SEC Form DEF 14A filed by CTS Corporation

Dear CTS Shareholder:

2024 Results

2024 was a year of challenges and opportunities for our business. I am proud of the progress we made on our diversification strategy, which was driven in part by accelerated growth in our diversified medical, industrial, and aerospace and defense markets and complemented by our continued progress on electrification in mobility. Revenue from our diversified markets accounted for 51% of overall company revenue for 2024. Diversification will continue to be a strategic priority for our business. Our strategic focus also improved the quality of our earnings as reflected by our adjusted gross margin for 2024, which was up 243 basis points from 2023.

We further advanced our diversification strategy in 2024 with the acquisition of SyQwest, LLC, a leading supplier of tactical solutions for U.S. Naval surface ship and submarine sonar systems and components. We believe that the addition of the SyQwest team to the CTS family will support the advancement of innovative defense technologies and move us from a components supplier to a supplier of sensors, transducers and sub-systems. We also expect to expand our product range and market opportunity after a period of integration.

In the medical end market, we are excited by the prospects for growth in minimally invasive applications where our products help deliver enhanced ultrasound images, which make it easier for medical professionals to detect artery restrictions and deliver treatment medications. We are proud to highlight that our products support solutions that help save lives. In 2024, we had wins for medical ultrasound across all regions and secured a large order for an application used in medical therapeutics. Over time, we expect the volume growth in portable ultrasound diagnostics and therapeutics will continue to enhance our growth profile.

In the industrial end market, although our sales declined slightly year over year, we saw a gradual recovery in distribution as well as with OEMs in the second half of 2024. We secured new business in EMC applications, industrial printing, temperature sensing, current sensing and distribution. We expect the megatrends of automation, connectivity, and efficiency will enhance our longer-term growth prospects in the industrial end market. Transportation sales were down for 2024, primarily driven by demand softness for transplant OEMs in China and competition in the commercial vehicle market. However, we continued to generate interest in our eBrake^™ product, including securing a pre-development award from a premium European OEM. The near-term growth rates for ICE versus EVs and hybrids are less of a concern for us given our products are mostly agnostic to the drivetrain technology.

We also remained focused on strong cash generation and maintaining a healthy balance sheet to continue to support organic growth, strategic acquisitions and returning cash to shareholders. To that end, in 2024, we returned over $48 million to shareholders through dividends and share repurchases.

2025 Annual Meeting of Shareholders

As we look to the future, you are cordially invited to attend the 2025 Annual Meeting of Shareholders of CTS Corporation. The meeting will be held on Thursday, May 8, 2025, at 9:30 a.m. central time, at the Hotel Arista, located at 2139 City Gate Lane, Naperville, Illinois 60563.

We are pleased to continue to take advantage of the Securities and Exchange Commission rules allowing us to furnish proxy materials to shareholders on the Internet. We believe that these rules provide you with proxy materials more quickly and reduce the environmental impact of our Annual Meeting. Accordingly, we are mailing to shareholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review our 2025 Proxy Statement and Annual Report to Shareholders for the year ended December 31, 2024, and to vote online or by telephone. If you would like to receive a paper copy of our proxy materials, please follow the instructions for requesting these materials on page 59 of this 2025 Proxy Statement.

We hope you will attend the meeting in person. Whether you plan to attend the meeting or not, we encourage you to read this 2025 Proxy Statement and to vote your shares. The vote of every shareholder is important.

		Kieran M. O’Sullivan Chairman, President and Chief Executive Officer

Table of Contents

Proposal 1: Election of Directors

Board Composition

CTS has benefitted from having a Board of Directors with a wide range of backgrounds who possess the experience necessary to provide the appropriate governance oversight and strategic direction for the Company.

Detailed information on each director nominee is provided below. All directors are elected annually and serve one-year terms, or until their successors are elected and qualified.

