DEF 14A 1 tm2134948d1_def14a.htm DEF 14A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549

SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )

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	¨	Definitive additional materials
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ESCO TECHNOLOGIES INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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ESCO TECHNOLOGIES INC.

9900A Clayton Road, St. Louis, Missouri 63124

NOTICE AND PROXY STATEMENT
FOR THE 2022 ANNUAL MEETING OF SHAREHOLDERS
OF ESCO TECHNOLOGIES INC.

St. Louis, Missouri

December 15, 2021

TO THE SHAREHOLDERS OF ESCO TECHNOLOGIES INC.:

The 2022 Annual Meeting of the shareholders of ESCO Technologies Inc. will be held on Thursday, February 3, 2022 at the offices of the Company’s subsidiary VACCO Industries, located at 10350 Vacco Street, El Monte, California 91733, beginning at 10:00 a.m. Pacific Time, for the following purposes:

	1.	To elect Leon J. Olivier and Gloria L. Valdez as directors of the Company to serve for three-year terms expiring in 2025;

	2.	To ratify the Company’s appointment of its independent registered public accounting firm for the 2022 fiscal year; and

Say on Pay – An advisory vote to approve the compensation of the Company’s executive officers.

Your Board of Directors recommends that you vote “FOR” the above director nominees
and “FOR” Proposals 2 and 3.

Shareholders of record at the close of business on December 1, 2021 are entitled to vote at the Meeting.

Information about each of the above Proposals, as well as additional relevant information concerning the Company, is set forth in the accompanying Proxy Statement and in the Company’s 2021 Annual Report to Shareholders. Instructions for voting, as well as for receiving a paper copy of the proxy materials, are set forth in the “Important Notice Regarding the Availability of Proxy Materials” for the Meeting sent to all shareholders entitled to vote at the Meeting beginning on or about December 15, 2021.

Thank you for your ongoing support.

ESCO Technologies Inc.

By:

	Victor L. Richey
	Chairman, Chief Executive Officer and President

	David M. Schatz
	Secretary

Even if you plan to attend the Meeting in person, please vote electronically via the Internet at www.investorvote.com/ESE or by telephone within the United States, U.S. territories or Canada at 1-800-652-VOTE (8683), or if you requested paper or e-mail copies of the proxy materials, please complete, sign, date and return the proxy card.

TABLE OF CONTENTS

	Page

PROXY STATEMENT	1

ITEMS TO BE VOTED ON AT THE MEETING

	Proposal 1: Election of Directors	2
	Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm	5
	Proposal 3: Advisory Vote on Executive Compensation	6
	Other Matters	8
	Required Vote	8

CORPORATE GOVERNANCE INFORMATION

	Board of Directors	9
	Committees	11
	Director Compensation	14

EXECUTIVE COMPENSATION INFORMATION

	Compensation Committee Report	16
	Compensation Discussion and Analysis	16
	Summary Compensation Table	27
	Grants of Plan-Based Awards	29
	Outstanding Equity Awards at Fiscal Year-End	30
	Option Exercises and Stock Vested	31
	Pension Benefits	31
	Employment Agreements	32
	Potential Payments Upon Termination or Change in Control	33
	Pay Ratio Disclosure	37

OTHER INFORMATION

	Audit-Related Matters	38
	Securities Ownership	39
	Shareholder Proposals	41

APPENDIX A: Participants in the2020 Mercer Benchmark Database/Total Remuneration Survey

A-1

PROXY STATEMENT

This Proxy Statement is being furnished by ESCO Technologies Inc. (the “Company”) in connection with the solicitation of proxies for the Company’s 2022 Annual Meeting of Shareholders (the “Meeting”). The Meeting will be held on Thursday, February 3, 2022 at the offices of the Company’s subsidiary VACCO Industries, located at 10350 Vacco Street, El Monte, California 91733, beginning at 10:00 a.m. Pacific Time, for the purposes set forth in the Notice of Annual Meeting above.

A Notice of the Meeting and of the availability of this Proxy Statement and related materials was sent on or about December 15, 2021 to all persons who held shares of the Company’s common stock (“shares”) as of the close of business on December 1, 2021, the record date for determining the persons entitled to vote at the Meeting. As of the record date, there were 26,101,172 shares outstanding. Each outstanding share is entitled to one vote on all matters presented at the Meeting.

This proxy solicitation is being made by the Board of Directors of the Company by mail and via the Internet. Proxies may also be solicited by telephone, e-mail or fax by directors, officers or regular employees of the Company. The expenses of this solicitation will be paid by the Company.

Whether or not you expect to be present in person at the Meeting, please vote in advance using one of the voting methods described in the “Important Notice Regarding the Availability of Proxy Materials” sent to the shareholders on or about December 15, 2021, which contained instructions on how to access the proxy materials and vote electronically via the Internet, by telephone, by mail, or in person. That Notice also contained instructions on how to request a paper or e-mail copy of the proxy materials, including the Company’s 2021 Annual Report to Shareholders, this Proxy Statement, and a proxy card. The 2021 Annual Report to Shareholders and this Proxy Statement are also available for review on the Company’s website, www.escotechnologies.com.

In voting, you have several choices:

	•	You may vote on each proposal, by proxy or by voting in person or via the Internet or by telephone, in which case your shares will be voted in accordance with your choices.

	•	You may abstain from voting on any one or more proposals, or withhold authority to vote for any one or more directors, which will have the effect described under “Required Vote” on page 8.

•

You may return a properly executed proxy form without indicating your preferences, in which case the proxies will vote the shares as follows: (1) FOR election of the directors nominated by the Board of Directors, (2) FOR ratifying the appointment of the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2022, and (3) FOR the advisory approval of executive compensation.

You will have the right to revoke your proxy at any time before it is voted by giving written notice of revocation to the Secretary of the Company, or by duly executing and delivering a proxy bearing a later date, or by attending the Meeting and casting a contrary vote in person.

* * * * *

ITEMS TO BE VOTED ON AT THE MEETING

PROPOSAL 1: ELECTION OF DIRECTORS

The Board of Directors recommends a vote FOR the election of
Leon J. Olivier and Gloria L. Valdez as directors of the Company.

The Company's Bylaws provide that the number of directors shall not be less than three nor greater than ten, with the exact number to be determined from time to time by majority vote of the Board of Directors. In accordance with this provision, current number of directors has been fixed at eight; however, from and after the Meeting the number of directors will be reduced to seven as described below.

The Board is divided into three classes, with the terms of office of each class ending in successive years. The terms of directors Leon J. Olivier, Larry W. Solley and Gloria L. Valdez will expire at the Meeting. The Board has nominated Mr. Olivier and Ms. Valdez to serve for additional three-year terms expiring at the 2025 Annual Meeting. Mr. Solley has decided to retire from the Board at the end of his current term and is not standing for re-election. As a result, the Board has decided to reduce the size of the Board from eight members to seven upon the expiration of Mr. Solley’s current term in order to eliminate the vacancy which would otherwise result from Mr. Solley’s retirement.

If elected, the nominees would serve until the expiration of their terms and until their successors have been elected and qualified. Proxies cannot be voted for more than two nominees. Should either or both of the nominees become unable or unwilling to serve (which is not expected), the proxies unless marked to the contrary will be voted for such other person or persons as the Board may recommend.

Certain information with respect to these nominees and the other directors whose terms of office will continue after the Meeting is set forth below, including each director’s business experience, directorships at other public companies during at least the past five years, and the specific experience, qualifications, attributes and skills which, among other reasons, have led the Board to conclude that such person is qualified to serve as a director.

Further information about the Board of Directors and its committees is set forth in the section captioned “Corporate Governance Information” beginning on page 9.

Nominees for Terms Ending in 2025

Leon J. Olivier

Age 73; Director since 2014

Mr. Olivier has broad utilities industry experience gained over a 30-year career in all aspects of strategy and operations. These include conventional and nuclear generation, renewable energy development (hydro, wind and solar), electric and gas transmission, distribution and development, and Smart Grid strategy and design. This experience, including his extensive experience in senior leadership and management roles, makes him well qualified to serve on the Board of Directors and to assist in guiding strategy at the highest levels.

Principal Occupation and Business Experience: Mr. Olivier is the retired Executive Vice President of Enterprise Energy Strategy and Business Development of Eversource Energy (formerly Northeast Utilities), headquartered in Boston, Massachusetts, a position he held from 2014 through February 2020 after previously serving as its Executive Vice President and Chief Operating Officer from 2007 to 2014. Eversource Energy is a public utility holding company engaged in the generation, transmission and distribution of electricity, and the distribution of natural gas, to customers in Connecticut, Massachusetts and New Hampshire.

Public Company Directorships: Mr. Olivier currently serves on the Company’s Board of Directors.

Other Experience and Education: Mr. Olivier has a Master of Business Administration degree from Northeastern University. He also served in the United States Navy submarine service. From 2010 through 2019 he was a director of Essex Financial Services, Essex, Connecticut.

Gloria L. Valdez

Age 59; Director since 2019

Ms. Valdez’s extensive strategic and operational experience in the defense markets as well as her management and financial expertise allow her to assist the Board in guiding the Company’s strategy at the highest levels.

Principal Occupation and Business Experience: Ms. Valdez retired in April 2018 after 32 years of civilian service with the Department of the Navy and the Department of Homeland Security. From June 2015 until her retirement, she served as the Deputy Assistant Secretary of the Navy within the Office of the Assistant Secretary of the Navy (ASN) for Research, Development and Acquisition. In this capacity, she was responsible for executive oversight of all naval shipbuilding programs, major ship conversions, and the maintenance, modernization and disposal of in-service ships. She previously served in a number of other civilian positions within the Navy Department including as the Executive Director for the Program Executive Office for submarines, responsible for civilian management and the design, acquisition and construction for submarine platform and undersea systems; as the Director of the Investment and Development division within the Office of ASN for Financial Management and Comptroller; and as the Director for Naval and Commercial Construction in the Office of the ASN for Ship Programs. She has also served as the Budget Director for the U.S. Immigration and Customs Enforcement within the Department of Homeland Security. Since February 2021, Ms. Valdez has been a member of the international Naval Shipbuilding Advisory Panel providing advice to the Commonwealth of Australia.

Public Company Directorships: Ms. Valdez currently serves on the Company’s Board of Directors.

Other Experience and Education: Ms. Valdez holds a Master of Science degree in Management from Florida Institute of Technology as well as a Bachelor of Science degree in Mechanical Engineering from the University of New Mexico. She has received the Department of the Navy’s Distinguished, Superior and Meritorious Civilian Service Awards, and in 2014 she was awarded the Pioneer award from Great Minds in STEM. She is also the sponsor of the Virginia Class submarine USS Vermont (SSN 792), which was commissioned in April 2020.

Directors Continuing in Office

Patrick M. Dewar (Term expires 2023)

Age 61; Director since 2017

Mr. Dewar’s extensive strategic and operational experience in the aerospace and defense markets makes him well-qualified to assist in guiding Company strategy at the highest levels.

Principal Occupation and Business Experience: Since August 2016, Mr. Dewar has been the Chief Executive of The Trenton Group, LLC, an investment and strategy consulting firm focused on security, aerospace and defense technology companies. From 2013 until August 2016 he was Executive Vice President of Lockheed Martin International and Chairman of Lockheed Martin Global, Inc., after serving as Senior Vice President, Strategy and Business Development for Lockheed Martin Corporation from 2010 to 2013 and in various capacities with Lockheed Martin and GE Aerospace prior to that.

Public Company Directorships: In addition to serving on the Company’s Board of Directors, Mr. Dewar is a director (since February 2018) of Butler America Aerospace, LLC, a subsidiary of HCL Technologies Ltd., which provides a wide range of engineering, design, IT and support services primarily to aerospace and defense markets in the United States.

Other Experience and Education: Mr. Dewar holds a Master of Science degree in Electrical Engineering from Drexel University as well as a Bachelor of Science degree in Engineering from Swarthmore College. He is a member of the Council on Foreign Relations and serves as a senior adviser to numerous investment firms on aerospace and defense matters. Mr. Dewar also qualifies as an audit committee financial expert under SEC regulations.

Vinod M. Khilnani (Term expires 2023)

Age 69; Director since 2014

As a former public company executive, Mr. Khilnani brings to the Board of Directors a wealth of management experience and business knowledge regarding operational, financial and corporate governance issues, as well as extensive international experience with global operations.

Principal Occupation and Business Experience: Mr. Khilnani is the retired Executive Chairman of the Board of Directors of CTS Corporation, Elkhart, Indiana, which designs, manufacturers, and sells electronic components and sensors primarily to original equipment manufacturers worldwide. He joined CTS in May 2001 as Senior Vice President and Chief Financial Officer; in 2007 he became President and Chief Executive Officer and in 2009 also Chairman of the Board; and in 2013 prior to his retirement he served as Executive Chairman. Mr. Khilnani has over 35 years of experience in the electronics, aerospace and commercial manufacturing industries, including extensive experience in mergers and acquisitions and international business development in Asia and Europe as well as North America.

Public Company Directorships: In addition to serving on the Company’s Board of Directors, Mr. Khilnani is a director (since 2009) of Materion Corporation (MTRN), a manufacturer of advanced materials, performance alloys and composites, and precision coatings, where he serves as Non-Executive Chairman of the Board (since January 2018, prior to which he was Lead Director) and Chair of both the Executive Committee and the Governance and Organization Committee as well as a member of the Compensation Committee; and a director (since April 2013) of 1^st Source Corporation (SRCE), the parent company of 1st Source Bank, where he serves as a member of the Audit Committee and the Executive Committee. From October 2014 to May 2021 he was a director of Gibraltar Industries, Inc. (ROCK), a manufacturer and distributor of products for the building markets, where he served as Chairman of the Nominating and Corporate Governance Committee and a member of the Compensation Committee.

Other Experience and Education: Mr. Khilnani holds a Master of Business Administration degree from the University of New York at Albany, and a Bachelor of Arts degree in Business Administration from Delhi University. He also qualifies as an audit committee financial expert under SEC regulations.

Robert J. Phillippy (Term expires 2023)

Age 61; Director since 2014

Along with his experience as chief executive officer of a publicly held technology company, Mr. Phillippy brings to the Board of Directors extensive experience in mergers and acquisitions as well as in new product innovation and international business development.

Principal Occupation and Business Experience: Mr. Phillippy is an independent executive consultant, advising technology companies on a range of strategic, operational and organizational issues. From 2007 until April 2016 he was the President, Chief Executive Officer and a director of Newport Corporation, a developer, manufacturer and supplier of lasers, optics and photonics technologies, products and systems for scientific research, microelectronics, defense and security, life and health sciences and industrial markets worldwide, after serving in various executive management positions with Newport and its subsidiaries from 1996 to 2007. In April 2016 Newport was acquired by MKS Instruments, a publicly held provider of instruments, components, subsystems and process control solutions for advanced manufacturing applications. Mr. Phillippy then served as Executive Advisor to MKS Instruments until September 2016, and from July 2016 to May 2018 he served on its board of directors.

