DEF 14A of Alto Ingredients, Inc., Apr 30, 2025

DEF 14A of Alto Ingredients, Inc.

Filed Apr 30, 2025 · FY20240001213900-25-037629

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 2024 as to our directors, our Compensation Committee compared our cash and equity compensation payable to directors against market data obtained by our compensation consultant in 2020. The data included a blend of results from two published surveys to identify companies with revenue and market capitalization comparable to ours. Our compensation consultant 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 2024, our Compensation Committee targeted compensation for our directors at approximately the median of compensation paid to directors of the survey group companies based on the historical data provided by our compensation consultant in 2020. 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, if applicable, 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 grant date. Vesting is typically subject to continued service on our Board during the full year. In determining the amount of equity compensation for 2024, 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 our compensation consultant. 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. McGregor was compensated as a full-time employee and officer and therefore received no additional compensation for service as a Board member during 2024. Mr. Kandris was compensated as a full-time employee and officer until his retirement on June 20, 2024 and therefore received no additional compensation for service as a Board member during that period in 2024. Information regarding the compensation awarded to Mr. McGregor is included in “Executive Compensation and Related Information—Summary Compensation Table” below. Director Compensation Table – 2024 The following table summarizes the compensation of our non-employee directors for the year ended December 31, 2024:

  14. Compensation of Directors

    | Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($) | Total ($)(2) | | Douglas L. Kieta(3) | $112,500 | $64,407 | $176,907 | | Michael D. Kandris(4) | $39,231 | $— | $39,231 | | Maria G. Gray(5) | $100,000 | $48,032 | $148,032 | | Gilbert E. Nathan(6) | $100,000 | $48,032 | $148,032 | | Dianne S. Nury(7) | $100,000 | $48,032 | $148,032 |

  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, 2024, Mr. Kieta held 265,682 vested shares from stock awards. Mr. Kieta was granted 49,166 shares of our common stock on June 20, 2024, having an aggregate grant date fair value of $64,407, 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, 2025. |

  18. Compensation of Directors

    | (4) At December 31, 2024, Mr. Kandris held 645,495 vested shares from stock awards. Mr. Kandris, a long-standing director, retired as our Interim Chief Operating Officer on April 1, 2024 and retired as an employee on June 20, 2024. He received no stock awards for 2024 but began earning director fees following his retirement in June 2024. |

  19. Compensation of Directors

    | (5) At December 31, 2024, Ms. Gray held 77,292 vested shares from stock awards. Ms. Gray was granted 36,666 shares of our common stock on June 20, 2024, having an aggregate grant date fair value of $48,032, 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, 2025. |

  20. Compensation of Directors

    | (6) At December 31, 2024, Mr. Nathan held 168,221 vested shares from stock awards. Mr. Nathan was granted 36,666 shares of our common stock on June 20, 2024, having an aggregate grant date fair value of $48,032, 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, 2025. |

  21. Compensation of Directors

    | (7) At December 31, 2024, Ms. Nury held 144,078 vested shares from stock awards. Ms. Nury was granted 36,666 shares of our common stock on June 20, 2024, having an aggregate grant date fair value of $48,032, 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, 2025. |

  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. Audit Committee Report

    | (1) Amount represents the “target” incentive award share payout under the performance-based portion of our long-term equity incentive compensation plan. The amount that may be earned is based on our attainment of preestablished performance goals selected by our Compensation Committee and is additionally subject to time-based vesting. A maximum incentive award payout of 361,960 shares may be issuable under incentive awards under the performance-based portion of our long-term equity incentive compensation plan. |

  29. Executive Summary

    | ● | annual cash incentive compensation; and |

  30. Executive Summary

    | ● | long-term equity incentive compensation. |

  31. Executive Summary

    | ○ | We conducted materiality assessments with internal and external stakeholders and identified multiple long-term market opportunities to viably expand our bio-based renewable offerings. |

  32. Executive Summary

    The 2024 compensation information in this Proxy Statement includes actual results for 2024 under our annual cash incentive compensation plan. Our annual cash incentive compensation plan payouts for 2024 were determined and made in March 2025. No payouts were made in respect of the financial or key performance indicator, or KPI, performance elements of our annual cash incentive compensation plan because our Adjusted EBITDA of negative $8,531,000 fell below the payout threshold for 2024 of Adjusted EBITDA of $25,000,000 and we did not achieve at least three of our seven KPI thresholds for 2024. Our NEOs performed well, however, in their execution of a number of other initiatives in 2024, as noted in the 2024 business highlights summarized above and their individual accomplishments noted below, and consequently, our NEOs each received target payouts under the individual performance element of the plan. See “—Individual NEO Compensation Targets and Results” below.

