DEF 14A of National Beverage Corp, Aug 25, 2023

DEF 14A of National Beverage Corp

Filed Aug 25, 2023 · FY20230001437749-23-024701

Open on EDGAR

  1. EXECUTIVE COMPENSATION AND OTHER INFORMATION

    | i. | Base salary; | | ii. | Annual cash bonuses; | | iii. | Share-based compensation; and | | iv. | Retirement, health and other benefits. |

  2. EXECUTIVE COMPENSATION AND OTHER INFORMATION

    In order to maintain a competitive compensation program for its Executive Officers, the Compensation and Stock Option Committee, on a semi-annual basis, (a) reviews compensation practices to assure fairness, relevance, support of the strategic goals of the Company and contribution of the executive to the creation of long-term shareholder value, (b) considers the relevant mix of compensation components and (c) implements a compensation plan that reasonably allocates a portion of each executive’s total compensation to incentives and other forms of longer-term compensation linked to Company and individual performance, and the creation of shareholder value. It is the policy of the Company that any director, officer or other employee of the Company is prohibited from engaging in transactions in publicly-traded options for the Company’s securities, such as puts, calls and other derivative securities, on an exchange or in any other organized market. Directors, officers and other employees are also prohibited from purchasing the Company’s securities on margin and engaging in hedging or monetization transactions, such as zero-cost collars and forward sales contracts. Factors Considered In Determining Compensation The Compensation and Stock Option Committee reviews executive compensation levels for its Executive Officers on a semi-annual basis to ensure that they remain competitive within the beverage industry. The overall value of the compensation package for an Executive Officer is determined by the Compensation and Stock Option Committee in consultation with the Chief Executive Officer, other key officers and the Board. The factors considered by the Compensation and Stock Option Committee include those related to both the overall performance of the Company and the individual performance of the Executive Officer. Consideration is also given to comparable compensation data for individuals holding similarly responsible positions at other peer group companies in determining appropriate compensation levels. With respect to long-term incentive compensation to be awarded to Executive Officers, the Company maintains three equity-based plans: (a) the 1991 Omnibus Incentive Plan, (b) the Special Stock Option Plan and (c) the Key Employee Equity Partnership Program (each plan is discussed in more detail below). The timing, amount and form of awards under these plans for each of the Executive Officers is made at the discretion of the Compensation and Stock Option Committee based on recommendations of the Chief Executive Officer. Any such awards are granted only upon the written approval of the Compensation and Stock Option Committee. No stock-based awards or other equity rights have been granted to Mr. Nick A. Caporella since the Company’s inception. Elements of Executive Compensation Base Salary Base salary is used to attract and retain Executive Officers and is determined using comparisons with industry competitors and other relevant factors including the seniority of the individual, the functional role of the position, the level of the individual’s responsibility and the ability to replace the individual. Salaries for the Executive Officers are reviewed by the Compensation and Stock Option Committee, the Chief Executive Officer and the Board on a semi-annual basis. Changes to base salaries, if any, are affected primarily by individual performance. Annual Cash Bonuses Annual cash bonuses are intended to be a significant component of an Executive Officer’s compensation package. The amount of annual bonus compensation to be awarded to the Executive Officers, if any, is determined by the Compensation and Stock Option Committee, upon recommendation by the Chief Executive Officer. While the Chief Executive Officer and the Compensation and Stock Option Committee consider the Company’s overall performance and each individual’s performance when determining the amount of bonus to award, there is no predefined written plan, acknowledged by the recipient, with respect to performance measures that obligates the Company to pay an annual cash bonus and the Compensation and Stock Option Committee retains absolute discretion to award bonuses and to determine the amount of such bonuses. Share-Based Compensation (Long-Term Incentive Programs) Share-based long-term incentive compensation is provided to Executive Officers through the award of stock options. The primary purpose of stock options is to provide Executive Officers and other employees with a personal and financial interest in the Company’s success through stock ownership, thereby aligning their interests with those of our shareholders. The Compensation and Stock Option Committee believes that the value of stock options will reflect the Company’s financial performance over the long-term. Because the Company’s stock option programs require vesting periods before options may be exercised and an exercise price based on either the fair market value as of the date of grant or the amount of Common Stock held, the value of stock options and stock ownership increases when the market value of the Company’s common shares increases over time. Share-based awards made under the Company’s 1991 Omnibus Incentive Plan (the “Omnibus Plan”) typically consist of options to purchase Common Stock which vest over five years and have a term of ten years. Certain Executive Officers also receive grants from time to time under the Company’s Special Stock Option Plan (the “Special Option Plan”). The vesting schedule and exercise price of these options are tied to the executive’s ownership levels of Common Stock. Generally, the terms of the Special Option Plan allow for the reduction in exercise price upon each vesting date of the option. The vesting schedule and exercise price reduction of such options may be accelerated at the discretion of the Compensation and Stock Option Committee. While the Compensation and Stock Option Committee considers the Company’s overall financial performance during the respective vesting periods, there is no predefined written plan with respect to financial measures that obligates the Company to such acceleration, and the Compensation and Stock Option Committee has not elected to accelerate the vesting or price reduction of any options held by Executive Officers during the past three fiscal years. The Company issues share-based awards with long-term vesting schedules designed to increase the level of the executive’s stock ownership, encourage long- term employment, promote adherence to the Company’s principles and philosophy and create long-term value for shareholders, while inducing corporate compatibility within the management team. In addition, share-based compensation is awarded under the Company’s Key Employee Equity Partnership Program (the “KEEP Program”). The KEEP Program is designed to positively align interests between the Company’s executives and its shareholders beyond traditional option programs while, at the same time, stimulating and rewarding management for “partnering-up” with the Company to create shareholder value. The KEEP Program provides for granting stock options to key employees, officers and directors of the Company who invest their personal funds in Common Stock. Participants who purchase shares of Common Stock in the open market receive grants of stock options equal to 50% of the number of shares purchased up to a maximum of 12,000 shares purchased in any two- year period. Options under the KEEP Program are automatically forfeited upon the sale of shares originally acquired by the participant. The options are granted at an initial exercise price of 60% of the purchase price paid for the shares acquired and reduce to the par value of Common Stock at the end of the six-year vesting period.

