Sector: Industrials
ENERGY RECOVERY INC · Meeting: June 4, 2026
Directors FOR
0
Directors AGAINST
6
Say on Pay
FOR
Auditor
FOR
Election of Six Directors for a One-Year Term
Against Analysis
Mr. Buehler has served since 2015 and bears full responsibility for the stock's severe underperformance — down about 58% over three years while the industrials sector ETF (XLI) rose roughly 79%, a gap of 136 percentage points that far exceeds the 30-point trigger threshold, and the five-year record does not provide relief as it similarly lags.
Ms. Chow joined in December 2021 and has served through essentially the entire three-year underperformance window; ERII's stock fell roughly 58% while the industrials sector ETF (XLI) gained about 79%, a 136-point gap well above the policy's 30-point trigger, and the five-year comparison does not mitigate this result given her tenure.
Mr. Hanstveit has been a director since 1995 and carries the longest tenure on the board; with ERII's stock down roughly 58% over three years against a roughly 79% gain for the industrials sector ETF (XLI), the 136-point underperformance gap vastly exceeds the 30-point trigger, and the five-year record offers no relief.
Mr. Moon joined the board in July 2023 — more than 24 months before the April 2026 record date — placing him within scope of the TSR trigger as both a director and the sitting CEO; ERII's stock has fallen roughly 58% over three years while the industrials sector ETF (XLI) rose about 79%, a 136-point gap that far exceeds the 30-point policy threshold, and this director-level vote is independent of the separate Say on Pay evaluation.
Mr. Sabol joined in July 2023, which is more than 24 months before the April 2026 record date, so he falls within the TSR trigger scope; ERII's roughly 58% stock decline over three years against a roughly 79% gain for the industrials sector ETF (XLI) produces a 136-point underperformance gap that far exceeds the 30-point policy threshold.
Ms. Tondreau has served since July 2019 and her tenure fully spans the underperformance period; ERII's stock fell roughly 58% over three years while the industrials sector ETF (XLI) gained about 79%, a 136-point gap that easily clears the 30-point trigger, and the five-year comparison — ERII down about 50% — likewise fails to provide the mitigant required to downgrade the vote to FOR.
For Analysis
All six director nominees are recommended AGAINST. No named compensation peer group was disclosed for TSR benchmarking purposes, so the policy defaults to the sector ETF benchmark (XLI — Industrials). ERII's three-year stock return of roughly -58% against XLI's roughly +79% produces a -136 percentage-point gap, far exceeding the 30-point trigger threshold that applies when a company's absolute three-year return is negative. The five-year record (ERII -50%, XLI strongly positive) does not satisfy the mitigant condition, so no votes are downgraded to FOR. David Moon and Colin Sabol joined in July 2023, which is more than 24 months before the April 2026 record date, placing them within scope. Attendance is not an issue — all directors attended at least 93% of meetings. No overboarding, familial relationships, or independence concerns were identified.
CEO
David W. Moon
Total Comp
$3,222,147
Prior Support
86.1%%
CEO David Moon's total reported compensation of approximately $3.2 million is within a reasonable range for a CEO at a mid-cap industrial company of ERII's size (~$543M market cap), and the pay mix is heavily weighted toward variable pay — the proxy states up to 84% of CEO target compensation is at risk, well above the 50-60% policy minimum. The annual cash bonus paid out at zero for 2025 because all performance targets were missed, which is exactly what a well-functioning pay-for-performance program should produce, and the compensation committee appropriately did not apply upward discretion. The 2025 Say on Pay received 86.1% support (above the 70% threshold), a meaningful clawback policy is in place, and the newly introduced performance stock awards tied to three-year revenue and adjusted EBITDA targets add long-term rigor to the incentive structure.
Auditor
Deloitte & Touche LLP
Tenure
N/A
Audit Fees
$1,160,000
Non-Audit Fees
$85,791
Non-audit fees (tax and other fees totaling approximately $85,791) represent about 7.4% of audit fees ($1,160,000), well below the 50% threshold that would raise independence concerns; auditor tenure is not disclosed in the proxy so the tenure trigger cannot be applied, and no material restatements were identified; Deloitte is a Big 4 firm appropriate for ERII's size and complexity.
The 2026 Energy Recovery annual meeting presents four proposals; the most significant governance concern is the company's severe stock underperformance — down roughly 58% over three years while the industrials sector ETF (XLI) gained roughly 79% — which triggers an AGAINST recommendation for all six director nominees under the policy's TSR trigger. The Say on Pay and auditor ratification proposals both pass policy screens and receive FOR recommendations, as CEO pay is reasonable and at-risk structured, the cash bonus correctly paid out at zero given missed targets, and the auditor's non-audit fee ratio is well within acceptable limits.
