Proxy Statement (definitive) (def 14a)

Date : 07/26/2019 @ 1:06PM
Source : Edgar (US Regulatory)
Stock : Methode Electronics Inc (MEI)
Quote : 35.12  0.0 (0.00%) @ 12:54PM

Proxy Statement (definitive) (def 14a)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.      )

Filed by the Registrant ☒
Filed by a Party other than the Registrant o

Check the appropriate box:

o
Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
o
Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12

METHODE ELECTRONICS, INC.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.
 
 
 
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
 
 
 
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METHODE ELECTRONICS, INC.
8750 West Bryn Mawr Avenue, Suite 1000
Chicago, Illinois 60631
(708) 867-6777

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
   
TO BE HELD ON SEPTEMBER 12, 2019

To the Shareholders of Methode Electronics, Inc.:

Notice is hereby given that the annual meeting of shareholders of Methode Electronics, Inc. will be held on Thursday, September 12, 2019 at 11:00 a.m., Central Daylight Time, at Methode’s offices at 7447 West Wilson Avenue, Chicago, Illinois, 60706 for the following purposes:

1. To elect a Board of Directors;
2. To ratify the Audit Committee’s selection of Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending May 2, 2020;
3. To provide advisory approval of Methode’s named executive officer compensation; and
4. To transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof.

The Board of Directors recommends that you vote “FOR” each of Methode’s nominees for director, “FOR” the ratification of Ernst & Young LLP as our independent registered public accounting firm and “FOR” advisory approval of Methode’s named executive officer compensation.

Our Board of Directors has fixed the close of business on July 18, 2019 as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting and at any adjournment or postponement thereof.

We are furnishing materials for our annual meeting on the Internet. You may vote your shares in person by attending our annual meeting, or by proxy. To vote by proxy, you may vote using the Internet, by toll-free telephone number or, if you request and receive a paper copy of the proxy card by mail, by signing, dating and mailing the proxy card in the self-addressed, postage-paid envelope provided. Information regarding voting by using the Internet or by telephone is contained in the Notice of Internet Availability of Proxy Materials. Instructions regarding voting by mail are contained on the proxy card.

It is important that your shares be represented and voted at the annual meeting. Whether or not you plan to attend the annual meeting, please vote on the matters to be considered. Thank you for your interest and cooperation.

 
By Order of the Board of Directors,
   
 
 
Walter J. Aspatore
Chairman

Chicago, Illinois
July 26, 2019

METHODE ELECTRONICS, INC.
8750 West Bryn Mawr Avenue, Suite 1000
Chicago, Illinois 60631
(708) 867-6777
   
PROXY STATEMENT
   
ANNUAL MEETING OF SHAREHOLDERS
September 12, 2019
   
GENERAL INFORMATION

We are furnishing this proxy statement to you in connection with the solicitation of proxies on behalf of Methode Electronics, Inc. (“Methode” or the “Company”) for use at our annual meeting of shareholders to be held on Thursday, September 12, 2019 at 11:00 a.m., Central Daylight Time, at Methode’s offices at 7447 West Wilson Avenue, Chicago, Illinois, 60706 and at any adjournment or postponement of the annual meeting. On July 26, 2019, we mailed our Notice of Internet Availability of Proxy Materials, which contains instructions for our shareholders to access our proxy statement and annual report over the Internet or request a paper copy of the proxy materials.

At the annual meeting, we will ask our shareholders to (i) elect our Board of Directors, (ii) ratify the Audit Committee’s selection of Ernst & Young LLP (“EY”) to serve as our independent registered public accounting firm for fiscal 2020, (iii) provide advisory approval of Methode’s named executive officer compensation, and (iv) consider and vote upon any other business which properly comes before the annual meeting.

The Board of Directors recommends that you vote “FOR” each of Methode’s nominees for director, “FOR” the ratification of EY as our independent registered public accounting firm and “FOR” advisory approval of Methode’s named executive officer compensation.

You may vote your shares in person, by attending our annual meeting, or by proxy. To vote by proxy, you may vote using the Internet, by toll-free telephone number or, if you request and receive a paper copy of the proxy card by mail, by signing, dating and mailing the proxy card in the self-addressed, postage-paid envelope provided. Information regarding voting by using the Internet or by telephone is contained in the Notice of Internet Availability of Proxy Materials. Instructions regarding voting by mail are contained on the proxy card. Please do not submit a proxy card if you have voted by telephone or the Internet.

It is important that your shares be represented and voted at the annual meeting. Whether or not you plan to attend the annual meeting in person, please vote on the matters to be considered.

Record Date; Shares Outstanding

Our Board of Directors has fixed the close of business on July 18, 2019 as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting and at any adjournment or postponement thereof. As of the record date, there were 37,061,487 shares of our common stock outstanding and entitled to vote at the annual meeting.

Quorum; Votes Required

In deciding all questions, assuming a quorum is present, a holder of Methode’s common stock is entitled to one vote, in person or by proxy, for each share held in such holder’s name on the record date. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Methode’s common stock is necessary to constitute a quorum at the annual meeting. Both abstentions and broker non-votes are counted as present for the purpose of determining the presence of a quorum at the annual meeting. Generally, broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal because the broker lacks discretionary power to vote such shares.

With respect to the election of directors, the ratification of the selection of EY as our independent registered public accounting firm and providing advisory approval of our executive compensation, shareholders may vote (1) “for,” (2) “against,” or (3) to “abstain” from voting on each matter and each such matter requires approval by a majority of the shares of common stock represented at the meeting and entitled to vote. Both abstentions and broker non-votes will be considered as present but will not be considered as votes in favor of any matter. Broker non-votes

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are excluded from the “for,” “against” and “abstain” counts, and instead are reported as simply “broker non-votes.” Consequently, abstentions have the effect of voting against these matters, while broker non-votes have no effect as to voting for or against any such matter.

Under New York Stock Exchange rules, the proposal to ratify the selection of EY is considered a routine item. Therefore, brokers may vote in their discretion on this matter on behalf of clients who have not furnished voting instructions to the broker. In contrast, all other proposals set forth in this proxy statement are considered non-routine items, and brokers who have not received voting instructions from their clients may not vote on these proposals.

All properly executed and timely delivered proxies will be voted in accordance with the instructions provided. Unless contrary instructions are indicated, proxies will be voted “FOR” each of Methode’s nominees for director, “FOR” the ratification of the selection of EY and “FOR” advisory approval of Methode’s named executive officer compensation. The Board of Directors knows of no other business that will be presented for consideration at the annual meeting. If any other matter is properly presented, it is the intention of the persons named in the proxy to vote in accordance with their best judgment.

Voting Procedures

It is important that your shares be represented at the annual meeting. You may vote your shares in person, by attending our annual meeting, or by proxy. To vote by proxy, you may vote using the Internet, by toll-free telephone number or, if you request and receive a paper copy of the proxy card by mail, by signing, dating and mailing the proxy card in the self-addressed, postage-paid envelope provided. Information regarding voting by using the Internet or by telephone is contained in the Notice of Internet Availability of Proxy Materials. Instructions regarding voting by mail are contained on the proxy card. Please do not submit a proxy card if you have voted by telephone or the Internet. You may revoke your proxy as described below.

Revoking Your Proxy

If you decide to change your vote, you may revoke your proxy at any time before the annual meeting. You may revoke your proxy by notifying our Corporate Secretary in writing that you wish to revoke your proxy at the following address: Methode Electronics, Inc., 8750 West Bryn Mawr Avenue, Suite 1000, Chicago, Illinois 60631, attention: Corporate Secretary. You may also revoke your proxy by submitting a later-dated and properly executed proxy (including by means of the telephone or Internet) or by voting in person at the annual meeting. Attendance at the annual meeting will not, by itself, revoke a proxy.

Proxy Solicitation Expenses

The proxy is being solicited on behalf of Methode. We will bear the entire cost of this solicitation. Our directors, officers or other regular employees may solicit proxies by telephone, by e-mail or in person. No additional compensation will be paid to directors, officers and other regular employees for such services. We have retained the services of Innisfree M&A Incorporated (“Innisfree”) to serve as our proxy solicitor in connection with the annual meeting. Innisfree may assist us in soliciting proxies by telephone, email and by other means, and we expect to pay Innisfree a fee of $20,000, plus reasonable expenses.

We will authorize brokers, dealers, banks, voting trustees and other nominees and fiduciaries to forward copies of the proxy materials to the beneficial owners of Methode common stock. Upon request, we will reimburse them for their reasonable expenses.

Householding of Annual Meeting Materials

We are sending only one copy of our Notice of Internet Availability of Proxy Materials and, if applicable, our proxy materials, to shareholders who share the same last name and address, unless they have notified us that they want to continue receiving multiple copies. This practice, known as “householding,” is designed to reduce duplicate mailings and save printing and postage costs. Shareholders who participate in householding will continue to be able to access and receive separate proxy cards. If you received a householded mailing this year and you would like to have additional copies of our Notice of Internet Availability of Proxy Materials and, if applicable, our proxy materials, mailed to you; if you received multiple copies of our Notice of Internet Availability of Proxy Materials and would prefer to participate in householding; or if you would like to opt out of householding for future mailings, you may do so at any time by contacting us at: Methode Electronics, Inc., 8750 West Bryn Mawr Avenue, Suite 1000, Chicago, Illinois 60631, Attention: Corporate Secretary, or telephonically at 708-867-6777.

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CORPORATE GOVERNANCE

We are committed to maintaining high standards of corporate governance in order to serve the long-term interests of Methode and our shareholders.

Director Independence

Our Board of Directors has considered the independence of the nominees for director under the applicable standards of the U.S. Securities and Exchange Commission (“SEC”) and the New York Stock Exchange. Our Board has determined that all of the nominees for director are independent under the applicable standards, except for Donald Duda, our President and Chief Executive Officer. Mr. Duda’s lack of independence relates solely to his service as an executive officer and is not due to any other transactions or relationships.

In addition, our Board of Directors has determined that each member of our Audit Committee, our Compensation Committee and our Nominating and Governance Committee satisfies the independence requirements of the applicable standards, if any, of the SEC and the New York Stock Exchange.

Board Committees

The following chart sets forth the current Committee membership.

Committee
Members
Principal Functions
Number of
Meetings in
Fiscal 2019
Audit
Isabelle C. Goossen (Chair)
Walter J. Aspatore
Paul G. Shelton
Lawrence B. Skatoff
Oversees accounting and financial reporting and audits of financial statements.
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Monitors performance of internal audit function and our system of internal control.
Monitors performance, qualifications and independence of our independent registered public accounting firm and makes decisions regarding retention, termination and compensation of the independent registered public accounting firm and approves services provided by the independent registered public accounting firm.
Monitors compliance with legal and regulatory requirements pertaining to financial statements.
Reviews our financial press releases and certain SEC filings.
Discusses with management major financial risk exposures and the steps taken to monitor and control such exposures, and discusses guidelines and policies by which risk assessment and risk management is undertaken.
If applicable, reviews related party transactions and potential conflict of interest situations.

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Committee
Members
Principal Functions
Number of
Meetings in
Fiscal 2019
Compensation
Martha Goldberg Aronson (Chair)
Brian J. Cadwallader
Darren M. Dawson
Christopher J. Hornung
Paul G. Shelton
Oversees our executive compensation policies and plans.
6
Approves goals and incentives for the compensation of our Chief Executive Officer and, with the advice of the Chief Executive Officer, the other executive officers.
Approves grants under our stock plan.
Makes decisions regarding the retention, compensation and termination of any Committee compensation consultant, and monitors their independence.
Evaluates whether risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect.
Nominating and
Governance
Walter J. Aspatore (Chair)
Brian J. Cadwallader
Darren M. Dawson
Isabelle C. Goossen
Lawrence B. Skatoff
Recommends director candidates for election to our Board at the annual meeting or to fill vacancies.
4
Recommends Board committee assignments.
Recommends compensation and benefits for directors.
Reviews and recommends revisions to our Corporate Governance Guidelines.
Conducts an annual assessment of Board and committee performance
Reviews our risk management policies and practices.
Reviews succession planning for our executive officers.
Technology
Darren M. Dawson (Chair)
Martha Goldberg Aronson
Walter J. Aspatore
Christopher J. Hornung
Reviews with management our technology assets and future needs.
4
Reviews technology research and development activities and possible acquisitions of technology.

