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April 4, 2024

I am pleased to invite you to attend the 2024 Annual Shareholders Meeting of Mistras Group, Inc. The annual meeting will be held on Tuesday, May 14, 2024, at 11:00 a.m., Eastern Time. The annual meeting will be conducted completely virtual, via a live webcast. You will be able to attend and participate in our annual meeting by visiting www.virtualshareholdermeeting.com/MG2024, where you will be able to listen to the annual meeting live, vote your shares and submit questions. There will be no physical meeting location.

At the annual meeting, you and our other shareholders will be asked to vote on the following:

You are entitled to participate in the virtual meeting if you were a shareholder as of the close of business on March 18, 2024, the record date, or hold a legal proxy for the annual meeting provided by your bank, broker, or nominee. To participate in the annual meeting webcast at www.virtualshareholdermeeting.com/MG2024, you must enter the control number found on your proxy card, voting instruction form or notice you receive. You may vote online during the annual meeting by following the instructions available on the annual meeting website during the annual meeting. Whether or not you plan to attend the annual meeting online, we urge you to vote and submit your proxy in advance of the annual meeting by one of the methods described in the proxy materials for the annual meeting.

Sincerely,

 

Manuel N. Stamatakis

Chairman of the Board and Interim President and

Chief Executive Officer

 

April 4, 2024

The 2024 Annual Shareholders Meeting of Mistras Group, Inc. will be held on Tuesday, May 14, 2024 at 11:00 a.m., Eastern Time. The meeting will be held exclusively via webcast at www.virtualshareholdermeeting.com/MG2024. There will be no physical location of the meeting and you will only be able to attend the annual meeting via the webcast. The details of the meeting are as follows:

Who can vote: Holders of Mistras Group, Inc. common stock as of the close of business on March 18, 2024 are entitled to vote at the meeting and any adjournment or postponement of the meeting.

Attending the Meeting: Shareholders as of the close of business on March 18, 2024, or their duly appointed proxies, may attend the meeting online. To attend the 2024 annual meeting, go to www.virtualshareholdermeeting.com/MG2024, then enter the control number found on your proxy card, voting instruction form or notice you receive. You may vote during the meeting by following the instructions available on the meeting website during the meeting.

Voting by proxy: Please submit your proxy and/or voting instructions as described in the accompanying proxy statement or other proxy materials you receive promptly so that a quorum may be represented at the meeting.

By order of the Board of Directors

MICHAEL C. KEEFE

Executive Vice President,

General Counsel and Secretary

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS.

This Proxy Statement and the Mistras Group, Inc. 2023 Annual Report are available electronically on the Internet at www.proxyvote.com and on the Company’s website at http://investors.mistrasgroup.com/financial-information.

 

 

We are providing these proxy materials in connection with the solicitation by our Board of Directors of proxies to be voted at our 2024 annual meeting of shareholders (“2024 Annual Meeting”) and at any adjournment or postponement of the 2024 Annual Meeting. You are invited to attend the 2024 Annual Meeting, which will take place on May 14, 2024, beginning at 11:00 a.m., Eastern Time, via a webcast over the Internet at www.virtualshareholdermeeting.com/MG2024.

The terms “Mistras,” the “Company,” “we,” “our” and “us” mean Mistras Group, Inc. and the term “Board” means our Board of Directors, unless the context indicates otherwise. We are incorporated in the State of Delaware, and our common stock trades on the New York Stock Exchange (“NYSE”) under the symbol “MG.” Our fiscal year ends December 31.

The accompanying proxy is being solicited by our Board. The notice of annual meeting and this proxy statement (“Proxy Statement”) and proxy card or voting instructions are first being distributed to shareholders on or about April 4, 2024. In addition to this solicitation, employees of the Company may solicit proxies by telephone. All costs of the solicitation of proxies will be borne by the Company. On the proxy card or voting instruction included in the materials, a shareholder of record (that is, a shareholder who holds the shares in his, her or its own name with our transfer agent, Equiniti Trust Company, LLC) may substitute the name of another person in place of those persons presently named as proxies. To vote, a substitute proxy must present adequate identification to the Corporate Secretary or Inspector of Election for the 2024 Annual Meeting before the voting occurs.

At the 2024 Annual Meeting, the proxies appointed by the Board (the persons named in the proxy card or voting instructions) will vote your shares as you instruct. If you complete and submit your proxy without indicating how you would like to vote your shares, your proxy will be voted as the Board recommends.

We are using the Internet as our primary means of furnishing proxy materials to shareholders as permitted by the rules of the Securities and Exchange Commission (“SEC”). Consequently, most shareholders will not receive paper copies of our proxy materials. We will instead send shareholders a Notice of Internet Availability of Proxy Materials with instructions for accessing the proxy materials, including our Proxy Statement and annual report, and voting via the Internet. The Notice of Internet Availability of Proxy Materials also provides information on how shareholders may obtain paper copies of our proxy materials if they so choose and how to attend the 2024 Annual Meeting via the Internet. This makes the proxy distribution process more efficient, less costly and helps conserve natural resources. If you previously elected to receive our proxy materials electronically, these materials will continue to be sent electronically unless you change your election.

The Board recommends that shareholders vote:

Shareholders of record of our common stock at the close of business on March 18, 2024 are entitled to notice of and to vote at the 2024 Annual Meeting and any adjournments or postponements of the meeting. Each share entitles its owner to one vote.

The holders of a majority of the shares entitled to vote at the 2024 Annual Meeting must be present or represented by proxy in order to constitute a quorum for all matters to come before the 2024 Annual Meeting. Both abstentions and broker non-votes are counted for the purpose of determining the presence of a quorum. On the record date, we had 30,641,064 shares outstanding.

The following chart sets forth the proposals to be considered at the 2024 Annual Meeting, the voting choices for each proposal, the votes needed to elect directors and for each other agenda item to pass, and the manner in which votes will be counted.

For Item 1, Election of Directors, as set forth in the Director Resignation Policy described on page 9 each director has agreed that if he or she receives more “Withheld” votes than “For” votes, the director will tender his or her resignation for consideration by the Corporate Governance Committee and the independent members of the Board.

 

Shares held in your name as the shareholder of record may be voted by you online at the 2024 Annual Meeting. Shares held beneficially in street name may be voted by you online at the 2024 Annual Meeting only if you obtain a legal proxy from the bank, broker, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the 2024 Annual Meeting online, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the meeting online.

You have the option of voting your shares over the Internet, by telephone or completing and returning a proxy card or voting instruction card. Voting over the Internet or telephone authorizes the named proxies to vote your shares as you direct. If you receive paper copies of our proxy materials and/or a proxy card or voting instruction card, you can also vote by marking, signing,

and returning your proxy card or voting instruction card as directed in the materials you receive. More information on how to vote by proxy is included in the proxy materials.

If any matters are properly presented for consideration at the 2024 Annual Meeting, the persons named in the proxy card will have discretion to vote on those matters in accordance with their best judgment. We do not currently anticipate that any other matters will be raised at the 2024 Annual Meeting.

You may change your vote at any time before the proxy is exercised. If you vote by mail, you may revoke your proxy at any time before it is voted by executing and delivering a timely and valid later-dated proxy, by voting online during the 2024 Annual Meeting or by giving written notice to the Secretary at 2024annualmeeting@mistrasgroup.com. If you vote over the Internet or by telephone, you may also change your vote with a timely and valid later Internet or telephone vote, as the case may be, or by voting online during the 2024 Annual Meeting. Attending the meeting online will not have the effect of revoking a proxy unless you give proper written notice of revocation to the Corporate Secretary or Inspector of Election before the proxy is exercised or you vote online at the 2024 Annual Meeting via the webcast.

If your shares are registered directly in your name with our transfer agent, Equiniti Trust Company, you are a record holder of your shares of Mistras common stock. If you hold your shares through a bank, broker or other intermediary, which is commonly referred to as holding your shares in “street name,” you are a beneficial holder but not a record holder. If you hold your shares in street name and want your shares to count on Item 1 (election of directors), Item 3 (Amended and Restated Mistras Group, Inc. 2016 Long-Term Incentive Plan), or Item 4 (advisory vote on executive compensation), you will need to instruct your bank or broker how you want your shares voted. If you hold your shares in street name and you do not instruct your bank or broker how to vote on Items 1, 3 or 4, no votes will be cast on your behalf on any of these items for which you did not provide voting instructions. Your bank or broker will have discretion to vote any uninstructed shares on the ratification of the appointment of the Company’s independent registered public accounting firm (Item 2). Abstentions for Items 2, 3 or 4 will have the practical effect of a vote against such Item.

If you are a shareholder of record and do not return your proxy or attend the 2024 Annual Meeting online, your shares will not be considered present at the 2024 Annual Meeting for voting purposes or determining whether we have a quorum and no votes will be cast for your shares at the meeting. If you return your proxy but do not cast your vote on your proxy, your shares will be voted as directed by the Board, which will be in favor of all the nominees listed in Item 1 and in favor of Items 2, 3 and 4. If you return your proxy but abstain from voting on one or more of the items of business, no votes will be cast on your behalf on any of the items of business at the 2024 Annual Meeting on which you abstained, but your shares will be counted for determining whether a quorum is present to conduct the 2024 Annual Meeting.

