%20{%20path%20{%20fill:%20%23FFFFFF;%20}%20}%20%3c/style%3e%3cg%20transform='matrix(0.003703,0,0,0.003703,0.657352,0.837315)'%3e%3cpath%20d='M8580.73,3008.16C8964.268,3580.673%208988.068,4832.98%208315.13,6120.75C7643.276,7408.24%206571.92,8200.68%205841.98,8253.84C5441.338,7699.574%205431.363,6428.18%206102.084,5140.4C6775.013,3853.76%207866.324,3088.97%208580.734,3008.16'%20style='fill-rule:nonzero;'/%3e%3c/g%3e%3cg%20transform='matrix(0.003703,0,0,0.003703,0.657352,0.837315)'%3e%3cpath%20d='M2280.87,43.928C3382.71,518.749%204580.78,2519.798%204784.45,5398.008C4987.542,8275.658%204140.867,10820.488%203106,11767.858C2003.65,11339.562%20803.88,9293.058%20599.65,6414.628C398.817,3538.908%201300.288,1015.668%202280.88,43.928'%20style='fill-rule:nonzero;'/%3e%3c/g%3e%3cg%20transform='matrix(0.003703,0,0,0.003703,0.657352,0.837315)'%3e%3cpath%20d='M12034.5,8297.53C11081.508,7862.263%209067.14,7944.205%207048.35,8904.33C5029.56,9862.238%203836.48,11277.29%203810.98,12203.98L3810.98,12205.059C4730.751,12656.075%206779.97,12559.23%208798.77,11600.188C10814.78,10641.992%2011961.97,9203.198%2012034.5,8297.538'%20style='fill-rule:nonzero;'/%3e%3c/g%3e%3c/svg%3e)
DEF 14A of Scotts Miracle-Gro Co
Filed Dec 13, 2023 · FY20230001443984-23-000378
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS At the Annual Meeting, four Class II directors will be elected. All four individuals nominated by the Board for election as directors at the Annual Meeting are currently serving as Class II directors — Thomas N. Kelly Jr., Brian E. Sandoval, Peter E. Shumlin and John R. Vines. The individuals elected as Class II directors at the Annual Meeting will hold office for a three-year term expiring at the 2027 Annual Meeting and until their respective successors are duly elected and qualified, or until their earlier death, resignation or removal. The individuals designated as proxy holders in the form of proxy intend to vote the Common Shares represented by the proxies received under this solicitation for the Board’s nominees, unless otherwise instructed on the form of proxy or through the telephone or Internet voting procedures. The Board has no reason to believe that any of the nominees will be unable or unwilling to serve as a director of the Company if elected. If any nominee becomes unable to serve or for good cause will not serve as a candidate for election as a director, then the individuals designated as proxy holders reserve full discretion to vote the Common Shares represented by the proxies they hold for the election of the remaining nominees and for the election of any substitute nominee designated by the Board following recommendation by the Governance Committee. The individuals designated as proxy holders cannot vote for more than four nominees for election as Class II directors at the Annual Meeting. The following information, as of December 8, 2023, with respect to the age, principal occupation or employment, other affiliations and business experience of each continuing director or nominee for election as a director, has been furnished to the Company by each such director or nominee.
Class II — Terms to Expire at the 2024 Annual Meeting
| | Thomas N. Kelly Jr., age 76, Director of the Company since 2006 | | | | | Mr. Kelly is a former director of GameStop Corp., where he also chaired the Compensation Committee. Mr. Kelly also served as Executive Vice President, Transition Integration of Sprint Communications (“Sprint”), a global communications company, from December 2005 until April 2006. He served as the Chief Strategy Officer of Sprint from August 2005 until December 2005. He served as the Executive Vice President and Chief Operating Officer of Nextel Communications, Inc., which became Sprint, from February 2003 until August 2005, and as Executive Vice President and Chief Marketing Officer of Nextel Communications, Inc. from 1996 until February 2003. Our Corporate Governance Guidelines state that, in general, a director should not stand for re-election once he or she has reached the age of 72, but provides the Board with flexibility to nominate a director who is age 72 or older based on individual circumstances. Mr. Kelly turned 76 on April 29, 2023. The Board, in alignment with a recommendation from the Governance Committee, reviewed Mr. Kelly’s individual circumstances, Company priorities, Board needs, and Mr. Kelly’s experience and expertise and determined that nominating Mr. Kelly is in the best interests of the Company. Having served at various times as Chief Strategy Officer, Chief Operating Officer and Chief Marketing Officer of Sprint, Mr. Kelly brings an extensive skill set to the Board. His blend of leadership, innovation and technology, international, marketing/consumer industry and financial experience make him a key advisor to the Board on a full range of consumer and strategy-related matters. Committee Memberships: Innovation and Technology (Chair); Compensation; Finance |
Class II — Terms to Expire at the 2024 Annual Meeting
| | Peter E. Shumlin, age 67, Director of the Company since 2017 and Lead Independent Director since November 2023 | | | | | Mr. Shumlin is a director at Putney Student Travel which provides educational summer programs for students around the globe. He is also a principal in numerous real estate partnerships specializing in commercial and residential properties. Mr. Shumlin served three terms as the 81st Governor of the State of Vermont, having held office from 2011 to 2017. Prior to serving as Governor, he served two terms in the Vermont House of Representatives and 14 non-consecutive years in the Vermont Senate, serving on the Rules Committee, the Finance Committee, the Transportation Committee, the Appropriations Committee and as Senate President Pro Tempore. Mr. Shumlin’s lengthy public service career provides in-depth knowledge of government, public policy, legal, finance, governance and leadership matters. We believe his unique experience and skill set make him a valuable asset to the Board. Committee Memberships: Compensation; Governance |
Class II — Terms to Expire at the 2024 Annual Meeting
| | John R. Vines, age 74, Director of the Company since 2013 | | | | | Lieutenant General (retired) Vines has been a partner of McChrystal Group since 2016 and was previously a Senior Advisor to McChrystal Group beginning in 2011. General Vines retired in 2007 from the U.S. Army after 35 years active service. He was in continuous command for his last six years of service, including as Commander, U.S. Army’s XVIII Airborne Corps and Multi-National Corps Iraq. In addition, he commanded the Combined Joint Task Force 180 Afghanistan. General Vines also served as the Senior Defense Representative to Afghanistan and Pakistan and previously commanded the 82nd Airborne Division, which included a year-long deployment in Afghanistan. Following retirement, General Vines acted as a Department of Defense Senior Mentor to U.S. Army and joint senior leadership and deploying combat units, a member of the Defense Service Board and a member of the Army DARPA Senior Advisory Group. Our Corporate Governance Guidelines state that, in general, a director should not stand for re-election once he or she has reached the age of 72, but provides the Board with flexibility to nominate a director who is age 72 or older based on individual circumstances. General Vines turned 74 on June 2, 2023. The Board, in alignment with a recommendation from the Governance Committee, reviewed General Vines’ individual circumstances, Company priorities, Board needs, and General Vines’ experience and expertise and determined that nominating General Vines is in the best interests of the Company. With more than 35 years of active military service and significant management consulting experience, General Vines brings extensive leadership, strategy and innovation experience to the Board. Committee Memberships: Innovation and Technology; Governance |
NON-EMPLOYEE DIRECTOR COMPENSATION
NON-EMPLOYEE DIRECTOR COMPENSATION This Non-Employee Director Compensation section provides our shareholders with an overview of our board compensation structure and key factors that are considered when determining the structure of our plan. For the 2023 fiscal year, the Company put an emphasis on reducing our leverage ratio and maintaining compliance with the financial covenants under our credit facility.
NON-EMPLOYEE DIRECTOR COMPENSATION
| This decision led to a modification of our design and changes in reporting for the 2023 fiscal year including: •Converting Annual Cash Retainer to Restricted Stock Units — As further described in this section, for the 2023 calendar year, the non-employee directors received a grant of restricted stock units in lieu of the normal cash retainer, to further help the Company maximize earnings and cash flow available to pay down debt. •Director Compensation Table Reporting — Given our approach for converting the normal cash retainer to restricted stock units, our director compensation tables will reflect more than a full year’s compensation for certain Board members when combining cash compensation received for the fourth quarter of the 2022 calendar year with the restricted stock units delivered for the full 2023 calendar year. |
Benchmarking Non-Employee Director Compensation
Benchmarking Non-Employee Director Compensation The Board believes that non-employee director compensation should be competitive with similarly situated companies and encourage high levels of ownership of Common Shares. To ensure that non-employee director compensation remains competitive, the Board periodically engages an independent outside consultant to conduct a benchmark study. The most recent benchmark study was conducted by ClearBridge Compensation Group LLC in 2021 (the “2021 Benchmark Study”) that compared each element of non-employee director compensation against the then-current peer group used to benchmark NEO compensation (the “Compensation Peer Group”). The Company used the 2021 Benchmark Study to establish overall compensation for our non-employee directors for the 2022 calendar year, and the compensation structure for the 2023 calendar year remains essentially static, subject to the changes noted in the following section. The current overall compensation for our non-employee directors compares at approximately the 75th percentile of the Compensation Peer Group, excluding the Lead Independent Director. For further discussion of the Compensation Peer Group, see the section of this Proxy Statement captioned “Our Compensation Practices — Compensation Peer Group” within the Compensation Discussion and Analysis. Although the Board establishes the non-employee director compensation on a calendar year basis, except as otherwise specifically provided, director compensation amounts are presented on a fiscal year basis in this Proxy Statement.
Non-Employee Director Compensation Structure for 2023
Non-Employee Director Compensation Structure for 2023 The annual Board retainer paid by the Company to the non-employee directors has historically consisted of a quarterly cash retainer and an annual grant of restricted stock units (“RSUs”). However, for the 2023 calendar year, the non-employee directors received a special grant of restricted stock units in lieu of the normal cash retainer (the “Special RSU Grant”) as part of the Company’s efforts to reduce its leverage ratio and maintain compliance with financial covenants under its credit facility. No additional compensation is provided for serving as a committee chair, serving as a committee member, or attending Board or committee meetings. The Lead Independent Director receives additional RSUs for serving in that role, as reflected in the table below. The 2023 calendar year compensation structure for non-employee directors breaks down as follows:
Non-Employee Director Compensation Structure for 2023
| | Pay Elements | | Amount | | Annual Board Retainer: (all non-employee directors) | | Cash Retainer* ($28,750 per quarter) | $115,000 | | | | Restricted Stock Units (annual) | $210,000 | | | | Committee Chair/Membership Fees | N/A | | Lead Independent Director: (supplemental compensation) | | Additional Restricted Stock Units (annual) | $50,000 |
Non-Employee Director Compensation Structure for 2023
________________________ * Converted to RSUs for 2023, as explained in more detail below. To better leverage the collective skills and experience of the Company’s non-employee directors, the Company expects each non-employee director to dedicate significant time beyond Board and committee meetings to Board service. In addition to participating at Board and committee meetings, the Company expects the non-employee directors to spend several days each year “in the field” immersing themselves in the Company’s business to gain additional insights and perspective regarding the Company’s operations, partners, customers and consumers. When determining the structure and overall magnitude of compensation for the non-employee directors, the Board considers the number of Board and committee meetings that are typically held each year, as well as the additional days the Company expects the non-employee directors to immerse in the business. Over the past several years, the engagement of each of our non-employee directors has remained high as our business has continued to face operational and financial challenges, and evolve in complexity. The Company believes its director compensation structure reflects the additional responsibilities that the Company expects each non-employee director to assume, facilitates the rotation of directors among the various Board committees and ensures that the Company continues to provide a competitive level of compensation to its non-employee directors. Given these factors, the Board concluded that the compensation levels for the 2023 calendar year are competitive and appropriately aligned with the time commitment required for service on our Board. In addition to the cash and equity-based compensation elements, non-employee directors also receive reimbursement of all reasonable travel and other expenses for attending Board meetings, Board committee meetings or other Company-related functions. As circumstances permit, we also allow family members to accompany directors on business-related flights on the corporate aircraft. There is no incremental cost to the Company for such allowances.
Aligning Non-Employee Director Compensation and Shareholder Interests
Aligning Non-Employee Director Compensation and Shareholder Interests Our non-employee director compensation program contains several design elements intended to strengthen the alignment between the interests of our non-employee directors and our shareholders:
Aligning Non-Employee Director Compensation and Shareholder Interests
| Design Element | How it Aligns to Shareholder Interests | | • Approximately 2/3 of annual compensation is normally equity based, but this temporarily increased to 100% in 2023 | • Significant portion of director pay is directly linked to long-term share price performance | | • Deferred settlement of equity-based compensation | • Mandatory two-year holding period for Standard RSU Grant after vesting aligns our directors with a long-term view | | • Mandatory share-based dividend equivalents on equity awards granted to directors | • Dividend equivalents automatically convert to additional Common Shares rather than paid in cash | | • Robust stock ownership guidelines (5x cash retainer) | • Directors must retain 50% of each Standard RSU Grant until the stock ownership guidelines have been met to ensure that our directors maintain a significant investment in the Company |
Non-Employee Director Compensation Table
Non-Employee Director Compensation Table The following table sets forth the compensation awarded to, or earned by, each of the non-employee directors of the Company during the 2023 fiscal year. Please note that the following table reflects more than a full year’s compensation for Board members who served the entire 2023 fiscal year. For those non-employee directors, the table shows: (1) cash compensation received in the first quarter of the 2023 fiscal year that was attributable to the 2022 calendar year non-employee director compensation structure; plus (2) the full year compensation amount attributable to the 2023 calendar year non-employee director compensation structure, which was delivered in the form of RSUs. The 2023 calendar year board compensation structure is discussed in more detail in the section captioned “Non-Employee Director Compensation Structure for 2023.” Mr. Hagedorn did not receive any additional compensation for his services as a director or as Chairman of the Board. Mr. Evans served as the Company’s Executive Vice President & Interim Chief Financial Officer during part of the 2023 fiscal year and received additional compensation that is separate from the compensation reported below for his service as a non-employee director. Accordingly, Mr. Hagedorn’s compensation as well as the compensation that Mr. Evans received in connection with his interim assignment is reported in the section captioned “EXECUTIVE COMPENSATION” and is not included in the table below.
