Standex International Corporation
Shareholder Annual Meeting in a DEF 14A on 09/10/2021   Download
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DEF 14A 1 d552493ddef14a.htm DEF 14A DEF 14A

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

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   Preliminary Proxy Statement
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   Definitive Proxy Statement
   Definitive Additional Materials
   Soliciting Material under § 240.14a-12

STANDEX INTERNATIONAL CORPORATION

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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LOGO


GUIDE TO STANDEXS PROXY STATEMENT

 

INVITATION TO 2021 ANNUAL MEETING OF SHAREHOLDERS

     4  

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

     5  

PROXY STATEMENT SUMMARY

     6  

PROPOSALS

     12  

Item 1: Election of Directors

     12  

Item 2: Omnibus Incentive Plan

     18  

Item 3: Advisory Vote on Executive Compensation

     25  

Item 4: Advisory Vote on Frequency of Advisory Vote on Executive Compensation

     26  

Item 5: Ratification of Independent Auditors

     27  

GOVERNANCE

     29  

Board Committees

     31  

Key Areas of Board Oversight

     36  

Additional Governance Matters

     41  

Director Compensation

     42  

Director Independence & Related Party Transactions

     44  

SHARE OWNERSHIP

     45  

Delinquent Section 16(a) Reports

     45  

Director & Management Stock Ownership

     45  

Stock Ownership of Certain Beneficial Owners

     46  

COMPENSATION DISCUSSION  & ANALYSIS

     47  

Business Highlights

     47  

Objectives and Principles

     48  

Components of Executive Compensation

     50  

Other Compensation Information

     60  

Basis for Determining Executive Compensation

     62  

Risk in Compensation Programs

     63  

Report of the Compensation Committee

     63  

Compensation Committee Interlocks and Insider Participation in Compensation Decisions

     63  

COMPENSATION TABLES

     64  

Summary Compensation Table

     64  

Grants of Plan-Based Awards

     66  

Outstanding Equity Awards at Fiscal Year End

     67  

Options Exercised and Stock Vested

     68  

Pension Benefits

     68  

NonQualified Deferred Compensation

     69  

Potential Payments upon Termination or Change in Control

     70  

QUESTIONS & ANSWERS

     73  

Voting Q&A

     73  

Communications, Shareholder Proposals  & Nominations and Company Documents

     74  

Helpful Resources

     75  

APPENDIX A: 2018 OMNIBUS INCENTIVE PLAN, AS AMENDED AND RESTATED

     78  


INVITATION TO 2021 ANNUAL MEETING OF SHAREHOLDERS

Tuesday, October 26, 2021

9:00 a.m., local time

Standex International Corporation Corporate Headquarters

23 Keewaydin Drive, Suite 300, Salem, New Hampshire 03079*

Dear Shareholder,

We cordially invite you to attend Standex’s Annual Meeting of Shareholders. We hope that you will join me, our Board of Directors, and other shareholders at the meeting. The attached Notice of Annual Meeting of Shareholders and Proxy Statement contain information about the business that will be conducted at the meeting. Following the meeting, I will present information on Standex’s operations and welcome any questions from shareholders.

Your vote is important to us! If you plan on attending the meeting, you may vote your shares in person. If you cannot vote in person, we urge you to vote via your proxy card, over the phone or on the Internet prior to the meeting. Detailed instructions on how to vote are found on page 73.

Thank you in advance for voting your shares, and thank you for your continued support of Standex.

Sincerely,

 

LOGO

 

David Dunbar

President/CEO

Chair, Board of Directors        

 

LOGO

 

Standing from left to right: Jeffrey S. Edwards, Michael A. Hickey, Robin J. Davenport (nominee for election to the Board), Charles H. Cannon, Jr., David Dunbar, and Thomas E. Chorman.

Seated from left to right: B. Joanne Edwards and Thomas J. Hansen.

 

 

*

Our Annual Meeting will follow all COVID-19 public health protocols, including keeping attendees at social distance and requiring all attendees to wear face coverings, which will be provided. In the unlikely event that we are not able to hold the Annual Meeting in person, we will notify all shareholders, through a press release and at www.envisionreports.com/sxi, regarding an alternative location or remote access.


NOTICE OF ANNUAL MEETING OF

SHAREHOLDERS

 

The 2021 Annual Meeting of Shareholders (the “Annual Meeting”) of Standex International Corporation (the “Company” or “Standex”) will be held on Tuesday, October 26, 2021 at 9:00 a.m., local time, at the Company’s Corporate Headquarters, located at 23 Keewaydin Drive, Suite 300, Salem, New Hampshire 03079.*

You are receiving these proxy materials in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Standex, a Delaware

corporation, to be voted at the 2021 Annual Meeting and any continuation, adjournment or postponement thereof.

Shareholders of record at the close of business on August 31, 2021 are entitled to vote at the meeting, either in person or by proxy, on the following matters, as well as the transaction of any other business properly presented at the Annual Meeting:

 

 

LOGO

 

On September 10, 2021, we began to mail our shareholders either a notice containing instructions on how to access this Proxy Statement and our Annual Report through the Internet, or a printed copy of these materials. We have provided each shareholder with a Notice of Internet Availability of Proxy Materials (the “Notice”), which encourages shareholders to review all proxy materials and our annual report and vote online at www.envisionreports.com/sxi. We believe that reviewing materials online reduces our costs, eliminates surplus printed materials and generally reduces the environmental impact of our Annual Meeting. If you would like to receive a printed copy of our proxy materials, please follow the instructions contained in the Notice.

All proxy solicitation costs are paid by the Company. In addition to proxy solicitations made by mail, the Company’s directors and officers may solicit proxies in person or by telephone.

 

Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope that you will vote your shares as soon as possible. We encourage you to vote via the Internet, since it is convenient and significantly reduces postage and processing costs. You may also vote via telephone or by mail if you received paper copies of the proxy materials. Instructions regarding the methods of voting are included in the Notice, the proxy card and this Proxy Statement on page 73.

By Order of the Board of Directors,

 

LOGO

Alan J. Glass, Secretary

 

 

   

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON OCTOBER 26, 2021.

 

As permitted by the SEC, the 2021 Notice of Annual Meeting of Shareholders and Proxy Statement and the 2021 Annual Report on Form 10-K are available for review at ir.standex.com by clicking “Financials” and then “Annual Reports.”

 

 

 

 

*

Our Annual Meeting will follow all COVID-19 public health protocols, including keeping attendees at social distance and requiring all attendees to wear face coverings, which will be provided. In the unlikely event that we are not able to hold the Annual Meeting in person, we will notify all shareholders, through a press release and at www.envisionreports.com/sxi, regarding an alternative location or remote access.


PROXY STATEMENT SUMMARY

This summary contains a general overview of this Proxy Statement. It highlights information contained elsewhere in this Proxy Statement and is meant to be used as a quick reference. This summary does NOT contain all of the information that you should consider before voting. You should read the entire Proxy Statement carefully before voting.

 

2021 ANNUAL MEETING   

 

LOGO

You are receiving these proxy materials in connection with the solicitation of proxies by the Board of Directors of Standex International Corporation, a Delaware corporation, to be voted at the 2021 Annual Meeting and any continuation, adjournment or postponement thereof.

On September 10, 2021, we began to mail our shareholders either a notice containing instructions on how to access this Proxy Statement and our Annual Report through the Internet, or a printed copy of these materials. The Notice explains how you may access and review the proxy materials and how you may submit your proxy via the Internet. If you would like to receive a printed copy of our proxy materials, please follow the instructions contained in the Notice.

All proxy solicitation costs are paid by the Company. In addition to proxy solicitations made by mail, the Company’s directors and officers may solicit proxies in person or by telephone.

 

AGENDA AND VOTING RECOMMENDATIONS   

 

  Item

 

  

Proposals

 

    

Board Vote Recommendation

 

  1

  

Election of Directors

    

FOR

  2

  

Amended and Restated Omnibus Incentive Plan

    

FOR

  3

  

Advisory Vote on Executive Compensation

    

FOR

  4

  

Advisory Vote on Frequency of Say on Pay

    

FOR “One Year”

  5

  

Ratification of Auditors

    

FOR

 

 

LOGO

 

6    2021 PROXY STATEMENT  

 


LOGO

 

BOARD NOMINEES & CONTINUING DIRECTORS   

 

   

  Age  

 

  Years of  

Tenure

 

Term

  Expiration  

  Committee Memberships
  Name         A               C           N&CG  

ROBIN J. DAVENPORT* INDEPENDENT

Vice President of Corporate Finance, Parker Hannifin Corporation

  59   0   -   LOGO   LOGO   LOGO

JEFFREY S. EDWARDS** INDEPENDENT

Chairman and Chief Executive Officer, Cooper Standard Holdings, Inc.

  59   7   2021   LOGO   LOGO   LOGO

B. JOANNE EDWARDS** INDEPENDENT

Former Senior Vice President and General Manager, Eaton Corporation Plc.

  65   3   2021   LOGO   LOGO   LOGO

CHARLES H. CANNON, JR. INDEPENDENT

Former Executive Chairman and Chief Executive Officer, John Bean Technologies

  69   17   2021   LOGO   LOGO   LOGO

THOMAS E. CHORMAN INDEPENDENT

Chief Executive Officer, Solar LED Innovations, LLC

  67   17   2022   LOGO   LOGO   LOGO

THOMAS J. HANSEN LEAD INDEPENDENT DIRECTOR

Former Executive Vice Chairman, Illinois Tool Works, Inc.

  72   8   2022   LOGO   LOGO   LOGO

DAVID DUNBAR

President and Chief Executive Officer, Standex International Corporation

  59   7   2023   LOGO   LOGO   LOGO

MICHAEL A. HICKEY INDEPENDENT

Former Executive Vice President and President of Global Institutional, Ecolab, Inc.

  60   4   2023   LOGO   LOGO   LOGO

            

 

A Audit Committee

 

C Compensation Committee

  

N&CG Nominating & Corporate

 

Governance Committee

  

LOGO Chair

 

LOGO Member

 

 

* New nominee for Director.

** Jeffrey S. Edwards and B. Joanne Edwards are not related.

 

CORPORATE GOVERNANCE HIGHLIGHTS   

We are committed to strong corporate governance practices, which promote the long-term interests of shareholders, strengthen financial integrity and hold our Board and management accountable. The highlights of our corporate governance practices include the following:

 

    All non-employee directors are independent
    Regular executive sessions of independent directors
    Audit, Compensation and Nominating and Corporate Governance committees are comprised solely of independent directors
    Annual board and committee self-evaluations
    Risk oversight (including cybersecurity) by the full board and committees
    Ongoing review of optimal Board composition
    Independent compensation consultant reports directly to the Compensation Committee
    Lead Independent Director
    Corporate Governance Guidelines
    Stock ownership guidelines for directors and executive officers
    Policy against hedging and pledging of Company stock
    Code of Conduct applies to directors & all employees
    Annual advisory approval of executive compensation
    Board and committees may engage outside advisors independently of management
    Oversight of whistleblower hotline
    Mandatory Board retirement age
 

 

   2021 PROXY STATEMENT      7  

 


LOGO

On October 23, 2018, our shareholders approved the 2018 Omnibus Incentive Plan. Under the OIP, as approved, there were 500,000 shares authorized for issuance. At the time of the approval, we believed this amount would be sufficient for award grants for the next 5 fiscal years. We have revised our estimates and we now believe there are sufficient shares available for anticipated FY 2022 grants, but there may not be sufficient shares available for FY 2023 grants. For this reason, the Board has approved and recommends an amendment to and restatement of the OIP to increase the number of shares authorized for issuance under the plan by 400,000. The Board also has approved and recommended an amendment to Section 4(a) of the OIP regarding the method of determining the number of shares available for issuance under the OIP. This amended and restated OIP would require that for every share granted under an award under the OIP, the number of total shares available for issuance be reduced by 1.0. Approval of this amendment and restatement will increase the number of currently available shares to over 600,000 and we believe this will be sufficient for anticipated grants through the next 5 fiscal years.

Please refer to page 18 for the full proposal and the plan summary. Please refer to Appendix A, starting on page 78 for the full text of the OIP, as amended and restated.

Below is some key information regarding grant practices, burn rate, dilution and overhang.

 

  Equity Metric    2021             2020             2019 1  

Percentage of equity awards granted to NEOs

     52     51     0

Equity burn rate 2

     1.29     0.98     0.11

Dilution 3

     3.87     5.09     5.82

Overhang 4

     2.81     2.11     1.88

 

  1

FY 2019 grants made prior to the October 23, 2018 adoption of the OIP were made under the 2008 Long Term Incentive Plan. The values contained here include FY 2019 grants made under the OIP only.

 

  2

The burn rate is calculated by taking the number of shares granted and dividing that by the weighted average basic Common Stock outstanding. The following table provides information regarding stock-settled, time-vested equity awards granted and performance-based, stock-settled equity awards granted over each of the last 3 fiscal years:

 

      2021      2020      2019   

Time-Vested Restricted Shares/Units Granted

     72,475        75,505        16,273   

MSPP Shares Granted

     19,311        14,883         

Performance-Based Stock Units Granted (at target)

     69,071        42,976         

Weighted Average Basic Common Stock Outstanding

     12,156,000                        12,324,000                        12,574,000   

 

  3

The dilution is calculated by taking the sum of (i) the number of shares granted and outstanding under awards at fiscal year end and (ii) the number of shares available for issuance under the OIP at fiscal year end, and dividing that sum by the number of outstanding Common Stock at fiscal year end.

 

  4

The overhang is calculated by taking the number of shares granted and outstanding under awards at fiscal year end and dividing it by the number of outstanding Common Stock at fiscal year end.

 

8    2021 PROXY STATEMENT  

 


LOGO

 

AT-RISK COMPENSATION MIX   

 

 

LOGO

 

2021 PAY AT A GLANCE   

 

  Named Executive Officer    Actual Salary
($)
     Stock Awards
($)
     Non-Equity
Incentive Plan
Compensation
($)
     All Other
Compensation
($)
    

Total 

($) 1  

 

David Dunbar

President & CEO

     864,870        3,681,435        772,961        110,204        5,784,732   

Ademir Sarcevic

Vice President, CFO & Treasurer

     433,675        894,037        396,649        26,638        1,751,948   

Alan J. Glass

Vice President, CLO & Secretary

     365,907        675,728        171,298        33,680        1,254,084   

Paul C. Burns

Vice President of Business Development & Strategy

     365,907        413,611        316,709        28,732        1,124,959   

James Hooven

Vice President of Operations & Supply Chain

     334,950        189,251        253,561        15,840        793,602   

 

  Note:

This table provides the summary compensation information for FY 2021. The Summary Compensation Table and associated footnotes may be found starting on page 64.

 

  1

As reported in the Summary Compensation Table.

 

   2021 PROXY STATEMENT      9  

 


LOGO

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, every six years, the Board provides shareholders with the opportunity to cast an advisory vote on the frequency of the advisory vote to approve our executive compensation. This year, we are seeking a non-binding determination from our shareholders as to how often the “Say on Pay” advisory vote should be held. Shareholders have the following frequency options to choose from: each year, every two years or every three years.

When this advisory vote was last held in 2015, shareholders indicated a preference to hold the advisory vote on executive compensation each year, and the Board continued this practice.

The Board continues to believe that an annual advisory Say on Pay vote is the most appropriate policy for our shareholders and the Company at this time. An annual advisory vote allows the Board to receive timely, ongoing feedback from our shareholders. This assists the Board in taking shareholder views into account when considering changes to the executive compensation program. Additionally, an annual advisory vote is currently the standard desired by many shareholders.

Although this vote is non-binding, the Board values the opinions of the Company’s shareholders and will consider the outcome of the vote when making future decisions on the frequency of our Say on Pay proposals.

 

10   

2021 PROXY STATEMENT

  

 


LOGO

 

AUDIT   

The Audit Committee has approved Deloitte & Touche LLP (“Deloitte”) to serve as our independent registered public accounting firm for the 2022 fiscal year. Deloitte has served as the Company’s independent auditors since 2021. Prior to 2021, Grant Thornton, LLP (“Grant Thornton”) served as the Company’s independent auditor. During this time, there have been no disagreements between the Company and either Deloitte or Grant Thornton on any matter of accounting principles or practices, financial statement disclosures or auditing scope or procedure. Also, during this time, neither Deloitte’s report nor Grant Thornton’s report on the Company’s financial statements contained any adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.

The following are the aggregate audit and non-audit fees billed to Standex by Deloitte, the member firms of Deloitte Touche Tohmatsu, and their respective affiliates for FY 2021 and the aggregate audit and non-audit fees billed in FY 2020 to Standex by Grant Thornton, who served as Standex’s independent auditors during that year. A full explanation of the types of fees and Deloitte’s role is contained in “Ratification of Independent Auditors” starting on page 27.

 

  Type of Fees    2020 ($)*                                           2021 ($)*  

Audit Fees

     1,563,000        1,371,000   

Audit-Related Fees

     239,000         

Tax Fees

     21,000        94,000  

All Other Fees

     1,000         

Total Fees

     1,824,000        1,465,000   

 

  *

Amounts have been rounded to the nearest thousand.

 

 

LOGO

 

  

 

 
   2021 PROXY STATEMENT      11  

 


LOGO

Our Board currently consists of seven directors; the election of Robin J. Davenport at the Annual Meeting would bring the board membership to eight. Prior to the 2020 annual meeting, the board had eight directors. At the 2020 annual meeting, Dr. Dan Hogan retired after 35 years of service. The Board had intended to recruit and nominate a successor to Dr. Hogan for election at the 2020 annual meeting. However, because of the challenges raised by the COVID-19 pandemic, the Board and Nominating & Corporate Governance Committee were unable to conduct a robust interview process in order to nominate a successor for election at the 2020 annual meeting. Over the past year, the Nominating & Corporate Governance Committee was able to engage in the recruitment process, and in April 2021, appointed Robin J. Davenport as a special advisor to the Board. She, along with the Class I directors, whose current terms are expiring, are being nominated for election to the Board.

We have three classes of directors, with each class being as equal in size as possible. The term of each class is three years and class terms expire on a rolling basis, so that one class of directors is elected each year. The current Class I directors are Charles H. Cannon, Jr., Jeffrey S. Edwards and B. Joanne Edwards. With the addition of Ms. Davenport, the number of Class I directors would be four, leaving only two Class II directors and two Class III directors (terms expiring at the 2023 and 2022 annual meetings, respectively). To keep the class size as equal as possible, as required by the NYSE listing standards, the Board has nominated Ms. Davenport, Mr. Edwards, and Ms. Edwards as Class I directors, with terms expiring at the 2024 annual meeting, and Mr. Cannon as a Class II director, with a term expiring at the 2023 annual meeting. This will enable each Class to be balanced and allow for orderly election cycles.

For the foregoing, the Board recommends that shareholders set the number of directors at eight, elect Ms. Davenport, Mr. Edwards, and Ms. Edwards as Class I directors for three-year terms, expiring at the 2024 annual meeting, and elect Mr. Cannon as a Class II director for a two-year term, expiring at the 2023 annual meeting.

BOARD OF DIRECTORS MEMBERSHIP CRITERIA

 

The Board and the Nominating and Corporate Governance Committee believe that there are general qualifications that all directors must exhibit and other key qualifications and experiences that should be represented on the Board as a whole, but not necessarily by each individual director.

QUALIFICATIONS REQUIRED OF ALL DIRECTORS

The Board and the Nominating and Corporate Governance Committee require that each director be a recognized person of high integrity with a proven record of success in his or her field, and be able to devote the time and effort necessary to fulfill his or her responsibilities to the Company. Each director must demonstrate innovative thinking, familiarity with and respect for corporate governance requirements and practices, an appreciation of multiple global cultures and a commitment to sustainability and to dealing responsibly with social issues. In addition, potential director candidates are interviewed to assess intangible qualities, including the individual’s ability to engage in constructive deliberations, by asking difficult questions, working collaboratively, and respecting differing views of other Board members.