Public Company Directorships: In addition to his current service on the Company’s Board of Directors, Mr. Phillippy is a director (since May 2018) of Materion Corporation (MTRN), a manufacturer of advanced materials, performance alloys and composites, and precision coatings, where he serves as a member of both the Audit and Risk Committee and the Nominating, Governance and Corporate Responsibility Committee, and a director (since November 2018) of Kimball Electronics, Inc. (KE), a contract manufacturer of durable electronics and other products for a variety of industries globally, where he serves as the Lead Independent Director and as a member of the Compensation and Governance Committee. He was a director of MKS Instruments from July 2016 until May 2018 and a director of its predecessor Newport Corporation from 2007 until April 2016.

Other Experience and Education: Mr. Phillippy holds a Master of Business Administration degree from Northwestern University’s Kellogg School of Management, and a Bachelor of Science degree in Electrical Engineering from the University of Texas at Austin. He has over 35 years of experience in technology-related industries, including various sales and marketing management positions at Square D Company (now Schneider Electric), an electrical equipment manufacturer, from 1984 to 1996. Mr. Phillippy also qualifies as an audit committee financial expert under SEC regulations.

Victor L. Richey (Term expires 2024)

Age 64; Director since 2002

Mr. Richey’s current position as Chairman and Chief Executive Officer as well as his previous positions of ever-increasing responsibilities with the Company during his many years of service make him uniquely qualified to provide the Board of Directors with valuable insights and perspectives concerning all areas of the Company’s business.

Principal Occupation and Business Experience: Mr. Richey has been the Chairman and Chief Executive Officer of the Company since 2003 and its President since 2006. He joined the Company in 1990 and previously served in a number of positions including Vice President of Sales and Marketing for one of the Company’s former divisions; Vice President of Administration; Vice President responsible for the Company’s Communications and Test segments; and President and Chief Operating Officer.

Public Company Directorships: In addition to serving on the Company’s Board of Directors, Mr. Richey is a director of Nordson Corporation (NDSN), a leader in precision dispensing equipment for applying industrial liquid and powder coatings, adhesives and sealants to numerous consumer and industrial products during manufacturing operations, where he serves as Chair of the Human Resources and Compensation Committee and a member of the Nominating and Corporate Governance Committee.

Other Experience and Education: Prior to joining the Company, Mr. Richey was employed by Emerson Electric Co., an international technology and engineering company serving customers in industrial, commercial and residential markets, in a variety of roles in the Electronics and Space Division. He previously served in the United States Army as a Military Intelligence Officer. Mr. Richey has a Bachelor of Arts degree from Western Kentucky University and a Master of Business Administration degree from Washington University in St. Louis, Missouri.

James M. Stolze (Term expires 2024)

Age 78; Director since 1999

Mr. Stolze’s experience in the accounting profession as well as his experience in corporate finance and treasury matters and domestic and foreign manufacturing enables Mr. Stolze to provide valuable advice and direction. As Chair of the Audit and Finance Committee of the Company’s Board of Directors, Mr. Stolze adds significant value to the Company’s goals of maintaining a strong balance sheet and fulfilling its financial reporting obligations, accurately and transparently.

Principal Occupation and Business Experience: Mr. Stolze has served as the Chief Financial Officer of two public companies. He was Vice President and Chief Financial Officer of Stereotaxis, Inc., a manufacturer of medical instruments, from 2004 until his retirement in 2009, and the Executive Vice President and Chief Financial Officer of MEMC Electronic Materials Inc. (now SunEdison Inc.) from 1995 to 2003. Prior thereto he served as an Audit Partner for KPMG LLP.

Public Company Directorships: Mr. Stolze currently serves on the Company’s Board of Directors.

Other Experience and Education: Mr. Stolze is a member of the Board of Trustees of Maryville University, St. Louis, Missouri as well as that Board’s Audit and Finance Committee. Until 2021 he also served on the Board of Directors of ISTO Technologies, Inc., an orthobiologics company. Mr. Stolze received a Bachelor of Science degree in Mechanical Engineering from the University of Notre Dame and a Master of Business Administration degree from the University of Michigan. He also holds a Certified Public Accountant (CPA) license from the State of Missouri, and qualifies as an audit committee financial expert under SEC regulations.

PROPOSAL 2: RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors recommends a vote FOR ratification of the Company’s appointment
of its independent registered public accounting firm for the 2022 fiscal year.

The Audit and Finance Committee of the Board of Directors has appointed Grant Thornton LLP (“Grant Thornton”), an independent registered public accounting firm, as independent public accountants of the Company for the fiscal year ending September 30, 2022.

Although the appointment of Grant Thornton is not required to be submitted to a vote of the shareholders, the Board of Directors believes it is appropriate to request that the shareholders ratify the appointment. If the shareholders do not ratify this appointment, the Committee will investigate the reasons for the rejection and will reconsider the appointment. A representative of Grant Thornton is expected to be present at the Meeting and will have the opportunity to make a statement if they desire to do so and be available to respond to appropriate questions from shareholders.

From the Company’s incorporation in 1990 through fiscal 2021 the Company’s independent public accounting firm was KPMG LLP or its predecessor firms (“KPMG”), and KPMG audited the Company’s consolidated financial statements for fiscal 2021, which are included in its 2021 Annual Report to Shareholders. Information about the fiscal 2021 audit, the Committee’s policies relating to the approval of audit and permitted non-audit services performed by KPMG, and the fees paid to KPMG by the Company for the past two years, are set forth under “Audit-Related Matters” on page 38.

On November 18, 2021, the Company notified KPMG that it was being dismissed as the Company’s independent registered public accounting firm, effective upon completion of KPMG’s audit of the Company’s fiscal 2021 financial statements and the effectiveness of the Company’s internal controls over financial reporting as of September 30, 2021. KPMG’s audit was completed on November 29, 2021. The decision to dismiss KPMG as the Company’s independent registered public accounting firm was at the direction of and approved by the Audit and Finance Committee of the Board of Directors after a competitive proposal process. A representative of KPMG will not be at the meeting.

KPMG’s audit reports on the Company’s consolidated financial statements as of and for the fiscal years ended September 30, 2021 and 2020 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, however, KPMG’s report dated November 30, 2020 contained the below separate paragraph:

“As discussed in Note 1 of the consolidated financial statements, the Company has changed its method of accounting for leases as of October 1, 2019 due to the adoption of ASU No. 2016-062, Leases (ASC Topic 842) and method of accounting for revenue contracts with customers as of October 1, 2018 due to the adoption of ASU No. 2014-09, Revenue with Contracts with Customers (ASC Topic 606).”

KPMG’s audit reports on the effectiveness of internal control over financial reporting as of September 30, 2021 and 2020 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles, except that KPMG’s report dated November 29, 2021 indicates that:

	•	The Company did not maintain effective internal control over financial reporting as of September 30, 2021 because of the effect of a material weakness on the achievement of the objectives of the control criteria and contains an explanatory paragraph that states that a material weakness related to an ineffective risk assessment process resulted in the ineffective design of certain controls over revenue recognition, and the accumulation of inventory costs and the determination of inventory carrying values at a reporting unit has been identified.

•

The Company acquired I.S.A.–Altanova Group (“Altanova”) on July 29, 2021, and the assets of Phenix Technologies (“Phenix”) on August 9, 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of September 30, 2021, Altanova’s and Phenix’s internal control over financial reporting associated with total assets representing 12.2 percent of consolidated assets, and total sales representing 0.6 percent of consolidated net sales, included in the consolidated financial statements of ESCO Technologies Inc. and subsidiaries as of and for the year ended September 30, 2021. KPMG’s audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Altanova and Phenix.

During the Company’s fiscal years ended September 30, 2020 and 2021 and the subsequent interim period through November 29, 2021 there were (i) no disagreements between the Company and KPMG within the meaning of Item 304(a)(1)(iv) of Regulation S-K and the related instructions on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which if not resolved to KPMG’s satisfaction would have caused it to make reference to the subject matter of the disagreement in connection with its report; and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K with the exception of the material weakness described above.

During the Company’s fiscal years ended September 30, 2020 and 2021 and the subsequent interim period through November 29, 2021, neither the Company nor anyone acting on its behalf consulted with Grant Thornton with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the consolidated financial statements of the Company and its subsidiaries, and no written report or oral advice was provided by Grant Thornton to the Company that Grant Thornton concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue, or (ii) any matter that was the subject of either a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K) or a reportable event (as described in Item 304(a)(1)(v) of Regulation S-K).

PROPOSAL 3: ADVISORY VOTE ON EXECUTIVE COMPENSATION

The Board of Directors recommends a vote FOR approval of the compensation
of the Company’s executive officers as disclosed in this Proxy Statement.

Pursuant to Section 14(a) of the Securities Exchange Act of 1934, the Board of Directors is again soliciting an advisory (non-binding) shareholder vote to approve the compensation of the Company’s executive officers (also referred to herein as the “named executive officers”) as described in this Proxy Statement (commonly referred to as “Say-on-Pay”). In accordance with the results of the vote we conducted at the 2017 Annual Meeting on the frequency of Say-on-Pay votes, we plan to continue to present a Say-on-Pay vote every year. At the 2021 Annual Meeting, over 99% of the shares represented and entitled to vote on the Say-on-Pay proposal, or over 90% of all outstanding shares, were voted in support of the Company’s executive compensation program.

The Board of Directors strongly endorses the Company’s executive compensation program and recommends that the shareholders vote in favor of the following Resolution:

“RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation of the named executive officers as disclosed in the Company’s Proxy Statement for the 2022 Annual Meeting of Shareholders pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and narrative disclosure.”

This vote is not intended to address any specific item of compensation, but rather the overall compensation of the named executive officers as described in this Proxy Statement. Although the vote is non-binding, the Board of Directors and its Human Resources and Compensation Committee value the opinions of the shareholders, and to the extent there is a significant vote against the above resolution the Company will consider the shareholders’ concerns and the Committee will evaluate what actions (if any) may be necessary to address those concerns.

The Company’s executive compensation program is designed to attract, motivate, and retain its executive officers, who are critical to the Company’s success. The Human Resources and Compensation Committee reviews the compensation program at least annually to ensure that it achieves the desired goals of aligning the Company’s executive compensation structure with shareholders’ interests and current market practices. Based on its latest review, the Company restructured its LTEI program as described below.

The Committee believes that the program constitutes a balanced, competitive approach to compensation that supports its compensation objectives through performance based compensation that aligns the interests of executives with those of the Company’s shareholders. Below are some key features of the compensation program, which is described in detail in the “Compensation Discussion and Analysis” section below:

	•	A significant part of the Company’s executive compensation is at-risk and performance-based, including annual cash incentives, which closely link pay to financial results and provide for variability through lower compensation in times of poor performance and higher compensation in times of strong performance. For fiscal 2021, the Committee determined that the performance criteria for the cash incentive plan should be based on Adjusted EPS and Cash Flow, as defined and described under “Principal Elements of Compensation Program–Cash Incentive Compensation”.

	•	The Company has historically provided a significant part of executive compensation as long-term equity incentives (LTEI) in the form of performance-accelerated restricted shares (PARS), in fiscal 2021 the Company restructured its LTEI award program to replace PARS with a combination of performance share units (PSUs) and restricted share units (RSUs). The restructured program was partially implemented in April 2021 through the initial RSU awards and was fully implemented in the first quarter of fiscal 2022 through the initial PSU awards, as described under “Principal Elements of Compensation Program–Long-Term Equity Incentive Compensation”.

	•	Since 2010, the Company has had a clawback policy for equity and incentive compensation and the Company includes recoupment as well as clawback provisions in certain awards where permitted by law.

	•	The Company has significant executive stock ownership guidelines, amounting to five times total cash compensation (base salary and annual cash incentive target) for the CEO and three times total cash compensation for the other executive officers, which approximates ten times base salary for the CEO and five times base salary for the other executive officers.

	•	The Company’s executive officer equity awards and severance plan utilize a “double trigger” upon a change in control of the Company and its employment agreements provide for the protection of confidential information and post-termination consulting.

•

Effective January 1, 2021, the Company eliminated tax gross-up payments on taxable perquisites.

Shareholders are encouraged to review the section captioned “Executive Compensation Information” beginning on page 16. This section provides details about the Company’s executive compensation program as well as specific information about the compensation of the named executive officers, and includes the Compensation Discussion and Analysis, the Summary Compensation Table, and the other related tables and narrative disclosure referred to in the proposed Resolution.

OTHER MATTERS

Management is not aware of any other matters that will be presented at the Meeting. However, if any other proposal is properly presented for a vote at the Meeting, other than the election of directors and the other proposals described in this Proxy Statement, the proxy holders will vote on it in their own discretion.

REQUIRED VOTE

At the Meeting, shareholders will be entitled to cast one vote for each share held by them of record on the record date. There is no cumulative voting with respect to the election of directors. The Company has no non-voting shares.

The affirmative vote of the holders of a majority of the shares represented in person or by proxy at the Meeting and entitled to vote on the matter in question will be required to elect directors, to approve each of the individual proposals described in this Proxy Statement, and to act on any other matters properly brought before the Meeting. The Company’s Corporate Governance Guidelines provide that an incumbent director who fails to obtain such a majority vote must promptly offer his or her resignation to the Chairman, and the remaining directors shall meet to consider whether it is in the best interests of the Company to accept the resignation or to permit the incumbent to remain on the Board for such period of time as the Board may determine or until a successor is elected and qualified.

Shares represented by proxies which are marked “Withhold Authority” with respect to the election of either or both nominees for election as directors, marked “Abstain” on any one or more of the other individual proposals described in this Proxy Statement, or marked to deny discretionary authority on any other matters brought before the Meeting will be counted for the purpose of determining the number of shares represented by proxy at the Meeting; but proxies so marked will have the same effect as if the shares represented thereby were voted against such nominee or nominees, against such proposals, or against such other matters, respectively.

Under the Rules of the New York Stock Exchange, the proposal to approve the appointment of independent registered public accountants is considered a “discretionary” item, which means that brokerage firms may vote in their discretion on this matter on behalf of clients who have not furnished voting instructions at least 10 days before the date of the Meeting. In contrast, the election of directors and the other items on the Meeting agenda are “non-discretionary” items, which means that brokerage firms that have not received voting instructions from their clients on these proposals may not vote on them. These so-called “broker non-votes” will, if the underlying shares are otherwise represented at the Meeting, be considered to be present for purposes of determining a quorum, but will be treated as not entitled to vote on such matter or matters; they will therefore not be considered in determining the number of votes necessary for approval and will have no effect on the outcome of the vote for directors or the other matters to be considered at the Meeting. If your shares are held by a broker it is important that you provide voting instructions to your broker so that your votes are counted.

CORPORATE GOVERNANCE INFORMATION

BOARD OF DIRECTORS

The Board of Directors currently consists of eight directors, but beginning at the Meeting the number of directors will be reduced to seven as described below. The directors are divided into three classes as nearly equal in size as practicable, with one class elected each year. Information about each of the current directors is provided under “Proposal 1: Election of Directors” beginning on page 2.

