DEF 14A of Cal-Maine Foods Inc
Filed Aug 22, 2024 · FY20240001140361-24-038234
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 4, 2024
| | Adolphus B. Baker Chairman, Cal-Maine Foods, Inc. | | | | | | Age | Director Since | Committees | Other Public Company Directorships | | | 67 | 1991 | • Executive (Chair) • Nominating (Chair) | Trustmark Corporation and Trustmark National Bank |
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 4, 2024
| | Max P. Bowman Vice President, Chief Financial Officer, Cal-Maine Foods, Inc. | | | | | | Age | Director Since | Committees | Other Public Company Directorships | | | 64 | 2018 | • Executive | None |
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 4, 2024
| | Letitia C. Hughes Retired Senior Vice President, Trustmark National Bank | | | | | | Age | Director Since | Committees | Other Public Company Directorships | | | 72 | 2001 | • Audit (Chair) • Compensation • Long-Term Incentive Plan • Nominating | None |
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 4, 2024
| | Sherman L. Miller President and Chief Executive Officer, Cal-Maine Foods, Inc. | | | | | | Age | Director Since | Committees | Other Public Company Directorships | | | 49 | 2012 | • Executive | None |
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 4, 2024
| | James E. Poole Retired Founder and Managing Partner, GranthamPoole | | | | | | Age | Director Since | Committees | Other Public Company Directorships | | | 75 | 2004 | • Audit • Compensation (Chair) • Long-Term Incentive Plan (Chair) • Nominating | None |
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 4, 2024
| | Steve W. Sanders Retired Managing Partner Ernst & Young | | | | | | Age | Director Since | Committees | Other Public Company Directorships | | | 78 | 2009 | • Audit • Compensation • Long-Term Incentive Plan • Nominating | None |
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 4, 2024
| | Camille S. Young Principal and Director, Cornerstone Government Affairs | | | | | | Age | Director Since | Committees | Other Public Company Directorships | | | 51 | 2021 | • Audit • Compensation • Long-Term Incentive Plan • Nominating | Mississippi Power Company |
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 4, 2024
EXECUTIVE OFFICERS OF THE COMPANY The following information sets forth the name, age, principal occupation and business experience during the last five years of each of the current executive officers of the Company. The executive officers serve at the pleasure of the Board. ADOLPHUS B. BAKER, age 67, is Chairman of the Board. See previous description under “Director Nominees.” SHERMAN L. MILLER, age 49, is President, Chief Executive Officer and a director. See previous description under “Director Nominees.” MAX P. BOWMAN, age 64, is Vice President, Chief Financial Officer, Treasurer and Secretary and a director. See previous description under “Director Nominees.” ROBERT L. HOLLADAY, JR., age 48, is Vice President – General Counsel. Mr. Holladay joined the Company and was appointed to this position in 2011. MICHAEL T. WALTERS, age 53, is Vice President – Operations and Chief Operating Officer. Mr. Walters has served as a Vice President since July 11, 2011. He was appointed as Chief Operating Officer by the Board on March 24, 2023. SCOTT D. HULL, age 37, is Vice President – Sales. Mr. Hull assumed the executive officer role on April 4, 2024 and has served as Vice President - Sales since October 1, 2021. Prior to that time, Mr. Hull served as National Sales Manager from September 2016. Mr. Hull previously served as a general manager at the Company’s Louisburg, North Carolina, location before joining the sales team in 2014. He has been with the Company since 2009. CORPORATE GOVERNANCE Meetings and Attendance Our Board of Directors holds regularly scheduled quarterly meetings and may hold special meetings each year. Normally, committee meetings occur the day of the Board meeting. At each quarterly Board meeting, time is set aside for the independent directors to meet without management present. Our Board held four regularly scheduled quarterly meetings, six special meetings, and took action by written consent twice during fiscal year 2024. All of our directors attended at least 75% of the aggregate of all Board of Directors meetings and meetings of the committees on which they served during their tenure in office in the last fiscal year. Directors are encouraged to attend the Annual Meeting of Stockholders, and all directors then in office attended the 2023 Annual Meeting. Board Committees Our Board has five standing committees: an Audit Committee, a Compensation Committee, an Executive Committee, a Long-Term Incentive Plan Committee (“LTIP Committee”) and a Nominating Committee. In addition, under our bylaws our Board may designate additional committees as it deems appropriate. In select instances, the Board and its committees may take action through written consent. The Audit and Compensation Committees have written charters which are available on the “Investor Relations – Corporate Governance” page of our website at www.calmainefoods.com. The Executive, Long-Term Incentive Plan, and Nominating Committees do not have charters. The table below provides the current composition for each of the Board’s standing committees.
