Non-Chair Membership | $ 3,000 | |||||
Chair | $ 8,000 | |||||
Lead Independent Director Service Fee | $ 16,000 |
Directors may choose to defer up to 100% of their annual cash retainer into the MSPP, which is described in detail on page 44,42 under “Management Stock Purchase Plan.” The equity portion ofnon-employee director compensation is granted in the form of shares of restricted stock having a $100,000 fair market value at the time of grant, which is established using the closing price of the Company’s stock on the date of the Annual Meeting. These shares of restricted stock vest 3 years after the grant date. Upon the retirement of a director or a change in control of the Company, all unvested shares of restricted stock are subject to acceleration and immediate vesting. Directors do not receive benefits under Standex retirement plans or any perquisites.
Under the Company’s Corporate Governance Guidelines, allnon-employee directors must own shares of Company stock with a value of at least five times the value of their annual cash retainer. Until a director has the requisite number of shares, they are required to retain at least 50% of the share units they are awarded. Directors have 5 years after their election or appointment to attain the requisite share ownership level. As of June 29, 2018,30, 2019, allnon-employee directors are presently in compliance with this requirement. Additionally, the Company has a policy concerning transactions involving Company securities. The policy is explained under “Policy Concerning Transactions Involving Company Securities” on page 49.46. None of the directors have engaged in any of the prohibited transactions during FY 20182019 or any prior periods.
Director Compensation Table
The following table sets forth certain information with respect to ournon-employee director compensation for FY 2018.2019. Compensation information for Mr. Dunbar is detailed in the Compensation Discussion & Analysis and Compensation Tables sections of this Proxy Statement. Mr. Dunbar did not receive any compensation solely for his service as a director.
Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | All Other Compensation ($) (3) | Total ($) | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($) (2) | All Other Compensation ($) (3) | Total ($) | ||||||||||||||||||||||||
Charles H. Cannon, Jr. | 75,500 | 100,000 | 2,602 | 178,102 | 73,000 | 100,000 | 3,158 | 176,158 | ||||||||||||||||||||||||
Thomas E. Chorman | 82,000 | 100,000 | 1,359 | 183,359 | 81,000 | 100,000 | 1,491 | 182,491 | ||||||||||||||||||||||||
B. Joanne Edwards | 50,500 | 100,000 | - | 150,500 | ||||||||||||||||||||||||||||
Jeffrey S. Edwards | 69,750 | 100,000 | 1,359 | 171,109 | 73,000 | 100,000 | 2,741 | 175,741 | ||||||||||||||||||||||||
Gerald H. Fickenscher | 71,000 | 100,000 | 1,359 | 172,359 | ||||||||||||||||||||||||||||
Thomas J. Hansen | 32,000 | 186,278 | 2,602 | 220,880 | 32,000 | 186,543 | 3,158 | 221,701 | ||||||||||||||||||||||||
Michael A. Hickey | 3,250 | 143,139 | - | 146,389 | 5,000 | 186,543 | - | 191,543 | ||||||||||||||||||||||||
Daniel B. Hogan | 18,000 | 164,708 | 1,359 | 184,067 | 18,000 | 164,907 | 1,908 | 184,815 |
(1) | This column includes the annual cash retainer and fees earned for serving as Lead Independent Director, Chair or member of any committee less the portion of the annual cash retainer that the director elected to defer pursuant to the MSPP. |
(2) | This column includes the aggregate grant date fair value of the annual equity stock grant and the RSUs granted under a director’s deferment election under the MSPP. The annual equity stock grants were made on October |
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(3) | This column consists of dividends equivalents that were paid in FY |
As of June 30, 2018,2019, the aggregate number of unvested shares or share units held by each director was as follows:
Name | Unvested Stock | Name | Unvested Stock | Unvested Stock | Name | Unvested Stock | ||||||||||||||||||
Charles H. Cannon, Jr. | 4,569 | Thomas E. Chorman | 2,899 | 3,975 | Thomas E. Chorman | 3,165 | ||||||||||||||||||
Jeffrey S. Edwards | 4,815 | Gerald H. Fickenscher | 2,899 | |||||||||||||||||||||
B. Joanne Edwards | 1,035 | Jeffrey S. Edwards | 4,436 | |||||||||||||||||||||
Thomas J. Hansen | 5,454 | Michael A. Hickey | 952 | 5,646 | Michael A. Hickey | 2,379 | ||||||||||||||||||
Daniel B. Hogan | 4,385 | 5,025 |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires Standex directors, executive officers and other persons who beneficially own more than 10% of our common stock, to file reports with the SEC regarding their initial stock ownership and any changes in their stock ownership.
Based solely on a review of the reports filed for FY 20182019 and related written representations, we believe that all of our executive officers and directors filed the required reports on a timely basis under Section 16(a)., with the exception of the Form 3 filing for Ms. Bell upon her appointment as an executive officer in June 2019. Such delay was caused by technical difficulties in obtaining necessary filer codes in order to make the EDGAR filing with the SEC.
Director & Management Stock Ownership
The following table shows, as of July 31, 2018,2019, the number of shares of our common stock beneficially owned by each of our current directors, directdirector nominee and Named Executive Officers, and all directors and executive officers as a group.
Name of Beneficial Owner | Common Stock Beneficially Owned (1) | Percent of Outstanding Shares | Common Stock Beneficially Owned (1) | Percent of Outstanding Shares | ||||||||
Annemarie Bell | 631 | * | ||||||||||
Paul C. Burns | 9,161 | * | 13,256 | * | ||||||||
Charles H. Cannon, Jr.(2) | 22,220 | * | 24,065 | * | ||||||||
Thomas E. Chorman | 8,645 | * | 9,680 | * | ||||||||
Thomas D. DeByle(3) | 65,436 | * | 69,229 | * | ||||||||
David Dunbar(4) | 61,043 | * | 72,849 | * | ||||||||
B. Joanne Edwards | - | * | 1,035 | * | ||||||||
Jeffrey S. Edwards | 4,340 | * | 6,646 | * | ||||||||
Gerald H. Fickenscher | 8,867 | * | ||||||||||
Alan J. Glass | 4,566 | * | 7,044 | * | ||||||||
Thomas J. Hansen | 5,275 | * | 8,791 | * | ||||||||
Michael A. Hickey | 952 | * | 2,379 | * | ||||||||
Daniel B. Hogan | 14,269 | * | 17,214 | * | ||||||||
Ross McGovern | 5,010 | * | ||||||||||
All Directors & Executive Officers | 209,784 | 1.64% | 232,819 | 1.81% |
* | Less than |
(1) | “Beneficially Owned” means having the sole or shared power to vote, and/or the sole or shared power to invest the shares of common stock. The column contains stock which is, as of |
(2) | Mr. Cannon has 18,460 shares held in a trust, of which he is the trustee, for the benefit of Mr. Cannon’s children. |
(3) | Mr. DeByle has shares held in the |
(4) | Mr. Dunbar has |
(5) | Mr. Hogan has 12,188 shares held in a revocable trust of which he is the trustee. |
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Stock Ownership of Certain Beneficial Owners
Based on the most recent Schedule 13G filings, the following table sets forth information about the number of shares of our common stock held by persons we know to be the beneficial owners, as determined in accordance with Rule13d-3 of the Exchange Act, of more than 5% of the issued and outstanding common stock.
Name and Address | Common Stock Beneficially Owned (1) | Percent of Outstanding Shares as of the Record Date | Common Stock Beneficially Owned (1) | Percent of Outstanding Shares as of the Record Date | ||||||||
Black Rock Inc. 55 East 52nd Street New York, New York 10055 | 1,571,867 | 12.3% | 1,874,997 | 14.6% | ||||||||
The Vanguard Group 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 1,212,567 | 9.5% | 1,302,643 | 10.15% | ||||||||
RE Advisers Corp. & National Rural Electric Cooperative Association 4301 Wilson Blvd. Arlington, Virginia 22203 | 720,759 | 5.6% | ||||||||||
Champlain Investment Partners, LLC 180 Battery Street Burlington, Vermont 05401 | 695,800 | 5.4% | 679,020 | 5.29% |
(1) | This column shows shares beneficially owned by the named owner as follows: |
Black Rock (a) | Vanguard (b) | RE Advisers (c) | Champlain (d) | Black Rock (a) | Vanguard (b) | Champlain (c) | ||||||||||||||||||
Sole voting power | 1,546,664 | 22,494 | 720,759 | 477,155 | 1,835,448 | 23,687 | 463,030 | |||||||||||||||||
Shared voting power | 0 | 2,181 | 0 | 0 | 0 | 2,181 | 0 | |||||||||||||||||
Sole investment power | 1,571,867 | 1,188,943 | 720,759 | 695,800 | 1,874,997 | 1,277,826 | 679,020 | |||||||||||||||||
Shares investment power | 0 | 23,624 | 0 | 0 | 0 | 24,817 | 0 |
The foregoing information is based solely on:
(a) | a Schedule 13G/A filed by Black Rock with the SEC on January |
(b) | a Schedule 13G/A filed by Vanguard with the SEC on February |
(c) |
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a Schedule 13G/A filed by Champlain with the SEC on February |
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Compensation Discussion & Analysis
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The following sections contain our Compensation Discussion and Analysis. This CD&A provides an overview and analysis of our executive compensation program and policies and the material compensation decisions we have made for our principalchief executive officer and our other executive officers named in the “Summary Compensation Table” on page 51.48. This group is collectively referred to as our “Named Executive Officers.Officers” or “NEOs.” During FY 2018,2019, our Named Executive OfficersNEOs were:
David Dunbar, President and Chief Executive Officer (“CEO”); |
Thomas D. DeByle, Vice President, Chief Financial Officer (“CFO”) and Treasurer; |
Alan J. Glass, Vice President and Chief Legal Officer (“CLO”); |
Paul C. Burns, Vice President of Strategy and Business Development; |
· | Annemarie Bell, Vice President of Human Resources; and |
Ross McGovern, Former Vice President and Chief Human Resources Officer |
Mr. McGovern’s employment with the Company terminated on October 5, 2018. Ms. Bell served as interim Vice President of Human Resources following the departure of Mr. McGovern and was promoted to Vice President of Human Resources and elected as a corporate officer in June 2019. As previously announced, Ademir Sarcevic joined the Company on September 9, 2019 as CFO and Mr. DeByle will be leaving the Company effective September 20, 2019 to pursue another opportunity.
Business Highlights
Standex had a solid year in 2018, with yearYear over year sales increasingincreased by 15% to $868.4M,2.7% as growth from strategic acquisitions and new business opportunities was largely offset by unexpected market softness, especially in our Electronics and Refrigeration businesses. These market conditions, together with the direct and indirect impact of U.S. tariffs on China, resulted in a decrease in adjusted operating income increasingof 7.7%. Despite our lower earnings, however, we increased cash flow by 17.8%$20M due to $95.6M and adjusted EPS increasingimprovements in working capital turns driven by 13.6% to $5.17. Acquisitions over the past three years have delivered nearly $100M in sales and an EBIT of over 15%. In 2014, we began aimproved management practices. We continued our business development strategy to seek and develop sales growth laneways acrosswhich are new avenues of business that evolve from our business segments. In 2018,development of new products and/or markets. Our three FY 2019 acquisitions delivered $28.3M in sales growth in our strategy has continued to deliverhigher margin Electronics and provided $39MEngraving businesses, and we made progress on the rationalization of organic sales increases, which has fueled a year over year growthour portfolio with the successful divestiture of 5.1%. At the beginning of FY 2017, we began a restructuring process for the standard product businesses within our Food Service Equipment segment. The restructuring was largely completed during FY 2018 and should result in margin improvements going forward.lower-margin Cooking Solutions Group at an attractive price.
OPERATIONAL HIGHLIGHTS* $868.4M $95.6M $5.17 15.0% 17.8% 13.6% Net revenue YOY Operating Income (adjusted) YOY Diluted EPS (adjusted) YOY SHAREHOLDER RETURNS TSR** 14.9% 9.3% 13.5% 5 YEAR 3 YEAR 1 YEAR
* Net revenue, operating income, diluted EPS and their growth rates exclude special items consisting of purchase accounting, restructuring and acquisition related expenses.
** Cumulative stock price appreciation including dividends, with the dividends reinvested quarterly.
Our Compensation Program Results in Alignment ofAligns Pay with Performance
The Compensation Committee designs the executive compensation program to deliver pay in accordance with performance.
As a result, a large percentage of our Named Executive Officers’ total target compensation is“at- risk,” tied to performance-based annual incentive awards and long-term equity awards which also have a performance-based component. The Compensation Committee sets those performance metrics and strategic goals that it believesare rigorous and will drive sustainable creation of shareholder value.
On an annual basis, the Compensation Committee reviews an independent report, provided by the Compensation Committee’s external compensation consultant’s reportconsultant on realizable pay for performance to ensure that the CEO’sour executives’ realizable pay is in line with overall Company performance and is also competitive when compared to the Company’s peer group. This approach has created a compensation program whereby the Named Executive Officers’ pay is in line with shareholder value creation, as shown in the adjacent graph with respect to our CEO’s compensation.
* ThisAdjusted EPS adjusts forexcludesnon-cash charges, gains or losses associated with the sale of excess real estate, as well asand mergers, acquisitions and acquisitionsdivestitures related costs that were incurred during thethat fiscal year. Prior year EPS does not include contribution from the divested Cooking Solutions Group.
** Reported CEO earnings fromPay represents the CEO’s total compensation disclosed in the Summary Compensation Table excludingset forth on page 48 of this proxy statement, less any earnings or losses reported in thenon- qualifiedNon-Qualified deferred compensationDeferred Compensation column.
30 | 2019 Proxy Statement |
Good Compensation Practices
In addition to providing compensation for performance, the Compensation Committee strives to design the Company’s compensation program to include what is considered good practices in the industry. Much like our corporate governance practices, we believe that good compensation practices increase shareholder value, strengthen our business and encourage us to manage risk properly. The checklist below provides a highlight of our compensation practices.
Checklist of Compensation Practices What we do What we don’t do ✓ Executive compensation is tied to performance ✓ Caps on incentive payouts ✓ Strategic performance metrics ✓ Benchmarks determined based on peers of comparable size, complexity & industry ✓ Compensation Committee has the right to “claw back” awards ✓ Independent compensation consultant ✓ Stock ownership guidelines ✓ Encourage long-range planning ✓ Compensation Committee is comprised solely of independent directors No excise taxgross-up provisions No single-trigger change in control severance benefits No hedging or pledging of Company shares Our incentive programs do not encourage excessive risk taking No stock options granted since 2003 No excessive perquisites
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OUR PRIMARY OBJECTIVES ARE TO: | OUR PRIMARY PRINCIPLES ARE: | |||
| ● Incentive compensation should beperformance-based ● Incentive compensation should represent the majority of total target compensation ● Incentive compensation should balance short and long-term performance ● Incentive compensation should discourage excessive risk-taking ● Long term incentives should balance stock appreciation and financial achievements ● Compensation levels should be competitive ● Executive compensation should be reviewed annually
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The aforementioned principles have been established by the Compensation Committee to further the objectives and guide the design and administration of specific plans, agreements and arrangements for our executives, including the Named Executive Officers.
