Audit Committee member | | (1) | In lieu of paying an annual cash retainer or fees to Mr. DeZwirek for his service as Chairman of the Board, we pay consulting fees to Icarus Investments Corp. (“Icarus”). For a description of this arrangement, see “Certain Transactions” below.5,000
| |
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These amounts reflect the following increases from amounts in effect for 2020 director service: a $5,000 increase in the annual cash retainer; a $10,000 increase in the annual equity retainer; a new Board Chairman fee for 2021; and a new Audit Committee member fee. Our Compensation Committee has determined that granting RSUsrestricted stock units (“RSUs”) in lieu of cash meeting payments simplifies the directors’ compensation while promoting the ownership of our common stock. We thereforeAccordingly, in May 2021 we granted to each then-serving non-management director RSUs covering 11,21810,625 shares of our common stock in June 2018stock. In November 2021, with his appointment to eachour Board, we granted Mr. Wallman RSUs covering 5,881 shares of thenon-management directors serving at that time.our common stock. The RSUs generally vest on theone-year anniversary of the grant.grant and are settled in shares of Company common stock. We also reimburse or pay our Board members their reasonable travel andout-of-pocket expenses to attend meetings. Beginning in 2019, ourOur non-management directors are eligible to participate in the Company’s U.S. health plan with 100% of the premium payable by the enrolled director. In addition, until September of 2018, we paid for office space at our Toronto facility, which is used by Icarus and Mr. DeZwirek. The following table reflects the 20182021 compensation paid to each of our directors who served at any time during 2018, other than Mr. Sadlowski, who is also anon-management directors. Directors that are employees of the Company employee and receives nodo not receive additional compensation for his servicesservice on the Board or as a director. The table does not include reimbursed expenses for attending meetings. The termsmembers of serviceany of two long-term directors, Mr. Rudin and Mr. Wright, expired at our 2018 Annual Meeting.its committees. | Name | | Fees Earned or Paid in Cash ($) | | Stock Awards1 ($) | | All Other
Compensation
($) | | Total ($) | | Fees Earned or
Paid in Cash
($) | | | Stock Awards1
($) | | | All Other
Compensation
($) | | | Total
($) | | Jason DeZwirek | | | | — | | | | | 70,000 | | | | | 240,000 2 | | | | | 310,000 | | | $ | 112,500 | | | | 80,006 | | | | — | | | | 192,506 | | | | | Eric M. Goldberg | | | | 45,000 | | | | | 70,000 | | | | | — | | | | | 115,000 | | | | 43,125 | | | | 80,006 | | | | — | | | | 123,131 | | | | | David B. Liner | | | | 60,000 | | | | | 70,000 | | | | | — | | | | | 130,000 | | | | 60,000 | | | | 80,006 | | | | — | | | | 140,006 | | | | | Claudio A. Mannarino | | | | 75,000 | | | | | 70,000 | | | | | — | | | | | 145,000 | | | | 69,375 | | | | 80,006 | | | | — | | | | 149,381 | | | | | Munish Nanda | | | | 13,475 | | | | | 70,000 | | | | | — | | | | | 83,475 | | | | 46,875 | | | | 80,006 | | | | — | | | | 126,881 | | | | | Jonathan Pollack | | | | 45,000 | | | | | 70,000 | | | | | 78,000 3 | | | | | 193,000 | | | | 43,125 | | | | 80,006 | | | | — | | | | 123,131 | | | | | Seth Rudin | | | | 31,525 | | | | | — | | | | | — | | | | | 31,525 | | | | | | Valerie Gentile Sachs | | | | 60,000 | | | | | 70,000 | | | | | — | | | | | 130,000 | | | | 56,250 | | | | 80,006 | | | | — | | | | 136,256 | | | | | Donald A. Wright | | | | 31,525 | | | | | — | | | | | — | | | | | 31,525 | | | | | | Richard F. Wallman | | | | — | | | | 41,990 | | | | — | | | | 41,990 | |
| (1) | RepresentsThis column reflects the grant date fair value of RSU awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), disregarding estimated forfeitures, rather than amounts realized by the named individuals. Assumptions used in calculating these amounts are included in Note 109 to the Company’s audited financial statements included in our Company’s Annual Report on Form10-K for the year ended December 31, 2018.2021. The stock awards shown in the table above represent the RSU awards granted to our directors in 2018.2021. The table below shows the aggregate number of unvested RSUs and unexercised options held by each of ournon-management directors as of December 31, 2018.2021:
|
| Name | | RSUs (#) | | | Stock Options (#) | | | RSUs (#) | | | Stock Options (#) | | Jason DeZwirek | | | 17,476 | | | | — | | | | 10,625 | | | | — | | | | | Eric M. Goldberg | | | 17,476 | | | | 15,000 | | | | 10,625 | | | | 15,000 | | | | | David B. Liner | | | 11,218 | | | | — | | | | 10,625 | | | | — | | | | | Claudio A. Mannarino | | | 17,476 | | | | — | | | | 10,625 | | | | — | | | | | Munish Nanda | | | 11,218 | | | | — | | | | 10,625 | | | | — | | | | | Jonathan Pollack | | | 17,476 | | | | 103,000 | | | | 10,625 | | | | 36,000 | | | | | Valerie Gentile Sachs | | | 15,632 | | | | — | | | | 10,625 | | | | — | | | | | Richard F. Wallman | | | | 5,881 | | | | — | |
| (2) | This amount reflects the fees we paid to Icarus, a company controlled by Mr. DeZwirek, pursuant to which Icarus provides us management consulting services. For a description of this arrangement, see “Certain Transactions” below. In addition, until September of 2018, we paid for office space at our Toronto facility, which is used by Icarus and Mr. DeZwirek, that approximated $50,000.
|
| (3) | This amount reflects the fees we paid to JMP Fam Holdings, Inc., a company controlled by Mr. Pollack, for consulting services performed by Mr. Pollack during 2018. Pursuant to an oral arrangement, JMP Fam Holdings provides us with strategic advisory services, including the evaluation of financing options, capital structure and potential acquisitions, for a monthly fee of $6,500.
|
Our Board has implemented mandatory stock ownership guidelines fornon-management directors to further align the interests ofnon-management directors and stockholders. Eachnon-management director is required to own shares of our common stock having a value equal to a specified multiple offive times thenon-management director’s regular annual cash retainer. Onretainer (which amount is $250,000). As of December 3, 2018, our Board increased31, 2021, all non-management directors met the minimum stock ownership requirement from three times the regular annual cash retainer to five times that amount.Non-management directors have five years from the later of December 3, 2018 or the date of his or her election or appointment to our Board to attain such ownership levels. Our Compensation Committee in its - 11 -
discretion may extend the period of time for attainment of such ownership levels in appropriate circumstances.requirement. For purposes of this requirement, anon-management director’s stock ownership includes all shares of our common stock owned by thenon-management director outright or held in trust for the director and the director’s immediate family, plus anon-management director’s restricted stock or equivalent units.RSUs. The value of a share is measured as the greater of the then current market price or the closing price of a share of our common stock on the acquisition or grant date.
Certain Transactions Since January 1, 2018,2021, except as described below, we have not been a party to any transaction or series of similar transactions in which the amount involved exceeded or will exceed $120,000 and in which any then director,then-director, executive officer, holder of more than five percent (5%)5% of our common stock, or any member of the immediate family of any of the foregoing, had or will have a direct or indirect material interest, other thaninterest. Our Audit Committee is responsible for reviewing and approving or ratifying any related party transactions in connectionaccordance with the Audit Committee Charter, and it has approved the transaction described below. We are a partyEffective April 5, 2021, Ramesh Nuggihalli joined us as Chief Operating Officer of the Company. From November 2020 and prior to an oral agreement with Icarus pursuant to which Icarus provides us managementjoining the Company, Mr. Nuggihalli provided consulting services regarding our corporate policies, marketing, strategicthe Company’s business strategy. Prior to joining the Company, Mr. Nuggihalli received a total of $73,125 in consulting fees during 2021. Upon appointment as Chief Operating Officer, the consulting arrangement was terminated and financial planning, including long- and short-term goals, mergers and acquisitions and other business combinations, financing, growth plans and other related matters, for $20,000 per month. Icarus is controlled by our ChairmanMr. Nuggihalli began being compensated as an employee of the Board, Jason DeZwirek. We paid fees of $240,000 to Icarus for its services during 2018. These fees are also shownCompany and in the 2018 Director Compensation Table above as “All Other Compensation” for Mr. DeZwirek. In addition, until September of 2018, we paid for office space ataccordance with our Toronto facility, which is used by Icarus and Mr. DeZwirek, that approximated $50,000.executive compensation program.
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| | | | | 2022 Proxy Statement • 13 |
At CECO Environmental and around the world, 2021 continued to be defined by our response to the COVID-19 pandemic. Over the course of the year, the Board worked closely with CECO’s senior leadership team to ensure that the Company prioritized the health and safety of our employees and customers, acting with speed and agility to serve our communities and protect our business. As the world emerges from the pandemic, CECO is planning for the next phase. We are continuing to assess COVID-19 transmission based on community data, namely case rates and hospital capability to manage risk level and safety protocols. This assessment process reflects the requirements for opening our facilities worldwide in the age of vaccines, hybrid work, and unpredictable outbreaks of COVID-19. We do not know how this pandemic will end, but we know that our CECO team will move forward with a passion for caring, community and collaboration. Together, we will continue to make every effort to meet the needs of customers and stakeholders, while working together to keep each other safe and healthy. At CECO, the health and safety of our employees continues to be one of our highest priorities. Through our environmental, health and safety program we implement policies and training programs, as well as perform self-audits to ensure our colleagues leave the workplace safely every day. To better understand employee safety at the site level, we have safety committees and safety scorecards to share best practices among sites. We currently share scorecard information monthly to foster visibility, accountability and commitment across our workplace, communicating and celebrating successful results across the enterprise. In addition to lagging indicators, such as injury performance, the scorecards highlight leading indicators such as safety observations and near-misses, as well as other proactive actions taken at each site to ensure worker safety. For the year ended December 31, 2021, CECO’s domestic Total Recordable Incident Rate (“TRIR”) was 1.9% as compared to our benchmark industry average TRIR of 4.1%. Our safety focus is also evident in our response to the COVID-19 pandemic around the globe. We implemented all government, federal and state policies, in addition to our enhanced policies, procedures and protocols: | | | • implemented hybrid, remote work, and work from home flexibility for office job roles; • continued utilization of Microsoft Teams world-wide to enable collaboration while ensuring team safety; • continued to leverage Emergency Paid Pandemic Leave policy to encourage those who are sick to stay home; • continued deep-cleaning protocols across all locations; • continued regular communication, public service announcements and mini-video sessions educating, promoting and encouraging the vaccine and highlighting our health and safety protocols and procedures; • continued to implement the self-certification health assessment internationally as offices opened up in addition to continuing requirement for employees, partners and vendors at our manufacturing facilities (where allowed by local law); • continued safety protocols to address actual and suspected COVID-19 cases and potential exposure; • prohibited all non-essential domestic and international business travel for all employees; • required masks to be worn in all locations where allowed by local law; • required on-site visitors to complete a health and travel declaration; and • for on-site visitors traveling by plane, required a negative Polymerase Chain Reaction test before entering the facility. | | | |  |
CECO manufactures products and performs services deemed essential to critical infrastructure, including manufacturing and energy, and, as a result, our facilities have continued operating during the COVID-19 pandemic. Importantly, during 2021, our experience and continuing focus on workplace safety have enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues and workplace visitors safe during the COVID-19 pandemic.
EXECUTIVE COMPENSATION Compensation Discussion and Analysis Our executive compensation program is designed to attract, motivate, retain and reward executive talent to achieve our business goals,objectives, with the ultimate goal of increasing stockholder value. This Compensation Discussion and Analysis (“CD&A”) provides information about our compensation objectives and policies for our CEOChief Executive Officer and the other executive officersindividuals included in the “2018“2021 Summary Compensation Table,” who are referred to in this CD&A as our “named executive officers.” During 2021, the Company qualified as a smaller reporting company under the SEC’s amended definition of “smaller reporting company.” The Company has, nonetheless, chosen to provide many of the compensation-related disclosures that are required for larger public companies. However, the Company is disclosing compensation for only three named executive officers, consistent with the disclosure requirements applicable for smaller reporting companies. This CD&ACompensation Discussion puts in perspective the information set forth in the “2018“2021 Summary Compensation Table” that follows in this Proxy Statement. For purposes of this Proxy Statement, the following individuals are considered our 2021 “named executive officers” (or “NEOs”). | | | | | | Named Executive Officer | | Title | Todd Gleason | | Chief Executive Officer (“CEO”) | Matthew Eckl | | Chief Financial Officer (“CFO”) | Ramesh Nuggihalli | | Chief Operating Officer (“COO”) |
| | | | | 2022 Proxy Statement • 15 |
Compensation Highlights In 2018 our Compensation Committee implemented changes to our executive compensation programs to be more competitive in the market for talent and to more closely align
| | | • During 2021, our Compensation Committee continued to administer executive compensation programs that it considers to be competitive in the market for talent and aligned with industry best practices and the long-term interests of our stockholders. | | | • Our 2018 annual performance-based cash incentive compensation program is typically designed to reward our management team (including our NEOs) for achievement of certain pre-established, short-term financial and/or operational goals. For 2021, the performance objectives under our performance-based incentive program consisted of equally-weighted financial measures including bookings, Adjusted EBITDA, revenue and free cash flow, in each case established by reference to the Company’s annual operating plan. For 2021, we made a decision to add an additional metric, bookings, to our usual incentive program metrics of Adjusted EBITDA, revenue and free cash flow. We did this because rebuilding our backlog was designed so that no amount woulda priority in 2021 and it will continue to be payable unless we achieved our operating income goal at or above 100% for Mr. Sadlowski, our Chief Executive Officer (“CEO”), and Mr. Eckl, our Chief Financial Officer (“CFO”) and at or above 90% for Mr. Gohr, our Chief Accounting Officer.a priority in 2022. • We introduced performance-basedPerformance-based restricted stock units (“PRSUs”) as a vehiclethat were granted in 2021 under our long-term equity incentive program and generally requiredrequire attainment of specified levels of adjusted EBITDA (as calculatedrelative total shareholder return (“Relative TSR”) goals during the 2021-2023 performance period for purposes of our Company’s quarterly financial reports) (“Adjusted EBITDA”) in 2020 for all or a portionspecific percentage of those PRSUs to vest. We also granted time-based restricted stock units (“RSUs”) thatin 2021 to our NEOs. These RSUs generally vest ratably over four or five years. • We increased the percentage of the total target compensation “at risk” for our CEO, so that for 2018 half of his total target cash compensation was performance-based and 70% of his total target equity compensation was performance-based. In 2018, we also included an additional performance-based goal to drive aggressive, sustainable growth that increased his total equity compensation opportunity to 80% if stretch performance is achieved, which would result in our CEO earning the maximum number of PRSUs that were granted. We discuss this program below under “2018 Equity Grant Detail.” • We revised ourOur stock ownership guidelines to apply to all executives,executive officers, including our named executive officers. Our CEO is required to own shares of our stock or stock equivalents having a value ofequal to five times his base salary. OurEach of our CFO and COO is now required to own shares of our stock or stock equivalents having a value equal to three times his base salary, and our other executive officers (currently, only Mr. Gohr) are required to own our stock having values equal to their base salaries.salary.
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Our other compensation practices include the following:
| | | • As noted above, our Compensation Committee has engaged an independent executive compensation consultant to provide advice on compensation matters. In December 2020, we engaged our independent compensation consultant to conduct a market analysis of Messrs. Gleason’s and Eckl’s, and the Board’s total cash compensation and equity incentives against the general market and our peer group. In 2021, we had this market analysis updated for our NEOs. As described below, the independent compensation consultant also advised the Compensation Committee with respect to the compensation and equity offered to Mr. Nuggihalli in connection with his employment. We adopted ahave determined that our named executive officers are appropriately compensated. • Our clawback policy in 2017 that permits us to recover excess incentive-based compensation paid to an executive officera current or former “Section 16 officer” if we are required to restate our financial statements due to material noncompliance with the financial reporting requirements under United States federal securities laws and such executive officerperson willfully committed an act of fraud, dishonesty or recklessness in the performance of his duties that contributed to the noncompliance or benefitted materially as a result of receiving excess incentive-based compensation. • We generally use tally sheets when determining executive compensation. • We review executive compensation paid by our peers to evaluate appropriate executive compensation.
• Our Compensation Committee has engaged an independent executive compensation consultant to provide advice on compensation matters.
• We provide limited perquisites. | | | | | |
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2021 Stockholder Engagement At our 20182021 Annual Meeting of Stockholders, approximately 98% of the votes cast on our advisory “Say-on-Pay”“Say-on-Pay” proposal was for approval ofto approve the compensation we paid toof our named executive officers.officers received approximately 88% approval of all shares represented at the meeting. Our Compensation Committee believes that this strong approval reflects our continued efforts to improve our compensation practices. As in the prior year, during 2018,During 2021, we had direct contact and discussions with stockholders representing approximately 50%57% of our outstanding shares. Our CEOshares, consistent with our experience in 2020. Mr. Gleason and CFOMr. Eckl, as well as some of our directors, participated in these discussions and provided stockholder feedback toourtoour Board as a whole.Ourwhole. Our Compensation Committee considered the 2018 2021 Say-on-Pay voting results at its subsequent meetings and remains dedicated to continuous improvement to our executive compensation programs, although it did not make any changes to our executive compensation policies or practices that were specifically driven by the outcome of that vote.
