DEF 14A of Hershey Co

Filed Mar 26, 2024 · FY20230000047111-24-000014

Open on EDGAR

OUR DIRECTOR NOMINEES
OUR DIRECTOR NOMINEES You have the opportunity to vote on the election of the following 11 nominees for director. Additional information regarding each director nominee’s experience, skills and qualifications to serve as a member of the Company’s Board of Directors (the “Board”) can be found in the Proxy Statement under Proposal No. 1 – Election of Directors.
OUR DIRECTOR NOMINEES
| Name | Age | Years on Board | Position | Independent | Committee Memberships* | | Michele G. Buck | 62 | 7 | Chairman of the Board, President and Chief Executive Officer, The Hershey Company | No | Executive(C) | | Victor L. Crawford | 62 | 4 | Former Chief Executive Officer, Pharmaceutical Segment, Cardinal Health, Inc. | Yes | Audit(C) Compensation Executive | | Robert M. Dutkowsky | 69 | 4 | Former Executive Chairman and Chief Executive Officer, Tech Data Corporation | Yes | Executive Finance & Risk(C) Governance | | Mary Kay Haben | 67 | 11 | Former President, North America, Wm. Wrigley Jr. Company | Yes | Compensation Finance & Risk | | M. Diane Koken | 71 | 7 | Vice Chair of the Board, Hershey Trust Company and Milton Hershey School | Yes | Audit Governance | | Huong Maria T. Kraus | 52 | 1 | Chairman of the Board, Hershey Trust Company and Milton Hershey School; Chief Financial Officer, Wedgewood Pharmacy | Yes | Audit Compensation | | Robert M. Malcolm | 71 | 13 | Former President, Global Marketing, Sales & Innovation, Diageo PLC | Yes | Audit Governance | | Kevin M. Ozan | 60 | 0 | Former Senior Executive Vice President, Strategic Initiatives, McDonald’s Corporation | Yes | New Nominee | | Anthony J. Palmer(L) | 64 | 13 | Operating Partner, One Rock Capital Partners, LLC | Yes | Audit Compensation Executive Finance & Risk(L) Governance(L) | | Juan R. Perez | 57 | 5 | Executive Vice President and Chief Information Officer, Salesforce.com, Inc. | Yes | Executive Finance & Risk Governance(C) | | Cordel Robbin-Coker | 37 | 0 | Director, Hershey Trust Company; Member, Board of Managers, Milton Hershey School; Co-founder and Chief Executive Officer, Carry1st | Yes | New Nominee |
OUR DIRECTOR NOMINEES
| * Compensation = Compensation and Human Capital Committee Finance & Risk = Finance and Risk Management Committee | | (C) Committee Chair | | (L) Lead Independent Director - As our Lead Independent Director, Mr. Palmer is an ex-officio member of the Finance and Risk Management Committee and the Governance Committee |
GOVERNANCE HIGHLIGHTS
GOVERNANCE HIGHLIGHTS
GOVERNANCE HIGHLIGHTS
| Composition of Director Nominees |
Over 60% of director nominees are diverse
Over 60% of director nominees are diverse
Over 60% of director nominees are diverse
| Female | Non-Diverse | Racial/ Ethnic | Female/ Racial/Ethnic | 30-39 | 50-59 | 60-69 | 70-71 |
Strong focus on board refreshment and independence
Strong focus on board refreshment and independence
Strong focus on board refreshment and independence
| Director Tenure | | Average Tenure: 6 Years |
Strong focus on board refreshment and independence
0 - 2 Years 3 - 6 Years 7 - 10 Years 11+ Years
Strong focus on board refreshment and independence
| 10 Independent Director Nominees |
Strong focus on board refreshment and independence
| Board Highlights |
Director nominees have appropriate mix of experiences, skills, qualifications and backgrounds to drive strategy and risk oversight
Director nominees have appropriate mix of experiences, skills, qualifications and backgrounds to drive strategy and risk oversight Mergers & Acquisitions Risk Management Innovation Experience Financial/Investment Leadership International Experience Operational Leadership ESG & Human Capital Supply Chain Consumer Packaged Goods Technology Experience Government Relations/Regulatory IT/Cybersecurity
Director nominees have appropriate mix of experiences, skills, qualifications and backgrounds to drive strategy and risk oversight
| Corporate Governance |
Director nominees have appropriate mix of experiences, skills, qualifications and backgrounds to drive strategy and risk oversight
| Board Structure Ensures Strong Oversight | Policies and Practices Promote High Corporate Governance Standards | Strong Alignment with Stockholders’ Interests | | •Four standing independent Board committees •Strong Lead Independent Director position •Independent directors meet separately at each regularly-scheduled Board meeting •Frequent Board and committee meetings to ensure awareness and alignment •Annual Board and committee self-evaluation | •All directors elected annually •Commitment to Board refreshment, as evidenced by retirement age guideline of 72 and new 13-year term limit for non-employee directors •Highly qualified directors reflect broad mix of skills, experiences and attributes •Active role in enterprise risk management, including separate risk management committee •Clearly delineated environmental, social and governance (“ESG”) responsibilities within each Board committee | •Strong clawback and anti-hedging policies •Significant stock ownership requirements •Annual advisory vote on executive compensation ◦Greater than 90% stockholder approval every year •Significant amount of each NEO’s annual compensation opportunity is in the form of equity •No supermajority voting •Meaningful threshold for shareholders to call special meetings •Shareholder right to act by written consent |
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
| ü | The Board of Directors unanimously recommends that stockholders vote FOR each of the nominees for director at the 2024 Annual Meeting |
PROPOSAL NO. 1 – ELECTION OF DIRECTORS
The first proposal to be voted on at the Annual Meeting is the election of 11 directors. If elected, each director will hold office until the 2025 Annual Meeting of Stockholders of the Company or until his or her successor is elected and qualified.
Election Procedures
Election Procedures We have two classes of common stock outstanding: Common Stock and Class B Common Stock. Under our certificate of incorporation and by-laws: •One-sixth of our directors (which currently equates to two directors) will be elected by the holders of our Common Stock voting as a separate class. ◦For the Annual Meeting, the Board has nominated Robert M. Dutkowsky and Kevin M. Ozan for election by the holders of our Common Stock voting as a separate class. •The remaining 9 directors will be elected by the holders of our Common Stock and Class B Common Stock voting together as a single class. With respect to the nominees to be elected by the holders of the Common Stock voting as a separate class, the two nominees receiving the greatest number of votes of the Common Stock will be elected as directors. With respect to the nominees to be elected by the holders of the Common Stock and the Class B Common Stock voting together as a single class, the 9 nominees receiving the greatest number of votes of the Common Stock and Class B Common Stock will be elected as directors. The Board’s Corporate Governance Guidelines set forth a 13-year term limit for all non-employee directors and provide that directors will generally not be nominated for re-election after their 72nd birthday. With the exception of Messrs. Malcolm and Palmer, all of the directors standing for election at the Annual Meeting satisfy both the age guideline and term limit requirement. In light of the fact that the term limit was adopted by the Board in 2023, Messrs. Malcolm and Palmer, both of whom have served on the Board for 13 years, were granted a one-year exemption from the term limit to minimize potential disruption to the Board and enable sufficient time to find highly-qualified replacement candidates. All director nominees have indicated their willingness to serve if elected. If a nominee becomes unavailable for election for any reason, the proxies will have discretionary authority to vote for a substitute.
Nominees for Director
Nominees for Director The director nominees listed below were recommended to the Board by the Governance Committee, and the Board unanimously recommends the director nominees for election at the Annual Meeting. In making its recommendation, the Governance Committee considered the experience, qualifications, attributes and skills of each nominee, as well as each director’s past performance on our Board, as reflected in the Governance Committee’s annual evaluation of Board and committee performance. This evaluation considers, among other things, each director’s individual contributions to the Board, the director’s ability to work collaboratively with other directors and the effectiveness of the Board as a whole. On the following pages, we provide certain biographical information about each nominee for director, as well as information regarding the nominee’s specific experience, qualifications, attributes and skills that qualify him or her to serve as a director and as a member of the committee(s) of the Board on which the nominee serves.
Nominees for Director
| Michele G. Buck Director since 2017 Term 7 years Age 62 Board Committees • Executive (Chair) | QUALIFICATIONS, ATTRIBUTES AND SKILLS As Chairman of the Board, President and Chief Executive Officer of the Company, a position she has held since October 2019, Ms. Buck is responsible for all day-to-day global operations and commercial activities of the Company. She previously served the Company in a variety of executive roles, including as President and Chief Executive Officer from March 2017 to October 2019 and as Executive Vice President and Chief Operating Officer from June 2016 to March 2017. Having served at the Company for more than 19 years and as an executive in the consumer-packaged goods industry for more than 30 years, Ms. Buck contributes to the Board in the areas of marketing, consumer products, strategy, supply chain management and mergers and acquisitions. Her presence in the boardroom also ensures efficient communication between the Board and Company management. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS • New York Life Insurance Company (November 2013 to present) EDUCATION • Bachelor’s degree from Shippensburg University of Pennsylvania • Masters of Business Administration degree from the University of North Carolina |
Nominees for Director
| Victor L. Crawford Director since 2020 Term 4 years Age 62 Committees • Audit (Chair) • Compensation • Executive | QUALIFICATIONS, ATTRIBUTES AND SKILLS Mr. Crawford is the former Chief Executive Officer, Pharmaceutical Segment, of Cardinal Health, Inc., a global healthcare services and products company, a position he held from November 2018 until November 2022. Mr. Crawford has held senior management positions at several companies across the food and beverage, hospitality and healthcare services industries. He held the position of President and Chief Operating Officer, Healthcare, Education and Business Dining, at Aramark Corporation, a global provider of food, facilities and uniform services, from September 2012 to October 2018. Mr. Crawford also held senior management positions at PepsiCo, Inc., a multinational food, snack and beverage company. Mr. Crawford contributes to the Board through his broad range of experience in digital transformation, fast moving consumer goods, logistics and supply chain management, as well as his valuable insights in emerging markets, consumer retail and finance. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS •Saputo Inc. (November 2023 to present) •Pelotonia (September 2020 to present) •Board of Trustees, National Urban League (October 2010 to present) •Dave & Buster’s Entertainment, Inc. (August 2016 to June 2020) EDUCATION •Bachelor of Science degree in Accounting from Boston College |
Nominees for Director
| Robert M. Dutkowsky Director since 2020 Term 4 years Age 69 Board Committees •Finance and Risk Management (Chair) •Executive •Governance | QUALIFICATIONS, ATTRIBUTES AND SKILLS Mr. Dutkowsky is the former Executive Chairman and Chief Executive Officer of Tech Data Corporation, a wholesale distributor of technology products, a position he held from June 2018 until his retirement in June 2020. He previously served as Chief Executive Officer of Tech Data from October 2006 to June 2018, including as Chairman of the Board from June 2017 until his appointment as Executive Chairman in June 2018. Prior to joining Tech Data, Mr. Dutkowsky served as President, Chief Executive Officer and Chairman of two software companies, Egenera, Inc. and J.D. Edwards & Co., Inc. Having spent most of his career in the technology industry, Mr. Dutkowsky brings to the Board broad operational experience and a deep understanding of the technology industry and how technology and digital capabilities drive growth and resiliency. The experiences and skills he developed as a senior executive at multiple technology and software businesses also allow Mr. Dutkowsky to provide the Board with insights related to finance, management, operations, risk management and governance. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS •Raymond James Financial, Inc. (October 2018 to present) •US Foods, Inc. (January 2017 to present) •Pitney Bowes, Inc. (July 2018 to May 2023) •Tech Data Corporation (October 2006 to June 2020) EDUCATION • Bachelor of Science degree in Industrial Labor Relations from Cornell University One of two directors nominated for election by the holders of the Common Stock voting separately as a class |
Nominees for Director
| Mary Kay Haben Director since 2013 Term 11 years Age 67 Board Committees • Compensation • Finance and Risk Management | QUALIFICATIONS, ATTRIBUTES AND SKILLS Ms. Haben is the former President, North America, of Wm. Wrigley Jr. Company, a leading confectionery company, a position she held from October 2008 until her retirement in February 2011. She served in several other senior management positions during her time at Wm. Wrigley Jr. Company, including as Group Vice President and Managing Director, North America. She also held a succession of leadership positions in her 27-year career at Kraft Foods, Inc., a grocery manufacturing and processing conglomerate. Throughout her career, Ms. Haben gained extensive experience managing businesses in the consumer-packaged goods industry and developed a track record of growing brands and developing new products. Her knowledge of and ability to analyze the overall consumer-packaged goods industry, evolving market dynamics and consumers’ relationships with brands make her a valuable contributor to the Board and the Company. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS • Grocery Outlet Holding Corp. (November 2019 to present) • Trustee of Equity Residential (July 2011 to present) EDUCATION • Bachelor’s degree, magna cum laude, in Business Administration from the University of Illinois • Masters of Business Administration degree in Marketing from the University of Michigan, Ross School of Business |
Nominees for Director
| M. Diane Koken Director since 2017 Term 7 years Age 71 Board Committees • Audit • Governance | QUALIFICATIONS, ATTRIBUTES AND SKILLS Ms. Koken is Vice Chair of the Board of Hershey Trust Company and Milton Hershey School, positions she has held since December 2023, having previously served as Chairman since December 2020. She has also served as a director of Hershey Trust Company and a member of the Board of Managers of Milton Hershey School since December 2016. For more than 15 years, Ms. Koken has also served as a legal/regulatory consultant. She previously served as Insurance Commissioner of Pennsylvania for three governors and in other leadership roles during her 22-year career at Provident Mutual Life Insurance Company, a national life insurer, that culminated in her serving as its Vice President, General Counsel and Corporate Secretary. Ms. Koken served as a previous president of the National Association of Insurance Commissioners. She contributes to the Board through her significant expertise in insurance, risk management and regulatory affairs, as well as her experience in legal operations and corporate governance. As one of three representatives of Hershey Trust Company and Milton Hershey School currently serving on the Board, Ms. Koken also brings to the Board valuable insights from our largest stockholder and the school that is its sole beneficiary. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS • Nationwide Mutual Funds and Nationwide Variable Insurance Trust (April 2019 to present) • Nationwide Mutual Insurance Company; Nationwide Mutual Fire Insurance Company; Nationwide Corporation (April 2007 to present) • Capital BlueCross (December 2011 to April 2022) • NORCAL Mutual (January 2009 to May 2021) EDUCATION • Bachelor’s degree, magna cum laude, from Millersville University • Juris Doctor degree from Villanova University School of Law |
Nominees for Director
| Huong Maria T. Kraus Director Since 2023 Term 1 year Age 52 Board Committees • Audit • Compensation | QUALIFICATIONS, ATTRIBUTES AND SKILLS Ms. Kraus is Chairman of the Board of Hershey Trust Company and Milton Hershey School, positions she has held since December 2023, having previously served as Vice Chair since December 2020. She has also served as a director of Hershey Trust Company and a member of the Board of Managers of Milton Hershey School since January 2018. Ms. Kraus is currently the Chief Financial Officer of Wedgewood Pharmacy, the largest compounding pharmacy devoted to animal health in the United States, a position she has held since June 2021. Prior to joining Wedgewood Pharmacy, from September 2019 to June 2021, Ms. Kraus served as Chief Financial Officer at Accelerated Enrollment Solutions, a division of PPD, a global contract research organization that provided comprehensive drug development, laboratory and lifecycle management services prior to being acquired by Thermo Fisher Scientific in 2021. Prior to this, Ms. Kraus served in various financial roles at Bioclinica (now Clario), a company providing pharmaceutical outsourced services, including most recently as Executive Vice President, Corporate Development and Strategy from March 2015 to August 2019. Ms. Kraus brings valuable insights to the Board from her 25 years' experience and leadership in finance, strategy and corporate development. Her experience in financial executive roles also contribute to the Board a deep understanding of financial matters. Additionally, her strong background in mergers and acquisitions and corporate development contribute to the Company's evolution into a leading snacking powerhouse. As Chairman of the Boards and one of three representatives of Hershey Trust Company and Milton Hershey School currently serving on the Board, Ms. Kraus also brings valuable insights from our largest stockholder and the school that is its sole beneficiary. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS • Girl Scouts of Eastern Pennsylvania (May 2008 to May 2023) EDUCATION • Bachelor’s degree in Accounting from Pennsylvania State University |
Nominees for Director
| Robert M. Malcolm Director since 2011 Term 13 years Age 71 Board Committees • Audit • Governance | QUALIFICATIONS, ATTRIBUTES AND SKILLS Mr. Malcolm is the former President, Global Marketing, Sales & Innovation, of Diageo PLC, a leading premium drinks company, a position he held from June 2002 until his retirement in December 2008. Prior to that position, Mr. Malcolm spent 24 years at The Procter & Gamble Company in various leadership positions, including as Vice President – General Manager Beverages, Europe, Middle East and Africa, and Vice President – General Manager, Arabian Peninsula. He is a globally recognized expert in strategic marketing and is currently Executive in Residence, Center for Customer Insight and Marketing Solutions, McCombs School of Business, University of Texas. Mr. Malcolm brings to the Board significant experience in emerging markets and in the marketing and sales of consumer products, including consumer-packaged goods and fast-moving consumer goods. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS • Boston Consulting Group (senior advisor) (December 2012 to May 2022) EDUCATION • Bachelor’s degree in Marketing from the University of Southern California • Masters of Business Administration degree in Marketing from the University of Southern California |
Nominees for Director
| Kevin M. Ozan Director Nominee Term 0 years Age 60 Board Committees • New Nominee | QUALIFICATIONS, ATTRIBUTES AND SKILLS Mr. Ozan is the former Senior Executive Vice President, Strategic Initiatives, of McDonald’s Corporation, a leading global food service retailer, a position he held from September 2022 until his retirement in June 2023. Mr. Ozan was identified as a potential director nominee by Egon Zehnder as part of the Governance Committee’s director succession planning process. Mr. Ozan held various roles of increasing responsibility during his 25-year career with McDonalds, including serving as Executive Vice President and Chief Financial Officer from March 2015 to August 2022. Prior to joining McDonald’s, he worked for over a decade in Ernst & Young’s audit and mergers and acquisitions practices. Having served as Chief Financial Officer and overseen strategy for one of the world’s largest quick service restaurant companies, Mr. Ozan will bring considerable expertise in the areas of finance, mergers and acquisitions, innovation, risk management and international operations to the Board. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS • McKesson Corporation (January 2024 to present) • Cineworld Group PLC (July 2023 to present) EDUCATION • Bachelor of Business Administration degree in Accounting from the University of Michigan • Masters of Business Administration degree from the Kellogg Graduate School at Northwestern University One of two directors nominated for election by the holders of the Common Stock voting separately as a class |