CTS’ Corporate Governance Guidelines require a director to submit an offer of resignation effective as of the next annual meeting of shareholders after reaching the age of 75 (the “Retirement Age Policy”). Mr. Profusek turned 75 years of age on January 14, 2025 and, in accordance with the Retirement Age Policy, he submitted an offer of resignation to be effective as of CTS’ Annual Meeting of Shareholders on May 8, 2025. In light of Mr. Profusek’s extensive experience and past contributions to CTS’ Board of Directors, the Nominating, Governance and Sustainability Committee recommended to the Board of Directors that an exception be made to the Retirement Age Policy permitting Mr. Profusek to be renominated for election as a director for another term. The Board of Directors approved the exception at its meeting on February 6, 2025.

Board Skills, Qualifications, Experience and Demographics

Nominees for the Board of Directors. Each director nominee named below is currently a director of CTS. The ages shown are as of December 31, 2024. Each director nominee has agreed to serve as a director if elected. If one or more of the nominees becomes unavailable for election, the remaining members of the Board will, in their sole discretion and pursuant to authority granted by the CTS Bylaws, nominate and vote for a replacement director or reduce the authorized number of directors.

Committees of the Board of Directors

Committee Membership

The Compensation and Talent Committee may delegate certain authority as provided for in its Charter. The Compensation and Talent Committee also administers the CTS Corporation 2018 Equity and Incentive Compensation Plan, including the annual equity awards thereunder and has delegated to management the oversight of those programs for participants who are not executive officers. In addition, the Compensation and Talent Committee reviews director compensation annually and makes recommendations regarding director compensation to the Board for approval. The Compensation and Talent Committee also periodically reviews and consults with the Company about its strategies, initiatives and programs with respect to talent management, which may include the Company’s culture, talent recruitment, development and retention, and employee engagement initiatives and periodically informs the Board of such strategies, programs and initiatives.

The Compensation and Talent Committee may, from time to time, direct senior members of the Company to research specific issues and make recommendations to the Compensation and Talent Committee. In addition, the Compensation and Talent Committee directly engaged Exequity, LLP (“Exequity”) to serve as its independent compensation consultant. The Compensation and Talent Committee has assessed the independence of Exequity, as required under the NYSE Corporate Governance Listing Standards. The Compensation and Talent Committee has also considered and assessed all relevant factors, including those required by the Securities and Exchange Commission (“SEC”), that could give rise to a potential conflict of interest with respect to Exequity. Based on these reviews, the Compensation and Talent Committee did not identify any conflict of interest raised by the work performed by Exequity. For more information regarding the role of the Compensation and Talent Committee’s independent compensation consultant and our executive officers in determining or recommending the amount or form of executive or director compensation, see the Compensation Discussion and Analysis and the 2024 Director Compensation sections of this Proxy Statement.

Compensation and Talent Committee Interlocks and Insider Participation. Directors Costello, Johnson and Profusek each served on the Compensation and Talent Committee during 2024. During 2024, no executive officer of CTS served as a director of any other entity for which any CTS director was an executive officer.

The Nominating, Governance and Sustainability Committee is also responsible for reviewing, evaluating and consulting with the Company regarding its environmental, social and governance policies and initiatives, and advising the Board regarding such initiatives. The Nominating, Governance and Sustainability Committee receives regular reports from management on the Company’s environmental, social and governance policies and initiatives.

CTS does not have a formal policy concerning whether the Nominating, Governance and Sustainability Committee will consider director nominees submitted by shareholders. CTS did not receive any shareholder director nominees for election at the Annual Meeting. At this time, the Board does not believe a formal policy regarding shareholder director nominees is necessary since CTS’ Bylaws provide a process for nomination of directors and no shareholder nominations for director have been received in past years.

The Nominating, Governance and Sustainability Committee reviews with the Board, on an annual basis, the requisite skills and director characteristics of any new members as well as the composition of the Board as a whole. This review includes an assessment of whether each non-management director qualifies as independent and an assessment of the diversity, age, skills and experience of the directors in the context of the needs of the Board. Although the Nominating, Governance and Sustainability Committee has not established any specific minimum criteria or qualifications that a candidate must possess, the Nominating, Governance and Sustainability Committee seeks a diverse selection of candidates who possess the experience necessary to make a valuable contribution to the Board. The Board does not have a formal diversity policy; it construes the notion of diversity broadly, considering differences in viewpoint, professional experience, education, skills, and other individual qualities, in addition to race, gender, national origin and other similar characteristics. The Board believes that its efforts to foster a diverse board have been effective; while all directors are skilled in business, a variety of points of view, educational backgrounds and experiences are represented on the Board. The Nominating, Governance and Sustainability Committee may retain and pay search firms for the purpose of identifying and evaluating director candidates.