2019 Proxy Statement | 31 |
Incentive Compensation shouldShould Be Performance-Based
The Compensation Committee believes that a significant portion of the compensation received by executives, including our Named Executive Officers, should be tied to the performance of the Company relative to established financial objectives and to individual strategic metrics. The elements of the executive compensation program embody this principle by linking the annual incentive opportunity and long-term equity grants directly to such performance.
Incentive Compensation shouldShould Represent the Majority of Total Target Compensation
The Compensation Committee believes that the majority of an executive’s compensation should be “at risk,” as an incentive to drive the creation of sustainable shareholder value and align the interests of our executives with those of our shareholders. In 2018,2019, our Named Executive Officers’ incentive compensation amounted to 62.7%58% of their total target compensation, on average. The Committee believes that the CEO’s incentive compensation should be a higher percentage of total compensation given the CEO’s strategic position and responsibility to drive company performance. In 2018,2019, the CEO’s incentive compensation was 75%76% of his total target compensation. The following table presents the percentage of total target compensation that was“at-risk” for each Named Executive Officer, and the graph represents the mix of the Named Executive Officers’ total target compensation.
Name | Percent of | |||
David Dunbar | ||||
Thomas D. DeByle | ||||
Alan J. Glass | ||||
Paul C. Burns | ||||
Annemarie Bell (1) | 26 | |||
Ross McGovern |
(1) | Ms. Bell served as Interim VP of Human Resources following the October 2018 departure of Mr. McGovern. She was promoted to the position of VP of Human Resources and elected as a corporate officer in June 2019. As such, she did not participate in the LTIP, which is established at the beginning of the fiscal year, to the same extent as other NEOs. Thus, Ms. Bell’s “at risk” pay percentage is lower than other NEOs. |
CEO COMPENSATION MIX NEO COMPENSATION MIX20% 24% 30% 26% At Risk 76% Base Salary Annual Incentive AVERAGE NEO COMPENSATION MIX 17% 42% 19% At Risk 58% 22% LTIP PSU LTIP RSU GuaranteedFixed Pay At Risk At Risk 75% At Risk 63% 20% 30% 25% 25% 19% 21% 38% 22%
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Incentive Compensation shouldShould Balance Short-Term and Long-Term Performance
The Compensation Committee believes that driving sustained shareholder value creation requires that executive incentive compensation be appropriately balanced between short and long-term objectives. In addition, the Compensation Committee believes that such balancing discourages excessexcessive risk taking that otherwise could drive short-term results at the expense of sustained long-term performance. Our executive compensation program promotes this objective by balancing the long-term incentive components in the form of equity-based awards, such as restricted stock awards and contingent performance shares, with short-term annual cash incentive opportunities.
The value of long-term incentive components make the Company’s commonis tied, in part, to our stock price, a targeted incentive for executives, thereby aligning executives’ interests with those of shareholders. TheHowever, the Compensation Committee recognizes that stock prices areour share price is an incomplete measure of Company performance in the short-term, as other factors may significantly impact stock prices. Accordingly, the base salary and annual cash incentive opportunity componentscomponent of executive compensation emphasizeemphasizes current or short-term corporate performance and the realization of short-term defined business and financial objectives. The Compensation Committee has determined that the balance between the annual short-term, cash incentive opportunities and the long-term equity incentives is crucial, and the Compensation Committee believes that maintaining a reasonable balance is the optimal way ofencourages our Named Executive Officers to focus on creating short and long-term shareholder value, while fulfilling business objectives and strategic goals.
Long-Term Incentives shouldShould Balance Stock Price Appreciation and Business/Financial-Based Achievements as well as Shareholder Return Relative to Other Industrial Manufacturing Companies
Our FY 2019 long-term incentive awards for NEOs other than the CEO are equally weighted between restricted stock awards which generallyand contingent performance shares. The restricted stock awards cliff vest at the end of a3-year period, andservice period. The contingent performance shares which vest to the extent thatpre-established financial performance criteria are met at the expirationend of a3-year performance period.period based on achievement againstpre-established financial performance criteria. With respect to FY 2019 awards, ultimate award payouts will be adjusted by a relative TSR measure over the3-year performance period to reflect performance relative to other industrial companies in the S&P 600 Capital Goods Index. The Compensation Committee has determined that this long-term incentive mix appropriately encourages long-term equity ownership, promotes a balance between stock price appreciation and financial-based achievement, and aligns the interests of our Named Executive Officers with shareholders.shareholders and aids in retention of our Named Executive Officers.
Compensation Levels shouldShould be Competitive
The Compensation Committee reviews market compensation data compiled and prepared by the Compensation Committee’s independent executive compensation consultant to evaluate how and whether our executive compensation program is market competitive. The Compensation Committee uses this data to benchmark our executives’ base salary, annual incentive opportunities and long-term incentive compensation. TheGenerally, the Compensation Committee then sets target compensation at levels that generally approximateapproximately the market median, which balances our interestsmedian. However, the Compensation Committee considers other relevant factors in maintainingsetting each Named Executive Officer’s total target compensation, including the Named Executive Officer’s scope of responsibilities and duties, experience, tenure with the Company, and individual performance as well as competitive market data, Company performance and internal pay equity. As a result, the Compensation Committee may set a Named Executive Officer’s total target compensation or an individual component of total target compensation below or above market median. By taking into account market data and organizational efficiency. This principleother relevant considerations, the Compensation Committee is able to set each Named Executive Officer’s compensation at an appropriate level that enables us to attract and ongoing compensation evaluation builds long-term shareholder value and attracts and retainsretain the highly qualified executives.executives necessary to drive long-term enhancement of shareholder value.
The Executive Compensation Program shouldShould be Reviewed Annually
The Compensation Committee believes that it is prudent to review and evaluate the executive compensation program annually in light of evolving market practices, regulatory requirements, the competitive market for executives and our executive compensation philosophy. This process is repeated in a structured manner annually.
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Basis for Determining Executive Compensation
The Compensation Committee uses a multi-faceted approach to designing the executive compensation program. The approach includes the use of the independent compensation consultant to advise the Compensation Committee on the selection of an appropriate peer group, analysis of the peer group’s practices and compensation levels and recommendations for the Compensation Committee to consider. Compensation levels for specific executives are based on various factors, including the executive’s experience, individual accomplishments and the breadth of the executive’s organizational responsibilities. The Compensation Committee discusses the program with the CEO and the CHROVP of Human Resources to determine the effectiveness of the program in terms of achieving our stated objectives, including whether the current program is achieving desired motivational effects and properly incentivizing the executives.
Executive Compensation Consultant
In FY 2018,2019, the Compensation Committee retained the same independent compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), whowhich has assisted the CompanyCompensation Committee since 2015. Meridian is an internationally recognized executive compensation consulting firm. No other compensation consultant was engaged in FY 2018.2019.
Meridian was retained to assist the Compensation Committee in establishing the development of a compensation peer group and to advise the Compensation Committee on our existing executive compensation program. Meridian also assisted in drafting, analyzing and benchmarking our proposed OIP. Meridian provided research, data analyses, survey information and design expertise as part of its services. Meridian also notified the Compensation Committee of regulatory developments and market trends relating to executive compensation practices. MeridienMeridian did not determine nor recommend the exact amount of compensation for any Named Executive Officer. From time to time, Meridian also performs an analysis of independent director compensation.
As part of the servicesFor FY 2019, Meridian provides, it conducted a surveycompetitive assessment of our peer group companies to determine whether our executive compensation program as a whole, is competitive when compared to similarly situated executives in(including, design, features and target pay opportunities) against our compensation peer group companies.group. Based on the survey,Meridian’s assessment, the Compensation Committee determined that our executive compensation program is reasonable and appropriate when compared to our peer group.
The Compensation Committee, in determining whether to continue retaining Meridian for FY 2018,2019, assessed Meridian’s independence under the NYSE’s listing standards. Meridian provided the Compensation Committee with confirmation of its independent status under the NYSE’s standards. As such, the Compensation Committee believes that Meridian is independent and that there is no conflict of interest between Meridian and the Company, the Company executives, the Compensation Committee or its members.
Peer Group
The following selection criteria were used in establishingto establish the Company’s Fiscal 2019 compensation peer group:
The company |
The company |
The company |
The company |
Based on this selection criteria, our 2018FY 2019 peer group consisted of the following 20 companies:
Albany International Corporation | Graco, Inc. | Middleby Corporation | ||
Altra Industrial Motion Corporation | Hardinge, Inc. | NN, Inc. | ||
Barnes Group, Inc. | Hillenbrand, Inc. | Nordson Corporation | ||
Chart Industries, Inc. | JBT Corporation | RBC Bearings, Inc. | ||
CIRCOR International, Inc. | Kadant, Inc. | TriMas Corporation | ||
Enpro Industries, Inc. | L.B. Foster Company | Xerium Technologies, Inc. | ||
ESCO Technologies, Inc. | Lydall, Inc. |
The Compensation Committee, with Meridian’s assistance, routinely reviews the selection criteria and the peer group companies to achieve a relative size positioning that is within a competitive range of median, that is, between the 40th and 60th percentile of the peer group companies. The latestAs a result of its most recent review resulted in the removal(applicable for FY 2020), two companies, Hardinge Inc. and Xerium Technologies, Inc., were removed from our peer group of 2 companies that had previously been included in our peer group. The 2 companies are CLARCOR, Inc. and Blount International, Inc., whichas they were both acquired during FY 20172019 and no longer publicly disclose their compensation practices.
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Components of Executive Compensation
Overview
The primary components of the Company’s executive compensation program in FY 20182019 are shown in the following table and are discussed in detail below:
Category | Compensation Element | Description | ||
| Base Salary | Fixed cash compensation based on responsibilities of the position | ||
Short-Term Incentives | Annual Incentive Opportunity | Variable annual cash incentive for achievement ofpre-determined performance goals and metrics | ||
Long-Term Incentives | Restricted Stock Awards | Grants of restricted stock, which cliff vest at the end of a3-year period | ||
Performance Share Units | Cliff vest at the end of a3-year performance period | |||
Management Stock Purchase Plan | Optional deferral of up to 50% of the annual incentive opportunity into the receipt of discounted RSUs | |||
Retirement | Standex Deferred Compensation Plan | Unfunded,non-qualified deferred compensation plan, available to executive officers and other U.S. employees based on salary level | ||
401(k) Plan | Qualified 401(k) plan available to U.S. employees | |||
Other | Employment Agreements & Severance | Caps severance pay in the event of termination and enforcesnon-competition | ||
Other Benefits | Certain executives receive an automobile allowance and/or tax preparation services; no other perquisites offered |
Base Salary
Base salary is fixed cash compensation. During the first quarter of each fiscal year, the Compensation Committee reviews and establishes the base salaries of the executives including the Named Executive Officers. For each Named Executive Officer, the Compensation Committee takes into account a number of factors, including the scope of the executive’s responsibilities and duties, experience, tenure with the Company, and individual performance as well as competitive market data, Company performance and balances these factors against competitive salary practices.internal pay equity. The Compensation Committee does not assign any relative or specific weights to these factors. Salary levels are reviewed annually and are adjusted when appropriate. Increases in base salary are not automatic or guaranteed in order to promote a performance culture.
Effective October 1st of FYs 20172018 and 2018,2019, the base salary of each Named Executive Officer was set as follows:
Name | FY 2018 Base ($) | FY 2017 Base ($) | Increase | FY 2019 Base ($) | FY 2018 Base ($) | Increase | ||||||||||||||||||
David Dunbar | 803,175 | 779,782 | 3% | 827,270 | 803,175 | 3 | % | |||||||||||||||||
Thomas D. DeByle | 411,526 | 399,540 | 3% | 423,872 | 411,526 | 3 | % | |||||||||||||||||
Alan J. Glass | 339,771 | 329,875 | 3% | 350,000 | 339,771 | 3 | % | |||||||||||||||||
Paul C. Burns | 318,270 | 309,000 | 3% | 350,000 | 318,270 | 10 | % | |||||||||||||||||
Annemarie Bell(2) | 214,434 | 185,657 | 16 | % | ||||||||||||||||||||
Ross McGovern | 290,400 | 264,000 | 10% (1) | 299,112 | 290,400 | 3 | % |
(1) | Mr. |
(2) | Ms. Bell served as Interim VP of Human Resources following the October 2018 departure of Mr. McGovern. The increase in Ms. Bell’s base salary reflects her increased responsibilities in this interim role. |
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Annual Incentive Opportunity
The Compensation Committee establishes the annual cash incentive opportunity for executives including our Named Executive Officers through a detailed performance planning process called the Balanced Performance Plan (“BPP”). During the BPP process, the Compensation Committee establishes (i) the target incentive amounts; (ii) the percentagesrespective weight of the target incentive allocated to financial performance measures and strategic goals; (iii) the Company financial performance measuresgoals at “threshold,” “target,” and “superior” levels; and (iv) the strategic goals for each Named Executive Officer to achieve.Executive. The BPPs and each goal are reviewed and discussed during the course of two Compensation Committee meetings through the first quarter of each fiscal year before being approved.
BPP PROCESS Step 1 Establish target incentive amounts Step 2 Establish % of target allocated to financial performance measures Establish % of target allocated to strategic goals Step 3 Establish threshold, target and superior levels Allocate percentages between strategic goals Step 4 Quantitatively evaluate performance Qualitatively evaluate performance
20182019 Annual Incentive Formula
2019 Annual Incentive Formula Base Salary Target Percentage Financial Achievement Factor* Strategic Achievement Factor* Annual Incentive Amount
* | These factors are calculated by taking the goal weight and multiplying it by the goal achievement percentage. For example, if the weight of financial goals totals |
Target Incentive Amounts
Each year the Compensation Committee sets the target incentive amount for each Named Executive Officer, expressed as a percentage of the executive’s base salary. The Compensation Committee sets these targetstarget incentives based on a number of factors, including the Named Executive Officer’s role and responsibilities, internal pay equity and competitive market data as provided by Meridian, in consultation with its compensation consultantMeridian and in adherence to our stated executive compensation objectives and principles. The target annual incentive opportunity for each Named Executive Officer in FY 20182019 is as follows:
Name | | Target Annual Incentive (% of Base Salary) | | | Target Annual Incentive Amount ($) | | | Target Annual Incentive (% of Base Salary) |
| | Target Annual Incentive Amount ($) | | ||||
David Dunbar | 100% | 803,175 | 105% | 868,634 | ||||||||||||
Thomas D. DeByle | 65% | 267,492 | 70% | 296,710 | ||||||||||||
Alan J. Glass | 50% | 169,886 | 55% | 192,500 | ||||||||||||
Paul C. Burns | 55% | 175,049 | 55% | 192,500 | ||||||||||||
Annemarie Bell (1) | 25% | 53,609 | ||||||||||||||
Ross McGovern | 45% | 130,680 | 45% | 134,600 |
(1) | The relatively lower target incentive for Ms. Bell reflects the fact she was promoted toVP-HR and appointed as a corporate officer at the end of June 2019, while such targets are set during the first quarter of each fiscal year. |
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Goal Weight within Target Incentive
After establishing a target bonusincentive amount for each executive, the Compensation Committee determines what percentages to allocate to the attainmentrelative weight of the financial performance measures and strategic goals. TheFor FY 2019, the Compensation Committee has determined thatset the following relative weight of these performance measures (except for FY 2018, 70% of the annual incentive opportunity is based on the achievement of financial performance goals, while 30% of the annual incentive opportunity isMr. Burns):
· | 75% of the annual incentive opportunity would be based on the achievement of financial performance goals and |
· | 25% of the annual incentive opportunity would be based on individual achievement of strategic goals. |
The foregoing relative weight represent a 5 percentage point increase with respect to the financial performance goals and a corresponding 5 percentage point decrease with respect to the strategic goals. This change in weight was made to enhance alignment with peer group and shareholder preferences. Payout for the achievement of both financial performance goals can range between 0% and 243% depending on whether financial performance met or exceeded specified levels. Payout for individual achievement of strategic goals can range between 0% and 133% depending on several factors. Total200% and total payout is capped at 200% of the target percentages specified above.
