Audit Committee Report
This Audit Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended (the “Securities Act”) or under the Exchange Act, except to the extent that we specifically incorporate this information by reference, and shall not be deemed filed under the Securities Act or the Exchange Act.
The Audit Committee is composed of four directors appointed by the Board - Wayne M. Rancourt, James R. Ray, Ruth Gratzke and J. Michael Nauman. All Audit Committee members are independent for Audit Committee purposes under applicable Exchange Act rules and Nasdaq Marketplace Rules. The Board designated each of Messrs. Nauman and Rancourt as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K under the Exchange Act. The Audit Committee operates under a written charter adopted by the Board and amended most recently in March 2023, a copy of which is posted on our website at www.cvgrp.com. The Audit Committee assists the Board in providing oversight of the systems and procedures relating to the integrity of the Company’s financial statements, the Company’s financial reporting process, its systems of internal accounting, financial and reporting controls, the internal audit process, risk management, the independent audit process of the Company’s annual financial statements, and the Company’s compliance with legal and regulatory requirements. Management is responsible for these processes.
The Audit Committee reviews with management the Company’s major financial risk exposures and the steps management has taken to monitor, mitigate and control such exposures. Management has the responsibility for the implementation of these activities. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, including a discussion of the quality and the acceptability of the Company’s financial reporting and controls. The Audit Committee also reviews the Company’s quarterly earnings press releases and reports on Form 10-Q prior to filing. The Audit Committee held 8 meetings in 2022.
The Company’s independent registered public accounting firm is responsible for expressing an opinion on the conformity of those audited financial statements with U.S. generally accepted accounting principles and on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee reviewed with the independent registered public accounting firm the firm’s judgments as to the quality and the acceptability of the Company’s financial reporting and such other matters as are required to be discussed with the Audit Committee under auditing standards of the U.S. Public Company Accounting Oversight Board (the “PCAOB”), including the matters required to be discussed by PCAOB Auditing Standard 1301, Communications with Audit Committees. In addition, the Audit Committee has discussed with the independent registered public accounting firm, the firm’s independence from management and the Company, including the impact of non-audit-related services provided to the Company and the matters in the independent registered public accounting firm’s written disclosures required by Rule 3526 of the PCAOB, as may be modified or supplemented.
The Audit Committee also discussed with the Company’s internal auditors and the independent registered public accounting firm in advance the overall scope and plans for their respective audits, including timing, risk assessments, locations and coverage, and any reliance by the independent registered public accounting firm on work performed by the internal auditors. The Audit Committee meets at least quarterly with the internal auditor and the independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls, and the overall quality of the Company’s accounting and financial reporting. Annually, the Audit Committee reviews and approves the internal audit plan. Additionally, the Audit Committee periodically meets separately with each of the Chief Financial Officer and Chief Legal Officer of the Company.
The Audit Committee is directly responsible for the appointment, oversight, qualification, independence, performance, compensation and retention of the Company’s independent registered public accounting firm, including audit fee negotiations and approval, approval in advance of all audit and non-audit services, and the rotation and selection of the lead audit partner every five years. In accordance with its Charter, the Audit Committee has reappointed KPMG LLP ("KPMG") as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for fiscal 2023, based on their overall qualifications, objectivity, significant experience and understanding of the Company’s operations, and their ability to deploy resources to match the Company’s global operations. Accordingly, in this proxy statement, the Board recommends the ratification of KPMG as the Company’s independent registered public accounting firm for fiscal year ending December 31, 2023.
In performing its review, the Audit Committee also considers the quality and effectiveness of KPMG’s communications with the Audit Committee and management; how effectively KPMG maintained its independence as demonstrated by exercising judgment, objectivity and professional skepticism; reports of the PCAOB and other available data regarding the quality of work performed by KPMG; KPMG’s tenure and experience as the Company’s auditor; and the geographic reach and expertise of KPMG to address the demands placed on an auditor by the global breadth of the Company’s business.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 for filing with the Securities and Exchange Commission.
Members of the Audit Committee
Wayne M. Rancourt (Chairman)
Ruth Gratzke
J. Michael Nauman
James R. Ray
Fees Paid to KPMG LLP
For fiscal years 2022 and 2021, the following fees were billed to us for the indicated services by KPMG LLP:
| | | | | | | | | | | |
| | 2022 | | 2021 |
| Audit Fees | $ | 1,589,376 | | | $ | 1,276,201 | |
| Audit-Related Fees | 13,450 | | | 21,406 | |
| Tax Fees | 70,896 | | | 151,120 | |
| All Other Fees | — | | | 105,148 | |
| Total Independent Accountant’s Fees | $ | 1,673,722 | | | $ | 1,553,875 | |
Audit Fees. Consist of fees billed for professional services rendered for the audit of our consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided in connection with statutory and regulatory filings or engagements.
Audit-Related Fees. Consist of fees billed for services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include employee benefit plan audits.
Tax Fees. Consist of fees billed for professional services for tax compliance, tax consultation and tax planning. These services include assistance regarding federal, state and international tax compliance, customs and duties and international tax planning.
All Other Fees. Consist of fees for services other than the services reported above.
Policy on Audit Committee Pre-Approval and Permissible Non-Audit Services of the Independent Registered Public Accounting Firm
The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to periodically report to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.
During fiscal year 2022, all services by our independent registered public accounting firm were pre-approved or ratified by the Audit Committee in accordance with this policy.
Share Ownership Information
Beneficial Ownership
Except as otherwise noted, the following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 22, 2023 by: (1) each of the named executive officers in the Summary Compensation Table; (2) each of our directors and director nominees; (3) all directors and executive officers as a group; and (4) each person or entity known to us to be the beneficial owner of more than five percent of our outstanding shares of common stock. All information with respect to beneficial ownership has been furnished to us by the respective director, director nominee, or executive officer, and in the case of five percent beneficial owner, as disclosed in a Schedule 13G or Form 4 (subsequent to the Schedule 13G) as filed with the SEC. Unless otherwise indicated, each person or entity named below has sole voting and investment power with respect to the number of shares set forth opposite his or her or its name.
The following table lists the number of shares and percentage of shares beneficially owned based on 33,344,744 shares of common stock outstanding as of March 22, 2023. Beneficial ownership of the common stock listed in the table has been determined in accordance with the applicable rules and regulations promulgated under the Exchange Act. There were no shares of common stock subject to options outstanding within 60 days of March 22, 2023.
| | | | | | | | | | | | | | |
| | Shares Beneficially Owned | | |
| Name of Beneficial Owner | | Number | | Percentage |
| 5% Stockholders: | | | | |
Forager Fund, LP (1) | | 2,627,619 | | | 7.9 | % |
Royce & Associates, LP (2) | | 1,956,697 | | | 5.9 | % |
Renaissance Technologies LLC (3) | | 1,778,804 | | | 5.3 | % |
| | | | |
OLMA Capital Management Limited (4) | | 1,948,001 | | | 5.8 | % |
| Directors and Named Executive Officers: | | | | |
Robert C. Griffin (5) | | 151,757 | | | * |
| Harold C. Bevis | | 735,529 | | | 2.2 | % |
Roger L. Fix (5)(6) | | 148,379 | | | * |
Ruth Gratzke (5) | | 26,588 | | | * |
J. Michael Nauman (5) | | 26,588 | | | * |
Wayne M. Rancourt (5) | | 108,636 | | | * |
James R. Ray (5) | | 67,582 | | | * |
| | | | |
Chung Kin Cheung ("Andy Cheung")(7) | | 43,742 | | | * |
Kristin S. Mathers (8) | | 46,124 | | | * |
Aneezal H. Mohamed (9) | | 140,051 | | | * |
Richard Tajer (10) | | 82,044 | | | * |
| All directors and executive officers as a group (11 persons) | | 1,577,020 | | | 4.7 | % |
| * Denotes less than one percent. | | | | |
(1) Information reported is based on Schedule 13G as filed with the SEC on February 14, 2023 on which Forager Fund, LP (the “Fund”), Forager
Capital Management, LLC (the “GP”), Edward Kissel and Robert MacArthur (collectively, "Forager") reported that the Fund has the sole power to
vote and dispose of 2,104,130 shares of our common stock; the GP has the sole power to vote and dispose of 2,627,619 shares of our common
stock and each of Messrs. Kissel and MacArthur has the shared power to vote and dispose of 2,627,619 shares of our common stock as of
October 14, 2022. The address for Forager is 2024 3rd Ave. N, Suite 201, Birmingham, AL 35203.
(2) Information reported is based on Amendment No. 7 to Schedule 13G as filed with the SEC on January 23, 2023 on which Royce & Associates,
LP ("RALP") reported sole voting and dispositive power over 1,956,697 shares of our common stock as of December 31, 2022, owned by one or
more registered investment companies or other managed accounts that are investment management clients of RALP, an indirect majority owned
subsidiary of Franklin Resources, Inc. The address for RALP is 745 Fifth Avenue, New York, NY 10151.
(3) Information reported is based on Amendment No. 5 to Schedule 13G as filed with the SEC on February 13, 2023 on which Renaissance
Technologies LLC and Renaissance Technologies Holding Corporation, which owns a majority interest in Renaissance Technologies LLC
(collectively "Renaissance") reported sole voting power and sole dispositive power over 1,778,804 shares of our common stock as of December
30, 2022. The address for Renaissance is 800 Third Avenue, New York, NY 10022.
(4) Information reported is based on Schedule 13D as filed with the SEC on September 24, 2020 on which OLMA Capital Management Limited
("OLMA") reported sole voting and dispositive power over 1,948,001 shares of our common stock as of September 14, 2020. The address for
OLMA is 7 Seville Place, Dublin, Ireland.
(5) Includes 15,919 shares with respect to Ms. Gratzke and Messrs. Fix, Griffin, Nauman, Rancourt and Ray that vest on the date of the Annual
Meeting.
(6) Includes 7,500 shares held by the Roger L. Fix Revocable Trust, with Reporting Person as trustee.
(7) Includes 33,742 shares of restricted stock that vest in three installments on each of December 31, 2023, 2024 and 2025.
(8) Includes 11,281 shares of restricted stock that vest in two installments on each of December 31, 2023 and 2024. Includes 6,696 shares of
restricted stock that vest in three installments on each of December 31, 2023, 2024 and 2025.
(9) Includes 5,398 shares of restricted stock that vest on December 31, 2023. Includes 13,985 shares of restricted stock that vest in two
installments on each of December 31, 2023 and 2024. Includes 21,404 shares of restricted stock that vest in three installments on each of
December 31, 2023, 2024 and 2025.
(10) Includes 4,049 shares of restricted stock that vest on December 31, 2023. Includes 11,655 shares of restricted stock that vest in two
installments on each of December 31, 2023 and 2024. Includes 17,838 shares of restricted stock that vest in three installments on each of
December 31, 2023, 2024 and 2025.
