DEF 14A of Medifast Inc
Filed Apr 26, 2024 · FY20230001628280-24-018731
Our Board of Directors and Director Nominees
Our Board of Directors and Director Nominees The following table provides information about our current Board of Directors and nominees.
Our Board of Directors and Director Nominees
| Name | Age at Annual Meeting | Director Since | Independent | Current Committee Memberships | | Jeffrey J. Brown | 63 | 2015 | ✓ | Audit (Chair); Executive;*;+ | | Daniel R. Chard | 59 | 2016 | | Executive (Chair); ✧ | | Elizabeth Geary | 43 | 2023 | ✓ | NCG | | Michael A. Hoer | 68 | 2018 | ✓ | Audit; +; CC | | Scott Schlackman | 66 | 2015 | ✓ | CC (Chair); Audit | | Andrea B. Thomas | 59 | 2019 | ✓ | NCG (Chair); CC | | Ming Xian | 60 | 2018 | ✓ | NCG |
Our Board of Directors and Director Nominees
| ✓ | Independent Director | ✧ | Chairman of the Board | | Audit | Audit Committee | NCG | Nominating/Corporate Governance Committee | | CC | Compensation Committee | + | Audit Committee Financial Expert | | Executive | Executive Committee | * | Lead Independent Director |
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Our Board is currently composed of seven directors. Our Board has set seven directors as the number to be elected at the Annual Meeting and, upon the recommendation of the Nominating/Corporate Governance Committee, has nominated current directors Jeffrey J. Brown, Daniel R. Chard, Elizabeth A. Geary, Michael A. Hoer, Scott Schlackman, Andrea B. Thomas and Ming Xian for reelection, as directors with terms expiring at the 2025 Annual Meeting of Stockholders and until their successors are elected and qualified. All seven nominees are currently directors of the Company and have been previously elected by our stockholders. Management has no reason to believe that any of the nominees are unable or unwilling to serve if elected. However, in the event that any of the nominees should become unable or unwilling to serve as a director, the Named Proxies will vote shares represented by proxies at the Annual Meeting for the election of such persons as designated by the Board. The names of the nominees, along with their present positions, their principal occupations, current directorships held with other public corporations, as well as directorships during the past five years, their ages and the first year elected as a Medifast director, are set forth below. Certain individual qualifications, experiences and skills of our directors that contribute to the Board’s effectiveness and support the Company’s strategy as a whole are also described below. The Nominating/Corporate Governance Committee considers numerous qualifications when considering candidates for the Board, including their qualifications, skills, experiences, and tenure. The Board and the Nominating/Corporate Governance Committee believe that the combination of the various qualifications and experiences of the director nominees would contribute to an effective and well-functioning Board and that, individually and as a whole, the director nominees possess the necessary qualifications to provide effective oversight of the business and quality advice and counsel to the Company’s management. As a group, our Director nominees exhibit: •Highest personal and professional ethical standards, integrity, and values; •Practical wisdom and mature judgment; •An appreciation of multiple cultures; •A commitment to sustainability and social issues; •Innovative thinking; •Knowledge of corporate governance requirements and practices; and •Diverse backgrounds, including Directors with experience in business, international operations, finance, product development, marketing and sales, multi-level marketing, and areas that are relevant to the Company’s direct-to-consumer activities. Directors must be willing to devote sufficient time to carrying out their duties and responsibilities effectively, including making themselves available for consultation outside of regularly scheduled Board meetings, and should be committed to serve on the Board. Our nominees have a balanced mix of short and long tenure, ranging from one year to nine years, as of the Annual Meeting.
ELECTION OF DIRECTORS
| THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE SEVEN NOMINEES IDENTIFIED BELOW. |
DIRECTOR NOMINEES
DIRECTOR NOMINEES
DIRECTOR NOMINEES
| Lead Independent Director Lead Independent Director Since: June 2015 Director Since: 2015 Age at Annual Meeting: 62 Board Committees: •Audit Committee (Chairperson) •Executive Committee Qualifications: Mr. Brown brings to the Board extensive public and private company board experience and significant transactional experience. | Jeffrey J. Brown Mr. Brown serves as the Chair of the Audit Committee and member of the Executive Committee. He has also served as Lead Independent Director of the Company since June 2015. Mr. Brown is the Chief Executive Officer and founding member of Brown Equity Partners, LLC (“BEP”), since BEP's founding in 2007, which provides capital to management teams and companies needing equity capital. Mr. Brown has 35 years of private equity and corporate governance experience. He has served as Chairman of the Board of 12 companies and on the Board of Directors of over 50 companies in both the public and private sectors. He has chaired the Audit, Compensation, Finance, and special committees of these organizations as well as been Lead Director. Mr. Brown directly invests equity and debt in operating companies and actively manages his investments in commercial, industrial and retail real estate. Education: Mr. Brown received his MBA from the Stanford University Graduate School of Business and graduated Summa Cum Laude with a BS in Mathematics from Willamette University. |
DIRECTOR NOMINEES
| Chairman & Chief Executive Officer Director Since: 2016 Age at Annual Meeting: 58 Board Committee: •Executive Committee (Chairperson) Qualifications: Mr. Chard brings to the Board leadership skills and experience across operations, international, and marketing functions. He possesses extensive direct selling industry experience along with a strong background in consumer products. | Daniel R. Chard Mr. Chard has served as the Chief Executive Officer of the Company since October 2016 and Chairman since 2020. Prior to joining the Company, Mr. Chard served as President and Chief Operating Officer at PartyLite, a portfolio company of The Carlyle Group, from October 2015 to October 2016. Mr. Chard also served as the President, Global Sales & Operations at Nu Skin Enterprises, Inc. (“Nu Skin”) from February 2006 to September 2015, President of Nu Skin Europe from July 2004 to January 2006, and in various other roles of increasing responsibility since he joined Nu Skin in 1998. Education: Mr. Chard holds a Bachelor of Arts in Economics from Brigham Young University and received an MBA from the University of Minnesota. |
DIRECTOR NOMINEES