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD OCTOBER 4, 2024
| Director | Audit | Compensation | Executive | Long-Term Incentive Plan | Nominating | | Adolphus B. Baker | | | Chair | | Chair | | Max P. Bowman | | | Member | | | | Letitia C. Hughes | Chair | Member | | Member | Member | | Sherman L. Miller | | | Member | | | | James E. Poole | Member | Chair | | Chair | Member | | Steve W. Sanders | Member | Member | | Member | Member | | Camille S. Young | Member | Member | | Member | Member |
Base Salary
Base Salary We believe that base salaries, which provide fixed compensation, should meet the objective of attracting and retaining the executive officers needed to manage our business successfully. Base salary adjustments, if any, are approved in December of each year and become effective January 1st of the following calendar year. After consideration of the review of peer company compensation prepared in 2022 by Mercer (US) Inc. (“Mercer”), a compensation consulting firm engaged by our Compensation Committee, which review indicated that the base salaries of our executive officers lagged behind the 25th percentile of our peer group, the Compensation Committee approved base salary increases effective January 1, 2024 for the members of the Executive Committee as follows: Mr. Baker – no increase, Mr. Miller – 7%, Mr. Bowman – 4% and Mr. Holladay – 4%. In connection with his promotion to Chief Operations Officer in March 2023, the Executive Committee approved a base salary increase for Mr. Walters of 20%. Following these increases, the base salaries of our named executive officers continue to remain below the 25th percentile of our peer group based on Mercer’s most recent peer company compensation reviews. See “Benchmarking of Compensation” below for information regarding recent updates to the Mercer report.
Annual Cash Bonus
Annual Cash Bonus Executive Committee Members and General Counsel Bonus Programs For members of our Executive Committee and Mr. Holladay, the annual bonus program is a variable, at-risk component of compensation designed to reward these officers for maximizing annual Company performance. The Executive Committee recommends bonuses for its members and Mr. Holladay, and the Compensation Committee reviews these recommendations and makes the final determination as to bonus awards. Although these bonus awards are not based on objective metrics or goals, our Company’s profitability has historically been the most significant item in determining bonus amounts for the Executive Committee members and Mr. Holladay. Mr. Walters participates in the general bonus program applicable to our other officers and employees. For 2024, the Compensation Committee considered the Company’s profitability for 2024 compared to 2023 and each individual’s workload and job performance in determining bonuses for the Executive Committee and Mr. Holladay for 2024. As reflected in the Summary Compensation Table on page 27, annual cash bonuses for 2024 were lower than the 2023 bonus awards given our record earnings and profitability in 2023. General Bonus Program Participants in our general bonus program are eligible to earn a bonus equal to 50% of the sum of the officer’s base salary plus such officer’s prior year’s bonus. This program is designed to reward both Company and individual performance during the year. Of the potential bonus that could be earned by Mr. Walters under this program, approximately 50% is based on our profitability. If we earn a minimum profit, on a pre-tax basis, of five cents per dozen eggs produced, Mr. Walters could earn the full portion of his bonus attributable to our profitability, subject to adjustment at the discretion of the Chief Executive Officer. If our profit is less than five cents per dozen eggs produced, Mr. Walter’s bonus would be reduced by a corresponding percentage, again subject to adjustment at the discretion of our Chief Executive Officer. The remaining approximate 50% is based on individual performance as evaluated by our Chief Executive Officer in his discretion. For 2024, Mr. Miller’s evaluation included his personal assessment of the overall efficiency, effectiveness, cooperativeness, enthusiasm, judgment and attitude that Mr. Walters brings to the performance of his duties. Our Chief Executive Officer has the authority to adjust general bonuses under this program for our officers as deemed appropriate for competitive reasons or extraordinary circumstances or conditions, but no adjustments were made for 2024 for Mr. Walters.
Equity Compensation
Equity Compensation The Company believes it is essential to provide our named executive officers with a long-term equity component of compensation in order to better align their interests with those of the Company’s stockholders. Our named executive officers participate in our Amended and Restated 2012 Omnibus Long-Term Incentive Plan (the “2012 Plan”). The 2012 Plan is administered by the LTIP Committee. On December 14, 2023, the LTIP Committee authorized grants of RSAs to a broad base of employees of the Company, including the named executive officers, which grants were effective January 12, 2024. The RSAs vest fully on the third anniversary of the date of grant, January 12, 2027. The Compensation Committee and LTIP Committee’s use of RSAs, the level of RSAs awarded to each named executive officer, and the vesting structure of such RSAs were based in large part on the Committees’ review and evaluation of Mercer’s 2022 peer company compensation review, comparisons to the Company’s peer group, and the Company’s overall compensation strategy and objectives. See the “Benchmarking of Compensation” and “Compensation Consultants” sections below. While the LTIP Committee has not developed formal policies concerning the timing of grants and other matters, its practice has been to authorize grants of restricted shares annually in mid-December, with the grants being effective the following January.
