DEF 14A of Hormel Foods Corp /De/
Filed Dec 20, 2023 · FY20230001104659-23-127508
ITEM 1 – ELECTION OF DIRECTORS
ITEM 1 – ELECTION OF DIRECTORS Identifying and Evaluating Nominees for Director - The Governance Committee is responsible for establishing procedures to identify and review the qualifications of all nominees for Board membership. The Committee considers recommendations of director candidates made by directors, senior management, and the Company’s stockholders. The Committee applies the same criteria for consideration of stockholder nominees as it does to nominees proposed by other sources. The Committee may engage an independent search firm to assist the Committee in identifying and evaluating potential director nominees to fill vacancies on the Board. In fiscal 2023, Russell Reynolds Associates, Inc., an independent search firm (“Russell Reynolds”), assisted the Committee in identifying and evaluating potential director nominees. Stockholders wishing to make a recommendation may do so by contacting the Governance Committee, c/o Brian D. Johnson, Vice President and Corporate Secretary, 1 Hormel Place, Austin, Minnesota 55912. Stockholders should send:
ITEM 1 – ELECTION OF DIRECTORS
| 1. | Name of the candidate and the candidate’s business and residence addresses; |
ITEM 1 – ELECTION OF DIRECTORS
| 2. | A resume or biographical sketch of the candidate, which includes the candidate’s principal occupation or employment; |
ITEM 1 – ELECTION OF DIRECTORS
| 3. | A document(s) evidencing the number of shares of Company stock currently held by the candidate and the candidate’s willingness to serve as a director if elected; and |
ITEM 1 – ELECTION OF DIRECTORS
| 4. | A signed statement as to the submitting stockholder’s current status as a stockholder, which includes the stockholder’s address and the number of shares of Company stock currently held. |
ITEM 1 – ELECTION OF DIRECTORS
The Committee’s procedures include making a preliminary assessment of each proposed nominee. Such assessment is based upon the resume and biographical information, an indication of the individual’s willingness to serve, and business experience and leadership skills. This information is evaluated against the criteria set forth below and the Company’s specific needs at that time. Based upon a preliminary assessment of the candidates, those who appear best suited to meet the Company’s needs may be invited to participate in a series of interviews, which are used to further evaluate candidates. On the basis of information learned during this process, the Committee determines which nominees to recommend to the Board. The two director nominees who joined the Board in March 2023 were recommended to the Committee by multiple sources and evaluated along with other potential director nominees. Raymond G. Young was recommended to the Committee by a non-management director and Russell Reynolds. Michael P. Zechmeister was recommended to the Committee by Russell Reynolds. Director Qualifications – The Governance Committee determines the selection criteria of director nominees based upon the Company’s needs at the time nominees are considered. In evaluating director candidates, the Committee will consider, among other qualifications the Committee deems appropriate, a candidate’s:
ITEM 1 – ELECTION OF DIRECTORS
| ● | Intellect; |
ITEM 1 – ELECTION OF DIRECTORS
| ● | Integrity; |
ITEM 1 – ELECTION OF DIRECTORS
| ● | Broad-based experience at the policy-making level in business, government, education or the public interest; |
ITEM 1 – ELECTION OF DIRECTORS
| ● | Analytical ability; |
ITEM 1 – ELECTION OF DIRECTORS
| ● | Ability to qualify as an independent director; |
ITEM 1 – ELECTION OF DIRECTORS
| ● | Ability and willingness to devote time and energy to effectively carry out all Board responsibilities; and |
ITEM 1 – ELECTION OF DIRECTORS
| ● | Unique qualifications, skills and experience. |
ITEM 1 – ELECTION OF DIRECTORS
The Committee reviews past performance on the Board for directors seeking reelection. The Board’s annual self-evaluation process assists the Committee in this review. The Committee considers the diversity of director candidates and seeks to enhance the overall diversity of the Board. Each candidate’s diversity in terms of race/ethnicity, gender and other personal characteristics is considered. The Committee also assesses each candidate’s contribution to the diversity of the Board in a broader sense, including age, education, experience, skills and other qualifications. While the Committee carefully considers diversity when evaluating director candidates, it has not adopted a formal diversity policy. The Committee believes its processes and considerations have resulted in a Board that currently is, and has historically been, diverse in many respects, including racial/ethnic and gender diversity. The Committee recommends director nominees to the Board to submit for election at the next Annual Meeting of Stockholders. The Board selects director nominees based on its assessment and consideration of various factors. These factors include the current Board profile, the long-term interests of stockholders, the needs of the Company, and the goal of creating an appropriate balance of knowledge, experience and diversity on the Board. Our Nominees for Director – Each of our director nominees is well qualified under the criteria described above. As an employee of the Company, Mr. Snee does not qualify as an independent director, but all other director nominees are independent. Each director nominee brings a variety of qualifications, skills, attributes and experience to the Board. A common trait among our director nominees is executive leadership experience with a large company or organization. Such experience brings a variety of benefits, including an understanding of business management, various business functions and strategic planning. Other advantages of an executive leadership background include experience with policy making, risk management and corporate governance matters. Another common characteristic of our director nominees is each has prior service on our Board, although that service is limited for Mr. Young and Mr. Zechmeister, the director nominees who joined the Board in March 2023. Each director nominee has a demonstrated record of regular attendance, advance preparation and active participation in Board and Board committee meetings. Through prior service on the Board committees, our director nominees have demonstrated and further developed expertise relating to the duties assigned to the Board committees. The biographical information below identifies and highlights additional qualifications, skills, attributes and experience each director nominee brings to the Board. The diversity of our director nominees in terms of race/ethnicity, gender, age and tenure on our Board is demonstrated in the following graphs: The Board of Directors recommends a vote FOR each of the 12 director nominees listed below. The persons named as proxies will vote FOR the election of these 12 nominees to hold office as directors until the next Annual Meeting of Stockholders and until their successors are elected and qualify, unless stockholders specify otherwise. If any of such nominees become unavailable for any reason, it is intended that the proxies will vote for the election of such substitute persons as may be designated by the Board of Directors. Directors are elected by a majority of the votes cast, whereby there must be more “FOR” votes than “AGAINST” votes for the nominee. An incumbent director who is not re-elected under this standard must promptly offer to resign.
DIRECTOR NOMINEES
DIRECTOR NOMINEES
DIRECTOR NOMINEES
| | PRAMA BHATT, age 53, director since 2019. Ms. Bhatt is Chief Digital Officer of Ulta Beauty, Inc. (NASDAQ: ULTA), a provider of retail beauty products and services, a position she has held since December 2019. She served Ulta Beauty, Inc. as Senior Vice President, Digital & eCommerce from April 2017 to December 2019 and Vice President, Digital & eCommerce from 2014 to 2017. Ms. Bhatt was Vice President, eCommerce of Kenneth Cole Productions, Inc., a fashion company, from 2011 to 2014. She held various management positions with Toys “R” Us, Inc. from 2002 to 2011, culminating with the position of Vice President, General Manager, eCommerce, US from 2008 to 2011. Her prior experience includes the position of management consultant with Booz Allen Hamilton, Inc. and a tenure at Ford Motor Company (NYSE: F) where she held various roles in product strategy, design and development. Ms. Bhatt brings extensive expertise in digital commerce and consumer product marketing to the Board, as well as ongoing experience as an active senior executive responsible for digital commerce for a large business. |
DIRECTOR NOMINEES
| | GARY C. BHOJWANI, age 55, director since 2014. Mr. Bhojwani is Chief Executive Officer of CNO Financial Group, Inc. (NYSE: CNO), a provider of health and life insurance and retirement solutions, a position he has held since January 2018. He was President of CNO Financial Group, Inc. from April 2016 to December 2017. Mr. Bhojwani was Chairman of Allianz Life Insurance Company of North America, a provider of retirement solutions, and a member of the Board of Management of Allianz SE from 2012 to 2015 and Chief Executive Officer of Allianz Life Insurance Company of North America from 2007 to 2011. He was President of Commercial Business, Fireman’s Fund Insurance Company from 2004 to 2007, Chief Executive Officer of Lincoln General Insurance Company from 2002 to 2004, founder and Chief Executive Officer of Avalon Risk Management from 1998 to 2002, and President, Trade Insurance Services from 1995 to 1997. Mr. Bhojwani is a member of the Board of Directors of CNO Financial Group, Inc., Carmel, Indiana. Mr. Bhojwani brings extensive expertise in risk management, finance and consumer product marketing to the Board, as well as ongoing experience as the active Chief Executive Officer of a publicly held company whose stock is traded on the NYSE. |
DIRECTOR NOMINEES
| | STEPHEN M. LACY, age 69, director since 2011. Mr. Lacy retired from Meredith Corporation, a media and marketing company, in November 2020. He served Meredith Corporation as Chairman of the Board from March 2019 to November 2020, Executive Chairman of the Board from February 2018 to March 2019, Chairman of the Board and Chief Executive Officer starting in 2016, Chairman of the Board, President and Chief Executive Officer starting in 2010, President and Chief Executive Officer starting in 2006, President and Chief Operating Officer starting in 2004, President, Publishing Group, and President, Interactive and Integrated Marketing Group, starting in 2000, and Chief Financial Officer starting in 1998. Mr. Lacy is a member of the Board of Directors of First Interstate BancSystem, Inc. (NASDAQ: FIBK), Billings, Montana, and SuckerPunch Gourmet, LLC, La Grange Highlands, Illinois. He was a member of the Board of Directors of Meredith Corporation, Des Moines, Iowa from 2004 to 2020. Mr. Lacy brings extensive expertise in finance, corporate development and consumer product marketing to the Board, as well as experience as the Chief Executive Officer of a company whose stock was traded on the NYSE. |
DIRECTOR NOMINEES
| | ELSA A. MURANO, Ph.D., age 64, director since 2006. Dr. Murano has served Texas A&M University as Director of the Norman Borlaug Institute for International Agriculture, Texas A&M AgriLife, since 2014, President Emerita since 2009, Professor, Department of Animal Science since 2001. She was Interim Associate Vice Chancellor for Academic Strategic Initiatives, Texas A&M AgriLife from August 2021 to June 2022, Interim Director of the Norman Borlaug Institute for International Agriculture from 2012 to 2014, President of Texas A&M University from 2008 to 2009, and Vice Chancellor and Dean of Agriculture, Director of the Texas Agricultural Experiment Station from 2005 to 2007. Dr. Murano was Undersecretary for Food Safety, U.S. Department of Agriculture from 2001 to 2004. She is a member of the Board of Directors of Food Safety Net Services, San Antonio, Texas and the Board of Trustees of the International Livestock Research Institute, Nairobi, Kenya. Dr. Murano brings preeminent food safety expertise and significant experience in agri-business and regulatory affairs to the Board. |
DIRECTOR NOMINEES
| | WILLIAM A. NEWLANDS, age 65, director since 2018. Mr. Newlands is President and Chief Executive Officer of Constellation Brands, Inc. (NYSE: STZ), a beverage alcohol company, a position he has held since March 2019. He served Constellation Brands, Inc. as President and Chief Operating Officer from February 2018 to February 2019, Executive Vice President and Chief Operating Officer from January 2017 to February 2018, Executive Vice President and President, Wine & Spirits Division from January 2016 to January 2017, and Executive Vice |
DIRECTOR NOMINEES
| | President and Chief Growth Officer from January 2015 to January 2016. Mr. Newlands was Senior Vice President and President, North America of Beam Inc., a beverage alcohol company, from 2011 to 2014 and Senior Vice President and President, North America of Beam Global Spirits & Wine, Inc. from 2010 to 2011, and Senior Vice President and President, USA of Beam Global Spirits & Wine, Inc. from 2008 to 2010. His prior experience includes several senior leadership roles in the beverage alcohol industry. Mr. Newlands is a member of the Board of Directors of Constellation Brands, Inc., Victor, New York. He was a member of the Board of Directors of Canopy Growth Corporation (NASDAQ: CGC), Smith Falls, Ontario, Canada from 2018 to 2021. Mr. Newlands brings extensive expertise in innovation, consumer product marketing, corporate development and international business to the Board, as well as ongoing experience as the active Chief Executive Officer of a publicly held company whose stock is traded on the NYSE. | | | CHRISTOPHER J. POLICINSKI, age 65, director since 2012. Mr. Policinski is Chief Executive Officer of CJP Leadership Partners, LLC, a consulting company, a position he has held since February 2021. He was Chief Executive Officer of VitaKey, Inc., a food ingredient company, from August 2020 to February 2021. Mr. Policinski retired from Land O’Lakes, Inc., a member-owned cooperative which produces and markets dairy-based food products and agricultural supplies, in June 2018. He served Land O’Lakes, Inc. as President and Chief Executive Officer from 2005 to 2018, as Chief Operating Officer of the Dairy Foods business unit from 1999 to 2005, and Vice President of Strategy and Business Development from 1997 to 1999. His prior experience includes various management positions at Kraft General Foods Corporation (NASDAQ: KHC), a food company, Bristol-Myers Squibb Co. (NYSE: BMY), a biopharmaceutical and consumer goods company, and Pillsbury Company, a food company. Mr. Policinski is a member of the Board of Directors of Xcel Energy, Inc. (NASDAQ: XEL), Minneapolis, Minnesota, and Isidro Investments, Baltimore, Maryland. Mr. Policinski brings extensive expertise in agri-business, consumer product marketing and corporate development to the Board, as well as experience as the Chief Executive Officer of a large Minnesota-based company operating globally in the food industry. |
