Securities firm investigates Applied Industrial Technologies
A New York-based national securities firm is investigating the board of directors of Applied Industrial Technologies.
Faruqi & Faruqi LLP is investigating the board for potential breaches of fiduciary duties in connection with their conduct of seeking shareholders’ approval of the compensation for the company’s named executive officers.
The terms of the compensation to be awarded to the company’s executive officers are outlined in the proxy statement on Form Schedule 14A that Applied filed with the Securities and Exchange Commission on Sept. 7, 2012.
Although Applied's shareholders overwhelmingly approved the company's executive compensation program in last year's advisory vote, the board and its Executive Organization & Compensation Committee continued to improve the program in 2012.
The committee's 2012 actions strengthened the relationship between overall compensation and performance, promoting alignment with shareholder interests:
• Direct pay. The Committee left the executive officers' targeted pay largely unchanged, with only two of the named executive officers receiving adjustments in base salaries and annual incentive target values. Long-term incentive target values for continuing officers were adjusted upward by 5%.
• Retirement benefits. The Committee froze participation in the Supplemental Executive Retirement Benefits Plan, the company's executive defined benefit plan, and stopped accruing additional benefits, by virtue of years of service and compensation levels, for existing participants. A more modest defined contribution plan was adopted as a replacement.
• Other benefits. The Committee eliminated most executive officer personal benefits and perquisites, including automobile allowances, club memberships, financial planning and tax return preparation services, and annual physical examinations.
• Change in control agreements. The Committee terminated change in control agreements for executives below the executive officer level. As a result, the only remaining agreements are with the company's seven executive officers. All the agreements have "double triggers," meaning they provide benefits only if the executive's employment is terminated under certain circumstances following a change in control.
• Advisory vote to approve executive compensation. The Board adopted an annual shareholder advisory vote to approve Applied's executive compensation, which is consistent with shareholders' frequency preference as expressed at last year's annual meeting.
INDUSTRIAL SUPPLY MAGAZINE
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