If applicable, our Audit Committee reviews related party transactions and potential conflict of interest situations in accordance with the Audit Committee Charter and our Code of Business Conduct. We do not have a separate written policy regarding related party transactions and potential conflict of interest situations. Our Code of Business Conduct states that conflicts of interest are prohibited, except as approved by our Board of Directors. In reviewing any such transaction, our Audit Committee and Board of Directors would consider Methode’s rationale for entering into the transaction, alternatives to the transaction, whether the transaction is on terms at least as fair to Methode as would be the case were the transaction entered into with a third party and other relevant factors.

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During the 2019 fiscal year, our Board of Directors held fourteen meetings, and no director attended less than 75% of the aggregate of the total number of meetings of our Board and the total number of meetings held by the respective committees on which he or she served. Under our Corporate Governance Guidelines, our directors are expected to attend Board and shareholder meetings and meetings of committees on which they serve. Our directors are expected to meet as frequently as necessary to properly discharge their responsibilities.

Our independent directors hold regularly scheduled executive sessions at which only independent directors are present. Pursuant to our Corporate Governance Guidelines, our Chairman of the Board is the Presiding Director of such sessions.

Our Audit, Compensation, Nominating and Governance and Technology Committees operate pursuant to charters adopted by the Board, which are available on our website at www.methode.com or in print upon any shareholder’s request. Our Corporate Governance Guidelines are also available on our website at www.methode.com or in print upon any shareholder’s request.

Board Leadership Structure, Evaluations, Risk Oversight and Compensation Policy Risks

The Board of Directors has determined that having an independent director serve as Chairman of the Board is in the best interests of our shareholders. This structure provides for a greater role for the independent directors in the oversight of Methode and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of the Board.

The Nominating and Governance Committee oversees the annual Board and committee evaluation process. Each year, our independent directors complete a written evaluation which focuses on Board practices, processes and skills, and seeks input on opportunities for improvement. To protect the directors’ anonymity and the integrity of the process, the directors send their completed evaluations directly to outside legal counsel. Legal counsel compiles the responses into a written report, which is then distributed to, and discussed by, the Nominating and Governance Committee and the full Board.

Our Board of Directors oversees Methode’s risk management practices. Our Board and committees review information regarding Methode’s markets, competition and financial risks, as well as risks associated with Methode’s operations throughout the world. Our Audit Committee discusses with management Methode’s major financial risk exposures and the steps management has taken to monitor and control such exposures, and reviews the process by which risk is managed and assessed. Our Audit Committee also reviews the Company’s cyber-security and information technology practices and policies. Our Compensation Committee evaluates risks arising from Methode’s compensation practices and policies. Our Nominating and Governance Committee reviews and evaluates Methode’s policies and practices with respect to risk management and risk assessment in areas such as business operations, human resources, international operations and intellectual property. The entire Board of Directors is regularly informed about the risk management policies and practices monitored by the various committees.

We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on Methode. The Compensation Committee monitors the mix and design of the elements of executive compensation and believes that our compensation programs do not encourage management to assume excessive risks.

Nominating Process of the Nominating and Governance Committee

Our Nominating and Governance Committee is responsible for identifying and recommending to our Board of Directors individuals qualified to become directors consistent with criteria approved by our Board. In considering potential candidates for our Board, including with respect to nominations for re-election of incumbent directors, the Committee considers the potential candidate’s integrity and business ethics; strength of character, judgment and experience consistent with our needs; specific areas of expertise and leadership roles; and the ability to bring diversity to our Board. While the Nominating and Governance Committee charter and our Corporate Governance Guidelines do not prescribe diversity standards, the Committee considers diversity in the context of the Board as a whole, including whether the potential candidate brings complementary skills and viewpoints. The Committee also considers the ability of the individual to allocate the time necessary to carry out the tasks of Board membership, including membership on appropriate committees. The Committee seeks an appropriate balance between newer directors and longer-serving directors. Two of our current ten independent directors were added in the last year. The Committee and the Board expect to add two more new independent directors by our 2020 annual meeting of shareholders.

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The Committee has adopted a process for identifying new director candidates. Recommendations may be received by the Committee from various sources, including directors and Company contacts. In the event the Committee deems it appropriate to engage a search firm, it has sole authority to retain and terminate any such search firm and approve the search firm’s fees. In June 2018, the Committee retained a search firm to assist with the independent director recruitment process.

The Committee will also consider suggestions from our shareholders. Shareholders may recommend candidates at any time, but the Committee requires recommendations for election at our annual meeting to be submitted to the Committee no later than 120 days before the first anniversary of the date of the proxy statement from the previous year’s annual meeting. The written notice must include (i) the name, age, address and principal occupation or employment of the proposed nominee, (ii) the number of shares of our common stock owned by such nominee, (iii) a statement that the nominee is willing to be nominated, and (iv) any other information required in a proxy statement under the SEC’s rules. Recommendations must be sent to the Nominating and Governance Committee, Methode Electronics, Inc., 8750 West Bryn Mawr Avenue, Suite 1000, Chicago, Illinois 60631. Any recommendations from shareholders will be evaluated in the same manner that potential nominees suggested by directors or Company contacts are evaluated. Information regarding the requirements to nominate a director at our 2020 Annual Meeting are set forth below under “Other Information—Shareholder Proposals and Director Nominations.”

Communications with Directors

Our annual meeting of shareholders provides an opportunity each year for shareholders to ask questions of, or otherwise communicate directly with, members of our Board of Directors on appropriate matters. All of our directors attended the 2018 annual meeting. We anticipate that all of our directors will attend the 2019 annual meeting.

In addition, interested parties may, at any time, communicate in writing with any particular director, or our independent directors as a group, by sending such written communication to the Corporate Secretary of Methode Electronics, Inc. at 8750 West Bryn Mawr Avenue, Suite 1000, Chicago, Illinois 60631. Copies of written communications received at such address will be provided to the relevant director or the independent directors as a group unless such communications are considered, in the reasonable judgment of the Corporate Secretary, to be improper for submission to the intended recipient(s). Examples of shareholder communications that would be considered improper for submission include, without limitation, customer complaints, solicitations, communications that do not relate directly or indirectly to us or our business or communications that relate to other improper or irrelevant topics.

Code of Business Conduct

Our Board of Directors has adopted a Code of Business Conduct that applies to our directors, principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions, as well as other employees. The Code is available on our website at www.methode.com or in print upon any shareholder’s request.

If we make any substantive amendments to the Code of Business Conduct or grant any waiver, including any implicit waiver, from a provision of the Code of Business Conduct to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, we will disclose the nature of such amendment or waiver on our website or in a report on Form 8-K in accordance with applicable rules and regulations.

Director Stock Ownership Guidelines

Our Compensation Committee considers stock ownership by directors to be an important means of linking their interests with those of our shareholders. We maintain stock ownership guidelines for our directors. All directors are expected to own stock with a value equal to at least five times the annual cash retainer paid to Methode directors, subject to a phase-in period. All of our directors were in compliance with our stock ownership guidelines for fiscal 2019.

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DIRECTOR COMPENSATION

We use a combination of cash and common stock to compensate our non-employee directors. Directors who are also our full-time employees are not paid for their services as directors or for attendance at meetings.

For the fiscal year ended April 27, 2019, our non-employee directors received an annual cash retainer of $44,000 and an attendance fee of $1,000 per committee meeting and for each board meeting other than the regularly scheduled quarterly meetings. In addition, in July 2018, the Compensation Committee, upon the recommendation of the Nominating and Governance Committee, granted each non-employee director serving at such time a stock award for 3,000 shares of common stock. Our Chairman of the Board and the Chair of each of our standing board committees received supplemental annual cash retainers in the following amounts: Chairman of the Board, $30,000; Chair of each of the Audit Committee and the Compensation Committee, $24,000; and Chair of each of the Nominating and Governance Committee and the Technology Committee, $12,000. In addition, members of our Audit Committee and Compensation Committee (other than the Chair) received an additional annual cash retainer of $10,000. Pursuant to our Deferred Compensation Plan, our directors may elect to defer up to 100% of their cash retainers and attendance fees per year. Additional information regarding the Deferred Compensation Plan is described under “Executive Compensation — Nonqualified Deferred Compensation” below.

The following table sets forth certain information regarding compensation earned by our non-employee directors during the fiscal year ended April 27, 2019.

Name
Fees Earned
or Paid in Cash
($)
Stock Awards
($) (1)
Total
($)
Martha Goldberg Aronson
 
88,000
 
 
116,250
 
 
204,250
 
Walter J. Aspatore
 
119,000
 
 
116,250
 
 
235,250
 
Brian J. Cadwallader
 
75,000
 
 
116,250
 
 
191,200
 
Darren M. Dawson
 
90,000
 
 
116,250
 
 
206,250
 
Isabelle C. Goossen
 
108,000
 
 
116,250
 
 
224,250
 
Christopher J. Hornung
 
80,000
 
 
116,250
 
 
196,250
 
Paul G. Shelton
 
90,000
 
 
116,250
 
 
206,250
 
Lawrence B. Skatoff
 
78,000
 
 
116,250
 
 
194,250
 
(1) The reported amounts reflect the fair value at the date of grant calculated in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718. Details of the assumptions used in valuing these awards are set forth in Note 4 to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended April 27, 2019.
(2) Directors Crowther and Schwabero were elected to the Board in June, 2019 and will be compensated in a manner consistent with the Company’s other independent directors.

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SECURITY OWNERSHIP

Five Percent Shareholders

The following table sets forth information regarding all persons known by Methode to be the beneficial owners of more than 5% of Methode’s common stock as of July 18, 2019.

Name and Address of Beneficial Owner
Amount and Nature of
Beneficial Ownership
Percent of Class (%)
BlackRock, Inc. (1)
55 East 52 nd Street
New York, New York 10055
 
5,403,585
 
 
14.6
 
The Vanguard Group (2)
100 Vanguard Blvd.
Malvern, Pennsylvania 19355
 
3,727,168
 
 
10.1
 
Dimensional Fund Advisors LP (3)
Building One
6300 Bee Cave Road
Austin, TX 78746
 
2,044,384
 
 
5.5
 
(1) Information is based on a Schedule 13G/A filed with the Securities and Exchange Commission (“SEC”) on January 31, 2019. In the Schedule 13G/A, BlackRock, Inc. reported that, as a parent holding company, as of December 31, 2018, it had sole voting power with respect to 5,317,494 shares and sole dispositive power with respect to 5,403,585 shares.
(2) Information is based on a Schedule 13G/A filed with the SEC on January 10, 2019. In the Schedule 13G/A, The Vanguard Group reported that, as of December 31, 2018, it had sole voting power with respect to 55,988 shares, shared voting power with respect to 5,559 shares, sole dispositive power with respect to 3,671,159 shares and shared dispositive power with respect to 56,009 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 50,450 shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 11,097 shares as a result of its serving as investment manager of Australian investment offerings.
(3) Information is based on a Schedule 13G/A filed with the SEC on February 8, 2019. In the Schedule 13G/A, Dimensional Fund Advisors LP reported that it is an investment advisor and, as of December 31, 2018, it had sole voting power with respect to 1,934,428 shares and sole dispositive power with respect to 2,044,384 shares.

Directors and Executive Officers

The following table sets forth information regarding our common stock beneficially owned as of July 18, 2019 by (i) each director and nominee, (ii) each of the named executive officers, and (iii) all current directors and executive officers as a group.

Name of Beneficial Owner
Amount and Nature of
Beneficial Ownership (1)
Percent of Class (%)
Martha Goldberg Aronson
 
12,000
(2)  
*
Walter J. Aspatore
 
33,000
(3)  
*
Brian J. Cadwallader
 
6,000
 
*
Bruce K. Crowther
 
3,000
 
*
Darren M. Dawson
 
16,000
 
*
Donald W. Duda
 
809,882
(4)  
2.1
Isabelle C. Goossen
 
43,450
 
*
Christopher J. Hornung
 
52,050
 
*
Mark D. Schwabero
 
3,000
 
*
Paul G. Shelton
 
47,850
 
*
Lawrence B. Skatoff
 
44,350
(5)  
*
Michael Brotherton
 
82,444
(6)  
*
Joseph E. Khoury
 
283,500
(7)  
*
Anil Shetty
 
84,306
(8)  
*
Ronald L.G. Tsoumas
 
108,801
(9)  
*
All current directors and executive officers as a group
 
1,700,012
(10)  
4.4
* Percentage represents less than 1% of the total shares of common stock outstanding.