Non-Employee Director Compensation Table
Non-Employee Director Compensation Table
Non-Employee Director Compensation Table
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2)(3) | Total ($) | | Edith Avilés | — | 325,049 | 325,049 | | David C. Evans | — | 325,049 | 325,049 | | Brian D. Finn | 28,750 | —(4) | 28,750 | | Adam Hanft | 28,750(5) | 325,049 | 353,799 | | Stephen L. Johnson | 28,750 | 325,049 | 353,799 | | Thomas N. Kelly Jr. | 28,750 | 325,049 | 353,799 | | Mark D. Kingdon | 28,750(6) | 105,044(7) | 133,794 | | Katherine Hagedorn Littlefield | 28,750 | —(8) | 28,750 | | Nancy G. Mistretta | 28,750 | 325,049 | 353,799 | | Brian E. Sandoval | 28,750 | 325,049 | 353,799 | | Peter E. Shumlin | 28,750 | 325,049 | 353,799 | | John R. Vines | 32,500(9) | 375,233(10) | 407,733 | | Gerald Volas | 28,750 | 325,049(11) | 353,799 |
Non-Employee Director Compensation Table
(1) Reflects the cash-based retainer earned for services rendered during the 2023 fiscal year, paid at a rate of $28,750 for the period from October 1, 2022 to December 31, 2022. With respect to Mr. Finn’s and Mr. Shumlin’s elections to defer 100% of their cash-based retainer for the 2022 calendar year, the amount reported reflects cash fees from October 1, 2022 through December 31, 2022 that were deferred and awarded in the form of fully vested DSUs on October 1, 2022. Mr. Evans did not receive a cash-based retainer for the period of October 1, 2022 to December 31, 2022 because he was serving as interim CFO during this period. (2) Reflects the aggregate grant date fair value of RSUs granted during the 2023 fiscal year. The grant date fair value of each RSU was determined using the value of the underlying Common Shares on the applicable date of grant and was calculated in accordance with the equity compensation accounting provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation — Stock Compensation (“FASB ASC Topic 718”), without respect to forfeiture assumptions. (3) The aggregate number of Common Shares subject to RSUs and related dividend equivalents (including both vested and unvested) and vested DSUs and related dividend equivalents outstanding as of September 30, 2023 was as follows:
Non-Employee Director Compensation Table
| Name | Aggregate Number of Common Shares Subject to Stock Awards Outstanding as of September 30, 2023 | | Edith Avilés | 2,998 | | David C. Evans | 5,542 | | Brian D. Finn | — | | Adam Hanft | 5,542 | | Stephen L. Johnson | 5,672 | | Thomas N. Kelly Jr. | 5,542 | | Mark D. Kingdon | 1,516 | | Katherine Hagedorn Littlefield | 2,544 | | Nancy G. Mistretta | 5,542 | | Brian E. Sandoval | 5,521 | | Peter E. Shumlin | 8,165 | | John R. Vines | 6,612 | | Gerald Volas | 2,998 |
Non-Employee Director Compensation Table
(4) On November 4, 2022, Brian D. Finn informed the Company and the Board that he would not stand for re-election following the expiration of his term at the 2023 Annual Meeting of Shareholders. Accordingly, Mr. Finn’s term expired January 23, 2023. Mr. Finn did not receive any compensation for the 2023 calendar year. (5) In addition to the cash-based retainer and RSUs granted to Mr. Hanft for his service on the Board, he earned an additional $300,000 in cash-based consulting fees for the provision of strategic marketing consulting services to the Company for the period of October 1, 2022 through January 31, 2023. Mr. Hanft’s consulting agreement ended January 31, 2023. (6) Reflects a cash-based retainer for Mr. Kingdon for his service on the Board from July 13, 2023 through September 30, 2023. The Board chose a cash-based retainer rather than a Special RSU grant due to the date Mr. Kingdon began his Board service. (7) Reflects the aggregate grant date fair value of the Standard RSUs granted to Mr. Kingdon when he joined the Board on July 13, 2023. The amount reported reflects approximately 50% of the normal annual equity-based retainer awarded to other non-employee directors for the full calendar year. (8) Ms. Littlefield decided to voluntarily forgo her non-employee director retainer for the 2023 calendar year. (9) With respect to General Vines, reflects an additional cash-based retainer of $3,750 for his service as the Company’s Lead Independent Director from October 1, 2022 through December 31, 2022. (10) Reflects an additional grant of $50,000 in Standard RSUs for General Vines’ service as the Company’s Lead Independent Director from January 1, 2023 through November 3, 2023, and was not otherwise reduced given the length of time he served in the role. (11) Although Mr. Volas resigned from the Board, effective July 11, 2023, the Board elected to permit vesting of his 2023 annual Board retainer so that he did not forfeit any RSUs.
COMPENSATION DISCUSSION AND ANALYSIS
| This CD&A will convey that: •The Company pays for performance and our compensation practices reflect that. None of our NEOs received an incentive payout for the 2023 fiscal year because the Company did not achieve its pre-defined performance goals. •Our executive compensation structure aligns with business goals. The Company undertook several initiatives across the enterprise during the 2023 fiscal year to maximize earnings and cash flow available to pay down debt and maintain compliance with the financial covenants under our credit facility. Our compensation programs for the 2023 fiscal year were designed to support these initiatives through several temporary stop-gap measures and a long-term incentive aligned to leverage ratio compliance. •The proxy rules for reporting on our stop-gap measures distorted the pay levels for our NEOs shown in the Summary Compensation Table. A Pro Forma Summary Compensation Table has been included in this Proxy Statement to more accurately reflect the compensation received by our NEOs. |
Executive Compensation Reflects Financial Performance and Fair Target Setting
Executive Compensation Reflects Financial Performance and Fair Target Setting The pre-defined performance goals for the 2023 fiscal year were established by the Compensation Committee amidst uncertainties about the health of the consumer and the declining profitability of our Hawthorne business unit. Despite overall business conditions at the time, the Company was optimistic about the potential for meaningful unit growth in our most profitable fertilizer and grass seed categories. Based on these factors, the Compensation Committee set what it believed to be reasonable goals for the threshold and target levels of performance; and, consistent with past practice, set aggressive goals for the maximum performance level by requiring a 33% growth in earnings over the prior year. Consistent with our executive compensation program design and pay-for-performance philosophy, our compensation program results* for the 2023 fiscal year reflect the fact that the Company did not achieve its predefined financial goals. Accordingly, none of our NEOs received an incentive payout for the 2023 fiscal year. •The target performance level for the 2023 fiscal year annual incentive plan was set based on an expectation that the Company would achieve a Non-GAAP Adjusted EBITDA (defined below) level of earnings growth of approximately 8.7% compared to the prior year, which correlates to the Company’s internal operating plan for the 2023 fiscal year. The target level of performance for the Non-GAAP Free Cash Flow metric (defined below) was set at a level requiring an increase of $842.5 million compared to the prior fiscal year. •Non-GAAP Adjusted EBITDA, weighted at 75% under the annual incentive plan for the 2023 fiscal year, declined by over 14% compared to the prior year, to $485.4 million, which was below the minimum performance goal of $585.0 million. In addition, the Company delivered $438.2 million in Non-GAAP Free Cash Flow, weighted at 25% under the annual incentive plan for the 2023 fiscal year, which was below the minimum performance goal of $550.0 million. Therefore, our NEOs did not receive any payout of the FY23 Equity Incentive Grant. * Plan results are derived from financial measures that are not calculated in accordance with the U.S. generally accepted accounting principles (“GAAP”). A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures are presented further herein. There may be differences between the Company’s reported financial results and the amounts used for purposes of calculating incentive payments under the annual incentive compensation program since the calculations reflect currency translation based on budgeted, rather than actual, exchange rates and other adjustments the Compensation Committee may make based on individual facts and circumstances.
Compensation Design Reflects Key Market Practices
Compensation Design Reflects Key Market Practices We believe our compensation design and practices align our executive compensation with our shareholders’ interests and generally reflect current market practices, including: •Performance-Based Pay: Performance should be the primary driver of compensation decisions. Consistent with this philosophy, an average of approximately 75% of the annual total direct compensation opportunity at target for our NEOs, including our CEO, is delivered in the form of variable pay tied to financial and/or share price performance. •No Employment Agreements: The Company does not maintain employment agreements with any of the NEOs. Severance benefits for our CEO are provided under a separate severance agreement, and severance benefits for all other NEOs are generally provided under an executive severance plan. The Company has entered into arbitration agreements with our NEOs and other associates as a means to address certain potential employment issues that may arise. •Limited Executive Perquisites: The Company does not offer cash-based executive perquisites, such as car allowances and financial planning services. •Double-Trigger Change in Control Provisions: Our plans include “double-trigger” change in control provisions for equity-based awards that are assumed or substituted in the change in control transaction or that continue in effect after the transaction if there is an involuntary termination of employment within 24 months after a change in control. We believe that a double-trigger provision is appropriate because it provides protection for our impacted executives while protecting the interests of shareholders. •Clawback Provisions: All of our equity-based awards and annual incentive awards include provisions designed to recoup such awards for violation of non-compete covenants or other post-employment obligations to the Company, or otherwise engaging in certain conduct that is detrimental to the Company. In addition, our Dodd-Frank-compliant executive compensation clawback policy requires the Company to recover any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a financial reporting measure in the event of a required accounting restatement due to material non-compliance with any applicable financial reporting requirement. •Stock Ownership Guidelines: We require our NEOs to meet stock ownership guidelines. Our stock ownership guidelines are designed to align the interests of each NEO with the long-term interests of the shareholders by ensuring that a material amount of each NEO’s accumulated wealth is maintained in the form of Common Shares. The ownership guidelines, which are competitive with the guidelines maintained by our Compensation Peer Group, are: 10 times base salary for the CEO, 5 times base salary for the COO and 3 times base salary for all other NEOs. •No Repricing or Backdating: We do not reprice underwater stock options or backdate options. •No Excess Benefit Retirement Plan: Our excess benefit plan was frozen effective December 31, 1997 and the only NEO who was enrolled in this plan before it was frozen is our CEO. •Independent Consultants: Our Compensation Committee engages independent consultants to advise with respect to executive compensation levels and practices. The consultants provide no services to management and had no prior relationship with any of our NEOs. •Anti-Hedging Policy: Our Insider Trading Policy prohibits all Company employees, including our NEOs, and members of the Board, from engaging in certain hedging transactions relating to Company securities held by them, including short sales, the purchase of puts, calls or listed options and hedging transactions such as prepaid variable forwards, equity swaps, caps, collars and exchange funds.
Our Compensation Philosophy and Objectives
Our Compensation Philosophy and Objectives Philosophy: Our executive compensation philosophy is based on the following principles: •Align our executives’ interests with the long-term interests of our shareholders; •Performance should be the primary driver of compensation decisions; •Place greater emphasis on variable pay versus fixed pay; and •Each NEO is benchmarked within a reasonable range of the median of our Compensation Peer Group (the “Competitive Market Range”). While we view the Competitive Market Range as a guide for positioning total compensation levels for our NEOs, our NEOs’ current and historic job performance, unique knowledge of the Company and our business, organizational impact and expected contribution to future success ultimately drive our compensation decisions. Objectives: The culture of our Company is based on a strong bias for action aimed at delivering sustainable results and driving value to our shareholders. Our compensation programs are structured to promote accountability and to promote our business objectives and shareholder alignment by: •Attracting, retaining and motivating high-caliber leadership; •Linking compensation to Company, functional and individual achievements; •Emphasizing pay-for-performance to motivate both short-term and long-term performance for the benefit of shareholders; and •Providing the opportunity for meaningful wealth accumulation over time, tied directly to shareholder value creation. Setting Pay Levels and Pay Mix: The Compensation Committee exercises its discretion to position individual pay levels and pay mix (i.e., how much of the pay opportunity is allocated among base salary, target incentive opportunity and long-term value) relative to the Competitive Market Range based on a subjective assessment of individual facts and circumstances, including: •The relative degree of organizational impact and strategic importance of the role (what we refer to as “role-based pay”); •The executive’s capability, experience, skill level and overall contribution to the success of our business; and •The overall level of personal performance, both historic and current, and the potential to make significant contributions to the Company in the future.
Base Salary (short-term compensation element)
Base Salary (short-term compensation element) Base salary is the primary fixed element of total compensation and serves as the foundation of the total compensation structure, since most of the variable compensation elements are linked directly or indirectly to the base salary level. Base salaries of the NEOs are reviewed on an annual basis. The Compensation Committee exercises its discretion to position individual base salary levels for the NEOs relative to the Competitive Market Range based on a subjective assessment of organizational and individual qualities and characteristics, including the strategic importance of the individual’s job function to the Company, as well as an NEO’s capability, experience, skill level, overall contribution to the success of our business and the potential of the individual to make significant contributions to the Company in the future. The Company undertook several initiatives across the enterprise during the 2023 fiscal year to reduce expenses, reduce our leverage ratio and help ensure compliance with the financial covenants under our credit facility. In connection with these initiatives, Mr. Hagedorn decided to voluntarily forgo approximately 40% of his annual base salary and his Company-paid deferred compensation contributions ($480,000 and $416,000, respectively) during the 2023 fiscal year to help the Company maximize earnings and cash flow available to pay down debt. The Compensation Committee was supportive of Mr. Hagedorn’s voluntary decision given the near-term financial covenant pressures the Company was facing at that time.
