DEF 14A of Neogen Corp, Sep 18, 2023

DEF 14A of Neogen Corp

Filed Sep 18, 2023 · FY20230000950170-23-048478

Open on EDGAR

  1. PROPOSAL 1—ELECTION OF DIRECTORS

    PROPOSAL 1—ELECTION OF DIRECTORS The Company’s current Bylaws, as amended at the special meeting of shareholders held on August 17, 2022, provide that the Company will have at least five and no more than eleven directors, with the exact number to be determined by the Board. The Board is currently comprised of ten directors. The directors are classified into three classes to serve for the terms set forth next to their names or until their successors have been duly qualified and elected. In September 2022, the Neogen Board increased the size of the Board from eight to ten directors and appointed Jeffrey D. Capello to the Board to serve as a Class I director and Aashima Gupta to the Board to serve as a Class III director. In April 2023, Darci Vetter tendered her resignation from the Board, effective the day after the 2023 annual meeting of Neogen shareholders. Ms. Vetter is resigning due to responsibilities associated with a new employment arrangement. Unless otherwise instructed, proxy holders will vote the proxies received by them for the election of the nominees named below. Each of the three nominees for director this year is currently a director of the Company. If any nominee becomes unavailable for any reason, it is intended that the proxies will be voted for a substitute nominee designated by the Board. The Board has no reason to believe that the nominees named will be unable to serve if elected. Any vacancy occurring on the Board for any reason may be filled by vote of a majority of the directors then in office for the full term of the class in which the vacancy occurs.

  2. PROPOSAL 1—ELECTION OF DIRECTORS

    | Nominees | Expiration of Proposed Term | | Class III: | | | Aashima Gupta | 2026 | | Raphael A. Rodriguez | 2026 | | Catherine E. Woteki, Ph.D. | 2026 |

  3. PROPOSAL 1—ELECTION OF DIRECTORS

    | Directors continuing in office | Expiration of Term | | Class I: | | | James C. Borel | 2024 | | Jeffrey D. Capello | 2024 | | Ronald D. Green, Ph.D. | 2024 | | Class II: | | | John E. Adent | 2025 | | William T. Boehm, Ph.D. | 2025 | | James P. Tobin | 2025 |

  4. PROPOSAL 1—ELECTION OF DIRECTORS

    Ms. Vetter is resigning from the Board, effective October 26, 2023, due to responsibilities associated with a new employment arrangement. Ms. Vetter’s resignation is not due to any disagreements regarding the Company’s operations, policies or practices. The following table sets forth the names, ages as of September 18, 2023, membership on Board committees and certain other information for each of the members of our Board with terms expiring at the Annual Meeting (who are also nominees for election as a director at the Annual Meeting) and for each of the continuing members of our Board:

  5. PROPOSAL 1—ELECTION OF DIRECTORS

    | Name of Director | Age | Position | Director Since | | John. E Adent | 55 | CEO, Director | 2018 | | William T. Boehm, Ph.D. (1) (3*) | 76 | Director | 2011 | | James C. Borel (3) (4) | 67 | Board Chair | 2016 | | Jeffrey D. Capello (1) (3) | 58 | Director | 2022 | | Ronald D. Green, Ph.D. (2*) (4) | 62 | Director | 2014 | | Aashima Gupta (2) (4) | 52 | Director | 2022 | | Raphael A. Rodriguez (1) (2) | 55 | Director | 2020 | | James P. Tobin (3) (4*) | 67 | Director | 2016 | | Darci L. Vetter (*1) (4) | 49 | Director | 2017 | | Catherine E. Woteki, Ph.D. (1) (2) | 75 | Director | 2020 |

  6. PROPOSAL 1—ELECTION OF DIRECTORS

    Member, Compensation Committee (2) Member, Science, Technology & Innovation Committee (3) Member, Audit Committee (4) Member, Governance Committee * - Denotes Committee Chair The table below provides information related to the composition of our Board members and nominees. Each of the categories listed in the below table has the meaning as it is used in Nasdaq Rule 5605(f).

  7. INFORMATION ABOUT THE BOARD AND CORPORATE GOVERNANCE MATTERS

    INFORMATION ABOUT THE BOARD AND CORPORATE GOVERNANCE MATTERS The Company is managed under the direction of its Board. The Board conducts its business through meetings of the Board and its committees. The Board held 7 meetings, and there were a total of 22 committee meetings during fiscal 2023. Each director attended more than 90% of the total meetings of the Board and the committees on which he or she served in fiscal 2023. Directors of the Board are expected to attend the annual meeting of shareholders unless they have a schedule conflict or other valid reason. Each of the current Board members attended the virtual 2022 annual meeting of shareholders.

  8. Named Executive Officers

    Named Executive Officers Named executive officers (“NEOs”) for SEC reporting purposes are:

  9. Named Executive Officers

    | Name | Title | | John E. Adent | President & Chief Executive Officer | | Douglas E. Jones | Chief Operating Officer | | Jason W. Lilly, Ph.D. | Vice President, Americas & Australia/New Zealand | | David H. Naemura | Chief Financial Officer | | Steven J. Quinlan | Vice President, Finance | | Amy M. Rocklin | Chief Legal & Compliance Officer |