DIRECTOR NOMINEES
| | JOSE LUIS PRADO, age 69, director since 2019. Mr. Prado is Executive Chairman of Palmex Alimentos, S.A. de C.V., a snack food pellets company, a position he has held since February 2022, and Chairman of Tropicale Foods, LLC, a frozen food company, a position he has held since December 2019. He is also serving as interim Chief Executive Officer of Tropicale Foods, LLC, a position he has held since July 2023. He served Evans Food Group Ltd., a snack food company, as Vice Chairman from August 2019 to August 2021 and as Chairman and Chief Executive Officer from April 2016 to August 2019. Mr. Prado was President, Quaker Oats North America and Global Baking, for PepsiCo, Inc. (NASDAQ: PEP) from 2011 to 2014, President and CEO, Grupo Gamesa-Quaker, a Division of PepsiCo, Mexico from 2002 to 2010, Regional Vice President, Andean Region, Frito Lay International from 2000 to 2002, President, PepsiCo Snacks Argentina from 1997 to 2000, President, Frito Lay Snacks Caribbean from 1994 to 1997, and Finance Vice President and CFO, Matutano, Frito Lay International from 1993 to 1994. Mr. Prado is a member of the Board of Directors of Northern Trust Corporation (NASDAQ: NTRS), Chicago, Illinois, the Chicago Council on Global Affairs, Chicago, Illinois, and the Latino Corporate Directors Association, Washington, D.C., and the Board of Trustees of the National Museum of the American Latino, Washington, D.C. He was a member of the Board of Directors of Brinker International, Inc. (NYSE: EAT), Dallas, Texas from July 2015 to March 2019. Mr. Prado brings extensive expertise in consumer product marketing, corporate development, international business and the food industry to the Board, as well as significant executive leadership experience. |
DIRECTOR NOMINEES
| | SALLY J. SMITH, age 65, director since 2014. Ms. Smith retired from Buffalo Wild Wings, Inc., a restaurant company, in February 2018. She served Buffalo Wild Wings, Inc. as President and Chief Executive Officer from 1996 to February 2018 and as Chief Financial Officer from 1994 to 1996. Ms. Smith was Controller from 1984 to 1987 and Chief Financial Officer from 1987 to 1994 of Dahlberg, Inc., a manufacturer of hearing aids. She began her career with KPMG LLP, an international accounting and consulting firm. Ms. Smith is a member of the Board of Directors of Digi International Inc. (NASDAQ: DGII), Minnetonka, Minnesota, The Marvin Companies, Warroad, Minnesota, and the National Restaurant Association, Washington, D.C. Ms. Smith was a member of the Board of Directors of Buffalo Wild Wings Inc., Minneapolis, Minnesota from 1996 to 2017 and Alerus Financial Corporation (NASDAQ: ALRS), Grand Forks, North Dakota from 2007 to 2022. Ms. Smith brings extensive expertise in finance, corporate development and the foodservice industry to the Board, as well as experience as the Chief Executive Officer of a Minnesota-based company whose stock was traded on the NASDAQ. |
DIRECTOR NOMINEES
| | JAMES P. SNEE, age 56, director since 2015. Mr. Snee is Chairman of the Board, President and Chief Executive Officer of the Company (NYSE: HRL), serving in that capacity since November 2017. He was President and Chief Executive Officer from October 2016 to November 2017, President and Chief Operating Officer from October 2015 to October 2016, Group Vice President and President, Hormel Foods International Corporation from 2012 to 2015, Vice President and Senior Vice President, Hormel Foods International Corporation from 2011 to 2012, and Vice President, Affiliated Business Units from 2008 to 2011. Mr. Snee is a member of the Board of Directors of Republic Services, Inc. (NYSE: RSG), Phoenix, Arizona, the Consumer Brands Association, Arlington, Virginia, the North American Meat Institute, Washington, D.C., and The Hormel Foundation, Austin, Minnesota. In addition to his executive leadership experience, Mr. Snee brings broad sales, marketing, supply chain and international business expertise to the Board, as well as in-depth knowledge of the Company and food industry developed during his 34-year career with the Company. |
DIRECTOR NOMINEES
| | STEVEN A. WHITE, age 63, director since 2014. Mr. White is President, Special Counsel to CEO Comcast Cable, for Comcast Corporation (NASDAQ: CMCSA), an entertainment and communications company, a position he has held since December 2020. He served Comcast as President, Comcast West Division from 2009 to December 2020, as Regional Senior Vice President, Comcast California from 2007 to 2009, and as Regional Senior Vice President, Comcast Mid-South Region from 2002 to 2007. Mr. White was Regional Vice President of AT&T Broadband, LLC from 2000 to 2002 and Regional Vice President of Telecommunications, Inc. from 1997 to 2000. His prior experience includes various marketing positions with Colgate-Palmolive Company (NYSE: CL) from 1991 to 1997. Mr. White is a member of the Board of Directors of W.W. Grainger, Inc. (NYSE: GWW), Lake Forest, Illinois. Mr. White brings significant expertise in digital commerce and consumer product marketing to the Board, as well as experience as the President of a large business. |
DIRECTOR NOMINEES
| | RAYMOND G. YOUNG, age 62, director since 2023. Mr. Young retired from Archer-Daniels-Midland Company (NYSE: ADM), a global leader in human and animal nutrition and the world’s premier agricultural origination and processing company, in December 2022. He served ADM as Vice Chairman from April 2022 to December 2022 and as Chief Financial Officer from December 2010 to April 2022. Mr. Young was with General Motors Company (NYSE: GM), a global producer of vehicles, from 1986 to 2010, where he served in various senior executive roles, including as its President of the Mercosur Region of South America from 2004 to 2007, its Chief Financial Officer from 2008 to 2009 and as Vice President, International Operations, based in China, in 2010. Mr. Young is a member of the Board of Directors of International Paper Company (NYSE: IP), Memphis, Tennessee, Marsh & McLennan Companies, Inc. (NYSE: MMC), and the American Cancer Society Illinois Division, Chicago, Illinois. Mr. Young brings extensive expertise in finance and related functions to the Board, as well as significant knowledge of international operations, food and nutrition business and corporate development. |
DIRECTOR NOMINEES
| | MICHAEL P. ZECHMEISTER, age 57, director since 2023. Mr. Zechmeister is Chief Financial Officer of C.H. Robinson Worldwide, Inc. (NASDAQ: CHRW), a global logistics company, a position he has held since September 2019. He was Chief Financial Officer of United Natural Foods, Inc. (NYSE: UNFI), a distributor of grocery and non-food products in North America, from September 2015 to August 2019. Mr. Zechmeister was with General Mills, Inc. (NYSE: GIS), a global manufacturer and marketer of branded consumer foods, from 1990 to 2015, where he served in various finance executive roles, including as its Vice President, Finance, U.S. Retail Sales from 2007 to 2010, its Vice President and Treasurer from 2010 to 2012 and as Vice President, Finance, Yoplait USA from 2012 to 2015. Mr. Zechmeister is a member of the Board of Advisors of Carlson School of Management, University of Minnesota, Minneapolis, Minnesota. Mr. Zechmeister brings extensive expertise in finance and related functions to the Board, as well as significant knowledge of corporate development, logistics and the food industry. |
DIRECTOR NOMINEES
No family relationship exists between any of the director nominees or executive officers of the Company.
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS In fiscal 2023, the Company provided the following elements of compensation to nonemployee directors:
COMPENSATION OF DIRECTORS
| ● | Annual retainer of $100,000; |
COMPENSATION OF DIRECTORS
| ● | Additional annual retainer of $30,000 for Lead Director; |
COMPENSATION OF DIRECTORS
| ● | Additional annual retainer of $25,000 for chair of the Audit Committee; |
COMPENSATION OF DIRECTORS
| ● | Additional annual retainer of $10,000 for Audit Committee members; |
COMPENSATION OF DIRECTORS
| ● | Additional annual retainer of $20,000 for chair of the Compensation Committee; |
COMPENSATION OF DIRECTORS
| ● | Additional annual retainer of $7,500 for Compensation Committee members; |
COMPENSATION OF DIRECTORS
| ● | Additional annual retainer of $15,000 for chair of the Governance Committee; |
COMPENSATION OF DIRECTORS
| ● | Additional annual retainer of $5,000 for Governance Committee members; and |
COMPENSATION OF DIRECTORS
| ● | An award of restricted shares of Company common stock having a value of $160,000 on February 1 based on the NYSE closing price for the stock at the end of that day (rounded to the nearest whole share number), subject to a restricted period which expires upon the date of the Company’s next annual stockholders meeting. |
COMPENSATION OF DIRECTORS
The retainers are paid half on February 1 and half on August 1. These payments and the equity award are made on the first business day after February 1 and August 1 if those dates fall on a non-business day. Nonemployee directors first elected to the Board other than at the annual stockholders meeting receive a prorated annual retainer and award of restricted shares based on the number of regular Board meetings scheduled from the time the director joins the Board to the next annual stockholders meeting out of the total number of regular Board meetings between annual stockholders meetings. The restricted period for restricted shares awarded to newly elected nonemployee directors expires upon the date of the second succeeding annual stockholders meeting. Nonemployee directors appointed as a new Committee Chair or member receive a pro-rated annual Committee retainer based on the number of regular Board meetings scheduled from the time the director takes the new Committee assignment to the next annual stockholders meeting out of the total number of regular Board meetings between annual stockholders meetings. The NYSE closing price of the Company’s stock was $45.34 on February 1, 2023. This price resulted in an award of 3,529 restricted shares of Company common stock to each nonemployee director on that date. On March 27, 2023, in connection with their election to the Board, Mr. Young and Mr. Zechmeister received an award of restricted shares of Company common stock having a value of $160,000. The NYSE closing price of the Company’s stock was $38.97 on March 27, 2023. This price resulted in an award of 4,106 restricted shares of Company common stock (after rounding to the nearest whole number) to each of Mr. Young and Mr. Zechmeister, subject to a restricted period that expires upon the date of the Company’s 2025 annual stockholders meeting. The awards of restricted shares on February 1, 2023 and March 27, 2023 were made pursuant to the terms of the stockholder-approved Hormel Foods Corporation 2018 Incentive Compensation Plan (“Incentive Compensation Plan”). Each nonemployee director and the Company entered into a Restricted Stock Award Agreement consistent with the Incentive Compensation Plan. Directors receive declared dividends on, and are entitled to vote, the restricted shares prior to vesting. Nonemployee directors may defer all or a portion of retainer and meeting fees under the Company’s Nonemployee Director Deferred Stock Subplan pursuant to the Incentive Compensation Plan. Deferred fees times 105% are credited as stock units under the plan. The stock units have the same value as Company common stock and receive dividend equivalents. Stock units become payable in shares of Company common stock following termination of service as a director. Directors who are employees of the Company receive no additional compensation for service on the Board pursuant to Compensation Committee policy. The Compensation Committee reviews the compensation to be paid to the Company’s nonemployee directors. The Committee uses a compensation consultant, Pearl Meyer, to provide advice regarding nonemployee director compensation. The consultant analyzes each element of director compensation and total director compensation for the same peer group of companies which is used to evaluate executive compensation. See “How Compensation Decisions are Made” on page 20 for a list of these peer companies. The Committee reviews the consultant’s report of competitive director compensation and determines whether to recommend to the Board a change in the Company’s nonemployee director compensation. If such a change is recommended by the Committee, the full Board would then determine whether to ratify the change. The Compensation Committee’s current policy is to review nonemployee director compensation every other year. After this process was completed in late 2022, the Company’s nonemployee director compensation policy was modified to increase the annual retainer to $100,000 and to increase the additional annual retainer for Lead Director to $30,000, effective February 1, 2023. The next regular review of nonemployee director compensation is scheduled to take place in late 2024. The fiscal 2023 compensation of our nonemployee directors is shown in the following table.
