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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

SCHEDULE 14A

(RULE 14a-101)

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE

SECURITIES EXCHANGE ACT OF 1934

Filed by the Registrant

Filed by a party other than the Registrant

Check the appropriate box:

Preliminary proxy statement

Confidential, for use of the Commission only (as permitted by Rule 14a-6(e)(2))

Definitive proxy statement

Definitive additional materials

Soliciting material pursuant to Sec. 240.14a-12

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CECO ENVIRONMENTAL CORP.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

Payment of filing fee (Check the appropriate box):

No Fee Required

Fee paid previously with preliminary materials:

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

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April __, 2024

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Jason DeZwirek

Chairman of the Board

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Todd Gleason

Chief Executive Officer

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Dear Stockholder:

We are pleased to invite you to attend CECO Environmental Corp.’s (“CECO” or the “Company”) Annual Meeting of Stockholders at 8:00 a.m. Central Time on Monday, May 20, 2024 to be held solely through virtual participation via webcast at www.virtualshareholdermeeting.com/CECO2024 (the “Annual Meeting”). We continue to embrace the latest technology to provide expanded access, improved communication, and cost savings. We believe hosting a virtual meeting enables increased stockholder attendance and participation from locations around the world. Stockholders attending the virtual meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting. Further information on attending, voting, and submitting questions at the Annual Meeting is included in the accompanying Notice of Annual Meeting and Proxy Statement.

Our Board supported the tremendous progress achieved in 2023

The Company achieved numerous financial records including the highest revenues in our history, as well as record bookings and backlog levels. Additionally, we continued to put in place more resources to support our global expansion and to sustain our performance. The result for our stockholders was a share price that once again greatly outperformed our industrial peer group and the broader stock market. We remain committed to creating stockholder value and ensuring our performance reflects the growth opportunities that we believe exist in the global marketplace.

Our Board is highly engaged in our enterprise strategy and business transformation

CECO has a focused growth strategy to advance in Industrial Air, Industrial Water and Energy Transition. To maximize the Company’s leadership, the Board established an M&A Committee to work closely with management and develop a robust pipeline of strategic transactions. In 2023, we closed three strategic acquisitions, expanding our international market leadership. The Company enters 2024 with a very balanced portfolio and stronger leadership positions in niche industries that we believe have attractive longer term growth profiles.

Our Board is adding more expertise

We believe our directors bring a well-rounded variety of diversity, skills, qualifications, and experiences, and represent an effective mix of Company knowledge and fresh perspectives. In September 2023, we announced the appointment of Laurie Siegel to the CECO Board of Directors. Laurie brings to the Company substantial experience as a human resources executive with large global enterprises as well as substantial public company board experience.

Your vote is important to us, regardless of whether you plan to participate virtually during the Annual Meeting. We have included voting instructions within these materials and request that you vote as soon as possible.

On behalf of our entire Board of Directors, we thank you for your continued ownership and support of CECO Environmental Corp. and our mission to protect people, the environment and industrial equipment.

THESE PROXY SOLICITATION MATERIALS AND CECO ENVIRONMENTAL CORP.’S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED DECEMBER 31, 2023, INCLUDING THE RELATED FINANCIAL STATEMENTS, WERE FIRST MADE AVAILABLE TO STOCKHOLDERS ON OR ABOUT APRIL __, 2024.

CECO ENVIRONMENTAL CORP.

NOTICE OF 2024 ANNUAL MEETING OF STOCKHOLDERS

    

WHEN

   

   

We are taking advantage of the Securities and Exchange Commission ("SEC") rules allowing us to furnish proxy materials to stockholders on the internet. We believe that this method of delivery is more efficient and reduces the environmental impact of our Annual Meeting. Accordingly, we are mailing to stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access and review our proxy materials, and to vote online. The proxy materials consist of: (1) this Notice of 2024 Annual Meeting of Stockholders; (2) the Proxy Statement for the Annual Meeting (the “Proxy Statement”); and (3) the CECO Environmental Corp. 2023 Annual Report to Stockholders. If you would like to receive a paper copy of our proxy materials, please follow the instructions for requesting these materials in the Notice of Internet Availability of Proxy Materials or in the Proxy Statement. This Proxy Statement is furnished in connection with the solicitation by the Board of Directors of CECO Environmental Corp., a Delaware corporation (“we,” “us,” “our,” or the “Company”), of proxies to be voted at the Annual Meeting to be held via webcast at 8:00 a.m., Central Time, on May 20, 2024, or any postponement or adjournment thereof.

For more information about the Annual Meeting, please refer to the “Additional Information About the Annual Meeting” section found within the proxy statement.

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Monday, May 20, 2024

8AM (CT)

ADMISSION

AGENDA:

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Via live audio webcast, please visit:

www.virtualshareholdermeeting.com/CECO2024

1    To elect eight directors for a one-year term.

2    To approve the proposed amendment to the Company’s Certificate of Incorporation to incorporate Delaware law provisions regarding officer exculpation.

3   To approve, on an advisory basis, the compensation of our named executive officers.

4    To ratify the appointment of BDO USA, P.C. (f/k/a BDO USA, LLP) as our independent registered public accounting firm for 2024.

5    To transact such other business as may properly come before the meeting or any postponements or adjournments thereof.

WHO MAY VOTE

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Stockholders of record at the close of business on March 25, 2024.

Your vote is important to us. Whether or not you plan to attend the Annual Meeting online, we urge you to submit your vote now via the Internet, telephone, or mail. We appreciate your continued support.

Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on May 20, 2024

This Proxy Statement and the CECO Environmental Corp. 2023 Annual Report to Stockholders, which includes our Annual Report on Form 10-K, are available at https://investors.cecoenviro.com. The content on any website referred to in this Proxy Statement is not incorporated by reference into this Proxy Statement.

BY INTERNET

www.proxyvote.com

BY TELEPHONE

1-800-690-6903

BY MAIL

Mail your signed proxy card

By Order of the Board of Directors

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Jason DeZwirek

Chairman of the Board of Directors

April __, 2024

PROXY SUMMARY

This summary highlights selected information contained in this Proxy Statement. Please read this entire Proxy Statement carefully before voting your shares. On April __, 2024, we began to mail to our stockholders of record, as of the close of business on March 25, 2024, either a notice containing instructions on how to access this Proxy Statement and our Annual Report through the Internet or a printed copy of these proxy materials. For more complete information regarding the Company’s 2023 performance, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Who We Are

CECO Environmental is a leading environmentally focused, diversified industrial company serving the broad landscape of industrial air, industrial water and energy transition markets globally providing innovative solutions and application expertise.

CECO helps companies grow their business with safe, clean, and more efficient solutions that help protect people, the environment and industrial equipment.

CECO solutions improve air and water quality, optimize emissions management, and increase energy efficiency for highly-engineered applications in power generation,

    

midstream and downstream hydrocarbon processing and transport, electric vehicle production, polysilicon fabrication, semiconductor and electronics, battery production and recycling, specialty metals and steel production, beverage can, water/wastewater treatment and a wide range of other industrial end markets.

We produce products to help protect the air we collectively breathe, maintain clean and safe operations for employees, lower energy consumption and minimize waste for customers, and ensure they meet regulatory compliance standards for toxic emissions, fumes, volatile organic compounds, and odors.

Virtual Annual Meeting

WHEN

ADMISSION

WHO MAY VOTE

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Monday, May 20, 2024
8AM (CT)

Via live audio webcast,
please visit:
www.virtualshareholdermeeting.com/CECO2024

Stockholders of record at the close of business on March 25, 2024

    

MATTERS TO BE VOTED

PROPOSALS

BOARD RECOMMENDATION

1

To elect eight directors for a one-year term.

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FOR each director nominee.

2

To approve the proposed amendment to the Company’s Certificate of Incorporation to incorporate Delaware law provisions regarding officer exculpation.

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FOR the approval of the proposed amendment to the Company’s Certificate of Incorporation to incorporate Delaware law provisions regarding officer exculpation.

3

To approve, on an advisory basis, the compensation of our named executive officers.

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FOR the approval, on an advisory basis, of the compensation of our named executive officers.

4

To ratify the appointment of BDO USA, P.C. (f/k/a BDO USA, LLP) as our independent registered public accounting firm for 2024.

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FOR the ratification of the appointment of BDO USA, P.C. (f/k/a BDO USA, LLP) as our independent registered public accounting firm for 2024.

DIRECTOR NOMINEES

HIDDEN_ROW

Age

Director
Since

Committees

Qualifications

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JASON DEZWIREK
Chairman of the Board
CECO Environmental Corp

53

1994

Mergers and Acquisitions

Nominations and Governance

Operations
Technology
Management
Strategy

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TODD GLEASON

Chief Executive Officer
CECO Environmental Corp

53

2020

Mergers and Acquisitions

Financial
Business
Executive Leadership

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ROBERT E. KNOWLING, JR.

Chairman
Eagles Landing Partners

68

2022

Compensation
(Chair)

Mergers and Acquisitions (Chair)

Business
Executive Leadership
Merger and Acquisition
Compensation

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CLAUDIO A. MANNARINO

President
Sette CS Inc

53

2015

Audit

Compensation

Financial
Strategy
Merger and Acquisition

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MUNISH NANDA

Former President, Americas & Europe

Watts Water Technologies, Inc.

59

2018

Audit

Nominations and Governance

Operations
Fluid Handling
Energy
Manufacturing

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VALERIE GENTILE SACHS

Former Vice President, General Counsel and Corporate Secretary
OM Group, Inc.

68

2016

Compensation

Nominations and Governance (Chair)

Legal
Management
Governance
Compliance
Compensation

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LAURIE A. SIEGEL

President
LAS Advisory Services.

67

2023

Compensation

Executive Leadership
Compensation
Human Resources

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RICHARD F. WALLMAN

Former Senior Vice President and Chief Financial Officer
Honeywell International, Inc.

72

2021

Audit (Chair)

Mergers and Acquisitions

Financial
Executive Leadership
Management

Board Diversity

8



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33%

INDEPENDENT

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7 of 8

WOMEN OR MINORITIES

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50%

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BUSINESS PERFORMANCE AND FINANCIAL HIGHLIGHTS

As an engineering and services company focused on helping our customers meet or exceed regulatory or self-appointed environmental targets, we understand that we have a responsibility to reduce our internal environmental footprint. We are also committed to ensuring that we are fostering an engaged workforce and strong processes around controls and transparency.

REVENUE

$545M
29% YOY

   

ORDERS

$583M
11% YOY

   

EARNINGS PER SHARE

$0.37
26% YOY ($0.13 YOY)

FREE CASH FLOW

GROSS PROFIT

BACKLOG

ADJUSTED EBITDA

$36M
$33% YOY

   

$171M
33% YOY

   

$371M
19% YOY

   

$58M
37% YOY

GOVERNANCE HIGHLIGHTS

BOARD AND GOVERNANCE PRACTICES

Size of the Board. The Company’s Bylaws provide that the Board will be not less than 3 nor more than 9 directors.

Majority of Independent Directors. It is the policy of the Board that a majority of the directors will not be current employees of the Company and will otherwise meet appropriate standards of independence.

Management Directors. The Board anticipates that the Company’s Chief Executive Officer (“CEO”) will be nominated annually to serve on the Board.

Chairman; Lead Independent Director. The Board will appoint a Chairman. All directors, including the CEO, are eligible for appointment as the Chairman.

Selection of Nominees to the Board of Directors. The Board, through the Nominations and Governance Committee, is responsible for the selection of nominees for election or appointment to the Board.