With respect to Mr. Burns, the Compensation Committee determined that 30% of his annual incentive opportunity would be based on achievement of financial performance goals and 70% of his annual incentive opportunity would be based on strategic goals due to the nature of his position as head of the Company’s strategy and business development function.
Setting Financial Performance Measures
The Compensation Committee, working with its compensation consultant and the CEO, evaluates and establishes financial objectives that correlate to the creation of shareholder value, are aligned with the Company’s annual business plan and are appropriate measures for judgingevaluating executive performance. For FY 2018,2019, the Compensation Committee determined that achieving a specified level of adjusted earnings per shareselected the following two financial performance measures: (i) EBITDA and adjusted operating cash flow were(ii) net working capital turns. The Compensation Committee selected these performance measures because it believes they are the Company’s most important financial objectives, followed by sales. The Compensation Committee believes that these measures were the most important factors in preserving and enhancing shareholder value in the short-term and sustaining growth and stability for the long-term. Last year (and previous fiscal years) the Compensation Committee had selected adjusted EPS and sales as performance measures for the annual incentive plan. For FY 2019, the Compensation Committee therefore lessened the absolute focus on EPS, although achieving a specified EPS target was included in each NEO’s strategic goals.
After determining the performance measures, the Compensation Committee setsset “threshold,” “target,” and “superior” performance levels, where thegoals, which corresponded to annual incentive amount ispayouts of 50%, 100% or 243%200% of the target bonusincentive amount, respectively. If achieved performance fell between two performance levels, the amount of the incentive payout would be determined through interpolation. However, no payout would be made if achieved performance results meet and exceed a level, the executive will earn a bonus on a sliding scale up to the maximum achievement allowed.fell below threshold. The Compensation Committee setsset the “threshold” performance level high enough so that achieving the level is not guaranteed, while setting the “superior” performance level high enough so that achieving it is difficult and represents an outstanding accomplishment. The Compensation Committee may adjust the financial performance targets to reflect the impact of special events, such as acquisitions or divestitures, during a fiscal year. These adjustments are made pursuant to established guidelines and are appropriate in light of long-term growth strategies and business operations.
Setting Strategic Goals
The Compensation Committee, in consultation with the Board, and its compensation consultant, evaluates and establishes strategic objectives that correlate towith the creation of shareholder value, align with the Company’s business plan and are appropriate measures for judging individual executive performance. As with financial performance measures, the Compensation Committee sets relative weights and metrics for each strategic goal. The specific goals are developed based on the individual nature of an executive’s role and are specific to the position the executive holds.responsibilities.
In FY 2018,2019, the Compensation Committee set the following strategic goals for the CEO:
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· | Initiate execution of Board approved portfolio alignment activities; successfully divest at least onenon-core business by |
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2019 Proxy Statement | 37 |
In consultation with the CEO, the Compensation Committee sets strategic goals for corporate staffexecutive officers, including the other Named Executive Officers, that are tied to the completion of specific projects in their functional areas. These projects are important to the Company in that they improve productivity and significantly lower the cost structures of the respective departments, resulting in better processes and reduced costs.
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Results for FY 20182019
Financial Goals and Results. For FY 2018,2019, the financial goals, for executives at the Company level, weightingweight, achieved performance levels and performance levelspayout percentage were as follows:
Financial Performance Metric & Goal Threshold (50%) Target (100%) Superior (243%(200%) Weight Payout Percentage EARNINGS PER SHAREEBITDA (1) Attractive earnings profile $4.55 $4.87 $5.18 25% 12.5% OPERATING CASH FLOW (2) High cash flows $62.3M $79.7M $85.9M $92.3M 25%$117,221 $132,291 $146,995 $165,369 45% 0% SALES Strong segment performance $802.5M $836.0M $868.4M $873.6M 20% 44.6%Net Working Capital Turns Q1(2) 4.2 4.5 4.7 5.2 0% (3) 0 Net Working Capital Turns Q2 4.5 4.5 5.0 5.5 7.5% 3.75% Net Working Capital Turns Q3 4.7 4.7 5.2 5.7 7.5% 3.75% Net Working Capital Turns Q4 4.8 5.3 5.6 5.8 7.5% 12.0% Net Working Capital Turns 5 Point Average (4) 4.7 4.9 5.3 5.5 7.5% 5.8% Financial Goal Weighted Achievement Total 57.1%25.3% (5)
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(3) | The weight of this was zero because the goals had not been finalized and communicated to the divisions until two months into the first quarter. |
(4) | This five-point average included the net working capital turns forQ1-Q4 of FY 2019 and Q4 of FY 2018. |
(5) | Mr. Burns’ financial goal weighted achievement total was 10.1% due to differing weight of financial vs. strategic goals. |
38 | 2019 Proxy Statement |
Strategic Goals and Results. The Compensation Committee met with the CEO to evaluate the performance of each executive in meetingNamed Executive Officer (other than the CEO) against their strategic goals. To determine the extent to which each strategic goal was met, the Compensation Committee evaluated several factors including the difficulty of reaching the goal, the work performed to achieve the goal, the quality of the work performed and other factors that influenced the ease or difficulty of meeting the goal. The Compensation Committee determined that each Named Executive Officer achieved eithergreater than target or superior performance on their strategic goals. For the CEO, the Compensation Committee evaluated his performance based on the following:
● | The continued deployment of the Company’s Growth Disciplines resulted in an increase of |
● | The acquisitions funnel |
● | The |
● | The EPS target was not met due to an EBIT shortfall, increased interest and |
The following table shows the overall annual incentive opportunity results for FY 2018.2019.
Name | Financial Performance Weighted Achievement (% of Target) | Strategic Goals Weighted Achievement (% of Target) | Total BPP Score | Annual Incentive Amount ($) | ||||
David Dunbar | 57% | 32% | 89% | 715,629 | ||||
Thomas D. DeByle | 57% | 33% | 90% | 241,010 | ||||
Alan J. Glass | 57% | 34% | 91% | 154,766 | ||||
Paul C. Burns | 57% | 39% | 96% | 168,222 | ||||
Ross McGovern | 57% | 35% | 92% | 120,356 |
Name | Financial Performance of Target) | Strategic Goals (% of Target) | Total BPP Score | Target Annual Incentive Amount ($) | Annual Incentive Amount ($) | |||||||||||||||
David Dunbar | 25% | 30% | 55% | 868,634 | 480,354 | |||||||||||||||
Thomas D. DeByle | 25% | 30% | 55% | 296,710 | 164,081 | |||||||||||||||
Alan J. Glass | 25% | 30% | 55% | 192,500 | 106,453 | |||||||||||||||
Paul C. Burns | 10% | 97% | 107% | 192,500 | 206,360 | |||||||||||||||
Annemarie Bell | 25% | 30% | 55% | 53,609 | 29,646 | |||||||||||||||
Ross McGovern(1) | 0% | 0% | 0% | 134,600 | 0 |
(1) | ||
Mr. McGovern did not receive an annual incentive award due to the October 2018 |
Management Stock Purchase Plan
The Compensation Committee believes that whileEach executive has the annual incentive award provides motivation for executivesopportunity to meet annual performance goals,participate in the Management Stock Purchase Plan (“MSPP”) adds an additional long-term component. Under the MSPP,, under which is similar to our Employee Stock Purchase Plan, management atexecutives can defer a certain salary level can elect to deferpre-selected percentage of their annual incentive awards into the receipt of RSUs at a 25% discount, valued atdiscount. More information can be found in the lower of (i) the closing price of the Company’s common stockManagement Stock Purchase Plan section on the last business day of the fiscal year (June 29th, 2018) or (ii) the closing price of the Company’s common stock on the date on which the award is certified by the Compensation Committee. Executives must make their election prior to the beginning of the fiscal year and can defer up to 50% of their award. These RSUs cliff vest at the end of a3-year period and the executive receives shares of stock equal to the amount of RSUs granted. Executives accrue dividends, which are paid upon vesting, on the RSUs, but do not have voting rights until the shares underlying the RSUs are delivered. The following table details, for FY 2018, the percent each Named Executive Officer elected to defer under the MSPP, the value of that deferral and the amount of RSUs granted pursuant to the deferral.page 42.
Name | Annual Incentive Award Deferred | Amount of the Deferral ($) (1) | RSUs Granted (#)(2) | |||
David Dunbar | 50% | 357,814 | 4,668 | |||
Thomas D. DeByle | 50% | 120,505 | 1,572 | |||
Alan J. Glass | 50% | 77,383 | 1,010 | |||
Paul C. Burns | 20% | 33,644 | 439 | |||
Ross McGovern | 25% | 30,089 | 393 |
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Long-Term Incentive Plan
In 2008, the Company, with the approval of its shareholders, adopted the 2008 Long Term Incentive Plan (“LTIP”). The purpose of the LTIP is to align executives’ interests with those of shareholders through the annual grant of long-term equity awards. These long-term equity awards reward executives for the Company’s performance over a multi-year period. The LTIP expired in October 2018 and was replaced by the 2018 Omnibus Incentive Plan (“OIP”), which was approved by our shareholders at the October 23, 2018 annual meeting. All long term incentive awards to NEOs for FY 2019 were made in September 2018 under the LTIP.
2019 Proxy Statement | 39 |
LTIP Structure
The FY 2019 LTIP consists of an annual granttwo types of equity awards: time-vested RSAs, which generally vest after 3 years,restricted stock awards (RSAs) and performance-based PSUs, which vest after 3 years.performance share units (PSUs). The Compensation Committee believes thatselected these equity vehicles for FY 2019 because each aligns the LTIP incentivizes executives to remain in the employinterests of the Company and aligns their interestsour Named Executive Officers with those of shareholders.our shareholders, enhances retention of our Named Executive Officers and provides the opportunity to meaningfully increase level of stock ownership by our Named Executive Officers. In addition, the PSUs motivate our NEOs and reward achievement of financial metrics (and share performance) that are aligned to the following standard components, the Compensation Committee may award grants of restricted stock based on performance or other factors.our long-term business strategy and build long-term shareholder value.
LTIP Component | Description | |
Awards of Restricted Stock (“RSAs”) | Cliff vest at the end of a3-year period | |
Performance Share Units (“PSUs”) | Cliff vest at the end of a3-year period at 0% to 200% of award value based onpre-determined financial performance metrics |
TheEach RSA grant component provides executives with meaningful stock ownership and promotes long-term executive employment with the company. FY 2017 grants of RSAs under the LTIP vestpro-rata annually over a3-year period. All other grants vestvests on the 3rd anniversary of the grant. RSAs are only vested ifgrant, provided that the individualRSA holder is employed by the Company oncontinuously through the vest date of the award.date. However, RSAs will immediately vest upon death, disability or retirement. All RSAs under the LTIP are considered beneficially owned by the executive, have voting rights, and earn dividend equivalents, which are paid upon vesting.
TheEach PSU grant component motivates executives to meet financial performance criteria that the Compensation Committee has established. PSU grants providecliff vests over a strong incentive for our executives to achieve specific performance goals over the3-year performance period that advance our business strategies and build long-term shareholder value. The Compensation Committee, with consultation from their compensation consultant and the CEO, establishes goals that impact long-term performance of the Company and enhance shareholder value. Prior to FY 2017, performance-based PSUs were granted based on results achieved against Compensation Committee-approved performance criteria measured over a1-year period. Startingmetrics. Payouts under the PSU grant may range from 0% to 200% of target award and are settled in FY 2017, the performance period was expanded to 3 years, so currently there are 2 performance periods, FYs 2017-2019 and FYs 2018-2020. Sharesshares of common stock underlying the PSUs are not delivered to the extent thestock. If threshold performance goals are not met atachieved by the conclusion of the performance period.period, the PSU award would be forfeited and no shares would be delivered under the award. PSUs are also subject to forfeiture ifupon termination of employment during the executive’s employment terminatesperformance period for any reason other than death, disability, or involuntary termination orin connection with a change in control before the end of the3-year performance period.control.
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The Compensation Committee believes that long-term incentive compensation is essential for retaining and motivating executives. It further believes that providing our executives with long-term incentives will encourage them to operate the Company’s business with a view towards building long-term shareholder value. Based on these considerations, the Compensation Committee, in consultation with Meridian, establishes (i) the target incentive amounts, (ii) the percentage of the target award that is granted in the form of RSAs and PSUs, and (iii) the performance measures at “threshold,” “target” and “superior” levels.
FY 2019 Target Incentive Amounts
Each yearFor FY 2019, the Compensation Committee setsset the target long-term incentive amountcompensation for each Named Executive Officer, expressed as a percentage of the executive’s base salary. The Compensation Committee sets these targets in consultation with its compensation consultantsalary based on a number of factors, including the Named Executive Officer’s role and in adherence toresponsibilities, internal pay equity, competitive market data and our stated executive compensation objectives and principles. The Compensation Committee also setsset the percentage of the total LTIP incentive compensation that will be granted in the form of PSUs and RSAs based on the understanding that executives in a position to drive overall Company performance should have a larger portion of their long-term incentive award be awarded in PSUs. The
For FY 2019, the Compensation Committee established the following target long-term incentive opportunity and PSU percentage for eachthe Named Executive Officer in FY 2018 is as follows:Officer:
Name | Target LTIP (% of Base Salary) | Target LTIP Amount ($) | Target LTIP Awarded in PSUs | Target LTIP (% of Base Salary) | Target LTIP Amount ($) | Target LTIP Awarded in PSUs | ||||||
David Dunbar | 200% | 1,606,350 | 60% | 205% | 1,695,904 | 60% | ||||||
Thomas D. DeByle | 150% | 617,289 | 50% | 170% | 720,582 | 50% | ||||||
Alan J. Glass | 100% | 339,771 | 50% | 100% | 350,000 | 50% | ||||||
Paul C. Burns | 75% | 238,703 | 50% | 100% | 350,000 | 50% | ||||||
Annemarie Bell (1) | 10% | 21,443 | 0% | |||||||||
Ross McGovern | 70% | 203,280 | 50% | 70% | 209,378 | 50% |
(1) | Ms. Bell served as Interim VP of Human Resources following the October 2018 departure of Mr. McGovern. She was promoted to the position of VP of Human Resources and elected as a corporate officer in June 2019. As such, she was not eligible to participate in the PSU performance-based portion of the LTIP grants and received only RSAs. |
40 | 2019 Proxy Statement |
FYs 2017-2019 Performance Goals & Results
The FY 2017 performance share units were subject to the following performance metrics for the3-year period of FYs 2017-2019 and their respective weights are:ending on June 30, 2019:
Goal | Weight | |||
Three Year Cumulative EBITDA | 60% | |||
Three Year Average Return on Invested Capital | 40% |
The first goal,3-year cumulative EBITDA, which stands for earnings before interest, tax, depreciation and amortization, is anon-GAAP financial measure that is determined by the sum of (i) income from continuing operations before income taxes, (ii) interest expense, and (iii) depreciation and amortization. The Compensation Committee selected this financial goal because of its direct correlation to profitability and cash flow. Profitability and cash flow are critical to the Company’s ability to complete acquisitions, invest in its core businesses, declare dividends for shareholders and improve overall liquidity.