| Director Since: 2023 Age at Annual Meeting: 42 Board Committee: •Nominating/Corporate Governance Committee Qualifications: Ms. Geary brings to the Board experience in cyber, risk mitigation, and insurance. | Elizabeth A. Geary Ms. Geary joined Liberty Mutual in August 2022 as President, Insurance Solutions. Before joining Liberty Mutual, Ms. Geary served in various roles with TransRe, since joining their team in 2002, most recently, a dual role as President, Global Portfolio Management and Chief Underwriting Officer, North America at TransRe, balancing both transactional and portfolio experience. Prior to this, she was the company’s Global Head of Cyber. Education: Ms. Geary is a graduate of Fordham University, earning a Bachelor’s degree in Business Administration and an MBA in Finance from the Gabelli School of Business. |
DIRECTOR NOMINEES
| Director Since: 2018 Age at Annual Meeting: 67 Board Committee: •Audit Committee Qualifications: Mr. Hoer brings to the Board financial expertise and leadership skills as a former Controller, CFO, and President. He also brings extensive international experience having worked throughout Asia including China, Singapore, Japan, Taiwan, and Hong Kong. | Michael A. Hoer Mr. Hoer has volunteered managing humanitarian projects in Egypt and Sudan since 2018. He previously held various positions of increasing responsibility at Continental Grain Company from 1992 to 2007, where he most recently served as President — Continental Enterprises Ltd. & Managing Director — Conti Asia. Mr. Hoer currently serves on the board of directors of Taiwan Fu Hsing Industrial Co. Ltd. and Brigham Young University's National Advisory Council. He served previously on the boards of Dynasty Petroleum Holdings LLC (as Chairman), First Western Advisors, Avantar LLC, and a joint venture of Beijing H.Hova Purification Technology Co. Ltd. He also served on the board of directors of Beijing H-Hova Purification Technology Co. Ltd. from August 2012 to July 2016. Education: Mr. Hoer received a BA in Chinese and an MBA from Brigham Young University. |
DIRECTOR NOMINEES
| Director Since: 2015 Age at Annual Meeting: 65 Board Committees: •Compensation Committee (Chairperson) •Audit Committee Qualifications: Mr. Schlackman brings to the Board extensive executive leadership experience and expertise in the direct selling business. | Scott Schlackman Mr. Schlackman serves as Chair of the Compensation Committee. He is President of Scott Schlackman Global Consulting, LLC. Mr. Schlackman has been on the Board of Image Skincare since 2015 and has served as Vice Chairman of Image Skincare since January 2018. From 2011 to 2013 he was President of Avon UK and Ireland and Vice President of Liz Earle Products, which Avon acquired in March 2010. He was Regional Vice President for Global Sales Development WEMEA and Asia Pacific Regions for Avon in 2010. In 2008 and 2009 he was General Manager of Continental Europe. From 2006-2008 he was General Manager of Avon Canada. In his 30 years with Avon, Mr. Schlackman served in a variety of senior executive roles with Avon Products, Inc., a global manufacturer and marketer of beauty and related products, living in nine different countries. Education: Mr. Schlackman received a BS from the Wharton School of the University of Pennsylvania. |
DIRECTOR NOMINEES
| Director Since: 2019 Age at Annual Meeting: 58 Board Committees: •Compensation Committee •Nominating/Corporate Governance Committee Qualifications: Ms. Thomas brings to the Board considerable executive leadership experience along with a strong background in consumer products. | Andrea B. Thomas Ms. Thomas is the Assistant Dean of Undergraduate Studies and a marketing professor at the David Eccles School of Business at the University of Utah. She joined the university in 2016 after a 23-year career in brand management, retail marketing, innovation and sustainability. She is also a consultant, bringing a unique approach of academia and experience working at tremendous scale for Walmart, Hershey and PepsiCo. She was a Senior Vice President at Walmart Stores for 8 and a half years leading teams in private brands, sourcing, sustainability and marketing. Prior to joining Walmart, she was Vice President of Global Chocolate for the Hershey Company where she was responsible for platform innovation for Hershey’s portfolio of global brands. Previously, Ms. Thomas spent 13 years at PepsiCo where she worked in brand management, innovation, and retail marketing at Frito-Lay and Pizza Hut, launching Tostitos Scoops, managing the Tostitos Fiesta Bowl and coordinating the NFL and Disney relationships. Education: Ms. Thomas received a BA in mass communications from the University of Utah and an MBA in business administration from Brigham Young University. She received an honorary doctorate of humanities from the University of Utah in May 2013. |
DIRECTOR NOMINEES
| Director Since: 2018 Age at Annual Meeting: 59 Board Committee: •Nominating/Corporate Governance Committee Qualifications: Mr. Xian brings to the Board strategic management, business development, public relations and marketing skills. As a Chinese foreign-national, he also brings an understanding of the complexity of the Chinese government as he has worked throughout Asia, including Singapore. | Ming Xian Mr. Xian is currently retired, and previously held the position of Senior Internal Trainer of Sinochem Corporation from 2019 through 2023, and served as Chairman of Sinochem International (Overseas) Pte, Ltd. in Singapore from August 2008 to August 2010. Mr. Xian also served as Chief Strategy Officer of DSM Sinochem Pharmaceuticals from September 2011 to January 2017. He also served as Chairman of GMG Global from August 2008 to August 2010 and its Chief Executive Officer from August 2010 to August 2011. Education: Mr. Xian received a BS from Dalian Jiaotong University in China, a BEc from the University of International Business and Economy in China and a MEc from the Norwegian Management School in Norway. |
INFORMATION CONCERNING OUR BOARD OF DIRECTORS
INFORMATION CONCERNING OUR BOARD OF DIRECTORS
Pay for Performance
Pay for Performance In accordance with our compensation philosophy and as further described below in the CD&A, the majority of compensation for our NEOs is provided in the form of variable, at risk pay. As shown below, 85% of our CEO's total target compensation is variable based on Company and stock performance (67% for our other NEOs’), and 68% of our CEO’s long-term incentive awards (44% for our other NEOs’) vest solely upon the achievement of long-term performance metrics. . Company Performance and CEO Pay We strive to ensure that there is long-term alignment between CEO pay and Company performance. As we have refined our executive compensation program over the past several years, we continue to monitor CEO pay as it relates to our performance to ensure this alignment. We entered 2023 with an understanding that our transformation would require a significant pivot in our business model and organizational and financial structure. While we increased our CEO's long-term incentive target opportunity based on compensation analysis for our peer group, the actual realized compensation for our CEO and executive officers has been significantly impacted by the decline in our stock price, as reflected in the following chart. This chart is supplemental to the “Pay versus Performance” disclosure included on page 38 of this Proxy, which is required under Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K.