Nominees for Director
| Anthony J. Palmer Lead Independent Director since May 2020 Director since 2011 Term 13 years Age 64 Board Committees • Audit • Compensation • Executive • Finance and Risk Management (ex-officio) • Governance (ex-officio) | QUALIFICATIONS, ATTRIBUTES AND SKILLS Mr. Palmer joined One Rock Capital Partners, LLC, a private equity firm, in April 2022 as an Operating Partner focused on investments in the food and beverage industry. Prior to that position, Mr. Palmer was Founder and Chief Executive Officer of TropicSport, a natural and environmentally friendly e-commerce suncare and skincare products company, a position he held from April 2019 to December 2022. Prior to founding TropicSport, Mr. Palmer held key leadership positions at Kimberly-Clark Corporation, a multinational personal care company, including serving as President, Global Brands and Innovation, from April 2012 to April 2019. Prior to Kimberly-Clark Corporation, Mr. Palmer served in various leadership positions at The Kellogg Company, a multinational food manufacturing company, and the Coca-Cola Company, a multinational beverage company. Having spent most of his career in the consumer-packaged goods industry, Mr. Palmer contributes to the Board through his insight in several key strategic areas for the Company, including fast-moving consumer-packaged goods, emerging markets, marketing and human resources. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS • None EDUCATION • Bachelor’s degree in Business from Monash University in Melbourne, Australia • Masters of Business Administration degree, with distinction, from the International Management Institute, Geneva, Switzerland |
Nominees for Director
| Juan R. Perez Director since 2019 Term 5 years Age 57 Board Committees • Governance (Chair) • Executive • Finance and Risk Management | QUALIFICATIONS, ATTRIBUTES AND SKILLS Mr. Perez is the Executive Vice President and Chief Information Officer of Salesforce.com, Inc., a global leader in customer relationship management technology, a position he has held since April 2022. Prior to joining Salesforce, he spent 32 years at United Parcel Service, Inc. (“UPS”), a multinational package delivery and supply chain management company, where he held a succession of leadership positions, including serving as Chief Information and Engineering Officer from April 2017 to March 2022 and Chief Information Officer from March 2016 to April 2017. Prior to those roles, Mr. Perez served as UPS’ Vice President of Technology and as Vice President, Engineering. Through his varied roles, he has developed a broad range of commercial, human resources, operational planning, logistics and technological expertise, including transformation and artificial intelligence. In addition to his overall leadership experience, Mr. Perez brings significant strength in the areas of supply chain management and logistics, digital technology, information security, innovation and data analytics to the Board. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS • None EDUCATION • Bachelor of Science degree in Industrial and Systems Engineering from the University of Southern California • Masters of Science degree in Computer and Manufacturing Engineering from the University of Southern California |
Nominees for Director
| Cordel Robbin-Coker Director Nominee Term 0 years Age 37 Board Committees • New Nominee | QUALIFICATIONS, ATTRIBUTES AND SKILLS Mr. Robbin-Coker is a director of Hershey Trust Company and a member of the Board of Managers of Milton Hershey School, a position he has held since January 2019. He is also Co-Founder and Chief Executive Officer of Carry1st, the leading venture-backed video game publisher and consumer fintech platform in Africa, a position he has held since July 2018. He was recommended to the Governance Committee as a potential director nominee by Hershey Trust Company. For the decade prior to founding Carry1st, Mr. Robbin-Coker served as an investment banker with Morgan Stanley and private equity investor with The Carlyle Group, culminating in his role as Vice President in the Carlyle Sub-Saharan Africa Fund. Mr. Robbin-Coker will bring to the Board his expertise in consumer technology, mergers and acquisitions, international business, and corporate governance. As one of three representatives of Hershey Trust Company and Milton Hershey School nominated to serve on the Board, Mr. Robbin-Coker will also bring valuable insights from our largest stockholder and the school that is its sole beneficiary. PUBLIC COMPANY AND OTHER KEY DIRECTORSHIPS • None EDUCATION • Bachelor of Arts degree in Political Science from Stanford University |
NON-EMPLOYEE DIRECTOR COMPENSATION
NON-EMPLOYEE DIRECTOR COMPENSATION
2023 Director Compensation
2023 Director Compensation The following table and explanatory footnotes provide information with respect to the compensation paid or provided to non-employee directors during 2023:
2023 Director Compensation
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | All Other Compensation(3) ($) | Total ($) | | Pamela M. Arway | 130,000 | 170,000 | 5,000 | 305,000 | | James W. Brown+ | 39,519 | 63,984 | 5,000 | 108,503 | | Victor L. Crawford | 126,458 | 170,000 | 5,000 | 301,458 | | Robert M. Dutkowsky | 130,000 | 170,000 | 5,000 | 305,000 | | Mary Kay Haben | 105,000 | 170,000 | 5,000 | 280,000 | | James C. Katzman | 105,000 | 170,000 | 5,000 | 280,000 | | Maria T. Kraus* | 65,769 | 106,484 | 1,500 | 173,753 | | M. Diane Koken | 105,000 | 170,000 | — | 275,000 | | Robert M. Malcolm | 105,000 | 170,000 | 5,000 | 280,000 | | Anthony J. Palmer | 155,000 | 170,000 | 4,750 | 329,750 | | Juan R. Perez | 130,000 | 170,000 | — | 300,000 | | Wendy L. Schoppert+ | 43,061 | 63,984 | 3,400 | 110,445 |
2023 Director Compensation
____________________ + Mr. Brown and Ms. Schoppert did not stand for re-election at the 2023 Annual Meeting of Stockholders. As such, their terms of services as directors ended on May 16, 2023. ⃰ Ms. Kraus was elected at the 2023 Annual Meeting of Stockholders. As such, her term of service as a director began on May 16, 2023. (1)Includes amounts earned or paid in cash or shares of Common Stock at the election of the director or deferred by the director under the Directors’ Compensation Plan. Amounts credited as earnings on amounts deferred under the Directors’ Compensation Plan are based on investment options available to all participants in our 401(k) plan or our Common Stock and, accordingly, the earnings credited during 2023 were not considered “above market” or “preferential” earnings. The following table sets forth the portion of fees earned or paid in cash or Common Stock, and the portion deferred with respect to retainers and fees earned during 2023:
2023 Director Compensation
| Name | Immediate Payment | | | Deferred and Investment Election | | | | | Cash Paid ($) | Value Paid in Shares of Common Stock ($) | Number of Shares of Common Stock (#) | Value Deferred to a Cash Account ($) | Value Deferred to a Common Stock Unit Account ($) | Number of Deferred Common Stock Units (#) | | Pamela M. Arway | 130,000 | — | — | — | — | — | | James W. Brown | 39,519 | — | — | — | — | — | | Victor L. Crawford | 21,458 | — | — | 105,000 | — | — | | Robert M. Dutkowsky | 130,000 | — | — | — | — | — | | Mary Kay Haben | 105,000 | — | — | — | — | — | | James C. Katzman | — | — | — | — | 105,000 | 458 | | Maria T. Kraus | 65,769 | — | — | — | — | — | | M. Diane Koken | 105,000 | — | — | — | — | — | | Robert M. Malcolm | 105,000 | — | — | — | — | — | | Anthony J. Palmer | — | — | — | — | 155,000 | 677 | | Juan R. Perez | 114,250 | 15,750 | 68 | — | — | — | | Wendy L. Schoppert | 43,061 | — | — | — | — | — |
2023 Director Compensation
(2)Represents the dollar amount recognized as expense during 2023 for financial statement reporting purposes with respect to RSUs awarded to the directors during 2023. RSUs awarded to directors are charged to expense in the Company’s financial statements at the grant date fair value on each quarterly grant date. The target annual grant date fair value of the RSUs for each director during 2023 was $170,000. The following table provides information with respect to the number and market value of deferred Common Stock units and RSUs held as of December 31, 2023, based on the $186.44 closing price of our Common Stock as reported by NYSE on December 29, 2023, the last trading day of 2023. The information presented includes the accumulated value of each director’s deferred Common Stock units and RSUs. Balances shown below include dividend equivalent units credited in the form of additional Common Stock units on deferred amounts and dividend equivalent units credited in the form of additional Common Stock units on RSUs.
2023 Director Compensation
| Name | Number of Deferred Common Stock Units (#) | Market Value of Deferred Common Stock Units as of December 31, 2023 ($) | Number of RSUs (#) | Market Value of RSUs as of December 31, 2023 ($) | | Pamela M. Arway | — | — | 742 | 138,338 | | James W. Brown | — | — | — | — | | Victor L. Crawford | 2,625 | 489,405 | 742 | 138,338 | | Robert M. Dutkowsky | — | — | 742 | 138,338 | | Mary Kay Haben | 13,518 | 2,520,296 | 742 | 138,338 | | James C. Katzman | 9,627 | 1,794,858 | 742 | 138,338 | | Maria T. Kraus | — | — | 471 | 87,813 | | M. Diane Koken | 7,209 | 1,344,046 | 742 | 138,338 | | Robert M. Malcolm | — | — | 742 | 138,338 | | Anthony J. Palmer | 3,999 | 745,574 | 742 | 138,338 | | Juan R. Perez | — | — | 742 | 138,338 | | Wendy L. Schoppert | 4,948 | 922,505 | — | — |
2023 Director Compensation
(3)Represents the Company match for contributions made by the director to one or more charitable organizations during 2023 under the Gift Matching Program.
Executive Summary
Executive Summary Strategic Plan The Hershey Company (the “Company”), headquartered in Hershey, PA, is a global snacking manufacturer, known for making more moments of goodness through its chocolate, sweets, mints and gum confections, popcorn, pretzel and puffs salty snacks and other great-tasting snacks. We have approximately 20,505 employees around the world who work every day to deliver delicious, quality products. We have more than 90 brands that drive approximately $11.2 billion in annual revenues. Our vision is to be a leading snacking powerhouse. We are currently the number two snacking manufacturer in the United States. We aspire to be a leader in meeting consumers’ evolving snacking needs while strengthening the capabilities that drive our growth. We are focused on four strategic imperatives to ensure the Company’s success now and in the future: •Drive core confection business and build and scale our salty snacks business; •Deliver profitable international growth; •Expand competitive advantage through differentiated capabilities; and •Responsibly manage our operations to ensure the long-term sustainability of our business, our planet and our people. Our strategic plan, and the financial metrics we establish to help achieve and measure success, serve as the foundation of our executive compensation program. In February 2023, we announced that Company financial expectations for 2023 would be above our long-term guidance, with net sales projected to grow 6-8% and adjusted earnings per share projected growth of 9-11%. For 2023, the Company performed in line with net sales expectations and exceeded adjusted earnings per share expectations. See the section titled “Annual Incentives” for more information regarding our 2023 annual incentive targets and related results.
Executive Summary
(1) While we report our financial results in accordance with U.S. generally accepted accounting principles (“GAAP”), we also use non-GAAP financial measures in order to provide additional information to investors to facilitate the comparison of past and present performance. Some of the financial targets under our short- and long-term incentive programs are also derived from non-GAAP financial measures, such as adjusted earnings per share-diluted. For more information regarding how we define adjusted earnings per share-diluted and a reconciliation to earnings per share-diluted, the most directly comparable GAAP measure, please see Appendix A. Executive Compensation Philosophy Our executive compensation philosophy is to provide compelling, dynamic, market-based total compensation tied to performance and aligned with our stockholders’ interests. Our goal is to ensure the Company has the talent it needs to maintain sustained long-term performance for our stockholders, employees and communities. The guiding principles that help us achieve this goal are compensation programs that do the following: Hershey Has Strong Pay-for-Performance Alignment The Compensation and Human Capital Committee (the “Compensation Committee”) of our Board of Directors (the “Board”) has oversight responsibility for our executive compensation framework and for aligning our executives’ pay with the Company’s performance. We believe we have strong pay-for-performance alignment because a significant portion of each NEO’s target total direct compensation is tied to the financial performance of the Company, as well as stockholder returns. In addition, consistent with our pay‐for‐performance philosophy, our Compensation Committee also assesses the quality of our financial results in conjunction with our non‐financial performance, such as Company culture, human capital management objectives, including planning and talent development, employee engagement, safety, and progress on our ESG initiatives, to enhance the link between compensation and performance. Performance goals are set with the intention to deliver peer‐leading performance. In 2023, approximately 88% of our CEO’s and 78% of our other NEOs’ target total direct compensation was at-risk, including a substantial portion tied to stockholder value. Specifically, 34% of our performance stock units (“PSUs”) were tied to Total Shareholder Return (“TSR”). Combined with the other financial and strategic metrics that determine our NEOs’ compensation, we have aligned our executive compensation program with the long-term interests of our stockholders. Our Stockholders Strongly Approve of Our Pay Practices Last year, our stockholders overwhelmingly approved our “say-on-pay” resolution, with more than 92% of the votes cast by the holders of Common Stock and more than 98% of the combined votes cast by the holders of the Common Stock and Class B Common Stock voting in favor. Our Compensation Committee believes the results of last year’s “say-on-pay” vote affirmed our stockholders’ support of our Company’s executive compensation program. Our approach to executive compensation in 2023 was substantially the same as the approach stockholders approved at our 2023 Annual Meeting of Stockholders. At the 2023 Annual Meeting of Stockholders, our stockholders voted to continue having an annual “say-on-pay” vote as described in “Proposal No. 3 – Advisory Vote on Named Executive Officer Compensation.” As required by Section 14A of the Securities Exchange Act of 1934, as amended (“the Exchange Act”), we will next ask stockholders to express a preference for the frequency of the “say-on-pay” vote at our 2029 Annual Meeting of Stockholders. We believe our compensation and governance policies and practices are significant drivers of our stockholder support. These policies and practices include:
Executive Summary
| WHAT WE DO | Pay for performance: A substantial percentage of each NEO’s target total direct compensation is at-risk. | | | Performance measures support strategic objectives: The performance measures we use in our compensation programs reflect strategic and operating objectives, creating long-term value for our stockholders. | | | Appropriate risk-taking: We set performance goals that consider our publicly-announced financial expectations, which we believe will encourage appropriate risk taking. Our incentive programs are appropriately capped so as not to encourage excessive risk taking. | | | “Double-trigger” benefits in the event of a change in control: In the event of a change in control, the payment of severance benefits and the acceleration of vesting of long-term incentive awards that are replaced with qualifying awards will not occur unless there is also a qualifying termination of employment upon or within two years following the change in control. | | | “Clawback” Policy: Our Compensation Recovery Policy applies to all current and former executive officers within a 3-year “lookback” period and requires recovery of previously awarded incentive-based compensation when payment was made as a result of achieving financial metrics that were subsequently amended due to an accounting restatement, regardless of whether the restatement was material or due to any misconduct. The amount subject to clawback under the Policy is the difference between the amount that would have been received based on the restated financial reporting measure and the amount actually paid to the officer. The policy further strengthens and is supplemental to existing clawback provisions. For more information, see the section titled “Other Compensation Policies and Practices—Clawbacks” set forth in this Proxy Statement. | | | Significant stock ownership guidelines: Our NEOs and other executives are required to accumulate and hold stock equal to a multiple of base salary. If an executive has not met his or her ownership requirement in a timely manner, the executive is required to retain a portion of shares received under long-term incentive awards until the requirement is met. | | WHAT WE DON’T DO | Excessive perquisites: Executive perquisites are kept to a minimal level relative to a NEO’s total compensation and do not play a significant role in our executive compensation program. | | | Tax gross-ups: We generally do not provide tax gross-ups, except for relocation expenses and standard expatriate tax equalization benefits available to all similarly situated employees. | | | Prepayment of dividends on unearned PSUs: Dividends are not paid on PSU awards during the three-year performance cycle. | | | Hedging Company stock: Our NEOs, directors, employees and other insiders are prohibited from entering into hedging transactions related to our stock, including forward sale purchase contracts, equity swaps, collars or exchange funds. | | | Pledging Company stock: Our NEOs, directors, employees and other insiders are prohibited from entering into pledging transactions related to our stock. | | | Re-pricings or exchanges of underwater stock options: Our stockholder-approved EICP prohibits re-pricing or exchange of underwater stock options without stockholder approval. |
Executive Summary
____________________ (1)For purposes of determining the Company performance score, net sales is measured on a constant currency basis, which is a non-GAAP performance measure, and, is then further adjusted to reflect the impact of divestitures and acquisitions as compared to target. To calculate net sales on a constant currency basis, net sales for the current fiscal year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the prior fiscal year. For more information on our use of non-GAAP performance measures, please see Appendix A. (2)For purposes of determining the Company performance score, adjusted earnings per share-diluted as determined for financial reporting purposes, which is a non-GAAP performance measure, is further adjusted to reflect the impact of divestitures and acquisitions as compared to target. For more information regarding how we define adjusted earnings per share-diluted, please see Appendix A. (3)EBIT Margin % is a non-GAAP performance measure, which is defined as adjusted operating profit divided by net sales. Adjusted operating profit is defined as reported operating profit, excluding certain items impacting comparability, which may include business realignment activities, acquisition-related costs and benefits, long-lived and intangible asset impairment charges, and gains and losses associated with mark-to-market commodity derivatives. 2021-2023 PSU Cycle - Performance Metrics and Results Payouts for the 2021-2023 PSU cycle, shown in the table below, reflect maximum performance in all three metrics, successfully delivering financial commitments to stockholders during unprecedented times. These payouts are described in more detail in the section titled “Performance Stock Unit Targets and Results.”
Executive Summary
| Metric | 2021-2023 Results | 2021-2023 Awards | | Total Shareholder Return(1) | 91st percentile | 250% payout | | Three-year Compound Annual Growth Rate (“CAGR”) in Adjusted Earnings per Share-Diluted(2)(3) | 13.8% CAGR | | | Three-year Cumulative Free Cash Flow(2)(4) | $4,916M | |
Executive Summary
