UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant  ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

☐	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☒	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material Pursuant to §240.14a-12

Orion Energy Systems, Inc.

(Name of Registrant as Specified in its Charter)

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

Payment of Filing Fee (Check the appropriate box):

 

☒	No fee required

 

☐	Fee paid previously with preliminary materials

 

☐	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

 

June 30, 2023

Dear Fellow Shareholders:

Thank you for your investment in Orion Energy Systems, Inc. and for the confidence you have placed in the Board of Directors and the Orion team. In fiscal 2023, we made substantial progress advancing our mission of helping customers achieve their business and environmental goals.

We continued our expansion into electrical maintenance solutions and entered the rapidly growing market for commercial electric vehicle charging station solutions. We are building out both of these businesses nationally, to complement our commercial and industrial LED lighting solution capabilities. Our expanded suite of complementary product and service offerings, our unique technical and turnkey project expertise, and our leading product and service quality truly differentiate Orion and support our mission and long-term opportunities.

Fiscal 2023 highlights include:

EV Charging Solutions. Following its acquisition in October 2022, the Voltrek business surpassed our expectations, delivering revenue of $6.3M in the second half of FY 2023. As we work this year to build out our reach across the U.S, we anticipate substantial growth in our EV charging division’s revenue and profits over the coming years, as it provides charging infrastructure supporting the rapid adoption of electric vehicles.

Maintenance Services. Maintenance services revenue rose 150% to $14.6M in FY 2023 compared to FY 2022, benefitting from a full year’s contribution from our new Stay-Lite Lighting team as well as organic growth. Like EV charging solutions, maintenance services enable us to offer an expanded suite of complementary solutions to our customers and partners. Importantly, maintenance also provides a growing base of recurring revenue that complements the project nature of LED lighting and EV charging deployments.

Financial Results and Position. As anticipated, due primarily to the expected lower level of revenue from our largest customer and a global online retailer, as well as on certain large LED project delays, our FY 2023 revenue declined to $77.4M from $124.4M in FY 2022. Excluding our largest customer and the global online retailer, Orion was successful in growing revenue by 11% over FY 2022, reflecting the increasing diversity of our customer base and the growing breadth of our operations. We believe the strategic changes we have made to the business positions us well for the coming year and going forward.

Importantly, Orion entered FY 2024 with $24.9M of working capital, including $16.0M of cash and cash equivalents and $18.2M of inventory. We believe this provides a solid financial base to fund our growth goals for the current year, and to support our efforts in advancing our long-term environmental, social and corporate governance objectives.

We encourage you to attend our 2023 Annual Meeting of Shareholders that will be held online at http://www.virtualshareholdermeeting.com/OESX2023 on Thursday, August 10, 2023, at 1:00 p.m. Central Time. A replay of our Annual Meeting of Shareholders will also be available on our website during the month of August.

 

Orion Energy Systems, Inc.

2210 Woodland Drive

Manitowoc, Wisconsin 54220

(800) 660-9340

NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS

To the Shareholders of Orion Energy Systems, Inc.:

Our 2023 Annual Meeting of Shareholders will be held on Thursday, August 10, 2023, at 1:00 p.m., Central Time, online at www.virtualshareholdermeeting.com/OESX2023. You will be able to listen to the annual meeting live, submit questions and vote online. A replay of the annual meeting will be available on our website during the month of August.

At the annual meeting, as we describe in the accompanying proxy statement, we will ask you to vote on the following matters:

 

1.

the election of one nominee named in the attached proxy statement as a Class I director to serve for a term expiring at the 2026 annual meeting of shareholders and one nominee named in the attached proxy statement as a Class II director to serve for a term expiring at the 2024 annual meeting of shareholders, in each case until his or her successor has been duly elected and qualified;

 

2.

an advisory vote to approve the compensation of our named executive officers as disclosed in the accompanying proxy statement;

 

3.

an advisory vote on the frequency of future advisory shareholder votes on the compensation of our named executive officers;

 

4.

the approval of the 2016 Orion Energy Systems, Inc. Omnibus Incentive Plan, as amended and restated (the “Amended 2016 Plan”);

 

5.

the ratification of BDO USA, LLP to serve as our independent registered public accounting firm for our fiscal year 2024; and

 

6.

such other business as may properly come before the annual meeting, or any adjournment or postponement thereof.

You are entitled to vote at the annual meeting only if you were a shareholder of record at the close of business on June 14, 2023. A proxy statement and proxy card are enclosed.

In order to provide our shareholders a more convenient, cost-effective method of attending, we have elected to hold our annual meeting via remote communication. You may attend the virtual annual meeting and vote your shares during the meeting by visiting our annual meeting website at www.virtualshareholdermeeting.com/OESX2023. You are entitled to participate in and submit questions in writing during the annual meeting if you were a shareholder as of the close of business on June 14, 2023. To be admitted to the annual meeting at www.virtualshareholdermeeting.com/OESX2023, you will need the 16-digit control number included on your notice, your proxy card or the instructions that accompanied your proxy materials. The annual meeting will begin promptly at 1:00 p.m., Central Time. Online check-in will begin at 12:45 p.m., Central Time. Please allow ample time for the online check-in procedures. If you have difficulty accessing the virtual annual meeting, please call the technical support number that will be posted on the virtual annual meeting log in page for assistance. We will have personnel available to assist you. If you hold shares through a bank, broker or other nominee, you will need to contact such bank, broker or other nominee for assistance with your 16-digit control number.

Whether or not you expect to attend the annual meeting, it is important that you promptly complete, sign, date and submit your proxy card via internet, telephone or mail in accordance with its instructions so that you may vote your shares. If you hold your shares in a brokerage account, you should be aware that, if you do not instruct your broker how to vote, your broker will not be permitted to vote your shares for the election of directors, on the advisory vote to approve the compensation of our named executive officers, on the advisory vote on the frequency of future advisory shareholder votes on the compensation of our named executive officers or the approval of the Amended 2016 Plan. Therefore, you must affirmatively take action to vote your shares at our annual meeting. If you do not, your shares will not be voted on these items.

 

Manitowoc, Wisconsin

June 30, 2023

Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting To Be Held on August 10, 2023. Our proxy statement for our 2023 Annual Meeting of Shareholders and our 2023 Annual Report to Shareholders are available at www.proxyvote.com.

Our Annual Report on Form 10-K is enclosed with this notice and proxy statement for shareholders who have elected to receive paper copies of our proxy materials.

 

 

PROXY STATEMENT

 

 

FOR THE 2023 ANNUAL MEETING OF SHAREHOLDERS

To be Held August 10, 2023

We are providing these proxy materials to you because our board of directors is soliciting proxies for use at our 2023 Annual Meeting of Shareholders to be held online on Thursday, August 10, 2023, at 1:00 p.m., Central Time, and at any adjournment or postponement thereof (which we refer to collectively as our “annual meeting”), for the purposes set forth in the attached Notice of 2023 Annual Meeting of Shareholders and as described herein. We either (i) mailed you a notice of internet availability of our proxy materials on or before June 30, 2023 notifying each shareholder entitled to vote at the annual meeting how to vote and how to electronically access a copy of this proxy statement and form or proxy or (ii) mailed you a printed copy of such proxy materials and a proxy card in paper format.

In order to provide our shareholders a more convenient, cost-effective method of attending, we have elected to hold our annual meeting via remote communication. You may attend the virtual annual meeting and vote your shares during the meeting by visiting our annual meeting website at www.virtualshareholdermeeting.com/OESX2023. A replay will be available on our website during the month of August. You are entitled to participate in the annual meeting if you were a shareholder as of the close of business on June 14, 2023. To be admitted to the annual meeting at www.virtualshareholdermeeting.com/OESX2023, you will need the 16-digit control number included on your notice, your proxy card or the instructions that accompanied your proxy materials. The annual meeting will begin promptly at 1:00 p.m., Central Time. Online check-in will begin at 12:45 p.m., Central Time. Please allow ample time for the online check-in procedures. If you have difficulty accessing the virtual annual meeting, please call the technical support number that will be posted on the virtual annual meeting log in page for assistance. We will have personnel available to assist you. If you hold shares through a bank, broker or other nominee, you will need to contact such bank, broker or other nominee for assistance with your 16-digit control number.

This year’s shareholder question and answer session will include appropriate questions submitted in advance of, and appropriate questions submitted live during, the annual meeting. You may submit an appropriate question in advance of the meeting at www.proxyvote.com after logging in with your 16-digit control number. Appropriate questions may be submitted during the annual meeting through www.virtualshareholdermeeting.com/OESX2023. We expect to respond to appropriate questions during the annual meeting, and may also respond to appropriate questions on an individual basis or by posting answers on our investor relations website after the meeting.

Consistent with prior years, we are using the “notice and access” system adopted by the SEC relating to the delivery of our proxy materials over the internet. The SEC’s notice and access rules allow us to deliver our proxy materials to our shareholders by posting the materials on an internet website, notifying shareholders of the availability of our proxy materials on the internet and sending paper copies of our proxy materials upon shareholder request. We believe that the notice and access rules allow us to use internet technology that many shareholders prefer, continue to provide our shareholders with the information that they need and, at the same time, ensure more prompt delivery of our proxy materials. The notice and access rules also lower our cost of printing and delivering our proxy materials and minimize the environmental impact of printing paper copies.

As a result, we mailed to many of our shareholders a notice of internet availability of our proxy materials instead of a paper copy of our proxy materials. Shareholders who received the notice will have the ability to access our proxy materials over the internet and to request a paper copy of our proxy materials by mail, by e-mail or by telephone. Instructions on how to access our proxy materials over the internet or to request a paper copy may be found on the notice. In addition, the notice contains instructions on how shareholders may request our

 

1

proxy materials in printed form by mail or electronically by e-mail on an ongoing basis. The notice of internet availability of our proxy materials also serves as a notice of meeting.

Execution of a proxy will not affect your right to attend and vote at the annual meeting virtually, nor will your presence revoke a previously submitted proxy. You may revoke a previously submitted proxy at any time before the annual meeting by giving written notice of your intention to revoke the proxy to our board secretary or by attending the annual meeting virtually and voting at the annual meeting online. Unless revoked, the shares represented by proxies received by our board of directors will be voted at the annual meeting in accordance with the instructions thereon. If no instructions are specified on a proxy, the votes represented thereby will be voted: (1) for the board’s director nominees set forth below; (2) for the advisory vote to approve the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis section and the executive compensation tables set forth below in this proxy statement; (3) for holding the advisory vote on the compensation of our named executive officers every year; (4) for the approval of the 2016 Orion Energy Systems, Inc. Omnibus Incentive Plan, as amended and restated (the “Amended 2016 Plan”); (5) for the ratification of BDO USA, LLP to serve as our independent registered public accounting firm for our fiscal year 2024; and (6) on such other matters that may properly come before the annual meeting in accordance with the best judgment of the persons named as proxies. Our board of directors has designated Michael H. Jenkins and J. Per Brodin, and each or either of them, as proxies to vote the shares of our common stock solicited on its behalf.

IMPORTANT: If you hold your shares in a brokerage account, you should be aware that, if you do not instruct your broker how to vote, your broker will not be permitted to vote your shares for the election of directors, on the advisory vote to approve the compensation of our named executive officers, on the advisory vote on the frequency of future advisory shareholder votes on the compensation of our named executive officers or the approval of the Amended 2016 Plan. Therefore, you must affirmatively take action to vote your shares at our annual meeting. If you do not, your shares will not be voted on these items.

The nominees receiving the highest vote totals of the eligible shares of our common stock, no par value per share (“Common Stock”), will be elected as a director. With regard to the election of directors, votes may be cast in favor or withheld; votes that are withheld will be excluded entirely from the vote and will have no effect. The advisory vote to approve the compensation of our named executive officers, the approval of the Amended 2016 Plan and the appointment of BDO USA, LLP to serve as our independent registered public accounting firm for our fiscal year 2024 will be approved if the votes cast in favor of approval exceed the votes cast against approval. The frequency of the advisory vote on the compensation of our named executive officers receiving the greatest number of votes cast in favor of such frequency, whether every year, every two years or every three years, will be the frequency of the advisory vote on executive compensation that shareholders are deemed to have approved. Abstentions and broker non-votes will be counted for purposes of determining the presence of a quorum but will be disregarded in the calculation of votes cast.

Only holders of record of shares of our Common Stock as of the close of business on June 14, 2023 (the “Record Date”) are entitled to vote at the annual meeting. As of the Record Date, we had 32,501,846 shares of Common Stock outstanding and entitled to vote. The record holder of each share of Common Stock outstanding on the Record Date is entitled to one vote per share on each matter submitted for shareholder consideration at the annual meeting. In order for us to validly transact business at the annual meeting, we must have a quorum present. A majority of the votes of the shares of Common Stock entitled to be cast, or shares representing at least 16,250,924 votes, will represent a quorum for the purposes of the annual meeting.

WE INTEND TO BEGIN MAKING THIS PROXY STATEMENT AND THE NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS AVAILABLE TO SHAREHOLDERS ON OR ABOUT JUNE 30, 2023.

 

2

TRIBUTE TO MICHAEL W. ALTSCHAEFL

 

		Michael W. Altschaefl has served on our board since October 2009 and served as our board chair from August 2016 to August 2022 and our chief executive officer from May 2017 to November 2022. Mr. Altschaefl is retiring from our board at the annual meeting. As a result, we want to formally extend our thanks and gratitude to Mr. Altschaefl for his years of dedicated service and contributions to our company, our board of directors and our shareholders. We extend to Mr. Altschaefl our sincere appreciation for his valued service, guidance, advice and dedication to our company and we all wish him the very best in his future endeavors.

TRIBUTE TO MARK C. WILLIAMSON

 

		Mark C. Williamson served on our board from April 2009 until his retirement from our board in November 2022 and was our lead independent director from October 2009 through May 2013. We want to formally extend our thanks and gratitude to Mr. Williamson for his years of dedicated service and contributions to our company, our board of directors and our shareholders. We extend to Mr. Williamson our sin cere appreciation for his valued service, guidance, advice and dedication to our company and we all wish him the very best in his future endeavors.

 

3

PROPOSAL ONE:

ELECTION OF DIRECTORS

We maintain a staggered board of directors comprised of six directors divided into three classes. Currently, there is one director in Class I (2021-2023) (Mr. Jenkins), three directors in Class II (2021-2024) (Ms. Richstone and Messrs. Altschaefl and Shapiro) and two directors in Class III (2022-2025) (Mr. Otten and Ms. Washlow). Each director generally serves for a term ending on the date of the third annual shareholders’ meeting following the annual shareholders’ meeting at which such director’s class was most recently elected and until his or her successor is duly elected and qualified.

At the annual meeting, the term of our current Class I director, Mr. Jenkins will expire. Mr. Jenkins will stand for re-election, and the board has determined to nominate Heather L. Wishart-Smith to be elected as a Class II director at the annual meeting. As noted above, Mr. Altschaefl will retire at the annual meeting.

The individuals named as proxy voters in the accompanying proxy, or their substitutes, will vote for the board’s nominees with respect to all proxies we receive unless instructions to the contrary are provided. If either nominee becomes unavailable for any reason, the votes will be cast for a substitute nominee designated by our board. Our directors have no reason to believe that the nominees named below will be unable to serve if elected.

The following sets forth certain information, as of June 30, 2023, about the board’s nominees for election at the annual meeting and each director of our company whose term will continue after our annual meeting.

