| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On July 21, 2023, the Compensation Committee of the Board of Directors (the “Committee”) of Graham Corporation (the “Company”) approved an amendment (the “Amendment”) to the restricted stock unit agreement (the “Award Agreement”) entered into by and between the Company and Danial J. Thoren, the Company’s President and Chief Executive Officer, effective as of May 23, 2022. The Award Agreement was entered in connection with the grant of an award of performance-vesting restricted stock units (“PSUs”) to Mr. Thoren under the 2020 Graham Corporation Equity Incentive Plan (the “Plan”) covering 24,420 shares of Company common stock, as previously disclosed in the Company’s Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on May 27, 2022. Pursuant to the Award Agreement, the number of shares of Company common stock issuable to Mr. Thoren under the PSUs is based on the level of performance achieved, with 50% payable at threshold, 100% payable at target and 200% payable at maximum (with linear interpolation applied to performance levels between such levels). Mr. Thoren was separately granted time-vesting restricted stock units covering 24,420 shares of Company common stock during 2022.
The Amendment will impose a limit of 35,580 shares of Company common stock issuable to Mr. Thoren upon vesting of the PSUs (the “PSU Limit”). The Plan currently imposes a limit on the number of shares of Company common stock for which awards may be granted to any participant during a calendar year of 60,000 shares. The Plan is currently silent as to whether the target or maximum number of shares underlying PSUs should be used when evaluating the application of the limit in Section 5(c)(i) of the Plan. The Committee implemented the PSU Limit to avoid the Company exceeding the limit contained in Section 5(c)(i) of the Plan.
At the annual meeting of stockholders, stockholders will consider a proposal to approve an amendment to the Plan that, among other items, specifies that for PSUs granted on or after the date of the annual meeting of stockholders, the target number of shares underlying PSUs will be used when applying the limitation in Section 5(c)(i) of the Plan. This will permit the Committee to set the maximum number of shares that may be payable under PSUs in its discretion, outside of the limitation contained in Section 5(c)(i) of the Plan.
The affects of the Amendment, as described herein, should be read in conjunction with the Company’s proxy statement on Form DEF 14A filed with the SEC on July 10, 2023 as it relates to the disclosure concerning Mr. Thoren’s equity grants and compensation for Fiscal 2023 and the amendment to the Plan.
