DEF 14A 1 nc10022268x1_def14a.htm DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

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☒	Definitive Proxy Statement

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☐	Soliciting Material under §240.14a-12

STONERIDGE, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing proxy statement, if other than the Registrant)

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STONERIDGE, INC.

39675 MacKenzie Drive, Suite 400

Novi, Michigan 48377

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Dear Shareholder:

We invite you to attend our 2021 Annual Meeting of Shareholders (the “Annual Meeting”) on Tuesday, May 11, 2021, at 11:00 a.m. (Eastern Time). The Annual Meeting can be accessed by the Internet at www.virtualshareholdermeeting.com/SRI2021. Because the Annual Meeting is virtual and being conducted electronically, shareholders cannot attend the meeting in person.

The purpose of the Annual Meeting is to consider and take action on the following items of business:

(1)	To elect nine directors, each for a term of one year;

(2)	To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021;

(3)	To vote on an advisory resolution to approve executive compensation;

(4)	To vote on a proposal to approve the Company’s Annual Incentive Plan; and

(5)	To transact such other business as may be properly brought before the Annual Meeting and any postponement or adjournment thereof.

Record Date. Only shareholders at the close of business on March 19, 2021, the record date, are entitled to notice of and to vote at the Annual Meeting.

We urge you to vote your shares on the Internet, by toll-free telephone call or, if you have requested a paper copy of our proxy materials, by signing, dating and returning the proxy card in the envelope provided.

			By order of the Board of Directors,

			THOMAS M. DONO, Jr.,
			Chief Legal Officer and Secretary

Dated: April 1, 2021

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 11, 2021:

This Proxy Statement and the Company’s 2020 Annual Report to Shareholders are also available at www.proxyvote.com.

YOUR VOTE IS IMPORTANT. PLEASE VOTE.

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STONERIDGE, INC.

2021 Proxy Statement Summary

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting.

We are furnishing to our shareholders these proxy materials, which include this Proxy Statement and our 2020 Annual Report to Shareholders, by providing access to them on the Internet at www.proxyvote.com. On or about April 1, 2021 we began mailing shareholders a Notice Regarding Availability of Proxy Materials (“Notice of Internet Availability”) containing important information, including instructions on how to access the proxy materials online and how to vote your shares over the Internet. If you receive a Notice of Internet Availability, you will not receive a paper or e-mail copy of the proxy materials unless you request one in the manner set forth in the Notice of Internet Availability.

The Board of Directors is soliciting proxies in connection with the 2021 Annual Meeting of Shareholders and encourages you to read the Proxy Statement and vote your shares by Internet, by telephone or by mailing your proxy card or voting instruction form.

Stoneridge, Inc. 2021 Annual Meeting Information

Date and Time:			Tuesday, May 11, 2021, at 11:00 a.m. (Eastern Time)
Virtual Meeting:			Access the meeting at www.virtualshareholdermeeting.com/SRI2021
Record Date:			March 19, 2021
Voting:			Shareholders as of the record date are entitled to vote. Each common share is entitled to one vote for each Director nominee and one vote for each of the other proposals presented for a vote.

Matters to be Considered:

Management Proposals		Board Vote Recommendation	Page (for more information)
1.	Elect nine directors named in this Proxy Statement	FOR ALL	6
2.	Ratify the appointment of Ernst & Young LLP	FOR	11
3.	Provide advisory vote on executive compensation	FOR	13
4.	Approval of the Company’s Annual Incentive Plan	FOR	40

Company Performance

We delivered strong performance in 2020, despite the external challenges of the global coronavirus pandemic (“COVID-19”), by adapting our cost structure to current market conditions and managing our cash position throughout the year. The Company believes that focusing on products that address industry megatrends will have a positive impact on both our top-line growth and underlying margins.

COVID-19 began to impact our operations in the first quarter of 2020 as government authorities imposed mandatory closures, work-from-home orders, social distancing protocols, and other restrictions. These actions materially affected our ability to adequately staff and maintain our operations and supply chain and significantly impacted our financial results in the first half of 2020. The adverse conditions caused by COVID-19 initially reduced demand for our products and increased operating costs, which resulted in lower overall margins. We instituted Safe Workplace Guidelines, which required changes to our manufacturing operations to reduce the spread of COVID-19 and keep our employees safe. In the second half of 2020, as a result of recovery across our global end-markets, we experienced significant sales growth compared to the second quarter of 2020. Although our end-markets showed strong recovery in the second half of 2020, during the fourth quarter of 2020, certain European, North American and South American countries began to initiate new governmental restrictions in response to renewed pandemic impacts and concerns, and many of these restrictions have continued into the first quarter of 2021. As a result, COVID-19 may continue to adversely impact demand for our products, financial condition and results of operations in the near term.

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Net sales decreased by $186.3 million, or 22.3%, compared to the prior year, due to lower sales in each of our segments. Our Control Devices segment net sales decreased primarily as a result of COVID-19 and discontinuation of 2019 sales under the contract manufacturing agreement relating to the disposal of Control Devices’ product lines and assets related to certain non-core switches and connectors (“Non-core Products”). Our Electronics segment net sales decreased primarily as a result of COVID-19, including a decrease in sales volume in our European, North American and China commercial vehicle markets as well as European off-highway vehicle products. These decreases were partially offset by a favorable foreign currency translation. Our Stoneridge Brazil segment (previously referred to as “PST”) net sales decreased due to unfavorable foreign currency translation and the effects of COVID-19 causing lower volumes for our aftermarket, mass retail and OES channels mostly in the second quarter of 2020.

Net income in 2020 decreased by $68.3 million compared to the prior year, primarily due to COVID-19, the 2019 gain on disposal of Control Devices’ Non-core Products of $33.6 million and the recovery of Brazilian indirect taxes of $6.5 million. This decrease in net income was partially offset by a favorable fair value adjustment, net for earn-out consideration of $5.5 million at Stoneridge Brazil and a $4.3 million decrease in restructuring costs during 2020.


(in thousands, except earnings per share and share price)	2020	2019
Net sales	$ 648,006	$ 834,289
Operating (loss) income	(7,664)	71,281
Net (loss) income	(7,950)	60,291
Diluted (loss) earnings per share	(0.29)	2.13
Share Price at December 31	30.23	29.32

Director Nominees

Below is a summary of the director nominees, who are elected for one-year terms. Additional information about each director nominee and his or her qualifications may be found beginning on page 6.

Jonathan B. DeGaynor

2015

President and CEO of Stoneridge, Inc.

Jeffrey P. Draime

2005

Self-employed business consultant

✔

Douglas C. Jacobs

2004

Chief Financial Officer and Treasurer, Brownstone Services LLC

✔

Ira C. Kaplan

2009

Executive Chairman of Benesch, Friedlander, Coplan & Aronoff LLP

✔

Kim Korth

2006

President and CEO 6th Avenue Group

✔

William M. Lasky

2004

Retired, Former President and CEO of Accuride Corporation

✔

George S. Mayes, Jr.

2012

Self-employed business consultant

✔

Paul J. Schlather

2009

Self-employed business consultant

✔

Frank S. Sklarsky

2021

Retired, Former Executive Vice President and Chief Financial Officer of PPG Industries, Inc.

✔

AC	Audit Committee	C	Committee Chairperson
CC	Compensation Committee	L	Lead Independent Director
NCGC	Nominating and Corporate Governance Committee
CEC	Compliance and Ethics Committee

Ratification of the appointment of Ernst & Young LLP

We are asking our shareholders to ratify the appointment of Ernst & Young LLP to serve as our independent registered public accounting firm for the year ending December 31, 2021. For more information, see page 11.

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Executive Compensation Highlights

Our executive compensation program is designed to attract, retain, motivate and reward talented executives who advance our strategic, operational and financial objectives and, thereby, enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:

•	Attract and retain talented executive officers by providing a compensation package that is competitive with that offered by similarly situated companies;

•	Create a compensation structure under which a substantial portion of total compensation is based on achievement of performance goals; and

•	Align total compensation with the objectives and strategies of our business and shareholders.

Key elements of our 2020 compensation program were as follows:

•	Base Salary. Base salary has been targeted at the 50^th percentile of our comparator group.

•	Annual Incentive Plan (AIP). The 2020 AIP was comprised of consolidated and, where appropriate, divisional financial performance metrics. In addition, there is an individual performance component.

•

Long-Term Incentive Plan (LTIP). Long-term incentives were awarded under our Long-Term Incentive Plan for 2020 and targeted at approximately the 50^th percentile of our comparator group. These awards will vest in three years, weight performance-based share units (“Performance Shares”) more heavily than time-based restricted share units (“RSUs”), and are allocated as follows: 25% of the Performance Shares vest subject to our Total Shareholder Return (“TSR”) over a three-year period compared to a group of peer companies; 20% vest based on our earnings per share (“EPS”) relative to budget over the three-year performance period; 10% vest based on our return on invested capital (“ROIC”) relative to budget over the three-year performance period; and 45% are RSUs that vest based on the passage of time.

For more information related to our executive compensation program, see page 19.

Annual Incentive Plan

We are also asking for our shareholders to approve the Company’s new Annual Incentive Plan. The Annual Incentive Plan will enable the Company to continue to attract, retain and reward officers and key employees. The Annual Incentive Plan provides an opportunity to our officers and key employees to earn annual incentive awards in order to motivate them to put forth maximum efforts toward the growth, profitability and success of the Company.