  33. 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 instituted a performance-based equity incentive compensation plan, the awards under which are also subject to long-term time-based vesting. |

  34. Compensation Governance Practices

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

  35. 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. |

  36. 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 and KPI performance. The 2024 performance measures for the compensation pool for our annual cash incentive compensation plan were: |

  37. Compensation Governance Practices

    | ○ | Financial Performance. Adjusted EBITDA is the financial performance measure we selected for the financial component of our annual cash incentive compensation plan, which we weighted at 50% for our NEOs. |

  38. Compensation Governance Practices

    | ○ | KPI Performance. As discussed below, we selected various KPIs as performance measures for the KPI component of our annual cash incentive compensation plan, which we weighted at 30% for our NEOs. |

  39. 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. |

  40. Compensation Governance Practices

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

  41. Compensation Governance Practices

    | ● | No option re-pricing. Our equity incentive plan does not permit options or stock appreciation rights to be repriced to a lower exercise price without the approval of our stockholders, except in connection with certain changes to our capital structure. |

  42. Executive Compensation Program and Processes

    Executive Compensation Program and Processes Participants Compensation Committee Our Compensation Committee, with input from our management and one or more independent compensation consultants, establishes, updates and administers our executive compensation program. Our Compensation Committee establishes our compensation philosophy and objectives, oversees the design and administration of our executive compensation program, establishes the elements and mix of total compensation, sets the parameters and specific target metrics of our performance-based incentive compensation plan, and determines the target compensation of our executive officers. Our Compensation Committee has the authority to retain independent counsel, advisors and other experts to assist it in the compensation-setting process and receives adequate funding to engage those service providers. Independent Compensation Consultants Our Compensation Committee engaged Korn Ferry as its independent advisor starting in 2013 following a competitive request for proposal from three different compensation consultants. Korn Ferry was selected based on its expertise and skilled team dedicated to meet the needs of our Compensation Committee and its experience with alcohol production and other companies closely tied to agriculture and commodity businesses. Korn Ferry continued to provide independent advisor services to our Compensation Committee through part of 2023. During 2023, after a thorough analysis of compensation consultants who responded to our request for proposal, our Compensation Committee engaged Pay Governance as its new independent advisor for its compensation review. Pay Governance was selected based on its insightful responses to our request for proposal and subsequent interview with our selection committee, its experience with similarly situated public companies with comparable revenues and commodity-based businesses, and its expertise and skilled team dedicated to meet the needs of our Compensation Committee. Our compensation consultants furnished independent data, market analyses and advice to our Compensation Committee concerning executive compensation, including regarding the competitiveness of compensation plan design and evolving executive compensation trends and practices. Pay Governance attends and participates in Compensation Committee meetings from time to time as and when requested by our Compensation Committee. Pay Governance also advises our Compensation Committee on the principal aspects of our executive compensation program, including the implementation of our compensation philosophy and objectives, and specific elements of executive compensation. In evaluating Pay Governance’s independence, our Compensation Committee considered multiple factors. In particular, our Compensation Committee reviewed all services Pay Governance provided to Alto Ingredients since our business relationship commenced. These services included consulting services and market benchmarking to help us determine appropriate compensation for our NEOs. Compensation consultant services also included dilution modeling for our equity incentive plan and advice concerning our long-term equity incentive compensation. The fees for these consulting services were not segregated between consulting services in respect of NEO compensation and consulting services in respect of non-NEO personnel compensation. In total, fees paid to Korn Ferry and Pay Governance for 2023 were approximately $8,500 and $36,600, respectively. We did not engage any compensation consultant, and no fees were paid to any compensation consultant, in respect of any services for 2023 and 2024 other than for work with our Compensation Committee and management to help us determine appropriate compensation for those years for our NEOs. We had no compensation consultant expenses for 2022. During 2024, fees paid to Pay Governance were approximately $7,800. Pay Governance benchmarked top executives pay against peers, reviewed our 2024 annual and long-term incentive plan designs, and addressed questions regarding stock ownership guidelines. In evaluating the independence of our compensation consultants, our Compensation Committee also considered the internal mechanisms and policies of the compensation consultants to ensure their ability to provide objective advice, including that:

  43. Executive Compensation Program and Processes

    | ● | our compensation consultants are hired by the Compensation Committee and report directly to the Compensation Committee; and |

  44. Executive Compensation Program and Processes

    | ● | our compensation consultants each have a broad base of clients, which reduces reliance on any specific account for achieving their respective business goals. |

  45. Executive Compensation Program and Processes

    | What We Heard | How We Have Addressed | | Use separate metrics in incentive plans. | We adopted separate metrics for our annual cash incentive compensation (STI) and long-term equity incentive compensation (LTI) programs. | | Discuss responsiveness to stockholder feedback. | We expanded disclosure concerning our stockholder input, practices, governance and ESG matters. | | Adopt a clawback policy. | We adopted a compensation recovery (clawback) policy to allow the Board to recover annual cash or long-term equity incentive awards in connection with a material financial restatement. | | Make a meaningful portion of long-term equity incentive compensation vest based on performance. | For 2024, 25% of our LTI grants to our executive officers were tied to our performance as measured by Adjusted EBITDA ROA. In 2025, 50% of our LTI grants to our executive officers are tied to our performance as measured by Adjusted EBITDA ROA. In addition, for 2025, our Compensation Committee approved an STI program under which the payout of the STI award is based on three elements: our financial performance, the attainment of KPIs, and the NEO’s individual performance. |

  46. Executive Compensation Program and Processes

    | ● | annual cash incentive compensation; and |

  47. Executive Compensation Program and Processes

    | ● | long-term equity incentive compensation. |

  48. 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 2024 were based on three elements: company financial performance, company KPIs 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 2024 payout structure under our annual cash incentive compensation plan for our NEOs is set forth below:

  49. Executive Compensation Program and Processes

    | Target ($)x | Performance Factor | = | Overall Payout | | ● Target $ = % of base salary ● NEO Target %: ➢ CEO: 80% ➢ Other NEOs: 60% | ● Financial performance: ➢ 50% weight ➢ Min/max payout for Adjusted EBITDA: 0%/200% of target ● KPI performance: ➢ 30% weight ➢ Min/max payout: 0%/200% of target ● Individual performance: ➢ 20% weight ➢ Min/max payout: 0%/100% of target | | ● Minimum payout: 0% of target ● Target Payout: 100% of target ● Maximum payout: 180% of target |

