Potential Payments Upon Termination or Change in Control
As of October 31, 2024, the Company had the following lump sum payment obligations, under the LCP as described above, to its Named Executive Officers upon a change in control, as defined in the HEICO Leadership Compensation Plan, or termination: Laurans A. Mendelson $60,884,183; Carlos L. Macau, Jr. $13,825,023; Eric A. Mendelson $27,701,611 and Victor H. Mendelson $23,440,271. As of October 31, 2024, the Company’s payment obligation under the LCP to Steven M. Walker upon a change in control was $0 and upon termination was $1,737,117.
The unexercisable (unvested) options held by the Named Executive Officers as detailed in “Outstanding Equity Awards at Fiscal 2024 Year- End” would become immediately vested and exercisable upon (i) a change in control, as defined in the Company's 2018 Incentive Compensation Plan, of the Company, (ii) the liquidation or dissolution of the Company, or (iii) any reorganization, merger, consolidation or other form of corporate transaction in which the Company does not survive or the shares are exchanged for or converted into cash or securities issued by another entity, or an affiliate of such successor or acquiring entity, unless the successor or acquiring entity, or an affiliate thereof, assumes the option or substitutes an equivalent option or right pursuant to Section 10(c) of the Company’s 2018 Incentive Compensation Plan, (each, an “Acceleration Event”). As of October 31, 2024, the value of this acceleration to the Named Executive Officers upon an Acceleration Event was: Laurans A. Mendelson $6,517,600, Carlos L. Macau, Jr. $4,305,000, Eric A. Mendelson $13,659,500, Victor H. Mendelson $13,659,500 and Steven M. Walker $727,499. The value of the accelerated vesting of the unexercisable options was calculated by aggregating the difference between the closing price of the applicable share class as of October 31, 2024 and the exercise price of such unexercisable option multiplied by the number of options for the applicable share class.
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the total annual compensation of our employees and the total annual compensation of our Chairman of the Board and Chief Executive Officer, Laurans A. Mendelson.
As of August 31, 2024, our employee population, excluding Mr. Mendelson, consisted of 9,711 individuals, of which 6,835 or 70% were located in the United States (“U.S.”). This population consisted of both domestic and foreign full time, part time and temporary employees.
To identify our median employee, we used a consistently applied compensation measure of total gross wages from January 1, 2024 to August 31, 2024. Total gross wages reflects a wide variety of pay items, including base wages, time-related bonuses (such as overtime, shift premiums, holiday bonuses), vacation pay, performance bonuses, stock option exercises and other benefits and allowances. We did not make cost of living adjustments when computing our employees' total gross wages. Additionally, we converted the gross wages paid to non-U.S. employees in local currency to U.S. dollars using the applicable average exchange rate for the period of January 1, 2024 to August 31, 2024.
To calculate the annual total compensation of our median employee, we identified and calculated the elements of such employee’s fiscal 2024 compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. Based on the aforementioned methodology, we determined that the fiscal 2024 median total annual compensation of our median employee was $57,762. As reported in the Summary Compensation Table, the fiscal 2024 annual total compensation for Mr. Mendelson was $10,382,143, resulting in a pay ratio of 180:1.
Our pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