Annual Cash Incentive Compensation (short-term compensation element)
Annual Cash Incentive Compensation (short-term compensation element)
Annual Cash Incentive Compensation (short-term compensation element)
| Key points to understand about The Scotts Company LLC Executive Incentive Plan (“EIP”) for the 2023 fiscal year are: •Designed around key drivers of shareholder value creation — earnings and cash flow; •Due to our financial covenant pressures, we converted cash incentive payout opportunity to equity; •Because of our equity-based compensation approach, proxy reporting rules require that the Summary Compensation Table show grants that were not achieved and subsequently cancelled as compensation for our NEOs, distorting their pay levels. A Pro Forma Summary Compensation Table has been included in this Proxy Statement to more accurately reflect the compensation received by our NEOs; and •Consistent with our pay-for-performance philosophy, none of our NEOs received an incentive payout for the 2023 fiscal year. |
Annual Cash Incentive Compensation (short-term compensation element)
The EIP provides annual cash incentive compensation opportunities for our NEOs and other key management employees. For the 2023 fiscal year, the Compensation Committee selected Non-GAAP Adjusted EBITDA and Non-GAAP Free Cash Flow as the financial measures, because we believe these performance measures drive shareholder value. But more importantly, these metrics were also aligned with the components of the Company’s leverage ratio calculations, which was at the center of the Company’s key financial goals for the year, as explained in more detail above. Beyond the components selected for determining the payout under the EIP, the Compensation Committee may adjust an NEO’s payout, in its discretion, based on individual facts and circumstances. EIP Business Performance Factors: Payouts based on the Business Performance Factors range from 0% to 250% of the incentive target set by the Compensation Committee. For the 2023 fiscal year, the incentive awards were based on a combination of Non-GAAP Adjusted EBITDA (75% weighting) and Non-GAAP Free Cash Flow (25% weighting), calculated at the consolidated Company level, as follows: •Non-GAAP Adjusted EBITDA as set forth in our credit facility — This measure is calculated as net income (loss) before interest, taxes, depreciation and amortization as well as certain other items, such as non-recurring or non-cash items affecting net income (loss). This calculation is intended to be consistent with the calculation of that measure as required by the Company's borrowing arrangements. •Non-GAAP Free Cash Flow — This measure is calculated as net cash provided by operating activities minus investments in property, plant and equipment and further adjusted to exclude discontinued operations, certain impairment, restructuring and other one-time charges, subject to further plus or minus adjustments at the discretion of the Compensation Committee based on the facts and circumstances. The Compensation Committee establishes challenging and demanding performance goals for the Business Performance Factors, while responsibly balancing the known risks associated with anticipated business conditions or customer changes. As reflected in the table below: •A threshold payout of 50% of target could be achieved at a Non-GAAP Adjusted EBITDA level that reflects a 3.1% growth over prior year, and correlates to the earnings needed for compliance with the then-current full-year leverage ratio of 6.25. •A target payout of 100% could be achieved at a Non-GAAP Adjusted EBITDA level that reflects an 8.7% growth over prior year, and correlates to the Company’s internal operating plan for the 2023 fiscal year, which assumes flat Consumer unit volume, except for Fertilizer and Seed products with an expectation of +10% in units, and Hawthorne sales down slightly vs. the prior year. •A maximum payout of 250% of target could be achieved at a Non-GAAP Adjusted EBITDA level that reflects a 33% growth over prior year. The Compensation Committee set the maximum performance goals at levels that it believed to be achievable under optimal business conditions with superior leadership and execution across all levels of the enterprise. •For Non-GAAP Free Cash Flow, the threshold, target and maximum targets correlate to free cash flow received by achieving the respective threshold, target and maximum Non-GAAP Adjusted EBITDA levels, plus additional benefit of reducing inventory levels. The consolidated Company-level performance goals for the EIP Business Performance Factors and actual performance results for the 2023 fiscal year (with dollars in millions) were:
Annual Cash Incentive Compensation (short-term compensation element)
| | Metric Weighting | Payout Level (in millions) | | | | | | Performance Results* | Weighted Payout % | | Metric | | 50.0% | 100.0% | 150.0% | | 200.0% | 250.0% | | | | Non-GAAP Adjusted EBITDA | 75% | $585.0 | $617.0 | | 680.0 | $717.0 | $755.0 | $485.4 | 0% | | Non-GAAP Free Cash Flow | 25% | $550.0 | $600.0 | | 670.0 | $715.0 | $760.0 | $438.2 | 0% | | Total | | | | | | | | | 0% |
Annual Cash Incentive Compensation (short-term compensation element)
* The Compensation Committee believes that the performance metrics should not be influenced by currency fluctuations and, therefore, where applicable, the EIP metrics reflect currency translation based on budgeted exchange rates, which is in contrast to actual exchange rates employed for currency conversions used for GAAP reporting. In addition, the Compensation Committee exercises its discretion to adjust the amounts used for purposes of calculating incentive payouts under the EIP based on individual facts and circumstances. As a result, there could be a difference between the Company’s reported financial results and the amounts shown in this Proxy Statement. Reconciliations of Non-GAAP Adjusted EBITDA and Non-GAAP Free Cash Flow to the most directly comparable GAAP measures are presented in the following tables:
Annual Cash Incentive Compensation (short-term compensation element)
| | Year ended September 30, 2023 (in millions) | | Net loss (GAAP) | $(380.1) | | Impairment, restructuring and other charges | 466.0 | | Interest expense | 178.1 | | Amortization expense | 25.2 | | Equity in loss of unconsolidated affiliates | 101.1 | | Income tax benefit from continuing operations | (73.2) | | Depreciation | 67.3 | | Interest income | (6.4) | | Share-based compensation expense | 68.9 | | Other | 38.5 | | Adjusted EBITDA (Non-GAAP) | $485.4 |
Annual Cash Incentive Compensation (short-term compensation element)
| | Year ended September 30, 2023 | | Net cash provided by operating activities (GAAP) | $531.0 | | Investments in property, plant and equipment | (92.8) | | Free Cash Flow (Non-GAAP) | $438.2 |
Annual Cash Incentive Compensation (short-term compensation element)
Temporary Stop-Gap Measure — Converting Cash Incentive Payout Opportunity to Equity for the 2023 Fiscal Year: To help improve Non-GAAP Adjusted EBITDA, the earnings measure prescribed in our credit facility for purposes of calculating the leverage ratio (which excludes equity-based compensation), the Compensation Committee, with the support of our banks, converted the target annual cash-based incentive opportunity for approximately 200 of our highest paid associates, including our NEOs, to equity in the form of a performance unit award. The impacted associates received the FY23 Equity Incentive Grant that was intended to cover incentive payouts up to 100% of target payout level under the annual incentive plan, with any payout above target payable in cash. The Compensation Committee enhanced the grant date value of the FY23 Equity Incentive Grant versus the annual target cash incentive opportunity, valued as of the date of grant, to provide additional upside opportunity and protect the value of the forgone cash incentive payout for our associates. Our associates were motivated and engaged by the potential to realize higher than normal payouts if the Company achieved its financial goals and our share price appreciated over the fiscal year. Further, this provided a strong retention inducement for associates to continue with the Company despite the uncertainty surrounding our business. The FY23 Equity Incentive Grant resulted in the conversion of potential cash compensation expense to equity compensation expense and helped maintain compliance with our credit facility because equity compensation expense does not impact the leverage ratio calculation (as prescribed in our credit facility). The conversion, however, required increased share utilization and contributed to the Company’s higher-than-typical dilution percentage. The Company will continue to rely on converting annual cash incentive compensation to equity in the 2024 fiscal year to further maximize earnings and cash flow available to pay down debt and reaching the other financial goals in our operating plan. The design approved by the Compensation Committee is structured so the 2024 fiscal year equity incentive grant, if any, will be made following year-end with limited enhancement of the payout opportunity, as part of the Company’s transition back to more normalized incentive payout opportunities. Notwithstanding, we will continue to use our Common Shares more quickly than is typical in the 2024 fiscal year, and we are seeking shareholder approval to replenish our share pool. Funding Trigger: Payouts under the EIP for all incentive participants, including the NEOs, are subject to the Company remaining in compliance with the quarterly financial covenant requirements under its credit facility. This requirement was met for the 2023 fiscal year; however, no payouts were achieved by the NEOs based on the EIP results. Personal Performance Factor (“PPF”): To ensure we recognize and reward desired behaviors and not just financial results, the EIP typically includes a discretionary PPF; however, the Compensation Committee temporarily suspended this feature of the EIP for the 2023 fiscal year. When applicable, the PPF is a multiplier on each NEO’s calculated annual cash incentive payout amount and is intended to reward and motivate our top performers by facilitating a meaningful differentiation of payouts based on personal goal achievement and demonstrated leadership and cultural attributes. The Compensation Committee considers financial results along with a qualitative assessment of effective leadership attributes such as team development, embodiment of the Company’s culture and personal development and growth, to determine the PPF multiplier for each NEO, which can range from 0% to 150%. After applying the PPF, an individual participant could receive a total incentive payout that differs from the payout calculated based solely on achievement of the Business Performance Factors under the EIP. No NEO Incentive Payouts for the 2023 Fiscal Year: Despite the work in the 2023 fiscal year to position the Company to return to financial strength in the coming years, the NEOs ultimately received no payouts under the EIP since the pre-defined full-year Non-GAAP Adjusted EBITDA and Non-GAAP Free Cash Flow performance goals were not achieved. Due to the interim nature of his assignment, Mr. Evans was not a participant in the EIP for the 2023 fiscal year. Summary Compensation Table Reporting for the 2023 Fiscal Year: Given the approach to convert the cash incentive payout opportunity to equity for the 2023 fiscal year as noted above, the NEOs received a performance unit grant in the 2023 fiscal year, with an enhanced grant value as explained above, that was intended to cover potential payouts under the EIP, in Common Shares, up to a 100% target payout. Although no payouts were ultimately received by our NEOs, proxy reporting rules require that the applicable grant date value of the stock award must be reported in the Summary Compensation Table (“SCT”), without regard to whether or not the Common Shares were paid out. We believe this required reporting significantly distorts the reported compensation for each of our NEOs in the Summary Compensation Table, as reflected below, in that the FY23 Equity Incentive Grant has since been cancelled because plan results were not achieved. See table captioned “Pro Forma Summary Compensation for 2023 Fiscal Year” that adjusts for this reporting requirement and therefore we believe this provides a more accurate look at the pay received by our NEOs in the 2023 fiscal year.
Annual Cash Incentive Compensation (short-term compensation element)
| NEO | Enhanced Target Incentive Opportunity* | | SCT Reportable Grant Value** | | Actual Payout Realized | | | Mr. Hagedorn | | 3,150,000 | | 4,281,523 | | — | | Mr. Garth | | 1,132,812 | | 1,132,823 | | — | | Mr. Baxter | | 761,301 | | 761,367 | | — | | Mr. Lukemire | | 1,350,000 | | 1,834,984 | | — | | Ms. Stump | | 877,500 | | 1,192,752 | | — | | Mr. Evans | n/a | | n/a | | n/a | |
Annual Cash Incentive Compensation (short-term compensation element)
________________________ * Reflects the enhanced 2023 fiscal year target incentive opportunity for each NEO determined by the Compensation Committee. For Mr. Hagedorn, Mr. Lukemire and Ms. Stump, the Enhanced Target Incentive Opportunity was converted to performance units based on the Company’s average closing share price for the 30 days ending on the November 11, 2022 grant date ($47.02), rounded up to the next whole share. While the Compensation Committee chose to use a 30-day average share price to determine the number of performance units to be granted pursuant to the FY23 Equity Incentive Grant, we are required to report in the Summary Compensation Table using the grant date fair market value of a share ($63.91). As a result, the Summary Compensation Table Reportable Grant Value is higher for Mr. Hagedorn, Mr. Lukemire and Ms. Stump than the Enhanced Target Incentive Opportunity determined by the Compensation Committee. By the time Mr. Garth and Mr. Baxter were hired, the Company had reverted to using the actual grant date closing share price to determine the number of performance units to be granted. Therefore, for Mr. Garth and Mr. Baxter, the Enhanced Target Incentive Opportunity was converted to performance units based on the actual grant date closing share price of $55.23 on December 1, 2022 for Mr. Garth and $66.81 on April 28, 2023 for Mr. Baxter. ** Reflects the number of performance units granted to each NEO pursuant to the FY23 Equity Incentive Grant, valued at the actual closing share price on the applicable grant date of November 11, 2022 ($63.91) for Mr. Hagedorn, Mr. Lukemire and Ms. Stump, December 1, 2022 ($55.23) for Mr. Garth and April 28, 2023 ($66.81) for Mr. Baxter.
Long-Term Equity-Based Incentive Awards (long-term compensation element)
Long-Term Equity-Based Incentive Awards (long-term compensation element)
Long-Term Equity-Based Incentive Awards (long-term compensation element)
| Key points to understand about our long-term equity-based incentive awards for the 2023 fiscal year are: •We pulled non-qualified stock option grants forward to help with retention; •Almost 60% of the long-term incentive grant value for our NEOs was awarded as performance units tied to achieving leverage ratio covenant compliance — creating a penalty for non-compliance; and •Due to the FY23 Equity Incentive Grant being included with the normal equity awards granted in the 2023 fiscal year, it is reported in the Summary Compensation Table even though it was not achieved and subsequently cancelled, which distorts the compensation levels of our NEOs. A Pro Forma Summary Compensation Table has been included in this Proxy Statement to more accurately reflect the compensation received by our NEOs. |
Long-Term Equity-Based Incentive Awards (long-term compensation element)
Long-term incentive compensation is an integral part of total compensation for Company executives and directly ties rewards to performance that creates and enhances shareholder value. Consistent with the Company’s performance-based pay philosophy, the Compensation Committee exercises its discretion to position the target grant value of individual equity-based incentive awards relative to the Competitive Market Range based on a subjective assessment of organizational and individual qualities and characteristics, including the strategic importance of the individual’s job function to the Company, as well as an NEO’s capability, experience, skill level, overall contribution to the success of our business and the potential of the individual to make significant contributions to the Company in the future. For the 2023 fiscal year, almost 60% of the normal target annual long-term incentive value granted to the NEOs was performance-based and awarded in performance units (“PUs”), with the remainder of the long-term grant value awarded in NSOs.