COMPENSATION OF DIRECTORS
| DIRECTOR COMPENSATION FOR FISCAL 2023 | | | | | | Name(1) | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) (3) | All Other Compensation ($)(4) | Total ($) | | Prama Bhatt | 107,500 | 160,005 | - | 267,505 | | Gary C. Bhojwani | 115,000 | 160,005 | 8,612 | 283,617 | | Terrell K. Crews(5) | - | - | 1,623 | 1,623 | | Stephen M. Lacy | 130,000 | 160,005 | 5,000 | 295,005 | | Elsa A. Murano | 105,000 | 160,005 | - | 265,005 | | Susan K. Nestegard | 107,500 | 160,005 | 15,378 | 282,883 | | William A. Newlands | 145,000 | 160,005 | 15,474 | 320,479 | | Christopher J. Policinski | 107,500 | 160,005 | 31,688 | 299,193 | | Jose Luis Prado | 105,000 | 160,005 | 7,591 | 272,596 | | Sally J. Smith | 132,500 | 160,005 | 21,963 | 314,468 | | Steven A. White | 115,000 | 160,005 | 21,416 | 296,421 | | Raymond G. Young | 115,000 | 160,011 | - | 275,011 | | Michael P. Zechmeister | 117,500 | 160,011 | - | 277,511 |
COMPENSATION OF DIRECTORS
| (1) Consists of annual retainer and additional annual retainers for Lead Director, committee chairs, and committee members. Includes amounts voluntarily deferred under the Company’s Nonemployee Director Deferred Stock Subplan pursuant to the Incentive Compensation Plan. |
COMPENSATION OF DIRECTORS
| (2) Consists of the aggregate grant date fair value of restricted stock awarded to each nonemployee director in fiscal 2023, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (Compensation – Stock Compensation) (“FASB ASC Topic 718”). Each nonemployee director on February 1, 2023 received a grant of 3,529 shares of restricted stock. Mr. Young and Mr. Zechmeister each received a grant of 4,106 shares of restricted stock when they joined the Board on March 27, 2023. The grant date fair value is based on the NYSE closing price of our common stock on the grant date, which was $45.34 on February 1, 2023 and $38.97 on March 27, 2023. |
COMPENSATION OF DIRECTORS
| (3) As of October 29, 2023, nonemployee directors held the following number of unvested shares of restricted stock: |
COMPENSATION OF DIRECTORS
| Name | Unvested Shares of Restricted Stock (#) | | Prama Bhatt | 3,529 | | Gary C. Bhojwani | 3,529 | | Terrell K. Crews | - | | Stephen M. Lacy | 3,529 | | Elsa A. Murano | 3,529 | | Susan K. Nestegard | 3,529 | | William A. Newlands | 3,529 | | Christopher J. Policinski | 3,529 | | Jose Luis Prado | 3,529 | | Sally J. Smith | 3,529 | | Steven A. White | 3,529 | | Raymond G. Young | 4,106 | | Michael P. Zechmeister | 4,106 |
COMPENSATION OF DIRECTORS
| (4) Consists of (a) dividend equivalents paid on stock units under the Company’s Nonemployee Director Deferred Stock Subplan pursuant to the Incentive Compensation Plan and the 2009 Nonemployee Director Deferred Stock Plan, and (b) matching gifts to educational institutions made by the Company on behalf of directors as follows: Mr. Lacy - $5,000; Mr. Newlands - $10,000. This matching gift program was available to all full-time and retired employees and directors of the Company until discontinued in the later part of fiscal 2023. |
COMPENSATION OF DIRECTORS
| (5) Mr. Crews’ term expired on January 31, 2023. |
2023 Compensation Decisions and Outcomes
2023 Compensation Decisions and Outcomes The Compensation Committee took several actions in 2023 to ensure market-competitive NEO compensation, emphasizing performance-based compensation programs tied directly to value creation for the Company’s stockholders. The Committee approved salary increases, Operators’ Shares grants, annual incentive plan (“AIP”) award target amounts, restricted stock units (“RSUs”) awards, and stock option grants for the NEOs and other key executives. The Committee redesigned the long-term incentive plan (“LTIP”) performance awards. The resulting fiscal 2023 compensation levels for the NEOs are detailed in the Summary Compensation Table on page 28 and the supporting tables that follow. At target performance, NEO total direct compensation is approximately the median of market consensus data. Based on our actual performance results for fiscal 2023, NEO compensation relative to target was as follows:
2023 Compensation Decisions and Outcomes
| ● | Actual AIP payouts for the NEOs were 62% of target, on average. As described below, 2023 AIP awards were tied to the achievement of a combination of Company earnings before interest and taxes (“EBIT”), Segment Profit, Net Sales, Asset Management performance results, and ESG metrics; and |
2023 Compensation Decisions and Outcomes
| ● | The performance period for the LTIP awards made in 2020 ended June 30, 2023. The Company’s three-year total shareholder return (“TSR”) was at the 19.0 percentile of its peer group, generating no payout. |
Best Compensation Governance Practices
| What We Do | | What We Don’t Do | | | ✓ | Place a heavy emphasis on variable, performance-based compensation | × | No significant perquisites | | ✓ | Have robust stock ownership guidelines | × | No employment agreements, severance or related tax gross ups | | ✓ | Use a mix of relative and absolute financial performance metrics | × | No pledging or hedging of stock | | ✓ | Use an independent, external compensation consultant | × | No repricing or exchange of underwater options(1) | | ✓ | Hold an annual say-on-pay vote | × | No dividends are paid on unvested RSUs. Dividend | | ✓ | Maintain a compensation recovery policy in the event of a financial restatement | | equivalents in the form of additional RSUs are only payable to the extent the RSUs ultimately vest |
Compensation Objectives
These two goals are achieved by providing a competitive total compensation program that offers competitive “fixed pay” (i.e., base salary and benefits) along with “variable, performance-based pay” designed to pay for performance. Total compensation for executive officers is leveraged toward performance-based compensation rather than base salary. Performance-based compensation is comprised of both short-term and long-term incentives. An appropriate balance of short-term and long-term incentives assures executive officers are properly balancing the need for consistent annual performance with the need for improved long-term performance. This compensation balance provides both downside risk and upside opportunity for Company performance.
Principal Components of Pay
| Pay Component | Performance Factors | Performance Time Horizon | Performance Leverage | % of Target Total Direct Compensation for NEOs | | Base Salary | Individual performance | Annual | Low | 10 – 25% | | Operators’ Shares | Company EPS | Annual | Low/Moderate | 5 – 15% | | AIP | Company EBIT, segment profit, net sales, ESG, and asset management | Annual | Moderate/High | 15 – 25% | | LTIP | Relative TSR performance | 3-year performance period | Moderate/High | 15 – 35% | | Stock Options | Stock price growth | 4-year vesting; 10-year term | High | 13 – 20% | | RSUs | Stock price | 3-year vesting | Low/Moderate | 13 – 20% |
How Compensation Decisions are Made
How Compensation Decisions are Made The Compensation Committee reviews and approves recommendations for pay changes for a group of key executives who hold senior positions within the Company, including all the Company’s executive officers (the CEO and such executives, collectively, the “Senior Management Group”). Each year, the Committee asks its outside compensation consultant to review the competitive analysis for each of these positions. For the Senior Management Group, the consultant develops “market consensus” data using both a peer group of companies similar to the Company in size and industry (listed below) and a combination of several compensation surveys. The use of peer group data (1) provides the Committee with more specific information regarding market practices than is available from surveys and (2) allows the Committee to compare the Company’s relative pay positioning in relation to the Company’s relative performance positioning to ensure a proper pay-for-performance alignment. The use of survey data (1) provides information based on specific position responsibilities rather than pay level and (2) provides pay information for positions that fall below the NEOs. The consultant works with the Company’s Senior Vice President of Human Resources to ensure a proper understanding of the roles, responsibilities and revenue scope of each position reviewed.
How Compensation Decisions are Made
| Hormel Foods Compensation Peer Group | | | | | | Campbell Soup Company ConAgra Brands, Inc. Flowers Foods, Inc. Fresh Del Monte Produce Inc. General Mills, Inc. Hain Celestial Group, Inc. Hershey Company J.M. Smucker Company Kellogg Company | | Kraft Heinz Company McCormick & Company, Inc. Mondelez International, Inc. Pilgrim’s Pride Corporation Post Holdings, Inc. Seaboard Corporation TreeHouse Foods, Inc. Tyson Foods, Inc. | | | | 2022/2023 Fiscal Year Data ($ in millions) Revenues Market Capitalization | Hormel Foods (Fiscal 2022) $12,459 $17,154 | 25th Percentile $5,851 $4,895 | Median $10,419 $16,466 | 75th Percentile $17,468 $24,313 |
How Compensation Decisions are Made
The Committee has established a separate performance peer group for purposes of measuring relative TSR, called the “LTIP Peer Companies.” The companies in the above Compensation Peer Group are different than the LTIP Peer Companies because the purpose of each list is different. The Compensation Peer Group consists of food companies which are more similar in size to the Company. The LTIP Peer Companies consist of a broader group of food and beverage companies that are used to determine relative TSR performance. This broader group assures there will be a sufficient number of comparison companies at the end of the three-year LTIP performance cycle if some of the companies are acquired, go bankrupt or are eliminated due to unforeseen events. The LTIP Peer Companies are listed on page 24. In July of each year, the Committee reviews and approves the Compensation Peer Group and the LTIP Peer Companies with input from the compensation consultant. The Compensation Peer Group listed above was approved in July 2023 and is the same as the Compensation Peer Group approved in July 2022, except that Sanderson Farms, Inc. was removed due to its being acquired and becoming a private company. Upon completing the competitive analysis, the consultant provides the Committee with a report of the relative pay and performance findings. Based on the results of this analysis, the Committee discusses strategic goals for the program and establishes broad parameters for annual pay decisions, including overall pay mix. The consultant then works with the CEO and the Senior Vice President of Human Resources to develop an initial set of recommendations for annual pay decisions, consistent with the guidelines established by the Committee. The consultant presents preliminary recommendations based on each executive’s market positioning and relative internal positioning. The CEO and Senior Vice President of Human Resources then modify those recommendations based on their assessment of each individual’s performance and contribution. The initial results are submitted to the Committee for review and discussion. Based on the Committee’s discussion, modifications are made to the initial recommendations and the Committee approves the final recommendations at a subsequent meeting. The CEO does not participate in the Committee’s process for establishing the CEO’s compensation.