You are entitled to attend the 2024 Annual Meeting only if you were a Mistras shareholder or joint holder as of the record date, the close of business on March 18, 2024, or you hold a valid legal proxy for the 2024 Annual Meeting. We will be hosting the 2024 Annual Meeting live via webcast, with no physical location. A summary of the information you need to attend the 2024 Annual Meeting online is provided below:

Assistance with questions regarding how to attend and participate via the Internet will be provided at www.virtualshareholdermeeting.com/MG2024 on the day of the 2024 Annual Meeting.

A representative from Broadridge Financial Services will tabulate the votes and will serve as Inspector of Election for the 2024 Annual Meeting.

We will announce preliminary voting results at the meeting. Voting results will also be disclosed in a Form 8-K filed with the SEC soon after the meeting, which will be available on our website.

Our Board is committed to maintaining good corporate governance practices and believes this is an important element of our long-term success and the enhancement of shareholder value. The Board has adopted and adheres to corporate governance guidelines and practices that the Board and senior management believe are sound and promote this purpose. Our Board continuously reviews our governance practices and updates them, as appropriate, based upon Delaware law (the state in which we are incorporated), NYSE rules and listing standards, and SEC regulations, as well as best practices suggested by recognized governance authorities.

All our relevant corporate governance documents are available on the corporate governance section of the investor page of our website at http://investors.mistrasgroup.com/governance.cfm. At this site, shareholders can view our:

Committee Charters

Key Governance Policies and Guidelines

Policies and Guidelines Regarding Conduct

Our Board has set the number of directors for the Board at seven and currently the seven members consist of Nicholas DeBenedictis, James J. Forese, Richard H. Glanton, Michelle J. Lohmeier, Charles P. Pizzi, Manuel N. Stamatakis and Sotirios J. Vahaviolos.

In February 2024, the Board and Corporate Governance Committee undertook a review of the independence of the directors and considered whether any director has a relationship with us that would preclude a determination of independence within the meaning of the rules of the NYSE. As a result of this review, our Board determined that Ms. Lohmeier and Messrs. DeBenedictis, Forese, Glanton and Pizzi, representing five of our seven current directors, are “independent directors” as defined under the NYSE rules because none of these directors had any material relationships with the Company.

Our Board has had four standing committees: Audit Committee, Compensation Committee, Corporate Governance Committee and Environmental, Social and Safety Committee. Each committee operates pursuant to a written charter and all committees are comprised solely of independent directors. The composition of the committees is set forth below and a description of each committee follows.

 

Our Board has determined that each member of our Audit Committee meets the requirements for independence and financial literacy and that Messrs. DeBenedictis and Forese qualify as audit committee financial experts under the applicable requirements of the NYSE and SEC rules and regulations. The Audit Committee is responsible for, among other things:

All the members of our Compensation Committee qualify as independent. The Compensation Committee is responsible for, among other things:

Our Corporate Governance Committee is responsible for, among other things:

Our Environmental, Social and Safety Committee is responsible for, among other things:

In October 2022, the Board established an ad hoc special committee of the independent directors. This committee’s responsibilities include reviewing strategic matters, such as acquisitions and new markets, working with the Corporate Governance Committee on succession planning and talent assessment, overseeing the budgeting and planning process, and overseeing other key initiatives. One such initiative was the retention of AlixPartners to undertake an operational review of the Company, designed to accelerate profitable growth and EBITDA, referred to as Project Phoenix. This special committee, with then Lead Director Manuel Stamatakis championing the effort, led the operational review and directed AlixPartners as to the areas of focus and attention.

Under our corporate governance guidelines, the Board does not have a policy on whether the roles of the Chairman and Chief Executive Officer, or CEO, should be separate or combined. The Board believes it should be free to determine what is best for the Company at a given point in time, as different leadership structures for a board of directors have their own advantages and disadvantages, which must be considered in the context of the specific circumstances, culture and challenges facing a company.

For several years, the Board has separated the roles of Chairman and CEO, with Dennis Bertolotti serving as President and CEO and our Founder Dr. Sotirios Vahaviolos serving as our Executive Chairman since 2017. However, with the dismissal of Mr. Bertolotti as CEO in October 2023 and the retirement of Dr. Vahaviolos as Chairman, the Board appointed Manuel “Manny” Stamatakis, formerly the lead director, to the position of Chairman of the Board and Interim President and CEO. Accordingly, these roles are now combined, but this is intended to be a temporary situation. While this combination of roles exists, the Board appointed James Forese as the Lead Director to serve in the role Mr. Stamatakis held previously. The Board intends to hire a permanent CEO in 2024, at which time Mr. Stamatakis is expected to remain in the role of Chairman, at which time the Board would resume the structure it adopted in 2017 of separating the roles of Chairman and CEO.

The Board established the position of independent Lead Director, which the Board determined should be the chair of the Corporate Governance Committee. The Lead Director serves as a liaison between management and non-management members of the Board; participates in setting the agenda for Board meetings; leads the executive sessions, including follow-up actions; and is involved in other governance matters. Mr. Stamatakis served as the chair of the Corporate Governance Committee and the Lead Director until his appointment as Interim President and CEO, at which time the Board appointed Mr. Forese to serve as Lead Director and Chair of the Corporate Governance Committee. The Board currently intends to hire a permanent CEO in 2024, at which time Mr. Stamatakis will become a non-employee Chairman and resume his status as an independent director and the position of lead director would be eliminated.

We have a Code of Ethics for Executive Officers and Senior Financial Officers and Managers, which applies to our CEO, chief financial officer (“CFO”), chief accounting officer, all other executive officers, the controller, the treasurer, the director of audit, the director of tax, the managing directors and controllers of international operations and other finance and accounting managers designated by the CEO or the CFO. This code of ethics requires that our leaders covered by the code act with honesty, integrity and a high level of ethics. This code also requires full, fair, timely and accurate reporting and disclosure of information in our reports to the SEC and to the public. We also have a Code of Conduct that applies to all our employees, officers and directors. Our Code of Conduct establishes guidelines for honesty and professionalism we expect all Mistras directors, officers and employees to follow at all times when representing or working for Mistras and is intended to foster an atmosphere of high integrity and accountability.

The Code of Conduct requires director and employees all to comply with all laws and regulations and addresses issues such as dealing with customers and suppliers, protecting valuable company assets, avoiding conflicts of interest, and other matters involving good corporate conduct.

The Corporate Governance Committee is responsible for identifying individuals qualified to become Board members and for recommending nominees to the Board for election at the annual meeting of shareholders or to fill vacancies on the Board between shareholder meetings. To facilitate this process, the Corporate Governance Committee and the Board adopted our Director Nominating Process and Policy and the Director Qualification Criteria. The Director Nominating Process and Policy and the Director Qualification Criteria articulate a process and qualifications that are clear, specific and prudent to help the Corporate

Governance Committee and the Board identify and select qualified directors to meet our needs and provide a well-functioning Board.

In accordance with the policy, the Corporate Governance Committee considers the Board’s current and anticipated strengths and needs. Among the criteria considered by the committee are experience or expertise in accounting, finance, management, international business, compensation, corporate governance, strategy, general business matters and industry knowledge, as well as diversity within the Board. The Board and the Corporate Governance Committee take diversity into account when considering potential director candidates.

As set forth in the Director Qualification Criteria, the Board seeks candidates for director who possess the following: (1) the highest level of integrity and ethical character, (2) personal and professional reputation consistent with the Company’s image and reputation, (3) sound judgment, (4) financial literacy and a sound understanding of business strategy, business environment, corporate governance and board operations, (5) independence, (6) significant experience and proven superior performance in professional endeavors, (7) an appreciation for board and team performance, (8) the commitment to devote the time necessary for service on our Board, (9) skills in areas that will benefit the Board and (10) the ability to make a long-term commitment to serve on the Board. The Corporate Governance Committee is also cognizant of having at least one independent director who meets the definition of an audit committee financial expert under SEC rules. As part of its in-depth review of its committee charters and governance policies and practices described below, the Board also added to the Director Qualification Criteria that the Board shall strive to have directors who are diverse in experience, gender, race, ethnicity and age.

The Corporate Governance Committee may rely on various sources to identify potential director nominees. These include input from directors, management, others the Corporate Governance Committee considers reliable, and professional search firms. The Corporate Governance Committee will consider director nominations made by a shareholder or other sources (including self-nominees) if these individuals meet our Director Qualification Criteria. If a candidate proposed by a shareholder or other source meets the criteria, the individual will be considered on the same basis as other candidates. For consideration by the Corporate Governance Committee, the submission of a candidate must be sent to the attention of the Corporate Secretary at our headquarters at 195 Clarksville Road, Princeton Junction, New Jersey 08550. The submission should be received by January 2, 2025 in order to receive adequate consideration for the 2025 annual meeting and must include sufficient details to demonstrate that the potential candidate meets the Director Qualification Criteria. For a shareholder to nominate a director for election, the shareholder must meet the requirements of our bylaws and make the nomination in the time required by our bylaws, as set forth on page 55 under “Shareholder Proposals and Other Matters.”

The Board has a Director Resignation Policy which provides that, in an uncontested election for directors, if a nominee for director receives more votes “withheld” or “against” than votes “for” his or her election, the director will promptly tender an offer of his or her resignation following certification of the shareholder vote. An uncontested election is any election of directors in which the number of nominees for election is less than or equal to the number of directors to be elected.