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(1) Beneficial ownership arises from sole voting and dispositive power unless otherwise indicated by footnote.
(2) Shares are held in a trust pursuant to which Ms. Goldberg Aronson shares voting and investment power with her husband.
(3) Includes 24,000 shares held jointly with Mr. Aspatore’s wife.
(4) Includes 13,979 shares held jointly with Mr. Duda’s wife, options to purchase 40,000 shares of common stock exercisable within 60 days, 195,055 shares of vested restricted stock units for which common stock will be delivered to Mr. Duda at such time as the value of the award is deductible by us or Mr. Duda’s employment terminates, 172,000 shares of vested restricted stock units for which common stock will be delivered to Mr. Duda in the event of termination from Methode under any circumstance, 270,000 shares of performance-based restricted stock subject to forfeiture and 70,848 shares of common stock held in our 401(k) Plan.
(5) Shares are held in a trust pursuant to which Mr. Skatoff shares voting and investment power with his wife.
(6) Includes 54,000 shares of performance-based restricted stock subject to forfeiture, options to purchase 1,668 shares of common stock exercisable within 60 days and 458 shares of common stock held in our 401(k) Plan.
(7) Includes options to purchase 12,000 shares of common stock exercisable within 60 days, 66,000 shares of vested restricted stock units for which common stock will be delivered to Mr. Khoury in the event of termination from Methode under any circumstance and 135,000 shares of performance-based restricted stock subject to forfeiture.
(8) Includes 54,000 shares of performance-based restricted stock subject to forfeiture and options to purchase 5,000 shares of common stock exercisable within 60 days.
(9) Includes options to purchase 8,000 shares of common stock exercisable within 60 days, 9,300 shares of common stock held in our 401(k) Plan, 33,200 shares of vested restricted stock units for which common stock will be delivered to Mr. Tsoumas in the event of termination from Methode under any circumstances and 49,500 shares of performance-based restricted stock subject to forfeiture.
(10) Includes 37,979 shares held jointly, 56,350 shares held in trust with voting and investment power shared with a spouse, options to purchase 76,668 shares of common stock exercisable within 60 days, 80,606 shares of common stock held in our 401(k) Plan, 466,255 shares of vested restricted stock units and 571,100 shares of performance-based restricted stock subject to forfeiture.

9

PROPOSAL ONE
ELECTION OF DIRECTORS

A Board of eight directors will be elected at the annual meeting. Each director will hold office until the next annual meeting of shareholders and until his or her successor is elected and qualified. All of the nominees listed below currently serve as directors. All of the nominees were recommended unanimously to our Board of Directors by our Nominating and Governance Committee and were nominated by our Board of Directors. If any nominee is unwilling or unable to serve as a director, an event which our Board does not anticipate, shares represented by the proxies will be voted for the election of another nominee nominated by our Board upon the recommendation of our Nominating and Governance Committee, or the Board may reduce the number of directors to be elected at the annual meeting. Ms. Goldberg Aronson and Messrs. Hornung and Shelton are not standing for re-election, and the Board expressed its great appreciation for all of the contributions they have made over the years. The size of the Board will be reduced from eleven directors to eight directors as of the date of the annual meeting.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF THE FOLLOWING NOMINEES.

Walter J. Aspatore, Chairman
Chairman Emeritus
Amherst Partners, LLC
Director since 2008
Age 76

Mr. Aspatore has served as Chairman Emeritus of Amherst Partners, LLC, a business consulting firm, since 2010. Prior thereto, Mr. Aspatore was Chairman of Amherst Partners from 1994 through 2010. Mr. Aspatore has served as Chairman of our Board since 2012. Prior to co-founding Amherst Partners, Mr. Aspatore served in various officer positions at diversified manufacturing and technology businesses, including Cross and Trecker Corporation, the Warner and Swasey Company, Bendix Corporation and TRW Corporation. He also served as Vice Chairman and President of Onset BIDCO, a venture capital and subordinated debt fund, from 1992 to 1994. Mr. Aspatore also serves as a director of Mackinac Financial Corporation, a bank holding company. Mr. Aspatore’s consulting experience and service at various consulting, manufacturing and technology businesses has resulted in continued contributions to the Board.

Brian J. Cadwallader
Retired Vice President and General Counsel
Johnson Controls, Inc.
Director since 2018
Age 60

Mr. Cadwallader served as Vice President, Corporate Secretary and General Counsel of Johnson Controls, Inc. from 2014 to 2016. Prior thereto, Mr. Cadwallader served as Vice President and Assistant General Counsel of Johnson Controls from 2011 to 2014. Mr. Cadwallader served as Group Vice President and General Counsel of Johnson Controls’ Building Efficiency business from 2010 to 2011. Prior to joining Johnson Controls, Mr. Cadwallader served as Associate General Counsel and Assistant Secretary at International Paper Company. In addition to his other responsibilities, Mr. Cadwallader was responsible for international legal and regulatory affairs for Johnson Controls and International Paper for over 15 years. Mr. Cadwallader’s legal background with expertise in international operations, corporate governance, M&A and executive compensation has led to significant contributions to the Board.

Bruce K. Crowther
Retired Chief Executive Officer
Northwest Community Healthcare
Director since June, 2019
Age 67

Mr. Crowther served as President and Chief Executive Officer of Northwest Community Healthcare from 1992 until his retirement in 2013. Prior thereto, Mr. Crowther served as Executive Vice President and Chief Operating Officer of Northwest Community Healthcare from 1989 to 1991. Mr. Crowther is the past Chairman of the board of directors of the Illinois Hospital Association. Mr. Crowther serves as a director of NeoGenomics, Inc., Wintrust Financial Corporation and Barrington Bank. Mr. Crowther’s extensive leadership experience and significant knowledge regarding the healthcare industry has provided valuable insights to the Board.

10

Dr. Darren M. Dawson
President
The University of Alabama in Huntsville
Director since 2004
Age 56

Dr. Dawson has served as the President of The University of Alabama in Huntsville since April, 2019. Prior thereto, Dr. Dawson served as Dean of the College of Engineering of Kansas State University since 2014. From 1990 to 2014, Dr. Dawson served as a Professor in the Electrical and Computer Engineering Department at Clemson University. His research interests included nonlinear control techniques for mechatronic systems, robotic manipulator systems and vision-based systems. Dr. Dawson’s work has been recognized by several awards, including the Clemson University Centennial Professorship in 2000. Dr. Dawson’s academic and technical background has provided the basis for continued contributions to the Board’s operations and deliberations.

Donald W. Duda
Chief Executive Officer and President
Methode
Director since 2001
Age 64

Mr. Duda has served as our Chief Executive Officer since 2004 and our President since 2001. Mr. Duda joined us in 2000 and served as our Vice President - Interconnect Products Group. Prior to joining Methode, Mr. Duda held several positions with Amphenol Corporation, a manufacturer of electronic connectors, most recently as General Manager of its Fiber Optic Products Division. Mr. Duda has used his executive background and unique understanding of Methode to contribute to the Board.

Isabelle C. Goossen
Retired Vice President and Chief Financial Officer
Chicago Symphony Orchestra Association
Director since 2004
Age 67

Ms. Goossen served as the Chief Financial Officer for the Chicago Symphony Orchestra Association from 2011 thru 2017. Ms. Goossen served as the Vice President for Finance and Administration for the Chicago Symphony Orchestra Association from 2001 thru 2017. From 1986 through 1999, Ms. Goossen held several management positions with Premark International, Inc., most recently as Vice President and Treasurer. Ms. Goossen serves as a director of the Columbian Financial Group, the parent company of Columbian Mutual Life Insurance and Columbian Life Insurance Company, each a life insurance company. In addition, Ms. Goossen is a trustee of Knox College and a director of the Cook County Health Foundation. Ms. Goossen has used her financial expertise and management background to make continued contributions to the Board.

Mark D. Schwabero
Retired Chairman and Chief Executive Officer
Brunswick Corporation
Director since June, 2019
Age 67

Mr. Schwabero served as Chairman, Chief Executive Officer and Director of Brunswick Corporation from 2016 until his retirement in December, 2018. Prior thereto, Mr. Schwabero served as President and Chief Operating Officer of Brunswick Corporation from 2014 to 2016 and as President of its Mercury Marine subsidiary from 2008 to 2014. Mr. Schwabero serves on the Advisory Committee of The Ohio State University Center for Automotive Research and is a director of 1st Source Corporation. Mr. Schwabero’s leadership experience, international expertise and detailed knowledge of the automotive and industrial industries has provided valuable insights to the Board.

11

Lawrence B. Skatoff
Retired Executive Vice President and Chief Financial Officer
BorgWarner Inc.
Director since 2004
Age 79

Mr. Skatoff retired in 2001 as Executive Vice President and Chief Financial Officer of BorgWarner Inc. Prior to joining BorgWarner Inc., Mr. Skatoff was Senior Vice President and Chief Financial Officer of Premark International, Inc. from 1991 through 1999. Before joining Premark, Mr. Skatoff was Vice President-Finance of Monsanto Company. Mr. Skatoff’s executive experience and financial background has led to continued contributions to the Board.

12

PROPOSAL TWO
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of our Board of Directors is directly responsible for the appointment, termination, compensation, evaluation and oversight of our independent registered public accounting firm. Our Audit Committee has selected EY to serve as our independent registered public accounting firm for the fiscal year ending May 2, 2020, subject to ratification of the selection by our shareholders. EY has served as our independent registered public accounting firm for many years and is considered to be well qualified.

Representatives of EY will be present at the annual meeting, will have the opportunity to make a statement and will be available to respond to appropriate questions.

If our shareholders do not ratify the selection of EY, our Audit Committee will reconsider the selection. Even if the selection is ratified, our Audit Committee may select a different independent registered public accounting firm at any time during the year if it determines that a change would be in the best interests of Methode and our shareholders.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF OUR AUDIT COMMITTEE’S SELECTION OF EY AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

13

PROPOSAL THREE
ADVISORY APPROVAL OF METHODE’S EXECUTIVE COMPENSATION

Section 14A of the Securities Exchange Act of 1934 requires that we provide our shareholders with the opportunity to vote to approve, on a nonbinding, advisory basis, the compensation of our named executive officers as disclosed in this proxy statement, commonly known as a “say-on-pay” vote.

As described under “Compensation Discussion and Analysis,” we seek to align the interests of our executives with the interests of our shareholders and reward performance.

The advisory vote on this resolution is not intended to address any specific element of compensation, but rather the overall compensation of our named executive officers as disclosed in this proxy statement. The vote is advisory, which means that the vote is not binding on Methode, our Board of Directors or our Compensation Committee. Although this vote is nonbinding, our Board of Directors and our Compensation Committee value the opinions of our shareholders and will consider the outcome of the vote when making decisions concerning executive compensation.

Shareholders may vote for or against the following resolution, or may abstain from voting. The affirmative vote of a majority of the shares present or represented at the annual meeting and entitled to vote is required to approve the proposed resolution.

We ask our shareholders to approve the following resolution:

      “RESOLVED, that the compensation of Methode’s named executive officers, as disclosed in Methode’s Proxy Statement for the 2019 Annual Meeting of Shareholders pursuant to the SEC’s compensation disclosure rules, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure, is hereby approved.”
 

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE FOREGOING RESOLUTION.

14

AUDIT COMMITTEE MATTERS

Report of the Audit Committee

The Audit Committee oversees our financial reporting process on behalf of our Board of Directors. Our management has the primary responsibility for the financial statements and the reporting process, including the system of internal controls. Our Board has determined that each member of our Audit Committee meets the requirements as to independence, experience and expertise established by the New York Stock Exchange. Our Board has designated Mr. Aspatore, Ms. Goossen, Mr. Shelton and Mr. Skatoff as audit committee financial experts as defined by the SEC. In fulfilling its oversight responsibilities, our Audit Committee reviewed and discussed the audited financial statements in the Annual Report on Form 10-K for the year ended April 27, 2019 with management, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements.

