Thomas McClelland
About Thomas McClelland
Thomas McClelland, age 71, is President and Chief Executive Officer of Frequency Electronics (FEIM); he joined the company in 1984, rose through engineering and product leadership roles, became Interim CEO in July 2022, and was appointed President & CEO on January 17, 2023; he was appointed to the Board on December 5, 2024 . Under his tenure, pay-versus-performance disclosure shows total shareholder return (TSR) improved from $70.20 to $178.56 on a $100 initial investment from FY2023 to FY2025, alongside net income improving from a $(5,501) thousand loss in FY2023 to $5,594 thousand in FY2024 and $23,686 thousand in FY2025 . Executive incentives emphasize consolidated bookings, revenue, and operating income through performance stock units (PSUs) in addition to discretionary annual cash bonuses, aligning incentives with operating execution rather than TSR .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Frequency Electronics, Inc. | Engineer (joined) | 1984 | Early technical foundation at FEIM |
| Frequency Electronics, Inc. | Vice President, Commercial Products | March 1999 – FY2011 | Commercial leadership; title later modified to reflect expanded role |
| Frequency Electronics, Inc. | Vice President, Advanced Development | FY2011 – Jan 28, 2020 | Title modified “to describe his expanded role in the Company” |
| Frequency Electronics, Inc. | Senior Vice President & Chief Scientist | Jan 28, 2020 – Jul 13, 2022 | Senior technical leadership |
| Frequency Electronics, Inc. | Interim President & CEO | Jul 13, 2022 – Jan 17, 2023 | Transition leadership |
| Frequency Electronics, Inc. | President & CEO | Jan 17, 2023 – Present | Current position |
External Roles
- Not disclosed in the 2025 DEF 14A for Dr. McClelland .
Fixed Compensation
| Metric (USD) | FY 2024 | FY 2025 |
|---|---|---|
| Salary (paid) | $324,089 | $327,488 |
| Bonus (paid) | $132,063 | $130,250 |
| All Other Compensation | $19,341 | $23,179 |
| Base Salary Rate (current) | — | $321,000 (annual rate) |
Notes
- Annual bonuses are discretionary, based on consolidated company results and role-specific metrics; the Board determines amounts at its sole discretion .
- Perquisites include medical reimbursement, insurance, financial planning/401(k) stock match, and an automobile arrangement .
Performance Compensation
| Grant Date | Instrument | Shares | Vesting | Performance Metrics | Status/Notes |
|---|---|---|---|---|---|
| Nov 1, 2021 | RSU | 1,000 | Vests equally over 4 years from grant | Time-based | Outstanding/continuing vest |
| Jan 17, 2023 | RSU | 30,000 | Vests equally over 4 years from grant | Time-based | Outstanding/continuing vest |
| Jan 17, 2023 | PSU | 20,000 | Vests equally over 4 years from grant | Consolidated bookings, revenue, operating income | Earned (performance achieved), subject to time-based vesting |
| Jul 31, 2023 | PSU | 50,000 | Vests equally over 4 years from grant | Consolidated bookings, revenue, operating income | Earned (performance achieved), subject to time-based vesting |
| May 13, 2024 | PSU | 50,000 | Vests equally over 4 years from grant | Consolidated bookings, revenue, operating income | As of 4/30/2025 not yet earned; performance achieved subsequent to 4/30/2025; single payout if criteria achieved |
Additional points
- The company granted PSUs (not RSUs/options) in FY2025; no RSUs, SARs or options were granted in FY2024–FY2025 .
- The company states it does not time grants in anticipation of material nonpublic information (no specific timing policy for options given they are not granting options) .