  3. REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE

    REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE The Compensation and Stock Option Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis, required by Item 402(b) of Regulation S-K, with management of the Company. Based on this review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for the Company’s 2023 Annual Meeting of Shareholders. THE COMPENSATION AND STOCK OPTION COMMITTEE Cecil D. Conlee (Chairman) Samuel C. Hathorn, Jr. (Deputy Chairman) Stanley M. Sheridan

  4. SUMMARY COMPENSATION TABLE

    SUMMARY COMPENSATION TABLE The following table sets forth information concerning compensation awarded to, earned by or paid to our Executive Officers, and payments made to CMA, for services rendered during the past three fiscal years:

  5. SUMMARY COMPENSATION TABLE

    | | | | | Total | Grant Date | GAAP | Management Fee | | | | Name and | | | | Salary | Option | Option | Plus All Other | | | | Principal | | | | and | Award Value | Expense | Compensation | Total ($)(4) | | | Position | Year | Salary ($) | Bonus ($) | Bonus ($) | ($)(2) | ($)(3) | ($) | SEC | GAAP | | Nick A. Caporella(1) | 2023 | – | – | – | n/a | – | 11,729,324(1) | 11,729,324 | 4 | | Chairman of the Board & | 2022 | – | – | – | n/a | – | 11,148,959(1) | 11,148,959 | 4 | | Chief Executive Officer | 2021 | – | – | – | n/a | – | 10,765,292(1) | 10,765,292 | 4 | | Joseph G. | 2023 | 825,000 | 800,000 | 1,625,000 | n/a | 85,037 | 13,875(1) | 1,638,875 | 1,723,912 | | Caporella | 2022 | 800,000 | 850,000 | 1,650,000 | n/a | 85,037 | 13,802(1) | 1,663,802 | 1,748,839 | | President | 2021 | 790,000 | 700,000 | 1,490,000 | 395,100 | 60,343 | 14,779(1) | 1,899,879 | 1,565,122 | | George R. | 2023 | – | – | – | n/a | 47,412 | 969,176(1) | 921,764 | 4 | | Bracken(1) | 2022 | – | – | – | n/a | 47,412 | 855,915(1) | 808,503 | 4 | | Executive Vice | 2021 | – | – | – | 316,080 | 27,657 | 812,710(1) | 1,101,133 | 4 | | President-Finance | | | | | | | | | | | | | SEC Required | | | → | | NBC (GAAP) | | |