Operators’ Share Incentive Plan
Operators’ Share Incentive Plan Why Operators’ Shares? The Hormel Foods Corporation 2018 Operators’ Share Incentive Compensation Subplan pursuant to the Incentive Compensation Plan (“Operators’ Share Plan”) is a short-term incentive. The basic concept of the Operators’ Share Plan structure has been in place since 1932. This annual cash incentive plan rewards employee participants for Company financial performance, as measured by EPS. The Operators’ Share Plan rewards employees as the EPS of the Company rises over time. Improved EPS, over time, results in an increase in the stock price, which improves stockholder value. How the Plan Works Upon initial eligibility for plan participation, an employee receives a grant of Operators’ Shares. Operators’ Shares are phantom units, not actual shares of stock or the right to receive the value of stock. Operators’ Shares represent the right to receive performance-based cash compensation under the Operators’ Share Plan. The Compensation Committee determines grants of Operators’ Shares to the Senior Management Group. Operators’ Shares are awarded at a level that results in competitive total annual cash compensation relative to market pay levels, taking into consideration length of service and performance. The total of an executive officer’s base pay plus the projected value of the Operators’ Shares is generally at the 50th percentile of the market for base pay. During the year, participants receive “dividend equivalents.” These are cash payments equal to declared dividends multiplied by the number of Operators’ Shares held. Following the end of each fiscal year, the Company calculates each participant’s Operators’ Share Plan award. This is done by multiplying the Company’s annual EPS by the number of Operators’ Shares identified for that participant. This award is decreased by the total amount of dividend equivalents paid during the year to determine the final Operators’ Shares payment.
Annual Incentive Plan
Annual Incentive Plan Why AIP? The AIP is a short-term incentive granted under the Incentive Compensation Plan. The AIP is an annual cash incentive program that rewards participants for the Company's financial performance. The AIP rewards achievement of growth and profit objectives, key ESG metric initiatives, and asset management. The Compensation Committee believes the AIP further aligns performance pay to key drivers of the Company’s financial success. How the Program Works Our executive compensation program emphasizes variable pay that aligns compensation with performance and stockholder value. For the NEOs, the mix of compensation elements has always been heavily weighted toward variable, performance-based compensation, and the AIP has a strong focus on profitability and returns as well as progress towards ESG metric initiatives. Performance goals for financial elements are based on the annual operating plan approved by the Board of Directors. AIP awards for NEOs are based on the following: The CEO’s goal is based 80% on EBIT for the consolidated Company, 10% Net Sales for the Company, and 10% based on achievement of key ESG metric initiatives, such as inclusion and diversity. Participants who are heads of one of the Company’s segments (Retail, Foodservice, and International) have their goal weighted, with 25% based on segment profit for their particular segment, 10% based on Net Sales for their segment, 55% based on EBIT for the consolidated Company, and 10% based on achievement toward Total Company ESG metrics. All other NEOs have their goal based on EBIT, Net Sales, and ESG metrics for the consolidated Company. For EBIT, Segment Profit, and Net Sales, threshold begins at 80% achievement of plan with a 50% target payout; 100% payout when plan is achieved; and 200% payout at 110% achievement of EBIT and Total Company Net Sales plan or 120% achievement of segment performance (Profit or Net Sales). Awards are interpolated between the discrete percentages. The ESG metrics payout ranges are 0-200% based upon improvement in our ESG metrics. Target award amounts under the AIP for the Senior Management Group are determined by the Committee and will vary based on the participant’s position within the Company and the competitive market rate. Performance levels at threshold, target, and maximum, and their payout levels are established at the beginning of the fiscal year. The AIP modifier is a secondary measure applied to the AIP award. This modifier is based on Return on Assets (“ROA”). ROA is calculated by dividing net earnings by average total assets relative to the annual operating plan. The ROA modifier may increase or decrease the payouts associated with EBIT and Segment Profit. ROA within 90% to 110% of the plan will have no impact on the payout. ROA below 90% of the plan will decrease the payouts by 20%. ROA above 110% of the plan will increase the payout by 20%. This modifier will be removed from the 2024 plan design, as the Company increases focus instead on Return on Invested Capital (“ROIC”) in the 2024 LTIP plan design. The maximum payout under the AIP will remain 200% of the target incentive. The Committee retains discretion to adjust the amount of any award payout. The Committee has authority to modify a performance period and/or make adjustments to or waive the achievement of performance goals for unusual or infrequently occurring events. As a result, adjustments were made to remove the impact of earnings related to a minority investment in PT Garudafood Putra Putri Jaya Tbk, an arbitration ruling, costs associated with the transformation and modernization initiative and impairments. The fiscal 2023 AIP payout percentage varied for the NEOs, based upon the Total Company results and/or their segment results, as follows:
Annual Incentive Plan
| | Target Incentive | Incentive Payment | AIP Payout % of Target | | James P. Snee | $1,700,000 | $1,057,400 | 62% | | Jacinth C. Smiley | $550,000 | $342,100 | 62% | | Deanna T. Brady | $525,000 | $316,050 | 60% | | Kevin L. Myers | $300,000 | $186,600 | 62% | | Mark A. Coffey | $310,000 | $192,820 | 62% |
Annual Incentive Plan
The Total Company along with the Retail, Foodservice, and International segments did not achieve their segment profit goals for fiscal 2023. The resulting payout percentages represent this performance. The Total Company EBIT goal for fiscal 2023 was $1,347,090,000. The Total Company’s actual EBIT performance was $1,072,698,000, which was adjusted to $1,182,405,000 for the events described above, resulting in 88% achievement of the EBIT goal. The Total Company ROA goal for fiscal 2023 was 7.6%. The Total Company’s actual ROA was 5.9%, which was adjusted to 6.6% for the events described above, resulting in 86% achievement of the ROA goal. Since the actual achievement fell below the 90% to 110% range, respective payouts were reduced by 20%. Total Company Net Sales goal for fiscal 2023 was $12,892,300,000. The Total Company’s actual Net Sales performance was $12,110,010,000, resulting in 94% achievement of the Net Sales goal. Actual achievement of the ESG initiatives were at goal in some cases and below goal in other cases, resulting in a cumulative payout that was 89% of the full target opportunity. SEC rules provide that the Company does not have to disclose confidential financial information if doing so would result in competitive harm to the Company. Segment profit targets and results are competitively sensitive information that the Company maintains as confidential and proprietary information and does not publicly disclose. The Committee believes disclosure of such information would result in competitive harm to the Company. The target-level goals can be characterized as “strong performance,” meaning that based on historical performance, although attainment of this performance level is uncertain, it can be reasonably anticipated that target performance may be achieved, while the threshold goals are more likely to be achieved and the maximum goals represent more aggressive levels of performance.
Long-Term Incentive Plan
Long-Term Incentive Plan Why LTIP Performance Awards? LTIP performance awards granted under the Incentive Compensation Plan are designed to provide a small group of key employees selected by the Compensation Committee with an incentive to maximize stockholder value. LTIP performance awards provide an additional incentive opportunity based on the Company’s long-term TSR performance compared to its peers. The Committee feels that the relative performance nature of these LTIP awards balances the absolute performance of the stock options and recognizes the cyclicality of the business. In other words, if the Company underperforms versus peers in a very strong market, the options may be valuable, but the LTIP awards will be worthless. Conversely, if the Company outperforms its peers in a very weak market, the options may be worthless, but the LTIP awards would generate a reward. How the LTIP Performance Awards Work TSR measures the increase in stock price and any reinvested dividends. Each participant, including the NEOs, is given a target dollar award opportunity for the three-year performance period. In selecting the cash incentive target for each participant, the Committee considers the responsibilities of the employee, his or her contributions to the Company’s success, and competitive market data. The performance cycle for each award is three years and participants can have up to three overlapping LTIP performance awards at any time. If, during any three-year performance cycle, a subsequent target award is increased or decreased due to a promotion or job change, that change will be applied to any existing target awards as of the subsequent award’s effective date. If the Company’s actual TSR for the three-year period is at the 50th percentile of the peer group, then the target award is earned. If the Company’s actual TSR ranks highest among the peers, then the award payout equals three times the target opportunity. No award is paid unless actual TSR is above the 25th percentile of the peers. Awards will be interpolated for Company performance between the discrete points. The Committee retains discretion to reduce the amount of any award payout. The peer group for LTIP awards consists of the publicly traded food industry companies listed below.
Long-Term Incentive Plan
| LTIP Peer Companies | | | | Campbell Soup Company Clorox Company Coca-Cola Company | Hain Celestial Group, Inc. Hershey Company J.M. Smucker Company | PepsiCo Inc. Pilgrim’s Pride Corporation Post Holdings, Inc. | | ConAgra Brands, Inc. Flowers Foods, Inc. Fresh Del Monte Produce Inc. | Kellogg Company Kraft Heinz Company McCormick & Company, Inc. | Seaboard Corporation TreeHouse Foods, Inc. Tyson Foods, Inc. | | General Mills, Inc. | Mondelez International, Inc. | |
Long-Term Incentive Plan
The LTIP Peer Companies listed above were approved in July 2023 and are the same as the LTIP Peer Companies approved in July 2022, except that Sanderson Farms Inc. was removed due to its being acquired and becoming a private company. For the LTIP performance period of June 8, 2020 through June 30, 2023, the Company’s TSR was at the 19.0 percentile of its peer group, resulting in no payout. Changes to LTIP Metrics for Fiscal 2024 Beginning with fiscal 2024 grants, the LTIP performance award design will be based upon 50% relative TSR, 25% ROIC, and 25% Organic Net Sales Growth. Collective award payouts will continue to be capped at up to three times the target award based on exceptional performance. We believe this approach will provide balance to the absolute value of long-term returns and investments while continuing to recognize the importance of relative performance to our peer group. The LTIP performance cycles will change to align with our fiscal year. For this reason, there were no LTIP performance awards granted in fiscal 2023 and the fiscal 2024 grants will include a prorated transitionary target amount added to the annual grant, commensurate with the pro-rated annual amount relating to the gap in cycle timing. While the new metrics (ROIC and Organic Net Sales Growth) will be measured based on fiscal year performance over a three-year period, the relative TSR performance will be measured from June 16, 2023 (when the 2023 cycle would have started) through October 25, 2026 (the last day of fiscal 2026) to ensure no gap in the measurement of performance of that metric. The outstanding LTIP performance awards for the three-year performance cycles ending in fiscal 2024 and fiscal 2025 will stay unchanged.
