The Compensation Committee determines base salary and target bonus as of each officer’s hire date, and it generally reconsiders both elements on an annual basis. The Compensation Committee determines officers’ annual bonuses after the Company’s financial results for the prior fiscal year are announced. The Compensation Committee generally grants each officer shares of restricted stock upon his or her hire date and considers granting additional equity awards on an annual basis. The Compensation Committee generally attempts to grant bonuses or equity compensation to its officers on a standard schedule.
Compensation Consultants and Benchmarking
The Compensation Committee has the authority to retain the services of compensation consultants and other advisors, as it deems necessary or appropriate, in connection with the administration of the Company’s compensation and employee benefit plans, policies and programs. The Compensation Committee retained the services of Pay Governance to assist the Compensation Committee in formulating certain recommendations regarding executive compensation in fiscal 2024, including with respect to the design of the annual incentive plan and compensation of the Interim Chief Executive Officer and new Chief Executive Officer.
Allocation and Amount
The Company compensates its executives through a combination of annual cash compensation (comprised of base salary and annual bonus) and long-term equity incentive compensation. The Compensation Committee views market competitive base salary and the annual bonus targets as essential for attracting, retaining, and motivating executive officers. The Compensation Committee also believes that equity incentive compensation is an essential factor in recruiting and retaining top executives and in driving performance over the long term.
The use and relative weights of base salary, annual bonus and long-term equity compensation are based on a subjective determination by the Compensation Committee of the effectiveness of each executive in all areas of management, including achievement of the Company’s strategic objectives, leadership, operating skills, and other attributes. Generally, the Compensation Committee views the various elements of compensation as part of one overall package but believes that a majority of the total compensation package should be weighted toward the performance of the Company and stock price appreciation in order to align the interests of management and shareholders. In fiscal 2024, base salary, benefits and perquisites are expected to range from approximately 38% to 53% of each current executive officer’s potential compensation, reflecting the importance that the Compensation Committee attached to performance-based bonuses and stock price appreciation.
When evaluating corporate performance, the Compensation Committee considers financial metrics, including net sales, organic sales, non-GAAP gross margin and earnings before interest, taxes and other income (expense), or EBIT, and also considers the performance of any acquired companies, and performance against long and short-term strategic goals. When evaluating individual performance, the Compensation Committee also considers subjective factors such as the individual’s overall leadership and management skills, success in attracting, retaining, and developing qualified successors and subordinates, success in achieving corporate and strategic objectives, ability to work with peers and supervisors in an effective and collegial manner, as well as numerous other criteria.
When making compensation decisions, the Compensation Committee also considers the issue of internal pay equity between the compensation of other Company executive officers and the compensation of the Chief Executive Officer. The Compensation Committee also considers issues relating to the corporate tax and accounting treatment of various forms of compensation and the impact of compensation decisions on shareholder dilution.
The Compensation Committee continues to subscribe to the philosophy that the overall financial performance of the Company and its stock price should be the primary areas of consideration when rewarding the Company’s top executives. However, the Compensation Committee also seeks to ensure that the Company’s executive officers are paid competitively with the market so that they remain motivated to stay with the Company and achieve its business and strategic objectives.
Former Chief Executive Officer Compensation
Mr. Cofer resigned as Chief Executive Officer effective October 6, 2023, so he served as Chief Executive Officer for only one week during fiscal 2024. He did not receive any bonus for fiscal 2023 or bonus or equity award for fiscal 2024. In fiscal 2024, Mr. Cofer received certain benefits as set forth in the Summary Compensation Table below.
Former Interim Chief Executive Officer Compensation
Upon Mr. Cofer’s resignation as Chief Executive Officer, Ms. Springer, a member of the Company’s Board of Directors, was appointed as Interim Chief Executive Officer and served in that capacity from October 6, 2023 to September 29, 2024. Pursuant to Ms. Springer’s compensation package in her position as Interim Chief Executive Officer, she received an annual base salary of $1,047,550, paid monthly during the period she remained the interim principal executive officer. Ms. Springer is also eligible to receive a bonus equal to 100% of her base salary and pro-rated for time in her position as interim principal executive officer, to be paid at the discretion of the Compensation Committee.
