DEF 14A 1 tm223990d1_def14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

SCHEDULE 14A INFORMATION

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Hurco Companies, Inc.

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HURCO COMPANIES, INC.

ONE TECHNOLOGY WAY

P.O. BOX 68180

INDIANAPOLIS, INDIANA 46268

(317) 293-5309

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To Be Held March 10, 2022

The 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting”) of Hurco Companies, Inc. (the “Company”), will be held in a virtual-only format at 10:00 a.m. Eastern Time on Thursday, March 10, 2022, for the following purposes:

To elect eight directors to serve until the next Annual Meeting of Shareholders and until their successors are duly elected and qualify;

To approve, in an advisory (non-binding) “say-on-pay” vote, the compensation paid to our named executive officers;

To approve the Amended and Restated Hurco Companies, Inc. 2016 Equity Incentive Plan;

To ratify the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2022; and

To transact such other business as may properly come before the meeting or any adjournments thereof.

Due to the continued public health impact of the coronavirus pandemic (COVID-19), and to support the health, safety, and well-being of our shareholders, employees, directors, and their respective families, the Company will host its 2022 Annual Meeting in a virtual meeting format only, via webcast. In future years, once the public health impact of COVID-19 begins to normalize, the Company intends to offer an in-person shareholder attendance option consistent with past practice.

The Board of Directors recommends a vote FOR items 1, 2, 3, and 4. The persons named as proxies will use their discretion to vote on any other matters that may properly arise at the 2022 Annual Meeting.

The foregoing items of business are more fully described in our proxy statement accompanying this notice. Please read our proxy statement carefully.

Only shareholders of record as of the close of business on the record date of January 14, 2022, are entitled to notice of and to vote at the 2022 Annual Meeting or any adjournments thereof. To participate in and/or vote at the virtual 2022 Annual Meeting, prior registration is required before 5:00 p.m. Eastern Time on March 8, 2022. To pre-register, go to www.proxydocs.com/HURC and enter the control number found on your proxy card or voting instruction form. Upon completing your registration, you will receive a confirmation email. Approximately one hour prior to the meeting start time, each pre-registered shareholder will receive an email containing a unique link that will allow that shareholder to access the virtual 2022 Annual Meeting, view the list of our shareholders of record, and vote at the virtual 2022 Annual Meeting.

If you have pre-registered by the deadline and plan to attend the virtual 2022 Annual Meeting, we encourage you to access the virtual platform prior to the start time of the meeting to allow sufficient time to log-in and test your device’s audio system. You may begin to log into the virtual platform beginning at 9:45 a.m. Eastern Time on March 10, 2022.

Please mark, sign, and date the enclosed proxy card and return it in the enclosed return envelope, which requires no postage if mailed in the United States, or vote your shares via the Internet or by telephone as described in the proxy statement and on the proxy card. In the event there are not sufficient votes for approval of one or more of the above matters at the time of the 2022 Annual Meeting, the Company may adjourn the 2022 Annual Meeting to permit further solicitation of proxies.

		By order of the Board of Directors,
		Jonathon D. Wright, Secretary

Indianapolis, Indiana

January 24, 2022

YOUR VOTE IS IMPORTANT—Even if you plan to attend the virtual 2022 Annual Meeting, we urge you to mark, sign, and date the enclosed proxy card and return it promptly in the enclosed envelope or to vote your shares via the Internet or by telephone as described on the proxy card.

Important Notice Regarding the Availability of Proxy Materials for the 2022 Annual Meeting to Be Held on March 10, 2022

In accordance with the rules of the Securities and Exchange Commission, we are advising our shareholders of the availability on the Internet of our proxy materials related to the 2022 Annual Meeting. These rules allow companies to provide access to proxy materials in one of two ways. Because we have elected to utilize the “full set delivery” option, we are delivering to all shareholders paper copies of all of the proxy materials, as well as providing access to those proxy materials on a publicly-accessible website.

This Notice of 2022 Annual Meeting and the corresponding proxy statement, form of proxy card, and our most recent annual report on Form 10-K are available at www.hurco.com/proxymaterials. If you plan to attend the virtual 2022 Annual Meeting by webcast, please see the corresponding proxy statement and form of proxy card for instructions regarding required pre-registration. You may obtain technical assistance or instructions related to pre-registration at www.proxydocs.com/HURC. You may obtain technical assistance related to attending the virtual 2022 Annual Meeting at the website in the unique link that will be sent to you approximately one hour prior to the start time of the 2022 Annual Meeting if you previously completed the pre-registration before 5:00 p.m. Eastern Time on March 8, 2022.

Table of Contents

PROXY STATEMENT	1
QUESTIONS AND ANSWERS ABOUT THE 2022 ANNUAL MEETING AND VOTING	1
PROPOSAL 1. ELECTION OF DIRECTORS	6
CORPORATE GOVERNANCE	11
PROPOSAL 2. ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION	18
EXECUTIVE COMPENSATION	19
Compensation Discussion and Analysis	19
Report of the Compensation Committee	36
Assessment of Compensation-Related Risks	37
Tabular Compensation Information	38
GRANTS OF PLAN-BASED AWARDS IN 2021 TABLE	40
OUTSTANDING EQUITY AWARDS AT 2021 FISCAL YEAR END TABLE	42
OPTION EXERCISES AND STOCK VESTED IN 2021	44
EQUITY COMPENSATION PLAN INFORMATION AT 2021 FISCAL YEAR END	45
CEO Pay Ratio Disclosure	47
Employment Agreements	48
Equity Awards	49
Potential Payments upon Termination	50
Compensation of Directors	53
DIRECTOR COMPENSATION TABLE	53
PROPOSAL 3. APPROVAL OF THE AMENDED AND RESTATED HURCO COMPANIES, INC. 2016 EQUITY INCENTIVE PLAN	54
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	65
REPORT OF THE AUDIT COMMITTEE	66
PROPOSAL 4. RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	67
SHAREHOLDER PROPOSALS FOR OUR 2023 ANNUAL MEETING	68
INCORPORATION BY REFERENCE	69
ANNUAL REPORT ON FORM 10-K	69
OTHER BUSINESS	69
APPENDIX A - HURCO COMPANIES, INC., 2016 EQUITY INCENTIVE PLAN (As Amended and Restated as of March 10, 2022)	A-1

Cautionary Note Regarding Forward-Looking Statements

The statements included in this proxy statement regarding future performance and results, expectations, plans, strategies, priorities, commitments, and other statements that are not historical facts are forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are based upon current beliefs, expectations, and assumptions and are subject to significant risks, uncertainties, and changes in circumstances that could cause actual results to differ materially from the forward-looking statements. A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended October 31, 2021. Readers of this proxy statement are cautioned not to place undue reliance on these forward-looking statements, since there can be no assurance that these forward-looking statements will prove to be accurate. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

HURCO COMPANIES, INC.

One Technology Way

P. O. Box 68180

Indianapolis, Indiana 46268

2022 Annual Meeting of Shareholders

March 10, 2022

PROXY STATEMENT

This proxy statement and accompanying proxy are being furnished to the holders of common stock of Hurco Companies, Inc. (the “Company,” “Hurco,” “we,” or “us”) in connection with the solicitation of proxies by the Board of Directors for the Company’s 2022 Annual Meeting of Shareholders (the “2022 Annual Meeting”), to be held at 10:00 a.m. Eastern Time on Thursday, March 10, 2022, in virtual format only, via webcast, and any adjournments thereof. This proxy statement and the accompanying form of proxy are being mailed to our shareholders on or about January 24, 2022.

QUESTIONS AND ANSWERS ABOUT THE 2022 ANNUAL MEETING AND VOTING

Who is entitled to vote at the meeting and what are my voting rights?

Shareholders of record as of the close of business on the record date of January 14, 2022, are entitled to vote at the 2022 Annual Meeting or any adjournments thereof. As of that date, there were 6,700,655 shares of our common stock outstanding and entitled to vote at the 2022 Annual Meeting. Holders of our common stock as of the record date are entitled to one vote per share with respect to each matter submitted to a vote of the shareholders. There is no cumulative voting on election of directors or any other matter.

How many shares must be present to hold the meeting?

The presence in person or by proxy of the holders of a majority of the outstanding shares entitled to vote at the 2022 Annual Meeting is necessary to constitute a quorum for the transaction of business.

What matters will be voted on at the meeting?

There are four matters to be considered at the meeting, as follows:

Election of eight directors to serve until the 2023 Annual Meeting of Shareholders and until their successors are duly elected and qualify;

An advisory vote to approve the compensation paid to our named executive officers, also referred to as the “say-on-pay” vote;

Approval of the Amended and Restated Hurco Companies, Inc. 2016 Equity Incentive Plan (the “Amended and Restated Plan”); and

Ratification of the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2022.

How are votes counted?

All shares that have been properly voted, and not revoked, will be voted at the meeting in accordance with the instructions of the voting shareholders.

Brokers are not entitled to exercise discretion to vote shares on any of the matters to be voted on at the meeting other than the ratification of the appointment of the auditor, unless the shareholder gives voting instructions to the broker. Accordingly, if you hold your shares in “street name” and wish your shares to be voted by your broker on the election of directors, the say-on-pay vote, or the approval of the Amended and Restated Plan, you must give your broker voting instructions.

What vote is required to approve each proposal?

To approve each of the proposals, the following votes are required from the holders of voting shares. Except as set forth below, abstentions and broker non-votes will not count as votes cast on the proposals below and will not affect the outcome of the votes.

Proposal		Vote Required
1	Election of directors	The election of director nominees will be determined by a plurality of the shares voting on such election, which means that the director nominees receiving the most FOR votes will be elected up to the maximum number of directors to be elected at the 2022 Annual Meeting.

2	Say-on-pay vote	More votes are cast FOR than AGAINST.

3	Amended and Restated Hurco Companies, Inc. 2016 Equity Incentive Plan	More votes are cast FOR than AGAINST or ABSTAIN. Abstentions will have the same effect as a vote against this proposal, but broker non-votes will not affect the outcome of this proposal.

4	Ratification of auditors	More votes are cast FOR than AGAINST.

With respect to the election of directors, although there is a plurality voting standard, our Amended and Restated By-Laws (the “By-Laws”) provide that in an uncontested election, any incumbent director nominee who does not receive more FOR votes than WITHHOLD votes must tender his or her resignation as a director to the Board of Directors (the “Board”), subject to acceptance by the Board. The Nominating and Governance Committee of the Board will consider any resignation tendered under this policy and will recommend to the Board whether to accept or reject it, or whether other action should be taken. The Board will act on the tendered resignation, taking into account the Nominating and Governance Committee’s recommendation, within 90 days following the certification of the shareholder director election, and will promptly issue a press release regarding its decision. If the resignation is not accepted, the director shall continue to serve until the 2023 Annual Meeting of Shareholders and until his or her successor has been elected and qualified, or unless he or she is removed, resigns, dies, or becomes so incapacitated he or she can no longer perform any of his or her duties as a director.

How can I vote my shares without attending the meeting?

Whether you hold your shares directly as a registered shareholder or beneficially in street name, you may vote without attending the meeting. If you are a shareholder of record, you can vote your shares by granting a proxy via the Internet, over the telephone, or by mailing your signed proxy card. If you hold your shares in street name, your broker, bank, or other nominee will provide you with materials and instructions on voting your shares.

How do I vote my shares at the meeting?

To participate and/or vote at the virtual 2022 Annual Meeting, shareholders must pre-register for the meeting by 5:00 p.m. Eastern Time on March 8, 2022, at www.proxydocs.com/HURC using the control number found on their proxy card or their voting instruction form. Upon completing your registration, you will receive a confirmation email. Approximately one hour prior to the meeting start time, each pre-registered shareholder will receive an email containing a unique link that will allow that shareholder to access the virtual 2022 Annual Meeting, view the list of our shareholders of record, and vote at the virtual 2022 Annual Meeting.

Whether or not you plan to attend the virtual 2022 Annual Meeting via webcast, we urge you to vote and submit your proxy in advance of the meeting either via the Internet, by telephone, or by mail so that your vote will be counted if you later decide not to, or cannot, attend the meeting. Only shareholders who owned our common stock as of the close of business on January 14, 2022 and who pre-registered in advance of the deadline set forth above are entitled to attend the meeting.