EXECUTIVE COMPENSATION
Compensation Policies and Practices
Our compensation philosophy is designed to attract and retain exceptional leaders who will deliver the Company’s annual business plan; execute our long-term diversification and growth strategy; and exceed the expectations of our investors, customers, and employees. The Compensation Committee (as used in this section, the "Committee"), which is comprised entirely of independent directors, has a pay for performance philosophy that is reflected in our compensation plan designs, and places a majority of each executive officer’s total compensation at risk each year. Our compensation plans are designed to provide appropriate incentives to encourage the execution of our business plan but we defer the delivery of significant portions of incentive compensation in order to link the interests of management to long-term value creation for our stockholders. Incentive awards are based on short-term and long-term financial metrics, designed to encourage profitable innovation and growth, without encouraging excessive or unnecessary risk taking. To further mitigate risk taking, the Committee sets a minimum performance threshold and a maximum payment limit on incentive award opportunities each year and has adopted executive stock ownership guidelines, an anti-hedging policy, and a clawback policy.
Fiscal 2022 was a challenging year for the Company. As we navigated the continued supply chain disruptions of the global coronavirus pandemic, inflationary concerns and record low unemployment, we were able to aggressively execute our long-term diversification and growth strategy, win new customers and secure pricing increases from a majority of our existing customers. With the challenges of 2022, we did not meet expectations for operating income and working capital targets but did meet new business wins expectations. Bonus payouts reflected this performance with no payout for operating income and working capital targets in the 2022 Annual Incentive Plan (AIP) while paying at target for the new business wins goal. Our executive compensation programs will continue to pay for performance and place considerable emphasis on variable compensation to align Named Executive Officer pay with long-term stockholder value creation. The Committee believes that the structure of our executive compensation program is appropriate and aligns with the Company's compensation philosophy and pay for performance program objectives.
Compensation Discussion and Analysis
Executive Summary
This Executive Summary provides an overview of the 2022 compensation programs for our NEOs and should be read in conjunction with the complete Compensation Discussion and Analysis (“CD&A”) in this report. For 2022, our NEOs included:
•Harold C. Bevis, President and CEO;
•Andy Cheung, Executive Vice President and Chief Financial Officer;
•Christopher H. Bohnert, out-going Chief Financial Officer, ceased to be an NEO on October 11, 2022 but continued employment as an advisor through December 31, 2022;
•Aneezal H. Mohamed, Chief Legal Officer, Compliance Officer and Secretary;
•Richard Tajer, Chief Commercial Officer and President of Electrical Systems; and
•Kristin S. Mathers, Chief Human Resource Officer
Our compensation programs are designed to balance annual and long-term organizational goals with individual performance and contributions of the NEOs to ensure our executive compensation programs are closely aligned with the interests of our stockholders. The Committee uses multiple performance measures to ensure an appropriate mix of annual and long-term incentives and to avoid over-weighting the Company's short-term objectives. Each NEO has a significant portion of total compensation that is at-risk in any given year, and each NEO receives long-term cash and equity awards to encourage retention and further align their interests with those of our stockholders.
At our 2022 Annual Meeting of Stockholders held on May 19, 2022, the compensation of our NEOs was approved, on an advisory basis, by approximately 97.68% of our stockholders who voted on the matter. The Committee considered the
results of this vote, which it viewed as strong investor support for our executive compensation philosophy and programs, but did not take any specific compensation actions in fiscal year 2022 in response to the executive compensation advisory vote. At the 2023 Annual Meeting of Stockholders, we will again hold an advisory vote to approve executive compensation. The Committee will continue to consider the results of this vote and future advisory votes, which we view as an important indicator of stockholder sentiment regarding our compensation philosophy, when contemplating executive compensation decisions and will continue to review and adjust our incentive programs, as appropriate, to align with our stockholders' interests.
Leadership Transitions
Mr. Bohnert ceased being an NEO effective October 11, 2022 and resigned at the request of the Board, which the Board deemed to be a termination without cause, from his position as Chief Financial Officer, effective October 11, 2022.
Andy Cheung joined the Company in the capacity of Executive Vice President and Chief Financial Officer as of October 10, 2022. In connection with his appointment, Mr. Cheung was paid a base salary of $450,000, with an annual incentive opportunity equal to 65% of base salary. Mr. Cheung also received walk away signing incentives valued at $540,000, $100,000 in the form of cash paid on November 11, 2022, $220,000 denominated in common stock issued on November 10, 2022 and $220,000 denominated in the form of performance shares issued on November 10, 2022.
Compensation Philosophy, Objectives and Process
Compensation Philosophy and Objectives
Our executive compensation programs are designed to align total compensation with the Company’s financial performance and each NEO’s individual experience, performance, and proficiencies while also supporting our ability to attract, motivate, and retain NEOs capable of operating profitably throughout each business cycle. Each NEO has a substantial portion of total compensation at risk in any given year, and each NEO receives long-term cash and equity awards to closely align their realized compensation with changes in stockholder value. This multi-year framework of cash and equity awards closely links total compensation to the creation of stockholder value and aligns the interests of our executives with those of our stockholders, while also managing share usage.
The specific objectives of our executive compensation program include:
•Attracting and retaining highly qualified executives who will embrace our strategy and values, and contribute to our long-term success;
•Linking executive compensation to the achievement of our short- and long-term financial, operation and strategic objectives;
•Aligning executive compensation with each executive’s individual contributions, performance, and scope of responsibility; and
•Fostering a culture of performance and accountability that drives best-in-class performance.
The Committee has structured and refined our executive compensation programs based on these objectives, while also considering the long term, cyclical nature of our industry. We seek to balance the consideration of those measures that our NEOs directly influence with the cyclical market forces that the Company and its executives cannot control. Our executive compensation program generally includes both annual and long-term incentive opportunities, and provides for cash and equity-based awards, as well as salary and benefit programs that are competitive within our industry and revenue scope. The Committee is committed to paying executives for performance and rewarding an increase in long-term stockholder value, while discouraging excessive risk taking. The Committee considers a number of factors when setting total compensation including individual performance and skillset, industry benchmarks, market conditions, current business challenges, and long-term strategic objectives. The Committee intends to continue to implement a compensation philosophy that places a greater emphasis on at-risk compensation tied to long-term performance.
Our compensation philosophy is represented by those practices we support and those that we avoid, as detailed below.
| | | | | |
What We Do | What We Don’t Do |
We align pay with performance | We do not guarantee salary increases |
We enforce share ownership policies | We do not offer a supplemental executive retirement program |
We enforce Non-Competition and Non-Solicitation provisions | We do not offer perquisites for our NEOs that differ materially from benefits available to our employees |
We employ an independent executive compensation consultant, reporting directly to the Committee and provides no other services to CVG | We do not provide tax gross ups for any benefits or perquisites |
We have a formal clawback policy | We do not provide tax gross ups in our Change in Control Agreements |
We reward actions that increase long-term stockholder value and discourage excessive risk taking | We do not permit hedging, the pledging of our securities as collateral for loans or holding our securities in margin accounts |
| |
We set performance targets for our annual cash incentive compensation program such that NEOs receive their targeted annual compensation only if our pre-determined performance targets are achieved. When performance exceeds the pre-determined targets, total compensation will be above targeted levels and when performance is below the pre-determined targets, total compensation will be below targeted levels. Due to the challenges of 2020, the annual incentive payments were purely discretionary based on the NEOs' leadership and the profitability and growth outcomes in the second half of the year. In 2022, the Company's performance was below target.
Compensation Process
In 2022, the Committee considered the following factors as part of the process by which it made executive compensation determinations:
•The accelerated execution of the Company's long-term diversification and growth strategy;
•Achievement of key financial metrics and operational outcomes;
•Evaluations of individual NEO’s competencies, performance and contributions; and
•The competitiveness of executive compensation as compared to our compensation peer group, as well as data compiled by our independent compensation consultant, Meridian Compensation Partners, LLC ("Meridian"). This analysis is performed on a periodic basis by Meridian. A full study was conducted in February 2021 with an additional May 2021 study for select executive roles, along with a more recent study in September 2022 that was used for setting 2023 pay levels. These studies are based on a peer group consisting of industrial companies of comparable size, as described below.
Compensation Adjustments Effective January 1, 2023
In December 2022, the Committee approved compensation adjustments as follows:
Effective January 1, 2023, Mr. Bevis’ compensation was set as a base salary of $825,000 per year, annual cash incentive target of $825,000, and target annual long-term incentive awards of $2,350,000 for a total target compensation of $4.0 million. The increase was the result of the compensation benchmarking performed by the Committee’s compensation consultant, Meridian, against the Company’s peer group. The new compensation package for Mr. Bevis is at approximately the median for total compensation for the peer group with 79% of Mr. Bevis’ compensation being at risk.
Effective January 1, 2023, Mr.Tajer’s compensation was set as a base salary of $375,000 per year, annual cash incentive target of 70% of the base salary, and target annual long term incentive awards of 100% of the base salary, for a total target compensation of $1,012,500.
Compensation Structure
Compensation Levels and Benchmarking
The Committee engaged Meridian to assist with a periodic review and analysis of compensation data for comparable positions in similarly sized general manufacturing companies. The analysis used for 2022 benchmarking purposes was prepared by Meridian in September 2022 and incorporated data from third party proprietary compensation surveys in addition to proxy data from the published peer group. The examination and comparison of this compensation data is an important component of the Committee’s review but does not serve as the sole basis for compensation decisions, and no formulaic methodology is used by the Committee when referring to such data in connection with executive compensation decisions.
The compensation peer group, which was used for 2022 executive compensation benchmarks ("2022 Compensation Peer Group"), includes the following:
| | | | | |
| Altra Industrial Motion Corp. | L. B. Foster Company |
| Astec Industries, Inc. | Motorcar Parts of America, Inc. |
| Columbus McKinnon Corporation | Myers Industries, Inc. |
| Dorman Products, Inc. | The Shyft Group, Inc. |
| EnPro Industries, Inc. | Standard Motor Products, Inc. |
| Federal Signal Corporation | Stoneridge, Inc. |
| Gentherm Incorporated |
|
The Total Shareholder Return ("TSR") peer group, which was used to calculate relative TSR (a metric in the Long-Term Incentive Plan ("LTIP") for 2022), included the following:
| | | | | |
| Altra Industrial Motion Corporation | Gentherm Incorporated |
| Astec Industries, Inc. | L.B. Foster Company |
| Columbus McKinnon Corporation | LCI Industries |
| Dorman Products, Inc. | Modine Manufacturing Company |
| EnPro Industries, Inc. | Spartan Motors Inc. |
| Federal Signal Corporation | Standard Motor Products, Inc. |
| FreightCar America, Inc. | Stoneridge, Inc. |
Beginning in 2023, the Committee approved an adjusted TSR peer group that mirrors the updated 2023 compensation peer group, which includes the following:
| | | | | |
| Altra Industrial Motion Corporation | Modine Manufacturing Company |
| Astec Industries, Inc. | Motorcar Parts of America, Inc. |
| Blue Bird Corporation | Myers Industries, Inc. |
| Columbus McKinnon Corporation | NN Inc. |
| Cooper-Standard Holdings Inc. | Standard Motor Products, Inc. |
| EnPro Industries, Inc. | Stoneridge, Inc. |
| Federal Signal Corporation | Superior Industries International Inc. |
| Gentherm Incorporated | The Shyft Group, Inc. |
| L.B. Foster Company | Wabash National Corporation |
For 2022, the Committee generally targeted base salaries, target annual cash incentives, and long-term incentives for our NEOs near the 50th percentile (or market median). As a result, target total cash compensation (salary and target annual cash incentives) and target total direct compensation (salary, target annual cash incentives and long-term incentives) will only exceed the market median for our NEOs if aggressive annual performance goals are met, consistent with our pay for performance philosophy.
