INFORMATION REQUIRED IN PROXY STATEMENT

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

The Annual Meeting of Shareholders of PARK AEROSPACE CORP. (the “Company”) will be held on Tuesday, July 21, 202020, 2021 at 11:00 A.M., E.D.T. Due to concerns about the COVID-19 pandemic and the related protocols implemented by federal, state and local governments, we plan to conduct this year’s Annual Meeting of Shareholders completely virtually via live webcast. You will be able to attend and participate in the Annual Meeting online, vote your shares electronically and submit your questions prior to and during the meeting by visiting www.meetingcenter.io/254901410234579528 at the meeting date and time described in the accompanying Proxy Statement. The password for the meeting is PKE2020.PKE2021. The Annual Meeting is being held, for the following purposes:

The requirement under New York corporate law to hold an in-person meeting has been suspended by executive order by the Governor of the State of New York. To the extent such suspension is not extended to the date of our Annual Meeting, we also may provide a venue for an in-person Annual Meeting, in addition to virtual participation. In that case, we would notify our shareholders in advance on the Company’s web site at www.parkaerospace.com under the caption “Shareholders” and by issuing a press release and filing it as additional proxy material with the Securities and Exchange Commission.

Only holders of record of Common Stock at the close of business on June 5, 20204, 2021 will be entitled to notice of, and to attend and vote at, the meeting or any adjournment or postponement thereof.

 

 

BlackRock, Inc., a parent holding company, holds sole voting power over all2,946,740 of such shares and sole dispositive power over all of such shares, based on an amendment to its Schedule 13G filed on February 4, 2020January 26, 2021 under the Exchange Act, which represented 15.0%14.7% of the outstanding shares of the Company’s Common Stock as of June 5, 2020.4, 2021.

Includes 39,00043,000 shares which Mr. Farabaugh may acquire pursuant to options exercisable as of, or within 60 days after, June 5, 2020.4, 2021.

 

During the Company’s last fiscal year, the Board met six16 times and authorized action by unanimous written consent on nineseven occasions, the Audit Committee met seven times and authorized action by unanimous written consent on one occasion, the Nominating Committee met once, the Corporate Governance Committee met once, the Compensation Committee met once, the Stock Option Committee met once and authorized action by unanimous written consent on one occasion, and the independent directors met in executive session without management one time. At each meeting of the independent directors, the Lead Independent Director presides. The functions of the Lead Independent Director are described elsewhere in this Proxy Statement under the caption “Board Leadership Structure”. Each of the directors attended more than 75% of all of the meetings held by the Board and each committee thereof of which such director was a member during the Company’s last fiscal year.

One of the Board’s functions is oversight of risk management. “Risk” is inherent in business, and the Board seeks to understand and advise on risk in conjunction with the activities of the Board and the Board’s committees. Management of the Company is responsible for identifying risk and risk controls related to significant business activities; mapping the risks to Company strategy; and developing programs and recommendations to determine the sufficiency of risk identification, the balance of potential risk to potential reward, and the appropriate manner in which to control risk. The Board implements its risk oversight responsibilities by having management provide periodic briefings on the significant voluntary and involuntary risks that the Company faces and how the Company is seeking to manage risk. In some cases, as with risks of new technology and risks related to product acceptance, risk oversight is addressed as part of the Board’s oversight of business and strategic developments. In other cases, a Board committee is responsible for oversight of specific risk topics. The Audit Committee oversees issues related to internal control over financial reporting, the Compensation Committee reviews risks that may be implicated by the Company’s compensation programs, as discussed below, and the Corporate Governance Committee oversees risks related to governance policies and practices. The Board and Board committees generally discuss relevant risks and risk control; and the Board members assess and oversee the risks as a part of their review of the related business, financial, or other activities of the Company. In addition, the Board receives presentations during the year from management regarding specific potential risks and trends as necessary. At each Board meeting, the Chief Executive Officer addresses matters of particular importance or concern, including any significant areas of risk requiring Board attention. The Board believes that the practices described above, and the current leadership structure, facilitate effective Board oversight of the Company’s significant risks.

if and when they exercise the options. At March 1, 2020,February 28, 2021, the end of the Company’s last fiscal year, Mr. Blanchfield held outstanding stock options for 22,50018,125 shares of Common Stock, Ms. Groehl held outstanding stock options for 25,50921,134 shares of Common Stock, Mr. Shore held outstanding stock options for 190,000 shares of Common Stock, Mr. Smith held outstanding stock options for 17,50013,125 shares of Common Stock, Mr. Thress held no outstanding stock options, and Mr. Warshaw held outstanding stock options for 19,75015,375 shares of Common Stock.

 

The amounts of bonuses for other named executive officers are based on the Chief Executive Officer’s subjective assessments of the individual’s overall performance and the other factors described elsewhere in this “Compensation Discussion and Analysis” and his recommendations to the Compensation Committee, which the Committee then reviews with the Chief Executive Officer and approves as appropriate. In addition to annual discretionary bonuses for the 2019 fiscal year, special bonuses were awarded to four of the executive officers named in the “Summary Compensation Table” elsewhere in this Proxy Statement for their roles in the Company’s sale of its electronics business in December 2018. The Chief Executive Officer declined to accept a bonus in connection with such sale.

