UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

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A MESSAGE FROM OUR NON-EXECUTIVE CHAIRMAN AND OUR CHIEF EXECUTIVE OFFICER

June 23, 2021

Dear Fellow Stockholders:

Fiscal 2021 will be remembered for the incredible resiliency our company, our markets and our employees demonstrated during the pandemic. We faced numerous challenges keeping our facilities open and our employees safe, all while continuing to meet our customers’ needs throughout the world. The advances we made – including the change to a line of business (LOB) focus rather than our traditional geographical approach – will allow us to manage organic growth more quickly and effectively into the future.

We outlined several significant strategic targets during our Investor Day in October 2019, including the introduction of our Lithium Motive Power NexSys^® Ion battery range and the expansion of our Thin Plate Pure Lead (TPPL) production capacity. The pandemic certainly slowed our progress, but the team ultimately delivered on these as well as several other strategic initiatives. The modular architecture and software utilized for the lithium Motive Power products is dramatically accelerating how quickly we expand this technology into our other core markets including Telecom and Datacenter Uninterruptible Power Systems (UPS). More importantly, this same lithium architecture will propel EnerSys into new markets, including residential battery energy storage systems (BESS), commercial and industrial BESS, and hyper fast DC fast charging of electric vehicles. The expansion of our TPPL capacity continues to attract new Transportation customers to our ODYSSEY^® line of premium batteries. We continue to enjoy tremendous organic growth in our Specialty business.

Fiscal 2021 revenue of $3.0 billion declined nearly 4% over the prior year due to a 5% drop in organic volume. All of the volume decline occurred in the first half of our fiscal year when the pandemic lockdowns were most severe. During our second half, organic volume rebounded, as strong underlying demand for our products overcame the headwinds caused by the pandemic. Our gross profit percentage remained relatively stable at 25% for both years despite fiscal 2021 being negatively impacted by production output reductions early in the fiscal year. A truly bright spot in this fiscal year was our free cash flow of $288 million, which was double the average of the three preceding years. Lowering costs as well as closely monitoring our collections and inventory levels helped us reduce our leverage from 2.3x at the onset of fiscal 2021 to under 1.7x by year’s end. This improvement gives us the flexibility to invest in our business as volume returns and to take advantage of any potential capital deployment opportunities.

From an Environmental, Social and Governance (ESG) standpoint, we accelerated our progress by expanding our sustainability team and by performing both pay and diversity assessments. This progress was validated as we earned a bronze star in our Eco-Vadis rating. While we are very proud to have advanced these initiatives so quickly, we recognize our ESG efforts will require long-term dedication and investment – which our team is committed to delivering.

As we look forward to fiscal 2022, we realize the pandemic recovery will bring continued challenges, including shortages in plastic resins and the skilled labor necessary to meet our customers’ growing demand. We expect that our first half of fiscal 2022 will be impacted by these spot shortages and are working hard to mitigate their impacts.

Despite the challenges, we are very grateful to be in an energy storage market that has so many growth opportunities which include the commencement of a 5G wireless network buildout, the impact of work-from-home policies on broadband networks, the continuation of data center proliferation with edge computing, continued investment in logistics to serve the growing e-commerce economy, strong growth in space and munitions programs and the significant disruption and opportunity required to charge electric vehicles.

We also wish to thank you, our stockholders, for your continued faith and trust in us. The future remains extremely bright for EnerSys and we are excited by the opportunity to deliver shareholder value in the quarters and years ahead.

 

Sincerely,
Arthur T. Katsaros		David M. Shaffer
Non-Executive Chairman of the Board		President and Chief Executive Officer

Please refer to “Management’s Discussion and Analysis” in our Annual Report on Form 10-K attached to this letter for additional information and to a reconciliation of the non-GAAP measures to the comparable GAAP measures contained in Exhibit 99.1 to the Company’s Current Report on Form 8-K filed on May 26, 2021.

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: Statements in this letter and proxy statement regarding EnerSys’ business, which are not historical facts, are “forward-looking statements” that involves risks and uncertainties. For a discussion of such risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see EnerSys’ filings with the Securities Exchange Commission, including “Item 1A. Risk Factors” in EnerSys’ Annual Report on Form 10-K attached to this letter. These statements speak only as of the date of this letter and proxy statement, even if subsequently made available by EnerSys on its website or otherwise. EnerSys undertakes no obligation to update or revise these statements to reflect events or circumstances occurring after the date of this letter and proxy statement.

 

 

		ANNUAL MEETING INVITATION

 

 

 

June 23, 2021

Dear Fellow Stockholder:

As a result of the global COVID-19 pandemic and our wishes to protect the health and safety of EnerSys stockholders and employees, the 2021 Annual Meeting will be held virtually on Thursday, August 5, 2021 at 10:00 a.m. (Eastern Time). Stockholders will not be able to attend the Annual Meeting in person.

The Annual Meeting will be accessible only at www.proxydocs.com/ENS (the “Annual Meeting platform”). We encourage you to access the Annual Meeting platform prior to the start time and allow ample time to log into the virtual Annual Meeting and test your computer system. To be admitted to the Annual Meeting, you must register for the meeting no later than 9:59 a.m. (Eastern Time) on August 5, 2021, the registration deadline. You can do so by entering the control number found on the proxy card or voting instruction form that accompanied your previously distributed proxy materials when requested by the Annual Meeting platform. Upon registering for the Annual Meeting, you will receive an email with additional information related to the virtual meeting. You may vote during the Annual Meeting by following the instructions available on the Annual Meeting platform during the meeting.

Your vote is important regardless of the number of shares you own. Whether or not you plan to attend the Annual Meeting virtually, we urge you to read these proxy materials and cast your vote on the matters that will be presented at the Annual Meeting. Stockholders of record have the option of voting by telephone, through the Internet or by completing, signing, dating and returning the enclosed proxy card in the envelope provided. Doing so will not prevent you from voting virtually during your attendance at the Annual Meeting.

Thank you for your continued support and interest in EnerSys.

 

Sincerely,

Arthur T. Katsaros

Non-Executive Chairman of the Board

 

 

 

		Notice of 2021 Annual Meeting of Stockholders

 

 

 

Date and Time:		Thursday, August 5, 2021, at 10:00 a.m. (Eastern Time)
Place:		www.proxydocs.com/ENS
Items to be voted:		∎    elect three (3) Class II director nominees named in this proxy statement;   ∎    ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year ending March 31, 2022;   ∎    an advisory vote to approve the compensation of EnerSys’ named executive officers; and   ∎    conduct any other business properly brought before the meeting.
Record date:		Stockholders of record at the close of business on June 10, 2021 may vote at the meeting, and any adjournments or postponements thereof. A list of stockholders will be available at the Annual Meeting.

By Order of the Board of Directors

 

 

Joseph G. Lewis

Senior Vice President, General Counsel,

Chief Compliance Officer & Secretary

June 23, 2021

Your vote is important!

Stockholders of record can vote their shares by using the Internet or the telephone or by attending the meeting virtually and voting in accordance with the website’s instructions. Instructions for voting by using the Internet or the telephone are set forth in the Notice of Internet Availability that has been provided to you. Stockholders of record who received a paper copy of the proxy materials also may vote their shares by marking their votes on the proxy card provided, signing and dating it, and mailing it in the envelope provided, or by attending the meeting voting virtually.

 

 

 

 

		TABLE OF CONTENTS

 

 

GENERAL INFORMATION			1
PROPOSAL NO. 1 ELECTION OF THE CLASS II DIRECTOR NOMINEES OF THE BOARD OF DIRECTORS			4
General			4
Director Nominees of the Board of Directors			4
BOARD OF DIRECTORS			5
CORPORATE GOVERNANCE			12
Independence of Directors			12
Access to Corporate Governance Documents			12
Committees of our Board of Directors			12
Process for Selection of Director Nominee Candidates			14
Board Leadership Structure			14
The Board’s Role in Risk Oversight			15
Charters of the Committees of the Board of Directors			15
Director Attendance at Board, Committee and Annual Meetings			15
Executive Sessions of Non-Management Directors			15
Communications with the Board of Directors			15
Code of Business Conduct and Ethics			16
ESG Initiatives			16
Human Capital Management			16
DIRECTOR COMPENSATION			18
Cash Compensation			18
Equity Compensation			18
Director Deferred Compensation Plan			18
Stock Ownership Guidelines			19
Hedging Prohibition			19
NON-EMPLOYEE DIRECTOR COMPENSATION FOR FISCAL YEAR 2021			20
PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			21
AUDIT COMMITTEE REPORT			21
Background			21
Responsibility			21
Process and Recommendation			21
Fees of Independent Auditors			22
Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services by Independent Auditors			22
Appointment of Independent Registered Public Accounting Firm for Fiscal Year 2022			23
EXECUTIVE OFFICERS			24
EXECUTIVE COMPENSATION			25
Compensation Discussion and Analysis			25
Business Overview			25
Fiscal Year 2021 Performance			25
Fiscal Year 2021 Compensation Actions			26
Summary of Other Major Program Elements			27
Results of 2020 Advisory Vote on Executive Compensation–Say-on-Pay			27
Executive Compensation Policy			27
Determination of Compensation			28
Components of Executive Compensation			29

 

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Other Matters			34
Compensation Committee Report			37
Compensation Tables
Summary Compensation Table			38
Employment Agreements			39
Grants of Plan-Based Awards Table for Fiscal Year 2021			41
Outstanding Equity Awards as of March 31, 2021			42
Options Exercised and Stock Vested During Fiscal Year 2021			43
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL			44
CEO PAY RATIO			48
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS			49
Related Person Transaction Policy			49
Indemnification			49
Indemnity and Expense Agreement			49
DELINQUENT SECTION 16(a) REPORTS			50
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			50
PROPOSAL NO. 3 ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION			52
OTHER INFORMATION			53
Stockholder Proposals or Nominations			53
Reduce Duplicate Mailings			53
Other Matters			53
Proxy Solicitation Costs			53
Incorporation by Reference			54
Annual Report for Fiscal Year 2021			54
2021 ANNUAL REPORT ON FORM 10-K			A-1

 

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		PROXY STATEMENT

GENERAL INFORMATION

Solicitation of Proxies

 

The Board of Directors of EnerSys is providing this Proxy Statement to solicit proxies for use at EnerSys’ virtual annual meeting of stockholders to be held on Thursday, August 5, 2021, at 10:00 a.m. (Eastern Time) or any adjournment or postponement thereof (the “Annual Meeting”). EnerSys (the “Company,” “we,” “our,” or “us”) is first delivering this Proxy Statement and the foregoing Notice on or about June 23, 2021.

Purpose of the Meeting

 

At the Annual Meeting, our stockholders will be asked to vote on the following proposals:

 

Proposals				Board Recommendation		Page       Reference
1		To elect the three (3) Class  II director nominees of the Board of Directors of EnerSys, each to serve until the 2024 annual meeting of stockholders, or until the earlier of their resignation or their respective successors shall have been elected and qualified		FOR		4
2		To ratify the appointment of Ernst  & Young LLP as EnerSys’ independent registered public accounting firm for the fiscal year ending March 31, 2022		FOR		23
3		An advisory vote to approve EnerSys’ named executive officer compensation		FOR		25

Voting and Revocation of Proxies

 

Stockholders of record have a choice of voting by way of traditional proxy card, by telephone or through the Internet.

 

By Mail		∎      Request a proxy card from us by following the instructions on your Notice of Internet Availability. ∎      When you receive your proxy card, mark your selections on the proxy card. ∎      Date and sign your name exactly as it appears on the proxy card. ∎      Mail the proxy card in the postage-paid envelope that’s provided to you with your proxy card. If you return the signed proxy card but do not mark the boxes showing how you wish to vote, your votes will be cast “FOR” the election of all director nominees; “FOR” the ratification of the appointment of Ernst & Young LLP as EnerSys’ independent registered public accounting firm; and “FOR” the approval of executive compensation.
By Telephone		Call toll-free 1-866-284-6730 and follow the voice prompts.
Through Internet		Access the website www.proxypush.com/ens and follow the instructions.

 

1

 

 

We encourage each stockholder of record to submit their proxy electronically through the Internet, if that option is available, or by telephone. Delivery of a proxy in any of the three ways listed above will not affect the right of a stockholder of record to attend the Annual Meeting and vote during the virtual meeting. If you hold your shares in “street name” (that is, through a broker, trustee or other holder of record), you will receive a voting instruction card from your broker seeking instructions as to how your shares should be voted. If no voting instructions are given, your broker or nominee has discretionary authority to vote your shares on your behalf on routine matters. A “broker non-vote” results on a matter when your broker or nominee returns a proxy but does not vote on a particular proposal because it does not have discretionary authority to vote on that proposal and has not received voting instructions from you. We believe that your broker or nominee only has discretionary voting power with respect to the proposal regarding the ratification of the appointment of the independent registered public accounting firm. You may not vote shares held in “street name” at the Annual Meeting unless you obtain a legal proxy from your broker or holder of record.