The Committee believes this pay philosophy, with market-based pay and an emphasis on at-risk compensation, supports the attraction and retention of high caliber executives in an increasingly competitive market for executive talent.
Compensation Elements - Overview
The three principal compensation components for our NEOs include:
•Base Salary;
•Annual Incentive Compensation; and
•Long-term Incentive Compensation.
Mr. Bevis is party to an employment agreement, executed on September 9, 2020. Messrs. Mohamed, Tajer, Cheung and Ms. Mathers are parties and Mr. Bohnert was a party, to a Change-In-Control & Non-Competition Agreement. We provide these agreements to encourage retention and continuity in the event of a Change-In-Control.
Compensation Mix
We use the principal components of compensation described above to provide at-risk compensation, retention value, and an equity stake designed to align NEO and stockholder interests. Our policy for allocating between fixed and incentive compensation, and between cash and equity-based awards, is based on the following general principles:
•We embrace a pay for performance philosophy that ties the majority of executive pay to performance, requires performance at a threshold level in order to qualify for incentive awards, caps maximum award payouts, and puts the majority of executive compensation at risk each year;
•Each NEO has a significant proportion of total compensation in the form of long-term incentives, with multi-year vesting of both equity-based awards and long-term cash performance awards to encourage their retention and align their interests with that of our stockholders; and
•We seek an appropriate mix of annual and long-term incentive opportunities that reflect the cyclical nature of our industry and encourage both performance and retention.
Our NEOs’ compensation is weighted towards variable incentives that provide award opportunities based on our annual and long-term performance. The Committee believes this pay mix motivates our NEOs to achieve results that support our strategic objectives and create long-term stockholder value without encouraging excessive risk taking.
Pay for Performance
Pay for performance is one of the primary objectives of our compensation philosophy. On average, 65% of the total target compensation opportunity for our NEOs is variable, or “at risk”.
The chart below shows base salaries, target annual incentive (“AIP”) opportunities under the Bonus Plan, and target LTI opportunities under the LTIP as a percentage of 2022 target total compensation opportunities for our current NEOs.
The AIP under the Bonus Plan, as illustrated in the chart above, reflects target award opportunities as shown in the Target column of the 2022 Grants of Plan-Based Awards Table for our current NEOs. LTI reflects the established Long-Term Incentive Target, as a percent of base salary for each of the current NEOs, as established by the Committee in March 2022 and with respect to Mr. Cheung on October 10, 2022. Mr. Cheung was not a 2022 LTIP participant but was designated as an LTIP participant for 2023 with a target grant date value of 135% of base salary.
The specific relationship of base salary to incentive compensation varies depending upon the scope of each NEO’s position, prior experience, time in the industry, and time in the role; but consistently reflects the Committee’s philosophy of collectively weighting target AIP and LTI opportunities more heavily than base salary.
Compensation Elements
Salary
We provide a salary to our NEOs to compensate them for their services during the year. Salaries are designed to be competitive with other comparable executive officer salaries in the published compensation survey data described above, and in the case of new hires, to attract high quality executive talent using the Committee’s discretion and judgment. The Committee sets base salaries based on market competitiveness, the NEOs’ specific roles and responsibilities, experience, expertise and individual performance throughout their tenure. Salaries are reviewed annually by the Committee and periodic adjustments are made based on the factors noted above, as well as input from the President & CEO with respect to his direct reports, and comparator data from the compensation surveys discussed in detail above. However, there is no specific formula applied to the factors noted above and annual increases are not guaranteed. The Committee believes the current NEO salaries are consistent with the salaries paid to similarly situated executive officers of companies in the compensation peer group and published survey data.
Annual Incentive Compensation
Annual incentive compensation, payable under the Bonus Plan, is designed to reward NEOs for the achievement of financial targets tied to our annual business plan. Target annual incentive award opportunities are determined as a percentage of each NEO’s salary for the fiscal year and are tied to the achievement of pre-determined financial performance targets, with the Committee having the discretion to increase or decrease individual awards based on the performance and contributions of each NEO.
On March 9, 2022, the Committee approved 2022 financial performance goals for the Commercial Vehicle Group Bonus Plan (the "Bonus Plan") based on our business plan and strategic objectives. The target award opportunity for Mr. Bevis was 100% of his base salary. The target award opportunity for Mr. Mohamed was 75% of base salary. The target award opportunity for Mr. Tajer was 70% of base salary. The target award opportunity for Mr. Bohnert was 65% of base salary. The target award opportunity for Ms. Mathers was 50% of base salary. Although Mr. Cheung was hired in the second half of the year, his target award opportunity was 65% of base salary on a full year basis with a guaranteed minimum of 100%.
The Committee adopted objective financial performance metrics for the Bonus Plan, including New Revenues, Operating Income Margin, and Operating Working Capital as a Percent of Sales. New Revenue correlates to the emphasis the Company's business plan places on diversified top-line growth. Operating Income Margin was selected based on the high correlation to Total Stockholder Return. Operating Working Capital as a Percent of Sales was selected to encourage the efficient and profitable use of capital in business operations. Performance metrics were established on a consolidated basis to promote high level collaboration across the enterprise. As shown below, 60% of the original total award opportunity for our NEOs was tied to consolidated profitability, as measured by corporate Operating Income Margin. The 2022 performance metrics and weighting are illustrated below.
The Committee also approved 2022 threshold, target, and superior performance goals, and corresponding award opportunities for the Bonus Plan. The following table summarizes the consolidated performance goals for 2022.
| | | | | | | | | | | |
| 2022 Bonus Plan Performance Goals |
| Consolidated Metric (Weighting) | Threshold | Target | Superior |
| Operating Income Margin (60%) | 4.6% | 5.6% | 6.6% |
| New Revenues ($ Millions) (25%) | 125M | 150M | 175M |
| Operating Working Capital % Sales (15%) | 21.6% | 20.6% | 19.6% |
| Payout for Performance Level Shown Above (% of Target) | 25% | 100% | 200% |
Award funding under the Bonus Plan for each metric is independent. Intermediate payout goals are established above and below target to flatten the payout curve, with performance between any points calculated using straight line interpolation. For each component, achievement of threshold performance is required to receive an award for that metric.
In 2022, the Bonus Plan included the original following baseline formula for our NEOs:
BONUS = (2022 Base Salary x BF1x 60% x BF2) + (2022 Base Salary x BF1x 25% x BF3) + (2022 Base Salary X BF1 x 15% x BF4)
Where:
•“2022 Base Salary” is each NEO’s salary at fiscal year-end 2022 for Messrs. Bevis, Bohnert, Cheung, Mohamed, Tajer, and Ms. Mathers.
•BF1 (“Bonus Factor 1” or “Target Factor”) is a percent of each executive’s 2022 base salary.
•BF2 (“Bonus Factor 2”) is scored independently as a fraction with a numerator equal to Operating Income Margin performance for the plan year, divided by the target set for the year. The payment for threshold performance was set at 25% of target while payment for superior performance was set at 200% of target.
•BF3 (“Bonus Factor 3”) is scored independently as a fraction with a numerator equal to New Sales performance for the year divided by the target set for the year. The payment for threshold performance was set at 25% of target, while payment for Superior performance was set at 200% of target.
•BF4 (“Bonus Factor 4”) is scored independently as a fraction with a numerator equal to Operating Working Capital as a Percent of Sales performance for the year divided by the target set for the year. The payment for threshold performance was set at 25% of target, while payment for superior performance was set at 200% of target.
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2022 Bonus Summary |
| Metric | Total | Operating Income Margin | New Sales | OWC % of Sales |
| Weighting | | 60% | 25% | 15% |
| Payout Calculation | | 0% | 100% | 0% |
Weighted Payout (1) | 25% | 0% | 25% | 0% |
(1) Based on the overall performance, the Committee exercised discretion and allocated payment equal to 21% as opposed to the weighted
payout of 25%.
For 2022, we achieved 4.4% adjusted Operating Income Margin, which excluded certain costs associated with new business startup costs, restructuring activities and stock compensation expenses in excess of budgeted amounts. Our target adjusted Operating Income Margin was 5.1% when adjusted for actual sales levels and therefore participants did not earn a payout for this goal. We ended 2022 with Operating Working Capital as a percent of sales at 22.5% and since our target was 20.6%, this resulted in no payout for this goal. We won $150 million in New Sales in 2022 and therefore reached the target of $150 million. These three outcomes resulted in payouts to our NEOs as follows:
Mr. Bevis received a cash incentive payment of $115,500, or 21% of his annual target, which payment was paid on March 10, 2023 and is reflected in the Summary Compensation Table.
Mr. Bohnert received a cash incentive payment of $57,330, or 21% of his annual target, which payment was paid on March 10, 2023 and is reflected in the Summary Compensation Table.
Mr. Mohamed received a cash incentive payment of $56,299, or 21% of his annual target, which payment was paid on March 10, 2023 and is reflected in the Summary Compensation Table.
Mr. Tajer received a cash incentive payment of $48,657, or 21% of his annual target, which payment was paid on March 10, 2023 and is reflected in the Summary Compensation Table.
Ms. Mathers received a cash incentive payment of $36,435, or 21% of her annual target, which payment was paid on March 10, 2023 and is reflected in the Summary Compensation Table.
Mr. Cheung received a cash incentive payment of $292,500, or 100% of his target. In order to induce him to join CVG and compensate him for the value of long-term incentives forfeited with his previous employer, Mr. Cheung also received incentives valued at $540,000; $100,000 in the form of cash paid on November 11, 2022, and effective November 10, 2022, $220,000 denominated in restricted stock and $220,000 denominated in the form of performance shares to be settled in cash.
On March 1, 2023, the Committee reviewed and approved the Bonus Plan for 2023. The Committee approved the following metrics for the 2023 Bonus Plan for the NEOs which are unchanged from 2022:
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Bonus Plan - 2023 Metrics and Weighting |
Metric Weighting | Operating Income Margin % | New Business Wins $ | Operating Working Capital % of Sales | TOTAL |
60% | 25% | 15% | 100% |
The 2023 target incentive opportunity established for Mr. Bevis is 100% of base salary. The 2023 target incentive opportunity established for Mr. Mohamed is 75% of base salary. The 2023 target incentive opportunity established for Mr. Tajer is 70% of base salary. The 2023 target incentive opportunity established for Mr. Cheung is 65% of base salary. The 2023 target incentive for Ms. Mathers is 50% of base salary.