Employment Agreements and Severance and Change in Control Arrangements
Employment Agreements and Severance and Change in Control Arrangements None of our named executive officers has an employment agreement with the Company. In addition, no named executive officer is entitled to receive any severance or change in control payments; however, existing grants of RSAs do vest on death, disability or change in control, and the LTIP Committee in its sole discretion may determine that such grants will vest partially or in full upon retirement. In addition, benefits under the SERP will vest upon disability or a change in control. See the “Potential Payments Upon Termination or Change in Control” section below.
Benchmarking of Compensation
Benchmarking of Compensation Since fiscal year 2013, the Compensation Committee has engaged the consulting firm of Mercer, a wholly owned subsidiary of Marsh & McLennan Companies, Inc. (“MMC”), to periodically provide compensation analysis and consulting services regarding executive and director compensation. Part of this engagement involves benchmarking the Company’s executive pay against a peer group and published compensation surveys. Mercer provided the Compensation Committee with an executive compensation analysis in July 2022, which included a benchmarking analysis using an updated peer group (the “2022 peer group”). The 2022 peer group consists of 15 companies, all of which were publicly traded at the time of the report. The peer group was selected based on research by Mercer and input from management and consisted of the following companies primarily based on size as measured by revenues (with the Company falling in the 46th). As compared to the prior peer group, the 2022 peer group, listed below, contains eight new companies. In addition, six companies were removed from the prior peer group based on a variety of factors, including company delisting, trading liquidity, size, industry exposure and incompatibility of compensation program structure. In May 2024, Mercer provided the Compensation Committee with an updated executive compensation analysis, which includes a benchmarking analysis using an updated peer group (the “2024 Review”). The 2024 Review will be used by the Compensation Committee in making decisions with respect to executive pay for 2025.
2022 Peer Group
2022 Peer Group
2022 Peer Group
| B&G Foods, Inc. | The Hain Celestial Group, Inc. | Seneca Foods Corporation | | The Boston Beer Company, Inc. | J&J Snack Foods Corp. | The Simply Good Foods Company | | Darling Ingredients, Inc. | Lamb Weston Holdings, Inc. | Treehouse Foods, Inc. | | Flowers Foods, Inc. | Lancaster Colony Corporation | Utz Brands, Inc. | | Fresh Del Monte Produce Inc. | Primo Water Corporation | Vital Farms, Inc. |
Compensation Consultants
Compensation Consultants In addition to the services described above, the Chairman of the Compensation Committee periodically engages Mercer to review annual and long-term incentive plan designs for competitiveness and alignment with peer companies, and to update management and the Board on executive compensation trends, including director compensation. This review was most recently completed late in fiscal 2024 and was substantially in line with the 2022 report. The Compensation Committee periodically assesses the independence of Mercer and whether any of its work presents a conflict of interest. Mercer reported to Mr. Poole, who is an independent director and Chairman of the Compensation Committee, and consulted with Mr. Baker, Chairman of the Board and Mr. Bowman, a Vice President and Chief Financial Officer of the Company, in connection with the Executive Committee’s determinations and recommendations regarding other officers’ compensation. The Compensation Committee has assessed the independence of Mercer pursuant to applicable SEC and Nasdaq rules and concluded that the engagement did not raise any conflicts of interest. Compensation Committee Report The Compensation Committee reviewed and discussed the above Compensation Discussion and Analysis with management of the Company, and, based on those review and discussions, the Compensation Committee has recommended to the Board of Directors that the above Compensation Discussion and Analysis be included in the Company’s proxy statement on Schedule 14A for the 2024 Annual Meeting of Stockholders. James E. Poole, Chairman Letitia C. Hughes Steve W. Sanders Camille S. Young Compensation Committee Interlocks and Insider Participation The members of the Compensation Committee during fiscal year 2024 were Mr. Poole, Ms. Hughes, Mr. Sanders and Ms. Young. None of Ms. Hughes, Mr. Poole, Mr. Sanders and Ms. Young was formerly an officer of the Company. During fiscal year 2024, none of our executive officers served as a member of the compensation committee or as a director of another entity, one of whose executive officers served on our Compensation Committee or as one of our directors. COMPENSATION TABLES Summary Compensation Table
Compensation Consultants