Any stockholder of record giving a proxy may revoke it by doing any of the following:

 

∎

delivering a written notice of revocation to the Secretary of EnerSys, dated later than the proxy, before the vote is taken at the Annual Meeting;

 

∎

delivering a duly executed proxy to the Secretary of EnerSys, bearing a later date (including proxy by telephone or through the Internet) before the vote is taken at the Annual Meeting; or

 

∎

voting virtually at the Annual Meeting (your attendance at the Annual Meeting, in and of itself, will not revoke the proxy).

Any written notice of revocation, or later dated proxy, should be delivered to EnerSys, 2366 Bernville Road, Reading, Pennsylvania 19605, Attention: Joseph G. Lewis, Senior Vice President, General Counsel, Chief Compliance Officer and Secretary.

Record Date

 

Only stockholders of record at the close of business on June 10, 2021 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting. At the close of business on the Record Date, there were 42,511,136 shares of EnerSys common stock outstanding, each of which will be entitled to one vote at the Annual Meeting.

Quorum

 

The presence, virtually or by proxy, of stockholders entitled to cast at least a majority of the votes that all stockholders are entitled to cast will constitute a quorum at the Annual Meeting. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of votes considered to be present at the Annual Meeting for purposes of determining the presence of a quorum.

Tabulation of Votes

 

Our bylaws provide for majority voting procedures for the election of directors in an election where the number of director nominees does not exceed the number of directors to be elected (an “uncontested election”). In an uncontested election, to be elected, a director nominee must receive more “for” than “against” votes cast by the holders of shares of our common stock present virtually or represented by proxy at the meeting and entitled to vote on the election of directors (a “majority vote”). In an election where the number of director nominees exceeds the number of directors to be elected, directors are elected by a plurality vote, which means that the director nominees receiving the most votes cast by the holders of shares of our common stock present virtually or represented by proxy at the meeting and entitled to vote on the election of directors will be elected, regardless of the number of votes cast in favor of each director nominee. The election of directors at this Annual Meeting is an uncontested election. A nominee holding shares in street name does not have discretionary voting power with respect to the election of directors and may not vote shares unless the nominee receives voting instructions from the beneficial owner. If your shares are held by a broker, it is important that you provide instructions to your broker so your vote is counted in the election of directors. Abstentions and broker non-votes will not constitute or be counted as “votes” cast for purposes of Proposal 1.

 

2

 

 

If an incumbent director receives more “against” than “for” votes, in accordance with our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee of our Board of Directors will consider such director’s contingent resignation and recommend to the Board of Directors the action to be taken. The Board of Directors will act on such recommendation and publicly disclose its decision and the rationale behind such decision within 90 days from the date of the certification of the election results.

The ratification of the appointment of Ernst & Young LLP, as EnerSys’ independent registered public accounting firm for the fiscal year ending March 31, 2022, requires the affirmative vote of the holders of a majority of the shares represented and entitled to vote at the Annual Meeting. With respect to this matter, abstentions will have the same effect as voting against such proposal, and broker non-votes, if any, will not constitute or be counted as “votes” cast for purposes of such proposal.

The affirmative vote of the holders of a majority of shares of our common stock, present virtually or represented by proxy and entitled to vote, is required for approval with respect to the advisory vote to approve our named executive officer compensation. An abstention is treated as present and entitled to vote and therefore has the effect of a vote against the advisory vote on executive compensation. A nominee holding shares in street name does not have discretionary voting power with respect to this proposal and may not vote shares unless the nominee receives voting instructions from the beneficial owner. Additionally, a broker non-vote will not constitute or be counted as “votes” cast for purposes of the advisory vote to approve our named executive officer compensation.

Although the advisory votes to approve our named executive officer compensation is non-binding, as provided by law, the Compensation Committee of our Board of Directors will review the result of the vote and take it into account in making a determination concerning executive compensation. For information regarding the Compensation Committee’s views in connection with the results of the 2020 non-binding advisory vote of stockholders to approve executive compensation, see the discussion beginning on page 27.

If any other matters are properly presented for consideration at the meeting, including, among other things, consideration of a motion to adjourn the meeting to another time or place, the persons named in the proxy card will have discretion to vote on those matters according to their best judgment to the same extent as the person signing the proxy would be entitled to vote. At the date of this proxy statement, we do not anticipate that any other matters will be raised at the Annual Meeting.

Attendance at the Annual Meeting

 

Virtual admittance to the Annual Meeting will be limited to stockholders as of the Record Date, their authorized representatives and guests of EnerSys. To be admitted to the Annual Meeting, you must register for the meeting no later than 5:00 p.m. (Eastern Time) on August 3, 2021, the registration deadline. Upon registering for the Annual Meeting, you will receive an email with additional information related to the virtual meeting. You can do so by entering the control number found on the proxy card or voting instruction form that accompanied your previously distributed proxy materials when requested by way of the Annual Meeting platform. Additional instructions on how to access the Annual Meeting can be found on our website at investor.enersys.com.

 

3

 

 

Proposal No. 1		Election of the Class II Director Nominees of the Board of Directors

General

 

 

Our certificate of incorporation provides that the Board of Directors shall consist of not less than three or more than eleven members, as fixed by the Board of Directors from time to time. The certificate of incorporation also divides the Board into three classes, with each class to be as nearly equal in number as possible. The members of each class will serve for a staggered, three-year term. Upon the expiration of the term of a class of directors, nominees for directors in that class will be considered for election for three-year terms at the annual meeting of stockholders in the year in which the term of directors in that class expires.

Following the Annual Meeting, our Board of Directors set its size at nine members, divided into three classes. The classes are currently composed of the following directors:

 

∎

Ms. Chan and Messrs. Fludder and Tufano are Class I directors, whose terms will expire at the 2023 annual meeting of stockholders;

 

∎

Mr. Chung, Mr. Katsaros, and Gen. Magnus, USMC (Retired) are Class II director nominees, whose terms will expire, if elected, at the 2024 annual meeting of stockholders; and

 

∎

Messrs. Hoffen, Shaffer and Vargo are Class III directors, whose terms will expire at the 2022 annual meeting of stockholders.

Our Corporate Governance Guidelines prohibit the re-election of a continuing director once such director has reached the age of 75. Our two newest directors, Caroline Chan and Steven Fludder, were identified with the assistance of a third-party search firm retained by the Nominating and Corporate Governance Committee.

Director Nominees of the Board of Directors

 

 

Based on the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors has unanimously nominated each of Mr. Chung, Mr. Katsaros and General Magnus for election as Class II directors of EnerSys. Each director nominee currently serves as a director of EnerSys, and each has consented to being named in this Proxy Statement and to serve, if elected. Each of the directors elected at the Annual Meeting will hold office until the 2024 annual meeting of stockholders or until the earlier of their resignation or their successors are duly elected and qualified. If any of the nominees become unable to accept their nomination or election, the persons named in the proxy may vote for a substitute nominee selected by the Board of Directors. Our management, however, has no present reason to believe that any Class II nominee will be unable to serve as a director, if elected.

 

		The Board of Directors recommends a vote “FOR” each director nominee

 

4

 

 

BOARD OF DIRECTORS

The following table sets forth certain information with respect to our directors and our director nominees as of the date of this Proxy Statement:

 

Name		Age				Position with EnerSys		First Year as Director				Term will Expire(1)
Arthur T. Katsaros		73				Non-Executive Chairman		2005				2021
Caroline Chan		58				Director		2020				2023
Hwan-yoon F. Chung		47				Director		2006				2021
Nelda J. Connors		55				Director		2017				2021
Steven M. Fludder		61				Director		2020				2023
Howard I. Hoffen		57				Director		2004				2022
Gen. Robert Magnus, USMC (Retired)		74				Director		2008				2021
David M. Shaffer		56				Director, President and Chief Executive Officer		2016				2022
Paul J. Tufano		67				Director		2015				2023
Ronald P. Vargo		67				Director		2017				2022

 

(1)	Terms of office for continuing directors and director nominees are scheduled to expire at the annual meeting of stockholders to be held in the year indicated.

 

ARTHUR T. KATSAROS

Age 73

Director Since 2005

Former Group Vice President - Development and Technology, Air Products and Chemicals Inc.

INDEPENDENT NON-EXECUTIVE CHAIRMAN

DIRECTOR QUALIFICATION HIGHLIGHTS

EnerSys Committees: None   Other Public Boards: None

✓    Senior Management Leadership                       ✓    International Business                       ✓    Global Manufacturing

Career Highlights: Mr. Katsaros has been a Director of EnerSys since July 2005 and the Non-Executive Chairman of the Board of Directors since May 2016. Mr. Katsaros was the Group Vice President—Development and Technology of Air Products and Chemicals, Inc. from 2002 and until his retirement in April 2007. From 1996 through 2002, he was Group Vice President of Engineered Systems and Operations of Air Products.

Board Experience: Mr. Katsaros serves as the Chairman of CDG Environmental, LLC, a manufacturer of supply systems for water treatment, a position he has held since 2009.

Skills and Qualifications: Mr. Katsaros received a Bachelor of Science degree in Chemical Engineering from Worcester Polytechnic Institute and a Master of Business Administration from Lehigh University. He also completed the Advanced Management Program at Harvard University’s Graduate School of Business. Mr. Katsaros’ experience qualifying him for service as a member of the Board of Directors includes over fifteen years’ experience in executive positions with a global manufacturer, in charge of international business and operations, such as manufacturing, engineering, information technology and research and development. His background and his experience as a member of our Board of Directors qualifies him to serve as Non-Executive Chairman of the Board.

 

5

 

 

CAROLINE CHAN

Age 58

Director Since 2020

Vice President & General Manager, Intel Corporation

INDEPENDENT DIRECTOR

DIRECTOR QUALIFICATION HIGHLIGHTS

EnerSys Committees: Compensation, Nominating & Corporate   Governance, Technology Advisory Committee   Other Public Boards: None

✓    Wireless / 5G Infrastructure                       ✓    Strategic Planning

Career Highlights: Ms. Chan has been a Director of EnerSys since 2020. Since 2018, she has been the Vice President and General Manager of the Network Business Incubator Division at Intel Corporation, whose shares are listed on The NASDAQ Stock Market. Ms. Chan has held numerous other positions with Intel, such as Vice President and General Manager of the 5G Infrastructure Division (from 2017 through 2018), Sr. Director of the 5G Infrastructure Division (from 2016 to 2017), Director of Wireless Technology and Strategy (from 2010 to 2016), and Director of Strategy Business Development, Wireless Program Office (from 2009 through 2010).

Board Experience: Since 2017, Ms. Chan has served as a director of Telecom Infra Project, a non-profit membership organization focused on progress and developments in all facets of the telecom industry.

Skills and Qualifications: Ms. Chan received her Bachelor of Science degree in Electrical and Computing Engineering from the University of Texas and her Master of Science degree in Electrical and Computing Engineering from the University of Massachusetts.

 

HWAN-YOON F. CHUNG

Age 47

Director Since 2006

Managing Director, DCP Capital

INDEPENDENT DIRECTOR

DIRECTOR QUALIFICATION  HIGHLIGHTS

EnerSys Committees: Audit    Other Public Boards: None

✓    Financial Expert                       ✓    Private Equity                       ✓    Environmental

Career Highlights: Mr. Chung has been a Director of EnerSys since February 2006. He is the Managing Director of DCP Capital, a private equity firm since August 2017. From December 2015 to August 2017, he was the Senior Vice President—Corporate Finance of Hudson’s Bay Company, a department store operator. From November 2012 through December 2015, he was President and Chief Executive Officer of Allied Resource Company, a privately held investment company with interests in businesses that deploy proprietary industrial-scale technologies to recycle waste, reduce pollutants and other emissions. Prior thereto, Mr. Chung was a Principal of Metalmark Capital LLC, a private equity firm since its inception in 2004 until 2012.

Board Experience: Mr. Chung currently serves as a Director of several privately held businesses, including MFS Technology a flexible printed circuit board manufacturer, and Orgain, Inc., a nutritional foods company. Mr. Chung also served as a Director of Shape Technologies Group, a leading ultrahigh-pressure pump manufacturer, from 2019 to 2020, and PURAGLOBE, a leading used oil recycling technology company, from 2013 to 2017.

Skills and Qualifications: Mr. Chung received his Bachelor of Arts in Philosophy from the College of Arts and Sciences of the University of Pennsylvania, and his Bachelor of Science degree in Economics from the Wharton School of Business of the University of Pennsylvania. The financial acumen that Mr. Chung obtained through his private equity experiences were attributes important in qualifying him for service as a member of the Board of Directors, and a member and financial expert to the Audit Committee.

