UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 2022
CHASE CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts | 1-9852 | 11-1797126 | ||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
375 University Avenue, Westwood, Massachusetts 02090
(Address of Principal Executive Office) (Zip Code)
Registrant’s telephone number, including area code: (781) 332-0700
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, $.10 par value | CCF | NYSE American |
Section 5 –- Corporate Governance and Management
Item 5.02 - Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
On August 30, 2022, the Compensation and Management Development Committee of the Board of Directors of Chase Corporation (the “Company”) approved the Chase Corporation Annual Incentive Plan and the Chase Corporation Long Term Incentive Plan, in each case for the Company’s fiscal year ending August 31, 2023.
Consistent with prior years, the Annual Incentive Plan for fiscal 2023 provides participating executive team members the opportunity for cash bonuses based on the Company achieving a preset annual goal or target based on earnings before interest expense, taxes, depreciation and amortization (EBITDA). For fiscal year 2023, budgeted adjusted EBITDA, less the effects of foreign transaction gain (loss), aka EBITDAX, will be used as the EBITDA based target. For each participating executive team member, target awards are valued at a specified percentage of base salary. The threshold for any payments to be made under the plan is 80% of the EBITDA based target, at which point 50% of the target bonus would be paid. The maximum award of 200% of the target bonus would be paid if the actual EBITDA based results under the plan equals or exceeds 120% of the target.
Also consistent with prior years, the Long Term Incentive Plan provides the opportunity for participating executive team members to participate in the long term growth of the Company through three types of equity awards: performance-based restricted stock awards, time-based restricted stock awards, and stock option awards. For the Chief Executive Officer, Chief Financial Officer and General Counsel, the performance share portion represents 50% of the total award (at target) and the time-based restricted stock and stock option awards represent 25% each. The performance-based restricted stock is granted subject to achieving certain preset goals relating to the Company’s earnings per share (EPS) and return on invested capital (ROIC) and can be adjusted up or down depending on performance. The EPS and ROIC related goals are weighted for 80% and 20% of the total award, respectively. For any of the performance-based shares to vest, 80% of either the EPS or ROIC target must be met, at which point 50% of the award (weighted applicably) would vest. The full award would vest at achievement of 100% of both the EPS and ROIC target and the award may be adjusted upward to a maximum of 200% of the target award if 120% of each target is achieved. For purposes of the plan, EPS is determined using the number of weighted average diluted shares outstanding on August 31, 2022, the last day of fiscal year 2022. For purposes of the plan, ROIC is determined using the 3-year average ROIC, calculated as earnings before interest and tax, divided by the sum of equity and debt less cash. The time-based restricted stock awards will vest on the last day of the Company’s 2025 fiscal year if continued employment conditions are met. Stock options are valued using a Black-Scholes calculation, and vest in three equal annual installments beginning on the last day of fiscal 2023.
The above summaries of the Chase Corporation Annual Incentive Plan and the Chase Corporation Long Term Incentive Plan are qualified in their entirety by the copies of such plans filed as exhibits to this Current Report on Form 8-K and incorporated herein by this reference.
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Section 9 — Financial Statements and Exhibits
Item 9.01 - Financial Statements and Exhibits
(d) Exhibits
Exhibit No. |
| Description |
99.1 |
| Chase Corporation Annual Incentive Plan for Fiscal Year 2023 |
99.2 | Chase Corporation Long Term Incentive Plan for Fiscal Year 2023 | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Chase Corporation | |
|
| |
Dated: September 1, 2022 | By: | /s/ Michael J. Bourque |
|
| Michael J. Bourque |
|
| Treasurer and Chief Financial Officer |
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Exhibit 99.1
CHASE CORPORATION
ANNUAL INCENTIVE PLAN
Fiscal Year 2023
The Company, in addition to salary and benefits provides further cash compensation to key employees based on achieving preset annual goals.
The plan is maintained and paid at the sole discretion of the Board of Directors and may be modified or suspended at any time by the Board.
