DEF 14A of MGP Ingredients Inc
Filed Apr 9, 2024 · FY20230001628280-24-015469
EACH OF THE NINE DIRECTOR NOMINEES
EACH OF THE NINE DIRECTOR NOMINEES
BOARD OF DIRECTORS
BOARD OF DIRECTORS
Board Nominees for Election
Board Nominees for Election The following table provides information about the nine director nominees as of March 25, 2024. All nominees currently serve as directors. Each director elected at the Annual Meeting will serve a one-year term and until their respective successor is elected and qualified or until their earlier death, resignation, or removal.
Board Nominees for Election
| Board Nominees | Age | Class of Director(1) | Director Since | Service on Standing Board Committees | | David S. Bratcher | 56 | Group B | January 2024 | None | | Neha J. Clark Audit Committee Chair | 48 | Group B | June 2021 | Audit Human Resources and Compensation Nominating and Governance | | Thomas A. Gerke Human Resources and Compensation Committee Chair | 67 | Group A | June 2021 | Audit Human Resources and Compensation Nominating and Governance | | Donn Lux | 63 | Group A | June 2021 | None | | Preet H. Michelson | 54 | Group B | May 2022 | Audit Human Resources and Compensation Nominating and Governance | | Lori L.S. Mingus | 54 | Group B | June 2020 | Human Resources and Compensation Nominating and Governance | | Kevin S. Rauckman Nominating and Governance Committee Chair | 61 | Group A | June 2021 | Audit Human Resources and Compensation Nominating and Governance | | Karen L. Seaberg Chairman of the Board of Directors | 76 | Group B | August 2009 Chairman since December 2014 | Human Resources and Compensation Nominating and Governance | | Todd B. Siwak | 61 | Group A | May 2022 | Audit Human Resources and Compensation Nominating and Governance |
Board Nominees for Election
(1) Group A indicates the director is elected by holders of our common stock. Group B indicates the director is elected by holders of our preferred stock.
Components of Our Compensation Program
Components of Our Compensation Program The principal components of our compensation program are base salary, short-term annual incentive awards, long-term equity awards, and retirement compensation. •Base salary is designed to attract and retain executive officers. In setting base salaries, the Committee consider internal fairness of pay in terms of the scope of job responsibilities, external competitiveness so that we can attract and retain needed talent, and a consistent, motivating system for administering compensation. •Short-term incentive awards are intended to focus our executive officers on performance goals deemed critical to our profitability and financial performance. By rewarding executive officers for strong performance, we help align their interests with those of our stockholders. •Long-term incentive awards, which are based on prior-year performance and are granted in the form of restricted stock units (“RSUs”), are intended to motivate the achievement of key performance goals and thereby generate stockholder value, provide executive officers an opportunity to increase ownership of our common stock, help attract and retain executive officers over the longer term, and be cost efficient. The Committee’s typical practice is to grant annual equity awards in mid- February each year, with the number of RSUs granted varying based on achievement against performance goals for the prior year. •Retirement compensation provided through our 401(k) plan and our non-qualified deferred compensation plan permits our executive officers to, among other things, reduce their current income taxes by making limited pre-tax contributions to increase, enhance, and diversify their retirement savings. For additional information, see “—Elements of Compensation—Retirement Compensation.”
How We Determine Compensation
How We Determine Compensation The Committee reviews and approves the salary and incentive compensation of our Chief Executive Officer and other executive officers. Our Chief Executive Officer provides the Committee with his performance assessment and compensation recommendations for our other executive officers, which the Committee considers in making compensation decisions regarding our other executive officers. The Committee has unrestricted access to management. It may also request the participation of management or the Committee’s independent compensation consultant at any meeting or executive session. Committee meetings are regularly attended by our Chief Executive Officer (except for executive sessions and discussions of his own compensation). The Committee regularly discusses executive compensation matters with the full Board of Directors and annually reviews our Chief Executive Officer’s compensation with the Board in an executive session of non-management directors. The Committee has sole discretion, at Company expense, to retain and terminate independent advisors, including sole authority to approve the fees and retention terms for such advisors, if it determines the services of such advisors to be necessary or appropriate. Use of Peer Group and Survey Data. The Committee uses a peer group, as described below, as well as survey data for similar-sized manufacturing companies when designing our executive compensation program. The Committee also uses this information to review the competitiveness of our executive officer compensation and in setting executive officer compensation. The Committee reviews a benchmarking report periodically prepared by its independent compensation consultant identifying the ranges of compensation for persons with similar responsibilities to those our executive officers with respect to our peer group and the survey data. If insufficient peer group data is available for a specific executive officer position, the Committee will only review survey data for that position. The Committee targets a total direct compensation range for each executive officer that is within 80% to 120% of the median total direct compensation for comparable positions within our peer group and the survey data. Although the ultimate goal is to compensate executive officers at the midpoint of this targeted range, an executive officer’s total direct compensation may fall above or below the targeted level because of his or her tenure, experience level, or performance. In December 2022, the Committee approved the peer group used for 2023 compensation decisions for our executive officers. In establishing this peer group, the Committee worked with its independent compensation consultant to determine the appropriate size and relevant industries of the peer group, which were food ingredient and consumer food and packaged goods companies. The peer group for 2023 compensation decisions for our executive officers consisted of the following 16 companies:
How We Determine Compensation
| 2023 Peer Group Companies | | | | | B&G Foods, Inc. | Calavo Growers, Inc. | Hostess Brands, Inc. | Sensient Technologies Corporation | | Balchem Corporation | Celsius Holdings, Inc. | Inter Parfums, Inc. | Tootsie Roll Industries, Inc. | | Boston Beer Company | Duckhorn Portfolio, Inc. (The) | J&J Snack Foods Corp. | Turning Point Brands, Inc. | | Cal-Maine Foods, Inc. | Freshpet, Inc. | Limoneira Company | Vintage Wine Estates, Inc. |
Elements of Compensation
Elements of Compensation Base Salary. The Committee targets for each executive officer’s base salary a range that is within 80% to 120% of the median base pay for comparable positions within our peer group and the survey data. Although the ultimate goal is to compensate executive officers at the midpoint of this targeted range, a particular individual’s salary may fall above or below the targeted level because of his or her tenure, experience level, or performance. When making base salary adjustments, the Committee also takes into account each executive officer’s performance, Company performance, and any changes in an executive officer’s duties. When made, annual base salary adjustments usually take place after the start of the next year but are retroactive to the beginning of the year. Adjustments sometimes occur at other times of the year for reasons such as a promotion or other change in duties. As a result of its review, in February 2023, the Committee determined to make changes to our named executive officer base salaries, effective January 1, 2023, primarily to more closely align with the median for base pay of comparable positions within our peer group and the survey data, as shown in the following table.
Elements of Compensation
(1) Mr. Landherr joined the Company on October 17, 2022 and his offer letter provided that he would not receive a base salary increase for 2023. In connection with Mr. Bratcher’s appointment as Chief Executive Officer and President, and along with other related compensation changes, the Committee increased his base pay to $625,000, effective January 1, 2024. In addition, in connection with Mr. Pasagic’s promotion to Chief Commercial Officer, the Committee increased his base salary to $425,000, effective January 8, 2024. Mr. Pasagic’s target incentive opportunities under our short-term and long-term incentive compensation programs did not change in connection with this promotion and remained at 50% and 65% of base salary, respectively. Incentive Compensation. The Committee believes a significant portion of executive officer compensation should be incentive based, and that by rewarding good performance, such arrangements help align the interests of our executive officers with those of our stockholders. The goal of our incentive program is to closely align how we compensate executive officers with our business strategy. Specifically, the Committee wants to encourage executive officers to focus on driving Company profitability, reduce costs, and create efficiencies to improve our ongoing operations. The Committee rewards them for success by basing short-term bonuses and long-term equity incentive awards on the attainment of performance metrics that they believe correspond with the creation of stockholder value. Short-Term Incentive Plan. Our Short-Term Incentive Plan (the “STI Plan”) is designed to attract, motivate, and retain executive officers and to tie their short-term incentive (“STI”) compensation to achievement of profitability and other goals. Pursuant to the STI Plan, STI incentive compensation, payable in cash, is dependent on the achievement of Company financial performance metrics established by the Committee and individual performance. Each executive officer is entitled to an STI award equal to a certain percentage of the executive officer’s base salary if the plan (or, target) level of performance is achieved, with the opportunity to earn up to 200% of this target payout based on the level of achievement of the performance metrics. For 2023, the Committee set the target STI incentive opportunity for each of the named executive officers as a percentage of base salary as 100% for Mr. Colo, 60% for Mr. Gall and Mr. Bratcher, and 50% for Mr. Landherr and Mr. Pasagic. The Committee made no changes to these target percentages in 2023, as compared to 2022. In connection with his appointment to Chief Executive Officer and President, the Committee increased Mr. Bratcher’s target STI incentive opportunity for 2024 to 100% of base salary. For 2023, the Committee chose adjusted operating income (“Adjusted Operating Income”), adjusted earnings before interest, taxes, and depreciation (“Adjusted EBITDA”), and adjusted basic earnings per share (“Adjusted Basic EPS”), with the weightings and payout scale presented in the table below, as the STI financial performance metrics. Adjusted Operating Income was the core measure of performance under the STI Plan, reflecting the Committee’s belief that this measure of performance is the most sensitive to management’s performance. Adjusted EBITDA is a common metric used by stockholders to measure performance and Adjusted Basic EPS reflects the Company’s full financial performance. These quantitative financial performance goals represent 90% of the total STI award and 10% of the total STI award is based on individual performance. The financial performance metric payout levels listed below include the impact of estimated bonus payments that would be made as a result of achievement of these metrics under the STI Plan.