Nominees For Election at the Annual Meeting

Class I Director (2023-2026) — Term Expiring 2026

 

		Michael H. Jenkins, 54, has served as our chief executive officer and a director since November 2022. Previously, from November 2021 until his appointment as our chief executive officer, Mr. Jenkins served as our chief operating officer and executive vice president. Prior to joining the company, Mr. Jenkins served as Construction and Consumer Business Director, General Manager — Americas of Bostik, Inc., a global adhesives business focused on developing “smart” adhesive solutions, from 2013 until November 2021. Prior to joining Bostik, Mr. Jenkins served as Vice President Sales, Americas — Diversey, and previously, as Vice President Marketing, Americas, for Sealed Air Corporation, a publicly traded integrated cleaning solutions and packaging company, from 2010 to 2012. Prior to 2010, Mr. Jenkins worked for Kohler Co., Master Lock and Illinois Tool Works in a variety of sales and marketing capacities. We believe that Mr. Jenkins’ experience as our chief executive officer and his experience in other leadership positions at manufacturing companies qualify him for service as our chief executive officer and director.

 

4

Class II Director (2021-2024) — Term Expiring 2024

 

		Heather L. Wishart-Smith, 49, is being nominated to serve as a newly-elected director. Ms. Wishart-Smith advises corporates and investors on strategy, growth, leadership, and innovation. Previously, from 2005 to May 2022, Ms. Wishart-Smith held operational positions of increasing responsibility, most recently as Senior Vice President, Technology & Innovation of Jacobs Solutions Inc., a publicly traded international technical professional services firm, where she developed and led the company’s global innovation strategy, including establishing and leading innovation accelerators and standing up corporate venture capital. Earlier in her career, she served in roles of increasing responsibility for KBR, Inc. Ms. Wishart-Smith serves on the board of directors of Group PMX, LLC, is a member of the Advisory Committee of Blockchain Founders Fund, a venture capital fund and serves as a board advisor to JS Global. Ms. Wishart-Smith is a registered Professional Engineer and certified Project Management Professional with proven experience managing large design programs and developing, managing, and turning around troubled operations in the architectural/engineering professional services market. A former Navy Civil Engineer Corps officer, Ms. Wishart-Smith served at the Presidential Retreat, Camp David under two presidential administrations, among other duty stations. Ms. Wishart-Smith holds Bachelor and Master of Science degrees in Civil Engineering from the University of Virginia. She is a Fellow of the American Society of Civil Engineers, a member of the National Academy of Construction, and also a Fellow of the Society of American Military Engineers (SAME) and was its President for the 2020-2021 centennial year. We believe that Ms. Wishart-Smith’s unique experience marrying technology and innovation with traditional engineering and industrial markets and her background as an engineer qualify her for service as a director of our company.

RECOMMENDATION OF THE BOARD: THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ABOVE DIRECTOR NOMINEES.

 

5

Directors Continuing in Office

Class II Directors (2021-2024) — Terms Expiring 2024

 

		Ellen B. Richstone, 71, has served as a director since May 2017. Ms. Richstone was the Chief Financial Officer of several public and private companies between 1989 and 2010, including Rohr Aerospace, a Fortune 500 company. Her primary Chief Financial Officer experience has been as a Chief Financial Officer of technology companies. From 2002 to 2004, Ms. Richstone was the President and Chief Executive Officer of the Entrepreneurial Resources Group. From 2003 until its sale in 2007, Ms. Richstone served as the financial expert on the board of directors of American Power Conversion. Ms. Richstone currently serves on the boards and chairs the audit committees of three other public companies: eMagin Corporation, Cognition Therapeutics, Inc., and Superior Industries International. Ms. Richstone has prior experience on both public and private boards and is currently on the board of the National Association of Corporate Directors in New England. Ms. Richstone’s past public board service includes American Power Conversion (sold), Everyware Global (taken private) and Parnell Pharmaceuticals Holdings Ltd. (taken private). In April 2013, Ms. Richstone was awarded the first annual Distinguished Director Award from the Corporate Directors Group (renamed ACCD). Ms. Richstone graduated from Scripps College in Claremont California and holds graduate degrees from the Fletcher School of Law and Diplomacy at Tufts University. Ms. Richstone also completed the Advanced Professional Certificate in Finance at New York University’s Graduate School of Business Administration and attended the Executive Development program at Cornell University’s business school. Ms. Richstone holds a Platinum Level Executive Master’s Certification in Director Governance from the American College of Corporate Directors. In January 2018 Ms. Richstone was named a National Association of Corporate Directors Fellow, the highest governance level awarded. In September 2020, Ms. Richstone was named to the Directorship 100 by the National Association of Corporate Directors (NACD) for her leadership in board governance. We believe that Ms. Richstone’s financial expertise in addition to her experience in cyber and technology, M&A and global business, as well as her overall experience as a seasoned executive and board member, qualify her for service as a director of our company.

 

6

		Richard A. Shapiro, 52, has served as a director since March 2023. Mr. Shapiro is the Founder and since October 2021 has served as the Chief Investment Officer of Ridge Run Partners, LLC, a family office firm. Previously, Mr. Shapiro served as Portfolio Manager at Millennium Management, a multi-billion dollar hedge fund, where he was focused on equity investments, from 2020 to 2021, and, earlier in his career at Millennium, from 2007 to 2011. From 2011 to 2020, Mr. Shapiro was at Wexford Capital, where he was Portfolio Manager and Co-Head of Equites, and was also a member of Wexford’s Hedge Fund Investment Committee. Mr. Shapiro currently serves on the board of directors of publicly traded Elah Holdings, Inc. and previously served on the board of directors of public company BBQ Holdings, Inc. Mr. Shapiro holds an M.B.A. from Georgetown University and a B.S. in Business Administration from the University of Southern California. We believe that Mr. Shapiro’s perspective as a professional institutional shareholder and experience in analyzing strategic opportunities and overseeing the management of positions in various investments qualify him for service as a director of our company. Mr. Shapiro was originally recommended as a director nominee by a shareholder.

Class III Director (2022-2025) — Terms Expiring 2025

 

		Anthony L. Otten, 67, has served as a director since August 2015. Mr. Otten has served as our board chair since August 2022 and from June 2017 to August 2022 served as our lead independent director. Mr. Otten serves as managing member of Stillwater, LLC. Previously, Mr. Otten served as chief executive officer of Versar, Inc. from February 2010 until its sale in November 2017 and also served as a member of the board of directors of Versar, Inc. from 2008 until its sale in November 2017. Mr. Otten also currently serves on the Advisory Board of Constant Associates, Inc., a federal contractor, and the Board of Directors of Sumaria Systems, LLC, a federal contractor focused on cyber and information technology support for U.S. Air Force drone programs. Mr. Otten previously served as managing member of Stillwater, LLC from July 2009 to February 2010; operating partner of New Stream Asset Funding, LLC from 2007 to June 2009; managing member of Stillwater, LLC from 2004 to 2007 and principal of Grisanti, Galef and Goldress, Inc. from 2001 to 2004. Previously, Mr. Otten held senior management positions with Cabot Corporation and Marriott Corporation. We believe that Mr. Otten’s experience as a chief executive officer of a public company, capital markets expertise and merger and acquisition experience qualify him for service as a director of our company. We further believe that Mr. Otten’s leadership experience and contributions to our board qualify him to serve as our board chair.

 

7

		Sally A. Washlow, 52, has served as a director since August 2022. Ms. Washlow currently leads a geographic region of the United States for Lee Hecht Harrison’s International Center for Executive Options working with senior level and C-Suite executives from companies ranging from Fortune 10 to privately held. Since 2017, Ms. Washlow operates SW Consulting LLC supporting companies with executive management, strategy initiatives and board service to privately and publicly held companies. From 2015 to 2017, Ms. Washlow was the Chief Executive Officer of Cedar Electronics Corporation (formerly a public company, Nasdaq: COBR), a supplier of radar detectors, GPS systems, dash cameras and other electronic products, and led the integration of the Cobra and Escort electronics businesses. Prior to Cedar Electronics, Ms. Washlow worked for 13 years at Cobra Electronics Corporation in various capacities, including as President from 2013 until 2015. She is also a member of the Consumer Technology Association . Ms. Washlow currently serves on three boards, Data I/O Corporation (Nasadq: DAIO), a company focused on advanced programming, security deployment, security provisions and associated intellectual property protection, since 2020 and serves as chair and a member of the compensation and corporate governance and nominating committee; Costar Technologies, Inc. (OTC Markets Group: CSTI), a designer, developer, manufacturer and distributor of video surveillance products, since 2019 and serves as the chairperson of the board of directors and a member of the audit committee; and on the advisory board of Matot Industries, an industrial products manufacturer since 2020. We believe that Ms. Washlow’s experience as an innovative go-to-market strategist, along with her other leadership and entrepreneurial skills qualify her for service as a director of our company.

We strongly encourage our directors to attend our annual meeting, and it is expected that they will do so. All of our then-serving directors attended our 2022 annual meeting virtually.

 

8

CORPORATE GOVERNANCE

Board of Directors — General

Our board of directors met 17 times during fiscal 2023, consisting of nine mandatory meetings and eight optional meetings. All of our directors attended at least 75% of the aggregate of (a) the total number of mandatory meetings of the board held during the fiscal year while they were a director and (b) the total number of meetings held by all committees of the board on which they served during the fiscal year while they were serving on the committees.

Our board has determined that each of Mses. Richstone, Washlow and Wishart-Smith and Messrs. Otten and Shapiro is independent under the listing standards of the Nasdaq Capital Market. Our board generally uses the director independence standards set forth by the Nasdaq Capital Market as its subjective independence criteria for directors, and then makes an affirmative determination as to each director’s independence by taking into account other, objective criteria as applicable.

Standing Board Committees

Our board of directors has established the following standing committees: an audit and finance committee, a compensation committee and a nominating and corporate governance committee. Our board has adopted charters for each standing committee describing their respective responsibilities. The charters are available on our website at www.orionlighting.com.

Our audit and finance committee is currently comprised of Mses. Richstone and Washlow and Mr. Otten, with Ms. Richstone acting as chair. Following the annual meeting, we expect Ms. Wishart-Smith will also serve on our audit and finance committee. Each member of the audit and finance committee is an audit committee financial expert, as defined under the rules of the Securities and Exchange Commission (the “SEC”) implementing Section 407 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The principal responsibilities and functions of our audit and finance committee are to (i) oversee the reliability of our financial reporting, the effectiveness of our internal control over financial reporting, and the independence of our internal and external auditors and audit functions and (ii) oversee the capital structure of our company and assist our board of directors in assuring that appropriate capital is available for operations and strategic initiatives. In carrying out its accounting and financial reporting oversight responsibilities and functions, our audit and finance committee, among other things, oversees and interacts with our independent auditors regarding the auditors’ engagement and/or dismissal, duties, compensation, qualifications and performance; reviews and discusses with our independent auditors the scope of audits and our accounting principles, policies and practices; reviews and discusses our audited annual financial statements with our independent auditors and management; and reviews and approves or ratifies (if appropriate) related party transactions. Our audit and finance committee also is directly responsible for the appointment, compensation, retention and oversight of our independent auditors. Our audit and finance committee met four times in fiscal 2023. Each member of our audit and finance committee meets the requirements for independence under the current rules of the Nasdaq Capital Market and the SEC.

Our compensation committee is currently comprised of Mses. Richstone and Washlow and Mr. Otten, with Ms. Washlow acting as chair. Following the annual meeting, we expect Mr. Shapiro will also serve on our compensation committee. The principal functions of our compensation committee include (i) administering our incentive compensation plans; (ii) establishing performance criteria for, and evaluating the performance of, our executive officers; (iii) annually setting the salary and other compensation for our executive officers; (iv) overseeing the company’s response to the outcome of our shareholders’ advisory votes on our executive compensation; (v) annually reviewing the compensation paid to our non-employee directors; (vi) annually reviewing the compensation committee’s charter, our equity compensation plans and the compensation committee’s current practices, procedures and controls in order to develop, maintain and implement equity compensation compliance procedures; (vii) providing our board of directors with an annual report on our compliance with our procedures, policies and guidelines for issuing equity awards; and (viii) reviewing and approving all disclosures in our SEC filings, including our annual proxy statement, concerning our equity compensation plans and executive and director compensation matters. In addition, members of our compensation committee are required to

 

9

receive periodic training concerning our operative equity compensation plans and compensation procedures, as well as general best practices for executive compensation. Our compensation committee met six times in fiscal 2023. Each member of our compensation committee meets the requirements for independence under the current Nasdaq Capital Market and SEC rules. Our compensation committee did not engage the services of a compensation consultant to determine executive compensation for either of fiscal 2023 or fiscal 2024. In general, the compensation committee utilizes compensation studies and reviews compensation practices of peer groups, but has determined to engage an independent compensation consultant only if relevant factors or circumstances change significantly.

Our nominating and corporate governance committee is currently comprised of Mses. Richstone and Washlow and Mr. Otten, with Mr. Otten acting as chair. Following the annual meeting, we expect Ms. Wishart-Smith will also serve on our nominating and corporate governance committee. The principal functions of our nominating and corporate governance committee are, among other things, to (i) establish and communicate to shareholders a method of recommending potential director nominees for the committee’s consideration; (ii) develop criteria for selection of director nominees; (iii) identify and recommend persons to be selected by our board of directors as nominees for election as directors; (iv) plan for continuity on our board of directors; (v) recommend action to our board of directors upon any vacancies on the board; and (vi) consider and recommend to our board other actions relating to our board of directors, its members and its committees. Our nominating and corporate governance committee met six times in fiscal 2023. Each member of our nominating and corporate governance committee meets the requirements for independence under the Nasdaq Capital Market and SEC rules.

Board Leadership Structure

Our board of directors does not have a policy on whether or not the roles of chief executive officer and board chair should be separate. Our board reserves the right to assign the responsibilities of the chief executive officer and board chair to different individuals or to the same individual if, in the board’s judgment, a combined chief executive officer and board chair position is determined to be in the best interest of our company. In the circumstance where the responsibilities of the chief executive officer and board chair are vested in the same individual or in other circumstances when deemed appropriate, the board will designate an independent lead director from among the independent directors. The duties of the lead director include (i) conferring with the board chair on, and approving, meeting agendas and meeting schedules to assure there is sufficient time for discussion of all agenda items; (ii) calling and presiding over all meetings of the board at which the board chair is not present, including executive sessions; (iii) leading the annual performance reviews of the chief executive officer and the board; (iv) ensuring that there is open communication between our independent directors, the board chair and other management members; (v) being available, when deemed appropriate by the board, for consultation and direct communication with shareholders; and (vi) reviewing, at his or her discretion, information to be sent to the board.

While our board believed that a combined position of chief executive officer and board chair from 2017 through 2023 (while Mr. Altschaefl went from a non-executive board chair to chief executive officer and board chair) assisted our board in implementing our strategic plan, created streamlined accountability for our performance and facilitated our board’s efficient and effective functioning, upon the announcement of Mr. Altschaefl’s retirement, our board currently believes that our company is best served by Mr. Otten continuing to serve as our board chair and Mr. Jenkins continuing as our chief executive officer. This structure allows Mr. Jenkins to focus on his relatively new chief executive officer role and leverages Mr. Otten’s long-standing stewardship of our company as board chair.

Our board retains the authority to modify its board leadership structure to best address our company’s unique circumstances as and when appropriate.

