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 29, 2019

 

 

Graham Corporation

(Exact name of Registrant as specified in its charter)

 

 

 

Delaware   1-8462   16-1194720

(State or other jurisdiction

of incorporation)

  (Commission
File Number)
  (IRS Employer
Identification No.)
20 Florence Avenue, Batavia, New York   14020
(Address of principal executive offices)   (Zip Code)

Registrant’s 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:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.10 per share   GHM   NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Fiscal 2020 Annual Stock-Based Long-Term Incentive Award Plan for Senior Executives. On May 29, 2019, the Compensation Committee of the Board of Directors (the “Compensation Committee”) of Graham Corporation (the “Company”) renewed and amended its Annual Stock-Based Long-Term Incentive Award Plan for Senior Executives (the “Restricted Stock Bonus Program”) for the fiscal year ending March 31, 2020 (“Fiscal 2020”) and approved grants of time-vested restricted stock and performance-vested restricted stock thereunder in the amounts set forth below to the Company’s named executive officers. All grants were made under the Amended and Restated 2000 Graham Corporation Incentive Plan to Increase Shareholder Value, as amended (the “Plan”).

Time-vested restricted stock awards are designed to encourage the Company’s named executive officers to remain employed by the Company. The time-vested restricted stock granted to the Company’s named executive officers vests 33 1/3% per year over three years and the time-vested restricted stock granted to the Company’s Directors, as described below, vests on the first anniversary of the date of grant.

Performance-vested restricted stock awards are designed to incent the Company’s named executive officers to focus on Company growth, align their compensation with the Company’s business strategy and to create stockholder value. Awards of performance-vested restricted stock vest: (i) 50% based upon the Company’s achievement over a three year period of Total Shareholder Return compared to the Russell 2000 Capital Goods and Energy Composite Ranking (using a 20 day price average at the start and end of the three year period commencing April 1, 2019 and ending March 31, 2022) (“Relative TSR”); and (i) 50% based on the earnings before interest expense, income taxes, depreciation and amortization (“EBITDA”) margin of the Company for the fiscal year ending March 31, 2022 (“Fiscal 2022”) compared to the Baird Industrial Company Composite as of December 2021 (“Relative EBITDA”). The threshold, target and maximum payout matrixes for the performance-vested restricted stock are set forth below:

Relative TSR

 

Threshold    25th percentile    50% payout
Target (1)    50th percentile    100% payout
Maximum    75th percentile    200% payout

 

(1)

If the Company’s TSR is negative, maximum payout is Target.

Relative EBITDA

 

Threshold    40th percentile    50% payout
Target    60th percentile    100% payout
Maximum    75th percentile    200% payout


The number of shares of time-vested restricted stock and performance-vested restricted stock awarded to the Company’s named executive officers under the Restricted Stock Bonus Program were determined using a Long-Term Incentive Percentage (the “L-T Percentage”) for each such officer. On May 29, 2019, the Compensation Committee set the L-T Percentage for each of the Company’s named executive officers as follows: James R. Lines – 80%; Jeffrey F. Glajch – 50%; Alan E. Smith – 50%; John N. Rice – 35%; and Jennifer R. Condame – 35%. The number of shares of time-vested restricted stock awarded were determined by multiplying 50% of each named executive officer’s base salary in effect on the date of grant by such officer’s L-T Percentage, and then dividing the product by the closing price of the Company’s 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 officer’s base salary in effect on the date of grant by such officer’s L-T Percentage, and then dividing the product by the closing price of the Company’s Common Stock on the NYSE on the date of grant. The number of shares of restricted stock awarded to each of the Company’s Directors was determined by dividing $50,000 by the closing price of the Company’s Common Stock on the NYSE on the date of grant. The closing price of the Company’s Common Stock on the NYSE on May 29, 2019 was $20.40.


Named Executive Officer

   Number of Shares
of Time-Vested
Restricted Stock
Granted (1)
     Number of Shares
of Performance-
Vested Restricted
Stock Granted
(1)(2)(3)
 

James R. Lines

President and Chief Executive Officer

     9,804        19,608  

Jeffrey Glajch

Vice President of Finance and Administration and Chief Financial Officer

     3,538        7,076  

Alan E. Smith

Vice President of Operations

     3,156        6,312  

John N. Rice

Vice President of Sales

     1,988        3,976  

Jennifer R. Condame

Controller and Chief Accounting Officer

     1,548        3,096  

 

(1)

In the event a named executive officer’s employment terminates prior to the conclusion of a vesting for reasons other than death or disability, such officer’s right to receive any unvested time-vested restricted stock is forfeited.