 

6

 

 

NELDA J. CONNORS

Age 55

Director Since 2017

Founder, Chairwoman and Chief Executive Officer of Pine Grove Holdings, LLC

INDEPENDENT DIRECTOR

DIRECTOR QUALIFICATION HIGHLIGHTS

EnerSys Committees: Audit, Compensation, Nominating &   Corporate Governance Chair   Other Public Boards: Baker Hughes Company, BorgWarner, Inc., Boston Scientific Corporation

✓    Financial Expert                       ✓    Global/ Public Company Experience                       ✓    Engineering Operations & Strategy

Career Highlights: Ms. Connors has been a Director of EnerSys since August 2017. In 2011, she founded and is Chairwoman and Chief Executive Officer of Pine Grove Holdings, LLC, a woman and minority-owned business that acquires lower middle market companies with a high engineering and service component. The investments are primarily focused in power generation, specialty logistics and transportation, SAAS and advanced materials. From 2008 through 2011, Ms. Connors was the President and Chief Executive Officer of Atkore International, which was formerly a division of Tyco International. Prior to that, she was a senior executive at Eaton Corporation, Ford Motor Company and Chrysler Corporation in various global business leadership and profit and loss management roles. She has lived and worked in the USA, Europe and Asia-Pacific.

Board Experience: Since May 2020, Ms. Connors has served as an independent director of Baker Hughes Company, an international industrial service company and one of the world’s largest oil field service companies. Since October 2020, she has been an independent director of BorgWarner Inc., a worldwide automotive industry components and parts supplier, and previously served as an independent director of its predecessor, Delphi Technologies PLC, the powertrain leader of technologies and software to enable next-generation advanced vehicle propulsion, from December 2017 until its sale to BorgWarner in October 2020. Since December 2009, Ms. Connors has been an independent director of Boston Scientific Corporation, a worldwide developer, manufacturer and marketer of medical devices. She has been an independent outside adviser for the board of directors of Nissan North America Inc., a wholly owned subsidiary of Nissan Motor Co., Ltd., a Japanese-based auto manufacturer, since November 2020. Ms. Connors formerly served as a director for Case New Holland Industrial from April 2020 to September 2020, Echo Global Logistics, Inc. from April 2013 to February 2020, Atkore from December 2010 to June 2011, Blount International Inc. from March 2012 to April 2016, Clarcor Corporation from April 2016 to February 2017, Vesuvius plc from March 2013 to September 2016, and as a Class B Director of the Federal Reserve Bank of Chicago from 2011 to 2017.

Skills and Qualifications: Ms. Connors holds a Bachelor of Science and a Master of Science degree in Mechanical Engineering from the University of Dayton with post- graduate studies at the University of Tokyo in International Finance and Economics. Her financial acumen and public company experiences, as well as her global experience in areas of operations, quality, engineering and business strategy were attributes important in qualifying her for service as a member of our Board of Directors, as Chair of the Nominating and Corporate Governance Committee, a member of the Compensation Committee, and as a member and financial expert to the Audit Committee.

 

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STEVEN M. FLUDDER

Age 61

Director Since 2020

Chief Executive Officer of LS Energy Solutions LLC

INDEPENDENT DIRECTOR

DIRECTOR QUALIFICATION HIGHLIGHTS

EnerSys Committees: Audit, Nominating & Corporate   Governance, Technology Advisory Committee   Other Public Boards: Ocean Power Technologies, Inc.

✓    Smart Energy Storage                       ✓    Electric Grid Experience

Career Highlights: Mr. Fludder has been a Director of EnerSys since 2020. Since October 2020, he is the President and Chief Executive Officer of LS Energy Solutions LLC, an energy storage and related technologies company. From 2017 to June 2020, he served as the Chief Executive Officer of NEC Energy Solutions, Inc., an electric power grid scale energy storage company wholly owned by NEC Corporation, a Japanese multinational information technology and electronics company whose shares are listed on the Tokyo Stock Exchange. From 2015 to 2017, Mr. Fludder was the Chief Executive Officer of alpha-En Corporation, a battery technology company publicly quoted on the OTC stock market. From 2010 to 2014, he was Senior Executive Vice President, Division General Manager and Samsung Group Officer, where he was head of worldwide sales and marketing for Samsung Engineering, a global engineering, procurement and construction (EPC) firm serving a broad range of energy industries, and President of Samsung Techwin Power Systems Division. Prior to Samsung, he had a 27-year career with General Electric in various roles, including having served as a Vice President and Corporate Officer where he led GE’s companywide environmental business initiative.

Board Experience: Since 2016, Mr. Fludder has served as a director of Ocean Power Technologies Inc., a renewable energy company focused on remote offshore applications, whose shares are listed on The NASDAQ Stock Market.

Skills and Qualifications: Mr. Fludder received a Bachelor of Science degree in Mechanical Engineering from Columbia University and a Bachelor of Science degree from Providence College. He earned a Master of Science degree in Mechanical Engineering from the Massachusetts Institute of Technology.

 

HOWARD I. HOFFEN

Age 58

Director Since 2004

Chairman, CEO and Managing Director, Metalmark Capital LLC

INDEPENDENT DIRECTOR

DIRECTOR QUALIFICATION  HIGHLIGHTS

EnerSys Committees: Nominating & Corporate Governance   Other Public Boards: None

✓    Audit & Financial                       ✓    Risk Management                       ✓    Strategic Planning

Career Highlights: Mr. Hoffen has been a Director of EnerSys since it became publicly traded in July 2004. He is currently the Chairman, Chief Executive Officer, and a Partner of Metalmark Capital LLC. Mr. Hoffen was a founding member of Metalmark in 2004 and served as Chairman and Chief Executive Officer of Morgan Stanley Capital Partners from 2001 to 2004, after having performed various roles in the private equity group since he joined Morgan Stanley in 1985.

Board Experience: Since October 2019, Mr. Hoffen has served as Chairman of Amplitude Healthcare Acquisition Corp., a biotechnology company in hematopoietic stem cell transplantation, whose shares are listed on The NASDAQ Stock Market. He served as a Director of Pacific Coast Energy Holdings LLC, the general partner of Pacific Coast Oil Trust, whose trust units are listed on The New York Stock Exchange from 2008 to September 2019, and as a Director of Jones Energy Inc., an independent oil and gas company whose shares are listed on The New York Stock Exchange, from 2009 to May 2017. He is also a Director of several private companies and serves on the Board of Visitors of The Fu Foundation School of Engineering and Applied Sciences at Columbia University.

Skills and Qualifications: Mr. Hoffen received his Master of Business Administration degree from Harvard Business School and his Bachelor of Science degree from Columbia University. Through Mr. Hoffen’s experience in private equity and service on other corporate boards, he has dealt with a wide range of issues including audit and financial reporting, risk management, executive compensation and strategic planning.

 

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GEN. ROBERT MAGNUS, USMC (RETIRED)

Age 74

Director Since 2008

Retired Asst. Commandant of the United States Marine Corps

INDEPENDENT DIRECTOR

DIRECTOR QUALIFICATION HIGHLIGHTS

EnerSys Committees: Compensation, Nominating &   Corporate Governance   Other Public Boards: None

✓    Financial Acumen                       ✓    Business & Military Experience

Career Highlights: Gen. Magnus has been a Director of EnerSys since July 2008. Gen. Magnus served as the Assistant Commandant of the U.S. Marine Corps from 2005 to 2008. He retired from the U.S. Marine Corps in 2008 after over 38 years of distinguished service. Gen. Magnus’ operational assignments included Commander, Marine Corps Air Bases Western Area and Deputy Commander, Marine Forces Pacific. Gen. Magnus’ staff assignments included Chief, Logistics Readiness Center, Joint Staff; Executive Assistant to the Director of the Joint Staff; Head, Aviation Plans and Programs Branch; Assistant Deputy Chief of Staff for Aviation; Assistant Deputy Commandant for Plans, Policies, and Operations; and Deputy Commandant for Programs and Resources.

Board Experience: Gen. Magnus serves as a Director of All My Sons Moving and Storage, a provider of moving services. He previously served as the Chairman of the Board of Directors of Elbit Systems of America, LLC, a provider of defense, homeland security, commercial aviation and medical products and solutions, as well as aircraft maintenance, repair and overhaul services, from March 2011 through December 2020. He also served as a Director of Augusta Westland NA, a subsidiary of Italy’s Finmeccanica, a producer of advanced helicopters, from June 2009 to March 2016, and a Director of Fairway Group Holdings Corp, which is a provider of specialty grocery products and whose shares were listed on The NASDAQ Stock Market, from February 2014 until July 2016.

Skills and Qualifications: Gen. Magnus received his Bachelor of Arts degree in history from the University of Virginia and his Master of Business Administration degree from Strayer College. His formal military education included Naval Aviator Training, U.S. Marine Corps Command and Staff College, and the National War College. Gen. Magnus’ personal decorations included two Distinguished Service Medal awards, the Defense Superior Service Medal, Legion of Merit, and Navy Achievement Medal. Gen. Magnus’ extensive financial management experience and responsibilities for peacetime and wartime programs and budgets for the U.S. Marine Corps qualifies him for service as a member of our Board of Directors, member of the Compensation Committee, and member of the Nominating and Corporate Governance Committee.

 

DAVID M. SHAFFER

Age 56

Director Since 2016

President & Chief Executive Officer, EnerSys

INDEPENDENT DIRECTOR

DIRECTOR QUALIFICATION HIGHLIGHTS

EnerSys Committees: Technology Advisory Committee   Other Public Boards: None

✓    Global Leadership Experience                       ✓    Manufacturing                       ✓    Sales

Career Highlights: Mr. Shaffer has been a Director of EnerSys and has served as our President and Chief Executive Officer since April 2016. Prior thereto, he served as President and Chief Operating Officer since November 2014. From January 2013 through October 2014 he served as our President—EMEA. From 2008 to 2013, Mr. Shaffer was our President—Asia. Prior thereto he was responsible for our telecommunications sales in the Americas. Mr. Shaffer joined the Company in 2005 and has worked in various roles of increasing responsibility in the industry since 1989.

Board Experience: Mr. Shaffer is a Director of several EnerSys subsidiaries and is presently not a member of any outside boards.

Skills and Qualifications: Mr. Shaffer received his Master of Business Administration degree from Marquette University and his Bachelor of Science degree in Mechanical Engineering from the University of Illinois. Mr. Shaffer’s educational background and broad range of leadership experience in various aspects of our business globally, are attributes that qualify him for service as a member of our Board of Directors.

 

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PAUL J. TUFANO

Age 67

Director Since 2015

Former President & Chief Executive Officer, Benchmark Electronics, Inc.

INDEPENDENT DIRECTOR

DIRECTOR QUALIFICATION HIGHLIGHTS

EnerSys Committees: Audit, Compensation (Chair)   Other Public Boards: Teradyne, Inc.

✓    Financial Expert                       ✓    Senior Leadership Experience                       ✓    Manufacturing

Career Highlights: Mr. Tufano has been a Director of EnerSys since April 2015. From September 2016 until March 2019, he was President and Chief Executive Officer of Benchmark Electronics, Inc., a global provider of electronics contract manufacturing services and integrated engineering design and test services, whose shares are listed on The New York Stock Exchange. From February 2016 through March 2019, Mr. Tufano also served as a member of its Board of Directors. From December 2008 through September 2013, Mr. Tufano served as Chief Financial Officer of the Alcatel-Lucent Group, a telecommunications company, whose shares were listed on The New York Stock Exchange and the Paris Stock Exchange. In January 2013, in addition to his Chief Financial Officer responsibilities, he was named Chief Operating Officer. Before joining Alcatel-Lucent, Mr. Tufano served as Executive Vice President and Chief Financial Officer of Solectron Corporation, an electronics manufacturing company for original equipment manufacturers, from January 2006 to October 2007 and as Interim Chief Executive Officer from February 2007 to October 2007. Prior to joining Solectron, Mr. Tufano was President and Chief Executive Officer at Maxtor Corporation, a manufacturer of computer hard disks, from February 2003 to November 2004. Previously, he served as Executive Vice President and Chief Operating Officer from April 2001 and as Chief Financial Officer from July 1996 at Maxtor Corporation. From 1979 until he joined Maxtor Corporation in 1996, Mr. Tufano held management positions in finance and operations at International Business Machines Corporation (IBM), a technology and consulting company.

Board Experience: Mr. Tufano has been a Director of Teradyne, Inc., a supplier of automation equipment for test and industrial application whose shares are listed on The New York Stock Exchange, since March 2005, and was appointed as Chair of its Board of Directors in May 2021. He served on the Board of Directors of Benchmark Electronics, Inc., as discussed above.