BOARD COMPOSITION & REFRESHMENT

The Board regularly reviews the skills, experience and background that it believes are desirable to be represented on the Board. On an annual basis, the Board reviews each director’s skills and assesses whether there are gaps that need to be filled. As a result, recruitment is an ongoing activity. A snapshot of our directors’ skills, including director nominees, is below, while the full skills matrix can be found under “Board Self-Assessment & Skills Matrix” of this Proxy Statement on page 34.

The Board aims to strike a balance between the experience that comes from long-term service on the Board with the new perspective that new Board members bring, while being sensitive to the benefits of gender and racial diversity. The Board also has a mandatory retirement policy, under which no director may stand for re-election if he or she has reached the age of 75. The election of Ms. Davenport would bring the refreshment to 6 directors, two of which are female and one of which is a racial minority, over the past 8 years. We believe this balanced approach creates a renewed perspective that is beneficial to shareholders. Please refer to “Identifying and Evaluating Candidates for Board Membership” on page 35 for further information.

 

12   

2021 PROXY STATEMENT

  


LOGO

SNAPSHOT OF 2021 DIRECTOR NOMINEES AND CONTINUING DIRECTORS

 

DEMOGRAPHICS

 

LOGO

SKILLS

 

LOGO

 

  

 

 
   2021 PROXY STATEMENT      13  


2021 DIRECTOR NOMINEES

 

The following is biographical information for each director nominee and each continuing director. The information includes names, ages, principal occupations for at least the past five years, the year in which each director joined our Board and certain other information. The information is current as of September 10, 2021, except for each director’s age, which is current as of October 26, 2021.

CLASS I DIRECTORS - TERM EXPIRING 2024:

 

LOGO

 

LOGO

 

14   

2021 PROXY STATEMENT

  


LOGO

CLASS II DIRECTOR - TERM EXPIRING 2023:

 

LOGO

REQUIRED VOTE & RECOMMENDATION

 

 

Our By-Laws require that, in an uncontested election, each director be elected by a majority of the votes cast. A majority of votes cast means that the number of votes cast “FOR” a director’s election exceeds the number of votes cast “AGAINST” that director. Shareholders that either mark “ABSTAIN” on the proxy card or otherwise abstain from voting will not be counted as either “FOR” or “AGAINST.” Broker non-votes will not be counted as either “FOR” or “AGAINST.”

In the event that there is a contested election, each director will be elected by a plurality of the votes cast, which means the directors receiving the largest number of “FOR” votes will be elected to the open positions.

In the event that any nominee becomes unavailable, the Board may either choose a substitute or postpone filling the vacancy until a qualified candidate is identified. If there is a substitute, the individuals acting under your proxy may vote for the election of a substitute. The nominees have indicated their willingness to serve as directors and we have no reason to believe that any nominee will become unavailable.

The Board of Directors recommends that you vote “FOR” setting the number of directors at eight and “FOR” the election of each nominee.

 

 

 

  

 

 
   2021 PROXY STATEMENT      15  


CONTINUING DIRECTORS

 

CLASS III DIRECTORS - TERM EXPIRING 2022:

 

 

LOGO

 

 

LOGO

 

16   

2021 PROXY STATEMENT

  


CLASS II DIRECTORS - TERM EXPIRING 2023:

 

LOGO

 

LOGO

 

  

 

 
   2021 PROXY STATEMENT      17  


LOGO

The Compensation Committee recommended, and our Board has approved, subject to shareholder approval, an amendment to and restatement of the 2018 Omnibus Incentive Plan (“OIP”). This amended and restated OIP would increase the number of shares authorized for grants under the OIP by 400,000 to 900,000 shares of our Common Stock. This is the first time we have requested approval to increase the number of shares authorized for issuance under the OIP.

We are also seeking shareholder approval to amend Section 4(a) of the OIP regarding the method of determining the number of shares available for issuance under the OIP. This amended and restated OIP would require that for every share granted under an award under the OIP, the number of total shares available for issuance be reduced by 1.0. Currently, for awards that provide for a range of potential payouts, the OIP requires shares available for issuance be reduced by the maximum number of shares which may be paid under such awards. By amending Section 4(a), we believe this method of determining shares available for issuance is a more accurate reflection of our historic awards and payouts, which have generally been at or below target levels.

Our Board recommends that shareholders approve the amended and restated OIP because it will allow the Company to successfully attract and retain the best possible candidates. We previously believed that the initial 500,000 authorized shares would be sufficient to cover our anticipated needs for a period of 5 years. However, we now believe that the initial authorized shares will be sufficient for anticipated grants during FY 2022, but will likely not be sufficient for grants in FY 2023. For these reasons, the Board recommends that shareholders approve an amended and restated OIP to increase the number of Common Stock authorized for future awards to be granted under the OIP and to amend Section 4(a).

As of June 30, 2021, the number of shares of Common Stock that remained available for future grants was 46,791 using the current method of determining shares available for issuance, or 208,971 using the proposed method of determining shares available for issuance. If this proposal is approved, the combined 608,971 shares available under the OIP would represent approximately 5% of fully diluted Common Stock outstanding as of June 30, 2021. The Board believes that this number of shares represents a reasonable amount of potential equity dilution in light of the purposes of the OIP, as described below. If the amended and restated OIP is approved and we issue awards in amounts consistent with the three-year average burn rate described below, it is anticipated that the available shares will meet our needs for approximately 5 years. Assuming shareholders approve this proposal, we will file a Registration Statement on Form S-8 to register the additional Common Stock available for issuance.

 

18   

2021 PROXY STATEMENT

  


SIGNIFICANT HISTORICAL AWARD INFORMATION

 

The following table provides information regarding the grant of equity awards over the past three fiscal years. The information accounts for PSU awards at target rather than maximum.

 

  Equity Metric    2021      2020      2019  1  

  Percentage of equity awards granted to NEOs

     52%        51%        0%  

  Equity burn rate 2

     1.29%        0.98%        0.11%  

  Dilution 3

     3.87%        5.09%        5.82%  

  Overhang 4

                 2.81%                    2.11%                    1.88%  

 

  1

FY 2019 grants made prior to the October 23, 2018 adoption of the OIP were made under the 2008 Long Term Incentive Plan. The values contained here include FY 2019 grants made under the OIP only.

 

  2

The burn rate is calculated by taking the number of shares granted and dividing that by the weighted average basic Common Stock outstanding. The following table provides information regarding stock-settled, time-vested equity awards granted and performance-based, stock-settled equity awards granted over each of the last 3 fiscal years:

 

      2021      2020      2019   

  Time-Vested Restricted Shares/Units Granted

     72,475        75,505        16,273   

  MSPP Shares Granted

     19,311        14,883         

  Performance-Based Stock Units Granted (at target)

     69,071        42,976         

  Weighted Average Basic Common Stock Outstanding

             12,156,000                    12,324,000                12,574,000   

 

  3

The dilution is calculated by taking the sum of (i) the number of shares granted and outstanding under awards at fiscal year end and (ii) the number of shares available for issuance under the OIP at fiscal year end, and dividing that sum by the number of outstanding Common Stock at fiscal year end.

 

  4

The overhang is calculated by taking the number of shares granted and outstanding under awards at fiscal year end and dividing it by the number of outstanding Common Stock at fiscal year end.

OIP PLAN SUMMARY

 

The following is a brief description of the principal features of the OIP. This summary is qualified by reference to the full text of the OIP, which is included, as amended and restated, as Appendix A to this Proxy Statement, starting on page 78.

PURPOSE

The purpose of the OIP is to encourage and enable executives, employees, directors and others (as defined in the OIP) to acquire a proprietary interest in Standex. This enables Standex to:

 

  u  

attract and maintain executive, managerial and other key employees;

  u  

motivate participants to achieve long-range goals consistent with increases in shareholder value;

  u  

provide incentive compensation opportunities that are flexible and competitive with those offered by other businesses;

  u  

support the Company’s executive compensation program, as discussed in the Compensation Discussion & Analysis section of this Proxy Statement; and

  u  

align the interests of participants with shareholder interests through compensation that is based on the value of the Company’s common stock.

ELIGIBILITY

The OIP authorizes the following types of awards to be made to any employee, officer, non-employee director, or Third Party Service Provider, as defined in the OIP, of the Company and its subsidiaries, as designated by the Compensation Committee. All awards will be evidenced by a written award agreement between the Company and the participant and will include such provisions and conditions as may be specified by the Compensation Committee.

 

  

 

 
   2021 PROXY STATEMENT      19  


TYPES OF AWARDS

STOCK OPTIONS

Stock options give the holder the right to purchase shares of common stock at a specified price during specified time periods. The exercise price of an option granted under the OIP may not be less than the fair market value of the common stock on the date of grant. Stock options granted under the OIP have a maximum term of 10 years. The OIP authorizes both incentive stock options and nonqualified stock options. Incentive stock options can only be granted to employees of the Company or its subsidiaries and have an annual fair market value limit of $100,000 per recipient. Stock options are not a part of the Company’s current compensation program.

RESTRICTED STOCK AND RESTRICTED STOCK UNITS

Awards of Restricted Stock (“RSAs”) grant the recipient shares of common stock which are subject to certain vesting requirements. Restricted Stock Unit (“RSU”) awards grant the recipient the right to receive a certain number of common stock at vesting, subject to certain vesting requirements. Recipients of such awards do not have any voting rights until the vesting requirements are satisfied, unless the Compensation Committee determines otherwise. Vesting requirements include continued employment, achievement of pre-established goals or a combination of both. The Company currently grants time-based RSAs, which do have voting rights, and also grants RSUs as part of the Management Stock Purchase Plan, which do not have voting rights.

STOCK APPRECIATION RIGHTS

Stock Appreciation Rights (“SARs”) give the holder the right to receive, either in cash or common stock equivalent, the excess of the fair market value of one share of common stock on the date of exercise, over the exercise price of the SAR. The exercise price of the SAR may not be less than the fair market value of the common stock on the date of grant. SARs granted under the OIP have a maximum term of 10 years. SARs are not a part of the Company’s current compensation program.

UNRESTRICTED STOCK AWARDS

The Compensation Committee, in its discretion, may grant or sell to any eligible person shares of common stock free of restrictions. The sales price of such stock awards is determined by the Compensation Committee. The OIP allows the granting or selling of unrestricted stock awards as payment for past services or other valid consideration. Unrestricted stock awards cannot be sold, assigned, transferred, pledged or otherwise encumbered.

PERFORMANCE AWARDS

Performance awards grant the recipient the right to receive, either in cash or shares of common stock, a payout upon the attainment of pre-established performance goals. The Company’s current compensation program includes performance share unit awards, as a component of long-term equity incentive compensation, and performance cash awards, as annual short-term incentive compensation.

SHARES

MAXIMUM NUMBER OF SHARES AVAILABLE

With the amendment, the maximum number of shares of Company common stock which may be allocated to awards, including SARs, is 900,000 shares.

SHARE POOL AND SHARE COUNTING

With the amendment, each share issued pursuant to an award under the OIP will reduce the number of shares available by one share. Shares subject to awards under the OIP that terminate or expire unexercised, or are canceled, terminated, forfeited or lapse for any reason, or are exchanged for an award that does not involve the issuance of shares and shares underlying awards that are ultimately settled in cash, will become available for future grants of awards under the OIP. Similarly, in the event that a maximum payout is not reached, the unearned shares originally subject to the award will be added back to the share reserve. The following shares do not return to the share pool and are not available for issuance under the OIP: (i) shares used to pay the exercise price or withholding taxes related to an outstanding stock option or SAR; (ii) shares that are not issued or delivered upon the exercise of an SAR; and (iii) shares repurchased by the Company on the open market with proceeds from the exercise of a stock option.

EXPECTED DURATION OF THE SHARE RESERVE

If this proposal is approved by our shareholders, we expect that the share reserve under the OIP will be sufficient for awards for approximately 5 years. Expectations regarding future share usage could be impacted by a number of factors such as award type mix; hiring and promotion activity at the executive level; the rate at which shares are returned to the OIP’s share pool upon expiration, forfeiture or cash settlement; the future performance of our stock price; the consequences of acquiring other companies; and other factors. While we believe that the assumptions are reasonable, future share usage may differ from current expectations.

 

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ADJUSTMENTS TO SHARE RESERVE

The number of shares allocated to the OIP shall be appropriately adjusted to reflect any subsequent equity restructuring, such as stock dividends, stock splits, reverse stock splits and similar matters affecting the overall number of the Company’s outstanding shares. Similarly, in the event of any other change in corporate capitalization, the Compensation Committee has the authority to make equitable adjustments to prevent dilution or enlargement of any rights granted under the OIP.

ADMINISTRATION

The OIP is administered by the Compensation Committee. The Compensation Committee has the authority to:

 

  u  

make awards;

  u  

designate participants;

  u  

determine the type or types of awards to be granted to each participant and the amount, terms and conditions thereof;

  u  

establish, adopt or revise any rules, regulations, guidelines and procedures as it may deem advisable to carry out the provisions and purposes and administer the OIP; and

  u  

prescribe forms of award agreements, and make rules, interpretations and any and all other decisions and determinations that may be required under the OIP.

Additionally, the Compensation Committee may, by resolution, authorize any officer of the Company to designate employees as award recipients and determine the amount of such awards. This delegation is limited by: (i) not allowing the authorized officer to grant an award to an officer (defined as a reporting person under Section 16 of the Exchange Act); (ii) requiring the resolution to include the total number and/or dollar value of awards the officer is allowed to grant; and (iii) requiring the officer to periodically report to the Compensation Committee regarding the nature and scope of awards granted by the officer. Lastly, the Compensation Committee may expressly delegate to one or more of its members or to one or more officers of the Company or its affiliates or to one or more agents or advisors its administrative duties or powers under the OIP.

TREATMENT OF AWARDS UPON CERTAIN EVENTS

TERMINATION OF CONTINUOUS SERVICE

The applicable award agreement or special plan document governing an award will specify the treatment of such award upon the termination of a participant’s continuous service. Continuous service means the absence of any interruption or termination of service as an employee, officer or director; provided that the following will not be considered an interruption in service: (i) a participant transfers employment, without interruption, between the Company and an affiliate or between affiliates, (ii) in the case of a spin-off, sale or disposition transaction where the Compensation Committee determines that no interruption will result or (iii) the participant is granted an unpaid leave of absence authorized in writing by the Company that does not exceed 12 months. The OIP defines an affiliate as any parent company of Company and each subsidiary of the Company, as those terms are defined in Section 424 of the IRC.

CHANGE IN CONTROL

Unless otherwise provided in an award agreement or any special plan document or separate agreement with a participant governing an award, upon the occurrence of a change in control (“CIC”) of the Company in which awards are not assumed by the surviving entity or otherwise converted into a Replacement Award, as defined in the OIP, the following shall occur:

 

  u  

A participant’s then-outstanding stock options and SARs that are not vested and are only subject to continuous service shall immediately become fully vested and exercisable over the exercise period set forth in the applicable award agreement. The Compensation Committee may elect to cancel such awards and pay a cash amount, unless the exercise price exceeds the value of the consideration received by the participant as a result of the CIC.

  u  

All other awards subject to continuous service shall become fully vested.

  u  

A participant’s then-outstanding stock options and SARs that are not vested and are subject to attaining certain performance measures shall immediately become vested and exercisable as of the date of the CIC. Where performance measures provide for a range of payouts, the number of shares that shall vest is based on the higher of (i) actual performance through the date of the CIC, or (ii) target performance. No payment shall be made if the exercise price exceeds the value of the consideration received by the participant as a result of the CIC.

  u  

All other awards subject to attaining certain performance measures shall immediately vest and be settled based on the higher of (i) actual performance through the date of the CIC, or (ii) target performance.

 

  

 

 
   2021 PROXY STATEMENT      21  


Unless otherwise provided in an award agreement or any special plan document or separate agreement with a participant governing an award, if there is a change in control of the Company and a qualifying Replacement Award is provided to the participant, the participant shall not receive any automatic vesting or acceleration of the Replaced Award, as defined in the OIP. However, if a participant’s employment is involuntarily terminated other than for cause after such a change in control, then a participant’s Replacement Award in the form of:

 

  u  

stock options or SARs shall become fully exercisable;

  u  

performance-based awards shall be deemed to be fully satisfied at the target level and be paid within 60 days of the termination; and

  u  

service-based awards shall become fully vested and paid within 60 days of the termination.

FORFEITURE EVENTS

Awards under the OIP will be subject to any compensation recoupment policy that the Company may adopt from time to time that is applicable to the participant, including the claw back policy. An award agreement may specify that an award will be reduced, canceled, forfeited or recouped upon certain events, including (i) termination of employment for cause; (ii) violation of material Company policies; (iii) breach of noncompetition, confidentiality or other restrictive covenants that may apply to the participant; (iv) other conduct by the participant that is detrimental to the business or reputation of the Company; and (v) a later determination that the vesting of, or amount realized from, a performance award was based on materially inaccurate financial statements or performance metric criteria, whether or not the participant caused or contributed to such inaccuracy. The Company will also seek to recover any granted awards as required by the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act or any other law or listing standards of the NYSE.

TERMINATION & AMENDMENT

The OIP became effective on October 23, 2018 and shall continue until October 23, 2028 unless earlier terminated by the Board or the Compensation Committee. The Board or the Compensation Committee may, at any time and from time to time, amend, modify or terminate the OIP, unless such an amendment or modification would require shareholder approval under applicable laws, regulations or the NYSE rules.

The Compensation Committee may amend, modify or terminate an outstanding award without the approval of the participant, provided however, (i) the value of such award may not be reduced or diminished without the participant’s consent; (ii) the original term of an option or SAR may not be extended without prior approval of the Company’s shareholders; (iii) subject to the anti-dilution provisions of the OIP, the exercise price of an option or base price of an SAR may not be reduced, directly or indirectly (such as an exchange of an “underwater” option or SAR for cash or for another award), without the prior approval of the Company’s shareholders; and (iv) no termination, amendment or modification of the OIP will adversely affect any award previously made under the OIP without the consent of the affected participant.

TAX CONSEQUENCES OF AWARDS

The following discussion is limited to a summary of the U.S. federal income tax provisions relating to the making, exercising and vesting of awards under the OIP and the subsequent sale of common stock acquired under the OIP. The tax consequences of awards may vary depending upon the particular circumstances, and it should be noted that the income tax laws, regulations and interpretations thereof change frequently. Participants should rely upon their own tax advisors for advice concerning the specific tax consequences applicable to them, including the applicability and effect of state, local and foreign tax laws.

NONSTATUTORY STOCK OPTIONS

There will be no federal income tax consequences to the optionee or to the Company upon the grant of a stock option under the OIP. When the optionee exercises a stock option, however, they will recognize ordinary income in an amount equal to the excess of the fair market value of the common stock received upon exercise over the exercise price, and the Company expects that it will be allowed a corresponding deduction. Any gain that the optionee realizes when the optionee later sells or disposes of the option shares will be short-term or long-term capital gain, depending on how long the shares were held.

STOCK APPRECIATION RIGHTS

At the time the award is granted, a participant receiving a SAR will not recognize income, and the Company will not be allowed a tax deduction. When the participant exercises the SAR, the amount of cash and the fair market value of any shares of common stock received will be ordinary income to the participant and the Company expects that it will be allowed a corresponding income tax deduction at that time.

 

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RESTRICTED STOCK

Generally, the participant will not recognize income and the Company will not be allowed a tax deduction, at the time a restricted stock award is granted, provided that the award is subject to restrictions on transfer and is subject to a substantial risk of forfeiture. When the restrictions lapse, the participant will recognize ordinary income equal to the fair market value of the common stock as of that date (less any amount paid for the stock), and the Company will be allowed a corresponding income tax deduction at that time, subject to any applicable limitations under IRC Section 162(m). If the participant files an election under IRC Section 83(b) within 30 days after the date of grant of the restricted stock, they will recognize ordinary income as of the date of grant equal to the fair market value of the stock on that date (less any amount paid for the stock), and the Company will be allowed a corresponding income tax deduction at that time, subject to applicable IRC Section 162(m) limitations. Any future appreciation in the stock will be taxable to the participant at capital gains rates. However, if the stock is later forfeited, the participant will not be able to recover the tax previously paid pursuant to the election. To the extent unrestricted dividends are paid during the restricted period under the applicable award agreement, any such dividends will be taxable to the participant as ordinary income and will be deductible by the Company unless the participant has made an election under IRC Section 83(b), in which case the dividends will thereafter be taxable to the participant as dividends and will not be deductible by the Company.