  6. SUMMARY COMPENSATION TABLE

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  7. SUMMARY COMPENSATION TABLE

    | (1) Mr. Nick A. Caporella, our Chairman of the Board and Chief Executive Officer, and Mr. George R. Bracken, our Executive Vice President-Finance, do not receive any cash compensation from the Company as their services are provided to us through CMA. As described above in “Compensation Discussion and Analysis” and “Management Services Agreement – Compensation”, we pay an annual base management fee equal to one percent of our consolidated net sales for the services that CMA provides, which include, among other things, the services of Mr. Nick A. Caporella and Mr. Bracken and other senior and corporate personnel who are not required to be included in the table above. The amounts set forth with respect to Mr. Nick A. Caporella under the caption “Management Fee Plus All Other Compensation” include the total management fees paid by us to CMA (which is compliant with the presentation requested by the Commission) and include amounts representing the use of aircraft of certain trips totaling $30,208 for fiscal 2021. Such trips for fiscal 2023 and 2022 are not included in the table as they were subsequently reimbursed by CMA. These trips, while considered ordinary and necessary business use, were not integrally and directly related to his responsibilities and required to be separately reported under the Commission’s rules. The use of aircraft for certain trips is valued based on the aggregate incremental cost to the Company, generally calculated using variable operating costs incurred as a result of such usage (such as fuel, maintenance, landing fees and crew expenses). The amounts set forth for the respective fiscal years should not be construed to be actual compensation paid by either the Company or CMA to Mr. Caporella. The amounts with respect to Mr. Joseph G. Caporella under the caption “Management Fee Plus All Other Compensation” represent a car allowance, retirement and health benefits. (See “Retirement, Health and Other Benefits” above and “Certain Relationships and Related Party Transactions” below.) The amounts set forth with respect to Mr. Bracken under the caption “Management Fee Plus All Other Compensation” represent payments to him by CMA and the amounts described in footnote 3 below. |

  8. SUMMARY COMPENSATION TABLE

    | (2) As prescribed by SEC regulations, grant date option award value represents the grant date fair value for the Special stock options granted on October 2, 2020. The fair value of the options were computed in accordance with Accounting Standards Codification 718 based on the Black-Scholes option-pricing model. (See Note 10 to the Financial Statements included in the Company’s Annual Report on Form 10-K for additional information regarding the assumptions utilized.) Special Options generally vest over five to nine-year periods and accordingly the Company will recognize compensation expense with respect to these options over the projected vesting periods. The Company believes the SEC-prescribed methodology does not fully reflect the periodic cost to the Company or the value to the recipient and therefore has provided additional Generally Accepted Accounting Principles (“GAAP”) based option expense information. (See footnote 3 below.) Amounts represent the annual compensation expense recognized for stock option awards computed in accordance with GAAP pursuant to Accounting Standards Codification 718 based on the Black-Scholes option-pricing model. (See Note 10 to the Financial Statements included in the Company’s Annual Report on Form 10-K for additional information regarding the assumptions utilized.) Options held by our Executive Officers generally vest over five to nine-year periods and are expensed in accordance with GAAP. The Company believes that the annual compensation expense provides an additional meaningful measure of the value of these options for any given fiscal year and therefore has been included as supplementary information. |