The second goal,3-year average return on invested capital, (“ROIC”), is the average over the three-year period of the Company’s return on invested capital. The Compensation Committee selected average ROIC as the second performance measure because it provides a means of determining whether the Company’s earnings are being invested in a way that optimizes the Company’s returns.
The Compensation Committee may adjust the threshold, target and superior levels to reflect the impact of special events, such as acquisitions or divestitures, during the performance period. These adjustments are made pursuant to established guidelines and are appropriate in light of long-term growth strategies and business operations. This
The threshold, target and superior levels, actual performance, weight and weighted total for the 2017-2019 performance period endsare:
Financial Performance Metric & Goal Threshold (50%) Target (100%) Superior (200%) Weight Payout Percentage EBITDA $347,171 $343,851 $389,509 $404,638 60% 32.2% ROIC 9.9% 9.74% 13.6% 13.8% 40% 20.7% Weighted Achievement Total 52.9%
Given this weighted achievement total, PSUs granted on August 30, 2016 vested at 52.9%, for the end of FY 2019 - June 30, 2019. If the goals are met, all earned shares will be delivered to the executives once the Compensation Committee certifies the financial performance results. Currently, if the Company were to certify the results over the two yearsfollowing share payouts and value as of the performance period, as of June 30, 2018, payout would be 76.2% of target.vest date:
Name | Shares granted on August 30, 2016 (#) | Shares Vesting (#) | Value of Shares Vesting ($) (1) | |||||||||
David Dunbar | 11,150 | 5,899 | 405,588 | |||||||||
Thomas D. DeByle | 3,605 | 1,907 | 131,134 | |||||||||
Alan J. Glass | 1,965 | 1,040 | 71,478 | |||||||||
Paul C. Burns | 1,197 | 633 | 43,542 | |||||||||
Annemarie Bell (2) | 0 | 0 | 0 | |||||||||
Ross McGovern(3) | 944 | 0 | 0 |
(1) | Based on the stock price on the date of vesting, August 30, 2019 ($68.75). |
(2) | Ms. Bell served as Interim VP of Human Resources following the October 2018 departure of Mr. McGovern. She was promoted to the position of VP of Human Resources and elected as a corporate officer in June 2019. As such, Ms. Bell was not granted any shares at the beginning of the performance period. |
(3) | Mr. McGovern did not receive any shares due to the October 2018 cessation of his employment. |
2019 Proxy Statement | 41 |
FYs 2018-2020 Performance Goals
The performance metrics for the3-year period of FYs 2018-2020 and their respective weights are the same as the FYs 2017-2019 metrics and weights. The threshold, target and superior goal levels differ. This performance period ends at the end of FY 2020 - June 30, 2020. If the goals are met, all earned shares will be delivered to the executives that are still employed with the Company once the Compensation Committee certifies the financial performance results. Currently,
FYs 2019-2021 Performance Goals
The performance metric for the3-year period of FYs 2019-2021 is a modified ROIC measure, where goodwill is excluded to eliminate distortion from acquisitions, and accumulated depreciation and amortization is added back into the calculation. The Compensation Committee selected this modified ROIC measure because it reflects the impact of Company efforts to improve the quality of earnings, both organically and inorganically, and supports the Committee’s view that improvement in quality of earnings drives value creation for shareholders. To further reflect performance relative to other industrial companies, the achievement of the measures will be adjusted by a relative TSR measure over the three-year performance period. Specifically, actual achievement would (i) be reduced up to 25% if the Company wereCompany’s TSR falls in the first quartile of the peer group, (ii) remain unadjusted if the Company’s TSR falls in the second and third quartiles, and (iii) be increased by up to certify25% if the resultsCompany’s TSR falls within the upper quartile. The peer group selected for this relative TSR modifier is the S&P 600 Capital Goods Index which the Committee believes is a reasonable proxy to measuring a broad, and therefore consistent, group of companies that will experience similar market influences over the first yearcycle of the long-term incentive performance period. Our NEOs, therefore, are partially compensated based on how our performance compares to similar investment alternatives when considering total shareholder return performance.
This performance period asends at the end of FY 2021 - June 30, 2018, payout would2021. If the goals are met, and subject to the TSR modifier, all earned shares will be 103.0%delivered to the executives once the Compensation Committee certifies the financial performance results.
Management Stock Purchase Plan
The Compensation Committee believes that while the annual incentive award provides motivation for executives to meet annual performance goals, the Management Stock Purchase Plan (“MSPP”) adds an additional long-term component. Under the MSPP, management at a certain salary level can elect to defer their annual incentive awards into the receipt of target.
Name | Annual Incentive Award Deferred | Amount of the Deferral ($) (1) | RSUs Granted (#) (2) | |||||||||
David Dunbar | 50% | 240,177 | 4,658 | |||||||||
Thomas D. DeByle | 50% | 82,040 | 1,591 | |||||||||
Alan J. Glass | 50% | 53,226 | 1,032 | |||||||||
Paul C. Burns | 20% | 41,272 | 800 | |||||||||
Annemarie Bell(3) | 0% | 0 | 0 | |||||||||
Ross McGovern(4) | 0% | 0 | 0 |
(1) | The amount of the deferral is the dollar value of the annual incentive award that is actually deferred into the receipt of discounted RSUs under the MSPP. |
(2) | Based on the closing price of the Company’s common stock on August 30, 2019 ($68.75), the date the Compensation Committee certified the awards. RSUs have been rounded up to the nearest whole unit. |
(3) | Ms. Bell did not participate in the MSPP program for FY 2019. |
(4) | Mr. McGovern did not receive an annual incentive award due to the October 2018 cessation of his employment. |
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Retirement Plans
Standex Retirement Savings Plan
The Company offers a qualified savings and investment 401(k) plan to most of ournon-production U.S.-based employees, including our Named Executive Officers. This plan provides eligible employees an opportunity to save for retirement on both apre-tax andafter-tax basis up to 100% of their eligible pay subject to annual IRS limits. The Company provides eligible employees with a matching contribution equal to:
● | 100% of the employee’s contribution for the first 3% of the employee’s total compensation (base salary plus annual incentive award); and |
● | 50% of the employee’s contribution for the next 2%. |
The Named Executive Officers, and employees who are at a location that is covered by thenow-frozen Standex Pension Plan (see below), receive an additional 1% of their eligible pay as a Company contribution regardless of the amount of the employee’s contribution. Some employees receive an additional sliding scaleage-based Company contribution if they were employed with the Company on December 31, 2007 and were of a certain age. All eligible employees are immediately 100% vested in all contributions to this plan.
Standex Deferred Compensation Plan
The Standex Deferred Compensation Plan is anon-qualified, “top hat” and unfunded plan maintained for the purpose of permitting a select group of management and highly compensated employees, including Named Executive Officers, to continue saving for retirement once they can no longer make contributions to the Retirement Savings Plan. If a highly compensated employee reaches the IRS compensation limit for the Retirement Savings Plan, the Deferred Compensation Plan allows the employee to continue to save for retirement under near identical terms. Eligible employees may defer up to 50% of their base salaries and 100% of their annual bonuses that combined exceed the IRS compensation limit. All Company contributions (match andnon-match) are made on the same basis as the Retirement Savings Plan described above.
Deferral elections must be made by December 31st of each year for the upcoming calendar year and all deferral elections are irrevocable. All eligible employees are immediately 100% vested in all contributions to this plan. Employees may elect the timing and form of distribution of the accrued benefits provided that the accrued benefit is greater than $10,000. For accrued benefits of less than $10,000, the distribution will be paid in a lump sum. Distributions will be paid no sooner than six months after termination of employment for our Named Executive Officers, pursuant to the IRC.
Pension Plans
The Standex Retirement Plan, atax-qualified defined benefit pension plan, and the Standex Supplemental Retirement Plan, anon-qualified defined benefit pension plan for highly compensated employees, are the Company’s two pension plans. Both plans were frozen as to future benefit accruals and new participants on December 31, 2007. All of our Named Executive Officers became employed with the Company after this date and are not accruing benefits under either of these plans.
2019 Proxy Statement | 43 |
Perquisites and Other Benefits
Employment Agreements
We have entered into employment agreements with each of the Named Executive Officers. Even though each Named Executive Officer has an employment agreement which sets out an initial term that automatically renews, the executives serve at the will of the Board because the agreements may be terminated for any reason with 30 days’ notice. All of the provisions within the employment agreements were crafted to consider the needs of the Company and the executive’s specific circumstances. The Compensation Committee believes that the employment agreements are an important tool to attract and retain highly qualified executives in a competitive marketplace, while also protecting the Company in the event of an executive’s termination.
In addition to the material terms detailed below,severance provisions, our employment agreements also contain restrictive covenants including anon-compete provision, which precludes an executive from engaging, in any active capacity, in any business other than Standex while they are employed with the Company. This term is vital to ensure that an executive’s attention and focus during their employment is solely on the Company’s business. Thenon-compete also precludes the executives from engaging in a business that is competitive with the Company for the duration noted in the table below.Company. Thenon-compete clause also contains anon-poaching provision, which restricts a departing executive’s ability to hire then-current employees of the Company. Thenon-poaching provision is the same duration as thenon-compete provision. These terms are beneficial to the Company because they safeguard against executives, who know the most about the Company, its businesses, its employees and its markets, using their knowledge to adversely impact the Company after their employment ends.
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The material terms of the employment agreements are detailed in the following table. The termination and severance terms are further discussed under “Potential Payments upon Termination or Change in Control” on page 56.
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Perquisites
We provide a limited number of perquisites to certain Named Executive Officers, including the CEO. The Compensation Committee designed these perquisites to be competitive and assist in attracting and retaining highly qualified executives. Furthermore, these perquisites also assist the Named Executive Officers in performing their responsibilities. The types ofFor FY 2019, we provided the following perquisites that are currently provided to the Named Executive Officers are:Officers: car allowances, reimbursement of automobile operating expenses (such as gas costs, auto insurance, maintenance and repairs) and Mr. Dunbar receivesreceived tax return preparation and counseling. We do not provide gross ups for any attributed income relating to these perquisites.
Change in Control
Our employment agreements, rather than a companywide plan, contain provisions governing what happens when there is a change in control. The benefits provided to the Named Executive Officers under these provisions, if payable, are in lieu of any other severance benefits. The Compensation Committee believes that these benefits are important to encourage the executives involved in any negotiation or completion of a change in control transaction to act in the best interest of shareholders, without regard tofor personal interest.
The severance benefits also promote the financial protection and security of an executive’s long-term incentive compensation arrangements in the event of the loss of their positions following a transaction that involves a change in the ownership or control of the Company. None of the severance benefits are triggered if the executive retains their position or a substantially similar position following a change in control. With equity compensation, if the executive is granted an award that substantially mirrors their then-current award, there is no acceleration of that current equity award. This “double trigger” only provides for a payment of benefits if (i) there is a change in control and (ii) the executive is involuntarily terminated or resigns for a specified reason. The Compensation Committee believes that this is appropriate because if an executive retains their position following a change in control, the impact on the executive is not significant enough to warrant the provision of benefits.
The severance benefits include a lump sum payment equal to a multiple of the executive’s annual base salary and annual incentive bonus, accelerated vesting of all outstanding equity awards under the LTIP and RSUs under the MSPP and a continuation of life insurance and medical plan benefits for a specified period of time. The Compensation Committee believes that these terms and amounts are customary and reasonable. The Compensation Committee, in consultation with its compensation consultant, periodically reviews these terms to evaluate both their effectiveness and competitiveness.
More detailed information concerning the trigger events and the severance benefits of each Named Executive Officer is discussed below under “Potential Payments upon Termination or Change in Control” on page 56.
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Other Compensation Information
Standex has approximately 5,3764,487 employees in 7071 locations across 2422 countries. With our global footprint, a majority (approximately 65%57%) of our employee population is located outside of the United States. In line with the customary nature of manufacturing organizations, a large segment of our employees is operations-based and paid on an hourly basis (approximately 73%66%). In order to attract and retain employees globally, we pay what we believe to be market competitive rates in each market where we operate. Our pay ratio below is a reasonable estimate that has been calculated in a manner consistent with Item 402(u) of RegulationS-K using the data and assumptions summarized below.
The CEO Pay Ratio was calculated by first identifying the median employee using our global employee population as of June 30, 2018,2019, which included all global full-time, part-time and temporary employees, including newly hired employees, that were employed on that date. In determining our median employee, we used base annual salary during the period from July 1, 20172018 through June 30, 2018.2019. All international employees’ base annual salaries were converted to USD from local currencies using exchange rates for the month ending June 30, 2018.2019. Once the median employee was identified, we calculated theirthe employee’s total compensation in accordance with Item 402(c)(2)(x) of Reg.S-K. The total compensation for our median employee and our CEO and the ratio of the two is as follows:
Median EmployeeCompensation(1) | ||||
CEO Compensation (2) | ||||
CEO Pay Ratio (3) |
(1) | Our median employee was an hourly individual located in the United States. |
(2) | This is the CEO’s total compensation, as detailed in the Summary Compensation Table. |
(3) | This value has been rounded to the nearest whole number. |
Stock Ownership Guidelines
The Compensation Committee believes that Company executives, including the Named Executive Officers, should have at least a minimum level of Company stock ownership to align their interests with those of Company shareholders. The Compensation Committee has adopted stock ownership guidelines through a competitive analysis prepared by management and reviewed by the compensation consultant. These guidelines require the CEO to maintain stock ownership valued at 5 times theirhis or her base salary and requiresrequire all other executives to maintain stock ownership valued at 2 times their base salary. Additionally, the guidelines require allnon-executive Vice Presidents, Group Presidents and Division Presidents to maintain stock ownership valued at 1 times their base salary. Until an executive has attained the applicable amount,stock ownership level, the executive is expected to retain at least 50% of the share unitsshares they are awarded, net of amounts required to pay taxes. To determine if the guideline amount is met, shares are valued at the average stock price during the 4th quarter of the prior fiscal year. Shares that are either owned outright or are unvested RSAs or RSUs are considered owned for the purpose of the guidelines. PSUs are not considered in the determination.determination of stock ownership level.
The required amount under the guidelines is recalculated annually or whenever an executive receives an increase in pay. The Compensation Committee monitors compliance with these stock ownership guidelines on an ongoing basis. The following table shows the stock ownership requirements for each Named Executive Officer, except Mr. McGovern, who is no longer employed with the Company, as of their most recent Form 4 filing.
