DEF 14A of Lifecore Biomedical, Inc. \de\, Jul 19, 2024

DEF 14A of Lifecore Biomedical, Inc. \de\

Filed Jul 19, 2024 · FY20230001005286-24-000090

Open on EDGAR

  1. Compensation of Directors

    Compensation of Directors The following table sets forth compensation information for fiscal year 2023 for each member of our Board of Directors who was not an executive officer during fiscal year 2023. Mr. Hall, who resigned as our CEO and a director in May 2024, did not receive any compensation for his service on the Board during fiscal year 2023.

  2. Compensation of Directors

    | Name | Fee Earned or Paid in Cash | Stock Awards | Other | Total | | Craig A. Barbarosh | $230,833 | $150,000 | $— | $380,833 | | Raymond Diradoorian | $97,333 | $150,000 | $— | $247,333 | | Jeffrey L. Edwards | $135,750 | $150,000 | $— | $285,750 | | Kathy Houde | $133,500 | $150,000 | $— | $283,500 | | Nelson Obus | $94,667 | $150,000 | $— | $244,667 | | Joshua E. Schechter | $95,083 | $150,000 | $— | $245,083 | | Nathaniel Calloway(1) | $19,758 | $62,500 | $— | $82,258 | | Christopher Kiper(1) | $19,758 | $62,500 | $— | $82,258 | | Tonia Pankopf(2) | $35,417 | $90,000 | $— | $125,417 | | Andrew Powell(2) | $33,333 | $90,000 | $— | $123,333 | | Catherine A. Sohn, Pharm.D.(2) | $29,167 | $90,000 | $— | $119,167 | | Deborah Carosella(2) | $33,333 | $90,000 | $— | $123,333 |

  3. Compensation of Directors

    (1)Dr. Calloway and Mr. Kiper were elected to the Board on January 9, 2023. The director cash fees and RSU grants are pro-rated from their election through May 28, 2023. (2)Ms. Pankopf, Mr. Powell, Dr. Sohn, and Ms. Carosella resigned from the Board effective November 1, 2022. Their director cash fees were pro-rated through that date. As of May 28, 2023, there were no outstanding options held by members of the Board. As of May 28, 2023, the aggregate number of shares subject to outstanding restricted stock unit (“RSU”) awards held by the members of the Board was: Mr. Barbarosh -19,028 shares; Mr. Diradoorian - 19,028 shares; Mr. Edwards - 19,028 shares; Ms. Houde - 19,028 shares; Mr. Obus - 19,028 shares; Mr. Schechter - 19,028 shares; Dr. Calloway - 9,887 shares; and Mr. Kiper - 9,887 shares. The 2023 annual cash retainer fee and per-meeting fees paid to non-employee directors of the Company are detailed in the following table:

  4. Compensation of Directors

    | Position | Annual Retainer Fees paid | | Non-employee Director | $50,000 | | Audit Committee | $10,000 | | Compensation Committee | $10,000 | | Nominating and Corporate Governance Committee ¹ | $5,000 | | Transaction (Curation Foods divestiture) Committee Chair ² | $1,500 | | Transaction (Strategic Planning) Committee Chair | $1,500 |

  5. Compensation of Directors

    (1) Retainer fee is per meeting. The Committee held seventeen meetings during fiscal year 2023. (2) Retainer fee is per meeting. The Committee held twenty-three meetings during fiscal year 2023. In lieu of the annual cash retainers paid to members of the committees as described above, for fiscal year 2023, the Company paid annual retainers and per-meeting fees to each of the chairs of the committee as shown below. In addition, the Chairperson of the Board received a separate annual retainer equal to the amount indicated in the table below:

  6. Compensation of Directors

    | Annual Cash Retainer for | Annual Retainer Fees paid | | Chairperson of the Board | $95,000 | | Audit Committee Chair | $20,000 | | Compensation Committee Chair | $20,000 | | Nominating and Corporate Governance Chair | $10,000 | | Transaction (Curation Foods divestiture) Committee Chair ¹ | $2,000 | | Transaction (Strategic Planning) Committee Chair ² | $2,000 |

  7. Compensation of Directors

    (1) Retainer fee is per meeting. The Committee held seventeen meetings during fiscal year 2023. (2) Retainer fee is per meeting. The Committee held twenty-three meetings during fiscal year 2023. Consistent with the general industry trend toward fixed-value RSU awards, each non-employee director receives an annual RSU award based on the fair market value of the Company’s Common Stock on the date of the grant and vesting on the first anniversary of the date of grant. On May 31, 2022, then-current directors were granted an RSU award with a fair market value of $90,000 covering 9,474 shares of stock. On February 1, 2023, then-current directors were granted an RSU award with a fair market value of $60,000 covering 9,554 shares of stock. Newly elected directors received pro-rated awards on January 9, 2023 covering 5,906 shares of stock and February 1, 2023 covering 3,981 shares of stock.

  8. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS The Company’s Bylaws currently provide for no fewer than six and no more than twelve directors. The authorized number of directors is currently set at nine. Current directors Craig A. Barbarosh and Nathaniel Calloway will not stand for re-election to our Board at the Annual Meeting, and the Board has reduced its size from nine to eight directors, to be effective upon the commencement of the Annual Meeting. At the Annual Meeting, four directors will be elected: one solely by the holders of the Series A Preferred Stock and three by the holders of both our Common Stock and Series A Preferred Stock, voting together as if they were a single class. As disclosed in the Company’s Current Report on Form 8-K filed on July 1, 2024, on June 28, 2024, the Company entered into a Cooperation Agreement (the “Cooperation Agreement”) with 22NW Fund, LP, 22NW, LP, 22NW Fund GP, LLC, 22NW GP, Inc., Aron R. English, Bryson O. Hirai-Hadley, and Dr. Calloway (collectively, the “22NW Investor Group”), as well as Matthew Korenberg and Jason Aryeh, who are independent of the 22NW Investor Group. Pursuant to the Cooperation Agreement, the Board has nominated Mr. Aryeh for election as the Series A Preferred Director at the Annual Meeting. As described in more detail under “Corporate Governance—Board of Directors Meetings and Committees,” in considering candidates for election to the Board, the Nominating and Corporate Governance Committee considers a number of factors, including the ability of prospective nominees to represent the interests of our stockholders, the extent to which the prospective nominees contribute to the range of talent, skill, and expertise appropriate for the Board, and the extent to which the prospective nominees facilitate the reflection of directors with diverse backgrounds and experiences.

  9. The Non-Series A Preferred Directors to be Elected by All Stockholders

    The Non-Series A Preferred Directors to be Elected by All Stockholders Based on the recommendation of the Nominating and Corporate Governance Committee, the Board has nominated, and recommends that stockholders elect, the following individuals to serve as non-Series A Preferred Directors: •Raymond Diradoorian, •Paul Josephs, and •Joshua E. Schechter.