The Corporate Governance Committee will consider and recommend to the Board whether to accept the resignation offer, which the independent members of the Board will decide. The Corporate Governance Committee and Board will evaluate any such tendered resignation based upon the best interests of the Company and its shareholders. When deciding the action to take, the Board could accept or turn down the offer of resignation or decide to pursue additional actions such as the following:

In addition, the policy provides that if a director’s principal occupation or business association changes substantially during his or her tenure as a director (other than as a result of retirement), the director shall tender his or her resignation for consideration by the Corporate Governance Committee. The Corporate Governance Committee, in consultation with the Chairman of the Board, will recommend to the Board the action, if any, to be taken with respect to the resignation.

STOCK OWNERSHIP GUIDELINES AND INCENTIVE COMPENSATION RECOUPMENT POLICY

The Board adopted stock ownership guidelines for all directors and executive officers. Non-employee directors are required to hold all shares awarded during the prior three years. All our non-employee directors are in compliance with the guidelines. The guidelines for our executive officers are discussed on page 42 in the Compensation Discussion and Analysis. The Board has also adopted an Incentive Compensation Recoupment Policy (often referred to as a claw-back policy), which is also discussed on page 42 in the Compensation Discussion and Analysis.

We have adopted an Insider Trading Compliance Policy governing the purchase, sale, and/or other dispositions of our securities by directors, officers and employees of the Company and its subsidiaries that is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the applicable rules and regulations of the NYSE.

Board Oversight of Risk Management. The Board believes that overseeing how management manages the various risks the Company faces is one of its important responsibilities. The risk oversight function is led by the Board and the Audit Committee, but some areas are administered by committees tasked by the Board with oversight of specific risks, as summarized below.

 

The Board and its committees receive information and reports from management on the status of the Company and the risks associated with the Company’s strategy and business plans.

Meetings. The following chart sets forth the number of meetings held by the Board and each of the four standing committees in 2023.

 

Each director attended at least 75% of the total meetings of the Board and the committees on which the director served. Due to the interest our directors have in the activities of all committees and our meeting schedule, all our directors attended 16 of the 21 meetings of the Board committees held in 2023.

Annual Meeting Attendance. The Company expects all directors (who are also all the director nominees) to attend the 2024 Annual Meeting. All our directors attended our 2023 annual shareholders meeting.

Communication with the Board. Shareholders, employees and others may contact the Board or any of the Company’s directors (including the Lead Director) by writing to them c/o Corporate Secretary, Mistras Group, 195 Clarksville Road, Princeton Junction, New Jersey 08550. The Company’s process for handling communications to the Board or the individual directors is set forth in our Securityholder Communication Policy.

Term Limits; Mandatory Retirement. The Board has decided not to have term limits or a mandatory retirement age for directors. The Board believes that a director should be evaluated based upon his or her abilities and contributions to the Board and an assessment of that individual’s qualities and qualifications to continue to serve as a director on the Board. Term limits and mandatory retirement may deprive the Board of a valuable member with significant insight and knowledge of Mistras and our industry.

Review of Charters and Policies: The Board and the committees review all committee charters and the governance policies, guidelines and practices annually and changes are made as needed.

Review of Cyber Security: In 2023, as it has done in the past, the Audit Committee reviewed with management the Company’s information technology function, including data and cyber security, and the plans for further enhancement of these functions as technology and external threats continue to develop.

Environmental, Social and Safety: With the establishment of Environmental, Social and Safety Committee, the Board and management have placed additional focus on our role as member of the broader communities in which we operate and our practices around safety, health, environmental, human rights, and other social responsibility matters. More information about these endeavors and our policies, practices and activities and our first report related to these areas can be viewed on our website at https://www.mistrasgroup.com/company/esg/.

Employee, Officer and Director Hedging: Our policies regarding hedging are discussed under “Compensation Discussion and Analysis—Compensation Policies—Hedging Prohibitions” on page 42.

For 2023, the compensation program for our non-employee directors provided for cash fees of $22,500 per quarter ($90,000 annually) and semi-annual equity grants of $55,000 ($110,000 annually) in shares of our common stock. The committee chairpersons received quarterly cash fees of $3,875 for the Audit Committee and $3,125 for the other committees and our Lead Director $33,000 for those responsibilities.

The following is the compensation paid to our non-employee directors and to our Executive Chairman in 2023.

For 2024, director compensation will remain the same as 2023.

During 2023, Michelle Lohmeier, as Committee Chair, James Forese and Richard Glanton served as members of our Compensation Committee, as did Manny Stamatakis until he resigned from the Compensation Committee upon his appointment as Interim President and CEO on October 9, 2023. None of the members of our Compensation Committee, while serving on the Compensation Committee, has been an officer or employee of Mistras or had any other relationship with us requiring disclosure in this Proxy Statement. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our Board or Compensation Committee.

We have a Related Person Transaction Policy, which requires the review, approval or ratification by the Corporate Governance Committee for any transaction, arrangement or relationships or series of the foregoing in which we are a participant and any related person has or will have a material interest, including those for which disclosure is required under Item 404(a) of SEC Regulation S-K. Under this policy, any renewals, extensions or material amendments to a related party transaction, even if previously approved under the policy or by the Board, shall be subject to review, approval or ratification by the Corporate Governance Committee. For purposes of the policy, the term “related person” is as defined in Item 404 of SEC Regulation S-K and includes our directors, director nominees, executive officers, holders of 5% or more of our common stock, and the immediate family members of the foregoing individuals and entities.

Under the Related Person Transaction Policy, all our directors and executive officers have a duty to report to the CEO, General Counsel or Lead Director potential conflicts of interest or transactions with related persons. Management has established procedures for monitoring transactions that could be subject to approval or ratification under the Policy.

Once a related person transaction has been identified, the Corporate Governance Committee, and in some cases the Audit Committee, will review all the relevant facts and circumstances and approve or disapprove of the entry into the transaction. The Corporate Governance Committee will take into account, among other factors, whether the transaction is on terms no less favorable to us than terms generally available from an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction. If advance approval of a transaction by the Corporate Governance Committee is not feasible, the transaction will be considered for ratification at the Corporate Governance Committee’s next regularly scheduled meeting.

There are no family relationships between or among any of our directors, director nominees and executive officers.

We lease our headquarters located at 195 Clarksville Road, Princeton Junction, New Jersey, from an entity majority-owned by Dr. Vahaviolos, one of our directors. The lease was set to expire October 31, 2024, and in March 2024, the Company and the landlord agreed to an extension of the lease until October 31, 2026. In 2023, the monthly payments were approximately $82,000 for January to October and approximately $84,500 for November and December. For the period of January 2024 until October 31, 2025, the monthly rent will remain $84,500, then increase to approximately $86,000 from November 1, 2025 to October 31, 2026.

Our subsidiary in Greece entered into an employment agreement with the daughter of Dr. Vahaviolos pursuant to which she serves as its Vice President and Managing Director. The employment agreement provides for a monthly salary and other compensation, including incentive bonuses, plus reimbursement of certain expenses. During 2023, Dr. Vahaviolos’ daughter received approximately $138,300 in total compensation and benefits. In addition, Dr. Vahaviolos’ daughter personally guaranteed payments on certain obligations of our Greek subsidiary. We have agreed to indemnify Dr. Vahaviolos’ daughter should she make any payments or incur any costs or loss on account of her guaranty. Another daughter of Dr. Vahaviolos is a Human Resource Director in the U.S. and received total compensation in 2023 of approximately $199,000, which Company management believes is in line with the total compensation of comparable positions at other companies.

The daughter of our former CEO, Mr. Bertolotti, was an employee of Mistras, serving as Corporate Counsel and received total compensation in 2023 of approximately $152,000, which Company management believes is consistent with the market for her position. She no longer works for the Company.

Manny Stamatakis, our Chairman and Interim President and CEO, is an officer of Capital Management Enterprise (“CME”) and was previously the owner of CME. CME provides benefits consulting services to the Company. The Company did not pay any fees

to CME in 2023. The compensation received by CME in 2023 for work related to Mistras was paid directly to CME by the third-party benefits providers in the form of normal and customary commissions.

In October 2016, a company filed a lawsuit in Orange County, California Superior Court against one of our directors and a director nominee, Richard Glanton, along with a privately held company for which Mr. Glanton was a director and officer, and other parties for allegedly defaulting on loans, among other allegations. In the case, styled Luxury Asset Lending, LLC v. Philadelphia Television Network, Inc., Case No. 2016-00880965, the court entered a default judgment against Mr. Glanton and the company defendant in April 2017. In April 2019, the company defendant filed a motion to set aside the default judgment against it, which the court denied. Thereafter, the Fourth District Court of Appeal of California issued an opinion (Luxury Asset Lending, LLC v. Phila. Television Network, Inc., 270 Cal. Rptr. 3d 724 (Oct. 29, 2020)) reversing the denial. The matter is ongoing.

In July 2017 and then in February 2022, Mr. Glanton filed separate voluntary proceedings under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of New Jersey. The 2017 case was styled In the Matter of Richard H. Glanton, Case No. 17-bk-24279, which has been closed. The February 2022 proceeding, styled In the Matter of Richard H. Glanton, Case No. 22-bk-11055, was converted in August 2022 to a Chapter 7 proceeding and a bankruptcy trustee was appointed. This matter is ongoing along with related cases in the same court and various appeals and adversary proceedings brought by the bankruptcy trustee. These legal and bankruptcy proceedings were not related in any way to Mr. Glanton’s service on our Board.

