DEF 14A of Natural Grocers by Vitamin Cottage, Inc.
Filed Jan 25, 2024 · FY20230001437749-24-002188
PROPOSAL 1 - ELECTION OF CLASS III DIRECTORS
PROPOSAL 1 - ELECTION OF CLASS III DIRECTORS Our Board currently consists of eight members. Our amended and restated certificate of incorporation and bylaws divide our Board into three classes. One class is elected each year for a term of three years. Our bylaws provide that our Board will consist of a number of directors to be fixed from time to time by a resolution of the Board but shall consist of no less than one director and no more than nine directors. Any increase or decrease in the number of directors must be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The following table sets forth the class of which each member of the Board is a member, the year in which he or she first became a director, and whether or not he or she is considered “independent” under the rules of the NYSE. The sections of this Proxy Statement below entitled “Executive Officers and Directors” and “Corporate Governance” provide additional information about the Board and its committees and our corporate governance.
PROPOSAL 1 - ELECTION OF CLASS III DIRECTORS
| Class | Director’s Name and Year First Became a Director | Independent? | | Class III (term expires 2024) | Heather Isely (2012) | No | | | Kemper Isely (2012) | No | | | Edward Cerkovnik (2013) | Yes | | Class I (term expires 2025) | Elizabeth Isely (2012) | No | | | Richard Hallé (2012) | Yes | | Class II (term expires 2026) | Zephyr Isely (2012) | No | | | David Rooney (2020) | Yes | | | Sandra Buffa (2023) | Yes |
Election of Three Class III Directors
Election of Three Class III Directors The terms of our three Class III directors will expire at the Annual Meeting. Accordingly, Ms. Heather Isely and Messrs. Kemper Isely and Edward Cerkovnik are standing for re-election to the Board as Class III directors. The Board has nominated Ms. Isely and Mr. Isely and recommended that each of them be re-elected to the Board as Class III directors, to hold such position until the 2027 Annual Meeting of Stockholders and until his or her successor has been duly elected and qualified or until his or her earlier death, resignation or removal. Ms. Isley is an Executive Vice President and Corporate Secretary of the Company and Mr. Isely is a Co-President of the Company and, thus, neither of them is independent under the rules of the NYSE. In addition, the Board has nominated Mr. Cerkovnik and recommended that he be re-elected to the Board as a Class III director, to hold such position until the 2027 Annual Meeting of Stockholders and until his successor has been duly elected and qualified or until his earlier death, resignation or removal. The Board has determined that Mr. Cerkovnik is independent within the meaning of the director independence standards of the NYSE. In making this determination, the Board solicited and considered information from Mr. Cerkovnik regarding whether he, or any member of his immediate family, had a direct or indirect material interest in any transactions involving the Company, was involved in a commercial or investment relationship with the Company or received personal benefits from or on behalf of the Company outside the scope of such person’s normal compensation.
EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE OFFICERS AND DIRECTORS Set forth below is information concerning our current executive officers and directors as of the date of this Proxy Statement. The business address of all of our executive officers and directors is 12612 West Alameda Parkway, Lakewood, Colorado 80228.
EXECUTIVE OFFICERS AND DIRECTORS
| Name | Age | Position(s) | | Kemper Isely* | 61 | Chairman, Director and Co-President | | Zephyr Isely | 74 | Director and Co-President | | Heather Isely* | 58 | Director, Executive Vice President and Corporate Secretary | | Elizabeth Isely | 69 | Director and Executive Vice President | | Sandra Buffa | 71 | Director | | Edward Cerkovnik* | 66 | Director | | Richard Hallé | 59 | Director | | David Rooney | 65 | Director | | Todd Dissinger | 66 | Chief Financial Officer |
EXECUTIVE OFFICERS AND DIRECTORS
| * Nominee for re-election as a director. |
EXECUTIVE OFFICERS AND DIRECTORS
Kemper Isely has been a director and our Co-President since 1998. He joined the Company as an employee in 1977 and during his tenure with our Company has functioned as Store Manager, Warehouse Manager, Director of Marketing, Director of Purchasing, Director of Operations and Director of Finance. We believe Mr. Kemper Isely’s qualifications to serve on our Board include his knowledge of our Company and the food retail industry and his extensive management experience at our Company. Zephyr Isely has been a director and our Co-President since 1998. He joined the Company as an employee in 1969 and during his tenure with our Company has functioned as Store Manager, Director of Receiving, Warehouse Manager, Director of Operations, Director of Purchasing, Director of Accounting, Manager of Payroll and Compensation and Director of Information Systems. We believe Mr. Zephyr Isely’s qualifications to serve on our Board include his knowledge