Fiscal 2022: Long-Term Equity-Based Target Awards
On December 7, 2021, the Compensation Committee established target awards for Ms. Johnson-Leipold and Mr. Johnson under our Stock Incentive Plan as shown in the table below. For these awards, the number of restricted stock units and shares of restricted stock granted was determined using a share price of $101.22.
| Helen P. Johnson-Leipold | | | 11,362 | | | $1,150,000 | | | — | | | — | |
| David W. Johnson | | | 2,593 | | | $262,500 | | | 2,470 | | | $250,000 | |
The actual number of shares tied to the portionperformance-based awards to be earned, if any, will be determined based on performance over the three-year performance period, i.e., fiscal 2022-2024. Service-based awards are subject to four-year cliff vesting periods from the date of grant. In addition, for service-based awards, the Compensation Committee has discretion, depending upon Company and participant performance for the applicable fiscal year, to reduce the value of the equity-based award that is tied to Company performance, theaward.
Closer Look at Performance-Based Stock Units
The Compensation Committee establishes pre-determined financial performance goals for the Company at the last quarterly Compensation Committee meeting held during the prior fiscal year (typically in September). The amount of the target award for each participant is set by the Compensation Committee during the first quarterly Compensation Committee meeting held during the initial fiscal year of the three year performance period (typically in December).
For fiscal 2020, the portion (or the entire award for the CEO) of the long-term equity-based incentive award that is2022, performance-based isrestricted stock units awarded to our NEOs are tied to three-year sales and operating profit goals aligned with our strategic plan and consisted of an award of performance-based restricted stock units.plan. These performance-based restricted stock units, similar to performance based restricted stock unit awards granted in prior years, include the following general provisions:
Fifty percent of the performance-based piece of the award is tied to achievement of cumulative net sales over a three year period (fiscal 20202022 - 2022)2024) and the remaining fifty percent is tied to achievement of cumulative operating profit over the same three year period (fiscal 2020 - 2022);period;
Awards are only paid if at least 80% of the target level of net sales or operating profit are met and maximummet. Maximum payouts are made if 120% or more of target levels of net sales or operating profit are achieved;
The payouts for achievement of the threshold levels of performance are equal to 50% of the target award amount. The payouts for achievement of maximum levels of performance are equal to 150% of the target award amount. Each of the financial metrics receives a fifty percent weighting in determining the aggregate award amount;
To the extent earned, awards are issued in shares of Company common stock after the end of the three year performance period; and
Awards are subject to downward adjustments in the event the Company has not achieved a specified minimum average return on invested capital per year during the three year performance period.
As noted above, the performance-based equity awards granted at the Compensation Committee meeting held in December 20197, 2021 cover a three-year performance period (fiscal years 2022 through 2024) with vesting to be determined in December 2024, depending on whether the performance criteria are satisfied.
On December 6, 2022, the Compensation Committee approved performance-based restricted stock unit awards to our named executive officersNEOs for fiscal 2023. These awards cover a three-year performance period consisting of fiscal years 20202023 through 2022,2025 with vesting determined by the Compensation Committee in December 2022,2025, depending on whether the performance criteria are satisfied. The Compensation Committee again approved performance-based equity-based awards to our named executive officers at the beginning of fiscal 2021 at the Compensation meeting held in December. These awards consisted of performance-based restricted stock units and also cover a three-year performance period consisting of fiscal years 2021 through 2023 with vesting in December 2023, depending on whether the performance criteria are satisfied.
As noted above, the Company splits the long-term equity-based incentive award for participants other than our CEO between shares of restricted stock tied to four year service-based cliff vesting and performance-based restricted stock unit equity grants described above. With respect to the portion of an equity-based award that is service-based, the Compensation Committee establishes the amount of the target award at its first quarterly Compensation Committee meeting heldawards granted during the prior fiscal year (typically in December). At the following December meeting, the Compensation Committee reviews each of Company and participant performance for the fiscal year. The Compensation Committee has discretion, depending upon Company and participant performance for the applicable fiscal year, to reduce the value of the equity award which is tied to service-based vesting with respect to any fiscal year. Any restricted shares which are granted for this service-based component are subject to at least four year cliff vesting periods from the date of grant.