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): May 28, 2015
Graham Corporation
(Exact name of Registrant as specified in its charter)
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Delaware |
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1-8462 |
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16-1194720 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
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20 Florence Avenue,
Batavia, New York |
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14020 |
(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code: (585) 343-2216
N/A
(Former name or former address, if changed since last report)
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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Fiscal 2016 Annual Stock-Based Long-Term Incentive Award Plan for Senior Executives. On May 28, 2015, the Compensation Committee of
the Board of Directors (the Compensation Committee) of Graham Corporation (the Company) renewed its Annual Stock-Based Long-Term Incentive Award Plan for Senior Executives (the Restricted Stock Bonus Program) for
the fiscal year ending March 31, 2016 (Fiscal 2016) and approved grants of time-vested restricted stock and performance-vested restricted stock thereunder in the amounts set forth below to the Companys named executive
officers. Also on May 28, 2015, the Compensation Committee approved the grant of time-vested restricted stock in the amounts set forth below to the Companys non-retiring Directors.
All such grants under the Restricted Stock Bonus Program were made under the Amended and Restated 2000 Graham Corporation Incentive Plan to
Increase Shareholder Value (the Plan). The time-vested restricted stock vests 33 1/3% per year over three years. The performance-vested restricted stock vests 50% based upon the Companys achievement of EBITDA margin goals for
the fiscal year ended March 31, 2018 (Fiscal 2018) and 50% based on the Companys achievement of consolidated revenue goals for Fiscal 2018. The time-vested restricted stock granted to the Companys Directors vests on the
first anniversary of the date of grant.
The number of shares of time-vested restricted stock and performance-vested restricted stock
awarded by the Compensation Committee to the Companys named executive officers under the Restricted Stock Bonus Program was determined using each such officers Long-Term Incentive Percentage (the L-T Percentage) in effect for
Fiscal 2015. For Fiscal 2015, the L-T Percentage for each of the Companys named executive officers was as follows: Mr. Lines 42%; Mr. Glajch 35%; Mr. Smith 35%; and Ms. Condame 25%. The number of
shares of time-vested restricted stock was determined by multiplying 50% of each named executive officers base salary in effect on the date of grant by such officers L-T Percentage, and then dividing the product by the closing price of
the Companys Common Stock on the NYSE on the date of grant. The number of shares of performance-vested restricted stock was determined by multiplying 50% of each named executive officers base salary in effect on the date of grant by such
officers L-T Percentage, and then dividing the product by the closing price of the Companys Common Stock on the NYSE on the date of grant. The number of shares of restricted stock awarded to each of the Companys Directors was
determined by dividing $25,000 by the closing price of the Companys Common Stock on the NYSE on the date of grant. The closing price of the Companys Common Stock on the NYSE exchange on May 28, 2015 was $23.13.
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Named Executive Officer |
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Number of Shares of Time-Vested Restricted Stock Granted (1) |
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Number of Shares of Performance-Vested Restricted Stock Granted (1)(2)(3) |
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James R. Lines,
President and Chief Executive Officer |
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3,275 |
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3,275 |
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Jeffrey Glajch,
Vice President of Finance and
Administration and Chief Financial Officer |
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1,926 |
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1,926 |
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Alan E. Smith,
Vice President of Operations |
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1,645 |
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1,645 |
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Jennifer R. Condame
Controller and Chief Accounting Officer |
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860 |
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860 |
(1) |
In the event a named executive officers employment terminates prior to the conclusion of a vesting for reasons other than death or disability, such officers right to receive any unvested time-vested
restricted stock is forfeited. |
(2) |
The number of shares that will vest following the conclusion of Fiscal 2018 is based upon the Companys achievement of performance criteria. The number of shares set forth above assumes target achievement of such
performance criteria. If maximum achievement is realized, the amounts set forth above will double. Once EBITDA margin and consolidated revenue are determined for Fiscal 2018, the actual number of shares to which each named executive officer is
entitled will be adjusted accordingly. |
(3) |
In the event a named executive officers employment terminates prior to the conclusion of Fiscal 2018 for reasons other than death or disability, such officers right to receive the performance-vested
restricted stock shall be forfeited. |
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Director |
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Number of Shares of Time-Vested Restricted Stock Awarded |
James Barber |
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1,081 |
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Alan Fortier |
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1,081 |
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James Malvaso |
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1,081 |
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Gerard Mazurkiewicz |
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1,081 |
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Jonathan Painter |
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1,081 |
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Lisa Schnorr |
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1,081 |
The Restricted Stock Bonus Program in effect for Fiscal 2016 is attached to this Current Report
on Form 8K as Exhibit 99.1 and the above summary of the Restricted Stock Bonus Program is qualified in its entirety by reference to such Exhibit.