  10. The Series A Preferred Director to be Elected Only by Series A Preferred Stockholders

    The Series A Preferred Director to be Elected Only by Series A Preferred Stockholders The Certificate of Designations provides that, so long as 30% of the amount of Series A Preferred Stock issued on the first date of the issuance of Series A Preferred Stock remains outstanding, holders of the Series A Preferred Stock have the right, voting separately as a single class, to nominate one or more persons for election to the Board to fill any vacancy created in any year in which a Series A Preferred Director’s term expires. Dr. Calloway, one of the Board’s current Series A Preferred Directors, will not stand for reelection at the Annual Meeting. Pursuant to the Cooperation Agreement, the Board has nominated, and recommends that stockholders elect, current Board observer Jason Aryeh as the Series A Preferred Director to be elected at the Annual Meeting. If the Company’s stockholders approve the Declassification Proposal described in Proposal No. 1, all directors elected at the Annual Meeting will serve for a term expiring at the 2025 Annual Meeting and until their successors are duly elected and qualified. If the Company’s stockholders do not approve the Declassification Proposal, then the Company will not file the Declassification Charter Amendment with the Secretary of State of the State of Delaware to effect the declassification of the Board, the Board will remain classified, and the directors elected at this Annual Meeting will serve as Class 2 directors for the two years following this Annual Meeting and until their successors are duly elected and qualified. The biographies and qualifications of the director nominees named in this Proposal No. 2 are set forth below under “Director and Director Nominee Biographies.”

  11. Board Recommendation

    Board Recommendation THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE FOLLOWING NOMINEES: •RAYMOND DIRADOORIAN, •PAUL JOSEPHS,

  12. •JOSHUA E. SCHECHTER, AND

    •JOSHUA E. SCHECHTER, AND •JASON ARYEH.

  13. Director and Director Nominee Biographies

    Director and Director Nominee Biographies The following sets forth certain information with regard to each of our current directors and director nominees. Ages are as of the Record Date. Current Directors Raymond Diradoorian (66) has served as a member of the Board since January 2022. Mr. Diradoorian is a seasoned operations executive with over 40 years of experience in the pharmaceutical and medical device industries. Mr. Diradoorian retired from Allergan, Inc. in 2015, which he joined in 1981. Mr. Diradoorian held numerous positions, serving most recently as Executive Vice President of Global Technical Operations from 2006 to 2015. After his time at Allergan, Mr. Diradoorian served as an independent industry consultant, working with a number of public and privately held companies as well private equity firms in the pharmaceutical and medical device industries. Mr. Diradoorian holds a Bachelor of Sciences degree in Biological Sciences from the University of California at Irvine and a Masters of Science Degree in Technology Management from Pepperdine University. Mr. Diradoorian’s extensive experience in the pharmaceutical and medical device industries, as well as his experiences corporate governance matters, capital markets, acquisitions, and other transactions in a variety of industries provides valuable insight to the Board of Directors. Jeffrey L. Edwards (64) has served as a member of the Board since October 2020. Mr. Edwards has also served as a member of the board of directors of FibroGen, Inc. (Nasdaq: FGEN), a publicly traded biopharmaceutical company, since October 2015 and currently serves as the chair of its audit committee. He has also served on the board of directors of Bio-Rad Laboratories, Inc. (NYSE: BIO), a publicly traded life sciences research and clinical diagnostic products company, since April 2017, where he is currently a member of its audit and compliance committees, as well as chairman of its compensation committee. Mr. Edwards has also served, since September 2018, on the board of directors, including the audit and nominating and corporate governance committees of Clearside Biomedical Inc. (Nasdaq: CLSD), a publicly traded, clinical-stage pharmaceutical company. Additionally, Mr. Edwards previously served on the board of directors of BioTheryX, Inc., a privately owned, clinical-stage biotechnology company, from September 2019 to May 2021. In 2015 Mr. Edwards retired from Allergan, Inc., which he joined in June 1993 and where he served as Executive Vice President, Finance and Business Development and Chief Financial Officer from September 2005 to August 2014. From 2003 to 2005, Mr. Edwards served as Allergan’s Corporate Vice President, Corporate Development and previously served as Senior Vice President, Treasury, Tax, and Investor Relations. Prior to joining Allergan, he was with Banque Paribas and Security Pacific National Bank, where he held various senior-level positions in the credit and business development functions. Mr. Edwards received a Bachelor of Arts in Sociology from Muhlenberg College and completed the Advanced Management Program at the Harvard Business School. Mr. Edwards has over 30 years of public company experience. We believe that Mr. Edwards’ deep financial, capital allocation, and business development experience give him the qualifications and skills to serve as a director. Katrina L. Houde (65) has served as a member of the Board since August 5, 2019. Ms. Houde is currently serving as an independent advisor to select food companies. Ms. Houde has served on the board of directors of SunOpta, Inc. (Nasdaq: STKL) since January 2000, where she previously served as chair of the compensation committee and a member of the audit committee until November 2016. Ms. Houde served as Interim CEO for SunOpta on two occasions, from October 2016 until March 2017 and again from January to March of 2019, and was instrumental in leading a major operational turnaround. Before and between her roles as Interim CEO of SunOpta, Ms. Houde had various consulting engagements in the food industry. Prior to becoming a food industry consultant, Ms. Houde was President of Cuddy Food Products, a division of Cuddy International Corp., from January 1999 to March 2000 and was Chief Operating Officer of Cuddy International Corp. from January 1996 to January 1999. She is a member of the Board of Directors of a number of private and charitable organizations. Ms. Houde holds an Honours Bachelor of Commerce degree from the University of Windsor. Ms. Houde’s extensive experience in senior management and corporate strategy roles, as well as her service on other boards of directors, provides the Board of Directors with significant insight with regards to operational and governance matters. Paul Josephs (59) has served as a member of the Board and as our President and Chief Executive Officer since May 2024. Mr. Josephs previously served as President and Chief Executive Officer, and as a member of the board of directors, of Woodstock Sterile Solutions, a contract development and manufacturing company, from 2021 to April 2024. Prior to joining Woodstock, Mr. Josephs served as Head of CDMO – Global Business Development at Viatris Inc. (Nasdaq: VTRS) from 2016 to 2021. Mr. Josephs also served in numerous roles at DPT Laboratories from 1997 until it was acquired by Viatris, including most recently as Senior Vice President, Sales, Marketing and Corporate Development. Mr. Josephs received a B.A. from the University of Western Ontario in Canada. Mr. Josephs is well qualified to serve on the Board because he has over 30 years of experience in the pharmaceutical industry, including more than 25 years of contract development and manufacturing organization (“CDMO”) experience. As Lifecore’s CEO, Mr. Josephs also possesses both operational and strategic insights into the Company, making him a critical tether between the Board and the Company’s executive officers. Christopher Kiper (53) has served as a member of the Board since January 2023 as a Series A Preferred Director. Mr. Kiper has served as a Co-Founder, Managing Director and Chief Investment Officer of Legion Partners Asset Management, LLC, an investment fund focused on accumulating large ownership stakes in undervalued U.S. small-cap companies, since April 2012, and at Legion's predecessor entities from January 2010 to April 2012. Prior to co-founding Legion, he served as Vice President at Shamrock Capital Advisors, the alternative investment vehicle of the Disney family, where he served as Portfolio Manager of the Shamrock Activist Value Fund, a concentrated, long-only, activist fund, from April 2007 to January 2010. Before that, Mr. Kiper founded and operated the Ridgestone Small Cap Value Fund, a small-cap targeted activist fund in association with the Ridgestone Corporation, an investment firm, from June 2000 to June 2007. From 1998 to 2000, he served as the Director of Financial Planning at Global Crossing Ltd., a telecommunications company that provided computer networking services. Mr. Kiper began his career as an Auditor at Ernst & Young Global Limited, an international tax, consulting and advisory service, from 1994 to 1997. Mr. Kiper received a B.S.B.A. in Accounting from the University of Nebraska in 1993. Mr. Kiper is well qualified to serve on the Board of Directors because of his extensive experience as an investor and advisor to small-cap public companies and his financial expertise.