Director Victor L. Richey is the only Board member who is a member of the Company’s management. The other seven directors are Patrick M. Dewar, Vinod M. Khilnani, Leon J. Olivier, Robert J. Phillippy, Larry W. Solley, James M. Stolze and Gloria L. Valdez. There have been no changes in the composition of the Board since the beginning of fiscal 2022. However, because Mr. Solley has announced his decision to retire at the end of his current term at the Meeting, and the Board has not yet determined whether his position will be filled and if so, by whom, the Board has decided to reduce the size of the Board from eight to seven directors upon Mr. Solley’s retirement in order to eliminate the vacancy which would otherwise result.

The Board of Directors has affirmatively determined that none of the non-management directors has any material relationship with the Company other than in his or her capacity as a director and shareholder, and that therefore all of these directors are, and at all times during their service in fiscal 2021 were, independent as defined under the Company’s Corporate Governance Guidelines and the listing standards of the New York Stock Exchange. See the discussion under “Independence and Related Person Procedures” below.

The Board of Directors held five meetings during fiscal 2021. All of the directors attended, either in person or by video conference call, at least 75% of the meetings of the Board and of each of the committees on which they served which were held during the year. The Company’s policy requires that all directors attend the Annual Meeting of Shareholders, except for absences due to causes beyond the reasonable control of the director. All of the directors attended the 2021 Annual Meeting held at the Company’s headquarters in St. Louis County, Missouri.

Governance Policies and Management Oversight

The Board of Directors has adopted Corporate Governance Guidelines to guide its actions, as well as a Code of Business Conduct and Ethics applicable to all of the Company’s directors, officers and employees. Additionally, the Board has adopted a Code of Ethics for Senior Financial Officers applicable to the Company’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Controller and persons performing similar duties. These documents are posted on the Company’s web site, www.escotechnologies.com, under the “Investor Center/ Governance Documents” tab, and a copy of any of these documents is also available in print to any shareholder who requests it.

As permitted in the Corporate Governance Guidelines, the Board has determined that Mr. Richey should hold the positions of both Chief Executive Officer and Chairman of the Board of Directors. Based upon its most recent review of that determination, the Board continues to believe that this has served the Company well and that Mr. Richey should continue to be Chairman of the Board and Chief Executive Officer. The Board believes that Mr. Richey is a strong leader at both the Company and the Board levels, and believes that because he has primary responsibility for managing the day-to-day operations of the Company he is also well positioned to provide Board leadership that is aligned with shareholder interests and the needs of the Company. Furthermore, the Board believes that having Mr. Richey serve as both Chairman of the Board and Chief Executive Officer enables the Company to speak with one voice, and reduces the chance of confusion about leadership roles and responsibilities.

At the same time, the Board is also very cognizant of its oversight responsibilities, and has in place structural safeguards that serve to preserve the Board’s independent oversight of management. The Board has only one management director, with all the other directors remaining independent. All of the directors are highly qualified and experienced. Additionally, all of the members of the Audit and Finance Committee, the Human Resources and Compensation Committee, and the Nominating and Corporate Governance Committee are independent as defined by the New York Stock Exchange and set forth in the Company’s Corporate Governance Guidelines; see “Independence and Related Person Procedures” below.

Further, in view of Mr. Richey’s dual role as Chief Executive Officer and Chairman, in accordance with the Corporate Governance Guidelines the Board has appointed Mr. Stolze as Lead Director. The Lead Director chairs all meetings of the independent directors, which normally occur in conjunction with each Board meeting; provides regular input to the Chairman regarding the content of the agendas for meetings of the Board; advises the Chairman of the quality, quantity and timeliness of the information required by the Board to effectively and responsibly perform its oversight duties; and acts as liaison between the Board and the Chairman on sensitive issues. The Board believes that these safeguards have been and are effective in preserving the Board’s independent oversight of management.

The Board’s Role in Risk Oversight

The Company’s management is responsible for managing the Company’s risks on a day-to-day basis, and has adopted an ongoing enterprise risk management process that it uses to identify and assess Company risks. Management has identified risks in four general areas: Financial and Reporting; Legal and Compliance; Operational; and Strategic. Periodically, management advises the Board and the appropriate Board committee of the risks identified; management’s assessment of those risks at the business unit and corporate levels; its plans for the management of these identified risks or the mitigation of their effects; and the results of the implementation of those plans.

While the Board as a whole has responsibility for and is involved in the oversight of management’s risk management processes, plans and controls, some of the identified risks are given further review by the Board committee most closely associated with the identified risks. For example, the Audit and Finance Committee provides additional review of the risks in the areas of accounting and auditing, liquidity, credit, tax, information security and cybersecurity. Similarly, the Human Resources and Compensation Committee provides additional review of risks in the area of compensation and benefits and human resource planning. The Nominating and Corporate Governance Committee devotes additional time to the review of risks associated with corporate governance, ethics, legal and ESG issues.

The Board’s leadership structure combines the positions of Chairman of the Board and Chief Executive Officer but includes the additional position of Lead Director, as discussed above. This structure enables the Chief Executive Officer, who has intimate knowledge of management’s day-to-day risk management processes and controls, to ensure that the directors receive the information necessary to discharge their oversight role responsibly, while ensuring that the independent directors maintain independence in their oversight role.

Succession Planning

The Human Resources and Compensation Committee of the Board conducts an annual review of the Company’s long-term succession plan for the CEO. Additionally the Board has in place an emergency succession plan for the CEO in order to minimize the uncertainty associated with an emergency succession event.

Independence and Related Person Procedures

The Company has implemented a written policy to ensure that all non-management directors meet the independence standards defined by the New York Stock Exchange and set forth in the Company’s Corporate Governance Guidelines, and to ensure that all Company transactions in which a “Related Person” has or will have a direct or indirect interest will be at arm’s length and on terms generally available to an unaffiliated third-party under the same or similar circumstances. “Related Persons” include the Company’s directors, director nominees and executive officers, holders of 5% or more of the Company’s stock, and the immediate family members of each. The policy contains procedures requiring Related Persons to notify the Company of any such transaction and for the Nominating and Corporate Governance Committee to review the material facts of the proposed transaction and determine whether to approve or disapprove the transaction. The Committee will consider whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances. If advance Committee approval is not feasible or is not obtained, the policy requires submission of the transaction to the Committee after the fact, and the Committee is empowered to approve, ratify, amend, rescind or terminate the transaction. In such event, the Committee will also request the General Counsel to evaluate the Company’s controls and procedures to ascertain whether any changes to the policy are recommended.

The Company has developed and implemented processes and controls to obtain information about Related Person transactions for the purpose of determining, based on the facts and circumstances, whether a Related Person has a direct or indirect material interest in the transaction. Pursuant to these processes and controls, all directors and executive officers must annually complete, sign and submit a Directors’ and Officers’ Questionnaire and a Conflict of Interest Questionnaire that are designed to identify Related Person transactions and both actual and potential conflicts of interest, and are required to update their responses in the event of any changes. Additionally, the holders of 5% or more of the Company’s shares (all of whom are institutional investors), are annually requested to respond to certain questions designed to identify direct or indirect material interests by such 5% or more shareholder in any transactions with the Company.

Based on its review and processes, the Company has determined that there has been no transaction since the beginning of the Company’s 2021 fiscal year, and there is no other currently proposed transaction, in which the Company was or is to be a participant and in which any Related Person had or will have a direct or indirect material interest.

Communications with Directors

Interested parties desiring to communicate concerns regarding the Company to the Lead Director or to the non-management Directors as a group may direct correspondence to: Mr. James M. Stolze, Lead Director, ESCO Technologies Board of Directors, ESCO Technologies Inc., 9900A Clayton Road, St. Louis, MO 63124-1186. Alternatively, interested parties who wish to communicate with an individual director or any group of directors may write to such director(s) at ESCO Technologies Inc., 9900A Clayton Road, St. Louis, MO 63124-1186, Attn: Secretary. All such letters will be forwarded promptly to the relevant director(s).

COMMITTEES

The members of the Board of Directors are appointed to various committees. The standing committees of the Board are the Executive Committee, the Audit and Finance Committee, the Nominating and Corporate Governance Committee, and the Human Resources and Compensation Committee.

Each Committee operates under a written charter adopted by the Board of Directors. The charters are posted on the Company’s web site, www.escotechnologies.com, under the “Investor Center/Committees & Charters” tab, and a copy of each Committee’s charter is available in print to any shareholder who requests it.

The members of each Committee as of the date of this Proxy Statement, and the number of meetings held by each Committee during fiscal 2021, are as follows:

	Executive Committee	Audit and Finance Committee	Human Resources and Compensation Committee	Nominating and Corporate Governance Committee
Patrick M. Dewar		Member
Vinod M. Khilnani		Member	Chair
Gary E. Muenster
Leon J. Olivier				Member
Robert J. Phillippy		Member		Member
Victor L. Richey	Member
Larry W. Solley			Member	Chair
James M. Stolze	Member	Chair	Member
Gloria L. Valdez				Member
Number of Meetings:	2	4	4	4

Executive Committee

The Executive Committee’s function is to exercise the full authority of the Board of Directors between Board meetings, except that the Executive Committee may not take certain specified actions which the Board of Directors has reserved for action by the whole Board.

Audit and Finance Committee

The functions of the Audit and Finance Committee are generally to assist the Board of Directors in its oversight of the Company’s financial reporting process, the Company’s compliance with legal and regulatory requirements, the qualifications, independence and performance of the Company’s independent registered public accounting firm (the “Accounting Firm”), and the performance of the Company’s internal audit function. The Committee is responsible for appointing, retaining and overseeing the Accounting Firm and its performance of the annual audit; annually evaluating the qualifications, independence and prior performance of the Accounting Firm; reviewing the scope of the Accounting Firm’s work and approving its annual audit fees and any non-audit service fees; reviewing the Company’s internal controls with the Accounting Firm and the internal audit executive; reviewing with the Accounting Firm any problems it may have encountered during the annual audit; discussing Form 10-K and 10-Q reports with management and the Accounting Firm before filing; reviewing and discussing earnings press releases; discussing with management major financial risk exposures; on a quarterly basis, reviewing management’s assessment and overview of information security, cybersecurity and IT risks, breaches (if any), and any preventive or remedial actions taken; reviewing the annual internal audit plan and associated resource allocation; and reviewing the Company's reports to shareholders with management and the Accounting Firm and receiving certain assurances from management.

The Committee is also responsible for the Audit Committee Report required to be included in this Proxy Statement pursuant to the regulations of the Securities and Exchange Commission (“SEC”). This Report is set forth under “Audit-Related Matters” on page 38.

The Board of Directors has determined that all four members of the Committee are independent, are financially literate, and have accounting or related financial management expertise, as those terms are defined under the Company’s Corporate Governance Guidelines and the applicable listing standards of the New York Stock Exchange. In addition, the Board of Directors has determined that all four members of the Committee are “audit committee financial experts” within the meaning of Item 407(d)(5)(ii) of SEC Regulation S-K.

Nominating and Corporate Governance Committee

The functions of the Nominating and Corporate Governance Committee are generally to identify individuals qualified to become Board members and recommend them for election to the Board; to review the composition of Board committees; to develop and recommend to the Board effective corporate governance guidelines; to review the Company’s corporate governance and compliance programs; to assist the Board in its oversight of the Company’s ESG initiatives; to oversee the Company’s ethics programs; to review conflicts of interest involving Related Persons, including oversight and administration of the Company’s policy on Related Person transactions; and to lead the Board in its annual review of the Board’s performance.

To be considered for nomination to the Board, candidates must be persons of the highest integrity, have extensive and varied business experience and have demonstrated their ability to interact effectively with associates and peers. They preferably will also have experience and expertise in business areas related to the Company and its technologies, industries and customers. In addition, the Committee will seek out candidates with the ability to interact constructively with the existing Board membership. These attributes will enable the Board to act in the long-term interests of the Company’s shareholders. While the Committee has not established specific minimum qualifications for candidates, it may establish specific membership criteria as appropriate from time to time if the Board determines there is a need for specific skills and industry experience.

Although the Committee does not have a formal policy on diversity, it seeks the most qualified candidates without regard to race, color, national origin, gender, religion, disability or sexual orientation. However, the Committee appreciates the benefits that diversity, including gender diversity, can bring to a board of directors. Both the Committee and the Board are committed to requiring the inclusion of women and underrepresented minorities in the initial pool of director search candidates.

The Committee may identify new candidates for nomination based on recommendations from Company management, employees, non-management directors, shareholders and other third parties. The Committee also has the authority to engage third party search firms to identify candidates, and it has done so from time to time. Consideration of a new candidate typically involves the Committee’s review of information pertaining to such candidate and a series of internal discussions, and may proceed to interviews with the candidate. New candidates are evaluated based on the above-described criteria in light of the specific needs of the Board and the Company at the time. Incumbent directors whose terms are set to expire are evaluated based on the above-described criteria, as well as a review of their overall past performance on the Board of Directors.

The Committee will consider director candidates recommended by shareholders, and will evaluate such individuals in the same manner as other candidates proposed to the Committee. All candidates must meet the legal, regulatory and exchange requirements applicable to members of the Board of Directors. Shareholders who wish to recommend individuals for consideration as director candidates for the 2023 Annual Meeting of Shareholders should notify the Committee no later than August 31, 2022 in order to allow time for their recommendations to be considered by the Committee. Submissions are to be addressed to the Nominating and Corporate Governance Committee, c/o David M. Schatz, Corporate Secretary, ESCO Technologies Inc., 9900A Clayton Road, St. Louis, MO 63124-1186, which submissions will then be forwarded to the Committee. The Committee is not obligated to nominate any such individual for election.

The Board of Directors has determined that all four members of the Committee are independent as defined under the Company’s Corporate Governance Guidelines and the applicable listing standards of the New York Stock Exchange.

Human Resources and Compensation Committee

The functions of the Human Resources and Compensation Committee are generally to review and approve corporate goals and objectives relevant to compensation of the Chief Executive Officer; to evaluate the Chief Executive Officer’s performance in light of these goals and objectives; to determine the Chief Executive Officer’s compensation based upon the evaluation; to review and approve the compensation of senior officers and other key executives; to approve and evaluate incentive compensation plans, equity-based plans and other compensation plans; to review and approve benefit programs which go beyond the prerogatives of management, including implementation of new programs and material changes to existing programs; to review the performance and development of, and succession planning for, Company management; to assure that executive officers and other senior executives of the Company are compensated in a manner consistent with the strategy of the Company and competitive practice; and to oversee the Company’s Charitable Contributions Program.

The Committee is also responsible for reviewing and discussing with management the Company’s annual Compensation Discussion and Analysis, and recommending its inclusion in the Company’s annual proxy statement and the Company’s Form 10-K filed with the SEC. Its Report on these matters is set forth on page 16.

The Board of Directors has determined that all three members of the Committee are independent as defined under the Company’s Corporate Governance Guidelines and the applicable listing standards of the New York Stock Exchange, including its enhanced independence standards for compensation committee members.