Long-Term Equity-Based Incentive Awards (long-term compensation element)
| NEO | 2023 NSO Grant Value | | 2023 PU Grant Value | | Normal LTI Grant Value* | | % Perf. Based | | Mr. Hagedorn | | 2,740,931 | | 3,600,053 | | 6,340,984 | 57% | | Mr. Garth | | 638,044 | | 900,034 | | 1,538,078 | 59% | | Mr. Baxter | | 638,041 | | 900,064 | | 1,538,105 | 59% | | Mr. Lukemire | | 913,648 | | 1,200,072 | | 2,113,720 | 57% | | Ms. Stump | | 342,625 | | 450,017 | | 792,642 | 57% | | Mr. Evans | n/a | | n/a | | n/a | | n/a |
Long-Term Equity-Based Incentive Awards (long-term compensation element)
________________________ * Normal LTI Grant Value does not include the grant date value of the FY23 Equity Incentive Grant that is also reported in the Stock Awards column of the Summary Compensation Table since this is not part of the normalized target annual LTI value for the NEOs. How the Company’s Financial Covenant Pressures Impacted the Performance Unit Design for the 2023 Fiscal Year: In support of the Company’s priority focus to ensure compliance with the then-current leverage ratio requirements of the Company’s credit facility, the Compensation Committee made certain changes to the Company’s long-term incentive plans for the 2023 fiscal year (in addition to the stop-gap measures described above for the EIP), that align the long-term incentive payout opportunities for our NEOs directly to metrics that comprise the Company’s leverage ratio. As a result, each of the NEOs received a portion of their normal long-term incentive grant value in the form of a performance unit grant (the “2023 Performance Unit Awards”), which are subject to a one-year performance period (the “Calendar 2023 Performance Period”) and a three-year service-based vesting requirement. Given the Company’s need to maintain compliance with the quarterly leverage ratio requirements of the credit facility, and the potential short- and long-term ramifications in the event of noncompliance, the Compensation Committee determined it was in the best interest of the Company’s shareholders to put a material portion of each NEO’s compensation at risk (almost 60% of the normal LTI grant value) if the Company failed to remain in compliance with the applicable quarterly leverage ratio covenant requirements of the credit facility for the Calendar 2023 Performance Period. Based on the design of the 2023 Performance Unit Awards, each executive officer could earn 25% of the target shares granted for each quarter during the Calendar 2023 Performance Period that the Company achieved compliance with the then-current quarterly leverage ratio covenant requirements (subject to also achieving the service requirements). In no case could the NEOs achieve a payout in excess of the target shares granted; however, they stood to lose 25% of the target shares granted for each quarter of noncompliance during the Calendar 2023 Performance Period. The Compensation Committee recognized that a one-year performance period is a departure from our normal practice but believed this approach was appropriate given the Company’s leverage ratio position and in the best interest of shareholders. Further, there is a meaningful long-term element to the design in that the performance units granted to the NEOs during the 2023 fiscal year are subject to a three-year time-based cliff vesting requirement, with a provision for accelerated vesting in the event of retirement, death or disability. The Compensation Committee is committed to incorporating a three-year performance-based incentive component into the LTI design for the 2024 fiscal year that is aligned to the Company’s long-term financial objectives. Calendar 2023 PU Performance Goals: The table below shows the performance metrics and goals established by the Compensation Committee for purposes of determining payouts of the 2023 Performance Unit Awards, and actual results achieved through the end of the 2023 fiscal year. The Company has satisfied the performance goals for each of the quarters in the 2023 calendar year completed as of the date of this Proxy Statement:
Long-Term Equity-Based Incentive Awards (long-term compensation element)
| Leverage Ratio Compliance** | Qtr. Ending 4/1/23 | Qtr. Ending 7/1/23 | Qtr. Ending 9/30/23* | Qtr. Ending 12/31/23* | | Applicable Leverage Ratio Goal | 6.50x | 6.50x | 7.75x | 8.25x | | Actual Leverage Ratio Achievement | 6.01x | 6.15x | 6.57x | TBD |
Long-Term Equity-Based Incentive Awards (long-term compensation element)
________________________ * Pursuant to the amendment of the credit facility in July 2023, the original 9/30/23 goal of 6.25x was revised to 7.75x and the original 12/31/23 goal of 6.25x was revised to 8.25x. At the time the performance goals were established for the Calendar 2023 Performance Period on January 26, 2023, the Compensation Committee contemplated the potential for the credit facility to be amended and made a determination that it was in the best interest of the Company’s shareholders to ensure that the Company maintained compliance with the then-current quarterly financial covenant requirements as of each quarter end. ** Leverage Ratio Covenant Compliance: Determined as of the end of each fiscal quarter calculated as average total indebtedness as of the end of each of the prior four quarters, divided by the Company’s cumulative Non-GAAP Adjusted EBITDA for the prior four quarters. Therefore, where the Actual Leverage Ratio Achievement number is lower than the Applicable Leverage Ratio Goal, the Company satisfied the performance goals. Each PU granted to the NEOs in the 2023 fiscal year also includes a dividend equivalent right entitling the NEO to receive an amount in cash equal to the dividends declared and paid by the Company during the period beginning on the grant date and ending on the settlement date, which is generally the third anniversary of the grant date. Failure to achieve the specified Leverage Ratio Covenant Compliance goals for the Calendar 2023 Performance Period would result in forfeiture of the PUs and the related dividend equivalent rights, even if the service-based vesting requirements are ultimately satisfied. Non-Qualified Stock Option Grants: During the 2023 fiscal year, each NEO, other than Mr. Evans, received a grant of non-qualified stock options (“NSOs”) structured to promote retention and continuity (with a grant date value that approximated 40% of the applicable normal target annual LTI value determined for each NEO) and which was pulled forward as explained in the following paragraph. The NSOs align our NEOs interests with those of our shareholders since value realization is dependent on future sustained share price appreciation. The NSOs are subject to three-year time-based cliff vesting, with a provision for accelerated vesting in the event of retirement, death or disability. Temporary Stop-Gap Measure: Pulling Forward Timing of NSO Grants for the 2023 Fiscal Year: The Company typically grants equity-based awards at the Compensation Committee meeting in January and the grant date is the second or third trading day following the Company’s first quarter earnings release. However, the 2023 fiscal year was not typical. During the 2023 fiscal year as part of the Company’s stop-gap compensation measures discussed above and to further promote retention and continuity, the Compensation Committee pulled forward approximately 40% of the normal target long-term incentive value for Mr. Hagedorn, Mr. Lukemire and Ms. Stump, as well as approximately 50 key management employees, that would normally be granted in February 2023 to November 2022 (the “Pull Forward LTI Value). The Pull Forward LTI Value was granted in the form of NSOs on November 4, 2022 as discussed in more detail in the section captioned “Long-Term Equity-Based Incentive Awards (long-term compensation element).” The Company's historical practice to determine the number of Common Shares subject to a grant is to utilize the grant date fair value of the option estimated using a Black-Scholes model. For the NSOs, the Company continued to use the grant date fair value estimated using a Black-Scholes model, but departed from historical practice by adjusting the current stock price assumption to instead use the average closing share price for the 30 trading days ending on October 24, 2022 to determine the number of NSOs. The decision to use the 30-day average price was intended to give more certainty to the number of Common Shares required to be reserved against the Company’s Long-Term Incentive Plan share pool, which was running low at the time, pending shareholder approval to replenish the pool which was subsequently obtained at the 2023 Annual Meeting of Shareholders. Summary Compensation Table Reporting for the 2023 Fiscal Year: For purposes of reporting the value of all equity-based grants in the Summary Compensation Table for the 2023 fiscal year, the grant date value of 2023 Performance Unit Awards is combined with the grant date value of the FY23 Equity Incentive Grant (described above in the section captioned “Annual Cash Incentive Compensation (short-term compensation element)”), as well as any additional one-time service-based grants, and reported in the Stock Awards column of the Summary Compensation Table for the 2023 Fiscal Year as reflected in the table below. Due to proxy reporting rules, we are required to disclose the grant value of the FY23 Equity Incentive Grant, which is non-recurring, despite the fact that no payout was achieved and the grant was subsequently cancelled because the plan performance goals were not achieved. Were it not for this reporting requirement, the Summary Compensation Table would reflect only the grant date value of the 2023 Performance Unit Awards that was a component of the normal annual compensation opportunity for the NEOs plus any additional one-time service-based grants. See table captioned “Pro Forma Summary Compensation for 2023 Fiscal Year” that corrects for this reporting requirement and provides a more accurate look at the pay received by our NEOs in the 2023 fiscal year.
Long-Term Equity-Based Incentive Awards (long-term compensation element)
| NEO | SCT Stock Award Value | FY23 Equity Incentive Grant Value* | Pro Forma Stock Award Value | | Mr. Hagedorn | $7,881,576 | $(4,281,523) | $3,600,053 | | Mr. Garth | $2,782,880 | $(1,132,823) | $1,650,057 | | Mr. Baxter | $3,911,473 | $(761,367) | $3,150,106 | | Mr. Lukemire | $3,035,056 | $(1,834,984) | $1,200,072 | | Ms. Stump | $1,642,769 | $(1,192,752) | $450,017 | | Mr. Evans | n/a | n/a | n/a |
Long-Term Equity-Based Incentive Awards (long-term compensation element)
________________________ * Amounts shown in this column were not earned and were subsequently cancelled. One-Time Restricted Stock Unit Grants: In connection with his hiring as Executive Vice President & Chief Financial Officer, Mr. Garth received a one-time grant of RSUs, with a grant date value of $750,023 on December 1, 2022 (the “Garth Sign-On Grant”). The Garth Sign-On Grant was made to mitigate value Mr. Garth stood to lose by leaving his prior employer. The Garth Sign-On Grant is generally subject to ratable vesting and settlement on the first and second anniversary of the grant date, with a provision for accelerated vesting of any unvested shares in the event of an involuntary termination, without Cause, prior to the second anniversary of the grant date. The Garth Sign-On Grant also includes a dividend equivalent right entitling him to receive an amount in cash equal to the dividends declared and paid by the Company during the period beginning on the grant date and ending on the applicable settlement date. In connection with his hiring as Executive Vice President, Technology & Operations, Mr. Baxter received a one-time grant of RSUs, with a grant date value of $750,009 on April 28, 2023 (the “Baxter Sign-On Grant”). The Baxter Sign-On Grant was made to mitigate value Mr. Baxter stood to lose by leaving his prior employer. The Baxter Sign-On Grant is generally subject to ratable vesting and settlement on the first and second anniversary of the grant date, with a provision for accelerated vesting of any unvested shares in the event of an involuntary termination, without Cause, prior to the second anniversary of the grant date. The Baxter Sign-On Grant also includes a dividend equivalent right entitling him to receive an amount in cash equal to the dividends declared and paid by the Company during the period beginning on the grant date and ending on the applicable settlement date. In connection with his appointment as Executive Vice President & Chief Operating Officer, Mr. Baxter received a one-time promotional grant of RSUs, with a grant date value of $1,500,033 on September 2, 2023 (the “Baxter Promotional Grant”). The Baxter Promotional Grant is generally subject to cliff vesting on the third anniversary of the grant date, with a provision for accelerated vesting in the event of termination due to death or disability prior to the third anniversary of the grant date. The Baxter Promotional Grant also includes a dividend equivalent right entitling him to receive an amount in cash equal to the dividends declared and paid by the Company during the period beginning on the grant date and ending on the settlement date, which is generally the third anniversary of the grant date. Information regarding our equity grant practices, including the determination of exercise price, can be found in the section captioned “Other Executive Compensation Policies, Practices and Guidelines — Practices Regarding Equity-Based Awards.”
Executive Perquisites and Other Benefits (short-term compensation element)
Executive Perquisites and Other Benefits (short-term compensation element) The Company maintains traditional health and welfare benefit plans and The Scotts Company LLC Retirement Savings Plan (the “RSP”), a qualified 401(k) plan, which are generally offered to all employees (subject to basic plan eligibility requirements) and are consistent with the types of benefits offered by other similar corporations. With the exception of a Company-paid annual physical examination and limited personal use of Company aircraft as provided below, none of the NEOs other than the CEO receive executive perquisites or benefits beyond those generally offered to all employees. From time to time, family members of the NEOs are accommodated as passengers on business-related flights on Company aircraft. There is no incremental cost to the Company for this perquisite. All of the NEOs, with the exception of Mr. Evans, are entitled to limited personal use of Company aircraft at their own expense. Specifically, Mr. Hagedorn has an option to purchase up to 150 flight hours per year for personal use at the Company’s incremental direct operating cost per flight hour. Mr. Lukemire is entitled to purchase up to 50 flight hours per year, and all other NEOs are entitled to purchase up to 25 flight hours per year. There is no incremental cost to the Company for this perquisite other than the partial loss of a tax deduction of certain aircraft-related costs as a result of personal use of Company aircraft. Since Company aircraft are used primarily for business travel, the determination of the direct operating cost per flight hour excludes the fixed costs that do not change based on usage, such as pilots’ salaries, the purchase cost of Company aircraft and the cost of maintenance not related to personal trips. Given the unique nature of Mr. Evans’ interim appointment, he was eligible for limited Company-paid commuting and personal flights on Company aircraft. His eligibility for this limited perquisite was subject to the approval of the Chief Executive Officer on a flight-by-flight basis and required Mr. Evans to bear any tax consequences associated with any approved personal flights. Mr. Evans did not take any personal flights during the 2023 fiscal year. As part of their respective relocation benefits provided in connection with their hiring during the 2023 fiscal year, Mr. Garth and Mr. Baxter were entitled to limited Company-paid commuting flights on Company aircraft. During the 2023 fiscal year, the Company incurred $248,685 in direct operating costs associated with Mr. Garth’s commuting flights and $144,795 associated with Mr. Baxter’s commuting flights. The respective amounts have been reported as additional compensation to Mr. Garth and Mr. Baxter in the All Other Compensation column of the Summary Compensation Table for the 2023 Fiscal Year. Both Mr. Garth and Mr. Baxter are responsible for the personal income tax consequences of the limited commuting benefit, which has now been discontinued. As an additional perquisite, Mr. Hagedorn has access to the services of the Company’s aviation mechanics and pilots in circumstances involving commuting flights on his personal aircraft. Since the Company’s aviation mechanics and pilots are paid on a salary basis, there is no incremental cost to the Company for this perquisite. To the extent Mr. Hagedorn utilizes the Company’s aviation mechanics and pilots in connection with non-commuting flights on his personal aircraft, he reimburses the Company for a pro-rata portion of their salaries and fringe benefit costs. For further discussion, see section captioned “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.”
Retirement Plans and Deferred Compensation Benefits (long-term compensation element)
Retirement Plans and Deferred Compensation Benefits (long-term compensation element) Executive Retirement Plan The Scotts Company LLC Executive Retirement Plan (the “ERP”) is a non-qualified deferred compensation plan that provides executives the opportunity to: (1) defer compensation with respect to salary and amounts received in lieu of salary; and (2) defer compensation with respect to any Performance Award (as defined in the ERP). The ERP consists of the following five parts: •Compensation Deferral, which allows continued deferral of up to 75% of salary and amounts received in lieu of salary; •Performance Award Deferral, which allows the deferral of up to 100% of any cash incentive compensation earned under the EIP; •Retention Awards, which reflect the Company’s contribution to the ERP for retention awards; •Supplemental Retirement Awards, which reflect Company directed contributions to the ERP, subject to the approval of the Compensation Committee; and •Crediting of Company matching contributions on qualifying deferrals. The Supplemental Retirement Awards (“SRA”) provide a tax deferred approach to award additional compensation to the NEOs and other key management employees of the Company. The SRA contributions, which are subject to the discretion of the Compensation Committee, are funded on a monthly basis. While the awards are fully vested at the time of contribution, the SRA account balance cannot be distributed to the recipient for a minimum of six months following the termination of employment. During the 2023 fiscal year, the Compensation Committee awarded the following SRAs: •Mr. Hagedorn was entitled to receive an annualized SRA contribution of $1.0 million (payable in monthly installments of $83,333), awarded in January 2014 in connection with the negotiation of the severance agreement between The Scotts Company LLC (“Scotts LLC”) and Mr. Hagedorn (the “Hagedorn Severance Agreement”). To assist the Company in ensuring compliance with the financial covenants under our credit facility, Mr. Hagedorn decided to voluntarily forgo $416,667 of the $1.0 million SRA contribution the Company would otherwise have made on his behalf during the 2023 fiscal year. •Mr. Lukemire has received an annualized SRA contribution of $300,000 (payable in monthly installments of $25,000), since January 2019. However, effective August 1, 2023, the Compensation Committee decided to reallocate Mr. Lukemire’s $25,000 monthly SRA value to his base salary and his monthly SRA contributions were discontinued as of July 31, 2023. As a result of this change, the salary amount reported in the Summary Compensation Table for 2023 Fiscal Year for Mr. Lukemire is $50,000 higher than the prior year, but this is offset by the corresponding reduction in the reported value of his “All Other Compensation” attributed to discontinuing his monthly SRA contributions. •Ms. Stump has received an annualized SRA contribution of $310,000 (payable in monthly installments of $25,833), since May 2018 in conjunction with the approval of the Stump Retention Agreement, which is described in more detail below. However, effective August 1, 2023, the Compensation Committee decided to reallocate Ms. Stump’s $25,833 monthly SRA value to her base salary and her monthly SRA contributions were discontinued as of July 31, 2023. As a result of this change, the salary amount reported in the Summary Compensation Table for 2023 Fiscal Year for Ms. Stump is $51,666 higher than the prior year, but this is offset by the corresponding reduction in the reported value of her “All Other Compensation” attributed to discontinuing her monthly SRA contributions. The Company matching contributions to the ERP were based on the same contribution formulae as those used for the RSP. Specifically, the Company will match participant contributions at a rate of 200% for the first 3% of eligible earnings contributed to the ERP and 50% for the next 3% of eligible earnings contributed to the ERP. As a result, if a participant contributes at least 6% of their pay to the ERP, the Company matching contribution would be equal to 7.5%. Company matching contributions to the ERP are not funded until the first quarter of the subsequent calendar year, provided the individual is actively employed by the Company as of December 31. All accounts under the ERP are bookkeeping accounts and do not represent claims against specific assets of the Company. Each participant may select one or more investment funds, including a Company stock fund, against which to benchmark such participant’s ERP accounts. The investment options under the ERP are substantially consistent with the investment options permitted under the RSP. Accordingly, there were no above-market or preferential earnings on investments associated with the ERP for any of the NEOs for the 2023 fiscal year. Other Retirement and Deferred Compensation Plans The Scotts Company LLC Excess Benefit Plan for Non Grandfathered Associates (the “Excess Pension Plan”) is an unfunded plan that provides benefits that cannot be provided under The Scotts Company LLC Associates’ Pension Plan (the “Associates’ Pension Plan”) due to specified statutory limits. The Associates’ Pension Plan and related Excess Pension Plan were frozen effective December 31, 1997 and, therefore, no additional benefits have accrued after that date under either plan. However, continued service taken into account for vesting purposes under the Associates’ Pension Plan is recognized with respect to the entitlement to, and the calculation of, subsidized early retirement benefits under the Excess Pension Plan. Based on their tenure, Mr. Hagedorn and Mr. Lukemire are the only NEOs who participate in the Associates’ Pension Plan. Based on his tenure, Mr. Hagedorn is the only NEO who participates in the Excess Pension Plan. For further details regarding the Excess Pension Plan, see section captioned “EXECUTIVE COMPENSATION TABLES — Pension Benefits Table.”