What can I do if I change my mind after I submit my proxy?

If you are a shareholder of record, you may revoke your proxy at any time before it is voted at the meeting by: (1) giving timely written notice of the revocation to our Corporate Secretary, (2) timely submitting a later-dated proxy via the Internet, by telephone, or by mail, or (3) attending the virtual meeting by webcast and voting in that forum if you have completed your pre-registration by the deadline noted above.

If your shares are held in street name, you may submit new voting instructions by contacting your broker, bank, or other nominee holder. In the alternative, you may vote at the virtual 2022 Annual Meeting if you have completed your pre-registration by the deadline noted above and have obtained a “legal proxy” issued by your broker, bank, or other nominee as described above.

What are the Board’s recommendations on how I should vote my shares?

The Board recommends that you vote your shares as follows:

•

FOR the election of the eight nominees as directors.

•

FOR the say-on-pay vote.

•

FOR the Amended and Restated Hurco Companies, Inc. 2016 Equity Incentive Plan.

•

FOR the ratification of the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2022.

How would my shares be voted if I do not specify how they should be voted?

If you sign and return a proxy card without indicating how you want your shares to be voted, the persons named as proxies will vote your shares as follows:

•

FOR the election of the eight nominees as directors.

•

FOR the say-on-pay vote.

•

FOR the Amended and Restated Hurco Companies, Inc. 2016 Equity Incentive Plan.

•

FOR the ratification of the appointment of RSM US LLP as our independent registered public accounting firm for the fiscal year ending October 31, 2022.

What is the effect of the say-on-pay vote?

The say-on-pay vote is advisory and not binding on the Company, the Board, or the Compensation Committee. We could, if the Board or the Compensation Committee concluded it was in the Company’s best interests, choose not to follow or implement the outcome of the advisory vote. However, as was the case with the results of the say-on-pay vote at prior Annual Meetings of Shareholders, we expect that the Compensation Committee will consider the outcome of the vote when making future compensation decisions for our named executive officers.

What happens if additional matters are presented at the 2022 Annual Meeting?

We know of no other matters other than the items of business described in this proxy statement that will be presented at the 2022 Annual Meeting. If you grant a proxy, the persons named as proxy holders will have discretion to vote your shares on any additional matters properly presented for a vote at the meeting in accordance with Indiana law and our By-Laws.

Who will count the votes?

Our Corporate Secretary will count the votes.

Can I review the list of shareholders entitled to vote at the meeting?

A list of shareholders entitled to vote at the meeting will be available for inspection by shareholders of record for five business days prior to the meeting, between the hours of 9:00 a.m. and 4:30 p.m., Eastern Time, at our offices at One Technology Way, Indianapolis, Indiana 46268. If you would like to view the shareholder list, please contact our Corporate Secretary to schedule an appointment.

A list of shareholders entitled to vote at the 2022 Annual Meeting will also be available virtually during the meeting to those shareholders who have pre-registered by the deadline and are attending the virtual annual meeting.

Who pays for the cost of proxy preparation and solicitation?

We will pay the cost of preparing, assembling, and mailing this proxy statement and form of proxy. We will also request that banks, brokers, and other holders of record send the proxy materials to, and obtain proxies from, beneficial owners, and will reimburse them for their reasonable expenses in doing so.

Is this proxy statement the only way that proxies are being solicited?

Our directors, officers, and other employees may also solicit proxies personally by telephone, facsimile, electronic mail, personal contact, or otherwise. They will not be specifically compensated for doing so.

Can I receive future proxy statements and annual reports electronically?

Yes. If you are a shareholder of record, you may request and consent to electronic delivery of future proxy statements, annual reports, and other shareholder communications by following the instructions on the proxy card to vote using the Internet and when prompted, indicate that you agree to receive or access shareholder communications electronically in future years. You may also contact our Transfer Agent, Computershare Investor Services, by calling (781) 575-2879 or toll-free at (877) 282-1169, or by writing: Computershare Investor Services, P.O. Box 505000, Louisville, KY 40233-5000. If your shares are held beneficially in street name, please contact your bank, broker, or other nominee and ask about the availability of electronic delivery.

Are you planning on making the proxy materials only available by Internet this year, unless paper copies are requested?

No. Although many public companies mail a notice to their shareholders so they can provide proxy materials through the Internet, we have elected to use the “full set delivery” option and so are providing paper copies of proxy materials to all of our shareholders, unless otherwise previously requested by the shareholder. Our proxy materials and Annual Report on Form 10-K are also available via the Internet at www.hurco.com/proxymaterials. We may decide not to use the “full set delivery” option in the future; however, you will still have the right to request a free set of proxy materials by mail.

PROPOSAL 1. ELECTION OF DIRECTORS

The Board currently consists of eight members. The Board, acting on the recommendation of our Nominating and Governance Committee, has nominated the eight individuals identified below for election as directors. Each of the nominees is currently a director. No fees were paid to any third parties to identify or evaluate potential nominees. Unless authority is specifically withheld, the shares being voted by proxy will be voted in favor of each of these nominees. Each nominee who is elected will serve for a term of one year, which expires at our next Annual Meeting of Shareholders or such later date as his or her successor has been elected and qualified. Proxies cannot be voted for a greater number of persons than eight, which is the number of nominees named in this proxy statement.

If any of these nominees becomes unable to serve, we expect that the persons named in the proxy will exercise their voting power in favor of such other person or persons as the Board may recommend. Each of the nominees has consented to being named in this proxy statement and to serve if elected. The Board knows of no reason why any of the nominees would be unable to serve.

Director Nominees

The names of the persons who are nominees for election and their current positions and offices with Hurco, if any, are set forth below. There are no family relationships among any of our directors or officers.

Nominees		Positions and Offices Held with Hurco
Thomas A. Aaro		Director

Michael Doar		Executive Chairman and Director

Cynthia Dubin		Director

Timothy J. Gardner		Director

Jay C. Longbottom		Director

Richard Porter		Director

Janaki Sivanesan		Director

Gregory S. Volovic		President, Chief Executive Officer, and Director

Thomas A. Aaro, age 64, has been a member of the Board since March 2015. From 2002 to 2017, Mr. Aaro was the founder and Managing Partner of BlueBlack LLC, an independent integrated/shopper marketing agency that provides strategic and promotional consulting, training, and implementation to consumer-packaged goods (“CPG”) companies, marketing agencies, marketing services, and digital marketing companies. Previously, he served as the Partner/Chief Executive Officer of Marketing Drive-MGR, an integrated promotional marketing agency and as Chief Marketing Officer/Consultant for a number of technology-oriented companies, including Supermarkets Online, a division of Catalina, a CPG internet savings site, and Wavetel, a startup wireless Internet Service Provider in North Carolina.

Mr. Aaro brings to our Board extensive knowledge of marketing and entrepreneurship. His over thirty years of experience leading marketing strategy for numerous CPG and technology companies and experience as an entrepreneur provides valuable insight to our Board.

Michael Doar, age 66, has been a member of the Board since 2000. Mr. Doar was elected Chairman of the Board and appointed our Chief Executive Officer (“CEO”) in fiscal 2001 – a position he held until March 2021, when he transitioned to the role of Executive Chairman. Mr. Doar also served as our President from November 2009 to March 2013. Prior to joining Hurco, Mr. Doar served as Vice President of Sales and Marketing of Ingersoll Contract Manufacturing Company, a subsidiary of Ingersoll International, an international engineering and machine tool systems business, having previously held various management positions with Ingersoll International from 1989. Mr. Doar also serves as a director of Twin Disc, Incorporated, a manufacturer of marine and heavy duty off-highway power transmission equipment.

Mr. Doar led Hurco for more than twenty years. As our current Executive Chairman and former CEO, Mr. Doar brings to our Board his in-depth knowledge of our business, strategy, people, operations, competition, and financial position.

Cynthia Dubin, age 60, has been a member of the Board since March 2019. Ms. Dubin is an experienced chief financial officer and board director. In February 2019, Ms. Dubin was appointed to the board of the U.K. Competition and Markets Authority (“CMA”) and is currently the Chair of its Nominations Committee and Audit and Risk Assurance Committee. The CMA is a non-ministerial government department in the United Kingdom, responsible for strengthening business competition and preventing and reducing anti-competitive activities. Ms. Dubin served as the CFO of Pivot Power LLP, an emerging leader in power storage and electric vehicle infrastructure in the U.K., from August 2018 to March 2019. Ms. Dubin was also the CFO for JKX Oil & Gas Ltd. from 2011 to 2016 and CFO for Canamens Ltd. from 2006 to 2011. These companies were London Stock Exchange listed and private equity-backed oil and gas exploration and production companies, respectively. Additionally, Ms. Dubin was European CFO for Edison Mission Energy, a builder, owner, and operator of large-scale power generation projects, and started her career as a project finance banker with Irving Trust Company. From 2015 to September 2020, she served on the Board of Directors of Babcock & Wilcox Enterprises, Inc., an New York Stock Exchange-listed global provider of advanced energy and environmental technologies and services for the power and industrial markets with operations, subsidiaries, and joint ventures worldwide. During her service, she served as the Chair of its Audit and Finance Committee and a member of its Governance Committee. Since September 2020, Ms. Dubin has served as a director for Synthomer plc, a publicly-traded chemicals manufacturer specializing in aqueous polymers, and is the Chair of its Audit Committee and a member of its Remuneration and Nomination Committees. Since December 2020, Ms. Dubin has also served as a director for ICE Futures Europe, an exchange for futures and options contracts for crude oil, interest rates, equity derivatives, natural gas, power, coal, emissions, and soft commodities, and is a member of its Audit Committee. Ms. Dubin became a director and Chair of the Audit Committee and member of the Compensation Committee for Franchise Group, Inc. in May 2021. Franchise Group is a holding company for a franchising platform for an increasingly diverse collection of market-leading and emerging brands.

Ms. Dubin brings to our Board thorough knowledge and understanding of complex international corporate finance, mergers and acquisitions, capital markets, and risk management and oversight.

Timothy J. Gardner, age 66, has been a member of the Board since March 2017. Since 2016, Mr. Gardner has been the Managing Director of Akoya Capital, responsible for leading Akoya’s industrial product sector. Since 2015, Mr. Gardner also has been serving as a Senior Advisor for Pritzker Private Capital (“Pritzker”) and a board member of LBP Manufacturing, a packaging company acquired by Pritzker. From 2009 to 2014, Mr. Gardner served as the Executive Vice President of Illinois Tool Works (“ITW”) and led ITW’s consumer products segment, a $1.6 billion business focused on packaging and specialty decorating. Between 1997 and 2009, Mr. Gardner held various leadership positions within ITW. Mr. Gardner also serves on the boards of multiple not-for-profit organizations and is a member of the Audit Committee for the Keep America Beautiful organization located in Stamford, Connecticut.

Mr. Gardner brings to our Board extensive leadership experience in industrial and international manufacturing operations, as well as extensive knowledge and experience in finance and acquisitions and divestitures. During his tenure at ITW, Mr. Gardner led ten acquisitions and four divestitures and managed multiple division and group financial controllers.

Jay C. Longbottom, age 68, has been a member of the Board since March 2015. Mr. Longbottom is currently an Operating Partner of the BERKS Group, a privately held investment initiative, a position he has held since 2018. Previously, from 2013 to 2017, Mr. Longbottom was CEO of Robert Family Holdings (“RFH”), a privately-held company that manages a portfolio of specialty manufacturers, was a board member of RFH from 2008 to 2017, and served as RFH’s Audit Committee Chair from 2008 to 2013. For one year prior to his RFH tenure, Mr. Longbottom served as CEO of Trostel, LLC, a rubber products company. Additionally, from 2002 to 2012, Mr. Longbottom was an executive of Haldex AB, a Swedish publicly-traded company that provides proprietary and innovative solutions to improve safety, vehicle dynamics, and environmental sustainability in the global commercial vehicle industry. Mr. Longbottom served as the CEO and President of Haldex AB from 2011 to 2012. Prior to 2011, he was the Executive Vice President and Head of the Commercial Vehicle Systems Division and the President of the Hydraulics Division of Haldex Group.

Mr. Longbottom brings to our Board significant knowledge in finance, mergers and acquisitions, and international manufacturing operations. His experience as a CEO of a Swedish publicly-traded company is especially relevant to understanding regulations and capital market requirements. Mr. Longbottom also currently serves as a director of two privately-held companies, was a director of RFH for nine years, and has served as a director of a number of international companies.