Corporate Governance Highlights

We believe that good corporate governance is key to achieving long-term shareholder value. We have adopted practices and policies that we believe serve the best interests of the Company and our shareholders, including:

•	8 out of 9 director nominees are independent directors

•	Independent Chairman of the Board who serves as the Board’s Lead Independent Director

•	22% percent Board ethnic/gender diversity

•	Separation of the Chief Executive Officer and Chairman of the Board roles

•	Annual Election of Directors

•	Majority Voting Principle in uncontested director elections

•	Independent directors regularly meet in executive session without management

•	All Committee members are independent

•	Shareholders’ ability to communicate with the Board

•	Single class of stock with equal voting rights; one vote per Common Share

iii

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•	Board establishment of a separate Compliance and Ethics Committee to oversee our Integrity Program

•	Robust Integrity Program

•	Code of Conduct

•	Whistleblower Policy and integrity helpline reporting available in multiple languages

•	Corporate Governance Guidelines

•	Annual Board and Committee self-evaluations

•	Meaningful stock ownership requirement for senior management and directors

•	Annual advisory vote on named executive officer compensation

•	Insider Trading Policy, including prohibition against hedging and pledging of Company stock

•	Review and approval of related party transactions

•	Adoption of a Modern Slavery Act Statement

Board Oversight of our Human Capital Management

The Board is actively engaged in oversight of the Company’s human capital management. Annually, the Board meets to review our succession strategy and leadership pipeline for key roles, including our President and Chief Executive Officer. In addition, the Board regularly receives reports from the Chief Human Resources Officer and is briefed on our employee engagement survey results. Board members also are active partners, engaging and spending time with our high potential leaders throughout the year at Board meetings and other events. The Board’s Compensation Committee oversees compensation and seeks to ensure it is aligned with creating long-term shareholder value. The Board’s Compliance & Ethics Committee oversees our global compliance programs, in part, to ensure all employees are treated fairly and with respect.

2020 Company Response to COVID-19.

It is always a top priority, but in 2020 the health and safety of our employees was of paramount importance due to the global COVID-19 pandemic. Where feasible, employees began working from home in March 2020 through the remainder of the year and into 2021. For jobs that could not be performed remotely, extensive safety measures were implemented through our Safe Workplace Guidelines, including temperature and health screenings, distanced workstations, plexiglass barriers, enhanced cleaning and disinfection protocols, required face coverings, contact tracing when needed and employee training. Our safety measures are aligned with the recommendations of U.S. and global health organizations, and have continued into 2021.

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STONERIDGE, INC.

PROXY STATEMENT

The Board of Directors (the “Board”) of Stoneridge, Inc. (the “Company”) is sending you this Proxy Statement to ask for your vote as a Company shareholder on matters to be voted on at our Annual Meeting of Shareholders (“Annual Meeting”) to be held on Tuesday, May 11, 2021, at 11:00 a.m. (Eastern Time), for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Shareholders. This year’s meeting will be a “virtual” Annual Meeting. You can attend the Annual Meeting online, vote your shares electronically, and submit your questions during the Annual Meeting, by visiting www.virtualshareholdermeeting.com/SRI2021. You will need to have your 16-digit Control Number included on your Notice of Internet Availability or your proxy card (if you received a printed copy of the proxy materials) to join the Annual Meeting.

We are mailing shareholders a Notice of Internet Availability containing instructions on how to access the Proxy Materials and how to vote online on or about April 1, 2021.

Annual Report; Internet Availability

As permitted by U.S. Securities and Exchange Commission (“SEC”) rules, we are furnishing our proxy materials, which include this Proxy Statement, our Notice of Annual Meeting of Shareholders and our 2020 Annual Report to Shareholders, to shareholders by providing access to the proxy materials on the Internet at www.proxyvote.com. The Company anticipates that the Notice of Internet Availability in connection with our proxy solicitation materials will first be mailed on or about April 1, 2021 to all shareholders entitled to vote at the Annual Meeting and we will post our proxy materials on the website referenced in the Notice of Internet Availability. As more fully described in the Notice of Internet Availability, all shareholders may choose to access our proxy materials on the website referred to in the Notice of Internet Availability or may request to receive, without charge, a printed set of our proxy materials.

Solicitation of Proxies

The Board is making this solicitation of proxies and we will pay the cost of the solicitation. In addition, our employees may solicit proxies by telephone, facsimile or e-mail.

Proxies

The common shares represented by your proxy will be voted in accordance with the instructions indicated on your proxy card. In the absence of any such instructions, they will be voted to (i) elect the director nominees set forth under “Election of Directors”; (ii) ratify the appointment of Ernst & Young LLP as our registered public accounting firm for 2021; (iii) approve on an advisory basis the compensation of our Named Executive Officers, and (iv) approve the Company’s Annual Incentive Plan.

No business other than that set forth in the accompanying Notice of Annual Meeting of Shareholders is expected to come before the Annual Meeting. Should any other matter requiring a vote of shareholders properly arise, the persons named in the enclosed form of proxy will vote such proxy in accordance with their judgment.

Revocation of Proxies

Your participation at the Annual Meeting, without further action, will not revoke your proxy. However, if you are a registered shareholder you may revoke your proxy at any time before it has been exercised by:

•	signing and delivering a later-dated proxy;

•	voting again by Internet or telephone prior to 11:59 p.m. (Eastern Time) on May 10, 2021 (only the latest vote you submit will be counted);

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•	giving notice to the Company in writing at our address indicated on the attached Notice of Annual Meeting of Shareholders (the notification must be received by the close of business on May 10, 2021); or

•	by voting at the Annual Meeting.

If you hold your common shares in “street name”, in order to change or revoke your voting instructions you must follow the specific voting directions provided to you by your bank, broker or other holder of record.

Virtual Shareholder Meeting

In order to address concerns and continuing government restrictions related to the ongoing global coronavirus pandemic (“COVID-19”) this year we are again holding a virtual Annual Meeting. In addition to concerns related to COVID-19, holding a virtual Annual Meeting provides expanded access, improved communication and potential cost savings to our shareholders and our Company. We believe that holding a virtual Annual Meeting will enable more shareholders to attend and participate in the meeting because our shareholders can fully participate from any location with Internet access.

The Annual Meeting will be conducted exclusively online via live, audio-only, webcast, allowing all of the Company’s shareholders the option to participate in the live, online shareholder meeting from any location convenient to them. Only shareholders at the close of business on the record date may attend, vote and ask questions at the Annual Meeting by following the instructions provided. The virtual Annual Meeting can be accessed by visiting:

www.virtualshareholdermeeting.com/SRI2021

You will need to have your 16-digit Control Number included on our Notice of Internet Availability and/or your proxy card (if you received a printed copy of the proxy materials) to join and participate in the Annual Meeting. If you hold any of your shares through a bank, broker or other holder of record (i.e., in street name) the control number is issued to you by your bank, broker or other holder of record.

We encourage you to access the Annual Meeting before the start time of 11:00 a.m. (Eastern Time), on May 11, 2021. Please allow ample time for online check-in, which will begin at 10:30 a.m. (Eastern Time) on May 11, 2021.

If you encounter difficulties accessing the virtual meeting, please call the technical support number that will be posted at www.virtualshareholdermeeting.com/SRI2021.

Shareholders who participate in the virtual Annual Meeting by means of the hyperlink above will be deemed to be “present in person,” as such term is used in this Proxy Statement, including for purpose of determining a quorum and counting votes.

Record Date and Voting Eligibility

Only shareholders at the close of business on the record date, March 19, 2021, are entitled to receive notice of the Annual Meeting and to vote the common shares held on the record date at the meeting. On the record date, our outstanding voting securities consisted of 27,161,776 common shares, without par value, each of which is entitled to one vote on each matter properly brought before the meeting.

Voting

The Board is asking for your proxy in advance of the Annual Meeting. Giving your proxy means you authorize the individuals designated as proxies to vote your common shares at the Annual Meeting in the manner you direct. You may give your proxy or otherwise vote your common shares in one of several ways, depending on how you hold your shares.

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Shareholders of Record

If your common shares are registered directly in your name with the Company’s transfer agent, you are considered the “shareholder of record” of those shares and you may:

•

By Telephone. You may vote by telephone by calling toll-free 1-800-690-6903 on a touch-tone phone until 11:59 p.m. Eastern Time on May 10, 2021. Please have your Notice of Internet Availability or proxy card in hand when you call. The telephone voting system has easy-to-follow instructions and provides confirmation that the system has properly recorded your vote.

•

By Internet. You may vote your shares by proxy by visiting the website www.proxyvote.com until 11:59 p.m. Eastern Time on May 10, 2021. Please have your Notice Internet of Availability or proxy card in hand when you access the website. The website has easy-to-follow instructions and provides confirmation that the system has properly recorded your vote.

•

By Mail. If you have requested or receive paper copies of our proxy materials by mail, you may vote your shares by proxy by signing, dating and returning the proxy card in the postage-paid envelope provided. Mailed proxy cards with respect to shares held of record should be mailed to allow sufficient time for delivery and tabulation. If you vote by telephone or over the Internet, you do not need to return your proxy card by mail.

•

At the Annual Meeting. You may vote your shares by attending the Annual Meeting by accessing www.virtualshareholdermeeting.com/SRI2021 and voting using the 16-digit control number included on your proxy card and/or on your Notice of Internet Availability. However, you are encouraged to vote in advance of the Annual Meeting by mail, telephone or Internet even if you plan to participate in the Annual Meeting via the Internet.

Street Name Holders

•

If you hold any of your shares through a bank, broker or other holder of record (i.e., in street name), you may be able to authorize your proxy for those shares by telephone, the Internet or mail. You should follow the instructions you receive from your bank, broker or other holder of record to vote these shares. If you are a street name holder and wish to vote during the virtual meeting you may use the 16-digit control number provided by your bank, broker or other holder of record. However, you are encouraged to vote in advance of the Annual Meeting by mail, telephone or Internet even if you plan to participate in the Annual Meeting via the Internet.