Our Board’s Role in Risk Oversight

Our full board is responsible for the oversight of our enterprise risk management process. Our board is responsible for overseeing our management team’s identification of certain enterprise risks that could adversely affect our company and the steps management has taken or plans to take to monitor, control and report such risks,

 

10

including risks relating to customer concentration, component inventory supply, supply chain and inventory management, integration of acquired businesses, our sales and distribution model, the sufficiency of our liquidity and capital, retention of key employees, competitive pressures on the average sales price of our products, security of information systems and data, implementation of new information systems, cybersecurity risk, uncertain political and economic conditions, adapting to convergence and commoditization in the lighting industry, the introduction of new, low-cost competitors in the lighting industry, innovation and product development, creating shareholder value, communication with investors including activist investors, industry and government regulations, the impact of changes in trade policies and tariffs on our components and products, financial reporting and compliance, product liability and warranties and the related costs thereof, rogue employees and exchange rate risk.

Our management reports on these risks to our board at each regular board meeting. Our board relies on our compensation committee to address significant risk exposures facing our company with respect to compensation. As described herein under the heading “Risk Assessment of our Compensation Policies and Practices,” each year, our compensation committee conducts a review of our compensation policies and practices to assess whether any significant risks arising from such policies and practices are reasonably likely to materially adversely affect our company. In addition, our audit and finance committee supports the board’s risk oversight function by overseeing and managing risks relating to the reliability of our financial reporting and the effectiveness of our internal control over financial reporting, as well as risks related to our liquidity and capital structure.

Our board’s role in the oversight of our risk management has not affected our board’s determination that the roles of chief executive officer and board chair should currently be separated, as our board believes that such structure constitutes the most appropriate leadership structure for our company at this time.

Our audit and finance committee and our full board review and comment on the draft risk factors for disclosure in our annual and quarterly reports and use the receipt of such draft risk factors to initiate discussions with appropriate members of our senior management if such risk factors raise questions or concerns about the status of enterprise risks then facing our company.

Nominating and Corporate Governance Committee Procedures

Our nominating and corporate governance committee will consider shareholder recommendations for potential director nominees, which should be sent to the nominating and corporate governance committee, c/o board secretary, Orion Energy Systems, Inc., 2210 Woodland Drive, Manitowoc, Wisconsin 54220. The time by which such recommendations must be received in order to be timely is set forth below under “Shareholder Proposals.” The information to be included with recommendations is set forth in our Amended and Restated Bylaws, and factors that our nominating and corporate governance committee will consider in selecting director nominees are set forth in our Corporate Governance Guidelines. Our Corporate Governance Guidelines are available on our website at www.orionlighting.com. Our nominating and corporate governance committee evaluates all potential nominees in the same manner, and may consider, among other things, a candidate’s strength of character, mature judgment, career specialization, relevant technical skills or financial acumen, industry knowledge and experience and geographic, gender, age, and ethnic diversity. Our nominating and corporate governance committee believes that directors should display the highest personal and professional ethics, integrity and values and sound business judgment. The committee also believes that, while diversity and variety of experiences and viewpoints represented on our board should always be considered, a director nominee should not be chosen nor excluded solely or largely because of geographic, gender, age or ethnic diversity. Our nominating and corporate governance committee evaluates each incumbent director to determine whether he or she should be nominated to stand for re-election, based on the types of criteria outlined above, as well as the director’s contributions to the board during their current term. As part of its periodic self-assessment, our nominating and corporate governance committee assesses the effectiveness of its director selection policy described in this paragraph, including its provisions relating to the consideration of diversity.

 

11

Code of Conduct

We have adopted a Code of Conduct that applies to all of our directors, officers and employees, including our principal executive officer, our principal financial officer, our controller and persons performing similar functions. Our Code of Conduct is available on our web site at www.orionlighting.com. Any material amendments or waivers relating to the Code of Conduct will be disclosed on our web site within four business days following the date of such amendment or waiver.

 

12

ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS

We are committed to achieving best practices in environmental, social and governance matters. We are in the beginning stages of creating meaningful metrics to monitor and demonstrate continuous improvement towards achieving this goal. We constantly strive to discover new and innovative ways to positively impact the environment, our employees, customers and stakeholders.

Environmental

For over 25 years, we have helped our customers achieve energy savings with healthy, safe and sustainable solutions that enable them to reduce their carbon footprint and digitize their business. Our LED lighting solutions generally result in a 50% or greater reduction in energy consumption for our customers. The result has been to reduce the need to create new power generation in North America.

At our own facilities, we incorporate energy-saving LED lighting and UVC air movement products to reduce our energy consumption and vastly improve the safety and comfort of our manufacturing and office workspaces. We also generate our own electricity from our onsite wind power tower, coupled with our solar array on our manufacturing facility rooftop providing up to 10% of our required daytime power usage.

Social

We are committed to the social needs of our employees, our stakeholders, the communities in which we operate and our global society. Two of our core values are integrity and respect. We have the courage to do the right thing and we maintain a strict adherence to honesty, ethics and equality. We value our relationships with each other, customers, suppliers and business partners and act in the same way that we want to be treated.

We are committed to maintaining a respectful work environment for our employees, free from discrimination or harassment of any kind. Our clear-cut anti-harassment and discrimination policy and Code of Conduct form the foundation of our culture of respect and dignity. We are also committed to being an equal opportunity employer and are constantly establishing meaningful diversity metrics. We are proud that over 40% of our workforce and 50% of our independent directors are female (this will grow to 60% of independent directors following the election of Ms. Wishart-Smith at the annual meeting).

We engage in our communities by donating lighting products for renovation and new construction, including projects at treasured local institutions, such as zoos, museums and exposition centers, as well as public service entities, such as local fire departments. All of our associates receive one paid day per year to volunteer in our company sponsored events. In addition, we have a community outreach committee that provides support for local causes.    

Governance and Board Diversity

Our board of directors adheres to our Corporate Governance Guidelines and Code of Conduct, which are reviewed annually. Our directors represent a wide range of perspectives, experience and knowledge.

Board Diversity Matrix

The table below provides certain self-identified personal characteristics of our current directors in the format required by Nasdaq rules, and each of the categories listed in the table has the meaning as it is used within such rules. Based on the decision of Mr. Altschaefl to retire from our board at the annual meeting and our nomination of Ms. Wishart-Smith to serve on our board, following the annual meeting, it is anticipated that our board will consist of three female and three male directors.

 

13

As of June 30, 2023

Total Number of Directors: 6

 

Part I: Gender Identity		Female		Male		Non- Binary		Did Not Disclose Gender
Directors		2		4		—		—
Part II: Demographic Background
African American or Black		—		—		—		—
Alaskan Native or Native American		—		—		—		—
Asian		—		—		—		—
Hispanic or Latinx		—		—		—		—
Native Hawaiian or Pacific Islander		—		—		—		—
White		2		4		—		—
Two or More Races or Ethnicities		—		—		—		—
LGBTQ+		—
Did Not Disclose Demographic Background		—

Shareholder Engagement

We are proud of our frequent and active shareholder engagement. In fiscal 2023, we continued investor outreach by participating in virtual investor conferences and investor meetings and hosting small groups of investors at our headquarters. A summary of recent outreach is listed below:

 

•

participated in five investor conferences;

 

•

hosted three investor visits to our facilities; and

 

•

conducted discussions with more than 60 shareholders (representing over one-third of our shareholder base).

Our team uses a purposeful and deliberate approach to build better lines of communication between investors and management. As we continue our efforts to build and to strengthen our relationships with the investment community, we encourage you to contact us by mail at Orion Energy Systems, Inc., 2210 Woodland Drive, Manitowoc, Wisconsin 54220, Attn: Chief Financial Officer or by email at ir@oesx.com. Please also visit investor.oriones.com for a regularly updated list of investor events and presentations.

 

14

EXECUTIVE OFFICERS

The following table sets forth information as of June 30, 2023 regarding our current executive officers:

 

Name		Age				Position
Michael H. Jenkins			54			Chief Executive Officer
J. Per Brodin			61			Chief Financial Officer, Executive Vice President, Chief Accounting Officer and Treasurer
Scott A. Green			65			Executive Vice President and President, Orion Services Group

The following biographies describe the business experience of our executive officers. (For a biography of Mr. Jenkins, see “Proposal One: Election of Directors” above.)

J. Per Brodin has served as our executive vice president since October 2020 and our chief financial officer, chief accounting officer and treasurer since November 2020. Prior to his joining our company, Mr. Brodin served as a partner of Hardesty LLC, a national executive services firm, and provided Interim CFO services to Hardesty’s clients. As a partner of Hardesty, he served as the Interim Chief Financial Officer to KKR-owned Fleet Farm, a large general retailer with stores in the Midwest, from March 2020 to August 2020. Prior to joining Hardesty, he served as the Chief Financial Officer of Shopko Stores, a general retailer, from December 2017 until April 2019. Prior to Shopko, he served as the Chief Financial Officer of ATI Physical Therapy from September 2016 until 2017 and prior to ATI, he served as the Chief Financial Officer of Claire’s Stores, Inc., a former NYSE listed global specialty retailer, from February 2008 until August 2016. Mr. Brodin is a Certified Public Accountant.

Scott A. Green has served as our executive vice president since August 2016 and president of Orion Services Group since November 2021. From May 2017 to November 2021, he was our chief operating officer. Mr. Green also previously served as our division president: innovation, project engineering and construction management from July 2015 to August 2016, our division president: Orion Engineered Systems from February 2014 to July 2015 and our division president: Harris Lighting from July 2013 to February 2014. Prior to joining us in connection with our acquisition of Harris Manufacturing, Inc. and Harris LED, LLC in July 2013 (“Harris”), Mr. Green served as the executive vice president of Harris from January 2011 until July 2013 and as chief executive officer of Harris from June 1997 to January 2011. Mr. Green graduated from Central Michigan University with a bachelor of science in business.

Involvement in Certain Legal Proceedings

None of our officers or directors have, during the last ten years: (i) been convicted in or is currently subject to a pending criminal proceeding; (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state securities or banking laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law; nor (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto or been subject to any of the items set forth under Item 401(f) of Regulation S-K, other than Mr. Brodin who was formerly the Chief Financial Officer at Shopko Stores from December 2017 until April 2019. In January 2019, while acting as its Chief Financial Officer, Shopko Stores filed for voluntary bankruptcy in the State of Nebraska.

 

15

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This compensation discussion and analysis describes the material elements of compensation awarded to, earned by, or paid to, each of our named executive officers, whom we refer to as our “NEOs,” during our fiscal 2023 and describes our policies and decisions made with respect to the information contained in the following tables, related footnotes and narrative for our fiscal 2023. Our NEOs are identified below in the table titled “Summary Compensation Table for Fiscal 2023.” In this compensation discussion and analysis, we also describe various actions regarding NEO compensation taken before or after our fiscal 2023 when we believe it enhances the understanding of our executive compensation program, including actions taken with respect to the material elements of compensation applicable to our NEOs for our fiscal 2024.

Continuing Evolution of our Executive Compensation to Increase Emphasis on Pay-For-Performance and “At Risk” Incentive Compensation

At our 2021 annual meeting of shareholders, our annual advisory vote on our executive compensation (“say-on-pay” vote) received support from only approximately 48.5% of the votes cast by our shareholders. As a result of this negative shareholder input on our fiscal 2021 executive compensation program, our board of directors and our compensation committee proactively engaged with our shareholders and took swift action to address the shareholder concerns that led to this negative vote, including:

 

•

We eliminated the “single-trigger” change of control severance provision in our then current chief executive officer’s employment agreement, amending it to create a “double-trigger” change of control severance benefit that would become payable only if there were both a change of control and a qualifying termination.

 

•

We added three-year financial performance vesting conditions to 25% of our fiscal 2023 annual long-term equity incentive grants for our NEOs.

 

•

In addition to these changes to our executive compensation practices, we also intentionally allowed our shareholder rights plan to expire in January 2022 and our board appointed an independent board chair effective immediately after our 2022 annual meeting of shareholders.

As a result of implementing these changes based on the input and desires of our then most significant shareholders, 97% of our voting shareholders approved of our fiscal 2022 executive compensation at our 2022 annual meeting of shareholders.

Based on this strong shareholder support of the changes we made to our executive compensation programs, our compensation committee believes that we should continue to evolve our executive compensation elements to further increase our emphasis on incorporating a “pay-for-performance” philosophy into our executive compensation program and by also increasing the relative proportion of our NEOs’ compensation that is placed “at risk”, so as to further align our NEOs’ incentive compensation elements with our shareholders’ economic interests in our Company.

Taking into account our compensation committee’s desire to continue to increase our emphasis on pay-for-performance and at risk incentive compensation, based on the advice and input of our chief executive officer, as well as several outside executive compensation expert reports, surveys and public company peer group comparisons, particularly the comparative executive compensation packages provided by our Company’s closest public company lighting industry peers, LSI Industries, Inc. and Acuity Brands, Inc., our compensation committee adopted the following goals and objectives for the various elements of our executive compensation program in fiscal 2024:

 

•

Hold our NEO base salaries at their fiscal 2023 levels in fiscal 2024 (other salaried employees received a 3% increase effective April 1, 2023).

 

•

Retain and attract senior leadership talent.

 

16

•

Further align our Company’s executive compensation structure with our shareholders’ economic interests to drive win / win outcomes.

 

•

Migrate closer to industry and peer company benchmarks in compensation elements that are “at risk” and subject to our Company’s and the NEO’s actual performance (specifically with respect to annual bonuses and long-term equity incentives).

 

•

Increase the percentage of “at risk” incentive compensation based on our Company’s and our NEOs’ actual performance.

 

•

Increase the stock ownership of our NEO team in absolute terms and as measured as a multiple of their base salary compared to benchmarks to further align our NEOs economic interests with that of our shareholders.

As a foundation for these fiscal 2024 executive compensation goals and objectives, our compensation committee and chief executive officer relied, in part, upon the 2022 BDO compensation survey for the surveyed group of public companies with revenues of between $100 million – $500 million. The BDO survey showed that average CEO compensation for this group of companies in 2022 was as follows ($000s):

 

Position		Base Salary				Annual Incentives				Total Cash Compensation				Long-Term Incentives				Total Direct Compensation
CEO		$	594			$	666			$	1,260			$	1,705			$	2,965
Change over Prior Year			3.7%				—				20.1%				—				15.6%

Our compensation committee and chief executive officer noted that CEOs in this group of companies received 42% of their compensation through salary and annual incentives and 58% through long-term incentives.

Our compensation committee and chief executive officer then compared the relative structure of our Company’s current chief executive officer compensation elements in fiscal 2023 to those of our lighting industry peer group companies, LSI Industries, Inc. and Acuity Brands, Inc., and the BDO survey results, as follows ($000s):

 

		Orion				LSI				Acuity				BDO $100M-$500M
Base Salary		$	425			$	614			$	1,000			$	594
% of Total Compensation			35%				26%				14%				20%
Short Term Bonus		$	383			$	491			$	1,100			$	666
% of Total Compensation			32%				21%				18%				22%
Long Term Incentive		$	404			$	938			$	5,700			$	1,705
% of Total Compensation			33%				39%				68%				58%
Deferred Compensation		$	—			$	333			$	700			$	—
% of Total Compensation			—				14%				10%				—
Totals at Target		$	1,211			$	2,376			$	7,800			$	2,965

Our compensation committee and chief executive officer also believed, based on the survey data reviewed, that most companies require a more substantial amount of their company’s shares to be owned by their executive officers compared to our Company’s current executive share ownership guidelines, as reflected below:

CEO Stock Ownership Required

 

		Orion				Peers
Multiple of CEO Base Salary			<0.5x				5x
Shares (000s)			112				256
Value ($000s)		$	224			$	3,070

 

17

The survey information reviewed by our compensation committee and chief executive officer also reflected that the vast majority of companies use more than one performance measure to determine annual incentive compensation payouts under their annual bonus plan. According to the data reviewed, about 40% use two financial performance measures and about 30% use three measures. The most common measures used included earnings, revenue and non-financial strategic goals. The survey data also reflected threshold payouts at 50% of targeted bonus amounts, with maximum payouts at 150% to 200% of targeted bonuses.