  10. Named Executive Officers

    Brief biographies of the NEOs, with the exception of Mr. Adent, follow. Mr. Adent’s biography is included in “Proposal 1-Election of Directors.” Douglas E. Jones, age 53, joined Neogen as Chief Commercial Officer on August 17, 2020; in 2022, he was named Chief Operating Officer. Prior to joining Neogen, Mr. Jones served as the President of the Companion Animal Division at Patterson Companies from 2016 to August 2020. Prior to joining Patterson, Mr. Jones served as the Head of Business Operations for the North American Merial Animal Health Division of Sanofi. Mr. Jones began his career as a management consultant with the North Highland Company and PriceWaterhouseCoopers, focusing on commercial transformation and strategy projects in the pharmaceutical, healthcare distribution and high-tech industries. Dr. Jason W. Lilly, age 49, joined Neogen in June 2005 as Market Development Manager for Food Safety. In June 2009, he moved to the Corporate Development group. He was named Vice President of Corporate Development in December 2011, responsible for the identification and acquisition of new business opportunities for the Company. In January 2019, Dr. Lilly was named Vice President, International Business, responsible for Neogen’s operations outside of the U.S. and Canada. In May 2023, Dr. Lilly was named Vice President, Americas & Australia/New Zealand, with responsibility for all commercial business. He also has strategic and operational oversight of our global genomics business. Prior to joining Neogen, he served in various technical sales and marketing roles at Invitrogen Corporation. David H. Naemura, age 54, joined Neogen in November 2022 as Chief Financial Officer. Previously, Mr. Naemura served as the Senior Vice President and Chief Financial Officer of Vontier Corporation from February 2020 until November 2022. Mr. Naemura served as Chief Financial Officer of Gates Industrial Corporation from March 2015 to January 2020. Mr. Naemura led the financial reporting teams at each of Vontier Corporation and Gates Industrial Corporation. Prior to his time at Gates Industrial Corporation, Mr. Naemura served as Vice President of Finance and Group Chief Financial Officer at Danaher Corporation from April 2012 to March 2015, and previously served as Danaher Corporation’s Test & Measurement Communications Platform Chief Financial Officer from January 2009 to April 2012. Prior to 2009, Mr. Naemura was employed by Tektronix Corporation from August 2000 to January 2009, including during its acquisition by Danaher Corporation in 2007. Steven J. Quinlan, age 60, joined Neogen in January 2011 as Vice President & Chief Financial Officer and was also Corporate Secretary until March 2021. Mr. Quinlan announced his retirement in September 2022 and Mr. Naemura was subsequently appointed as Chief Financial Officer, beginning in November 2022. For the remainder of fiscal year 2023, Mr. Quinlan continued to serve the Company as Vice President of Finance and is continuing to work on special projects through the end of the 2023 calendar year. Prior to his retirement announcement, Mr. Quinlan was responsible for all internal and external financial reporting for Neogen, and managed the accounting, information technology, corporate purchasing, treasury and investor relations functions. Mr. Quinlan came to Neogen following 19 years at Detrex Corporation (1992-2010), the last eight years serving as Vice President-Finance, CFO and Treasurer. He was on the audit staff at the public accounting firm Price Waterhouse (now PricewaterhouseCoopers) from 1985-1989. Amy M. Rocklin, Ph.D., age 51, joined Neogen in March 2021 as Vice President, General Counsel & Corporate Secretary. In 2022, Dr. Rocklin was named Chief Legal & Compliance Officer. In this role, she is responsible for all legal and compliance matters and also leads the regulatory, quality and ESG functions. Dr. Rocklin also serves as the Corporate Secretary. Prior to joining Neogen, Dr. Rocklin was Division Vice President, Corporate Law at Corning Incorporated. In her nearly ten years at Corning, she held multiple leadership positions within Corning’s Law Department. Before Corning, Dr. Rocklin held leadership positions at Smiths Group plc and was in private practice at the law firm of Foley & Lardner LLP.

  11. Discretionary Annual Bonus

    Discretionary Annual Bonus Bonuses paid in fiscal 2024 related to fiscal 2023 performance are as follows:

  12. Discretionary Annual Bonus

    | Name | Target Value | Actual Payments | Percentage of Target | Percentage of Base Salary | | John E. Adent | $750,000 | $637,500 | 85% | 85% | | Douglas E. Jones. | 297,000 | 252,450 | 85% | 51% | | Jason W. Lilly, Ph.D. | 124,000 | 132,500 | 107% | 43% | | David H. Naemura | 500,000 | 250,000 | 50% | 50% | | Steven J. Quinlan | 158,300 | 100,000 | 63% | 32% | | Amy M. Rocklin | 215,000 | 182,750 | 85% | 43% |