After reviewing this information, the Board decided to renominate Mr. Glanton for election as a director at the 2024 Annual Meeting based on his historical performance and his long-term dedicated service on the Company’s Board, his knowledge of Mistras’ business, and the breadth of experience he possesses.

The following table sets forth information regarding the beneficial ownership of our common stock as of March 1, 2024 by (1) each of our directors and nominees for director, (2) each of the executive officers named in the summary compensation table, (3) all our directors and executive officers as a group, and (4) each person or group of affiliated persons known by us to be the beneficial owners of more than 5% of our common stock.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to our common stock. Shares of common stock that may be acquired by an individual or group within 60 days of March 1, 2024 pursuant to the exercise of options or warrants, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not for the purpose of computing the percentage ownership of any other person shown in the table. The percentage of shares beneficially owned is computed on the basis of 30,634,785 shares of common stock outstanding as of March 1, 2024.

We believe that the shareholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such shareholders, except as disclosed otherwise. The address for the directors and named executive officers listed below is c/o Mistras Group, 195 Clarksville Road, Princeton Junction, NJ 08550.

 

 

We believe that during 2023, all reports for our executive officers and directors that were required to be filed under Section 16(a) of the Securities Exchange Act of 1934 were filed on a timely basis, except for one report filed by Mr. Glanton regarding a stock award for director fees and one report filed by Mr. Stamatakis for the purchase of stock.

At the recommendation of the Corporate Governance Committee, the Board has recommended that all the current directors be nominated for election to the Board. Directors who are elected at the 2024 Annual Meeting will serve a one-year term expiring at the 2025 annual shareholders meeting or until their successors have been elected and qualified, or until their death or resignation.

The following contains the background, experience and other information about the nominees. Following each nominee’s biographical information, we have provided information concerning the particular experience, qualifications, attributes and/or skills that contributed to the determination by the Corporate Governance Committee and the Board that the nominee should serve as a director. Several of our independent directors serve or have served on boards and board committees (including, in many cases, as committee chairs) of other public companies, which we believe provides them with additional board leadership and governance experience, exposure to best practices, and substantial knowledge and skills that further enhance the functioning of our Board. In addition, James Forese, Richard Glanton, Manny Stamatakis and Sotirios Vahaviolos have been on our Board for over ten years, and all of them have a wealth of knowledge about our business, industry and corporate culture that provides great value to the functioning and decision-making of the Board.

We believe that each nominee for election as director will be able to serve if elected. If any nominee is not able to serve, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees, unless the Board chooses to reduce the number of directors serving on the Board.

 

 

 

 

 

 

 

Vote Required and Recommendation of the Board. The seven nominees receiving the greatest number of votes cast for their election as directors will be elected. The Board intends to vote all proxies for the election of each of these nominees unless you indicate otherwise on your proxy card or pursuant to your voting instructions.

The Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 2024. Shareholder ratification of the appointment is not required under the laws of the State of Delaware or NYSE rules, but the Board has decided to ascertain the position of shareholders on the appointment. The Audit Committee will reconsider the appointment of PwC if shareholders do not ratify the appointment. Even if the appointment is ratified, the Audit Committee will still have the discretion to appoint a different independent registered public accounting firm if the committee determines that such a change would be in our and our shareholders’ best interests.

A representative of PwC is expected to attend the 2024 Annual Meeting online and will have the opportunity to make a statement if the PwC representative desires to do so and to respond to appropriate questions presented at the meeting.

On March 29, 2023, we dismissed KPMG LLP (“KPMG”) as our prior independent registered accounting firm for the year ended December 31, 2022 and appointed PwC in its place. The Audit Committee approved the decision to change our independent registered public accounting firm from KPMG to PwC.

The audit reports of KPMG on the consolidated financial statements of the Company as of and for the years ended December 31, 2022 and 2021 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. In addition, the audit reports of KPMG on the effectiveness of internal control over financial reporting as of December 31, 2022 and 2021 did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During the years ended December 31, 2022 and 2021 and through March 29, 2023, the Company had no disagreements with KPMG on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of KPMG, would have caused KPMG to make reference to the subject matter of the disagreements in connection with their report on the consolidated financial statements of the Company for each of the two years.

No “reportable events”, as such term is defined in Item 304(a)(1)(v) of Regulation S-K, occurred within the years

December 31, 2022 and 2021 and the subsequent period through March 29, 2023.

During the years ended December 31, 2023 and the subsequent period preceding the appointment of PwC, neither we nor anyone on our behalf consulted PwC regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; and as such, neither a written report nor oral advice was provided to us that PwC concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Regulation S-K, Item 304(a)(1)(iv) and the related instructions to this Item) or a “reportable event” (as defined in Regulation S-K, Item 304(a)(1)(v)).

Vote Required and Recommendation of the Board. The ratification of the appointment of the independent registered public accounting firm will be approved if a majority of the shares of common stock present or represented by proxy at the 2024 Annual Meeting entitled to vote on this item vote FOR this item. The Board intends to vote all proxies for the ratification of PwC, unless you indicate otherwise on your proxy card or pursuant to your voting instructions.

The Audit Committee reports to and acts on behalf of the Board of Directors of Mistras Group, Inc. (the “Company”) by providing oversight of the financial reporting process, accounting policies and procedures and the system of internal controls of the Company. The Company’s management is responsible for preparing the Company’s consolidated financial statements and designing and monitoring a system of internal controls. The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), is responsible for performing an independent, integrated audit of the Company’s consolidated financial statements and internal control over financial reporting and expressing its opinion on the Company’s consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting, based upon its audit. The Audit Committee is responsible for overseeing the conduct of these activities by the Company’s management and PwC.

In this context, the Audit Committee has met and held discussions with management, the Company’s internal auditors and PwC. These meetings also included private sessions with the internal auditors, PwC, the Chief Executive Officer, the Chief Financial Officer, and other members of management at Audit Committee meetings and such other times as the Audit Committee deemed appropriate. Management represented to the Audit Committee that the Company’s consolidated financial statements as of and for the year ended December 31, 2023, were prepared in accordance with U.S. generally accepted accounting principles. The Audit Committee has reviewed and discussed the consolidated financial statements with management, the Company’s internal auditors and PwC. The Audit Committee also discussed with the Company’s internal auditors and PwC the overall scope and plans for their respective audits, their evaluation of the Company’s internal control over financial reporting and the overall quality of the Company’s financial reporting process.

The Audit Committee has discussed with PwC matters required to be discussed pursuant to Public Company Accounting Oversight Board Auditing Standard No. 1301 and other generally accepted auditing standards. In addition, PwC provided to the Audit Committee the written disclosures required by the applicable requirements of the Public Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee concerning independence, and the Audit Committee and PwC have discussed PwC’s independence from the Company and its management, including the matters in those written disclosures. Additionally, the Audit Committee considered the non-audit services provided by PwC and the fees and costs billed and expected to be billed by PwC for those services and concluded that the provision of these services by PwC is compatible with maintaining PwC’s independence.

Based upon these reviews and discussions with management and PwC, the Audit Committee recommended to the Board of Directors, and the Board has approved, the inclusion of the Company’s audited consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, for filing with the Securities and Exchange Commission.

James Forese, Chairman

Nicholas DeBenedictis

Charles Pizzi

The following table sets forth the fees billed by PwC for professional services rendered for the audit of the 2023 financial statements and for the other services listed below, and the fees billed by KPMG for professional services rendered for the audit of the 2022 financial statements and for the other services listed below.

 

Audit Fees: Audit fees for all periods consisted of aggregate fees billed for professional services rendered for the integrated audit of our consolidated annual financial statements and internal control over financial reporting and, reviews of interim consolidated financial information.

All Other Fees: For license for use of a PwC disclosure checklist.

The Audit Committee’s charter provides for review and pre-approval by the Audit Committee of all audit services and permissible non-audit services, and related fees, conducted by our independent auditor. All the fees and services described above were approved by the Audit Committee and the Audit Committee concluded that the provision of such services by PwC did not impact PwC’s independence in the conduct of its auditing function.

We are asking our shareholders to approve an amendment and restatement of the Mistras Group, Inc. 2016 Long-Term Incentive Plan (the “Plan”). The proposed amendment and restatement of the Plan (the “Amended Plan”) includes the following material changes: (i) increase the number of shares of our common stock that may be issued by 1,300,000 shares, to a total of 6,200,000 shares, (ii) remove individual award limits and otherwise reflect changes to Section 162(m) of the Internal Revenue Code (the “Code”), (iii) allow the administrator to accelerate award vesting in its discretion, (iv) extend the expiration date of the Plan, (v) allow the recycling of award shares withheld to satisfied tax withholding obligations (other than shares subject to stock option or stock appreciation right awards), (vi) accelerate the vesting of non-employee director awards in the event of a change in control, and (vii) vest performance-based awards at the greater of the level determined based on actual performance or the target level, if not assumed or continued by the surviving company in a change in control, or if assumed or continued but the grantee’s service ceases within the following two years due to death, disability or involuntary termination.