of our Company and the food retail industry and his extensive management experience at our Company. Heather Isely has been a director and our Executive Vice President and Corporate Secretary since 1998. Ms. Heather Isely joined the Company as an employee in 1989 and during her tenure with our Company has functioned as Produce Coordinator, Store Manager, Manager of Quality Control, Director of Nutrition Education, Manager of Operations, Manager of Compensation, Manager of Training and Director of Human Resources. We believe Ms. Heather Isely’s qualifications to serve on our Board include her knowledge of our Company and the food retail industry and her extensive management experience at our Company. Elizabeth Isely has been a director and our Executive Vice President since 1998. Ms. Elizabeth Isely joined the Company as an employee in 1977 and during her tenure with our Company has functioned as Store Manager, Regional Manager, Director of Operations, Manager of Training and Director of New Store Openings. We believe Ms. Elizabeth Isely’s qualifications to serve on our Board include her knowledge of our Company and the food retail industry, her experience in opening our new stores and her extensive management experience at our Company. Sandra Buffa has been a director since August 2023. She served as Chief Financial Officer of the Company from 2008 to 2017. Prior to her role with the Company, Ms. Buffa previously served as Chief Financial Officer at QCE, LLC, the parent company of the Quizno's restaurant chain, as Senior Vice President, Chief Financial Officer and Treasurer of Mrs. Fields' Original Cookies, Inc., and as President and Chief Operating Officer of Crabtree & Evelyn, Ltd. She began her career with PricewaterhouseCoopers, including as a senior audit manager. We believe that Ms. Buffa’s qualifications to serve on the Board include her extensive retail industry experience, her direct knowledge of our Company and significant experience in business operations, corporate finance and financial reporting. Edward Cerkovnik has been a director since July 23, 2013. Mr. Cerkovnik is a founder, a director and the Co- Chief Executive Officer of Breckenridge-Wynkoop, LLC, which owns and operates brew pubs, ale houses and other restaurant concepts. He was a founder, officer and director of Breckenridge Holding Company, the owner and operator of the Breckenridge Brewery, from its inception in 1994 until its sale in 2016. In addition, Mr. Cerkovnik has been an active principal in other restaurant and commercial real estate projects since 1994. We believe that Mr. Cerkovnik’s qualifications to serve on the Board include his knowledge of the retail industry and significant experience in business ownership and operations. Richard Hallé has been a director since October 17, 2012. Mr. Hallé has served as a managing director of Alvarez and Marsal Private Equity Performance Improvement Group since March 2023. From 2011 until its sale in 2021, Mr. Hallé served as the Chief Financial Officer of Vivial Inc. in Englewood, Colorado, overseeing finance, including accounting, treasury, tax, planning, forecasting, budgeting and financial reporting. Previously, Mr. Hallé served as the Chief Financial Officer and Secretary of DTN Holding Company, Inc. in Omaha, Nebraska from 2003 to 2008 and as a Managing Director of FTI Consulting, Inc. from 2002 to 2003 where he developed business restructuring strategies. We believe that Mr. Hallé’s qualifications to serve on the Board include his significant experience in business operations, corporate finance and financial reporting. David Rooney has been a director since August 5, 2020. During Mr. Rooney’s 40-year career with Deloitte & Touche LLP (“Deloitte”), he served as an audit partner and held numerous leadership roles. Prior to his retirement from Deloitte, Mr. Rooney served as partner-in-charge of the Denver audit practice, as Colorado practice leader for services to the Consumer & Industrial products industries, and as an advisory partner, advising public and private companies on critical business issues. Mr. Rooney has extensive experience in the areas of accounting and finance, risk assessment, internal controls, corporate governance, mergers and acquisitions, and public offerings. We believe that Mr. Rooney’s qualifications to serve on the Board include his significant experience with financial reporting by public companies and his experience with risk assessment, internal controls and corporate governance. Todd Dissinger has served as our Chief Financial Officer since January 1, 2018. From August 2015 until his appointment as our Chief Financial Officer, Mr. Dissinger served as Vice President, Treasurer of the Operating Company. From 1997 to 2015, he held senior management positions, including Senior Vice President – Treasurer, Risk Management and Credit, at The Bon-Ton Stores, Inc. From 1985 to 1997, Mr. Dissinger held management positions, including Vice President – Senior Relationship Manager, with PNC Bank. Kemper Isely, Zephyr Isely and Heather Isely are siblings. Elizabeth Isely was previously married to a member of the Isely family who is not currently involved in Company operations.