If you do not instruct your broker, bank or other nominee on how to vote your shares, it will have discretionary authority, under New York Stock Exchange (“NYSE”) rules, to vote your shares on the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2021 (“Proposal 2”). However, your broker, bank or other nominee will not be permitted to vote your shares (a “broker non-vote”) on the election of directors (“Proposal 1”), the advisory vote to approve our compensation of our Named Executive Officers (“Proposal 3”), or proposal to approve the Annual Incentive Plan (“Proposal 4”).

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the beneficial ownership of our common shares as of February 26, 2021, by: (a) our directors and nominees for election as directors; (b) each other person who is known by us to own beneficially more than 5% of our outstanding common shares; (c) the executive officers named in the Summary Compensation Table; and (d) all of our executive officers and directors as a group.

Name of Beneficial Owner	Number of Shares Beneficially Owned⁽¹⁾	Percent of Class
Frontier Capital Management Co., LLC.⁽²⁾	2,155,173	8.0%
BlackRock, Inc.⁽³⁾	1,999,076	7.4
T. Rowe Price Associates, Inc.⁽⁴⁾	1,734,644	6.4
Janus Henderson Group plc⁽⁵⁾	1,689,494	6.3
Dimensional Fund Advisors LP⁽⁶⁾	1,646,765	6.1
The Vanguard Group⁽⁷⁾	1,367,130	5.1
Jeffrey P. Draime⁽⁸⁾	447,023	1.7
Jonathan B. DeGaynor⁽⁹⁾	209,970	*
William M. Lasky⁽¹⁰⁾	134,389	*
Paul J. Schlather⁽¹¹⁾	123,346	*
Ira C. Kaplan⁽¹²⁾	69,361	*
Douglas C. Jacobs⁽¹⁰⁾	68,669	*
Robert R. Krakowiak⁽¹³⁾	65,485	*
Kim Korth⁽¹⁰⁾	63,409	*
George S. Mayes, Jr.⁽¹⁰⁾	52,429	*
Thomas M. Dono, Jr.⁽¹⁴⁾	14,949	*
Laurent P. Borne⁽¹⁵⁾	14,678	*
Frank S. Sklarsky	—	*
Kevin R. Heigel	—	*
All Executive Officers and Directors as a Group (18 persons)	1,313,074	4.9%

*	Less than 1%.

(1)	Unless otherwise indicated, the beneficial owner has sole voting and investment power over such common shares.

(2)	According to a Schedule 13G filed with the SEC by Frontier Capital Management Co., LLC. The address of Frontier Capital Management Co., LLC is 99 Summer Street, Boston, MA 02110.

(3)	According to a Schedule 13G/A filed with the SEC by BlackRock, Inc. The address of BlackRock, Inc. is 55 East 52^nd Street, New York, New York 10055.

(4)	According to a Schedule 13G/A filed with the SEC by T. Rowe Price Associates, Inc. The address of T. Rowe Price Associates Inc. is 100 E. Pratt Street, Baltimore, MD 21202.

(5)	According to a Schedule 13G filed with the SEC by Janus Henderson Group plc (“Janus”), reporting that Janus and/or its subsidiaries hold shared voting and dispositive power over 1,689,494 shares. The address of Janus is 201 Bishopsgate, EC2M 3AE, United Kingdom.

(6)

According to a Schedule 13G/A filed with the SEC by Dimensional Fund Advisors LP, all securities reported are owned by commingled funds, group trusts and separate accounts to which it or its subsidiaries serve as investment advisor, sub-advisor and/or manager. Dimensional Fund Advisors LP has disclaimed beneficial ownership of all such securities. The address of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, Texas 78746.

(7)	According to a Schedule 13G/A filed with the SEC by The Vanguard Group. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, Pennsylvania 19355.

(8)	Represents 347,714 common shares held in trust for the benefit of Draime family members, of which Mr. Draime is trustee, 92,499 common shares owned by Mr. Draime directly and 6,810 restricted common shares subject to forfeiture (which vested on March 9, 2021).

(9)	Includes 73,762 time-based share units and performance-based performance shares, which vest and are payable in common shares on a one-for-one basis on March 6, 2021.

(10)	Includes 6,810 restricted common shares subject to forfeiture (which vested on March 9, 2021).

(11)	Represents 47,500 common shares held in an investment retirement account for the benefit of Mr. Schlather, 69,036 common shares owned by Mr. Schlather directly and 6,810 restricted common shares subject to forfeiture (which vested on March 9, 2021).

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(12)	Represents 62,551 common shares held in a trust, of which Mr. Kaplan is trustee, and 6,810 restricted common shares subject to forfeiture (which vested on March 9, 2021).

(13)	Includes 21,951 time-based share units and performance-based performance shares, which vest and are payable in common shares on a one-for-one basis on March 6, 2021.

(14)	Includes 14,949 time-based share units and performance-based performance shares, which vest and are payable in common shares on a one-for-one basis on March 6, 2021.

(15)	Includes 12,166 time-based share units and performance-based performance shares, which vest and are payable in common shares on a one-for-one basis on March 10, 2021.

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PROPOSAL ONE: ELECTION OF DIRECTORS

In accordance with the Company’s Amended and Restated Code of Regulations, the number of directors has been fixed at nine. At the Annual Meeting, shareholders will elect nine directors to hold office until our next Annual Meeting of Shareholders and until their successors are elected and qualified. The Board proposes that the nominees identified below be elected to the Board. Jonathan B. DeGaynor has an employment agreement with the Company which provides that during the term of the agreement he shall be entitled to be nominated for election to the Board. At our Annual Meeting, the common shares represented by proxies, unless otherwise specified, will be voted for the election of the nine nominees hereinafter named.

Directors are elected by a plurality of the votes cast at the Annual Meeting. Broker non-votes and abstaining votes will be counted as “Present” for purposes of determining whether a quorum has been achieved at the Annual Meeting, but will not be counted as “For” or “Withheld” from any nominee. “Plurality” means that the director nominees who receive the greatest number of votes cast are elected, up to the maximum number of directors to be elected at the meeting. The maximum number to be elected is nine. Shares not voted will have no impact on the election of directors. Unless proper voting instructions are to “Withhold” authority for any or all nominees, the proxy given will be voted “For” each of the nominees for director.

Majority Voting Principle. Under our Corporate Governance Guidelines, any nominee for director in an uncontested election who receives a greater number of votes “Withheld” from his or her election than votes “For” his or her election must promptly offer his or her resignation. The Board’s Nominating and Corporate Governance Committee will then consider the resignation and recommend to the Board whether to accept or reject it. The Board will act on the Committee’s recommendation within 90 days after the Annual Meeting, and the Board’s decision will be publicly disclosed on Form 8-K. Any director who offers his or her resignation may not participate in the Board’s discussion or vote.

The director nominees nominated by the Board are identified below. If for any reason any of the nominees is not a candidate when the election occurs (which is not expected), the Board expects that proxies will be voted for the election of a substitute nominee designated by the Board. The following information is furnished with respect to each person nominated for election as a director.

The Board of Directors recommends that you vote FOR the following nominees.

Nominees to Serve for a One-Year Term Expiring in 2022

Jonathan B. DeGaynor			Mr. DeGaynor, 54, is the President and Chief Executive Officer (“CEO”) of the Company and has served in this role since March 2015. Mr. DeGaynor served as the Vice President-Strategic Planning and Innovation of Guardian Industries Corp. (“Guardian”), a manufacturer of industrial glass and other building products for commercial, residential and automotive applications, from October 2014 until March 2015. Prior to that, Mr. DeGaynor served as Vice President-Business Development, Managing Director Asia for SRG Global, Inc., a Guardian company and manufacturer of chrome plated plastic parts for the automotive, commercial truck and consumer goods industries, from August 2008.

			The Company believes that Mr. DeGaynor should serve as a director because he provides services as the Company’s President and Chief Executive Officer and because his extensive career in the automotive industry has spanned all phases of engineering, operations leadership, corporate strategy and business leadership. He brings expertise related to development and production of products and technologies. He provides valuable insight to the Board and strengthens the Board’s collective qualifications, skills and experience.

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Jeffrey P. Draime			Mr. Draime, 54, has served as a director since 2005. Since 2005 Mr. Draime has been a self-employed business consultant. Mr. Draime is a partner and the President of AeroMax Aviation Holdings LLC, a charter aircraft corporation.

			Mr. Draime served in various roles with the Company from 1988 through 2001, including operations, sales, quality control, product costing, and marketing. From 1999 to 2011 he was the owner of QSL Columbus/QSL Dayton, a restaurant franchise. From 2017 to the fall of 2020 Mr. Draime has served as the Chairman of the Board of Directors of Aeromics, Inc., a clinical stage biotech company. From 2013 through 2015, Mr. Draime served as a director of Servantage Dixie Sales, Inc., an independent, full service, value added distributor serving consumer products markets. The Company believes Mr. Draime should serve as a director because he provides historical as well as an internal perspective of our business to the Board and strengthens the Board’s collective qualifications, skills and experience.

Douglas C. Jacobs			Mr. Jacobs, 81, has served as a director since 2004. Since 2015 he has served as the Chief Financial Officer and Treasurer of Brownstone Services LLC and several other privately held companies owned by the beneficiary of a marital trust. From 2005 to 2014, Mr. Jacobs was the Executive Vice President-Finance and Chief Financial Officer of Brooklyn NY Holdings LLC, a privately held investment advisory company established to manage the assets of a marital trust. Prior to serving in this position, from 1999 until 2005, Mr. Jacobs held various financial positions with the Cleveland Browns. Mr. Jacobs is a former partner of Arthur Andersen LLP.

