UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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| ☒ | Definitive Proxy Statement | ||||
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☐ | Soliciting Material under §240.14a-12 | ||||
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STONERIDGE, INC.
39675 MacKenzie Drive, Suite 400
Novi, Michigan 48377
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
________________
Dear Shareholder:
We invite you to attend our 2025 Annual Meeting of Shareholders (the ‘‘Annual Meeting’’) on Tuesday, May 13, 2025, at 11:00 a.m. (Eastern Time). The Annual Meeting can be accessed on the Internet at www.virtualshareholdermeeting.com/SRI2025. Because the Annual Meeting is virtual and being conducted electronically, shareholders cannot attend the meeting in person.
The purpose of the Annual Meeting is to consider and take action on the following items of business:
(1)To elect seven directors, each for a term of one year;
(2)To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2025;
(3)To vote on an advisory resolution to approve executive compensation;
(4)To vote on a proposal to approve the 2025 Long-Term Incentive Plan; and
(5)To transact such other business as may be properly brought before the Annual Meeting and any postponement or adjournment thereof.
Record Date. Only shareholders at the close of business on March 21, 2025, the record date, are entitled to notice of and to vote at the Annual Meeting.
We urge you to vote your shares on the Internet, by toll-free telephone call or, if you have requested a paper copy of our proxy materials, by signing, dating, and returning the proxy card in the envelope provided.
By order of the Board of Directors,
ROBERT M. LOESCH
Secretary
Dated: April 3, 2025
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 13, 2025:
This Proxy Statement and the Company’s 2024 Annual Report to Shareholders are also available at www.proxyvote.com.
YOUR VOTE IS IMPORTANT. PLEASE VOTE.
2025 Proxy Statement
Table of Contents
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STONERIDGE, INC.
2025 Proxy Statement Summary
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.
We are furnishing to our shareholders these proxy materials, which include this Proxy Statement and our 2024 Annual Report to Shareholders, by providing access to both on the Internet at www.proxyvote.com. On or about April 3, 2025 we began mailing shareholders a Notice Regarding Availability of Proxy Materials (“Notice of Internet Availability”) containing important information, including instructions on how to access the proxy materials online and how to vote your shares over the Internet. If you receive a Notice of Internet Availability, you will not receive a paper or e-mail copy of the proxy materials unless you request one in the manner set forth in the Notice of Internet Availability.
The Board of Directors is soliciting proxies in connection with the 2025 Annual Meeting of Shareholders (the “Annual Meeting”) and encourages you to read the Proxy Statement and vote your shares by Internet, by telephone call, or by mailing your proxy card or voting instruction form.
Stoneridge, Inc. 2025 Annual Meeting Information
| Date and Time: | Tuesday, May 13, 2025, at 11:00 a.m. (Eastern Time) | ||||
| Virtual Meeting: | Access the meeting at www.virtualshareholdermeeting.com/SRI2025 | ||||
| Record Date: | March 21, 2025 | ||||
| Voting: | Shareholders as of the record date are entitled to vote. Each common share is entitled to one vote for each Director nominee and one vote for each of the other proposals presented for a vote. | ||||
Matters to be Considered:
| Management Proposals | Board Vote Recommendation | Page for more information | |||||||||
| 1. | Elect seven directors named in this Proxy Statement | FOR ALL | |||||||||
| 2. | Ratify the appointment of Ernst & Young LLP | FOR | |||||||||
| 3. | Provide advisory vote on executive compensation | FOR | |||||||||
| 4. | Approval of 2025 Long-Term Incentive Plan | FOR | |||||||||
Company Performance
In 2024, Stoneridge specific growth drivers, our continued focus on the execution of our major program launches, continuous improvement in our manufacturing facilities, and structural cost control enabled us to navigate through a challenging macroeconomic environment. Full year 2024 net sales decreased by $67.5 million, or 6.9%, compared to the prior year primarily due to lower volumes from lower customer production in most of our served markets, including the North American automotive and European and North American commercial vehicle end markets. This decline was partially offset by sales in our Electronics segment related to the launches of a European OEM MirrorEye® program and our next generation tachograph.
Operating income (loss) declined by $13.2 million dollars in 2024 compared to the prior year. Lower sales levels adversely affected gross margin contribution, however we were able to mitigate a portion of the adverse impact through material cost improvement and operational improvement throughout our facilities.
Net loss in 2024 increased by $11.3 million compared to the prior year, primarily due to lower contribution from lower sales levels and higher interest expense offset by other income from favorable foreign exchange fluctuations and lower business realignment costs.
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| (in thousands, except earnings per share and share price) | 2024 | 2023 | ||||||
| Net sales | $ | 908,295 | $ | 975,818 | ||||
| Operating income (loss) | $ | (381) | $ | 12,836 | ||||
| Net loss | $ | (16,524) | $ | (5,183) | ||||
Diluted loss per share attributable to Stoneridge, Inc. | $ | (0.60) | $ | (0.19) | ||||
| Share Price at December 31 | $ | 6.27 | $ | 19.57 | ||||
Director Nominees
Below is a summary of the director nominees, who are elected for one-year terms. Additional information about each director nominee and his or her qualifications may be found beginning on page 6.
| Committee Memberships | ||||||||||||||||||||||||||
| Name | Age | Director Since | Primary Occupation | Independent | AC | CC | NCGC | CEC | ||||||||||||||||||
| James Zizelman | 64 | 2023 | President and CEO of Stoneridge, Inc. | |||||||||||||||||||||||
| Ira C. Kaplan | 70 | 2009 | Executive Chairman of Benesch, Friedlander, Coplan & Aronoff LLP | ✔ | ✔ | ✔ | ✔ | |||||||||||||||||||
| Kim Korth | 70 | 2006 | President and CEO of 6th Avenue Group | ✔ | C | ✔ | ||||||||||||||||||||
| William M. Lasky | 77 | 2004 | Retired, Former President and CEO and Board Chair of Accuride Corporation and Former President and CEO and Board Chair of JLG Industries, Inc. | ✔* | ✔ | ✔ | C | |||||||||||||||||||
| Carsten J. Reinhardt | 57 | 2023 | Self-employed business consultant | ✔ | ✔ | ✔ | ||||||||||||||||||||
| Sheila Rutt | 56 | 2023 | Chief Human Resources Officer of Hexion Inc. | ✔ | ✔ | C** | ||||||||||||||||||||
| Frank S. Sklarsky | 68 | 2021 | Retired, Former Executive Vice President and Chief Financial Officer of PPG Industries, Inc. | ✔ | C | ✔ | ||||||||||||||||||||
| AC | Audit Committee | C | Committee Chairperson | |||||||||||
| CC | Compensation Committee | * | Lead Independent Director | |||||||||||
| NCGC | Nominating and Corporate Governance Committee | ** | George S. Mayes, Jr. will continue to serve as CEC Chairperson until the 2025 Annual Meeting. | |||||||||||
| CEC | Compliance and Ethics Committee | |||||||||||||
Ratification of the appointment of Ernst & Young LLP
We are asking our shareholders to ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for the year ending December 31, 2025. For more information, see page 12.
Advisory resolution on executive compensation on the Say-on-Pay vote
We are asking our shareholders to approve, on an advisory basis, the compensation of our Named Executive Officers. For more information, see page 14.
2025 Long-Term Incentive Plan
We are asking our shareholders to approve our 2025 Long-Term Incentive Plan (2025 LTIP) because our current LTIP effectively expires in 2026. We view having a long-term equity incentive program as a fundamental tool to attract and retain top talent. We are requesting 726,000 shares be reserved for issuance pursuant to the 2025 LTIP. For more information, see page 14.
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Executive Compensation Highlights
Our executive compensation program is designed to attract, retain, motivate and reward talented executives who advance our strategic, operational and financial objectives, and thereby enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:
•Attract and retain talented executive officers by providing a compensation package that is competitive with that offered by similarly situated companies;
•Create a compensation structure under which a substantial portion of total compensation is based on achievement of performance goals; and
•Align total compensation with the objectives and strategies of our business and shareholders.
Key elements of our 2024 compensation program were as follows:
•Base Salary. Base salary has been targeted at the 50th percentile of our comparator group.
•Annual Incentive Plan (AIP). The 2024 AIP payouts were based on (i) achieved consolidated and, where appropriate, divisional financial performance against pre-determined performance metrics and (ii) achieved individual performance.
•Long-Term Incentive Plan (LTIP). The 2024 long-term incentive (LTI) target values for each NEO were set at approximately the 50th percentile of our comparator group. The LTI target value was allocated 55% to the grant of performance share units (“Performance Shares”) and 45% to time-based restricted stock units (“RSUs”). The Performance Shares are earned over a three-year performance period based on achievement against the following performance metrics, with the indicated weights noted parenthetically: (i) Total Shareholder Return (“TSR”) relative to a group of peer companies (25%); (ii) earnings per share (“EPS”) relative to annual budget (20%), and (iii); return on invested capital (“ROIC”) relative to annual budget (10%). The RSUs cliff vest at the end of the three-year period.
Corporate Governance Highlights
We believe that good corporate governance is key to achieving long-term shareholder value. We have adopted practices and policies that we believe serve the best interests of the Company and our shareholders, including:
•Eight out of nine directors are independent directors; six out of seven nominees are independent
•Ongoing review of board composition
•Independent Chairman of the Board who serves as the Board’s Lead Independent Director
•Separation of the Chief Executive Officer and Chairman of the Board roles
•Annual Election of all Directors
•Majority voting principle in uncontested director elections
•Independent directors regularly meet in executive session without management
•All Committee members are independent
•Shareholders’ ability to communicate with the Board
•Single class of stock with equal voting rights; one vote per Common Share
•Board establishment of a separate Compliance and Ethics Committee to oversee our Integrity Program
•Robust Integrity Program
•Code of Conduct
•Whistleblower Policy and integrity helpline reporting available in multiple languages
•Corporate Governance Guidelines
•Annual Board and Committee self-evaluations
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•Meaningful stock ownership requirement for senior management and directors
•Annual advisory vote on named executive officer compensation
•Insider Trading and Pre-Clearance Policy, including prohibition against hedging and pledging of Company stock
•Review and approval of related party transactions
•Published our first Sustainability Report
•Adoption of a Modern Slavery Act Statement
•Board and Compliance & Ethics Committee oversight of environmental, social and governance (“ESG”) management
•Board and Audit Committee oversight of cybersecurity and information security management
•NYSE compliant Recovery Policy
Board Oversight of our Human Capital Management
The Board is actively engaged in oversight of the Company’s human capital management. Annually, the Board meets to review our succession strategy and leadership pipeline for key roles, including our President and Chief Executive Officer. In addition, the Board regularly receives reports from the Chief Human Resources Officer and Assistant General Counsel and is briefed on our employee engagement survey results. Board members also are active partners, engaging and spending time with our high potential leaders throughout the year at Board meetings and other events. The Board’s Compensation Committee oversees compensation and seeks to ensure it is aligned with creating long-term shareholder value. The Board’s Compliance and Ethics Committee oversees our Integrity Program, which is critical to driving our ethical culture and ensuring all employees are treated fairly and with respect.
Oversight of ESG Management
The Board provides oversight and guidance of the Company’s ESG-related initiatives, and the Board Committees have various responsibilities connected to ESG matters. The Board’s Compliance and Ethics Committee provides oversight of the Company’s ESG policies, strategies, and performance related to sustainability matters, corporate social responsibility, and ethics and compliance. The other Board committees receive updates and provide guidance on specific topics related to sustainability and other ESG-related topics that otherwise fall within their respective committee charters.
The Company’s internal cross-functional ESG Steering Committee continually works to refine Stoneridge’s overall ESG and sustainability efforts and meets regularly to oversee and monitor progress on our initiatives. The Company’s Director of Compliance and Environmental, Health and Safety (EH&S) leads the ESG Steering Committee, and the Chief Human Resources Officer and Assistant General Counsel provides oversight and champions our key ESG and sustainability initiatives. The Director of Compliance and EH&S provides regular updates to the Executive Leadership Team and the Compliance and Ethics Committee on the Company’s ESG initiatives, including the efforts of the internal cross-functional ESG Steering Committee.
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STONERIDGE, INC.
PROXY STATEMENT
________________
The Board of Directors (the “Board”) of Stoneridge, Inc. (the “Company”) is sending you this Proxy Statement to ask for your vote as a Company shareholder on matters to be voted on at our Annual Meeting of Shareholders to be held on Tuesday, May 13, 2025, at 11:00 a.m. (Eastern Time), for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Shareholders. The Annual Meeting will be held virtually. You can attend the Annual Meeting online, vote your shares electronically, and submit your questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/SRI2025. You will need to have your 16-digit Control Number included on your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials) to join the Annual Meeting.
We are mailing shareholders a Notice of Internet Availability containing instructions on how to access the Proxy Materials and how to vote online on or about April 3, 2025.
Annual Report; Internet Availability
We are furnishing our proxy materials, which include this Proxy Statement, our Notice of Annual Meeting of Shareholders and our 2024 Annual Report to Shareholders to shareholders by providing access to the proxy materials on the Internet at www.proxyvote.com. The Company anticipates that the Notice of Internet Availability in connection with our proxy solicitation materials will first be mailed on or about April 3, 2025 to all shareholders entitled to vote at the Annual Meeting and then we will post our proxy materials on the website referenced in the Notice of Internet Availability. As more fully described in the Notice of Internet Availability, all shareholders may choose to access our proxy materials on the website referred to in the Notice of Internet Availability or may request to receive, without charge, a printed set of our proxy materials.
Solicitation of Proxies
The Board is making this solicitation of proxies and we will pay the cost of the solicitation. In addition, our employees, without any additional remuneration, may solicit proxies by telephone or other electronic means. We will also make arrangements with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to beneficial owners of our shares held of record by such persons, and we will reimburse such persons for their reasonable out-of-pocket expenses in forwarding solicitation material.
Proxies
The common shares represented by your proxy will be voted in accordance with the instructions indicated on your proxy card. In the absence of any such instructions, they will be voted to (i) elect the seven director nominees set forth under “Election of Directors”; (ii) ratify the appointment of Ernst & Young LLP as our registered public accounting firm for 2025; (iii) approve on an advisory basis the compensation of our Named Executive Officers and (iv) approve the Company’s 2025 Long-Term Incentive Plan.
No business other than that set forth in the accompanying Notice of Annual Meeting of Shareholders is expected to come before the Annual Meeting. Should any other matter requiring a vote of shareholders properly arise, the persons named in the enclosed form of proxy will vote such proxy in accordance with their judgment.
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Revocation of Proxies
Your participation at the Annual Meeting, without further action, will not revoke your proxy. However, if you are a registered shareholder you may revoke your proxy at any time before it has been exercised by:
•signing and delivering a later-dated proxy;
•voting again by Internet or telephone prior to 11:59 p.m. (Eastern Time) on May 12, 2025 (only the latest vote you submit will be counted);
•giving notice to the Company in writing at our address indicated on the attached Notice of Annual Meeting of Shareholders (the notification must be received by the close of business on May 12, 2025); or
•voting at the Annual Meeting.
If you hold your common shares in “street name,” in order to change or revoke your voting instructions you must follow the specific voting directions provided to you by your bank, broker or other holder of record.
Virtual Shareholder Meeting
The Annual Meeting will be conducted exclusively online via live, audio-only, webcast, allowing all of the Company’s shareholders the option to participate in the live, online shareholder meeting from any location convenient to them. Only shareholders at the close of business on the record date may vote and ask questions at the Annual Meeting by following the instructions provided. The virtual Annual Meeting can be accessed by visiting:
www.virtualshareholdermeeting.com/SRI2025
You will need to have your 16-digit Control Number included on the Notice of Internet Availability and/or your proxy card (if you received a printed copy of the proxy materials) to join and participate in the Annual Meeting. If you hold any of your shares through a bank, broker or other holder of record (i.e., in street name) the control number is issued to you by your bank, broker or other holder of record.
We encourage you to access the Annual Meeting before the start time of 11:00 a.m. (Eastern Time), on May 13, 2025. Please allow ample time for online check-in, which will begin at 10:45 a.m. (Eastern Time) on May 13, 2025.
If you encounter difficulties accessing the virtual meeting, please call the technical support number that will be posted at www.virtualshareholdermeeting.com/SRI2025.
Shareholders who participate in the virtual Annual Meeting by means of the hyperlink above will be deemed to be “present in person,” as such term is used in this Proxy Statement, including for purpose of determining a quorum and counting votes.
Record Date and Voting Eligibility
Only shareholders at the close of business on the record date, March 21, 2025, are entitled to receive notice of the Annual Meeting and to vote the common shares held on the record date at the meeting. On the record date, our outstanding voting securities consisted of 27,845,336 common shares, without par value, each of which is entitled to one vote on each matter properly brought before the meeting.
Voting
The Board is asking for your proxy in advance of the Annual Meeting. Giving your proxy means you authorize the individuals designated as proxies to vote your common shares at the Annual Meeting in the manner you direct. You may give your proxy or otherwise vote your common shares in one of several ways, depending on how you hold your shares.
Shareholders of Record
If your common shares are registered directly in your name with the Company’s transfer agent, you are considered the “shareholder of record” of those shares and you may vote:
•By Telephone. You may vote by telephone by calling toll-free 1-800-690-6903 until 11:59 p.m. Eastern Time on May 12, 2025. Please have your Notice of Internet Availability or proxy card in hand when you
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call. The telephone voting system has easy-to-follow instructions and provides confirmation that the system has properly recorded your vote.
•By Internet. You may vote your shares by proxy by visiting the website www.proxyvote.com until 11:59 p.m. Eastern Time on May 12, 2025. Please have your Notice of Internet Availability or proxy card in hand when you access the website. The website has easy-to-follow instructions and provides confirmation that the system has properly recorded your vote.
•By Mail. If you have requested or receive paper copies of our proxy materials by mail, you may vote your shares by proxy by signing, dating and returning the proxy card in the postage-paid envelope provided. Mailed proxy cards with respect to shares held of record should be mailed to allow sufficient time for delivery and tabulation. If you vote by telephone or over the Internet, you do not need to return your proxy card by mail.
•At the Annual Meeting. You may vote your shares by attending the Annual Meeting by accessing www.virtualshareholdermeeting.com/SRI2025 and voting using the 16-digit control number included on your proxy card and/or on your Notice of Internet Availability. However, you are encouraged to vote in advance of the Annual Meeting by mail, telephone or Internet even if you plan to participate in the Annual Meeting via the Internet.
Street Name Holders
•If you hold any of your shares through a bank, broker or other holder of record (i.e., in street name), you may be able to authorize your proxy for those shares by telephone, the Internet or mail. You should follow the instructions you receive from your bank, broker or other holder of record to vote these shares. If you are a street name holder and wish to vote during the virtual annual meeting you may use the 16-digit control number provided by your bank, broker or other holder of record. However, you are encouraged to vote in advance of the Annual Meeting by telephone, Internet or mail even if you plan to participate in the Annual Meeting via the Internet.
•If you do not instruct your broker, bank or other nominee on how to vote your shares, it will have discretionary authority, under New York Stock Exchange (“NYSE”) rules, to vote your shares on the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2025 (“Proposal 2”). However, your broker, bank or other nominee will not be permitted to vote your shares (a “broker non-vote”) on the election of directors (“Proposal 1”), the advisory vote to approve the compensation of our Named Executive Officers (“Proposal 3”), or the vote on the proposal to approval the 2025 Long-Term Incentive Plan (“Proposal 4”).
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of our common shares as of March 18, 2025, by: (a) our directors and nominees for election as directors; (b) each other person who is known by us to own beneficially more than 5% of our outstanding common shares; (c) the executive officers named in the Summary Compensation Table; and (d) all of our executive officers and directors as a group.
| Name of Beneficial Owner | Number of Shares Beneficially Owned(1) | Percent of Class | ||||||
BlackRock, Inc.(2) | 2,134,380 | 7.7 | % | |||||
Cooke & Bieler LP(3) | 1,637,414 | 5.9 | ||||||
Dimensional Fund Advisors LP(4) | 1,531,421 | 5.5 | ||||||
Thrivent Financial for Lutherans(5) | 1,605,960 | 5.8 | ||||||
22NW Fund, LP(6) | 1,536,228 | 5.5 | ||||||
The Vanguard Group(7) | 1,478,425 | 5.3 | ||||||
Cooper Creek Partners Management LLC(8) | 1,442,314 | 5.2 | ||||||
Paul J. Schlather(9) | 174,031 | * | ||||||
| William M. Lasky | 147,994 | * | ||||||
Ira C. Kaplan(10) | 105,046 | * | ||||||
| Kim Korth | 91,349 | * | ||||||
| George S. Mayes, Jr. | 85,614 | * | ||||||
| Robert J. Hartman Jr. | 36,117 | * | ||||||
| Frank S. Sklarsky | 35,685 | * | ||||||
James Zizelman(11) | 26,195 | * | ||||||
| Sheila Rutt | 25,867 | * | ||||||
| Carsten J. Reinhardt | 23,215 | * | ||||||
| Matthew R. Horvath | 13,888 | * | ||||||
| Susan C. Benedict | 13,072 | * | ||||||
| Caetano R. Ferraiolo | 9,372 | * | ||||||
| Rajaey Kased | 8,610 | * | ||||||
| Troy Cooprider | 6,362 | * | ||||||
| Natalia Noblet | — | * | ||||||
| All Executive Officers and Directors as a Group (16 persons) | 802,417 | 2.9 | ||||||
* Less than 1%
(1)Unless otherwise indicated, the beneficial owner has sole voting and investment power over such common shares.
(2)According to a Schedule 13G/A by BlackRock, Inc (2,076,043 sole voting power and 2,134,380 sole dispositive power). The address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.
(3)According to a Schedule 13G/A by Cooke & Bieler LP (1,222,175 shared voting power and 1,637,414 shared dispositive power). The address of Cooke & Bieler LP is Two Commerce Square 2001 Market Street, Suite 4000, Philadelphia, PA 19103.
(4)According to a Schedule 13G by Dimensional Fund Advisors LP (1,499,533 sole voting power and 1,531,421 sole dispositive power). The address of Dimensional Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, TX 78746.
(5)According to a Schedule 13G/A by Thrivent Financial for Lutherans (13,454 sole voting power, 1,592,506 shared voting power, 13,454 sole dispositive power and 1,592,506 shared dispositive power). The address of Thrivent Financial for Lutherans is 901 Marquette Avenue, Suite 2500, Minneapolis, MN 55402.
(6)According to a Schedule 13G by 22NW Fund, LP, 22NW, LP, 22NW Fund GP, LLC, 22NW GP, Inc., and Aron R. English, each of whom is a reporting person, (1,536,228 both sole voting and dispositive power). The address of each reporting person is 590 1st Ave. S, Unit C1, Seattle, Washington 98104.
(7)According to a Schedule 13G by The Vanguard Group (24,980 shared voting power, 1,430,023 sole dispositive power and 48,402 shared dispositive power). The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
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(8)According to a Schedule 13G/A by Cooper Creek Partners Management LLC (1,442,314 both sole voting and dispositive power). The address of Cooper Creek Partners Management LLC is 501 Madison Avenue, Suite 302, New York, NY 10022.
(9)Represents 62,500 common shares held in an IRA for the benefit of Mr. Schlather, 76,714 common shares held in a trust, of which Mr. Schlather is trustee and 34,817 common shares owned by Mr. Schlather directly.
(10)Represents 86,924 common shares held in a trust, of which Mr. Kaplan is trustee and 18,122 common shares owned by Mr. Kaplan directly.
(11)Represents 6,500 common shares held in a trust, of which Mr. Zizelman is trustee and 19,695 common shares owned by Mr. Zizelman directly.
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PROPOSAL ONE: ELECTION OF DIRECTORS
In accordance with the Company’s Amended and Restated Code of Regulations, the number of directors is currently fixed at nine. However, in accordance with the Company’s Amended and Restated Code of Regulation the number of directors will be reduced to seven when the Annual Meeting is called to order. At the Annual Meeting, shareholders will elect seven directors to hold office until our next Annual Meeting of Shareholders and until their successors are elected and qualified. The Board proposes that the seven nominees listed below be elected to the Board. During the Annual Meeting, the common shares represented by proxies, unless otherwise specified, will be voted for the election of the seven nominees. Current directors, Paul J. Schlather and George S. Mayes, Jr., notified the Company of their decision not to stand for re-election at the Annual Meeting. Both will continue to serve until the Annual Meeting.
