DEF 14A of Ingles Markets Inc
Filed Jan 4, 2024 · FY20230001140361-24-000700
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Each member of the Board is elected for a term of one year and until his or her successor is elected and qualified or until his or her earlier death, resignation, or removal from office. The Company’s Articles of Incorporation and Bylaws provide that the Board may from time-to-time fix by resolution the number of directors that constitutes the Board, which shall be not less than five nor more than eleven. The Board has determined by resolution that the number of directors will be fixed at eight for purposes of this election. In accordance with the Company’s Articles of Incorporation and Bylaws, two of the eight directors will be elected by a vote of the holders of the Class A Common Stock, voting as a separate class, and the remaining six directors will be elected by a vote of the holders of the Class B Common Stock, voting as a separate class.
Identification of Directors and Executive Officers
Identification of Directors and Executive Officers The Board has nominated, and recommends a vote FOR, Ernest E. Ferguson and John R. Lowden as directors to be elected by the holders of the Class A Common Stock and Fred D. Ayers, Robert P. Ingle, II, Patricia E. Jackson, James W. Lanning, Laura Ingle Sharp, and Brenda S. Tudor as directors to be elected by the holders of the Class B Common Stock. Proxies received by the Board will be voted “FOR” the election of all the nominees unless stockholders specify a contrary choice in their proxy. We expect each director nominee to be able to serve if elected. If any director nominee is not able to serve, proxies will be voted “for” the remainder of those nominated and may be voted for substitute nominees. The biographical information set forth below was furnished by each named director and executive officer of the Company. Except as otherwise indicated, each such person has been engaged in his or her most recent occupation or employment for more than five years.
Identification of Directors and Executive Officers
| DIRECTORS AND EXECUTIVE OFFICERS | | | Robert P. Ingle, II | Robert P. Ingle, II has been a member of the Board since February 1997, has served as Chairman of the Board since May 2004, and served as Chief Executive Officer from March 2011 until March 2016. He has been employed by the Company in a variety of positions since 1985. Mr. Ingle brings many years of grocery industry experience to the Board. Mr. Ingle is 55. | | James W. Lanning | Mr. Lanning has served as a director of the Company since May 2003 and was appointed Chief Executive Officer in March 2016. He has served as President since March 2003. He has been employed by the Company in a variety of positions since 1975. Mr. Lanning brings leadership development skills and many years of grocery industry experience to the Board. Mr. Lanning is 64. | | Fred D. Ayers | Mr. Ayers has served as a director of the Company since February 2006. Mr. Ayers retired in 2002 as a senior officer of Wachovia Bank (now Wells Fargo). He has served on numerous boards and remains active in the Asheville community. Mr. Ayers brings many years of auditing, accounting, and finance experience to the Board. Mr. Ayers is 81. | | Patricia E. Jackson | Ms. Jackson has served as a director of the Company since March 2022 and was appointed as Chief Financial Officer of the Company in February 2022. Ms. Jackson is a certified public accountant. She previously served as the Company’s Controller from 2010 to February 2022. Ms. Jackson brings considerable auditing, accounting, and finance experience to the Board. Ms. Jackson is 59. |
Identification of Directors and Executive Officers
| DIRECTORS AND EXECUTIVE OFFICERS | | | Ernest E. Ferguson | Mr. Ferguson has served as a director of the Company since December 2014. Mr. Ferguson retired in 2007 as a senior vice president and commercial sales director of Wachovia Bank (now Wells Fargo). He has continued to serve on numerous boards and remains active in the Asheville community. Mr. Ferguson brings auditing, accounting, and finance experience to the Board. Mr. Ferguson is 76. | | John R. Lowden | Mr. Lowden has served as a director of the Company since April 2018. Mr. Lowden is President and Chief Investment Officer of NewCastle Partners, LLC, a private investment firm founded in 2001. Mr. Lowden brings finance skills as well as investing knowledge to the Board. Mr. Lowden is 66. | | Laura Ingle Sharp | Ms. Sharp has been a director of the Company since February 1997. She has in the past served the Company in several capacities on a full-time and part-time basis. Ms. Sharp has been an associate or Director of the