Equity Ownership & Alignment
| Item | Amount |
|---|---|
| Beneficial ownership (shares) | 156,766 (1.6% of 9,749,271 outstanding as of Aug 21, 2025) |
| 401(k) plan shares (allocated) | 16,259 |
| SAR/RSU shares deemed owned within 60 days | 87,750 (rights to acquire via vesting/exercise) |
| Outstanding RSUs (aggregate, by plans) | 10,250 shares, vesting equally over 4 years |
| Outstanding PSUs (aggregate, by plans) | 77,500 shares, vesting equally over 4 years; performance criteria as above |
| Hedging policy | Hedging of company securities is prohibited for directors and officers |
| Pledging disclosure | Proxy discloses hedging prohibition; no explicit pledging prohibition disclosure noted |
Employment Terms
| Term | Details |
|---|---|
| Employment Agreement | None; the company has not entered into an employment agreement with Dr. McClelland |
| Base Salary Rate | $321,000 annually |
| Annual Bonus | Discretionary; based on consolidated results and role-specific metrics; Board determines payout |
| Deferred Compensation | Nonqualified deferred compensation agreement: $85,000 annual benefit upon retirement, death, or termination not for cause (life with 10-year minimum) |
| Change-in-Control/Severance | For covered executives, if a change in control results in discharge without cause: 1.5× average base salary + cash bonus (5-year average) if within 1 year post-CIC; 2/3 of 5-year average if >1 but <2 years post-CIC (i.e., double-trigger) |
| Benefits/Perquisites | Health, life, disability insurance (partially company-paid), medical expense reimbursement, and automobile leasing arrangement |
| Insider Trading/Hedging | Insider trading policy in place; hedging of company securities prohibited |
Performance & Track Record (Pay vs Performance reference)
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| TSR – $100 initial investment | $70.20 | $89.39 | $178.56 |
| Net Income (USD thousands) | $(5,501) | $5,594 | $23,686 |
The company notes it does not use TSR as a compensation metric; incentive measures emphasize bookings, revenue, operating income, and other operational goals .
Board Governance and Service
- Board service: Appointed to FEIM’s Board on December 5, 2024; nominee listed with “Year First Elected” 2024; currently serving as Director and President & CEO .
- Committee roles: Audit, Compensation, and Nominating & Corporate Governance Committees are composed solely of independent directors (Brolin/Lord/Sarachek on Audit; Brolin/Sarachek/Schwartz on Compensation; Brolin/Lord/Schwartz on Nominating); McClelland does not serve on these committees .
- Board structure and independence safeguards: Chairman and CEO roles are separated (Chairman: Gen. Lance W. Lord; CEO: McClelland) .
- Attendance: Six Board meetings in FY2025; all then-serving directors attended all Board and committee meetings of which they were members .
- Director compensation: Company officers do not receive additional compensation for Board service or meeting attendance .
Director Compensation (context)
- Non-employee directors receive $50,000 cash plus annual stock grants (6,702 shares; $84,579 grant-date fair value as of Oct 31) with additional stipends for Audit ($8,000) and Compensation ($4,000) committee chairs; officers (including McClelland) receive no additional board fees .
Compensation Structure Analysis
- Mix shift toward equity: McClelland’s stock awards (grant-date fair value) increased from $345,500 (FY2024) to $475,500 (FY2025), while cash bonus was roughly stable ($132,063 to $130,250), increasing his equity-at-risk weighting .
- Discretionary short-term incentives: Annual cash bonuses are discretionary and tied to consolidated results and role-specific metrics (not TSR) .
- Long-term performance focus: PSUs tied to consolidated bookings, revenue, and operating income dominate long-term incentives; 2023 PSU awards earned based on performance but remain subject to time-based vesting; 2024 PSU performance criteria were achieved after FY2025 year-end, creating line-of-sight to future vesting-based realizations .
- Grant timing risk controls: Company states it does not grant option-like awards in anticipation of material nonpublic information .
Say-on-Pay & Shareholder Feedback
- The company seeks an annual non-binding say-on-pay vote; historically, stockholders supported annual frequency (89.9% in the 2019 frequency vote) .
