DEF 14A of Freshpet, Inc.
Filed Aug 22, 2024 · FY20230001140361-24-038217
FOR THE ANNUAL MEETING
| | TABLE OF CONTENTS | | Director Compensation | 74 | | Security Ownership of Certain Beneficial Owners and Management | 76 | | Audit Committee Report | 80 | | Proposals | 81 | | Proposal No. 1: Election of Directors | 83 | | Proposal No. 2: Approval 2024 Equity Plan | 84 | | Proposal No. 3: Ratification of Appointment of Independent Registered Public Accounting Firm | 96 | | Proposal No. 4: Advisory Vote on Named Executive Officer Compensation | 97 | | Certain Relationships and Related Party Transactions | 99 | | Delinquent Section 16(a) Reports | 101 | | Additional Information | 102 | | Other Business | 103 | | Costs of the Solicitation | 103 | | Householding of Annual Meeting Materials | 103 | | Stockholder Proposals and Nominations for the 2024 Annual Meeting | 103 | | Incorporation by Reference | 104 | | Forward-Looking Statements | 105 | | Appendix A: Non-GAAP Financial Measures | A-1 | | Appendix B: 2024 Equity Plan | B-1 |
BOARD OF DIRECTORS
BOARD OF DIRECTORS
BOARD OF DIRECTORS
| | | | | | COMMITTEES | | | | | NAME | AGE | CLASS | APPOINTED | CURRENT TERM EXPIRES | AUDIT | NOMINATING AND GOVERNANCE | COMPENSATION AND HUMAN CAPITAL MANAGMENT | OPERATIONS AND FSQA | | DIRECTOR NOMINEES | | | | | | | | | | David B. Biegger | 65 | I | May 2023 | 2024 | | | | | | Daryl G. Brewster | 67 | I | Jan 2011 | 2024 | | | | | | Jacki S. Kelley | 58 | I | Feb 2019 | 2024 | | | | | | Timothy R. McLevish | 69 | I | Aug 2023 | 2024 | | | | | | CONTINUING DIRECTORS | | | | | | | | | | William B. Cyr Chief Executive Officer | 61 | III | Sept 2016 | 2025 | | | | | | Olu Beck | 58 | III | Oct 2019 | 2025 | | | | | | Leta D. Priest | 65 | III | Sept 2018 | 2025 | | | | | | David J. West | 61 | III | Jul 2023 | 2025 | | | | | | Lauri Kien Kotcher | 63 | II | Apr 2024 | 2025 | | | | | | Walter N. George III | 68 | II | Nov 2014 | 2025 | | | | | | Joseph E. Scalzo | 66 | II | Aug 2023 | 2025 | | | | | | Craig D. Steeneck | 66 | II | Nov 2014 | 2025 | | | | |
BOARD OF DIRECTORS
| BOARD OF DIRECTORS SKILL MATRIX | | | | | | | | | | | | | | SKILL OR EXPERIENCE | Olu Beck | David Biegger | Daryl Brewster | Billy Cyr | Walt George | Jacki Kelley | Lauri Kien Kotcher | Tim McLevish | Leta Priest | Joe Scalzo | Craig Steeneck | David West | | Executive Leadership | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Consumer Packaged Goods (“CPG”) | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Business Growth and Innovation | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Corporate Governance and ESG | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ | | Financial or Accounting | ✔ | ✔ | ✔ | ✔ | | | | ✔ | | ✔ | ✔ | ✔ | | Retail Experience | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Human Capital Management | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | | ✔ | | Marketing | ✔ | ✔ | ✔ | ✔ | | ✔ | ✔ | | ✔ | ✔ | | ✔ | | Manufacturing and Supply Chain | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | ✔ | | ✔ | ✔ | ✔ | | Public Company Board | ✔ | | ✔ | | | | ✔ | ✔ | | ✔ | ✔ | ✔ | | Pet Food Experience | ✔ | | ✔ | ✔ | ✔ | | | | | | | ✔ | | Diverse | ✔ | | | | | ✔ | ✔ | | ✔ | | | |
BOARD OF DIRECTORS
Includes Company Nominees and Continuing Directors. For definitions of each of the above skills or experiences, please see page 39 of this Proxy Statement.
GOVERNANCE HIGHLIGHTS: OUR GOVERNANCE TRANSFORMATION ROADMAP
GOVERNANCE HIGHLIGHTS: OUR GOVERNANCE TRANSFORMATION ROADMAP
STOCKHOLDER RIGHTS AND ENGAGEMENT
STOCKHOLDER RIGHTS AND ENGAGEMENT
STOCKHOLDER RIGHTS AND ENGAGEMENT
| BOARD PRACTICES | | INDEPENDENT, NON-EXECUTIVE CHAIR | | The positions of Chair of the Board and Chief Executive Officer are presently separated. While our Amended and Restated Bylaws (the “Bylaws”) and Corporate Governance Guidelines do not require that our Chair and Chief Executive Officer positions be separate, we believe that separating these positions allows our Chief Executive Officer to focus on our day-to-day business and our Chair of the Board to lead the Board in its fundamental role of providing advice to and independent oversight of management. | | BOARD AND COMMITTEE INDEPENDENCE | | During 2023, all of our directors (other than our Chief Executive Officer) were independent, and each of our Board committees consisted entirely of independent directors. | | BOARD REFRESHMENT & COMMITMENT TO DIVERSITY | | We believe that fresh viewpoints and diversity, in its many forms, and the breadth of perspective this brings, enhance the effectiveness of our Board. Over the last six years we have appointed eight new directors, four of whom are women, the most recent being Lauri Kien Kotcher who joined our Board in April 2024 upon the retirement of Larry Coben. In 2023 we announced the retirement of our former Board Chair, Charles A. Norris, consistent with our director retirement policy, with Walter N. George, III, previously Chair of the Nominating and Governance Committee, becoming Board Chair. The Board remains committed to continuously evaluating and maintaining the appropriate balance of director tenure, industry and professional experience and skillsets, while ensuring a diversity of perspectives | | 4 in 12 directors are diverse (includes gender and ethnic diversity) | | BOARD OVERBOARDING | | Our Corporate Governance Guidelines require a director, prior to becoming a director of another public company, to give prior notice to the Chair of the Nominating and Governance Committee, the Chair of the Board and the Chief Executive Officer regarding the potential additional directorship. If a determination is made that the prospective additional directorship, considered in aggregate with the director’s other directorships, would interfere with the director’s ability to carry out responsibilities on our Board, then the director must either submit a resignation from our Board or not accept the prospective additional directorship. Our Corporate Governance Guidelines do not impose an express limit on the number of boards of directors on which our directors can serve. | | Joseph E. Scalzo, one of the directors appointed pursuant to the JANA Agreement on August 21, 2023 (please see “Directors, Executive Officers, and Corporate Governance—Board of Directors—JANA Agreement” for more information), currently serves on three public company boards of directors, inclusive of our Board. Mr. Scalzo has served as a member of the board of directors of Treehouse Foods, Inc. since April 2022. In addition, Mr. Scalzo previously served as the Chief Executive Officer of The Simply Good Foods Company (“Simply Good Foods”) until July 7, 2023, when he assumed the role of Executive Vice Chairman of the board of directors of Simply Good Foods. Mr. Scalzo will continue to serve in that role until August 31, 2024, at which time he shall step into the role of Non-Executive Vice Chairman of the Simply Good Foods board. Based on the transitionary nature of Mr. Scalzo’s role as Executive Vice Chairman and the limited additional responsibilities that are inherent in this role, the Board does not believe that this role, when considered in aggregate with his other directorships, interferes with his ability to carry out his responsibilities on our Board. |
STOCKHOLDER RIGHTS AND ENGAGEMENT
| STOCKHOLDER RIGHTS | | SINGLE VOTING CLASS | | All holders of Freshpet’s Common Stock have the same voting rights (one vote per share of stock). | | NO POISON PILL | | The Company has not adopted a stockholder rights plan, also known as a poison pill. | | STOCKHOLDER ENGAGEMENT | | SINCE OUR 2023 ANNUAL MEETING AND SO FAR IN 2024… | | Since last year’s annual meeting of stockholders, we have met and engaged directly with stockholders holding approximately 78% of our outstanding Common Stock, and additional outreach is underway. | | Members of our Board and management have also: • Met with analysts who cover our Company and leading proxy advisors who serve our investors • Presented at seven industry conferences • Held six non-deal road shows • Hosted numerous investors on tours of the Freshpet Kitchens, where investors and analysts heard presentations from our senior management about all aspects of our business |
STOCKHOLDER RIGHTS AND ENGAGEMENT
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
Proposal 1: Election of Directors
Proposal 1: Election of Directors The Board is asking stockholders to elect four Class I directors to the Board. Each of the director nominees is standing for election for a term ending at the 2025 Annual Meeting and until his or her successor has been duly elected and qualified, or until such director’s earlier death, resignation or removal. The Board has nominated and unanimously recommends the election of four incumbent directors (the “Company Nominees”). For more information on the Company Nominees, please see “Directors, Executive Officers, and Corporate Governance—Board of Directors—Director Nominees” on page 40 of the Proxy Statement. The Board unanimously recommends that stockholders vote “FOR” each of the Company Nominees.
WHAT VOTE IS REQUIRED, AND HOW WILL MY VOTES BE COUNTED TO ELECT THE DIRECTOR NOMINEES AND TO APPROVE EACH OF THE OTHER PROPOSALS?
WHAT VOTE IS REQUIRED, AND HOW WILL MY VOTES BE COUNTED TO ELECT THE DIRECTOR NOMINEES AND TO APPROVE EACH OF THE OTHER PROPOSALS?
WHAT VOTE IS REQUIRED, AND HOW WILL MY VOTES BE COUNTED TO ELECT THE DIRECTOR NOMINEES AND TO APPROVE EACH OF THE OTHER PROPOSALS?
| Proposal | Voting Standard | Board Recommendation | Effect of Abstentions and Withholds | Effect of Broker Non-Votes | | Proposal No. 1 Election of Four Class I Directors to the Board | Majority of votes cast, meaning that for a director to be elected to the Board, the number of shares voted “FOR” such director’s election must exceed the number of votes cast “AGAINST” such director’s election. | FOR each of the COMPANY NOMINEES: David Biegger, Daryl Brewster, Jacki Kelley, and Timothy McLevish | Abstentions have no effect on the outcome of the proposal. | Broker discretionary voting is not permitted, and broker non-votes will have no effect on the outcome of this proposal. | | Proposal No. 2 Approval of the 2024 Equity Incentive Plan (the “Plan”) | Majority of shares present in person or by proxy and entitled to vote on the matter. | FOR | Abstentions have the same effect as a vote against the proposal. | Broker discretionary voting is not permitted, and broker non-votes will have no effect on the outcome of this proposal. | | Proposal No. 3 Ratification of the Appointment of KPMG as Our Independent Registered Public Accounting Firm for 2024 | Majority of shares present in person or by proxy and entitled to vote on the matter. | FOR | Abstentions have the same effect as a vote against the proposal. | Broker discretionary voting is expected to be permitted for this proposal. | | Proposal No. 4 Non-Binding Advisory Vote to Approve Executive Compensation (“Say-on-Pay”) | Majority of shares present in person or by proxy and entitled to vote on the matter. | FOR | Abstentions have the same effect as a vote against the proposal. | Broker discretionary voting is not permitted, and broker non-votes will have no effect on the outcome of this proposal. |
WHAT VOTE IS REQUIRED, AND HOW WILL MY VOTES BE COUNTED TO ELECT THE DIRECTOR NOMINEES AND TO APPROVE EACH OF THE OTHER PROPOSALS?
Under our Bylaws, when a quorum is present at any meeting of stockholders, in all matters other than the election of directors, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the subject matter is required to approve such matter, subject to certain exceptions governed by law or regulation, such as the DGCL. Pursuant to our Bylaws, an election of directors is considered to be “contested” if, in connection with the Annual Meeting, the Secretary of the Company has received one or more notices that a stockholder has nominated or proposed to nominate a person or persons for election as a director, which notice(s) purport(s) to be in compliance with the advance notice requirements set forth in our Bylaws, and as of the date that is 14 days in advance of the date that the Company files its definitive proxy statement with the SEC, such notice has not been formally and irrevocably withdrawn by such stockholder. Because no one has submitted such a notice of nomination, the election of directors at this year’s Annual Meeting is uncontested and will be conducted by a majority of the votes cast. OUR BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF OUR BOARD’S NOMINEES ON PROPOSAL 1 AND “FOR” PROPOSALS 2, 3 AND 4 USING ONE OF THE METHODS DESCRIBED IN OUR PROXY MATERIALS.