Based on 455,305 shares remaining available under the Plan as of March 18, 2024, the increase of 1,300,000 shares would result in 1,755,305 shares becoming available for future issuance under the Plan. The Plan was approved by our shareholders at the 2016 Annual Meeting and amendments to increase the number of shares authorized for issuance under the Amended Plan from 1,700,000 shares to 3,700,000 shares and from 3,700,000 shares to 4,900,000 shares were approved by our shareholders at the 2020 and 2022 Annual Meetings, respectively.

The amendment and restatement will not become effective until shareholder approval is obtained. If shareholders do not approve the amendment and restatement, the Plan will instead remain in effect in accordance with its current terms until October 18, 2026. However, the shares available under the Plan would be quickly depleted and preclude us from using equity as a compensation and retention tool.

This proposal requires the affirmative vote of a majority of the shares of our common stock entitled to vote on the proposal and present in person or represented by proxy at the 2024 Annual Meeting. Abstentions have the same effect as a vote against this proposal. Broker non-votes will not be considered entitled to vote on this item and will therefore not be counted in determining the number of votes necessary for approval of this proposal. Our named executive officers and directors are eligible to receive awards under the Plan and therefore have an interest in this proposal.

The Amended Plan is attached hereto as Exhibit A. To facilitate your review of the changes reflected in the Amended Plan, all differences from the existing Plan are shown in Exhibit A-1.

Long term equity-based and other forms of incentive compensation have been and are expected to continue to be necessary and key components of our overall compensation program. The Board believes that our ability to grant equity-based incentive compensation will enable us to meet several objectives that are important to the success and growth of our business, including, for example, fostering an ownership mentality that aligns the interests of our management and other personnel with those of our shareholders, and enabling us to attract, motivate, reward and retain talented individuals whose skills, experience and efforts are essential to the continuing success and development of our business and the enhancement of shareholder value. If the Amended

Plan is not approved, we will still be able to make equity-based awards under the Plan but, as indicated, the Plan will be of limited utility given the relatively low number of shares that remain available for future awards. Based upon the foregoing, the Board believes strongly that approval of the Amended Plan is in the best interests of the Company and our shareholders.

We are requesting that our shareholders vote in favor of approving the Amended Plan, which will allow us to continue providing equity compensation awards to employees and other key individuals as a competitive compensation practice and to align the interests of our employees and other key individuals with those of our shareholders.

The Plan currently authorizes the issuance of up to 4,900,000 shares of our common stock. As of March 18, 2024, 455,305 shares remained available for future awards under the Plan (plus any of the approximately 2 million shares subject to awards outstanding under the Plan as of March 18, 2024 that again become available for future awards under the Plan due to the cancellation, forfeiture, or cash-settlement of those outstanding awards).¹

The increase by 1,300,000 shares of the shares available for issuance under the Amended Plan would result in potential overhang or dilution of 11%, determined as follows (based upon information as of the record date of March 18, 2024):

 

Our three-year average annual burn rate (calculated as the number of shares granted each fiscal year, including stock options, unrestricted shares, RSUs, and PRSUs delivered to employees and directors, divided by the weighted average common shares outstanding) is approximately 2.75%.

Shareholder approval of the Amended Plan is required by the equity compensation rules of the NYSE, on which our shares are listed, and to enable the issuance of incentive stock options under the Amended Plan, should the Compensation Committee elect to grant such options.

The Amended Plan includes a number of features that are designed to reflect good corporate governance and compensation practices and otherwise take into account our shareholders’ interests, including:

The following summary describes the principal features of the Amended Plan and is qualified in its entirety by reference to the full terms of the Amended Plan document set forth in Exhibit A.

The Amended Plan enables us to grant equity- and cash-based awards to our and any of our subsidiaries’ present or future non-employee directors, officers, employees, consultants or advisers and to grant “incentive stock options” (within the meaning of Section 422 of the Code) to our and any of our subsidiaries’ employees. We estimate that the total number of eligible persons currently is approximately 4,600, of which all are employees except our 5 non-employee directors. Approximately 400 current employees (including executive officers) hold outstanding equity awards under the Plan.

The types of awards that may be granted under the Amended Plan are described below under the heading “Forms of Awards.”

As of March 18, 2024, we had 455,305 shares remaining in the Plan that are available for issuance in respect of future awards. Shareholder approval of the Amended Plan will increase the number of shares of our common stock that may be issued by 1,400,000 shares. As of March 25, 2024, the closing price of our common stock on the NYSE was $9.30.

The Amended Plan provides the following share-counting rules:

In the event of a split-up, spin-off, stock dividend, recapitalization, consolidation of shares or similar capital change involving the outstanding shares of our common stock, the aggregate number of shares that may be issued under the Amended Plan and the number, class and exercise price of shares covered by outstanding awards will be subject to equitable adjustment in order to avoid undue dilution or enlargement of the benefits available under the Amended Plan and any outstanding awards.

Unless otherwise determined by the Board, the Amended Plan will be administered by the Compensation Committee of the Board. Subject to the terms of the Amended Plan, the Compensation Committee, acting in its discretion, may select the persons to whom awards will be made, prescribe the terms and conditions of each award and make amendments thereto, construe, interpret and apply the provisions of the Amended Plan and of any award agreement, and make any determinations and take any other actions as it deems necessary or desirable in order to carry out the terms of the Amended Plan or of any award. The Compensation Committee’s determinations and decisions as to matters relating to the operation and administration of the Amended Plan are final and binding on all persons. To the extent permitted by law, the Compensation Committee may delegate its authorities and responsibilities under the Plan to any person or subcommittee (who may, but need not be, officers or directors of the Company). However, the Compensation Committee may not delegate its authority to take non-ministerial actions with respect to grantees who are subject to Section 16 of the Exchange Act. We will indemnify the members of the Compensation Committee (and others to whom authority is delegated) for claims they may incur in connection with the administration of the Amended Plan, unless attributable to fraud or willful misconduct.

Awards under the Amended Plan may be in the form of stock options, restricted stock, restricted stock units, stock appreciation rights, other share-based awards and cash-based awards. The following is a description of the types of equity and cash-based awards that may be granted under the Amended Plan:

In general, awards made under the Amended Plan may not be transferred or assigned, except (a) for certain gratuitous transfers of non-qualified stock options or SARs to family members, (b) upon death, or (c) as may otherwise be permitted by the administrator of the Amended Plan.

The Amended Plan provides that awards made under the Amended Plan are subject to the Company’s incentive compensation clawback policies as in effect from time to time, including the policy of the Company adopted to comply with the clawback requirements of Section 954 of the Dodd-Frank Act.

In general, the exercise price under a stock option and the tax withholding obligation resulting from the exercise or settlement of an award may be satisfied in cash and/or in such other ways as the Compensation Committee may permit, including, for example, by the participant’s surrender of previously-owned shares or by our withholding of shares that would otherwise be issued in connection with such exercise or settlement.

Non-employee director awards will become fully vested upon a “change in control” (as defined in the Amended Plan). Otherwise, upon a change in control, the parties to the change in control transaction can agree that outstanding Amended Plan awards will be assumed by, or converted into economically equivalent awards for securities of, the acquiring or successor company and continued with substantially the same vesting and other terms and conditions as the original award. The Amended Plan also contains a “double trigger” vesting provision pursuant to which vesting of an assumed or converted award will accelerate if the participant’s employment with the acquiring or successor company is involuntarily terminated (e.g., by the successor without “cause” or by the participant for “good reason,” as defined in the Amended Plan) within two years after the date of the change in control. If an outstanding Amended Plan award is not assumed or substituted by the acquiring or successor company, however, the award will be deemed to be fully vested immediately prior to the change in control and will be cancelled in exchange for the transaction value. If the original award is subject to the satisfaction of performance conditions, then such performance conditions shall be deemed to have been satisfied immediately prior to the change in control on the basis of the greater of target and actual performance as of the date of the change in control. No consideration will be payable for the cancellation of an option or stock appreciation right if the transaction value per share is not greater than the exercise or base price per share under the award.

Unless sooner terminated by the Board, the Amended Plan shall expire on March 27, 2034, the tenth anniversary of the date it was approved by our Board. The Board may amend or terminate the Amended Plan at any time, provided, however, that no such action may adversely affect outstanding awards without the holder’s consent. Amendments to the Amended Plan will be subject to shareholder approval if and to the extent required in order to comply with applicable legal or stock exchange requirements. The Amended Plan requires shareholder approval under NYSE requirements.

Awards under the Amended Plan are discretionary and no awards have yet been made under the Amended Plan. Therefore, the benefits and amounts that will be received or allocated under the Amended Plan are not determinable at this time and a new plan benefits table is not provided.

As of March 22, 2024, no stock options have been granted under the Plan.

The following paragraphs summarize the principal federal income tax consequences generally applicable to U.S. taxpayers who receive awards under the Amended Plan and to us. The following summary does not purport to be a complete discussion of the federal income tax issues relating to an award under the Amended Plan and may not be relied upon as tax advice.

