David O’Neil
About David O’Neil
David A. O’Neil, age 60, is President & CEO of Espey Mfg. & Electronics Corp. since January 1, 2022 and a director since 2018; he previously served as CFO/Treasurer from 2000 and EVP from 2016, including interim CEO in 2014–2015 . Pay-versus-performance disclosure shows strong alignment with results: a $100 TSR stake grew to $315 by FY2025 while net income rose from $3.7M in FY2023 to $8.1M in FY2025, and “compensation actually paid” to the CEO increased commensurately to $926,742 in FY2025 . Education details are not disclosed in the proxy; his prior career includes Senior Manager at KPMG LLP, supporting financial expertise and governance literacy .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Espey Mfg. & Electronics Corp. | Chief Financial Officer & Treasurer | 2000–2016; continued as CFO/Treasurer through 2016 before becoming EVP | Established financial discipline; long-tenured finance leadership |
| Espey Mfg. & Electronics Corp. | Executive Vice President | 2016–2021 | Expanded operational oversight and strategic planning prior to CEO role |
| Espey Mfg. & Electronics Corp. | Interim President & CEO | 2014–2015 | Maintained continuity during leadership transition |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| KPMG LLP | Senior Manager | Pre-2000 (exact years not disclosed) | Big Four accounting experience; strengthens financial reporting and controls capabilities |
Fixed Compensation
| Component | FY2024 | FY2025 | FY2026 (Contracted Rate) |
|---|---|---|---|
| Base Salary ($) | $306,025 | $313,575 | $400,000 effective 7/1/2025 (annual review, no decrease) |
| All Other Compensation ($) | $15,789 | $33,817 | Incentive Compensation Recovery Policy applies (adopted 12/1/2023) |
Notes:
- Employee directors receive no board fees; non-employee director fee structure is separate (not applicable to O’Neil) .
Performance Compensation
| Metric/Instrument | Target Definition | Weighting / Max | Actual (FY2025) | Payout (FY2025) | Vesting |
|---|---|---|---|---|---|
| Annual Bonus – Component A (Discretionary) | Board discretion based on annual performance assessment | Up to 50% of base salary | Not disclosed | Part of total bonus $300,300 (aggregate) | Cash, annual |
| Annual Bonus – Component B (Sales + Backlog growth) | Increase in combined sales + backlog vs. avg. of prior 3 fiscal years × 0.5% | Up to $125,000 | Not disclosed | Part of total bonus $300,300 (aggregate) | Cash, annual |
| Annual Bonus – Component C (Operating income margin) | Operating income ≥13% of net sales; payout tiers at 13%, 14%, ≥15% | Up to $125,000 (tiers: $50k/$90k/$125k) | Not disclosed | Part of total bonus $300,300 (aggregate) | Cash, annual |
| Stock Options (FY25 awards included in SCT) | Board-approved annual grants; timing not coordinated with MNPI | Two-year standard vesting practice | Grant-date fair value $7,455 | $7,455 (ASC 718) | Options granted FY25 on 7/1/2024, 9/6/2024, 1/6/2025; two-year vest |
Pay-versus-performance adjustments (SEC methodology) for CEO:
| Year | SCT Total ($) | Compensation Actually Paid ($) | TSR Value of $100 | Net Income ($000) |
|---|---|---|---|---|
| 2023 | $441,788 | $456,905 | $114 | $3,677 |
| 2024 | $621,964 | $651,079 | $148 | $5,815 |
| 2025 | $655,147 | $926,742 | $315 | $8,142 |
Equity Ownership & Alignment
| Item | Amount | Notes |
|---|---|---|
| Direct shares (incl. options exercisable within 60 days) | 29,106 | 1.6% of class; includes 7,675 exercisable options |
| Indirect shares (ESOP allocated to account) | 15,544 | 100% vested in ESOP as of 6/30/2025 |
| Options – Exercisable | 7,675 | $26.25 exp 12/02/2026 (2,250); $21.75 exp 10/10/2027 (2,925); $27.21 exp 12/07/2028 (2,500) |
| Options – Unexercisable | 1,500 | $22.30 exp 09/06/2034; vests 09/06/2026 |
| Hedging/Pledging | Prohibited | No short sales, derivatives, margin, swaps, or pledging company stock |
| ESOP stake outstanding | 547,370 shares (18.66% of shares) | ESOP voting mechanics disclosed; indicates broad employee ownership alignment |
Employment Terms
| Term | Details |
|---|---|
| Effective date & term | Employment Agreement effective 7/1/2025; term through 6/30/2028 |
| Base salary | $400,000, subject to annual review (no decrease) |
| Annual bonus cap | Max $250,000 across three components (A discretionary; B sales+backlog growth formula; C operating income margin tiers) |
| Severance – without cause / good reason | 9 months base salary, subject to release and covenant compliance |
| Change-of-control severance | 18 months base salary upon voluntary termination incidental to CoC (single-trigger on resignation during/after CoC) |
| Clawback | Incentive Compensation Recovery Policy (effective 12/1/2023) incorporated |
| Non-compete | 12 months post-termination; 9 months if terminated without cause and release; 18 months if voluntary termination incidental to CoC |
| Non-solicit & confidentiality | Non-solicit during non-compete term; broad confidentiality obligations and IP assignment |
| Post-termination duties | Cooperation and resignation from all positions upon termination |
Board Governance
- Board roles: O’Neil serves as a director since 2018 and is a member of the Legal Affairs, Strategic Planning & M&A Committee (with Michael Wool) .