Company, or its subsidiaries for many years, and as such is qualified to serve on the Board. Ms. Sharp is 66. | | Brenda S. Tudor | Ms. Tudor has served as a director of the Company since December 2014. Ms. Tudor is a certified public accountant. She retired May 31, 2019, as President and Chief Financial Officer of Morgan-Keefe Builders, Inc., a role she held since 2006. Ms. Tudor brings auditing, accounting, and finance skills as well as knowledge of the grocery industry to the Board. Ms. Tudor is 66. | | Michael David Hogan | Mr. Hogan has served as President of the Company’s subsidiary, Milkco, since October 1, 2022. Mr. Hogan has served as Plant Operations Manager in the Dairy industry since 2014, serving in that capacity with Milkco since 2019. Mr. Hogan is 41. |
Identification of Directors and Executive Officers
Robert P. Ingle, II and Laura Ingle Sharp are brother and sister. There are no other family relationships among any of the directors or executive officers of the Company. Based upon the voting power of Mr. Robert P. Ingle, II, the majority holder of the outstanding shares of Class B Common Stock in the election of directors, the Company meets the definition of a “Controlled Company” for purposes of the Nasdaq corporate governance rules. Under the Nasdaq corporate governance rules, a company of which more than 50% of the voting power for the election of directors is held by an individual, group or another company is a “Controlled Company” and may elect not to comply with certain corporate governance requirements, including the requirement that a majority of the board members be “Independent Directors.”
Meetings of the Board of Directors and Committees; Director Compensation
Meetings of the Board of Directors and Committees; Director Compensation The Board held four formal meetings during fiscal 2023. The Executive Committee held no formal meetings during fiscal 2023 but met periodically on an informal basis. The Audit/Compensation Committee held ten formal meetings during fiscal 2023 and met periodically on an informal basis during Board meetings and as required for other purposes. Other than Mr. Lowden, each director attended at least 75% of all meetings of the Board and of the committees of the Board on which he or she served during fiscal 2023. See “Committees of the Board of Directors.” Directors who are not officers of the Company or any of its subsidiaries are paid an annual retainer of $15,000 plus $1,250 for each Board or committee meeting they attend. Audit/Compensation Committee members other than the Chairman of such committee are paid an additional annual retainer of $10,000 for service on such committee, and the Chairman of the Audit/Compensation Committee is paid an additional annual retainer of $15,000. The following director compensation table sets forth, for the fiscal year ended September 30, 2023, the total compensation paid by the Company to its outside directors, all of which was paid in cash.
Meetings of the Board of Directors and Committees; Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Total ($) | | Fred D. Ayers | 42,500 | 42,500 | | Ernest E. Ferguson | 37,508 | 37,508 | | John R. Lowden | 16,250 | 16,250 | | Laura Ingle Sharp | 20,000 | 20,000 | | Brenda S. Tudor | 37,508 | 37,508 |
Compensation Discussion and Analysis
| • | Annual cash incentive bonuses; and |
Compensation Discussion and Analysis
The Company does not have any employment, change of control or severance agreements with any of its Executive Officers. The Company believes in trust, loyalty and commitment from both the Company and the Executive Officers and believes that such agreements are not necessary to achieve its goals and the needs of the Executive Officers. Factors Considered in Determining Compensation. The Company’s Chairman of the Board, Chief Executive Officer, and members of management periodically review the compensation paid by the Company to its Executive Officers and other associates. Based on the Company’s general performance and that of the individual Executive Officer, final subjective determinations are made with respect to any changes to be made to that compensation. Bonuses paid to officers of the Company’s subsidiary, Milkco, Inc. (“Milkco”), are based on a percentage of Milkco’s earnings before taxes and payment of bonuses. Neither the full Board nor the Audit/Compensation Committee generally reviews or ratifies the decisions of the Chairman of the Board, Chief Executive Officer, and members of management relating to executive compensation unless otherwise required by the Company’s Bylaws, by resolutions adopted by the Board, or by the North Carolina Business Corporation Act. Decisions are made by the Board or the