DEF 14A of Alto Ingredients, Inc., Apr 26, 2024

DEF 14A of Alto Ingredients, Inc.

Filed Apr 26, 2024 · FY20230001213900-24-036740

Open on EDGAR

  1. Compensation of Directors

    Compensation of Directors We use a combination of cash and equity-based incentive compensation to attract and retain qualified candidates to serve on our Board. In setting the compensation of directors, we consider the significant amount of time that Board members spend fulfilling their duties to Alto Ingredients as well as the experience level we require to serve on our Board. The Board, through its Compensation Committee, annually reviews the compensation and compensation policies for Board members. In recommending director compensation, the Compensation Committee is guided by the following three goals:

  2. Compensation of Directors

    | ● | compensation should pay directors fairly for work required in a company of our size and scope; |

  3. Compensation of Directors

    | ● | compensation should align directors’ interests with the long-term interests of our stockholders; and |

  4. Compensation of Directors

    | ● | the structure of the compensation should be clearly disclosed to our stockholders. |

  5. Compensation of Directors

    In making compensation decisions for 2023 as to our directors, our Compensation Committee compared our cash and equity compensation payable to directors against market data obtained by Korn Ferry in 2020. The data included a blend of results from two published surveys to identify companies with revenue and market capitalization comparable to ours. Korn Ferry used a revenue range in one survey that included companies with revenue of $0.5 billion to $2.5 billion and used a market capitalization threshold in the second survey that included companies with a market capitalization of less than $1.0 billion. The surveys did not specifically identify the companies surveyed. For 2023, our Compensation Committee targeted compensation for our directors at approximately the median of compensation paid to directors of the survey group companies. Cash Compensation Our annual cash compensation program for directors includes the following:

  6. Compensation of Directors

    | ● | annual cash compensation provided to the Chairman of our Board is $112,500; |

  7. Compensation of Directors

    | ● | base annual cash compensation provided to our non-employee directors, other than our Chairman, is $75,000; |

  8. Compensation of Directors

    | ● | additional annual cash compensation provided to each of our Board committee chairs is $25,000; and |

  9. Compensation of Directors

    | ● | additional annual cash compensation provided to our lead independent director is $12,000. |

  10. Compensation of Directors

    These amounts are paid in advance in bi-weekly installments. In addition, directors are reimbursed for specified reasonable and documented expenses in connection with attendance at meetings of our Board and its committees. An employee director does not receive director compensation in connection with his or her service as a director. In lieu of cash compensation, directors may elect to receive additional equity compensation having the same cash value. Equity Compensation Our Compensation Committee or our full Board typically grants equity compensation to our newly elected or reelected directors which normally vests as to 100% of the grants at the earlier of our next annual meeting or approximately one year after the date of grant. Vesting is typically subject to continued service on our Board during the full year. In determining the amount of equity compensation for 2023, the Compensation Committee determined a target value of total compensation at approximately the median of compensation paid to directors of the comparable companies identified by Korn Ferry. The Compensation Committee then determined the cash component based on this market data. The balance of the total compensation target was then allocated to equity awards, and the number of shares to be granted to our directors was based on the estimated value of the underlying shares on the expected grant date. Our annual equity compensation program for directors includes the following:

  11. Compensation of Directors

    | ● | the value of annual equity compensation provided to the Chairman of our Board is $147,500; and |

  12. Compensation of Directors

    | ● | the value of annual equity compensation provided to our non-employee directors, other than our Chairman, is $110,000. |

  13. Compensation of Directors

    In addition, our Compensation Committee may grant, and has from time to time granted, additional equity compensation to directors at its discretion. Compensation of Employee Directors Mr. Kandris was compensated as a full-time employee and officer and therefore received no additional compensation for service as a Board member during 2023. Information regarding the compensation awarded to Mr. Kandris is included in “Executive Compensation and Related Information—Summary Compensation Table” below. Director Compensation Table – 2023 The following table summarizes the compensation of our non-employee directors for the year ended December 31, 2023:

  14. Compensation of Directors

    | Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($) | Total ($)(2) | | Douglas L. Kieta(3) | $112,269 | $185,850 | $298,119 | | Maria G. Gray(4) | $88,462 | $138,600 | $227,062 | | Gilbert E. Nathan(5) | $100,000 | $138,600 | $238,600 | | Dianne S. Nury(6) | $100,000 | $138,600 | $238,600 | | William L. Jones(7) | $51,923 | $- | $51,923 | | Terry L. Stone(7) | $46,154 | $- | $46,154 |

  15. Compensation of Directors

    | (1) For a description of annual director fees and fees for chair and lead independent director positions, see the disclosure above under “Compensation of Directors—Cash Compensation.” |

  16. Compensation of Directors

    | (2) The value of perquisites and other personal benefits was less than $10,000 in aggregate for each director. |

  17. Compensation of Directors

    | (3) At December 31, 2023, Mr. Kieta held 192,912 vested shares from stock awards. Mr. Kieta was granted 73,750 shares of our common stock on June 22, 2023, having an aggregate grant date fair value of $185,850, calculated based on the fair market value of our common stock on the grant date. The shares vest on the earlier of the date of our Annual Meeting or July 1, 2024. |

  18. Compensation of Directors

    | (4) At December 31, 2023, Ms. Gray held 20,109 vested shares from stock awards. Ms. Gray was granted 55,000 shares of our common stock on June 22, 2023, having an aggregate grant date fair value of $138,600, calculated based on the fair market value of our common stock on the grant date. The shares vest on the earlier of the date of our Annual Meeting or July 1, 2024. |

  19. Compensation of Directors

    | (5) At December 31, 2023, Mr. Nathan held 113,221 vested shares from stock awards. Mr. Nathan was granted 55,000 shares of our common stock on June 22, 2023, having an aggregate grant date fair value of $138,600, calculated based on the fair market value of our common stock on the grant date. The shares vest on the earlier of the date of our Annual Meeting or July 1, 2024. |

  20. Compensation of Directors

    | (6) At December 31, 2023, Ms. Nury held 89,078 vested shares from stock awards. Ms. Nury was granted 55,000 shares of our common stock on June 22, 2023, having an aggregate grant date fair value of $138,600, calculated based on the fair market value of our common stock on the grant date. The shares vest on the earlier of the date of our Annual Meeting or July 1, 2024. |

  21. Compensation of Directors

    | (7) Messrs. Jones’s and Stone’s service on our board ceased on June 22, 2023, the date of our prior annual meeting. |

  22. Compensation of Directors

    Indemnification of Directors and Officers Section 145 of the Delaware General Corporation Law permits a corporation to indemnify its directors and officers against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a pending or completed action, suit or proceeding if the officer or director acted in good faith and in a manner the officer or director reasonably believed to be in the best interests of the corporation. Our certificate of incorporation provides that, except in certain specified instances, our directors shall not be personally liable to us or our stockholders for monetary damages for breach of their fiduciary duty as directors, except liability for the following:

  23. Compensation of Directors

    | ● | any breach of their duty of loyalty to Alto Ingredients or our stockholders; |

  24. Compensation of Directors

    | ● | acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |

  25. Compensation of Directors

    | ● | unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; and |

  26. Compensation of Directors

    | ● | any transaction from which the director derived an improper personal benefit. |

  27. Compensation of Directors

    In addition, our certificate of incorporation and bylaws obligate us to indemnify our directors and officers against expenses and other amounts reasonably incurred in connection with any proceeding arising from the fact that such person is or was an agent of ours or is or was serving at our request as a director, officer, employee or agent of another entity or enterprise. Our bylaws also authorize us to purchase and maintain insurance on behalf of any of our directors or officers against any liability asserted against that person in that capacity, whether or not we would have the power to indemnify that person under the provisions of the Delaware General Corporation Law. We have entered and expect to continue to enter into agreements to indemnify our directors and officers as determined by our Board. These agreements provide for indemnification of related expenses including attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers. We also maintain directors’ and officers’ liability insurance. The limitation of liability and indemnification provisions in our certificate of incorporation and bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and other stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (“Securities Act”), may be permitted to our directors, officers and controlling persons under the foregoing provisions of our certificate of incorporation or bylaws, or otherwise, we have been informed that in the opinion of the Securities and Exchange Commission, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

  28. Executive Summary

    | ● | annual performance-based cash incentive compensation; and |

  29. Executive Summary

    | ● | long-term equity incentive compensation. |

  30. Executive Summary

    The 2023 compensation information in this Proxy Statement includes actual results for 2023 under our performance-based annual cash incentive compensation plan. Our annual cash incentive compensation plan payouts for 2023 were determined and made in March 2024. No payouts were made in respect of the financial performance element of our annual cash incentive compensation plan because our Adjusted EBITDA of $20,766,000 fell below the payout threshold for 2023 of Adjusted EBITDA of $25,000,000. Our NEOs performed well, however, in their execution of a number of strategic and other initiatives in 2023, as noted in the 2023 business highlights summarized above, and consequently, our NEOs each received maximum payouts under the individual performance element of the plan.