Richard Porter, age 66, has been a member of the Board since 2012. Mr. Porter has managed a private equity portfolio of manufacturing companies since 2007. Previously, he was President of CB Manufacturing, a cutting tool company, and President of Ingersoll Contract Manufacturing Company, a subsidiary of Ingersoll International.

Mr. Porter brings to our Board extensive experience in the machine tool industry, particularly in product and contract manufacturing. Mr. Porter also has experience serving on the boards of a number of private companies with annual revenues ranging from approximately $40 million to $480 million.

Janaki Sivanesan, age 50, has been a member of the Board since 2008. Ms. Sivanesan is a practicing attorney and founding principal of a private equity firm focused on middle-market investments. She previously served as a partner at a large, New York law firm. She was admitted to the bars of the States of New York and Georgia in 2007 and 1996, respectively. Since 2020, Ms. Sivanesan has also served as a director of Essential Properties Realty Trust, Inc., a publicly-traded real estate investment trust that acquires, owns, and manages primarily single-tenant properties that are net leased on a long-term basis to companies operating service-oriented or experience-based businesses. Ms. Sivanesan has experience in a wide range of corporate transactions, from mergers and acquisitions to corporate finance, including private debt, equity investments, and venture capital transactions. Ms. Sivanesan also has experience in cross-border transactions related to manufacturing and outsourcing and is particularly knowledgeable with respect to business operations in India. Ms. Sivanesan served as the General Counsel and Chief Compliance Officer of Hayfin Capital Management, LLC (formerly known as Kingsland Capital Management, LLC), from 2011 to 2018, and has been self-employed as an attorney in private practice since 2009.

Ms. Sivanesan provides to the Board and Audit Committee thorough knowledge and understanding of complex legal and capital markets transactions, as well as corporate mergers and acquisitions.

Gregory S. Volovic, age 58, has been a member of the Board since March 2019. He has been employed by us since March 2005, was appointed as our President in March 2013, and served as our Chief Operating Officer from March 2019 until he was appointed as our CEO in March 2021. Mr. Volovic oversees all of Hurco’s operations, including worldwide sales, service, end-to-end management of research and development, new product development activities, and operational initiatives. He has held various positions within Hurco, most recently Executive Vice President, Software and Engineering, before becoming President in 2013. Prior to joining Hurco, Mr. Volovic led the advanced manufacturing equipment development program for the CRT division of RCA/Thomson and the worldwide development of Information Technology (IT) and E-business/Knowledge Management technologies. He also held various positions within Thomson, including Director of E-Business, Engineering, and Information Technology. Mr. Volovic started his career as a software developer for Unisys Corporation, where he was a Linux programmer. Mr. Volovic also serves on the board of a privately held company and is a board member of the Association of Manufacturing Technology (AMT).

Mr. Volovic brings to our Board his significant knowledge of the machine tool industry, as well as his experience and understanding of our technologies, product development, business strategies, people, and operations. Mr. Volovic also provides leadership and vision for the development and execution of our strategic plans and the achievement of our business goals and objectives.

Board Diversity, Director Experience and Qualifications, and Board Composition

While neither the Board nor the Nominating and Governance Committee has a formal written policy regarding director diversity, each body considers the diversity of backgrounds and experience when selecting nominees for director election and in evaluating Board composition and performance. Not only has this informal approach to the promotion of diversity resulted in a group of director nominees that we believe to be individuals of substantial accomplishment with demonstrated leadership capabilities, but, as indicated in the charts below, it has also resulted in a group of director nominees possessing diversity of thought, perspective, experience, and backgrounds.

Director Experience & Qualifications

Thomas A. Aaro

Michael Doar

Cynthia Dubin

Timothy J. Gardner

Jay C. Longbottom

Richard Porter

Janaki Sivanesan

Gregory S. Volovic

Public Company Board

Public Company Executive

Manufacturing Industry

International Business / Global Operations

Risk Management

Financial Analysis / Accounting

Information Technology

Project Management

Environmental Sustainability

Sales & Marketing

Supply Chain / Logistics

Strategic Planning

Government Relations, Public Policy or Regulatory

Mergers & Acquisitions / Business Development

Talent Management

Board Composition

Thomas A. Aaro

Michael Doar

Cynthia Dubin

Timothy J. Gardner

Jay C. Longbottom

Richard Porter

Janaki Sivanesan

Gregory S. Volovic

Gender Identity

Male

Female

Non-Binary

Did Not Disclose Gender

Demographic Background

African American or Black

Alaskan Native or Native American

Asian

Hispanic or Latinx

Native Hawaiian or Pacific Islander

White

Two or More Races or Ethnicities

LGBTQ+

Did Not Disclose Demographic Background

In further demonstration of the value the Board places on diversity, it also considers the diversity of background and experience when appointing our executive officers. To that end, and as indicated in the chart below, our executive officer team is a diverse group of individuals representative of both Hurco’s global footprint and the communities in which we operate.

	Gregory S. Volovic	Michael Doar	Sonja K. McClelland	HaiQuynh Jamison	Jonathon D. Wright
Gender Identity
Male	X	X			X
Female			X	X
Non-Binary
Did Not Disclose Gender
Demographic Background
African American or Black
Alaskan Native or Native American
Asian				X
Hispanic or Latinx
Native Hawaiian or Pacific Islander
White	X	X			X
Two or More Races or Ethnicities			X
LGBTQ+
Did Not Disclose Demographic Background

The Board of Directors recommends a vote “FOR” each of the nominees for director.

CORPORATE GOVERNANCE

Policies on Corporate Governance

Our Board believes that good corporate governance is important to ensure that our Company is managed for the long-term benefit of our shareholders. The Board or one of its committees periodically reviews our Corporate Governance Principles, the written charters for each of the standing committees of the Board, and our Code of Business Conduct and Ethics, and amends them as appropriate to reflect new policies or practices.

Board Leadership Structure

Our Board is currently led by our Executive Chairman, Mr. Doar. Mr. Doar has held this position since March 2021. Prior to transitioning to the role of Executive Chairman, Mr. Doar served as our Chairman and CEO since 2001. Therefore, he has experience in leading the Company through a range of changes in business environments and vast institutional knowledge about our business, industry, and people.

The Board regularly reevaluates our Board leadership structure and succession planning and may determine that a different leadership structure is appropriate in the future. The Board currently believes that it is most efficient and effective for an executive officer of the Company to serve as Executive Chairman of the Board. Assumption of the Chairman role by an executive officer facilitates continuous and broad Board access to, and communication with, the CEO, management team, and the Company’s outside advisors. It also promotes responsibility and accountability, effective decision-making, and a cohesive corporate strategy. Our Board possesses considerable experience and knowledge of the challenges and opportunities that we face as a company. We feel the Board is well qualified to evaluate our current and future needs and to assess how the capabilities of our senior management can be most effectively organized to meet those needs.

Our Board currently has six independent directors. We have three standing committees, and one of our independent directors serves as our Presiding Independent Director. The independent directors have designated Mr. Porter to serve as Presiding Independent Director. The Presiding Independent Director oversees executive sessions of the independent directors and plays an active role in setting Board agendas and facilitating interactions between the independent directors, on the one hand, and the full Board or management, on the other. The Board evaluates the appropriateness of its leadership structure on an ongoing basis and may change it as circumstances warrant. We believe that each of these measures counterbalances any risk that may exist in having Mr. Doar serve as both an executive employee of the Company and as Executive Chairman of the Board. For these reasons, our Board believes this leadership structure is effective for our company.

Board Role in Risk Oversight

Our Board regularly receives reports from our CEO and other members of our senior management team regarding areas of significant risk to us, including strategic, operational, financial, legal, regulatory, and reputational risks. However, management is responsible for assessing and managing our various risk exposures on a day-to-day basis. In this regard, management, with the assistance, where appropriate, of counsel and other advisors, has established functions that focus on particular risks, such as legal matters, regulatory compliance, treasury management, research and development, supply chain, and quality control, and has developed a comprehensive and integrated approach to overall risk management, which includes the identification of risks and mitigation plans in the strategic planning process.

Our Board’s role is primarily one of oversight. Our Board oversees our risk management processes to determine whether those processes are functioning as intended and are consistent with our business and strategy. Our Board conducts this oversight primarily through the Audit Committee, although some aspects of risk oversight are performed by the full Board or another committee. The Audit Committee is assigned with, among other things, oversight of our risks relating to accounting matters, financial reporting, and legal and regulatory compliance. The Audit Committee meets regularly with our Chief Financial Officer (“CFO”), external auditors, internal auditors, legal counsel, and management to discuss our major financial risk exposures and the steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies. The Audit Committee also receives regular reports regarding issues such as the status and findings of audits being conducted by our independent auditors, the status of material litigation, and material accounting changes or proposed audit adjustments that could affect our financial statements. Our Audit Committee has standing items on its quarterly meeting agendas relating to these responsibilities. The Audit Committee members, as well as all other directors, have access to our CFO, internal auditors, and any other member of our management for discussions between meetings, as warranted. The Audit Committee provides reports to the full Board on risk-related items.

The activities of the Compensation Committee with respect to risks relating to our compensation policies and procedures are discussed below in the Executive Compensation section of this proxy statement.

Director Independence and Board Meetings

The Board has determined that each of our non-employee directors – Mr. Aaro, Ms. Dubin, Mr. Gardner, Mr. Longbottom, Mr. Porter, and Ms. Sivanesan – is “independent” as defined by the listing standards of The Nasdaq Stock Market (the market in which our common stock trades), or Nasdaq, and the director independence rules of the Securities and Exchange Commission, or SEC. The Board has affirmatively determined that none of the persons who served as independent directors during fiscal 2021 has any relationship with us that would impair their independence.

Directors are expected to attend Board meetings, meetings of committees on which they serve, and our Annual Meeting of Shareholders, and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities. The Board held five meetings during fiscal 2021. All directors attended at least 75% of the aggregate number of meetings of the Board and the committees on which they served during fiscal 2021. Except for Mr. Cruickshank, all incumbent directors and director nominees, as of that date, attended our 2021 Annual Meeting of Shareholders.

Board Committees and Committee Meetings

The Board of Directors has three standing committees: the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee. The members of the committees, as of the date of this proxy statement, are identified in the following table.

Name of Director	Audit Committee	Compensation Committee	Nominating and Governance Committee
Thomas A. Aaro		X	X
Michael Doar
Cynthia Dubin	X
Timothy J. Gardner		Chair
Jay C. Longbottom		X	X
Richard Porter	X		Chair
Janaki Sivanesan	Chair
Gregory S. Volovic

Audit Committee

The Audit Committee oversees our accounting, financial reporting, and internal audit activities. It appoints our independent registered public accounting firm and meets with that firm, our internal audit team, and our CFO to review the scope, cost, and results of our annual audit and to review our internal accounting controls, policies, and procedures. The Report of the Audit Committee is included on page 66 of this proxy statement.

All members of the Audit Committee are “independent” as such term is defined for audit committee members under the Nasdaq rules and SEC Rule 10A-3 promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Board has determined that each of Ms. Dubin and Ms. Sivanesan qualifies as an “audit committee financial expert,” as defined in Item 407(d)(5)(ii) of Regulation S-K of the Exchange Act.

The Audit Committee held six meetings during fiscal 2021.

The Audit Committee operates under a written charter, a copy of which is available on our website at www.hurco.com/investors under “Corporate Governance.”

Compensation Committee

The Compensation Committee reviews and recommends to the Board the compensation of our officers and managers and guidelines for the general wage structure of our entire workforce. The Compensation Committee also oversees the administration of our employee benefit plans and discusses with management the Compensation Discussion and Analysis and, if appropriate, recommends its inclusion in our Annual Report on Form 10-K and proxy statement. In determining the compensation of the executive officers other than our CEO and Executive Chairman, the Compensation Committee considers the recommendations of the CEO. The Report of the Compensation Committee is included on page 36 of this proxy statement.

All members of the Compensation Committee are “independent” as such term is defined for compensation committee members under the Nasdaq rules and SEC Rule 10C-1 promulgated under the Exchange Act.

The Compensation Committee held four meetings during fiscal 2021.