Name | Stock Ownership Guideline Amount (% of Annual Base Salary) | Required Ownership on June 30, 2018 (#)(1) | Actual Stock Ownership (#) | Stock Ownership Guideline Amount (% of Annual Base Salary) | Required Ownership on June 30, 2019 (#) (1) | Actual Stock Ownership (#) | ||||||
David Dunbar | 500% | 40,288 | 54,164 | 500% | 58,547 | 72,849 | ||||||
Thomas D. DeByle | 200% | 8,257 | 63,088 | 200% | 11,999 | 69,229 | ||||||
Alan J. Glass | 200% | 6,817 | 4,566 | 200% | 9,908 | 7,044 | ||||||
Paul C. Burns | 200% | 6,386 | 8,820 | 200% | 9,908 | 13,256 | ||||||
Ross McGovern | 200% | 5,827 | 4,066 | |||||||||
Annemarie Bell(3) | 200% | 6,070 | 631 |
(1) | Based on the average price of the Company’s common stock between April |
(2) | With the exception of shares allowed to pay for taxes upon vesting, Mr. Glass has retained all shares awarded to him since his employment with the Company commenced in April 2016. |
(3) | Ms. Bell has retained all shares held by her since her June 2019 appointment as an executive officer. |
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Say-on-Pay
Stockholders are afforded the opportunity to cast an advisory vote on an annual basis with respect to the total compensation of our Named Executive Officers. At the 20172018 annual meeting, 97.9% of the votes cast on the advisory proposal were voted in its favor. After reviewing the results, the Compensation Committee decided to continue to apply the same general philosophy, compensation objectives and governing principles that it used in FY 2017.2018.
In the event that the Company’s financial results for any reporting period require restatement so that the period’s financial performance measures are not met, and the restatement is necessary due to the executives’ misconduct, the LTIP givesand OIP give our Board of Directors the discretion and authority to “claw-back” or cancel unpaid annual and long-term incentive awards and to recover excess annual and long-term incentive awards that have been paid to any executive officer.
Tax and Accounting Aspects of Compensation
The federal Tax Cuts and Jobs Act (“TCJA”) signed into law on December 22, 2017 made significant changes to the tax laws regarding executive compensation. Previously, Section 162(m) of the IRC limited the amount of compensation paid to the Named Executive Officers that a public corporation may deduct from its federal income tax to $1.0 million per year, unless the compensation met certain requirements. Beginning on January 1, 2018, the TCJA repealed the performance-based compensation and commission exceptions to the Section 162(m) limitation. Additionally, the TCJA revised the definition of a “covered employee” to specifically include the “principal financial officer.” As a result of the changes in the law, all compensation paid to the Named Executive Officers in excess of $1.0M will not be deductible.
The Company does not have a specific policy regarding executive compensation and Section 162(m). The Compensation Committee retains the discretion to provide compensation that is not deductible under Section 162(m) if it determines that such compensation is in the best interests of the Company.
Policy Concerning Transactions Involving Company Securities
(Anti-Hedging Policy & Anti-Pledging Policy)
The Company has aCompany’s anti-hedging and anti-pledging policy which is applicable toprohibits all officers, directors and employees that prohibitsfrom engaging in certain transactions involving the Company’s securities. TheSpecifically, officers, directors and employees are prohibited from engaging in transactions that are intended to offset, in whole or in part, potential loss in value of Company securities. These transactions include, engaging in short-term speculative transactions, such asbut are not limited to, hedging transactions, and buying or selling put or call options, holding Company securities in a margin account or engaging inand short sales of Company securities.sales. In addition, the policy prohibits pledging Company securities without first providing at least two weeks’ advance notice explaining the purpose of the pledge. No Named Executive Officer has entered into any such prohibited transactions.
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The Compensation Committee regularly monitors and reviews the executive compensation program to determine the program’s effectiveness at achieving the stated objectives and principles. In August 2018,2019, the Compensation Committee conducted its annual review of the executive compensation policies and practices and assessed whether the current incentives could lead to excessive or inappropriate risk taking by the executives. Following the review, the Compensation Committee concluded that the Company’s executive compensation program elements, when considered both separately and as a whole, are not reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the Compensation Committee noted the following factors:
● | Compensation elements are mixed. The executive compensation program has a balanced mix of base salary, annual cash incentive awards and long-term equity incentive awards. The mix between the elements decreases the dependency on one form of compensation over other forms and thus provides executives with an incentive to perform at high levels, both in the short-term and long-term. |
● | Incentive award metrics contain both short and long-term goals. The annual incentive award is contingent upon the attainment ofpre-established short-term corporate, business and financial objectives, while the long-term incentive award is based on long-term stock growth as well as the attainment of financial performance goals. This balance between short and long-term goals reduces the incentive to prioritize short-term performance at the expense of long-term growth. |
● | Short-term and long-term performance metrics differ. The performance metrics used to determine the amount of annual incentive awards are different than the performance metrics used to determine the amount of long-term incentive awards. This helps avoid excessive risk-taking to achieve one performance objective at the detriment of other objectives. |
● | Annual incentive awards are capped. The total annual incentive award is capped at 200% of target, which reduces the incentive to engage in unnecessarily risky behavior in any given year at the expense of long-term growth. |
● | Long-term incentives are completely equity-based. All long-term incentive awards are paid in the form of shares and are only paid if an executive remains employed with the Company at the time of vesting. This practice aligns the executive’s interests with those of shareholders and reduces the likelihood that an executive will act in a way that is detrimental to the long-term stock growth of the Company. |
● | Long-term performance metrics are based on corporate objectives. The performance metrics for long-term incentive awards are based on overall corporate performance rather than individual business unit performance. This reduces the risk that business unit heads will engage in conduct that inflates their business unit performance, but does not benefit the Company, as a whole, in the long-term. |
● | Incentives have performance thresholds. The annual incentive award and the PSUs granted under the LTIP and OIP have threshold payout levels, which ensures that incentive compensation is reduced or eliminated completely if the minimum performance levels are not achieved. |
● | Compensation is |
● | Compensation can be |
● | Executives have ownership requirements. Our executives are subject to stock ownership guidelines, which require executives to maintain ownership of a certain amount of Company stock during their employment. This encourages executives to focus on sustainable long-term growth and aligns the interests of our executives with those of our shareholders. |
Report of the Compensation Committee
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this Proxy Statement with management. Based on that review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
COMPENSATION COMMITTEE
Jeffrey S. Edwards, Chair
Charles H. Cannon, Jr.
Thomas E. Chorman
Michael A. Hickey
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The following table sets forth compensation information for 1fiscalfiscal years 2016, 2017, 2018 and 20182019 for our Named Executive Officers – the individuals who served during FY 20182019 as CEO and CFO and three other highly compensated executive officers of the Company, plus Mr. McGovern, who, but for the cessation of his employment in October 2018, would have been a highly compensated executive officer of the Company.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | Change in ($) (3) | All Other ($) (4) | Total ($) | ||||||||||||||||||||
David Dunbar President and CEO | 2018 | 797,327 | - | 2,120,875 | 357,814 | 40,012 | 112,340 | 3,428,368 | ||||||||||||||||||||
2017 | 774,098 | - | 2,113,055 | 155,957 | 54,708 | 112,655 | 3,210,473 | |||||||||||||||||||||
2016 | 751,537 | - | 1,987,958 | 428,021 | (749) | 92,082 | 3,258,849 | |||||||||||||||||||||
Thomas D. DeByle Vice President, CFO and Treasurer | 2018 | 408,530 | - | 790,571 | 120,505 | 33,668 | 58,870 | 1,412,144 | ||||||||||||||||||||
2017 | 395,703 | - | 786,492 | 51,940 | 52,212 | 60,788 | 1,347,135 | |||||||||||||||||||||
2016 | 381,393 | - | 620,640 | 112,726 | (1,084) | 60,212 | 1,173,887 | |||||||||||||||||||||
Alan J. Glass (5) Vice President, CLO and Secretary | 2018 | 337,297 | - | 451,045 | 77,383 | - | 22,303 | 888,028 | ||||||||||||||||||||
2017 | 328,656 | - | 446,900 | 32,988 | 19 | 18,610 | 827,173 | |||||||||||||||||||||
2016 | - | - | - | - | - | - | - | |||||||||||||||||||||
Paul C. Burns (6) VP of Strategy & Business Development | 2018 | 315,953 | - | 487,082 | 134,577 | 177 | 16,723 | 954,512 | ||||||||||||||||||||
2017 | 306,750 | - | 249,108 | 54,384 | 301 | 18,213 | 628,756 | |||||||||||||||||||||
2016 | 280,768 | 100,000 (7) | 661,370 | 141,768 | - | 74,678 | 1,258,584 | |||||||||||||||||||||
Ross McGovern (8) Vice President, CHRO | 2018 | 283,800 | - | 246,547 | 90,267 | 6,101 | 15,939 | 642,654 | ||||||||||||||||||||
2017 | 258,000 | - | 195,876 | 31,680 | 82 | 11,727 | 497,365 | |||||||||||||||||||||
2016 | 210,000 | 111,600 (9) | 236,406 | 2,811 | - | 10,083 | 570,900 |
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | Change in ($) (3) | All Other ($) (4) | Total ($) | ||||||||||||||||||||
David Dunbar President and CEO | 2019 | 821,246 | - | 2,042,329 | 240,177 | (2,274 | ) (5) | 144,820 | 3,246,298 | |||||||||||||||||||
2018 | 797,327 | - | 2,120,875 | 357,814 | 40,012 | 112,340 | 3,428,368 | |||||||||||||||||||||
2017 | 774,098 | - | 2,113,055 | 155,957 | 54,708 | 112,655 | 3,210,473 | |||||||||||||||||||||
Thomas D. DeByle Vice President, CFO and Treasurer | 2019 | 420,786 | - | 838,916 | 82,040 | 11,514 | (6) | 68,456 | 1,421,712 | |||||||||||||||||||
2018 | 408,530 | - | 790,571 | 120,505 | 33,668 | 58,870 | 1,412,144 | |||||||||||||||||||||
2017 | 395,703 | - | 786,492 | 51,940 | 52,212 | 60,788 | 1,347,135 | |||||||||||||||||||||
Alan J. Glass Vice President, CLO and Secretary | 2019 | 347,443 | - | 426,772 | 53,226 | 231 | 14,787 | 842,460 | ||||||||||||||||||||
2018 | 337,297 | - | 451,045 | 77,383 | - | 22,303 | 888,028 | |||||||||||||||||||||
2017 | 328,656 | - | 446,900 | 32,988 | 19 | 18,610 | 827,173 | |||||||||||||||||||||
Paul C. Burns VP of Strategy & Business Development | 2019 | 342,068 | - | 609,530 | 165,088 | 527 | 22,337 | 1,139,550 | ||||||||||||||||||||
2018 | 315,953 | - | 487,082 | 134,577 | 177 | 16,723 | 954,512 | |||||||||||||||||||||
2017 | 306,750 | - | 249,108 | 54,384 | 301 | 18,213 | 628,756 | |||||||||||||||||||||
Annemarie Bell (7) Vice President, Human Resources | 2019 | 207,240 | - | 21,443 | 29,646 | - | 7,474 | 265,803 | ||||||||||||||||||||
2018 | - | - | - | - | - | - | - | |||||||||||||||||||||
2017 | - | - | - | - | - | - | - | |||||||||||||||||||||
Ross McGovern Former Vice President, CHRO | 2019 | 296,934 | - | 209,378 | - | (1,033 | ) | 6,259 | 511,538 | |||||||||||||||||||
2018 | 283,800 | - | 246,547 | 90,267 | 6,101 | 15,939 | 642,654 | |||||||||||||||||||||
2017 | 258,000 | - | 195,876 | 31,680 | 82 | 11,727 | 497,365 |
(1) | This column includes the grant date fair value (calculated in accordance with FASB ASC 718) of the long-term incentive awards under the Company’s long-term incentive program (RSAs and PSUs) and RSUs that an executive received pursuant to a deferral election under the MSPP. Assumptions used in the valuations may be found in Note |
Risk-free interest rate: | 2.63% | |||||
Expected life of option grants: | 3 years | |||||
Expected stock value volatility: | 25.06% | |||||
Expected quarterly dividends: | $0.18 per share |
48 | 2019 Proxy Statement |
The grant date fair value of these three separate equity awards is as follows:
Grant Date Fair Value of Annual Incentive Deferred Pursuant to MSPP ($) | Grant Date Fair Value of Restricted Stock Awards under the LTIP ($) | Grant Date Fair Value of Performance Share Unit Awards under the LTIP ($) | Total ($) | Grant Date Fair Value of Annual Incentive Deferred Pursuant to MSPP ($) | Grant Date Fair Value of Restricted Stock Awards under the LTIP ($) | Grant Date Fair Value of Performance Share Unit Awards under the LTIP ($) | Total ($) | |||||||||||||||||||||||||
David Dunbar | 514,525 | 642,540 | 963,810 | 2,120,875 | 346,426 | 678,361 | 1,017,542 | 2,042,329 | ||||||||||||||||||||||||
Thomas D. DeByle | 173,282 | 308,645 | 308,645 | 790,571 | 118,333 | 360,291 | 360,291 | 838,916 | ||||||||||||||||||||||||
Alan J. Glass | 111,274 | 169,886 | 169,886 | 451,045 | 76,772 | 175,000 | 175,000 | 426,772 | ||||||||||||||||||||||||
Paul C. Burns | 48,379 | 119,351 | 119,351 | 487,082 (a) | 59,530 | 175,000 | 175,000 | 609,530 (a) | ||||||||||||||||||||||||
Annemarie Bell | - | 21,443 | - | 21,443 | ||||||||||||||||||||||||||||
Ross McGovern | 43,267 | 101,640 | 101,640 | 246,547 | - | 104,689 | 104,689 | 209,378 |
(a) | Mr. Burns received an additional discretionary stock grant of $200,000, which is included in this total and in the Summary Compensation Table above. |
The value of performance-based awards is based on the probable outcome of the performance conditions as of the grant date. The payout for 20162017 grants was 79.03%52.9% of the target levels shown. The payout for 20172018 and 20182019 grants will be determined in 20192020 and 2020, respectively, due to a change starting in FY 2017 from aone-year performance measurement period to a three-year performance measurement period.2021, respectively. The probable outcome for 2016, 2017, 2018 and 20182019 grants of performance-based awards was estimated at the target payout level, or 100%. The following table shows the grant date fair value of the performance share units granted in 20182019 at the target level included in the Summary Compensation Table above and the potential maximum grant date fair value:
Grant Date Fair Value of Performance Share Awards under the LTIP ($) | Potential Maximum Grant Date Fair Value ($) | Grant Date Fair Value of Performance Share Awards under the LTIP ($) | Potential Maximum Grant Date Fair Value ($) | |||||
David Dunbar | 963,810 | 1,927,620 | 1,017,542 | 2,035,084 | ||||
Thomas D. DeByle | 308,645 | 617,289 | 360,291 | 720,582 | ||||
Alan J. Glass | 169,886 | 339,771 | 175,000 | 350,000 | ||||
Paul C. Burns | 119,351 | 238,703 | 175,000 | 350,000 | ||||
Annemarie Bell | - | - | ||||||
Ross McGovern | 101,640 | 203,280 | 104,689 | 209,378 |
(2) | This column shows the amounts earned in cash under our annual incentive opportunity. |
(3) | This column includes the above-market earnings of the Named Executive Officer’s accumulated benefit under the Standex Deferred Compensation Plan. None of the Named Executive Officers have any accumulated benefits under thenow-frozen Standex pension plans. |
(4) | This column includes the following compensation: |
Accrued Dividends ($) (a) | 401(k) Contributions ($) | Non-qualified Deferred Compensation Contribution ($) | Life Insurance Premium ($) | Perquisites & Personal Benefits ($) (b) | Total ($) | 401(k) ($) | Non-qualified Deferred Compensation Contribution ($) | Life Insurance Premium ($) | Perquisites & Personal Benefits ($) (a) | Total ($) | ||||||||||||||||||||||||||||||||||
David Dunbar | 19,973 | 13,750 | 41,712 | 10,578 | 26,327 | 112,340 | 9,954 | 98,653 | 10,578 | 25,635 | 144,820 | |||||||||||||||||||||||||||||||||
Thomas D. DeByle | 10,269 | 13,498 | 11,821 | 8,550 | 14,732 | 58,870 | 14,433 | 31,091 | 8,548 | 14,384 | 68,456 | |||||||||||||||||||||||||||||||||
Alan J. Glass | 420 | 11,744 | 6,416 | 3,723 | - | 22,303 | 7,663 | 2,222 | 4,902 | - | 14,787 | |||||||||||||||||||||||||||||||||
Paul C. Burns | 2,601 | 11,172 | 1,093 | 1,857 | - | 16,723 | 9,145 | 10,974 | 2,218 | - | 22,337 | |||||||||||||||||||||||||||||||||
Annemarie Bell | 4,409 | - | 3,065 | - | 7,474 | |||||||||||||||||||||||||||||||||||||||
Ross McGovern | 202 | 12,259 | 2,406 | 1,072 | - | 15,939 | 2,159 | 3,783 | 317 | - | 6,259 |
(a) |
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Mr. Dunbar has an automobile allowance of which he used |
(5) | Mr. |
(6) | Mr. |
(7) |
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The following table sets forth information with respect to 20182019 plan-based awards granted to our Named Executive Officers for the year ended June 30, 2018.2019.
