1020 West Park Avenue
Kokomo, Indiana 46904-9013
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 21, 2024
This proxy statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Haynes International, Inc. (“Haynes,” “we,” “us,” “our,” or the “Company”) of proxies to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held at 9:30 a.m. EST on Wednesday, February 21, 2024, and at any adjournment or postponement thereof. The meeting will be held virtually at www.virtualshareholdermeeting.com/HAYN2024.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Why am I receiving these proxy materials?
As allowed by the rules of the Securities and Exchange Commission (the “SEC”), we are furnishing our proxy materials to our stockholders primarily via the Internet. This electronic process diminishes the impact on the environment and reduces our printing and mailing costs. Accordingly, on or about January 9, 2024, we mailed a majority of our stockholders a Notice of Internet Availability of Proxy Materials (the “E-Proxy Notice”) containing instructions on how to access our proxy materials and vote via the Internet, and mailed a printed copy of this proxy statement, a proxy card and our Annual Report on Form 10-K for the fiscal year ended September 30, 2023 (the “Form 10-K”) to our other stockholders. If you received an E-Proxy Notice and would like to receive a printed copy of our proxy materials, please follow the instructions included in the E-Proxy Notice.
Who is entitled to vote at the Annual Meeting?
All stockholders of record as of December 29, 2023, the record date for the Annual Meeting, are entitled to notice of and to vote at the Annual Meeting. As of the close of business on December 29, 2023, 12,782,992 shares of common stock of Haynes were outstanding and entitled to vote. Each outstanding share of common stock is entitled to one vote on each matter properly brought before the Annual Meeting and can be voted only if the record owner of that share, determined as of the record date, is present virtually or represented by a properly completed proxy or votes by any of the other authorized voting methods described herein at the Annual Meeting.
For beneficial owners who are not record holders, the brokers, banks or nominees holding shares for beneficial owners must vote those shares as instructed. If the broker, bank, or nominee has not received instructions from the beneficial owner, the broker, bank, or nominee generally has discretionary voting power only with respect to matters that are considered routine matters.
Haynes has no voting securities outstanding other than the common stock. Stockholders do not have cumulative voting rights.
What will constitute a quorum for the transaction of business at the Annual Meeting?
A quorum will be present if holders of a majority of the outstanding shares of common stock are present, virtually or by proxy or other authorized voting method, at the Annual Meeting. Shares registered in the names of brokers or other “street name” nominees for which proxies are voted on some, but not all, matters will be considered to be present at the Annual Meeting for quorum purposes, but will be voted only as to those matters as to which a vote is indicated, and will not be voted as to the matters with respect to which no vote is indicated (commonly referred to as “broker non-votes”).
May I change my vote after I have submitted a proxy?
If you are a stockholder of record, you have the power to revoke your proxy at any time before it is voted at the Annual Meeting by:
| ● | delivering to our Corporate Secretary a written notice revoking the proxy; |
| ● | submitting a properly executed proxy card bearing a later date or by entering a new vote over the Internet or by telephone; or |
| ● | attending the Annual Meeting and voting online during the live webcast (attendance without casting a vote online during the Annual Meeting will not, by itself, constitute revocation of a proxy). |
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank, or other holder of record. You may also revoke your previous voting instructions by voting online during the live webcast of the Annual Meeting.
Is my vote confidential?
We maintain the confidentiality of the votes of individual stockholders. Proxy forms and voting instruction forms returned to brokerage firms, banks and other holders of record are kept confidential. Only the proxy tabulator and the inspector of election have access to the proxy cards and voting instruction forms. The proxy tabulator will disclose information taken from the proxy cards and voting instruction forms only if there is a proxy contest, if the stockholder authorizes disclosure, to defend legal claims or as otherwise required by law. If you write comments on your proxy card or voting instruction form, management may learn how you voted in reviewing your comments.
Who will serve as the proxy tabulator and inspector of election?
A representative from Broadridge Financial Services, Inc. will serve as the independent inspector of election and will tabulate votes cast by proxy or online during the Annual Meeting. We will report the results in a current report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”).
What vote is required to approve each proposal?
If a quorum is present, the nominees for director (Proposals No. 1 through No. 6) will be elected by the affirmative vote of the majority of the shares present and entitled to vote on such election. Abstentions will have the same effect as votes against the applicable nominee(s) for director. Broker non-votes will have no effect on the election of directors because this is a non-routine matter for which banks, brokers or other nominees may not vote absent instructions.
The affirmative vote of the majority of the shares present and entitled to vote on the matter is required to approve, on an advisory basis, Proposal No. 7, the compensation of our Named Executive Officers, and to approve Proposal No. 8, the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2024. Accordingly, abstentions applicable to shares represented at the meeting will have the same effect as votes against Proposal No. 7 and Proposal No. 8. Broker non-votes will have no effect on the outcome of Proposal No. 7, the proposal to approve, on an advisory basis, the compensation of our Named Executive Officers because this is a non-routine matter for which brokers, banks or other nominees may not vote absent instructions. There will be no broker non-votes for Proposal No. 8, the appointment of Deloitte & Touche LLP, because this proposal is a routine matter for which brokers, banks or other nominees have discretionary voting power.
With respect to any other proposals which may properly come before the Annual Meeting, proposals will be approved upon the affirmative vote of a majority of the shares of common stock present virtually or represented by proxy or other authorized voting method and entitled to vote on such matters at the Annual Meeting.
Who is paying for the cost of this proxy solicitation?
Our Board is soliciting the proxy accompanying this proxy statement. We will pay all proxy solicitation costs. Proxies may be solicited by our officers, directors and employees, none of whom will receive any additional compensation for their services. These solicitations may be made personally or by mail, facsimile, telephone, messenger, email or the Internet. We will pay persons holding shares of common stock in their names or in the names of nominees, but not owning such shares beneficially, such as brokers, banks and other holders of record, for the expense of forwarding solicitation materials to the beneficial owners.
Is there a list of stockholders entitled to vote at the Annual Meeting?
A list of stockholders entitled to vote at the Annual Meeting will be available for ten days prior to the meeting, between the hours of 8:00 a.m. and 4:00 p.m. EST, at our offices at 1020 West Park Avenue, Kokomo, Indiana 46904-9013. If you would like to view the stockholder list at our offices, please contact our Corporate Secretary to schedule an appointment.
I share an address with another stockholder, and we received only one E-Proxy Notice or one paper copy of the proxy materials. How may I obtain an additional copy of the E-Proxy Notice or proxy materials?
We have adopted a procedure approved by the SEC called “householding.” Under the householding procedure, certain stockholders, whether they own registered shares or shares in street name, who have the same address and who receive either E-Proxy Notices or paper copies of the proxy materials in the mail will receive only one copy of our proxy materials, or a single E-Proxy Notice, for all stockholders at that address, unless one or more of the stockholders at that address has previously notified us that they want to receive separate copies. Each 401(k) plan participant will continue to receive a copy of all of the proxy materials. Regardless of how you own your shares, if you received a single E-Proxy Notice or set of proxy materials as a result of householding, and one or more stockholders at your address would like to have separate copies of these materials with respect to the Annual Meeting or in the future, or if you would like to request that only a single E-Proxy Notice or set of proxy materials be sent to the household, please contact Angela M. Kohlheim, Haynes International, Inc., 1020 West Park Avenue, P.O. Box 9013, Kokomo, Indiana 46904-9013 or by telephone at 765-456-6000.
