Derek Schmidt
About Derek Schmidt
Derek P. Schmidt, age 52, is President and Chief Executive Officer of Flexsteel Industries (FLXS) and a director since 2024; he became President in January 2024 and CEO on July 1, 2024 after joining the Company in April 2020 as CFO and COO (also serving as interim CFO May 2023–January 2024) . He holds a BBA in Accounting and Finance from the University of Wisconsin and an MBA (finance and strategic management) from the University of Minnesota’s Carlson School of Management . Under his FY2025 leadership, the company achieved cash incentive plan objectives at a weighted 177% of target (adjusted operating income at 200% and net sales at 122%), and cumulative TSR from FY2023–FY2025 rose to 2.15x a $100 base while net income reached $20.2 million in FY2025 .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Flexsteel Industries | President (Jan 2024–present); CEO (Jul 1, 2024–present); Director (since 2024) | 2024–present | Led achievement of FY2025 incentive goals (AOI and net sales) and oversaw equity/comp design aligned to AOI and sales metrics . |
| Flexsteel Industries | CFO & COO; interim CFO | CFO/COO from Apr 2020; interim CFO May 2023–Jan 2024 | Took strategic ownership of operations (manufacturing, sourcing, logistics, design/engineering) and later finance; transitioned CFO role Jan 2024 . |
| Crescent Electric Supply Co. | Chief Financial Officer | Prior to Flexsteel (dates not specified) | Senior finance leadership at large electrical distributor . |
| HNI Corporation | Multiple executive positions | 2011–2018 | Leadership at leading global office furniture manufacturer . |
| Silgan Plastics; MasterBrand Cabinets; General Mills | Financial leadership positions | Not disclosed | Broad finance/general management foundation across CPG/industrial sectors . |
External Roles
- No current public company directorships for Mr. Schmidt are disclosed in the proxy; he serves as an executive director at Flexsteel .
Fixed Compensation
| Element | FY2024 | FY2025 | Notes |
|---|---|---|---|
| Base salary ($) | $470,000 | $570,000 | Increased to $600,000 effective July 1, 2025 for FY2026 . |
| Perquisites/other ($) | $50,680 | $78,195 | FY2025 detail: supplemental medical $25,499; furniture program $32,946; 401(k) match $19,750 . |
Performance Compensation
Annual Cash Incentive (CIP)
| Metric | Weight | FY2025 Target | FY2025 Actual/Result | Weighted outcome | Payout to Schmidt ($) |
|---|---|---|---|---|---|
| Adjusted operating income | 70% | $26.2m | 200% of target | Contributed to 177% overall payout | $908,010 |
| Net sales | 30% | $431.6m | 122% of target | Contributed to 177% overall payout | Included in above |
- CEO target bonus is 90% of base salary at target (max 200%) per employment agreement; FY2025 payout at 177% aligns with plan mechanics .
Long-Term Incentives (LTI)
| Component | Plan design | FY2025 Grants/Accounting | Vesting/Performance |
|---|---|---|---|
| PSUs | Three-year performance periods; objective primarily adjusted operating income; payouts 40%–200% of target; overlapping tranches . | FY2025 stock awards fair value includes PSUs at target within $902,990 total; max value for FY2025 grant could reach $957,588 . | FY2025–FY2027 performance period; prior 2023–2025 cycle paid at 145% AOI performance for plan period . |
| RSUs | Time-based, 3-year vest under 2022 EIP . | FY2025 RSU grant-date fair value $424,196 (part of $902,990 total stock awards) . | Outstanding RSUs: 22,842; vest 9,444 on 6/30/2026 and 13,398 on 6/30/2027 . |
| Options | Historically granted; no new options in FY2024–FY2025 . | N/A | Existing options: 13,566 @ $12.77 exp. 7/1/2030; 108,884 @ $9.97 exp. 4/6/2030 . |
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Beneficial ownership | 341,059 shares (6.2% of outstanding) including 122,450 options exercisable within 60 days; includes spouse/IRA/401k holdings as noted . |
| Shares outstanding (record date) | 5,340,446 . |
| Unvested RSUs | 22,842 (9,444 vest 6/30/2026; 13,398 vest 6/30/2027) . |
| PSUs outstanding (target) | 42,244 across FY2025–FY2027, FY2024–FY2026, FY2023–FY2025 cycles at target . |
| Options (exercisable) | 13,566 @ $12.77 (exp. 7/1/2030); 108,884 @ $9.97 (exp. 4/6/2030) . |
| Ownership guidelines | CEO required to hold 4x base salary; directors 5x annual director cash compensation . |
| Hedging/pledging | Prohibited: hedging, shorting, margin and pledging transactions; min six-month holding for open-market purchases . |
| Clawback | Incentive compensation subject to clawback under policy and applicable listing/SEC rules . |
Employment Terms
| Term | Key provisions |
|---|---|
| Employment agreement | Effective July 1, 2024; initial CEO base $570,000; signing RSUs $105,000; CIP target 90% (max 200%); LTI target 140% (max 200%); base increased to $600,000 effective July 1, 2025 . |
| Severance plan (no CIC) | If involuntary termination (Qualifying Termination): 12 months base salary; lump-sum COBRA equivalent for 12 months; lump-sum target CIP for fiscal year of termination (pro-rated mechanics per plan) . |
| Severance plan (CEO CIC) | If CEO is terminated 30 days before, on, or within 24 months after a change in control: severance amounts above are doubled . |
| Equity on death/disability/retirement | Under 2022 EIP, RSUs/PSUs vest pro rata upon death/disability or termination other than for cause at age ≥55 with ≥10 years of service; options do not accelerate on termination unless per change-in-control treatment . |
| Equity on change in control | No automatic vesting if awards assumed; if not assumed, unvested awards vest at 100% of target; if assumed and involuntary termination without cause occurs from signing of definitive agreement through 24 months post-CIC (amended), awards vest as if not assumed . |
| Non-compete | 12-month non-competition and confidentiality obligations post-termination . |
| Clawback/forfeiture | CIP/LTI/Equity subject to clawback; forfeiture of awards for competitive activity or misuse of confidential info within specified periods . |
Board Governance
- Board service: Executive director since 2024; not identified as serving on any Board committees (committees listed do not include Mr. Schmidt) .
