incentive awards encourage executives to focus on and align themselves with the
Company’s long-term goals as well. These incentives are based on financial objectives of importance to the Company, including revenue and earnings growth and creation of stockholder value. The Company’s compensation program also accounts for
individual performance, which enables the Company to differentiate among executives and emphasize the link between personal performance and compensation.
The Company is committed to the interests of our stockholders and the delivery of
long-term value through an executive compensation program and governance actions that
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drive outstanding Company performance,
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align CEO pay with Company performance,
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ensure that no problematic pay practices exist (e.g., benchmarking compensation above peers, re-pricing or backdating of stock options, excessive perquisites, or tax gross-ups), and
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reflect appropriate communication with and responsiveness to stockholders.
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As part of this commitment, we maintain a periodic dialogue with our stockholders to
address any concerns they may have. In response to the say-on-pay proposal at the 2021 annual meeting receiving only 25% approval, as well as feedback received from stockholder after the 2021 annual meeting, two of the members of the
Compensation Committee were replaced, after which the Committee, with the assistance of its outside compensation consultant, made significant changes to the Company’s selected peer group and the compensation program for the Chief Executive
Officer and Chief Operating Officer. Following the announcement of those changes, the say-on-pay proposal at our 2022 annual meeting received 32% approval.
The changes made by the Compensation Committee in 2022 included:
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Peer Group: The peer group in place as of
the 2021 annual meeting was revised by removing ten companies (AAR, Astronics, CIRCOR International, Cognex, Esterline Technologies, FARO Technologies, FLIR Systems, Kulicke and Soffa Industries, MTS Systems and Teledyne
Technologies), adding 11 companies (Altra Industrial Motion, BWX Technologies, Donaldson Company, Evoqua Water Technologies, ITT, Kratos Defense & Security, Mercury Systems, Regal Rexnord, Timken, Watts Water Technologies and
Woodward), and retaining eight companies (Barnes Group, Crane, Curtiss-Wright, Franklin Electric, Graco, HEICO, Hexcel and Moog). The changes were made to recognize the Company’s significantly larger size and scope of business
following our acquisition of Dodge Industrial in November 2021 while at the same time avoiding the inclusion in our peer group of “aspirational” peers.
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Equity-Based Compensation: The previous
long-term equity incentive program for the CEO and COO, which each year awarded a specific number of shares of restricted stock
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and stock options based on the Company’s performance in the prior fiscal year, was replaced
with a new program consisting of one-year performance-based restricted stock awards and three-year performance-based stock awards that deliver a specific amount of compensation based on the Company’s performance in the relevant period, with the
first awards under the one-year portion of the new program occurring in fiscal 2023 based on Company performance in fiscal 2022 and the first awards under the three-year portion of the new program to occur in fiscal 2026 based on Company
performance for fiscal 2023, 2024 and 2025. This new program, which contains elements found in the equity incentive programs of our peer group, enables the Compensation Committee to predictably tie a particular amount of equity-based
compensation to a particular Company performance level and avoid the possibility that our strong stock price could cause equity awards to be worth significantly more than the amount of compensation that the Compensation Committee intended. In
addition, the new program marks the first time that a portion of CEO/COO compensation will be tied to a three-year performance cycle.
Because the changes to the CEO and COO’s equity-based compensation program were made
after the end of fiscal 2022, Dr. Hartnett and Mr. Bergeron had already earned awards under the old program for fiscal 2022 that would have been worth $16,838,389 and $7,372,114, respectively, but they agreed to forego those awards and instead
receive awards under the one-year portion of the new program worth $5,985,000 and $2,344,192, respectively. As a result, Dr. Hartnett and Mr. Bergeron gave up $10,853,389 and $5,027,922, respectively, of equity-based compensation relating to
fiscal 2022.
Dr. Hartnett is the Company’s founder and has served as our CEO since 1992. Dr. Hartnett
is widely regarded as a technology visionary and one of the industry’s most successful business executives. Under Dr. Hartnett’s leadership the Company’s revenues have grown from approximately $82 million in fiscal 1996 to approximately
$1.47 billion in fiscal 2023. He is also one of our significant stockholders, owning approximately 1.5% of the outstanding common stock, directly aligning his interests with those of all our stockholders. The Compensation Committee believes
Dr. Hartnett is extremely important to our success and that, given his role in our operations, strategy and growth, it is appropriate for Dr. Hartnett to receive competitive compensation that performs both retentive and incentivizing functions.
See “Compensation Discussion and Analysis” and “Executive Compensation” below for
additional information about our executive officer compensation program.
This proposal gives our stockholders the opportunity to express their views on our named
executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named