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
Board of Directors
Board of Directors Board Composition Our business and affairs are managed under the direction of our Board. Our Board currently has eight members, Kemper Isely, Zephyr Isely, Heather Isely, Elizabeth Isely, Sandra Buffa, Edward Cerkovnik, Richard Hallé and David Rooney. Our bylaws provide that our Board consists of a number of directors to be fixed from time to time by a resolution of the Board. Our amended and restated certificate of incorporation and bylaws provide for a classified board of directors consisting of three classes of directors, each serving staggered three-year terms, as follows:
Board of Directors
| • | Heather Isely, Kemper Isely and Edward Cerkovnik are Class III directors; their terms will expire at the Annual Meeting and they have been nominated for re-election at the Annual Meeting; |
Board of Directors
| • | Elizabeth Isely and Richard Hallé are Class I directors; their terms will expire at the 2025 Annual Meeting of Stockholders; and |
Board of Directors
| • | Zephyr Isely, Sandra Buffa and David Rooney are Class II directors; their terms will expire at the 2026 Annual Meeting of Stockholders. |
Board of Directors
Upon expiration of the term of a class of directors, directors for that class will be elected for a three-year term at the Annual Meeting of Stockholders in the year in which that term expires. Each director’s term continues until the election and qualification of his or her successor, or his or her earlier death, resignation or removal. Any increase or decrease in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of the Board into three classes with staggered three-year terms may delay or prevent stockholder efforts to effect a change in our management or a change in control. A voting agreement entered into with and among our major stockholders is in effect and provides the Isely family with control over the election of directors. See “Certain Relationships and Related Party Transactions-Stockholders Agreement” in this Proxy Statement for a description of this agreement. Directors can be removed from our Board only for cause, as defined in our amended and restated certificate of incorporation. Vacancies on our Board, and any new director positions created by the expansion of our Board, can be filled only by a majority vote of the remaining directors then in office. Board Leadership Structure and Risk Oversight The Chairman of our Board is also a Co-President of the Company. Because of his knowledge of and insight into our business, we believe Mr. Kemper Isely is in the best position to focus the attention of our independent directors on matters that are the most critical to our Company. We also believe that Mr. Kemper Isely’s effectiveness in promoting the Company and forming new business relationships is significantly enhanced by his role as both the Chairman and a Co-President. We do not currently have a lead independent director. Mr. Rooney currently serves as the presiding director at executive sessions of the Board at which only non-management directors are present. Our Board and audit committee are responsible for overall supervision of our risk management activities and oversight of the material risks facing the Company. Our Board administers its risk oversight function primarily through the audit committee, which oversees our risk management practices (with the exception of cybersecurity risk, which is overseen by the full Board, as described further below). The audit committee is responsible for, among other things, discussing with management our major risk exposures and actions taken to monitor and mitigate these exposures. To this end, management provides regular reports to the audit committee regarding the risks facing the Company and the steps taken to address those risks. The audit committee also discusses with management our guidelines, policies and business practices that govern the risk assessment and management process. The Board receives presentations throughout the year from various business department leaders that include, as appropriate, discussion of significant risks. At each Board meeting, Mr. Kemper Isely, our Chairman and Co-President, addresses matters of particular importance to the Company, including any significant areas of risk that require Board attention. Further, our independent directors, in executive sessions, address significant areas of risk outside the presence of Company employees. We have identified cybersecurity as a critical part of the Company’s risk management activity. Our Board is responsible for oversight of cybersecurity risk and has appointed the Operating Company’s Vice President of Information Technology as the point person for biannual reporting to the Board on cybersecurity risks and actions taken to mitigate those risks. We have a dedicated team that is responsible for managing enterprise-wide information security strategy, policy, standards, architecture and processes. Controlled Company and Director Independence We have elected to avail ourselves of the “controlled company” exception under the corporate governance rules of the NYSE. Under NYSE rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a “controlled company” and may elect not to comply with certain corporate governance standards. Certain members of the Isely family holding over 50% of our Common Stock are parties to a stockholders agreement (the “Stockholders Agreement”) pursuant to which they control the election of our directors, and we are therefore a “controlled company.” As a result, we have elected not to have a majority of “independent directors” on our Board, we do not have a compensation committee composed entirely of “independent directors” and compensation for our executives and the selection of our director nominees are not determined by a majority of “independent directors,” as defined under the rules of the NYSE. The “controlled company” exception does not modify the independence requirements for the audit committee, and we are subject to, and have complied with, the requirements of the SEC and the NYSE, which require that our audit committee be composed of at least three members, each of whom is required to be independent. Consistent with these requirements, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and the Company, its senior