Item 5.02Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 7, 2020, the Flexsteel Industries, Inc. (the "Company") Compensation
Committee ("Committee") approved the terms of certain awards under the Company's
Cash Incentive Plan and Long-Term Incentive Plan. The Committee's actions are
designed to address the near-term economic uncertainty due to the COVID-19
pandemic and continued global trade tensions while ensuring executive
compensation plans promote long-term shareholder value creation at an acceptable
level of risk.
Under the Cash Incentive Plan, the awards for the fiscal year ended June 30,
2021 will be based on two six-month performance periods, July 1, 2020 to
December 31, 2020 and January 1, 2021 to June 30, 2021. The Committee has
established performance objectives for the first six-month period and any awards
will be paid after the release of the second fiscal quarter results. The
performance objectives for the second six-month period will be set in January
2021 and any related awards will be paid upon the release of the fiscal
2021 year-end results.
For awards under the Long-Term Incentive Plan for the three-year period ended
June 30, 2022, participants may earn 1/3 of the award in each of the three years
based on meeting performance objectives for that year. The cumulative award
payout for all three years is made after the end of the third year. The
performance objectives for the second and third years were to be based on a set
growth rate of the performance objectives over the previous year's financial
results. Because of the adverse impact of the COVID-19 pandemic and continued
global trade tensions on the Company's financial results for the period ending
June 30, 2020, the calculation of the performance objectives for the second year
using the established growth rates in the plan would have resulted in financial
goals that are not aligned to long-term shareholder value creation. As a result,
performance objectives for the second year of the three-year award period ending
June 30, 2022 were modified.
Under the Long-Term Incentive Plan for the three-year period ended June 30,
2023, participants may earn 1/3 of the award each of the three years based on
meeting the performance objectives for that year. The cumulative award
payout for all three years is made after the end of the third year. Specific
performance objectives for the first year of the three-year award period have
been set by the Committee. The performance objectives for years two and three
will be based on set financial improvement goals over the previous year's actual
results of the performance objectives.
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