Could other matters be decided at the Annual Meeting?
As of the date of this proxy statement, the Board has no knowledge of any matters to be presented for consideration at the Annual Meeting other than those referred to above. If (a) any matters unknown to the Board as of the date of this proxy statement should properly come before the Annual Meeting; (b) a person not named herein is nominated at the Annual Meeting for election as a director because a nominee named herein is unable to serve or for any reason will not serve; (c) any proposals properly omitted from this proxy statement and the form of proxy should come before the Annual Meeting; or (d) any matters should arise incident to the conduct of the Annual Meeting, then the proxies will be voted with respect to such matters in the discretion of the proxy holders, who intend to vote in accordance with their best judgment.
What is Haynes’ Internet address?
Our Internet address is www.haynesintl.com. Our filings with the SEC are available free of charge via a link from this Internet address or directly from the SEC’s website at www.sec.gov. Unless expressly indicated otherwise, information contained on, or accessible through, our website is not a part of this proxy statement. In addition, none of the information on the other websites listed in this proxy statement is a part of this proxy statement. These website addresses are intended to be inactive textual references only.
strategic issues while the non-executive Chairman focuses on governance and providing counsel and advice to the Chief Executive Officer. The Company believes that separating the Chairman and Chief Executive Officer positions enhances the independence of the Board, provides independent business counsel for the Company’s Chief Executive Officer and facilitates improved communications between Company management and Board members.
Family Relationships
There are no family relationships among the directors and executive officers of the Company.
Conflict of Interest and Related Person Transactions
As set forth in the Audit Committee Charter, it is the Company’s policy to require that all conflict of interest transactions between the Company and any of its directors, officers or 5% or greater beneficial owners (each, an “insider”) and all transactions where any insider has a direct or indirect financial interest, including related person transactions required to be reported under Item 404(a) of Regulation S-K, must be reviewed and approved or ratified by the Audit Committee of the Board of Directors. Management discloses the existence of any such transaction to the Audit Committee. In addition, the material terms of any such transaction, including the nature and extent of the insider’s interest therein, must be disclosed to the Audit Committee. The Audit Committee will then review the terms of the proposed transaction to determine whether the terms of the proposed transaction are fair to the Company and are no less favorable to the Company than those that would be available from an independent third party. Following the Audit Committee’s review and discussion, the proposed transaction will be approved or ratified only if it receives the affirmative votes of a majority of the members of the Audit Committee who have no direct or indirect financial interest in the proposed transaction, even though the disinterested directors may represent less than a quorum. Interested directors may be counted in determining the presence of a quorum at a meeting of the Audit Committee which authorizes the contract or transaction. Haynes did not enter into any transactions in fiscal 2023 with any insider and none are currently proposed.
Governance Committee and Director Nominations
Nominees for the Board of Directors are currently recommended for nomination to the Board of Directors by the Governance Committee. The Governance Committee bases its recommendation for nomination on criteria that it believes will provide a broad perspective and depth of experience in the Board of Directors. In general, when considering independent directors, the Governance Committee will consider the candidate’s experience in areas central to the Company, such as operational experience in a manufacturing environment, aerospace or specialty metals industry experience, general business management experience, finance and legal acumen and experience and demonstrated leadership capabilities as well as considering the candidate’s personal qualities and accomplishments and their ability to devote sufficient time and effort to their duties as directors. Important areas of experience and expertise include manufacturing, international operations, finance and the capital markets, accounting, ESG, human capital management, and experience as a director or executive of other companies, or similar experience in a governmental or non-profit setting.
The Governance Committee has adopted Corporate Governance Guidelines which establish, among other matters, a mandatory retirement age for Board members of 72, subject to exceptions that may be granted by the Board. Mr. Campion is retiring from the Board at the expiration of his current term pursuant to this retirement age policy. In keeping with its commitment to enhancing diversity of viewpoints and background on the Board, the two most recent directors appointed to the Board, each of whom brings substantial experience in the form of executive leadership in manufacturing and the financial industry, respectively, further the Board’s goals of enhancing diversity of viewpoints and experience. The Company benefits from their valuable perspectives on the competitive landscape confronting the Company, as well as their general leadership skills.
As set forth in the Governance Committee Charter, the Governance Committee will consider candidates recommended by stockholders, provided the names of such persons, accompanied by relevant biographical information, are properly submitted in writing to the Corporate Secretary of the Company in accordance with the procedure described below for stockholder nominations. Candidates recommended by stockholders are evaluated in the same manner using the same criteria as candidates recommended by the Board or Governance Committee or individual directors or officers.
In all cases, the Governance Committee encourages the proposal of diverse candidates.
Stockholders may nominate directors by providing timely notice thereof in proper written form to the Corporate Secretary of Haynes. To be timely, a stockholder’s notice to the Corporate Secretary must be delivered to or mailed and received at Haynes’ principal executive offices (a) in the case of an annual meeting, not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that the annual meeting is called for a date that is not within 25 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which notice of the date of the annual meeting is mailed or public disclosure of the date of the annual meeting is made, whichever first occurs; and (b) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the 10th day following the day on which notice of the date of the special meeting is mailed or public disclosure of the date of the special meeting is made, whichever first occurs.
To be in proper written form, a stockholder’s notice to the Secretary must set forth (a) as to each person whom the stockholder proposes to nominate for election as a director (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.
Code of Ethics
The Company has adopted a Code of Business Conduct and Ethics (the “Code”) that applies to its Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as well as to its directors and other officers and employees. This Code is posted on the Company’s website at https://haynesintl.com/investor-relations/our-company/code-of-business-conduct-and-ethics. The Audit Committee of the Board annually reviews the Code of Business Conduct and Ethics and is informed of any whistleblower complaints provided thereunder. In addition, the Chief Executive Officer discusses the importance of ethical conduct and compliance with the Code in each quarterly employee meeting or update.
Board of Directors’ Role in Risk Oversight
As a part of its oversight function, the Board monitors how management operates the Company. The full Board is engaged in our Enterprise Risk Management program, including through regular reporting and discussion, and by working with management to identify and prioritize enterprise risks—the specific financial, operational, business, reputational and strategic risks that the Company faces, whether internal or external. These functions are distributed among the full Board, the committees of the Board and management, as appropriate. Certain strategic and business risks, such as those relating to our products, markets, and capital investments (including environmental and social risks), are overseen by the entire Board. The Audit Committee oversees management of market and operational risks that could have a financial impact, such as those relating to internal controls or liquidity. The Governance Committee manages the risks associated with governance issues, such as the independence of the Board, and the Compensation Committee manages risks relating to our compensation plans and policies, including analysis of appropriate incentives and measures.
In addition to the formal compliance program, the Board encourages management to promote a corporate culture
that understands risk management and incorporates it into the overall corporate strategy and day-to-day business operations of the Company. Our risk management structure also includes a standing enterprise risk management committee comprised of members of the executive team and led by the CEO, collectively undertaking an ongoing effort to assess and analyze the most likely areas of current and future risk for the Company and to address them in its short-term and long-term planning processes. This committee, or individual members thereof, periodically reports to the Board, and individual members of the committee may also do so on an informal basis.
