Scot R. Jafroodi
About Scot R. Jafroodi
Scot R. Jafroodi, 55, is Vice President, Chief Financial Officer and Treasurer of Insteel Industries (IIIN). He has served in senior finance roles at the company since 2005, including VP Corporate Controller and Chief Accounting Officer (2020–2023), and was promoted to CFO on January 2, 2023; he holds B.S. and M.S. degrees in accounting from Appalachian State University and is a CPA in North Carolina . Fiscal 2024 was challenging for IIIN: revenue declined 18.5% to $529.2 million and net earnings fell to $19.3 million ($0.99/share), underscoring the cyclicality of end markets and emphasizing the importance of return-on-capital-driven incentives; Say‑on‑Pay garnered over 94% support at the 2024 AGM .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Insteel Industries | Vice President, Chief Financial Officer and Treasurer | 2023–present | Senior financial leadership of public company; treasury and reporting oversight |
| Insteel Industries | VP, Corporate Controller and Chief Accounting Officer | 2020–2023 | Corporate controllership and SEC reporting leadership |
| Insteel Industries | Corporate Controller and Chief Accounting Officer | 2007–2020 | Corporate accounting oversight |
| Insteel Industries | Corporate Controller | 2005–2007 | Corporate accounting |
| BDO Seidman, LLP | Senior Manager | 2003–2005 | Public accounting leadership |
| Deloitte & Touche USA, LLP | Senior Manager (among roles over 10 years) | Ten years prior to 2003 | Audit/assurance leadership |
External Roles
No public company directorships or external board roles disclosed for Mr. Jafroodi in the 2025 proxy .
Fixed Compensation
| Component | FY 2024 Amount | Notes |
|---|---|---|
| Base salary | $335,000 | Increased from $310,000 in July 2024; ~5% increase in total target direct compensation |
| Target annual incentive (ROCICP) | $187,731 | Set as target dollar for FY24 under ROCICP |
| Maximum annual incentive (ROCICP) | $375,462 | FY24 plan maximum at 2.0x target |
| Dividend equivalents on RSUs (cash) | $19,848 | Paid on outstanding RSUs |
| 401(k) matching payments | $9,351 | Company match |
| Death benefit value (comp table) | $1,782 | Insurance-related value included in compensation disclosures; separate program pays $500,000 upon death |
Performance Compensation
- Annual cash incentive plan (ROCICP): IIIN emphasizes pay-for-performance with annual bonuses tied to Return on Capital (ROC), a metric the company links to long-term shareholder value .
| Metric | Weighting | Target | Maximum | Actual | Vesting/Payment |
|---|---|---|---|---|---|
| Return on Capital (ROCICP) | Not disclosed | $187,731 | $375,462 | Not disclosed | Annual cash bonus; based on FY performance |
- Long-term incentives: entirely equity-based, 50% RSUs and 50% stock options; awards occur in two tranches per year (approximately Feb and Aug), RSUs vest at 3 years; options vest 1/3 annually over 3 years; 10‑year option term; priced at grant-date close .
FY 2024 Equity Grants (NEO awards specific to Mr. Jafroodi)
| Grant date | Type | Shares/Options (#) | Strike ($) | Grant-date fair value ($) | Vesting |
|---|---|---|---|---|---|
| 2/13/2024 | RSU | 1,799 | — | 62,515 | Cliff vest at 3 years |
| 2/13/2024 | Option | 4,775 | 34.75 | 62,505 | 1/3 annually over 3 years; 10‑year term |
| 8/13/2024 | RSU | 1,957 | — | 62,507 | Cliff vest at 3 years |
| 8/13/2024 | Option | 4,830 | 31.94 | 62,500 | 1/3 annually over 3 years; 10‑year term |
Equity Ownership & Alignment
- Outstanding and unvested awards (FY24 year-end)
- Unvested RSUs: 9,696 units; market value $299,412 at $30.88 close on 9/27/2024 .
- Options outstanding (selected unexercisable tranches): 4,775 @ $34.75; 4,830 @ $31.94; 3,152 @ $30.27; 3,131 @ $30.99; 890 @ $32.77; 594 @ $38.54 .
| Equity | Status | Count | Strike/Value | Source |
|---|---|---|---|---|
| RSUs | Unvested | 9,696 | $299,412 market value at FY24 close | |
| Stock options | Unexercisable | 4,775 | $34.75 | |
| Stock options | Unexercisable | 4,830 | $31.94 | |
| Stock options | Unexercisable | 3,152 | $30.27 | |
| Stock options | Unexercisable | 3,131 | $30.99 | |
| Stock options | Unexercisable | 890 | $32.77 | |
| Stock options | Unexercisable | 594 | $38.54 |
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RSU vesting schedule (potential near-term supply) | Vest date | RSUs vesting (#) | |---|---:| | 2/15/2025 | 714 | | 8/15/2025 | 1,144 | | 2/14/2026 | 2,065 | | 8/14/2026 | 2,017 | | 2/13/2027 | 1,799 | | 8/13/2027 | 1,957 |
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Ownership guidelines and trading policies
- Stock ownership guidelines: NEOs must hold IIIN stock equal to 1.5x base salary; new executives have 5 years; counting two‑thirds of unvested RSUs and one‑third of options; all NEOs with ≥5 years of service are in compliance (Mr. Jafroodi joined IIIN in 2005) .