management and its independent auditors, the Board has affirmatively determined that the following four directors are independent directors within the meaning of the applicable NYSE and SEC rules and regulations: Sandra Buffa, Edward Cerkovnik, Richard Hallé and David Rooney. In making this determination, the Board found that none of these directors had a material or other disqualifying relationship with the Company. Specifically, the Board solicited and considered information from each such director regarding whether he or she, or any member of his or her immediate family, had a direct or indirect material interest in any transactions involving the Company, was involved in a commercial or investment relationship with the Company or received personal benefits from or on behalf of the Company outside the scope of such person’s normal compensation. In making its determination as to Mr. Cerkovnik’s independence, the Board considered the Operating Company’s commercial relationship with Teakoe & Company Inc. (“Teakoe”), a Colorado-based producer of organic teas, which is discussed in more detail under “CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS” below. Teakoe, of which Mr. Cerkovnik is a minority shareholder and director, has entered into a supply agreement with the Operating Company to source organic tea products for sale in our stores. The amount we paid Teakoe for products during fiscal 2023 was approximately $60,000. Mr. Cerkovnik had no input in the Operating Company’s selection of Teakoe as a vendor or the terms of its relationship with Teakoe. Mr. Cerkovnik does not have any direct or indirect interest in the transaction other than as a result of being a minority shareholder and director of Teakoe. This commercial relationship was approved by our audit committee in accordance with our policies and procedures for related party transactions. Kemper Isely, our Co-President; Zephyr Isely, our Co-President; Heather Isely, our Executive Vice President and Corporate Secretary; and Elizabeth Isely, our Executive Vice President, are not independent directors. Each is an employee of the Company and a party to the Stockholders Agreement. Communications with the Board
Board of Directors
The Board welcomes questions or comments about our Company and its operations. Interested parties and stockholders may contact the Board as a whole, our non-management directors, or any one or more individual directors by sending a letter to the intended recipient’s attention c/o Natural Grocers by Vitamin Cottage, Inc. Attention: Corporate Secretary, 12612 West Alameda Parkway, Lakewood, Colorado 80228. The Corporate Secretary will maintain a record of all such communications and promptly forward to the Chairman of the Board those that the Corporate Secretary believes require immediate attention. The Corporate Secretary will periodically provide the Chairman of the Board with a summary of all such communications. The Chairman of the Board will notify the Board or the chairs of the relevant committees of the Board of those matters that he believes are appropriate for further action or discussion. Meetings of the Board The Board met four times during fiscal 2023. Each Board member attended at least 75% of the meetings of the Board held during fiscal 2023. Ms. Buffa attended at least 75% of the meetings of the Board held during fiscal 2023 following her election to the Board. During fiscal 2023, our Board held four executive sessions at which only non-management directors were present. Pursuant to our Corporate Governance Guidelines, our directors are expected to attend meetings of the Board and all committees on which they sit (including separate meetings of non-management directors), with the understanding that, on occasion, a director may be unable to attend a meeting in person or by teleconference. It is the Company’s policy to encourage directors to attend the Annual Meeting of Stockholders and seven members of the Board attended our 2023 Annual Meeting of Stockholders.
Compensation Discussion and Analysis
Objectives of our executive compensation program Hiring and retaining our officers and other key employees is critically important to ensure the continuity and stability required to grow our business. Our executive compensation and benefits program is designed to attract, retain, reward and create incentives for a highly talented and committed team of executive officers who share our vision and desire to work toward our goals. Compensation decisions in fiscal 2023 regarding our NEOs were made by our compensation committee. Our compensation philosophy is to provide our NEOs with a compensation package that attracts, motivates and retains executive talent and aligns the interests of management with those of our stockholders. Our approach to executive compensation is intended to reward our NEOs for making strong individual contributions to our success and creating long-term value. Given that all of our NEOs other than Mr. Dissinger, our Chief Financial Officer, are members of the Isely family and have a substantial ownership stake in the Company, we believe that our Co-Presidents and our Executive Vice Presidents have significant incentives to create shareholder value without participation in the Company’s equity incentive program. In consideration of each of their individual contributions to the Company’s strong financial and operating performance in fiscal 2023, Ms. Heather Isely, Ms. Elizabeth Isely and Mr. Dissinger were eligible to receive cash-based incentive compensation for fiscal 2023. Mr. Dissinger was the only NEO to participate in the equity incentive program. See “—Primary elements of compensation; Compensation decisions for fiscal 2023” below for a discussion of the compensation committee’s compensation decisions for fiscal 2023. Executive compensation process Compensation‑setting process. During fiscal year 2023, our compensation committee engaged FW Cook, an independent compensation consultant, to conduct an executive compensation study. FW Cook provided the compensation committee with peer group market data as a general reference point to consider when making compensation decisions. The compensation committee considered the information provided by FW Cook and recommendations from our Co-Presidents to determine the appropriate level and mix of compensation for our