Pay for Performance
| Compensation Best Practices | | | Things We Do | Things We Don't Do | | Pay-for-performance | Dividends on unearned shares | | Double-trigger equity awards | Excise tax gross-up payments | | Competitive severance benefits | Guarantee bonuses | | Annual Say-on-Pay vote | Supplemental retirement benefits | | Stock ownership guidelines | Excessive perquisites | | Clawback policy | Repricing of stock options | | Anti-hedging & anti-pledging policy | |
How We Make Compensation Decisions
How We Make Compensation Decisions Role of Compensation Committee The Compensation Committee is responsible for developing and approving the executive compensation program for all executive officers, including the NEOs, and for reviewing, approving and, where appropriate, recommending to the full Board for approval, our incentive compensation and equity-based plans. The Compensation Committee is also responsible for the creation and periodic review of our overall executive compensation philosophy, the analysis and assessment of any material risk to the Company related to our compensation program, and the determination of the components and levels of executive compensation for the CEO and other executive officers. The Committee applies a set of principles to ensure our executive compensation programs support our business strategy and vision, are simple and easy to understand, reinforce a One Team mindset, provide market competitive opportunities, align with stockholder interests and set balanced and achievable incentive targets. Role of Management The Compensation Committee works closely with members of our management team in designing our executive compensation program, including Mr. Chard, our CEO, Mr. Maloney, our CFO, and Mrs. Greninger, our Chief Human Resources Officer. Our CEO evaluates the performance of our executives (other than his own performance) and makes recommendations as to the compensation levels of each executive (other than himself) and the goals for our short-term and long-term incentives. The advice of our CEO is important in order for the Compensation Committee to design compensation programs that align to corporate goals and strategic direction. All compensation decisions are made by the Compensation Committee in its sole discretion. Role of Compensation Consultants and Survey Data The Compensation Committee works with Meridian Compensation Partners, LLC (“Meridian”), an independent executive compensation consultant, as its independent compensation consultant to closely monitor developments and trends in executive compensation and to provide recommendations for appropriate adjustments to the Company’s executive compensation program, policies, and practices, in line with the Company’s business and talent strategies and investor expectations. The Compensation Committee evaluated the independence of Meridian and concluded that no conflict of interest existed that would prevent Meridian from independently advising the Compensation Committee. Meridian does not provide services to Medifast other than as the independent consultant to the Compensation Committee. Use of Peer Group The Compensation Committee assesses each executive’s total target compensation (which includes base pay, annual incentive target bonus and stock-based long-term incentives) against our compensation peer group. Our ability to remain competitive depends, in significant part, on our success in recruiting and retaining executive leadership with a competitively attractive compensation package. The Compensation Committee sets total target compensation for each NEO near the median of our compensation peer group, with the mix of pay (base pay, annual cash incentives and stock-based long-term incentives) designed to reflect a strong bias towards pay for performance by placing a majority of total target compensation at risk. The Compensation Committee may set total target compensation above or below median based on various factors including Company performance, internal equity considerations and individual performance. Each year, the Compensation Committee reviews and approves our compensation peer group to ensure that the peer companies meet the following criteria: (1) industry (healthy living and wellness companies and general weight-loss industry companies); (2) revenue (approximately l/2x to 2x our annual revenue); or (3) business model (with an emphasis on direct selling consumer product companies). As part of Meridian’s engagement, the compensation consultant reviewed the compensation peer group for continued appropriateness, which was used to evaluate and set the 2023 compensation of our NEOs. As a result of the annual review, the Compensation Committee approved a sixteen company peer group in 2022 for 2023 compensation, with slight modifications from the prior year's peer group. Our peer group companies, their respective industries, and revenue and market caps as of December 31, 2023 are illustrated below.
How We Make Compensation Decisions
| 2023 Peer Group | | | | | Company (n = 16) | Industry | Revenue (LTM) ($M) | Market Cap ($M) | | McCormick & Company, Incorporated | Packaged Foods and Meats | 6,662 | 18,352 | | Herbalife Nutrition Ltd. | Personal Products | 5,062 | 1,512 | | Nu Skin Enterprises, Inc. | Personal Products | 1,969 | 960 | | 1-800-FLOWERS.COM, Inc. | Internet and Direct Marketing Retail | 1,907 | 700 | | Edgewell Personal Care Company | Personal Products | 2,271 | 1,840 | | B&G Foods, Inc. | Packaged Foods and Meats | 2,062 | 826 | | The Hain Celestial Group, Inc. | Packaged Foods and Meats | 1,782 | 982 | | BellRing Brands, Inc. | Personal Products | 1,735 | 7,271 | | Tupperware Brands Corporation | Housewares and Specialties | 1,304 | 93 | | The Simply Good Foods Company | Packaged Foods and Meats | 1,250 | 3,952 | | WW International, Inc. | Specialized Consumer Services | 890 | 692 | | USANA Health Sciences, Inc. | Personal Products | 921 | 1,025 | | Inter Parfums, Inc. | Personal Products | 1,318 | 4,606 | | Duluth Holdings Inc. | Internet and Direct Marketing Retail | 643 | 185 | | Etsy, Inc. | Broadline Retail | 2,748 | 9,705 | | Spectrum Brands Holdings, Inc. | Household Products | 2,898 | 2,817 | | 75th Percentile | | 2,391 | 4,113 | | Median | | 1,845 | 1,269 | | 25th Percentile | | 1,291 | 794 | | Medifast, Inc. | Personal Products | 1,072 | 724 | | Percent Rank | | 16% | 21% |
Elements of Executive Compensation
Annual Incentive Bonus Our annual incentive bonus plan is designed to reward our NEOs for the achievement of critical short-term financial goals and other corporate objectives that support the long-term sustainability of the Company. The Compensation Committee determined each NEO’s target bonus opportunities, taking into account benchmark data from our compensation peer group, the NEO’s contribution to current and long-term corporate goals and input from the CEO (the CEO did not provide input on his own target bonus opportunity). For 2023, each NEO's target bonus opportunity did not change from 2022 levels. The table below shows each NEO’s 2023 target bonus opportunity, expressed as a percentage of base salary.