____________________ (1)For our 2021-2023 PSU awards, TSR was measured based on the average closing price of the Common Stock in the month of December 2020 as compared to the average closing price of the Common Stock in the month of December 2023. (2)Results for our Lily’s Sweets, LLC (“Lily’s”), Dot’s Pretzels, LLC (“Dot’s”) and Pretzels Inc. (“Pretzels”) businesses were excluded from the following metrics, as applicable, as these acquisitions were made subsequent to the approval of the 2021-2023 PSU cycle metrics: • Three-year CAGR in in adjusted earnings per share-diluted; and • Three-year cumulative free cash flow. (3)Adjusted earnings per share-diluted is a non-GAAP performance measure. For more information regarding how we define adjusted earnings per share-diluted, please see Appendix A. (4)Cumulative free cash flow is measured using net cash provided by operations less capital expenditures and write-downs of investment tax credits.
The Role of the Compensation Committee
The Role of the Compensation Committee The Compensation Committee has primary responsibility for making compensation decisions for our executive officers other than our CEO. Our CEO’s compensation is approved by the independent members of the Board based on the recommendations of the Compensation Committee. The Compensation Committee operates under a charter approved by the Board. The Compensation Committee uses information from its independent compensation consultant, input from our CEO (except for matters regarding her own pay) and assistance from our Human Resources Department to make decisions and to conduct its annual review of the Company’s executive compensation program. The Compensation Committee works with a rolling agenda, with its heaviest workload occurring during the first quarter of the year. During this quarter, decisions are made with respect to annual and long-term incentives earned based on the prior year’s performance, and target compensation levels are finalized for the current year. The Compensation Committee also reviews and approves this “Compensation Discussion & Analysis.” During the second and third quarters, the Compensation Committee reviews materials relating to peer group composition, tally sheets, competitive pay analysis and other information that forms the foundation for future decisions. The Compensation Committee uses the third and fourth quarters to finalize decisions relating to the peer group and compensation plan design for the upcoming year. The Compensation Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Compensation Committee and, pursuant to the provisions of the EICP, may appoint the CEO as a committee of the Board as necessary for the purpose of making equity grants under the EICP; provided, however, that the Compensation Committee may not delegate the approval of certain transactions to a subcommittee or to the CEO if such transactions involve the approval or grant of equity-based compensation to an “officer” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934 (“Exchange Act”) or certification as to the attainment of performance goals for a “covered employee” for purposes of Section 162(m) of the Internal Revenue Code (“IRC”) unless such subcommittee consists solely of members of the Compensation Committee who are (i) “Non-Employee Directors” for the purposes of Rule 16b-3 under the Exchange Act, and (ii) “outside directors” for the purposes of Section 162(m) of the IRC. Role of the Independent Compensation Consultant Pursuant to its charter, the Compensation Committee is directly responsible for the appointment, compensation and oversight of the work of an independent compensation consultant, and for fiscal 2023, the Compensation Committee retained Frederic W. Cook & Co., Inc. (“F.W. Cook”) as its independent compensation consultant. F.W. Cook advised the Compensation Committee on director and executive compensation and performed no other work for the Company. F.W. Cook’s services included advice, counsel and recommendations with respect to the composition of our Compensation Peer Group and competitive data used for benchmarking our director and executive compensation program. F.W. Cook also provided updates on relevant trends and emerging market practices in compensation design and philosophy, as well as policy developments related to the Compensation Committee’s mandate. The Committee has assessed the independence of F.W. Cook pursuant to SEC and NYSE Rules and concluded that no conflict of interest exists that would prevent the consulting firm from independently advising the Committee. In establishing compensation levels and awards for executive officers other than our CEO, the Compensation Committee takes into consideration the recommendations of F.W. Cook and the Human Resources Department, combined with our CEO’s evaluations of each officer’s individual performance and Company performance. The Compensation Committee evaluates non-employee director compensation primarily on the basis of peer group data used for benchmarking director compensation provided by F.W. Cook.
Compensation Components
| Element | Design | Purpose | | Base Salary | Fixed compensation component. Reviewed annually and adjusted as appropriate. | Intended to attract and retain executives with proven skills and leadership abilities that will enable us to be successful. | | Annual Incentive Award | Variable, performance-based compensation component. Payable based on business results and subject to adjustment based on the quality of our financial results in conjunction with our non‐financial performance, such as Company culture, human capital management objectives, including planning and talent development, employee engagement, safety, and progress on our ESG initiatives. | Intended to motivate and reward executives for successful execution of strategic priorities. | | Long-Term Incentive Awards | Variable compensation component. Granted annually as a combination of RSUs and PSUs. PSUs are considered to be performance-based; the value of amounts actually earned depends on Company and stock price performance. | Intended to motivate and reward executives for long-term Company financial performance and enhanced long-term stockholder value by balancing compensation opportunity and risk, while encouraging sustained performance and retention. |
Setting Compensation
Setting Compensation The Compensation Committee’s annual compensation review for 2023 included an analysis of data comparing the Company’s executive compensation levels against a peer group of publicly-held consumer products companies. The Compensation Committee uses this and other information provided by F.W. Cook to reach an independent recommendation regarding compensation to be paid to our CEO, directors and other officers. The Compensation Committee’s final recommendation with respect to CEO compensation is then given to the independent directors of our Board for review and final approval. Companies in the peer group used to benchmark executive pay levels for 2023 (the “Compensation Peer Group”) are:
Setting Compensation
The Compensation Committee selected these companies after reviewing publicly held companies offering products/services similar to ours, with annual revenues within a range of approximately one-third to three times our annual revenue (with the exception of Mondelez International, Inc. who is outside of this range and whom we also consider a peer company for executive talent) and market capitalization within a reasonable range of our market capitalization. As compared to the Compensation Peer Group, Hershey’s revenue and market capitalization were at the 42nd and 78th percentiles, respectively. The Compensation Peer Group has not changed from last year. Data from the Compensation Peer Group was supplemented by composite data from consumer products and general industry companies of comparable size. The survey composite data provided us with broader, industry-specific information regarding pay levels at consumer products and general industry companies for positions similar to those held by our NEOs. The Compensation Committee reviewed a report summarizing target total direct compensation (base salary plus target annual incentive plus target long-term incentive) levels at the 25th, 50th and 75th percentiles of the Compensation Peer Group and the survey composite data for positions comparable to those held by each of our NEOs. Hershey targets total direct compensation for its executive officers, in aggregate, at competitive pay levels using the median of our peer group for reference. Positioning varies by job, and the Compensation Committee considers a number of factors including market competitiveness, specific duties and responsibilities of the executive versus those of peers, experience and succession planning. The Compensation Committee believes it is appropriate to reward the executive management team with compensation above or below the competitive median if the financial targets associated with its variable pay programs are above or below target, respectively. During 2023, the Compensation Committee received detailed tally sheets prepared by management. Each tally sheet captures comprehensive compensation, benefits and stock ownership data. The tally sheets provide the Compensation Committee with a complete picture of each executive’s current and projected compensation and the amount of each element of compensation or other benefit the executive would receive in the event of voluntary or involuntary termination, retirement, disability, death or upon a change in control. The Compensation Committee considers this information, as well as the benchmark information, when making compensation decisions.
Annual Incentives
Annual Incentives Our NEOs are eligible to receive an annual cash incentive award under the OHIP. The OHIP links the NEO’s annual payout opportunity to measures he or she can affect most directly. For 2023, our CEO and all employees reporting directly to her, including the NEOs, had common financial objectives tied to total Company performance consistent with their responsibility to manage the entire Company. Total Company performance targets are established in the context of our announced expectations for financial performance, prior year results and market conditions. For 2023, our NEOs were eligible to earn individual OHIP awards as follows:
Annual Incentives
| Name | 2023 Target OHIP (% of Base Salary) | | Ms. Buck | 160 | | Mr. Voskuil | 100 | | Mr. Bhatia | 100 | | Mr. Raup | 100 | | Ms. Riggs | 100 |
Annual Incentives
In determining the target OHIP percentage for each of the NEOs, the Compensation Committee, and the independent directors in the case of our CEO, considered the value of target total cash compensation against market references. Target total cash compensation levels for each of the NEOs fall within an appropriate range relative to the median for comparable positions in the market given each incumbent’s performance, responsibilities and tenure in the role. In general, the final OHIP award is determined by multiplying the NEO’s base salary, by (i) the NEO’s 2023 target OHIP percentage (as reflected in the table above) and (ii) the financial performance scores ranging from 0% to 200% based on Company performance, subject to adjustment at the discretion of the Compensation Committee based on the quality of our financial performance and non‐financial performance results. The Company financial performance goals are established at the beginning of each year by the Compensation Committee. If the financial performance scores exceed the target objectives, a NEO may receive an OHIP payout greater than his or her target award value; however, payouts will not exceed 200% of each NEO’s target opportunity. If the financial performance scores are below the target objectives, the NEO’s OHIP payout will be below his or her target award value, subject to no award if performance is below threshold levels. Once the financial performance review is complete, the Compensation Committee retains discretion to adjust final OHIP award payouts based on the Company’s overall performance against financial and non‐financial objectives. 2023 OHIP Financial Performance Targets and Results (100% of Total OHIP) Our 2023 OHIP financial performance targets, our financial performance results for 2023 and the resulting financial performance scores for OHIP were as follows:
Annual Incentives
| Metric | 2023 Target | | 2023 Actual | | Target Award (%) | Performance Score (%) | | | ($) | (% growth) | ($) | (% growth) | | | | Net Sales(1) | 11.211 billion | 7.6 | 11.153 billion | 7.0 | 50.00 | 39.64 | | Adjusted Earnings per Share-Diluted(2) | 9.42 | 10.6 | 9.59 | 12.6 | 25.00 | 41.35 | | EBIT Margin %(3) | 23.60% | 51 basis points | 24.17% | 108 basis points | 25.00 | 50.00 | | Total OHIP Company Score | | | | | 100.00 | 130.99 |
Annual Incentives
____________________ (1)For purposes of determining the Company performance score, net sales is measured on a constant currency basis, which is a non-GAAP performance measure, and is then further adjusted to reflect the impact of divestitures and acquisitions as compared to target. To calculate net sales on a constant currency basis, net sales for the current fiscal year period for entities reporting in currencies other than the U.S. dollar are translated into U.S. dollars at the average rates during the comparable period of the prior fiscal year. For more information on our use of non-GAAP performance measures, please see “Appendix A.” (2)For purposes of determining the Company performance score, adjusted earnings per share-diluted as determined for financial reporting purposes, which is a non-GAAP performance measure, and is further adjusted to reflect the impact of divestitures and acquisitions as compared to target. For more information regarding how we define adjusted earnings per share-diluted, please see “Appendix A.” (3)EBIT Margin % is a non-GAAP performance measure, which is defined as adjusted operating profit divided by net sales. Adjusted operating profit is defined as reported operating profit, excluding certain items impacting comparability, which may include business realignment activities, acquisition and integration-related costs, other miscellaneous losses and benefits, and gains and losses associated with mark-to-market commodity derivatives. Once the Compensation Committee reviewed the Company financial performance score, they considered the quality of the financial results in conjunction with our non‐financial performance, such as Company culture, human capital management objectives, including planning and talent development, employee engagement, safety, and progress on our ESG initiatives. The Compensation Committee did not make any performance adjustments to the OHIP payouts for 2023. Based upon the Company financial score of 130.99%, the NEOs earned the following OHIP payout:
Annual Incentives
| Name | Award Target (%) | Award Target(1) ($) | 2023 OHIP Payout ($) | | Ms. Buck | 160 | 2,240,000 | 2,934,176 | | Mr. Voskuil | 100 | 790,000 | 1,034,821 | | Mr. Bhatia | 100 | 139,423 | 182,630 | | Mr. Raup | 100 | 790,000 | 1,034,821 | | Ms. Riggs | 100 | 790,000 | 1,034,821 |
Annual Incentives
(1)Target award is based upon actual salary received in 2023.
Long-Term Incentives
Long-Term Incentives We provide long-term incentive opportunities to motivate, retain and reward our NEOs for their contributions to multi-year performance in achieving strategies and improving long-term share value. In February of each year, the Compensation Committee awards long-term incentive grants to our NEOs. The Compensation Committee and the independent directors determine the value of Ms. Buck’s annual long-term incentive award by considering her target total direct compensation against external references. The target award approved in 2023, expressed in dollars, was:
Long-Term Incentives
| Name | Target Long-Term Incentive Award ($) | | Ms. Buck | 8,160,000 |
Long-Term Incentives
For all other NEOs, the Compensation Committee determines the value of long-term incentive awards made to each NEO by considering the NEO’s target total direct compensation against internal and external references. The target awards approved in 2023, expressed as a percentage of base salary, were:
Long-Term Incentives
| Name | Target Long-Term Incentive Award (% of Salary) | | Mr. Voskuil | 260 | | Mr. Bhatia | 250 | | Mr. Raup | 255 | | Ms. Riggs | 255 |
Long-Term Incentives
The Compensation Committee values RSUs and PSUs using the closing stock price of the Company’s Common Stock on the NYSE on the date of grant. Target total direct compensation levels for each of the NEOs fall within an appropriate range relative to the median for comparable positions in the market given each incumbent’s performance, responsibilities and tenure in the role. At the sole discretion of the Compensation Committee, all NEOs (other than Ms. Buck) have the opportunity to receive long-term incentive grants above or below their targeted amounts based on individual performance. See the “2023 Grants of Plan-Based Awards Table” for additional information. Performance Stock Unit Targets and Results (65% of Long-Term Incentive Mix) PSUs are granted to NEOs and other executives in a position to affect the Company’s long-term results as part of a total compensation package based on the peer group and survey composite benchmarks. At the start of each three-year cycle, a contingent target number of PSUs is established for each executive. These PSU awards represent approximately 65% of the NEO’s long-term incentive compensation target award. See the “2023 Grants of Plan-Based Awards Table” for additional information. The performance objectives for the 2021-2023 performance cycle awarded in 2021 were based upon the following metrics: •Three-year relative TSR versus the 2021 Financial Peer Group described below; •Three-year CAGR in adjusted earnings per share-diluted measured against an internal target; and •Three-year cumulative free cash flow measured against an internal target. These metrics are weighted 34%, 33% and 33%, respectively. In October 2020, the Committee approved the following 15 companies as a separate peer group for measuring relative TSR within our 2021-2023 PSU cycle (the “2021 Financial Peer Group”):
Long-Term Incentives
| Campbell Soup Company | Kellanova | Post Holdings, Inc. | | Colgate-Palmolive Company | Kimberly-Clark Corporation | The Clorox Company | | ConAgra Brands, Inc. | The Kraft Heinz Company | The Hain Celestial Group, Inc. | | Flowers Foods | McCormick & Company, Inc | The J.M. Smucker Company | | General Mills | Mondelez International, Inc. | TreeHouse Foods, Inc. |
Long-Term Incentives
Payment of any amounts earned is made in shares of Common Stock at the conclusion of the three-year performance cycle. The maximum award for any participant in a performance cycle is 250% of the contingent target award. Targets and results for the 2021-2023 performance cycle were as follows:
Long-Term Incentives
| Metric | Target | Actual Performance | Target Award Weighting (%) | Final Performance Score (%) | | Total Shareholder Return(1) | 50th Percentile | 91st Percentile | 34.00 | 85.00 | | Three-year CAGR in Adjusted Earnings per Share-Diluted(2)(3) | 6.5% CAGR | 13.8% CAGR | 33.00 | 82.50 | | Three-year Cumulative Free Cash Flow(2)(4) | $4,253M | $4,916M | 33.00 | 82.50 | | Total | | | 100.00 | 250.00 |
Long-Term Incentives
____________________ (1)For our 2021-2023 PSU awards, TSR was measured based on the average closing price of the Common Stock in the month of December 2020 as compared to the average closing price of the Common Stock in the month of December 2023. (2)Results for our Lily’s, Dot’s and Pretzels businesses were excluded from the following metrics, as applicable, as these acquisitions were made subsequent to the approval of the 2021-2023 PSU cycle metrics: • Three-year CAGR in adjusted earnings per share-diluted; and • Three-year cumulative free cash flow. (3)Adjusted earnings per share-diluted is a non-GAAP performance measure. For more information regarding how we define adjusted earnings per share-diluted, please see Appendix A. (4)Cumulative free cash flow is measured using net cash provided by operations less capital expenditures and write-downs of investment tax credits. At the conclusion of each three-year cycle, the Compensation Committee reviews the level of performance achieved and the percentage, if any, of the applicable portion of the target number of PSUs earned. In determining the final performance cycle score, adjustments may be made by the Compensation Committee to the Company’s performance score to take into account extraordinary or unusual items occurring during the period. No adjustments were made in determining the 250% performance score or the number of PSUs earned by our NEOs for the 2021-2023 performance cycle. 2022-2024 and 2023-2025 PSU Awards The performance metrics and weightings for the 2022-2024 and 2023-2025 performance cycles are the same as the 2021-2023 performance cycle. Restricted Stock Units (35% of Long-Term Incentive Mix) The Compensation Committee sets guidelines for the value of the annual RSUs to be awarded based on competitive compensation data. These RSU awards represent approximately 35% of the NEO’s long-term incentive compensation target award. Annual RSUs vest in equal increments over three years. See the “2023 Grants of Plan-Based Awards Table” for additional information. The Compensation Committee also awards RSUs to NEOs and other executives from time to time as special incentives or to replace compensation forfeited by newly-hired executive officers. Mr. Bhatia was granted RSUs upon his hire to replace forfeited compensation from his prior employer. This replacement RSU award vests in equal increments over two years.
Retirement Plans