  14. Director and Director Nominee Biographies

    Nelson Obus (77) has served as a member of the Board since October 2018. Mr. Obus is a co-founder, President, and Chief Investment Officer at Wynnefield Capital, Inc. which he co-founded with Joshua Landes in November 1992. Mr. Obus manages the firm, oversees its investment portfolio. Mr. Obus served as a board member at Williams Industrial Services from June 2016 to October 2023. Previously, from January 1990 until September 1992, he was the director of research at Schafer Capital Management, Inc. Prior to that, Mr. Obus was a director of sell side research in the equity sales department at Lazard Frères & Co. Before that, he was a manager at Massachusetts Department of Environmental Management. Mr. Obus holds a Bachelor of Arts degree from New York University and a Master of Arts in political science from Brandeis University. Mr. Obus’ extensive financial experience with technology and small- to middle-market companies provides the Board of Directors with valuable insights of an experienced investment manager. Joshua E. Schechter (51) has served as a member of the Board since October 2020. He is a private investor and public company director. He has served as a director of Viad Corp (NYSE: VVI), an S&P SmallCap 600 international experiential services company, since April 2015. Mr. Schechter served as a member of the board of directors of Bed Bath & Beyond (Nasdaq: BBBY) from May 2019 to September 2023, including as chairman of its audit committee. He also served as chairman of the board of directors of Support.com, Inc. (Nasdaq: SPRT), a provider of cloud-based software and services, from June 2016 to September 2021. From April 2018 to January 2020, he served as chairman of the board of directors of SunWorks, Inc. (Nasdaq: SUNW), a provider of high-performance solar power solutions. From 2001 to June 2013, Mr. Schechter served as Managing Director of Steel Partners Ltd., a privately-owned hedge fund sponsor, and from 2008 to June 2013, served as Co-President of Steel Partners Japan Asset Management, LP, a private company offering investment services. Mr. Schechter earned a Masters of Public Administration in Professional Accounting and a Bachelor of Business Administration from The University of Texas at Austin. Mr. Schechter’s experience in corporate governance matters, capital markets, acquisitions, and other transactions in a variety of industries, together with his managerial and public company board experience, provides valuable insight to the Board of Directors. Director Nominee Jason Aryeh (55) is a director nominee. Mr. Aryeh has more than 25 years of equity investment experience focused on the life sciences industry. He is the Founder and Managing General Partner of JALAA Equities, LP, a private investment fund focused on the biotechnology and medical device sectors. He has served in such capacity since 1997. Mr. Aryeh currently serves on the board of directors of public companies Ligand Pharmaceuticals Incorporated, a biopharmaceutical company (Nasdaq: LGND), Anebulo Pharmaceuticals, Inc., a biotechnology company (Nasdaq: ANEB), and Orchestra BioMed Holdings, Inc., a life sciences company (Nasdaq: OBIO). He currently serves as chairman of Ligand Pharmaceuticals’ Nominating and Corporate Governance Committee and as a member of its Human Capital Management and Compensation Committee, as Chairman of Anebulo Pharmaceuticals’ Audit and Nominating and Corporate Governance Committees, and as Chairman of Orchestra BioMed’s Nominating and Corporate Governance Committee, as well as a member of its Audit Committee. Since 2006, Mr. Aryeh has served on the board of directors or as a consultant to over a dozen public and private life sciences companies and charitable foundations, including the Novelion Therapeutics Inc. board from June 2012 to August 2018 and the Cystic Fibrosis Foundation’s Therapeutics board from February 2011 to February 2018. Mr. Aryeh earned a B.A. in Economics, with honors, from Colgate University and is a member of the Omnicron Delta Epsilon Honor Society in Economics. The Company believes that Mr. Aryeh’s extensive public company board service and his deep industry experience would enhance the current Board’s composition.

  15. •Short-term Incentive Compensation Program

    •Short-term Incentive Compensation Program Our short-term incentive program is designed to focus our executives on the achievement of annual objectives which we believe will drive the delivery of enhanced stockholder value over the long term. The Lifecore, fiscal year 2023 annual cash incentive award was based on Lifecore exceeding Lifecore segment minimum Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of $33.413 million. Upon achieving this Lifecore segment adjusted EBITDA bonus funding gate, then 75% of the bonus was based on Lifecore segment adjusted EBITDA (goal was $38.805 million), and 25% on Lifecore segment revenue level (goal was $128.1 million.). No cash bonuses were earned or paid in fiscal 2023 because Lifecore segment adjusted EBITDA did not meet the threshold of $33.413 million. Dr. Bolles at Curation Foods was not eligible for a short-term incentive cash bonus in fiscal 2023 because his transition was expected as part of the planned transformation of the Company from Landec to Lifecore.