| Name and Principal Position | Fiscal Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(3) | All Other Compensation ($)(4) | Total ($) | | Adolphus B. Baker, | 2024 | 489,250 | 176,662 | 102,297 | -0- | 80,161 | 848,370 | | Chairman | 2023 | 487,058 | 326,095 | 102,682 | -0- | 69,393 | 985,228 | | | 2022 | 467,207 | 380,336 | 305,719 | -0- | 139,550 | 1,292,812 | | Sherman L. Miller, | 2024 | 408,438 | 374,874 | 158,470 | 36,436 | 129,757 | 1,107,975 | | President/CEO | 2023 | 370,826 | 487,122 | 154,401 | 10,889 | 126,189 | 1,149,427 | | | 2022 | 310,577 | 253,203 | 102,290 | -0- | 15,237 | 681,307 | | Max P. Bowman, | 2024 | 318,160 | 298,687 | 125,140 | 159,425 | 102,982 | 1,004,394 | | VP/CFO/ Treasurer/ | 2023 | 306,345 | 408,561 | 121,941 | 41,750 | 97,740 | 976,337 | | Secretary | 2022 | 289,231 | 231,782 | 102,290 | -0- | 92,572 | 715,875 | | Robert L. Holladay, Jr, | 2024 | 283,313 | 265,000 | 111,303 | 34,481 | 85,961 | 780,058 | | VP/General | 2023 | 268,141 | 360,000 | 105,441 | 10,411 | 81,922 | 825,915 | | Counsel | 2022 | 249,436 | 201,591 | 102,290 | -0- | 18,572 | 571,889 | | Michael T. Walters, | 2024 | 248,659 | 230,481 | 91,700 | -0- | 133,943 | 704,783 | | VP/COO(5) | 2023 | 189,938 | 278,942 | 61,458 | -0- | 65,734 | 596,072 |
Pension Benefits
Pension Benefits Effective March 1, 2023, the Company adopted a non-qualified supplemental executive retirement plan (“SERP”) designed to provide deferred compensation for a select group of highly compensated employees of the Company. Currently, Messrs. Miller, Bowman, and Holladay participate in the SERP. Provided the vesting conditions are met, participants in the SERP are eligible to receive an aggregate retirement benefit of $500,000, which will be paid in annual installments of $50,000 for 10 years. A participant becomes vested in the retirement benefit over five years of plan participation at 20% per year. If a participant becomes disabled, attains the retirement age of 65, or the Company experiences a change in control, vesting will be accelerated to 100%. If a participant dies while employed, he or she will not receive any benefits under the SERP, but their beneficiaries will instead be entitled to the life insurance benefit provided under a split dollar life insurance plan. PENSION BENEFITS
Pension Benefits
| Name | Plan Name | Number of Years of Credited Service | Present Value of Accumulated Benefit ($)(1) | Payments During Last Fiscal Year ($) | | Sherman L. Miller | SERP | 1.25 | 47,325 | -0- | | Max P. Bowman | SERP | 1.25 | 201,175 | -0- | | Robert L. Holladay, Jr. | SERP | 1.25 | 44,892 | -0- |
Pension Benefits
| (1) These figures represent accumulated benefits as of June 1, 2024 based on several assumptions, including the assumption that the executive remains employed by us and begins receiving retirement benefits at the normal retirement age of 65, with such accumulated benefits being discounted from the normal retirement age to June 1, 2024 using an effective discount rate of 4.98%. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL As described in the Compensation Discussion and Analysis, the Company has not entered into severance or change in control agreements with our named executive officers, although the DC Plan, the SERP and the RSAs provide for accelerated vesting in connection with certain terminations of employment and upon a change in control. Specifically, as amended effective December 1, 2021, our DC Plan provides that unvested Company contributions will also vest upon a change in control. Further, the SERP provides that if a participant becomes disabled, attains the retirement age of 65, or the Company experiences a change in control, the participant will vest in any unvested portion of his $500,000 SERP benefit. Finally, RSAs will vest upon certain terminations of employment and upon a change in control as described in the footnotes to the table below. In addition, the following table does not quantify payments under plans that are generally available to all salaried employees, similarly situated to the named executive officers in age, years of service, date of hire, etc., and that do not discriminate in scope, terms or operation in favor of executive officers. For the named executive officers, the value of the RSAs that would vest upon termination of employment due to death or disability, or a change in control of the Company as of the end of the Company’s fiscal year ended June 3, 2023, are outlined below, based on the Company’s closing stock price of $61.67 on May 31, 2024, the last business day of such fiscal year.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Name | Form of Compensation | Involuntary Termination By Company or Voluntary Termination by Employee (1)($) | Retirement (2)($) | Death (3) | Disability (3) | Change in Control (4) | | Adolphus B. Baker | RSAs | -0- | 690,334 | 690,334 | 690,334 | 690,334 | | Sherman L. Miller | RSAs SERP (5) DC Plan (6) | -0- -0- -0- | 507,359 500,000 -0- | 507,359 -0- -0- | 507,359 500,000 -0- | 507,359 500,000 147,223 | | Max P. Bowman | RSAs SERP (5) | -0- -0- | 432,923 500,000 | 432,923 -0- | 432,923 500,000 | 432,923 500,000 | | Robert L. Holladay, Jr. | RSAs SERP (5) DC Plan (6) | -0- -0- -0- | 398,573 500,000 -0- | 398,573 -0- -0- | 398,573 500,000 -0- | 398,573 500,000 101,951 | | Michael T. Walters | RSAs DC Plan (6) | -0- -0- | 264,811 -0- | 264,811 -0- | 264,811 -0- | 264,811 160,580 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (1) Upon termination by the Company or the employee (other than termination due to a retirement, death or disability), the named executive officers’ RSA agreements provide for forfeiture of all unvested RSAs. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (2) Upon retirement of a grantee, the LTIP Committee in its sole discretion may provide that RSAs will vest partially or in full as of the effective date of the grantee’s termination due to retirement. The amounts set forth in the column assume the LTIP Committee has exercised discretionary authority to fully vest all such RSAs. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (3) Upon death or disability of a grantee, all RSAs will vest as of the date of such death or disability and all restrictions will lapse. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (4) Upon the completion of a change in control of the Company, all RSAs will vest and all restrictions will lapse. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (5) With regard to the SERP, unvested amounts will fully vest upon a retirement after age 65, a disability or a change of control. The amounts in the table reflect the full benefit of the SERP that would be payable to each applicable executive in connection with the noted event, 20% of which was fully vested as of May 31, 2024. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (6) With regard to the DC-Plan, unvested amounts will fully vest upon a participant’s attainment of the age of 60 with five years of service or a change of control. The amounts in the table for a change of control reflect the full balance of each applicable executive’s DC-Plan account, some of which was fully vested as of May 31, 2024. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. Further information concerning the Company’s pay for performance philosophy and how the Company’s aligns executive compensation with the Company’s performance is described under “Compensation Discussion & Analysis” beginning on page 21. On September 30, 2022, Adolphus B. Baker stepped down as the Company’s CEO and continues to serve as the Company’s Chairman of the Board and as an executive officer of the Company. On September 30, 2022, Sherman L. Miller was named the CEO. The following table sets forth information concerning the compensation of our CEOs and other NEOs for each of the fiscal years 2024, 2023, 2022 and 20221 and our financial performance for each such fiscal year:
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year (1) | Summary Compensation Table Total for CEO - Adolphus B. Baker ($) | Summary Compensation Table Total for CEO - Sherman L. Miller ($)(2) | Compensation Actually Paid to CEO - Adolphus B. Baker ($)(2)(3) | Compensation Actually Paid to CEO - Sherman L. Miller ($)(2)(3) | Average Summary Compensation Table Total for NEOs ($) | Average Compensation Actually Paid to NEOs ($)(2)(3) | Total Shareholder Return ($)(4) | Peer Group Total Shareholder Return ($)(4) | Net Income ($) | Net Income per Dozen Produced (5) | | 2024 | — | 1,107,975 | — | 1,223,640 | 834,401 | 950,022 | 158.30 | 128.16 | 276,232,000 | $0.271 | | 2023 | 985,228 | 1,149,427 | 958,998 | 1,126,150 | 781,668 | 767,626 | 117.77 | 140.40 | 756,732,000 | $0.715 | | 2022 | 1,292,812 | — | 1,594,506 | — | 634,433 | 739,489 | 108.43 | 133.27 | 132,441,000 | $0.130 | | 2021 | 1,174,401 | — | 948,658 | — | 556,382 | 493,914 | 78.41 | 124.39 | 2,060,000 | $0.002 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (1) The CEO and NEOs included in the above compensation columns reflect the following: |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| Year | CEO | NEOs | | 2024 | Sherman L. Miller | Max P. Bowman, Adolphus B. Baker, Michael T. Walters, Rob L. Holladay, Jr. | | 2023 | Adolphus B. Baker, Sherman L. Miller | Max P. Bowman, Michael T. Walters, Charles J. Hardin, Rob L. Holladay, Jr. | | 2022 | Adolphus B. Baker | Sherman L. Miller, Max P. Bowman, Charles J. Hardin, Rob L. Holladay, Jr. | | 2021 | Adolphus B. Baker | Sherman L. Miller, Max P. Bowman, Charles J. Hardin, Rob L. Holladay, Jr. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (2) Fair value or change in fair value, as applicable, of equity awards in the “Compensation Actually Paid” columns was determined by reference to closing price on applicable year-end dates or, in the case of vesting dates, the actual vesting price. For the portion of “Compensation Actually Paid” that is based on year-end stock prices, the following prices were used: for 2024 - $61.67; 2023 - $47.56; for 2022 - $48.16; for 2021 - $34.91. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (3) 2024 “Compensation Actually Paid” to the CEO and the average “Compensation Actually Paid” to the NEOs reflect the following adjustments from Total Compensation reported in the Summary Compensation Table: |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | CEO ($) | Average of NEOs ($) | | Total Reported in 2024 Summary Compensation Table (SCT) | 1,107,975 | 834,401 | | Less, Value of Stock & Option Awards Reported in SCT | (158,470) | (107,610) | | Less, Change in Pension Value in SCT | (36,436) | (48,477) | | Plus, Pension Service Cost and impact of Pension Plan Amendments | 37,973 | 49,360 | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | 177,980 | 120,858 | | Plus, Change in Fair Value of Prior Year awards that are Outstanding and Unvested | 75,362 | 74,543 | | Plus, Change in Fair Value (from Prior Year-End) of Prior Year awards that Vested this year | 19,257 | 26,947 | | Total Adjustments | 115,665 | 115,621 | | “Compensation Actually Paid” in Fiscal Year 2024 | 1,223,640 | 950,022 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | CEO - Dolph Baker ($) | CEO - Sherman Miller ($) | Average of NEOs ($) | | Total Reported in 2023 Summary Compensation Table (SCT) | 985,228 | 1,149,427 | 781,668 | | Less, Value of Stock & Option Awards Reported in SCT | (102,682) | (154,401) | (87,574) | | Less, Change in Pension Value in SCT | — | (10,889) | (13,040) | | Plus, Pension Service Cost and impact of Pension Plan Amendments | — | 10,889 | 13,040 | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | 90,269 | 135,736 | 76,988 | | Plus, Change in Fair Value of Prior Year awards that are Outstanding and Unvested | (9,173) | (3,064) | (2,449) | | Plus, Change in Fair Value (from Prior Year-End) of Prior Year awards that Vested this year | (4,644) | (1,548) | (1,006) | | Total Adjustments | (26,230) | (23,277) | (14,042) | | “Compensation Actually Paid” in Fiscal Year 2023 | 958,998 | 1,126,150 | 767,626 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | CEO ($) | Average of NEOs ($) | | Total Reported in 2022 Summary Compensation Table (SCT) | 1,292,812 | 634,433 | | Less, Value of Stock & Option Awards Reported in SCT | (305,719) | (92,018) | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | 357,973 | 107,746 | | Plus, Change in Fair Value of Prior Year awards that are Outstanding and Unvested | 206,634 | 61,993 | | Plus, Change in Fair Value (from Prior Year-End) of Prior Year awards that Vested this year | 42,806 | 27,335 | | Total Adjustments | 301,694 | 105,056 | | “Compensation Actually Paid” in Fiscal Year 2022 | 1,594,506 | 739,489 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| | CEO ($) | Average of NEOs ($) | | Total Reported in 2021 Summary Compensation Table (SCT) | 1,174,401 | 556,382 | | Less, Value of Stock & Option Awards Reported in SCT | (296,134) | (88,878) | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | 274,218 | 82,300 | | Plus, Change in Fair Value of Prior Year awards that are Outstanding and Unvested | (141,102) | (42,308) | | Plus, Change in Fair Value (from Prior Year-End) of Prior Year awards that Vested this year | (62,725) | (13,582) | | Total Adjustments | (225,743) | (62,468) | | “Compensation Actually Paid” in Fiscal Year 2021 | 948,658 | 493,914 |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (4) Company and Peer Group Total Shareholder Return (“TSR”) reflects the Company’s peer group (S&P Comp 1500 Food Products Industry Index) as reflected in our Annual Report on the Form 10-K pursuant to Item 201(e) of Regulation S-K for the fiscal year 3. Each year reflects what the cumulative value of $100 would be, including the reinvestment of dividends, if such amount were invested on June 1, 2020. |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| (5) Net income per dozen produced is a non-GAAP financial measure which is calculated as net income divided by the dozens produced. |
Pay versus Performance Descriptive Disclosure
Pay versus Performance Descriptive Disclosure As described in greater detail in “Compensation Discussion & Analysis,” the Company’s executive compensation program reflects a pay-for-performance philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, all of those Company measures are not presented in the Pay Versus Performance table above. We believe food quality and safety is an important measurement that provides a foundation for reliable and continued financial performance. Because of the cyclical nature of the egg industry, net income does not weigh as highly as other measures year to year. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with SEC rules) for a particular year. We believe the table above shows the strong link between compensation actually paid to our executives and our company’s performance, consistent with our compensation philosophy and as described in our Compensation Discussion and Analysis beginning on page 21. Specifically,
Pay versus Performance Descriptive Disclosure
| • | Our cumulative TSR and the peer group TSR during the past four years have both increased each year. Our cumulative TSR remained below the peer group each year until 2024, when it exceeded the peer group. Likewise, the CEO and other-NEO “compensation actually paid” has only increased when our TSR increased. |
Pay versus Performance Descriptive Disclosure