SPECIFIC WAYS WE ENGAGED WITH STOCKHOLDERS IN 2023 AND SO FAR IN 2024
SPECIFIC WAYS WE ENGAGED WITH STOCKHOLDERS IN 2023 AND SO FAR IN 2024 Since last year’s annual meeting, we have met and engaged directly with stockholders holding approximately 78% of our outstanding Common Stock. We also met with analysts who cover our Company and leading proxy advisors who serve our investors. We presented at seven industry conferences, held six non-deal road shows, and hosted numerous investors on tours of the Freshpet Kitchens, where investors and analysts heard presentations from our senior management about all aspects of our business (which presentation materials were also made available to our stockholders generally through our filings with the SEC and on the “Investors” section of our website at investors.freshpet.com). Our Board and management carefully consider and evaluate feedback received during these meetings. Additionally, in response to the Say-on-Pay results (97% approval) at our 2023 annual meeting of stockholders (the “2023 Annual Meeting”), management and the Board have continued to focus their discussions with stockholders on executive compensation. In response to those discussions, the Compensation Committee has added an Environmental, Social, and Governance (“ESG”) goal as a key part of the executive officers’ annual bonus calculation to both further distinguish the annual incentives from the long-term incentives and to ensure commitment to the ESG goals. Additionally, our independent directors continued to be closely and directly involved in our investor engagement efforts. Specifically, over the past eight months, our directors held outreach discussions with stockholders representing approximately 45% of our outstanding shares, and additional outreach is underway. The Compensation Committee met with many of our core stockholders and considered their feedback, as well as the commentary from Glass Lewis and ISS, and committed to not grant equity to the named executive officers in 2022 or 2023. Additionally, the Compensation Committee refocused the goals of the 2014 Plan (as defined below) to include an ESG metric for 2023. The feedback we received in 2022, 2023 and early 2024 is described below and reflected in the governance changes we announced in 2020 and are continuing to implement.
SPECIFIC WAYS WE ENGAGED WITH STOCKHOLDERS IN 2023 AND SO FAR IN 2024
| | WHAT WE HEARD | OUR RESPONSE | | GOVERNANCE | Stockholders expressed support for the concept of a long-term governance transformation plan and the fact that we have executed each element as originally outlined and on the timetable that was committed in 2020. | Our Board appreciates shareholder support for the plan. As we reach the completion of that 5-year plan, we are considering what type of long-term governance roadmap might be appropriate for Freshpet at this stage of development and over the next several years. | | | Stockholders encouraged us to strengthen our conflict of interest and non-compete policies for both the Board and management. Stockholders encouraged the Company to provide greater visibility and rigor to the capital investment and cash needs of the business. | The Board conducted an extensive review of its past practices, industry norms, the evolving legal landscape, and the unique challenges presented by founder-involved businesses. The Company has adopted updated Conflict of Interest, Code of Conduct, and non-compete policies and is the process of implementing them. The Company has outlined specific capital investment plans and the related cash needs for shareholders. It has committed to being cash flow positive by 2026 and is currently ahead of schedule. |
STOCKHOLDER ENGAGEMENT | 18
| | WHAT WE HEARD | OUR RESPONSE | | ENVIRONMENTAL SOCIAL & GOVERNANCE | Stockholders said they were satisfied with our progress on diversity within our Board but would like us to provide greater metrics on the Company’s overall progress. | The Company is providing more detailed metrics on the diversity within our Company as part of the Proxy Statement. Additionally, the Company has continued to add diversity to its senior management team and its Board. | | | Stockholders encouraged us to enhance our ESG disclosure practices and align on the most appropriate reporting framework. | The Company has released its 4th annual Sustainability Report which provides the most detailed reporting yet on the Company’s performance against its long-term sustainability goals. Our annual sustainability reports are available on our website at investors.freshpet.com. | | EXECUTIVE COMPENSATION | Stockholders encouraged the Board to transition to more traditional equity incentive plans upon the completion of the 2020 Multi-Year Grant performance period in order to avoid the risk of misalignment of goals. | The Company has committed to implementing a more traditional equity incentive plan for the most senior management beginning in 2025. The Company has fulfilled its original commitment to not issue any additional equity to participants in the 2020 Multi-Year Grant Program. However, it is also clear that the 2020 Grants have driven outsized net sales growth (~32% CAGR) and Adj. EBITDA growth (~35%) – consistent with the goals included in the 2025 plan. | | | Stockholders felt that the Company’s addition of employee retention to the Annual Incentive Plan for senior executives was a very pragmatic way to address a business-appropriate social goal in the current environment. | The focus on retention drove significant improvement in the Company’s overall retention rate and that has positively impacted the Company’s profitability. The Company is expanding the retention goal to now include employee safety, development and satisfaction to the Annual Incentive Plan. |
COMMUNICATIONS WITH THE BOARD
COMMUNICATIONS WITH THE BOARD Stockholders and other interested parties who would like to communicate with one or more members of the Board, a Board committee or the Chair of the Board may do so by writing to any such party at Freshpet, Inc., 1545 US-206, Bedminster, NJ 07921, Attention: Corporate Secretary. The Corporate Secretary will forward copies of all correspondence that, in the opinion of the Corporate Secretary, deals with the functions of the Board or its committees or that the Corporate Secretary otherwise determines requires the attention of any member, group or committee of the Board. BUSINESS TRANSFORMATION: 2006-2024 Freshpet was founded in 2006 with a single-minded mission to do right by pets, people and the planet, every step of the way from farm to fridge. In 2010, we welcomed a private equity investor who believed in our mission and the power of our platform, and subsequently went public in 2014. In addition to onboarding new directors with financial and industry expertise that we needed as a public company, we welcomed our current CEO, William B. Cyr, in 2016 to support the Board’s ambition to rapidly and strategically scale the business. In 2019, our Board added three female directors, who brought deep expertise in retail, digital optimization and strategy to support our 2020 long-term plan. Four new directors were added in 2023, and Walter N. George III assumed the role of Chair of the Board. In 2024, the Board welcomed a fourth female director. The Board’s commitment to regular refreshment and corporate governance best practices underlies our dynamic and thoughtful approach to oversight of our business and management. The following graphic helps illustrate our history, progress. FRESHPET’S COMMITMENT TO GOOD CORPORATE GOVERNANCE: 2020 TO 2025 ROADMAP As a young public company in pursuit of sizable long-term goals to disrupt the pet food industry, our IPO-related governance provisions provided protection from market volatility and helped ensure business continuity and organizational stability while our Board and management pursued long-term strategic goals and stockholder value creation. While these governance provisions were critical to our success as a young public company, our Board recognized that some of these protections provided by our governance structure should be gradually phased out as we reach maturity. Concurrent with setting Freshpet’s strategic 2025 long-term plan, the Board during 2019 solicited valuable stockholder feedback to receive direct input as to how to best evolve Freshpet’s corporate governance. In response, the Board has implemented a number of corporate governance updates aimed at allowing our Board and management to still focus primarily on the creation of long-term value for our stockholders while also being responsive to our stockholders, employees and the communities in which we do business. Supporting that philosophy, we have adopted, many leading corporate governance practices over the past several years, including: CORPORATE GOVERNANCE PRACTICES
COMMUNICATIONS WITH THE BOARD
| BOARD PRACTICES | | INDEPENDENT, NON-EXECUTIVE CHAIR | | The positions of Chair of the Board and Chief Executive Officer are presently separated. While our Amended and Restated Bylaws (the “Bylaws”) and Corporate Governance Guidelines do not require that our Chair and Chief Executive Officer positions be separate, we believe that separating these positions allows our Chief Executive Officer to focus on our day-to-day business and our Chair of the Board to lead the Board in its fundamental role of providing advice to and independent oversight of management. | | BOARD AND COMMITTEE INDEPENDENCE | | All of our directors (other than our Chief Executive Officer) are independent, and each of our Board committees consist entirely of independent directors. | | BOARD REFRESHMENT & COMMITMENT TO DIVERSITY | | We believe that fresh viewpoints and diversity, in its many forms, and the breadth of perspective this brings, enhance the effectiveness of our Board. Over the last six years we have appointed eight new directors, four of whom are women, the most recent being Lauri Kien Kotcher who joined our Board in April 2024 upon the retirement of Larry Coben. In 2023 we announced the retirement of our former Board Chair, Charles A. Norris, consistent with our director retirement policy, with Walter N. George, III, previously Chair of the Nominating and Governance Committee, becoming Board Chair. The Board remains committed to continuously evaluating and maintaining the appropriate balance of director tenure, industry and professional experience and skillsets, while ensuring a diversity of perspectives. | | 4 in 12 directors are diverse (includes gender and ethnic diversity) | | BOARD OVERBOARDING | | Our Corporate Governance Guidelines require a director, prior to becoming a director of another public company, to give prior notice to the Chair of the Nominating, and Governance Committee, the Chair of the Board and the Chief Executive Officer regarding the potential additional directorship. If a determination is made that the prospective additional directorship, considered in aggregate with the director’s other directorships, would interfere with the director’s ability to carry out responsibilities on our Board, then the director must either submit a resignation from our Board or not accept the prospective additional directorship. Our Corporate Governance Guidelines do not impose an express limit on the number of boards of directors on which our directors can serve. | | Joseph E. Scalzo, one of the directors appointed pursuant to the JANA Agreement on August 21, 2023 (please see “Directors, Executive Officers, and Corporate Governance—Board of Directors—JANA Agreement” for more information), currently serves on three public company boards of directors, inclusive of our Board. Mr. Scalzo has served as a member of the board of directors of Treehouse Foods, Inc. since April 2022. In addition, Mr. Scalzo previously served as the Chief Executive Officer of The Simply Good Foods Company (“Simply Good Foods”) until July 7, 2023, when he assumed the role of Executive Vice Chairman of the board of directors of Simply Good Foods. Mr. Scalzo will continue to serve in that role until August 31, 2024, at which time he shall step into the role of Non-Executive Vice Chairman of the Simply Good Foods board. Based on the transitionary nature of Mr. Scalzo’s role as Executive Vice Chairman and the limited additional responsibilities that are inherent in this role, the Board does not believe that this role, when considered in aggregate with his other directorships, interferes with his ability to carry out his responsibilities on our Board. |
COMMUNICATIONS WITH THE BOARD