STOCK UNITS

A participant will not recognize income, and the Company will not be allowed a tax deduction, at the time a stock unit award is granted. Stock unit awards are typically RSUs or PSUs. Upon receipt of shares of common stock (or the equivalent value in cash) in settlement of a stock unit award, a participant will recognize ordinary income equal to the fair market value of the common stock or other property as of that date, and the Company will be allowed a corresponding income tax deduction at that time, subject to any applicable limitations under IRC Section 162(m).

CASH-BASED AWARDS

A participant will not recognize income at the time a cash-based award is granted (for example, when the performance goals are established). Upon receipt of cash in settlement of the award, a participant will recognize ordinary income equal to the cash received. The Company will be allowed a corresponding income tax deduction at the time the award is accrued under GAAP, as long as the award is settled within 2 1/2 months of the end of the fiscal year and subject to any applicable limitations under IRC Section 162(m). Otherwise, the Company will be allowed a corresponding income tax deduction at the time the award is paid.

IRC SECTION 409A

If an award is subject to IRC Section 409A (which relates to nonqualified deferred compensation plans), and if the requirements of Section 409A are not met, the taxable events as described above could apply earlier than described, and could result in the imposition of additional taxes and penalties. All awards that comply with the terms of the OIP, however, are intended to be exempt from the application of Section 409A or meet the requirements of Section 409A in order to avoid such early taxation and penalties.

TAX WITHHOLDING

The Company has the right to deduct or withhold, or require a participant to remit to the Company, an amount sufficient to satisfy the Company’s federal, state and local tax withholding obligations (including employment taxes) imposed by law with respect to any exercise, lapse of restriction or other taxable event arising as a result of an award under the OIP. The Compensation Committee may, at the time the award is granted or thereafter, require or permit that any such withholding requirement be satisfied, in whole or in part, by delivery of, or withholding from the award, shares having a fair market value on the date of withholding equal to the amount required to be withheld for tax purposes.

 

  

 

 
   2021 PROXY STATEMENT      23  


BENEFITS TO NAMED EXECUTIVE OFFICERS & OTHERS

 

Because awards under the OIP are discretionary, benefits or amounts that may be received by or allocated to eligible participants are not presently determinable. No awards that are contingent upon obtaining shareholder approval of the amendment of the OIP have been made.

The following table shows all of the awards under the OIP for FY 2021:

 

  Name and Position    Number of Shares of Common
Stock Covered by Awards 1
 

  David Dunbar, Chair, President & CEO

     50,260  

  Ademir Sarcevic, Vice President, CFO & Treasurer

     13,487  

  Alan J. Glass, Vice President, CLO & Secretary

     8,755  

  Paul C. Burns, Vice President of Business Development & Strategy

     7,460  

  James Hooven, Vice President of Operations & Supply Chain

     3,218  

  All current executive officers as a group

     91,844  

  All current non-employee directors as a group

     14,781  

  All employees as a group (excluding current executive officers)

     54,232  

 

  1

The awards included in this column are RSAs and PSUs (at target) made under the OIP during FY 2021, and RSUs awarded pursuant to an MSPP deferral during FY 2021.

REQUIRED VOTE & RECOMMENDATION

 

Approval of this proposal will require the affirmative vote of a majority of the votes cast in person or represented by proxy. Abstentions will not count as votes cast on this proposal, so abstentions will have no effect on the outcome. Broker non-votes will not be considered to have voted on this proposal, so will have no effect on the outcome.

The Board recommends that you vote “FOR” the amendment to and restatement of the 2018 Standex Omnibus Incentive Plan.

 

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2021 PROXY STATEMENT

  


LOGO

At each annual meeting, the Board provides shareholders with the opportunity to cast an advisory vote to approve the compensation of our named executive officers. Please see the “Summary Compensation Table” starting on page 64 for full details. This proposal, commonly known as a “Say on Pay” proposal, gives our shareholders the opportunity to endorse or not endorse our executive compensation programs and policies and the total compensation paid to our named executive officers. This advisory vote does not address any specific element of compensation, but rather the overall compensation of our named executive officers and our compensation philosophy, policies and practices, as detailed in the “Compensation Discussion & Analysis” starting on page 47.

Although this vote is non-binding, the Board values the opinions of the Company’s shareholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.

As described in more detail in the Compensation Discussion and Analysis (“CD&A”) section, we have designed our executive compensation programs to align the long-term interests of our executives with those of our shareholders, attract and retain talented individuals and reward current performance. A large portion of the compensation is tied to the Company’s performance and is paid in both performance and time-based equity. This closely aligns both the short-term and long-term interests of our executives with those of shareholders and drives the creation of shareholder value.

We encourage shareholders to review the CD&A, which describes our philosophy and business strategy underpinning the programs, the individual elements of the compensation programs and how our compensation plans are administered.

REQUIRED VOTE & RECOMMENDATION

 

Approval of this advisory proposal will require the affirmative vote of a majority of the votes cast in person or represented by proxy. Abstentions will not count as votes cast on this proposal, so abstentions will have no effect on the outcome. Broker non-votes will not be considered to have voted on this proposal, so will have no effect on the outcome.

The advisory vote on executive compensation is non-binding, therefore, our Board will not be obligated to take any compensation actions or adjust our executive compensation programs or policies as a result of the vote. Notwithstanding, the resolution will be considered passed with the affirmative vote of the majority of the votes cast at the Annual Meeting.

The Board recommends that you vote “FOR” the following non-binding resolution:

RESOLVED, that the compensation of the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.

 

  

 

 
   2021 PROXY STATEMENT      25  


LOGO

Every six years, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Board provides shareholders with the opportunity to cast an advisory vote on the frequency of the advisory vote to approve our executive compensation. This year, we are seeking a non-binding determination from our shareholders as to how often the “Say on Pay” advisory vote should be held. Shareholders have the following frequency options to choose from: each year, every two years or every three years.

When this advisory vote was last held in 2015, shareholders indicated a preference to hold the advisory vote on executive compensation each year and the Board continued this practice.

The Board continues to believe that an annual advisory Say on Pay vote is the most appropriate policy for our shareholders and the Company at this time. An annual advisory vote allows the Board to receive timely, ongoing feedback from our shareholders. This assists the Board in taking shareholder views into account when considering changes to the executive compensation program. Additionally, an annual advisory vote is currently the standard desired by many shareholders.

Although this vote is non-binding, the Board values the opinions of the Company’s shareholders and will consider the outcome of the vote when making future decisions on the frequency of our Say on Pay proposals.

REQUIRED VOTE & RECOMMENDATION

 

While the Board recommends an annual advisory vote on executive compensation, shareholders may vote to hold the advisory vote on executive compensation each year, every two years or every three years.

Abstentions will not count as votes cast on this proposal, so abstentions will have no effect on the outcome. Broker non-votes will not be considered to have voted on this proposal, so will have no effect on the outcome.

The advisory vote on the frequency of holding the advisory vote on executive compensation is non-binding, therefore, our Board will not be obligated to take any actions or change the frequency as a result of the vote.

The Board recommends that you vote “FOR” holding the advisory vote on the compensation paid to our named executive officers with a frequency of “ONE YEAR”.

 

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LOGO

The Audit Committee has approved Deloitte & Touche LLP (“Deloitte”) to serve as our independent registered public accounting firm for the 2022 fiscal year. Deloitte was appointed on August 26, 2020. The Company did not engage Deloitte at any time during the two years before the appointment for any accounting-related matter. In the time since Deloitte’s appointment, Deloitte’s reports on the Company’s financial statements did not contain any adverse opinion or a disclaimer of opinion, nor was Deloitte’s opinion qualified or modified as to uncertainty, audit scope or accounting principles.

Grant Thornton LLP (“Grant Thornton”) had served as the Company’s independent auditors from 2014 until their replacement on August 26, 2020 as the result of a competitive process. During that time, there were no disagreements between the Company and Grant Thornton on any matter of accounting principles or practices, financial statement disclosures or auditing scope or procedure. Also, during that time, Grant Thornton’s report on the Company’s financial statements did not contain any adverse opinion or a disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope or accounting principles.

We are asking our shareholders to ratify the appointment of Deloitte as our independent registered public accounting firm. Although shareholder ratification is not required, the Board is submitting the proposal because we value our shareholders’ views on the Company’s independent auditor and as a matter of good corporate practice. In the event that our shareholders fail to ratify the appointment, the Audit Committee will investigate the reasons and consider selecting a different firm. Even if the selection is ratified, the Audit Committee may select a different independent auditor at any time during the year if it determines such a change would be in the best interests of the Company and its shareholders.

A representative from Deloitte will be available at the Annual Meeting to, as requested, make a statement, speak with shareholders or respond to appropriate questions.

PRE-APPROVAL POLICY

 

All services performed in FY 2021 were pre-approved by the Audit Committee in accordance with the Audit Committee’s charter. The pre-approval policy requires the independent auditor to submit an itemization of the services to be provided and fees to be incurred during the fiscal year. The Audit Committee approves the scope and timing of the external audit plan and focuses on any matters that may affect the scope of the audit or the independence of the independent auditor. In that regard, the Audit Committee receives certain representations from the independent auditor regarding its independence and the permissibility, under the applicable laws and regulations, of any services provided.

Once the initial audit plan has been approved, any requests for additional services or fees must be submitted to the Audit Committee for approval. These additional services may not commence until the Audit Committee reviews and approves the request.

These requests for approval are normally evaluated during regularly scheduled Audit Committee meetings. However, if a request is submitted between meeting times, the Chair of the Audit Committee may approve the request pursuant to a delegation of authority. For the Chair of the Audit Committee, the approval authority is limited to services valued at less than $100,000. Any requests for services exceeding $100,000 must be approved by the full Audit Committee. If the Chair has exercised their approval authority, they must disclose all approval determinations to the full Audit Committee at the next regularly scheduled meeting.

 

  

 

 
   2021 PROXY STATEMENT      27  


RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

The Audit Committee reviews all relationships between the independent auditor and the Company, including the provision of non-audit services. Deloitte has provided non-audit services during FY 2021 related to tax compliance and tax advisory services.

The Audit Committee considered the effect of Deloitte’s non-audit services in assessing its independence. After discussion with Company management and Deloitte, the Audit Committee concluded that the provision of these services was permitted under the rules and regulations concerning auditor independence.

INDEPENDENT AUDITORS FEES

 

The following table summarizes the aggregate fees for audit and non-audit services incurred by the Company. The Audit Committee pre-approved all of these audit and non-audit fees in accordance with the pre-approval policy described above. The fees for FY 2020 shown below were for Grant Thornton’s services, while the fees for FY 2021 were for Deloitte’s services.

 

  Type of Fees

    

2020 ($)*

     

2021 ($)*

   

Description

       Fees for audit services performed during fiscal year 2020 consisted substantially of: auditing the Company’s annual financial statements, reviewing the Company’s quarterly financial statements, audit services in connection with the adoption of ASC 842 and audit services in connection with acquisitions and divestitures.

  Audit Fees

     1,563,000       1,371,000     Fees for audit services performed during fiscal year 2021 relate to professional services rendered in connection with the annual audit of our consolidated financial statements and internal control over financial reporting; the reviews of the condensed consolidated financial statements performed in connection with each of our Quarterly Reports on Form 10-Q; and statutory audits required by foreign jurisdictions.

  Audit-Related Fees

     239,000       -     Fees for audit-related services performed during fiscal year 2020 consisted substantially of international statutory audit-related services in Germany, India, Ireland, Malaysia, Mexico, Portugal and the United Kingdom.
       Fees for tax services performed during fiscal year 2020 consisted substantially of tax assistance in Malaysia, Mexico, the Netherlands and Turkey.

  Tax Fees

     21,000       94,000     For FY 2021, tax fees consist of fees billed for permissible professional services performed by Deloitte Tax LLP, an affiliate of Deloitte, for tax compliance, planning and advice.

  All Other Fees

     1,000       -     Fees for all other services in 2020 represent agreed upon procedures performed by Grant Thornton in Ireland in connection with a government grant.

  Total Fees

     1,824,000       1,465,000      

 

  *

Amounts have been rounded to the nearest thousand.

REQUIRED VOTE & RECOMMENDATION

 

Approval of this advisory proposal will require the affirmative vote of a majority of the votes cast in person or represented by proxy. Abstentions will not count as votes cast on this proposal, so abstentions will have no effect on the outcome. Broker non-votes will be considered as a vote “FOR” this proposal.

The Board recommends that you vote “FOR” the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the 2022 fiscal year.

 

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GOVERNANCE

The purpose of corporate governance is to ensure that we maximize shareholder value consistent with a business model of integrity, ethical practices and compliance with all applicable law.

As part of its duties to the Company, the Board monitors and oversees the proper safeguarding of the assets of the Company, the maintenance of appropriate financial and other internal controls and the Company’s compliance with applicable laws and regulations. Additionally, the Board monitors and oversees the governance practices of the CEO and senior management.

In order to serve the best interests of shareholders while carrying out its purpose, the Board has established internal guidelines — the Corporate Governance Guidelines — designed to promote effective oversight of the Company’s governance program and principles, beginning with the Board itself. You can access these materials by going to ir.standex.com and clicking on “Governance.” See page 75 for instructions on receiving copies of these corporate governance materials.

 

 

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LOGO

 

 

  

 

 
   2021 PROXY STATEMENT      29  


BOARD LEADERSHIP STRUCTURE

The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure in order to best serve shareholders’ interests. To ensure an efficient and high-functioning board, in 2016, the Board elected our President and CEO, David Dunbar, to serve as Chair of the Board. In its determination that Mr. Dunbar should serve in this role, our Board examined several factors and believed that Board independence and management oversight were effectively maintained through the Board’s composition of independent directors, the committee system and a seasoned and engaged Lead Independent Director. A combined CEO and Chair role serves as an effective bridge between the Board and senior management and also provides strong unified leadership of the Company.

Optimal Board leadership structure may change as circumstances warrant. The Board reviews its determination annually in accordance with the Corporate Governance Guidelines. This annual review allows the Board to maintain flexibility and promote the execution of the Company’s strategy, the independent oversight of senior management and the best interests of shareholders. In the event the Board determines that a different leadership structure is in the best interests of the Company and its shareholders, the Board will consider a change.

Within the Board leadership structure are three distinct roles with specific duties and responsibilities. These duties and responsibilities are described below and are set forth in the Company’s By-Laws and Corporate Governance Guidelines.

CHAIR OF THE BOARD

 

u  

Presides over meetings of the Board.

u  

Presides over meetings of shareholders.

u  

Consults and advises the Board and its committees on the business and affairs of the Company.

u  

Performs such other duties as may be assigned by the Board.

CHIEF EXECUTIVE OFFICER

 

u  

In charge of the affairs of the Company, subject to the overall direction and supervision of the Board and its committees and subject to such powers as reserved by the Board.

LEAD INDEPENDENT DIRECTOR

 

u  

Presides at all meetings of the Board at which the Chair of the Board is not present, including all executive sessions of independent directors.

u  

Encourages and facilitates active participation of all directors.

u  

Serves as a liaison between the independent directors and the Chair of the Board on particular issues brought up by independent directors.

u  

Calls and leads the executive sessions of independent directors.

u  

Leads the Board discussions regarding the CEO’s annual evaluation and succession planning.

u  

Provides feedback on information flow from management to the Board.

u  

Available to advise committee chairs in fulfilling their designated roles and responsibilities.

u  

Available for consultation and communication with shareholders, where appropriate and upon reasonable request.

u  

Performs such other functions as the Board or other directors may request.

 

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2021 PROXY STATEMENT

  


BOARD COMMITTEES

 

The Board maintains three Committees:

 

LOGO

Only independent directors are eligible to serve on these Board committees. Each committee is governed by a written charter. To view the charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance (“N&CG”) Committee, go to ir.standex.com, click on “Governance,” then “Committee Charters.”

MEETING ATTENDANCE

Under our Corporate Governance Guidelines, directors have a duty to attend, whenever possible, all Board and committee meetings for committees on which the director serves. The Board held 7 meetings in FY 2021, while the Committees of the Board held a total of 15 meetings. Each director attended at least 75 % of the meetings of the Board and each of the committees on which such director served during FY 2021. All Board members attended the Company’s 2020 annual meeting of shareholders. The Company anticipates that all of the Board members will attend the 2021 Annual Meeting.

COMMITTEE STRUCTURE AND MEMBERSHIP

Our Board designates Committee members and Chairs based on the N&CG recommendations. The following table shows the composition of each committee for FY 2021:

 

     Committee Memberships  

Name

         A                C                N&CG      

DAVID DUNBAR

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

MICHAEL A. HICKEY INDEPENDENT

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

CHARLES H. CANNON, JR. INDEPENDENT

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

JEFFREY S. EDWARDS INDEPENDENT

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

B. JOANNE EDWARDS INDEPENDENT

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

THOMAS E. CHORMAN INDEPENDENT

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

THOMAS J. HANSEN INDEPENDENT

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

  

 

 

LOGO

 

 

 

 

 

A Audit Committee

  

N&CG Nominating & Corporate

   LOGO  Chair

C Compensation Committee

  

Governance Committee

   LOGO  Member

 

  

 

 
   2021 PROXY STATEMENT      31  


LOGO

REPORT OF THE AUDIT COMMITTEE

The Company’s internal controls and financial reporting are a multi-faceted undertaking, monitored and overseen by the Audit Committee. The Company’s management has the primary responsibility for the Company’s internal controls and financial reporting process. The independent auditors are responsible for performing an independent audit of the Company’s consolidated financial statements and reporting on the Company financial statements’ conformity with generally accepted accounting principles. Additionally, the independent auditors are responsible for providing an attestation on management’s assessment of the Company’s internal controls over financial reporting. The Audit Committee’s responsibility is to monitor and oversee all of these processes on behalf of the Board. This responsibility includes engaging the independent auditors, pre-approving their annual audit plan and reviewing their annual audit report.

In this context, the Audit Committee has reviewed and discussed the consolidated financial statements with management and Deloitte. The Audit Committee has also reviewed management’s assessment of the effectiveness of the Company’s internal controls over financial reporting and Deloitte’s evaluation of these controls. The Audit Committee further discussed matters required to be discussed by the applicable requirements of the PCAOB and the SEC. Deloitte has provided to the Audit Committee the written disclosures and the letter required by the PCAOB and has discussed with the Audit Committee its independence from the Company and Company management. Finally, the Audit Committee considered whether Deloitte’s provision of non-audit services to the Company was compatible with maintaining its independence.

Based on these reviews and discussions, the Audit Committee has recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021 for filing with the SEC.

Thomas J. Hansen, Chair

Charles H. Cannon, Jr.

Thomas E. Chorman

B. Joanne Edwards

Michael A. Hickey

 

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2021 PROXY STATEMENT

  


LOGO

Under our long-term incentive plans, the Compensation Committee may delegate some decision-making authority regarding awards to the CEO. This authority is limited to granting and approving awards for designated individuals, as long as such individuals are not officers of the Company, as determined by the Board, or directly report to the CEO. Currently, the Compensation Committee has delegated authority to Mr. Dunbar to grant such awards subject to a pool limit authorized by the Committee. The Compensation Committee has not delegated any of its other authority to any individual.

 

 

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   2021 PROXY STATEMENT      33  


REPORT OF THE NOMINATING & CORPORATE GOVERNANCE COMMITTEE

The duties and responsibilities of the Nominating and Corporate Governance Committee are broad. The N&CG Committee operates pursuant to the Corporate Governance Charter. In fulfilling the responsibilities and duties contained therein, the N&CG Committee actively reviews all Board principles, guidelines and charters. The N&CG Committee also maintains responsibility for overseeing senior management’s compliance with the Code of Conduct and Code of Ethics for Senior Financial Management. The N&CG Committee further identifies and evaluates candidates for Board membership, evaluates Board committee membership and recommends Company employees for election to Company officer roles. The N&CG Committee is also responsible for overseeing the Company’s ESG strategy. Lastly, the N&CG Committee establishes and maintains a Board performance review process and recommends changes to the Board based on the review.