As a result of the foregoing, our compensation committee made the following decisions with respect to our NEOs’ compensation elements for fiscal 2024:

 

•

No changes were made to base salary for our NEO group in fiscal 2024. The current expectation would be to adjust our NEOs’ base salaries to reflect market comparables in fiscal 2025.

 

•

Annual bonus target pay-outs were set at 100% of base salary for our chief executive officer and 50% of base salary for the rest of our NEOs.

 

•

Long-term equity incentive grant changes were made to further align our grants with survey data and peer group practices, including:

 

•

Increased the relative amount of our NEOs’ total annual long-term equity incentive opportunity.

 

•

Out of this increased overall annual long-term equity incentive opportunity, increased the performance-based vesting element from 25% of the total annual long-term incentive grant to 50%.

 

•

As a result, our fiscal 2024 annual long-term equity incentive grants for our chief executive officer were granted 100% of his base salary as performance-based vesting restricted shares (coupled with restricted cash) and 100% of his base salary granted as time-based restricted shares (coupled with restricted cash). Our other NEOs received 75% of their base salary as performance-based vesting restricted shares (coupled with restricted cash) and 75% of their base salary as time-based restricted shares (coupled with restricted cash).

In addition, in order to reduce the substantially increased equity grant share burn rate associated with the increased level of our fiscal 2024 annual long-term equity grants to our NEOs, our compensation committee adopted a policy that all long-term equity incentive grants made to our NEOs or our non-employee directors must be comprised of a combination grant of 60% in restricted shares or performance shares and 40% in restricted cash until our stock price increases to at least $5.00 per share. Additional analysis was undertaken by our compensation committee to coordinate our new burn rate with the proposed amount of shares to be added to the 2016 Omnibus Plan at the Company’s 2023 annual meeting of shareholders so that we would be able to cover about three fiscal years of currently anticipated annual long-term equity awards.

Since, our 2016 Omnibus Plan does not currently have reserved and available for grant a sufficient number of shares of the Company’s common stock to support the level of fiscal 2024 awards to our NEOs, the fiscal 2024 awards to our NEOs were conditioned and contingent upon our Company’s shareholders approving an amendment to the 2016 Omnibus Plan at our Company’s 2023 annual meeting of shareholders that sufficiently increases the number of shares of the Company’s common stock reserved and available for grant under the Plan to support such awards (“Share Increase Plan Amendment”).

Overview of Our Executive Compensation Philosophy and Design

General

We believe that a skilled, experienced and dedicated senior management team is essential to the future performance of our company and to building shareholder value. We have sought to establish competitive compensation programs that enable us to attract and retain executive officers with these qualities. The other objectives of our compensation programs for our executive officers are the following:

 

•

to motivate and reward our executive officers to achieve strong financial performance, particularly increased revenue, adjusted EBITDA, profitability, free cash flow, cost containment and shareholder value;

 

18

•

to attract and retain executive officers who we believe have the experience, temperament, talents and convictions to contribute significantly to our future success; and

 

•

to align the economic interests of our executive officers with the interests of our shareholders.

In light of these objectives, we have sought to reward our NEOs’ for achieving our financial performance goals, creating value for our shareholders, and for their extraordinary effort and dedication to our company. Over the recent past, we have implemented annual and long-term executive incentive compensation plans that have focused on achieving increased revenue, net income and/or adjusted EBITDA (defined as our earnings before interest, tax, depreciation and amortization, and adjusted for equity compensation charges), along with long-term shareholder value enhancements.

Fiscal 2023 Compensation Decisions

In late fiscal 2022, after consultation with the chair of our compensation committee, our chief executive officer recommended, and our compensation committee approved, the following key elements of our fiscal 2023 executive compensation program:

 

•

Kept the fiscal 2023 base salary for Mr. Altschaefl (our then current CEO) unchanged from fiscal 2022 at $500,000. We increased the fiscal 2023 base salaries of each of Messrs. Brodin, Green and Jenkins by approximately 4% to $380,000. Our compensation committee believed that such modest salary increases were warranted as a result of market conditions, to keep pace with inflation and to maintain consistency with our closest publicly-traded peer company, LSI Industries, Inc.

 

•

Authorized a fiscal 2023 annual executive cash bonus program focused on our goal of achieving our budgeted level of EBITDA. Our fiscal 2023 annual executive cash bonus program provided that, if we had achieved a threshold level of EBITDA of $6 million in fiscal 2023, Messrs. Altschaefl, Brodin, Green and Jenkins would have received threshold annual bonus payments of 50%, 25%, 25% and 25%, respectively, of their fiscal 2023 base salaries. If we had achieved a target level of EBITDA of $8 million in fiscal 2023, then Messrs. Altschaefl, Brodin, Green and Jenkins would have received their target annual bonus payments of 90%, 45%, 45% and 45%, respectively, of their fiscal 2023 base salaries. Finally, if we had achieved a maximum level of EBITDA of $10 million or more in fiscal 2023, then Messrs. Altschaefl, Brodin, Green and Jenkins would have received maximum annual bonus payments of 150%, 75%, 75% and 75%, respectively, of their fiscal 2023 base salaries. Bonuses would have been interpolated for EBITDA between the threshold and maximum amounts. We did not achieve our threshold level of EBITDA in fiscal 2023, so no bonuses were paid to our NEOs pursuant to our fiscal 2023 annual executive cash bonus program.

 

•

Authorized a special bonus for fiscal 2023 based on our achievement of predetermined revenue targets. If our fiscal 2023 revenue would have been between $145 million and $150 million, Mr. Altschaefl would have received a bonus of $75,000 and Messrs. Brodin, Green and Jenkins would have received bonuses of $35,000 each. If our fiscal 2023 revenue would have been equal or greater than $150 million, then, rather than the bonuses in the preceding sentence, Mr. Altschaefl would have received a bonus of $100,000 and Messrs. Brodin, Green and Jenkins would have each received bonuses of $50,000. Since our fiscal 2023 revenue did not exceed $145 million, no special bonuses were paid pursuant to this authorized special bonus program.

 

•

Allowed for the creation of up to a maximum $100,000 discretionary financial performance bonus pool for our NEOs (other than our chief executive officer) contingent on our achieving at least $8 million in target EBITDA in fiscal 2023. Additionally, if we had achieved in excess of $150 million of revenue in fiscal 2023, then an additional maximum $100,000 discretionary bonus pool would have been made available for our NEOs (other than our chief executive officer). If and to the extent these goals were achieved, the resultant bonus pools would have been allocated among our NEOs (excluding our chief executive officer) at the discretion of our chief executive officer. We believed that these additional bonus opportunities further evidenced our commitment to “pay for performance”.    Since we did not achieve either financial performance metric in fiscal 2023, no discretionary bonus pools were established under these programs

 

19

•

Added performance conditions to 25% of our fiscal 2023 annual long-term incentive grants for our NEOs; prior to fiscal 2023, none of our long-term incentive grants contained any performance conditions. As a result, our fiscal 2023 annual long-term equity incentive awards to our NEOs were awarded 25% in the form of performance-vesting restricted stock and 75% in the form of time-vesting restricted stock (or a combination of restricted stock and restricted cash). The performance-vesting restricted stock will vest to the relative extent we achieve between 25-40% revenue growth in our fiscal 2025 revenue compared to our revenue in fiscal 2022. Our compensation committee allowed each of our NEOs the alternative of accepting the time-vesting portion of their fiscal 2023 long-term equity-based incentive grants either in the form of (a) 100% three-year pro rata vesting restricted stock or (b) a combined grant, with 60% of the dollar value of the award in the form of three-year pro rata vesting restricted stock and 40% of the dollar value of the award in the form of restricted cash payable in one-third increments upon the annual vesting of the tandem restricted stock awards. Three of our NEOs chose to accept the time-vesting portion of their fiscal 2023 annual long-term incentive awards in 100% three-year pro rata vesting restricted stock. One of our NEOs chose the combined grant of 60% three-year pro rata vesting restricted stock and 40% restricted cash payable in one-third increments upon the annual vesting of the tandem restricted stock awards.

 

•

Increased the relative percentages of base salary represented by the target grant date value of our fiscal 2023 annual long-term equity incentive awards by approximately 12% for Mr. Altschaefl and 16% for Messrs. Brodin and Green. We set Mr. Jenkins’s target long-term award at the same level as Messrs. Brodin and Green. As a result, the target grant date value of our fiscal 2023 annual long-term equity incentive awards for each of our NEOs was 95% of their respective fiscal 2023 base salaries.

Changes to Fiscal 2023 NEO Compensation upon Retirement of Existing CEO and Appointment of New CEO

In conjunction with Mr. Altschaefl’s November 10, 2022 retirement as our chief executive officer, we promoted Mr. Jenkins to become our new chief executive officer. He previously served as our chief operating officer and executive vice president.

In connection with Mr. Jenkins’ promotion to our new chief executive officer, we entered into an Amended Executive Employment and Severance Agreement with Mr. Jenkins, pursuant to which he was provided with the following new compensation arrangements: (i) an annual base salary of $425,000 and (ii) a pre-change of control severance multiplier of 1.5x and a post-change of control severance multiplier of 2.0. Additionally, he received (a) a new grant of restricted stock with a value of $42,750 (which increased his total fiscal 2023 target long-term incentive award value to $403,750 from $361,000, or 95% of his new base salary), 75% of which will vest annually pro-rata over a three-year period and 25% of which will be subject to performance-vesting based on the relative achievement of our 40% revenue growth target in fiscal 2025 compared to our revenue in fiscal 2022; (b) a one-time promotion grant of 25,000 shares of restricted stock vesting pro rata annually over a three-year period; (c) a special fiscal 2023 bonus of either $75,000 or $100,000 if our revenue for fiscal 2023 met certain targets; and (d) an increase in his target fiscal 2023 annual bonus eligibility potential to 90% of his actual base salary paid in fiscal 2023 from 60%. We did not achieve any bonus payment performance thresholds in fiscal 2023, so no performance bonuses were paid to Mr. Jenkins for fiscal 2023.

In conjunction with his retirement, we entered into a Voluntary Retirement and Consulting Agreement with Mr. Altschaefl (the “Retirement Agreement”). Pursuant to the Retirement Agreement, in addition to the continuation of certain health insurance benefits through age 65 for both Mr. Altschaefl and his wife, (i) we paid Mr. Altschaefl his current base salary and other accrued benefits owed to him through the Retirement Date; (ii) Mr. Altschaefl was entitled to receive a pro-rata fiscal 2023 annual and special bonus to the extent earned by and paid to our other senior executive officers (no performance bonuses were paid to our NEOs in fiscal 2023); and (iii) all of Mr. Altschaefl’s current (A) unvested restricted stock (and any related restricted cash awards) became fully vested on the Retirement Date, (B) unvested performance share awards became fully vested on the Retirement Date (with performance share awards deemed fully vested at their “target” level of 66%) and (C) existing stock options that had vested as of the Retirement Date may be exercised by Mr. Altschaefl pursuant to the terms of the individual option award grants. Mr. Altschaefl has been entitled to receive non-employee director compensation for continuing to serve on our board of directors after the Retirement Date. All of Mr. Altschaefl’s unvested restricted stock and restricted cash awards earned after the Retirement Date as a

 

20

non-employee member of our board of directors (including his deferred fiscal 2024 grant) will become fully vested upon his retirement from our board of directors. In connection with Mr. Altschaefl’s retirement and planned transition to a consulting role after he retires from our board of directors, we will pay Mr. Altschaefl $300 per hour for any provided consulting services starting after the date Mr. Altschaefl is no longer a member of our board of directors until December 31, 2023. Under the Retirement Agreement, Mr. Altschaefl agreed to a general release of any claims in favor of us and reaffirmed his existing confidentiality, noncompetition and non-solicitation obligations. He also agreed to certain so-called “standstill” restrictions during his consulting period and for two years thereafter.

Fiscal 2024 Compensation Decisions

In late fiscal 2023, after consultation with the chair of our compensation committee, our chief executive officer recommended, and our compensation committee approved, the following key attributes for our fiscal 2024 executive compensation program:

 

•

Maintained the fiscal 2024 base salaries of each of our NEOs at $425,000 and $380,000 for Mr. Jenkins and each of Messrs. Brodin and Green, respectively. These were the same levels of base salary as paid in fiscal 2023.

 

•

Authorized a fiscal 2024 annual executive cash bonus program focused on our goal of achieving our budgeted fiscal 2024 target levels of $3.1 million of adjusted EBITDA (after taking into account any NEO bonuses), $114 million of revenue and combined $31.5 million of revenue from our Orion Maintenance Division and our new Orion Electric Vehicle Division. Our compensation committee also determined to continue our practice that we started in fiscal 2023 of providing for a tiered annual bonus program as a better corporate governance and executive compensation practice that reduces compensation-related risk compared to our prior “all-or-nothing” approach.

The following chart sets forth our NEOs’ fiscal 2024 executive bonus plan performance targets and related payouts, with the performance targets based on our Company’s board-approved fiscal 2024 budget:

Fiscal 2024 Annual Executive Bonus Program ($000s)

 

														All Targets = FY24 Budget
1   Orion Adj. EBITDA 50%*						Threshold=$1.5 Million								Target=$3.1 Million								Max=$4.5 Million
		Base				%Payout				Payout				%Payout				Payout				%Payout				Payout
CEO			425				50	%		$	106.3				100	%		$	212.5				150	%		$	318.8
CFO			380				25	%		$	47.5				50	%		$	95.0				75	%		$	142.5
Pres.OSG			380				25	%		$	47.5				50	%			95.0				75	%		$	142.5
2   Orion Revenue 30%						Threshold=$105 Million								Target=$114 Million								Max=$120 Million
		Base				%Payout				Payout				%Payout				Payout				%Payout				Payout
CEO			425				50	%		$	63.8				100	%		$	127.5				150	%		$	191.3
CFO			380				25	%		$	28.5				50	%		$	57.0				75	%		$	85.5
Pres.OSG			380				25	%		$	28.5				50	%		$	57.0				75	%		$	85.5
3   Strategic: EV/OMS Revenue 20%**						Threshold=$27 Million								Target=$31.5 Million								Max=$36 Million
		Base				%Payout				Payout				%Payout				Payout				%Payout				Payout
CEO			425				50	%		$	42.5				100	%		$	85.0				150	%		$	127.5
CFO			380				25	%		$	19.0				50	%		$	38.0				75	%		$	57.0
Pres.OSG			380				25	%		$	19.0				50	%		$	38.0				75	%		$	57.0

 

21

 

 

*	Adjusted EBITDA to be measured after taking into account any NEO bonuses.

 

**

Reflects EV Division $12.5 million budgeted revenue target in fiscal 2024 combined with OSG Division $19 million budgeted revenue target in fiscal 2024, provided that this element of the fiscal 2024 executive bonus plan will only be paid out if and to the extent so determined by the Compensation Committee after taking into account our Company’s relative profitability.

The financial goals described above are not a prediction of how we will perform during fiscal 2024. The purpose of the goals is to provide appropriate financial metrics to determine amounts of potential incentive compensation under our fiscal 2024 executive bonus program. The goals are not intended to serve, and should not be relied upon, as guidance or any other indication of our expected future performance.