Risk Indicators & Governance Controls
- Hedging prohibition for directors and officers; insider trading policy disclosed (filed with 10-K as Exhibit 19 for FY2025) .
- Legal/related-party screens: Proxy reports no Item 401(f) legal proceedings for directors/executives in last 10 years and no related-party transactions above the threshold in the last two fiscal years .
- Concentrated ownership/board representation: Edenbrook Capital and Jonathan Brolin beneficially own ~19.5%; Brolin serves on the Board and chairs the Audit Committee, indicating meaningful shareholder influence within governance .
Equity Vesting & Potential Insider Selling Pressure
- Time-based RSU/PSU vesting over four years from grant dates (Nov 1, 2021 RSUs; Jan 17, 2023 RSUs/PSUs; Jul 31, 2023 PSUs; May 13, 2024 PSUs) suggests ongoing annual vesting tranches through 2028, which can create periodic liquidity/withholding-related selling pressures upon vesting events .
- Hedging is prohibited; no explicit pledging prohibition disclosed in the proxy (reduces hedging-related misalignment risk but leaves pledging policy unclear) .
Investment Implications
- Alignment: Pay design is operationally focused (bookings/revenue/operating income), with sizeable performance-conditioned equity and improving TSR and profitability under McClelland’s tenure—supportive of pay-for-performance alignment despite discretionary bonus elements .
- Retention/overhang: Earned PSUs from 2023 and performance-achieved 2024 PSUs now vest on time schedules, creating strong retention hooks but also predictable vesting flow that may lead to routine selling to cover taxes/portfolio diversification on vest dates .
- Change-in-control economics: Double-trigger severance equal to 1.5× five-year average cash comp if terminated within one year of a CIC (2/3× if between one and two years) is moderate and not outlier-rich (no tax gross-ups disclosed), unlikely to be a takeover impediment but meaningful to an acquirer’s integration plan .
- Governance risk: Separation of Chair/CEO and independent committee compositions mitigate dual-role risks from McClelland’s CEO/Director status; hedging is banned, but lack of explicit pledging disclosure leaves a small governance gray area for alignment purists .
- Signal watchlist: Monitor Form 4 activity around annual vesting cycles and any updates to ownership/pledging policies; continued delivery against bookings/revenue/operating income targets is key for PSU realizations and alignment continuity .
Citations:
**[39020_0001185185-25-001084_feimdef14a082625.htm:0]** **[39020_0001185185-25-001084_feimdef14a082625.htm:2]** **[39020_0001185185-25-001084_feimdef14a082625.htm:4]** **[39020_0001185185-25-001084_feimdef14a082625.htm:5]** **[39020_0001185185-25-001084_feimdef14a082625.htm:6]** **[39020_0001185185-25-001084_feimdef14a082625.htm:8]** **[39020_0001185185-25-001084_feimdef14a082625.htm:9]** **[39020_0001185185-25-001084_feimdef14a082625.htm:10]** **[39020_0001185185-25-001084_feimdef14a082625.htm:11]** **[39020_0001185185-25-001084_feimdef14a082625.htm:12]** **[39020_0001185185-25-001084_feimdef14a082625.htm:13]** **[39020_0001185185-25-001084_feimdef14a082625.htm:14]** **[39020_0001185185-25-001084_feimdef14a082625.htm:16]** **[39020_0001185185-25-001084_feimdef14a082625.htm:18]** **[39020_0001185185-25-001084_feimdef14a082625.htm:20]** **[39020_0001185185-25-001084_feimdef14a082625.htm:21]** **[39020_0001185185-25-001084_feimdef14a082625.htm:22]** **[39020_0001185185-25-001084_feimdef14a082625.htm:24]** **[39020_0001185185-25-001084_feimdef14a082625.htm:25]** **[39020_0001185185-25-001084_feimdef14a082625.htm:26]** **[39020_0001185185-25-001084_feimdef14a082625.htm:27]**