The Compensation Committee operates under a written charter, a copy of which is available on our website at www.hurco.com/investors under “Corporate Governance.”

Compensation Committee Interlocks and Insider Participation

No member of our Compensation Committee was, at any time during fiscal 2021 or at any other time before fiscal 2021, an officer or an employee of the Company. In addition, none of the members of the Compensation Committee were involved in a relationship requiring disclosure as an interlocking executive officer or director under Item 407(e)(4) of Regulation S-K of the Exchange Act. None of our executive officers served as a member of the Compensation Committee at any time during or before fiscal 2021.

Nominating and Governance Committee

The Nominating and Governance Committee assists the Board by identifying individuals qualified to become Board members, maintains our Corporate Governance Principles and Code of Business Conduct and Ethics, leads the Board in an annual self-evaluation, recommends members and chairs for each standing committee, and determines and evaluates succession plans for our CEO.

All members of the Nominating and Governance Committee are independent directors as defined by Nasdaq rules.

The Nominating and Governance Committee held four meetings during fiscal 2021.

The Nominating and Governance Committee is responsible for identifying potential Board members or nominees. The Nominating and Governance Committee does not have a formal written policy regarding the consideration of diversity in identifying nominees for directors. It does, however, consider the diversity of backgrounds and experiences of director candidates when identifying director nominees and evaluating the Board’s composition and performance. The Nominating and Governance Committee also examines the following qualifications and skills of director candidates, among other things: their business or professional experience, their integrity and judgment, their records of public service, their ability to devote sufficient time to the affairs of the Company, and the needs of the Board for certain skills or experiences. The Nominating and Governance Committee also believes that all nominees should be individuals of substantial accomplishment with demonstrated leadership capabilities.

The Nominating and Governance Committee will consider candidates for director who are recommended by shareholders. A shareholder who wishes to recommend a director candidate for consideration by the committee should send such recommendation to our Corporate Secretary at One Technology Way, Indianapolis, Indiana 46268, who will forward it to the committee. Any such recommendation should include a description of the candidate’s qualifications for Board service and contact information for the shareholder and the candidate.

A shareholder who wishes to nominate an individual as a candidate for director without the recommendation of the Nominating and Governance Committee must comply with the advance notice and informational requirements set forth in our By-Laws, which are more fully explained later in this proxy statement under “Shareholder Proposals for our 2023 Annual Meeting.”

The Nominating and Governance Committee operates under a written charter, a copy of which is available on our website at www.hurco.com/investors under “Corporate Governance.”

Shareholder Communications

The Board has implemented a process whereby shareholders may send communications to its attention. The process for communicating with the Board is set forth in our Corporate Governance Principles, which are available on our website at www.hurco.com/investors under “Corporate Governance.”

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our common stock, to file reports of ownership with the SEC and Nasdaq. Such persons are also required to furnish us with copies of all Section 16(a) forms they file.

Based solely on our review of the copies of such forms received by us, and written representations from certain reporting persons that they were not required to file a Form 5 to report previously unreported ownership or changes in ownership, we believe that, during our fiscal year ended October 31, 2021, all of our executive officers, directors, and greater than 10% beneficial owners complied with all filing requirements under Section 16(a), except as described immediately below.

On Saturday, January 2, 2021, and Sunday, January 3, 2021, certain outstanding restricted stock awards for each of Mr. Doar, Ms. McClelland, and Mr. Volovic vested, resulting in the following amount of shares being withheld to satisfy these officers’ respective tax obligations with respect to the vested portion of the underlying awards: (1) for Mr. Doar, 2,157 shares on January 2, 2021, and 708 shares on January 3, 2021; (2) for Ms. McClelland, 1,207 shares on January 2, 2021, and 282 shares on January 3, 2021; and (3) for Mr. Volovic, 1,391 shares on January 2, 2021, and 423 shares on January 3, 2021. However, due to an administrative error related to the underlying awards’ weekend vesting dates, the Form 4s reporting such tax withholding dispositions were not filed on behalf of these individuals until January 6, 2021 – one day late with respect to such tax withholding dispositions under applicable beneficial ownership reporting rules. The Form 4 filed on behalf of each such executive was only late with respect to the transactions specifically referenced above.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics, which applies to all of our directors, executive officers, and employees, including our principal executive officer and principal financial officer. If we grant any waiver to the Code of Business Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, we will disclose the nature of such waiver in a Current Report on Form 8-K that we will file with the SEC or on our website at www.hurco.com/investors under “Corporate Governance.” A copy of the Code of Business Conduct and Ethics is available on our website at www.hurco.com/investors under “Corporate Governance.” We will disclose any amendments or updates to our Code of Business Conduct and Ethics by posting such amendments or updates on our website.

Environmental, Social, and Governance Matters

Our Board has adopted an Environmental, Social, and Governance Policy (the “ESG Policy”), which is both set forth immediately below and available on our website at www.hurco.com/investors under “Corporate Governance.”

Hurco Companies, Inc. (“Hurco,” “we,” “us,” or “our”) believes that: (1) business, at its best, serves the public good, improves the quality of people’s lives, and leaves the world a better place; (2) it is an inherent and critical component of sound corporate citizenship to be responsive to environmental, social, and governance-related (“ESG”) matters that directly impact our business, industry, stakeholders, and the communities in which we operate; (3) as a global, industrial technology company, we are in a unique position to help address a variety of ESG issues; and (4) profitable growth and meaningful responsiveness to ESG matters are not mutually exclusive.

Accordingly, Hurco is committed to being responsive to ESG matters that are important to our business and stakeholders, including our customers, employees, shareholders, business partners, and the communities in which we operate. We are dedicated to operating our business with integrity; being responsible fiscal and environmental stewards; maintaining a diverse, inclusive, and caring culture with an emphasis on employee safety, development, and wellbeing; and having strong corporate governance practices that foster principled actions, informed and effective decision-making, appropriate monitoring of our compliance and performance, and accountability. To that end, our Board of Directors has direct oversight of our ESG strategy and its implementation.

We believe Hurco’s approach in addressing ESG matters should be thoughtful, proactive, practical, and risk-based – with priority given to ESG issues that are both material to our business and otherwise aligned with our corporate strategies. Through our business activities, we want to be economically successful and create value for society. In that regard, Hurco will strive to evaluate and respond to ESG issues in a manner that is intended to create long-term value both for our stakeholders and for our business. More specifically, we will aim to focus on ESG initiatives that we believe are the most impactful to both and that will make Hurco a better company.

Our Board has direct oversight over ESG matters pertaining to the Company. In addition, the Charter of the Nominating and Governance Committee requires that committee to periodically review the Company’s environmental, social, and sustainability programs, initiatives, and policies, and such committee may make recommendations to the Board and/or our management regarding the same, to the extent the committee determines such recommendations are justified, in each case after taking into account the interests of all of the Company’s stakeholders, including shareholders. A copy of the charter of the Nominating and Governance Committee is available on our website at www.hurco.com/investors under “Corporate Governance.”

We also believe that all companies have a responsibility to respect human rights. In recognition of the foregoing, our Board has adopted a Human Rights Policy representing the Company’s public expression of (1) its commitment to respect internationally recognized fundamental human rights standards and (2) its belief that all human beings should be treated with dignity, fairness, and respect. A copy of the Company’s Human Rights Policy is available at our website at www.hurco.com/investors under “Corporate Governance.”

Through our Supplier Code of Conduct, we communicate our expectation that our suppliers, vendors, and other supply chain partners adhere to certain standards related to corporate integrity, fair and ethical business practices, responsible product sourcing, and the safety and wellbeing of workers across our global supply chain. A copy of our Supplier Code of Conduct is also available on our website at www.hurco.com/investors under “Corporate Governance.”

Below are just a few representative examples demonstrating Hurco’s commitment to ESG matters:

Commitment to fostering a strong corporate culture that promotes high standards of ethics and compliance for our businesses, including policies that set forth principles to guide employee, officer, director, and vendor conduct, such as our Code of Business Conduct and Ethics, ESG Policy, Human Rights Policy, and Supplier Code of Conduct.

Commitment to the development, training, and maintenance of a skilled manufacturing and machinist workforce to support advancements in manufacturing technology and the industries it serves, including the donation and/or consignment of our products and software to educational organizations, trade schools, or other public-private partnerships. For example, in 2020, we created and implemented the Hurco Apprenticeship Program, a robust advanced manufacturing apprenticeship program aimed at educating and training the next generation of skilled machinists, advanced manufacturing skilled labor, and automation specialists.

Maintenance of a whistleblower policy providing for the confidential reporting of any suspected policy violations or unethical business conduct on the part of our businesses, employees, officers, directors, or vendors and the provision of training and education to our global workforce with respect to our Code of Business Conduct and Ethics and anti-corruption and anti-bribery policies.

Commitment to the development and fair treatment of our global workforce, including generous healthcare and benefit programs for our employees, equal employment opportunity hiring practices and policies, anti-harassment, workforce safety, and anti-retaliation policies, and tuition-reimbursement for qualifying continuing educational expenses.

Fostering environmental awareness and education, including evaluating our products and supply chain for conflict minerals and holding our suppliers to high quality standards, our Code of Business Conduct and Ethics and our Supplier Code of Conduct.

Developing software, hardware, and product design enhancements that have the potential to reduce the amount of power or energy required by end users to produce parts. More specifically, our software enhancements, such as UltiMotion, and product design changes have significantly reduced the amount of power required by a Hurco machine tool to produce similar parts over time. By way of example, an internal Hurco study found that, assuming consistent levels of part geometry, finishing, and quality for the same production operation, a 2021 VMX42 requires approximately 28% less power (i.e., 7,049 kWh/a) than a 2011 VMX42 (i.e., 9,756 kWh/a) to produce the same part.

Commitment to provide safe and high-quality products and services that meet customer and regulatory requirements and to demonstrate continuous improvement, including ISO 9001 certification.

Commitment to an inclusive and diverse workforce and environment that is representative of our global footprint and the communities in which we operate at all levels of the organization, including the composition of our Board, our executive officers, managerial positions, and global workforce. See section titled “Proposal 1. Election of Directors” for more information about the diversity of our Board and executive officers.

PROPOSAL 2. ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

The second proposal to be considered at the 2022 Annual Meeting is the advisory vote to approve the compensation paid to our named executive officers as disclosed in this proxy statement pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative discussion following the compensation tables), also known as the say-on-pay vote. Consistent with the preference expressed by shareholders at the 2011 and 2017 Annual Meetings of Shareholders, we have been conducting say-on-pay votes on an annual basis.

The Compensation Discussion and Analysis beginning on page 19 of this proxy statement describes our executive compensation program, in detail, and explains the philosophy of the program, the elements of compensation, and the factors considered by the Compensation Committee in determining the compensation of our named executive officers during fiscal 2021.

From 2014 through 2019, votes cast in favor of the Company’s annual say-on-pay vote ranged from 97% to 99%. Although the 81% approval rating received in 2020 was a notable decrease from historical approval levels, after a careful evaluation of our compensation policies and practices with the Company’s independent compensation consultant, the Compensation Committee determined that our overall executive compensation program structure was generally aligned with prevailing market practices and met shareholders’ expectations. Nevertheless, in consideration of the extraordinary challenges presented by the COVID-19 pandemic, the continually evolving roles and responsibilities of the senior executive team, and input from management, the Compensation Committee made several decisions regarding executive compensation for fiscal 2020 and 2021 to manage overall program costs during that uncertain time. Please see the section below in the Compensation Discussion and Analysis titled “Compensation Decisions for Fiscal 2021.” The Compensation Committee believes that at least partially in response to those actions, and based upon the shareholders’ assessment of our executive compensation program at the time, approximately 99% of the votes cast on the annual say-on-pay vote at our 2021 Annual Meeting of Shareholders were voted to approve the proposal. Based on the foregoing, the Compensation Committee continues to believe that our executive compensation program is well aligned with prevailing market practices and meets shareholders’ expectations.

Accordingly, the Board of Directors recommends that our shareholders vote FOR the following resolution at the 2022 Annual Meeting:

“Resolved, that the compensation paid to Hurco Companies, Inc.’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion in this proxy statement, is approved.”

Because it is advisory, the results of the say-on-pay vote are not binding upon the Board or the Compensation Committee. However, as was the case with the results of the say-on-pay vote at prior Annual Meetings of Shareholders, we expect that the Compensation Committee, which is responsible for designing and administering our executive compensation program, will consider the outcome of the vote when making future compensation decisions for our named executive officers.

