DEF 14A of Performance Food Group Co
Filed Oct 10, 2023 · FY20230001308179-23-001027
THE BOARD OF DIRECTORS OF PERFORMANCE FOOD GROUP COMPANY (THE “BOARD” OR “BOARD OF DIRECTORS”)
THE BOARD OF DIRECTORS OF PERFORMANCE FOOD GROUP COMPANY (THE “BOARD” OR “BOARD OF DIRECTORS”)
THE BOARD OF DIRECTORS OF PERFORMANCE FOOD GROUP COMPANY (THE “BOARD” OR “BOARD OF DIRECTORS”)
| | George L. Holm Chairman and Chief Executive Officer of Performance Food Group Other Current Public Company Boards: None | | Manuel A. Fernandez IND Lead Independent Director. Managing Director of SI Ventures. Former Chief Executive Officer of Gartner, Inc. Other Current Public Company Boards: Leggett & Platt, Incorporated Committees: Compensation, NCG, Technology | | Age: 68 Director Since: 2002 | | Age: 77 Director Since: 2017 | | | | Barbara J. Beck IND Executive Advisor to American Securities LLC Other Current Public Company Boards: Ecolab Inc. Committees: Compensation , NCG | | William F. Dawson, Jr. IND Chairman and CEO of Northway Partners LLC Other Current Public Company Boards: None Committees: Audit, Technology | | Age: 63 Director Since: 2019 | | Age: 59 Director Since: 2002 | | | | Laura Flanagan IND Chief Executive Officer of Ripple Foods Other Current Public Company Boards: Topgolf Callaway Brands Corp. Committees: Audit, Technology | | Matthew C. Flanigan IND Former EVP and Chief Financial Officer of Leggett & Platt, Incorporated Other Current Public Company Boards: Jack Henry & Associates, Inc. Committees: Audit , Technology | | Age: 55 Director Since: 2021 | | Age: 61 Director Since: 2019 | | | | Kimberly S. Grant IND Former Global Head of Restaurants and Bars for Four Seasons Hotels and Resorts Other Current Public Company Boards: None Committees: Compensation, NCG | | Jeffrey M. Overly IND Former Operating Partner of The Blackstone Group Other Current Public Company Boards: None Committees: Compensation, NCG | | Age: 52 Director Since: 2017 | | Age: 65 Director Since: 2013 | | | | David V. Singer IND Former Chief Executive Officer of Snyder’s-Lance, Inc. Other Current Public Company Boards: Brunswick Corporation Committees: Audit, Technology | | Randall N. Spratt IND Former Executive Vice President, Chief Information Officer and Chief Technology Officer of McKesson Corporation Other Current Public Company Boards: None Committees: Audit, Technology | | Age: 68 Director Since: 2019 | | Age: 71 Director Since: 2018 | |
THE BOARD OF DIRECTORS OF PERFORMANCE FOOD GROUP COMPANY (THE “BOARD” OR “BOARD OF DIRECTORS”)
| Age: 64 Director Since: 2020 | Warren M. Thompson IND Chairman of the Board and President of Thompson Hospitality Other Current Public Company Boards: Sizzle Acquisition Corp. Committees: Compensation, NCG | KEYS IND Independent Chair | | | | | | | Committees: Audit | Audit and Finance Committee | NCG | Nominating and Corporate Governance Committee | | | | Compensation | Human Capital and Compensation Committee | Technology | Technology and Cybersecurity Committee |
THE BOARD OF DIRECTORS OF PERFORMANCE FOOD GROUP COMPANY (THE “BOARD” OR “BOARD OF DIRECTORS”)
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COMPENSATION PRACTICES
COMPENSATION PRACTICES
COMPENSATION PRACTICES
| | WHAT WE DO | | Performance Driven Pay: We base a very high percentage of executive pay on Company performance through annual and long-term incentives that are capped. We require executives to achieve annual and long-term performance-based goals tied to stockholder value. Pay Aligned to Peers: We target median compensation levels and benchmark market data of our peer group companies when making executive compensation decisions. Annual Say-on-Pay: We hold an annual advisory Say-on-Pay vote concerning executive compensation. Clawbacks: Our clawback policy subjects sign-on grants, incentive cash, and/or equity awards to clawbacks in the event of a restatement of the financial statements or an error in the calculation of such incentive-based or equity-based compensation, regardless of fraud or misconduct. Stock Ownership Requirements: We apply mandatory stock ownership guidelines for executive officers and directors. Independent Compensation Consulting Firm reporting directly to the Human Capital and Compensation Committee (“Compensation Committee”): Our Compensation Committee engages an independent compensation consulting firm, that does not provide any other services to our Company, to provide counsel and evaluate and manage risk in our compensation programs. Double-Trigger Severance Agreements: We maintain double-trigger equity award vesting acceleration upon involuntary termination following a change in control (“CIC”). Annual Risk Assessment: We perform an annual risk assessment of our compensation programs with the assistance of our independent compensation consulting firm. | |
COMPENSATION PRACTICES
| | WHAT WE DON’T DO | | No excise tax gross-ups. No modified single-trigger or single-trigger CIC severance agreements (we only use double-trigger CIC severance provisions). No uncapped incentive compensation opportunities. No hedging of shares by our directors or employees, including our executive officers. No pledging of shares by our directors or executive officers. No excessive perquisites. No repricing of underwater stock options. No dividends provided on unearned performance awards. | |
COMPENSATION PRACTICES
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COMPENSATION PRACTICES
| MESSAGE FROM OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER | 03 | | PROXY SUMMARY | 04 | | CORPORATE GOVERNANCE AT PERFORMANCE FOOD GROUP | 13 | | PROPOSAL 01 Election of Directors | 13 | | The Board of Directors | 13 | | Director Nomination Process | 14 | | Director Qualifications and Expertise | 14 | | Nominees for Election to the Board of Directors | 17 | | Stockholder Nominations | 23 | | Board Tenure Policy | 23 | | The Board’s Role and Responsibilities | 23 | | Oversight of Risk Management | 24 | | Management Succession Planning | 25 | | Communications with the Board | 25 | | Code of Business Conduct | 25 | | Board Structure | 25 | | Selection of Chairman of the Board and Chief Executive Officer | 26 | | Lead Director | 26 | | Director Independence and Independence Determinations | 27 | | Executive Sessions | 27 | | Board Committees | 27 | | Special Committees | 31 | | Board Practices, Processes and Policies | 31 | | The Board of Directors and Certain Governance Matters | 31 | | Board Meetings and Attendance | 32 | | Board Performance Evaluations | 32 | | Director Orientation and Continuing Education | 33 | | Committee Charters and Corporate Governance Guidelines | 33 | | Director Service on Other Public Company Boards | 33 | | Transactions with Related Persons | 33 | | COMPENSATION OF DIRECTORS | 35 | | Director Compensation for Fiscal 2023 | 35 | | Stock Ownership Guidelines | 36 | | AUDIT MATTERS | 37 | | PROPOSAL 02 Ratification of Independent Registered Public Accounting Firm | 37 | | Audit and Non-Audit Fees | 37 | | Pre-Approval Policy for Services of Independent Registered Public Accounting Firm | 38 | | Report of the Audit and Finance Committee | 38 | | EXECUTIVE OFFICERS OF THE COMPANY | 39 | | STOCKHOLDER ENGAGEMENT | 42 | | Fiscal 2023 Stockholder Engagement Activities | 42 | | Key Takeaways from Our Stockholder Engagement | 43 | | CORPORATE SOCIAL RESPONSIBILITY | 44 | | EXECUTIVE COMPENSATION | 48 | | PROPOSAL 03 Advisory Vote on Named Executive Officer Compensation | 48 |
COMPENSATION PRACTICES
| 2023 Proxy Statement | 11 |
COMPENSATION PRACTICES
| Report of the Human Capital and Compensation Committee | 49 | | Compensation Committee Interlocks and Insider Participation | 49 | | Compensation Discussion and Analysis | 50 | | Business Highlights for Fiscal 2023 | 51 | | Executive Summary | 52 | | Executive Compensation Program Objectives and Overview | 52 | | Fiscal 2023 Executive Total Targeted Compensation Mix | 53 | | Fiscal 2023 Compensation Program Changes | 54 | | Executive Compensation Program Elements | 55 | | Base Salaries | 55 | | Cash Bonus Opportunities | 55 | | Long-Term Equity Incentive Awards | 57 | | Benefits and Perquisites | 59 | | Severance and Other Benefits | 60 | | Compensation Determination Process | 60 | | Annual Compensation Program Risk Assessment | 61 | | Hedging and Pledging Policies | 61 | | Clawback Policy | 62 | | Employment Agreements | 62 | | Summary of Employment Agreement of Mr. Holm | 62 | | Summary of Consulting Agreement of Mr. Hope | 62 | | Non-Qualified Deferred Compensation Plan | 63 | | Stock Ownership Guidelines | 64 | | Tax Impact on Compensation | 64 | | Section 409A of the Internal Revenue Code | 64 | | TABULAR EXECUTIVE COMPENSATION DISCLOSURE | 65 | | Summary Compensation Table | 65 | | Fiscal 2023 Grants of Plan-Based Awards | 66 | | Narrative to Summary Compensation Table and Fiscal 2023 Grants of Plan-Based Awards | 67 | | Outstanding Equity Awards at 2023 Fiscal Year-End | 67 | | Fiscal 2023 Option Exercises and Stock Vested | 69 | | Fiscal 2023 Pension Benefits | 69 | | Potential Payments Upon Termination or Change in Control | 69 | | Severance Arrangements and Restrictive Covenants | 70 | | Treatment of Equity Awards in Connection with a Change in Control or Qualifying Termination | 70 | | CEO Pay Ratio Disclosure | 73 | | Pay Versus Performance | 74 | | Relationship Between Pay and Financial Performance | 75 | | Financial Performance Measures | 76 | | EQUITY COMPENSATION PLAN INFORMATION | 77 | | OWNERSHIP OF SECURITIES | 78 | | Beneficial Ownership | 78 | | INSTRUCTIONS FOR THE VIRTUAL ANNUAL MEETING | 80 | | GENERAL INFORMATION | 81 | | Questions and Answers about Voting and the Annual Meeting | 81 | | Stockholder Proposals for the 2024 Annual Meeting | 84 | | Other Business | 85 | | APPENDIX A RECONCILIATION OF NON-GAAP ITEMS | 86 |
COMPENSATION PRACTICES
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COMPENSATION PRACTICES
| PROPOSAL 01 | Election of Directors |
COMPENSATION PRACTICES
| | Your Board of Directors recommends that you vote “FOR” the election of the 11 director nominees. |
COMPENSATION PRACTICES
Upon the recommendation of the Nominating and Corporate Governance Committee, the full Board of Directors has considered and nominated the following slate of director nominees to hold office for one year until our 2024 Annual Meeting of Stockholders (the “2024 Annual Meeting”) and until their successors have been elected and qualified, subject to their earlier death, resignation, or removal: George L. Holm, Barbara J. Beck, William F. Dawson, Jr., Manuel A. Fernandez, Laura Flanagan, Matthew C. Flanigan, Kimberly S. Grant, Jeffrey M. Overly, David V. Singer, Randall N. Spratt and Warren M. Thompson. Action will be taken at the Annual Meeting for the election of these 11 director nominees. Unless otherwise instructed, the individuals named in the form of proxy card (the “proxyholders”) included with this Proxy Statement intend to vote the proxies held by them “FOR” the election of George L. Holm, Barbara J. Beck, William F. Dawson, Jr., Manuel A. Fernandez, Laura Flanagan, Matthew C. Flanigan, Kimberly S. Grant, Jeffrey M. Overly, David V. Singer, Randall N. Spratt, and Warren M. Thompson. Each of these nominees has indicated that he or she is willing and able to serve as a director. If any of these nominees ceases to be a candidate for election by the time of the Annual Meeting (a contingency which the Board does not expect to occur), proxies may be voted by the proxyholders in accordance with the recommendation of the Board.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS The following information describes the offices held, other public company directorships and the term of service of each director nominee. Beneficial ownership of equity securities of the director nominees is shown under “Ownership of Securities.”