| STOCKHOLDER RIGHTS | | SINGLE VOTING CLASS | | All holders of Freshpet’s Common Stock have the same voting rights (one vote per share of stock). | | NO POISON PILL | | The Company has not adopted a stockholder rights plan, also known as a poison pill. | | 2020 STOCKHOLDER AND BOARD ACTIONS | | ELIMINATED SUPERMAJORITY VOTING PROVISIONS FROM OUR CERTIFICATE OF INCORPORATION | | At our 2020 Annual Meeting, our Board submitted a proposal to our stockholders to eliminate all of the supermajority voting provisions from the Company’s Certificate of Incorporation, which our stockholders overwhelmingly approved. | | DIRECTOR RESIGNATION POLICY | | Our Board adopted a policy that any incumbent nominee for director who does not receive the affirmative vote of a majority of the votes cast in any uncontested election must promptly offer to resign. In such case, the Nominating, and Governance Committee will make a recommendation on the offer and the Board will decide whether to accept or reject the offer. | | 2021 STOCKHOLDER AND BOARD ACTIONS | | MAJORITY VOTING STANDARD FOR DIRECTOR ELECTIONS | | Before the Company’s 2021 annual meeting of stockholders (the “2021 Annual Meeting”), our Board amended our Bylaws to implement a majority voting standard for director elections in uncontested elections and a plurality voting standard in contested elections. Our previous Bylaws provided for a plurality voting standard in both uncontested and contested elections. | | DIRECTOR TENURE POLICY | | Before the Company’s 2021 Annual Meeting, our Board adopted a director retirement policy that provides that non-employee directors will not be nominated for re-election to the Board after reaching age 75. | | DECLASSIFICATION OF THE BOARD OF DIRECTORS BY 2025 | | In the Company’s 2021 proxy statement, our Board submitted a proposal to be voted on by stockholders to fully declassify the Board by 2025, which our stockholders overwhelmingly approved. Our Certificate of Incorporation currently divides our Board into three classes, with one class being elected each year. Our Board will be fully declassified by the 2025 Annual Meeting, with each director to be elected on an annual basis thereafter. | | 2022 STOCKHOLDER AND BOARD ACTIONS | | PROXY ACCESS | | In June 2022, the Board amended the Company’s Bylaws to incorporate a provision that permits a stockholder, or a group of up to 20 stockholders, owning at least 3% of our outstanding Common Stock for three years, to nominate a certain percentage of the directors for the Company’s Board. | | STOCKHOLDER RIGHT TO REQUEST THE COMPANY CALL A SPECIAL MEETING | | In the Company’s 2022 proxy statement, our Board submitted a proposal to be voted on by stockholders to amend our Certificate of Incorporation to allow stockholders the ability to make a request to the Company to call special meetings, which our stockholders overwhelmingly approved. |
COMMUNICATIONS WITH THE BOARD
| 2023 STOCKHOLDER AND BOARD ACTIONS | | COMPENSATION RECOUPMENT POLICY | | In October 2023, the Board’s Compensation Committee adopted a new Compensation Recoupment Policy, replacing the pre-existing policy, to be consistent with the requirements of the SEC’s final compensation clawback rules under the Dodd-Frank Act and the Nasdaq listing standards. | | CONFLICT OF INTEREST POLICY | | In response to concerns raised by shareholders in 2023, the Board adopted in February 2024 a Conflict of Interest Policy applicable to directors and officers as defined by Section 16(a) of the Exchange Act to provide such persons with written guidance on recognizing actual, or the appearance of, conflicts of interest, mechanisms to disclose and deal with potential or actual conflicts, and help in fostering a culture of honesty and accountability. The Nominating and Governance Committee is responsible for oversight (see—Other Board Matters—Conflict of Interest Policy for more details). | | GOVERNANCE GUIDELINES AND COMMITTEE CHARTERS | | In 2023, the Board re-constituted the membership of its committees. Led by the Nominating and Governance Committee, the Board conducted a thorough review of its Governance Guidelines and Committee Charters and, in February 2024, the Board, approved updates to each document including stating an intention to maintain an average director’s tenure on the Board of 12 years while not imposing a specific limit on tenure, allocating responsibility for ESG oversight among the Committees, and adding oversight of Food Safety and Quality Assurance to the Operations Committee, formalizing it as a standing committee. |
COMMITMENT TO NOURISHING PETS, PEOPLE AND PLANET
| | WATER CONSERVATION | | Manufacturing fresh pet food requires water in the cooking and cleaning processes. As one of our most valuable natural resources, Freshpet aims to minimize our impact on the planet’s water supply. Freshpet Kitchens include technolofy to minimize their impact on our planet's water supply including: | | | ON-SITE WASTEWATER TREATMENT FACILITY | | | Freshpet’s wastewater treatment facility in Pennsylvania became operational in September 2020. This 6,600 square foot facility processes up to 200 gallons per minute removing residual traces of meat, vegetables, fat, and pollutants from the Kitchens’ wastewater. The 15,000 sq ft facility located in our Ennis Kitchens is even more advanced and has begun providing water so clean that it can be re-used in the facility’s cooling system. In addition to easing our burden on municipal facilities, Freshpet’s investment in treating our own wastewater was a sound financial decision. These systems help avoid significant wastewater treatment fees, helping the project pay for itself over time. | | | RAINWATER HARVESTING SYSTEM | | | The Freshpet's Pennsylvania Kitchens incorporate a 427,500 gallon rainwater harvesting system that provides irrigation for 62,000 square feet of landscaping on site. In addition to reducing our burden on the municipal water supplies, rainwater harvesting helps reduce stormwater runoff from the property. Reduced stormwater runoff helps minimize a storm’s peak flow volume and velocity in local creeks, streams, and rivers, thereby reducing the potential for streambank erosion. Reduced runoff can also help reduce contamination of surface water with pesticides, sediment, metals, and fertilizers. | |
COMMITMENT TO NOURISHING PETS, PEOPLE AND PLANET
| OUR GOAL | PROGRESS | | Expand our organizational focus and broaden responsibility for sustainability initiatives | We maintained our long-term partnership with 3Degrees, a leading climate consultant. They helped us to calculate our carbon footprint across Scope 1, 2 and 3 emissions and publicly report our CO2e emission and water usage data to the Carbon Disclosure Project (CDP). 2024 was the fourth year we have publicly disclosed SASB- aligned sustainability metrics in our annual sustainability report. The report for 2024 also includes our fourth public disclosure of our CO2e footprint across Scope 1, 2, and 3. In 2021, we appointed a Sustainability Lead reporting to the Founder and President to manage our sustainability efforts. In 2022, we established the Sustainability Leadership Team, a cross-functional group charged with identifying and implementing sustainability opportunities within the Company. In 2023, we introduced our first electronic supplier code of conduct to help us engage suppliers and their sustainability policies. Over time, we expect this database of practices to help us all reach our sustainability goals. We also implemented phase 1 of a comprehensive overhaul of Freshpet’s logistics program to introduce bracket pricing to customers as well as better utilize our new Texas manufacturing facility and distribution center. The program has already resulted in significantly reduced road-miles, better order fill rates, and higher profitability. | | Install new infrastructure that can help ensure the sustainability of the Company | Freshpet’s latest manufacturing facility in Ennis, TX was designed from the ground up to be our most efficient yet. It has been built with environmentally-friendly construction techniques including low carbon footprint concrete, recycled steel, and on-site soil preparation. Eventually, it will incorporate our latest engineering, including on-site solar power with a battery storage system and a wastewater treatment facility that purifies our wastewater so thoroughly that it can be re-used in the building’s cooling system. Low water use and pollinator-friendly landscaping are also part of the site plan. 2021 was the first full year for the on-site wastewater treatment and rainwater capture facilities in our Kitchens in Bethlehem, PA, helping to conserve one of our most important natural resources. Freshpet significantly expanded the Company’s in-house R&D laboratories helping to support the creation of even more nutritious recipes and ensure future product quality and safety. A new pilot production line was installed that allows the testing of new recipes without having to start/stop the main production lines. This reduces downtime and material waste. We installed equipment to increase our use of ingredients supplied in large “supersacks” instead of small individual cases. This helped significantly reduce the total amount of packaging used in some of our dry ingredients. |
COMMITMENT TO NOURISHING PETS, PEOPLE AND PLANET
| OUR GOAL | PROGRESS | | Minimizing our Company-wide carbon footprint | Freshpet’s long-term goal is to develop a pathway to net zero carbon emissions using renewable energy and source reductions. Efforts such as our landfill free policy, renewable energy commitment, higher efficiency chillers, re-vamped logistics program, and on-site power generation including solar in Ennis, TX are just the beginning. Rather than wait until we can eliminate our carbon footprint with process changes and technology implementation, we have purchased verified carbon credits since July 2021 equivalent to the company’s remaining scope 1 and 2 emissions. Nature’s Fresh leads the way in our sustainability efforts as scopes 1, 2, and 3 emissions remaining after source reductions have been matched with carbon credits from verified projects since July 2020. These projects were chosen to support UN’s Sustainable Development Goals such as bio-diversity, regenerative farming, and social justice. We hope that these efforts demonstrate our commitment to minimizing the impact of our carbon footprint and spur other companies to act sooner rather than later as well. To ensure accurate climate accounting, Freshpet partnered with 3Degrees to calculate our carbon footprint. Their analysis uses widely accepted GHG Protocol guidelines to estimate carbon dioxide equivalent (CO2e) emissions of our Scope 3 value chain including protein sources, distribution, packaging, waste, etc. As climate science evolves, so will our carbon footprint model helping ensure the most complete analysis possible. To that end, we now subscribe to the WFLDB (World Food LCA Database) from Quantis which allows more accurate Scope 3 emission calculations for ingredient purchases. Emissions for 2021 and 2022 were re-stated to include the emission factors from WFLDB as well as the latest EPA spend based measures by North American Industry Classification System (NAICS). We have chosen to publicly disclose our emissions in our Sustainability Report and through the Carbon Disclosure Project (CDP). | | Expand our water conservation commitment | In 2020, we backed our belief in water conservation with major infrastructure investments via on-site wastewater treatment and rainwater capture facilities at our Kitchens in Bethlehem, PA. In 2021, we completed our first water footprint analysis and our first engagement with CDP, a recognized non-profit that works with companies to disclose their environmental and water impacts. The new Kitchens in Ennis, TX includes an on-site wastewater treatment facility that purifies our wastewater so thoroughly that it can be re-used in the building’s cooling system, high pressure washdown systems that use up to 42% less water than previous systems, and eventually, low water usage landscaping. |
BOARD OF DIRECTORS
BOARD OF DIRECTORS Set forth below is the name, age (as of August 22, 2024), position, class, and tenure information for our directors and director nominees:
BOARD OF DIRECTORS
| | | | | | COMMITTEES | | | | | NAME | AGE | CLASS | APPOINTED | CURRENT TERM EXPIRES | AUDIT | NOMINATING AND GOVERNANCE | COMPENSATION AND HUMAN CAPITAL MANAGEMENT | OPERATIONS AND FSQA | | DIRECTOR NOMINEES | | | | | | | | | | David B. Biegger | 65 | I | May 2023 | 2024 | | | | | | Daryl G. Brewster | 67 | I | Jan 2011 | 2024 | | | | | | Jacki S. Kelley | 58 | I | Feb 2019 | 2024 | | | | | | Timothy R. McLevish | 69 | I | Aug 2023 | 2024 | | | | | | CONTINUING DIRECTORS | | | | | | | | | | William B. Cyr Chief Executive Officer | 61 | III | Sept 2016 | 2025 | | | | | | Olu Beck | 58 | III | Oct 2019 | 2025 | | | | | | Leta D. Priest | 65 | III | Sept 2018 | 2025 | | | | | | David J. West | 61 | III | Jul 2023 | 2025 | | | | | | Lauri Kien Kotcher | 63 | II | Apr 2024 | 2025 | | | | | | Walter N. George III | 68 | II | Nov 2014 | 2025 | | | | | | Joseph E. Scalzo | 66 | II | Aug 2023 | 2025 | | | | | | Craig D. Steeneck | 66 | II | Nov 2014 | 2025 | | | | |
BOARD OF DIRECTORS
| BOARD OF DIRECTORS SKILL MATRIX | | | | | | | | | | | | | | SKILL OR EXPERIENCE | Olu Beck | David Biegger | Daryl Brewster | Billy Cyr | Walt George | Jacki Kelley | Lauri Kien Kotcher | Tim McLevish | Leta Priest | Joe Scalzo | Craig Steeneck | David West | | Executive Leadership | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Consumer Packaged Goods (“CPG”) | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Business Growth and Innovation | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Corporate Governance and ESG | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ | | Financial or Accounting | ✔ | ✔ | ✔ | ✔ | | | | ✔ | | ✔ | ✔ | ✔ | | Retail Experience | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | Human Capital Management | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | | ✔ | | Marketing | ✔ | ✔ | ✔ | ✔ | | ✔ | ✔ | | ✔ | ✔ | | ✔ | | Manufacturing and Supply Chain | ✔ | ✔ | ✔ | ✔ | ✔ | | ✔ | ✔ | | ✔ | ✔ | ✔ | | Public Company Board | ✔ | | ✔ | | | | ✔ | ✔ | | ✔ | ✔ | ✔ | | Pet Food Experience | ✔ | | ✔ | ✔ | ✔ | | | | | | | ✔ | | Diverse | ✔ | | | | | ✔ | ✔ | | ✔ | | | |
BOARD OF DIRECTORS
Includes Company Nominees and Continuing Directors.