The Board of Directors recommends a vote “FOR” the advisory proposal to approve the compensation of our named executive officers as disclosed in this proxy statement.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This section and the tables that follow it provide information regarding our compensation program and practices as they relate to our CEO, CFO, and three other executive officers identified in the Summary Compensation Table on page 38 and are referred to as the “named executive officers” in this analysis. We currently do not have any executive officers who are not also named executive officers.

The responsibilities of the Compensation Committee of the Board (referred to as the Committee in this section) include administering our compensation programs and approving or ratifying all compensation-related decisions for the named executive officers.

Philosophy

The goals of our executive compensation program are to foster the creation of shareholder value while, at the same time, motivating and retaining managerial personnel. Our executive compensation program has been designed to hold executives accountable for the financial and operational performance of the Company, as well as reflecting the value of the Company’s stock. Therefore, a substantial amount of an executive’s compensation is at risk and tied to the performance of the Company on both a short-term and long-term basis. Our compensation program includes the use of Company common stock and stock ownership guidelines that serve to align the interests of our executives with the interests of our shareholders. Our compensation program is designed to reward executives at levels comparable to our peers to promote fairness and success in attracting and retaining executives. We believe that our compensation program does not promote excessive risk-taking and various elements of our policies that are in place (such as capped incentive opportunities, use of capital return metrics, stock ownership guidelines, recoupment policies, and governance processes) serve to mitigate excessive risk. Any written employment agreements with our named executive officers that provide for a change in control severance benefit have a “double-trigger” (i.e., requires both a change in control and termination of the executive’s employment in order to receive that benefit).

Fiscal 2021 Overview

We are an industrial technology company that designs, produces, and sells computerized machine tools. Our strategic plans focus on market expansion to reach more customers with more products on a global basis. We have made five acquisitions since 2013, and the products we have added through these acquisitions have provided more advanced products with significant improvements in our machine tool accuracy and precision, allowed us to seek higher productivity in complex manufacturing environments, provided automation for machine tending solutions, and reduced dependencies associated with volatilities from economic and geographic cyclicality. While the Hurco-branded computer control systems have been, and continue to be, our premium flagship product line, we have added other products to our portfolio that provide product diversity and market penetration opportunity in a variety of different industries, and at different price points. We have not changed our overall strategy to design, manufacture, and sell a comprehensive line of computerized machine tools; rather, we have enhanced this strategy through growth both organically and through acquisitions to attain long-term stability and profitability.

During fiscal 2021, our sales and service fees were $235.2 million, an increase of $64.6 million, or 38%, compared to fiscal 2020 and included a favorable currency impact of $7.7 million, or 5%, when translating foreign sales to U.S. dollars for financial reporting purposes. For fiscal 2021, Hurco reported net income of $6.8 million, or $1.01 per diluted share, compared to a net loss of $6.2 million, or $(0.93) per diluted share, for fiscal 2020. During fiscal 2021, sales increased year-over-year for all product brands and in all regions as countries began to lift the government-mandated COVID-19 stay-at-home orders or other similar operating restrictions put in place in fiscal 2020. The net loss for fiscal 2020 included a one-time $4.9 million non-cash goodwill impairment charge attributable primarily to the then prolonged ongoing uncertainty in the global markets due to the COVID-19 pandemic.

Fiscal 2021 Leadership Transitions and Management Succession Planning

In March 2021, we announced that, in connection with our long-term succession planning strategy, Michael Doar would transition from the role of CEO to the position of Executive Chairman. In that capacity, Mr. Doar has continued to serve as an executive officer and director of the Company and has focused on growth and acquisition plans; corporate governance and sustainability; board development and engagement; managerial succession planning; and other high-level strategic initiatives. In connection with Mr. Doar’s transition to Executive Chairman, the Board appointed Gregory S. Volovic (then President and Chief Operating Officer) as the Company’s President and CEO.

Also in March 2021, the Board appointed HaiQuynh Jamison as the Company’s Corporate Controller. In that capacity, Ms. Jamison has since served as our principal accounting officer. At that time, we also announced that Jonathon D. Wright, then the Company’s General Counsel and Assistant Secretary, had been appointed General Counsel and Corporate Secretary. Ms. McClelland, who was the Company’s principal accounting officer and Corporate Secretary immediately prior to such appointments, has continued to serve in her roles as Executive Vice President, Treasurer, and CFO.

Because Ms. Jamison and Mr. Wright did not become executive officers until March 2021, for fiscal year 2021, they participated in a non-named executive officer compensation program for other managerial and key employees of the Company. Ms. Jamison and Mr. Wright will participate in the Company’s named executive officer executive compensation program for fiscal year 2022. See “Compensation Decisions for Fiscal Year 2022.”

The Committee did not make any base salary adjustments in March 2021 in connection with the leadership and role changes described above. As discussed further below under “Compensation Decisions for Fiscal 2021 – Base Salaries,” the Committee established new annual base salaries for the named executive officers that became effective in late May 2021, following a reassessment of business and macroeconomic conditions in relation to the pandemic. In connection with its determination of base salary adjustments for fiscal 2022, the Committee considered the market competitive ranges for the new respective roles and responsibilities of Mr. Volovic, Mr. Doar, Ms. Jamison, and Mr. Wright, as well as other factors, as described below under “Compensation Decisions for Fiscal 2022 – Base Salaries.”

We believe the overall construct of our executive compensation programs and practices, in addition to strong management and internal communication, have contributed to the ability to have successful internal succession planning over the past year.

Alignment of Executive Pay-for-Performance

The compensation program for our named executive officers is designed to provide competitive pay opportunities while aligning the incentive compensation realized by our named executive officers with the interests of our shareholders – by linking pay with Company and stock performance. The Committee regularly reviews the alignment of the Company’s performance with its compensation to named executive officers and annually engages its independent compensation consultant to provide reports comparing such alignment to that of its peers.

In January 2021, the Committee approved the following four types of incentive compensation opportunities for named executive officers as of that date, which are intended to align their pay with Company and individual performance:

cash award opportunities under the short-term incentive compensation plan based on the Company’s operating income margin for fiscal 2021 and strategic objectives set for fiscal 2021;

restricted shares that vest in equal installments over three years;

performance stock units (“PSUs”) that will be earned based on the Company’s average return on invested capital, or ROIC, for fiscal years 2021 through 2023; and

PSUs that will be earned based on the Company’s total shareholder return, or TSR, relative to companies in the established 2021 peer group, for fiscal years 2021 through 2023.

The incentive compensation realized by our named executive officers (excluding Ms. Jamison and Mr. Wright) related to fiscal year 2021 consisted of:

cash awards earned and paid based on fiscal 2021 operating income margin and achievement of strategic objectives set for certain of the named executive officers for fiscal 2021;

the vesting in 2021 of a portion of the restricted shares granted in fiscal years 2018, 2019 and 2020;

PSUs granted in fiscal 2019 that were earned based on the Company’s average ROIC for fiscal years 2019 through 2021; and

PSUs granted in fiscal 2019 that were earned based on the Company’s TSR performance, relative to companies in the established peer group, for fiscal years 2019 through 2021.

During fiscal 2020 and 2021, the Committee engaged Pay Governance, LLC (“Pay Governance”), its independent compensation consultant, to assess whether pay and performance were aligned for our CEO over the immediately preceding three-year and five-year fiscal periods. The Committee believes realizable pay-for-performance assessments provide the Committee and investors an alternative view of pay-for-performance alignment based on compensation actually earned relative to actual Company performance. The assessments considered our CEO’s “total realizable compensation” (as defined below), as well as certain key Company performance metrics, relative to those of our peer group.

“Total realizable compensation” is defined as (1) base salary paid over the period; (2) actual bonus earned and paid during the period; (3) the aggregate current value of restricted stock or restricted stock unit grants made during the period; (4) the aggregate in-the-money value of stock option grants made during the period; (5) the actual payouts of performance-based equity awards with performance periods beginning and ending during the period; and (6) the estimated payout for performance-based equity awards that were granted during the period but remained unvested at its conclusion. Total realizable compensation for our CEO was calculated in the same manner as for the CEOs of our peer group companies.

In defining the Company’s performance relative to peers, the assessments used the following indicators: (1) operating income margin – a measure of profitability used in the Company’s annual incentive plan; (2) ROIC – a measure of capital efficiency used in the Company’s long-term incentive plan; and (3) TSR – a measure of shareholder value creation used in the Company’s long-term incentive plan. In developing a composite performance ranking, the assessments average the Company’s percentile rank for each performance metric relative to its peer group for compensation purposes based on their most recent fiscal year-end.

The result of the assessments indicated that (1) our CEO’s three-year total realizable compensation for fiscal years 2018 through 2020 was positioned at the 47^th percentile of our peer group, which was strongly aligned with Hurco’s composite performance over the same period, which ranked at the 37^th percentile; and (2) our CEO’s five-year total realizable compensation for fiscal years 2016 through 2020 was positioned at the 51^st percentile, which is strongly aligned with Hurco’s composite performance over the same period, which ranked at the 43^rd percentile.

Based on the results of the above-referenced realizable pay-for-performance assessments, the Committee believes the Company’s executive compensation program continues to have a strong pay-for-performance orientation, namely attributable to setting rigorous financial performance goals within the annual and long-term plans; using incentive metrics that align with shareholder value creation; and using a pay mix that is largely focused on variable compensation remaining at risk based on Company performance.

Alignment of Current Executive Pay-for-Performance and Impact of the COVID-19 Pandemic

During fiscal 2020, the Company experienced reduced demand resulting from extraordinary uncertainty associated with the COVID-19 pandemic, including business disruptions from government-mandated stay-at-home or shelter orders in many of the largest machine tool markets in the world. Despite the Company’s ability to achieve certain strategic objectives and maintain a strong balance sheet during this period – improving its cash position, supporting global operations, executing a stock repurchase program, and continuing its cash dividend program, all without incurring indebtedness – the reduced demand and changes in the business macroenvironment had a negative impact on the Company’s fiscal 2020 financial performance.

The Committee believes that the impact to compensation realized by the named executive officers during this period also indicates a strong pay-for-performance alignment between the Company’s executive compensation program and Company performance. More specifically, as further described in “Compensation Decisions for Fiscal 2021” below and the Company’s proxy statement for its 2021 Annual Meeting of Shareholders, the Committee recognized the following impacts to executive pay based, at least in part, upon the Company’s fiscal 2020 and 2021 performance: (1) delayed increases in base salaries for named executive officers for fiscal 2021; (2) no bonuses payable to the named executive officers under their 2020 short-term incentive compensation arrangements and/or under the non-named executive officer discretionary bonus program, as applicable, despite their attainment of certain strategic objectives – some previously-established as part of the short-term incentive compensation arrangement and others critically important that were established during the year as a result of extremely challenging business, political, and public health environments; (3) no PSUs – TSR or PSUs – ROIC payable to the named executive officers under their respective 2018 long-term incentive compensation arrangements for the three-year performance period ending October 31, 2020, even though that performance period also included a record revenue year and two years of historically high earnings per share; (4) a decrease of approximately 33% in the 2021 grant value of the CEO’s total long-term incentive award; and (5) no PSUs – TSR or PSUs – ROIC payable to the named executive officers under their respective 2019 long-term incentive compensation arrangements for the three-year performance period ending October 31, 2021. The Committee also recognized that these impacts on executive pay are likely amplified by the fact that (1) the named executive officers’ base salary is positioned at or slightly below market, based on assessments conducted by its independent compensation consultant, and (2) a large percentage of the named executive officers’ total target compensation is both at-risk and performance-based. See “Compensation Decisions for Fiscal 2021” for further information.