Directors are elected by a plurality of the votes cast at the Annual Meeting. Plurality means that the nominees who receive the most votes cast “For” their election are elected as directors. Votes withheld and broker non-votes will not affect the election of directors. Broker non-votes will be counted as “Present” for purposes of determining whether a quorum has been achieved at the Annual Meeting, but will not be counted as “For” or “Withheld” from any nominee. The maximum number of nominees to be elected is nine and the proxies cannot be voted for a greater number of persons than the number of nominees named. Shares not voted will have no impact on the election of directors. At our Annual Meeting, the common shares represented by proxies, unless otherwise specified, will be voted “For” the election of the nine nominees hereinafter named.
Majority Voting Principle
Under our Corporate Governance Guidelines, any nominee for director in an uncontested election who receives a greater number of votes “Withheld” than votes “For” must promptly offer his or her resignation. The Board’s Nominating and Corporate Governance Committee will then consider the resignation and recommend to the Board whether to accept or reject it. The Board will act on the Committee’s recommendation within 90 days after the Annual Meeting, and the Board’s decision will be publicly disclosed on Form 8-K. Any director who offers his or her resignation may not participate in the Board’s discussion or vote.
The director nominees nominated by the Board are identified below. If for any reason any of the nominees is not a candidate when the election occurs (which is not expected), the Board expects that proxies will be voted for the election of a substitute nominee designated by the Board. The following information is furnished with respect to each person nominated for election as a director.
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The Board of Directors recommends that you vote FOR the following nominees.
Nominees to Serve for a One-Year Term Expiring in 2026
Ira C. Kaplan  | Mr. Kaplan, 70, has served as a director since 2009. Since January 2015 he has served as the Executive Chairman of Benesch, Friedlander, Coplan & Aronoff LLP, a national law firm, and served as the Managing Partner from 2008 until 2014. He is a member of the firm’s Executive Committee and has been a partner with the firm since 1987. Mr. Kaplan focuses his practice on mergers and acquisitions as well as public and private debt and equity financings. Mr. Kaplan counsels clients in governance and business matters in his role at the law firm. In addition to his legal and management experience described above, the Company believes that Mr. Kaplan should serve as a director because he brings thoughtful analysis, sound judgment and insight on best practices to the Board, in addition to his professional experiences, which strengthen the Board’s collective qualifications, skills and experience. | ||||
Kim Korth  | Ms. Korth, 70, has served as a director since 2006. Since July 2022, Ms. Korth has served as the Chief Executive Officer of Engauge Workforce Solutions LLC, a staffing and contract manufacturing firm. Since June 2017, Ms. Korth has served as the President and Chief Executive Officer of 6th Avenue Group, a firm focused on improving the sustainability and adaptability of small to medium manufacturing and distribution firms. Prior to that, from December 2012 until May 2017, Ms. Korth was the President and Chief Executive Officer and a director of Techniplas LLC, a privately held international group of plastics-focused manufacturing businesses. Prior to that, she served as President, Chief Executive Officer and as a director of Supreme Corporation, a manufacturer of truck and van bodies, from 2011 to 2012. Ms. Korth was the founder and owner of IRN Inc. from 1983 to 2014, a well-known firm focused on automotive supplier strategy issues. Ms. Korth has also served on a variety of corporate boards (5 public companies and 12 private companies) over the course of her career, including Burke E. Porter Machinery Company, Shape Corp., Unique Fabricating, Autocam, and Unwired Technology. Ms. Korth currently serves on the Boards of Engauge Workforce Solutions LLC and she is Vice Chair of Garyline Inc’s Board of Directors. Ms. Korth has several decades of experience in corporate governance issues, organizational design, and development of strategies for growth and improved financial performance for automotive suppliers. In addition to the knowledge and experience described above, the Company believes that Ms. Korth should serve as a director because she provides insight on industry trends and expectations to the Board, which strengthens the Board’s collective qualifications, skills and experience. | ||||
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William M. Lasky  | Mr. Lasky, 77, has served as a director since 2004. Mr. Lasky served as President and Chief Executive Officer of Accuride Corporation (“Accuride”), a manufacturer and supplier of commercial vehicle components, from 2008 until his retirement in 2011. He served as the Chairman of the Board of Accuride from 2009 to 2012. Mr. Lasky served as President and Chief Executive Officer of JLG Industries, Inc., a diversified construction and industrial equipment manufacturer, from 1999 through 2006 and served as Chairman of the Board from 2001 through 2006. Mr. Lasky has served on the Board of Directors of NUARI since 2019. NUARI is a federally chartered 501(c)(3) non-profit that serves the national public interest through the interdisciplinary study of critical national security issues including rapid research, development, and education in cybersecurity, defense technologies, and information advantage. From 2011 through 2016, Mr. Lasky also served as a director of Affinia Group, Inc., a designer, manufacturer and distributor of industrial grade replacement parts and services for automotive and heavy-duty vehicles. In addition to his professional experience described above, the Company believes that Mr. Lasky should serve as a director because he provides in-depth industry knowledge, business acumen and leadership to the Board, which strengthen the Board’s collective qualifications, skills and experience. | ||||
Carsten J. Reinhardt  | Mr. Reinhardt, 57, was elected to the Board of Directors in February 2023. Mr. Reinhardt currently provides independent business consulting services that support enterprise strategy, operations improvement, sales growth, product management, human capital development, and mergers and acquisitions to various public and private companies in Europe and North America. From 2012 to 2016, Mr. Reinhardt served as President and Chief Executive Officer of Voith Turbo and as a member of the Board of Management of Voith Group, Heidenheim, Germany. Prior to that, from 2006 to 2011, Mr. Reinhardt served as an officer at Meritor Inc. as President of Commercial Vehicle Systems (2006 to 2009) and as Chief Operating Officer (2009 to 2011), with global responsibility for Meritor’s business segments including commercial truck, industrial/off-highway and aftermarket/trailer as well as manufacturing, research and development, purchasing and quality. From 1993 to 2006, Mr. Reinhardt served in various capacities at Daimler AG with increasing levels of responsibilities, concluding as President and Chief Executive Officer of Detroit Diesel Corporation from 2003 to 2006. From October 2016 to present, Mr. Reinhardt has served as the Vice Chairman of the Board of Grundfos Holding A/S, Bjerringbro, Denmark, a privately-held global market leader providing fluid management and water treatment solutions. From 2017 to present, Mr. Reinhardt has served as a member of the Supervisory Board of SAF-Holland SE, Bessenbach, Germany, where he was a member of the Audit Committee from 2017 to 2023, and a member of the Nomination and Compensation Committee from 2023 to present. SAF-Holland is a publicly traded company in Germany and a leading Tier 1 supplier to the commercial vehicle industry. Mr. Reinhardt also serves as chairman of the advisory board for tmax Holding GmbH, Mannheim, Germany, a specialty supplier of high-temperature insulation technologies, and is a member of the advisory board for Beinbauer Automotive GmbH, Buechlberg, Germany, a machining supplier to commercial vehicle and off-highway OEMs. From January 2024 until present, Mr. Reinhardt has been a member of the supervisory board of Samson AG, a privately held manufacturer of industrial valve and controls technology, based in Frankfurt, Germany. The Company believes that Mr. Reinhardt should serve as a director because he has 32 years of experience in the global commercial vehicle industry (17 years in the USA and 13 years in Europe) and provides in-depth industry knowledge in the Company’s business, especially the commercial vehicle industry, business acumen and leadership to the Board as a result of his three decades of experience in the commercial vehicle and automotive industries, including executive leadership roles with some of the world’s leading commercial vehicle manufacturers and suppliers. Mr. Reinhardt’s background and experience strengthen the Board’s collective qualifications, skills and experience. | ||||
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Sheila Rutt  | Ms. Rutt, 56, was elected to the Board of Directors in March 2023. Ms. Rutt has been the Chief Human Resources Officer of Hexion Inc., an advanced specialty chemical company, since July 2023. Ms. Rutt served as the Chief Human Resources Officer of Culligan International, a water treatment and filtration company, from May 2021 to July 2023. From 2017 to 2020, Ms. Rutt was Executive Vice President, Chief Human Resources Officer of RR Donnelley (NYSE: RRD), a Fortune 500 global integrated communication company providing marketing solutions, multichannel business communications, commercial printing and related services. Prior to that from 2000 to 2017, Ms. Rutt spent 17 years with Diebold Nixdorf Incorporated (NYSE: DBD), a company that automates, digitizes and transforms the way people bank and shop, serving in a variety of management roles, ultimately serving as the Chief Human Resources Officer (2005-2017). Ms. Rutt has a master’s degree in business administration from Walsh University (2004) and a PhD in industrial/organizational psychology from the University of Akron (1996). The Company believes that Ms. Rutt should serve as a director because she is a recognized leader in human resource management, in structuring transforming organizations, as well as elevating and enhancing a company’s corporate culture. The Board believes that Ms. Rutt’s experience will help the Company continue to foster a performance-based and inclusive culture focused on accountability and collaboration, and that her background and experience will assist the Board with the Company’s transformation and long-term strategy. Ms. Rutt’s background and experience strengthen the Board’s collective qualifications, skills and experience. | ||||
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Frank S. Sklarsky  | Mr. Sklarsky, 68, has served as a director since 2021. Mr. Sklarsky is currently Vice-Chairman of the board of trustees and a member of the executive committee and chairman of the investment committee at Rochester Institute of Technology. From 2019 to 2024, Mr. Sklarsky served on the board of directors of the privately held company, Nexa3d, Inc. From 2018 to 2022, Mr. Sklarsky was a director and chairman of the audit committee at the privately held company Cenveo Worldwide Ltd. From 2012 to 2017, Mr. Sklarsky was a director and a member of the audit and compensation committees of Harman International (NYSE: HAR). From 2013 to 2017, Mr. Sklarsky served as Executive Vice President and Chief Financial Officer of PPG Industries, Inc. (NYSE: PPG). From 2010 to 2012, he was Executive Vice President and Chief Financial Officer of Tyco International. From 2006 to 2010 he was Executive Vice President and Chief Financial Officer of Eastman Kodak Company (NYSE: KODK). From 2004 to 2006, he was Executive Vice President and Chief Financial Officer of Conagra Foods, Inc (NYSE: CAG). Earlier in his career, Mr. Sklarsky spent 20 years with Chrysler and DaimlerChrysler, serving in a series of management roles, ultimately rising to the position of vice president, Finance – Product Quality, Cost Management and Procurement. He also served in executive finance positions with Dell, Inc. He started his career as a CPA at Ernst & Young LLP. Mr. Sklarsky qualifies as an audit committee financial expert due to his extensive accounting and financial background built through his experience in public accounting and his service as CFO at several large public companies. In his prior chief financial officer positions at four fortune 200 companies, Mr. Sklarsky was intimately involved in oversight and discussions with the firms’ IT departments related to cybersecurity matters. In addition to his professional, accounting and finance experience described above, the Company believes that Mr. Sklarsky should serve as a director because he provides vast experience in CFO roles, as well as the comprehensive management and leadership experience he has gained as a senior executive at multiple global corporations, which strengthen the Board’s collective qualifications, skills and experience. | ||||
James Zizelman  | Mr. Zizelman, 64, is the President and Chief Executive Officer (“CEO”) of the Company and has served in this role since January 2023. Prior to that, Mr. Zizelman served as President of the Control Devices Division since April 2020. Previously, Mr. Zizelman served as the Vice President of Engineering and Program Management for Aptiv from December 2017 to March 2019. Mr. Zizelman was employed at Delphi for more than 20 years, where he was last a Vice President of Engineering from 2016 to 2017. Mr. Zizelman’s extensive career in the automotive industry has spanned all phases of engineering, operations leadership, corporate strategy and business leadership. As President and CEO of the Company, Mr. Zizelman showcases decades of experience where he has been instrumental in the development and production of both technical and business strategies, resulting in the introduction of dozens of new products, many of which were industry firsts, bringing significant business growth. Mr. Zizelman’s rigorous and disciplined approach to execution, along with the development and implementation of innovative business and engineering processes, quality systems, and operational excellence, have substantially improved business performance. Mr. Zizelman insists on an organizational culture of transparency, collaboration, and respect to ensure maximum performance with the application of strong business and technical strategies and processes. Mr. Zizelman provides valuable insight to the Board and strengthens the Board’s collective qualifications, skills and experience. | ||||
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Board Composition
The following matrix provides information regarding the composition of our Board.
Board Diversity Matrix as of April 3, 2025 | ||||||||||||||
Total Number of Directors: 9 (nominees 7) | ||||||||||||||
| Part I: Gender Identity | Female | Male | Non-Binary | Undisclosed | ||||||||||
| Directors | 2 (2) | 5 (4) | 1 (1) | 1 (0) | ||||||||||
| Part II: Demographic Background | ||||||||||||||
| Hispanic | — | — | — | — | ||||||||||
| Native American or Alaskan Native | — | — | — | — | ||||||||||
| Asian | — | — | — | — | ||||||||||
| Black or African American | — | 1 (0) | — | — | ||||||||||
| Native Hawaiian or Pacific Islander | — | — | — | — | ||||||||||
| White | 2 (2) | 4 (4) | 1 (1) | — | ||||||||||
| Two or more races or ethnicities | — | — | — | — | ||||||||||
| Did not disclose demographic background | — | — | — | 1 (0) | ||||||||||
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PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP
The Audit Committee of the Board anticipates appointing Ernst & Young LLP (“EY”) as our independent registered public accounting firm for the year ending December 31, 2025. For 2024, EY was engaged by us to audit our annual financial statements, assess our internal control over financial reporting and to perform audit-related and tax services. We expect that representatives of EY will be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions from shareholders.
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit the Company’s financial statements. As a matter of good corporate governance, the Audit Committee requests that shareholders ratify its anticipated selection of EY to serve as our independent registered public accounting firm for 2025.
Although ratification by shareholders is not legally required, the Board believes that the submission is an opportunity for the shareholders to provide feedback on an important issue of corporate governance. If our shareholders do not approve the appointment of EY, the appointment of our independent registered public accounting firm will be re-evaluated by the Audit Committee, but will not require the Audit Committee to appoint a different accounting firm. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during 2025 if it determines that such a change would be in the best interests of the Company and our shareholders.
Vote Required for Approval
Approval of this proposal requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to be voted on the proposal at our Annual Meeting. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on the proposal and will not have a positive or negative effect on the outcome of this proposal; however, there should be no broker non-votes on this proposal because brokers should have the discretion to vote uninstructed common shares on this proposal.
The Board of Directors recommends that you vote FOR Proposal Two.
Service Fees Paid to the Registered Public Accounting Firm
For the fiscal years ended December 31, 2024 and 2023 we retained EY to provide services in the following categories and amounts. The Audit Committee has considered the scope and fee arrangements for all services provided by EY, taking into account whether the provision of non-audit-related services is compatible with maintaining EY’s independence.
| 2024 | 2023 | |||||||
| Audit Fees | $ | 2,511,700 | $ | 2,216,500 | ||||
| Audit Related Fees | 146,000 | 7,000 | ||||||
| Tax Fees | 120,200 | 39,200 | ||||||
| Total Fees | $ | 2,777,900 | $ | 2,262,700 | ||||
Audit Fees. Audit fees include services associated with the annual audit of our consolidated financial statements, the audit of our internal control over financial reporting, the quarterly reviews of the financial statements included in our SEC Form 10-Q filings, certain international statutory audits, and other services that are normally provided by the independent registered accountants in connection with regulatory filings.
Audit Related Fees. Audit related fees include services associated with assurance and related services that are reasonably related to the performance of the audit of the Company’s financial statements, and consist primarily of due diligence services in connection with acquisitions and divestitures and other attest services.
Tax Fees. Tax fees relate to tax planning, domestic and international tax compliance and tax advice.
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Pre-Approval Policies and Procedures
The Audit Committee’s policy is to approve in advance all audit and permitted non-audit services to be performed for the Company by its independent registered public accounting firm. Pre-approval is generally provided for up to one year, is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee also pre-approves particular services on a case-by-case basis. In accordance with this policy, the Audit Committee has delegated pre-approval authority to the Chairman of the Audit Committee. The Chairman may pre-approve services and inform the Audit Committee at the next scheduled meeting.
All services provided by EY during fiscal year 2024, as noted in the previous table, were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described above.
Audit Committee Report
In accordance with its written charter, the Audit Committee assists the Board in fulfilling its responsibility relating to corporate accounting, our reporting practices, and the quality and integrity of the financial reports and other financial information provided by us to any governmental body or to the public. Management is responsible for the financial statements and the financial reporting process, including assessing the effectiveness of the Company’s internal control over financial reporting. The independent registered public accounting firm is responsible for conducting audits and reviews of our financial statements in accordance with standards established by the Public Company Accounting Oversight Board, expressing an opinion on the conformity of the Company’s financial statements in accordance with generally accepted accounting principles, and auditing and reporting on the Company’s effectiveness of internal controls over financial reporting. The Audit Committee is comprised of four directors, each of whom is “independent” for audit committee purposes under the listing standards of the NYSE.
In discharging its oversight responsibility as to the audit process, the Audit Committee reviewed and discussed our audited financial statements for the year ended December 31, 2024, with management, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements. The Audit Committee also discussed with our independent registered public accounting firm, EY, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. The Audit Committee has received the written disclosures and letter from EY required by the applicable requirements of the Public Company Accounting Oversight Board regarding EY’s communication with the Audit Committee concerning independence. The Audit Committee discussed EY’s independence with EY. The Audit Committee also considered whether the provision of non-audit services by EY is compatible with maintaining EY’s independence.
The Audit Committee discussed with our Internal Audit Director and EY the overall scope and plans for their respective audits. The Audit Committee also met with the Internal Audit Director and EY to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of the Company’s financial reporting.
Based on the above-referenced review and discussions with management, the Internal Audit Director and EY, the Audit Committee recommended to the Board, and the Board approved, that the audited consolidated financial statements for fiscal year 2024 be included in the Company’s Annual Report on Form 10-K filed with the SEC.
The Audit Committee
Frank S. Sklarsky, Chairman
William M. Lasky
Carsten J. Reinhardt
Paul J. Schlather
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PROPOSAL THREE: SAY-ON-PAY
As required by the Dodd-Frank Act and Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”) we provide our shareholders with the opportunity to cast an annual advisory non-binding vote to approve the compensation of our Named Executive Officers as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables) (a “Say-On-Pay” proposal). We believe that it is appropriate to seek the views of shareholders on the design and effectiveness of the Company’s executive compensation program. Since 2011, our Board of Directors, upon the recommendation of the Company’s shareholders, has elected to hold an annual advisory vote on the Company’s executive compensation practices.
At the Company’s 2024 Annual Meeting of Shareholders, 99% of the votes cast on the Say-On-Pay proposal voted in favor of the proposal. The Compensation Committee believes this affirmed shareholders’ support of the Company’s approach to executive compensation.
Our goal for the executive compensation program is to attract, motivate, and retain a talented, entrepreneurial and creative team of executives to provide operational and strategic leadership for the Company’s success in competitive markets. We seek to accomplish this goal in a way that rewards performance and is aligned with our shareholders’ long-term interests. We believe that our executive compensation program, which emphasizes performance-based compensation and long-term equity awards, satisfies this goal and is strongly aligned with the long-term interests of our shareholders.
Base compensation is aligned to be competitive in the industry in which we operate. Performance-based compensation (cash and equity) represents 50-75% of each Named Executive Officer’s target compensation opportunity, with long-term incentives representing the largest portion of compensation. Targets for incentive compensation are based on financial performance targets and increasing shareholder value.
The Compensation Committee retains the services of an independent compensation consultant to advise the Committee on competitive compensation and compensation practices.
The Board recommends that shareholders vote FOR the following resolution:
“RESOLVED that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Because the vote is advisory, it will not be binding upon the Board or the Compensation Committee. The Board and the Compensation Committee value the opinions of our shareholders and will take into account the outcome of the vote when considering future decisions regarding executive compensation.
Vote Required for Approval
The affirmative vote of a majority of the common shares present or represented by proxy and voting at the Annual Meeting will constitute approval of this non-binding resolution. If you own common shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your common shares so that your vote can be counted on this proposal. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on this proposal and will not have a positive or negative effect on the outcome of this proposal.
PROPOSAL FOUR: APPROVAL OF 2025 LONG-TERM INCENTIVE PLAN
The Company is seeking shareholder approval of the 2025 Long-Term Incentive Plan (“LTIP”) to assist the Company in achieving its goal of promoting long-term growth and profitability by enabling the Company to attract, retain and reward key employees and, therefore, align the interests of those employees with those of the Company’s shareholders. As described under the section heading “Executive Compensation,” the Company has made annual grants of restricted share units, performance units and/or performance shares under the 2016 Long-Term Incentive Plan, as amended, (the “Current LTIP”) that is currently in place. By aligning compensation with performance, the Company believes that the use of share-based benefits as part of the Company’s compensation package is of fundamental importance in promoting the Company’s growth and continued success and is thus a substantial benefit to the Company’s shareholders and the Company.
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As of March 31, 2025, there are 1,127 common shares available for issuance pursuant to grants or awards under the Current LTIP. In addition, the Current LTIP effectively expires in May 2026 as it provides that no awards may be granted under it after May 10, 2026; provided, however that awards granted prior to that date may remain in effect subject to their respective terms. Therefore, the new LTIP is needed to enable the Company to grant equity-based awards to participants, which is a key component to the Company’s compensation program.
The description of the LTIP is subject to and qualified by reference to the full text of the LTIP, a copy of which is attached as Appendix A.
Summary of the 2025 Long-Term Incentive Plan:
•Overview. The purpose of the LTIP is to promote the Company’s long-term growth and profitability by enabling the Company to attract, retain and reward key employees, officers, directors and other key service providers to the Company and to strengthen the common interests of such persons and the Company’s shareholders by offering them equity or equity-based incentives. Employees, directors and other service providers to the Company and its subsidiaries or affiliates will be eligible to participate in the LTIP.
•Shares Reserve. The LTIP reserves 726,000 common shares for issuance pursuant to grants or awards under it. Shares subject to awards granted under the LTIP that expire or terminate without being exercised in full will not reduce the number of shares available for issuance under the LTIP. In addition, shares issued pursuant to awards under the LTIP that are forfeited will become available for future grant under the LTIP. The maximum number of shares subject to stock options that are intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code (“Code”), will be equal to the initial share reserve (not including any subsequent adjustments).
•Term. The LTIP will terminate ten years from the date it is approved by the Company’s shareholders; no awards can be granted after the ten year anniversary date of that approval.
•Administration. The Compensation Committee administers the LTIP and determines who receives awards, the type and amount of awards, the consideration, if any, to be paid for awards, the timing of awards and the terms and conditions of awards. Under the LTIP, the Compensation Committee may delegate its responsibilities as to the selection of and grant of awards to employees who are not executive officers of the Company or, subject to Section 16 of the Exchange Act, to the Company’s management in a manner consistent with applicable law. The Compensation Committee will have the authority to adopt, alter and repeal rules, guidelines and practices governing the LTIP as it considers advisable and to interpret the terms and provisions of the LTIP and any award issued under the LTIP.
•Eligibility. Employees, consultants, directors, and other service providers of the Company and its subsidiaries and affiliates are eligible to receive awards under the LTIP. The Compensation Committee will determine who will receive awards and the terms and conditions of such awards.
•Award Types. The LTIP authorizes the grant of stock awards, performance awards and other cash-based awards, including stock options that qualify as incentive stock options under Section 422 of the Code, stock options that do not qualify as incentive stock options, restricted shares, restricted share units, share units, share appreciation rights, performance shares, performance share units, and other cash- and share-based awards.
