DEF 14A of Church & Dwight Co Inc /De/
Filed Mar 22, 2024 · FY20230001193125-24-075319
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE We strive to maintain effective corporate governance practices and policies. We believe that the following practices and policies contribute to our strong governance profile:
CORPORATE GOVERNANCE
| Director Independence | ◾ | 9 of 10 director nominees are independent under the NYSE listing standards | | | ◾ | 3 fully independent Board committees: Audit, Compensation & Human Capital, and Governance, Nominating & Corporate Responsibility | | | ◾ | Independent Lead Director presides over executive sessions of, and facilitates communication with, the independent directors | | Board Accountability | ◾ | Annual election of directors | | | ◾ | Our directors are subject to “majority voting,” and each incumbent director nominee submits, prior to the Annual Meeting, an irrevocable resignation in writing that our Board of Directors may accept if a majority of stockholders do not re-elect the director in an uncontested election | | Board Leadership | ◾ | Annual assessment and determination of Board leadership structure | | | ◾ | Annual appointment of independent Lead Director when Chairman/Chief Executive Officer (“CEO”) roles are combined or when the Chairman is not independent (or when the Board otherwise determines appropriate) | | | ◾ | Lead Director has strong role and significant governance duties, including approval of Board agendas and chairing executive sessions of all independent directors | | Board Evaluation and Effectiveness | ◾ | Annual Board, Committee, and individual director evaluations | | Board Refreshment | ◾ | Existing Board members are required to retire on the earlier of reaching age 75, or twenty years on the Board, and new Board members (joining since 2021) will be required to retire on the earlier of reaching age 75 or fifteen years on the Board | | | ◾ | Annual review of board succession plans | | Prevent Overboarding | ◾ | Our Corporate Governance Guidelines set forth limits on the number of public company boards our non-employee directors and CEO should serve upon: four (including the Company) for our non-employee directors and two (including the Company) for our CEO | | | ◾ | Compliance is reviewed annually, and all of our directors are in compliance with this policy | | Director Engagement | ◾ | Each director attended at least 75 percent of the aggregate number of meetings held by the Board and all committees of the Board on which such director served in 2023 | | | ◾ | Board policy limits director membership to four other public company boards for non-employee directors (without the approval of the Governance, Nominating & Corporate Responsibility Committee) | | | ◾ | Stockholder ability to contact directors (as described under “Communication with the Board of Directors”) | | Director Access and Resources | ◾ | Significant interaction with the Company’s senior business leaders through regular business reviews | | | ◾ | Directors have direct access to senior management and other employees | | | ◾ | Directors have authorization to hire outside experts and consultants and to conduct independent investigations | | Proxy Access | ◾ | Our Bylaws provide for proxy access by stockholders | | No Supermajority Voting Requirements | ◾ | No supermajority requirement for stockholders to amend Bylaws | | | ◾ | No supermajority requirement for stockholders to amend the Certificate of Incorporation | | Right of Stockholders to Request Special Meeting | ◾ | Stockholders with at least 25% of our outstanding stock have the right to request special meetings of the stockholders | | Clawback Policies | ◾ | Clawback policies that require the recoupment of excess incentive-based compensation paid to our executive officers as a result of a material financial misstatement in accordance with the Dodd-Frank Act and NYSE rules, and permit recoupment of compensation from a broader group of senior leaders across the Company in the case of material financial misstatements, cause conduct and violations of restrictive covenants | | | ◾ | Clawback provisions incorporated into the Company’s Annual Incentive Plan and Omnibus Equity Compensation Plan (and underlying award agreements) that are tied to the clawback policies | | Anti-Hedging Policy | ◾ | Insider trading policy prohibits non-employee directors and employees from engaging in any pledging, short sales, or hedging involving Company stock |
CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE
| Share Ownership | ◾ | CEO is required to hold shares equivalent to 6x base salary | | | ◾ | CFO is required to hold shares equivalent to 3x base salary | | | ◾ | All other senior executives are required to hold shares equivalent to 2.5x base salary | | | ◾ | Board members are required to hold shares equivalent to 5x the standard annual retainer | | Director Compensation | ◾ | Implemented a maximum annual limit of $750,000, in the aggregate, for Director Compensation | | Compensation Practices | ◾ | Target compensation opportunities are competitive in markets in which we compete for management talent | | | ◾ | Use of short-term and long-term incentives ensure a strong connection between Company performance and actual compensation realized | | | ◾ | Our Annual Incentive Plan utilizes five diverse metrics to avoid over-emphasis on any one measure | | | ◾ | In the event of a change in control, our named executive officers will not receive cash severance, nor will equity granted after July 30, 2019 vest, unless accompanied by a qualifying termination of the named executive officer | | | ◾ | No excise tax gross-ups for change in control payments | | | ◾ | No defined pension benefit plan or similarly actuarially valued pension plan for executives | | | ◾ | Limited perquisites | | | ◾ | Repricing of stock options is prohibited without prior stockholder approval | | Board Diversity | ◾ | Commitment to building a diverse and well-rounded Board comprising individuals from different backgrounds, ages, genders, and ethnic diversity, and with a range of experiences and viewpoints. The Governance, Nominating & Corporate Responsibility Committee works with the search firms it engages to seek a selection of women and racially/ethnically diverse candidates in all prospective director candidate pools. Of our 10 director nominees, three are women, one is African American and one is Asian | | Risk Management/ESG | ◾ | Risk assessment and risk management are the responsibility of the Company’s management, and the Board has oversight responsibility for those processes and findings | | | ◾ | The Board and its committees oversee the execution of the Company’s sustainability strategy and its environmental, social and governance priorities and initiatives as part of their oversight of the Company’s overall strategy and risk management |
CORPORATE GOVERNANCE
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PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS Our Certificate of Incorporation provides for the annual election of our Board of Directors. At the 2024 Annual Meeting, all of our directors will stand for election for one-year terms on our Board of Directors. Our Board of Directors currently consists of 10 members. At the Annual Meeting, all directors will be elected to serve until the 2025 Annual Meeting, in each case, until their successors are elected and qualified. Our Board of Directors has nominated Bradlen S. Cashaw, Matthew T. Farrell, Bradley C. Irwin, Penry W. Price, Susan G. Saideman, Ravichandra K. Saligram, Robert K. Shearer, Janet S. Vergis, Arthur B. Winkleblack, and Laurie J. Yoler, all of whom currently serve as members of our Board of Directors. All nominees have agreed to be named in this proxy statement and to serve if elected. We do not anticipate that any of the nominees will become unavailable to serve as a director for any reason. However, if any of them becomes unavailable, the persons named in the enclosed form of proxy will vote for any substitute nominee designated by our Board of Directors, unless our Board of Directors determines to reduce the number of directors on our Board.
Director Nominees
Director Nominees
Director Nominees
| | BRADLEN S. CASHAW | | | Director since 2021 Independent Age: 60 ◾ Audit Committee ◾ Governance, Nominating & Corporate Responsibility Committee |
Director Nominees
Mr. Cashaw has been the Chief Operating Officer of Agropur, a top 15 global dairy processor, since December 2021. He also serves as a member of the Board of Directors of Agropur, USA and Agropur Inc. From September 2020 to November 2021, he was the Chief Supply Chain officer for Flowers Foods. Mr. Cashaw was Executive Vice President and Chief Supply Chain Officer for Dean Foods the nation’s largest fluid dairy producer from March 2016 to September 2019. From October 2013 to August 2015, Mr. Cashaw was Vice President, Integrated Supply Chain for the Cheese & Dairy division at Kraft Foods Group. From April 2012 to September 2013, he was Senior Vice President, Snacks Supply Chain at the Kellogg Company. From September 2008 to February 2012, he was the Vice President of Supply Chain for Quaker Foods & Snacks, and from November 2006 to September 2008 he was the Vice President, Operations, North America for Quaker Foods. Mr. Cashaw began his career at PepsiCo as a project engineer and held several operations and supply chain roles, including plant manager and director during his tenure of over 24 years with the company.
Director Nominees
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Director Nominees
Mr. Cashaw’s more than 35 years of progressive leadership experience within the consumer packaged goods industry at Fortune 300 companies and leadership over supply chain strategy and operations, enables him to provide our Board of Directors with a valuable global perspective and insight into supply chain matters, such as sales, manufacturing, distribution, finance, business analytics and strategic planning.
Director Nominees
| | MATTHEW T. FARRELL | | | Chairman since 2019 Director since 2016 Non-Independent Age: 67 ◾ Chair, Executive Committee |
Professional Experience
Professional Experience Mr. Farrell has been our Chairman since May 2019 and President and Chief Executive Officer since January 2016. From November 2014 to December 2015, he was our Executive Vice President, Chief Operating Officer, and Chief Financial Officer, prior to which he served as our Executive Vice President, Finance and Chief Financial Officer since May 2007. From September 2006 through May 2007, he was our Vice President and Chief Financial Officer. Mr. Farrell was Executive Vice President and Chief Financial Officer of Alpharma Inc. from April 2002 through August 2006. From July 2000 through April 2002, he served as Vice President, Investor Relations & Communications at Ingersoll-Rand Ltd. From November 1994 through June 2000, he held various senior financial positions at AlliedSignal Inc.
Other Boards and Appointments
Other Boards and Appointments Mr. Farrell has served as a member of the board of directors of Trinseo PLC, a global materials supplier of latex binders, plastics, and specialty products since 2021. He previously served as a member of the Board of Directors of Lydall, Inc., a supplier of engineered thermal, acoustical, and filtration products, from 2003 to 2021. Mr. Farrell’s intimate knowledge of our Company, gained through over 17 years of executive service as our Chief Executive Officer, Chief Operating Officer or Chief Financial Officer, combined with his four years of experience as the Chief Financial Officer of a pharmaceutical company and many years of experience in other finance and investor relations roles at large multinational companies, enable him to provide important insights and leadership to us and our Board of Directors regarding our operations, including marketing, strategic planning, mergers and acquisitions, finance and capital structure, performance management, business analytics, compliance, risk management, public company reporting and governance, and investor relations.
Other Boards and Appointments
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Other Boards and Appointments
| | BRADLEY C. IRWIN | | | Director since 2006 Independent Age: 65 ◾ Compensation & Human Capital Committee ◾ Governance, Nominating & Corporate Responsibility Committee |
Professional Experience
Professional Experience Mr. Irwin retired in December 2018 as President and Chief Executive Officer of Welch Foods Inc., a global processor and marketer of juices and jams, where he served in that capacity since February 2009. Mr. Irwin was President of Cadbury Adams North America LLC, the North American confectionery business unit of Cadbury Schweppes plc. (“Cadbury Schweppes”), from June 2007 through November 2008. From April 2003 through June 2007, Mr. Irwin was President of Cadbury Adams USA LLC, the United States confectionery business unit of Cadbury Schweppes. Mr. Irwin served as President of Mott’s Inc., a business unit of Cadbury Schweppes, from May 2000 through April 2003. From 1980 through 1999, Mr. Irwin served in various capacities for The Procter & Gamble Company.
Other Boards and Appointments
Other Boards and Appointments Mr. Irwin currently serves on the boards of directors of Save the Children U.S. and Save the Children International, a large global non-profit delivering education, health and humanitarian support for disadvantaged children. He also serves on the board of directors of Bay State Milling Co, a private grain milling company. Mr. Irwin was a member of the board of directors of Welch Foods from February 2009 to December 2018.