NEOs. The compensation committee assessed the independence of FW Cook and concluded that no conflict of interest existed that would prevent FW Cook from serving as the compensation committee’s independent compensation consultant. Except for the services provided to the compensation committee, FW Cook does not provide any other services to the Company. Our compensation committee currently consists of Ms. Heather Isely, Mr. Kemper Isely, Mr. Cerkovnik and Mr. Hallé. In addition to reviewing and approving executive compensation, our compensation committee’s duties include administering the 2012 Omnibus Incentive Plan, as amended (the “Omnibus Plan”), which we adopted in July 2012, as subsequently amended. At our 2018 Annual Meeting of Stockholders, our stockholders approved holding future advisory votes regarding the compensation paid to our NEOs every three years. At our 2021 Annual Meeting of Stockholders, our stockholders approved, on an advisory basis, the compensation paid to our NEOs during fiscal 2020. Given the strong stockholder support reflected in the results of the advisory vote, we determined that it was advisable to continue our compensation structure consistent with past practices. At the Annual Meeting, we are asking our stockholders to approve, on an advisory basis, the compensation paid to our NEOs during fiscal 2023 and the frequency of future advisory votes regarding the compensation paid to our NEOs. Role of management in setting compensation. During fiscal 2023, our Co-Presidents provided recommendations regarding pay levels for all executives, and we expect that these executive officers will continue to provide such input. Use of market data. While the compensation committee considered market data as a general reference point in its assessment of executive compensation for fiscal 2023 executive compensation decisions, the committee did not target compensation to specific benchmarks against peer group companies. In its review of executive compensation, the compensation committee considered, among other factors, the fiscal 2023 executive compensation study completed by FW Cook, which analyzed market data from a 19‑company peer group of retail, food, restaurant and natural product companies. FW Cook recommended this peer group based on industry, annual revenue, and market capitalization. The Company was near the median of the peer group based on market capitalization and revenue. The peer group was comprised of the following companies:
Compensation Discussion and Analysis
The market data presented by F.W. Cook indicated that actual total direct compensation (actual total cash compensation plus long-term incentive grant value) for our NEOs in the aggregate is positioned in the bottom quartile of the peer group. After consideration of the Company’s performance during fiscal 2023, as well as the individual contributions and performance of Ms. Heather Isely, Ms. Elizabeth Isely and Mr. Dissinger, our compensation committee approved the compensation decisions described below. Primary elements of compensation; Compensation decisions for fiscal 2023 Base salary. We believe that base salaries are of primary importance to our approach to executive compensation, allowing us to attract and retain our key executives, and reward consistent contributions to our long-term success, in a manner that does not encourage excessive risk taking by our executives. The compensation committee primarily based salaries of the NEOs on its collective experience and view of appropriate fixed pay in our geographic location and industry. Additionally, the compensation committee considered non-participation in our cash-based incentive compensation program by our Co-Presidents and the absence of a long-term incentive program. The compensation committee periodically reviews base salaries and considers individual performance, the Company’s performance, internal pay equity, historical compensation practice, incentive program participation and current equity ownership levels. However, our compensation committee may exercise its discretion in setting an executive’s base salary, considering the executive’s overall contribution to our success. At fiscal year-end 2023, the base salaries of our NEOs were as follows:
Summary Compensation Table
Summary Compensation Table The following table provides information concerning the compensation earned by our NEOs during the fiscal years ended September 30, 2023 and 2022.
Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | All Other Compensation ($)(1) | Total ($) | | Kemper Isely, Co-President | 2023 | 607,800 | — | — | 17,662 | 625,462 | | | 2022 | 607,800 | — | — | 15,307 | 623,107 | | Zephyr Isely, Co-President | 2023 | 576,000 | — | — | 5,044 | 581,044 | | | 2022 | 576,000 | — | — | 4,378 | 580,378 | | Heather Isely, Executive Vice President | 2023 | 528,000 | 325,000 | — | 17,112 | 870,112 | | | 2022 | 528,000 | 250,000 | — | 14,132 | 792,132 | | Elizabeth Isely, Executive Vice President | 2023 | 528,000 | 325,000 | — | 12,349 | 865,349 | | | 2022 | 528,000 | 250,000 | — | 9,553 | 787,553 | | Todd Dissinger, Chief Financial Officer | 2023 | 550,000 | 325,000 | 449,993(2) | 12,022 | 1,337,015 | | | 2022 | 507,910 | 250,000 | 349,998(3) | 11,130 | 1,119,038 |
Summary Compensation Table
| (1) Includes 401(k) retirement benefit matching contributions, Vitamin Bucks, Company paid medical and short-term disability insurance premiums and work anniversary payments. |
Summary Compensation Table
| (2) Represents the grant date fair value of 34,220 restricted stock units granted to Mr. Dissinger on August 15, 2023. See “-Equity Compensation” above. |
Summary Compensation Table
| (3) Represents the grant date fair value of 31,876 restricted stock units granted to Mr. Dissinger on September 30, 2022. See “-Equity Compensation” above. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table provides information regarding grants of plan-based awards made to Todd Dissinger, our Chief Financial Officer, which were effective during the fiscal year ended September 30, 2023. Other than Mr. Dissinger, none of our NEOs received any plan-based awards during the fiscal year ended September 30, 2023. The cash bonuses awarded to Ms. Heather Isely, Ms. Elizabeth Isely and Mr. Dissinger for fiscal 2023 were awarded on a discretionary basis and are not presented in the table below.