•Award Terms and Limitations:
◦Awards will be exercisable and or vest at such time or times as the Compensation Committee determines. In general, restricted shares are non-transferable prior to vesting. Additionally, if any stock option or grant of restricted shares or restricted share units is exercisable or becomes vested only in installments or after specified exercise dates, the Compensation Committee may waive such exercise provisions and accelerate any exercise date based on such factors as the Compensation Committee shall determine in its sole discretion.
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◦The exercise price of a stock option granted under the LTIP may not be less than 100% of the fair market value of the Company’s common shares on the date the stock option is granted. With respect to an incentive stock option grant made to a participant who, on the date of grant, owns more than 10% of the total combined voting power of all classes of shares of the Company, the exercise price may not be less than 110% of the fair market value of the Company’s common shares on the date of grant.
◦The term of each stock option will be fixed by the Compensation Committee and may not exceed ten years (five years in the case of qualified incentive stock options granted to 10% or more stockholders) from the date the stock option is granted.
◦Subject to a limitation of $400,000 for those directors serving on special committees or as the lead independent director or chairperson of the Board, the maximum number of common shares subject to awards granted during a single calendar year to any one non-employee director of the Company shall not exceed $350,000 (calculating the value of any awards based on the grant date fair value for financial reporting purposes).
•Additional Provisions:
◦In the event of any dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, acquisition, split-up, spinoff, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or exchange of shares or other securities of the Company, issuance of warrants or other rights to purchase shares or other securities of the Company, or other similar corporate transaction or event, and such event affects shares such that the Compensation Committee determines an adjustment is appropriate to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the LTIP, the Compensation Committee may adjust (i) the number of shares with respect to which awards may be granted or awarded, (ii) the number of shares subject to outstanding awards, (iii) the grant or exercise price with respect to any award, and (iv) the applicable limitations for grants to a participant. In the event there is a change in control (as defined in the LTIP) and a grantee’s termination of service within 24 months following such change in control, then (i) any stock options awarded under the LTIP not previously exercisable and vested shall become fully exercisable and vested upon the termination of the employment of the participant by the Company other than for cause or by the participant for good reason; (ii) any share appreciation rights shall become immediately exercisable upon the termination of employment of the participant by the Company other than for cause or by the participant for good reason; (iii) the restrictions applicable to any restricted shares or restricted share units, performance shares or performance share units, and other share-based awards shall lapse and such shares and awards shall be deemed fully vested upon the termination of employment of the participant by the Company other than for “cause” or by the participant for “good reason” (as such terms are defined in the LTIP) ; and (iv) unless otherwise determined by the Committee, the payout of performance shares and performance share units shall be determined exclusively by the attainment of the performance goals established by the Committee.
◦The LTIP will not be qualified under Section 401(a) of the Internal Revenue Code and will not be subject to the provisions of the Employee Retirement Income Security Act of 1974.
◦The LTIP is intended to comply with Section 409A of the Internal Revenue Code. If it is determined that any amount to be paid to a “specified employee” (as such term is defined in Section 409A of the Internal Revenue Code) under the LTIP is considered “nonqualified deferred compensation” subject to Section 409A of the Internal Revenue Code, then such payment if made upon “separation from service”, as defined in Section 409A of the Internal Revenue Code, shall be delayed for six months and one day following the specified employee’s separation from service.
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◦The Board of Directors may amend, alter, or discontinue the LTIP. The Board of Directors must submit to the Company’s shareholders for approval any amendments to the LTIP which require shareholder approval under Section 16 of the Exchange Act or the rules and regulations thereunder or NYSE listing standards.
◦No awards or grants may be made under the LTIP until shareholders approve the LTIP. See Executive Compensation on page 27, including Compensation Discussion and Analysis (page 27), Summary Compensation Table (page 39) and Grants of Plan-Based Awards (page 40) for information about awards made under the Current LTIP to the Company’s Named Executive Officers.
The LTIP will serve as the plan for issuing regular annual grants of restricted shares to independent directors moving forward. As a result, the Directors’ Restricted Shares Plan is no longer necessary as grants can now be made to employees and directors under one plan. The Board of Directors intends to discontinue making annual grants under the Directors’ Restricted Shares Plan and anticipates formally terminating the plan later in 2025. The Directors’ Restricted Shares Plan currently has 138,000 shares available for issuance to independent directors.
It is expected that if the Company’s shareholders approve the LTIP at the Annual Meeting that grants of restricted shares with a grant date fair market value of $83,400 will be made to each non-employee director serving as of the date of this proxy statement.
On March 31, 2025, the closing price of common shares of the Company on the New York Stock Exchange was $4.59 and approximately 47 officers, key employees and non-employee directors would be eligible to participate in the LTIP.
Federal Income Tax Consequences
The following summary of the federal income tax consequences applicable to options awarded under the LTIP is only a general summary of the applicable provisions of the Internal Revenue Code and regulations promulgated thereunder as in effect on the date of this proxy statement. The actual federal, state, local and foreign tax consequences to the participant may vary depending upon his or her particular circumstances.
Incentive Stock Options
An incentive stock option results in no taxable income to the participant or a deduction to the Company at the time it is granted or exercised. However, the excess of the fair market value of the shares acquired over the option price is an item of adjustment in computing the alternative minimum taxable income of the participant. If the participant holds the shares received as a result of an exercise of an incentive stock option for at least two years from the date of the grant and one year from the date of exercise, then the gain realized on disposition of the shares (generally the amount received in excess of the option price) is treated as a long-term capital gain. If the shares are disposed of during this period, however (i.e., a “disqualifying disposition”), then the participant will include in income, as compensation for the year of the disposition, an amount equal to the excess, if any, of the fair market value of the shares on the date of exercise of the option over the option price (or, if less, the excess of the amount realized upon disposition over the option price). The excess, if any, of the sale price over the fair market value on the date of exercise will be either a long-term or a short-term capital gain depending on whether the participant has held the shares for more than one year. In such case, the Company will be entitled to a deduction, in the year of such a disposition, for the amount includible in the participant’s income as compensation. The participant’s basis in the shares acquired upon exercise of an incentive stock option is equal to the option price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.
If an incentive stock option is exercised by tendering previously owned common shares, the following generally will apply: a number of new shares equal to the number of previously owned common shares tendered will be considered to have been received in a tax-free exchange; the participant’s basis and holding period (except for the disqualifying disposition period) for such number of new common shares will be equal to the basis and holding period of the previously owned common shares exchanged. To the extent that the number of common shares received exceeds the number of common shares surrendered, no taxable income will be realized by the participant at that time; such excess common shares will be considered incentive stock option stock with a zero basis; and the holding period of the participant in such common shares will begin on the date such common
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shares are transferred to the participant. If the common shares surrendered were acquired as the result of the exercise of an incentive stock option and the surrender takes place within two years from the date the incentive stock option relating to the surrendered common shares was granted or within one year from the date of such exercise, the surrender will result in a disqualifying disposition and the participant will realize ordinary income at that time in the amount of the excess, if any, of the fair market value at the time of exercise of the common shares surrendered over the basis of such common shares. If any of the common shares received are disposed of in a disqualifying disposition, the participant will be treated as first disposing of the common shares with a zero basis.
Non-qualified Stock Options
Provided that the exercise price is not less than the market value of a share at grant, a non-qualified stock option results in no taxable income to the participant or deduction to the Company at the time it is granted. A participant exercising such an option will, at that time, realize taxable compensation in the amount of the difference between the option price and the then market value of the shares. Subject to the applicable provisions of the Internal Revenue Code, the Company will be allowed a deduction for federal income tax purposes in the year of exercise in an amount equal to the taxable compensation recognized by the participant.
The participant’s basis in such common shares is equal to the sum of the option price plus the amount includible in his or her income as compensation upon exercise. Any gain (or loss) upon subsequent disposition of the common shares will be a long-term or short-term gain (or loss), depending upon the holding period of the common shares.
If a non-qualified option is exercised by tendering previously owned common shares, the following generally will apply: a number of new common shares equal to the number of previously owned shares tendered will be considered to have been received in a tax-free exchange; the participant’s basis and holding period for such number of new common shares will be equal to the basis and holding period of the previously owned common shares exchanged. The participant will have compensation income equal to the fair market value on the date of exercise of the number of new common shares received in excess of such number of exchanged common shares; the participant’s basis in such excess common shares will be equal to the amount of such compensation income; and the holding period in such common shares will begin on the date of exercise.
Vote Required for Approval
The affirmative vote of a majority of the votes cast in person or by proxy by shareholders represented and entitled to vote at the Annual Meeting of Shareholders is required for approval of the LTIP. Broker non-votes will not be treated as votes cast and will not have a positive or negative effect on the outcome of the proposal. Abstentions will be treated as votes cast and, consequently, will have the same effect as votes against the proposal.
The Board of Directors recommends that you vote FOR Proposal Four.
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CORPORATE GOVERNANCE
Corporate Governance Documents and Committee Charters
The Company’s Corporate Governance Guidelines, Code of Conduct, Code of Ethics for Senior Financial Officers and the charters of the Board of Directors’ Audit, Compensation, Nominating and Corporate Governance and Compliance and Ethics Committees are posted on our website at www.stoneridge.com.
Written copies of these documents are available without charge to any shareholder upon request. Requests should be directed to Investor Relations at the address listed on the Notice of Annual Meeting of Shareholders.
Stoneridge Integrity Helpline
We established the Stoneridge Integrity Helpline as part of our Integrity Program, which includes our Whistleblower Policy and Procedures. This policy encourages all employees, customers, business partners, and others to disclose any wrongdoing that may adversely impact the Company, the Company’s customers, shareholders, employees, investors, or the public at large. This includes, but is not limited to concerns involving accounting, auditing, and internal control matters. Concerned parties may report confidentially and anonymously (where allowed by local law), about any accounting, auditing, or other matter. Information regarding the Stoneridge Integrity Helpline is contained in our Whistleblower Policy and Procedures, which is posted on our website at www.stoneridge.com.
Director Independence
The NYSE rules require listed companies to have a Board of Directors comprised of at least a majority of independent directors. Under the NYSE rules, a director qualifies as “independent” upon the affirmative determination by the Board of Directors that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The Board has not adopted categorical standards of independence. The Board has determined that the following directors and nominees for election as a director are independent:
| Ira C. Kaplan | Carsten J. Reinhardt | ||||
| Kim Korth | Sheila Rutt | ||||
| William M. Lasky | Frank S. Sklarsky | ||||
Current directors, George S. Mayes, Jr. and Paul J. Schlather, who are not standing for re-election at the Annual Meeting are also independent.
Annual Board and Committee Self-Assessments
Our Corporate Governance guidelines require that the Board and each Committee conduct an annual self-assessment. The self-assessment are intended to facilitate a candid assessment and discussion by the Board and each Committee of its effectiveness as a group in fulfilling its responsibilities. Each year the Board and each Committee conduct a self-assessment using questionnaires to facilitate the assessment. The Board and each Committee then reviews a summary of the questionnaires in connection with discussions to determine which areas the Board and Committee would like to focus on during the coming year to enhance its effectiveness.
The Board of Directors’ Role in Risk Oversight
It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company. The Board has oversight responsibility of the processes established to report and monitor systems for material risks applicable to us. The Audit Committee regularly reviews enterprise-wide risk management, which includes treasury risks (foreign exchange rates, and credit and debt exposures), financial and accounting risks, legal and compliance risks, cybersecurity and information security risks and other risk management functions. The Compensation Committee considers risks related to the attraction and retention of talent and related to the design of compensation programs and arrangements. The full Board considers strategic risks and opportunities and regularly receives reports from management on risk and from the Committees regarding risk oversight in their areas of responsibility.
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The Board of Directors’ Role in Ethics and Compliance
The Company is committed to a culture of integrity and trust, to conducting all its business dealings in compliance with applicable federal, state and foreign laws, rules and regulations, and to operating with the highest standards of business ethics. The Board established the Compliance and Ethics Committee to assist the Board in overseeing (i) the Company’s activities in the areas of corporate responsibility, compliance and ethics, including oversight of the Company’s Code of Conduct and Integrity Program Charter, and (ii) the Company’s compliance with legal and regulatory requirements.
Oversight of Human Capital Management
The Company strives to create a welcoming work environment and inclusive culture that allows all employees to feel valued and have the confidence to do their jobs well. The Board understands the importance of an inclusive, performance-driven culture to our ongoing success and is actively engaged with our President and Chief Executive Officer and our Chief Human Resources Officer and Assistant General Counsel across a broad range of human capital management topics. On an annual basis, the Board reviews the results of our annual talent review process and succession plans for our President and Chief Executive Officer and our other executive officers. In addition, talent strategy and the results of employee engagement surveys are regularly discussed with the Board, including retention, engagement and talent development.
Oversight of Environmental, Social and Governance (ESG) Management
The Board provides oversight and guidance on the Company’s ESG-related initiatives, and the Board Committees have various responsibilities connected to ESG matters. The Board’s Compliance and Ethics Committee provides oversight of the Company’s ESG policies, strategies, and performance related to sustainability matters, corporate social responsibility, and ethics and compliance. The other Board committees receive updates and provide guidance on specific topics related to sustainability and other ESG-related topics that otherwise fall within their committee charters.
The Company’s internal cross-functional ESG Steering Committee continually works to refine the Company’s overall ESG and sustainability efforts and meets regularly to oversee and monitor progress on our initiatives. The Company’s Director of Compliance and EH&S leads the ESG Steering Committee, and the Chief Human Resources Officer and Assistant General Counsel provides oversight and champions our key ESG and sustainability initiatives. The Director of Compliance and EH&S provides regular updates to the Executive Leadership Team and the Compliance and Ethics Committee on the Company’s sustainability initiatives including the efforts of the ESG Steering Committee.
Cybersecurity, Information Security and Data Privacy
The Company’s Board of Directors, as a whole, has oversight responsibility for our strategic and operational risks. The Board’s Audit Committee oversees the Company’s information security, cybersecurity and data privacy risk management program. The Audit Committee is responsible for board-level oversight of cybersecurity risk, and the Audit Committee regularly reports risks and compliance actions to the Board. As part of its oversight role, the Audit Committee receives reporting about the Company’s strategy, programs, incidents and threats, and other developments and action items related to cybersecurity regularly throughout the year, including through periodic updates from the Chief Information Officer. Additionally, ad hoc matters of interest, key risks and relevant industry news are provided to the Board and Audit Committee throughout the year as needed.
The Company’s cybersecurity activities align to the Center for Internet Security and Cybersecurity Controls.
The Company has established a cybersecurity policy which requires mandatory compliance of all Company directors, officers, employees, interns, consultants, and contractors. The Company has also established cybersecurity and information security awareness training programs. Employees with access to the Company’s network receive annual training on topics such as phishing, malware, and other cybersecurity risks. Training is administered and tracked through online learning modules. The Board receives cybersecurity awareness training on a periodic basis. This training is to raise awareness of typical security risks as well as new and evolving risks to our Company.
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Insider Trading and Pre-Clearance Policy
Our Insider Trading and Pre-Clearance Policy governs the purchase, sale or other disposition of the Company’s securities by directors, officers and employees. The Insider Trading and Pre-Clearance Policy promotes compliance with insider trading laws, rules and regulations, and NYSE listing applicable standards.
Anti-Hedging Policy
Our Insider Trading and Pre-Clearance Policy prohibits Company directors, officers and key employees covered by the pre-clearance procedures of the Insider Trading and Pre-Clearance Policy from engaging in hedging transactions designed to offset decreases in the market value of the Company’s securities, including transactions in prepaid variable forward contracts, equity swaps, collars, exchange funds, put options, call options or other derivative securities, on an exchange or in any other organized market.
Anti-Pledging Policy
Our Insider Trading and Pre-Clearance Policy prohibits directors, officers and key employees covered by the pre-clearance provisions of the Insider Trading and Pre-Clearance Policy from holding Company securities in a margin account or pledging Company securities as collateral for a loan.
The Board of Directors
In 2024 the Board held 10 meetings. Each Board member attended at least 75% of the meetings of the Board and of the Committees on which he or she serves. Our policy is that directors are to attend the Annual Meeting of Shareholders. All of our directors attended the 2024 Annual Meeting of Shareholders. Mr. Lasky has been appointed as the lead independent director by the independent directors to preside at the executive sessions of the independent directors. The Board’s independent directors meet regularly in executive session. Other than Mr. Zizelman, the Company’s President and CEO, all directors are independent.
Leadership of the Board
The Board does not have a formal policy regarding the separation of the roles of CEO and Chairman of the Board because the Board believes it is in the best interest of the Company and our shareholders to make that determination based on the position and direction of the Company and the membership of the Board. At this time, the Board has determined that having an independent director serve as Chairman is in the best interest of the Company and our shareholders. This structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing Board priorities and procedures. Further, this structure permits our President and CEO to devote more time focusing on the strategic direction of the Company and management of our day-to-day operations.
Committees of the Board
The Board has four standing Committees to facilitate and assist the Board in the execution of its responsibilities. These Committees are the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Compliance and Ethics Committee. Each member of the Audit, Compensation, Nominating and Corporate Governance and Compliance and Ethics Committees is independent as defined under the listing standards of the NYSE. The table below shows the current composition of the Board’s Committees:
| Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | Compliance and Ethics Committee | ||||||||
| William M. Lasky | Ira C. Kaplan | Ira C. Kaplan | Ira C. Kaplan | ||||||||
| Carsten J. Reinhardt | Kim Korth* | Kim Korth | George S. Mayes, Jr.* | ||||||||
| Paul J. Schlather | William M. Lasky | William M. Lasky* | Paul J. Schlather | ||||||||
| Frank S. Sklarsky* | Sheila Rutt | George S. Mayes, Jr. | Frank S. Sklarsky | ||||||||
| Carsten J. Reinhardt | Sheila Rutt** | ||||||||||
| * Committee Chairperson | |||||||||||
** Sheila Rutt will assume role as Chairperson of the Compliance and Ethics Committee following the 2025 Annual Meeting. | |||||||||||
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Audit Committee
This Committee held eight meetings in 2024. Information regarding the functions performed by the Audit Committee is set forth in the “Audit Committee Report,” included in this Proxy Statement. The Board has determined that each Audit Committee member is financially literate under the listing standards of the NYSE. The Board also determined that Mr. Schlather and Mr. Sklarsky each qualify as an “audit committee financial expert” as defined by the SEC rules adopted pursuant to the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”). In addition, under the Sarbanes-Oxley and the NYSE rules mandated by the SEC, members of the audit committee must have no affiliation with the issuer, other than their Board seat, and receive no compensation in any capacity other than as a director or committee member. Each member of the Audit Committee meets this additional independence standard applicable to audit committee members of NYSE listed companies.
Compensation Committee
This Committee held four meetings in 2024. Each member of our Compensation Committee meets the independence requirements of the NYSE, including the enhanced independence requirements applicable to Compensation Committee members under NYSE rules and is a non-employee director under Rule 16b-3 of the Exchange Act. The Compensation Committee is responsible for establishing and reviewing the Company’s compensation philosophy and programs with respect to our executive officers; approving executive officer compensation and benefits; recommending to the Board the approval, amendment and termination of incentive compensation and equity-based plans; and certain other compensation matters, including director compensation. Our CEO makes recommendations regarding compensation of other officers to the Compensation Committee. The Compensation Committee can exercise its discretion in modifying any amount presented by our CEO. The Compensation Committee regularly reviews the total compensation obligations to each of our executive officers. During 2024, the Compensation Committee retained Total Rewards Strategies LLC (“TRS”) and Meridian Compensation Partners (“Meridian”) to provide compensation-related consulting services. Specifically, these compensation consultants provided relevant market data, current trends in executive and director compensation and advice on program design. The Compensation Committee determined that its use of TRS and Meridian as compensation consultants during the Company’s last completed fiscal year did not involve any conflict of interest. In making this determination, the Committee considered all relevant factors, including those set forth in Rule 10C-1(b)(4) under the Exchange Act. In accordance with its charter, the Compensation Committee may delegate power and authority as it deems appropriate for any purpose to a subcommittee of not fewer than two members.
Nominating and Corporate Governance Committee
This Committee held five meetings in 2024. The purposes of the Nominating and Corporate Governance Committee are to (a) evaluate the qualifications of director nominees; (b) recommend candidates for election as directors; (c) make recommendations concerning the size and composition of the Board; (d) develop and implement our corporate governance policies; and (e) assess the effectiveness of the Board.
Compliance and Ethics Committee
This Committee held four meetings in 2024. The purposes of the Compliance and Ethics Committee are to assist the Board in overseeing (a) the Company’s activities in the areas of corporate responsibility, compliance and ethics, including oversight of the Stoneridge Integrity Program; (b) the Company’s compliance with legal and regulatory requirements in collaboration with the Audit Committee; (c) the Company’s ESG initiatives, and (d) the Company’s commitment to establishing a culture of integrity and trust, to conducting all of its business dealings in compliance with applicable federal, state and foreign laws, rules and regulations, and to operating with the highest standards of business ethics.
Nominations and Nomination Process
It is the policy of the Nominating and Corporate Governance Committee to consider individuals recommended by shareholders for membership on the Board. If a shareholder desires to recommend an individual for membership on the Board, then that shareholder must provide a written notice (the “Recommendation Notice”) to the Secretary of the Company at Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377, on or before January 15 for consideration by this Committee for that year’s election of directors at the Annual Meeting of Shareholders.
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In order for a recommendation to be considered by the Nominating and Corporate Governance Committee, the Recommendation Notice must contain, at a minimum, the following:
•the name and address, as they appear on the Company’s books, telephone number and email of the shareholder making the recommendation, including information on the number of common shares owned and date(s) acquired, and if such person is not a shareholder of record or if such common shares are owned by an entity, reasonable evidence of such person’s ownership of such shares or such person’s authority to act on behalf of such entity;
•the full legal name, address, email address and telephone number of the individual being recommended, together with a reasonably detailed description of the background, experience, and qualifications of that individual;
•a written acknowledgment by the individual being recommended that he or she has consented to the recommendation, and consents to the Company undertaking an investigation into that individual’s background, experience, and qualifications in the event that the Nominating and Corporate Governance Committee desires to do so;
•any information not already provided about the person’s background, experience and qualifications necessary for us to prepare the disclosure required to be included in our proxy statement about the individual being recommended;
•the disclosure of any relationship of the individual being recommended with the Company or any of the Company’s subsidiaries or affiliates, whether direct or indirect; and
•the disclosure of any relationship of the individual being recommended with the shareholder, whether direct or indirect, and, if known to the shareholder, any material interest of such shareholder or individual being recommended in any proposals or other business to be presented at our Annual Meeting of Shareholders (or a statement to the effect that no material interest is known to such shareholder).
The Nominating and Corporate Governance Committee determines, and periodically reviews with the Board, the desired skills and characteristics for directors as well as the composition of the Board as a whole. This assessment considers the directors’ qualifications and independence, as well as diversity, experience, skill, and experience in the context of the needs of the Board. Directors should share our values and should possess the following characteristics: high personal and professional integrity; the ability to exercise sound business judgment; an inquiring mind; and the time available to devote to Board activities and the willingness to do so.
In evaluating the suitability of director and senior leadership candidates, the Nominating and Corporate Governance Committee and the Board take into account many factors such as expertise in various business disciplines (e.g., finance, risk management, etc.), educational and professional background, analytical ability, diversity of experience and viewpoint in the context of the needs of the Board and the Company as the Company’s business evolves, and willingness to devote adequate time to Board or leadership duties. In addition to the foregoing considerations, generally with respect to nominees recommended by shareholders, the Nominating and Corporate Governance Committee will evaluate such recommended nominees considering the additional information about them contained in the Recommendation Notices. In its recruitment process the Nominating and Corporate Governance Committee and Board will consider a pool of potential candidates reflecting diversity in gender, race, ethnic background, country of citizenship and professional experience. The Board often engages a third-party firm to assist with these searches to present a diverse pool of potential candidates. The Board believes that the backgrounds and qualifications of its directors and leadership team, as a group, should provide a broad mix of experience, knowledge and abilities that will allow the Board and Company to fulfill its responsibilities. Ultimately, the Nominating and Corporate Governance Committee will recommend to the Board prospective nominees who the Nominating and Corporate Governance Committee believes will be effective with the other members of the Board, in collectively serving the long-term best interests of our shareholders.