Skills and Qualifications: Mr. Tufano holds a Bachelor of Science degree in Economics from St. John’s University and a Master of Business Administration, Finance, Accounting and International Business degree from Columbia University. Mr. Tufano’s experience qualifying him for service as a member of our Board of Directors includes expertise garnered from service as a former senior executive, including Chief Financial Officer, of several public manufacturing companies involving complex technologies. This experience qualifies him to serve as a member and a financial expert to the Audit Committee, and as Chairperson of the Compensation Committee.

 

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RONALD P. VARGO

Age 67

Director Since 2017

Former Executive Vice President and Chief Financial Officer of ICF International, Inc.

INDEPENDENT DIRECTOR

DIRECTOR QUALIFICATION HIGHLIGHTS

EnerSys Committees: Audit (Chair), Compensation   Other Public Boards: Ferro Corporation and EPAM   Systems, Inc.

✓    Financial Expert                       ✓    Technology & Engineering                       ✓    Leadership Experience

Career Highlights: Mr. Vargo served as Executive Vice President and Chief Financial Officer of ICF International, Inc., a global consulting and technology services company whose shares are listed on The NASDAQ Stock Market, from April 2010 to May 2011. Prior to joining ICF, he served as the Executive Vice President and Chief Financial Officer of Electronic Data Systems (“EDS”), a global technology services company, and served as a member of the EDS Executive Committee. Mr. Vargo joined EDS as Vice President and Treasurer in 2004 and was promoted to Chief Financial Officer in 2006. Before joining EDS, he was employed from 1991 to 2003 by TRW, Inc., a global manufacturing and service company strategically focused on providing products and services with a high technology or engineering content to the automotive, space and defense markets. While at TRW, Mr. Vargo served in the positions of Vice President of Investor Relations and Treasurer and Vice President of Strategic Planning and Business Development. He began his career with General Electric in 1976 and also served in numerous leadership positions at BP plc and the Standard Oil Company, which was acquired by BP.

Board Experience: Mr. Vargo has served as a Director of Ferro Corporation, a leading supplier of technology based functional coatings and color solutions, whose shares are listed on The New York Stock Exchange, since 2009 and has served as a Director of EPAM Systems, Inc., a global provider of product development and software engineering solutions, whose shares are traded on The New York Stock Exchange, since 2012.

Skills and Qualifications: Mr. Vargo holds a Master of Business Administration degree in Finance and General Management from Stanford University and a Bachelor of Arts degree in Economics from Dartmouth College. Mr. Vargo’s financial acumen and broad experiences in technology and engineering in global markets qualify him for service on the Board of Directors, and as the Chair and a financial expert of the Audit Committee, and member of the Compensation Committee.

 

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		CORPORATE GOVERNANCE

Independence of Directors

 

Our Board of Directors determined that all directors, with the exception of Mr. Shaffer, are independent from EnerSys and our management under the listing standards of The New York Stock Exchange (“NYSE”). The Board considered the NYSE standards, the fact that there were no transactions or arrangements between the directors and EnerSys, other than the consideration for serving as a director, and all other relevant facts and circumstances in making these independence determinations and concluded that there were no material relationships between any of our directors and EnerSys.

There are no familial relationships among our directors or executive officers.

Access to Corporate Governance Documents

 

Our corporate governance information and materials, including our Corporate Governance Guidelines, charters of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, and Code of Business Conduct and Ethics, are available on the Investors page of our website at www.enersys.com or at investor.enersys.com, and any stockholder may obtain printed copies of these documents by writing to Investor Relations at: EnerSys, 2366 Bernville Road, Reading, Pennsylvania 19605, by e-mail at: investorrelations@enersys.com or by calling Investor Relations at (610) 236-4040. Information contained on the website is not incorporated by reference or otherwise considered part of this Proxy Statement.

Committees of our Board of Directors

 

Our Board of Directors has an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each of which has the composition and responsibilities described below. The Board of Directors has determined that each committee member is independent under the NYSE listing standards. Our Board of Directors, from time to time, may establish other committees.

Audit Committee

Since July 30, 2020, Ms. Connors and Messrs. Chung, Fludder, Tufano and Vargo (Chairperson) have served as members of our Audit Committee. Prior thereto, from August 15, 2017, Messrs. Chung, Marlo, Tufano (Chairperson) and Vargo and Ms. Connors, served as members of our Audit Committee. For fiscal year 2021, the Board of Directors appointed each of Ms. Connors, and Messrs. Chung, Fludder, Tufano, and Vargo as an “audit committee financial expert,” as such term is defined in rules promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Board of Directors determined that each member of the Audit Committee is an independent director under the NYSE listing standards and the SEC rules and regulations applicable to audit committees and financially literate in accordance with the NYSE listing standards.

Our Audit Committee held a total of four (4) meetings during the fiscal year ended March 31, 2021.

The Audit Committee is responsible for:

 

∎

appointing, compensating and overseeing our independent registered public accounting firm (“independent auditors”);

 

∎

overseeing management’s fulfillment of its responsibilities for financial reporting and internal control over financial reporting;

 

∎

overseeing the activities of our internal audit function;

 

∎

reviewing and discussing policies with respect to risk assessment and risk management; and

 

∎

reviewing, discussing and overseeing policies relating to our hedging, swaps and other derivative transactions.

For additional information, see “Audit Committee Report” herein and the Audit Committee Charter, which is available on the Investors page of our website at www.enersys.com or investor.enersys.com.

 

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Compensation Committee

Since July 30, 2020, Ms. Chan, Ms. Connors, Gen. Magnus, Mr. Tufano (Chairperson) and Mr. Vargo, have served as members of the Compensation Committee. Prior thereto, since August 15, 2017, Messrs. Lehman (Chairperson), Marlo and Tufano, Gen. Magnus and Ms. Connors had served as members of the Compensation Committee.

This Committee held a total of five (5) meetings during the fiscal year ended March 31, 2021.

The Compensation Committee is responsible for:

 

∎

reviewing and approving the compensation of our Chief Executive Officer (“CEO”) and the other named executive officers;

 

∎

reviewing and recommending to the Board the adoption of non-employee director compensation programs; and

 

∎

administering our equity plans and other certain incentive compensation plans.

More specifically, the Compensation Committee has sole authority to set the base salaries and approve equity-based and incentive-based compensation for our named executive officers. It engages its own independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), to review the compensation levels of executives at our peer group companies and assess total compensation and make recommendations about changes in the compensation of our executives, including incentive and equity plan structure and performance goals. The consultant works with management on behalf of the Compensation Committee on matters under the Committee’s purview but provides no services to management or the Company other than its work for the Committee. The Compensation Committee also considers recommendations from our CEO with respect to the base salary of our other named executive officers. The Compensation Committee utilizes a similar methodology, including advice from its consultant on compensation levels and structure, for recommending non-employee director compensation and meeting fees, which are subject to Board approval.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee (i) was, during fiscal year 2021, or had previously been an officer or employee of EnerSys or our subsidiaries nor (ii) had any direct or indirect material interest in a transaction of EnerSys or a business relationship with EnerSys, in each case that would require disclosure under the applicable rules of the SEC. No other interlocking relationship existed between any member of the Compensation Committee or an executive officer of EnerSys, on the one hand, and any member of the Compensation Committee (or committee performing equivalent functions, or the full board of directors) or an executive officer of any other entity, on the other hand, requiring disclosure pursuant to the applicable rules of the SEC.

Nominating and Corporate Governance Committee

Since July 30, 2020, Ms. Chan, Ms. Connors (Chairperson) Mr. Fludder, Mr. Hoffen and Gen. Magnus have served as members of the Nominating and Corporate Governance Committee. Prior thereto, since August 15, 2017, Gen. Magnus (Chairperson) and Messrs. Hoffen, Marlo and Vargo had served as members of the Nominating and Corporate Governance Committee.

The Committee held a total of five (5) meetings during the fiscal year ended March 31, 2021.

The responsibilities of the Nominating and Corporate Governance Committee include the following:

 

∎

identifying, reviewing the qualifications of, and recruiting qualified candidates for board membership;

 

∎

reviewing the continuation of each director being considered for re-election;

 

∎

considering the contingent resignations of directors who do not receive a majority vote in connection with their respective election and recommend to the Board of Directors the action to be taken;

 

∎

making recommendations to the Board concerning the structure, composition and function of the board and its committees;

 

∎

executive succession planning;

 

∎

oversee the Company’s environmental, social and governance (ESG) and sustainability strategy, initiatives and policies; and

 

∎

reviewing and assessing the adequacy of the Company’s corporate governance documents.

 

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Technology Advisory Committee

In October 2020, the Board approved the formation of the EnerSys Technology Advisory Committee. The Technology Advisory Committee acts as an advisory committee composed of both members of the Board and management, concerning matters of technology, research and development in support of the overall business strategy of the Company. Directors Caroline Chan, Steven Fludder and David Shaffer each serve as a member of the Technology Advisory Committee, along with other members of management, which held a total of three (3) meetings during the fiscal year ended March 31, 2021.

Process for Selection of Director Nominee Candidates

 

The Nominating and Corporate Governance Committee believes that the minimum qualifications for serving as a director of EnerSys are that a candidate demonstrate, by significant accomplishments in his or her field, an ability to make a meaningful contribution to the Board of Directors’ oversight of the business and affairs of EnerSys and have an impeccable record and reputation for honest and ethical conduct in his or her professional and personal activities. In addition, the Nominating and Corporate Governance Committee considers the following characteristics in reviewing director candidates:

 

∎

integrity and character;

 

∎

sound and independent judgment;

 

∎

breadth of experience;

 

∎

business acumen;

 

∎

leadership skills;

 

∎

scientific or technology expertise;

 

∎

familiarity with issues affecting global businesses in diverse industries; and

 

∎

diversity of backgrounds and experience.

In addition to these requirements, the Nominating and Corporate Governance Committee will also evaluate, in the context of the Board’s needs, whether the nominee’s skills are complementary to the existing Board members’ skills, and assess any material relationships with EnerSys or third parties that might adversely impact independence and objectivity, as well as such other criteria as the Nominating and Corporate Governance Committee determines to be relevant at the time. Except as described above, the Board and the Nominating and Corporate Governance Committee do not maintain a formal diversity policy, however, diversity is one of many factors considered in the nomination of our directors.

The Nominating and Corporate Governance Committee, Committee Chairperson and/or our Chief Executive Officer interview director nominee candidates that meet the criteria, and the Nominating and Corporate Governance Committee selects candidates that best suit the Board’s needs. We may from time to time hire an independent search firm to help identify and facilitate the screening and interview process of director candidates.

Stockholders may recommend qualified persons for consideration by the Nominating and Corporate Governance Committee. Stockholders making a recommendation must submit the same information as that required to be included by us in our Proxy Statement with respect to nominees of the Board of Directors. The stockholder recommendation should be submitted in writing, addressed to EnerSys at 2366 Bernville Road, Reading, Pennsylvania 19605, Attn: Joseph G. Lewis, Senior Vice President, General Counsel, Chief Compliance Officer and Secretary.

The Nominating and Corporate Governance Committee’s evaluation process does not vary based on whether or not a candidate is recommended by a stockholder. The Nominating and Corporate Governance Committee will also review the performance as a director of any person already serving on the Board of Directors of EnerSys in determining whether to recommend that the Director be re-nominated.

Board Leadership Structure

 

For fiscal year 2021, the Board of Directors maintained a leadership structure that continues to separate the Chairman and Chief Executive Officer roles by appointing a Non-Executive Chairman of the Board. Given its governance structure, the Board of Directors determined that the optimal structure for the Company at this time is to leave the role of Lead Director vacant, in lieu of appointing both a Non-Executive Chairman of the Board and a Lead Director (as described below).

The Board had created the position of Lead Director to strengthen Board oversight. The Lead Director must be a non-management director and must be deemed independent by the Board of Directors. The Lead Director works with the

 

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Non-Executive Chairman to approve Board agendas and schedules, advises on the quality, quantity and timeliness of information provided by management to the Board, and acts as a liaison between the independent directors and the Non-Executive Chairman of the Board. In the absence of the Non-Executive Chairman, the Lead Director also chairs executive sessions of the independent directors not attended by management. The Board has established procedures for determining which non-management director will serve as the Lead Director. The Lead Director is designated by the Board of Directors.

The Board’s Role in Risk Oversight

 

The Board oversees various risks potentially affecting EnerSys both directly and indirectly through its committees. EnerSys has in place a risk management program that, among other things, is designed to identify risks across EnerSys with input from each business unit and function. Material risks are identified and prioritized by management and its risk committee that reports to the Audit Committee, and each prioritized risk is referred to the appropriate committee of the Board or the full Board for oversight. Members of the Board regularly review information regarding our credit, liquidity, markets, legal, regulatory, compliance and operations, including technology and cyber security risk, as well as the strategic and financial considerations associated with each.