Elements of Compensation
| Financial Performance Metrics | Weighting (%) | Threshold Payout of 50% ($) | Target Payout of 100% ($) | Maximum Payout of 200% ($) | | Adjusted Operating Income | 70 | 149.0 million | 163.9 million | 178.8 million | | Adjusted EBITDA | 20 | 169.3 million | 187.1 million | 202.0 million | | Adjusted Basic EPS | 10 | 4.94 | 5.30 | 5.81 |
Elements of Compensation
| Performance Metrics | Weighting (%) | Actual Performance Achieved ($) | Resulting Performance Factor Achievement (%) | | Adjusted Operating Income | 63 | 180.3 million | 200 | | Adjusted EBITDA | 18 | 202.5 million | 200 | | Adjusted Basic EPS | 9 | 5.90 | 200 | | Individual Performance | 10 | n/a | 200 |
Elements of Compensation
| Named Executive Officer | STI Award Paid ($) | Target STI Award ($) | Percentage of Target STI Award (%) | | David S. Bratcher | 600,000 | 300,000 | 200 | | Brandon M. Gall | 558,000 | 279,000 | 200 | | Curtis C. Landherr | 425,000 | 212,500 | 200 | | Amel Pasagic | 344,000 | 172,000 | 200 | | David J. Colo(1) | 1,688,000 | 844,000 | 200 |
Elements of Compensation
(1) Pursuant to the terms of the Colo Retirement Agreement, Mr. Colo remained eligible to receive a payout of his STI award for the 2023 performance year. Long-Term Incentive Program. Under our long-term incentive (“LTI”) program, we issue a variable number of RSUs based on the achievement of profitability and other goals, which attract and motivate our executive officers, align with stockholder value creation, and align with our pay-for-performance compensation philosophy. The RSUs have time-based vesting to align the interests of our executive officers with the interests of our stockholders by promoting the stability and retention of our executive team over the longer term. The Committee set the LTI target opportunity for 2023 for the named executive officers as a percentage of base salary as 170% for Mr. Colo, 100% for Mr. Bratcher and Mr. Gall, and 65% for Mr. Landherr and Mr. Pasagic. These target percentages reflect an increase for Mr. Colo from his 2022 target percentage of 140% and an increase for Mr. Bratcher and Mr. Gall from their 2022 target percentage of 75%, following a review of our peer group and survey data. In connection with his appointment to Chief Executive Officer and President, the Committee increased Mr. Bratcher’s LTI target opportunity for 2024 to 170% of base salary. In addition, the Committee increased Mr. Gall’s target LTI incentive opportunity for 2024 to 115% of base salary. For 2023, the Committee set the performance metrics, weightings, targeted achievement levels, and payout scale for the LTI program as the same as for the STI awards discussed above. The RSUs granted in February 2024 were based on 2023 performance, have pro rata vesting over a three-year period, with one-third vesting each year, and are subject to a “double trigger” change-in-control provisions, which means that the RSUs are only accelerated if the executive officer’s employment is terminated without cause or voluntarily for good reason within 18 months of a change in control. RSUs granted prior to 2023 had three-year cliff vesting and “single trigger” change-in-control provisions (for more information, see “Compensation Tables—Potential Payments on Termination or Change in Control”). RSU holders are entitled to receive cash dividend equivalents with respect to shares underlying their RSUs, to be paid at the same time as dividend payments are made to holders of our common stock. In February 2024, the Committee reviewed 2023 performance and issued RSUs in the amounts presented below to each of our named executive officers under our LTI program based on a payout equal to 200% (the maximum amount).
Elements of Compensation
| Named Executive Officer | RSUs Issued (#) | Grant Date Fair Value ($) | Target LTI Award Value ($) | Percentage of Target LTI Award (%) | | David S. Bratcher | 11,779 | 1,000,037 | 500,000 | 200 | | Brandon M. Gall | 10,954 | 929,995 | 465,000 | 200 | | Curtis C. Landherr | 6,508 | 552,529 | 276,250 | 200 | | Amel Pasagic | 5,267 | 447,168 | 223,600 | 200 | | David J. Colo(1) | 33,800 | 2,869,620 | 1,434,800 | 200 |
Elements of Compensation
(1) Pursuant to the terms of the Colo Retirement Agreement, Mr. Colo remained eligible to receive RSUs for the LTI award he earned for the 2023 performance year. Retirement Compensation. We provide retirement compensation through our 401(k) plan, a tax-qualified defined contribution plan. We provide a Company match of 1% for each 1% of employee deferral to their 401(k) plan account, up to a maximum of 6%. In addition, our non-qualified deferred compensation plan permits participants to defer salary or short-term incentive payments. Amounts deferred are deemed invested in investments selected by the participant from the choices available in our 401(k) plan. For more information, see “Compensation Tables—Non-Qualified Deferred Compensation” and “Compensation Tables—Potential Payments on Termination or Change in Control.” For information about the Colo Retirement Agreement, see “Compensation Tables—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Mr. Colo’s Employment Agreement and Retirement Agreement.” Executive Severance Plan. The Committee has adopted the MGP Ingredients, Inc. Executive Severance Plan (the “Executive Severance Plan.” The Executive Severance Plan is designed to provide uniform treatment of individuals not covered by individual employment agreements, attract these executive officers, and encourage retention of these executive officers by providing financial protection in the event of unexpected job loss resulting from certain terminations of employment. More information about the Executive Severance Plan can be found under “Compensation Tables—Potential Payments on Termination or Change in Control.” Other Compensation Programs. We provide limited executive perquisites to our executive officers, as described herein, and we do not offer significant executive benefits, such as supplemental executive retirement plans. We provide supplemental long-term disability coverage to our executive officers, and executive officers can elect to receive supplemental life insurance coverage. Mr. Colo received an automobile allowance of $500 per month pursuant to the terms of his employment agreement. Mr. Bratcher and Mr. Pasagic receive an automobile allowance of $1,500 and $600 per month, respectively, and reimbursement for gas expenses. In addition, pursuant to his offer letter, we agreed to reimburse Mr. Landherr for certain costs related to his subsequent relocation to our principal executive office.