DIRECTOR NOMINEES
DIRECTOR NOMINEES
DIRECTOR NOMINEES
| | | | | BACKGROUND Mr. Holm has served as our Chief Executive Officer since September 2002, when he founded the Company and subsequently led the Company through its expansion into the broadline foodservice distribution industry with the Performance Food Group Company acquisition in May 2008. Additionally, in January 2019, Mr. Holm was named Chairman of the Board. Prior to joining the Company, he held various senior executive positions with Sysco Corporation, Alliant Foodservice and US Foods. Mr. Holm received a Bachelor of Science degree in business administration from Grand Canyon University. KEY EXPERIENCES We considered Mr. Holm’s experience as an executive in the U.S. foodservice distribution industry. Furthermore, we also considered how his additional role as our Chief Executive Officer brings management perspective to Board deliberations and provides valuable information about the status of our day-to-day operations. OTHER PUBLIC COMPANY DIRECTORSHIPS None. | | George L. Holm Age: 68 Director since: 2002 Committees: None | |
DIRECTOR NOMINEES
| | | | | BACKGROUND Mr. Fernandez serves as the Managing Director of SI Ventures, a venture capital firm focused on information technology and communications infrastructure. He has held that position with the firm since its inception in 1998. Mr. Fernandez served as Chief Executive Officer of Gartner, Inc., a leading research and advisory company, from 1991 to 1998, and Chairman of the Board of Directors of Gartner, Inc. from 1991 until 2001. He has also been Chairman and Chief Executive Officer of three technology-driven companies: Dataquest, Inc., Gavilan Computer Corporation and Zilog Incorporated. Mr. Fernandez has served on the board of directors of Leggett & Platt, Incorporated since 2014. He previously served on the board of directors of Brunswick Corporation from 1997 to 2020, Time, Inc. from 2014 to 2018, Flowers Foods, Inc. from 2005 to 2014, and Sysco Corporation from 2006 to 2013. Mr. Fernandez graduated from the University of Florida with a degree in electrical engineering and completed post-graduate work in solid-state engineering at the University of Florida. Mr. Fernandez currently serves as our Lead Independent Director. KEY EXPERIENCES We considered Mr. Fernandez’s extensive experience leading both public and private companies in foodservice and other industries, including three technology companies, allowing him to bring significant experience and knowledge to our Board regarding strategic planning, innovation, technology, acquisitions, corporate governance, distribution, operations, and human resources. OTHER PUBLIC COMPANY DIRECTORSHIPS Leggett & Platt, Incorporated PRIOR PUBLIC COMPANY DIRECTORSHIPS Brunswick Corporation Time, Inc. Flowers Foods, Inc. Sysco Corporation | | Manuel A. Fernandez Age: 77 Director since: 2017 Committees: Human Capital and Compensation; Nominating and Corporate Governance; Technology and Cybersecurity | |
DIRECTOR NOMINEES
| 2023 Proxy Statement | 17 |
DIRECTOR NOMINEES
| | | | | BACKGROUND Ms. Beck serves as an Executive Advisor to American Securities LLC, after retiring from her position as Chief Executive Officer of Learning Care Group, Inc., a global for-profit early education provider, which she held from March 2011 to June 2019. Learning Care Group is a portfolio company of American Securities LLC. Prior to joining Learning Care Group, Ms. Beck spent nine years as an executive of Manpower Inc., a world leader in the employment services industry. From 2006 to 2011, Ms. Beck was President of Manpower’s EMEA operations, overseeing Europe (excluding France), the Middle East and Africa. She previously served as Executive Vice President of Manpower’s U.S. and Canada business unit from 2002 to 2005. Prior to joining Manpower, Ms. Beck was an executive of Sprint, a global communications company, serving in various operating and leadership roles for 15 years. Since 2008, Ms. Beck has served on the board of directors of Ecolab Inc., a global provider of water, hygiene, and energy technologies and services to food, energy, healthcare, industrial, hospitality, and other markets. KEY EXPERIENCES We considered Ms. Beck’s extensive general management and operational experience, including as a tenured Chief Executive Officer, allowing her to contribute to our strategic vision particularly as it relates to value creation and innovative business strategies. Ms. Beck has significant knowledge of the impact of labor market trends on global and local economies and expertise in human capital management. Additionally, as a former executive at Sprint Corporation, Ms. Beck also gained expertise in the information technology field. OTHER PUBLIC COMPANY DIRECTORSHIPS Ecolab Inc. | | Barbara J. Beck Age: 63 Director since: 2019 Committees: Human Capital and Compensation (Chair); Nominating and Corporate Governance | |
DIRECTOR NOMINEES
| | | | | BACKGROUND Mr. Dawson is Chairman and Chief Executive Officer of Northway Partners LLC, a private investment firm. Prior to Northway Partners LLC, Mr. Dawson spent 21 years at Wellspring Capital Management Group LLC (“Wellspring”), a leading middle-market private equity firm. He was Chief Executive Officer from 2014 to 2020 and then Co-Executive Chairman from 2020 to 2021, when he retired from Wellspring. While at Wellspring, he served as the chair of Wellspring’s investment committee for 17 years. Mr. Dawson led or co-sponsored several of Wellspring’s most successful investments in distribution, consumer services, business services, healthcare, energy services, and industrial companies. Prior to joining Wellspring, Mr. Dawson was a partner at Whitney & Co., where he was head of the middle-market buyout group. Prior to that, Mr. Dawson spent 14 years at Donaldson, Lufkin & Jenrette Securities Corporation where he was most recently a managing director at DLJ Merchant Banking. Mr. Dawson received a Bachelor of Science degree from St. Francis College and an MBA from Harvard Business School. KEY EXPERIENCES We considered Mr. Dawson’s significant financial, investment, and operational experience from his involvement in Wellspring’s investments in numerous portfolio companies, as well as his many years of experience as a director of the Company and its predecessor. OTHER PUBLIC COMPANY DIRECTORSHIPS None. | | William F. Dawson, Jr. Age: 59 Director since: 2002 Committees: Audit and Finance; Technology and Cybersecurity | |
DIRECTOR NOMINEES
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DIRECTOR NOMINEES
| | | | | BACKGROUND Ms. Flanagan is the Chief Executive Officer of Ripple Foods, a plant-based food and beverage company, and has served on the board of Topgolf Callaway Brands Corp. since 2018. Ms. Flanagan previously served on the board of Core-Mark International from 2016 to 2021, serving on the Compensation Committee and as chair of the Nominating and Governance Committee. She served as Chief Executive Officer of Foster Farms, the West Coast leader in branded and private label poultry, from 2016 to February 2019. She was previously the President of the Snacks Division of ConAgra Foods, Inc. (“ConAgra”) from 2011 until 2014, and served as President of ConAgra’s Convenient Meals Division from 2008 until 2011. Prior to joining ConAgra in 2008, Ms. Flanagan was Vice President and Chief Marketing Officer for Tropicana® Shelf Stable Juices at PepsiCo Inc. from 2005 to 2008. Ms. Flanagan also held various marketing leadership positions at General Mills, Inc. and PepsiCo Inc. from 1996 to 2005. Ms. Flanagan has an MBA from Stanford Graduate School of Business and a B.S. in Engineering from Case Western Reserve University. KEY EXPERIENCES We considered Ms. Flanagan’s extensive general management and operational experience, including as a tenured Chief Executive Officer, and her knowledge, experience and expertise in the food and beverage industry, as well as her experience on other public company boards. Her over 25 years of experience in the food and beverage industry enables her to bring valuable perspectives of a food and beverage industry customer to our Board of Directors. She also has functional expertise in human capital management, strategic planning, consumer sales/marketing, sell-through retail, mergers and acquisitions, operations and logistics, and ESG matters. OTHER PUBLIC COMPANY DIRECTORSHIPS Topgolf Callaway Brands Corp. PRIOR PUBLIC COMPANY DIRECTORSHIPS Core-Mark International | | Laura Flanagan Age: 55 Director since: 2021 Committees: Audit and Finance; Technology and Cybersecurity | |
DIRECTOR NOMINEES
| | | | | BACKGROUND Mr. Flanigan retired in 2019 from his role as Executive Vice President & Chief Financial Officer of Leggett & Platt, Incorporated (“Leggett & Platt”), a global manufacturer of engineered components and products, where he also served on the board of directors for nearly 10 years. Mr. Flanigan was appointed Senior Vice President of Leggett & Platt in 2005 and became Chief Financial Officer in 2003. From 1999 until 2003, he served as President of the Office Furniture and Plastics Components Groups of Leggett & Platt. Mr. Flanigan currently serves as Vice Chairman of the Board and Lead Director of Jack Henry & Associates, Inc., a leading financial technology company. He has served on the board of directors of Jack Henry & Associates since 2007, and he was appointed Lead Director by the independent directors of Jack Henry & Associates in 2012. He also served on the board of directors, including the audit committee and the transaction committee, of Fast Radius, Inc., a cloud manufacturing and digital supply chain company, in 2022. KEY EXPERIENCES We considered Mr. Flanigan’s substantial executive experience of 16 years as the Chief Financial Officer of a large, publicly-traded company in enabling him to bring important perspectives to our Board of Directors on financial matters, business analytics, compliance, risk management, public reporting, and investor relations. OTHER PUBLIC COMPANY DIRECTORSHIPS Jack Henry & Associates PRIOR PUBLIC COMPANY DIRECTORSHIPS Fast Radius, Inc. | | Matthew C. Flanigan Age: 61 Director since: 2019 Committees: Audit and Finance (Chair); Technology and Cybersecurity | |
DIRECTOR NOMINEES
| 2023 Proxy Statement | 19 |
DIRECTOR NOMINEES
| | | | | BACKGROUND Ms. Grant is the former Global Head of Restaurants and Bars for Four Seasons Hotels and Resorts (“Four Seasons”), where she served as the chief executive leading all worldwide food and beverage operations for the company. Ms. Grant previously served as the Chief Executive Officer of ThinkFoodGroup, a global hospitality management company, which owns and operates innovative dining concepts created by two-star Michelin awarded chef José Andrés, from September 2014 to April 2020. Prior to this role, Ms. Grant was the President and Chief Operations Officer of Ruby Tuesday Inc., where she assumed various operations and finance leadership roles over her 21 years. Ms. Grant earned a Master of Science in Banking and Financial Services Management from Boston University and a Bachelor of Science in Hotel and Restaurant Management from Thomas Edison State University, and she has attended various executive education programs at UC Berkeley School of Law (ESG), Stanford Law School, and Harvard Business School while a director of Performance Food Group. KEY EXPERIENCES We considered Ms. Grant’s knowledge, experience, and expertise in the restaurant and hospitality industry and her significant experience in operations, finance, and investments. Her over 25 years of experience in the restaurant and hospitality industry enables her to bring valuable perspectives of a foodservice industry customer to our Board of Directors. OTHER PUBLIC COMPANY DIRECTORSHIPS None. | | Kimberly S. Grant Age: 52 Director since: 2017 Committees: Human Capital and Compensation; Nominating and Corporate Governance | |
DIRECTOR NOMINEES
