Tracy G. Smith
OPTICAL CABLEAbout Tracy G. Smith
Senior Vice President and Chief Financial Officer of Optical Cable Corporation (OCC) since July 9, 2008; previously Vice President & CFO (Sep 2003–Jul 2008) and Controller (May 2002–Sep 2003). Age 57, CPA, B.S. in Business (Accounting) from Virginia Tech; 12+ years in public accounting at KPMG LLP, and prior Corporate Controller at RBX Corporation . Compensation is explicitly pay-for-performance: no annual cash bonus paid in fiscal years 2022–2024; long-term equity awards are restricted shares that vest based on multi-year performance goals tied to gross profit growth rate, typically over five or more years . In pay-versus-performance disclosures, OCC’s TSR value of a fixed $100 investment declined over the 2022–2024 window (92.49→70.21→63.47) and net income swung from +$2.07M (FY2023) to −$4.21M (FY2024), highlighting cyclicality and pressure on short-term incentive outcomes .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| OCC | Controller | May 2002–Sep 2003 | Built internal controls and financial reporting foundation post public accounting, enabling subsequent CFO responsibilities |
| OCC | Vice President & Chief Financial Officer | Sep 2003–Jul 2008 | Led finance during operational transitions; elevated to SVP & CFO |
| OCC | Senior Vice President & Chief Financial Officer | Jul 2008–Present | Executive leadership of finance, capital allocation, investor relations; Corporate Secretary since June 2004 |
| RBX Corporation | Corporate Controller | Pre-2002 | Corporate controllership experience supporting manufacturing finance rigor |
| KPMG LLP | Public Accounting | ~1989–Dec 2001 (12+ years) | Audit and advisory experience; CPA credential; departed KPMG Dec 2001 |
External Roles
None disclosed (no public company directorships or external board service noted for Ms. Smith) .
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | $290,000 | $296,250 | $315,000 |
| Annual Bonus ($) | $0 | $0 | $0 |
| All Other Compensation ($) | $22,721 | $24,661 | $26,930 |
| Total ($) | $312,721 | $320,911 | $439,366 |
- Current annual base salary: $315,000 (effective Aug 1, 2023) .
- Current annual bonus target: 55% of base salary (subject to periodic adjustment) .
- No short-term incentive bonus paid for FY2022, FY2023, or FY2024 (performance trigger not met) .
Performance Compensation
Annual Short-term Incentives (SLT ABC)
| Metric | Weighting | Target | Actual | Payout |
|---|---|---|---|---|
| Consolidated Sales | Not disclosed | Budget “stretch” goals set by Board | Not disclosed (company performance below thresholds) | $0 in FY2022, FY2023, FY2024 |
| EBITDA | Not disclosed | Budget “stretch” goals set by Board | Not disclosed (company performance below thresholds) | $0 in FY2022, FY2023, FY2024 |
- Structure: Minimum financial performance trigger; payouts levered to quantitative and qualitative goals; CEO has ROE target (CFO governed by consolidated sales/EBITDA goals) .
Long-term Equity Incentives (Restricted Stock)
| Grant Date | Instrument | Shares Granted | Vesting | Performance Metric | Fair Value at Grant ($) |
|---|---|---|---|---|---|
| Aug 7, 2024 | Restricted Stock (PSU-style; performance-vesting) | 36,630 | Performance-based over >5 years; subject to forfeiture | Gross profit growth rate (pre-established objectives) | $97,436 |
| FY2023 | None granted to employees (executives) | — | — | — | — |
| FY2022 | None granted to employees (executives) | — | — | — | — (except one new hire) |
- Program design: Restricted stock is primary long-term element; minimum 1-year vesting; employee awards generally have 4+ year performance periods; dividends not paid until restrictions lapse; repricing prohibited; plan terminates 2/26/2027 .
Equity Ownership & Alignment
| Ownership Element | Detail |
|---|---|
| Total Beneficial Ownership (Shares) | 353,276 |
| Ownership as % of Outstanding | 4.3% of 8,220,344 shares |
| Restricted Shares Unvested | 47,150 (still subject to vesting as of Jan 24, 2025) |
| Options Outstanding | None; company hasn’t granted options since June 2002; all expired FY2012 |
| Shares Pledged | No pledging disclosed for Ms. Smith |
| Joint Holdings | 4,125 shares jointly with husband; includes 2,500 acquired via warrant exercise |
| Stock Ownership Guideline | CFO must hold ≥3× current base salary in OCC shares; must retain 75% of granted shares until guideline met, then ≥50% thereafter |
Ownership value calibration:
- As of Oct 31, 2024 close ($2.45), holdings imply ~$865,528 (=353,276×$2.45), modestly below 3×$315,000=$945,000 .
- As of Feb 14, 2025 close ($4.43), holdings imply ~$1,563,022 (=353,276×$4.43), exceeding the 3× salary guideline at that price level .
Governance alignment features:
- Employee equity policy mandates retention percentages (75% until guideline met; 50% thereafter) and long, performance-vesting periods; reduces near-term selling pressure and increases “skin-in-the-game” .