- Dual-role implications: As the CEO and a director, O’Neil is not independent; the Board has no standing Lead Independent Director and designates a lead on an ad hoc basis, which can raise oversight concerns during strategic events .
- Committee independence: Audit (Corr, Chair; Patzwahl; Wool) and Nominating (Helmetag, Chair; Wool; Corr) composed of independent directors; Compensation Committee (Wool, Chair; Helmetag) oversees executive pay and grants; no external compensation consultant is engaged .
- Board leadership & attendance: Chair of the Board is Carl Helmetag; Board held 4 meetings in FY2025, each director attended at least 75% .
- Director compensation: Employee directors receive no fees; non-employee directors receive $71,000 annual retainer plus committee fees; option grants are standard .
Performance & Track Record Highlights
- Under O’Neil’s tenure, ESP announced multiple contract wins and funding milestones: $29.5M new contract (Dec 2024) [26], additional $19.8M contract (Apr 2025) [18] [19], and facility expansion funding award (Mar 2025) [20]. These wins support backlog growth, a factor in the CEO’s bonus formula .
- Capital returns: Special cash dividend of $0.75 per share plus regular dividend (Sept 2025), alongside ongoing quarterly dividends, signaling confidence and cash generation [14] [15] [22] [16].
- Pay-for-performance: Strong TSR and net income gains aligned with increases in compensation actually paid, indicating incentive structures tied to shareholder outcomes .
Risk Indicators & Red Flags
- Hedging/pledging prohibitions mitigate misalignment risks and curb leveraged selling pressure .
- Single-trigger CoC severance on voluntary termination may reduce stickiness in a sale scenario versus strict double-trigger constructs; however, restrictive covenants and release mechanics provide some protection .
- No external compensation consultant could limit benchmarking rigor; oversight rests with a two-member Compensation Committee .
- Option grants follow regular schedules and two-year vesting, with policy stating timing is not coordinated with MNPI, reducing optics of opportunistic grants .
Compensation Structure Analysis
| Feature | Observation |
|---|---|
| Cash vs. equity mix | FY2025 total comp $655,147 with $300,300 cash bonus and modest option grant value ($7,455), skewing toward cash given smaller equity grants |
| Shift in guarantees | Base salary moved up to $400,000 in new agreement (no decrease clause), increasing fixed pay while maintaining capped variable bonus at $250,000 |
| Performance metrics | Explicit formulas for backlog+sales growth and operating income margin tiers; discretionary portion capped at 50% of salary |
| Clawback & trading controls | Clawback policy adopted and strict trading policy (no hedging/pledging), reinforcing shareholder-friendly governance |
Say-on-Pay & Shareholder Feedback
- 2025 advisory vote on NEO compensation proposed; Board recommends a three-year frequency for say-on-pay to emphasize long-term strategy alignment .
- Historical approval percentages are not disclosed in the 2025 proxy.
Director Compensation (for context; employee CEO receives none)
| Director | Cash Fees ($) | Option Awards ($) | Total ($) |
|---|---|---|---|
| Paul J. Corr | $74,500 | $6,000 | $80,500 |
| Carl Helmetag | $72,000 | $6,000 | $78,000 |
| Nancy K. Patzwahl | $72,000 | $6,000 | $78,000 |
| Michael Wool | $79,500 | $6,000 | $85,500 |
Investment Implications
- Alignment: Explicit backlog/sales and operating margin targets, clawback, and anti-hedging/pledging policies support pay-for-performance and curb adverse trading behavior; ESOP participation and vested status further align interests .
- Retention risk: New agreement increases base pay to market-rate levels and sets clear severance economics; single-trigger CoC severance on voluntary termination is less protective than double-trigger but restrictive covenants and release requirements temper risk .
- Selling pressure: Near-term unexercisable options (1,500 vesting in 2026) are modest; strict trading policy and no pledging mitigate forced selling, while ESOP allocations are fully vested for O’Neil .
- Execution: Contract wins and rising net income underpin the bonus framework; TSR improvement during 2023–2025 suggests strategy execution translating to shareholder returns [26] [18] [19] [20] .
- Governance watchpoints: CEO-director dual role, absence of a permanent Lead Independent Director, and lack of external comp consultant warrant monitoring during strategic decisions (M&A, major capital allocation) .