Consideration of Say-on-Pay Votes

From 2014 through 2019, votes cast in favor of the Company’s annual say-on-pay vote ranged from 97% to 99%. Although the 81% approval rating received in 2020 was a notable decrease from historical approval levels, after a careful evaluation of our compensation policies and practices with the Company’s independent consultant, the Committee determined that our overall executive compensation program structure was generally aligned with prevailing market practices and met shareholders’ expectations. Nevertheless, in consideration of the extraordinary challenges presented by the COVID-19 pandemic, the continually evolving roles and responsibilities of the senior executive team, and the input from management, the Committee made several decisions regarding executive compensation for fiscal 2020 and 2021 to manage overall program costs during that unprecedented time. Please see the section below titled “Compensation Decisions for Fiscal 2021.” The Compensation Committee believes that at least partially in response to those actions, and based upon the shareholders’ assessment of our executive compensation program at the time, approximately 99% of the votes cast on the annual say-on-pay vote at our 2021 Annual Meeting of Shareholders were voted to approve the proposal. Based on the foregoing, the Compensation Committee continues to believe that our executive compensation program is well aligned with prevailing market practices and meets shareholders’ expectations.

Elements of Compensation

The compensation package under our named executive officer compensation program consists primarily of a base salary, short-term incentive compensation, and long-term incentive compensation. As part of the Committee’s continuous effort to strengthen the executive compensation program, the Committee annually engages its independent compensation consultant, Pay Governance, to conduct a competitive market assessment for each executive position using publicly-available data from the Company’s applicable peer group and executive compensation surveys. In addition, the Committee’s compensation consultant also provides reports and assessments on changes in executive compensation programs, generally, and executive compensation within comparable industries, specifically, to evaluate trends and recommend changes to better align our executive compensation programs with similarly situated companies in comparable industries. The assessment focuses on the competitiveness of compensation delivered to each executive by compensation element (base salary, target annual incentive, target total cash compensation, expected value of long-term incentives, and target total direct compensation). The objectives of the assessment are to understand changes in market compensation from year to year, to analyze the competitiveness of current pay levels relative to the market, and to serve as an input for making compensation adjustments if necessary.

The charts below display the total compensation mix, based on actual compensation for fiscal 2021, for Mr. Volovic, Mr. Doar, and Ms. McClelland, the named executive officers that participated in our named executive officer compensation program for fiscal 2021. The chart on the left summarizes the breakdown of total compensation for these named executive officers fiscal 2021 among base salary, short-term incentive compensation, and long-term incentive compensation. The chart on the right summarizes the allocation of compensation mix for these named executive officers based upon fixed, time-based, and performance-based compensation for fiscal 2021. Historically, base salary has been targeted at approximately 25% of total compensation and the remaining 75% of compensation has been tied to short-term and long-term performance metrics, such as operating margin, total shareholder return, return on invested capital, or time-based vesting awards.

2021 Executive Compensation Mix

Base Salaries. Our industry is highly cyclical, and we believe that offering competitive base salaries is a key factor in attracting and retaining talent, particularly since our program places a significant proportion of executive compensation at-risk and tied to company performance. In deciding on the appropriate base salary for each named executive officer, the Committee takes into consideration the results of the most recent competitive market assessment, as well as the individual’s performance, his or her roles and responsibilities, related experience in those roles, and long-term executive succession planning strategies.

Short-Term Incentive Compensation. For the fiscal 2021 short-term incentive compensation arrangement, pursuant to the Hurco Companies, Inc. Cash Incentive Plan (“Cash Incentive Plan”), which was approved by shareholders at our 2016 Annual Meeting of Shareholders, the Committee selected the applicable performance measures, specified the performance goals based on those performance measures, and specified the method for calculating the amount payable to named executive officers if the performance goals are satisfied. Like the 2020 short-term incentive compensation plan, the 2021 arrangement provides for cash incentives tied to the achievement of targets for objective performance measures that are based on our fiscal 2021 operating income margin and certain strategic objectives for each participating named executive officer. The Committee determined to maintain operating income margin and strategic objectives as the performance measures for the short-term incentive compensation arrangement for fiscal 2022 under the Cash Incentive Plan, since the Committee believes those performance measures appropriately align executive compensation with Company and individual performance. See “Compensation Decisions for Fiscal 2022.”

Long-Term Incentive Compensation. The Company has a shareholder-approved plan that permits the Committee to grant several types of equity-based awards. The Committee believes that equity-based awards that include certain vesting requirements provide our executive officers with an ownership stake in the Company and promote executive retention. The Committee also believes that grants of restricted shares are an effective means to align the interests of executives more closely with those of our shareholders and that grants of PSUs directly link executive compensation with company performance. In fiscal 2021, the Committee awarded a combination of restricted shares and PSUs to the named executive officers participating in the named executive officer compensation program at that time, which have a three-year vesting or performance period, respectively. The Committee determined to also maintain the same general structure and metrics for the long-term incentive compensation awards for fiscal 2022. See “Compensation Decisions for Fiscal 2022.”

Stock Ownership Guidelines. Our Corporate Governance Principles include stock ownership guidelines for our executive officers and independent directors. The Committee is responsible for interpreting and reviewing compliance with the stock ownership guidelines as they relate to the executive officers. The Committee believes that the executive stock ownership guidelines align executives’ interests with those of shareholders through equity-based incentives and stock ownership guidelines that facilitate a culture of ownership. The guidelines provide that the executive officers are expected to acquire and maintain ownership of shares of our common stock (including unvested restricted stock awards) having an aggregate market value that is at least equal to five times annual base salary for the CEO, three times annual base salary for the President, if separate from the CEO role, and two times annual base salary for the CFO and other executive officers. The executive officers are expected to retain ownership of all net shares (shares of common stock acquired as a result of the exercise or vesting of equity incentive awards granted, reduced by any shares sold, tendered, or retained to pay exercise price or tax withholding requirements related to such awards) acquired with respect to awards granted under the Company’s equity incentive plans, until the requisite ownership has been achieved. If an executive officer fails to comply with the guidelines, the Committee may determine that such person is not eligible for awards under the Company’s equity incentive plan until such time as he or she is in compliance. Any shares of stock subject to pledges or security interests will not be considered as owned in determining compliance with the stock ownership guidelines.

Hedging Prohibitions. Our Corporate Governance Principles prohibit our executive officers and directors from hedging the economic risk of ownership of our common stock. More specifically, our Corporate Governance Principles contain the following prohibition against hedging and derivative transactions related to the Company’s securities:

“Transactions in derivative securities may reflect a short-term and speculative interest in the Company’s securities and may create the appearance of impropriety, even where a transaction does not involve trading on inside information. Trading in derivatives may also focus attention on short-term performance at the expense of the Company’s long-term objectives. In addition, the application of securities laws to derivatives transactions can be complex, and persons engaging in derivatives transactions run an increased risk of violating securities laws. As a result, the Company’s directors and executive officers are prohibited from engaging in transactions in publicly-traded options, such as puts and calls, collars, and other derivative securities with respect to the Company’s securities. This prohibition also extends to any hedging or similar transaction designated to decrease the risks associated with holding Company securities including ‘zero cost collars,’ variable prepaid forward contracts, equity swaps and exchange funds. Stock options, stock appreciation rights, other securities issued pursuant to a Company equity incentive plans or other compensatory arrangements with the Company, and broad-based index options, futures or baskets are not subject to this prohibition.”

Our Corporate Governance Principles can be accessed through our website at: www.hurco.com/investors under “Corporate Governance.”

Medical, Disability and Life Insurance. All full-time employees, including the named executive officers, are eligible to participate in insurance benefits coverage to help manage the financial impact of ill health, disability, and death. In addition, our named executive officers are provided supplemental disability benefits, and our Executive Chairman is also provided a split-dollar life insurance benefit.

Retirement Benefits. We sponsor a 401(k) plan in which all full-time employees are eligible to participate. The purpose of the plan is to provide an incentive for employees to save for their retirement income needs and to assist in our attraction and retention of employees. Our named executive officers participate in the 401(k) plan on the same basis as other eligible employees. We currently match 100% of the first 6% of a participant’s annual earnings that he or she contributes, up to the maximum permitted by law. We also maintain a deferred compensation program in which our named executive officers and other senior management employees may voluntarily participate. For additional information regarding the deferred compensation program, see “Nonqualified Deferred Compensation.”

Perquisites. The Committee believes that, even though the level of perquisites provided to the named executive officers is relatively minimal, perquisites are an integral component in establishing the competitiveness of our overall compensation program. Perquisites offered to the named executive officers include the use of company leased vehicles. For additional information regarding perquisites, see “Tabular Compensation Information.”

Employment Agreements

We have employment agreements with the following named executive officers: Mr. Doar, Ms. McClelland, and Mr. Volovic. Information regarding these employment agreements is found in this section under the heading “Employment Agreements” on page 48. Under the heading “Potential Payments upon Termination” on page 50, we also estimate the benefits that we would have paid to our named executive officers if their employment had terminated on October 31, 2021, under various scenarios.

The Committee believes that these agreements are an important part of the overall compensation arrangements for the executives by helping to secure for us the continued employment and dedication of the executives (as well as certain noncompetition and other restrictive covenants), while simultaneously providing a reasonable amount of assurance of continued employment to them.

Compensation Decisions for Fiscal 2021

Details of the compensation payable to the named executive officers for fiscal 2021 are disclosed in the tables and related discussion that follow this Compensation Discussion and Analysis.

Base Salaries. On November 12, 2020, employing the methodology described above under “Elements of Compensation,” the Committee considered whether the annual base salaries for the named executive officers as of such date should be adjusted for fiscal 2021. In light of the difficult business macroenvironment resulting from the COVID-19 pandemic, and based upon input from the named executive officers, the Committee determined not to initially implement base salary increases for the named executive officers in January 2021. Rather, at that time, the Committee maintained the executive officers’ fiscal 2020 base salaries and deferred any decision on potential executive officer base salary increases until such time as company performance and the business macroenvironment began to normalize.

As the Company’s financial performance began to rebound in fiscal 2021 when government-mandated stay-at-home orders or similar operational restrictions associated with the COVID-19 pandemic began to be lifted, the Committee periodically reassessed potential base salary increases for the named executive officers. In the third quarter of fiscal 2021, employing the methodology described above under “Elements of Compensation,” the Committee established new annual base salaries for the named executive officers for the balance of fiscal 2021, which became effective in late May 2021. Ms. Jamison and Mr. Wright each received a salary increase of approximately 3%, the average merit increase for all U.S.-based employees of the Company. Mr. Volovic and Ms. McClelland received an approximately 10% and 5% salary increase, respectively, which took into account their performance during fiscal 2020 and to-date in fiscal 2021. Mr. Doar did not receive a base salary increase. The following table sets forth the annual base salary of each of the named executive officers for fiscal 2020 and then as later established by the Committee for fiscal 2021 and effective May 2021 (without retroactive payment for the interim fiscal 2021 period).

Name	2020 Base Salary		2021 Base Salary		Percentage Increase
Gregory S. Volovic	$	417,150	$	458,865		10	%
Michael Doar	$	509,850	$	509,850		0	%
Sonja K. McClelland	$	360,500	$	378,525		5	%
HaiQuynh Jamison	$	158,000	$	162,740		3	%
Jonathon D. Wright	$	168,684	$	173,744		3	%

Short-Term Incentive Compensation. On January 5, 2021, the Committee, pursuant to the Cash Incentive Plan, selected the applicable performance measures, specified the performance goals based on those performance measures, and specified the method for calculating the amount payable to named executive officers as of such date, if and to the extent the performance goals were satisfied. Similar to fiscal 2020, for fiscal 2021, the Committee selected operating income margin and certain strategic objectives for the named executive officers as the performance measures, which are among the performance measures set forth in the Cash Incentive Plan.

The performance goals related to our fiscal 2021 operating income margin and certain strategic objectives for the participating named executive officers and payouts were based on the relative weightings set forth below:

Name	Performance Metric	Weighting
Gregory S. Volovic	Operating Income Margin Strategic Objectives	70% 30%
Michael Doar	Operating Income Margin Strategic Objectives	70% 30%
Sonja K. McClelland	Operating Income Margin Strategic Objectives	70% 30%

Operating income margin was chosen as the primary performance metric because the Committee believes it continues to most directly correlate to our executives’ performance. An executive could earn a short-term incentive award due to success in achieving individual strategic objectives, even if performance fell below threshold on the operating income margin; however, the weighting of the two performance metrics encourages decisions that should benefit our overall profitability. Further, the Committee provided that if the fiscal 2021 operating income margin was zero or negative, then no amounts would be paid under the 2021 short-term incentive arrangement, even if all or a portion of the performance goals under the strategic objectives component were attained. Participants had the ability to earn between 50% of target for achieving threshold performance and 200% of target for achieving maximum performance for each metric.