Board Membership Criteria. Nominees for the Board should be committed to enhancing long-term stockholder value and must possess a high level of personal and professional ethics, sound business judgment and integrity.

Board Compensation. The Board, through the Compensation Committee, reviews, with the assistance of management (including the CEO), and the Compensation Committee-retained compensation consultant, policies for the directors serving on the Board and its committees.

Other Board Memberships. Without prior approval from the Board, no director may serve on more than four public corporation boards (including the Company’s Board).

Board Evaluations. The Board shall conduct a self-evaluation at least annually.

Attendance. Absent unusual circumstances, each director is expected to attend all meetings of the Board and all meetings of any committee on which such director serves.

Independent and Non-Management Directors Discussions. It is the policy of the Board that the independent members of the Board meet separately after each Board meeting to discuss such matters as the independent directors consider appropriate.

Board Presentations and Access to Information. The Board encourages the presentation at meetings by managers who can provide additional insight into matters being discussed and the CEO will occasionally ask high-potential employees to present to the Board to give these individuals exposure to the Board.

Director Stock Ownership. To further align the interests of non-management directors and stockholders, each non-management director is required to own shares of the Company’s common stock having a value equal to at least three times the non-management director’s regular annual cash retainer.

CEO Stock Ownership. To further align the interests of the CEO and stockholders, the CEO is required to own shares of the Company’s common stock having a value equal to at least five times his or her base salary.

Management Succession and Development Planning. The CEO reviews with the Board succession and development plans for senior executive officers. The Board discusses CEO succession planning annually.

COMPENSATION HIGHLIGHTS

1

   

2

During 2023, our Compensation Committee continued to administer executive compensation programs that it considers to be competitive in the market for talent and aligned with industry best practices and the long-term interests of our stockholders.

 Our annual performance-based cash incentive compensation program is typically designed to reward our management team (including our named executive officers (“NEOs”)) for achievement of certain pre-established, short-term financial and/or operational goals. For 2023, the performance objectives under our performance-based incentive program consisted of Adjusted EBITDA (50)%, Revenue (25)% and Free Cash Flow (25)%, in each case established by reference to the Company’s annual operating plan.

3

   

4

Performance-based restricted stock units (“PRSUs”) that were granted in 2023 under our long-term equity incentive program require attainment of relative total shareholder return (“Relative TSR”) goals during the 2023-2025 performance period for a specific percentage of those PRSUs to vest. We also granted time-based restricted stock units (“RSUs”) in 2023 to our NEOs. These RSUs have a four-year vesting period, with 25% vesting annually on each anniversary date.

Our Compensation Committee has engaged an independent executive compensation consultant to provide advice on compensation matters. In 2023, we engaged our independent compensation consultant to conduct a market analysis of the compensation of all our executive officers and the entire Board’s total cash compensation and equity retainer against the general market and our peer group.

5

   

6

   

7

Our stock ownership guidelines apply to all executive officers, including our named executive officers. Our CEO is required to own shares of our stock or stock equivalents having a value equal to five times his base salary. Our other NEOs are required to own shares of our stock or stock equivalents having a value equal to three times their base salary.

During 2023, we adopted an updated clawback policy governing the recovery of erroneously awarded incentive-based compensation consistent with the requirements of the SEC and NASDAQ. The policy provides that, if we are required to prepare a qualifying accounting restatement, then, unless an exception applies, we will recover any excess incentive-based compensation paid to covered officers.

We use tally sheets when determining executive compensation.

8

We provide very few perquisites.

TABLE OF CONTENTS

Page

INFORMATION ABOUT THE ANNUAL MEETING

1

PROPOSAL 1 ELECTION OF DIRECTORS

2

Directors and Nominees

2

ESG Oversight

13

Attributes And Experience

3

Director Qualifications and Diversity

13

Our Board and Its Committees

8

2023 Director Compensation

15

Director Independence

8

PROPOSAL 2 APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCORPORATE DELAWARE LAW PROVISIONS REGARDING OFFICER EXCULPATION

17

Background Of The Proposed Amendment

17

Additional Information

18

Rationale For The Proposed Amendment

17

PROPOSAL 3 ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

19

EXECUTIVE COMPENSATION

20

Compensation Discussion and Analysis

20

2023 Option Exercises and Stock Vested Table

35

Compensation Committee Report

33

Potential Payments Upon Termination or Change in Control

36

2023 Summary Compensation Table

33

Chief Executive Officer Pay Ratio

38

2023 Grants of Plan-Based Awards

34

Pay Versus Performance

39

2023 Outstanding Equity Awards at Fiscal Year-End Table

35

PROPOSAL 4 RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

42

AUDIT MATTERS

43

Audit Committee Report

43

Independent Registered Public Accounting Firm Fees

43

OTHER INFORMATION

44

Management Ownership

44

Other Security Ownership

45

Compensation Committee Interlocks and Insider Participation

45

INFORMATION FOR OUR 2025 ANNUAL MEETING

46

QUESTIONS AND ANSWERS ABOUT OUR 2024 ANNUAL MEETING

48

APPENDIX

A-1

Certificate of Amendment to the Certificate of Incorporation of CECO Environmental Corp.

A-1

Supplementary Reconciliation of Non-GAAP Financial Measures

A-3

RTSR Peer Group Entities

A-2

Table of Contents

CECO ENVIRONMENTAL

INFORMATION ABOUT THE ANNUAL MEETING

Attendance and Participation

Our Annual Meeting will be conducted on the internet via webcast only. Stockholders attending the Annual Meeting will be afforded the same rights and opportunities to attend and participate as they would at an in-person meeting, and will be able to submit questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/CECO2024. Stockholders who would like to attend and participate in the Annual Meeting will need the 16-digit control number included on their proxy card or voting instruction form. The Annual Meeting will begin promptly at 8:00 a.m. Central Time. We encourage you to access the Annual Meeting prior to the start time. Online access will begin at 7:45 a.m. Central Time.

The Annual Meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Stockholders should ensure that they have a strong internet connection if they intend to attend and/or participate in the Annual Meeting. Attendees should allow plenty of time to log in and ensure that they can hear streaming audio prior to the start of the Annual Meeting.

Questions and Information Accessibility

Stockholders may submit questions during the Annual Meeting. If you wish to submit a question, you may do so by logging into the virtual meeting platform at www.virtualshareholdermeeting.com/CECO2024, typing your question into the “Ask a Question” field, and clicking “Submit.”

Questions pertinent to the Annual Meeting will be answered during the Annual Meeting, subject to time constraints. Any such questions that cannot be answered during the Annual Meeting due to time constraints will be posted and answered on our Investor Relations website, https://investor.cecoenviro.com/, as soon as practicable after the Annual Meeting.

Additional information regarding the ability of stockholders to ask questions during the Annual Meeting, related rules of conduct and other materials for the Annual Meeting, will be available at www.virtualshareholdermeeting.com/CECO2024. Stockholders may view the list for such purposes 10 days prior to the meeting by contacting Investor.Relations@OneCECO.com.

Technical Difficulties

Information regarding matters addressing technical and logistical issues, including technical support during the Annual Meeting, will be available at www.virtualshareholdermeeting.com/CECO2024 starting at 7:45 a.m. Central Time on May 20, 2024, through the conclusion of the Annual Meeting.

We will provide a copy of our proxy materials for the Annual Meeting to any stockholder without charge upon written request addressed to CECO Environmental Corp., to the attention of the Corporate Secretary, 14651 N. Dallas Parkway, Suite 500, Dallas, Texas 75254 or by phone at (214) 357-6181. Any stockholder may also receive a copy of our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC, without exhibits, upon written request to the address above.

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2024 Proxy Statement

1

Table of Contents

CECO ENVIRONMENTAL

PROPOSAL 1

ELECTION OF DIRECTORS

Directors and Nominees

Our Board of Directors (“Board”) currently consists of eight directors, each serving a one-year term. Upon the recommendation of the Nominations and Governance Committee of the Board, our Board has proposed the re-election of each of the existing directors to serve as directors until the next annual meeting or until their successors have been duly elected and qualified. If, for any reason, any nominee should become unable or unwilling to serve as a director, our Board may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the persons named in the proxy card may exercise their discretion to vote your shares for the substitute nominee. The following table lists all of the director nominees.

The Board recommends a vote FOR each nominee for Director

Name (1)

Director
Since

Independent

Audit
Committee

Compensation
Committee

Nominations &
Governance
Committee

M&A Committee

Jason DeZwirek
Chairman of the Board

1994

Todd Gleason
Chief Executive Officer

2020

Robert E. Knowling, Jr.

2022

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Claudio A. Mannarino

2015

Munish Nanda

2018

Valerie Gentile Sachs

2016

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Laurie Siegel

2023

Richard F. Wallman

2021

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GraphicChair

(1)These are the committee assignments as of the date of this Proxy Statement.

2

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2024 Proxy Statement

Table of Contents

CECO ENVIRONMENTAL

ATTRIBUTES AND EXPERIENCE

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EXECUTIVE

RISK MANAGEMENT

CORPORATE GOVERNANCE

FINANCE

100%

57%

57%

43%

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TECHNOLOGY &
INNOVATION

INTERNATIONAL

CYBERSECURITY

57%

100%

38%

Our Board believes that collectively our directors provide the diversity of experience and skills necessary for a well-functioning board. Our Board values highly the ability of individual directors to contribute to a constructive board environment and believes that our current directors perform in such a manner. Below is a description of each director nominee’s background, professional experience, qualifications and skills.

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2024 Proxy Statement

3

Table of Contents

CECO ENVIRONMENTAL

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Jason DeZwirek

Chairman of the Board | CECO Environmental Corp.

Age: 53

Director Since:1994

Board Committees: Nominations and Governance and Mergers & Acquisitions

Other Directorships: N/A

Professional Experience

CECO Environmental Corp

Chairman of the Board since May 2013
Secretary of our Company from February 1998 until September 2013

API Technologies Corp.

Served as a director and corporate secretary
Served as a prime contractor in electronics, highly engineered systems, secure communications and electronic components and sub-systems for the defense and aerospace industries, from November 2006 through January 2011

Kaboose Inc.

Founder
Served as the Chairman and CEO of Kaboose Inc. until its sale to Disney Online (a subsidiary of The Walt Disney Company) and Barclays Private Equity Limited in June 2009
Mr. DeZwirek also is and has been involved in private investment activities

Mr. DeZwirek brings broad executive expertise, including operations, technology, management, and strategy. Having served as a director of our Company for over 25 years, he also has a breadth of knowledge of the overall issues our Company faces.

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Todd Gleason

Chief Executive Officer | CECO Environmental Corp.

Age: 53

Director Since:2020

Board Committees: Mergers & Acquisitions

Other Directorships: NSF

Professional Experience

CECO Environmental Corp

Chief Executive Officer since July 2020

Scientific Analytics Inc.

Served as President and Chief Executive Officer of Scientific Analytics, a predictive analytic technologies and services company, from April 2015 to July 2020

Pentair plc.

Senior Vice President and Corporate Officer from January 2013 to March 2015
President, Integration and Standardization from January 2010 to January 2013
Vice President, Global Growth and Investor Relations from June 2007 to January 2010

American Standard Companies Inc.

Served as Vice President, Strategy and Investor Relations

Honeywell International Inc

Served as Chief Financial Officer, Honeywell Process Solutions

Mr. Gleason’s qualifications to sit on the Board include his financial and business background, as well as his extensive executive and leadership experience.