 

•

Our compensation committee determined to increase the relative amount of our NEOs’ total long-term equity awards and, as a result of this increase, to increase the performance vesting proportion of our NED fiscal 2024 annual long-term equity incentive grant from 25% to 50% of their total grant. As a result, our chief executive officer received a fiscal 2024 long-term equity incentive grant of 100% of his base salary as performance-based vesting restricted shares (coupled with restricted cash) and 100% of his base salary as time-based restricted shares (coupled with restricted cash). Our other NEOs received a fiscal 2024 annual long term equity incentive grant of 75% of his base salary as performance-based vesting restricted shares (coupled with restricted cash) and 75% of his base salary as time-based restricted shares (coupled with restricted cash). In order to reduce the equity burn rate of these grants, our compensation committee adopted a policy that, until our stock price increases to at least $5.00 per share, our NEOs’ annual long-term equity-based incentive grants must be in the form of a combined grant, with 60% of the dollar value of the award in the form of restricted stock or performance shares and 40% of the dollar value of the award in the form of restricted cash payable in proportion if and to the extent the tandem restricted stock or performance shares vest.

The chart below reflects the fiscal 2023 to fiscal 2024 executive compensation comparison for our NEOs:

 

		Base Salary				Annual Bonus@ Target				LTI @ Target								Total
FY23 ($000s)										PSA				RSA
CEO		$	425			$	383			$	101			$	303			$	1,211
% Total			35%				32%				8%				25%				100%
CFO		$	380			$	171			$	90			$	271			$	912
% Total			42%				19%				10%				30%				100%
President OSG		$	380			$	171			$	90			$	271			$	912
% Total			42%				19%				10%				30%				100%

 

		Base Salary				Annual Bonus@ Target				LTI @ Target								Total
FY24 ($000s)										PSA				RSA
CEO		$	425			$	425			$	425			$	425			$	1,700
% Total			25%				25%				25%				25%				100%
CFO		$	380			$	190			$	285			$	285			$	1,140
% Total			33%				17%				25%				25%				100%
President OSG		$	380			$	190			$	285			$	285			$	1,140
% Total			33%				17%				25%				25%				100%

Our compensation committee reserved the right and discretion to make exceptions or additions to our executive compensation programs, including as any such exception or addition may apply to the determination of any and/or all of the relative base salaries, annual bonuses, long-term incentive compensation and/or total direct compensation of our executives, for outstanding contributions to the overall success of our company and the

 

22

creation of shareholder value, as well as in cases where it may be necessary or advisable to attract and/or retain executives who our compensation committee believes are or will be key contributors to creating and sustaining shareholder value, as determined by our compensation committee based on the recommendations of our chief executive officer (in all cases, other than our chief executive officer’s own compensation). Our compensation committee also has the discretion to adjust the achievement of the financial metrics under our annual cash bonus programs for unusual and nonrecurring factors and events, such as acquisitions and other unusual events, costs and expenses.

Setting Executive Compensation

Our board of directors, our compensation committee and our chief executive officer each play a role in setting the compensation of our NEOs. Our board of directors appoints the members of our compensation committee and delegates to the compensation committee the direct responsibility for overseeing the design and administration of our executive compensation program. Currently, our compensation committee consists of Ms. Washlow (Chair), Mr. Otten and Ms. Richstone. Each member of our compensation committee is a “non-employee director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934 (the “Exchange Act”).

Our compensation committee has primary responsibility for, among other things, determining our compensation philosophy, evaluating the performance of our executive officers, setting the compensation and other benefits of our executive officers, overseeing our company’s response to the outcome of the advisory votes of shareholders on executive compensation, assessing the relative enterprise risk of our compensation program and administering our incentive compensation plans. In consultation with the chair of our compensation committee, our chief executive officer makes recommendations to our compensation committee regarding the compensation of other executive officers and attends meetings of our compensation committee at which our compensation committee considers the compensation of other executives. Our compensation committee considers these recommendations, but has the final discretionary responsibility for determining the compensation of all of our executive officers.

As described above under the heading “Continuing Evolution of our Executive Compensation to Increase Emphasis on Pay-For-Performance and ‘At Risk’ Compensation,” our compensation committee considered the results from the shareholder advisory (or “say-on-pay”) vote on executive compensation at our 2021 annual meeting of shareholders and made responsive changes to our executive compensation program that resulted in our receiving a 97% shareholder say-on-pay vote approval at our 2022 annual meeting of shareholders.

Internal and External Reports

In general, our compensation committee has determined to save our Company the cost of engaging an independent compensation consultant, unless factors or circumstances change significantly. In connection with setting executive compensation levels for fiscal 2024, our compensation committee reviewed the following external reports and surveys: (i) 2022 Top 250 Annual Incentive Plan Report by FW Cook; (ii) 2022 Use of Environmental, Social, and Governance Measures in Incentive Plans by FW Cook; (iii) The BDO 600, 2022 Study of CEO and CFO Compensation Practices of 600 Mid-Market Public Companies by BDO; (iv) The Clear Bridge Report for Mid-Cap Companies — Executive Compensation Policies — A Decade in Review by Clear Bridge Compensation Group; (v) The Clear Bridge 200 Report — Annual Incentive Plan Practices and Trends by Clear Bridge Compensation Group; and (vi) Compensation Trends and Developments Survey Results by Meridian Compensation Partners, LLC. In setting executive compensation for fiscal years 2023 and 2024, our compensation committee also took into account the executive compensation paid by our Company’s two closest lighting industry peers, LSI Industries, Inc. and Acuity Brands, Inc., as well as its own internal reports on recent trends in executive compensation at public companies, including pay-for-performance, say-on-pay, merit increases, annual incentives, long-term incentives and perquisites.

 

23

To assure independence, in the event it engages a compensation consultant, our compensation committee has a policy of pre-approving all work unrelated to executive compensation proposed to be provided by such compensation consultant. Our compensation committee also would consider all factors relevant to the consultant’s independence from management, including but not limited to the following factors:

 

•

The provision of other services that the consultant provides to us;

 

•

The amount of fees received from us as a percentage of the consultant’s total revenue;

 

•

The consultant’s policies and procedures designed to prevent conflicts of interest;

 

•

Business or personal relationships of the consultant with our compensation committee members;

 

•

The amount of our stock owned by the consultant; and

 

•

Business or personal relationships of the consultant with our executive officers.

Our compensation committee assessed the independence of our principal outside legal counsel, with whom the committee consults from time to time on executive compensation matters. Using the factors set forth above, our compensation committee determined that our principal outside legal counsel was independent and that there were no conflicts of interest with respect to its work for the committee.

Elements of Executive Compensation

Our current executive compensation program for our NEOs consists of the following elements:

 

•

Base salary;

 

•

Short-term annual cash incentive bonus compensation;

 

•

Long-term equity-based incentive compensation (both time vesting and performance vesting); and

 

•

Retirement and other benefits.

Base Salary — Fiscal 2023

We pay our NEOs a base salary to compensate them for services rendered and to provide them with a steady source of income for living expenses throughout the year.

The compensation committee approved a starting base salary for Mr. Jenkins of $365,000 when he joined our company as our executive vice president and chief operating officer on November 11, 2021 based on arm’s length negotiations and internal pay equity considerations.

In late fiscal 2022, in consultation with the chair of our compensation committee, our chief executive officer recommended, and our compensation committee approved, increases to the fiscal 2023 base salaries of each of our NEOs, other than our chief executive officer. Based on the highly competitive labor market, increasing inflationary trends and executive compensation survey data, our chief executive officer recommended, and the compensation committee approved, an approximate 4% increase to the base salaries of each of our NEOs other than the chief executive officer, from $365,000 to $380,000 for fiscal 2023. Our compensation committee did not increase the base salary of our chief executive officer for fiscal 2023. On November 10, 2022, Mr. Altschaefl retired as our chief executive officer and Mr. Jenkins became our new chief executive officer. Upon such promotion, Mr. Jenkins’ base salary was increased from $380,000 to $425,000.

 

24

The fiscal 2023 base salaries for our NEOs compared to their fiscal 2022 base salaries were as follows:

 

Name and Position		Fiscal 2022 Base Salary				Fiscal 2023 Base Salary
Michael W. Altschaefl*		$	500,000			$	500,000
Chief Executive Officer
J. Per Brodin		$	365,000			$	380,000
Chief Financial Officer, Executive Vice President, Chief Accounting Officer and Treasurer
Scott A. Green		$	365,000			$	380,000
Executive Vice President and President of Orion Services Group
Michael H. Jenkins*		$	365,000			$	380,000
Executive Vice President and Chief Operating Officer

 

 

*	On November 10, 2022, Mr. Altschaefl retired as our chief executive officer and Mr. Jenkins became our new chief executive officer. Upon such promotion, Mr. Jenkins’ base salary was increased from $380,000 to $425,000.

Incentive Compensation — Fiscal 2023

For fiscal 2023, in consultation with the chair of our compensation committee, our chief executive officer proposed, and our compensation committee approved, an incentive compensation program for our NEOs that consisted of (i) annual incentive cash bonus opportunities and (ii) long-term equity-based incentive compensation, consisting of awards of three-year pro rata vesting restricted stock grants and three-year performance vesting restricted stock grants. These annual cash bonus opportunities and the long-term incentive compensation for fiscal 2023 for our NEOs are discussed in detail below.

Annual Incentive Cash Bonus Opportunities for Fiscal 2023

Our compensation committee authorized a fiscal 2023 annual executive cash bonus program focused on our goal of achieving our budgeted level of EBITDA. Our fiscal 2023 annual executive cash bonus program initially provided that, if we had achieved threshold EBITDA of $6 million in fiscal 2023, Messrs. Altschaefl, Brodin, Green and Jenkins would have received threshold annual bonus payments of 50%, 25%, 25% and 25%, respectively, of their fiscal 2023 base salaries. If we had achieved our target level of EBITDA of $8 million in fiscal 2023, then Messrs. Altschaefl, Brodin, Green and Jenkins would have received their target annual bonus payments of 90%, 45%, 45% and 45%, respectively, of their fiscal 2023 base salaries. Finally, if we had achieved a maximum level of EBITDA of $10 million or more in fiscal 2023, then Messrs. Altschaefl, Brodin, Green and Jenkins would have received maximum annual bonus payments of 150%, 75%, 75% and 75%, respectively, of their fiscal 2023 base salaries. Bonuses would have been interpolated for EBITDA between the threshold and maximum amounts. We did not achieve our minimum threshold EBITDA goal for fiscal 2023, so no bonuses were paid to our NEOs under our fiscal 2023 annual executive cash bonus program.

Our compensation committee also authorized a special bonus for fiscal 2023 based on our achievement of predetermined revenue targets. If our fiscal 2023 revenue would have been between $145 million and $150 million, Mr. Altschaefl would have received a bonus of $75,000 and Messrs. Brodin, Green and Jenkins would have received bonuses of $35,000 each. If our fiscal 2023 revenue would have been equal or greater than $150 million, then, rather than the bonuses in the preceding sentence, Mr. Altschaefl would have received a bonus of $100,000 and Messrs. Brodin, Green and Jenkins would have received bonuses of $50,000 each. Since our fiscal 2023 revenue was less than $145 million, no special bonuses were paid under this program.

For fiscal 2023, our compensation committee also created a $100,000 discretionary financial performance bonus pool for our NEOs contingent on our achieving at least $10 million in EBITDA in fiscal 2022. Additionally, if we had achieved in excess of $150 million in revenue in fiscal 2023, then an additional $100,000 discretionary bonus pool would have been made available to our NEOs. If and to the extent these goals would have

 

25

been achieved, the resultant bonus pool would have been allocated among our NEOs (excluding our chief executive officer) at the discretion of our chief executive officer. Since we did not achieve either our EBITDA or revenue performance goals for fiscal 2023, no bonus pools were created under these programs.

In connection with Mr. Jenkins, promotion to become our new chief executive officer, he received (a) a special fiscal 2023 bonus of either $75,000 or $100,000 if our revenue for fiscal 2023 met certain targets and (b) an increase in his target fiscal 2023 annual bonus eligibility potential to 90% of his actual base salary paid in fiscal 2023 from 60%. We did not achieve any bonus payment performance thresholds in fiscal 2023, so no performance bonuses were paid to Mr. Jenkins for fiscal 2023.

While our compensation committee had the discretion to adjust the achievement of the financial goals under the fiscal 2023 cash bonus program for unusual and nonrecurring factors and events, such as acquisitions and other unusual events, costs and expenses, it did not exercise any such discretion.

Long-Term Equity-Based Incentive Compensation for Fiscal 2023

As described above, we added performance conditions to a portion of our annual long-term incentive grants for fiscal 2023 for our NEOs.

We granted long-term equity incentive awards to our NEOs for fiscal 2023 25% in the form of performance-vesting restricted stock and 75% in the form of time-vesting restricted stock (or a combination of a restricted stock and restricted cash). The performance-vesting restricted stock vests to the relative extent we achieve between 25%–40% revenue growth in fiscal 2025 compared to our revenue in fiscal 2022. Our compensation committee allowed each of our NEOs the alternative of accepting the time-vesting portion of their fiscal 2023 long-term equity-based incentive grants either in the form of (a) 100% three-year pro rata vesting restricted stock or (b) a combined grant, with 60% of the dollar value of the award in the form of three-year pro rata vesting restricted stock and 40% of the dollar value of the award in the form of restricted cash payable in one-third increments upon the annual vesting of the tandem restricted stock awards. Three of our NEOs chose to accept the time-vesting portion of their fiscal 2023 annual long-term incentive awards in 100% three-year pro rata vesting restricted stock. One of our NEOs chose the combined grant of 60% three-year pro rata vesting restricted stock and 40% restricted cash payable in one-third increments upon the annual vesting of the tandem restricted stock awards.

To reflect more of an emphasis on rewarding enhanced financial performance over a longer-term period, we also increased the relative percentages of base salary represented by the target grant date value of our fiscal 2023 annual long-term equity incentive awards by approximately 12% for Mr. Altschaefl and 16% for Messrs. Brodin and Green. We initially set Mr. Jenkins’s target annual long-term equity incentive award at the same level as Messrs. Brodin and Green. As a result, the relative percentages of base salary represented by the target grant date value of our fiscal 2023 annual long-term equity incentive awards for Messrs. Altschaefl, Brodin, Green and Jenkins were 95% of their respective base salaries.

In connection with Mr. Jenkins’ promotion to become our new chief executive officer, he received (a) a new grant of restricted stock with a value of $42,750 (which increased his total fiscal 2023 target long-term incentive award value to $403,750 from $361,000, or 95% of his new base salary), 75% of which will vest annually pro-rata over a three-year period and 25% of which will be subject to performance-vesting based on the relative achievement of our 40% revenue growth target in fiscal 2025 compared to our revenue in fiscal 2022 and (b) a one-time promotion grant of 25,000 shares of restricted stock vesting pro rata annually over a three-year period.