Further Information Concerning the Board of Directors

Attendance

During 2024, the Board held five meetings and all of the directors attended at least 75% of the regular meetings of the Board and the standing committees of which they were then members, either in person, by telephone or by video conference. It is the policy of the Board that each director endeavor to attend each Annual Meeting of Shareholders, unless exigent circumstances arise. Each director standing for re-election at the 2024 Annual Meeting of Shareholders attended that meeting.

Director Independence

In addition to the NYSE Corporate Governance Listing Standards, the CTS Corporation Corporate Governance Guidelines govern the determination of whether a director is independent. A copy of the CTS Corporation Corporate Governance Guidelines can be found in the governance section of the Company’s website at https://investors.ctscorp.com.

The Board has determined that each non-management director that served in 2024 and each non-management director nominee is or was an independent director and has or had no material relationship with CTS, apart from his or her service as a director. For purposes of determining whether a director has a material relationship with CTS apart from his or her service as a director, the Board has determined that any transaction that is not required to be disclosed pursuant to Item 404(a) of Regulation S-K shall be deemed categorically immaterial.

Review and Approval of Transactions with Related Persons

CTS has written policies and procedures regarding conflicts of interest including those in its Code of Ethics. The CTS Corporation Corporate Governance Guidelines provide that the Nominating, Governance and Sustainability Committee shall review any transaction that might be construed to disqualify a director as independent (including any transactions that are required to be reported under Item 404(a) of Regulation S-K) and, if appropriate, make a recommendation that the Board approve such transaction. The Board would then review and, if appropriate, approve such transaction. The Nominating, Governance and Sustainability Committee Charter further provides that the Nominating, Governance and Sustainability Committee shall review any potential director conflict of interest and recommend appropriate action to the Board. CTS employees, including executive officers, are subject to the CTS Code of Ethics, which governs conflicts of interest. Generally, the Nominating, Governance and Sustainability Committee is responsible for reviewing and overseeing any related person transactions involving directors and the Audit Committee is responsible for reviewing and overseeing any related person transactions involving executive officers or other related persons other than directors.

Meetings of Non-Management Directors

The Board held an independent session excluding management directors at each regular Board meeting in 2024.

Board Leadership Structure

CTS does not have a policy as to whether the role of Chief Executive Officer and Chairman of the Board should be separate or combined, or whether the Chairman should be a management or non-management director. In the past, the Board has been structured with an independent director as Chairman and alternatively structured with a combined Chairman/Chief Executive or Executive Chairman and Chief Executive Officer. Currently, Mr. O’Sullivan serves as Chairman of the Board, President and Chief Executive Officer and Mr. Profusek serves as Lead Independent Director. Mr. O’Sullivan is the only CTS director who is not independent. He does not receive any additional compensation for his service on the Board.

The Lead Independent Director is the leader of the independent directors, and leads all sessions of independent directors, which normally occur at the end of each regular Board meeting. A full description of his duties is as follows:

The General Counsel and Corporate Secretary’s Office provides support to the Lead Independent Director in fulfilling his role. The Lead Independent Director receives an annual retainer of $20,000, in addition to his ordinary director compensation, for the additional services the Lead Independent Director provides. The Board believes this leadership structure is effective, efficient, appropriate to CTS’ size and complexity and represents a cost-effective allocation of responsibilities.

Contrasting with the cost and efficiency benefits is the desire to ensure that control over both management and corporate governance is not overly invested in one person. The Board is confident that, as currently constituted, it will provide ample counterbalance to a combined Chairman and Chief Executive Officer and that it continues to provide suitable independent oversight of management. The independent directors on the Board are all accomplished professionals possessing substantial business and business-related experience as described in this Proxy Statement. Additionally, most have served on the Board for a number of years. As discussed above, the independent directors meet in separate session excluding management at each regular meeting of the Board. Further, any director has the right to submit items to be heard at any Board meeting. Lastly, the independent directors outnumber the one non-independent director, the combined Chairman and Chief Executive Officer, by a large supermajority.