Elements of Executive Compensation
During this time of transformation, managing the growth and profitability of the Company while maintaining stable operations that deliver strong customer satisfaction were deemed critical for Company success. The financial targets for the annual incentive bonus were set based on the annual budget approved by the Board during the first quarter of 2023. For 2023, the Compensation Committee selected the following three financial measures: (i) Revenue, (ii) Operating Income and (iii) Client Net Promoter Score ("NPS"). The Company elected to add the NPS metric, which measures the likelihood a customer will recommend the Company's products and services to others as the Company believes it provides a barometer for customer satisfaction and loyalty, and is sensitive to business disruption and is a predictor of business growth. The Compensation Committee selected Revenue and Operating Income to focus the NEOs on achieving profitable growth, which it believes drives sustainable performance. In light of the difficult economic challenges facing the Company at the start of 2023, the Committee approved target performance goals reflective of anticipated declines in revenue and operating income due to the Company's long-term transformation plan. The Committee believed the targets set were ambitious while still achievable in light of the financial investment required to reinvent our business model and the challenging business conditions the Company would need to overcome in 2023. To ensure that 2023 payout levels were aligned with performance expectations, the threshold payout level was reduced from 50% to 25% and the maximum payout level was reduced from 200% to 150%. The performance range was also flattened, putting the threshold and maximum level of performance farther out from the target. The table below shows the 2023 threshold, target and maximum performance goals for each financial measure (expressed in millions).
Elements of Executive Compensation
| Performance Measures | Threshold 25% | Target 100% | Maximum 150% | Weight (%) | | Revenue ($) | 879.2 | 1,120.0 | 1,598.6 | 35% | | Adjusted Operating Income ($) | 37.4 | 82.0 | 184.8 | 55% | | Client Net Promoter Score of 40 or Higher (# of Months) | 4 Months | 5 to 8 Months | 9 Months or Greater | 10% |
Elements of Executive Compensation
| Name | Long-Term Target Value ($) | Time-Based Restricted Shares (#) | Performance-Based Deferred Shares (#) | | Daniel R. Chard | 4,600,000 | 16,807 | 25,211 | | James P. Maloney | 1,001,462 | 4,574 | 4,574 | | Nicholas M. Johnson | 858,686 | 3,922 | 3,922 | | Anthony E. Tyree | 810,952 | 3,704 | 3,704 | | Jason L. Groves | 812,784 | 3,712 | 3,712 |
Elements of Executive Compensation
| 2021 LTI Grant – 3-Year LTI Cumulative Targets | | | | Actual Performance | Achievement | Weight | PSU Actual Achievement | | ($ in thousands) | Threshold | Target | Maximum | | | | | | 3-Year Cumulative Revenue | $3,279,150 | $3,733,892 | $3,896,020 | $4,196,718 | 200% | 40% | 80% | | 3-Year Cumulative Operating Income | $444,209 | $524,478 | $566,733 | $571,409 | 200% | 60% | 120% |
Severance Benefits
Severance Benefits We maintain, the Medifast Executive Severance Plan (the “Severance Plan”) pursuant to which severance benefits are provided to our CEO, the other NEOs and certain executives at the Executive Vice-President level or above who report directly to the CEO upon certain terminations of employment, including a termination by the Company without “cause” or by the executive for “good reason.” The Severance Plan was designed with an eye towards severance plans and policies in the market, so that the severance benefits provided under the Severance Plan are market competitive. In our industry, companies typically provide severance benefits to their executives upon certain qualifying terminations of employment. Severance benefits provide economic security for our executives during times of uncertainty, which allows them to focus their attention on leading and managing the Company. In addition, we believe that the Severance Plan is an important factor in the retention of our executives while remaining within market norms. Please refer to the Potential Payments upon Termination or Change in Control narrative within the Executive and Director Compensation Tables section herein for additional information on the Severance Plan.
ANALYSIS OF RISK INHERENT IN OUR COMPENSATION POLICIES AND PRACTICES
ANALYSIS OF RISK INHERENT IN OUR COMPENSATION POLICIES AND PRACTICES The Compensation Committee has conducted a risk assessment of all of our compensation policies and practices to ensure that they do not foster risk taking above the level of risk associated with our business model. Based upon that review and a review by management of the Company’s internal controls, the Compensation Committee has concluded that the Company’s compensation programs do not encourage executives or other employees to take inappropriate risks that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee based its conclusion on a variety of factors, including the following specific aspects of the Company’s compensation practices: •Our annual incentive compensation program is based on balanced performance metrics that promote disciplined progress towards longer-term Company goals; •We do not offer significant short-term incentives that might drive high-risk investments at the expense of long-term Company and stockholder value; •At the senior management and executive levels, our compensation programs are weighted towards offering incentives that reward sustainable performance by requiring continued service to receive payment; and •All of our compensation awards are capped at reasonable and sustainable levels, as determined by a review of our economic position and prospects, as well as the compensation offered within our peer group and by comparable companies.