| | | | | BACKGROUND Mr. Overly is retired, having most recently served as an Operating Partner at The Blackstone Group (“Blackstone”) from 2008 to 2018. Before joining Blackstone in 2008, Mr. Overly was Vice President of Global Fixture Operations at Kohler Company. Prior to that, he served 25 years at General Motors Corporation and Delphi Corporation in numerous operations and engineering positions. Mr. Overly has a Bachelor of Science degree in Industrial Management from the University of Cincinnati and a Masters in Business from Central Michigan University. KEY EXPERIENCES We considered Mr. Overly’s significant operational and strategic planning experience in public companies and his significant corporate governance expertise gained from his active involvement in Blackstone’s investments in numerous portfolio companies. OTHER PUBLIC COMPANY DIRECTORSHIPS None. | | Jeffrey M. Overly Age: 64 Director since: 2013 Committees: Human Capital and Compensation; Nominating and Corporate Governance (Chair) | |
DIRECTOR NOMINEES
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DIRECTOR NOMINEES
| | | | | BACKGROUND Mr. Singer retired in 2013 as the Chief Executive Officer of Snyder’s-Lance, Inc. (“Synder’s-Lance”), a manufacturer and marketer of snack foods throughout the United States and internationally. Mr. Singer served as Chief Executive Officer and as a director of Snyder’s-Lance from its formation in 2010 until his retirement in 2013. He was the President and Chief Executive Officer of Lance, Inc. from 2005 until its merger with Snyder’s of Hanover, Inc. (“Snyder’s”) in 2010. Mr. Singer also served as a director of Lance, Inc. from 2003 until its merger with Snyder’s. He previously served as Executive Vice President and Chief Financial Officer of Coca-Cola Bottling Co. Consolidated, a beverage manufacturer and distributor, from 2001 to 2005. Presently, Mr. Singer also serves on the board of directors of Brunswick Corporation, and also previously served on the board of directors of Flowers Foods, Inc., Hanesbrands, Inc. and SPX Flow, Inc. KEY EXPERIENCES We considered Mr. Singer’s experience as a Chief Financial Officer and his board governance, management and financial experience, as well as his significant knowledge of the food and beverage industries. He also offers expertise in corporate finance and mergers and acquisitions. OTHER PUBLIC COMPANY DIRECTORSHIPS Brunswick Corporation PRIOR PUBLIC COMPANY DIRECTORSHIPS Snyder’s-Lance, Inc. Flowers Foods, Inc. Hanesbrands, Inc. SPX Flow, Inc. | | David V. Singer Age: 68 Director since: 2019 Committees: Audit and Finance; Technology and Cybersecurity | |
DIRECTOR NOMINEES
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DIRECTOR NOMINEES
| | | | | BACKGROUND Mr. Spratt is retired, having most recently served as the Executive Vice President, Chief Information Officer and Chief Technology Officer of McKesson Corporation (“McKesson”), a global pharmaceutical distribution services and information technology company, from 2009 to 2015. Mr. Spratt joined McKesson in 1999 and held various executive positions at McKesson prior to becoming Chief Information Officer and Chief Technology Officer, including as Chief Information Officer from 2005 to 2009, Chief Process Officer for McKesson Provider Technologies from 2003 to 2005 and Senior Vice President, Imaging, Technology and Business Process Improvement from 2000 to 2003. Mr. Spratt previously served on the board of directors of Imperva, Inc. from May 2016 until the company was acquired by Thoma Bravo, LLC in January 2019. Mr. Spratt received a Bachelor of Science in biology from the University of Utah. KEY EXPERIENCES We considered Mr. Spratt’s extensive experience leading the information technology functions of a multinational large distributor, which allows him to provide invaluable advice and guidance to our management and Board of Directors. We also considered his significant experience in operations and risk management. OTHER PUBLIC COMPANY DIRECTORSHIPS None. PRIOR PUBLIC COMPANY DIRECTORSHIPS Imperva, Inc. | | Randall N. Spratt Age: 71 Director since: 2018 Committees: Audit and Finance; Technology and Cybersecurity (Chair) | |
DIRECTOR NOMINEES
| | | | | BACKGROUND Mr. Thompson is Chairman of the Board and President of Thompson Hospitality Services, LLC, a private retail food and facilities management firm that he founded in 1992. Mr. Thompson began his career with the Marriott Corporation in 1983, where he started with the Restaurant Fast Track Management Development Program and served in 15 positions in nine years, ending as Vice President Operations for the Host Division. Mr. Thompson serves on the board of directors of Sizzle Acquisition Corp, having previously served on the board of directors of Duke Realty Corp. from 2019 until the company was acquired by Prologis, Inc. in October 2022. Mr. Thompson received his Bachelor of Arts degree in Managerial Economics from Hampden-Sydney College and holds an MBA from the University of Virginia’s Darden Graduate School of Business Administration. KEY EXPERIENCES We considered Mr. Thompson’s knowledge, experience, and expertise in the restaurant and hospitality industry and his significant experience in operations and management. His over 35 years of experience in the restaurant and hospitality industry enables him to bring valuable perspectives of a foodservice industry customer to our Board of Directors. OTHER PUBLIC COMPANY DIRECTORSHIPS Sizzle Acquisition Corp. PRIOR PUBLIC COMPANY DIRECTORSHIPS Duke Realty Corp. Federal Realty Investment Trust | | Warren M. Thompson Age: 64 Director since: 2020 Committees: Human Capital and Compensation; Nominating and Corporate Governance | |
DIRECTOR NOMINEES
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DIRECTOR COMPENSATION FOR FISCAL 2023
DIRECTOR COMPENSATION FOR FISCAL 2023 The table below sets forth information regarding non-employee director compensation for the fiscal year ended July 1, 2023.
DIRECTOR COMPENSATION FOR FISCAL 2023
| NAME | FEES EARNED OR PAID IN CASH ($)(1) | STOCK AWARDS ($)(2) | TOTAL ($) | | BARBARA J. BECK | 100,000 | 160,048 | 260,048 | | WILLIAM F. DAWSON, JR. | 100,000 | 160,048 | 260,048 | | MANUEL A. FERNANDEZ | 120,000 | 260,055 | 380,055 | | LAURA FLANAGAN | 100,000 | 160,048 | 260,048 | | MATTHEW C. FLANIGAN | 125,000 | 160,048 | 285,048 | | KIMBERLY S. GRANT | 100,000 | 160,048 | 260,048 | | JEFFREY M. OVERLY | 120,000 | 160,048 | 280,048 | | DAVID V. SINGER | 100,000 | 160,048 | 260,048 | | RANDALL N. SPRATT | 115,000 | 160,048 | 275,048 | | WARREN M. THOMPSON | 100,000 | 160,048 | 260,048 |
DIRECTOR COMPENSATION FOR FISCAL 2023
| (1) Amounts reported reflect cash retainer fees earned by our non-employee directors during fiscal 2023. | | (2) Represents the grant date fair value of restricted stock units, calculated in accordance with FASB ASC Topic 718, issued to our non-employee directors on November 16, 2022. The aggregate number of restricted stock units outstanding or deferred stock units, as applicable, as of July 1, 2023, for our non-employee directors was as follows: 2,727 deferred stock units for Ms. Beck, 2,727 deferred stock units for Mr. Dawson, 4,431 deferred stock units for Mr. Fernandez, 2,727 restricted stock units for Ms. Flanagan, 2,727 restricted stock units for Mr. Flanigan, 2,727 restricted stock units for Ms. Grant, 2,727 deferred stock units for Mr. Overly, 2,727 restricted stock units for Mr. Singer, 2,727 restricted stock units for Mr. Spratt and 2,727 restricted stock units for Mr. Thompson. |
DIRECTOR COMPENSATION FOR FISCAL 2023
| 2023 Proxy Statement | 35 |
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS
DIRECTORS
DIRECTORS To align the interests of our Board of Directors with those of our stockholders, the Board of Directors believes that the non-employee members of our Board of Directors (the “Covered Directors”) should have a significant financial stake in the Company’s stock. To further that goal, we implemented stock ownership guidelines for our non-employee directors (the “Director Guidelines”). The Covered Directors are required to hold a specific level of equity ownership as outlined below:
DIRECTORS
| Covered Directors’ Stock Ownership Multiples The stock ownership level under the Director Guidelines, expressed as a multiple of the Covered Director’s annual cash retainer, is five times each Covered Director’s annual cash retainer. | 5 times annual cash retainer | | Retention Requirement There is no required time period within which a Covered Director must attain the applicable stock ownership level under the Director Guidelines. However, until the applicable ownership level is achieved, a stock retention requirement of 100% of shares will apply. | |
DIRECTORS
The shares counted toward these ownership requirements include shares of common stock owned directly by the Covered Director and outstanding restricted stock, restricted stock units and deferred stock units. These ownership requirements are set at levels that the Company believes are reasonable given the Covered Directors’ annual cash retainers. In addition, Meridian Compensation Partners, LLC reviewed our Director Guidelines and confirmed that they are consistent with the corresponding practices of our peer group. As of October 2, 2023, each of our directors has met the applicable ownership level.
DIRECTORS
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DIRECTORS
| PROPOSAL 02 | Ratification of Independent Registered Public Accounting Firm |
DIRECTORS
| | Your Board of Directors recommends that you vote “FOR” the ratification of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal 2024. |
DIRECTORS
The Audit and Finance Committee has selected Deloitte & Touche LLP to serve as our independent registered public accounting firm for fiscal 2024. Although ratification is not required by our Bylaws or otherwise, the Board is submitting the selection of Deloitte & Touche LLP to our stockholders for ratification as a matter of good corporate governance and because we value our stockholders’ views on the Company’s independent registered public accounting firm. If our stockholders fail to ratify the selection, it will be considered as notice to the Board and the Audit and Finance Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit and Finance Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting. The representative will have the opportunity to make a statement if he or she desires to do so, and the representative is expected to be available to respond to appropriate questions. The shares represented by your proxy will be voted “FOR” the ratification of the selection of Deloitte & Touche LLP unless you specify otherwise.
EXECUTIVE SUMMARY
| ● | compensation fairness and competitiveness among our peer group and industry, as well as retention considerations; | | ● | our financial and operating performance, measured by the attainment of strategic objectives and operating results at the Company level and, in certain circumstances, the business unit level; | | ● | the duties, responsibilities, performance, and contributions of each executive officer tied to the achievement of critical long-term strategic initiatives; and | | ● | historical cash and equity compensation levels. |
EXECUTIVE COMPENSATION PROGRAM OBJECTIVES AND OVERVIEW
| | | | | Competitive Compensation. Our executive compensation program should provide a fair and competitive compensation opportunity that enables us to attract and retain high-caliber executive talent. Executives should be appropriately rewarded for their contributions to our successful performance. | Pay for Performance. A significant portion of each executive’s compensation should be “at risk” and tied to overall Company, business unit, and individual performance. | Alignment with Stockholder Interests. Executive compensation should be structured to include elements that link executives’ financial rewards to stockholder returns. |
EXECUTIVE COMPENSATION PROGRAM OBJECTIVES AND OVERVIEW
As described in more detail below, the material elements of our executive compensation program for NEOs include base salary, a cash incentive opportunity, a long-term equity incentive opportunity, and broad-based employee benefits. The NEOs may also receive severance payments and other benefits in connection with certain terminations of employment or a change in control of the Company. We believe that each element of our executive compensation program helps us to achieve one or more of our compensation objectives, as illustrated by the table below.
