DEF 14A of United Natural Foods Inc
Filed Nov 8, 2023 · FY20230001020859-23-000105
Proxy Materials
| Potential Payments Upon Termination or Change-in-Control | 50 | | Securities Authorized for Issuance Under Equity Compensation Plans | 52 | | PAY VS. PERFORMANCE | 53 | | PROPOSAL 2—RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 55 | | Fees Paid to KPMG LLP | 55 | | Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services | 56 | | AUDIT COMMITTEE REPORT | 57 | | PROPOSAL 3—ADVISORY APPROVAL OF OUR EXECUTIVE COMPENSATION | 58 | | PROPOSAL 4—ADVISORY VOTE ON THE FREQUENCY OF APPROVAL OF OUR EXECUTIVE COMPENSATION | 59 | | PROPOSAL 5—APPROVAL OF THE THIRD AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN | 60 | | Background | 60 | | Summary of the Third Amended and Restated 2020 Equity Incentive Plan | 64 | | Certain Federal Income Tax Consequences | 68 | | New Plan Benefits | 70 | | Historical Grants and Share Usage | 70 | | OTHER MATTERS | 72 | | Stock Ownership of Certain Beneficial Owners and Management | 72 | | Stockholder Proposals and Director Nominations for the Next Annual Meeting of Stockholders | 73 | | INFORMATION ABOUT THE MEETING | 75 | | Record Date and Share Ownership | 75 | | Submitting and Revoking Your Proxy | 75 | | How to Vote | 75 | | Broker Non-Votes and Proxy Solicitation | 76 | | Quorum | 76 | | Votes Required | 76 | | Attending the Annual Meeting | 77 | | Householding | 77 | | ANNEX A – THIRD AMENDED AND RESTATED 2020 EQUITY INCENTIVE PLAN | A-1 | | ANNEX B – RECONCILIATION OF NON-GAAP PERFORMANCE METRICS | B-1 |
Director Nominees
Director Nominees Our business and affairs are managed under the direction of the Board of Directors (the Board). The Board currently consists of fourteen (14) Directors, eleven (11) of whom will be standing for election at the Annual Meeting. Information about our Directors standing for election and the Committees on which they serve is set forth below. Each Director serves a one-year term.
Director Nominees
| Name | Director Since | Audit | Compensation | Nominating and Governance | | Lynn S. Blake* Independent | Sept 2023 | — | — | — | | Gloria R. Boyland Independent | Jan 2021 | ✓ | — | ✓ | | Denise M. Clark Independent | Feb 2013 | — | — | CHAIR | | J. Alexander (Sandy) Miller Douglas Chief Executive Officer and President | Aug 2021 | — | — | — | | Daphne J. Dufresne Independent | Oct 2016 | — | CHAIR | — | | Michael S. Funk Independent | Feb 1996 | — | — | — | | James M. Loree* Independent | Sept 2023 | — | — | — | | Shamim Mohammad Independent | Feb 2022 | ✓ | — | — | | James L. Muehlbauer Independent | Apr 2019 | CHAIR | ✓ | — | | James C. Pappas* ** Independent | Sept 2023 | — | ✓ | ✓ | | Jack Stahl Independent Chair | Jun 2019 | ✓ | — | — |
Director Nominees
*Ms. Blake and Messrs. Loree and Pappas are expected to be appointed to Committees following the Board’s regularly scheduled November meeting. **Pursuant to the Cooperation Agreement (as defined below), Mr. Pappas will be appointed to the Nominating and Governance Committee and the Compensation Committee following the Board’s regularly scheduled November meeting.
Proposal 1—Election of Directors
Proposal 1—Election of Directors
Directors and Nominees for Director
Directors and Nominees for Director The Board currently consists of fourteen Directors, each of whose term will expire at the Annual Meeting. Eleven Directors have been nominated for reelection. Mses. Blake, Boyland, Clark and Dufresne and Messrs. Douglas, Funk, Loree, Mohammad, Muehlbauer, Pappas and Stahl have been nominated to stand for election as Directors at the Annual Meeting to hold office until the next annual meeting of stockholders and until their successors are duly elected and qualified. Each nominee has indicated his or her willingness to continue to serve if elected by our stockholders. If any nominee should be unable to serve, the person acting under the proxy may vote the proxy for a substitute nominee. We have no reason to believe any of the nominees will be unable to serve if elected. We have included below information concerning the business experience and qualifications, and the age as of October 25, 2023, of each of our director nominees.
Directors and Nominees for Director
| The Board unanimously recommends that stockholders vote “FOR” each of the Director nominees. Proxies received by the Board will be voted “FOR” each of the Director nominees unless a contrary choice is specified in the proxy. |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| Lynn S. Blake | | Age: 58 | | Board Member since September 2023 |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Ms. Blake served in various positions of increasing responsibility at State Street Global Advisors (SSGA), the investment management division of State Street Corporation, a financial services company, from 1987, including most recently as Executive Vice President and Chief Investment Officer of Global Equity Beta Solutions, until she retired in 2021. She also led Corporate Governance and Asset Stewardship, ESG Research and ESG data management while at SSGA, with a particular focus during the last two years on transformation. Ms. Blake served as a member of the Sustainability Accounting Standards Board’s (SASB) investment advisory group from 2016 to 2021. She currently is a member of the board of Directors of WisdomTree, Inc., a global exchange-traded product sponsor and asset manager, where she serves on the compensation committee, the audit committee and the nominating and governance committee. Skills and Qualifications: Ms. Blake has over thirty years of experience in the investment industry. Her deep financial and strategic expertise, as well as her institutional investor perspective, including her knowledge of environmental and social matters, bring valuable insight to our Board.
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| Gloria R. Boyland | | Age: 63 | | Board Member since January 2021 | | Audit Committee Member | | Nominating & Governance Committee Member |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Ms. Boyland is a retired senior executive of the FedEx Corporation, where she served as Corporate Vice President, Operations and Service Support from 2016 to 2020. While at FedEx, Ms. Boyland led advanced operations technology initiatives, electro mobility, network and fleet automation, service quality and customer experience improvements and new service offerings for the company. Prior to her tenure at FedEx, Ms. Boyland held leadership positions in various functions at GE Capital Corporation (GE), including Six Sigma Quality, mergers and acquisitions and acquisition integration. She also practiced for eight years as a commercial transactions and investment attorney at GE. Ms. Boyland currently serves on the boards of directors of Vontier Corporation and Aurora Innovation, Inc., and previously served as a member of the boards of Chesapeake Energy Corporation and UMRF Ventures, Inc. She has also served as a trustee of the Memphis Brooks Museum of Art since 2020. In 2016, Ms. Boyland was appointed to the U.S. DOT Advisory Committee on Automation in Transportation. Prior to serving on its board, Ms. Boyland served as a strategic advisor to Aurora Technologies, LLC. Skills and Qualifications: Ms. Boyland’s extensive experience leading operational transformation and customer service at global companies, coupled with her leading-edge, future-focused logistics and supply chain knowledge, make her a valuable member of our Board.
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| Denise M. Clark | | Age: 65 | | Board Member since February 2013 | | Chair of the Nominating & Governance Committee |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Ms. Clark previously served on the Compensation Committee from 2014 to 2015. Ms. Clark served as Senior Vice President and Global Chief Information Officer for The Estée Lauder Companies Inc. from November 2012 until her retirement in March 2017. Prior to that role, Ms. Clark served as Senior Vice President and Chief Information Officer for Hasbro Inc. from October 2007 to November 2012. Ms. Clark also previously served at Mattel, Inc. as Global Chief Technology Officer and later as Chief Information Officer for the Fisher Price brand from January 2000 to February 2007. Ms. Clark’s previous experience includes two other consumer goods companies, Warner Music Group, formerly a division of Time Warner Inc., and Apple Inc. Ms. Clark has served as a director of AMC Entertainment Holdings, Inc. since January 2023 and previously served as a director of Six Flags Entertainment Corporation from August 2021 to August 2022 and as a director and compensation committee chair of Caesars Entertainment Corporation from October 2018 to July 2020. Skills and Qualifications: Ms. Clark has over 20 years of experience in the delivery of enterprise resource planning, digital platforms and innovative business transformation initiatives. Ms. Clark’s extensive expertise in corporate information technology, transformation initiatives and crisis management, allows her to provide the Company with valuable guidance on our strategic initiatives, especially as it relates to information technology solutions, cybersecurity and transformation efforts.
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| J. Alexander Miller Douglas | | Age: 62 | | Board Member since August 2021 | | UNFI Chief Executive Officer and President |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Mr. Douglas has served as our Chief Executive Officer and a member of our Board since August 2021. In October 2023, he assumed the title of Chief Executive Officer and President. He most recently served as the Chief Executive Officer of Staples, Inc. (Staples), an office retail company, from April 2018 to June 2021, which included leading that company’s business-to-business distribution platform. Prior to Staples, Mr. Douglas served as President of Coca-Cola North America, the flagship market of The Coca-Cola Company (Coca-Cola) and a $10 billion revenue business that includes finished goods, juice and foodservice businesses, until February 2018, overseeing all aspects of its consumer and business-to-business operations. During Mr. Douglas’ 30-year tenure at Coca-Cola, he also served as Global Chief Customer Officer and held a variety of positions across sales and marketing. Mr. Douglas began his career at The Procter & Gamble Company in sales and sales management positions. Since May 2020, Mr. Douglas has served as a member of the board of directors of Wawa Inc., a leading convenience retailer in the Eastern United States. Skills and Qualifications: Mr. Douglas’s experience at large public companies, including his extensive experience leading consumer and business-to-business-to-consumer distribution operations and leadership development, brings valuable insight to the Board beyond the knowledge and insight he brings from being our Chief Executive Officer and President.
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| Daphne J. Dufresne | | Age: 51 | | Board Member since October 2016 | | Chair of the Compensation Committee |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Ms. Dufresne previously served on the Nominating and Governance Committee from 2016 to 2021 and the Audit Committee from 2017 to 2018. Ms. Dufresne has been a Managing Partner of GenNx360 Capital Partners, a venture capital firm that specializes in acquisition, buyouts and turnaround of underperforming businesses, since January 2017. Ms. Dufresne was previously a Managing Director of RLJ Equity Partners, a private equity fund, from December 2005 to June 2016. Ms. Dufresne participated in building the RLJ investment team, raising capital to fund its operations and constructing a partnership with The Carlyle Group, a global private equity firm. Prior to that role, Ms. Dufresne was a Venture Partner during 2005 with Parish Capital Advisors, an investment fund for emerging and experienced institutional investors, and a Principal from 1999 to 2005 at Weston Presidio Capital, a private equity organization. She also served as Associate Director in 1997 in the Bank of Scotland’s Structured Finance Group. Ms. Dufresne previously served as a director of Condor Hospitality Trust, Inc. from June 2015 to December 2022. Skills and Qualifications: Ms. Dufresne’s professional experience, including her role as an equity investor for over 24 years, brings valuable knowledge and insight to our Board. Ms. Dufresne is very familiar with conducting due diligence, negotiating purchase and sale agreements and leading the Board during these processes. She also possesses experience in owning and managing enterprises like our Company and is familiar with corporate finance, strategic business planning activity and general issues that are important to stockholders.
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| Michael S. Funk | | Age: 69 | | Board Member since February 1996 |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Mr. Funk served as Chair of the Board from January 2003 to December 2003 and again from September 2008 to December 2016. Mr. Funk served as our President and Chief Executive Officer from October 2005 to September 2008. Mr. Funk also served as Vice Chair of the Board from February 1996 until December 2002, as our Chief Executive Officer from December 1999 until December 2002 and as our President from October 1996 until December 1999. Until January 1, 2019, Mr. Funk served as an executive advisor to the Company. From its inception in July 1976 until April 2001, Mr. Funk served as President of Mountain People’s Warehouse, Inc., now known as United Natural Foods West, Inc., one of the Company’s wholly owned subsidiaries. Mr. Funk has served on the board of Amy’s Kitchen since April 2023. Skills and Qualifications: Mr. Funk’s extensive knowledge of our industry through his past service as our Chief Executive Officer brings to the Board valuable insight and a strong understanding of the natural and organic products distribution business. His deep institutional knowledge of our business and industry is valuable to the Board.