Compensation Policy and Objectives Our Compensation Committee believes that an effective executive compensation program generally rewards the achievement of annual, long-term and strategic goals set by the Company and aligns our named executive officers’ interests with those of our other stockholders. Our executive compensation program is designed to attract, motivate, retain and reward highly qualified individuals who are committed to the achievement of solid financial performance and excellence in the management of our Company assets. To accomplish this objective, our typical executive compensation program is designed to provide competitive compensation and to link compensation to our Company’s financial and operational performance. Our Compensation Committee generally evaluates compensation against individual and external market factors to help ensure that we maintain our ability to attract, motivate and retain key executive talent. Total compensation for our named executive officers generally is comprised of base salary, short-term incentives and long-term incentives, a portion of which is designed to be earned based on our Company’s financial performance. From time to time, our Compensation Committee may approve discretionary cash bonuses or special equity awards to recognize and reward a named executive officer’s individual effort in certain circumstances. Compensation Committee Role Our Compensation Committee oversees our compensation programs, with particular attention to the compensation for our CEO and the other named executive officers, to help ensure that our compensation philosophy is consistent with the best interests of the Company and our stockholders. It reviews and approves (or, as appropriate, recommends to our Board for approval) changes to our executive compensation policies and programs. While our Compensation Committee has historically established and utilized objective, formula-based arrangements, it believes that an effective executive compensation program also requires the use of sound business judgementjudgment and the ability to exercise discretion. Accordingly, our Compensation Committee retains discretion to adjust the mix of cash and equity compensation components, adjust the mix of RSUs and PRSUs awarded, and offer other forms of equity-based compensation. From time to time,In the past, our Compensation Committee exerciseshas exercised its discretion and modifiesmodified the recommended adjustments or awards to our named executive officers. We believe that this discretion allows our Compensation Committee to better calibratereward the relative contributions of each named executive officer and to respond to market practices as our business needs change. Role of Compensation Consultants in Compensation Decisions Our Compensation Committee has engaged Meridian Compensation Partners LLC (“Meridian”) as its independent executive compensation consultant to advise our Compensation Committee on executive compensation matters. At our Compensation Committee’s direction, Meridian prepared, presented and made recommendations on peer group data, competitive market pay, compensation structure and general market trends. More specifically, Meridian provided market and peer group data to give our Compensation Committee context for our Company’s annualshort-term cash compensation. The Compensation Committee sought the advice of Meridian in considering the design of the NEOs’ 2021 cash compensation, including the short-term incentive plan participants, target award opportunities and the appropriate allocation among financialprogram. As described above, we also consulted Meridian in connection with determining Mr. Nuggihalli’s compensation package, which emphasizes performance metrics. In addition, Meridian recommended that our Compensation Committee set the annual incentive targets to align with our Company’s short-term business strategy and to complement our long-term incentive structure, as well as to be measurable and specific with respect to goals and ranges tied to creating stockholder value. In revisingreviewing our executive compensation programs to be more market competitivefor market-competitiveness and more closely alignedalignment with what we believe are industry best practices, our Compensation Committee considered the information and advice presented by Meridian. Meridian has also provided a review of our fixed, variable, and long-term compensation against our peer group for our named executive officers. Our Compensation Committee reviewed and discussed the data but determined that it did not warrant any adjustments to our current compensation structure or awards. - 14 -
Our Compensation Committee assessed the independence of Meridian, as required under the NASDAQ listing requirements, and considered and assessed all relevant factors, including those set forth in Rule10C-1(b)(4)(i) through (vi) under the Exchange Act, thatwhich could give rise to a potential conflict of interest with respect to Meridian during 2018.2021. Based on this review, our Compensation Committee did not identify any conflict of interest raised by the work of Meridian. Meridian does not provide any services to management or any other services to our Company. Role of Executive Officers in Compensation Decisions Our annual and long-term incentive-based executive compensation is generally structured to reward our executivesexecutive officers for achieving our Company’s business goals. From time to time, our Compensation Committee relies upon recommendations made by our management, and in particular, our CEO, regarding compensation for our executivesexecutive officers other than our CEO. | | | | | 2022 Proxy Statement • 17 |
As part of its review and establishment of the performance criteria and compensation of our named executive officers, our Compensation Committee meets separately with our CEO at least once each year and with our other executivesexecutive officers as it deems appropriate. Our CEO, and such other executivesexecutive officers as our CEO deems appropriate, annually review the performance of each of our other named executive officers (other than our CEO) with our Compensation Committee and makes recommendations to our Compensation Committee regarding such named executive officers’ compensation. Our Compensation Committee makes its compensation decisions for our named executive officers other than the CEO based on that review and the recommendations of our CEO. Each year, our CEO’s performance is reviewed by ournon-executivenon-management directors, and based on that review, our Compensation Committee makes a recommendation to thenon-executivenon-management directors regarding the compensation of our CEO. Setting Executive Compensation Our Compensation Committee evaluates the performance of our CEO and the other named executive officers as described above and reviews and approves the annual salary and any annual cash incentive, bonus, long-term stock-based compensation and other material benefits of our named executive officers other than our CEO, subject to the terms of any applicable employment agreements. Based on the recommendations of our Compensation Committee, ournon-management directors approve the annual salary and any annual cash incentive, bonus, long-term stock-based compensation and other material benefits of our CEO, subject to the terms of his employment agreement. External Pay Comparisons Our Compensation Committee generally considers external pay comparison data as a market check on its compensation decisions, but not for specific benchmarking. InWith input from Meridian, our independent compensation consultant, in December 2018,2020, our Compensation Committee identified arecommended not changing our peer group thatas it believes more appropriately reflectsbelieved our then-current peer group, as revised in December 2018, reflected our peers for purposes of determining executive compensation in subsequent years; however, for purposes of 2018 compensation decisions we used the following peer group, which has been the same since 2015, except that TRC Companies, Inc. was removed following its acquisition in 2017.2021. These companies were selected based on revenue, market capitalization, as well as overall business characteristics, including product offerings and end markets, similar to ours. | | | | | | | • Aegion Corporation
| | • Federal Signal Corporation
| | • Ormat Technologies, Inc.
| | | • Ameresco, Inc. | | • GracoEsco Technologies, Inc. | | • Manitex International, Inc. | | | • Argan, Inc. | | • Graham Corporation | | • Powell Industries, Inc. | | | • Chart Industries,Aspen Aerogels, Inc. | | • Graham CorporationHeritage-Crystal Clean Inc. | | • Preformed Line Products Co. | | | • CIRCOR International,DMC Global, Inc. | | • HC2 Holdings,Hurco Companies, Inc. | | • Thermon Group Holdings Inc.The Gorman-Rupp Co. | |
| • Douglas Dynamics, Inc. | | • Heritage-Crystal CleanL.B. Foster Company | | • Thermon Group Holdings Inc. | • Enphase Energy, Inc. | | • Lydall, Inc. * | | • US Ecology, Inc. | | | | | |
• Enphase Energy, Inc.
• Esco Technologies, Inc.
| * | • Lydall, Inc.
| | • Williams Industrial Services Group Inc. (formerly knownNo longer publicly traded as Global Power Equipment Group Inc.)of September 14, 2021. Acquired by Unifax.
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We are currently in the bottom quartile of this peer group in terms of size, based primarily on revenue and market capitalization. Based on its review of the peer group data and market data and other factors discussed in this Compensation Discussion, and Analysis, Meridian determined that our CEO’s 20182021 total target compensation approximatesis between the 25th percentile and median of this peer group, which corresponds to our Company’s size within the peer group, as described above.
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2018Highlights of 2021 Executive Compensation
Our Company’s financial performance reflected solid progression in 2018. WeThroughout 2021, despite continued COVID-19 headwinds, the management team remained focused on growth and effectively managed through significant market challenges, organizational change, and the competition for talent. As a result, we had year-over-year organicgrowth in bookings, revenue growth and exceededfree cash flow; however, we did not achieve the threshold level for our operating incomeAdjusted EBITDA and free cash flow targets for the year.metrics. As a result of this performance, our named executive officers earned cash incentive compensation for 20182021 at a payout percentage of 46% of target. Additionally, in recognition of additional 2021 achievements, management was awarded a discretionary bonus of 34%. These payments are described below in this Compensation Discussion and received RSUs. reflected in our 2021 Summary Compensation Table under the columns captioned “Bonus” and “Non-Equity Incentive Plan Compensation.”
As incentive for future performance, the named executive officersin April 2021, Messrs. Gleason, Eckl, and Nuggihalli were granted PRSUs that give them the opportunity to earn shares based on our Company’s future performance. As in prior years, each named executive officer also received a grant of timed-based RSUs that generally vest over four years, so the value an executive officer may actually realize depends on our future stock performance.
The charts below show the proportion of base salary and actual annual cash incentivebonus payments for 20182021 and the RSUs and PRSUs granted in 2018the first half of 2021 for each named executive officer.of Messrs. Gleason, Eckl, and Nuggihalli. The compensation of Mr. Gleason is discussed in further detail below. The PRSUs noted below represent the grant date fair value and assume maximumprobable achievement with respect to performance conditions. 
Key Elements of 2021 Compensation Our 2021 executive compensation program consistsconsisted primarily of cash, with a fixed base salary and an annual cash incentive opportunity,bonus, and equity generally in in the form of RSUs and PRSUs. We have in the past also granted stock options to our executives, but stock options are not currently part of our ongoing executive compensation program. From time to time we have paid discretionary cash bonuses to recognize and reward executives, if the circumstances warrant. 2021 Base Salary We provide our named executive officers with a base salary to compensate them for the expertise and value they bring to us. Base salary is determined for each individual based on the executive’s position and responsibility, taking into account the executive’s impact level, external market data, scope of responsibility, prior experience, past accomplishments and other similar factors (including negotiation when joining the Company), and whether the particular base salary is subject to any existing employment agreement. Salary levels for our named executive officers are reviewed and approved by the Compensation Committee annually as well as upon joining the Company or upon a promotion or other change in job responsibility. The salary levels, including any increases, are also based on our Compensation Committee’s evaluation of the individual’s strengths, development, and expected future contributions with respect to the corporate goals and objectives relevant to the individual’s compensation, including individual performance. In 2018,2021, our Compensation Committee approved a 2% merit increase to the following base salaries for our named executive officers. Wheneach of Messrs. SadlowskiGleason and Eckl joined our Company, each entered into an employment agreement on terms negotiated at arms’ length.to help achieve market competitiveness and address retention considerations following a year of no merit increases or pay adjustments in 2020. In 2021, Mr. Sadlowski did not receive an increase in his salary in 2018. Mr. Eckl’s salary increased from $300,000 to $335,000 as of January 9, 2018 in accordance with the terms of his employment agreement. Mr. Gohr received an increase in hisNuggihalli’s base salary of approximately 4% effective April 1, 2018 based on his performance.was newly negotiated when he joined the Company. | | | Named Executive Officer | | Base Salary
Rate ($)
(as of 12/31/18)
| Dennis Sadlowski
| | 575,000 | Matthew Eckl
| | 335,000 | Paul Gohr
| | 200,000 |
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| | | | | | | | | | | | | | Named Executive Officer | | Base Salary Rate ($)
(as of 12/31/20) | | | Base Salary Rate ($)
(as of 12/31/21) | | | % Increase | Todd Gleason | | | 450,000 | | | | 459,000 | | | | 2% | | Matthew Eckl | | | 342,000 | | | | 348,840 | | | | 2% | | Ramesh Nuggihalli | | | N/A | | | | 375,000 | | | | N/A | |
2021 Cash Incentive Compensation We believe that, in typical circumstances, a portion of our named executive officers’ cash compensation should be earned based on our annual performance, so that our executivesexecutive officers are appropriately motivated to maximize our financial and operating performance each year. Early each year, our Compensation Committee typically selects executivesexecutive officers to participate in the annual incentive program and determines the amount of the award opportunity and the performance goals for the participant. Afteryear-end, | | | | | 2022 Proxy Statement • 19 |
For 2021, the performance objectives under our annual incentive program were established in the first quarter of 2021 by our Compensation Committee determines whetherafter consultation with our Chief Executive Officer and Senior Vice President of Human Resources and consisted of equally-weighted objectives of bookings, Adjusted EBITDA, revenue and free cash flow, in each case established by reference to the objectivesCompany’s annual operating plan. The payout with respect to each metric could range from 0% to a maximum of 200% of target (which was 100%, 55% and conditions55% of base salary for earningMessrs. Gleason, Eckl and Nuggihalli, respectively), as set forth in the awards have been met.table below: For 2018, our
| | | | | | | | | | | | | | Performance Measures ($ in millions) | | Threshold
(0% Payout) ($) | | | Target
(100% Payout) ($) | | | Maximum
(200% Payout) ($) | | Bookings | | $ | 287.9 | | | $ | 359.9 | | | $ | 431.9 | | Revenue | | $ | 267.3 | | | $ | 334.1 | | | $ | 401.0 | | Adjusted EBITDA | | $ | 26.2 | | | $ | 32.8 | | | $ | 39.4 | | Free Cash Flow | | $ | 12.9 | | | $ | 16.1 | | | $ | 19.3 | |
In early 2022, the Compensation Committee approved annual incentive award opportunitiesdetermined that the Company’s performance in 2021 resulted in total formulaic payout of 46% of target for our named executive officers based on objective Company financial performance goals. Each named executive officer had an incentive award opportunity expressed as a percentage of his 2018 salary. The percentages were 100% of salary for Mr. Sadlowski, 55% of salary for Mr. Eckl and 35% of salary for Mr. Gohr. At target performance, each named executive officer would receive 100% of his incentive award opportunity. If our Company’s performance in 2018 exceeded the target,under the annual incentive payout could be upprogram as shown below: | | | | | | | | | | Performance Measures ($ in millions) | | Actual Achievement | | | Percentage Payout
Earned | | Bookings | | $ | 360.8 | | | | 100% | | Revenue | | $ | 324.1 | | | | 85% | | Adjusted EBITDA | | $ | 25.0 | | | | 0% | | Free Cash Flow | | $ | 11.3 | | | | 0% | | | | | | | | | | | | | | | | | | 185% | | Average (for equal weighting) | | | | | | | x0.25 | | | | | | | | | | | Total Formulaic Payout Percentage | | | | | | | 46% | |
At the time the performance goals were established in early 2021, we expected that a decline in the COVID-19 pandemic would lead to a maximum 200%the business aggressively returning to pre-pandemic levels. However, during 2021, with the introduction of new COVID-19 variants, the Company’s operations and the global community were once again impacted as businesses remained out of office, the supply chain was disrupted, and the labor shortages affected day to day business operations. Throughout 2021, however, the management team remained focused on growth and effectively managed through significant market challenges, organizational change, and the competition for talent. In 2022, in connection with certifying the results of the incentiveaward opportunity for each of Messrs. Sadlowski and Eckl and up to a maximum 120% of the incentive award opportunity for Mr. Gohr. Our Compensation Committee selected revenue, adjusted operating income and adjusted free cash flow as thecorporate performance metrics for our 2018 cash incentive program because it believed that improvement in these three metrics would drive stockholder value. For purposes of the cash incentive program, we make certain adjustments deemed appropriate byobjectives described above, the Compensation Committee also subjectively evaluated the Company’s performance and as noted below.
Revenue: To determine achievementthe performance of our revenue metric, we used revenue as reported in our financial statements.
Operating Income: For purposes of determining achievement of this performance metric, we adjusted operating income as reported in our financial statements to excludethe management team (including individual NEOs), with a particular focus on the following special items: (1) amortization and earnout expenses, and (2) loss on divestitures, net of selling costs.key accomplishments:
Free Cash Flow: We calculated free cash flow by adjusting cash flows from operating activities as reported in our financial statements to exclude earnout payments and to include acquisitions of property and equipment.
Our Compensation Committee gave equal weight to each of the three performance metrics; however, it determined that unless our Company achieved a specified level of operating income (100% of target for Messrs. Sadlowski and Eckl and 90% of target for Mr. Gohr), no cash incentive would be paid.
| | | | | | | | | | | | | | | | | | | | | | Metric | | Threshold (dollars in millions) (50% Payout) | | Target (dollars in millions) (100% Payout) | | Maximum (dollars in millions) (200% / 120% Payout) | | Weighting | Revenue | | | | 309.3 | | | | | 343.7 | | | | | 412.4 | | | | | 33% | | Operating Income1 | | | | 21.7 | | | | | 21.7 | | | | | 28.2 | | | | | 33% | | Free Cash Flow | | | | 17.2 | | | | | 19.1 | | | | | 24.8 | | | | | 33% | |
(1) | | | As noted above, Mr. Gohr’s specified minimum level
• Management was disciplined in developing and applying COVID-19 policies and procedures to protect the safety of operating income is 90% orour workforce and maintain our plant operations, all of which remained open throughout the pandemic; • Management addressed the challenges in the markets by realigning the organizational design to drive greater growth and accountability while adding key talent to mitigate risk and investing in existing talent through development to retain top performers; • Management delivered balanced results with appropriate investments and focus to put the Company in a threshold of $19.5 million.position for 2022 growth; and • Management maintained the Company’s strong liquidity and balance sheet. | | | | |
If the target level for each performance metric is attained, the cash incentive award is designed to pay out at 100% for that metric. The threshold is the lowest level of payout below which no payment is made for the specific component. If performance for a metric is between the identified threshold and target, or target and maximum, the actual payout is determined based on straight-line mathematical interpolation. Regardless of the actual attainment of any of the individual metrics, the cash incentive awards were designed so that no payout would be made for any named executive officer unless we achieved the specified minimum level of operating income for the performance period (as noted above).