  16. Compensation Governance Practices

    | Best Practices We Employ | | Long-term focus. The majority of our executive compensation is tied to long-term performance. | | Equity Ownership Guidelines. We have robust equity ownership guidelines of 5x salary for our CEO and 3x salary for other executive officers. | | Equity Holding Requirements. We have implemented holding requirements for executives wherein each executive must retain at least 50% of equity granted until minimum share ownership requirements are achieved. | | Clawback Policy. We have implemented a recoupment, or “clawback” policy, to recover incentive compensation in the event of certain restatements of the financial results of the Company. Effective October 2, 2023, we enhanced our compensation recoupment policy to comply with Section 10D of the Exchange Act and Rule 10-D promulgated thereunder, as well as Nasdaq listing rules. | | No Excessive Benefits. We offer limited perquisites and other benefits to our executive officers. | | No Section 280G Gross-ups. None of our executive officers are entitled to an excise tax gross-up of the payments received in connection with a change in control. | | Director Independence. The Compensation Committee is made up entirely of independent directors. | | Independent Compensation Consultant. The Compensation Committee retains an independent compensation consultant to advise on our executive compensation programs and practices. |

  17. Role of the Compensation Consultant

    Role of the Compensation Consultant The Compensation Committee retained Frederic W. Cook & Co (“FW Cook”) to provide consulting services in fiscal year 2023, including advice on the compensation philosophy, incentive plan designs, executive compensation analysis, and CD&A disclosure, among other compensation topics. FW Cook provides no services to the Company other than consulting services provided to the Compensation Committee. The Compensation Committee has conducted a specific review of its relationship with FW Cook and determined that FW Cook’s work for the Compensation Committee does not raise any conflicts of interest. FW Cook’s work has conformed to the independence factors and guidance provided by the Dodd-Frank Act, the SEC and Nasdaq.

  18. IV. Compensation Competitive Analysis

    IV. Compensation Competitive Analysis Our Compensation Committee uses peer group information to provide context for its compensation decision-making for our executive officers. The Compensation Committee reset the peer group before making fiscal 2023 compensation decision so that the peers reflected the Lifecore business and its market for both life sciences executive talent and for investment.

  19. Fiscal Year 2023 Peers and Philosophy

    Fiscal Year 2023 Peers and Philosophy Peer group data is gathered with respect to base salary, bonus targets and equity awards (including stock options, performance shares, restricted stock and long-term, and any cash-based long-term awards). To assist in determining compensation for fiscal year 2023, FW Cook helped the Compensation Committee to identify companies similar to Lifecore with respect to life sciences sector, market capitalization and revenue to provide a broad perspective on competitive pay levels and practices. This determination of the peer group companies occurred in late fiscal year 2022 to prepare for fiscal year 2023 decision-making. Peer companies generally fell into the following parameters: •Sector: Contract development and manufacturing organizations, contract research organizations, medical technology and device, commercial drug development or pharma, and healthcare. •Revenue: Revenue up to $300 million. •Market Capitalization: up to $1.1 billion in the prior fiscal year, which was up to a little less than 4x Lifecore’s market capitalization when work occurred. Using these criteria, the Compensation Committee determined that the following 19 companies comprised the Company’s 2023 peer group. At the time the Compensation Committee set the fiscal year 2023 peer group, Lifecore's market capitalization was approximately $280 million as compared to the median market capitalization of the peer group companies of approximately $160:

  20. Fiscal Year 2023 Peers and Philosophy

    The Compensation Committee does not benchmark compensation to a particular level, but rather uses competitive market data as a reference point among several when determining appropriate pay levels. On an overall basis, Lifecore's goal is to target total compensation for executive officers at a level that is near the 50th percentile within the 2023 peer group, but other considerations include each executive’s particular experience, unique and critical skills, scope of responsibilities, proven performance, succession management and retention considerations, and the need to recruit new executives. The Compensation Committee analyzes base pay, target cash compensation and target total direct compensation within this broader context. The CEO’s salary, target cash compensation, equity award value, and total compensation during fiscal year 2023 were set below the median of the fiscal year 2023 peers upon promotion of Mr. Hall to the CEO role.

  21. V. Elements of Compensation

    V. Elements of Compensation As outlined above, there are three major elements that comprise Lifecore’s executive compensation program: (i) base salary; (ii) annual cash incentive opportunities; and (iii) long-term incentives, which for fiscal year 2023, were in the form of stock options and restricted stock units. Further, for Dr. Bolles, severance was provided upon his termination consistent with the terms of his employment agreement.

  22. Annual Cash Incentive Award Plan

    Annual Cash Incentive Award Plan Lifecore maintains an annual cash incentive award plan (the “Cash Incentive Award Plan”) for senior executives to encourage and reward achievement of Lifecore’s business goals and to assist Lifecore in attracting and retaining executives by offering an opportunity to earn a competitive level of compensation. This plan is consistent with our overall pay-for-performance philosophy and our goal of attracting and retaining top level executive officers in the industry. In keeping with our pay for performance philosophy, a portion of our executives’ annual compensation is “at risk” compensation. This has resulted in most of our Named Executive Officers not receiving any annual cash incentive award or only a portion of their targeted award in recent years. Award targets are set as a percentage of base salary. Incentive award targets and ranges are typically set early in each fiscal year, together with performance goals. The overall corporate and business unit objectives are intended to be challenging but achievable. Such objectives are based on actual performance compared to predetermined financial performance targets, which are weighted depending upon whether the employee is a member of a business unit or the corporate staff. Incentive award targets and criteria for executive officers are subject to approval by the Compensation Committee.

  23. Fiscal Year 2023 Cash Incentive Award Plan

    Fiscal Year 2023 Cash Incentive Award Plan The Cash Incentive Award Plan for fiscal year 2023 included financial objectives for Lifecore. The financial objectives used were Adjusted EBITDA (weighted 75%) and Revenue (weighted 25%). The goals were based on the internal operating plan approved by the Board of Directors for fiscal year 2023. Adjusted EBITDA was used as the primary metric because it requires both top line revenue and cost control which are viewed as inputs for creating stockholder value, while revenue was added as a lesser measure in fiscal year 2023 to reflect an incentive to grow Lifecore’s business as part of the transition. The focus on Adjusted EBITDA was further reinforced with a requirement to achieve threshold. For fiscal year 2023, the target annual cash incentive award was 100% of base salary for Mr. Hall and 60% of base salary for Mr. Morberg, while Mr. Bolles was not provided a fiscal 2023 cash incentive opportunity due to the previously described transition in the President and Chief Executive Officer role position.

  24. Performance Goals

    Performance Goals In fiscal year 2023, performance measures were broken into two categories: Adjusted EBITDA of $38.805 million with Adjusted EBITDA performance weighted 75% and revenue goal of $128.1 million, with revenue performance weighted 25%. Adjusted EBITDA is defined as EBITDA, excluding restructuring charges, other non-recurring charges, and management fees, and including the cost of bonuses.