Upon approval by the Board of Directors, the Chief Financial Officer will administer the plan.
It is the intent of the Board of Directors to exclude the effect of unusual events and expenses from the calculation. The Compensation and Management Development Committee is given the authority by the Board to use its discretion in determining relevant exclusions.
Targets, awards, opportunities and associated performance award methodology and eligibility requirements will be established by the Compensation and Management Development Committee for the Chief Executive Officer, the Chief Financial Officer and the General Counsel and approved by the Board of Directors. For senior management, the Executive Chairman and the Chief Executive Officer will jointly make recommendations to be approved by the Compensation and Management Development Committee. For all other employees, the Executive Chairman and the Chief Executive Officer will be the approval authority. See schedule below for award opportunities for the executive officers:
For fiscal year 2023, budgeted Adjusted EBITDA, less the effects of foreign transaction gain (loss), aka EBITDAX, is the target. Payment threshold is 80% of the target which yields 50% of individual award opportunity. There is a cap on the incentive payments of 200% achieved at 120% of the target performance.
Actual v. Target |
| Award Earned |
|
|
80% of target | | 50 | | % |
90% of target | | 75 | | % |
100% of target | | 100 | | % |
110% of target | | 150 | | % |
120% of target | | 200 | | % |
Payment is made in cash no later than 75 days from the close of the fiscal year.
Award Opportunity
Chief Executive Officer |
| 100% of base salary for 100% achievement of target. At 80% of target award is 50% of base salary. For results in excess of 100% target, award increases to 200% of base salary at 120% of the target. |
|
| | | |
Chief Financial Officer | | 60% of base salary for 100% achievement of target. At 80% of target award is 30% of base salary. For results in excess of 100% target, award increases to 120% of base salary at 120% of the target. | |
| | | |
General Counsel | | 25% of base salary for 100% achievement of target. At 80% of target award is 12.5% of base salary. For results in excess of 100% target, award increases to 50% of base salary at 120% of the target. |
In addition to the financial targets the Compensation and Management Development Committee may choose to establish qualitative measurement criteria. Together with the financial measures these are referred to as critical success factors (CSF). When utilized, the Chief Executive Officer’s CSFs and appropriate weightings are approved by the Board. The Executive Chairman and the Chief Executive Officer will jointly approve all others.
Other management and non-union bonus participants will have opportunities established by the Executive Chairman and the Chief Executive Officer.
To be eligible an employee must be on the active payroll when the bonus is paid and for at least 6 months prior to the end of the fiscal year.
Exhibit 99.2
CHASE CORPORATION
Long Term Incentive Plan
Award Design and Grant Process
Fiscal Year Ending August 31, 2023
Key Provisions
1. | There are three reward vehicles: 1) Performance-based restricted stock, 2) Time-vested restricted stock and 3) Stock options. At least two will be used each year. For the Chief Executive Officer, Chief Financial Officer and General Counsel, Fiscal Year 2023 performance shares will be 50%, time-vested restricted stock will be 25% and stock options will be 25%. |
2. | Time-vested restricted stock is fixed and not subject to performance measures and will vest at the end of the third fiscal year after the grant date (August 31, 2025), subject to grant date, pricing, and termination provisions listed below. |
3. | Stock options will be fixed based on a Black-Scholes calculation and will vest in three equal annual allotments beginning on August 31, 2023 and be exercisable for 10 years. |
4. | Performance shares, designed to challenge and, when warranted, award executive leadership’s management of both the balance sheet and income statement, will be in the form of restricted stock subject to performance and other criteria as follows. |
· | Performance measure 1: |
o | Target is earnings per share (EPS) based on Fiscal Year 2023’s budget; by dividing net income by the number of diluted shares outstanding at August 31, 2022 (end of most recent fiscal year). Actual is net income for the measurement period divided by the same number of diluted shares used in the Target. |
o | Performance measurement period: September 1, 2022 through August 31, 2023 |
o | Vesting: 2 years after performance measurement period (August 31, 2025) |
o | Grant date: first day of measurement period |
o | Stock price for award: closing price for last trading day prior to grant date |
o | Threshold: the point at which an award is earned (80% of the target). Between threshold and target the award increases on a linear basis. |
o | Stretch area: performance in excess of target awarded at a higher rate (200% for 120% achievement of target) with a cap of 200%. Between target and cap award increases on a linear basis. |
o | Weighted value in award opportunity: 80% |
Example:
· | Individual opportunity is $50,000 at target; performance share opportunity (50%) is $25,000 at target; 80% of LTIP value relates to performance measure 1 (or $20,000). |
· | Stock price (8/31/2022) is $100.00 |
· | Threshold is 80% of target |
Performance |
| Payout % of Target |
| Vesting Shares |
| Reward Value |
| |
Threshold 80% of target | | 50 | % | 100 |
| $ | 10,000 | |
Target | | 100 | % | 200 |
| $ | 20,000 | |
Stretch at 120% of target | | 200 | % | 400 |
| $ | 40,000 | |
Plan metrics: standard performance measures are 80% threshold, 100% target and 120% maximum.
