Brett Larsen
About Brett Larsen
Brett R. Larsen is President and CEO of Key Tronic Corporation and a director since June 30, 2024; he is 52, a CPA, with B.S. and M.S. in Accounting from Brigham Young University, and previously served as CFO and EVP Administration (2015–2024) after joining Key Tronic in 2004 . Under pay-versus-performance disclosures, cumulative TSR declined from $94.85 to $63.93 between FY2024 and FY2025, while net income shifted from a $2.8M loss to an $8.3M loss, aligning compensation actually paid with performance trends . Company revenues and EBITDA declined over FY2023–FY2025, providing important context for incentive outcomes (see Performance Context).*
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Key Tronic Corporation | President & CEO; Director | 2024–present | Leadership transition; board separation of Chair/CEO maintained . |
| Key Tronic Corporation | EVP Administration, CFO & Treasurer | 2015–2024 | Finance leadership through growth, governance, and compensation program design transitions . |
| Key Tronic Corporation | VP Finance & Controller | 2010–2015 | Strengthened reporting and controls; succession to CFO . |
| Key Tronic Corporation | Controller; Manager Financial Reporting | 2004–2008 | Built internal reporting capabilities . |
| FLSmidth Spokane, Inc. | Chief Financial Officer | 2008–2010 | External CFO experience prior to return to KTCC . |
| BDO USA, LLP; Grant Thornton LLP | Audit Manager; Supervisory roles | 1997–2004 | Public audit expertise; CPA credential foundation . |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| FLSmidth Spokane, Inc. | Chief Financial Officer | 2008–2010 | External operating finance leadership . |
| BDO USA, LLP | Audit Manager | 2002–2004 | Public audit, financial rigor . |
| Grant Thornton LLP | Auditing/Supervisory roles | 1997–2002 | Assurance and controls background . |
Fixed Compensation
Multi-year reported compensation (Summary Compensation Table):
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Salary ($) | 475,952 | 599,686 | 790,770 |
| Bonus ($) | — | — | 2,048 |
| Stock/RSU Awards ($) | — | — | 249,994 |
| Option/SAR Awards ($) | 23,513 | — | — |
| Non-Equity Incentive Plan ($) | 199,900 | — | — |
| All Other Compensation ($) | 12,200 | 13,200 | 13,800 |
| Total ($) | 711,565 | 612,886 | 1,056,612 |
Key fixed pay notes:
- Temporary 10% base salary reduction took effect May 18, 2025 for executive team including Larsen; did not alter incentive eligibility .
Performance Compensation
Structure and metrics:
- RSUs: Beginning FY2025, long-term equity shifted from SARs to RSUs. CEO RSUs vest in equal annual installments over 3 years, with 60% performance-based on annual EBITDA meeting/exceeding a threshold; 40% time-based .
- Annual Incentive Plan (AIP): Plan establishes threshold/target/maximum payout levels; actual AIP payout for Larsen was $0 in FY2025 (and FY2024), with prior FY2023 payout $199,900 .
- Long-Term Cash Incentive Plan (LTIP): 2025–2027 cycle tied to three-year sales growth versus peer group and return on invested capital (ROIC) .
| Incentive Type | Metric | Weighting | Target | Actual (FY2025) | Payout (FY2025) | Vesting / Cycle |
|---|---|---|---|---|---|---|
| RSUs (CEO) | Annual EBITDA threshold | 60% perf-based; 40% time-based | Threshold not disclosed | Not disclosed | N/A; equity vests per schedule | Vests in equal annual installments over 3 yrs |
| AIP | Company performance (plan-defined) | Not disclosed | Threshold/Target/Max set | Not disclosed | $0 | FY2025 |
| LTIP (cash) | 3-yr sales growth vs peers; ROIC | Not disclosed | Targets set for 2025–2027 | In cycle | Not applicable in FY2025 | 2025–2027 |
Equity grants detail (FY2025 and outstanding awards):
- FY2025 RSU grant fair value $249,994 to Larsen; share counts split between performance- and time-based units; grant date 9/3/2024 .
- Outstanding as of 6/28/2025: 22,172 time-based RSUs ($60,530 market value) and 22,173 performance-based RSUs ($60,532 market value) from 9/3/2024 grant .
- SARs granted 7/29/2022 did not vest and expired by 7/29/2025; no intrinsic value at FY2025 close (share price $2.73 versus SAR base price $5.10) .
Equity Ownership & Alignment
| Item | Value | Notes |
|---|---|---|
| Total beneficial ownership | 58,629 shares | Includes 39,378 shares held via 401(k) |
| Ownership % of outstanding | <1% | 10,773,774 shares outstanding at record date |
| Vested vs unvested | Unvested RSUs: 22,172 time-based; 22,173 perf-based at 6/28/2025 | SARs from 2022 did not vest; none outstanding |
| Options/SARs exercisable | None (2022 SARs failed to vest) | In-the-money value $0 as of 6/28/2025 |
| Pledging/Hedging | Prohibited by Insider Trading Policy; no margin accounts or pledging permitted | Alignment positive; reduces risk of forced sales |
| Ownership guidelines | Not disclosed | — |
Insider trading activity (recent):
- On 9/3/2025, RSUs delivered (7,390 shares) and a small open market sale of 1,816 shares at $2.90; post-transaction direct holdings 19,251 plus 39,283 via 401(k) as disclosed in Form 4 . Additional Form 4 filed March 4, 2025 for transactions dated 2/28/2025 .