FISCAL 2023 EXECUTIVE TOTAL TARGETED COMPENSATION MIX
| WHAT WE DO | WHAT WE DON’T DO | | Performance-driven pay Pay aligned to peers Transparency to stockholders Clawback policy Stock ownership requirements Independent compensation consulting firm reporting directly to the Compensation Committee Double-trigger severance agreements upon change-in-control Robust insider trading requirements and restrictions Annual risk assessment of our compensation program | No excise tax gross-ups No modified single-trigger or single-trigger change-in-control severance agreements No uncapped incentive compensation opportunities No hedging of shares by our directors or employees No pledging of shares by our directors or executive officers No excessive perquisites No repricing of underwater stock options No dividends provided on unearned performance awards |
FISCAL 2023 COMPENSATION PROGRAM CHANGES
| FISCAL 2023 COMPENSATION PROGRAM CHANGES | SPECIFIC CHANGE | RATIONALE | | Annual Incentive Plan (AIP) | ●Expanded strategic initiatives component to include progress towards ESG objectives: ●Metric Weights: ●Eliminated liquidity as % of sales ●Increased value of strategic initiatives to 20%, but at the same time eliminated the ability to earn above target on these metrics | Expanded strategic initiatives: To demonstrate our commitment to ESG, beginning with fiscal 2023, the strategic initiatives component accounting for 20% of the AIP award opportunity included progress towards integration of acquisitions and ESG objectives, including goals related to investments in electric vehicles, diversity and inclusion, and safety. Metrics: The fiscal 2023 metric changes made to the AIP were designed to focus our NEOs on our strategic growth objectives, including capturing synergies and growth from recent acquisitions, and ESG progress. Liquidity was eliminated to continue our focus on profitability metrics. | | Long-Term Incentive Plan (LTIP) | ●Performance shares earned based on achievement of total stockholder return (“TSR”) relative to companies in the Russell 1000 Index: ●Nesting measurement periods for performance shares weighted as follows: ●Years 1-2: 25% ●Years 1-3: 50% ●Payout is capped at 100% if TSR is negative over the three-year measurement period | The change in TSR measurement group from the S&P 400 midcap index to the Russell 1000 index provides a larger sample size of companies to insulate results from M&A and bankruptcy activity and provides an appropriate size comparison for the Company’s market capitalization. Nesting measurement periods are designed to focus management on short, mid, and long-term performance, while placing the greatest weight on the cumulative three-year period (50%) is intended to emphasize the Company’s long-term performance. The total payout will be capped at 100% if performance is negative over the cumulative three-year measurement period. |
CASH BONUS OPPORTUNITIES
CASH BONUS OPPORTUNITIES
ANNUAL CASH BONUS OPPORTUNITY
ANNUAL CASH BONUS OPPORTUNITY We maintain an annual incentive plan (the “AIP”), which is a cash bonus program in which all of our NEOs are eligible to participate. The primary purpose of the AIP is to focus management on key measures that drive financial performance and provide competitive bonus opportunities tied to the achievement of our financial and strategic growth objectives.
FISCAL 2023 AIP
FISCAL 2023 AIP The Compensation Committee annually establishes a target annual bonus as a percentage of base salary, which may be adjusted in connection with an NEO’s promotion, performance, or based upon competitive conditions. For our NEOs, the target opportunity for AIP awards was based on the following components as compared to pre-established targets: (i) net sales growth for fiscal 2023 (40% of the overall AIP), (ii) Adjusted EBITDA growth for fiscal 2023 (40% of overall AIP), and (iii) strategic initiatives (20% of overall AIP). Payouts related to each financial metric for the fiscal 2023 AIP had a range from 60% of target payout upon achieving a threshold performance level to 162.5% of target payout upon achieving the maximum performance level. Payouts related to the strategic initiatives metric had a maximum of 100% of target. When combined, total payouts could not exceed 150% of target.
FISCAL 2023 AIP
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FISCAL 2023 AIP
We believe that tying part or all of the NEOs’ bonuses to Company-wide performance goals encourages collaboration across the executive leadership team. We use Adjusted EBITDA as a measure of financial performance because we believe that it provides a reliable indicator of our strategic growth and the strength of our cash flow and overall financial results. We believe using the net sales increases accountability of the financial health of the Company and more closely aligns with the focus of stockholders. With respect to the strategic initiatives performance measure, the Compensation Committee designed the achievement of strategic goals to be challenging, but achievable with strong and consistent performance. The long-term strategic planning goal was based on the completion of certain enterprise initiatives to support the Company’s growth and enhance long-term stockholder value, including the integration of acquisitions, investment in electric vehicles, diversity and inclusion objectives and safety. The payout percentage of target earned for the AIP was determined by calculating our actual achievement against the performance targets based on the pre-established goals set forth in the following table:
FISCAL 2023 AIP
| PERFORMANCE MEASURE | METRICS | TARGET PAYOUT OF THE OVERALL AIP | THRESHOLD | TARGET | MAXIMUM | PAYOUT OF % OF TARGET | | Profitability | Net Sales | | | | | 106.44% | | | Adjusted EBITDA | | | | | 162.50% | | Strategic Initiatives | Core-Mark Integration Progress | | | ACTUALS 90.00% | | | | | ESG Progress Safety | | N/A | Demonstrated progress towards Strategic Initiatives | N/A | 90.00% | | Total | | 100% | | | | 125.58% |
FISCAL 2023 AIP
As noted in the table above, all financial goals were exceeded based on actual performance versus pre-established targets. In addition, the Compensation Committee confirmed that achievement of demonstrated progress towards strategic initiatives was substantially achieved based upon synergy capture and execution on integration relating to the acquisition of Core-Mark, investments in electric vehicles, increasing the number of candidates for open positions from underrepresented backgrounds and launching a Diversity, Inclusion & Belonging Advisory Council, among other achievements, and awarded 90.00% of the target amount based on its determination.
FISCAL 2023 AIP
| NOTES: ●The maximum payout for profitability measures is 162.50% of target and this was achieved at 106.44% and 162.50% for the net sales and Adjusted EBITDA financial metrics, respectively, as shown above. ●The maximum payout for strategic initiatives performance measures is 100% of target and this was achieved at 90%, as shown above. ●Net sales is defined as fiscal 2023 gross sales plus excise taxes minus sales returns and minus sales incentives that we offer to our customers, such as rebates and discounts that are offsets to gross sales. ●Adjusted EBITDA is defined as fiscal 2023 net income before interest expense, income taxes, depreciation and amortization and further adjusted to exclude certain items. |
FISCAL 2023 AIP
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CORPORATE NEOS’ AIP
CORPORATE NEOS’ AIP The following tables illustrate the calculation of the cash bonus payable to each NEO under the fiscal 2023 AIP in light of these performance results and achievement of strategic objectives.
CORPORATE NEOS’ AIP
| | BASE SALARY FULL YEAR $ | TARGET BONUS % | PROFITABLE GROWTH | | | | | | STRATEGIC INITIATIVES | | | | | | | | NET SALES | | | AEBITDA | | | STRATEGIC INITIATIVES | | | TOTAL PAYOUT $ | | | | | MEASURE % | PAYOUT % | PAYOUT $ | MEASURE % | PAYOUT % | PAYOUT $ | MEASURE % | PAYOUT % | PAYOUT $ | | | GEORGE L. HOLM Chairman & CEO | 1,200,000 | 150 | 40 | 106.44 | 766,401 | 40 | 162.50 | 1,170,000 | 20 | 90.00 | 324,000 | 2,260,401 | | H. PATRICK HATCHER(1) EVP, Chief Financial Officer | 486,898 | 100 | 40 | 106.44 | 212,060 | 40 | 162.50 | 323,734 | 20 | 90.00 | 89,649 | 625,443 | | JAMES D. HOPE(2) Former EVP, Chief Financial Officer | 681,000 | 100 | 40 | 106.44 | 145,038 | 40 | 162.50 | 221,417 | 20 | 90.00 | 61,315 | 427,770 | | PATRICK T. HAGERTY EVP & Chief Commercial Officer | 600,000 | 100 | 40 | 106.44 | 255.467 | 40 | 162.50 | 390,000 | 20 | 90.00 | 108,000 | 753,467 | | CRAIG H. HOSKINS President & Chief Operating Officer | 625,000 | 100 | 40 | 106.44 | 266,111 | 40 | 162.50 | 406,250 | 20 | 90.00 | 112,500 | 784,861 | | SCOTT E. MCPHERSON EVP, President & CEO, Convenience | 610,018 | 100 | 40 | 106.44 | 259,733 | 40 | 162.50 | 396,512 | 20 | 90.00 | 109,803 | 766,048 |
CORPORATE NEOS’ AIP
| (1) Payout is pro-rated based upon increase to Mr. Hatcher’s base salary effective October 1, 2022. | | (2) Reflects 50% of Mr. Hope’s fiscal 2023 annual bonus for fiscal 2023 at the actual level of performance per the terms of his consulting agreement. |
LONG-TERM EQUITY INCENTIVE AWARDS
LONG-TERM EQUITY INCENTIVE AWARDS We believe that the NEOs’ long-term compensation should be directly linked to the value we deliver to our stockholders. Equity awards to the NEOs are designed to provide long-term incentive opportunities over a period of several years and align compensation with the creation of stockholder value and achievement of business goals. We make annual grants under our 2015 Omnibus Incentive Plan that provide a mix of performance shares and time-based restricted stock. For fiscal 2023, to support the goal of continued executive stock ownership and enhance the focus on performance, the weight of restricted stock awards for senior management was 40% and the weight of performance share awards tied to multi-year performance results for senior management was 60%. Annual award levels are established based on a review of competitive market practice, internal equity considerations and other factors as the Compensation Committee deems appropriate.
FISCAL 2023 LONG-TERM EQUITY INCENTIVE GRANTS
FISCAL 2023 LONG-TERM EQUITY INCENTIVE GRANTS For fiscal 2023, the Compensation Committee approved the following long-term equity incentive awards to each of the NEOs as follows:
FISCAL 2023 LONG-TERM EQUITY INCENTIVE GRANTS
| NAME | TOTAL GRANT VALUE | PERFORMANCE SHARES | RESTRICTED STOCK | | GEORGE L. HOLM | $6,000,052 | 52,895 | 46,521 | | H. PATRICK HATCHER(1) | $1,600,080 | 14,106 | 12,406 | | JAMES D. HOPE(2) | — | — | — | | CRAIG H. HOSKINS | $2,750,049 | 24,244 | 21,322 | | PATRICK H. HAGERTY | $1,600,080 | 14,106 | 12,406 | | SCOTT E. MCPHERSON | $1,000,081 | 9,260 | 8,144 |
FISCAL 2023 LONG-TERM EQUITY INCENTIVE GRANTS
| (1) Includes $500,000 equity grant in connection with Mr. Hatcher’s promotion discussed below. | | (2) Due to his retirement, Mr. Hope did not receive a grant of long-term equity incentive awards for fiscal 2023. |
FISCAL 2023 LONG-TERM EQUITY INCENTIVE GRANTS
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FISCAL 2023 LONG-TERM EQUITY INCENTIVE GRANTS
Subject to the recipient’s continued service with the Company through each applicable vesting date:
FISCAL 2023 LONG-TERM EQUITY INCENTIVE GRANTS
| ● | one third of the shares of time-based restricted stock will vest on each anniversary of the date of grant; and | | ● | performance shares will vest on the date the Compensation Committee certifies the Company’s performance, subject to the recipient’s continued service to the Company through the end of the performance period (which began on July 3, 2022, and ends on June 28, 2025), if the applicable performance goals are attained. |
FISCAL 2023 LONG-TERM EQUITY INCENTIVE GRANTS
In connection with his appointment as Executive Vice President and Chief Financial Officer effective January 1, 2023, Mr. Hatcher received a $500,000 equity grant on August 25, 2022 comprised 60% of performance shares and 40% of time-based restricted stock. For the performance shares, 100% of the award will be earned based on the achievement of TSR relative to companies in the Russell 1000 Index as described below under “—Performance Shares.” For the time-based restricted stock, 100% of the shares will vest on August 25, 2025. See “—Treatment of Equity Awards in Connection with a Change in Control or Qualifying Termination” for a more detailed description of the material terms of these awards and a description of the potential vesting of these awards that may occur in connection with certain terminations of employment.
PERFORMANCE SHARES
PERFORMANCE SHARES For the performance shares, 100% of the award will be earned based on achievement of TSR relative to companies in the Russell 1000 Index that are public throughout each TSR measurement period. For each of the three TSR measurement periods, the Company’s TSR is calculated as (i) (a) the average closing price of a share of our common stock over the 20 trading day period ending on (and including) the last date of the TSR measurement period (assuming dividends are reinvested) minus (b) the price of a share of our common stock at the beginning of the performance period (the “Beginning Share Price”) divided by (ii) the Beginning Share Price (“Relative TSR”). Relative TSR is expressed as a relative percentile ranking of the Company among the TSR of companies in the Russell 1000 Index over the TSR measurement period. Each TSR measurement period is weighted as shown below.