  50. Executive Compensation Program and Processes

    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 plan. Each time-vested 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. Time-vested 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 plan, only to the extent we satisfy the minimum financial performance criteria. In making long-term equity incentive awards, our Compensation Committee sets a target value for the award for each executive officer based on its judgment about the factors used in setting executive officer total compensation described under “Compensation Philosophy and Objectives” above as well as our Compensation Committee’s judgment regarding the desired mix of base salary, annual cash incentives and long-term equity incentives. Our Compensation Committee also considers outstanding vested and unvested equity awards to executive officers, the stock ownership levels of executive officers and the potential dilutive effect on our stockholders. For annual grants, once our Compensation Committee determines the target value of a recipient’s long-term equity incentive award, we establish 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 later date during our annual compensation decision-making cycle. We chose the date of March 15th to avoid the appearance of market-timing and because it is a consistent date year-to-year. However, the number of shares granted multiplied by the closing price of a share of our common stock on the date of grant is the valuation model we use for our financial statements determined in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718, Stock Compensation. For this reason, the long-term equity incentive compensation target amounts for our NEOs differ from the actual amounts reflected in the Stock Awards column in the Summary Compensation Table below. See “Individual Executive Officer Compensation Targets” and “Summary Compensation Table” below. Performance-Based Equity Incentive Compensation Plan Our Compensation Committee adopted, in March 2024, a performance-based equity incentive compensation plan to be administered under our 2016 Stock Incentive Plan. The compensation program applies to our executive officers and is designed to tie certain equity incentive compensation to our financial performance. Under the compensation program, the Compensation Committee may grant awards to our executive officers. The awards consist of performance-based grants of restricted stock that vest upon the attainment of predetermined financial targets and are additionally subject to time-based vesting. Our Compensation Committee selected the financial performance measure of Adjusted EBITDA ROA to determine payouts under the program. The Compensation Committee has the discretion to define and determine Adjusted EBITDA ROA. The Compensation Committee currently defines Adjusted EBITDA the same as under our annual cash incentive compensation plan. Adjusted EBITDA ROA is calculated as (1) Adjusted EBITDA, divided by (2) average gross fixed assets after deducting construction in progress and capitalized interest. We will determine Adjusted EBITDA for each calendar month and average gross fixed assets after deducting construction in progress and capitalized interest as of the end of each calendar month. The sum of the Adjusted EBITDA ROA for the twelve calendar months will represent annual Adjusted EBITDA ROA. Our long-term equity incentive compensation plan for 2024 was comprised of 25% of these performance-based equity incentive awards and 75% of time-vested equity incentive awards. Our long-term equity incentive compensation plan for 2025 is comprised of 50% of these performance-based equity incentive awards and 50% of time-vested equity incentive awards. The Compensation Committee expects to make additional grants under the program in future years and anticipates maintaining the proportion of awards at 50% performance-based equity incentive awards and 50% time-vested equity incentive awards. March 2024 Awards For 2024, the Compensation Committee established Adjusted EBITDA ROA amounts at threshold, target and maximum values, which would determine the amount of any payouts of restricted stock depending on the levels attained. There would be no payout under the compensation program if the threshold Adjusted EBITDA ROA was not attained. If Adjusted EBITDA ROA fell between established levels, the amount of any payouts of restricted stock would be calculated on a straight-line basis and determined based on where Adjusted EBITDA ROA falls between the two values, but in all cases, subject to the minimum threshold. On March 20, 2024, we made the following awards under our performance-based equity incentive compensation plan that may be paid out in the following amounts of restricted stock to our executive officers in consideration of services to be provided and based on the attainment of Adjusted EBITDA ROA amounts for 2024, 2025 and 2026. See also the “Grants of Plan-Based Awards – 2024” table below.

  51. Executive Compensation Program and Processes

    Of the amounts set forth above, 33% of the executive officer’s award is eligible to be earned for 2025, 33% of the executive officer’s award is eligible to be earned for 2026 and 34% of the executive officer’s award is eligible to be earned for 2027, in each case based on the attainment of a minimum Adjusted EBITDA ROA threshold, and subject to the executive officer’s continued service through the time-based vesting period that ends in early 2028. The Adjusted EBITDA ROA threshold and amounts for 2025 are set forth below. Adjusted EBITDA ROA Amounts Our Compensation Committee established the following Adjusted EBITDA ROA levels for 2024 and 2025 and will establish in the future the Adjusted EBITDA ROA levels for 2026 and 2027. Year Ended December 31, 2024

  52. Executive Compensation Program and Processes

    | Performance-Based LTI | Threshold | Target | Maximum | | 2024 Adjusted EBITDA ROA | 4.80% | 5.20% | 5.60% | | % of Target Shares Earned | 20.00% | 100.00% | 200.00% |

  53. Executive Compensation Program and Processes

    | Performance-Based LTI | Threshold | Target | Maximum | | 2025 Adjusted EBITDA ROA | 1.05% | 5.26% | 10.53% | | % of Target Shares Earned | 20.00% | 100.00% | 200.00% |

  54. Executive Compensation Program and Processes

    For 2025, our Compensation Committee also established intermediate achievement levels of Adjusted EBITDA ROA of 2.74%, 4.21% and 7.37% that, if achieved, would result in a percentage of target shares earned of 52%, 80% and 140%, respectively. If Adjusted EBITDA ROA falls between established levels, the amount of any payouts of restricted stock will be calculated on a straight-line basis and determined based on where Adjusted EBITDA ROA falls between the two values, but in all cases, subject to the minimum threshold. Timing of Stock Option and other Equity Awards Awards of stock options, stock appreciation rights, or SARs, and/or similar option-like instruments are not part of our current equity incentive award program or other current equity incentive grant practices. Although we do not have a formal policy regarding the timing of awards of stock options, stock appreciation rights, or SARs, and/or similar option-like instruments to our NEOs, we do not make these awards or any other form of equity compensation in anticipation of the release of material, non-public information. Similarly, we do not time the release of material, non-public information based on stock option, SARs or other equity award grant dates for the purpose of affecting the value of any NEO award. In 2024, none of our NEOs were granted any options to purchase shares of our common stock, SARs or similar option-like instruments and we did not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation. 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 Internal Revenue Code Section 401(k). In 2024, 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 $20,700. 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.