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| James M. Loree | | Age: 65 | | Board Member since September 2023 |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Mr. Loree most recently served as President and CEO of Stanley Black & Decker, Inc., a leading industrial and consumer products company, from 2016 to 2022. Mr. Loree served as President and COO of the company from 2013 to 2016; COO from 2009 to 2013; EVP and CFO from 2002 to 2009; and VP and CFO from 1999 to 2002. Prior to joining Stanley Black & Decker, Mr. Loree held positions of increasing responsibility in financial and operating management in business, corporate, and financial services at General Electric Company from 1980 to 1999. Mr. Loree served as a director of Stanley Black & Decker from 2016 to 2022 and Harsco Corporation from 2010 to 2016. He was chair of Harsco’s audit committee from 2012 to 2016. Mr. Loree currently serves on the board of Whirlpool Corporation, where he is a member of the audit committee and human resources committee and previously served on the corporate governance committee. Skills and Qualifications: Mr. Loree is a seasoned transformational leader with more than four decades of experience across two global diversified industrial and consumer products businesses. His extensive experience in finance, operations, supply chain and logistics, risk management, sustainable business practices, and corporate governance, as well as broad expertise across the consumer sector, are a valuable addition to our Board.
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| Shamim Mohammad | | Age: 54 | | Board Member since February 2022 | | Audit Committee Member |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Mr. Mohammad currently serves as Executive Vice President and Chief Information and Technology Officer at CarMax Inc. (CarMax), the largest used car retailer in the United States, third largest wholesaler of used cars in the United States and a leading auto finance company, a position he has held since April 2021. Prior to then, he held various senior technology roles of increasing responsibility at CarMax since 2012. Prior to joining CarMax, Mr. Mohammad held information technology leadership roles at BJ’s Wholesale Club Inc., Blockbuster, Inc. and TravelClick, Inc. In 2020, MIT Sloan selected Mr. Mohammad as the recipient of the CIO Leadership Award, which recognizes CIOs who lead their organizations to deliver exemplary levels of business value through the innovative use of technology. Mr. Mohammad is a registered CPA. Skills and Qualifications: Mr. Mohammad’s experience overseeing the strategic use of technology at various companies throughout his career and his role in leading CarMax through a massive digital transformation in all areas of its business bring valuable insight to our Board as we navigate our own strategic transformation initiatives. He has strong financial oversight experience and brings with him a wealth of financial expertise. Mr. Mohammad’s proven track record in strategic leadership, development of forward-thinking technology solutions and business transformation make him a valuable member of our Board.
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| James L. Muehlbauer | | Age: 62 | | Board Member since April 2019 | | Chair of the Audit Committee | | Compensation Committee Member |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Mr. Muehlbauer previously served as a member of the Nominating and Governance Committee from 2019 to 2020. Mr. Muehlbauer is a retired former executive officer of The Valspar Corporation, an American manufacturer of paint and coatings, where he served as the Executive Vice President, Chief Financial and Administrative Officer from 2013 to 2017. Prior to that role, Mr. Muehlbauer served as Executive Vice President and Chief Financial Officer of Best Buy Co., Inc. from 2007 to 2013. Skills and Qualifications: Mr. Muehlbauer’s extensive finance, commercial and leadership experience with complex, multinational organizations provides him with background and experience in strategic planning, financial oversight, and large-scale business transformations. Mr. Muehlbauer’s knowledge and experience in broad strategic transitions and large-scale integration efforts are a valuable addition to our Board.
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| James C. Pappas | | Age: 42 | | Board Member since September 2023 |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Mr. Pappas founded JCP Investment Management in Houston in June 2009 and is the Managing Member and owner of the firm. From 2007 until 2009, he was a private investor, in addition to consulting with several businesses. From 2005 until 2007, he worked in the Investment Banking/Leveraged Finance Division of Goldman Sachs, where he advised private equity groups and corporations on appropriate leveraged buyout, recapitalization and refinancing alternatives. Prior to that, he was an investment banker at Banc of America Securities, where he focused on consumer and retail investment banking. He currently serves as a director of Innovative Food Holdings, Inc., a direct-to-chef and restaurant specialty food platform, a position he has held since 2020, and as a director of Tandy Leather Factory, Inc., a specialty retailer and wholesale distributor of leather and leather related products, a position he has held since 2016. Mr. Pappas previously served on the boards of several public companies, including food-related businesses such as Jamba, Inc., The Pantry, Inc., and Morgan’s Foods, Inc. He currently also serves as Secretary for the Endowment Advisory Board of the Annunciation Greek Orthodox Church in Houston and on the Methodist Hospital Gastro Division’s Advisory Board in Houston. Skills and Qualifications: Mr. Pappas’s thorough understanding of restaurant and food businesses, in addition to his expertise in corporate finance and experience on several public company boards, make him a valuable addition to our Board.
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
| Jack Stahl | | Age: 70 | | Board Member since June 2019 | | Independent Chair | | Audit Committee Member |
Nominees for Election as Directors for a Term Expiring at the Next Annual Meeting
Mr. Stahl previously served as a member of the Compensation Committee from 2019 to 2020 and as Chair of the Compensation Committee from 2020 to 2021. Mr. Stahl has served as a member of the board of Catalent, Inc., a contract manufacturing and development company for drugs, biologics and consumer health products, since August 2014, and as its lead director since August 2023. Mr. Stahl served as President and Chief Executive Officer of Revlon Inc. (Revlon), a multinational cosmetics, skin care, fragrance and personal care company, from 2002 until his retirement in 2006. Prior to joining Revlon, Mr. Stahl served as President and Chief Operating Officer of The Coca-Cola Company (Coca-Cola) from 2000 to 2001 after previously serving in various management positions of increasing responsibility, including Chief Financial Officer, during a tenure with Coca-Cola which began in 1979. Today, Mr. Stahl also serves on the U.S. board of advisors of CVC Capital, a private equity firm. Additionally, he formerly served on the boards of Advantage Solutions LLC, Schering Plough Corporation, Dr Pepper Snapple Group, Saks, Inc., Coty Inc. and Ahold Delhaize, and was chairman of the board of managers of New Avon LLC. Skills and Qualifications: Mr. Stahl has extensive leadership and significant board experience. Mr. Stahl has a long-term record of profit and value driving performance in both stable and turnaround operating environments and significant experience with complex, large, and dynamic organizations. At Coca-Cola and Revlon, he gained significant skills and general management experience in building brands, maximizing customer relationships, and reducing costs, which bring valuable insight to the Board.
Majority Vote Standard for Election of Directors
Majority Vote Standard for Election of Directors Our Bylaws provide for a majority voting standard for the election of Directors in an uncontested election. If the number of nominees exceeds the number of Directors to be elected in an election (a contested election), Directors will be elected by a plurality standard. When the number of nominees does not exceed the number of Directors to be elected (an uncontested election), however, as is the case for this Annual Meeting, our Bylaws require each of the Directors to be elected by a majority of the votes cast (that is, the number of shares voted “for” a Director must exceed the number of shares voted “against” that Director). If a nominee who is serving as a Director is not elected at the Annual Meeting, under Delaware law the Director would continue to serve on the Board as a “holdover director.” However, under our Bylaws, any Director who fails to be elected must offer to tender his or her resignation to the Board. The Nominating and Governance Committee would then make a recommendation to the Board whether to accept or reject the resignation, or whether other action should be taken. The Board will act on the Nominating and Governance Committee’s recommendation and publicly disclose its decision and the rationale behind it within 90 days from the date the election results are certified. The Director who offers to tender his or her resignation will not participate in the Board’s decision or the Nominating and Governance Committee’s deliberations (if the Director is a member of that Committee). All nominees for election as Directors at the Annual Meeting are currently serving on the Board.
Director Compensation
Director Compensation The Board and the Compensation Committee review and determine compensation for our non-employee Directors, based in part on a review of the annual Director Compensation Survey prepared by the National Association of Corporate Directors and other reputable sources, as well as with the input from the Compensation Committee’s independent consultant, based on benchmarking of comparable peer company director compensation. The Compensation Committee and the Board believe that we should fairly compensate non-employee Directors for work required in a company of our size and scope and that our compensation program for non-employee Directors should be designed to drive long-term value creation for our stockholders. Our non-employee Director stock ownership guidelines, which are discussed in greater detail below, require our Directors to hold a substantial amount of our stock during their tenure as Directors, thereby directly aligning the interests of our non-employee Directors with those of our stockholders. Mr. Douglas, our CEO and President, does not receive separate compensation for service on our Board.
Non-Employee Director Compensation
Non-Employee Director Compensation The components of our non-employee Director compensation are annual cash retainers and awards of time-based restricted stock units (RSUs), which vest one year from the date of grant of the award. Each non-employee Director is also reimbursed for direct expenses (e.g. travel, hotel and meals) incurred in connection with his or her attendance at meetings of the Board and its Committees. In December 2022, the Compensation Committee, after reviewing certain benchmarking information and in consideration of when the Board last approved an increase, recommended, and the Board approved, an increase in the annual cash retainer for non-employee Directors of $5,000 and an increase in the annual equity grants from $162,500 to $170,000. Accordingly, non-employee Director compensation is as follows: •Annual cash retainer of: ◦$105,000 for serving as a Director; ◦$125,000 for serving as Independent Chair; ◦$30,000 for serving as the Chair of the Audit Committee; ◦$20,000 for serving as Chair of the Compensation Committee; and ◦$20,000 for serving as Chair of the Nominating and Governance Committee. •Annual equity grants of RSUs having a value, based on the stock price on the date of grant, of $170,000 for serving as a director.
Director Compensation Table—Fiscal 2023
Director Compensation Table—Fiscal 2023 The following table summarizes compensation provided to each individual who served as a non-employee Director during fiscal 2023.
Director Compensation
Director Compensation
Director Compensation
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Total ($) | | Eric F. Artz | 103,750 | 162,000 | — | 265,750 | | Ann Torre Bates | 133,750 | 162,000 | — | 295,750 | | Gloria R. Boyland | 103,750 | 162,000 | — | 265,750 | | Denise M. Clark | 123,750 | 162,000 | — | 285,750 | | Daphne J. Dufresne | 123,750 | 162,000 | — | 285,750 | | Michael S. Funk | 103,750 | 162,000 | — | 265,750 | | Shamim Mohammad | 103,750 | 270,740 | — | 374,490 | | James L. Muehlbauer | 103,750 | 162,000 | — | 265,750 | | Peter A. Roy | 103,750 | 162,000 | — | 265,750 | | Jack Stahl | 222,500 | 162,000 | — | 384,500 |
Director Compensation
(1)This column shows the amount of cash compensation earned in fiscal 2023 for service on the Board, its Committees and as Independent Chair. (2)The amounts contained in this column represent the grant date fair value for the RSUs granted in fiscal 2023 calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification 718, Stock Compensation (ASC 718). The grant date fair value for RSUs is calculated based on the closing price of our common stock on the NYSE on the date of grant. As of July 29, 2023, each director held 4,591 unvested RSUs, other than Mr. Mohammad, who held 7,674 unvested RSUs. (3)As of July 29, 2023, no Directors held options to purchase shares of common stock.