Director Qualifications
Director Qualifications Mr. Irwin’s more than 40 years of experience in the consumer products industry, including his service in executive capacities at large multinational public companies that market products in the same categories as some of our products, enables him to provide valuable insights into a wide variety of matters relating to our operations. These matters include, among others, strategic planning, risk assessment, and international operations.
Director Qualifications
| | PENRY W. PRICE | | | Director since 2011 Independent Age: 55 ◾ Chair, Compensation & Human Capital Committee ◾ Audit Committee ◾ Executive Committee |
Director Qualifications
Mr. Price has been the Vice President, Marketing Solutions of LinkedIn Corporation (a subsidiary of Microsoft Corporation) since October 2013. From June 2011 through October 2013, he was President of Dstillery, Inc., a marketing technology company formerly known as Media6Degrees, LLC. From June 2004 through June
Director Qualifications
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Director Qualifications
2011, he served in various capacities at Google, Inc., a provider of Internet-related products and services, the last of which was Vice President, Agency Sales and Partnerships, Worldwide. From July 2000 through June 2004, Mr. Price served as Sales Director of Wenner Media, LLC, a company engaged in the publication of magazines and production of radio and television programs, where he was principally responsible for revenue generation and strategic partnerships.
Director Qualifications
Director Qualifications Mr. Price’s extensive experience as a senior executive in companies specializing in digital marketing, advertising, and social networks enables him to provide valuable perspectives on our marketing initiatives and strategies, including the use of social media and digital technology to reach new consumers.
Director Qualifications
| | SUSAN G. SAIDEMAN | | | Director since 2020 Independent Age: 61 ◾ Audit Committee ◾ Governance, Nominating & Corporate Responsibility Committee |
Professional Experience
Professional Experience Ms. Saideman is the founder of Portage Bay Limited LLC and has served as its CEO since September 2019. Ms. Saideman was Vice President, Amazon, Inc., the world’s largest online retailer, from January 2019 to August 2019, Vice President, Amazon Fashion EU from October 2016 to January 2019 and Vice President, Global Vendor Management at Amazon, Inc. from November 2013 to September 2016. From December 2007 to October 2013, Ms. Saideman was President Mars Retail Group, the group responsible for the Direct to Consumer businesses for Mars including M&M’s World, Ethel M and MyM&Ms, from January 2004 to June 2007, she was CEO Mikasa and Company/Arc International, a leader in tableware products, and from December 2002 to June 2003, President, Parker Division, Newell Rubbermaid, a leading global consumer goods company. From May 1998 to December 2002 and August 1991 to May 1998, Ms. Saideman held various positions with increasing responsibility at Campbell Soup Company, a multi-national food company and PepsiCo, one of the world’s largest food and beverage companies, respectively. Earlier in her career Ms. Saideman held positions at Mt. Trading Company, Bain & Company and Chase Manhattan Bank.
Other Boards and Appointments
Other Boards and Appointments Ms. Saideman is a member of the board of directors of MYT Netherlands Parent B.V., an industry leader in the world of online luxury fashion and retail, and of Prepac Manufacturing Ltd. Ms. Saideman’s extensive experience in the “direct-to-consumer” businesses, building brands in the consumer packaged goods industries and leadership over global operational teams, enable her to provide our Board of Directors with a valuable global perspective on our digital transformation, ecommerce, marketing, innovation, international operations and technology.
Other Boards and Appointments
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Other Boards and Appointments
| | RAVICHANDRA K. SALIGRAM | | | Lead Director since 2023 Director since 2006 Independent Age: 67 ◾ Compensation & Human Capital Committee ◾ Executive Committee ◾ Governance, Nominating & Corporate Responsibility Committee |
Professional Experience
Professional Experience Mr. Saligram retired in May 2023 as Chief Executive Officer and a member of the Board of Directors of Newell Brands, a leading global consumer goods company, where he served in that capacity since May 2022. Mr. Saligram was the President and Chief Executive Officer and a member of the Board of Directors of Newell Brands, from October 2019 to May 2022, and the Chief Executive Officer and a member of the board of directors of Ritchie Bros. Auctioneers Incorporated, the world’s largest industrial equipment auctioneer, from July 2014 to October 2019. From November 2010 through November 2013, he served as the Chief Executive Officer, President, and a member of the board of directors of OfficeMax Incorporated, a company engaged in business-to-business and retail office products distribution. From 2003 through November 2010, he served in various executive management positions with ARAMARK Corporation, a global food services company, including Executive Vice President, President, ARAMARK International, and Chief Globalization Officer, and Senior Vice President of ARAMARK Corporation. From 1994 through 2002, Mr. Saligram served in various capacities for the InterContinental Hotels Group, a global hospitality company, including as President of Brands & Franchise, North America, Chief Marketing Officer & Managing Director, Global Strategy, President, International and President, Asia Pacific. Earlier in his career, Mr. Saligram held various general and brand management positions with S. C. Johnson & Son, Inc. in the United States and overseas.
Other Boards and Appointments
Other Boards and Appointments Mr. Saligram was a member of the board of directors of Ritchie Bros. Auctioneers Incorporated from July 2014 to October 2019 and Newell Brands from October 2019 to May 2023. Mr. Saligram’s extensive experience building businesses and brands in the industrial products, office products distribution, consumer packaged goods, hospitality, and consumer and managed services industries and leadership over operational teams in a large number of countries, enable him to provide our Board of Directors with a valuable global perspective on governance and control matters, as well as on strategic planning and risk assessment.
Other Boards and Appointments
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Other Boards and Appointments
| | ROBERT K. SHEARER | | | Director since 2008 Independent Age: 72 ◾ Audit Committee |
Professional Experience
Professional Experience Mr. Shearer retired in March 2015 as Senior Vice President and Chief Financial Officer of VF Corporation, a global lifestyle apparel company, where he served in that capacity since May 2005. He also served VF Corporation in several other capacities since 1986, including Vice President, Finance and Chief Financial Officer from July 1998 to May 2005. Earlier in his career, Mr. Shearer held a senior audit position with Ernst & Young LLP.
Other Boards and Appointments
Other Boards and Appointments Mr. Shearer currently serves on the board of directors of YETI Holdings, Inc., a designer, marketer, retailer, and distributor of a variety of innovative, branded, premium products to a wide-ranging customer base and Kontoor Brands, Inc. a global lifestyle apparel company.
Director Qualifications
Director Qualifications Mr. Shearer’s role as Chief Financial Officer of VF Corporation, coupled with his 12 years of experience in public accounting, enables him to provide our Board of Directors and the Audit Committee with important insights on a range of financial and internal control matters, as well as on matters relating to capital structure, information systems, risk management, public company reporting and investor relations. In addition, his participation in VF Corporation expansion initiatives, including a number of acquisitions and growth in international markets, enables him to provide important insights on international operations, business combination opportunities, and strategic planning.
Director Qualifications
| | JANET S. VERGIS | | | Director since 2014 Independent Age: 59 ◾ Chair, Governance, Nominating & Corporate Responsibility Committee ◾ Compensation & Human Capital Committee ◾ Executive Committee |
Director Qualifications
Ms. Vergis served as an Executive Advisor for private equity firms from January 2013 to December 2019, where she identified and evaluated healthcare investment opportunities. From January 2011 to August 2012, she was the Chief Executive Officer of OraPharma, Inc., a specialty pharmaceutical company dedicated to oral health, where she led that company’s successful turnaround and its subsequent sale. From 2004 to 2009, Ms. Vergis served as President of Janssen Pharmaceuticals, McNeil Pediatrics and Ortho-McNeil Neurologics. From 1988 to 2004, she served in various positions of increasing responsibility in executive leadership, research and development, new product development, sales, and marketing with Johnson & Johnson and its subsidiaries.
Director Qualifications
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Director Qualifications
Ms. Vergis is currently a member of the board of directors of Teva Pharmaceutical Industries, a global leader in generics and biopharmaceuticals, Dentsply Sirona, the world’s largest manufacturer of professional dental solutions and SGS, a leading testing, inspection and certification company. She was also a member of the board of directors of Amneal Pharmaceuticals, Inc. and MedDay Pharmaceuticals from 2015 to 2019 and 2016 to 2021, respectively.
Director Qualifications
Director Qualifications Ms. Vergis’ more than 35 years of healthcare leadership experience, together with her extensive background in research and development, new product development (including products regulated by the U.S. Food and Drug Administration), sales, and marketing, combined with her focus in the areas of oral health and women’s health, enable her to provide important perspectives to our Board of Directors on a range of matters relating to our operations.
Director Qualifications
| | ARTHUR B. WINKLEBLACK | | | Director since 2008 Independent Age: 66 ◾ Chair, Audit Committee ◾ Executive Committee |
Professional Experience
Professional Experience Mr. Winkleblack retired in June 2013 as Executive Vice President and Chief Financial Officer of the HJ Heinz Company, a global packaged food manufacturer, where he had served in such capacity since January 2002. Prior to his tenure with Heinz, Mr. Winkleblack held senior executive positions with various private equity owned businesses from 1996 to 2001, including Perform.com and Freeride.com as part of Indigo Capital, C. Dean Metropolous Group and Six Flags Entertainment Corporation. He was VP & CFO of Commercial Avionics Systems, a division of AlliedSignal, from 1994 to 1996. Previously, he held various finance, strategy and business planning roles at PepsiCo Inc. from 1982 to 1994. Mr. Winkleblack also provided financial and capital markets consulting services to Ritchie Brothers Auctioneers (“RBA”), an industrial auctioneer, from 2014 to 2019. He served as the Senior Advisor to the then RBA’s CEO, Ravichandra K. Saligram, who also serves on our Board of Directors.
Other Boards and Appointments
Other Boards and Appointments Mr. Winkleblack currently serves as a member of the board of directors of The Wendy’s Company, a global quick service restaurant company. Previously, he was a member of the Board of Directors of Aramark, a global provider of food, facilities and uniform services from 2019 to 2024, and a member of the Board of Directors of Performance Food Group, a company specializing in the distribution of food and food-related products to customers throughout the United States, from 2015 to 2019. Mr. Winkleblack’s substantial executive experience across a broad range of industries enables him to provide our Board of Directors with knowledgeable perspectives on strategic planning, international operations, and mergers and acquisitions. In addition, his nearly 12 years of experience as the Chief Financial Officer of a large, multinational, consumer goods company enables him to bring important perspectives to our Board of Directors on performance management, business analytics, finance and capital structure, compliance, information technology, risk management, public company reporting, and investor relations.
Other Boards and Appointments
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Other Boards and Appointments
| | LAURIE J. YOLER | | | Director since 2018 Independent Age: 59 ◾ Compensation & Human Capital Committee ◾ Governance, Nominating & Corporate Responsibility Committee |
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS In 2023, our directors’ fees, other than the CEO, consisted of the following:
COMPENSATION OF DIRECTORS
| Annual Retainer 2023 | | | | • | Lead Director | $150,000 | | • | Chairperson of the Audit Committee | $145,000 | | • | Chairperson of the Compensation & Human Capital Committee | $140,000 | | • | Chairperson of the Governance, Nominating & Corporate Responsibility Committee | $140,000 | | • | Other non-employee directors | $120,000 | | • | Chairperson of the Finance Committee (per meeting) | $2,000 | | Annual Equity 2023 | | | | • | Annual Equity Grant | $160,000 | | Special Assignment 2023 | | | | • | Special Assignment (Per Meeting) | $2,000 |
COMPENSATION OF DIRECTORS
The table above does not include a separate annual retainer for the Board Chair, as the Board Chair is currently our Chief Executive Officer and he receives no additional compensation for his service on the Board.
