UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported) August 10, 2021 (August 4, 2021)

TWIN DISC, INCORPORATED

(Exact name of registrant as specified in its charter)

Wisconsin	001-7635	39-0667110
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

1328 Racine Street Racine, Wisconsin 53403

(Address of principal executive offices)

Registrant's telephone number, including area code:         (262)638-4000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐         Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐         Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐         Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐         Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock (No Par Value)	TWIN	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Item 5.02         Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

2021 LONG-TERM INCENTIVE PLAN

On August 4, 2021, the Board of Directors (the “Board”) of Twin Disc, Incorporated (the “Company”) approved a new long-term incentive plan, entitled the Twin Disc, Incorporated 2021 Long-Term Incentive Compensation Plan (the “2021 LTI Plan”).          Benefits under the 2021 LTI Plan may be granted, awarded or paid in any one or a combination of stock options, stock appreciation rights, restricted stock awards, restricted stock units, cash-settled restricted stock units, performance stock awards, performance stock unit awards, performance unit awards, and dividend equivalent awards.  There is reserved for issuance under the Plan an aggregate of 715,000 shares of the Company’s common stock, which may be authorized and unissued shares or shares reacquired by the Company in the open market or a combination of both.  The aggregate amount is subject to proportionate adjustments for stock dividends, stock splits and similar changes.

The Compensation and Executive Development Committee of the Board (the "Committee") will administer the 2021 LTI Plan.  The Committee has the discretionary authority to prescribe, amend and rescind rules and regulations relating to the 2021 LTI Plan, to select the eligible employees who shall receive awards under the 2021 LTI Plan, to grant awards under the 2021 LTI Plan and determine the terms and conditions of such awards, and to interpret the 2021 LTI Plan and/or any agreement entered into under the 2021 LTI Plan.

The 2021 LTI Plan became effective immediately upon approval by the Board. However, the Company intends to submit the 2021 LTI Plan to the Company’s shareholders for approval at the next annual meeting of shareholders, and all awards made under the 2021 LTI Plan will be null and void if the shareholders do not approve the 2021 LTI Plan before August 4, 2022. Pursuant to rules of the NASDAQ Stock Market, awards granted under the 2021 LTI Plan are designed so that no equity may be issued prior to shareholder approval of the 2021 LTI Plan. The 2021 LTI Plan is intended to replace the Twin Disc, Incorporated 2018 Long-Term Incentive Compensation Plan, and if the 2021 LTI Plan is approved by the Company’s shareholders, no new awards will be made under the 2018 LTI Plan.

Statements about the 2021 LTI Plan are qualified by and subject to the actual provisions of the 2021 LTI Plan, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.

SALARY AND INCENTIVE COMPENSATION

At its meeting on August 4, 2021, the Committee (i) approved the base salaries of, and (ii) approved the targets for fiscal 2022 bonuses for, the Company’s principal executive officer, principal financial officer, and the Company’s other “named executive officers” (as used in Instruction 4 to Item 5.02 of Form 8-K). The base salaries and target bonuses for such named executive officers were set as follows:

Name and Position	Base Salary	Target Bonus as
		% of Base Salary
John H. Batten
Chief Executive Officer	$630,000	85%
James E. Feiertag
President and
Chief Operating Officer	$440,000	65%
Jeffrey S. Knutson	$367,500	55%
Vice President – Finance,
Chief Financial Officer,
Treasurer, and Secretary

The above base salaries represent an increase of 5% for Mr. Batten and Mr. Knutson, which increases are effective the first pay period that includes October 1, 2021. The base salary of Mr. Feiertag was not changed.

In each case, the target incentive bonus is based on the FY 2019 Corporate Incentive Plan (“CIP”), which the Committee adopted and approved on August 4, 2021. The CIP establishes the target bonuses for the named executive officers based on the following factors and relative weights for each factor: (i) EBITDA (20%); corporate free cash flow (20%); gross margin improvement (20%); optimization of corporate-owned facilities (20%) and group continuous improvement objectives (20%). In no event will an incentive payment under the CIP exceed 200% of the target. An incentive payment to a named executive officer under the CIP may be increased or decreased by up to 20%, at the discretion of the Chief Executive Officer (except that an increase or decrease of the CIP payment to the CEO shall be at the discretion of the Committee).