Summary Compensation Table
Summary Compensation Table The following table sets forth information regarding the compensation of our named executive officers for 2023, 2022, and 2021:
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | | David S. Bratcher Chief Executive Officer and President (since January 1, 2024); Chief Operating Officer and President of Branded Spirits (until December 31, 2023) | 2023 | 500,000 | 712,479 | 600,000 | 64,469 | 1,876,948 | | | 2022 | 475,000 | 441,713 | 570,000 | 52,103 | 1,538,816 | | | 2021 | 342,828 | 294,981 | 453,000 | 22,627 | 1,113,436 | | Brandon M. Gall Vice President of Finance and Chief Financial Officer and Treasurer | 2023 | 465,000 | 622,487 | 558,000 | 22,531 | 1,668,018 | | | 2022 | 415,000 | 487,525 | 498,000 | 35,899 | 1,436,424 | | | 2021 | 375,000 | 417,355 | 450,000 | 26,555 | 1,268,910 | | Curtis C. Landherr Vice President, Chief Legal Officer and Corporate Secretary | 2023 | 425,000 | 115,082 | 425,000 | 49,155 | 1,014,237 | | Amel Pasagic Chief Commercial Officer (since January 8, 2024); Vice President of Technology and Chief Information Officer (until January 7, 2024) | 2023 | 344,000 | 357,547 | 344,000 | 31,661 | 1,077,208 | | | 2022 | 275,000 | 179,516 | 275,000 | 33,329 | 762,845 | | David J. Colo Senior Advisor (until April 30, 2024); Chief Executive Officer and President (until December 31, 2023) | 2023 | 844,000 | 2,147,608 | 1,688,000 | 30,257 | 4,709,865 | | | 2022 | 767,000 | 1,712,716 | 1,534,000 | 56,261 | 4,069,977 | | | 2021 | 685,100 | 1,281,242 | 1,370,200 | 37,153 | 3,373,695 |
Summary Compensation Table
(1)The amount shown is the grant date fair value of awards made during the period computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 and represents RSUs granted on February 16, 2023 and earned under the LTI program for the 2022 performance year. Mr. Bratcher, Mr. Gall, Mr. Landherr, Mr. Pasagic, and Mr. Colo were granted RSUs based on 2023 performance on February 14, 2024 in the amounts of $1,000,037, $929,995, $552,529, $447,168, and $2,869,620, respectively. These grants are not included in the Summary Compensation Table. (2) Amounts shown reflect annual cash incentive payments under the STI Plan for 2023 performance that were paid in March 2024. (3) Includes Company contributions to 401(k) plan accounts for 2023 in the following amounts: Mr. Bratcher - $19,800, Mr. Gall - $19,800, Mr. Landherr - $19,800, Mr. Pasagic - $19,126, and Mr. Colo - $19,800. Includes amounts paid by the Company for the purchase of additional life insurance for Mr. Gall and Mr. Landherr. Includes an automobile allowance and gas reimbursement for Mr. Bratcher and Mr. Pasagic in the amounts of $21,129 and $9,759, respectively, and an automobile allowance in the amount of $6,000 for Mr. Colo. For Mr. Bratcher, includes a 25-year service anniversary gift of $15,036, which includes a gross up of $6,958, and reimbursement of $4,275 for legal fees in connection with negotiating and drafting his employment agreement. For Mr. Landherr, includes payments or reimbursement of $16,361 of commuting costs and $8,221 of relocation expenses. Additionally, includes amounts paid by the Company for the purchase of long-term disability insurance.
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table sets forth information about STI and LTI awards granted to each named executive officer during the year ended December 31, 2023.