  31. Compensation Governance Practices

    | ● | Retention through long-term equity awards. We employ long-term equity awards through grants of restricted stock that vest in the future. These equity awards are designed to aid in our retention of key personnel in important positions and align the interests of our executive officers with those of our stockholders. As noted above, for 2024, we have instituted a performance-based equity incentive compensation program, the awards under which are also subject to long-term time-based vesting. |

  32. Compensation Governance Practices

    | ● | Long and minimum vesting periods. Our equity awards to our NEOs generally vest in annual installments over a three-year period with an initial minimum vesting period of one year. |

  33. Compensation Governance Practices

    | ● | Executive stock holding policy. We have adopted an executive stock holding policy to better align executive compensation with our long-term interests and those of our stockholders and to address the time horizon of risks. |

  34. Compensation Governance Practices

    | ● | Linkage of annual cash incentive compensation plan to company performance. Our annual cash incentive compensation plan links a majority of targeted and potential payouts to our financial performance. The 2023 financial performance measure for the compensation pool for our annual incentive compensation plan was Adjusted EBITDA, which we weighted at 80% for our NEOs. The 2023 non-financial performance measure for funding the compensation pool of this incentive compensation plan was individual performance measured against pre-established goals, which we weighted at 20% for our NEOs. |

  35. Compensation Governance Practices

    | ● | Perquisites. We do not currently offer our NEOs any significant perquisites, other than certain travel perquisites or those offered to our employees generally. Our executive officers are not guaranteed any retirement or pension benefits or any non-qualified deferred compensation plans. Instead, we offer our NEOs the opportunity to accumulate assets through their equity awards and the appreciation of their equity awards and offer the opportunity to participate in our 401(k) plan and a health savings account plan on the same basis as our other employees. |

  36. Compensation Governance Practices

    | ● | Independent compensation consultant. Our independent compensation consultants are retained directly by our Compensation Committee. |

  37. Executive Compensation Program and Processes

    | What We Heard | How We Will Address or Have Addressed | | Short-Term Annual Cash Incentive Compensation Program (STI) Some of our stockholders have requested that we provide a general narrative of the evaluation of the personal component of the STI program. | For 2024, the Compensation Committee approved a STI award program whereby the payout of the STI award will be based on three elements: our financial performance, the NEO’s individual performance, and our attainment of strategic metrics. See “—Individual Performance” below. | | Long-Term Equity Incentive Compensation Program (LTI) Some of our stockholders expressed concern that some portion of our LTI program for our NEOs was not tied to a performance metric. | Our Compensation Committee reviewed its LTI program and tied a portion of our LTI compensation to NEO performance. For 2024, 25% of our LTI equity grants to our executive officers are tied to our performance as measured by Adjusted EBITDA return on gross fixed assets (“ROA”). The Compensation Committee will reevaluate the program in 2025, aiming to tie 50% of our LTI equity grants to our performance as measured by Adjusted EBITDA ROA. | | Transparency of changes to our executive compensation program Some stockholders expressed a desire to see an explanation of changes made to our executive compensation program. | Going forward, we will summarize significant changes to our executive compensation program and explain how and why we make such changes, including changes to our STI and LTI award programs, which, for 2024, are partially tied to our performance. For 2024, 25% of our LTI equity grants to our executive officers are tied to our performance as measured by Adjusted EBITDA ROA. The Compensation Committee will reevaluate the program in 2025, aiming to tie 50% of our LTI equity grants to our performance as measured by Adjusted EBITDA ROA. For 2024, the Compensation Committee approved a STI award program whereby the payout of the STI award will be based on three elements: our financial performance, the NEO’s individual performance, and our attainment of strategic metrics. | | Board evaluation and assessment Some stockholders inquired about our Board evaluation process, including the substantive process and frequency. | We provided an overview of our Board evaluation process to the stockholders with whom we engaged during our outreach process. Our Nominating and Corporate Governance Committee annually assesses our directors. The results of our director self-evaluation and peer evaluations are taken into consideration to determine the proposed slate of directors for each annual stockholder meeting. The charter of our Nominating and Corporate Governance Committee can be found here: https://ir.altoingredients.com/corporate- governance/governance-documents. | | Sustainability and governance initiative Some of our stockholders have commended our sustainability and governance efforts and expressed the importance of seeing a comprehensive sustainability and governance program, including Board oversight of the program. | We continue to focus on progressing our sustainability and governance initiatives. We issued a Sustainability Summary and tear-sheet in 2023. See “Governance and Sustainability” above. |

  38. Executive Compensation Program and Processes

    | ● | annual cash incentive compensation; and |

  39. Executive Compensation Program and Processes

    | ● | long-term equity incentive compensation. |

  40. Executive Compensation Program and Processes

    In addition, our executive compensation program also includes indirect compensation in the form of standard employee benefits, limited perquisites and other executive benefits, and severance and change-in-control benefits. Our executive compensation program also allows for special discretionary cash or equity awards to address specific individual or other circumstances not fully addressed by the three principal elements of our executive compensation program. In making compensation decisions, our Compensation Committee exercises its judgment on the overall level of compensation provided by this total compensation package as well as the mix of the three principal elements of compensation. Base Salary Our Compensation Committee reviews the base salary levels of our executive officers annually and makes such adjustments as it deems appropriate after considering the officer’s level and scope of responsibility and experience, company and individual performance, competitive market data, and internal pay equity considerations. Annual Cash Incentive Compensation Annual cash incentive compensation for key employees, including our NEOs, consists of cash awards under our short-term incentive plan. We have an annual cash incentive compensation plan applicable to all executive officers. Participants are eligible for annual cash incentive compensation based upon the attainment of pre-established goals. Awards under the plan for 2023 were based on two elements: company financial performance and the NEO’s individual performance. Our Compensation Committee believes that these elements will best incentivize our executive officers to attain our short- and long-term financial and other business goals. The 2023 payout structure under our annual cash incentive compensation plan for our NEOs is set forth below:

  41. Executive Compensation Program and Processes

    | Target ($)x | Performance Factor | = | Overall Payout | | ● Target $ = % of base salary | ● Financial performance: | | ● Minimum payout: 0% of target | | ● NEO Target %: | ➢ 80% weight | | ● Target Payout: 100% of target | | ➢ CEO: 70% | ➢ Min/max payout for Adjusted EBITDA: 0%/200% of target | | ● Maximum payout: 180% of target | | ➢ Other NEOs: 50-70% | | | | | | ● Individual performance: | | | | | ➢ 20% weight | | | | | ➢ Min/max payout: 0%/100% of target | | |

  42. Executive Compensation Program and Processes

    Our Compensation Committee selected our annual cash incentive compensation plan as the vehicle for cash incentive compensation for 2023 for our executive officers because the Compensation Committee believes the plan properly incentivizes our executive officers by focusing primarily on our financial performance, as further discussed below, while allowing awards to reflect other important factors, including an executive officer’s individual performance and accomplishments. Financial Performance We have an annual cash incentive compensation plan applicable to all NEOs. Our annual cash incentive compensation plan uses our Adjusted EBITDA as its sole financial performance element and is based on an Adjusted EBITDA goal established by our Compensation Committee. The Compensation Committee expects to change the numerical Adjusted EBITDA goal from year to year and may include financial performance measures other than Adjusted EBITDA in future years. The Compensation Committee selected the Adjusted EBITDA metric because it believes that net income or loss before interest income/expense, provision/benefit for income taxes, and depreciation and amortization, or EBITDA, is an industry-accepted measure of overall financial performance and demonstrates our financial performance and ability to reinvest in our business. We define Adjusted EBITDA as net income or loss before interest income/expense, provision/benefit for income taxes, asset impairments, loss on extinguishment of debt, unrealized derivative gains and losses, acquisition-related expense, depreciation and amortization expense, and fair value adjustments. The Compensation Committee departed from the standard EBITDA metric because it believes Adjusted EBITDA better reflects Alto Ingredients’ financial performance on a year-over-year basis by excluding non-recurring, non-cash charges or gains from asset impairments, loss on extinguishment of debt, unrealized derivative gains and losses, acquisition-related expense and fair value adjustments. Use of the Adjusted EBITDA metric also allowed the Compensation Committee to incentivize our executive officers to focus on factors over which they can exert control, such as attaining higher margins through managing production volumes relative to both specialty alcohol and essential ingredient sales prices and production input costs, increasing production efficiencies, and controlling operating costs such as selling, general and administrative expenses, all of which impact Adjusted EBITDA. The Compensation Committee also desired to omit from the financial performance metric those factors over which the executive officers have less control and which it viewed as less relevant to measuring year-over-year financial performance, such as recurring interest income/expense and taxes as well as non-cash charges or gains from depreciation and amortization, asset impairments, loss on extinguishment of debt, acquisition-related expense and fair value adjustments. See Appendix D for a reconciliation of our Adjusted EBITDA to its most directly comparable measure under generally accepted accounting principles, consolidated net income (loss). The financial performance element for 2023 was weighted at 80% and was the most heavily weighted element. This element was assigned the highest weighting because the principal purpose of our annual cash incentive compensation plan is to motivate and reward participants for achieving our financial goals, while allowing significantly higher payouts for 2023 of up to 200% of the targeted payout amount for financial outperformance, and to align participant and stockholder interests. Individual Performance The individual performance element for 2023 was weighted at 20% and is based on individual participant goals formulated with reference to quantitative criteria and subjective elements established by each participant’s supervisor, in consultation with our executive committee. Individual performance goals are aligned with our corporate strategic objectives. The extent to which a participant is deemed to have achieved his or her individual performance goals is determined by our executive committee in consultation with the participant’s supervisor. However, the extent to which a participant who is an executive officer (other than our Chief Executive Officer) is deemed to have achieved his or her individual performance goals is recommended by our Chief Executive Officer but ultimately determined by our Compensation Committee. Payout under the individual performance element is in the discretion of the Compensation Committee and could range from 0% to 100% of the participant’s targeted payout amount; provided, that the Compensation Committee retains discretion to grant a payout in excess of 100% of a participant’s targeted payout amount for his or her individual performance if the total amount granted to all participants for their individual performances did not exceed the total targeted payout amount for all participants for their individual performances. Long-Term Equity Incentive Compensation Long-term equity incentive compensation for key employees, including our NEOs, generally consists of awards of restricted stock under our equity incentive plans. Although we have granted stock options in the past, awards under our equity incentive plans have primarily been in the form of restricted stock grants as a means of providing long-term equity incentive compensation. We believe that shares of restricted stock are less subject to market volatility than stock options and therefore offer a more balanced and competitive equity compensation arrangement. Considering feedback received from our stockholders, our Compensation Committee has implemented for 2024 a performance-based equity incentive compensation program to tie a portion of our long-term equity incentive compensation to our financial performance. This program will first apply for the 2024 compensation period and is described below. The Compensation Committee approves equity awards for our NEOs in connection with the annual review of their individual performance and overall compensation. The annual awards are typically made near the end of the first quarter and represent a majority of the shares granted for the year under our long-term equity incentive compensation program. Each award is designed primarily as a retention tool, typically requiring the executive to remain with Alto Ingredients for at least one year after the date of grant to receive the benefit of one-third of the award on partial vesting and at least three years to receive the full benefit of the award on full vesting. We believe our equity incentive compensation aligns the interests of our NEOs with those of our stockholders and provides each NEO with a significant incentive to manage our company from the perspective of an owner with an equity stake in the business by tying significant portions of the recipients’ compensation to the market price of our common stock. Awards of restricted stock typically vest annually over a three-year period of continued service measured from the grant date. Each award of restricted stock will provide a return to the NEO only to the extent he or she remains employed with us during the partial or full vesting period, and for our 2024 performance-based equity incentive compensation program, only to the extent we satisfy the minimum financial performance criteria.