Our Audit Committee reviewed and discussed with our independent registered public accounting firm, Ernst & Young LLP (“EY”), which is responsible for expressing an opinion on the conformity of the audited financial statements with U.S. generally accepted accounting principles, the firm’s judgments as to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed under the standards of the Public Company Accounting Oversight Board (United States).

The Committee has received the written disclosures and the letter from EY required by applicable requirements of the Public Company Accounting Oversight Board regarding EY’s communications with the Committee concerning independence, and has discussed with EY the firm’s independence from management and Methode and considered the compatibility of nonaudit services with the firm’s independence.

Our Audit Committee discussed with our internal auditors and EY the overall scope and plans for their respective audits. Our Audit Committee met with the internal auditors and EY, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting. The Committee also discussed with EY the matters required to be discussed under the Public Company Accounting Oversight Board Auditing Standard No. 1301, Communications with Audit Committees (AS 1301). In reliance on the reviews and discussions referred to above, the Committee recommended to our Board of Directors (and our Board has approved) that the audited financial statements be included in the Annual Report on Form 10-K for the year ended April 27, 2019 filed with the SEC.

 
AUDIT COMMITTEE
 
Isabelle C. Goossen, Chair
 
Walter J. Aspatore
 
Paul G. Shelton
 
Lawrence B. Skatoff

15

Auditing and Related Fees

Our Audit Committee engaged Ernst & Young to examine our consolidated financial statements for the fiscal year ended April 27, 2019. Fees paid to Ernst & Young for services performed during the 2019 and 2018 fiscal years were as follows:

 
Fiscal 2019
Fiscal 2018
Audit Fees (1)
$
2,844,199
 
$
2,669,509
 
Tax Fees (2)
$
45,326
 
$
98,389
 
All Other Fees (3)
$
 
$
395,929
 
Total
$
2,889,525
 
$
3,163,827
 
(1) Audit fees represent aggregate fees billed for professional services rendered by Ernst & Young for the audit of our annual financial statements and review of our quarterly financial statements, audit services provided in connection with other statutory and regulatory filings and consultation with respect to various accounting and financial reporting matters.
(2) Tax fees primarily include fees for consultations regarding intercompany transfer pricing.
(3) All other fees primarily includes fees related to due diligence on acquisition targets.

Pre-Approval Policy

Our Audit Committee is responsible for reviewing and pre-approving all audit and non-audit services provided by Ernst & Young and shall not engage Ernst & Young to perform non-audit services proscribed by law or regulation. In fiscal 2019, 100% of audit and non-audit services were approved by the Audit Committee.

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COMPENSATION DISCUSSION AND ANALYSIS

Overview

This Compensation Discussion and Analysis describes the key elements of our executive compensation program, including an analysis of compensation awarded to, earned by or paid to our named executive officers in fiscal 2019. Our fiscal 2019 named executive officers included Donald W. Duda, Chief Executive Officer; Ronald L.G. Tsoumas, Chief Financial Officer; Joseph E. Khoury, Chief Operating Officer; Michael Brotherton, Vice President and President of Grakon; and Anil Shetty, Vice President and President of Dabir Surfaces. Messrs. Brotherton and Shetty were appointed executive officers in September 2018.

Executive Summary

Our Compensation Committee strives to provide compensation programs that align our executives’ interests with those of our shareholders and appropriately reward our executives for performance against annual and multi-year objectives.

The key elements of our fiscal 2019 compensation program for our named executive officers included the following:

Salary . In reviewing fiscal 2019 salaries for our named executive officers, our Compensation Committee reviewed advice from its independent compensation consultant regarding market practices and considered Mr. Duda’s recommendations for officers other than himself. The Compensation Committee also considered other relevant factors, including the individual performance, skills and experience of each executive, internal pay equity issues, executive retention, promotions, increased responsibilities, peer comparisons and the Company’s performance. After deliberation, the Compensation Committee increased Mr. Duda’s salary by 3% and Mr. Khoury’s salary by 10%. In establishing the new salaries for Messrs. Tsoumas, Brotherton and Shetty, the Compensation Committee also considered each officer’s recent promotion and significant increase in responsibilities. The Compensation Committee increased the salaries of our recently promoted named executive officers as follows: Mr. Tsoumas (promoted to Chief Financial Officer), 63%; Mr. Brotherton (promoted to President of Grakon), 25%; and Mr. Shetty (promoted to President of Dabir Surfaces), 31%.
Annual Performance-Based Cash Bonus . After considering the guideline benchmark target, executive performance, retention issues, internal pay equity, market conditions, the advice of our independent compensation consultant and Mr. Duda’s recommendations for the other officers, the Compensation Committee set fiscal 2019 annual performance-based cash bonus opportunities. For Mr. Duda, the target amount payable under the annual performance-based cash bonus was set at 100% of base salary. For all other executive officers, the amount payable at target was set at 66% of base salary. For all of our executive officers, 70% of the target bonus was based on an adjusted pre-tax income measure for the Company (excluding costs and earnings from the Grakon acquisition) and 30% was based on new business bookings or revenue objectives and/or individual management objectives. The maximum amount payable with respect to the pre-tax income measures and new business objectives was set at 200% of the amount payable at the target level of performance, which aligns the bonus opportunity with competitive practice among the peer group.
Long-Term Incentive (“LTI”) Program . Our multi-year, long-term equity program consists of a mix of 60% performance-based restricted stock awards (“RSAs”), at target performance, and 40% time-based restricted stock units (“RSUs”). The Compensation Committee expects the LTI Program to cover all long-term incentive grants to the participants through the end of fiscal 2020. The number of RSAs earned will be based on the achievement of established goals for the Company’s earnings before net interest, taxes, fixed asset depreciation and intangible asset amortization (“EBITDA”) for fiscal 2020. The EBITDA performance goals under the LTI Program were designed to align with the Company’s targeted annual growth rate for EBITDA of 9% to 10% for the five-year period ending with fiscal 2020. The RSUs are subject to vesting based on continued service, subject to acceleration in certain limited circumstances.

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Our executive compensation program contains the following components and features that are designed to reflect compensation governance best practices and align the interests of our named executive officers and shareholders.

No excessive post-termination benefits : Our executives do not participate in pension plans or receive other post-retirement benefits, nor do they generally have employment or severance agreements (other than in connection with a change of control).
No “single trigger” change of control benefits : We maintain “double-trigger” change of control agreements, and the executives are only entitled to a severance payment if an executive is terminated without cause or an executive terminates for good reason subsequent to a change of control. In addition, awards under our LTI Program do not automatically vest upon a change in control.
No excise tax gross ups : We do not provide for gross-up payments for excise taxes our executive officers may incur in connection with a change of control.
Robust performance-based incentives : In general, a significant amount of each of our named executive officer’s compensation is variable compensation and “at risk” for non-payment if we fail or the executive fails to meet performance targets. Consistent with our pay-for-performance philosophy, approximately 53% of our Chief Executive Officer’s fiscal 2019 compensation is composed of performance-based compensation, consisting of an annualized portion of the multi-year LTI Program RSAs (at target performance), and the annual performance-based cash bonus for fiscal 2019 at target.
Disclosure of performance measures : We disclose the performance measures for the RSAs outstanding under our LTI Program and our fiscal 2019 performance-based annual bonuses in this Compensation Discussion and Analysis.
No dividends or dividend equivalents on unearned awards : Under our 2014 Omnibus Incentive Plan, dividends on performance-based stock awards and dividend equivalents on performance-based stock unit awards are paid only to the extent the underlying awards are earned or vest.
Use of an independent compensation consultant : The Compensation Committee directly engages an independent compensation consultant to review the competitiveness and effectiveness of our executive compensation program and to advise the Compensation Committee on regulatory and other current trends and key developments in executive compensation.
Executive officer stock ownership requirements : We require all of our executive officers to hold substantial amounts of our common stock. Our Chief Executive Officer is expected to own stock with a value at least equal to six (6) times his base salary, our Chief Operating Officer is expected to own stock with a value at least equal to three (3) times his base salary and other executive officers are expected to own two (2) times their base salary. The requirements are subject to a phase-in period in the event of a new hire or a promotion. In addition, for the majority of our executive officers, shares of common stock underlying vested RSUs will not be delivered to the executive until the earlier of the executive’s termination of employment or a change of control of Methode.
Incentive “clawback” policy : In the event we are required to restate our financial statements due to material noncompliance, our Incentive Compensation Recoupment Policy requires us to recover from our current or former executive officers certain amounts of incentive-based compensation paid within the prior three years.
Policy prohibiting hedging or pledging our stock : Our Insider Trading Policy prohibits our directors, executive officers and certain key employees from engaging in certain transactions involving our common stock, including options trading, short sales, derivative transactions and hedging transactions. In addition, these directors, executive officers and key employees are prohibited from holding our common stock in a margin account or otherwise pledging our common stock as collateral for a loan.
Annual say-on-pay advisory vote : We hold an annual advisory vote for our stockholders to review and approve our executive compensation program, which received 95% stockholder support last year.

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Objectives and Measurement Principles

Our executive compensation program supports our objective of enhancing shareholder value through a competitive program that attracts and retains high-quality talent and rewards executives for demonstrating strong leadership and delivering results. Our executive compensation program is designed to:

Provide executives with a competitive pay arrangement.
Link short-term cash incentive pay to achievement of company objectives for pre-tax income and new business bookings, and in certain cases, individual objectives.
Link long-term equity incentives to achievement of EBITDA objectives, as adjusted for certain acquisitions and divestitures.
Align executive interests with shareholder interests by providing for capital accumulation through awards of RSAs and RSUs and encourage significant ownership of our common stock by our executive officers.

Our Compensation Process

Our Overall Process. Our Compensation Committee is comprised entirely of independent directors and meets as often as necessary to perform its duties. In fiscal 2019, our Compensation Committee met six times. Our Compensation Committee typically meets with Donald W. Duda, our Chief Executive Officer, and reserves time at each meeting to hold an executive session without any members of management present.

Our Compensation Committee annually engages a compensation consultant to review the competitiveness and effectiveness of our executive compensation program and annually reviews summaries of our named executive officers’ compensation relative to peers and survey data. Our Compensation Committee also annually reviews company performance relative to peers.

Our Chief Executive Officer’s compensation is determined by our Compensation Committee. Management does not make recommendations to our Compensation Committee regarding compensation elements with respect to Mr. Duda’s compensation. For named executive officers other than Mr. Duda, compensation packages are developed and recommended by Mr. Duda, in consultation with the Chief Human Resources Officer, based on guidelines provided by our Compensation Committee. Our Compensation Committee determines whether to approve these recommendations, subject to any modifications that it may deem appropriate.

Role of Compensation Consultant . Since 2013, Frederic W. Cook & Co., Inc. (“FW Cook”) has provided independent executive compensation consulting services to the Compensation Committee. FW Cook is retained by and reports to the Compensation Committee. During fiscal 2019, FW Cook provided the following services:

assisted the Compensation Committee in evaluating the linkage between pay and performance;
assisted the Compensation Committee in developing a compensation peer group to be used for evaluating compensation decisions;
provided and reviewed market data and advised the Compensation Committee on setting executive compensation and the competitiveness and reasonableness of the Company’s executive compensation program;
reviewed and advised the Compensation Committee regarding the elements of the Company’s executive compensation program, each as relative to the Company’s peers and survey data;
provided information regarding realizable pay in light of our multi-year LTI Program;
evaluated the Company’s compensation programs and practices in relation to potential compensation risk areas to confirm that the risks inherent in the executive compensation program are not reasonably likely to have a material adverse effect on the Company; and
reviewed and advised the Compensation Committee regarding regulatory, governance, disclosure and other technical matters.

The Compensation Committee reviewed information provided by FW Cook addressing the independence of FW Cook and the representatives serving the Committee. Based on this information, the Compensation Committee concluded that the work performed by FW Cook and its representatives involved in the engagement did not raise any conflict of interest and that FW Cook and such representatives are independent from the Company’s management.

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Consideration of 2018 Say-on-Pay Vote Results . At our 2018 annual meeting, our shareholders approved our fiscal 2018 executive compensation, with approximately 95% of voted shares cast in favor of the say-on-pay resolution. Our Compensation Committee considered the results of the 2018 say-on-pay vote along with other factors when making executive compensation decisions.