Stock Incentives
Stock Incentives Why Stock? The Incentive Compensation Plan also allows the Compensation Committee to grant several types of equity awards, including stock options, restricted stock and other stock-based awards. Stock options are intended to provide long-term performance-based compensation tied specifically to increases in the price of the Company’s stock, aligning the financial interests of executives and stockholders. By comparison, RSUs convey real, immediate value to participants as of the grant date, thereby providing much stronger retention incentive than other compensation vehicles. The total equity award value for executive officers is delivered 50% in the form of stock options and 50% in RSUs. Stock options typically vest equally over a four-year period and have a term of ten years. This extended vesting period and term encourage executives to balance how business decisions made in the near-term affect the Company’s long-term stock price performance. RSUs have a three-year cliff vesting schedule, which serves as a retention incentive. Stock options and RSUs are granted annually, effective on the first Tuesday of December (effective the second Tuesday in December starting in fiscal 2024), for all eligible employees except the CEO. This practice ensures that grant dates cannot be manipulated for a more favorable exercise price or market price. The Committee determined to make the CEO’s stock option and RSUs grants effective the same date as the nonemployee directors’ restricted share grants, February 1. This date was chosen because it falls shortly after conclusion of the annual CEO evaluation process. Stock options are always granted at the market price of the Company’s stock at the date of grant. RSUs are credited with dividend equivalents in the form of additional RSUs each time a cash dividend is paid on our common stock. The declared dividends multiplied by the number of RSUs held are deemed reinvested in additional RSUs based on the market value of our common stock on the dividend payment date. Such additional RSUs are subject to the same terms as the underlying RSUs, including the timing of vesting. How Awards are Determined The Committee determines, with the assistance of its independent outside consultant, the number of options and RSUs to be granted to the Senior Management Group. The CEO adds his input and recommendations regarding grants to members of the Senior Management Group (other than himself). The Committee reviews such recommendations and determines all final option and RSU grants to the Senior Management Group. Stock option and RSUs awards generally reflect the Committee’s assessment of the influence an employee’s position has on stockholder value. The number of stock options and/or RSUs awarded may vary up or down from prior year awards based on the level of an individual executive officer’s contribution to the Company in a particular year, determined in part on the recommendation of the CEO. The Committee’s determination of stock option and RSUs grants in fiscal 2023 and in past years took into consideration the individual’s contributions to the Company during the last fiscal year, potential for contributions in the future, and as a component of competitive total compensation based on market data.
Nonqualified Deferred Compensation Plan
Nonqualified Deferred Compensation Plan Why have a NQDCP? The Company also maintains a supplemental retirement plan to replace the portion of an executive’s pension benefit that cannot be paid under the broad-based plans because of the Internal Revenue Service (“IRS”) limitation. In the same way that the SERP restores the full value of the Pension Plan, the nonqualified deferred compensation plan, the Executive Deferred Income Plan (“NQDCP”), eliminates the IRS limitations on the 401(k) Plan. The Company’s NQDCP permits eligible employees, including all NEOs, to annually defer certain compensation. This compensation includes base salary, Operators’ Shares dividend equivalents and year-end payments, AIP payments, and LTIP payments. The Company makes contributions on behalf of participants for 401(k) match amounts which could not be contributed to the 401(k) Plan because of IRS limitations. The Company also may make discretionary contributions to the participant’s deferral accounts. Deferrals of cash compensation are credited with deemed investment gains and losses. Similar to a 401(k) plan, the participant may choose from a number of investments, none of which provide above-market interest rates. Payments under the NQDCP are made on the date(s) selected by each participant in accordance with the terms of the plan or on such other date(s) as specified in the plan. Payments relating to deferrals of cash compensation are paid in cash. In connection with the NQDCP, the Company has created a grantor trust, commonly known as a “rabbi trust.” The Company is under no obligation to further fund this trust and would do so only at its discretion. The assets of the trust are intended to be used to pay benefits under the plan, but the assets of the trust are subject to the claims of general creditors of the Company. The Compensation Committee believes that the SERP and the NQDCP together provide a competitive retirement package for executives that is consistent with the retirement benefits provided to all Company employees.
ANALYSIS OF RISK ASSOCIATED WITH OUR COMPENSATION PLANS
| ● | Executive compensation is reviewed by the Compensation Committee, which is comprised of independent directors, and the independent compensation consultant. Committee self-assessments and outside advisor assessments are performed annually. |
ANALYSIS OF RISK ASSOCIATED WITH OUR COMPENSATION PLANS
| ● | Compensation pay levels and design are benchmarked against peer companies on an annual basis to ensure there is appropriate alignment to the market. The peer group used for benchmarking is also reviewed annually. |
ANALYSIS OF RISK ASSOCIATED WITH OUR COMPENSATION PLANS
| ● | Risk-mitigating design features have been embedded into the Company’s incentive plans, including the following: |
ANALYSIS OF RISK ASSOCIATED WITH OUR COMPENSATION PLANS
| o | The short-term incentive plan contains multiple performance metrics such that the performance focus is well balanced across top and bottom line results. The payout is capped at 200% of target. |
ANALYSIS OF RISK ASSOCIATED WITH OUR COMPENSATION PLANS
| o | The long-term incentive plan mix is balanced by options, restricted stock, and a cash-based plan focused on relative TSR (as well as organic net sales growth and ROIC in fiscal 2024), which together serve as performance and retention tools. Performance-based cash payouts are capped at 300% of target. |
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(7) | Total ($) | | James P. Snee | 2023 | 1,032,692 | - | 2,000,038 | 1,999,841 | 1,347,400 | 271,507 | 134,501 | 6,785,979 | | Chairman of the Board, President | 2022 | 1,000,000 | 200 | 1,750,042 | 1,749,732 | 4,733,850 | - | 244,278 | 9,478,102 | | and Chief Executive Officer | 2021 | 1,010,577 | 200 | 1,675,044 | 1,674,704 | 4,792,500 | 556,138 | 248,311 | 9,957,474 | | Jacinth C. Smiley | 2023 | 513,077 | - | 440,015 | 440,051 | 458,100 | 45,646 | 47,981 | 1,944,870 | | Executive Vice President | 2022 | 482,692 | 200 | 375,039 | 374,967 | 766,768 | 49,923 | 70,964 | 2,120,553 | | and Chief Financial Officer | 2021 | 294,231 | - | 996,819 | 175,122 | 333,527 | 73,920 | 100,617 | 1,974,236 | | Deanna T. Brady | 2023 | 527,307 | - | 400,014 | 400,232 | 432,050 | 118,640 | 36,096 | 1,914,339 | | Executive Vice President | 2022 | 466,346 | 200 | 375,039 | 374,967 | 890,610 | - | 72,364 | 2,179,526 | | | 2021 | 450,034 | 200 | 310,038 | 309,672 | 854,368 | 193,516 | 71,276 | 2,189,104 | | Kevin L. Myers | 2023 | 396,538 | - | 300,025 | 200,116 | 288,100 | 73,610 | 59,598 | 1,317,987 | | Senior Vice President | | | | | | | | | | | Mark A. Coffey | 2023 | 406,538 | - | 210,031 | 210,326 | 308,820 | 105,613 | 58,904 | 1,300,232 | | Group Vice President | 2022 | 394,808 | 200 | 180,030 | 180,312 | 621,762 | - | 59,220 | 1,436,332 |
SUMMARY COMPENSATION TABLE
| (1) Includes amounts voluntarily deferred under the Company’s Tax Deferred Investment Plan A - 401(k) and the Executive Deferred Income Plan. |
SUMMARY COMPENSATION TABLE
| (2) Consists of a discretionary bonus that was paid, in the same amount, to all other eligible employees. |
SUMMARY COMPENSATION TABLE
| (3) Consists of the aggregate grant date fair value of RSUs granted during the fiscal year, calculated in accordance with FASB ASC Topic 718. The grant date fair value is based on the NYSE closing price for the Company’s common stock on the grant date. |
SUMMARY COMPENSATION TABLE
| (4) Consists of the aggregate grant date fair value of stock options granted during the fiscal year, calculated in accordance with FASB ASC Topic 718. The grant date fair value is based on the Black-Scholes valuation model. Assumptions used to calculate these amounts are included in Note A, “Summary of Significant Accounting Policies – Stock-Based Compensation,” and Note M, “Stock-Based Compensation,” of the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 29, 2023. |
SUMMARY COMPENSATION TABLE
| (5) Consists of Operators’ Share Plan and AIP incentive payments earned during the fiscal year, the majority of which were paid subsequent to fiscal year end, and payouts under the LTIP performance awards, as shown in the table below. For the LTIP performance period June 8, 2020 through June 30, 2023, the Company’s TSR was at the 19.0 percentile of its peer group, resulting in no payout. Includes amounts voluntarily deferred under the Executive Deferred Income Plan. |
SUMMARY COMPENSATION TABLE
| Name | Year | Operators’ Share Plan Payment ($) | AIP Payment ($) | LTIP Payout ($) | Total Non-Equity Incentive Plan Compensation ($) | | James P. Snee | 2023 | 290,000 | 1,057,400 | - | 1,347,400 | | | 2022 | 364,000 | 1,369,600 | 3,000,250 | 4,733,850 | | | 2021 | 332,000 | 1,221,000 | 3,239,500 | 4,792,500 | | Jacinth C. Smiley | 2023 | 116,000 | 342,100 | - | 458,100 | | | 2022 | 145,600 | 440,840 | 180,328 | 766,768 | | | 2021 | 75,170 | 230,377 | 27,980 | 333,527 | | Deanna T. Brady | 2023 | 116,000 | 316,050 | - | 432,050 | | | 2022 | 145,600 | 418,475 | 326,535 | 890,610 | | | 2021 | 132,800 | 359,365 | 362,203 | 854,368 | | Kevin L. Myers | 2023 | 101,500 | 186,600 | - | 288,100 | | Mark A. Coffey | 2023 | 116,000 | 192,820 | - | 308,820 | | | 2022 | 145,600 | 243,960 | 232,202 | 621,762 |
SUMMARY COMPENSATION TABLE
| (6) Consists of the annual increase in the actuarial present value of accumulated benefits under the Pension Plan and the SERP. In fiscal 2022, the annual change in the actuarial present value of accumulated benefits under the Pension Plan and the SERP was a negative amount for the following NEOs: Mr. Snee – ($1,282,399); Ms. Brady – ($671,820); and Mr. Coffey – ($793,428). In accordance with SEC rules, the present value was determined using the same assumptions applicable for valuing pension benefits for purposes of our financial statements. See “Pension Benefits” on page 34. No NEOs had above-market or preferential earnings on deferred compensation. |
SUMMARY COMPENSATION TABLE
| (7) All other compensation for fiscal 2023 includes for all the NEOs (except as noted) the following: (a) Company contributions to the Joint Earnings Profit Sharing Trust on behalf of participants, (b) Company matching payments under the Hormel Tax Deferred Investment Plan A - 401(k), (c) for Dr. Myers, Company contributions to the Executive Deferred Income Plan on behalf of participants for 401(k) match amounts which could not be contributed to the 401(k) Plan because of IRS limitations, (d) the aggregate incremental cost to the Company of a vehicle provided for business and personal use, (e) for all the NEOs except for Ms. Brady and Dr. Myers, the aggregate incremental cost to the Company of use of a Company-owned condominium in Vail, Colorado, (f) for all the NEOs except for Mr. Snee, costs of physical medical examinations paid for by the Company, and (g) for Mr. Snee, the aggregate incremental cost to the Company of Mr. Snee’s use of Company aircraft for personal travel and to attend outside public company board meetings. |
SUMMARY COMPENSATION TABLE
The Company contributions to the Joint Earnings Profit Sharing Trust were as follows: Mr. Snee - $ 24,695; Ms. Smiley - $12,230; Ms. Brady - $13,053; Dr. Myers - $9,408; and Mr. Coffey - $9,643. The Company matching payments under the Hormel Tax Deferred Investment Plan A - 401(k) were as follows: Mr. Snee - $ 13,200; Ms. Smiley - $10,812; Ms. Brady - $12,206; Dr. Myers - $15,233; and Mr. Coffey - $13,200. The Company contributions to the Executive Deferred Income Plan for 401(k) match amounts which could not be contributed to the 401(k) Plan because of IRS limitations were $13,139 for Dr. Myers. The Company matching payments under the Hormel Tax Deferred Investment Plan A - 401(k) and contributions to the Executive Deferred Income Plan for 401(k) match amounts which could not be contributed to the 401(k) Plan because of IRS limitations were atypical due to a change in plan year from the Company’s fiscal year to the calendar year, which resulted in a short plan year from October 31, 2022 to December 31, 2022. The aggregate incremental cost to the Company of Mr. Snee’s use of Company aircraft for personal travel and to attend outside public company board meetings was $ 80,093. This cost includes landing fees, parking, crew travel expenses, aircraft fuel, and maintenance expenses. The following table describes each stock option and non-equity incentive plan award made to each NEO in fiscal 2023.