EXECUTIVE AND DIRECTOR COMPENSATION TABLES
EXECUTIVE AND DIRECTOR COMPENSATION TABLES
Summary Compensation Table (2023, 2022, and 2021)
Summary Compensation Table (2023, 2022, and 2021) The following table sets forth the annual and long-term compensation for the last three fiscal years of the Company’s Chief Executive Officer, the Chief Financial Officer, The Chief Field Operations Officer, the Chief Business Operations Officer, and the Chief Legal Officer & Corporate Secretary. These individuals are our “Named Executive Officers” for fiscal year 2023. Mr. Groves was not an NEO prior to 2022, therefore his compensation for the prior years is not included in the table below.
Summary Compensation Table (2023, 2022, and 2021)
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(2)(3) | Total ($) | | Daniel R. Chard Chairman & Chief Executive Officer | 2023 | 1,000,000 | — | 4,604,755 | 1,322,500 | 111,807 | 7,039,062 | | | 2022 | 980,624 | — | 4,002,009 | 943,000 | 14,603 | 5,940,235 | | | 2021 | 914,291 | 17,847 | 3,484,918 | 2,134,469 | 13,968 | 6,565,494 | | James P. Maloney Chief Financial Officer | 2023 | 527,085 | — | 992,101 | 424,303 | 66,334 | 2,009,824 | | | 2022 | 506,761 | — | 602,572 | 302,547 | 14,603 | 1,426,483 | | | 2021 | 433,831 | 8,663 | 492,120 | 630,700 | 55,929 | 1,621,243 | | Nicholas M. Johnson Chief Field Operations Officer | 2023 | 440,352 | — | 850,682 | 354,483 | 57,928 | 1,703,445 | | | 2022 | 429,728 | — | 503,609 | 252,762 | 13,910 | 1,200,009 | | | 2021 | 389,775 | 7,698 | 437,581 | 560,448 | 23,244 | 1,418,746 | | Anthony E. Tyree Chief Business Operations Officer | 2023 | 415,873 | — | 803,398 | 334,778 | 54,141 | 1,608,190 | | | 2022 | 404,048 | — | 475,587 | 238,711 | 13,103 | 1,131,449 | | | 2021 | 368,486 | 7,141 | 405,872 | 519,841 | 15,135 | 1,316,475 | | Jason L. Groves Chief Legal Officer & Corporate Secretary | 2023 | 427,781 | — | 805,133 | 344,364 | 54,866 | 1,632,143 | | | 2022 | 411,286 | — | 489,128 | 245,546 | 12,683 | 1,158,643 | | | | — | — | — | — | — | — |
Summary Compensation Table (2023, 2022, and 2021)
____________________ (1)Amounts shown represent the aggregate grant date fair value of the stock awards in the year indicated, computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation reflected in this column, see Note 8 of the Notes to Consolidated Financial Statements included in the 2023 Annual Report. The values do not correspond to the actual value that will be recognized by the NEOs at the time such awards vest. With respect to the performance-based awards granted in 2023, the value included in this column reflects the target level of performance. The grant date fair value of the 2023 performance-based awards at the maximum level of performance is equal to the following: for Mr. Chard, $5,275,937; Mr. Maloney, $957,206; Mr. Johnson, $820,761; Mr. Tyree, $775,141 and Mr. Groves, $776,815. (2)Amounts reported in this column represent the Company’s matching contributions under the 401(K) plan and Company contributions to group term life insurance and health savings accounts. Mr. Chard's all other compensation total for 2023 primarily includes group term life insurance contributions, $13,200 in matched 401(k) plan contributions made by the Company, $1,500 in health savings account contributions, and a one-time vacation payout to transition to an unlimited vacation policy in the amount of $96,154. Mr. Maloney's all other compensation total for 2023 primarily includes $13,200 in matched 401(k) plan contributions made by the Company, $1,500 in health savings account contributions, and a one-time vacation payout to transition to an unlimited vacation policy in the amount of $50,681. Mr. Johnson’s all other compensation total for 2023 primarily includes $13,200 in matched 401(k) plan contributions made by the Company, $1,500 in health savings account contributions, and a one-time vacation payout to transition to an unlimited vacation policy in the amount of $42,342. Mr. Tyree’s all other compensation total for 2023 primarily includes $13,200 in matched 401(k) plan contributions made by the Company and a one-time vacation payout to transition to an unlimited vacation policy in the amount of $39,988. Mr. Groves' all other compensation total for 2023 primarily includes $13,200 in matched 401(k) plan contributions made by the Company and a one-time vacation payout to transition to an unlimited vacation policy in the amount of $41,133. (3) As reported in prior years, All Other Compensation and the resulting Total Compensation for 2021 included dividends accrued on unvested shares. These amounts exclude dividends accrued on unvested shares in 2022 and 2023, and the historical 2021 information was updated to conform to this presentation. Dividends accrued on unvested shares are included in the Pay versus Performance table below.
2023 Grants of Plan-Based Awards Table
2023 Grants of Plan-Based Awards Table The following table outlines the cash incentive awards and equity-based awards granted to the NEOs during fiscal 2023. All equity-based awards were granted under the Amended and Restated 2012 Share Incentive Plan (the "2012 Plan"), which was approved by stockholders.