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· | Performance measure 2: |
o | Target is trailing three-year average Return on Invested Capital (“ROIC”) calculated using the budget for Fiscal Year 2023 and prior two years’ (Fiscal Years 2022 and 2021) actual results. Actual ROIC for the measurement period will be calculated using actual results for the three years ending August 31, 2023. |
o | Performance measurement period: September 1, 2020 through August 31, 2023 |
o | Vesting: 2 years after performance measurement period (August 31, 2025) |
o | Grant date: September 1, 2022, the first day of fiscal year 2023 |
o | Stock price for award: closing price for last trading day prior to grant date |
o | Threshold: the point at which an award is earned (80% of the target). Between threshold and target the award increases on a linear basis. |
o | Stretch area: performance in excess of target awarded at a higher rate (200% for 120% achievement of target) with a cap of 200%. Between target and cap award increases on a linear basis. |
o | ROIC defined as Earnings before Interest Expense and Income Tax, divided by the sum of equity and debt less cash on hand (ROIC = EBIT / (Equity + Debt - Cash)). |
o | Weighted value in award opportunity: 20% |
Example:
· | Individual opportunity is $50,000 at target; performance share opportunity (50%) is $25,000 at target; 20% of LTIP value relates to performance measure 2 (or $5,000). |
· | Stock price (8/31/2022) is $100.00 |
· | Threshold is 80% of target |
Performance |
| Payout % of Target |
| Vesting Shares |
| Reward Value |
| |
Threshold 80% of target | | 50 | % | 25 |
| $ | 2,500 | |
Target | | 100 | % | 50 |
| $ | 5,000 | |
Stretch at 120% of target | | 200 | % | 100 |
| $ | 10,000 | |
Plan metrics: standard performance measures are 80% threshold, 100% target and 120% maximum
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5. | Termination provisions: |
6. | Eligibility: key executives and others |
Participant | | Target % of Base Salary |
| |
Adam P. Chase | | 250% | ||
Michael J. Bourque | |
| 60% | |
Jeffery D. Haigh | | | 50% | |
Award opportunities are set annually, and the plan is subject to the approval of the Compensation and Management Development (“C&MD”) Committee and may be modified from time to time.
FY 2023 SCHEDULE
· | Q4 FY22 Board approves continuance of plan and sets grant date |
· | Q4 FY22 Goals and awards proposed by management for FY23 |
· | Q4 FY22 C&MD Committee reviews and approves FY23 plan |
· | Q1 FY23 Management presents FY22 plan achievement |
· | Q1 FY23 C&MD Committee approves FY22 results |
· | Q1 FY24 Management presents FY23 plan achievement |
· | Q1 FY24 C&MD Committee approves FY23 results |
· | Q4 FY25 Vested FY23 shares are released to participant |
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