COMPENSATION OF DIRECTORS
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COMPENSATION OF DIRECTORS
We pay fees to our directors in accordance with the Amended and Restated Compensation Plan for Directors (the “Compensation Plan for Directors”). Any fees payable to our directors under the Compensation Plan for Directors may be deferred in accordance with our Deferred Compensation Plan for Directors, provided that a timely election is made by the director seeking such deferral. We also provide annual restricted stock units and stock option awards to our directors under the Church & Dwight Co., 2022 Omnibus Equity Compensation Plan (the “Omnibus Equity Compensation Plan”). All of these arrangements are described in further detail below. Compensation Plan for Directors. The Compensation Plan for Directors was amended and restated in February 2023 and further amended and restated on November 1, 2023 (as so amended and restated, the “Compensation Plan for Directors”) and provides for the payment of fee-based compensation (i.e., an annual retainer and any special assignment meeting fees) and annual equity grants to our directors who are not full-time employees of the Company or its affiliates. Special assignment meeting fees of $2,000 per meeting may be paid in consideration for attendance at meetings with respect to certain non-scheduled activities and special projects as determined by the Governance, Nominating & Corporate Responsibility Committee and cannot exceed $20,000 per special assignment committee member, including the chair of such committee. Mr. Winkleblack received special assignment meeting fees in 2023 which were paid in December 2023. The annual retainer amount is pro-rated for any director with less than a full year of service. The Compensation Plan for Directors provides each director with the choice of receiving his or her fee-based compensation (i) 100 percent in cash if that director has fully satisfied the Company’s Stock Ownership Guidelines for Directors, (ii) 50 percent in cash and 50 percent in shares of our common stock if specifically elected by a director or (iii) 100 percent in shares of our common stock (the default method of payment). For 2023, all directors made their elections for how to receive their fee-based compensation in December 2022. To determine the number of shares a director is entitled to receive under the Compensation Plan for Directors, the annual retainer or special assignment meeting fee amount (as applicable) is divided by the closing price of a share of our common stock as reported on the NYSE on the applicable payment date. Annual Equity Grants for Directors. The Compensation Plan for Directors provides that, beginning in January 2023, non-employee directors will receive 50 percent of their Annual Equity Grant in the form of stock option awards and 50 percent in the form of restricted stock units (“RSUs”), in each case, granted under the 2022 Omnibus Equity Compensation Plan. These grants will be made on the first day of the first open trading window following the Company’s earnings release associated with the annual meeting of stockholders. A new director will receive his or her initial equity grant on the date such individual commences service with us as a director. The stock options will vest in full on the earlier of (i) the third anniversary of the date of grant, or (ii) the third annual meeting of the Company’s stockholders following the date of grant, provided that the director continues to serve on the Board until such date. Upon any cessation of service due to death or disability, all outstanding stock options, to the extent unvested, continue to vest and remain outstanding until the third anniversary of such death or disability (or earlier until expiration of the option term). With respect to stock option awards, directors who retire after service on the Board for at least six years (“Retirement”), any stock options (to the extent unvested) will continue to vest and all unexercised stock options remain outstanding for the remainder of the option term. The RSUs will vest in full on the first anniversary of the date of grant, provided that the director continues to serve on the Board until such date. Upon any cessation of service due to death or disability all unvested RSUs will vest in full and will be settled by the payment of underlying shares following vesting. Upon Retirement,100 percent of the RSUs will immediately vest. No non-employee director may receive more than one equity grant in any calendar year. Deferred Compensation Plan for Directors. The Deferred Compensation Plan for Directors provides an opportunity for our directors to defer payment of all or a portion of their respective director fees into a notional account until after termination of service. A director electing to defer payment must decide whether to receive the deferred payment in a lump sum or in annual installments over a period of up to 10 years. A director must make any of the foregoing elections prior to the beginning of the calendar year for which the deferred fees are earned. Also, newly elected directors may make such election within 30 days of becoming a director. A director’s election is deemed to remain in effect with respect to the following year unless the director revokes or changes such election prior to the commencement of such following year. Following a termination of service, the director generally receives a number of shares of our common stock in accordance with his or her timely filed election,
COMPENSATION OF DIRECTORS
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COMPENSATION OF DIRECTORS
either in a lump sum or in annual installments over a period of up to 10 years, equal to the number of notional shares then outstanding in the director’s deferred compensation account under the plan. On a change in control, any and all deferred accounts (including any account being paid in installments) will be immediately distributed. The number of notional shares represented by amounts in a participating director’s account is set forth below in the table captioned “Securities Ownership of Certain Beneficial Owners and Management.” 2023 Annual Compensation Limit for Directors. Consistent with market practice, the Compensation Plan for Directors incorporates a maximum annual limit of $750,000 on the aggregate grant date value of equity and equity-based awards plus the aggregate amount of cash-based compensation granted to any non-employee director (whether elected to be paid in cash or shares of common stock or on a current or deferred basis). The following table provides information regarding compensation paid to our non-employee directors in 2023.
2023 DIRECTOR COMPENSATION TABLE
2023 DIRECTOR COMPENSATION TABLE
2023 DIRECTOR COMPENSATION TABLE
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Option Awards ($)(1)(2) | All Other Compensation | Total ($) | | Bradlen S. Cashaw | — | 200,000 | 80,000 | — | 280,000 | | James R. Craigie(3) | 40,000 | — | — | — | 40,000 | | Bradley C. Irwin | — | 200,000 | 80,000 | — | 280,000 | | Penry W. Price | — | 218,334 | 80,000 | — | 298,334 | | Susan G. Saideman | — | 200,000 | 80,000 | — | 280,000 | | Ravichandra K. Saligram | — | 230,000 | 80,000 | — | 310,000 | | Robert K. Shearer | 61,041 | 141,042 | 80,000 | — | 282,083 | | Janet S. Vergis | 70,000 | 150,000 | 80,000 | — | 300,000 | | Arthur B. Winkleblack(4) | 164,584 | 80,000 | 80,000 | — | 324,584 | | Laurie J. Yoler | — | 200,000 | 80,000 | — | 280,000 |
2023 DIRECTOR COMPENSATION TABLE
| (1) Amounts shown represent the aggregate grant date fair values computed in accordance with FASB ASC Topic 718 for each director. Awards include grants of RSUs (Stock Awards) and options (Option Awards) under the 2022 Omnibus Equity Compensation Plan. The assumptions used in determining these amounts are set forth in note 12 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 15, 2024. |
2023 DIRECTOR COMPENSATION TABLE
| See “Compensation Plan for Directors” and “Deferred Compensation Plan for Directors” for information regarding the computation of the number of shares or notional shares provided to a director in payment of director fees. Three directors deferred payment of all or a portion of their 2023 fees under the Deferred Compensation Plan for Directors, as follows: Mr. Cashaw, $120,000; Mr. Saligram, $150,000; and Mr. Shearer, $61,041. |
2023 DIRECTOR COMPENSATION TABLE
| (2) At December 31, 2023, the number of shares of our common stock underlying options held by each of the directors listed in the table was: Mr. Cashaw, 17,420; Mr. Craigie, 14,250; Mr. Irwin, 66,430; Mr. Price, 104,594; Ms. Saideman, 27,810; Mr. Saligram, 104,594; Mr. Shearer, 49,880; Ms. Vergis, 71,430; Mr. Winkleblack, 74,430; and Ms. Yoler, 50,430. At December 31, 2023, the number of RSUs held by each of the directors listed in the table was: Mr. Cashaw, 820; Mr. Craigie, 0; Mr. Irwin, 820; Mr. Price, 820; Ms. Saideman, 820; Mr. Saligram, 820; Mr. Shearer, 820; Ms. Vergis, 820; Mr. Winkleblack, 820; and Ms. Yoler, 820. |
2023 DIRECTOR COMPENSATION TABLE
| (3) Mr. Craigie retired from the Board on April 27, 2023. |
2023 DIRECTOR COMPENSATION TABLE
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2023 DIRECTOR COMPENSATION TABLE
| (4) Mr. Winkleblack received $20,000 for special assignment meeting fees in 2023. |
2023 and 2022 Financial Results
| (1) 2023: The cost of restricted stock issued for the Hero acquisition ($0.12) 2022: The cost of restricted stock issued for the Hero acquisition ($0.03) and impact of the discontinuation of business in Russia due to the Russia/Ukraine war ($0.01) |
2023 and 2022 Financial Results
In our Annual Incentive Plan for 2023, we replaced the Gross Margin metric with a Relative Gross Margin metric and added a fifth metric, Strategic Initiatives. The effect of these financial results, and the Strategic Initiatives metric, on payouts under our Annual Incentive Plan are discussed in further detail below under the heading “Annual Incentive Plan.” In addition, the Company delivered total shareholder return (“TSR”), assuming dividends are reinvested, of 18.7 percent, following a decrease of 20.4 percent in TSR in 2022.
Alignment to Strategy
| • | Provide compensation that is competitive in markets in which we compete for management talent. We refer to this objective as “competitive compensation.” |
Alignment to Strategy
| • | Condition the majority of a named executive officer’s compensation on achievement of both short- and long-term performance. We refer to this objective as “performance incentives.” |
Alignment to Strategy
| • | Provide an incentive for long-term continued employment with us. We refer to this objective as “retention incentives.” |
Alignment to Strategy
| • | Annual Incentive Plan: The Annual Incentive Plan aligns the interests of our executives and stockholders by achieving goals that support long-term stockholder return. The Annual Incentive Plan rating was set at 1.0, as projected EPS growth on a percentage basis was comparable to the average projected EPS growth of the Corporate Incentive Plan Rating Peer Group (as defined below). The Company achieved a plan rating of 1.71 based on 2023 actual performance, as adjusted. The Annual Incentive Plan payouts to our named executive officers for 2023 are discussed in further detail below under “2023 Compensation – Annual Incentive Plan.” |
Alignment to Strategy
| • | Long-Term Incentive: The Committee utilizes stock options as the primary form of long-term compensation. The Committee believes that stock options provide a strong incentive to increase stockholder value, since the value of stock options is directly dependent on the market performance of our common stock. The Committee believes that options are an appropriate vehicle for long-term equity compensation because they directly reflect the stockholder experience, are straightforward to communicate, and provide value only if our stock price increases over time, which aligns our executives’ interests with those of our stockholders in delivering TSR. In 2023, the Committee approved the addition of performance stock units and restricted stock units as long-term incentive (“LTI”) vehicles in order to more closely align with market practice and to provide our executives with alternative forms of incentives that complement our stock option awards. In deciding the weighting among LTI vehicles, the Committee benchmarked the Compensation Peer Group but also balanced the historical reliance on stock options in driving successful results and for 2023 75% of the long-term incentive awards for the executive officers consisted of stock options, 15% of performance stock units and 10% of restricted stock units. The performance stock units granted in 2023 are measured based on a relative ranking of total shareholder return over a three year performance period as we believe this is the best output metric available. |
Say-On-Pay Vote and Stockholder Engagement
Say-On-Pay Vote and Stockholder Engagement At the 2023 Annual Meeting of Stockholders, we asked our stockholders to vote to approve, on an advisory basis, the compensation paid to our named executive officers, commonly referred to as a Say-on-Pay vote. Our stockholders approved compensation to our named executive officers, with approximately 84% percent of votes cast in favor of our say-on-pay resolution. We value this positive endorsement by our stockholders of our executive compensation program. After soliciting input from and engaging with various major stockholders regarding our executive compensation program, the Compensation & Human Capital Committee assessed our compensation programs and found our current mix of performance metrics to be generally balanced and supportive of our pay-for-performance philosophy, consistent with the solid support expressed by our stockholders, and determined to further ensure that our compensation program is supportive of our pay-for-performance philosophy by adjusting our long-term incentive program to introduce restricted stock units and performance-based restricted stock units. We believe our programs are effectively designed, are working well, and are aligned with the interests of our stockholders. The Compensation & Human Capital Committee will continue to seek and consider stockholder feedback in the future.