4

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2024 Proxy Statement

Table of Contents

CECO ENVIRONMENTAL

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Robert E. Knowling, Jr.

Chairman | Eagles Landing Partners

Age: 68

Director Since: 2022

Board Committees: Compensation (Chair) and Mergers & Acquisitions (Chair)

Other Directorships: Rite Aid Corporation, Stride, Inc., Rocket Software and Stream Companies

Professional Experience

Eagles Landing Partners

Chairman of Eagles Landing Partners, which specializes in helping senior management formulate strategy, lead organizational transformations, and re-engineer businesses, since 2009

Telwares

Served as Chief Executive Officer from 2005 to 2009

Served as Chief Executive Officer of the New York City Leadership Academy, an independent nonprofit corporation that is chartered with developing the next generation of principals in the New York City public school system, from 2002 to 2005
Served as Chairman and Chief Executive Officer of SimDesk Technologies, a computer software company, from 2001 to 2003
Served as Chairman, President and Chief Executive Officer of Covad Communications, a Warburg Pincus private equity-backed start-up company
Previously served on the board of directors of Citrix Systems Inc., Roper Technologies Inc. and HP

Mr. Knowling brings to the Board extensive experience in executive management and leadership roles, including experience leading companies through periods of high growth and organizational turnaround. In addition, his service on a number of other public company boards of directors enables Mr. Knowling to share insights with the Board regarding corporate governance best practices.

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Claudio A. Mannarino

President | Sette CS Inc

Age: 53

Director Since: 2015

Board Committees: Audit and Compensation

Other Directorships: N/A

Professional Experience

Sette CS Inc

President of Sette CS, a management consulting firm, since 2016

API Technologies Corp

Served as the Senior Vice President and Chief Financial Officer from June 2014 to November 2015
He also served as API’s Senior Vice President, Finance from January 2010 to June 2014 and as its Chief Financial Officer and Vice President of Finance from November 2006 to January 2010

He served in various, senior-level management roles throughout API’s finance organization

Transcontinental, Inc

Served as Controller for two divisions
A Canadian publicly traded company on the Toronto Stock Exchange

Mr. Mannarino brings over 25 years of financial, strategic and merger and acquisition expertise to our Board, which assists us as we expand our business.

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Munish Nanda

Former President, Americas & Europe | Watts Water Technologies, Inc.

Age: 59

Director Since: 2018

Board Committees: Audit and Nominations and Governance

Other Directorships: N/A

Professional Experience

Americas & Europe of Watts Water Technologies, Inc

Served as President of Americas & Europe of Watts Water, a global manufacturer of plumbing, heating, and water quality products, from 2016 to 2023

ITT Corporation

Served as President of Control Technologies for ITT Corporation from April 2011 to March 2015
Served as Group Vice President of ITT Corporation’s Fluid and Motion Control Group from April 2008 to April 2011

Thermo Fisher Scientific Corporation and Honeywell International Inc

Earlier in his career, Mr. Nanda held several operating leadership and general management positions with Thermo Fisher Scientific Corporation, Honeywell International Inc. and W.L. Gore & Associates.

Mr. Nanda brings over 25 years of experience working in senior operational management roles for global industrial manufacturers, which assists us as we continue to grow and streamline our business. Mr. Nanda also brings extensive experience in the fluid handling, energy, and other niche manufacturing industries including medical electronics, defense and aerospace.

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Valerie Gentile Sachs

Former Vice President, General Counsel and Corporate Secretary | OM Group, Inc.

Age: 68

Director Since: 2016

Board Committees: Compensation and Nominations and Governance (Chair)

Other Directorships: NACCO Industries, Inc.

Professional Experience

OM Group, Inc

Served as the Vice President, General Counsel and Corporate Secretary
She also served on the boards of directors and acted as Managing Director of numerous U.S. and non-U.S. entities affiliated with OM Group

Marconi plc

Served as General Counsel

Ms. Sachs brings a combination of legal expertise, extensive executive management and leadership experience to our Board. She has been an integral part of executive management teams that have effectively worked through strategic transitions, integrations and restructurings and is very familiar with international operating challenges and opportunities. As the former General Counsel of three public companies, she has developed expertise in the areas of governance, compliance, and executive compensation, which provides strong support and additional depth to our Board and to the committees on which she serves.

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Laurie A. Siegel

President | LAS Advisory Services

Age 67

Director Since: 2023

Board Committees: Compensation

Other Directorships: Lumen Technologies and Factset Research Systems, Inc.

Professional Experience

LAS Advisory Services

Serves as the President since 2012

Tyco International Ltd.

Served as Senior Vice President of Human Resources and Internal Communications from 2003 to 2012

Honeywell International, Inc.

Served as Vice President of Human Resources – Specialty Materials

Previously served on the board of directors of California Resources Corporation and Volt Information Sciences, Inc.

Ms. Siegel was first identified as a candidate for director by another currently serving director and was appointed to the Board effective September 6, 2023. Ms. Siegel brings to CECO’s Board substantial experience as a human resources executive with large global enterprises as well as substantial public company board experience.

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Richard F. Wallman

Retired Senior Vice President and Chief Financial Officer| Honeywell International, Inc.

Age 72

Director Since: 2021

Board Committees: Audit (Chair) and Mergers and Acquisitions

Other Directorships: Charles River Laboratories International, Inc. and Roper Technologies, Inc.

Professional Experience

Honeywell International, Inc.

Served as Senior Vice President and Chief Financial Officer

Previously served on the board of directors of SmileDirectClub, Extended Stay America, Inc. and Wright Medical, Inc. all publicly traded companies in the United States and Boart Longyear, a publicly traded company in Australia

Mr. Wallman brings more than 30 years of executive leadership and management experience across a broad range of global businesses and industries and has a deep understanding of the global challenges and opportunities we will continue to face as we grow our business.

VOTE REQUIRED

In order to be elected, a nominee must receive the affirmative vote of a majority of the shares represented at the Annual Meeting in person or by proxy.

Our Board recommends a vote “FOR” the election of each director nominee named above.

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Our Board and Its Committees

Our Board has four standing committees: the Audit Committee, the Compensation Committee, the Mergers & Acquisitions Committee, and the Nominations and Governance Committee. Each of these committees operates under a written charter, which can be found on our website www.cecoenviro.com in the Investor Relations, Governance section.

Director Independence

All of our directors, other than Mr. Gleason, qualify as independent directors in accordance with the listing requirements of The NASDAQ Stock Market LLC (the “NASDAQ”). The NASDAQ independence definition includes a series of objective tests, including that the director is not an employee of our Company and has not engaged in various types of business dealings with us. In addition, our Board has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Audit Committee

Our Board has determined that Mr. Wallman qualifies as an audit committee financial expert as defined in Item 407(d)(5) of Regulation S-K of the Securities Exchange Act of 1934 (the “Exchange Act”), and that each of our Audit Committee members is independent under the applicable NASDAQ listing requirements and the rules and regulations promulgated by the SEC.

The primary purpose of our Audit Committee is to assist our Board in its general oversight of the integrity of our Company’s financial statements and of our Company’s compliance with legal and regulatory requirements.

Members:

Richard F. Wallman, Chair

Claudio Mannarino

Munish Nanda

7
Meetings in
2023

Primary Responsibilities

Our Audit Committee’s responsibilities include overseeing and reviewing:

the financial reports and other financial information;
our Company’s system of internal accounting and financial controls;
the engagement of our independent auditor; and
the annual independent audit of our financial statements.

Our Audit Committee also reviews and approves the services of our independent registered public accounting firm and evaluates transactions where the potential for a conflict of interest exists.

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Compensation Committee

Our Board has determined that each member of our Compensation Committee is independent under the applicable NASDAQ listing requirements. Our Compensation Committee oversees our executive compensation programs, with particular attention to the compensation for our Chief Executive Officer (“CEO”) and the other executive officers subject to Section 16 of the Exchange Act. The Compensation Committee's primary purpose is to assist our Board in matters related to compensation of these executive officers.

Members:

Robert E. Knowling, Jr., Chair

Claudio Mannarino

Valerie Gentile Sachs

Laurie Siegel

6
Meetings in
2023

Primary Responsibilities

Our Compensation Committee’s responsibilities include:

reviewing and approving corporate goals and objectives for the compensation of our CEO, evaluating our CEO’s performance in light of those goals and objectives, and recommending to our Board for approval our CEO's compensation level based on this evaluation; and
determining and approving the compensation of our other executive officers.

Our Compensation Committee also oversees our equity programs, including our 2021 Equity and Incentive Compensation Plan and 2020 Employee Stock Purchase Plan. The Compensation Committee's activities include reporting to our Board on all compensation matters regarding our directors and executive officers. Our Compensation Committee annually reviews and recommends to our Board for approval the compensation for our directors, executive officers and other key salaried employees. It does not generally delegate any of its authority to other persons, although it has the power to delegate certain authority as permitted by applicable law and the NASDAQ listing standards to subcommittees, our Board or management, including under our 2021 Equity and Incentive Compensation Plan. Our Compensation Committee’s processes and procedures for the consideration and determination of executive compensation, including the role of executive officers and the Compensation Committee’s independent consultant in determining or recommending the amount or form of compensation of our named executive officers, are discussed in the “Compensation Discussion and Analysis” section below.

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Nominations and Governance Committee

Our Board has determined that each member of our Nominations and Governance Committee is an independent director under the applicable NASDAQ listing requirements. Our Nominations and Governance Committee identifies individuals qualified to become Board members and makes recommendations to our Board regarding Board and committee composition, consistent with the Director Nomination Policy described below. It also recommends Board members for committee membership. A copy of the Director Nomination Policy can be found on our website www.cecoenviro.com on the Investor Relations, Governance section.

Our Bylaws provide stockholders the ability to nominate candidates for election as directors at the annual meeting of stockholders. Stockholders who wish to nominate a candidate should submit the candidate’s name and other information required by our Bylaws to our Corporate Secretary and follow the procedures stated in our Bylaws. These procedures are summarized below in “Information for Our 2025 Annual Meeting.”

In addition to the formal procedure set forth in our Bylaws for the nomination of directors by stockholders, our Nominations and Governance Committee has adopted a policy to consider stockholder recommendations of candidates for nomination to our Board that stockholders submit outside the process in the Company’s Bylaws discussed above. Our Nominations and Governance Committee will consider director candidates recommended by stockholders for inclusion on the slate of directors recommended to our Board on the same basis as candidates recommended by other sources, including evaluating the candidate against the standards and qualifications set out in our Director Nomination Policy, as well as any other criteria approved by our Board from time to time. Our Nominations and Governance Committee will determine whether to interview any candidate. Recommendations must include the candidate’s name, contact information and a statement of the candidate’s background and qualifications, and must be mailed to the following address: CECO Environmental Corp., 14651 N. Dallas Parkway, Suite 500, Dallas, Texas 75254, Attention: Corporate Secretary.

Members:

Valerie Gentile Sachs, Chair

Jason DeZwirek

Munish Nanda

3
Meetings in
2023

Primary Responsibilities

Our Nominations and Governance Committee’s responsibilities include:

identifying individuals qualified to become Board members;
making recommendations to our Board regarding Board and committee composition;
developing and recommending to our Board corporate governance principles applicable to our Company;
advising and assisting the Board with oversight of environmental, social and governance related ("ESG") matters; and
overseeing the evaluation of our Board and management.

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Mergers and Acquisitions Committee

Our Board established our Mergers and Acquisitions Committee with the primary purpose of reviewing with management periodically the Company’s strategy regarding acquisitions, dispositions, joint ventures, or mergers (“Strategic Transactions”).