BOARD SELF-ASSESSMENT & SKILLS MATRIX

The N&CG Committee has developed and implemented a prescribed self-evaluation process to assess the configuration and enhance the functionality of the Board and each of its committees. This process identifies current Board members’ attributes, expertise and experiences and creates a skills matrix, which is used to identify areas of improvement within Board structure and committee configuration. The self-evaluation is instrumental in evaluating the future needs of the Board in relation to the Company’s strategic goals and identifying the qualifications that a future candidate should have to aid in the achievement of those strategic goals. The matrix shown below details the skills that are evaluated, a description of those skills and how many Board members and nominees are proficient in a particular skill.

 

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2021 PROXY STATEMENT

  


IDENTIFYING AND EVALUATING CANDIDATES FOR BOARD MEMBERSHIP

The N&CG Committee is responsible for recommending candidates for Board membership when the N&CG Committee has identified a need to add new members or when there is a vacancy. The N&CG Committee has not established specific, minimum qualifications for director nominees. However, the N&CG Committee strives to find candidates whose skills complement the needs presented by the global, multi-sector, engineered manufacturing operations of the Company and whose skills include analytical financial expertise and strategic planning. Candidates must also possess characteristics, such as integrity and sound judgment, that would enable the Board to function cohesively and effectively. The N&CG Committee also evaluates whether a particular candidate has the capacity and desire to make a significant time commitment to serving on the Board. Finally, the Committee focuses on prioritizing the identification of candidates with gender, ethnic and racial diversity who will lend nuanced perspectives to Board discussions.

To identify such candidates, the N&CG Committee has the authority to retain a third-party search firm and to consider suggestions from directors, shareholders and management. The N&CG Committee ensures that the pool of candidates reflects a range of professional experience and expertise as well as diversity of gender, race and ethnicity by instructing the search firm to seek out and present diverse candidates who may expand the perspectives of the Board. The N&CG Committee views diversity expansively and considers depth and breadth of relevant business experience, leadership performance and strategic acumen alongside other immutable characteristics that a candidate may possess.

The N&CG Committee reviews and evaluates each candidate by taking into account all available information concerning the candidate. All candidates, whether identified by a third-party search firm, the directors, management or shareholders, are evaluated based on the same criteria. The candidates must also fit within the existing composition of the Board to be recommended to the Board as a prospective nominee. In the FY 2020 Proxy Statement, the Board committed to adding another female to the Board; Robin J. Davenport is nominated herein for election.

Shareholders may submit recommendations for future candidates by notifying the N&CG Committee, in writing, using the process described under “How Can I Submit a Shareholder Proposal or Director Nomination?” on page 74. Please attach any appropriate supporting materials. Shareholders may submit direct nominations for inclusion in the Company’s Proxy Statement by following the process described under “How Can I Submit a Shareholder Proposal or Director Nomination?” on page 74.

CODE OF CONDUCT AND CODE OF ETHICS FOR SENIOR FINANCIAL MANAGEMENT

Management has the primary responsibility for creating, maintaining and administering programs to ensure employees’ compliance with the Code of Conduct and the Code of Ethics for Senior Financial Management, (the “Codes”), both of which are available by going to ir.standex.com, clicking on “Governance,” and then clicking on “Policies.” The N&CG Committee routinely receives updates from the Corporate Governance Officer on the existing programs and any proposed programs. On an annual basis, employees are presented with a copy of the Code of Conduct and must affirm their compliance with it.

The Company also utilizes an online interactive compliance training program to educate employees on the Codes as well as other regulatory and workplace compliance topics. Employees are assigned training modules on a regular basis to promote ongoing awareness of ethics issues. The Company divisions routinely customize the modules to address ethics issues specific to their organizations.

The N&CG Committee is also responsible for evaluating and approving requests for waivers of the Codes. Any request must be submitted, in writing, to the Chair of the N&CG Committee, who then reports the submission to the whole N&CG Committee. The N&CG Committee then provides their recommendation on the request to the Board. Any waivers granted to executive officers are disclosed to shareholders as soon as practicable via the Company’s website. No waivers have been granted during FY 2021 or during any prior period.

Additionally, a third-party global, multi-language hotline is available 24/7 at every Company location worldwide, for anonymous reporting of financial, accounting, auditing or other employee concerns. This communication tool is a beneficial outlet for employees to express concerns. During FY 2021, the Corporate Governance Officer engaged in a compliance check to ensure that (i) hotline posters were prominently placed in each global location, in the local language and that (ii) the international dialing codes provided access to the hotline. The Company continues to believe that all employees across the globe should and do have full access to this communication and reporting tool.

Thomas E. Chorman, Chair

B. Joanne Edwards

Jeffrey S. Edwards

 

  

 

 
   2021 PROXY STATEMENT      35  


KEY AREAS OF BOARD OVERSIGHT

 

The key responsibilities of the Board, as a whole, include oversight of business strategy; succession planning for the CEO and for senior management; oversight of compliance; oversight of risk management; and oversight of ESG strategy and initiatives.

STRATEGY

Oversight of the Company’s business strategy and strategic planning is a key responsibility of the Board. The Board believes that overseeing and monitoring strategy is a continuous process - one that involves constant assessment to ensure that Company performance in the short and in the long term are consistent with creating and maximizing shareholder value. The Company’s management, on the other hand, are tasked with executing the business strategy. The Board receives regular updates and actively engages with senior management to monitor execution of the business strategy.

SUCCESSION PLANNING

The Board believes that one of its primary responsibilities is to oversee the development and retention of senior talent and to ensure that an appropriate succession plan is in place for our CEO and other members of senior management. To this end, the Board undergoes an annual review process with the CEO, members of senior management, as well as division leaders, to develop, evaluate and make adjustments to succession plans.

RISK

The CEO and other members of senior management are primarily responsible for managing the risks the Company faces. Our Enterprise Risk Management process is driven by our Corporate Governance Officer (a senior member of our internal legal department), in cooperation with the Company’s Director of Internal Audit, risk management department, CFO and other members of senior management. Risks are assessed and categorized in order to put in place appropriate mitigation plans. Risk factors are reviewed and rated according to their likelihood of occurrence, financial and intangible impact if occurrence took place, and velocity (how quickly the risk could affect the business). Mitigation plans are developed for the top identified risks. These risk assessments and mitigation plans are presented annually to the full Board for review and discussion.

The Board’s responsibility regarding risk management is to oversee the Company’s risk management policies and procedures and provide guidance on the overall effectiveness of the policies and procedures. To fulfill this responsibility, the Audit Committee receives reports, on a quarterly basis, regarding the risks that have been identified and the measures that are being taken. Additionally, the Audit Committee receives reports on a regularly scheduled quarterly basis, presented by our Corporate Governance Officer and our Chief Legal Officer regarding material litigation, legal loss contingencies and calls received on our whistleblower hotline. The Board is regularly informed through the Audit Committee’s reports and through direct communications from senior management.

The Board and each committee’s risk oversight roles, as provided in their respective charters, are evaluated on an annual basis to determine whether the risk oversight responsibilities are being discharged effectively. The Board undertook this evaluation in FY 2021 and found that changing the current structure of risk oversight was not warranted. Other risk factors facing the Company are described in the Annual Report on Form 10-K, filed on August 13, 2021, under the Part I Section entitled “Item IA. Risk Factors.”

 

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2021 PROXY STATEMENT

  


CYBERSECURITY

Protecting our digital assets and the security of our information systems is a top priority for us. Historically, the nature and scope of our IT applications and systems was almost as diverse as the array of companies that comprised the Standex portfolio. With our transformation into a more focused, high performance operating company, however, over the past several years, we have been rationalizing and standardizing our approach to IT. As a critical component of this effort, we have improved and continue to enhance our IT security controls and protocols.

While management has oversight of cybersecurity execution, the Board and the Audit Committee regularly oversee the general cybersecurity strategy and the efficacy of IT controls. To this end, during FY 2021, a Chief Information Officer (CIO) was appointed for the Company. The CIO oversees and implements the Company’s IT strategy and, with respect to IT security, is responsible for ensuring the effectiveness of access and security controls, the deployment and use of effective security tools, applications and policies, and the training of all employees on applicable IT policies and procedures. The CIO periodically presents to the Board on the status of and plans for IT security.

During FY 2021, we took several steps to enhance our cybersecurity program to address ever evolving cybersecurity risks. We also have various initiatives underway to further enhance the efficacy of our IT security and controls. Please refer to our website, www.standex.com/corporate-responsibility/information-data-security for more information.

COVID-19 RESPONSE

Our service and manufacturing facilities are located in 24 countries. We are proud of our employees, who worked diligently to keep our locations open as critical, essential manufacturers, serving infrastructure, medical and supply chain industries that are responding to the global pandemic. We were able, with very few exceptions, to keep all locations fully open during the entire duration of the COVID-19 pandemic. COVID-19 continues to be a part of our operational planning and response.

To ensure consistent policies and procedures during the pandemic, a COVID-19 leadership task force developed resources for our businesses to use, along with written processes implementing all public health recommendations. The task force was available at all times to respond immediately to reports of potential employee infection, and to form action plans. Frequent global calls, during which all businesses shared best practices and practical guidance, helped our businesses support each other and manage through the pandemic. As the pandemic has evolved during FY 2021, the Company has also pivoted, following all public health guidance and encouraging vaccines for all eligible employees.

We recognize the value of good health for our employees, their families and our communities. Our principal focus during the COVID-19 crisis was the health and safety of our people across the globe. We continue to communicate daily with our business locations to monitor safe practices and the ability to continue serving our customers.

COMPLIANCE

We view compliance with applicable laws and regulations as a foundational minimum for ethical business practices. The Board oversees our compliance policies and procedures to ensure the effective performance of management’s duties. Having our Code of Conduct apply to all employees globally, as well as the Board, sends the message that we are all committed to doing the right thing. Our specific compliance policies detail the ethical framework found in the Code of Conduct. Together, these compliance efforts assure that we act effectively and efficiently in the best interests of shareholders.

ENVIRONMENT, SOCIAL & GOVERNANCE

We have formalized responsibility for oversight of our ESG program with two of our board committees. Our Board’s N&CG Committee maintains responsibility for oversight of our ESG strategy, while the Audit Committee is responsible for oversight of the integrity of those ESG related metrics that we publicly disclose. Both of the N&CG Committee and the Audit Committee provide pertinent updates to the full Board.

A management-level ESG Steering Committee has responsibility for implementing the Company’s ESG strategy and reporting on its effectiveness and accomplishments. This ESG Steering Committee provides an update to the N&CG Committee at each regularly scheduled meeting of the Committee.

As our ESG Strategy matures into the establishment of specific goals and the reporting of achievement against these goals, the ESG Steering Committee will periodically review with the Audit Committee the processes for measuring such achievements. The Audit Committee also will receive input from the Company’s internal audit function on the integrity of such processes.

The information contained on the following pages outlines our approach to ESG and also highlights some of the key facets of our ESG programs. Additional information can also be found on our website at www.standex.com, by clicking on “Environment, Social & Governance.”

 

  

 

 
   2021 PROXY STATEMENT      37  


LOGO

 

38   

2021 PROXY STATEMENT

  


LOGO

 

 

  

 

 
   2021 PROXY STATEMENT      39  


LOGO

 

LOGO

 

40   

2021 PROXY STATEMENT

  


ADDITIONAL GOVERNANCE MATTERS

 

ANTI-HEDGING AND ANTI-PLEDGING POLICIES

The Company’s anti-hedging and anti-pledging policy prohibits all officers, directors and key employees from engaging in certain transactions involving the Company’s securities. Specifically, officers, directors and key employees are prohibited from engaging in the following transactions involving Company securities:

 

  u  

short-term trading, defined as selling Standex stock within six months of purchasing Standex stock on the open market;

  u  

short sales;

  u  

buying or selling put or call options, or other derivative securities;

  u  

hedging transactions, such as zero-cost collars and forward sale contracts;

  u  

holding Standex stock in a margin account; or

  u  

pledging Standex stock as collateral.

For information regarding our Named Executive Officers’ compliance with such policies, refer to “Policy Concerning Transactions Involving Company Securities (Anti-Hedging Policy & Anti-Pledging Policy)” on page 60 of the Compensation Discussion and

Analysis.

VIEW THE COMPANYS GOVERNANCE MATERIALS

You can view the Company’s governance materials, including the Certificate of Incorporation, By-Laws, Corporate Governance Guidelines and Board committee charters on the Company’s website, ir.standex.com, by clicking on “Governance” and then selecting the specific Company material. Instructions on how to obtain copies of these materials are included on page 75.

COMMUNICATE WITH THE BOARD

The Board has established a process to facilitate communication by shareholders and other interested parties with directors. Communications can be addressed to directors by emailing boardofdirectors@standex.com, or by writing to:

Standex International Corporation

23 Keewaydin Drive, Suite 300

Salem, New Hampshire 03079

Attention: Corporate Governance Officer

Communications with the Board are distributed by the Corporate Governance Officer. At the direction of the Board, all mail received may be opened and screened for security purposes. The Corporate Governance Officer uses his or her discretion in determining whether to forward communications to the Board. Communications that are unrelated to the duties and responsibilities of the Board will not be distributed. Such items include, but are not limited to:

 

u  

spam

u  

junk mail and mass mailings

u  

product complaints or inquiries

u  

new product suggestions

u  

resumes and other forms of job inquiries

u  

surveys

u  

business solicitations or advertisements

In addition, material that is trivial, obscene, unduly hostile, threatening or illegal or similarly unsuitable items will be excluded; however, any communication that is excluded will be made available to any independent, non-employee director upon request.

 

  

 

 
   2021 PROXY STATEMENT      41  


DIRECTOR COMPENSATION

 

The compensation elements and amounts are established by the Board after a review of data prepared by the Compensation Committee’s independent compensation consultant. The data and report show competitive director compensation levels for peer companies and the Company’s peer group. More information about the Compensation Committee’s independent consultant report and the methods for determining competitive compensation can be found under “Basis for Determining Executive Compensation” on page 62.

In FY 2021, the Compensation Committee undertook a review of the compensation paid to our non-employee directors relative to the Company’s peer group. Based on this review, the Committee determined that no changes were warranted for FY 2021.

 

DIRECTOR COMPENSATION ELEMENTS

 

The FY 2021 compensation elements are shown in the adjacent table.

 

Directors may choose to defer up to 100% of their annual cash retainer into the MSPP, which is described in detail under “Management Stock Purchase Plan” on page 54. The equity portion of non-employee director compensation is granted in the form of shares of restricted stock having a $105,000 fair market value at the time of grant, which is established using the closing price of the Company’s stock on the date of the Annual Meeting. These shares of restricted stock vest 3 years after the grant date, are considered beneficially owned by the director and accrue dividend equivalents. Upon the retirement of a director or a change in control of the Company, all unvested shares of restricted stock are subject to acceleration and immediate vesting.

 

Directors do not receive fees for attending Board or committee meetings. Directors also do not receive benefits under Standex retirement plans or any perquisites.

 

Under the Company’s Corporate Governance Guidelines, all non-employee directors are expected to accumulate shares of Company stock with a value of at least five times the value of their annual cash retainer. Until a director has the requisite number of shares, they are required to retain at least 50% of the share units they are awarded. As of June 30, 2021, all non-employee directors were in compliance with this requirement. Additionally, the Company has a policy concerning transactions involving Company securities. The policy is explained under “Anti-Hedging and Anti-Pledging Policies” on page 41. None of the directors have engaged in any of the prohibited transactions during FY 2021 or any prior periods.

 

 

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2021 PROXY STATEMENT

  


DIRECTOR COMPENSATION TABLE

The following table sets forth certain information with respect to our non-employee director compensation for FY 2021. Compensation information for Mr. Dunbar is detailed in the Compensation Discussion & Analysis and Compensation Tables sections of this Proxy Statement. Mr. Dunbar did not receive any compensation solely for his service as a director.

 

 Name

 

  

Fees Earned or
Paid in Cash ($) 1

 

    

Stock Awards
($) 2

 

    

All Other
Compensation ($) 3

 

    

Total ($)

 

 

 

 Charles H. Cannon, Jr.

 

  

 

 

 

 

87,500

 

 

 

 

  

 

 

 

 

105,000

 

 

 

 

  

 

 

 

 

2,285

 

 

 

 

  

 

 

 

 

194,785

 

 

 

 

 

 Thomas E. Chorman

 

  

 

 

 

 

97,500

 

 

 

 

  

 

 

 

 

105,000

 

 

 

 

  

 

 

 

 

2,285

 

 

 

 

  

 

 

 

 

204,785

 

 

 

 

 

 B. Joanne Edwards

 

  

 

 

 

 

60,500

 

 

 

 

  

 

 

 

 

142,490

 

 

 

 

  

 

 

 

 

-

 

 

 

 

  

 

 

 

 

202,990

 

 

 

 

 

 Jeffrey S. Edwards

 

  

 

 

 

 

90,000

 

 

 

 

  

 

 

 

 

105,000

 

 

 

 

  

 

 

 

 

3,878

 

 

 

 

  

 

 

 

 

198,878

 

 

 

 

 

 Thomas J. Hansen

 

  

 

 

 

 

45,000

 

 

 

 

  

 

 

 

 

212,113

 

 

 

 

  

 

 

 

 

4,409

 

 

 

 

  

 

 

 

 

261,522

 

 

 

 

 

 Michael A. Hickey

 

  

 

 

 

 

87,500

 

 

 

 

  

 

 

 

 

105,000

 

 

 

 

  

 

 

 

 

2,285

 

 

 

 

  

 

 

 

 

194,785

 

 

 

 

 

  1

This column includes the annual cash retainer and fees earned for serving as Lead Independent Director, Chair or member of any committee less the portion of the annual cash retainer that the director elected to defer pursuant to the MSPP.

 

  2

This column includes the aggregate grant date fair value of the annual equity stock grant and the RSUs granted under a director’s deferment election under the MSPP. The annual equity stock grants were made on October 20, 2020, valued at $63.19 per share, the closing price of our common stock on the grant date. The MSPP RSU grants were certified on August 17, 2021 and granted on August 23, 2021, valued at $71.18 per share, the closing price of our common stock on June 30, 2021 discounted by 25% under the terms of the MSPP. Totals have been calculated in accordance with FASB ASC 718.

 

  3

This column consists of dividends equivalents that were paid in FY 2021 which had accrued during the 3-year vesting period for the director’s previous stock awards.

 

    

As of June 30, 2021, the aggregate number of unvested shares or share units held by each director was as follows:

 

 Name

 

  

Unvested Stock (#)

 

         

Name

 

  

Unvested Stock (#)

 

 

 

 Charles H. Cannon, Jr.

 

  

 

 

 

 

4,121

 

 

 

 

      

 

Thomas E. Chorman

 

  

 

 

 

 

4,121

 

 

 

 

 

 B. Joanne Edwards

 

  

 

 

 

 

4,121

 

 

 

 

      

 

Jeffrey S. Edwards

 

  

 

 

 

 

4,121

 

 

 

 

 

 Thomas J. Hansen

 

  

 

 

 

 

7,655

 

 

 

 

      

 

Michael A. Hickey

 

  

 

 

 

 

7,261

 

 

 

 

 

  

 

 
   2021 PROXY STATEMENT      43  


DIRECTOR INDEPENDENCE & RELATED PARTY TRANSACTIONS

 

DIRECTOR INDEPENDENCE

Under our Corporate Governance Guidelines, the Board requires that at least a majority of directors either meet or exceed the independence requirements of the NYSE. These rules provide that, in order to be considered independent, each director or nominee does not have a material relationship with the Company, either directly or as a partner, shareholder, or officer of an organization that has a relationship with the Company. Furthermore, directors and nominees cannot have any prohibited relationships, such as certain employment relationships, with the Company, its independent auditor or another organization that has an affiliated relationship with the Company.

The Board undertakes an annual evaluation of director independence. At its meeting on July 21, 2021, the Board affirmatively determined that each member of the Board and each nominee, (other than David Dunbar, the Company’s President and CEO), meets the independence standards. In addition, all members of the Audit Committee satisfy the enhanced independence criteria required for members of audit committees, and all members of the Compensation Committee satisfy the enhanced independence criteria required for members of compensation committees.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Any transaction between the Company and its directors, executive officers, beneficial owners, and their immediate family members, is monitored closely. Proposed transactions in excess of $120,000 must be disclosed to the CLO. Furthermore, in the event a transaction is completed without the CLO’s knowledge, the transaction must be disclosed in an annual questionnaire that is completed and submitted to the CLO. During the past fiscal year and all prior periods, there have not been any such related party transactions.