Long-Term Incentives
The Company's Equity Incentive Plan is designed to recognize and reward executive officers for efforts related to the long-term growth and success of the Company. The Equity Incentive Plan permits grants of various types of equity-based awards, including stock options, stock-settled stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other equity-based and cash awards, at the discretion of the Committee. This range of available awards provides the Committee the flexibility to grant appropriate types of awards under different circumstances, depending on our needs and the relative importance of compensation objectives as they may change from time to time.
As designed, our LTIP generally includes equity-based awards in the form of time-based restricted stock, which vests ratably over three years or cliff vests upon the grantee reaching the "Rule of 70", which is the date the grantee reaches at least 60 years of age and when that grantee's age and total years of employment with the Company equals 70. The use of restricted stock minimizes the level of dilution from the use of equity incentives. The Committee continues to believe restricted stock is an appropriate element of long-term compensation because it serves as a retention incentive for the current management team whose skills and experience are desirable and sought after within the industry. Restricted stock also aligns the NEOs' interests directly with those of the stockholders, as the NEOs will realize greater or lesser value based on stock price changes during the vesting period which will parallel the interests of our stockholders over the same period. The restricted share component of the LTIP represents 50% of the total opportunity for plan participants, except for Mr. Bevis for whom the restricted share component represents 33.3% of the total opportunity.
The balance of the LTIP incentive is generally comprised of cliff vested restricted cash to preserve shares and/or performance shares tied to our TSR over a three-year performance period, relative to the TSR peer group. In 2022, the Committee approved an additional Return on Investment Capital ("ROIC") metric that will be included as a piece of the three-year performance period along with the TSR
.
TSR is defined as the change in stock price in addition to any dividends paid over the three-year performance cycle. TSR calculations are based on average closing stock prices, both for us and for our peers, for the twenty trading days leading up to the beginning and end of the performance cycle.
On March 9, 2022, the Committee approved awards for each NEO. The target for Mr. Bevis was set at 345% of base salary. The target for Mr. Bohnert was set at 90% of base salary. The target for Mr. Mohamed was set at 100% of base salary. The target for Mr. Tajer was set at 90% of base salary. The target for Ms. Mathers was set at 80% of base salary.
For a description of Mr. Bevis' 2022 LTIP target, see the section titled Terms of Employment, Mr. Bevis, on page 54.
Mr. Cheung did not receive a 2022 LTIP award based on his hire date but was designated as an LTIP participant for 2023.
The LTIP award for Messrs. Bohnert, Mohamed and Tajer was equally weighted between time-based restricted stock and cliff vested restricted cash awards under the original plan design as described above. Messrs. Mohamed and Tajer were also eligible for a restricted cash award for the LTI period commencing April 1, 2020 and vesting on December 31, 2022. Mr. Mohamed’s original cash target was $116,597. The vested award was 200% of target, or $233,195, based on relative TSR performance measured against the comparator group in place at the time the 2020 awards were established. Mr. Tajer’s original cash target was $133,667. The vested award was 200% of target, or $267,334, based on relative TSR performance measured against the comparator group in place at the time the 2020 awards were established. Messrs. Mohamed and Tajer’s awards were paid on January 20, 2023 and are reflected in the Summary Compensation Table as Incentive Plan Compensation.
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| Commercial Vehicle Group 3-Year Total Stockholder Return Rank (out of 16 companies) | Percent of Target Award Earned |
| Top Quartile | 200% |
| Second Quartile | 100% |
| | | | | |
| Third Quartile | 50% |
| Bottom Quartile | 0% (No Payout) |
Potential payouts under the 2022 cash performance awards may range from 0% to 200% of target, based on our relative TSR performance over the three-year period. The award values were granted on March 31, 2022 and will vest on December 31, 2024 and follow a three-year performance period from January 1, 2022 through December 31, 2024 of the published group of peer companies traded on a “national securities exchange” as selected by the Committee in consultation with the Company’s executive management.
The Committee believes the LTIP design, which puts at least 50% of the award at risk and ties the performance award to stockholder outcomes is consistent with our philosophy of placing greater emphasis on long-term and at-risk incentive compensation to encourage a long-term view that supports the creation of stockholder value. Under current accounting rules, CVG is able to adjust any accounting expense associated with cash-settled awards tied to market-based performance conditions so that the final expense recognized matches the actual performance outcome.
Terms of Employment
Mr. Bevis
The Company and Mr. Bevis entered into an employment agreement ("Bevis Employment Agreement") on September 9, 2020. Under the terms of the agreement, Mr. Bevis receives a base salary of $500,000 subject to annual review and periodic upward adjustment as determined by the Committee. Mr. Bevis received a market-based salary adjustment in April 2021, taking his base salary to $550,000. Mr. Bevis received a market-based salary adjustment effective January 1. 2023, taking his base salary to $825,000. During the term of his employment, Mr. Bevis will be eligible to receive an annual incentive opportunity under the Company's Bonus Plan based on a target award opportunity equal to 100% of his base salary. Pursuant to the terms of Mr. Bevis’ Employment Agreement, during its term, Mr. Bevis shall be eligible, pursuant to the terms of the LTIP, to receive discretionary annual incentive awards with a target of $1,800,000 (as may be adjusted upward from time to time) on terms to be determined by the Committee. Mr. Bevis received an adjustment effective January 1, 2023, taking his long-term incentive target to $2,350,000. The terms and conditions of such awards shall be no less favorable than those awards granted to similarly situated executive officers of the Company. Pursuant to Mr. Bevis' Employment Agreement, Mr. Bevis was eligible to receive equity and other long-term incentive awards under any applicable plan adopted by CVG for which employees are generally eligible.
During the term of his employment, Mr. Bevis will be entitled to participate in any employee benefit plan CVG adopts for the benefit of its employees generally, including the Commercial Vehicle Group, Inc. Deferred Compensation Plan, subject to satisfying applicable eligibility requirements. Additionally, Mr. Bevis' Employment Agreement provides for certain payments upon termination, which are detailed in the Payments Upon Termination or Change-In-Control section below.
Mr. Cheung
In connection with his employment as Executive Vice President and Chief Financial Officer, Mr. Cheung receives a base salary of $450,000. He is eligible for an annual incentive opportunity under the Bonus Plan, as may be in effect from time to time based on a target award opportunity of at least 65% of his base salary. Additionally, Mr. Cheung is eligible for equity and other long-term incentive awards under any applicable plan adopted by the Company for which similarly situated employees are generally eligible. Mr. Cheung's target LTIP award opportunity is 135% of his base salary.
Mr. Cheung is entitled to participate in any employee benefit plan the Company has adopted or may adopt for the benefit of its employees, generally, including the Commercial Vehicle Group, Inc. Deferred Compensation Plan, subject to satisfying applicable eligibility requirements. Additionally, Mr. Cheung may receive certain payments and benefits upon termination, which are detailed in the "Payments Upon Termination of Change in Control" section below.
Mr. Bohnert
During 2022, Mr. Bohnert received a base salary of $420,000. He was eligible for an annual incentive opportunity under the Company's Bonus Plan, as may be in effect from time to time based on a target award opportunity of at least 65% of
his base salary. Additionally, Mr. Bohnert was eligible for equity and other long-term incentive awards under any applicable plan adopted by the Company for which similarly situated employees are generally eligible. Mr. Bohnert's target LTI award opportunity was 90% of his base salary. Though Mr. Bohnert resigned from his position as Chief Financial Officer on October 11, 2022, he remained employed by the Company through December 31, 2022 and was therefore eligible for the 2022 annual incentive payout.
Mr. Bohnert resigned from his position as Chief Financial Officer effective October 11, 2022, and remained employed as an advisor through December 31, 2022. Upon resignation and remaining employed through December 31, 2022, Mr. Bohnert became eligible for payout of his 2022 annual incentive plan payment and vesting of 13,921 unvested restricted shares as an employee. In addition, pursuant to his Change in Control Agreement, Mr. Bohnert will continue to be paid his salary in accordance with the Company's payroll practices for twelve (12) months from January 1, 2023 to December 31, 2023.
Mr. Mohamed
During 2022, Mr. Mohamed received a base salary of $357,455. He is also eligible for an annual incentive opportunity under the Company's Bonus Plan, as may be in effect from time to time based on a target award opportunity of at least 75% of his base salary. Additionally, Mr. Mohamed is eligible for equity and other long-term incentive awards under any applicable plan adopted by the Company for which similarly situated employees are generally eligible. Mr. Mohamed's target LTIP award opportunity is 100% of his base salary.
Mr. Mohamed is entitled to participate in any employee benefit plan the Company has adopted or may adopt for the benefit of its employees generally, including the Commercial Vehicle Group, Inc. Deferred Compensation Plan, subject to satisfying applicable eligibility requirements. Additionally, Mr. Mohamed may receive certain payments and benefits upon termination, which are detailed in the "Payments Upon Termination or Change in Control" section below.
Mr. Tajer
During 2022, Mr. Tajer received a base salary of $331,000. The Committee approved a market-based adjustment on December 14, 2022, that became effective January 1, 2023, taking his base salary to $375,000. He is also eligible for an annual incentive opportunity under the Company's Bonus Plan, as may be in effect from time to time based on a target award opportunity of 70% of his base salary. Additionally, Mr. Tajer is eligible for equity and other long-term incentive awards under any applicable plan adopted by the Company for which similarly situated employees are generally eligible. Mr. Tajer's target LTIP award opportunity was 90% of his base salary in 2022 and was increased to 100% effective January 1, 2023.
Mr. Tajer is entitled to participate in any employee benefit plan the Company has adopted or may adopt for the benefit of its employees generally, including the Commercial Vehicle Group, Inc. Deferred Compensation Plan, subject to satisfying applicable eligibility requirements. Additionally, Mr. Tajer may receive certain payments and benefits upon termination, which are detailed in the "Payments Upon Termination or Change in Control" section below.
Ms. Mathers
During 2022, Ms. Mathers received a base salary of $347,000. She is eligible for an annual incentive opportunity under the Company's Bonus Plan, as may be in effect from time to time based on a target award opportunity of at least 50% of her base salary. Additionally, Ms. Mathers is eligible for equity and other long-term incentive awards under any applicable plan adopted by the Company for which similarly situated employees are generally eligible. Ms. Mathers target LTIP award opportunity is 80% of her base salary.
Ms. Mathers is entitled to participate in any employee benefit plan the Company has adopted or may adopt for the benefit of its employees generally, including the Commercial Vehicle Group, Inc. Deferred Compensation Plan, subject to satisfying applicable eligibility requirements. Additionally, Ms. Mathers may receive certain payments and benefits upon termination, which are detailed in the "Payments Upon Termination or Change in Control" section below.