  25. Performance Goals

    | 75% Weighting EBITDA Portion of Bonus | | | | + | 25% Weighting Revenue Portion of Bonus | | | | | ($000s) | | % of | % EBITDA | | ($000s) | | % of | % Revenue | | | FY23 | EBITDA | Target | | | FY23 | Revenue | Target | | | EBITDA | Goal | Earned | | | Revenue | Goal | Earned | | Cap | $50,447 | 130% | 175% | | Cap | $147,315 | 115% | 115% | | Goal | $38,805 | 100% | 100% | | Goal | $128,100 | 100% | 100% | | Threshold | $33,413 | 86% | —% | | Threshold | $115,290 | 90% | 90% | | Interpolation used if performance is between points shown. | | | | | | | | | | EBITDA threshold must be met for any bonus to be earned. | | | | | | | | |

  26. Fiscal Year 2023 Earned Annual Cash Incentives

    Fiscal Year 2023 Earned Annual Cash Incentives No bonus would be earned if Adjusted EBITDA was below the threshold of $33.413 million under the fiscal year 2023 Plan, and actual Adjusted EBITDA was $7.24 million for fiscal 2023. As a result of falling short of the Plan threshold, the Company did not pay any performance bonus to Mr. Hall or to Mr. Morberg for fiscal 2023. Based on the metrics and actual performance described above, the Named Executive Officers’ target annual incentive awards and actual amounts earned for fiscal year 2023 were as follows:

  27. Fiscal Year 2023 Earned Annual Cash Incentives

    | Name | Target as % of Base Salary | Target ($) | Actual 2023 Cash Award ($) | | James G. Hall | 100% | $500,000 | — | | John D. Morberg | 60% | $268,830 | — |

  28. Long-Term Incentive Compensation

    Long-Term Incentive Compensation Lifecore provides long-term incentive compensation through equity-based, and awards intended to align the interests of officers with those of the stockholders by creating an incentive for officers to maximize long-term stockholder value. At the same time, our long-term awards are designed to encourage officers to remain employed with Lifecore despite a competitive labor market in our industry.

  29. Award Types

    Award Types Awards to eligible employees, including Named Executive Officers, are generally made on an annual basis. Equity-based awards historically have taken the form of stock options and RSUs. The RSUs to ensure retention through short-term market volatility typically vest on the third anniversary of the grant date. Stock option awards provide that one-third vests on the first anniversary of the grant date and then 1/36th of the remaining unvested amount vests each month thereafter. Lifecore grants stock options because they can be an effective tool for meeting Lifecore’s goal of increasing long-term stockholder value. Employees are able to profit from stock options only if Lifecore’s stock price increases in value over the stock option’s exercise price. Lifecore also granted RSUs to ensure retention through short-term market volatility, while still maintaining the link to shareholder value. Fewer RSUs are needed to provide the same retention and incentive value as a stock option and the Company’s internal view during fiscal 2023 was that one RSU was equivalent to two stock options, which was based generally on the Black-Scholes value of options. In fiscal year 2023, the Compensation Committee utilized stock options and restricted stock units for the Named Executive Officers because they are a simple way to ensure that executives realize a reward in the event that stockholders experience stock price appreciation and for retention.

  30. Equity Grants in Fiscal Year 2023

    Equity Grants in Fiscal Year 2023 In general, long-term incentive awards granted to each executive officer are determined based on a number of qualitative factors, considered holistically, including an analysis of competitive market data, the officer’s degree of responsibility, general level of performance, ability to affect future Company performance, salary level, promotion to CEO (in the case of Mr. Hall) and recent noteworthy achievements, as well as prior years’ awards. Further, the awards to the two ongoing Lifecore NEOs, Mr. Hall and Mr. Morberg, were made in two parts with the first award reflecting their responsibility prior to Lifecore becoming the primary company and the second award reflecting the Company’s change from Landec to Lifecore. Dr. Bolles was not provided an equity award in fiscal 2023. Awards to Mr. Hall and Morberg were primarily options as shown in the table below:

  31. Equity Grants in Fiscal Year 2023

    | Equity | | | Grant | | Conversion | Option- | Implied | | Type | | Name | Date | Shares | to Options (1) | Equivalents | Equity Mix | | Options | | Hall | 7/14/2022 | 60,000 | 1 | 60,000 | 70% Options | | | | Hall | 8/11/2022 | 150,000 | 1 | 150,000 | | | RSUs | | Hall | 8/11/2022 | 45,000 | 2 | 90,000 | 30% RSUs | | | | | | Total Option-Equivalents | | 300,000 | | | Options | | Morberg | 7/14/2022 | 50,000 | 1 | 50,000 | 63% Options | | | | Morberg | 8/11/2022 | 13,000 | 1 | 13,000 | | | RSUs | | Morberg | 7/14/2022 | 5,123 | 2 | 10,246 | 37% RSUs | | | | Morberg | 8/11/2022 | 13,500 | 2 | 27,000 | | | | | | | Total Option-Equivalents | | 100,246 | | | (1) | The Company's view was that 1 RSU was equivalent to 2 options | | | | | | |

  32. Equity Grants in Fiscal Year 2023

    In total, the number of stock option and RSUs awarded to Messrs. Hall and Morberg was as follows:

  33. Equity Grants in Fiscal Year 2023

    | Name | Stock Options (#) | RSUs (#) | | James G. Hall | 210,000 | 45,000 | | John D. Morberg | 63,000 | 18,623 |

  34. Re-location Bonus for Executive Vice President, Chief Financial Officer, and Secretary Mr. Morberg

    Re-location Bonus for Executive Vice President, Chief Financial Officer, and Secretary Mr. Morberg Mr. Morberg was hired to be the Executive Vice President, Chief Financial Officer, and Secretary of Landec in 2021. Mr. Morberg and Landec were based in California from the time of hire until fiscal 2023. In fiscal 2023 Mr. Morberg re-located from California to the Company’s new headquarters in Minnesota following the transition from Landec to Lifecore. The Compensation Committee determined to provide Mr. Morberg with re-location assistance for $60,000 to cover expenses for moving, temporary housing, and related travel.

  35. Summary Compensation Table

    Summary Compensation Table

  36. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) (1) | Stock Awards ($) (2) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) (3) | All Other Compensation ($) (4) | Total ($) | | James G. Hall | 2023 | $485,435 | $— | $508,950 | $731,661 | $— | $38,167 | $1,764,213 | | President and Chief Executive Officer | 2022 | $379,972 | $— | $— | $201,462 | $294,873 | $36,721 | $913,028 | | | 2021 | $365,373 | $— | $33,578 | $120,923 | $315,589 | $25,294 | $860,757 | | John D. Morberg | 2023 | $433,359 | $— | $202,685 | $203,594 | $— | $87,457 | $927,096 | | Executive Vice President, Chief Financial Officer, and Secretary | 2022 | $420,881 | $— | $— | $174,600 | $— | $22,550 | $618,031 | | | 2021 | $141,923 | $85,416 | $189,525 | $266,884 | $— | $4,330 | $688,078 | | | | | $— | | | | | | | Albert D. Bolles | 2023 | $538,856 | $— | $— | | $— | $802,582 | 1,341,438 | | Former President and Chief Executive Officer | 2022 | $655,547 | $— | $— | $268,616 | $— | $32,647 | $956,810 | | | 2021 | $633,592 | $319,300 | $141,840 | $— | $— | $36,567 | $1,131,299 |