Members:

Robert E. Knowling, Jr., Chair

Jason DeZwirek

Todd Gleason

Richard Wallman

2
Meetings in
2023

Primary Responsibilities

Our Mergers and Acquisitions Committee’s responsibilities include:

reviewing with management the Company’s strategy for Strategic Transactions;
reviewing with management the material details of any proposed Strategic Transaction, including how such transaction fits with the Company’s strategic plans and transaction strategy, transaction timing, important transaction milestones, financing, key risks and opportunities and the integration plan (including the ROI);
providing the Board such additional information and materials as appropriate to assist the Board in its evaluation or understanding of any Strategic Transaction; and
reviewing and discussing with management, after consummation of any Strategic Transaction, the execution, the financial performance, and the integration of such Strategic Transaction, including relative to information presented by management in connection with the approval of such transaction and the Company’s strategic objectives.

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Meeting Attendance

During 2023, our Board held 7 regular meetings. Directors are expected to regularly attend Board meetings and meetings of committees on which they serve, as well as the annual meeting of stockholders. Each director attended 100% of the total number of Board meetings, and 100% of all applicable committee meetings, during each director’s tenure on the Board. Our Board's policy regarding directors’ attendance at the Annual Meeting is that directors are encouraged to attend, and that we will make all appropriate arrangements for directors to attend. All of the directors, other than Ms. Siegel, who was not a director at the time, attended our 2023 Annual Meetings of Stockholders.

Board Leadership Structure and Risk Oversight

The positions of Chairman of the Board and Chief Executive Officer are held by different individuals: Mr. DeZwirek serves as Chairman and Mr. Gleason serves as Chief Executive Officer. Although our Bylaws provide that any two or more offices may be held by the same person, our Board believes that the current separation of the offices of Chief Executive Officer and Chairman reflects the difference in the roles of those positions. Our Chief Executive Officer is responsible for determining the strategic direction and the day-to-day leadership of our Company. Our Chairman facilitates and provides leadership to our Board and executive management and ensures they are focused on key issues. The Chairman of the Board shares a common understanding of the organization with the executive management and provides focus to ensure our Board is effective in its task of setting and implementing the Company’s strategy.

The separation of the roles of Chief Executive Officer and Chairman and the independence of a majority of our Board help ensure independent oversight of management. All of our directors, other than the Chief Executive Officer, Mr. Gleason, qualify as independent under the applicable NASDAQ listing requirements. Our Audit Committee, Compensation Committee, and Nominations and Governance Committee — are comprised entirely of independent directors. Additionally, the non-management directors regularly meet in executive session, and the independent directors meet in executive session, as required.

Our management is responsible for identifying, assessing, and managing the material risks facing our Company. Our Board performs an important role in the review and oversight of these risks and generally oversees our Company’s risk management practices and processes, with a strong emphasis on financial controls. Our Board has delegated primary oversight of the management of (i) financial and accounting risks and related-party transaction risks to our Audit Committee, (ii) compensation risk to our Compensation Committee, and (iii) ESG risk to our Nominations and Governance Committee. To the extent that the Audit Committee, Compensation Committee or the Nominations and Governance Committee identifies any material risks or related issues, the risks or issues are addressed with the full Board.

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ESG Oversight

Environmental, Social and Governance Matters

We believe that the Company is able to advance ESG-related considerations and that sound corporate citizenship includes responsiveness to ESG issues that materially impact our stakeholders and the communities in which we operate. We are committed to operating our business with integrity; focusing on material ESG issues; giving back to the communities we serve; being environmentally conscious; and improving the lives of workers involved in manufacturing our products. Our Nominations and Governance Committee has formal oversight of ESG related matters, including our governance-related policies and strategies on which we advance sustainability through our business and operations.

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Environmental

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Social

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Governance

Reduced energy consumption in our manufacturing operations
Continued investment in recycling programs across office and manufacturing operations
Continued efforts to reduce greenhouse gas emissions
Provide products, services and solutions for our customers that lead to reduced environmental pollutant impact
Continuation of policies and training programs, and retained a proactive program of safety scorecards and best practice sharing between manufacturing sites
Maintained CECO Living WELL work program, encouraging employees to live healthier lives
Grew investment toward employee development initiatives that provide employees and leaders with tools and skills they need
Set goals to strengthen our diversity, equity and inclusion (DEI) commitments and management plan
Maintain robust set of practices and policies to ensure that our team is operating with integrity, honestly, fairness and accountability
Our Human Rights Policy reinforces our commitment to treating all people with dignity and respect
Employees and any external party can report concerns to CECO’s anonymous Ethics Hotline
Require cybersecurity awareness training
Require regular training that reinforces policies such as sexual harassment and anti-bullying

Director Qualifications and Diversity

Board Diversity Matrix (as of March 31, 2023)

Total Number of Directors

8

Female

Male

Part I: Gender Identity

Directors

2

6

Part II: Demographic Background

Asian

1

African American or Black

1

White

2

4

Our Board believes that the Board, as a whole, should have a diverse range of characteristics and skills to function at an optimal level in exercising its oversight over our Company. When evaluating a person for nomination for election to our Board, the qualifications and skills considered by our Board, including our Nominations and Governance Committee, include:

Whether the person will qualify as a director who is “independent” under applicable laws and regulations, and whether the person is qualified under applicable laws and regulations to serve as a director of our Company;
Whether the person is willing to serve as a director, and willing to commit the time necessary for the performance of the duties of a director;
The contribution that the person can make to our Board, with consideration being given to the person’s business experience, education and skills, conflicts of interest, the interplay of the candidate’s experience with that of other Board members, and such other factors as our Board may consider relevant; and
The character and integrity of the person.

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Our Board applies a broad concept of diversity, which includes all of the criteria listed in the paragraph below together with other factors such as the nominee’s experience and leadership abilities. When our Board seeks new director candidates to add to our Board or to replace directors who have resigned or recommends the re-election of incumbent directors, our Board selects director nominees on the basis of all of these criteria with the goal of finding the best match for our Board.

The Board is also committed to having a membership that reflects a diversity of gender, race, ethnicity, age and background. This commitment is demonstrated by the fact that the Board currently includes two female directors and two directors who are ethnically diverse. Our directors currently range in age from 53 to 72.

With respect to skill set diversity, our Board seeks to have directors and nominees composed of qualified professionals with a broad range of skills. Our current directors have a broad range of skills, expertise and diversity, some of which have been described in the directors’ profiles. Diversity helps to create a balanced Board to effectively develop strategies for our Company’s growth. In fact, it is the Board’s objective to take affirmative steps to enhance the Board’s diversity. This will be done over time, taking into account the valuable knowledge and experience of the present board members.

Code of Business Conduct and Ethics and Corporate Governance Guidelines

We have adopted a Code of Business Conduct and Ethics that applies to our directors and employees (including our principal executive officer, principal financial officer, principal accounting officer and persons performing similar functions) and Corporate Governance Guidelines applicable to our directors to assist our Board in following corporate guidelines that serve the best interests of our Company and stockholders. The Code of Business Conduct and Ethics and Corporate Governance Guidelines are posted on our website www.cecoenviro.com on the Investor Relations, Governance section. We will post on our website any amendments to or waivers of the Code of Business Conduct and Ethics for executive officers or directors in accordance with applicable laws and regulations. The information on or accessible through our website is not a part of or incorporated by reference into this Proxy Statement.

Insider Trading Policy

Our Insider Trading Policy, which applies to the Company and all of our directors, officers, employees, and agents, expressly prohibits buying or selling securities while in possession of material, nonpublic information about us or another company and from disclosing such information on to others who might purchase or sell securities on the basis of such information. We consider short-term or speculative transactions by our personnel involving our securities to be inappropriate. We also discourage our personnel from buying or selling our securities in margin accounts. Our Insider Trading Policy expressly prohibits the following activities with respect to our securities: short sales, including short sales against the box, buying or selling puts or calls and frequent trading to take advantage of fluctuations in stock price. The restrictions under our Insider Trading Policy also apply to immediate family and household members of our directors, officers, employees, and agents.

Our Insider Trading Policy prohibits all members of our Board and all officers and employees of the Company and its subsidiaries from engaging in hedging or monetization transactions, including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars and exchange funds, or through other transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Company securities. The policy further prohibits such persons from pledging, hypothecating or otherwise using the Company’s securities as collateral for a loan or other form of indebtedness.

Stockholder Communications with Directors

Our Board has adopted a process by which stockholders may communicate with our Board for matters other than director nominations. Stockholders who would like to communicate with our Board or a committee of our Board should send the communication to: Chairman of the Board, CECO Environmental Corp., 14651 North Dallas Parkway, Suite 500, Dallas Texas, 75254.

Our Chairman of the Board, Mr. DeZwirek, will forward such communications to our Board at or prior to its next regular meeting. Stockholders wishing to communicate only with the independent directors can address their communications to “Independent Directors, c/o Chairman of the Board” at the same address above. These communications will be forwarded to the independent directors at or prior to the next meeting of the independent directors.

Our Board or the independent directors will determine, in their respective sole discretion, the method by which any such communications will be reviewed and considered.

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2023 Director Compensation

For 2023, our non-management directors received the following compensation for their service on our Board:

Director Service

    

Compensation ($)

Annual cash retainer, paid quarterly

 

62,000

Annual equity retainer

 

100,000

Annual Chair supplement

 

  

Board Chairman

 

100,000

Audit Committee

 

30,000

Compensation Committee

 

15,000

M&A Committee

 

15,000

Nominations and Governance Committee

 

15,000

Annual Committee member supplement

 

  

Audit Committee member

 

5,000

Our Compensation Committee has determined that granting restricted stock units (“RSUs”) in lieu of cash meeting payments simplifies the directors’ compensation while promoting the ownership of our common stock. Accordingly, in June 2023, we granted to each then-serving non-management director RSUs covering 8,299 shares of our common stock. In September 2023, with her appointment to our Board, we granted Ms. Siegel RSUs covering 5,406 shares of our common stock. The RSUs generally vest on the one-year anniversary of the grant and are settled in shares of Company common stock. We also reimburse or pay our Board members their reasonable travel and out-of-pocket expenses to attend meetings. Our non-management directors are eligible to participate in the Company’s U.S. health plan with 100% of the premium payable by the enrolled director.

The following table reflects the 2023 compensation paid to each of our non-management directors. Directors that are employees of the Company do not receive additional compensation for service on the Board or as members of any of its committees.

Paid in Cash

Stock Awards 1

Compensation

Total

Name

($)

($)

($)

($)

Jason DeZwirek

156,000

 

100,003

 

 

256,003

Valerie Gentile Sachs

 

71,000

 

100,003

 

 

171,003

Robert E. Knowling, Jr. 2

63,500

100,003

163,503

David B. Liner 3

30,139

30,139

Claudio A. Mannarino

 

73,500

 

100,003

 

 

173,503

Munish Nanda

 

58,500

 

100,003

 

 

158,503

Laurie A. Siegel

19,806

74,873

94,679

Richard F. Wallman 4

 

73,500

 

100,003

 

 

173,503

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(1)This column reflects the grant date fair value of RSU awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”), disregarding estimated forfeitures, rather than amounts realized by the named individuals. Assumptions used in calculating these amounts are included in Note 9 to the Company’s consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. The stock awards shown in the table above represent the RSU awards granted to our directors in 2023. The table below shows the aggregate number of unvested RSUs and unexercised options held by each of our non-management directors as of December 31, 2023:

Name

    

RSUs (#)

    

Stock Options (#)

Jason DeZwirek

 

8,299

 

Valerie Gentile Sachs

 

8,299

 

Robert E. Knowling, Jr.