			Mr. Jacobs served as a director and member of the Audit Committee of the Board of CalAtlantic Group Inc., a national residential home builder, which was formed as a result of the merger of Standard Pacific Corporation and Ryland Homes in October 2015 until January 2018. Prior to the merger, beginning in 1998, Mr. Jacobs served as a director of Standard Pacific Corporation, a national residential home builder in southern California, and served as Chairman of the Audit Committee and a member of the Compensation, Executive and Nominating and Corporate Governance Committees.

			Mr. Jacobs qualifies as an audit committee financial expert due to his extensive background in accounting and finance built through his career in public accounting. In addition to his professional and accounting experience described above, the Company believes that Mr. Jacobs should serve as a director because he provides valuable business experience and judgment to the Board, which strengthens the Board’s collective qualifications, skills and experience.

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Ira C. Kaplan			Mr. Kaplan, 66, has served as a director since 2009. Since January 2015 he has served as the Executive Chairman of Benesch, Friedlander, Coplan & Aronoff LLP, a national law firm, and served as the Managing Partner from 2008 until 2014. He is a member of the firm’s Executive Committee and has been a partner with the firm since 1987. Mr. Kaplan focuses his practice on mergers and acquisitions as well as public and private debt and equity financings.

			Mr. Kaplan counsels clients in governance and business matters in his role at the law firm. In addition to his legal and management experience described above, the Company believes that Mr. Kaplan should serve as a director because he brings thoughtful analysis, sound judgment and insight to best practices to the Board, in addition to his professional experiences, which strengthens the Board’s collective qualifications, skills and experience.

Kim Korth
			Ms. Korth, 66, has served as a director since 2006. Since April 2019, Ms. Korth has served as the Managing Director of Engauge Workforce Solutions LLC. Since June 2017, Ms. Korth has served as the President and Chief Executive Officer of 6^th Avenue Group, a firm focused on improving the sustainability and adaptability of small to medium manufacturing and technology firms. Prior to that, from January 2018 to December 2019, Ms. Korth was the Chief Executive Officer of bb7. Prior to that, from December 2012 until May 2017, Ms. Korth was the President and Chief Executive Officer of Dickten Masch Plastics, LLC, a thermoplastics and thermoset manufacturer, and as the President, Chief Executive Officer and director of TECHNIPLAS^TM, a privately held group of plastics-focused manufacturing businesses. Prior to that, she served as President, Chief Executive Officer and as a director of Supreme Corporation, a manufacturer of truck and van bodies, from 2011 to 2012. Ms. Korth was the founder and owner of IRN Inc. from 1983 to 2014, a well-known firm focused on automotive supplier strategy issues.

			Ms. Korth is a member of the board of directors of Unique Fabricating, Inc., (NYSE American: UFAB), a leader in engineering and manufacturing multi-material foam, rubber, and plastic components utilized in noise, vibration, and harshness management and air/water sealing applications for the transportation, appliance, medical, and consumer markets.

			Ms. Korth has several decades of experience in corporate governance issues, organizational design, and development of strategies for growth and improved financial performance for automotive suppliers. In addition to the knowledge and experience described above, the Company believes that Ms. Korth should serve as a director because she provides insight to industry trends and expectations to the Board, which strengthens the Board’s collective qualifications, skills and experience.

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William M. Lasky			Mr. Lasky, 73, has served as a director since 2004. Mr. Lasky served as President and Chief Executive Officer of Accuride Corporation (“Accuride”), a manufacturer and supplier of commercial vehicle components, from 2008 until his retirement in 2011. He served as the Chairman of the Board of Accuride from 2009 to 2012. Mr. Lasky served as President and Chief Executive Officer of JLG Industries, Inc., a diversified construction and industrial equipment manufacturer, from 1999 through 2006 and served as Chairman of the Board from 2001 through 2006.

			From 2011 through May 2016, Mr. Lasky also served as a director of Affinia Group, Inc., a designer, manufacturer and distributor of industrial grade replacement parts and services for automotive and heavy-duty vehicles.

			In addition to his professional experience described above, the Company believes that Mr. Lasky should serve as a director because he provides in-depth industry knowledge, business acumen and leadership to the Board, which strengthens the Board’s collective qualifications, skills and experience.

George S. Mayes, Jr.			Mr. Mayes, 62, has served as a director since 2012. Mr. Mayes currently provides independent business consulting services. Previously, Mr. Mayes served as Executive Vice President and Chief Operating Officer of Diebold, Inc., a provider of integrated self-service delivery and security systems and services, from 2013 to 2015. Prior to that, he served as Executive Vice President of Operations from 2008, as Senior Vice President, Supply Chain Management from 2006 to 2008, and as Vice President, Global Manufacturing upon joining Diebold, Inc. in 2005. Since March 2021, Mr. Mayes has been a member of the board of directors of Forward Air Corporation (NASDAQ: FWRD), a leading asset-light freight and logistics company that provides services across the United States and Canada.

			Mr. Mayes has extensive experience in lean manufacturing and Six Sigma processes and has managed manufacturing facilities in Canada, Mexico, France, Hungary, Brazil, China, Poland, Italy and the United States.

			The Company believes that Mr. Mayes should serve as a director because he provides in-depth knowledge of manufacturing and operations, business acumen and leadership to the Board, which strengthens the Board’s collective qualifications, skills and experience.

Paul J. Schlather			Mr. Schlather, 68, has served as a director since 2009. Mr. Schlather currently provides independent business consulting services. Mr. Schlather was a partner at PricewaterhouseCoopers LLP, serving as co-head to the Private Client Service group from August 2002 until his retirement in 2008. Mr. Schlather also serves on the boards of five closely held businesses.

			Mr. Schlather qualifies as an audit committee financial expert due to his extensive background in accounting and finance built through his career in public accounting. In addition to his professional and accounting experience described above, the Company believes that Mr. Schlather should serve as a director because he provides financial analysis and business acumen to the Board, which strengthens the Board’s collective qualifications, skills and experience.

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Frank S. Sklarsky			Mr. Sklarsky, 64, was elected to the Board of Director on February 22, 2021. Mr. Sklarsky currently serves on the Board of Directors of two privately held companies, Nexa3d, Inc., and Cenveo Worldwide Ltd. From 2012 to 2017, Mr. Sklarsky was a director and a member of the audit and compensation committees of Harman International (NYSE: HAR). From 2013 to 2017, Mr. Sklarsky served as Executive Vice President and Chief Financial Officer of PPG Industries, Inc. From 2010 to 2012, he was Executive Vice President and Chief Financial Officer of Tyco International. From 2006 to 2010 he was Executive Vice President and Chief Financial Officer of Eastman Kodak Company. From 2004 to 2006, he was Executive Vice President and Chief Financial Officer of Conagra Foods, Inc. Earlier in his career, Mr. Sklarsky spent 20 years with Chrysler and DaimlerChrysler, serving in a series of management roles, ultimately rising to the position of vice president, Finance – Product Quality, Cost Management and, Procurement. He also served in executive finance positions with Dell, Inc. He started his career at Ernst & Young LLP.

			Mr. Sklarsky qualifies as an audit committee financial expert due to his extensive accounting and financial background built through his experience in public accounting and his service as CFO at several large public companies. In addition to his professional, accounting and finance experience described above, the Company believes that Mr. Sklarsky should serve as a director because he provides vast experience in CFO roles as well as the comprehensive management and leadership experience he has gained as a senior executive at multiple global corporations, which strengthens the Board’s collective qualifications, skills and experience.

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PROPOSAL TWO: RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP

The Audit Committee of the Board currently anticipates appointing Ernst & Young LLP (“Ernst & Young”) as our independent registered public accounting firm for the year ending December 31, 2021. For 2020, Ernst & Young was engaged by us to audit our annual financial statements, assess our internal control over financial reporting and to perform audit-related and tax services. We expect that representatives of Ernst & Young will be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions from shareholders.

The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit the Company’s financial statements. As a matter of good corporate governance, the Audit Committee requests that shareholders ratify its anticipated selection of Ernst & Young to serve as our independent registered public accounting firm for 2021.

Although ratification by shareholders is not legally required, the Board believes that the submission is an opportunity for the shareholders to provide feedback on an important issue of corporate governance. If our shareholders do not approve the appointment of Ernst & Young, the appointment of our independent registered public accounting firm will be re-evaluated by the Audit Committee, but will not require the Audit Committee to appoint a different accounting firm. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during 2021 if it determines that such a change would be in the best interests of the Company and our shareholders.

Vote Required for Approval

Approval of this proposal requires the affirmative vote of a majority of the common shares present in person or by proxy and entitled to be voted on the proposal at our Annual Meeting. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on the proposal and will not have a positive or negative effect on the outcome of this proposal, however, there should be no broker non-votes on this proposal because brokers should have the discretion to vote uninstructed common shares on this proposal.

The Board of Directors recommends that you vote FOR Proposal Two.

Service Fees Paid to the Registered Public Accounting Firm

For the fiscal years ended December 31, 2020 and 2019 we retained Ernst & Young to provide services in the following categories and amounts. The Audit Committee has considered the scope and fee arrangements for all services provided by Ernst & Young, taking into account whether the provision of non-audit-related services is compatible with maintaining Ernst & Young’s independence.

	2020	2019
Audit Fees	$1,895,700	$2,380,600
Audit Related Fees	3,000	5,400
Tax Fees	286,400	331,100
Total Fees	$2,178,000	$2,717,100

Audit Fees. Audit fees include services associated with the annual audit of our consolidated financial statements, the audit of our internal control over financial reporting, the quarterly reviews of the financial statements included in our SEC Form 10-Q filings, international statutory audits and other services that are normally provided by the independent registered accountants in connection with regulatory filings.