- Hedging prohibited; pledging requires prior approval; executive transactions limited to open trading windows and pre-clearance for certain officers .
- No option repricing without shareholder approval; minimum vesting 1 year in new 2025 plan; independent compensation committee administers plan .
Employment Terms
- Employment agreement: None for executive officers; executives are at-will; double-trigger CIC severance in place .
- Change-in-control (CIC) terms (non-CEO NEOs): 1x base salary + 1x average bonus (prior 3 years) paid over one year; 12 months benefits (COBRA); up to $15,000 outplacement; full acceleration of options/RSUs upon qualifying termination following CIC; subject to 280G cutback; no tax gross‑ups .
- Clawback: Company will recover incentive compensation (3 prior fiscal years) in the event of an accounting restatement .
- Supplemental Retirement Plan (SRP): Target benefit after 30 years of service equals 50% of the average of the five highest base-salary years, paid over 15 years post retirement or age 65; present values by scenario disclosed below .
Potential Payments Upon Termination or Change in Control (as of FY24 year-end; Mr. Jafroodi)
| Scenario | Salary Continuation | Severance | Options (intrinsic on unvested) | RSUs (market value) | Benefits | Outplacement | SRP (present value) | Death Benefit | Total |
|---|---|---|---|---|---|---|---|---|---|
| Voluntary termination | — | — | $1,923 | $299,412 | — | — | $560,367 | — | $861,702 |
| Termination without cause | — | — | $1,923 | $299,412 | — | — | $560,367 | — | $861,702 |
| CIC + termination without cause/for good reason | $335,000 | $131,671 | $1,923 | $299,412 | $21,617 | $15,000 | $560,367 | — | $1,364,990 |
| Retirement | — | — | $1,923 | $299,412 | — | — | $560,367 | — | $861,702 |
| Death | — | — | $1,923 | $299,412 | — | — | $1,061,581 | $500,000 | $1,862,916 |
| Disability | $1,324,957 | — | $1,923 | $299,412 | — | — | $678,232 | — | $2,304,524 |
Compensation Structure Analysis
- Shift/levels: For FY24, Mr. Jafroodi’s base salary increased to $335,000; target bonus opportunity and long‑term incentive target remained unchanged; total target direct compensation increased ~5% .
- Mix and vesting: Long‑term incentives are 100% equity (50% RSUs, 50% options), with multi‑year vesting; no performance‑share units (PSUs) are disclosed, indicating time-based vesting for equity .
- Governance and safeguards: Double‑trigger CIC agreements; no tax gross‑ups; clawback policy; no option repricing; minimum one‑year vesting in new plan; independent committee oversight .
Performance & Track Record (context)
- FY24 operating context: Revenues declined 18.5% to $529.2 million with net earnings of $19.3 million ($0.99/share), driven by pricing pressures and import competition; the company emphasizes continued strategic investments and strong balance sheet despite the downturn .
- Shareholder feedback: Say‑on‑Pay received over 94% support, reinforcing shareholder approval of the compensation framework .
Compensation Committee Analysis
- Committee composition and independence: The Executive Compensation Committee is independent and administers equity plans; members include Jon M. Ruth (Chair), Abney S. Boxley III, Anne H. Lloyd, Joseph A. Rutkowski, and G. Kennedy Thompson .
- Process: Program emphasizes ROC‑based annual incentives and equity-heavy LTI; company engages an independent compensation consultant .
Investment Implications
- Alignment and retention: Strong structural alignment via ownership guidelines (1.5x salary for NEOs; compliance achieved for NEOs with ≥5 years), clawback policy, and double‑trigger CIC protections should support retention and prudent risk-taking .
- Pay-for-performance rigor: Annual bonus is tied to Return on Capital (a value-creation metric), but LTI is time‑based RSUs/options without explicit performance-vesting PSUs, modestly diluting direct performance linkage for equity .
- Selling pressure and supply: RSU vesting dates cluster mid‑February and mid‑August (e.g., 2/15/2025: 714 shares; 8/15/2025: 1,144 shares), which can create periodic supply; trading remains constrained by insider trading windows and pre‑clearance requirements .
- Down-cycle sensitivity: FY24 results declined materially, but incentive design anchored to ROC and retention-oriented SRP may help maintain leadership continuity through cyclical headwinds; Say‑on‑Pay support (94%+) suggests investor tolerance for the current mix .