Compensation Committee Interlocks and Insider Participation

During fiscal 2021, none of the members of the Human Resources and Compensation Committee (i) was an officer or employee of the Company; (ii) was formerly an officer of the Company; or (iii) had any other relationship requiring disclosure under any paragraph of Item 404 or under Item 407(e)(4) of SEC Regulation S-K. In addition, during fiscal 2021 none of the executive officers served as a member of the board of directors or compensation committee of any entity that had one or more executive officers serving as a member of either the Company’s Board of Directors or its Human Resources and Compensation Committee.

DIRECTOR COMPENSATION

The responsibilities and the substantial time commitment of a director at a public company require that the Company provide reasonable compensation to incentivize the directors’ performance and ensure their willingness to continue to serve. The Company strives to engage and retain well-qualified directors with significant experience at companies of similar size and complexity. To ensure this is achieved, the Company regularly reviews the compensation provided to its directors. The Human Resources and Compensation Committee obtains competitive market and peer data and periodically retains a compensation consultant to evaluate the competitiveness of its director compensation. The Company’s non-employee directors are compensated pursuant to the Company’s Compensation Plan for Non-Employee Directors (through January 2021) or the equivalent provisions of the Omnibus Incentive Plan (beginning in February 2021) based upon their respective levels of Board participation and responsibilities, including service on Board committees. As an employee of the Company, Mr. Richey does not receive compensation for his service as a director.

Compensation Components. Cash compensation paid to non-management directors consists of an annual cash retainer of $50,000 for all Board and Committee member services during the year; plus additional annual cash retainers for the Lead Director and the Chairs of the Audit and Finance Committee, the Nominating and Corporate Governance Committee and the Human Resources and Compensation Committee of $25,000, $7,000, $5,000 and $5,000, respectively. These annual cash retainers are paid in early January.

In addition, each non-management director receives an annual restricted share award on the first business day of January, of a number of Company shares equal to $180,000 divided by the NYSE closing price of the common stock on that date, rounded to the nearest whole share. Beginning in January 2021, the Human Resources and Compensation Committee and the Board revised the form of the award to restricted share units (RSUs), which require the director to continuously serve as a member of the Board for one year after the award date, at which time the award will vest and be issued to the director in shares of common stock. The annual equity award for 2021 was made on January 4, 2021 and will vest on January 4, 2022; based on the January 4, 2021 NYSE closing stock price of $99.98 it amounted to 1,800 RSUs per director. During the vesting period, each director’s RSU account also accrues an additional number of RSUs equivalent to the quarterly dividend that would have been paid on a like number of shares of common stock, divided by the NYSE closing price on the dividend date; and on the vesting date, which in this case is January 4, 2022, the whole number of accrued RSUs will be issued to the director in additional shares of common stock and any fractional RSUs will be paid out in cash based on the NYSE closing stock price on the vesting date. The value of the RSUs awarded in January 2021 is included in the directors’ stock compensation for fiscal 2021 in the table below; the value of additional RSUs accrued during the vesting period ending January 4, 2022 will be reported in the directors’ compensation for fiscal 2022.

The Human Resources and Compensation Committee reviewed the directors’ annual compensation plan in 2021 and determined that the directors were appropriately compensated; therefore, no changes were made to the directors’ compensation for 2022.

Election to Defer Compensation. Directors may elect in advance to defer receipt of all of their cash compensation and/or all of their stock compensation. If deferral is elected, the deferred amounts are credited to the director’s deferred compensation account in common stock equivalents. If cash compensation is deferred, the number of common stock equivalents credited is equal to the amount deferred divided by the NYSE closing price of the common stock as of the date on which the deferral occurs (or if that is not a trading day, then the last preceding trading day). If stock compensation is deferred, the number of common stock equivalents credited is equal to the number of shares whose receipt is deferred. Common stock equivalents in the director’s deferred compensation account have no voting rights, but earn dividend equivalents on each dividend payment date equal to the dividends payable on a like number of shares of common stock; and the dividend equivalents earned are credited to the director’s deferred compensation account as additional common stock equivalents valued at the NYSE closing price on the dividend date. A director’s deferred compensation account becomes distributable when the director leaves the Board, or at such other date as may be specified by the director consistent with the terms of the Plan; distribution will be accelerated in certain circumstances, including a change in control of the Company. The account is distributable at the election of the director either in cash or in shares; however, any stock portion which has been deferred may only be distributed in shares. During fiscal 2021, Mr. Dewar, Mr. Olivier and Ms. Valdez deferred receipt of their cash compensation and stock compensation, as described in the footnotes to the Fiscal 2021 Compensation table below. In addition, Mr. Phillippy’s and Mr. Stolze’s stock compensation from certain prior years continued to be deferred pursuant to prior deferral elections which they had terminated as to future compensation.

Director Stock Ownership Guidelines. Directors are subject to stock ownership guidelines. Under these guidelines, within five years after their appointment to the Board each non-management director is expected to acquire and hold shares or common stock equivalents having a total cash value equal to five times the annual cash retainer. All directors currently hold more than that amount.

Extended Compensation Plan for Certain Directors. Under the Company’s Directors’ Extended Compensation Plan, a plan for non-management directors who began Board service prior to April 2001, Mr. Solley and Mr. Stolze are each eligible to receive for life an annual benefit of $20,000 beginning after their service as a director ceases. In the event of the death of a retired director who is eligible under this plan, 50% of the benefit will be paid to the surviving spouse for life; if an eligible director dies before retirement, 50% of the benefit, determined as if the director had retired on the date of death, will be paid to the surviving spouse in a lump sum. The plan permits an eligible director to elect to receive the actuarial equivalent of the benefit in a single lump sum after retirement; and in compliance with section 409(a) of the Internal Revenue Code, Mr. Solley and Mr. Stolze have each made this election.

Fiscal 2021 Compensation. The following table sets forth the compensation of the Company’s non-management directors for fiscal 2021. As an executive officer, Mr. Richey did not receive any additional compensation for his service as a director; his compensation is set forth in the section captioned “Executive Compensation Information” beginning on page 16.

Name⁾	Fees Earned or Paid in Cash			Stock Awards ⁽¹⁾		Option Awards		Non-Equity Incentive Plan Compensation		Change In Pension Value and Nonqualified Deferred Compensation Earnings ⁽²⁾		All Other Compensation		Total
Patrick M. Dewar	$	50,000	⁽³⁾	$	179,964		—		—	$	n/a		—	$	229,964
Vinod M. Khilnani		55,000	⁽⁴⁾		179,964		—		—		n/a		—		234,964
Leon J. Olivier		50,000	⁽⁵⁾		179,964		—		—		n/a		—		229,964
Robert J. Phillippy		50,000	⁽⁶⁾		179,964		—		—		n/a		—		229,964
Larry W. Solley		55,000	⁽⁷⁾		179,964		—		—		0		—		234,964
James M. Stolze		82,000	⁽⁸⁾		179,964		—		—		0		—		261,964
Gloria L. Valdez		50,000	⁽⁹⁾		179,964		—		—		n/a		—		229,964

⁽¹⁾

Dollar amounts represent the aggregate fair values of the 1,800 Restricted Stock Units awarded to each director under the Compensation Plan for Non-Employee Directors on January 4, 2021 based on the $99.98 NYSE closing price of the underlying common stock on that date. The value of the dividend equivalents accrued on the RSUs will be reported for the year in which vesting occurs. See “Compensation Components” above. The amounts reflect the actual dollar amounts recognized for financial statement reporting purposes for fiscal 2021.

⁽²⁾

Represents the changes in actuarial present value of the participating directors’ accumulated benefits under the Company’s Directors’ Extended Compensation Plan, described above, from September 30, 2020 to September 30, 2021. For fiscal 2021 overall pension values decreased for Mr. Solley and Mr. Stolze in the amounts of ($14,482) and ($15,315) respectively, partly due to the effect of changes in actuarial assumptions from the preceding year which decreased their pension values by ($4,546) and ($4,997) respectively. Pursuant to SEC regulations, the amounts in the table do not include these decreases. The actuarial assumptions used in fiscal 2021 are described in footnote (1) to the Pension Benefits table on page 31.

⁽³⁾

Represents cash retainer of $50,000; however, Mr. Dewar elected to defer receipt of his cash compensation and to receive in lieu of cash approximately 453 common stock equivalents having the same aggregate value on the issue date.

⁽⁴⁾

Represents cash retainer of $50,000 and committee chair fee of $5,000.

⁽⁵⁾

Represents cash retainer of $50,000; however, Mr. Olivier elected to defer receipt of his cash compensation and to receive in lieu of cash approximately 453 common stock equivalents having the same aggregate value on the issue date.

⁽⁶⁾

Represents cash retainer of $50,000.

⁽⁷⁾

Represents cash retainer of $50,000 and committee chair fee of $5,000.

⁽⁸⁾

Represents cash retainer of $50,000, lead director cash retainer of $25,000, and committee chair fee of $7,000.

⁽⁹⁾

Represents cash retainer of $50,000; however, Ms. Valdez elected to defer receipt of her cash compensation and to receive in lieu of cash approximately 453 common stock equivalents having the same aggregate value on the issue date.

EXECUTIVE COMPENSATION INFORMATION

COMPENSATION COMMITTEE REPORT

The Human Resources and Compensation Committee is responsible for determining the compensation of the Chairman and Chief Executive Officer and other senior officers and key executives of the Company. The Committee has reviewed and discussed with management the Company’s disclosures under the section captioned “Compensation Discussion and Analysis” beginning immediately following this Compensation Committee Report.

Based on such review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021 filed with the Securities and Exchange Commission.

The Human Resources and Compensation Committee

Vinod M. Khilnani, Chair
Larry W. Solley
James M. Stolze

COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis discusses the compensation of the executive officers identified in the Summary Compensation Table on page 27, whom we refer to herein as the “executive officers” or the “named executive officers.” Pursuant to Securities and Exchange Commission regulations, these include, in addition to the current executive officers, two former executive officers who retired during fiscal 2021, Gary E. Muenster, the Company’s former Executive Vice President and Chief Financial Officer, and Alyson S. Barclay, the Company’s former Senior Vice President, Secretary and General Counsel.

Compensation Objective

The Committee’s objective is to develop and maintain industry-competitive compensation packages to attract, retain, motivate and reward the Company’s executive officers and other senior officers and key executives. Compensation programs are designed to be consistent with those of other companies engaged in similar industries and/or of similar size with which the Company is likely to compete for talent to enable the Company to employ and retain a high-quality management team. The Committee seeks to use performance based compensation to maximize the alignment of executive compensation with the long-term interests of the Company’s shareholders.

Executive Summary

The Company’s compensation programs are designed to reward positive financial performance. The cash incentive program is tied to key strategic and financial targets and is designed to reward strong performance. Payouts are higher in times of good performance and lower when targets are not achieved. The stock-based long-term equity incentive (“LTEI”) program and stock ownership guidelines align the interests of executives and shareholders by ensuring that executives bear the economic risk of share ownership. Because the compensation program has historically produced the results desired by the Committee, and based on its review of the compensation program, the executive officers’ current compensation and the Company’s historic performance, the Committee had originally determined in early 2020 that no changes to the structure of its compensation program were warranted.

However, in May 2020, due to the effects of the COVID-19 pandemic on the Company’s business outlook and expected stock volatility the Committee re-evaluated the Company’s compensation program for fiscal 2020. As a result, the Committee delayed making its normal mid-year LTEI grants, and eventually determined not to grant any fiscal 2020 LTEI awards to the executive officers, although awards to senior management personnel other than the executive officers were granted. However, in April 2021, after determining that the Company’s 2020 results had been better than anticipated, in large part due to Mr. Richey’s efforts managing the Company’s business during the pandemic, the Committee granted him an LTEI award on the same terms as the awards granted in fiscal 2020 to other senior management.

In the early part of fiscal 2021 the Committee decided to implement more extensive changes to the structure of the LTEI program, and approved replacing the Company’s performance-accelerated restricted share (PARS) awards with a combination of performance-based Performance Share Unit (PSU) and Restricted Share Unit (RSU) awards. The restructured program was partly implemented in fiscal 2021 with the initial RSU awards and fully implemented in the first quarter of fiscal 2022 with the initial PSU awards.

Compensation Summary

The Committee offers its executive officers a compensation package that includes:

A competitive base salary;

An annual at-risk cash incentive based on key performance metrics;

Equity-based long-term incentive compensation (“LTEI”) which incorporates Company stock and financial performance and retention factors such as delayed vesting;

An employment agreement and a “double-trigger” change of control Severance Plan; and

Appropriate and reasonable perquisites.

The Committee sets compensation levels based on the skills, experience and performance of each executive officer, taking into account the benchmarking described below and compensation recommendations made by the CEO (except with respect to his own position). The Committee’s pay for performance philosophy is reflected in the annual compensation review. The Committee also considers tally sheets which provide, for each executive officer, a recap of each principal element of compensation as well as benefits, perquisites, equity awards, and stock ownership and potential ownership. The tally sheets also reflect the incremental compensation which would be payable as a result of various termination scenarios and each element of pay or benefits impacted. The Committee retains the discretion to adjust all elements of compensation as it deems appropriate, subject to the requirements of shareholder-approved plans.

Compensation Consultant and Benchmarking

The Committee is authorized by its charter to employ independent compensation and other consultants. The Committee has typically engaged a nationally recognized compensation consulting firm (the “Compensation Consultant”) every other year to assist the Committee in evaluating executive compensation. The Compensation Consultant provides information, research and analysis pertaining to executive compensation as requested by the Committee, including updates on market trends, survey data and analysis for market review. The Committee also from time to time engages its primary outside counsel, Bryan Cave Leighton Paisner LLP (“BCLP”) to advise it on selected executive compensation issues.

The Company conducts a peer and market review every two years; the most recent review was in 2020, as described below.

2020 Compensation Report (Fiscal 2021 Compensation Review). In the summer of 2020, the Committee engaged Pay Governance LLC as the Compensation Consultant to provide a compensation report (the “2020 Compensation Report”) for the Committee’s fiscal 2021 compensation review. One of the elements of the 2020 Compensation Report was the 2020 Mercer Benchmark Database/Total Remuneration Survey – Executive (the “Mercer Survey”), a broad-based survey of management compensation, as the primary source for benchmarking its executive compensation levels. A broad market survey provides decision-quality data that is generally reliable and consistent year-over-year. The Company did not participate in the Mercer Survey. A list of all of the participating companies included in the Mercer Survey is attached as Appendix A to this Proxy Statement.

For its 2020 Compensation Report, the Compensation Consultant also provided proxy data from the peer group described below (the “2020 Peer Group”) to be used in conjunction with the Mercer Survey in order to add context to the decision-making process and provide a supplemental perspective on the market. Peer group proxy data provides transparent line-by-line information for each company in the peer group, and provides the ability to review industry trends and compensation design practices as well as pay-for-performance alignment. The 2020 Peer Group was based on the SIC codes assigned to the Company’s subsidiaries and represented companies in the following industries in which the Company participates:

Industrial valves;

General industrial machinery;

Radio and television communications equipment;

Printed circuit boards;

Instruments to measure electricity; and

Services not elsewhere classified.