Grants of Plan-Based Awards
| | | Estimated Payouts Under Non-Equity Incentive Plan Awards | | Estimated Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of | All Other Option Awards: Number of Securities Underlying | Exercise or Base Price of Option | Grant Date Fair Value of Stock and Option | | Name | Grant Date | Target ($) | Maximum ($) | Target (#) | Maximum (#) | Stock or Units (#) | Options (#) | Awards ($/Share) | Awards ($) | | Todd Dissinger | 8/15/2023(1) | — | — | 34,220 | 34,220 | 34,220 | — | — | 449,993 |
Grants of Plan-Based Awards
| (1) Represents 34,220 restricted stock units granted on August 15, 2023, of which 11,407 will vest on August 15, 2024; 11,407 will vest on August 15, 2025; and 11,406 will vest on August 15, 2026. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table provides information regarding outstanding equity awards held by Todd Dissinger, our Chief Financial Officer, at September 30, 2023. Other than Mr. Dissinger, none of our NEOs held any outstanding equity awards at September 30, 2023.
Outstanding Equity Awards at Fiscal Year-End
| Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market or Payout Value of Shares or Units of Stock That Have Not Vested ($)(2) | | Todd Dissinger | 100,056(1) | 1,291,723 |
Outstanding Equity Awards at Fiscal Year-End
| (1) Of such restricted stock units: (i) 1,600 restricted stock units vested on October 1, 2023; (ii) 1,600 restricted stock units will vest on October 1, 2024; (iii) 1,920 restricted stock units vested on October 1, 2023; (iv) 1,920 restricted stock units will vest on each of October 1, 2024 and 2025; (v) 25,000 restricted stock units will vest on September 30, 2024; (vi) 31,876 restricted stock units will vest on December 31, 2024; (vii) 11,407 restricted stock units will vest on each of August 15, 2024 and 2025; and (viii) 11,406 restricted stock units will vest on August 15, 2026, in each case subject to Mr. Dissinger’s continued employment. |
Outstanding Equity Awards at Fiscal Year-End
| (2) The market value of the awards of restricted stock units that have not vested was determined by multiplying the number of restricted stock units by $12.91, the market value of the underlying shares at September 30, 2023, the last day of fiscal 2023. |
Option Exercises and Stock Vested
Option Exercises and Stock Vested The following table provides information regarding restricted stock units and stock awards held by Todd Dissinger, our Chief Financial Officer, that vested during the year ended September 30, 2023. Other than Mr. Dissinger, none of our NEOs held any stock awards that vested, or exercised any stock options, during the year ended September 30, 2023.
Option Exercises and Stock Vested
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Todd Dissinger | — | — | 21,154(1) | 214,499(2) |
Option Exercises and Stock Vested
| (1) Represents 21,154 restricted stock units that were issued to Mr. Dissinger and settled in shares of Common Stock. |
Option Exercises and Stock Vested
| (2) Value realized on vesting was determined by multiplying the number of shares underlying the restricted stock units by the price of the Common Stock on the date preceding settlement. |
Pension Benefits
Pension Benefits None of our NEOs participates in any qualified or non-qualified pension benefit plan sponsored by us.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation None of our NEOs participates in any nonqualified deferred compensation plan sponsored by us.
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control None of our NEOs for fiscal 2023 was contractually entitled to any potential payments as a result of any termination or change in control as of September 30, 2023.