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | Estimated Payouts Under Equity Incentive Plan Awards (3) | All Other Stock Awards: Number of Shares of Stock or Units (4) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (2) | Estimated Payouts Under Equity Incentive Plan Awards (3) | All Other Stock Awards: Number of Shares of Stock or Units (4) | Total ($) (5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Action Date (1) | Threshold
| Target
| Maximum
| Threshold
| Target
| Maximum
| Total ($) (5) | Grant Date | Action Date (1) | Threshold
| Target ($)
| Maximum
| Threshold
| Target (#)
| Maximum
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David Dunbar | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | 401,588 | 803,175 | 1,606,350 | 434,317 | 868,634 | 1,737,267 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - PSU | 9/6/17 | 5,253 | 10,505 | 21,010 | 963,834 | 9/6/18 | 4,672 | 9,344 | 18,688 | 1,017,562 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - RSA | 9/6/17 | 7,003 | 642,525 | 9/6/18 | 6,229 | 678,338 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Thomas D. DeByle | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | 133,746 | 267,492 | 534,984 | 148,355 | 296,710 | 593,421 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - PSU | 9/6/17 | 1,682 | 3,364 | 6,728 | 308,647 | 9/6/18 | 1,654 | 3,308 | 6,616 | 360,241 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - RSA | 9/6/17 | 3,364 | 308,647 | 9/6/18 | 3,308 | 360,241 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Alan J. Glass | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | 84,943 | 169,886 | 339,771 | 96,250 | 192,500 | 385,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - PSU | 9/6/17 | 926 | 1,852 | 3,704 | 169,921 | 9/6/18 | 804 | 1,607 | 3,214 | 175,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - RSA | 9/6/17 | 1,852 | 169,921 | 9/6/18 | 1,607 | 175,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Paul C. Burns | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | 87,524 | 175,049 | 350,097 | 96,250 | 192,500 | 385,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - PSU | 9/6/17 | 651 | 1,301 | 2,602 | 119,367 | 9/6/18 | 804 | 1,607 | 3,214 | 175,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - RSA | 9/6/17 | 1,301 | 119,367 | 9/6/18 | 1,607 | 175,002 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Grant | 9/6/17 | 2,180 | 200,015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discretionary | 9/6/18 | 1,837 | 200,049 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annemarie Bell | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | 26,804 | 53,609 | 107,217 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - RSA | 9/6/18 | 261 | 28,423 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Ross McGovern | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | 65,340 | 130,680 | 261,360 | 67,300 | 134,600 | 269,201 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - PSU | 9/6/17 | 554 | 1,108 | 2,216 | 101,659 | 9/6/18 | 481 | 961 | 1,922 | 104,653 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LTIP - RSA | 9/6/17 | 1,108 | 101,659 | 9/6/18 | 961 | 104,653 |
(1) | The date on which the Compensation Committee took action for the grant of all of the plan-based awards was 8/ |
(2) | The amounts in these columns indicate the threshold, target and maximum amounts payable under the annual incentive opportunity prior to deducting any amounts the named executive officers elected to defer under the MSPP. |
(3) | The amounts in these columns indicate the threshold, target and maximum amounts payable under the LTIP for PSUs. The LTIP PSU amounts are based on the achievement of specific financial performance metrics over a three-year performance period. Payouts range from 50% of target for the attainment of threshold levels, to 200% of target for the attainment of superior performance levels. If threshold levels are not met, no PSUs are awarded. |
(4) | The amounts shown in this column reflect the number of RSAs granted to each Named Executive Officer pursuant to the LTIP. |
(5) | These amounts represent the grant date fair value, as determined under FASB ASC Topic 718. For the PSU awards under the LTIP, the fair value assumes performance and payout at the target level. |
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Outstanding Equity Awards at FiscalYear-End
The following table sets forth information with respect to equity awards that were outstanding as of June 30, 2018.2019. The Company has not awarded stock options since 2003 and there are no outstanding option awards.
Name | Stock Awards | Stock Awards | ||||||||||||||||||||||||||||||
Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) | |||||||||||||||||||||||||
David Dunbar | 33,182 | 2,908,026 | 32,160 | 3,286,752 | 27,275 | 1,293,157 | 21,655 | 1,583,847 | ||||||||||||||||||||||||
Thomas D. DeByle | 13,442 | 1,181,930 | 10,333 | 1,056,033 | 12,015 | 626,575 | 6,969 | 509,713 | ||||||||||||||||||||||||
Alan J. Glass | 4,935 | 484,093 | 5,669 | 579,372 | 5,934 | 324,623 | 3,817 | 279,175 | ||||||||||||||||||||||||
Paul C. Burns | 6,168 | 594,985 | 3,799 | 388,258 | 4,516 | 257,026 | 2,498 | 182,704 | ||||||||||||||||||||||||
Ross McGovern | 4,366 | 418,319 | 2,216 | 226,475 | ||||||||||||||||||||||||||||
Annemarie Bell | 476 | 34,815 | - | - | ||||||||||||||||||||||||||||
Ross McGovern (5) | - | - | - | - |
(1) | The outstanding stock awards presented in this column include: RSAs awarded under the LTIP, which remain subject to service-based vesting conditions; PSUs awarded in |
Vest Date | David Dunbar | Thomas D. DeByle | Alan J. Glass | Paul C. Burns | Ross McGovern | |||||||||||||||
7/27/2018 | - | - | - | 1,338 | - | |||||||||||||||
8/25/2018 | 4,414 | 1,253 | - | 430 | 198 | |||||||||||||||
8/30/2018 | 2,478 | 1,190 | 655 | 399 | 315 | |||||||||||||||
9/1/2018 | 6,522 | 2,507 | - | 862 | 1,806 | |||||||||||||||
9/9/2018 | 3,391 | 1,357 | - | - | - | |||||||||||||||
4/4/2019 | - | - | 962 | - | - | |||||||||||||||
7/27/2019 | - | - | - | 669 | - | |||||||||||||||
8/30/2019 | 2,478 | 1,190 | 655 | 399 | 315 | |||||||||||||||
9/6/2019 | 4,604 | 1,818 | 327 | 571 | 450 | |||||||||||||||
9/6/2020 | 9,295 | 4,127 | 2,336 | 1,500 | 1,282 | |||||||||||||||
Total | 33,182 | 13,442 | 4,935 | 6,168 | 4,366 |
Vest Date | David Dunbar | Thomas D. DeByle | Alan J. Glass | Paul C. Burns | Annemarie Bell | Ross McGovern | ||||||||||||||||
8/30/2019 | 2,478 | 1,190 | 655 | 399 | - | - | ||||||||||||||||
9/6/2019 | 4,604 | 1,818 | 327 | 571 | - | - | ||||||||||||||||
9/15/2019 | - | - | - | - | 110 | - | ||||||||||||||||
9/6/2020 | 9,295 | 4,127 | 2,336 | 1,500 | 105 | - | ||||||||||||||||
9/6/2021 | 10,898 | 4,880 | 2,616 | 2,046 | 261 | �� | - | |||||||||||||||
Total | 27,275 | 12,015 | 5,934 | 4,516 | 476 | - |
(2) | The market values in this column are calculated using a price of |
(3) | The shares presented in this column are performance share units granted in fiscal years |
(4) | The values shown in this column are calculated using a price of |
| (5) |
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Options Exercised and Stock Vested
The following table sets forth information about option exercises and the vesting of stock during the fiscal year. The Company has not awarded stock options since 2003, so no options are reported. The stock vested during the fiscal year represents PSUs, RSAs granted under the LTIP and RSUs granted from an MSPP deferral.
Name | Stock Awards | Stock Awards | ||||||||||||||
Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | |||||||||||||
David Dunbar | 21,866 | 1,831,395 | 15,879 | 1,531,101 | ||||||||||||
Thomas D. DeByle | 9,232 | 705,994 | 6,045 | 577,378 | ||||||||||||
Alan J. Glass | 655 | 62,061 | 2,881 | 244,414 | ||||||||||||
Paul C. Burns | 2,747 | 256,697 | 2,940 | 312,005 | ||||||||||||
Annemarie Bell | 312 | 29,768 | ||||||||||||||
Ross McGovern | 512 | 47,948 | 2,319 | 231,418 |
(1) | The value realized on vesting for the three stock categories was calculated as follows. For PSUs |
2019 Proxy Statement | 51 |
The Company’s two pensions plans, the Standex Retirement Plan and the Standex Supplemental Retirement Plan, were frozen as to future benefit accruals and new participants on December 31, 2007. All of our Named Executive Officers became employed with the Company after this date and are not accruing benefits under either of these plans.
Nonqualified Deferred Compensation
The following table contains compensation information relating to the Company’s nonqualified deferred compensation plan. For a description of the Standex Deferred Compensation Plan, including material factors, see “Standex Deferred Compensation Plan” on page 46.43.
Name | Executive Contributions in Last FY ($) (1) | Registrant Contributions in Last FY ($) (2) | Aggregate Earnings in Last FY ($) (3) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE ($) (4) | Executive Contributions in Last FY ($) (1) | Registrant Contributions in Last FY ($) (2) | Aggregate Earnings in Last FY ($) (3) | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last FYE ($) (4) | ||||||||||||||||||||||||||||||
David Dunbar | 41,712 | 41,712 | 59,115 | - | 520,528 | 62,858 | 98,653 | (2,274 | ) | - | 643,969 | |||||||||||||||||||||||||||||
Thomas D. DeByle | 11,821 | 11,821 | 47,584 | - | 379,190 | 19,036 | 31,091 | 26,238 | - | 443,500 | ||||||||||||||||||||||||||||||
Alan J. Glass | 6,416 | 6,416 | 494 | - | 13,541 | - | 2,222 | 781 | - | 16,543 | ||||||||||||||||||||||||||||||
Paul C. Burns | - | 1,093 | 319 | - | 3,857 | 10,974 | 10,974 | 1,432 | - | 27,237 | ||||||||||||||||||||||||||||||
Annemarie Bell | - | - | - | - | - | |||||||||||||||||||||||||||||||||||
Ross McGovern | 2,406 | 2,406 | 6,118 | - | 484 | 3,783 | 3,783 | (1,033 | ) | 12,652 | - |
(1) | All amounts in this column are included in the salary andnon-equity incentive plan compensation columns of the Summary Compensation Table above. |
(2) | All amounts in this column are included in the other compensation column and detailed in footnote (4) of the Summary Compensation Table above. |
(3) | The amount of aggregate earnings is reported in the change in pension value and nonqualified deferred compensation plans column of the Summary Compensation Table to the extent the aggregate earnings exceeded 120% of the applicable federal |
Above-Market Earnings Reported in Summary Compensation Table ($) | ||||
David Dunbar | (2,274 | ) | ||
Thomas D. DeByle | 11,514 | |||
Alan J. Glass | 231 | |||
Paul C. Burns | 527 | |||
Annemarie Bell | - | |||
Ross McGovern | (1,033 | ) |
Additionally, for Mr. Dunbar and Mr. DeByle, the reported amounts do not include the benefit both would have earned on their contributions made in September 2018 that was, due to an administrative error, not properly placed into their respective accounts. The accounts are scheduled to be credited with their contributions during September 2019, at which time the earnings or losses will be determined, and their accounts further credited as if the accounts were correctly credited in September 2018. These amounts will be fully reflected in Standex’s 2020 Proxy Statement.
(4) | The aggregate balance includes amounts that were reported in previous Summary Compensation Tables as follows: |
Amounts Previously Reported ($) | ||||
David Dunbar | 462,840 | |||
Thomas D. DeByle | 354,767 | |||
Alan J. Glass | 13,047 | |||
Paul C. Burns | 3,716 | |||
Annemarie Bell | - | |||
Ross McGovern | 10,913 |
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Potential Payments upon Termination or Change in Control
Employment Agreements
The following table lists the compensation and benefits that an executive would generally be provided in various scenarios involving a termination of employment. The amounts denoted in the table are for the CEO, Mr. Dunbar. Where the amounts or time periods differ between Mr. Dunbar and the other executives, the differences are explained in a footnote.