Retirement Plans NEOs are eligible to participate in our tax-qualified defined benefit pension plan (“pension plan”) and tax-qualified defined contribution 401(k) plan (“401(k) plan”) on the same basis as other salaried employees of the Company. IRC regulations do not permit the Company to use base salary and other compensation paid above certain limits to determine the benefits earned by the NEOs under tax-qualified plans. The Company maintains a defined benefit Supplemental Executive Retirement Plan (“DB SERP”), a defined contribution Supplemental Executive Retirement Plan (“DC SERP”), a defined benefit Compensation Limit Replacement Plan, as amended (“CLRP”) and a Deferred Compensation Plan to provide these and additional benefits that are comparable to those offered by our peers. Under the provisions of the Deferred Compensation Plan, our NEOs may elect to defer payments from OHIP, PSU and RSU awards, but not stock options or base salary. The DB SERP was closed to new participants in 2006. No new participants have been or will be added to the DB SERP. NEOs and other senior executives reporting to the CEO not eligible for the DB SERP are considered by the Compensation Committee for participation in the DC SERP. In comparison, the DC SERP typically yields a lower benefit than the DB SERP upon retirement. Executive officers eligible for the Company’s pension plan who are not eligible for the DB SERP participate in the CLRP. The Company believes that the DB SERP, DC SERP, CLRP and Deferred Compensation Plan help, in the aggregate, to attract and retain executive talent, as similar plans are often components of the executive compensation program within our peer group. The DC SERP was established as part of our Deferred Compensation Plan and is not a separate plan. See the “2023 Pension Benefits Table” and accompanying narrative and the “2023 Non-Qualified Deferred Compensation Table” and accompanying narrative for more information regarding the DB SERP, DC SERP, CLRP and other retirement benefits.
Employment Agreements
Employment Agreements The Company entered into an employment agreement with Ms. Buck in February 2017, which provides for Ms. Buck’s continued employment as President and CEO and continued nomination as a member of the Board of Directors. The employment agreement does not have a specified term. Under the terms of the employment agreement, in the event Ms. Buck’s employment is terminated by the Company without Cause or she resigns for Good Reason (in each case as defined in the employment agreement), Ms. Buck will be entitled to certain severance benefits. In the event of her termination after a change in control, Ms. Buck will be eligible to receive benefits under the Executive Benefits Protection Plan (Group 3A) (“EBPP 3A”). She is not entitled to an excise tax gross-up. The employment agreement subjects Ms. Buck to certain non-competition and non-solicitation covenants under the Employee Confidentiality and Restrictive Covenant Agreement (“ECRCA”) and to compensation recovery (clawback) to the extent required by the provisions of the OHIP, long-term incentive award agreements, applicable law and regulations. See the section titled “Potential Payments upon Termination or Change in Control” for information regarding the payments Ms. Buck would receive in the event of an applicable termination or change in control occurring on December 31, 2023. Other than as set forth above, we have not entered into employment agreements with any other NEO.
Severance and Change in Control Plans
Severance and Change in Control Plans All of the NEOs are covered by our EBPP 3A. The EBPP 3A is intended to help us attract and retain executive talent and maintain a stable work environment in the event of activity that could potentially result in a Change in Control. The severance protection provided under the EBPP 3A upon a Change in Control is based upon a “double trigger.” The terms of the plan generally provide that a covered NEO whose employment with the Company terminates in qualifying circumstances within two years after a Change in Control of the Company is entitled to certain severance payments and benefits. The EBPP 3A also provides severance benefits in the event of involuntary termination without Cause unrelated to a Change in Control or voluntary termination for Good Reason within two years after the appointment of a new CEO. Change in Control, Cause and Good Reason are defined in the EBPP 3A. See the discussion in the section titled “Potential Payments upon Termination or Change in Control” for information regarding the payments that would be due to our NEOs under the EBPP 3A in the event of an applicable termination of employment or a Change in Control.
Other Compensation Policies and Practices
Other Compensation Policies and Practices Clawbacks Under the EICP, when an individual’s actions result in the filing of financial documents not in compliance with financial reporting requirements, the Company has the right to recoup or require repayment of an award earned or accrued during the 12-month period following the first public issuance or filing with the SEC of the non-compliant financial document. Repayment or clawback occurs where the material non-compliance results from misconduct, the participant’s knowledge or gross negligence in engaging in the misconduct or failing to prevent the misconduct, or if the participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002. In 2008, the Company initiated the execution of the ECRCA by executive officers as a condition for the receipt of long-term incentive awards and, for new executive officers, also as a condition of employment. The purpose of the ECRCA is to protect the Company and further align the interests of the executive officer with those of the Company. The terms of the ECRCA prohibit the executive from misusing or disclosing the Company’s confidential information, competing with the Company in specific categories for a period of 12 months following separation from employment, recruiting or soliciting the Company’s employees or disparaging the Company’s reputation in any way. For those officers or employees based outside the United States, the restrictive covenants and terms may be modified to comply with local laws. Failure to comply with the provisions of the ECRCA may result in cancellation of the unvested portion of PSU and RSU awards, cancellation of any unexercised stock options and a requirement for repayment of amounts received from equity awards during the last year of employment, as well as any amounts received from the DB SERP or DC SERP. In 2021, the Company updated the clawback language within our ECRCA, OHIP and long-term incentive award agreements to authorize the Compensation Committee to seek clawback in the event of intentional misconduct by a grantee that causes the Company material financial or reputational harm. In 2023 and in accordance with SEC Rule 10D-1 and the applicable NYSE Listing Standards, the Company approved The Hershey Company Compensation Recovery Policy, effective October 2, 2023 (“Clawback Policy”). The Clawback Policy further enhances and expands the scope of existing clawback provisions for current and former executive officers. It requires previously awarded incentive‐based compensation to be returned where payment was made as a result of achieving financial metrics that were subsequently amended, within a three-year period, due to an accounting restatement, regardless of whether the restatement was material or due to any misconduct. The amount subject to clawback under the Clawback Policy is the difference between the amount that would have been received based on the restated financial reporting measure and the amount actually paid to the officer based on the previously misstated measure. Tax Considerations Section 162(m) of the IRC limits the deductibility of compensation in excess of $1 million paid to NEOs in any calendar year. Under the U.S. tax rules in effect before 2018, compensation that qualified as “performance- based” under Section 162(m) was deductible without regard to this $1 million limit. However, the U.S. Tax Cuts and Jobs Act of 2017 eliminated this performance-based compensation exception effective January 1, 2018, such that any compensation awarded on or after January 1, 2018 in excess of $1 million to our NEOs generally is not deductible. As a result, performance-based compensation, including equity awards, is no longer exempt from the Section 162(m) deduction limitation, subject to a transition rule. The employees (referred to as “covered employees”) to whom the deduction limitation applies include the CEO and CFO (in each case, whether or not serving as executive officers as of the end of the fiscal year) and the three other most highly compensated executive officers. In addition, once considered a “covered employee” for a given year, the individual will be treated as a “covered employee” for all subsequent years. The Compensation Committee has considered the effect of Section 162(m) of the IRC on the Company’s executive compensation program. The Compensation Committee exercises discretion in setting base salaries, structuring incentive compensation awards and in determining payments in relation to levels of achievement of performance goals. The Compensation Committee believes that the total compensation program for NEOs should be managed in accordance with the objectives outlined in the Company’s compensation philosophy and in the best overall interests of the Company’s stockholders. Accordingly, compensation paid by the Company may not be deductible because such compensation exceeds the limitations for deductibility under Section 162(m) of the IRC. Section 409A of the IRC specifies certain rules and limitations regarding the operation of our Deferred Compensation Plan and other retirement programs. Failure to comply with these rules could subject participants in those plans and programs to additional income tax and interest penalties. We believe our plans and programs comply with Section 409A of the IRC.
2023 Summary Compensation Table
2023 Summary Compensation Table The following table and explanatory footnotes provide information regarding compensation earned by, held by, or paid to, all individuals holding the positions of Chief (Principal) Executive Officer and Chief (Principal) Financial Officer during 2023 and the next three most highly compensated executive officers serving at the end of the fiscal year. These individuals collectively comprise our NEOs. The table provides information with respect to 2023, as well as 2022 and 2021 compensation where required. Information for 2021 and 2022 is not provided for Mr. Bhatia because he was hired on October 23, 2023.
2023 Summary Compensation Table
| Name and Principal Position | Year | Salary(1) ($) | Bonus(2) ($) | Stock Awards(3) ($) | Option Awards(4) ($) | Non- Equity Incentive Plan Compen- sation(5) ($) | Change in Pension Value and Non-Qualified Deferred Compen- sation Earnings(6) ($) | All Other Compen- sation(7) ($) | Total ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | | Ms. Buck | 2023 | 1,400,000 | — | 8,256,692 | — | 2,934,176 | 2,569,968 | 493,373 | 15,654,209 | | Chairman of the Board, President and CEO | 2022 | 1,300,000 | — | 7,699,321 | — | 4,160,000 | — | 390,728 | 13,550,049 | | | 2021 | 1,240,000 | — | 7,307,707 | — | 4,051,730 | 3,281,860 | 263,273 | 16,144,570 | | Mr. Voskuil | 2023 | 790,000 | — | 2,078,741 | — | 1,034,821 | — | 480,917 | 4,384,479 | | Senior Vice President, Chief Financial Officer | 2022 | 750,000 | — | 2,027,770 | — | 1,500,000 | — | 427,733 | 4,705,503 | | | 2021 | 695,000 | — | 1,711,914 | — | 1,277,486 | — | 326,239 | 4,010,639 | | Mr. Bhatia | 2023 | 139,423 | 875,000 | 7,947,930 | — | 182,630 | — | 27,885 | 9,172,868 | | Senior Vice President, Chief Technology Officer | | | | | | | | | | | Mr. Raup | 2023 | 790,000 | — | 2,038,425 | — | 1,034,821 | — | 464,112 | 4,327,358 | | President, U.S. Confection | 2022 | 750,000 | — | 1,987,148 | — | 1,350,000 | — | 382,580 | 4,469,728 | | | 2021 | 600,000 | — | 1,598,634 | — | 975,313 | — | 246,130 | 3,420,077 | | Ms. Riggs | 2023 | 790,000 | — | 2,038,425 | — | 1,034,821 | 88,839 | 387,586 | 4,339,671 | | President, Salty Snacks and Chief Growth Officer | 2022 | 750,000 | — | 1,987,148 | — | 1,350,000 | — | 338,487 | 4,425,635 | | | 2021 | 600,000 | — | 1,285,178 | — | 975,313 | 33,117 | 205,533 | 3,099,141 |
2023 Summary Compensation Table
____________________ (1) Column (c) reflects base salary earned, on an accrual basis, for the years indicated and includes IRC Section 125 deductions pursuant to The Hershey Company Flexible Benefits Plan and amounts deferred by the NEOs in accordance with the provisions of the 401(k) plan. (2) With the exception of Mr. Bhatia, Column (d) indicates that no discretionary bonuses were paid to the NEOs in 2023, 2022 or 2021. Mr. Bhatia, who joined the Company in October 2023, received a cash sign-on payment of $750,000 in 2023 to replace awards forfeited at his prior employer and a transition allowance of $125,000. These cash payments are subject to repayment if Mr. Bhatia voluntarily terminates employment with the Company without Good Reason within 24 months or 12 months of his hire date, respectively. (3) Column (e) shows the aggregate grant date fair value of RSUs and contingent target PSU awards granted to the NEOs in the years indicated. The assumptions used to determine the grant date fair value of awards listed in Column (e) are set forth in Note 12 to the Company’s Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K that accompanies this Proxy Statement. The amounts in Column (e) do not reflect the value of shares actually received or which may be received in the future with respect to such awards. The number of contingent target PSUs awarded in 2023 to each NEO is shown on the “2023 Grants of Plan-Based Awards Table” in Column (g). Assuming the highest level of performance is achieved for each of the PSU awards included in Column (e), the value of the awards at grant date for each of the NEOs would be as follows:
2023 Summary Compensation Table
| Name | Year | Maximum Value at Grant Date ($) | | Ms. Buck | 2023 | 13,260,341 | | | 2022 | 11,570,258 | | | 2021 | 11,089,325 | | Mr. Voskuil | 2023 | 3,338,392 | | | 2022 | 3,047,218 | | | 2021 | 2,597,789 | | Mr. Bhatia | 2023 | 2,945,499 | | Mr. Raup | 2023 | 3,273,831 | | | 2022 | 2,986,003 | | | 2021 | 2,242,637 | | Ms. Riggs | 2023 | 3,273,831 | | | 2022 | 2,986,003 | | | 2021 | 1,950,080 |
2023 Summary Compensation Table
The unvested portion of RSU awards is included in the amounts presented in Columns (g) and (h) of the “Outstanding Equity Awards at 2023 Fiscal-Year End Table.” The number of shares acquired and value received by the NEOs with respect to PSU and RSU awards that vested in 2023 is included in Columns (d) and (e) of the “2023 Option Exercises and Stock Vested Table.” (4) Column (f) presents the grant date fair value of stock options awarded to the NEOs for the years indicated and does not reflect the value of shares actually received or which may be received in the future with respect to such stock options. The assumptions we made to determine the value of these awards are set forth in Note 12 to the Company’s Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K that accompanies this Proxy Statement. (5) Column (g) reflects the OHIP payments made to each NEO based upon actual salary received in 2023. (6) Column (h) reflects the aggregate change in the actuarial present value of the NEO’s retirement benefit under the Company’s pension plan, the CLRP and the DB SERP. The change in value calculation uses the same discount rate and mortality rate assumptions as the 2023 and 2022 audited financial statements, as applicable, and measures the change in value between the pension plan measurement date in the 2023 and 2022 audited financial statements. The change in value during a year is primarily driven by three factors: 1) changes in valuation assumptions; 2) changes in the NEO’s pensionable earnings; and 3) an additional year of service and age. During 2023, changes in earnings caused an increase to the pension value, while an additional year of age caused a relatively small decrease to the pension value. During 2022, changes in earnings caused an increase to the pension value, while an additional year of age caused a relatively small decrease to the pension value, and changes in assumption, namely discount rates, caused a decrease to the pension value. The amounts in Column (h) do not reflect amounts paid or that might be paid to the NEO. Messrs. Bhatia, Raup, and Voskuil and Ms. Riggs participate in the DC SERP rather than the DB SERP. The DC SERP is established under the Company’s Deferred Compensation Plan. DC SERP contributions for Messrs. Bhatia, Raup, and Voskuil and Ms. Riggs are included in footnote (7). The NEOs also participate in our non-qualified, non-funded Deferred Compensation Plan under which deferred amounts are credited with notional earnings based on the performance of one or more third-party investment options available to all participants in our 401(k) plan. No portion of the notional earnings credited during 2023 was “above market” or “preferential.” Consequently, no Deferred Compensation Plan earnings are included in amounts reported in Column (h) above. See the “2023 Pension Benefits Table” and the “2023 Non-Qualified Deferred Compensation Table” for more information on the benefits payable to the NEOs under the pension plan, DB SERP, CLRP and Deferred Compensation Plan. (7) All other compensation includes amounts as described below:
2023 Summary Compensation Table
| Name | Year | Retirement Income | | | | | | Perquisites and Other Benefits | | | | | | | | | 401(k) Match ($) | Supple- mental 401(k) Match(a) ($) | Supple- mental Retirement Contri- bution ($) | DC SERP Contri- bution ($) | Core Retirement Contri- bution(b) ($) | Supple- mental Core Retirement Contri- bution(b) ($) | Personal Use of Company Aircraft(c) ($) | Company- Paid Financial Counseling ($) | Reimburse- ment of Personal Tax Return Preparation Fee ($) | Company-Paid Executive Physical ($) | Attorney Fees(d) ($) | Tax Reimburse-ment($) | | Ms. Buck | 2023 | 14,850 | 235,350 | 1,291 | — | — | — | 186,832 | 11,845 | — | 7,204 | 36,001 | — | | | 2022 | 13,725 | 227,103 | 1,237 | — | — | — | 131,708 | 11,500 | — | 5,455 | — | — | | | 2021 | 13,050 | 163,619 | 1,183 | — | — | — | 73,281 | 11,170 | 970 | — | — | — | | Mr. Voskuil | 2023 | 14,850 | 88,200 | — | 286,250 | 9,900 | 58,800 | — | 15,000 | 1,500 | 6,417 | — | — | | | 2022 | 13,725 | 77,512 | — | 253,436 | 9,150 | 51,675 | — | 15,000 | 1,500 | 5,735 | — | — | | | 2021 | 13,050 | 56,641 | — | 193,587 | 8,700 | 37,761 | — | 15,000 | 1,500 | — | — | — | | Mr. Bhatia | 2023 | 6,274 | — | — | 17,428 | 4,183 | — | — | — | — | — | — | — | | Mr. Raup | 2023 | 14,850 | 81,450 | — | 267,500 | 9,900 | 54,300 | 17,505 | 12,189 | — | 6,417 | — | — | | | 2022 | 13,725 | 63,914 | — | 215,664 | 9,150 | 42,609 | 21,632 | 10,150 | — | 5,735 | — | — | | | 2021 | 13,050 | 39,299 | — | 145,414 | 8,700 | 26,199 | 1,763 | 9,860 | 1,725 | — | — | 120 | | Ms. Riggs | 2023 | 14,850 | 81,450 | 547 | 267,500 | — | — | — | 15,000 | 1,500 | 6,739 | — | — | | | 2022 | 13,725 | 63,914 | 520 | 215,664 | — | — | 22,708 | 15,000 | 1,500 | 5,455 | — | — | | | 2021 | 13,050 | 37,255 | 493 | 139,735 | — | — | — | 15,000 | — | — | — | — |
2023 Summary Compensation Table
(a)Employees who earn over the Internal Revenue Service (“IRS”) compensation limit and/or defer any portion of their OHIP award are eligible for the Supplemental 401(k) Match, contingent on the employee contributing an amount to the 401(k) plan equal to the annual pre-tax limit established by the IRS. All of the NEOs were eligible to receive a Supplemental 401(k) Match Contribution equal to 4.5% of the amount by which their eligible earnings (salary and OHIP) exceeded the IRS compensation limit. (b)As new hires of the Company after January 1, 2007, Messrs. Bhatia, Raup and Voskuil were eligible to receive a contribution to their 401(k) plan account equal to 3% of base salary and OHIP up to the maximum amount permitted by the IRS. We call this contribution the Core Retirement Contribution (“CRC”). They also were eligible to receive a Supplemental Core Retirement Contribution (“Supplemental CRC”) equal to 3% of the amount by which their eligible earnings (salary and OHIP) exceeded the IRS compensation limit. (c)The value of any personal use of Company aircraft by the NEOs is based on the Company’s aggregate incremental per-flight hour cost for the aircraft used and flight time of the applicable flight. The incremental per-flight hour cost is calculated by reference to fuel, maintenance (labor and parts), crew, landing and parking expenses. (d)Reflects attorney fees paid or incurred in connection to Ms. Buck’s employment agreement and benefits.
2023 Grants of Plan-Based Awards Table