Fiscal 2016 Annual Executive Cash Bonus Program. On May 28, 2015, the Compensation Committee renewed the Companys Annual
Executive Cash Bonus Program (the Cash Bonus Program) for Fiscal 2016. The objective of the Cash Bonus Program is to compensate the Companys named executive officers for above-average performance through an annual cash bonus
related both to Company and individual performance. For Fiscal 2016, the Compensation Committee has set target bonus levels at 100% attainment of both Company and personal objectives as follows: Mr. Lines 60% of base salary;
Mr. Glajch 35% of base salary; Mr. Smith 35% of base salary; and Ms. Condame 25% of base salary. Each named executive officer may receive anywhere from 0% to 200% of his or her target bonus level depending on the
attainment of such objectives. A summary of the performance goal weightings for the Companys named executive officers for Fiscal 2016 is as follows:
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Named Executive Officer |
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Consolidated Net Income |
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Executable Backlog at Fiscal 2016 Year End |
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Personal Goals |
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James R. Lines |
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40% |
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40% |
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20% |
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Jeffrey Glajch |
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40% |
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40% |
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20% |
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Alan E. Smith |
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40% |
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40% |
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20% |
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Jennifer R. Condame |
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40% |
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40% |
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20% |
The Cash Bonus Program in effect for Fiscal 2016 is attached to this Current Report on Form 8K as
Exhibit 99.2 and the above summary of the Cash Bonus Program is qualified in its entirety by reference to such Exhibit.
Fiscal 2015
Named Executive Officer Bonuses. On May 28, 2015, the Compensation Committee approved the payment of cash bonuses to the Companys named executive officers, as set forth below. Such bonuses were approved in accordance with the
Companys Annual Executive Cash Bonus Program in effect for the fiscal year ending March 31, 2015 (Fiscal 2015) and were based on the Companys achievement during Fiscal 2015 of net income and bookings as well as the
achievement of personal objectives by each named executive officer during such year.
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Named Executive Officer |
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Total Fiscal 2015 Bonus |
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James R. Lines |
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$ |
306,023 |
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Jeffrey Glajch |
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$ |
122,980 |
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Alan E. Smith |
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$ |
123,504 |
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Jennifer R. Condame |
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$ |
65,345 |
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Item 9.01. |
Financial Statements and Exhibits. |
(d) Exhibits.
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Exhibit No. |
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Description |
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99.1 |
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Graham Corporation Annual Stock-Based Long-Term Incentive Award Plan for Senior Executives in effect for the fiscal year ending March 31, 2016. |
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99.2 |
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Graham Corporation Annual Executive Cash Bonus Program in effect for the fiscal year ending March 31, 2016. |
SIGNATURES
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.
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Graham Corporation |
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Date: June 2, 2015 |
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By: |
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/s/ Jeffrey Glajch |
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Jeffrey Glajch Vice President
Finance & Administration and Chief Financial Officer |
Exhibit 99.1
GRAHAM CORPORATION
ANNUAL STOCK-BASED LONG-TERM INCENTIVE AWARD PLAN
FOR SENIOR EXECUTIVES
(As
Amended and Restated Effective May 28, 2015)
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Purpose |
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The purpose of this Annual Stock-Based Long-Term Incentive Award Plan for Senior Executives (the Plan) is to motivate the senior executive officers of Graham Corporation (the Company) to increase
shareholder value by providing them long-term stock-based awards for above-average Company performance. |
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Administration |
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The Plan will be administered by the Compensation Committee of the Board of Directors of the Company (the Committee), which shall have final and conclusive authority to administer and interpret the Plan. |
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Eligibility |
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Eligible employees will include the President and Chief Executive Officer and such officers direct reports, subject to the approval by the Committee of such participation. |
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Award Periods |
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Annual awards under the Plan will be based on the fiscal year of the Company, beginning with its April 1, 2015 through March 31, 2016 fiscal year (each, a Fiscal Year). |
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Awards |
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Unless the Committee determines otherwise, annual awards under the Plan for the Fiscal Year that commences in 2015 and each subsequent
Fiscal Year will consist of shares of time-vesting restricted stock (Time-Vested Restricted Stock) and shares of performance-vesting restricted stock (Performance-Vested Restricted Stock, and together with Time-Vested
Restricted Stock, Restricted Stock), which awards will be issued under the Amended and Restated 2000 Graham Corporation Incentive Plan to Increase Shareholder Value, or a successor plan thereto (the Incentive Plan), and will
be subject to the terms thereof. Time-Vested Restricted Stock.