  43. Executive Compensation Program and Processes

    Our Compensation Committee granted awards that may be paid out in restricted stock to our executive officers under the compensation program based on the attainment of Adjusted EBITDA ROA amounts for 2024, 2025 and 2026. The awards establish a specific number of shares of restricted stock at threshold, target and maximum Adjusted EBITDA ROA amounts. Of the shares of restricted stock, 33% of the executive officer’s award will be eligible to be earned for 2024, 33% of the executive officer’s award will be eligible to be earned for 2025 and 34% of the executive officer’s award will be eligible to be earned for 2026, in each case based on the attainment of the Compensation Committee’s predetermined Adjusted EBITDA ROA levels, and subject to the executive officer’s continued service through the time-based vesting period that ends in early 2027. For 2024 awards to our executive officers, see “Certain Relationships and Related Transactions” below. For 2024, our long-term equity incentive compensation program was comprised of 25% of these performance-based equity incentive awards and 75% of time-based equity incentive awards. The Compensation Committee expects to make additional grants under the program in future years and anticipates changing the proportion of awards to 50% performance-based equity incentive awards and 50% time-based equity incentive awards for 2025 and future years. Other Compensation and Benefits We do not currently offer retirement or pension benefits or any non-qualified deferred compensation plans. Instead, we provide our NEOs with the opportunity to accumulate retirement income primarily through a defined contribution plan and through the appreciation of the value of their equity awards. Consistent with our pay-for-performance compensation philosophy, we do not provide our executive officers with any significant perquisites, other than certain travel perquisites or those offered to our employees generally. Except as noted below, our NEOs are eligible to participate in the following employee benefit programs on the same basis as all other regular employees: 401(k) Plan. Each of our NEOs and other salaried employees are eligible to participate in a defined contribution plan qualified under Code Section 401(k). In 2023, we contributed $1.00 for each $1.00 of employee contributions, up to a maximum contribution of 6.0% of the participant’s eligible compensation, and subject to a maximum matching contribution of $19,800. We have included our contributions to the accounts of the NEOs for the applicable years in the “All Other Compensation” column in the Summary Compensation Table below to the extent “All Other Compensation” exceeded $10,000 for a particular NEO. Group Life, Health and Disability Plans. We have established group life, health and disability plans for our employees. The NEOs may participate in these plans on the same basis as other employees. Perquisites and Other Benefits. We furnish a limited number of perquisites to our NEOs, of which only travel-related perquisites, if any, together with matching contributions under our 401(k) plan, as discussed above, and contributions to health savings accounts, meet the threshold for reporting in the “All Other Compensation” column in the Summary Compensation Table under the rules of the Securities and Exchange Commission.

  44. Compensation Decisions for 2023

    Compensation Decisions for 2023 Our Compensation Committee established compensation for our NEOs in 2023 in a manner consistent with our executive compensation philosophy and objectives. Our Compensation Committee made its annual compensation decisions for 2023 in March 2023 and March 2024. Our Compensation Committee’s decisions were based upon its judgment about our financial and other business performance for 2022, expected and actual financial and other business performance for 2023, and the positions, scope and importance of the roles of our NEOs and how their positions compared to other Alto Ingredients executive officers and personnel. Our Compensation Committee’s decisions were also based on comparing and adjusting the compensation of our NEOs in reference to the compensation of similarly situated personnel at other organizations through a benchmarking process. See “Benchmarking” above. The Compensation Committee also considered certain other factors such as budget constraints and executive officer recommendations. Through these efforts, our Compensation Committee established a desired level and mix of total compensation. In setting the compensation of our executive officers, except as noted below, our Compensation Committee did not adhere to any specific formulas tied to market data, nor did it rely on market data to determine the specific mix of compensation components. Instead, our Compensation Committee used this data as a guide and a resource for tracking executive compensation trends. Total Compensation Our Compensation Committee targeted total compensation for our NEOs to be competitive with similarly situated personnel at the 50th percentile relative to our peer group companies based on the data provided by Korn Ferry. Our Compensation Committee, based on Korn Ferry’s advice, generally considers target compensation as competitive if, as to base salary, it falls within 10% of the 50th percentile of comparable market data; as to total cash compensation, if it falls within 15% of the 50th percentile of comparable market data; and as to total direct compensation, if it falls within 20% of the 50th percentile of comparable market data. The Compensation Committee determined that targeting total compensation for our NEOs to be competitive with similarly situated personnel at the 50th percentile was appropriate because that level is consistent with the Compensation Committee’s intention for 2023 to target total compensation for our executive officers at the median of total compensation of similarly situated personnel at other organizations. Although the Compensation Committee set targeted compensation for 2023 at less than the 50th percentile, we anticipate that compensation will approach the 50th percentile as our financial performance improves over time. Base Salary Our Compensation Committee did not enact merit adjustments to our executive officers’ base salaries in 2023. Auste M. Graham received a market adjustment to her base salary in 2023 and Bryon T. McGregor’s and Robert R. Olander’s salaries were increased effective in August 2023 upon their appointments to new executive officer positions. Targeted base salaries for 2023 were at approximately the 25th percentile relative to base salaries of comparable executives among our third-party survey group companies based on the market data provided by Korn Ferry. Annual Cash Incentive Compensation Our Compensation Committee targeted 2023 annual cash incentive compensation at 70% of base salary for our President and Chief Executive Officer, prorated for the partial period during which he served in that capacity; at 70% of base salary for our Interim Chief Operating Officer; at 50% of base salary for our Chief Financial Officer, prorated for the partial period during which he served in that capacity; at 50% of base salary for our General Counsel, Vice President and Secretary; and at 50% of base salary for our Vice President and Chief Commercial Officer. These levels were consistent with the targeted percentage bonus amounts included in each NEO’s employment agreement. Targeted annual cash incentive compensation for 2023 was between the 25th and 50th percentiles relative to annual cash incentive compensation of comparable executives among our third-party survey group companies based on the market data provided by Korn Ferry. As discussed above, awards under our annual cash incentive compensation plan are based on two elements: company financial performance and the NEO’s individual performance. For 2023, our Compensation Committee weighted for each of our NEOs, company financial performance at 80% and individual NEO performance at 20%. In doing so, our Compensation Committee desired to incentivize most heavily activities intended to lead to strong overall financial performance while still rewarding individual performance. Our Compensation Committee established our 2023 financial performance goal of Adjusted EBITDA of $50,000,000 based on our financial projections determined early in the year. Our Adjusted EBITDA goal of $50,000,000 was viewed as attainable but challenging at the time the projections were finalized. Payout under the financial performance element was non-discretionary and was funded at a rate of 0% to 200% of the participants’ targeted payout amount for the financial performance element based on our actual Adjusted EBITDA for 2023 compared to our Adjusted EBITDA goal of $50,000,000. Our Adjusted EBITDA goal of $50,000,000 for 2023 was set above our goal for 2022 as we expected an improved market for our products, and we continued to execute on a number of capital improvement projects that we anticipated would contribute to higher Adjusted EBITDA for 2023. Our Compensation Committee approved a sliding scale of achievement and payout opportunities under which lower actual Adjusted EBITDA for 2023 corresponded to lower levels of goal achievement and lower payouts, subject to a minimum Adjusted EBITDA threshold; and higher actual Adjusted EBITDA for 2023 corresponded to higher levels of goal achievement and higher payouts, subject to a maximum payout. The Compensation Committee established for 2023 a targeted payout amount of $3,622,000 if we achieved our Adjusted EBITDA goal of $50,000,000 and all personnel covered by the plan attained all of their individual performance goals. The targeted payout amount of $3,622,000 was comprised of $2,060,000 attributable to financial performance and $1,562,000 attributable to individual performance. The Compensation Committee established for 2023 a maximum aggregate plan pool of $5,682,000 comprised of $4,120,000 attributable to financial performance and $1,562,000 attributable to individual performance. In setting the targeted and maximum plan payout amounts, the Compensation Committee assumed that all eligible plan participants would continue their eligibility through 2023 and until final payment of amounts earned under the plan. In addition, in setting the targeted and maximum plan payout amounts, the Compensation Committee did not provide for an increase in the plan pool for any new eligible plan participants. The $2,060,000 difference between the maximum aggregate plan pool of $5,682,000 and the targeted payout amount of $3,622,000 was available if our actual Adjusted EBITDA for 2023 equaled or exceeded 150% of our Adjusted EBITDA goal of $50,000,000.