2023 Executive Compensation Highlights
2023 Executive Compensation Highlights Redesign of Long-Term Incentive Compensation Program. In 2023 the Committee evaluated the structure of our long-term incentive compensation program in the context of our compensation objectives and principles, including pay for performance and alignment with stockholder interests:
2023 Executive Compensation Highlights
| • | In connection with this evaluation and in consideration of market practice and risk management, the Committee determined to alter its years-long practice of granting long-term incentives entirely in the form of stock options and instead determined that, beginning in 2023, long-term incentives would be granted as a mix of restricted stock units, performance stock units and stock options. For our named executive officers, the mix of awards in 2023 was 10% time-based restricted stock units, 15% performance stock units, and 75% stock options. The Committee believes that one of the reasons for the Company’s outperformance over the long term is due to the long-term incentive award significant reliance on stock options. |
2023 Executive Compensation Highlights
| • | Performance stock units granted in 2023 vest entirely based on the achievement of a relative total shareholder return metric over a three-year performance period, reflecting our core principle of alignment with stockholder interests. |
2023 Executive Compensation Highlights
Changes to Our Annual Incentive Plan. In addition to reviewing and making changes to our long-term incentive program in 2023, our Committee reviewed our Annual Incentive Plan, which has been in place since 2004, and determined to make the following changes beginning in 2023:
2023 Executive Compensation Highlights
| • | Introduced a “Strategic Initiatives” metric, focused on sustainability and long-term growth, consistent with market practice and our compensation principles, with each of the five metrics equally weighted (i.e., 20% per metric); and |
ANNUAL INCENTIVE PLAN
ANNUAL INCENTIVE PLAN Our Annual Incentive Plan utilizes five equally weighted metrics, namely: Net Sales, Relative Gross Margin, Diluted EPS, Cash from Operations and Strategic Initiatives. The table below summarizes the reasons the Committee utilizes these metrics for our Annual Incentive Plan. The principal objective of the Annual Incentive Plan is to align executive and stockholder interests by providing an incentive to our named executive officers to achieve annual performance goals that support long-term
ANNUAL INCENTIVE PLAN
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ANNUAL INCENTIVE PLAN
stockholder return. The performance goals for the financial metrics are established each year to reflect specific objectives set in our annual budget. For the Strategic Initiatives metric, the Committee establishes specific objective goals under each category and measures the attainment of such goals using a detailed scorecard approach. The Committee considers competitive factors, including competitive market data for total cash compensation, which includes salary and target annual incentive bonus opportunities, in determining the amount of annual incentive award opportunities for our named executive officers. To more accurately reflect the operating performance of our business, the Committee has approved adjustment principles to our reported financial results for the Annual Incentive Plan. Generally, these adjustments are intended to exclude one-time or unusual items and may have either a favorable or unfavorable impact to the payout on the Annual Incentive Plan. Examples of common adjustments include the elimination of the effect of foreign exchange rates that differed from budgeted amounts and the impact of unplanned acquisitions and divestitures. The actual adjustments that apply can vary from year to year and depend on the one-time or unusual events occurring within the year. As noted below, in structuring total direct compensation for our named executive officers, we have referenced the 50th percentile of direct compensation of the Compensation Peer Group and survey data. This median has influenced our annual incentive compensation target award levels, although we have from time to time, set target payouts above the median level when we believed that our planned performance was well ahead of the targets of a subset of non-food companies in our Performance Peer Group (the “Corporate Incentive Plan Rating Peer Group”, as described further below). The Committee uses a numerical performance rating system with a range from 0.0 to 1.85 to determine the payout amounts under the Annual Incentive Plan and establishes a Corporate Incentive Plan Rating. At the beginning of each year, the Committee determines the specific rating for each year by comparing the Company’s projected EPS growth for that year to the average projected EPS growth of the Company’s Corporate Incentive Plan Rating Peer Group. A rating of 1.0 normally represents the target achievement level for plan performance with each participant’s target payout based on his or her target percentage of his or her annual base salary (though in certain cases operating plan level performance results in an above target level payout). For 2023, a 1.0 rating was determined to be appropriate and the target achievement level for plan performance was therefore set to reflect a 1.0 rating. In 2023, the Company delivered Diluted EPS of $3.17 after adjusting for the cost of restricted stock issued for the Hero acquisition ($0.12). Diluted EPS, as adjusted, resulted in a year-over-year increase in EPS of 6.7 percent, exceeding the average of the Corporate Incentive Plan Rating Peer Group, and our target Diluted EPS growth, as adjusted. The Company exceeded its planned targets for Net Sales, Relative Gross Margin, Earnings Per Share, as adjusted, Cash from Operations, and Strategic Initiatives resulting in an actual performance rating of 1.71. In addition to the absolute performance compared to the annual incentive targets, the Company delivered TSR, assuming dividends are reinvested, of 18.7 percent following a 20.4 percent decrease in TSR during 2022. The bonus amounts payable to our named executive officers under our Annual Incentive Plan are included in the “Non-Equity Incentive Plan Compensation” column of the “2023 Summary Compensation Table.” The following table indicates the percentage of salary payable at a 1.0 target rating, the percentage of salary payable at a 1.0 plan rating and the award opportunity for 2023, based on a 1.0 plan rating for each of our named executive officers:
Annual Incentive Plan Target Payouts
Annual Incentive Plan Target Payouts
Annual Incentive Plan Target Payouts
| Name | Percentage of Salary Payable at 1.0 Performance Rating | Award Opportunity (Based on a 1.0 Performance Rating)(1) | | Matthew T. Farrell | 125% | $1,487,300 | | Richard A. Dierker | 90% | $628,800 | | Patrick D. de Maynadier | 60% | $306,300 | | Barry A. Bruno | 70% | $349,900 | | Carlos G. Linares | 55% | $272,100 |
Annual Incentive Plan Target Payouts
| (1) Amounts represent the target bonus as a percentage of the December 31, 2023 base salary and are rounded to nearest $100. |
Annual Incentive Plan Target Payouts
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Annual Incentive Plan Target Payouts
As described further below, in 2023 the Committee referenced competitive compensation data provided by Semler Brossy Consulting Group (“Semler Brossy”) in setting the percentage levels. The following table indicates, with respect to each corporate performance measure, the threshold level of 2023 performance for which a payout could be made, the target performance level, the maximum performance level, and the actual performance and performance ratings.
2023 Annual Incentive Plan Performance Ranges, Actual Performance and Performance Ratings
2023 Annual Incentive Plan Performance Ranges, Actual Performance and Performance Ratings (in millions, except gross margin percentage and per share data)
2023 Annual Incentive Plan Performance Ranges, Actual Performance and Performance Ratings
| Performance Measure (20% weighting each) | Threshold (0 rating) | Target (1.0 rating) | Maximum (2.0 rating) | Actual Performance (as adjusted) | Rating | | Net Sales | $5,479 | $5,708 | $5,936 | $5,868 | 1.68 | | Relative Gross Margin | <25th percentile | 56th to 60th percentile | 80th percentile | 72nd percentile | 1.75 | | Diluted Earnings Per Share | $2.91 | $3.03 | $3.15 | $3.17 | 2.00 | | Cash From Operations | $833 | $925 | $1,018 | $1,031 | 2.00 | | Strategic Initiatives | Qualitative with scale of 0.75 to 1.25 | | | 1.10 | 1.10 |
2023 Annual Incentive Plan Performance Ranges, Actual Performance and Performance Ratings
The corporate performance rating for 2023 was equal to the weighted average number rating of these factors, or 1.71. Based on that performance rating, our named executive officers received award payments under the Annual Incentive Plan for 2023 as shown in the table below:
2023 Annual Incentive Plan Payouts
2023 Annual Incentive Plan Payouts
2023 Annual Incentive Plan Payouts
| Name | Plan Rating | Performance Rating vs Plan Rating | Actual Performance Rating | Actual Award Payment(1)(2) | Actual Award as percentage of Award Opportunity (Based on a 1.0 Performance Rating) | | Matthew T. Farrell | 1.0 | 1.71 | 1.71 | $2,530,700 | 171% | | Richard A. Dierker | 1.0 | 1.71 | 1.71 | $1,070,000 | 171% | | Patrick D. de Maynadier | 1.0 | 1.71 | 1.71 | $521,200 | 171% | | Barry A. Bruno | 1.0 | 1.71 | 1.71 | $595,300 | 171% | | Carlos G. Linares | 1.0 | 1.71 | 1.71 | $463,000 | 171% |
2023 Annual Incentive Plan Payouts
| (1) Amounts rounded to nearest $100. |
2023 Annual Incentive Plan Payouts
| (2) The award payments are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. |
LONG-TERM INCENTIVE
LONG-TERM INCENTIVE We provide long-term, equity-based executive compensation for our named executive officers, which aligns our performance and executive officer compensation with the interests of our stockholders. Each year, the Committee approves a target long-term equity award for each executive officer, expressed as a percentage of base salary. In connection with our 2023 long-term incentive grants, the Committee targeted the following percentages of salary based on market data for our named executive officers:
Long-Term Incentive as Percent of Salary
Long-Term Incentive as Percent of Salary
Long-Term Incentive as Percent of Salary
| Name | Percentage of Salary | | Matthew T. Farrell | 620% | | Richard A. Dierker | 290% | | Patrick D. de Maynadier | 165% | | Barry A. Bruno | 170% | | Carlos G. Linares | 130% |
Long-Term Incentive as Percent of Salary
Beginning in fiscal year 2023, our named executive officers received 75 percent of their total annual long-term incentive award in stock options, 15 percent in performance stock units (“PSUs”), and 10 percent in restricted stock units (“RSUs”). The number of shares underlying PSUs and RSUs granted to our named executive officers is calculated by designating 15% and 10%, respectively, of an amount equal to a percentage of the named executive officer’s salary and, with respect to the PSUs, dividing that amount by the grant date fair value of a share of our common stock underlying the PSUs as determined in accordance with U.S. generally accepted accounting principles using Monte Carlo valuation methodology, and, with respect to the RSUs, the grant date fair value of a share of our common stock, in each case rounded to the nearest 10 shares. The number of shares underlying stock options, RSUs, and PSUs granted to our named executive officers are set forth below in the “2023 Grants of Plan-Based Awards” table. As previously disclosed, during fiscal year 2023, Mr. Bruno forfeited, without consideration, an aggregate value of $200,000 of vested in-the-money stock options. For additional information regarding long-term incentive award terms, see the narrative accompanying the “2023 Grants of Plan-Based Awards” table. Stock Options. In 2023, while introducing RSUs and PSUs, the Committee continued to utilize options on our common stock as our principal form of long-term compensation. The number of shares underlying options granted to our named executive officers is calculated by designating 75% of an amount equal to a percentage of the named executive officer’s salary and dividing that amount by the grant date fair value of the shares underlying the option, in accordance with U.S. generally accepted accounting principles, rounded to the nearest 10 shares. The grant date fair value of the stock options is calculated in accordance with ASC Topic 718. Stock options granted in 2023:
Long-Term Incentive as Percent of Salary
| • | have a 10-year term; |
Long-Term Incentive as Percent of Salary
| • | vest on the third anniversary of the date of grant; |
Long-Term Incentive as Percent of Salary
| • | vesting is subject to continued service through such vesting date; and |
Long-Term Incentive as Percent of Salary
| • | the exercise price is equal to the fair market value per share on the date of grant, based on the closing price as reported on the NYSE on that date. |
Long-Term Incentive as Percent of Salary
The Committee believes that stock options provide a strong incentive to increase stockholder value, because the value of the stock options is directly dependent on the market performance of our common stock following the date of grant. Stock options also directly reflect the stockholder experience, are straightforward to communicate, and provide value only if our stock price increases over time, which aligns our executives’ interests with those of our stockholders in delivering TSR.