Risk Assessment . The Compensation Committee, together with the Chief Executive Officer and its independent compensation consultant, annually considers potential risks when reviewing our compensation programs for all employees, including our executive officers. Based on this assessment, the Compensation Committee concluded that our fiscal 2019 compensation programs do not create risks that are reasonably likely to have a material adverse effect on the Company. In making this determination, the Compensation Committee reviewed the key features of our compensation programs and policies, including the following:

The Compensation Committee members are fully independent and supported by an outside independent compensation consultant.
Compensation for our executive officers is composed of salary, annual performance-based cash incentives and long-term equity incentives that are time-based and performance-based, representing a balanced mix.
Our incentive programs are designed to avoid an over emphasis on a single performance metric. The annual incentive awards reward the achievement of short-term profit, new business bookings, and individual performance objectives. The performance-based RSAs under the LTI Program are tied to a longer-term profitability growth objective. Incentive opportunities for non-executive employees (including sales employees) are market competitive and balanced with fixed compensation components.
The maximum amount payable under the annual performance-based cash bonuses with respect to the profit and sales objectives is capped at 200% of target.
Our LTI Program is comprised entirely of equity awards in order to directly align the interests of our executive officers with those of our shareholders. The award mix of 60% performance-based RSAs, at target performance, and 40% time-vested RSUs is intended to support the Company’s operating performance and retention objectives, respectively.
Our stock ownership policy requires significant stock ownership by our executive officers, which further aligns the interests of our executive officers with the long-term interests of our shareholders.
Our Incentive Compensation Recoupment Policy requires us to recover from our current or former executive officers certain amounts of incentive-based compensation in the event we are required to restate our financial statements due to material noncompliance.
Employees are subject to a Company policy that prohibits pledging and hedging activities with respect to Methode common stock.
Severance benefits are at appropriate levels to attract necessary talent, but not excessive, and the Company does not provide excise tax gross-ups.

Market Benchmarking and Positioning of Fiscal 2019 Executive Compensation

We strive to provide compensation opportunities that are market competitive. In order to assist the Compensation Committee in achieving this objective for fiscal 2019, FW Cook was retained to conduct a review of our executive compensation peer group and benchmark our executive compensation program using a custom peer group and third-party survey data. The Compensation Committee considers this benchmarking information in reviewing each element of our compensation program.

After considering the advice of FW Cook, the Compensation Committee approved using the fiscal 2018 peer group for fiscal 2019, subject to one modification. One former peer company, IPG Photonics Corporation, was eliminated since it is positioned well above the market capitalization range targeted for our peer companies.

The peer group used for benchmarking purposes in fiscal 2019 was selected using the following criteria:

Size as measured by revenue – we generally targeted companies with revenue one-half to two times our annual revenue.
Size as measured by market capitalization – we generally targeted companies with market capitalization one-third to three times our market capitalization.
Similar-type businesses – we generally targeted companies that are multinational and engage in businesses with similar technology, products and markets.

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For compensation decisions affecting fiscal 2019 compensation, the peer group included the following companies:

AVX Corporation
Kemet Corporation
Rogers Corporation
CTS Corporation
LCI Industries
Standard Motor Products, Inc.
Dorman Products, Inc.
Littelfuse, Inc.
Stoneridge, Inc.
Franklin Electric Company, Inc.
MTS Systems Corporation
TTM Technologies, Inc.
Gentherm Incorporated
OSI Systems, Inc.
Universal Electronics Inc.

In benchmarking our compensation program for fiscal 2019, the Compensation Committee also reviewed information compiled by FW Cook from major third-party executive pay surveys.

As a general policy, we targeted fiscal 2019 executive officer total direct compensation (salary, annual cash bonus and long-term incentive compensation) and each component thereof in the 50 th to 75 th percentile range of competitive practice, which aligned with the Company’s relative positioning in terms of revenues, net income and market capitalization versus its peer group. In making benchmarking determinations for fiscal 2019 compensation, the Compensation Committee assumed that each executive would achieve the target level of performance under all performance-based awards. In addition, in valuing the RSA and RSU awards outstanding under the LTI Program, the Compensation Committee assumed each executive would achieve the target level of performance under the RSAs and included an annualized portion of these shares in the comparative calculations since the LTI Program is intended to cover all long-term equity incentive grants to the named executive officers from fiscal 2016 through fiscal 2020. One-fifth of the grant date fair value of these shares is included for each executive officer.

In setting each compensation component for our executive officers, the Compensation Committee considered the competitive market data, together with other relevant factors, including the individual performance and experience of each executive, retention issues, internal pay equity and consistency issues, the Company’s performance, expected future contributions of each executive, historical compensation levels, tenure, promotions, increased responsibilities and industry conditions. These and other factors may affect whether one or more of the compensation components for any of our executive officers is set outside of the benchmark range. In addition, the total direct compensation, annual cash bonus and long-term incentive compensation for one or more of our executive officers could be above or below this target range depending on the amounts earned under the performance-based awards.

Consistent with our pay-for-performance philosophy, our executive compensation program is generally structured so that a significant amount of each of our named executive officers’ compensation is variable compensation and “at risk” for non-payment if we fail, or the executive fails, to meet performance targets.

Components of Fiscal 2019 Compensation

Salary . Our Compensation Committee establishes salaries on an annual basis taking into account the guideline benchmark target. In reviewing fiscal 2019 salaries for our named executive officers, our Compensation Committee reviewed advice from its independent compensation consultant regarding market practices and considered Mr. Duda’s recommendations for officers other than himself. The Compensation Committee also considered other relevant factors, including the individual performance, skills and experience of each executive, internal pay equity issues, executive retention, promotions, increased responsibilities, peer comparisons and the Company’s performance. After deliberation, the Compensation Committee increased Mr. Duda’s salary by 3% and Mr. Khoury’s salary by 10%. In establishing the new salaries for Messrs. Tsoumas, Brotherton and Shetty, the Compensation Committee also considered each officer’s recent promotion and significant increase in responsibilities. The Compensation Committee increased the salaries of our recently promoted named executive officers as follows: Mr. Tsoumas (promoted to Chief Financial Officer), 63%; Mr. Brotherton (promoted to President of Grakon), 25%; and Mr. Shetty (promoted to President of Dabir Surfaces), 31%.

Annual Performance-Based Bonuses . Our Compensation Committee established fiscal 2019 annual performance-based cash bonus opportunities for our executive officers after considering the guideline benchmark target, the individual performance and experience of each executive, retention issues, internal pay equity and industry conditions. The Compensation Committee reviewed advice from FW Cook regarding market practices and considered Mr. Duda’s recommendations for officers other than himself. In setting the performance measures, our Compensation Committee considered, among other matters, past performance, the fiscal 2019 operating budget and general economic conditions. For Mr. Duda, the target amount payable under the annual performance-based cash

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bonus was set at 100% of base salary. For all other executive officers, the amount payable at target was set at 66% of base salary. The Compensation Committee determined that 70% of the target bonus would be based on a Company pre-tax income measure (excluding costs and earnings from the Grakon acquisition) and 30% would be based on new business bookings or revenue objectives and/or individual management objectives. The maximum amount payable with respect to the pre-tax income measures and new business objectives was set at 200% of the amount payable at the target level of performance, which aligns the opportunity with competitive practice among the peer group.

Set forth below is an outline of the annual performance-based cash bonus awards for fiscal 2019 performance, including the maximum bonus, the relevant performance measures and the bonus paid.

Executive
Target
Bonus
Performance Measures and Amounts Payable *
Bonus Earned
Donald W. Duda
$
759,719
 
(1) Achieve consolidated pre-tax income (excluding costs and earnings from the Grakon acquisition) of $124.0 million (threshold), $130.5 million (target) and $150.1 million (maximum), with $265,902, $531,803 and $1,063,606 payable at threshold, target and maximum, respectively. The Company achieved consolidated adjusted pre-tax income (excluding costs and earnings from the Grakon acquisition) below the threshold level of performance.
   
(2) Obtain certain new business bookings of $62.0 million (threshold), $65.0 million (target) and $75.0 million (maximum), with $113,958, $227,916 and $455,832 payable of threshold, target and maximum respectively. The Company booked $78.8 million for such new business and Mr. Duda earned $455,832.
   
$
455,832
 
Ronald L.G. Tsoumas
$
264,000
 
(1) Achieve consolidated pre-tax income (excluding costs and earnings from the Grakon acquisition) of $124.0 million (threshold), $130.5 million (target) and $150.1 million (maximum), with $92,400, $184,800 and $369,600 payable at threshold, target and maximum, respectively. The Company achieved consolidated adjusted pre-tax income (excluding costs and earnings from the Grakon acquisition) below the threshold level of performance.
   
(2) Update the Company’s Enterprise Risk Management program to the satisfaction of the Audit Committee ($39,600 payable). This performance measure was not achieved as of this time.
   
(3) Implement certain analytics reports for forecasting, account reconciliation and budget planning ($39,600 payable). This performance measure was achieved.
   
$
39,600
 

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Executive
Target
Bonus
Performance Measures and Amounts Payable *
Bonus Earned
Joseph E. Khoury
$
294,756
 
(1) Achieve consolidated pre-tax income (excluding costs and earnings from the Grakon acquisition) of $124.0 million (threshold), $130.5 million (target) and $150.1 million (maximum), with $103,165, $206,329 and $412,658 payable at threshold, target and maximum, respectively. The Company achieved consolidated adjusted pre-tax income (excluding costs and earnings from the Grakon acquisition) below the threshold level of performance.
   
(2) Obtain certain new business bookings of $62.0 million (threshold), $65.0 million (target) and $75.0 million (maximum), with $44,214, $88,427 and $176,854 payable at threshold, target and maximum, respectively. The Company booked $78.8 million for such new business and Mr. Khoury earned $176,854.
   
$
176,854
 
Michael Brotherton
$
224,400
 
(1) Achieve consolidated pre-tax income (excluding costs and earnings from the Grakon acquisition) of $124.0 million (threshold), $130.5 million (target) and $150.1 million (maximum), with $78,540, $157,080 and $314,160 payable at threshold, target and maximum, respectively. The Company achieved consolidated adjusted pre-tax income (excluding costs and earnings from the Grakon acquisition) below the threshold level of performance.
   
(2) Achieve Grakon pre-tax income (excluding amortization and purchase accounting adjustments) of $24.8 million (threshold), $26.1 million (target) and $30.0 million (max), with $33,660, $67,320 and $134,640 payable at threshold, target and maximum, respectively. Grakon achieved adjusted pre-tax income (excluding amortization and purchase accounting adjustments) of $33.1 million and Mr. Brotherton earned $134,640.
   
$
134,640
 

23

Executive
Target
Bonus
Performance Measures and Amounts Payable *
Bonus Earned
Anil Shetty
$
245,520
 
(1) Achieve consolidated pre-tax income (excluding costs and earnings from the Grakon acquisition) of $124.0 million (threshold), $130.5 million (target) and $150.1 million (maximum), with $85,932, $171,864 and $343,728 payable at threshold, target and maximum, respectively. The Company achieved consolidated adjusted pre-tax income (excluding costs and earnings from the Grakon acquisition) below the threshold level of performance.
   
(2) Upgrade the Dabir Surfaces sales structure and salesforce to the satisfaction of the Chief Executive Officer ($36,828 payable). This performance measure was achieved.
   
(3) Expand Dabir Surfaces sales into new hospital customers (defined as being hospitals with different addresses from existing hospital customers) that are part of multi-institutional hospital networks, with 2 such hospitals at threshold, 5 such hospitals at target and 10 such hospitals at maximum, with $18,414, $36,828 and $73,656 payable at threshold, target and maximum, respectively. Dabir Surfaces achieved maximum performance and Mr. Shetty earned $73,656.
   
$
110,484
 
* Payouts are interpolated for performance falling between established performance objectives.

Prior to his promotion as executive officer in fiscal 2019, Mr. Brotherton participated in the Company’s new business bookings incentive plan for certain non-executive officers which provides for payments following the completed launch of certain new business programs. In fiscal 2019, Mr. Brotherton received a final payment of $50,000 under the new business bookings incentive plan.