 

(2)

The number of shares that will vest following the conclusion of Fiscal 2022 is based upon the Company’s achievement of performance criteria. The number of shares set forth above assumes the maximum achievement of such performance criteria. If maximum achievement is not realized, any unearned shares will be forfeited back to the Company. Once the achievement of the performance measures are determined for Fiscal 2022, the actual number of shares to which each named executive officer is entitled will be adjusted accordingly.

 

(3)

In the event a named executive officer’s employment terminates prior to the conclusion of Fiscal 2022 for reasons other than death or disability, such officer’s right to receive the performance-vested restricted stock shall be forfeited.


The Restricted Stock Bonus Program in effect for Fiscal 2020 is attached to this Current Report on Form 8–K as Exhibit 99.1 and the above summary of the Restricted Stock Bonus Program is qualified in its entirety by reference to such Exhibit.

Annual Stock-Based Grant to Non-Employee Directors. Also on May 29, 2019, the Compensation Committee approved the grant of time-vested restricted stock under the Plan in the amounts set forth below to the Company’s non-employee Directors.

 

Director

   Number of Shares
of Time-Vested
Restricted Stock
Awarded
 

James Barber

     2,450  

Alan Fortier

     2,450  

James Malvaso

     2,450  

Gerard Mazurkiewicz

     2,450  

Jonathan Painter

     2,450  

Lisa Schnorr

     2,450  

Fiscal 2020 Annual Executive Cash Bonus Program. On May 29, 2019, the Compensation Committee renewed and amended the Company’s Annual Executive Cash Bonus Program (the “Cash Bonus Program”) for Fiscal 2020. The objective of the Cash Bonus Program is to motivate the Company’s named executive officers to attain short-term objectives through an annual cash bonus related both to Company and personal performance. On May 29, 2019, the Compensation Committee set target bonus levels under the Cash Bonus Program for Fiscal 2019 at 100% attainment of both Company and personal objectives, as follows: Mr. Lines — 80% of base salary; Mr. Glajch — 50% of base salary; Mr. Smith — 50% of base salary; Mr. Rice – 35% of base salary; and Ms. Condame — 35% of base salary. Each named executive officer will be eligible to 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 Company’s named executive officers for Fiscal 2020 is as follows:

 

Named Executive Officer

   Consolidated
Net Income
    Consolidated
Bookings
    Personal
Goals
 

James R. Lines

     40     40     20

Jeffrey Glajch

     40     40     20

Alan E. Smith

     40     40     20

John N. Rice

     40     40     20

Jennifer R. Condame

     40     40     20


The Cash Bonus Program in effect for Fiscal 2020 is attached to this Current Report on Form 8–K as Exhibit 99.2 and the above summary of the Cash Bonus Program is qualified in its entirety by reference to such Exhibit.

Fiscal 2019 Named Executive Officer Bonuses. On May 29, 2019, the Compensation Committee approved the payment of cash bonuses to the Company’s named executive officers, as set forth below. Such bonuses were approved in accordance with the Company’s Annual Executive Cash Bonus Program in effect for the fiscal year ending March 31, 2019 (“Fiscal 2019”) and were based on the Company’s achievement during Fiscal 2019 of net income and bookings as well as the achievement of personal objectives by each named executive officer during such year.

 

Named Executive Officer

   Total Fiscal
2019 Bonus
 

James R. Lines

   $ 181,482  

Jeffrey Glajch

   $ 106,776  

Alan E. Smith

   $ 88,520  

John N. Rice

   $ 60,480  

Jennifer R. Condame

   $ 56,155  

Named Executive Officer Salary Increases. On May 29, 2019, the Compensation Committee increased the base salary of each of the below listed named executive as set forth below.

 

Named Executive Officer

   Previous
Base Salary
     New Base
Salary
 

James R. Lines

   $ 435,000      $ 500,000  

Jeffrey Glajch

   $ 280,252      $ 288,660  

Alan E. Smith

   $ 250,058      $ 257,560  

John N. Rice

   $ 225,000      $ 231,750  

Jennifer R. Condame

   $ 175,157      $ 180,412  


Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit No.

  

Description

99.1    Graham Corporation Annual Stock-Based Long-Term Incentive Award Plan for Senior Executives in effect for the fiscal year ending March 31, 2020.
99.2    Graham Corporation Annual Executive Cash Bonus Program in effect for the fiscal year ending March 31, 2020.


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.

 

    Graham Corporation
Date: May 31, 2019     By:   /s/ Jeffrey Glajch
      Jeffrey Glajch
      Vice President – Finance & Administration and Chief Financial Officer