Compensation Peer Group
Compensation Peer Group For the purpose of enabling the Company to benchmark our compensation practices, as well as the total compensation packages of our NEOs, the Company uses a customized Compensation Peer Group, established by the Compensation Committee with its independent compensation consultant. The Compensation Committee believes that the companies chosen for the Compensation Peer Group (listed below) reflect the types of highly regarded consumer products-oriented companies with which the Company typically competes to attract and retain executive talent. The following Compensation Peer Group was utilized to benchmark our compensation practices for the 2023 fiscal year:
Compensation Peer Group
| Central Garden & Pet Company | Church & Dwight Co., Inc. | The Clorox Company | | Constellation Brands, Inc. | Energizer Holdings, Inc. | FMC Corporation | | Herbalife Nutrition Ltd. | Masco Corporation | Nu Skin Enterprises, Inc. | | Newell Brands, Inc. | Rollins, Inc. | RPM International, Inc. | | The J. M. Smucker Company | Spectrum Brands Holdings, Inc. | The Toro Company | | Molson Coors Beverage Company | The Boston Beer Company, Inc. | |
Compensation Peer Group
The Compensation Committee believes this Compensation Peer Group reflects the pay practices of the broader consumer products industry and is reflective of the size and complexity of the Company. The Compensation Peer Group includes companies that ranged between $1.9 billion and $10.7 billion of annual revenues at the time they were selected, with a median annual revenue of approximately $5.2 billion. Looking ahead to the 2024 fiscal year, the Compensation Committee made certain changes to the Compensation Peer Group to ensure the Compensation Peer Group continues to reflect the Company’s size and business profile. Specifically, The Boston Beer Company, Inc., Constellation Brands, Inc., and Molson Coors Beverage Company will be removed from the group and Edgewell Personal Care Company, Griffon Corporation, Helen of Troy Limited, Reynolds Consumer Products Inc. and Prestige Consumer Healthcare Inc. will be added to the group.
Role of Management in Compensation Decisions
Role of Management in Compensation Decisions The Compensation Committee is responsible for establishing performance objectives for our CEO and completing an annual assessment of his performance. Our CEO is responsible for establishing performance objectives and conducting annual performance reviews for all of the other NEOs. The Compensation Committee believes that performance evaluation and goal-setting are critical to the overall compensation-setting process because the personal performance level of each NEO is one of the most heavily weighted factors considered by the Compensation Committee when making compensation decisions. In conjunction with the Company’s outside consultants from Willis Towers Watson and Aon Consulting, Inc., management conducts annual market surveys of the base salary levels, short-term incentives and long-term incentives for each of our NEOs, with the goal of helping to ensure that executive compensation levels remain competitive with the benchmark compensation data, which facilitates our ability to retain and motivate key executive talent. The benchmark compensation data provided by Willis Towers Watson and Aon Consulting, Inc. reflects several hundred general industry companies, representing a wide range of annual revenue, who voluntarily participate in the surveys and are not selected by the Company. To account for the wide range of companies included in the surveys, the data is statistically adjusted by the Company’s compensation consultants to more closely reflect the relative size of the Company based on revenue.
Setting Compensation Levels for CEO and Other NEOs
Setting Compensation Levels for CEO and Other NEOs The compensation structure for our CEO and our other NEOs, other than Mr. Evans, is designed to deliver approximately 75% of the target annual compensation opportunity (without respect to the impact of temporary stop-gap measures described above) in the form of variable pay (i.e., annual incentive compensation and long-term equity-based compensation) and the remainder in the form of fixed pay (i.e., base salary and SRA contributions). The Compensation Committee believes that the pay mix and overall levels of pay are generally in line with the pay mix for similar positions within our Compensation Peer Group. Once a year, the Compensation Committee completes an evaluation of our CEO’s performance with respect to the Company’s goals and objectives and makes a report of its evaluation to the Board. When evaluating potential changes to Mr. Hagedorn’s total level of compensation, the Compensation Committee considers Mr. Hagedorn’s personal performance against pre-established goals and objectives, the Company’s performance and relative shareholder return, and the compensation of CEOs at comparable companies, as reflected in the benchmark compensation data. Based on their assessment of the competitive market trends and the individual performance level of each NEO, our CEO and the Executive Vice President, Global Human Resources make specific recommendations to the Compensation Committee with respect to each element of compensation for each of the other NEOs. In evaluating these compensation recommendations, the Compensation Committee considers information such as the Company’s financial performance as well as the compensation of similarly situated executive officers as determined by the Competitive Market Range for each role. The Compensation Committee strives to deliver a competitive level of total compensation to each of them by evaluating and balancing the strategic importance of the position within our executive ranks, the overall performance level and expected contribution of the individual to the Company’s business results, industry compensation practices (including companies within our Compensation Peer Group), internal pay equity, and our executive compensation structure and philosophy. Consistent with our role-based pay approach, which is intended to distinguish the overall level of and mix of pay for those roles that have a higher degree of organizational impact and influence, the Compensation Committee determines the overall pay levels for the CEO and each of the other NEOs relative to the Competitive Market Range to reflect the impact they believe that each of these individuals brings to our Company. In its determination of pay, the Compensation Committee also considers the personal performance of each of the NEOs as well as the extended time that certain NEOs have served in their respective roles. After applying the above guidelines and considering the financial covenant pressures the Company faced, the Compensation Committee decided to maintain the existing annualized total direct compensation structure for the 2023 fiscal year for Mr. Hagedorn, Mr. Lukemire and Ms. Stump as reflected in the table below (without respect to the impact of temporary stop-gap measures described above). The annualized total direct compensation in the table below for Mr. Garth and Mr. Baxter reflect their annualized total direct compensation at the time of their respective hiring and does not include one-time compensation elements such as one-time signing bonuses or one-time equity grants. The annualized total direct compensation indicated in the table below for Mr. Evans reflects the annualized value of the monthly salary he received in connection with his interim appointment as CFO, which ended as of November 30, 2022, in connection with Mr. Garth assuming the CFO role. Consistent with our pay-for-performance philosophy, the ability for our NEOs to realize the LTI value is dependent on future business results and share price. The annualized amounts reported below for each NEO reflect the components of their annualized TDC structure and differ from the actual compensation paid in the 2023 fiscal year as reported in the Summary Compensation Table.
Setting Compensation Levels for CEO and Other NEOs
| | | Fixed Elements of Compensation | | | Variable Elements of Compensation | | | | Total Direct Compensation (TDC)(4) | | | | | | | Annual Bonus | | Target Annual Long-Term Incentive Value(3) | | | | | | Base Salary | Other Comp(1) | Fixed % of TDC | Target % | Target $(2) | | Variable % of TDC | | | Mr. Hagedorn | 2023 TDC | $1,200,000 | $1,000,000 | 21% | 175% | $2,100,000 | $6,000,000 | 79% | $10,300,000 | | | 2022 TDC | $1,200,000 | $1,000,000 | 21% | 175% | $2,100,000 | $6,000,000 | 79% | $10,300,000 | | Mr. Garth | 2023 TDC | $725,000 | $— | 23% | 125% | $906,250 | $1,500,000 | 77% | $3,131,250 | | Mr. Baxter | 2023 TDC | $950,000 | $— | 26% | 125% | $1,187,500 | $1,500,000 | 74% | $3,637,500 | | Mr. Lukemire | 2023 TDC | $720,000 | $300,000 | 26% | 125% | $900,000 | $2,000,000 | 74% | $3,920,000 | | | 2022 TDC | $720,000 | $300,000 | 26% | 125% | $900,000 | $2,000,000 | 74% | $3,920,000 | | Ms. Stump | 2023 TDC | $650,000 | $310,000 | 42% | 90% | $585,000 | $750,000 | 58% | $2,295,000 | | | 2022 TDC | $650,000 | $310,000 | 42% | 90% | $585,000 | $750,000 | 58% | $2,295,000 | | Mr. Evans (5) | 2023 TDC | $1,687,500 | $— | 100% | —% | $— | $— | —% | $1,687,500 | | | 2022 TDC | $1,687,500 | $— | 61% | —% | $— | $1,075,000 | 39% | $2,762,500 |
Setting Compensation Levels for CEO and Other NEOs
(1) Other Compensation reflects the annualized values of the SRA contributions, applicable to each NEO, as noted in the section captioned “Elements of Executive Compensation — Retirement Plans and Deferred Compensation Benefits (long-term compensation element).” The amounts reflected in the Base Salary and Other Comp columns for Mr. Lukemire and Ms. Stump do not reflect the decision made by the Compensation Committee to reallocate the value of their respective monthly SRA contributions to their base salaries effective August 1, 2023. (2) The Target Annual Bonus amount reported reflects the annualized cash-based target incentive opportunity. For the 2023 fiscal year, the amount excludes the one-time enhancement that was applied for the 2023 fiscal year in connection with the Compensation Committee’s decision to convert the cash incentive payout opportunity to equity to help the Company maximize earnings and cash flow available to pay down debt. (3) The actual grant value awarded to each of the NEOs, other than Mr. Evans, during the 2023 fiscal year was granted in the form of PUs and NSOs. For additional details on grant values, see section captioned “Elements of Executive Compensation — Long-Term Equity-Based Incentive Awards (long-term compensation element).” (4) TDC reflects the annualized total direct compensation opportunity at target approved by the Compensation Committee in January 2023 for the 2023 fiscal year for Mr. Hagedorn, Mr. Lukemire and Ms. Stump. The TDC for Mr. Garth and Mr. Baxter reflects the annualized total direct compensation opportunity at target established at the time of their respective hires in December 2022 and April 2023. The TDC for Mr. Evans reflects the annualized value of his monthly salary in connection with his interim appointment as CFO. Due to the interim nature of his assignment, Mr. Evans did not receive an additional long-term incentive award in the 2023 fiscal year. (5) The Compensation Committee believes the TDC structure for Mr. Evans was appropriate given the interim nature of his assignment when it began in August 2022. The structure was designed to provide cash compensation at an annualized rate appropriate for the CFO role, and Mr. Evans was not eligible to participate in our annual incentive program. The Compensation Committee believes that each element of total direct compensation reflected above, as well as the overall level of compensation for each of the NEOs, suitably recognizes their personal performance and unique skill sets and is appropriate relative to the Competitive Market Range for their respective roles.
Summary Compensation Table
Summary Compensation Table The following table summarizes the total compensation paid to, awarded to or earned by each of the NEOs for the fiscal years shown. The amounts shown include all forms of compensation provided to the NEOs, including amounts that may have been deferred. Since the table includes equity-based compensation costs and changes in the actuarial present value of the NEOs’ accumulated pension benefits, the total compensation amounts may be greater than the compensation that was actually paid to the NEOs during each of the fiscal years.
Summary Compensation Table for 2023 Fiscal Year
Summary Compensation Table for 2023 Fiscal Year
Summary Compensation Table for 2023 Fiscal Year
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($)(2) | Stock Awards ($)(3) | Option Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($)(8) | Total ($)(9) | | James Hagedorn Chairman of the Board, Chief Executive Officer & President | 2023 | 720,000 | — | 7,881,576 | 2,740,931 | — | —(7) | 652,059 | 11,994,566 | | | 2022 | 1,104,000 | — | 6,000,143 | — | — | —(7) | 1,065,718 | 8,169,861 | | | 2021 | 1,200,000 | — | 2,500,122 | 2,400,932 | 3,465,000 | —(7) | 1,147,858 | 10,713,912 | | Matthew E. Garth Executive Vice President, Chief Financial Officer & Chief Administrative Officer | 2023 | 604,167 | 700,000 | 2,782,880 | 638,044 | — | — | 927,510 | 5,652,601 | | Nathan E. Baxter Executive Vice President & Chief Operating Officer | 2023 | 395,833 | 700,000 | 3,911,473 | 638,041 | — | — | 288,670 | 5,934,017 | | Michael C. Lukemire President | 2023 | 770,000 | — | 3,035,056 | 913,648 | — | —(7) | 316,209 | 5,034,913 | | | 2022 | 720,000 | — | 2,000,225 | — | — | —(7) | 462,172 | 3,182,397 | | | 2021 | 720,000 | — | 875,161 | 840,323 | 1,485,000 | —(7) | 599,553 | 4,520,037 | | Denise S. Stump Executive Vice President, Global Human Resources and Chief Ethics Officer | 2023 | 701,667 | — | 1,642,769 | 342,625 | — | — | 304,057 | 2,991,118 | | | 2022 | 650,000 | — | 750,184 | — | — | — | 424,895 | 1,825,079 | | | 2021 | 650,000 | — | 310,091 | 297,739 | 877,500 | — | 516,449 | 2,651,779 | | David C. Evans Former Executive Vice President & Interim Chief Financial Officer | 2023 | 281,250 | — | — | — | — | — | 22,875 | 304,125 | | | 2022 | 153,606 | — | 1,075,015 | — | — | — | — | 1,228,621 |
Summary Compensation Table for 2023 Fiscal Year
(1) Reflects the amount of base salary received by each NEO for the applicable fiscal years. Due to the timing of pay changes, the amount reported may be less than the base salary rate as of the end of each fiscal year. For Mr. Hagedorn, the amount reported reflects his decision to voluntarily forgo $480,000 of his base salary during the 2023 fiscal year. For Mr. Lukemire and Ms. Stump, amount reflects the Company’s decision to reallocate monthly deferred compensation contributions to base pay beginning August 1, 2023. (2) Reflects the cash value of the sign-on bonuses paid to Mr. Garth and Mr. Baxter in connection with their respective hiring events in the 2023 fiscal year. The sign-on bonuses were provided to mitigate value Mr. Garth and Mr. Baxter stood to lose by leaving their prior employers. (3) The grant date fair value of the PUs and service-based RSUs was determined using the value of the underlying Common Shares on the date of grant and were calculated in accordance with the equity compensation accounting provisions of FASB ASC Topic 718, without respect to forfeiture assumptions. Pursuant to applicable SEC Rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Assumptions used in the calculation of these amounts are included in Note 1 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the 2023 fiscal year. PUs granted to each NEO as part of the standard annual grant in the 2023 fiscal year assume the underlying applicable performance criteria will be satisfied at target. As required, the value noted for the FY23 Equity Incentive Grant includes the grant date fair value of the PUs granted, however, the FY23 Equity Incentive Grants did not achieve the performance criteria and these grants were subsequently cancelled. Additional information on the impact of the FY23 Equity Incentive Grant reporting is reflected in the section captioned “Pro Forma Summary Compensation Table for 2023 Fiscal Year.” (4) Reflects the aggregate grant date fair value of NSOs granted to each NEO. The value of the NSOs granted is determined using a binomial option valuation on the date of the grant computed in accordance with the equity compensation accounting provisions of FASB ASC Topic 718. Pursuant to applicable SEC Rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. Assumptions used in the calculation of the amounts shown are included in Note 13 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the 2023 fiscal year. (5) Reflects the EIP payouts awarded to the NEOs by the Compensation Committee for the 2021 fiscal year, calculated pursuant to the terms of the EIP. No incentive payouts were awarded to any of the NEOs for the 2022 fiscal year or 2023 fiscal year. (6) Participant account balances in the ERP are credited to one or more benchmark funds that are substantially consistent with the investment options available under the RSP. Accordingly, there are no above-market or preferential earnings on amounts deferred under the ERP. The Associates’ Pension Plan and the Excess Pension Plan were frozen as of December 31, 1997; therefore, no service credits have been earned since that date by Mr. Hagedorn or Mr. Lukemire. No other NEOs were eligible for either the Associates’ Pension Plan or the Excess Pension Plan. For additional information, see table below captioned “Pension Benefits at 2023 Fiscal Year-End.” (7) Reflects the actuarial present value of accumulated benefit for the respective fiscal year under both the Associates’ Pension Plan and the Excess Pension Plan for Mr. Hagedorn and under the Associates’ Pension Plan for Mr. Lukemire. With respect to the 2023 fiscal year, the accumulated benefit decreased for both Mr. Hagedorn $(18,090) and Mr. Lukemire $(236); however, based on applicable SEC guidance, amounts reported in this table cannot be negative. (8) Please see table below captioned “All Other Compensation” for information regarding the components of the “All Other Compensation” column. (9) For Mr. Evans, the amounts shown reflect only compensation that he earned in his role as Interim Chief Financial Officer.