Pay Ratio Disclosure
Pay Ratio Disclosure Because we are a “smaller reporting company” (as defined in Rule 12b-2 promulgated under the Exchange Act), we are not required to provide executive pay ratio disclosure pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K. However, we are providing such information voluntarily. Set out below is information regarding the ratio of the annual total compensation of each of our Co-Presidents and principal executive officers, Kemper Isely and Zephyr Isely, to the annual total compensation of our median employee. We identified our median employee as of September 30, 2023, the last day of fiscal 2023. We included in our analysis all employees who were employed on September 30, 2023, including full-time, part-time, temporary and seasonal employees. We calculated the median employee’s pay utilizing our internal records based on the same pay elements and calculation methodology as used in determining the Co-Presidents’ pay for purposes of disclosure in the Summary Compensation Table. We annualized the earnings of all full-time and part-time employees as of September 30, 2023 who were hired during fiscal 2023 but did not work for us for the entire fiscal year. We did not make any other adjustments allowed by the SEC, nor did we make any other material assumptions or estimates to identify our median employee. Using this methodology, we determined that the annual total compensation of our median employee for fiscal 2023, excluding Kemper Isely and Zephyr Isely, our Co-Presidents and principal executive officers, was $38,066. As reported in the Summary Compensation Table, Kemper Isely, our Chairman and Co-President, had total annual compensation for fiscal 2023 of $625,462 and Zephyr Isely, our Co-President, had total annual compensation for fiscal 2023 of $581,044. As a result, the ratio of Kemper Isely’s annual total compensation to that of our median employee for fiscal 2023 was estimated to be 16 to 1, and the ratio of Zephyr Isely’s annual total compensation to that of our median employee for fiscal 2023 was estimated to be 15 to 1. These pay ratios are a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. The SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices. As such, other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Therefore, the estimated pay ratio reported above may not be comparable to the pay ratios reported by other companies and should not be used as a basis for comparison between companies.
PAY VERSUS PERFORMANCE DISCLOSURE
PAY VERSUS PERFORMANCE DISCLOSURE The following tables and related disclosures provide information, for each of the fiscal years presented, about (i) the “total compensation” of our Co-Presidents, Kemper Isely and Zephyr Isely, who are each principal executive officers (“PEOs”), and Todd Dissinger, Elizabeth Isely and Heather Isely, who are our other named executive officers (“Other NEOs”), as presented under “Executive Compensation—Summary Compensation Table” on page 26 of this Proxy Statement (the “SCT Total”), (ii) the “compensation actually paid” to our PEOs and our Other NEOs, as calculated pursuant to the SEC’s pay-versus-performance rules (the “CAP Amounts”), (iii) certain financial performance measures including Total Shareholder Return (“TSR”) and Net Income, and (iv) the relationship of the CAP Amounts to those financial performance measures. This disclosure has been prepared in accordance with Item 402(v) of Regulation S-K under the Exchange Act and does not necessarily reflect value actually realized by the executives or how our Board and compensation committee evaluate compensation decisions in light of company or individual performance. For additional discussion of executive compensation program decisions for fiscal 2023, please review the “EXECUTIVE COMPENSATION” section of this Proxy Statement beginning on page 23.
PAY VERSUS PERFORMANCE DISCLOSURE
| Fiscal Year (a) | SCT Total Kemper Isely (PEO 1) (b) | Compensation Actually Paid to Kemper Isely (PEO 1) (c)(1) | SCT Total Zephyr Isely (PEO 2) (b) | Compensation Actually Paid to Zephyr Isely (PEO 2) (c)(1) | Average SCT Total for Other NEOs (d) | Average Compensation Actually Paid to Other NEOs (e)(1) | Value of Initial Fixed $100 Investment Based on TSR (f) | Net Income ($)(Thousands) (g) | | 2023 | $625,462 | $625,462 | $581,044 | $581,044 | $1,024,159 | $1,064,381 | $122.28 | $23,243 | | 2022 | $623,107 | $623,107 | $580,378 | $580,378 | $899,574 | $903,287 | $98.68 | $21,365 |
PAY VERSUS PERFORMANCE DISCLOSURE
(1) The following table describes the adjustments, each of which is required by SEC rule, to calculate the CAP Amounts of our two PEOs (columns (c)) and our Other NEOs (column (e)) from the SCT Amounts of our two PEOs (columns (b)) and our Other NEOs (column (d)). The SCT Amounts and the CAP Amounts do not reflect the actual amount of compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402 of Regulation S-K under the Exchange Act.