Employment Terms
| Term | Provision |
|---|---|
| Role & Tenure | Senior Vice President & CFO since Jul 9, 2008; Corporate Secretary since Jun 2004 |
| Employment Agreement | Amended & restated 4/11/2011; amended 12/18/2012 and 3/14/2014 |
| Contract Term | Auto-renews annually; current term ends Oct 31, 2027 |
| Base & Bonus Target | Base currently $315,000; target bonus 55% of base; criteria per SLT ABC |
| Long-term Incentives | Eligible for grants under OCC’s 2017 Stock Incentive Plan and successors |
| Severance | “Severance compensation under certain circumstances” (multiples not disclosed in proxy) |
| Change-of-Control (Plan-level) | If awards are not assumed by successor, immediate vesting/payment (performance awards paid based on actual performance to date); no acceleration if assumed (unless award-specific terms provide); plan uses non-liberal CoC definitions |
| Clawback | Compensation Recovery Policy effective Nov 30, 2023 per SEC 10D for prior three fiscal years’ incentive comp upon material restatement, regardless of individual fault |
Compensation Structure Analysis
- Equity-heavy, performance-tied program: Restricted stock awards vest on multi-year gross profit growth criteria; no options outstanding; repricing prohibited; dividends withheld until vesting .
- Cash incentives restrained: No annual bonuses paid in FY2022–FY2024 given performance triggers; bonus targets remain but depend on “stretch” budgets and EBITDA/sales outcomes .
- Ownership alignment: CFO holds ~4.3% of shares; robust retention policy and 3× salary guideline reinforce alignment and reduce sell pressure .
- Governance safeguards: Clawback in place; equity plan has minimum vesting, prohibits repricing, and conservative CoC mechanics .
Say-on-Pay & Peer Group
- Say-on-Pay approval: 92.2% support at 2024 annual meeting .
- Benchmarking: External consultant constructed revenue-based peer group (12 public companies + OCC); executive pay targeted ~25th–50th percentile; director pay targeted ~25th percentile .
Performance & Track Record Indicators
- Pay vs performance data: TSR value of fixed $100 investment was $92.49 (FY2022), $70.21 (FY2023), $63.47 (FY2024); net income was −$0.35M (FY2022), +$2.07M (FY2023), −$4.21M (FY2024) .
- Incentive outcomes consistent with performance: zero annual bonuses across FY2022–FY2024; long-term awards issued in 2024 after pause in 2022–2023 .
Equity Ownership & Awards Detail
| Item | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Unvested Restricted Shares (count) | — | — | 47,150 |
| Market Value of Unvested (at Oct 31 year-end close) | — | — | $115,518 (at $2.45) |
| New Restricted Stock Granted (shares) | — | — | 36,630 (Aug 7, 2024) |
| New Restricted Stock Grant Fair Value ($) | — | — | $97,436 |
Director/Board Governance (for directors only)
Not applicable; Ms. Smith is an executive officer and Corporate Secretary, not a director. Board committee compositions and independence are disclosed for directors and committees, with no director role for Ms. Smith .
Risk Indicators & Red Flags
- Hedging/pledging: No pledging disclosed for Ms. Smith; plan restricts transferability of unvested awards, and dividends on restricted shares accrue only post-vesting .
- Option repricing: Explicitly prohibited under the 2017 Plan; no options outstanding .
- Clawback: Implemented per SEC rules, addressing restatements across three most recent fiscal years .
- Related party transactions: None noted involving Ms. Smith; a nominal transaction with a director ($720) disclosed .
- Auditor transition: Crowe LLP engaged April 25, 2024 following Brown Edwards’ exit from public company audits; no disagreements reported; 2023 report dual-dated for restatement effects .
Employment & Contracts Snapshot
| Element | Detail |
|---|---|
| Start at OCC | Controller May 2002; CFO Sep 2003; SVP & CFO since Jul 2008 |
| Auto-renewal | Annual extensions unless notice; current term to Oct 31, 2027 |
| Non-compete / Non-solicit / Garden Leave | Not disclosed in proxy |
| Post-termination consulting | Not disclosed in proxy |
Investment Implications
- Strong alignment and reduced selling overhang: 4.3% personal stake, strict retention (75% until guideline met; then 50%), and performance-vesting over 5+ years mitigate near-term insider supply and align incentives with multi-year value creation .
- Compensation disciplined to performance: Zero cash bonuses for three consecutive years underscores pay-strictness; long-term equity grants key lever tied to gross profit growth, favoring margin structurals over short-term revenue-only targets .
- Governance protections: Clawback, anti-repricing, minimum vesting and conservative CoC terms reduce tail risks around pay outcomes and change-of-control windfalls .
- Watch items: Net loss in FY2024 and lower TSR in pay-versus-performance may pressure future short-term incentive realizations; equity grant pacing resumed in FY2024 after 2-year pause, reintroducing performance-contingent exposure for the CFO .