Grants of Plan-Based Awards
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) | | Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold ($) | Target ($) | Maximum ($) | | | | David S. Bratcher | | | | | | | | | | | LTI Opportunity(1) | 2/15/2023 | | | | 250,000 | 500,000 | 1,000,000 | | | | STI Opportunity(2) | 2/15/2023 | 150,000 | 300,000 | 600,000 | | | | | | | RSUs(3) | 2/16/2023 | | | | | | | 7,355 | 712,479 | | Brandon M. Gall | | | | | | | | | | | LTI Opportunity(1) | 2/15/2023 | | | | 232,500 | 465,000 | 930,000 | | | | STI Opportunity(2) | 2/15/2023 | 139,500 | 279,000 | 558,000 | | | | | | | RSUs(3) | 2/16/2023 | | | | | | | 6,426 | 622,487 | | Curtis C. Landherr | | | | | | | | | | | LTI Opportunity(1) | 2/15/2023 | | | | 138,125 | 276,250 | 552,500 | | | | STI Opportunity(2) | 2/15/2023 | 106,250 | 212,500 | 425,000 | | | | | | | RSUs(3) | 2/16/2023 | | | | | | | 1,188(4) | 115,082 | | Amel Pasagic | | | | | | | | | | | LTI Opportunity(1) | 2/15/2023 | | | | 111,800 | 223,600 | 447,200 | | | | STI Opportunity(2) | 2/15/2023 | 86,000 | 172,000 | 344,000 | | | | | | | RSUs(3) | 2/16/2023 | | | | | | | 3,691 | 357,547 | | David J. Colo | | | | | | | | | | | LTI Opportunity(1) | 2/15/2023 | | | | 717,400 | 1,434,800 | 2,869,600 | | | | STI Opportunity(2) | 2/15/2023 | 422,000 | 844,000 | 1,688,000 | | | | | | | RSUs(3) | 2/16/2023 | | | | | | | 22,170 | 2,147,608 |
Grants of Plan-Based Awards
(1)The amounts reported under the Threshold, Target, and Maximum columns reflect the values of the possible LTI awards. If less than the Threshold performance targets are met, no incentive award is paid. The Target column reports the awards that would have been paid if 100% of the performance targets were met and the Maximum column represents the maximum awards available regardless of the amount by which the performance targets are exceeded. The performance targets relate to both quantitative and qualitative criteria. The award amounts are denominated in dollars but are payable in RSUs in the number of shares that the award equates to at the time of payout. In February 2024, each named executive officer received an award of RSUs based on 2023 performance that was the maximum award payable, as described in “Compensation Discussion and Analysis—Elements of Compensation—Long-Term Incentive Program.” (2)The amounts reported under the Threshold, Target, and Maximum columns reflect the possible STI awards. If less than the Threshold performance targets are met, no incentive award is paid. The Target column reports the awards that would have been paid if 100% of the performance targets were met and the Maximum column represents the maximum awards available regardless of the amount by which the performance targets are exceeded. The performance targets performance goals relate to both quantitative and qualitative criteria. For 2023, each named executive officer received an STI award that was the maximum amount payable, as reported in the Summary Compensation Table. (3)Represents the grant of RSUs based on Company financial performance goals and the named executive officer’s individual performance for 2022. The RSUs will vest on February 16, 2026. (4)Prorated amount based on October 17, 2022 start date.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards
Outstanding Equity Awards on December 31, 2023
Outstanding Equity Awards on December 31, 2023 The following table shows information concerning outstanding RSU awards held by each named executive officer on December 31, 2023. No stock options were held by any named executive officers as of December 31, 2023. Amounts shown are based on a price of $98.52 per share, the closing market price of our common stock on December 29, 2023.
Outstanding Equity Awards on December 31, 2023
| | Stock Awards | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | | David S. Bratcher | 4,987(1) | 491,319 | | | 5,679(2) | 559,495 | | | 7,355(3) | 724,615 | | Brandon M. Gall | 6,294(4) | 620,085 | | | 2,500(5) | 246,300 | | | 6,500(6) | 640,380 | | | 6,268(2) | 617,523 | | | 6,426(3) | 633,090 | | Curtis C. Landherr | 1,000(7) | 98,520 | | | 1,188(3) | 117,042 | | Amel Pasagic | 575(1) | 56,649 | | | 2,308(2) | 227,384 | | | 3,691(3) | 363,637 | | David J. Colo | 19,322(4) | 1,903,603 | | | 22,020(2) | 2,169,410 | | | 22,170(3) | 2,184,188 |
Outstanding Equity Awards on December 31, 2023
(1)This award vested on April 1, 2024. (2)This award will vest on February 10, 2025. (3)This award will vest on February 16, 2026. (4)This award vested on February 11, 2024. (5)This award vested on February 18, 2024. (7)This award will vest on October 17, 2025.
Stock Vested
Stock Vested The following table sets forth information with respect to our named executive officers concerning the vesting of RSU awards during the year ended December 31, 2023. Mr. Gall and Mr. Colo are the only named executive officers with RSUs that vested in 2023.