Key Compensation Highlights from Fiscal 2023
| •Over 97% support from our stockholders for our Say-on-Pay vote in January 2023. •No design changes to the short- and long-term incentive plans in fiscal 2023, consistent with positive feedback received from our stockholder engagement sessions. •Reinforced pay for performance philosophy and an emphasis on profitable growth, with no short-term incentive payouts for fiscal 2023 as a result of our “gateway” funding metric (adjusted EBITDA) not meeting threshold performance, despite sales metrics being in payout range. •Expanded peer group, resulting in a robust sample of 18 companies that the Compensation Committee believes will add more statistical reliability and reduce volatility year-to-year when benchmarking executive pay. •Pay mix continues to be weighted heavily in at-risk pay (86% CEO and 75% NEOs). •Fiscal 2021-2023 performance share units paid out at 54%; only one of three metrics had achieved payout against robust targets and the relative TSR modifier resulted in a 10% payout reduction. •No pay increases for executives (merit, bonus or long-term incentive) for fiscal 2024, other than due to promotion. •No discretionary adjustments to recently departed executives; payouts based on terms of agreements. |
Say-on-Pay Vote, Investor Engagement and Responsive Action
| WHAT WE HEARD | | WHAT WE DID | | Preference for performance-based, at-risk compensation | → | Beginning in fiscal 2022, equity grants are more heavily weighted to performance at 60% performance-based restricted stock units (PSUs) and 40% time-based restricted stock units (RSUs) (compared to 50%/50% in prior years). | | Add second metric to short-term incentive (STI) plan aligned to strategic priorities | → | Added Net Sales metric to the STI plan, which, balanced with the existing adjusted EBITDA metric, aligns with our strategy to grow sales profitably and maintain a robust and diverse customer base, which supports our growth with suppliers. | | Continue to align long-term incentive (LTI) plan metrics with strategic priorities | → | Removed the Leverage metric in fiscal 2022 given significant progress on this metric in recent years and long-term nature of the target, reweighted adjusted EPS growth and adjusted return on invested capital (ROIC) metrics. | | Consideration of the dilutive impact of equity awards | → | We are mindful of the effect of our comparatively low number of outstanding shares on the dilutive impact of our equity awards. | | | → | We have maintained disciplined grant practices reflective of market practices, resulting in decreasing dilution year-over-year. See “Executive Compensation Tables—Securities Authorized for Issuance under our Equity Compensation Plans” for more information. | | | → | In September 2022, our Board approved a share buyback program which provides an opportunity to help offset dilution; 1.9 million shares repurchased in fiscal 2023. | | Disfavor special severance arrangements with departing executive officers | → | We have entered into severance agreements with limited terms (three years) and other policies and programs that specify the benefits payable to executive officers upon a separation of employment, which have been fully disclosed to our stockholders. No discretionary payments to recently departing officers. | | | → | No employment agreement with our CEO, whose terms and conditions of employment generally align with those in place for our other executive officers and plan participants, except as specifically disclosed with respect to retirement years of service and multiples for severance and change in control payments. | | | → | No employment agreements with any of our NEOs. |
Other Actions Responsive to Stockholder Feedback in Recent Years
| •Strengthened our recoupment policy to permit the Board to require forfeiture of time- and performance-based incentive compensation (cash and equity) in the event of certain misconduct causing reputational harm, and to provide for reporting of any required recoupment or forfeiture thereunder in certain circumstances; | | •Tied all payouts under the STI plan to pre-established financial goals that are aligned with strategic initiatives – for fiscal 2023, applicable metrics were adjusted EBITDA and Net Sales to support a balanced approach of growing both top and bottom line results; | | •Revised STI payout levels at threshold and maximum to 50% and 150%, respectively (previously 200% maximum), for annual cash incentive plan to limit cash compensation costs; |
Other Actions Responsive to Stockholder Feedback in Recent Years
| •Aligned LTI awards to market by extending to a three-year cliff-vesting for PSUs, and a three-year ratable annual vesting for time-based RSUs; | | •Implemented a new stock plan in 2020 that includes the addition of robust restrictive covenants, payment of dividends only upon vesting, one-year minimum vesting period and better defined death, disability and retirement treatment to create a uniform approach for equity participants; | | •Aligned pay programs competitively, both internally and externally with the market; | | •Incorporated use of tally sheets (showing all forms of compensation for each officer) and measurements of internal pay equity; | | •Aligned metrics in the LTI program to key strategic priorities; for grants in fiscal 2023, that included adjusted EPS growth and adjusted ROIC, which we believe are important drivers of the Company’s long-term success; | | •Removed duplicative performance metric from STI and LTI plans; | | •Enhanced disclosures of compensation program and pay for performance objectives, including the “why” for each component of compensation; | | •Reduced payment multiples in change in control and severance agreements, limited the number of executives covered and limited agreements to established terms; and | | •Amended equity award agreements for all participants, including executives, to provide for the continuous vesting of awards in retirement, to keep executives focused on long-term performance through their retirement date and limit the need for discretion. |
Executive Compensation Program Highlights
| | WHAT WE DO | | ✓ | Our NEO pay is aligned with financial performance, with variable, performance-based pay constituting 71% - 86% of NEO compensation at target in fiscal 2023. | | ✓ | We grant incentive compensation based on rigorous performance conditions and peer group comparisons. | | ✓ | Performance-based incentive awards are tied 100% to pre-established financial metrics; any adjustments to performance targets and conditions impacting payouts are considered by the Compensation Committee in accordance with pre-established guidelines. | | ✓ | Our Compensation Committee engages an independent compensation consultant to advise on our compensation program. | | ✓ | Our change in control severance benefits are double-trigger and provide for market multiples of 2 to 2.5 (CEO only) and cover only executive officers and small groups of officers under pre-existing agreements. | | ✓ | Severance agreements for executives other than CEO are limited to 1x multiple of base and bonus and to three-year terms and cover only executive officers and a small group of officers under pre-existing agreements in exchange for non-compete and no solicitation covenants. |
Executive Compensation Program Highlights
| | WHAT WE DON’T DO | | ✗ | No employment agreements with any executive officers (including CEO). | | ✗ | No uncapped incentive opportunities. | | ✗ | No change in control agreements are expected to be extended beyond key executive officers and the existing group. | | ✗ | No severance agreements are expected to be extended beyond existing group and are time-bound. | | ✗ | No tax gross-ups of severance or change in control payments. | | ✗ | No hedging or short sales of our stock and no pledging by certain employees, including executive officers. | | ✗ | No excessive perquisites. | | ✗ | No supplemental retirement benefits. | | ✗ | No guaranteed bonuses. | | ✗ | No incentives that motivate excessive risk-taking. |
Role of the Compensation Committee
Role of the Compensation Committee The Compensation Committee is responsible for establishing, implementing and monitoring our executive compensation program and its adherence to our compensation philosophy. The Compensation Committee approves the performance thresholds and the financial and strategic performance metrics applicable to executive officers under our annual cash incentive plan as described in “Components of Our Executive Compensation Program for Fiscal 2023—Performance-Based Annual Cash Incentive Compensation” and sets performance metrics applicable to the performance-based component of our long-term equity incentive plan as described in “Components of Our Executive Compensation Program for Fiscal 2023—Long-Term Equity-Based Incentive Program”. The Compensation Committee is responsible for approving our employment policies and agreements impacting executive officers. The Compensation Committee also evaluates actual performance against the established goals and determines appropriate levels of compensation for our executive officers. The Compensation Committee makes all decisions with respect to, and approves, compensation for our executive officers, including base salary, annual cash incentive, long-term equity incentive and benefits, except that the compensation of our CEO is further reviewed and approved by the independent members of our Board. As part of the compensation approval process for our executive officers, the Compensation Committee considers the views and recommendations of Management, particularly our CEO. For our CEO, we have established an annual performance evaluation process, which includes a self-assessment by the CEO and a formal performance assessment by the full Board consisting of both quantitative and qualitative assessments, which is reviewed by the Nominating and Governance Committee, and considered by the Compensation Committee and the Board in setting the CEO’s annual compensation. In setting the nature, type and level of compensation for all of our executive officers, the Compensation Committee considers the recommendation of its independent compensation consultant as described in greater detail below.
Role of Independent Compensation Consultant
Role of Independent Compensation Consultant The Compensation Committee selected and directly retained FW Cook to provide independent, third-party advice and expertise on all aspects of executive compensation and related corporate governance matters, including input on our executive compensation program for fiscal 2023. FW Cook provided guidance related to our incentive plan design, reviewed our Compensation Discussion and Analysis and associated disclosures and summarized and provided perspectives on market developments related to executive compensation, including regulatory requirements and related disclosures. FW Cook only provides services to the Compensation Committee. It does not provide any services to Management. The Compensation Committee assessed the independence of FW Cook pursuant to SEC and NYSE rules, as described below, and concluded that no conflict of interest exists that would prevent FW Cook from serving as an independent consultant to the Compensation Committee. As mentioned above, the Compensation Committee analyzed whether the work of FW Cook as its compensation consultant raises any conflict of interest, taking into consideration the following factors: (i) FW Cook does not provide any other services to the Company; (ii) the amount of fees the Company paid to FW Cook represents less than 1% of FW Cook’s total revenues; (iii) FW Cook maintains policies and procedures designed to prevent conflicts of interest; (iv) FW Cook does not have any business or personal relationship with any executive officer of the Company; (v) neither FW Cook nor any member of its consulting team for UNFI directly owns any stock of the Company; and (vi) FW Cook’s consulting team for UNFI does not have any known business or personal relationship with any member of the Compensation Committee. The Compensation Committee determined, based on its analysis of the above factors, that the work of FW Cook and the individual compensation advisors employed by FW Cook as compensation consultant to the Compensation Committee does not create any conflict of interest. The Compensation Committee will continue to monitor the independence of its compensation consultant on an annual basis. The Compensation Committee also annually evaluates the independence, performance, scope of work and fees, and other key elements of this relationship under a pre-approval policy pursuant to which fees are ultimately approved. In the future, the Compensation Committee may retain other similar consultants.
Competitive Marketplace Assessment
Competitive Marketplace Assessment In making compensation decisions, the Compensation Committee periodically, generally once annually in September, reviews all elements of total compensation for our executive officers compared to those in similar positions with substantially similar responsibilities at “peer” organizations, i.e., those organizations with similar characteristics to our Company generally (Comparator Group). Due to the nature of our business, there are ongoing challenges in developing an appropriate mix of companies to include in our Comparator Group, including that few of our direct peers are publicly traded, the complex nature of our business, in particular as it relates to our margin profile, and the structure of our Management team and their responsibilities. In developing our Comparator Group, we include companies in the same or similar industries, companies with comparable revenues, firms with similar business models and companies from which we would consider recruiting talent. For fiscal 2023, FW Cook reviewed our peer group and recommended changes to increase the number of total peers, including retailers and other companies outside of the distribution industry, acknowledging that UNFI’s labor market for executive talent is not limited only to distribution companies. Prior to reaching this conclusion, additional companies were reviewed by FW Cook and were screened based on the following criteria: •Size and scale of operations (e.g., revenues, market cap, EBITDA margin); •Companies in wholesale/distribution industry; •Various business characteristics (e.g., US securities exchange listings, high volume/low margin); and •Other characteristics (e.g., M&A activity, proxy advisory peers, peers of peers, reverse peers). The following changes were made to the peer group, resulting in a robust sample of 18 companies that the Committee believes will add more statistical reliability and reduce volatility year-to-year: •Removed Core Mark following its acquisition by Performance Food Group in September 2021; and •Added: BJs Wholesale Club Holding, Inc., Insight Enterprises, Inc., Owens & Minor, Inc., Rite Aid Corp., The Andersons, Inc. and Wesco International, Inc. In setting compensation for our NEOs for fiscal 2023, the Compensation Committee also considered Willis Towers Watson Retail/Wholesale survey data for companies in the retail/wholesale distribution sector with revenues comparable to ours, in addition to the companies in the table below, the Comparator Group. The Compensation Committee believes this group of companies, together with consideration of the industry survey data referenced above, provides a meaningful perspective of current pay practices and levels, as well as overall compensation trends.
Competitive Marketplace Assessment
| Food- and Distribution-Related Companies of Comparable Size | | | | | Company | GICS Sub-Industry | Revenue ($ in millions) | Market Value ($ in millions) | | Arrow Electronics | Technology Distributors | 35,840 | 8,060 | | Avnet | Technology Distributors | 26,355 | 4,437 | | BJ’s Wholesale Club | Consumer Staples Merchandise Retail | 19,542 | 8,976 | | C.H. Robinson Worldwide | Air Freight and Logistics | 22,492 | 11,419 | | CDW | Technology Distributors | 22,383 | 25,250 | | Genuine Parts | Distributors | 22,879 | 22,016 | | Henry Schein | Health Care Distributors | 12,528 | 10,326 | | Insight Enterprises | Technology Distributors | 9,711 | 4,869 | | Owens & Minor | Health Care Distributors | 10,071 | 1,466 | | Performance Food Group | Food Distributors | 52,980 | 9,437 | | Pilgrim's Pride | Packaged Foods and Meats | 17,070 | 5,837 | | Rite Aid | Drug Retail | 23,730 | 94 | | SpartanNash | Food Distributors | 9,787 | 772 | | Sysco | Food Distributors | 75,554 | 38,469 | | TD SYNNEX | Technology Distributors | 60,792 | 9,242 |
Competitive Marketplace Assessment
| Food- and Distribution-Related Companies of Comparable Size | | | | | Company | GICS Sub-Industry | Revenue ($ in millions) | Market Value ($ in millions) | | The Andersons | Food Distributors | 17,229 | 1,666 | | US Foods | Food Distributors | 34,801 | 10,678 | | WESCO International | Trading Companies and Distributors | 22,010 | 9,245 | | Summary Statistics (n=18) | | | | | 75th Percentile | | 32,689 | 10,590 | | Median | | 22,438 | 9,109 | | 25th Percentile | | 17,110 | 4,545 | | United Natural Foods, Inc. | Food Distributors | 30,272 | 1,239 | | Percentile Rank | | 73P | 10P | | Source: S&P Capital IQ. Peer Total Revenue = trailing 12 months; Market Value as of August 1, 2023. | | | |
Competitive Marketplace Assessment
Market data is only one factor that the Compensation Committee considers when making determinations regarding executive compensation. Other factors considered include individual performance, internal pay equity, scope of responsibilities, tenure, criticality of the position and executive retention concerns and the need to recruit new officers. The Compensation Committee does not target a specific positioning versus the market for each role and takes into account all the above factors in determining the competitiveness of our compensation.
