Neil D. Wilkin, Jr.
OPTICAL CABLEAbout Neil D. Wilkin, Jr.
Neil D. Wilkin, Jr. (age 61) is Chairman of the Board, President and Chief Executive Officer of Optical Cable Corporation (OCC). He joined OCC’s board and was appointed CFO/SVP in September 2001, became Acting President in December 2001, President in April 2002, and Chairman & CEO in September 2003 . His credentials include an MBA from UVA Darden, a JD from UVA School of Law, and a Commerce degree from UVA; he previously practiced as a CPA at Coopers & Lybrand and in M&A/corporate finance law at McGuireWoods and Kirkland & Ellis, and served as CFO of an internet-based real estate brokerage prior to OCC . Pay-versus-performance disclosures show 3-year TSR and net income outcomes: TSR value of a fixed $100 investment was $92.49 (FY2022), $70.21 (FY2023), and $63.47 (FY2024); net income was $(347,091), $2,066,498, and $(4,210,211) respectively .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Optical Cable Corporation | Director; CFO & SVP | 2001–present (Director); 2001 (CFO/SVP) | Stabilized finance function; initiated leadership transition |
| Optical Cable Corporation | Acting President | Dec 2001–Apr 2002 | Interim leadership during transition |
| Optical Cable Corporation | President | Apr 2002–present | Strategic and operational leadership |
| Optical Cable Corporation | Chairman & CEO | Sep 2003–present | Combined leadership role; strategy and governance |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Carilion Clinic (not-for-profit) | Director; Chair, Finance Committee | n/d | Financial oversight at regional health system |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | $455,000 | $465,000 | $495,000 |
| Annual Bonus ($) | $0 | $0 | $0 |
| All Other Compensation ($) | $22,913 | $24,661 | $25,430 |
| Total Compensation ($) | $477,913 | $489,661 | $710,873 |
Notes:
- Salary increases effective Aug 1, 2023 (CEO +8.8%) .
- No short-term bonus was paid for FY2022, FY2023, or FY2024 given performance versus budgeted goals .
Performance Compensation
Long-term equity incentives are granted as performance-vesting restricted stock (no options since 2002), with multi-year vesting; current awards vest based on achieving pre-established gross profit growth rate objectives and generally span five or more years .
| Award Component | Grant Date | Shares | Grant-date Fair Value ($) | Vesting Criteria | Vesting Horizon |
|---|---|---|---|---|---|
| Performance-vesting Restricted Stock | Aug 7, 2024 | 71,595 | $190,443 | Gross profit growth rate (pre-set performance goals) | >5 years; subject to forfeiture |
| Unvested Restricted Stock (outstanding at FYE) | Oct 31, 2024 | 94,542 | $231,628 (MV at $2.45) | As above | Ongoing |
Annual incentive framework for CEO (no payouts FY2022–FY2024):
- Metrics: Consolidated sales, EBITDA, and CEO return on equity target; payouts leverage up/down based on quantitative and qualitative goal achievement versus “stretch” budget .
- Minimum performance trigger required; no actual bonus paid for FY2022–FY2024 .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total Beneficial Ownership | 1,070,095 shares (13.0% of outstanding) |
| Unvested RS included | 94,542 shares still subject to vesting (as of Jan 24, 2025) |
| Indirect holdings | 22,595 shares via Wilkin Capital Fund I, LLC (IRA) |
| Joint holdings | 70,729 shares jointly with spouse |
| Children’s holdings | 1,060 shares disclaimed |
| Options outstanding | None; company has not granted options since 2002 |
| Pledging | Prior pledges (2007/2016) fully repaid; no outstanding loan balances (as of Jan 26, 2024) |
| Tax paid to retain shares | ≈$967,000 cumulative cash paid since FY2003 to retain vesting shares (instead of net vest) |
| Stock ownership guidelines | CEO: 5x base salary; retain 75% of granted shares until met; then retain 50% thereafter |
| Compliance analysis | At $4.43/share (Feb 14, 2025) his holdings ≈$4.74M, exceeding 5x salary ($2.475M at $495k salary), indicating compliance |
Employment Terms
| Provision | Detail |
|---|---|
| Agreement | Amended & Restated Employment Agreement (Apr 11, 2011), amended Dec 18, 2012 and Mar 14, 2014 |
| Current Term End | Oct 31, 2027 (auto-renew annually unless notice) |
| Target Annual Bonus | 100% of base salary; metrics in SLT bonus criteria |
| Long-term Incentive Eligibility | Participates in grants under OCC’s 2017 Stock Incentive Plan (and any successor) |
| Severance | Provided under certain circumstances (details in agreement; multiples not disclosed) |
| Clawback | Compensation Recovery Policy effective Nov 30, 2023 (recovers incentive-based comp upon accounting restatements for prior 3 fiscal years, regardless of fault) |
| Change of Control (Plan) | Awards accelerate if not assumed/continued by successor; prohibits “liberal” change-of-control definitions; dividends only after restrictions lapse; repricing prohibited without shareholder approval |
Board Governance and Director Service
- Board Service: Director since 2001; Chairman & CEO since 2003 (combined role) .