2023 Grants of Plan-Based Awards Table The following table and explanatory footnotes provide information with regard to the potential cash award that each NEO had the opportunity to earn during 2023 under the OHIP and with regard to PSUs and RSUs awarded to each NEO during 2023, as applicable. The Company did not grant stock options in 2023 as stock options were removed from our annual long-term incentive program in 2019. The amounts that were actually earned under the OHIP during 2023 by the NEOs are set forth in Column (g) of the “2023 Summary Compensation Table.” Information on the treatment of PSUs and RSUs upon retirement, death, disability, termination or Change in Control can be found in the section titled “Potential Payments upon Termination or Change in Control.”
2023 Grants of Plan-Based Awards Table
| Name | Grant Date(1) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(3) | | | All Other Stock Awards: Number of Shares of Stock or Units(4) (#) | Grant Date Fair Value of Stock and Option Awards(5) ($) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | | Ms. Buck | 2/21/2023 | 4,032 | 2,240,000 | 4,480,000 | 11 | 22,018 | 55,045 | 11,856 | 8,256,692 | | Mr. Voskuil | 2/21/2023 | 1,422 | 790,000 | 1,580,000 | 3 | 5,543 | 13,858 | 2,985 | 2,078,741 | | Mr. Bhatia | 11/8/2023 | 251 | 139,423 | 278,846 | 3 | 6,233 | 15,583 | 35,100 | 7,947,930 | | Mr. Raup | 2/21/2023 | 1,422 | 790,000 | 1,580,000 | 3 | 5,436 | 13,590 | 2,927 | 2,038,425 | | Ms. Riggs | 2/21/2023 | 1,422 | 790,000 | 1,580,000 | 3 | 5,436 | 13,590 | 2,927 | 2,038,425 |
2023 Grants of Plan-Based Awards Table
____________________ (1)Column (b) represents the grant date for the PSUs reflected in Columns (f), (g) and (h) and the RSUs reflected in Column (i). All awards were made under the EICP. (2)Columns (c), (d) and (e) represent the threshold, target and maximum potential amounts each NEO had the opportunity to earn based on the OHIP targets and performance measures approved for the NEOs in February 2023, or, in the case of Mr. Bhatia’s OHIP target, at the time of hire. All amounts shown in Columns (c), (d) and (e) are based upon actual salary received in 2023. The threshold amount is the amount that would have been payable had the minimum Company performance score been achieved. The target amount is the amount that would have been payable had the Company score been 100% on all metrics. The maximum amount is the amount that would have been payable had the maximum score been achieved on all metrics. The actual amounts awarded for 2023 are reported in column (g) of the “Summary Compensation Table.” (3)Columns (f), (g) and (h) represent the number of threshold, target and maximum potential PSUs that can be earned for the 2023-2025 performance cycle. These PSU awards represent approximately 65% of the NEO’s long-term incentive compensation target award. The target PSU award value shown in Column (j) was determined by dividing the PSU target award value by the closing price of the Company’s Common Stock on the NYSE on the award date. Each PSU represents the value of one share of our Common Stock. The number of PSUs earned for the 2023-2025 performance cycle will depend upon achievement against the metrics explained in the “Compensation Discussion & Analysis” in the section titled “Performance Stock Unit Targets and Results.” Payment, if any, will be made in shares of the Company’s Common Stock at the conclusion of the three-year performance cycle. The minimum award as shown in Column (f) is the number of shares payable for achievement of the threshold level of performance on one of the metrics and the maximum award as shown in Column (h) is the number of shares payable for achievement of the maximum level of performance on all metrics. More information regarding PSUs and the 2023 awards can be found in the “Compensation Discussion & Analysis” and the “Outstanding Equity Awards at 2023 Fiscal-Year End Table.” (4)With the exception of Mr. Bhatia, Column (i) represents the number of annual RSUs granted on February 21, 2023. These annual RSU awards represent approximately 35% of the NEO’s long-term incentive compensation target award. For Mr. Bhatia, column (i) includes the number of RSUs granted upon his hire date as a new hire award and to replace compensation forfeited at his prior employer. For all NEOs, the RSU award value shown in Column (j) was determined by dividing the RSU award value by the closing price of the Company’s Common Stock on the NYSE on the award date. (5)Column (j) represents the aggregate grant date fair value of (1) the target number of PSUs reported in Column (g) and (2) the number of RSUs reported in Column (i), in each case as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The assumptions used in determining these amounts are set forth in Note 12 to the Company’s Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K that accompanies this Proxy Statement.
Outstanding Equity Awards at 2023 Fiscal-Year End Table
Outstanding Equity Awards at 2023 Fiscal-Year End Table The following table and explanatory footnotes provide information regarding unexercised stock options and unvested stock awards held by our NEOs as of December 31, 2023:
Outstanding Equity Awards at 2023 Fiscal-Year End Table
| Name | Option Awards(1) | | | | | Stock Awards | | | | | | Number of Securities Underlying Unexercised Options- Exercisable(2) (#) | Number of Securities Underlying Unexercised Options- Unexercisable(3) (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(4) (#) | Market Value of Shares or Units of Stock That Have Not Vested(4) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(5) (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(5) ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | | Ms. Buck | 90,905 | — | — | 99.90 | 2/19/2028 | 25,461 | 4,907,439 | 55,045 | 10,262,590 | | | 77,160 | — | — | 109.40 | 2/28/2027 | — | — | 57,270 | 10,677,419 | | | 31,210 | — | — | 90.39 | 2/15/2026 | — | — | — | — | | | 35,500 | — | — | 105.91 | 2/16/2025 | — | — | — | — | | Total | 234,775 | — | — | — | — | 25,461 | 4,907,439 | 112,315 | 20,940,009 | | Mr. Voskuil | — | — | — | — | — | 6,412 | 1,235,543 | 13,858 | 2,583,686 | | | — | — | — | — | — | — | — | 15,083 | 2,812,075 | | Total | — | — | — | — | — | 6,412 | 1,235,543 | 28,941 | 5,395,761 | | Mr. Bhatia | — | — | — | — | — | 35,100 | 6,585,884 | 15,583 | 2,905,295 | | | — | — | — | — | — | — | — | — | — | | Total | — | — | — | — | — | 35,100 | 6,585,884 | 15,583 | 2,905,295 | | Mr. Raup | — | — | — | — | — | 6,410 | 1,235,735 | 13,590 | 2,533,720 | | | — | — | — | — | — | — | — | 14,780 | 2,755,583 | | Total | — | — | — | — | — | 6,410 | 1,235,735 | 28,370 | 5,289,303 | | Ms. Riggs | — | — | — | — | — | 5,997 | 1,154,219 | 13,590 | 2,533,720 | | | — | — | — | — | — | — | — | 14,780 | 2,755,583 | | Total | — | — | — | — | — | 5,997 | 1,154,219 | 28,370 | 5,289,303 |
Outstanding Equity Awards at 2023 Fiscal-Year End Table
____________________ (1)Columns (b) through (f) represent information about stock options awarded to each NEO under the EICP. Stock option awards vest in 25% increments over four years and have a ten-year term. Information on the treatment of stock options upon retirement, death, disability, termination, or Change in Control can be found in the section titled “Potential Payments upon Termination or Change in Control.” (2)Options listed in Column (b) are vested and may be exercised by the NEO at any time subject to the terms of the stock option. (3)As shown in Column (c), all Options were vested as of December 31, 2023. (4)For Mmes. Buck and Riggs and Messrs. Raup and Voskuil, Column (g) includes unvested annual RSUs awarded in February 2021, February 2022 and February 2023, which vest ratably over 3 years. For Mr. Bhatia, Column (g) includes unvested special RSUs granted in November 2023 which vest ratably over 2 or 3 years. Column (h) sets forth the value of the RSUs reported in Column (g) using the $186.44 closing price per share of our Common Stock on the NYSE on December 29, 2023, the last trading day of 2023. Column (h) also includes the value of dividend equivalents accrued through December 31, 2023 on the RSUs included in Column (g). (5)Based on progress to date against the performance metrics established for open PSU performance cycles, the first number in Column (i) for each NEO is the maximum number of PSUs potentially payable for the 2023-2025 performance cycle ending on December 31, 2025. The second number in Column (i) for each NEO is the maximum number of PSUs potentially payable for the 2022-2024 performance cycle ending on December 31, 2024. The actual number of PSUs earned, if any, will be determined at the end of each performance cycle and may be fewer than the number reflected in Column (i). Column (j) sets forth the value of PSUs reported in Column (i) using the $186.44 closing price per share of our Common Stock on the NYSE on December 29, 2023, the last trading day of 2023.
2023 Option Exercises and Stock Vested Table
2023 Option Exercises and Stock Vested Table The following table and explanatory footnotes provide information with regard to amounts paid to or received by our NEOs during 2023 as a result of the exercise of stock options or the vesting of stock awards:
2023 Option Exercises and Stock Vested Table
| Name | Option Awards(1) | | Stock Awards(2) (3) | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | (a) | (b) | (c) | (d) | (e) | | Ms. Buck | 29,755 | 4,220,792 | 74,938 | 14,424,816 | | | | | 13,948 | 3,462,448 | | Mr. Voskuil | — | — | 17,556 | 3,379,354 | | | | | 4,070 | 1,011,305 | | Mr. Bhatia | — | — | — | — | | | | | — | — | | Mr. Raup | — | — | 15,155 | 2,917,186 | | | | | 2,978 | 738,268 | | Ms. Riggs | — | — | 13,179 | 2,536,826 | | | | | 2,849 | 707,901 |
2023 Option Exercises and Stock Vested Table
____________________ (1)Column (b) represents the number of stock options exercised by the NEO during 2023, and Column (c) represents the market value at the time of exercise of the shares purchased less the exercise price paid. (2)The first number in Column (d) includes the number of PSUs earned from the 2021-2023 performance cycle that ended on December 31, 2023, as determined by the Compensation Committee, or, in the case of Ms. Buck, by the independent directors of our Board. The number of PSUs included in Column (d) reflects payment of the 2021-2023 PSU cycle at 250% of target. All of the applicable NEOs received payment of the award in Common Stock in February 2024. In accordance with the terms of the PSU award agreement, each PSU represents one share of our Common Stock valued in Column (e) at $192.49, the closing price of our Common Stock on the NYSE on February 21, 2024, the date the Compensation Committee approved the PSU payment. (3)The second number in Column (d) reflects RSUs that were distributed in 2023 and the corresponding number in Column (e) sets forth the value of such RSUs at vesting and cash credits equivalent to dividends accrued during the vesting period.
2023 Pension Benefits Table
2023 Pension Benefits Table Mmes. Buck and Riggs are participants in our pension plan and are fully vested in benefits under that plan. Ms. Buck is also eligible to participate in our non-qualified DB SERP. No benefit is payable under the DB SERP if the executive officer terminates employment prior to age 55 or if he or she does not have five years of service with the Company. As of December 31, 2023, Ms. Buck had attained age 55 with five years of service and therefore was fully vested in her DB SERP benefit. The combination of the pension and DB SERP plans was designed to provide a benefit upon retirement at or after reaching age 60 based on a joint and survivor annuity equal to 55% of final average compensation for an executive with 15 or more years of service (reduced pro rata for each year of service under 15). Effective January 1, 2007, the benefit payable under the DB SERP to an executive who was age 50 or over as of January 1, 2007, was reduced by 10%, and the benefit payable to an executive who had not attained age 50 as of January 1, 2007, was reduced by 20%. As a result, the benefit payable to Ms. Buck was reduced by 20% since she had not attained age 50 as of January 1, 2007. Under the terms of the DB SERP, final average compensation is calculated as the sum of (i) the average of the highest three calendar years of base salary paid over the last five years of employment with the Company and (ii) the average of the highest three OHIP awards, paid or deferred, for the last five years of employment with the Company. The benefit accrued under the DB SERP is payable upon retirement (subject to the provisions of Section 409A of the IRC) as a lump sum or a life annuity with 50% benefit continuation to the participant’s surviving spouse, or payment may be deferred in accordance with the provisions of the Company’s Deferred Compensation Plan. The lump sum is equal to the actuarial present value of the joint and survivor pension earned, reduced by the lump sum value of the benefits to be paid under the pension plan and the value of the executive’s Social Security benefits. If the executive terminates employment after age 55 but before age 60, the benefit is reduced for early retirement at a rate of 5% per year for the period until the executive would have turned 60. The CLRP provides eligible participants the defined benefit he or she would have earned under our pension plan were it not for the legal limitation on compensation used to determine benefits. An executive who is a participant in the DB SERP is not eligible to participate in the CLRP unless he or she (i) ceases to be designated by the Compensation Committee as eligible to participate in the DB SERP prior to his or her termination of employment with the Company or (ii) has his or her employment involuntarily terminated by the Company other than for Cause prior to vesting in the DB SERP. NEOs meeting these criteria become eligible to participate in the CLRP and receive a benefit for all years in which they would have been a participant of the CLRP had they not been designated by the Compensation Committee to be eligible for the DB SERP. For executives who are eligible for both the DC SERP, as described in the section titled “2023 Non-Qualified Deferred Compensation Table,” and the pension plan, the additional credit under the CLRP is limited to 3% of eligible earnings less the IRS annual limitation on compensation. Ms. Riggs is the only NEO eligible for the CLRP. Upon separation, benefits under the CLRP are payable in a single lump sum or may be deferred into the Deferred Compensation Plan. A participant is eligible for his or her CLRP benefit upon separation from service (subject to the provisions of Section 409A of the IRC) after five years of service or attaining age 55 (unless the participant is terminated for Cause). Payment is also made to the estate of a participant who dies prior to separation from service. Participants who become disabled are 100% vested in their benefit and continue to accrue additional benefits for up to two additional years. The following table and explanatory footnote provide information regarding the present value of benefits accrued under the pension plan and the DB SERP or CLRP, as applicable, for each NEO as of December 31, 2023. The amounts shown for the DB SERP reflect the reduction for the present value of the benefits under the pension plan and Social Security benefits.
2023 Pension Benefits Table
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit(1) ($) | Payments During Last Fiscal Year ($) | | (a) | (b) | (c) | (d) | (e) | | Ms. Buck | Pension Plan | 19 | 294,136 | — | | | DB SERP | 19 | 29,817,797 | — | | Mr. Voskuil | — | — | — | — | | Mr. Bhatia | — | — | — | — | | Mr. Raup | — | — | — | — | | Ms. Riggs | Pension Plan | 19 | 151,339 | — | | | CLRP | 19 | 131,558 | — |
2023 Pension Benefits Table
____________________ (1)These amounts have been calculated using discount rate, mortality and other assumptions consistent with those used for financial reporting purposes as set forth in Note 11 to the Company’s Consolidated Financial Statements included in our 2023 Annual Report on Form 10-K which accompanies this Proxy Statement. The actual payments would differ due to plan assumptions. The estimated vested DB SERP benefit, as of December 31, 2023, for Ms. Buck was $29,817,797. The amount is based on Ms. Buck’s final average compensation under the terms of the DB SERP, as of December 31, 2023, as shown below:
2023 Pension Benefits Table
| Name | Final Average Compensation ($) | | Ms. Buck | 4,952,258 | | Mr. Voskuil | — | | Mr. Bhatia | — | | Mr. Raup | — | | Ms. Riggs | — |
2023 Non-Qualified Deferred Compensation Table
2023 Non-Qualified Deferred Compensation Table Our NEOs are eligible to participate in the Company’s Deferred Compensation Plan. The Deferred Compensation Plan is a non-qualified, non-funded plan that permits participants to defer compensation that would otherwise be paid to them currently. The Deferred Compensation Plan is intended to secure the goodwill and loyalty of participants by enabling them to defer compensation when the participants deem it beneficial to do so and by providing a vehicle for the Company to make, on a non-qualified basis, contributions that could not be made on the participants’ behalf to the 401(k) plan. The Company credits the Deferred Compensation Plan with a specified percentage of compensation for NEOs participating in the non-qualified DC SERP. Our NEOs may elect to defer payments to be received from the OHIP, PSU and RSU awards, but not stock options or base salary. Amounts deferred under the DB SERP, DC SERP, CLRP, OHIP, PSU and RSU awards are fully vested and are credited to the individual’s account under the Deferred Compensation Plan. Participants elect to receive payment at termination of employment or some other future date. DB SERP and CLRP payments designated for deferral into the Deferred Compensation Plan are not credited as earned but are credited in full upon the participant’s retirement. Payments are distributed in a lump sum or in annual installments for up to 15 years. All amounts are payable in a lump sum following a Change in Control (as such terms is defined in the EICP). All elections and payments under the Deferred Compensation Plan are subject to compliance with Section 409A of the IRC, which may limit elections and require a delay in payment of benefits in certain circumstances. While deferred, amounts are credited with notional earnings as if they were invested by the participant in one or more investment options offered by the Deferred Compensation Plan. The investment options under the Deferred Compensation Plan consist of investment in a deferred common stock unit account that we value according to the performance of our Common Stock (for awards paid in stock) or in mutual funds or other investments available to participants in our 401(k) plan (for awards paid in cash). The participants’ accounts under the Deferred Compensation Plan fluctuate daily, depending upon performance of the investment options elected. Effective January 1, 2007, we began crediting the deferred compensation accounts of all employees, including the NEOs, with the amount of employer matching contributions that exceed the limits established by the IRS for contribution to the 401(k) plan. These amounts are credited in the first quarter of the year after they are earned. As shown in the footnotes to the “2023 Summary Compensation Table,” these amounts are designated as “Supplemental 401(k) Match” and are included as “All Other Compensation” in the year earned. These amounts also are included in Column (c) of the “2023 Non-Qualified Deferred Compensation Table” in the year earned. All of our NEOs are eligible for a Supplemental 401(k) Match credit for 2023. With the exception of Mr. Bhatia, all of the NEOs are fully vested in the Supplemental 401(k) Match credits presented and will be paid at a future date or at termination of employment, as elected by the executive subject to the provisions of Section 409A of the IRC. Mr. Bhatia will vest in this benefit upon completion of two years of employment. If vested, he will receive payment for this benefit at termination of employment subject to the provisions of Section 409A of the IRC. Effective January 1, 2007, we began crediting the deferred compensation accounts of all employees hired on or after January 1, 2007, including eligible NEOs, with the amount of Core Retirement Contributions (“CRC”) that exceed the limits established by the IRS for contribution to the 401(k) plan. These amounts are credited in the first quarter of the year after they are earned. As shown in the footnotes to the “2023 Summary Compensation Table,” these amounts are designated as “Supplemental Core Retirement Contribution” and are included as “All Other Compensation” in the year earned. These amounts also are included in Column (c) of the “2023 Non-Qualified Deferred Compensation Table” in the year earned. Messrs. Raup and Voskuil are eligible for a Supplemental CRC credit for 2023, and they are fully vested in this benefit and will receive payment at termination of employment subject to the provisions of Section 409A of the IRC. Mr. Bhatia will vest in this benefit upon completion of two years of employment. If vested, he will receive payment for this benefit at termination of employment subject to the provisions of Section 409A of the IRC. Messrs. Bhatia, Raup, and Voskuil and Ms. Riggs are also eligible to participate in our DC SERP, a part of the Deferred Compensation Plan. The DC SERP provides annual allocations to the Deferred Compensation Plan equal to a percentage of compensation determined by the Compensation Committee in its sole discretion. In order to receive the annual DC SERP allocation, an executive must (i) defer into the 401(k) plan the maximum amount allowed by the Company or the IRS and (ii) be employed on the last day of the plan year, unless the executive terminates employment after age 55 and completion of five years of continuous employment preceding termination, dies or becomes disabled. After completing five years of service with the Company, an executive is vested in 10% increments based on his or her age, beginning at age 46. An executive age 46 with five years of service is 10% vested and an executive age 55 with five years of service is 100% vested. The annual DC SERP allocation for Messrs. Bhatia, Raup, and Voskuil and Ms. Riggs is equal to 12.5% of base salary and OHIP award for the calendar year, whether paid or deferred. Mr. Raup is 100% vested in his DC SERP benefits. Messrs. Bhatia and Voskuil are 0% vested because they have not yet completed five years of continuous employment with the Company, and Ms. Riggs is 0% vested as she is under age 46. The following table and explanatory footnotes provide information relating to the activity in the Deferred Compensation Plan accounts of the NEOs during 2023 and the aggregate balance of the accounts as of December 31, 2023:
2023 Non-Qualified Deferred Compensation Table
| Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year(1) ($) | Aggregate Earnings in Last Fiscal Year(2) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year-End(3) ($) | | (a) | (b) | (c) | (d) | (e) | (f) | | Ms. Buck | — | 235,350 | (3,056,281) | — | 18,854,477 | | Mr. Voskuil | — | 433,250 | 51,031 | — | 1,383,099 | | Mr. Bhatia | — | 17,428 | — | — | 17,428 | | Mr. Raup | — | 403,250 | 100,631 | — | 1,201,119 | | Ms. Riggs | — | 348,950 | 91,779 | — | 976,920 |
2023 Non-Qualified Deferred Compensation Table
(1)For Ms. Buck, Column (c) reflects the Supplemental 401(k) Match contributions earned for 2023. For Messrs. Raup and Voskuil, Column (c) reflects the DC SERP, the Supplemental 401(k) Match contributions and the Supplemental CRC earned for 2023. For Ms. Riggs, Column (c) reflects the DC SERP and the Supplemental 401(k) Match contributions earned for 2023. For Mr. Bhatia, Column (c) reflects the DC SERP earned in 2023. These contributions are included in Column (i) of the “2023 Summary Compensation Table.” (2)Column (d) reflects the adjustment made to each NEO’s account during 2023 to reflect the performance of the investment options chosen by the executive. Amounts reported in Column (d) were not required to be reported as compensation in the “2023 Summary Compensation Table.” (3)Column (f) reflects the aggregate balance credited to each NEO as of December 31, 2023, including the 2023 amounts reflected in Columns (b), (c) and (d). The following table indicates the portion of the Column (f) balance that reflects amounts disclosed in a Summary Compensation Table included in proxy statements for years prior to 2023:
2023 Non-Qualified Deferred Compensation Table
| Name | Amounts Reported in Previous Years(a) ($) | | Ms. Buck | 1,397,920 | | Mr. Voskuil | 939,130 | | Mr. Bhatia | — | | Mr. Raup | 634,573 | | Ms. Riggs | 456,568 |
2023 Non-Qualified Deferred Compensation Table
(a) These amounts reflect values as reported in the Summary Compensation Table in prior fiscal years. These amounts do not include accumulated earnings or losses.
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control We maintain plans covering our NEOs that will require us to provide incremental compensation in the event of termination of employment or a Change in Control (as such term is defined in the applicable governing document), provided certain conditions are met. The following narrative takes each hypothetical termination of employment situation – voluntary resignation, termination for Cause, death, disability, retirement, termination without Cause, and resignation for Good Reason – and a Change in Control of the Company, and describes the additional amounts, if any, that the Company would pay or provide to the NEOs, or their beneficiaries, as a result. The narrative below and the amounts shown reflect certain assumptions we have made in accordance with SEC rules. We have assumed that the termination of employment or Change in Control occurred on December 31, 2023, and that the value of a share of our Common Stock on that day was $186.44, the closing price on the NYSE on December 29, 2023, the last trading day of 2023. In addition, in keeping with SEC rules, the following narrative and amounts do not include payments and benefits which are not enhanced by a qualifying termination of employment or Change in Control. These payments and benefits are referred to as “vested benefits” and include: •Vested benefits accrued under the 401(k) and pension plans; •Accrued vacation pay, health plan continuation and other similar amounts payable when employment terminates under programs generally applicable to the Company’s salaried employees; •Vested Supplemental 401(k) Match and Supplemental CRC provided to the NEOs on the same basis as all other employees eligible for Supplemental 401(k) Match and Supplemental CRC; •Vested benefits accrued under the DB SERP, CLRP and account balances held under the Deferred Compensation Plan as previously described in the sections titled “2023 Pension Benefits Table” and “2023 Non-Qualified Deferred Compensation Table”; and •Stock options that have vested and become exercisable prior to termination of employment or Change in Control. Voluntary Resignation (other than a Resignation for Good Reason) We are not obligated to pay amounts over and above vested benefits to a NEO who voluntarily resigns. Vested stock options may not be exercised after the NEO’s resignation date unless the executive meets retirement eligibility requirements (separation after attainment of age 55 with at least five years of continuous service). Termination for Cause If we terminate a NEO’s employment for Cause, we are not obligated to pay the executive any amounts over and above vested benefits. The NEO’s right to exercise vested stock options expires upon termination for Cause, and amounts otherwise payable under the DB SERP are subject to forfeiture at the Company’s discretion. In general, a termination will be for Cause if the executive has been convicted of a felony or has engaged in gross negligence or willful misconduct in the performance of duties, material dishonesty or a material violation of Company policies, including our Code of Conduct, or bad faith actions in the performance of duties not in the best interests of the Company. Death or Disability If a NEO dies prior to meeting the vesting requirements under the DB SERP, no benefits are paid. As of December 31, 2023, Ms. Buck was fully vested in her DB SERP benefit and her estate would therefore be entitled to a payout of such benefits in the event of her death. If a NEO dies while participating in the CLRP, the value of the account balance at death is paid to the designated beneficiary. Ms. Riggs participates in the CLRP, so her designated beneficiary would be entitled to such payout in the event of her death. If a NEO dies or becomes disabled prior to meeting the vesting requirements under the 401(k) plan or for the Supplemental 401(k) Match, Supplemental CRC or DC SERP benefits, the accrued amounts under those plans become vested. Mr. Bhatia is not fully vested in these benefits. Mr. Voskuil and Ms. Riggs are not fully vested in their respective DC SERP benefits. In the event of death or disability, Messrs. Bhatia and Voskuil and Ms. Riggs would have received $31,652, $939,377 and $743,551, respectively, as a result of vesting. In the event of termination due to disability, long-term disability (“LTD”) benefits are generally payable until age 65, but may extend longer if disability benefits begin after age 60, and are offset by other benefits such as Social Security. The maximum amount of the monthly LTD payments from all sources, assuming LTD began on December 31, 2023, is set forth in the table below:
Potential Payments upon Termination or Change in Control
| Name | Long-Term Disability Benefit | | | | | | Maximum Monthly Amount ($) | Years and Months Until End of LTD Benefits (#) | Total of Payments ($) | Lump Sum Benefit(1) ($) | | Ms. Buck | 35,000 | 3 years 6 months | 1,470,000 | 75,869 | | Mr. Voskuil | 25,000 | 9 years 9 months | 2,925,000 | 1,649,277 | | Mr. Bhatia | 25,000 | 14 years 6 months | 4,350,000 | 256,402 | | Mr. Raup | 25,000 | 8 years 7 months | 2,575,000 | 663,400 | | Ms. Riggs | 25,000 | 19 years 4 months | 5,800,000 | 1,468,866 |
Potential Payments upon Termination or Change in Control
(1)For Mmes. Buck and Riggs, the amounts reflect pension plan benefits payable at age 65 that are attributable to benefit service credited during the disability period, along with additional SRC contributions through the year prior to which they reach age 65. For the DB SERP, Ms. Buck has reached the service limit and would receive no incremental benefits in the event of her disability. For Ms. Riggs, amounts also reflect an additional two years of CLRP and DC SERP credits and vesting in her DC SERP upon disability. For Mr. Bhatia, amounts reflect an additional two years of CRC, Supplemental CRC and DC SERP credits and vesting in his 401(k) Match, CRC, Supplemental 401(k) Match, Supplemental CRC and DC SERP upon disability. For Mr. Raup, amounts reflect an additional two years of CRC, Supplemental CRC and DC SERP credits upon disability. For Mr. Voskuil, amounts reflect an additional two years of CRC, Supplemental CRC and DC SERP credits and vesting in his DC SERP upon disability. Treatment of Stock Options upon Retirement, Death or Disability In the event of retirement, death or disability, vested stock options remain exercisable for a period of three or five years, not to exceed the option expiration date. The exercise period is based upon the terms and conditions of the individual grant. Retirement is defined as separation after attainment of age 55 with at least five years of continuous service. Options that are not vested at the time of retirement, death or disability will generally vest in full (subject to the exception described in the following sentence) and the options will remain exercisable for three or five years following termination, depending on the terms and conditions of the grant. Options granted in the year of retirement are prorated based upon the number of full calendar months worked in that year. As of December 31, 2023, there were no unvested stock options for the NEOs. Treatment of RSUs upon Retirement, Death or Disability In the event of retirement, death or disability, RSUs that are not vested will generally vest in full (subject to the exception described in the following sentence). RSUs granted in the year of retirement are prorated based upon the number of full calendar months worked in that year. The following table provides the number of unvested RSUs that would have vested on December 31, 2023, if the executive’s employment terminated that day due to death or disability. Messrs. Bhatia and Voskuil and Ms. Riggs were not considered retirement eligible as of December 31, 2023 and they would have forfeited 35,100 RSUs, 6,412 RSUs and 5,997 RSUs, respectively, upon voluntary separation.
Potential Payments upon Termination or Change in Control
| Name | Restricted Stock Units | | | | Number(1) (#) | Value(2) ($) | | Ms. Buck | 25,461 | 4,907,439 | | Mr. Voskuil | 6,412 | 1,235,543 | | Mr. Bhatia | 35,100 | 6,585,884 | | Mr. Raup | 6,410 | 1,235,735 | | Ms. Riggs | 5,997 | 1,154,219 |
Potential Payments upon Termination or Change in Control
____________________ (1)Represents the total number of unvested RSUs as of December 31, 2023. (2)Based on the closing price of $186.44 for our Common Stock on the NYSE on December 29, 2023, the last trading day of 2023, plus accrued dividend equivalents. Treatment of PSUs upon Retirement, Death or Disability In general, in the event of retirement, death or disability, any unvested contingent PSUs are prorated based on the number of full or partial months worked in each of the open PSU cycles. Any remaining unvested contingent PSUs not prorated are forfeited. The following table provides the total number of contingent PSUs each NEO would be entitled to if the executive’s employment ended on December 31, 2023 due to death or disability, or retirement if applicable. As of December 31, 2023, Ms. Buck and Mr. Raup were considered retirement eligible based on the provisions of all open PSU cycles. Messrs. Bhatia and Voskuil and Ms. Riggs were not considered retirement eligible as of December 31, 2023 and they would have forfeited all of their contingent PSUs upon voluntary separation.
Potential Payments upon Termination or Change in Control
| Name | Performance Stock Units | | | | Number(1) (#) | Value(2) ($) | | Ms. Buck | 97,549 | 18,187,036 | | Mr. Voskuil | 23,426 | 4,367,543 | | Mr. Bhatia | 2,078 | 387,422 | | Mr. Raup | 20,908 | 3,898,088 | | Ms. Riggs | 18,932 | 3,529,682 |
Potential Payments upon Termination or Change in Control
(1)For the 2021-2023 PSU cycle, amount reflects the total number of contingent PSUs calculated by multiplying the number of contingent target PSUs by 250%, the final performance score for that cycle. For the 2022-2024 and 2023-2025 PSU cycles, amount reflects the total number of contingent PSUs at target. (2)Based on the closing price of $186.44 for our Common Stock on the NYSE on December 29, 2023, the last trading day of 2023. Termination without Cause; Resignation for Good Reason Under Ms. Buck’s employment agreement and the EBPP 3A, as applicable, we have agreed to pay severance benefits if we terminate a NEO’s active employment without Cause or if the NEO resigns from active employment for Good Reason, in each case as defined in the applicable document. Severance benefits consist of a lump sum payment calculated as a multiple of base salary as well as continued OHIP eligibility, calculated as the lower of target or actual Company performance, for a set period of time, as shown in the table below. Additionally, all NEOs would be entitled to receive a pro rata payment of the OHIP award, if any, earned for the year in which termination occurs, continuation of health and welfare benefits and financial planning and tax preparation benefits for a set period of time, as shown in the table below as well as outplacement services up to $35,000.
Potential Payments upon Termination or Change in Control
| Plan | Benefit Entitlement | | | | | | Severance Multiple | OHIP Continuation | Health and Welfare Benefits | Financial Planning and Tax Preparation Benefits | | Ms. Buck’s employment agreement and participants in EBPP 3A on or before February 22, 2011 | 2 times | 24 months | 24 months | 24 months | | Participants in EBPP 3A after February 22, 2011 | 1.5 times | 18 months | 18 months | 18 months |
Potential Payments upon Termination or Change in Control
If a NEO has not met retirement eligibility requirements and his or her employment is terminated for reasons other than for Cause, or if the NEO terminates for Good Reason, he or she will be eligible to exercise all vested stock options and a prorated portion of his or her unvested stock options held on the date of separation from service for a period of 120 days following separation. If the NEO is age 55 or older with five or more years of continuous service and his or her employment is terminated for reasons other than for Cause, or if the NEO terminates for Good Reason, the NEO will be entitled to exercise any vested stock options until the earlier of three or five years (based on the provisions of the individual grant) from the date of termination or the expiration of the options. In addition, if a NEO has not met retirement eligibility requirements and his or her employment is terminated for reasons other than for Cause, or if the NEO terminates for Good Reason, the NEO will vest in a prorated portion of any unvested RSUs held on the date of separation from service. The following table provides the incremental amounts that would have vested and become payable to each NEO had his or her employment terminated on December 31, 2023, under circumstances entitling the NEO to severance benefits as described above:
Potential Payments upon Termination or Change in Control
| Name | Salary ($) | OHIP at Target ($) | PSU Related Payments(1) ($) | Vesting of Stock Options(1) ($) | Vesting of Restricted Stock Units(1) ($) | Value of Benefits Continuation(2) ($) | Value of Financial Planning and Outplacement(3) ($) | Total ($) | | Ms. Buck | 2,800,000 | 4,480,000 | — | — | — | 51,839 | 68,000 | 7,399,839 | | Mr. Voskuil | 1,185,000 | 1,185,000 | — | — | 845,395 | 25,424 | 59,750 | 3,300,569 | | Mr. Bhatia | 1,087,500 | 1,087,500 | — | — | 667,594 | 34,899 | 59,750 | 2,937,243 | | Mr. Raup | 1,185,000 | 1,185,000 | — | — | — | 35,073 | 59,750 | 2,464,823 | | Ms. Riggs | 1,185,000 | 1,185,000 | — | — | 774,099 | 13,427 | 59,750 | 3,217,276 |
Potential Payments upon Termination or Change in Control
(1)Reflects the value of equity awards that would have vested and become payable to each NEO over and above amounts they would have received upon a voluntary termination. (2)Reflects projected medical, dental, vision and life insurance continuation premiums paid by the Company during the applicable time period following termination. (3)Value of maximum payment for financial planning and tax preparation continuation during the applicable time period following termination plus outplacement services of $35,000. For information with respect to stock options, RSUs and PSUs held by each NEO as of December 31, 2023, refer to the “Outstanding Equity Awards at 2023 Fiscal-Year End Table.” Change in Control The EBPP 3A and the terms of the applicable award agreements provide for the vesting and payment of the following benefits to each of the NEOs upon a Change in Control: •An OHIP payment for the year in which the Change in Control occurs, calculated as the greater of target or the estimated payment based on actual performance through the date of the Change in Control; •To the extent not vested, full vesting of benefits accrued under the DB SERP, CLRP and the Deferred Compensation Plan; •To the extent not vested, full vesting of benefits under the 401(k) and pension plans; •If not replaced with awards that qualify as Replacement Awards (as defined in the EICP), full vesting of all outstanding RSUs and stock options; •If not replaced with awards that qualify as Replacement Awards (as defined in the EICP), a vested and non-forfeitable right to receive a lump sum cash payment equal to the target PSU grant for the performance cycle ending in the year of the Change in Control, determined based upon the greater of target or actual performance through the date of the Change in Control, with each PSU valued at the higher of (a) the highest closing price for our Common Stock during the 60 days prior to (and including the date of) the Change in Control and (b) the price at which an offer is made to purchase shares of our Common Stock from the Company’s stockholders, if applicable (the higher of (a) and (b), the “Transaction Value”); and •If not replaced with awards that qualify as Replacement Awards (as defined in the EICP), a vested and non-forfeitable right to receive a lump sum cash payment equal to the target PSU grant for the second year of the performance cycle and a prorated portion of the target PSU grant for the first year of the performance cycle at the time of the Change in Control, with each PSU valued at the higher of the Transaction Value and the highest closing price of our Common Stock from the date of the Change of Control until the earlier of the end of the applicable grant cycle or the NEO’s separation from service. Under our EICP and the terms of the applicable award agreements, awards that are continued as Replacement Awards after a Change in Control are not subject to accelerated vesting or payment upon the Change in Control. In the event of termination of employment within two years following the Change in Control for any reason other than termination for Cause or resignation without Good Reason, the Replacement Awards will vest and become payable as described on the pages that follow. The following table and explanatory footnotes provide information with respect to the incremental amounts that would have vested and become payable on December 31, 2023, if a Change in Control occurred on that date.
Potential Payments upon Termination or Change in Control
| Name | OHIP Related Payment(1) ($) | PSU Related Payments(2) ($) | Vesting of Stock Options(3) ($) | Vesting of Restricted Stock Units(3) ($) | Retirement and Deferred Compensation Benefits(4) ($) | Total(5) ($) | | Ms. Buck | — | 2,622,765 | — | — | — | 2,622,765 | | Mr. Voskuil | — | 1,759,315 | — | 1,235,543 | 939,377 | 3,934,235 | | Mr. Bhatia | — | 411,112 | — | 6,585,884 | 31,652 | 7,028,648 | | Mr. Raup | — | 628,294 | — | — | — | 628,294 | | Ms. Riggs | — | 1,678,356 | — | 1,154,219 | 743,551 | 3,576,126 |