Unless the Committee determines otherwise, Time-Vested Restricted Stock will vest as
follows: one-third of the shares on the first anniversary of the date of grant, an additional one-third of the shares on the second anniversary of the date of grant and the remaining one-third of the shares on the third anniversary of the date of
grant. The number of shares of Time-Vested Restricted Stock to be issued to an
eligible employee for a Fiscal Year will be determined by multiplying 50 percent (or such other percentage as may be determined by the Committee) of |
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the eligible employees base salary then in effect by such employees Target L-T Incentive Percentage, and then dividing by the
value of a share of stock on the date of grant, rounded to the nearest whole number.
Performance-Vested Restricted Stock.
Unless the Committee determines otherwise, Performance-Vested Restricted Stock will vest on the third anniversary of the date of grant, depending on the
satisfaction of the performance goal matrixes for the three-year period commencing with the 2016 Fiscal Year, which matrixes will be determined by the Committee. In determining the performance for the three-year period commencing with a Fiscal Year,
the Committee shall have the discretion to include or exclude any extraordinary events that positively or negatively affected the Companys financial performance for the Fiscal Year.
The number of shares of Performance-Vested Restricted Stock to be issued to an eligible
employee for a Fiscal Year will be determined by multiplying 50 percent (or such other percentage as may be determined by the Committee) of the eligible employees base salary then in effect by such employees Target L-T Incentive
Percentage, and then dividing by the value of a share of stock on the date of grant, rounded to the nearest whole number.
Effect of Certain Events.
Notwithstanding any other provision of the Plan, the following terms shall apply to all Restricted Stock awarded under the Plan:
Upon the death of
an eligible employee, any outstanding Time-Vested Restricted Stock awarded under the Plan will vest in full, and any outstanding Performance-Vesting Restricted Stock will vest pro-rata based on the satisfaction of the applicable performance goals
through the end of the quarter immediately preceding the date of death.
Upon the Disability (as such term is defined by the Incentive Plan) of an eligible
employee, any outstanding Time-Vested Restricted Stock awarded under the Plan will vest in full, and any outstanding Performance-Vesting Restricted Stock will vest pro-rata based on the satisfaction of the applicable performance goals through the
end of the quarter immediately preceding the date of Disability.
Except as otherwise provided by the Plan or by the Committee, the unvested portion of
Restricted Stock awarded under the Plan will terminate upon the termination or resignation of an eligible employees employment.
Unless the Committee determines otherwise, upon the termination of an eligible employee
for cause (as such term shall be defined by the Committee), the unvested portion of all Restricted Stock awarded under the Plan will terminate. |
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Payment |
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Annual awards for a Fiscal Year will be approved by the Committee and will be issued as soon as practicable after approval. |
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Section 409A |
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The Plan and the Restricted Stock awarded thereunder, are intended to qualify for an exemption from Section 409A of the Internal Revenue Code of 1986, as amended, and the treasury regulations promulgated and other official
guidance issued thereunder, and shall be administered and interpreted consistent with such intention. |
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Amendment &
Termination |
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The Plan may be amended or terminated by the Committee at any time. No eligible employee will have any right to an award under the Plan
until such award is approved by the Committee. Neither the existence of the Plan nor
the grant of an award in any year shall give an eligible employee any right to an award or similar award in future years or any right to continue such eligible employees employment relationship with the Company. All eligible employees shall
remain subject to discharge to the same extent as if the Plan were not in effect. |
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EXHIBIT A
TARGET L-T INCENTIVE PERCENTAGES
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Position |
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Target L-T Incentive % |
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President and Chief Executive Officer |
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42 |
% |
Vice President, Finance and Administration and Chief Financial Officer |
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35 |
% |
Vice President of Operations |
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35 |
% |
Chief Accounting Officer |
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25 |
% |
Notwithstanding the foregoing, the Committee shall have the discretion to specify a different Target L-T
Incentive Percentage for a given position or employee for a given Fiscal Year.
Exhibit 99.2
GRAHAM CORPORATION
ANNUAL EXECUTIVE CASH BONUS PLAN
(As Amended and Restated Effective May 28, 2015)
Summary
The objective of this Annual Executive Cash
Bonus Plan (the Plan) is to compensate the Chief Executive Officer and his direct reports for above-average performance through annual bonuses related to both Company and individual performance.
