Michael McClaflin
About Michael McClaflin
Michael J. McClaflin, age 62, serves as Chief Information & Technology Officer at Flexsteel Industries, responsible for enterprise technology strategy, ERP/eBusiness platforms, business intelligence, and IT operations; he joined Flexsteel in March 2019 after senior technology leadership roles at Genuine Parts and The HON Company . He holds a BA in Accounting and General Management from Upper Iowa University and an MBA (marketing emphasis) from the University of Iowa’s Tippie College of Business . Flexsteel’s compensation programs tie executive pay to adjusted operating income and net sales, with the 3-year LTIP ending June 30, 2025 achieving 145% against adjusted operating income goals; company TSR rose from $110 to $215 on a $100 base across FY2023–FY2025 while net income improved to $20.2M in 2025, framing the performance environment during his tenure .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Genuine Parts Corporation (Industrial Parts division, Birmingham) | Director of Acquisition Strategy & Integration | Not disclosed | Led acquisition strategy and integration, leveraging cross-functional process and performance improvement expertise |
| The HON Company | Vice President of eBusiness & IT | 12 years (furniture industry aggregate) | Drove eBusiness and IT leadership in furniture sector; implemented ERP/eBusiness/BI and IT operations improvements |
External Roles
No public company directorships or external board roles disclosed for McClaflin in the proxy materials .
Fixed Compensation
McClaflin is not a named executive officer (NEO) in the proxy; specific base salary, target bonus %, and RSU grant values for him are not disclosed. The following executive policies apply broadly:
- Executive compensation components: base salary, annual cash incentive (CIP), and long-term equity under the 2022 Equity Incentive Plan; perquisites include tax planning services, supplemental health insurance, and a furniture program .
- CIP (FY2025): one-year performance period; target award levels for executive officers ranged from 50% to 90% of base salary; payouts range from 40% to 200% of target; weighting was 70% adjusted operating income and 30% net sales .
- Long-term equity: emphasis shifted toward stock awards (RSUs/PSUs) over options; RSUs granted in FY2025 vest at the end of three years under the 2022 Equity Incentive Plan .
Performance Compensation
Annual Cash Incentive Plan (CIP) – FY2025
| Metric | Weighting | Target definition | Payout range | Notes |
|---|---|---|---|---|
| Adjusted Operating Income | 70% | One-year FY2025 plan; payout tied to AOI level vs plan | 40%–200% of target | Threshold to max scale; committee ratifies post period |
| Net Sales | 30% | One-year FY2025 plan; payout tied to net sales vs plan | 40%–200% of target | Threshold to max scale |
Long-Term Incentive Plan (LTIP) – 3-year period ending June 30, 2025
| Metric | FY2023 Target ($mm) | FY2024 Target ($mm) | FY2025 Target ($mm) | FY2023 Threshold ($mm) | FY2024 Threshold ($mm) | FY2025 Threshold ($mm) | FY2023 Outstanding ($mm) | FY2024 Outstanding ($mm) | FY2025 Outstanding ($mm) | FY2023 Maximum ($mm) | FY2024 Maximum ($mm) | FY2025 Maximum ($mm) | 3-year Achievement |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Adjusted Operating Income (100% weight) | 6.5 | 14.9 | 20.7 | 1.5 | 7.4 | 13.2 | 11.5 | 22.4 | 28.2 | 14.0 | 26.2 | 31.9 | 145% of objective over period |
- Vesting and payout: PSUs pay in shares after each three-year performance period; grants on/after July 1, 2023 are under the 2022 Equity Incentive Plan .
Equity Ownership & Alignment
Insider Transactions and Beneficial Ownership
| Date | Type | Shares | Price | Post-Transaction Beneficial Ownership |
|---|---|---|---|---|
| 2025-08-22 | Acquisition (likely RSU vest) | 8,899 | $0.00 | 40,479 |
| 2025-08-22 | Sale | 4,303 | $43.97 | 36,176 |
| 2021-07-01 | RSU Grant | 1,851 | — | — |
- Stock ownership guidelines: Executive officers are expected to hold shares equal to 2× base salary; ownership includes direct, joint, indirect, and time-based RSUs (vested/unvested) .