Board of Directors’ Role in Risk Oversight

As a part of its oversight function, the Board monitors how management operates the Company. Risk is an important part of deliberations at the Board and committee levels throughout the year. Committees consider risks associated with their particular areas of responsibility. The Board conducts periodic reviews of corporate risk management policies and procedures and annually reviews risk assessments prepared by management as a part of CTS’ enterprise risk management process. The enterprise risk management process evaluates CTS’ major risk exposures and the steps management has taken to monitor and mitigate these exposures. Therefore, the Board and its committees consider among other items, the relevant risks to CTS when granting authority to management and approving business strategies. The Board has utilized this risk management structure for a number of years. Although the Board retains the right to make changes in risk oversight responsibilities from time-to-time, the Board anticipates that the risk management responsibilities will continue in a substantially similar manner as described above, whether or not the Board’s leadership structure changes.

Director Education

The CTS Corporation Corporate Governance Guidelines encourage all directors to participate in director continuing education programs. CTS reimburses directors for attendance at such programs. In addition, management monitors and reports to the directors regarding significant corporate governance initiatives. The directors also receive a presentation on new developments in corporate governance at least annually.

Stock Ownership Guidelines for Executives and Directors

The Board has adopted stock ownership guidelines that apply to directors and executives to increase the alignment of their interests with those of our shareholders and promote enduring shareholder value. The guidelines are administered by the Compensation and Talent Committee, and as part of that process the Compensation and Talent Committee periodically reviews the guidelines and directors’ and executive officers’ progress against the requirements of the guidelines and recommends to the Board any changes that may be appropriate. The stock ownership levels included in the guidelines for our Chief Executive Officer, other executive officers and directors are as follows:

In each case, the share ownership guideline level will be recalculated whenever the Chief Executive Officer or other executive officer receives an increase in base salary or, in the case of directors, whenever the directors’ annual retainer is increased. In calculating compliance with the guidelines, each executive officer and director is credited with one share unit for: (1) each share of the Company’s stock beneficially owned by such executive or director including shares of restricted stock; and (2) each restricted stock unit or directors’ deferred common stock unit which such executive or director holds. Both vested and non-vested shares of restricted stock and restricted stock units are included in calculating the total share units. Unvested performance equity awards and shares subject to non-vested stock options are not included in the calculation. Each director and executive officer has a period of six years from his or her initial election/appointment to attain the applicable share ownership level. The Compensation and Talent Committee or the Board, as applicable, may, in its discretion, reduce future grants to any director or executive officer who does not comply with the restrictions on dispositions of shares as set forth in the stock ownership guidelines. A copy of the stock ownership guidelines can be found in the governance section of the Company’s website at https://investors.ctscorp.com.

Messrs. O’Sullivan, Agrawal, and Baumeister hold shares in excess of the minimum requirements. Messrs. D’Angelo and Trivedi, who commenced employment with the Company in 2021 and 2024 respectively, currently do not satisfy the minimum requirement but are within the initial six-year compliance period. All directors hold shares in excess of the minimum requirement with the exception of Mr. Stone and Ms. Dodrill, who joined the Board in 2023 and 2024, respectively, and are still within the initial six-year compliance period.

Director Resignation Policy

The CTS Corporation Corporate Governance Guidelines designate the circumstances under which a director must offer his or her resignation to the Board in connection with a change of employment or a failure to receive the required vote by the shareholders. The Guidelines also require that a director tender his or her resignation effective as of the next occurring Annual Meeting of Shareholders after the date on which he or she reaches the age of 75. The Nominating, Governance and Sustainability Committee may recommend to the full Board that an exception be made to this policy. The Board will evaluate the best interest of CTS and its shareholders and may consider any factors it deems relevant in deciding whether to accept a director’s resignation.

Code of Ethics

CTS has adopted a Code of Ethics that applies to all CTS employees, including the principal executive officer, the principal financial officer, the principal accounting officer and/or controller, and all other executive officers and non-management directors. The Code of Ethics includes ethical standards concerning conflicts of interest and potential conflicts of interest. The Code of Ethics also includes the Company’s policies prohibiting workplace harassment and discrimination, compliance with anti-corruption, antitrust and trade laws, and requirements addressing the accurate and timely reporting of the Company’s financial information.