Also, the Compensation Committee periodically reviews the most important risks to EnerSys to ensure that compensation programs do not encourage excessive risk-taking. Senior members of management from across business units and programmatic and functional disciplines within EnerSys make up a risk committee, which meets at least quarterly to identify significant risks to the Company, coordinate information sharing and mitigation efforts for all types of risks, sometimes working with outside advisors. We also have mandatory training of our workforce around our policies, including our Code of Business Conduct and Ethics. The risk committee periodically reports its results to the Audit Committee.

Charters of the Committees of the Board of Directors

 

The Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee each operate pursuant to a written charter adopted by the Board of Directors. Each Committee reviews its charter at least annually. Copies of the charters are available on the Investors page of our website at investor.enersys.com or in print upon request. See “Corporate Governance–Access to Corporate Governance Documents.”

Director Attendance at Board, Committee and Annual Meetings

 

Our Corporate Governance Guidelines provide that directors are expected to attend meetings of the Board and meetings of the committees on which they serve. During fiscal year 2021, the Board of Directors met a total of four (4) times. Each director attended at least 75% of the total number of meetings of the Board and its committees on which the director served during the fiscal year, based on the number of such meetings held during the period for which each person served as a director or on a committee. It is our policy that directors are invited to the Annual Meeting but are not required to attend. Nine (9)  members of the Board of Directors attended the 2020 annual meeting of stockholders.

Executive Sessions of Non-Management Directors

 

The Board has established a policy requiring non-management directors to meet in executive session periodically during the course of each year.

Communications with the Board of Directors

 

Stockholders and other interested parties, who desire to communicate directly with any member (or all members) of the Board, any Board committee or any chair of any such committee, should submit such communication in writing addressed to the “Non-Executive Chairman of the Board of Directors” or “Non-Management Directors,” at EnerSys, P.O. Box 14145, Reading, Pennsylvania 19612 or by email to the Non-Executive Chairman of the Board of Directors or Non-Management Directors by going to investor.enersys.com, under the link for Governance and Documents and Charters. Communications intended for the full Board of Directors may be submitted in the same manner.

Stockholders, employees and other interested parties who desire to express a concern relating to accounting or auditing matters should communicate directly with our Audit Committee in writing addressed to the “Audit Committee Chair” at EnerSys, P.O. Box 14145, Reading, Pennsylvania 19612 or by e-mailing the Audit Committee by going to investor.enersys.com, under the link for Governance and Documents and Charters.

 

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Code of Business Conduct and Ethics

 

The Board has adopted a Code of Business Conduct and Ethics that is applicable to our Chief Executive Officer, Chief Financial Officer and Controller, as well as our other officers, directors, employees and contractors of EnerSys. The Code of Business Conduct and Ethics is available on the Investors page of our website at www.enersys.com or investor.enersys.com or in print upon request. See “Corporate Governance–Access to Corporate Governance Documents.” Any amendment to, or waiver from, the Code of Business Conduct and Ethics for such officers will be disclosed on the Investors page of our website at www.enersys.com or investor.enersys.com.

ESG Initiatives

 

EnerSys is committed to being a responsible corporate citizen, working to decrease the environmental impact of our business activities throughout our operations, enhancing workplace safety and the health and well-being of our employees, offering our employees opportunities to grow and develop their careers, and working to increase the diversity of our workforce and supporting inclusive workplaces. We believe that the power systems and energy management sector has a key role to play in finding innovative solutions to address these global issues. Our policies and practices aim to protect, conserve, and sustain the world’s natural resources, as well as to protect our customers and the communities in which we live and operate.

EnerSys has been integrating the fundamental sustainable values of environment, social and governance (ESG) into our everyday operations and future business strategies. The Board of Directors recently revised the charter of the Nominating and Corporate Governance Committee to specifically include as one of its responsibilities assisting the Board in fulfilling its oversight responsibilities relating to the Company’s policies and practices regarding ESG matters that are significant to the Company. Our other Board committees also have oversight responsibility for ESG topics under their purview. The Senior Vice President, General Counsel and Chief Compliance Officer of the Company reports to the Audit Committee of the Board of Directors on both legal, ethics and compliance matters, and environmental, health and safety matters, at each Audit Committee meeting. The Compensation Committee and the Nominating and Corporate Governance Committee have oversight of management succession, talent development and diversity and inclusion efforts. The Audit Committee and the full Board are also directly engaged with ESG risk areas through our comprehensive enterprise risk management program.

The Board of Directors and our CEO administer our ESG Program by which EnerSys communicates and monitors our information regarding compliance with our various policies, including those with respect to sustainability, conflict minerals, environmental responsibility and engagement, employee and supplier diversity, anti-slavery and human trafficking, battery recycling programs and environment and sustainability issues with respect to the production and life cycle of our products. We maintain a sustainability team, who leads our significant efforts with respect to climate change management, product sustainability, operations, supply chain management, workforce health and safety, diversity, equity, inclusion, and community engagement. We also offer a complete battery recycling program to assist our customers in preserving our environment and comply with recycling and waste disposal regulations. These various policies are available on our website at www.enersys.com.

Human Capital Management

 

EnerSys is committed to developing a comprehensive, cohesive and positive employee experience. We consider talent acquisition, development, engagement and retention a key driver of our business success. Our Board of Directors, through the Compensation Committee and the Nominating and Corporate Governance Committee, retains oversight of our human capital management process, including demographics, talent development, employee retention, material aspects of employee compensation, as well as diversity and inclusion, recruitment, and compensation efforts through the following initiatives:

 

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Equity, Inclusion and Belonging. For fiscal year 2022, we formed an executive steering committee and funded additional resources to further support creating a work environment that emphasizes respect, fairness and dignity and that does not tolerate discrimination or harassment.

 

∎

Health, Safety, and Wellness. Our health, safety and wellness programs are designed around global standards with appropriate variations addressing the multiple jurisdictions and regulations, specific hazards and unique working environments of our manufacturing and production facilities, service centers and headquarter operations. This undertaking is explained further in our Safety and Health Policy. Above all else, we are dedicated to the safety and wellbeing of our employees.

 

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∎

COVID-19 Response. As the COVID-19 pandemic unfolded in March 2020, we quickly shifted to a remote work environment where possible and provided employees with the resources necessary to effectively perform their job responsibilities. Additionally, we implemented changes to our manufacturing and distribution operations to include the use of personal protective equipment, intensive cleaning measures, and social distancing. We also provided resources for well-being and work life flexibility for our employees to take care of themselves and their families.

 

∎

Philanthropy and Volunteerism. EnerSys is strongly committed to being an outstanding corporate citizen on a global basis in all of the countries and communities where we do business. We regularly sponsor volunteer events and fundraising campaigns, encourage our employees to give back to our communities, a commitment that we further support by offering employees paid time off for charitable volunteering. We also have internal committees to assist the company in its philanthropic endeavors that support all communities in which we work.

 

∎

Training and Career Management. Employees receive regular development feedback from their manager through a quarterly 1:1 review, in addition to the annual review process, which encourages open dialogues to identify and cultivate skills, training, professional development, educational advancement programs and opportunities. All new employees are required to participate in substantial training seminars to introduce them to the EnerSys business, our strategy, our culture and philosophies. Through our established EnerSys Academy, we provide employees worldwide with resources to expand their knowledge on a broad scope of relevant topics to promote their growth and development.

 

∎

Compensation and Benefits. To attract, retain and recognize talent, we aim to ensure merit-based, compensation practices and strive to provide competitive compensation and benefit packages to our workforce. We provide employee wages that are consistent with employee positions, skill levels, experience, knowledge and geographic location. We completed an initial pay equity study in fiscal year 2021 to further evaluate our global pay practices across the organization.

 

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		NON-EMPLOYEE DIRECTOR COMPENSATION

We believe that the amounts and form of compensation and the methods used to determine compensation of our non-employee directors are important in (i) attracting and retaining directors who are independent, interested, diligent and actively involved in overseeing EnerSys’ affairs and (ii) more substantially aligning the interests of our non-employee directors with the interests of our stockholders. We did not separately compensate Mr. Shaffer for his service on the Board of Directors for fiscal year 2021.

For fiscal year 2021, our Compensation Committee retained the services of FW Cook, as an independent compensation consultant to the Compensation Committee, to provide competitive data and make recommendations on the compensation of our named executive officers as we describe beginning on page 25, as well as to assist the Compensation Committee in evaluating the compensation of our non-employee directors. The Compensation Committee considers this information, including the applicable peer group data, and ultimately recommends any changes to the non-employee director compensation program to our Board for its approval. In assessing non-employee director compensation, we utilize the same peer group that is used for executive compensation and is described in the Compensation Discussion and Analysis section of this Proxy Statement beginning on page 25. The Compensation Committee reviews the non-employee director compensation program annually.

Cash Compensation

 

The cash elements of the non-employee director compensation program for fiscal year 2021, which the Compensation Committee recommended, and the Board approved, effective immediately following the 2020 annual meeting of stockholders, were as follows:

 

∎

Annual retainer—$80,000 per year

 

∎

Committee meetings—$1,500 each

 

∎

Non-Executive Chairman—additional $150,000 per year (paid 50% in deferred stock units and 50% in cash)

 

∎

Audit Committee Chairperson—additional $15,000 per year

 

∎

Compensation Committee Chairperson—additional $15,000 per year

 

∎

Nominating and Corporate Governance Committee Chairperson—additional $15,000 per year

Equity Compensation

 

For fiscal year 2021, each non-employee director received an award of deferred stock units, with a grant date fair market value of $135,000. Deferred stock units are immediately vested on the date of grant and are payable in shares of our common stock six months after termination of service as a director unless payout is otherwise deferred by a director at the time of grant.

We make all equity awards to non-employee directors under our stockholder-approved equity incentive plan, which we describe on page 32, and in accordance with our policy on granting equity awards, which we described on page 35. As required under their respective award agreements, we credit directors with any dividend equivalents attributable to such equity awards.

Director Deferred Compensation Plan

 

Under the EnerSys Voluntary Deferred Compensation Plan for Non-Employee Directors, which we refer to as the “Director Plan,” each non-employee director may defer receipt of all or a portion of any cash fees that are payable to the director for service on the Board.

Participants may elect to allocate the deferred fees (i) into an investment account, under which investment options are the same as those available to our employees under our 401(k) retirement plan, or (ii) into a stock unit account, under which the director will be awarded stock units pursuant to our stockholder-approved equity compensation plan. If the director elects to allocate the deferred fees into the stock unit account, we will make an additional matching contribution in the amount of 20% of the deferred amount. Dividend equivalent units, if any, will be credited to each stock unit account. Each

 

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participant is 100% vested with respect to the amounts deferred to the stock unit deferral account. The matching contribution will be in the form of restricted stock units and will vest quarterly over one year from the date the units are credited to the account, except that participants will automatically become 100% vested in their matching contribution upon our change in control. All stock units are payable in shares of our common stock.

Under the Director Plan, our non-employee directors may also defer receipt of all or a portion of shares payable due to vesting of restricted stock units granted pursuant to the matching contribution discussed above. At a director’s election, the shares otherwise payable, together with any dividends thereon, are credited to a hypothetical bookkeeping account in the director’s name and will be paid to the director in a lump sum at the time specified in the election or, if earlier, upon our change in control or the director’s death.

The Director Plan is a nonqualified deferred compensation plan. As such, the rights of all participants to any deferred amounts represent our unsecured promise to pay and the deferred amounts remain subject to the claims of our creditors.

Stock Ownership Guidelines

 

We have implemented stock ownership guidelines under which we expect each non-employee director to beneficially own shares of our common stock with a value equal to five times the annual Board cash retainer, not including meeting or committee chair fees, paid to such director during the previous fiscal year. The Compensation Committee evaluates stock ownership on an annual basis. We expect each director to attain the investment level no later than five years from the date the director first becomes a non-employee director. Each individual serving as a non-employee director during fiscal year 2021 has achieved the investment level established by the stock ownership guidelines. Ms. Chan and Mr.  Fludder will each have until 2025 (five years from their appointment) to attain this investment level.

Hedging and Pledging Prohibition

 

As with our employees, we do not permit our non-employee directors to hedge their economic exposures to our common stock that they own by engaging in transactions involving puts, calls, or other derivative securities, zero-cost collars, forward sales contracts, or buying on margin or pledging shares as collateral for a loan.