In January 2021, the Committee established the following payout levels that would be associated with the degree to which the operating income margin was attained for fiscal 2021:

Operating Income Margin	Threshold			Target			Exceeds			Maximum
Actual Results		3	%		6	%		8	%		10	%
Percentage Payout Level		50	%		100	%		150	%		200	%

Payout levels interpolated for results between 3% and 6%, 6% and 8%, and 8% and 10%

In reaching its decision with respect to setting operating margin threshold, target, exceeds, and maximum levels as set forth above, the Committee took into consideration the impact of COVID-19 on the Company’s business; the Company’s current projections, business plan, and strategic plan (as affected by the impact of COVID-19); the negative operating profit recorded by the Company in recent periods; the desire to motivate and incentivize the named executive officers to perform and return the Company to profitability; and similar permissible factors.

In January 2021, the Committee also approved the strategic objectives set for each participating named executive officer and the associated payout levels for fiscal 2021. Participants had the ability to earn between 50% and 200% of the target amount based on the overall achievement of the applicable 2021 strategic objectives set for each participant. The strategic objectives approved by the Committee for each of the participating named executive officers and the related performance categories, were as follows:

	Performance Categories	Objective
Gregory S. Volovic	Strategic Initiatives/Market Share	Assess and implement management and organizational changes to increase market share of newly-acquired entities.
	Strategic Initiatives/Profit Improvement	Expand/improve worldwide sales and manufacturing operations.
	Research & Development	Commercialize automation and robotics capabilities; develop new software features and new machine tool products.
	Strategic Initiatives	Identify and pursue next generation machine tool designs and advanced control platform for future generation product release.
	Succession Plan/Next Generation Leadership	Update succession plan/ recommend actions /identify risks/communicate developmental activities.
	Strategic Initiatives/Market Share/Product Development	Evaluate acquisition opportunities (domestic and foreign) to accelerate growth of geographic market share and/or product development.
Michael Doar	Strategic Initiatives/Asset Management/Profit Improvement	Execute 2021 business plan.
	Strategic Initiatives/Liquidity/ Profit Improvement	Balance growth in market with return to profitability and sustained strength of balance sheet/cashflow.
	Board Governance	Assist in the evaluation of members for standing committees.
	Investor Relations	Shareholder outreach.
	Strategic Initiatives	Evaluate executive leadership and board leadership changes during 2021.
	Strategic Initiatives/Market Share/Product Development	Evaluate acquisition opportunities (domestic and foreign) to accelerate growth of geographic market share and/or product development.
Sonja K. McClelland	Strategic Initiatives/Profit Improvement	Execute 2021 business plan sales and production.
	Asset Management/Profit Improvement/Cost Reduction	Execute the annual business plan initiatives for profitability and return on corporate assets. Execute 2021 targeted return on invested capital and total shareholder return.
	Strategic Initiatives/Liquidity	Extend term of current global credit facilities (from 1-2 years) and execute financing as needed for capital allocation plans for 2021. Sustain improvement in cashflows.
	Cost Reduction/Profit Improvement	Assess ongoing cost containment initiatives to continue improved profitability in line with strategic plan.
	Strategic Initiatives/Market Share/Product Development	Evaluate acquisition opportunities (domestic and foreign) to accelerate growth of geographic market share and/or product development.

In January 2021, the Committee also established the target percentage by which the base salary of each named executive officer paid during fiscal 2021 would be multiplied in order to determine the dollar amount that would be multiplied by the weighted-average percentage payout level applicable to each named executive officer following determination of such based on actual performance. The target amount for each named executive officer is set forth below:

Name	Target Amount of 2021 Base Salary
Gregory S. Volovic		85	%
Michael Doar		100	%
Sonja K. McClelland		75	%

On January 4, 2022, the Committee determined the degree to which the operating income margin metric and the strategic objectives for fiscal 2021 were attained, and the resulting payout level relative to the target amount for each metric. For fiscal 2021, the Company achieved a 4.3% operating income margin and, therefore, the Committee determined that the resulting percentage payout level relative to the target amount for that metric was 71.7%. In determining the potential payout level associated with the above strategic objectives set for fiscal 2021 for each of the named executive officers named above, the Committee assessed the level of achievement of those strategic objectives. As a result, the Committee determined that the resulting percentage payout level relative to the target amount for the strategic objectives was: for Mr. Doar – 100%; for Ms. McClelland – 100%; and for Mr. Volovic – 100%.

The weightings applicable to each of the operating income margin metric and the 2021 strategic objectives metric set forth above for each listed named executive officer were then applied to the percentage payout level for each metric as determined by the Committee, resulting in a weighted-average percentage payout level relative to the target amount for each such executive. The weighted-average percentage payout level applicable to each listed named executive officer was then multiplied by his or her target amount of fiscal 2021 base salary listed above.

The following table sets forth the total short-term incentive compensation amounts awarded to each named executive officer related to fiscal 2021:

Name	Operating Income Margin		Strategic Objectives		Total Short-Term Compensation
Gregory S. Volovic	$	195,759	$	117,011	$	312,770
Michael Doar	$	255,894	$	152,955	$	408,849
Sonja K. McClelland	$	142,487	$	85,168	$	227,655

Ms. Jamison and Mr. Wright were awarded discretionary cash bonuses under the Company’s non-named executive officer discretionary cash bonus program related to fiscal 2021 performance. Because Ms. Jamison and Mr. Wright were not executive officers at the time the fiscal 2021 short-term incentive compensation parameters for executive officers was established, they did not participate in that arrangement for fiscal 2021.

Long-Term Incentive Compensation.

Earned PSU Awards for Fiscal 2019-2021. On January 4, 2022, the Committee also determined the degree to which the long-term incentive compensation arrangement approved for the fiscal 2019-2021 performance period was attained, and the resulting payout level relative to the target amount for each metric.

The performance and payout standards for the PSUs – TSR for the fiscal 2019-2021 performance period that were established by the Committee in 2019 are set forth immediately below:

PSUs – TSR	Threshold	Target	Maximum
Performance Range	30^th Percentile	55^th Percentile	90^th Percentile
Payout Range	50% of Target Shares	100% of Target Shares	200% of Target Shares

Awards will be interpolated for results between the 30^th and 55^th percentiles and the 55^th and 90^th percentiles

For fiscal years 2019 through 2021, the Company’s total shareholder return performance over the three-year period of (21.2)% is positioned below the 30th percentile TSR of (5.7)%, relative to the total shareholder return of the companies in our 2019 peer group. As such and based on the applicable performance and payout standards noted above, the Committee determined that the resulting percentage payout level relative to the target amount for the fiscal 2019-2021 PSUs – TSR was zero.

The performance and payout standards for the PSUs – ROIC for the fiscal 2019-2021 performance period that were established by the Committee in 2019 are set forth immediately below.

PSUs – ROIC	Threshold	Target	Maximum
Average ROIC	7%	9%	13%
Payout Range	50% of Target Shares	100% of Target Shares	200% of Target Shares

Awards will be interpolated for results between 7% and 9% and 9% and 13%

As calculated under our 2019 long-term incentive compensation arrangement, the Company’s average ROIC for fiscal years 2019 through 2021 was 2.6 %. As such and based on the applicable performance and payout standards noted above, the Committee determined that the resulting percentage payout level relative to the target amount for the fiscal 2019-2021 PSUs – ROIC was zero.

Restricted Share and PSU Awards for Fiscal 2021-2023. On January 5, 2021, the Committee approved a long-term incentive compensation arrangement for the named executive officers as of such date in the form of restricted shares and PSUs awarded under the Hurco Companies, Inc. 2016 Equity Incentive Plan (the “2016 Plan”). The awards were weighted as approximately 25% time-based vesting (in equal installments over three years) and approximately 75% performance-based vesting (at the end of a three-year period, to the extent performance metrics are satisfied). The three-year performance period for those awards is fiscal 2021 through fiscal 2023.

The Committee granted the awards of restricted shares and target number of PSUs to the following named executive officers effective as of January 5, 2021, as follows:

Name	Restricted Shares		PSUs – TSR		PSUs – ROIC
Gregory S. Volovic		7,867		13,313		11,014
Michael Doar		8,741		14,792		12,238
Sonja K. McClelland		6,556		11,094		9,178

The PSUs designated as “PSUs – TSR” were weighted as approximately 40% of the overall long-term incentive compensation arrangement and will vest and be paid based on our total shareholder return over the three-year period, relative to the total shareholder return over that period of the companies in our peer group. The companies comprising the peer group for the purposes of this award are the same as the companies comprising the peer group utilized for fiscal 2021 executive compensation determinations described below under “The Committee’s Processes and Analyses – Use of Peer Group Data.” Participants will have the ability to earn between 50% of the target number of PSUs for achieving threshold performance and 200% of the target number of PSUs for achieving maximum performance. The performance and payout standards for the PSUs – TSR are as follows:

PSUs – TSR	Threshold	Target	Maximum
Performance Range	30^th Percentile	55^th Percentile	90^th Percentile
Payout Range	50% of Target Shares	100% of Target Shares	200% of Target Shares

Awards will be interpolated for results between the 30^th and 55^th percentiles and the 55^th and 90^th percentiles

The PSUs designated as “PSUs – ROIC” were weighted as approximately 35% of the overall long-term incentive compensation arrangement and will vest and be paid based on the achievement of pre-established goals related to our average ROIC over the three-year period. Average ROIC may be hereafter adjusted by the Committee to exclude the effects of unanticipated material transactions or events such as acquisitions, divestitures, accounting changes, restructurings, and special charges or gains (determined according to objective criteria established by the Committee). Participants will have the ability to earn between 50% of the target number of PSUs for achieving threshold performance and 200% of the target number of PSUs for achieving maximum performance. The performance and payout standards for the PSUs – ROIC are as follows:

PSUs – ROIC	Threshold	Target	Maximum
Average ROIC	4%	6%	12%
Payout Range	50% of Target Shares	100% of Target Shares	200% of Target Shares

Awards will be interpolated for results between 4% and 6% and 6% and 12%

From time to time, the Committee reassesses the threshold, target, and maximum performance levels relating to newly-granted performance-based awards. In reaching its decision to adjust such thresholds, targets, or maximum performance levels, the Committee considers a number of factors, including, among others: (1) the impact of recent acquisitions on the overall product portfolio and strategy of the Company, including entry into more price-competitive and lower-margin product and/or brand categories; (2) whether historical experience or payout levels indicate that the previously established threshold, target, or maximum payout levels may have been too high or too low to accomplish the compensation program’s objectives; (3) the disproportionate impact a year with low or negative financial performance can have on the average over a three-year performance period, particularly in a highly-cyclical industry or market and in light of COVID-19’s impact on the Company’s business; (4) recruitment and retention of a skilled and experienced management team; (5) the review of other market practices and peer group information in the executive compensation context; and (6) an assessment of other macroeconomic factors and indicators with a high probability of impacting our business. Based on the factors described above, and as disclosed in our Proxy Statement for our 2021 Annual Meeting of Shareholders, in January 2020, Committee reduced the threshold and target payout levels for PSUs – ROIC subject to a performance period of fiscal years 2020 through 2022 from 7% and 9%, to 6% and 8%, respectively. Similarly, based on the factors described above, in January 2021, the Committee determined to reduce the threshold and target levels for PSUs – ROIC subject to a performance period of fiscal years 2021 through 2023 from 6% and 8%, to 4%, 6%, respectively. In doing so, the Committee determined that an appropriate adjustment should be made to reflect the fact that it would likely take some period of time for our business to normalize after experiencing significant impact from the COVID-19 pandemic and that any interim normalization period would present a significant drag on one-year performance and a three-year ROIC average. The Committee also considered the Company’s strategic plan and the importance of incentivizing a senior executive team during performance periods containing interim periods with a challenging business environment. However, in each such case, the Committee decided to retain the maximum performance payout level for the above-referenced PSUs – ROIC awards, to both incentivize significant and quick improvement in the Company’s return on invested capital metrics and to manage program costs in the event business conditions normalized more quickly than anticipated.

Because Ms. Jamison and Mr. Wright were not executive officers in January 2021 when the restricted shares and PSUs described above were granted to our executive officers, they did not receive such grants. However, Ms. Jamison and Mr. Wright each received 682 restricted shares in November 2020 as part of the fiscal 2021 annual equity grants to key employees, which restricted shares vest in thirds on each of the first three anniversaries of the date of grant.