 

26

The target grant date fair values and number of shares (or dollar amounts for time-vesting restricted cash) for our long-term equity incentive awards to our NEOs for fiscal 2023 (with the dollar values of performance-vesting and time-vesting restricted stock converted into a specific number of shares based on the closing sale price of our Common Stock on the Nasdaq Capital Market on the award effective grant date of June 10, 2022) were as follows:

 

Name and Grant Date Position		Target Grant Date Fair Value of Long- Term Grant ($)				Performance- Vesting Restricted Stock (#)				Time- Vesting Restricted Stock (#)				Time- Vesting Restricted Cash ($)
Michael W. Altschaefl*		$	475,000				54,472				163,417				—
Chief Executive Officer
J. Per Brodin		$	361,000				41,399				74,518			$	108,300
Chief Financial Officer and Executive Vice President
Scott A. Green		$	361,000				41,399				124,197				—
Executive Vice President and President of Orion Services Group
Michael H. Jenkins*		$	361,000				41,399				124,197				—
Executive Vice President and Chief Operating Officer

 

 

*

On November 10, 2022, Mr. Altschaefl retired as our chief executive officer and Mr. Jenkins became our new chief executive officer. Upon such promotion, Mr. Jenkins received (a) a new grant of restricted stock with a value of $42,750 (which increased his total fiscal 2023 target long-term incentive award value to $403,750 from $361,000, or 95% of his new base salary), 75% of which will vest annually pro-rata over a three-year period and 25% of which will be subject to performance-vesting based on the relative achievement of our fiscal 2025 40% revenue growth target over our fiscal 2022 revenue and (b) a one-time promotion grant of 25,000 shares of restricted stock vesting pro rata annually over a three-year period. In connection with Mr. Altschaefl’s retirement, all of Mr. Altschaefl’s then current (i) unvested restricted stock (and any related restricted cash awards) became fully vested on the Retirement Date; (ii) unvested performance share awards became fully vested on the Retirement Date (with performance share awards deemed fully vested at their “target” level of 66%); and (iii) existing stock options that had vested as of the Retirement Date may be exercised by Mr. Altschaefl pursuant to the terms of the individual option award grants.

Base Salary — Fiscal 2024

In late fiscal 2023, in consultation with the chair of our compensation committee, our chief executive officer recommended, and our compensation committee approved, holding the fiscal 2024 base salaries of each of our NEOs at their fiscal 2023 levels; however, the compensation committee determined it would likely reset our NEOs’ base salaries in fiscal 2025 to be more in accordance with market comparables.

 

27

The fiscal 2024 base salaries for our continuing NEOs compared to their fiscal 2023 base salaries are as follows:

 

Name and Current Position		Fiscal 2023 Base Salary				Fiscal 2024 Base Salary
Michael H. Jenkins*		$	380,000			$	425,000
Chief Executive Officer
J. Per Brodin		$	380,000			$	380,000
Chief Financial Officer, Executive Vice President, Chief Accounting Officer and Treasurer
Scott A. Green		$	380,000			$	380,000
Executive Vice President and President of Orion Services Group
Total		$	1,140,000			$	1,185,000

 

 

*	Mr. Jenkins was promoted to become our chief executive officer on November 10, 2022 and, upon such promotion, his base salary was increased from $380,000 to $425,000.

Incentive Compensation — Fiscal 2024

For fiscal 2024, in consultation with the chair of our compensation committee, our chief executive officer proposed, and our compensation committee approved, an incentive compensation program for our NEOs that consisted of (i) annual incentive cash bonus opportunities and (ii) long-term equity-based incentive compensation, consisting of awards of three-year pro rata time vesting restricted stock grants (coupled with restricted cash) and three-year performance vesting restricted stock grants (coupled with restricted cash). These annual cash bonus opportunities and the long-term equity-based incentive compensation for fiscal 2024 for our NEOs are discussed in detail below.

Annual Incentive Cash Bonus Opportunities for Fiscal 2024

Our compensation committee determined that our fiscal 2024 annual incentive cash bonus program should establish target bonus opportunities equal to 100% of base salary for our chief executive officer and 50% for our other NEOs. We also decided to use three fiscal 2024 financial performance measures to determine the level of potential bonus payouts under our fiscal 2024 executive bonus plan, with 50% of the payout based on our relative achievement of our fiscal 2024 budgeted adjusted EBITDA target of $3.1 million, 30% of the payout based on our relative achievement of our fiscal 2024 budgeted revenue target of $114 million and 20% of the payout based on our relative achievement of our fiscal 2024 budgeted combined EV Division/OMS Division revenue target of $31.5 million. All targeted amounts were based on our board-approved fiscal 2024 budget and adjusted EBITDA must take into account any NEO bonuses. Additionally, the EV Division/OMS Division revenue target element of the fiscal 2024 executive bonus plan will only be paid out if and to the extent so determined by the Compensation Committee after taking into account our Company’s relative profitability.

 

28

The compensation committee established the target bonus levels for each of our NEOs as follows for fiscal 2024:

 

Name and Current Position		Fiscal 2024 Target Bonus				Percentage of Fiscal 2024 Base Salary
Michael H. Jenkins		$	425,000				100	%
Chief Executive Officer
J. Per Brodin		$	190,000				50	%
Chief Financial Officer, Executive Vice President, Chief Accounting Officer and Treasurer
Scott A. Green		$	190,000				50	%
Executive Vice President and President of Orion Services Group

The following chart sets forth our NEO’s fiscal 2024 executive bonus plan performance targets and related payouts, with the performance targets based on our Company’s board-approved fiscal 2024 budget:

Fiscal 2024 Annual Executive Bonus Program ($000s)

 

														All Targets = FY24 Budget
1   Orion Adj. EBITDA 50%*						Threshold=$1.5 Million								Target=$3.1 Million								Max=$4.5 Million
		Base				%Payout				Payout				%Payout				Payout				%Payout				Payout
CEO			425				50	%		$	106.3				100	%		$	212.5				150	%		$	318.8
CFO			380				25	%		$	47.5				50	%		$	95.0				75	%		$	142.5
Pres.OSG			380				25	%		$	47.5				50	%			95.0				75	%		$	142.5
2   Orion Revenue 30%						Threshold=$105 Million								Target=$114 Million								Max=$120 Million
		Base				%Payout				Payout				%Payout				Payout				%Payout				Payout
CEO			425				50	%		$	63.8				100	%		$	127.5				150	%		$	191.3
CFO			380				25	%		$	28.5				50	%		$	57.0				75	%		$	85.5
Pres.OSG			380				25	%		$	28.5				50	%		$	57.0				75	%		$	85.5
3   Strategic: EV/OMS Revenue 20%**						Threshold=$27 Million								Target=$31.5 Million								Max=$36 Million
		Base				%Payout				Payout				%Payout				Payout				%Payout				Payout
CEO			425				50	%		$	42.5				100	%		$	85.0				150	%		$	127.5
CFO			380				25	%		$	19.0				50	%		$	38.0				75	%		$	57.0
Pres.OSG			380				25	%		$	19.0				50	%		$	38.0				75	%		$	57.0

 

 

*	Adjusted EBITDA to be measured after taking into account any NEO bonuses.

**

Reflects EV Division $12.5 million budgeted revenue target in fiscal 2024 combined with our Maintenance Division $19 million budgeted revenue target in fiscal 2024, provided that this element of the fiscal 2024 executive bonus plan will only be paid out if and to the extent so determined by the Compensation Committee after taking into account our Company’s relative profitability.

The financial goals described above are not a prediction of how we will perform during our fiscal 2024. The purpose of the goals is to provide appropriate financial metrics to determine amounts of potential incentive compensation under our fiscal 2024 executive bonus program. The goals are not intended to serve, and should not be relied upon, as guidance or any other indication of our expected future performance.

 

29

Long-Term Equity-Based Incentive Compensation for Fiscal 2024

Our chief executive officer recommended, and our compensation committee approved, that the total dollar amount of our NEO fiscal 2024 annual long-term incentive grants be increased on a percentage-of-salary basis to 200% for our chief executive officer and to 150% for our other NEOs. As a result, each NEO was granted fiscal 2024 annual long-term incentive grants (at target level) valued at $850,000, $570,000 and $570,000 for each of Messrs. Jenkins, Brodin and Green, respectively. One half of the dollar value of such awards were granted in the form of a time-vesting award of restricted stock and restricted cash that vests on a pro-rata basis over a three-year employment period after their effective grant date and one-half of the dollar value such awards were granted in the form of performance vesting shares and restricted cash based on our relative achievement of between a 25% to 50% revenue growth target for fiscal 2026 compared to our fiscal 2023 revenue.

In order to reduce the burn-rate of our long-term incentive annual grants, our compensation committee adopted a policy that requires that, until our stock price increases to the level of at least $5.00 per share, all long-term equity incentive awards to our NEOs and our non-employee directors will be evidenced in the form of 60% of the dollar value of each award in restricted stock or performance shares and 40% of the dollar value of the award in the form of restricted cash payable upon and in proportion to the vesting of the tandem stock award.

Since, our 2016 Omnibus Plan does not currently have reserved and available for grant a sufficient number of shares of our Common Stock to support the level of our fiscal 2024 NEO awards, the awards were conditioned and contingent upon our shareholders approving the Share Increase Plan Amendment at our 2023 annual meeting of shareholders and with an effective date of grant three business days thereafter.

The restricted stock and restricted cash awards (with the dollar values of the restricted stock portion of the award to be converted into a specific number of shares based on the closing sale price of our Common Stock on the Nasdaq Capital Market on the third business day after our 2023 annual meeting of shareholders) resulted in grants as follows to our NEOs:

 

Name and Current Position		Value of Time- Vesting Long-Term Grant ($)				Restricted Stock 60% ($)				Restricted Cash 40% ($)
Michael H. Jenkins		$	425,000			$	255,000			$	170,000
Chief Executive Officer
J. Per Brodin		$	285,000			$	171,000			$	114,000
Chief Financial Officer, Executive Vice President, Chief Accounting Officer and Treasurer
Scott A. Green		$	285,000			$	171,000			$	114,000
Executive Vice President and President of Orion Services Group

 

30

The performance share and restricted cash awards (with the dollar values of the restricted stock portion of the award to be converted into a specific number of shares based on the closing sale price of our Common Stock on the Nasdaq Capital Market on the third business day after our 2023 annual meeting of shareholders) resulted in grants as follows to our NEOs:

 

Name and Current Position		Value of Performance- Vesting Long-Term Grant ($) at Target				Performance- Vesting Restricted Stock 60% ($) at Target				Performance- Vesting Restricted Cash 40% ($) at Target				Value of Performance- Vesting Long-Term Grant ($) at Max				Performance- Vesting Restricted Stock 60% ($) at Max				Performance- Vesting Restricted Cash 40% ($) at Max
Michael H. Jenkins		$	425,000			$	255,000			$	170,000			$	637,500			$	382,500			$	255,000
Chief Executive Officer
J. Per Brodin		$	285,000				171,000			$	114,000			$	427,500			$	256,500			$	171,000
Chief Financial Officer, Executive Vice President, Chief Accounting Officer and Treasurer
Scott A. Green		$	285,000			$	171,000			$	114,000			$	427,500			$	256,500			$	171,000
Executive Vice President and President of Orion Services Group

Retirement and Other Benefits

Welfare and Retirement Benefits. As part of a competitive compensation package, we sponsor a welfare benefit plan that offers health, life and disability insurance coverage to participating employees. We also sponsor an employee stock purchase plan under which our employees may purchase shares of our Common Stock. In addition, to help our employees prepare for retirement, we sponsor the Orion Energy Systems, Inc. 401(k) Plan and match employee contributions at a rate of 25% of the first $5,000 of an employee’s contributions (i.e., capped at $1,250). Our NEOs participate in the broad-based welfare plans, our employee stock purchase plan and the 401(k) Plan on the same basis as our other employees. We also provide enhanced life and disability insurance benefits for our NEOs. Under our enhanced life insurance benefit, we pay the full cost of premiums for life insurance policies for our NEOs. The amounts of the premiums are reflected in the Summary Compensation Table below. Our enhanced disability insurance benefit includes a higher maximum benefit level than under our broad-based plan, cost of living adjustments and a portability feature.

Perquisites and Other Personal Benefits. We provide perquisites and other personal benefits that we believe are reasonable and consistent with our overall compensation program to better enable our executives to perform their duties and to enable us to attract and retain employees for key positions. We provide each of our NEOs with a car allowance of $1,000 per month and reimburse them for tax planning and tax preparation services.

Severance and Change of Control Arrangements

We provide certain protections to our NEOs in the event of certain terminations of their employment, including enhanced protections for certain terminations that may occur after a change of control of our company. However, our NEOs will only receive the enhanced severance benefits following a change in control if their employment terminates without cause or for good reason. We describe this type of severance arrangement as being subject to a “double trigger.”

All payments, including any severance payments, to be made to our NEOs in connection with a change of control under their employment agreements and any other of our agreements or plans will be subject to a potential “cut-back” in the event any such severance payments or other benefits become subject to non-deductibility or excise taxes as “excess parachute payments” under Code Section 280G or 4999. The cut-back provisions have

 

31

been structured such that all amounts payable under their employment agreements and other of our agreements or plans that constitute change of control payments will be cut back to one dollar less than three times the executive’s “base amount,” as defined by Code Section 280G, unless the executive would retain a greater amount by receiving the full amount of the payment and paying the related excise taxes (a so-called “valley provision”).

Our 2004 Stock and Incentive Awards Plan and 2016 Plan also provide potential protections to our NEOs in the event of certain changes of control. Under these plans, our NEOs’ stock options and restricted stock and performance shares that are unvested at the time of a change of control may become vested on an accelerated basis in the event of certain changes of control. In addition, our restricted stock and performance share award agreements under the 2016 Plan provide for the automatic vesting of all unvested shares of restricted stock and performance share upon a change of control. Any acceleration of unvested performance shares will be accelerated at their “target level”. Moreover, our employment agreements with our NEOs provide that any unvested equity awards held by our NEOs will be automatically accelerated upon a qualifying termination prior to a change of control, but only to the extent such equity awards would have vested within two years following the date of such qualifying termination.

We selected these triggering events to afford our NEOs some protection in the event of a termination of their employment, particularly after a change of control of our company. We believe these types of protections better enable our NEOs to focus their efforts on behalf of our company without undue concern over the impact on their employment or financial security of a change of control of our company. We also provide severance benefits in order to obtain from our NEOs certain concessions that protect our interests, including their agreements with respect to confidentiality, intellectual property rights waiver, non-solicitation and non-competition. See below under the heading “Payments upon Termination or Change of Control” for a description of the specific circumstances that would trigger payment or the provision of other benefits under these arrangements, as well as a description, explanation and quantification of the payments and benefits under each circumstance.

Other Policies

Policies On Timing of Equity Awards. Our compensation committee and board of directors have adopted a general policy on the timing of equity awards under which our compensation committee generally will make annual equity awards beginning effective as of the date three business days after our next quarterly (or fiscal year-end) earnings release following the decision to make the grant, regardless of the timing of the decision. Our compensation committee has elected to grant equity-based awards shortly following our earnings releases so that the equity-based awards are granted (and valued) at a point in time when the most important information about our company then known to management and our board is likely to have been disseminated in the market.

Our board of directors has also delegated limited authority to our chief executive officer, acting as a subcommittee of our compensation committee, to grant certain equity-based awards under our 2016 Plan. Our chief executive officer may grant awards covering up to a total of 100,000 shares of our Common Stock per fiscal year (beginning in fiscal 2024) to certain non-executive officers in connection with offers of employment, promotions and certain other circumstances. Shares subject to awards granted under this delegated authority which are subsequently cancelled or forfeited may be added back to the delegated share authority grant amount for that fiscal year. Under this delegation of authority, any equity-based awards granted by our chief executive officer must have an effective grant date on the first business day of the month following the event giving rise to the award.

Our equity incentive plans do not permit awards of stock options or stock appreciation rights with an effective grant date prior to the date our compensation committee or our chief executive officer takes action to approve the award.

Executive Officer Stock Ownership Guidelines. One of the key objectives of our executive compensation program is alignment of the interests of our executive officers with the interests of our shareholders. We believe that ensuring that our executive officers are also significant shareholders and have a significant financial interest in our company is an effective means to accomplish this objective.