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In early March 2019, ourRecognizing the extraordinary actions undertaken by management to deliver uninterrupted performance, help ensure sustained employee engagement, and drive key business results, and with input from the COVID-19 Committee, the Compensation Committee determined the degree to which theapproved 2021 annual cash incentive program awards for our NEOs equal to 80% of each such NEO’s target award goalsunder our 2021 annual cash incentive program, consistent with the Company’s approach for 2018 were achieved. For 2018,other participants in the actual achievementsannual incentive program. This represented an addition of 34 percentage points to the formulaic level of achievement. The Compensation Committee believes the 2021 cash bonus payments reflect a strong correlation with the short-term financial performance of the Company. We believe that investors evaluate companies in our industry in part based on their ability to grow their businesses profitably while maintaining adequate returns on their invested capital. The Compensation Committee believes that the 2021 annual incentive award payouts help to align the interests of our executives with those of our stockholders.
The payouts of the annual incentive awards for the specific performance metrics2021 are set forth below. The “Achievement Percentage” indicatesin the performance for that metric as compared to the target. The “Payout Percentage” for each metric is determined based on the applicable interpolation of the achievement between the thresholdtable below and target, or target and maximum, levels. Mr. Gohr had a different Payout Percentage for operating income and free cash flow, since his maximum payout opportunity for each metric was 120% of target. After giving equal weighting to each metric, the total payout as a percentage of target was determined. | | | | | | | | | | | | | | | | | | Metric | | Achievement (dollars in millions) | | | Achievement Percentage | | | Payout Percentage for CEO & CFO | | | Payout Percentage for Mr. Gohr | | Revenue | | | 337.3 | | | | 98% | | | | 90% | | | | 90% | | Operating Income | | | 24.1 | | | | 111% | | | | 137% | | | | 107% | | Free Cash Flow | | | 21.7 | | | | 114% | | | | 146% | | | | 110% | | | | | | | | | | | | | | | | | | | Aggregate Percentage | | | | | | | | | | | 373% | | | | 307% | | Average | | | | | | | | | | | x .333 | | | | x .333 | | | | | | | | | | | | | | | | | | | Total Payout as a Percentage of Target | | | | | | | | | | | 124% | | | | 102% | |
Since the specified minimum operating income levels for our named executive officers were achieved, our named executive officers earned the amounts shown below under the 2018 annual cash incentive program. The amount of each annual cash incentive payment is also shownreflected in our 20182021 Summary Compensation Table under the column captioned “Bonus” and “Non-Equity Incentive Plan Compensation.”
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Named Executive Officer | | Target Opportunity as Percentage of Salary | | | | | | Payout Percentage | | | | | | Salary ($) | | | | | | Amount of Incentive Payment ($) | | Dennis Sadlowski | | | 100% | | | | x | | | | 124% | | | | x | | | | 575,000 | | | | = | | | | 715,561 | | Matthew Eckl | | | 55% | | | | x | | | | 124% | | | | x | | | | 334,192 | | | | = | | | | 228,736 | | Paul Gohr | | | 35% | | | | x | | | | 102% | | | | x | | | | 198,423 | | | | = | | | | 70,991 | |
Other Bonus Payments
No discretionary bonuses were paid to our named executive officers for 2018, although the Compensation Committee may from time to time approve the payment of a discretionary bonus if the circumstances warrant.
| | | | | | | | Named Executive Officer | | Amount of Final
Payment ($) | | | | Todd Gleason | | | 367,200 | | | | Matthew Eckl | | | 153,490 | | | | Ramesh Nuggihalli | | | 122,055 | |
Long-Term Equity Compensation Our Compensation Committee believes that granting stock-based awards and options from time to time provides our executivesexecutive officers with a strong economic interest in maximizing stockholder returns over the longer term and is important in retaining and recruiting the key talent necessary to ensure our Company’s continued success. As a result, our equity compensation plansprograms have been designed to promote the long-term financial interests and growth of our Company by helping attract and retain management with the ability to contribute to the success of the business, by providing an opportunity for increased equity ownership by our executivesexecutive officers and by maintaining competitive levels of total compensation. Under our 20172021 Equity and Incentive Compensation Plan, awards may take the form of restricted stock grants, bonus stock grants without restrictions,non-qualified stock options, incentive stock options, RSUs, performance-based awards and certain other awards. Our Compensation Committee believes that the ability to grant various types of equity awards offers more flexibility in designing the overall compensation packages. Our Compensation Committee administers our equity compensation plans. - 18 -
20182021 Equity Grant DetailGrants
In 2018, ourOur Compensation Committee approved a change tochanged our Company’s long-term equity incentive practices and providedin 2018 to provide for grants of long-term incentive awards that generally consist of RSUs that generally vest over time and PRSUs that generally vest only to the extent our Company attains the performance goal established by our Compensation Committee. To the extent stock units vest, the recipient receives one share of our common stock for each vested stock unit and an amount in cash equal to the dividends, if any, that would have been paid on the underlying common stock since the date of the stock unit grant.
For 2018,2021, the value of the total stock units awarded to each named executive officer serving at the beginning of the year was based on a fixed dollar amount determined by our Compensation Committee with Meridian’s guidance. To determine the number of stock units, we divided the value of the award by $5, which was higher than$8.16, the per shareclosing stock price on the date of ourgrant for Messrs. Gleason and Eckl. To determine the number of stock at the time of grant. Our Board determined that the higher value more appropriately reflectedunits for Mr. Nuggihalli we divided the value for purposes of his reward by $8.18 the awards. For our CEO and CFO, our Compensation Committee allocatedclosing stock price on the stock units between RSUs and PRSUs. Because he serves as our CEO, our Compensation Committee determined that Mr. Sadlowski would be granted equity awards with an aggregate valuedate of approximately $500,000, and that his awards would be more heavily allocated to PRSUs, 70% of the target long-term incentive award value with the remaining 30% allocated to RSUs.grant. For Mr. Eckl, our Compensation Committee determined that his equity awards would have an aggregate value of approximately $250,000 withand allocated the target long-term incentive award value allocated evenlyequally between RSUs and PRSUs. OurFor Mr. Nuggihalli, our Compensation Committee determined that his equity awards would have an aggregate value of approximately $300,000 and allocated the award equally between RSUs and PRSUs. Additionally, Mr. Gohr should receiveNuggihalli received a one-time sign-on equity grant of $200,000 in RSUs valued at $50,000 and PRSUs valued at $37,500.when he joined the Company. The 2018 stock unitsRSUs that were designated as RSUs vest over time. Pursuant to his employment agreement, in early 2018 Mr. Eckl was granted 20,000 RSUs that generally vest in substantially equal annual installments over a five-year period. Our Compensation Committee took those RSUs into account and granted him an additional 5,000 RSUs, so that his combined RSUs would reflect the fixed dollar amount for RSUs established by our Compensation Committee. The additional RSUs granted to Mr. Eckl and the RSUs granted to the other named executive officers in April 2021 generally vest in four substantially equal annual installments.installments on each of the first four anniversaries of the grant date. All of the 20182021 RSU awards granted to all of our named executive officers are shown in the “2018“2021 Grants of Plan-Based Awards Table” below in this Proxy Statement. | | | | | 2022 Proxy Statement • 21 |
The 2018 stock unitslong-term performance awards that were granted in 2021 were designated as PRSUs that generally vest in three years on March 15, 20212024, to the extent our Company attains the Adjusted EBITDA goalsRelative TSR (as defined below) goal for the 2020 fiscal yearperformance period beginning on January 1, 2021, and ending on December 31, 2023, as established by our Compensation Committee. The Adjusted EBITDACompensation Committee determined to use Relative TSR for the 2021 PRSU awards because this metric was usedkeeps the focus on creating value (i.e. alignment with shareholder interests) even in challenging times. Messrs. Gleason, Eckl and Nuggihalli were granted the following target PRSU awards (which can be earned from 0% to help align our named executive officers’ rewards with our stockholder interests and150% of target levels based on actual performance): | | | | | | | PRSU Target Opportunity (Shares) | | | | | Todd Gleason | | Matthew Eckl | | Ramesh Nuggihalli | | | | 85,785 | | 15,319 | | 18,338 |
For purposes of the 2021 PRSU awards, Relative TSR is the percentile rank of the Company’s total shareholder return as compared to help create(and included in) the total shareholder returns of all members of a stronger and more direct connection to success drivers anddesignated peer group at the end of the 2021-2023 performance period. “Total shareholder return” is a rate of return reflecting stock price performance.appreciation, plus the reinvestment of dividends in additional shares of stock (with appropriate adjustments for certain changes in capital structure), from the beginning of the performance period through the end of the performance period, where (1) the beginning stock price is based on the average closing stock price for the 20 calendar days preceding January 1, 2021 and (2) the ending stock price is based on the average closing stock price for the 20 calendar days preceding January 1, 2024. For purposes of Relative TSR, the Company’s total shareholder return will be compared against a peer group of 90 publicly traded companies that, at the time of selection by the Compensation Committee, were classified in the Materials or Industrials sector with a market capitalization from $100 million to $500 million. The list of Relative TSR peer companies is included with this Proxy Statement as Appendix I. The peer group is subject to adjustment in the event of certain significant events that occur with respect to a peer company, including bankruptcy, delisting, liquidation, certain acquisitions, or “going private” transactions. Based on our Relative TSR achievement during the 2021-2023 performance period, the PRSUs can be earned as follows (with straight-line interpolation between performance levels): | | | | | | | | | | | Performance Level | | Relative TSR | | % of Target PRSUs Earned | | | | | Below Threshold | | Below 25th percentile | | | 0% | | | | | Threshold | | At 25th percentile | | | 50% | | | | | Target | | At 50th percentile | | | 100% | | | | | Maximum | | At or above 75th percentile | | | 150% | |
However, regardless of the level of Relative TSR performance, if the Company’s absolute total shareholder return during the performance period is negative, the percentage of target PRSUs earned will not exceed 100% of target. Under the terms of Mr. Gleason’s employment agreement, for calendar years following 2020, Mr. Gleason is generally eligible for annual awards under our equity compensation arrangements as reasonably determined by the Compensation Committee. His total annual equity award target opportunity for each such calendar year will have an aggregate grant date value (as reasonably determined by the Compensation Committee) of no less than $1,000,000. For 2021, Mr. Gleason’s Grant Date fair value award was valued at $1,126,112. Mr. Gleason’s annual equity awards will be made in the form of time-based RSUs and/or PRSUs, or in such other forms as determined by the Compensation Committee after consideration of competitive market data provided by its independent compensation consultant. However, no less than 60% of Mr. Gleason’s annual equity awards will be subject to the achievement of performance objectives determined by the Compensation Committee. Currently 70% of Mr. Gleason’s annual equity awards are subject to the achievement of performance objectives determined by the Compensation Committee. Performance-Based Awards Granted in Prior Years In 2019, we granted PRSUs to Mr. Eckl that were generally scheduled to vest on March 15, 2022, to the extent the Company attained a single Adjusted EBITDA achievement, our named executive officers are eligible to earntarget-level for the 2021 fiscal year established by the Compensation Committee. Messrs. Gleason and Nuggihalli were not serving with the Company when these PRSUs in the following amounts, with no interpolation between the performance levels.were granted, and did not receive an award | | | | | | | | | | | | | | | | | | | PRSUs Granted (#) | | 2020 Adjusted EBITDA Performance Level | | Dennis
Sadlowski | | Matthew
Eckl | | Paul Gohr | Target | | | | 70,000 | | | | | 25,000 | | | | | 7,500 | | Maximum | | | | 120,000 | | | | | 50,000 | | | | | — | |
If the “target” Adjusted EBITDA performance level is not achieved, then no PRSUs will be earned by any of the named executive officers. Messrs. Sadlowski and Eckl both have a significant portion of their annual equity opportunity tied to PRSUs due to their leadership positions and responsibilities for our financial performance, and their PRSUs have a target Adjusted EBITDA goal that would result in their earning the target number of PRSUs and a “stretch” level Adjusted EBITDA goal that would result in their earning the maximum number of PRSUs. In 2018, Mr. Gohr was granted a PRSU award in addition to his annual RSU grant.The only goal or “target”Adjusted EBITDA level for Mr. Gohr’s PRSU award is equal to the “maximum” Adjusted EBITDA level under the PRSU awards of Messrs. Sadlowski and Eckl. Our Compensation Committee believed that if we achieved the stretch goal for Adjusted EBITDA so that Messrs. Sadlowski and Eckl earned the maximum PRSUs, then Mr. Gohr should also be rewarded with PRSUs vesting in addition to his annual RSUs grant.
We do not disclose in this Proxy Statement the specific, forward-looking Adjusted EBITDA goals that we established for the PRSUs granted in 2018 because (i) these goals relate to executive compensation to be earned and/or paid in future years, and (ii) we believe that disclosure of such goals before the applicable performance period has commenced would cause us
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| | | | | | | Target PRSUs (#) | | 2021 Adjusted EBITDA Performance Level | | Matthew Eckl | | | | Target: $51,000,000 | | | 17,266 | |
competitive harm. However, we expectThe Company’s actual Adjusted EBITDA for 2021 was $25.0 million. As a result, none of Mr. Eckl’s PRSUs were earned. In addition, target PRSUs granted to disclose such goalsMr. Eckl in 2020 to be earned based on Relative TSR performance for a future Proxy Statement once the applicable performance period has ended as partbeginning on January 1, 2020 and ending on December 31, 2022 remain outstanding due to the ongoing performance period, and applicable payout (if any) will be determined after the end of our discussion and analysis about the amounts earned by our named executive officers under these awards. In setting the applicable achievement levels, our Compensation Committee considered how achievement of the performance goals could be impacted by events expected to occur in the coming years. We believe that the target goals for Messrs. Sadlowski and Eckl will require considerable and increasing collective effort on the part of our employees, including our named executive officers, to achieve. Achievement of the maximum goal for Messrs. Sadlowski and Eckl (and the target goal for Mr. Gohr) is considered to be a stretch goal given current market conditions. The PRSU grants made in 2018 for our named executive officers are set forth in the “2018 Grants of Plan-Based Awards Table” below in this Proxy Statement.2022.
Options
We also issue options from time to time under our equity compensation plans to provide long-term equity compensation to our executives. None of the named executive officers received options in 2018.