Long-Term Incentive as Percent of Salary
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Long-Term Incentive as Percent of Salary
Restricted Stock Units. RSUs align the interests of our named executive officers with those of our stockholders because the value of the RSUs increases or decreases as the price of our stock changes. RSUs vest in equal installments over a three-year period, beginning one year from the date of grant. Performance Stock Units. PSUs align the interests of our named executive officers with those of our stockholders because the number of shares of stock earned are tied to the achievement of performance targets as well as changes in our stock price. PSUs pay out at the end of a three-year performance period only if we meet relative Total Shareholder Return targets compared to our Performance Peer Group, as described further below. Grant Practices. Beginning in fiscal year 2023, the Committee approved shifting the annual long-term incentive award grant date from June to the first trading day of March to align timing more closely with peer practice. Grants to new employees are effective on the date the employee commences employment with us, and special grants made to employees at times other than the time of the annual grant are effective on the first trading day of the month following approval of the grant. The per share exercise price of stock options is equal to the closing price of a share of our common stock on the date of grant. We believe that our grant practices are appropriate and eliminate any questions regarding “timing” of grants in anticipation of material events, since grants become effective in accordance with a long-standing schedule. We do not permit repricing of options without prior stockholder approval.
2024 Base Salary
| • | Annual Incentive Plan Targets. Mr. Farrell’s Annual Incentive Plan target increased from 125 percent in 2023 to 150 percent in 2024 and Mr. Dierker’s Annual Incentive Plan target increased from 90 percent in 2023 to 95 percent in 2024. |
2024 Base Salary
| • | Long-Term Incentive Targets. Mr. Farrell’s Long-Term Incentive target increased from 620 percent in 2023 to 650 percent in 2024, Mr. Dierker’s target increased from 290 percent in 2023 to 320 percent in 2024, Mr. de Maynadier’s target increased from 165 percent in 2023 to 170 percent in 2024, and Mr. Bruno’s target increased from 170 percent in 2023 to 175 percent in 2024. |
Executive Stock Ownership Guidelines
| • | shares acquired and held upon stock option exercises; |
SAVINGS AND PROFIT SHARING PLAN FOR SALARIED EMPLOYEES
SAVINGS AND PROFIT SHARING PLAN FOR SALARIED EMPLOYEES This plan, which we sometimes refer to below as the “Savings and Profit Sharing Plan,” is a tax-qualified defined contribution plan available to all of our salaried employees in the United States. All of our named executive officers participate in the plan. Under the plan, an employee may contribute, subject to the limitations of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), up to a maximum of 70 percent of his or her eligible compensation (approximately 15 percent for highly compensated employees in 2023), which includes salary and payments under the Annual Incentive Plan, on a pre-tax basis or as Roth contributions. We provide a matching contribution equal to 100 percent of the first five percent of eligible compensation that an employee contributes in any year. In addition, the plan provides a profit sharing feature under which we make an annual contribution to the account of each employee based on our performance in the preceding year and can make additional contributions for all employees excluding at or above the executive vice president level, including our named executive officers. The performance measures and results used to calculate the annual contribution level are identical to the Company-wide measures described applicable to payouts under the Annual Incentive Plan described above under “2023 Compensation—Annual Incentive Plan.” Achievement of a performance rating of 1.0 would have resulted in a contribution of five percent of a participant’s base salary and Annual Incentive Plan payments made in 2023. Based on 2023 performance results, the Compensation & Human Capital Committee approved a contribution equal to 8.55 percent of a participant’s eligible compensation in 2023. Amounts credited to an employee’s account in the plan may be invested among a number of funds, including a Company stock fund. A participant’s account is adjusted to reflect the rate of return, positive or negative, on the investments. Employee contributions and compensation on which our profit sharing contributions may be based cannot exceed limits under the Internal Revenue Code (the eligible compensation limit was $330,000 in 2023).
EXECUTIVE DEFERRED COMPENSATION PLAN
paid to the executive officer under the Annual Incentive Plan. In addition, an executive can make a separate deferral, which we refer to below as the “Excess Compensation Deferral,” of up to five percent of compensation that exceeds Internal Revenue Code limits on eligible contributions under the Savings and Profit Sharing Plan. We provide a contribution equal to (i) 100 percent of the Excess Contribution Deferral; (ii) five percent of other salary and Annual Incentive Plan deferrals; and (iii) the profit sharing contributions we would have made to the participant’s account under the Savings and Profit Sharing Plan were it not for the Internal Revenue Code limit on the amount of eligible compensation under that plan and the participant’s deferrals into the EDCP. We amended the EDCP, effective January 1, 2024, to permit “in-service” account elections, adjust base salary and bonus deferral(s) to 1% minimum and 70% maximum (versus the previous minimum of 10% and the previous maximum of 85%), limit the Company match to active participants and retirees for periods of active service, provide additional flexibility on vesting, and make certain operational investment changes. Amounts deferred under the EDCP generally are not subject to federal, and in many cases state, income taxes until they are distributed. An executive officer can choose to have his or her contributions allocated to one or more of several notional investments, including a notional investment in our common stock. A participant may not initially allocate more than 50 percent of his or her contributions to our common stock, although the participant can increase the notional common stock amount through intra-plan transfers of notional investments previously made. A participant’s account is adjusted to reflect the deemed rate of return, positive or negative, on the notional investments. An executive officer may choose to receive a payout following retirement, either in a lump sum or in annual installments, in accordance with the terms of the EDCP. The EDCP also includes provisions for payment upon termination (pre-retirement) death or disability. See the “2023 Nonqualified Deferred Compensation” table and accompanying narrative for additional information.
CHANGE IN CONTROL AND SEVERANCE AGREEMENTS
CHANGE IN CONTROL AND SEVERANCE AGREEMENTS We have adopted change in control and severance agreements for our executive officers because we believe that these agreements can create management stability during a period of potential uncertainty. Absent such agreements, there is an increased risk that executive officers may be encouraged to seek other employment opportunities if they became concerned about their employment security following a change in control. We also believe that the agreements provide financial security to an executive officer in the event of an involuntary termination of the executive officer without cause or for good reason following a change in control by providing a meaningful payment to the executive officer. The agreements also provide clear statements of the rights of the executive officers and protect against a change in employment and other terms by an acquirer that would be unfavorable to the executive officer. We also provide severance benefits to our executive officers, although at a lower level, for certain types of employment terminations that do not follow a change in control. We believe these arrangements provide a competitive benefit that enhances our ability to hire and retain capable executive officers. The change in control and severance agreements provide for payments and other benefits if an executive officer’s employment is terminated without cause, or if an executive officer terminates employment for “good reason,” within two years following a change in control. These provisions require what is sometimes called a “double trigger,” namely both a change in control and a specified termination event, before payment is made. The agreements also provide for lesser payments if these types of terminations occur outside of the context of a change in control. The agreements do not contain an excise tax gross-up provision and, instead provide that, in the event that payments to be made to an executive under the agreements in connection with a change in control would result in the imposition of the excise tax under Section 4999 of the Internal Revenue Code, the payments will be reduced to the highest amount that could be paid without triggering the excise tax if, following the reduction, the executive would retain a greater amount of net after-tax payments than if no reduction were made. If no reduction is made, the executive officer will pay any applicable excise tax. See “Potential Payments Upon Termination or Change in Control” for further information regarding benefits under the change in control and severance agreements.
ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT
ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT Representatives from Semler Brossy attend Compensation & Human Capital Committee meetings, participate in executive sessions, and communicate directly with the Committee. Semler Brossy also provides independent consulting services to the Nominating, Governance & Corporate Responsibility Committee regarding non-employee director compensation. In its role as independent compensation consultant, Semler Brossy provides recommendations on compensation for our named executive officers, regularly reviews the Company’s executive compensation programs, in cooperation with management, and regularly reviews the Company’s compensation philosophy, peer group (as described further below) and target competitive positioning for reasonableness and appropriateness.
ROLE OF PEER GROUPS
ROLE OF PEER GROUPS The Committee utilizes two distinct peer groups for purposes of benchmarking compensation as well as measuring financial and plan performance – the “Compensation Peer Group” and the “Performance Peer Group” (with an additional non-food companies subset of this peer group, the “Corporate Incentive Plan Rating Peer Group”), each of which is described further below. Compensation Peer Group. Consists of a group of 16 consumer-packaged goods companies that have revenues in the range of approximately 1/3x to 3x our revenues. Within this classification, the Committee referenced companies with similar distribution channels and with a significant focus on brand recognition, and focused on identifying our closest business competitors and including high valuation companies. We believe there is a strong likelihood that the skills of our named executive officers are transferable among the companies in the Compensation Peer Group and, accordingly, we would expect to compete with these companies for executive officer talent. Below are the criteria used to determine the 2023 Compensation Peer Group:
Criteria for Determining Compensation Peer Group
Criteria for Determining Compensation Peer Group
✓ Business Fit: similar distribution channels and brand recognition focus
✓ Business Fit: similar distribution channels and brand recognition focus In 2023 the Committee reviewed the Compensation Peer Group to determine potential changes to use when evaluating 2024 compensation and determined that no changes were necessary. Compensation Peer Group and Survey Data. The Committee primarily utilizes data from proxy materials with respect to the Compensation Peer Group for our CEO and CFO. With respect to our other named executive officers, the Committee primarily uses survey data in determining compensation due to the limited amount of comparable data available in the proxy materials from companies within the Compensation Peer Group, although the Committee does reference Compensation Peer Group data in determining our other named executive officers’ compensation when there is a meaningful level of relevant data for those positions.
✓ Business Fit: similar distribution channels and brand recognition focus
| Company Name | Compensation Peer Group | Performance Peer Group | Corporate Incentive Plan Rating Peer Group | | Conagra Brands, Inc. | | ✓ | | | Colgate-Palmolive Company | | ✓ | ✓ | | The Clorox Company | ✓ | ✓ | ✓ | | Coty Inc. | ✓ | | | | Campbell Soup Company | ✓ | ✓ | | | The Estée Lauder Companies Inc. | | ✓ | ✓ | | Energizer Holdings, Inc. | ✓ | ✓ | ✓ | | Edgewell Personal Care Company | ✓ | ✓ | ✓ | | Essity AB | | ✓ | ✓ | | Flowers Foods, Inc. | ✓ | ✓ | | | General Mills, Inc. | | ✓ | | | Hasbro, Inc. | ✓ | | | | The Hershey Company | ✓ | ✓ | | | Kellogg Company | | ✓ | | | Keurig Dr Pepper Inc. | ✓ | ✓ | | | The Kraft Heinz Company | | ✓ | | | Kimberly-Clark Corporation | | ✓ | ✓ | | Mondelez International, Inc. | | ✓ | | | McCormick & Company, Incorporated | ✓ | ✓ | | | Monster Beverage Corporation | ✓ | ✓ | | | Newell Brands Inc. | ✓ | ✓ | ✓ | | PepsiCo, Inc. | | ✓ | | | Perrigo Company, plc | ✓ | | | | The Procter & Gamble Company | | ✓ | ✓ | | Post Holdings, Inc. | ✓ | ✓ | | | Reckitt Benckiser Group plc | | ✓ | ✓ | | The Scotts Miracle-Gro Company | ✓ | | | | The J. M. Smucker Company | ✓ | ✓ | | | Unilever PLC | | ✓ | ✓ |
ACCOUNTING AND TAX CONSIDERATIONS
ACCOUNTING AND TAX CONSIDERATIONS The Committee may consider various accounting and tax implications of equity-based and other forms of compensation. When determining the amounts of equity-based awards to be granted, the Committee examines the accounting cost associated with the grants. Under ASC 718, grants of stock options, restricted stock units, and performance stock units result in an accounting charge for the Company equal to the fair value of the award issued.