Pro Forma Summary Compensation for 2023 Fiscal Year
| Name | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($)(1) | | James Hagedorn | 2023 | 720,000 | — | 3,600,053(1) | 2,740,931 | — | — | 652,059 | 7,713,043 | | | 2022 | 1,104,000 | — | 6,000,143 | — | — | — | 1,065,718 | 8,169,861 | | | 2021 | 1,200,000 | — | 2,500,122 | 2,400,932 | 3,465,000 | — | 1,147,858 | 10,713,912 | | Matthew E. Garth | 2023 | 604,167 | 700,000 | 1,650,057(1) | 638,044 | — | — | 927,510 | 4,519,778 | | Nathan E. Baxter | 2023 | 395,833 | 700,000 | 3,150,106(1) | 638,041 | — | — | 288,670 | 5,172,650 | | Michael C. Lukemire | 2023 | 770,000 | — | 1,200,072(1) | 913,648 | — | — | 316,209 | 3,199,929 | | | 2022 | 720,000 | — | 2,000,225 | — | — | — | 462,172 | 3,182,397 | | | 2021 | 720,000 | — | 875,161 | 840,323 | 1,485,000 | — | 599,553 | 4,520,037 | | Denise S. Stump | 2023 | 701,667 | — | 450,017(1) | 342,625 | — | — | 304,057 | 1,798,366 | | | 2022 | 650,000 | — | 750,184 | — | — | — | 424,895 | 1,825,079 | | | 2021 | 650,000 | — | 310,091 | 297,739 | 877,500 | — | 516,449 | 2,651,779 | | David C. Evans | 2023 | 281,250 | — | — | — | — | — | 22,875 | 304,125 | | | 2022 | 153,606 | — | 1,075,015 | — | — | — | — | 1,228,621 |
Grants of Plan-Based Awards Table
Grants of Plan-Based Awards Table The following table sets forth information concerning equity-based awards made during the 2023 fiscal year as well as the range of potential payouts under the EIP, a non-equity incentive plan, with respect to performance goals for the 2023 fiscal year. No grants of plan-based awards were made in connection with Mr. Evans’ role as Interim Chief Financial Officer during the 2023 fiscal year. Compensation for his service as a non-employee director is reflected in the section captioned “NON-EMPLOYEE DIRECTOR COMPENSATION.” Based on the design of our annual cash incentive plan for the 2023 fiscal year and the reporting requirements for grants of plan-based awards, the following table reflects incentive payments, up to target, within the “Payouts Under Equity Incentive Plan Awards” columns, and the incremental cash incentive award payout opportunity above target, within the “Payouts Under Non-Equity Incentive Plan Awards” columns.
Grants of Plan-Based Awards for 2023 Fiscal Year
Grants of Plan-Based Awards for 2023 Fiscal Year
Grants of Plan-Based Awards for 2023 Fiscal Year
| Name | Grant Date(1) | | Payouts Under Non-Equity Incentive Plan Awards (2) | | | Payouts Under Equity Incentive Plan Awards (Common Shares) | | | Stock Awards: Number of Shares of Stock or Units (#) | Number of Shares Underlying Stock Options (#) | Price of Option Awards ($/sh) | Grant Date Fair Value of Stock and Option Awards (#)(3) | | | | Approval Date | Min. ($) | Target ($) | Max. ($) | Min. | Target | Max. | | | | | | James Hagedorn | | | | | | | | | | | | | | NSOs | 11/4/2022 | 10/27/2022 | | | | | | | | 200,507 | 50.40 | 2,740,931 | | PUs | 2/3/2023 | 1/26/2023 | | | | — | 43,759 | 43,759 | | | | 3,600,053 | | FY23 Equity Incentive | 11/11/2022 | 11/11/2022 | | | | 33,497 | 66,993 | 66,993 | | | | 4,281,523 | | EIP | | | — | — | 3,150,000 | | | | | | | | | Matthew E. Garth | | | | | | | | | | | | | | NSOs | 2/3/2023 | 1/26/2023 | | | | | | | | 28,599 | 82.27 | 638,044 | | PUs | 2/3/2023 | 1/26/2023 | | | | — | 10,940 | 10,940 | | | | 900,034 | | RSUs | 12/1/2022 | 11/3/2022 | | | | | | | 13,580 | | | 750,023 | | FY23 Equity Incentive | 12/1/2022 | 11/3/2022 | | | | 10,256 | 20,511 | 20,511 | | | | 1,132,823 | | EIP | | | — | — | 1,132,812 | | | | | | | | | Nathan E. Baxter | | | | | | | | | | | | | | NSOs | 4/28/2023 | 1/26/2023 | | | | | | | | 35,212 | 66.81 | 638,041 | | PUs | 4/28/2023 | 1/26/2023 | | | | — | 13,472 | 13,472 | | | | 900,064 | | RSUs | 4/28/2023 | 1/26/2023 | | | | | | | 11,226 | | | 750,009 | | FY23 Equity Incentive | 4/28/2023 | 1/26/2023 | | | | 5,698 | 11,396 | 11,396 | | | | 761,367 | | RSUs | 9/5/2023 | 8/24/2023 | | | | | | | 27,448 | | | 1,500,033 | | EIP | | | — | — | 761,301 | | | | | | | | | Michael C. Lukemire | | | | | | | | | | | | | | NSOs | 11/4/2022 | 10/27/2022 | | | | | | | | 66,836 | 50.40 | 913,648 | | PUs | 2/3/2023 | 1/26/2023 | | | | — | 14,587 | 14,587 | | | | 1,200,072 | | FY23 Equity Incentive | 11/11/2022 | 11/11/2022 | | | | 14,356 | 28,712 | 28,712 | | | | 1,834,984 | | EIP | | | — | — | 1,350,000 | | | | | | | | | Denise S. Stump | | | | | | | | | | | | | | NSOs | 11/4/2022 | 10/27/2022 | | | | | | | | 25,064 | 50.40 | 342,625 | | PUs | 2/3/2023 | 1/26/2023 | | | | — | 5,470 | 5,470 | | | | 450,017 | | FY23 Equity Incentive | 11/11/2022 | 11/11/2022 | | | | 9,332 | 18,663 | 18,663 | | | | 1,192,752 | | EIP | | | — | — | 877,500 | | | | | | | |
Grants of Plan-Based Awards for 2023 Fiscal Year
(1) In general, the grant date was established in accordance with the Company’s grant date protocol establishing an effective date for all annual long-term incentives as the second or third trading day following the first quarter earnings release with the exception of the FY23 Equity Incentive Grant and the NSOs granted on November 4, 2022. For awards made to newly hired or newly promoted NEOs, the grant date is generally effective commensurate with the NEOs’ date of hire or date of promotion. (2) These amounts reflect the incremental 150% cash incentive payout opportunity that each NEO was eligible to receive based on performance goals set for the EIP Business Performance Factors pursuant to the EIP for the 2023 fiscal year above a 100% target payout. EIP payouts up to the target (100%) payout amount were payable in Common Shares as reflected in the “Payouts Under Equity Incentive Plan Awards” columns. A detailed description of the performance goals for the EIP Business Performance Factors, and potential incentive award payouts under the EIP is provided in the section captioned “Elements of Executive Compensation — Annual Cash Incentive Compensation (short-term compensation element)” within the CD&A. (3) The grant date fair value of each RSU and PU award, and the the binomial value for each NSO award, was determined using the value of the underlying Common Shares on the date of grant listed, and was calculated in accordance with the equity compensation accounting provisions of FASB ASC Topic 718, without respect to forfeiture assumptions. Awards are subject to the following vesting provisions:
Grants of Plan-Based Awards for 2023 Fiscal Year
| Award | Vesting Provision | | NSOs | Three-year cliff vesting requirement | | PUs | Three-year cliff vesting requirement and achievement of the pre-defined performance goals | | Service-Based RSUs | Ratable vesting on the first and second anniversary of the grant date | | FY23 Equity Incentive | Cliff vesting on September 30, 2023 and achievement of the pre-defined performance goals. No payouts were achieved for the 2023 fiscal year, and the FY23 Equity Incentive Grant was subsequently cancelled as of September 30, 2023 |
Outstanding Equity Awards Table
Outstanding Equity Awards Table The following table provides information regarding outstanding equity-based awards as of September 30, 2023. Mr. Evans had no outstanding equity awards related to his role as Interim Chief Financial Officer as of September 30, 2023, however, his outstanding equity awards received for his service as a non-employee director are reflected in the section captioned “NON-EMPLOYEE DIRECTOR COMPENSATION.”
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End
Outstanding Equity Awards at 2023 Fiscal Year-End
| | | Option Awards | | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#)(1) | Number of Securities Underlying Unexercised Options Unexercisable (#)(1) | Option Exercise Price ($)(2) | Option Expiration Date | Number of Shares or Units That Have Not Vested (#)(3) | Market Value of Shares or Units That Have Not Vested ($)(4) | Equity Incentive Plan Awards: Number of Unearned Shares or Units That Have Not Vested (#)(5) | Equity Incentive Plan Awards: Market or Payout Value Of Unearned Shares or Units That Have Not Vested ($)(7) | | James Hagedorn | 1/30/2015 | 142,733 | | 59.62 | 1/30/2025 | | | | | | | 1/29/2016 | 143,079 | | 64.55 | 1/29/2026 | | | | | | | 2/5/2021 | | 39,263 | 236.53 | 2/5/2031 | 10,570 | 546,258 | | | | | 2/4/2022 | | | | | 22,579 | 1,166,883 | —(6) | — | | | 11/4/2022 | | 200,507 | 50.40 | 11/4/2032 | | | | | | | 2/3/2023 | | | | | | | 43,759 | 2,261,465 | | Matthew E. Garth | 12/1/2022 | | | | | 13,580 | 701,814 | | | | | 2/3/2023 | | 28,599 | 82.27 | 2/3/2033 | | | 10,940 | 565,379 | | Nathan E. Baxter | 4/28/2023 | | 35,212 | 66.81 | 4/28/2033 | 11,226 | 580,160 | 13,472 | 696,233 | | | 9/5/2023 | | | | | 27,448 | 1,418,513 | | | | Michael C. Lukemire | 2/5/2021 | | 13,742 | 236.53 | 2/5/2031 | 3,700 | 191,216 | | | | | 2/4/2022 | | | | | 7,527 | 388,995 | —(6) | — | | | 11/4/2022 | | 66,836 | 50.40 | 11/4/2032 | | | | | | | 2/3/2023 | | | | | | | 14,587 | 753,856 | | Denise S. Stump | 2/5/2021 | | 4,869 | 236.53 | 2/5/2031 | 1,311 | 67,752 | | | | | 2/4/2022 | | | | | 2,823 | 145,893 | —(6) | — | | | 11/4/2022 | | 25,064 | 50.40 | 11/4/2032 | | | | | | | 2/3/2023 | | | | | | | 5,470 | 282,690 |
Outstanding Equity Awards at 2023 Fiscal Year-End
(1) All of the NSOs shown in these two columns have a normal vesting date that is the third anniversary of the grant date shown in the column captioned “Grant Date.” (2) Each NSO was granted with an exercise price equal to the closing price of one Common Share on NYSE on the date of grant. (3) This column shows the aggregate number of RSUs outstanding as of September 30, 2023. The normal vesting date for each award based on the listed grant date is as follows:
Outstanding Equity Awards at 2023 Fiscal Year-End
| Award Type | Grant Date | Normal Vesting Date | Vesting Schedule Notes | | RSUs | 2/5/2021 | 2/5/2024 | Vests on the third anniversary of the grant date | | RSUs | 2/4/2022 | 2/4/2025 | Vests on the third anniversary of the grant date | | RSUs | 12/1/2022 | 12/01/2023; 12/01/2024 | Ratable vesting on the first and second anniversary of the grant date | | RSUs | 4/28/2023 | 4/28/2024; 4/28/2025 | Ratable vesting on the first and second anniversary of the grant date | | RSUs | 9/5/2023 | 9/5/2026 | Vests on the third anniversary of the grant date |
Outstanding Equity Awards at 2023 Fiscal Year-End
(4) Reflects the market value of unvested RSUs, computed by multiplying the closing price of our Common Shares on September 29, 2023 (the last trading day of the 2023 fiscal year) of $51.68 by the number of Common Shares underlying such unvested RSUs. (5) This column shows the aggregate number of Common Shares underlying the PUs outstanding as of September 30, 2023. In each case the number of Common Shares reported reflects probable payout based on accounting assumptions as of September 30, 2023 as indicated below.
Outstanding Equity Awards at 2023 Fiscal Year-End
| Award Type | Grant Date | Probable Payout % | | PUs | 2/4/2022 | 0.0% | | PUs | 2/3/2023 | 100.0% | | PUs | 4/28/2023 | 100.0% |
Outstanding Equity Awards at 2023 Fiscal Year-End
(6) The following share amounts are not reportable based on the probable payout of 0% for PU awards granted February 4, 2022:
Outstanding Equity Awards at 2023 Fiscal Year-End
| NEO | PU Shares | | Mr. Hagedorn | 22,579 | | Mr. Lukemire | 7,527 | | Ms. Stump | 2,823 |
Outstanding Equity Awards at 2023 Fiscal Year-End
(7) Reflects the market value of unvested shares as of September 30, 2023 based on the closing stock price of our Common Shares on September 29, 2023 (the last trading day of the 2023 fiscal year) of $51.68. Value reflects actual or probable payout based on accounting assumptions as of September 30, 2023 as indicated in footnote (5).
Option Exercises and Stock Vested Table
Option Exercises and Stock Vested Table The following table provides information concerning the aggregate amounts realized or received in connection with the exercise or vesting of equity-based awards for each NEO during the 2023 fiscal year.