Components of Our Executive Compensation Program for Fiscal 2023
| Component | | How It Supports Our Compensation Philosophy | | Base Salary | → | Provides a competitive level of compensation to attract and retain top talent. | | Performance-based annual cash incentive | → | At-risk, variable pay to motivate our executives to achieve short-term (annual) business objectives within appropriate risk parameters. | | Long-term equity awards in the form of time-based vesting RSUs and performance-based vesting restricted stock units, or PSUs | → | At-risk, variable pay that motivates our executives to focus on multi-year operational performance and increasing stockholder value; also a long-term retention tool. | | Other compensation and benefits, including minimal perquisites and participation in benefit plans generally available to all our employees, such as the 401(k) Plan | → | Assist in attracting and retaining top talent by providing competitive benefits with minimal perquisites. |
Base Salary
Base Salary As described above, for fiscal 2023, the Compensation Committee considered data from the Willis Towers Watson Retail/Wholesale survey as well as proxy statement data from the Comparator Group. Base salaries were generally targeted at the median of these data sources taking into account other factors mentioned above. Mr. Douglas’s salary was set in fiscal 2022 upon his hiring and was aligned with market midpoint for the Comparator Group. There was no increase to Mr. Douglas’s base salary in fiscal 2023. There was no increase to Mr. Testa’s base salary in fiscal 2023 given his pay adjustments the prior two years and his new role in Services. For Messrs. Howard and Stigers and Ms. Benedict, the competitive market assessment determined that their base salaries were below market for an executive performing comparable duties, and their salary increases reflect our attempt to close this gap with merit increases while also recognizing their performance during the year. Mr. Martin received a 6% merit increase early in fiscal 2023, followed by a promotional increase for the President, Wholesale role, in recognition of his increased responsibilities which include sales/customers, merchandising, national accounts and revenue growth management. Set forth below are the fiscal 2022 and fiscal 2023 base salaries for the NEOs and the percentage change between periods.
Performance-Based Annual Cash Incentive Compensation
Performance-Based Annual Cash Incentive Compensation Performance Metrics. The fiscal 2023 annual cash incentive compensation design remained unchanged from the prior year. The Compensation Committee selected adjusted EBITDA, a key metric tied to our long-term business performance, as well as Net Sales, to drive top-line growth in support of our long-term strategy. We believe using adjusted EBITDA and Net Sales as performance metrics focuses our executive officers on profitable growth in core operational performance and rewards all officers for achievement of this important driver of overall financial performance while also growing market share through scale and customer satisfaction. Our Net Sales metric is also important as it reflects a strong and diverse customer base, which is attractive to suppliers when they are deciding on distribution partners. However, to further emphasize profitability, adjusted EBITDA must meet minimum threshold performance before any payouts with respect to any other metric can occur. For information on how we calculate adjusted EBITDA, a non-GAAP metric, and a reconciliation of adjusted EBITDA to net income, see Annex B. Performance-Based Annual Cash Incentive Targets (Potential Payouts). For our NEOs, the annual cash award targets, or potential payouts, for fiscal 2023 at threshold, target and stretch Company-wide performance levels were set as percentages of base salary earned, and prorated if applicable to changes in base salary over the fiscal year, as follows:
Performance-Based Annual Cash Incentive Compensation
| | Applicable Targets as % of Fiscal 2023 Salary | | | | Named Executive Officer | Threshold (50% Achievement) | Target (100% Achievement) | Stretch (150% Achievement) | | Sandy Douglas | 75.0% | 150.0% | 225.0% | | John W. Howard | 50.0% | 100.0% | 150.0% | | Danielle Benedict | 42.5% | 85.0% | 127.5% | | Louis Martin(1) | 45.5% | 91.0% | 136.5% | | Christopher P. Testa | 50.0% | 100.0% | 150.0% | | Michael C. Stigers(2) | 41.0% | 82.1% | 123.1% |
Performance-Based Annual Cash Incentive Compensation
(1)Mr. Martin’s bonus target was increased from 85% to 100% in March of 2023 with his promotion to President, Wholesale; his target opportunity is prorated for time in both roles during the fiscal year. (2)Mr. Stigers bonus target increased from 75% to 85% to better align both internally and externally and is prorated accordingly. For example, if the Company achieved its performance at the threshold level, Mr. Douglas’ cash incentive would be an amount equal to 75% of his base salary; at target level, he would receive a cash incentive in an amount equal to 150% of his base salary; and at the stretch level he would receive an award equal to 225% of his base salary. The actual payout depends, however, on whether the Company met the threshold performance level for adjusted EBITDA. If performance were below the threshold level, there would be no payout. Performance Target. In setting the performance targets for fiscal 2023, the Compensation Committee reviewed historical levels of performance, expected initiatives in connection with ongoing transformation and productivity initiatives, a desire to support our growth and long-term operating results, the competitive environment and ongoing uncertainty in the macro-environment. In establishing the intended degree of difficulty of the payout level for adjusted EBITDA, the Compensation Committee set the performance targets at levels that required successful implementation of corporate operating objectives for meaningful payouts to occur. The Compensation Committee believed that the initial targets related to “threshold” performance were achievable in light of budgeted expectations, but the payouts for “target” performance and “stretch” performance each required significant improvement over the prior year’s comparable performance, after taking into account the factors noted above. Determination of Performance-Based Annual Cash Incentive Plan Payouts. Annual cash incentive plan goals for NEOs for fiscal 2023 were set by the Compensation Committee at the following amounts for Messrs. Douglas, Howard, Martin and Testa and Ms. Benedict:
Performance-Based Annual Cash Incentive Compensation
| Performance Metric (in millions) | Weight | Threshold | Target | Stretch | Threshold Payout | Target Payout | Stretch Payout | | Adjusted EBITDA | 75% | $762.4 | $896.9 | $1,031.4 | 50% | 100% | 150% | | Net Sales | 25% | $29,105 | $30,317 | $31,530 | 50% | 100% | 150% |
Performance-Based Annual Cash Incentive Compensation
For Mr. Stigers, his annual cash incentive included total Company adjusted EBITDA and Net Sales plus Retail Adjusted EBITDA and Retail Net Sales to drive performance in his specific business unit metrics:
Performance-Based Annual Cash Incentive Compensation
| Performance Metric (in millions) | Weight | Threshold | Target | Stretch | Threshold Payout | Target Payout | Stretch Payout | | Adjusted EBITDA | 50% | $762.4 | $896.9 | $1,031.4 | 50% | 100% | 150% | | Net Sales | 15% | $29,105 | $30,317 | $31,530 | 50% | 100% | 150% | | Retail Adjusted EBITDA | 25% | $103.6 | $121.9 | $140.2 | 50% | 100% | 150% | | Retail Net Sales | 10% | $2,427.3 | $2,528.5 | $2,629.6 | 50% | 100% | 150% |
Performance-Based Annual Cash Incentive Compensation
In September 2023, the Compensation Committee reviewed with Management our financial results for fiscal 2023. The Compensation Committee determined the level of achievement against each of the metrics as set forth below. Although our Net Sales metric was in payout range, adjusted EBITDA was below threshold performance, which is the gateway metric that must be met for any bonus payout, and as a result, the bonus payout is zero (0%). For Messrs. Douglas, Howard, Martin and Testa and Ms. Benedict, final payouts were based on the following metrics:
Performance-Based Annual Cash Incentive Compensation
| Performance Metric (in millions) | Weight | Target | Actual | Performance as a Percentage of Target | Weighted Payout | | Adjusted EBITDA | 75% | $896.9 | $639.5(1) | 71.3% | —% | | Net Sales | 25% | $30,317 | $30,272 | 99.8%(2) | —% |
Performance-Based Annual Cash Incentive Compensation
(1)See Annex B for a reconciliation to the most comparable GAAP metric. (2)Although Net Sales was above threshold, no bonus payout if adjusted EBITDA threshold is not achieved. Similarly for Mr. Stigers, the Net Sales metrics were in payout range, but because total Company adjusted EBITDA was below threshold, his final bonus payout is also zero (0%) and is based on the following metrics:
Performance-Based Annual Cash Incentive Compensation
| Performance Metric (in millions) | Weight | Target | Actual | Performance as a Percentage of Target | Weighted Payout | | Adjusted EBITDA | 50% | $896.9 | $639.5(1) | 71.3% | —% | | Net Sales | 15% | $30,317 | $30,272(2) | 99.8% | —% | | Retail Adjusted EBITDA | 25% | $121.9 | $69.6 | 57.1% | —% | | Retail Net Sales | 10% | $2,528 | $2,480(2) | 98.1% | —% |
Performance-Based Annual Cash Incentive Compensation
(1)See Annex B for a reconciliation to the most comparable GAAP metric. (2)Although Net Sales was above threshold, no bonus payout if adjusted EBITDA threshold is not achieved. The Company did not meet the adjusted EBITDA threshold performance level for fiscal 2023, which resulted in no annual performance-based cash incentive payout for each of the NEOs. The payout amounts reflect performance in fiscal 2023 that missed the established performance objectives, demonstrating the effectiveness of our pay for performance philosophy in aligning our incentive plans with the interests of our stockholders.
Performance-Based Annual Cash Incentive Compensation
| | Performance-Based Annual Incentive | | | Named Executive Officer | Target | Actual | | Sandy Douglas | $1,575,000 | $— | | John W. Howard | $710,438 | $— | | Danielle Benedict | $450,444 | $— | | Louis Martin(1) | $498,750 | $— | | Christopher P. Testa | $810,000 | $— | | Michael C. Stigers(2) | $406,928 | $— |
Performance-Based Annual Cash Incentive Compensation
(1)Mr. Martin’s target was prorated for his time, target opportunity and pay changes during his role as Chief Strategy and Transformation Officer and his promotion to President, Wholesale during fiscal 2023. (2)Mr. Stigers’s target was prorated for his increased bonus opportunity from 75% to 85% and his departure in May 2023.