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2023
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2023
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2023
| | | | | Estimated Future Payouts Under Non- Equity Incentive Plan Awards | | | All Other Stock | All Other | | Grant | | | | Award Approval | Operators' Shares(1) | Threshold | Target | Maximum | Awards: Number of Shares of Stock or Units | Option Awards: Number of Securities Underlying Options | Exercise or Base Price of Option Awards | Date Fair Value of Stock and Option Awards | | Name | Grant Date | Date | (#) | ($) | ($) | ($) | (#) | (#) | ($/Sh.) | ($) | | James P. Snee | | 1/31/2023(1) | 200,000 | | 364,000 | | | | | | | | | 1/31/2023(2) | | 850,000 | 1,700,000 | 3,400,000 | | | | | | | 2/1/2023(3) | 1/31/2023 | | | | | 44,112 | | | 2,000,038 | | | 2/1/2023(4) | 1/31/2023 | | | | | | 208,100 | 45.34 | 1,999,841 | | Jacinth C. Smiley | | 11/21/2022(1) | 80,000 | | 145,600 | | | | | | | | | 11/21/2022(2) | | 275,000 | 550,000 | 1,100,000 | | | | | | | 12/6/2022(3) | 11/21/2022 | | | | | 9,394 | | | 440,015 | | | 12/6/2022(4) | 11/21/2022 | | | | | | 43,100 | 46.84 | 440,051 | | Deanna T. Brady | | 11/21/2022(1) | 80,000 | | 145,600 | | | | | | | | | 11/21/2022(2) | | 262,500 | 525,000 | 1,050,000 | | | | | | | 12/6/2022(3) | 11/21/2022 | | | | | 8,540 | | | 400,014 | | | 12/6/2022(4) | 11/21/2022 | | | | | | 39,200 | 46.84 | 400,232 | | Kevin L. Myers | | 11/21/2022(1) | 70,000 | | 127,400 | | | | | | | | | 11/21/2022(2) | | 150,000 | 300,000 | 600,000 | | | | | | | 12/6/2022(3) | 11/21/2022 | | | | | 4,270 | | | 200,007 | | | 12/6/2022(4) | 11/21/2022 | | | | | | 19,600 | 46.84 | 200,116 | | | 10/3/2023(3) | 9/23/2023 | | | | | 2,653 | | | 100,018 | | Mark A. Coffey | | 11/21/2022(1) | 80,000 | | 145,600 | | | | | | | | | 11/21/2022(2) | | 155,000 | 310,000 | 620,000 | | | | | | | 12/6/2022(3) | 11/21/2022 | | | | | 4,484 | | | 210,031 | | | 12/6/2022(4) | 11/21/2022 | | | | | | 20,600 | 46.84 | 210,326 |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2023
| (1) The “Operators’ Shares” column discloses the number of Operators’ Shares granted to each NEO for fiscal 2023. The “Target” column shows the estimated possible Operators’ Share payment for fiscal 2023 based on fiscal 2022 EPS of $1.82. In accordance with SEC rules, this estimated possible payment is based on the previous fiscal year’s performance since the fiscal 2023 EPS results are not determinable when the award is made at the beginning of fiscal 2023. The actual Operators’ Share payment earned in fiscal 2023 for each NEO based on fiscal 2023 EPS of $1.45 was paid subsequent to fiscal year end and is included under “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page 28. See “Operators’ Share Incentive Plan” on page 21 for a description of Operators’ Shares. |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2023
| (2) Consists of AIP performance awards granted in fiscal 2023. These awards include target amounts and are subject to threshold and maximum payouts under the AIP. The actual AIP payment earned in fiscal 2023 for each NEO was paid subsequent to fiscal year end and is included under “Non-Equity Incentive Plan Compensation” in the Summary Compensation Table on page 28. See “Annual Incentive Plan” on page 22 for a description of the AIP and AIP payouts for fiscal 2023. |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2023
| (3) Consists of RSUs granted under the Company’s Incentive Compensation Plan. These RSUs vest in full on the third anniversary of the grant date. The grant date fair value is included under “Stock Awards” in the Summary Compensation Table on page 28. See “Potential Payments Upon Termination or Change-in-Control” on page 34 for a discussion of how RSUs are treated under various termination scenarios. |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2023
| (4) Consists of stock options granted under the Company’s Incentive Compensation Plan. These stock options vest at 25% per year starting on the first anniversary of the grant date. The grant date fair value is included under “Option Awards” in the Summary Compensation Table on page 28. See “Potential Payments Upon Termination or Change-in-Control” on page 34 for a discussion of how stock options are treated under various termination scenarios. |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2023
The following table summarizes the total outstanding equity awards as of October 29, 2023 for each of the NEOs.
OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR END
OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR END
OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR END
| | OPTION AWARDS | | | | STOCK AWARDS | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1)(2) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(3)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | | James P. Snee | 107,000 | - | 37.755 | 12/1/2025 | | | | | 277,400 | - | 35.62 | 2/1/2027 | | | | | 365,900 | - | 34.08 | 2/1/2028 | | | | | 335,000 | - | 42.00 | 2/1/2029 | | | | | 153,900 | 51,300 | 47.43 | 2/3/2030 | | | | | 111,350 | 111,350 | 46.92 | 2/1/2031 | | | | | 52,450 | 157,350 | 47.11 | 2/1/2032 | | | | | - | 208,100 | 45.34 | 2/1/2033 | | | | | | | | | 37,805 | 1,186,710 | | | | | | | 38,497 | 1,208,413 | | | | | | | 44,733 | 1,404,164 | | Jacinth C. Smiley | 10,350 | 10,350 | 48.34 | 6/1/2031 | | | | | 13,725 | 41,175 | 42.43 | 12/7/2031 | | | | | - | 43,100 | 46.84 | 12/6/2032 | | | | | | | | | 21,723 | 681,878 | | | | | | | 9,210 | 289,111 | | | | | | | 9,585 | 300,883 | | Deanna T. Brady | 51,600 | - | 26.38 | 12/2/2024 | | | | | 39,000 | - | 37.755 | 12/1/2025 | | | | | 51,300 | - | 33.31 | 12/6/2026 | | | | | 46,900 | - | 37.10 | 12/5/2027 | | | | | 35,900 | - | 44.91 | 12/4/2028 | | | | | 23,475 | 7,825 | 45.54 | 12/3/2029 | | | | | 20,700 | 20,700 | 47.53 | 12/1/2030 | | | | | 13,725 | 41,175 | 42.43 | 12/7/2031 | | | | | - | 39,200 | 46.84 | 12/6/2032 | | | | | | | | | 6,944 | 217,961 | | | | | | | 9,210 | 289,111 | | | | | | | 8,714 | 273,530 | | Kevin L. Myers | 34,800 | - | 26.38 | 12/2/2024 | | | | | 26,000 | - | 37.755 | 12/1/2025 | | | | | 8,100 | - | 37.91 | 4/25/2026 | | | | | 50,600 | - | 33.31 | 12/6/2026 | | | | | 46,900 | - | 37.10 | 12/5/2027 | | | | | 35,300 | - | 44.91 | 12/4/2028 | | | | | 17,100 | 5,700 | 45.54 | 12/3/2029 | | | | | 12,050 | 12,050 | 47.53 | 12/1/2030 | | | | | 6,950 | 20,850 | 42.43 | 12/7/2031 | | | | | - | 19,600 | 46.84 | 12/6/2032 | | | | | | | | | 4,032 | 126,573 | | | | | | | 532 | 16,707 | | | | | | | 4,666 | 146,469 | | | | | | | 4,357 | 136,765 | | | | | | | 2,653 | 83,278 |
OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR END
| | OPTION AWARDS | | | | STOCK AWARDS | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable(1)(2) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(3)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | | Mark A. Coffey | 30,800 | - | 26.38 | 12/2/2024 | | | | | 20,200 | - | 37.755 | 12/1/2025 | | | | | 24,500 | - | 33.31 | 12/6/2026 | | | | | 28,900 | - | 37.10 | 12/5/2027 | | | | | 23,700 | - | 44.91 | 12/4/2028 | | | | | 12,675 | 4,225 | 45.54 | 12/3/2029 | | | | | 9,350 | 9,350 | 47.53 | 12/1/2030 | | | | | 900 | 900 | 48.34 | 6/1/2031 | | | | | 6,600 | 19,800 | 42.43 | 12/7/2031 | | | | | - | 20,600 | 46.84 | 12/6/2032 | | | | | | | | | 3,136 | 98,438 | | | | | | | 532 | 16,707 | | | | | | | 328 | 10,284 | | | | | | | 4,421 | 138,783 | | | | | | | 4,575 | 143,619 |
OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR END
| (1) Stock option grants generally vest in four equal annual installments, starting with one-fourth of the grant vesting on the first anniversary of the grant date. The stock options have a term of ten years. The grant date is thus ten years prior to the option expiration date shown in this table. Specific vesting dates are listed in footnote 2 below. See “Potential Payments Upon Termination or Change-in-Control” on page 34 for a discussion of how stock options are treated under various termination scenarios. |
OUTSTANDING EQUITY AWARDS AT FISCAL 2023 YEAR END
| (2) The table below shows the vesting schedule for all unexercisable options held as of October 29, 2023. These options vest on the anniversary of the grant date in the year indicated. For example, the December 6, 2022 option grant for Ms. Smiley vested as to 10,775 shares on December 6, 2023 and will vest as to 10,775 shares on each of December 6, 2024, December 6, 2025 and December 6, 2026. |
OPTION EXERCISES AND STOCK VESTED FOR FISCAL 2023
OPTION EXERCISES AND STOCK VESTED FOR FISCAL 2023
OPTION EXERCISES AND STOCK VESTED FOR FISCAL 2023
| | OPTION AWARDS | | STOCK AWARDS | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized Upon Exercise ($)(1) | Number of Shares Acquired on Vesting (#)(2) | Value Realized On Vesting ($)(3) | | James P. Snee | - | - | 36,236 | 1,639,315 | | Jacinth C. Smiley | - | - | - | - | | Deanna T. Brady | - | - | 5,602 | 266,857 | | Kevin L. Myers | 10,400 | 132,426 | 4,084 | 194,561 | | Mark A. Coffey | 31,400 | 549,814 | 3,034 | 144,541 |
OPTION EXERCISES AND STOCK VESTED FOR FISCAL 2023
| (1) Amount is the difference between the market price (current NYSE price or NYSE current day closing price, depending on exercise method) of the Company stock at the time of exercise and the exercise price of the options. |
OPTION EXERCISES AND STOCK VESTED FOR FISCAL 2023
| (2) RSUs vested includes dividend equivalents in the form of additional RSUs that accrued during the vesting period. |
OPTION EXERCISES AND STOCK VESTED FOR FISCAL 2023
| (3) The value realized is calculated using the closing price of the Company’s stock on the vesting date. |
OPTION EXERCISES AND STOCK VESTED FOR FISCAL 2023
The following table shows the present value of accumulated benefits that NEOs are entitled to under the Pension Plan and SERP.