Communications with Board of Directors
Stockholders may communicate with the full Board of Directors by sending a letter to Haynes International, Inc. Board of Directors, c/o Corporate Secretary, 1020 West Park Avenue, P.O. Box 9013, Kokomo, Indiana 46904-9013. Our Corporate Secretary will review the correspondence and forward it to the chair of the appropriate committee or to any individual director or directors to whom the communication is directed, unless the communication is unduly hostile, threatening, illegal, does not reasonably relate to the Company or its business or is similarly inappropriate. In addition, interested parties may contact the non-management directors as a group by sending a written communication to the Corporate Secretary as directed above. Such communication should be clearly addressed to the non-management directors.
Director Compensation Program
Directors who are also Company employees do not receive compensation for their services as directors. The following is a description of the Company’s compensation program for non-management directors in fiscal 2023. In consultation with its independent compensation consultant, Total Rewards Strategies, the Compensation Committee reviews the cash and equity compensation paid to non-management directors and recommends changes to the Board of Directors, as appropriate.
Equity Compensation
In consultation with its compensation consultant, for fiscal 2023, the Compensation Committee established a target equity restricted stock grant amount of $115,000 for each non-employee Director and $140,000 for the Chairman of the Board. In establishing the grants, the Compensation Committee considered information provided by Total Reward Strategies on methods of encouraging long-term stock ownership by directors, as well as information regarding how comparator group companies utilize restricted or deferred stock.
Non-employee members of the Board of Directors are granted shares of time-based restricted stock annually. The shares of restricted stock will vest in full on the earlier of (i) the first anniversary of the grant date, or (ii) the failure of the director to be re-elected at an annual meeting of the stockholders of the Company as a result of the director being excluded from the nominations for any reason other than “cause” as defined in the applicable incentive compensation plan.
Cash Compensation
In consultation with Total Reward Strategies, in September 2022, the Board reviewed the fiscal 2023 annual cash Director retainer and the Committee fees and Committee chair fees. The annual cash retainer each non-employee Director received for fiscal 2023 was increased from $65,000 to $75,000 and the additional cash retainer the Chairman of the Board received for fiscal 2023 was increased from $50,000 to $60,000. Committee fees for fiscal 2023 were $10,000 each for the Audit Committee members, $7,500 each for the Compensation Committee members and $5,000 each for the Governance Committee members. Committee chair fees were $20,000 for serving as chair of the Audit Committee, $15,000 for serving as chair of the Compensation Committee and $12,500 for serving as chair of the Governance Committee. In fiscal 2022, the Board of Directors formed a Strategic Committee for the purposes of reviewing and analyzing capital allocation, potential acquisitions, and enhancement of stockholder value. The Strategic Committee chair annual cash retainer for fiscal 2023 was $100,000 and the committee members’ annual cash retainer for fiscal 2023 was $70,000.
Environmental, Social and Governance Matters
Over the past year, we have continued our focus on environmental, social and governance matters (“ESG”). Our initiatives include Haynes alloy and applications development to support customer and end market carbon reduction programs, social programs to support our employees and communities, continued ESG public disclosures and a dedicated ESG & Sustainability Program Manager. We also audit select suppliers to ensure that our supply chain partners have likeminded ESG strategies, and have new and planned carbon footprint reduction investments, including our now fully operational 1MW Solar Array at our Mountain Home, North Carolina manufacturing facility.
In addition to the information set forth below, further information regarding our environmental, social and governance activities can be found under the Sustainability tab on our website at https://haynesintl.com/company-information/sustainability.
Governance and Social Matters
We are committed to a culture of openness, trust, and integrity in all aspects of our business. It is critical that all of our employees, vendors and customers understand and accept that, in everything we do, we will conduct ourselves from the perspective of “doing the right thing for the right reason” at all times.
We have a number of policies in place governing social and ethical issues, including, without limitation:
| ● | Code of Business Conduct and Ethics |
| ● | Human Trafficking Policy |
| ● | Conflict Minerals Policy |
In addition, all vendors of the Company must adhere to our Supplier Code of Conduct, which requires compliance with laws regarding anti-trust, human rights, health and safety, and conflict minerals, as well as laws prohibiting corruption, bribery, conflicts of interest, and child labor.
All Company employees must certify compliance with the Code of Business Conduct and Ethics annually, and regular training is provided to employees regarding these and other policies. In addition, the Company maintains a whistleblower hotline with access available on an anonymous basis online or by telephone.
Environmental Matters
During fiscal 2022 and 2023, the Company completed installations of solar arrays at two of its manufacturing facilities. The first installation, located at its wire facility in Mountain Home, North Carolina, is a 1MW solar fixed ground mount array, which continues to produce approximately 50% of the facility’s baseline electrical demand. The second installation, located at its tubular facility in Arcadia, Louisiana, is a 300KW rooftop solar array, which allows the Company to reduce annual carbon dioxide emissions by approximately 800,000 pounds at that location.
The Company is conscious of its environmental impact and is actively working to lighten its carbon footprint, including projects to measure greenhouse gas emissions and develop goals of reduction. The ever-increasing demand for clean energy generation has led to the development of several emerging technologies that require high-temperature alloys for demanding operating conditions.
Since the invention of HASTELLOY® X alloy in 1954, the Company’s alloys have made it possible for aerospace engines to run at high temperatures for long periods of time. This has been further enhanced with alloys used in new generation engines such as HAYNES 282®. Engines being placed in service today reportedly consume 15% less fuel, produce 50% less pollutants and reduce the noise footprint near airports compared to the previous generation of airplane engines. The environmentally related improvements stem in part from the increased use of alloys, such as HASTELLOY® X, HAYNES® 188, 230®, 282®, 242®, 244® and other Haynes-invented alloys.
In addition to the Company’s alloys for energy production and powering modern aircraft in a more environmentally friendly manner, the Company’s alloys are used in chemical plants that produce ecologically safe agrichemicals which help to feed the world’s growing population. Company-invented HASTELLOY® G-35®, HYBRID-BC1® and C-276 alloys are commonly used in these applications. In addition, HASTELLOY® C-22®, C-2000® and B-3® alloys are used by the pharmaceutical companies for production of chemicals.
Renewable and more efficient power generation offers the promise of producing power from nature’s resources, such as wind, sun, rivers, and oceans, as well as from other sources that can lower carbon footprint, with minimal depletion of the Earth's resources and damage to the environment. Many modern power generation technologies require the generation, conveyance, and, sometimes, storage of energy at high temperatures in extreme environments. These technologies, which are often enabled by some of the Company’s proprietary and specialty alloys, can include concentrated solar energy, advanced nuclear energy, geothermal energy, fuel cells, waste-to-energy, and supercritical carbon dioxide energy systems. Some of our proprietary and specialty alloys such as HAYNES® 282®, HR-235®, 230® and HR-160® alloys are also used in fast-growing hydrogen economy, plastic recycling, and waste processing sectors.