The Compensation Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management of the Company; and based on such review and discussion, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.

All members of the Compensation Committee were independent directors during the 20202021 fiscal year, and none of them is, or has been, an employee or officer of the Company, except that Carl Smith was an employee of the Company prior to 2007 and a consultant of the Company prior to 2012. During the 20202021 fiscal year, none of the Company’s executive officers served on the compensation committee (or equivalent) or the board of directors of another entity whose executive officers served on the Board or the Compensation Committee of the Board.

The following table shows all the compensation paid by the Company for the last three completed fiscal years for the Company’s Chief Executive Officer, the Company’s Chief Financial Officer, the three other most highly compensated executive officers who were serving in such capacities at the end ofduring the Company’s last completed fiscal year, which was March 1, 2020.February 28, 2021.

All options granted under the 2018 Stock Option Plan have exercise prices equal to the fair market value of the underlying Common Stock of the Company on the dates of grant, which, in accordance with the terms of such Plan, is the reported closing price of the Common Stock on the New York Stock Exchange on the date preceding the date the option is granted. The reported closing price of the Common Stock on the New York Stock Exchange on April 9, 2020,2, 2021, the date of grant, was $13.23.$13.83.

 

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which was signed into law by President Obama on July 21, 2010, requires public companies to provide their shareholders with a non-binding vote to approve executive compensation at least once every three years. The Company is providing this shareholder advisory vote on its executive compensation in accordance with Section 14A of the Exchange Act and Exchange Act Rule 14a-21(a), which the Securities and Exchange Commission (the “SEC”) adopted on January 25, 2011 in order to implement the Dodd-Frank Act’s requirement. The Company will include a shareholder vote on executive compensation in its proxy materials each year until the next required vote on the frequency of shareholder votes on executive compensation, which must be held no later than 2023, or until the Company’s Board of Directors otherwise determines that a different frequency is in the best interests of the Company and its shareholders.

As described in the “Compensation Discussion and Analysis” elsewhere in this Proxy Statement, the Compensation and Stock Option Committees have developed an executive officer compensation program designed to pay for performance and to align the long-term interests of the Company’s executive officers with the long-term interests of the Company’s shareholders. The Company’s disclosure in the Compensation Discussion and Analysis and the disclosure included elsewhere in this Proxy Statement under the caption “Executive“Named Executive Officer Compensation” have been provided in response to the requirements of Item 402 of Regulation S-K of the SEC and explain the compensation policies under which the Company paid its named executive officers for the 20202021 fiscal year.

Under the Dodd-Frank Act and the related SEC rules, the Company’s shareholders’ vote on this resolution is an advisory or “non-binding” vote. This means that the purpose of the vote is to provide shareholders with a method to give their opinion to the Board and the Compensation and Stock Option Committees about the Company’s executive officer compensation. The Board is not required by law to take any action in response to the shareholder vote. As an advisory vote, the outcome of this vote is not binding on the Company or on the Board. However, the Board and the Compensation and Stock Option Committees will consider the voting outcome in connection with their ongoing evaluation of the Company’s compensation programs and arrangements.

Shareholders are being asked to approve the Company’s named executive officer compensation as described in this Proxy Statement. This approval vote is not intended to address any specific element of compensation but rather the overall compensation of the Company’s named executive officers and the philosophy, policies and practices described in this Proxy Statement.

Approval of the compensation of the Company’s named executive officers, on an advisory basis, requires the affirmative vote of the holders of a majority of the shares casting votes online or by proxy on this proposal at the Meeting. Abstentions and broker non-votes will have no effect on the outcome of the vote.

 

The Audit Committee has appointed CohnReznick LLP as the Company’s independent registered public accounting firm for the current fiscal year, which ends February 28, 2021,27, 2022, to audit the consolidated financial statements of the Company and its subsidiaries for the 20212022 fiscal year; and the Board is requesting ratification of such appointment by the shareholders at the Meeting. If this appointment is not ratified by the holders of a majority of the shares voting onlineoronline or by proxy at the Meeting, the Audit Committee will consider appointing another independent registered public accounting firm. The Audit Committee may terminate the appointment of CohnReznick LLP as the Company’s independent registered public accounting firm without the approval or ratification of the Company’s shareholders whenever the Audit Committee considers such termination to be appropriate. A representative of CohnReznick LLP is expected to be virtually present at the Meeting and will have an opportunity to make a statement if such representative so desires and will be available to respond to appropriate questions.

Ratification of CohnReznick LLP as the Company’s independent registered public accounting firm requires the affirmative vote of the holders of a majority of the shares casting votes online or by proxy on this proposal at the Meeting. Abstentions will have no effect on the outcome of the vote.