2023 Grants of Plan-Based Awards Table
| Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | Grant Date Fair Value of Stock Awards ($)(3) | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Daniel R. Chard | | 287,500 | 1,150,000 | 1,725,000 | | | | | | | | 3/17/2023 | | | | 6,303 | 25,211 | 46,219 | | 2,877,836 | | | 3/17/2023 | | | | | | | 16,807 | 1,726,919 | | James P. Maloney | | 92,240 | 368,960 | 553,439 | | | | | | | | 3/17/2023 | | | | 1,144 | 4,574 | 8,386 | | 522,122 | | | 3/17/2023 | | | | | | | 4,574 | 469,979 | | Nicholas M. Johnson | | 77,062 | 308,246 | 462,370 | | | | | | | | 3/17/2023 | | | | 981 | 3,922 | 7,190 | | 447,696 | | | 3/17/2023 | | | | | | | 3,922 | 402,986 | | Anthony E. Tyree | | 72,778 | 291,111 | 436,667 | | | | | | | | 3/17/2023 | | | | 926 | 3,704 | 6,791 | | 422,812 | | | 3/17/2023 | | | | | | | 3,704 | 380,586 | | Jason L. Groves | | 74,862 | 299,447 | 449,170 | | | | | | | | 3/17/2023 | | | | 928 | 3,712 | 6,805 | | 423,725 | | | 3/17/2023 | | | | | | | 3,712 | 381,408 |
2023 Grants of Plan-Based Awards Table
____________________ (1)The amounts included in these columns represent the threshold, target, and maximum cash value payable to each NEO under the 2023 annual incentive bonus. Each amount represents the individual's current salary multiplied by their bonus opportunity. A more detailed description of the terms of the 2023 annual incentive bonus is included above under the heading "Annual Incentive Bonus." The actual payout amounts with respect to the 2023 annual incentive bonus are set forth in the "Non-Equity Incentive Plan Compensation" column of the Summary Compensation Table. (2)The stock awards vest in three equal annual installments on each of the first three anniversaries of the date of grant. (3)The amounts included in this column are the dollar amounts representing the grant date fair value of each restricted share or performance-based deferred share (at the target level), as applicable, calculated in accordance with FASB ASC Topic 718, and do not represent the actual value that may be recognized by the NEOs upon vesting of restricted shares or deferred shares. For performance-based deferred shares, the amounts disclosed in this column are based on the probable outcome of the performance conditions consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718.
Outstanding Equity Awards at 2023 Fiscal Year-End Table
Outstanding Equity Awards at 2023 Fiscal Year-End Table
Outstanding Equity Awards at 2023 Fiscal Year-End Table
| | | | | | Restricted Stock Units | | Performance-Based Deferred Shares | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Unvested Units (#) | Market Value of Unvested Units ($)(1) | Unearned Units that Have Not Vested (#)(2) | Market Value of Unearned Units that Have Not Vested ($)(1)(2) | | Daniel R. Chard | | | | | 1,832(3) | 123,147 | 12,764(18) | 857,996 | | | | | | | 5,673(4) | 381,339 | 25,211(19) | 1,694,683 | | | | | | | 16,807(5) | 1,129,767 | — | — | | James P. Maloney | | | | | 259(6) | 17,410 | 1,922(18) | 129,197 | | | | | | | 854(7) | 57,406 | 4,574(19) | 307,464 | | | | | | | 4,574(8) | 307,464 | — | — | | Nicholas M. Johnson | 22,640 | — | 66.68 | | 230(9) | 15,461 | 1,606(18) | 107,955 | | | | | | | 714(10) | 47,995 | 3,922(19) | 263,637 | | | | | | | 3922(11) | 263,637 | — | — | | Anthony E. Tyree | | | | | 214(12) | 14,385 | 1,517(18) | 101,973 | | | | | | | 674(13) | 45,306 | 3,704(19) | 248,983 | | | | | | | 3,704(14) | 248,983 | — | — | | Jason L. Groves | | | | | 163(15) | 10,957 | 1,560(18) | 104,863 | | | | | | | 694(16) | 46,651 | 3,712(19) | 249,521 | | | | | | | 3,712(17) | 249,521 | — | — |
Outstanding Equity Awards at 2023 Fiscal Year-End Table
(1)The market value of shares of stock that have not vested is based on the closing price of our common stock on December 29, 2023, or $67.22 per share. (2)The number of shares and the market value of the performance-based deferred share awards is based on the target performance level. (3)The restricted shares will vest on March 17, 2024. (4)The restricted shares will vest 2,836 and 2,837 shares on March 16, 2024 and 2025, respectively. (5)The restricted shares will vest 5,602, 5,602 and 5,603 shares on March 17, 2024, 2025 and 2026, respectively. (6)The restricted shares will vest on March 17, 2024. (7)The restricted shares will vest 427 shares on March 16, 2024 and 2025, respectively. (8)The restricted shares will vest 1,524, 1,525 and 1,525 shares on March 17, 2024, 2025 and 2026, respectively. (9)The restricted shares will vest on March 17, 2024. (10) The restricted shares will vest 357 shares on March 16, 2024 and 2025, respectively. (11) The restricted shares will vest 1,307, 1,307 and 1,308 shares on March 17, 2024, 2025 and 2026, respectively. (12) The restricted shares will vest on March 17, 2024. (13) The restricted shares will vest 337 shares on March 16, 2024 and 2025, respectively. (14) The restricted shares will vest 1,234, 1,235 and 1,235 shares on March 17, 2024, 2025 and 2026, respectively. (15) The restricted shares will vest on March 17, 2024. (16) The restricted shares will vest 347 shares on March 16, 2024 and 2025, respectively. (17) The restricted shares will vest 1,237, 1,237 and 1,238 shares on March 17, 2024, 2025 and 2026, respectively. (18) The performance-based shares will vest on December 31, 2024. (19) The performance-based shares will vest on December 31, 2025.
2023 Option Exercises and Stock Vested Table
2023 Option Exercises and Stock Vested Table The following table sets forth information regarding stock vesting for the NEOs during 2023, and the resulting value realized.