The Company, through a third-party provider, maintains an Ethics and Compliance Hotline which may be used to report violations of the Code of Ethics and other misconduct. Reports can be made over the phone or through the third-party provider’s website. The Ethics and Compliance Hotline is available 24/7, permits anonymous reporting and supports reports in applicable local languages. The Company holds annual training sessions on the Code of Ethics and other compliance-related topics.

The Audit Committee is responsible for reviewing compliance with the Code of Ethics and reviews any potential conflict of interest involving an executive officer. A copy of the Code of Ethics can be obtained free of charge from the Corporate Secretary upon request or found in the governance section of the Company’s website at https://investors.ctscorp.com.

Communications to Directors

Shareholders and other interested parties may address written communications to individual directors, including non-management directors, or to the Board, by writing to the Corporate Secretary at CTS’ principal executive offices located at 4925 Indiana Avenue, Lisle, Illinois 60532. All communications from shareholders must include the name and address of the shareholder as it appears on the record books of CTS and the name and address of the beneficial owner, if any, on whose behalf the communication is submitted. The Corporate Secretary will compile such communications and forward them to the directors on a periodic basis. However, the Corporate Secretary has authority to disregard any communication that is primarily an advertisement or solicitation or is threatening, obscene or similarly inappropriate in nature. Communications that have been disregarded for these reasons may be reviewed by any non-management director upon request.

ESG – 2024 Key Highlights

At CTS, our mission is to enable an intelligent and seamless world. We strive to fulfill our mission by being instrumental in helping our customers and their products shape the future, including by designing highly-engineered components that make our customers’ products smarter with effective and efficient technologies that allow systems to sense, connect and move. We firmly believe that one way to deliver greater value to our customers, stakeholders and the communities in which we operate is to help shape not only a more connected future, but one that is mindful of the needs of future generations.

We made meaningful progress on environmental, social and governance (“ESG”) initiatives in 2024. Some of our key accomplishments include the following:

Stock Ownership Information

Five Percent Stockholders

The table below lists information about the persons known by CTS to beneficially own at least 5% of the outstanding shares of CTS common stock as of December 31, 2024. The shareholding information below is as of the dates indicated in the footnotes below and is derived solely from the most recent Schedules 13G or Forms 13F, and amendments thereto, filed with the SEC. The percentage ownership is based on the number of shares outstanding as of March 14, 2025 and may vary from the percentage reported in the applicable Schedules 13G or Form 13F.

Directors’ and Officers’ Stock Ownership

The following table shows the number of shares of CTS common stock each named executive officer, director and director nominee beneficially owned as of March 14, 2025 (the “Record Date”), including shares of CTS common stock covered by restricted stock units exercisable within 60 days of March 14, 2025. Please note that, as reported in this table, and the footnotes below, beneficial ownership includes those shares of CTS common stock a director or officer has the power to vote or transfer, as well as shares of CTS common stock owned by immediate family members that reside in the same household with the director or officer.

Proposal 2: Approval, on an Advisory

Basis, of the Compensation of CTS’

Named Executive Officers

As required under the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities Exchange Act of 1934 (“Exchange Act”), our Board of Directors is asking shareholders to cast an advisory vote approving the compensation of CTS’ named executive officers (commonly referred to as a “Say-on-Pay” vote). The Compensation Discussion and Analysis section of this Proxy Statement describes CTS’ executive compensation program and the compensation decisions made by the Compensation and Talent Committee and the Board for 2024 with respect to our named executive officers. We currently hold a Say-on-Pay vote on an annual basis. Our next Say-on-Pay vote is expected to be held at the 2026 Annual Meeting of Shareholders.

CTS’ executive compensation program is designed to attract, retain and motivate high quality executive talent, to provide executives with strong incentives to maximize CTS’ performance, and to align executives’ interests with those of our shareholders. For these reasons, the Board is asking shareholders to vote FOR the following resolution:

“RESOLVED, that the compensation of the named executive officers as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in the CTS 2025 Proxy Statement, is hereby approved.”

