Key Tronic sets executive compensation targets and awards for fiscal 2026

Key Tronic Corp (NASDAQ:KTCC), a small-cap electronics manufacturing services provider with a market capitalization of $31.21 million, announced Monday that its board of directors has established new performance goals and target payments for executive officers under its incentive compensation plan for fiscal year 2026. The information was disclosed in a press release statement filed with the Securities and Exchange Commission. According to InvestingPro data, the company faces profitability challenges with weak gross profit margins of 8.02%, making these new performance targets particularly significant for potential turnaround efforts.

According to the filing, payments under the incentive compensation plan will be based on the company achieving minimum profit goals, with three performance levels: entry, expected value, and overachievement. If the company exceeds the overachievement level, participants will receive a bonus pool equal to 35% of the profit achieved above that threshold. Payments will be calculated as a percentage of each participant’s base salary for the fiscal year.

For fiscal 2026, President and CEO Brett R. Larsen is eligible for incentive payments ranging from 10% of base salary at entry-level performance to 150% at the overachievement level. Executive Vice President of Administration, CFO and Treasurer Anthony G. Voorhees, and Executive Vice President of Customer Relations and Integration Philip S. Hochberg, are each eligible for payments ranging from 7% to 105% of base salary, depending on achieved performance levels. Actual payment percentages will be interpolated for results between the defined levels. Participants must be employed by the company at the time of payment to be eligible.

On August 21, 2025, the board’s compensation committee also granted restricted stock unit (RSU) awards under the company’s 2024 Incentive Plan. Mr. Larsen received 89,927 RSUs, vesting in equal annual installments over three years, with about 40% subject to time-based vesting and 60% to performance-based vesting based on annual EBITDA thresholds. Mr. Voorhees and Mr. Hochberg each received 44,964 RSUs, split evenly between time-based and performance-based vesting. Non-employee directors received 14,388 RSUs each, vesting one year after the grant.

Additionally, the board approved long-term incentive plan performance measures and target awards for fiscal years 2026-2028, based on sales growth and return on invested capital targets. If expected targets are met, Mr. Larsen may receive $400,000, while Mr. Voorhees and Mr. Hochberg may each receive $190,000. Non-employee directors are eligible for $35,000 each. Actual payouts may range from zero to 150% of the target, depending on company performance. Trading at just 0.26 times book value and currently showing signs of undervaluation according to InvestingPro Fair Value analysis, the company’s comprehensive incentive structure could be pivotal for unlocking shareholder value. For deeper insights into Key Tronic’s valuation metrics and growth potential, investors can access the detailed Pro Research Report, available exclusively to InvestingPro subscribers.

All information is based on a press release statement included in the company’s SEC filing.

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