The Nominating and Corporate Governance Committee recommended to the Board each of the nominees identified in “Election of Directors” beginning on page 6 of this Proxy Statement.
Compensation Committee Interlocks and Insider Participation
None of the members of the Board’s Compensation Committee served as an officer at any time or as an employee during 2024. In addition, no Compensation Committee interlocks existed during 2024.
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Communications with the Board of Directors
The Board believes that it is important for interested parties to have the ability to send communications to the Board. Persons wishing to communicate with the Board may do so by sending a letter to the Secretary of the Company at Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377. The envelope must contain a clear notation indicating that the enclosed letter is a “Board Communication” or “Director Communication.” All such letters must identify the author and clearly state whether the intended recipients are all members of the Board or certain specified individual directors (such as the lead independent director or non-management directors as a group). The Secretary will make copies of all such letters and circulate them to the appropriate director or directors. The directors are not spokespeople for the Company and responses or replies to any communication should not be expected.
Transactions with Related Persons
There were no reportable transactions involving related persons in 2024.
Review and Approval of Transactions with Related Persons
The Board has adopted a written statement of policy with respect to related party transactions. Under the policy, a related party transaction is a transaction required to be disclosed pursuant to Item 404 of Regulation S-K or any other similar transaction involving the Company or the Company’s subsidiaries and any Company employee, officer, director, 5% shareholder or an immediate family member of any of the foregoing if the dollar amount of the transaction or series of transactions exceeds $25,000. A related party transaction will not be prohibited merely because it is required to be disclosed or because it involves related parties. Pursuant to the policy, such transactions are presented to the Compliance and Ethics Committee for evaluation and approval by the Committee, or if the Committee elects, by the full Board. If the transaction is determined to involve a related party, the Compliance and Ethics Committee will either approve or disapprove the proposed transaction. Under the policy, in order to be approved, the proposed transaction must be on terms that are fair to the Company and are comparable to market rates, where applicable.
Human Capital Disclosure
As of December 31, 2024, Stoneridge employed approximately 4,450 full time and temporary employees in 14 countries, with about 85% located outside of the United States. Although we have no collective bargaining agreements covering U.S. employees, a significant number of employees located in Brazil, China, Estonia, Mexico, Netherlands, Sweden and the United Kingdom either (i) are represented by a union and are covered by a collective bargaining agreement, or (ii) are covered by a works council or other employment arrangements required by law. We work to ensure positive relations with our employees.
We strive to create a work environment that enhances employee engagement, fosters productivity, and is aligned with our values of Integrity, Accountability, Teamwork, Adaptability, Customer Orientation, and Social Responsibility. We know that our success is dependent on our employees’ engagement, performance, skills, and development. To that end, we have established talent management programs, which include but are not limited to the following:
•Periodic global employee engagement surveys and subsequent action planning
•Regular talent reviews for employee development and succession planning
•Feedback and coaching to ensure performance is aligned with our goals and strategic direction
•Delivery of Code of Conduct and global policy training
•New employee orientation with globally consistent and locally flexible messaging
•Frequent global “town hall” meetings and other communications
•Employee wellness programs
•Opportunities for community and charitable involvement
•Employee mentoring program
•Internship programs
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When we hire new employees, we focus not just on the skills required for current positions, but the ever-changing complex skills and competencies that will be required as we move forward on our path to being the mobility industry’s integrated technology partner. We seek diverse sources for candidates, and we offer wages and benefits that are competitive in the markets where employees are located.
The Company is committed to creating diverse, equitable and inclusive workplaces that align with our core values and deliver sustainable business success. It is our mission to attract, advance and advocate for a diverse workforce that represents the communities around us. We challenge bias and strive to eliminate barriers through fair policies and practices. We are building an inclusive company where all employees can grow, excel, and contribute to our success in a meaningful way.
Our Human Resources function is an active and visible partner to the business at all levels. Our Chief Human Resources Officer and Assistant General Counsel reports directly to the Chief Executive Officer and interacts frequently with the Company’s Board of Directors. Our Human Capital focus will continue to be on employee engagement, employee and leadership development, communications, and employee health and safety.
ESG Initiatives
The Company’s culture, policies, external communications, products, and other initiatives reflect the growing importance that ESG matters have to our shareholders, employees and the industry. The Company strives to provide durable long-term value to our shareholders; support our employees and partners; and make a positive contribution to the communities where we live and work while continuously improving our operational practices to minimize our impact on the environment.
Our culture and core values are central to how we operate and grow as a company. We recognize that conducting our business in a responsible way is important to all our stakeholders. Our core values include social responsibility:
We will operate our business and personally conduct ourselves in our workplace in a manner that supports employee safety, treats all equally and respectfully, benefits our communities and remains mindful of our impact on the environment.
Several ESG-related policies and statements support this cultural commitment, including the Company’s:
•Code of Conduct
•Global Human Rights and Working Conditions Policy
•Environmental Policy
•Health and Safety Policy
•Cybersecurity Policy
•Anti-Corruption Policy
•Policy Against Discrimination and Harassment
•Conflict Minerals Policy
•Modern Slavery Act Statement
•Whistleblower Policy
•Global Quality Agreement and Supplier Code of Conduct
The Company also demands accountability on these matters from its business partners. Our suppliers agree to follow the Company’s Global Quality Agreement and Supplier Code of Conduct, which effectively cascades these policies throughout their supply chain. This is part of the minimum requirement for an approved or strategic supplier designation in our Approved Supplier Listing. We monitor these commitments through our Category Strategy planning and management.
We also believe transparency and accountability are critical to driving a more sustainable future. To this end, we provide annual public reporting on climate-related risks and opportunities through the CDP’s Climate Change
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and Water Security disclosures. In January 2024, we published our first Task Force for Climate-Related Financial Disclosures (TCFD) report that details the efforts underway at the Company to address both the risks and opportunities related to climate change. Additionally, in April 2024, we published our first Sustainability Report which expands on our environmental, social, and governance efforts. This report includes details on the Company’s alignment with the United Nations Sustainable Development Goals (UN SDGs), the Sustainable Accounting Standards Board (SASB) standards for the transportation sector and auto parts industry, and the TCFD.
The Company’s dedication to these matters is further reflected in our product portfolio, which is focused on sustainable solutions that drive positive change through the mobility industry. We are committed to designing and manufacturing products that are applicable to evolving engine types and maintain sustainable attributes, including improving vehicle safety and efficiency and reducing greenhouse gas emissions. Our product offerings power vehicle intelligence, provide increases in efficiency, reduce vehicle emissions and improve safety and security for vehicles, cargo, drivers and the public.
The Company continually works to improve our ability to identify and manage the ESG factors that can impact the Company and our stakeholders. We continue to make progress on our sustainability efforts by addressing the ESG factors most important for the Company.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
In this section we describe the compensation program for our Named Executive Officers (“NEOs”). We also discuss our compensation philosophy, policies and the decisions made by the Compensation Committee of the Board (the “Committee”) in 2024 as it relates to the compensation of our NEOs.
Named Executive Officers for 2024
| Name | Title | ||||
| James Zizelman | President & Chief Executive Officer | ||||
| Matthew R. Horvath | Chief Financial Officer & Treasurer | ||||
| Susan C. Benedict | Chief Human Resources Officer & Assistant General Counsel | ||||
| Salvatore D. Orsini | Chief Procurement Officer | ||||
| Rajaey Kased | President, Control Devices Division | ||||
2024 Overview
In 2024, Stoneridge specific growth drivers, our continued focus on the execution of our major program launches, continuous improvement in our manufacturing facilities, and structural cost control enabled us to navigate through a challenging macroeconomic environment. The Company was adversely affected by lower customer production volumes in most of our served markets, resulting in lower revenue. This decline was partially offset by sales in our Electronics segment related to the launches of a European OEM MirrorEye program and our next generation tachograph. Lower sales levels adversely affected gross margin contribution, however we were able to mitigate a portion of the adverse impact through material cost improvement and structural cost reduction actions. Further, we significantly increased cash provided by operating activities by reducing working capital levels, specifically lowering inventory.
The actions of the Committee and our pay-for-performance philosophy functioned such that compensation earned by our executives was aligned with our financial performance for 2024. Highlights from the year and our performance are as follows:
•Our business units have continued to focus on profitable and sustainable top line growth by developing a clear current and future vision of our products, technologies, and targeted customers.
•Net sales decreased by 6.9% compared to the prior year due to lower customer production volumes in most of our served markets, including the North American automotive market and the European and North American commercial vehicle markets. Sales were also adversely affected by the 2023 impact of lower customer recoveries of required electronic component spot buy purchases and the impact of end of life production for certain programs. This decline was partially offset by sales in our Electronics segment related to the launches of a European OEM MirrorEye program and our next generation tachograph.
Net loss in 2024 increased by $11.3 million compared to the prior year, primarily due to lower contribution from lower sales levels and higher interest expense offset by other income from favorable foreign exchange fluctuations and lower business realignment costs. Based on the Company’s 2024 operating cash flow performance, incentive payments under AIP were paid in excess of threshold but less than target.
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Compensation Philosophy and Objectives
Our Company’s compensation programs for executive officers are designed to attract, retain, motivate, and reward talented executives who advance our strategic, operational, and financial objectives and thereby enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:
•Attract and retain talented executive officers by providing a total compensation package that is competitive with that offered by similarly situated companies.
•Create a compensation structure under which a substantial portion of total compensation is based on achievement of performance goals.
•Align total compensation with the objectives and strategies of our shareholders and business.
•Tie a substantial portion of our executive officers’ annual and long-term incentive compensation to quantifiable measures of the Company’s financial performance, with incentives not earned unless at least the minimum threshold performance is achieved.
Elements of Compensation
Following are the elements of our executive compensation program and the objectives for including them.
| Element | Type | Objective | ||||||
| Base Salary | Cash - fixed | Attract and retain highly skilled executives by providing market competitive base salary that is aligned with the executive's responsibilities, experience and performance. | ||||||
| Annual Incentive Plan | Cash - variable | Motivate and reward the achievement of individual, division and/or consolidated financial and operational strategic objectives. | ||||||
| Long-Term Incentive Plan | Equity and/or Cash - variable | Retain and reward key employees, and align the interests of employees with our shareholders and the long-term success of the Company. | ||||||
| Benefits & Perquisites | Non-cash | Retain key employees by providing market competitive health, welfare and retirement benefits, and limited perquisites that align with our compensation philosophy. | ||||||
Mix of Compensation
Our executive compensation is based on our pay-for-performance philosophy, which emphasizes executive performance measures that closely correlate with the achievement of both short-term performance objectives and long-term shareholder value. A significant portion of our executive officers’ annual and long-term performance-based compensation is at-risk, with the amount of risk increasing with the officer’s position level. This provides more upside potential as well as downside risk for more senior positions because they have greater influence on our overall performance.
There is no pre-established policy or target for the allocation between cash and non-cash or short-term and long-term incentive compensation. Rather, the Committee reviews competitive market compensation information provided by our compensation consultant and considers the Company’s historical compensation practices in determining the appropriate level and mix of incentive compensation for each executive position.
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Total Target Compensation
Total target compensation is the value of the compensation package that is intended to be delivered if performance goals are met. Actual compensation depends on the payouts realized under the annual and long-term incentive plans, as determined by results on the performance metrics. For awards under the long-term incentive plan, the value is also based on the price of our common shares. The following charts show the weighting of each element of 2024 total target annualized compensation for the CEO (Mr. Zizelman), and average for the other NEOs. This demonstrates our pay-for-performance philosophy, showing that annual and long-term incentive-based compensation comprises the majority of total target compensation.
Compensation Policies and Best Practices
To achieve the goals of aligning executive compensation with Company performance while maintaining strong corporate governance and minimizing risk, the Committee and the Company review and adopt policies and best practices that they believe are in the best interest of the Company and our shareholders. Following are some of the practices that have been adopted over time that we believe help us to achieve these goals:
•Significant emphasis on performance-based compensation
•Use of the TSR metric in the long-term incentive plan to align executive and shareholder interests
•Use of financial metrics in the annual and long-term incentive plan to incentivize executives to achieve key financial and operational results that support our business strategy
•Include caps on both the annual incentive plan and the long-term incentive plan
•Annual benchmarking of compensation mix and levels for executive officers to ensure competitiveness
•Maintain stock ownership guidelines for our executive officers and non-employee Directors
•Provide limited perquisites to executive officers
•Maintain anti-hedging and anti-pledging policies
•Maintain NYSE compliant compensation Recovery Policy (which replaced the Company’s former Clawback Policy)
•Conduct an annual compensation risk assessment
•Use of an independent compensation consultant whose firm does no other work for the Company
The Compensation Committee
The Committee has the responsibility for determining the compensation paid to the Company’s executive officers. In carrying out its responsibilities, among other things, the Committee does the following:
•Ensures there is a clear, reasonable, and logical linkage between executive officer compensation programs and overall Company performance
•Considers comparison to the Company’s established Comparator Group and the broader market to ensure appropriate mix and level of competitiveness of compensation
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•Reviews and approves annual base salary levels, annual incentive plan targets, and long-term incentive plan targets, in alignment with the level and performance of each NEO as well as Company performance and market conditions
•Reviews, advises on, and approves new or revised compensation plans
Independent Compensation Consultant
The Committee retains the services of an independent compensation consultant to assist the Committee with the following:
•Appraising relevant trends and compensation developments in the market
•Providing advice regarding issues such as long-term incentives and change in control arrangements and other topics as needed
•Providing Comparator Group analysis
•Providing market data for the CEO position and other executive officers
In 2024, the Committee engaged two compensation consultants. Meridian was the primary compensation consultant during 2024. However, TRS provided consulting services through the mailing of the 2024 proxy materials.
Management
The Committee considers the recommendations and evaluations of the CEO when setting the compensation of the other executive officers.
Comparator Group
The Comparator Group is comprised of some of our direct competitors and a broader group of companies in the electronic and motor vehicle parts manufacturing industries that the Committee believes is representative of the labor market from which we recruit executive talent. The Committee reviews and approves the Comparator Group annually. Factors considered by the Committee in selecting Comparator Group companies include, but are not limited to, industry segment, revenue, profitability, number of employees and market capitalization. The table below shows the companies that comprised the 2024 Comparator Group:
| Allison Transmission Holdings Inc | Franklin Electric Co Inc | Rogers Corp | ||||||
| Columbus McKinnon Corp | Gentex Corp | Standard Motor Products Inc | ||||||
| Commercial Vehicle Group Inc | Gentherm Inc | Strattec Security Corp | ||||||
| Cooper-Standard Holdings Inc | LCI Industries | Superior Industries International Inc | ||||||
| CTS Corp | Littelfuse Inc | Visteon Corp | ||||||
| Curtiss-Wright Corp | Martinrea International Inc | Wabash National Corp | ||||||
| Donaldson Company Inc | Methode Electronics Inc | CalAmp(1) | ||||||
| Dorman Products Inc | Modine Manufacturing Co | |||||||
(1) CalAmp declared bankruptcy in the 2024 and will stay within the peer group, reflecting a TSR of negative 100%.
Compensation Benchmarking
The independent compensation consultant provides the Committee with the 25th, 50th and 75th percentiles of the Comparator Group for base salary, target cash incentives, target total cash, long-term incentives, and target total direct compensation. The Committee uses the 50th percentile as a primary reference point when determining base salary, target annual incentives, and target long-term incentives. The goal of the executive compensation program is to target total compensation at or around the 50th percentile of the Comparator Group. Actual target pay for an individual may be more or less than the referenced percentiles based on the Committee’s evaluation of the individual’s experience, performance and potential. Consistent with the Committee’s philosophy of pay-for-performance, incentive payments can exceed target levels only if overall Company financial targets are exceeded and will fall below target levels if overall financial target goals are not achieved.
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Consideration of Shareholder Advisory Vote on Executive Compensation
At our 2024 Annual Meeting of Shareholders, our executive compensation program received the support of approximately 99% of the votes cast on the Say-on-Pay proposal. The Committee has considered the results of this vote and views this outcome as evidence of shareholder support of its executive compensation decisions and policies. The Committee will continue to review and consider the annual shareholder votes on our executive compensation program.
Base Salary
Base salary sets the foundation of our compensation program for our executive officers. The annual cash incentive compensation targets and long-term incentive targets are typically established as a percentage of base compensation. The base salary is set at competitive market levels to attract and retain our executive officers. Base salary levels for our executive officers are set on the basis of the executive’s responsibilities, the current general industry, and competitive market data, as discussed above. In each case, due consideration is given to individual factors, such as the officer’s experience, competencies, performance, and contributions, and to external factors, such as salaries paid to similarly situated executive officers by like-sized companies and in particular our Comparator Group. The Committee considers the evaluation and recommendation of the CEO in determining the base salary of the other executive officers. The Committee typically approves executive officer base salaries with an effective date of January 1st. Executive officers’ base salaries remain fixed throughout the year unless a promotion, change in responsibilities, or special circumstances occur. In 2024, there were no changes to any NEO’s Base Salary mid-year.
Annual Incentive Awards
Our executive officers and other key employees participate in our AIP, which provides for annual cash payments based on the achievement of specific financial goals. As described above, the Company believes that a substantial portion of each executive’s overall compensation should be directly tied to quantifiable measures of financial performance. At the March 2024 Compensation Committee meeting, the Committee approved each NEO’s 2024 AIP target payout opportunity and the AIP’s performance metrics and related payout levels. The AIP targets are expressed as a percentage of the executive officer’s base salary.
For 2024, our AIP linked payout opportunities to the achievement of performance goals related to two financial metrics: (i) Consolidated Operating Income (weighted 70%) and, in the case of Mr. Kased, divisional Operating Income and (ii) Consolidated Cash Flow (weighted 30%) and, in the case of Mr. Kased, divisional Cash Flow. The consolidated and divisional financial performance metric targets were established based on our 2024 business plan. The targets were intended to be challenging but achievable based on industry conditions known at the time they were established. Under the 2024 AIP, the threshold level for achievement on the consolidated and divisional financial metrics was based on 80% of target while the maximum level was based on 130% of target.
For each performance metric, the Compensation Committee approved payout levels (expressed as a percentage of AIP target) corresponding to achieved performance at threshold, target, and maximum. At target, 100% payout is achieved for each element of the plan; at maximum, 200% payout is achieved; and at threshold, 50% payout is achieved. If threshold performance is not achieved with respect to a financial metric, then no incentive is earned on that metric. Threshold achievement on the Consolidated Operating Income metric is required for the Cash Flow metric to pay above threshold level. The AIP incentive compensation payout levels are interpolated for performance that falls between the threshold and maximum levels.
The stated objectives of the AIP include retaining and motivating key employees, and rewarding them for performance aligned with the growth and profitability of the Company. In 2024, we faced macroeconomic challenges, and customer production volatility, significantly impacting our financial performance. As a result, the Consolidated Operating Income was below threshold, capping payout levels for achievement against the Cash Flow metric at threshold. AIP was earned by NEOs in 2024 as referenced in the table below.
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The table below shows 2024 AIP performance measures and weightings, achieved results and performance target AIP earned.
| Mr. Zizelman, Mr. Horvath, Ms. Benedict & Mr. Orsini | Weight | Metric Target | Metric Achievement | % of AIP Target Earned | ||||||||||
| Consolidated Metrics: | ||||||||||||||
| Operating Income | 70 | % | $35.7 Million | $3.8 Million | — | % | ||||||||
| Cash Flow | 30 | % | $18.4 Million | $28.6 Million | 50 | % | ||||||||
| Overall Weighted Achievement | 15 | % | ||||||||||||
| Mr. Kased | Weight | Metric Target | Metric Achievement | % of AIP Target Earned | ||||||||||
| Consolidated Metrics: | ||||||||||||||
| Operating Income | 45 | % | $35.7 Million | $3.8 Million | — | % | ||||||||
| Cash Flow | 30 | % | $18.4 Million | $28.6 Million | 50 | % | ||||||||
| Divisional Metrics: | ||||||||||||||
| Operating Income | 15 | % | $16 Million | $6.9 Million | — | % | ||||||||
| Cash Flow | 10 | % | $6.2 Million | $22.6 Million | 50 | % | ||||||||
| Overall Weighted Achievement | 20 | % | ||||||||||||
The following table provides the total 2024 AIP targets and achievement for the combined Performance Periods:
| Executive Officer | Percent of Base Salary Target | Percent of Target Bonus Achieved | Target Bonus | Achieved Bonus (1) | |||||||||||||||||||
| James Zizelman | 100 | % | 15.0 | % | $ | 680,000 | $ | 102,000 | |||||||||||||||
| Matthew R. Horvath | 60 | % | 15.0 | % | $ | 284,625 | $ | 42,694 | |||||||||||||||
| Susan C. Benedict | 60 | % | 15.0 | % | $ | 232,565 | $ | 34,885 | |||||||||||||||
| Salvatore D. Orsini | 50 | % | 15.0 | % | $ | 173,056 | $ | 25,958 | |||||||||||||||
| Rajaey Kased | 50 | % | 20.0 | % | $ | 164,300 | $ | 32,860 | |||||||||||||||
(1) Mr. Orsini did not receive his 2024 achieved bonus due to his separation from the Company on February 28, 2025 due to workforce reduction resulting in the elimination of his position.
No discretionary bonuses were paid in 2024.
Long-Term Incentive Awards
Overview. We believe that long-term incentive awards are a valuable motivation and retention tool and provide a long-term performance incentive to management. The objective when establishing targets for performance share metrics is that they are challenging but achievable and aligned with budget expectations. Under our LTIP, executive officers may be granted share options, share units, performance shares, restricted common shares, and other equity-based awards.
Setting Target LTI Values. The Committee set each NEO’s 2024 LTI target value by considering competitive market data derived from our Comparator Group, and the executives’ responsibilities, performance, and potential contributions. The table below shows each NEO’s 2024 LTI target value.
| Executive Officer | Targeted Value 2024 Grant | ||||
| James Zizelman | $ | 1,414,994 | |||
| Matthew R. Horvath | $ | 493,545 | |||
| Susan C. Benedict | $ | 403,261 | |||
| Salvatore D. Orsini | $ | 180,033 | |||
| Rajaey Kased | $ | 205,106 | |||
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The grant date fair value of the RSUs and Performance Shares awarded in 2024 are included in the “Stock Awards” column of the Summary Compensation Table. The RSUs awarded in 2024 are included in the “All Other Stock Awards” column of the Grants of Plan-Based Awards table, and the grant date fair value of the Performance Shares awarded are included in the “Estimated Future Payouts Under Equity Incentive Plan Awards” columns of the Grants of Plan-Based Awards table.
Equity Pay Mix. The following chart shows the allocation of the LTIP awards among the equity that were granted in 2024 to our named executive officers:
2024 Equity Grants. In 2024, we granted to our named executive officers restricted stock units and performance shares, which are described below:
•Time-Based Restricted Share Units (“RSUs”) (45% of LTI target value): RSUs granted to our named executive officers provide strong retention value because the RSUs are subject to a three-year vesting period (i.e., the RSUs 100% vest at the conclusion of the performance period); provided that the executive officer is continuously employed by the Company through the end of that period. Upon vesting, the number of RSUs that vest is distributed in a like number of common shares.
•Performance-Based Share Units (“Performance Shares”) (25% of target LTI value) - Total Shareholder Return (“TSR”): Performance Shares-TSR are earned based on our TSR over a three-year performance period relative to the TSR of our 2024 Comparator Group of companies. We believe the use of the TSR metric effectively aligns the interests of our named executive officers with those of our shareholders. The number of Performance Shares-TSR earned at the conclusion of the three-year performance period will be distributed in a like number of common shares. No common shares are distributed if our relative TSR percentile ranking is below the 30th percentile of the Comparator Group.
The following table shows the payout levels associated with our relative TSR percentile ranking.