Additionally, the Code of Conduct requires that all directors, executive officers and employees avoid engaging in any activity that might create a conflict of interest. All individuals are required to report any proposed transaction that might reasonably be perceived as creating a conflict of interest to their supervisor and/or the CLO. During the past fiscal year and for all prior periods, there have not been any reports of such transactions. During FY 2022, an annual certification process will be in place for all employees at management-or-above level to certify to the lack of a conflict of interest.

 

44   

2021 PROXY STATEMENT

  


SHARE OWNERSHIP

DELINQUENT SECTION 16(A) REPORTS

 

Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires Standex directors, executive officers and other persons who beneficially own more than 10 % of our common stock, to file reports with the SEC regarding their initial stock ownership and any changes in their stock ownership.

Based solely on a review of the reports filed for FY 2021 and related written representations, we believe that all of our executive officers and directors filed the required reports on a timely basis under Section 16(a), with the exception of Mr. Cannon’s Form 5 filing. Mr. Cannon reallocated shares between his direct ownership account and his family trust account and the Company was inadvertently not notified within the requisite time period, causing his filing to be late.

DIRECTOR & MANAGEMENT STOCK OWNERSHIP

 

The following table shows, as of July 31, 2021, the number of shares of our common stock beneficially owned by each of our current directors, director nominees and Named Executive Officers, and all directors and executive officers as a group.

 

  Name of Beneficial Owner    Common Stock Beneficially Owned 1    Percent of Outstanding Shares

  Paul C. Burns

   16,998    *

  Charles H. Cannon, Jr. 2

   27,151    *

  Thomas E. Chorman

   12,766    *

  Robin J. Davenport

   -    *

  David Dunbar 3

   99,596    *

  B. Joanne Edwards

   4,121    *

  Jeffrey S. Edwards

   9,732    *

  Alan J. Glass

   14,504    *

  Thomas J. Hansen

   8,715    *

  Michael A. Hickey

   5,073    *

  James Hooven

   4,949    *

  Ademir Sarcevic

   15,148    *

  All Directors & Executive Officers 4

   232,032    1.87%

 

  *

Less than 1% of outstanding common stock

 

  1

“Beneficially Owned” means having the sole or shared power to vote, and/or the sole or shared power to invest the shares of common stock. The column contains stock which is, as of July 31, 2021, beneficially owned by the director or executive. The column also includes shares of restricted stock units and performance share units that will be converted to common stock within 60 days: Burns (1,254), Dunbar (9,410), Glass (1,824), Hansen (786), Hickey (392) and all other directors and executive officers (312).

 

  2

Mr. Cannon has 23,029 shares held in a trust, of which he is the trustee, for the benefit of Mr. Cannon’s children.

 

  3

Mr. Dunbar has 36,637 shares held in a revocable trust, of which he is the trustee, for the benefit of his immediate family members.

 

  4

This total includes shares beneficially owned by four additional corporate executive officers that are not NEOs.

 

  

 

 
   2021 PROXY STATEMENT      45  


STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

 

Based on the most recent Schedule 13G filings, the following table sets forth information about the number of shares of our common stock held by persons we know to be the beneficial owners, as determined in accordance with Rule 13d-3 of the Exchange Act, of more than 5 % of the Company’s issued and outstanding common stock.

 

  Name and Address

 

  

Common Stock Beneficially Owned 1

 

  

Percent of Outstanding Shares as of the 

Dates Specified in their Respective Filings 

 

 

  BlackRock Inc. 2

     

  55 East 52nd Street

   1,889,620    15.3% 

  NewYork, NewYork 10055

 

     

 

  The Vanguard Group 3

     

  100 Vanguard Blvd.

   1,244,643    10.05% 

  Malvern, Pennsylvania 19355

 

     

 

  Champlain Investment Partners, LLC 4

     

  180 Battery Street

   812,330    5.19% 

  Burlington, Vermont 05401

 

     

 

  Silvercrest Asset Management Group LLC 5

     

  1330 Avenue of the Americas, 38th floor

   635,295    5.1% 

  NewYork, NewYork 10019

 

     

 

  Dimensional Fund Advisors LP 6

     

   6300 Bee Cave Road, Building One

   631,855    5.1% 

  Austin, Texas 78746

         

 

  1

This column shows shares beneficially owned by the named owner as follows:

 

     

BlackRock

 

    

Vanguard

 

    

Champlain

 

    

Silvercrest

 

    

Dimensional

 

 

 

 Sole voting power

 

  

 

 

 

 

1,868,988

 

 

 

 

  

 

 

 

 

-

 

 

 

 

  

 

 

 

 

494,110

 

 

 

 

  

 

 

 

 

635,295

 

 

 

 

  

 

 

 

 

602,925

 

 

 

 

 

 Shared voting power

 

  

 

 

 

 

-

 

 

 

 

  

 

 

 

 

12,330

 

 

 

 

  

 

 

 

 

-

 

 

 

 

  

 

 

 

 

-

 

 

 

 

  

 

 

 

 

-

 

 

 

 

 

 Sole investment power

 

  

 

 

 

 

1,889,620

 

 

 

 

  

 

 

 

 

1,221,350

 

 

 

 

  

 

 

 

 

642,670

 

 

 

 

  

 

 

 

 

635,295

 

 

 

 

  

 

 

 

 

631,855

 

 

 

 

 

 Shared investment power

  

 

 

 

 

-

 

 

 

 

  

 

 

 

 

23,293

 

 

 

 

  

 

 

 

 

-

 

 

 

 

  

 

 

 

 

-

 

 

 

 

  

 

 

 

 

-

 

 

 

 

 

  2

Information on BlackRock is based on a Schedule 13G/A filed by BlackRock on January 26, 2021.

 

  3

Information on Vanguard is based on a Schedule 13G/A filed by Vanguard on February 10, 2021.

 

  4

Information on Champlain is based on a Schedule 13G/A filed by Champlain on February 11, 2021.

 

  5

Information on Silvercrest is based on a Schedule 13G filed by Silvercrest on February 16, 2021.

 

  6

Information on Dimensional is based on a Schedule 13G filed by Dimensional on February 16, 2021.

 

46   

2021 PROXY STATEMENT

  


COMPENSATION DISCUSSION & ANALYSIS

The following sections contain our Compensation Discussion and Analysis. This CD&A provides an overview and analysis of our executive compensation program and policies and the material compensation decisions we have made for our chief executive officer, chief financial officer and our other executive officers named in the “Summary Compensation Table” starting on page 64. This group is collectively referred to as our “Named Executive Officers” or “NEOs.” During FY 2021, our NEOs were:

 

  u  

David Dunbar, President and Chief Executive Officer (“CEO”);

  u  

Ademir Sarcevic, Vice President, Chief Financial Officer (“CFO”) and Treasurer;

  u  

Alan J. Glass, Vice President, Chief Legal Officer (“CLO”) and Secretary;

  u  

Paul C. Burns, Vice President of Strategy and Business Development; and

  u  

James Hooven, Vice President of Operations and Supply Chain.

Mr. Sarcevic joined the Company on September 9, 2019.

Mr. Hooven joined the Company on February  17, 2020.

BUSINESS HIGHLIGHTS

 

We started the year with an uncertain economic outlook due to the pandemic, but combined with operational improvements and excellent execution, results strengthened quarter after quarter. As a result, we had a year that exceeded our original expectations. We closed with a fourth quarter that delivered the highest adjusted operating margin in the Company’s history, with record backlogs as we look to FY 2022. Our GDP+ growth resulted in a record level of sales to new applications in Electronics, a first-ever patent issued to our Scientific business, and growth of laneway sales from $53M to $55M. We were proud to play a direct role in supporting the vaccine rollout in the United States, as our Scientific business responded directly to the growth in demand for vaccine storage units. As a result, the Scientific segment experienced record sales and earnings. Our robust balance sheet further strengthened during the year as our increasing profitability and focus on improving working capital turns helped deliver free cash flow of over 100% of net income. We ended the fiscal year with a net debt to EBITDA ratio of 0.57 (as defined under our revolving credit facility) and an available borrowing capacity of approximately $250 million. Net sales of $656.2 million represented an 8.6 % increase over the prior year, while income from operations decreased by 2.3 % to $59.2 million. After adjusting for a $14.6 million loss associated with the sale of an Engineering Technologies product line, income from operations was $73.8 million, an increase of 22.0 %. We close the year optimistic about FY 2022, with new development projects underway, and a renewed focus on organic growth in across the corporation.

 

LOGO

 

 

  

 

 
   2021 PROXY STATEMENT      47  


LOGO

OBJECTIVES AND PRINCIPLES

 

INCENTIVE COMPENSATION SHOULD BE PERFORMANCE-BASED

The Compensation Committee believes that a significant portion of the compensation received by executives, including our Named Executive Officers, should be tied to the performance of the Company relative to established financial objectives and to individual strategic metrics. The elements of the executive compensation program embody this principle by linking the annual incentive opportunity and long-term equity grants directly to such performance.

On an annual basis, the Compensation Committee reviews an independent report, provided by the external compensation consultant on realizable pay for performance to ensure that our executives’ realizable pay is in line with overall Company performance and is also competitive when compared to the Company’s peer group.

 

INCENTIVE COMPENSATION SHOULD REPRESENT THE MAJORITY OF TOTAL TARGET COMPENSATION        

The Compensation Committee believes that the majority of an executive’s compensation should be “at risk,” as an incentive to drive the creation of sustainable shareholder value and align the interests of our executives with those of our shareholders. In 2021, our Named Executive Officers’ incentive compensation amounted to 65% of their total target compensation, on average. The Committee believes that the CEO’s incentive compensation should be a higher percentage of total compensation given the CEO’s strategic position and responsibility to drive company performance. In 2021, the CEO’s incentive compensation was 80% of his total target compensation. The adjacent table presents the percentage of total target compensation that was “at-risk” for each Named Executive Officer, and the graph represents the mix of the Named Executive Officers’ total target compensation.

      

 

Name

 

 

 

    

 

Percent of FY 2021 Pay
“At Risk” (%)

 

 
 

 

          

 

 

 

 

David Dunbar

 

 

 

 

  

 

 

 

 

79.7%

 

 

 

 

    

 

 

 

 

Ademir Sarcevic

 

 

 

 

  

 

 

 

 

70.0%

 

 

 

 

    

 

 

 

 

Alan J. Glass

 

 

 

 

  

 

 

 

 

62.6%

 

 

 

 

    

 

 

 

 

Paul C. Burns

 

 

 

 

  

 

 

 

 

62.6%

 

 

 

 

    

 

 

 

 

James Hooven

 

 

 

 

  

 

 

 

 

50.3%

 

 

 

 

       
       
       

 

LOGO

 

48   

2021 PROXY STATEMENT

  


INCENTIVE COMPENSATION SHOULD BALANCE SHORT-TERM AND LONG-TERM PERFORMANCE

The Compensation Committee believes that driving sustained shareholder value creation requires that executive incentive compensation be appropriately balanced between short and long-term objectives. In addition, the Compensation Committee believes that such balancing discourages excessive risk taking that otherwise could drive short-term results at the expense of sustained long-term performance. Our executive compensation program promotes this objective by balancing the long-term incentive components in the form of equity-based awards, such as restricted stock awards and contingent performance shares, with short-term annual cash incentive opportunities.

The value of long-term incentive components is tied, in part, to our stock price, thereby aligning executives’ interests with those of shareholders. However, the Compensation Committee recognizes that our share price is an incomplete measure of Company performance in the short term, as other factors may significantly impact stock prices. Accordingly, the annual cash incentive opportunity component of executive compensation emphasizes current or short-term corporate performance and the realization of short-term defined business and financial objectives. The Compensation Committee has determined that the balance between annual cash incentive opportunities and long-term equity incentives encourages our Named Executive Officers to focus on creating short and long-term shareholder value, while fulfilling business objectives and strategic goals.

LONG-TERM INCENTIVES SHOULD BALANCE STOCK PRICE APPRECIATION AND BUSINESS/FINANCIAL-BASED ACHIEVEMENTS AS WELL AS SHAREHOLDER RETURN RELATIVE TO OTHER INDUSTRIAL MANUFACTURING COMPANIES

Our FY 2021 long-term incentive awards for NEOs other than the CEO are equally weighted between restricted stock awards and contingent performance shares. The restricted stock awards component will vest on a pro-rata basis over three years. The contingent performance shares vest at the end of a 3-year performance period based on achievement against pre-established financial performance criteria. With respect to FY 2021 PSU awards, ultimate award payouts will be adjusted by a relative TSR measure over the 3-year performance period to reflect performance relative to other industrial companies in the S&P 600 Capital Goods Index. The Compensation Committee has determined that this long-term incentive mix appropriately encourages long-term equity ownership, promotes a balance between stock price appreciation and financial-based achievement, aligns the interests of our Named Executive Officers with shareholders and aids in retention of our Named Executive Officers.

COMPENSATION LEVELS SHOULD BE COMPETITIVE

The Compensation Committee reviews market compensation data compiled and prepared by the Compensation Committee’s independent executive compensation consultant to evaluate whether our executive compensation program is market competitive. The Compensation Committee uses this data to benchmark our executives’ base salary, annual incentive opportunities and long-term incentive compensation. Generally, the Compensation Committee then sets target compensation at approximately the market median. However, the Compensation Committee considers other relevant factors in setting each Named Executive Officer’s total target compensation, including the Named Executive Officer’s scope of responsibilities and duties, experience, tenure with the Company, and individual performance as well as competitive market data, Company performance and internal pay equity. As a result, the Compensation Committee may set a Named Executive Officer’s total target compensation or an individual component of total target compensation below or above market median. By taking into account market data and other relevant considerations, the Compensation Committee is able to set each Named Executive Officer’s compensation at an appropriate level that enables us to attract and retain the highly qualified executives necessary to drive long-term enhancement of shareholder value.

THE EXECUTIVE COMPENSATION PROGRAM SHOULD BE REVIEWED ANNUALLY

The Compensation Committee believes that it is prudent to review and evaluate the executive compensation program annually in light of evolving market practices, regulatory requirements, the competitive market for executives and our executive compensation philosophy. This process is repeated in a structured manner annually.

 

  

 

 
   2021 PROXY STATEMENT      49  


COMPONENTS OF EXECUTIVE COMPENSATION

 

OVERVIEW

We provide three elements of total direct compensation: base salary, annual incentives and long-term incentives, which are described below. We also provide limited perquisites (see page 59) and standard retirement and benefit plans (see page 58).

 

          

CEO

 

       

Average Named

Executive Officer

       

Description

 

Base Salary

 

        

   LOGO  

        

   LOGO  

        

   Fixed cash compensation based on the market-competitive value of the skills and knowledge required for each role. Reviewed and adjusted when appropriate to maintain market competitiveness.

Annual

Incentive

       LOGO        LOGO       

Designed to reward results in the prior year. Annual cash incentives based on:

 

u  Achievement of Company financial metrics

u   Individual performance on pre-established strategic goals

Long-Term

Incentives

       LOGO        LOGO       

Forward-looking equity awards intended to motivate and reward potential to drive future growth and align the interests of NEOs and shareholders. Grants awarded in the form of restricted stock awards and performance share units. Current performance measures include:

 

u Modified ROIC

BASE SALARY

Base salary is fixed cash compensation. During the first quarter of each fiscal year, the Compensation Committee reviews and establishes the base salaries of the executives including the Named Executive Officers. For each Named Executive Officer, the Compensation Committee takes into account a number of factors, including the scope of the executive’s responsibilities and duties, experience, tenure with the Company, and individual performance as well as competitive market data, Company performance and internal pay equity. The Compensation Committee does not assign any relative or specific weights to these factors. Salary levels are reviewed annually and are adjusted when appropriate. Increases in base salary are not automatic or guaranteed in order to promote a performance culture.

Effective October 1st of FYs 2020 and 2021, the base salary of each Named Executive Officer was set as follows:

 

  Name    FY 2021 Base ($)      FY 2020 Base ($)      Increase  

  David Dunbar

     869,130        852,088        2%   

  Ademir Sarcevic 1

     439,900        415,000        6%   

  Alan J. Glass

     367,710        360,500        2%   

  Paul C. Burns

     367,710        360,500        2%   

  James Hooven

     336,600        330,000        2%   

 

 

  1

Mr. Sarcevic obtained an above-average increase in base salary due to his performance during the fiscal year and to bring his base salary closer to the median of the peer group.

 

50   

2021 PROXY STATEMENT

  


ANNUAL INCENTIVE OPPORTUNITY

The Compensation Committee establishes the annual cash incentive opportunity for executives including our Named Executive Officers through a detailed performance planning process called the Balanced Performance Plan (“BPP”). During the BPP process, the Compensation Committee establishes (i) the target incentive amounts; (ii) the respective weight of the financial performance measures and strategic goals; (iii) the Company financial performance goals at “threshold,” “target,” and “superior” levels; and (iv) the strategic goals for each Named Executive Officer. The BPPs and each goal are reviewed and discussed during the course of two Compensation Committee meetings through the first quarter of each fiscal year before being approved.

2021 ANNUAL INCENTIVE FORMULA

 

LOGO

* These factors are calculated by taking the goal weight and multiplying it by the goal achievement percentage. For example, if the weight of financial goals totals 75%, and the financial achievement percentage is 100%, the financial achievement factor would be 75%.

TARGET INCENTIVE AMOUNTS

Each year the Compensation Committee sets the target incentive amount for each Named Executive Officer, expressed as a percentage of the executive’s base salary. The Compensation Committee sets these target incentives based on a number of factors, including the Named Executive Officer’s role and responsibilities, internal pay equity and competitive market data, in consultation with the compensation consultant and in adherence to our stated executive compensation objectives and principles. The target annual incentive opportunity for each Named Executive Officer in FY 2021 is as follows:

 

  Name   

Target Annual

Incentive (% of

Base Salary)

    

Target Annual

Incentive Amount
($)

 

David Dunbar

     105%        912,587  

Ademir Sarcevic

     65%        285,935  

Alan J. Glass

     55%        202,241  

Paul C. Burns

     55%        202,241  

James Hooven

     45%        151,470  

GOAL WEIGHT WITHIN TARGET INCENTIVE

After establishing a target incentive amount for each executive, the Compensation Committee determines the relative weight of financial performance measures and strategic goals. For FY 2021, the Compensation Committee set the following relative weight of these performance measures (except for Mr. Burns):

 

  u  

75 % of the annual incentive opportunity would be based on the achievement of financial performance goals, and

  u  

25 % of the annual incentive opportunity would be based on individual achievement of strategic goals.

Payout for the achievement of both financial performance and strategic goals can range between 0% and 200%, where performance below threshold levels corresponds to a payout of 0%, while performance at or above superior levels corresponds to a payout of 200%. For example, if the weight of financial goals is 75%, the maximum financial achievement factor would be 150%. Similarly, if the weight of strategic goals is 25%, the maximum strategic achievement factor would be 50%. The combined factors are capped at 200%.

With respect to Mr. Burns, the Compensation Committee determined that 50% of his annual incentive opportunity would be based on achievement of financial performance goals and 50% of his annual incentive opportunity would be based on strategic goals due to the nature of his position as head of the Company’s strategy and business development function.

 

  

 

 
   2021 PROXY STATEMENT      51  


SETTING FINANCIAL PERFORMANCE MEASURES

The Compensation Committee, working with the CEO, evaluates and establishes financial objectives that correlate to the creation of shareholder value, are aligned with the Company’s annual business plan and are appropriate measures for evaluating executive performance. For FY 2021, the Compensation Committee selected the following three financial performance measures: (i) EBITDA, (ii) adjusted EPS, and (iii) net working capital turns. The Compensation Committee selected these performance measures because it believes they are important financial factors in preserving and enhancing shareholder value in the short-term and sustaining growth and stability for the long-term.