Audit/Compensation Committee if such decisions require the adoption of documents relating to employee benefit plans or programs. In addition, the Audit/Compensation Committee is required by resolution of the Board to approve any increases in compensation that the Company will pay to an associate whose base salary is in excess of $500,000, all incentive compensation that the Company will pay to Executive Officers and any incentive payments in excess of $250,000 that the Company will pay to any other associate who does not work in one of the Company’s supermarkets. Certain managers that work in the Company’s supermarkets are paid incentive compensation based on each individual store’s operating profit. These incentive payments may exceed $250,000 and are not approved by the Audit/Compensation Committee.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(1) | Total ($) | | James W. Lanning Chief Executive Officer and President | 2023 | 1,118,462 | 2,115,000 | — | 57,518 | 3,290,980 | | | 2022 | 1,004,375 | 1,450,000 | — | 50,991 | 2,505,366 | | | 2021 | 903,333 | 1,175,000 | — | 46,337 | 2,124,670 | | Robert P. Ingle Chairman of the Board | 2023 | 1,194,904 | 6,645,000 | — | 111,468 | 7,951,372 | | | 2022 | 1,053,333 | 4,685,000 | — | 79,962 | 5,818,295 | | | 2021 | 853,333 | 2,775,000 | — | 49,303 | 3,677,636 | | Patricia E. Jackson Vice President Finance, Chief Financial Officer(2) | 2023 | 411,442 | 315,000 | — | 19,158 | 745,600 | | | 2022 | 285,633 | 270,000 | — | 1,624 | 557,257 | | Michael D. Hogan President, Milkco, Inc.(3) | 2023 | 321,058 | 50,000 | 49,950 | 17,962 | 438,970 |
SUMMARY COMPENSATION TABLE
| (1) All other fiscal 2023 compensation for each of the Executive Officers consists of the following: |
SUMMARY COMPENSATION TABLE
| | Fiscal 2023 | | | | | | James W. Lanning | Robert P. Ingle, II | Patricia E. Jackson | Michael D. Hogan | | Employer Match for 401(k) Plan | $7,425 | $7,425 | $12,938 | $7,840 | | Employer Match for Non-Qualified Plan | 38,642 | 88,170 | 4,549 | 5,373 | | Life Insurance | 960 | 960 | 780 | 559 | | Accidental Death & Dismemberment and Long-Term Disability Insurance | 891 | 891 | 891 | 891 | | Travel Expenses | 9,600 | 14,022 | — | 3,300 |
SUMMARY COMPENSATION TABLE
| (2) Ms. Jackson was named Vice President and Chief Financial Officer of the Company, effective February 23, 2022. |
SUMMARY COMPENSATION TABLE
| (3) Mr. Hogan was named President of Milkco, Inc., effective October 1, 2022. |
CEO Pay Ratio
CEO Pay Ratio SEC rules require that the Company disclose the total annual compensation of James W. Lanning, our Chief Executive Officer (“CEO”), the median of the total annual compensation of all associates other than Mr. Lanning (“Median Annual Compensation”), as well as their ratio to each other (referred to as the “CEO pay ratio”), which we base on data as of September 17, 2023 (the “Determination Date”). Our associate population consists of a number of part-time associates, most of them compensated on an hourly basis. As noted in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023, approximately 53% of the Company’s associates work on a part-time basis. The Company’s median associate for fiscal 2023 was a full-time, hourly associate who was paid for less than forty hours during the week containing the Determination Date. For fiscal 2023:
CEO Pay Ratio
| • | Mr. Lanning’s total compensation: $3,290,980 |
CEO Pay Ratio
| • | Median Annual Compensation: $22,708 |
CEO Pay Ratio
| • | Ratio of CEO total compensation to Median Annual Compensation: 145:1 |
CEO Pay Ratio
| • | This CEO pay ratio is a reasonable estimate calculated in good faith, in a manner consistent with Item 402(u) of Regulation S-K. To identify the Median Annual Compensation, we took the following steps: |
CEO Pay Ratio
| ○ | For the week ending with the Determination Date, 26,253 active associates received cash compensation. This population consisted of full-time, part-time and temporary associates for the Company and all of its subsidiaries. |
CEO Pay Ratio
| ○ | The Company used gross wages including salary, wages, overtime and any other cash compensation for the week ending the determination date to identify the median associate. |
CEO Pay Ratio
| ○ | For this associate, we multiplied the weekly wages by 53 weeks to determine Median Annual Compensation of $22,708. |
CEO Pay Ratio
| ○ | We calculated the CEO pay ratio taking into account that CEO compensation includes amounts other than weekly salary. |
CEO Pay Ratio
SEC rules for the CEO pay ratio allow companies to adopt a variety of methodologies and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the CEO pay ratio reported by other companies may not be comparable to what the Company reports.