8,299

David B. Liner

Claudio A. Mannarino

 

8,299

 

Munish Nanda

 

8,299

 

Laurie A. Siegel

5,406

Richard F. Wallman

 

8,299

 

(2)Mr. Knowling has elected to forgo receiving compensation for his role as M&A chair and will only accept compensation designated for the Chair of the Compensation Committee.

(3)Mr. Liner ceased serving as a director at our 2023 Annual Meeting of Stockholders.

(4)Mr. Wallman elected to receive the cash component of his director compensation in the form of shares of the Company’s common stock.

Our Board has implemented mandatory stock ownership guidelines for non-management directors to further align the interests of non-management directors and stockholders. Each non-management director is required to own shares of our common stock having a value equal to five times the non-management director’s regular annual cash retainer (which amount currently equals 310,000). Non-management directors have five years from the date of his or her election or appointment to the Board to attain such ownership levels. As of December 31, 2023, all non-management directors met the stock ownership requirement, except for Ms. Siegel and Mr. Knowling, who have served on the Board for less than five years and thus are not yet subject to the ownership requirement. For purposes of this requirement, a non-management director’s stock ownership includes all shares of our common stock owned by the non-management director outright or held in trust for the director and the director’s immediate family, plus a non-management director’s RSUs. The value of a share is measured as the greater of the then current market price or the closing price of a share of our common stock on the acquisition or grant date.

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FOR the approval of the amendment to our Certificate of Incorporation to incorporate Delaware law provisions regarding officer exculpation.

PROPOSAL 2

APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCORPORATE DELAWARE LAW PROVISIONS REGARDING OFFICER EXCULPATION

The Board recommends a vote FOR the approval of the amendment to our Certificate of Incorporation to incorporate Delaware law provisions regarding officer exculpation.

We are asking you to approve an amendment to the Company’s Certificate of Incorporation (the “Certificate of Incorporation”) to provide for exculpation of certain officers of the Company as permitted by recent amendments to Delaware law (the “Proposed Amendment”).

Background of the Proposed Amendment

The State of Delaware, our state of incorporation, recently enacted legislation that enables Delaware corporations to limit the liability of certain of their officers in limited circumstances. Specifically, Section 102(b)(7) of the General Corporation Law of the State of Delaware (“DGCL”) was amended to authorize corporations to adopt a provision in their certificate of incorporation to eliminate or limit monetary liability of certain corporate officers, or exculpation, for breach of the fiduciary duty of care. Previously, the DGCL allowed only exculpation of directors for breach of the fiduciary duty of care. As amended, Section 102(b)(7) of the DGCL authorizes corporations to provide for exculpation of the following officers: (i) the corporation’s president, chief executive officer, chief operating officer, chief financial officer, chief legal officer, controller, treasurer or chief accounting officer, (ii) “named executive officers” identified in the corporation’s SEC filings, and (iii) other individuals who have agreed to be identified as officers of the corporation.

Section 102(b)(7) of the DGCL, as amended, only permits, and the Proposed Amendment would only permit, the exculpation of certain officers in connection with direct claims brought by stockholders, including class actions, but would not eliminate officers’ monetary liability for breach of fiduciary duty claims brought by the Company itself or for derivative claims brought by stockholders in the name of the Company. In addition, as is currently the case with directors under the Certificate of Incorporation, the Proposed Amendment would not limit the liability of officers for any breach of the duty of loyalty to the Company or its stockholders, any acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law and any transaction from which the officer derived an improper personal benefit. Article IX in the Certificate of Incorporation currently provides for the exculpation of directors, but it does not include a provision that allows for the exculpation of officers.

Rationale for the Proposed Amendment

The Board believes that it is important to provide protection from certain liabilities and expenses that may discourage prospective or current officers from accepting or continuing service with corporations. As with directors, officers frequently must make decisions in response to time-sensitive opportunities and challenges, which can create substantial risk of investigations, claims, actions, suits or proceedings seeking to impose liability on the basis of hindsight.

The Board also believes the Proposed Amendment would better position the Company to attract exceptional officer candidates. In the absence of this exculpatory protection, candidates might be deterred from serving as officers due to exposure to personal liability and the risk that substantial expense will be incurred in defending lawsuits, regardless of merit. A number of our peers have adopted exculpation clauses that limit the personal liability of officers in their respective

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certificates of incorporation, and failing to adopt the Proposed Amendment could impact our recruitment and retention of exceptional officer candidates.

In considering the Proposed Amendment, the Board also took into account the narrow class and type of claims from which such officers would be exculpated from liability pursuant to Section 102(b)(7) of the DGCL, the limited number of our officers that would be impacted and the benefits the Board believes would accrue to the Company by providing exculpation in accordance with Section 102(b)(7) of the DGCL, including the ability to further enable our officers to best exercise their business judgment in furtherance of stockholder interests.

After weighing these considerations, the Board approved and declared it advisable to adopt, subject to stockholder approval, the Proposed Amendment to provide for exculpation of certain officers of the Company as permitted by recent amendments to Delaware law.

Additional Information

Approval of Proposal 2 will constitute approval of the Proposed Amendment to the Certificate of Incorporation, as set forth in Appendix 1 to this Proxy Statement. If Proposal 2 is approved, the Company intends to file the Amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware promptly following the Annual Meeting, to be effective at the time of that filing. The Board may, at any time prior to the effectiveness of the Proposed Amendment, abandon the Proposed Amendment without further action by the stockholders or the Board (even if the requisite stockholder vote is obtained).

If Proposal 2 is not approved by a majority of the shares of our common stock outstanding on the Record Date, then the Proposed Amendment will not be approved and will not be implemented or become effective.

Our Board recommends a vote “FOR” the approval of the Proposed Amendment to our Certificate of Incorporation to incorporate Delaware law provisions regarding officer exculpation.

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PROPOSAL 3

ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

The Board recommends a vote FOR the approval, on an advisory basis, of the compensation of our named executive officers.

We are seeking your advisory (non-binding) vote approving the compensation of our named executive officers. We believe that the structure of our executive officer compensation programs promotes the long-term interests of our stockholders. Our executive officer compensation programs are designed to attract, retain, motivate and reward talented executive officers who will achieve our business objectives and create long-term value for our stockholders. We believe that our compensation program rewards sustained performance that is aligned with long-term stockholder interests.

This proposal, commonly known as a “Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies, and practices described in this Proxy Statement. We encourage stockholders to read the Executive Compensation sections of this Proxy Statement, including the Compensation Discussion and Analysis, which discuss our compensation policies and procedures, and the compensation of our named executive officers for 2023.

At our 2023 Annual Meeting of Stockholders, our Say-on-Pay proposal to approve the compensation of our named executive officers was supported by approximately 97% of all votes represented at the meeting. We believe that this indicates strong support for our continued focus on aligning our named executive officer compensation programs with the interests of our stockholders. During 2023, we continued to focus on pay for performance, and in addition to granting time-based RSUs, we granted PRSUs that only vest if our market performance meets or exceeds the goals established by our Compensation Committee as well as special one-time incentive grants.

This vote is required pursuant to Section 14A of the Exchange Act and is advisory and non-binding; however, our Compensation Committee and our Board are expected to consider the results of the vote when making future determinations regarding our named executive officer compensation programs. Advisory Say-on-Pay votes have been scheduled to be held once every year. We expect to hold the next advisory vote to approve the compensation of our named executive officers in 2025.

VOTE REQUIRED

This proposal requires an affirmative vote of the majority of shares represented at the Annual Meeting in person or by proxy for advisory approval.

Our Board recommends a vote “FOR” the following resolution, providing an advisory approval of the compensation of our named executive officers:

RESOLVED, that the compensation of the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and the related material disclosed in this Proxy Statement, is hereby approved.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Our executive compensation program is designed to attract, motivate, retain and reward executive talent to achieve our business objectives, with the ultimate goal of increasing stockholder value. This Compensation Discussion and Analysis (“CD&A”) provides information about our compensation objectives and policies for our Chief Executive Officer and the other individuals who are considered our “named executive officers” under SEC rules. This CD&A puts in perspective the information set forth in the “2023 Summary Compensation Table” that follows in this Proxy Statement.

For purposes of this Proxy Statement, the following individuals are considered our 2023 “named executive officers” or “NEOs”.

Named Executive Officer*

    

Title

Todd Gleason

Chief Executive Officer ("CEO")

Peter Johansson

Chief Financial Officer ("CFO")

Lynn Watkins-Asiyanbi

Chief Administrative and Legal Officer ("CALO")

*The three listed individuals were our only executive officers as of December 31, 2023. No other individuals met the definition of named executive officer under SEC rules for 2023. Our Board has elected only three executive officers in light of their expansive leadership roles.

Compensation Highlights

During 2023, our Compensation Committee continued to oversee the executive compensation programs that it considers to be competitive in the market for talent and aligned with industry best practices and the long-term interests of our stockholders.
Our annual performance-based cash incentive compensation program is typically designed to reward our management team (including our NEOs) for achievement of certain pre-established, short-term financial and/or operational goals. For 2023, the performance objectives under our performance-based incentive program consisted of Adjusted EBITDA (50%), Revenue (25%) and Free Cash Flow (25%), in each case established by reference to the Company’s annual operating plan.
Our 2023 annual grant of performance-based restricted stock units (“PRSUs”) under our long-term equity incentive program required attainment of relative total shareholder return (“Relative TSR”) goals during the 2023-2025 performance period for a specific percentage of those PRSUs to vest. We also granted time-based restricted stock units (“RSUs”) in 2023 to our NEOs. These RSUs have a four-year vesting period, with 25% vesting annually on each anniversary of the grant date.
Our stock ownership guidelines apply to all executive officers, including our named executive officers. Our CEO is required to own shares of our stock or stock equivalents having a value equal to five times his base salary. Our other NEOs are required to own shares of our stock or stock equivalents having a value equal to three times their base salary.
As noted above, our Compensation Committee has engaged an independent executive compensation consultant to provide advice on compensation matters. In May 2023, we engaged our independent compensation consultant to conduct a market analysis of the compensation of all our executive officers (including the NEOs) and the Board’s total cash compensation and equity retainer against the general market and our peer group. Based on this review, we made changes to the compensation levels, discussed in further detail below.
During 2023, we adopted an updated compensation recovery policy (the “Clawback Policy”) governing the recovery of erroneously awarded incentive-based compensation consistent with the requirements of the SEC and NASDAQ. The Clawback Policy replaced our existing compensation recovery policy and provides that, if we are required to prepare a qualifying accounting restatement, then, unless an exception applies, we will recover the excess of (1) the amount of incentive-based compensation received by a person who served as a covered officer at any time during the applicable performance period during the three completed years immediately preceding the date we are required to prepare the accounting restatement over (2) the amount that the person would have received had the incentive-based compensation been determined based on the restated financials.
We annually review tally sheets to understand historical target and realizable compensation.
We provide very few perquisites.

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2023 Stockholder Engagement

At our 2023 Annual Meeting of Stockholders, our advisory “Say-on-Pay” proposal to approve the compensation of our named executive officers was supported by approximately 97% of votes represented at the meeting. Our Compensation Committee believes that this strong approval reflects our continued efforts to improve our compensation practices. During 2023, we had direct contact and discussions with stockholders representing greater than 50% of our investor base, consistent with our experience in 2022. Mr. Gleason, Mr. Johansson, as well as some of our directors, participated in these discussions and provided stockholder feedback to our Board as a whole. Our Compensation Committee considered the 2023 Say-on-Pay voting results at its subsequent meetings and remains dedicated to continuous improvement to our executive compensation programs, although it did not make any changes to our executive compensation policies or practices that were specifically driven by the outcome of that vote.