BOARD OF DIRECTORS
| DEFINITIONS | | | Business Growth and Innovation | Experience in scaling and/or growing a business to provide for sustainable long-term growth | | Consumer Packaged Goods | Experience working for companies that operate in the consumer packaged goods industry | | Corporate Governance and ESG | Experience in managing or overseeing corporate governance, environmental, climate or sustainability practices. Understanding of environmental policy, risk, regulations and compliance | | Diverse | Female and/or racially diverse | | Executive Leadership | CEO or executive management experience with an understanding of complex organizations, strategic planning, risk management, human capital management and corporate governance | | Financial or Accounting | Experience in accounting or finance, including oversight of financial reporting and internal controls of a company | | Human Capital Management | Experience in process of hiring, managing workforces, diversity and inclusion efforts and optimizing productivity | | Manufacturing and Supply Chain | Experience working within or overseeing manufacturing and supply chain divisions | | Marketing | Experience working within or overseeing the marketing function | | Pet Food Experience | Experience working for companies that operate in the pet food industry | | Public Company Board | Prior or concurrent service on other U.S. public company boards | | Retail Experience | Experience working for companies that operate in the retail sector |
DIRECTOR NOMINEES
DIRECTOR NOMINEES
DIRECTOR NOMINEES
| | Director Nominee David B. Biegger has been a member of our Board since May 17, 2023. Mr. Biegger is an accomplished supply chain leader with over 40 years of experience in the consumer package goods industry. Mr. Biegger currently serves as an Operating Partner of Shore Capital Partners, a Chicago-based private equity firm specializing in investments across food & beverage, healthcare and business services sectors. He previously served as Executive Vice President and Chief Supply Chain Officer of Conagra Brands, a leading food and beverage services company, from 2015 until his retirement in May 2021. Prior to joining Conagra Brands, he worked at Campbell Soup Company, providing leadership across the company’s complex Global Supply Chain and Operations functions between 2005 and 2015. He also spent time in his early career building his foundational Manufacturing experience at Proctor & Gamble Company. Mr. Biegger provides the Board with supply-chain and consumer packaged goods expertise, in addition to his executive leadership experience. |
DIRECTOR NOMINEES
| | Director Nominee Daryl G. Brewster has been a member of our Board since January 2011. Since 2013, Mr. Brewster has served as the Chief Executive Officer of CECP, a coalition of chief executive officers from over 200 large cap companies focused on driving sustainable business and improving communication with strategic investors. Since 2008, Mr. Brewster has also been the founder and chief executive officer of Brookside Management, LLC, a boutique consulting firm that provides C-level consulting and support to consumer companies and service providers to the industry. Mr. Brewster serves as an Operating Advisor to The Carlyle Group and previously served as a Management Advisor to MidOcean Partners. Mr. Brewster served as the Chief Executive Officer of Krispy Kreme Doughnuts, Inc. from March 2006 through January 2008. From 1996 to 2006, Mr. Brewster was a senior executive at Nabisco, Inc. and Kraft, Inc. (which acquired Nabisco in 2000), where he served in numerous senior executive roles, most recently as Group Vice President and President, Snacks, Biscuits and Cereal. Before joining Nabisco, Mr. Brewster served as Managing Director, Campbell’s Grocery Products Ltd.—UK, Vice-President, Campbell’s Global Strategy, and Business Director, Campbell’s U.S. Soup. Mr. Brewster serves on the boards of The Bazooka Companies, LLC and Mother Administered Nutritive Assistance (MANA), and previously served on the board of E*Trade Financial Services, Inc. Mr. Brewster provides the Board with experience in corporate leadership, public company operations, and an understanding of the pet and consumer packaged goods industries. |
DIRECTOR NOMINEES
| | Director Nominee Jacki S. Kelley has been a member of our Board since February 2019. Ms. Kelley has over 25 years of executive and senior leadership experience in the media and digital industries. Ms. Kelley currently serves as EVP, Chief Client Officer & Chief Business Officer at IPG. Prior to her current role she served as CEO/Americas at Dentsu, Inc. from January 2020 to September 2023. Ms. Kelley spent five years at Bloomberg, first joining as Chief Operating Officer of Bloomberg Media in 2014 and then moving to Bloomberg LP in 2017 after being appointed Deputy Chief Operating Officer. Before joining Bloomberg, Ms. Kelley was the CEO, North America, and President of Global Clients for IPG Mediabrands as well as Global CEO, Universal McCann. Ms. Kelley was also a Vice President, Worldwide Strategy & Solutions, at Yahoo! and worked with USA Today for 18 years, leaving the company as a Senior Vice President. Ms. Kelley also serves on the board of directors of Comic Relief USA and is an Executive Board member of the Ad Council. Ms. Kelley provides the Board with corporate leadership and extensive senior management experience in media and marketing. |
DIRECTOR NOMINEES
| | Director Nominee Timothy R. McLevish has been a member of our Board since August 21, 2023. Mr. McLevish is a senior corporate finance executive and board member with deep experience in large-scale, complex and global consumer businesses. He has served as Chief Financial Officer at five public companies, including Carrier Corporation, Walgreens Boots Alliance, Inc., Kraft Foods Group, Inc., Ingersoll-Rand Corporation and Mead Corporation. Mr. McLevish previously worked at Touche Ross & Co. and began his career at General Mills. He has served as a member of the board of directors of Revlon, Inc. since April 2023, and is a former member of the board of directors of Conagra Brands, Inc. until its spinoff to Lamb Weston Holdings, Inc. in 2016, where he served as a director until 2017. Mr. McLevish also served as a director of Kennametal, Inc. from 2004 to 2019, during which tenure he served as chair of the audit committee and as a member of the nominating and governance committee, and as a director of R.R. Donnelley & Sons Company from 2016 to 2022, during which tenure he served as chair of the audit committee and as a member of the compensation committee. Mr. McLevish has also served as a director of URS Corporation and US Foods, Inc. Mr. McLevish provides the Board with extensive corporate finance experience and deep experience in large-scale, complex and global consumer businesses. |
CONTINUING DIRECTORS
CONTINUING DIRECTORS
CONTINUING DIRECTORS
| | Director and CEO William B. Cyr has been a member of our Board and our Chief Executive Officer since September 2016. Before assuming his role at Freshpet, Mr. Cyr served as President and Chief Executive Officer of Sunny Delight Beverages Co. (“SDBC”) from August 2004 to February 2016. Prior to joining SDBC, Mr. Cyr spent 19 years at Procter & Gamble, where he ultimately served as the Vice President and General Manager of the North American Juice Business and Global Nutritional Beverages. Mr. Cyr serves as a Board and Executive Committee Member of the Consumer Brands Association, a position he has held since 2002. Additionally, during his time as President and Chief Executive Officer of SDBC, Mr. Cyr was a member of the board of directors of American Beverage Association from 2007 until 2016 and served on the Executive Committee from 2012 to 2016. Mr. Cyr holds an A.B. from Princeton University. Mr. Cyr provides the Board with knowledge of the daily affairs of the Company, expertise in the consumer products industry (including pet products and refrigerated foods), extensive experience in corporate leadership and high growth businesses, including mergers and acquisitions. |
CONTINUING DIRECTORS
| | Director Olu Beck has been a member of our Board since October 2019. Since January 2013, Ms. Beck has been the Founder and Chief Executive Officer of The Beck Group NJ, a boutique strategic and management consulting firm. Ms. Beck also served as Chief Executive Officer and a member of the board of directors of Wholesome Sweeteners, Inc., a maker of consumer-packaged natural and organic sweeteners and snacks, from 2016 to 2018. Prior to that, Ms. Beck served as Head of Global & U.S. Marketing (Shopper) & Health and Wellness for Johnson and Johnson, Inc. from 2010 to 2012. Prior to Johnson and Johnson, Inc., Ms. Beck served in various executive leadership roles in Finance and Sales at Mars Incorporated from 1989 to 2009, including serving as Chief Financial Officer of Uncle Ben’s Rice. Ms. Beck also serves on the boards of directors of Denny’s Corporation (Nasdaq: DENN), Saputo Inc. (TSX: SAP) and Tropicana Brand Group, and served on the board of directors and as Chair of the Audit Committee of Hostess Brands, Inc until its acquisition by The J.M. Smucker Company in November 2023. Ms. Beck has more than 25 years of experience in finance, portfolio business management and general management, including direct experience in transformational and strategic growth—both organically and through mergers and acquisition. Ms. Beck provides the Board with diversified, cross-functional and global experience, extensive management experience in the consumer packaged goods industry and insights into leading practices in executive compensation, corporate governance and audit. |
CONTINUING DIRECTORS
| | Director Leta D. Priest has been a member of our Board since September 2018. Ms. Priest has over 30 years of executive and senior leadership experience in the retail and consumer packaged goods industries. Ms. Priest was a key leader in food for Walmart from May 2003 to November 2015 during Walmart’s expansion of grocery, including serving as Senior Vice President and General Merchandising Manager, Fresh Food from 2009 to 2015. Ms. Priest also served as Senior Vice President, General Merchandising Manager in other key areas of food for Walmart from January 2007 through 2015. Ms. Priest began her career with Walmart as Vice President of Food Development. Ms. Priest joined Walmart from Safeway, where she served as Vice President Corporate Brands, North America from January 1998 to April 2003. Prior to her time at Safeway, Ms. Priest had 11 years of consumer products experience in senior leadership roles across brand management and product development with The Torbitt & Castleman Company and Dole Food Company. Ms. Priest serves as a director on the board of Milo’s Tea Company, a privately held compan, since April 2018. Ms. Priest previously also served on the private company board of Gehl Foods from November 2019 through June 2024. Ms. Priest provides the Board with corporate leadership, public company experience and extensive senior management experience in the retail and consumer packaged goods industries |
CONTINUING DIRECTORS
| | Director David J. West has been a member of our Board since July 21, 2023. Mr. West is an accomplished pet food and consumer products executive who brings over three decades of experience leading a range of blue-chip consumer companies and well-known brands. Mr. West has served as a partner of Centerview Capital Consumer since May 2016. He previously served as Chief Executive Officer and President of Del Monte Foods from August 2011 to March 2015. During that time, Mr. West led the Del Monte Foods’ Consumer Products business through its rebrand to Big Heart Pet Brands and oversaw its sale to The J.M. Smucker Company in March 2015. He then worked for The J.M. Smucker Company as President of Big Heart Pet Food and Snacks until March 2016 and as a Senior Advisor until April 2016. Mr. West previously served as CEO, President and director of The Hershey Company (“Hershey”) from 2007 to May 2011. Prior to Hershey, Mr. West held a range of senior positions at the Nabisco Biscuit and Snacks group, including Senior Vice President, Finance, and Vice President, Corporate Strategy and Business Planning. Mr. West is also currently a member of the board of directors of Advantage Solutions Inc. (Nasdaq: ADV) and The Simply Good Foods Company (Nasdaq: SMPL) and was a member of the board of directors of Hershey (from 2007 to 2011), Del Monte Foods (from 2011 to 2014), Big Heart Pet Brands (from 2014 to 2015) and The J.M. Smucker Company (from 2015 to 2016). Mr. West provides the Board with experience in corporate leadership, public company operations, and an understanding of the pet and consumer packaged goods industries. |
CONTINUING DIRECTORS
| | Director Lauri Kien Kotcher has been a member of our Board since April 9, 2024. Ms. Kien Kotcher’s experience includes serving as a member of the board of directors and as Chief Executive Officer of Quip NYC Inc. since August 2023. Prior to this role, Ms. Kien Kotcher served as Chief Executive Officer of The Shade Store from October 2021 to May 2022, and as Chief Executive Officer of Hello Products from January 2015 to January 2021, as well as Chief Marketing Officer of Godiva Chocolatier from 2009 to 2013. Ms. Kien Kotcher is also the President of LLK Associates, a position she has held since 2003, where she provides advisory and consulting services to consumer products companies. Earlier in her career, she held roles at Lehman Brothers, Pfizer Consumer Healthcare, and spent 16 years at McKinsey & Company. Ms. Kien Kotcher also serves on the board of directors of Farmer’s Fridge and previously served as a director of LXRandCo, Inc. Ms. Kien Kotcher provides the Board with leadership experience in high growth companies as well as senior management experience in marketing. |
CONTINUING DIRECTORS
| | Chair of the Board and Director Walter N. George III has been a member of our Board since 2014, and Chair of the Board since 2023. Mr. George is the President of G3 Consulting, LLC, a boutique advisory firm specializing in value creation in small and mid-market consumer products companies, a company he founded in 2013. Mr. George served as President of the American Italian Pasta Company and Corporate Vice President of Ralcorp Holdings from 2010 until its sale to Conagra Foods in 2013. Mr. George served as Chief Operating Officer at American Italian Pasta Company from 2008 to 2010. From 2001 to 2008, Mr. George served in other executive roles with American Italian Pasta Company, including as Senior Vice President—Supply Chain and Logistics and Executive Vice President—Operations and Supply Chain. From 1988 through 2001, Mr. George held a number of senior operating positions with Hill’s Pet Nutrition, a subsidiary of Colgate Palmolive Company, most recently as Vice President of Supply Chain. Mr. George is non-executive chairman of the board of Indigo Wild, LLC. Mr. George provides the Board with operations expertise, consumer products and pet food industry expertise and public company experience. |
CONTINUING DIRECTORS
| | Director Joseph E. Scalzo has been a member of our Board since August 21, 2023. Mr. Scalzo is an experienced consumer packaged goods executive and board member with significant operational, leadership and governance expertise. He has more than 30 years of experience at leading food and consumer companies, including serving as CEO of The Simply Good Foods Company, Atkins Nutritionals, Inc., and WhiteWave Foods Company, as well as in senior executive roles at Dean Foods, The Gillette Company and The Coca-Cola Company. Mr. Scalzo began his career at Procter & Gamble. He has been a member of the board of directors at Treehouse Foods, Inc. (NYSE: THS) since April 2022, where he serves on the audit committee and compensation committee, and serves as Executive Vice Chairman and member of the board of directors of The Simply Good Foods Company (Nasdaq: SMPL), where he has been a member of the board since July 2017. He will become a partner in Centerview Capital Consumer in September 2024. He formerly served as a director of HNI Corp., Earthbound Farms and Focus Brands. Mr. Scalzo provides the Board with extensive experience in the consumer packaged goods industry and significant operational, leadership and governance expertise. |
CONTINUING DIRECTORS
| | Director Craig D. Steeneck has been a member of our Board since November 2014. Mr. Steeneck served as the Executive Vice President and Chief Financial Officer of Pinnacle Foods Inc., a packaged foods company, from July 2007 to January 2019, where he oversaw the company’s financial operations, treasury, tax, investor relations, corporate development and information technology and was an integral part of the integration team for several of its acquisitions. From June 2005 to July 2007, Mr. Steeneck served as Executive Vice President, Supply Chain Finance and IT of Pinnacle Foods, helping to redesign the supply chain to generate savings and improved financial performance. Pinnacle Foods was acquired by Conagra Brands in October 2018. From April 2003 to June 2005, Mr. Steeneck served as Executive Vice President, Chief Financial Officer and Chief Administrative Officer of Cendant Timeshare Resort Group (now Wyndham Hotels and Resorts, Inc.), playing key roles in wide-scale organization of internal processes and staff management. From March 2001 to April 2003, Mr. Steeneck served as Executive Vice President and Chief Financial Officer of Resorts Condominiums International (now Wyndham Hotels and Resorts, Inc.). From October 1999 to February 2001, Mr. Steeneck was the Chief Financial Officer of International Home Foods Inc. which was acquired by ConAgra Brands in 2000. Prior to its acquisition by The J.M. Smucker Company in November 2023, Mr. Steeneck previously served as a board member and as a member of the Audit Committee of Hostess Brands, Inc., and as lead independent director from January 2019 to December 2019. Mr. Steeneck also previously served as Chairman of the Hostess Brands, Inc. Audit Committee from November 2016 to June 2022. Mr. Steeneck has served as a board member of Utz Brands, Inc. (formerly Collier Creek Holdings) (NYSE: UTZ) since November 2018, where he is Chairman of the audit committee and member of the compensation committee. Mr. Steeneck served on the board of directors of Kind, Inc. from May 2019 to July 2020. Mr. Steeneck provides the Board with extensive management experience in the consumer-packaged goods industry as well as accounting and financial expertise. Mr. Steeneck also has extensive M&A and capital markets experience. |
COMPENSATION PHILOSOPHY AND OBJECTIVES
| • | to encourage our successful NEOs to remain with us for the long term. |
Relevant Peer Group
Relevant Peer Group The Compensation Committee selects a peer group for compensation comparison purposes that includes a blend of comparably-sized companies in similar industries, including pet-related companies—our most likely sources of talent to support our growth. The Committee also adds to this peer group companies experiencing significant growth to help ensure that our compensation practices are competitive with and relevant to the circumstances found in growth-oriented companies. The Company considers peer group data for overall compensation and for specific elements of compensation. Please see “Compensation Discussion and Analysis (CD&A)—Peer Group”.