2023 Option Exercises and Stock Vested Table
| | | Stock Awards | | | Name | Grant Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Daniel R. Chard | 03/17/2021 Performance-Based Deferred Shares | 16,486 | 1,108,189 | | | 02/19/2020 Restricted Stock Units | 3,787 | 436,679 | | | 03/17/2021 Restricted Stock Units | 1,832 | 188,238 | | | 03/16/2022 Restricted Stock Units | 2,836 | 296,249 | | James P. Maloney | 07/20/2020 Performance-Based Deferred Shares | 3,574 | 337,743 | | | 03/17/2021 Performance-Based Deferred Shares | 2,328 | 156,488 | | | 07/20/2020 Restricted Stock Units | 398 | 37,611 | | | 03/17/2021 Restricted Stock Units | 259 | 26,612 | | | 03/16/2022 Restricted Stock Units | 427 | 44,604 | | Nicholas M. Johnson | 03/17/2021 Performance-Based Deferred Shares | 2,070 | 139,145 | | | 02/07/2018 Restricted Stock Awards | 848 | 97,495 | | | 6/13/2018 Restricted Stock Awards | 70 | 8,048 | | | 02/19/2020 Restricted Stock Units | 407 | 46,931 | | | 03/17/2021 Restricted Stock Units | 230 | 23,633 | | | 03/16/2022 Restricted Stock Units | 357 | 37,292 | | Anthony E. Tyree | 03/17/2021 Performance-Based Deferred Shares | 1,920 | 129,062 | | | 02/19/2020 Restricted Stock Units | 537 | 61,921 | | | 03/17/2021 Restricted Stock Units | 213 | 21,886 | | | 03/16/2022 Restricted Stock Units | 337 | 35,203 | | Jason L. Groves | 03/17/2021 Performance-Based Deferred Shares | 1,460 | 98,141 | | | 02/19/2020 Restricted Stock Units | 315 | 36,323 | | | 03/17/2021 Restricted Stock Units | 162 | 16,646 | | | 03/16/2022 Restricted Stock Units | 346 | 36,143 |
2023 Option Exercises and Stock Vested Table
____________________ (1)Represents the number of shares vested multiplied by the fair market value of the common stock on the vesting date.
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control Messrs. Chard, Maloney, Johnson, Tyree, and Groves are eligible to participate in the Severance Plan. Under the Severance Plan, if one of these executives is terminated by the Company without “cause” or terminates employment for “good reason,” and if such termination occurs prior to a “change in control” or more than two years following a “change in control”, subject to the executive's execution of a release of claims, the executive would be entitled to: i.a lump sum cash payment equal to 1 times (1.5 times for Mr. Chard) the sum of the executive's annual base salary and target annual bonus; ii.a prorated annual bonus for year of termination, based on the number of full months during the year the executive was employed and based on actual Company performance; iii.acceleration and vesting of all unvested stock options; iv.pro-rata vesting of all unvested time-based restricted shares or deferred shares; v.pro-rata vesting of all unvested performance-based restricted shares or deferred shares, based on the actual achievement of the performance factors. In the event such termination occurs during the two-year period following a "change in control," subject to the executive's execution of a release of claims, he or she would be entitled to: i.a lump sum cash payment equal to 1.5 times (2.5 times for Mr. Chard) the sum of the executive's annual base salary and target annual bonus; ii.a prorated annual bonus for year of termination, based on the number of full months during the year the executive was employed, at the greater of (i) target level performance OR (ii) actual Company performance as determined by the most recent forecast as of the date of termination; iii.acceleration and vesting of all unvested stock options; iv.acceleration and vesting of all unvested time-based restricted shares or deferred shares; v.pro-rata vesting of all unvested performance-based restricted shares or deferred shares, based on the number of full months during the performance period the participant was employed, at the greater of (i) target level performance or (ii) actual performance, as determined by most recent financial projections/forecast used for accrual purposes as of the date of termination. For purposes of the Severance Plan, the Company will have "Cause" to terminate an executive's employment if the executive engages in any of the following: •Indictment or conviction for, or plea of guilty or nolo contendere to, a felony or criminal act involving moral turpitude; •Gross misconduct or willful and continued failure to substantially perform employment duties reasonably requested by the Company, after 30 days' written notice of the conduct or failure and failure of the executive to remedy such conduct or failure; •Fraud, embezzlement, or misappropriation of any amounts of money or other assets or property of the Company; •Misconduct or negligence in connection with the business of the Company which has a substantial adverse effect on the Company; or •Violation of any material policy of the Company, including the Company's Code of Conduct and Business Ethics. For purposes of the Severance Plan, an executive will be deemed to have "Good Reason" to terminate his or her employment if any of the following occur: •A material reduction in the executive's base salary or target bonus; •A material diminution on the executive's authority, duties, or responsibilities; •A relocation of the executive's principal work location by more than 50 miles; or •Any other action or inaction by the Company that constitutes a material breach by the Company of any written agreement under which the executive provides services.
Potential Payments Upon Termination or Change in Control Table
Potential Payments Upon Termination or Change in Control Table The table below details the payments and benefits that would be provided to each of our NEOs if he was terminated by the Company without Cause or terminated employment for Good Reason, or if a Change in Control occurred, in each case on December 31, 2023.
Potential Payments Upon Termination or Change in Control Table
| Name | Severance ($) | Annual Cash Bonus(1) ($) | Restricted Shares(2) (unvested) ($) | Performance- Based Shares(2) (unvested) ($) | Stock Options(2) (unvested) ($) | | Daniel R. Chard | | | | | | | Termination Without Cause or Good Reason | 3,225,000 | 1,322,500 | 517,804 | 1,673,083 | — | | Termination Without Cause or Good Reason Following a Change in Control | 5,375,000 | 1,322,500 | 1,634,253 | 2,245,081 | — | | James P. Maloney | | | | | | | Termination Without Cause or Good Reason | 896,045 | 424,303 | 111,451 | 258,976 | — | | Termination Without Cause or Good Reason Following a Change in Control | 1,344,067 | 424,303 | 382,280 | 345,107 | — | | Nicholas M. Johnson | | | | | | | Termination Without Cause or Good Reason | 748,598 | 354,483 | 95,503 | 227,024 | — | | Termination Without Cause or Good Reason Following a Change in Control | 1,122,898 | 354,483 | 327,093 | 298,995 | — | | Anthony E. Tyree | | | | | | | Termination Without Cause or Good Reason | 706,984 | 334,778 | 90,024 | 212,057 | — | | Termination Without Cause or Good Reason Following a Change in Control | 1,060,476 | 334,778 | 308,674 | 280,039 | — | | Jason L. Groves | | | | | | | Termination Without Cause or Good Reason | 727,228 | 344,364 | 88,092 | 181,315 | — | | Termination Without Cause or Good Reason Following a Change in Control | 1,090,842 | 344,364 | 307,128 | 251,224 | — |
Potential Payments Upon Termination or Change in Control Table
(1)The annual cash bonus reflects the target cash bonus that the executive would have been entitled to receive under our 2017 Annual Incentive Bonus program, without pro-ration since the assumed date of termination is also the last day of the fiscal year. (2)The value of the restricted shares, performance-based shares, and stock options that would be accelerated upon a termination of employment is based on the closing price of our common stock on December 29, 2023, the trading day preceding December 31, 2023, which was a Sunday, or $67.22 per share.