Stock Vested
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Brandon M. Gall | 720 | 68,839 | | David J. Colo | 8,000 | 747,920 |
Stock Vested
(1)Amounts calculated using the closing market price of our common stock on the vesting date (or if such date is not a trading day, the closing market price of our common stock on the trading day immediately preceding the vesting date), multiplied by the number of shares vested.
Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation We have adopted a non-qualified deferred compensation plan for our executive officers, which permits participants to defer salary or short-term incentive payments. Amounts deferred are deemed invested in investments selected by the participant from the choices available in our 401(k) plan. Aggregate earnings (losses) represent price appreciation (or depreciation) on the investments plus dividends or interest paid on investments. The following table sets forth the contributions made by our named executive officers and the earnings accrued on all such contributions under our non-qualified deferred compensation plan during the year ended December 31, 2023. Mr. Gall is the only named executive officer with a balance under our non-qualified deferred compensation plan as of December 31, 2023.
Non-Qualified Deferred Compensation
| | Executive Contributions in 2023 | Registrant Contributions in 2023 | Aggregate Earnings (Losses) in 2023 | Aggregate Withdrawals/ Distributions | Aggregate Balance at 2023 Year End | | Name | ($)(1) | ($) | ($)(1) | ($) | ($)(2) | | Brandon M. Gall | — | — | 56,463 | 39,356 | 360,661 |
Non-Qualified Deferred Compensation
(1)Amounts are not included in the Summary Compensation Table because plan earnings were not preferential or above market. (2)Amounts include $276,117 for Mr. Gall that was previously reported in the Summary Compensation Table for years prior to 2023.
Potential Payments on Termination or Change in Control
Potential Payments on Termination or Change in Control In order to offer competitive compensation to our executive officers, ensure retention of our executive officers, and incentivize our executive officers to remain focused on stockholder interests, we offer payments and benefits to our executive officers upon certain termination events and a change-in-control.
Restricted Stock Unit Awards
Restricted Stock Unit Awards The treatment of RSUs under various termination scenarios under RSU awards agreements is as follows: •Change in Control. Commencing with RSUs granted in 2023, RSU awards include a “double trigger” change in control provision, which means that that unvested RSUs will accelerate and vest only if there is a change in control (as defined in the 2014 Equity Incentive Plan, as amended (the “2014 Plan”)) and the executive officer’s employment is terminated without cause or for good reason (as defined in the applicable RSU award agreement) within 18 months following the change in control. Unvested RSUs granted prior to 2023 vest upon a change in control. •Retirement. Upon retirement, unvested RSUs will continue to vest on their scheduled vesting dates. Commencing with RSUs granted in 2023, the definition of retirement required the executive officer to be at least age 60 with at least five years of service with us. For RSUs granted prior to 2023, the definition of retirement required the executive officer to be at least age 65. •Death or disability. Upon any executive officer’s death or disability (as defined in the 2014 Plan), any unvested RSUs will immediately vest. Under the RSU award agreements, upon termination of employment or separation from service for any other reason, any RSUs that have not previously vested are forfeited. In addition to the provisions in the RSU award agreements, the Colo Employment Agreement, the Bratcher Employment Agreement, and the Bratcher Severance Agreement provide for the treatment of RSUs upon termination in certain circumstances, as described under “—Employment Agreements” and “Compensation Tables—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards—Mr. Bratcher’s Employment Agreement.”
CHIEF EXECUTIVE PAY RATIO
CHIEF EXECUTIVE PAY RATIO As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Mr. Colo, our Chief Executive Officer and President during 2023. As of December 31, 2022, we had approximately 626 U.S. employees and 64 employees in the United Kingdom (including Northern Ireland). We used total cash compensation, consisting of base pay, annual incentive compensation, and Company contributions to retirement plans for the 12-month period from January 1, 2022 through December 31, 2022 to identify our median employee. We did not annualize compensation for permanent employees who did not work for the entire measurement period. Our median employee remains unchanged from last year as there has been no change in our employee population or employee compensation arrangements that we reasonably believe would significantly impact our 2023 pay ratio disclosure. Similarly, there has been no change in our median employee’s circumstances that we reasonably believe would result in a significant change to our 2023 pay ratio disclosure. Our median employee’s compensation for 2023, calculated using the same methodology as the Summary Compensation Table in this proxy statement, was $86,104. Our Chief Executive Officer’s compensation for 2023, as reported in the Summary Compensation Table, was $4,709,865. Therefore, we estimate that our CEO to median employee pay ratio is 55:1.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive officer “compensation actually paid” (“CAP”) and certain Company financial performance metrics. The table below reflects CAP to our chief executive officer (“CEO”) and average CAP to our other named executive officers (the “Other NEOs”) during 2020 through 2023. In addition, the table compares our total shareholder return (“TSR”) against TSR for the Russell 2000 – Consumer Staples Index. For further information concerning our variable pay-for-performance philosophy and how we align executive compensation with our performance, refer to “Compensation Discussion and Analysis.”