  45. Compensation Decisions for 2023

    We had to attain minimum Adjusted EBITDA of $25,000,000 for 2023, or 50% of our Adjusted EBITDA goal, to result in any payout under the financial performance element. This feature was intended to assure that we achieved an acceptable minimum level of financial performance before annual cash incentives would be paid to any participant, including our NEOs, under the financial performance element of the plan. The Compensation Committee set an Adjusted EBITDA ceiling of $75,000,000 for 2023, above which there would be no additional incremental payout under the financial performance element. At the Adjusted EBITDA ceiling of $75,000,000, the aggregate payout for the financial performance element would have been $4,120,000; however, plan participants were capped at 200% of the participants’ targeted payout amount for the financial performance element. The payout under the financial performance element would be calculated on a straight-line prorated basis at actual Adjusted EBITDA levels below our Adjusted EBITDA goal of $50,000,000, subject to minimum Adjusted EBITDA $25,000,000 for 2023. Likewise, the payout under the financial performance element would be calculated on a straight-line prorated basis at actual Adjusted EBITDA levels above our Adjusted EBITDA goal of $50,000,000, subject to a maximum payout of $4,120,000 corresponding to our Adjusted EBITDA ceiling of $75,000,000 for 2023. The targeted and maximum payout for the individual performance element was $1,562,000 under all scenarios if all personnel covered by the plan attained 100% of their individual performance goals. Long-Term Equity Incentive Compensation Our Compensation Committee targeted 2023 long-term equity incentive compensation for our NEOs at a level comparable to similarly situated personnel at the 25th percentiles relative to our third-party survey group companies based on the market data provided by Korn Ferry. In making equity awards, our Compensation Committee established the specific number of shares subject to the award of long-term equity incentive compensation by dividing the target value of the equity grant by the closing price of a share of our common stock on March 15, 2023 but then selected the higher price of $2.00 per share as determined appropriate under the circumstances by our Compensation Committee due to its belief that our stock price on March 15th was unjustifiably low. Grants typically occur at a slightly later date during our annual compensation decision-making cycle. Long-term equity incentive compensation decisions and grants were made in late March 2023 based on $2.00 per share, which was higher than the closing price of a share of our common stock on March 15th . As noted above, we refer to the date of March 15th to avoid the appearance of market-timing and because it is a consistent date year-to-year. Individual NEO Compensation Targets Target direct compensation for each of our NEOs for 2023 is set forth below. Specific results against performance objectives that influenced the amount and mix of our NEOs’ total direct compensation for 2023 included our Adjusted EBITDA for 2023, which fell short of the Adjusted EBITDA threshold of $25,000,000, and full attainment by our NEOs of their respective individual performance goals under our annual cash incentive compensation plan. We did not achieve our Adjusted EBITDA threshold or target for 2023 primarily due to the idling of our Magic Valley facility because of extreme commodity price volatility and negative gross margins in the region and a delay in implementing a capital improvement project at the facility, higher than anticipated unscheduled downtime at our Pekin campus, and challenging industry conditions occurring primarily in the second half of 2023. As a result, we did not make any payments to our NEOs under the financial performance element of our annual cash incentive compensation plan. Our NEOs performed well under their individual performance elements, in particular, their successful execution of a number of strategic and other initiatives in 2023, as noted in the 2023 business highlights summarized above, resulting in maximum payouts under that measure. See “Compensation Discussion and Analysis—Executive Summary—2023 Business Highlights” above. The long-term equity incentive compensation target amounts for our NEOs set forth below differ from the actual amounts reflected in the Stock Awards column in the Summary Compensation Table below. This is primarily because our Compensation Committee determines the target value of a recipient’s long-term equity incentive award and establishes the specific number of shares subject to the award by dividing the target value of the equity grant by the closing price of a share of our common stock on March 15th or a higher price determined appropriate under the circumstances by our Compensation Committee. Grants typically occur at a slightly later date during our annual compensation decision-making cycle. As noted above, we choose the date of March 15th to avoid the appearance of market-timing and because it is a consistent date year-to-year. See “Summary Compensation Table” below for actual amounts paid to our NEOs. Bryon T. McGregor, President and Chief Executive Officer The following table shows Mr. McGregor’s direct target compensation for 2023 and 2022. The bar chart below shows the positioning of Mr. McGregor’s 2023 direct target compensation relative to similarly situated personnel at our third-party survey group companies based on market data provided by Korn Ferry. We excluded 2022 from the chart below because Mr. McGregor transitioned to his current position as our President and Chief Executive Officer effective August 1, 2023. See our Proxy Statement for 2023 for a comparison of the positioning of Mr. McGregor’s 2022 direct target compensation relative to similarly situated personnel at our third-party survey group companies relative to his prior position as our Chief Financial Officer. The 69.7% year-over-year increase in Mr. McGregor’s target compensation is primarily due to his appointment as our President and Chief Executive Officer.

  46. Compensation Decisions for 2023

    | | | | Change | | | Bryon T. McGregor | 2023 | 2022 | Dollars | Percent | | Base Salary* | $525,000 | $356,855 | $168,145 | 47.1% | | Annual Cash Incentive Compensation** | | | | | | Target Percent of Base Salary | 49.0% | 50.0% | | (2.0)% | | Target Dollars | $257,683 | $178,428 | $79,255 | 44.4% | | Long-Term Equity Incentive Compensation** | | | | | | Target Percent of Base Salary | 104.8% | 70.0% | | 49.7% | | Target Dollars | $550,000 | $250,000 | $300,000 | 120.0% | | Target Total Direct Compensation | $1,332,683 | $785,283 | $547,400 | 69.7% |

  47. Compensation Decisions for 2023

    | | | | Change | | | Michael D. Kandris | 2023 | 2022 | Dollars | Percent | | Base Salary* | $528,403 | $528,403 | $— | —% | | Annual Cash Incentive Compensation | | | | | | Target Percent of Base Salary | 70.0% | 70.0% | | —% | | Target Dollars | $369,882 | $369,882 | $— | —% | | Long-Term Equity Incentive Compensation | | | | | | Target Percent of Base Salary | 132.5% | 132.5% | | | | Target Dollars | $700,000 | $700,000 | $— | —% | | Target Total Direct Compensation | $1,598,285 | $1,598,285 | $— | —% |

  48. Compensation Decisions for 2023

    | | | | Change | | | Robert R. Olander | 2023 | 2022 | Dollars | Percent | | Base Salary* | $325,000 | $263,967 | $61,033 | 23.1% | | Annual Cash Incentive Compensation** | | | | | | Target Percent of Base Salary | 37.1% | 30.0% | | 23.7% | | Target Dollars | $120,735 | $79,190 | $41,545 | 52.5% | | Long-Term Equity Incentive Compensation** | | | | | | Target Percent of Base Salary | 59.0% | 28.4% | | 107.7% | | Target Dollars | $191,667 | $75,000 | $116,667 | 155.6% | | Target Total Direct Compensation | $637,402 | $418,157 | $219,245 | 52.4% |

  49. Compensation Decisions for 2023

    | | | | Change | | | Auste M. Graham | 2023 | 2022 | Dollars | Percent | | Base Salary* | $350,000 | $325,000 | $25,000 | 7.7% | | Annual Cash Incentive Compensation** | | | | | | Target Percent of Base Salary | 50.0% | 50.0% | | —% | | Target Dollars | $175,000 | $162,500 | $12,500 | 7.7% | | Long-Term Equity Incentive Compensation | | | | | | Target Percent of Base Salary | 61.4% | 66.2% | | (7.3)% | | Target Dollars | $215,000 | $215,000 | $— | —% | | Target Total Direct Compensation | $740,000 | $702,500 | $37,500 | 5.3% |