  9. SUMMARY COMPENSATION TABLE

    | (3) Amounts represent the annual compensation expense recognized for stock option awards computed in accordance with GAAP pursuant to Accounting Standards Codification 718 based on the Black-Scholes option-pricing model. (See Note 10 to the Financial Statements included in the Company’s Annual Report on Form 10-K for additional information regarding the assumptions utilized.) Options held by our Executive Officers generally vest over five to nine-year periods and are expensed in accordance with GAAP. The Company believes that the annual compensation expense provides an additional meaningful measure of the value of these options for any given fiscal year and therefore has been included as supplementary information. |

  10. SUMMARY COMPENSATION TABLE

    | (4) Mr. Nick A. Caporella has not been awarded stock options, therefore, his total does not differ from the SEC recommended total. GAAP option expense for Mr. Bracken is included in “Management Fee Plus All Other Compensation”, therefore his GAAP total is reflected in that column. |

  11. GRANTS OF PLAN-BASED AWARDS IN FISCAL 2023

    GRANTS OF PLAN-BASED AWARDS IN FISCAL 2023 There were no equity or non-equity incentive plan based awards granted to Executive Officers during Fiscal 2023.

  12. OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2023

    OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2023 The following table sets forth information about the number of outstanding equity awards held by our Executive Officers at April 29, 2023. No equity awards have been granted to Nick A. Caporella since the inception of the Company.

  13. OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2023

    | | Option Awards | | | | | Name | Number of Securities Underlying Unexercised Options (# Exercisable) | Number of Securities Underlying Unexercised Options (# Unexercisable) | Option Exercise Price ($) | Option Expiration Date | | Joseph G. Caporella | 40,000 | - | $3.13(1) | 8/26/2024 | | | 2,400 | 3,600 | $8.99(2) | 3/24/2029 | | | 2,100 | 12,900 | $30.08(1) | 10/1/2030 | | George R. Bracken | 30,000 | - | $3.13(1) | 8/26/2024 | | | 1,680 | 10,320 | $30.08(1) | 10/1/2030 |

  14. OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2023

    | 1 | Options granted under the Company’s Special Option Plan are exercisable for a ten-year period and vest in relatively equal amounts at approximately 16-month intervals. The exercise price can be reduced and the vesting schedule can be accelerated if the optionee purchases and maintains ownership of shares of Common Stock and the Company achieves performance objectives as determined by the Board. Based upon these factors, full vesting can occur from 64 to 104 months after issuance and the exercise price can range from 50% to 7% of the initial grant price if the options are held until the final vesting date. |

  15. OUTSTANDING EQUITY AWARDS AT END OF FISCAL 2023

    | 2 | Under the Company’s KEEP plan, participants receive a grant equal to 50% of the number of shares of common stock purchased on the open market. KEEP options are granted at an initial exercise price of 60% of the purchase price of the shares acquired, and such price is reduced to the par value of the Common Stock over a six-year vesting period. |

  16. OPTION EXERCISES AND STOCK VESTED IN FISCAL 2023

    OPTION EXERCISES AND STOCK VESTED IN FISCAL 2023 There were no stock options exercised by Executive Officers during Fiscal 2023.

  17. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION Officers of the Company who are also directors do not receive any fee or remuneration for services as members of the Board of Directors or of any Committee of the Board of Directors. Non-management directors receive a retainer fee of $50,000 per annum, a fee of $2,500 for each Board meeting attended, a fee of $1,500 for each Audit Committee meeting attended ($2,500 in the case of the Chairman) and a fee of $1,250 ($2,000 in the case of a committee Chairman) for each other committee meeting attended. Effective July 2023, the annual retainer fee for non-management directors was increased to $60,000. Set forth below are the amounts paid to non-management directors in Fiscal 2023.