2023 SUMMARY COMPENSATION TABLE
2023 SUMMARY COMPENSATION TABLE The following table sets forth information regarding the compensation for 2023, 2022, and 2021 of our Chairman, President and CEO, our Executive Vice President, CFO and Head of Business Operations, and each of the persons who were the next three most highly paid executive officers in 2023, or our “named executive officers,” as defined in Item 402 of Regulation S-K.
2023 SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(1)(3) | All Other Compensation ($)(9) | Total ($) | | Matthew T. Farrell(4) | 2023 | 1,183,975 | — | 1,808,075 | 5,424,225 | 2,530,700 | 235,191 | 11,182,166 | | Chairman, President and | 2022 | 1,156,275 | — | — | 6,590,772 | 453,600 | 174,764 | 8,375,361 | | Chief Executive Officer | 2021 | 1,117,400 | — | — | 6,359,608 | 1,130,800 | 281,718 | 8,889,526 | | Richard A. Dierker(5) | 2023 | 695,275 | — | 496,625 | 1,489,875 | 1,070,000 | 136,450 | 3,888,225 | | Executive Vice President, | 2022 | 673,300 | — | — | 1,780,976 | 191,400 | 100,087 | 2,745,763 | | Chief Financial Officer and Head of Business Operations | 2021 | 633,550 | — | — | 1,499,735 | 473,900 | 152,382 | 2,759,567 | | Patrick D. de Maynadier(6) | 2023 | 508,000 | — | 206,456 | 619,369 | 521,200 | 98,043 | 1,953,068 | | Executive Vice President, | 2022 | 494,500 | — | — | 750,728 | 94,900 | 85,460 | 1,425,588 | | General Counsel & Secretary | 2021 | 473,025 | — | — | 714,769 | 249,800 | 93,853 | 1,531,447 | | Barry A. Bruno(7) | 2023 | 497,350 | — | 208,250 | 624,750 | 595,300 | 109,117 | 2,034,767 | | Executive Vice President, | 2022 | 486,250 | — | — | 661,402 | 101,300 | 84,152 | 1,333,104 | | Chief Marketing Officer and President— Consumer Domestic | 2021 | 458,022 | — | — | 571,329 | 201,200 | 83,414 | 1,313,965 | | Carlos G. Linares(8) | 2023 | 492,275 | — | 157,625 | 472,875 | 463,000 | 366,632 | 1,952,407 | | Executive Vice President Chief Technology Officer & Global New Product Innovation | 2022 | 480,400 | — | — | 557,757 | 82,700 | 67,318 | 1,188,175 |
2023 SUMMARY COMPENSATION TABLE
| (1) Some of our named executive officers deferred a portion of their salary and non-equity incentive plan compensation in 2023 under the EDCP as follows: Mr. Farrell, $168,678; Mr. Dierker, $601,126; Mr. Bruno, $86,160; Mr. de Maynadier, $343,305; and Mr. Linares, $688,915. |
2023 SUMMARY COMPENSATION TABLE
| (2) The amounts shown for option and stock awards are based on the grant date fair value of awards calculated in accordance with ASC Topic 718. The assumptions used in determining the amounts in this column are set forth in note 12 to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 15, 2024. The below table provides the aggregate value of the performance stock units at the grant date at the target and maximum performance levels. The actual value of the performance stock units at the time of payout will depend upon the achievement of the relative TSR performance measure, as well as the price of our Common Stock at the time of the vesting. For information regarding the number of shares subject to 2023 stock option grants and other features of those grants, see the “2023 Grants of Plan-Based Awards” table. |
2023 SUMMARY COMPENSATION TABLE
| Named Officer | PSU Value at Target Level (Reported in Stock Awards column above) ($) | PSU Value at Maximum Level ($) | | Matthew T. Farrell | 1,084,845 | 2,169,690 | | Richard A. Dierker | 297,975 | 595,950 | | Patrick D. de Maynadier | 123,874 | 247,748 | | Barry A. Bruno | 124,950 | 249,900 | | Carlos G. Linares | 94,575 | 189,150 |
2023 SUMMARY COMPENSATION TABLE
| (3) Includes payments under the Annual Incentive Plan based on achievement of corporate performance measures. See “Compensation Discussion and Analysis—2023 Compensation—Annual Incentive Plan” for further information regarding payments for 2023. |
2023 SUMMARY COMPENSATION TABLE
| (4) Mr. Farrell’s base salary increased to $1,189,800 effective April 1, 2023. |
2023 SUMMARY COMPENSATION TABLE
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2023 SUMMARY COMPENSATION TABLE
| (5) Mr. Dierker’s base salary increased to $698,700 effective April 1, 2023. |
2023 SUMMARY COMPENSATION TABLE
| (6) Mr. de Maynadier’s base salary increased to $510,500 effective April 1, 2023. |
2023 SUMMARY COMPENSATION TABLE
| (7) Mr. Bruno’s base salary increased to $499,800 effective April 1, 2023. |
2023 SUMMARY COMPENSATION TABLE
| (8) Mr. Linares’ base salary increased to $494,700 effective April 1, 2023. |
2023 SUMMARY COMPENSATION TABLE
| (9) The following table sets forth the component amounts presented in the “All Other Compensation” column above for the year ended December 31, 2023: |
2023 SUMMARY COMPENSATION TABLE
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2023 SUMMARY COMPENSATION TABLE
| 2023 ALL OTHER COMPENSATION TABLE |
2023 GRANTS OF PLAN-BASED AWARDS
2023 GRANTS OF PLAN-BASED AWARDS The following table provides information regarding plan-based awards granted to our named executive officers in 2023.
2023 GRANTS OF PLAN-BASED AWARDS
| Name | Grant Date(1) | Approval Date(1) | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(3) | | | Estimated Possible Payouts Under Equity Incentive Plan Awards(4) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(5) | All Other Option Awards: Number of Securities Underlying Options (#)(6) | Exercise or Base Price of Option Awards ($ / Sh) | Grant Date Fair Value of Stock and Option Awards ($)(7) | | | | | Threshold ($)(2) | Target (at 1.0 rating) ($) | Maximum ($) | Threshold (#)(2) | Target (at 1.0 rating) (#) | Maximum (#) | | | | | | Matthew T. Farrell | | | | | | | | | | | | | | Annual Incentive Plan | | | — | 1,480,000 | 2,737,900 | | | | | | | | | Stock Options | 3/1/2023 | 1/31/2023 | | | | | | | | 226,670 | $83.13 | 5,424,225 | | Restricted Stock Units | 3/1/2023 | 1/31/2023 | | | | | | | 8,700 | | | 723,230 | | Performance Stock Units | 3/1/2023 | 1/31/2023 | | | | — | 9,780 | 19,560 | | | | 1,084,845 | | Richard A. Dierker | | | | | | | | | | | | | | Annual Incentive Plan | | | — | 625,700 | 1,157,600 | | | | | | | | | Stock Options | 3/1/2023 | 1/31/2023 | | | | | | | | 62,260 | $83.13 | 1,489,875 | | Restricted Stock Units | 3/1/2023 | 1/31/2023 | | | | | | | 2,390 | | | 198,650 | | Performance Stock Units | 3/1/2023 | 1/31/2023 | | | | — | 2,690 | 5,380 | | | | 297,975 | | Patrick D. de Maynadier | | | | | | | | | | | | | | Annual Incentive Plan | | | — | 304,800 | 563,900 | | | | | | | | | Stock Options | 3/1/2023 | 1/31/2023 | | | | | | | | 25,880 | $83.13 | 619,369 | | Restricted Stock Units | 3/1/2023 | 1/31/2023 | | | | | | | 990 | | | 82,583 | | Performance Stock Units | 3/1/2023 | 1/31/2023 | | | | — | 1,120 | 2,240 | | | | 123,874 | | Barry A. Bruno | | | | | | | | | | | | | | Annual Incentive Plan | | | — | 348,100 | 644,100 | | | | | | | | | Stock Options | 3/1/2023 | 1/31/2023 | | | | | | | | 26,110 | $83.13 | 624,750 | | Restricted Stock Units | 3/1/2023 | 1/31/2023 | | | | | | | 1,000 | | | 83,300 | | Performance Stock Units | 3/1/2023 | 1/31/2023 | | | | — | 1,130 | 2,260 | | | | 124,950 | | Carlos G. Linares | | | | | | | | | | | | | | Annual Incentive Plan | | | — | 270,800 | 500,900 | | | | | | | | | Stock Options | 3/1/2023 | 1/31/2023 | | | | | | | | 19,760 | $83.13 | 472,875 | | Restricted Stock Units | 3/1/2023 | 1/31/2023 | | | | | | | 760 | | | 63,050 | | Performance Stock Units | 3/1/2023 | 1/31/2023 | | | | — | 850 | 1,700 | | | | 94,575 |
2023 GRANTS OF PLAN-BASED AWARDS
| (1) For information regarding the timing of Long-Term Incentive grants, see “Compensation Discussion and Analysis—Long-Term Incentive Grant Practices.” |
2023 GRANTS OF PLAN-BASED AWARDS
| (2) There is no specified minimum award payout. |
2023 GRANTS OF PLAN-BASED AWARDS
| (3) Constitutes target and maximum award opportunities for our named executives under our Annual Incentive Plan. See “Compensation Discussion and Analysis—2023 Compensation—Annual Incentive Plan” for information regarding the criteria applied in determining the amounts payable under the awards. The actual amounts paid with respect to these awards are included in the “Non-Equity Incentive Plan Compensation” column in the “2023 Summary Compensation Table”. Amounts are rounded to the nearest $100. |
2023 GRANTS OF PLAN-BASED AWARDS
| (4) Constitutes the performance stock units target and maximum award opportunities for our named executive officers. |
2023 GRANTS OF PLAN-BASED AWARDS
| (5) These amounts include awards of restricted stock units granted to our named executive officers on March 1, 2023. |
2023 GRANTS OF PLAN-BASED AWARDS
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2023 GRANTS OF PLAN-BASED AWARDS
| (6) The amounts shown in this column represent the shares of our common stock underlying options granted under the Omnibus Equity Compensation Plan in 2023. All options were granted with an exercise price per share equal to the closing price per share as reported on the NYSE on the date of grant. The options vest as to all underlying shares on the third anniversary of the date of grant and terminate ten years from the date of grant, subject to earlier termination upon the occurrence of specified events. All stock options granted on or after July 20, 2019, require a “double trigger” before payment can be made or equity can vest (requiring a qualifying termination following a change in control). |
2023 GRANTS OF PLAN-BASED AWARDS
| (7) The grant date fair value is computed in accordance with ASC Topic 718. The assumptions used in determining the amounts in this column are set forth in note 12 to our consolidated financial statements in our Annual Report Form 10-K for the fiscal year ended December 31, 2023 filed with the SEC on February 15, 2024. |
2023 GRANTS OF PLAN-BASED AWARDS
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2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table provides information regarding outstanding equity awards held by our named executive officers at December 31, 2023.