  13. Discretionary Annual Bonus

    Target values for bonuses are set by the Compensation Committee and communicated to the officers at the time that the prior year actual payments are approved. Bonus awards are determined by the Compensation Committee based on the Company’s performance, officers’ achievements of their objectives and the Committee’s perception of the efforts expended during the recently completed fiscal year. The Compensation Committee took into account the recommendations of Mr. Adent with respect to bonuses for Mr. Jones, Dr. Lilly, Mr. Quinlan and Dr. Rocklin. Mr. Naemura joined the Company in November 2022; per the terms of his offer letter, his bonus was guaranteed at $250,000 for fiscal 2023. This guaranteed bonus amount was intended to ensure that Mr. Naemura was offered a competitive pay package when joining the company, especially given the complexity of joining the Company as it was integrating the acquired 3M FSD business. It should also be noted that Mr. Naemura did not receive a sign-on bonus upon beginning his role as Chief Financial Officer in November 2022. His annual bonus opportunity for fiscal 2024 is $500,000 and is not guaranteed. Beginning fiscal year 2024, Mr. Naemura's target and actual bonuses are based on individual objectives and the Company's performance. Similarly, Mr. Naemura's fiscal year 2024 long-term incentive compensation has not been predetermined and will be awarded based on the Compensation Committee's review and discretion. Overall, all target and actual bonuses are based on individual objectives and the Company’s performance, within the discretion of the Compensation Committee. The Compensation Committee’s assessment of the Company’s overall performance was influenced, in part, by the following: The 3M Food Safety transaction closed on September 1, 2022, and significant management effort was expended in preparing the Company to absorb the conveying employees and in integrating the business. Integration activities, which include preparation for the transition of sample handling and pathogen detection manufacturing into Neogen facilities, progressed during the year. Additionally, the construction of the new production facility in Lansing and implementation of enterprise systems remain on track. • Revenues increased 56% to $822.4 million, largely the result of the acquired FSD business; core revenue growth, which removes the impact of acquisitions and foreign currency exchange, was 4.0%; • Gross margins, expressed as a percentage of sales, increased to 49.4% in fiscal year 2023 compared to 46.1% in fiscal 2022; • Adjusted EBITDA in fiscal year 2023 was $205.4 million, representing an increase of 78.0% and Adjusted EBITDA margin of 25.0%, compared to $115.4 million and a margin of 21.9% in fiscal year 2022; While the Company reported a net loss of $22.9 million for fiscal year 2023 compared to net income of $48.3 million for fiscal year 2022, the change was primarily the result of $56.0 million of interest expense from the $1 billion in debt incurred in the 3M Food Safety transaction, $59.8 million of related transaction fees and integration expenses, and $60.9 million in incremental amortization expenses related to 3M acquired intangibles. Adjusted net income, which removes the impact of these and other nonrecurring items, was $105.7 million in fiscal year 2023, representing an increase of $26.4 million compared to adjusted net income of $79.3 million in fiscal year 2022. Mr. Adent’s bonus opportunity for fiscal 2023 was primarily based on the successful closing of the 3M FSD transaction and the preparation for and initial integration of the 3M FSD business, as well as the achievement of the Company’s financial objectives. Mr. Adent had additional objectives related to continued improvements in product quality, progress on the implementation of the Company’s environmental, social and governance (ESG) strategy, phased implementation of the Company’s compliance program and reduction of voluntary employee turnover. In addition to the 3M FSD transaction, the Compensation Committee took into consideration the Company's core revenue growth and Adjusted EBITDA performance in determining Mr. Adent’s annual bonus for fiscal 2023. Additionally, manufacturing issues at 3M, which is supplying certain products to the Company for the 3M FSD business under a number of transition agreements, resulted in product backorders and hampered the attainment of financial objectives for the 3M FSD business in the first nine months of Company ownership. Mr. Adent and other Company executives addressed these issues with 3M and made significant progress mitigating them. In addition to his objectives related to the 3M FSD transaction and financial metrics, Mr. Adent largely achieved objectives in continuing the implementation of the Company’s ESG strategy, the improvement of product quality and the reduction of voluntary employee turnover. The Compensation Committee, after taking the above into account, determined that Mr. Adent had continued to provide strong, effective and proactive leadership during the year, and awarded Mr. Adent 85% of his targeted bonus opportunity. The fiscal 2023 bonus opportunity for Mr. Jones was primarily based on the successful closing of the 3M FSD transaction and the preparation for and initial integration of the 3M FSD business, as well as the achievement of the Company’s financial objectives. Additional objectives for Mr. Jones included improvements in manufacturing and supply chain, and shared objectives in improving product quality and compliance. Significant efforts were expended to ensure a successful closing of the 3M FSD transaction and Mr. Jones’ leadership was instrumental in driving the initial integration of the business. The Company had significant improvements in product quality and, based on his performance and the achievement of his objectives in fiscal 2023, the Committee awarded Mr. Jones 85% of his bonus opportunity. Dr. Lilly's fiscal 2023 bonus opportunity was primarily based on the successful closing of the 3M FSD transaction and the preparation for and initial integration of the 3M FSD business. In his role leading the Company’s international and agrigenomics businesses, Dr. Lilly had additional objectives tied to the achievement of financial metrics, capacity enhancements, operational improvements and new product introductions. Significant efforts were expended in fiscal 2023 on the successful closing of the 3M FSD transaction and initial integration of the business internationally, including the creation of the proper legal entities, the successful absorption of the conveying employees, the hiring of additional international senior leadership roles, and the alignment of the legacy and newly acquired sales and marketing teams and strategies. Additional work was completed to prepare the organization to exit certain transition service agreements between 3M and the Company. Capacity improvements and automation, designed to increase efficiency, were also completed in the genomics business during the year. Based on his operations’ financial performance, and his efforts in the successful integration of both the 3M FSD international business and a recently acquired genomics business, Dr. Lilly was awarded 107% of his bonus opportunity.

  14. Discretionary Annual Bonus

    Mr. Quinlan’s bonus opportunity for fiscal 2023 was tied primarily to the successful closing of and initial accounting for the 3M FSD transaction, including the opening balance sheet and purchase price allocation, as well as the achievement of financial objectives for the overall Company. In addition, Mr. Quinlan had shared objectives with the leadership team on continued progress on the Company’s ESG strategy. Mr. Quinlan announced his retirement from his role as Chief Financial Officer, effective at the end of the Company’s second quarter of fiscal 2023, and remained with the Company through the end of fiscal 2023 to ensure a smooth transition for his successor, Mr. Naemura, and to transition the Company’s investor relations function. Based on achievement of his goals while in his role in fiscal 2023, Mr. Quinlan was awarded 63% of his targeted bonus. Dr. Rocklin’s bonus opportunity was primarily based on the successful closing of the 3M FSD transaction and initial integration of the 3M FSD business, as well as the achievement of the Company's financial objectives. Dr. Rocklin had additional objectives of aligning corporate governance policies, documents and processes with the Company’s structure, the implementation of a phased compliance program across the Company and the development of an intellectual property strategy and training curriculum for the organization. She also had shared objectives for the overall Company's financial metrics and the continued rollout of the Company’s ESG strategy. Significant progress was made on the revision of governance policies and processes, the creation of the corporate intellectual property strategy and the implementation of the Company’s compliance program. Based on the overall assessment of progress made on her objectives, Dr. Rocklin was awarded 85% of her bonus opportunity.