Safety Matters
Safety is our top priority. Listed below are certain improvement efforts we have implemented in order to reduce occurrences of injuries, occupational diseases and the potential of work-related fatalities.
| ● | Each year, employees receive emergency preparedness training, and we conduct severe weather and fire drills periodically. |
| ● | Employees attend refresher training annually. This training includes coverage of the following items: Lock Out Tag Out, Confined Spaces, First Aid and Bloodborne Pathogens, Fire Prevention and Emergency Action Plan, Hearing Conservation, Hand Safety, Personal Protective Equipment requirements, Working Around Mobile Equipment and Walking and Working Surfaces. |
| ● | All of our manufacturing sites have a volunteer Emergency Response Team (ERT). The ERT members are state-certified trained in first aid and HAZMAT response. |
| ● | Company supervisors receive OSHA-10 Hour and Incident Investigation training. |
| ● | We conduct routine departmental safety audits. |
We extend our health and safety policies to suppliers, visitors, and contractors. When suppliers, visitors and contractors come on site, they receive safety training. The training includes a review of relevant policies, required personal protection equipment, emergency procedures and specific hazards that may be encountered.
Human Capital Resources
We value our workforce as one of our most important assets. Accordingly, we have adopted and maintain a number of programs and practices designed to attract and retain the best available personnel.
Succession and Recruitment
We have an organizational development and succession planning process in place for human capital strategic planning. The succession planning process evaluates performance, skillsets, and leadership capabilities of employees to backfill strategic roles. Such succession plans have been utilized throughout the Company to prepare employees for future roles and leadership opportunities.
We attempt to promote from within when opportunities occur, given employee growth and progression. In addition to our internal corporate recruiter, we may also use external recruiters due to the challenging and competitive hiring environment. In order to encourage development of a future workforce for the Company, we continue to sponsor projects at Purdue University, as well as providing internships in various departments and locations throughout the Company.
Retirement and Exit Programs
We also utilize exit interviews and on-boarding interviews to provide feedback regarding turnover and employee desires for growth and development. These interviews are also utilized to identify drivers of voluntary turnover and departures from the Company. Employee turnover rate and reasons, including voluntary and involuntary departures, are monitored annually. The global turnover rate in fiscal 2022 was 13.0%, compared to 13.3% in fiscal 2023. Both voluntary and involuntary terminations, including retirements, are used to calculate the turnover rate.
Compensation Equity
We conduct inflation-adjusted compensation analysis to promote competitive compensation. This analysis takes into account ranges for the geographical area, education level and job title under consideration. The Human Resources Department develops offers for new salaried employees and also administers promotions to maintain the internal integrity of the compensation levels for comparable positions. We work with managers to ensure that high potential employees and those individuals with unique talents are appropriately developed and compensated. For example, the Board authorized a pool of restricted stock that can be used to compensate high potential employees and for retention purposes. The Compensation Committee, with the approval of the full Board in the case of incentive compensation, determines annual salaries and other elements of compensation of the Company’s executive management team, taking into account similarly situated executives employed by a peer group of companies while also considering input of the Compensation Committee’s independent compensation consultant.
Diversity and Inclusion
We consider diversity as a criterion evaluated as a part of the attributes and qualifications a candidate possesses. We construe the notion of diversity broadly, considering differences in viewpoint, professional experience, education, skills, and other individual qualities, in addition to race, gender, age, ethnicity and cultural backgrounds as elements that contribute to a diverse Company.
Management also considers similar broad concepts of diversity in its selection of vendors, contractors, and other service providers. We follow applicable federal rules and regulations relating to diversity and other matters, including reporting requirements.
Company Culture
At Haynes we strive for a culture that puts people first. This encompasses our culture of safety and ethics. We have controls in place relating to compliance with our Code of Business Conduct and Ethics, including a requirement for annual employee certification of that code as well as an established whistleblower hotline and related procedures. In addition, human capital management, and more specifically employee hiring and retention, are included within our Enterprise Risk Management program, which is subject to Board oversight through regular reporting.
Stock Options
The Company currently grants stock option awards under the 2020 Plan and previously granted options under the 2016 Plan and the Second Amended and Restated Stock Option Plan, adopted in 2007 (the “2007 Plan”). The CEO does not hold any options under the 2007 Plan.
All options granted to the Company’s Named Executive Officers have an exercise price equal to the closing price of our common stock as reported by Nasdaq on the trading day prior to the grant date, vest in three equal annual installments on the first, second and third anniversaries of the grant date and expire on the tenth anniversary of the date of grant. Upon the termination of a Named Executive Officer’s employment for any reason other than death or Cause, Disability or Retirement (each as defined in the applicable plan) any unvested options would terminate and vested options would be exercisable for six months (in the case of the CEO for options granted under the 2016 Plan and 2020 Plan or the other Named Executive Officers for options granted under the 2007 Plan) or 90 days (in the case of the other Named Executive Officers for options granted under the 2016 Plan and the 2020 Plan) following the date of termination of employment, but no later than the expiration date of such options, except that vested and unvested options granted under the 2007 Plan terminate upon the resignation of a Named Executive Officer (other than the CEO) without Good Reason (as defined in the 2007 Plan). In the event of termination of employment due to death, Disability or Retirement, all unvested options would vest and all options held by the Named Executive Officer would be exercisable for five years (in the case of options granted under the 2016 Plan and 2020 Plan) or six months (in the case of options granted under the 2007 Plan) following the date of termination of employment, but no later than the expiration date of such options, except that, in the case of Retirement, unvested options granted under the 2007 Plan would not vest and would terminate on the retirement date. In the case of termination for Cause, the options granted under all of the plans would be forfeited and no longer exercisable.
Restricted Stock and Performance Share Awards
Grants of restricted stock and PSAs vest in accordance with the terms and conditions established by the Compensation Committee. In fiscal 2023, the Compensation Committee set restrictions on the vesting of the PSA grants based on the achievement of specific performance goals, while vesting of the restricted stock grants is time-based.
Subject to certain exceptions, restricted stock and PSA grants are subject to forfeiture if employment or service terminates prior to the end of the vesting period and, in the case of PSAs, if performance goals are not met. We assess, on an ongoing basis, the probability of whether performance criteria will be achieved. The Company will recognize compensation expense over the performance period if it is deemed probable that the goal will be achieved. The fair value of the Company’s restricted stock is determined based upon the closing price of our common stock on the trading day before the grant date. The plans provide for the adjustment of the number of shares covered by an outstanding grant and the maximum number of shares for which awards may be granted in the event of a stock split, extraordinary dividend or distribution or similar recapitalization event. Outstanding shares of restricted stock are entitled to receive dividends on shares of common stock after the grant date, but no other type of equity compensation award is entitled to receive dividends until after vesting or exercise, as applicable.
2021 Fiscal Year Performance Share Awards
On November 24, 2020, executives, including the Named Executive Officers, were granted awards of a target amount of PSAs. The actual number of shares that were ultimately earned, as well as the number of shares of common stock that would be distributed in settling those PSAs, was determined at the end of a three-year performance period starting on October 1, 2020 and ending on September 30, 2023, based on the relative total shareholder return (TSR) of the Company compared to the TSR Peer Group set forth below. The total number of PSAs earned, and shares of common stock distributed could range from 0% to 200% of the target amount of PSAs granted to each participant. Participants are required to be employees at the end of the performance period to receive a payout, except in the event of death, Disability, or a Change in Control (in addition to other limited circumstances). Participants received shares equal to 125.00% of the PSA target amount based upon our stock performance versus the stock of the companies in the TSR Peer Group.