Other Benefits and Perquisites . Our U.S.-based executive officers are eligible to participate in all of our employee benefit plans, such as medical, dental, vision, group life, disability and, as applicable, our 401(k) savings plan (with a company contribution equal to three percent (3%) of salary, subject to certain limitations), in each case, on the same basis as our other employees. Prior to their promotion as executive officers in fiscal 2019, Messrs. Brotherton and Shetty participated in a discretionary matching program for certain non-executive officers. The program awards a discretionary matching payment equal to the amount paid to the employee three years earlier, subject to the employee’s continued employment. In fiscal 2019, Messrs. Brotherton and Shetty received matching payments of $125,000 and $150,000, respectively, pursuant to the program. Messrs. Brotherton and Shetty are eligible to receive matching payments through fiscal 2021. Our U.S.-based executive officers are provided deferred compensation opportunities through a non-qualified Deferred Compensation Plan. We have never contributed any amounts to the Deferred Compensation Plan on behalf of any of the named executive officers. For a description of the Deferred Compensation Plan, please see “Executive Compensation — Nonqualified Deferred Compensation,” below. In addition, a few perquisites are provided to the named executive officers. Perquisites include a company car allowance, professional association dues and provision for an annual physical exam.

Change of Control Arrangements . We have entered into change of control agreements with all of our named executive officers, other than Mr. Khoury, that provide certain benefits upon termination in connection with a change of control event. As a Lebanese resident, Mr. Khoury is entitled to certain payments in the event of his termination under the Lebanese Labor Laws. These change of control agreements are designed to promote stability and continuity of senior management if a change of control event were to occur, both of which are in the best interest of Methode and our shareholders. Our executives are not entitled to a gross-up payment for excise taxes under our change of control agreements. In addition, our change of control agreements are “double trigger” whereby the executives are

24

only entitled to a severance payment if an executive is terminated without cause or an executive terminates for good reason subsequent to a change of control. Our change of control provisions for the named executive officers are summarized below under “Executive Compensation − Potential Payments Upon Termination or Change of Control.”

Fiscal 2016 to 2020 Long-Term Incentive Program

During fiscal 2016, our Compensation Committee adopted a five-year, long-term incentive program consisting of a mix of 60% performance-based RSAs, at target performance, and 40% time-based RSUs (the “LTI Program”). The number of RSAs earned will vary based on performance relative to established goals for threshold, target and maximum performance. Performance will be based on the Company’s earnings before net interest, taxes, fixed asset depreciation and intangible asset amortization (“EBITDA”) for fiscal 2020, subject to certain adjustments, including adjustments for certain acquisitions and divestitures. The RSUs are subject to a vesting period based on continued service, subject to acceleration in certain limited circumstances. The Compensation Committee intends for the LTI Program to cover all long-term equity incentive grants to the participants through fiscal 2020.

A key consideration of the Compensation Committee in developing the LTI Program was the success of the prior five-year, long-term incentive program which concluded as of the end of fiscal 2015 (the “Fiscal 2011 LTI Program”). The Fiscal 2011 LTI Program included performance-based RSAs, performance-based tandem cash awards, RSUs and stock options. During the five-year period of the Fiscal 2011 LTI Program, revenues grew at an annualized rate of 18.5%, which supported annualized pre-tax profit growth and diluted earnings per share growth of 73.0% and 47.5%, respectively. In addition, we realized strong annualized total shareholder return of 34.0% during the period. During this period, our industry-leading performance reflected the introduction of numerous new products and technologies, the benefits of selective licensing and other business arrangements, the expansion of lower-cost manufacturing facilities and further vertical integration The Compensation Committee concluded that the Fiscal 2011 LTI Program succeeded in focusing our executive officers on growing the Company and appropriately rewarded our executive officers for creating value for our shareholders.

The Compensation Committee intends for the LTI Program to continue creating value for our shareholders using a long-term program that aligns pay with performance and includes a strong retention feature. In structuring the LTI Program, the Compensation Committee considered the advice of FW Cook, its independent executive compensation consultant, regarding market practices, award mix and size, possible performance criteria and alternative program structures. The Compensation Committee also considered Mr. Duda’s recommendations for officers other than himself.

The Compensation Committee considered multiple approaches for the LTI program, including the use of annual grants and alternative performance periods. After careful review, the Compensation Committee determined that the five-year program is appropriate after considering the success of the Fiscal 2011 LTI Program discussed above, as well as the lengthy sales and product development cycles and significant upfront capital requirements for many of the Company’s products. The Compensation Committee believes the term will focus our executive officers on the Company’s long-term objectives and retain our top executive talent over the period.

The LTI Program is comprised entirely of equity awards in order to directly align the interests of our executive officers with those of our shareholders. The Compensation Committee believes that the award mix of 60% performance-based RSAs, at target performance, and 40% time-vested RSUs supports the Company’s operating performance and retention objectives, respectively. Unlike the Fiscal 2011 LTI Program, stock options and performance-based tandem cash awards are not components of the LTI Program, in part due to accounting considerations, including the high costs of stock options relative to historical grants.

The Compensation Committee applied EBITDA, as adjusted, as the RSA performance metric because it is one of the primary operating metrics tracked by the Company and its shareholders. The EBITDA performance goals set forth below align with the Company’s targeted 9% to 10% annual growth rate for EBITDA for the period. The adjustments to EBITDA for acquisitions and divestitures are designed to mitigate unintended windfalls to management for certain acquisitions and also to safeguard management from unintended penalties for shareholder-friendly divestitures that negatively impact the fiscal 2020 performance results.

In general, the Compensation Committee targeted the LTI Program awards in the 50 th to 75 th percentile range of competitive practice, which aligned with the Company’s relative positioning in terms of revenues, net income and market capitalization versus its peer group. In making these benchmarking determinations, the Compensation Committee assumed that each executive would achieve the target level of performance under the RSAs and included

25

one-fifth of the grant date fair value of these shares in these comparative calculations. In determining the size of the award to each of our executive officers, the Compensation Committee also considered other relevant factors, including the individual performance and experience of each executive, internal pay equity and consistency issues, expected future contributions of each executive, historical compensation levels and tenure.

The table below sets forth the number of target RSAs and RSUs awarded to the named executive officers (“Target Shares”).

Executive
Number of Shares
Target RSAs *
RSUs
Donald W. Duda
 
180,000
 
 
120,000
 
Ronald L.G. Tsoumas
 
33,000
 
 
22,000
 
Joseph E. Khoury
 
90,000
 
 
60,000
 
Michael Brotherton
 
36,000
 
 
24,000
 
Anil Shetty
 
36,000
 
 
24,000
 
* The number of shares earned will depend on performance and may be up to 150% of this number.

Performance-Based RSAs . The number of RSAs earned will vary based on performance relative to established goals for threshold performance, target performance and maximum performance. The executive will not earn any shares if threshold performance is not met. Performance will be based on the Company’s EBITDA for fiscal 2020, subject to certain adjustments. All positive EBITDA from acquisitions that close during the term of the program and that are not accretive (as defined in the respective award agreement) in fiscal 2020 will be excluded. All positive EBITDA from acquisitions that close during fiscal 2019 or fiscal 2020 that are accretive in fiscal 2020 shall be included for purposes of determining fiscal 2020 EBITDA up to the target level and shall be excluded for purposes of determining fiscal 2020 EBITDA above the target level. For any divestitures approved by the Board during the period, the final four quarters of EBITDA from the divested business will be included in fiscal 2020 EBITDA. The performance measures and corresponding percentages of the target shares earned are set forth below.

Performance Measure
Fiscal 2020 EBITDA, As Adjusted
Percentage of Target RSAs Earned *
Threshold Performance
$198.9 million
 
50
%
Target Performance
$221.0 million
 
100
%
Maximum Performance
$243.1 million
 
150
%
* Payouts are interpolated for performance falling between established performance measures.

Dividends will not be paid on the RSAs until the shares have been earned. At such time, the executive will be entitled to a dividend equivalent payment based on the dividends declared during the restricted period and the number of shares earned.

In the event of an executive’s death or disability, he or she will earn all of the Target Shares. In the event of an executive’s qualified retirement, the executive will be eligible to earn a prorated number of shares based on the number of months during the 60-month performance period that have elapsed prior to retirement and Methode’s actual fiscal 2020 EBITDA result. In the event of a change of control in which the successor company does not assume the RSAs, the executive will earn a prorated number of the Target Shares based on the number of months during the 60-month performance period that have elapsed prior to the change of control. If the successor company assumes the RSAs and, if the executive is terminated without cause or resigns for good reason within a period of time after the transaction (two years for Mr. Duda and one year for our other executive officers), then the executive will earn a prorated number of the Target Shares based on the number of months during the 60-month performance period that have elapsed prior to termination of employment. The Compensation Committee believes these provisions regarding the treatment of the RSAs in the event of death, disability, retirement or a change of control reflect fair and reasonable treatment under these scenarios based on current governance best practices and competitive standards.

Time-Based RSUs . The RSUs are subject to a vesting period based on continued service, with 30% vested at the end of fiscal 2018 and fiscal 2019, and 40% vesting at the end of fiscal 2020. Following vesting, the delivery of the stock underlying the RSUs will be deferred for Messrs. Duda, Tsoumas and Khoury until the earlier of the executive’s

26

termination of employment or a change of control. Dividend equivalents will not be paid on the RSUs until the units have vested. Following vesting and until the delivery of the underlying common stock, each executive will be entitled to a quarterly payment in an amount equal to the aggregate per share cash dividend paid during the quarter multiplied by the number of vested RSUs held by the executive.

In the event of an executive’s death or disability, all unvested RSUs will become immediately and fully vested. In the event of an executive’s qualified retirement, a prorated number of RSUs will vest based on the months during the 60-month vesting period that have elapsed prior to retirement . In the event of a change of control in which the successor company does not assume the RSUs, all unvested RSUs will become immediately and fully vested. If the successor company assumes the RSUs and, if the executive is terminated without cause or resigns for good reason within a period of time after the transaction (two years for Mr. Duda and one year for our other executive officers), then all unvested RSUs will become immediately and fully vested. The Compensation Committee believes these provisions regarding the treatment of the RSUs in the event of death, disability, retirement or a change of control reflect fair and reasonable treatment under these scenarios based on current governance best practices and competitive standards.

Significant Policies and Procedures

Stock Ownership Policy . Our Compensation Committee considers stock ownership by management to be an important means of linking management’s interests with those of our shareholders. After considering the importance of stock ownership, our Compensation Committee maintains stock ownership guidelines for our executive officers. Our Chief Executive Officer is expected to own stock with a value at least equal to six (6) times his base salary, our Chief Operating Officer is expected to own stock with a value at least equal to three (3) times his base salary and all other executive officers are expected to own stock with a value at least equal to two (2) times their base salary. Vested and unvested time-based RSUs are included in the calculation of stock ownership for purposes of these guidelines. The value of each executive officer’s common stock holdings is determined as of the end of each fiscal year based on the average daily closing price of Methode’s common stock for such fiscal year. All of our named executive officers were in compliance with our stock ownership guidelines for fiscal 2019, subject to the phase-in-period for new hires and promotions.

Insider Trading Policy . Our Insider Trading Policy prohibits our directors, executive officers and certain key employees from engaging in certain transactions involving our common stock, including options trading, short sales, derivative transactions and hedging transactions. In addition, these directors, executive officers and key employees are prohibited from holding our common stock in a margin account or otherwise pledging our common stock as collateral for a loan.

Deductibility of Compensation . Internal Revenue Code Section 162(m) generally limits the deductibility of compensation in excess of $1 million paid to our named executive officers. Under the tax rules in effect before 2018, compensation that qualified as “performance-based” was deductible without regard to this $1 million limit. In prior years, the awards of options, performance-based RSAs, and annual performance-based cash bonuses to our named executive officers were structured in order to qualify for this performance-based compensation exception. However, the 2017 Tax Cuts and Jobs Act (the “Tax Act”), eliminated this performance-based compensation exception effective January 1, 2018, subject to a special rule that “grandfathers” certain prior awards. As a result, compensation that the Compensation Committee structured in 2017 and prior years with the intent of qualifying as performance-based compensation or otherwise being deductible under Section 162(m) that is paid on or after January 1, 2018 may not be fully deductible, depending on the application of the special grandfather rules. Moreover, from and after January 1, 2018, compensation awarded in excess of $1 million to our named executive officers generally will not be deductible. Going forward, the Compensation Committee will continue to retain the flexibility to design compensation programs that are in the best long-term interests of the Company and our shareholders after taking into account a variety of factors, including deductibility.