Compensation Policy and Objectives

Our Compensation Committee believes that an effective executive compensation program generally rewards the achievement of annual, long-term and strategic goals set by the Company and aligns our named executive officers’ interests with those of our other stockholders. Our executive compensation program is designed to attract, motivate, retain and reward highly qualified individuals who are committed to the achievement of solid financial performance and excellence in the management of our Company assets. To accomplish this objective, our typical executive compensation program is designed to provide competitive compensation and to link compensation to our Company’s financial and operational performance. Our Compensation Committee generally evaluates compensation against individual and external market factors to help ensure that we maintain our ability to attract, motivate and retain key executive talent.

Total compensation for our named executive officers generally is comprised of base salary, short-term incentives and long-term incentives, a portion of which is designed to be earned based on our Company’s financial performance. From time to time, our Compensation Committee may approve discretionary cash bonuses or special equity awards to recognize and reward a named executive officer’s individual effort in certain circumstances.

Governance Practices

In designing our overall compensation program, we endeavor to support good governance, enhance alignment with shareholder value creation, and seek to mitigate excessive risk-taking by our executives. Accordingly, the following details the features implemented within our compensation program:

WHAT WE DO

þ Annual “say-on-pay” advisory vote for shareholders, with robust engagement outreach to understand and respond to feedback

þ Pay-for-performance emphasis with a balance of short- and long-term incentives, using an array of key performance metrics

þ Alignment of executive compensation with shareholder returns through equity ownership and equity-based awards

þ Significant stock ownership guidelines for executives

þ Long-term incentive compensation tied to relative TSR

þ Claw-back provisions for cash and equity performance-based compensation

þ “Double trigger” required for severance under change-in-control agreements and for accelerated vesting of equity awards

þ Compensation consultant to the Committee is independent and free of conflicts of interest

WHAT WE DO NOT DO 

ý No excise tax gross-up payments

ý No back dating or re-pricing of stock options and stock appreciation rights

ý No hedging or pledging of CECO Common Stock

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Compensation Committee Role

Our Compensation Committee oversees our compensation programs, with particular attention paid to the compensation of our CEO and the other named executive officers, to help ensure that our compensation philosophy is consistent with the best interests of the Company and our stockholders. It reviews and approves changes to our executive compensation programs. While our Compensation Committee has historically established and utilized objective, formula-based incentive arrangements, it believes that an effective executive compensation program also requires the use of sound business judgment and the ability to consider qualitative factors to make adjustments when appropriate, though it did not do so during 2023.

Role of Compensation Consultants in Compensation Decisions

Our Compensation Committee engaged Meridian Compensation Partners LLC ("Meridian") as its independent executive compensation consultant to advise our Compensation Committee on executive compensation matters. At our Compensation Committee’s direction, Meridian prepared, presented and made recommendations on peer group composition, competitive market pay, compensation structure and general market trends for our NEOs and the Board. More specifically, Meridian provided market and peer group data to give our Compensation Committee context for our Company’s short-term cash and long-term equity compensation. The Compensation Committee sought the advice of Meridian in considering the design of the NEOs’ incentive compensation and the Board’s total cash compensation and equity incentive. In reviewing our executive compensation programs for market-competitiveness and alignment with industry best practices, our Compensation Committee considered the information and advice presented by Meridian.

Our Compensation Committee assessed the independence of Meridian, as required under the NASDAQ listing requirements, and considered and assessed all relevant factors, including those set forth in Rule 10C-1(b)(4)(i) through (vi) under the Exchange Act, which could give rise to a potential conflict of interest with respect to Meridian during 2023. Based on this review, our Compensation Committee did not identify any conflict of interest raised by the work of Meridian. Meridian does not provide any services to management or any other services to our Company.

Role of Executive Officers in Compensation Decisions

Our annual and long-term incentive-based executive compensation is generally structured to reward our executive officers for achieving our Company’s business goals. From time to time, our Compensation Committee relies upon recommendations made by our CEO, regarding compensation for our executive officers other than our CEO. As part of its review and establishment of the performance criteria and compensation of our named executive officers, our Compensation Committee meets separately with our CEO at least once each year and with our other executive officers as it deems appropriate. Our CEO annually reviews the performance of each of our other named executive officers (other than himself) with our Compensation Committee and makes recommendations to our Compensation Committee regarding such named executive officers’ compensation. Our Compensation Committee makes its compensation decisions for our named executive officers, other than the CEO, based on that review and the recommendations of our CEO. Each year, our CEO’s performance is reviewed by our non-management directors, and based on that review, our Compensation Committee makes a recommendation to the non-management directors regarding the compensation of our CEO.

Setting Executive Compensation

Our Compensation Committee evaluates the performance of our CEO and the other named executive officers as described above and reviews and approves the annual salary and any annual cash incentive, bonus, long-term stock-based compensation and other material benefits of our named executive officers other than our CEO, subject to the terms of any applicable employment agreements. Based on the recommendations of our Compensation Committee, our non-management directors approve the annual salary and any annual cash incentive, long-term stock-based compensation and other material benefits of our CEO, subject to the terms of his employment agreement.

External Pay Comparisons

Our Compensation Committee generally considers external pay comparison data as a market check on its compensation decisions. The Compensation Committee referenced our peer group’s market data, as provided by our independent compensation consultant, when establishing pay for our NEOs for 2023. The companies in our 2023 peer group listed below were selected based on having revenue, market capitalization, and overall business characteristics, including product offerings and end markets, similar to ours.

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Ameresco, Inc.

ESCO Technologies, Inc.

Powell Industries, Inc.

Argan, Inc.

Graham Corporation

Preformed Line Products Co.

Aspen Aerogels Inc.

Heritage-Crystal Clean Inc.

The Gorman-Rupp Co.

Douglas Dynamics, Inc.

Hurco Companies, Inc.

Thermon Group Holdings Inc.

DMC Global, Inc.

L.B. Foster Company

US Ecology, Inc.

Enphase Energy, Inc.

Manitex International, Inc.

Highlights of 2023 Executive Compensation

Throughout 2023, the management team remained focused on growth and effectively managed our business through significant market challenges, organizational change, and the competition for talent. As a result, we had a capstone, high-growth transformational year, setting a record and exceeding targets in Revenue, Adjusted EBITDA and Free Cash Flow metrics. As a result of this performance, our named executive officers earned cash incentive compensation for 2023 at a payout percentage of 200% of target.

In April 2023, as incentive for future performance, Messrs. Gleason and Johansson and Ms. Watkins-Asiyanbi were awarded an annual grant of PRSUs that gives them the opportunity to earn shares based on our Company’s future performance. As in prior years, each named executive officer also received a grant of timed-based RSUs that vest over four years, so that the value an executive officer may actually realize depends on our future stock performance. As discussed in more detail below, each of our NEOs also received a special PRSU award in 2023 that vests based on our stock price performance.

The charts below show how each NEO’s target direct compensation for 2023 was divided between base salary, annual cash incentive awards, and RSUs and PRSUs granted in 2023 (showing the cash incentive awards and PRSUs at target). As reflected below, we weigh a significant portion of each NEO’s target compensation toward incentive-based compensation elements. These charts do not include the special incentive PRSU awards mentioned above that we granted in 2023 as such award represents a one-time grant that was not taken into account when setting target pay at the beginning of 2023 and is also not representative of our normal pay mix.

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Todd Gleason

Peter Johansson

Lynn Watkins-Asiyanbi

Key Elements of 2023 Compensation

Our 2023 executive compensation program consisted of cash, with a fixed base salary and an annual cash incentive opportunity, and equity in the form of RSUs and PRSUs.

2023 Base Salary

We provide our named executive officers with a base salary to compensate them for the expertise and value they bring to us. Base salary is determined for each individual based on the executive’s position and responsibility, taking into account

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the executive’s impact level, external market data, scope of responsibility, prior experience, past accomplishments and other similar factors, and whether the particular executive is entitled to a minimum base salary under any existing employment agreement.

Salary levels for our named executive officers are reviewed and approved by the Compensation Committee annually as well as upon joining the Company or upon a promotion or other change in job responsibility. The salary levels, including any increases, are also based on our Compensation Committee’s evaluation of the individual’s strengths, development, and expected future contributions with respect to the corporate goals and objectives relevant to the individual’s compensation, including individual performance. In 2023, our Compensation Committee approved merit increases ranging from 5% to 9% of the base salaries for each of Messrs. Gleason and Johansson, and Ms. Watkins-Asiyanbi to help achieve market competitiveness.

Named Executive

Base Salary Rate ($)

Base Salary Rate ($)

Officer

    

(as of 12/31/22)

    

(as of 12/31/23)

    

% Increase

Todd Gleason

481,950

525,326

9.0

%

Peter Johansson

375,000

393,750

5.0

%

Lynn Watkins-Asiyanbi

350,000

367,500

5.0

%

2023 Cash Incentive Compensation

We believe that, in typical circumstances, a portion of our named executive officers’ cash compensation should be earned based on our annual performance, so that our executive officers are appropriately motivated to maximize our financial and operating performance each year. Early each year, our Compensation Committee typically selects executive officers to participate in the annual incentive program and determines the amount of the award opportunity and the performance goals for the participant.

For 2023, the performance objectives under our annual incentive program were established in the first quarter of 2023 by our Compensation Committee after consultation with our CEO and CALO and consisted of objectives of Adjusted EBITDA (50%), Revenue (25%) and Free Cash Flow (25%), in each case established by reference to the Company’s annual operating plan. The payout with respect to each metric could range from 0% to a maximum of 200% of target. In early 2024, the Compensation Committee determined that the Company’s performance in 2023 resulted in total payout of 200% of target for each named executive officer under the annual incentive program as shown below:

Performance Measures

Threshold

Target

Maximum

Actual

Payout

($ in millions)

Weight (%)

(0% Payout) ($)

(100% Payout) ($)

(200% Payout) ($)

Achievement ($)

Earned (%)

Revenue

25

%

450.0

475.0

510.0

544.8

200

%

Adjusted EBITDA*

50

%

45.0

48.0

52.0

57.6

200

%

Free Cash Flow

25

%

25.0

28.0

33.0

34.4

200

%

Total Payout

200

%

*Adjusted EBITDA and Free Cash Flow are non-GAAP measures. Adjusted EBITDA for purposes of our annual incentive program can be calculated from our audited financial statements as follows: Net income adjusted for the effects of amortization and earnouts expenses, acquisition and integration expenses, executive transition expenses, depreciation, non-cash stock compensation, other income & expense, interest expense, income tax expense, and noncontrolling interest. Free Cash Flow for purposes of our annual incentive program can be calculated from our audited financial statements as follows: Cash provided by operating activities adjusted for the effects of earnout payments (within operating activities) and acquisitions of property and equipment. Please refer to Appendix 3 to this Proxy Statement for reconciliation information relating to the non-GAAP measures presented herein.

Based on such achievement, the payouts of the annual incentive awards for 2023 are set forth in the table below and reflected in our 2023 Summary Compensation Table under the column captioned “"Non-Equity Incentive Plan Compensation." We did not make any discretionary adjustments to the payouts for 2023 and based the amounts solely on achievement of the pre-established performance goals.