PAY VERSUS PERFORMANCE DISCLOSURE
| | Fiscal 2023 | | | Fiscal 2022 | | | | Adjustments | Kemper Isely (PEO 1) | Zephyr Isely (PEO 2) | Other NEOs | Kemper Isely (PEO 1) | Zephyr Isely (PEO 2) | Other NEOs | | SCT Totals | $625,462 | $581,044 | $1,024,159 | $623,107 | $580,378 | $899,574 | | Subtract: Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | $— | $— | $149,998 | $— | $— | $116,666 | | Add: Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year | $— | $— | $138,995 | $— | $— | $105,462 | | Add: Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | $— | $— | $54,765 | $— | $— | $(5,711) | | Add: Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year | $— | $— | $— | $— | $— | $— | | Add: Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years For Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | $— | $— | $(3,540) | $— | $— | $20,628 | | Subtract: Fair Value as of Prior Fiscal Year-End of Option Awards and Stock Awards Granted in Prior Fiscal Years That Failed to Meet Applicable Vesting Conditions During Fiscal Year | $— | $— | $— | $— | $— | $— | | Add: Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | $— | $— | $— | $— | $— | $— | | CAP Amounts (as calculated) | $625,462 | $581,044 | $1,064,381 | $623,107 | $580,378 | $903,287 |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Only those directors who are considered independent directors under the rules of the NYSE receive compensation from us for their service on our Board. For fiscal 2023, our independent directors were compensated for their service as directors as follows:
DIRECTOR COMPENSATION
| • | a base annual retainer of $40,000; |
DIRECTOR COMPENSATION
| • | an additional annual retainer of $15,000 for serving as the chair of our audit committee and $10,000 for serving as the chair of our compensation committee, if applicable; |
DIRECTOR COMPENSATION
| • | an additional annual retainer of $5,000 for serving as a member of our audit committee, if applicable; and |
DIRECTOR COMPENSATION
| • | an additional annual retainer of $5,000 for serving as a member of our compensation committee, if applicable. |
DIRECTOR COMPENSATION
The presiding director at executive sessions of the Board at which only non-management directors are present, which is determined by the independent directors in attendance at executive sessions, receives no additional compensation for such service. If our Board were to appoint a lead independent director, such director would receive an additional annual retainer of $15,000. In addition, each independent director is granted, on an annual basis, a number of restricted stock units under the Omnibus Plan. In each of fiscal 2022 and fiscal 2023, the number of restricted stock units awarded to each independent director equaled the number of shares of our Common Stock having a value of $60,000 (based on the closing price of our Common Stock on the NYSE on the date of grant). Such awards were granted on the date of our Annual Meeting of Stockholders. The restricted stock units granted to our independent directors fully vest on the first anniversary of the date of grant if the director does not have a termination of “Service,” as defined in the Omnibus Plan, and are settled in shares of our Common Stock. Our independent directors are subject to equity ownership guidelines approved by our Board, requiring each independent director to, within five years of their initial election to our Board, achieve holdings in our equity securities, including vested and unvested restricted stock units, with a value equal to three times the annual cash retainer received. We also reimburse our directors for reasonable expenses incurred to attend meetings of our Board or any committee of our Board.
Director Compensation For Fiscal 2023
Director Compensation For Fiscal 2023 The following table shows for the fiscal year ended September 30, 2023the compensation for all non-employee directors of the Company:
Director Compensation For Fiscal 2023
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation ($) | Total ($) | | Edward Cerkovnik | 50,000(1) | 60,000(2) | — | — | — | — | 110,000 | | Richard Hallé | 50,000(1) | 60,000(2) | — | — | — | — | 110,000 | | David Rooney | 55,000(3) | 60,000(2) | — | — | — | — | 115,000 | | Sandra Buffa | 8,333(4) | 35,000(5) | | | | | 43,333 |
Director Compensation For Fiscal 2023
| (1) Represents a base annual retainer of $40,000, an annual retainer of $5,000 for serving as a member of our audit committee and an annual retainer of $5,000 for serving as a member of our compensation committee. |
Director Compensation For Fiscal 2023
| (2) Represents the full grant date fair value as of March 1, 2023 of 5,535 restricted stock units granted to each of Messrs. Cerkovnik, Hallé and Rooney, respectively. These restricted stock units will vest on March 1, 2024. |
Director Compensation For Fiscal 2023
| (3) Represents a base annual retainer of $40,000 and an annual retainer of $15,000 for serving as the chair of our audit committee. |
Director Compensation For Fiscal 2023
| (4) Ms. Buffa was elected to the Board on August 2, 2023. Represents the pro rata portion of a base annual retainer of $40,000, and the pro rata portion of an annual retainer of $5,000 for serving as a member of our audit committee. |
Director Compensation For Fiscal 2023
| (5) Represents the full grant date fair value as of August 11, 2023 of 2,667 restricted stock units granted to Ms. Buffa on a pro rata basis following her election to the Board. These restricted stock units will vest on March 1, 2024. |