Compensation Elements | Termination Scenarios | |||||||||||
Death | Disability (1) | Retirement (2) | Termination with Cause (3) | Termination without Cause (4) | Termination due to Change in Control (5) | |||||||
Base Salary |
Ceases immediately |
Continuation for 2 years (6) |
Ceases immediately |
Ceases immediately |
Continuation for 2 years (7) |
Ceases immediately | ||||||
Severance Pay | None | None | None | None | None | Lump sum equal to 3 times base salary (8) | ||||||
Annual Incentive | Prorated for the year | Prorated for the year | Prorated for the year | None | None | Lump sum equal to 3 times the higher of (i) the most recent annual incentive award or (ii) the current FY’s target incentive award (9) | ||||||
Restricted Stock (10) | Awards vest immediately | Awards vest immediately | Awards vest immediately | Forfeited | Forfeited | Awards vest immediately | ||||||
PSUs (11) | Awards are prorated and vest in normal course | Awards are prorated and vest in normal course | Awards are prorated and vest in normal course | Forfeited | Forfeited | Awards vest immediately | ||||||
Deferred Compensation (12) | Payable immediately | Distributions commence after 6 months per participants election | Distributions commence after 6 months per participants election | Distributions commence after 6 months per participants election | Distributions commence after 6 months per participants election | Payable immediately | ||||||
Health, Welfare and Other Benefits | None
| Medical and dental coverage for 1 year (13)
| None
| None
| Medical and dental coverage for 1 year (14)
| Life insurance and medical benefits coverage for 3 years (15)
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(1) | Disability is defined as a condition where the executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. |
(2) | Retirement is defined as a voluntary termination of employment when either (i) the executive has reached age 55 and has at least 10 years of service with Standex, or (ii) the executive has reached age 65. |
(3) | Termination with cause, under the terms of the executives’ employment agreements, is defined as a termination by Standex for the executive’s material breach of the employment agreement. A material breach is (i) an act of dishonesty which is intended to enrich the executive at the Company’s expense, or (ii) the willful, deliberate and continuous failure to perform the executive’s duties after being properly demanded to do so. |
(4) | Termination without cause is a termination by Standex where the executive has not committed a material breach of the employment agreement. |
(5) | A change in control is defined as an event where (i) any person or group (as used in sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rules13d-3 and13d-5 of the Exchange Act), directly or indirectly, of at least a majority of the equity securities of Standex entitled to vote for members of the Board of Directors; (ii) Standex is a |
2019 Proxy Statement | 53 |
party to a merger or consolidation, which results in Standex voting securities representing less than a majority of the resulting voting securities; (iii) the sale or disposition of all or substantially all of Standex’s assets; or (iv) a greater than 75% change in the composition of the Board of Directors during a consecutive12-month period.
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An executive would be entitled to the payments described in this column after such a change in control only if, within 2 years of the change in control, either (i) the executive is terminated without cause, (a) or (ii) the executive voluntarily terminates their employment for “good cause.” (b)
(a) | Termination without cause is any termination by Standex other than a termination where there is conclusive evidence of substantial and indisputable intentional personal malfeasance in office, such as a conviction for embezzlement of Standex funds. |
(b) | Good cause for Mr. Dunbar is defined as any of the following: (i) the assignment to any position other than President & CEO; (ii) any change in the reporting relationship such that he is no longer reporting solely to the Board of Directors; (iii) any reduction in the budget which results in him no longer having 100% control over the budget; (iv) any material diminution of base salary or incentive compensation; (v) any change in the location of employment to a location greater than 10 miles from the present location; and (vi) any other action or inaction of Standex that constitutes a material breach of the employment agreement. |
Good cause for Mr. DeByle is defined as any of the following, if it goes unremedied for more than 30 days after Mr. DeByle has provided notice of the event: (i) a significant decrease in his substantive or managerial responsibilities; (ii) a change in the reporting relationship such that he is no longer reporting to the CEO (or someone with such high level of responsibility); (iii) a change in the location of employment to a location greater than 50 miles from the present location; and (iv) a reduction in base salary or incentive compensation.
Good cause for the other executives is defined as any of the following: (i) a change in their general area of responsibility; (ii) a change in their title; (iii) a change in the place of employment; and (iv) a decrease in base salary or diminished benefits.
(6) | Mr. Dunbar’s employment agreement provides for a continuation of base salary for a period of 2 years up to the IRS compensation limit specified in IRC Section 401(a)(17), with the excess payable immediately upon termination. The other executives’ employment agreements provide for a continuation of base salary for a period of 1 year. |
(7) | Mr. Dunbar’s employment agreement provides for a continuation of base salary for a period of 2 years up to the IRS compensation limit specified in IRC Section 401(a)(17), with the excess payable immediately upon termination. The other executives’ employment agreements provide for a continuation of base salary for a period of 1 year. |
(8) | Both Mr. Dunbar’s and Mr. DeByle’s employment agreements provide for a lump sum severance payment in the amount of 3 times their then-current base salary. The remaining executives’ employment agreements provide for a lump sum severance payment in the amount of 1 times their then-current base salary. |
(9) | Both Mr. Dunbar’s and Mr. DeByle’s employment agreements provide for an annual incentive payment equal to 3 times the higher of (i) the most recent annual incentive award or (ii) the current FY’s target incentive award. The remaining executives’ employment agreements provide for an annual incentive payment equal to 1 times the higher of (i) the most recent annual incentive award or (ii) the current FY’s target incentive award. |
(10) | Included in the RSU category are both RSAs that an executive received pursuant to a grant under the LTIP and RSUs that an executive received pursuant to a deferral under the MSPP. |
(11) | For PSUs, except in the case of a termination for cause, without cause or due to a change in control, the PSUs are converted to shares of unrestricted stock once the performance period has ended and the Compensation Committee has determined the requisite payout in accordance with the performance levels. The number of PSUs that is converted is prorated to the date of the executive’s termination. |
(12) | See the “Standex Deferred Compensation Plan” section on page |
(13) | Mr. Dunbar’s employment agreement provides for a continuation of medical and dental benefits for a period of 1 year. The other executives’ employment agreements do not provide for any health or welfare benefit continuation. |
(14) | Mr. Dunbar’s employment agreement provides for a continuation of medical and dental benefits for a period of 1 year. The other executives’ employment agreements do not provide for any health or welfare benefit continuation. |
(15) | Mr. Dunbar’s employment agreement provides for a continuation of medical and life insurance benefits for a period of 3 years. The other executives’ employment agreements provide for a continuation of medical and life insurance benefits for a period of 1 year. |
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Quantification of Potential Payments
The following table contains compensation information relating to the potential payments that an executive would receive in the various scenarios described above if the executive had a triggering event on June 29,28, 2019. All such potential payments are largely based on the executive’s employment agreement with the Company, with the remaining payments based on award agreements under the LTIP. Mr. McGovern’s employment agreement and award agreements expired upon his departure in October 2018.
Triggering Event | Payout ($) (1) | Payout ($) (1) | ||||||||||||||||||||||||||||||||||||||||||
Compensation Component | David Dunbar | Thomas D. DeByle | Alan J. Glass | Paul C. Burns | Ross McGovern | Compensation Component | David Dunbar | Thomas D. DeByle | Alan J. Glass | Paul C. Burns | Annemarie Bell | |||||||||||||||||||||||||||||||||
Death |
Acceleration of Outstanding Equity Awards
| 4,670,056 | 1,766,105 | 874,190 | 1,029,130 | 511,321 |
Acceleration of Outstanding Equity Awards
| 1,293,157 | 626,575 | 324,623 | 257,026 | 34,815 | ||||||||||||||||||||||||||||||||
Pro-rata Performance Share Vesting
| 680,584 | 208,181 | 66,941 | 70,075 | 13,490 |
Pro-rata Performance Share Vesting
| 799,786 | 257,794 | 140,965 | 90,084 | - | |||||||||||||||||||||||||||||||||
Total
| 5,350,640 | 1,974,287 | 941,131 | 1,099,205 | 524,811 |
Total
| 2,092,942 | 884,370 | 465,589 | 347,110 | 34,815 | |||||||||||||||||||||||||||||||||
Disability |
Termination Payment - Salary
| 1,606,350 | 411,526 | 339,771 | 318,270 | 290,400 |
Termination Payment - Salary
| 1,654,540 | 423,872 | 350,000 | 350,000 | 214,434 | ||||||||||||||||||||||||||||||||
Acceleration of Outstanding Equity Awards
| 4,670,056 | 1,766,105 | 874,190 | 1,029,130 | 511,321 |
Acceleration of Outstanding Equity Awards
| 1,293,157 | 626,575 | 324,623 | 257,026 | 34,815 | |||||||||||||||||||||||||||||||||
Pro-rata Performance Share Vesting
| 680,584 | 208,181 | 66,941 | 70,075 | 13,490 |
Pro-rata Performance Share Vesting
| 799,786 | 257,794 | 140,965 | 90,084 | - | |||||||||||||||||||||||||||||||||
Health & Welfare Benefits
| 18,495 | - | - | - | - |
Health & Welfare Benefits
| 17,004 | - | - | - | - | |||||||||||||||||||||||||||||||||
Total
| 6,975,485 | 2,385,813 | 1,280,902 | 1,417,475 | 815,211 |
Total
| 3,764,487 | 1,308,242 | 815,589 | 697,110 | 249,249 | |||||||||||||||||||||||||||||||||
Retirement |
Acceleration of Outstanding Equity Awards
| 4,670,056 | 1,766,105 | 874,190 | 1,029,130 | 511,321 |
Acceleration of Outstanding Equity Awards
| 1,293,157 | 626,575 | 324,623 | 257,026 | 34,815 | ||||||||||||||||||||||||||||||||
Pro-rata Performance Share Vesting
| 680,584 | 208,181 | 66,941 | 70,075 | 13,490 |
Pro-rata Performance Share Vesting
| 799,786 | 257,794 | 140,965 | 90,084 | - | |||||||||||||||||||||||||||||||||
Total
| 5,350,640 | 1,974,287 | 941,131 | 1,099,205 | 524,811 |
Total
| 2,092,942 | 884,370 | 465,589 | 347,110 | 34,815 | |||||||||||||||||||||||||||||||||
Termination Without Cause by the Company |
Termination Payment - Salary
| 1,606,350 | 411,526 | 339,771 | 318,270 | 290,400 |
Termination Payment - Salary
| 1,654,540 | 423,872 | 350,000 | 350,000 | 214,434 | ||||||||||||||||||||||||||||||||
Health & Welfare Benefits
| 18,495 | - | - | - | - |
Health & Welfare Benefits
| 17,004 | - | - | - | - | |||||||||||||||||||||||||||||||||
Total
| 1,624,845 | 411,526 | 339,771 | 318,270 | 290,400 |
Total
| 1,671,544 | 423,872 | 350,000 | 350,000 | 214,434 | |||||||||||||||||||||||||||||||||
Termination Payment - Salary
| 2,409,525 | 1,234,578 | 339,771 | 318,270 | 290,400 |
Termination Payment - Salary
| 2,481,810 | 1,271,616 | 350,000 | 350,000 | 214,434 | |||||||||||||||||||||||||||||||||
Termination Payment - Annual Incentive
| 2,409,525 | 802,476 | 169,886 | 175,049 | 130,680 |
Termination Payment - Annual Incentive
| 2,605,901 | 890,131 | 192,500 | 192,500 | 53,609 | |||||||||||||||||||||||||||||||||
Change in Control (2) |
Acceleration of Outstanding Equity Awards
| 7,956,808 | 2,822,138 | 1,453,562 | 1,417,388 | 737,796 |
Acceleration of Outstanding Equity Awards
| 2,877,003 | 1,136,288 | 603,799 | 439,730 | 34,815 | ||||||||||||||||||||||||||||||||
Health & Welfare Benefits
| 67,053 | 28,658 | 25,563 | 27,957 | 25,481 |
Health & Welfare Benefits
| 62,580 | 27,370 | 25,592 | 26,481 | 18,021 | |||||||||||||||||||||||||||||||||
Total
| 12,842,911 | 4,887,850 | 1,988,782 | 1,938,663 | 1,184,356 |
Total
| 8,027,294 | 3,325,405 | 1,171,891 | 1,008,711 | 320,879 |
(1) | The payout values are based on the closing price of the Company’s stock on June |
(2) | Upon a change in control, if the termination payments are triggered and exceed the amounts prescribed under IRC Section 280G such that the Company will be required to pay a tax under IRC Section 4999, the payment will be reduced to an amount such that the payment does not exceed IRC Section 280G. |
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How can I vote & how many votes do I have?
Shareholders at the close of business on August 31, 201830, 2019 are entitled to vote. As of the record date, there were 12,830,20912,439,834 shares outstanding. You may vote the shares you own directly in your name as a shareholder of record, shares you hold through Standex benefit plans and shares held for you as a beneficial owner through a broker, bank or other nominee (shares held in “street name”). Each share is entitled to one vote.
How can I change my vote?
You may change your vote by revoking your proxy at any time before it has been exercised by:
● | Delivering a written notification to our Corporate Secretary that you are revoking your proxy; |
● | Delivering a revised proxy dated later than the proxy you are revoking; |
● | Voting again by Internet or telephone until |
● | Attending the Annual Meeting and voting in person. |
What is a Quorum?
A quorum is necessary to conduct business at the Annual Meeting. A majority of the outstanding shares of common stock entitled to vote at the Annual Meeting and represented either in person or by proxy constitutes a quorum. Your shares are counted as present if you have voted. If you abstain from voting, your shares are counted as present in determining a quorum. Brokernon-votes are counted as present in determining a quorum.
What are BrokerNon-votes?
A brokernon-vote occurs when a bank, broker or other nominee of share held in street name is represented at the Annual Meeting either in person or by proxy, but has not received instructions from the beneficial owner on how to vote the shares and cannot or chooses not to vote the shares. We strongly encourage shareholders who own shares in street name to instruct their bank, broker or other nominee on how to vote.
How are the votes counted?
The Company has engaged Morrow Sodali LLCEQ Proxy Services to assist in soliciting proxies to establish the necessary quorum. Tabulation for the quorum shall be handled by Morrow Sodali LLC. Morrow Sodali LLCEQ Proxy Services, which receives $6,250$5,000 as payment for their services, in addition to additional disbursements.
Official tabulation of voted proxies will be handled by Computershare, the Company’s transfer agent.
How to Vote
Beneficial Owners: If your shares are held in street name, you will receive instructions from your bank, broker or other nominee on how to vote your shares. You must follow their instructions for your vote to be counted. If you wish to attend the Annual Meeting and vote your shares at that time, you must obtain a proxy from the broker, bank or other nominee and bring it to the Annual Meeting.
Shareholders of Record: If you are a shareholder of record, you may vote either in person at the Annual Meeting or by proxy. There are four ways to vote by proxy:
● Vote by Internet. You may vote your shares via the Internet by visitingwww.envisionreports.com/sxiand following theon-screen instructions. Please have your proxy card available when you access the website. ● Vote by Telephone. You may vote your shares by telephone by calling toll-free to1-800-652-8683 from the United States and Canada and following the series of voice instructions. Please have your proxy card available when you call. ● Vote by Mail. You may vote your shares by requesting a paper copy of the Proxy Statement (see page ● Voting in Person. You may attend the Annual Meeting in person and deliver a completed proxy card or vote by ballot.
Internet and telephone voting will be available 24 hours a day, 7 days a week, until
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Householding: Shareholders Sharing an Address
To reduce the expenses of delivering duplicate proxy materials, we deliver one Notice and, if applicable, Annual Report on Form10-K and Proxy Statement, to multiple shareholders sharing the same mailing address unless otherwise requested. We will promptly send a separate Annual Report on Form10-K and Proxy Statement to a shareholder at a shared address upon request at no cost. Shareholders with a shared address may also request that we send a single copy in the future if we are currently sending multiple copies to the same address. Requests related to the delivery of proxy materials may be made by calling Investor Relations at603-893-9701 or writing to:
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Shareholder Proposals and Nominations
In accordance with Rule14a-8 of the Exchange Act, certain shareholder proposals may be eligible for inclusion in our 2019 Proxy Statement. All shareholder proposals must comply with the requirements of Rule14a-8 and must be received by our Corporate Secretary, in writing, no later than May 14, 2019. We strongly encourage any interested shareholder to contact our Corporate Secretary prior to the deadline to discuss the proposal. Submission of a proposal does not guarantee that it will be included in our Proxy Statement.