While the advisory vote we are asking you to cast is non-binding, the Compensation and Talent Committee and the Board value the views of our shareholders and expect to take into account the outcome of the vote when considering future compensation decisions for our named executive officers.

Compensation Discussion and Analysis

This Compensation Discussion and Analysis provides details about CTS’ compensation practices for its named executive officers. The information provided in this section should be read together with the tables and narratives that accompany the information presented.

The following executive officers are CTS’ named executive officers for 2024, as that term is defined by the SEC:

Executive Summary   Executive Compensation Goals. CTS’ executive compensation program is designed to attract, retain and motivate high-quality executive talent, to provide its executives with strong incentives to maximize CTS’ performance and to align executives’ interests with those of our shareholders. Our executive compensation structure consists of base salary, annual cash incentives, performance-based equity compensation, service-based equity compensation, health and welfare benefits, retirement benefits and limited perquisites. CTS believes that our executive compensation program provides the best means of attracting, retaining and motivating executives with the skills and experience necessary to achieve our business goals and maximize shareholder value.   Recent Governance Activity. We hold “Say-on-Pay” votes every year. At our 2024 Annual Meeting of Shareholders, we received over 97% approval, based on the total votes cast, for our advisory Say-on-Pay proposal to approve the compensation of our named executive officers. Over the past five years, our Say-on-Pay votes have an average approval rate of greater than 97%. The Compensation and Talent Committee believes these strong voting results demonstrate significant continuing support for our overall executive pay program. After reviewing the 2024 Say-on-Pay vote results, the Compensation and Talent Committee did not make any changes as a direct result of the vote and decided to continue to apply the same general philosophy, compensation objectives and governing principles that it used in 2023 regarding named executive officer compensation decisions and policies. The Compensation and Talent Committee remains dedicated to aligning executive pay with Company performance both in the existing executive pay programs and the governance environment surrounding the overall program.

Kieran M. O’Sullivan, Chairman, President and Chief Executive Officer

Ashish Agrawal, Vice President and Chief Financial Officer

Scott L. D’Angelo, Vice President, Chief Legal and Administrative Officer and Corporate Secretary

Martin Baumeister, Senior Vice President

Pratik Trivedi, Senior Vice President

Inside This CD&A

Executive Summary

25

Compensation Objectives

26

Competitive Market Pay Information

27

How 2024 Named Executive Officer Compensation was Determined

28

Key Elements of 2024 Named Executive Officer Compensation

28

Agreements and Other Arrangements with Named Executive Officers

36

CTS Securities Hedging/Pledging Policy

36

Insider Trading Policy

37

Clawback Policy

37

2024 Performance. The Company made good progress against its strategic priorities in spite of difficult industry headwinds in 2024. Sales were $516 million, down 6% compared to $550 million in 2023. GAAP earnings per diluted share were $1.89 in 2024, compared to $1.92 per diluted share in 2023. Adjusted net earnings per diluted share were $2.17 in 2024, down from $2.22 in 2023.¹ Cash flow from operations was $99 million in 2024 versus $89 million in 2023. Sales, adjusted earnings per diluted share and cash flow from operations are each used as targets for incentive compensation as described below. For more information on the Company’s 2024 performance, please see the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Implications of 2024 Results for Compensation. For the 2024 Management Incentive Plan (also sometimes referred to in this Proxy Statement as the “MIP”), which is our annual performance-based cash incentive plan, Messrs. O’Sullivan, Agrawal and D’Angelo were each granted award opportunities based on the following weighted quantitative performance metrics: 60% based on the Company’s adjusted net earnings per diluted share (“Adjusted EPS”), 30% based on sales, 10% based on controllable working capital as a percentage of annual sales and an ESG modifier as further described below (the “ESG Modifier”), which could adjust the aggregate award by +/- 10% (these goals are sometimes collectively referred to herein as the “Company MIP Goals”). Messrs. Baumeister and Trivedi were granted award opportunities based on a combination of the Company MIP Goals (weighted at 20%) and weighted quantitative performance metrics specific to the areas of the business they each managed in 2024 (weighted at 80%) (sometimes collectively referred to herein as the “Supplemental MIP Goals”). Mr. Baumeister’s Supplemental MIP Goals for the sensors and mechatronics business were: 50% based on adjusted operating earnings, 30% based on total booked business and 20% based on controllable working capital as a percentage of annual sales. Mr. Trivedi’s Supplemental MIP Goals for the advanced materials and solutions business were the same as those for Mr. Baumeister except the 30% component was based on sales instead of total booked business. In addition, Messrs. Baumeister’s and Trivedi’s aggregate awards could be adjusted by +/- 10% based on the ESG Modifier.