  50. Compensation Decisions for 2023

    | | | | Change | | | James R. Sneed | 2023 | 2022 | Dollars | Percent | | Base Salary* | $329,409 | $329,409 | $— | —% | | Annual Cash Incentive Compensation** | | | | | | Target Percent of Base Salary | 50.0% | 50.0% | | —% | | Target Dollars | $164,705 | $164,705 | $— | —% | | Long-Term Equity Incentive Compensation | | | | | | Target Percent of Base Salary | 65.3% | 57.7% | | 13.2% | | Target Dollars | $215,000 | $190,000 | $25,000 | 13.2% | | Target Total Direct Compensation | $709,114 | $684,114 | $25,000 | 3.7% |

  51. COMPENSATION COMMITTEE REPORT

    | ● | the mix and balance of base salary, annual cash incentive compensation and long-term equity incentive compensation, with an emphasis on long-term equity incentive compensation that increases along with our executives’ respective levels of responsibility; |

  52. COMPENSATION COMMITTEE REPORT

    | ● | a long-term equity incentive compensation program under which grants of restricted stock are made, which is intended to mitigate the risk of actions intended to capture short-term stock appreciation gains at the expense of sustainable total stockholder return over the longer-term; |

  53. COMPENSATION COMMITTEE REPORT

    | ● | vesting of long-term equity incentive awards over multiple years; |

  54. COMPENSATION COMMITTEE REPORT

    | ● | caps on annual cash incentive compensation; |

  55. COMPENSATION COMMITTEE REPORT

    | ● | broad performance ranges for minimum, target and maximum financial performance goals with, after the minimum financial performance goal is attained, continuous increments for annual cash incentive compensation that reduce the risk of accelerating or delaying revenue or expense recognition to satisfy the next tier for larger incentive payouts; and |

  56. COMPENSATION COMMITTEE REPORT

    | ● | the financial performance measure we utilize under our annual cash incentive compensation plan is Adjusted EBITDA, which accounts for controllable factors such as attaining higher margins through managing production volumes relative to both specialty alcohol and essential ingredient sales prices and production input costs, increasing production efficiencies, controlling operating costs such as selling, general and administrative expenses, and successfully implementing capital improvement projects that increase Adjusted EBITDA. |

  57. COMPENSATION COMMITTEE REPORT

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation(2) | All Other Compensation(3) | Total ($) | | Bryon T. McGregor(4) | 2023 | $427,346 | $— | $846,000 | $62,756(5) | $21,400 | $1,357,502 | | President and Chief | 2022 | $351,626 | $— | $312,151 | $35,200 | $21,400 | $720,377 | | Executive Officer | 2021 | $336,130 | $— | $252,640 | $302,600 | $19,000 | $910,370 | | Michael D. Kandris | 2023 | $528,403 | $— | $525,000 | $62,756(5) | $21,400 | $1,137,559 | | former Interim Chief | 2022 | $524,437 | $— | $874,035 | $73,400 | $21,400 | $1,493,272 | | Operating Officer(6) | 2021 | $509,856 | $— | $707,392 | $642,500 | $19,000 | $1,878,748 | | Robert R. Olander, | 2023 | $292,843 | $— | $313,065 | $27,974(8) | $21,387 | $655,269 | | Chief Financial Officer(7) | 2022 | $261,220 | $— | $93,646 | $23,625 | $21,400 | $399,891 | | | 2021 | $252,469 | $— | $75,791 | $129,325 | $16,748 | $474,333 | | Auste M. Graham | 2023 | $346,154 | $— | $161,250 | $35,000 | $19,800 | $562,204 | | General Counsel, Vice President | 2022 | $298,750 | $100,000(10) | $423,953 | $29,900 | $9,750 | $862,353 | | and Secretary(9) | 2021 | $— | $— | $— | $— | $— | $— | | James R. Sneed | 2023 | $329,409 | $— | $161,250 | $32,941 | $21,400 | $545,000 | | Vice President and | 2022 | $325,982 | $— | $237,233 | $32,600 | $21,400 | $617,215 | | Chief Commercial Officer | 2021 | $314,776 | $— | $192,003 | $283,400 | $19,000 | $809,179 |

  58. Calculation of Potential Payments upon Termination or Change in Control

    Calculation of Potential Payments upon Termination or Change in Control In accordance with the rules of the Securities and Exchange Commission, the following table presents our estimate of the benefits payable to our NEOs under their executive employment agreements and our 2016 Plan assuming that for each of the NEOs (i) a “change in control” occurred on December 29, 2023, the last business day of 2023, and (a) there was a termination by the executive “for good reason,” or by us without “cause” within three months before or twelve months after the change in control, or (b) none of the executives’ equity awards were assumed by the successor corporation or replaced with a cash retention program, (ii) a qualifying termination occurred on December 29, 2023, which is a termination by the executive “for good reason,” by us without “cause” or upon the executive’s disability, or (iii) a non-qualifying termination occurred on December 29, 2023, which is a voluntary termination by the executive other than “for good reason” or by us for “cause.” See “Executive Employment Agreements” above for the definitions of “for good reason,” “cause” and “change in control.”

  59. Calculation of Potential Payments upon Termination or Change in Control

    | Name | Trigger | Salary and Bonus(1) | Continuation of Benefits(2) | Value of Stock Acceleration(3) | Total Value(4) | | Bryon T. McGregor | Change in Control | $2,677,500 | $78,967 | $852,759 | $3,609,226 | | | Qualifying Termination | $1,338,750 | $39,483 | $213,190 | $1,591,423 | | | Non-Qualifying Termination | $— | $— | $— | $— | | Michael D. Kandris(5) | Change in Control | $2,694,855 | $55,679 | $1,270,525 | $4,021,059 | | | Qualifying Termination | $1,347,428 | $27,839 | $317,631 | $1,692,898 | | | Non-Qualifying Termination | $— | $— | $— | $— | | Robert R. Olander | Change in Control | $1,040,000 | $29,143 | $291,734 | $1,360,877 | | | Qualifying Termination | $520,000 | $14,573 | $72,934 | $607,507 | | | Non-Qualifying Termination | $— | $— | $— | $— | | Auste M. Graham | Change in Control | $1,050,000 | $— | $355,998 | $1,405,998 | | | Qualifying Termination | $525,000 | $— | $89,000 | $614,000 | | | Non-Qualifying Termination | $— | $— | $— | $— | | James R. Sneed | Change in Control | $988,228 | $37,119 | $378,106 | $1,403,453 | | | Qualifying Termination | $494,114 | $18,560 | $94,526 | $607,200 | | | Non-Qualifying Termination | $— | $— | $— | $— |

  60. Calculation of Potential Payments upon Termination or Change in Control

    | (1) Amount represents twenty-four months additional salary plus 200% of the executive’s total target short-term cash incentive compensation after the date of termination in the event of a change in control and twelve months additional salary plus 100% of the executive’s total target short-term cash incentive compensation after the date of termination in the event of a qualifying termination, in each case based on the executive’s salary as of December 29, 2023; provided, that Bryon T. McGregor is, and Michael D. Kandris was, entitled to thirty-six months additional salary plus 300% of his total target short-term cash incentive compensation after the date of termination in the event of a change in control and eighteen months additional salary plus 150% of his total target short-term cash incentive compensation after the date of termination in the event of a qualifying termination, in each case based on his salary as of December 29, 2023. |

  61. Calculation of Potential Payments upon Termination or Change in Control

    | (2) For those NEOs reported as eligible for benefits, the amount represents the aggregate value of the continuation of certain employee health benefits for up to twenty-four months after the date of termination in the event of a change in control and for up to twelve months after the date of termination in the event of a qualifying termination; provided, that Bryon T. McGregor is, and Michael D. Kandris was, entitled to thirty-six months of additional benefits after the date of termination in the event of a change in control and eighteen months of additional benefits after the date of termination in the event of a qualifying termination. |

  62. Calculation of Potential Payments upon Termination or Change in Control

    | (3) For those NEOs reported as eligible for acceleration of vesting benefits, the amount represents the aggregate value of the accelerated vesting of 100% of the executive’s unvested restricted stock grants in the event of a change in control and 25% of the executive’s unvested restricted stock grants in the event of a qualifying termination. The amounts shown as the value of the accelerated restricted stock grants are based solely on the intrinsic value of the restricted stock grants as of December 29, 2023, which was calculated by multiplying (i) the fair market value of our common stock on December 29, 2023, which was $2.66 per share, by (ii) the assumed number of shares vesting on an accelerated basis on December 29, 2023. |

  63. Calculation of Potential Payments upon Termination or Change in Control

    | (4) Excludes the value to the executive of the continuing right to indemnification and continuing coverage under our directors’ and officers’ liability insurance, if applicable. |

  64. Calculation of Potential Payments upon Termination or Change in Control

    | (5) Mr. Kandris resigned from his position as our Interim Chief Operating Officer effective April 1, 2024, and we amended, effective as of that date, his employment agreement to remove the severance benefits provide for in the table above, which speaks only as of December 29, 2023. |