 

32

The number of shares required to be held by our executive officers as of the Record Date is as follows:

 

Position		Required Number Of Shares				Shares Beneficially Owned
Michael H. Jenkins (Chief Executive Officer)			112,154				73,970
J. Per Brodin (Executive Vice President and Chief Financial Officer)			38,077				75,229
Scott Green (Executive Vice President and President of Orion Services Group)			38,077				407,775

Executive officers are permitted to satisfy these ownership guidelines with shares of our Common Stock that they acquire through the exercise of stock options or other similar equity-based awards, through retention upon vesting of restricted stock and performance share awards or other similar equity-based awards and through direct share purchases. Newly appointed executive officers have until the fifth anniversary of their appointment as executive officers to satisfy the ownership requirement. All of our executive officers have either satisfied the ownership requirement or have additional time to do so.

Tax Considerations. Section 162(m) of the Code generally prohibits publicly traded companies from taking a tax deduction for compensation in excess of $1.0 million that is paid to certain of their current and former executive officers. To the extent the value of any such individual’s compensation exceeds $1.0 million in value, our compensation committee believes that such level of compensation is appropriate to further our company’s objectives of motivating, attracting and retaining our NEOs, despite a portion of such compensation not being eligible for deductibility under Section 162(m).

We also maintain certain deferred compensation arrangements for our employees and non-employee directors that are potentially subject to Code Section 409A. If such an arrangement is neither exempt from the application of Code Section 409A nor complies with the provisions of Code Section 409A, then the employee or non-employee director participant in such arrangement is considered to have taxable income when the deferred compensation vests, even if not paid at such time, and such income is subject to an additional 20% income tax. In such event, we are obligated to report such taxable income to the IRS and, for employees, withhold regular income taxes (but no withholding is required on the 20% additional income tax). If we fail to do so, we could be liable for the withholding taxes and interest and penalties thereon. As a result, our deferred compensation arrangements are intended to either qualify for an exemption from, or to comply with, Code Section 409A.

Strict Prohibition Against Hedging and Pledging. We maintain a policy strictly prohibiting our employees, officers and directors, as well as any of their designees, from engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the value of our Common Stock, including through financial instruments such as prepaid variable forwards, equity swaps collars and exchange funds. Our employees, officers and directors are also prohibited from trading on an exchange in puts, calls and other derivative securities related to our Common Stock. Additionally, our officers and directors are prohibited from entering into any arrangement that, directly or indirectly, involves the pledge of our Common Stock or other use of our Common Stock as collateral for a loan.

 

33

Compensation Committee Interlocks and Insider Participation

During fiscal 2023, no member of our compensation committee had a relationship with us that required disclosure under Item 404 of Regulation S-K. During fiscal 2023, none of our executive officers served as a member of the board of directors or compensation committee, or other committee serving an equivalent function, of any entity that has one or more executive officers who served as members of our board of directors or our compensation committee. None of the members of our compensation committee is an officer or employee of our company, nor have they ever been an officer or employee of our company.

Compensation Committee Report

Our compensation committee has reviewed and discussed the “Compensation Discussion and Analysis” contained in this proxy statement with management. Based on our compensation committee’s review and discussions with management, our compensation committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

Sally Washlow, Chair

Anthony L. Otten

Ellen B. Richstone

 

34

Summary Compensation Table for Fiscal 2023

The following table sets forth for our NEOs the following information for each of the past three fiscal years or for such shorter period as the NEO has been a NEO: (i) the dollar amount of base salary earned; (ii) the dollar value of bonuses and non-equity incentive plan compensation earned; (iii) the grant date fair value, determined under Accounting Standards Codification Topic 718 (“ASC Topic 718”), for all equity-based awards held by our NEOs; (iv) all other compensation and (v) the dollar value of total compensation.

 

Name and Current Principal Position		Fiscal Year				Salary ($)				Bonus ($)				Non-Equity Incentive Plan Compensation ($)				Stock Awards ($)(1)				Option Awards ($)				All Other Compensation ($)				Total ($)
Michael H. Jenkins*			2023				397,557				—				—				456,665				—				11,500	(3)			865,722
Chief Executive Officer(2)			2022				141,086				—				25,000				206,500				—				4,600				377,186
Michael A. Altschaefl*			2023				361,695				—				—				544,407				—				52,897	(4)			958,999
Retired Chief Executive Officer			2022				500,000				—				25,000				424,999				—				82,538				1,032,537
			2021				402,500				—				425,000				361,248				—				115,425				1,304,173
J. Per Brodin			2023				380,000				—				—				222,615				—				51,667	(5)			654,282
Chief Financial Officer, Executive Vice President, Chief Accounting Officer and Treasurer			2022				365,000				—				25,000				310,248				—				51,767				752,015
			2021				159,316				—				79,658				178,499				—				13,451				430,924
Scott A. Green			2023				380,000				—				—				330,915				—				131,539	(6)			842,454
Executive Vice President and President of Orion Services Group			2022				365,000				—				25,000				186,145				—				110,706				686,851
			2021				333,250				—				175,000				178,497				—				59,039				745,786

 

 

*

On November 10, 2022, Mr. Altschaefl retired as our chief executive officer and Mr. Jenkins became our new chief executive officer. Upon such promotion, Mr. Jenkins’ base salary was increased from $380,000 to $425,000 and he received (a) a new grant of restricted stock with a value of $42,750 (which increased his total fiscal 2023 target long-term incentive award value to $403,750 from $361,000, or 95% of his new base salary), 75% of which will vest annually pro-rata over a three-year period and 25% of which will be subject to performance-vesting based on the relative achievement of our 25% to 40% revenue growth target in fiscal 2025 compared to our fiscal 2022 revenue; (b) a one-time promotion grant of 25,000 shares of restricted stock vesting pro rata annually over a three-year period; (c) a special fiscal 2023 bonus of either $75,000 or $100,000 if our revenue for fiscal 2023 met certain targets; and (d) an increase in his target fiscal 2023 annual bonus eligibility potential to 90% of his actual base salary paid in fiscal 2023 from 60%. We did not achieve any bonus payment performance thresholds in fiscal 2023, so no performance bonuses were paid to Mr. Jenkins for fiscal 2023. In conjunction with his retirement, we entered into the Retirement Agreement with Mr. Altschaefl. Pursuant to the Retirement Agreement, in addition to the continuation of certain health insurance benefits through age 65 for both Mr. Altschaefl and his wife, (i) we paid Mr. Altschaefl his current base salary and other accrued benefits owed to him through the Retirement Date; (ii) Mr. Altschaefl was entitled to receive a pro-rata fiscal 2023 annual and special bonus to the extent earned by and paid to our other senior executive officers (no such bonuses were paid in fiscal 2023); and (iii) all of Mr. Altschaefl’s current (A) unvested restricted stock (and any related restricted cash awards) became fully vested on the Retirement Date; (B) unvested performance share awards became fully vested on the Retirement Date (with performance share awards deemed fully vested at their “target” level of 66%); and (C) existing stock options that vested as of the Retirement Date may be exercised by Mr. Altschaefl pursuant to the terms of the individual option award grants. Mr. Altschaefl is entitled to receive non-employee director compensation for continuing to serve on our board of directors after the Retirement Date. All of Mr. Altschaefl’s unvested restricted stock and restricted cash awards earned after the Retirement Date as a non-employee member of our board of directors (including his fiscal 2024 deferred grant) will become fully vested upon his retirement from our board of directors.

 

35

(1)

Represents the grant date fair value calculated pursuant to ASC Topic 718 for restricted stock awards. Additional information about the assumptions that we used when valuing equity awards is set forth in our Annual Report on Form 10-K in the Notes to Consolidated Financial Statements for our fiscal year ended March 31, 2023.

 

(2)	Mr. Jenkins became our executive vice president and chief operating officer effective November 11, 2021. Mr. Jenkins was promoted to our chief executive officer effective as of November 10, 2022.

 

(3)	Includes an $11,500 automobile allowance.

 

(4)	Includes $38,107 in restricted cash that vested in tandem with the vesting of restricted stock awards, a $7,000 automobile allowance, $6,425 in annual life and disability insurance premiums, $1,365 in tax planning expenses.

 

(5)	Includes $39,667 in restricted cash that vested in tandem with the vesting of restricted stock awards and $12,000 automobile allowance.

 

(6)	Includes $113,113 in restricted cash that vested in tandem with the vesting of restricted stock awards, a $12,000 automobile allowance and $6,426 in annual life and disability insurance premiums.

 

36

Grants of Plan-Based Awards for Fiscal 2023

As described above in the Compensation Discussion and Analysis, under our 2016 Plan and employment agreements with certain of our NEOs, we granted restricted stock and non-equity incentive awards (i.e., cash bonuses) to our NEOs in fiscal 2023. The following table sets forth information regarding all such awards.

 

Name		Grant Date				Date of Committee Action				Estimated Future Payouts Under Non-Equity Incentive Plan Awards												Estimated Future Payouts Under Equity Incentive Plan Awards(5)												All Other Stock Awards: Number of Shares of Stock (#)(4)				All Other Option Awards: Number of Securities Underlying Options (#)				Exercise Price of Option Awards ($/Sh)				Grant Date Fair Value of Stock and Option Awards ($)(1)
										Thres- hold ($)				Target ($)				Max ($)				Thres- hold (#)				Target (#)				Max (#)
Michael H.* Jenkins			6/10/2022				5/18/22																13,798				27,599				41,399				124,197				—				—			$	330,915
										$	95,000	(2)		$	171,000	(2)		$	637,500				—				—				—
											—	(3)			—	(3)
			11/11/22																				2,146				4,292				6,438				44,315											$	80,688
Michael* Altschaefl			6/10/2022				5/18/22																18,157				36,311				54,472				213,417				—				—			$	544,407
										$	250,000	(2)		$	450,000	(2)		$	750,000				—				—				—
											—	(3)			—	(3)
J. Per Brodin			6/10/2022				5/18/22																13,798				27,599				41,399				74,518				—				—			$	222,615
										$	95,000	(2)		$	171,000	(2)		$	285,000				—				—				—
											—	(3)		$	108,300	(3)
Scott Green			6/10/2022				5/18/22																13,798				27,599				41,399				124,197				—				—			$	330,915
										$	95,000	(2)		$	171,000	(2)		$	285,000				—				—				—
											—	(3)			—	(3)

 

 

*

On November 10, 2022, Mr. Altschaefl retired as our chief executive officer and Mr. Jenkins became our new chief executive officer. Upon such promotion, Mr. Jenkins’ base salary was increased from $380,000 to $425,000. Upon such promotion, Mr. Jenkins received (a) a new grant of restricted stock with a value of $42,750 (which increased his total fiscal 2023 target long-term incentive award value to $403,750 from $361,000, or 95% of his new base salary), 75% of which will vest annually pro-rata over a three-year period and 25% of which will be subject to performance-vesting based on the relative achievement of our revenue growth targets over three fiscal years; and (b) a one-time promotion grant of 25,000 shares of restricted stock vesting pro rata annually over a three-year period. In connection with his retirement, all of Mr. Altschaefl’s then current (i) unvested restricted stock (and any related restricted cash awards) became fully vested on the Retirement Date; (ii) unvested performance share awards became fully vested on the Retirement Date (with performance share awards deemed fully vested at their “target” level of 66%); and (iii) existing stock options that had vested as of the Retirement Date may be exercised by Mr. Altschaefl pursuant to the terms of the individual option award grants.

 

(1)	Represents the grant date fair value computed in accordance with ASC Topic 718.

 

(2)

The compensation committee established bonus targets for each of our NEOs pursuant to the fiscal 2023 annual incentive cash bonus plan equal to 100% of base salary earned for our chief executive officer and 50% of base salary earned for our other NEOs. The amounts actually earned under the bonus plan by our NEOs are shown in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table for Fiscal 2023.

 

(3)	Represents cash awards payable in one-third increments upon the annual vesting of the tandem restricted stock awards in order to provide liquidity for the tax liabilities incurred upon the vesting of the restricted stock awards. Amount vests 1/3 per year on June 10, 2023, 2024 and 2025.

 

(4)	Vests 1/3 per year on each of the first three anniversaries of the grant date other than Mr. Altschaefl which vested 100% upon retirement.

 

(5)	Vests on the third anniversary of the grant date contingent on achievement of a 3 year revenue growth target.

 

37

Outstanding Equity Awards at Fiscal 2023 Year End

The following table sets out information about the outstanding equity awards held by our NEOs as of March 31, 2023.

 

		Option Awards																Stock Awards
Name		Number of Securities Underlying Unexercised Options Exercisable (#)				Number of Securities Underlying Unexercised Options Un- exercisable (#)				Option Exercise Price ($)				Option Expiration Date				Number of Shares or Units of Stock That Have Not Vested (#)				Market Value of Shares or Units of Stock That Have Not Vested ($)(1)				Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1)
Mr. Jenkins			—				—												201,845	(2)		$	456,230				47,837	(5)		$	127,096
Mr. Altschaefl			36,568				—			$	2.41				5/28/2023				—				—
Mr. Brodin			—				—												117,006	(3)		$	237,522				41,399	(6)		$	84,040
Mr. Green			—				—												161,727	(4)		$	328,306				41,399	(6)		$	84,040

 

 

(1)	The amounts in this column have been computed based on the closing price of our Common Stock of $2.03 on March 31, 2023. The actual value realized by the executive will depend on the market value of our Common Stock on the date that the award vests.

(2)

33,333 shares vest in equal increments on November 11, 2023 and 2024; 124,197 shares vest in equal increments on June 10, 2023, 2024, and 2025; and 44,315 shares vest in equal increments on November 11, 2023, 2024, and 2025; in each instance contingent on Mr. Jenkins’s continued employment through the applicable vesting date.

(3)	34,587 shares vest in equal increments on June 4, 2023 and 2024; and 74,518 shares vest in equal increments on June 10, 2023, 2024, and 2025; and 7,901 shares vest on October 19, 2023; in each instance contingent on Mr. Brodin’s continued employment through the applicable vesting date.

(4)	22,352 shares vest in equal increments on June 4, 2023 and 2024; 15,178 shares vest on June 9, 2023; and 124,197 shares vest in equal increments on June 10, 2023, 2024, and 2025; in each instance contingent on Mr. Green’s continued employment through the applicable vesting date.

(5)	Up to 41,399 shares and 6,438 shares may vest on June 10, 2025 and November 11, 2025, respectively, contingent on achievement of a 3-year revenue performance goal and Mr. Jenkins’s continued employment.

(6)	May vest on June 10, 2025 contingent on achievement of a 3-year revenue performance goal and the executive’s continued employment.

 

38

Option Exercises and Stock Vested for Fiscal 2023

The following table sets forth information about the exercise of options and vesting of restricted stock awards of our NEOs in fiscal 2023.

 

		Option Awards								Stock Awards
Name		Number of Shares Acquired on Exercise (#)(1)				Value Realized on Exercise ($)(2)				Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)(3)
Michael H. Jenkins			—				—				16,667			$	27,667
Michael Altschaefl			26,646			$	3,997				403,124			$	724,129
J. Per Brodin			—				—				25,196			$	53,382
Scott Green			—				—				43,442			$	87,910

 

(1)	Represents the gross number of shares acquired upon exercise of vested options without taking into account any shares that may be withheld to cover option exercise price or applicable tax obligations.

(2)

Represents the value of exercised options calculated by multiplying (a) the number of shares of our Common Stock to which the exercise of the option related, by (b) the difference between the per share unadjusted closing price of our Common Stock on the date of exercise and the exercise price of the options.

(3)	The amounts in this column have been computed based on the closing price of our Common Stock on the vesting date.

