Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 14, 2023, the Compensation Committee established the performance criteria and targets for the fiscal 2023 bonus payable in fiscal 2024 under the Company’s Executive Incentive Compensation Plan. The performance criterion is operating income, calculated in accordance with U.S. generally accepted accounting principles (“Operating Income”). Subjective factors based on an executive officer’s individual performance can reduce an executive officer’s bonus. Performance below the threshold level would result in no payout, performance at the threshold level of performance would result in a payout at 25% of the executive officer’s target bonus amount and performance at the maximum level of performance would result in a payout at 175% of the executive officer’s target bonus amount (or 150% of his target bonus amount, in the case of Mr. Edwards), with payout for performance between threshold and target and between target and maximum Operating Income interpolated.
The following table sets forth the percentage of salary the Company’s executive officers could earn based upon the attainment of the various levels of Operating Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percentage of Annual Salary |
Name |
Threshold |
Target |
Maximum |
Mark J. Worden |
31.25 |
% |
125.00 |
% |
218.75 |
% |
Carl N. Scibetta |
18.75 |
% |
75.00 |
% |
131.25 |
% |
Marc A. Chilton |
18.75 |
% |
75.00 |
% |
131.25 |
% |
Patrick C. Edwards |
10.00 |
% |
40.00 |
% |
60.00 |
% |
In addition, as previously announced, Erik Gast has been appointed the Company's Executive Vice President, Chief Financial Officer, effective as of April 24, 2023. Upon the commencement of his employment, Mr. Gast will be eligible to earn a bonus for fiscal 2023 payable under the Executive Incentive Compensation Plan as follows: 18.75% of his base salary at threshold performance, 75% at target performance and 131.25% at maximum performance, with the award prorated based on his start date.
J. Wayne Weaver, Chairman of the Company’s Board of Directors and an executive officer, and Clifton E. Sifford, Vice Chairman of the Board and an executive officer, will not participate in the Executive Incentive Compensation Plan in fiscal 2023. W. Kerry Jackson, the Company’s Senior Executive Vice President, Chief Financial and Administrative Officer and Treasurer, also will not participate in the Executive Incentive Compensation Plan in fiscal 2023 in light of his retirement from the Company in May 2023.
On March 14, 2023, the Compensation Committee also granted service-based restricted stock units and performance stock units under the 2017 Equity Incentive Plan (the “2017 Plan”) to the following executive officers:
|
|
|
|
|
|
Name |
Target Number of Performance Stock Units Awarded |
Service-Based Restricted Stock Units Awarded |
Mark J. Worden |
51,263 |
34,175 |
Carl N. Scibetta |
14,153 |
9,435 |
Marc A. Chilton |
12,259 |
8,172 |
Patrick C. Edwards |
4,056 |
2,704 |
In addition, upon the commencement of his employment, Mr. Gast will be granted a prorated annual equity grant for fiscal 2023 equal to 100% of his prorated base salary, allocated 60% to performance stock units (at the target level of performance) and 40% to service-based restricted stock units, using the same grant price to determine the equity awards for the other executive officers on March 14, 2023.
The performance stock units may be earned based on the Company’s net income per diluted share for fiscal 2023. The Compensation Committee established a range of goals at threshold, target and maximum levels for which 25% to 175% of the target number of performance stock units may be earned, with payout for performance between threshold and target and between target and maximum net income per diluted share interpolated. Performance below the threshold level would result in forfeiture of all of the performance stock units. Any earned performance stock units will vest in full on March 31, 2026, provided that the executive officer maintains continuous service with the Company through such date.
2
The service-based restricted stock units granted to the executive officers vest 33% on March 31, 2025 and 67% on March 31, 2026, provided that the executive officer maintains continuous service with the Company through such dates.
The restricted stock units and the performance stock units will be subject to the terms and conditions of the 2017 Plan. The 2017 Plan was previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on June 15, 2017. The service-based restricted stock units will also be subject to the terms and conditions of the Company’s award agreement for service-based restricted stock units granted to executive officers under the 2017 Plan (the “RSU Award Agreement”). The form of RSU Award Agreement was previously filed as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the SEC on March 15, 2022. The performance stock units will also be subject to the terms and conditions of the Company’s 2023 award agreement for performance stock units granted to executive officers under the 2017 Plan (the “PSU Award Agreement”). The foregoing description of the PSU Award Agreement is intended only as a summary and is qualified in its entirety by reference to the form of PSU Award Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 5.03Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
On March 14, 2023, the Board of Directors of the Company amended the Company’s By-Laws to implement certain procedural mechanisms related to shareholder nominations of directors under Rule 14a-19 (“Rule 14a-19”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These amendments were effective immediately. The amendments implement the following changes to the By-Laws:
•Require a shareholder soliciting proxies in support of director nominees, other than the Company’s director nominees, to certify their compliance with Rule 14a-19 and, upon request of the Company, to deliver reasonable evidence of such compliance to the Company no later than five business days prior to the date of the applicable meeting of shareholders;
•Provide that, unless otherwise required by law, if a shareholder provides notice under Rule 14a-19 and subsequently: (i) notifies the Company that such shareholder no longer intends to solicit proxies in support of director nominees other than the Company’s director nominees in accordance with Rule 14a-19; (ii) fails to comply with the requirements of Rule 14a-19; or (iii) fails to provide reasonable evidence sufficient to satisfy the Company that the requirements of Rule 14a-19 have been met, then the shareholder’s nominations shall be deemed null and void and the Company shall disregard any proxies or votes solicited for any nominee proposed by such shareholder;
•Reserve white proxy cards for use by the Company’s Board of Directors only; and
•Incorporate other technical, clarifying and conforming changes.
This summary is qualified in its entirety by reference to the full text of the Company’s By-Laws, as amended on March 14, 2023, which are attached hereto as Exhibit 3.B and are incorporated herein by reference. A marked copy of the Company’s By-Laws, as amended effective March 14, 2023, is attached hereto as Exhibit 3.B(i) and is incorporated herein by reference.