| • | For the years reflected in the table, until 2024, our CEO and other-NEO “compensation actually paid” only increased when our Net Income and Net Income Per Dozen Produced increased, demonstrating a strong correlation between pay and performance. However, Net Income and Net Income Per Dozen Produced was lower in 2024 compared to 2023, which was a record year for us, while “compensation actually paid” for both the CEO and other-NEOs increased. Our operating results are directly tied to egg prices, which are highly volatile and subject to wide fluctuations, and are outside of our control, and therefore profitability is not always the best indicator of executive performance for compensation. |
Pay versus Performance Descriptive Disclosure
| • | Moreover, our Net Income and Net Income Per Dozen Produced decreased in 2024 after an increase in each of the prior three years. We note that our CEO and other-NEO “compensation actually paid” appears higher in 2024 than in 2023. The higher values for 2024 were due in part to our higher stock price values during 2024. In addition, 2024 represented our CEO’s first full fiscal year under the CEO title, and for the other-NEOs, the average value of compensation actually paid is also higher as a result of Mr. Baker’s inclusion in the group for the first time. |
Pay versus Performance Descriptive Disclosure
PAY-RATIO DISCLOSURE To determine the median employee compensation, we analyzed all of Cal-Maine Foods’ employees, excluding Cal-Maine Foods’ Chief Executive Officer, as of June 1, 2024. We annualized wages for employees that were not employed for the full year. We used year to date gross wages as the consistently applied compensation metric to determine the median employee. After identifying the median employee, we calculated annual total compensation for the median employee according to the methodology used to report the annual compensation of our named executive officers in the Summary Compensation Table on page 27. The 2024 annual total compensation of our median employee other than Mr. Miller was $46,858. For fiscal year 2024, the total compensation of our Chief Executive Officer, Mr. Miller, was $1,107,975 as reported in the “Total” column of the Summary Compensation Table on page 27. Based on the foregoing, our estimate of the ratio of the average annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all other employees was approximately 24 to 1. Given the different methodologies that different public companies use to determine an estimate of their pay ratio, the estimated ratio reported above should not be used as a basis for comparison between companies. DIRECTOR COMPENSATION For fiscal year 2024, the Company’s non-employee directors each received an annual fee of $45,000 as compensation for their services as a director. The fee is paid in quarterly installments following the end of each quarter and in advance of the next quarterly board meeting. During fiscal 2024, each non-employee director received an additional one-time special payment of $20,000 related to additional special meetings of the Board requiring increased director time and to our record Company performance in fiscal 2023. During fiscal year 2024, each non-employee director received an annual equity award with a target grant date value of approximately $100,000. On January 12, 2024, Mses. Hughes and Young and Messrs. Poole and Sanders, as independent directors, each received grants of 1,863 RSAs under the 2012 Plan. Such RSAs vest 100% on the third anniversary of the date of grant. Mercer also periodically reviews and benchmarks the Company’s director compensation program, and the most recent such review was completed in May 2024. See “Compensation Discussion & Analysis – Compensation Advisors” for more information regarding Mercer. Employee directors receive no additional compensation for their services as directors of the Company, and the compensation of Messrs. Baker, Bowman and Miller is reflected in the Summary Compensation Table above. DIRECTOR COMPENSATION TABLE
Pay versus Performance Descriptive Disclosure
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | | Letitia C. Hughes | 65,000 | 102,297 | 167,297 | | James E. Poole | 65,000 | 102,297 | 167,297 | | Steve W. Sanders | 65,000 | 102,297 | 167,297 | | Camille S. Young | 65,000 | 102,297 | 167,297 |
Pay versus Performance Descriptive Disclosure
| (1) The aggregate grant date fair value of the RSAs set forth in this column is computed in accordance with FASB ASC Topic 718 and based on the closing price of the Company’s common stock as of the grant date, which was $54.91. At the end of fiscal year 2024, each director listed in this table had 6,248 unvested RSAs. |
Pay versus Performance Descriptive Disclosure