- Independence: Wilkin is not independent; all other directors are independent .
- Committees: Audit (Chair Weber), Compensation (Chair Weber), Nominating & Corporate Governance (Chair Frazier); Wilkin does not sit on board committees .
- Board Meetings: 6 meetings in FY2024; all directors attended ≥75% of meetings and the last annual meeting .
- Lead Independent Director: Not appointed; board rationale cites small company size, majority-independent board, and committee structure .
- Director Compensation: CEO receives no director fees; non-employee directors receive cash retainers and annual stock awards (e.g., 9,990 shares granted May 17, 2024, vesting in one year) .
Dual-role implications:
- Combined CEO/Chair can reduce board independence optics; OCC mitigates via fully independent committees/chairs, majority-independent board, and explicit rationale against appointing a lead independent director .
Pay Practices, Peer Group, and Say-on-Pay
| Item | Detail |
|---|---|
| Compensation philosophy | Competitive pay; pay-for-performance; long-term value creation; culture of ownership; fairness |
| Equity vehicle choice | Restricted stock preferred over options; less dilutive; lower GAAP expense; dividends paid only after vesting |
| Consultant & peer group | National consultant; revenue-based peer group (12 companies plus OCC); executive targets ~25th–50th percentile |
| Equity plan discipline | ≥1-year minimum vesting; no liberal share recycling; no options since 2002; repricing prohibited |
| Stock incentive plan amendment | Seeking +350,000 shares authorization in 2025 (first new shares since 2022); remaining available pre-amend: 50,904 |
| Insiders’ ownership | Employees and directors owned ~36.9% of outstanding shares as of Jan 24, 2025 |
Say-on-Pay Results (approval rate, advisory):
| Year | Approval % |
|---|---|
| 2022 | 87.1% |
| 2023 | 97.8% |
| 2024 | 92.2% |
Performance & Track Record
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| TSR – Value of $100 investment | $92.49 | $70.21 | $63.47 |
| Net Income (Loss) | $(347,091) | $2,066,498 | $(4,210,211) |
Highlights and context:
- No annual cash bonus paid for FY2022–FY2024, consistent with pay-for-performance alignment .
- Equity grants focused on multi-year gross profit growth metrics, aligning incentives with profitable growth .
Risk Indicators & Red Flags
- Combined CEO/Chair role without a lead independent director (governance optic) .
- Prior share pledging (2007/2016) now fully repaid (reduces alignment risk) .
- Clawback policy adopted in Nov 2023 (mitigates incentive risk) .
- No options since 2002; repricing prohibited; dividends restricted until vest (plan safeguards) .
- 2024 financial statement restatement noted by auditor (dual-dated 2023 report) (process diligence point) .
Compensation Structure Analysis
- Year-over-year mix shift: 2024 introduced meaningful performance-vesting equity after no employee grants in 2022–2023; hybrid focus on long-duration performance objectives .
- Short-term vs long-term: No short-term payouts for 3 years; emphasis on long-term restricted stock tied to gross profit growth underscores retention and value creation .
- Guaranteed vs at-risk: Base salary increased in Aug 2023; at-risk pay remained contingent (no bonus payouts; equity vests only on performance) .
- Plan integrity: No repricing; minimum vesting; no liberal change-of-control; dividend restrictions on unvested shares .
Equity Ownership Guidelines & Compliance
- CEO required holding: 5x salary; retention rule at 75% until met and 50% thereafter .
- Based on 1,070,095 shares and $4.43/share (Feb 14, 2025), estimated holding value ≈$4.74M vs requirement $2.475M, indicating guideline compliance and strong alignment .
Employment Terms Summary
| Term | Summary |
|---|---|
| Auto-renewal | Extends annually each Nov 1 unless notice; current term through Oct 31, 2027 |
| Severance | Provided for certain termination scenarios (specific multiples not disclosed) |
| Change-of-control (equity) | Acceleration if awards not assumed by successor; performance awards paid based on actual performance to change-of-control date |
| Clawback | Restatement-triggered recovery over prior 3 fiscal years, irrespective of fault |
Investment Implications
- Alignment strong: High insider ownership (CEO ~13%; insiders ~36.9%), strict ownership/retention policy, and CEO’s long-run cash tax payments to retain shares reduce selling pressure and signal commitment .
- Incentive design emphasizes profitable growth: Multi-year restricted stock tied to gross profit growth with five-year+ horizons supports longer-dated execution, but delays liquidity and concentrates outcomes in multi-year performance .
- Governance trade-off: Combined CEO/Chair without a lead independent director elevates oversight risk; mitigated by independent committees and majority-independent board .
- Near-term comp signals: Three consecutive years of zero annual bonus reflect tight pay-for-performance discipline amid variable net income; fresh 2024 equity grants could introduce future vesting-related supply if performance metrics are met, but CEO’s historical preference to pay cash taxes rather than net vest points to lower secondary share pressure from vesting events .