Audit Related Fees. Audit Related fees include services associated with assurance and related services that are reasonably related to the performance of the audit of the Company’s financial statements.

Tax Fees. Tax fees relate to tax planning, domestic and international tax compliance and tax advice.

Pre-Approval Policies and Procedures

The Audit Committee’s policy is to approve in advance all audit and permitted non-audit services to be performed for the Company by its independent registered public accounting firm. Pre-approval is

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generally provided for up to one year, is detailed as to the particular service or category of services and is generally subject to a specific budget. The Audit Committee also pre-approves particular services on a case-by-case basis. In accordance with this policy, the Audit Committee has delegated pre-approval authority to the Chairman of the Audit Committee. The Chairman may pre-approve services and inform the Audit Committee at the next scheduled meeting.

All services provided by Ernst & Young during fiscal year 2020, as noted in the previous table, were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described above.

Audit Committee Report

In accordance with its written charter, the Audit Committee assists the Board in fulfilling its responsibility relating to corporate accounting, our reporting practices, and the quality and integrity of the financial reports and other financial information provided by us to any governmental body or to the public. Management is responsible for the financial statements and the financial reporting process, including assessing the effectiveness of the Company’s internal control over financial reporting. The independent registered public accounting firm is responsible for conducting audits and reviews of our financial statements in accordance with standards established by the Public Company Accounting Oversight Board, expressing an opinion on the conformity of the Company’s financial statements in accordance with generally accepted accounting principles, and auditing and reporting on the Company’s effectiveness of internal controls over financial reporting. The Audit Committee is comprised of five directors, each of whom is “independent” for audit committee purposes under the listing standards of the NYSE.

In discharging its oversight responsibility as to the audit process, the Audit Committee reviewed and discussed our audited financial statements for the year ended December 31, 2020, with management, including a discussion of the quality, not just the acceptability, of the accounting principles; the reasonableness of significant judgments; and the clarity of disclosures in the financial statements. The Audit Committee also discussed with our independent registered public accounting firm, Ernst & Young, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. The Audit Committee has received the written disclosures and letter from Ernst & Young required by the applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young’s communication with the Audit Committee concerning independence. The Audit Committee discussed Ernst & Young’s independence with Ernst & Young. The Audit Committee also considered whether the provision of non-audit services by Ernst & Young is compatible with maintaining Ernst & Young’s independence.

The Audit Committee discussed with our Internal Audit Director and Ernst & Young the overall scope and plans for their respective audits. The Audit Committee also met with the Internal Audit Director and Ernst & Young, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of the Company’s financial reporting.

Based on the above-referenced review and discussions with management, the Internal Audit Director and Ernst & Young, the Audit Committee recommended to the Board, and the Board approved, that the audited consolidated financial statements for fiscal 2020 be included in the Company’s Annual Report on Form 10-K filed with the SEC.

The Audit Committee

Douglas C. Jacobs, Chairman

Ira C. Kaplan

William M. Lasky

George S. Mayes, Jr.

Paul J. Schlather

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PROPOSAL THREE: SAY-ON-PAY

As required by Section 14A of the Securities Exchange Act of 1934 (the “Exchange Act”) we provide our shareholders with the opportunity to cast an annual advisory non-binding vote to approve the compensation of our Named Executive Officers as disclosed pursuant to the SEC’s compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables) (a “Say-On-Pay” proposal). We believe that it is appropriate to seek the views of shareholders on the design and effectiveness of the Company’s executive compensation program.

At the Company’s 2020 Annual Meeting of Shareholders, 95.2% of the votes cast on the Say-On-Pay proposal voted in favor of the proposal. The Compensation Committee believes this affirmed shareholders’ support of the Company’s approach to executive compensation.

Our goal for the executive compensation program is to attract, motivate, and retain a talented, entrepreneurial and creative team of executives to provide operational and strategic leadership for the Company’s success in competitive markets. We seek to accomplish this goal in a way that rewards performance and is aligned with our shareholders’ long-term interests. We believe that our executive compensation program, which emphasizes performance-based compensation and long-term equity awards, satisfies this goal and is strongly aligned with the long-term interests of our shareholders.

Base compensation is aligned to be competitive in the industry in which we operate. Performance-based compensation (cash and equity) represents 46-53% of each executive officer’s target compensation opportunity, with long-term incentives representing the largest portion of compensation. Targets for incentive compensation are based on financial performance targets and increasing shareholder value. The Compensation Committee retains the services of an independent compensation consultant to advise the Committee on competitive compensation and compensation practices.

The Board recommends that shareholders vote FOR the following resolution:

“RESOLVED that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”

Because the vote is advisory, it will not be binding upon the Board or the Compensation Committee. The Board and the Compensation Committee value the opinions of our shareholders and will take into account the outcome of the vote when considering future decisions regarding executive compensation.

Vote Required for Approval

The affirmative vote of a majority of the common shares present or represented by proxy and voting at the Annual Meeting will constitute approval of this non-binding resolution. If you own common shares through a bank, broker or other holder of record, you must instruct your bank, broker or other holder of record how to vote in order for them to vote your common shares so that your vote can be counted on this proposal. Abstentions will have the same effect as votes against the proposal. Broker non-votes will not be considered common shares present and entitled to vote on this proposal and will not have a positive or negative effect on the outcome of this proposal.

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CORPORATE GOVERNANCE

Corporate Governance Documents and Committee Charters

The Company’s Corporate Governance Guidelines, Code of Conduct, Code of Ethics for Senior Financial Officers and the charters of the Board of Directors’ Audit, Compensation, Nominating and Corporate Governance and Compliance and Ethics committees are posted on our website at www.stoneridge.com.

Written copies of these documents are available without charge to any shareholder upon request. Requests should be directed to Investor Relations at the address listed on the Notice of Annual Meeting of Shareholders.

Corporate Ethics Hotline

We established a corporate ethics hotline as part of our Whistleblower Policy and Procedures to allow persons to lodge complaints about accounting, auditing and internal control matters, and to allow an employee to lodge a concern, confidentially and anonymously, about any accounting and auditing matter. Information about lodging such complaints or making such concerns known is contained in our Whistleblower Policy and Procedures, which is posted on our website at www.stoneridge.com.

Director Independence

The NYSE rules require listed companies to have a Board of Directors comprised of at least a majority of independent directors. Under the NYSE rules, a director qualifies as “independent” upon the affirmative determination by the Board of Directors that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The Board has not adopted categorical standards of independence. The Board has determined that the following directors and nominees for election as a director are independent:

Jeffrey P. Draime	Kim Korth	Paul J. Schlather
Douglas C. Jacobs	William M. Lasky	Frank S. Sklarsky
Ira C. Kaplan	George S. Mayes, Jr.

Annual Board and Committee Self-Evaluations

Our Corporate Governance guideline requires that the Board and each committee conduct an annual self-evaluation. The self-evaluations are intended to facilitate a candid assessment and discussion by the Board and each committee of its effectiveness as a group in fulfilling its responsibilities. Each year the Board and each committee conducts a self-evaluation/assessment using questionnaires to facilitate the evaluation. The Board and each Committee then reviews a summary of the questionnaires in connection with discussions to determine which areas the Board and Committee would like to focus on during the coming year to enhance its effectiveness.

The Board of Directors’ Role in Risk Oversight

It is management’s responsibility to manage risk and bring to the Board’s attention the most material risks to the Company. The Board has oversight responsibility of the processes established to report and monitor systems for material risks applicable to us. The Audit Committee regularly reviews enterprise-wide risk management, which includes treasury risks (foreign exchange rates, and credit and debt exposures), financial and accounting risks, legal and compliance risks, and other risk management functions. The Compensation Committee considers risks related to the attraction and retention of talent and related to the design of compensation programs and arrangements. The full Board considers strategic risks and opportunities and regularly receives reports from management on risk and from the committees regarding risk oversight in their areas of responsibility.

The Board of Directors’ Role in Ethics and Compliance

The Company is committed to a culture of integrity and trust, to conducting all of its business dealings in compliance with applicable federal, state and foreign laws, rules and regulations and to operating with the highest standards of business ethics. The Board established the Compliance and Ethics Committee to

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assist the Board in overseeing (i) the Company’s activities in the areas of corporate responsibility, compliance and ethics, including oversight of the Company’s Code of Business Conduct and Stoneridge Integrity Program Charter, and (ii) the Company’s compliance with legal and regulatory requirements. Members of the Compliance and Ethics Committee are Ira C. Kaplan, Kim Korth, George S. Mayes, Jr. (chair) and Paul Schlather.

Oversight of Human Capital Management

The Company strives to create a welcoming work environment and inclusive culture that allows all our employees to feel valued and have the confidence to do their jobs well. The Board understands the importance of an inclusive, performance-driven culture to our ongoing success and is actively engaged with our President and Chief Executive Officer and our Chief Human Resources Officer across a broad range of human capital management topics. On an annual basis, the Board reviews the results of our annual talent review process and succession plans for our President and Chief Executive Officer and our other executive officers. In addition, talent strategy and the results of employee engagement surveys are regularly discussed with the Board, including retention, engagement and talent development.

Anti-Hedging Policy

Our Insider Trading Policy prohibits Company directors, officers and key employees covered by the pre-clearance procedures of the Insider Trading Policy from engaging in hedging transactions designed to offset decreases in the market value of the Company’s securities, including transactions in prepaid variable forward contracts, equity swaps, collars, exchange funds, put options, call options or other derivative securities, on an exchange or in any other organized market.