Long-Term Equity-Based Incentive Program
Long-Term Equity-Based Incentive Program 2023 Grant of Time- and Performance-Based Vesting Restricted Stock Units. Our long-term, equity-based incentive program in fiscal 2023 for our NEOs remained unchanged from fiscal 2022 and consisted of RSUs and PSUs. Approximately 40% of the aggregate grant date fair value of these units awarded to NEOs represented RSUs that vest ratably over three years and 60% were PSUs that may cliff-vest at the end of a three-year performance period, subject to meeting predetermined financial targets, and have a maximum payout opportunity of 200% before the potential 10% relative TSR modifier, explained below. The Compensation Committee believes a mix of time- and performance-based vesting restricted stock units provides our NEOs with an incentive to improve our stock price performance and a direct alignment with stockholders’ interests, as well as a continuing stake in our long-term success. In fiscal 2023, the Compensation Committee determined the target grant date fair value of equity awards for our compensation program was to be a fixed value that will be benchmarked annually and used as a lever to align our executives’ overall target direct compensation and/or reward executives for outstanding performance. For our NEOs, the fiscal 2023 grant values were:
Long-Term Equity-Based Incentive Program
| Named Executive Officer | Target Annual LTI $ | | Sandy Douglas(1) | $5,000,000 | | John W. Howard(2) | $1,800,000 | | Danielle Benedict | $850,000 | | Louis Martin | $1,000,000 | | Christopher P. Testa | $1,800,000 | | Michael C. Stigers | $1,000,000 |
Long-Term Equity-Based Incentive Program
(1)Mr. Douglas’s LTI was increased $1,100,000 annually (from $3,900,000) in recognition of his strong leadership and continued focus on expanding and strengthening the executive team to drive results, in addition to maintaining comparable total compensation that is aligned with market practices. (2)Mr. Howard’s LTI was increased $300,000 annually (from $1,500,000) in recognition of his accomplishments regarding debt reduction, capital structure foundation and revolving credit facility refinancing. These grants were made in October 2022 following approval by the Compensation Committee. Performance Metrics for Performance Units. PSUs granted in fiscal 2023 (October 2022) are subject to two metrics that the Compensation Committee believes are critical to our long-term strategy. The performance criteria and weighting of these PSUs are as follows: fiscal 2023-2025 adjusted EPS growth, weighted at 75%, and fiscal 2025 adjusted ROIC, weighted at 25%, each as described below. Adjusted EPS Growth. At the end of three years, adjusted EPS growth is based on the average achievement against the three-year performance goals and metrics. Adjusted EPS growth rate targets are set at the time of grant for each three-year cycle as a targeted rate of growth applied to the prior-year actual adjusted EPS. This design is intended to keep Management engaged throughout the three-year cycle even if there is under-performance in one year or, conversely, if the maximum growth is achieved in one year, Management must still meet predetermined growth rate goals in subsequent years. For example, if our executives were to significantly outperform relative to the year-one adjusted EPS growth target, they must still achieve the predetermined growth rate targets in the second and third years to attain an above-target payout because the contribution of the first year to total payout is effectively capped. If our target were a cumulative three-year growth target, maximum payout could be achieved with one year of significant outperformance. The Compensation Committee believes that including an adjusted EPS metric aligns our executives’ interests with both our strategic objectives and long-term stockholder interests. Fiscal 2025 Adjusted ROIC. The Compensation Committee believes this metric, which is set at the grant date, drives long-term value by emphasizing prudent investments and effective capital management over the full three-year performance period. Please see Annex B for a definition of this metric. In addition to the performance criteria tied to the two financial metrics described above, the Compensation Committee approved a feature of the grants pursuant to which the number of units that will vest will be adjusted upward or downward by up to 10% depending on how our common stock price performs relative to the S&P Mid Cap 400 Index (Relative TSR) over the three-year performance period ending on the close of fiscal 2025. The number of units that would vest is adjusted up or down proportionately by 10% based on the number of basis points difference between our performance and the performance of the S&P Mid Cap 400 index. The Compensation Committee believes this design focuses our Management team on improving core operational performance and long-term value creation. Targets were based on long-term projections for all three fiscal years, taking into account investments in growth opportunities and ongoing uncertainty in the macro-environment. The applicable NEOs are eligible to earn between 0% and 200% of their targeted award, depending on our performance during the relevant measurement period. Each metric must meet a minimum threshold level of performance for any payout to occur with respect to that metric (shown below). The table below does not include the actual forward targets. We generally do not disclose forward-looking goals for our LTI plan because we do not consistently provide long-range guidance on all metrics as it is competitively sensitive information. We disclose performance goals for our incentive programs in full after completion of the performance period.
Long-Term Equity-Based Incentive Program
| Performance Metric | Weight | Threshold | Target | Stretch | Threshold Payout(1) | Target Payout(1) | Stretch Payout(1) | | Fiscal 2023-2025 Adjusted EPS Growth | 75% | 70% | 100% | 130% | 50% | 100% | 200% | | Fiscal 2025 Adjusted ROIC | 25% | 90% | 100% | 110% | 50% | 100% | 200% |
Long-Term Equity-Based Incentive Program
(1)Aggregate payout subject to +/-10% adjustment based on Relative TSR performance.
Prior Long-Term Equity-Based Incentive Program, Results and Payouts
Prior Long-Term Equity-Based Incentive Program, Results and Payouts Fiscal 2021-2023. The PSUs granted in fiscal 2021 (October 2020) had three weighted metrics: fiscal 2021-2023 adjusted EPS growth (60%), fiscal 2023 adjusted ROIC (20%), and fiscal 2023 Leverage, or Net Debt/adjusted EBITDA (20%). The applicable NEOs were eligible to earn between 50% and 150% of their targeted award, depending on our performance during the relevant measurement period across the threshold, target and maximum levels below. Adjusted EBITDA, adjusted ROIC and Leverage are non-GAAP metrics. A reconciliation to the nearest GAAP metrics is provided in Annex B.
Prior Long-Term Equity-Based Incentive Program, Results and Payouts
| Performance Metric | Weight | Threshold | Target | Stretch | Threshold Payout | Target Payout | Stretch Payout | | Fiscal 2021-2023 Adjusted EPS Growth | 60% | 7% 7% 7% | F21 10% F22 10% F23 10% | 13% 13% 13% | 50% | 100% | 150% | | Fiscal 2023 Adjusted ROIC | 20% | 9.11% | 10.13% | 11.14% | 50% | 100% | 150% | | Fiscal 2023 Leverage (Net Debt/adjusted EBITDA) | 20% | 2.89x | 2.63x | 2.36x | 50% | 100% | 150% |
Prior Long-Term Equity-Based Incentive Program, Results and Payouts
In addition to the performance criteria tied to adjusted EPS growth, adjusted ROIC and Leverage, the grants included a provision for adjustment of the number of units that would vest upward or downward by up to 10% depending on the Relative TSR over the three-year performance period. The number of units that will vest is adjusted up or down proportionally by up to 10% based on the number of basis points difference between our performance and the performance of the S&P Mid Cap 400 Index. In September 2023, the Compensation Committee reviewed performance against the three-year performance period ending in fiscal 2023 with the following results, performance to target and final weighted payout of 60%, before the Relative TSR modifier.
Prior Long-Term Equity-Based Incentive Program, Results and Payouts
| Performance Metric | Weight | Target | Actual | Performance as a Percentage of Target | Weighted Payout | | Fiscal 2021-2023 Adjusted EPS Growth | 60% | F21 10% F22 10% F23 10% | F21 41% F22 16% F23 -54% | 412% 156% -537% | 60.0% | | Fiscal 2023 Adjusted ROIC | 20% | 10.13% | 6.3% | 62% | —% | | Fiscal 2023 Leverage (Net Debt/adjusted EBITDA) | 20% | 2.63x | 3.0x | 86% | —% |
Prior Long-Term Equity-Based Incentive Program, Results and Payouts
The number of earned PSUs was then adjusted downward by 10% as a result of application of the adjustment for the Relative TSR, which was -4,138 basis points, for a final payout of 54%. Messrs. Douglas and Martin were not employees at the time of grant and therefore did not receive these PSUs. The table below shows the number of shares earned compared to target.
Prior Long-Term Equity-Based Incentive Program, Results and Payouts
| Named Executive Officer | Shares at Target | Final PSU Payout % After -10% TSR Modifier | Final Shares After -10% TSR Modifier | | Sandy Douglas | n/a | n/a | n/a | | John W. Howard | 34,542 | 54.0% | 18,652 |
Prior Long-Term Equity-Based Incentive Program, Results and Payouts
| Named Executive Officer | Shares at Target | Final PSU Payout % After -10% TSR Modifier | Final Shares After -10% TSR Modifier | | Danielle Benedict | 18,350 | 54.0% | 9,909 | | Louis Martin | n/a | n/a | n/a | | Christopher P. Testa | 43,177 | 54.0% | 23,315 | | Michael C. Stigers | 24,827 | 54.0% | 13,406 |
Prior Long-Term Equity-Based Incentive Program, Results and Payouts
The payouts under these PSUs reflect our executive compensation program’s pay for performance structure. Despite exceeding the adjusted EPS maximum growth target in fiscal 2021 and 2022, the Company did not meet the predetermined threshold adjusted EPS growth performance in fiscal 2023, which demonstrates that consistent financial performance over the performance period is required to achieve the robust targets set by the Compensation Committee. The adjusted ROIC and Leverage metrics did not meet threshold performance expectations resulting in zero (0%) payout for those metrics. In addition to above, as previously disclosed in our 2021 proxy statement, Ms. Benedict received a one-time PSU award with a grant date value of approximately $400,000 for her extraordinary work with regard to managing the Company through the COVID-19 pandemic, as she oversaw special COVID policies and collaboration with federal, state and local health officials. Payout for this award is based upon achieving a minimum cumulative adjusted EBITDA amount at the end of the three-year performance period.
Prior Long-Term Equity-Based Incentive Program, Results and Payouts
| Performance Metric | Weight | Target | Target Payout | | 3-Year Cumulative Adjusted EBITDA | 100% | $1.6 billion | 100% |
Prior Long-Term Equity-Based Incentive Program, Results and Payouts
In September 2023, the Compensation Committee also reviewed performance against Ms. Benedict’s one-time PSU award with final three-year cumulative metric results of over $2.2 billion, well above the $1.6 billion target, resulting in her earning the target number of 23,028 shares.
Other Compensation and Benefits
Other Compensation and Benefits The NEOs are eligible for the same level and type of benefits that we make available to other employees, including our 401(k) plan, health care plan, life insurance plans, other welfare benefit programs and equity treatment upon retirement or a separation from service event. We do not have any defined benefit pension plans available to our NEOs. Additional Benefits. We provide certain NEOs with additional benefits that we believe are reasonable and consistent with our overall executive compensation program. The costs of these benefits constitute only a small portion of each NEO’s total compensation and have included items such as relocation benefits. We offer perquisites and other benefits that we believe to be competitive with benefits offered by companies with whom we compete for talent for purposes of recruitment and retention. In September 2022, the Committee approved a perquisite for senior vice presidents and above to pay for tax preparation fees beginning in 2023 in recognition of increased tax reporting obligations due to business travel. Retirement. To recognize significant years of service to the Company and to incentivize employees who might consider retiring to remain focused on the long-term best interests of the Company regardless of their personal retirement plans, which could otherwise create bias toward short-term performance, the Compensation Committee has established a retirement policy that provides that time-based RSUs will continue to vest during retirement on the same terms as they would if the executive had not retired, but without the requirement that they remain employed. PSUs will be treated similarly on retirement, but subject to actual performance at the time when achievement of performance objectives are measured. In addition, an executive’s equity awards granted in the year of retirement will be prorated to reflect the service period prior to the date of retirement. Qualified retirement is defined as retirement by an employee who has reached age 59 or older and who has achieved at least 10 years of service to the Company. This policy applies to all participants, provided that, as described below, our CEO will be eligible for retirement treatment upon achievement of six years of service to the Company.
Components of Our Executive Compensation Program for Fiscal 2024
| •Added a second metric to our STI plan. We believe the addition of a Net Sales metric (weighted at 25%) along with adjusted EBITDA (weighted at 75%) creates a balance between top- and bottom-line growth and aligning incentives with our long-term strategy; •Adjusted the design of LTI awards to increase weighting of performance-based awards; mix is now 60% PSUs and 40% RSUs (from 50%/50%); in connection with this change, the Compensation Committee also aligned maximum payout with market and peers at 200% (from 150%); and •Simplified the LTI plan PSUs in fiscal 2022 by removing the Leverage metric and reweighting the remaining two metrics, adjusted EPS growth (75%) and adjusted ROIC (25%). |
Severance and Change in Control Agreements
Severance and Change in Control Agreements As of July 29, 2023, we were a party to severance agreements and change in control agreements with each of Messrs. Douglas, Howard, Martin and Testa and Ms. Benedict. The capitalized terms “Cause,” “Good Reason” and “Change in Control” in this section are used as defined in those agreements. The Compensation Committee believes that the protections afforded in these severance and change in control agreements are reasonable and are an important element in retaining our executive officers. Each of the severance agreements includes non-solicitation, non-competition and intellectual property assignment provisions, which apply during the employment period and continue for a one-year period following termination of employment for any reason. On September 21, 2022, the Compensation Committee approved an updated form of severance agreement with each of the current NEOs (other than the CEO, whose severance agreement was executed in August 2021). The updated severance agreements became effective on October 23, 2022 and expire on the third anniversary of that effective date, subject to extension by mutual agreement of the Company and the individual executive officer. The updated severance agreements provide for the payment of an amount equal to such executive’s target bonus upon a qualifying termination and revised restrictive covenant provisions, including to clarify the provisions and definitions regarding competitors, competition and the restricted period. The change in control agreements also include non-solicitation and non-competition provisions, which apply during the employment period and continue for a two-year period, and intellectual property assignment provisions, which apply during the employment period and continue for a one-year period, following a termination of employment that occurs in contemplation of or within two years after a Change in Control. The severance and change in control agreements also contain confidentiality provisions that are not subject to a term. None of our executives is a party to an agreement providing for “gross up” payments for excise taxes imposed upon termination following a Change in Control. Any benefits to be paid upon a Change in Control under the change in control agreements are “double trigger,” which requires both a Change in Control and a termination of a the executive’s employment in contemplation of or within two years of the date of the Change in Control, either by us for a reason other than Cause, death or disability or by the executive for Good Reason. The key benefits provided for in these agreements are summarized below:
Severance and Change in Control Agreements
| Executive | Benefit or Payment (1) | Severance (2) | Change in Control (2) | | CEO | Base Multiple | 2X, continued pay | 2.5X, lump sum | | | Bonus Multiple | 2X target $, lump sum | 2.5X target $, lump sum | | | Prorated Bonus | Yes, prorated and based on actual performance | Yes, prorated and based on actual performance | | | Medical Benefits | $70,000 lump sum | $87,500 lump sum | | Other Executives | Base Multiple | 1X, continued pay | 2X, lump sum | | | Bonus Multiple | 1X target $, lump sum | 2X target $, lump sum | | | Prorated Bonus | Yes, prorated and based on actual performance | Yes, prorated and based on actual performance | | | Medical Benefits | $35,000 lump sum | $105,000 lump sum payment |
Severance and Change in Control Agreements
(1)The provision of any such benefits will be subject to any restrictions under applicable law, including under Section 409A of the Internal Revenue Code of 1986, as amended from time to time (Code). (2)The treatment of equity awards upon separation is governed by the terms of the Second Amended and Restated 2020 Equity Incentive Plan and respective award agreements. In establishing the multiples of base salary and bonus that a terminated executive would be entitled to receive following termination without Cause or for Good Reason following a Change in Control, the Compensation Committee considered the need to be able to competitively recruit and retain talented executive officers who often times seek protection against the possibility that they might be terminated without Cause or be forced to resign for Good Reason following a Change in Control, while taking into account the views of our stockholders on appropriate multiples.
