UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Director Retirement and Reclassification
On November 14, 2023, director James M. Stolze notified the Company’s Board of Directors that he would retire from the Board effective upon the expiration of his current term at the Company’s 2024 Annual Meeting of Stockholders. Mr. Stolze indicated that his retirement from the Board was not due to any disagreement with the Company or any concerns relating to the Company’s operations, policies or practices.
In order to rebalance the three classes of directors, and with the consent of director Janice L. Hess, whose current term would not have expired until 2025, the Board reclassified Ms. Hess into the same class as Mr. Sayler and Mr. Stolze, with terms expiring at the Company’s 2024 Annual Meeting; and in order to avoid a vacancy on the Board resulting from Mr. Stolze’s retirement the Board of Directors approved reducing the size of the Board from eight to seven directors upon the expiration of Mr. Stolze’s term.
Executive Officers – Long-Term Equity Incentive Awards
On November 14, 2023, the Human Resources and Compensation Committee of the Company’s Board of Directors approved the fiscal 2024 awards of time-based Restricted Share Units (RSUs) and Performance Share Units (PSUs) to the Company’s three executive officers and the other participants in the Company’s LTI program, effective November 14, 2023.
Other than the share amounts, the terms of the fiscal 2024 RSUs (and future RSUs except to the extent hereafter amended by the HRCC) are substantially similar to those awarded for fiscal 2023, except that the fiscal 2024 awards will vest over a period of approximately three instead of 3½ years, in three equal portions approximately 12, 24 and 36 months after the grant date; for the fiscal 2024 awards, vesting will occur on the last NYSE trading days in November 2024, 2025 and 2026.
The terms of the fiscal 2024 PSUs (and future PSUs except to the extent hereafter amended by the HRCC) are substantially similar to those awarded for fiscal 2023 other than the specific share amounts and performance goals, except that a provision has been added to expressly provide that the awards are subject to the Company’s Clawback Policy as recently amended to comply with the enhanced clawback-related listing standards adopted in 2023 by the NYSE. The fiscal 2024 PSUs will vest after a three-year performance period beginning October 1, 2023 and ending on September 30, 2026, at which time they will be converted into a currently undeterminable number of shares of Company common stock, which may be less than or greater than the number of PSUs awarded, within certain specified threshold and maximum limits, depending on the degree to which the Company has achieved one or more specified performance goals. If the performance is less than the threshold goal for a particular performance measure, there will be no payout of that portion of the PSUs dependent on that measure.
The performance goals for the fiscal 2024 PSUs are specified Committee-approved targets for EBITDA (60%) and Return on Invested Capital (40%), with the resulting number of shares potentially subject to increase or decrease based on the Company’s Total Shareholder Return (TSR) over the performance period compared to the TSR of the companies in a peer group based on the S&P Small-Cap 600 Industrials Index (rTSR). If the Company’s rTSR is below the 25th percentile or above the 75th percentile, the resulting number of shares will be decreased by 20% or increased by 20%, respectively; if the Company’s rTSR is from the 25th percentile to the 75th percentile, no adjustment will be made.
The target number of shares in each RSU and PSU award equals the Committee-approved target values divided by the 15-day average trading price of the Company’s stock. The actual payout of the RSUs and PSUs will be in shares, whose value at the time of payout may be greater or less than the target values.
For the executive officers, the numbers of RSUs granted and the PSU threshold, target and maximum numbers of shares payable according to the performance criteria, were as follows:
| RSU | PSU | |||||||||||||||||||||||
| Target Values | Number | Target Values | PSU Payout Potential (Shares) | |||||||||||||||||||||
| Name and Title | as of Grant Date | of RSUs Granted | as of Grant Date | Threshold (50%) | Target (100%) | Maximum (200%) | ||||||||||||||||||
| Bryan H. Sayler Chief Executive Officer & President | $ | 755,000 | 7,627 | $ | 755,000 | 2,288 | 7,627 | 15,254 | ||||||||||||||||
| Christopher L. Tucker Senior Vice President & Chief Financial Officer | $ | 299,250 | 3,023 | $ | 299,250 | 907 | 3,023 | 6,046 | ||||||||||||||||
| David M. Schatz Senior Vice President, General Counsel & Secretary | $ | 152,500 | 1,538 | $ | 152,500 | 461 | 1,538 | 3,076 | ||||||||||||||||
| Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
| Exhibit No. | Description of Exhibit | ||
| 104 | Cover Page Inline Interactive Data File |
SIGNATURE
Pursuant to the requirements 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: November 20, 2023
| ESCO TECHNOLOGIES INC. | ||
| By: | /s/ David M. Schatz | |
| David M. Schatz | ||
| Senior Vice President, General Counsel and Secretary | ||