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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): February 8, 2011
Mistras Group, Inc.
(Exact name of registrant as specified in its charter)
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Delaware
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001- 34481
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22-3341267 |
(State or other jurisdiction
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(Commission
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(IRS Employer |
of incorporation)
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File Number)
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Identification No.) |
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195 Clarksville Road
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08550 |
Princeton Junction, New Jersey
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(Zip Code) |
(Address of principal executive offices) |
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Registrants telephone number, including area code: (609) 716-4000
Not Applicable
(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 ( see General
Instruction A.2 below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d 2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02. |
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Departure of Directors or Certain Officers; Election of Directors; Appointment of
Certain Officers; Compensatory Arrangements of Certain Officers. |
The Compensation Committee of the Board of Directors of Mistras Group, Inc. (Mistras or the
Company) approved an annual incentive plan and a long-term compensation plan for its executive
officers. These plans are being instituted for the fiscal year ending May 31, 2011. The financial
targets used to determine awards for fiscal year 2011 are based upon the Companys operating budget
established at the beginning of fiscal year 2011. A description of the awards under each of the
plans is set forth below.
Annual Incentive Plan
The annual incentive plan is a cash bonus plan pursuant to which executive officers can
earn a percentage of their base salary based upon the Companys performance against specific
metrics. The metrics can be given different weightings, and each metric has its own range for
which the senior executives can earn a maximum bonus or a portion of their annual bonus related to
that metric, down to a minimum threshold. If results are below the threshold for that metric, no
bonus can be earned for that metric.
For fiscal 2011, the metrics being used are (i) EBITDAS, defined as net income before interest,
taxes, depreciation, amortization and non-cash stock-based compensation expense, which accounts for
50% of the bonus, and (ii) revenue, which accounts for 30% of the bonus. The remaining 20% of the
bonus potential is discretionary, based upon the individual executive officers performance. For
the Chief Executive Officer, Chief Financial Officer, the General Counsel, and other executive
officers who are not responsible for one particular business unit or segment, the metrics are based
100% on the Companys performance. For the Group Executive Vice Presidents and other executive
officers whose primarily responsibilities are to manage a business unit or segment, the EBITDAS and
revenue metrics are based 75% on their specific business unit or segments performance and 25% on
the Companys performance.
Each executive has a maximum bonus potential that he can earn, which is a percentage of his base
salary. If performance for a specific metric is below the level for maximum payout, a lesser
percentage for the portion of the bonus related to that metric will be earned, to a minimum payout
of 25% of the maximum bonus potential if the performance level for that metric is at the minimum
threshold level. The Compensation Committee will determine the discretionary portion of the award
for the Chairman and Chief Executive Officer. The Chairman and Chief Executive Officer, in
consultation with the Compensation Committee, will determine the discretionary portion of the
awards for the other executive officers.
The following sets forth the bonus ranges and allocations for each of the named executive
officers of the Company for the annual incentive plan:
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Bonus Range as a |
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Allocation of Bonus |
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Percentage of Base |
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Business Unit |
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Business Unit |
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Name and Principal Position |
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Salary* |
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Corporate EBITDAS |
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Corporate Revenue |
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EBITDAS |
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Revenue |
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Discretionary |
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Sotirios J. Vahaviolos
Chairman, President and Chief
Executive Officer |
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17% 85 |
% |
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50 |
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30 |
% |
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20 |
% |
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Francis Joyce
Executive Vice President,
Chief Financial Officer and
Treasurer |
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12% 60 |
% |
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50 |
% |
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30 |
% |
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20 |
% |
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Michael J. Lange
Group Executive Vice
President, Services |
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15% 75 |
% |
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12.5 |
% |
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7.5 |
% |
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37.5 |
% |
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22.5 |
% |
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20 |
% |
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Dennis Bertolotti
President and Chief Operating
Officer, Services |
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13% 65 |
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12.5 |
% |
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7.5 |
% |
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37.5 |
% |
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22.5 |
% |
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20 |
% |
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Michael C. Keefe
Executive Vice President,
General Counsel and Secretary |
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13% 65 |
% |
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50 |
% |
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30 |
% |
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20 |
% |
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Assumes (a) for the minimum bonus, achievement of each metric at the threshold level for minimum
payout and $0 award for discretionary portion, and (b) for the maximum bonus, achievement of each
metric at or above the level for maximum payout and maximum bonus for the discretionary portion. |
Phil Cole, the Companys other named executive officer, will participate in a pool of awards that
will be allocated among the presidents and managing directors of the Companys international
subsidiaries.
Long-Term Plan
The Companys long-term compensation plan for its executive officers will award executive officers
restricted stock units (RSUs) based upon the Companys performance against specific metrics. Each
executive officer has a range, in terms of dollar value, he may receive in RSUs at the end of the
fiscal year. The dollar value is based upon a range of percentages of his base salary. The
Companys performance against these various metrics will determine what percentage, if any, of the
executive officers base salary he will receive in RSUs. The
RSUs an executive officer receives
will vest 25% per year on each one-year anniversary date of the issuance of the RSUs.
For fiscal 2011, the metrics being used are (i) EBITDAS (the same term as used for the annual
incentive plan), which accounts for 40% of the award, (ii) revenue, which accounts for 20% of the
award, and (iii) Free Cash Flow (which is net cash flows from operations, minus all capital
expenditures, whether paid in cash or financed), which accounts for 20% of the award. If results
are below a minimum threshold level for that metric, no award can be earned for that metric. The
remaining 20% of the award potential is discretionary, based upon the individual executive
officers performance.
Each executive has a maximum award potential that he can earn, which is a percentage of his base
salary. If performance for a specific metric is below the level for a maximum award, a lesser
percentage for the portion of the award related to that metric will be earned, to a minimum
of 25% of the maximum award potential if the performance level for that metric is at the minimum
threshold level. The Compensation Committee will determine the discretionary portion of the award
for the Chairman and Chief Executive Officer. The Chairman and Chief
Executive Officer, in consultation with the Compensation Committee, will determine the
discretionary portion of the awards for the other executive officers.
The following sets forth the award ranges and allocations for each of the named executive officers
of the Company for the long-term plan:
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Award Range as a |
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Percentage of Base |
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Name and Principal Position |
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Salary* |
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Sotirios J. Vahaviolos
Chairman, President and Chief Executive Officer |
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36% 180 |
% |
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Francis Joyce
Executive Vice President, Chief Financial Officer
and Treasurer |
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15% 75 |
% |
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Michael J. Lange
Group Executive Vice President, Services |
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20% 100 |
% |
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Dennis Bertolotti
President and Chief Operating Officer, Services |
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17% 85 |
% |
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Michael C. Keefe
Executive Vice President, General Counsel and
Secretary |
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16% 80 |
% |
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Assumes (a) for the minimum award, achievement of each metric at the threshold level for minimum
award and $0 award for discretionary portion, and (b) for the maximum award, achievement of each
metric at or above the level for maximum award and maximum award for the discretionary portion. |
Phil Cole, the Companys other named executive officer, will participate in a pool of awards that
will be allocated among the presidents and managing directors of the Companys international
subsidiaries.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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MISTRAS GROUP, INC.
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Date: February 14, 2011 |
By: |
/s/ Michael C. Keefe
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Name: |
Michael C. Keefe |
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Title: |
Executive Vice
President,
General
Counsel and Secretary |
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