Business Context and Reporting Period
Company: ESPEY MFG. & ELECTRONICS CORP.
Filing Type: Form 8-K (Current Report)
Date of Report: September 9, 2025
Subject: Execution of a new Employment Agreement with David A. O'Neil, President and Chief Executive Officer.
Key Financial Metrics
This filing does not contain financial performance data such as revenue, profit, cash flow, margins, debt, or liquidity. The document focuses exclusively on executive compensation terms.
Material Changes
The primary material change is the replacement of the CEO's prior employment agreement (dated June 6, 2024) with a new agreement effective July 1, 2025, through June 30, 2028. Key changes include:
- Base Salary: Set at $400,000 effective July 1, 2025, subject to annual review with no decrease.
- Term: Extended to a three-year term ending June 30, 2028.
Guidance, Outlook, and Compensation Structure
The filing details the compensation structure for the CEO, which includes:
- Annual Bonus: Maximum potential of $250,000, comprised of three components:
- Discretionary component (up to 50% of base salary).
- Sales and backlog growth component (0.5% of increase over prior three-year average, capped at $125,000).
- Operating income margin component (capped at $125,000).
- Severance Provisions:
- Termination without cause or "good reason": 9 months of base salary.
- Voluntary termination incidental to a "change of control": 18 months of base salary.
The filing does not provide specific business outlook, guidance, or risk factors beyond the standard terms of the employment contract.
Investor Verification Checklist
- Verify the total potential annual compensation cost for the CEO ($650,000 maximum).
- Review the specific definitions of "good reason" and "change of control" in the attached Exhibit 10.13 to understand severance triggers.
- Confirm the impact of the new agreement on the company's future cash flow obligations regarding executive compensation.
- Check subsequent filings for any changes to the Board's annual salary review decisions.