Personal Benefits and Perquisites We provide our named executive officers with a limited number of perquisites that we believe are reasonable and consistent with our overall compensation program and better enable us to attract and retain employees for key positions. These perquisites generally consist of car allowances and payment of life insurance premiums. In connection with his appointment as CEO, Mr. Gleason is also entitled to reimbursement through December 31, 2021, for up to $2,500 per month for apartment or comparable rental expenses incurred by him, pursuant to the terms of his employment agreement. Retirement and Post-Employment Benefits Our Company sponsors a 401(k) retirement plan for substantially all of our U.S. employees (the “401(k) Plan”), pursuant to which we generally match contributions each pay period at 100% of the employee’s contributions for the first 3% of eligible compensation, and 50% of the employee’s contribution on the next 3% of eligible compensation, for a maximum match of 4.5% of eligible compensation. Our named executive officers generally participate in the 401(k) Plan on the same terms as our other eligible employees. However, as a cost savings measure in response to the COVID-19 pandemic, during 2021 we suspended the match contributions for highly compensated employees, which included our NEOs. We believe the 401(k) Plan, which has limited cost to our Company, is set at a reasonable level, is highly valued by participants, and is part of a competitive compensation program consistent with our overall goal of attracting and retaining qualified employees. Agreements with Individual Named Executive Officers We have individual employment agreements with Messrs. SadlowskiMr. Gleason and Mr. Eckl. We Effective July 6, 2020, we entered into the June 10, 2017an employment agreement with Mr. SadlowskiGleason in connection with his appointment as our permanent CEO, having served as our interim CEO for the previous four months pursuant to an interim offer letter dated January 26, 2017.CEO. We entered into an employment agreement with Mr. Eckl effective as of January 9, 2017, when he joined our Company as our CFO. These employment agreements set forth the basic terms and conditions of employment for such named executive officers, including initial base salary, annual incentive opportunity, andlong-term incentive opportunity, as well as certainsign-on equity and cash bonus compensation and certain perquisites and personal benefits. The employment agreements also include customary restrictive covenants and provide for certain severance compensation and benefits in the event of a qualifying termination of employment. The terms of these employment agreements reflect the product of arms’ length negotiations between the individual and the Company. We do not have an employment agreement with Mr. Gohr. For more information regarding these individual arrangements and the benefits provided thereunder, please see “Potential Payments Upon Termination or Change in Control” below. - 20 -
| | | | | 2022 Proxy Statement • 23 |
Stock Ownership Guidelines To reinforce the alignment of our CEO’s long-term financial interest with the interests of our stockholders, we have required our CEO to own shares of our common stock having a value equal to at least five times his base salary. During 2018, our Compensation Committee revised our stock ownership guidelines to require our other executivesexecutive officers to own shares of our common stock having values equal to the applicable multiple of base salary set forth in the table below: | | | | | | Named Executive Officer | | Ownership Requirement
(as a multipleMultiple of base salary)
| | | Chief Executive Officer | | | 5X | | | Chief Financial Officer and Chief Operating Officer | | | 3X | | | Other Executives Including Our Other Named Executive Officers | | | 1X | |
Our executive officers have five years after becoming subject to these guidelines to achieve the stock ownership required. Our Compensation Committee in its discretion may extend the period of time for attainment of such ownership levels in appropriate circumstances. For purposes of this requirement, stock ownership includes all shares of our common stock owned by the named executive officer directly or held in trust for the executive or the executive’s immediate family. In addition, restricted stock and RSUs are also included in determining whether the required level of ownership has been attained. For purposes of the stock ownership requirements, the value of a share is measured as the greater of the then current market price or the closing price of a share of the common stock on the grant date. As of December 31, 2021, Mr. Eckl met the stock ownership requirement. Mr. Gleason, who has served as our Chief Executive Officer only since July 2020, and Mr. Nuggihalli, who has served as our Chief Operating Officer only since April 2021, were not yet in compliance with their stock ownership requirements, but both are still within the applicable five-year compliance period. Our executive officers are prohibited under our Insider Trading Policy from engaging in certain transaction in our securities, including short sales against the box, buying or selling puts or calls and frequent trading to take advantage of fluctuations in stock price. Our Insider Trading Policy is described in the “Insider Trading Policy” paragraph under “Our Board and Its Committees” section above. Clawback Policy In April 2017, ourOur Board adopted a clawback policy that provides if (1) our Company is required to prepare an accounting restatement due to its material noncompliance with any financial reporting requirement under the U.S. federal securities laws and (2) our Board reasonably in good faith determines that any current or former “Section 16 officer” of our Company willfully committed an act of fraud, dishonesty or recklessness that contributed to the noncompliance or benefitted materially from excessive incentive-based compensation, then our Board may direct the Company to use prompt and reasonable efforts to recover the excessive incentive-based compensation paid to the individual.
Risk Considerations in our Compensation Program Our executive compensation consists of both fixed and variable compensation. The fixed (or salary) portion of compensation is designed to provide a steady income so our executivesexecutive officers are not pressured to focus exclusively on short-term gains, which may be detrimental to long-term stock price appreciation and other business metrics. The variable portions of compensation consist of cash incentives or discretionary cash bonuses and long-term equity incentives (restricted stock units(time-based RSUs and performance-based restricted stock units)PRSUs). IncentiveIn a typical year, incentive compensation is generally tied to the achievement of corporate performance goals based on metrics established by our Compensation Committee. For 2018,2021, we used adjusted operating income, revenue and adjusted free cash flow for short-term cash incentives and Adjusted EBITDAa Relative TSR goal for long-term equity incentives. Although 2021 cash bonuses were determined on a discretionary basis by the Compensation Committee, we believe that the level of such bonuses was appropriate in light of our 2021 performance. For 2021, we made a decision to add an additional metric, bookings, to our usual incentive program metrics of Adjusted EBITDA, revenue and free cash flow. We did this because rebuilding our backlog was a priority in 2021 and it will continue to be a priority in 2022. We believe that the variable components of compensation motivate our executivesexecutive officers to produce short- and long-term corporate results while the fixed element of compensation helps provide security so that management is not encouraged to take unnecessary or excessive risks in working to produce such results. Periodically, our Compensation Committee conducts a risk review of the compensation programs for all employees, including our named executive officers. Although no new comprehensive reviewIn 2021, a market pay analysis study was conducted, in 2018, based on our previous review in 2016 and following discussions held in Compensation Committee meetings that addressed risks associated with our plans and metrics, we believe our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our Company.
Tax and Accounting Considerations We recognize a charge to earnings for accounting purposes for equity awards over their requisite service period. With respect to the tax deductibility of compensation, although the “performance-based compensation” exception under Section 162(m) of the Internal Revenue Code was repealed as part of the late 2017 U.S. tax reform, generally effective as of January 1, 2018, our Compensation Committee still very generally considers the tax deductibility of compensation. However, our Compensation Committee is fully authorized to approve compensation that may not be deductible when it believes that such payments are appropriate to attract and retain executive talent. - 21 -
Conclusion We recognize the importance of attracting, motivating, retaining and rewarding executive talent who can effectively lead our business. Our Compensation Committee continues to analyze and adjust our compensation programs to emphasize the alignment of our named executive officers’ interests with the long-term interests of our stockholders. It seeks to incentivize our named executive officers to maximize our Company’s performance and reward them for their achievements. With the various components of our executive compensation programs, our Compensation Committee seeks a balance between fixed andat-risk compensation, cash and equity, and short-term and long-term rewards with the ultimate objective of creating long-term value for our stockholders.stockholders. Compensation Committee Report The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and, by incorporation by reference, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2021. This report is submitted on behalf of the members of the Compensation Committee: Valerie Gentile Sachs, Chair Eric M. Goldberg David B. Liner - 22 -
20182021 Summary Compensation Table
The following table sets forth certain information with respect to the compensation earned duringfor the years ended December 31, 2018 and 2017 byindicated for Mr. Sadlowski, our principal executive officer,Gleason, Mr. Eckl our principal financial officer, and Mr. Gohr, our other executive officer. All of these individuals became executive officers in 2017, and weNuggihalli. We refer to themthese executive officers collectively as “our named executive officers.” | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(3) | | | Non-Equity Incentive Plan Compensation ($) | | | All Other Compensation ($)(4) | | | Total ($) | | Dennis Sadlowski, Chief Executive Officer | | | 2018 | | | | 575,000 | | | | — | | | | 742,500 | | | | 715,561 | | | | 29,692 | | | | 2,062,753 | | | | | 2017 | | | | 531,629 | 1 | | | 201,644 | 2 | | | 471,716 | | | | — | | | | 27,526 | | | | 1,232,515 | | | | | | | | | | | Matthew Eckl, Chief Financial Officer | | | 2018 | | | | 334,192 | | | | — | | | | 357,650 | | | | 228,736 | | | | 18,795 | | | | 939,373 | | | | | 2017 | | | | 282,693 | | | | 115,000 | 2 | | | 368,940 | | | | — | | | | 199,636 | 5 | | | 966,269 | | | | | | | | | | | Paul Gohr, Chief Accounting Officer | | | 2018 | | | | 198,423 | | | | — | | | | 86,625 | | | | 70,991 | | | | 18,347 | | | | 374,386 | | | | | 2017 | | | | 176,137 | | | | 30,000 | | | | 50,004 | | | | — | | | | 12,727 | | | | 268,868 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary ($) | | Bonus ($)(1) | | Stock Awards ($)(2) | | Option Awards ($) | | Non-Equity
Incentive Plan
Compensation
($)(3) | | All Other
Compensation ($)(4) | | | Total ($) | Todd Gleason Chief Executive Officer | | | 2021 | | | | 456,577 | | | | 156,060 | | | | 1,126,112 | | | | — | | | $ | 211,140 | | | | 29,410 | | | | 1,979,299 | | | | | 2020 | | | | 216,346 | | | | 300,000 | | | | 599,059 | | | | 2,400,000 | | | | — | | | | 24,376 | | | | 3,539,781 | | Matthew Eckl Chief Financial Officer | | | 2021 | | | | 346,999 | | | | 65,233 | | | | 272,525 | | | | — | | | $ | 88,257 | | | | 16,892 | | | | 789,906 | | | | | 2020 | | | | 336,739 | | | | 94,000 | | | | 570,700 | | | | — | | | | — | | | | 25,165 | | | | 1,026,604 | | | | | 2019 | | | | 339,846 | | | | — | | | | 250,000 | | | | — | | | | 92,899 | | | | 27,352 | | | | 710,097 | | Ramesh Nuggihalli Chief Operating Officer | | | 2021 | | | | 274,039 | | | | 51,873 | | | | 526,601 | | | | — | | | $ | 70,182 | | | | 15,363 | | | | 938,058 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | Mr. Sadlowski’s salary in 2017 includes aThis column reflects for 2021 the discretionary portion of the annual cash retainer of $14,125incentive awards paid to our named executive officers for his service on our Board prior to being appointed2021, as our CEO in June of that year.further described above.
|
(2) | Mr. Sadlowski’s 2017 bonus was paid for the period from January 1, 2017 through May 31, 2017 while he served as our interim chief executive officer pursuant to the terms of a written agreement with him. The amount for Mr. Eckl includes a $65,000“sign-on” cash bonus when he joined our Company in 2017 pursuant to the terms of his employment agreement.
| | | | 2022 Proxy Statement • 25 |
(3)(2) | This column reflects for 2021 the aggregate grant date fair value of stock awards granted during 2021 calculated in accordance with FASB ASC Topic 718, disregarding estimated forfeitures. There is no assurance that the named executive officers will realize these amounts. Assumptions used in calculating these amounts are included in Note 109 to the Company’s audited financial statements included in the Company’sour Annual Report on Form10-K for the year ended December 31, 2018. The 2017 amount for Mr. Sadlowski includes $70,001 for RSUs he received for services as a director while serving as our interim CEO.2021. For PRSU awards, the grant date fair value represents the probable outcome of the applicable performance conditions. Assuming maximum achievement with respect to the performance conditions,metrics applicable to the 2021 PRSU awards, the grant date valuefair values of such awards would be as follows: $1,239,169, $221,288, and $264,892 for Messrs. Gleason, Eckl, and Nuggihalli, respectively. |
| (3) | This column reflects for 2021 the portion of the PRSUs would be $594,000 for Mr. Sadlowski, $247,500 for Mr. Eckl, and $37,125 for Mr. Gohr.named executive officers’ annual cash incentive awards that was paid based on formulaic performance, as further described above. |
| (4) | Amounts reported in this column for 2018 include2021 consist of the following: |
| | Named Executive Officer | | 401 (k) Matching Contributions ($) | | | Term Life
Insurance
Premiums ($) | | | Car
Allowance ($) | | | Total ($) | | | 401 (k)
Matching
Contributions ($)(1) | | | Term Life
Insurance
Premiums ($) | | | Car
Allowance ($) | | | Rental
Allowance ($) | | | Total ($) | | Dennis Sadlowski | | | 15,170 | | | | 2,522 | | | | 12,000 | | | | 29,692 | | | Todd Gleason | | | | 533 | | | | 6,977 | | | | 12,000 | | | | 9,900 | | | | 29,410 | | Matthew Eckl | | | 6,504 | | | | 291 | | | | 12,000 | | | | 18,795 | | | | — | | | | 4,892 | | | | 12,000 | | | | — | | | | 16,892 | | Paul Gohr | | | 8,565 | | | | 182 | | | | 9,600 | | | | 18,347 | | | Ramesh Nuggihalli | | | | — | | | | 6,594 | | | | 8,769 | | | | — | | | | 15,363 | |
(5)(1) | Includesone-time payment of $181,472 relatedCompany matching contributions were suspended for executive officers for plan year 2021 and are expected to relocation expensesresume in conjunction with Mr. Eckl’s hiring.2022.
|
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20182021 Grants of Plan-Based Awards Table
| | | | | | | Estimated Possible Payouts
Under
Non-Equity Incentive Plan
Awards(1) | | | Estimated Future Payouts
Under
Equity Incentive Plan
Awards(2) | | | All Other Stock Awards: Number of Shares of Stock | | | Grant Date Fair Value of Stock and Option | | | | | | Estimated Possible Payouts
Under Non-Equity Incentive Plan
Awards(1) | | | Estimated Future Payouts
Under Equity Incentive Plan
Awards(2) | | | All Other
Stock
Awards:
Number
of Shares
of Stock or Units
(#)(3) | | | Grant Date
Fair Value
of Stock
and Option Awards
($)(4) | | | Name | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target (#) | | | Maximum (#) | | | or Units (#)(3) | | | Awards ($)(4) | | | Grant
Date | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | | Threshold
(#) | | | Target
(#) | | | Maximum
(#) | | Dennis Sadlowski | | | | | | — | | | 575,000 | | | 1,150,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 4/19/18 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 30,000 | | | 148,500 | | | | | | 4/19/18 | | | | — | | | | — | | | | — | | | | — | | | 70,000 | | | 120,000 | | | | — | | | 594,000 | 5 | | Todd Gleason | | | | | | — | | | | 459,000 | | | | 918,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 4/1/21 | | | | — | | | | — | | | | — | | | | — | | | | | | | | 36,765 | | | | 300,002 | | | | | | 4/1/21 | | | | — | | | | — | | | | — | | | | 42,893 | | | | 85,785 | | | | 128,678 | | | | | | 826,110 | | Matthew Eckl | | | | | | — | | | 184,000 | | | 368,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | — | | | | 191,862 | | | | 383,724 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | 2/12/18 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 20,000 | | | 85,400 | | | | | | 4/19/18 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 5,000 | | | 24,750 | | | | | | 4/19/18 | | | | — | | | | — | | | | — | | | | — | | | 25,000 | | | 50,000 | | | | — | | | 247,500 | 5 | | Paul Gohr | | | | | | — | | | 69,500 | | | 83,400 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 4/19/18 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 10,000 | | | 49,500 | | | | | | 4/19/18 | | | | — | | | | — | | | | — | | | | — | | | 7,500 | | | | — | | | | — | | | 37,125 | 5 | | | | | | 4/1/21 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15,319 | | | | 125,003 | | | | | | 4/1/21 | | | | — | | | | — | | | | — | | | | 7,660 | | | | 15,319 | | | | 22,979 | | | | — | | | | 147,522 | | Ramesh Nuggihalli | | | | | | — | | | | 206,250 | | | | 412,500 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | | | 4/1/21 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 42,788 | | | | 350,006 | | | | | | 4/1/21 | | | | — | | | | — | | | | — | | | | 9,169 | | | | 18,338 | | | | 27,507 | | | | — | | | | 176,595 | |
| (1) | The amounts shown in the “Target” and “Maximum” columns consist of annual performance-based cash compensation opportunities for 20182021 provided to the named executive officers and further described in the Compensation Discussion and Analysis above. The “Threshold” column shows dashes because the ultimate value of the performance-based compensation opportunities could be reduced to essentially zero. Please seeThe actual payout for 2021 is shown in the “2018“2021 Summary Compensation Table” for information about cash incentives actually paid to these named executive officers.. |
| (2) | The amounts shown in the “Threshold,” “Target” and “Maximum” columns for Messrs. Sadlowski andGleason, Eckl and the amount shown in the “Target” column for Mr. Gohr,Nuggihalli represent the potential payout levels with respect to PRSU awards granted to such officers in 2018,2021, which amounts may be earned based on Adjusted EBITDARelative TSR performance during the 2020 fiscal year2021-2023 performance period and will generally vest, subject to continued employment, on March 15, 2021. Please see the “Compensation Discussion and Analysis” above for more information about these PRSU awards.2024. |
| (3) | The amounts shown in this column consist of RSU awards, to Messrs. Sadlowski, Eckl and Gohr. Please seewhich generally vest in four substantially equal annual installments on each of the Compensation Discussion and Analysis above for more information about these awards.first four anniversaries of the grant date. |
| (4) | RepresentsThe amounts shown in this column represent the grant date fair value of stock awards calculated in accordance with FASB ASC Topic 718, disregarding estimated forfeitures, rather than amounts realized by the named executive officers. Assumptions used in calculating these amounts are included in Note 10 9to the Company’s audited financial statements included in the Company’sour Annual Report on Form10-K for the year ended December 31, 2018.2021.
|
(5) | The amounts shown represent the grant date fair value for the maximum PRSUs awarded to Messrs. Sadlowski and Eckl and the targeted PRSUs for Mr. Gohr.