Eligibility and Participation
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1. |
Eligible employees shall include the Chief Executive Officer and his direct reports. Direct reports means (a) the Vice President, Finance and Administration and Chief Financial Officer,
(b) the Vice President of Operations, (c) the Chief Accounting Officer and (d) such other employees of the Company selected by the Chief Executive Officer to participate in this plan, subject to the approval by the Compensation
Committee of such participation. |
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2. |
Target participation levels shall be established by the Compensation Committee. |
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3. |
Newly hired or promoted employees are eligible for participation in the Plan upon employment unless otherwise determined by the Chief Executive Officer for direct reports and by the Compensation Committee in the
case of the Chief Executive Officer. |
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4. |
Participants who voluntarily terminate employment or whose employment is involuntarily terminated, in each case, for any reason before the end of the fiscal year shall receive no bonus except as approved by the
Compensation Committee, in its sole discretion. |
Establishment and Level of Goals
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1. |
Financial goals shall be approved by the Board of Directors. |
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2. |
The Chairman of the Compensation Committee shall approve individual goals for the Chief Executive Officer. The Chief Executive Officer shall approve individual goals for direct reports. The Chairman of the
Compensation Committee or Chief Executive Officer, as applicable, shall determine the number and weighting of goals. |
Payment Calculation
At the end of each fiscal year, the Compensation Committee shall determine the extent to which the applicable financial goals and individual goals
have been satisfied and the corresponding goal payout factors. The Compensation Committee shall then determine each Participants
preliminary payout value, which shall be the Participants Target Participation Level multiplied by the product of each performance goals weighting times its payout factor. The
Compensation Committee may then adjust each Participants preliminary payout value, either upwards or downwards, in the Compensation Committees sole discretion, to determine each Participants final payout value.
The final payout values, as determined by the Compensation Committee, will be paid to Participants as soon as practicable after the end of the fiscal
year, but in no event later than 75 days immediately following the end of the fiscal year.
Other Considerations
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1. |
Participants who change position during the fiscal year shall receive bonus on a pro rated basis. |
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2. |
Special awards may be made to any executive or employee who has made an extraordinary contribution to the Company during the year. Such awards must be recommended in writing by the Chief Executive Officer to the
Chairman of the Compensation Committee and may be approved by the Compensation Committee. |
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3. |
Extraordinary events that either positively or negatively affect financial performance may be included or excluded in financial calculations at the discretion of the Compensation Committee. |
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4. |
Nothing herein shall be construed to limit or affect the normal and usual powers of management, including right to terminate any individual at any time. |
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5. |
The Compensation Committee shall have final and conclusive authority on the existence and administration of this plan. |
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6. |
In the event of death, a Participants designated beneficiary will be entitled to the Participants plan benefits. If the Participant has not designated a beneficiary, the Participants beneficiary
or beneficiaries will be determined in accordance with the Participants will. If there is no will, the beneficiary or beneficiaries shall be determined by the laws of descent and distribution in the state in which the Participant was a
resident at the time of death. |
Section 409A
The Plan and the compensation payable thereunder are intended to be exempt from Section 409A of the Internal Revenue Code of 1986, as amended, and the
treasury regulations promulgated and other official guidance issued thereunder, and shall be administered and interpreted consistent with such intention.
2
ANNUAL EXECUTIVE CASH BONUS PLAN
2015 FISCAL YEAR TERMS
Target
Participation Levels
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Position |
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% Base Pay |
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President and Chief Executive Officer |
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60 |
% |
Vice President, Finance and Administration and Chief Financial Officer |
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35 |
% |
Vice President of Operations |
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35 |
% |
Chief Accounting Officer |
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25 |
% |
Goal Weightings
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Position |
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Consol. Net Income |
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Consol. Executable Backlog at Fiscal 2016 Year End |
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Personal Goals |
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President and Chief Executive Officer |
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40 |
% |
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40 |
% |
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20 |
% |
Vice President, Finance and Administration and Chief Financial Officer |
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40 |
% |
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40 |
% |
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20 |
% |
Vice President of Operations |
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40 |
% |
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40 |
% |
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20 |
% |
Chief Accounting Officer |
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40 |
% |
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40 |
% |
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20 |
% |
Executable backlog is defined as orders received during fiscal 2016 that are in backlog as of March 31, 2016. The
calculation for bonus purposes shall be consolidated executable backlog for Batavia, NY, Lapeer, MI and Suzhou, PRC, plus new orders that may be received by a company acquired by the corporation during the fiscal year. For an acquired company only
new bookings subsequent to an acquisition apply.
Net Income shall be based upon year-end results.
Currency exchange rates will be calculated monthly at a fixed rate to eliminate currency fluctuations from incentive calculations.
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