The TSR Peer Group for the 2021 fiscal year PSA grant consisted of the following companies: ATI Inc. (formerly Allegheny Technologies Incorporated); Arconic Corporation; Carpenter Technology Corporation; Commercial Metals Company; Insteel Industries, Inc.; Kaiser Aluminum Corporation; Materion Corporation; Olympic Steel, Inc.; and Universal Stainless & Alloy Products, Inc.
2023 Fiscal Year Grants
The Committee believes that a combination of PSAs, time-based restricted stock and stock options aligns the executives’ interests with those of our stockholders and provides an appropriate balance between long-term stock price appreciation and executive retention. In fiscal 2023, the regular annual allocation of equity grants to the Named Executive Officers consisted of PSAs at 37.5%, time-based restricted stock at 37.5% and stock options at 25%.
On November 22, 2022, executives, including the Named Executive Officers, were granted awards of time-based restricted stock. Participants must be employees at the end of the three-year vesting period to have continuing rights to the awarded stock, except in the event of death, Disability, or a Change in Control (in addition to other limited circumstances).
On November 22, 2022, executives, including the Named Executive Officers, were granted stock options that expire after ten years. In determining the number of shares underlying the options to be granted to the Named Executive Officers, the Compensation Committee established the value of such shares underlying the options at $20.52 for the November 2022 grant using a fair value methodology. The options vest one-third per year over three years from the date of grant.
On November 22, 2022, executives, including the Named Executive Officers, were also granted awards of a target number of PSAs. The actual number of shares that may ultimately be earned, as well as the number of shares of common stock that may be distributed in settling those PSAs, will be determined at the end of a three-year performance period starting October 1, 2022 and ending September 30, 2025, based on the relative TSR of the Company compared to the 2023 TSR Peer Group described below. The total number of PSAs earned, and shares of common stock distributed can range from 0% to 200% of the target amount of PSAs granted. Participants must be employees at the end of the performance period to receive a payout, except in the event of death, Disability, Retirement, or a Change in Control (in addition to other limited circumstances).
Relative TSR compares the results of investing in common stock of the Company versus the stock of other companies in the 2023 TSR Peer Group, considering both the appreciation and depreciation in share price as well as the value of dividends distributed during the three-year time period. Share price is calculated at the beginning and end of the period using the average closing price for the twenty (20) business days immediately prior to the start of the performance period (October 1) and immediately prior to the end of the performance period (September 30).
The relative TSR performance metric for the fiscal 2023 to 2025 performance period is determined as follows:
| | |
Haynes TSR Versus 2023 TSR Peer Group | | Payout % of Target Award |
50th %ile to 100th %ile | | 2.0x Haynes Percentile Ranking |
30th %ile to 49th %ile | | 50% + (2.5x {Haynes Percentile Ranking—30%}) |
<30th percentile | | 0.0% |
The 2023 TSR Peer Group is comprised of the following companies: ATI Inc. (formerly Allegheny Technologies Incorporated); Carpenter Technology Corporation; Commercial Metals Company; Howmet Aerospace Inc.; Insteel Industries, Inc.; Kaiser Aluminum Corporation; Materion Corporation; Olympic Steel, Inc.; and Universal Stainless & Alloy Products, Inc.
Other Compensation Policies, Plans and Practices
Clawback Policy
The Board of Directors adopted a revised clawback policy effective September 12, 2023 (the “Clawback Policy”) that complies with the final SEC regulations mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Nasdaq Listing Rule 5608. The Clawback Policy provides for recoupment of incentive compensation in the event of an accounting restatement resulting from noncompliance with financial reporting requirements under federal securities laws. The policy applies to current and former executives and requires reimbursement or forfeiture of any excess incentive compensation received by an executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare an accounting restatement.
Anti-Pledging and Anti-Hedging Policies
Pledging is the practice in which a director or executive secures a loan by using equity compensation obtained from the Company as collateral to secure the loan (“Pledging”). Any director, executive officer or other employee of the Company is prohibited from Pledging. In addition, directors, executive officers, and key employees of the Company are prohibited from trading in any interest or position relating to the future price of the Company’s securities, such as a put, call or short sale.
Stock Ownership and Retention Guidelines
The Board has approved stock ownership guidelines applicable to executive officers and members of the Board. The guidelines established the goal that, within five (5) years from the date of hiring, promotion or election, executive officers and directors must each own an amount of the Company’s common stock determined based upon a multiple of base salary, in the case of executive officers, or annual cash retainer, in the case of Board members. The multiples are as follows: in the case of the Chief Executive Officer, 300% of base salary; in the case of all other Named Executive Officers, 200% of base salary; in the case of other executive officers, 100% of base salary; and in the case of non-employee members of the Board, 400% of the annual cash retainer. The calculation of shares owned by an individual includes shares or other equity interests owned directly or indirectly, including those subject to risk of forfeiture (but not forfeited) under the 2016 Plan or the 2020 Plan, as applicable, including PSAs at the target amount, whether or not then earned, shares subject to a deferral election and shares subject to exercisable stock options with exercise prices lower than the then current market value. The guidelines also require that executive officers and directors retain at all times the required amount of stock (based upon value of shares owned) after first meeting the ownership goal. As of September 30, 2023, given the five (5) year accumulation period permitted by the guidelines, all of the executive officers of the Company, including the Named Executive Officers, to whom the guidelines are applicable were in compliance with the guidelines.
Benefits
The Named Executive Officers are eligible for the same level and offering of benefits made available to other employees, including our 401(k) plan (which provides for a matching contribution to be made by the Company), health care plan, life insurance plan and other welfare benefit programs. We pay premiums for life insurance for each of the Named Executive Officers and other executive officers. Our benefits are designed to be competitive with other employers in the central/ northern Indiana region to enable us to compete for and retain employees.
In addition, we maintain the Haynes International, Inc. Pension Plan (the “Pension Plan”), a defined benefit pension plan for the benefit of certain eligible domestic employees, including three of the Named Executive Officers (Messrs. Maudlin, Losch, and Pinkham), who were hired prior to December 31, 2005. As of December 31, 2005, the Pension Plan was closed to new salaried employees and, as of December 31, 2007, the benefits of all salaried participants in the Pension Plan were frozen, and no further benefits will accumulate.
In addition, the 2020 Plan provides for the vesting of restricted stock, restricted stock units, PSAs and performance units in the case of “retirement” or involuntary severance of service other than for “cause” or other terminations of employment not specifically covered in the 2020 Plan. Mr. Losch was the sole Named Executive Officer that was retirement eligible as of September 30, 2023.
Non-Qualified Deferred Compensation Plan
The Compensation Committee approved implementation of a non-qualified deferred compensation plan for independent directors and executive officers effective November 20, 2017. The plan provides the opportunity to defer current compensation and taxes until a future date, and to receive tax deferred investment returns on deferred amounts. The plan allows directors to defer up to 100% of their annual cash retainer, annual committee cash retainers and annual equity grants. The plan allows eligible employees to defer up to 80% of their base salaries, up to 100% of MIP and up to 100% of long-term incentive awards.
As of September 30, 2023, no amounts were deferred by any of the Named Executive Officers.