PENSION BENEFITS
PENSION BENEFITS
PENSION BENEFITS
| Name | Plan Name | Number of Years Credited Service (#) | Present Value of Accumulated Benefit ($) | Payments During Last Fiscal Year ($) | | James P. Snee(1) | Pension Plan | 34-6/12 | 785,619 | - | | | SERP | 34-6/12 | 3,128,536 | - | | Jacinth C. Smiley | Pension Plan | 2-7/12 | 49,334 | - | | | SERP | 2-7/12 | 120,155 | - | | Deanna T. Brady(1) | Pension Plan | 27-2/12 | 707,982 | - | | | SERP | 27-2/12 | 1,107,197 | - | | Kevin L. Myers(1) | Pension Plan | 22-3/12 | 537,779 | - | | | SERP | 22-3/12 | 580,147 | - | | Mark A. Coffey(1) | Pension Plan | 38-4/12 | 1,138,547 | - | | | SERP | 38-4/12 | 1,296,936 | - |
PENSION BENEFITS
| (1) Mr. Coffey is eligible for retirement under both the Pension Plan and the SERP. Mr. Snee, Ms. Brady and Dr. Myers are eligible for early retirement under both the Pension Plan and the SERP. The retirement provisions of these plans are described under “Pension Plan” on page 25 and “Supplemental Executive Retirement Plan” on page 26. |
PENSION BENEFITS
In accordance with SEC rules, the present value of accumulated benefits that NEOs are entitled to under these plans was determined using the same assumptions applicable for valuing pension benefits for purposes of our financial statements. See Note G, “Pension and Other Post-retirement Benefits,” of the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended October 29, 2023. The material terms of these plans are described under “Pension Plan” on page 25 and “Supplemental Executive Retirement Plan” on page 26. The following table shows information about each NEO’s participation in the Company’s Executive Deferred Income Plan.
NONQUALIFIED DEFERRED COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION
| Name | Executive Contributions in Last Fiscal Year ($)(1) | Company Contributions in Last Fiscal Year ($)(1) | Aggregate Earnings in Last Fiscal Year ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at October 29, 2023 ($)(1) | | James P. Snee | - | - | 175,979 | - | 4,583,129 | | Jacinth C. Smiley | 486,758 | - | 58,567 | - | 724,757 | | Deanna T. Brady | - | - | 12,997 | - | 325,525 | | Kevin L. Myers | - | 13,139 | 44,135 | - | 1,316,121 | | Mark A. Coffey | - | - | 24,628 | - | 433,863 |
NONQUALIFIED DEFERRED COMPENSATION
| (1) The following table identifies amounts that have already been reported as compensation in our Summary Compensation Table for the current and prior years: |
NONQUALIFIED DEFERRED COMPENSATION
| Name | Amount of Fiscal 2023 Contributions and Earnings Reported as Compensation in Fiscal 2023 Summary Compensation Table ($) | Amounts in “Aggregate Balance at October 29, 2023” Column Reported as Compensation in Summary Compensation Tables for Prior Years ($) | | James P. Snee | - | 4,096,689 | | Jacinth C. Smiley | 486,758 | 195,980 | | Deanna T. Brady | - | 149,998 | | Kevin L. Myers | 13,139 | - | | Mark A. Coffey | - | 17,614 |
NONQUALIFIED DEFERRED COMPENSATION
The material terms of the Company’s Executive Deferred Income Plan are described under “Nonqualified Deferred Compensation Plan” on page 26.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL Our executive officers do not have employment or severance agreements with the Company. Consequently, no executive officer has any right to cash severance of any kind, except for Ms. Smiley. The Company’s offer of employment to Ms. Smiley included a severance payment in the event of the involuntary termination without cause of her employment with the Company. This severance payment includes the value of her June 1, 2021 RSU grant, June 1, 2021 stock option grant and three initial prorated LTIP performance awards, to the extent those awards do not vest prior to the termination of her employment. Our stock option awards include standard provisions that result in the vesting or forfeiture of awards upon termination of employment, depending on the reason for termination. These provisions are summarized as follows:
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | All stock options vest immediately upon death of the executive; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Qualified retirement or disability results in the continued vesting of stock options per the original vesting schedule, except that all stock options granted under the Company’s 2009 Long-Term Incentive Plan (the “Prior Plan”) vest immediately upon disability; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Vesting ends upon voluntary termination of employment and all stock options expire three months after such termination, except that stock options granted under the Prior Plan continue to vest during this three month post termination period; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Upon a change in control of the Company via a corporate transaction such as a merger, a sale of assets, or a tender or exchange offer, if the stock options are not continued or replaced by the surviving entity, then the stock options fully vest and the Compensation Committee may in its discretion permit some or all stock options to be exchanged for a cash payment; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Upon a change in control of the Company that does not involve a corporate transaction, the Compensation Committee may in its discretion take action which the Committee deems appropriate, including accelerating vesting of stock options or permitting the exchange of stock options for a cash payment; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | For stock options granted under the Prior Plan, upon a change in capital structure of the Company, including a change in control of the Company via a merger, a sale of assets, or a tender or exchange offer, the Compensation Committee may in its discretion take action which the Committee deems appropriate, including accelerating vesting of stock options or permitting the exchange of stock options for a cash payment or substitute stock options; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Stock options are forfeited immediately upon termination for cause; and |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Stock options will be cancelled upon (1) a material breach of the Company’s Code of Ethical Business Conduct, (2) a breach of any nondisclosure or similar obligation, or (3) rendering services for any organization or engaging directly or indirectly in any business that is competitive with, prejudicial to or in conflict with the interests of the Company while employed by the Company and for purposes of clauses (1) and (2) only, for the one-year period immediately following termination of such employment. For stock options granted under the Prior Plan, stock options will be cancelled upon rendering services for any organization or engaging directly or indirectly in any business that is competitive with, prejudicial to or in conflict with the interests of the Company and stock options are forfeited immediately upon breach of a confidentiality or non-compete agreement, as determined by the Compensation Committee. All NEOs have signed the Company’s current form of confidentiality, non-compete, non-solicitation and invention assignment agreement. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
Our RSU awards include standard provisions that result in the vesting or forfeiture of awards upon termination of employment, depending on the reason for termination. These provisions are summarized as follows:
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | All RSUs vest immediately upon death, qualified retirement or disability of the executive; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | All unvested RSUs are forfeited upon termination of employment for reasons other than the death, qualified retirement or disability of the executive; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Upon a change in control of the Company via a corporate transaction such as a merger, a sale of assets, or a tender or exchange offer, if the RSUs are not continued or replaced by the surviving entity, then the RSUs fully vest and the Compensation Committee may in its discretion permit some or all RSUs to be exchanged for a cash payment; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Upon a change in control of the Company that does not involve a corporate transaction, the Compensation Committee may in its discretion take action which the Committee deems appropriate, including accelerating vesting of RSUs or permitting the exchange of RSUs for a cash payment; and |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | RSUs will be cancelled upon (1) a material breach of the Company’s Code of Ethical Business Conduct, (2) a breach of any nondisclosure or similar obligation or (3) rendering services for any organization or engaging directly or indirectly in any business that is competitive with, prejudicial to or in conflict with the interests of the Company while employed by the Company and for purposes of clauses (1) and (2) only, for the one-year period immediately following termination of such employment. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
Our LTIP performance award agreements include standard provisions that result in the vesting or forfeiture of awards upon termination of employment, depending on the reason for termination. These provisions are summarized as follows:
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Death results in calculation of an award as if the performance period ended on the date of death and payment is made to the employee’s beneficiary of a prorated amount based on the employee’s actual period of employment during the performance period; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | A change in control of the Company results in calculation of an award as if the performance period ended on the date the change in control occurred and payment of the award to the employee is made without proration; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Qualified retirement or disability results in a payment after the end of the performance period equal to the amount that would have been earned over the entire performance period prorated based on the employee’s actual period of employment; |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | Termination of employment for any reason other than qualified retirement, disability or death results in forfeiture of all award rights; and |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
| ● | LTIP awards will be cancelled upon (1) a material breach of the Company’s Code of Ethical Business Conduct, (2) a breach of any nondisclosure or similar obligation or (3) rendering services for any organization or engaging directly or indirectly in any business that is competitive with, prejudicial to or in conflict with the interests of the Company while employed by the Company and for purposes of clauses (1) and (2) only, for the one-year period immediately following termination of such employment. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
The following table shows the potential payment of LTIP performance awards, the potential value of unexercisable stock option awards and the potential value of unvested RSUs for the NEOs upon death, qualified retirement, disability, or change in control of the Company as of October 29, 2023.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
| | Death | Qualified Retirement or Disability | | | Change in Control | | | Potential | Potential Value or Payment ($)(1)(3)(5)(6) | | | Potential | | | Value or Payment | Threshold | Target | Maximum | Value or Payment | | Name | ($)(1)(2) (3)(4) | ($) | ($) | ($) | ($)(1)(2)(3)(4)(7) | | James P. Snee | | | | | | | Stock Options | - | - | - | - | - | | RSUs | 3,799,288 | 3,799,288 | 3,799,288 | 3,799,288 | 3,799,288 | | LTIP award (6/21-6/24) | - | 1,323,250 | 2,646,500 | 7,939,500 | - | | LTIP award (6/22-6/25) | - | 805,000 | 1,610,000 | 4,830,000 | - | | Total | 3,799,288 | 5,927,538 | 8,055,788 | 16,568,788 | 3,799,288 | | Jacinth C. Smiley(8) | | | | | | | Stock Options | - | - | - | - | - | | RSUs | 1,271,872 | 1,271,872 | 1,271,872 | 1,271,872 | 1,271,872 | | LTIP award (6/21-6/24) | - | 174,983 | 349,965 | 1,049,895 | - | | LTIP award (6/22-6/25) | - | 103,500 | 207,000 | 621,000 | - | | Total | 1,271,872 | 1,550,355 | 1,828,837 | 2,942,767 | 1,271,872 | | Deanna T. Brady | | | | | | | Stock Options | - | - | - | - | - | | RSUs | 780,602 | 780,602 | 780,602 | 780,602 | 780,602 | | LTIP award (6/21-6/24) | - | 152,075 | 304,150 | 912,450 | - | | LTIP award (6/22-6/25) | - | 115,000 | 230,000 | 690,000 | - | | Total | 780,602 | 1,047,677 | 1,314,752 | 2,383,052 | 780,602 | | Kevin L. Myers | | | | | | | Stock Options | - | - | - | - | - | | RSUs | 509,792 | 509,792 | 509,792 | 509,792 | 509,792 | | LTIP award (6/21-6/24) | - | 90,850 | 181,700 | 545,100 | - | | LTIP award (6/22-6/25) | - | 55,200 | 110,400 | 331,200 | - | | Total | 509,792 | 655,842 | 801,892 | 1,386,092 | 509,792 | | Mark A. Coffey | | | | | | | Stock Options | - | - | - | - | - | | RSUs | 407,831 | 407,831 | 407,831 | 407,831 | 407,831 | | LTIP award (6/21-6/24) | - | 104,675 | 209,350 | 628,050 | - | | LTIP award (6/22-6/25) | - | 63,250 | 126,500 | 379,500 | - | | Total | 407,831 | 575,756 | 743,681 | 1,415,381 | 407,831 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
| (1) Stock options are valued based on the difference between the $31.39 closing price of the Company’s stock on October 29, 2023, the last trading day of the fiscal year, and the applicable exercise price of the stock options. Stock options with an exercise price in excess of the $31.39 closing price on October 29, 2023 have no value for this purpose. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
| (2) Amounts shown for stock options represent the value of all unexercisable stock options. Exercisable stock options would not be affected by this termination event. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
| (3) RSUs are valued based on the $31.39 closing price of the Company’s stock on October 29, 2023, the last trading day of the fiscal year. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
| (4) Payments for LTIP performance awards upon death or change in control of the Company are based on actual Company performance through October 29, 2023. Payments for such awards upon death are prorated based on employment from the beginning of the performance period through October 29, 2023. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
| (5) While unexercisable stock options granted under the Prior Plan vest immediately upon disability, all outstanding stock options granted under the Prior Plan have vested and are exercisable as of October 29, 2023 and thus would not be affected by this termination event. Unexercisable stock options granted under the Prior Plan continue to vest per the original vesting schedule upon qualified retirement and such stock options thus would not be affected by this termination event. Unexercisable stock options granted under the 2018 Plan continue to vest per the original vesting schedule upon qualified retirement or disability and such stock options thus would not be affected by these termination events. Exercisable stock options would not be affected by these termination events. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
| (6) Qualified retirement or disability results in a payment for LTIP performance awards after the end of the performance period equal to the amount that would have been earned over the entire performance period prorated based on the employee’s actual period of employment. These columns thus show the potential threshold, target and maximum payments for such awards, each prorated based on employment from the beginning of the performance period through October 29, 2023. The actual payment would not be determined until after the performance period end date for each award. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
| (7) For this table, it is assumed that the Compensation Committee exercised its discretion to accelerate vesting of all stock options and RSUs upon a change in control of the Company. Alternative assumptions which provide the same result are that the Committee exercised its discretion to permit the exchange of stock options and RSUs for a cash payment (with a value equal to the difference between the closing price of the Company’s stock on October 29, 2023, the last trading day of the fiscal year, and the applicable exercise price of the stock options and a value equal to that closing price for RSUs) or that the stock options and RSUs fully vested upon a change in control of the Company via a corporate transaction where the stock options and RSUs are not continued or replaced by the surviving entity. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
| (8) The Company’s offer of employment to Ms. Smiley included a severance payment in the event of the involuntary termination without cause of her employment with the Company. This severance payment includes the value of her June 1, 2021 RSU grant, June 1, 2021 stock option grant and three initial prorated LTIP performance awards, to the extent those awards do not vest prior to the termination of employment. Ms. Smiley’s three initial prorated LTIP performance awards have vested and been paid out, and thus these awards no longer have value for the severance payment. In addition, one-half of Ms. Smiley’s June 1, 2021 stock option grant has vested and thus no longer has value for the severance payment. The total value of Ms. Smiley’s severance payment for this event is $995,119 as of October 29, 2023. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL AT FISCAL 2023 YEAR END
Following termination of employment for any reason, our executive officers receive payment of retirement benefits and nonqualified deferred compensation benefits under the plans in which they participate. The value of those benefits is set forth in the sections above entitled “Pension Benefits” and “Nonqualified Deferred Compensation.” Upon termination of employment caused by the death of an executive officer, the SIPE would provide a death benefit to the executive’s survivors. The value of those benefits is described under “Survivor Income Protection Plan” on page 27.