Companies in the above industries were then filtered for revenue size in order to determine the 2020 Peer Group. The following is a list of the companies in the 2020 Peer Group, with their ticker symbols:

Ameresco, Inc. (AMRC) *

Badger Meter, Inc. (BMI) *

Barnes Group Inc. (B)

Chart Industries, Inc. (GTLS)

CIRCOR International, Inc. (CIR) *

Comtech Telecommunications Corp. (CMTL) *

CTS Corporation (CTS)

FARO Technologies, Inc. (FARO)

Franklin Electric Co., Inc. (FELE) *

Helios Technologies (HLIO)

MACOM Technology Solutions Holdings Inc. (MTSI) *

MKS Instruments, Inc. (MKSI)

Mueller Water Products, Inc. (MWA)

National Instruments Corporation (NATI) *

Powell Industries, Inc. (POWL) *

Standex International Corporation (SXI)

Tri Mas Corporation (TRS)

Viavi Solutions Inc. (VIAV) *

* These companies did not report compensation data for the General Counsel position in their proxy materials.

Fiscal 2021 Benchmarking. For its compensation review for fiscal 2021, the Committee reviewed each principal element of compensation (base salary, cash incentive and LTEI), as well as total cash compensation (base salary and cash incentive), and total direct compensation (target cash compensation and LTEI) for each of the Company’s executive officer positions, and compared them against the annual median and 75^th percentile market rates from the Mercer Survey and for the 2020 Peer Group. The range for each element of compensation from the median to the 75^th percentile in a survey, as aged by 3%, is referred to hereinafter as the “Benchmark Range” for that survey and that element of compensation. For fiscal 2021, the Committee utilized the Benchmark Ranges from the Mercer Survey and the 2020 Peer Group in determining the competitiveness of the executives’ compensation. The Committee also compared relative Company performance against the performance of the companies in the 2020 Peer Group to test the overall reasonableness of pay for performance.

The Committee used the Mercer Survey and 2020 Peer Group data described above as a guideline and frame of reference in determining appropriate compensation levels and incentives for the executive officers; however, the Committee does not make its decisions according to a formula, and the Committee exercises considerable judgment and discretion in making them. The complexity and composition of the Company (consisting at that time of four primary business lines) does not lend itself to comparisons with a readily ascertainable peer group, and while matching by SIC codes can provide some measure of comparability, there are wide variations in the type and complexity of these companies. The Committee therefore considers the Benchmark Ranges to be only a guide, and makes individual determinations of compensation for each of the executive officers based on numerous factors including the comparative responsibilities of the executive officers and the Committee’s assessments of individual and Company performance.

Compensation Consultant Independence. In August 2021, the Committee assessed the independence of Pay Governance and BCLP in line with the SEC’s compensation consultant independence factors, and determined there were no conflicts of interest. The Committee will continue to review their independence status at least annually and will keep the compliance letters on file.

Principal Elements of Compensation Program

The principal elements of the compensation program for executive officers (base salary, annual cash incentive and long-term equity incentive) are reflected in the Summary Compensation Table on page 27. Each of these elements is described in detail in the corresponding sections below.

The Company does not believe that any risks arising from its compensation policies and practices are reasonably likely to have a material adverse effect on the Company. Any such risk is mitigated by the multiple elements of the compensation programs, including base salary, annual cash incentive programs, and LTEI awards which are earned over multiple years. This structure encourages decision-making that is in the best long-term interests of the Company and the shareholders.

Based on its review of the compensation program, the executive officers’ current compensation and the Company’s performance, the Committee approved several changes in the compensation programs beginning in fiscal 2021 and continuing into fiscal 2022, including eliminating the tax gross-up on perquisites, modifying the “change of control” provisions in several plans and award agreements to include a “double trigger”, and changing the types of equity awards to be granted under the LTEI program from time-vested, performance-accelerated PARS awards to performance-based Performance Share Unit (PSU) and Restricted Share Unit (RSU) awards.

Total Direct Compensation. The executive officers receive total direct compensation consisting of cash compensation (base salary plus annual cash incentive compensation) and long-term equity incentive compensation. Each of these elements is described in detail in the corresponding sections below.

The Committee sets target levels for total direct compensation based on the skills, experience, breadth of their role, and performance of each executive officer, taking into account the benchmarking described above and compensation recommendations made by the CEO (except with respect to his own position). The Committee also considers the performance of the Company. For fiscal 2021, noting the Company’s stronger than originally expected performance in fiscal 2020, the Committee increased the executive officers’ total direct compensation as described in detail below. Total direct compensation for fiscal 2021 was within the Mercer Survey and below the 2020 Peer Group Benchmark Ranges for Mr. Richey, above the Mercer Survey and within the 2020 Peer Group Benchmark Ranges for Mr. Muenster, and within the Mercer Survey Benchmark Range and the 2020 Peer Group Benchmark Range for Ms. Barclay.

In determining the 2021 partial year compensation for the two new executive officers, Mr. Tucker and Mr. Schatz, the Committee used market data from the Mercer Survey. Initial compensation for Mr. Tucker and Mr. Schatz were reviewed with the Committee and were commensurate with their prior experience and the 2021 Benchmark Ranges.

Base Salaries. Base salaries are designed to attract, retain, motivate and reward competent, qualified, experienced executives. The Company emphasizes performance-based compensation for the executive officers. At the discretion of the Committee, with input by the CEO, executive officers with significant experience and responsibility who consistently demonstrate exemplary performance may be paid above the Benchmark Ranges for their positions.

Fiscal 2021 base salaries for the executive officers were set by the Committee in the first quarter of fiscal 2021. The salaries were based on the Committee’s review of current salary levels and total cash compensation (base salary plus cash incentive target) compared to the Mercer Survey and 2020 Peer Group Benchmark Ranges for each position, as adjusted for the relative value of the jobs within the Company compared to those in the comparison surveys. The Committee also took into account, for Mr. Richey, fiscal 2020 individual and Company performance, and for the other executive officers, a subjective evaluation of the executives’ fiscal 2020 performance with input from Mr. Richey. Based on the factors considered, the Committee determined that increases in total cash compensation of 6.0%, 5.2% and 6.2% were warranted for Mr. Richey, Mr. Muenster and Ms. Barclay, respectively, and (as it had done for 2020) it provided each of the executive officers with the discretion to allocate their increase prospectively between their base salaries and their cash incentive targets. Mr. Richey, Mr. Muenster and Ms. Barclay each elected to allocate their increase between their base salary and their cash incentive target, resulting in fiscal 2021 base salaries of $898,100, $637,100 and $377,500 and cash incentive targets of $959,500, $499,200 and $251,000 for Mr. Richey, Mr. Muenster and Ms. Barclay, respectively. Base salaries for fiscal 2021 were within the Benchmark Ranges for Mr. Richey, above the Benchmark Ranges for Mr. Muenster, and within the Benchmark Ranges for Ms. Barclay.

Initial base salaries for Mr. Tucker and Mr. Schatz were reviewed with the Committee and were commensurate with their prior experience and the 2021 Benchmark Ranges.

Annual base salaries for the executive officers for fiscal 2021 and, where applicable, fiscal 2020 were as follows:

Base Salaries ⁽¹⁾

Officer	FY 2021 Base Salary			Percent Increase from FY 2020			FY 2020 Base Salary			Percent Increase from FY 2019
Victor L. Richey (CEO)	$	898,100			8.9	%	$	824,500			None
Christopher L. Tucker (Senior VP & CFO)		500,000	⁽²⁾		N/A	⁽²⁾		N/A	⁽²⁾		N/A	⁽²⁾
David M. Schatz (Senior VP & General Counsel)		335,000	⁽³⁾		N/A	⁽³⁾		N/A	⁽³⁾		N/A	⁽³⁾
Gary E. Muenster (former Executive VP & CFO)		637,100			6.2	%	$	600,000			4.2	%
Alyson S. Barclay (former Senior VP & General Counsel)		377,500			7.7	%	$	350,600			None

	⁽¹⁾	Amounts shown are annualized salaries for FY 2021; the actual amounts paid over the officers’ respective periods of service are set forth in the Summary Compensation Table.

	⁽²⁾	Mr. Tucker became an employee and executive officer during FY 2021.

⁽³⁾

Mr. Schatz was an employee but not an executive officer during FY 2019 and FY 2020. The FY 2021 base salary shown is for his position as an executive officer.

Cash Incentive Compensation. The Committee uses annual performance-based cash incentives to compensate the executive officers. The Committee establishes at-risk performance targets for the executive officers using financial and operational goals linking compensation to overall Company performance. For fiscal 2021, as described under “Base Salaries” above, Mr. Richey, Mr. Muenster and Ms. Barclay elected to divide the increase in their total cash compensation between their base salaries and their cash incentive targets.

Initial incentive targets for Mr. Tucker and Mr. Schatz were reviewed with the Committee and were commensurate with their prior experience and the 2021 Benchmark Ranges.

The annual cash incentive targets for fiscal 2021 and fiscal 2020 were as follows:

Target Cash Incentive Compensation ⁽¹⁾


Officer	FY 2021 Target Cash Incentive			Percent Increase from FY 2020			FY 2020 Target Cash Incentive			Percent Increase from FY 2019
Victor L. Richey (CEO)	$	959,500			3.4	%	$	927,965			8.9	%
Christopher L. Tucker (Senior VP & CFO)		325,000	⁽²⁾		N/A	⁽²⁾		N/A	⁽²⁾		N/A	⁽²⁾
David M. Schatz (Senior VP & General Counsel)		145,000	⁽³⁾		N/A	⁽³⁾		N/A	⁽³⁾		N/A	⁽³⁾
Gary E. Muenster (former Executive VP & CFO)		499,200			4.0	%	$	480,000			4.2	%
Alyson S. Barclay (former Senior VP & General Counsel)		251,000			4.0	%	$	241,400			10.8	%

	⁽¹⁾	Amounts shown are annual targets for FY 2021; the actual targets were prorated over the officers’ respective periods of service and the amounts paid are set forth in the Summary Compensation Table.

	⁽²⁾	Mr. Tucker became an employee and executive officer during FY 2021. For the balance of 2021 his cash incentive payout was guaranteed at a 1.00x multiple of the prorated target.

⁽³⁾

Mr. Schatz was an employee but not an executive officer during FY 2019 and FY 2020. The FY 2021 target shown is for his position as an executive officer.

The fiscal 2021 cash incentive target for the executive officers was established pursuant to the Company’s Performance Compensation Plan (the “PCP”) authorized under the Company’s 2018 Omnibus Incentive Plan. This at-risk plan closely links the executive officers’ pay to the Company’s financial results and provides compensation variability in the form of reduced payments when performance is below targets and higher compensation when performance exceeds targets. The PCP has a fixed target with a range based on performance. The Committee has discretion to either increase or decrease the actual cash incentive payouts.

The target percentages of total cash compensation represented by base salary and by the PCP target varied for fiscal 2021 based on the position, as follows:

Total Cash Compensation – Fiscal 2021 ⁽¹⁾

	Base Salary					Cash Incentive Target (PCP)
Officer			Percent of Total Cash Compensation					Percent of Total Cash Compensation			Total Cash Compensation
Victor L. Richey (CEO)	$	898,100		48	%	$	959,500		52	%	$	1,857,600
Christopher L. Tucker (Senior VP & CFO) ⁽²⁾		500,000		61	%		325,000		39	%		825,000
David M. Schatz (Senior VP & General Counsel) ⁽³⁾		335,000		70	%		145,000		30	%		480,000
Gary E. Muenster (former Executive VP & CFO)		637,100		56	%		499,200		44	%		1,136,300
Alyson S. Barclay (former Senior VP & General Counsel)		377,500		60	%		251,000		40	%		628,500

	⁽¹⁾	Amounts shown are annual targets for FY 2021; the actual amounts paid over the officers’ respective periods of service are set forth in the Summary Compensation Table.

	⁽²⁾	Mr. Tucker became an employee and executive officer during FY 2021.

⁽³⁾

Mr. Schatz was an employee but not an executive officer prior to mid-2021. The FY 2021 amount shown is for his position as an executive officer.

The higher at-risk target percentage for the CEO as compared to the other executive officers is based on the Company’s at-risk philosophy, and his role as CEO of the Company. Likewise, the CFO has a higher percentage as compared to the General Counsel. Near the beginning of each fiscal year, after reviewing the Company’s business plans for the fiscal year, the Committee determines the key short-term business metrics on which the Company’s senior management should focus in order to drive results and approves the cash incentive target for each executive officer. Because of the broad responsibilities of the executive officers, their criteria are tied to Company-wide metrics. The Committee then determines the percentage of the cash incentive target which should be tied to each of the metrics and the performance target for each metric, and approves the minimum and maximum multipliers which will be applied to each of the performance targets to determine the payment under the plan.

During the first quarter of fiscal 2021, the Committee approved two metrics for achievement of the fiscal 2021 PCP incentive targets, on the basis of the annual operating plan reviewed by the Board of Directors. One was “Adjusted EPS”, weighted at 70% of the total cash incentive target. Adjusted EPS was defined as earnings per share adjusted to exclude certain non-recurring gains and charges, as communicated in the Company’s quarterly press releases. Adjusted EPS is a non-GAAP financial measure.

The second metric was “Cash Flow,” weighted at 30% of the total cash incentive target. Cash Flow was defined as cash generated from operations at the subsidiary level, including corporate cash activity related to debt and interest payments, tax payments, pension contributions and corporate general administrative expenses, and excluding corporate cash activity related to acquisitions, dividends and share repurchases. Cash Flow is a non-GAAP financial measure.

The Committee approved the following targets and evaluation matrices for the two fiscal 2021 cash incentive metrics. The Committee also considered the uncertainty of the economy and the potential impact of tariffs on the markets the Company serves. At the time the Committee approved the PCP goals, the business impact of COVID-19 was unknown and its possible effects were not determinable; therefore its impact was not considered in the goal-setting process. For each component, the multiplier applied is the one underneath the dollar value or percentage which is closest to the actual result for that measure.

PCP – Fiscal 2021 Evaluation Matrices

						Target
Adjusted EPS:	≤ $2.58	$2.63	$2.69	$2.75	$2.81	$2.87	$2.93	$2.99	$3.05	$3.11	≥ $3.16
Multiplier:	0.20	0.36	0.52	0.68	0.84	1.00	1.20	1.40	1.60	1.80	2.00

						Target
Cash Flow (in millions):	≤ $41.0	$43.0	$45.0	$47.0	$49.0	$51.0	$53.0	$55.0	$57.0	$59.0	≥ $61.0
Multiplier:	0.20	0.36	0.52	0.68	0.84	1.00	1.20	1.40	1.60	1.80	2.00

Actual Adjusted EPS for fiscal 2021 was $2.59, which resulted in a multiplier of 0.20 being applied to the cash incentive target associated with the Adjusted EPS metric. Actual Cash Flow for fiscal 2021 was $94.8 million, which resulted in a multiplier of 2.0 being applied to the cash incentive target associated with the Cash Flow metric.

The Summary Compensation Table on page 27 reflects the actual payouts under the PCP for fiscal 2021 and the preceding two years.