Nonstatutory Stock Options. A nonstatutory stock option is an option that does not qualify as an “incentive stock option” under Section 422 of the Code. No taxable income is realized by a participant upon the grant of a nonstatutory stock option. If the option is exercised, the participant will generally realize ordinary income on the exercise date in an amount equal to the excess of the then fair market value of the shares purchased on that date over the exercise price paid for those shares, and we will generally be entitled to a corresponding deduction. The participant’s tax basis for the shares will be equal to the value of the shares on the date the option is exercised, and the participant’s holding period for the shares will begin on that date. Gain or loss on a subsequent sale of the shares will be long- or short-term capital gain or loss, depending on whether the sale occurs more than one year after the participant’s holding period begins.

Incentive Stock Options. No taxable income is realized by a participant upon the grant or exercise of an “incentive stock option” (within the meaning of Section 422 of the Code), although the exercise may have alternative minimum tax consequences to the participant. A participant will realize taxable income (or loss) when shares acquired upon the exercise of an “incentive stock option” are subsequently sold. If the participant sells the shares more than two years after the grant date and more than one year after the exercise date, any gain or loss realized on the sale will be long-term capital gain or loss, and we will not be entitled to a deduction. If the participant sells the shares before the end of either of those two holding periods, any gain realized on the sale will be taxable as ordinary income to the extent that the value of the shares on the date the option is exercised exceeds the option exercise price paid for the shares, and any remaining gain will be capital gain. In general, we will be entitled to a deduction equal to any ordinary income realized by the participant upon the sale of the shares.

Restricted Stock Awards. In general, a participant who receives shares of restricted stock will not realize taxable income unless and until the shares become vested, at which time the participant will realize ordinary income equal to the then fair market value of the vested shares and we will be entitled to a corresponding deduction. The participant’s tax basis for the shares will be equal to their fair market value on the vesting date and, upon a subsequent sale of the vested shares, the participant will realize long- or short-term capital gain, depending on whether the sale occurs more than one year after the vesting date (when ordinary income was realized). A participant may make an “early income election” within 30 days of the receipt of restricted shares, in which case the participant will realize ordinary income on the date the restricted shares are received equal to the fair market value of the shares on that date (less any amount paid for the shares), and we would be entitled to a corresponding deduction. If the early election is made, no income will be realized by the participant if and when the shares become vested.

Restricted Stock Units. In general, a participant who is granted a RSU award will not realize taxable income unless and until the participant receives shares of our common stock and/or cash in settlement of the RSU award. When an RSU is settled, the participant will recognize ordinary income equal to the fair market value at that time of the shares and/or amount of cash received, and we will have a corresponding deduction.

Stock Appreciation Rights. No taxable income is realized upon the grant of SARs. In general, a participant will realize ordinary income when SARs are exercised, equal to the excess of the value of the shares covered by the exercise on the exercise date over the SAR exercise price, and we will have a corresponding deduction.

Other Equity- or Cash-Based Awards. Similarly, if a participant receives cash and/or shares pursuant to another form of award under the Amended Plan, he or she will generally realize ordinary income equal to the fair market value at that time of the shares and/or the amount of cash received, and we will be entitled to a corresponding deduction.

Tax Withholding. We have the right to deduct or withhold, or require a participant to remit to us, amounts sufficient to satisfy applicable tax withholding requirements arising in connection with the exercise, vesting, lapse of restrictions or other taxable event pertaining to any awards made under the Amended Plan. The Compensation Committee may, at the time an award is granted or thereafter, require or permit any such withholding requirement to be satisfied, in whole or in part, by delivery or withholding from the award of shares having a fair market value on the date of withholding equal to the applicable withholding amount.

Section 162(m) Limitations. In general, Section 162(m) of the Code imposes a limit on our corporate tax deductions for compensation in excess of $1 million per year to any person who was a covered executive in 2017 or later (subject to transition relief for compensation provided pursuant to a written binding contract which was in effect on November 2, 2017, and which was not modified in any material respect on or after November 2, 2017). The Compensation Committee retains full discretion to grant non-deductible awards under the Amended Plan or materially modify outstanding awards if, in its judgment, it is in our best interest to do so.

Section 409A. Acceleration of income recognition, additional taxes, and interest apply to nonqualified deferred compensation that is not compliant with Section 409A of the Code. The terms of the Amended Plan are intended to enable awards that comply with, or are otherwise exempt from, Section 409A of the Code, but we make no representation or warranty regarding the tax treatment of awards under the Amended Plan.

The following table provides information as of December 31, 2023 concerning the shares of our common stock that may be issued under our existing equity compensation plans.

 

Vote Required and Recommendation of the Board. The Amended Plan will be considered approved if a majority of the shares of common stock present or represented by proxy at the 2024 Annual Meeting entitled to vote on this item vote FOR this item. The Board intends to vote all proxies to approve the Amended Plan, unless you indicate otherwise on your proxy card or pursuant to your voting instructions.

The Board is asking our shareholders to cast an advisory vote on the compensation paid to our named executive officers as set forth in the Summary Compensation Table and other compensation tables and narratives under the “Executive Compensation” section of this Proxy Statement and as described in the “Compensation Discussion and Analysis” section of this Proxy Statement.

The Compensation Committee of the Board recommends, approves and governs all the compensation policies and actions for all our named executive officers. The section of this Proxy Statement captioned “Compensation Discussion and Analysis” provides an extensive discussion of our executive compensation programs, the role the Compensation Committee plays in overseeing and developing our compensation programs and philosophy, the reasons for our compensation programs and the compensation provided to our named executive officers. We urge you to read the Compensation Discussion and Analysis and Executive Compensation sections of this Proxy Statement so you may better understand our compensation programs on which you are being asked to vote.

Shareholders are being asked to approve the adoption of the following resolution:

“RESOLVED, that the shareholders of Mistras Group, Inc. (the “Company”) approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in the Company’s proxy statement for the 2024 annual meeting of shareholders pursuant to rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, narrative disclosures and any other relevant information.”

While the results of the shareholder vote on executive compensation is non-binding, the Compensation Committee and the Board value the opinion of our shareholders and will consider the outcome of the vote when making future compensation decisions.

Vote Required and Recommendation of the Board. The advisory vote on executive compensation will be approved if a majority of the shares of common stock present or represented by proxy at the 2024 Annual Meeting entitled to vote on this item vote FOR this item. The Board intends to vote all proxies to approve executive compensation unless you indicate otherwise on your proxy card or pursuant to your voting instructions.

The Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis section of the Proxy Statement for the 2024 Annual Meeting. Based on our review and discussions, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement for the 2024 Annual Meeting.

Michelle Lohmeier (Chair)

James Forese

Richard Glanton

 

Our executive compensation programs and policies have been developed to link incentive compensation for executive officers to Company performance and increases in shareholder value with the goal of establishing compensation that is reasonably competitive and fair. For 2023, the Compensation Committee revised the incentive plan targets to emphasize key performance metrics the Compensation Committee believes drive increased shareholder value. The Compensation Committee also implemented stretch goals to incentivize the executive team to reach pre-COVID performance in terms of revenue and Adjusted EBITDA (as described below). In addition, with the termination of President and CEO Dennis Bertolotti, the Compensation Committee developed a compensation package for Manny Stamatakis to serve as our Interim President and CEO and continue his work championing Project Phoenix, the Company’s efforts to improve profitability through rationalizing costs and improving pricing and margins.

Overall, the goal of our executive compensation program is to achieve strategic business objectives that are aimed at growing our business profitably and aligning the long-term interests of our executives and shareholders. Our executive compensation objectives are to have compensation programs and policies that (1) align our executive team’s performance with our operational and strategic objectives, (2) attract and retain talent that is needed to be successful and achieve our strategic objectives, and (3) pay for outstanding performance.

Our current compensation program for our executive officers includes our “named executive officers,” who are listed in the Summary Compensation Table below. We have two incentive plans, an annual cash incentive or “bonus plan” and an equity incentive plan or “equity plan.” For 2023, the Compensation Committee selected the same metrics, weighting, and targets for both plans – 50% based on Adjusted EBITDA and 25% for each of revenue and free cash flow (as described below). The Compensation Committee concluded that the executive team needs to be focused on these key financial measures in order to improve performance and enhance shareholder approval. The awards for the cash bonus plan pay executive officers currently in cash, while the equity plan offers the opportunity for long-term rewards that will provide incentives for our executive officers to remain with us and enhance the long-term value of the Company for our shareholders. These equity awards help ensure our executive team has an equity stake in the Company and remains aligned with shareholders’ interests.

We review our compensation programs every year to ensure the programs continue to be effective and are aligned with the objectives described above.

The Compensation Committee is responsible for the executive compensation program design and decision-making process, and will consider input, in some cases from executive officers in making its decisions. The Compensation Committee has annually reviewed the performance of the Executive Chairman and the CEO and, together with the other independent directors, establishes the compensation. For 2023, both the Executive Chairman and the President and CEO provided the Compensation Committee with their assessment of the other members of senior management and their recommendations for the compensation of the other executives. For the first nine months of 2023, the Compensation Committee consisted of four directors who meet the independence requirements of the NYSE (Michelle Lohmeier, the Committee Chair, James Forese, Richard Glanton, and Manny Stamatakis). On October 9, 2023, upon accepting the positions of Interim President and CEO, Manny Stamatakis resigned from all Board committees, including the Compensation Committee.