Employment Terms
Key contract provisions:
- Standard nondisclosure, confidentiality, and non-competition provisions; company may terminate at any time .
- Severance (without cause or qualifying demotion): 12 months base salary; ceases or reduces if re-employed at equal/lower salary .
- Change-in-control severance: 24 months base salary; plus acceleration of equity and target LTIP value under specified conditions .
- Triggers: If awards are assumed/continued/substituted, acceleration generally requires a qualifying termination (double-trigger) within two years; if not assumed, time-based awards vest at CoC and performance awards vest at target; details in 2024 Plan .
- Clawback: Dodd-Frank-compliant incentive compensation recovery policy covering the prior three completed fiscal years; applied regardless of misconduct . Following 2024 restatement analysis, no recovery was required given timing of incentive-based pay .
Severance and change-of-control economics (as of FY2025):
| Scenario | Cash Severance ($) | Equity Acceleration ($) | LTIP Acceleration ($) | Total ($) |
|---|---|---|---|---|
| Termination (outside CoC) | 720,000 | — | — | 720,000 |
| Termination upon CoC | 1,440,000 | 151,327 | 840,000 | 2,431,327 |
Board Service, Governance, and Director Compensation
- Board service: Larsen is a director; the Board determined he is not independent given current CEO role; the Chair is independent (Ronald F. Klawitter), and KTCC separates CEO and Chair roles, mitigating dual-role concerns .
- Committees: Audit, Compensation & Administration, and Governance & Nominating Committees comprised solely of independent directors; Larsen does not serve on these committees .
- Board meeting attendance: In FY2025, each director attended at least 85% of Board meetings and 84% of their committee meetings; independent directors held executive sessions at two of five Board meetings .
- Director compensation: Non-employee director annual cash retainers were $81,000 ($97,200 for Chair), temporarily reduced by 10% effective May 18, 2025; non-employee directors received RSU grants (8,869 units on 9/3/2024); employee directors like Larsen are not included in non-employee director compensation .
Performance Context (Company-level)
Key Tronic revenues and EBITDA declined during FY2023–FY2025:
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Revenues ($) | 605,315,000* | 566,942,000* | 467,871,000* |
| EBITDA ($) | 21,564,000* | 17,365,000* | 10,161,000* |
Values retrieved from S&P Global.*
Additional CEO pay-versus-performance metrics:
| Metric | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|
| Cumulative TSR (Value of initial $100) | $132.79 | $94.85 | $63.93 |
| Net income (loss) ($) | 5,156,736 | (2,787,296) | (8,318,230) |
Qualitative performance note: On Q1 FY2026 call, Larsen cited strong bank relationships, positive cash generation, and debt paydown despite earnings pressure .
Compensation Structure Analysis
- Shift from SARs to RSUs in FY2025 increased alignment with measurable operating performance (annual EBITDA) and reduced option-related risk; performance-based proportion for CEO set at 60% .
- Guaranteed compensation is modest relative to peers; 2025 AIP and LTIP payouts to date were $0 actual for AIP, with LTIP mid-cycle .
- Clawback policy and prohibition of hedging/pledging strengthen governance and alignment .
- Temporary base salary reductions in FY2025 reflect cost discipline amidst macro softness .
Risk Indicators & Red Flags
- Earnings weakness and negative TSR in FY2024–FY2025 are notable; however, compensation actually paid tracked performance per SEC methodology .
- No evidence of option repricing; 2024 Plan explicitly disallows repricing without shareholder approval .
- Related-party transaction: consulting agreement with former CEO Craig Gates at $10,000/month through June 2026; approved and disclosed under policy .
- Insider selling pressure appears low: small 1,816-share sale concurrent with RSU delivery; policy prohibits pledging and hedging, lowering forced sale risk .
Compensation Peer Group & Committee Practices
- Compensation Committee uses independent consultants Total Compensation Solutions (TCS) and Milliman; they advised on peer group selection and competitive market pay; neither provided other services to KTCC .
- LTIP metrics benchmark sales growth against peer group and ROIC; specific peer names and target percentile not disclosed .
Say-on-Pay & Shareholder Feedback
- Advisory say-on-pay vote proposed annually; historical approval percentages not disclosed in available documents .
Investment Implications
- Alignment: RSU design with 60% performance weighting to annual EBITDA and robust clawback/anti-hedging/anti-pledging policies signal strong governance alignment .
- Retention risk: Contractual severance of 1x base salary (2x on change-of-control) and multi-year RSU vesting reduce near-term turnover risk; LTIP mid-cycle further anchors retention .
- Trading signals: Minimal insider selling alongside RSU vesting suggests limited selling pressure; watch subsequent Forms 4 for pattern changes .
- Performance overhang: Declining revenues/EBITDA and negative TSR could constrain incentive payouts and weigh on sentiment; management commentary emphasizes cash generation and debt reduction, which may de-risk balance sheet albeit with profitability headwinds . Near-term focus should be on EBITDA improvements to unlock RSU performance vesting and support AIP outcomes .