 

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NON-EMPLOYEE DIRECTOR COMPENSATION FOR FISCAL YEAR 2021

The table set forth below summarizes the compensation that we paid to our non-employee directors for the fiscal year ended March 31, 2021. None of our non-employee directors received option awards, non-equity incentive plan compensation, pension, nonqualified deferred compensation, or any other compensation for the fiscal year ended March 31, 2021.

 

Name		Fees Earned            Paid in Cash					Stock Awards(3)(4)					Total
Caroline Chan			$	66,505				$	135,003				$	201,508
Hwan-yoon F. Chung			$	84,500				$	135,003				$	219,503
Nelda J. Connors(1)			$	106,720				$	135,003				$	241,723
Steven M. Fludder			$	65,005				$	135,003				$	200,008
Howard I. Hoffen			$	86,000				$	135,003				$	221,003
Arthur T. Katsaros			$	155,000	(5)			$	240,995				$	395,995
John F. Lehman(2)			$	33,275	(5)			$	38,329				$	71,604
Gen. Robert Magnus, USMC (Retired)			$	99,780				$	135,003				$	234,783
Dennis S. Marlo(2)			$	35,995	(5)			$	41,140				$	77,135
Paul J. Tufano			$	108,500	(5)			$	154,805				$	263,305
Ronald P. Vargo			$	105,220	(5)			$	156,068				$	261,288

 

(1)	Term expires at the 2021 Annual Meeting of Stockholders.

 

(2)	Term expired at the 2020 Annual Meeting of Stockholders.

 

(3)	On March 31, 2021, Messrs. Katsaros, Tufano and Vargo each held unvested stock units, including accumulated dividend equivalents with respect to such units, under the Director Plan.

 

Name		Unvested Stock Units Under the     Director Plan
Arthur T. Katsaros				259
Paul J. Tufano				183
Ronald P. Vargo				176

 

(4)

We calculated these amounts using the provisions of ASC Topic 718. Amounts represent the aggregate grant date fair value of the deferred stock units that we awarded to each non-employee director in fiscal year 2021 as we describe above. Assumptions used in the calculation of these amounts are included in the footnotes to our audited financial statements for the fiscal year ended March 31, 2021, included in our Annual Report on Form 10-K, which we filed on March 26, 2021.

 

(5)

Messrs. Lehman, Katsaros, Marlo, Tufano and Vargo each deferred all or a portion of these amounts into a stock unit deferral account, pursuant to the terms of the Director Plan. They received matching contributions, subject to dividend equivalents, with respect to such stock units. Under the terms of the Director Plan, the restricted stock units comprising the matching contribution vest quarterly over one year from the date of the deferral, and any unvested amounts are cancelled upon termination of service as a director. All stock units are payable in shares of our common stock.

 

Name		Underlying Stock Units Added to Director Plan					Matching Contribution          Added to Director Plan
John F. Lehman				482					75
Arthur T. Katsaros				1,935					387
Dennis S. Marlo				519					77
Paul J. Tufano				1,257					251
Ronald P. Vargo				1,309					262

 

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Proposal No. 2		Ratification of Appointment of Independent Registered Public Accounting Firm

The Audit Committee of the Board of Directors of EnerSys has appointed Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2022. No determination has been made as to what action the Audit Committee would take if stockholders do not ratify the appointment.

Ernst & Young LLP conducted the audit of the financial statements of EnerSys and its subsidiaries for the fiscal year ended March 31, 2021. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting, will be given an opportunity to make a statement if they desire to do so, and will be available to answer appropriate questions from stockholders.

 

		The Board of Directors recommends a vote “FOR” the ratification of the appointment of Ernst & Young LLP

 

		AUDIT COMMITTEE REPORT

Background

 

The members of the Audit Committee are currently Directors Ronald P. Vargo (Chairperson), Hwan-yoon F. Chung, Nelda J. Connors, Steven M. Fludder and Paul J. Tufano. For additional information relating to the members and responsibilities of the Audit Committee, see “Corporate Governance–Committees of our Board of Directors–Audit Committee.”

Responsibility

 

Management is responsible for the preparation of financial statements and the integrity of the reporting process, including the system of internal and disclosure controls.

The independent auditors are responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles in the United States and to express an opinion on the audit of internal control over financial reporting.

The primary responsibilities of the Audit Committee are to select, engage, and compensate our independent auditors and to oversee the financial reporting process on behalf of the Board. It is not the duty of the Audit Committee to prepare financial statements and related disclosures. It is also not the duty of the Audit Committee to plan or conduct audits, or to determine that our financial statements are complete and accurate and in accordance with generally accepted accounting principles in the United States.

Process and Recommendation

 

In fulfilling its responsibilities, the Audit Committee reviewed and discussed the audited financial statements for the fiscal year ended March 31, 2021, with our management and independent auditors, including a discussion of the quality, not just the acceptability, of the accounting principles as applied in our financial reports, the reasonableness of significant judgments, and the clarity of the disclosures in the financial statements. The Audit Committee discussed with our internal and independent auditors the overall scope and plans for their respective audits. The Audit Committee meets with management to discuss disclosure controls and procedures and internal control over financial reporting. The Audit Committee also meets with the internal and independent auditors, with and without our management present, to discuss the results of their examinations and overall quality of our financial reporting. The Audit Committee also reviewed with our CEO and CFO their certification relating to their evaluation of our disclosure controls, the completeness and accuracy of the financial statements and other financial information contained in the Form 10-K, and the process followed by the CEO and CFO to assure the truthfulness of such certification.

 

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The Audit Committee also discussed with the independent auditors, who are responsible for expressing an opinion on the conformity of those financial statements with generally accepted accounting principles, the matters required to be discussed by the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), including PCAOB Auditing Standard No. 1301, Communications with Audit Committees, the rules of the Securities and Exchange Commission, and other applicable regulations. In addition, the Audit Committee has discussed with the independent auditor the firm’s independence from Company management and the Company, including the matters in the letter from the firm required by PCAOB Rule 3526, Communication with Audit Committees Concerning Independence, and considered the compatibility of non-audit services with the independent auditor’s independence.

The Audit Committee also reviewed and discussed together with management and the independent auditor the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2021, and the results of management’s assessment of the effectiveness of the Company’s internal control over financial reporting and the independent auditor’s audit of internal control over financial reporting.

Based on the process referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021.

Fees of Independent Auditors

 

The following table sets forth the aggregate fees for the fiscal years ended March 31, 2020, and March 31, 2021, incurred for services provided by our independent registered public accounting firm, Ernst & Young LLP.

 

		Year Ended
Description of Fees		March 31, 2021				March 31, 2020
Audit Fees, including fees associated with the annual audit of EnerSys and statutory audits required internationally, the reviews of EnerSys’ quarterly reports on Form 10-Q, services provided in connection with the requirements of the Sarbanes-Oxley Act of 2002, and comfort letters		$	4,218,200			$	4,356,400
Audit-Related Fees, including fees associated with target mergers and acquisitions, and general accounting research and consultations		$	0			$	0
Tax Fees, including fees associated with income tax compliance, advice and planning		$	8,200			$	4,300
All Other Fees		$	2,000			$	2,000
Total		$	4,228,400			$	4,362,700

The Audit Committee considered whether the provision of non-audit services by our independent registered public accounting firm for the fiscal year ended March 31, 2021, was compatible with maintaining auditor independence. The Audit Committee pre-approved all fees for non-audit related services paid to our independent registered public accounting firm for fiscal years 2020 and 2021.

Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services by Independent Auditors

 

The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. The Audit Committee has adopted a policy for the pre-approval of services provided by the independent auditors. Under the policy, pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is subject to a specific budget. In addition, the Audit Committee may also pre-approve particular services on a case-by-case basis. For each proposed service, the Audit Committee has received detailed information sufficient to enable the Audit Committee to pre-approve and evaluate such service. The Audit Committee has delegated pre-approval authority to the Chairman of the Committee of up to $100,000, to pre-approve permitted non-audit services. Any pre-approval decisions made under this delegated authority are ratified by the Audit Committee at its next scheduled meeting.

 

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Appointment of Independent Registered Public Accounting Firm for Fiscal Year 2022

 

The Audit Committee has appointed Ernst & Young LLP to conduct the audit of the financial statements of EnerSys and its subsidiaries for the fiscal year ending March 31, 2022. EnerSys stockholders are being asked to ratify the Audit Committee’s appointment of Ernst & Young LLP as our independent registered public accounting firm at the Annual Meeting to which this Proxy Statement relates.

Audit Committee

Ronald P. Vargo, Chairperson

Hwan-yoon F. Chung

Nelda J. Connors

Steven M. Fludder

Paul J. Tufano

 

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		NAMED EXECUTIVE OFFICERS

Our current executive officers, who are also our named executive officers for fiscal year 2021, are listed below. Mr. Shaffer’s information is included under “Board of Directors.”

 

		Holger P. Aschke, age 52, Former President, EMEA & APAC. Mr. Aschke served as President, EMEA & APAC from April 2019 through June 30, 2020, and remains an employee through June 30, 2021. Prior thereto, from January 2016, he was our President–EMEA. From April 2010 to January 2016, Mr. Aschke was the Vice President Sales and Marketing Reserve Power–Europe. Mr. Aschke joined a predecessor company in 1996 and held a wide range of operational and sales roles of increased responsibility in the Company’s EMEA business. Mr. Aschke completed a commercial IT education and apprenticeship sponsored by the University of Dortmund (Germany) and completed the Advanced Management Program from INSEAD (France).
		Shawn M. O’Connell, age 48, President, Motive Power Global. Mr. O’Connell has served as our President, Motive Power Global since July 2020. Prior thereto, from April 2019 through July 2020, he served as our President, Motive Power, our Vice President–Reserve Power Sales and Service for the Americas from February 2017, and Vice President of EnerSys Advanced Systems from December 2015 to January 2017. Mr. O’Connell joined EnerSys in 2011, serving in various sales and marketing capacities in several areas of our business. Mr. O’Connell received his Master of Business Administration degree in International Business from the University of Redlands, CA and his Bachelor of Arts degree in English Literature from the California State University, San Bernardino. Mr. O’Connell is a veteran of the U.S. Army’s 82nd Airborne Division (Paratroopers) where he served as a Signals Intelligence Analyst, Spanish Linguist, and held a Top-Secret security clearance.
		Michael J. Schmidtlein, age 60, Executive Vice President and Chief Financial Officer. Mr. Schmidtlein has served as Executive Vice President and Chief Financial Officer since January 2016. Prior thereto, since February 2010, he was our Senior Vice President–Finance and Chief Financial Officer. From November 2005 until February 2010, Mr. Schmidtlein was Vice President–Corporate Controller and Chief Accounting Officer. Prior thereto, Mr. Schmidtlein was the Plant Manager of our manufacturing facility in Warrensburg, Missouri. In 1995, he joined the Energy Storage Group of Invensys plc. which EnerSys acquired in 2002. Mr. Schmidtlein is a certified public accountant and received his Bachelor of Science degree in Accounting from the University of Missouri.
		Andrew M. Zogby, age 61, President, Energy Systems Global. Mr. Zogby has served as President, Energy Systems Global since July 2020. Prior thereto, from April 2019, he served as President, Energy Systems–Americas. He joined EnerSys upon completion of the acquisition of Alpha Technologies in December 2018. Mr. Zogby served as President of Alpha Technologies since 2008 and brings over 30 years of experience in global broadband, telecommunications and renewal energy industries. He has held corporate leadership positions with several leading technology firms. Mr. Zogby received his Bachelor of Science degree in Industrial and Labor Relations from LeMoyne College, Syracuse, New York, and his Master of Business Administration degree from Duke University’s Fuqua School of Business. He is active in the US Chamber of Commerce, and serves on the Chamber’s Energy, Clean Air & Natural Resources Committee and the C_TEC, Chamber Technology Engagement Center Committee.

 

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		NAMED EXECUTIVE OFFICER COMPENSATION

Compensation Discussion and Analysis

 

This Compensation Discussion and Analysis includes a description of the compensation provided in fiscal year 2021 to our named executive officers.

Business Overview

EnerSys is the global leader in stored energy solutions for industrial applications. We manufacture and distribute energy systems solutions and motive power batteries, specialty batteries, battery chargers, power equipment, battery accessories and outdoor equipment enclosure solutions to customers worldwide. Energy Systems which combine enclosures, power conversion, power distribution and energy storage are used in the telecommunication and broadband, utility industries, uninterruptible power supplies, and numerous applications requiring stored energy solutions. Motive Power batteries and chargers are utilized in electric forklift trucks and other industrial electric powered vehicles. Specialty batteries are used in aerospace and defense applications, large over the road trucks, premium automotive and medical. We also provide aftermarket and customer support services to over 10,000 customers in more than 100 countries through a network of distributors, independent representatives and our internal sales force around the world.