Recoupment Policy
Recoupment Policy We have in place a recoupment policy applicable to our executive officers, including our NEOs, other principal officers and certain key employees or former employees designated by the Board or our CEO. Under the policy, if the Company’s financial statements are required to be restated for any reason, except when due to a change in accounting policy that has a retroactive effect, the Board will review all performance-based compensation awarded or earned for all periods materially affected by such restatement. In addition, the Board will review all performance-based compensation awarded or earned that is based on performance metrics that appear to be materially inaccurate or affected in any way by fraud, regardless of whether a restatement of the Company’s financial statements is required. The policy provides that the Board may, to the extent permitted by applicable law, seek the following actions with respect to compensation: •After conducting the review described above, the Board may seek recoupment from the persons covered by the policy for the extent of such performance-based compensation as it deems appropriate if it determines that: ◦the payment of such performance-based compensation was predicated upon the achievement of certain financial statement results that were subsequently corrected, or upon material inaccuracy or fraud, and a lower incentive payment or award would been made based upon the restated financial results or corrected performance metrics; or ◦a person covered by the policy has engaged in conduct that will cause damage to the Company or is inimical or in any manner contrary to the best interests of the Company, and if the conduct resulted in a material inaccuracy in the Company’s financial statements or performance metrics which affects such person’s compensation. •The Board may also require forfeiture of incentive compensation, including annual incentive compensation, LTI performance awards, stock options, stock appreciation rights, restricted stock units (including performance-based and time-based), dividend equivalent rights and any other similar awards the Board deems to be “incentive based,” in the case of misconduct in violation of law or Company policy, including through failure of an executive’s oversight responsibilities, that results in material financial or reputational harm to the Company. •In the event the Board seeks recoupment or forfeiture pursuant to the recoupment policy, the Company must disclose such recoupment or forfeiture, provided that, among other things, the related facts and circumstances giving rise to the recovery have been publicly disclosed.
Summary Compensation Table—Fiscal Years 2021-2023
Summary Compensation Table—Fiscal Years 2021-2023 The following table sets forth for each NEO for each fiscal year indicated: (i) the dollar value of base salary, retention bonuses and non-equity incentive compensation earned; (ii) the aggregate grant date fair value related to all equity-based awards made to the NEO; (iii) non-qualified deferred compensation earnings, where applicable; (iv) all other compensation; and (v) the dollar value of total compensation.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards(1) | Option Awards | Non-Equity Incentive Plan Compensation(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings(3) | All Other Compensation | Total | | Sandy Douglas(4) | 2023 | $1,050,000 | — | $5,135,192 | — | — | — | $16,250(5) | $6,201,442 | | Chief Executive Officer | 2022 | $1,029,808 | — | $5,899,913 | — | $1,784,744 | — | $7,827 | $8,722,292 | | | 2021 | — | — | — | — | — | — | — | — | | John W. Howard | 2023 | 710,438 | — | 1,848,659 | — | — | — | 13,750(6) | 2,572,847 | | Chief Financial Officer | 2022 | 662,500 | — | 1,499,935 | — | 765,446 | — | 10,250 | 2,938,131 | | | 2021 | 618,750 | — | 1,199,989 | — | 717,453 | — | 9,923 | 2,546,115 | | Danielle Benedict (4) | 2023 | 529,934 | — | 872,949 | — | — | — | 16,250(7) | 1,419,133 | | Chief Human Resource Officer | 2022 | — | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — | — | | Louis Martin (4) | 2023 | 548,077 | — | 1,026,981 | — | — | — | 22,774(8) | 1,597,832 | | President, Wholesale | 2022 | — | — | — | — | — | — | — | — | | | 2021 | — | — | — | — | — | — | — | — | | Christopher P. Testa | 2023 | 810,000 | | 1,848,659 | — | — | — | 16,250(9) | 2,674,909 | | President | 2022 | 795,000 | 675,000 | 1,799,968 | — | 918,535 | — | 10,250 | 4,198,753 | | | 2021 | 750,000 | — | 1,499,969 | — | 869,640 | — | 9,750 | 3,129,359 | | Michael C. Stigers(4) | 2023 | 495,650 | — | 1,026,981 | — | — | — | 10,595(10) | 1,533,226 | | Former Chief Executive Officer, Cub | 2022 | 575,000 | — | 999,972 | — | 489,046 | — | 9,952 | 2,073,970 | | | 2021 | — | — | — | — | — | — | — | — |
Summary Compensation Table
(1)Amounts shown represent the grant date fair value of awards of RSUs and PSUs at the target level as computed under ASC 718 granted during the fiscal year indicated. For PSUs, grant date fair value is calculated based on the probable outcome of the performance result (i.e., target level of performance) for each of the performance periods, excluding the effect of estimated forfeitures. These amounts do not necessarily reflect the actual amounts that were paid to, or may be realized by, the NEO for any of the fiscal years reflected. Refer to footnotes 1 and 13 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended July 29, 2023 for a discussion of the relevant assumptions used to determine the grant date fair value of these awards. The grant date fair value of PSUs awarded to Mr. Douglas in fiscal 2023, assuming stretch, or maximum level performance, was $6,897,418. The grant date fair value of PSUs awarded to Mr. Howard in fiscal 2023, assuming stretch, or maximum level performance, was $2,483,047. The grant date fair value of PSUs awarded to Ms. Benedict in fiscal 2023, assuming stretch, or maximum level performance, was $1,172,503. The grant date fair value of PSUs awarded to Mr. Martin in fiscal 2023, assuming stretch, or maximum level performance, was $1,379,417. The grant date fair value of PSUs awarded to Mr. Testa in fiscal 2023, assuming stretch, or maximum, level performance, was $2,483,047. The grant date fair value of PSUs awarded to Mr. Stigers in fiscal 2023, assuming stretch, or maximum, level performance, was $1,379,417. (2)Amounts shown for fiscal 2023 reflect zero ($0) payments made in fiscal 2024 under our annual cash incentive plan related to fiscal 2023 performance. Amounts shown for fiscal 2022 and 2021 reflect payments under our annual cash incentive plan for those fiscal years. For a discussion regarding the annual cash incentive plan, see “Executive Compensation—Compensation Discussion and Analysis—Components of Our Executive Compensation Program for Fiscal 2023—Performance-Based Annual Cash Incentive Compensation.” (3)The Deferred Compensation Plan and the Deferred Stock Plan were frozen in fiscal 2019 and paid out in fiscal 2020. (4)Messrs. Douglas and Stigers were not NEOs in fiscal 2021. Mr. Martin and Ms. Benedict were not NEOs in fiscal 2022 or fiscal 2021. Accordingly, compensation information for those years is not provided. (5)Represents our contributions to a 401(k) account and tax planning reimbursement for Mr. Douglas in the amount of $11,250 and $5,000, respectively. (6)Represents our contributions to a 401(k) account and tax planning reimbursement for Mr. Howard in the amount of $11,250 and $2,500, respectively. (7)Represents our contributions to a 401(k) account and tax planning reimbursement for Ms. Benedict in the amount of $11,250 and $5,000, respectively. (8)Represents our contributions to a 401(k) account, relocation benefits and tax planning reimbursement for Mr. Martin in the amount of $9,900, $7,874 and $5,000, respectively. (9)Represents our contributions to a 401(k) account and tax planning reimbursement for Mr. Testa in the amount of $11,250 and $5,000, respectively. (10)Represents our contributions to a 401(k) account and tax planning reimbursement for Mr. Stigers in the amount of $8,095 and $2,500, respectively.
Grants of Plan-Based Awards in Fiscal 2023
Grants of Plan-Based Awards in Fiscal 2023 The following table reflects the equity-based awards approved by the Compensation Committee on September 21, 2022 and granted by the Company in fiscal 2023:
Grants of Plan-Based Awards in Fiscal 2023
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards (#)(3) | All Other Option Awards (#) | Exercise Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards ($)(4) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Sandy Douglas | 10/6/2022 | — | — | — | 42,517 | 85,034 | 187,074 | — | — | — | 3,135,204 | | | 10/6/2022 | — | — | — | — | — | — | 56,689 | — | — | 1,999,988 | | | N/A | 787,500 | 1,575,000 | 2,362,500 | — | — | — | — | — | — | — | | John W. Howard | 10/6/2022 | — | — | — | 15,306 | 30,612 | 67,346 | — | — | — | 1,128,664 | | | 10/6/2022 | — | — | — | — | — | — | 20,408 | — | — | 719,994 | | | N/A | 355,219 | 710,438 | 1,065,656 | — | — | — | — | — | — | — | | Danielle Benedict | 10/6/2022 | — | — | — | 7,227 | 14,455 | 31,801 | — | — | — | 532,956 | | | 10/6/2022 | — | — | — | — | — | — | 9,637 | — | — | 339,993 | | | N/A | 225,222 | 450,444 | 675,666 | — | — | — | — | — | — | — | | Louis Martin | 10/6/2022 | — | — | — | 8,503 | 17,006 | 37,413 | — | — | — | 627,011 | | | 10/6/2022 | — | — | — | — | — | — | 11,337 | — | — | 399,969 | | | N/A | 249,375 | 498,750 | 748,125 | — | — | — | — | — | — | — | | Christopher P. Testa | 10/6/2022 | — | — | — | 15,306 | 30,612 | 67,346 | — | — | — | 1,128,664 | | | 10/6/2022 | — | — | — | — | — | — | 20,408 | — | — | 719,994 | | | N/A | 405,000 | 810,000 | 1,215,000 | — | — | — | — | — | — | — | | Michael C. Stigers | 10/6/2022 | — | — | — | 8,503 | 17,006 | 37,413 | — | — | — | 627,011 | | | 10/6/2022 | — | — | — | — | — | — | 11,337 | — | — | 399,969 | | | N/A | 203,464 | 406,928 | 610,392 | — | — | — | — | — | — | — |
Grants of Plan-Based Awards in Fiscal 2023
(1)This column shows separately the possible payouts to the NEOs under our annual cash incentive plan for the fiscal year ended July 29, 2023 for “threshold”, “target” and “maximum” performance. Actual amounts paid for these incentives are reflected in the table included under “Summary Compensation Table—Fiscal Years 2021-2023” under the column “Non-Equity Incentive Plan Compensation.” (2)These awards were granted on October 6, 2022 under the Second Amended and Restated 2020 Equity Incentive Plan and represent the number of PSUs that may be earned with a three-year performance period at “threshold,” “target” and “maximum” levels of performance. Vesting of these PSUs is linked to our attaining certain levels of adjusted EPS growth for fiscal 2023 through 2025, and adjusted ROIC for fiscal 2025. In addition, the number of PSUs earned may be increased or decreased by up to 10% based on our Relative TSR for the three-year performance period. At the conclusion of the three-year performance period, the performance units may vest based on our results of these financial metrics. The PSUs earned by each NEO will be settled by delivery of a like number of shares of common stock. These PSUs are described in more detail in "Executive Compensation—Compensation Discussion and Analysis—Components of Our Executive Compensation Program for Fiscal 2023—Long-term Equity-Based Incentive Program—2023 Grant of Time- and Performance-Based Vesting Restricted Stock Units." (3)Represents RSUs granted in fiscal 2023 to each of the NEOs. The RSUs vest in three equal annual installments beginning on October 6, 2023. (4)The amount shown with respect to each award represents the grant date fair value of the award calculated using the assumptions described in footnote (1) of the table included under “Summary Compensation Table—Fiscal Years 2021-2023.” The grant date fair value of PSUs was calculated based on the probable outcome of the performance result (i.e., “target” level of performance) for each of the performance periods, excluding the effect of estimated forfeitures.