  15. Long-Term Incentive Compensation

    Long-Term Incentive Compensation The objectives of the long-term incentive portion of the compensation package are to: Align the personal and financial interests of management and other employees with shareholder interests; • Balance short-term decision-making with a focus on improving shareholder value over the long term; • Provide a means to attract, reward and retain a skilled management team; and • Provide the opportunity to increase ownership interest in the Company. The primary long-term incentive mechanism at the Company has historically been stock option awards, the ultimate value of which is dependent on increases in the Company’s stock price. During fiscal 2021, the Company also began to award restricted stock units (“RSUs”) as an additional vehicle for long-term incentive compensation for Company employees. Stock options and RSUs are granted to provide employees with a personal financial interest in the Company’s long-term success, promote retention of employees and enable the Company to compete for the services of new employees in a competitive market. The Company believes that stock options and RSUs are appropriate means to incentivize the achievement of long-term objectives. The stock option and RSU programs are designed to deliver competitive long-term awards while incurring reasonable levels of expense and shareholder dilution. It is the Company’s view that grants of stock options and RSUs represent appropriate uses of corporate resources and are effective methods for the Company to achieve its long-term compensation element objectives. In general, stock options granted to employees are incentive options with seven year lives that vest 33% per year beginning with the year following the initial year of grant. Prior to fiscal year 2022, stock options granted had five year lives and vested 20% per year. Certain incentive options are converted to non-qualified options when IRS limitations for incentive options are exceeded. The non-qualified options retain the same vesting and life provisions as incentive options. Directors are granted non-qualified stock options, with seven year terms and vesting of 33% per year for each of the three years following the year of grant. In all cases, grant prices are equal to the closing price on the day of the grant. The Company does not reprice options and does not “reload”—which means the recipient is only able to exercise the number of shares in the original stock option grant. RSUs granted to employees have three -year vesting periods, with 33% of the units vesting each year beginning with the first anniversary date of the grant. The RSU is priced at the closing stock price on the date of the grant. Non-employee directors are also granted RSUs, with three year lives, which vest 33% per year for each of the three years beginning on the first anniversary date of the grant. The Company’s practice has been to make an annual award of option grants or RSUs to a select group of employees as well as occasional hire-on awards to select new hires. Annual stock option and RSU grants are made at the discretion of the Compensation Committee, with the exception of non-employee Director awards that are granted annually on election or continuation of an existing term. Management makes recommendations to the Compensation Committee as to the stock option and RSU award levels. The determination with respect to the option or RSU award to be granted to any particular participant is ultimately subjective in nature. While no specific or absolute performance measures are applied, factors considered in determining the option or RSU award to an individual include his or her level of responsibility and position within the Company, demonstrated performance over time, value to the Company’s past and future success, historic grants, retention concerns and, in the aggregate, share availability under the plan, overall Company expense and shareholder dilution from awards. Management provides the Compensation Committee information on grants made in the past three years and the accumulated value of all stock option and RSU awards outstanding to each executive officer. During fiscal 2023, there was one grant of stock options and RSUs for NEOs; the annual recurring grant issued in October 2022. The Company maintains two equity-based long-term incentive plans that have been previously approved by shareholders—the Neogen Corporation 2015 Omnibus Incentive Plan ( “2015 Plan”) and the 2018 Plan. Fiscal 2023 stock option and RSU grants were made under the 2018 Plan. If the 2023 Plan is approved at the 2023 Annual Meeting of Shareholders, future awards of equity or equity rights will be granted under the 2023 Plan and no further awards will be made under the 2018 Plan. In any event, no further awards can be made under the 2015 Plan. The table below shows the amounts of the fiscal 2023 stock option grants to each of the NEOs.

  16. Long-Term Incentive Compensation

    | Name | Number of Options Granted | Compensation Cost Recognized for Option Grants (1) (2) | | John E. Adent | 625,001 | $2,800,000 | | Douglas E. Jones | 165,105 | 739,670 | | Jason W. Lilly, Ph.D. | 41,965 | 188,004 | | David H. Naemura | 172,413 | 900,000 | | Steven J. Quinlan (3) | — | — | | Amy M. Rocklin | 120,537 | 540,000 |

  17. Long-Term Incentive Compensation

    Represents the aggregate grant date fair value of each stock option granted in fiscal 2023, calculated in accordance with the provisions of the Compensation—Stock Compensation Topic of the FASB Codification. This amount will be recognized over the vesting period of the grants. (2) The stock option Codification Topic 718 values throughout this Proxy Statement have been calculated using the Black-Scholes option pricing model using the assumptions in the table below. (3) Note that in fiscal 2023, Mr. Quinlan announced his retirement, and was therefore not awarded any options.

  18. Long-Term Incentive Compensation

    | Black-Scholes Model Assumptions (1) | 2023 | 2022 | 2021 | 2020 | 2019 | | Risk-free interest rate | 3.3% | 0.4% | 0.2% | 1.9% | 2.6% | | Expected dividend yield | 0% | 0% | 0% | 0% | 0% | | Expected stock price volatility | 34.0% | 32.8% | 31.3% | 29.4% | 27.0% | | Expected option life | 4.5 years | 3.12 years | 3.25 years | 3.5 years | 3.5 years |

  19. Long-Term Incentive Compensation

    (1) The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Expected stock price volatility is based on historical volatility of the Company’s stock. The expected option life, representing the period of time that options are expected to be outstanding, is based on historical option exercise and employee termination data. The table below shows the amounts of the fiscal 2023 RSU grants to each of the NEOs.

  20. Long-Term Incentive Compensation

    | Name | Number of RSUs Granted | Compensation Cost Recognized for RSU Grants (1) | | John E. Adent | 90,361 | $1,200,000 | | Douglas E. Jones | 37,133 | 493,126 | | Jason W. Lilly, Ph.D. | 14,157 | 188,004 | | David H. Naemura | 38,735 | 600,000 | | Steven J. Quinlan (2) | — | — | | Amy M. Rocklin | 27,108 | 360,000 |