| | | 26 • CECO Environmental | | |
For information regarding the terms of the employment agreements in effect with our named executive officers during 2018,2021, please see “Potential Payments Upon Termination or Change in Control.” For information regarding the terms of the awards described in the table above, please see “Compensation DiscussionDiscussion.” For more information about the amount of salary and Analysis.” - 24 -
bonus earned in relation to total compensation, please see “2021 Executive Compensation” in the “Compensation Discussion” above. 2021 Outstanding Equity Awards at 2018 FiscalYear-End Table The following table sets forth information regarding outstanding equity awards for each named executive officer as of December 31, 2018.2021. | | | | | | | Option Awards | | | Stock Awards | | | | | | Option Awards | | | Stock Awards | | | Name | | Grant
Date | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option
Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) | | | Grant Date | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | | | Option Exercise Price ($) | | | Option
Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | | Dennis Sadlowski | | 5/12/2016 | | | | — | | | | — | | | | — | | | | — | | | 4,414 | | | 29,795 | | | | — | | | | — | | | Todd Gleason | | | | 7/6/2020 | | | | 79,225 | | | | 237,677 | | | | 6.36 | | | | 7/6/2027 | | | | — | | | | — | | | | — | | | | — | | | | | 6/10/2017 | | | | — | | | | — | | | | — | | | | — | | | 15,674 | 2 | | 105,800 | | | | — | | | | — | | | | 7/6/2020 | | | | 224,551 | | | | 673,653 | | | | 12.72 | | | | 7/6/2027 | | | | — | | | | — | | | | — | | | | — | | | | | 4/19/2018 | | | | — | | | | — | | | | — | | | | — | | | 30,000 | | | 202,500 | | | | — | | | | — | | | | 7/6/2020 | | | | — | | | | — | | | | — | | | | — | | | | 70,755 | | | | 440,804 | | | | — | | | | — | | | | | 4/19/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 70,000 | 6 | | 472,500 | | | | 4/1/2021 | | | | — | | | | — | | | | — | | | | — | | | | 36,765 | | | | 229,046 | | | | — | | | | — | | | | | 6/10/2017 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 29,167 | 7 | | 196,877 | | | | 4/1/2021 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 85,785 | 6 | | | 534,441 | | Matthew Eckl | | 1/11/2017 | | | | — | | | | — | | | | — | | | | — | | | 12,000 | 3 | | 81,000 | | | | — | | | | — | | | | 1/11/2017 | | | | — | | | | — | | | | — | | | | — | | | | 3,000 | 3 | | | 18,690 | | | | — | | | | — | | | | | 1/11/2017 | | | | — | | | | — | | | | — | | | | — | | | 5,500 | 4 | | 37,125 | | | | — | | | | — | | | | 2/12/2018 | | | | — | | | | — | | | | — | | | | — | | | | 8,000 | 3 | | | 49,840 | | | | — | | | | — | | | | | 2/12/2018 | | | | — | | | | — | | | | — | | | | — | | | 20,000 | 3 | | 135,000 | | | | — | | | | — | | | | 4/19/2018 | | | | — | | | | — | | | | — | | | | — | | | | 1,250 | | | | 7,788 | | | | — | | | | — | | | | | 4/19/2018 | | | | — | | | | — | | | | — | | | | — | | | 5,000 | | | 33,750 | | | | — | | | | — | | | | 3/08/2019 | | | | — | | | | — | | | | — | | | | — | | | | 8,633 | | | | 53,784 | | | | — | | | | — | | | | | 4/19/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 25,000 | 6 | | 168,750 | | | | 5/20/2020 | | | | — | | | | — | | | | — | | | | — | | | | 15,000 | | | | 93,450 | | | | — | | | | — | | Paul Gohr | | 10/1/2014 | | | 2,000 | | | 500 | 8 | | 13.08 | | | 10/1/19 | | | | — | | | | — | | | | — | | | | — | | | | | | 9/4/2015 | | | 3,000 | | | 1,000 | 9 | | 9.44 | | | 9/4/19 | | | | — | | | | — | | | | — | | | | — | | | | 7/6/2020 | | | | — | | | | — | | | | — | | | | — | | | | 37,500 | | | | 233,625 | | | | — | | | | — | | | | | 9/4/2015 | | | | — | | | | — | | | | — | | | | — | | | 1,000 | | | 6,750 | | | | — | | | | — | | | | 4/1/2021 | | | | — | | | | — | | | | — | | | | — | | | | 15,319 | | | | 95,437 | | | | | | | | | | 9/8/2016 | | | | — | | | | — | | | | — | | | | — | | | 1,800 | 3 | | 12,150 | | | | — | | | | — | | | | 5/20/2020 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 20,000 | 5 | | | 124,600 | | | | | 5/16/2017 | | | | — | | | | — | | | | — | | | | — | | | 4,095 | | | 27,641 | | | | — | | | | — | | | | 4/1/2021 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 15,319 | 6 | | | 95,437 | | Ramesh Nuggihalli | | | | 4/5/2021 | | | | — | | | | — | | | | — | | | | — | | | | 42,788 | | | | 266,569 | | | | — | | | | — | | | | | 4/19/2018 | | | | — | | | | — | | | | — | | | | — | | | 10,000 | | | 67,500 | | | | — | | | | — | | | | 4/5/2021 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 18,338 | 6 | | | 114,246 | | | | | 4/19/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | 7,500 | 6 | | 50,625 | | |
| (1) | RepresentsThis column shows the unvested options, which options generally vest in four equal annual installments commencing one year after the grant date.
|
| (2) | This column shows the unvested RSUs, which RSUs generally vest in four equal annual installments commencing one year after the grant date, except as otherwise indicated. |
(2) | These RSUs generally vest in three equal annual installments commencing one year after the grant date.
|
| (3) | These RSUs generally vest in five equal annual installments commencing one year after the grant date. |
| (4) | These RSUs generally vest in two equal annual installments commencing one year after the grant date.
|
(5) | Represents the market value of the awards based on the closing share price of our common stock on December 31, 20182021, of $6.75.$6.23 per share. |
| (5) | These PRSUs generally vest on March 15, 2023, based on the extent to which the Relative TSR goal for the performance period beginning January 1, 2020, and ending on December 31, 2022, as established by our Compensation Committee is met. |
| (6) | These PRSUs generally vest on March 15, 20212024, based on the extent to which the applicableRelative TSR goal for the performance targetperiod beginning on January 1, 2021, and ending on December 31, 2023, as established by our Compensation Committee is met. See “Compensation Discussion and Analysis”Discussion” above for more information about these awards. |
(7) | Reflects the threshold number of performance units that could be earned to the extent stock price goals for atwo-year period ending June 10, 2020 are met. To the extent earned, the performance units generally vest on the third anniversary of the grant date.
| | | | 2022 Proxy Statement • 27 |
(8) | Options generally vest in five equal installments commencing one year after the grant date.
|
(9) | Options generally vest in four equal installments commencing one year after the grant date.
|
20182021 Option Exercises and Stock Vested Table
| | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | | | | Option Awards(1) | | | Stock Awards | | | | | | | Name | | Number of Shares
Acquired on Exercise
(#) | | | Value Realized on Exercise
($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting
($)(2) | | | Number of Shares
Acquired on Exercise
(#) | | | Value Realized on Exercise
($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting
($)1 | | Dennis Sadlowski | | | — | | | | — | | | | 17,686 | | | | 110,317 | | | | | | | | | | Todd Gleason | | | | — | | | | — | | | | 23,585 | | | | 167,925 | | | | | | | | | Matthew Eckl | | | — | | | | — | | | | 8,500 | | | | 44,965 | | | | — | | | | — | | | | 30,067 | | | | 232,015 | | Paul Gohr | | | — | | | | — | | | | 2,464 | | | | 17,803 | | | | | | | | | | Ramesh Nuggihalli | | | | — | | | | — | | | | — | | | | — | |
| (1) | No stock options were exercised by any named executive officers in 2018.
|
(2) | Amounts reflect the number of shares acquired on vesting valued at the closing price of our common stock on the business day immediately preceding the date of vesting. |
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Potential Payments Upon Termination or Change in Control Our named executive officers may beare entitled to certain payments upon voluntary or involuntary termination, retirement, death or disability or change in control. We have no formal policy regardingAdditionally, certain NEOs may be entitled to severance payments or retirement payments.other benefits in certain circumstances pursuant to their employment agreements or the terms of their equity awards. We maintain disability and life insurance policies that would provide for certain benefits upon the death or disability of a named executive officer then serving as one of our employees. In August 2021, the Board of Directors approved the CECO Environmental Corp. Executive Change in Control Severance Plan for certain NEOs and certain other executive leaders (the “CIC Severance Plan”). This CIC Severance Plan is designed to address organizational leadership needs to attract and retain senior level executives in CECO removing barriers and distractions of executives by providing limited protection to senior level leaders should a potential change in control occur. Offering continuity for these leaders while not tying the organization to an employment contract allows CECO to recruit, retain and demonstrate the value our senior level leaders contribute to our organization. The tables below summarize the amounts that each continuing named executive officer would receive if his employment had terminated on December 31, 2018,2021, the last business day of that year, under the various circumstances shown. The amounts include the value of sucheach named executive officer’s equity awards outstanding as of that date (based on hypothetical vesting under the various circumstances) based on the closing price per share of our common stock on such date ($6.75)6.23). For information about these equity awards held by our named executive officers, see “2018the “2021 Outstanding Equity Awards at FiscalYear-End”Year-End Table” above. We also discuss these awards in the “Compensation Discussion and Analysis”Discussion” above. If a named executive officer’s employment was terminated for cause, no amount would be payable. | | Dennis Sadlowski | | Death or Disability ($)(1) | | | Change in Control ($)(2) | | | Without Cause or for
Good Reason ($)(1) | | | | Todd Gleason | | | Death or Disability(1) ($) | | | Change in Control(2) ($) | | | Without Cause or for Good Reason(1) ($) | | | | | | | Cash Payments(3) | | | — | | | | 1,290,561 | | | | 1,290,561 | | | | — | | | | 918,000 | | | | 826,200 | | Accelerated Equity Awards | | | | | | | | | | | | | | | Accelerated Equity Awards: | | | | | | | | | | | | | | | RSUs | | | 338,095 | | | | 338,095 | | | | 338,095 | | | | 669,850 | | | | 669,850 | | | | 669,850 | | | | | | | PRSUs | | | 810,000 | | | | 810,000 | | | | 810,000 | | | | 534,441 | | | | 534,441 | | | | 534,441 | | Performance Units | | | — | | | | 700,000 | | | | — | | | COBRA(5) | | | 3,465 | | | | 3,465 | | | | 3,465 | | | | | | | | Options | | | | — | | | | — | | | | — | | | | | | | COBRA(6) | | | | — | | | | 30,271 | | | | 30,271 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 1,151,560 | | | | 3,142,121 | | | | 2,442,121 | | | | 1,204,291 | | | | 2,152,562 | | | | 2,060,762 | | | | | | | | | | | | | | | | | | | | | Matthew Eckl | | Death or Disability ($)(1) | | | Change in Control ($)(2) | | | Without Cause or for
Good Reason ($)(1) | | | Death or Disability(1) ($) | | | Change in Control(2) ($) | | | Without Cause or for
Good Reason(1) ($) | | | | | | | Cash Payments(4) | | | — | | | | 563,736 | | | | 563,736 | | | | — | | | | 502,330 | | | | 502,330 | | Accelerated Equity Awards | | | | | | | | | | | | | | | Accelerated Equity Awards: | | | | | | | | | | | | | | | RSUs | | | 286,875 | | | | 286,875 | | | | 286,875 | | | | 468,508 | | | | 468,508 | | | | 468,508 | | | | | | | PRSUs | | | 337,500 | | | | 337,500 | | | | 337,500 | | | | 220,037 | | | | 220,037 | | | | 220,037 | | COBRA(5) | | | 300 | | | | 300 | | | | 300 | | | | | | | | COBRA(6) | | | | — | | | | 27,714 | | | | 27,714 | | | | | | | | | | | | | | | | | | | | | | | | | | | Total | | | 624,675 | | | | 1,188,411 | | | | 1,188,411 | | | | 688,545 | | | | 1,218,589 | | | | 1,218,589 | | | | | | | | | | | | | | Paul Gohr | | Death or Disability ($)(1) | | | Change in Control ($)(2) | | | Without Cause or for
Good Reason ($)(1) | | | Accelerated Equity Awards | | | | | | | | | | RSUs | | | 114,041 | | | | 114,041 | | | | 114,041 | | | PRSUs | | | 50,625 | | | | 50,625 | | | | 50,625 | | | Options(6) | | | — | | | | — | | | | — | | | | | | | | | | | | | | | Total | | | 164,666 | | | | 164,666 | | | | 164,666 | | |
| | | | | | | | | | | | | | Ramesh Nuggihalli | | Death or Disability(1) ($) | | | Change in Control(2) ($) | | | Without Cause or for
Good Reason(1) ($) | | | | | | | Cash Payments(5) | | | — | | | | 581,250 | | | | 497,055 | | | | | | | Accelerated Equity Awards: | | | | | | | | | | | | | | | | | | RSUs | | | 266,569 | | | | 266,569 | | | | 266,569 | | | | | | | PRSUs | | | 114,246 | | | | 114,246 | | | | 114,246 | | | | | | | COBRA(6) | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | Total | | | 380,815 | | | | 962,065 | | | | 877,870 | |
| (1) | The accelerated vesting of all or part of outstanding RSUs and PRSUs, and stock optionsoption awards, is subject to the discretion of our Compensation Committee in the event of an involuntary termination or a termination as a result of death or disability. For the purpose of this disclosure, we have assumed that all outstanding RSUs, PRSUs, and stock optionsoption awards will be accelerated in such circumstances. In the event of death or disability, Mr. Sadlowski’s performance units would generally vest on apro-rata basis (based on the date of such death or disability) based on actual performance for the full performance period. For the purposes of this disclosure, we have assumed that none of Mr. Sadlowski’s performance units have vested because of stock price performance to date, and accordingly we have valued them at $0. |
| (2) | The accelerated vesting of all or part of outstanding RSUs and PRSUs, and stock option awards, upon a change in control is generally subject to the discretion of our Compensation Committee, except thatas described in this footnote. Mr. Eckl’s RSUs will vest immediately prior to the closing of a change in control pursuant to the terms of his employment agreement. Mr. Sadlowski’s performance unitsGleason’s RSUs and stock option awards would generally vest in the event of a change in control based on performance through the date of the change in control, unless a replacement award is provided in accordance with the |
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| applicable award agreement. If such a replacement award is provided, and Mr. SadlowskiGleason is terminated by us without cause (as defined in the applicable award agreement) or by Mr. SadlowskiGleason for good reason (as defined in the applicable award agreement), in each case within a period of two years after the change in control, 100% of the replacement award will become vested. PRSU awards would generally vest in the event of a change in control based on “target” performance, unless a replacement award is provided in accordance with the applicable award agreement. If such a replacement award is provided, and the grantee is terminated by us without cause (as defined in the applicable award agreement) or by the grantee for good reason (as defined in the applicable award agreement), in each case within two years after the change in control, 100% of the replacement award will become vested. For the purposes of this disclosure, we have assumed that all outstanding awards will accelerate and that the named executive officer experiences a qualifying termination of employment on the date of the change in control. |
| (3) | Mr. Sadlowski’sGleason’s employment agreement provides in the event of termination ofthat if his employment is terminated by the Company without “cause” or by Mr. SadlowskiGleason for “good reason” (as such terms are defined in his employment agreement), for other than during the two-year period following a change in control, he will receive, in addition to certain accrued benefits, (i) a lump sum equal to his annual base salary ($575,000);459,000), and (ii) a lump sum equal to apro-rated annual cash incentive payment for 2018 based on actual performance ($715,561)(which we have assumed to be $367,200 for this presentation). Mr. Gleason’s employment agreement provides that if his employment is terminated by the Company without cause or by Mr. Gleason for good reason within a period of two years after a change in control, he will receive, in addition to certain accrued benefits, a lump sum payment equal to the sum of (a) his annual base salary and (b) his full year target annual bonus for the year in which termination occurs. Mr. Gleason’s cash severance benefits are generally subject to Mr. Gleason’s execution and non-revocation of a release of claims in favor of the Company. |
| (4) | Mr. Eckl’s employment agreement provides in the event of a termination ofthat if his employment is terminated by the Company without “cause” or by Mr. Eckl for “good reason” (as such terms are defined in his employment agreement), forhe will receive (i) a lump sum equal to the sum of his annual base salary ($335,000);348,840), and (ii) a lump sum equal to apro-rated annual cash incentive payment for 20182021 based on actual performance ($228,736)(which we have assumed to be $153,490 for this presentation). In the event of a change in control of the Company, in certain circumstances as described below, Mr. Eckl may be eligible for a lump sum cash amount equal to the sum of his annual base salary ($335,000)348,840) plus hisan annual cash incentive (equal to the same percentage of his annual base salary as the annual cash incentive, if any, that he received for the prior fiscal year ($228,736)153,490); if this amount were paid, it would be in lieu of the base salary ($335,000)348,840) lump sum that would be paid in anon-change in control termination. |
| (5) | Mr. Nuggihalli’s employment arrangement provides that in general, if his employment is terminated by the Company without “cause” or by Mr. Nuggihalli for “good reason” (as such terms are defined for purposes of his employment arrangement) other than during the one-year period following a change in control, he will receive, in addition to certain accrued benefits, (i) a lump sum equal to his annual base salary ($375,000); and (ii) a lump sum equal to his full pro-rated year target annual bonus for the year in which the termination occurs (which we have assumed to be $122,055 for this presentation), plus COBRA benefits for one year, if elected. Mr. Nuggihalli’s employment participation in the CIC Severance Plan (as defined and further described below) provides that in general, if his employment is terminated by the Company without cause or by Mr. Nuggihalli for good reason within a period of one year after a change in control (or in certain circumstances within six months prior to a change in control), he will receive, in addition to certain accrued benefits, a lump sum payment equal to the sum of (a) his annual base salary and (b) his full year target annual bonus for the year in which termination occurs and up to $20,000 in outplacement services, plus COBRA coverage benefits for one year, if elected. Mr. Nuggihalli’s cash severance benefits are generally subject to Mr. Nuggihalli’s execution and non-revocation of a release of claims in favor of the Company. |
| (6) | Represents the payment of COBRA reimbursements for 12 months following termination. Mr. Sadlowski’sGleason’s employment agreement provides for the reimbursement of his12 months COBRA payments if he elects continued coverage. Mr.Messrs. Eckl’s employment agreement and Mr. Nuggihalli’s employment arrangement provides for a lump sum payment.payment (or direct payment) for up to 12 months of COBRA coverage if elected. |
(6) | No value is reported for Mr. Gohr’s stock options, because the exercise prices of such stock options exceeded the closing price of our common stock as of December 31, 2018.