Timing of Equity Grants
We did not grant any stock options or stock appreciation rights during 2022.
Adjustment or Recovery of Awards
The Board of Directors has adopted a formal clawback policy, stating that if any Section 16 officer of CVG or any member of the executive leadership team, defined as the CEO and his/her direct reports, engages in any fraud, misconduct, bad-faith action, or intentional or unintentional errors or omissions that, directly or indirectly, causes a material accounting restatement of previously filed financial statements for any period as to which a performance based award or other equity grant was made based on the financial results that the Company subsequently restates, such award in excess of what would have been paid without the restatement, made to Section 16 officers and executive leadership team, shall be subject to reduction, cancellation or reimbursement to the Company, on an individual or collective basis at the Board's discretion.
Risk Assessment
The Committee mitigates risk related to CVG's compensation programs and policies through periodic market benchmarking, capped incentive award opportunities that are tied to multiple performance metrics measured over multiple timeframes, stock ownership requirements, anti-hedging and anti-pledging policies, insider trading policy, a clawback policy, and oversight by independent, non-employee directors who meet in executive session and utilize independent external compensation advisors. Potential payouts under the incentive plans are modest as a percentage of revenue and income, and NEOs must deliver a minimum threshold performance in order to receive an award. The Committee believes that our compensation philosophy and structure do not create risks that are likely to have a material adverse effect on CVG.
Consideration of Prior Amounts Realized
The Committee does not consider prior stock compensation gains in setting future compensation levels. The Committee believes this practice is consistent with our philosophy of providing future opportunities to executive officers in exchange for our future financial and stockholder return performance.
Post-Termination Payments
Change-in-Control Agreements
Mr. Bevis is party to an Employment Agreement, executed in September 2020 in connection with his appointment as President and Chief Executive Officer. Mr. Bohnert was a party to a Change in Control Agreement executed in March 2021 and he resigned as Chief Financial Officer effective October 11, 2022 and remained employed as an advisor through December 31, 2022. Mr. Mohamed is party to a Change in Control Agreement executed in October 2014. Mr. Tajer is party to a Change in Control Agreement executed in January 2020. Ms. Mathers is party to a Change in Control Agreement executed in December 2021. Mr. Cheung is party to a Change in Control Agreement executed in December 2022.
The Employment Agreement and Change-in-Control Agreements specify severance payments in the event of certain employment termination scenarios both before and following a Change-in-Control of CVG. The agreements currently in place generally provide the following:
Mr. Bevis
•Termination without Cause or by the executive for Good Reason in the absence of a Change-in-Control: Any annual incentive based on actual performance earned with respect to the previous calendar year but unpaid as of the employment termination date; a prorated amount of the annual incentive for the calendar year in which the termination occurs; immediate vesting of all outstanding stock options and restricted stock awards (and; solely with respect to Mr. Bevis' 2020 awards, immediate vesting of his outstanding performance shares award, restricted cash award and his discretionary cash award, payable as if Mr. Bevis had achieved maximum performance objectives); and salary continuation severance pay at the base salary rate for an additional 24 months.
•Termination without Cause or by the executive for Good Reason within 13 months of a Change-in-Control: Any annual incentive based on actual performance earned with respect to the previous calendar year but unpaid as of the employment termination date; a prorated amount of the annual incentive for the calendar year in which the termination occurs; the amount of any earned but unpaid portion of any incentive compensation, or any other fringe benefit to which the executive is entitled under the agreement through the date of the terminations as a result of the Change-in-Control; an amount equal to two times the sum of the Mr. Bevis’ base salary plus the average annual incentive received over the last three fiscal years, plus any medical, financial and insurance coverage provided under the annual compensation plan; and accelerated vesting of all outstanding stock options and restricted stock awards; and accelerated vesting of performance awards.
•Non-compete and non-solicitation provisions that continue for 24 months following termination of employment.
•The agreements do not provide for any tax gross up payments.
Messrs. Cheung, Mohamed, and Tajer and Ms. Mathers,
•Termination without Cause or by the executive for Good Reason in the absence of a Change-in-Control: Any annual incentive based on actual performance earned with respect to the previous calendar year but unpaid as of the employment termination date; a prorated amount of the annual incentive for the calendar year in which the termination occurs; and salary continuation severance pay at the base salary rate for an additional 12 months.
•Termination without Cause or by the executive for Good Reason within 13 months of a Change-in-Control: Any annual incentive based on actual performance earned with respect to the previous calendar year but unpaid as of the employment termination date; a prorated amount of the annual incentive for the calendar year in which the termination occurs; the amount of any earned but unpaid portion of any incentive compensation, or any other fringe benefit to which the executive is entitled under the agreement through the date of the terminations as a result of the Change-in-Control; an amount equal to the sum of the executive’s base salary plus the average annual incentive received over the last three fiscal years, plus any medical, financial and insurance coverage provided under the annual compensation plan; and accelerated vesting of all outstanding stock options and restricted stock or cash awards.
•Non-compete and non-solicitation provisions that continue for 12 months following termination of employment.
•The agreements do not provide for any tax gross up payments.
Severance payments under these agreements will end immediately if the executive is in violation of any of the obligations under the agreement or if we learn of any facts relating to the executive’s job performance or conduct that would have given us cause to terminate an executive's employment. Payments under Mr. Bevis' employment agreement and Messrs. Cheung, Mohamed, and Tajer and Ms. Mathers Change-in-Control Agreements are subject to applicable delay periods for benefits that constitute non-qualified deferred compensation under Section 409A of the Internal Revenue Code.
As defined in the Change-in-Control Agreements and Mr. Bevis' Employment Agreement, “Cause” generally means (1) dishonesty in carrying out company business; (2) engaging in acts injurious to us; (3) willful failure to follow Board directives; (4) illegal conduct or gross misconduct; (5) breach of the employment agreement or Change-in-Control Agreement; (6) violation of our code of conduct; or (7) a felony or certain misdemeanors.
“Good Reason” means (1) a material change in duties and responsibilities; (2) reduction in base salary or failure to increase salary following a change-in-control; (3) relocation outside the Columbus, Ohio metropolitan area; (4) material reduction of incentive opportunities; (5) failure to provide substantially similar benefits following a Change-in-Control; (6) failure of successor to assume the Change-in-Control Agreement; (7) request that executive engage in illegal conduct; or (8) breach of the Change-in-Control Agreement.
“Change-in-Control” means (1) change in more than 50% of beneficial ownership of CVG; (2) change in more than a majority of voting shares following any transaction; (3) change in more than half of the Board over two consecutive years with respect to Messrs. Cheung, Mohamed, Tajer and Ms. Mathers, and 12 consecutive months with respect to Mr. Bevis, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors of the Company representing at least one-half of the directors then in office who were directors at the beginning of the period; or (4) sale of all, or substantially all, of our assets.
The potential payments that result from these various events are set forth below in the section entitled “Potential Payments upon Termination or Change-in-Control.” The Committee believes the use of these agreements provides an important retention incentive for the NEOs primarily in the context of potential corporate transactions. The Committee also believes that the provisions in the Change-in-Control Agreements and Mr. Bevis' Employment Agreement are comparable to standard provisions of such agreements for similarly situated executive officers in the competitive market.
Retirement Plans
We sponsor tax-qualified employee savings and retirement plans (collectively the “401(k) Plan”) that cover most employees who satisfy certain eligibility requirements relating to minimum age and length of service. Under the 401(k) Plan effective at December 31, 2022, eligible employees, including all of the current NEOs, may elect to contribute between 1% and 5% of their annual compensation and receive a Company matching contribution of 100% of the first 3% of employee contributions, and 50% of the next 2% of employee contributions. All matching dollars vest immediately under CVG's 401(k) Plan. The matching amounts received by the NEOs in 2022 are set forth below in the “All Other Compensation” column of the “Summary Compensation Table. The 401(k) Plan and the non-qualified Deferred Compensation Plan described below represent the only sources of retirement income provided by the Company for the NEOs.
Deferred Compensation Plan
We implemented a Deferred Compensation Plan (the “Deferred Plan”) in 2006 for NEOs, and other key employees, primarily for the purpose of retention and recruitment. The Deferred Plan allows for pre-tax deferrals of compensation and provides for the assets to accumulate on a tax-deferred basis for the purpose of supplementing retirement income but does not include a Company match. Eligible participants may defer up to 80% of their base salary and/or up to 100% of their eligible annual incentive. Election deferrals must be made annually and before the compensation is earned. Participants make elections on the length of the deferral period at the same time they make the deferral election. Participants make investment choices from a selection of investment options similar to the 401(k) Plan. Distributions under the plan may be made as a lump sum or annual installments over periods of up to 15 years as determined at the time of deferral by the participant. Additional distribution triggers include termination of employment, disability, death, unforeseeable emergency or a change-in-control.
Stock Ownership Guidelines and Hedging Policies
Our stock ownership guidelines, as established by the Committee, requires executive officers and directors to hold shares of common stock with a value equal to: (a) five times annual base salary for the President & CEO; (b) three times annual base salary for the Chief Financial Officer; (c) two times annual base salary for all NEOs, and (d) five times the annual cash retainer for all members of the Board. Compliance is calculated annually, on the last trading day of each fiscal year. Compliance is determined using the share price as of calendar year end, or a three-year average share price as of calendar year end, whichever is higher. There is no mandated time frame by which the officers and directors must meet the ownership guidelines, but covered persons may not sell any shares until compliance is reached, other than the voluntary forfeiture of shares to satisfy annual tax withholding obligations associated with vested shares.
We maintain a policy that prohibits directors, executive officers and employees from engaging in any type of hedging transactions or from holding our securities in a margin account or pledging our securities as collateral for a loan. A director, executive officer or employee may seek prior approval from the Board to pledge securities as collateral for a loan (but not for margin accounts) if the director, executive officer or employee can clearly demonstrate the financial capacity to repay the loan without resorting to the pledged securities. This policy is posted on our website at www.cvgrp.com.
The Compensation Committee has reviewed and discussed the CD&A required by Item 402(b) of Regulation S-K with management, and based on such review and discussions, the Compensation Committee recommended to the Board that the CD&A be included in the Company’s 2022 Annual Report on Form 10-K and Proxy Statement.
Roger L. Fix (Chairman)
Wayne M. Rancourt
J. Michael Nauman
The following table summarizes the compensation of the NEOs for the years ending December 31, 2022, 2021 and 2020. The NEOs are the Company’s chief executive officer; chief financial officer; chief legal officer, compliance officer and corporate secretary; chief commercial officer and president of electrical systems; chief human resource officer; and, if applicable, the next most highly compensated executive officer, as detailed in the table below.