Shareholders may also nominate a director nominee for election at our 2019 annual meeting by following the provisions of the Company’sBy-Laws. All nomination and supporting materials must comply with the requirements set forth in ourBy-Laws. Notice of such a nomination must be received by our Corporate Secretary, in writing, between May 14, 2019 and June 13, 2019. However, if the 2019 annual meeting is held more than 30 days before or more than 90 days after the anniversary of the 2018 Annual Meeting, the shareholder must submit the notice either (i) by 120 calendar days prior to the 2019 annual meeting or (ii) within 10 calendar days following the date on which the public announcement of the date of the 2019 annual meeting is made.
Shareholders do not have to include their proposals in our Proxy Statement for them to be heard. Proposals may be introduced at our 2019 annual meeting from the floor. Notice of these proposals must be provided to our Corporate Secretary between May 14, 2019 and June 13, 2019 and must comply with the requirements set forth in ourBy-Laws.
The Company’sBy-Laws are posted on our website atwww.standex.com under the “Governance” caption. To make a submission or to request a copy of the Company’sBy-Laws, shareholders should contact our Corporate Secretary at the following address:
Standex International Corporation
11 Keewaydin Drive, Suite 300
Salem, New Hampshire 03079
Attention: Investor Relations
Shareholders who hold shares in “street name” (as described above) may contact their brokerage firm, bank or other nominee to request information about this householding procedure.
Shareholder Communicationswith
the Board
The Board welcomes input and suggestions from shareholders and interested parties. Shareholders may communicate with the Board or any member of the Board by writing to the following address and addressing the correspondence accordingly:
Standex International Corporation
11 Keewaydin Drive, Suite 300
Salem, New Hampshire 03079
Attention: Corporate Secretary
We strongly encourage shareholders to seek advice from knowledgeable legal counsel and contact the Corporate Secretary before submitting a proposal or nomination.
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Both this Proxy Statement and the Annual Report on Form10-KAlternatively, shareholders may be viewed online at:send an email towww.envisionreports.com/SXIboardofdirectors@standex.com and on Standex’s website atir.standex.com/annual-materials.specify the individual director, committee or group to be contacted in the message line.
Shareholders may obtain print or emailed copies, free of charge, of this Proxy Statement, Annual Report on Form10-K,
Communications with the Codes of Conduct, Committee Charters orBoard are distributed by the Corporate Governance Guidelines by writing to:
Standex International Corporation
11 Keewaydin Drive, Suite 300
Salem, NH 03079.
Attention: Investor Relations Department
Shareholders may also call Standex’s Investor Relations at(603) 893-9701Officer. The Corporate Governance Officer uses his or her discretion in determining whether to request copies. Alternatively, print copies can also be requested bye-mailingforward communications to the requestBoard. Communications that are not related toinvestorrelations@standex.com. the duties and the responsibilities of the Board are not forwarded. All requests will be fulfilled within 3 business dayscommunications, regardless of receipttheir nature, are catalogued and copies will be sent via first class mail.archived.
Shareholder Proposals and Nominations
In accordance with Rule14a-8 of the Exchange Act, certain shareholder proposals may be eligible for inclusion in our 2020 Proxy Statement. All shareholder proposals must comply with the requirements of Rule14a-8 and must be received by our Corporate Secretary, in writing, no later than May 14, 2020. We strongly encourage any interested shareholder to contact our Corporate Secretary prior to the deadline to discuss the proposal. Submission of a proposal does not guarantee that it will be included in our Proxy Statement.
Shareholders may also nominate a director nominee for election at our 2020 annual meeting by following the provisions of the Company’sBy-Laws. All nomination and supporting materials must comply with the requirements set forth in ourBy-Laws. Notice of such a nomination must be received by our Corporate Secretary, in writing, between May 14, 2020 and June 12, 2020. However, if the 2020 annual meeting is held more than 30 days before or more than 90 days after the anniversary of the 2019 Annual Meeting, the shareholder must submit the notice either (i) by 120 calendar days prior to the 2020 annual meeting or (ii) within 10 calendar days following the date on which the public announcement of the date of the 2020 annual meeting is made.
Shareholders do not have to include their proposals in our Proxy Statement for them to be heard. Proposals may be introduced at our 2020 annual meeting from the floor. Notice of these proposals must be provided to our Corporate Secretary between May 14, 2020 and June 12, 2020 and must comply with the requirements set forth in ourBy-Laws.
The Company’sBy-Laws are posted on our website atir.standex.com under the “Governance” section in the “Organizational Documents” subsection. To make a submission or to request a copy of the Company’sBy-Laws, shareholders should contact our Corporate Secretary at the following address:
Standex International Corporation
11 Keewaydin Drive, Suite 300
Salem, New Hampshire 03079
Attention: Corporate Secretary
We strongly encourage shareholders to seek advice from knowledgeable legal counsel and contact the Corporate Secretary before submitting a proposal or nomination.
2019 Proxy Statement | 57 |
Both this Proxy Statement and the Annual Report on Form10-K may be viewed online at:www.envisionreports.com/SXI and on Standex’s website atir.standex.com/annual-reports.
Shareholders may obtain print or emailed copies, free of charge, of this Proxy Statement, Annual Report on Form10-K, the Codes of Conduct, Committee Charters or the Corporate Governance Guidelines by writing to:
Standex International Corporation
11 Keewaydin Drive, Suite 300
Salem, NH 03079.
Attention: Investor Relations Department
Shareholders may also call Standex’s Investor Relations at(603) 893-9701 to request copies. Alternatively, print copies can also be requested bye-mailing the request toinvestorrelations@standex.com. All requests will be fulfilled within 3 business days of receipt and copies will be sent via first class mail.
ANNUAL MEETING | ||
Proxy & Supplemental Materials | ir.standex.com/annual- reports | |
Online voting for registered shareholders | www.envisionreports.com/sxi | |
BOARD OF DIRECTORS | ||
Standex Board | ir.standex.com/ board-of-directors | |
Board Committees | ir.standex.com/board- committees | |
Audit Committee Charter | ir.standex.com/ committee-charters | |
Compensation Committee Charter | ir.standex.com/ committee-charters | |
Nominating and Corporate Governance Committee Charter | ir.standex.com/ committee-charters | |
FINANCIAL REPORTING | ||
Earnings & Financial Reports | ir.standex.com/quarterly- results | |
STANDEX | ||
Corporate Website | www.standex.com | |
Leaders | www.standex.com/about/ management | |
Investor Relations | ir.standex.com | |
GOVERNANCE DOCUMENTS | ||
By-Laws | ir.standex.com/ organizational- documents | |
Certificate of Incorporation | ir.standex.com/ organizational- documents | |
Code of Business Conduct | ir.standex.com/policies | |
Code of Ethics for Senior Financial Management | ir.standex.com/policies | |
Corporate Governance Guidelines | ir.standex.com/ | |
organizational- documents |
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ACRONYMS | ||
BPP | Balanced Performance Plan | |
CHRO | Chief Human Resources Officer | |
CIC | Change in Control | |
CLO | Chief Legal Officer | |
EBIT | Earnings Before Income Tax | |
EBITDA | Earnings Before Income Tax, Depreciation & Amortization | |
EPS | Earnings Per Share | |
GAAP | Generally Accepted Accounting Principles | |
IRC | Internal Revenue Code | |
IRR | Internal Rate of Return | |
IRS | Internal Revenue Service | |
LTIP | Long-Term Incentive Plan | |
MSPP | Management Stock Purchase Plan | |
N&CG | Nominating & Corporate Governance | |
NEO | Named Executive Officer | |
NYSE | New York Stock Exchange | |
OIP | 2018 Omnibus Incentive Plan | |
PCAOB | Public Company Accounting Oversight Board | |
PSUs | Performance Share Units | |
ROIC | Return on Invested Capital | |
RSAs | Awards of Restricted Stock | |
RSUs | Restricted Stock Units | |
SEC | Securities and Exchange Commission | |
TSR | Total Shareholder Return | |
TRIR | Total Recordable Incident Rate |
Standex IMPORTANT ANNUAL MEETING INFORMATION Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the internet or telephone must be received by 12:00 a.m., Central Time, on October 23, 2018. Vote by Internet Go to www.envisionreports.com/SX Or scan the QR code with your smartphone Follow the step outlined on the secure website Vote by telephone Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone Follow the instructions provided by the recorded message Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual Meeting Proxy Card IF YOU HAVE VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE A Proposals - The Board of Directors recommends a vote FOR all nominees listed in Proposal 1, FOR Proposal 2, FOR Proposal 3, and FOR Proposal 4. 1. Election of Directors For three year terms expiring in 2021: 01 -Charles H. Cannon For Against Abstain 02 – Jeffrey S. Edwards For Against Abstain 03 – B. Joanne Edwards For Against Abstain 2. To approve the adoption of the 2018 Omnbus Incentive Plan. For Against Abstain 3. To conduct an advisory vote on the total compensation paid to the named executive officers of the Company. For Against Abstain 4. To ratify the appointment by the Audit Committee of Grant Thornton LLP as independent auditors. For Against Abstain To transact such other business as may come before the meeting. B Non-Voting Items Change of Address - Please print your new address below. Comments - Please print your comments below. Meeting Attendance Mark the box to the right if you plan to attend the Annual Meeting . C Authorized Signatures - This section must be completed for your vote to be counted. Date and Sign Below Note: Please sign exactly as your name appears on this proxy. If signing for estates, trusts, corporations or partnerships, title or capacity should be stated. If shares are held jointly, each holder should sign. Date (mm/dd/yyyy) - Please print date below. Signature 1 - Please keep signature within the box. Signature 2- Please keep signature within the box. 1 P C F 02WFKC
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Annual Meeting Materials are available at: http://www.envisionreports.com/SXI IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE Standex REVOCABLE PROXY — Standex International Corporation ANNUAL MEETING OF STOCKHOLDERS OCTOBER 23, 2018 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The stockholder of record hereby appoints David A. Dunbar and Alan J. Glass, and either of them, with full power of substitution, as Proxies for the stockholder, to attend the Annual Meeting of the Stockholders of Standex International Corporation (the “Company”), to be held at the Standex International Corporation Headquarters, 11 Keewaydin Drive, Suite 300, Salem, NH, 03079, on Tuesday, October 23, 2018 at 9:00 a.m., local time, and any adjournments thereof, and to vote all shares of the common stock of the Company that the stockholder is entitled to vote upon each of the matters referred to in this Proxy and, at their discretion, upon such other matters as may properly come before this meeting. In connection with those shares (if any) held by me as a participant in the Standex Retirement Savings Plan (the “Plan”), I hereby direct the trustee of the Plan in which I participate to vote all vested shares allocated to my account under such Plan on August 31, 2018 in accordance with the instructions on the reverse side of this proxy card or, if no instructions are given, in accordance with the Board of Directors’ recommendations, on all items of business to come before the Annual Meeting of Stockholders to be held on October 23, 2018 or any adjournment thereof. Your voting instructions will be kept confidential from the officers, directors and employees of the Company. Under the Plan, the shares for which no signed proxy card is returned or for which any instructions are not timely received or are improperly executed shall be voted by the trustee in the same proportions on each Proposal for which properly executed instructions were timely received. This Proxy, when properly executed, will be voted in the manner directed herein by the stockholder of record. If no direction is made, this Proxy will be voted FOR all nominees listed in Proposal 1, FOR Proposal 2, FOR Proposal 3 and FOR Proposal 4. PLEASE PROVIDE YOUR INSTRUCTIONS TO VOTE BY TELEPHONE OR THE INTERNET OR COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. (Continued, and to be marked, dated and signed, on the other side)
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Proxy Card Reproduction Standex Your vote matters – here’s how to vote! You may vote online by phone of mailing this card. Votes submitted electronically must be received by 12:00 a.m., Central Time, on October 22, 2019. Online Go to www.envisionreports.com/SXI or scan the QR code – login details are located in the shaded bar below. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and Money! Sign up for electronic delivery at www.envisionreports.com/SXI Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Annual meeting Proxy Card IFVOTING BY MAIL, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE A Proposals – The Board of Directors recommends a vote FOR all nominees listed proposal 1, FOR Proposal 2, and FOR Proposal 3. Election of Directors For three year terms expiring in 2022: 01 – Thomas E. Chorman For Against Abstain 02 – Thomas J. Hansen For Against Abstain To Conduct an advisory vote on the total compensation paid to the named executive officers of the Company. For Against Abstain To ratify the appointment by the Audit committee of Grant Thornton LLP as Independent auditors. For Against Abstain To transact such other business as may come before the meeting. B Authorized Signature – This section must be completed for your vote to be counted. Date and sign Below Note: Please sign exactly as your name appears on this Proxy. If signing for estates, trusts, corporations or partnerships, title or capacity should be stated. If shares are held jointly, each holder should sign. Date (mm/dd/yyyy) – please print date below. Signature 1- Please keep signature within the box. Signature 2- Please keep signature within the box.
Annual Meeting Materials are available at: http://www.envisionreports.com/SXI Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/SXI IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE REVOCABLE PROXY - Standex International Corporation ANNUAL MEETING OF STOCKHOLDERS OCTOBER 22, 2019 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The stockholder of record hereby appoints David A, Dunbar and Alan J. Glass, and either of them, with lull power of substitution, as Proxies for the stockholder, to attend the Annual Meeting of the Stockholders of Standex International Corporation (the “Company”!, to be held at the Standex International Corporation Headquarters, Tl Keewaydin Drive, Suite 300, Salem, MH, 03079, on Tuesday, October 22, 2019 at 9:00 a.m., local time, and any adjournments thereof, and to vote all shares of the common stock of the Company that the stockholder Is entitled to vote upon each of the matters referred to in this Proxy and, at their discretion, upon such other matters as may properly come before this meeting. In connection with those shares (If any) held by me as a participant In the Standex Retirement Savings Plan (the “Plan”), I hereby direct the trustee of the Plan In which I participate to vote all vested shares allocated to my account under such Plan on August 39, 2019 in accordance with the instructions on the reverse side of this proxy card or, if no instructions are given, In accordance with the Board of Directors’ recommendations, on ail items of business to come before the Annual Meeting of Stockholders to be held on October 22, 2019 or any adjournment thereof, your voting instructions will be kept confidential from the officers, directors and employees of the Company. Under the Plan, the shares for which no signed proxy card is returned or for which any instructions are not timely received or are Improperly executed shall be voted by the trustee In the same proportions on each Proposal for each properly executed Instructions were timely received. This Proxy, when properly executed, will be voted In the manner directed herein by the stockholder of record V no direction it mode, this Proxy will be voted FOR III nominees listed in Proposal 1, FOR Proposal 2. and FOR Proposal 3. PLEASE PROVIDE YOUR INSTRUCTIONS TO VOTE IV TELEPHONE OR THE INTERNET OR COMPUTE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTACE-PAID ENVELOPE. (Continued, and to be marked. dated and signed, on the other side) Non-Voting Items Change of Address – Please print new address below. Comments – Please print your comments below. Meeting Attendance Mark box to the right if you plan to the right if you plan to attend the Annual Meeting. 2019 Proxy Statement 63
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