Payments Upon Termination or Change of Control

Changes to Employment Agreements During Fiscal 2023

In connection with Mr. Jenkins’ appointment as our new chief executive officer, we entered into an Amended Executive Employment and Severance Agreement with Mr. Jenkins, pursuant to which he was provided with the following new compensation arrangements: (i) an annual base salary of $425,000 and (ii) a pre-change of control severance multiplier of 1.5x and a post-change of control severance multiplier of 2.0. Additionally, he received (a) a new grant of restricted stock with a value of $42,750 (which increased his total fiscal 2023 target long-term incentive award value to $403,750 from $361,000, or 95% of his new base salary), 75% of which will vest annually pro-rata over a three-year period and 25% of which will be subject to performance-vesting based on the relative achievement of our 25% to 40% revenue growth target in fiscal 2025 compared to our revenue in fiscal 2022; (b) a one-time promotion grant of 25,000 shares of restricted stock vesting pro rata annually over a three-year period; (c) a special fiscal 2023 bonus of either $75,000 or $100,000 if our revenue for fiscal 2023 met certain targets; and (d) an increase in his target fiscal 2023 annual bonus eligibility potential to 90% of his actual base salary paid in fiscal 2023 from 60%. We did not achieve any bonus payment performance thresholds in fiscal 2023, so no performance bonuses were paid to Mr. Jenkins for fiscal 2023

In conjunction with his retirement, we entered into the Retirement Agreement with Mr. Altschaefl. Pursuant to the Retirement Agreement, in addition to the continuation of certain health insurance benefits through age 65 for both Mr. Altschaefl and his wife, (i) we paid Mr. Altschaefl his current base salary and other accrued benefits owed to him through the Retirement Date; (ii) Mr. Altschaefl was entitled to receive a pro-rata fiscal 2023 annual and special bonus to the extent earned by and paid to our other senior executive officers (no such bonuses were paid in fiscal 2023); and (iii) all of Mr. Altschaefl’s then current (A) unvested restricted stock (and any related restricted cash awards) became fully vested on the Retirement Date; (B) unvested performance share awards became fully vested on the Retirement Date (with performance share awards deemed fully vested at their “target” level of 66%); and (C) existing stock options that vested as of the Retirement Date may be exercised by Mr. Altschaefl pursuant to the terms of the individual option award grants. Mr. Altschaefl is entitled to receive non-employee director compensation for continuing to serve on our board of directors after the Retirement Date. All of Mr. Altschaefl’s unvested restricted stock and restricted cash awards earned after the Retirement Date as a non-employee member of our board of directors will become fully vested upon his retirement from the board of directors. In connection with Mr. Altschaefl’s retirement and planned transition to a consulting role after he

 

39

retires from our board of directors, we will pay Mr. Altschaefl $300 per hour for any provided consulting services after the date Mr. Altschaefl is no longer a member of our board of directors until December 31, 2023. Under the Retirement Agreement, Mr. Altschaefl agreed to a general release of any claims in favor of us and our affiliates and reaffirmed his existing confidentiality, noncompetition and non-solicitation obligations. He also agreed to certain so-called “standstill” restrictions during his consulting period and for two years thereafter.

Changes to Employment Agreements During Fiscal 2022

In fiscal 2022, our compensation committee approved an amendment to Mr. Altschaefl’s employment agreement to eliminate his single-trigger change in control payment, and to provide that such change in control payment would instead only be paid upon a termination without cause or for good reason following a change in control.

During fiscal 2022, we also entered into an employment agreement with Mr. Jenkins when he joined our company in November of 2021. The terms of his agreement are substantially similar to the agreements we entered into with Mr. Brodin and Mr. Green in fiscal 2021, and includes severance benefits upon a termination without cause or for good reason, both before and after a change in control, which are described below.

Severance Benefits (No Change in Control)

Under the employment agreements with our NEOs, our NEOs are entitled to certain severance payments and other benefits upon a qualifying employment termination. If such executive’s employment is terminated without “cause” or for “good reason”, the executive will be entitled to a lump sum severance benefit equal to a multiple (indicated in the table below) of the sum of his base salary plus the average of the prior three years’ bonuses; a pro rata bonus for the year of the termination; COBRA premiums at the active employee rate for the duration of the executive’s COBRA continuation coverage period; and the acceleration and vesting of all equity awards, but only to the extent such equity awards would have vested within two years following the date of such qualifying termination. To receive these benefits, such executives must execute and deliver to us (and not revoke) a general release of claims acceptable to us.

“Cause” is defined in the employment agreements as a good faith finding by our board of directors that the executive has (i) failed, neglected, or refused to perform the lawful employment duties related to his position or that we assigned to him (other than due to disability); (ii) committed any willful, intentional, or grossly negligent act having the effect of materially injuring our interests, business, or reputation; (iii) violated or failed to comply in any material respect with our published rules, regulations, or policies; (iv) committed an act constituting a felony or misdemeanor involving moral turpitude, fraud, theft, or dishonesty; (v) misappropriated or embezzled any of our property (whether or not an act constituting a felony or misdemeanor); or (vi) breached any material provision of the employment agreement or any other applicable confidentiality, non-compete, non-solicit, general release, covenant not-to-sue, equity award agreement or other agreement with us.

“Good reason” is defined in the employment agreements as the occurrence of any of the following without the executive’s consent: (i) a material diminution in the executive’s base salary; (ii) a material diminution in the executive’s authority, duties or responsibilities; (iii) a material change in the geographic location at which the executive must perform services; or (iv) a material breach by us of any provision of the employment agreement or any equity agreement.

 

40

The severance multiples and restrictive covenants under the employment agreements, prior to any change of control occurring, are as follows:

 

Executive		Severance				Non-compete and Confidentiality
Michael H. Jenkins			1.5 × Salary + Avg. Bonus				Yes
J. Per Brodin			1 × Salary + Avg. Bonus				Yes
Scott Green			1 × Salary + Avg. Bonus				Yes

We originally set the severance multiples and restrictive covenants under the employment agreements based on advice from an independent compensation consultant that such multiples were consistent with general public company practice and our subjective belief at the time that these amounts and terms were necessary to provide our NEOs with compensation arrangements that will help us to retain and attract high-quality executives in a competitive job market. The severance multiples vary among our individual NEOs based on the advice of an independent compensation consultant that such multiples and terms were consistent with general public company practice and our subjective judgment. We did not ascertain the basis or support for an independent compensation consultant’s advice that such multiples and other terms are consistent with general public company practice.

Change of Control Severance Benefits

The severance provisions for a termination without cause or for good reason following a change of control, as defined below, generally remain the same as in the pre-change of control context as described above, except that the multiplier used to determine the severance amount increases, as is shown in the table below. The employment agreements do not provide for an exercise tax gross up in the event such taxes would become due on the change in control benefits. Rather, each employment agreement provides that, if excise taxes would otherwise be imposed in connection with payments received upon a change in control, then the amount of such payments will either be cut back to a level below the level that would trigger the imposition of the excise taxes, or be paid in full and subject to the excise taxes, whichever results in the better after-tax result to the NEO.

 

Executive		Severance		Trigger				Excise Tax Gross-Up
Michael H. Jenkins		2 x Salary + Avg. Bonus			Double				No
J. Per Brodin		2 × Salary + Avg. Bonus			Double				No
Scott Green		2 × Salary + Avg. Bonus			Double				No

We set the post change of control severance multiples under the NEOs’ employment agreements based on our belief that these amounts and terms would provide appropriate levels of protection for the NEOs to enable them to focus their efforts on behalf of our company without undue concern for their employment or financial security following a change in control. In making this original determination, our compensation committee considered information provided by an independent compensation consultant indicating that the proposed change of control severance multiples were generally consistent with the practices of an independent compensation consultant’s surveyed companies.

The employment agreements for Messrs. Jenkins, Brodin and Green also provide that, following the change of control, the executive is guaranteed the same base salary and a bonus opportunity at least equal to 100% of the prior year’s target award and with the same general probability of achieving performance goals as was in effect prior to the change of control. In addition, the executive is guaranteed participation in salaried and executive benefit plans that provide benefits, in the aggregate, at least as great as the benefits being provided prior to the change of control.

 

41

Definition of Change in Control

A change of control under the employment agreements generally occurs when a third party acquires 20% or more of our outstanding stock, there is a hostile board election, a merger occurs in which our shareholders cease to own 50% of the equity of the successor, we are liquidated or dissolved or substantially all of our assets are sold. We have agreed to treat these events as triggering events under the employment agreements because such events would represent significant changes in the ownership of our company and could signal potential uncertainty regarding the job or financial security of the NEOs. Specifically, we believe that an acquisition by a third party of 20% or more of our outstanding stock would constitute a significant change in ownership of our company because we have a relatively diverse, widely-dispersed shareholder base. We believe the types of protections provided under our employment agreements better enable our executives to focus their efforts on behalf of our company during such times of uncertainty.

Equity Plans

Our equity plans provide for certain benefits in the event of certain changes of control. Under our existing equity plans, if there is a change of control, our compensation committee may, among other things, accelerate the vesting of restricted stock and restricted cash and exercisability of all outstanding stock options and/or require that all outstanding options be cashed out. In addition, our restricted stock performance shares award agreements approved by our compensation committee under the 2004 Stock and Incentive Awards Plan and 2016 Plan provide for the automatic vesting of all unvested shares of restricted stock and performance shares upon a change of control, with performance shares to vest at their designated “target” level.

A change of control under our 2004 Stock and Incentive Awards Plan and our 2016 Plan generally occurs when a third party acquires 20% or more of our outstanding stock, there is a hostile board election, a merger occurs in which our shareholders cease to own 50% of the equity of the successor, or we are liquidated or dissolved or substantially all of our assets are sold.

 

42

Payments Upon Termination

The following table summarizes the estimated value of payments and other benefits to which our NEOs would have been entitled upon certain terminations of employment, assuming, solely for purposes of such calculations, that (i) the triggering event or events occurred on March 31, 2023, and that the employment agreements had been amended and restated as of such date, and (ii) in the case of a change of control, the vesting of all restricted stock, performance shares and restricted cash held by our NEOs was accelerated, with performance shares to vest at their designated “maximum” level.

 

Name		Benefit		Without Cause or for Good Reason ($)				Without Cause or for Good Reason in Connection With a Change of  Control ($)(1)
Michael H. Jenkins		Severance		$	650,000			$	866,667
		Pro Rata Target Bonus		$	382,500			$	382,500
		Benefits		$	45,000			$	45,000
		Acceleration of Equity		$	325,705			$	506,854
		Total		$	1,403,205			$	1,801,021
J. Per Brodin		Severance		$	414,886			$	829,772
		Pro Rata Target Bonus		$	171,000			$	171,000
		Benefits		$	45,000			$	45,000
		Acceleration of Equity		$	226,766			$	361,229
		Total		$	929,852			$	1,515,301
Scott Green		Severance		$	446,667			$	893,333
		Pro Rata Target Bonus		$	171,000			$	171,000
		Benefits		$	45,000			$	45,000
		Acceleration of Equity		$	412,670			$	603,752
		Total		$	1,029,333			$	1,644,079

 

*	Based on the closing price of our Common Stock on March 31, 2023 of $2.03. Also includes accelerated vesting of restricted cash.

Equity Award Acceleration Upon Change of Control

If a change of control had occurred at the end of our fiscal 2023 on March 31, 2023, and the vesting of all performance shares and shares of restricted stock and all restricted cash then held by our NEOs were automatically accelerated in accordance with the terms of the applicable award agreements (assuming maximum performance for performance shares), and all such restricted stock and performance shares were cashed out for a payment equal to the product of (A) the number of unvested restricted and performance shares and (B) the closing price of our Common Stock on March 31, 2023 of $2.03, and with respect to the restricted cash, a cash payment equal to the amounts set forth in each tandem award agreement at the time of grant, our NEOs would have received approximately the following benefits.

 

Name		Number of Unvested Restricted Stock / Performance Shares Accelerated and Cashed Out (#)				Value Realized For Restricted Stock / Performance Shares ($)				Value Realized For Restricted Cash ($)
Michael H. Jenkins			249,682			$	506,854			$	0
J. Per Brodin			158,405			$	321,562			$	147,967
Scott Green			203,126			$	412,346			$	122,400

 

43

Pay Versus Performance

In accordance with rules adopted by the Securities and Exchange Commission (“SEC”) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are providing the following disclosure regarding executive “compensation actually paid” (“CAP”), as calculated per SEC disclosure rules, in accordance with the rules applicable to smaller reporting companies. CAP represents a new required calculation of compensation that differs significantly from the Summary Compensation Table calculation of compensation, the NEO’s realized or earned compensation, as well as from the way in which the Compensation Committee views annual compensation decisions. The amounts in the table below are calculated in accordance with SEC rules and do not represent amounts actually earned or realized by NEOs, including with respect to equity awards which remain subject to forfeiture if the vesting conditions are not satisfied.

 

Fiscal Year		Summary Compensation Table Total for CEO Michael A. Altschaefl $				Summary Compensation Table Total for CEO Michael H. Jenkins $				Compensation Actually Paid to CEO Michael A. Altschaefl(2) $				Compensation Actually Paid to CEO Michael H. Jenkins(2) $				Average Summary Compensation Table Total for Non-CEO NEOs(3) $				Average Compensation Actually Paid to Non-CEO NEOs(2)(3) $				Value of Initial Fixed $100 Investment Based on the Total Shareholder Return				Net Income (in millions) $
2023		$	958,999.00			$	865,722.00			$	678,778.00			$	824,124.00			$	748,368.00			$	673,880.00				29.17				-34.3
2022(1)		$	1,032,537.00			$	—			$	350,056.00			$	—			$	605,350.00			$	370,835.00				40.23				6.1

 

Footnotes:

 

1)	Michael W. Altschaefl retired as CEO on November 10, 2022, and Michael H. Jenkins was appointed as CEO.

 

2)	Deductions from, and additions to, total compensation in the Summary Compensation Table by year to calculate Compensation Actually Paid include:

 

		Fiscal 2023												Fiscal 2022
		CEO Michael A. Altschaefl				CEO Michael H. Jenkins				Average Non-CEO NEOs				CEO Michael A. Altschaefl				Average Non-CEO NEOs
Total Compensation from Summary Compensation Table		$	958,999			$	865,722			$	748,368			$	1,032,537			$	605,350
Adjustments for Equity Awards
Adjustment for grant date values in the Summary Compensation Table		$	(544,407	)		$	(456,665	)		$	(276,765	)		$	(424,999	)		$	(234,298	)
Year-end fair value of unvested awards granted in the current year		$	—			$	457,567			$	257,666			$	198,996			$	124,142
Year-over-year difference of year-end fair values for unvested awards granted in prior years		$	—			$	(25,666	)		$	(30,192	)		$	(343,970	)		$	(88,811	)
Fair values at vest date for awards granted and vested in current year		$	436,560			$	—			$	—			$	—			$	—
Difference in fair values between prior year-end fair values and vest		$	(172,374	)		$	(16,834	)		$	(25,197	)		$	(112,508	)		$	(35,548	)
date fair values for awards granted in prior years
Forfeitures during current year equal to prior year-end fair value		$	—			$	—			$	—			$	—			$	—
Dividends or dividend equivalents not otherwise included in total compensation		$	—			$	—			$	—			$	—			$	—
Total Adjustments for Equity Awards		$	(280,221	)		$	(41,598	)		$	(74,488	)		$	(682,481	)		$	(234,515	)
Compensation Actually Paid (as calculated)		$	678,778			$	824,124			$	673,880			$	350,056			$	370,835

 

44