Our strategy is to continue to develop modern energy systems and expand into new markets though increased investment in research and development (R&D) and possibly through acquisitions. Our R&D is focused on improving the efficiency and utilization of our legacy lead-based products, along with our continued deployment of lithium-related products and other stored energy solutions. Our recent acquisitions have allowed us to expand our product and service offerings, providing new opportunities in existing markets such as telecommunications and broadband networks, data centers, material handling, aerospace and defense, trucking and premium aftermarket transportation, along with opening new markets in renewable energy.

Fiscal Year 2021 Performance

In fiscal year 2021, EnerSys achieved strong financial results despite significant economic headwinds from the COVID-19 pandemic. We faced numerous challenges keeping our facilities open and our employees safe, all while continuing to meet our customers’ needs throughout the world.

Fiscal year 2021 revenue of $3.0 billion declined nearly 4% over the prior year due to a 5% drop in organic volume. All of the volume decline occurred in the first half of our fiscal year when the pandemic lockdowns were most severe. During our second half, organic volume rebounded, as strong underlying demand for our products overcame the headwinds caused by the pandemic. Our gross profit percentage remained relatively stable at 25% for both years despite fiscal year 2021 being negatively impacted by production output reductions early in the fiscal year. A significant highlight was our free cash flow of $288 million, which was double the average of the three preceding years. Lowering costs as well as closely monitoring our collections and inventory levels helped us reduce our leverage from 2.3x at the onset of fiscal year 2021 to under 1.7x by year’s end. This improvement gives us the flexibility to invest in our business as volume returns and to take advantage of any potential capital deployment opportunities that may present themselves.

While the pandemic slowed our progress, we also delivered on several significant strategic targets, including the introduction of our Lithium Motive Power NexSys^® Ion battery range and the expansion of our Thin Plate Pure Lead (TPPL) production capacity. The modular architecture and software utilized for the lithium Motive Power products is dramatically accelerating how quickly we expand this technology into our other core markets including Telecom and Datacenter Uninterruptible Power Systems (UPS). More importantly, this same lithium architecture will propel EnerSys into new markets, including residential battery energy storage systems (BESS), Commercial and Industrial BESS, and hyper fast DC fast charging of electric vehicles. The expansion of our TPPL capacity continues to attract new Transportation customers to our ODYSSEY^® line of premium batteries. We also continue to enjoy tremendous organic growth in our Specialty business.

From an ESG standpoint, we accelerated our progress by expanding our sustainability team and performing both pay and diversity assessments. This progress was validated as we earned a bronze star in our Eco-Vadis rating. While achievement of these initiatives is significant, we also recognize our ESG efforts will require long-term dedication and investment—which our team is committed to delivering.

 

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Fiscal Year 2021 Compensation Actions

Our executive compensation program is structured to support our vision, which is to be the global leader in our chosen markets for stored energy solutions, while maximizing long-term stockholder value. We design the program to link executive compensation to our financial performance and use equity compensation to closely align the interests of management with those of our stockholders. The Compensation Committee evaluates our overall performance in making decisions on the executive compensation program.

Our incentive plan results for fiscal year 2021 is summarized below, and reflects our strong performance described above:

 

Incentive Plan		Incentive Plan Metrics		Results
Fiscal Year 2021 Management Incentive Plan (MIP)		35%   Operating Earnings   35%   Free Cash Flow   30%   Strategic Goals tied to New Product Development and the Company’s COVID-19 Response		Payout = 158% of Target
Performance Shares (Fiscal Year 2019-2021 performance period)		50%   Cumulative EPS Goal from fiscal year 2019-2021   50%   Relative Total Shareholder Return (TSR) versus the S&P Small Cap 600 Industrial Index for the 3-year period ending on August 13, 2021		Payout for EPS Achievement = 61.7%   Payout for the relative TSR component will be determined on August 13, 2021, after the date of this proxy; estimated payout tracking through the end of fiscal year 2021 is 122% of target.

In fiscal year 2021, we made significant changes to the structure of our incentive plans to better align with our go-forward business strategy. A summary of incentive plan changes are as follows:

 

Incentive Plan		Fiscal Year 2020 Structure		Fiscal Year 2021 Structure
Management Incentive Plan		85%   Operating Earnings   15%   Primary Working Capital		35%   Operating Earnings   35%   Free Cash Flow   30%   Strategic Goals based on new product development and our COVID-19 response
Long-Term Incentives		50%   Performance Shares based on 3-year adjusted EPS and relative TSR   25%   Stock Options   25%   Time-Vested Restricted Stock Units (RSUs)		50%   Premium-Priced Stock Options   50%   Time-Vested RSUs

The new MIP structure was developed to support the specific needs of the business during fiscal year 2021, which included efforts necessary to manage the business through the pandemic. Thus, the plan focused on expense control, profitability, cash generation and preservation, continued investment in our new product lines, and keeping our employees safe and our operations open.

The long-term incentive program was designed to support the strategic objectives of the Company over a multi-year period. Half of the long-term value was provided in the form of premium-priced stock options, which ensured that a meaningful portion of the program was at-risk and performance-based. We shifted from performance shares to premium-priced options with a 10-year term to better align and incentivize management with the execution and achievement of the Company’s business strategy and financial model.

The remaining portion of the long-term program was in the form of RSUs that increased the retentive value of the overall program, while also providing shareholder alignment since the underlying award was equity-based. This was critical as

 

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the retention power of the overall program had diminished in recent years from below target payouts under the MIP and long-term incentive plans.

Finally, while the long-term program was designed before the pandemic, the Committee concluded that the new structure was effective in addressing the related economic uncertainty experienced during fiscal year 2021.

Summary of Other Major Program Elements

Other significant elements of our compensation program that continue to reinforce stockholder alignment, our long-term pay-for-performance objectives, and what the Compensation Committee considers best practices include the following:

 

∎

an independent Compensation Committee makes the compensation decisions for our named executive officers and the Committee engages an independent compensation consultant to assist in making such decisions;

 

∎

we require that a majority of pay be at-risk, 85% of fiscal year 2021 target total pay was at-risk for our Chief Executive Officer (74% on average for our other named executive officers);

 

∎

we require that a majority of pay be tied to long-term performance, 66% of fiscal year 2021 target total pay was granted in the form of long-term incentives for our Chief Executive Officer (55% on average for other named executive officers);

 

∎

we maintain robust stock ownership guidelines for executives;

 

∎

we prohibit hedging and pledging of our stock;

 

∎

we have a clawback policy designed to recoup excess compensation paid to executive officers in the event of an accounting restatement;

 

∎

we have adopted a mandatory holding requirement after vesting for certain equity awards granted to our executive officers;

 

∎

equity grant administration procedures are in place to ensure that awards comply with legal, regulatory, and accounting requirements;

 

∎

the Compensation Committee conducts an annual risk assessment of our compensation program to confirm that the program does not encourage excessive risk-taking;

 

∎

our equity awards generally require a double trigger in order for vesting to be accelerated in the event of a change in control (i.e., a qualifying termination of employment plus the occurrence of a change in control);

 

∎

our executive severance arrangements do not provide for excise tax gross-ups; and

 

∎

we do not provide excessive perquisite or benefit programs, nor do we offer supplemental retirement plans.

Results of 2020 Advisory Vote on Executive Compensation–Say-on-Pay

At our annual meeting of stockholders held on July 30, 2020, approximately 96% of votes cast by stockholders approved the advisory resolution on our executive compensation. The Compensation Committee considered this a high approval rate by the stockholders in establishing the compensation programs for fiscal year 2021 and will continue to consider the outcome of future non-binding advisory stockholder votes on executive compensation in its determinations regarding executive compensation.

At our 2021 Annual Meeting, stockholders will have the opportunity to cast an advisory say-on-pay vote regarding the compensation of our named executive officers as discussed further in Proposal No. 3 beginning on page 52.

Executive Compensation Policy

We generally base our executive compensation program on the same objectives that guide us in establishing compensation programs for all our employees:

 

∎

Compensation should align the interests of higher-level employees, including executives, with the long-term interests of our stockholders through award opportunities that result in ownership of our common stock. While our key employees receive a mix of both annual and longer-term incentives, employees at higher levels have an increasing proportion of their compensation tied to longer-term performance because these employees are in a position to have greater influence on longer-term results.

 

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∎

Compensation should reward teamwork. Because our success depends on our ability to optimize our worldwide business, our compensation programs emphasize our total results in addition to individual geographic or product line results.

 

∎

Compensation should be based on the level of job responsibility, as well as individual and corporate performance. As employees progress to higher levels in the organization, an increasing proportion of their pay should be linked to corporate performance and stockholder returns because they are more able to affect corporate results.

 

∎

Compensation should reflect the value of the job in the marketplace. To attract and retain a skilled work force, we must remain competitive with the pay of other employers who compete with us for talent.

 

∎

To be effective motivation, performance-based compensation programs should enable employees to easily understand how their efforts can affect their pay by contributing to the achievement of our strategic and operational goals.

 

∎

The programs and individual pay levels will always reflect differences in job responsibilities, geographies, and marketplace considerations, although the overall structure of compensation and benefit programs should be broadly similar across the organization.

Determination of Compensation

 

The Compensation Committee reviews and approves each named executive officer’s base pay, bonus, and equity incentive compensation annually, with the guidance of the Compensation Committee’s independent compensation consultant, FW Cook. The Compensation Committee considers a number of factors to determine the compensation for the named executive officers and to ensure that our executive compensation program is achieving its objectives. Among those are:

 

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Assessment of Corporate Performance. The Compensation Committee uses corporate performance measures in two ways. First, in establishing total compensation ranges, the Compensation Committee considers our performance within our industry using various measures, including, but not limited to, sales growth, profitability, balance sheet management, and TSR. Second, as we describe in more detail below, the Compensation Committee has established specific corporate performance measures that determine the size of payments under our MIP, and a portion of our equity incentives, and the payout of our equity awards is based on the value of our common stock.

 

∎

Assessment of Individual Performance. Individual performance affects the compensation of all our employees, including the named executive officers. In addition, the Compensation Committee has adopted a formal evaluation process for our CEO. Each member of our Board provides a written, subjective evaluation of our CEO, on an anonymous basis, covering a broad range of criteria. The evaluations are collected and summarized by FW Cook, and the Compensation Committee considers them in setting the CEO’s compensation. For each other named executive officer, the Compensation Committee receives a recommendation from the CEO and also exercises its judgment based on the Committee’s interactions with the executive officer.

 

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Benchmarking. The Compensation Committee benchmarked our compensation programs for fiscal year 2021 with a peer group consisting of the following companies, which are broadly similar with respect to industry and size, as measured by revenue (peers range from $1.7 billion to $3.5 billion, with a median of $2.7 billion) and 12-month average market capitalization (peers range from $1.3 billion to $7.4 billion, with a median of $5.0 billion). At the time of the study, EnerSys’ revenues were $3 billion, and 12-month average market capitalization was $2.9 billion. Our peer group for fiscal year 2021 was comprised of the following companies:

 

A.O. Smith Corporation		Hubbell Incorporated
Acuity Brands, Inc.		Kennametal Inc.
AVX Corporation		Lincoln Electric Holdings Inc.
Barnes Group Inc.		Regal-Beloit Corporation
Belden Inc.		Rexnord Corporation
Carlisle Companies Incorporated		Timken Company
Colfax Corporation		Valmont Industries, Inc.
Crane Co		Watts Water Technologies, Inc.
Donaldson Company, Inc.		Woodward, Inc.
Flowserve Corporation

 

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In addition, the Compensation Committee conducted its annual review of the peer group for fiscal year 2022 benchmarking, considering financial size, industry, and the condition of each company in the group. Based on such review, the Compensation Committee eliminated AVX Corporation from the peer group for fiscal year 2022 pay analyses, as it had been acquired.

The Compensation Committee evaluates our compensation program versus that of the peer companies with respect to both individual pay levels and the structure of the program. The Compensation Committee uses this data primarily to ensure that our executive compensation program as a whole is competitive. Market data is one of several factors that is used to evaluate compensation levels. Other factors may include individual and company performance, experience in the role, responsibility level, and internal equity. Target total direct compensation for fiscal year 2021 was positioned exactly at the median on average.

The Compensation Committee believes that this competitive positioning for incentive compensation is appropriate in light of our rigorous goal setting approach under the annual incentive plan and our desire to place a greater emphasis on at-risk pay that is earned over a multi-year period to support long-term stockholder value creation. The Compensation Committee believes this compensation structure is at a level consistent with our executive compensation philosophy.

Components of Executive Compensation

Base Salary

Base salary is the fixed element of our named executive officers’ cash compensation. The Compensation Committee generally considers whether each named executive officer’s base salary should be increased based on individual performance, as well as whether the base salary is competitive with that of executives in peer companies with comparable roles and responsibilities.