Anti-Pledging Policy

Our Insider Trading Policy prohibits directors, officers and key employees covered by the pre-clearance provisions of the Insider Trading Policy from holding Company securities in a margin account or pledging Company securities as collateral for a loan.

The Board of Directors

In 2020 the Board held ten meetings. Each Board member attended at least 75% of the meetings of the Board and of the committees on which he or she serves. Our policy is that directors are to attend the Annual Meeting of Shareholders. All of our directors attended the 2020 Annual Meeting of Shareholders. Mr. Lasky has been appointed as the lead independent director by the independent directors to preside at the executive sessions of the independent directors. The Board’s independent directors meet regularly in executive session. All directors, except Mr. DeGaynor, the Company’s President and CEO, are independent.

Leadership of the Board

The Board does not have a formal policy regarding the separation of the roles of CEO and Chairman of the Board as the Board believes it is in the best interest of the Company and our shareholders to make that determination based on the position and direction of the Company and the membership of the Board. At this time, the Board has determined that having an independent director serve as Chairman is in the best interest of the Company and our shareholders. This structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing Board priorities and procedures. Further, this structure permits our President and CEO to devote more time focusing on the strategic direction and management of our day-to-day operations.

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Committees of the Board

The Board has four standing committees to facilitate and assist the Board in the execution of its responsibilities. These committees are the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Compliance and Ethics Committee. Each member of the Audit, Compensation, Nominating and Corporate Governance and Compliance and Ethics Committees is independent as defined under the listing standards of the NYSE. The table below shows the composition of the Board’s committees:

Audit Committee	Compensation Committee	Nominating and Corporate Governance Committee	Compliance and Ethics Committee
Douglas C. Jacobs*	Jeffrey P. Draime	Jeffrey P. Draime	Ira C. Kaplan
Ira C. Kaplan	Douglas C. Jacobs	Ira C. Kaplan	Kim Korth
William M. Lasky	Kim Korth*	Kim Korth	George S. Mayes, Jr. *
George S. Mayes, Jr.	William M. Lasky	William M. Lasky*	Paul J. Schlather
Paul J. Schlather

*	Committee Chairperson

Audit Committee

This committee held eight meetings in 2020. Information regarding the functions performed by the Audit Committee is set forth in the “Audit Committee Report,” included in this Proxy Statement. The Board has determined that each Audit Committee member is financially literate under the listing standards of the NYSE. The Board also determined that Mr. Jacobs and Mr. Schlather each qualify as an “audit committee financial expert” as defined by the SEC rules adopted pursuant to the Sarbanes-Oxley Act of 2002. In addition, under the Sarbanes-Oxley Act of 2002 and the NYSE rules mandated by the SEC, members of the audit committee must have no affiliation with the issuer, other than their Board seat, and receive no compensation in any capacity other than as a director or committee member. Each member of the Audit Committee meets this additional independence standard applicable to audit committee members of NYSE listed companies.

Compensation Committee

This committee held four meetings in 2020. Each member of our Compensation Committee meets the independence requirements of the NYSE, including the enhanced independence requirements applicable to Compensation Committee members under NYSE rules and is a non-employee director under Rule 16b-3 of the Exchange Act. The Compensation Committee is responsible for establishing and reviewing our compensation philosophy and programs with respect to our executive officers; approving executive officer compensation and benefits; recommending to the Board the approval, amendment and termination of incentive compensation and equity-based plans; and certain other compensation matters, including director compensation. Our CEO makes recommendations regarding compensation of other officers to the Compensation Committee. The Compensation Committee can exercise its discretion in modifying any amount presented by our CEO. The Compensation Committee regularly reviews the total compensation obligations to each of our executive officers. During 2020, the Compensation Committee retained Total Rewards Strategies LLC to provide compensation related consulting services. Specifically, the compensation consultant provided relevant market data, current trends in executive and director compensation and advice on program design. In accordance with its charter, the Compensation Committee may delegate power and authority as it deems appropriate for any purpose to a subcommittee of not fewer than two members.

Nominating and Corporate Governance Committee

This committee held two meetings in 2020. The purpose of the Nominating and Corporate Governance Committee is to evaluate the qualifications of director nominees, to recommend candidates for election as directors, to make recommendations concerning the size and composition of the Board, to develop and implement our corporate governance policies and to assess the effectiveness of the Board.

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Compliance and Ethics Committee

This committee held seven meetings in 2020. The purposes of the Compliance and Ethics Committee are to assist the Board in overseeing (a) the Company’s activities in the areas of corporate responsibility, compliance and ethics, including oversight of the Stoneridge Integrity Program, (b) in collaboration with the Audit Committee the Company’s compliance with legal and regulatory requirements, and (c) to oversee the Company’s commitment to establishing a culture of integrity and trust, to conducting all of its business dealings in compliance with applicable federal, state and foreign laws, rules and regulations and to operating with the highest standards of business ethics.

Nominations and Nomination Process

It is the policy of the Nominating and Corporate Governance Committee to consider individuals recommended by shareholders for membership on the Board. If a shareholder desires to recommend an individual for membership on the Board, then that shareholder must provide a written notice (the “Recommendation Notice”) to the Secretary of the Company at Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377, on or before January 15 for consideration by this committee for that year’s election of directors at the Annual Meeting of Shareholders.

In order for a recommendation to be considered by the Nominating and Corporate Governance Committee, the Recommendation Notice must contain, at a minimum, the following:

•

the name and address, as they appear on the Company’s books, and telephone number of the shareholder making the recommendation, including information on the number of common shares owned and date(s) acquired, and if such person is not a shareholder of record or if such common shares are owned by an entity, reasonable evidence of such person’s ownership of such shares or such person’s authority to act on behalf of such entity;

•	the full legal name, address and telephone number of the individual being recommended, together with a reasonably detailed description of the background, experience, and qualifications of that individual;

•

a written acknowledgment by the individual being recommended that he or she has consented to the recommendation and consents to the Company undertaking an investigation into that individual’s background, experience, and qualifications in the event that the Nominating and Corporate Governance Committee desires to do so;

•	any information not already provided about the person’s background, experience and qualifications necessary for us to prepare the disclosure required to be included in our proxy statement about the individual being recommended;

•	the disclosure of any relationship of the individual being recommended with us or any of our subsidiaries or affiliates, whether direct or indirect; and

•

the disclosure of any relationship of the individual being recommended with the shareholder, whether direct or indirect, and, if known to the shareholder, any material interest of such shareholder or individual being recommended in any proposals or other business to be presented at our Annual Meeting of Shareholders (or a statement to the effect that no material interest is known to such shareholder).

The Nominating and Corporate Governance Committee determines, and periodically reviews with the Board, the desired skills and characteristics for directors as well as the composition of the Board as a whole. This assessment considers the directors’ qualifications and independence, as well as diversity, experience, skill, and experience in the context of the needs of the Board. Directors should share our values and should possess the following characteristics: high personal and professional integrity; the ability to exercise sound business judgment; an inquiring mind; and the time available to devote to Board activities and the willingness to do so. The Nominating and Corporate Governance Committee does not have a formal policy specifically focusing on the consideration of diversity; however, diversity is one of the factors that the Nominating and Corporate Governance Committee considers when identifying candidates and making its recommendations to the Board. In addition to the foregoing considerations, generally with respect to nominees recommended by shareholders, the Nominating and Corporate Governance

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Committee will evaluate such recommended nominees considering the additional information regarding them contained in the Recommendation Notices. When seeking candidates for the Board, the Nominating and Corporate Governance Committee may solicit suggestions from incumbent directors, management and third-party search firms. Ultimately, the Nominating and Corporate Governance Committee will recommend to the Board prospective nominees who the Nominating and Corporate Governance Committee believes will be effective, in conjunction with the other members of the Board, in collectively serving the long-term best interests of our shareholders.

The Nominating and Corporate Governance Committee recommended to the Board each of the nominees identified in “Election of Directors” beginning on page 6 of this Proxy Statement.

Compensation Committee Interlocks and Insider Participation

None of the members of the Board’s Compensation Committee served as an officer at any time or as an employee during 2020. In addition, no Compensation Committee interlocks existed during 2020.

Communications with the Board of Directors

The Board believes that it is important for interested parties to have the ability to send communications to the Board. Persons wishing to communicate with the Board may do so by sending a letter to the Secretary of the Company at Stoneridge, Inc., 39675 MacKenzie Drive, Suite 400, Novi, Michigan 48377. The envelope must contain a clear notation indicating that the enclosed letter is a “Board Communication” or “Director Communication.” All such letters must identify the author and clearly state whether the intended recipients are all members of the Board or certain specified individual directors (such as the lead independent director or non-management directors as a group). The Secretary will make copies of all such letters and circulate them to the appropriate director or directors. The directors are not spokespeople for the Company and responses or replies to any communication should not be expected.

Transactions with Related Persons

There were no reportable transactions involving related persons in 2020.

Review and Approval of Transactions with Related Persons

The Board has adopted a written statement of policy with respect to related party transactions. Under the policy, a related party transaction is a transaction required to be disclosed pursuant to Item 404 of Regulation S-K or any other similar transaction involving the Company or the Company’s subsidiaries and any Company employee, officer, director, 5% shareholder or an immediate family member of any of the foregoing if the dollar amount of the transaction or series of transactions exceeds $25,000. A related party transaction will not be prohibited merely because it is required to be disclosed or because it involves related parties. Pursuant to the policy, such transactions are presented to the Nominating and Corporate Governance Committee for evaluation and approval by the committee, or if the committee elects, by the full Board. If the transaction is determined to involve a related party, the Nominating and Corporate Governance Committee will either approve or disapprove the proposed transaction. Under the policy, in order to be approved, the proposed transaction must be on terms that are fair to the Company and are comparable to market rates, where applicable.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis (“CD&A”)

In this section we describe the compensation program for our Named Executive Officers (“NEOs”). We also discuss our compensation philosophy, policies and the decisions made by the Compensation Committee of the Board in 2020 as it relates to the compensation of our NEOs.