Significant Portion of Compensation as Equity
Significant Portion of Compensation as Equity We award a significant portion of executive compensation in the form of equity awards, as we believe this is an effective way to help management focus on our long-term goals while also aligning stockholder and management interests. A meaningful portion of our executive compensation consists of stock option awards, which have no value to the recipient unless our stock price rises following the date of the grant.
Long-Term Goal Setting
Long-Term Goal Setting In 2020, the Company set new long-term goals and issued multi-year stock option grants to members of the then current leadership team within the Company. The grants were issued in stock options to align with our growth mindset, and were split between performance-vested and time-vested stock options as follows:
Long-Term Goal Setting
| • | 75% of each participant’s grant value was awarded in the form of performance-vested stock options. |
Long-Term Goal Setting
| • | The performance measures are Adjusted EBITDA (50%) and net sales (50%), with pre-established threshold, target and maximum performance goals that represent significant growth. Given the potential for competitive harm the performance goals have not yet been disclosed, but we will disclose them in our 2024 Proxy Statement filed in 2025 following the conclusion of the four-year performance period, along with the actual level of achievement. These goals represented long-term multi-year growth aspirations aligned with our strategic plan, and are complemented by the annual performance measures and goals in our annual incentive plan, that recognize the importance of year-on-year improvement to drive long-term performance. |
Long-Term Goal Setting
| • | The remaining 25% of each participant’s grant value was awarded in the form of time-vested stock options. |
Long-Term Goal Setting
| • | The time-vested stock options were and are eligible for vesting subject to continued service on a backloaded cadence, with 20% vesting on each of the first, second and third anniversaries of the date of grant, and the remaining 40% vesting on the fourth anniversary of the date of grant. |
Long-Term Goal Setting
| • | Employees receiving the multi-year stock option grants in 2020 are not eligible to receive further equity awards until 2025. |
Long-Term Goal Setting
With this multi-year program concluding at the end of 2024, the Compensation Committee has started discussing the equity grant strategy from 2025 with management. The Committee anticipates moving to an annual award cadence, aligned with preferences expressed by certain of our investors and other external stakeholders, and reflecting the continued evolution and growth of the Company.
INDEPENDENT COMPENSATION CONSULTANT
INDEPENDENT COMPENSATION CONSULTANT From 2019 through 2023, the Compensation Committee retained Korn Ferry (“KF”) to advise on compensation practices for our executive officers, including each NEO. Specifically, KF was engaged to review our compensation peer group and our compensation structure for our executive officers, develop and recommend targets for our executive compensation program by analyzing the compensation structures of our peer group companies and market trends, and provide advice to the Compensation Committee on our executive compensation structure and program based on KF’s analysis. KF was also engaged to separately review the compensation arrangements applicable to employees at the director level and above, and the non-employee, independent directors of the Board In the fourth quarter of 2023, The Compensation Committee conducted a comprehensive review of the Independent Compensation Consultant and effective January 1, 2024 retained WTW to advise on compensation practices on a go-forward basis.
PEER GROUP
PEER GROUP The Compensation Committee, in consultation with KF, considered several factors in selecting an industry-specific compensation peer group. Considerations generally included the following:
PEER GROUP
| • | revenue between 0.4 and 2.5 times Freshpet’s revenue; |
PEER GROUP
| • | companies in the food, beverage, and pet products industries; |
PEER GROUP
| • | companies with similar location and geographical reach; |
PEER GROUP
| • | companies with similar span, scope, and vertical integration; |
PEER GROUP
| • | companies experiencing similar rates of growth; |
PEER GROUP
| • | companies with similar operating complexity; and |
PEER GROUP
| • | other publicly traded companies. |
PEER GROUP
Based on the foregoing considerations, the Compensation Committee determined that our compensation peer group for 2023 would consist of the following entities:
PEER GROUP
| Beyond Meat, Inc. Bridgford Foods Corporation Central Garden & Pet Company Farmer Bros. Co. Hostess Brands, Inc. John B. Sanfilippo & Son, Inc. | Lancaster Colony Corporation Lifecore Biomedical Medifast, Inc. Natural Alternatives International, Inc. Nature’s Sunshine Products, Inc. PetIQ Inc. | PetMed Express, Inc. Tattooed Chef, Inc The Simply Good Foods Company Tootsie Roll Industries, Inc. Yeti Holdings, Inc. |
PEER GROUP
We target the total compensation amount for each of our NEOs (based on position) to be competitive with similarly situated executives within our compensation peer group (bearing in mind that we pay a significant portion of our compensation in the form of long-term, performance-based equity awards). We deliberately target a higher percentile within the benchmark peer group for strategically important roles. We believe that this targeting philosophy will help us to achieve an important goal of our executive compensation program, which is to hire and retain talented and experienced executives who are motivated to achieve or exceed our short-term and long-term goals. We also believe that this compensation structure will help us to achieve our objectives of aligning our NEOs’ interests with the interests of our stockholders and encouraging our successful NEOs to remain with us for the long term.
ELEMENTS OF EXECUTIVE COMPENSATION FOR 2023
ELEMENTS OF EXECUTIVE COMPENSATION FOR 2023 We used three primary elements of compensation in our executive compensation program in 2023: base salary, annual incentive awards, and long-term equity compensation. Annual incentive awards and long-term equity compensation represent the performance-based elements of our compensation program. The performance goals tied to these compensation elements are flexible in application and can be tailored to meet our specific objectives. The amount of a specific individual’s annual incentive award for a performance period is intended to reflect that individual’s relative contribution to the Company in achieving or exceeding our annual goals, and the amount of an individual’s long-term incentive compensation is intended to reflect the individual’s expected contribution to the Company over longer performance periods.
Annual Incentive Awards
Annual Incentive Awards The Board initially adopted our current annual incentive plan—in which our NEOs participate—in 2016. Awards under the plan, which are calculated as a percentage of base salary, are designed to motivate our employees to achieve our annual goals based on our strategic, financial, and operating performance objectives. For 2023, the annual target awards as a percentage of base salary were the following:
Annual Incentive Awards
| NAME | ANNUAL BONUS TARGET (%) | | William B. Cyr | 95% | | Scott Morris | 60% | | Todd Cunfer | 60% | | Thembeka Machaba | 40% | | Cathal Walsh | 40% |
Annual Incentive Awards
In 2023, the annual incentive plan for our NEOs was based on a combination of quantitative financial measures, collectively weighted at 90%, and quantitative Environmental, Social, and Governance, or “ESG” measures. The same quantitative financial measures apply to all plan participants on an equally weighted basis, with the quantitative “ESG” measures only applicable to senior leaders. To encourage teamwork, the Compensation Committee determines a single Company financial performance result that is multiplied against each eligible employee’s target bonus amount to determine annual incentive compensation.
Financial Element
| | WEIGHTING | TARGET (MILLIONS) | MINIMUM THRESHOLD | RESULT (MILLIONS) | | Net Sales | 45% | $760 | $720 | $767 | | Adj. EBITDA before bonus accrual* | 45% | $62.0 | $55.0 | $79.2 |
Financial Element
| * The Compensation Committee defines “Adjusted EBITDA before bonus accrual” for fiscal 2023 as Adjusted EBITDA for the year, prior to the payment of the Annual Incentive Award. As a result, Adjusted EBITDA before bonus accrual as used by the committee was higher by approximately $12.5 million than the Adjusted EBITDA as reported in our Form 10-K (the total amount of the annual incentive award for 2023). |
Executive ESG Goal
| NAME | OPERATIONAL GOALS | EXECUTIVE ESG GOAL | TOTAL PAYOUT AWARDED | | | AMOUNT OF AWARD | AMOUNT OF AWARD | | | William B. Cyr | $902,348 | $78,337 | $980,685 | | Scott Morris | $487,176 | $42,294 | $529,470 | | Todd Cunfer | $459,600 | $39,900 | $499,500 | | Thembeka Machaba | $223,672 | $19,418 | $243,090 | | Cathal Walsh | $243,507 | $21,140 | $264,647 |
Long-Term Equity Compensation
Long-Term Equity Compensation We believe that equity compensation provides our executive officers with a strong link to our long-term performance, creates an ownership culture, and helps to align the interests of our executive officers and our stockholders. Further, we believe that awards with time-based vesting features promote executive retention, as they incentivize our executive officers to remain employed with us for the applicable vesting period. Accordingly, the Compensation Committee (or alternatively, the Board) periodically reviews the equity compensation of our NEOs and from time to time may grant awards as it deems appropriate. We grant equity awards under our 2014 Equity Incentive Plan (or “2014 Plan”), which allows for awards of tax-qualified incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, other stock-based awards, and other cash-based awards to our directors, officers, employees, consultants, and advisors. Each of our NEOs is eligible to participate in our 2014 Plan. The Compensation Committee (or alternatively, the Board) determines the size and vesting terms of all awards made under our 2014 Plan and administers all other aspects of the plan. In 2023, the Compensation Committee took into account a number of factors when making awards under our 2014 Plan, including, among others, the eligible employee’s expected contribution to the long-term success of the Company and information gathered by the Compensation Committee regarding compensation paid to similarly situated executives at companies in our compensation peer group, as well as the amounts of outstanding stock options that each NEO held at such time. Those NEOs who received multi-year stock option grants in December 2020 were not eligible to receive long-term equity awards in 2023, and will remain ineligible for additional long-term equity incentive awards until December 31, 2024. The multi-year grants of stock options were awarded in December 2020 under our 2014 Plan to certain officers. The grants were designed to align senior management with the long-term goals established by the Company in early 2020, and cover a four-year performance period ending December 31, 2024. The stock options comprised a performance-vested and time-vested component:
Long-Term Equity Compensation
| • | 75% of each participant’s grant value was awarded in the form of performance-vested stock options. |
Long-Term Equity Compensation
| • | The performance measures are Adjusted EBITDA (50%) and net sales (50%), with pre-established threshold, target and maximum performance goals that represent significant growth. Given the potential for competitive harm the performance goals have not yet been disclosed, but we will disclose them in our 2024 Proxy Statement filed in 2025 following the conclusion of the four-year performance period, along with the actual level of achievement. These goals represented long-term multi-year growth aspirations aligned with our strategic plan, and are complemented by the annual performance measures and goals in our annual incentive plan, that recognize the importance of year-on-year improvement to drive long-term performance. |
Long-Term Equity Compensation
| • | The remaining 25% of each participant’s grant value was awarded in the form of time-vested stock options. |
Long-Term Equity Compensation
| • | The time-vested stock options were and are eligible for vesting subject to continued service on a backloaded cadence, with 20% vesting on each of the first, second and third anniversaries of the date of grant, and the remaining 40% vesting on the fourth anniversary of the date of grant. |
Long-Term Equity Compensation
| • | Employees receiving the multi-year stock option grants in 2020 are not eligible to receive further equity awards until 2025. |
Long-Term Equity Compensation
As noted above, for competitive reasons, we are not disclosing the specific goals and instead they will be disclosed upon the conclusion of the four-year performance period. Upon a termination by the Company other than for “cause” or by the NEO for “good reason” (each as defined in each applicable award agreements), within two years following a “change in control” (as defined in the applicable award agreements), the time-vesting options will accelerate and vest and the performance-vesting options will in accelerate and vest in part or in full based on actual Company performance through the change in control. Upon termination by the Company other than for “cause” not in connection with a “change in control”, the performance-vesting options will accelerate on a prorated basis based on number of days employed during the performance period, based on actual Company performance through the end of the performance period. In 2023, Messrs. Walsh and Cunfer were the only NEOs eligible to receive long-term equity awards. The Compensation Committee approved awards for the amounts of $158,097 and $608,027, respectively, granted in the form of restricted stock units. The awards vest in three equal annual installments which began on March 13, 2024, with accelerated vesting in full upon termination due to death or “disability”, “involuntary termination without cause” or “voluntary resignation with good reason” (each as defined in the award agreement). For additional information, see “—2023 Outstanding Equity Awards at Fiscal Year-End.”
Other Compensation
| • | short-term and long-term disability insurance. |
EMPLOYMENT AGREEMENTS WITH NEOS
EMPLOYMENT AGREEMENTS WITH NEOS The Company is party to an employment agreement with each of Messrs. Cyr, Morris, Cunfer and Walsh. For Messrs. Cyr, Morris and Walsh, each agreement provides for an initial term of one year and for automatic one-year extensions beginning on the expiration of the initial term. Any automatic extension may be cancelled upon at least 90 days’ prior written notice from the respective NEO or the Company. Under their agreements, and following past adjustments made in connection with the Board’s annual review, Messrs. Cyr, Morris, Cunfer and Walsh are entitled to receive annual base salaries of $620,000, $530,000, $500,000, and $397,368, respectively, subject to annual review by the Board. Further, Messrs. Cyr, Morris, Cunfer and Walsh have the opportunity to earn annual target bonuses equal to at least 95%, 60%, 60% and 40%, respectively, of their base salaries. Each executive is also entitled to participate in the Company’s employee and fringe benefit plans as may be in effect from time to time on the same basis as other employees of the Company generally. The Company is also party to an offer letter with Ms. Machaba, which is described further below.