Option Exercises and Stock Vested for 2023 Fiscal Year
Option Exercises and Stock Vested for 2023 Fiscal Year
Option Exercises and Stock Vested for 2023 Fiscal Year
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(4) | | James Hagedorn | — | — | 20,185(2) | 1,660,620 | | Matthew E. Garth | — | — | — | — | | Nathan E. Baxter | — | — | — | — | | Michael C. Lukemire | — | — | 7,065(2) | 581,238 | | Denise S. Stump | — | — | 2,503(2) | 205,922 | | David C. Evans | — | — | 9,816(3) | 684,568 |
Option Exercises and Stock Vested for 2023 Fiscal Year
(1) There were no option exercises for the 2023 fiscal year. (2) Reflects the number of Common Shares received in connection with the RSUs granted on February 3, 2020 that vested and settled on February 3, 2023 for Mr. Hagedorn, Mr. Lukemire and Ms. Stump. (3) Reflects the number of Common Shares received in connection with the RSUs granted for Mr. Evans’ service as interim Chief Financial Officer on September 1, 2022, a pro-rata portion of which vested and settled on March 3, 2023. (4) The value realized on the settlement of RSUs described above is calculated by multiplying the number of Common Shares underlying the vested shares or units by the closing price of our Common Shares on the applicable settlement date.
Pension Benefits Table
Pension Benefits Table Scotts LLC maintains the Associates’ Pension Plan, a tax-qualified, non-contributory defined benefit pension plan. Eligibility for and accruals under the Associates’ Pension Plan were frozen as of December 31, 1997. Monthly benefits under the Associates’ Pension Plan upon normal retirement (age 65) are determined under the following formula: (a)(i) 1.5% of the individual’s highest average annual compensation for 60 consecutive months during the 10-year period ending December 31, 1997; times (ii) Years of benefit service through December 31, 1997; reduced by (b)(i) 1.25% of the individual’s primary Social Security benefit (as of December 31, 1997); times (ii) Years of benefit service through December 31, 1997. Compensation includes all gross earnings plus 401(k) contributions and salary reduction contributions for welfare benefits (such as medical, dental, vision and flexible spending accounts), but does not include earnings in connection with foreign service, the value of a Company car or separation or other special allowances. An individual’s primary Social Security benefit is based on the Social Security Act as in effect on December 31, 1997, and assumes constant compensation through age 65 and that the individual will not retire earlier than age 65. No more than 40 years of benefit service are taken into account. For Mr. Hagedorn, benefits under the Associates’ Pension Plan are supplemented by benefits under the Excess Pension Plan. The Excess Pension Plan was established October 1, 1993 and was frozen as of December 31, 1997. The Excess Pension Plan provides additional benefits to participants in the Associates’ Pension Plan whose benefits are reduced by limitations imposed under IRC § 415 and § 401(a)(17). Executive officers and certain key employees participating in the Excess Pension Plan will receive, at the time and in the same form as benefits are paid under the Associates’ Pension Plan, additional monthly benefits in an amount which, when added to the benefits paid to each participant under the Associates’ Pension Plan, will equal the benefit amount such participant would have earned but for the limitations imposed by the IRC. The following table shows information related to the Associates’ Pension Plan and the Excess Pension Plan for Mr. Hagedorn and Mr. Lukemire, the only two NEOs who participate in either plan. Since both the Associates’ Pension Plan and the Excess Pension Plan were frozen as of December 31, 1997, no further years of credited service have been or may be earned after that date.
Pension Benefits at 2023 Fiscal Year-End
Pension Benefits at 2023 Fiscal Year-End
Pension Benefits at 2023 Fiscal Year-End
| Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit ($)(2) | | James Hagedorn | The Scotts Company LLC Associates’ Pension Plan | 9.917 | 227,529 | | | The Scotts Company LLC Excess Benefit Plan For Non Grandfathered Associates | 2.000 | 43,565 | | | Total | | 271,094 | | Michael C. Lukemire | The Scotts Company LLC Associates’ Pension Plan | 0.917 | 21,254 |
Pension Benefits at 2023 Fiscal Year-End
________________________ (1) The number of years of credited service shown for each participant is the applicable service earned under each respective plan as of December 31, 1997, the date each of the plans were frozen. As a result, no additional benefits will be attributed to years of service after such date. (2) Assumptions used in the calculation of these amounts are included in Note 10 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the 2023 fiscal year.
Non-Qualified Deferred Compensation Table
Non-Qualified Deferred Compensation Table The ERP is a non-qualified deferred compensation plan that provides executives, including the NEOs, the opportunity to: (1) defer compensation with respect to salary and amounts received in lieu of salary; and (2) defer compensation with respect to any Performance Award (as defined in the ERP). The ERP also includes Company SRA contributions which may be awarded to the NEOs at the discretion of the Compensation Committee. The ERP is an unfunded plan and is subject to the claims of the Company’s general creditors. For additional discussion, see section captioned “Elements of Executive Compensation — Retirement Plans and Deferred Compensation Benefits (long-term compensation element) — Executive Retirement Plan” within the CD&A.
Non-Qualified Deferred Compensation for 2023 Fiscal Year
Non-Qualified Deferred Compensation for 2023 Fiscal Year
Non-Qualified Deferred Compensation for 2023 Fiscal Year
| Name | Executive Contributions in Last Fiscal Year ($)(1) | Company Contributions in Last Fiscal Year ($)(2) | Aggregate Earnings in Last Fiscal Year ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($)(4) | | James Hagedorn | 21,583 | 628,659 | 1,860,530 | — | 10,636,439 | | Matthew E. Garth | 69,800 | — | 2,247 | — | 72,047 | | Nathan E. Baxter | — | — | — | — | — | | Michael C. Lukemire | 71,626 | 281,202 | 931,527 | — | 6,103,551 | | Denise S. Stump | 146,853 | 284,244 | 1,064,650 | (167,175) | 5,564,200 | | David C. Evans | — | — | — | — | — |
Non-Qualified Deferred Compensation for 2023 Fiscal Year
(1) These amounts reflect each NEOs’ contributions to the ERP during the 2023 fiscal year which are also included in base salary amounts reported in the Summary Compensation Table. (2) Reflects Company matching contributions and discretionary SRA contributions made to the ERP with respect to each NEO during the 2023 fiscal year as follows:
Non-Qualified Deferred Compensation for 2023 Fiscal Year
| | ERP Match | SRA Contribution | Total | | James Hagedorn | $45,325 | $583,333 | $628,659 | | Matthew E. Garth | — | — | — | | Nathan E. Baxter | — | — | — | | Michael C. Lukemire | 31,201 | 250,000 | 281,201 | | Denise S. Stump | 25,911 | 258,333 | 284,244 | | David C. Evans | — | — | — |
Non-Qualified Deferred Compensation for 2023 Fiscal Year
Mr. Hagedorn decided to voluntarily forgo $416,667 of his SRA contribution for the 2023 fiscal year. Company matching contributions to the ERP for a particular calendar year are not allocated until the first quarter of the subsequent calendar year. As a result, amounts reflected in this column do not include the following estimated Company matching contributions with respect to NEO contributions that were made to the ERP between January 1, 2023 and September 30, 2023: Mr. Hagedorn, $19,690; Mr. Garth, $68,531; Mr. Baxter, $0; Mr. Lukemire, $19,500; Ms. Stump, $15,688; and Mr. Evans, $0. A description of the SRA contributions is set forth in the section captioned “Elements of Executive Compensation — Retirement Plans and Deferred Compensation Benefits (long-term compensation element) — Executive Retirement Plan” within the CD&A. (3) Represents aggregate earnings for the 2023 fiscal year allocated to each NEO’s account in accordance with the ERP. Under the terms of the ERP, each participant has the right to elect investment funds against which amounts allocated to such participant’s account under the ERP will be benchmarked. The investment funds include a Company stock fund and mutual funds that are substantially consistent with the investment options available under the RSP. Because there are no preferential earnings, these amounts are not reflected in the Summary Compensation Table. (4) Includes amounts previously reported as compensation to the NEOs in the Summary Compensation Table for the 2022 and 2021 fiscal years as follows: (a) Mr. Hagedorn, $2,168,951; (b) Mr. Garth, n/a; (c) Mr. Baxter, n/a; (d) Mr. Lukemire, $1,021,866; (e) Ms. Stump, $897,825; and (f) Mr. Evans, n/a. The aggregate balances shown for each of the NEOs is fully vested.
CEO PAY RATIO DISCLOSURE
CEO PAY RATIO DISCLOSURE We are providing the following information regarding the relationship of the annual total compensation of our CEO and that of our “median employee,” as required by Section 953(b) of the Dodd-Frank Act, and Item 402(u) of Regulation S-K. Utilizing our defined methodology, we have identified our median employee for the 2023 fiscal year based on our employee population (including full-time, part-time, temporary and seasonal employees located within or outside of the United States, other than the CEO) as of September 30, 2023. For the 2023 fiscal year, our median employee is a machine operator located in the United States: •The annual total compensation of our median employee, excluding the CEO, was $58,683; •The annual total compensation of our CEO, as reported in the Summary Compensation Table on page 48 of this Proxy Statement, was $11,994,566; and •The ratio of the annual total compensation of our CEO to the annual total compensation of our median employee, excluding the CEO, was 204 to 1. As of September 30, 2023, the identified population consisted of 5,437 employees. In accordance with the SEC’s de minimis exemption, which, depending on our circumstances, allows us to exclude up to 5% of our non-U.S. based employees. Therefore, we excluded 36 employees in China, 37 employees in Mexico and 37 employees in the Netherlands, as they represented less than 5% of our total employee population. Our median employee was identified utilizing calendar year-to-date gross wages (annualized for our non-seasonal associates) plus target cash incentive. For employees working outside of the United States, we converted wages to U.S. dollars using budgeted exchange rates. The annual total compensation for our median employee during the 2023 fiscal year was calculated using the same methodology we use for our NEOs, as reported in the Summary Compensation Table on page 48 of this Proxy Statement. Note that the SEC’s pay ratio disclosure rules provide reporting companies with a great deal of flexibility in determining the methodology used to identify the median employee and the pay ratio. As such, our methodology may differ materially from the methodology used by other companies to prepare their pay ratio disclosures, which may contribute to a lack of comparability between our pay ratio and the pay ratio reported by other companies, including those within our industry.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our CEO and all other NEOs (“Other NEOs”) and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
PAY VERSUS PERFORMANCE
| | | | | | Value of Initial Fixed $100 Investment based on:(4) | | | | | Year | SCT Total for CEO(1) $ | CAP to CEO (1)(2)(3) $ | Avg. SCT Total for Other NEOs (1) $ | Avg. CAP Paid to Other NEOs (1)(2)(3) $ | TSR $ | S&P 500 Household Products Index TSR $ | Net Income (Loss) ($M) | Non-GAAP Adj. EBITDA (5) ($M) | | 2023 | 11,994,566 | 6,794,634 | 3,983,355 | 2,698,654 | 36.6 | 106.1 | (380.1) | 446.9 | | 2022 | 8,169,861 | (3,411,145) | 1,949,940 | (949,567) | 29.0 | 91.6 | (437.5) | 557.9 | | 2021 | 10,713,912 | 8,226,342 | 2,761,516 | 2,446,250 | 97.0 | 99.9 | 513.4 | 902.6 |
PAY VERSUS PERFORMANCE
________________________ (1) James Hagedorn was our CEO for each year presented. The individuals comprising the Other NEOs for each year presented are listed below.
PAY VERSUS PERFORMANCE
| 2023 | 2022 | 2021 | | Matthew E. Garth | David C. Evans | Cory J. Miller | | Nathan E. Baxter | Michael C. Lukemire | Michael C. Lukemire | | Michael C. Lukemire | Christopher J. Hagedorn | Christopher J. Hagedorn | | Denise S. Stump | Denise S. Stump | Denise S. Stump | | David C. Evans | Cory J. Miller | Thomas R. Coleman |
PAY VERSUS PERFORMANCE
(2) The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. (3) Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the CEO and the Other NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in row (A) reflect the amounts attributable to the Change in Pension Value reported in the Summary Compensation Table. Amounts in row (B) are based on the service cost for services rendered during the listed year. Amounts in row (C) are the totals from the Stock Awards and Option Awards columns set forth in the Summary Compensation Table.
PAY VERSUS PERFORMANCE
| | 2023 | 2022 | 2021 | | Summary Compensation Table Total for CEO | $11,994,566 | $8,169,861 | $10,713,912 | | - Aggregate change in actuarial present value of pension benefits (A) | — | — | — | | + Service cost of pension benefits (B) | — | — | — | | - SCT Stock Awards / SCT Option Awards (C) | (10,622,507) | (6,000,143) | (4,901,054) | | + Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year | 5,189,014 | 2,019,918 | 2,435,833 | | -/+ Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards | (577,472) | (3,953,686) | (1,951,224) | | -/+ Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year | — | — | — | | + Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year | 811,033 | (3,647,095) | 1,928,875 | | - Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year | — | — | — | | + Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included | — | — | — | | Compensation Actually Paid to CEO | $6,794,634 | $(3,411,145) | $8,226,342 |
PAY VERSUS PERFORMANCE
| | 2023 | 2022 | 2021 | | Average Summary Compensation Table Total for all Other NEOs | $3,983,355 | $1,949,940 | $2,761,516 | | - Aggregate change in actuarial present value of pension benefits (A) | — | — | — | | + Service cost of pension benefits (B) | — | — | — | | - SCT Stock Awards / SCT Option Awards (C) | (2,780,907) | (1,205,150) | (1,007,774) | | + Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year | 1,411,361 | 459,236 | 532,710 | | -/+ Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards | (52,405) | (1,768,168) | (187,247) | | -/+ Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year | — | 20,990 | — | | + Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year | 137,250 | (406,415) | 347,045 | | - Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year | — | — | — | | + Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included | — | — | — | | Average Compensation Actually Paid to all Other NEOs | $2,698,654 | $(949,567) | $2,446,250 |
PAY VERSUS PERFORMANCE
(4) The Peer Group TSR set forth in this table utilizes the S&P 500 Household Products Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in the Company’s Annual Report on Form 10-K for the 2023 fiscal year. The comparison assumes $100 was invested for the period starting September 30, 2020, through the end of the listed year in the Company and in the S&P 500 Household Products Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. (5) We determined Non-GAAP Adjusted EBITDA to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our CEO and Other NEOs in 2023. Non-GAAP Adjusted EBITDA is a non-GAAP financial performance measure, and is calculated as net income (loss) before interest, taxes, depreciation and amortization as well as certain other items such as the impact of the cumulative effect of changes in accounting, costs associated with debt refinancing and other non-recurring or non-cash items affecting net income (loss). A form of Adjusted EBITDA is used in agreements governing the Company’s outstanding indebtedness for debt covenant compliance purposes. Adjusted EBITDA as used in those agreements includes additional adjustments to the Adjusted EBITDA presented in this table which may decrease or increase Adjusted EBITDA for purposes of remaining consistent with the calculation of that measure as required by the Company's borrowing arrangements. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Non-GAAP Measures” in the Company’s Annual Report on Form 10-K filed on November 22, 2023, for a reconciliation of Adjusted EBITDA to net income (loss) as reported under GAAP. This performance measure may not have been the most important financial performance measure for years 2022 and 2021 and we may determine a different financial performance measure to be the most important financial performance measure in future years.
Relationship Between CEO and Other NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”)
Relationship Between CEO and Other NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our CEO, the average of Compensation Actually Paid to our Other NEOs, and the Scotts-Miracle Gro’s cumulative TSR over the three most recently completed fiscal years.
Relationship Between CEO and Other NEO Compensation Actually Paid and Net Income
Relationship Between CEO and Other NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our CEO, the average of Compensation Actually Paid to our Other NEOs, and our Net Income (loss) during the three most recently completed fiscal years.