  21. Long-Term Incentive Compensation

    (1) Compensation cost is calculated as the closing market price on each of the grant dates ($13.28 on October 6, 2022, and $15.49 on November 29, 2022) multiplied by the number of restricted shares granted. For purpose of this disclosure, the calculations do not attribute the compensation cost to the requisite vesting period. (2) In fiscal 2023, Mr. Quinlan announced his retirement, and was therefore not awarded any RSUs. Retirement Plans: A defined contribution plan, the Neogen Corporation 401(k) Retirement Savings Plan (“401(k) Plan”) is available to all eligible U.S. employees including all NEOs. Under the 401(k) Plan, the Company matches dollar per dollar of the first 3%, and fifty cents per dollar of the next 2%, of pay contributed by the employee up to the Internal Revenue Code limits. Matching contributions to the 401(k) Plan vest immediately. Health and Welfare Benefits Plans: Benefits such as medical, dental, vision, life insurance and disability coverage are provided to each NEO under benefits plans that are provided to all eligible U.S.-based employees. The benefits plans are part of the overall total compensation offering and are intended to be competitive and provide health care coverage for employees and their families. The NEOs have no additional Company-paid health benefits. Similar to all other employees, NEOs have the ability to purchase supplemental life, dependent life, long-term care insurance, and accidental death and dismemberment coverage through the Company. The value of these benefits is not included in the Summary Compensation Table since they are purchased by each NEO and are made available to all U.S. employees. No form of post-retirement health care benefits is provided to any employee. Perquisites: The values of perquisites and other personal benefits are included in the “All Other Compensation” column of the Summary Compensation Table, and consist primarily of Company matching contributions to the 401(k) Plan and the value of Company paid group term life insurance. Employee Stock Purchase Plan: Employees in the U.S. are permitted to voluntarily purchase Company stock at a 5% discount through after-tax payroll deductions under the Employee Stock Purchase Plan (“ESPP”) as a way to facilitate employees becoming shareholders of the Company. The ESPP purchases stock bi-annually for participants through a third party plan administrator. Each of the NEOs is currently eligible to purchase shares through the ESPP.

  22. Chief Executive Officer Compensation

    Chief Executive Officer Compensation John Adent has been the President and Chief Executive Officer of the Company since 2017. His base salary in fiscal 2023 was adjusted on January 1, 2023, from $487,000 to $750,000, largely to reflect the increased size and complexity of the Company following the completion of the 3M FSD transaction. His target bonus opportunity was $750,000, based primarily on the successful closing of the 3M FSD transaction and initial integration of the business, as well as the achievement of certain financial objectives, and other strategic and operational goals. In addition to base salary and bonus opportunity, Mr. Adent was awarded 625,001 stock options and 90,361 RSUs in fiscal 2023, valued at $4,000,000 at the respective grant dates. In determining the amount of Mr. Adent’s annual bonus for fiscal 2023, the Compensation Committee took into consideration the closing of the 3M FSD transaction and largely successful initial integration, the Company’s core revenue growth over fiscal 2022, improved gross margins, and the Board’s assessment of the level of attainment of Mr. Adent’s other fiscal 2023 goals, which included continued improvement in product quality, phased implementation of the Company’s compliance program, reduction in voluntary employee turnover and ongoing progress on the Company’s ESG strategy. Based on the above, the Committee awarded him 85% of his targeted bonus opportunity for the year.

  23. Tax and Accounting Implications

    Tax and Accounting Implications Section 162(m) of the Code provides that annual compensation in excess of $1 million paid to a “covered employee” (which generally includes the chief executive officer, chief financial officer and certain other current or former named executive officers) is not deductible by the company for federal income tax purposes. To maintain flexibility in compensating the Company’s executive officers to meet a variety of objectives, the Compensation Committee reserves the right to compensate Company executives in amounts deemed appropriate and competitive, regardless of whether such compensation is deductible for federal income tax purposes. Section 162(m) of the Code is expected to prevent the Company from deducting a portion of the compensation paid to the Company’s NEOs in 2023. Section 409A of the Code provides that amounts deferred under non-qualified deferred compensation arrangements will be included in an employee’s income when vested, as well as be subject to additional taxes, penalties and interest, unless certain requirements are complied with. The Company believes that its compensation arrangements satisfy, or are exempt from, the requirements of Section 409A. If a company makes “parachute payments,” Section 280G of the Code prohibits the company from deducting the portion of the parachute payments constituting “excess parachute payments” and Section 4999 of the Code imposes on the payee a 20% excise tax on the excess parachute payments. For this purpose, parachute payments generally are defined as payments to specified persons that are contingent upon a change in control in an amount equal to or greater than three times the person’s base amount (i.e., the five-year average Form W-2 compensation). The excess parachute payments, which are nondeductible and subject to a 20% excise tax, equal the portion of the parachute payments that exceeds one times the payee’s base amount. If a covered employee receives excess parachute payments in any year, the $1 million deduction limitation applicable to the covered employee for such year under Section 162(m) of the Code is reduced (but not below zero) by the amount of the excess parachute payments. The employment arrangements with the Company’s NEOs and the Company’s equity incentive plans may entitle participants to receive payments in connection with a change in control that may result in excess parachute payments. The Company is not obligated to pay any tax gross-ups with respect to the excise tax imposed on any person who receives excess parachute payments.