Pay Versus Performance Table
Pay Versus Performance Table
Pay Versus Performance Table
| Year | Summary Compensation Table Total for CEO(1) | | Compensation Actually Paid to CEO(2) | | Average Summary Compensation Table Total for Other NEOs(3) | Average Compensation Actually Paid to Other NEOs(4) | Value of Initial Fixed $100 Investment Based on: | | GAAP Net Income (millions)(7) | Adjusted Operating Income (millions)(8) | | | Augustus C. Griffin (First CEO) | David J. Colo (Second CEO) | Augustus C. Griffin (First CEO) | David J. Colo (Second CEO) | | | TSR(5) | Russell 2000 – Consumer Staples Index TSR(6) | | | | | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | ($) | | (a) | (b) | (b) | (c) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | N/A | 4,709,865 | N/A | 4,318,377 | 1,409,103 | 1,298,732 | 209.85 | 128.73 | 107.13 | 180.30 | | 2022 | N/A | 4,069,977 | N/A | 5,284,166 | 1,345,585 | 1,371,973 | 225.52 | 116.57 | 108.87 | 148.97 | | 2021 | N/A | 3,373,695 | N/A | 4,038,070 | 1,139,922 | 1,441,624 | 179.30 | 135.66 | 90.82 | 126.36 | | 2020 | 1,194,892 | 1,859,171 | 1,075,003 | 2,026,211 | 826,587 | 818,709 | 98.58 | 123.23 | 40.35 | 54.24 |
Pay Versus Performance Table
(1)The amounts reported in columns (b) represent the compensation reported in the “Total” column of the Summary Compensation Table for Augustus C. Griffin and Mr. Colo for the years in which they served as CEO. For the years reported in the table, Mr. Griffin was our CEO from January 2020 to May 2020, and Mr. Colo was our CEO from May 2020 to December 2023. (2)The amounts reported in columns (c) represent the amount of CAP to Mr. Griffin and Mr. Colo, as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual amount of compensation earned by or paid to Mr. Griffin and Mr. Colo during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Colo’s compensation for 203 to determine his CAP. Mr. Colo did not participate in a pension plan; therefore, no adjustment was made from the Summary Compensation Table totals related to pension value.
Pay Versus Performance Table
| Year | Summary Compensation Table Total ($) | Minus: | Plus: | Compensation Actually Paid ($) | | | | Summary Compensation Table Stock Awards ($) | Equity Awards Adjustments(A) ($) | | | 2023 | 4,709,865 | 2,147,608 | 1,756,120 | 4,318,377 |
Pay Versus Performance Table
(A)The equity award adjustments are shown in the following table.
Pay Versus Performance Table
| Year | Year-End Fair Value of Equity Awards That Were Granted in the Applicable Year That Remained Outstanding and Unvested ($) | Change in Fair Value from Prior Year-End to Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year ($) | Fair Value as of Prior Year-End of Equity Awards Granted in Prior Year and Forfeited During Year ($) | Change in Fair Value from Prior Year-End to this Year-End of Equity Awards Granted in a Prior Year That Remain Outstanding and Unvested ($) | Total Equity Awards Adjustments ($) | | 2023 | 2,184,188 | (103,120) | 0 | (324,948) | 1,756,120 |
Pay Versus Performance Table
(3) The amounts reported in column (d) represents the average of the amounts reported for the Other NEOs in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the Other NEOs included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Mr. Bratcher, Mr. Gall, Mr. Landherr, and Mr. Pasagic; (ii) for 2022, Mr. Gall, Mr. Bratcher, David E. Dykstra, Stephen J. Glaser, Mr. Pasagic, and Erika Lapish; (iii) for 2021, Mr. Gall, Mr. Bratcher, Mr. Dykstra, and Mr. Glaser; and (iv) for 2020, Mr. Gall, David E. Rindom, Mr. Dykstra, and Mr. Glaser. (4) The amounts reported in column (e) represent the average amount of CAP to the Other NEOs, as computed in accordance with Item 402(v) of Regulation S-K. The amounts do not reflect the actual average amount of compensation earned by or paid to the Other NEOs during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the Other NEOs for 2023 to determine CAP, using the same methodology described in footnote 2 above. The Other NEOs did not participate in a pension plan; therefore, no adjustment was made from the Summary Compensation Table totals related to pension value.
Pay Versus Performance Table
| Year | Average Reported Summary Compensation Table Total for Other NEOs ($) | Minus: | Plus: | Average Compensation Actually Paid to Other NEOs ($) | | | | Average Reported Summary Compensation Table Stock Awards for Other NEOs ($) | Average Equity Adjustments for Other NEOs(A) ($) | | | 2023 | 1,409,103 | 451,899 | 341,528 | 1,298,732 |
Pay Versus Performance Table
(A) The equity award adjustments are shown in the following table.