| | | | 2022 Proxy Statement • 29 |
Employment Agreement with Mr. SadlowskiGleason We entered into an employment agreement on June 10, 2017July 6, 2020, with Mr. SadlowskiGleason in connection with his appointment as our permanent CEO. HisThe employment agreement has an initial term of three years, subject to annual extensions unless the Company timely terminates such extensions. In addition to participation in the employee benefit plans, programs and policies for senior executives of our Company, Mr. Gleason’s employment agreement provides for the following:following ongoing rights and obligations: | | | • an initial annuala base salary of $575,000 that is subject to annual reviewreviews for any increase; • the opportunity to earn, based on achievement with respect to the applicable performance criteria established by our Compensation Committee, an annual cash bonusincentive with a target bonus opportunity equal to no less than 100% of his base salary and a maximum bonusincentive opportunity equal to no less than 200% of his base salary; • eligibility for market-competitivenot less than $1 million in annual awards under our Company’s long-term incentive compensation arrangements as reasonably determined by our Compensation Committee after consideration of competitive market data provided by its independent compensation consultant, in accordance with Company policies and the applicable award agreements and incentive compensation plans under which such awards may be granted;granted (no less than 60% of such annual equity award shall be subject to the achievement of performance objectives determined by the Compensation Committee); • a $1,000 monthly car allowance of $1,000;allowance; and • participation in the employee benefit plans, programs and policiesreimbursement for senior executives of our Company.up to $2,500 per month for apartment or comparable rental expense through December 31, 2021. | | | | | |
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Under the employment agreement, Mr. Gleason is subject to customary one-year post-employment non-competition obligations and indefinite employee non-solicitation and confidentiality obligations. The employment agreement also includes a mutual non-disparagement provision that applies for one year following termination of Mr. Gleason’s employment. Employment Agreement with Mr. Eckl We entered into an employment agreement on January 9, 2017 with Mr. Eckl in 2017 when he joined our Company. In addition to participation in the employee benefit plans, programs and policies for senior executives of our Company, as our Chief Financial Officer. HisMr. Eckl’s employment agreement provides for the following:following ongoing rights and obligations: | | | • a base salary of $335,000that is subject to annual reviews for 2018, which will thereafter be reviewed by us at least annually for any increase; • a target annual bonusthe opportunity equal to 55% of annual base salary for 2018, which will thereafter be annually reviewed by our Compensation Committee; • subjectearn, based on achievement with respect to approvalthe applicable performance criteria established by our Compensation Committee, an award in early 2018 of 20,000 RSUs that generally vests (subject to continued employment) in five equal annual installments commencing oncash incentive as determined by the first anniversary of the date of grant;Compensation Committee; and
• a $1,000 monthly car allowance of $1,000; and • participation in the employee benefit plans, programs and policies for senior executives of the Company.allowance.
| | | | | |
Under the employment agreement, Mr. Eckl is subject to customary one-year post-employment non-competition obligations and indefinite employee non-solicitation and confidentiality obligations. The employment agreement also includes a mutual non-disparagement provision that applies for one year following termination of Mr. Eckl’s employment. The employment agreements with Messrs. SadlowskiGleason and Eckl, and our employment arrangement with Mr. Nuggihalli, also each provide that if we terminate the executive’sexecutive officer’s employment without “cause” (as defined for Messrs. Gleason and Eckl in each of their employment agreement)agreements) or if the executive officer terminates employment for “good reason” (as defined for Messrs. Gleason and Eckl in each of their employment agreement)agreements), he will be entitled to receive (in addition to certain accrued compensation and other benefits), subject to his execution of a release: (1) a lump sum cash amount equal to his annual base salary; (2) a lump sum cash amount equal to a pro rata portion of the annual bonusincentive he would have earned had he remained employed through the end of the fiscal year in which such termination occurs; and (3) for Mr. Sadlowski,Messrs. Gleason and Nuggihalli, reimbursement (or direct payment) of monthly COBRA payments for up to 12 months after termination, and for Mr. Eckl, a lump sum cash amount equal to the product of 12 multiplied by the monthly COBRA premium for health, dental and vision benefits in effect for the executive officer, his spouse and his dependents.
If Mr. Gleason is terminated without cause or terminates his employment for good reason within two years after a “change in control” (as defined in Mr. Gleason’s employment agreement) of our Company, the cash severance amount would include Mr. Gleason’s target annual bonus for the year of termination (rather than a pro-rata bonus based on actual performance). In the event of a “change in control” (as defined in Mr. Eckl’s employment agreement) of our Company, if the successor entity or purchaser does not offer Mr. Eckl employment as Chief Financial Officer with a compensation package equal to or better than the combination of his annual base salary and annual bonus opportunity as in effect immediately prior to such change in control, then Mr. Eckl will resign as of the date of such change in control (or agree to resign as of the end of a reasonable transition period) and, subject to his execution of a release, he will be entitled to receive a lump sum cash amount equal to the sum of his annual base salary plus his annual bonus (equal to the same percentage of his annual base salary as the annual bonus, if any, that he received for the prior fiscal year). Immediately prior to the closing of a change in control, any unvested RSUs held by Mr. Eckl will immediately vest. Pursuant to their employment agreements, Messrs. SadlowskiGleason and Eckl are also subject toone-year post-employmentnon-competition obligations and indefinitenon-solicitation and confidentiality obligations. Each of these employment agreements also includes a customary indemnification provision. Mr. Sadlowski’sGleason’s employment agreement also includes a mutualnon-disparagement provision that applies for one year following termination of his employment. CIC Severance Plan Coverage As part of Mr. Nuggihalli’s employment, he was granted participation in the employee benefit plans, programs and policies for senior executives of our Company and a monthly car allowance similar to that described above for Mr. Gleason. Additionally, Mr. Nuggihalli is a participant in the CIC Severance Plan. The CIC Severance Plan generally provides that, if within one year after the date of a change in control of our Company (or within six months of such change in control under certain circumstances described in the CIC Severance Plan), we terminate Mr. Nuggihalli’s employment without “cause” (as defined in the CIC Severance Plan) (and not for death or disability, as explained in the CIC Severance Plan), or if he terminates employment for “good reason” (as defined in the CIC Severance Plan), then he will be entitled to receive (in addition to certain accrued compensation and other benefits), subject to his execution of a release of claims in favor of the Company: (1) a lump sum cash amount equal to his annual base salary; (2) a lump sum cash amount equal to full target achievement of the annual bonus he would have earned had he remained employed through the end of the fiscal year in which such termination occurs; (3) direct payment on his behalf of monthly COBRA payments for up to 12 months after termination; and (4) up to $20,000 in outplacement benefits (plus transfer of certain life insurance policies by the Company if applicable and requested). Participation in the CIC Severance Plan also requires compliance with certain customary confidentiality, non-disparagement, non-competition, and non-solicitation provisions. Messrs. Gleason and Eckl are not currently participants in the CIC Severance Plan, but instead participate in certain change in control severance benefits under their employment agreements as described above. Chief Executive Officer Pay Ratio For 2018,2021, the ratio of the annual total compensation of Mr. Gleason, our CEO (“CEO Compensation”), to the median of the annual total compensation of all our employees and those of our consolidated subsidiaries (other than our CEO) (“Median Annual Compensation”) was approximately 3531 to 1. We note that due to our permitted use of reasonable estimates and assumptions in preparing this pay ratio disclosure, the disclosure may involve a degree of imprecision. Accordingly, this pay ratio disclosure is a reasonable estimate calculated in a manner consistent with SEC rules, using the data and assumptions described below. We refer to the employee who received the Median Annual Compensation as the “Median Employee.” For purposes of this disclosure, the date used to identify the Median Employee was December 31, 2018 (the “Determination Date”). In general, we changed the date for purposes of this disclosure from November 30, 2017 (the date used for last year’s disclosure) to the current Determination Date to reflect our smaller employee population after the completion of our Zhongli divestiture (at the end of November) and due to the administrative benefits of obtaining information as of year-end rather than as of the end of November. For purposes of this pay ratio disclosure, CEO Compensation was determined to be $2,062,753,$1,979,299, which represents the total 2021 compensation reported for our CEOMr. Gleason, as set forth above in the 20182021 Summary Compensation Table. For purposes of this pay ratio disclosure, Median Annual Compensation was determined to be $59,300$63,250 and was calculated using the same methodology we used for our named executive officers in the 20182021 Summary Compensation Table. For purposes of this disclosure, we have used the same Median Employee analysis that was used for the pay ratio disclosure in our 2021 Proxy Statement, because there has been no material changes in our employee population or employee - 28 -
| | | | | 2022 Proxy Statement • 31 |
compensation arrangements that we believe would significantly impact the pay ratio disclosure. The date used to identify such Median Employee was December 31, 2020 (the “Determination Date”). To identify the Median Employee, we measured cash compensation (as described below) for the period beginning on January 1, 20182020, and ending on December 31, 20182020, for 754702 U.S. andnon-U.S. employees, representing all full-time, part-time, seasonal, and temporary employees for us and our consolidated subsidiaries as of theour Determination Date (except as described below and other than for our CEO). This number does not include any independent contractors or “leased” workers, as permitted by the applicable SEC rules. This number excludes 1923 non-U.S. employees (consisting of 78 employees in Singapore, 4 employees in Canada and 811 employees in India,the United Kingdom, or collectively approximately 2%3% of our total workforce of 773725 employees) and does not exclude any employees of businesses acquired by us or combined with us. ThisThe cash compensation measurement was calculated by totaling, for each employee, the following cash compensation elements: salary, wages, commissions, bonuses, and certain cash perquisites (such as moving allowance and automobile allowances). This cash compensation represents the consistently applied compensation measure that we used for our pay ratio determination. Specifically excluded from the consistently applied compensation measure were equity awards and Companycompany contributions to 401(k) plans. Further, we did not utilize any statistical sampling,cost-of-living adjustments or annualizationother annualizations for purposes of this pay ratio disclosure. - 29 -
PROPOSAL 2 ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS We are seeking your advisory(non-binding) vote approving the compensation of our named executive officers. We believe that the structure of our named executive officer compensation programs promotes the long-term interests of our stockholders. Our named executive officer compensation programs are designed to attract, retain, motivate and reward talented named executive officers who will achieve our business objectives and create long-term value for our stockholders. We believe that our compensation program rewards sustained performance that is aligned with long-term stockholder interests. This proposal, commonly known as a “Say-on-Pay”“Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies, and practices described in this Proxy Statement. We encourage stockholders to read the Executive Compensation sections of this Proxy Statement, including the Compensation Discussion, and Analysis, which discussesdiscuss our compensation policies and procedures, and the compensation of our named executive officers for 2018.2021. At our 20182021 Annual Meeting of Stockholders, approximately 98% of the votes cast on our Say-on-Pay proposal were for approval ofto approve the compensation of our named executive officers.officers received approximately 88% approval of all shares represented at the meeting. We believe that this indicates strong support for our continued focus on aligning our named executive officer compensation programs with the interests of our stockholders. During 2018,2021, we continued to focus on pay for performance, and in addition to granting time-based restricted stock units,RSUs, we granted performance-based restricted stock unitsPRSUs that only vest if our named executive officers attainmarket performance meets or exceeds the goals established by our Compensation Committee. 
Our Board recommends a vote "FOR" the following resolution, providing an advisory approval of the compensation paid to our named executive officers: RESOLVED, that the compensation paid to the Company's named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in this Proxy Statement is hereby approved.
This vote is required pursuant to Section 14A of the Exchange Act and is advisory andnon-binding; however, our Compensation Committee and our Board will review and expectare expected to consider the results of the vote when making future determinations regarding our named executive officer compensation programs. Advisory Say-on-Pay votes have been scheduled to be held once every year. Depending on the results of Proposal 3 (the frequency of future Say-on-Pay votes), weWe expect to hold the next advisory vote to approve the compensation of our named executive officers in 2020, 2021 or 2022.2023. This proposal requires a favorable vote of the majority of shares represented at the Annual Meeting for advisory approval. For the purposes of this proposal, abstentions and broker non-votes are treated as shares represented at the Annual Meeting and will have the same effect as a vote against. - 30 -
| | | | | 2022 Proxy Statement • 33 |
PROPOSAL 3
ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES
TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
We are also seeking your advisory(non-binding) vote on the frequency of future advisory stockholder votes to approve the compensation paid to our named executive officers. Stockholders may indicate whether they prefer future advisory votes to approve named executive officer compensation every one, two, or three years, or they may abstain with respect to this proposal.
We have included a Say-on-Pay vote every year since 2013, and our Board has determined that it is appropriate to continue with an annual advisory vote to approve named executive officer compensation. Our Board believes that an advisory vote to approve named executive officer compensation every year will allow our stockholders to provide us with their direct input on our compensation philosophy, policies and practices as disclosed in the Proxy Statement. Setting aone-year period for holding this stockholder vote will enhance stockholder communication by providing a clear, simple means for us to obtain information more frequently on investor sentiment about our named executive officer compensation philosophy. It will also facilitate more timely responses to stockholder concerns.
When voting on this Proposal, you will have the option to recommend holding future advisory votes to approve the compensation of our named executive officers every one, two, or three years or to abstain entirely from voting on the matter. The frequency (one, two or three years) that receives the highest number of votes cast by stockholders will be the frequency of future advisory votes to approve named executive officer compensation that has been recommended by the stockholders. Abstentions and brokernon-votes are not treated as votes cast, so they will have no effect on the outcome of the vote. Although the vote isnon-binding, our Board will consider the outcome of this vote when deciding when to call for the next advisory vote to approve named executive officer compensation. However, because this vote is advisory only andnon-binding, our Board may nevertheless decide that it is in the best interests of our stockholders and our Company to hold an advisory vote to approve named executive officer compensation more or less frequently than the most popular option recommended by our stockholders.
We will hold the next advisory vote on the frequency of future advisory votes to approve named executive officer compensation in 2025.
Our Board recommends that you vote for every "ONE YEAR" as the frequency of future advisory votes to approve named executive officer compensation.
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AUDIT MATTERS Audit Committee Report Our Audit Committee has reviewed and discussed our Company’s audited financial statements for the fiscal year ended December 31, 2018,2021, with our management and has discussed with BDO USA, LLP (“BDO”), our independent registered public accounting firm, those matters required to be discussed by Auditing Standard No. 1301, “Communications with Audit Committees,” as issued bythe applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”). and the Securities and Exchange Commission. In addition, our Audit Committee has received the written disclosures and the letter from BDO required by applicable requirements of the PCAOB, regarding BDO’s communications with our Audit Committee concerning independence, and our Audit Committee has discussed BDO’s independence with BDO. Based on these reviews and discussions, the Audit Committee recommended to our Board that our audited financial statements be included in our Annual Report on Form10-K for the fiscal year ended December 31, 20182021, for filing with the SEC. Audit Committee Claudio A. Mannarino, Chairman David B. Liner Munish Nanda Independent Registered Public Accounting Firm Fees The following table sets forth the fees for services provided to us by BDO for the fiscal years ended December 31, 2018 and 2017.31: | | | | | | | | | | | | | | 2021 | | | 2020 | | | | | 2018 ($) | | | 2017 ($) | | | | Audit Fees | | | 1,654,336 | | | | 1,966,872 | | | $ | 1,260,321 | | | $ | 1,267,779 | | | | | | | Audit-Related Fees | | | — | | | | 3,000 | | | | 127,000 | | | | 85,000 | | | | | | | Tax Fees | | | 61,998 | | | | 30,496 | | | | — | | | | — | | All Other Fees | | | — | | | | — | | | | | | | | | | | | | | | | | | | | | | Total | | | 1,716,334 | | | | 2,000,368 | | | $ | 1,387,321 | | | $ | 1,352,779 | |
The following is a description of the nature of the services comprising the fees disclosed in the table above for each of the fourthree categories of services. The Audit Committee has considered whether providingnon-audit services is compatible with maintaining BDO’s independence. Audit Fees These are fees for professional services for the integrated audit of our annual consolidated financial statements, the review of financial statements included in Quarterly Reports on Form10-Q, Proxy Statements and services that are normally rendered in connection with statutory and regulatory filings or engagements. Audit-Related Fees These are fees for assurance and related services that are reasonably related to the performance of the audit or the review of our financial statements that are not included as audit fees. - 32 -
Tax Fees These are fees for professional services rendered by BDO with respect to tax compliance and tax planning. All Other Fees
These are fees for other services rendered by BDO that do not meet the above category descriptions.