SRI TSR v. Comparator Group | Calculation of # of Shares | Shares Earned as a % of Target Shares | ||||||
| 50th - 100th percentile | SRI percentile x 2.0 | 100% - 200% | ||||||
| 30th - 49th percentile | 50% + {2.5 x (SRI percentile-30)} | 50% - 99% | ||||||
| < 30th percentile | n/a | 0 | % | |||||
•Performance Shares – Earnings Per Share (“EPS”) (20% of target LTI value): Performance Shares-EPS are earned over a three-year performance period based on our average actual EPS relative to the average budgeted EPS. A named executive officer may earn between zero percent and 200% of target Performance Shares-EPS granted based on achieved performance against pre-set performance goals. We set one-year performance goals for each year during the three-year performance period. The number of Performance Shares-EPS is based on the three-year average of the number of such shares earned at the conclusion of each one-year performance period. The table below shows the 2024 target EPS goal and results and 2025 target EPS goal. The 2026 EPS target will be set when the 2026 budget is established.
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2024 Grant
2024 LTIP Grant - EPS
| Average Annual EPS | Target | Results | ||||||
| 2024 Budgeted EPS | $0.30 | ($0.47) | ||||||
| +2025 Budgeted EPS | $0.01 | TBD | ||||||
| +2026 Budgeted EPS | TBD | TBD | ||||||
Threshold performance is achieved at 70% of target and maximum performance is achieved at 130% of target. Below the threshold, no shares will be earned. At target, 100% of the Performance Shares (EPS) will be earned. The maximum number of Performance Shares that may be earned is 200% of target
•Performance Shares – Return on Invested Capital (“ROIC”) (10% of target LTI value): Performance Shares -ROIC are earned over a three-year performance period based on our average actual ROIC relative to the average budgeted ROIC. A named executive officer may earn between zero percent and 200% of target Performance Shares-ROIC granted based on achieved performance against pre-set performance goals. We set one-year performance goals for each year during the three-year performance period. The number of Performance Shares-ROIC is based on the three-year average of the number of such shares earned at the conclusion of each one-year performance period. The table below shows the 2024 targets ROIC goal and results and 2025 target ROIC goal. The 2026 ROIC target will be set when the 2026 budget is established.
2024 LTIP Grant - ROIC
| Average Annual ROIC | Target | Results | ||||||
| 2024 Budgeted ROIC | 5.4 | % | 0.2 | % | ||||
| +2025 Budgeted ROIC | 3.6 | % | TBD | |||||
| +2026 Budgeted ROIC | TBD | TBD | ||||||
Threshold performance is achieved at 70% of target and maximum performance is achieved at 130% of target. Below the threshold, no Performance Shares-ROIC will be earned. At target, 100% of the Performance Shares-ROIC will be earned. The maximum number of Performance Shares-ROIC that may be earned is 200% of target.
Provided the executive officer remains continuously employed through the end of the performance period, and depending on performance relative to the target, the number of vested Performance Shares is prorated between the minimum and maximum amounts. The Performance Shares earned based on the TSR, EPS, and ROIC metrics will be paid after the conclusion of the three-year performance period by the issuance of one common share for each Performance Share earned.
Timing of Equity Awards. The Committee’s practice has been to approve the long-term incentive awards at the first regular meeting of the calendar year. As a general practice, awards under the long-term incentive plans are approved once per year unless a situation arises whereby a compensation package is approved for a newly hired or promoted executive officer with equity-based compensation as a component. The Committee does not time the grant of equity awards in conjunction with the release of material nonpublic information.
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2023 Grant Update
In 2023, Performance Shares were granted that may be earned after three years based on our average annual actual EPS and ROIC relative to the average annual budgeted EPS and ROIC over the three-year performance period. In the table below, the 2023 and 2024 targets and results on each of those metrics is shown, as well as the target for the 2025 tranche of the grant.
2023 LTIP Grant - EPS
| Average Annual EPS | Target | Results | ||||||
| 2023 Budgeted EPS | $0.00 | ($0.08) | ||||||
| +2024 Budgeted EPS | $0.30 | ($0.47) | ||||||
| +2025 Budgeted EPS | $0.01 | TBD | ||||||
2023 LTIP Grant - ROIC
| Average Annual ROIC | Target | Results | ||||||
| 2023 Budgeted ROIC | 3.8 | % | 3.3 | % | ||||
| +2024 Budgeted ROIC | 5.4 | % | 0.2 | % | ||||
| +2025 Budgeted ROIC | 3.6 | % | TBD | |||||
The TSR Peer Group for the 2023 grant consisted of the following companies(1):
| Allison Transmission Holdings Inc | Franklin Electric Co Inc | Rogers Corp | ||||||
| Columbus McKinnon Corp | Gentex Corp | Standard Motor Products Inc | ||||||
| Commercial Vehicle Group Inc | Gentherm Inc | Strattec Security Corp | ||||||
| Cooper-Standard Holdings Inc | LCI Industries | Superior Industries International Inc | ||||||
| CTS Corp | Littelfuse Inc | Visteon Corp | ||||||
| Curtiss-Wright Corp | Martinrea International Inc | Wabash National Corp | ||||||
| Donaldson Company Inc | Methode Electronics Inc | CalAmp | ||||||
| Dorman Products Inc | Modine Manufacturing Co | |||||||
(1)Meritor, Altra, and Circor were in the original TSR Peer Group but have been excluded because they were acquired or merged with another company during the performance period. CalAmp filed for bankruptcy during the performance period and was included in the results calculation at -100%.
2022 Grant Update
The performance period for the Performance Shares that were granted in 2022 ended on December 31, 2024. The shares vested on March 3, 2025, as shown below. No performance shares were earned during the performance period due to Company underperformance. These shares are included for the NEOs, as applicable, in the Outstanding Equity Awards at Year-End table.
2022 LTIP Grant - Performance Period Results
| Award Type & Metric | Grant Date | Vest Date | Allocation of Shares | Performance Results (2022-2024) | Payout % of Target Shares | ||||||||||||
| Time-Based RSU | 3/14/2022 | 3/3/2025 | 45 | % | n/a | 100 | % | ||||||||||
| Performance Shares - TSR | 3/14/2022 | 3/3/2025 | 25 | % | 5th percentile of Peer Group | 0 | % | ||||||||||
| Performance Shares - EPS | 3/14/2022 | 3/3/2025 | 20 | % | (396%) of Target | 0 | % | ||||||||||
| Performance Shares - ROIC | 3/14/2022 | 3/3/2025 | 10 | % | 40% of Target | 0 | % | ||||||||||
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The TSR Peer Group for the 2022 grant consisted of the following companies(1):
| Allison Transmission Holdings Inc | Franklin Electric Co Inc | Rogers Corp | ||||||
| Columbus McKinnon Corp | Gentex Corp | Standard Motor Products Inc | ||||||
| Commercial Vehicle Group Inc | Gentherm Inc | Strattec Security Corp | ||||||
| Cooper-Standard Holdings Inc | LCI Industries | Superior Industries International Inc | ||||||
| CTS Corp | Littelfuse Inc | Visteon Corp | ||||||
| Curtiss-Wright Corp | Martinrea International Inc | Wabash National Corp | ||||||
| Donaldson Company Inc | Methode Electronics Inc | CalAmp | ||||||
| Dorman Products Inc | Modine Manufacturing Co | |||||||
(1)Meritor, Altra, and Circor were in the original TSR Peer Group but have been excluded because they were acquired or merged with another company during the performance period. CalAmp filed for bankruptcy during the performance period and was included in the results calculation at -100%.
Perquisites
We provide executive officers with limited perquisites that we and the Committee believe are reasonable and consistent with the overall compensation program to better enable us to attract and retain superior employees for key positions. The Committee periodically reviews the levels of perquisites provided to executive officers. The incremental costs of the perquisites for the NEOs are included in the “All Other Compensation” column of the Summary Compensation Table.
Employment Agreements
We use employment agreements in limited situations.
Mr. Zizelman Employment Agreement
On April 13, 2023, the Company and Mr. Zizelman entered into an Employment Agreement (the “Zizelman Employment Agreement”). The Zizelman Employment Agreement had an initial term of 11 months ending on December 31, 2023, and is automatically renewed for one year every year thereafter unless notice of termination is delivered by either party at least 90 days before the end of the then current term. The Zizelman Employment Agreement provides for an annual base salary of $600,000 (which was $680,000 in 2024); participation in the Company’s AIP at a target of 100% of base salary; a monthly car allowance; and participation in the Company’s customary benefit plans for senior executive officers. In addition, under the Zizelman Employment Agreement the Company has agreed to grant Mr. Zizelman certain share-based awards under the Company’s current LTIP, equal in value on the grant date to 125% of his then current base salary.
If Mr. Zizelman is terminated by the Company without cause, or he terminates the Zizelman Employment Agreement and his employment for good reason, the Company (following receipt of a general release) shall be obligated to pay him severance equal to his annual base salary and target annual incentive. In addition, upon a termination without cause (or good reason termination), the Company must continue to cover his health and welfare benefits for a period of twelve months following such termination, and if the termination occurs in the last six months of the fiscal year, he would be paid a prorated annual incentive.
Under the Zizelman Employment Agreement, Mr. Zizelman is entitled to be nominated for election to serve on the Company’s Board of Directors as long as the Zizelman Employment Agreement remains in effect. Mr. Zizelman is a nominee for election to the Board of Directors at the 2024 Annual Meeting of Shareholders.
There are no other employment agreements in effect with any other NEO.
Severance Plan
The Company provides executive severance through the Officers’ and Key Employees’ Severance Plan (the “Severance Plan”). The NEOs covered under the Severance Plan include Mr. Horvath, Ms. Benedict, Mr. Kased and Mr. Orsini. If a covered executive is terminated by us without cause, we will be obligated under the Severance Plan to pay the executive’s salary for twelve months and continue health and welfare benefits coverage over the same period of time. Severance protection for Mr. Zizelman is provided in his employment agreement, as described above.
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Termination and Change in Control Payments
We have entered into change in control agreements with Mr. Horvath, Ms. Benedict, Mr. Kased, Mr. Orsini and certain other senior management employees. Change in control for Mr. Zizelman is provided in his employment agreement, as described above. These agreements are designed to promote stability and continuity of senior management, both of which are in the best interest of the Company and our shareholders. Our termination and change in control provisions for the NEOs are summarized below in the “Potential Payments Upon Termination or Change in Control” table.
Accounting Treatment of Compensation
As one of many factors, the Committee considers the financial impact in determining the amount of and allocation of the different pay elements, including the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 Stock Compensation.
Share Ownership Guidelines
The Committee has established share ownership guidelines for our executive officers to enhance the linkage between the interests of our executive officers and those of our shareholders. These guidelines provide that the CEO and other executive officers must retain Company common shares equal in market value to five and three times, respectively, of their annual base salaries. The executive officers have a five-year accumulation period starting on the date of their first compensation-related equity award following their date of hire or promotion to a position, with retention requirements to achieve compliance, and are restricted from selling any common shares earned under a Company equity-based compensation plan until their ownership guideline has been reached. The accumulation period begins on the date of their first grant following their date of hire or promotion which subjects them to the guidelines.
Recovery Policy
To mitigate risk to the Company of awarding certain of its executives, including its NEOs, incentive compensation based on financial results that are subsequently restated, the Board adopted a Recovery Policy effective September 13, 2023, that complies with the final Securities and Exchange Commission and NYSE regulations mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Recovery Policy replaces the prior Clawback Policy that was adopted by the Board on December 8, 2015. The Recovery Policy provides for recoupment of incentive compensation in the event of an accounting restatement resulting from noncompliance with financial reporting requirements under federal securities laws. The policy applies to current and former executives and requires reimbursement or forfeiture of any excess incentive compensation received by an executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement. The policy can be found as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 2024. The Recovery Policy has not been triggered following its adoption in 2023.
Compensation Risk Assessment
The Compensation Committee reviews the Company’s incentive compensation structure practices for all employees to evaluate any risks associated with the Company’s compensation programs.
As part of the evaluation, the Compensation Committee reviews a compensation risk assessment prepared by Company management and its independent compensation consultant. The compensation risk assessment analyzes all Company compensation programs for various categories of compensation related risk.
The Compensation Committee considers, among other factors, the design of the incentive compensation programs, which are closely aligned to corporate performance; the mix of short-term and long-term compensation; the maximum payout levels for short-term and long-term incentives; the distribution of compensation between equity and cash; and other factors that mitigate risk.
The Compensation Committee reviewed the compensation risk assessment at the May 2024 Compensation Committee meeting and determined that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.
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Compensation Committee Report
We have reviewed and discussed with management the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K and, based on that review and discussion, we recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.
The Compensation Committee
Kim Korth, Chairperson
Ira C. Kaplan
William M. Lasky
Sheila Rutt
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Summary Compensation Table
The following table provides information regarding the compensation of our NEOs for 2024.
| Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||
| James Zizelman | 2024 | $ | 680,000 | $ | — | $ | 1,414,994 | $ | 102,000 | $ | 29,652 | $ | 2,226,646 | ||||||||||
| President & Chief Executive Officer | 2023 | $ | 585,533 | $ | — | $ | 741,678 | $ | 398,179 | $ | 27,984 | $ | 1,753,374 | ||||||||||
| 2022 | $ | 410,000 | $ | — | $ | 699,752 | $ | — | $ | 13,784 | $ | 1,123,536 | |||||||||||
| Matthew R. Horvath | 2024 | $ | 474,375 | $ | — | $ | 493,545 | $ | 42,694 | $ | 13,998 | $ | 1,024,611 | ||||||||||
| Chief Financial Officer & Treasurer | 2023 | $ | 412,500 | $ | — | $ | 868,258 | $ | 183,150 | $ | 13,416 | $ | 1,477,324 | ||||||||||
| 2022 | $ | 356,833 | $ | — | $ | 398,554 | $ | — | $ | 12,416 | $ | 767,803 | |||||||||||
| Susan C. Benedict | 2024 | $ | 387,608 | $ | — | $ | 403,261 | $ | 34,885 | $ | 12,660 | $ | 838,414 | ||||||||||
| Chief Human Resources Officer & Assistant General Counsel | 2023 | $ | 337,050 | $ | — | $ | 804,824 | $ | 149,650 | $ | 14,232 | $ | 1,305,756 | ||||||||||
| 2022 | $ | 315,000 | $ | — | $ | 304,124 | $ | — | $ | 11,401 | $ | 630,525 | |||||||||||
| Salvatore D. Orsini | 2024 | $ | 346,112 | $ | — | $ | 180,033 | $ | — | $ | 10,679 | $ | 536,824 | ||||||||||
| Chief Procurement Officer | 2023 | $ | 332,800 | $ | — | $ | 373,139 | $ | 123,136 | $ | 12,546 | $ | 841,621 | ||||||||||
| Rajaey Kased | 2024 | $ | 328,600 | $ | — | $ | 205,106 | $ | 32,860 | $ | 220 | $ | 566,786 | ||||||||||
| President, Control Devices Division | |||||||||||||||||||||||
(1)The amounts included in the “Stock Awards” column represent the grant date fair value of time-based RSUs and Performance Shares computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024. In 2024, RSUs, Performance Share awards and Phantom Share awards (which are settled in cash upon vesting) were granted to our NEOs. The Performance Share awards were expected to be earned at the target level when granted. The grant date fair value of the Performance Share awards, assuming the maximum level of performance would be achieved, is $1,495,933 for Mr. Zizelman, $521,768 for Mr. Horvath, $426,336 for Ms. Benedict, $190,332 for Mr. Orsini and $216,825 for Mr. Kased. Please see the “Grants of Plan-Based Awards for 2024” table for more information regarding the RSUs, Performance Shares and Phantom Shares granted in 2024.
(2)The Performance Share awards granted under the Company LTIP were reviewed and recalculated in 2024. Due to these calculations it was determined that the amounts of the grant date fair market values previously disclosed for 2022 were less than the amounts calculated under FASB ASC Topic 718. The increase in the grant date fair value market value of the performance shares is included in the Stock Awards column. The increases in respective amounts in 2022 for Mr. Zizelman are $30,410, for Mr. Horvath are $17,697, and for Ms. Benedict are $18,049. These changes are also included in the Total Compensation column for 2022.
(3)The amounts shown for 2024 in the “All Other Compensation” column are comprised of the following:
| Executive Officer | Auto Allowance | 401(k) Match | Group Term Life Ins | ||||||||
| James Zizelman | $ | 14,400 | $ | 13,800 | $ | 1,452 | |||||
| Matthew R. Horvath | $ | — | $ | 13,800 | $ | 198 | |||||
| Susan C. Benedict | $ | — | $ | 11,628 | $ | 1,032 | |||||
| Salvatore D. Orsini | $ | — | $ | 9,733 | $ | 946 | |||||
| Rajaey Kased | $ | — | $ | — | $ | 220 | |||||
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Grants of Plan-Based Awards in 2024
Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares or Units | Grant Date Fair Value of Stock and Option Awards | |||||||||||||||||||||||||||||
| Threshold | Target | Maximum | Threshold | Target | Maximum | |||||||||||||||||||||||||||
| Executive Officer | Grant Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | ($)(4) | |||||||||||||||||||||||
| James Zizelman | $ | 340,000 | $ | 680,000 | $ | 1,360,000 | ||||||||||||||||||||||||||
| 3/11/2024 | 22,501 | 45,004 | 90,008 | 36,823 | $ | 1,414,994 | ||||||||||||||||||||||||||
| Matthew R. Horvath | $ | 142,313 | $ | 284,625 | $ | 569,250 | ||||||||||||||||||||||||||
| 3/11/2024 | 7,848 | 15,697 | 31,394 | 12,844 | $ | 493,545 | ||||||||||||||||||||||||||
| Susan C. Benedict | $ | 116,282 | $ | 232,565 | $ | 465,130 | ||||||||||||||||||||||||||
| 3/11/2024 | 6,413 | 12,826 | 25,652 | 10,494 | $ | 403,261 | ||||||||||||||||||||||||||
| Salvatore D. Orsini | $ | 86,528 | $ | 173,056 | $ | 346,112 | ||||||||||||||||||||||||||
| 3/11/2024 | 2,862 | 5,726 | 11,452 | 4,685 | $ | 180,033 | ||||||||||||||||||||||||||
| Rajaey Kased | $ | 82,150 | $ | 164,300 | $ | 328,600 | ||||||||||||||||||||||||||
| 3/11/2024 | 3,261 | 6,523 | 13,046 | 5,338 | $ | 205,106 | ||||||||||||||||||||||||||
(1)The amounts shown reflect awards granted under our 2024 AIP. In March 2024, the Compensation Committee approved the 2024 target AIP awards expressed as a percentage of the executive officer’s 2024 approved base salary. The Compensation Committee established a performance period for the 2024 AIP awards from January 1, 2024 to December 31, 2024. In March 2024, the Compensation Committee approved Company performance metrics and targets and a +/- 10% individual performance multiplier for the purpose of determining any amount to be paid out under the AIP for each executive officer for the performance period. Please see “Compensation Discussion and Analysis – Annual Incentive Awards” for more information regarding the Company’s 2024 awards and performance measures.
(2)The amounts shown reflect grants of Performance Share awards made under our LTIP on March 11, 2024. The amount of the Performance Shares that will be earned will be determined based on our total shareholder return compared to that of a defined peer group for 25% of the awards, based on our EPS performance for 20% of the awards, and based on our ROIC performance for 10% of the awards for the performance period January 1, 2024 through December 31, 2026. The shares will vest on March 1, 2027, assuming the grantee is still employed on that date.
(3)The amounts shown reflect grants of time-based RSUs made under our LTIP. These RSUs were granted on March 11, 2024. The time-based grant comprises 45% of the total LTIP award, and will vest on March 1, 2027, assuming the grantee is still employed on that date.
(4)The amounts included in “Fair Value of Awards” column represent the aggregate grant date fair value of the awards computed in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.
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Outstanding Equity Awards at Year-End
| Stock Awards | ||||||||||||||||||||
| Executive Officer | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | ||||||||||||||||
| James Zizelman | 11,035 | (2) | $ | 69,410 | — | (9) | $ | — | ||||||||||||
| 19,363 | (3) | $ | 121,793 | 11,831 | (10) | $ | 74,417 | |||||||||||||
| 36,823 | (4) | $ | 231,617 | 26,592 | (11) | $ | 167,264 | |||||||||||||
| Matthew R. Horvath | 6,423 | (2) | $ | 40,401 | — | (9) | $ | — | ||||||||||||
| 9,052 | (3) | $ | 56,937 | 5,530 | (10) | $ | 34,784 | |||||||||||||
| 12,844 | (4) | $ | 80,789 | 9,275 | (11) | $ | 58,340 | |||||||||||||
| 29,103 | (5) | $ | 183,058 | — | $ | — | ||||||||||||||
| Susan C. Benedict | 6,551 | (2) | $ | 41,206 | — | (9) | $ | — | ||||||||||||
| 7,396 | (3) | $ | 46,521 | 4,518 | (10) | $ | 28,418 | |||||||||||||
| 10,494 | (4) | $ | 66,007 | 7,579 | (11) | $ | 47,672 | |||||||||||||
| 29,103 | (5) | $ | 183,058 | — | $ | — | ||||||||||||||
| Salvatore D. Orsini | 2,744 | (6) | $ | 17,260 | 1,749 | (12) | $ | 11,001 | ||||||||||||
| 1,431 | (7) | $ | 9,001 | 3,352 | (13) | $ | 21,084 | |||||||||||||
| 11,641 | (8) | $ | 73,222 | — | $ | — | ||||||||||||||
| Rajaey Kased | 4,306 | (2) | $ | 27,085 | — | (9) | $ | — | ||||||||||||
| 4,001 | (3) | $ | 25,166 | 2,444 | (10) | $ | 15,373 | |||||||||||||
| 5,338 | (4) | $ | 33,576 | 3,854 | (11) | $ | 24,242 | |||||||||||||
| 14,551 | (5) | $ | 91,526 | — | $ | — | ||||||||||||||
(1)Time-based restricted share units (RSUs) and performance shares are paid after the performance period ends and on the vesting dates indicated in the following footnotes. For performance shares, the actual number of common shares earned depends on achieving the related performance objectives. The theoretical value of the outstanding RSUs and performance shares, as reported in the adjacent column, is based on the price of our common shares on December 31, 2024 ($6.29). To calculate the number and value of performance shares, we compare the Company's performance through 2024 against the threshold, target, and maximum performance levels for each grant. The potential payout amount reported in this column reflects the highest applicable level if performance falls between levels.
(2)These time-based share units vested on March 3, 2025.
(3)These time-based share units vest on March 2, 2026.
(4)These time-based share units vest on March 1, 2027.
(5)These time based Phantom share units vest on June 20, 2025.
(6)These time-based share units vested pro rata on February 28, 2025 due to workforce reduction, resulting in the elimination of Mr. Orsini’s position. 2,744 shares vested and 1,552 were forfeited. Actual results are shown.
(7)These time-based share units vested pro rata on February 28, 2025 due to workforce reduction, resulting in the elimination of Mr. Orsini’s position. 1,431 shares vested and 3,254 were forfeited. Actual results are shown.
(8)These time-based phantom share units vested on February 28, 2025 due to workforce reduction, resulting in the elimination of Mr. Orsini’s position. Actual results are shown.
(9)These Performance Shares vested on March 3, 2025. Performance on EPS, TSR and ROIC was below threshold and therefore no shares were earned. Actual results are shown.
(10)These performance shares are scheduled to vest on March 2, 2026 subject to achievement of specified financial performance metrics. Performance is currently forecasted to be below threshold for TSR, EPS and ROIC (threshold is shown).
(11)These performance shares are scheduled to vest on March 1, 2027 subject to achievement of specified financial performance metrics. Performance is currently forecasted to be below threshold for TSR and EPS (threshold is shown). Performance is currently forecasted to be between threshold and target for ROIC (target is shown).
(12)These performance shares vested pro rata at target attainment on February 28, 2025 due to workforce reduction. 3,352 shares vested and 3,794 were forfeited, resulting in the elimination of Mr. Orsini’s position. Actual results are shown.