Outstanding Equity Awards at Fiscal 2023 Year-End
Outstanding Equity Awards at Fiscal 2023 Year-End The following table summarizes information with respect to holdings of stock options and stock awards by the NEOs as of July 29, 2023. This table includes unexercised stock options, unvested RSUs and unvested PSUs. Each equity grant is shown separately for each NEO, except that incentive stock options and non-qualified stock options granted on the same date with the same material terms, including exercise price, vesting period and expiration date, are combined.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal 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 ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | | Sandy Douglas | 10/12/2021 | — | — | — | — | 22,472 | 465,620 | — | — | | | 10/12/2021 | — | — | — | — | 11,524 | 238,777 | — | — | | | 10/6/2022 | — | — | — | — | 56,689 | 1,174,596 | — | — | | | 10/12/2021 | — | — | — | — | — | — | 50,561 | 1,047,624 | | | 10/12/2021 | — | — | — | — | — | — | 25,929 | 537,249 | | | 10/6/2022 | — | — | — | — | — | — | 85,034 | 1,761,904 | | | Totals: | — | — | — | — | 90,685 | 1,878,993 | 161,524 | 3,346,777 | | John W. Howard | 10/12/2020 | — | — | — | — | 11,514 | 238,570 | — | — | | | 10/12/2021 | — | — | — | — | 8,643 | 179,083 | — | — | | | 10/6/2022 | — | — | — | — | 20,408 | 422,854 | — | — | | | 10/12/2020 | — | — | — | — | — | — | 34,542 | 715,710 | | | 10/12/2021 | — | — | — | — | — | — | 19,446 | 402,921 | | | 10/6/2022 | — | — | — | — | — | — | 30,612 | 634,281 | | | Totals: | — | — | — | — | 40,565 | 840,507 | 84,600 | 1,752,912 | | Danielle Benedict | 10/12/2020 | — | — | — | — | 6,117 | 126,744 | — | — | | | 10/12/2021 | — | — | — | — | 4,898 | 101,487 | — | — | | | 10/6/2022 | — | — | — | — | 9,637 | 199,679 | — | — | | | 10/12/2020 | — | — | — | — | — | — | 23,028 | 477,140 | | | 10/12/2020 | — | — | — | — | — | — | 18,350 | 380,212 | | | 10/12/2021 | — | — | — | — | — | — | 11,019 | 228,314 | | | 10/6/2022 | — | — | — | — | — | — | 14,455 | 299,508 | | | Totals: | — | — | — | — | 20,652 | 427,910 | 66,852 | 1,385,174 | | Louis Martin | 3/22/2022 | — | — | — | 0 | 3,057 | 63,341 | — | — | | | 3/22/2022 | — | — | — | — | 13,540 | 280,549 | — | — | | | 10/6/2022 | — | — | — | — | 11,337 | 234,903 | — | — | | | 3/22/2022 | — | — | — | — | — | — | 6,877 | 142,491 | | | 10/6/2022 | — | — | — | — | — | — | 17,006 | 352,364 | | | Totals: | — | — | — | — | 27,934 | 578,793 | 23,883 | 494,855 |
Outstanding Equity Awards at Fiscal 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 Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4) | | Christopher P. Testa | 9/16/2013 | 3,510 | — | 67.48 | 9/16/2023 | — | — | — | — | | | 9/19/2014 | 3,800 | — | 64.55 | 9/19/2024 | — | — | — | — | | | 10/12/2020 | — | — | — | — | 14,393 | 298,223 | — | — | | | 10/12/2021 | — | — | — | — | 10,372 | 214,908 | — | — | | | 10/6/2022 | — | — | — | — | 20,408 | 422,854 | — | — | | | 10/12/2020 | — | — | — | — | — | — | 43,177 | 894,627 | | | 10/12/2021 | — | — | — | — | — | — | 23,336 | 483,522 | | | 10/6/2022 | — | — | — | — | — | — | 30,612 | 634,281 | | | Totals: | 7,310 | — | — | — | 45,173 | 935,985 | 97,125 | 2,012,430 | | Michael C. Stigers | 5/16/2014 | 15,377 | — | 48.58 | 5/16/2024 | — | — | — | — | | | 4/30/2015 | 8,050 | — | 56.94 | 5/31/2024 | — | — | — | — | | | 10/12/2020 | — | — | — | — | 8,276 | 171,479 | — | — | | | 10/12/2021 | — | — | — | — | 5,762 | 119,389 | — | — | | | 10/6/2022 | — | — | — | — | 7,361 | 152,520 | — | — | | | 10/12/2020 | — | — | — | — | — | — | 24,827 | 514,415 | | | 10/12/2021 | — | — | — | — | — | — | 12,964 | 268,614 | | | 10/6/2022 | — | — | — | — | — | — | 14,163 | 293,457 | | | Totals: | 23,427 | — | — | — | 21,399 | 443,388 | 51,954 | 1,076,486 |
Outstanding Equity Awards at Fiscal Year-End
(1)All outstanding RSUs vest over three annual installments, and PSUs cliff vest at the end of a three-year performance period. (2)Market value reflects the number of unvested RSUs multiplied by $20.72 per share, the closing price of our common stock on the NYSE on July 28, 2023, the last business day of fiscal 2023. (3)Represents the number of shares that may be issued pursuant to performance units at the applicable level of performance utilizing the closing price of our common stock on the NYSE on July 28, 2023, the last business day of fiscal 2023. The performance units granted are shown at target performance. (4)Market value reflects the number of shares that may be issued pursuant to the applicable level of performance, multiplied by $20.72 per share, the closing price of our common stock on the NYSE on July 28, 2023, the last business day of fiscal year 2023.
Option Exercises and Stock Vested—Fiscal 2023
Option Exercises and Stock Vested—Fiscal 2023 The following table summarizes information for the NEOs concerning exercise of stock options and vesting of RSUs and PSUs during the fiscal year ended July 29, 2023, including the (i) number of shares of common stock underlying options exercised in fiscal 2023; (ii) aggregate dollar value realized upon such exercises of stock options utilizing the actual sales price for same-day sale transactions and the closing price for any exercise and hold transactions; (iii) number of shares of common stock received from the vesting of RSUs during fiscal 2023 and any PSUs earned based on fiscal 2023 performance; and (iv) aggregate dollar value realized upon the vesting of such RSUs and PSUs.
Option Exercises and Stock Vested
Option Exercises and Stock Vested
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | | Sandy Douglas | — | — | 16,997 | 619,371 | | John Howard | — | — | 114,586(3) | 3,807,107(3) | | Danielle Benedict | — | — | 55,441(4) | 1,310,741(4) | | Louis Martin | — | — | 8,298 | 191,269 | | Christopher P. Testa | — | — | 65,358(5) | 1,870,451(5) | | Michael C. Stigers | — | — | 55,816(6) | 1,711,061(6) |
Option Exercises and Stock Vested
(1)In connection with the vesting of RSUs and PSUs, our NEOs surrendered shares of stock to cover withholding taxes, which reduced the actual value received upon vesting. The number of shares surrendered but included in this table are: Mr. Douglas—7,684; Mr. Howard—45,393; Ms. Benedict—19,588; Mr. Martin—2,580; Mr. Testa—25,360; and Mr. Stigers—22,485. (2)Represents the product of the number of shares or shares underlying units vested and the closing price of our common stock on the NYSE on the vesting date. (3)Mr. Howard was awarded performance units during fiscal 2021, of which 18,652 performance units were earned for the three-year performance period ended July 29, 2023 and the like number of shares of our common stock issued in settlement of these units in fiscal 2024 are included herein. (4)Ms. Benedict was awarded performance units during fiscal 2021, of which 9,909 performance units were earned for the three-year performance period ended July 29, 2023, as well as 23,028 performance units for her one-time award for the three-year performance period ended July 29, 2023 and the like number of shares of our common stock issued in settlement of these units in fiscal 2024 are included herein. (5)Mr. Testa was awarded performance units during fiscal 2021, of which 23,315 performance units were earned for the three-year performance period ended July 29, 2023 and the like number of shares of our common stock issued in settlement of these units in fiscal 2024 are included herein. (6)Mr. Stigers was awarded performance units during fiscal 2021, of which 13,406 performance units were earned for the three-year performance period ended July 29, 2023 and the like number of shares of our common stock issued in settlement of these units in fiscal 2024 are included herein.
Pension Benefits
Pension Benefits We do not maintain any defined benefit pension plans for NEOs.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation We do not maintain any nonqualified deferred compensation plans for NEOs.
CEO Pay Ratio
CEO Pay Ratio SEC rules require us to disclose the total annual compensation of Sandy Douglas, our CEO for fiscal 2023, compared to the median of the total annual compensation of all employees other than Mr. Douglas, as well as the ratio of such amounts to each other (referred to as the “CEO pay ratio”). Total compensation for Mr. Douglas and our median employee is calculated in accordance with SEC rules applicable to the Summary Compensation Table. We calculated this information for the twelve (12) months ended July 29, 2023. For such period, Mr. Douglas’ total compensation was $6,201,442, based on information disclosed in the Summary Compensation Table. Based on the total compensation for the CEO and our median employee’s total compensation of $56,223, the ratio of Mr. Douglas’s total compensation to the median employee’s total compensation was 110 to 1. To identify the median employee, we obtained payroll data for all active employees (full-time, part-time, active and seasonal) as of June 10, 2023, utilizing cash compensation as our consistently applied compensation measure. Canadian wages were converted to U.S. dollars using an average annual exchange rate for the 12 months ended June 28, 2023. Earnings for permanent employees who did not work for the entire year (i.e., new hires) were annualized. The wages of temporary employees were not annualized.
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination or Change-in-Control The information below describes and quantifies the compensation that would become payable to each of our NEOs if the NEO’s employment had terminated on July 29, 2023, given the NEO’s compensation and service levels as of such date and, if applicable, based on our closing stock price on that date. These benefits are in addition to benefits generally available to salaried employees. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, any actual amounts paid or distributed may be different. Factors that could affect these amounts include the timing during the year of any such event and our stock price at the time of such event. If an associate, including any of our NEOs, were to die or become disabled, target bonus would be paid, any unvested RSUs would become immediately vested (with performance units vesting at target levels of performance), and any unexercisable stock options would be cancelled and forfeited. Any vested stock options exercisable at the time of death or disability would be exercisable at any time on or before the earlier to occur of the date that is one year after such separation or the grant’s expiration date. For a description of termination provisions in the severance and change in control agreements, see “Executive Compensation—Compensation Discussion and Analysis—Employment, Severance and Change in Control Agreements.” In addition, the Second Amended and Restated 2020 Equity Incentive Plan and award agreements for long-term equity incentive awards also address some of these circumstances. The following table describes the potential payments as of July 29, 2023 upon termination of the NEOs.