- Hedging/pledging: Company policy prohibits hedging, short selling, margin and pledging transactions, and mandates at least six-month holding for open-market purchases .
Employment Terms
- Severance Plan (Management Employees): Upon a Qualifying Termination (company-initiated or good reason around change in control), eligible executive officers receive 12 months base salary continuation; lump-sum 12 months COBRA premiums; and lump-sum CIP award at target for the fiscal year of termination (CEO’s severance doubles if within 24 months of change in control; not applicable to other executives) .
- Conditions/Clawback: Requires execution of a severance agreement including a 12-month non-compete and non-hire; company may claw back severance if non-compete/confidentiality or related covenants are breached .
- Equity upon termination/change-in-control:
- Omnibus Stock Plan (pre-2022 awards): Unvested RSUs/restricted stock/options vest on death/disability; for fiscal years prior to 2022, vesting upon change in control; post-termination forfeiture and clawback provisions apply .
- 2022 Equity Incentive Plan: Unvested RSUs/PSUs vest on death/disability or termination other than for cause at age ≥55 with ≥10 years service (pro rata by days worked); no automatic vesting on change in control if awards are assumed; if not assumed, full vesting at 100% target; if assumed and involuntary termination without cause within 12 months after change in control, vesting treatment mirrors “not assumed”; amendment expands voluntary termination/change-in-control protection window to begin at definitive agreement signing and run 24 months post-change in control .
Performance & Track Record
- Technology leadership: Over 25 years in ERP, eBusiness, BI, and IT operations; drives cross-functional process/performance improvements aligned to enterprise capabilities and go-to-market initiatives .
- Company performance context: Cumulative TSR value of an initial $100 investment increased from $110 (FY2023) to $182 (FY2024) to $215 (FY2025); net income increased to $20.2M in FY2025, aligning with equity-heavy pay-for-performance design .
Compensation Structure Analysis
- Shift toward RSUs/PSUs: Compensation Committee emphasizes stock awards over options to strengthen ownership alignment and facilitate guideline compliance; RSUs vest over three years; no option awards granted in recent years and repricing is prohibited .
- Pay-for-performance rigor: CIP emphasizes AOI and net sales; LTIP AOI targets escalate over time and achieved 145% in the FY2023–FY2025 cycle, suggesting robust operating improvement focus .
- Clawback: Incentive compensation clawback applies to CIP, LTIP, and equity plans in event of restatement or misconduct .
Risk Indicators & Red Flags
- Hedging/pledging: Explicitly prohibited—reduces misalignment risk from collateral pledging .
- Insider selling pressure: Periodic Form 4 sales (e.g., 4,303 shares at $43.97 on 08/22/2025) following zero-priced acquisitions consistent with RSU vesting can create near-term supply; monitor 10b5-1 plans and vest calendars for timing risk .
- Related party transactions: None reportable in FY2025 per policy oversight .
- Option repricing: Prohibited under equity plans—mitigates shareholder-unfriendly practices .
Equity Ownership & Alignment Details
| Policy/Item | Detail |
|---|---|
| Stock Ownership Guidelines | Executive officers: 2× base salary required; includes time-based RSUs in ownership count |
| Holding/Trading Policy | Prohibits hedging, pledging, short sales, margin; six-month minimum hold for open-market purchases |
| Vested vs Unvested | Not disclosed for McClaflin individually in proxy; Form 4s indicate RSU vests (zero-priced acquisitions) |
Investment Implications
- Alignment: Heavy use of RSUs/PSUs, strict hedging/pledging prohibitions, and ownership guidelines support long-term alignment; performance levers center on AOI and net sales, with demonstrated 145% LTIP achievement over FY2023–FY2025 .
- Retention/COC Risk: Standardized severance (12 months salary/COBRA/target CIP), 12-month non-compete, and expanded COC protection window under the 2022 Plan reduce transition risk, though award treatment depends on successor assumption and termination conditions .
- Trading Signals: Monitor scheduled vest dates and any 10b5-1 activity; the August 2025 vest and concurrent sale indicate potential periodic supply that could cap near-term rallies around vest dates if repeated .
- Execution focus: Technology modernization and data-driven operations under McClaflin should support margin and throughput initiatives; pay structures incentivize sustained AOI growth—the primary driver for multi-year equity payouts .