Potential Payments upon Termination or Change in Control
(1)For all NEOs, the amount of the OHIP award earned for 2023 was greater than target. Therefore, no incremental amount attributable to that program would have been payable upon a Change in Control. (2)Amounts reflect vesting of PSUs awarded, as follows: • For the performance cycle that ended on December 31, 2023, the difference between a value per PSU of $197.84, the highest closing price for our Common Stock on the NYSE during the last 60 days of 2023, and a value per PSU of $186.44, the closing price for our Common Stock on the NYSE on December 29, 2023, the last trading day of 2023; • For the performance cycle ending December 31, 2024, at target performance, with a value per PSU of $197.84, the highest closing price for our Common Stock on the NYSE during the last 60 days of 2023; and • For the performance cycle ending December 31, 2025, one-third of the contingent target units awarded, at target performance, with a value per PSU of $197.84, the highest closing price for our Common Stock on the NYSE during the last 60 days of 2023. Because Ms. Buck and Mr. Raup were retirement eligible as of December 31, 2023, as of that date they had already vested in a portion of the PSU awards for the performance cycles ending December 31, 2024 and December 31, 2025. Accordingly, with respect to Ms. Buck and Mr. Raup, the amount reflects only (i) an incremental payment of the portion of the PSU award that would vest upon a Change in Control if the awards were not continued as Replacement Awards (i.e., 1/3 of the total award) and (ii) an incremental benefit equal to the difference between a value per PSU of $197.84, the highest closing price for our Common Stock on the NYSE during the last 60 days of 2023, and a value per PSU of $186.44, the closing price for our Common Stock on the NYSE on December 29, 2023, the last trading day of 2023, while the amount for the performance cycle ending December 31, 2023 reflects only an incremental benefit equal to the difference between a value per PSU of $197.84 and a value per PSU of $186.44. (3)Reflects the value of equity awards that would have vested and become payable to each NEO over and above amounts that would have already vested. (4)Reflects the full vesting value of DB SERP benefits and more favorable early retirement discount factors as provided under the EBPP 3A. Ms. Buck is fully vested in her DB SERP benefit and the more favorable early retirement factors do not apply to the CEO, so no additional benefit is applicable. For Mr. Bhatia, the amount includes the vesting of DC SERP benefits, 401(k), Supplemental 401(k) Match, CRC and Supplemental CRC. For Mr. Voskuil and Ms. Riggs, the amount includes the vesting of their respective DC SERP benefits. Mr. Raup is fully vested in his DC SERP benefit so no additional benefit is applicable. Ms. Riggs is fully vested in her CLRP benefits so no additional benefit is applicable. (5)For any given executive, the total payments made in the event of a Change in Control would be reduced to the “safe harbor” limit under IRC Section 280G if such reduction would result in a greater after-tax benefit for the executive. Termination without Cause or Resignation for Good Reason after Change in Control If a NEO’s employment is terminated by the Company without Cause or by the NEO for Good Reason within two years after a Change in Control, we pay severance benefits under the EBPP 3A to assist the NEO in transitioning to new employment. These severance benefits as of December 31, 2023, consist of: •A lump sum cash payment equal to two (or, if less, the number of full and fractional years from the date of termination to the executive’s 65th birthday, but not less than one) times: ◦The executive’s base salary; and ◦The highest OHIP award payment paid or payable during the three years preceding the year of the Change in Control (but not less than the OHIP target award for the year of the termination) (“Highest OHIP”); •For replacement PSU awards, a lump sum cash payment equal to the target PSU grant for the performance cycle ending in the year of the Change in Control, determined based upon the greater of target or actual performance through the date of the Change in Control, with each PSU valued at the Transaction Value; •For replacement PSU awards, a lump sum cash payment equal to the target PSU grant for the second year of the performance cycle and a prorated portion of the target PSU grant for the first year of the performance cycle at the time of the Change in Control, with each PSU valued at the higher of the Transaction Value and the highest closing price of our Common Stock from the date of the Change of Control until the NEO’s separation from service; •For replacement stock options and RSU awards (including accrued cash credits equivalent to dividends that would have been earned had the executive held Common Stock instead of RSUs), full vesting of all unvested stock options and RSUs; •Continuation of medical, dental, vision and life benefits for 24 months (or, if less, the number of months until the executive attains age 65, but not less than 12 months), or payment of the value of such benefits if continuation is not permitted under the terms of the applicable plan; •For executives who participate in the pension plan and do not participate in the DB SERP, a lump sum equal to their pay credit percentage under that plan times the sum of their base salary and Highest OHIP times the number of years in their severance period (two, or, if less, the number of full and fractional years from the date of termination to the executive’s 65th birthday, but not less than one). For executives who do not participate in the pension plan, a lump sum equal to the CRC rate times the sum of their base salary and Highest OHIP times the number of years in their severance period (two, or, if less, the number of full and fractional years from the date of termination to the executive’s 65th birthday, but not less than one). IRS limitations imposed on the 401(k) and pension plans will not apply for this purpose; •Outplacement services up to $35,000 and reimbursement for financial counseling and tax preparation services for two years; •An enhanced matching contribution cash payment equal to the 401(k) matching contribution rate of 4.5% multiplied by the executive’s base salary and Highest OHIP calculated as if such amounts were paid during the years in the executive’s severance period. For this purpose, the IRS limitations imposed on the 401(k) plan do not apply; •For executives who participate in the DB SERP, an enhanced benefit reflecting an additional two years of credit; and •For executives who participate in the DC SERP, an enhanced benefit reflecting a cash payment equal to the applicable percentage rate multiplied by his or her base salary and Highest OHIP calculated as if such amounts were paid during the years in the executive’s severance period. The following table provides amounts that would have vested and become payable to each NEO over and above amounts they would have received upon a termination by the Company without Cause or by the NEO for Good Reason, assuming a Change in Control occurred, and the executive’s employment terminated on December 31, 2023:
Potential Payments upon Termination or Change in Control
| Name | Lump Sum Cash Severance Payment ($) | PSU Related Payments(1) ($) | Vesting of Stock Options ($) | Vesting of RSUs ($) | Value of Medical and Other Benefits Continuation ($) | Value of Financial Planning and Outplace- ment ($) | Value of Enhanced DB SERP/ DC SERP and 401(k) Benefit(2) ($) | Total(3) ($) | | Ms. Buck | 3,840,000 | 2,622,765 | — | — | — | — | 4,267,892 | 10,730,657 | | Mr. Voskuil | 2,210,000 | 1,759,315 | — | 390,148 | 8,781 | 8,250 | 916,000 | 5,292,494 | | Mr. Bhatia | 725,000 | 411,112 | — | 5,918,290 | 12,064 | 8,250 | 580,000 | 7,654,716 | | Mr. Raup | 1,910,000 | 628,294 | — | — | 12,122 | 8,250 | 856,000 | 3,414,666 | | Ms. Riggs | 1,910,000 | 1,678,356 | — | 380,120 | 4,625 | 8,250 | 829,000 | 4,810,351 |
Potential Payments upon Termination or Change in Control
____________________ (1)Amounts reflect vesting of PSUs awarded as described in footnote (2) to the Change in Control table. (2)For Ms. Buck, this value reflects the amounts of enhanced DB SERP, 401(k) match and Supplemental 401(k) Match over a 24-month period. For Messrs. Bhatia, Raup and Voskuil, the value reflects the amounts of enhanced DC SERP, CRC, Supplemental CRC, 401(k) match and Supplemental 401(k) Match that would have been paid had they remained employees for 24 months after their termination. For Ms. Riggs, the value reflects the amounts of enhanced DC SERP, pension plan credits, 401(k) match and Supplemental 401(k) Match that would have been paid had she remained employed for 24 months after her termination. (3)For any given executive the total payments made in the event of termination after a Change in Control would be reduced to the “safe harbor” limit under IRC Section 280G if such reduction would result in a greater after-tax benefit for the executive.
CEO Pay Ratio Disclosure
CEO Pay Ratio Disclosure The annual total compensation of our CEO for fiscal year 2023 was $15,654,209. The median of the annual total compensation for all employees, excluding the CEO, for fiscal year 2023 was $43,527. As a result, we estimate that the ratio of the annual total compensation of our CEO to the annual total compensation of the median employee for fiscal year 2023 was 360 to 1. Absent significant changes in our employee population or compensation arrangements (including the compensation arrangements of the median employee used in fiscal 2022), SEC rules generally permit utilization of the same median employee for three years for purposes of the pay ratio analysis. Any increases in compensation were widespread across the company and did not significantly shift the median. Accordingly, we used the same median employee for the pay ratio analysis for fiscal year 2023. We identified the median employee using base salary, including overtime, earned in the first nine months of 2022 for all employees, excluding our CEO, as of October 11, 2022, the second Tuesday in October in 2022, which is our annual measurement date for determining our median employee. We calculated annual total compensation for the median employee using the same methodology used for calculating the total compensation of our NEOs as set forth in the “2023 Summary Compensation Table.”
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure Provided below is the Company’s “pay versus performance” disclosure as required pursuant to Item 402(v) of Regulation S-K promulgated under the Exchange Act (referred to herein as Item 402(v)). As required by Item 402(v), we have included: •A list of the most important measures that our Compensation Committee used in 2023 to link a measure of pay calculated in accordance with Item 402(v) (referred to as “compensation actually paid,” or “CAP”) to Company performance; •A pay versus performance table that compares the total compensation of our NEOs as presented in the “Summary Compensation Table” (“SCT Total Compensation”) to CAP and that compares CAP to specified performance measures, including TSR, Peer Group TSR (as defined below), Net Income calculated in accordance with GAAP (“GAAP Net Income”) and our Company selected financial performance measure, Net Sales (as defined in the section titled “Compensation Discussion & Analysis”); and •Graphs that describe: ◦The relationship between our TSR and the TSR of the S&P 500 Packaged Foods Index (the “Peer Group TSR”); and ◦The relationships between CAP and our cumulative TSR, GAAP Net Income, and our Company selected financial performance measure, Net Sales. This disclosure has been prepared in accordance with Item 402(v) and does not necessarily reflect value actually realized by our executives or how our Committee evaluates compensation decisions in light of Company or individual performance. In particular, our Committee does not use CAP as a basis for making compensation decisions, nor does it use GAAP Net Income or Peer Group TSR for purposes of determining incentive compensation. Please see the section titled “Compensation Discussion & Analysis” for a discussion of our executive compensation program objectives and the ways in which we align our executives’ compensation with the Company’s performance. For purposes of the following disclosures, each of Salary, Bonus, Non-Equity Incentive Plan Compensation, Non-qualified Deferred Compensation Earnings and All Other Compensation is calculated in the same manner for purposes of CAP as it is calculated for purposes of SCT Total Compensation. There are, however, two primary differences between the calculation of CAP and SCT Total Compensation:
Pay Versus Performance Disclosure
| | SCT Total Compensation | CAP | | Pension | Year-over-year change in the actuarial present value of pension benefits | Current year service cost and any prior year service cost (if a plan amendment occurred during the year) | | Stock and Option Awards | Grant date fair value of stock and option awards granted during the year | Year-over-year change in the fair value of stock and option awards that are unvested as of the end of the year or that vested or were forfeited during the year(1) |
Pay Versus Performance Disclosure
____________________ (1) Includes any dividends paid on equity awards in the fiscal year prior to the vesting date that are not otherwise reflected in the fair value of such award. Metrics Used for Linking Pay and Performance The following is a list of performance metrics, which in our assessment represent the most important performance measures used by the Company to link Company performance to the compensation actually paid to the NEOs for 2023. Each metric below is used for purposes of determining payouts under either our 2023 OHIP or our current open PSU cycles. Please see the section titled “Compensation Discussion & Analysis” for a description of these metrics and how they are used in the Company’s executive compensation program. •Net Sales •Adjusted EPS •Free Cash Flow Net Sales was the most heavily weighted financial performance metric under our 2023 OHIP and is an important top-line measure that, when combined with the other measures in the OHIP and PSU awards, supports long-term shareholder value creation. Net Sales is the Company-selected financial performance measure included in the table and graphs that follow. Net Sales is a non-GAAP financial performance measure. For more information on how we define and use Net Sales in our executive compensation program, please see the section titled “Compensation Disclosure & Analysis” above. Pay Versus Performance Table Below is the tabular disclosure for the Company’s CEO and the average of our NEOs other than the CEO for 2023, 2022, 2021 and 2020.
Pay Versus Performance Disclosure
| Year | SCT Total Compensation for CEO(1) | Compensation Actually Paid to CEO(2) | Average SCT Total Compensation for Other NEOs(1) | Average Compensation Actually Paid to Other NEOs(2) | Value of Initial Fixed $100 Investment Based on: | | GAAP Net Income ($mil.) | Company Selected Measure: Net Sales ($mil.)(4) | | | | | | | TSR | Peer Group TSR(3) | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 15,654,209 | 12,730,946 | 5,556,094 | 5,298,510 | 137 | 120 | 1,862 | 11,165 | | 2022 | 13,550,049 | 26,043,523 | 4,182,463 | 6,492,643 | 167 | 129 | 1,645 | 10,419 | | 2021 | 16,144,570 | 32,159,575 | 3,253,471 | 5,677,965 | 137 | 118 | 1,478 | 8,971 | | 2020 | 19,115,059 | 19,711,109 | 3,160,508 | 3,730,097 | 106 | 105 | 1,279 | 8,150 |
Pay Versus Performance Disclosure
____________________ (1) 2023 CEO is Michele Buck; other NEOs are Deepak Bhatia, Charles Raup, Kristen Riggs, and Steven Voskuil; 2022 CEO is Michele Buck; other NEOs are Charles Raup, Jason Reiman, Kristen Riggs, and Steven Voskuil; 2021 CEO is Michele Buck; other NEOs are Charles Raup, Jason Reiman, Kristen Riggs, and Steven Voskuil; 2020 CEO is Michele Buck; other NEOs are Damien Atkins (former), Charles Raup, Jason Reiman, Steven Voskuil, Kevin Walling (former), and Mary Beth West (former). (2) The dollar amounts reported represent CAP, as computed in accordance with Item 402(v). The fair value of option awards was determined using a Black-Scholes option-pricing model. The dollar amounts do not reflect the actual amount of compensation earned by or paid during the applicable year. In accordance with Item 402(v), the following adjustments were made to SCT Total Compensation to determine the CAP values: Reconciliation of SCT Total Compensation to Compensation Actually Paid to CEO
Pay Versus Performance Disclosure
| Fiscal Year | SCT Total Compensation for CEO | Minus SCT Change in Pension Value for CEO | Plus Pension Value Service Cost | Minus SCT Equity for CEO | Plus EOY Fair Value of Equity Awards Granted During Fiscal Year that are Outstanding and Unvested at EOY(a) | Plus Change from BOY to EOY in Fair Value of Awards Granted in Any Prior Fiscal Year that are Outstanding and Unvested at EOY(a) | Plus Change in Fair Value from BOY to Vesting Date of Awards Granted in Any Prior Fiscal Year that Vested During the Fiscal Year(a) | Plus value of Dividends or other Earnings Paid on Stock Option Awards not Otherwise Reflected in Fair Value of Total Compensation | CEO CAP | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j)=(b)-(c)+(d)- (e)+(f)+(g)+(h)+(i) | | 2023 | 15,654,209 | 2,569,968 | 861,566 | 8,256,692 | 7,264,952 | (1,197,875) | 859,133 | 115,621 | 12,730,946 |
Pay Versus Performance Disclosure
(a) “EOY” = End of Year, “BOY” = Beginning of Year. Reconciliation of Average SCT Total Compensation to Average Compensation Actually Paid to Other NEOs
Pay Versus Performance Disclosure
| Fiscal Year | Average SCT Total Compensation for Other NEOs | Minus Average SCT Change in Pension Value for Other NEOs | Plus Average Pension Value Service Cost | Minus Average SCT Equity for Other NEOs | Plus Average EOY Fair Value of Equity Awards Granted During Fiscal Year that are Outstanding and Unvested at EOY(a) | Plus Average Change from BOY to EOY in Fair Value of Awards Granted in Any Prior Fiscal Year that are Outstanding and Unvested at EOY(a) | Plus Average Change in Fair Value from BOY to Vesting Date of Awards Granted in Any Prior Fiscal Year that Vested During the Fiscal Year(a) | Plus value of Dividends or other Earnings Paid on Stock Option Awards not Otherwise Reflected in Fair Value of Total Compensation | Average Other NEOs CAP | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j)=(b)-(c)+(d)- (e)+(f)+(g)+(h)+(i) | | 2023 | 5,556,094 | 22,210 | 2,349 | 3,525,880 | 3,347,797 | (226,386) | 135,048 | 31,698 | 5,298,510 |
Pay Versus Performance Disclosure
(3) Reflects total shareholder return indexed to $100 for the S&P 500 Packaged Foods Index, which is an industry line peer group reported in the performance graph included in the Company’s 2023 Annual Report on Form 10-K. (4) Values shown reflect Net Sales as calculated for purposes of our executive compensation program for the applicable reporting year. For purposes of the above adjustments, the fair value of equity awards on the applicable date were determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, using valuation methodologies that are generally consistent with those used to determine the grant-date fair value for accounting purposes. The table below contains ranges of assumptions used in the valuation of outstanding equity awards for the relevant fiscal year(s). For more information, please see the notes to our financial statements in our Annual Report on Form 10-K and the footnotes to the “2023 Summary Compensation Table” in this Proxy Statement
Pay Versus Performance Disclosure
| | Fiscal Year 2023 | | Restricted Stock Units | | | Stock Price | $186.44 - $242.74 | | Performance Share Units | | | EPS and FCF Metric Multipliers | 100% - 250% | | TSR Realized Performance (Percentile) | 25P - 75P | | Volatility | 10% - 30% | | Risk-Free Interest Rate | 3.0% - 5.0% |
Pay Versus Performance Disclosure
Relationships Between Company TSR and Peer Group TSR and CAP and Company TSR The graphs below illustrate the relationship between our TSR and the Peer Group TSR, as well as the relationship between CAP and our TSR for the CEO and other NEOs, for each of the years presented. For reference, SCT Total Compensation values for each year are also shown. As the graphs below illustrate, CAP amounts for our CEO and other NEOs are strongly aligned with Hershey’s TSR, as intended. Relationship Between CAP and GAAP Net Income The graph below reflects the relationship between the CEO and average other NEOs CAPs and GAAP Net Income for each of the years presented. GAAP Net Income is not used as a metric in our annual or long-term incentive plans. Relationship Between CAP and Net Sales (our Company-Selected Measure) The graph below reflects the relationship between the CEO and average other NEOs CAPs and Net Sales for each of the years presented. Net Sales determined 50% of financial performance funding under our 2023 OHIP and is an important top-line measure that, when combined with the other measures in the OHIP and PSU awards, supports long-term shareholder value creation.