  18. DIRECTOR COMPENSATION

    | Name | Fees Earned or Paid in Cash ($) | Grant Date Option Award Value ($)(1) | All Other Compensation ($) | Total ($)(2) | | Cecil D. Conlee | 70,000 | __ | — | 70,000 | | Samuel C. Hathorn, Jr. | 85,000 | __ | — | 85,000 | | Stanley M. Sheridan | 71,000 | __ | — | 71,000 |

  19. DIRECTOR COMPENSATION

    | 1 | There were no stock options granted to non-management directors during Fiscal 2023. Compensation expense recognized for accounting purposes with respect to stock options held by Directors during Fiscal 2023, computed in accordance with Accounting Standards Codification 718, is as follows: Mr. Conlee $47,400, Mr. Hathorn, $59,250, and Mr. Sheridan $39,500. |

  20. DIRECTOR COMPENSATION

    | 2 | Totals, including compensation expense recognized for accounting purposes with respect to stock options held by Directors, are as follows: Mr. Conlee $117,400, Mr. Hathorn $144,250 and Mr. Sheridan $110,500. |

  21. CEO PAY RATIO

    CEO PAY RATIO Pursuant to Item 402(u) of Regulation S-K and Section 953(b) of the Dodd-Frank Act the Company is required to provide the ratio of the annual total compensation of Mr. Nick A. Caporella, who has served as the Company’s Chief Executive Officer since the Company was founded in 1985, to the annual total compensation of the median employee of the Company. Mr. Nick A. Caporella, our Chairman of the Board and Chief Executive Officer, does not receive any direct compensation from the Company as his services, along with the services of other individuals, are provided to the Company through CMA. As noted under “Certain Relationships and Related Party Transactions” CMA employs numerous individuals, who, acting as a unit, provide management, administrative and creative functions for the Company. As further noted in “Management Services Agreement – Compensation”, the compensation for Mr. Caporella that is presented in the “Summary Compensation Table” reflects, pursuant to a Commission staff request, the entire amount of the CMA fee for Fiscal 2023. We believe this method of reporting is misleading and could lead the reader to construe that these amounts are paid by the Company or CMA directly to Mr. Nick A. Caporella. The amounts paid by the Company to CMA, as reflected in the Summary Compensation Table, should not be interpreted as the actual amount of compensation paid to Mr. Nick A. Caporella by either the Company or CMA and are shown only to comply with the Commission comment letter. The pay of our median employee was $67,225. The resulting ratio of the net CMA fee to the pay of our Median Employee is 174 to 1. The median employee was identified using the gross annual compensation as of April 29, 2023 for all active employees on that date. The calculation of CEO’s annual total compensation, used to determine the pay ratio, utilized the methodology outlined above.

  22. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE Pursuant to Item 402(v) of Regulation S-K and Section 953(a) of Dodd-Frank Act, the Company is required to provide the following disclosure regarding executive compensation and Company performance for the fiscal years listed below. While this form is new to this filing, the Compensation and Stock Option Committee has always participated in the pay versus performance for its executives, in making compensation decisions for any of the fiscal years shown. However, the Compensation and Stock Option Committee did not consider the additional disclosures now required.

  23. PAY VERSUS PERFORMANCE

    | | Summary Compensation | Compensation | Average Summary Compensation Table Total for | Average Compensation Actually Paid to | Value of Initial Fixed $100 Investment Based On: | | | | | Year | Table Total for PEO ($) (1) | Actually Paid to PEO ($) (1) | Non-PEOs ($) (2) | Non-PEO NEOs ($) (3) | TSR ($) (4) | Peer Group TSR($) (5) | Net Income ($ in thousands) (6) | Net Sales ($ in thousands) (7) | | 2023 | $11,729,324 | - | $1,280,320 | $1,004,002 | $206.5 | $121.7 | $142,164 | $1,172,932 | | 2022 | 11,148,959 | - | 1,236,153 | 643,956 | 199.0 | 145.2 | 158,512 | 1,138,013 | | 2021 | 10,765,292 | - | 1,500,506 | 1,607,178 | 224.3 | 157.0 | 174,146 | 1,072,210 |