  37. Summary Compensation Table

    (1)The amounts shown were discretionary bonuses. (2)Reflects the aggregate grant date fair value of restricted stock unit awards and the grant date fair value of option awards in the respective fiscal year, as computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation using the assumptions discussed in Note 5, “Stock-based Compensation and Stockholders’ Equity,” in the notes to financial statements included in our Annual Report on Form 10-K for the year ended May 28, 2023. These amounts do not reflect the actual economic value or gain that will be realized by our Named Executive Officers relating to these awards. The amount of value realized by our executives may be significantly different than this figure depending on our future stock price performance. (3)The amounts shown for each of the years reflect the annual cash incentive earned for the year noted. (4)Includes the following amounts for fiscal year 2023:

  38. Summary Compensation Table

    | Name | Company-Paid Life Insurance | 401k Match | Company-Paid Long Term Disability Insurance | Executive Medical | Severance Benefits | Relocation Allowance | Total | | Mr. Hall | $720 | $10,429 | $4,314 | $22,704 | $— | $— | $38,167 | | Mr. Morberg | $930 | $15,186 | $313 | $11,028 | $— | $60,000 | $87,457 | | Dr. Bolles | $810 | $11,400 | $— | $15,327 | $775,045 | $— | $802,582 |

  39. Summary Compensation Table

    For a description of the severance benefits to Dr. Bolles in fiscal year 2023, see “Compensation Discussion & Analysis--Transition and Separation Agreement with Former President and Chief Executive Officer.”

  40. Grants of Plan-Based Awards

    Grants of Plan-Based Awards

  41. Grants of Plan-Based Awards

    | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | | | Grant | Threshold | Target | Maximum | | | | | | Name | Date | ($) | ($) | ($) | | | | | | | | | | | | | | (2) | | James G. Hall | 7/14/2022 | — | 500,000 | 1,000,000 | — | — | — | — | | | 7/14/2022 | | | | | 60,000(4) | 9.76 | 187,746 | | | 8/11/2022 | | | | — | 150,000(4) | 11.31 | 543,915 | | | 8/11/2022 | | | | 45,000(3) | | | 508,950 | | John D. Morberg | 7/14/2022 | — | 268,830 | 537,660 | — | — | — | — | | | 7/14/2022 | | | | | 50,000(4) | 9.76 | 156,455 | | | 7/14/2022 | | | | 5,123(3) | | | 50,000 | | | 8/11/2022 | | | | | 13,000(4) | 11.31 | 47,139 | | | 8/11/2022 | | | | 13,500(3) | | | 152,685 | | Albert D. Bolles | | — | — | — | — | — | — | — |

  42. Grants of Plan-Based Awards

    (1)Amounts shown are estimated payouts for fiscal year 2023 to the Named Executive Officers under the 2023 Cash Incentive Award Plan. The target amount is based on a percentage of the individual’s fiscal year 2023 base salary. (2)The value of an option award is based on the fair value as of the grant date of such award determined pursuant to ASC 718. The assumptions used to calculate the value of stock option awards are set forth under Note 1 and Note 5 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May 28, 2023. Regardless of the value placed on a stock option on the grant date, the actual value of the option will depend on the market value of the Common Stock at such date in the future when the option is exercised. (3)RSU awards provide 100% vesting on the third anniversary of the grant date, subject to continued employment. (4)Stock option awards provide that 12/36th vests on the first annual anniversary of the grant date and 1/36th vests on each monthly anniversary thereafter. Therefore, all options are fully vested three years after the date of grant and have a seven-year term, subject to continued employment. The following table shows all outstanding equity awards held by the Named Executive Officers at the end of fiscal year 2023.

  43. Outstanding Equity Awards at Fiscal Year 2023 Year End

    Outstanding Equity Awards at Fiscal Year 2023 Year End

  44. Outstanding Equity Awards at Fiscal Year 2023 Year End

    | | | Option Awards | | | | Stock Awards | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable | Number of Securities Underlying Unexercised Options Unexercisable | Option Exercise Price | Option Expiration | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares Or Units of Stock That Have Not Vested | | | | | (#) (1) | ($) | Date | (#) (2) | ($) (3) | | James G. Hall | 8/11/2022 | — | 150,000 | 11.31 | 8/11/2029 | 45,000 | 357,300 | | | 7/14/2022 | — | 60,000 | 9.76 | 7/14/2029 | — | — | | | 7/27/2021 | 45,687 | 29,313 | 12.14 | 7/27/2028 | — | — | | | 7/23/2020 | 49,568 | 2,932 | 9.40 | 7/23/2027 | — | — | | | 1/7/2020 | 100,000 | — | 10.12 | 1/7/2027 | — | — | | | 7/25/2018 | 16,875 | — | 14.35 | 7/25/2025 | — | — | | | 6/1/2017 | 75,000 | — | 14.00 | 6/1/2024 | — | — | | John D. Morberg | 8/11/2022 | — | 13,000 | 11.31 | 8/11/2029 | 13,500 | 107,190 | | | 7/14/2022 | — | 50,000 | 9.76 | 7/14/2029 | 5,123 | 40,677 | | | 7/27/2021 | 39,595 | 25,405 | 12.14 | 7/27/2028 | — | — | | | 1/18/2021 | 77,666 | 22,334 | 10.83 | 1/18/2028 | 17,500 | 138,950 | | Albert D. Bolles | 7/27/2021 | 100,000 | — | 12.14 | 2/10/2025 | — | — | | | 5/27/2020 | 100,000 | — | 11.20 | 2/10/2025 | — | — | | | 5/23/2019 | 162,000 | — | 9.35 | 2/10/2025 | — | — |

  45. Outstanding Equity Awards at Fiscal Year 2023 Year End

    (1)Options granted in fiscal year 2020 or later vest one-third on the first anniversary of the grant date and then 1/36th per month thereafter. (2)The RSUs vest on the third anniversary of the date of grant, subject to continued employment (3)Value is based on the closing price of the Common Stock of $7.94 on May 26, 2023 (the last trading day of our fiscal year) as reported on the Nasdaq Global Select Market. The following table shows all stock options exercised and the value realized upon exercise and the number of stock awards vested and the value realized upon vesting by the Named Executive Officers during fiscal year 2023.

  46. Option Exercises and Stock Vested For Fiscal Year 2023

    Option Exercises and Stock Vested For Fiscal Year 2023

  47. Option Exercises and Stock Vested For Fiscal Year 2023

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | | James G. Hall | — | — | 10,000 | 104,200 | | John D. Morberg | — | — | — | — | | Albert D. Bolles | — | — | — | — |

  48. Option Exercises and Stock Vested For Fiscal Year 2023

    (1) The value realized on vesting a stock award is determined by multiplying (a) the number of shares of Common Stock vesting by (b) the market price of our Common Stock on the vesting day. The following table provides information as of May 28, 2023 regarding the number of shares of Common Stock that may be issued under our equity compensation plans.