After determining the performance measures, the Compensation Committee sets “threshold,” “target,” and “superior” performance goals, which correspond to annual incentive payouts of 50%, 100% or 200% of the target incentive amount, respectively, except for “threshold” for the EBITDA performance measure corresponds to a payout of 25%. If actual performance falls between two performance levels, the amount of the incentive payout would be determined through interpolation. However, no payout would be made if actual performance falls below threshold. The Compensation Committee sets the “threshold” performance level high enough so that achieving the level is not guaranteed, while setting the “superior” performance level high enough so that achieving it is difficult and represents an outstanding accomplishment. The Compensation Committee may adjust the financial performance targets to reflect the impact of special events, such as acquisitions or divestitures, during a fiscal year. These adjustments are made pursuant to established guidelines and are appropriate in light of long-term growth strategies and business operations.

FINANCIAL GOALS & RESULTS FOR FY 2021

For FY 2021, the financial performance metrics, weights, achieved performance levels and payout percentages were as follows:

 

  Financial Performance Metric    Threshold    Target     Superior      Weight    Weighted
Achievement

Adjusted EBITDA 1

   LOGO    40%    80%

Adjusted EPS 2

   LOGO    5%    10%

Net Working Capital Turns

Q1 3

   LOGO    6%    6%

Net Working Capital Turns

Q2

   LOGO    6%    9%

Net Working Capital Turns

Q3

   LOGO    6%    10.3%

Net Working Capital Turns

Q4

   LOGO    6%    12%

Net Working Capital Turns

5 Point Average 4

   LOGO    6%    10.1%
     Financial Goals Weighted Achievement Total    137.4% 5

 

  1

Adjusted EBITDA, which stands for earnings before interest, tax, depreciation and amortization, is a non-GAAP financial measure that is determined by the sum of (i) income from continuing operations before income taxes, (ii) interest expense, and (iii) depreciation and amortization. This value, used for the purpose of determining the annual incentive opportunity, adjusts for restructuring charges, purchase accounting expenses, insurance recoveries and acquisition costs.

 

  2

This value is greater than the Company’s actual reported diluted earnings per share of $2.97 for FY 2021. This value, used for the purpose of determining the annual incentive opportunity, adjusts for restructuring charges, purchase accounting expenses, insurance recoveries, discontinued operations, acquisition costs and any income tax impacts thereof, along with one-time tax adjustments.

 

  3

Net working capital turns measures the ratio of sales to net working capital. The ratio was calculated by using annualized net sales for the trailing three-months of the listed quarter, and dividing by the net working capital (calculated as net accounts receivable and inventory minus accounts payable) at the end of the listed quarter.

 

  4

This five-point average included the net working capital turns for Q1-Q4 of FY 2021 and Q4 of FY 2020.

 

  5

Mr. Burns’ financial goal weighted achievement total was 91.6% due to differing weight of financial vs. strategic goals.

 

52   

2021 PROXY STATEMENT

  


SETTING STRATEGIC GOALS

The Compensation Committee, in consultation with the Board, evaluates and establishes strategic objectives that correlate with the creation of shareholder value, align with the Company’s business plan and are appropriate measures for judging individual executive performance. As with financial performance measures, the Compensation Committee sets relative weights and metrics for each strategic goal. The specific goals are developed based on the individual nature of an executive’s role and responsibilities.

In FY 2021, the Compensation Committee set the following strategic goals for the CEO:

 

  u  

Improve growth management process to deliver sequential quarterly sales growth from $135M to $151M with organic growth from laneways; improve accountability and financial management process to improve business forecasting; create operating scorecards to support achievement of productivity targets; maintain TRIR below 0.7;

  u  

Attempt to close two or more strategic bolt-on acquisitions with IRR > 15%; initiate divestiture activity on at least one portfolio business; execute portfolio moves such that modified ROA of corporation improves over 3-5 year period; and

  u  

Support successful implementation of global Electronics organization and succession plan to deliver the sales and EBIT budgets for the Magnetics and Sensor business; successful implementation of global Engraving organization to drive growth and operating initiatives; launch global employee survey in Q3 to establish baseline engagement levels.

In consultation with the CEO, the Compensation Committee sets strategic goals for executive officers, including the other Named Executive Officers, that are tied to the completion of specific projects in their functional areas. These projects are important to the Company in that they improve productivity and significantly lower the cost structures of the respective departments, resulting in better processes and reduced costs.

STRATEGIC GOALS & RESULTS FOR FY 2021

The Compensation Committee met with the CEO to evaluate the performance of each Named Executive Officer (other than the CEO) against their strategic goals. To determine the extent to which each strategic goal was met, the Compensation Committee evaluated several factors including the difficulty of reaching the goal, the work performed to achieve the goal, the quality of the work performed and other factors that influenced the ease or difficulty of meeting the goal. The Compensation Committee determined that each Named Executive Officer achieved greater than target on their strategic goals. For the CEO, the Compensation Committee evaluated his performance based on the following:

 

  u  

Topline sales grew well in excess of plan, both in absolute dollars and sequential rate of growth. Q1 sales of $151M grew to $176M, while laneway sales grew to $55M. The business improved their forecasting ability. Operating scorecards were implemented in all businesses and productivity achievement of $18.9M was reached. Safety improvements continued, hitting a year end TRIR of 0.39.

  u  

Acquisition activity was significantly dampened by the pandemic in the early part of the fiscal year. Despite the pandemic, the acquisition of Renco Electronics, Inc., as well as the successful divestiture of Enginetics, Inc. contributed to an improved growth and earnings profile.

  u  

The re-organization of the Electronics segment and the consequent succession planning was successful, with many new leaders assuming their new and expanded responsibilities in the midst of a turbulent economic climate. Electronics exceeded sales, EBIT and cash targets. Structured monthly reviews were created with each laneway leader and global regional leader. The global employee survey was successfully launched in Q3.

OVERALL ANNUAL INCENTIVE OPPORTUNITY RESULTS FOR NEOS

The following table shows the overall annual incentive opportunity results for FY 2021. Each executive has the opportunity to participate in the Management Stock Purchase Plan, described below, under which executives can defer a pre-selected percentage of their annual incentive awards into the receipt of RSUs at a 25% discount.

 

  Name    Financial
Achievement Factor
     Strategic
Achievement Factor
   Total BPP
Score
   Target Annual
Incentive
Amount ($)
   Annual Incentive
Amount ($)

David Dunbar

     137.4      32.0    169.4    912,587    1,545,922

Ademir Sarcevic

     137.4      36.0    173.4    285,935    495,811

Alan J. Glass

     137.4      32.0    169.4    202,241    342,595

Paul C. Burns

     91.6      65.0    156.6    202,241    316,709

James Hooven

     137.4      30.0    167.4    151,470    253,561

 

  

 

 
   2021 PROXY STATEMENT      53  


MANAGEMENT STOCK PURCHASE PLAN

The Compensation Committee believes that while the annual incentive award provides motivation for executives to meet annual performance goals, the Management Stock Purchase Plan (“MSPP”) adds an additional long-term component. Under the MSPP, management at a certain salary level can elect to defer their annual incentive awards into the receipt of restricted stock units (RSUs) at a 25% discount, valued at the lower of (i) the closing price of the Company’s common stock on the last business day of the fiscal year (June 30, 2021) or (ii) the closing price of the Company’s common stock on the date on which the annual incentive award is certified by the Compensation Committee (August 17, 2021). Executives must make their election prior to the beginning of the fiscal year and can defer up to 50% of their annual incentive award. These RSUs cliff vest at the end of a 3-year period and the executive receives shares of stock equal to the amount of RSUs granted. Executives accrue dividends, which are paid upon vesting, on the RSUs, but do not have voting rights until the shares underlying the RSUs are delivered. The following table details, for FY 2021, the percent each Named Executive Officer elected to defer under the MSPP, the value of that deferral and the amount of RSUs granted pursuant to the deferral.

 

  Name   

Annual Incentive Award

Deferred (% of Award)

       Amount of the
    Deferral ($) 1
       RSUs Granted
(#) 2

David Dunbar

   50%    772,961    10,858

Ademir Sarcevic

   20%    99,162    1,394

Alan J. Glass

   50%    171,298    2,407

Paul C. Burns

   0%    -    -

James Hooven

   0%    -    -

 

  1

The amount of the deferral is the dollar value of the annual incentive award that is actually deferred into the receipt of discounted RSUs under the MSPP.

 

  2

Based on the closing price of the Company’s common stock on June 30, 2021 ($94.91), the closing price of the Company’s common stock on the last day of the fiscal year, and discounted by 25%. RSUs have been rounded up to the nearest whole unit.

 

54   

2021 PROXY STATEMENT

  


LONG-TERM INCENTIVE PLAN

In 2018, the Company, with the approval of its shareholders, adopted the 2018 Omnibus Incentive Plan (“OIP”). The purpose of the OIP is to align executives’ interests with those of shareholders through the annual grant of long-term equity awards. These long-term equity awards reward executives for the Company’s performance over a multi-year period. All long term incentive awards to NEOs for FY 2021 were made in September 2020 under the OIP. Prior to the approval of the OIP, the Company granted awards under the 2008 Long Term Incentive Plan (“LTIP”), which expired in October 2018. Certain outstanding award grants were made under the LTIP.

OIP STRUCTURE

The FY 2021 OIP awards consists of two types of equity awards: time-vested restricted stock awards (RSAs) and performance-based performance share units (PSUs). The Compensation Committee selected these equity vehicles for FY 2021 because each aligns the interests of our Named Executive Officers with those of our shareholders, enhances retention of our Named Executive Officers and provides the opportunity to meaningfully increase the level of stock ownership by our Named Executive Officers. In addition, the PSUs motivate our NEOs and reward achievement of financial metrics (and share performance) that are aligned to our long-term business strategy and build long-term shareholder value.

 

  OIP Component

 

  

Description

 

    

  Awards of Restricted Stock (“RSAs”)

 

  

Time-based, annual pro-rata vesting over a 3-year period

 

 

 

  Performance Share Units (“PSUs”)

 

  

Cliff vest at the end of a 3-year period at 0 % to 200 % of award value based on pre-determined financial performance metrics

 

   

For FY 2021 RSA awards, the RSA will vest on a pro-rated basis on the 1st, 2nd and 3rd anniversaries of the grant date, provided that the RSA holder is employed continuously through the particular vest date. Outstanding RSA awards from FY 2019 and 2020 grants will vest on the 3rd anniversary of the grant, provided that the RSA holder is employed continuously through the vest date. The Compensation Committee adjusted the vesting schedule for RSAs based on a review of peer practices and the perspective that pro-rata vesting is a more effective tool in attracting and retaining high potential employees. All RSAs will immediately vest upon death, disability or retirement. All RSAs under the OIP and the LTIP are considered beneficially owned by the executive, have voting rights, and earn dividend equivalents, which are paid upon vesting.

Each PSU grant cliff vests at the end of a 3-year performance period based on results achieved against Compensation Committee-approved performance metrics. Payouts under the PSU grant may range from 0% to 200% of the target award and are settled in shares of common stock. Payout begins at 50 % of target for achieving threshold performance goals. If threshold performance goals are not achieved by the conclusion of the performance period, the PSU award would be forfeited and no shares would be delivered under the award. PSUs are also subject to forfeiture upon termination of employment during the performance period for any reason other than death, disability, retirement or involuntary termination in connection with a change in control.

Additionally, the Compensation Committee has the discretion to grant awards of restricted stock for a variety of reasons, including sign-on bonuses to attract talent and discretionary grants to retain and motivate executives.

The Compensation Committee believes that long-term incentive compensation is essential for retaining and motivating executives. It further believes that providing our executives with long-term incentives will encourage them to operate the Company’s business with a view towards building long-term shareholder value. Based on these considerations, the Compensation Committee, in consultation with its external compensation consultant, establishes (i) the target incentive amounts, (ii) the percentage of the target award that is granted in the form of RSAs and PSUs, and (iii) the performance measures at “threshold,” “target” and “superior” levels.

 

  

 

 
   2021 PROXY STATEMENT      55  


FY 2021 TARGET INCENTIVE AMOUNTS

For FY 2021, the Compensation Committee set the target long-term incentive compensation for each Named Executive Officer, expressed as a percentage of the executive’s base salary based on a number of factors, including the Named Executive Officer’s role and responsibilities, internal pay equity, competitive market data and our stated executive compensation objectives and principles. Since the CEO is in the best position to drive overall Company performance, the CEO should have a larger portion of his long-term incentive award be awarded in PSUs as opposed to RSAs. The Compensation Committee set the CEO’s percentage of PSUs at 60% of the target award, while the NEOs PSUs were set at 50% of their target award.

For FY 2021 PSU awards, which will payout in FY 2023 based on achievement of the performance metrics during the FY 2021-2023 performance period, the Compensation Committee granted certain company leaders, including the NEOs, 25% of their target PSU amounts in additional PSU shares. The Compensation Committee factored in the uncertainty surrounding the pandemic, the negative impact of the pandemic on the targets of existing awards and the best way to incentivize management to stay focused on long-term enhancement of shareholder value in determining the appropriate level of PSU awards for each NEO. This enhanced PSU incentive, along with all other PSU awards, is subject to achieving certain goals and further modified by the TSR modifier, as described below.

For FY 2021, the Compensation Committee established the following target long-term incentive awards, with the percentage of such award granted as PSUs for each Named Executive Officer and the enhanced PSU incentive:

 

  Name    Target Award
(% of Base Salary)
           Target Award
        Amount  ($)
           Target Award
    (% Awarded in  PSUs)
           Enhanced PSU
Incentive
Amount ($)

 

  David Dunbar

 

  

 

250%

 

  

 

2,172,825

 

   60%    325,925

  Ademir Sarcevic

 

  

 

150%

 

  

 

659,850

 

   50%    82,452

  Alan J. Glass

  

 

100%

 

  

 

367,710

 

   50%    45,931

  Paul C. Burns

  

 

100%

 

  

 

367,710

 

   50%    45,931

  James Hooven

  

 

50%

 

  

 

168,300

 

   50%    21,054

PERFORMANCE MEASURES

Since FY 2019 and applicable for the FYs 2019-2021, FYs 2020-2022, and FYs 2021-2023 performance periods, the Compensation Committee uses a single modified ROIC measure. The modified ROIC is calculated by adjusting the denominator to add accumulated depreciation and accumulated amortization and remove goodwill. This ratio reflects the improved efficiency of the Company’s operating assets to generate profits while reducing distortion from the effects of divestitures and acquisitions. The Compensation Committee selected this modified ROIC measure because it reflects the Company’s efforts to improve the quality of earnings, whether they come from organic actions or through inorganic portfolio moves. The measure supports the Committee’s view that improvement in quality of earnings drives shareholder value creation. To more broadly reflect Standex value creation for shareholders relative to other industrial companies, the achievement of the measure will be adjusted by a relative TSR modifier over the three-year performance period. Specifically, actual awards will be modified up or down as follows:

 

  If TSR over the three-year performance period is:          Then:

 

  At or above the 75th percentile of the comparator group

 

  

 

LOGO

 

  

 

The award will be increased up to 25 %

 

 

  At or above the 25th and below the 75th percentile of the comparator group

 

  

 

LOGO

 

  

 

No change to the award

 

 

 

  Below the 25th percentile of the comparator group

 

  

 

LOGO

 

  

 

The award will be decreased up to 25 %

 

The peer group selected for this relative TSR modifier is the S&P 600 Capital Goods Index which the Committee believes is a reasonable proxy to measuring a broad, and therefore consistent, group of companies that will experience similar market influences during the performance period. Our NEOs, therefore, are partially compensated based on how our performance compares to similar investment alternatives when considering total shareholder return performance.

 

56   

2021 PROXY STATEMENT

  


STATUS OF LONG TERM INCENTIVE PLAN PROGRAMS

 

  Performance
  Period and Measure
   Performance Levels      Weighted
Achievement
    Status

 

  FY 2019-2021

       

 

u  Results were certified in August 2021.

u  The Modified ROIC was above threshold levels.

 

  Modified ROIC

    

 

LOGO

 

 

 

  

 

 

 

50.74%

 

 

 

u  Company’s 3-year TSR ranked in the 26th percentile amongst peer group of S&P 600 Capital Goods companies.

u  Final payout was certified at 50.74 % for Company performance and individual share payouts are in the table below.

FY 2020-2022 awards will be certified in August 2022, while FY 2021-2023 awards will be certified in August 2023.

As certified by the Compensation Committee, the FY 2019-2021 performance period ended on June 30, 2021 and the PSUs granted on September 6, 2018 vested at 50.74%, for the following share payouts and value as of the date of certification:

 

  Name    Shares granted on
September 6, 2018 (#)
     Shares Vesting
(#)
     Value of Shares
Vesting ($) 1
 

  David Dunbar

  

 

9,344

 

  

 

4,741

 

  

 

463,385

 

  Ademir Sarcevic 2

  

 

-

 

  

 

-

 

  

 

-

 

  Alan J. Glass

  

 

1,607

 

  

 

815

 

  

 

79,658

 

  Paul C. Burns

  

 

1,607

 

  

 

815

 

  

 

79,658

 

  James Hooven 3

  

 

-

 

  

 

-

 

  

 

-

 

 

  1

Based on the stock price on the date the Compensation Committee certified the award, August 17, 2021 ($97.74).

 

  2

Mr. Sarcevic joined the Company in September 2019 and was not granted any shares for this performance period.

 

  3

Mr. Hooven joined the Company in February 2020 and was not granted any shares for this performance period.

 

  

 

 
   2021 PROXY STATEMENT      57  


RETIREMENT PLANS

STANDEX RETIREMENT SAVINGS PLAN

The Company offers a qualified savings and investment 401(k) plan to most of our non-production U.S.-based employees, including our Named Executive Officers. This plan provides eligible employees an opportunity to save for retirement on both a pre-tax and after-tax basis up to 100% of their eligible pay subject to annual IRS limits. The Company provides eligible employees with a matching contribution equal to:

 

  u  

100% of the employee’s contribution for the first 3% of the employee’s total compensation (base salary plus annual incentive award); and

  u  

50% of the employee’s contribution for the next 2%.

The Named Executive Officers, as well as employees who are at a location that is covered by the now-frozen Standex Pension Plan (see below), receive an additional 1% of their eligible pay as a Company contribution regardless of the amount of the employee’s contribution. Some employees receive an additional sliding scale age-based Company contribution if they were employed with the Company on December 31, 2007 and were of a certain age. All eligible employees are immediately 100% vested in all contributions to this plan.

STANDEX DEFERRED COMPENSATION PLAN

The Standex Deferred Compensation Plan is a non-qualified, “top hat” and unfunded plan maintained for the purpose of permitting a select group of management and highly compensated employees, including Named Executive Officers, to continue saving for retirement once they can no longer make contributions to the Retirement Savings Plan. If a highly compensated employee reaches the IRS compensation limit for the Retirement Savings Plan, the Deferred Compensation Plan allows the employee to continue to save for retirement under near identical terms. Eligible employees may defer up to 50% of their base salaries and 100% of their annual bonuses that combined exceed the IRS compensation limit. All Company contributions (match and non-match) are made on the same basis as the Retirement Savings Plan described above.

Deferral elections must be made by December 31st of each year for the upcoming calendar year and all deferral elections are irrevocable. All eligible employees are immediately 100% vested in all contributions to this plan. Employees may elect the timing and form of distribution of the accrued benefits provided that the accrued benefit is greater than $10,000. For accrued benefits of less than $10,000, the distribution will be paid in a lump sum. Distributions will be paid no sooner than six months after termination of employment for our Named Executive Officers, pursuant to the IRC.

PENSION PLANS

The Standex Retirement Plan, a tax-qualified defined benefit pension plan, and the Standex Supplemental Retirement Plan, a non-qualified defined benefit pension plan for highly compensated employees, are the Company’s two pension plans. Both plans were frozen as to future benefit accruals and new participants on December 31, 2007. All of our Named Executive Officers became employed with the Company after this date and are not accruing benefits under either of these plans.