  24. PAY VERSUS PERFORMANCE

    | (1) The Principal Executive Officer (PEO) was Nick A. Caporella for all years in the table. The amounts set forth in the Summary Compensation Table for Mr. Caporella reflect, pursuant to a Commission staff request, the entire amount of the CMA fees for the respective years and should not be interpreted as the actual amounts of compensation paid to Mr. Caporella by either the Company or CMA. As described more fully under "Management Services Agreement - Compensation" and the "Summary Compensation Table" of this Proxy, Mr. Nick A. Caporella does not receive any cash compensation from the Company. As described more fully under "Certain Relationships and Related Party Transactions" of this Proxy, the Board of Directors has contemplated incentive compensation under the Management Agreement, but since inception of the agreement, no incentive compensation has been paid. | | (2) The Non-PEO NEOs were Joseph G. Caporella and George R. Bracken for all years in the table. | | (3) The following table describes the adjustments, each of which is prescribed by the SEC rules, to calculate the Compensation Actually Paid Amounts from the Summary Compensation Table Amounts. The Compensation Actually Paid Amounts and the Summary Compensation Table Amounts do not reflect the actual amount of compensation earned or paid to our executives during the applicable years, but rather are amounts that are determined in accordance with Item 402 of Regulation S-K of the SEC. |

  25. PAY VERSUS PERFORMANCE

    | | 2023 | 2022 | 2021 | | Adjustments (a) | Non-PEO NEOs | Non-PEO NEOs | Non-PEO NEOs | | Summary Compensation Table Amounts | $1,280,320 | $1,236,153 | $1,500,506 | | (Deduct): Aggregate value for option awards included in Summary Compensation Table | - | - | (355,540) | | Add: Fair value at year end of awards granted during the fiscal year that were outstanding and unvested at year end | - | - | 183,735 | | Add (Deduct): Year-over year change in fair value at fiscal year end of awards granted in any prior fiscal year that were outstanding and unvested at fiscal year end. | (290,047) | (469,255) | 71,599 | | Add (Deduct): Vesting date fair value of awards granted and vested during the fiscal year | - | - | - | | Add (Deduct): Change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in prior fiscal year for which vesting conditions were satisfied during the applicable fiscal year | 13,729 | (122,942) | 206,878 | | (Deduct): Fair Value at end of prior fiscal year of awards granted that failed to meet the applicable vesting conditions during the year | - | - | - | | Add: Dividends or other earnings paid on awards in the fiscal year prior to vesting | - | - | - | | Compensation Actually Paid Amounts (as calculated) | $1,004,002 | $643,956 | $1,607,178 |

  26. PAY VERSUS PERFORMANCE

    a) The following valuation assumptions were used to calculate fair values of equity awards differed from those used to calculate the fair values at the time of grant as reflected in Summary Compensation Table. Stock prices used were: April 29, 2023: $49.70; April 30, 2022: $44.08; May 1, 2021: $48.59; and, May 2, 2020: $25.035

  27. PAY VERSUS PERFORMANCE

    | (4) Total Shareholder Return ("TSR") assumes that dividends were reinvested on the date of issuance | | (5) The Peer Group used is the Dow Jones U.S. Soft Drink Index , which is the same peer group used in Part II, Item 5 in our Form 10-K | | (6) Net Income as reported in the Company's Consolidated Statement of Income included in our Form 10-K | | (7) The Company is a party to a management agreement with CMA. As set forth in Certain Relationships and Related Party Transactions, the management agreement provides that the Company will pay CMA an annual base fee equal to one percent of consolidated net sales of the Company, and further provides that the Compensation and Stock Option Committee and the Board of Directors may from time to time award additional incentive compensation to CMA or its personnel. As a result, the Company has elected to present net sales due to its relationship to the management fee. |