Potential Payments Upon Termination or Change-in-Control
| Named Executive Officer | Payments Upon Termination | Separation from Service Without Cause, including Resignation for Good Reason(1) | Termination without Cause not qualifying as a Separation from Service without Cause(1) | Termination Without Cause or Resignation for Good Reason following Change in Control(2) | Termination as a result of Death or Disability | Retirement | Termination for Cause, or Resignation for Other Than Good Reason | | Sandy Douglas | Cash Severance Pay | $5,250,000(3) | $5,250,000(3) | $6,562,500(4) | $1,575,000(5) | $— | $— | | | Medical Benefits | 70,000(6) | 70,000(6) | 87,500(6) | — | — | — | | | Acceleration of Stock Options | — | — | — | — | — | — | | | Acceleration of Stock Awards | 2,301,536(7) | — | 5,225,770(8) | 5,225,770(8) | — | — | | | Total | $7,621,536 | $5,320,000 | $11,875,770 | $6,800,770 | $— | $— | | John W. Howard | Cash Severance Pay | $1,444,500(9) | $1,444,500(9) | $2,889,000(10) | $710,438(5) | $— | $— | | | Medical Benefits | 35,000(6) | 35,000(6) | 105,000(6) | — | — | — | | | Acceleration of Stock Options | — | — | — | — | — | — | | | Acceleration of Stock Awards | 1,634,559(7) | — | 2,593,419(8) | 2,593,419(8) | — | — | | | Total | $3,114,059 | $1,479,500 | $5,587,419 | $3,303,857 | $— | $— | | Danielle Benedict | Cash Severance Pay | $978,178(9) | $978,178(9) | $1,956,357(10) | $450,444(5) | $— | $— | | | Medical Benefits | 35,000(6) | 35,000(6) | 105,000(6) | — | — | — | | | Acceleration of Stock Options | — | — | — | — | — | — | | | Acceleration of Stock Awards | 1,338,968(7) | — | 1,813,083(8) | 1,813,083(8) | | — | | | Total | $2,352,146 | $1,013,178 | $3,874,440 | $2,263,527 | $— | $— | | Louis Martin | Cash Severance Pay | $1,200,000(9) | $1,200,000(9) | $2,400,000(10) | $498,750(5) | $— | $— | | | Medical Benefits | 35,000(6) | 35,000(6) | 105,000(6) | — | — | — | | | Acceleration of Stock Options | — | — | — | — | — | — | | | Acceleration of Stock Awards | 446,247(7) | — | 1,073,648(8) | 1,073,648(8) | — | — | | | Total | $1,681,247 | $1,235,000 | $3,578,648 | $1,572,398 | $— | $— | | Christopher P. Testa | Cash Severance Pay | $1,620,000(9) | $1,620,000(9) | $3,240,000(10) | $810,000(5) | $— | $— | | | Medical Benefits | 35,000(6) | 35,000(6) | 105,000(6) | — | — | — | | | Acceleration of Stock Options | — | — | — | — | — | — | | | Acceleration of Stock Awards | 1,944,427(7) | — | 2,948,415(8) | 2,948,415(8) | — | — | | | Total | $3,599,427 | $1,655,000 | $6,293,415 | $3,758,415 | $— | $— |
Potential Payments Upon Termination or Change-in-Control
(1)The Second Amended and Restated 2020 Equity Incentive Plan provides for certain prorated or partial vesting of shares upon Separation from Service without Cause (as defined in the Second Amended and Restated 2020 Equity Incentive Plan). The severance agreements provide for cash severance benefits only, including for certain terminations without Cause that do not qualify as a Separation from Service without Cause under the Second Amended and Restated 2020 Equity Incentive Plan. (2)Amounts presented in this column assume that the NEO is terminated without Cause or resigns for Good Reason in contemplation of or within two years following a Change in Control (each as defined in the NEO’s applicable change in control agreement). (3)Amount represents the sum of (i) 2 times the CEO’s target base salary as of July 29, 2023, (ii) 2 times the CEO’s annual cash incentive payment based on target performance for the fiscal year in which the executive is terminated and (iii) the amount of the CEO’s annual cash incentive payment that he would have earned during the fiscal year in which the executive was terminated. (4)Amount represents the sum of (i) 2.5 times the CEO’s base salary as of July 29, 2023, (ii) 2.5 times the CEO’s annual cash incentive payments based on target performance for the fiscal year in which the executive is terminated, and (iii) the amount of the CEO’s annual cash incentive payment he would have earned during the fiscal year in which his employment was terminated. (5)Represents the target bonus opportunity paid upon death or disability. (6)Represents the amount that the Company would be required to pay in lieu of post-termination medical benefits for the executive and the executive’s dependents. (7)Amount represents the intrinsic value of each share that will vest upon a Separation from Service without Cause, which reflects shares underlying RSUs expected to vest within 365 days of the separation date (prorated with respect to any awards granted within 365 days of the separation date) and a prorated portion of unearned PSUs that are outstanding on July 29, 2023, which vest on an accelerated basis following the relevant termination date (as defined in the 2012 Equity Incentive Plan or the Second Amended and Restated 2020 Equity Incentive Plan, as applicable), with unearned PSUs vesting based on the “target” level of performance. These amounts are calculated by multiplying (i) the aggregate number of equity awards which vest on an accelerated basis by (ii) $20.72 per share, the closing price of our common stock on the NYSE on July 28, 2023 (the last business day of fiscal 2023). See “Compensation Discussion and Analysis—Components of Executive Compensation Program for Fiscal 2022—Other Compensation and Benefits” for more information. (8)Amount represents the intrinsic value of each share underlying an RSU or unearned PSU outstanding on July 29, 2023, and which vests on an accelerated basis following the relevant termination date (as defined in the 2012 Equity Incentive Plan or the Second Amended and Restated 2020 Equity Incentive Plan, as applicable), with unearned PSUs vesting based on the “target” level of performance. These amounts are calculated by multiplying (i) the aggregate number of equity awards which vest on an accelerated basis by (ii) $20.72 per share, the closing price of our common stock on the NYSE on July 28, 2023 (the last business day of fiscal 2023). (9)Amount represents the sum of (i) the NEO’s base salary, as in effect as of July 29, 2023, (ii) the NEO’s annual cash incentive payments based on target performance for the fiscal year in which the executive is terminated, and (iii) the prorated portion of the amount of the NEO’s annual cash incentive payment that the executive would have earned during the fiscal year in which the NEO’s employment was terminated. Amounts in the table reflect a full year bonus amount due to the assumption of a termination at year end. If an NEO were terminated during the fiscal year, this amount would be prorated. (10)Amount represents the sum of (i) 2 times the NEO’s base salary as of July 29, 2023, (ii) 2 times the NEO’s annual cash incentive payments based on target performance for the fiscal year in which the NEO is terminated, and (iii) the amount of the NEO’s annual cash incentive payment he or she would have earned during the fiscal year in which his or her employment was terminated. Mr. Stigers resigned on May 31, 2023. There were no payments made upon his departure in fiscal 2023, including under his previously disclosed Transition Agreement, as amended. However, he was retirement eligible and per the Second Amended and Restated 2020 Equity Incentive Plan, his outstanding awards will continue to vest on their normal schedule (not accelerated). The value of his outstanding shares was $1,519,874 as of the end of fiscal 2023.
Pay vs. Performance
Pay vs. Performance This disclosure has been prepared in accordance with the SEC’s pay versus performance rules in Item 402(v) of Regulation S-K under the 1934 Act (Item 402(v)) and does not necessarily reflect the actual value realized by our NEOs or how the Compensation Committee evaluates compensation decisions in light of Company performance. For discussion of how the Compensation Committee seeks to align pay with performance when making compensation decisions, please see the “Executive Compensation—Compensation Discussion and Analysis” section beginning on page 28. The following tables and related disclosures provide information about (i) the Summary Compensation Table total compensation of our principal executive officers (PEOs) and our non-PEO Named Executive Officers (Other NEOs) as presented in the Summary Compensation Table on page 46, (ii) the “compensation actually paid” (CAP) to our PEOs and our Other NEOs, as calculated pursuant to Item 402(v), (iii) certain financial performance metrics and (iv) the relationship of the CAP to those financial performance metrics.
Pay vs. Performance
| Year | Summary Compensation Table Total for PEO(1) | | Compensation Actually Paid to PEO(4) | | Average Summary Compensation Table Total for non-PEO NEOs $(1) | Average Compensation Actually Paid to non-PEO NEOs $(4)(5) | Value of Initial Fixed $100 Investment Based on: (6) | | (in millions) | | | | 1st PEO $(2) | 2nd PEO $(3) | 1st PEO $(2) | 2nd PEO $(3) | | | Total Shareholder Return $ | Peer Group Total Shareholder Return $ | Net Income $(7) | Adjusted EBITDA $(8) | | 2023 | n/a | 6,201,442 | n/a | (1,706,502) | 1,958,589 | (4,707,369) | 104 | 180 | 24 | 640 | | 2022 | 6,312,014 | 8,722,292 | 709,289 | 8,947,423 | 3,053,051 | 2,223,745 | 214 | 222 | 248 | 829 | | 2021 | 8,403,365 | n/a | 17,558,584 | n/a | 2,794,629 | 4,726,283 | 167 | 164 | 149 | 770 |
Pay vs. Performance
(1)The values reflected in this column represent the “Total” compensation set forth in the Summary Compensation Table (SCT) on page 46. (2)Mr. Spinner served as PEO in fiscal 2021-2022, retiring on August 9, 2021, at which time Mr. Douglas became the new PEO. (3)Mr. Douglas has served as PEO since August 9, 2021 (week 2 of fiscal 2022). (4)“Compensation actually paid” begins with the Summary Compensation Table totals reported for the PEOs and the average of the Other NEOs for each year and were subject to the following adjustments per Item 402(v)(2)(iii) of Regulation S-K. NEOs do not participate in 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 do not apply.
Pay vs. Performance
| NEO | Fiscal Year | Summary Compensation Table Total Pay $ | Subtract Grant Date Fair Value of Stock Awards Granted in Fiscal Year $ | Add Fair Value at Fiscal Year End of Outstanding Awards Granted in Fiscal Year(9) $ | Add Change in Fair Value of Outstanding Awards Granted in Prior Years9) $ | Add Change in Fair Value as of Vesting Date of Stock Awards Granted in Prior Years $ | Add Fair Value as of Prior Fiscal of Awards that failed to meet Vesting Conditions $ | Compensation Actually Paid $(9) | | PEO #1 Spinner | 2023 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | | 2022 | 6,312,014 | — | — | (10,699,745) | 5,097,020 | — | 709,289 | | | 2021 | 8,403,365 | (5,099,971) | 11,570,416 | 3,096,530 | (411,756) | — | 17,558,584 | | PEO #2 Douglas | 2023 | 6,201,442 | (5,135,192) | 2,001,105 | (4,670,685) | (103,172) | — | (1,706,502) | | | 2022 | 8,722,292 | (5,899,913) | 6,125,044 | — | — | — | 8,947,423 | | | 2021 | n/a | n/a | n/a | n/a | n/a | n/a | n/a | | Other NEOs | 2023 | 1,958,589 | (1,324,846) | 494,269 | (5,146,889) | (640,179) | (48,313) | (4,707,369) | | | 2022 | 3,053,051 | (1,419,963) | 1,281,636 | (913,495) | 592,254 | (369,738) | 2,223,745 | | | 2021 | 2,794,629 | (1,366,224) | 3,054,335 | 310,091 | (66,548) | — | 4,726,283 |
Pay vs. Performance
(5)Other NEOs for fiscal 2021 are Mr. Howard (CFO), Mr. Dorne (COO), Ms. Sutton, (Chief Legal Officer, General Counsel and Corporate Secretary) and Mr. Testa (President); Other NEOs for fiscal 2022 are Mr. Howard (CFO), Mr. Dorne (COO), Mr. Stigers (CEO, Cub), Ms. Sutton, (former Chief Legal Officer, General Counsel and Corporate Secretary) and Mr. Testa (President); Other NEOs for fiscal 2023 are Mr. Howard (CFO), Ms. Benedict (CHRO), Mr. Martin (President, Wholesale), Mr. Testa (President) and Mr. Stigers (former CEO, Cub). (6)Represents hypothetical $100 investment at the beginning of the measurement period. Peer group represents the S&P SmallCap 600 Food Distributors Index also used in the Company’s Annual Report under Part II Item 5 for the Comparative Stock Performance graph. (7)As reported on Registrant’s Consolidated Statements of Income for the applicable fiscal reporting year, as provided under Part II Item 8 of the Company’s Annual Report. (8)The Company has identified adjusted EBITDA as the Company-selected measure, as it represents the most important financial performance measure used to link compensation actually paid to the PEO and the Other NEOs in 2023 to the Company’s performance. See Annex B for the definition of adjusted EBITDA, a non-GAAP measure, and reconciliation to the most directly comparable GAAP measure. (9)For performance-based awards, the fair values reflect the probable outcome of the performance vesting conditions as of each measurement date. The following table identifies the four most important financial performance metrics used by our Compensation Committee to link the “compensation actually paid” to our PEO and other NEOs in fiscal 2023, calculated in accordance with SEC regulations, to company performance. For a description of each of these performance metrics on our NEOs’ compensation, see “Executive Compensation—Compensation Discussion and Analysis”.
Pay vs. Performance
| Financial Performance Measures | | Adjusted EBITDA | | Net Sales | | Adjusted EPS | | Adjusted ROIC |
Pay vs. Performance
The charts below describe the relationship between compensation actually paid to our PEOs and other NEOs (as calculated above) and our net income, our adjusted EBITDA and our cumulative TSR. In addition, the last chart includes a comparison of our cumulative TSR and the cumulative TSR of our peer group.