  24. Summary Compensation Table for Fiscal Years 2023, 2022, and 2021

    Summary Compensation Table for Fiscal Years 2023, 2022, and 2021

  25. Summary Compensation Table for Fiscal Years 2023, 2022, and 2021

    | Name and Principal Position | Year | Salary | Bonus | Stock Awards (1) | Option Awards (1) | All Other Compensation (2) | Total | | John E. Adent | 2023 | $671,100 | $637,500 | $1,200,000 | $2,800,000 | $16,574 | 5,325,174 | | President & Chief Executive Officer | 2022 | 477,798 | 900,000 | 925,689 | 1,999,858 | 12,082 | 4,315,427 | | | 2021 | 459,173 | 378,000 | 480,832 | 1,181,786 | 7,255 | 2,507,046 | | Douglas E. Jones (3) | 2023 | 456,000 | 252,450 | 493,126 | 739,670 | 966 | 1,942,212 | | Chief Operating Officer | 2022 | 357,924 | 330,000 | 279,999 | 381,491 | 4,232 | 1,353,646 | | | 2021 | 277,531 | 120,000 | 95,962 | 151,941 | 3,266 | 648,700 | | Jason W. Lilly, Ph.D. | 2023 | 301,000 | 132,500 | 188,004 | 188,004 | 13,298 | 822,806 | | Vice President, Americas | 2022 | 274,685 | 191,388 | 385,019 | 352,225 | 10,919 | 1,214,236 | | & Australia/New Zealand | 2021 | 234,734 | 99,932 | 200,461 | 211,033 | 5,586 | 751,746 | | David H. Naemura (4) | 2023 | 228,846 | 250,000 | 600,000 | 900,000 | 297 | 1,979,143 | | Chief Financial Officer | | | | | | | | | Steven J. Quinlan (5) | 2023 | 317,000 | 100,000 | — | — | 14,385 | 431,385 | | Vice President, Finance | 2022 | 310,971 | 280,000 | 385,988 | 527,276 | 11,880 | 1,516,115 | | | 2021 | 274,519 | 100,000 | 192,265 | 303,882 | 6,816 | 877,482 | | Amy M. Rocklin (6) | 2023 | 380,500 | 182,750 | 360,000 | 540,000 | 966 | 1,464,216 | | Chief Legal & | 2022 | 255,481 | 21,000 | 140,011 | 185,696 | 759 | 602,948 | | Compliance Officer | 2021 | 43,269 | — | — | — | — | 43,269 |

  26. Summary Compensation Table for Fiscal Years 2023, 2022, and 2021

    (1) Calculations use grant-date fair value based on Codification Topic 718 for stock option and RSU grants for the 2023, 2022 and 2021 fiscal years. For purpose of this disclosure, the calculations do not attribute the compensation cost to the requisite vesting period. For information on valuation assumptions, see “Compensation Discussion and Analysis—Compensation Elements—Long-term Incentive Compensation.” (2) Includes 401(k) Plan matching contributions and value of group term life insurance. (3) Mr. Jones joined the Company in August 2020. (4) Mr. Naemura joined the Company in November 2022. (5) Mr. Quinlan retired from his role as Chief Financial Officer in November 2022. (6) Dr. Rocklin joined the Company in March 2021. The following table sets forth the fiscal 2023 compensation cost recognized for fiscal 2023 equity-based awards and compensation cost recognized for equity-based awards granted in prior years:

  27. Grants of Plan-Based Awards in the 2023 Fiscal Year

    Grants of Plan-Based Awards in the 2023 Fiscal Year The following table sets forth additional information regarding the option awards granted to the NEOs in the year ended May 31, 2023, that are, in combination with the RSU award totals, disclosed in the Summary Compensation Table.

  28. Grants of Plan-Based Awards in the 2023 Fiscal Year

    | Name | Grant Date (1) | Number of Securities Underlying Options | Exercise or Base Price of Option Awards (2) | Grant-date Fair Value of Option Awards (3) | | John E. Adent | 10/6/2022 | 625,001 | $13.28 | $2,800,000 | | Douglas E. Jones | 10/6/2022 | 165,105 | 13.28 | 739,670 | | Jason W. Lilly, Ph.D. | 10/6/2022 | 41,965 | 13.28 | 188,004 | | David H. Naemura | 11/28/2022 | 172,413 | 15.49 | 900,000 | | Steven J. Quinlan | 10/6/2022 | — | — | — | | Amy M. Rocklin | 10/6/2022 | 120,537 | 13.28 | 540,000 |

  29. Grants of Plan-Based Awards in the 2023 Fiscal Year

    (1) Represents the date the grants were made. (2) In accordance with the terms of the 2018 Plan, these options were granted at 100% of the closing market price on the day of the grant. Options have a seven-year term and generally become exercisable as to 33% of the shares on each of the three anniversary dates of the grant. Represents grant-date value based on Codification Topic 718 for the option grants. For information on valuation assumptions, see “Compensation Discussion and Analysis—Compensation Elements—Long-term, Incentive Compensation.” The following table sets forth additional information regarding the restricted stock units (“RSUs”) granted to the NEOs in the year ended May 31, 2023, that are, in combination with the stock option awards, disclosed in the Summary Compensation Table.

  30. Grants of Plan-Based Awards in the 2023 Fiscal Year

    | Name | Grant Date (1) | Number of Shares or Units | Grant-date Fair Value of RSU Awards (2) | | John E. Adent | 10/6/2022 | 90,361 | $1,200,000 | | Douglas E. Jones | 10/6/2022 | 37,133 | 493,126 | | Jason W. Lilly, Ph.D. | 10/6/2022 | 14,157 | 188,004 | | David H. Naemura | 11/28/2022 | 38,735 | 600,000 | | Steven J. Quinlan | 10/6/2022 | — | — | | Amy M. Rocklin | 10/6/2022 | 27,108 | 360,000 |

  31. Grants of Plan-Based Awards in the 2023 Fiscal Year

    Represents the dates the grants were made. (2) In accordance with the terms of the 2018 Plan, these RSUs were granted at 100% of the closing market price on the day of the grant. The RSUs have three-year lives and vest in equal annual 33% installments on each of the three anniversary dates of the grant. Represents grant-date value based on Codification Topic 718 for the RSU grants.

  32. Outstanding Equity Awards at May 31, 2023

    Outstanding Equity Awards at May 31, 2023 The following table sets forth information regarding unexercised options that were held by the NEOs at May 31, 2023.