- Committee structure: Audit & Ethics (McGovern—Chair, Creekmuir, Bertsch, Calloway); Compensation (Culbreth—Chair, Creekmuir, Dickson); Nominating & Governance (Dickson—Chair, Culbreth, McGovern) .
- Independence: Board comprised of a majority independent directors; Mr. Schmidt is the sole executive director .
- Chair/CEO split: Independent chair; Ms. McGovern to assume Chair role after Dec 10, 2025—Board believes separation is in shareholders’ best interests .
- Attendance: In FY2025, directors attended 93% of Board meetings and 100% of committee meetings .
- Compensation oversight: Compensation Committee engaged Meridian Compensation Partners as independent advisor in 2025 .
- Say-on-pay: Annual advisory vote; 2025 proxy seeks approval of NEO compensation and one-year frequency .
Performance & Track Record
| Metric | FY2023 | FY2024 | FY2025 |
|---|---|---|---|
| Cumulative TSR (Value of $100 initial investment) | $110 | $182 | $215 |
| Net income ($) | $14,778,000 | $10,528,000 | $20,154,000 |
| LTIP AOI achievement for 2023–2025 cycle | — | — | 145% of target |
- FY2025 CIP performance: AOI 200% of target; Net sales 122% of target; weighted 177%—supports pay-for-performance linkage under Mr. Schmidt’s first full CEO year .
- CAP/TSR relationship: Company reports alignment between “compensation actually paid” and TSR/net income due to equity-heavy pay mix .
Risk Indicators & Red Flags
- Hedging/pledging prohibited, reducing misalignment risk from derivative strategies or collateralization .
- Clawback in place; awards subject to forfeiture upon competitive activity or misconduct .
- Related party transactions: None reportable in FY2025 .
- Equity plan governance: No evergreen; no repricing; director compensation cap; dividends deferred until vesting .
Equity Award Overhang and Vesting Triggers (Trading Pressure Watchpoints)
- Upcoming RSU vest dates: 6/30/2026 (9,444 shares) and 6/30/2027 (13,398 shares) .
- PSU cycles outstanding: FY2023–2025, FY2024–2026, FY2025–2027—settlement post-period; FY2023–2025 cycle achieved 145% AOI .
- Options: 122,450 options exercisable (strike $9.97–$12.77) with 2030 expirations could influence exercise/sale timing near windows .
Compensation Structure Analysis
- Mix shift toward RSUs/PSUs (no options granted in FY2024–FY2025) aligns with market practice and stock ownership guidelines .
- CEO target pay-at-risk: CIP target 90% of salary; LTI target 140% of salary; both with 200% caps—high at-risk orientation tied to AOI and sales .
- No tax gross-ups disclosed; Section 162(m) deductibility acknowledged with flexibility retained .
Investment Implications
- Strong alignment: High at-risk pay (CIP 90% target; LTI 140% target) tied to AOI and revenue, plus meaningful ownership (6.2% beneficial) and strict anti-hedging/pledging policy support shareholder alignment and execution incentives .
- Retention and CIC protection: Standard severance (12 months salary, COBRA, target bonus) with CEO double benefits upon CIC-related termination and expanded 24-month CIC protection for equity could stabilize leadership through strategic events, but increases change-in-control economics .
- Near-term trading signals: Watch quarter- and year-end windows around RSU vest dates (6/30/2026, 6/30/2027) and any PSU settlements; option exercises are possible given low strikes vs. recent trading ranges referenced in plan disclosures, though policy bans pledging/shorting .
- Governance: CEO is not Board Chair; independent Chair structure and active committees with independent advisor mitigate dual-role concerns; Board attendance and independence profile support governance quality .