Audit CommitteePre-Approval Policy Our Audit Committee is responsible forpre-approving all audit services and permittednon-audit services (including the fees and retention terms) to be performed for our Company by its auditors prior to their engagement for such services. Our Audit Committee has delegated to each of its members the authority to grantpre-approvals, such approvals to be presented to the full Audit Committee at the next scheduled meeting. All of the fees paid to BDO under the categories Audit-Related Fees and Tax Fees werepre-approved by the Audit Committee or the Audit Committee Chair and none of the fees for such services were under the de minimis exception topre-approval provided in the applicable rules rendered established by the SEC. - 33 -
| | | | | 2022 Proxy Statement • 35 |
PROPOSAL 43 RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM At the recommendation of the Audit Committee, our Board has appointedratified the appointment of BDO as our independent registered public accounting firm for the fiscal year ending December 31, 2019.2022. BDO has served asin that capacity and reported on our independent registered public accounting firmconsolidated financial statement and the effectiveness of our internal controls over financial reporting continuously since September 2008. A representative of BDO is not expected to be present at the Annual Meeting. Our Audit Committeepre-approves approves any engagement of BDO and has the ultimate authority and responsibility to select, evaluate and, where appropriate, replace the independent registered public accounting firm and nominate an independent registered public accounting firm for stockholder approval. A representative of BDO isAlthough we are not expectedrequired to be present at the Annual Meeting. Althoughseek stockholder approval of the appointment of BDO, is not required by law, ourthe Board believes that it is advisableconsistent with good corporate governance practices to giveask stockholders an opportunity to ratify thisthe appointment. If the appointment is not ratified, the Audit Committee will explore the reasons for stockholder rejection and will reconsider the appointment. In addition, even if stockholders fail to ratify the Audit Committee’s appointment of BDO, the Audit Committee, in its discretion, may reconsiderstill appoint a different independent registered public accounting firm if it believes that such a change would be in the selection.best interests of the Company and our stockholders.
This proposal requires a favorable vote of the majority of shares represented at the Annual Meeting for approval. 
Our Board recommends a vote "FOR" the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for fiscal year 2019.
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OTHER INFORMATION Security Ownership of Certain Beneficial Owners The following table shows the beneficial ownership of our common stock as of March 1, 2019February 28, 2022, by (i) each of our directors, (ii) each of our named executive officers, (iii) all directors and executive officers as a group, and (iv) all persons whom we know to be the beneficial owner of five percent (5%) or more of our common stock. Beneficial ownership includes the right to acquire shares within 60 days, including upon the exercise of an option or vesting of an RSU; however, such shares are not deemed to be outstanding for the purpose of computing the percentage owned by any other person. Except as noted below, each person exercises sole voting and investment power with respect to the shares listed. | | | | | | Name of Beneficial Owner | | Number of Shares of Common Stock Beneficially Owned2 | | Percent of Total Common Stock Outstanding1 | Executive Officers, Directors and Director Nominees as a group (10 persons) | | 4,584,111 | | 13.1% | Jason DeZwirek3 | | 4,188,904 | | 12.0% | Matthew Eckl | | 26,250 | | * | Paul Gohr | | 11,064 | | * | Eric M. Goldberg | | 37,088 | | * | David B. Liner | | 26,642 | | * | Claudio A. Mannarino | | 24,088 | | * | Munish Nanda | | — | | * | Jonathan Pollack4 | | 208,088 | | * | Valerie Gentile Sachs | | 17,094 | | * | Dennis Sadlowski | | 44,893 | | * | Other Beneficial Owners | | | | | BlackRock, Inc.5 55 East 52nd Street New York, New York 10055 | | 2,150,295 | | 6.1% | Dimensional Fund Advisors LP6 Building One 6300 Bee Cave Road Austin, Texas, 78746 | | 2,366,493 | | 6.8% | Icarus Investment Corp.3 2300 Yonge Street, Suite 1710 Toronto, Ontario M4P 1E4 | | 2,734,546 | | 7.8% | J. Luther King, Jr.7 301 Commerce Street, Suite 1600 Fort Worth, Texas 76102 | | 2,300,569 | | 6.6% | Trigran Investments, Inc.8 630 Dundee Road, Suite 230 Northbrook, Illinois 60062 | | 4,637,498 | | 13.3% |
| | | | | | Name of Beneficial Owner | | Number of Shares of Common Stock Beneficially Owned 2 | | Percent of Total Common Stock Outstanding 1 | | | | | Executive Officers, Directors and Director Nominees as a group (12 persons) | | 5,297,625 | | 15.1% | | | | | Jason DeZwirek 3 | | 4,261,534 | | 12.2% | | | | | Matthew Eckl | | 92,116 | | * | | | | | Todd Gleason | | 338,328 | | * | | | | | Ramesh Nuggihalli | | 12,568 | | * | | | | | Eric M. Goldberg | | 73,718 | | * | | | | | David B. Liner | | 77,514 | | * | | | | | Claudio A. Mannarino | | 60,718 | | * | | | | | Munish Nanda | | 30,372 | | * | | | | | Jonathan Pollack 4 | | 223,876 | | * | | | | | Valerie Gentile Sachs | | 51,880 | | * | | | | | Richard F. Wallman | | 75,000 | | * | | | | | Other Beneficial Owners | | | | | | | | | American Century Investment Management, Inc. 5 4500 Main Street, 9th Floor Kansas City, Missouri, 64111 | | 2,293,671 | | 6.5% | | | | | BlackRock, Inc. 6 55 East 52nd Street New York, New York 10055 | | 2,416,268 | | 6.9% | | | | | Dimensional Fund Advisors LP 6 Building One 6300 Bee Cave Road Austin, Texas, 78746 | | 2,432,470 | | 6.9% | | | | | Icarus Investment Corp.3 127 Davenport Road Toronto, Ontario M5R 1H8 | | 2,770,546 | | 7.9% | | | | | J. Luther King, Jr.7 301 Commerce Street, Suite 1600 Fort Worth, Texas 76102 | | 2,300,569 | | 6.6% | | | | | Trigran Investments, Inc.8 630 Dundee Road, Suite 230 Northbrook, Illinois 60062 | | 4,452,609 | | 12.7% |
| | | | | 2022 Proxy Statement • 37 |
| (1) | Based on 34,979,89535,047,612 shares of common stock outstanding as of March 1, 2019.February 28, 2022. |
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| (2) | Amounts reported in this column include RSUs that vest before April 30, 201929, 2022, and shares that could be acquired upon options that are exercisable before April 30, 2019,29, 2022, as shown in this table:table below: |
| | | | | | | | | | Name of Beneficial Owner | | RSUs (#) | | | Option Shares (#) | | Matthew Eckl | | | 1,250 | | | | — | | Paul Gohr | | | 2,500 | | | | 5,000 | | Eric M. Goldberg | | | — | | | | 15,000 | | Jonathan Pollack | | | — | | | | 103,000 | | Dennis Sadlowski | | | 7,500 | | | | — | |
| | | | | | | | | Name of Beneficial Owner | | RSUs | | | Option Shares | | | | | Todd Gleason | | | 9,191 | | | | — | | | | | Matthew Eckl | | | 16,396 | | | | — | | | | | Ramesh Nuggihalli | | | 10,697 | | | | — | | | | | Eric M. Goldberg | | | — | | | | 15,000 | | | | | Jonathan Pollack | | | — | | | | 36,000 | |
| (3) | This information was obtained from a Schedule 13D/A filed with the SEC on September 11, 2015, and is supplemented by a Form 4 filed with the SEC on June 13, 2018May 25, 2021, by Jason DeZwirek. Jason DeZwirek is deemed to control Icarus Investment Corp. (“Icarus”) and has sole voting and dispositive power ofover the shares of common stock owned by Icarus and ownership of such shares is attributed to Jason DeZwirek in this table.Icarus. Shares shown as beneficially owned by Mr. DeZwirek include the shares owned by Icarus. |
| (4) | Shares beneficially owned by Mr. Pollack include 2,300 shares owned by his spouse, over which she has sole voting and dispositive power, and 85,20088,200 shares held by JMP (as defined above)Fam Holdings, Inc., over which Mr. Pollack has sole voting and dispositive power. |
| (5) | Based on a Schedule 13G/A13G filed with the SEC on February 4, 2019,2022, as of December 31, 2018,2021, American Century Investments Management, Inc. beneficially owned and had sole dispositive power over all of these shares and has sole voting power over 2,246,420 of these shares. |
| (6) | Based on a Schedule 13G/A filed with the SEC on January 31, 2022, as of December 31, 2021, BlackRock, Inc. beneficially owned and had sole dispositive power over all of these shares and has sole voting power over 2,098,0542,362,130 of these shares, which include shares held by certain subsidiaries of BlackRock, Inc. |
(6)(7) | Based on a Schedule 13G/A filed with the SEC on February 8, 2019,12, 2021, as of December 31, 2018,2021, Dimensional Fund Advisors LP beneficially owned and has sole dispositive power over all of these shares and has sole voting power over 2,252,0832,324,024 shares. Dimensional Fund Advisors LP disclaims beneficial ownership of all of these shares. |
(7)(8) | This information was obtained from a Schedule 13D/A filed with the SEC on November 27, 2017. According to the Schedule 13D/A, J. Luther King, Jr. beneficially owns and has sole dispositive and voting power over all of these shares, which include shares held by J. Bryan King and certain entities controlled by J. Luther King, Jr. and J. Bryan King. |
(8)(9) | Based on a Schedule 13G/A filed with the SEC on February 14, 2019,10, 2022, as of December 31, 2018,2021, Trigran Investments, Inc. and certain control persons of that entity beneficially owned and had shared dispositive and voting power over all of these shares. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers and persons beneficially owning more than ten percent of a class of our equity securities to file certain reports of beneficial ownership and changes in beneficial ownership with the SEC. Based solely on our review of Section 16(a) reports and any written representation made to us, the Company believes that all such required filings for 2018 were made in a timely manner.
- 36 -
INFORMATION FOR THIS ANNUAL MEETING The Board of Directors of CECO Environmental Corp. is soliciting proxies to be voted at the Annual Meeting to be held solely through virtual participation via webcast at www.virtualshareholdermeeting.com/CECE2022 at 8:00 a.m., Central Time, on June 8, 2022, or any postponement or adjournment thereof. Why Did I Receive a Notice of Internet Availability of Proxy Materials? Pursuant to rules adopted by the SEC, we have elected to provide access to our proxy materials over the internet. Accordingly, we have sent you a Notice of Internet Availability of Proxy Materials (“Notice”) because our Board is soliciting your proxy to vote at the Annual Meeting, including at any adjournments or postponements of the Annual Meeting. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the internet or to request a printed copy may be found in the Notice. We mailed the Notice and released our proxy materials on or about April 29, 2022, to all stockholders of record as of April 11, 2022, the Record Date, who are entitled to vote in connection with the Annual Meeting. Will I Receive Other Proxy Materials by Mail? No, you will not receive any proxy materials, other than the Notice, by mail unless you request a paper copy of proxy materials. To request that a full set of the proxy materials be sent to your specified postal address, please go to www.ProxyVote.com,call 1-800-579-1639 or send an email to sendmaterial@proxyvote.com prior to May 24, 2022. Who Bears the Cost of SolicitationSolicitation? The Company is soliciting your votes for this Annual Meeting. The cost of solicitation of the proxies will be borne by us. In addition to this solicitation of the proxies, our employees, without extra remuneration, may solicit proxies personally or by telephone. We will reimburse brokerage firms, nominees, custodians, and fiduciaries for theirout-of-pocket expenses for forwarding proxy materials to beneficial owners and seeking instruction regarding the proxy materials. Who Can VoteVote? Only stockholders of record at the close of business on April 8, 2019,11, 2022, which we refer to as the record date, are entitled to notice of, and to attend and vote at, the Annual Meeting. As of the record date, there were 34,979,89535,076,119 outstanding shares of our common stock. Each share of our common stock outstanding on the record date will be entitled to cast one vote upon each matter submitted to a vote at the Annual Meeting. Who is a stockholderStockholder of recordRecord? A stockholder of record (or record holder or registered holder) means that your shares are registered in your name directly on the books of our registrar and transfer agent American Stock Transfer & Trust Company.Broadridge Financial Services, Inc. If you are a stockholder of record, we have provided these proxy materials directly to you. If you hold your shares through a bank, broker or other intermediary, you are considered the “beneficial owner” of those shares held in “street name.” If your shares are held in street name, these proxy materials have been forwarded to you by your bank, broker or other intermediary. As the beneficial owner, you have the right to instruct that institution on how to vote the shares you beneficially own. How You Can Vote and What You are Voting on Stockholders of record can simplify their voting by voting their sharesIf you are a registered shareholder, there are several ways for you to vote. You may attend the Annual Meeting via the Internet. Instructions for voting viainternet and vote during the Internet areAnnual Meeting. You may also vote by internet before the date of the Annual Meeting, by proxy or by telephone using one of the methods described on the Notice of Internet Availability of Proxy Materials.and in the proxy card. We recommend you vote by mail, internet or telephone even if you plan to attend the Annual Meeting. If you vote by internet or telephone, please do not return the proxy card. If voting by mail, please complete, sign and date your proxy card enclosed with these proxy materials. If desired, you can change your vote at the Annual Meeting.
| | | | | 2022 Proxy Statement • 39 |
Whether you hold your shares are helddirectly as the stockholder of record or beneficially in street name, you canmay vote without attending the Annual Meeting in one of the following manners: By Internet: Go to www.proxyvote.com and follow the instructions. You will need the 16-digit control number included on the Notice, proxy card or voting instruction form; By Telephone: Dial 1-800-579-1639. You will need the control number included on the Notice, proxy card or voting instruction form; or By Mail: Complete, date and sign your proxy card or voting instruction form and mail it. Internet and telephone voting for stockholders is available 24 hours a day, and will close at 11:59 p.m., Eastern Time, on June 7, 2022. The persons named as proxies have informed the Company of their intention, if no contrary instructions are given, to vote the shares represented by such proxies as follows: | | | • FOR the election of each director nominee (Proposal 1); • FOR the approval, on an advisory basis, of the compensation of our named executive officers (Proposal 2); • FOR the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for 2022 (Proposal 3); and • In accordance with their judgment on any other matters which may properly come before the Annual Meeting. | | | | |
The Board does not know of any other business to be brought before the Annual Meeting other than as indicated in the Notice of Annual Meeting of Stockholders. If other matters are properly presented at the meeting only ifAnnual Meeting, the persons named as proxies may vote on such matters in their discretion. In addition, the persons named as proxies may vote your shares to adjourn the Annual Meeting and will be authorized to vote your shares at any adjournments or postponements of the Annual Meeting. How Many Votes do I Have? On each matter to be voted upon, you have a valid proxy from the bank, broker or other intermediary confirming your beneficial ownershipone vote for each share of shares of our common stock you own as of April 11, 2022. What Does it Mean if I Receive More Than One Notice? If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the record date andvoting instructions on each of the Notices you receive to ensure that all of your authority to vote such shares. Please bring personal photo identification with you to the meeting.shares are voted. Revocability of Proxies Stockholders who execute proxies retain the right to revoke them at any time before the shares are voted by proxy at the meeting. A stockholder may revoke a proxy by delivering a signed statement to our Corporate Secretary at or prior to the Annual Meeting or by timely executing and delivering, by internet, mail or in person atduring the Annual Meeting, another proxy dated as of a later date. Furthermore, you may revoke a proxy by attending the Annual Meeting and voting in person, which will automatically cancel any proxy previously given. Unless you revoke your proxy at the Annual Meeting, your revocation must be received by 11:59 p.m. Eastern Time on June 7, 2022. Attendance at the Annual Meeting, however, will not automatically revoke any proxy that you have given previously unless you request a ballot and vote in person.during the Annual Meeting. If you hold shares through a bank, broker or other intermediary, you must contact the bank, broker or other intermediary to revoke any prior voting instructions. How do I participate in, and ask questions during the Annual Meeting? If you would like to submit a question during the Annual Meeting, you may log in to www.virtualshareholdermeeting.com/CECE2022 using your control number, type your question into the “Ask a Question” field, and click “Submit.”