  33. Outstanding Equity Awards at May 31, 2023

    | Name | Grant Date (1) | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable (1) | Option Exercise Price | Option Expiration Date | | John E. Adent | 11/1/2018 | 72,000 | 36,000 | 31.35 | 12/1/2023 | | President & Chief Executive Officer | 10/11/2019 | 72,000 | 72,000 | 31.95 | 11/11/2024 | | | 10/6/2020 | 61,502 | 92,252 | 34.15 | 11/6/2025 | | | 10/12/2021 | 30,070 | 120,282 | 40.85 | 11/12/2026 | | | 4/25/2022 | 17,178 | 68,712 | 28.40 | 5/25/2027 | | | 10/6/2022 | — | 625,001 | 13.28 | 10/6/2029 | | | | 252,750 | 1,014,247 | | | | Douglas E. Jones | 10/6/2020 | 7,908 | 11,860 | 34.15 | 11/6/2025 | | Chief Operating Officer | 10/12/2021 | 4,943 | 19,774 | 40.85 | 11/12/2026 | | | 4/25/2022 | 4,417 | 17,669 | 28.40 | 5/25/2027 | | | 10/6/2022 | — | 165,105 | 13.28 | 10/6/2029 | | | | 17,268 | 214,408 | | | | Jason W. Lilly, Ph.D. | 11/1/2018 | 23,364 | 12,000 | 31.35 | 12/1/2023 | | Vice President, Americas | 10/11/2019 | 26,400 | 26,400 | 31.95 | 11/11/2024 | | & Australia/New Zealand | 10/6/2020 | 10,982 | 16,474 | 34.15 | 11/6/2025 | | | 10/12/2021 | 4,840 | 19,362 | 40.85 | 11/12/2026 | | | 4/25/2022 | 3,681 | 14,724 | 28.40 | 5/25/2027 | | | 10/6/2022 | — | 41,965 | 13.28 | 10/6/2029 | | | | 69,267 | 130,925 | | | | David H. Naemura | 11/28/2022 | — | 172,413 | 15.49 | 11/28/2029 | | Chief Financial Officer | | | | | | | Steven J. Quinlan | 11/01/2018 | 57,600 | 14,400 | 31.35 | 12/1/2023 | | Vice President, Finance | 10/11/2019 | 48,000 | 32,000 | 31.95 | 11/11/2024 | | | 10/6/2020 | 15,814 | 23,722 | 34.15 | 11/6/2025 | | | 10/12/2021 | 6,982 | 27,930 | 40.85 | 11/12/2026 | | | 4/25/2022 | 5,889 | 23,559 | 28.40 | 5/25/2027 | | | | 134,285 | 121,611 | | | | Amy M. Rocklin | 10/12/2021 | 1,853 | 7,416 | 40.85 | 11/12/2026 | | Chief Legal & Compliance Officer | 4/25/2022 | 2,944 | 11,780 | 28.40 | 5/25/2027 | | | 10/6/2022 | — | 120,537 | 13.28 | 10/6/2029 | | | | 4,797 | 139,733 | | |

  34. Outstanding Equity Awards at May 31, 2023

    For awards granted in fiscal years 2019 through 2022, vesting schedules for Incentive Stock and Non-Qualified Options are 20% of the shares on each of the first five anniversary dates of the grant. For awards granted in fiscal year 2023, vesting schedules for Incentive Stock and Non-Qualified Options are 33% of the shares on each of the first three anniversary dates of the grant. The following table sets forth information regarding outstanding RSU awards held by the NEOs at May 31, 2023.

  35. Outstanding Equity Awards at May 31, 2023

    | Name | Grant Date (1) | Number of Shares of Stock that have not Vested | Market Value of Shares of Stock that have not Vested (2) | | John E. Adent | 10/6/2020 | 8,448 | $147,756 | | President & Chief Executive Officer | 10/12/2021 | 12,254 | 214,322 | | | 4/25/2022 | 8,451 | 147,808 | | | 10/6/2022 | 90,361 | 1,580,414 | | | | | 2,090,300 | | Douglas E. Jones | 10/6/2020 | 1,686 | 29,488 | | Chief Operating Officer | 10/12/2021 | 3,134 | 54,814 | | | 4/25/2022 | 3,380 | 59,116 | | | 10/6/2022 | 37,133 | 649,456 | | | | | 792,874 | | Jason W. Lilly, Ph.D. | 10/6/2020 | 3,522 | 61,600 | | Vice President, Americas | 10/12/2021 | 4,603 | 80,506 | | & Australia/New Zealand | 4/25/2022 | 4,226 | 73,913 | | | 10/6/2022 | 14,157 | 247,606 | | | | | 463,625 | | David H. Naemura | 11/28/2022 | 38,735 | 677,475 | | Chief Financial Officer | | | | | Steven J. Quinlan | 10/6/2020 | 3,378 | 59,081 | | Vice President, Finance | 10/12/2021 | 4,426 | 77,411 | | | 4/25/2022 | 4,508 | 78,845 | | | | | 215,337 | | Amy M. Rocklin | 10/12/2021 | 1,176 | 20,568 | | Chief Legal & Compliance Officer | 4/25/2022 | 2,254 | 39,422 | | | 10/6/2022 | 27,108 | 474,119 | | | | | 534,110 |

  36. Outstanding Equity Awards at May 31, 2023

    For awards granted in fiscal years 2021 and 2022, vesting schedules for Restricted Stock Units are 20% of the grant annually on each of the first five anniversary dates of the grant. For awards granted in fiscal year 2023, vesting schedules for Restricted Stock Units are 33% of the grant annually on each of the first three anniversary dates of the grant. Based upon the closing price of our Common Stock on May 31, 2023, of $17.49.

  37. Option Exercises and Stock Vested in 2023 Fiscal Year

    Option Exercises and Stock Vested in 2023 Fiscal Year This table sets forth information with respect to restricted stock units vested of the NEOs that vested during fiscal 2023. No options were exercised during fiscal year 2023.

  38. Option Exercises and Stock Vested in 2023 Fiscal Year

    | Name | Number of Shares Vested | Value Realized on Vesting(1) | | John E. Adent | 7,991 | $110,247 | | Douglas E. Jones | 2,190 | 31,212 | | Jason W. Lilly, Ph.D. | 3,380 | 47,362 | | David H. Naemura | — | — | | Steven J. Quinlan | 3,358 | 47,363 | | Amy M. Rocklin | 856 | 13,033 |

  39. Option Exercises and Stock Vested in 2023 Fiscal Year

    (1) Represents the price of the Common Stock at the time of vesting on the vesting date.

  40. Pension Benefits

    Pension Benefits The Company sponsors no defined benefit plans, therefore, none of the NEOs participates in a defined benefit plan sponsored by the Company.