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| | Option Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#)(1) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(2) | Market Value of Shares or Units of Stock That Have Not Vested (#)(3) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(4) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (3) | | Matthew T. Farrell | | | | | | | | | | Stock Options | 556,800 | | $41.76 | 1/4/2026 | | | | | | Stock Options | 398,550 | | $53.75 | 6/19/2027 | | | | | | Stock Options | 454,100 | | $50.28 | 6/18/2028 | | | | | | Stock Options | 376,610 | | $77.33 | 6/17/2029 | | | | | | Stock Options | 485,020 | | $73.87 | 6/15/2030 | | | | | | Stock Options | | 367,820 | $84.54 | 6/14/2031 | | | | | | Stock Options | | 308,410 | $84.85 | 6/13/2032 | | | | | | Stock Options | | 226,670 | $83.13 | 3/1/2033 | | | | | | Restricted Stock Units | | | | | 8,700 | 822,672 | | | | Performance Stock Units | | | | | | | 9,780 | 924,797 | | Richard A. Dierker | | | | | | | | | | Stock Options | 24,380 | | $73.87 | 6/15/2030 | | | | | | Stock Options | | 86,740 | $84.54 | 6/14/2031 | | | | | | Stock Options | | 83,340 | $84.85 | 6/13/2032 | | | | | | Stock Options | | 62,260 | $83.13 | 3/1/2033 | | | | | | Restricted Stock Units | | | | | 2,390 | 225,998 | | | | Performance Stock Units | | | | | | | 2,690 | 254,366 | | Patrick D. de Maynadier | | | | | | | | | | Stock Options | 58,240(5) | | $53.75 | 6/19/2027 | | | | | | Stock Options | 65,580(5) | | $50.28 | 6/18/2028 | | | | | | Stock Options | 45,120 | | $77.33 | 6/17/2029 | | | | | | Stock Options | 54,510 | | $73.87 | 6/15/2030 | | | | | | Stock Options | | 41,340 | $84.54 | 6/14/2031 | | | | | | Stock Options | | 35,130 | $84.85 | 6/13/2032 | | | | | | Stock Options | | 25,880 | $83.13 | 3/1/2033 | | | | | | Restricted Stock Units | | | | | 990 | 93,614 | | | | Performance Stock Units | | | | | | | 1,120 | 105,907 | | Barry A. Bruno | | | | | | | | | | Stock Options | 10,993(6) | | $41.92 | 6/22/2025 | | | | | | Stock Options | 9,926(6) | | $49.62 | 6/20/2026 | | | | | | Stock Options | 8,959(6) | | $53.75 | 6/19/2027 | | | | | | Stock Options | 9,366(6) | | $50.28 | 6/18/2028 | | | | | | Stock Options | 6,301(6) | | $77.33 | 6/17/2029 | | | | | | Stock Options | 8,470 | | $73.87 | 6/15/2030 | | | | | | Stock Options | | 26,232 | $86.60 | 1/4/2031 | | | | | | Stock Options | | 8,990 | $82.24 | 10/1/2031 | | | | | | Stock Options | | 30,950 | $84.85 | 6/13/2032 | | | | | | Stock Options | | 26,110 | $83.13 | 3/1/2033 | | | | | | Restricted Stock Units | | | | | 1,000 | 94,560 | | | | Performance Stock Units | | | | | | | 1,130 | 106,853 | | Carlos G. Linares | | | | | | | | | | Stock Options | 40,083 | | $53.20 | 6/16/2027 | | | | | | Stock Options | 39,520 | | $53.75 | 6/19/2027 | | | | | | Stock Options | 40,750 | | $50.28 | 6/18/2028 | | | | | | Stock Options | 29,460 | | $77.33 | 6/17/2029 | | | | | | Stock Options | 37,360 | | $73.87 | 6/15/2030 | | | | | | Stock Options | | 28,340 | $84.54 | 6/14/2031 | | | | | | Stock Options | | 26,100 | $84.85 | 6/13/2032 | | | | | | Stock Options | | 19,760 | $83.13 | 3/1/2033 | | | | | | Restricted Stock Units | | | | | 760 | 71,866 | | | | Performance Stock Units | | | | | | | 850 | 80,376 |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (1) Options vest and expire as to all of the underlying unexercisable shares as follows: |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
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2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| Option Exercise Price ($) | Expiration Date | Vesting Date | | 86.60 | 1/04/2031 | 1/04/2024 | | 84.54 | 6/14/2031 | 6/14/2024 | | 82.24 | 10/01/2031 | 10/01/2024 | | 84.85 | 6/13/2032 | 6/13/2025 | | 83.13 | 3/1/2033 | 3/1/2026 |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
In the event of a “change in control,” as defined in the Omnibus Equity Compensation Plan, all stock options granted prior to July 30, 2019, immediately vest upon a change in control unless our Board of Directors determines otherwise. All stock options granted on or after July 20, 2019, require a “double trigger” before payment can be made or equity can vest (requiring a qualifying termination following a change in control).
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (2) Represents the restricted stock units awarded to the named executive officers as part of their annual equity grants. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (3) Based on the closing price per share of our common stock on December 29, 2023, of $94.56. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (4) Represents the number of performance stock units awarded to the named executive officers. As the threshold payout amount is zero, such number represents the number of shares based on the target payout at the end of fiscal year 2023. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (5) The economic interest of one-sixth of the shares subject to this option has been transferred pursuant to a marital settlement agreement. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| (6) 1,167, 1,054, 951, 994, and 669 of the shares subject to the options with expiration dates of June 22, 2025, June 20, 2026, June 19, 2027, June 18, 2028, and June 17, 2029, respectively, were forfeited, without consideration, as required by the Board and the Compensation Committee to reflect changes to Mr. Bruno’s compensation as a penalty for violations of Company policies. |
2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
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2023 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| 2023 OPTION EXERCISES AND STOCK VESTED |
2023 OPTION EXERCISES AND STOCK VESTED
2023 OPTION EXERCISES AND STOCK VESTED The following table provides information regarding option exercises and stock vested by our named executive officers during 2023.
2023 OPTION EXERCISES AND STOCK VESTED
| | Option Awards | | Stock Awards | | | Name | # Shares Acquired on Exercise | Value Realized on Exercise ($) | # Shares Acquired on Vesting | Value Realized on Vesting ($) | | Matthew T. Farrell | 311,020 | 17,987,088 | — | — | | Richard A. Dierker | 178,630 | 3,690,966 | — | — | | Patrick D. de Maynadier | 68,460 | 3,247,962 | — | — | | Barry Bruno | 10,440 | 643,444 | — | — | | Carlos Linares | — | — | — | — |
2023 OPTION EXERCISES AND STOCK VESTED
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2023 OPTION EXERCISES AND STOCK VESTED
| 2023 NONQUALIFIED DEFERRED COMPENSATION |
2023 NONQUALIFIED DEFERRED COMPENSATION
2023 NONQUALIFIED DEFERRED COMPENSATION Our named executive officers are among the employees eligible to participate in the Executive Deferred Compensation Plan (“EDCP”). Amounts deferred are invested, as determined by the participant, in one or more notional investments, including a notional investment in our common stock. The other notional investments are based on a group of mutual funds. We also made contributions to a participant’s deferred compensation account equal to the matching contributions and profit sharing contributions that would have been made to the participant’s account under the Savings and Profit Sharing Plan for Salaried Employees but for (i) limitations imposed by the Internal Revenue Code on plan contributions, and (ii) the participant’s deferrals under the EDCP. Following retirement, participants may elect to receive either a lump sum payment or installment payments for up to 20 years. A participant’s interest in the portion of his or her account derived from our contributions, vests, depending on the nature of the contribution, between two to five years from commencement of employment. The following table provides details regarding nonqualified deferred compensation for our named executive officers in 2023.
2023 NONQUALIFIED DEFERRED COMPENSATION
| Name | Executive Contributions in Last Fiscal Year ($)(1) | Registrant Contributions in Last Fiscal Year ($)(1) | Aggregate Earnings in Last Fiscal Year ($) | Aggregate Withdrawals / Distributions | Aggregate Balance at Last Fiscal Year-End ($)(2) | | Matthew T. Farrell | 168,678 | 280,476 | 1,980,135 | — | 13,195,439 | | Richard A. Dierker | 601,126 | 112,593 | 861,496 | — | 4,824,047 | | Patrick D. de Maynadier(3) | 343,305 | 47,932 | 319,508 | — | 3,883,355 | | Barry A. Bruno | 86,160 | 52,576 | 121,525 | — | 706,565 | | Carlos G. Linares | 688,915 | 65,710 | 814,017 | — | 5,069,109 |
2023 NONQUALIFIED DEFERRED COMPENSATION
| (1) All amounts shown in this column are reported as compensation in the “2023 Summary Compensation Table” for 2023. These amounts include contributions made after the end of 2023 which were earned with respect to 2023. |
2023 NONQUALIFIED DEFERRED COMPENSATION
| (2) Includes amounts that are reported as compensation in the “2023 Summary Compensation Table” for 2022 and 2021 as follows: Mr. Farrell, $887,158; Mr. Dierker, $1,148,617; Mr. Bruno, $119,043; and Mr. de Maynadier, $496,780. Amounts shown in this column also include contributions made after the end of 2023 which were earned with respect to 2023. |
2023 NONQUALIFIED DEFERRED COMPENSATION
| (3) A portion of Mr. de Maynadier’s account balance is subject to a marital settlement agreement. |
2023 NONQUALIFIED DEFERRED COMPENSATION
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POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL In this section, we describe payments that may have been made to our named executive officers upon several events of termination, including termination in connection with a change in control, assuming the termination event occurred on December 31, 2023 (except as otherwise noted). The information in this section does not include information relating to the following:
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| • | distributions under the EDCP—see “2023 Nonqualified Deferred Compensation” for information regarding this plan, |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| • | other payments and benefits provided on a nondiscriminatory basis to salaried employees generally upon termination of employment, including the Savings and Profit Sharing Plan for Salaried Employees, |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| • | restricted shares and shares underlying options that vested prior to the termination event—see the “2023 Outstanding Equity Awards at Fiscal Year-End” table, and |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
| • | short-term incentive payments that would not be increased due to the termination event. |
TABLE OF BENEFITS UPON TERMINATION EVENTS
| CEO PAY RATIO |
CEO PAY RATIO
CEO PAY RATIO We believe executive pay must be internally consistent and equitable to motivate our employees to create shareholder value. We are committed to internal pay equity, and the Compensation & Human Capital Committee monitors the relationship between the pay our officers receive and the pay our non-officer employees receive. The compensation for our CEO in 2023 was approximately 126.4:1 times the 2023 pay for our median employee. As a result of the rules adopted by the SEC under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), we are required to disclose the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee, using the required calculations. We identified our median employee utilizing data as of November 30, 2023 by examining the 2023 target total cash compensation (base salary plus target bonus) for all individuals excluding our CEO, who were employed by us on November 30, 2023. We included all employees, whether employed on a full-time or part-time basis. We did not make any assumptions, adjustments, or estimates with respect to total target cash compensation. We excluded four employees from Brazil, which represented less than one percent of the Company’s total employee population of 5,575 as of November 30, 2023. We believe the use of total target cash compensation for all employees is a consistently applied compensation measure because we do not widely distribute annual equity awards to employees. We calculated annual total compensation for that employee using the same methodology we use for our named executive officers as set forth in the 2023 Summary Compensation Table in this Proxy Statement. As illustrated in the table below, our 2023 CEO to median employee pay ratio is 126.4:1.