CEO PAY RATIO DISCLOSURE
CEO PAY RATIO DISCLOSURE We determined that the fiscal 2023 annual total compensation of the median compensated employee of our adjusted employee population employed as of October 29, 2023, other than our CEO, James P. Snee, was $52,099. Mr. Snee’s fiscal 2023 annual total compensation, as reported in the Summary Compensation Table on page 28, was $6,785,979. Therefore, the ratio of our CEO’s annual total compensation to the median employee’s annual total compensation was 130 to 1. As of October 29, 2023, our total employee population consisted of 20,055 employees, of which 18,369 were located in the United States and 1,686 were located in non-U.S. jurisdictions. Pursuant to SEC rules, we excluded 23 employees from the following countries under the de minimis exemption: Australia (8); Canada (4); Hong Kong (1); Japan (2); Mexico (1); Philippines (4); and Singapore (3). After applying this exemption, our adjusted employee population used for purposes of identifying the median employee consisted of 20,032 employees of which 18,369 were located in the United States and 1,663 were located in non-U.S. jurisdictions. To identify the median compensated employee, we used total cash compensation, including base salary, actual bonus paid and overtime and allowances, as applicable, for fiscal 2023. This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll and employment records and the methodology described above.
PAY VERSUS PERFORMANCE DISCLOSURE
PAY VERSUS PERFORMANCE DISCLOSURE As required by the pay versus performance rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Rule 402(v) of Regulation S-K, the Company is providing the following information regarding the relationship between “compensation actually paid” to our NEOs and certain of our financial performance metrics for each of the past three fiscal years. For a discussion of our compensation program and how our Compensation Committee seeks to align pay with performance, please refer to the Compensation Discussion and Analysis section starting on page 18.
Pay Versus Performance Table
Pay Versus Performance Table The following table sets forth additional compensation information for our CEO and our remaining NEOs (“Other NEOs”) in addition to TSR, net income, and EBIT performance results for fiscal 2021, 2022, and 2023.
Pay Versus Performance Table
| | | | | | Year-end value of $100 invested(3) on 10/25/2020 in: | | | | | Year | Summary Comp. Table Total for CEO ($)(1) | Comp. Actually Paid to CEO ($)(1) (2) | Average Summary Comp. Table Total for Non-CEO NEOs ($)(1) | Average Comp. Actually Paid to Non- CEO NEOs ($)(1) (2) | Hormel Foods Corp. ($) | S&P 500 Packaged Foods & Meats ($)(4) | Net Income (in millions) ($) | EBIT(5) (in millions) ($) | | 2023 | 6,785,979 | 3,794,875 | 1,619,357 | 1,072,900 | 67.95 | 105.48 | 794 | 1,073 | | 2022 | 9,478,102 | 10,172,606 | 1,567,860 | 1,752,171 | 98.81 | 121.58 | 1,000 | 1,312 | | 2021 | 9,957,474 | 10,718,861 | 2,144,105 | 2,100,469 | 87.16 | 104.50 | 909 | 1,122 |
Pay Versus Performance Table
| (1) For 2021, 2022, and 2023 the CEO was James P. Snee. The Other NEOs were as follows: |
Pay Versus Performance Table
| a. | 2021: James N. Sheehan, Deanna T. Brady, Jacinth C. Smiley, Glenn R. Leitch, and Lori J. Marco. |
Pay Versus Performance Table
| b. | 2022: Deanna T. Brady, Jacinth C. Smiley, Lori J. Marco, Mark A. Coffey, and James N. Sheehan. |
Pay Versus Performance Table
| c. | 2023: Jacinth C. Smiley, Deanna T. Brady, Kevin L. Myers, and Mark A. Coffey. |
Pay Versus Performance Table
| (2) See the following table for details on the calculation of compensation actually paid. |
Pay Versus Performance Table
| (3) Company and peer group TSR for each year reflects what the cumulative value of $100 would be, including reinvestment of dividends, if such amount were invested on October 25, 2020. |
Pay Versus Performance Table
| (4) For purposes of the table, the Company’s peer group is the S&P 500 Packaged Foods & Meats, as reflected in our shareholder return performance graph in our Annual Report on Form 10-K, which was filed with the SEC on December 6, 2023. |
Pay Versus Performance Table
| (5) Our company-selected measure, which is the measure we believe represents the most important financial performance not otherwise presented in the table above that we use to link compensation actually paid to our NEOs for fiscal 2023 to our company’s performance, is EBIT. See our Annual Report on Form 10-K for a reconciliation of GAAP measures to non-GAAP adjusted measures. |
Pay Versus Performance Table
Compensation actually paid was determined by making the following adjustments:
Pay Versus Performance Table
| | 2023 | | 2022 | | 2021 | | | | CEO ($) | Average of Other NEOs ($) | CEO ($) | Average of Other NEOs ($) | CEO ($) | Average of Other NEOs ($) | | Summary Compensation Table Total | 6,785,979 | 1,619,357 | 9,478,102 | 1,567,860 | 9,957,474 | 2,144,105 | | Adjustments for Defined Benefit and Actuarial Pension Plans: | | | | | | | | Subtraction: Aggregate change in the actuarial present value of accumulated benefits under all defined benefit and pension plans reported in the Summary Compensation Table | (271,507) | (85,877) | -- | (9,985) | (556,138) | (205,792) | | Addition: Current year service cost | 192,538 | 53,419 | 375,753 | 68,584 | 357,148 | 82,976 | | Subtraction: Prior service cost | -- | -- | (300,808) | (19,715) | -- | -- | | Total Adjustments for Pensions: | (78,969) | (32,458) | 74,945 | 38,884 | (198,990) | (122,816) | | Adjustments for Stock and Option Awards(A): | | | | | | | | Subtraction: Summary Compensation Table Amounts of stock and option awards(B) | (3,999,879) | (650,203) | (3,499,774) | (448,046) | (3,349,748) | (739,952) | | Addition: Year-end fair value of awards granted in the current year that are outstanding and unvested at year-end(C) (D) | 2,860,067 | 437,011 | 3,564,130 | 587,654 | 3,285,965 | 621,125 | | Addition (Subtraction): The difference between fair value of awards from the end of the prior fiscal year to the end of the covered fiscal year for awards granted in any prior fiscal year that are outstanding and unvested at the end of the covered fiscal year(C) (D) | (1,743,540) | (347,553) | 398,622 | 49,268 | 439,846 | 50,759 | | Addition: Fair values at vest date for awards granted and vested in covered fiscal year(C) (D) (E) | -- | -- | -- | -- | -- | 78,005 | | Addition (Subtraction): The change in fair value from the end of the prior fiscal year to the vesting date for awards granted in any prior fiscal year which vested during the covered fiscal year(C) (D) | (28,783) | 46,746 | 156,581 | (43,449) | 584,314 | 69,242 | | Total Adjustments for Stock and Option Awards | (2,912,135) | (513,999) | 619,559 | 145,427 | 960,377 | 79,180 | | Compensation Actually Paid | 3,794,875 | 1,072,900 | 10,172,606 | 1,752,171 | 10,718,861 | 2,100,469 |
Pay Versus Performance Table
| (A) Certain NEOs in each of the covered fiscal years are retirement eligible. Adjustments to the vesting of RSU awards, which accelerate upon a qualified retirement, have not been made for retirement-eligible NEOs that remained employed during the covered year, as those awards remain subject to forfeiture until a termination of service due to retirement occurs. Adjustments related to retirement for the purposes of calculating compensation actually paid were only made for NEOs who retired during any of the covered fiscal years, and includes the accelerated vesting of RSUs and accrued dividend equivalents. Stock options continue to vest after retirement as scheduled per the award agreements and are considered outstanding upon the NEO’s retirement for purposes of these pay versus performance disclosures. |
Pay Versus Performance Table
| (B) Summary Compensation Table values include the grant date fair values of equity calculated in accordance with FASB ASC Topic 718 and as such do not include any dividend equivalents for RSUs. |
Pay Versus Performance Table
| (C) Stock options are calculated based on the Black-Scholes methodology in accordance with FASB ASC Topic 718 at year-end or at vest, as applicable. |
Pay Versus Performance Table
| (D) Fair values at vest date and year-end fair values include the value of accrued dividend equivalents. |
Pay Versus Performance Table
| (E) Values reflect RSU grants that were accelerated in connection with a qualified retirement in fiscal year 2021. |
Compensation Actually Paid vs. Total Shareholder Return
Compensation Actually Paid vs. Total Shareholder Return
Compensation Actually Paid vs. Net Income
Compensation Actually Paid vs. Net Income
Compensation Actually Paid vs. EBIT
Compensation Actually Paid vs. EBIT