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Named Executive Officer

    

Target Amount ($)

Payout (%)

    

Amount of Final Payment ($)

 

Todd Gleason

525,326

200

 

1,050,652

Peter Johansson

236,250

200

 

472,500

Lynn Watkins-Asiyanbi

183,750

200

 

367,500

Long-Term Equity Compensation

Our Compensation Committee believes that granting stock-based awards on an annual basis provides our executive officers with a strong economic interest in maximizing stockholder returns over the longer term and is important in retaining and recruiting the key talent necessary to ensure our Company’s continued success. As a result, our equity compensation programs have been designed to promote the long-term financial interests and growth of our Company by: (i) helping attract and retain management with the ability to contribute to the success of the business; (ii) providing an opportunity for increased equity ownership by our executive officers and (iii) maintaining competitive levels of total compensation.

2023 Annual Equity Grants

Our 2023 annual grants consisted of RSUs that vest over time based on continued employment and PRSUs that vest only to the extent our Company attains the performance goals established by our Compensation Committee. To the extent stock units vest, the recipient receives one share of our common stock for each vested stock unit and an amount in cash equal to the dividends, if any, that would have been paid on the underlying common stock since the date of the stock unit grant.

For 2023, the value of the total stock units awarded to each named executive officer serving at the beginning of the year was based on a fixed dollar amount determined by our Compensation Committee with Meridian’s guidance. To determine the number of stock units then granted to each NEO, we divided the target value of the NEO’s award by $13.99, the closing stock price on the date of grant. We then divide such number of stock units between RSUs and PRSUs based on the proportion approved by the Compensation Committee for each NEO, reflected in the table below.

Todd Gleason

    

Peter Johansson

    

Lynn Watkins-Asiyanbi

Target LTI ($)

$1,000,000

$300,000

$262,500

Vehicle Split (%)

70% PRSUs/30% RSUs

50% PRSUs/50% RSUs

50% PRSUs/ 50%RSUs

# of RSUs Granted

21,444

10,722

9,382

Target # of PRSUs Granted

50,036

10,722

9,382

The RSUs that were granted to the named executive officers in March 2023 vest in equal annual installments on each of the first four anniversaries of the grant date. All of the 2023 RSU awards granted to our named executive officers are shown in the “2023 Grants of Plan-Based Awards Table” below in this Proxy Statement.

The PRSUs that we granted to the NEOs in March 2023 vest on March 15, 2026, to the extent our Company attains the Relative TSR (as defined below) goals for the performance period beginning on January 1, 2023, and ending on December 31, 2025, as established by our Compensation Committee. The Compensation Committee determined to use Relative TSR for the 2023 PRSU awards because this metric keeps the focus on creating value (i.e., alignment with shareholder interests) even in challenging times. The target number of PRSUs granted to each NEO and noted above can be earned from 0% to 150% of target levels based on actual performance.

For purposes of the 2023 PRSU awards, Relative TSR is the percentile rank of the Company’s total shareholder return as compared to the total shareholder returns of all members of a designated peer group at the end of the relevant performance period. “Total shareholder return” is a rate of return reflecting stock price appreciation, plus the reinvestment of dividends in additional shares of stock (with appropriate adjustments for certain changes in capital structure), from the beginning of the performance period through the end of the performance period, where (1) the beginning stock price is based on the average closing stock price for the twenty (20) calendar days preceding January 1, 2023 and (2) the ending stock price is based on the average closing stock price for the twenty (20) calendar days preceding and including the last day of the performance period.

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For purposes of calculating Relative TSR, the relevant peer group is 104 publicly traded companies that, at the time of selection by the Compensation Committee, were U.S. companies classified in the Materials or Industrials sector with a market capitalization from $200 million to $800 million and revenue greater than $100 million. The list of Relative TSR peer companies is included with this Proxy Statement as Appendix 2. The peer group is subject to adjustment in the event of certain significant events that occur with respect to a peer company, including bankruptcy, delisting, liquidation, certain acquisitions, or “going private” transactions.

The target PRSUs are divided into three equal tranches. Each one-third tranche has a specific "Performance Period" from January 1, 2023, until December 31 of each “Performance Period” as outlined in the table below. All three tranches vest on March 15, 2026, based on achievement of relative TSR during the applicable Performance Period and generally contingent on the NEO’s continued employment through such vesting date.

Performance

Performance

Period

Period

Performance Period

    

Weighting

    

Beginning

    

Ending

    

Vesting Date

 

1-Year TSR Measurement

1/3

1/1/2023

12/31/2023

3/15/2026

2-Year TSR Measurement

1/3

1/1/2023

12/31/2024

3/15/2026

3-Year TSR Measurement

1/3

1/1/2023

12/31/2025

3/15/2026

For each one-third tranche, a percentage of the PRSUs subject to such one-third tranche will be earned based on achievement of Relative TSR during the performance period for such one-third tranche as follows (with straight line mathematical interpolation between performance levels):

Performance Level

    

Relative TSR

    

% of Target PRSUs Earned

 

Below Threshold

Below 25th percentile

%

Threshold

 

At 25th percentile

 

50

%

Target

 

At 50th percentile

 

100

%

Maximum

 

At or above 75th percentile

 

150

%

However, regardless of the level of Relative TSR performance, if the Company’s absolute total shareholder return at the end of the last Performance Period is negative, the percentage of target PRSUs earned will not exceed 100% of target.

Special One-Time Retention Awards Granted in 2023

In connection with the expiration of Mr. Gleason’s employment agreement (which is discussed in more detail below under the heading “Agreement with Mr. Gleason,”) on July 5, 2023, we granted Mr. Gleason a retention equity grant of 225,000 PRSUs under the Company’s 2021 Equity and Incentive Compensation Plan. The award vests on the fourth anniversary of the grant date based on the achievement of stock price performance goals, but only if Mr. Gleason is still employed by the Company on the vesting date. The number of PRSUs that are earned on the vesting date will be calculated based on the highest stock price that we achieve for any twenty (20) or more consecutive trading days during the four-year vesting period according to the table below (with no interpolation for stock prices between the levels set forth in the table below):

Stock Price

    

%of PRSUs Earned

Less than $22.00

0%

$22.00

100%

$25.25

125%

$28.50

150%

$31.75

175%

$35.00

200%

In September 2023, the Compensation Committee decided to make a special PRSU grant to each of Mr. Johansson and Ms. Watkins-Asiyanbi in the amount of 47,247 and 41,341 target shares, respectively, on substantially the same terms as the award made to Mr. Gleason to provide them enhanced retention and performance incentives. This grant is intended to unify the executive team and motivate them to achieve significant shareholder value creation. These awards, which were granted on September 29, 2023, vest on July 5, 2027, based on the performance schedule set forth in the table above, provided that the NEO is employed by the Company on the vesting date.

The target and maximum number of shares that each NEO could earn pursuant to these awards are set forth below:

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PRSU Award Opportunity

Target Number of

 

Maximum Number of

Name

    

Shares

    

Shares

Todd Gleason

225,000

450,000

Peter Johansson

47,247

94,494

Lynn Watkins-Asiyanbi

41,341

82,682

PRSUs Earned for 2021-2023 Performance Cycle

In 2021, we made an annual grant of PRSUs to Mr. Gleason having a performance period that ran from January 1, 2021 to December 31, 2023 and which vested on March 15, 2024 by their terms as a result of Mr. Gleason’s continuous employment through the vesting date. Mr. Johansson and Ms. Watkins-Asiyanbi were not serving with the Company when these PRSUs were granted and did not receive an award opportunity for this particular cycle.

The Compensation Committee determined to use Relative TSR as the sole performance metric for the 2021 PRSU awards with the payout being determined by comparing our total shareholder return against a peer group of 107 publicly traded companies that, at the time of selection by the Compensation Committee, were U.S. companies classified in the Materials or Industrials sector with a market capitalization from $100 million to $500 million and revenue greater than $100 million. The chart below details the performance goals and achievement levels of the 2021 PRSUs.

Performance Level

    

Relative TSR

    

% of Target PRSUs Earned

 

Below Threshold

Below 25th percentile

%

Threshold

 

At 25th percentile

 

50

%

Target

 

At 50th percentile

 

100

%

Maximum

 

At or above 75th percentile

 

150

%

At the end of the performance period, we had achieved a calculated TSR of 193.26% which ranked just over the 80th percentile and resulted in a payout of 150% of the target number of shares granted to Mr. Gleason.

The following table summarizes the target and actual earned shares under the PRSUs granted to Mr. Gleason in 2021.

PRSU Award Opportunity

2021-2023 Performance

    

Target Number of

 

Maximum Number of

% of Target

Number of Shares

Name

    

Shares

 

Shares

Earned

Earned

Todd Gleason

 

85,785

128,678

150.0

%

128,678

Personal Benefits and Perquisites

We provide our named executive officers with very few perquisites that we believe are reasonable and consistent with our overall compensation program and better enable us to attract and retain employees for key positions. These perquisites generally consist of a car allowance and payment of life insurance premiums.

Retirement Benefits

Our Company sponsors a 401(k) retirement plan for substantially all of our U.S. employees (the “401(k) Plan”), pursuant to which we generally match contributions each pay period at 100% of the employee’s contributions for the first 3% of eligible compensation, and 50% of the employee’s contribution on the next 3% of eligible compensation, for a maximum match of 4.5% of eligible compensation. Our named executive officers generally participate in the 401(k) Plan on the same terms as our other eligible employees. We believe the 401(k) Plan, which has limited cost to our Company, is set at a reasonable level, is highly valued by participants, and is part of a competitive compensation program consistent with our overall goal of attracting and retaining qualified employees.

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Severance Benefits

Agreement with Mr. Gleason

As mentioned above, prior to July 5, 2023, we had in place an employment agreement with Mr. Gleason, which we had previously entered into effective July 6, 2020, in connection with his appointment as our CEO. This employment agreement set forth the basic terms and conditions of his employment, including initial base salary, annual incentive opportunity, and long-term incentive opportunity, as well as certain sign-on equity and cash bonus compensation and certain perquisites and personal benefits. The employment agreement also included customary restrictive covenants and provided for severance benefits in connection with certain terminations of employment. Specifically, the agreement provided that if his employment was terminated by the Company without “cause” or by Mr. Gleason for “good reason” other than during the two-year period following a change in control, he would have been entitled to a lump sum cash payment equal to his annual base salary plus a pro-rated annual cash incentive payment based on actual performance for the year of termination. In addition, if his employment was terminated by the Company without cause or by Mr. Gleason for good reason within a period of two years after a change in control, then he would have been entitled to receive a lump sum payment equal to the sum of his annual base salary plus his target annual cash incentive for the year in which termination occurs.

During 2023, the Company and Mr. Gleason mutually decided not to renew his employment agreement that was expiring as of July 6, 2023. Instead, Mr. Gleason and the Company entered into a letter agreement that provides for the following retention-focused benefits in addition to the other elements of compensation and employee benefits provided generally to executive officers of the Company:

The one-time special retention PRSU award described above under the heading “Special One-Time Retention Awards Granted in 2023”;

A housing allowance of $5,000 per month for six months in the Dallas, Texas area; and

Participation in the Company’s Executive Change in Control Severance Plan (“CIC Severance Plan”).