DEF 14A of Hershey Co

OUR DIRECTOR NOMINEES

OUR DIRECTOR NOMINEES

OUR DIRECTOR NOMINEES

GOVERNANCE HIGHLIGHTS

GOVERNANCE HIGHLIGHTS

Over 60% of director nominees are diverse

Over 60% of director nominees are diverse

Strong focus on board refreshment and independence

Strong focus on board refreshment and independence

Strong focus on board refreshment and independence

Strong focus on board refreshment and independence

Strong focus on board refreshment and independence

Director nominees have appropriate mix of experiences, skills, qualifications and backgrounds to drive strategy and risk oversight

Director nominees have appropriate mix of experiences, skills, qualifications and backgrounds to drive strategy and risk oversight

Director nominees have appropriate mix of experiences, skills, qualifications and backgrounds to drive strategy and risk oversight

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

PROPOSAL NO. 1 – ELECTION OF DIRECTORS

Election Procedures

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

Nominees for Director

NON-EMPLOYEE DIRECTOR COMPENSATION

2023 Director Compensation

2023 Director Compensation

2023 Director Compensation

2023 Director Compensation

2023 Director Compensation

2023 Director Compensation

2023 Director Compensation

Executive Summary

Executive Summary

Executive Summary

Executive Summary

Executive Summary

Executive Summary

The Role of the Compensation Committee

Compensation Components

Setting Compensation

Setting Compensation

Annual Incentives

Annual Incentives

Annual Incentives

Annual Incentives

Annual Incentives

Annual Incentives

Annual Incentives

Long-Term Incentives

Long-Term Incentives

Long-Term Incentives

Long-Term Incentives

Long-Term Incentives

Long-Term Incentives

Long-Term Incentives

Long-Term Incentives

Long-Term Incentives

Retirement Plans

Employment Agreements

Severance and Change in Control Plans

Other Compensation Policies and Practices

2023 Summary Compensation Table

2023 Summary Compensation Table

2023 Summary Compensation Table

2023 Summary Compensation Table

2023 Summary Compensation Table

2023 Summary Compensation Table

2023 Summary Compensation Table

2023 Grants of Plan-Based Awards Table

2023 Grants of Plan-Based Awards Table

2023 Grants of Plan-Based Awards Table