Named Executive Officers for 2020

Name			Title
Jonathan B. DeGaynor			President & Chief Executive Officer
Robert R. Krakowiak			Executive Vice President, Chief Financial Officer & Treasurer
Laurent P. Borne			President Electronics & Chief Technology Officer
Thomas M. Dono, Jr.			Chief Legal Officer & Secretary
Kevin R. Heigel			Vice President Operations

2020 Overview

We delivered strong performance in 2020, despite the external challenges of COVID-19, by adapting our cost structure to current market conditions and managing our cash position throughout the year. The Company believes that focusing on products that address industry megatrends will have a positive impact on both our top-line growth and underlying margins.

COVID-19 began to impact our operations in the first quarter of 2020 as government authorities imposed mandatory closures, work-from-home orders, social distancing protocols, and other restrictions. These actions materially affected our ability to adequately staff and maintain our operations and supply chain and significantly impacted our financial results in the first half of 2020. The adverse conditions caused by COVID-19 initially reduced demand for our products and increased operating costs, which resulted in lower overall margins. We instituted Safe Workplace Guidelines, which required changes to our manufacturing operations to reduce the spread of COVID-19 and keep our employees safe. In the second half of 2020, as a result of recovery across our global end-markets, we experienced significant sales growth compared to the second quarter 2020. Although our end-markets showed strong recovery in the second half of 2020, during the fourth quarter of 2020, certain European, North American and South American countries began to initiate new governmental restrictions in response to renewed pandemic impacts and concerns, and many of these restrictions have continued into the first quarter of 2021. As a result, COVID-19 may continue to adversely impact demand for our products, financial condition and results of operations in the near term.

The actions of the Compensation Committee (the “Committee”) and our pay-for-performance philosophy functioned such that compensation earned by our executives was aligned with our financial performance for 2020. Highlights from the year and our performance are as follows:

•	Our business units have continued to focus on profitable and sustainable top line growth by developing a clear current and future vision of our products, technologies, and targeted customers.

•

Net sales decreased by 22.3% compared to the prior year due to lower sales in each of our segments. Our Control Devices segment net sales decreased primarily as a result of COVID-19 and discontinuation of 2019 sales under the contract manufacturing agreement relating to the disposal of the Non-core Products. Our Electronics segment net sales decreased primarily as a result of COVID-19 including a decrease in sales volume in our European, North American and China commercial vehicle markets as well as European off-highway vehicle products. These decreases were partially offset by a favorable foreign currency translation. Our Stoneridge Brazil segment net sales decreased due to unfavorable foreign currency translation and the effects of COVID-19 causing lower volumes for our aftermarket, mass retail and OES channels mostly in the second quarter of 2020.

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•

COVID-19 and 2020 Executive Compensation

The impact of the global COVID-19 pandemic on our company, our employees and our 2020 financial results was significant. The challenges that we faced included a 22.3% decline in volumes compared to prior year, complex governmental requirements that differed greatly by geography and resulted in partial or full office and plant shutdowns, as well as a significant impact on our employees and their families. Our response to the crisis included implementing stringent and consistent health and safety protocols across all of our locations, imposing travel restrictions, swiftly reacting to declining volumes by reducing work hours or furloughing employees where needed, increasing global employee communication and engagement activities, and actively managing costs throughout our businesses. We also implemented temporary executive officer base salary reductions and delayed merit increases for salaried employees. While customer volumes began to rebound later in 2020, the pandemic adversely and significantly impacted our 2020 financial results, especially our second quarter results.

The Compensation Committee considered many factors when making compensation decisions in light of the pandemic’s impact in 2020. Of particular importance, it considered management’s effective response to the crisis and the Company’s performance on controllable factors, the impact to shareholders, the overall financial results, and the need to retain and motivate critical talent to ensure continued progress on longer-term strategic goals. The 2020 financial metrics and associated targets in the Annual Incentive Plan (“AIP”) and Long-Term Incentive Plan (“LTIP”) were established before the start of the pandemic. With no modification of those targets or adjustment to results, the achievement on the 2020 portion of those metrics would have been below threshold and, therefore, generate no payment to plan participants.

Results at year-end showed that the Company’s performance was positively impacted by strong cost mitigation actions, conversion on incremental volumes and focused continuous improvement activities. Had volume been at the levels forecasted prior to the pandemic, the Company’s performance would have resulted in an AIP payout estimated at 108% of target. Based on these results, and weighing the need to retain and motivate critical talent, the Committee approved the following actions:

•	Discretionary payout under the Annual Incentive Plan at 63% of target

•	Modified the target-setting approach for the EPS and ROIC metrics in the 2020 LTIP grant

The Committee believes these actions appropriately balance the rewards to management and the impact on shareholders, and will positively impact employee retention and motivation. Further details of these actions are included in the applicable sections of this CD&A.

Human Capital Disclosure

As of December 31, 2020, Stoneridge employed approximately 4,500 employees in 13 countries, with about 84% located outside of the United States. Although we have no collective bargaining agreements covering U.S. employees, a significant number of employees located in Brazil, China, Estonia, Mexico, Netherlands, Sweden and the United Kingdom either (i) are represented by a union and are covered by a collective bargaining agreement, or (ii) are covered by a works council or other employment arrangements required by law. We work to ensure positive relations with our employees.

We strive to create a work environment that enhances employee engagement, fosters productivity, and is aligned with our values of Integrity, Accountability, Teamwork, Adaptability, Customer Orientation, and Social Responsibility. We know that our success is dependent on our employees’ engagement, performance, skills, and development. To that end, we have established talent management programs at Stoneridge, which include but are not limited to the following:

•	Periodic global employee engagement surveys and subsequent action planning

•	Regular talent reviews for employee development and succession planning

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•	Feedback and coaching to ensure performance is aligned with our goals and strategic direction

•	Delivery of Code of Conduct and global policy training

•	New employee orientation with globally consistent and locally flexible messaging

•	Frequent global ‘‘town hall’’ meetings and other communications

•	Employee wellness programs

•	Opportunities for community and charitable involvement (reduced in 2020 due to COVID-19)

•	Employee mentoring program

•	Internship programs

•	A cross-section of top talent participates in an annual strategic planning event with the executive team and the Board, providing exposure and valuable input

When we hire new employees, we focus not just on the skills required for current positions, but the ever-changing complex skills and competencies that will be required as we move forward on our path to being the mobility industry’s integrated technology partner. We seek diverse sources for candidates and we offer wages and benefits that are competitive in the markets where employees are located.

It is always a top priority, but in 2020 employee health and safety was of paramount importance due to the global COVID-19 pandemic. Wherever possible, employees began working from home in March 2020 through the remainder of the year. For jobs that could not be performed remotely, extensive safety measures were implemented through our Safe Workplace Guidelines, including temperature and health screenings, distanced workstations, plexiglass barriers, enhanced cleaning and disinfection protocols, required face coverings, contact tracing when needed and employee training. Our safety measures are aligned with the recommendations of US and global health organizations, and have continued into 2021.

We believe a diverse workforce and an inclusive work environment is required for us to achieve our full potential as an organization. We further recognize the importance of having a strong Diversity, Equity & Inclusion (“DEI”) strategy. In 2020, we embarked on an initiative to reassess our DEI strategy, identify gaps between our ideal and current states, and develop goals and actions to realize measurable improvement. We look forward to continuing this work in 2021.

The Human Resources function at Stoneridge is an active and visible partner to the business at all levels. Our Chief Human Resources Officer reports directly to the Chief Executive Officer and interacts frequently with the Board of Directors. In 2021, our human capital focus will continue to be on employee engagement, employee and leadership development, communications, and employee health and safety.

Compensation Philosophy and Objectives

Our Company’s compensation programs for executive officers are designed to attract, retain, motivate, and reward talented executives who advance our strategic, operational, and financial objectives and thereby enhance shareholder value. The primary objectives of our compensation programs for executive officers are to:

•	Attract and retain talented executive officers by providing a total compensation package that is competitive with that offered by similarly situated companies.

•	Create a compensation structure under which a substantial portion of total compensation is based on achievement of performance goals.

•	Align total compensation with the objectives and strategies of our shareholders and business.

A substantial portion of our executive officers’ annual and long-term compensation is tied to quantifiable measures of the Company’s financial performance and will not be earned unless at least the minimum threshold performance is achieved.

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Elements of Compensation

Following are the elements of our executive compensation program and the objectives for including them.

Element	Type	Objective
Base Salary	Cash - fixed	Attract and retain highly skilled executives by providing market competitive base salary that is aligned with the executive's responsibilities, experience & performance.
Annual Incentive Plan	Cash - variable	Motivate and reward the achievement of individual, division and/or corporate financial and operational strategic objectives.
Long-Term Incentive Plan	Equity and/or Cash - variable	Retain and reward key employees, and align the interests of employees with our shareholders and the long-term success of the Company.
Benefits & Perquisites	Non-cash	Retain key employees by providing market competitive health, welfare & retirement benefits, and limited perquisites that align with our compensation philosophy.

Mix of Compensation

Our executive compensation is based on our pay-for-performance philosophy, which emphasizes executive performance measures that closely correlate with the achievement of both short-term performance objectives and long-term shareholder value. A significant portion of our executive officers’ annual and long-term performance-based compensation is at-risk, with the amount of risk increasing with the officer’s position level. This provides more upside potential as well as downside risk for more senior positions because they have greater influence on our overall performance.