  55. Compensation Decisions for 2024

    Compensation Decisions for 2024 Our Compensation Committee established compensation for our NEOs in 2024 in a manner consistent with our executive compensation philosophy and objectives. Our Compensation Committee made its annual compensation decisions for 2024 in March 2024 and March 2025. Our Compensation Committee’s decisions were based upon its judgment about our financial and other business performance for 2023, expected and actual financial and other business performance for 2024, 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 approximately the 50th percentile relative to our peer group companies based on the historical data provided by our compensation consultant in 2020. Our Compensation Committee conducted a thorough evaluation and redesign of our compensation program for our NEOs which underscores our Compensation Committee’s steadfast dedication to aligning executive compensation with our financial results and in accordance with our pay-for-performance philosophy. For 2024, this redesign includes:

  56. Compensation Decisions for 2024

    | ● | an increase in STI targets from 70% to 80% for our CEO and from 50% to 60% for our other NEOs; |

  57. Compensation Decisions for 2024

    | ● | a new performance-based STI element based on KPIs; and |

  58. Compensation Decisions for 2024

    | ● | a reduction in time-vested LTI compensation targets and an increase in performance-based LTI compensation targets. |

  59. Compensation Decisions for 2024

    For some NEOs, their targeted total compensation exceeds the 50th percentile because their target compensation has increased over time while our historical reference data has not been updated since 2020. Our Compensation Committee also recognizes that the current base pay of our NEOs is generally below the 50th percentile of our third-party survey data provided in 2020. This is generally consistent with our Compensation Committee’s intention to provide performance incentive opportunities that allow our NEOs to earn compensation at or above the 50th percentile only during years when we meet or achieve our financial benchmarks. Our Compensation Committee believes this approach serves the best interests of our stockholders and supports our long-term strategic objectives by ensuring our pay structure remains equitable and responsible, and directly reflects the financial health and performance of our business. More recent compensation benchmark data obtained from a relevant peer group indicates that our NEOs’ total targeted compensation remains below the 50th percentile. However, our Compensation Committee believes that additional peer group analysis and improved financial performance are both necessary before considering additional market adjustments to our NEOs’ base salaries and incentive compensation. Base Salary Our Compensation Committee made merit adjustments of 4% to our executive officers’ base salaries in 2024. In addition, our Compensation Committee made market adjustments to the base salaries of Robert R. Olander, our Chief Financial Officer, and James R. Sneed, our Chief Commercial Officer. Todd E. Benton’s salary was increased effective April 1, 2024 upon his appointment as our Chief Operating Officer. Targeted base salaries for 2024 were at approximately the 25th percentile relative to base salaries of comparable executives among our third-party survey group companies based on the historical market data provided by our compensation consultant in 2020. Annual Cash Incentive Compensation Our Compensation Committee targeted 2024 annual cash incentive compensation at 80% of base salary for our President and Chief Executive Officer and at 60% of base salary for each of our Chief Operating Officer, Chief Financial Officer, Chief Legal Officer and Secretary, and Chief Commercial Officer. The targeted 2024 annual cash incentive compensation for our Chief Operating Officer was, however, prorated for the partial period during which he served in that capacity. These levels were increased as market adjustments from the targeted percentage bonus amounts included in each NEO’s employment agreement. Targeted annual cash incentive compensation for 2024 was between the 25th and 50th percentiles, or slightly higher, relative to annual cash incentive compensation of comparable executives among our third-party survey group companies based on the historical market data provided by our compensation consultant in 2020. As discussed above, awards under our annual cash incentive compensation plan for 2024 were based on three elements: company financial performance, company KPI performance and the NEO’s individual performance. For 2024, our Compensation Committee weighted for each of our NEOs, company financial performance at 50%, company KPI performance at 30% 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 efforts. Financial Performance Our Compensation Committee established our 2024 financial performance goal of Adjusted EBITDA of $40,000,000 based on our financial projections determined early in the year. Our Adjusted EBITDA goal of $40,000,000 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 2024 compared to our Adjusted EBITDA goal of $40,000,000. Our Adjusted EBITDA goal of $40,000,000 for 2024 was set below our goal for 2023 because, despite optimism around our potential 2024 performance, we expected a more challenging market environment compared to 2023 and therefore lower Adjusted EBITDA for 2024. Notably, our Adjusted EBITDA goal of $40,000,000 for 2024 was well above our actual Adjusted EBITDA for 2023. Our Compensation Committee approved a sliding scale of achievement and payout opportunities under which lower actual Adjusted EBITDA for 2024 corresponded to lower levels of goal achievement and lower payouts, subject to a minimum Adjusted EBITDA threshold; and higher actual Adjusted EBITDA for 2024 corresponded to higher levels of goal achievement and higher payouts, subject to a maximum payout. The Compensation Committee established for 2024 a targeted payout amount of $4,050,000 if we achieved our Adjusted EBITDA goal of $40,000,000, achieved our KPI goals at target and all personnel covered by the plan attained all of their individual performance goals. The targeted payout amount of $4,050,000 was comprised of $1,797,000 attributable to financial performance, $537,000 attributable to company KPI performance and $1,716,000 attributable to individual performance. The Compensation Committee established for 2024 a maximum aggregate plan pool of $6,383,000 comprised of $3,594,000 attributable to financial performance, $1,073,000 attributable to company KPI performance and $1,716,000 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 2024 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 $2,333,000 difference between the maximum aggregate plan pool of $6,383,000 and the targeted payout amount of $4,050,000 was available if our actual Adjusted EBITDA for 2024 equaled or exceeded $75,000,000, or 187.5% of our Adjusted EBITDA goal of $40,000,000. We had to attain minimum Adjusted EBITDA of $25,000,000 for 2024, or 62.5% 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 2024, 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 $3,594,000; 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 $40,000,000, subject to minimum Adjusted EBITDA of $25,000,000 for 2024. 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 $40,000,000, subject to a maximum payout of $3,594,000 corresponding to our Adjusted EBITDA ceiling of $75,000,000 for 2024. KPI Performance