  65. Calculation of Potential Payments upon Termination or Change in Control

    Compensation Committee Interlocks and Insider Participation Our Compensation Committee consists of Maria G. Gray, Dianne S. Nury and Gilbert E. Nathan. None of these individuals were officers or employees of Alto Ingredients at any time during 2023 or at any other time. During 2023, Terry L. Stone also served as a member of our Compensation Committee. Mr. Stone was not an officer or employee of Alto Ingredients at any time during 2023 or at any other time. None of our executive officers served as a member of the board of directors or compensation committee of any other entity whose executive officer(s) served on our Board or Compensation Committee during 2023. CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K under the Securities Act, we are providing the following information about the relationship of the annual total compensation of Bryon T. McGregor, our Chief Executive Officer, and Michael D. Kandris, our former Chief Executive Officer (collectively, our “CEO”), and the annual total compensation of our employees. The pay ratio included in this information is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Securities Act. The Securities and Exchange Commission’s rules for identifying our median employee and calculating the pay ratio allow companies to use different methodologies, estimates and assumptions, therefore the pay ratio disclosure below may not be comparable to the pay ratio reported by other companies. For 2023, our last completed fiscal year:

  66. Calculation of Potential Payments upon Termination or Change in Control

    | ● | the annual total compensation of our CEO, calculated in the manner described below, was $1,229,202; and |

  67. Calculation of Potential Payments upon Termination or Change in Control

    | ● | the median of the annual total compensation of all employees (other than our CEO) was $84,084. |

  68. Calculation of Potential Payments upon Termination or Change in Control

    Based on this information, for 2023 the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all employees was 14.6 to 1. During 2023, two persons served as our Chief Executive Officer. Bryon T. McGregor, our current Chief Executive Officer, served in that capacity starting August 1, 2023. Michael D. Kandris served as our Chief Executive Officer from January 1, 2023 until Mr. McGregor’s appointment. As permitted under Item 402(u) of Regulation S-K under the Securities Act, to calculate the annual total compensation of our CEO to determine the pay ratio set forth above, we combined the compensation, as reported in the Summary Compensation Table included above in this Proxy Statement, of each of Messrs. McGregor and Kandris, prorated for the respective periods during which each of them served as our Chief Executive Officer. To identify the median of the annual total compensation of all employees, as well as to determine the annual total compensation of our median employee and our CEO, we took the following steps: 1. We determined that as of October 26, 2023, our employee population consisted of approximately 445 individuals with all of those persons located in the United States. This employee population consisted of our full-time, part-time and temporary employees. We did not employ any seasonal workers in 2023. We selected October 26, 2023, which is within the last three months of 2023, as the date upon which we would identify the “median employee” because it enabled us to make such identification in a reasonably efficient and economical manner. We shifted to the October 26th date for 2023 instead of the October 20th date used for the prior year to better align the pay periods of our union and non-union employees to calculate our median employee. 2. To identify the median employee from our employee population, we compared the amount of wages of our employees, as reflected in our payroll records as of the determination date and ultimately reported to the Internal Revenue Service on Forms W-2 for 2023. In making this determination, we annualized the compensation of employees who were hired in 2023 but did not work for us for the entire year. 3. We identified our median employee using this compensation measure, which was consistently applied to all employees included in the calculation. Since all employees are located in the United States, as is our CEO, we did not make any cost-of-living adjustments in identifying the median employee. 4. Once we identified our median employee, who is a non-exempt, full-time employee, we combined all of the elements of the employee’s compensation for 2023 in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K under the Securities Act, resulting in annual total compensation of $84,084, which includes base pay, overtime pay, equity incentive compensation, any matching contributions to the employee’s 401(k) plan and any employer contribution to the employee’s health savings account. 5. With respect to the annual total compensation of our CEO, we used the amounts reported for 2023 in the “Total” column of our Summary Compensation Table included in this Proxy Statement and incorporated by reference under Item 11 of Part III of our Annual Report, prorated those amounts for the respective periods during which the two persons who served as our Chief Executive Officer during 2023 so served, and added the prorated amounts together. Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of Alto Ingredients, Inc. For further information concerning our variable pay-for-performance philosophy and how we align executive compensation with our performance, refer to “Executive Compensation and Related Information – Compensation Discussion and Analysis” above.

  69. Calculation of Potential Payments upon Termination or Change in Control

    | | Summary Compensation | Summary Compensatio | Summary Compensation | Compensation | Compensation | Compensation | Average Summary | Average | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Table Total for PEO (Bryon T. McGregor)(1) | Table Total for PEO (Michael D. Kandris)(1) | Table Total for PEO (Neil M. Koehler)(1) | Actually Paid to PEO (Bryon T. McGregor)(2) | Actually Paid to PEO (Michael D. Kandris)(2) | Actually Paid to PEO (Neil M. Koehler)(2) | Table Total for Non-PEO NEOs(3) | Compensation Actually Paid to Non-PEO NEOs(4) | Total Shareholder Return(5) | Peer Group Total Shareholder Return(6) | Net Income (loss) (in thousands)(7) | Adjusted EBITDA (in thousands)(8) | | (a) | (b) | (b) | (b) | (c) | (c) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | $1,357,502 | $1,137,559 | N/A | $1,192,118 | $1,401,079 | N/A | $587,491 | $558,663 | $309.23 | $74.51 | $(29,270) | $20,766 | | 2022 | N/A | $1,493,272 | N/A | N/A | $1,179,649 | N/A | $632,267 | $575,007 | $343.08 | $93.70 | $(42,862) | $(5,743) | | 2021 | N/A | $1,878,748 | N/A | N/A | $1,712,162 | N/A | $843,060 | $843,350 | $640.00 | $177.30 | $44,217 | $87,799 | | 2020 | N/A | $749,925 | $531,297 | N/A | $2,119,851 | $1,054,049 | $473,486 | $1,069,362 | $735.38 | $184.82 | $(16,384) | $53,948 |

  70. Calculation of Potential Payments upon Termination or Change in Control

    | (1) The dollar amounts reported in columns (b) are the amounts of total compensation reported for Bryon T. McGregor, Michael D. Kandris and Neil M. Koehler, our Chief Executive Officers and Co-Chief Executive Officers for the periods stated below, for each corresponding year in the “Total” column of the applicable Summary Compensation Table for the year. Refer to “Executive Compensation and Related Information – Summary Compensation Table” above for information concerning Messrs. McGregor and Kandris for 2021, 2022 and 2023 and our prior filings with the Securities and Exchange Commission for information concerning Messrs. Kandris and Koehler for 2020. Mr. McGregor was appointed as our Chief Executive Officer on August 1, 2023. Mr. Kandris was appointed as our Co-Chief Executive Officer in May 2020 and became our sole Chief Executive Officer on September 30, 2020 and continued in that position until the appointment of Mr. McGregor. Prior to Mr. Kandris’s appointment in May 2020, Mr. Koehler served as our sole Chief Executive Officer. |

  71. Calculation of Potential Payments upon Termination or Change in Control

    | (2) The dollar amounts reported in columns (c) represent the respective amounts of “compensation actually paid” to Messrs. McGregor, Kandris and Koehler, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Messrs. McGregor, Kandris or Koehler during the applicable year. |

  72. Calculation of Potential Payments upon Termination or Change in Control

    In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. McGregor’s total compensation for 2023 to determine the compensation actually paid to him:

  73. Calculation of Potential Payments upon Termination or Change in Control

    | Year | Reported Summary Compensation Table Total for PEO (Bryon T. McGregor) | Less Reported Value of Equity Awards(a) | Equity Award Adjustments(b) | Reported Change in the Actuarial Present Value of Pension Benefits(c) | Pension Benefit Adjustments(d) | Compensation Actually Paid to PEO (Bryon T. McGregor) | | 2023 | $1,357,502 | $(846,000) | $680,616 | $– | $– | $1,192,118 | | 2022 | N/A | N/A | N/A | $– | $– | N/A | | 2021 | N/A | N/A | N/A | $– | $– | N/A | | 2020 | N/A | N/A | N/A | $– | $– | N/A |

  74. Calculation of Potential Payments upon Termination or Change in Control

    In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Kandris’s total compensation for each year to determine the compensation actually paid to him:

  75. Calculation of Potential Payments upon Termination or Change in Control

    | Year | Reported Summary Compensation Table Total for PEO (Michael D. Kandris) | Less Reported Value of Equity Awards(a) | Equity Award Adjustments(b) | Reported Change in the Actuarial Present Value of Pension Benefits(c) | Pension Benefit Adjustments(d) | Compensation Actually Paid to PEO (Michael D. Kandris) | | 2023 | $1,137,559 | $(525,000) | $788,520 | $– | $– | $1,401,079 | | 2022 | $1,493,272 | $(874,035) | $560,412 | $– | $– | $1,179,649 | | 2021 | $1,878,748 | $(707,392) | $540,806 | $– | $– | $1,712,162 | | 2020 | $749,925 | $(181,025) | $1,550,951 | $– | $– | $2,119,851 |

  76. Calculation of Potential Payments upon Termination or Change in Control

    In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Koehler’s total compensation for 2020 to determine the compensation actually paid to him:

  77. Calculation of Potential Payments upon Termination or Change in Control

    | Year | Reported Summary Compensation Table Total for PEO (Neil M. Koehler) | Less Reported Value of Equity Awards(a) | Equity Award Adjustments(b) | Reported Change in the Actuarial Present Value of Pension Benefits(c) | Pension Benefit Adjustments(d) | Compensation Actually Paid to PEO (Neil M. Koehler) | | 2023 | N/A | N/A | N/A | $– | $– | N/A | | 2022 | N/A | N/A | N/A | $– | $– | N/A | | 2021 | N/A | N/A | N/A | $– | $– | N/A | | 2020 | $531,297 | $– | $522,752 | $– | $– | $1,054,049 |

  78. Calculation of Potential Payments upon Termination or Change in Control

    | (a) The reported values of equity awards in the tables above are the total grant date fair values of equity awards as reported in the “Stock Awards” column in the Summary Compensation Table for the applicable year. | | (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. |

  79. Calculation of Potential Payments upon Termination or Change in Control

    The amounts deducted or added in calculating the equity award adjustments for Mr. McGregor are as follows:

  80. Calculation of Potential Payments upon Termination or Change in Control

    | Year | Year End Fair Value of Equity Awards (Bryon T. McGregor) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments (Bryon T. McGregor) | | 2023 | $731,500 | $(10,029) | $– | $(40,855) | $– | $– | $680,616 | | 2022 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | | 2021 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | | 2020 | N/A | N/A | N/A | N/A | N/A | N/A | N/A |

  81. Calculation of Potential Payments upon Termination or Change in Control

    The amounts deducted or added in calculating the equity award adjustments for Mr. Kandris are as follows:

  82. Calculation of Potential Payments upon Termination or Change in Control

    | Year | Year End Fair Value of Equity Awards (Michael D. Kandris) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments (Michael D. Kandris) | | 2023 | $931,000 | $(28,081) | $– | $(114,399) | $– | $– | $788,520 | | 2022 | $368,554 | $(159,360) | $– | $351,218 | $– | $– | $560,412 | | 2021 | $592,780 | $(77,500) | $– | $25,526 | $– | $– | $540,806 | | 2020 | $1,357,500 | $214,641 | $– | $(21,190) | $– | $– | $1,550,951 |

  83. Calculation of Potential Payments upon Termination or Change in Control

    The amounts deducted or added in calculating the equity award adjustments for Mr. Koehler are as follows:

  84. Calculation of Potential Payments upon Termination or Change in Control

    | Year | Year End Fair Value of Equity Awards (Neil M. Koehler) | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments (Neil M. Koehler) | | 2023 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | | 2022 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | | 2021 | N/A | N/A | N/A | N/A | N/A | N/A | N/A | | 2020 | $– | $– | $– | $522,752 | $– | $– | $522,752 |

  85. Calculation of Potential Payments upon Termination or Change in Control

    | (c) The amounts included in this column are the amounts reported, if any, in the “Change in Pension and Nonqualified Deferred Compensation” column of the Summary Compensation Table for each applicable year. There were no such amounts for any applicable year, therefore we have excluded the “Change in Pension and Nonqualified Deferred Compensation” column from the Summary Compensation Table. |

  86. Calculation of Potential Payments upon Termination or Change in Control

    | (d) The total pension benefit adjustments for each applicable year for each of Messrs. McGregor, Kandris and Koehler was $0.00. We do not presently have, nor have we had in the past for any of the periods covered, any pension plans for the benefit of our NEOs, including our PEOs. |

  87. Calculation of Potential Payments upon Termination or Change in Control

    | (3) The dollar amounts reported in column (d) represent the average of the amounts reported for our NEOs as a group (excluding Messrs. McGregor, Kandris and Koehler, who served as Chief Executive Officers or Co-Chief Executive Officers during the periods covered) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. McGregor for 2023 and Messrs. Kandris and Koehler for 2020, 2021, 2022 and 2023) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Robert R. Olander, Auste M. Graham and James R. Sneed; (ii) for 2022, Bryon T. McGregor, Auste M. Graham, James R. Sneed and Christopher W. Wright; (iii) for 2021, Bryon T. McGregor, Christopher W. Wright, James R. Sneed and Paul P. Koehler; and (iv) for 2020, Bryon T. McGregor and Christopher W. Wright. Mr. Wright retired in May 2022 and Paul P. Koehler retired in February 2021. The included averages are affected by the retirements of Messrs. Wright and Koehler in 2022 and 2021, respectively, resulting in compensation reported only for the periods through their respective dates of retirement, but in the case of Mr. Wright, also include his post-retirement compensation under a consulting arrangement for the remainder of 2022. |

  88. Calculation of Potential Payments upon Termination or Change in Control

    | (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Mr. McGregor for 2023 and Messrs. Kandris and Koehler for 2020, 2021, 2022 and 2023), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding, for the periods noted above, Messrs. McGregor, Kandris and Koehler) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding, for the periods noted above, Messrs. McGregor, Kandris and Koehler) for each year to determine the compensation actually paid to them, using the same methodology described above in Note 2: |

  89. Calculation of Potential Payments upon Termination or Change in Control

    | Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Less Average Reported Value of Equity Awards | Average Equity Award Adjustments(a) | Average Reported Change in the Actuarial Present Value of Pension Benefits | Average Pension Benefit Adjustments(b) | Average Compensation Actually Paid to Non-PEO NEOs | | 2023 | $587,491 | $(211,855) | $183,027 | $– | $– | $558,663 | | 2022 | $632,267 | $(268,947) | $211,687 | $– | $– | $575,007 | | 2021 | $843,060 | $(165,478) | $165,768 | $– | $– | $843,350 | | 2020 | $473,486 | $(61,921) | $657,797 | $– | $– | $1,069,362 |

  90. Calculation of Potential Payments upon Termination or Change in Control

    (a) The amounts deducted or added in calculating the total average equity award adjustments are as follows:

  91. Calculation of Potential Payments upon Termination or Change in Control

    | Year | Average Year End Fair Value of Equity Awards | Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards | Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Average Equity Award Adjustments | | 2023 | $206,815 | $(4,106) | $– | $(19,682) | $– | $– | $183,027 | | 2022 | $95,214 | $(25,042) | $39,919 | $101,596 | $– | $– | $211,687 | | 2021 | $138,668 | $(19,883) | $– | $46,983 | $– | $– | $165,768 | | 2020 | $464,346 | $214,641 | $– | $(21,190) | $– | $– | $657,797 |

  92. Calculation of Potential Payments upon Termination or Change in Control

    | (b) The total pension benefit adjustments for each applicable year for each of our NEOs was $0.00. We do not presently have, nor have we had in the past for any of the periods covered, any pension plans for the benefit of our NEOs. |

  93. Calculation of Potential Payments upon Termination or Change in Control

    | (5) Cumulative Total Shareholder Return, or TSR, is calculated by dividing (i) the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment (which dividends totaled $0.00 for all periods), and the difference between our share price at the end of the measurement period and the beginning of the measurement period, by (ii) our share price at the beginning of the measurement period. |

  94. Calculation of Potential Payments upon Termination or Change in Control

    | (6) The peer group used for this purpose is The Nasdaq Clean Edge Green Energy Index, a published industry index. |

  95. Calculation of Potential Payments upon Termination or Change in Control

    | (7) The dollar amounts reported represent the amount of income (loss) available to common stockholders reflected in our audited financial statements for the applicable year. |

  96. Calculation of Potential Payments upon Termination or Change in Control

    | (8) Adjusted EBITDA is defined as unaudited consolidated net income or loss before interest expense, interest income, provision/benefit for income taxes, asset impairments, loss on extinguishment of debt, unrealized derivative gains and losses, acquisition-related expense, depreciation and amortization expense, and fair value adjustments. While we use various performance measures in our compensation programs to evaluate performance, we have determined that Adjusted EBITDA is the financial performance measure that, in our assessment, represents the most important performance measure (not otherwise required to be disclosed in the table) used by us to link compensation actually paid to our NEOs, for the most recently completed fiscal year, to our performance. For 2023, we modified our calculation of Adjusted EBITDA to exclude unrealized non-cash gains and losses on derivative instruments. Unrealized gains and losses on derivatives are commodity price driven, mark-to-market non-cash adjustments of derivative instruments for open positions related to future sales. For comparability between 2023 and prior years, we have reflected this change in the Adjusted EBITDA amounts stated for 2020, 2021 and 2022. See Appendix D for a reconciliation of Adjusted EBITDA to its most directly comparable measure under generally accepted accounting principles, consolidated net income (loss). |

  97. Calculation of Potential Payments upon Termination or Change in Control

    Financial Performance Measure As described in greater detail in “Executive Compensation – Compensation Discussion and Analysis,” our executive compensation program reflects a variable pay-for-performance philosophy. The measures we use for both our short- and long-term incentive awards are selected based on our objective to incentivize our NEOs to increase the value of our company over both the short- and long-term. Adjusted EBITDA is the key financial performance measure we use to link executive compensation actually paid to our NEOs for the most recently completed fiscal year to our performance. Starting in 2024, we have also begun to use Adjusted EBITDA ROA as a financial performance measure to link executive compensation actually paid to our NEOs to our performance through performance-based equity incentive awards. See “Executive Compensation – Compensation Discussion and Analysis – Compensation Decisions for 2023 – Annual Cash Incentive Compensation” and “—Long-Term Equity Incentive Compensation – 2024 Performance-Based Equity Incentive Compensation Program” above. Analysis of the Information Presented in the Pay versus Performance Table As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” our executive compensation program reflects a variable pay-for-performance philosophy. Although we use various subjective performance measures to align executive compensation with our performance, those measures are not presented in the Pay versus Performance table. The primary variables in year-over-year changes in executive compensation relative to our performance are:

  98. Calculation of Potential Payments upon Termination or Change in Control

    | ● | Cash payments under our short-term cash incentive plan driven mainly by annual fluctuations in our Adjusted EBITDA compared to our threshold, targeted and maximum Adjusted EBITDA amounts established from time to time by our Compensation Committee; and |

  99. Calculation of Potential Payments upon Termination or Change in Control

    | ● | Grants of restricted stock under our long-term equity incentive plan, the value of which as of the grant date, upon vesting, and thereafter, is tied directly to the market price of our common stock. |

  100. Calculation of Potential Payments upon Termination or Change in Control

    In seeking to incentivize short-term performance, we directly align our compensation that is actually paid each year (as computed in accordance with Item 402(v) of Regulation S-K) with our Adjusted EBITDA performance measure. Compensation that is actually paid each year can significantly vary year-over-year due to fluctuations in our annual Adjusted EBITDA. In seeking to incentivize long-term performance, we do not directly align our financial performance measure with compensation that is actually paid for a particular year, which can significantly vary year-over-year due to the change in the market value of our stock and the corresponding impact on the value of prior years’ equity awards. However, as noted above, starting in 2024, we now link a portion of equity incentive compensation to an Adjusted EBITDA ROA financial performance measure while also retaining time-based vesting for the equity incentive compensation. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance table. Compensation Actually Paid and Cumulative TSR As demonstrated by the following graph, the amount of compensation actually paid to Mr. Kandris is somewhat aligned with our cumulative TSR over the four years presented in the table. Since Mr. McGregor’s compensation is included for only a partial year, we are unable to provide an analysis of the alignment of his compensation with our cumulative TSR over the four-year period. Likewise, since Mr. Koehler’s compensation is included for only one year, we are unable to provide an analysis of the alignment of his compensation with our cumulative TSR over the four-year period. The average amount of compensation actually paid to our NEOs as a group (excluding our PEOs for the years in which they served in that capacity) is aligned with our cumulative TSR over the four years presented in the table. The overall alignment of compensation actually paid with our cumulative TSR over the period presented is because a significant portion of the compensation actually paid to Mr. Kandris and the other NEOs (excluding our other PEOs for the years in which they served in that capacity) is comprised of short-term cash incentive awards linked to our Adjusted EBITDA which we believe itself is directly and positively correlated with our stock price and therefore to our TSR, and also because a significant portion of the compensation actually paid to those persons is through equity awards the value of which are directly linked to our stock price and therefore to our TSR. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” the targeted value of our short-term cash incentive compensation was between 50% and 70%, and the targeted value of our equity awards in the form of restricted stock was between approximately 60% and 130%, in each case depending on the particular NEO, of base compensation awarded to our NEOs. Compensation Actually Paid and Net Income As demonstrated by the following graph, the amount of compensation actually paid to Mr. Kandris is not closely aligned with our income (loss) available to common stockholders over the four years presented in the table. Since Mr. McGregor’s compensation is included for only a partial year, we are unable to provide an analysis of the alignment of his compensation with our income (loss) available to common stockholders over the four-year period. Likewise, since Mr. Koehler’s compensation is included for only one year, we are unable to provide an analysis of the alignment of his compensation with our income (loss) available to common stockholders over the four-year period. The average amount of compensation actually paid to our NEOs as a group (excluding our PEOs for the years in which they served in that capacity) is not closely aligned with our income (loss) available to common stockholders over the four years presented in the table. Mr. Kandris’s compensation differs from our other NEOs in this analysis primarily due to a substantial grant of equity in mid-2020 to Mr. Kandris and the subsequent large increase in the market price of our common stock through year-end, neither of which recurred in similar magnitude in subsequent years. The substantial grant of equity in 2020 to Mr. Kandris was made in respect of his elevation to the position of Co-Chief Executive Officer and in anticipation of his impending status as our sole Chief Executive Officer, which occurred in the succeeding months, as well as Mr. Kandris’s key efforts in furtherance of the successful and timely pivot of our sole business focus away from renewable fuel toward specialty alcohols and essential ingredients during the coronavirus pandemic in the midst of a bleak market for transportation fuels. Although we do not use income (loss) available to common stockholders as a performance measure in our overall executive compensation program, that metric is correlated to our primary financial performance measure, Adjusted EBITDA, which we do use when setting goals in our short-term incentive compensation program and making cash awards to our NEOs. As described in more detail in “Executive Compensation – Compensation Discussion and Analysis,” the targeted value of our short-term incentive compensation was between approximately 50% and 70%, depending on the particular NEO, of base compensation awarded to our NEOs. Compensation Actually Paid and Adjusted EBITDA As demonstrated by the following graph, the amount of compensation actually paid to Mr. Kandris and the average amount of compensation actually paid to our NEOs as a group (excluding our PEOs for the years in which they served in that capacity) is generally aligned with our Adjusted EBITDA over the four years presented in the table. Since Mr. McGregor’s compensation is included for only a partial year, we are unable to provide an analysis of the alignment of his compensation with our Adjusted EBITDA over the four-year period. Likewise, since Mr. Koehler’s compensation is included for only one year, we are unable to provide an analysis of the alignment of his compensation with our Adjusted EBITDA over the four-year period. As noted above, Mr. Kandris received a substantial grant of equity in mid-2020, the value of which increased significantly due to the large increase in the price of our common stock through year-end. This grant of equity elevated Mr. Kandris’s compensation for 2020 to an unusually high level and reduced the alignment of his compensation with our Adjusted EBITDA when compared with the succeeding years included in the graph. While we use various financial and non-financial performance measures to evaluate performance for our compensation programs, we have determined that Adjusted EBITDA is the financial performance measure that, in our assessment, represents the most important performance measure (not otherwise required to be disclosed in the table) used by us to link compensation actually paid to our NEOs, for the most recently completed fiscal year, to our performance. We use Adjusted EBITDA when setting goals in our short-term incentive compensation program and in determining cash awards to our NEOs. As described in more detail in “Executive Compensation – Compensation Discussion and Analysis,” the targeted value of our short-term incentive compensation was between approximately 50% and 70%, depending on the particular NEO, of base compensation awarded to our NEOs. Our Cumulative TSR and Peer Group Cumulative TSR

  101. Calculation of Potential Payments upon Termination or Change in Control

    As demonstrated by the following graph, our cumulative TSR was 309% while the cumulative TSR of the peer group presented for this purpose, The Nasdaq Clean Edge Green Energy Index, was 75%, in each case over the four-year period presented in the table. Our TSR outperformed the Index during the first year but underperformed the Index during the succeeding three years presented in the table. However, our cumulative TSR outperformed the Index over the full four-year period, which we believe represents our superior overall performance arising from the successful pivot of our sole business focus away from renewable fuel toward specialty alcohols and essential ingredients. For more information regarding our performance and the companies that the Compensation Committee considers when determining compensation, refer to “Executive Compensation – Compensation Discussion and Analysis.” Certain Relationships and Related Transactions

  102. Todd E. Benton

    Todd E. Benton Todd E. Benton is employed as our Chief Operating Officer. Mr. Benton’s annual base salary is currently $350,000 after an increase effective April 1, 2024. Mr. Benton is eligible to participate in our short-term incentive plan with a pay-out target of 60% of his base salary, to be paid based upon performance criteria set by our Compensation Committee. All other terms and conditions of Mr. Benton’s employment agreement are substantially the same as those contained in Robert R. Olander’s Second Amended and Restated Employment Agreement described under “Executive Compensation and Related Information—Summary Compensation Table—Executive Employment Agreements” above. On March 31, 2023, we granted 37,500 shares of our restricted common stock to Mr. Benton in consideration of services to be provided. The value of the common stock was determined to be $56,250. The grant vested as to 33% of the shares on April 1, 2024 and vests as to 33% of the shares on April 1, 2025 and 34% of the shares on April 1, 2026. In March 2023, we granted Mr. Benton an award to be paid based on our financial performance and Mr. Benton’s individual performance for the January 1, 2023 to December 31, 2023 performance period under our annual performance-based cash incentive compensation plan. Mr. Benton was eligible to earn up to $52,793 at threshold, up to $81,221 at target and up to $138,076 at maximum for the performance period. See “Compensation Discussion and Analysis—Executive Compensation Program and Processes—Compensation Decisions for 2023—Annual Cash Incentive Compensation” above. In March 2024, we paid $24,400 to Mr. Benton under our performance-based annual cash incentive compensation plan in respect of this award for his individual performance during 2023. In March 2023, we paid $23,525 to Mr. Benton under our performance-based annual cash incentive compensation plan for his individual performance during 2022.