There is no pre-established policy or target for the allocation between cash and non-cash or short-term and long-term incentive compensation. Rather, the Committee reviews competitive market compensation information provided by our compensation consultant and considers the Company’s historical compensation practices in determining the appropriate level and mix of incentive compensation for each executive position.

Total Target Compensation

Total target compensation is the value of the compensation package that is intended to be delivered if performance goals are met. Actual compensation depends on the payouts realized under the annual and long-term incentive plans, as determined by results on the performance metrics. For awards under the long-term incentive plan, the value is also based on the price of our common shares. The following charts show the weighting of each element of total target compensation for the CEO, and average for the other NEOs. This demonstrates our pay-for-performance philosophy, showing that annual and long-term incentive-based compensation comprises the majority of total target compensation.

Compensation Policies & Best Practices

To achieve the goals of aligning executive compensation with Company performance while maintaining strong corporate governance and minimizing risk, the Committee and the Company review and adopt

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policies and best practices that they believe are in the best interest of the Company and our shareholders. Following are some of the practices that have been adopted over time that we believe help us to achieve these goals.

•	Significant emphasis on performance-based compensation

•	Use of an independent compensation consultant whose firm does no other work for the Company

•	Annual benchmarking of compensation mix and levels for executive officers to ensure competitiveness

•	Use of the TSR metric in the long-term incentive plan to align executive and shareholder interests

•	Include caps on both the annual incentive plan and the long-term incentive plan

•	Provide limited perquisites to executive officers

•	Maintain stock ownership guidelines for our executive officers and non-employee Directors

•	Established anti-hedging and anti-pledging policies

•	Recoupment of compensation (“clawback”) policy

•	Conduct an annual compensation risk assessment

The Compensation Committee

The Committee has the responsibility for determining the compensation paid to the Company’s executive officers. In carrying out its responsibilities, among other things, the Committee does the following:

•	Ensures there is a clear, reasonable, and logical linkage between executive officer compensation programs and overall Company performance

•	Considers comparison to the Company’s established Comparator Group and the broader market to ensure appropriate mix and level of competitiveness of compensation

•	Reviews and approves annual base salary levels, annual incentive plan targets, and long-term incentive plan targets, in alignment with the level and performance of each NEO as well as Company performance and market conditions

•	Reviews, advises on, and approves new or revised compensation plans

Independent Compensation Consultant

The Committee retains the services of an independent compensation consultant to assist the Committee with the following:

•	Appraising relevant trends and compensation developments in the market

•	Providing advice regarding issues such as long-term incentives and change in control arrangements and other topics as needed

•	Providing Comparator Group analysis

•	Providing market data for the CEO position and other executive officers

In 2020, the Committee’s compensation consultant was Total Rewards Strategies, LLC (“TRS”).

Management

The Committee considers the recommendations and evaluations of the CEO when setting the compensation of the other executive officers.

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Comparator Group

The Comparator Group is comprised of some of our direct competitors and a broader group of companies in the electronic and motor vehicle parts manufacturing industries that the Committee believes is representative of the labor market from which we recruit executive talent. The Committee reviews and approves the Comparator Group annually. Factors considered by the Committee in selecting Comparator Group companies include, but are not limited to, industry segment, revenue, profitability, number of employees and market capitalization. The companies in the Comparator Group in 2020 were:

Allison Transmission	Donaldson	Methode Electronics
Altra Industrial Motion	Dorman Products	Modine Manufacturing
CalAmp	Franklin Electric	Rogers
CIRCOR	Gentex	Shiloh Industries
Columbus McKinnon	Gentherm	Standard Motor Products
Commercial Vehicle Group	LCI Industries	Strattec Security
Cooper-Standard Holdings	Littelfuse	Superior Industries
CTS	Lydall	Visteon
Curtiss-Wright	Martinrea International	Wabash National
Delphi Technologies	Meritor

Compensation Benchmarking

TRS provides the Committee with the 50^th and 75^th percentiles of the Comparator Group for base salary, cash bonus, long-term incentives, and total direct compensation. The Committee uses as a primary reference point the 50^th percentile when determining base salary, annual incentive, and long-term incentive targets; each element of pay is adjusted to reflect competitive market conditions. The goal of the executive compensation program is to target overall compensation at the 50^th percentile of pay practices of the Comparator Group of companies. Actual target pay for an individual may be more or less than the referenced percentiles based on the Committee’s evaluation of the individual’s performance and potential. Consistent with the Committee’s philosophy of pay-for-performance, incentive payments can exceed target levels only if overall Company financial targets are exceeded and will fall below target levels if overall financial goals are not achieved.

Consideration of Shareholder Advisory Vote on Executive Compensation

At our 2020 Annual Meeting of Shareholders, our executive compensation program received the support of approximately 95.2% of shares represented at the meeting. The Committee has considered the results of this vote and views this outcome as evidence of shareholder support of its executive compensation decisions and policies. The Committee will continue to review and consider the annual shareholder votes on our executive compensation program.

Base Salary

Base salary sets the foundation of our compensation program for our executive officers. The annual cash incentive compensation targets and long-term incentive targets are typically established as a percentage of base compensation. The base salary is set at competitive market levels to attract and retain our executive officers. Base salary levels for our executive officers are set on the basis of the executive’s responsibilities, the current general industry, and competitive market data, as discussed above. In each case, due consideration is given to individual factors, such as the officer’s experience, competencies, performance, and contributions, and to external factors, such as salaries paid to similarly situated executive officers by like-sized companies and in particular our Comparator Group. The Committee considers the evaluation and recommendation of the CEO in determining the base salary of the other executive officers. The Committee typically approves executive officer base salaries with an effective date of January 1^st. Executive officers’ base salaries remain fixed throughout the year unless a promotion, change in responsibilities, or special circumstances occur.

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On January 1, 2020, our executive officers’ base salary merit increase adjustments were implemented, as approved by the Compensation Committee in December 2019. On April 1, 2020, those merit increase adjustments were suspended and the executive officers’ base salaries were correspondingly reduced as the financial uncertainty of the impact of the COVID-19 pandemic intensified. In addition, the merit increases for salaried employees, which are typically effective April 1, were delayed. As the impact of the pandemic and our forecasted performance began to stabilize, merit increases were reinstated for executive officers and were implemented for salaried employees, effective August 1, 2020.

Annual Incentive Awards

Our executive officers and other key employees participate in our AIP which provides for annual cash payments based on the achievement of specific financial goals. As described above, the Company believes that a substantial portion of each executive’s overall compensation should be directly tied to quantifiable measures of financial performance. At the early March 2020 Compensation Committee meeting, the Committee approved the Company’s 2020 AIP targets and performance metrics. The AIP targets are expressed as a percentage of the executive officer’s base salary.

For 2020, the structure of our AIP included both consolidated financial performance metrics and, where appropriate, divisional metrics to incentivize specific performance. In addition, there is an individual performance metric for executive officers (excluding Mr. DeGaynor) and certain other leaders in the Company as a way to incentivize and reward specific strategic and measurable activities that are particular to each leader’s area of responsibility. The individual metrics are considered critical to the achievement of the overall financial and operational metrics. The individual performance metric functions as a multiplier to the overall weighted achievement, and can range from 90% to 110%.

The consolidated and divisional financial performance metric targets were established based on our 2020 business plan. The targets were intended to be challenging but achievable based on industry conditions known at the time they were established. Under the 2020 AIP, the threshold level for achievement on the consolidated and divisional financial metrics was based on 80% of target while the maximum level was based on 130% of target.

For each performance metric, specific levels of achievement for threshold, target, and maximum were established. At target, 100% payout is achieved for each element of the plan; at maximum, 200% payout is achieved; and at threshold, 50% payout is achieved. Below the threshold, no incentive is earned on that metric. Threshold achievement on the Operating Income metric is required for the other metrics to pay out above their threshold levels. The AIP incentive compensation payout earned between the threshold and maximum levels is prorated.

The stated objectives of the AIP include retaining key employees and rewarding them for performance aligned with the growth and profitability of the Company. In 2020, the AIP performance targets were established prior to the start of the global pandemic. As a result of the impact of COVID-19, achievement on the metrics was below threshold. The Compensation Committee considered the Company’s performance on controllable factors, conversion on incremental volume and the plan’s objective of retaining critical talent, and exercised its discretion to approve payment under the plan at 63% of target. The Committee also considered that, eliminating the impact of COVID-19, the estimated payout under AIP would have been 108% of target.

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The AIP metrics, weighting, performance targets, and achievement for 2020 are summarized as follows:

Mr. DeGaynor, Mr. Krakowiak, Mr. Dono, Mr. Heigel	Weight	Metric Target	Achievement ⁽¹⁾
Consolidated Metrics:
Operating Income	70%	$41.1 million	0%
Cash Flow	30%	$41.8 million	0%
Overall Weighted Achievement			0%

Mr. Borne	Weight	Metric Target	Achievement ⁽¹⁾
Consolidated Metrics:
Operating Income	45%	$41.1 million	0%
Cash Flow	30%	$41.8 million

		Page
2021 Proxy Statement Summary		i
Information about Annual Meeting and Voting		1
Beneficial Ownership		4
•	Proposal One - Election of Directors	6
•	Proposal Two - Ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2021	11
Audit Committee Report		12
•	Proposal Three - Approve, on an advisory basis, the compensation of named executives	13
Corporate Governance		14
Compensation Discussion and Analysis		19
Compensation Committee Report		31
Executive Compensation Tables		32
•	Proposal Four – Approval of the Company’s Annual Incentive Plan	40
Other Information		43