  60. Compensation Decisions for 2024

    The threshold, targeted and maximum payout amounts for the KPI performance element were $268,000, $537,000 and $1,073,000, respectively. We had to attain a minimum of three of our seven KPIs at threshold levels to result in any payout under the KPI performance element. As with our financial performance element, this feature was intended to assure that we achieved an acceptable minimum level of KPI performance before annual cash incentives would be paid to any participant, including our NEOs, under the KPI performance element of the plan. As an additional limitation, if we did not attain minimum Adjusted EBITDA of $25,000,000 for 2024, our NEOs could not receive more than 100% of targeted payout amounts for the company KPI performance element even if we achieved more than four of our KPI goals. For 2024, the payout levels for the KPI performance element were as follows:

  61. Compensation Decisions for 2024

    | KPI Goals Achieved | Payout % | | Two or fewer | 0% | | Three | 50% | | Four (target) | 100% | | Five | 133% | | Six | 167% | | Seven | 200% |

  62. Compensation Decisions for 2024

    Individual Performance The targeted and maximum payout for the individual performance element was $1,716,000 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 2024 long-term equity incentive compensation for our NEOs at a level comparable to similarly situated personnel at the 50th percentiles relative to our third-party survey group companies based on the historical market data provided by our compensation consultant in 2020. 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, 2024 but then selected the higher price of $3.00 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 2024 based on $3.00 per share, which was higher than the closing price of a share of our common stock on March 15th. As noted above, we use 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 and Results Target direct compensation for each of our NEOs for 2024 is set forth in the tables below. Specific results against performance objectives that influenced the amount and mix of our NEOs’ total direct compensation for 2024 included our Adjusted EBITDA for 2024, which fell short of the Adjusted EBITDA threshold of $25,000,000, our failure to achieve a minimum of three of our seven KPIs at threshold levels, 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 2024 primarily due to low crush margins from challenging market conditions and expenses from our efforts to install our high protein and corn oil technology at our Magic Valley facility. As a result, we did not make any payments to our NEOs under the financial performance element of our annual cash incentive compensation plan. We also did not achieve at least three of seven of our KPI performance measures at threshold or target levels for 2024 primarily due to those same challenging market conditions and expenses. As a result, we did not make any payments to our NEOs under the KPI 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 important strategic and other initiatives in 2024, as noted in the 2024 business highlights summarized above, resulting in target payouts under that measure. See “Compensation Discussion and Analysis—Executive Summary—2024 Business Highlights” above. Our Compensation Committee also determined that our NEOs exhibited exemplary leadership and unwavering commitment, and met their individual performance goals with the following accomplishments:

  63. Compensation Decisions for 2024

    | ○ | provided new annual metric targets for the STI and LIT components of our executive compensation program; and |

  64. Compensation Decisions for 2024

    | ○ | oversaw new annual metric targets for the STI and LIT components of our executive compensation program; and |

  65. Compensation Decisions for 2024

    | | | | Change | | | Bryon T. McGregor | 2024 | 2023 | Dollars | Percent | | Base Salary* | $546,000 | $525,000 | $21,000 | 4.0% | | Annual Cash Incentive Compensation** | | | | | | Target Percent of Base Salary | 80.0% | 49.1% | | 63.2% | | Target Dollars | $436,800 | $257,683 | $179,117 | 69.5% | | Long-Term Equity Incentive Compensation** | | | | | | Target Percent of Base Salary | 170.9% | 104.8% | | 63.1% | | Target Dollars | $933,000 | $550,000 | $383,000 | 69.6% | | Target Total Direct Compensation | $1,915,800 | $1,332,683 | $583,117 | 43.8% |

  66. Compensation Decisions for 2024

    | | | | Change | | | Todd E. Benton | 2024 | 2023 | Dollars | Percent | | Base Salary* | $350,000 | $273,570 | $76,430 | 27.9% | | Annual Cash Incentive Compensation | | | | | | Target Percent of Base Salary | 60.0% | 30.0% | | 100.0% | | Target Dollars | $210,000 | $82,071 | $127,929 | 155.9% | | Long-Term Equity Incentive Compensation | | | | | | Target Percent of Base Salary | 95.1% | 27.4% | | 247.1% | | Target Dollars | $333,000 | $75,000 | $258,000 | 344.0% | | Target Total Direct Compensation | $893,000 | $430,641 | $462,359 | 107.4% |

  67. Compensation Decisions for 2024

    | | | | Change | | | Robert R. Olander | 2024 | 2023 | Dollars | Percent | | Base Salary* | $363,000 | $325,000 | $38,000 | 11.7% | | Annual Cash Incentive Compensation** | | | | | | Target Percent of Base Salary | 60.0% | 37.1% | | 61.7% | | Target Dollars | $217,800 | $120,735 | $97,065 | 80.4% | | Long-Term Equity Incentive Compensation** | | | | | | Target Percent of Base Salary | 91.7% | 59.0% | | 55.4% | | Target Dollars | $333,000 | $191,667 | $141,333 | 73.7% | | Target Total Direct Compensation | $913,800 | $637,402 | $276,398 | 43.4% |

  68. Compensation Decisions for 2024

    | | | | Change | | | Auste M. Graham | 2024 | 2023 | Dollars | Percent | | Base Salary* | $364,000 | $350,000 | $14,000 | 4.0% | | Annual Cash Incentive Compensation | | | | | | Target Percent of Base Salary | 60.0% | 50.0% | | 20.0% | | Target Dollars | $218,400 | $175,000 | $43,400 | 24.8% | | Long-Term Equity Incentive Compensation | | | | | | Target Percent of Base Salary | 78.8% | 61.4% | | 28.3% | | Target Dollars | $287,000 | $215,000 | $72,000 | 33.5% | | Target Total Direct Compensation | $869,400 | $740,000 | $129,400 | 17.5% |