  49. Pay Versus Performance

    Pay Versus Performance 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. As required by Item 402(v), we have included: 1) A description of our most important measures that our Compensation Committee used in fiscal year 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; 2) A table that compares the total compensation of our named executive officers’ (also known as NEOs) as presented in the Summary Compensation Table (“SCT”) to CAP and that compares CAP to specified performance measures; and 3) Graphs that describe: •the relationships between CAP and our cumulative total shareholder return (“TSR”), GAAP Net Income, and our Company selected measure, Adjusted EBITDA (defined as EBITDA, excluding restructuring charges, other non-recurring charges, and management fees, and including cost of bonuses); and •the relationship between our TSR and the TSR of the Nasdaq Industrial Index (“Peer Group TSR”).

  50. Pay Versus Performance Table

    Pay Versus Performance Table

  51. Pay Versus Performance Table

    | Fiscal Year | Summary Compensation Table Total for PEO | Compensation Actually Paid to PEO | Summary Compensation Table Total for PEO 2 | Compensation Actually Paid to PEO 2 | Average Summary Compensation Table Total for non-PEO NEOs | Average Compensation Actually Paid to non-PEO NEO's | Total Shareholder Return | Peer Group Total Shareholder Return | Net Income ($M) | Adjusted EBITDA ($M) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | | 2023 | $1,341,438 | $640,585 | $1,764,213 | $1,395,472 | $927,096 | $777,243 | $74.41 | $116.26 | $(99.6) | $7.2 | | 2022 | $956,810 | $711,502 | N/A | N/A | $687,606 | $451,471 | $92.50 | $119.75 | $(116.7) | $17.8 | | 2021 | $1,131,299 | $1,665,818 | N/A | N/A | $624,189 | $696,568 | $112.18 | $146.72 | $(32.3) | $15.2 |

  52. Pay Versus Performance Table

    (1) The dollar amounts reported in column (b) and (d) are the aggregate amounts of total compensation reported for PEO (Bolles) and PEO2 (Hall) respectively, for each corresponding year in the “Total” column of the SCT. Refer to “Executive Compensation – Executive Compensation Tables – Summary Compensation Table.” (2) The dollar amounts reported in column (c), (e), and (g) represent the amount of CAP, as computed in accordance with SEC rules. CAP does not necessarily represent cash and/or equity value transferred to the applicable NEO without restriction, but rather is a value calculated under applicable SEC rules. We do not have a defined benefit plan so no adjustment for pension benefits is included in the table below. Similarly, no adjustment is made for dividends as dividends are factored into the fair value of the award. Reconciliation of the SCT total compensation and CAP is summarized in the following table:

  53. Pay Versus Performance Table

    | Fiscal Year | | SCT (a) | Grant Date Value of New Awards (b) | Year End Value of New Awards (i) | Change in Value of Prior Awards (ii) | Change in Value of Vested Awards (iii) | Prior Year End Value of Failed to Vest Awards (iv) | CAP | | 2023 | PEO | $1,341,438 | $— | $— | $— | $(118,193) | $(582,660) | $640,585 | | | PEO2 | $1,764,213 | $(1,240,611) | $900,825 | $9,307 | $(38,262) | $— | $1,395,472 | | | NEOs | $927,096 | $(406,279) | $321,723 | $(22,143) | $(43,154) | $— | $777,243 | | 2022 | PEO | $956,810 | $(268,616) | $186,013 | $60,856 | $(223,561) | $— | $711,502 | | | PEO2 | $— | $— | $— | $— | $— | $— | $— | | | NEOs | $687,606 | $(152,216) | $86,806 | $(62,463) | $(42,030) | $(66,233) | $451,471 | | 2021 | PEO | $1,131,299 | $(141,840) | $480,384 | $183,014 | $12,961 | $— | $1,665,818 | | | PEO2 | $— | $— | $— | $— | $— | $— | $— | | | NEOs | $624,189 | $(185,062) | $196,183 | $40,880 | $45,120 | $(24,741) | $696,568 |

  54. Pay Versus Performance Table

    (a) The dollar amounts reported in the SCT for the applicable year, plus: (b) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” column in the SCT for the applicable year plus: (i-iv) The recalculated value of equity awards for each applicable year including: (i) Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year; (ii) Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years; (iii) Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in the Current Year and Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year; (iv) Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year. (3) The dollar amounts reported in column (f) represent the average of the amounts reported for the Company’s named executive officers (NEOs) as a group in the “Total” column of the SCT in each applicable year. The names of each of the NEOs included for purposes of calculating the average amounts in each applicable year are as follows:

  55. Pay Versus Performance Table

    | 2023 | John D. Morberg | | 2022 | John D. Morberg, James G. Hall, and Timothy Burgess | | 2021 | John D. Morberg, Brian McLaughlin, James G. Hall, Timothy Burgess, and Dawn Kimball |

  56. Pay Versus Performance Table

    (4) TSR determined in Column (h) is based on the value of an initial fixed investment of $100 as of May 28, 2021. (5) The Peer Group TSR set forth in this table utilizes the Nasdaq Industrial Index.

  57. Potential Payments upon Termination or Change in Control

    Potential Payments upon Termination or Change in Control The following describes the potential payments upon termination or change in control, based on the arrangements in effect as of May 28, 2023, the last day of our fiscal year 2023. The Executive Change in Control Severance Plan (the “Severance Plan”), provides for the payment of cash severance and other benefits to participants in the event of a qualifying termination of employment in connection with a change in control. Mr. Hall is a participant in the Severance Plan. Mr. Morberg is not a participant in the Severance Plan. Under the Severance Plan, in the event of a termination of Mr. Hall's employment by us without “cause” or by Mr. Hall for “good reason,” in either case, on or within two years following a “change in control”, Mr. Hall will be eligible to receive the following payments and benefits: a cash payment equal to the sum of 1.0 times (i) the then-current annual base salary, plus (ii) the target cash performance bonus for the year in which the termination occurs, to be paid in a lump sum within 60 days following termination; (iii) a cash payment equal to his pro-rated target cash performance bonus for the year in which the termination occurs; (iv) Company-subsidized COBRA premium payments for Mr. Hall and his covered dependents for up to 12 months; and (v) full accelerated vesting of all outstanding Company equity awards, with performance-based awards vesting at target performance values (unless otherwise specified in the applicable award agreement). If Mr. Hall’s employment with the Company had been terminated without cause or for good reason in connection with a change in control of the company on May 28, 2023, he would have received the benefits under the Severance Plan set forth below.