As described more fully in the section below titled “How 2024 MIP Awards Were Calculated,” the Company’s performance in 2024 against the Company MIP Goals did not meet the minimum performance levels for sales; however, the Company did achieve the minimum performance levels for controllable working capital as a percentage of annual sales, and Adjusted EPS and qualified for the ESG Modifier. The Company did not achieve the minimum performance levels for any of the Supplemental MIP Goals applicable to Mr. Baumeister. The Company achieved the controllable working capital as a percentage of annual sales goal applicable to the advanced materials and solutions business, but did not achieve the other Supplemental MIP Goals applicable to Mr. Trivedi. As a result of the performance against the Company MIP Goals, Messrs. O’Sullivan, Agrawal and D’Angelo received MIP payments of $540,380, $183,562 and $147,725 respectively. Mr. Baumeister received a MIP payment of $43,144 and Mr. Trivedi received a MIP payment of $45,564, which was prorated to account for his April 29, 2024 start date with the Company.

The Compensation and Talent Committee determined the shares earned by participants under the 2022-2024 Performance Restricted Stock Unit Plan, which is a three-year performance-based equity award program established under the CTS Corporation 2018 Equity and Incentive Compensation Plan. This program measured the Company’s performance over a three-year performance period based on the following weighted criteria: 35% based on relative total shareholder return (“RTSR”), 35% based on sales growth and 30% based on operating cash flow. As a result of the Company’s three-year performance based on these metrics, Messrs. O’Sullivan, Agrawal, D’Angelo and Baumeister received payouts of 44,608, 14,320, 9,289 and 5,806 shares, respectively, in 2025. Mr. Trivedi commenced employment with the Company on April 29, 2024, and therefore was not eligible to receive a payout under the 2022-2024 Performance Restricted Stock Unit Plan.

Compensation Objectives

CTS designs its named executive officer compensation program to achieve three main objectives:

Additionally, the elements of total compensation are designed to reward the named executive officers for: (1) their core competencies, skills, experience and contributions to CTS (in the form of base salary, retirement benefits, health and welfare benefits and limited perquisites); (2) achievement of annual corporate goals (in the form of annual performance-based cash incentives); and (3) achievement of long-term objectives that are beneficial to CTS and its shareholders (in the form of performance-based and service-based equity awards). The first compensation element helps CTS offer competitive compensation, while the second and third compensation elements help CTS link compensation to performance and align compensation with shareholder interests. Decisions on specific elements of compensation do not generally affect the Compensation and Talent Committee’s decisions regarding the other elements of compensation except to the extent that these categories of compensation are structured to provide a substantial portion of total compensation that is based on performance and at risk each year.

Competitive Market Pay Information

CTS initially designed its executive compensation program to be competitive with similarly situated companies with whom we compete for executive talent. The Compensation and Talent Committee initially references total compensation at the fiftieth percentile of the compensation for similar positions at similarly situated companies. For purposes of 2024 compensation decisions, this analysis was based on market comparator group company and survey data provided by Exequity, LLP, the Compensation and Talent Committee’s independent compensation consultant. 

While the Compensation and Talent Committee considers this comparative compensation information to gain a general understanding of current median pay practices in our markets, this consideration provides only an initial, general guideline for CTS’ compensation decisions, rather than a fixed rule or final determining factor. By initially referencing median compensation levels for its named executive officers, CTS believes it strikes the right balance between motivating named executive officers with market competitive factors and providing the compensation necessary to recruit and retain top executive talent. Individual compensation opportunities vary based on other factors, such as tenure with CTS, individual performance and level of leadership responsibility with CTS.

What We Pay and Why