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| 2022 Summary Compensation Table |
| Name and Principal Position | Year | | Salary ($) | | Stock Awards ($) (2) | | Incentive Plan Compensation ($) (3) | | Discretionary Bonus ($) (4) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (5) | | All Other Compensation ($) (6) | | Total ($) |
Harold C. Bevis (1) | 2022 | | 550,000 | | 1,717,957 | | 415,500 | | | — | | | — | | | 48,427 | | | 2,731,884 | |
| President and Chief Executive Officer and Director | 2021 | | 536,539 | | 1,638,097 | | 660,000 | | | 1,350,000 | | | — | | | 45,078 | | | 4,229,714 | |
| 2020 | | 334,615 | | | 1,650,000 | | | — | | | 500,000 | | | — | | | 258,807 | | | 2,743,422 | |
| | | | | | | | | | | | | | | |
Andy Cheung (1) | 2022 | | 95,192 | | | 220,000 | | | 292,500 | | | 100,000 | | | — | | | — | | | 707,692 | |
Chief Financial Officer | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
Christopher H. Bohnert (1) | 2022 | | 420,000 | | | 63,755 | | | 57,330 | | | — | | | — | | | 432,200 | | | 973,285 | |
Former Chief Financial Officer | 2021 | | 414,615 | | | 189,000 | | | 311,220 | | | — | | | — | | | 53,203 | | | 968,038 | |
| 2020 | | 76,923 | | | 250,000 | | | — | | | 54,167 | | | — | | | 12,769 | | | 393,859 | |
| | | | | | | | | | | | | | | |
Aneezal H. Mohamed (1) | 2022 | | 357,455 | | | 180,864 | | | 289,494 | | | — | | | — | | | 12,200 | | | 840,013 | |
Chief Legal Officer, Compliance Officer and Secretary | 2021 | | 309,920 | | | 160,000 | | | 335,450 | | | — | | | — | | | 11,600 | | | 816,970 | |
| 2020 | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | |
Richard Tajer (1) | 2022 | | 331,000 | | | 150,731 | | | 315,991 | | | — | | | — | | | 12,200 | | | 809,922 | |
| Chief Commercial Officer and President of Electrical Systems | 2021 | | 316,949 | | | 120,000 | | | 278,556 | | | — | | | — | | | 11,600 | | | 727,105 | |
| 2020 | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | | | | | | | | | | | | | | |
Kristin S. Mathers (1) | 2022 | | 347,000 | | | 183,386 | | | 36,435 | | | — | | | — | | | 22,290 | | | 589,111 | |
Chief Human Resource Officer | 2021 | | 110,773 | | | 299,999 | | | 197,790 | | | — | | | — | | | 127,765 | | | 736,327 | |
| 2020 | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
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(1) Messrs. Bevis and Bohnert were NEOs in 2022, 2021 and 2020. Mr. Cheung was designated as an NEO in November 2022. Messrs. Mohamed and Tajer and Ms. Mathers were designated as NEOs in 2021.
(2) The amounts shown for Messrs. Bevis, Bohnert, Mohamed, and Tajer for 2022 represents the closing stock price of CVGI stock on the grant date of March 30, 2022, or $8.45. The amount shown for Mr. Cheung for 2022 represents the closing price of CVGI stock on November 10, 2022 at $6.52. The amount shown for Ms. Mathers has two (2) grant dates and represents the closing stock price on the grant date of March 30, 2022, or $8.45 and May 19, 2022, or $6.41. The 2022 awards for Messrs. Bevis, Bohnert, Mohamed, Tajer, and Ms. Mathers, were based on the average closing price of CVGI stock for twenty (20) trading days prior to the grant on March 30, 2022, or $8.35.
Mr. Bevis received awards of performance rights granted on March 31, 2022, March 31, 2021 and April 3, 2020 that, if and when earned and vested, will convert to 75,848, 64,038, and 185,185 shares, respectively. Vesting may range from 0% to 200% of the target shares based on performance; if earned and vested, the performance rights convert to CVGI stock following the end of the respective three-year performance period that concludes on December 31, 2024 and December 31, 2023, and March 23, 2023, respectively. Amounts are based on grant date fair value of $14.20, $15.70, and $2.43, respectively.
The amount shown for Messrs. Bevis, Bohnert, Mohamed and Tajer for 2021 represents the closing stock price on the grant date of March 30, 2021, or $9.88. The amount shown for Ms. Mathers for 2021 represents the closing stock price on the grant date of October 1, 2021, or $9.94. The amount shown for Mr. Bevis for 2020 represents the average closing price of CVGI stock for twenty (20) trading days prior to the grant date of April 3, 2020, or $2.43.
The amount shown for Mr. Bevis represents the average closing price of CVGI stock for twenty (20) trading days prior to the grant on December 31, 2020, or $8.72. These shares cliff vested on June 12, 2022. The 2020 amount shown for Mr. Bohnert represents the average closing price of CVGI stock for twenty (20) trading days prior to the grant date of October 20, 2020, or $6.09.
(3) The amounts shown for Messrs. Bevis, Cheung, Bohnert, Mohamed, Tajer and Ms. Mathers for 2022 represent an incentive payment made in 2022 under the Commercial Vehicle Group Bonus Plan. The amount shown of $300,000 for Mr. Bevis for LTIP payment made in 2022 was for the award period March 24, 2020 through March 23, 2022. The amounts shown for Messrs. Mohamed and Tajer, $233,195 and $267,334, respectively, for LTIP payment made in 2022 are for the award period April 1, 2020 through December 31, 2022.
The amounts shown for 2021 represent incentive payments made in 2022 under the Commercial Vehicle Group Bonus Plan. The amount shown for Mr. Mohamed includes $56,513, for LTIP payments made in 2021 for the award period October 1, 2018 through September 30, 2021. No payments were made pursuant to CVG’s AIP plan in 2020. Discretionary awards are reflected under Discretionary Bonus. No annual incentive bonuses were paid to our NEOs in 2020 for the calendar year 2019.
(4) The amount shown for Mr. Bevis for 2020 represents a discretionary incentive bonus paid in 2021 and 2021 represents a discretionary incentive bonus paid in 2022 at the sole discretion of the Committee. The amount shown for Mr. Cheung represents a sign-on bonus paid in 2022. The amount shown for Mr. Bohnert represents a discretionary bonus paid in 2021 at the sole discretion of the Committee.
(5) Messrs. Bevis, Cheung, Bohnert, Mohamed, Tajer and Ms. Mathers elected not to participate in the Deferred Plan in 2022.
(6) All Other Compensation total includes consulting fees, company contributions to retirement plans, and relocation and temporary travel/lodging expenses paid in 2022, as detailed in the table below.
2022 All Other Compensation Table
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| Name | | | Severance Wages ($)(1) | | Company Contributions to Deferred Compensation and 401 (k) Plans ($) (2) | | Relocation and Temporary Travel/Lodging Expenses ($) (3) | | | | Total
($) |
| Harold C. Bevis | | | — | | | 12,200 | | | 36,227 | | | | | 48,427 | |
| Andy Cheung | | | | | 1,385 | | | — | | | | | 1,385 | |
| Christopher H. Bohnert | | | 420,000 | | | 12,200 | | | — | | | | | 432,200 | |
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| Aneezal H. Mohamed | | | — | | | 12,200 | | | — | | | | | 12,200 | |
| Richard Tajer | | | — | | | 12,200 | | | — | | | | | 12,200 | |
| Kristin S. Mathers | | | — | | | 9,671 | | | 12,619 | | | | | 22,290 | |
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(1) Represents Mr. Bohnert's severance that includes Mr. Bohnert's salary for a period of 12 months from January 1, 2023 to December 31, 2023.
(2) Represents our matching contributions equal to 100% of the first 3%, and 50% of the next 2% of the participant’s contribution relating to the 401(k) Plan in 2022.
(3) The amount shown for Mr. Bevis and Ms. Mathers includes the payment or reimbursement of costs associated with their relocation to the Central Ohio area. The Company will continue to pay Mr. Bevis' ongoing storage fees and final move costs during 2023 due to construction delays related to his relocation primarily resulting from the COVID-19 pandemic.
The following table provides information regarding estimated possible payouts under the 2022 incentive plans:
2022 Grants of Plan Awards
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| | | | | | Estimated Future and Possible Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Share Equity Incentive Plan Awards | | | | |
| Name | | Grant Date | | | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold ($) | | Target ($) | | Maximum ($) | | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | | Grant Date Fair Value of Stock and Option Awards ($) |
| Harold C. Bevis | | N/A | | (1) | | 20,625 | | | 550,000 | | | 1,100,000 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (2) | | 316,348 | | | 633,333 | | | 1,266,666 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (3) | | — | | | — | | | — | | | — | | | — | | | — | | | 75,848 | | | 640,916 | |
| | 3/30/22 | | (4) | | — | | | — | | | — | | | 316,348 | | | 633,333 | | | 1,266,666 | | | — | | | — | |
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| Andy Cheung | | N/A | | (1) | | 292,500 | | | 292,500 | | | 585,000 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (5) | | 110,000 | | | 220,000 | | | 440,000 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (6) | | — | | | — | | | — | | | — | | | — | | | — | | | 33,742 | | | 220,000 | |
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| Christopher H. Bohnert | | N/A | | (1) | | 10,238 | | | 273,000 | | | 546,000 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (2) | | — | | | — | | | — | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (3) | | — | | | — | | | — | | | — | | | — | | | — | | | 7,545 | | | 63,755 | |
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| Aneezal H. Mohamed | | N/A | | (1) | | 10,053 | | | 268,091 | | | 536,182 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (2) | | 89,364 | | | 178,727 | | | 357,454 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (3) | | — | | | — | | | — | | | — | | | — | | | — | | | 21,404 | | | 180,864 | |
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| Richard Tajer | | N/A | | (1) | | 8,689 | | | 231,700 | | | 463,400 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (2) | | 74,475 | | | 148,950 | | | 297,900 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (3) | | — | | | — | | | — | | | — | | | — | | | — | | | 17,838 | | | 150,731 | |
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| Kristin S. Mathers | | N/A | | (1) | | 6,506 | | | 173,500 | | | 347,000 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (2) | | 92,535 | | | 185,069 | | | 370,138 | | | — | | | — | | | — | | | — | | | — | |
| | 3/30/22 | | (3) | | — | | | — | | | — | | | — | | | — | | | — | | | 23,319 | | | 183,386 | |
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(1)"N/A" refers to the lack of a specific grant date for the annual incentive opportunity. See the “Compensation Discussion and Analysis - Annual Incentive Compensation” for a description of the 2022 metrics for the Commercial Vehicle Group Bonus Plan. These amounts represent potential payouts under the Bonus Plan in 2022. Actual awards can be found in the “Summary Compensation Table” under the column titled “Incentive Plan Compensation."