CEO PAY RATIO
| | CEO to Median Employee Pay Ratio | | | | President and CEO | Median Employee | | Base Salary | $1,183,975 | $74,124 | | Annual Incentive Plan Compensation | 2,530,700 | 5,070 | | Long-Term Incentive Awards | 7,232,300 | — | | All Other Compensation | 235,191 | 9,287 | | TOTAL | 11,182,166 | 88,482 | | CEO Pay to Median Employee Pay Ratio | 126.4 | 1 |
CEO PAY RATIO
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CEO PAY RATIO
| DELINQUENT SECTION 16(A) REPORTS |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As required under the SEC pay versus performance rules adopted under the Dodd-Frank Act (“PvP Rules”), we are providing the following information about the relationship between “compensation actually paid” to our CEO (referred to below as our principal executive officer or PEO) and average “compensation actually paid” to our named executive officers (“NEOs”) and certain financial performance of the Company for the last three years, in each case, calculated in a manner consistent with PvP Rules. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Compensation Discussion and Analysis.”
PAY VERSUS PERFORMANCE
| PAY VERSUS PERFORMANCE | | | | | | | | | | | | Year (a) | Summary Compensation Table Total for PEO (b) | Compensation Actually Paid to PEO (1) (c) | | Average Summary Compensation Table Total for Non-PEO NEOs (2) (d) | Average Compensation Actually paid to Non-PEO NEOs (1) (2) (e) | | Value of Initial Fixed $100 Investment Based On: | | Net Income ($ in millions) (3) (h) | Company- Selected Measure: Diluted EPS (4) (i) | | | | | | | | | Total Shareholder Return (f) | Peer Group Total Shareholder Return (g) | | | | 2023 | $11,182,166 | $24,015,899 | | $2,457,117 | $4,099,117 | | $141 | $126 | $756 | $3.17 | | 2022 | $8,375,361 | $(5,956,688 | ) (6) | $1,673,157 | $(8,738 | ) (7) | $119 | $126 | $414 | $1.72 | | 2021 | $8,889,526 | $26,421,358 | | $1,743,820(5) | $3,270,073 | (5) | $149 | $133 | $828 | $3.04 | | 2020 | $9,902,703 | $22,777,595 | | $2,018,372 | $3,794,101 | | $125 | $116 | $786 | $2.85 |
PAY VERSUS PERFORMANCE
| (1) The dollar amounts reported in columns (c) and (e) represent the amount of “compensation actually paid” (“CAP”) to Mr. Farrell, and to our NEOs other than Mr. Farrell, respectively. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our NEOs during the applicable year. In accordance with the PvP Rules, the following adjustments were made to the “Total” amount of compensation reported on the Summary Compensation Table (“SCT”): |
PAY VERSUS PERFORMANCE
| PEO SCT Total to CAP Reconciliation | | | | | | | | | | | Year | Salary | Bonus and Non-Equity Incentive Compensation | All Other Compensation (i) | SCT Total | Deductions from SCT Total (ii) | Additions from SCT Total (iii) | | CAP | | | 2023 | $1,183,975 | $2,530,700 | $235,191 | $11,182,166 | $(7,232,300) | $20,066,032 | | $24,015,899 | | | 2022 | $1,156,275 | $453,600 | $174,764 | $8,375,361 | $(6,590,722) | $(7,741,328 | ) (6) | $(5,956,688 | ) (6) | | 2021 | $1,117,400 | $1,130,800 | $281,718 | $8,889,526 | $(6,359,608) | $23,891,440 | | $26,421,358 | | | 2020 | $1,084,825 | $2,195,700 | $447,873 | $9,902,703 | $(6,174,305) | $19,049,196 | | $22,777,595 | |
PAY VERSUS PERFORMANCE
| Average Non-PEO NEOs (2) SCT Total to CAP Reconciliation | | | | | | | | | | | Year | Salary | Bonus and Non-Equity Incentive Compensation | All Other Compensation (i) | SCT Total | Deductions from SCT Total (ii) | Additions from SCT Total (iii) | | CAP | | | 2023 | $548,225 | $662,375 | $177,561 | $2,457,117 | $(1,068,956) | $2,710,956 | | $4,099,117 | | | 2022 | $533,613 | $117,575 | $84,254 | $1,673,157 | $(937,716) | $(744,180 | ) (7) | $(8,738 | ) (7) | | 2021 | $513,474 | $285,050 | $107,146 | $1,743,820 | $(838,150) | $2,364,402 | | $3,270,073 | | | 2020 | $501,338 | $565,600 | $144,288 | $2,018,372 | $(807,146) | $2,582,875 | | $3,794,101 | |
PAY VERSUS PERFORMANCE
| (i) Reflects “all other compensation” reported in the SCT for each year shown. |
PAY VERSUS PERFORMANCE
| (ii) Represents the grant date fair value of equity-based awards granted each year. We do not have a pension program for any of the years reflected in this table; therefore, a deduction from SCT total related to pension value is not needed. |
PAY VERSUS PERFORMANCE
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PAY VERSUS PERFORMANCE
| (iii) | Reflects the value of equity calculated in accordance with the SEC methodology for determining CAP for each year shown. The equity component of CAP for fiscal year 2023 is further detailed in the supplemental table below: |
PAY VERSUS PERFORMANCE
| PEO Equity Component of CAP for Each Fiscal Year (FY) | | | | | | | | | Year | Equity Type | Fair Value of Current Year Equity Awards at 12/31 (IV) (a) | Change in Value of Prior Years’ Awards That Vested in FY (IV) (b) | Change in Value of Prior Years’ Awards Unvested at 12/31 (IV) (c) | | Equity Value Included in CAP (d) = (a) + (b) + (c) | | | 2023 | Options/RSUs/PSUs | $9,453,817 | $5,228,516 | $5,383,700 | | $20,066,032 | | | 2022 | Options | $6,325,489(6) | $(4,379,219) | $(9,687,598 | ) (6) | $(7,741,328 | ) (6) | | 2021 | Options | $10,985,931 | $(1,173,880) | $14,079,390 | | $23,891,440 | | | 2020 | Options | $7,482,445 | $1,887,995 | $9,678,757 | | $19,049,196 | |
PAY VERSUS PERFORMANCE
| Average Non-PEO NEOs (2) Equity Component of CAP for each Fiscal Year (FY) | | | | | | | | | Year | Equity Type | Fair Value of Current Year Equity Awards at 12/31 (IV) (a) | Change in Value of Prior Years’ Awards That Vested in FY (IV) (b) | Change in Value of Prior Years’ Awards Unvested at 12/31 (IV) (c) | | Equity Value Included in CAP (d) = (a) + (b) + (c) | | | 2023 | Options/RSUs/PSUs | $1,397,538 | $578,670 | $734,748 | | $2,710,956 | | | 2022 | Options | $899,979(7) | $(494,713) | $(1,149,445 | ) (7) | $(744,180 | ) (7) | | 2021 | Options | $1,213,885 | $(145,752) | $1,296,270 | | $2,364,402 | | | 2020 | Options | $978,154 | $262,936 | $1,341,785 | | $2,582,875 | |
PAY VERSUS PERFORMANCE
| (iv) Stock option fair values, reported for CAP purposes, are estimated using a Black-Scholes option pricing model. The methodology used for determining the model inputs is consistent with the valuation performed on the grant date. This model requires several assumptions: (i.e., volatility, term, dividend yield, and risk-free interest rate) as of the measurement date. |
PAY VERSUS PERFORMANCE
| Restricted stock unit fair values are calculated using the stock price as of the measurement date. Performance stock unit fair values, reported for CAP purposes, are estimated using a Monte Carlo pricing model. The methodology used for determining the model inputs is consistent with the valuation performed on the grant date. This model requires several assumptions: (i.e., volatility, financial metric multiplier, realized performance, and risk-free interest rate) as of the measurement date. |
PAY VERSUS PERFORMANCE
| (2) The non-principal executive officer (PEO) named executive officers (NEOs) reflected in columns (d) and (e) represent the following individuals for each of the years shown: |
PAY VERSUS PERFORMANCE
2023: Richard Dierker, Patrick de Maynadier, Barry Bruno, Carlos Linares 2022: Richard Dierker, Patrick de Maynadier, Barry Bruno, Carlos Linares 2021: Richard Dierker, Patrick de Maynadier, Britta Bomhard, Barry Bruno 2020: Richard Dierker, Patrick de Maynadier, Britta Bomhard, Steven Cugine
PAY VERSUS PERFORMANCE
| (3) Net Income is as reported in our Form 10-K |
PAY VERSUS PERFORMANCE
| (4) Diluted EPS, is as adjusted for purposes of calculating Diluted EPS under the “Annual Incentive Plan” and includes the following: |
PAY VERSUS PERFORMANCE
2023: The cost of restricted stock issued for the Hero acquisition ($0.12)
PAY VERSUS PERFORMANCE
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PAY VERSUS PERFORMANCE
2022: The cost of restricted stock issued for the Hero acquisition ($0.03) and impact of the discontinuation of business in Russia due to the Russia/Ukraine war ($0.01) 2021: The favorable adjustment to Flawless earnout ($0.30) and the operational and transactional cost of the Therabreath acquisition ($0.02) 2020: The favorable adjustment to Flawless earnout ($0.28), gain on sale of an international brand ($0.01) and the operational and transactional cost of the Zicam acquisition ($0.02)
PAY VERSUS PERFORMANCE
| (5) Compensation values disproportionately declined from the prior fiscal year due to the impact of the departure of Steven Cugine and Britta Bomhard, both longer tenured NEOs, and replacement with Barry Bruno |
PAY VERSUS PERFORMANCE
| (6) 2022: Compensation Actually Paid to PEO was modified to reflect an inadvertent inaccuracy in the December 31, 2022 valuation of outstanding stock options, which resulted in an understatement of $1,705,417 |
PAY VERSUS PERFORMANCE
| (7) 2022: Compensation Actually Paid to Non-PEO NEOs was modified to reflect an inadvertent inaccuracy in the December 31, 2022 valuation of outstanding stock options, which resulted in an understatement of $240,367 |
Discussion Regarding Pay versus Performance Relationship
Discussion Regarding Pay versus Performance Relationship The graphs that follow provide descriptions of the relationship between compensation actually paid and TSR, net income and our company-selected metric (Diluted EPS) for both the PEO and the average non-PEO NEO cohort. The graphs also describe the relationship between our own TSR and a peer group TSR based upon an initial $100 investment made at the beginning of the applicable performance period (January 1, 2020). Compensation actually paid is influenced by numerous factors, including but not limited
Discussion Regarding Pay versus Performance Relationship
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Discussion Regarding Pay versus Performance Relationship
to the timing of new grant issuances and outstanding grant vesting, share price volatility during the fiscal year, our mix of short-term and long-term metrics, and many other factors.
Discussion Regarding Pay versus Performance Relationship
| Fiscal Years | p CAP to PEO | p Avg CAP to Non-PEO NEOs | p Company TSR | p Peer Group TSR | | 2023 vs. 2022 | 503.2% | 973.8% | 18.7% | 0.4% | | 2022 vs. 2021 | (122.5)% | (100.3)% | (20.4)% | (5.9)% | | 2021 vs. 2020 | 16.0% | (13.8)% | 18.9% | 15.2% |
Discussion Regarding Pay versus Performance Relationship
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Discussion Regarding Pay versus Performance Relationship
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