Employment Agreement with William Cyr
Employment Agreement with William Cyr The Company entered into an employment agreement with Mr. Cyr in July 2016. In the event of a termination of Mr. Cyr’s employment by the Company without “cause,” or by Mr. Cyr for “good reason” (each as defined in his employment agreement), he is generally eligible to receive, subject to his timely execution and non-revocation of a general release of claims against the Company: (i) an amount equal to (A) one and one-half times the sum of his (x) base salary and (y) target bonus, for a period of 18 months, payable in equal monthly payments in accordance with the Company’s normal payroll practice; and (ii) Company payment of premiums (at active employee rates) for continuation of group health coverage for him and his eligible dependents for 18 months. In the event of a termination of Mr. Cyr’s employment due to “permanent disability” (as defined in his employment agreement), he is generally eligible to receive, subject to his timely execution and non-revocation of a general release of claims against the Company, Company payment of premiums (at active employee rates) for continuation of group health coverage for him and his eligible dependents for 18 months. Mr. Cyr’s employment agreement contains a cutback provision for “parachute payments” under Internal Revenue Code (or “Code”) Section 280G, under which he may be subject to a cutback of certain change-in-control payments in order to avoid any excise tax or loss of deduction under Code Section 280G, if the cutback would result (after factoring any potential excise taxes under Section 280G) in a larger after-tax payment to Mr. Cyr. Mr. Cyr’s employment agreement contains the following restrictive covenants: (i) a non-compete covenant that prohibits him from competing against the Company for 24 months after employment; (ii) non-solicit covenants that prohibit him from actively soliciting the Company’s employees, customers, or suppliers during employment and for 24 months after employment; and (iii) a perpetual confidentiality covenant that protects the Company’s proprietary information, developments, and other intellectual property.
Employment Agreements with Scott Morris, Todd Cunfer and Cathal Walsh
Employment Agreements with Scott Morris, Todd Cunfer and Cathal Walsh The Company entered into employment agreements with Messrs. Morris and Walsh in October 2014, and with Mr. Cunfer in December 2022. Under the agreements, in the event of a termination of the NEO by the Company without “cause,” by the NEO for “good reason,” or due to “permanent disability” (each as defined in the respective employment agreements), each NEO is generally eligible to receive, subject to his timely execution and non-revocation of a general release of claims against the Company: (i) an amount equal to 12 months of the NEO’s base salary in accordance with the Company’s normal payroll practice; (ii) Company payment of premiums (at active employee rates) for continuation of group health coverage for the NEO and his eligible dependents for 12 months; and (iii) only in the event of a termination by the Company without “cause” or by the NEO for “good reason” after June 30th during any year in which the employment agreement is effective, a pro-rated annual incentive award based on actual performance for the year in which termination occurs. Each of the employment agreements with Messrs. Morris and Walsh contains a cutback provision for “parachute payments” under Code Section 280G, under which the NEO may be subject to a cutback of certain change-in-control payments in order to avoid any excise tax or loss of deduction under Code Section 280G, if the cutback would result (after factoring any potential excise taxes under Section 280G) in a larger after-tax payment to the NEO. Each of the employment agreements with Messrs. Morris, Cunfer and Walsh contains the following restrictive covenants: (i) a non-compete covenant that prohibits the NEO from competing against the Company for 12 months after employment; (ii) non-solicit covenants that prohibit the NEO from actively soliciting the Company’s employees, customers, or suppliers during employment and for 12 months after employment; and (iii) a perpetual confidentiality covenant that protects the Company’s proprietary information, developments, and other intellectual property.
Inducement Grants to Todd Cunfer
Inducement Grants to Todd Cunfer In December 2022, we granted our CFO, Mr. Cunfer, an inducement grant of stock options in accordance with Nasdaq rules. Mr. Cunfer’s inducement grant consisted of 40,120 time-vesting options and 22,381 restricted stock units.
2023 SUMMARY COMPENSATION TABLE
2023 SUMMARY COMPENSATION TABLE The following table sets forth the compensation for 2023 for each NEO. Compensation information for 2022 and 2021 is presented for individuals who were also our NEOs in those years.
2023 SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($)(1) | Stock Awards ($)(2) | Options Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | | William B. Cyr(6) Chief Executive Officer | 2023 | 620,000 | — | — | 980,685 | 13,200 | 1,613,885 | | | 2022 | 620,000 | — | — | 282,720 | 12,200 | 914,920 | | | 2021 | 600,000 | — | — | 153,440 | 11,600 | 765,040 | | Scott Morris President and Chief Operating Officer | 2023 | 526,154 | — | — | 529,470 | 13,200 | 1,068,824 | | | 2022 | 510,000 | — | — | 146,880 | 12,200 | 669,080 | | | 2021 | 490,000 | — | — | 80,556 | 11,600 | 582,156 | | Todd Cunfer(7) Chief Financial Officer | 2023 | 500,000 | 608,027 | — | 499,500 | 13,200 | 1,620,727 | | | 2022 | 41,667 | 1,500,000 | 1,500,000 | 12,230 | — | 3,053,897 | | Thembi Machaba Chief Human Resources Officer | 2023 | 360,192 | — | — | 243,090 | 5,277 | 608,559 | | | 2022 | 340,000 | — | — | 65,280 | 2,448 | 407,728 | | Cathal Walsh(7) Managing Director, Europe | 2023 | 389,835 | 156,408 | — | 259,630 | — | 805,873 | | | 2022 | 348,379 | 156,235 | — | 60,000 | — | 564,614 | | | 2021 | 429,231 | 149,977 | — | 35,275 | — | 614,483 |
2023 SUMMARY COMPENSATION TABLE
| (1) Amounts reflect base salary earned during the year, including any amounts voluntarily deferred under our qualified 401(k) plan. |
2023 SUMMARY COMPENSATION TABLE
| (2) Amounts reflect the aggregate grant date fair value of restricted stock units granted in the year computed in accordance with FASB ASC Topic 718 and are based on the valuation assumptions described in Note 11 to our consolidated financial statements included in our Annual Report. |
2023 SUMMARY COMPENSATION TABLE
| (3) Amounts reflect the aggregate grant date fair value of options granted in the year computed in accordance with FASB ASC Topic 718 and are based on the valuation assumptions described in Note 11 to our consolidated financial statements included in our Annual Report. |
2023 SUMMARY COMPENSATION TABLE
| (4) Amounts reflect cash awards earned by our NEOs under the Company’s annual incentive plan and with respect to ESG goals established for executives. Please see “Annual Incentive Awards” and “Executive ESG Goals” in the CD&A above for further information about our annual incentive plan. |
2023 SUMMARY COMPENSATION TABLE
| (5) Amounts reflect matching Company contributions under our 401(k) plan. In addition. |
2023 SUMMARY COMPENSATION TABLE
| (6) Mr. Cyr also serves as a member of the Board but does not receive any additional compensation for his service as a director. |
2023 SUMMARY COMPENSATION TABLE
| (7) Mr. Walsh’s annual compensation is €360,000 with an exchange rate of 1.1038 as of December 31, 2023, the last day of the fiscal year. |
2023 GRANTS OF PLAN-BASED AWARDS
2023 GRANTS OF PLAN-BASED AWARDS The following table sets forth certain information with respect to grants of plan-based awards to our NEOs during 2023. Please see “Annual Incentive Awards” in the CD&A above for additional information about the non-equity incentive plan awards reflected in the table below. Please see the “2023 Outstanding Equity Awards at Fiscal Year-End” table below for additional information about the vesting parameters that are applicable to equity awards reflected in the table immediately below.
2023 GRANTS OF PLAN-BASED AWARDS
| Name | Award Type | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise of Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | | | | | Threshold ($) | Target ($) | Maximum ($) | | | | | | William B. Cyr | Annual Incentive | — | — | 589,000 | 1,472,500 | — | — | — | — | | Scott Morris | Annual Incentive | — | — | 318,000 | 795,000 | — | — | — | — | | Todd Cunfer | Annual Incentive | — | — | 300,000 | 750,000 | — | — | — | — | | | RSU Grant under 2014 Plan | 3/13/2023 | — | — | — | 11,007(1) | — | — | 608,027(2) | | Thembeka Machaba | Annual Incentive | — | — | 146,000 | 365,000 | — | — | — | — | | Cathal Walsh | Annual Incentive | — | — | 158,947 | 397,368 | — | — | — | — | | | RSU Grant under 2014 Plan | 3/13/2023 | — | — | — | 2,862(1) | — | — | 158,097(2) |
2023 GRANTS OF PLAN-BASED AWARDS
| (1) Scheduled to vest in three equal annual installments which began on March 13, 2024, subject to continued employment. |
2023 GRANTS OF PLAN-BASED AWARDS
| (2) Amount reflects the aggregate grant date fair value of restricted stock units granted in the year computed in accordance with FASB ASC Topic 718 and is based on the valuation assumptions described in Note 11 to our consolidated financial statements included in our annual report. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table sets forth certain information with respect to outstanding equity awards at December 31, 2023. Vesting of awards reflected in the table is generally subject to continuous service with the Company, with accelerated vesting in certain circumstances, as reflected in the footnotes to the table.
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | | Option Awards | | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | William B. Cyr | 9/6/2016 | 1,000,000 | — | — | 10.23 | 9/6/2026 | — | — | — | — | | | 12/24/2020 | 41,016 | 27,344(1) | 205,079(2) | 142.79 | 12/24/2030 | — | — | — | — | | Scott Morris | 9/27/2016 | 78,368 | — | — | 8.90 | 9/27/2026 | — | — | — | — | | | 4/3/2017 | 81,949 | — | — | 11.00 | 4/3/2027 | — | — | — | — | | | 4/1/2020 | 13,015 | — | — | 63.87 | 4/1/2030 | — | — | — | — | | | 12/24/2020 | 30,762 | 20,508(1) | 153,809(2) | 142.79 | 12/24/2030 | — | — | — | — | | Todd Cunfer | 12/1/2022 | 13,371 | 26,749(3) | — | 67.02 | 12/1/2032 | — | — | — | — | | | 12/1/2022 | — | — | — | — | — | 14,922(3) | 1,294,633(4) | — | — | | | 3/13/2023 | — | — | — | — | — | 11,007(3) | 954,967(4) | — | — | | Thembeka Machaba | 8/1/2020 | 3,333 | 1,667(3) | — | 96.05 | 8/1/2030 | — | — | — | — | | | 12/24/2020 | 16,404 | 10,940(1) | 82,031(2) | 142.79 | 12/24/2030 | — | — | — | — | | Cathal Walsh | 5/10/2016 | 14,184 | — | — | 9.05 | 5/10/2026 | — | — | — | — | | | 4/3/2017 | 15,449 | — | — | 11.00 | 4/3/2027 | — | — | — | — | | | 3/30/2018 | 16,092 | — | — | 16.45 | 3/30/2028 | — | — | — | — | | | 4/1/2019 | 6,820 | — | — | 42.29 | 4/1/2029 | — | — | — | — | | | 4/1/2020 | 4,932 | — | — | 63.87 | 4/1/2030 | — | — | — | — | | | 10/1/2020 | 35,000 | — | — | 111.65 | 10/1/2030 | — | — | — | — | | | 10/1/2020 | 20,000 | — | — | 111.65 | 10/1/2030 | — | — | — | — | | | 3/12/2021 | — | — | — | — | — | 319(5) | 27,676(4) | — | — | | | 3/14/2022 | — | — | — | — | — | 1,235(5) | 107,149(4) | — | — | | | 3/13/2023 | — | — | — | — | — | 2,862 | 248,307(4) | — | — |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (1) Scheduled to vest annually in approximately equal installments on the first four anniversaries of the grant date, subject to continued employment, with accelerated pro rata vesting based on the number of days worked following the grant date upon a termination of employment by the Company without cause or upon a resignation by the executive for good reason (as defined in the grant agreement) within two years after a change in control of the Company. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (2) Eligible to vest based upon the achievement of performance goals upon the conclusion of a four-year performance period, subject to continued employment, with (a) the opportunity to vest in a pro rata portion based on the number of days employed during the performance period upon a termination by the Company other than for cause, based on actual Company performance through the end of the performance period, and (b) the opportunity to vest in part or in full upon a termination of employment by the Company without cause or upon a resignation by the executive for good reason (as defined in the grant agreement) within a two years after a change in control of the Company, based on actual Company performance through the change in control. For competitive reasons, these performance goals shall not be disclosed until the end of the performance period. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (3) Scheduled to vest annually in approximately equal installments on the first three anniversaries of the grant date, subject to the Executive’s continued employment through such vesting dates. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (4) Amount reflects the value as of December 29, 2023 based on the Company’s closing stock price of $86.76 as of December 29, 2023, the last trading day during 2023. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (5) Scheduled to vest in three equal annual installments on the first three anniversaries of the grant date, with accelerated vesting in full upon termination due to death or Disability, Involuntary Termination Without Cause or Voluntary Resignation with Good Reason (as each is defined in the award agreement). |
2023 OPTIONS EXERCISES AND STOCK VESTED
2023 OPTIONS EXERCISES AND STOCK VESTED The following table sets forth certain information regarding vesting of stock awards owned by one of our NEOs during 2023. None of our NEOs exercised of stock options by our NEOs in 2023.