Pay Versus Performance
Pay Versus Performance In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and Item 402(v) of Regulation S-K, we are providing the following disclosure regarding executive compensation and Company performance for the years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
Pay Versus Performance
| | | | | | Value of Initial Fixed $100 Investment Based on(3) | | | | | Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Non-PEO NEOs(1) | Average Compensation Actually Paid to Non-PEO NEOs(2) | Total Shareholder Return | Peer-Group Total Shareholder Return | Net Income ($000s) | Net Sales ($000s) | | 2023 | $3,290,980 | $3,290,980 | $3,045,314 | $3,045,314 | $213 | $131 | $210,812 | $5,892,782 | | 2022 | $2,505,366 | $2,505,366 | $1,753,173 | $1,753,173 | $229 | $117 | $272,759 | $5,678,835 | | 2021 | $2,124,670 | $2,124,670 | $1,583,027 | $1,583,027 | $182 | $118 | $249,731 | $4,987,920 |
Pay Versus Performance
| (1) The amounts reflect the Summary Compensation Table total compensation figures for James W. Lanning, our principal executive officer (“PEO”), for each of the years listed. The Non-PEO NEOs (named executive officers) for who the Summary Compensation Table total average compensation is presented are: for 2023, Robert P. Ingle, Patricia E. Jackson, and Michael D. Hogan; for 2022, Robert P. Ingle, Patricia E. Jackson, Ronald B. Freeman, and Larry K. Collins; for 2021, Robert P. Ingle, Ronald B. Freeman, and Larry K. Collins. |
Pay Versus Performance
| (2) The amounts shown for Compensation Actually Paid and Average Compensation Actually Paid to Non-PEO NEOs have been calculated in accordance with Item 402(v) of Regulation S-K. These amounts reflect total compensation as set forth in the Summary Compensation Table above for each year. None of the adjustments required by Item 402(v) are applicable to the Company. |
Pay Versus Performance
| (3) This column shows Company Total Shareholder Return (“TSR”) and peer group TSR on a cumulative basis for each year of the three-year period from 2021 through 2023. For purposes of this disclosure, the peer group consists of the peer group used for our stock performance graph, as presented in Item 5 of the Company’s Annual Report on Form 10K for the fiscal year ended September 30, 2023. The companies making up the peer group, in no particular order, are Ingles Markets, Inc., Koninklijke Ahold Delhaize N.V., Weis Markets, Inc., The Kroger Co., SpartanNash Co., Sprouts Farmers Markets, Inc., and Village Super Market, Inc. Dollar values assume $100 was invested for the cumulative period from September 26, 2020 to September 30, 2023, in either the Company or the peer group, and reinvestment of the pre-tax value of dividends paid. Historical stock performance is not necessarily indicative of future stock performance. |
Pay Versus Performance
Relationship Between Compensation Actually Paid and Company Cumulative Total Shareholder Return (TSR). The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the Average Compensation Actually Paid to Non-PEO NEOs, and the Company Cumulative TSR for each year of the three-year period from 2021 through 2023. Relationship Between Compensation Actually Paid and Company Net Income. The following charts sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to Non-PEO NEOs, and Company Net Income for each year of the three-year period from 2021 to 2023. Relationship Between Compensation Actually Paid and Company Net Sales. The following charts sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to Non-PEO NEOs, and Company Net Sales for each year of the three-year period from 2021 to 2023. Relationship Between Company TSR and Peer Group TSR. The following chart sets forth the relationship between our cumulative TSR and the TSR for the peer group for each year of the three-year period from 2021 through 2023.