REPORT OF THE AUDIT COMMITTEE The Audit Committee oversees the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed the audited financial statements in the Annual Report on Form 10-K for the fiscal year ended June 1, 2024, with management, including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures. The Audit Committee also worked with Frost, PLLC, the Company’s independent registered public accounting firm, which is responsible for expressing an opinion on the conformity of those audited financial statements with generally accepted accounting principles, its judgment as to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. In addition, the Audit Committee has discussed with Frost, PLLC that firm’s independence from management and the Company and all matters required to be discussed pursuant to Public Company Accounting Oversight Board rules and has received the written disclosures and letter from Frost, PLLC required by Public Company Accounting Oversight Board rules and the SEC and considered the compatibility of non-audit services with Frost, PLLC’s independence. The Audit Committee discussed with our internal auditors and our independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the internal auditors and our independent registered public accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of our internal controls, and the overall quality of our financial reporting. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors (and the Board has approved) that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 1, 2024, for filing with the SEC. The Audit Committee is currently composed of four directors, all of whom are independent, as defined by SEC rules and in the Nasdaq listing standards. In addition, the Board of Directors has determined Ms. Hughes and Messrs. Poole and Sanders qualifies as an “audit committee financial expert,” as such term is defined in the SEC rules. Letitia C. Hughes, Chairperson James E. Poole Steve W. Sanders Camille S. Young FEES AND RELATED DISCLOSURES FOR ACCOUNTING SERVICES The following table discloses the aggregate fees billed by Frost, PLLC for professional services rendered during fiscal 2024 and 2023:
Pay versus Performance Descriptive Disclosure
| | 2024 | | 2023 | | | Fee | Amount | Percent | Amount | Percent | | Audit Fees | $295,308 | 92% | $281,491 | 93% | | Audit-Related Fees | 23,950 | 8% | 22,600 | 7% | | Tax Fees | — | — | — | — | | All Other Fees | — | — | — | — | | Frost Total Fees | $319,258 | | $304,091 | |
Pay versus Performance Descriptive Disclosure
All audit and any material non-audit services provided by the Company’s independent registered public accounting firm require pre-approval by the Audit Committee or its designee. 100% of the services performed by Frost, PLLC for the fiscal years 2024 and 2023 were pre-approved by the Audit Committee. Audit fees include fees associated with the annual audit of the Company’s financial statements and the review of the financial statements included in the Company’s quarterly reports on Form 10-Q. Audit-related fees principally include employee benefit plan audits for plan fiscal years ended December 31, 2023 and December 31, 2022. PROPOSAL NO. 2: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee selected the firm of Frost, PLLC of Little Rock, Arkansas, to serve as the independent registered public accounting firm for the Company for fiscal year 2025, and the Board of Directors recommends a vote FOR ratification of such selection. There have been no controversies, disputes or differences of opinion with Frost, PLLC since the firm has been engaged by the Company. Frost, PLLC has extensive experience in serving the poultry and egg industries, and, as a result, the Audit Committee felt they would be particularly well-suited to serve as independent registered public accounting firm for the Company. If the Company’s stockholders do not ratify the selection of Frost, PLLC, the Audit Committee will reconsider this selection. Representatives of Frost, PLLC are expected to attend the Annual Meeting and be available to respond to appropriate questions, and they may make a statement if they desire to do so. Approval of this proposal requires the vote of a majority of the voting interest present in person or represented by proxy. For more information on the voting requirements, see “Voting Shares” above. Unless otherwise specified, proxies will be voted FOR the ratification of Frost, PLLC’s selection. The Board unanimously recommends a vote “FOR” the ratification of the selection of Frost, PLLC as independent registered public accounting firm of the Company. PROPOSAL NO. 3: Approval of the Amendment to Our Certificate of Incorporation to ADD Officer Exculpation We are asking stockholders to approve an amendment to our second amended and restated certificate of incorporation (our “Charter”) to limit the personal liability of certain officers of the Company (the “Amendment”) to reflect new Delaware law provisions as further described herein. Paragraph 10 of our Charter currently contains a provision eliminating the personal liability of our directors for monetary damages for breach of fiduciary duty as a director to the extent permitted by the Delaware General Corporation Law (the “DGCL”). Delaware recently amended Section 102(b)(7) of the DGCL to allow a Delaware corporation to include a similar provision in its certificate of incorporation eliminating the personal liability of certain officers for monetary damages for breach of fiduciary duty as an officer in certain circumstances. As further described below, we are asking our stockholders to approve the Amendment to add such officer exculpation, similar to our existing provision exculpating our directors.