2023 OPTIONS EXERCISES AND STOCK VESTED
| NAME | NUMBER OF SHARES ACQUIRED ON VESTING (#) | VALUE REALIZED ON VESTING ($)(1) | | William B. Cyr | | | | Scott Morris | | | | Todd Cunfer | 7,459 | 638,416(1) | | Thembi Machaba | | | | Cathal Walsh | 936(2) | 52,461(3) |
2023 OPTIONS EXERCISES AND STOCK VESTED
| (1) Reflect the market value of the underlying shares on the vesting date based on $85.59, the closing price of the common stock on December 19, 2023. |
2023 OPTIONS EXERCISES AND STOCK VESTED
| (2) Reflects the vested amount on March 12, 2023 of 319 shares and March 14, 2023 of 617 shares. |
2023 OPTIONS EXERCISES AND STOCK VESTED
| (3) Reflects the market value of the underlying shares on the vesting date based on $56.78 and $55.67, the closing price of the common stock on March 10, 2023 and March 14, 2023, respectively, as March 10, 2023 was the last trading day prior to the March 12, 2023 vesting. |
PENSION BENEFITS
PENSION BENEFITS Currently, the Company does not sponsor or adopt any pension plans (other than our 401(k) plan).
NONQUALIFIED DEFERRED COMPENSATION
NONQUALIFIED DEFERRED COMPENSATION Currently, the Company does not sponsor or adopt a nonqualified deferred compensation plan.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The following table sets forth information regarding the severance payments and the change in control payments that could have been made to our NEOs had they experienced a termination of employment or a change in control as of December 31, 2023. The fair market value of a share of our common stock on December 29, 2023, the last trading day of 2023, was $86.76. The table only includes information for employment termination and change in control events that trigger vesting or severance-related payments, and assumes that each NEO will take all action necessary to receive the maximum available benefit, such as execution of a release of claims. Any amounts payable to the NEOs in the event of a change in control of the Company may be subject to reduction under Code Sections 280G and 4999. The amounts below are estimates of the incremental amounts that could be received upon a change in control or termination of employment; the actual amount could be determined only at the time of any actual change in control or termination of employment.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| NAME | CASH ($) | COBRA ($) | EQUITY ($) | TOTAL ($) | | William B. Cyr | | | | | | Termination due to permanent disability | — | 47,388(1) | —(5) | 47,388 | | Involuntary termination(10) | 2,720,250(2) | 47,388(1) | —(5) | 2,767,638 | | Change in control | — | — | — | — | | Involuntary termination after change in control | 2,720,250(2) | 47,388(1) | —(6) | 2,767,638 | | Scott Morris | | | | | | Termination due to permanent disability | — | 31,592(3) | —(7) | 31,592 | | Involuntary termination(10) | 1,059,470(4) | 31,592(3) | —(7) | 1,091,062 | | Change in control | — | — | — | — | | Involuntary termination after change in control | 1,059,470(4) | 31,592(3) | —(8) | 1,091,062 | | Todd Cunfer | | | | | | Termination due to permanent disability | — | 31,592(3) | — | 31,592 | | Involuntary termination(10) | 999,500(4) | 31,592(3) | 528,025(9) | 1,559,117 | | Change in control | — | — | 528,025(9) | 528,025 | | Involuntary termination after change in control | 999,500(4) | 31,592(3) | 528,025(9) | 1,559,117 | | Cathal Walsh | | | | | | Termination due to permanent disability | — | — | — | — | | Involuntary termination(10) | 662,015(4) | — | —(11) | 662,015 | | Change in control | — | — | —(11) | — | | Involuntary termination after change in control | 662,015(4) | — | —(11) | 662,015 | | Thembeka Machaba | | | | | | Termination due to permanent disability | — | — | — | — | | Involuntary termination(10) | — | — | —(12) | — | | Change in control | — | — | —(12) | — | | Involuntary termination after change in control | — | — | —(12) | — |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (1) Amount reflects the cost of COBRA premiums for 18 months following termination. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (2) Amount reflects 1.5 times the sum of Mr. Cyr’s base salary and target bonus for a period of 18 months. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (3) Amounts reflect the cost of COBRA premiums for one year following termination. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (4) Amounts reflect (i) one year of base salary and (ii) pro-rated bonus based on actual performance for the 2023 performance year. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (5) As of December 31, 2023, Mr. Cyr held unvested performance-vesting options to purchase 205,079 shares of stock with an exercise price of $142.79 which would have accelerated on a pro-rata basis upon a termination by the Company other than for cause. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (6) As of December 31, 2023, Mr. Cyr held unvested (i) performance-vesting options to purchase 205,079 shares of stock with an exercise price of $142.79 which would have accelerated upon an Involuntary Termination within two years after a change in control of the Company, based on actual Company performance through the change in control and (ii) unvested time-vesting options to purchase 41,016 shares of stock with an exercise price of $142.79 which would have accelerated on a pro-rata basis upon an Involuntary Termination within two years after a change in control of the Company. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (7) As of December 31, 2023, Mr. Morris held unvested performance-vesting options to purchase 153,809 shares of stock with an exercise price of $142.79 which would have accelerated on a pro-rata basis upon a termination by the Company other than for cause. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (8) As of December 31, 2023, Mr. Morris also held unvested (i) performance-vesting options to purchase 153,809 shares of stock with an exercise price of $142.79 which would have accelerated upon an Involuntary Termination within two years after a change in control of the Company, based on actual Company performance through the change in control and (ii) unvested time-vesting options to purchase 30,762 shares of stock with an exercise price of $142.79 which would have accelerated on a pro-rata basis upon an Involuntary Termination within a two years after a change in control of the Company. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (9) As of December 31, 2023, Mr. Cunfer held unvested (i) time-vesting options to purchase 26,749 shares of stock with an exercise price of $67.02 which would have fully accelerated in connection with a change of control occurring on December 31, 2023 if the options had not been assumed, repurchased by the Company, or terminated. Mr. Cunfer also had 25,929 restricted stock units which would have fully accelerated in connection with a change of control occurring on December 31, 2023. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (10) An “Involuntary Termination” means a termination by the Company without cause or by the NEO for good reason. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (11) As of December 31, 2023, Mr. Walsh did not hold any unvested (i) time-vesting options to purchase shares of stock. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (12) As of December 31, 2023, Ms. Machaba held unvested (i) performance-vesting options to purchase 82,031 shares of stock with an exercise price of $142.79 which would have accelerated upon an Involuntary Termination within two years after a change in control of the Company, based on actual Company performance through the change in control and (ii) unvested time-vesting options to purchase 10,940 shares of stock with an exercise price of $142.79 and 1,667 shares of stock with an exercise price of $96.05 which would have accelerated on a pro-rata basis upon an Involuntary Termination within two years after a change in control of the Company. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (13) No equity value was attributable to options with an exercise price at or above the December 29, 2023 stock price of $86.76, the last day of trading during the fiscal year. |
CEO PAY RATIO
CEO PAY RATIO To determine the ratio of our CEO’s annual total compensation to the median annual total compensation of all our employees excluding the CEO, we identified, as of December 31, 2023, the median employee using annual base salary. We sorted the data set from lowest to highest salary using salary amounts calculated as of December 31, 2023, noting that all salaries were annualized for employees who were new hires or worked a partial year and without excluding any employees from the data set. We believe this measure reasonably reflects the typical annual compensation of our employee population and is a consistently applied compensation measure for all employees. We estimate that the median employee’s 2023 total compensation was $74,264, as calculated pursuant to the Summary Compensation Table Rules. Mr. Cyr’s 2023 total compensation was $1,613,885 which was approximately 22 times that of the median of the annual total compensation of all our employees (1: 22 ratio). To determine the ratio of our CEO’s annual total compensation to the median annual total compensation of all our employees excluding the CEO, we identified, as of December 31, 2023, the median employee using annual base salary. We sorted the data set from lowest to highest salary using salary amounts calculated as of December 31, 2023, noting that all salaries were annualized for employees who were new hires or worked a partial year and without excluding any employees from the data set. We believe this measure reasonably reflects the typical annual compensation of our employee population and is a consistently applied compensation measure for all employees.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, the following table describes the executive compensation for our Chief Executive Officer, who is our Principal Executive Officer (“PEO”), the other NEOs, and the Company’s performance for our four most recently completed fiscal years.
PAY VERSUS PERFORMANCE
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Fiscal Year | Summary Compensation Table Total for PEO(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for non-PEO NEOs(3) | Average Compensation Actually Paid to non-PEO NEOs(4) | Total Shareholder Return | Peer Group Total Shareholder Return(5) | Net Income (in millions)(6) | Net Sales (in millions)(7) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | $1,613,885 | $12,186,818 | $1,025,996 | $4,536,365 | $146.83 | $172.77 | $(33.61) | $766.90 | | 2022 | $914,920 | $(2,714,943) | $980,228 | $(398,985) | $89.30 | $119.45 | $(59.49) | $595.34 | | 2021 | $765,040 | $(7,070,793) | $522,686 | $(3,320,911) | $161.23 | $177.06 | $(29.67) | $425.49 | | 2020 | $15,858,452 | $24,395,225 | $6,537,735 | $13,384,214 | $240.29 | $144.92 | $(3.19) | $318.79 |
PAY VERSUS PERFORMANCE
| (1) During all four reported fiscal years, Mr. Cyr served as our PEO. The dollar amounts reported in this column are the amounts of total compensation reported for each corresponding year in the Total column of the Summary Compensation Table. |
PAY VERSUS PERFORMANCE
| (2) The dollar amounts reported in this column represent the amount of “compensation actually paid” to Mr. Cyr as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual amount of compensation earned by or paid to Mr. Cyr during the applicable year. The values for fiscal years 2020, 2021, and 2022 differ from those published in our August 31, 2023 Proxy Statement as a result of changes in our understanding of the assumptions and methodologies required under the SEC rules. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments (which are also updated) were made to Mr. Cyr’s total compensation for each year to determine the compensation actually paid: |
PAY VERSUS PERFORMANCE
| FISCAL YEAR | 2020 | 2021 | 2022 | 2023 | | SCT Total | $15,858,452 | $765,040 | $914,920 | $1,613,885 | | - Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | $(14,701,112) | $— | $— | $— | | + Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | $14,276,655 | $— | $— | $— | | + Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | $— | $(7,308,209) | $(3,357,103) | $9,749,898 | | + Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | $— | $— | $— | $— | | + Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $8,961,230 | $(527,624) | $(272,761) | $823,034 | | - Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $— | $— | $— | $— | | Compensation Actually Paid(a) | $24,395,225 | $(7,070,793) | $(2,714,943) | $12,186,818 |
PAY VERSUS PERFORMANCE
| (a) Amounts may not sum due to rounding |
PAY VERSUS PERFORMANCE
| (3) The dollar amounts reported represent the average of the amounts reported for the Company’s NEOs as a group (excluding Mr. Cyr) in the “Total” column of the Summary Compensation Table in each applicable year. The NEOs (excluding Mr. Cyr) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Scott Morris, Todd Cunfer, Thembeka Machaba, and Cathal Walsh; (ii)for 2022, Scott Morris, Todd Cunfer, Thembeka Machaba, Cathal Walsh, Richard Kassar, and Heather Pomerantz; (iIi) for 2021, Scott Morris, Heather Pomerantz, Stephen Weise, and Cathal Walsh; (iv) for 2020, Scott Morris, Heather Pomerantz, Stephen Weise, Cathal Walsh, and Richard Kassar. The values for fiscal year 2020 differs from our August 31, 2023 Proxy Statement to reflect the unintended omission of Richard Kassar. |
PAY VERSUS PERFORMANCE
| (4) The dollar amounts reported in this column represent the average amount of “compensation actually paid” to the Non-PEO NEOs as a group as identified in footnote 3 above, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average of compensation earned by or paid to these NEOs as a group during the applicable year. The values for fiscal years 2020, 2021, and 2022 differ from those published in our August 31, 2023 Proxy Statement as a result of changes in our understanding of the assumptions and methodologies required under the SEC rules. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments *which are also updated) were made to the average total compensation for these NEOs as a group for each year to determine the compensation actually paid: |
PAY VERSUS PERFORMANCE
| FISCAL YEAR | 2020 | 2021 | 2022 | 2023 | | SCT Total | $6,537,735 | $522,686 | $980,228 | $1,025,996 | | - Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | $(6,027,297) | $(37,494) | $(526,039) | $(191,109) | | + Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | $6,690,739 | $22,770 | $579,010 | $300,819 | | + Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | $565,895 | $(3,689,321) | $(835,444) | $2,840,261 | | + Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | $— | $— | $— | $— | | + Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $5,617,141 | $(139,552) | $(87,366) | $560,398 | | - Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $— | $— | $(509,374) | $— | | Compensation Actually Paid(a) | $13,384,214 | $(3,320,911) | $(398,985) | $4,536,365 |
PAY VERSUS PERFORMANCE
| (a) Amounts may not sum due to rounding |
PAY VERSUS PERFORMANCE
| (5) The peer group used for total shareholder return comparisons refects the Nasdaq Composite, which is one of the Company’s indices utilized in the stock performance graph set forth in our Annual Report. |
PAY VERSUS PERFORMANCE
| (6) The dollar amounts reported represent the amount of net income (loss) reflected in the Company’s audited financial statements for the applicable year. |
PAY VERSUS PERFORMANCE
| (7) This column is the “Company-Selected Measure,” which in the registrant’s assessment represents the most important financial performance measure (that is not otherwise required to be disclosed in the table) used by the registrant to link compensation actually paid to the registrant’s named executive officers, for the most recently completed fiscal year, to Company performance. The value for fiscal 2020 has been corrected. |
Relationships Between Certain Data in the Pay Versus Performance Table
Relationships Between Certain Data in the Pay Versus Performance Table
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid (CAP) and Total Shareholder Return (TSR)
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid (CAP) and Total Shareholder Return (TSR) The following chart sets forth the relationship between (i) the Company’s cumulative total shareholder return over the four most recently completed fiscal years and the Nasdaq Composite index’s cumulative total shareholder return (TSR) over the same period, and (ii) the compensation actually paid (CAP) to our PEO and the average CAP to our non-PEO NEOs.