Payments Upon Termination of Employment
As described in the “Compensation Discussion and Analysis” section above, Mr. Shor has an Employment Agreement, and the other Named Executive Officers have termination benefits agreements, that provide for payments to the Named Executive Officers at, following or in connection with a termination of their employment in the circumstances described in those agreements.
Conditions and Obligations Applicable to Receipt of Termination Payments Under All Circumstances
Under the applicable compensation agreements, each Named Executive Officer has agreed not to compete with, or solicit the employees of, the Company during and for a one-year period (two years for Mr. Shor) after termination of employment. Further, each Named Executive Officer is obligated to maintain the confidentiality of Company information and to assign all inventions, improvements, discoveries, designs, works of authorship, concepts or ideas or expressions thereof to the Company. We are entitled to cease making payments or providing benefits due under the applicable agreement if the Named Executive Officer breaches the confidentiality, non-competition, or non-solicitation provisions of the agreement.
As a condition to the receipt of the payments and other benefits to be received by the Named Executive Officers under the applicable agreements upon termination of employment, each Named Executive Officer must execute and deliver to the Company a release of all claims against the Company, including claims arising out of his or her employment with the Company. Certain payments to Mr. Shor are required to be made or commence on the date that the release executed by him in connection with the termination of his employment becomes effective (generally seven days following execution thereof by Mr. Shor). In addition to the release, Named Executive Officers may be asked to sign letter agreements reaffirming their applicable confidentiality, non-competition and non-solicitation obligations and may enter into extended non-competition agreements with the Company.
Payments Made Upon Death, Disability or Retirement
Upon death or total disability, our compensation plans and arrangements for the Named Executive Officers provide as follows:
| ● | Each Named Executive Officer, or his or her heirs, estate, personal representative or legal guardian, as appropriate, is entitled to receive a lump sum payment equal to the sum of (i) the Named Executive Officer’s earned but unpaid base salary and bonus through the termination date; (ii) any reimbursable expenses incurred by the Named Executive Officer and not reimbursed as of the termination date and (iii) a bonus for the fiscal year in which the termination date occurs in an amount equal to his or her target bonus for such fiscal year pro-rated based upon the number of days he or she worked in the fiscal year in which the termination date occurs. |
| ● | All unvested stock options held by the Named Executive Officer will vest immediately and all options will |
AUDIT COMMITTEE REPORT
The Audit Committee reviews the Company’s financial reporting process on behalf of the Board of Directors. In fulfilling its responsibilities, the Audit Committee has reviewed and discussed the audited financial statements contained in the Annual Report on Form 10-K for the year ended September 30, 2023, with the Company’s management and the independent auditors. These reviews included quality, not just acceptability, of accounting principles, reasonableness of significant judgments and clarity of disclosures in financial statements. Management is responsible for the financial statements and the reporting process, including administering the systems of internal control. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles, as well as expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the Commission. In addition, the Audit Committee has discussed with the Company’s independent registered public accounting firm such firm’s independence from the Company and its management, including the matters in the written disclosures and letter received by the Audit Committee, as required by Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees, as amended, and considered the compatibility of non-audit services with such firm’s independence.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2023 for filing with the SEC, and the Board of Directors has so approved the audited financial statements.
Respectfully submitted,
Brian Shelton, Chair
Dawne S. Hickton
Alicia B. Masse
PROPOSAL NO. 8. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
In accordance with its charter, the Audit Committee has selected the firm of Deloitte & Touche LLP (“Deloitte”), an independent registered public accounting firm, to be the Company’s auditors for the fiscal year ending September 30, 2024, and the Board of Directors is asking stockholders to ratify that selection. The Company is not required to have the stockholders ratify the selection of Deloitte as the independent auditor. The Company nonetheless is doing so because the Company believes it is a matter of good corporate practice. If the stockholders do not ratify the selection, the Audit Committee will reconsider the retention of Deloitte, but ultimately may decide to retain Deloitte as the Company’s independent auditor. Even if the selection is ratified, the Audit Committee, in its discretion, may change the appointment at any time if it determines that such a change would be in the best interests of the Company and its stockholders. Before selecting Deloitte, the Audit Committee carefully considered that firm’s qualifications as an independent registered public accounting firm for the Company. This included a review of its performance in prior years, including the firm’s efficiency, integrity, and competence in the fields of accounting and auditing. The Company has been advised by Deloitte that neither it nor any of its associates has any direct or material indirect financial interest in the Company.
Deloitte has acted as the independent registered public accounting firm for Haynes and its predecessors since 1998. Its representatives are expected to be present at the Annual Meeting and will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions concerning the audit of the Company’s financial statements.
Audit Fees—We have paid, or expect to pay, audit fees (including cost reimbursements) to Deloitte for the fiscal years ended September 30, 2022 and 2023, including fees for an integrated audit which included the Sarbanes-Oxley attestation audit and reporting to the SEC, of $1,127,608 and $1,256,204, respectively.
Pay vs Performance Disclosure
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12 Months Ended |
Sep. 30, 2023
USD ($)
item
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Sep. 30, 2022
USD ($)
item
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Sep. 30, 2021
USD ($)
item
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Pay vs Performance Disclosure |
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Pay vs Performance Disclosure, Table |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Average | | | | Value of Initial Fixed | | | | | | | | | | | Summary | | Average | | $100 Investment Based On: | | | | | | | Summary | | | | Compensation | | Compensation | | | | Peer Group | | | | Company- | | | Compensation | | Compensation | | Table Total for | | Actually Paid | | Total | | Total | | Net | | Selected | | | Table Total | | Actually Paid | | Other | | to Other | | Shareholder | | Shareholder | | Income | | Measure: | | | for PEO (1) (2) | | to PEO (1) (2) | | NEOs (1) (2) | | NEOs (1) (2) | | Return (3) | | Return (3)(4) | | ($ in | | Relative TSR Rank(5) | | | ($) | | ($) | | ($) | | ($) | | ($) | | ($) | | thousands) | | (Cumulative 3 Year) | 2023 | | 2,610,143 | | 2,769,462 | | 845,606 | | 930,655 | | 292 | | 285 | | 41,975 | | 63rd | 2022 | | 2,806,067 | | 1,888,585 | | 911,392 | | 780,656 | | 217 | | 188 | | 45,087 | | 33rd | 2021 | | 2,491,682 | | 5,229,796 | | 826,834 | | 1,481,073 | | 225 | | 180 | | (8,683) | | 44th |
(1) | Our PEO and Other NEOs for each reported fiscal year were: |
| | | | | Year | | PEO | | Other NEOs | 2023 | | Mr. Shor | | Messrs. Maudlin, Strobel, Losch and Pinkham | 2022 | | Mr. Shor | | Messrs. Maudlin, Strobel, Losch and Pinkham | 2021 | | Mr. Shor | | Messrs. Maudlin, Strobel, Losch and Ishwar |