Compensation Decisions for Fiscal 2022

Base Salaries. On November 10, 2021, employing the methodology described above under “Elements of Compensation,” the Committee established annual base salaries for all of our named executive officers for fiscal 2022, to become effective January 2022. The salary increases of Ms. Jamison of approximately 23% and of Mr. Wright of approximately 32% were intended to bring their salaries more in line with market competitive ranges for their new respective roles and responsibilities. Similarly, the salary increase for Mr. Volovic was approximately 24% and intended to bring his base salary more in line with a market competitive range for his new role and responsibilities as CEO. The salary increase for Ms. McClelland was approximately 3% and was in line with the average merit increase received by all U.S.-based Company employees. The salary decrease for Mr. Doar was approximately 8% and was intended to bring his base salary more in line with a market competitive range for his new role as Executive Chairman.

The following table sets forth the annual base salary of each of the named executive officers for 2021 and the annual base salary established by the Committee for each of those officers for 2022, as well as the percentage increase between the two years:

Name	2021 Base Salary		2022 Base Salary		Percentage Increase (Decrease)
Gregory S. Volovic	$	458,865	$	569,000		24	%
Michael Doar	$	509,850	$	469,000		(8	)%
Sonja K. McClelland	$	378,525	$	390,000		3	%
HaiQuynh Jamison	$	162,740	$	200,000		23	%
Jonathon D. Wright	$	173,744	$	230,000		32	%

Short-Term Incentive Compensation. On January 4, 2022, pursuant to the Cash Incentive Plan, the Committee approved the short-term incentive compensation arrangement for fiscal 2022 for all named executive officers, with payout to occur thereunder in January 2023, if and to the extent the performance goals are attained during fiscal 2022. Similar to fiscal 2021, the Committee selected operating income margin and certain strategic objectives for the named executive officers as the performance measures, which are among the performance measures set forth in the Cash Incentive Plan. While the Committee decided to maintain the performance measures for the short-term incentive compensation arrangement, the Committee also reassessed the required performance levels for operating income margin that it established for fiscal 2022. Many factors are considered when these levels are set, including the short and long-term strategic plan objectives that weight the importance of factors such as the impact of recently completed acquisitions, research and development of new products, market penetration into new and sometimes price-competitive markets, diversification of products to include entry-level, mid-range, and premium products, and continued growth of the existing markets and product lines - all of which can significantly impact the level of operating income the Company achieves from year to year.

Following the end of fiscal 2022, the Committee will determine the degree to which the operating income margin goal and the strategic objectives were attained, and the resulting payout level relative to the target amount for each metric. The Committee retains the discretion to adjust downward, but not upward, the amount of compensation that would otherwise be payable under the 2022 short-term incentive compensation arrangement.

Long-Term Incentive Compensation. Similar to the 2022 short-term incentive compensation arrangement, the Committee selected the same performance metrics for the fiscal 2022 long-term incentive compensation arrangements, as compared to fiscal 2021 (i.e., relative TSR and ROIC). Therefore, effective January 4, 2022, the Committee granted the awards below of restricted shares and target number of PSUs to each of the named executive officers. The restricted shares will vest in equal installments over three years and the three-year performance period for the PSUs will be fiscal 2022 through fiscal 2024.

Name	Restricted Shares		PSUs – TSR		PSUs – ROIC
Gregory S. Volovic		8,225		12,001		11,517
Michael Doar		7,404		10,801		10,365
Sonja K. McClelland		6,169		9,001		8,637
HaiQuynh Jamison		822		1,200		1,151
Jonathon D. Wright		822		1,200		1,151

The companies comprising the peer group for the purposes of this award are the companies comprising the 2022 peer group described below under “The Committee’s Processes and Analyses – Use of Peer Group Data.” The performance and payout standards for the PSUs – TSR are as follows:

PSUs - TSR	Threshold	Target	Maximum
Performance Range	30^th Percentile	55^th Percentile	90^th Percentile
Payout Range	50% of Target Shares	100% of Target Shares	200% of Target Shares

Awards will be interpolated for results between the 30^th and 55^th and 55^th and 90^th percentiles

The PSUs designated as “PSUs – ROIC” were weighted as approximately 35% of the overall long-term incentive compensation arrangement and will vest and be paid based on the achievement of pre-established goals related to our average ROIC over the three-year period. Average ROIC may be hereafter adjusted by the Committee to exclude the effects of unanticipated material transactions or events such as acquisitions, divestitures, accounting changes, restructurings, and special charges or gains (determined according to objective criteria established by the Committee). Participants will have the ability to earn between 50% of the target number of shares for achieving threshold performance and 200% of the target number of shares for achieving maximum performance.

From time to time, the Committee reassesses the threshold, target, and maximum performance levels for ROIC that the Committee establishes for a three-year performance period. Many factors are considered when these levels are set, including long-term strategic plan objectives that weight the importance of factors such as the impact of recently completed acquisitions, research and development of new products, market penetration into new and sometimes price-competitive markets, diversification of products to include entry-level, mid-range, and premium products, continued growth of the existing markets and product lines, anticipated business macroenvironment for certain portions of the performance period with the probability of significantly impacting overall capital market and business conditions - all of which can significantly impact the level of ROIC the Company achieves over a three year period.

The Committee’s Processes and Analyses

Role of Committee and Input from Management. The Committee is responsible for determining our executive compensation philosophy, objectives, policies, and programs and approves or ratifies all compensation-related decisions for the named executive officers. When making executive compensation decisions, the Committee considers the input of Pay Governance and, for all executives other than our CEO and our Executive Chairman, the recommendation of our CEO. Our CEO recommends salary levels, short-term incentive compensation awards, equity-based compensation awards, and perquisites for our other named executive officers other than the Executive Chairman. Our CEO’s and Executive Chairman’s compensation are determined solely by the Committee with the assistance of Pay Governance. The Compensation Committee applies the same principles for executive compensation in determining our CEO’s and Executive Chairman’s compensation that it applies in determining the compensation of our other named executive officers.

Role of Compensation Consultant. In 2020 and 2021, the Committee engaged Pay Governance to advise and assist the Committee related to executive compensation matters. Pay Governance is retained directly by the Committee, reports directly to the Committee, and participates in certain Committee meetings. In this regard, from time to time, Pay Governance advises and assists the Compensation Committee:

·	in determining the appropriate objectives and goals of our executive compensation program;
·	in designing compensation programs that fulfill those objectives and goals;
·	in reviewing the primary components of that compensation;
·	in evaluating the effectiveness of our compensation programs, including pay-for performance alignment;
·	in identifying appropriate pay positioning strategies and pay levels in our executive compensation program; and
·	in identifying comparable companies and compensation surveys for the Committee to use to benchmark the appropriateness and competitiveness of our executive compensation program; and in determining the appropriate share reserve level and other amendments to incorporate into the Amended and Restated Plan.

Pay Governance may, from time to time, contact our executive officers for information necessary to fulfill its assignment and may make reports and presentations to and on behalf of the Committee that our executive officers also receive.

Pay Governance and its affiliates did not provide any other services to us or our affiliates during 2020 or 2021. In addition, the Committee has determined that the work of Pay Governance and its employees has not raised any conflict of interest.

Use of Peer Group Data. With the assistance of Pay Governance, in 2020 and 2021, the Committee approved the composition of a peer group of publicly-traded companies that were selected on the basis of industry, revenue, global operations, employee size, and market capitalization for use in the Committee’s 2021 fiscal year and 2022 fiscal year analyses of executive compensation.

The following companies made up the peer group utilized for fiscal 2021 and fiscal 2022 executive compensation determinations:

· Ampco-Pittsburgh Corporation	· Graham Corporation	· Proto Labs, Inc.
· Broadwind, Inc.	· Helios Technologies	· QAD Inc.
· Douglas Dynamics, Inc.	· IEC Electronics, Corp.	· Transcat, Inc.
· DMC Global Inc.	· Key Tronic Corporation	· Twin Disc, Incorporated
· The Eastern Company	· The L.S. Starrett Company	· UFP Technologies, Inc.
· Energy Recovery, Inc.	· Omega Flex, Inc.	· Vishay Precision Group, Inc.
· FARO Technologies, Inc.	· Onto Innovation Inc.

The Committee uses the peer group data as one of several inputs when making compensation determinations. Periodically, the Committee also reviews trends data for the manufacturing industry from Willis Towers Watson to obtain a general understanding of current compensation practices in that industry as part of its analysis of executive compensation. In addition to the market data, the Committee may consider other factors such as an executive’s individual performance, experience in his or her position and responsibilities that may not necessarily be benchmarked in market data.

Recoupment Policy

Our Corporate Governance Principles contain a compensation recoupment policy. Our Corporate Governance Principles are available on our website at www.hurco.com/investors under “Corporate Governance.” The recoupment policy provides that in the event that the Company restates previously released financial results, the Compensation Committee shall determine whether any incentive compensation (defined as all equity-based and non-equity based compensation, the amount, payment and/or vesting of which was determined based wholly or in part on the value of the Company’s financial results or the achievement of specified performance measures) paid or awarded to executive officers during the three years preceding the restatement should be recovered by the Company. If the Committee determines that the amount of any incentive compensation paid to executive officers (the “Awarded Compensation”) during the three-year period preceding the date of restatement exceeded the amount that would have been paid based on the restated financial results (the “Adjusted Compensation”), and the restatement resulted from the Company’s material noncompliance, due in whole or part to intentional fraud or ethical misconduct, with any financial reporting requirement under the federal securities laws, then the Committee shall determine whether the Company should, except as provided below, recover the after-tax portion of the difference between the Awarded Compensation and the Adjusted Compensation for the affected executive officer.

In making the determination whether the Company should recover any incentive compensation, the Committee will take any appropriate considerations into account, including the role the executive officer played in contributing to the events that caused the restatement, the likelihood of success in recovering the amounts under applicable law, the costs of seeking recovery, and whether the assertion of a claim may prejudice the interests of the Company in any related proceeding or investigation relating to the circumstances giving rise to the restatement.

In addition, the Compensation Committee is monitoring regulatory developments with respect to compensation recoupment policies and will recommend to the Board any changes to the current policy that are necessary or appropriate in light of future SEC guidance.

Tax Considerations

Section 409A of the Internal Revenue Code affects the payments of certain types of deferred compensation to key employees and includes requirements relating to when payments under such arrangements can be made, acceleration of benefits, and timing of elections under such arrangements. Failure to satisfy these requirements will generally lead to an acceleration of the timing for including deferred compensation in an employee’s income, as well as certain penalties and interest. Our nonqualified deferred compensation arrangements are intended to comply with the effective requirements of Section 409A as required by law or regulation.

Report of the Compensation Committee

The information contained in this report shall not be deemed to be “soliciting material,” to be “filed” with the SEC, or to be subject to Regulation 14A or Regulation 14C (other than as provided in Item 407 of Regulation S-K) or to the liabilities of Section 18 of the Exchange Act, and shall not be deemed to be incorporated by reference in future filings with the SEC except to the extent that we specifically incorporate it by reference into a document filed under the Securities Act of 1933, as amended, or the Securities Act, or the Exchange Act.

The Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on that review and those discussions, the Committee recommended to the Board of Directors that this Compensation Discussion and Analysis be included in this proxy statement on Schedule 14A and incorporated by reference in the Company’s Annual Report on Form 10-K for its 2021 fiscal year.

		Timothy J. Gardner, Chairman
		Thomas A. Aaro
		Jay Longbottom

Assessment of Compensation-Related Risks

On an ongoing basis as part of our strategic business planning process, the named executive officers and key senior management conduct an assessment of the current risks arising from our compensation policies and practices. This team reviews and discusses the characteristics and approval policies of compensation programs for all employees, including salaries, equity awards, and cash bonuses, to determine whether any of these policies or programs could create risks that are reasonably likely to have a material adverse effect on us.

In November 2021, we reviewed and discussed all components of our compensation policies and practices with our Board as part of our business plan review and approval process. In addition, the Compensation Committee met separately to review the management team’s assessment of the risks that could arise from our compensation policies and practices. As part of their review, the Compensation Committee specifically considered f

SEC Form DEF 14A filed by Hurco Companies Inc.