The Compensation Committee has an active role in overseeing the design and implementation of the two incentive programs. The Compensation Committee worked with senior management and its consultant to develop a peer group for purposes of benchmarking compensation and to develop the plans. The Compensation Committee, from time to time, utilizes the services of its

independent compensation consultant, Pay Governance LLC, to review the compensation programs, assist in the development of the incentive plans and review the peer group. In developing the compensation for Manny Stamatakis in his role as Interim President and CEO, the Compensation Committee consulted with Pay Governance for advice and benchmarking on the compensation package for Manny.

The principal components of our current executive compensation program are base salary, the bonus plan and equity plan awards. Although each element of compensation, as described below, is considered separately, the Compensation Committee considers the aggregate compensation package for each executive officer in its determination of each individual component of that package. We also provide some benefits, such as car allowances or company vehicles, but these are not a significant portion of our compensation program.

Base salary is a fixed compensation amount paid during the fiscal year. Each named executive officer’s base salary is reviewed annually by the Compensation Committee. The Compensation Committee takes into account benchmarking information regarding our executive officers’ base salary against an industry peer group and broader database when determining adjustments to executive officers’ salaries.

The bonus plan and equity plan for our executive officers are 100% performance-based and are tied to our results as described below. The objective of these plans is to link compensation to our performance. The Compensation Committee believes that our named executive officers should have a meaningful portion of their total compensation opportunity incentive based and linked to increasing shareholder value through the Company’s business strategy of focusing upon growth opportunities and continued improvements in profitability. Reflecting this philosophy, at target levels of awards for the bonus plan and the equity plan for 2023, over 50% of total compensation for all our named executive officers is performance-based.

Under the cash bonus plan, executive officers can earn a percentage of their base salary predicated on our performance against specific metrics. The equity plan provides executive officers with the opportunity to earn RSUs based on our performance against specific metrics. The metrics are given different weightings, and executive officers earn their awards based upon our performance relative to the specific metrics. In addition, each metric has a minimum performance threshold, below which no cash bonus or RSUs can be earned for that metric.

Each executive officer has a target award potential he can earn under each program expressed as a percentage of the executive officer’s base salary. If the performance for a specific metric is at the target level, the executive will receive 100% of his target award related to that metric. Each executive officer can earn between 0% and 200% of his target award, based upon performance against specific metrics.

The following are the 2023 target awards for our named executive officers under each program:

 

Pursuant to his employment agreement, Chairman and Interim President and CEO Manny Stamatakis did not participate in the Bonus Plan for 2023. Rather, Manny will be compensated under the 2024 bonus plan for the period in 2023 (October 9 to December 31, 2023) and 2024 in which he serves as Interim President and CEO. Manny’s target award for the 2024 bonus plan is 100% of his base salary, prorated for the greater of: (i) six (6) months; and (ii) the actual number of months served as Interim President and CEO (including months served in 2023 and the month in which his employment as Interim President and CEO

ceases in 2024). In addition, Manny will not participate in the equity plan, as the Compensation Committee elected to grant him an option to purchase 250,000 shares of our common stock on October 11, 2023, vesting on October 12, 2023, with an exercise price of $5.36, the closing price of our stock on the NYSE of the October 11, 2023 grant date. See “Employment Agreement” and the subheading “Stamatakis Employment Agreement” on page 53.

For 2023, the Compensation Committee decided to use the same performance metrics and targets for both the bonus plan and the equity plan, with identical thresholds for minimum performance and the level of achievement required to receive the maximum payout. The performance metrics were as follows:

The targets for these metrics were based upon the Company’s 2023 internal plan and budget established early in the year, with an increase to drive the executive team to attain stretch goals. The Compensation Committee selected these metrics because the Compensation Committee believed these metrics would incentivize the executive team to focus on key drivers of performance to improve shareholder value and attain pre-COVID performance levels.

A minimum of 95% of the target performance level of a metric must be achieved for an executive officer to receive any award for that metric. At 95% of the target performance level, the executive officer will receive 70% of his target award related to that metric. If performance is between 95% and 100% of the target performance level for a metric, the executive officer would receive a percentage of his target award for that metric based upon a straight-line interpolation between 70% and 100%, with each 1% increase in performance against target above the 95% performance level equating to a 6% increase in percentage of the earned award. If the performance for a specific metric exceeds 100% of the target performance level, the executive officer will receive more than 100% of his target award related to that metric, to a maximum of 200% of his target award if the performance for the metric equals or exceeds 112.5% of the target performance level. If performance is between 100% and 112.5% of target performance level for a metric, the executive officer will receive a percentage of his target award for that metric based upon a straight-line interpolation between 100% and 200%, with each 1% increase in performance against target above the 100% level equating to an 8% increase in percentage of the earned award. The Compensation Committee adopted a tighter range of performance measures to receive a payout than in prior years because the Compensation Committee believed achieving performance below 95% of target was not an acceptable performance level, and the decrease of the range for over target performance provided more incentive to overachieve with a more realistic opportunity to achieve a 200% payout.

The equity plan target awards for each executive officer related to the performance metrics were established in RSUs, based upon a stock price of $8.50 per share. The plan would normally utilize a stock price in March 2023 after we released earnings for the year ended 2022, but the Committee determined that the stock price was too low (in the range of $5.30 to $5.60 per share), due in large part to under achieving in 2022, and that using the lower price would create too much dilution. At the end of the year, an executive earns RSUs based upon our performance against the metrics which is then applied to the executive officer’s target award of RSUs. For example, if an executive officer has a target award of 10,000 RSUs for the three performance-based metrics, and the Company performance results in the executive officer achieving 115% of the target award, that executive officer would be awarded 11,500 RSUs for the equity plan. The RSUs an executive officer receives will vest 25% per year, with the first 25% vesting on the anniversary of the date on which the earned award is deemed final (the date of filing our Form 10-K for the year), and then 25% vesting on each of the second, third and fourth anniversary dates of end of the year for which the RSUs were earned. If an executive officer retires at the age of 65 or older, the executive officer will continue to hold the RSUs post-retirement and the RSUs will continue to vest if the executive officer complies with non-compete and non-solicitation restrictions. If the executive officer violates these restrictions, the RSUs will be forfeited, and he will be required to repay the Company all value realized from post-retirement vesting of any RSUs.

To assist in the assessment of the appropriateness and competitiveness of our compensation programs, management and the Compensation Committee, with the assistance of Pay Governance, developed a compensation peer group in 2021-22. In deciding the companies to include in the compensation peer group, management and the Compensation Committee focused on companies that are involved in or related to the asset protection, testing, inspection or similar industrial business services, and primarily selected firms that were generally in the range of 50% to 200% of our size with respect to revenues and/or market capitalization. This peer group is evaluated periodically to ensure continued relevance and applicability, which was done in 2023.

The 2023 compensation peer group (which is the same as 2022) consists of the following companies:

 

The Compensation Committee utilized its advisor, Pay Governance, in 2023 to advise the Compensation Committee on the following: (1) the terms of incentive plans and the changes in our incentive compensation programs for 2023, which are discussed below, and (2) the compensation for our Interim President and CEO, Manny Stamatakis. Pay Governance was retained directly by the Compensation Committee and any services rendered for us were as directed by the Compensation Committee.

The following is a discussion of the decisions made on the various components of executive compensation for 2023 for our named executive officers.

Executive officers are generally reviewed and provided with salary adjustments, if any, after the conclusion of the fiscal period. This enables the Compensation Committee to make decisions after reviewing our financial performance during the just completed fiscal year and to evaluate the executive officers’ performance during that period. Our named executive officers’ annual salaries for 2023 were: (a) $500,000 for Manny Stamatakis; (b) $625,000 for Dennis Bertolotti; (c) $440,000 for Edward Prajzner, which was increased to $500,000 effective October 1, 2023; (d) $450,000 for John Smith effective with his promotion to Executive Vice President on October 1, 2023; (e) $329,400 for Michael Keefe; and (f) $280,000 for Michael Lange.

The Company was below the minimum threshold of all three metrics for 2023 under the bonus plan and the equity plan, which had identical metrics and targets. Accordingly, none of our named executive officers earned any incentive compensation under either plan for 2023. Set forth below for the plans are the performance metrics and the weight, target performance and 2023 results for each metric.

 

Although the named executive officers failed to earn a performance benefit under either the bonus plan or the equity plan, several individuals performed outstandingly in 2023. The Compensation Committee considered the events of 2023 and concerns about retaining key executives while the Company is going through a critical transformational period. Accordingly, the Compensation Committee decided to grant discretionary awards of cash and RSUs to our named executives as follows.

 

The RSUs awarded will vest over 4 years, with 25% vesting on each of the first four anniversary dates of the grant. These awards are not included in the Summary Compensation Table under “Executive Compensation” as these awards are considered 2024 compensation under the rules for executive compensation. The cash bonuses are included in a separate column for 2023 in the Summary Compensation Table.

In making its decision to award Manny Stamatakis a discretionary $250,000 cash bonus, the Compensation Committee considered various factors, including the following:

The Compensation Committee elected not to provide any equity awards to Manny at this time on account of the inducement stock option to purchase 250,000 shares awarded to Manny in October 2023 when he accepted the position of Interim President and CEO.

The Compensation Committee awarded Ed Prajzner a cash bonus and equity award due to the following:

The Compensation Committee also recognized the critical contributions of Michael Keefe, Mike Lange and John Smith during 2023 to the ongoing transformation of the Company.