The decision not to renew Mr. Gleason’s employment agreement was done to move away from employment agreements in general. The decision to move away from the use of employment agreements was motivated by the Company’s desire to (1) align with prevailing market trends, (2) negate the need for one-off negotiations with prospective new hires, and (3) streamline our severance and change in control benefits through our CIC Severance Plan described below. As amended, the CIC Severance Plan provides market-aligned severance and change-in-control protections (from both an individual and Company perspective) that would be duplicative if restated in an employment agreement. Having a unified policy is also administratively less burdensome than if such benefits differed from one employment agreement to another and promotes internal pay equity through the provision of similar benefits to similar levels of executives and other key employees.

Change in Control Severance Plan

We maintain the CIC Severance Plan, which provides our executive officers and other eligible participants with certain severance benefits in the event of certain qualifying terminations of employment. The Severance Plan is designed to address organizational leadership needs to attract and retain senior level executives in the Company and remove barriers and distractions of executives by providing limited protection to senior level leaders should a potential change in control occur. Offering continuity for these leaders while not tying the organization to an employment contract allows the Company to recruit, retain and demonstrate the value our senior level leaders contribute to our organization.

During 2023, we amended the plan to (1) include a resignation for good reason outside the change in control period as a qualifying termination event, (2) replace the Company-paid outplacement benefits with a cash payment of $20,000 intended for the executive to find his or her own outplacement services, and (3) revise the severance benefit payout formulas to be more in line with market best practices. Following such amendments, the CIC Severance Plan provides for the following benefits:

If the participant’s employment is terminated by the Company without cause, or by the participant for good reason, during the change in control period, then the participant is entitled to receive (1) a pro-rata target bonus for the year of termination, (2) a lump sum cash payment equal to the sum of the Participant’s base salary plus target bonus, multiplied by the applicable “severance multiplier”, (3) a lump sum payment of $20,000 to enable the Participant to obtain executive outplacement services, and (4) subsidized COBRA coverage for the period equal to 12 months multiplied by the Severance Multiplier (but capped at 18 months).

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If the participant’s employment is terminated by the Company without cause or by the participant for good reason outside the change in control period, then the participant is also entitled to receive the same benefits described in the bullet above, except that the lump sum cash payment described in (2) shall only equal the Participant’s base salary multiplied by the severance multiplier.

The “severance multiplier” is equal to 2.0 for the CEO, and 1.5 for the other executive officers.

Participation in the Severance Plan requires compliance with certain customary confidentiality, non-disparagement, non-competition, and non-solicitation provisions, and participants are required to execute a release of claims against the Company to receive the severance benefits (unless we waive such requirement).

Under the CIC Severance Plan:

“Good reason” means (1) a material diminution of the participant’s duties, authorities or responsibilities; (2) a material reduction in the participant’s base salary or incentive opportunity (other than broad-based reductions applicable to all executives); (3) certain relocations of the participant’s primary workplace; and (4) our material breach of the Severance Plan.
“Termination without cause” means a termination of employment initiated by us other than due to the participant’s death, disability, or the occurrence of the following events: (1) the participant’s misappropriation of Company assets; (2) the participant’s conviction of a felony or commission of any act of moral turpitude, dishonesty, or fraud; (3) the participant’s failure to perform the lawful instructions of the participant’s superior; (4) the participant’s willful or gross misconduct which could reasonably be expected to be materially injurious to the Company; (5) the participant’s violation of a material Company policy; or (6) the participant’s material breach by the Participant of a material obligation under the Severance Plan.
A “change in control” is defined as the occurrence of any the following: any person becoming the beneficial owner of 50% or more of our outstanding common stock or voting securities; certain changes in the majority of our Board of Directors that are not approved by a super-majority of the incumbent directors; the consummation of certain mergers or similar transactions or sales of all or substantially all of our assets; and approval by our stockholders of a complete liquidation or dissolution.

Key Changes to Executive Compensation Program for 2024

During 2023 and early 2024, our Compensation Committee considered, with the help of Meridian, potential changes to our executive compensation program with the goal of aligning our pay program with current industry best practices and the pay programs of our newly established peer group (as shown below) with whom we compete for talent, as well as continuing to align our executives’ interests with those of our shareholders. Additionally, we have a limited number of senior officers of the company, with our NEOs taking on hybrid roles consisting of multiple functions and added responsibilities. The compensation-related decisions noted below were intended to continue to motivate strong company performance during a time of rapid growth and retain our highly sought after talent. As a result of these discussions, we made the following changes to our executive pay program for 2024:

We changed our CEO’s long-term incentive mix from 70% PSUs and 30% RSUs to 75% PSUs and 25% stock options to further tie our CEO’s compensation to shareholder value creation.
For our other executive officers who will continue to receive RSUs, we updated the vesting period from four years to three years to align with market practice.
Our PSUs will continue to be based 100% on relative TSR, but we updated the measurement period to be a single three-year performance period (2024-2026) and changed the maximum PSU payout from 150% to 200%, in each case to align with market practice and incentivize our executive team to provide above average long-term shareholder returns.
Eliminated free cash flow as a metric in our annual incentive plan and instead weighted Revenue and EBITDA equally at 50% to further motivate profitable growth.
Increased “threshold” payout under our annual incentive plan from 50% of target to 75% of target based on the rigor of our performance goals, as we set our “threshold” goals above our prior year actual results to motivate our executive team to grow the business. This “threshold” performance requirement significantly exceeds 2023 actual results and reflects the desire to continue recent outperformance (i.e., the opportunity to earn a payout for performance that would have resulted in 50-74.99% of target has been eliminated).

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Increased base salary, target annual bonus, and target long-term incentive grant value for each of our NEOs to position pay more competitively with our new peer group (as shown below) and retain this high performing executive team, which resulted in the following pay values for 2024:

Mr. Gleason

  

Mr. Johansson

  

Ms. Watkins-Asiyanbi

Base Salary

$775,000

$450,000

$400,000

Target Bonus (% of Base Salary)

125%

75%

75%

LTI Target (% of Base Salary)

280%

125%

125%

The new peer group that Meridian and our Compensation Committee referred to when making the above-mentioned changes is made up of the following companies:

Allient Inc.

Hudson Technologies Inc.

Powell Industries, Inc.

Ameresco, Inc.

Kadant Inc.

Preformed Line Products Co.

Argan, Inc.

L.B. Foster Company

Standex International Corporation

Astec Industries Inc..

Lindsay Corporation

The Gorman-Rupp Co.

Babcock & Wilcox Enterprises Inc.

Luxfer Holdings PLC

Thermon Group Holdings Inc.

ESCO Technologies, Inc.

Northwest Pipe Company

Vishay Precision Group Inc

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Stock Ownership Guidelines

To reinforce the alignment of our executive officers’ long-term financial interests with the interests of our stockholders, we require our executive officers to own shares of our common stock having values equal to the applicable multiple of base salary set forth in the table below:

    

Ownership

Requirement

(Multiple of

Named Executive Officer

    

base salary)

Chief Executive Officer

 

5X

Chief Financial and Strategy Officer

3X

Chief Administrative and Legal Officer

3X

Other Executives Officers

 

1X

Our executive officers have five years after becoming subject to these guidelines to achieve the stock ownership required. Our Compensation Committee in its discretion may extend the period of time for attainment of such ownership levels in appropriate circumstances. For purposes of this requirement, stock ownership includes all shares of our common stock owned by the named executive officer directly or held in trust for the executive or the executive’s immediate family. In addition, restricted stock and RSUs are also included in determining whether the required level of ownership has been attained. For purposes of the stock ownership requirements, the value of a share is measured as the greater of the then current market price or the closing price of a share of the common stock on the grant date. As of December 31, 2023, Mr. Gleason, who has served as our CEO only since July 2020 had achieved this goal; Mr. Johansson, who has served as our CFO only since August 2022 and Ms. Watkins-Asiyanbi who has served as our Chief Administrative and Legal Officer since August 2022, were not yet in compliance with their stock ownership requirements, but both are still within the applicable five-year compliance period.

Our executive officers are prohibited under our Insider Trading Policy from engaging in certain transaction in our securities, including short sales against the box, buying or selling puts or calls and frequent trading to take advantage of fluctuations in stock price. Our Insider Trading Policy is described in the “Insider Trading Policy” paragraph under “Our Board and Its Committees” section above.

Clawback Policy

During 2023, we adopted an updated compensation recovery policy (the “Clawback Policy”) governing the recovery of erroneously awarded incentive-based compensation consistent with the requirements of the SEC and NASDAQ. The Clawback Policy replaced our existing compensation recovery policy and provides that, if we are required to prepare a qualifying accounting restatement, then, unless an exception applies, we will recover the excess of (1) the amount of incentive-based compensation received by a person who served as a covered officer at any time during the applicable performance period during the three completed years immediately preceding the date we are required to prepare the accounting restatement over (2) the amount that would have been received had it been determined based on the restated financials.

Risk Considerations in our Compensation Program

Our executive compensation consists of both fixed and variable compensation. The fixed (or salary) portion of compensation is designed to provide a steady income so our executive officers are not pressured to focus exclusively on short-term gains, which may be detrimental to long-term stock price appreciation and other business metrics. The variable portions of compensation consist of cash incentives or discretionary cash bonuses and long-term equity incentives (time-based RSUs and PRSUs). In a typical year, incentive compensation is generally tied to the achievement of corporate performance goals based on metrics established by our Compensation Committee. For 2023, we used a Relative TSR goal for long-term equity incentives. We believe that the variable components of compensation motivate our executive officers to produce short- and long-term corporate results while the fixed element of compensation helps provide security so that management is not encouraged to take unnecessary or excessive risks in working to produce such results. Periodically, our Compensation Committee conducts a risk review of the compensation programs for all employees, including our named executive officers. In 2023, a market pay analysis study was conducted, and following discussions held in Compensation Committee meetings that addressed risks associated with our plans and metrics, we believe our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on our Company.

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Conclusion

We recognize the importance of attracting, motivating, retaining and rewarding executive talent who can effectively lead our business. Our Compensation Committee continues to analyze and adjust our compensation programs to emphasize the alignment of our named executive officers’ interests with the long-term interests of our stockholders. It seeks to incentivize our named executive officers to maximize our Company’s performance and reward them for their achievements. With the various components of our executive compensation programs, our Compensation Committee seeks a balance between fixed and at-risk compensation, cash and equity, and short-term and long-term rewards with the ultimate objective of creating long-term value for our stockholders.

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Compensation Committee Report

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and, by incorporation by reference, in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

This report is submitted on behalf of the members of the Compensation Committee:

Robert F. Knowling, Jr., Chair

Claudio Mannarino

Valerie Gentile Sachs

Laurie Siegel

2023 Summary Compensation Table

The following table summarizes compensation earned by each of our named executives during the fiscal years indicated. To understand the table below, we encourage a careful reading of the footnotes, which explain the various assumptions and calculations employed in determining the dollar amounts set forth below.

Non-Equity

Stock

Option

 Incentive Plan

All Other

Name and Principal

Salary

Bonus

Awards

Awards

Compensation

Compensation

Total

Position

  

Year

  

($)

  

($)

  

($) 1

  

($)

  

 ($) 2

  

($) 3

  

($)

Todd Gleason

2023

515,316

3,981,255

1,050,652

30,753

5,577,976

Chief Executive Officer

2022

475,771

25,990

1,059,469

937,910

35,054

2,534,194

 

2021

 

456,577

156,060

1,126,112

211,140

29,410

1,979,299

2020

216,346

 

300,000

 

599,059

 

2,400,000

 

 

24,376

 

3,539,781

Peter Johansson

 

2023

 

389,423

1,054,536

472,500

38,654

1,955,114

Chief Financial and Strategy

 

2022

 

151,442

155,086

450,015

183,544

13,308

953,395

Officer