(2)See "Compensation Discussion and Analysis - Long Term Incentives" for a description of the cash performance awards. These amounts represent potential payouts under the cash performance awards granted on March 30, 2022 under the 2020 Equity Incentive Plan. Messrs. Bevis, Mohamed, Tajer and Ms. Mathers' awards will be earned and payable following the end of the three-year performance period that concludes on December 31, 2024. Mr. Bohnert was no longer eligible for the Long-Term Incentives as of December 31, 2022.
(3)Represents the restricted stock awarded on March 30, 2022 under the 2020 Equity Incentive Plan. Mr. Bevis' awarded shares fully vested in 2022 due to the rule relating to vesting upon attaining retirement age.
(4)Represents performance shares awarded to Mr. Bevis on March 30, 2022. Awarded shares were issued in the form of performance shares tied to relative performance of Total Shareholder Return (TSR) as compared to the established peer group and ROIC. The performance shares will be earned and payable in CVGI stock following the end of the three-year performance period that concludes on December 31, 2024.
(5)See "Compensation Discussion and Analysis - Long Term Incentives" for a description of the cash performance awards. Represents potential payouts under the cash performance awards granted on November 11, 2022 under the 2020 Equity Incentive Plan. Mr. Cheung's awards will be earned and payable following the end of the three-year performance period that concludes on December 31, 2024.
(6)Represents restricted stock awarded to Mr. Cheung as sign on incentives in November 2022. Awarded stock vests pro-rata on December 31, 2023, 2024 and 2025.
The following table shows the number of shares covered by unvested restricted stock held by the NEOs on December 31, 2022, calculated using the closing stock price of $6.81 on December 30, 2022:
Outstanding Equity Awards at Fiscal 2022 Year-End
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| Name | | Note | | Number of Shares or Units of Stock That Have Not Vested
(#) | | Market Value of Shares or Units of Stock That Have Not Vested
($) | | 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
($) |
| Harold C. Bevis | | (1) | | 28,669 | | | 195,236 | | | — | | | — | |
| | (2) | | — | | | — | | | 201,615 | | | 1,372,998 | |
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| Andy Cheung | | (1) | | 33,742 | | | 229,783 | | | — | | | — | |
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| Christopher H. Bohnert | | (1) | | — | | | — | | | — | | | — | |
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| Aneezal H. Mohamed | | (1) | | 19,667 | | | 133,932 | | | — | | | — | |
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| Richard Tajer | | (1) | | 15,940 | | | 108,551 | | | — | | | — | |
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| Kristin S. Mathers | | (1) | | 31,095 | | | 211,757 | | | — | | | — | |
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(1) Represents one-third of unvested stock issued in December 2020 which ratably vests on December 31, 2021, 2022 and 2023. Mr. Bevis' unvested shares fully vested in January 2023 due to the rule relating to vesting upon attaining retirement age. For Mr. Cheung, unvested shares were issued November 2022 which vest ratably December 31, 2023, 2024 and 2025. Mr. Mohamed's unvested shares represent one-third of the stock issued March 2021 which vests on December 31, 2021, 2022 and 2023 and two-thirds of the stock issued March 2022 which vests ratably on December 31, 2022, 2023 and 2024. Mr. Tajer's unvested shares represent one-third of the stock issued March 2021 which ratably vests on December 31, 2021, 2022 and 2023 and two-thirds of the stock issued March 2022 which ratably vests on December 31, 2022, 2023 and 2024. For Ms. Mathers, her unvested shares represent two-thirds of her sign on incentives that vest in 3 annual installments on January 28, 2022, 2023 and 2024, two-thirds of the stock issued March 2022 which ratably vests on December 31, 2022, 2023 and 2024 and two-thirds of the stock issued May 2022 which ratably vests on December 31, 2022, 2023 and 2024.
(2) Mr. Bevis' award represents performance shares granted on April 3, 2020 at the target amount of 185,185 shares. The amount represents these shares, less two-thirds, which vested March 23, 2021 and 2022, and which are settled in CVGI stock in three annual installments on March 23 of each year, with remaining amounts vesting in March 2023, with a payout that may range from 0% to 200% based on performance. The amount also includes performance shares granted on March 31, 2021 at the target amount of 64,038 shares and performance shares granted on March 31, 2022 at the target amount of 75,848, that may range from 0% to 200% based on performance, which are earned and payable in CVGI stock following the end of the three-year performance period that concludes on December 31, 2023 and December 31,2024, respectively.
The following table shows the number of shares of common stock acquired by the NEOs upon the vesting of restricted stock during 2022:
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2022 Option Exercise and Stock Vested Table (1) |
| | | | Stock Awards |
| Name | | | | | | Number of Shares Acquired on Vesting
(#) | | Value Realized on Vesting ($) (2) |
| Harold C. Bevis | | | | | | 332,394 | | | 2,287,485 | |
| Andy Cheung | | | | | | — | | | — | |
| Christopher H. Bohnert | | | | | | 13,921 | | | 94,802 | |
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| Aneezal H. Mohamed | | | | | | 28,527 | | | 194,269 | |
| Richard Tajer | | | | | | 58,330 | | | 390,027 | |
| Kristin S. Mathers | | | | | | 22,405 | | | 164,284 | |
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(1)CVG stock options have not been awarded.
(2)Calculated using the closing price of CVGI shares as of the vesting date. In the case of Mr. Bevis the closing price of CVGI shares on March 23, 2022 was $8.37, June 4, 2022 was $6.98 and December 31, 2022 was $6.81. In the case of Mr. Bohnert, the closing price of CVGI shares on December 31, 2022 was $6.81. In the case of Mr. Mohamed, the closing price of CVGI shares on December 31, 2022 was $6.81. In the case of Mr. Tajer, the closing price of CVGI shares on June 12, 2022 was $6.57 and December 31, 2022 was $6.81. In the case of Mrs. Mathers, the closing price of CVGI shares on January 28, 2022 was $7.61 and December 31, 2022 was $6.81.
The 2022 Deferred Compensation Table has been omitted because the NEOs did not contribute to or participate in the Company's Deferred Compensation Plan in 2022. Additionally, the Company does not provide matching dollars under the Deferred Compensation Plan.
The table below shows the compensation payable to each NEO upon the occurrence of the following events: voluntary termination or involuntary for cause termination; death or disability; retirement; involuntary not for cause termination; change-in-control, and change-in-control and termination within thirteen months. The amounts shown assume that each event was effective as of December 31, 2022 and are estimates of the amounts which would be paid out to the NEOs upon their termination. Mr. Bohnert was no longer an NEO effective October 11, 2022 as a result of his announced resignation so he does not appear in this table. The actual amounts to be paid to each NEO can only be determined at the time of such person’s separation.
Potential Payments Upon Termination or Change in Control Table
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| Executive | | Voluntary Termination or Involuntary for Cause Termination
($) | | Death or Disability
($) | | Retirement
($) | | Involuntary not for Cause Termination
($) | | Change-in-Control
($) | | Change-in-Control and Termination Within Thirteen Months
($)(2) |
| Harold C. Bevis | | | | | | | | | | | | |
| Severance Payment (1) | | — | | | 2,475,000 | | | 825,000 | | | 2,475,000 | | | — | | | 2,175,167 | |
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| Restricted Stock (3) | | — | | | 195,236 | | | 195,236 | | | 195,236 | | | — | | | 195,236 | |
| Stock Performance Award (4) | | | | 2,745,996 | | | 2,745,996 | | | 2,745,996 | | | 2,745,996 | | | 2,745,996 | |
| Cash Performance Award (5) | | — | | | 2,832,066 | | | 2,832,066 | | | 2,832,066 | | | 2,832,066 | | | 2,832,066 | |
| Benefit Continuation (6) | | — | | | — | | | — | | | — | | | — | | | 65,000 | |
| Legal Counsel Representation (7) | | — | | | — | | | — | | | — | | | — | | | 50,000 | |
| Totals | | — | | | 8,248,298 | | | 6,598,298 | | | 8,248,298 | | | 5,578,062 | | | 8,063,465 | |
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| Andy Cheung | | | | | | | | | | | | |
| Severance Payment (1) | | — | | | 742,500 | | | 292,500 | | | 742,500 | | | — | | | 742,500 | |
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| Restricted Stock (3) | | — | | | 229,783 | | | 229,783 | | | — | | | — | | | 229,783 | |
| Cash Performance Award (5) | | — | | | — | | | — | | | — | | | 173,686 | | | 173,686 | |
| Benefit Continuation (6) | | — | | | — | | | — | | | — | | | — | | | 32,000 | |
| Legal Counsel Representation (7) | | — | | | — | | | — | | | — | | | — | | | 50,000 | |
| Totals | | — | | | 972,283 | | | 522,283 | | | 742,500 | | | 173,686 | | | 1,227,969 | |
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| Aneezal H. Mohamed | | | | | | | | | | | | |
| Severance Payment (1) | | — | | | 625,546 | | | 268,091 | | | 625,546 | | | — | | | 669,927 | |
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| Restricted Stock (3) | | — | | | 133,932 | | | 133,932 | | | — | | | — | | | 133,932 | |
| Cash Performance Award (5) | | — | | | — | | | — | | | — | | | 480,511 | | | 480,511 | |
| Benefit Continuation (6) | | — | | | — | | | — | | | — | | | — | | | 20,000 | |
| Legal Counsel Representation (7) | | — | | | — | | | — | | | — | | | — | | | 50,000 | |
| Totals | | — | | | 759,478 | | | 402,023 | | | 625,546 | | 625,546 | | 480,511 | | | 1,354,370 | |
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| Richard Tajer | | | | | | | | | | | | |
| Severance Payment (1) | | — | | | 637,500 | | | 262,500 | | | 637,500 | | | — | | | 672,274 | |
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| Restricted Stock (3) | | — | | | 108,551 | | | 108,551 | | | — | | | — | | | 108,551 | |
| Cash Performance Award (5) | | — | | | — | | | — | | | — | | | 464,588 | | | 464,588 | |
| Benefit Continuation (6) | | — | | | — | | | — | | | — | | | — | | | 22,000 | |
| Legal Counsel Representation (7) | | — | | | — | | | — | | | — | | | — | | | 50,000 | |
| Totals | | — | | | 746,051 | | | 371,051 | | | 637,500 | | | 464,588 | | | 1,317,413 | |
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| Kristin S. Mathers | | | | | | | | | | | | |
| Severance Payment (1) | | — | | | 520,500 | | | 193,500 | | | 520,500 | | | — | | | 464,113 | |
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| Restricted Stock (3) | | — | | | 211,757 | | | 211,757 | | | — | | | — | | | 211,757 | |
| Cash Performance Award (5) | | — | | | — | | | — | | | — | | | 160,237 | | | 160,237 | |
| Benefit Continuation (6) | | — | | | — | | | — | | | — | | | — | | | 32,000 | |
| Legal Counsel Representation (7) | | — | | | — | | | — | | | — | | | — | | | 50,000 | |
| Totals | | — | | | 732,257 | | | 405,257 | | | 520,500 | | | 160,237 | | | 918,107 | |
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(1)The Severance Payment includes salary continuation obligations, severance payments and cash bonus payments the NEO is entitled to receive on any trigger event. In the case of death or disability, Mr. Bevis is entitled to receive any Annual Bonus earned with respect to the previous fiscal year but unpaid as of the date of his death or disability based on the higher of the actual amount accrued by the Company or the target amount as of the date of his death or disability; a prorated amount of the Annual Bonus for the fiscal year in which the his death or disability occurs, calculated by multiplying the greater of the Annual Bonus accrued by the Company as of his death or disability or his target Annual Bonus for such fiscal year based on the higher of the actual amount accrued by the Company or the target amount as of the date of his death or disability by a fraction, the numerator of which is the number of days he was employed during the applicable year and the denominator of which is 365. In the case of an involuntary, Not-For-Cause separation or a termination by Mr. Bevis for good reason or on retirement, Mr. Bevis is entitled to receive any Annual Bonus earned with respect to the previous fiscal year but unpaid as of the employment termination date; a prorated amount of the Annual Bonus for the fiscal year in which the termination occurs, calculated by multiplying the Annual Bonus that he would have received for such year had his employment continued through the end of such fiscal year by a fraction, the numerator of which is the number of days he was employed during the applicable year and the denominator of which is 365, payable when annual bonuses for such fiscal year are payable to other members of the senior management team; and salary continuation severance pay at the Base Salary rate for an additional twenty-four (24) months (except no such salary continuation severance payment is payable as a result of retirement).