The Compensation Committee annually sets the base salaries of our named executive officers with assistance from the Compensation Committee’s independent compensation consultant and solicits recommendations from the CEO for our named executive officers, other than the CEO.

For fiscal year 2021, the Compensation Committee considered the aforementioned factors and current responsibilities, performance, success and achievements of the business, and determined that the following base salary adjustments were appropriate.

The base salaries of each of the named executive officers for fiscal years 2020 and 2021 are shown in the chart below in U.S. Dollars as of the end of the fiscal year.

 

Name		2021				2020				% Change
David M. Shaffer		$	970,080	(1)		$	940,000				3	%
Michael J. Schmidtlein		$	545,900	(1)		$	530,000				3	%
Holger P. Aschke		$	398,213	(2)		$	398,820				0	%
Shawn M. O’Connell		$	440,000	(3)		$	365,000				21	%
Andrew M. Zogby		$	462,000	(4)		$	440,000				5	%

 

(1)	Merit increase effective November 1, 2020.

 

(2)	Salary determined based on conversion of 376,000 Swiss Francs on March 31, 2021, at a rate of 1 USD = 1.059076 CHF.

 

(3)	Mr. O’Connell’s salary was increased on July 5, 2020 in connection with his promotion to President – Motive Power Global. He previously served as President, Motive Power Americas.

 

(4)	Mr. Zogby’s salary was increased on July 5, 2020, in connection with his promotion to President – EnerSys Systems Global. He previously served as President, Energy Systems – Americas.

Management Incentive Plan

Under our MIP, our executives and key management personnel, including the named executive officers, may receive an annual cash bonus upon satisfaction of annual financial targets, which the Compensation Committee establishes at the beginning of each year. Consistent with our compensation policy, individuals with greater job responsibilities have a greater portion of their total cash compensation tied to our corporate performance through the MIP.

Under the MIP, each participant has threshold, target, and maximum potential cash bonus payouts, which the Compensation Committee establishes at the beginning of each fiscal year. The Compensation Committee bases the

 

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potential payments on each participant’s job responsibilities and position within our organization. The potential payouts are stated as a percentage of base salary. In establishing the targets, the Committee gives significant consideration to our prior year’s performance. Satisfactory individual performance is a condition to payment, and, at the end of each fiscal year, the Committee can, at its discretion, adjust an individual’s payout under the MIP based on such individual’s performance.

Each year, the Committee also reviews overall financial performance and adjusts for items that are not reflective of normal operating performance for that year. These adjustments are items that the Committee believes are fair to both participants and stockholders, encourage appropriate actions that foster the long-term health of the business, and are consistent with the objectives underlying our predetermined performance goals. There are certain automatic adjustments such as expenses related to merger and acquisition activity, the impact of restructuring programs, unplanned legal settlements, and the effects of foreign currency fluctuations. The Committee also reserves the right to exercise its judgment outside of this predetermined list of adjustments if there is a valid business rationale. For fiscal year 2021, the Committee did not make any additional adjustments to the performance calculation or payouts to the named executive officers.

Fiscal Year 2021 MIP Targets and Payout

For fiscal year 2021, the Compensation Committee selected adjusted operating income, free cash flow, and several strategic objectives tied to new product development and the Company’s COVID-19 response. Operating income and free cash flow focused on improving both our core operating earnings and balance sheet strength, respectively. The strategic component was designed to focus management on the critical non-financial goals that support new product development and our transformational business strategy, while the COVID-19-related objectives were to support the critical steps needed for the company to endure the pandemic. Overall, the Committee believes that the mix of performance metrics supported the objectives of the business established for fiscal year 2021, which were expense control, profitability, cash generation and preservation, continued investment in our new product lines, and keeping our employees safe and operations open during the pandemic.

The Compensation Committee established the following framework for awards in fiscal year 2021:

 

∎

Bonus Targets. For our named executive officers, the threshold, target, and maximum bonus opportunities for fiscal year 2021 were 15%, 100%, and 200% of target, respectively, which were the same as used in fiscal year 2020.

 

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∎

Company Performance Measures. For all participants in the MIP, including our named executive officers, the Compensation Committee established fiscal year 2021 performance measures as follows:

 

		Metric		Philosophy / Methodology
		Operating Earnings		Focus on growth, expense control, and ultimately, profitability.
		Free Cash Flow		Focus on cash generation and strengthening the balance sheet.
		Standard Gross Margin TPPL Growth		Increasing sales and expanding production of our Thin Plate Pure Lead battery line is part of our long-term strategic goal.
		NexSys® Ion Products		This metric relates to product release attainment. Management identified this new product introduction (NPI) as a key element to our long-term strategic goals.
		XM3.1/ODYSSEY® DOCSIS		This metric relates to product release attainment. Management identified this new product introduction as a key element to our long-term strategic goals.
		COVID-19 Operating Effectiveness		We are an essential business delivering life-saving products to our customers and organizations who are critical in getting us all through the global pandemic. Our effectiveness during the time of crisis was paramount. Ensuring employee safety through compliance with all applicable COVID-19 regulations within manufacturing operations. This metric is tied to the number of plant closures due to controllable COVID-19 related factors. Additionally, mitigating where possible, supplier related disruptions to operations.
		COVID-19 Transmission Prevention		Ensure employee safety through rigorous application of best practices to prevent and/or contain any COVID-19 infections within the worldwide organization. Required implementation of global contact tracing protocols with review of all possible contacts. The metric is based on the number of employee-to-employee COVID-19 infection transmissions as a percentage of the average total number of employees during fiscal year 2021.
		COVID-19 Communications		Develop, implement and maintain employee communication plans addressing COVID-19. Ensuring employee safety and employee confidence in management’s communications and direction during COVID-19. This metric is based on the percentage of office employees answering Neutral, Agree or Strongly Agree to the following questions: 1.) EnerSys and top-level leaders within the organization have provided effective communication and direction during COVID-19; and 2.) My direct Supervisor/Manager is providing effective communication and direction during COVID-19.

 

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For fiscal year 2021, the total payout as a percentage of target was 158%, as shown in the chart and discussed below.

 

						Performance Goal Range
Performance Metrics		Weighting				Threshold				Target				Maximum				Actual Results				Payout % of Target
Operating Earnings			35%				$174,000				$290,000				$319,000				$284,126				96%
Free Cash Flow			35%				$152,000				$188,000				$226,000				$288,400				200%
Standard Gross Margin TPPL Growth			5%				See below				See below				See below				See below				94%
NexSys® Ion Products Variants 1, 3, 6.2 & 10 Saleable Product Release			5%				1 Variant				2 Variants				4 Variants				4				200%
XM3.1/Odyssey DOCSIS Saleable Product Release			5%				1 Variant				2 Variants				3 Variants				3				200%
COVID Operating Effectiveness – Number of Plant Closures			5%				2 Closures				1 Closure				0 Closures				0				200%
COVID Transmission Prevention – % Employee to Employee Infections			5%				6% Rate				3% Rate				0% Rate				0.05%				198%
COVID Communications 4th Quarter Employee Survey % answering neutral or positive on ENS COVID communications			5%				70%				80%				90%				96%				200%
																			Total Payout				158	%

The adjusted operating income performance goal for fiscal year 2021 was established at a level that was consistent with actual performance in fiscal year 2020, which was a rigorous goal given the significant challenges of the pandemic. In addition, the free cash flow goal was established at a level that was significantly higher than actual performance in fiscal year 2020, reflecting an aggressive business plan for the year. The standard gross margin for TPPL growth had a 5% weighting in terms of the overall MIP payout, with the performance goals established at a level that was also significantly higher than actual performance in fiscal 2020, reflecting an aggressive business plan for the year. Based upon actual results for this factor, participants achieved 94% payout with respect to the standard gross margin for TPPL growth performance metric.

The 2021 MIP payouts were made on May 21, 2021. We set forth the amounts due to each named executive officer for fiscal year 2021 performance under “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table.

Long-Term Equity Incentive Compensation

The Compensation Committee has the ability to make various types of equity awards as long-term incentive compensation to our named executive officers under the 2017 Equity Incentive Plan. For fiscal year 2021, the Committee reviewed the long-term incentive program, and determined to adjust the mix that was used in fiscal year 2020 to better align with the Company’s business strategy. An overview of the program is as follows:

 

Long-Term Grant Type		Weighting		Description
Premium-Priced Stock Options		50%		●   Exercise price set at a 10% premium to the fair market value on the grant date   ●   Vesting in annual increments over three years   ●   10-year exercise term
Time-Vested RSUs		50%		●   Vesting in annual increments over four years

Stock options align employee incentives with stockholders because options have value only if the stock price increases over time. The nonqualified stock options that the Compensation Committee approved for fiscal year 2021 each have a 10-year term and vest one-third each year over three years. The options, which we granted at our common stock’s closing price on the date of grant, plus a 10% premium, encourage participants to focus on long-term performance and growth.

Time-vested RSUs support the retention of our executives and also align employee incentives with stockholders since the value of RSUs is dependent on our stock price. RSUs vest in 25% annual increments over four years and have a longer vesting period than the stock options and PSUs because their main purpose is for retention.

 

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On July 29, 2020, the Compensation Committee approved the fiscal year 2021 equity awards, which we granted on August 17, 2020. The fiscal year 2021 equity awards to each of the named executive officers were as follows:

 

Name		Number of Premium-Priced     Stock Options(1)					Number of Restricted Stock Units(2)					Total Value(3)
David M. Shaffer				94,894					27,855				$	4,200,000
Michael J. Schmidtlein				29,824					8,754				$	1,320,000
Holger P. Aschke(4)				0					0				$	0
Shawn M. O’Connell				20,334					5,969				$	900,000
Andrew M. Zogby				20,334					5,969				$	900,000

 

(1)	The exercise price of each premium stock option is $82.93, which is the closing price on August 17, 2020, the day of grant, plus 10% premium. The value of each premium stock option was $22.13. We determined the total value of each premium-priced stock option using a Black-Scholes valuation model.

 

(2)	The value of each restricted stock unit was $75.39, the closing price on August 17, 2020, the date of grant.

 

(3)	The total value is the sum of the value of the premium-priced stock options and restricted stock units determined as of August 17, 2020, the date of grant. Final award values may vary slightly due to fractional shares and rounding.

 

(4)	Mr. Aschke did not receive an award for fiscal year 2021 due to his providing notice to terminate his employment agreement, as is more fully described under the heading “Employment Agreement.”

These awards are subject to the clawback policy adopted by the Board of Directors, which we discuss in more detail on page     .

Deferred Compensation Plan

We maintain the EnerSys Voluntary Deferred Compensation Plan for Executives, which we refer to as the “Deferred Compensation Plan,” under which participants who are among a select group of management and highly compensated employees may elect to defer receipt of all or a portion of their cash bonus. Under the Deferred Compensation Plan, as amended, each participant must make an irrevocable deferral election before the beginning of the fiscal year to which the cash bonus relates or, in the case of “performance-based compensation,” on or before six months before the end of such fiscal year. Participants can elect to receive distributions of their accounts in the Deferred Compensation Plan, either in a lump sum or in installments, (i) upon their termination of employment, (ii) on a specified date, or (iii) upon our change in control.

A participant may elect to allocate the deferred amounts into an investment account and select among various investment options upon which the rate of return of the deferred amounts will be based. The participants’ investment accounts are adjusted periodically to reflect the deemed gains and losses attributable to the deferred amounts. The specific investment options are the same investment options available to our employees under our 401(k) retirement plan. Each participant is always 100% vested in their investment accounts.

Alternatively, participants may elect to allocate the deferred amounts to a stock unit deferral account or a market share unit deferral account. All amounts allocated to the stock unit account or the market share unit account are invested in restricted stock units or market share units, respectively, awarded under our 2017 Equity Incentive Plan. If a participant elects to allocate the deferred amounts to the restricted stock unit or market share unit account, we will make an additional matching contribution in the amount of 20% of the deferred amount. Dividend equivalent units, if any, will be credited to each stock unit account. Each participant is 100% vested with respect to the amounts deferred to the restricted stock unit or market share unit deferral account. The matching contribution will vest over three years from the last date of the fiscal year to which the amounts relate, except that participants will automatically become 100% vested in their matching contribution upon (i) our change in control where the consideration paid is cash, or (ii) upon their death, disability, voluntary termination for “good reason,” or involuntary termination of employment without cause, provided that such event occurs within two years of any type of change in control. All restricted stock units and market share units are payable in shares of our common stock.

The Deferred Compensation Plan is a nonqualified deferred compensation plan. As such, the rights of all participants to any deferred amounts represent our unsecured promise to pay and the deferred amounts remain subject to the claims of our creditors.

Currently, none of our named executive officers participate in the Deferred Compensation Plan.

 

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