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income (Loss)
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income (Loss) The following chart sets forth the relationship between CAP to our PEO, the average of CAP to our Non-PEO NEOs, and our net income (loss) during the four most recently completed fiscal years.
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Sales
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Sales The following chart sets forth the relationship between compensation actually paid to our PEO, the average of compensation actually paid to our Non-PEO NEOs, and our Net Sales during the four most recently completed fiscal years.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The full Board approved director compensation for 2023, based on the recommendation of the Compensation Committee with assistance from KF, and in accordance with the Company’s non-employee director compensation program. For 2023, each non-employee member of the Board who served for the entire year received an annual cash retainer of $60,000, paid quarterly. In addition, certain directors who served as Chairs of Board committees received additional cash payments for 2023 as follows: $15,000 for the Chair of the Company’s Audit Committee and $7,500 each for the Chairs of the Compensation Committee and the Nominating and Governance Committee. Certain directors who served on multiple committees also received additional cash payments for 2023 of $5,000. The following table shows compensation paid to each of our non-employee directors who served during 2023. Mr. Cyr, our Chief Executive Officer, also serves as a director of the Company, but did not receive any additional compensation for his service as a director. Please see the “2023 Summary Compensation Table” for the compensation received by Mr. Cyr as Chief Executive Officer of the Company.
DIRECTOR COMPENSATION
| NAME | FEES EARNED OR PAID IN CASH ($) | STOCK AWARDS ($)(1) | Shares(2) | TOTAL ($) | | Charles A. Norris(3) | 33,462 | 169,999 | 2,994 | 203,461 | | Walter N. George III(4) | 64,162 | 119,976 | 2,113 | 184,138 | | J. David Basto(5) | 25,000 | | | 25,000 | | Olu Beck(6) | 61,875 | 119,976 | 2,113 | 181,851 | | Daryl G. Brewster(7) | 68,370 | 119,976 | 2,113 | 188,346 | | Lawrence S. Coben(8) | 60,000 | 119,976 | 2,113 | 179,976 | | Jacki S. Kelley(9) | 63,338 | 119,976 | 2,113 | 183,314 | | Leta D. Priest(10) | 61,799 | 119,976 | 2,113 | 181,775 | | Craig D. Steeneck(11) | 71,250 | 119,976 | 2,113 | 191,226 | | David Biegger(12) | 38,750 | 119,995 | 1,872 | 158,745 | | David West(13) | 26,703 | 119,956 | 1,837 | 146,659 | | Timothy McLevish(14) | 21,593 | 119,951 | 1,513 | 141,544 | | Joe Scalzo(14) | 21,593 | 119,951 | 1,513 | 141,544 |
DIRECTOR COMPENSATION
| (1) Represents the aggregate grant date fair value of shares of restricted Common Stock granted under our 2014 Plan without regard to forfeitures, computed in accordance with FASB ASC Topic 718 and is based on the valuation assumptions described in Note 11 to our consolidated financial statements included in our annual report. This amount does not reflect the actual economic value realized by the director. The stock awards reflected in the table comprise all outstanding equity awards held by our non-employee directors at the end of 2023. |
DIRECTOR COMPENSATION
| (2) Number of shares outstanding as of December 31, 2023. |
DIRECTOR COMPENSATION
| (3) Charles A. Norris served as Chair of the Board until July 20, 2023. |
DIRECTOR COMPENSATION
| (4) Walter N. George III served as Chair of the Nominating and Governance Committee until July 20, 2023. Mr. George then served as the Chair of the Board beginning July 20, 2023. |
DIRECTOR COMPENSATION
| (5) J. David Basto resigned from the Board effective May 31, 2023. |
DIRECTOR COMPENSATION
| (6) During 2023, Olu Beck served on two committees: the Audit Committee and the Compensation Committee. Ms. Beck now serves on the Operations and FSQA Committee. |
DIRECTOR COMPENSATION
| (7) Daryl G. Brewster serves as Chair of the Compensation Committee. |
DIRECTOR COMPENSATION
| (8) Lawrence S. Coben retired from the Board as of April 8, 2024. |
DIRECTOR COMPENSATION
| (9) Jacki S. Kelley served as chair of the Nominating and Governance Committee from July 20, 2023 until June 18, 2024. |
DIRECTOR COMPENSATION
| (10) Leta D. Priest served on two committees: the Nominating and Governance Committee and the Compensation Committee. Ms. Priest served as the Chair of the Nominating and Governance Committee beginning on June 18, 2024. |
DIRECTOR COMPENSATION
| (11) Craig D. Steeneck serves as the Chair of the Audit Committee and serves on the Operations and FSQA Committee. |
DIRECTOR COMPENSATION
| (12) David Biegger joined the Board effective May 17, 2023 and serves on the Audit Committee and as Chair of the Operations and FSQA Committee. |
DIRECTOR COMPENSATION
| (13) David West joined the Board effective July 21, 2023 and serves on the Compensation Committee. |
DIRECTOR COMPENSATION
| (14) Messrs. McLevish and Scalzo joined the Board effective August 21, 2023. Mr. McLevish serves on the Audit Committee and Mr. Scalzo serves on the Operations and FSQA Committee. |
DIRECTOR COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table shows information about the beneficial ownership of our Common Stock as of July 31, 2024 by:
DIRECTOR COMPENSATION
| • | each person known by us to beneficially own 5% or more of our outstanding Common Stock (each, a “Principal Stockholder” below); |
DIRECTOR COMPENSATION
| • | each of our directors, director nominees and named executive officers; and |
DIRECTOR COMPENSATION
| • | all of our directors and executive officers as a group. |
DIRECTOR COMPENSATION
The numbers listed below are based on 48,483,030 shares of our Common Stock outstanding as of July 31, 2024. Unless otherwise indicated, the address of each individual listed in this table is c/o Freshpet, Inc., 1545 US-206, Bedminster, NJ 07921.
DIRECTOR COMPENSATION
| NAME AND ADDRESS OF BENEFICIAL OWNER(1) | AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OF COMMON STOCK | PERCENT OF COMMON STOCK OUTSTANDING | | PRINCIPAL STOCKHOLDERS: | | | | Wellington Management Group LLP (2) | 6,527,178 | 13.5% | | The Vanguard Group, Inc.(3) | 4,652,698 | 9.7% | | Champlain Investment Partners, LLC (4) | 3,794,059 | 7.9% | | William Blair Investment Management, LLC(5) | 2,629,801 | 5.5% | | Wasatch Advisors LP (6) | 2,774,353 | 5.8% | | NAMED EXECUTIVE OFFICERS AND DIRECTORS: | | | | Walter N. George III | 44,176 | * | | William B. Cyr(7) | 1,118,367 | 2.3% | | Olu Beck | 6,483 | * | | David B. Biegger | 1,872 | * | | Daryl G. Brewster | 54,791 | * | | Jacki S. Kelley | 8,566 | * | | Lauri Kien Kotcher | — | — | | Timothy R. McLevish | 25,513 | * | | Leta D. Priest | 9,640 | * | | Joseph Scalzo | 1,513 | * | | Craig D. Steeneck | 29,384 | * | | David J. West | 1,837 | * | | Scott Morris | 335,106 | * | | Todd Cunfer | 18,599 | * | | Cathal Walsh | 115,310 | * | | Thembeka “Thembi” Machaba | 21,404 | * | | EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP (18 PERSONS) | 1,805,794 | 3.7% |
DIRECTOR COMPENSATION
| * Less than 1% |
DIRECTOR COMPENSATION
| (1) A “beneficial owner” of a security is determined in accordance with Rule 13d-3 under the Exchange Act and generally means any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise, has or shares: |
DIRECTOR COMPENSATION
| • | voting power, which includes the power to vote, or to direct the voting of, such security; and/or |
DIRECTOR COMPENSATION
| • | investment power, which includes the power to dispose, or to direct the disposition of, such security. |
DIRECTOR COMPENSATION
Unless otherwise indicated, all amounts above are as of July 31, 2024, and each person named in the table above has sole voting and investment power, or shares voting and investment power with his or her spouse (as applicable), with respect to all shares of stock listed as owned by that person. Shares issuable upon the exercise of options exercisable on July 31, 2024 or within 60 days and restricted stock units that vest and are required to be delivered within 60 days thereafter are considered outstanding and to be beneficially owned by the person holding such options for the purpose of computing such person’s beneficial ownership percentage but are not deemed outstanding for the purpose of computing the beneficial ownership percentage of any other person.
DIRECTOR COMPENSATION
| (2) Represents shares of common stock beneficially owned as of December 29, 2023, based on Amendment No. 1 to a Schedule 13G filed on February 8, 2024, by Wellington Management Group LLP, Wellington Group Holdings LLP and Wellington Investment Advisors Holdings LLP (together, “Wellington”) and Wellington Management Company LLP (“Wellington Management”), pursuant to which Wellington reports shared voting power over 2,812,561 shares and shared dispositive power over 3,359,855 shares, and Wellington Management reports shared voting power over 2,806,245 shares and shared dispositive power over 3,167,323 shares. In such filing, Wellington lists its address as 280 Congress Street, Boston, MA 02210. |
DIRECTOR COMPENSATION
| (3) Represents shares of common stock beneficially owned as of December 29, 2023, based on Amendment No. 4 to a Schedule 13G filed on February 13, 2024, by The Vanguard Group, Inc., pursuant to which The Vanguard Group, Inc. reports sole voting power over zero shares, shared voting power over 16,981 shares, sole dispositive power over 4,587,155 shares and shared dispositive power over 65,543 shares. In such filing The Vanguard Group, Inc., lists its address as 100 Vanguard Blvd., Malvern, PA 19355. |
DIRECTOR COMPENSATION
| (4) Represents shares of common stock beneficially owned as of December 31, 2023, based on a Schedule 13G/A filed on February 13, 2024, by Champlain Investment Partners, LLC, pursuant to which Champlain Investment Partners, LLC reports sole voting power over 3,275,239 shares and sole dispositive power over 3,794,059 shares. In such filing, Champlain Investment Partners, LLC lists its address as 180 Battery St., Burlington, Vermont 05401. |
DIRECTOR COMPENSATION
| (5) Represents shares of common stock beneficially owned as of December 31, 2023, based on a Schedule 13G filed on February 12, 2024, by William Blair Investment Management, LLC, pursuant to which William Blair Investment Management, LLC reports sole voting power over 2,382,799 shares and sole dispositive power over 2,629,801 shares. In such filing, William Blair Investment Management, LLC lists its address as 150 North Riverside Plaza, Chicago, IL 60606. |
DIRECTOR COMPENSATION
| (6) Represents shares of common stock beneficially owned as of December 31, 2023, based on Amendment No. 3 to a Schedule 13G filed on February 9, 2024, by Wasatch Advisors LP, pursuant to which Wasatch Advisors LP reports sole voting power over 2,774,353 shares and sole dispositive power over 2,774,353 shares. In such filing, Wasatch Advisors LP lists its address as 505 Wakara Way, Salt Lake City, UT 84108. |
DIRECTOR COMPENSATION
| (7) Includes 77,351 shares of common stock and 783,516 options to purchase common stock held by Mr. Cyr directly, 55,000 options to purchase shares of common stock held by his spouse, 107,500 options to purchase shares of common stock held by Irrevocable Spousal Trust for Linda W. Cyr, and 95,000 options to purchase shares of common stock held by Linda W. Cyr 2020 Irrevocable Trust for Descendant. |
PROPOSAL NO. 1: ELECTION OF DIRECTORS
PROPOSAL NO. 1: ELECTION OF DIRECTORS The Board has nominated David B. Biegger, Daryl G. Brewster, Jacki S. Kelley and Timothy R. McLevish to be elected to the Board to serve until the 2025 Annual Meeting of stockholders and until their respective successors are duly elected and qualified. For more information on the Company Nominees, please see page 40 of this Proxy Statement. Holders of proxies solicited by this Proxy Statement will vote the proxies received by them as directed on the proxy card or, if no direction is made, for the re-election of the four Company Nominees. Each of the Company Nominees has consented to serve as a nominee, to serve, if elected, as a director until the 2025 Annual Meeting and until his or her successor is elected and has qualified (or until such director’s earlier death, resignation or removal); and to being named as a nominee in this Proxy Statement. Should any of the four Company Nominees become unable to accept nomination or election as a director (which is not anticipated as of the date of this Proxy Statement), the Company’s named proxy holders will vote for such substitute Company Nominee as may be selected by the Board, unless the size of the Board is reduced.