In the case of Messrs. Cheung, Mohamed, Tajer and Ms. Mathers, if the NEO is separated as a result of death, disability, or qualified retirement or is terminated by the Company without cause, the amount represents payment of any annual incentive award earned in the prior year but not yet paid and a prorated amount of the Annual Bonus for the calendar year in which the termination occurs, calculated by multiplying the Annual Bonus that the Executive would have received for such year had NEO's employment continued through the end of such calendar year by a fraction, the numerator of which is the number of days the NEO was employed during the applicable year and the denominator of which is 365 and in the event of termination by the Company without cause, the Company will continue to pay the NEO his/her Base Salary in accordance with the Company's payroll practices in effect at the time of the employment separation for an additional twelve (12) months.
(2)In the event of a Change-in-Control and termination within thirteen months, the NEOs are entitled to the earned but unpaid portion of incentive compensation under the Bonus Plan as of December 31, 2021. The unpaid earned compensation is payable within 15 days after termination of employment, but if the NEO is deemed to be a “specified employee” (within the meaning of Section 409A of the Code) on the date of termination of his employment, any severance payments that are considered deferred compensation subject to the requirements of 409A will be made on the earlier of (A) six months from the date of the NEO's separation from service, and (B) the date of his death (the “delay period”). Upon the expiration of the delay period, all payments that would have been paid in the absence of such delay shall be paid to the NEO in a lump sum, and any remaining payments and benefits shall be paid or provided in accordance with the Change-in-Control Agreement.
In the event of a Change in Control and termination within thirteen months, the severance/salary termination benefit for Mr. Bevis is equal to two times the amount of his current annual compensation, which is defined as the total of the base salary in effect at the time of termination, plus the average annual performance incentive award actually received by him over the last three fiscal years.
In the event of a Change in Control and termination within thirteen months, the severance benefit for Messrs. Cheung, Mohamed, Tajer, and Ms. Mathers is equal to the amount of their current annual compensation, which is defined as the total of the base salary in effect at the time of the termination, plus the average annual performance incentive award actually received by the NEO over the last three fiscal years. The current annual compensation does not include the value of any stock options granted or exercised, restricted stock awards granted or vested, or contributions to 401(k) or other qualified plans. One-half of the salary termination benefit is payable as a lump sum payment within 30 days of termination and one-half of the salary termination benefit is payable as severance pay in equal monthly payments commencing 30 days after termination of employment and ending on the date that is the earlier of two and one-half months after the end of the fiscal year in which termination occurred or death, but if the NEO is deemed to be a “specified employee” (within the meaning of Section 409A of the Internal Revenue Code) on the date of termination of his employment, any severance payments that are considered deferred compensation subject to the requirements of 409A will be made on the earlier of the delay period. Upon expiration of the delay period, all payments that would have been paid in the absence of such delay shall be paid to the NEO in a lump sum, and any remaining payments and benefits shall be paid or provided in accordance with the Employment Agreement or Change-in-Control Agreement.
(3)Payments relating to restricted stock represent the value of unvested restricted stock as of December 31, 2022 that will immediately vest in the trigger event, calculated by multiplying the number of unvested shares of restricted stock as of December 31, 2022 by the closing market price of our common stock on December 30, 2022, which was $6.81. See the "Outstanding Equity Awards at Fiscal 2022 Year-End Table."
(4)Mr. Bevis is entitled to be vested in the remaining portion of performance shares (determined assuming maximum performance for any performance period not yet completed) upon his termination of employment due to death, disability, retirement or resignation for Good Reason (each as defined in his Employment Agreement) or by the Company without Cause (as defined in the Employment Agreement). Mr. Bevis was awarded a target amount of 185,185 performance shares on April 3, 2020. These performance shares are settled in CVGI stock in three annual installments over a three-year period on March 23 of each year, beginning in 2021; 61,728 shares of this award were unvested as of December 31, 2022. Mr. Bevis was awarded a target amount of 64,038 performance shares on March 31, 2021, which are earned and payable in CVGI stock following the end of the three-year performance period that concludes on December 31, 2023. Mr. Bevis was awarded a target amount of 75,848 performance shares on March 30, 2022, which are earned and payable in CVGI stock following the end of the three-year performance period that concludes on December 31, 2024. The unvested performance shares will be determined as if he had achieved maximum performance and will be payable as soon as reasonably practicable following his employment termination.
(5)In the event of a Change-in-Control, the cash performance award will be earned and paid based on the Total Shareholder Return calculated through the end of the most recently completed fiscal quarter prior to the Change-in-Control, subject to any terms and conditions set forth in the plan and/or imposed by the Committee. The grantee will vest in the remaining unvested portion of the Cash Performance Award (determined assuming maximum performance for any performance period not yet completed) upon the grantee’s termination of employment due to (i) the grantee’s death, Disability, Retirement or resignation for Good Reason (each as defined in the Employment Agreement) or (ii) by the Company without Cause (as defined in the Employment Agreement).
The amount presented for Mr. Bevis includes the immediate vesting of restricted cash awarded to him, with the payout determined as if he had achieved maximum performance and payable as soon as reasonably practicable following his employment termination.
For Messrs. Mohamed and Tajer, the amount presented represents the amount that would be earned and paid based on our Total Shareholder Return relative to the Total Shareholder Return of companies in the Total Shareholder Return Peer Group, for each of the following award periods: April 1, 2020 to December 31, 2022, January 1, 2021 to December 31, 2023, and January 1, 2022 to December 31, 2024.
For Ms. Mathers and Mr. Cheung, the amount presented represents the amount that would be earned and paid based on our Total Shareholder Return relative to the Total Shareholders Return of companies in the Total Shareholder Return Peer Group, for the award periods January 1, 2022 to December 31, 2024.
(6)Represents any health, dental and vision insurance coverage provided at the time of termination of employment for a period of 24 months for Mr. Bevis and 12 months for Messrs. Cheung, Mohamed, Tajer and Ms. Mathers.
(7)Represents the maximum amount reimbursable for legal expenses in connection with enforcement of the Change-in-Control Agreement in the event of a dispute following a Change-in-Control.
The Company is obligated to pay the following pursuant to the NEOs’ Employment Agreement or Change-in-Control Agreement:
Terminations due to death, disability, for “Cause” or voluntary termination - The NEO will receive the earned but unpaid portion of base salary through the termination date.
For terminations by the Company without “Cause” prior to a Change-in-Control - The NEO will receive the earned but unpaid portion of base salary through the termination date plus base salary in accordance with CVG's payroll practices in effect at the time of employment separation for an additional 24 months for Mr. Bevis and an additional 12 months for Messrs. Cheung, Mohamed, and Tajer and Ms. Mathers. In addition, any restrictions on restricted shares held by Mr. Bevis will lapse and the restricted stock awards will be deemed fully vested in the event of termination without cause.
For without “Cause” or “Good Reason” terminations occurring at or within 13 months of a Change-in-Control - The NEO will receive the earned but unpaid portion of the base salary, credit for accrued but unused vacation and the amount of any earned but unpaid bonus, and incentive compensation or other fringe benefit through the date of termination. Mr. Bevis receives two times the amount of his current annual compensation, which is defined as the total of the base salary in effect at the time of termination, plus the average annual incentive actually received by the executive over the last three fiscal years. Mr. Bevis also receives the continuation of certain benefits as described in the table for a period of 24 months. The salary termination benefit for Messrs. Cheung, Mohamed, and Tajer and Ms. Mathers is equal to one time the amount of the current annual compensation and certain benefits continuation for a period of 12 months. In addition, upon a termination without “Cause” or for “Good Reason” within 12 months of a Change in Control, any restrictions on the NEO’s restricted stock awards will lapse and the restricted stock awards will be deemed fully vested.
Change-in-Control - Under the cash performance awards, in the event of a Change-in-Control prior to the expiration of the three year performance period, the cash performance award will be earned and paid based on the Total Shareholder Return calculated through the end of the most recently completed fiscal quarter prior to the Change in Control, subject to any terms and conditions set forth in the Equity Plan and/or imposed by the Committee.
Non-competition and non-solicitation provisions - Pursuant to his Employment Agreement, Mr. Bevis has agreed not to compete with us, or solicit any of our employees during the period in which he is employed by us and for a 24-month period thereafter. Pursuant to the Change-in-Control Agreements, Messrs. Cheung, Mohamed, and Tajer and Ms. Mathers have agreed not to compete with us, or solicit any of our employees, during the period in which they are employed by us and for a 12-month period thereafter.
Terms of Employment for Executive Officers
Each of our NEOs is generally entitled to participate in the following CVG benefit programs: participation in the management performance bonus plan; vacation in accordance with CVG policy, hospital/surgical/medical insurance; dental and vision insurance; group life insurance and short-term disability and long-term disability coverage; participation in the CVG 401(k) Savings Plan; participation in the Deferred Compensation Plan; reasonable and customary relocation package in connection with the start of employment, as appropriate; and severance in accordance with the applicable Employment Agreement or Change-in-Control Agreement.
Indemnification Agreements
In addition to the indemnification provided for in our certificate of incorporation, we have entered into separate indemnification agreements with each of our directors, and NEOs. These indemnification agreements require us, among other things, to indemnify our directors, and NEOs for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts, incurred by each of our directors, and NEOs in connection with the investigation, defense, settlement or appeal of any proceeding to which he was or is a party, or is threatened to be made a party or is involved, by reason of the fact that he or she is or was a director, or an NEO. We believe that these provisions and agreements are necessary to attract and retain qualified individuals to serve in these roles.