(2) | SEC rules require certain adjustments be made to the Summary Compensation Table (“SCT”) totals to determine “compensation actually paid” (“CAP”) as reported in the Pay Versus Performance Table. CAP does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. In fiscal years 2022 and 2023, there were no changes in the actuarial present value of accumulated benefits under the defined benefit and pension plans included in the SCT. Reconciliations of the SCT totals to CAP for our PEO and our Other NEOs (as an average) are shown below: |
Adjustments to determine CAP for PEO | | | | | | | | | 2023 | | 2022 | | 2021 | | | PEO | | PEO | | PEO | | | ($) | | ($) | | ($) | Adjustments to determine CAP for PEO | | | | | | | SCT Total Compensation | | 2,610,143 | | 2,806,067 | | 2,491,682 | SCT stock award adjustments | | | | | | | Deduction for stock award amounts reported in the SCT | | (1,080,122) | | (959,654) | | (763,966) | SCT stock option adjustments: | | | | | | | Deduction for stock option grant amounts reported in the SCT | | (297,499) | | (268,107) | | (340,002) | Equity awards granted during fiscal year: | | | | | | | Fair value of current year unvested awards at year end | | 1,075,029 | | 902,743 | | 2,342,431 | Unvested equity awards granted in prior fiscal years: | | | | | | | Change in fair value from prior year end to current year end | | 164,306 | | (716,727) | | 1,328,711 | Vested equity awards granted in prior fiscal years: | | | | | | | Change in fair value from prior year end to vesting date | | 283,455 | | 103,571 | | 170,940 | Dividends and other earnings paid during fiscal year: | | | | | | | Dividends and other earnings paid during fiscal year prior to vesting date | | 14,150 | | 20,692 | | — | Compensation Actually Paid (CAP) | | 2,769,462 | | 1,888,585 | | 5,229,796 |
Adjustments to determine average CAP for Other NEOs | | | | | | | | | 2023 | | 2022 | | 2021 | | | Average of | | Average of | | Average of | | | Other NEOs | | Other NEOs | | Other NEOs | | | ($) | | ($) | | ($) | Adjustments to determine average CAP for Other NEOs | | | | | | | SCT Total Compensation | | 845,606 | | 911,392 | | 826,834 | SCT Pension Adjustments | | | | | | | Deduction for change in pension values reported in the SCT | | — | | — | | (8,159) | SCT stock award adjustments: | | | | | | | Deduction for stock award amounts reported in the SCT | | (239,170) | | (209,958) | | (189,856) | SCT stock option adjustments: | | | | | | | Deduction for stock option grant amounts reported in the SCT | | (65,880) | | (58,691) | | (93,022) | Unvested equity awards granted during fiscal year: | | | | | | | Fair value of current year unvested awards at year end | | 203,630 | | 171,207 | | 512,042 | Unvested equity awards granted in prior fiscal years: | | | | | | | Change in fair value from prior year end to current year end | | 101,164 | | (131,072) | | 343,529 | Vested equity awards granted in prior fiscal years: | | | | | | | Change in fair value from prior year end to vesting date | | 47,811 | | 66,666 | | 85,869 | Vested equity awards granted during fiscal year: | | | | | | | Fair value of current year vested awards at vesting date | | 34,416 | | 26,323 | | — | Dividends and other earnings paid during fiscal year: | | | | | | | Dividends and other earnings paid during fiscal year prior to vesting date | | 3,078 | | 4,789 | | 3,836 | Compensation Actually Paid (CAP) | | 930,655 | | 780,656 | | 1,481,073 |
(3) | TSR is calculated based on a fixed investment of one hundred dollars measured from the market close on September 30, 2020 (the last trading day of fiscal 2020) through and including the end of each fiscal year reported in the table. |
(4) | Our peer group used for the TSR calculation is the Peer Group defined in our Annual Report on Form 10-K for fiscal 2023. The companies included in the Peer Group Index are: ATI Inc. (formerly Allegheny Technologies, Inc.), Carpenter Technology Corporation, Commercial Metals Company, Howmet Aerospace Inc., Insteel Industries, Inc., Kaiser Aluminum Corporation, Materion Corporation, Olympic Steel, Inc., and Universal Stainless & Alloy Products, Inc. |
(5) | Our company-selected measure, which is the measure we believe represents the most important financial performance measure not otherwise presented in the table above that we use to link CAP to our NEOs for fiscal 2023 to our Company’s performance, is cumulative 3-year relative TSR rank. |
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Company Selected Measure Name |
cumulative 3-year relative TSR rank
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Named Executive Officers, Footnote |
| | | | | Year | | PEO | | Other NEOs | 2023 | | Mr. Shor | | Messrs. Maudlin, Strobel, Losch and Pinkham | 2022 | | Mr. Shor | | Messrs. Maudlin, Strobel, Losch and Pinkham | 2021 | | Mr. Shor | | Messrs. Maudlin, Strobel, Losch and Ishwar |
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Peer Group Issuers, Footnote |
Our peer group used for the TSR calculation is the Peer Group defined in our Annual Report on Form 10-K for fiscal 2023. The companies included in the Peer Group Index are: ATI Inc. (formerly Allegheny Technologies, Inc.), Carpenter Technology Corporation, Commercial Metals Company, Howmet Aerospace Inc., Insteel Industries, Inc., Kaiser Aluminum Corporation, Materion Corporation, Olympic Steel, Inc., and Universal Stainless & Alloy Products, Inc.
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PEO Total Compensation Amount |
$ 2,610,143
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$ 2,806,067
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$ 2,491,682
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PEO Actually Paid Compensation Amount |
$ 2,769,462
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1,888,585
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5,229,796
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Adjustment To PEO Compensation, Footnote |
(2) | SEC rules require certain adjustments be made to the Summary Compensation Table (“SCT”) totals to determine “compensation actually paid” (“CAP”) as reported in the Pay Versus Performance Table. CAP does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. In fiscal years 2022 and 2023, there were no changes in the actuarial present value of accumulated benefits under the defined benefit and pension plans included in the SCT. Reconciliations of the SCT totals to CAP for our PEO and our Other NEOs (as an average) are shown below: |
Adjustments to determine CAP for PEO | | | | | | | | | 2023 | | 2022 | | 2021 | | | PEO | | PEO | | PEO | | | ($) | | ($) | | ($) | Adjustments to determine CAP for PEO | | | | | | | SCT Total Compensation | | 2,610,143 | | 2,806,067 | | 2,491,682 | SCT stock award adjustments | | | | | | | Deduction for stock award amounts reported in the SCT | | (1,080,122) | | (959,654) | | (763,966) | SCT stock option adjustments: | | | | | | | Deduction for stock option grant amounts reported in the SCT | | (297,499) | | (268,107) | | (340,002) | Equity awards granted during fiscal year: | | | | | | | Fair value of current year unvested awards at year end | | 1,075,029 | | 902,743 | | 2,342,431 | Unvested equity awards granted in prior fiscal years: | | | | | | | Change in fair value from prior year end to current year end | | 164,306 | | (716,727) | | 1,328,711 | Vested equity awards granted in prior fiscal years: | | | | | | | Change in fair value from prior year end to vesting date | | 283,455 | | 103,571 | | 170,940 | Dividends and other earnings paid during fiscal year: | | | | | | | Dividends and other earnings paid during fiscal year prior to vesting date | | 14,150 | | 20,692 | | — | Compensation Actually Paid (CAP) | | 2,769,462 | | 1,888,585 | | 5,229,796 |
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Non-PEO NEO Average Total Compensation Amount |
$ 845,606
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911,392
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826,834
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Non-PEO NEO Average Compensation Actually Paid Amount |
$ 930,655
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780,656
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1,481,073
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Adjustment to Non-PEO NEO Compensation Footnote |