(13)These performance shares vested pro rata at target attainment on February 28, 2025 due to workforce reduction. 1,749 shares vested and 7,954 were forfeited, resulting in the elimination of Mr. Orsini’s position. Actual results are shown.
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Shares Vested in 2024
| Stock Awards | ||||||||
| Executive Officer | Number of Time-Based RSUs Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||
| James Zizelman | 6,258 | $ | 106,257 | |||||
| Matthew R. Horvath | 13,975 | $ | 224,748 | |||||
| Susan C. Benedict | 3,865 | $ | 65,935 | |||||
| Salvatore D. Orsini | — | $ | — | |||||
| Rajaey Kased | 2,640 | $ | 44,912 | |||||
Non-Qualified Deferred Compensation Plan
The Compensation Committee approved implementation of a non-qualified deferred compensation plan for our executive officers and certain other leaders in the organization, effective June 1, 2017. The plan provides the opportunity to defer current compensation and taxes until a future date, and to receive tax deferred investment returns on deferred amounts. The Company will provide matching contributions to the extent that participants are unable to receive a full match in the 401(k) plan, due to contribution and/or compensation limits. The plan allows eligible employees to defer up to 80% of their base salary, up to 100% of AIP and up to 100% of LTIP. The minimum deferral period is three years.
As of December 31, 2024 no amounts were deferred by any of the NEOs.
Potential Payments upon Termination or Change in Control
We have entered into a Change in Control Agreement (the “CIC Agreement”) with certain executive officers. There is no excise tax gross-up payment under the CIC Agreements. Our change in control agreements were designed to provide for continuity of management in the event of change in control of the Company. We think it is important for our executives to be able to react neutrally to a potential change in control and not be influenced by personal financial concerns. We believe our arrangements are consistent with market practice. For our NEOs covered under a CIC Agreement, we set the level of benefits, as described below, to remain competitive with our select peer group. All payments under the CIC Agreement are conditioned on a non-compete, non-solicitation and non-disparagement agreement.
We believe that the CIC Agreements should compensate executives displaced by a change in control and not serve as an incentive to increase personal wealth. Therefore, our CIC Agreements are “double trigger” arrangements. In order for the executives to receive the payments and benefits set forth in the agreement, both of the following must occur:
•a change in control of the Company; and
•a triggering event:
◦the Company separates NEO from service, other than in the case of a termination for cause, within two years of the change in control; or
◦NEO separates from service for good reason (defined as material reduction in NEO’s title, responsibilities, power or authority, or assignment of duties that are materially inconsistent to previous duties, or material reduction in NEO’s compensation and benefits) within two years of the change in control.
On April 13, 2023, we entered into a CIC Agreement with Mr. Zizelman as part of his employment agreement. The terms of this CIC Agreement are substantially similar to those described above.
If the events listed above occur and the executive delivers a release to the Company, we will be obligated to provide the following to Mr. Zizelman, Mr. Horvath, Ms. Benedict, Mr. Kased and Mr. Orsini:
•two times the greater of the NEO’s annual base salary at the time of a triggering event or at the time of the occurrence of a change in control;
•two times the greater of the NEO’s target annual incentive award at the time of termination or the actual incentive award received for the fiscal year prior to termination;
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•an amount equal to the pro rata amount of annual incentive compensation the NEO would have been entitled to at the time of a triggering event calculated based on the performance goals that were achieved in the year in which the triggering event occurred; and
•continued life and health insurance benefits for twenty-four months following termination.
Upon a change in control as defined by the 2016 LTIP, time-based RSUs and Performance Shares granted under that plan remain subject to forfeiture under the original terms of the grant unless a triggering event, as described above, occurs within two years of the effective date of the change in control.
Mr. Zizelman’s severance protection is provided in his employment agreement. If Mr. Zizelman is terminated without cause, we will be obligated to pay an amount equal to the sum of one year of base salary and target annual incentive, and continue health and welfare benefits coverage for twelve months. No severance is payable if the NEO’s employment is terminated for cause.
Mr. Horvath, Ms. Benedict, Mr. Kased and Mr. Orsini participate in the Company Severance Plan. If we terminate a covered executive without cause, we will be obligated under the Severance Plan to pay the executive’s salary for one year and continue health and welfare benefits coverage over the same period of time.
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Value of Payment Presuming Hypothetical December 31, 2024 Termination Date
Upon resignation, no payments are due to any NEO in the table below. Assuming the events described in the table below occurred on December 31, 2024, each NEO would be eligible for the following payments and benefits:
| Termination Without Cause | Change in Control and NEO Resigns for Good Reason or is Terminated Without Cause | Disability | Death | Retirement(2) | |||||||||||||
| James Zizelman | |||||||||||||||||
| Base Salary | $ | 680,000 | $ | 1,360,000 | $ | 170,000 | $ | — | $ | — | |||||||
| Annual Incentive Award | $ | 680,000 | $ | 1,360,000 | $ | — | $ | — | $ | — | |||||||
| Prorated Annual Incentive Award in Year of Termination | $ | 102,000 | $ | 102,000 | $ | 102,000 | $ | 102,000 | $ | 102,000 | |||||||
| Unvested and Accelerated Restricted Common Shares and Share Units | $ | 203,672 | $ | 421,475 | $ | 421,475 | $ | 421,475 | $ | 421,475 | |||||||
| Unvested and Accelerated Performance Shares | $ | 277,537 | $ | 515,112 | $ | 515,112 | $ | 515,112 | $ | 515,112 | |||||||
| Health and Welfare Benefits | $ | 21,587 | $ | 43,175 | $ | — | $ | — | $ | — | |||||||
280G Reduction or Excise Tax(1) | $ | — | $ | (544,637) | $ | — | $ | — | $ | — | |||||||
| Total | $ | 1,964,796 | $ | 3,257,125 | $ | 1,208,587 | $ | 1,038,587 | $ | 1,038,587 | |||||||
| Matthew R. Horvath | |||||||||||||||||
| Base Salary | $ | 474,375 | $ | 948,750 | $ | — | $ | — | $ | — | |||||||
| Annual Incentive Award | $ | — | $ | 569,250 | $ | — | $ | — | $ | — | |||||||
| Prorated Annual Incentive Award in Year of Termination | $ | — | $ | 42,694 | $ | 42,694 | $ | 42,694 | $ | — | |||||||
| Unvested and Accelerated Restricted Common Shares and Share Units | $ | 277,565 | $ | 360,036 | $ | 360,036 | $ | 360,036 | $ | — | |||||||
| Unvested and Accelerated Performance Shares | $ | 128,263 | $ | 216,998 | $ | 216,998 | $ | 216,998 | $ | — | |||||||
| Health and Welfare Benefits | $ | 28,302 | $ | 56,603 | $ | — | $ | — | $ | — | |||||||
280G Reduction or Excise Tax(1) | $ | — | $ | (292,154) | $ | — | $ | — | $ | — | |||||||
| Total | $ | 908,505 | $ | 1,902,177 | $ | 619,728 | $ | 619,728 | $ | — | |||||||
| Susan C. Benedict | |||||||||||||||||
| Base Salary | $ | 387,608 | $ | 775,216 | $ | — | $ | — | $ | — | |||||||
| Annual Incentive Award | $ | — | $ | 465,130 | $ | — | $ | — | $ | — | |||||||
| Prorated Annual Incentive Award in Year of Termination | $ | — | $ | 34,885 | $ | 34,885 | $ | 34,885 | $ | — | |||||||
| Unvested and Accelerated Restricted Common Shares and Share Units | $ | 267,885 | $ | 335,721 | $ | 335,721 | $ | 335,721 | $ | — | |||||||
| Unvested and Accelerated Performance Shares | $ | 114,781 | $ | 187,285 | $ | 187,285 | $ | 187,285 | $ | — | |||||||
| Health and Welfare Benefits | $ | 1,032 | $ | 2,064 | $ | — | $ | — | $ | — | |||||||
280G Reduction or Excise Tax(1) | $ | — | $ | (223,302) | $ | — | $ | — | $ | — | |||||||
| Total | $ | 771,306 | $ | 1,576,999 | $ | 557,891 | $ | 557,891 | $ | — | |||||||
Salvatore D. Orsini | |||||||||||||||||
| Base Salary | $ | 346,112 | $ | 692,224 | $ | — | $ | — | $ | — | |||||||
| Annual Incentive Award | $ | — | $ | 346,112 | $ | — | $ | — | $ | — | |||||||
| Prorated Annual Incentive Award in Year of Termination | $ | — | $ | 25,958 | $ | 25,958 | $ | 25,958 | $ | — | |||||||
| Unvested and Accelerated Restricted Common Shares and Share Units | $ | 97,610 | $ | 129,300 | $ | 129,300 | $ | 129,300 | $ | — | |||||||
| Unvested and Accelerated Performance Shares | $ | 33,908 | $ | 68,813 | $ | 68,813 | $ | 68,813 | $ | — | |||||||
| Health and Welfare Benefits | $ | 29,050 | $ | 58,099 | $ | — | $ | — | $ | — | |||||||
280G Reduction or Excise Tax(1) | $ | — | $ | (113,897) | $ | — | $ | — | $ | — | |||||||
| Total | $ | 506,679 | $ | 1,206,610 | $ | 224,072 | $ | 224,072 | $ | — | |||||||
| Rajaey Kased | |||||||||||||||||
| Base Salary | $ | 328,600 | $ | 657,200 | $ | — | $ | — | $ | — | |||||||
| Annual Incentive Award | $ | — | $ | 328,600 | $ | — | $ | — | $ | — | |||||||
| Prorated Annual Incentive Award in Year of Termination | $ | — | $ | 32,860 | $ | 32,860 | $ | 32,860 | $ | — | |||||||
| Unvested and Accelerated Restricted Common Shares and Share Units | $ | 141,361 | $ | 176,789 | $ | 176,789 | $ | 176,789 | $ | — | |||||||
| Unvested and Accelerated Performance Shares | $ | 55,573 | $ | 93,059 | $ | 93,059 | $ | 93,059 | $ | — | |||||||
| Health and Welfare Benefits | $ | 28,324 | $ | 56,647 | $ | — | $ | — | $ | — | |||||||
280G Reduction or Excise Tax(1) | $ | — | $ | (191,134) | $ | — | $ | — | $ | — | |||||||
| Total | $ | 553,858 | $ | 1,154,021 | $ | 302,708 | $ | 302,708 | $ | — | |||||||
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(1)Code Section 280G provides guidelines that govern payments triggered by a change in control, known as parachute payments. If such payment exceeds 2.99 times the average annual compensation (safe harbor limit) for certain individuals, the payments may result in adverse tax consequences and excise taxes. The CIC Agreements provide that the executive shall receive the greater of the safe harbor amount or the aggregate parachute value less the applicable excise tax.
(2)Mr. Zizelman is retirement eligible. All other NEOs are not retirement eligible.
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Pay Versus Performance Disclosure
This disclosure has been prepared in accordance with the SEC’s pay versus performance rules in Item 402(v) of Regulation S-K (“Item 402(v)”) and does not necessarily reflect value actually realized by the NEOs or how the Compensation Committee evaluates compensation decisions in light of Company or individual performance. For discussion of how the Compensation Committee seeks to align pay with performance when making compensation decisions, please review the Compensation Discussion and Analysis beginning on page 27. The following tables and related disclosures provide information about (i) the total compensation (“SCT Total”) of our principal executive officer (“PEO”), who was our President and Chief Executive Officer, and our non-PEO Named Executive Officers (collectively, the “Other NEOs”) as presented in the Summary Compensation Table on page 39, (ii) the “compensation actually paid” (“CAP”) to our PEO and our Other NEOs, as calculated pursuant to Item 402(v), (iii) certain financial performance measures, and (iv) the relationship of the CAP to those financial performance measures. The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. James Zizelman (our President & CEO) and Mr. Jon DeGaynor (our former President & CEO) for each corresponding year in the total common column of the summary compensation table. Mr. DeGaynor served as our CEO and President during 2020 through 2022. Mr. DeGaynor terminated employment on January 30, 2023. Mr. Zizelman was appointed CEO and President effective January 31, 2023.
| Summary Compensation Table Total for PEO 1 Mr. DeGaynor (b) | Summary Compensation Table Total for PEO 2 Mr. Zizelman (b) | Compensation Actually Paid for PEO 1 Mr. DeGaynor (c) | Compensation Actually Paid for PEO 2 Mr. Zizelman (c) | Average Summary Compensation Table total for Non-PEO NEOs (d) | Average Compensation Actually Paid to Non-PEO NEOs (e) | Value of Initial Fixed $100 Investment as of 12/31/2019 based on | ||||||||||||||||||||||||||
| Year (a) | Company TSR (f) | Peer Group TSR (g)(1) | Net Income ($000) (h) | Operating Income ($000) (i) | ||||||||||||||||||||||||||||
| 2024 | $ | — | $ | $ | — | $ | $ | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||||||||||
| 2023 | $ | $ | $ | ( | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||
| 2022 | $ | $ | — | $ | $ | — | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||
| 2021 | $ | $ | — | $ | ( | $ | — | $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| 2020 | $ | $ | — | $ | $ | — | $ | $ | $ | $ | $ | ( | $ | ( | ||||||||||||||||||
(1) The peer group consists of the companies that make up the Dow Jones U.S. Auto Parts Index. We reviewed the methodology applied for the years 2022 and 2023, which were reported as 103 and 102, respectively. The values for 2022 and 2023 have been restated above to account for dividend adjustments, which aligns with the methodology used in other years.
Names of PEOs and Other NEOs (columns (b), (c), (d) and (e))
2024: PEO: Mr. Zizelman ; Other NEOs: Mr. Horvath, Ms. Benedict, Mr. Kased and Mr. Orsini
2023: PEOs: Mr. DeGaynor and Mr. Zizelman ; Other NEOs: Mr. Horvath, Ms. Benedict, Mr. Ferraiolo and Mr. Orsini
2022: PEO: Mr. DeGaynor ; Other NEOs: Mr. Horvath, Mr. Borne, Mr. Zizelman and Ms. Benedict
2021: PEO: Mr. DeGaynor ; Other NEOs: Mr. Horvath, Mr. Borne, Mr. Zizelman, Ms. Benedict, Mr. Krakowiak and Mr. Dono
2020: PEO: Mr. DeGaynor ; Other NEOs: Mr. Krakowiak, Mr. Borne, Mr. Dono and Mr. Heigel
Adjustments to Calculate Compensation Actually Paid to PEO (column (c)) and Average Compensation Actually Paid to Other NEOs (column (e))
The table below describes the adjustments, each of which is required by SEC rules, to calculate CAP Amounts from the SCT Total of our PEO (column (b)) and our Other NEOs (column (d)). The SCT Total and CAP Amounts do not reflect the actual amount of compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402(v).
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| PEO 2024 Mr. Zizelman | Other NEOs 2024 | |||||||
| SCT Total Compensation | $ | $ | ||||||
| Deduct Amounts reported in SCT Stock Awards column | $ | $ | ||||||
| Equity Awards Granted during Fiscal Year: | ||||||||
| Add Fair Value of Nonvested Awards as of Year End | $ | $ | ||||||
| Add/Subtract the Change in Fair Value from Prior Year End to Current Year End | $ | ( | $ | ( | ||||
| Add/Subtract the Change in Fair Value from Prior Year End to Vesting Date | $ | ( | $ | ( | ||||
| Compensation Actually Paid (CAP) | $ | $ | ( | |||||
Total Shareholder Return (columns (f) and (g))
Total shareholder return assumes that dividends were reinvested on the day of issuance.
Peer Group Total Shareholder Return (column (g))
The peer group used in this disclosure is the Dow Jones U.S. Auto Parts Total Return Index, which is the same peer group used in Part II, Item 5 of our Form 10-K.
Net Income (column (h))
Net Income as reported in the Company’s Consolidated Statements of Income included in our Form 10-K.
Operating Income (column (i))
Performance Measures
The following list identifies the six most important performance measures used by our Compensation Committee to link CAP to our NEOs in 2024, calculated in accordance with SEC regulations, to company performance. The role of each of these performance measures on our NEOs’ compensation is discussed in the Compensation Disclosure and Analysis section. The measures in this list are not ranked.
•Operating Income
•Free Cash Flow
•Relative TSR
•Earnings Per Share
•Return On Invested Capital
•Individual Performance
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Relationship Between Compensation Actually Paid and Performance
The graphs below show the relationship of compensation actually paid to our PEOs and Other NEOs to (i) the Company’s net income, (ii) the Company’s operating income, (iii) the Company’s TSR and (iv) the peer group TSR based on the Dow Jones U.S. Auto Parts Total Return Index. CAP, as calculated in accordance with Item 402(v), reflects adjustments to the fair value of equity awards during the years presented. Factors impacting the fair value of equity awards include the price of our Common Shares at year end, as well as the projected and actual achievement of performance goals that do not include net income. These adjustments contributed significantly to the change in CAP reported for 2020 through 2024. The PEO compensation actually paid for 2023 in the graphs is the total combined amount for Mr. DeGaynor and Mr. Zizelman.
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CEO Pay Ratio
In compliance with Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K, we undertook activities to calculate the ratio of our CEO’s total annual compensation to that of our median employee.
Pursuant to SEC rules, we are providing the following information about the ratio of the annual total compensation of our median employee to the annual total compensation of Mr. Zizelman, our CEO. Mr. Zizelman’s 2024 compensation of $2,124,646 is based on the following:
Salary: a salary of $680,000
Annual Incentive: Due to company performance, no annual incentive was paid in calendar year 2024 to Mr. Zizelman.
Long-Term Incentive: the full value of his long-term incentive awards granted in 2024.
All Other Compensation: as reported in the Summary Compensation Table.
We determined that, as of December 31, 2024, our employee population consisted of approximately 4,450 individuals globally. We selected December 31, 2023, which was the last day of fiscal 2023, as the date upon which we would identify the median employee. The median employee is required to be updated only after the passage of three years or if recalculation would cause a material change in the ratio. For 2024, as permitted, we used the employee who was identified in 2023 as our median paid employee as that individual is still employed and there have been no significant changes to our global employee population.
Our median employee’s total annual compensation in 2024 was $11,294. Our CEO’s total annual compensation in 2024 for purposes of calculating the CEO pay ratio was $2,124,646. The ratio of our CEO’s total annual compensation compared to the total annual compensation of our median employee is 188 to 1. We also compared the CEO's 2024 total cash compensation to the total cash compensation of our median paid employee. The total cash compensation ratio is 63 to 1.
Director Compensation
Non-employee directors are compensated for their services as directors as shown in the following chart.
| 2024 Schedule of Director Fees | |||||
| Cash Compensation | |||||
| Annual Retainer-Director | $ | 90,000 | |||
| Annual Retainer-Chairman | $ | 170,000 | |||
| Additional Compensation: | |||||
| Audit Committee Chair | $ | 20,000 | |||
| Compensation Committee Chair | $ | 15,000 | |||
| Nominating & Corporate Governance Committee Chair | $ | 13,000 | |||
| Compliance & Ethics Committee Chair | $ | 13,000 | |||
| Equity Compensation | |||||
| Date of grant value | $ | 135,000 | |||
The Compensation Committee reviews director compensation annually relative to data of the Company’s Comparator Group provided by its independent compensation consultant, and recommends changes to the full Board for approval, as appropriate. For 2024, the annual cash retainer and the annual equity grant was unchanged from 2023.
Pursuant to the Directors’ Restricted Shares Plan, non-employee directors are eligible to receive awards of restricted common shares. On March 11, 2024, each director was granted 8,122 restricted common shares. The restrictions on those shares lapsed on March 3, 2025.
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Director Compensation Table
| Non-Employee Director | 2024 Annual Cash Retainer | Committee Chair Fees | Fees Earned or Paid in Cash | Stock Awards ($)(1) | Total Compensation ($) | ||||||||||||
| Ira C. Kaplan | $ | 90,000 | $ | — | $ | 90,000 | $ | 135,000 | $ | 225,000 | |||||||
| Kim Korth | $ | 90,000 | $ | 15,000 | $ | 105,000 | $ | 135,000 | $ | 240,000 | |||||||
| William M. Lasky | $ | 170,000 | $ | 13,000 | $ | 183,000 | $ | 135,000 | $ | 318,000 | |||||||
| George S. Mayes, Jr. | $ | 90,000 | $ | 13,000 | $ | 103,000 | $ | 135,000 | $ | 238,000 | |||||||
| Paul J. Schlather | $ | 90,000 | $ | — | $ | 90,000 | $ | 135,000 | $ | 225,000 | |||||||
| Frank S. Sklarsky | $ | 90,000 | $ | 20,000 | $ | 110,000 | $ | 135,000 | $ | 245,000 | |||||||
| Sheila Rutt | $ | 90,000 | $ | — | $ | 90,000 | $ | 135,000 | $ | 225,000 | |||||||
| Carsten Reinhardt | $ | 90,000 | $ | — | $ | 90,000 | $ | 135,000 | $ | 225,000 | |||||||
(1)The amounts included in the “Stock Awards” column represent fair value at grant date of restricted common share awards to directors, computed in accordance with FASB ASC Topic 718. For a discussion of the valuation assumptions, see Note 8 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2024.
Director Share Ownership Guidelines
The Board has established share ownership guidelines for all non-employee directors. These guidelines provide that each director should own Company common shares equal in market value to four times the cash portion of the Board’s annual retainer. The Directors have a five-year accumulation period from implementation of the guideline or appointment to the Board to achieve compliance and are restricted from selling any common shares earned under a Company equity-based compensation plan until their ownership guideline has been reached.
Maximum Annual Director Compensation Policy
The Directors’ Restricted Stock Plan has a current maximum annual limit for equity grants to any non-employee director of 10,000 shares. The Board has adopted an annual limit for total compensation paid to a non-employee director of $350,000 in 2024.
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OTHER INFORMATION
Shareholder’s Proposals for 2026 Annual Meeting of Shareholders
Matters for Inclusion in the Proxy Materials for the 2026 Annual Meeting of Shareholders
Proposals of shareholders intended to be presented, pursuant to Rule 14a-8 under the Exchange Act, at our 2026 Annual Meeting of Shareholders must be received by Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377, on or before the close of business on December 4, 2025, for inclusion in our proxy statement and form of proxy relating to the 2026 Annual Meeting of Shareholders.
Matters for Consideration at the 2026 Annual Meeting of Shareholders, but not for Inclusion in the Proxy Materials
Matters for consideration at the 2026 Annual Meeting of Shareholders, but not for inclusion in the proxy materials, must be received by Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377 no later than the close of business on February 17, 2026. If notice of a matter for consideration is not timely received, the proxies solicited by the Board of Directors for the 2026 Annual Meeting of Shareholders will confer discretionary authority to vote on the proposal if presented at the meeting.
Universal Proxy Rule Deadline for the 2026 Annual Meeting of Shareholders
In addition to satisfying the requirements set forth under our Amended and Restated Code of Regulations, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees, other than the Board’s nominees, at the 2026 Annual Meeting of Shareholders must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act, which notice must be postmarked or transmitted electronically to Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377, no later than 60 days prior to the one-year anniversary date of the 2025 Annual Meeting of Shareholders, which is March 14, 2026.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our officers and directors and holders of more than 10% of our common shares to file with the SEC initial reports of ownership and reports of changes in ownership of our common shares. Such persons are required by regulations of the SEC to furnish us with copies of all such filings. As a matter of practice, our staff and legal advisors assist our officers and directors in preparing initial reports of ownership and reports of changes in ownership and file those reports on their behalf. Based on our review of the copies of such forms we have received, as well as information provided and representations made by the reporting persons, we believe that all required Section 16(a) filing requirements were met with respect to the year ended December 31, 2024, except for Mr. Reinhardt who filed one late report for one transaction.
Interest in Matters to Be Acted Upon
The Company is not aware of any substantial interest, direct or indirect, by security holdings or otherwise, of any director, executive officer, nominee for election as a director, or associate thereof in any matter to be acted upon at the Annual Meeting other than the nominees have an interest in the election of directors and each executive officer and the Board has an indirect interest in the advisory vote on executive compensation to the extent compensation is addressed. No director, executive officer, or associate thereof has any material interest in the ratification of Company’s registered independent public accounting firm. Finally, the approval of the 2025 Long-Term Incentive Plan may result in the granting of awards under such plan to directors and executive officers. Prior awards under the Company’s equity-incentive compensation plans are described in this proxy statement.