The following table shows the fees paid or accrued for audit, audit-related, tax and all other services rendered by CohnReznick LLP for the last two fiscal years ended February 28, 2021 and March 1, 2020, and March 3, 2019, respectively:

Audit fees include fees for the audit of the Company’s consolidated financial statements, interim reviews of the Company’s quarterly financial statements and the audit of the Company’s internal control over financial reporting and include out-of-pocket expenses.

The services performed by CohnReznick LLP were pre-approved in accordance with the pre-approval policy adopted by the Audit Committee.

The policy of the Audit Committee is to require that all services to be provided to the Company by the Company’s independent registered public accounting firm must be approved by the Audit Committee before such services are provided by the independent registered public accounting firm.

 

Shareholder proposals intended to be presented at the 20212022 Annual Meeting of Shareholders pursuant to Rule 14a-8 under the Exchange Act must be received by the Company at the Company’s principal executive offices for inclusion in the Proxy Statement and form of Proxy relating to that meeting by February 18, 2021. In order for shareholder proposals made outside of Rule 14a-8 under the Exchange Act to be considered “timely” within the meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be received by the Company at the Company’s principal executive offices by May 1, 2021.17, 2022. The Company’s By-Laws require that proposals of shareholders made outside of Rule 14a-8 under the Exchange Act must be submitted, in accordance with the requirements of the By-Laws, not later than April 22, 202121, 2022 and not earlier than March 23, 2021.22, 2022.

The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to the accounting, auditing, financial reporting, internal control and legal compliance functions of the Company and its subsidiaries. The Board of Directors has determined that all members of the Audit Committee are “independent”, as required by the current rules of the New York Stock Exchange. The Committee functions pursuant to a Charter that has been adopted by the Board, as required by rules of the New York Stock Exchange.

Management of the Company is responsible for the preparation, presentation and integrity of the Company’s financial statements, and for maintaining appropriate accounting and financial reporting principles and policies and internal controls and procedures designed to provide reasonable assurance of compliance with accounting standards and applicable laws and regulations. The independent registered public accounting firm is responsible for planning and carrying out an audit in accordance with the standards of the Public Company Accounting Oversight Board and expressing an opinion as to the conformity of the financial statements with generally accepted accounting principles and as to the Company’s internal control over financial reporting.principles.

The Board has established a process to receive communications from shareholders and other interested parties. Shareholders and other interested parties may contact any member (or all members) of the Board, including the non-management directors as a group, by mail. To communicate with the Board of Directors, any individual director or the non-management directors, correspondence should be addressed to the Board of Directors or any such individual director or the non-management directors by either name or title. All such correspondence should be sent “c/o General Counsel”Legal Department” at the Company’s office at 1400 Old Country Road, Westbury, New York 11590.

All communications received as set forth in the preceding paragraph will be opened by the office of the Company’s General CounselLegal Department for the sole purpose of determining whether the contents represent a message to the directors of the Company. Any contents that are not in the nature of advertising, promotions of a product or service, or patently offensive material will be forwarded promptly to the addressee. In the case of communications to the Board or the non-management directors, the General Counsel’sLegal Department’s office will make sufficient copies of the contents to send to each director who is a member of the group to which the communication is addressed.

For more than forty-five years, the Company has maintained basic corporate rules and guidelines agreed to in writing by its Chief Executive Officer, and prior to the sale of the electronics business, its business unit presidents and controllers. Such rules and guidelines cover such matters as personnel guidelines, transactions with suppliers, conflicts of interest and business ethics, transactions with relatives and friends, cash control and consolidations, capital expenditures, disposal of property, plant, equipment and inventory, insurance programs, legal matters and contracts, credit and collections, unusual business transactions and special charges and transfer charges, inventory levels, weekly and monthly financial reports and annual business plans, employee safety and environmental matters.

The Board has adopted a Code of Ethics for the Company’s Chief Executive Officer, Chief Financial Officer and Controller and, as required by rules of the New York Stock Exchange, a Code of Business Conduct and Ethics for the Company’s directors, officers and employees. Substantially all of the matters required to be addressed in the Code of Ethics and Code of Business Conduct and Ethics have been addressed

The Board has adopted Corporate Governance Guidelines, which are available on the Company’s web site at www.parkaerospace.com under the caption “Shareholders — Charters and Codes” as required by rules of the New York Stock Exchange and are available in print to any shareholder upon request submitted to the General CounselLegal Department at the Company’s office at 1400 Old Country Road, Westbury, New York 11590.

As of the date of this Proxy Statement, 564,500 securities454,050 shares remain available for future issuance under the 2018 Stock Option Plan.

The Board does not know of any other matters to be brought before the Meeting. If any other matters not mentioned in this Proxy Statement are properly brought before the Meeting, including matters incident to the conduct of the Meeting or relating to any adjournment of the meeting, the persons named in the enclosed proxy intend to vote such proxy in accordance with their best judgment on any other matters properly presented at the Meeting.