Adjustments to determine average CAP for Other NEOs | | | | | | | | | 2023 | | 2022 | | 2021 | | | Average of | | Average of | | Average of | | | Other NEOs | | Other NEOs | | Other NEOs | | | ($) | | ($) | | ($) | Adjustments to determine average CAP for Other NEOs | | | | | | | SCT Total Compensation | | 845,606 | | 911,392 | | 826,834 | SCT Pension Adjustments | | | | | | | Deduction for change in pension values reported in the SCT | | — | | — | | (8,159) | SCT stock award adjustments: | | | | | | | Deduction for stock award amounts reported in the SCT | | (239,170) | | (209,958) | | (189,856) | SCT stock option adjustments: | | | | | | | Deduction for stock option grant amounts reported in the SCT | | (65,880) | | (58,691) | | (93,022) | Unvested equity awards granted during fiscal year: | | | | | | | Fair value of current year unvested awards at year end | | 203,630 | | 171,207 | | 512,042 | Unvested equity awards granted in prior fiscal years: | | | | | | | Change in fair value from prior year end to current year end | | 101,164 | | (131,072) | | 343,529 | Vested equity awards granted in prior fiscal years: | | | | | | | Change in fair value from prior year end to vesting date | | 47,811 | | 66,666 | | 85,869 | Vested equity awards granted during fiscal year: | | | | | | | Fair value of current year vested awards at vesting date | | 34,416 | | 26,323 | | — | Dividends and other earnings paid during fiscal year: | | | | | | | Dividends and other earnings paid during fiscal year prior to vesting date | | 3,078 | | 4,789 | | 3,836 | Compensation Actually Paid (CAP) | | 930,655 | | 780,656 | | 1,481,073 |
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Compensation Actually Paid vs. Total Shareholder Return |
The charts shown below present a graphical comparison of CAP to our PEO and the average CAP to our Other NEOs set forth in the Pay Versus Performance Table above, as compared against the following performance measures: our (1) TSR, (2) peer group TSR, (3) net income, and (4) Cumulative Relative TSR Ranking (3-Year). The charts also provide a comparison of our TSR to the peer group TSR for the three-year period. CAP Versus Company and Peer Group TSR TSR in the above chart, in the case of both the Company and our peer group, reflects the cumulative return of $100 as if invested on September 30, 2020, including reinvestment of any dividends.
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Compensation Actually Paid vs. Net Income |
The charts shown below present a graphical comparison of CAP to our PEO and the average CAP to our Other NEOs set forth in the Pay Versus Performance Table above, as compared against the following performance measures: our (1) TSR, (2) peer group TSR, (3) net income, and (4) Cumulative Relative TSR Ranking (3-Year). The charts also provide a comparison of our TSR to the peer group TSR for the three-year period. CAP Versus Net Income
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Compensation Actually Paid vs. Company Selected Measure |
The charts shown below present a graphical comparison of CAP to our PEO and the average CAP to our Other NEOs set forth in the Pay Versus Performance Table above, as compared against the following performance measures: our (1) TSR, (2) peer group TSR, (3) net income, and (4) Cumulative Relative TSR Ranking (3-Year). The charts also provide a comparison of our TSR to the peer group TSR for the three-year period. CAP Versus Cumulative 3-year Relative TSR Rank
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Total Shareholder Return Vs Peer Group |
The charts shown below present a graphical comparison of CAP to our PEO and the average CAP to our Other NEOs set forth in the Pay Versus Performance Table above, as compared against the following performance measures: our (1) TSR, (2) peer group TSR, (3) net income, and (4) Cumulative Relative TSR Ranking (3-Year). The charts also provide a comparison of our TSR to the peer group TSR for the three-year period. CAP Versus Company and Peer Group TSR TSR in the above chart, in the case of both the Company and our peer group, reflects the cumulative return of $100 as if invested on September 30, 2020, including reinvestment of any dividends.
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Tabular List, Table |
Performance Measures The following list identifies the three performance measures (two financial and one non-financial) used by our Compensation Committee to link compensation actually paid to our NEOs in fiscal 2023 to company performance, calculated in accordance with SEC regulations. The role of each performance measure on our NEOs’ compensation is discussed in the Compensation Discussion and Analysis above. Net Income Cumulative 3-Year Relative TSR Percentile Rank Total Case Incident Rate (TCIR)
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Total Shareholder Return Amount |
$ 292
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217
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225
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Peer Group Total Shareholder Return Amount |
285
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188
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180
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Net Income (Loss) |
$ 41,975,000
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$ 45,087,000
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$ (8,683,000)
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Company Selected Measure Amount | item |
63
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33
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44
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PEO Name |
Mr. Shor
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Measure:: 1 |
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Pay vs Performance Disclosure |
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Name |
Net Income
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Measure:: 2 |
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Pay vs Performance Disclosure |
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Name |
Cumulative 3-Year Relative TSR Percentile Rank
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Non-GAAP Measure Description |
(5) | Our company-selected measure, which is the measure we believe represents the most important financial performance measure not otherwise presented in the table above that we use to link CAP to our NEOs for fiscal 2023 to our Company’s performance, is cumulative 3-year relative TSR rank. |
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Measure:: 3 |
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|
Pay vs Performance Disclosure |
|
|
|
Name |
Total Case Incident Rate (TCIR)
|
|
|
PEO | Deduction for stock award amounts reported in the SCT |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
$ (1,080,122)
|
$ (959,654)
|
$ (763,966)
|
PEO | Deduction for stock option grant amounts reported in the SCT |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
(297,499)
|
(268,107)
|
(340,002)
|
PEO | Fair value of current year unvested awards at year end |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
1,075,029
|
902,743
|
2,342,431
|
PEO | Change in fair value from prior year end to current year end |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
164,306
|
(716,727)
|
1,328,711
|
PEO | Change in fair value from prior year end to vesting date |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
283,455
|
103,571
|
170,940
|
PEO | Dividends and other earnings paid during fiscal year prior to vesting date |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
14,150
|
20,692
|
|
Non-PEO NEO | Deduction for change in pension values reported in the SCT |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
|
|
(8,159)
|
Non-PEO NEO | Deduction for stock award amounts reported in the SCT |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
(239,170)
|
(209,958)
|
(189,856)
|
Non-PEO NEO | Deduction for stock option grant amounts reported in the SCT |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
(65,880)
|
(58,691)
|
(93,022)
|
Non-PEO NEO | Fair value of current year unvested awards at year end |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
203,630
|
171,207
|
512,042
|
Non-PEO NEO | Fair value of current year vested awards at vesting date |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
34,416
|
26,323
|
|
Non-PEO NEO | Change in fair value from prior year end to current year end |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
101,164
|
(131,072)
|
343,529
|
Non-PEO NEO | Change in fair value from prior year end to vesting date |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
47,811
|
66,666
|
85,869
|
Non-PEO NEO | Dividends and other earnings paid during fiscal year prior to vesting date |
|
|
|
Pay vs Performance Disclosure |
|
|
|
Adjustment to Compensation, Amount |
$ 3,078
|
$ 4,789
|
$ 3,836
|