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Other Matters
If the enclosed proxy is executed and returned to us via mail, telephone or Internet, the persons named in it will vote the common shares represented by that proxy at the meeting. The form of proxy permits specification of a vote for the election of directors as set forth under “Election of Directors,” the withholding of authority to vote in the election of directors, or the withholding of authority to vote for one or more specified nominees. When a choice has been specified in the proxy, the common shares represented will be voted in accordance with that specification. If no specification is made, those common shares will be voted at the Annual Meeting to (i) elect directors as set forth under “Election of Directors”, and (ii) FOR (a) the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2025; and (b) the approval of the advisory resolution on executive compensation on the Say-on-Pay vote, and (c) approval of the 2025 Long-Term Incentive Plan.
The holders of shares of a majority of the common shares outstanding on the record date, present in person or by proxy, shall constitute a quorum for the transaction of business to be considered at the Annual Meeting of Shareholders.
If any other matter properly comes before the meeting, the persons named in the proxy will vote thereon in accordance with their judgment. We do not know of any other matter that may be presented for action at the meeting and we have not received any timely notice that any of our shareholders intend to present a proposal at the meeting.
By order of the Board of Directors,
Robert M. Loesch
Secretary
Dated: April 3, 2025
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Appendix A
STONERIDGE, INC.
2025 LONG-TERM INCENTIVE PLAN
SECTION 1.Purpose; Definitions.
The purpose of the Stoneridge, Inc. 2025 Long-Term Incentive Plan (the “LTIP”) is to promote the success of Stoneridge, Inc. (the “Company”) for the benefit of its shareholders by enabling the Company to offer Eligible Individuals cash and stock-based incentives in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and the Company’s shareholders. The LTIP is effective as of the date set forth in Section 17.
(a)“Applicable Law” means the requirements relating to the administration of equity-based awards and the related shares under U.S. state corporate law, U.S. federal and state securities laws, the rules of any stock exchange or quotation system on which the shares are listed or quoted, and any other applicable laws, including tax laws, of any U.S. or non-U.S. jurisdictions where Awards are, or will be, granted under the LTIP.
(b)“Award” means any award of Stock Options, Share Appreciation Rights, Restricted Shares, Restricted Share Units, Performance Shares, Performance Share Units, Share Appreciation Rights or Other Share-Based Awards under the LTIP.
(c)“Award Agreement” means a written or electronic agreement entered into by the Company and a Participant, or a written or electronic statement issued by the Company to a Participant, which in either case contains (either expressly or by reference to this Plan or any subplan created hereunder) the terms and provisions applicable to an Award granted under the Plan, including any amendment or modification thereof. The Committee may provide for the use of electronic, Internet or other non-paper Award Agreements, and the use of electronic, Internet or other non-paper means for the acceptance thereof and actions thereunder by a Participant.
(d)“Board” means the Board of Directors of the Company.
(e)“Cause” means, unless otherwise provided by the Committee, (i) “Cause” as defined in any Individual Agreement to which the Participant is a party, or (ii) if there is no such Individual Agreement or if it does not define Cause:
(1)misappropriation of funds from the Company or dishonesty in the course of fulfilling the Participant’s employment duties;
(2)conviction of a felony;
(3)commission of a crime or act or series of acts involving moral turpitude;
(4)commission of an act or series of acts of dishonesty that are materially inimical to the best interests of the Company;
(5)violation of the Company’s Code of Conduct or other Company policy;
(6)breach of any material term of an employment agreement, if any;
(7)willful and repeated failure to perform the duties associated with the Participant’s position, which failure has not been cured within thirty (30) days after the Company gives notice thereof to the Participant; or
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(8)failure to cooperate with any Company investigation or with any investigation, inquiry, hearing or similar proceedings by any governmental authority having jurisdiction over the Participant or the Company.
The Committee shall, unless otherwise provided in an Individual Agreement with the Participant, have the sole discretion to determine whether “Cause” exists, and its determination shall be final.
(f)“Change in Control” has the meaning set forth in Section 11(b).
(g)“Change in Control Price” has the meaning set forth in Section 11(d).
(h)“Code” means the Internal Revenue Code of 1986, as amended, and any lawful regulations or other lawful guidance promulgated thereunder. Whenever a reference is made to a specific Code Section, such reference shall be deemed to include any successor Code Section having the same or similar purpose.
(i)“Committee” means any committee of the Board duly authorized by the Board to administer the LTIP; provided, however, that unless otherwise determined by the Board, the Committee shall consist solely of two (2) or more Outside Directors. If no committee is duly authorized by the Board to administer the LTIP, the term “Committee” shall be deemed to refer to the Board for all purposes under the LTIP. The Board may abolish any Committee or re-vest in itself any previously delegated authority from time to time, and will retain the right to exercise the authority of the Committee to the extent consistent with Applicable Law.
(j)“Company” means Stoneridge, Inc., an Ohio corporation, or any successor corporation.
(k)“Consultant” means any natural person who is an advisor or consultant or other service provider to the Company or any Subsidiary.
(l)“Disability” means a permanent and total disability as defined in Section 22(e)(3) of the Code.
(m)“Eligible Individual” means an employee of the Company, Non-Employee Director, or Consultant who is designated by the Committee in its discretion as eligible to receive Awards subject to the conditions set forth herein.
(n)“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(o)“Fair Market Value” means, as of a given date (in order of applicability): (i) the closing price of a Share on the principal exchange on which the Shares are then trading, if any, on the day immediately prior to such date, or if Shares were not traded on the day previous to such date, then on the next preceding trading day during which a sale occurred; or (ii) if Shares are not traded on an exchange but are quoted on NASDAQ or a successor quotation system, (A) the last sale price (if Shares are then listed as a National Market Issue under the NASD National Market System) or (B) if Shares are not then so listed, the mean between the closing representative bid and asked prices for Shares on the day previous to such date as reported by NASDAQ or such successor quotation system; or (iii) if Shares are not publicly traded on an exchange and not quoted on NASDAQ or a successor quotation system, the mean between the closing bid and asked prices for Shares, on the day previous to such date, as determined in
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good faith by the Committee; or (iv) if Shares are not publicly traded, the fair market value established by the Committee acting in good faith.
(p)“Incentive Stock Option” means any Stock Option intended to be and designated as, and that otherwise qualifies as, an “Incentive Stock Option” within the meaning of Section 422 of the Code.
(q)“Individual Agreement” means an employment or similar agreement between a Participant and the Company or one of its Subsidiaries.
(r)“LTIP” means this Stoneridge, Inc. 2025 Long-Term Incentive Plan, as amended from time to time.
(s)“Non-Employee Director” means a director or a member of the Board of the Company who is not an employee of the Company.
(t)“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.
(u)“Other Share-Based Awards” means an Award granted pursuant to Section 11 that is valued, in whole or in part, by reference to, or is otherwise based on, Shares.
(v)“Participant” means an Eligible Individual to whom an Award has been granted pursuant to the LTIP.
(w)“Outside Director” means a member of the Board who is (a) a “non-employee director” within the meaning of Rule 16b-3(b)(3) under Section 16(b) of the Exchange Act as then in effect or any successor provision and (b) “independent” under the listing standards or rules of the securities exchange upon which the Shares are traded, but only to the extent such independence is required to take the action at issue pursuant to such standards or rules.
(x)“Performance Shares” has the meaning set forth in Section 8.
(y)“Performance Share Units” has the meaning set forth in Section 8.
(z)“Restricted Shares” means an Award of Shares that is granted pursuant to Section 6 and is subject to restrictions.
(aa)“Restricted Share Units” means an Award of Restricted Share Units that is granted pursuant to Section 6 and is subject to restrictions.
(bb)“Section 16 Participant” means a Participant under the LTIP who is then subject to Section 16 of the Exchange Act.
(cc)“Share” means a common share, without par value, of the Company.
(dd)“Share Appreciation Right” means an Award of a right to receive an amount from the Company that is granted pursuant to Section 7.
(ee)“Stock Option” or “Option” means any option to purchase Shares that is granted pursuant to Section 5.
(ff)“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in that chain. For purposes
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of Section 409A of the Code “at least 50%” is to be used instead of “at least 80%” in applying the tests to determine whether a corporation is a service recipient.
(gg)“Termination of Service” means the termination of the applicable Participant’s employment with the Company or any Subsidiary, or performance of services as a Non-Employee Director or Consultant for the Company. With respect to any Award that constitutes a “nonqualified deferred compensation plan” within the meaning of Section 409A of the Code, a Participant shall not be considered to have experienced a “Termination of Service” unless the Participant has experienced a “separation from service” within the meaning of Section 409A of the Code. If a Participant is granted a leave of absence by the Company or any Subsidiary, the Participant’s employment with the Company or such Subsidiary will not be considered terminated, and the Participant shall be deemed an employee of the Company or such Subsidiary during such approved leave of absence or any extension thereof granted by the Company or such Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed 90 days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three months following the 91st day of such leave, any Incentive Stock Option held by a Participant shall cease to be treated as an Incentive Stock Option and shall be treated for tax purposes as a Nonqualified Stock Option.
SECTION 2.Administration.
The LTIP shall be administered by the Committee. The Committee shall have full power to interpret and administer the LTIP and full authority to select the individuals to whom Awards will be granted and to determine the type and amount of any Awards to be granted to each Participant, the consideration, if any, to be paid for any Awards, the timing of any Awards, the terms and conditions of any Award granted under the LTIP, and the terms and conditions of the related agreements that will be entered into with Participants. As to the selection of and grant of Awards to Participants who are not executive officers of the Company or any Subsidiary or Section 16 Participants, the Committee may delegate its responsibilities to members of the Company’s management in a manner consistent with Applicable Law.
The Committee shall have the authority to adopt, alter and repeal such rules, guidelines and practices governing the LTIP, including the delegation of its responsibilities (to the extent permitted by Applicable Law) and the authority to establish sub-plans or specific guidelines of issuances outside of the United States, as it shall, from time to time, deem advisable; to interpret the terms and provisions of the LTIP and any Award issued under the LTIP (and any agreements relating thereto); to direct employees of the Company or other advisors to prepare such materials or perform such analyses as the Committee deems necessary or appropriate; to waive any restrictions, conditions or limitations imposed on an Award (including any vesting conditions and performance conditions) at the time the Award is granted or at any time thereafter; and otherwise to supervise the administration of the LTIP.
Any interpretation or administration of the LTIP by the Committee, and all actions and determinations of the Committee, shall be final, binding and conclusive on the Company, its shareholders, Subsidiaries, affiliates, all Participants in the LTIP, their respective legal representatives, successors and assigns, and all persons claiming under or through any of them.
To the maximum extent permitted by Applicable Law and to the extent not covered by insurance directly insuring such person, each officer or employee of the Company or any of its affiliates and member or former member of the Committee or the Board shall be indemnified and held harmless by the Company against any cost or expense or liability (including any sum paid in settlement of a claim with the approval of the Committee), and advanced amounts necessary to pay the foregoing at the earliest time and to the fullest extent permitted, arising out of any act or omission to act in connection with the administration of the LTIP, except to the extent arising out of such officer’s, employee’s, member’s, or former member’s own fraud or bad faith. Such indemnification shall be in addition to any right of indemnification the employees, officers, directors, or members or former officers, directors, or members may have under Applicable Law or under the Code of Regulations of the Company or the by-laws any of its affiliates. Notwithstanding anything else herein, this indemnification will not apply to the actions or determinations made by an individual with regard to Awards granted to such individual under the LTIP.
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SECTION 3.Shares Subject to the LTIP.
(a)Aggregate Shares Subject to the LTIP. Subject to adjustment as provided in Section 3(c), the total number of Shares reserved and available for Awards under the LTIP is 726,000, which is also the maximum number of Shares which may be issued subject to Incentive Stock Options. Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares or treasury shares. The maximum number of Shares subject to Awards granted during a single fiscal year to any Non-Employee Director, taken together with any cash fees paid to that Non-Employee Director during the fiscal year and the value of awards granted to the Non-Employee Director under any other equity compensation plan of the Company during the fiscal year, in each case, for such individual’s service on the Board shall not exceed a total value of $350,000 (calculating the value of any Awards based on the grant date fair value for financial reporting purposes), provided that, for any fiscal year in which a Non-Employee Director (i) first commences service on the Board, (ii) serves on a special committee of the Board, or (iii) serves as lead director or chairman of the Board, such limit shall be $400,000.
(b)Forfeiture or Termination of Awards of Shares and Recycling. If any Shares subject to any Award granted hereunder are forfeited or an Award otherwise terminates or expires without the issuance of Shares, the Shares subject to that Award shall again be available for distribution in connection with future Awards under the LTIP as set forth in Section 3(a). The following Shares shall not be available for issuance under the LTIP: (i) Shares not issued due to a net settlement of a Stock Option or Share Appreciation Right; (ii) Shares used to pay the exercise price or for withholding purposes such as for Stock Options or Stock Appreciation Rights; (iii) Shares which the Company may repurchase on the open market with proceeds from a Stock Option exercise; (iv) Shares delivered to the Company to satisfy withholding requirements for Awards other than Stock Options and Share Appreciation Rights; or (v) other Shares acquired or retained in similar fashion.
(c)Adjustment. In the event of any dividend (other than a regular cash dividend) or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, acquisition, split-up, spinoff, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event (an “Event”), and in the Committee’s opinion, such Event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the LTIP or with respect to an Award, then the Committee shall, in such manner as it may deem equitable, including, without limitation, adjust any or all of the following: (i) the number of Shares (or other securities or property) with respect to which Awards may be granted or awarded; (ii) the number of Shares (or other securities or property) subject to outstanding Awards; (iii) the grant or exercise price with respect to any Award; and (iv) the applicable limitations for grants to a Participant under Section 3. The Committee determination under this Section 3(c) shall be final, binding and conclusive. Any such adjustment made to an Incentive Stock Option shall be made in accordance with Section 424(a) of the Code and any adjustment to any other Award that is subject to Section 409A of the Code shall be made in accordance with Section 409A of the Code, unless otherwise determined by the Committee, in its sole discretion.
Upon the occurrence of an Event in which outstanding Awards are not to be assumed or otherwise continued following such an Event, the Committee may, in its discretion, terminate any outstanding Award without a Participant’s consent and (i) provide for either the purchase of any such Award for an amount of cash equal to the amount that could have been attained upon the exercise of such Award or realization of the Participant’s rights had such Award been currently exercisable or payable or fully vested (or without any payment if the Fair Market Value of one Share on the date of the Event is less than the per share exercise price of a Stock Option or Share Appreciation Right) or the replacement of such Award with other rights or property selected by the Committee in its sole discretion and/or (ii) provide that such Award shall be
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exercisable (whether or not vested) as to all shares covered thereby for at least 10 days prior to such Event.
The existence of the LTIP, Award Agreements and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Shares or the rights thereof or which are convertible into or exchangeable for Shares, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
(d)Minimum Vesting Standards. Any Award granted under LTIP shall be subject to a minimum vesting period of at least one year. Notwithstanding the immediately preceding sentence, (i) the Committee may permit and authorize acceleration of vesting of Awards pursuant to Section 2 of the LTIP, and (ii) the Committee may grant Awards covering up to five percent (5%) of the total number of Shares authorized under this Plan without respect to the minimum vesting standards set forth in this paragraph (d).
(e)Substitute Awards. In connection with an entity’s merger or consolidation with the Company or the Company’s acquisition of an entity’s property or stock, the Committee may grant Awards in substitution for any options or other stock or stock-based awards granted before such merger or consolidation by such entity or its Affiliate (“Substitute Awards”). Substitute Awards may be granted on such terms as the Committee deems appropriate, notwithstanding limitations on Awards in the LTIP. Substitute Awards will not count against the overall share limit (nor shall Shares subject to a Substitute Award be added to the Shares available for Awards under the LTIP as provided above), except that Shares acquired by exercise of substitute Incentive Stock Options will count against the maximum number of Shares that may be issued pursuant to the exercise of Incentive Stock Options under the LTIP. Additionally, in the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grants pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the LTIP and shall not reduce the Shares authorized for grant under the LTIP (and Shares subject to such Awards shall not be added to the Shares available for Awards under the LTIP as provided above); provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Eligible Individuals prior to such acquisition or combination.
SECTION 4.Eligibility.
All current and prospective Eligible Individuals are eligible to be granted Awards. Eligibility for the grant of Awards and actual participation in the LTIP shall be determined by the Committee in its sole discretion. Notwithstanding the foregoing, only Eligible Individuals who are employees of the Company or its Subsidiaries are eligible to be granted Incentive Stock Options under the LTIP. The vesting and exercise of Awards granted to a prospective Eligible Individual are conditioned upon such individual actually becoming an Eligible Individual.
SECTION 5.Stock Options.
(a)Grant. The Committee may grant Stock Options under such terms and conditions as shall be determined by the Committee. The Committee shall determine the individuals to whom, and the time or times at which, grants of Stock Options will be made, the number of Shares
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purchasable under each Stock Option, and the other terms and conditions of the Stock Option in addition to those set forth in Sections 5(b) and 5(c). Any Stock Option granted under the LTIP shall be in such form as the Committee may from time to time approve.
Stock Options granted under the LTIP may be of two types which shall be indicated on their face: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. Subject to Section 5(c) hereof, the Committee shall have the authority to grant to any Participant Incentive Stock Options, Non-Qualified Stock Options or both types of Stock Options.
(b)Terms and Conditions. Options granted under the LTIP shall be evidenced by an Award Agreement, shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the LTIP, as the Committee shall deem desirable:
(1)Option Price. The option price per share of Shares purchasable under a Non-Qualified Stock Option or an Incentive Stock Option shall be determined by the Committee at the time of grant and shall be not less than 100% of the Fair Market Value of the Shares at the date of grant (or, with respect to an Incentive Stock Option, 110% of the Fair Market Value of the Shares at the date of grant in the case of a Participant who at the date of grant owns Shares possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or Subsidiary corporations (as determined under Sections 424(d), (e) and (f) of the Code)).
(2)Option Term. The term of each Stock Option shall be determined by the Committee but shall not exceed ten years from the date the Option is granted (or, with respect to an Incentive Stock Options, five years in the case of a Participant who at the date of grant owns Shares possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or Subsidiary corporations (as determined under Sections 424(d), (e) and (f) of the Code)).
(3)Exercise. Stock Options shall be exercisable at such times and be subject to such restrictions and vesting conditions as the Committee shall determine as set forth in the applicable Award Agreement; except as provided in Section 5(b)(5) and Section 11.
(4)Method of Exercise. A Participant may exercise a Stock Option, in whole or in part, by giving to the Company written notice of exercise specifying the number of Shares to be purchased. That notice shall be accompanied by payment in full of the option price of the Shares for which the Stock Option is exercised, in cash or Shares or by check or such other instrument or pursuant to such other method as the Committee may accept. The value of each such Share surrendered or withheld shall be 100% of the Fair Market Value of the Shares on the date the Stock Option is exercised.
No Shares shall be issued on an exercise of a Stock Option until full payment has been made. A Participant shall not have rights to dividends or any other rights of a shareholder with respect to any Shares subject to a Stock Option unless and until the Participant has given written notice of exercise, has paid in full for those Shares, has given, if requested, the representation described in Section 15(a) and those Shares have been issued to the Participant.
(5)Termination of Service.
(i)Termination by Death. Subject to Sections 5(b)(3) and 5(c), if a Participant’s Termination of Service is by reason of death, any Stock Option held by that Participant shall become immediately and automatically vested and exercisable for a
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period of two years (or with respect to an Incentive Stock Option, for a period of one year) (or such other period as the Committee may specify at grant) from the date of death by the Participant’s estate. Notwithstanding the foregoing, in no event will any Stock Option be exercisable after the expiration of the option period of such Option. Any unexercised Stock Options shall be forfeited if not exercised prior to the lapse of such two year period (or one year period with respect to Incentive Stock Options).
(ii)Termination by Reason of Disability. Subject to Sections 5(b)(3) and 5(c), if a Participant’s Termination of Service is by reason of Disability, any Stock Option held by that Participant shall become immediately and automatically vested and exercisable for a period of two years (or with respect to an Incentive Stock Option, for a period of one year) (or such other period as the Committee may specify at grant) from the date of such Termination of Service by the Participant or the Participant’s duly authorized legal representative; and if the Participant dies within that two-year period (or such other period as the Committee may specify at or after grant), any unexercised Stock Option held by that Participant shall thereafter be exercisable by the estate of the Participant (acting through its fiduciary) for the duration of the two-year period from the date of the Participant’s Termination of Service. Notwithstanding the foregoing, in no event will any Stock Option be exercisable after the expiration of the option period of such Option. Any unexercised Stock Option shall be forfeited if not exercised within two year period (or one year period with respect to Incentive Stock Options).
(iii)Termination for Cause. Unless otherwise determined by the Committee at or after the time of granting any Stock Option, if a Participant’s Termination of Service is due to Cause, then any Stock Option held by the Participant will be forfeited and terminated immediately.
(c)Incentive Stock Options. Notwithstanding Sections 5(b)(5), an Incentive Stock Option shall be exercisable by (i) a Participant’s authorized legal representative (if the Participant is unable to exercise the Incentive Stock Option as a result of the Participant’s Disability) only if, and to the extent, permitted by Section 422 of the Code and (ii) by the Participant’s estate, in the case of death, or authorized legal representative, in the case of Disability, no later than ten years from the date the Incentive Stock Option was granted (in addition to any other restrictions or limitations that may apply). Anything in the LTIP to the contrary notwithstanding, no term or provision of the LTIP relating to Incentive Stock Options shall be interpreted, amended or altered, nor shall any discretion or authority granted under the LTIP be exercised, so as to disqualify the LTIP under Section 422 of the Code, or, without the consent of the Participants affected, to disqualify any Incentive Stock Option under such Section 422 or any successor section thereto.
SECTION 6.Restricted Shares and Restricted Share Units.
(a)Grant. The Committee may grant Restricted Shares under such terms and conditions as shall be determined by the Committee. The Committee shall determine the individuals to whom, and the time or times at which, grants of Restricted Shares will be made, the number of Restricted Shares to be awarded to each Participant, the price (if any) to be paid by the Participant (subject to Section 6(b)), the date or dates upon which Restricted Share Awards will vest and the period or periods within which those Restricted Share Awards may be subject to forfeiture, and the other terms and conditions of those Awards in addition to those set forth in Section 6(b). The Committee may condition the vesting of Restricted Shares upon the attainment of specified performance goals or such other factors as the Committee may determine in its sole discretion.
(b)Terms and Conditions. Restricted Shares awarded under the LTIP shall be subject to the following terms and conditions and such additional terms and conditions, not inconsistent with the provisions of the LTIP, as the Committee shall deem desirable. A Participant who receives a Restricted Share Award shall not have any rights with respect to that Award, unless
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and until the Participant has executed an agreement evidencing the Award in the form approved from time to time by the Committee and has delivered a fully executed copy thereof to the Company, and has otherwise complied with the applicable terms and conditions of that Award.
(1)The purchase price (if any) for Restricted Shares shall be determined by the Committee at the time of grant.
(2)Awards of Restricted Shares must be accepted by executing an Award Agreement and paying the price (if any) that is required under Section 6(b)(1).
(3)The Committee shall determine in its discretion the manner of delivery of Restricted Shares subject to a Restricted Share Award. Such delivery may be in the form of one or more Share certificates, an electronic account entry into a new or existing account, or any other means the Committee in its discretion shall deem appropriate. If one or more physical certificates are issued, the certificate(s) shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to the Award.
(4)If the Committee determines that delivery should be in the form of one or more Share certificates, the Committee shall require that the stock certificates evidencing such Restricted Shares be held in custody by the Company until the restrictions thereon shall have lapsed, and that, as a condition of any Restricted Share Award the Participant shall have delivered to the Company a stock power, endorsed in blank, relating to the Shares covered by that Award.