PERFORMANCE SHARES
| | 2022 | 2023 | 2024 | 2025 | Weighting | | One Year | | | | | | | Two Years | | | | | | | Three Years | | | | | |
PERFORMANCE SHARES
The Compensation Committee believes that the performance goals for the performance shares are reasonably attainable yet provide an appropriate incentive to maximize our performance and shareholder value. To that end, the Compensation Committee requires performance levels above median (i.e., 60th percentile) to attain target payout levels. The Compensation Committee believes that achievement of maximum performance against the goals would require exceptional corporate performance over the performance period. For the performance share awards granted on August 25, 2022 and September 2, 2022, the earned amounts will be determined based on the following performance and payout scales during each of the TSR measurement periods:
PERFORMANCE SHARES
| PERFORMANCE | RELATIVE TSR RANKING | TARGET PAYOUT % | | Threshold | 40th percentile | 50% | | Target | 60th percentile | 100% | | Maximum | 80th percentile | 200% |
PERFORMANCE SHARES
The total payout will be capped at 100% if performance is negative over the cumulative three-year measurement period. For performance percentages between the levels set forth above, the resulting payout percentage would be adjusted on a linear interpolation basis.
PERFORMANCE SHARES
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PERFORMANCE SHARES
For the most recently completed performance cycle (ended July 1, 2023) for awards granted in August 2020 (the “2020 Performance Grants”), the earned amounts were determined based on the following performance and payout scales:
PERFORMANCE SHARES
| PERFORMANCE | RELATIVE TSR RANKING | TARGET PAYOUT % | | Threshold | 40th percentile | 50% | | Target | 60th percentile | 100% | | Outstanding/Maximum | 80th percentile | 200% |
PERFORMANCE SHARES
During the performance period ended July 1, 2023, the Company’s Relative TSR ranked in the 77.26th percentile of the S&P Midcap 400 Index, resulting in a payout at 186.30% of target of the 2020 Performance Grants with respect to the Relative TSR performance metric. The table below sets forth the shares earned by the NEOs for the 2020 Performance Grants based on actual performance during the performance period and the payout scales above:
PERFORMANCE SHARES
| NAME | 2020-2023 RELATIVE TSR SHARES | | GEORGE L. HOLM | 104,809 | | H. PATRICK HATCHER | — | | JAMES D. HOPE | 19,398 | | CRAIG H. HOSKINS | 15,519 | | PATRICK H. HAGERTY | 15,519 | | SCOTT E. MCPHERSON | — |
SEVERANCE AND OTHER BENEFITS
SEVERANCE AND OTHER BENEFITS We believe that severance protections can play a valuable role in attracting and retaining high-caliber talent. In the competitive market for executive talent, we believe severance payments and other termination benefits are an effective way to offer executives financial security to offset the risk of foregoing an opportunity with another company. Consistent with our objective of using severance payments and benefits to attract and retain executives, our Executive Severance Plan approved in May 2020 (the “Severance Plan”) provides our executives who enter into the related Executive Severance Plan Participation Agreement (the “Participation Agreement”) with severance benefits that we believe (i) will permit us to better attract and/or continue to employ high-caliber talent, (ii) are more aligned with those severance benefits offered at our peers, and (iii) are more aligned with broader market trends. The Severance Plan replaced the NEOs’ previous severance arrangements. Each of our NEOs, other than Mr. Hope, is eligible for the Severance Plan benefits. Mr. Hope is no longer eligible to participate in the Severance Plan under the terms of his consulting agreement. See “Potential Payments Upon Termination or Change in Control” for descriptions of these potential benefits.
COMPENSATION DETERMINATION PROCESS
| RESPONSIBLE PARTY | PRIMARY ROLES AND RESPONSIBILITIES | | Compensation Committee | The Compensation Committee, which is composed entirely of independent directors, is responsible for establishing, maintaining, and administering our compensation and benefit policies and determines the compensation for our NEOs. Our CEO is not a member of the Compensation Committee and does not participate in deliberations regarding his compensation. The Compensation Committee uses several resources in making decisions regarding executive compensation, and these resources are described in the following paragraphs. See “Board Structure - Board Committees - Compensation and Human Resources Committee” for more information regarding the Compensation Committee’s responsibilities. | | Independent Compensation Consultant | In fiscal 2023, the Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”), an independent compensation consulting firm, as its compensation consultant to advise on executive and non-employee director compensation matters and provide information and advice regarding market trends, competitive compensation programs, and strategies, including: ●Assessing management’s recommendations for changes to our compensation structure; ●Providing annual market data for each NEO position, including evaluating the Company’s compensation strategy and reviewing and confirming the peer group used to prepare the market data; ●Providing information on executive compensation trends, regulatory developments and emerging best practices; and ●Conducting an annual compensation risk assessment. During fiscal 2023, Meridian reported directly to the Chair of the Compensation Committee and performed no other work for the Company. Meridian attends all meetings where the Compensation Committee evaluates the overall effectiveness of the executive compensation programs or where the Compensation Committee analyzes or approves executive compensation. In connection with engaging Meridian, the Compensation Committee considered the independence of Meridian in light of the standards embodied in SEC rules and NYSE listing standards. The Compensation Committee took into account these considerations, along with other factors relevant to the firm’s independence from management, and concluded that Meridian was independent and the engagement of Meridian would not raise any conflict of interest. | | Our CEO | Our CEO, with the assistance of Meridian and our Executive Vice President and Chief Human Resources Officer, provides recommendations to the Compensation Committee with respect to compensation decisions for our NEOs (other than with respect to his own position). In preparing recommendations to the Compensation Committee, our CEO consults benchmarking data and other market surveys conducted by Meridian and our Human Resources Department. No officer, including our CEO and our Executive Vice President and Chief Human Resources Officer, has a role in determining his or her own compensation. | | Human Resources Department | Our Human Resources Department, led by our Executive Vice President and Chief Human Resources Officer, works with our independent compensation consultant to compile benchmarking data, including peer group analysis and market studies, in order to provide preliminary recommendations with respect to base salary, annual incentive and long-term incentive program design and target award levels for our NEOs and other employees eligible to receive such incentive awards. |
PEER GROUP
PEER GROUP Meridian evaluated the competitiveness of our executive and non-employee director compensation programs using peer group compensation data of the following peer group companies:
PEER GROUP
| 2023 PEER GROUP |
PEER GROUP
| Arrow Electronics, Inc. | Compass Group PLC | Pilgrim’s Pride Corporation | United Natural Foods, Inc. | | Avnet, Inc. | Dollar General Corporation | TD SYNNEX Corporation | US Foods Holding Corp. | | Bunge Limited | Dollar Tree, Inc. | Sysco Corporation | WESCO International, Inc. | | CDW Corporation | Genuine Parts Company | Tyson Foods, Inc. | W.W. Grainger, Inc. |
PEER GROUP
This peer group is composed of companies of similar size and stature in our foodservice distribution industry or related industries. There were no changes to the Company’s peer group in fiscal 2023 from the fiscal 2022 peer group. Meridian analyzed target compensation levels for senior executives benchmarked against the updated compensation peer group. Based on this evaluation, Meridian recommended, and the Compensation Committee determined, to set total target direct compensation (comprised of base salary, cash bonus opportunity at target, and long-term equity incentive opportunity at target) at levels that, in the aggregate, approximate the median of the peer group.
ANNUAL COMPENSATION PROGRAM RISK ASSESSMENT
| ● | Annual total compensation benchmarking relative to appropriate data sources and adjusted for size; | | ● | Multiple financial performance goals in the annual incentive plan with reasonable maximum payout limits; | | ● | Compensation Committee discretion to adjust payouts, as needed; | | ● | Appropriate balance of fixed and at-risk compensation, as well as an appropriate balance of cash and equity-based compensation; | | ● | Stock grants that occur each year, with overlapping performance cycles and multi-year vesting; | | ● | Use of relative TSR in the long-term plan to balance internally-set financial goals in the short-term plan; | | ● | Compensation Committee that is actively involved in setting short- and long-term incentive performance targets and payout intervals, typically over a series of meetings; | | ● | A clawback policy that applies to both cash and equity, as described under “—Clawback Policy” below; | | ● | Existence of stock ownership guidelines and holding requirements, as described under “—Stock Ownership Guidelines” below; | | ● | Reasonable severance arrangements, as described under “—Severance and Other Benefits” above; and | | ● | Anti-hedging policy and anti-pledging policy for directors and executive officers, as described under “—Hedging and Pledging Policies” below. |
EMPLOYMENT AGREEMENTS
EMPLOYMENT AGREEMENTS We do not typically enter into formal employment agreements with our executive officers. However, as noted below, we have an employment agreement with Mr. Holm. In addition, we typically enter into offer letters with our executive officers. In connection with the commencement of their employment, we entered into offer letters with Messrs. Hagerty, Hope and Hoskins, setting forth their initial compensation and benefits. Mr. McPherson entered into an employment agreement with the Company on September 1, 2021 in connection with the Company’s acquisition of Core-Mark. The employment agreement provided for an initial term of two years with automatic one-year renewals thereafter unless terminated by either the Company or Mr. McPherson. On September 1, 2023, Mr. McPherson’s employment agreement was terminated, with Mr. McPherson continuing as an at-will employee. Additionally, as noted below, Mr. Hope entered into a consulting agreement with the Company on August 9, 2022 in connection with his retirement as Executive Vice President and Chief Financial Officer. For the employment agreement and offer letters, the Severance Plan supersedes any similar provisions in such agreements.
SUMMARY OF EMPLOYMENT AGREEMENT OF MR. HOLM
SUMMARY OF EMPLOYMENT AGREEMENT OF MR. HOLM Mr. Holm’s employment agreement, dated as of September 6, 2002, as amended effective January 2003, provides that he serves as President and Chief Executive Officer for an initial term of three years that automatically extends for successive automatic one-year periods, unless we or Mr. Holm elect not to extend the term by providing 30 days’ advance notice. Mr. Holm’s employment agreement establishes: (1) an initial base salary, subject to discretionary annual increases; (2) eligibility to receive an annual bonus, with a target amount equal to 100% of his base salary if performance targets set by the Compensation Committee are achieved, which he may elect to receive as shares of our common stock; and (3) a requirement that he purchase $2 million of our common stock. Mr. Holm is also entitled to participate in all employee benefit and fringe plans made available to our employees generally. Mr. Holm’s employment agreement also contains restrictive covenants, including an indefinite covenant not to disclose confidential information and not to disparage us, and, during Mr. Holm’s employment and for the one-year period following the termination of his employment, covenants related to non-competition and non-solicitation of our employees, customers, or suppliers. Mr. Holm, like our other NEOs, is also eligible for severance benefits following certain terminations of employment pursuant to the Severance Plan. See “Potential Payments Upon Termination or Change in Control” for a description of these provisions.
SUMMARY OF CONSULTING AGREEMENT OF MR. HOPE
vest in the unvested portions of any equity awards that are unvested and outstanding as of the Retirement Date, subject to the terms of the applicable award agreements. Mr. Hope will also be eligible for “retirement” vesting of his unvested and outstanding equity awards at the conclusion of the Consulting Period in accordance with the terms of such awards. Mr. Hope is also subject to certain restrictive covenants under the Consulting Agreement, including customary confidentiality covenants as well as non-competition and non-solicitation restrictions for a period of 12 months following the end of the Consulting Period.
