UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 24, 2021
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Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On March 24, 2021, the Compensation Committee (the “Committee”) of the Board of Directors of Mistras Group, Inc. (“Mistras” or the “Company”) finalized changes to the Company’s equity incentive compensation plan for its named executive officers and approved the final target awards for 2021.
Under the plan, each named executive officer has a target number of performance-based restricted stock units (“PRSUs”) he can earn, which is based upon a percentage of his base salary. At the end of the performance period, the PRSUs earned will paid in time-based restricted stock units (“RSUs”), which become shares of the Company’s common stock upon vesting. The number of RSUs earned will depend upon how well the Company performs on the performance metrics. The performance metrics and weighting are the following:
Metric | Weighting | |||||||
Free Cash Flow | 25% | |||||||
Adjusted EBITDA | 25% | |||||||
Total Shareholder Return | 30% | |||||||
Time-Based | 20% | |||||||
The following is a description of each metric
Free Cash Flow: net cash provided by operating activities less purchases of property, plant, equipment and intangible assets and is subject to adjustments as approved by the Committee.
Adjusted EBITDA: net income attributable to the Company plus: (a) interest expense, (b) provision for income taxes, (c) depreciation and amortization, (d) share-based compensation expense, (e) certain acquisition related costs subject to approval by the Committee (including transaction due diligence costs and adjustments to the fair value of contingent consideration), (f) foreign exchange (gain) loss, (g) non-cash impairment charges and (h) certain additional special items approved by the Committee.
Total Shareholder Return: Measures the total return to shareholders of the Company during 2021 versus the total return to the shareholders of 17 companies in a peer group that provide inspection, testing, certification or similar industrial services. The return will be measured by the year over year percent change in share price. The share prices used to calculate the return are the average share price during the 20-trading day period ending on the initial measurement date (the last 20 trading days of 2020), compared to the average share price during the 20-trading day period ending on the final measurement date (the last 20 trading days of 2021). Any cash dividends or distributions paid in 2021 will be added to calculate the return to shareholders during the year.
Time-Based: RSUs awarded immediately with no performance requirements.
The RSUs received as payment for PRSUs earned will vest 25% on the anniversary of the filing of the Company’s 2021 Annual Report on Form 10-K with the SEC, then 25% on December 31, 2023, 2024 and 2025. The time-based RSUs will vest 25% per year on each anniversary of the award (March 24, 2022, 2023, 2024 and 2025).
If the Company performs at target for a specific metric, the executive will receive 100% of his target award for that metric. Each executive officer can earn between 0% and 200% of his target award, based upon performance. If the performance is below a minimum threshold for a metric, no award will be earned for that metric. The following are the target levels for each metric and how much can be earned.
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Adjusted EBITDA and Free Cash Flow | TSR | |||||||||||||||||||
Percent of Target Performance Achieved | Percent of Target Award Earned | Percentile of TSR Compared to Peers | Percent of Target Award Earned | |||||||||||||||||
Threshold Performance | 80% | 50% | 30th | 30% | ||||||||||||||||
Target | 100% | 100% | 50th | 100% | ||||||||||||||||
Maximum | 120% | 200% | 90th | 200% | ||||||||||||||||
Each executive is awarded PRSUs at the beginning of the period, which is the target award for that individual. The target award is the number of PRSUs determined based upon a percentage of the individual’s base salary, divided by the average of the high and low trading prices of the Company’s common stock during the three-trading day period beginning on the third trading day after Mistras released its 2020 results. The share price used to determine the target number of PRSUs and time-based RSUs was $10.95, based on the high and low average during the three-trading day period of March 19, 22 and 23, 2021. The Committee chair has discretion to adjust the target award levels to account for changes in an officer’s base salary.
The following are the target award levels for each of the Company’s named executive officers as a percentage of his base salary and the number of PRSUs and time-based RSUs awarded to each of them.:
Executive | Base Salary | Target as a Percent of Base Salary | Total Award Potential | Target PRSU Award | Time-Based RSUs | ||||||||||||
Dennis Bertolotti | $525,000 | 200% | 95,890 | 76,712 | 19,178 | ||||||||||||
Edward Prajzner | 350,000 | 95% | 30,365 | 24,292 | 6,073 | ||||||||||||
Jonathan Wolk | 425,400 | 125% | 48,562 | 38,850 | 9,712 | ||||||||||||
Michael Lange | 280,000 | 110% | 28,128 | 22,502 | 5,626 | ||||||||||||
Michael Keefe | 306,100 | 80% | 22,363 | 17,890 | 4,473 | ||||||||||||
The following is the list of the peer group which will be used to determine TSR:
Aegion Corporation (NasdaqGS:AEGN) | Archrock, Inc. (NYSE: AROC) | ||||
CECO Environmental Corp. (NasdaqGS:CECE) | CIRCOR International, Inc. (NYSE: CIR) | ||||
Columbus McKinnon Corporation (NasdaqGS:CMCO) | DMC Global Inc. (NasdaqGS:BOOM) | ||||
DXP Enterprises, Inc. (NasdaqGS:DXPE) | Enerpac Tool Group Corp. (NYSE: EPAC) | ||||
Forum Energy Technologies, Inc. (NYSE: FET) | Helix Energy Solutions Group, Inc. (NYSE: HLX) | ||||
Matrix Service Company (NasdaqGS:MTRX) | MYR Group Inc. (NasdaqGS:MYRG) | ||||
Oceaneering International, Inc. (NYSE: OII) | Oil States International, Inc. (NYSE: OIS) | ||||
SEACOR Holdings Inc. (NYSE: CKH) | Team, Inc. (NYSE: TISI) | ||||
The Hackett Group, Inc. (NasdaqGS:HCKT) | |||||
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MISTRAS GROUP, INC. | |||||||||||
| Date: March 29, 2021 | By: | /s/ Michael C. Keefe | |||||||||
| Name: | Michael C. Keefe | ||||||||||
| Title: | Executive Vice President, General Counsel and Secretary | ||||||||||
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