Long-Term Equity Incentive Compensation. The Company does not coordinate LTEI grants with the release of material non-public information. Company-wide equity grants, including equity grants to executive officers, have been made at regular meetings of the Human Resources and Compensation Committee. Prior to 2018, the Committee had generally granted LTEI awards to the executive officers at the first meeting of the fiscal year. However, beginning in fiscal 2018, the Committee decided to defer the granting of the executive officers LTEI awards until approximately the middle of the year in order to provide the Committee with the opportunity to evaluate the Company’s financial performance prior to granting the awards. In 2020, due to business uncertainties and potential stock volatility primarily resulting from the continuing COVID-19 pandemic, the Committee initially determined not to grant any LTEI awards to the executive officers for fiscal 2020, although it did grant PARS awards to senior management personnel other than the executive officers, and later granted a reduced PARS award to Mr. Richey on the same terms as the 2020 awards to senior management personnel.

In the early part of fiscal 2021, the Committee undertook a comprehensive look at the structure of its LTEI award program which resulted in the changes described below.

In recent years the Committee had granted LTEI exclusively in the form of performance-accelerated restricted share units (“PARS”), as authorized under the 2018 Omnibus Incentive Plan. These PARS awards have a term of five years, and the award (net of withholding taxes) is distributable to the recipient in shares of Company common stock at the end of the term. However, if the Company performance criteria stated in the notice of award, which for 2018, 2019 and 2020 were achievement of target stock prices, are met during a specified twelve-month period, generally the third or fourth years of the term (the “performance periods”), then part or all of the award is accelerated, and the accelerated portion (net of withholding taxes) will be distributed in shares six months after the end of the performance period in which the criteria are first met; and if acceleration occurs during the fifth year of the award the award will become distributable at the end of the fifth year. Distribution of PARS award shares may not occur earlier than 3½ years after the initial award date even if the performance criteria are met, except in cases of death, disability, retirement or certain other special circumstances. In all events, the award recipient must remain continuously employed by the Company until the underlying shares are distributed (except that the Committee may in its discretion waive this requirement if termination of employment is due to death, disability, retirement or other circumstance the Committee deems appropriate). Until the underlying shares are actually distributed, dividends are not paid or accrued on the PARS. Information about the PARS awards for 2018, 2019 and 2020 is provided in the Summary Compensation Table on page 27 and under “Outstanding Equity Awards at Fiscal Year-End” on page 30.

Beginning with fiscal 2021, the Company revamped its LTEI program in line with best practices and published proxy adviser firm guidance, and began providing its annual LTEI awards in the form of time-vested restricted share units (RSUs) and performance-based performance share units (PSUs). The initial RSU grants were made to the executive officers in April 2021, as described in the following paragraph; the initial PSU grants were deferred until the first quarter of fiscal 2022 to align with the Company’s fiscal year goal-setting process, as described under “Compensation Changes for 2022” below.

The terms of the RSU awards are similar to those of the Company’s former PARS awards, but without any provision for acceleration of the vesting date. Each RSU represents the right to receive one share of Company common stock if the recipient remains continuously employed by the Company until the award vests, which for the 2021 awards was 3½ years after the effective award date, and such shares will be paid out to the participant (after statutory tax withholdings) on the following business day. The number of RSUs granted was based on a percentage of the recipient’s target cash compensation for fiscal 2021. For the 2021 RSU grants to the executive officers, see “Grants of Plan-Based Awards” on page 29.

Compensation Changes for 2022. For fiscal 2022 the Committee determined that increases in target total cash compensation (base salary plus cash incentive target) of 5.5% and 6.3% were warranted for Mr. Tucker and Mr. Schatz, respectively; however, Mr. Richey advised the Committee that he would forego an increase in his target total cash compensation due to operational issues in fiscal 2021. Therefore, fiscal 2022 base salaries were $898,100, $522,000 and $357,000 and fiscal 2022 cash incentive targets were $959,500, $348,000 and $153,000 for Mr. Richey, Mr. Tucker and Mr. Schatz, respectively.

In line with its practice in recent years, the Committee determined to allocate 100% of the executive officers’ cash incentive compensation opportunity to the PCP, and approved the following performance criteria for fiscal 2022:

	·	“Adjusted EPS,” weighted at 70% of the total target opportunity and consisting of earnings per share excluding certain defined non-recurring gains and charges expected to be realized or incurred in fiscal 2021; and

“Cash Flow,” weighted at 30% of the total target opportunity and consisting of cash generated from operating activities at the subsidiary level, plus corporate cash activity related to debt and interest payments, tax payments, pension contributions and corporate general administrative expenses, and minus corporate cash activity related to acquisitions, dividends and share repurchases.

The actual cash incentive compensation payable under the PCP for fiscal 2022 will range from 0.2 to 2.0 times the target opportunity for both Adjusted EPS and Cash Flow, depending on actual 2022 performance, based on a separate matrix for each of the measures.

For the fiscal 2022 LTEI awards to the executive officers, the Committee retained the same historic percentages of LTEI value as compared to total target cash compensation. The resulting fiscal 2022 LTEI values increased by 5.5% and 6.3% for Mr. Tucker and Mr. Schatz, respectively; the fiscal 2022 LTEI value for Mr. Richey did not change. LTEI awards for fiscal 2022 will be in two forms:

Restricted Share Units (RSUs), which will vest 3½ years after the award date, at which time they will be converted into a like number of shares of Company common stock, and

Performance Share Units (PSUs), which will vest after a three-year performance period beginning with fiscal 2022, at which time they will be converted into a currently indeterminate number of shares of Company common stock, which may be less than or greater than the number of PSUs awarded depending on the degree to which the Company has achieved specified EBITDA targets determined by the Committee and relative Total Shareholder Return (TSR) targets compared to the TSRs of the companies in a specified peer group approved by the Committee.

The PSU awards for fiscal 2022 were made in November 2021, with target values as of the grant date of $1,462,905, $357,265 and $173,976 for Mr. Richey, Mr. Tucker and Mr. Schatz, respectively. The Company currently expects to grant the fiscal 2022 RSU awards in the spring of 2022.

Other Compensation Elements

Perquisites. The Company also provides limited perquisites to its executive officers, which have historically included club membership, an annual physical, financial planning and an auto allowance. The Committee annually reviews the types and value of the perquisites provided to the executive officers as part of its overall review of executive compensation. The Committee determined the perquisites paid in fiscal 2021 to be reasonable. Certain of these perquisites are treated as taxable income. Effective January 1, 2021, the Company ceased reimbursing the officers for the income taxes due on these perquisites (“tax gross-ups”).

Retirement Benefits. Like other employees of the Company, the executive officers are eligible for retirement benefits provided through a matched defined contribution (401(k)) program. In February 2020, the Company terminated its defined benefit pension plan, which had been frozen since 2003, and the executive officers received lump sum distributions in liquidation of their plan accounts. Mr. Richey is eligible for a frozen benefit under the Company’s supplemental executive retirement plan (the “SERP”); the accrual of benefits under the SERP ended in December 2003 for all Company employees, consistent with the compensation program’s change in emphasis to at-risk rather than risk-free or safety-net pay. See “Pension Benefits,” below.

Severance Plan. Severance provisions in the event of a change of control benefit a company by allowing executives who are parties to such arrangements to focus on continuing business operations and the success of a potential business combination rather than seeking alternative employment, thereby providing stability to a corporation during a potentially uncertain period. Accordingly, the Committee decided that it was in the Company’s best interest to adopt a Severance Plan, effective in 1995 and last amended in November 2020, which prescribes the compensation and benefits to be provided in the event of a change of control to certain executives, including the CEO and the other executive officers.

The Company’s change of control arrangements were designed to provide executives with severance payments and certain other benefits in the event that their employment is terminated in connection with a change of control transaction. The Severance Plan includes a “double trigger,” which means that it provides severance benefits only if there is both (1) a change of control of the Company, and (2) the Company (or any successor) terminates the employee’s employment without cause within 36 months following a change of control, or the employee terminates his or her employment for good reason within 36 months following a change of control, or the Company terminates the employee’s employment within 90 days before a change of control at the request of a third party who, at such time, had taken steps reasonably calculated to effect the change of control.

For purposes of the Severance Plan, “change of control” means any of the following (subject to the specific definitions in the Severance Plan): (i) the acquisition by any person or group of at least 20% of the then-outstanding shares of the Company’s common stock; or (ii) a change in a majority of the members of the Board of Directors that is not approved by the incumbent Board; or (iii) the approval by the shareholders of either a reorganization, merger or consolidation after which the shareholders will not own at least a majority of the Company’s common stock and voting power, or a liquidation or dissolution of the Company, or the sale of all or substantially all of the Company’s assets.

If the Severance Plan is triggered, the executive will be entitled to all accrued but unpaid compensation, a pro rata cash bonus for the year of separation and benefits through the date of separation, as well as a lump sum cash payment which is designed to replicate the cash compensation (base salary and cash incentive), plus certain benefits, that the executive would have received had he or she remained employed for two years, and in the case of Mr. Richey, the amount of his accumulated benefit under the SERP. Except for the SERP benefit, these payments and benefits would only be paid as a result of a double-trigger event. The determination of the appropriate level of payments and benefits to be provided in the event of a change of control termination involved consideration of a number of factors. The two-year multiple was determined based on a survey of the Company’s peers at the time the Severance Plan was adopted by the Company, and is deemed to be reasonable. The Committee considered that a high-level executive, who is more likely to lose his or her job in connection with a change of control than other employees, may require more time than other employees in order to secure an appropriate new position, and, unless that executive was provided with change of control benefits, he or she may be motivated to start a job search early if a change of control is anticipated, to the detriment of the Company. Thus, the existence of the Severance Plan provides an incentive for the executive to remain with the Company until a change of control actually occurs. In addition, payments are not provided under the Severance Plan unless there has been not only a change of control but also a qualifying termination of employment, thus providing an acquirer the opportunity to retain the Company’s management team during or after a transition period.

For further information about the Severance Plan, and a sample calculation of the cash compensation and benefits to be provided under the Severance Plan, based on certain stated assumptions, see “Potential Payments Upon Termination or Change in Control” beginning on page 33.

In addition, pursuant to the executive officers’ severance agreements as well as their LTEI award agreements, in the event of a change of control, all LTEI awards are to be assumed by the acquirer or successor entity and converted to an equivalent agreement. If for any reason the awards will not or cannot be assumed, they will be paid out in cash.

Employment Agreements. In 2021, the Company entered into new employment and compensation agreements with each of its executive officers. Mr. Richey’s agreement was an update to provide for treatment of the Company’s new types of equity awards and remove obsolete provisions such as those relating to the pension plan and the tax gross-up on perquisites. The initial term of Mr. Schatz’s agreement is one year and the initial term of Mr. Tucker’s agreement is 24 months. Each agreement automatically renews annually unless either party gives notice of non-renewal at least 180 days prior to expiration of the then-current term. The agreements provide for payment of an annual base salary, participation in the Company’s cash incentive plans, eligibility for participation in the Company’s LTEI plans and benefit plans and programs applicable to senior executives, and continuance of certain perquisites. For more information about the terms of these agreements, including specifics regarding the cash compensation and benefits provided in the event of a qualifying separation, and for a sample calculation based on certain stated assumptions, see “Employment Agreements” on page 32, and “Potential Payments Upon Termination or Change in Control” beginning on page 33.

The Committee periodically assesses the reasonableness of the Agreements to consider whether any changes are appropriate.

Limit on Deductibility of Certain Compensation

Section 162(m) of the Internal Revenue Code prohibits publicly held companies, including the Company, from deducting salaries and other compensation paid to an executive officer to the extent that the total exceeds $1 million during the tax year. Until calendar 2018, compensation based upon the attainment of performance goals set by the Committee pursuant to shareholder-approved plans could be structured to qualify for an exclusion from this limitation; however, changes in the tax laws eliminated this exclusion beginning in 2018.

Despite the change, the Committee intends to continue its practice of utilizing shareholder-approved metrics for the Company’s cash incentive plans when appropriate. However, the Committee reserves the right to use other award provisions that are tailored to achieving the Company’s financial and business objectives if it determines that the awards and performance metrics are appropriate and consistent with the Company’s business needs.

Stock Ownership Guidelines

The Committee has established stock ownership guidelines for the executive officers. The guidelines currently set the minimum level of ownership at five times total cash compensation (base salary and annual cash incentive target) for the CEO and three times total cash compensation for the other executive officers, which equate to approximately ten times base salary for the CEO, and approximately five times base salary for the other executive officers. Unvested LTEI awards are not included in determining these ownership amounts. Executive officers are expected to be in compliance with the ownership guidelines within five years of their appointments. They are required to hold 100% of all after-tax stock distributions received from compensation awards until the guideline amounts are reached and thereafter as needed to maintain ownership of at least the guideline amounts. Mr. Richey exceeded the ownership guidelines at the end of fiscal 2021, and Mr. Tucker and Mr. Schatz, who became executive officers in April 2021, are expected to meet the guidelines within the five-year period.

Insider Trading Policy; Anti-Hedging and Anti-Pledging Policies

In addition to the general provisions of the Company’s Insider Trading Policy, which prohibit any employee from trading in Company securities while in possession of material non-public information, a Supplement to the Insider Trading Policy strictly prohibits the Company’s directors, officers and employees from engaging in transactions in Company securities involving puts, calls or other derivative securities on an exchange or in any other organized market, selling Company securities “short”, or entering into hedging or similar arrangements (such as exchange funds) involving Company securities. The Insider Trading Policy also prohibits the Company’s directors, officers, corporate office employees, and other designated employees in management positions from pledging Company securities as collateral for a loan or holding Company Securities in a margin account. These policies are intended to ensure that the executive officers, as well as other Company personnel in positions of authority, cannot offset or hedge against declines in the price of the Company stock they own or have a personal interest in the price of their shares which may be different from the interests of other shareholders generally.

Compensation Recovery Policy

The Company’s Code of Business Conduct and Ethics reaffirms the importance of high standards of business ethics. Adherence to these standards by all employees is the best way to ensure compliance and secure public confidence and support. All employees are responsible for their actions and for conducting themselves with integrity. Any failure on the part of any employee to meet any of the standards embodied in this Code will be subject to disciplinary action, including potential dismissal.

The Company has in effect a Compensation Recovery Policy which provides that when appropriate, and in accordance with applicable law, the Company may recover any “Recoverable Compensation” received during a prescribed period of up to three years if an executive or other senior officer of the Company or any of its affiliates:

	•	Engages in intentional misconduct resulting in a financial restatement or in any increase in his or her incentive or equity income, or

•

Engages in activity that competes with the Company or its affiliated companies in violation of any non-compete agreements entered into by such employee, or

•

Solicits customers or hires or assists anyone else in soliciting or hiring employees of the Company or its affiliates after termination of employment or engages in the unauthorized disclosure or use of the Company’s confidential information resulting in harm to the Company or its affiliates, in any case in violation of agreements entered into by such employee prohibiting such actions.