NON-QUALIFIED DEFERRED COMPENSATION PLAN
NON-QUALIFIED DEFERRED COMPENSATION PLAN In January 2020, the Board of Directors adopted the Performance Food Group Company Deferred Compensation Plan (the “Deferred Compensation Plan”) under which (i) individuals whose position qualifies for an equity grant under the 2015 Omnibus Incentive Plan for the fiscal year that ends within the Deferred Compensation Plan’s year or (ii) members of the Board of Directors can defer (a) receipt of up to 50% of his or her base compensation (base salary for employees and cash retainers for directors) and/or (b) up to 75% of his or her payout under the AIP. The initial Deferred Compensation Plan year commenced on January 1, 2021 and each of our NEOs was eligible to participate. Any such deferral elections are irrevocable for the applicable Deferred Compensation Plan year other than in the event a participant receives a distribution from the Deferred Compensation Plan due to an unforeseeable emergency. Currently, none of our NEOs participate in the Deferred Compensation Plan A participant in the Deferred Compensation Plan may elect a distribution date, subject to the limitations imposed by the Deferred Compensation Plan committee, on which deferred amounts (including discretionary employer contributions, to the extent applicable) will be paid (or commence in the case of installments); provided, however, that all deferral accounts will be paid (or commence in the case of installments) in the event of the participant’s separation of service, death or disability. With respect to distribution, a participant’s deferral account will be paid, at the election of the participant, either in (i) a lump sum or (ii) annual installments over a period of five (5), ten (10) or fifteen (15) years. On February 14, 2023, the Deferred Compensation Plan was amended to allow participants to change the timing and/or the form of payment of a previous election made by the participant for a distribution upon a specified date at least five (5) years from the date such payment would otherwise have been made, subject to certain conditions. Participants in the Deferred Compensation Plan are eligible, but not guaranteed, to receive discretionary employer contributions, which will generally vest in accordance with the vesting schedule under the Performance Food Group Employee Savings Plan. A participant who is making a deferral election will be asked to specify the distribution date and form of payment with respect to any discretionary employer contributions that such participant may receive for the applicable Deferred Compensation Plan year. Any discretionary employer contributions that are not vested as of a participant’s separation from service shall immediately be forfeited at such time. The Company will establish an account on each participant’s behalf to track his or her deferrals. Each participant may choose from a variety of investment fund options available under the Deferred Compensation Plan and the account will be adjusted based on the performance of the applicable funds and the investment directions. The investment choices may be changed in accordance with the rules and procedures established by the Deferred Compensation Plan committee.
NON-QUALIFIED DEFERRED COMPENSATION PLAN
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SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following table presents summary information regarding the total compensation awarded to, earned by, or paid to each of our NEOs for the fiscal years indicated.
SUMMARY COMPENSATION TABLE
| NAME AND PRINCIPAL POSITION | YEAR | SALARY ($)(1) | STOCK AWARDS ($)(2) | NON-EQUITY INCENTIVE PLAN COMPENSATION ($)(3) | ALL OTHER COMPENSATION ($)(4) | TOTAL ($) | | GEORGE L. HOLM Chairman and Chief Executive Officer | 2023 | 1,167,308 | 6,000,052 | 2,260,401 | 59,782 | 9,487,543 | | | 2022 | 1,075,000 | 5,000,035 | 2,523,675 | 61,801 | 8,660,511 | | | 2021 | 1,000,000 | 5,350,123 | 1,835,313 | 43,114 | 8,228,550 | | H. PATRICK HATCHER Executive Vice President and Chief Financial Officer | 2023 | 486,898 | 1,600,080 | 625,443 | 34,797 | 2,747,218 | | JAMES D. HOPE Former Executive Vice President and Chief Financial Officer | 2023 | 353,743 | — | 427,770 | 262,329 | 1,043,842 | | | 2022 | 659,121 | 1,500,068 | 996,716 | 37,954 | 3,193,859 | | | 2021 | 624,000 | 1,500,102 | 916,188 | 36,177 | 3,076,467 | | CRAIG H. HOSKINS President and Chief Operating Officer | 2023 | 605,750 | 2,750,049 | 784,861 | 54,174 | 4,194,834 | | | 2022 | 551,848 | 2,300,117 | 845,614 | 62,401 | 3,759,980 | | | 2021 | 515,000 | 1,200,101 | 756,149 | 46,718 | 2,517,967 | | PATRICK T. HAGERTY Executive Vice President and Chief Commercial Officer | 2023 | 585,077 | 1,600,080 | 753,467 | 65,126 | 3,003,750 | | | 2022 | 551,848 | 2,300,102 | 845,614 | 52,942 | 3,750,506 | | | 2021 | 515,000 | 1,200,101 | 756,149 | 44,168 | 2,515,418 | | SCOTT E. MCPHERSON Executive Vice President, President and CEO of Convenience | 2023 | 606,602 | 1,000,081 | 766,048 | 20,014 | 2,392,745 |
SUMMARY COMPENSATION TABLE
| (1) Effective October 1, 2022, Mr. Hatcher’s salary was increased to $550,000. Mr. Hope received his annual base salary of $681,000 through the effective date of his retirement (December 31, 2022). | | (2) Amounts shown in this column include the grant date fair value, calculated in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 and using the assumptions discussed in Note 18, “Stock-based Compensation,” of the audited financial statements in our Annual Report, of the performance shares and restricted stock granted in fiscal 2023, as described under “Compensation Discussion and Analysis—Long-Term Equity Incentive Awards—Fiscal 2023 Long-Term Equity Incentive Grants.” With respect to the performance shares granted in fiscal 2023, 100% vest according to Relative TSR. Therefore, they are subject to market conditions as defined under FASB ASC Topic 718 and are not subject to performance conditions as defined under FASB ASC Topic 718. Accordingly, they have no maximum grant date fair values that differ from the grant date fair values presented in the table. | | (3) Amounts shown in this column reflect amounts earned under our AIP. The amount shown for Mr. Hatcher was prorated to reflect his change in base salary as of October 1, 2022. | | (4) Amounts reported under All Other Compensation for fiscal 2023 include: (i) contributions to our 401(k) plan on behalf of our NEOs, including annual STAR Contributions under our 401(k) plan, as follows: Mr. Holm, annual STAR Contribution of $14,500; Mr. Hatcher matching contributions of $14,226, Mr. Hoskins, matching contribution of $11,498 and annual STAR Contribution of $14,500; Mr. Hagerty, matching contribution of $11,060 and annual STAR Contribution of $14,500; Mr. McPherson, matching contribution of $10,675, and Mr. Hope, matching contributions of $917; (ii) annual auto allowances; (iii) fees for participation in our executive health programs; (iv) the incremental additional cost of spouse travel and meals for business events to which spouses are invited (including a related “gross-up” for payment of taxes in the amount of $441 for Mr. Holm and $842 for Mr. Hoskins) for Mr. Holm ($1,466) and Mr. Hoskins ($1,867); (v) gifts (including a tax “gross-up” related to gifts in the amount of $3,385 for Mr. Holm, $169 for Mr. Hope, $3,439 for Mr. Hoskins, $5,665 for Mr. Hagerty, $877 for Mr. Hatcher, and $561 for Mr. McPherson) for Mr. Holm ($9,033), Mr. Hope ($430), Mr. Hoskins ($7,626), Mr. Hagerty ($12,905), Mr. Hatcher ($3,036), and Mr. McPherson ($1,425); and (vi) amounts with respect to the payment of life insurance premiums as follows: $859 for Mr. Holm, $535 for Mr. Hatcher, $684 for Mr. Hoskins, $662 for Mr. Hagerty, and $474 for Mr. McPherson and (vii) $250,000 paid to Mr. Hope pursuant to the terms of the Consulting Agreement. |
SUMMARY COMPENSATION TABLE
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FISCAL 2023 GRANTS OF PLAN-BASED AWARDS
FISCAL 2023 GRANTS OF PLAN-BASED AWARDS The following table sets forth information concerning grants of plan-based awards to our NEOs during fiscal 2023.
FISCAL 2023 GRANTS OF PLAN-BASED AWARDS
| NAME | GRANT DATE | AWARD TYPE | ESTIMATED FUTURE PAYOUTS UNDER NON-EQUITY INCENTIVE PLAN AWARDS(1) | | | ESTIMATED FUTURE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS(2) | | | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK OR UNITS(3) (#) | GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS(4) ($) | | | | | THRESHOLD ($) | TARGET ($) | MAXIMUM ($) | THRESHOLD (#) | TARGET (#) | MAXIMUM (#) | | | | GEORGE L. HOLM | | 2023 AIP | 864,000 | 1,800,000 | 2,700,000 | | | | | | | | 8/25/2022 | Performance Shares | | | | 26,448 | 52,895 | 105,790 | | 3,600,034 | | | 8/25/2022 | Restricted Stock | | | | | | | 46,521 | 2,400,018 | | H. PATRICK HATCHER | | 2023 AIP | 233,711 | 486,898 | 730,347 | | | | | | | | 8/25/2022 | Performance Shares | | | | 7,053 | 14,106 | 28,212 | | 960,054 | | | 8/25/2022 | Restricted Stock | | | | | | | 12,406 | 640,026 | | JAMES D. HOPE | | 2023 AIP | 163,508 | 340,642 | 510,962 | | | | | | | | N/A | Performance Shares | | | | — | — | — | | — | | | N/A | Restricted Stock | | | | | | | — | — | | CRAIG H. HOSKINS | | 2023 AIP | 300,000 | 625,000 | 937,500 | | | | | | | | 8/25/2022 | Performance Shares | | | | 12,122 | 24,244 | 48,488 | | 1,650,047 | | | 8/25/2022 | Restricted Stock | | | | | | | 21,322 | 1,100,002 | | PATRICK T. HAGERTY | | 2023 AIP | 288,000 | 600,000 | 900,000 | | | | | | | | 8/25/2022 | Performance Shares | | | | 7,053 | 14,106 | 28,212 | | 960,054 | | | 8/25/2022 | Restricted Stock | | | | | | | 12,406 | 640,026 | | SCOTT E. MCPHERSON | | 2023 AIP | 292,809 | 610,018 | 915,028 | | | | | | | | 9/2/2022 | Performance Shares | | | | 4,630 | 9,260 | 18,520 | | 600,048 | | | 9/2/2022 | Restricted Stock | | | | | | | 8,144 | 400,033 |
FISCAL 2023 GRANTS OF PLAN-BASED AWARDS
| (1) Amounts represent awards payable under our AIP. See “Compensation Discussion and Analysis—Executive Compensation Program Elements—Cash Bonus Opportunities—Annual Cash Bonus Opportunity” above for a description of our AIP. Actual amounts paid under our fiscal 2023 AIP are set forth in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. | | (2) Reflects the number of shares that will vest for the applicable level of performance under the performance share portion of the fiscal 2023 grants made pursuant to the 2015 Omnibus Incentive Plan, the terms of which are summarized under “Compensation Discussion and Analysis—Long-Term Equity Incentive Awards—Fiscal 2023 Long-Term Equity Incentive Grants.” | | (3) Reflects the time-based restricted stock portion of the fiscal 2023 grants made pursuant to the 2015 Omnibus Incentive Plan, the terms of which are summarized under “Compensation Discussion and Analysis—Long-Term Equity Incentive Awards—Fiscal 2023 Long-Term Equity Incentive Grants.” | | (4) The grant date fair value of the performance shares that vest according to Relative TSR was computed in accordance with FASB ASC Topic 718 as of the grant date. |
FISCAL 2023 GRANTS OF PLAN-BASED AWARDS
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NARRATIVE TO SUMMARY COMPENSATION TABLE AND FISCAL 2023 GRANTS OF PLAN-BASED AWARDS
NARRATIVE TO SUMMARY COMPENSATION TABLE AND FISCAL 2023 GRANTS OF PLAN-BASED AWARDS
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END The following table sets forth information regarding outstanding equity awards made to our NEOs as of July 1, 2023.