  41. Potential Payments upon Termination or Change-in-Control

    Potential Payments upon Termination or Change-in-Control The Company does not provide employment, severance or change-in-control agreements. The Company maintains a discretionary severance practice for all eligible employees, which could potentially include the NEOs. The discretionary practice provides for payments as determined by the Company as circumstances warrant.

  42. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE The following tables provide additional compensation information regarding our NEO's, prepared in accordance with the SEC's pay versus performance disclosure regulations for fiscal years 2023, 2022 and 2021.

  43. Pay Versus Performance (PVP) Table

    Pay Versus Performance (PVP) Table

  44. Pay Versus Performance (PVP) Table

    | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Summary Compensation Table (SCT) Total for PEO | Compensation Actually Paid (CAP) to PEO(1) | Average SCT Total for Non-PEO NEOs(2) | Average CAP to Non-PEO NEOs(3) | Neogen TSR | S&P MidCap 400 Health Care Index TSR | Net Income (in millions) | Adjusted EBITDA (Company Selected Measure) (in millions) | | 2023 | $5,325,174 | $4,853,105 | $1,327,952 | $1,251,767 | $49.1 | $105.5 | $(20.9) | $205.1 | | 2022 | 4,315,427 | 2,315,621 | 1,220,774 | 727,779 | 74.3 | 110.8 | 48.3 | 115.4 | | 2021 | 2,507,046 | 4,575,029 | 714,856 | 1,226,880 | 129.6 | 129.8 | 60.9 | 104.2 |

  45. Pay Versus Performance (PVP) Table

    (1) Amounts reported reflect CAP for Mr. Adent, as computed in accordance with Item 402(v) of Regulation S-K, for each corresponding year, which amounts do not reflect the actual amount of compensation earned by or paid to Mr. Adent during the applicable year. The adjustments below were made to Mr. Adent’s total compensation for each year to determine the CAP for such year in accordance with the requirements of Item 402(v) of Regulation S-K.

  46. CEO SCT Total to CAP Reconciliation

    | Year | SCT Total | Reported Value of Equity Awards | Equity Award Adjustments(a) | Compensation Actually Paid | | 2023 | $5,325,174 | $4,000,000 | $3,527,931 | $4,853,105 | | 2022 | 4,315,427 | 2,925,547 | 925,741 | 2,315,621 | | 2021 | 2,507,046 | 1,662,618 | 3,730,601 | 4,575,029 |

  47. Average Other NEOs SCT Total to CAP Reconciliation

    | Year | SCT Total | Reported Value of Equity Awards | Equity Award Adjustments(a) | Compensation Actually Paid | | 2023 | $1,327,952 | $776,244 | $725,576 | $1,251,767 | | 2022 | 1,220,774 | 673,894 | 180,899 | 727,779 | | 2021 | 714,856 | 342,362 | 854,386 | 1,226,880 |

  48. 2. Compensation Actually Paid (CAP) versus Neogen TSR

    2. Compensation Actually Paid (CAP) versus Neogen TSR The graph below compares Neogen’s Total Shareholder Return (TSR) to the CEO’s and Other NEOs’ Compensation Actually Paid (CAP) for the three fiscal years beginning with 2021. As shown in the graph, the CAP to the CEO and Other NEOs declined with the Company’s TSR in 2022 before increasing in 2023, primarily reflecting the completion of the merger with the former 3M Food Safety Division and the resulting increase in size and complexity of the Company.

  49. CEO PAY RATIO

    CEO PAY RATIO In accordance with the requirements of Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of our median employee’s annual total compensation to the annual total compensation of our CEO. Mr. Adent has been the CEO of the Company since 2017, and served as CEO on May 31, 2023, the determination date of the median employee compensation. The annual compensation used for this analysis included each element of compensation listed in the Summary Compensation Table in this Proxy. We annualized the total compensation for any employee on the payroll at May 31, 2023, who was not employed for all of fiscal 2023. We then ranked all of our employees (except for Mr. Adent) in terms of total compensation from highest to lowest, and identified the employee that ranked as the median. Following this methodology, the components of our pay ratio disclosure for fiscal 2023 were reasonably estimated as follows: • The median of the total annual compensation for all of our employees, excluding Mr. Adent, was $45,291; • Mr. Adent’s total compensation was $5,325,174; • The ratio of Mr. Adent’s compensation to the compensation of the median employee was 118:1. The Pay Ratio disclosure presented above is a reasonable estimate. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, the Pay Ratio Disclosure may not be comparable to the ratio reported by other companies.

  50. COMPENSATION OF DIRECTORS

    COMPENSATION OF DIRECTORS This table sets forth information regarding compensation paid during fiscal 2023 to Directors who were not employees.

  51. COMPENSATION OF DIRECTORS

    | Name | Fees Earned or Paid in Cash | Equity-Based Awards (1) | Total | | William T. Boehm, Ph.D. | $70,000 | $165,000 | $235,000 | | James C. Borel | 97,500 | 165,000 | 262,500 | | Jeffrey D. Capello | 36,250 | 165,000 | 201,250 | | Ronald D. Green, Ph.D. | 66,250 | 165,000 | 231,250 | | Aashima Gupta | 35,000 | 165,000 | 200,000 | | Raphael A. Rodriguez | 60,000 | 165,000 | 225,000 | | James P. Tobin | 67,500 | 165,000 | 232,500 | | Darci L. Vetter | 66,250 | 165,000 | 231,250 | | Catherine E. Woteki, Ph.D. | 60,000 | 165,000 | 225,000 |

  52. COMPENSATION OF DIRECTORS

    (1) Calculations use grant-date fair value based on Codification Topic 718 for the fiscal 2023 equity-based grants. For purpose of this disclosure, the calculations do not attribute the compensation cost to the requisite vesting period. For information on valuation assumptions for the option grants, see “Compensation Discussion and Analysis—Compensation Elements—Long-term Incentive Compensation.” The following table sets forth the fiscal 2023 compensation cost recognized for fiscal 2023 equity-based awards to directors and compensation cost recognized for equity-based awards granted in prior years.