On August 4, 2021, the Committee also issued performance stock awards to certain of its named executive officers of the Company under the 2021 LTI Plan.  A target number of 48,887 performance shares were awarded to Mr. Batten, and a target number of 18,857 performance shares were awarded to Mr. Knutson. The performance shares will be paid out based on the following performance objectives and relative weights for each objective for the three fiscal year period ending June 30, 2024: (i) average return on invested capital (also known as return on total capital) (40%), (ii) cumulative sales revenue (30%), and (iii) adjusted earnings per share (30%). With respect to each performance objective, a value shall be determined as a percentage of the target based on the attainment of the performance objective for the performance period. If the Company does not obtain the threshold for that performance objective, such percentage shall be 0%. If the Company obtains the threshold for that performance objective, the percentage shall be 50%. If the Company equals or exceeds the maximum for that performance objective, the percentage shall be 150%. Outcomes between the threshold and target will be interpolated linearly between the amount of threshold award and the amount of the target award applicable to that performance objective, and outcomes between target and maximum will be interpolated linearly between the amount of the target award and the amount of the maximum award applicable to that performance objective. The percentage for each performance objective will be multiplied by the weight accorded to that performance objective, and the sum of the weighted percentages for each of performance objectives will be multiplied by the target number of performance shares awarded. The maximum number of performance shares that can be earned by the named executive officers pursuant to this award is 101,617. A copy of the form of the Performance Stock Award Grant Agreement is attached hereto as Exhibit 10.2 and is incorporated herein by reference. 

On August 4, 2021, the Committee also issued restricted stock units to certain of its named executive officers of the Company under the 2021 LTI Plan.  Each restricted stock unit represents the right to receive one share of common stock of the Company if and when the restricted stock unit vests. A total of 20,952 restricted stock units were granted to Mr. Batten, and a total of 12,571 restricted stock units were granted to Mr. Knutson.  The restricted stock units will vest in three years, provided the named executive officer remains employed as of such vesting date.  Subject to obtaining shareholder approval of the 2021 LTI Plan, the restricted stock units will fully vest if the named executive officer terminates employment due to death or disability, or if, following a change in control of the Company, the named executive officer is involuntarily terminated without cause or terminates employment for good reason.  In conjunction with the restricted stock unit awards, the Committee also granted dividend equivalent awards. If and when a named executive officer’s restricted stock units vest, the named executive officer shall receive a payment equal to the cash dividends that would have been paid during the restricted period on the shares of stock represented by the restricted stock units (plus interest), as well as any stock dividends that would have been issued during the restricted period on the shares of stock represented by the restricted stock units. All awards of restricted stock units and dividend equivalent awards are contingent upon the approval of the 2021 LTI Plan by the Company’s shareholders prior to August 4, 2022, and the awards shall be null and void if such shareholder approval is not obtained. A copy of the form of the Restricted Stock Unit Grant Agreement is attached hereto as Exhibit 10.3 and is incorporated herein by reference.         

RESIGNATION OF CHIEF ACCOUNTING OFFICER

On August 5, 2021, Mr. Feiertag announced his intention to retire effective on or about September 30, 2021. The Company is in the process of defining the future state organizational model.

On August 5, 2021, Debbie Lange, the Chief Accounting Officer of the Company, announced her intention to retire effective on or about August 31, 2021. After that date, the functions of the Company’s Chief Accounting Officer will be assumed by Jeffrey S. Knutson, the Chief Financial Officer of the Company.

FORWARD LOOKING STATEMENTS

The disclosures in this report on Form 8-K and in the documents incorporated herein by reference contain or may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believes,” “expects,” “intends,” “plans,” “anticipates,” “hopes,” “likely,” “will,” and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company (or entities in which the Company has interests), or industry results, to differ materially from future results, performance or achievements expressed or implied by such forward-looking statements. Certain factors that could cause the Company’s actual future results to differ materially from those discussed are noted in connection with such statements, but other unanticipated factors could arise. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management’s view only as of the date of this Form 8-K. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, conditions or circumstances.

Item 9.01         Financial Statements and Exhibits.

(d)         Exhibits.

EXHIBIT NUMBER	DESCRIPTION
10.1	Twin Disc, Incorporated 2021 Long-Term Incentive Compensation Plan
10.2	Form of Performance Stock Award Grant Agreement for performance stock grants on August 4, 2021
10.3	Form of Restricted Stock Unit Grant Agreement for restricted stock grants on August 4, 2021
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 10, 2021	Twin Disc, Incorporated
	/s/ Jeffrey S. Knutson
	Jeffrey S. Knutson
	Vice President-Finance, Chief Financial Officer, Treasurer & Secretary