Clawback Policy . In the event we are required to restate our financial statements due to material noncompliance, our Incentive Compensation Recoupment Policy requires us to recover from our current or former executive officers certain amounts of incentive-based compensation paid within the prior three years that were erroneously paid.

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COMPENSATION COMMITTEE REPORT

Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussion, our Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

 
COMPENSATION COMMITTEE
 
Martha Goldberg Aronson, Chair
 
Brian J. Cadwallader
Darren M. Dawson
 
Christopher J. Hornung
 
Paul G. Shelton

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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth certain summary information regarding the compensation awarded to, earned by or paid by us to, or for the account of, our Chief Executive Officer, our Chief Financial Officer and our three other most highly compensated executive officers (the “named executive officers”) for the four fiscal years ended April 27, 2019.

Name and
Principal Position
Fiscal
Year
Salary
($)
Stock Awards
($) (1)
Non-Equity
Incentive Plan
Compensation
($) (4)
All Other
Compensation
($) (5)
Total
($)
RSAs (2)
RSUs (3)
Donald W. Duda
President and Chief
Executive Officer
 
2019
 
 
759,719
 
 
 
 
 
 
455,832
 
 
174,027
 
 
1,389,578
 
 
2018
 
 
736,476
 
 
 
 
 
 
660,991
 
 
148,159
 
 
1,545,626
 
 
2017
 
 
716,108
 
 
 
 
 
 
955,541
 
 
138,169
 
 
1,809,818
 
 
2016
 
 
695,588
 
 
6,080,400
 
 
4,053,600
 
 
572,102
 
 
311,114
 
 
11,712,804
 
Ronald L.G. Tsoumas
Chief Financial
Officer and
Vice President,
Corporate Finance
 
2019
 
 
420,749
 
 
 
 
 
 
39,600
 
 
28,682
 
 
489,031
 
 
2018
 
 
245,942
 
 
 
 
 
 
155,532
 
 
30,174
 
 
431,648
 
 
2017
 
 
238,703
 
 
 
 
 
 
210,425
 
 
27,017
 
 
476,145
 
 
2016
 
 
231,880
 
 
1,114,740
 
 
743,160
 
 
129,628
 
 
21,976
 
 
2,241,384
 
Joseph E. Khoury
Chief Operating
Officer (6)
 
2019
 
 
446,607
 
 
 
 
 
 
176,854
 
 
22,062
 
 
645,523
 
 
2018
 
 
400,025
 
 
 
 
 
 
280,340
 
 
15,682
 
 
696,047
 
 
2017
 
 
362,518
 
 
 
 
 
 
320,261
 
 
14,482
 
 
697,261
 
 
2016
 
 
359,600
 
 
3,040,200
 
 
2,026,800
 
 
184,127
 
 
90,221
 
 
5,700,948
 
Michael Brotherton
Vice President and
President of Grakon (7)
 
2019
 
 
309,996
 
 
 
 
 
 
184,640
 
 
167,549
 
 
662,185
 
Anil Shetty
Vice President and
President Dabir
Surfaces (7)
 
2019
 
 
372,000
 
 
 
 
 
 
110,484
 
 
170,014
 
 
652,498
 
(1) Reflects the fair value at the date of grant. The value is calculated in accordance with Accounting Standards Codification Topic 718, Stock Compensation (“ASC 718”). Details of the assumptions used in valuing the awards are set forth in Note 4 to our audited financial statements included in our Annual Report on Form 10-K for such fiscal year.
(2) These performance-based RSAs are eligible for vesting based on fiscal 2020 EBITDA, as adjusted, relative to established goals for threshold, target and maximum performance. At the time of the grants, we deemed achievement of target performance probable, and therefore the grant date fair values reflected above were calculated on that basis. If, instead, the RSA amounts had been calculated assuming the Company would achieve maximum performance, the grant date fair values for these RSAs would have been as follows: Mr. Duda, $9,120,600; Mr. Tsoumas $1,672,110; and Mr. Khoury, $4,560,300.
(3) These RSUs are subject to a vesting period based on continued service, with 30% vested at the end of fiscal 2018 and fiscal 2019 and 40% vesting at the end of fiscal 2020. For Messrs. Duda, Tsoumas and Khoury, the RSUs are not eligible to be converted into common stock until a change of control or the executive officer leaves the Company.
(4) Amounts reflect annual performance-based cash bonuses. For Mr. Brotherton, also includes a payment of $50,000 pursuant to the Company’s new business bookings incentive plan for non-executive officers.

29

(5) Amounts included in All Other Compensation reflect the following for fiscal 2019:
Executive
Vested
RSU Dividend
Equivalents ($)
401(k)
Contribution
($)
Life
Insurance
($)
Car
Allowance ($)
Executive
Physical ($)
Mr. Duda
 
145,664
 
 
8,467
 
 
3,564
 
 
9,600
 
 
6,732
 
Mr. Tsoumas
 
11,704
 
 
9,949
 
 
1,029
 
 
6,000
 
 
0
 
Mr. Khoury
 
21,120
 
 
0
 
 
0
 
 
0
 
 
942
 
Mr. Brotherton
 
0
 
 
9,112
 
 
804
 
 
7,650
 
 
0
 
Mr. Shetty
 
0
 
 
8,634
 
 
580
 
 
10,800
 
 
0
 

For Mr. Brotherton, also includes the following: (i) a monthly housing allowance of $7,500 and a monthly living allowance of $2,500 in connection with his relocation to Seattle; and (ii) a discretionary matching payment of $125,000 pursuant to the Company’s discretionary matching program for non-executive officers. For Mr. Shetty, also includes a matching payment of $150,000 pursuant to the Company’s discretionary matching program for non-executive officers.

(6) Mr. Khoury is a Lebanese resident and we paid Mr. Khoury’s cash compensation in Euros. For purposes of the Summary Compensation Table, this cash compensation was converted from Euros to U.S. Dollars using the average exchange rate of 1.1085 for fiscal 2016; 1.0926 for fiscal 2017, 1.1805 for fiscal 2018 and 1.1498 for fiscal 2019.
(7) Messrs. Brotherton and Shetty were appointed executive officers in September 2018.

Grants of Plan-Based Awards

The following table sets forth certain information regarding grants of plan-based non-equity incentive awards to the named executive officers during the fiscal year ended April 27, 2019.

 
 
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards (1)
Name
Grant
Date
Threshold
($)
Target
($)
Maximum
($)
Donald W. Duda
7/31/2018
 
379,860
 
 
759,719
 
 
1,519,438
 
Ronald L.G. Tsoumas
7/31/2018
 
171,600
 
 
264,000
 
 
448,800
 
Joseph E. Khoury
7/31/2018
 
147,379
 
 
294,756
 
 
589,512
 
Michael Brotherton
9/12/2018
 
112,200
 
 
224,400
 
 
448,800
 
Anil Shetty
7/31/2018
 
159,588
 
 
245,520
 
 
417,384
 
(1) Reflects annual performance-based cash bonus awards pursuant to the Methode Electronics, Inc. 2014 Omnibus Incentive Plan (the “2014 Plan”). The executive officers’ bonus amounts are based on achieving certain performance measures. For purposes of this table, for any award components that include only one level of performance, we have included such amount in each of the threshold, target and maximum columns. Amounts earned in fiscal 2019 by the executive officers under this award are reported in “Compensation Discussion and Analysis” and in the column titled “Non-Equity Incentive Plan Compensation-Annual Bonus” in the “Summary Compensation Table.” Details regarding these awards, including the relevant performance measures, are set forth in “Compensation Discussion and Analysis.”

Alternative Summary Compensation Table

As discussed in “Compensation Discussion and Analysis-Fiscal 2016 to 2020 Long-Term Incentive Program,” in fiscal 2016, our Compensation Committee adopted a five-year, long-term equity incentive program consisting of a mix of 60% performance-based RSAs, at target performance, and 40% time-based RSUs (the “LTI Program”). The number of RSAs earned will vary based on performance relative to established goals for threshold, target and maximum performance. Performance will be based on the Company’s earnings before net interest, taxes, fixed asset depreciation and intangible asset amortization (“EBITDA”) for fiscal 2020, subject to certain adjustments for acquisitions and divestitures. The RSUs are subject to vesting based on continued service, subject to acceleration in certain limited circumstances. The Compensation Committee intends for the LTI Program to cover all long-term equity incentive grants to the participants through fiscal 2020.

Under the SEC’s proxy statement disclosure rules, the grant date fair value of the number of RSAs eligible for vesting at the target level of performance and the total number of RSUs awarded under the LTI Program has been reported in the Summary Compensation Table above in fiscal 2016.

The Company is presenting the following Alternative Summary Compensation Table in order to illustrate how the Compensation Committee views annualized total compensation under the LTI Program. The Compensation Committee believes that due to the front-loaded nature of the RSA and RSU awards, the compensation amounts

30

disclosed in the Summary Compensation Table for our named executive officers overstate compensation attributable to fiscal 2016 and understate compensation attributable to fiscal 2017, fiscal 2018 and fiscal 2019.

The values in this table differ from the values disclosed in the Summary Compensation Table in that the value of the RSAs and the RSUs have been annualized equally over the respective five-year periods of the programs. In both the Summary Compensation Table and the Alternative Summary Compensation Table, the values for the RSA and RSU awards reflect grant date fair values calculated in accordance with the applicable accounting rules. The Alternative Summary Compensation Table below has been revised as described and does not comply with SEC rules for the Summary Compensation Table. Shareholders should not view this alternative table as a substitute for the Summary Compensation Table and should review this Alternative Summary Compensation Table together with the Summary Compensation Table and other compensation tables contained herein that have been prepared in accordance with SEC rules.

Alternative Summary Compensation Table

Name and
Principal Position
Fiscal
Year
Salary ($)
Annualized Value of
Stock Awards ($) (1)
Non-Equity
Incentive Plan
Compensation
($) (4)
All Other
Compensation
($) (5)
Total ($)
RSAs (2)
RSUs (3)
Donald W. Duda
President and Chief Executive Officer
 
2019
 
 
759,719
 
 
1,216,080
 
 
810,720
 
 
455,832
 
 
174,027
 
 
3,416,378
 
 
2018
 
 
736,476
 
 
1,216,080
 
 
810,720
 
 
660,991
 
 
148,159
 
 
3,572,426
 
 
2017
 
 
716,108
 
 
1,216,080
 
 
810,720
 
 
948,700
 
 
138,169
 
 
3,829,777
 
 
2016
 
 
695,598
 
 
1,216,080
 
 
810,720
 
 
572,102
 
 
311,114
 
 
3,605,614
 
Ronald L.G. Tsoumas
Chief Financial
Officer and
Vice President,
Corporate Finance
 
2019
 
 
420,749
 
 
222,948
 
 
148,632
 
 
39,600
 
 
28,682
 
 
860,611
 
 
2018
 
 
245,942
 
 
222,948
 
 
148,632
 
 
155,532
 
 
30,174
 
 
803,228
 
 
2017
 
 
238,703
 
 
222,948
 
 
148,632
 
 
210,425
 
 
27,017
 
 
847,725
 
 
2016
 
 
231,880
 
 
222,948
 
 
148,632
 
 
129,628
 
 
21,976
 
 
755,064
 
Joseph E. Khoury
Chief Operating
Officer (6)
 
2019
 
 
446,607
 
 
608,040
 
 
405,360
 
 
176,854
 
 
22,062
 
 
1,658,923
 
 
2018
 
 
400,025
 
 
608,040
 
 
405,360
 
 
280,340
 
 
15,682
 
 
1,717,170
 
 
2017
 
 
362,518
 
 
608,040
 
 
405,360
 
 
320,261
 
 
14,482
 
 
1,710,661
 
 
2016
 
 
359,600
 
 
608,040
 
 
405,360
 
 
184,127
 
 
90,221
 
 
1,647,348
 
Michael Brotherton
Vice President and President Grakon (7)
 
2019
 
 
309,996
 
 
243,216
 
 
162,144
 
 
184,640
 
 
167,549
 
 
1,067,545
 
Anil Shetty
Vice President and President Dabir Surfaces (7)
 
2019
 
 
372,000
 
 
243,216
 
 
162,144
 
 
110,484
 
 
170,014
 
 
1,057,858
 
(1) Reflects the annualized fair value at the date of grant. See footnotes (1), (2) and (3) of the Summary Compensation Table for additional information.
(2) These performance-based RSAs are eligible for vesting based on fiscal 2020 EBITDA, as adjusted, relative to established goals for threshold, target and maximum performance. The grant date fair values reflected above were calculated assuming the achievement of the target level of performance.
(3) These RSUs are subject to vesting based on continued service, with 30% vested at the end of fiscal 2018 and fiscal 2019 and 40% vesting at the end of fiscal 2020. For Messrs. Duda, Tsoumas and Khoury, the RSUs are not eligible to be converted into common stock until a change of control or the executive officer leaves Methode.
(4) Amounts reflect annual performance-based cash bonuses.
(5) See footnote (5) of the Summary Compensation Table for information regarding the amounts included in All Other Compensation.
(6) Mr. Khoury is a Lebanese resident and we paid Mr. Khoury’s cash compensation in Euros. For purposes of the Alternative Summary Compensation Table, this cash compensation was converted from Euros to U.S. Dollars. See footnote (7) of the Summary Compensation Table for information regarding the exchange rates.
(7) Messrs. Brotherton and Shetty were appointed executive officers in September 2018.