Relationship Between CEO and Other NEO Compensation Actually Paid and Company-Selected Measure
Relationship Between CEO and Other NEO Compensation Actually Paid and Company-Selected Measure The following chart sets forth the relationship between Compensation Actually Paid to our CEO, the average of Compensation Actually Paid to our Other NEOs, and our Company-Selected Measure during the three most recently completed fiscal years.
Performance Measures Used to Link Company Performance and Compensation Actually Paid to the NEOs
Performance Measures Used to Link Company Performance and Compensation Actually Paid to the NEOs The financial performance measures that the Company considers to have been the most important in linking Compensation Actually Paid to our CEO and other NEOs for 2023 to Company performance are Non-GAAP Adjusted EBITDA and Non-GAAP Free Cash Flow (these measures are not ranked). See the CD&A for a further description of the metrics used in the Company’s executive compensation program.
PAYMENTS ON TERMINATION OF EMPLOYMENT AND/OR CHANGE IN CONTROL
PAYMENTS ON TERMINATION OF EMPLOYMENT AND/OR CHANGE IN CONTROL The Company and its subsidiaries have entered into certain agreements and maintain certain plans that may provide compensation to the NEOs employed by the Company and its subsidiaries in the event of a termination of employment and/or a change in control of the Company and that would provide compensation to the NEOs no longer employed by the Company or its subsidiaries upon termination of employment. Severance Arrangements: None of our NEOs has an employment agreement with the Company. Effective December 11, 2013, Mr. Hagedorn entered into the Hagedorn Severance Agreement, which superseded and terminated his then-effective employment agreement. Each of the NEOs currently employed by the Company other than Mr. Hagedorn and Mr. Evans is a participant in the Company’s Executive Severance Plan. The Hagedorn Severance Agreement and the Executive Severance Plan provide for severance and continued compensation and benefit eligibility as summarized in the table below.
PAYMENTS ON TERMINATION OF EMPLOYMENT AND/OR CHANGE IN CONTROL
| | Prior to CIC | | Within 2 Years Following CIC | | | Involuntary Without Cause or Voluntary With Good Reason | Due to Death or Disability | Involuntary Without Cause or Voluntary With Good Reason | | Salary Continuation: | | | | | CEO | 3x base salary (lump sum) | None | 3x base salary (lump sum) | | All Other NEOs** | 2x base salary | None* | 2x base salary (lump sum) | | Annual Incentive: | | | | | CEO | 3x highest bonus paid in prior 3 years (lump sum) | None | 3x highest bonus paid in prior 3 years (lump sum) | | All Other NEOs** | 2x target bonus | None* | 2x target bonus plus prorated annual bonus (lump sum) | | Welfare Benefits: | | | | | CEO | Coverage ends and CEO receives lump sum payment equal to the equivalent monthly premiums to continue medical, disability and life insurance for a period of 3 years | None | Coverage ends and CEO receives lump sum payment equal to the equivalent monthly premiums to continue medical, disability and life insurance for a period of 3 years | | All Other NEOs** | Coverage ends and NEO receives Benefits Offset Payment for 24 months | None* | Coverage ends and NEO receives lump sum payment equal to Benefits Offset Payment for 24 months | | Non-Compete Payments: | | | | | CEO | $3.6 million, payable in $100,000 monthly installments | None | $3.6 million, payable in $100,000 monthly installments | | All Other NEOs** | No additional compensation provided | None | No additional compensation provided |
PAYMENTS ON TERMINATION OF EMPLOYMENT AND/OR CHANGE IN CONTROL
________________________ * The Stump Retention Agreement provides for certain payments to Ms. Stump in the event of termination due to Disability or Retirement as described above. ** Does not apply to Mr. Evans since he is not a participant in the Company’s Executive Severance Plan. Under the Executive Severance Plan, if an NEO terminates his or her employment voluntarily without Good Reason, other than for retirement, or such NEO’s employment is terminated for Cause, the NEO is not entitled to receive any additional base salary, annual incentive payment or welfare benefits. The Company’s specific obligations to each of the NEOs are detailed in the separate tables that follow. Equity-Based Compensation Plans: Grants of NSOs, RSUs and PUs are typically subject to three-year, time-based vesting. However, our equity-based compensation plans generally provide for accelerated vesting (either full or partial) or forfeiture in certain situations, as indicated in the following table. These acceleration and forfeiture provisions apply to all Participants in our equity-based compensation plans.
PAYMENTS ON TERMINATION OF EMPLOYMENT AND/OR CHANGE IN CONTROL
| Termination Due to: | Treatment of Unvested NSOs, RSUs and PUs | | Retirement | Vest on date of termination (PUs remain subject to the achievement of performance criteria) | | Death or Disability | Vest on date of termination | | For Cause | Forfeited on date of termination | | Any Other Reason | Forfeited on date of termination | | Subsequent to Change in Control | Generally vest on date of termination within 24-months following a CIC (“double-trigger”) if the unvested awards are assumed, substituted or continued, as described below |
PAYMENTS ON TERMINATION OF EMPLOYMENT AND/OR CHANGE IN CONTROL
Retirement: A voluntary termination after a participant reaches age 55 with 10 years of service. As of September 30, 2023, Mr. Hagedorn, Mr. Lukemire and Ms. Stump satisfy the requirements for retirement eligibility. For purposes of the Stump Retention Agreement only, the Retirement definition does not impact the treatment of equity awards and only provides for certain cash benefits upon termination due to Retirement. Disability: Impairment that qualifies a participant for benefits under the Company’s long-term disability plan or any other long-term disability plan sponsored by the Company. Treatment of Equity Awards Following a Change in Control: Upon a change in control, our LTIP generally imposes a “double-trigger” vesting provision, which provides for vesting upon involuntary termination of employment within 24 months after a change in control if (1) equity-based awards are assumed, continued or substituted in the transaction or (2) equity-based awards otherwise continue in effect after the transaction. On the other hand, if the Compensation Committee, after evaluating the facts and circumstances of a change in control event, reasonably concludes that equity-based awards will not be assumed, substituted or continued by the resulting entity, our “responsive” single trigger will take effect and the awards will generally cancel or vest in exchange for a lump sum cash payment. These vesting and forfeiture provisions generally apply to all participants in our LTIP. Based on the vesting and forfeiture provisions, the following treatment applies to each equity-based award type subsequent to a CIC: •If awards are assumed, substituted or continued: Following an involuntary termination, without Cause, within 24 months after a change in control of the Company, any conditions on the employee’s rights under, or any restrictions on transfer or exercisability applicable to each replaced or continued award, will be waived or lapse as of the date of termination (i.e., “double-trigger”), •If awards are not substituted or continued: ◦NSOs: Subsequent to a change in control, and only if the unvested NSOs are not substituted or continued, (a) outstanding NSOs will be cancelled and the applicable NEO will receive cash in the amount of, or Common Shares having a fair value equal to, the difference between the change in control price per Common Share and the exercise price per Common Share associated with the cancelled NSO, or (b) the NEO exercises, with the permission of the Compensation Committee, the NEO’s outstanding NSOs within 15 days of the date of the change in control. ◦RSUs: Subsequent to a change in control, and only if the unvested RSUs are not substituted or continued, RSUs will vest in full and all restrictions relating to such awards will lapse. The vested awards will be distributed in (i) a single lump sum cash payment within 30 days following such change in control based on the change in control price, or (ii) at the Compensation Committee’s discretion, in the form of whole Common Shares of the Company or shares of any successor company. ◦PUs: Subsequent to a change in control, and only if the unvested PUs are not substituted or continued, all service-based vesting criteria will be deemed to be satisfied and performance goals associated with outstanding awards will be deemed to have been met on the date of the change in control (as specified in the applicable award agreement), all performance periods will be accelerated to the date of the change in control and all outstanding awards will be distributed in a single lump sum cash payment within 30 days following such change in control based on the change in control price.
Termination of Employment and Change in Control — James Hagedorn
| | Termination Prior to CIC | | Following CIC(1) | | | Executive Benefits and Payments Upon Termination | Involuntary Without Cause or Voluntary With Good Reason | Termination Due to Death or Disability | Involuntary Without Cause or Voluntary With Good Reason | CIC Only | | Compensation(2): | | | | | | Base Salary (3x annual base salary) | $3,600,000 | $— | $3,600,000 | $— | | EIP(3) | 10,395,000 | — | 10,395,000 | — | | EIP — Pro Rata Payout(4) | 2,100,000 | 2,100,000 | 2,100,000 | — | | Equity-Based Compensation: | | | | | | Stock Options: | | | | | | Unvested and Accelerated(5) | 256,649 | 256,649 | 256,649 | — | | Restricted Stock Units: | | | | | | Unvested and Accelerated(6) | 1,713,140(6) | 1,713,140(6) | 1,713,140(6) | — | | Performance Units: | | | | | | Unvested and Accelerated(7) | 2,261,465 | 2,261,465 | 2,261,465 | — | | Benefits and Perquisites: | | | | | | Health & Welfare Benefits(8) | 62,259 | — | 62,259 | — | | Accrued Retirement Benefits (vested): | | | | | | Assoc. Pension Plan | n/a(9) | n/a(9) | n/a(9) | — | | Excess Benefit Plan | n/a(9) | n/a(9) | n/a(9) | — | | ERP | n/a(9) | n/a(9) | n/a(9) | — | | Other Payments: | | | | | | Non-Compete Payments(10) | 3,600,000 | — | 3,600,000 | — | | Total: | $23,988,513 | $6,331,254 | $23,988,513 | $— |
Termination of Employment and Change in Control — Mr. Garth, Mr. Baxter, Mr. Lukemire and Ms. Stump
| Executive Benefits and Payments Upon Termination | Mr. Garth | Mr. Baxter | Mr. Lukemire | Ms. Stump | | Compensation(1): | | | | | | Base Salary (2x annual base salary)(2) | $1,450,000 | $1,900,000 | $2,040,000 | $1,920,000 | | EIP — Pro Rata Actual Payout(3) | 754,795 | 507,534 | 962,500 | 631,500 | | EIP — Target Payout (2x target amount)(4) | 1,812,500 | 2,375,000 | 2,550,000 | 1,728,000 | | Equity-Based Compensation: | | | | | | Stock Options: | | | | | | Unvested and Accelerated(5) | — | — | 85,550 | 32,082 | | Restricted Stock Units: | | | | | | Unvested and Accelerated(6) | 701,814 | 580,160 | 580,211 | 213,645 | | Performance Units: | | | | | | Unvested and Accelerated(7) | — | — | 753,856 | 282,690 | | Benefits and Perquisites: | | | | | | Benefits Offset Payment(8) | 35,866 | 33,953 | 26,961 | 13,620 | | Accrued Retirement Benefits: | | | | | | Assoc. Pension Plan | — | — | n/a(9) | — | | ERP | n/a(9) | n/a(9) | n/a(9) | n/a(9) | | Total: | $4,754,975 | $5,396,647 | $6,999,078 | $4,821,537 |
Subsequent Departures of Mr. Lukemire and Ms. Stump Following the 2023 Fiscal Year
| Executive Benefits and Payments Upon Termination | Mr. Garth | Mr. Baxter | Mr. Lukemire | Ms. Stump | | Compensation(1): | | | | | | Base Salary(2) | $— | $— | $— | $1,920,000 | | EIP — Pro Rata Actual Payout(3) | 754,795 | 507,534 | 962,500 | 631,500 | | EIP — Target Payout (2x target amount)(4) | — | — | — | 1,728,000 | | Equity-Based Compensation: | | | | | | Stock Options: | | | | | | Unvested and Accelerated(5) | — | — | 85,550 | 32,082 | | Restricted Stock Units: | | | | | | Unvested and Accelerated(6) | 701,814 | 1,998,672 | 580,211 | 213,645 | | Performance Units: | | | | | | Unvested and Accelerated(7) | 565,379 | 696,233 | 753,856 | 282,690 | | Benefits and Perquisites: | | | | | | Benefits Offset Payment(8) | — | — | — | 13,620 | | Accrued Retirement Benefits: | | | | | | Assoc. Pension Plan | — | — | n/a(9) | — | | ERP | n/a(9) | n/a(9) | n/a(9) | n/a(9) | | Total: | $2,021,988 | $3,202,439 | $2,382,117 | $4,821,537 |
Subsequent Departures of Mr. Lukemire and Ms. Stump Following the 2023 Fiscal Year
| Executive Benefits and Payments Upon Termination | Mr. Garth | Mr. Baxter | Mr. Lukemire | Ms. Stump | | Compensation(1): | | | | | | Base Salary (2x annual base salary)(2) | $1,450,000 | $1,900,000 | $2,040,000 | $1,920,000 | | EIP — Pro Rata Actual Payout(3) | 754,795 | 507,534 | 962,500 | 631,500 | | EIP — Target Payout (2x target amount)(4) | 1,812,500 | 2,375,000 | 2,550,000 | 1,728,000 | | Equity-Based Compensation: | | | | | | Stock Options: | | | | | | Unvested and Accelerated(5) | — | — | 85,550 | 32,082 | | Restricted Stock Units: | | | | | | Unvested and Accelerated(6) | 701,814 | 1,998,672 | 580,211 | 213,645 | | Performance Units: | | | | | | Unvested and Accelerated(7) | 565,379 | 696,233 | 753,856 | 282,690 | | Benefits and Perquisites: | | | | | | Benefits Offset Payment(8) | 35,866 | 33,953 | 26,961 | 13,620 | | Accrued Retirement Benefits: | | | | | | Assoc. Pension Plan(9) | — | — | n/a | — | | ERP(9) | n/a | n/a | n/a | n/a | | Total: | $5,320,354 | $7,511,392 | $6,999,078 | $4,821,537 |
Subsequent Departures of Mr. Lukemire and Ms. Stump Following the 2023 Fiscal Year
| Executive Benefits and Payments Upon Termination | Mr. Garth | Mr. Baxter | Mr. Lukemire | Ms. Stump | | Compensation(1): | | | | | | Base Salary (2x annual base salary) | $— | $— | $— | $— | | EIP — Pro Rata Actual Payout | — | — | — | — | | EIP — Target Payout (2x target) | — | — | — | — | | Equity-Based Compensation: | | | | | | Stock Options: | | | | | | Unvested and Accelerated(2) | — | — | — | — | | Restricted Stock Units: | | | | | | Unvested and Accelerated(2) | — | — | — | — | | Performance Units: | | | | | | Unvested and Accelerated(2) | — | — | — | — | | Benefits and Perquisites: | | | | | | Benefits Offset Payment | — | — | — | — | | Accrued Retirement Benefits: | | | | | | Assoc. Pension Plan | — | — | — | — | | ERP | — | — | — | — | | Total: | $— | $— | $— | $— |
Dilution Analysis — Supplemental Disclosures
| Shares Underlying Outstanding Equity Awards as reported on Form 10-K as of September 30, 2023 | 2,347,811 | | Awards settled between October 1, 2023 and November 27, 2023 | (185,170) | | Awards cancelled between October 1, 2023 and November 27, 2023 | (221,542) | | Awards granted between October 1, 2023 and November 27, 2023 (Options and full-value awards)(1) | 1,500,338 | | Vested PU awards with deferred settlement dates | 18,823 | | Shares reserved for incremental performance above target outstanding PU Awards, where applicable | 116,358 | | Actual equity awards outstanding as of November 27, 2023 | 3,576,618 |