  69. Compensation Decisions for 2024

    | | | | Change | | | James R. Sneed | 2024 | 2023 | Dollars | Percent | | Base Salary* | $362,586 | $329,409 | $33,177 | 10.1% | | Annual Cash Incentive Compensation | | | | | | Target Percent of Base Salary | 60.0% | 50.0% | | 20.0% | | Target Dollars | $217,552 | $164,705 | $52,847 | 32.1% | | Long-Term Equity Incentive Compensation | | | | | | Target Percent of Base Salary | 79.2% | 65.3% | | 21.3% | | Target Dollars | $287,000 | $215,000 | $72,000 | 33.5% | | Target Total Direct Compensation | $867,138 | $709,114 | $158,024 | 22.3% |

  70. 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; |

  71. COMPENSATION COMMITTEE REPORT

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

  72. COMPENSATION COMMITTEE REPORT

    | ● | vesting of a significant portion of long-term equity incentive awards tied to financial performance; |

  73. COMPENSATION COMMITTEE REPORT

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

  74. COMPENSATION COMMITTEE REPORT

    | ● | caps on annual cash incentive compensation; |

  75. COMPENSATION COMMITTEE REPORT

    | ● | broad performance ranges for minimum, target and maximum financial performance goals with, after the minimum financial performance goals are 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; |

  76. 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; and |

  77. COMPENSATION COMMITTEE REPORT

    | ● | the KPI performance measures we utilize under our annual cash incentive compensation plan are corn oil yield; ratio of protein feed (dry) production; ethanol yield; SG&A expenses as a percentage of alcohol production volume; production uptime; repairs and maintenance expense per gallon produced; and cost savings. These KPIs account for controllable factors such operational efficiency. |

  78. 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) | 2024 | $537,115 | $— | $615,760(5) | $87,360 | $22,500 | $1,262,735 | | President and | 2023 | $427,346 | $— | $846,000 | $62,756(6) | $21,400 | $1,357,502 | | Chief Executive Officer | 2022 | $351,626 | $— | $312,151 | $35,200 | $21,400 | $720,377 | | Todd E. Benton(7) | 2024 | $331,103 | $— | $219,760(8) | $36,000 | $22,500 | $609,363 | | Chief Operating Officer | 2023 | $270,737 | $— | $56,250 | $24,400 | $19,256 | $370,643 | | | 2022 | $260,311 | $— | $93,646 | $23,525 | $21,400 | $398,882 | | Robert R. Olander(9) | 2024 | $354,231 | $— | $219,760(8) | $43,560 | $22,500 | $640,051 | | Chief Financial Officer | 2023 | $292,843 | $— | $313,065 | $27,974(10) | $21,387 | $655,269 | | | 2022 | $261,220 | $— | $93,646 | $23,625 | $21,400 | $399,891 | | Auste M. Graham(11) | 2024 | $360,769 | $— | $189,407(12) | $43,680 | $20,700 | $614,556 | | Chief Legal Officer and | 2023 | $346,154 | $— | $161,250 | $35,000 | $19,800 | $562,204 | | Secretary | 2022 | $298,750 | $100,000(13) | $423,953 | $29,900 | $9,750 | $862,353 | | James R. Sneed | 2024 | $349,479 | $— | $189,407(12) | $43,510 | $22,500 | $604,896 | | Chief Commercial Officer | 2023 | $329,409 | $— | $161,250 | $32,941 | $21,400 | $545,000 | | | 2022 | $325,982 | $— | $237,233 | $32,600 | $21,400 | $617,215 |

  79. COMPENSATION COMMITTEE REPORT

    | (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. |

  80. COMPENSATION COMMITTEE REPORT

    | (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. |

  81. COMPENSATION COMMITTEE REPORT

    | (4) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding Messrs. McGregor, Kandris and Koehler for the applicable years during which they served as our PEO), 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 during the applicable year (excluding Messrs. McGregor, Kandris and Koehler for the applicable years during which they served as our PEO). 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 Messrs. McGregor, Kandris and Koehler for the applicable years during which they served as our PEO) for each year to determine the compensation actually paid to them, using the same methodology described above in Note 2: |

  82. COMPENSATION COMMITTEE REPORT

    | ● | KPIs to link executive compensation actually paid to our NEOs to our performance under our annual cash incentive compensation plan; and |

  83. COMPENSATION COMMITTEE REPORT

    | ● | one or more financial performance measures to link executive compensation actually paid to our NEOs to our performance through performance-based equity incentive awards. |