To help ensure that we have a productive and efficient meeting, and in fairness to all stockholders in attendance, you will also find posted our rules of conduct for the Annual Meeting when you log in prior to its start. These rules of conduct will include the following guidelines: | | | • You may submit questions and comments electronically through the meeting portal during the Annual Meeting. • Only stockholders of record as of the Record Date for the Annual Meeting and their proxy holders may submit questions or comments. • Questions pertinent to the Annual Meeting and related to our business will be answered during the webcast, subject to time constraints. Any such questions that cannot be answered live due to time constraints will be posted and answered on our website, https://cecoenviro.com as soon as practical after the Annual Meeting. • Questions may be omitted if they are, among other things, irrelevant to our business, related to pending or threatened litigation, disorderly, repetitious of statements already made, or in furtherance of the speaker’s own personal, political or business interests. • No audio or video recordings of the Annual Meeting are permitted. | | | | |
How are Votes Counted? Votes will be counted by the inspector of election appointed for the meeting, who will separately count votes “For,” “Withhold,” broker non-votes (Proposals 1 and 2) and “Abstain” (Proposals 2 and 3). Abstentions will be counted towards the vote total for Proposals 2 and 3 and will have the same effect as “Against” votes. Broker non-votes have no effect and will not be counted towards the vote total for Proposal 1 and will have the same effect as a vote against proposals 2 and 3. Quorum Required In order for business to be conducted, a quorum must be represented at the Annual Meeting. The holders of a majority of the outstanding shares of common stock, present in personat the Annual Meeting or represented by proxy, shall constitute a quorum at the Annual Meeting. Shares represented by a proxy in which authority to vote for any matter considered is “withheld,” a proxy marked “abstain” or a proxy as to which there is a “brokernon-vote” (described below) will be considered present at the meeting for purposes of determining a quorum. - 37 -
Required Vote to Elect Directors Directors will be elected by a plurality of the votes cast at the Annual Meeting. This means the eightnine nominees receiving the most votes will be elected. Only votes cast for a nominee will be counted. Unless indicated otherwise by your proxy, the shares will be voted for the eightnine nominees named in this Proxy Statement. Instructions on the accompanying proxy to withhold authority to vote for one or more of the nominees will result in those nominees receiving fewer votes but will not count as a vote against the nominees. Required Votes to Pass Other Proposals Proposal 2 (to approve, on an advisory basis, the compensation paid to our named executive officers) and Proposal 43 (to ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for 2019)2022), each require the favorable vote of the majority of shares represented at the Annual Meeting for approval. For these proposals, abstentions are treated as shares present or represented and voting, so abstaining has the same effect as a negative vote. For Proposal 3 (the frequency of future advisory votes to approve named executive officer compensation), the frequency that receives the most votes cast will be deemed to be the frequency of future advisory votes to approve named executive officer compensation that has been recommended by our stockholders. Abstentions are not treated as votes cast.
The votes for ProposalsProposal 2 3, and 4Proposal 3 are advisory in nature and are not binding on our Company, however, our Board will consider the outcomes of these votes in future deliberations. BrokerNon-Votes If your shares are held by a bank, broker or other nominee and you do not provide the bank, broker or other nominee with specific voting instructions, the organization that holds your shares may generally vote on “routine” matters but cannot vote | | | | | 2022 Proxy Statement • 41 |
onnon-routine matters. If the bank, broker or other nominee that holds your shares does not receive instructions from you on how to vote your shares on anon-routine matter, the organization will inform our Inspector of Elections that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “brokernon-vote.” When our Inspector of Elections tabulates the votes for any matter, brokernon-votes will be counted for purposes of determining whether a quorum is present. Only Proposal 43 (ratification of the selection of BDO USA, LLP as our independent registered public accounting firm for 2019)2022) is a routine proposal. Proposal 1 (election of directors), and Proposal 2 (to approve, on an advisory basis, the compensation paid toof our named executive officers) and Proposal 3 (the frequency of future advisory votes to approve named executive officer compensation) will be considered“non-routine,” and banks, brokers and certain other nominees that hold your shares in street name will not be able to cast votes on these proposals if you do not provide them with voting instructions. Any brokernon-votes will have the same effect as a vote against Proposal 2 butand will not affect the outcome of Proposal 1 because directors are elected by a plurality of votes cast. or Proposal 3 because the frequency with the most votes cast will be deemed to the stockholders’ selection. Please provide voting instructions to the bank, broker or other nominee that holds your shares by carefully following their instructions. Where Can I Find the Voting Results? Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a Current Report on Form 8-K that we expect to file within four business days after the Annual Meeting. The report will be available on our website at www.cecoenviro.com. Householding Information Unless we have received contrary instructions, we may send a single copy of this Proxy Statement to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. This process, known as “householding,” reduces the volume of duplicate information received at any one household and helps reduce our expenses. However, if stockholders prefer to receive multiple sets of our disclosure documents at the same address this year or in future years, the stockholders should follow the instructions described below. Similarly, if an address is shared with another stockholder and together both stockholders would like to receive only a single set of our disclosure documents, the stockholders should follow these instructions; | | | • If the shares are registered in the name of the stockholder, the stockholder should contact Corporate Secretary at 14651 N. Dallas Parkway, Suite 500 Dallas, Texas 75254, or via telephone at (214) 357-6181, to inform us of his or her request; or • If a broker, bank, broker-dealer, custodian or other similar organization holds the shares, the stockholder should contact that representative directly. | | | | |
Other Information If no instructions are indicated on a duly executed and returned proxy, the shares represented by the proxy will be voted FOR the election of the eightnine director nominees proposed by our Board, FOR the approval, on an advisory basis, of the compensation paid to our named executive officers, for ONE YEAR as the frequency of future advisory votes to approve named executive officer compensation, FOR the ratification of the appointment of BDO USA, LLP as our independent registered public accounting firm for 2019,2022, and in accordance with the judgment of the persons named in the proxy as to such other matters as may properly come before the Annual Meeting. - 38 -
INFORMATION FOR OUR 20202023 ANNUAL MEETING Stockholders who wish to submit a proposal to be considered at our 20202023 Annual Meeting of Stockholders, must comply with the following procedures. Any communication to be made to us as described below should be addressed to the Corporate Secretary, CECO Environmental Corp., 14651 N. Dallas Parkway, Suite 500, Dallas, Texas 75254. Proxy Statement Proposals If you intend to present proposals for inclusion in our Proxy Statement for our 20202023 Annual Meeting, you must give our us written notice of your intent, and your proposal must comply with SEC regulations under Rule14a-8. Our Corporate Secretary must receive your notice no later than December 26, 2019 (120 calendar days prior to the anniversary of our mailing this Proxy Statement).28, 2022. Matters for Annual Meeting Agenda If you intend to bring a matter before the 20202023 Annual Meeting, other than by submitting a proposal to be included in our Proxy Statement, we must receive your notice in accordance with our Bylaws. To be timely, such notice must be delivered to or mailed and received by us not less than 90 nor more than 120 calendar days prior to the first anniversary of the date of the preceding year’s annual meetingAnnual Meeting of stockholders.Stockholders. In accordance with our Bylaws, we must receive your notice no earlier than February 6, 20208, 2023, and no later than March 7, 2020.10, 2023. If, however, the date of the 20202023 Annual Meeting is changed by more than 30 days from the anniversary date of this year’s Annual Meeting, the stockholder notice described above will be deemed timely if it is received not later than the close of business on the later of the 90th calendar day prior to such annual meeting and the 10th calendar day after public announcement of the date of such meeting. If the Company does not receive such notice within the timeframe described above, the notice will be considered untimely, and the proposal may not be brought. Director Candidate Nominations Any stockholder may submit one candidate for consideration at each stockholder meeting at which directors are to be elected. Stockholders wishing to recommend a candidate must submit the recommendation no later than 120 days before the date our Proxy Statement was released to stockholders in connection with the previous year’s annual meetingAnnual Meeting of stockholders,Stockholders, provided, that if we did not hold any annual meeting in the previous year, or if the date of the next annual meeting has been changed by more than 30 days from the date of the previous year’s meeting, then the deadline will be a date that is a reasonable time before we begin to print and mail our proxy materials, but in no event, less than 90 days prior to such mailing. - 39 -
| | | | | 2022 Proxy Statement • 43 |
Our Bylaws also provide certain requirements as to the form and content of a stockholder’s notice. These provisions may preclude stockholders from making nominations for directors at an annual meetingthe Annual Meeting of stockholders.Stockholders. A stockholder’s notice must set forth, among other things, as to a nomination the stockholder proposes to bring before the meeting: | | | • the name and address of the stockholder and the beneficial owner, if any, on whose behalf the proposal or nomination is made; • the class, series and number of shares that are owned of record or beneficially by the stockholder nominating the nominee or nominees; • a representation that the stockholder giving the notice is a holder of record of shares of our voting stock entitled to vote at such annual meeting and intends to appear in person or by proxy at the annual meeting to nominate the person or persons specified in the notice; • whether such stockholder or beneficial owner intends to deliver a Proxy Statement and forms of proxy to holders of at least the percentage of shares of our voting stock required to nominate such nominee or nominees; • any derivative interest in our Company’s securities (as such term is defined in our Bylaws); • any voting arrangements pursuant to which such stockholder has the right to vote any shares of the Company, or which has the effect of increasing or decreasing such stockholder’s voting power; • any contract or arrangement pursuant to which such stockholder is a party that provides any party, directly or indirectly, the opportunity to profit from any decrease in the price or value of our stock; • any material pending or threatened legal proceeding involving our Company, any of its affiliates or any of our directors or officers; • any rights to certain dividends on shares of Company stock that are separated or separable from the underlying shares of the Company and any entitlement to certain performance-related fees resulting from an increase or decrease in the value of shares of Company stock or derivative interests; and • any equity interests, including any convertible, derivate or short interests, in any competitor of the Company; and any other information relating to such stockholder that would be required to be disclosed in a Proxy Statement or other filing required pursuant to Section 14(a) of the Exchange Act to be made in connection with a general solicitation of proxies or consents in support of the nomination of the nominee or nominees. | | | | | |
Universal Proxy Rules In addition to satisfying the requirements under our Bylaws, to comply with the universal proxy rules (once effective), stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule Other Matters14a-19 under the Exchange Act no later than April 9, 2023.
OTHER MATTERS As of the date of this Proxy Statement, the Board knows of no matters that will be presented for consideration at the Annual Meeting other than the proposals set forth in this Proxy Statement. If any other matters properly come before the Annual Meeting, it is intended that the persons named in the proxy will vote the shares they represent as the Board may recommend. | | By Order of the Board of Directors | |   | | Jason DeZwirek | | Chairman of the Board of Directors |
April 24, 201929, 2022 - 40 -
ANNUAL MEETING OF STOCKHOLDERS OF
CECO ENVIRONMENTAL CORP.
Wednesday, June 5, 2019
GO GREEN
| | | | | | | e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy materials, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access.
| | 2022 Proxy Statement • 45 |
Important Notice Regarding the Availability of Proxy Materials
Appendix I for the Stockholders Meeting to Be Held on Wednesday, June 5, 2019
Our Annual Report to Stockholders and the Proxy Statement
are available at www.cecoenviro.com/investors.aspx
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
¯ Please detach along perforated line and mail in the envelope provided. ¯
| | | Company (n = 90) | | | THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS, | | “FOR” PROPOSAL NO. 2, “ONE YEAR” FOR PROPOSAL NO. 3, AND “FOR” PROPOSAL NO. 4.Acme United Corporation | | Hurco Companies, Inc. | | | AgroFresh Solutions, Inc. | | Infrastructure and Energy Alternatives, Inc. | | | Allied Motion Technologies Inc. | | Insteel Industries, Inc. | | | Alpha Metallurgical Resources, Inc. | | Intrepid Potash, Inc. | | | Alta Equipment Group Inc. | | Kimball International, Inc. | | | American Vanguard Corporation | | L.B. Foster Company | | | Ampco-Pittsburgh Corporation | | Lawson Products, Inc. | | | Astronics Corporation | | LSI Industries Inc. | | | Atento S.A. | | Luxfer Holdings PLC | | | Babcock & Wilcox Enterprises, Inc. | | Manitex International, Inc. | | | BGSF, Inc. | | Mastech Digital, Inc. | | | Blue Bird Corporation | | Matrix Service Company | | | BlueLinx Holdings Inc. | | Mayville Engineering Company, Inc. | | | Broadwind, Inc. | | McEwen Mining Inc. | | | Caesarstone Ltd. | | Mechel PAO | | | Capital Product Partners L.P. | | Mesa Air Group, Inc. | | | Ciner Resources LP | | Miller Industries, Inc. | | | Civeo Corporation | | Mistras Group, Inc. | | | Commercial Vehicle Group, Inc. | | Navios Maritime Containers Partners L.P. | | | CompX International Inc. | | Navios Maritime Partners L.P. | | | Concrete Pumping Holdings, Inc. | | Custom Truck One Source, Inc. | | | Core Molding Technologies, Inc. | | NL Industries, Inc. | | | Covenant Logistics Group, Inc. | | NN, Inc. | | | CRA International, Inc. | | Northwest Pipe Company | | | CVR Partners, LP | | Olympic Steel, Inc. | | | Danaos Corporation | | Orion Energy Systems, Inc. | | | Daseke, Inc. | | Orion Group Holdings, Inc. | | | Diana Shipping Inc. | | P.A.M. Transportation Services, Inc. | | | DLH Holding Corp. | | Pangaea Logistics Solutions, Ltd. | | | DXP Enterprises, Inc. | | Park-Ohio Holdings Corp. | | | Eagle Bulk Shipping Inc. | | Powell Industries, Inc. | | | Eneti Inc. | | Preformed Line Products Company | | | Ennis, Inc. | | Quad/Graphics, Inc. | | | EVI Industries, Inc. | | Quhuo Limited | | | Ferroglobe PLC | | R.R. Donnelley & Sons Company | | | Fly Leasing Limited | | Radiant Logistics, Inc. | | | Franklin Covey Co. | | Ramaco Resources, Inc. | | | Genco Shipping & Trading Limited | | Rayonier Advanced Materials Inc. | | | General Finance Corporation | | Resources Connection, Inc. | | | Global Ship Lease, Inc. | | Safe Bulkers, Inc. | | | Gold Resource Corporation | | Steel Partners Holdings L.P. | | | GP Strategies Corporation | | SunCoke Energy, Inc. | | | Haynes International, Inc. | | Team, Inc. | | | HC2 Holdings, Inc. | | Tecnoglass Inc. | | | Hill International, Inc. | | The Eastern Company |
| | | | | 2022 Proxy Statement • I-1 |
| | | CECO ENVIRONMENTAL CORP. C/O BROADRIDGE P.O. BOX 1342 BRENTWOOD, NY 11717 | |  VOTE BY INTERNET - www.proxyvote.com or scan the QR Barcode above Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 p.m. Eastern Time on June 7, 2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. During The Meeting - Go to PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASEwww.virtualshareholdermeeting.com/CECE2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 p.m. Eastern Time on June 7, 2022. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
| | | TO VOTE, MARK YOUR VOTEBLOCKS BELOW IN BLUE OR BLACK INK AS SHOWN HERE☒FOLLOWS: | | KEEP THIS PORTION FOR YOUR RECORDS | | — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — | | | DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | | | | | | | | | | | | | | | | | | | | | | | | | For
All | | Withhold
All | | For All
Except | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | | The Board of Directors recommends you vote FOR each of the nominees in proposal 1: | | ☐ | | ☐ | | ☐ | | | | | | | | | 1. | | Election of Directors:Directors | | | | | | | | | | | | | Nominees | | | | | | | | FOR | | AGAINST | | ABSTAIN | ☐
☐
☐
| | FOR ALL NOMINEES
WITHHOLD AUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
| | NOMINEES:
 Jason DeZwirek
Eric M. Goldberg
David B. Liner
Claudio A. Mannarino
Munish Nanda
Jonathan Pollack
Valerie Gentile Sachs
Dennis Sadlowski
| | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | 01) | | Jason DeZwirek | | 02) | | David B. Liner | | 03) | | Claudio A. Mannarino | | 04) | | Munish Nanda | | 05) | | Valerie Gentile Sachs | | | | | 06) | | Richard F. Wallman | | 07) | | Todd Gleason | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR proposals 2 and 3: | | For | | Against | | Abstain | | | | | 2. To approve, on an advisory basis, the compensation paid toof the Company’s named executive officers. | | ☐ 3. To recommend, on an advisory basis, the frequency of future advisory votes to approve named executive officer compensation.
| | 4. ☐
| | ☐ | | | | | 3. To ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for 2019.2022. | | 1 YEAR
☐ | | ☐
2 YEARS
☐
FOR
☐ | | ☐
3 YEARS
☐
AGAINST
☐ | | ☐
ABSTAIN
☐
ABSTAIN
☐
| | | | | | | 5.NOTE: To transact such other business as may properly come before the meeting or any adjournmentsadjourments thereof.
| INSTRUCTIONS:To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here:
| | | | THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR ALL OF THE NOMINEES LISTED IN PROPOSAL 1, FOR PROPOSALS 2 AND 4, AND FOR EVERY ONE YEAR AS THE FREQUENCY IN PROPOSAL 3.
| | | | | | | PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
MARK “X” HERE IF YOU PLAN TO ATTEND THE MEETING. ☐
| To change the address onPlease sign exactly as your account,name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please check the box at right and indicate your new addressgive full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.full corporate or partnership name, by authorized officer.
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| | | | | | | | | | | | | | | | | Signature of Stockholder | | | | Date: | | | | | | Signature of Stockholder | | | | Date: | | | | |
| | | | | | |  | | Note:
Signature [PLEASE SIGN WITHIN BOX] | | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.Date | | | | Signature (Joint Owners) | | Date | | |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: Our Annual Report to Stockholders and Proxy Statement are available at www.proxyvote.com — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — – CECO ENVIRONMENTAL CORP. Annual Meeting of Stockholders June 8, 2022 8:00 AM Central Time THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned stockholder hereby appoints Todd Gleason and Alyson Richter, or either of them, as proxy, and each with full power of substitution and revocation, to represent and to vote as designated on this proxy, all of the shares of common stock that the undersigned would be entitled to vote at the Annual Meeting of Stockholders to be held at 8:00 AM Central Time on Wednesday, June 8, 2022, at www.virtualshareholdermeeting.com/CECE2022, or at any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED “FOR” ALL OF THE NOMINEES LISTED IN PROPOSAL 1 AND “FOR” PROPOSALS 2 AND 3. Continued and to be signed on reverse side |
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