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| NAME | GRANT DATE | OPTION AWARDS | | | | STOCK AWARDS | | | | | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE(1) | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE | OPTION EXERCISE PRICE ($) | OPTION EXPIRATION DATE | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)(2)(7) | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($)(3) | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#) | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($)(3)(4)(5)(6) | | GEORGE L. HOLM | 9/30/2015 | 318,921 | — | 19.00 | 9/30/2025 | | | | | | | 8/9/2016 | 194,131 | — | 26.57 | 8/9/2026 | | | | | | | 9/21/2017 | 120,679 | — | 28.80 | 9/21/2027 | | | | | | | 9/10/2018 | 105,070 | — | 32.50 | 9/10/2028 | | | | | | | 8/18/2020 | | | | | 32,843 | 1,978,462 | | | | | 8/18/2020 | | | | | | | 104,809 | 6,313,694 | | | 8/17/2021 | | | | | 29,468 | 1,775,152 | | | | | 8/17/2021 | | | | | | | 96,402 | 5,807,256 | | | 8/25/2022 | | | | | 46,521 | 2,802,425 | | | | | 8/25/2022 | | | | | | | 105,790 | 6,372,790 | | H. PATRICK HATCHER | 8/18/2020 | | | | | 6,018 | 362,524 | | | | | 8/17/2021 | | | | | 2,432 | 146,504 | | | | | 8/25/2022 | | | | | 12,406 | 747,337 | | | | | 8/25/2022 | | | | | | | 28,212 | 1,699,491 | | JAMES D. HOPE | 9/21/2017 | 6,524 | — | 28.80 | 8/31/2025 | | | | | | | 9/10/2018 | 12,609 | — | 32.50 | 8/31/2025 | | | | | | | 8/18/2020 | | | | | 14,110 | 849,986 | | | | | 8/18/2020 | | | | | | | 19,398 | 1,168,536 | | | 8/17/2021 | | | | | 8,841 | 532,582 | | | | | 8/17/2021 | | | | | | | 20,898 | 1,258,896 | | CRAIG H. HOSKINS | 8/18/2020 | | | | | 12,094 | 728,543 | | | | | 8/18/2020 | | | | | | | 15,519 | 934,865 | | | 8/17/2021 | | | | | 7,662 | 461,559 | | | | | 8/17/2021 | | | | | | | 25,066 | 1,509,976 | | | 1/1/2022 | | | | | 5,812 | 350,115 | | | | | 1/1/2022 | | | | | | | 19,852 | 1,195,884 | | | 8/25/2022 | | | | | 21,322 | 1,284,437 | | | | | 8/25/2022 | | | | | | | 48,488 | 2,920,917 |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
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OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| NAME | GRANT DATE | OPTION AWARDS | | | | STOCK AWARDS | | | | | | | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE(1) | NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE | OPTION EXERCISE PRICE ($) | OPTION EXPIRATION DATE | NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (#)(2)(7) | MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($)(3) | EQUITY INCENTIVE PLAN AWARDS: NUMBER OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED (#) | EQUITY INCENTIVE PLAN AWARDS: MARKET OR PAYOUT VALUE OF UNEARNED SHARES, UNITS OR OTHER RIGHTS THAT HAVE NOT VESTED ($)(3)(4)(5)(6) | | PATRICK T. HAGERTY | 9/30/2015 | 36,934 | — | 19.00 | 9/30/2025 | | | | | | | 8/9/2016 | 27,401 | — | 26.57 | 8/9/2026 | | | | | | | 9/21/2017 | 19,081 | — | 28.80 | 9/21/2027 | | | | | | | 9/10/2018 | 18,913 | — | 32.50 | 9/10/2028 | | | | | | | 8/18/2020 | | | | | 12,094 | 728,543 | | | | | 8/18/2020 | | | | | | | 15,519 | 934,865 | | | 8/17/2021 | | | | | 7,662 | 461,559 | | | | | 8/17/2021 | | | | | | | 25,066 | 1,509,976 | | | 1/1/2022 | | | | | 21,792 | 1,312,750 | | | | | 8/25/2022 | | | | | 12,406 | 747,337 | | | | | 8/25/2022 | | | | | | | 28,212 | 1,699,491 | | SCOTT E. MCPHERSON(7) | 9/1/2021 | | | | | 12,459 | 750,530 | | | | | 9/13/2021 | | | | | 22,061 | 1,328,955 | | | | | 2/16/2022 | | | | | 2,912 | 175,419 | | | | | 2/16/2022 | | | | | | | 6,630 | 399,391 | | | 9/2/2022 | | | | | 8,144 | 490,595 | | | | | 9/2/2022 | | | | | | | 18,520 | 1,115,645 |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (1) Represents fully-vested time-vesting and time and performance-vesting options. Options in this column granted on September 30, 2015, represent time and performance-vesting options granted pursuant to the 2007 Amended and Restated Management Option Plan (the “2007 Management Option Plan”) and time-vesting options granted pursuant to the 2015 Omnibus Incentive Plan. Options in this column granted on August 9, 2016, September 21, 2017, and September 10, 2018 represent time-vesting options granted pursuant to the 2015 Omnibus Incentive Plan. | | (2) Represents time-vesting restricted stock granted pursuant to the 2015 Omnibus Incentive Plan. Restricted stock in this column granted on August 17, 2021 and August 25, 2022 to Mr. Holm, Mr. Hope, Mr. Hoskins and Mr. Hagerty, granted on January 1, 2022 to Mr. Hoskins, and granted on February 16, 2022 and September 2, 2022 to Mr. McPherson vests in three equal annual installments on each of the first three anniversaries of the date of grant. The annual grant of restricted stock on August 18, 2020 in this column vests in three equal annual installments on each of the first three anniversaries of the date of grant and the one-time grants of restricted stock on August 18, 2020 in this column vest in total at the end of the three-year vesting period. Restricted stock in this column granted on January 1, 2022 to Mr. Hagerty vests in two equal installments on the second and third anniversary of the grant date. The employment agreement inducement awards granted to Mr. McPherson on September 13, 2021 vest in two equal installments on each of the first two anniversaries of the employment commencement date, which was September 1, 2021. The annual grant of restricted stock on August 25, 2022 for Mr. Hatcher vests in three equal annual installments on each of the first three anniversaries of the grant date and the one-time grant of restricted stock in connection with his promotion vest in total at the end of the three-year vesting period. | | (3) Based on $60.24, the closing price of our common stock on June 30, 2023, the last trading day on the NYSE of fiscal 2023. | | (4) The performance shares granted on August 18, 2020 vested based on the Company’s achievement of the Relative TSR performance measure with respect to the period that began on June 28, 2020, and ended on July 1, 2023, as determined by the Compensation Committee on August 22, 2023. The achievement level with respect to Relative TSR was between target and maximum performance. Accordingly, the number of shares reported in the table reflect the actual amounts based on 186.30% of target performance for Relative TSR. |
OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
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OUTSTANDING EQUITY AWARDS AT 2023 FISCAL YEAR-END
| (5) The performance shares granted on August 17, 2021 and January 1, 2022, will vest, if at all, based on the Company’s achievement of Relative TSR with respect to the period that began on July 4, 2021, and ends on June 29, 2024, as determined by the Compensation Committee following the end of fiscal 2024. As of July 1, 2023, the achievement level with respect to Relative TSR was between target and maximum performance. Accordingly, the number of shares reported in the table reflect amounts based on maximum performance for Relative TSR. The actual number of shares that will vest with respect to the performance shares is not yet determinable. | | (6) The performance shares granted on August 25, 2022 and September 2, 2022, will vest, if at all, based on the Company’s achievement of Relative TSR with respect to the period that began on July 3, 2022, and ends on June 28, 2025, as determined by the Compensation Committee following the end of fiscal 2025. As of July 1, 2023, the achievement level with respect to Relative TSR was between target and maximum performance. Accordingly, the number of shares reported in the table reflect amounts based on maximum performance for Relative TSR. The actual number of shares that will vest with respect to the performance shares is not yet determinable. | | (7) Awards granted to Mr. McPherson on September 1, 2021 represent awards under Core-Mark’s 2019 Long-Term Incentive Plan that were assumed by the Company in connection with the acquisition of Core-Mark and converted to Company restricted stock units based on the ratio prescribed in the merger agreement. |
FISCAL 2023 OPTION EXERCISES AND STOCK VESTED
FISCAL 2023 OPTION EXERCISES AND STOCK VESTED The following table provides information with respect to our NEOs regarding options exercised and stock vested during fiscal 2023.
FISCAL 2023 OPTION EXERCISES AND STOCK VESTED
| NAME | OPTION AWARDS | | STOCK AWARDS | | | | NUMBER OF SHARES ACQUIRED ON EXERCISE (#) | VALUE REALIZED ON EXERCISE ($)(1) | NUMBER OF SHARES ACQUIRED ON VESTING (#)(2) | VALUE REALIZED ON VESTING ($)(3) | | GEORGE L. HOLM | — | — | 80,707 | 4,153,478 | | H. PATRICK HATCHER | 2,139 | 79,742 | 4,356 | 224,628 | | JAMES D. HOPE | — | — | 23,058 | 1,187,678 | | CRAIG H. HOSKINS | 60,402 | 1,759,943 | 20,211 | 1,061,298 | | PATRICK T. HAGERTY | — | — | 17,810 | 917,853 | | SCOTT E. MCPHERSON | — | — | 50,172 | 2,729,731 |
FISCAL 2023 OPTION EXERCISES AND STOCK VESTED
| (1) We report the value realized on exercise as the difference between the fair market value of the shares acquired on exercise and the exercise price of the stock option. | | (2) Represents the vesting of one fourth of the shares of time-based restricted stock granted on September 10, 2018, one third of the shares of time-based restricted stock granted on September 16, 2019, August 18, 2020, August 17, 2021, January 1, 2022 and February 16, 2022, one third of the shares of time-based restricted stock units granted on September 1, 2021 and one half of the shares of time-based restricted stock granted on September 13, 2021. Additionally, the performance shares granted on September 16, 2019, vested based on the Company’s achievement of each performance metric (return on invested capital (“ROIC”) and Relative TSR) with respect to the period that began on June 30, 2019, and ended on July 2, 2022, as determined by the Compensation Committee on August 19, 2022. The achievement level with respect to ROIC was below threshold, and the achievement level with respect to Relative TSR was between threshold and target performance. Accordingly, the number of shares reported in the table reflect the actual amounts based on 0% of target performance for ROIC and 70.17% of target performance for Relative TSR. | | (3) Represents the value realized on each grants’ respective vesting date. |
FISCAL 2023 PENSION BENEFITS
FISCAL 2023 PENSION BENEFITS We have no pension benefits for our executive officers, including our NEOs.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL We have agreed to provide payments or other benefits to our NEOs under certain scenarios related to a termination of employment pursuant to the terms of the Severance Plan and pursuant to the agreements under which equity awards have been granted. This section describes those payments and benefits and events that trigger them.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
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SEVERANCE ARRANGEMENTS AND RESTRICTIVE COVENANTS
SEVERANCE ARRANGEMENTS AND RESTRICTIVE COVENANTS Severance Arrangements with George L. Holm, H. Patrick Hatcher, Craig H. Hoskins, Patrick T. Hagerty, and Scott E. McPherson. Each of Messrs. Holm, Hatcher, Hoskins, Hagerty, and McPherson has entered into the Participation Agreement and are, therefore, participants in the Severance Plan. The Severance Plan provides that if a participant’s employment is terminated by the Company or an affiliate without “Cause” or by the participant for “Good Reason” (each term as defined in the Severance Plan), the participant will be entitled to certain severance payments based on the participant’s “tier” level, as set forth below:
SEVERANCE ARRANGEMENTS AND RESTRICTIVE COVENANTS
| ● | Mr. Holm is entitled to receive cash severance equal to 2.0 times his salary if his employment is terminated without Cause or if he resigns with Good Reason (the “Tier 1 Non-CIC Termination Benefits”), in addition to any (i) annual bonus that has been earned but remains unpaid, and (ii) expenses that are reimbursable under the expense reimbursement policies of the Company (collectively, the “Standard Termination Benefits”). If Mr. Holm’s employment is terminated without Cause or he resigns with Good Reason within 90 days before or 24 months after a Change in Control (as defined in the Severance Plan), then, in addition to the Standard Termination Benefits and the Tier 1 Non-CIC Termination Benefits, Mr. Holm will receive an additional amount of cash severance benefit equal to 2.0 times his target bonus. | | ● | Each of Messrs. Hatcher, Hoskins, Hagerty and McPherson (each, a “Tier 2 Participant”) is entitled to receive cash severance equal to 1.5 times his salary if the Tier 2 Participant’s employment is terminated without Cause or the Tier 2 Participant resigns with Good Reason (the “Tier 2 Non-CIC Termination Benefits”), in addition to the Standard Termination Benefits. If the Tier 2 Participant’s employment is terminated without Cause or if the Tier 2 Participant resigns with Good Reason within 90 days before or 24 months after a Change in Control, then, in addition to the Standard Termination Benefits and the Tier 2 Non-CIC Termination Benefits, the Tier 2 Participant will receive an additional amount of cash severance benefit equal to the sum of 0.5 times the Tier 2 Participant’s salary plus 2.0 times the Tier 2 Participant’s target bonus. |
SEVERANCE ARRANGEMENTS AND RESTRICTIVE COVENANTS
A participant who is entitled to receive cash severance benefits under the Severance Plan will also be entitled to receive monthly COBRA supplements equal to the monthly payment that former employees of the Company are required to pay for COBRA coverage for the same type and level of coverage that was in effect for the participant and his or her qualified beneficiaries on the date the participant’s employment with the Company and its affiliates ended minus monthly payment that the participant paid for such coverage immediately before such employment ended. In addition to the execution of the Participation Agreement, the provision of payments and benefits described above is conditioned upon (i) a participant’s execution of a release of claims following the termination of the participant’s employment with the Company and its affiliates, and (ii) a participant’s agreement not to compete with the Company or solicit its employees or customers for one year following termination of employment, and not to use or disclose the Company’s confidential information. Any breach by a participant of the terms of the participant’s non-compete, non-solicit and confidentiality provisions will constitute a material breach of the Severance Plan, resulting in the waiver or forfeiture of all rights to future payments and benefits under the Severance Plan and may require the participant to repay to us amounts previously paid to the participant under the Severance Plan. As of December 31, 2022, Mr. Hope was not eligible to participle in the Severance Plan under the terms of the Consulting Agreement.