The Compensation Committee reviews cash and RSUs earned by our named executive officers based on performance during a particular year. Due to the SEC disclosure rules for the Summary Compensation Table under “Executive Compensation,” the compensation set forth in that table for a particular year does not necessarily align with the actual compensation related to that year. The equity compensation in the Summary Compensation Table is based upon accounting and SEC rules, which requires that we include 100% of the target award value for the equity plan based on accounting rules, regardless of how much of the award is ultimately earned by the named executive officers. For 2023, our named executive officers received no payouts under our equity plan because the thresholds were not met. On the other hand, as mentioned above, the Compensation Committee awarded our named executive officers, other than Manny Stamatakis, discretionary equity awards for their contributions in 2023, but these will appear next year as 2024 compensation and not as 2023 compensation. The information under Pay Versus Performance below provides information which is intended to disclose amounts actually earned by our named executive officers in a given year.

In the past, the Compensation Committee did seek input from the Executive Chairman on CEO compensation and the CEO on the compensation of other executive officers. In 2023, the Compensation Committee made compensation decisions with much less input from executive officers. In his new role as Chairman and Interim President and CEO, the Compensation Committee will be seeking input from Manny Stamatakis regarding compensation of the other executive officers of the Company.

With respect to the compensation of Manny Stamatakis in his role as Interim President and CEO, the Compensation Committee received advice from Pay Governance and took into account benchmarking information provided by Pay Governance.

The Company and the Compensation Committee consider tax, tax deductibility and accounting treatment of various compensation alternatives, and strive to structure all compensation to be fully tax deductible. However, these are not the driving or most influential factors. The Compensation Committee may approve non-deductible compensation arrangements if it believes they are in our best interests and those of our shareholders, taking into account several factors, including the need to retain quality executive officers.

We entered into an employment agreement with Manny Stamatakis for his role as Interim President and CEO, to which he was appointed on October 9, 2023. Manny’s employment agreement is described in “Employment Agreements” under the subheading “Stamatakis Employment Agreement” on page 53.

We entered into an employment agreement with John Smith for his position as Executive Vice President and President of Services to which he was appointed as of October 1, 2023. John’s employment agreement is described in “Employment Agreements” under the subheading “Smith Employment Agreement” on page 53.

We had an employment agreement with Mr. Bertolotti for the positions of President and CEO, which provided the basis for his termination payments upon the termination of his employment. We had an employment agreement with Dr. Vahaviolos for the

position of Executive Chairman, but he retired as Executive Chairman in 2023 and is now on the Board as Chairman Emeritus and is employed by the Company as a strategic advisor to the CEO, with a salary of $100,000 per year. Various terms of Sotirios’ employment agreement will continue, such as confidentiality and other restrictive covenants.

We established a severance plan for our other named executive officers that is explained in “Potential Payments upon Termination of Employment or Change of Control” on page 51.

The Compensation Committee, with the concurrence of all the independent directors, elected to continue Manny Stamatakis’ employment for an additional 6 months, effective April 9, 2024 and increase his base salary to $625,000, based upon benchmarking his base salary and taking into account the base salary paid to the prior CEO. The Compensation Committee also approved an increase to Mr. Keefe’s base salary to $360,000, effective April 1, 2024.

For 2024, the incentive compensation programs for our named executives will have several changes, which the Compensation Committee believes will provide incentives for our management team to drive increased profitability and growth, and thus enhance shareholder value. The weighting of the metrics for the cash and equity incentive plans have been changed for 2024 as follows: Adjusted EBITDA is accounting for 60% of the total opportunity, while revenue is accounting for 25% and free cash flow is accounting for 15%. In addition, the minimum thresholds to earn any payout are (a) 97.5% for revenue, which would earn a 70% payout, and (b) 90% for Adjusted EBITDA and, free cash flow, which would earn a 50% payout. If the Company achieves over 100% of the target for a metric, the maximum payout will be 200% of the target payout with respect to (i) revenue if performance is 112.5% or higher of target performance, (ii) Adjusted EBITDA if performance is 120% or higher of target performance, and (iii) free cash flow if performance is 127.5% or higher of target performance. The targets are based on our 2024 budget and plan.

The Compensation Committee and Board have established stock ownership guidelines for our executive officers. Our CEO is required to hold shares of our common stock with a value of at least five times his annual base salary and all other executive officers are required to hold shares of our common stock with a value of at least two times their annual base salary. Executive officers will have five years from their appointment to meet the guidelines. Unexercised options and unearned performance shares or performance RSUs are not counted toward meeting the guidelines until earned. If an executive officer is not meeting the minimum ownership guidelines (even if before the date he must meet them), the executive officer is required to hold all shares received from the vesting or exercise of an equity award during the preceding 36 months (other than shares withheld to pay withholding taxes and shares acquired upon the exercise of options which are sold to cover the exercise price) until the guidelines are met. In addition, all executive officers are not allowed to sell shares they acquire upon the vesting of RSUs or the exercise of options (net of shares withheld to pay withholding taxes or sold to pay the exercise price of options) for one year after vesting or exercise. For 2023 all our executive officers were in compliance with the stock ownership guidelines.

We have established an incentive compensation recoupment policy in accordance with the NYSE requirements adopted in 2023. The policy requires that we recoup both cash and equity incentive compensation from executive officers if there is an accounting restatement of our financial statements in a three year period due to the material noncompliance of the Company with any financial reporting requirement under the securities laws, including any required accounting restatement (i) to correct an error in previously issued financial statements that is material to the previously issued financial statements, or (ii) that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.

The Compensation Committee will recalculate the incentive compensation for the period or periods related to the restated financial statements to determine what the executive officers should have received, based upon the restated financial statements. If the incentive compensation the executive officers received is greater than the recalculated amount of incentive compensation as determined by the Compensation Committee, then the Compensation Committee will seek to recoup such excess incentive compensation. The Compensation Committee will determine the manner and timing by which we will seek recovery, including the cancellation of equity awards and setoff against current or future compensation, to the extent permitted by law.

Our Insider Trading Compliance Policy prohibits all our directors, officers and employees (and those of our subsidiaries) from (i) trading in options of any kind or other derivatives related to our securities, (ii) selling our securities short, (iii) purchasing our securities on margin, or (iv) entering into any other transaction or buying any financial instrument that directly or indirectly hedges or offsets any decrease in the value of Mistras common stock (or is designed to do so).

We will continue to review our compensation practices and programs and will consider changes as the Compensation Committee deems appropriate to meet our compensation goals. Changes for the incentive compensation programs are discussed above.

Our Compensation Committee and senior management assessed whether our compensation practices and programs for our executive officers and other employees pose any material risk to us and determined that our compensation practices and programs are not reasonably likely to have a material adverse effect on us.

SUMMARY COMPENSATION TABLE

The following table provides information regarding the compensation in 2023 of each person who served as our Chief Executive Officer, our Chief Financial Officer, and each of the next three most highly compensated executive officers. We refer to these individuals as our “named executive officers.”

 

Note on this table: The amounts in this table in the column “Stock Awards,” do not reflect the value of equity awards actually earned, due to the SEC rules for this column and accounting rules. See “Overall Compensation for 2023 Performance” on page 41 and Pay Versus Performance on page 48.

The following table provides information regarding grants of non-equity incentive awards for our named executive officers, as approved in 2023.

The following table provides information regarding the estimated future payouts of equity awards to our named executive officers granted in 2023.

Any performance-based RSUs a named executive officer earns will vest 25% per year, the first 25% vesting on the anniversary of the date on which the earned award is deemed final (the date of filing our Form 10-K for the year), and then 25% vesting on each of the second, third and fourth anniversary dates of end of the year for which the RSUs were earned.

The following tables provide information regarding equity awards granted to our named executive officers that were outstanding as of December 31, 2023:

The value realized for stock awards is the number of shares vesting on a particular day multiplied by the closing price of our common stock that day, or the immediately preceding trading day if shares vest on a day that is not a trading day. There were no options exercised in 2023.

We do not currently provide our named executive officers with pension benefits or nonqualified deferred compensation.

We prepared a determination of the median total compensation of all employees for 2023 to determine the ratio of the total 2023 compensation of the median employee to the total 2023 compensation of our CEO. The date we used to identify the median employee was December 31, 2023. We used employees from all countries worldwide for determining the median employee, except for Belgium, Brazil, Greece and India which were excluded under the de minimis exemption.

The following table illustrates the approximate number of employees we had as of December 31, 2023 in the U.S., in countries outside the U.S. and in each of the countries we excluded under the de minimis exemption.

 

To identify the median employee, we used the payroll records for determining the total pay in 2023 for all employees in all jurisdictions, except for the four excluded countries listed above. We annualized the pay for employees hired during the year. For each jurisdiction using a currency other than U.S. dollars, we used the same exchange rates used during 2023 to prepare our consolidated results of operations. We did not use any cost of living or other adjustments.

We had two CEO’s during 2023. We decided to use the compensation of Mr. Stamatakis, as he was our CEO on December 31, 2023, the day for selecting all other employees used for determining the median annual total compensation. As Mr. Stamatakis did not work the entire year, we annualized his total compensation for serving as CEO in 2023, using the number of days he served as our CEO (October 9, 2023 to December 31, 2023), other than his stock option award. We did not annualize the stock option award as this was a one-time award granted to induce Mr. Stamatakis to accept the role of Interim President and CEO.