31

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information regarding the outstanding equity awards of the named executive officers at April 27, 2019.  

Name
Option Awards
Stock Awards
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable (1)
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
Option
Exercise
Price
($)
Option
Expiration
Date
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#) (2)
Market
Value of
Share of
Units of
Stock That
Have Not
Vested ($) (3)
Equity
Incentive Plan
Awards:
Numbers of
Unearned
Shares, Units
or Other
Rights That
Have Not Yet
Vested (#) (4)
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Yet Vested
($) (3)
Donald W. Duda
 
40,000
 
 
 
 
37.01
 
 
7/7/2024
 
 
48,000
 
 
1,407,840
 
 
180,000
 
 
5,279,400
 
Ronald L.G. Tsoumas
 
8,000
 
 
 
 
37.01
 
 
7/7/2024
 
 
8,800
 
 
258,104
 
 
33,000
 
 
967,890
 
Joseph E. Khoury
 
12,000
 
 
 
 
37.01
 
 
7/7/2024
 
 
24,000
 
 
703,920
 
 
90,000
 
 
2,639,700
 
Michael Brotherton
 
1,668
 
 
 
 
37.01
 
 
7/7/2024
 
 
9,600
 
 
281,568
 
 
36,000
 
 
1,055,880
 
Anil Shetty
 
5,000
 
 
 
 
37.01
 
 
7/7/2024
 
 
9,600
 
 
281,568
 
 
36,000
 
 
1,055,880
 
(1) These options were granted in July 2014. One-third of these options vested on each of the first, second and third anniversaries of the grant date.
(2) These RSUs are subject to vesting based on continued service through the end of fiscal 2020.
(3) Calculated based on the closing price of the Company’s common stock on April 26, 2019 of $29.33 per share.
(4) These performance-based restricted stock awards are eligible for vesting based on the achievement of certain financial targets for fiscal 2020 EBITDA, as adjusted. Reflects the number of shares to be earned if the target level of performance is achieved.

Option Exercises and Stock Vested

The following table sets forth certain information regarding option exercises by the named executive officers and the vesting of restricted stock units during fiscal 2019.

Name
Option Awards
Stock Awards
Number of Shares
Acquired on Exercise (#)
Value Realized on
Exercise ($) (1)
Number of Shares
Acquired on Vesting (#) (2)
Value Realized on
Vesting ($) (3)
Donald W. Duda
 
 
 
 
 
36,000
 
 
1,055,880
 
Ronald L.G. Tsoumas
 
 
 
 
 
6,600
 
 
193,578
 
Joseph E. Khoury
 
 
 
 
 
18,000
 
 
527,940
 
Michael Brotherton
 
 
 
 
 
7,200
 
 
211,176
 
Anil Shetty
 
 
 
 
 
7,200
 
 
211,176
 
(1) Calculated based on market value of Methode’s common stock at the time of exercise, minus the exercise cost.
(2) Reflects RSUs awarded pursuant to our LTI Program that vested on April 27, 2019. For Messrs. Duda, Tsoumas and Khoury, the RSUs are not eligible to be converted into common stock until a change of control or the executive leaves the Company.
(3) Calculated based on the closing price of Methode’s common stock on April 26, 2019 of $29.33 per share.

32

Nonqualified Deferred Compensation

The following table sets forth certain information regarding deferred compensation with respect to the named executive officers for fiscal 2019.

Name
Executive
Contributions
in Last Fiscal Year
($) (1)
Registrant
Contributions in
Last Fiscal Year
($)
Aggregate Earnings
in Last
Fiscal Year
($)
Aggregate
Withdrawals/
Distributions
($) (2)
Aggregate Balance
at Last Fiscal
Year-End
($)
Donald W. Duda
 
0
 
 
0
 
 
610
 
 
0
 
 
31,973
 
Ronald L.G. Tsoumas
 
33,847
 
 
0
 
 
24,198
 
 
0
 
 
1,162,631
 
Joseph E. Khoury
 
0
 
 
0
 
 
0
 
 
0
 
 
0
 
Michael Brotherton
 
20,000
 
 
0
 
 
4,263
 
 
0
 
 
85,837
 
Anil Shetty
 
16,000
 
 
0
 
 
733
 
 
0
 
 
16,733
 
(1) All executive contributions were reported as compensation in the “Summary Compensation Table” under the “Salary” and/or “Non-Equity Incentive Plan Compensation” columns, depending on the source of the executive contribution.
(2) Reflects distributions in accordance with the terms of each executive’s deferral election.

The Methode Electronics, Inc. Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”) allows a select group of management and highly compensated employees to defer up to 75% of their annual base salary, 100% of their annual bonus, and/or 100% of their tandem cash award, if applicable, with an aggregate minimum deferral of $3,000. The minimum period of deferral is three years. Participants are immediately 100% vested.

In addition to employee-directed deferrals, we may make contributions to the Deferred Compensation Plan to make up for limits applicable under our qualified plans and may make additional discretionary contributions as well. Participants vest in company contributions in accordance with the schedule set forth in the applicable agreement or plan governing such contributions. We made no contributions to the Deferred Compensation Plan in fiscal 2019.

Participants may elect from a list of certain mutual funds to determine any amounts credited or debited from their accounts, although we are under no obligation to invest the deferred amounts in any specified fund. This list is made available to all participants and account balances are credited or debited based on the current market rates for these funds. Participants may reallocate account balances and/or future deferrals on a daily basis.

Participants are entitled to receive a distribution from their account balances at the earlier of the end of the elected deferral period or retirement, disability, termination of employment or a change of control. Accounts are distributed in a lump sum or, in certain circumstances, in installments over a period of up to 15 years. Participants can also petition the Compensation Committee to receive a full or partial payout from the Deferred Compensation Plan in the event of an unforeseeable financial emergency.

33

Potential Payments Upon Termination or a Change of Control

In the event our named executive officers are terminated or Methode undergoes a change of control, our named executive officers are entitled to certain payments under their change of control agreements, our stock plans and certain other benefit plans.

The following table summarizes payments payable to our named executive officers upon a change in control or the executive’s death, disability or qualified retirement under our outstanding equity and cash bonus awards.

Type of Award
Termination Scenario
Change in Control
Death or Disability
Qualified Retirement (1)
Annual Performance-Based Cash Bonus
If the successor company does not assume the award, or if the successor company assumes the award and the executive is terminated without cause or resigns for good reason prior to payment, the executive will be entitled to the bonus payable assuming achievement of the target level of performance.
Entitled to the bonus payable assuming achievement of the target level of performance.
Eligible to earn a prorated bonus based on the number of months elapsed since the start of the fiscal year and the actual performance achieved as of the end of such fiscal year.
Restricted Stock Units
If the successor company does not assume the RSUs, or if the successor company assumes the RSUs and the executive is terminated without cause or resigns for good reason within a period of time after the transaction (two years for Mr. Duda and one year for the other executive officers), all unvested RSUs will become immediately and fully vested.
All unvested RSUs will become immediately and fully vested.
A prorated number of RSUs will vest based on the months elapsed since May 3, 2015.
Restricted Stock Awards
If the successor company does not assume the RSAs, or if the successor company assumes the RSAs and the executive is terminated without cause or resigns for good reason within a period of time after the transaction (two years for Mr. Duda and one year for the other executive officers), the executive will earn a prorated number of the RSAs eligible for vesting assuming the achievement of the target level of performance based on the number of months elapsed since May 3, 2015.
   
In either case, the executive is also entitled to a payment based on the dividends declared during the restricted period and the number of shares vested.
The number of RSAs eligible for vesting assuming the achievement of the target level of performance will become immediately and fully vested.
   
The executive is also entitled to a payment based on the dividends declared during the restricted period and the number of shares vested.
Eligible to earn a prorated number of shares based on the number of months elapsed since May 3, 2015 and Methode’s fiscal 2020 EBITDA, as adjusted.
   
The executive is also entitled to a payment based on the dividends declared during the restricted period and the number of shares vested.
(1) An executive’s qualified retirement occurs at or after age 65, or after age 55 with Company consent.

34

All of our executive officers other than Mr. Khoury are parties to change of control agreements with the Company. Pursuant to these change of control agreements, if within two years of a change of control or during a period pending a change of control, we terminate the executive’s employment without good cause or the executive voluntarily terminates his or her employment for good reason, the executive is entitled to the following:

a lump sum payment in an amount equal to a multiple of the executive’s base salary (three times for Mr. Duda and two times for Messrs. Tsoumas, Brotherton and Shetty);
a lump sum payment equal to a multiple of the lesser of: (a) the executive’s target bonus amount for the fiscal year in which executive’s employment termination occurs, or (b) the bonus the executive earned in the prior fiscal year (three times for Mr. Duda and two times for Messrs. Tsoumas, Brotherton and Shetty); and
continued participation in our welfare benefit plans for three years for Mr. Duda and two years for Messrs. Tsoumas, Brotherton and Shetty, or until the executive becomes covered under other welfare benefit plans providing substantially similar benefits.

The following table shows the potential amounts payable to our named executive officers upon termination or a change of control of Methode. The amounts shown assume that such termination was effective as of April 26, 2019 (the last trading day of our 2019 fiscal year), and reflect the price of our common stock on such date ($29.33) and reflects awards outstanding and unvested on such date. The table below does not reflect amounts payable to our named executive officers pursuant to plans or arrangements that are available generally to salaried employees, such as payments under the 401(k) Plan, the life insurance plan, the disability insurance plan and the vacation pay policy, payment of accrued base salary and accrued bonuses and, in the case of Mr. Khoury, payments under the Lebanese Labor Laws. In addition, the table does not reflect the distribution of each officer’s account balance in our Deferred Compensation Plan or the delivery of common stock underlying outstanding vested restricted stock units. For purposes of this table, we have assumed that our Compensation Committee has elected to accelerate all awards in each instance in which acceleration is subject to the discretion of our Compensation Committee.

Name
Termination Scenario
(on 4/26/19)
Salary and
Bonus
Severance
($)
Payment of
Annual
Performance-
Based Bonus
($)
Vesting of
RSUs ($)
Vesting of
RSAs ($) (1)
Health and
Welfare
Benefits
($) (2)
Donald W. Duda
Upon Change of Control (3)
 
 
 
759,719
 
 
1,407,840
 
 
5,623,200
 
 
 
Resignation for Good Reason/Termination Without Cause Following Change of Control (4)
 
3,646,653
 
 
 
 
 
 
 
 
68,165
 
Death or Disability
 
 
 
759,719
 
 
1,407,840
 
 
5,623,200
 
 
 
Qualified Retirement
 
 
 
759,719
 
 
1,126,272
 
 
4,498,560
 
 
 
Ronald L.G. Tsoumas
Upon Change of Control (3)
 
 
 
264,000
 
 
258,104
 
 
1,030,920
 
 
 
Resignation for Good Reason/Termination Without Cause Following Change of Control (4)
 
920,698
 
 
 
 
 
 
 
 
29,919
 
Death or Disability
 
 
 
264,000
 
 
258,104
 
 
1,030,920
 
 
 
Qualified Retirement