(5)Subject to the provisions of this LTIP and the Restricted Share Award agreement, during a period set by the Committee commencing with the date of any Award (the “Restriction Period”), the Participant shall not be permitted to sell, transfer, pledge, assign or otherwise encumber the Restricted Shares covered by that Award.
(6)Except as provided in this Section 6(b)(6) and Section 6(b)(5) the Participant shall have, with respect to the Restricted Shares the right to vote the Shares.
(7)If a Participant’s Termination of Service is by reason of death, any Restricted Shares held by such Participant shall thereupon vest and all restrictions thereon shall lapse.
(8)If a Participant’s Termination of Service is by reason of Disability, any Restricted Shares held by such Participant shall thereupon vest and all restrictions thereon shall lapse.
(9)If a Participant’s Termination of Service is for a reason other than due to death or Disability (and other than for Cause), then upon such Termination of Service, the Participant’s Restricted Shares shall be forfeited.
(c)Restricted Share Units. The Committee may grant Restricted Share Units under such terms and conditions as shall be determined by the Committee. Restricted Share Units shall be subject to the same terms and conditions under this LTIP as Restricted Shares except as otherwise provided in this LTIP or as otherwise provided by the Committee and set forth in an applicable Award Agreement. Except as otherwise provided by the Committee and set forth in the applicable Award Agreement, a Restricted Share Unit shall be settled upon vesting and shall be settled by the payment of a single Share or cash equal to the Fair Market Value of such Share as of the settlement date. Restricted Share Units shall not be transferable and shall have no voting rights.
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SECTION 7.Share Appreciation Rights.
(a)Grant. The Committee may grant Share Appreciation Rights under such terms and conditions as shall be determined by the Committee. The Committee shall determine the individuals to whom, and the time or times at which, grants of Share Appreciation Rights will be made, the number of Shares subject to a Share Appreciation Right, and the other terms and conditions of the Share Appreciation Right in addition to those set forth in Sections 7(b). Any Share Appreciation Right granted under the LTIP shall be in such form as the Committee may from time to time approve.
(b)Terms and Conditions. Share Appreciation Right granted under the LTIP shall be evidenced by an Award Agreement, shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the LTIP, as the Committee shall deem desirable:
(1)Base Price. The Base Price for each grant of Share Appreciation Right shall be determined by the Committee and shall be specified in the Award Agreement evidencing the Share Appreciation Right; provided, however, the Base Price shall not be less than 100% of the Fair Market Value of a Share as of the date of grant, except in the case of Substitute Awards (to the extent consistent with Code Section 409A), and subject to adjustment as provided for under Section 3(c).
(2)Term. The term of a Share Appreciation Right shall be determined by the Committee but may not exceed ten years from the date the Share Appreciation Right is granted.
(3)Exercise. A Share Appreciation Rights shall be exercisable at such times and be subject to such restrictions and vesting conditions as the Committee shall determine and as set forth in the Award Agreement.
(4)Method of Exercise. A Participant may exercise a Share Appreciation Right, in whole or in part, by giving written notice of the exercise to the Company, stating the number of Share Appreciation Rights the Participant has elected to exercise.
(5)Settlement of Share Appreciation Rights. Upon the exercise of an Share Appreciation Rights, pursuant to a notice of exercise properly completed and submitted to the Company in accordance with paragraph (4) above, a Participant shall be entitled to receive payment from the Company in an amount equal to the product of (a) the excess of the Fair Market Value of a Share on the date of exercise over the Base Price and (b) the number of Shares with respect to which the Share Appreciation Rights, pursuant to a notice of exercise properly completed and submitted is exercised. Payment shall be made in cash, Shares or a combination thereof as provided for under the applicable Award Agreement.
(6)Termination of Service.
(i) Termination by Death. Subject to 7(b)(3), if a Participant’s Termination of Service is by reason of death, any Share Appreciation Right held by that Participant shall become immediately and automatically vested and exercisable for a period of two years from the date of death by the Participant’s estate. Notwithstanding the foregoing, in no event will any Share Appreciation Right be exercisable after the expiration of the exercise period of such Option. Any unexercised Share Appreciation Right shall be forfeited if not exercised prior to the lapse of such two year period.
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(ii)Termination by Reason of Disability. Subject to 7(b)(3), if a Participant’s Termination of Service is by reason of Disability, any Share Appreciation Right held by that Participant shall become immediately and automatically vested and exercisable for a period of two years from the date of such Termination of Service by the Participant or the Participant’s duly authorized legal representative; and if the Participant dies within that two-year period (or such other period as the Committee may specify at or after grant), any unexercised Share Appreciation Right held by that Participant shall thereafter be exercisable by the estate of the Participant (acting through its fiduciary) for the duration of the two-year period from the date of the Participant’s Termination of Service. Notwithstanding the foregoing, in no event will any Share Appreciation Right be exercisable after the expiration of the exercise period of such Option. Any unexercised Share Appreciation Right shall be forfeited if not exercised within two year period.
(iii)Termination for Cause. If a Participant’s Termination of Service is due to Cause, then any Share Appreciation Right held by the Participant will be forfeited and terminated immediately.
SECTION 8.Performance Shares and Performance Share Units.
(a)Grant. The Committee may grant Performance Shares and Performance Share Units under such terms and conditions as shall be determined by the Committee. The Committee shall determine the individuals to whom, and the time or times at which, grants of Performance Shares and/or Performance Units will be made, the number of Performance Shares and/or Performance Units to be awarded to a Participant, the price (if any) to be paid by the Participant, the performance conditions which must be satisfied for the Performance Shares and/or Performance Units to vest, the Performance Shares and/or Performance Units applicable performance periods, the conditions under which Performance Shares and Performance units shall be subject to forfeiture, and such other terms and conditions as determined by the Committee in addition to those set forth in Section 7(b).
(b)Terms and Conditions.
(1)A Performance Share or Performance Share Unit is equivalent in value to a Share.
(2)Performance Goals. For each Award of Performance Shares or Performance Share Units, the Committee shall establish performance goals for the Company, its Subsidiaries, and/or divisions of any of foregoing, using the performance criteria. Unless previously canceled or reduced, to the extent Performance Shares and Performance Share Units remain unvested at the conclusion of an applicable performance period, such Performance Shares and Performance Share Units shall be forfeited without further action by the Committee.
(3)Form and Timing of Payment of Performance Shares and Performance Share Units. As soon as practicable after the applicable performance period has ended and all other conditions (other than Committee actions), the Committee shall determine whether and the extent to which the applicable Performance Goals were met for the applicable Performance Shares and Performance Share Units and shall certify such results. If Performance Goals have been met, then the number of vested Performance Shares shall no longer be subject to any restrictions and shall be freely transferable and the number of vested Performance Share Units shall be distributed in a like number of Shares, cash equivalent or combination of both as provided for in the applicable Award Agreement, as soon as reasonably administratively possible but not later than the 15th day of the third month of the year immediately following the year in which the Performance Share Units vested.
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(c)Termination due to Death or Disability. If a Participant’s Termination of Service is by reason of death or Disability during a performance period, the Participant shall receive a lump sum payout, in cash and/or Shares as determined by the Committee, of the related outstanding Performance Shares and Performance Share Units calculated as if all unfinished performance periods had ended and one hundred percent (100%) of the performance goals are achieved at target level. The vested Performance Shares Units shall be immediately settled in a like number of Shares, cash equivalent or combination of both as provided for in the applicable Award Agreement, as soon as reasonably administratively possible but not later than the 15th day of the third month of the year immediately following the year in which the Performance Share Units vested.
(d)Termination of Service for Other than Death or Disability. If a Participant’s Termination of Service during is for reasons other than due to death or Disability (and other than for Cause), then upon such Termination of Service, then Participant’s Performance Shares and Performance Share Units shall be forfeited.
(e)Termination of Service for Cause. If a Participant’s Termination of Service is for Cause, then the Participant’s Performance Shares and Performance Share Units shall be forfeited.
(f)Non-transferability. Performance Shares and Performance Share Units may not be sold, transferred, pledged, assigned or otherwise alienated or hypothecated.
SECTION 9.Other Share-Based Awards.
The Committee may grant Other Share-Based Awards, not otherwise specified in the LTIP, under such terms and conditions as shall be determined by the Committee. At the time Other Share-Based Awards are granted, the Committee shall determine the individuals to whom and the time or times at which such Other Share-Based Awards shall be awarded, the number of such Other Share Shall-Based Awards, the consideration, if any, to be paid for such Other Share-Based Awards, and all other terms and conditions of the Awards as determined by the Committee and set forth in an applicable Award Agreement.
SECTION 10.Dividends and Dividend Equivalents.
(a)No Payment of Dividends or Dividend Equivalents on Options and Share Appreciation Rights. No dividends or dividend equivalents may accrue or be paid with respect to Options and Share Appreciation Rights.
(b)Payment of Dividends on Restricted Stock. With respect to an Award of Restricted Stock, the Committee may grant or limit the right of a Participant to receive dividends declared on Shares that are subject to such Award to the extent the Award is not yet vested. The terms of any right to dividends shall be as set forth in the applicable Award Agreement, including the time and form of payment and whether such dividends shall be credited with interest or deemed to be reinvested in additional shares of Restricted Stock. If the Committee grants the right of a Participant to receive dividends declared on Shares subject to an unvested Award of Restricted Stock, then such dividends shall be subject to the same performance conditions and/or service conditions, as applicable, as the underlying Award.
(c)Payment of Dividend Equivalents on Awards Other than Options, Share Appreciation Rights and Restricted Stock. Except for Options, Share Appreciation Rights and Restricted Stock, the Committee may grant Dividend Equivalents on the units or other Share equivalents subject to an Award based on the dividends actually declared and paid on outstanding Shares. The terms of any dividend equivalents shall be as set forth in the applicable Award Agreement, including the time and form of payment and whether such dividend equivalents shall be credited with interest or deemed to be reinvested in additional units or Share equivalents. Dividend
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Equivalents shall be subject to the same performance conditions and service conditions, as applicable, as the underlying Award.
SECTION 11.Change In Control Provision.
(a)Impact of Event. Unless otherwise provided in an Award agreement, following the effective date of a Change in Control as defined in Section 11(b) in which outstanding Awards are not terminated in accordance with Section 3(c) of the LTIP and are assumed or substituted for by the successor company (or in which the Company is the ultimate parent corporation and continues the Award), if a Participant’s continuous service with such successor company (or the Company) or a subsidiary thereof terminates within 24 months following such Change in Control (or such other period set forth in the Award Agreement, including prior thereto if applicable) and under the circumstances specified in the Award Agreement, the following shall apply:
(1)Any Stock Options awarded under the LTIP not previously exercisable and vested shall become fully exercisable and vested upon either: (i) the involuntary Termination of Service of the Participant by the Company other than for Cause or (ii) the voluntary Termination of Service by the Participant for a Good Reason;
(2)Any Share Appreciation Rights shall become immediately exercisable upon either: (i) the involuntary termination of service of the Participant by the Company other than for Cause or (ii) the voluntary termination of service by the Participant for a Good Reason;
(3)The restrictions applicable to any Restricted Shares or Restricted Share Units, Performance Shares or Performance Share Units, and Other Share-Based Awards shall lapse and such Shares and Awards shall be deemed fully vested upon either: (i) the involuntary Termination of Service of the Participant by the Company other than for Cause or (ii) the voluntary Termination of Service by the Participant for a Good Reason; and
(4)The payout of Performance Shares and Performance Share Units shall be based on the greater of actual performance through the Participant’s Termination of Service or target performance.
(5)Notwithstanding any provision of this Section 11(a) to the contrary, any Award which is subject to Section 409A of the Code shall be settled in accordance with the terms of the grant without regard to the Change in Control unless the Change in Control also constitutes a “change in control event” within the meaning of Section 409A of the Code and such termination of employment occurs within two years after such Change in Control.
(b)Definition of Change in Control. For purposes of Section 11(a), a “Change in Control” means the occurrence of any of the following:
(i) the Board or shareholders of the Company approve a consolidation or merger that results in the shareholders of the Company immediately prior to the transaction giving rise to the consolidation or merger owning less than 50% of the total combined voting power of all classes of stock entitled to vote of the surviving entity immediately after the consummation of the transaction giving rise to the merger or consolidation;
(ii) the Board or shareholders of the Company approve the sale of substantially all of the assets of the Company (other than the sale of assets to a Subsidiary or any Company employee benefit plan (including any trustee of any such plan acting in its capacity as trustee) or the liquidation or dissolution of the Company;
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(iii) any person or other entity (other than the Company or a Subsidiary or any Company employee benefit plan (including any trustee of any such plan acting in its capacity as trustee)) becomes the beneficial owner of securities of the Company representing 35% or more of the voting power of the Company’s outstanding securities; or
(iv) during any two-year period, individuals who at the beginning of such period constitute the entire Board cease to constitute a majority of the Board, unless the election or the nomination for election of each new director is approved by at least two-thirds of the directors then still in office who were directors at the beginning of that period.
Notwithstanding any of the foregoing, however, in any circumstance or transaction in which compensation resulting from or in respect of an Award would result in the imposition of an additional tax under Code Section 409A if the foregoing definition of “Change in Control” were to apply, but would not result in the imposition of any additional tax if the term “Change in Control” were defined herein to mean a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5), then “Change in Control” shall mean a “change in control event” within the meaning of Treasury Regulation Section 1.409A-3(i)(5), but only to the extent necessary to prevent such compensation from becoming subject to an additional tax under Code Section 409A.
(c)Definition of Good Reason. For purposes of Section 11(a), a Participant will be considered to have terminated employment for “Good Reason” if such termination is due to any one or more of the following listed conditions (with each occurrence of such a condition being considered a separate Good Reason) within two years following a Change in Control provided that the Participant terminates employment within two years following the initial occurrence of such condition and provided further that the Participant provides notice to the Company of such condition within 90 days following the initial occurrence of such condition and gives the Company at least 30 days to cure such condition:
(1)A material diminution in the Participant’s base compensation.
(2)A material diminution in the Participant’s authority, duties, or responsibilities.
(3)A material diminution in the authority, duties, or responsibilities of the supervisor to whom the Participant is required to report, including a requirement that a Participant report to a corporate officer or employee instead of reporting directly to the Board.
(4)A material diminution in the budget over which the Participant retains authority.
(5)A material change in the geographic location at which the Participant must perform the services.
(6)Any other action or inaction that constitutes a material breach by the Company of the agreement under which the Participant provides services.
SECTION 12.Deferral of Payment.
If and to the extent permitted by and in accordance with Section 409A of the Code, installment or deferred payments under an Award may be required by the Committee or permitted at the election of the Participant on terms and conditions approved by the Committee, including without limitation the ability to defer payment of Awards pursuant to any deferred compensation plan maintained by the Company or a Subsidiary.
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SECTION 13.Clawback Provisions.
All Awards (including any proceeds, gains, or other economic benefit the Participant actually or constructively receives upon receipt or exercise of any Award or the receipt or resale of any Shares underlying the Award) will be subject to any Company clawback policy, including any clawback policy adopted to comply with Applicable Law (including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder) as set forth in such clawback policy or the Award Agreement.
SECTION 14.Amendments and Termination.
The Board may at any time, in its sole discretion, amend, alter or discontinue the LTIP, but no such amendment, alteration or discontinuation shall be made that would (i) impair the rights of a Participant under an Award theretofore granted, without the Participant’s consent, or (ii) require shareholder approval under any Applicable Law, unless such shareholder approval is received. The Company shall submit to the shareholders of the Company for their approval any amendments to the LTIP which are required by Section 16 of the Exchange Act or the rules and regulations thereunder or the listing standards of an exchange or market on which the Shares are listed and/or traded to be approved by the shareholders.
Without the prior approval of the Company’s shareholders and except as provided for in Section 3(c), no Option or Share Appreciation Award may be (i) amended to reduce the Exercise Price or the Base Price thereof, as applicable; (ii) cancelled in exchange for the grant of any new Option or Share Appreciation Award with a lower Exercise Price or Base Price, as applicable; or (iii) cancelled in exchange for cash, other property or the grant of any new Award at a time when the Exercise Price of the Option or the Base Price of the Share Appreciation Award is greater than the current Fair Market Value of a Share.
The Committee may at any time, in its sole discretion, amend the terms of any Award, but no such amendment shall be made that would impair the rights of a Participant under an Award theretofore granted, without the Participant’s consent; nor shall any such amendment be made which would make the applicable exemptions provided by Rule 16b-3 under the Exchange Act unavailable to any Section 16 Participant holding the Award without the Participant’s consent.
Subject to the above provisions, the Board shall have all necessary authority to amend the LTIP to clarify any provision or to take into account changes in applicable securities and tax laws and accounting rules, as well as other developments.
SECTION 15.Unfunded Status of LTIP.
The LTIP is intended to constitute an “unfunded” plan for incentive and deferred compensation. With respect to any payments not yet made to a Participant by the Company, nothing contained herein shall give that Participant any rights that are greater than those of a general creditor of the Company. The adoption of the LTIP and any reservation of Shares or cash amounts by the Company to discharge its obligations hereunder shall not be deemed to create a trust or other funded arrangement. Neither a Participant nor the Participant’s permitted transferees or estate shall have any other interest in any assets of the Company by virtue of the LTIP. Notwithstanding the foregoing, the Company shall have the right to implement or set aside funds in a grantor trust, subject to the claims of the Company’s creditors or otherwise, to discharge its obligations under the LTIP.
SECTION 16.General Provisions.
(a)Participant Representation. The Committee may require each Participant acquiring Shares pursuant to an Award under the LTIP to represent to and agree with the Company in writing that the Participant is acquiring the Shares without a view to distribution thereof. The certificates for any such Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.
All Shares or other securities delivered under the LTIP shall be subject to such stop-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon
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which the Shares are then listed, and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be put on any certificates for those Shares to make appropriate reference to such restrictions.
(b)Transferability of Awards. Awards shall not be transferable other than by will or the laws of descent and distribution or, subject to the consent of the Committee, pursuant to a domestic relations order entered into by a court of competent jurisdiction. Notwithstanding the foregoing, ISOs may only be transferred by will or the laws of descent and during the lifetime of the Participant may only be exercised by the Participant in accordance with Code Section 422 and the applicable regulations thereunder. No Awards shall be subject, in whole or in part, to attachment, execution or levy of any kind; and any purported transfer in violation of this paragraph (b) shall be null and void. The Committee may establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable or Shares deliverable in the event of, or following, the Participant’s death may be provided.
(c)Other Arrangements. Nothing contained in this LTIP shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required, and such arrangements may be either generally applicable or applicable only in specific cases.
(d)No Right to Employment. Neither the adoption of the LTIP, nor its operation, nor any document describing, implementing or referring to the LTIP, or any part thereof, shall confer upon any Participant under the LTIP any right to continue in the employ, or as a director, of the Company or any Subsidiary, or shall in any way affect the right and power of the Company or any Subsidiary to terminate the employment, or service as a director, of any Participant under the LTIP at any time with or without assigning a reason therefor, to the same extent as the Company or any Subsidiary might have done if the LTIP had not been adopted.
(e)Transfers. For purposes of this LTIP, a transfer of a Participant between the Company and its Subsidiaries shall not be deemed a Termination of Service.
(f)Taxes. No later than the date as of which an amount first becomes includable in the gross income of the Participant for federal income tax purposes with respect to any award under the LTIP, the Participant shall pay to the Company, or make arrangements satisfactory to the Committee regarding the payment of, any federal, state or local taxes or other items of any kind required by law to be withheld with respect to that amount. Subject to the following sentence, unless otherwise determined by the Committee, withholding obligations may be settled with Shares, including unrestricted Shares previously owned by the Participant or Shares that are part of the Award that gives rise to the withholding requirement, provided that the Fair Market Value of such Shares shall not exceed the maximum statutory withholding obligation. Notwithstanding the foregoing, any right by a Section 16 Participant to elect to settle any tax withholding obligation with Shares that are part of an Award must be set forth in the agreement evidencing the Award or be approved by the Committee, in its sole discretion. The obligations of the Company under the LTIP shall be conditional on those payments or arrangements and the Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise payable to the Participant.
(g)Governing Law. The LTIP, all Awards made and actions taken thereunder and any agreements relating thereto shall be governed by and construed in accordance with the laws of the State of Ohio.
(h)Plan Document Controls. All agreements entered into with Participants pursuant to the LTIP shall be subject to the terms of this LTIP.
(i)Awards May Vary. The provisions of Awards need not be the same with respect to each Participant.
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(j)Section 409A of the Code. In the event that an Award granted pursuant to the LTIP shall constitute “non-qualified deferred compensation” within the meaning of Section 409A of the Code, the terms of the LTIP as they apply to such Award shall be interpreted to comply with Section 409A of the Code. To the extent that an Award which is subject to Section 409A shall be payable to a Participant who is a “specified employee” on account of his “separation from service” as such terms are defined in Section 409A, such payment shall not occur until the date which is six (6) months and one (1) day after the Participant’s separation from service. To the extent applicable, it is intended that the LTIP and all Awards hereunder comply with the requirements of Section 409A of the Code, and the LTIP and all Award Agreements shall be interpreted and applied by the Committee in a manner consistent with this intent in order to avoid the imposition of any additional tax under Section 409A of the Code. In the event that any provision of the LTIP or an Award Agreement is determined by the Committee to not comply with the applicable requirements of Section 409A of the Code, the Committee shall have the authority to take such actions and to make such changes to the LTIP or an Award Agreement as the Committee deems necessary to comply with such requirements, provided that no such action shall adversely affect any outstanding Award without the consent of the affected Participant. Notwithstanding the foregoing or anything elsewhere in the LTIP or an Award Agreement to the contrary unless the Committee shall otherwise expressly provide, if Section 409A applies the term “disability” shall have the meaning given to such term under Section 409A and the regulations and guidance issued thereunder. The Company makes no guarantee concerning tax treatment and the Participant will be solely responsible for any taxes incurred.
(k)Foreign Jurisdictions. The Committee may adopt, amend and terminate such arrangements and grant such Awards, not inconsistent with the intent of the LTIP, as it may deem necessary or desirable to comply with any tax, securities, regulatory or other laws of other jurisdictions with respect to Awards that may be subject to such laws. The terms and conditions of such Awards may vary from the terms and conditions that would otherwise be required by the LTIP solely to the extent the Committee deems necessary for such purpose. Moreover, the Board may approve such supplements to or amendments, restatements or alternative versions of the LTIP, not inconsistent with the intent of the LTIP, as it may consider necessary or appropriate for such purposes, without thereby affecting the terms of the LTIP as in effect for any other purpose.
(l)Substitute Awards in Corporate Transactions. Nothing contained in the LTIP shall be construed to limit the right of the Committee to grant Awards under the LTIP in connection with the acquisition, whether by purchase, merger, consolidation or other corporate transaction, of the business or assets of any corporation or other entity. Without limiting the foregoing, the Committee may grant Awards under the LTIP to an employee or director of another corporation who becomes an Eligible Individual pursuant to Section 4 of the LTIP by reason of any such corporate transaction in substitution for awards previously granted by such corporation or entity to such person. The terms and conditions of the substitute Awards may vary from the terms and conditions that would otherwise be required by the LTIP solely to the extent the Committee deems necessary for such purpose. Unless otherwise determined by the Committee, such substitute Award shall not be deemed to deplete the number of Shares available for Awards pursuant to Section 3 nor reduce the number of Shares under the term of the LTIP.
SECTION 17.Shareholder Approval; Effective Date of LTIP.
This LTIP was adopted by the Board of Directors on March 25, 2025, and is subject to the approval by the holders of the Company’s outstanding Shares, in accordance with Applicable Law. This LTIP will become effective on the date of such shareholder approval.
SECTION 18. Term of LTIP.
No Award shall be granted pursuant to the LTIP on or after May 10, 2035, but Awards granted prior to such date may extend beyond that date.
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39675 MacKenzie Drive, Suite 400
Novi, Michigan 48377