 

58   

2021 PROXY STATEMENT

  


PERQUISITES AND OTHER BENEFITS

EMPLOYMENT AGREEMENTS

We have entered into employment agreements with each of the Named Executive Officers. Even though each Named Executive Officer has an employment agreement which sets out an initial term that automatically renews, the executives serve at the will of the Board because the agreements may be terminated for any reason with 30 days’ notice. All of the provisions within the employment agreements were crafted to consider the needs of the Company and the executive’s specific circumstances. The Compensation Committee believes that the employment agreements are an important tool to attract and retain highly qualified executives in a competitive marketplace, while also protecting the Company in the event of an executive’s termination.

In addition to severance provisions, our employment agreements also contain restrictive covenants including a non-compete provision, which precludes an executive from engaging, in any active capacity, in any business other than Standex while they are employed with the Company. This term is vital to ensure that an executive’s attention and focus during their employment is solely on the Company’s business. The non-compete also precludes the executives from engaging in a business that is competitive with the Company. The non-compete clause also contains a non-poaching provision, which restricts a departing executive’s ability to hire then-current employees of the Company. These terms are beneficial to the Company because they safeguard against executives, who know the most about the Company, its businesses, its employees and its markets, using their knowledge to adversely impact the Company after their employment ends.

PERQUISITES

We provide a limited number of perquisites to certain Named Executive Officers, including the CEO. The Compensation Committee designed these perquisites to be competitive and assist in attracting and retaining highly qualified executives. Furthermore, these perquisites also assist the Named Executive Officers in performing their responsibilities. For FY 2021, we provided the following perquisites to certain Named Executive Officers: car allowances, reimbursement of automobile operating expenses (such as gas costs, auto insurance, maintenance and repairs), and Mr. Dunbar received tax return preparation and counseling. We do not provide gross ups for any attributed income relating to these perquisites.

CHANGE IN CONTROL

Our employment agreements contain provisions governing what happens when there is a change in control. The benefits provided to the Named Executive Officers under these provisions, if payable, are in lieu of any other severance benefits. The Compensation Committee believes that these benefits are important to encourage the executives involved in any negotiation or completion of a change in control transaction to act in the best interest of shareholders, without regard for personal interest.

The severance benefits also promote the financial protection and security of an executive’s long-term incentive compensation arrangements in the event of the loss of their positions following a transaction that involves a change in the ownership or control of the Company. None of the severance benefits are triggered if the executive retains their position or a substantially similar position following a change in control. With equity compensation, if the executive is granted an award that substantially mirrors their then-current award, there is no acceleration of that current equity award. This “double trigger” only provides for a payment of benefits if (i) there is a change in control and (ii) the executive is involuntarily terminated or resigns for a specified “good reason.” The Compensation Committee believes that this is appropriate because if an executive retains their position following a change in control, the impact on the executive is not significant enough to warrant the provision of benefits.

The severance benefits include a lump sum payment equal to a multiple of the executive’s annual base salary and annual incentive bonus, accelerated vesting of all outstanding equity awards under the LTIP or OIP and RSUs under the MSPP and a continuation of life insurance and medical plan benefits for a specified period of time. The Compensation Committee believes that these terms and amounts are customary and reasonable. The Compensation Committee, in consultation with its compensation consultant, periodically reviews these terms to evaluate both their effectiveness and competitiveness.

More detailed information concerning the trigger events and the severance benefits of each Named Executive Officer is discussed below under “Potential Payments upon Termination or Change in Control” starting on page 70.

 

  

 

 
   2021 PROXY STATEMENT      59  


OTHER COMPENSATION INFORMATION

 

CEO PAY RATIO DISCLOSURE

As required by the SEC rules, we are providing the following information to show the ratio between the annual total compensation of our CEO in FY 2021 and the annual total compensation of the median employee of the Company.

As of June 30, 2021, Standex has approximately 3,718 employees in 64 locations across 24 countries. Approximately 69 % of our employee population is located outside of the United States and approximately 63 % of our global workforce is paid on an hourly basis. These demographics are not substantially different than those used in our last CEO pay ratio disclosure, however the median employee identified in our FY 2020 Proxy Statement, a full-time, hourly employee in our Engraving division, located in the United States, is no longer with Standex, so we identified a new median employee.

To identify our median employee, we used our global employee population as of June 30, 2021, which included all global full-time, part-time and temporary employees, including newly hired employees, that were employed on that date. To determine the median employee, we used base annual salary during the period from July 1, 2020 through June 30, 2021 and all international employees’ base annual salaries were converted to USD from local currencies using exchange rates for the month ending June 30, 2021. Our median employee for FY 2021 is an hourly employee in our Electronics division, located in the United States.

For FY 2021, our median employee’s total compensation was $27,206, calculated in accordance with Item 402(c)(2)(x) of Reg. S-K. Our CEO’s annual total compensation for FY 2021, as reported and detailed in the Summary Compensation Table was $5,784,732. Based on this information, the ratio of these two annual total compensations was estimated to be 213 to 1.

SAY-ON-PAY

Stockholders are afforded the opportunity to cast an advisory vote on an annual basis with respect to the total compensation of our Named Executive Officers. At the 2020 annual meeting, 97.4 % of the votes cast on the advisory proposal were voted in its favor. After reviewing the results, the Compensation Committee decided to continue to apply the same general philosophy, compensation objectives and governing principles that it used in FY 2020.

CLAWBACK PROVISION

In the event that the Company’s financial results for any reporting period require restatement so that the period’s financial performance measures are not met, and the restatement is necessary due to the executives’ misconduct, the OIP and LTIP give our Board the discretion and authority to “claw-back” or cancel unpaid annual and long-term incentive awards and to recover excess annual and long-term incentive awards that have been paid to any executive officer.

POLICY CONCERNING TRANSACTIONS INVOLVING COMPANY SECURITIES (ANTI-HEDGING POLICY & ANTI-PLEDGING POLICY)

The Company’s anti-hedging and anti-pledging policy prohibits all named executive officers from engaging in certain transactions involving the Company’s securities. Specifically, they are prohibited from engaging in transactions that are intended to offset, in whole or in part, potential loss in value of Company securities. These transactions include, but are not limited to, hedging transactions, buying or selling put or call options, and short sales. In addition, the policy prohibits pledging Company securities. No Named Executive Officer has entered into any such prohibited transaction.

 

60   

2021 PROXY STATEMENT

  


STOCK OWNERSHIP GUIDELINES

The Compensation Committee believes that Company executives, including the Named Executive Officers, should have at least a minimum level of Company stock ownership to align their interests with those of Company shareholders. The Compensation Committee has adopted stock ownership guidelines through a competitive analysis prepared by management and reviewed by the compensation consultant. These guidelines require the CEO to maintain stock ownership valued at five times his or her base salary and require all other executives to maintain stock ownership valued at two times their base salary. Additionally, the guidelines require all non-executive Vice Presidents, Group Presidents and Division Presidents to maintain stock ownership valued at one times their base salary. Until an executive has attained the requisite stock ownership level, the executive is expected to retain at least 50% of the shares they are awarded, net of amounts required to pay taxes. To determine if the guideline amount is met, shares are valued at the average stock price during the 4th quarter of the prior fiscal year. Shares that are either owned outright or are unvested RSAs are considered owned for the purpose of the guidelines. Neither PSUs awarded under the OIP or the LTIP nor RSUs granted pursuant to a deferral under the MSPP are considered in the calculation of stock ownership.

The required amount under the guidelines is recalculated annually or whenever an executive receives an increase in pay. The Compensation Committee monitors compliance with these stock ownership guidelines on an ongoing basis. The following table shows the stock ownership requirements for each Named Executive Officer.

 

 Name    Stock Ownership Guideline Amount
(% of Annual Base Salary)
     Required Ownership
on June 30, 2021 (#) 1
   Actual Stock  
Ownership (#)  

 David Dunbar

  

 

500%

 

  

44,839

  

94,855  

 Ademir Sarcevic

  

 

200%

 

  

9,078

  

15,148  

 Alan J. Glass

  

 

200%

 

  

7,588

  

13,689  

 Paul C. Burns

  

 

200%

 

  

7,588

  

16,183  

 James Hooven 2

  

 

200%

 

  

6,946

  

4,949  

 

  1

Based on the average price of the Company’s common stock between April 1, 2021 and June 30, 2021 ($96.92). Shares have been rounded to the nearest whole share.

 

  2

Mr. Hooven has retained at least 50% of all shares awarded to him since his employment with the Company commenced.

 

  

 

 
   2021 PROXY STATEMENT      61  


BASIS FOR DETERMINING EXECUTIVE COMPENSATION

 

The Compensation Committee uses a multi-faceted approach to designing the executive compensation program. The approach includes the use of the independent compensation consultant to advise the Compensation Committee on the selection of an appropriate peer group, analysis of the peer group’s practices and compensation levels and recommendations for the Compensation Committee to consider. Compensation levels for specific executives are based on various factors, including the executive’s experience, individual accomplishments and the breadth of the executive’s organizational responsibilities. The Compensation Committee discusses the program with the CEO and the VP of Human Resources to determine the effectiveness of the program in terms of achieving our stated objectives, including whether the current program is achieving desired motivational effects and properly incentivizing the executives.

EXECUTIVE COMPENSATION CONSULTANT

In FY 2021, the Compensation Committee retained the same independent compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), which has assisted the Compensation Committee since 2015. Meridian is an internationally recognized executive compensation consulting firm. No other compensation consultant was engaged in FY 2021.

Meridian was retained to assist the Compensation Committee in the development of a compensation peer group and to advise the Compensation Committee on our existing executive compensation program. Meridian provided research, data analyses, survey information and design expertise as part of its services. Meridian also notified the Compensation Committee of regulatory developments and market trends relating to executive compensation practices. Meridian did not determine nor recommend the exact amount of compensation for any Named Executive Officer. From time to time, Meridian also performs an analysis of independent director compensation.

For FY 2021, Meridian conducted a competitive assessment of our executive compensation program (including, design, features and target pay opportunities) against our compensation peer group. Based on Meridian’s assessment, the Compensation Committee determined that our executive compensation program is reasonable and appropriate when compared to our peer group.

The Compensation Committee, in determining whether to continue retaining Meridian for FY 2021, assessed Meridian’s independence under the NYSE’s listing standards. Meridian provided the Compensation Committee with confirmation of its independent status under the NYSE’s standards. As such, the Compensation Committee believes that Meridian is independent and that there is no conflict of interest between Meridian and the Company, the Company executives, the Compensation Committee or its members.

PEER GROUP

The following selection criteria were used to establish the Company’s FY 2021 compensation peer group:

 

  u  

The company should be an industrial and technology manufacturing company;

  u  

The company should have revenues between 13 and 3 times the Company’s revenue;

  u  

The company should have multiple business units; and

  u  

The company should serve global markets.

Based on this selection criteria, our FY 2021 peer group consisted of the following 19 companies:

 

     

 Albany International Corporation

  

ESCO Technologies, Inc.

  

NN, Inc.

 Altra Industrial Motion Corporation

  

Franklin Electric Co., Inc.

  

Proto Labs, Inc.

 Barnes Group, Inc.

  

Helios Technologies, Inc.

  

RBC Bearings, Inc.

 Chart Industries, Inc.

  

Hurco Companies, Inc.

  

TriMas Corporation

 CIRCOR International, Inc.

  

Kadant, Inc.

  

Welbilt, Inc.

 Enerpac Tool Group Corp.

  

L.B. Foster Company

  

 Enpro Industries, Inc.

  

Lydall, Inc.

    

The Compensation Committee, with Meridian’s assistance, routinely reviews the selection criteria and the peer group companies to achieve a relative size positioning that is within a competitive range of median, that is, between the 40th and 60th percentile of the peer group companies. As a result of the comprehensive analysis for FY 2021, two companies (Hurco Companies, Inc. and Proto Labs, Inc.) were added.

For FY 2022, the Compensation Committee has decided to keep the same peer group.

 

62   

2021 PROXY STATEMENT

  


RISK IN COMPENSATION PROGRAMS

 

The Compensation Committee regularly monitors and reviews the executive compensation program to determine the program’s effectiveness at achieving the stated objectives and principles. In August 2021, the Compensation Committee conducted its annual review of the executive compensation policies and practices and assessed whether the current incentives could lead to excessive or inappropriate risk taking by the executives. Following the review, the Compensation Committee concluded that the Company’s executive compensation program elements, when considered both separately and as a whole, are not reasonably likely to have a material adverse effect on the Company. In reaching this conclusion, the Compensation Committee noted the following factors:

 

  u  

Compensation elements are mixed. The executive compensation program has a balanced mix of base salary, annual cash incentive awards and long-term equity incentive awards. The mix between the elements decreases the dependency on one form of compensation over other forms and thus provides executives with an incentive to perform at high levels, both in the short-term and long-term.

  u  

Incentive award metrics contain both short and long-term goals. The annual incentive award is contingent upon the attainment of pre-established short-term corporate, business and financial objectives, while the long-term incentive award is based on long-term stock growth as well as the attainment of financial performance goals. This balance between short and long-term goals reduces the incentive to prioritize short-term performance at the expense of long-term growth.

  u  

Short-term and long-term performance metrics differ. The performance metrics used to determine the amount of annual incentive awards are different than the performance metrics used to determine the amount of long-term incentive awards. This helps avoid excessive risk-taking to achieve one performance objective at the detriment of other objectives.

  u  

Annual incentive awards are capped. The total annual incentive award is capped at 200% of target, which reduces the incentive to engage in unnecessarily risky behavior in any given year at the expense of long-term growth.

  u  

Long-term incentives are completely equity-based. All long-term incentive awards are paid in the form of shares and are only paid if an executive remains employed with the Company at the time of vesting. This practice aligns the executive’s interests with those of shareholders and reduces the likelihood that an executive will act in a way that is detrimental to the long-term stock growth of the Company.

  u  

Long-term performance metrics are based on corporate objectives. The performance metrics for long-term incentive awards are based on overall corporate performance rather than individual business unit performance. This reduces the risk that business unit heads will engage in conduct that inflates their business unit performance, but does not benefit the Company, as a whole, in the long-term.

  u  

Incentives have performance thresholds. The annual incentive award and the PSUs granted under the LTIP and OIP have threshold payout levels, which ensures that incentive compensation is reduced or eliminated completely if the minimum performance levels are not achieved.

  u  

Compensation is benchmarked. The Compensation Committee benchmarks compensation against the peer group to ensure that the compensation program elements and payout levels are consistent with industry practice.

  u  

Compensation can be recouped. The Board is empowered to “claw-back” any portion of the annual or long-term incentive compensation attributable to misconduct or financial misstatement in the event of a financial restatement.

  u  

Executives have ownership requirements. Our executives are subject to stock ownership guidelines, which require executives to maintain ownership of a certain amount of Company stock during their employment. This encourages executives to focus on sustainable long-term growth and aligns the interests of our executives with those of our shareholders.

 

REPORT OF THE COMPENSATION COMMITTEE

 

The Compensation Committee has reviewed and discussed this Compensation Discussion and Analysis with management. Based on that review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

Jeffrey S. Edwards, Chair

Charles H. Cannon, Jr.

Thomas E. Chorman

Michael A. Hickey

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION DECISIONS

 

During FY 2021, the members of the Compensation Committee were Charles H. Cannon, Jr., Thomas E. Chorman, Jeffrey S. Edwards and Michael A. Hickey.

None of these directors have ever been an employee or officer of the Company. None of our executive officers serve as a member of the board of directors or on the compensation committee of any other entity that has had any executive officer serving as a member of our Board or Compensation Committee.

 

 

  

 

 
   2021 PROXY STATEMENT      63  


COMPENSATION TABLES

SUMMARY COMPENSATION TABLE

 

The following table sets forth compensation information for fiscal years 2019, 2020 and 2021 for our Named Executive Officers – the individuals who served during FY 2021 as CEO and CFO and three other highly compensated executive officers of the Company.

 

Name and Principal

Position

   Year     Salary
($)
     Bonus
($)
     Stock
Awards
($)  1
    Non-Equity
Incentive Plan
Compensation
($) 2
   

Change in
Pension

Value and
Nonqualified
Deferred
Compensation
Earnings

($) 3

    All Other
Compensation
($) 4
    Total
($)
 

 

David Dunbar

President and CEO

 

     2021       864,870        -        3,681,435       772,961       355,262       110,204       5,784,732  
     2020       845,884        -        2,631,221       335,510       86,932       105,138       4,004,684  
     2019       821,246        -        2,042,329       240,177       (2,274     144,820       3,246,298  

Ademir Sarcevic 5

Vice President, CFO

and Treasurer

 

     2021       433,675        -        894,037       396,649       949       26,638       1,751,948  
     2020       336,521        200,000 6        1,218,302       149,400       -       93,896       1,998,119  
     2019       -        -        -       -       -       -       -  

Alan J. Glass

Vice President, CLO

and Secretary

 

     2021       365,907        -        675,728       171,298       7,470       33,680       1,254,084  
     2020       357,875        -        471,528       74,353       539       19,422       923,717  
     2019       347,443        -        426,772       53,226       231       14,787       842,459  

Paul C. Burns

VP of Strategy and

Business Development

 

     2021       365,907        -        413,611       316,709       -       28,732       1,124,959  
     2020       357,875        -        415,570       147,517       7,963       29,250       958,175  
     2019       342,068        -        609,530       165,088       527       22,337       1,139,550  

James Hooven 7

VP of Operations and

Supply Chain

 

     2021       334,950        -        189,251       253,561       -       15,840       793,602  
     2020       123,749        25,000 8        299,950       83,531       -       7,175       539,405  
     2019       -        -        -       -       -       -       -  

 

  1

This column includes the grant date fair value (calculated in accordance with FASB ASC 718) of the long-term incentive awards under the Company’s long-term incentive program (RSAs and PSUs) and RSUs that an executive received pursuant to a deferral election under the MSPP. The assumptions used in the valuation of the RSUs received pursuant to a deferral election under the MSPP were as follows:

 

Risk-free interest rate:

     0.46%

Expected life of option grants:

     3 years

Expected stock value volatility:

     46.66%

Expected quarterly dividends:

     $0.24 per share

The grant date fair value of these three separate equity awards is as follows:

 

      Grant Date Fair Value of
Annual Incentive Deferred
Pursuant to MSPP ($)
    

Grant Date Fair Value of
    Restricted Stock Awards

under the OIP ($)

     Grant Date Fair Value of
Performance Share Unit
    Awards  under the OIP ($)
     Total ($)  

David Dunbar

     1,182,774        869,094        1,629,566        3,681,435  

Ademir Sarcevic

     151,737        329,924        412,376        894,037  

Alan J. Glass

     242,312        183,840        229,771        655,922  

Paul C. Burns

     -        183,840        229,771        413,611  

James Hooven

     -        84,098        105,152        189,251  

 

64   

2021 PROXY STATEMENT

  


1 (continued)

The value of performance-based awards is based on the probable outcome of the performance conditions as of the grant date. The payout for 2019 grants was 50.1 % of the target levels. The payout for 2020 and 2021 grants will be determined in 2022 and 2023, respectively. The outcome for 2019, 2020 and 2021 grants of performance-based awards was estimated at the target payout level, or 100 %. The following table shows the grant date fair value of the performance share units granted in 2021 at the target level included in the Summary Compensation Table above and the potential maximum grant date fair value. As described in the Compensation Discussion and Analysis, awards have a maximum payout level of 200 % and are further subject to the TSR modifier, which, at its maximum level, can increase the payout by a further 25 %, for a combined maximum payout level of 250 % of target.

 

      Grant Date Fair Value
of Performance Share
Awards under the  OIP ($)
     Potential Maximum Grant
Date Fair Value ($)
 

David Dunbar

  

 

1,629,566

 

  

 

4,073,916

 

Ademir Sarcevic

  

 

412,376

 

  

 

1,030,939

 

Alan J. Glass

  

 

229,771

 

  

 

574,427

 

Paul C. Burns

  

 

229,771

 

  

 

574,427

 

James Hooven

  

 

105,152

 

  

 

262,881

 

 

  2

This column shows the amounts earned in cash under our annual incentive opportunity. Some of our Named Executive Officers elected to defer a portion of their annual incentive award under the MSPP. The values of these deferrals are contained in the stock awards column and further explained above in footnote (1).