“Recoverable Compensation” is defined to include any equity and incentive compensation received, earned or distributed to or for the benefit of an executive or senior officer, including amounts and shares under any equity or compensation plan or employment agreement. The Compensation Recovery Policy specifies that to the extent compensation is recovered from an individual as a result of a financial restatement such amounts will be excluded from “Recoverable Compensation.”

The Company has previously included recoupment, non-compete and clawback provisions in PARS and performance compensation plan agreements for certain participants. Where not previously included, the above provisions will be added to all new non-base compensation awards. This policy does not prevent the Company from taking other actions as appropriate, if warranted, based on the misconduct outlined above.

Advisory Shareholder Say-On-Pay Vote

At each Annual Meeting of Shareholders the Company submits the executive compensation disclosed in the proxy statement for that meeting to the shareholders for their approval on an advisory basis, a so-called “Say-on-Pay” vote. The Committee and the Board of Directors review and give consideration to that vote in determining future executive compensation policies and decisions. At the Company’s last Annual Meeting held on February 5, 2021, the shareholders strongly supported the current compensation program, with over 99% of the shares represented and entitled to vote at the Meeting, or over 90% of all outstanding shares, voting to approve the executive officers’ compensation.

SUMMARY COMPENSATION TABLE

The following table contains compensation information for fiscal 2021 and the preceding two fiscal years for all services rendered in all capacities to the Company and its subsidiaries by (1) the executive officers serving at September 30, 2021, and (2) the two former executive officers, Mr. Muenster and Ms. Barclay, who would have been included but for their retirement during fiscal 2021 (collectively, the “executive officers”). Because Mr. Tucker and Mr. Schatz were not executive officers prior to 2021, under SEC regulations 2021 was the first year for which their compensation was required to be reported.

Name and Principal Position	Fiscal Year	Salary			Bonus			Stock Awards ⁽¹⁾		Non-Equity Incentive Plan Compensation ⁽²⁾			Change in Pension Value & Nonqualified Deferred Compensation Earnings ⁽³⁾		All Other Compensation ⁽⁴⁾		Total
Victor L. Richey Chairman, Chief Executive Officer & President	2021	$	898,100		$	0		$	2,462,845	$	710,030		$	6,405	$	84,362	$	4,161,742
	2020	824,500			0			0		686,694			74,002		83,360		1,668,556
	2019	824,500			0			1,676,941		1,346,950			136,386		87,156		4,071,933

Christopher L. Tucker Senior Vice President and Chief Financial Officer	2021	$	221,154	⁽⁵⁾	$	1,335,000	⁽⁵⁾	$	346,493	$	149,500	⁽⁵⁾	$	0	$	22,187	$	2,074,334

David M. Schatz Senior Vice President, Secretary and General Counsel	2021	$	296,780	⁽⁶⁾	$0			$	168,047	$	77,342	⁽⁶⁾	$	0	$	25,412	$	567,581

Gary E. Muenster Former Executive Vice President & Chief Financial Officer	2021	$	465,145	⁽⁷⁾	$	211,011	⁽⁸⁾	$0		$	262,280	⁽⁷⁾	$	0	$	57,768	$	996,204
	2020	600,000			0			0		355,200			33,509		66,880		1,055,589
	2019	576,000			0			777,442		727,748			73,811		72,048		2,227,049

Alyson S. Barclay Former Senior Vice President, Secretary & General Counsel	2021	$	231,997	⁽⁷⁾	$	114,579	⁽⁸⁾	$	0	$	111,444	⁽⁷⁾	$	0	$	63,707	$	521,727
	2020	350,600			0			0		178,636			11,251		76,165		616,652
	2019	350,600			0			375,072		344,124			96,347		76,404		1,242,547

⁽¹⁾

Represents the aggregate grant date fair values of equity-based awards based on the fair market value of the underlying Common Stock on the respective grant dates. Such amounts do not correspond to the actual value that will be realized by the executive officers at the time of distribution. Awards shown for 2019 and 2020 are performance-accelerated restricted share (PARS) awards. Awards shown for 2021 are grants of time-vested RSUs to Mr. Richey, Mr. Tucker and Mr. Schatz, and for Mr. Richey only, a PARS award granted to him in recognition of his services in managing the Company during the COVID-19 pandemic. For more information, see “Principal Elements of Compensation – Long-Term Equity Incentive Compensation” in the Compensation Discussion and Analysis section.

⁽²⁾

Reflects the performance-based cash awards earned for the fiscal year indicated under the PCP. For more information, see “Principal Elements of Compensation – Cash Incentive Plans” in the Compensation Discussion and Analysis section, and “Grants of Plan-Based Awards” below.

⁽³⁾

Amounts represent the changes in actuarial present value of the accumulated pension benefits for Mr. Richey, Mr. Muenster and Ms. Barclay under the Company’s defined benefit pension plan until its termination in 2020 and for Mr. Richey and Ms. Barclay under the Company’s supplemental executive retirement plan (SERP) for each fiscal year shown. These changes in value include the effects of changes in actuarial assumptions from year to year. For fiscal 2021, Mr. Richey’s SERP value increased and Ms. Barclay’s SERP value decreased, partly due to the effect of changes in actuarial assumptions from the preceding year. Pursuant to SEC regulations, the amount in the table does not reflect the overall decrease in Ms. Barclay’s SERP value. The fiscal 2021 changes in Mr. Richey’s and Ms. Barclay’s SERP values due to assumption changes were $0 and ($2,677), respectively. For fiscal 2020 overall pension values increased, although changes in actuarial assumptions from the preceding year added to the increase in Mr. Richey’s and Mr. Muenster’s overall pension values and reduced the increase in Ms. Barclay’s overall pension value. The fiscal 2020 changes in Mr. Richey’s, Mr. Muenster’s and Ms. Barclay’s pension values due to assumption changes were $48,761, $21,356 and ($4,837), respectively. For fiscal 2019, overall pension values increased due in part to the effect of changes in actuarial assumptions from the preceding year. The fiscal 2019 increases in Mr. Richey’s, Mr. Muenster’s and Ms. Barclay’s pension values due to assumption changes were $107,702, $60,338 and $78,456, respectively. For additional information, including the actuarial assumptions used in fiscal 2021 and information about the termination of the Company’s defined benefit pension plan, see “Pension Benefits” below. There were no non-qualified deferred compensation earnings.

⁽⁴⁾

Comprised of the amounts provided in the table below:

Name and Principal Position	Fiscal Year	Perquisites^(a)		Tax Gross-ups^(b)		Defined Contribution Savings Plan Company Contributions		Employee Stock Purchase Plan Company Contributions		Total
Victor L. Richey Chairman, Chief Executive Officer & President	2021	$	52,364	$	16,809	$	11,600	$	3,589	$	84,362
	2020	55,714		12,948		11,400		3,298		83,360
	2019	50,347		17,331		11,200		8,278		87,156

Christopher L. Tucker Senior Vice President and Chief Financial Officer	2021	$	13,533	$	0	$	6,923	$	1,731	$	22,187

David M. Schatz Senior Vice President, Secretary and General Counsel	2021	$	12,950	$	0	$	8,961	$	3,501	$	25,412

Gary E. Muenster Former Executive Vice President & Chief Financial Officer	2021	$	38,915	$	14,186	$	0	$	4,667	$	57,768
	2020	$	46,286	$	14,595	$	0	$	5,999	$	66,880
	2019	45,608		20,680		0		5,760		72,048

Alyson S. Barclay Former Senior Vice President, Secretary& General Counsel	2021	$	29,918	$	14,292	$	10,422	$	9,075	$	63,707
	2020	41,745		14,050		11,200		9,170		76,165
	2019	40,615		20,854		11,403		3,532		76,404

	^(a)	Comprised of car allowance, financial planning, Company cost related to the personal use of clubs, and premiums for group variable universal life (GVUL) insurance. The GVUL benefit is offered to a number of senior managers at ESCO and its participating subsidiaries.

	^(b)	Represents annual tax gross-up payment for taxable club fees and financial planning made in December. The Company has discontinued these payments for years after calendar 2020. For more information, see “Other Compensation Elements – Perquisites” in the Compensation Discussion and Analysis section.

	⁽⁵⁾	Mr. Tucker received an initial salary at the annualized rate of $500,000 and an initial cash incentive at an annualized target of $325,000, with his 2021 cash incentive guaranteed at a multiple of at least 1.00x; his actual salary and cash incentive target were prorated based on his period of employment during 2021. At the commencement of his employment he also received a transition bonus of $835,000 plus Company common stock valued at $500,000 on the award date, to partially compensate him for equity opportunities he forfeited upon his departure from his prior employer.

	⁽⁶⁾	Upon becoming an executive officer Mr. Schatz, who was previously a Vice President and IP Counsel of the Company, received an increase in his annualized salary from $270,700 to $335,000 annually and an increase in his 2021 cash incentive target from $75,200 to $145,000; his actual salary and cash incentive target were prorated based on his days of service in each position.

	⁽⁷⁾	Mr. Muenster’s and Ms. Barclay’s 2021 salaries and cash incentives were prorated based on the days served prior to their respective retirement dates.

⁽⁸⁾

Represents compensation in lieu of the fiscal 2020 PARS awards which were not granted to the executive officers, a prorated portion of which, if granted, would have vested upon retirement. The amounts equal the number of 2020 PARS which Mr. Muenster and Ms. Barclay would otherwise have received in shares upon retirement multiplied by the value of the underlying shares on their respective retirement dates.

GRANTS OF PLAN-BASED AWARDS

The following table provides information for fiscal 2021 for the executive officers regarding awards under the Company’s cash incentive plan (PCP) and awards of performance-accelerated restricted share units (PARS) and restricted stock units (RSUs) under its long-term equity incentive plan. See “Principal Elements of Compensation – Cash Incentive Plans” and “– Long-Term Equity Incentive Compensation” in the Compensation Discussion and Analysis section.

Estimated Future Payouts Under Non-Equity
Incentive Plan Awards ⁽¹⁾

Named
Executive Officer

Grant Date⁽²⁾

Threshold

Target

Maximum

All Other
Stock
Awards:
Number of
Shares of
Stock ⁽³⁾

All Other
Option
Awards:
Number of
Securities
Underlying
Options

Exercise
or Base
Price of
Option
Awards

Grant Date
Fair Value
of Stock
and Option
Awards ⁽⁴⁾

Victor L. Richey

11/18/2020

191,900

959,500

1,919,000

4/30/2021

22,262

–

$ 2,462,845

Christopher L. Tucker

4/19/2021

149,500

⁽⁵⁾

149,500

⁽⁵⁾

299,000

⁽⁵⁾

4/30/2021

3,132

–

346,493

David M. Schatz

4/30/2021

20,903

⁽⁶⁾

104,516

⁽⁶⁾

209,032

⁽⁶⁾

4/30/2021

1,519

–

168,047

Gary E. Muenster

11/18/2020

99,840

⁽⁷⁾

499,200

⁽⁷⁾

998,400

⁽⁷⁾

Alyson S. Barclay

11/18/2020

50,200

⁽⁸⁾

251,000

⁽⁸⁾

502,000

⁽⁸⁾

	⁽¹⁾	Represent threshold (minimum), target and maximum cash incentive opportunities for fiscal 2021 under the Company’s Performance Compensation Plan (PCP). For more information, see “Principal Elements of Compensation – Cash Incentive Plans” in the Compensation Discussion and Analysis section and footnotes (2), (5) and (6) below.

	⁽²⁾	Date of approval of the cash incentive opportunities for fiscal 2021; actual payouts were based on fiscal 2021 results and were not determined until after the end of fiscal 2021. See the column captioned “Non-Equity Incentive Plan Compensation” and footnote (2) in the Summary Compensation Table.

	⁽³⁾	Consists of time-vested RSUs awarded to Mr. Richey, Mr. Tucker and Mr. Schatz, and for Mr. Richey only, a delayed 2020 award of 9,039 PARS units. The Company did not grant any stock based awards to Mr. Muenster and Ms. Barclay in fiscal 2021. For more information, see “Principal Elements of Compensation – Long-Term Equity Incentive Compensation” in the Compensation Discussion and Analysis section.

	⁽⁴⁾	Based on the fair market value of the underlying Common Stock on the respective grant dates. Such amounts do not correspond to the actual value that will be realized by the executive officers at the time of distribution.

	⁽⁵⁾	Mr. Tucker’s annualized target for fiscal 2021 was $325,000; however, his actual minimum, target and maximum incentive opportunities were prorated at 46% of the annualized amounts based on his actual days of service during fiscal 2021. His minimum payout for 2021 was guaranteed at a multiple of 1.0x the target amount. The prorated amounts are shown in this table; the actual amount paid to Mr. Tucker is shown in the Summary Compensation Table.

	⁽⁶⁾	Mr. Schatz’s annualized target for fiscal 2021 increased from $75,200 to $145,000 when he became an executive officer, and his actual target incentive opportunity was prorated between the annualized amounts based on his days of service in each position during fiscal 2021. The prorated amounts are shown in this table; the actual amount paid to Mr. Schatz is shown in the Summary Compensation Table.

	⁽⁷⁾	Amounts shown are as of the grant date; however, upon Mr. Muenster’s retirement the threshold, target and maximum opportunities were prorated at 71% of the initial amounts based on the days served prior to his retirement date. The actual amount paid to Mr. Muenster is shown in the Summary Compensation Table.

⁽⁸⁾

Amounts shown are as of the grant date; however, upon Ms. Barclay’s retirement the threshold, target and maximum opportunities were prorated at 60% of the initial amounts based on the days served prior to her retirement date. The actual amount paid to Ms. Barclay is shown in the Summary Compensation Table.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table provides information as of the end of fiscal 2021 for the executive officers regarding outstanding equity awards, consisting of unvested performance-accelerated restricted share units (PARS) and/or unvested restricted stock units (RSUs). As of the end of fiscal 2021, no executive officer had any outstanding stock option awards, either exercisable or unexercisable, and neither Mr. Muenster nor Ms. Barclay had any outstanding equity awards of any kind.

			Stock Awards
Executive Officer	Type of Award	Grant Date	Number of Shares or Units of Stock That Have Not Vested		Market Value of Shares or Units of Stock That Have Not Vested ⁽¹⁾
Victor L. Richey	PARS	4/30/2018	28,872	⁽²⁾	$	2,223,144
	PARS	5/1/2019	22,422	⁽³⁾	1,726,494
	PARS	4/30/2021	9,039	⁽⁴⁾	696,003
	RSU	4/30/2021	13,223	⁽⁵⁾	1,018,171

Christopher L. Tucker	RSU	4/30/2021	3,132	⁽⁵⁾	241,164

David M. Schatz	PARS	4/30/2018	2,500	⁽²⁾	192,500
	PARS	5/1/2019	2,000	⁽³⁾	154,000
	PARS	5/1/2020	2,008	⁽⁴⁾	154,616
	RSU	4/30/2021	1,519	⁽⁵⁾	116,963

	⁽¹⁾	Based on the NYSE closing price of the Company’s common stock of $77.00 on September 30, 2021, the last day of the Company’s 2021 fiscal year.