CEO PAY RATIO DISCLOSURE
CEO PAY RATIO DISCLOSURE For fiscal 2023, the annual total compensation of our CEO was $9,512,305 and the annual total compensation of our median employee, other than our CEO, was $75,257. As a result, we estimate the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee for fiscal 2023 was 126 to 1. To identify the median employee, we used the following methodology:
CEO PAY RATIO DISCLOSURE
| ● | We determined that, as of July 1, 2023, our employee population (including employees of our consolidated subsidiaries) totaled approximately 36,172 full-time, part-time and temporary employees in the U.S. and Canada. As permitted under SEC rules, we excluded from our employee population 88 associates who became employees of the Company during fiscal 2023 due to acquisitions completed during the fiscal year. | | ● | To identify the median employee from our employee population, we first determined the amount of each employee’s annual total compensation for fiscal 2023. For this purpose, annual total compensation refers to the sum of an employee’s annual salary and wages and fiscal 2023 bonus paid under the AIP. In making this determination, we annualized the compensation of any full-time employees who were hired in fiscal year 2023 but did not work for us for the entire fiscal year. | | ● | We then identified our median employee from our employee population by arraying and sorting our employee population from highest to lowest annual total compensation and then choosing the employee whose annual total compensation ranked in middle of the population. | | ● | After identifying our median employee, we calculated the annual total compensation for the median employee and for the CEO in the following manner: The median employee’s annual total compensation was calculated based on the same methodology used to determine our NEOs’ annual total compensation as reported in the Summary Compensation Table included on page 65 of this Proxy Statement plus the value of the median employee’s fiscal 2023 health and welfare benefits (i.e., $10,439). The annual total compensation of the CEO was based on the amount reported for the CEO in the “Total” column of our Summary Compensation Table included on page 65 of this Proxy Statement plus the value of the CEO’s fiscal 2023 health and welfare benefits (i.e., $24,762). |
CEO PAY RATIO DISCLOSURE
In calculating pay ratios, the SEC allows companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations. Therefore, our reported pay ratio may not be comparable to that reported by other companies due to differences in industries and geographical dispersion, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their pay ratios.
CEO PAY RATIO DISCLOSURE
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PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The following table provides information regarding “compensation actually paid” to the Company’s CEO and other NEOs along with the cumulative TSR of the Company and the S&P 400 Food, Beverage & Tobacco Index, the Company’s net income, and the Company’s Adjusted EBITDA which is considered the most important financial measure used by the Company to link compensation actually paid to the Company’s NEOs to Company performance. Compensation actually paid, as determined under SEC requirements, does not reflect the actual amount of compensation earned by or paid to our executive officers during a covered year. For further information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the Compensation Discussion and Analysis.
PAY VERSUS PERFORMANCE
| | | | AVERAGE SUMMARY COMPENSATION TABLE TOTAL FOR OTHER NEOs(2) | AVERAGE COMPENSATION ACTUALLY PAID TO OTHER NEOs(2)(5) | VALUE OF INITIAL FIXED $100 INVESTMENT BASED ON: | | | | | YEAR | SUMMARY COMPENSATION TABLE TOTAL FOR CEO(1) | COMPENSATION ACTUALLY PAID TO CEO(1)(5) | | | COMPANY TOTAL SHAREHOLDER RETURN(3) | PEER GROUP TOTAL SHAREHOLDER RETURN(3) | NET INCOME | ADJUSTED EBITDA(5) | | Fiscal 2023 | $9,487,543 | $16,029,890 | $2,676,478 | $3,979,424 | $216.07 | $141.90 | $397.2 | $1,363.4 | | Fiscal 2022 | $8,660,511 | $8,228,369 | $3,245,862 | $3,196,126 | $169.80 | $127.29 | $112.5 | $1,019.8 | | Fiscal 2021 | $8,228,550 | $14,307,114 | $2,564,703 | $3,763,424 | $172.13 | $149.38 | $40.7 | $625.3 |
PAY VERSUS PERFORMANCE
| (1) The amounts in these columns reflect the Summary Compensation Table and Compensation Actually Paid totals, respectively, for Mr. Holm for fiscal years 2021–2023. Mr. Holm was our principal executive officer for fiscal 2021-2023. See footnote 5 below for additional information on the calculation of “compensation actually paid.” |
PAY VERSUS PERFORMANCE
| (2) The amounts in these columns reflect the average Summary Compensation Table and average Compensation Actual Paid totals, respectively, for our non-CEO NEOs. For fiscal 2023, our non-CEO NEOs were Messrs. Hatcher, Hope, Hagerty, Hoskins and McPherson. For fiscal 2021 and 2022, our non-CEO NEOs were Messrs. Hope, Hagerty, Hoskins and King. See footnote 5 below for additional information on the calculation of “compensation actually paid.” |
PAY VERSUS PERFORMANCE
| (3) The calculation of TSR is based on the value of an initial fixed investment of $100 from the beginning of fiscal 2021 through the end of fiscal 2023 in the table, assuming reinvestment of dividends. The peer group TSR is represented by the S&P Midcap 400 Food, Beverage & Tobacco Industry Group Index. |
PAY VERSUS PERFORMANCE
| (4) Adjusted EBITDA is a non-GAAP financial measure. Please see Appendix A at the end of this Proxy Statement for the definitions of non-GAAP financial measures and reconciliations of such non-GAAP financial measures to their respective most comparable financial measures calculated in accordance with GAAP. |
PAY VERSUS PERFORMANCE
| (5) SEC rules require certain adjustments be made to the Summary Compensation Table amounts to calculate the “compensation actually paid” amounts. The following table details these adjustments: |
PAY VERSUS PERFORMANCE
| YEAR | EXECUTIVES | SUMMARY COMPENSATION TABLE TOTAL | DEDUCT STOCK AWARDS(a) | ADD EQUITY AWARD ADJUSTMENT(b) | COMPENSATION ACTUALLY PAID | | Fiscal 2023 | CEO | $9,487,543 | $6,000,052 | $12,542,399 | $16,029,890 | | | Other NEOs | $2,676,478 | $1,390,058 | $2,693,004 | $3,979,424 | | Fiscal 2022 | CEO | $8,660,511 | $5,000,035 | $4,567,893 | $8,228,369 | | | Other NEOs | $3,245,862 | $1,800,088 | $1,750,352 | $3,196,126 | | Fiscal 2021 | CEO | $8,228,550 | $5,350,123 | $11,428,687 | $14,307,114 | | | Other NEOs | $2,564,703 | $1,237,613 | $2,436,334 | $3,763,424 |
PAY VERSUS PERFORMANCE
| (a) Represents the amounts reported in the Stock Awards column in the Summary Compensation Table. | | (b) SEC rules require certain adjustments be made to equity awards totals to determine “compensation actually paid.” |
PAY VERSUS PERFORMANCE
| (i) | add the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; | | (ii) | add the amount of change in fair value as of the end of the applicable year (from the end of the prior fiscal year) of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; | | (iii) | add, for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; | | (iv) | add, for awards granted in prior years that vest in the applicable year, the amount equal to the change in fair value as of the vesting date (from the end of the prior fiscal year); |
PAY VERSUS PERFORMANCE
| 74 | |
PAY VERSUS PERFORMANCE
| (v) subtract, for awards granted in prior years that fail to meet the applicable vesting conditions during the applicable year, the amount equal to the fair value at the end of the prior fiscal year; and | | (vi) add the dollar value of any dividends or other earnings paid on equity awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. This adjustment is not applicable to PFG as no dividends are paid on equity. |
PAY VERSUS PERFORMANCE
The following table details these adjustments.
PAY VERSUS PERFORMANCE
| | | UNVESTED AWARDS | | VESTED AWARDS | | | | | YEAR | EXECUTIVES | YEAR END FAIR VALUE OF EQUITY AWARDS GRANTED DURING YEAR AND OUTSTANDING AND UNVESTED AT YEAR END ($) | YEAR OVER YEAR CHANGE IN FAIR VALUE OF OUTSTANDING AND UNVESTED EQUITY AWARDS AT YEAR END ($) | FAIR VALUE AS OF VESTING DATE OF EQUITY AWARDS GRANTED AND VESTED DURING YEAR ($) | CHANGE AS OF VESTING DATE FROM PRIOR YEAR END OF PRIOR AWARDS THAT VESTED DURING YEAR ($) | DEDUCT FORFEITED AWARDS (FAIR VALUE AT END OF PRIOR YEAR) ($) | EQUITY AWARD ADJUSTMENT ($) | | Fiscal 2023 | CEO | 7,211,752 | 4,890,740 | - | 746,381 | (306,474) | 12,542,399 | | | Other NEOs | 1,682,870 | 920,813 | - | 177,154 | (87,833) | 2,693,004 | | Fiscal 2022 | CEO | 5,225,446 | (258,337) | - | (177,714) | (221,502) | 4,567,893 | | | Other NEOs | 1,881,048 | (53,935) | - | (39,573) | (37,188) | 1,750,352 | | Fiscal 2021 | CEO | 7,720,265 | 2,682,515 | - | 1,102,538 | (76,631) | 11,428,687 | | | Other NEOs | 1,786,194 | 477,960 | - | 184,548 | (12,368) | 2,436,334 |
COMPENSATION ACTUALLY PAID V. TOTAL SHAREHOLDER RETURN
COMPENSATION ACTUALLY PAID V. TOTAL SHAREHOLDER RETURN
COMPENSATION ACTUALLY PAID V. TOTAL SHAREHOLDER RETURN
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COMPENSATION ACTUALLY PAID V. NET INCOME
COMPENSATION ACTUALLY PAID V. NET INCOME
COMPENSATION ACTUALLY PAID V. ADJUSTED EBITDA
COMPENSATION ACTUALLY PAID V. ADJUSTED EBITDA
DIRECTOR NOMINEES FOR INCLUSION IN NEXT YEAR’S PROXY STATEMENT (PROXY ACCESS)
DIRECTOR NOMINEES FOR INCLUSION IN NEXT YEAR’S PROXY STATEMENT (PROXY ACCESS) Our Bylaws permit a stockholder (or group of stockholders (up to 20)) who has owned a significant amount of Company common stock (at least 3%) for a significant amount of time (at least three years) to submit director nominees (the greater of two or up to 20% of the Board) for inclusion in our proxy statement if the stockholder(s) and the nominee(s) satisfy the requirements specified in our Bylaws. To be included in the Company’s proxy statement for the 2024 Annual Meeting, the proposing stockholder(s) must send notice and the required information to the Secretary so that it is received not earlier than May 13, 2024, nor later than June 12, 2024.