Pay Versus Performance Table
| Year | Average Year-End Fair Value of Equity Awards that Were Granted in the Applicable Year That Remained Outstanding and Unvested ($) | Average Change in Fair Value from Prior-Year End to Vesting Date of Equity Awards Granted in Prior Years that Vested in the Year ($) | Average Fair Value as of Prior Year-End of Equity Awards Granted in Prior Year and Forfeited During Year ($) | Average Change in Fair Value from Prior Year-End to this Year-End of Equity Awards Granted in a Prior Year That Remain Outstanding and Unvested ($) | Total Average Equity Awards Adjustments ($) | | 2023 | 414,424 | (1,939) | 0 | (70,958) | 341,528 |
Pay Versus Performance Table
(5) TSR reported in column (h) is calculated based on a fixed investment of $100 made on December 31, 2019 through and including the end of the fiscal year for each year reported in the table, assuming dividend reinvestment. Our TSR calculations differ in these disclosures from those disclosed in our 2023 proxy statement due to a change in methodology. (6) The peer group reported in column (g) is the Russell 2000 – Consumer Staples Index. We used this index as our industry comparison index in the stock performance graph required by Item 201(e) of Regulation S-K as reported in our Annual Report on Form 10-K for the year ended December 31, 2023. Our TSR calculations differ in these disclosures from those disclosed in our 2023 proxy statement due to a change in methodology. (7) The amounts reported in column (h) represent the amount of net income reflected in our audited financial statements for the applicable year. (8) Our Company-selected measure is Adjusted Operating Income, a non-GAAP measure, as defined under “Compensation Discussion and Analysis.” While we use numerous financial and non-financial performance measures for the purpose of evaluating performance for our compensation programs, we have determined that Adjusted Operating Income is the financial performance measure that, in our assessment, represents the most important performance measure used by us to link CAP to our NEOs, for the most recently completed fiscal year, to Company performance.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Our non-employee directors receive compensation for their service. The Human Resources and Compensation Committee annually reviews the total compensation of our non-employee directors and each element of our non-employee director compensation program. As part of this process, the Human Resources and Compensation Committee evaluates data provided by its independent compensation consultant, including compensation data for our peer group companies, and makes a recommendation to the Board. Our non-employee directors receive the following payments and fees for their services: •Annual cash retainer of $75,000, payable quarterly; •Annual equity award of our common stock, valued at $90,000, paid once per year, which vests immediately on grant; •Annual cash retainers for Board committee chairs ($15,000 for the chair of the Audit Committee, $10,000 for the chair of the Human Resources and Compensation Committee, and $8,000 for the chair of the Nominating and Governance Committee), payable quarterly; and •Annual cash retainer of an additional $70,000 for the non-executive Chairman of the Board, payable quarterly. Non-employee director compensation in 2023 remained the same as 2022 compensation, other than increases, effective July 1, 2023, to the annual cash retainer (increasing to $75,000 from $70,000), and to the cash retainer for the non-executive Chairman of the Board (increasing to $70,000 from $60,000). In addition, the annual equity award was increased to $90,000 in 2023, from $85,000 in 2022. Non-employee directors may elect to have their cash compensation paid in the form of our common stock, which vests immediately on grant. In addition, beginning in 2023, non-employee directors who own more than ten times their ownership requirement under our stock ownership guidelines may elect to receive their annual equity award in cash (see “Compensation Discussion and Analysis—Stock Ownership Guidelines” for information about the stock ownership requirements for our non-employee directors and “Principal Stockholders” for information about the stock ownership of our non-employee directors). Each of Mr. Lux, Ms. Mingus, and Ms. Seaberg own more than ten times their stock ownership requirement, and each elected to receive their annual equity award in cash for 2023. Non-employee director compensation is prorated based on the relevant dates of service. Executive officers do not receive any additional compensation for serving as a member of our Board. The following table shows compensation earned by or paid to our non-employee directors during 2023.
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | Total ($) | | Neha J. Clark | 87,526 | 89,974 | 177,500 | | Thomas A. Gerke | 82,526 | 89,974 | 172,500 | | Donn Lux | 162,500 | — | 162,500 | | Lori L.S. Mingus | 162,500 | — | 162,500 | | Preet H. Michelson | 72,526 | 89,974 | 162,500 | | Kevin Rauckman | 80,526 | 89,974 | 170,500 | | Karen L. Seaberg | 227,500 | — | 227,500 | | Todd B. Siwak | 72,526 | 89,974 | 162,500 |
DIRECTOR COMPENSATION
(1)Mr. Gerke, Ms. Michelson, Ms. Seaberg, and Mr. Siwak each elected to receive the following amounts of their cash compensation in shares of common stock: $82,325, $72,326, $137,337, and $72,326, respectively. Mr. Lux, Ms. Mingus, and Ms. Seaberg each elected to received their equity compensation in the form of cash. Amounts include fractional shares of equity compensation that were paid in the form of cash. (2)Amount represents the grant date fair value of the awards computed in accordance with FASB ASC Topic 718.