 

  3

This column includes the above-market earnings of the Named Executive Officer’s accumulated benefit under the Standex Deferred Compensation Plan. None of the Named Executive Officers have any accumulated benefits under the now-frozen Standex pension plans.

 

  4

This column includes the following compensation:

 

      401(k)
Contributions
($)
     Non-qualified Deferred
Compensation
Contribution ($)
     Life Insurance
Premium ($)
     Perquisites &
Personal Benefits
($) a
     Total ($)  

David Dunbar

  

 

14,500

 

  

 

62,295

 

  

 

13,407

 

  

 

20,003

 

  

 

110,204

 

Ademir Sarcevic

  

 

9,698

 

  

 

3,230

 

  

 

1,710

 

  

 

12,000

 

  

 

26,638

 

Alan J. Glass

  

 

10,240

 

  

 

6,538

 

  

 

4,902

 

  

 

12,000

 

  

 

33,680

 

Paul C. Burns

  

 

12,917

 

  

 

13,085

 

  

 

2,731

 

  

 

-

 

  

 

28,732

 

James Hooven

  

 

12,528

 

  

 

1,159

 

  

 

2,154

 

  

 

-

 

  

 

15,840

 

 

  a

Mr. Dunbar has an automobile allowance of which he used $16,627.73. Mr. Dunbar also received tax preparation reimbursement in the amount of $3,375. Mr. Sarcevic and Mr. Glass have an automobile allowance of $12,000. No other Named Executive Officer received total perquisites and personal benefits exceeding $10,000.

 

  5

Mr. Sarcevic became employed by the Company on September 9, 2019.

 

  6

Under his employment agreement, Mr. Sarcevic received a cash payment of $200,000 as a sign-on bonus.

 

  7

Mr. Hooven became employed by the Company on February 17, 2020.

 

  8

Under his employment agreement, Mr. Hooven received a cash payment of $25,000 as a sign-on bonus.

 

  

 

 
   2021 PROXY STATEMENT      65  


GRANTS OF PLAN-BASED AWARDS

 

The following table sets forth information with respect to FY 2021 plan-based awards granted to our Named Executive Officers for the year ended June 30, 2021.

 

    

Grant
Date

    

Action
Date 1

   

Estimated Future Payouts Under
Non-Equity Incentive

Plan Awards 2

   

Estimated Payouts Under

Equity Incentive
Plan Awards 3

   

All Other
Stock
Awards:
Number
of Shares

of Stock or
Units  4

   

Total
($) 5

 
Name  

 

Threshold
($)

    Target
($)
     Maximum
($)
    Threshold
(#)
    Target
(#)
    Maximum
(#)
 

David Dunbar

                      

Annual Incentive

       

 

456,293

 

 

 

912,587

 

  

 

1,825,173

 

         

OIP - PSU

  

 

9/6/20

 

           

 

13,855

 

 

 

27,709

 

 

 

55,418

 

   

 

1,629,566

 

OIP - RSA

  

 

9/6/20

 

                 

 

14,778

 

 

 

869,094

 

Ademir Sarcevic

                      

Annual Incentive

       

 

142,968

 

 

 

285,935

 

  

 

571,870

 

         

OIP - PSU

  

 

9/6/20

 

           

 

3,506

 

 

 

7,012

 

 

 

14,024

 

   

 

412,376

 

OIP - RSA

  

 

9/6/20

 

                 

 

5,610

 

 

 

329,924

 

Alan J. Glass

                      

Annual Incentive

       

 

101,120

 

 

 

202,241

 

  

 

404,481

 

         

OIP - PSU

  

 

9/6/20

 

           

 

1,954

 

 

 

3,907

 

 

 

7,814

 

   

 

229,771

 

OIP - RSA

  

 

9/6/20

 

                 

 

3,126

 

 

 

183,840

 

Paul C. Burns

                      

Annual Incentive

       

 

101,120

 

 

 

202,241

 

  

 

404,481

 

         

OIP - PSU

  

 

9/6/20

 

           

 

1,954

 

 

 

3,907

 

 

 

7,814

 

   

 

229,771

 

OIP - RSA

  

 

9/6/20

 

                 

 

3,126

 

 

 

183,840

 

James Hooven

                      

Annual Incentive

       

 

75,735

 

 

 

151,470

 

  

 

302,940

 

         

OIP - PSU

  

 

9/6/20

 

           

 

894

 

 

 

1,788

 

 

 

3,576

 

   

 

105,152

 

OIP - RSA

  

 

9/6/20

 

                                                           

 

1,430

 

 

 

84,098

 

 

  1

The date on which the Compensation Committee took action for the grant of all of the plan-based awards was 8/26/2020.

 

  2

The amounts in these columns indicate the threshold, target and maximum amounts payable under the annual incentive opportunity prior to deducting any amounts the named executive officers elected to defer under the MSPP. Most of our Named Executive Officers elected to defer a portion of their annual incentive opportunity under the MSPP. The annual incentive opportunity amounts are based on the achievement of specific financial performance metrics and individual strategic goals. The annual incentive opportunity metrics are discussed under “Annual Incentive Opportunity” on page 51. Payouts range from 50% of target for the attainment of threshold levels to 200% of target for the attainment of superior performance levels. If threshold levels are not met, no annual incentive opportunity is paid. The amount the executives actually received and the amounts they elected to defer for fiscal year 2021 are discussed under the “Annual Incentive Opportunity” and “Management Stock Purchase Plan” sections of the CD&A.

 

  3

The amounts in these columns indicate the threshold, target and maximum amounts payable under the OIP for PSUs. The OIP PSU amounts are based on the achievement of specific financial performance metrics over a three-year performance period. Payouts range from 50% of target for the attainment of threshold levels, to 200% of target for the attainment of superior performance levels, subject to a TSR modifier, as explained in the CD&A. If threshold levels are not met, no PSUs are awarded.

 

  4

The amounts shown in this column reflect the number of RSAs granted to each Named Executive Officer pursuant to the OIP.

 

  5

These amounts represent the grant date fair value, as determined under FASB ASC Topic 718. For the PSU awards under the OIP, the fair value assumes performance and payout at the target level.

 

66   

2021 PROXY STATEMENT

  


OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

 

The following table sets forth information with respect to equity awards that were outstanding as of June 30, 2021. The Company has not awarded stock options since 2003 and there are no outstanding option awards.

 

           Stock Awards         
Name   Number of Shares or
Units of Stock That
Have Not  Vested (#) 1
    Market Value of Shares
or Units of Stock That
Have Not Vested ($) 2
    Equity Incentive Plan
Awards: Number of
Unearned Shares, Units
or Other Rights That Have
Not Vested (#) 3
    Equity Incentive Plan
Awards: Market or Payout
Value of  Unearned Shares,
Units or Other Rights That
Have Not Vested ($) 4
 

David Dunbar

 

 

54,956

 

 

 

4,282,411

 

 

 

91,744

 

 

 

8,707,423

 

Ademir Sarcevic

 

 

13,658

 

 

 

1,258,947

 

 

 

22,870

 

 

 

2,170,592

 

Alan J. Glass

 

 

11,872

 

 

 

921,937

 

 

 

12,936

 

 

 

1,227,756

 

Paul C. Burns

 

 

11,611

 

 

 

966,732

 

 

 

12,936

 

 

 

1,227,756

 

James Hooven

 

 

3,870

 

 

 

367,302

 

 

 

3,576

 

 

 

339,398

 

 

  1

The outstanding stock awards presented in this column include: RSAs awarded under the OIP and LTIP, which remain subject to service-based vesting conditions; PSUs awarded in FY 2019 under the LTIP, which have been earned (and are included at the earned payout percentage) but are subject to service-based vesting conditions; RSUs granted pursuant to an MSPP deferral; and discretionary RSA grants. These awards are scheduled to vest as follows:

 

Vest Date    David Dunbar      Ademir Sarcevic      Alan J. Glass      Paul C. Burns      James Hooven  

9/6/2021

     20,565        1,870        4,473        5,740        1,291  

9/9/2021

     -        2,760        -        -        -  

2/17/2022

     -        -        -        -        2,440  

9/6/2022

     21,692        6,293        4,635        4,402        477  

9/6/2023

     12,699        2,735        2,764        1,469        477  

Total

     54,956        13,658        11,872        11,611        4,685  

 

  2

The market values in this column are calculated using a price of $94.91 per share, the closing price of the Company’s common stock on June 30, 2021, less the value of an executive’s deferral under the MSPP.

 

  3

The shares presented in this column are performance share units granted in fiscal years 2020 and 2021 for the three-year performance periods ending on June 30, 2022 and June 30, 2023, respectively. These units will vest if certain targets are met during the applicable performance period. See “Long-Term Incentive Plan” starting on page 55 for more information. For both FY 2020 PSUs and FY 2021 PSUs, the number of shares reported in this column are based on achieving the “superior” level of performance because our financial performance for both performance periods through June 30, 2021 indicated performance above target levels.

 

  4

The values shown in this column are calculated using a price of $94.91 per share, the closing price of the Company’s common stock on June 30, 2021.

 

  

 

 
   2021 PROXY STATEMENT      67  


OPTIONS EXERCISED AND STOCK VESTED

 

The following table sets forth information about option exercises and the vesting of stock during the fiscal year. The Company has not awarded stock options since 2003, so no options are reported. The stock vested during the fiscal year represents PSUs and RSAs granted under the LTIP and RSUs granted from an MSPP deferral.

 

     Stock Awards  

Name

  

Number of Shares Acquired on Vesting (#)

  

        Value Realized on Vesting ($) 1

 

David Dunbar

  

15,303

  

 

744,056

 

Ademir Sarcevic

  

4,700

  

 

277,300

 

Alan J. Glass

  

3,395

  

 

166,736

 

Paul C. Burns

  

4,424

  

 

246,638

 

James Hooven

  

1,626

  

 

151,998

 

 

  1

The value realized on vesting for the three stock categories was calculated as follows. For PSUs and RSAs granted under the LTIP that vested during the year, the number of shares that vested was multiplied by the closing price of our stock on the vest date. For RSUs issued pursuant to an MSPP deferral that vested during the year, the number of shares that vested was multiplied by the closing price of our stock on the vest date less the value the executive paid under the deferral.

PENSION BENEFITS

 

The Company’s two pensions plans, the Standex Retirement Plan and the Standex Supplemental Retirement Plan, were frozen as to future benefit accruals and new participants on December 31, 2007. All of our Named Executive Officers became employed with the Company after this date and are not accruing benefits under either of these plans.

 

68   

2021 PROXY STATEMENT

  


NONQUALIFIED DEFERRED COMPENSATION

 

The following table contains compensation information relating to the Company’s nonqualified deferred compensation plan. For a description of the Standex Deferred Compensation Plan, including material factors, see “Standex Deferred Compensation Plan” on page 58.

 

Name    Executive
Contributions in
Last FY ($) 1
     Registrant
Contributions in
Last FY ($) 2
     Aggregate Earnings
in Last FY ($) 3
    Aggregate
Withdrawals/
Distributions
     Aggregate Balance
at Last FYE ($) 4
 

David Dunbar

  

 

62,294

 

  

 

62,295

 

  

 

390,191

 

 

 

-

 

  

 

1,397,173

 

Ademir Sarcevic

  

 

-

 

  

 

3,230

 

  

 

1,068

 

 

 

-

 

  

 

4,770

 

Alan J. Glass

  

 

10,695

 

  

 

6,538

 

  

 

8,594

 

 

 

-

 

  

 

44,931

 

Paul C. Burns

  

 

13,085

 

  

 

13,085

 

  

 

(458

 

 

-

 

  

 

89,564

 

James Hooven

  

 

-

 

  

 

1,159

 

  

 

26

 

 

 

-

 

  

 

1,185

 

 

  1

All amounts in this column are included in the salary and non-equity incentive plan compensation columns of the “Summary Compensation Table” above.

 

  2

All amounts in this column are included in the other compensation column and detailed in footnote (4) of the “Summary Compensation Table” above.

 

  3

The amount of aggregate earnings is reported in the change in pension value and nonqualified deferred compensation earnings column of the Summary Compensation Table to the extent the aggregate earnings exceeded 120% of the applicable federal rate or a loss was reported. The reported amounts are as follows:

 

      Above-Market Earnings Reported in Summary Compensation Table  ($)

David Dunbar

  

355,262

Ademir Sarcevic

  

949

Alan J. Glass

  

7,470

Paul C. Burns

  

-

James Hooven

  

-

 

  4

The aggregate balance includes amounts that were reported in previous Summary Compensation Tables as follows:

 

      Amounts Previously Reported ($)

David Dunbar

  

777,337

Ademir Sarcevic

  

490

Alan J. Glass

  

17,829

Paul C. Burns

  

62,034

James Hooven

  

-

 

  

 

 
   2021 PROXY STATEMENT      69  


POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

EMPLOYMENT AGREEMENTS

The following table lists the compensation and benefits that an executive would generally be provided in various scenarios involving a termination of employment. The amounts denoted in the table are for the CEO, Mr. Dunbar. Where the amounts or time periods differ between Mr. Dunbar and the other executives, the differences are explained in a footnote.

 

    

Termination Scenario

Compensation
Element
   Death    Disability 1   Retirement 2    Termination
with Cause  3
   Termination
without Cause  4
  Termination due to
Change in Control 
5

  Base Salary

   Ceases
immediately
   Continuation
for 2 years 6
  Ceases
immediately
   Ceases
immediately
   Continuation
for 2 years 7
  Ceases immediately

  Severance Pay

   None    None   None    None    None   Lump sum equal to 3
times base salary 8

  Annual Incentive

   Prorated for
the year
   Prorated for
the year
  Prorated for
the year
   None    None   Lump sum equal to 3
times the higher of
(i) the most recent
annual incentive
award or (ii) the
current FY’s target
incentive award 9

  Restricted Stock 10

   Awards
vest
immediately
   Awards vest
immediately
  Awards vest
immediately
   Forfeited    Forfeited   Awards vest
immediately

  PSUs 11

   Awards are
prorated
and vest in
normal
course
   Awards are
prorated
and vest in
normal
course
  Awards are
prorated
and vest in
normal
course
   Forfeited    Forfeited   Awards vest
immediately

  Deferred

  Compensation 12

   Payable
immediately
   Distributions
commence
after 6
months per
participants
election
  Distributions
commence
after 6
months per
participants
election
   Distributions
commence
after 6
months per
participants
election
   Distributions
commence
after 6
months per
participants
election
  Payable immediately

  Health, Welfare

  and Other

  Benefits

   None    Medical and
dental
coverage for
1 year 13
  None    None    Medical and
dental
coverage for
1 year 14
  Life insurance and
medical benefits
coverage for 3 years 15

 

  1

Disability is defined as a condition where the executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.

 

  2

Retirement is defined as a voluntary termination of employment when either (i) the executive has reached age 55 and has at least 10 years of service with Standex, or (ii) the executive has reached age 65.

 

  3

Termination with cause, under the terms of the executives’ employment agreements, is defined as a termination by Standex for the executive’s material breach of the employment agreement. A material breach is (i) an act of dishonesty which is intended to enrich the executive at the Company’s expense, or (ii) the willful, deliberate and continuous failure to perform the executive’s duties after being properly demanded to do so.

 

  4

Termination without cause is a termination by Standex where the executive has not committed a material breach of the employment agreement.

 

  5

A change in control is defined as an event where (i) any person or group (as used in sections 13(d) and 14(d) of the Exchange Act) becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 of the Exchange Act), directly or indirectly, of at least a majority of the equity securities of Standex entitled to vote for members of the Board of Directors; (ii) Standex is a party to a merger or consolidation, which results in Standex voting securities representing less than a majority of the resulting voting securities; (iii) the sale or disposition of all or substantially all of Standex’s assets; or (iv) a greater than 75% change in the composition of the Board of Directors during a consecutive 12-month period.

 

70   

2021 PROXY STATEMENT

  


5 (continued)

An executive would be entitled to the payments described in this column after such a change in control only if, within 2 years of the change in control, either (i) the executive is terminated without cause,(a) or (ii) the executive voluntarily terminates their employment for “good cause.” (b)

 

  (a)

Termination without cause is any termination by Standex other than a termination where there is conclusive evidence of substantial and indisputable intentional personal malfeasance in office, such as a conviction for embezzlement of Standex funds.

 

  (b)

Good cause for Mr. Dunbar is defined as any of the following: (i) the assignment to any position other than President & CEO; (ii) any change in the reporting relationship such that he is no longer reporting solely to the Board of Directors; (iii) any reduction in the budget which results in him no longer having 100% control over the budget; (iv) any material diminution of base salary or incentive compensation; (v) any change in the location of employment to a location greater than 10 miles from the present location; and (vi) any other action or inaction of Standex that constitutes a material breach of the employment agreement.

Good cause for the other executives is defined as any of the following: (i) a change in their general area of responsibility; (ii) a change in their title; (iii) a change in the place of employment; and (iv) a decrease in base salary or diminished benefits.

 

  6

Mr. Dunbar’s employment agreement provides for a continuation of base salary for a period of 2 years up to the IRS compensation limit specified in IRC Section 401(a)(17), with the excess payable immediately upon termination. Mr. Glass and Mr. Burns’ employment agreements provide for a continuation of base salary for a period of 1 year. Mr. Sarcevic and Mr. Hooven do not receive a continuation of base salary upon termination due to a disability.

 

  7

Mr. Dunbar’s employment agreement provides for a continuation of base salary for a period of 2 years up to the IRS compensation limit specified in IRC Section 401(a)(17), with the excess payable immediately upon termination. The other executives’ employment agreements provide for a continuation of base salary for a period of 1 year.

 

  8

Mr. Dunbar’s employment agreement provides for a lump sum severance payment in the amount of 3 times his then-current base salary. The remaining executives’ employment agreements provide for a lump sum severance payment in the amount of 2 times their then-current base salary.

 

  9

Mr. Dunbar’s employment agreement provides for an annual incentive payment equal to 3 times the higher of (i) the most recent annual incentive award or (ii) the current FY’s target incentive award. The remaining executives’ employment agreements provide for an annual incentive payment equal to 2 times the higher of (i) the most recent annual incentive award or (ii) the current FY’s target incentive award.

 

  10

Included in the restricted stock category are both RSAs that an executive received pursuant to a grant under the LTIP or OIP and RSUs that an executive received pursuant to a deferral under the MSPP.

 

  11

For PSUs, except in the case of a termination for cause, without cause or due to a change in control, the PSUs are converted to shares of unrestricted stock once the performance period has ended and the Compensation Committee has determined the requisite payout in accordance with the performance levels. The number of PSUs that is converted is prorated to the date of the executive’s termination.

 

  12

See the “Standex Deferred Compensation Plan” section on page 58 for more information about the plan and distribution options.

 

  13

Mr. Dunbar’s employment agreement provides for a continuation of medical and dental benefits for a period of 1 year. The other executives’ employment agreements do not provide for any health or welfare benefit continuation.

 

  14

Mr. Dunbar’s employment agreement provides for a continuation of medical and dental benefits for a period of 1 year. The other executives’ employment agreements do not provide for any health or welfare benefit continuation.

 

  15

Mr. Dunbar’s employment agreement provides for a continuation of medical and life insurance benefits for a period of 3 years. The other executives’ employment agreements provide for a continuation of medical and life insurance benefits for a period of 2 years.

 

  

 

 
   2021 PROXY STATEMENT      71  


QUANTIFICATION OF POTENTIAL PAYMENTS

The following table contains compensation information relating to the potential payments that an executive would receive in the various scenarios described above if the executive was terminated due to a triggering event on June 30, 2021. All such potential payments are largely based on the executive’s employment agreement with the Company, with the remaining payments based on award agreements under the LTIP or OIP.

 

  Triggering

  Event

  

Compensation

Component

   Payout ($) 1  
    

 

David Dunbar

 

 

    

 

Ademir Sarcevic

 

 

 

    

 

Alan J. Glass

 

 

 

    

 

Paul C. Burns

 

 

 

    

 

James Hooven

 

 

 

  Death

  

 

Annual Incentive

  

 

1,545,922

 

  

 

495,811

 

  

 

342,595

 

  

 

316,709

 

  

 

253,561

 

  

 

Acceleration of Outstanding Equity Awards

  

 

4,282,398

 

  

 

1,258,947