	⁽²⁾	With respect to the PARS awards granted April 30, 2018, the specified stock price targets of $60.05 and $64.25 were achieved on April 30, 2020, based on the average stock price over the preceding thirty consecutive trading days; accordingly, these awards were accelerated and vested on October 30, 2021, and were distributed in shares on the following business day (less a number of shares having a value equal to the amount of required tax withholdings). Dividends are not accrued or paid on PARS units until the underlying shares are distributed to the recipient. For more information, see “Principal Elements of Compensation – Long-Term Equity Incentive Compensation” in the Compensation Discussion and Analysis section.

	⁽³⁾	With respect to the PARS awards granted May 1, 2019, the specified stock price targets of $80.40 and $86.00 were achieved on May 3, 2021, based on the average stock price over the preceding thirty consecutive trading days; accordingly, these awards have accelerated and will vest on November 1, 2022 if the executive officer continues in the employment of the Company through that date and will be distributed in shares on the following business day (less a number of shares having a value equal to the amount of required tax withholdings). Dividends are not accrued or paid on PARS units until the underlying shares are distributed to the recipient. For more information, see “Principal Elements of Compensation – Long-Term Equity Incentive Compensation” in the Compensation Discussion and Analysis section.

	⁽⁴⁾	The PARS awards granted to Mr. Schatz on May 1, 2020 and to Mr. Richey on April 30, 2021 will vest on May 1, 2025 if the executive officer continues in the employment of the Company through that date and will be distributed in shares on the following business day (less a number of shares having a value equal to the amount of required tax withholdings). Alternatively, acceleration of 50% and 100% of these awards will occur if the specified stock price targets of $80.31 and $85.91, respectively, are achieved between May 1, 2022 and April 30, 2024, based on the average stock price over a period of thirty consecutive days; in that event the accelerated percentage of the awards will vest on November 1 following the end of the twelve-month performance period in which the target is achieved if the executive officer continues in the employment of the Company through that date and will be distributed in shares on the following business day (less a number of shares having a value equal to the amount of required tax withholdings). Dividends are not accrued on PARS units. For more information, see “Principal Elements of Compensation – Long-Term Equity Incentive Compensation” in the Compensation Discussion and Analysis section.

⁽⁵⁾

Each RSU represents the right to receive one share of Company common stock if the recipient remains continuously employed by the Company until the award vests, in this case 3½ years after the effective award date, and such shares will be paid out to the participant (less a number of shares having a value equal to the amount of required tax withholdings) on the following business day. Dividends are not accrued on RSUs.

OPTION EXERCISES AND STOCK VESTED

The following table sets forth information for the executive officers regarding the stock-based awards which vested during 2021. The Company has not awarded stock options to its executive officers since 2006, and no stock options were outstanding or were exercised during 2021.

	Stock Awards
Executive Officer	Number of Shares Acquired on Vesting ⁽¹⁾	Value Realized on Vesting ⁽²⁾
Gary E. Muenster	23,780	2,136,157
Alyson S. Barclay	11,473	1,256,752

⁽¹⁾

Shares of Common Stock underlying the PARS awards granted April 30, 2018 and May 1, 2019, which vested for Ms. Barclay on May 7, 2021 and for Mr. Muenster on June 18, 2021 by reason of their retirement. A number of these shares were withheld in lieu of cash payment of applicable withholding taxes, and the remaining shares were distributed to Ms. Barclay on May 10, 2021 and to Mr. Muenster on June 21, 2021.

⁽²⁾

Fair market value of the shares of Common Stock underlying the vested awards, based on the NYSE closing prices of $109.54 on May 7, 2021 and $89.83 on June 18, 2021, the values used by the Company for tax and accounting purposes.

PENSION BENEFITS

Pension Plan and SERP. Beginning in 1990, the Company had sponsored a defined benefit pension plan (the “Pension Plan”) in which the Company’s executive officers as well as other covered employees participated. Because benefits under the Pension Plan were subject to reduction under certain provisions of the Internal Revenue Code, in 1993 the Company adopted a Supplemental Executive Retirement Plan (the “SERP”) which provides that where such reductions occurred, the Company would make supplemental post-retirement payments to certain executives, including Mr. Richey and Ms. Barclay. The SERP was designed to maintain total pension benefits at the formula level of the Pension Plan.

Both the Pension Plan and the SERP were frozen at the end of 2003, with no increase in benefits accruing to participants after that date.

Effective February 29, 2020, the Company terminated the Pension Plan, with no impact on the participants’ accrued benefits because it had already been frozen. As part of the termination process, the Pension Plan liquidated its plan assets, and participants were offered either a lump sum payment of their Pension Plan benefits or an annuity issued by a qualified insurance company. All of the executive officers elected a lump sum payment, which was paid to them during 2020, and therefore no benefits were due to them in 2021 under the Pension Plan. Mr. Richey remains eligible to receive benefits under the SERP beginning at the later of his reaching age 65 or the termination of his employment; Ms. Barclay received a lump-sum distribution from the SERP upon her retirement in 2021.

The following table sets forth the present value of the accumulated benefits for Mr. Richey under the SERP as of September 30, 2021, and the payments to Mr. Richey and Ms. Barclay under the SERP during 2021, based upon the assumptions described in footnote (1).

Name	Plan Name	Number of Years of Credited Service ⁽¹⁾		Present Value of Accumulated Benefit ⁽¹⁾			Payments During Last Fiscal Year
Victor L. Richey	SERP		18	$	288,336	⁽²⁾	$	0
Alyson S. Barclay	SERP		16		0	⁽³⁾		31,240	⁽³⁾

	⁽¹⁾	The number of years of credited service and the accumulated benefit were frozen as of December 31, 2003. The present value has been calculated assuming that Mr. Richey will remain in service until age 65, the age at which retirement may occur without any reduction in benefits, and that the benefit is payable on the basis of a single life annuity with a 60 month certain payment period. Except for the assumption that the executives remain in service and retire at age 65, the present value is based on the assumptions described in Note 12 to the Company’s Consolidated Financial Statements included in the 2021 Annual Report to Shareholders. The discount rate assumption is 2.05% and the post-retirement mortality assumption is based on the RP-2014 mortality table projected back to 2007 with Scale MP-2014, and generational improvements based on Scale BB-2D grading down to 0.75% in 2024.

	⁽²⁾	Mr. Richey has elected to receive his accumulated benefits in the form of a lump sum cash payment in the event of a change of control.

⁽³⁾

Ms. Barclay received the present value of her account in a lump-sum payment upon her retirement.

Defined Contribution Plan. The Company’s Employee Savings Investment Plan (the “Defined Contribution Plan”) is an employee benefit plan under section 401(k) of the Internal Revenue Code, which is offered to substantially all United States employees including the executive officers. The Defined Contribution Plan provides for a Company cash match at a rate of 100% of the contributions by each employee up to 3% of the employee’s eligible compensation, and 50% of any additional contributions by the employee up to 5% of the employee’s eligible compensation, subject to Internal Revenue Code contribution limits. The amounts of the Company’s cash match for the accounts of the executive officers in fiscal years 2019, 2020 and 2021 are listed on page 28 in footnote (4) to the Summary Compensation Table, under the heading “Defined Contribution Savings Plan Company Contributions.”

EMPLOYMENT AGREEMENTS

The Company entered into employment and compensation agreements with Mr. Richey, Mr. Tucker and Mr. Schatz effective in April, 2021. Mr. Richey’s agreement updated his previous agreement to provide for treatment of the Company’s new types of equity awards and remove obsolete provisions such as those relating to the pension plan and the tax gross-up on perquisites.

The agreements provide for a base salary, which is subject to annual review by the Human Resources and Compensation Committee of the Board of Directors but may not be decreased, and an annual cash incentive opportunity in accordance with the Company’s cash incentive program. These executives are entitled to participate in LTEI awards and other compensation programs as determined by the Human Resources and Compensation Committee, as well as in all Company employee benefit programs applicable to senior executives, and the Company agrees to provide certain perquisites, including financial planning, an automobile allowance and club membership.

Mr. Schatz’s agreement provides for an initial term of one year; Mr. Tucker’s agreement provides for an initial term of 24 months. The agreements provide that they will be automatically renewed for successive one year periods unless a six month notice of non-renewal is given by the Company or the executive. However, the Company has the right to terminate the executive’s employment at any time upon thirty days’ notice either with or without Cause, and the executive has the right to resign at any time upon thirty days’ notice. “Cause” is defined in the agreements as the executive’s willful failure to perform his or her duties, disability or incapacity extending for nine consecutive months, willful misconduct, conviction of a felony, breach of any material provision of the employment agreement, or a determination by the Board that the executive has committed fraud, embezzlement, theft or misappropriation against the Company.

The following section, “Potential Payments Upon Termination or Change in Control,” describes the compensation and benefits payable to the executive upon termination of the executive’s employment for various reasons.

The employment agreements prohibit the executives from disclosing confidential information or trade secrets concerning the Company, and for a period of two years from soliciting employees of the Company and from soliciting customers or distributors of the Company. The agreements also require the executive officers to provide limited consulting services on an as-requested basis following termination.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

Payments/Benefits Upon Change in Control

Severance Plan. The Company has established a Severance Plan (the “Plan”) covering the executive officers. Under the Plan, following an occurrence of a “Change of Control,” as defined in the Plan (see “Other Compensation Elements – Severance Plan” in the Compensation Discussion And Analysis section), each of the executive officers will be entitled to be employed by the Company for a period of three years following the Change of Control, unless terminated earlier in accordance with the Plan. During this employment period the executive officer will: (i) be paid a minimum base salary equal to his or her base salary prior to the Change of Control, (ii) be paid a minimum annual bonus equal to the latest target cash incentive opportunity approved by the Human Resources and Compensation Committee prior to the effective date of the Change of Control (the “Current Cash Incentive Target”), (iii) continue to receive the employee benefits to which he or she was entitled prior to the Change of Control, and (iv) receive annually the value (determined as described under “Incentive Plan Awards” below) of the last LTEI awards issued to him or her prior to the Change of Control, which value may be paid either in cash or in publicly traded stock of the entity which acquired the Company in the Change of Control.

If the executive officer’s employment is terminated by the Company during this three-year employment period other than for death, disability or “Cause” as defined in the Plan, or if the executive officer terminates his or her employment during the employment period following certain specified actions by the Company (“Good Reason”), such as materially failing to comply with the provisions of the Plan, a material diminution in his or her authority, duties or responsibilities or base salary, or requiring him or her to relocate, he or she will be entitled to receive, among other things, a cash lump sum equal to the aggregate of (i) any unpaid current base salary, (ii) a bonus equal to the Current Cash Incentive Target, prorated for a partial year, and (iii) an amount calculated by multiplying two times the sum of the current annual base salary and the Current Cash Incentive Target. In addition, he or she will receive the continuation of his or her employee benefits for two years.

The Company may amend the Plan, but no amendment adverse to the rights of an executive officer under the Plan will be effective unless notice of the amendment has been given by the Company to the executive officer at least one year before a Change of Control occurs.

Long-Term Incentive Plan Awards. The terms of the Company’s PARS and RSU awards in effect at September 30, 2021 provide that upon a change of control (defined in the awards substantially the same as in the Severance Plan) the awards will be assumed by the acquirer or successor entity and converted to an equivalent agreement. If for any reason the awards will not or cannot be assumed, they will be paid out in cash.

Payments/Benefits Upon Death or Disability

If the executive officer’s employment were to be terminated because of death or disability, under the executive officer’s employment agreement with the Company the executive officer (or his or her beneficiaries) would receive benefits under the Company’s disability plan or the Company’s life insurance plans, as applicable.

With respect to PARS and RSU awards in effect at September 30, 2021, the Committee may, in its sole discretion, make full, pro-rata, or no share distributions, as it may determine, to an executive officer in the event of disability, or to the executive officer’s surviving spouse or beneficiary in the event of death.

Payments/Benefits Upon Termination by the Employee With Good Reason or by the Company Without Cause

The executive officers’ employment agreements provide that if the executive officer’s employment were to be terminated by the Company prior to a Change of Control other than for cause, death or disability or by the executive officer following certain actions by the Company defined in the agreements as “Good Reason,” including the Company’s materially failing to comply with the agreement, materially reducing the executive’s responsibilities or requiring the executive to relocate, the Company would be required to continue to pay the executive officer’s base salary and cash incentive for two years following termination; however, the executive officer could elect to receive each of these payments in a lump sum on or about March 15 of the calendar year following the calendar year in which the termination occurs. In addition, certain employee benefits would continue after the termination, the executive officer’s outstanding stock options (if any; no stock options are currently outstanding) would vest and become exercisable, and his or her accelerated but unvested PARS and RSU awards would become fully vested and the underlying shares would be distributed, subject to and in accordance with the terms of the applicable Incentive Compensation Plan. These payments and benefits would be conditioned upon the executive officer not soliciting employees, customers or distributors of the Company for a period of two years after termination. In addition, the executive officer would be required to execute the Company’s standard severance agreement and release.

Payments Upon Termination by the Employee Without Good Reason

If the executive officer were to terminate his or her employment without Good Reason, the executive officer would not be entitled to payment of continued compensation or benefits, and all outstanding PARS and RSU awards would be forfeited.

Payments Upon Termination by the Company for Cause

If the executive officer’s employment were to be terminated by the Company for Cause, under the employment agreement the executive officer would not be entitled to payment of continued compensation or benefits, and all outstanding PARS and RSU awards would be forfeited.

Incremental Compensation in the Event of Termination As A Result of Certain Events

The following tables reflect the additional compensation and benefits to be provided to the executive officers of the Company in the event of a termination of employment at, following, or in connection with a Change of Control or for the other listed reasons. The amounts shown assume that the termination was effective as of the close of business on September 30, 2021, the end of the Company’s last fiscal year. No PSU awards were in effect as of September 30, 2021. The actual amounts to be paid would be determinable only at the time of the actual termination of employment.

Victor L. Richey:

Pay Element	Change in Control			Death		Disability			Termination by Employee for Good Reason or by Employer Without Cause			Termination by Employee Without Good Reason		Termination by Employer for Cause
Cash Compensation:
Base salary	$	0		$	0	$	224,525	⁽¹⁾	$	1,796,200	⁽²⁾	$	0	$	0
Cash incentive		959,500	⁽³⁾		0		0			2,878,500	⁽⁴⁾		0		0
Severance payment		3,715,200	⁽⁵⁾		0		0			0			0		0
Total Cash Compensation	$	4,674,700		$	0	$	224,525		$	4,674,700		$	0	$	0

Long-Term Equity Incentive Awards:
PARS & RSUs		5,663,812	⁽⁶⁾		0		0			3,949,638	⁽⁷⁾		0		0
Total Awards	$	5,663,812		$	0	$	0		$	3,949,638		$	0	$	0

Total Direct Compensation	$	10,338,512		$	0	$	224,525		$	8,624,338		$	0	$	0

Benefits: ⁽⁸⁾
Broad-based benefits	$	83,996		$	0	$	0		$	5,556		$	0	$	0

SEC Form DEF 14A filed by ESCO Technologies Inc.