  58. Potential Payments upon Termination or Change in Control

    | Name | Cash Severance (1) | Pro-rated Bonus for Year of Termination (2) | Accelerated Vesting of Options (3) | Accelerated Vesting of RSUs (4) | Post-Termination Health Insurance Premiums (5) | Total | | James G. Hall | $500,000 | 1,000,000 | $0 | $357,300 | $39,570 | $1,296,870 |

  59. Potential Payments upon Termination or Change in Control

    (1)Reflects the potential payment for Mr. Hall based on 100% of his base salary. (2)Pro-rated bonus for year of termination is the full target bonus, as well as an additional pro-rated target cash performance because the effective date of the table is the final day of the fiscal year. (3)The value equals the positive difference, if any, between the option exercise price and the closing price of the Common Stock of $7.94 on May 26, 2023 (the last trading day of our fiscal year) as reported on the Nasdaq Global Select Market, multiplied by the number of options accelerated. For stock options out of the money (exercise price above stock price as of May 28, 2023), there is no value to the acceleration for those options. (4)The value of accelerated lapse of restricted stock units is determined by multiplying the closing share price of $7.94 on May 28, 2023 (the last trading day of our fiscal year) as reported on the Nasdaq Global Select Market by the number of RSUs whose lapse of restrictions is accelerated. (5)Twelve months of premiums that would have been paid under COBRA and the Armada Care plan. If Mr. Hall’s employment with the Company had been terminated without cause or for good reason not in connection with a change of control of the Company, Lifecore would have no further obligations to Mr. Hall other than the obligation to pay to him any earned but unpaid base salary and to provide the other welfare plan or fringe benefits in accordance with the provisions of the applicable plan. If Mr. Morberg is terminated without cause or if he terminates his employment for good reason (generally, any relocation of Mr. Morberg's place of employment, reduction in salary, reduction in his target bonus amount or material reduction of his duties or authority), Mr. Morberg will receive a cash amount equal to Mr. Morberg’s then-current annual base salary, to be paid in substantially equal installments over the 12-month period following the termination date; a cash payment equal to Mr. Morberg’s pro-rated target cash performance bonus for the year in which the termination occurs; Company-subsidized COBRA premium payments for Mr. Morberg and his covered dependents for up to the maximum period permitted under COBRA; and partial accelerated vesting of all outstanding Company equity awards that would have vested over the one-year period following the termination date (or, if either such termination occurs on or within two years following a “change in control,” full accelerated vesting of all outstanding Company equity awards, with performance-based awards vesting at target performance values, unless otherwise specified in the applicable award agreement). If Mr. Morberg’s employment with the Company had been terminated without cause or for good reason not in connection with a change of control of the Company on May 28, 2023, Mr. Morberg would have received the following severance benefits under the Morberg Agreement:

  60. Potential Payments upon Termination or Change in Control

    | Name | Cash Severance (1) | Bonus Payment (2) | Accelerated Vesting of Options (3) | Accelerated Vesting of RSUs (4) | Post-Termination Health Insurance Premiums (5) | Total | | John D. Morberg | $448,050 | 268,830 | — | $228,575 | $38,614 | $968,620 |

  61. Potential Payments upon Termination or Change in Control

    (1)Reflects potential payments based on 100% of base salaries as of May 28, 2023. (2)Reflects pro-rate portion of Mr. Morberg's target bonus, with 100% earnout since full year completed (3)The value equals the positive difference, if any, between the option exercise price and the closing price of the Common Stock of $7.94 on May 26, 2023 (the last trading day of our fiscal year) as reported on the Nasdaq Global Select Market, multiplied by the number of options accelerated. For stock options out of the money (exercise price above stock price as of May 28, 2023), there is no value to the acceleration for those options. (4)The value of accelerated lapse of restricted stock units is determined by multiplying the closing share price of $7.94 on May 26, 2023 (the last trading day of our fiscal year) as reported on the Nasdaq Global Select Market by the number of RSUs whose lapse of restrictions is accelerated. (5)The maximum amount of premiums that would have been paid under COBRA and the Armada Care plan. If Mr. Morberg’s employment with the Company had been terminated without cause or for good reason in connection with a change of control of the Company on May 28, 2023, the last day of the 2023 fiscal year, Mr. Morberg would have received the following severance benefits under the Morberg Agreement:

  62. Potential Payments upon Termination or Change in Control

    | Name | Cash Severance (1) | Bonus Payment (2) | Accelerated Vesting of Options (3) | Accelerated Vesting of RSUs (4) | Post-Termination Health Insurance Premiums (5) | Total | | John D. Morberg | $448,050 | 268,830 | — | $286,817 | $38,614 | $1,026,861 |

  63. Potential Payments upon Termination or Change in Control

    (1)Reflects potential payments based on 100% of base salaries as of May 28, 2023. (2)Reflects pro-rate portion of Mr. Morberg's target bonus, with 100% earnout since full year completed. (3)The value equals the positive difference, if any, between the option exercise price and the closing price of the Common Stock of $7.94 on May 26, 2023 (the last trading day of our fiscal year) as reported on the Nasdaq Global Select Market, multiplied by the number of options accelerated. For stock options out of the money (exercise price above stock price as of May 28, 2023), there is no value to the acceleration for those options. (4)The value of accelerated lapse of restricted stock units is determined by multiplying the closing share price of $7.94 on May 26, 2023 (the last trading day of our fiscal year) as reported on the Nasdaq Global Select Market by the number of RSUs whose lapse of restrictions is accelerated. (5)Reflects the maximum amount of premiums that would have been paid under COBRA and the Armada Care plan. Mr. Bolles’ employment was terminated on February 10, 2023, in accordance with the Separation Agreement and in accordance with the Separation Agreement, Mr. Bolles received payments and benefits as more fully described above under “Transition and Separation Agreement with Former President and Chief Executive Officer.”

  64. CEO Pay Ratio

    CEO Pay Ratio The following table sets forth the ratio of the total compensation of the Company’s CEO for fiscal year 2023, James G. Hall, to that of our median compensated employee for the fiscal year ended May 28, 2023.

  65. CEO Pay Ratio

    | CEO total annual compensation | $1,764,213 | | Median Employee total annual compensation | $70,239 | | Ratio of CEO to Median Employee total annual compensation | 25:1 |

  66. CEO Pay Ratio

    To determine the CEO’s total annual compensation, we used the amount reported in the 2023 “Total” column of our Summary Compensation Table included in this Proxy Statement. Lifecore has elected to identify its median employee every three years unless a significant change in employee population or employee compensation arrangements has occurred. In determining the median compensated employee, we used base salary and actual bonus as the consistently applied compensation metric to determine the median compensated employee. If this resulted in more than one individual at the median level, we assessed the grant date fair value of standard equity awards for these individuals and selected the employee with the median award value. We calculated annual total compensation for the median employee according to the methodology used to report the annual compensation of our Named Executive Officers in the Summary Compensation Table.