CEO Pay Ratio
CEO 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 median of the annual total compensation of our employees and the annual total compensation of Mr. Daniel Chard, our CEO. For Fiscal year 2023, the annual total compensation of our CEO was $7,039,062 (as set forth in the Summary Compensation Table) and the annual total compensation of the median employee of our Company (other than our CEO) was $76,829. As a result, the ratio between our CEO’s annual total compensation and the median of the annual total compensation of our employees (other than our CEO) was 92 to 1. We identified the median total compensation of our employees by examining the 2023 total compensation for all individuals, excluding our CEO, who were employed by us on December 31, 2023, the last day of our payroll year. We included all employees, whether employed on a full-time, or part-time basis. For our newly hired permanent full-time or part-time employees that were employed for less than the full year, we annualized their 2023 total compensation. In determining the median employee, we considered the total cash compensation for each active employee as of December 31, 2023, including regular pay, overtime pay, shift differential pay, regular exception pay (holiday, paid time off or PTO, jury, short-term disability, bereavement, paid parental leave, etc.), production and other incentives such as employee cash referral awards, bonuses paid (signing, retention and discretionary), 2023 performance bonuses paid in 2024, tuition reimbursement, imputed value of Company-provided group term life insurance, relocation expenses, severance and Company contributions to employee 40l(k) plans.
Pay versus Performance
Pay versus Performance As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and New Item 402(v) of Regulation S-K, we are providing the below information to disclose the relationship between the compensation represented in the Summary Compensation Table included in this Proxy ("SCT"), compensation actually paid to our NEOs and the Company’s financial performance since 2020. Compensation actually paid, as determined under SEC requirements, does not reflect the actual amount of compensation earned by or paid to our executive officers during a covered year. For further information concerning the Company’s pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to the CD&A.
Pay versus Performance
| Year | SCT Total Compensation For CEO ($) | Compensation Actually Paid to CEO ($)(2) | Average SCT Total Compensation for Other NEOs ($)(1) | Average Compensation Actually Paid to Other NEOs ($)(1)(2) | Cumulative TSR ($)(3) | S&P 600 Consumer Staples Cumulative TSR ($)(3) | Net Income ($M) | Company-Selected Performance Measure (Revenue) ($M) | | 2023 | 7,039,062 | 2,928,661 | 1,738,401 | 1,103,919 | 72 | 154 | 99 | 1,072 | | 2022 | 5,940,235 | (710,735) | 1,229,146 | 337,631 | 117 | 134 | 144 | 1,599 | | 2021 | 6,565,494 | 12,935,723 | 1,438,062 | 2,214,069 | 204 | 143 | 164 | 1,526 | | 2020 | 5,539,836 | 9,914,019 | 951,877 | 1,304,904 | 186 | 111 | 103 | 935 |
Pay versus Performance
(1) The Other Named Executive Officers for each year are as follows: 2020: Messrs James Maloney, Nicholas Johnson, Anthony Tyree, Joseph Kelleman, Timothy Robinson, and William Baker. 2021: Messrs. James Maloney, Nicholas Johnson, Anthony Tyree, and Ms. Lauren Walker. 2022: Messrs. James Maloney, Nicholas Johnson, Anthony Tyree, and Jason Groves. 2023: Messrs. James Maloney, Nicholas Johnson, Anthony Tyree, and Jason Groves. (2) The total compensation and equity grants of our Named Executive Officers, as reported in the summary compensation tables for 2020, 2021, 2022 and 2023, are detailed below along with the dividends earned, additions and deductions to the fair value of their equity grants and any forfeitures as reflected in the actual compensation calculations above.
Pay versus Performance
| Breakdown of Actual Compensation of Chief Executive Officer | | | | | | | | | | Year | SCT Total for CEO ($) | Equity Value from SCT for CEO ($) | Adjustment for Year-End Equity Value of Awards Granted in Current Fiscal Year for CEO ($) | Adjustment for Dividends Accrued During Fiscal Year on Unvested Equity Awards for CEO ($) | Adjustment for Change in Fair Value of Unvested Equity Awards Granted in Prior Years for CEO ($) | Adjustment for Change in Fair Value of Equity Awards Vested During Fiscal Year for CEO ($) | Adjustment for Fair Value of Equity Awards Forfeited During Fiscal Year for CEO ($) | Compensation Actually Paid for CEO ($) | | 2023 | 7,039,062 | (4,604,755) | 2,866,049 | 373,037 | (1,897,142) | (847,590) | — | 2,928,661 | | 2022 | 5,940,235 | (4,002,009) | 2,517,440 | 553,538 | (2,251,992) | (3,467,947) | — | (710,735) | | 2021 | 6,565,494 | (3,484,918) | 4,603,480 | 546,641 | 3,925,442 | 779,584 | — | 12,935,723 | | 2020 | 5,539,836 | (2,865,825) | 5,575,467 | 177,872 | 1,508,409 | (21,740) | — | 9,914,019 |
Pay versus Performance
| Breakdown of Average Actual Compensation of Named Executive Officers | | | | | | | | | | Year | SCT Total for NEO's ($) | Equity Value from SCT for NEO's ($) | Adjustment for Year-End Equity Value of Awards Granted in Current Fiscal Year for NEO's ($) | Adjustment for Dividends Accrued During Fiscal Year on Unvested Equity Awards for NEO's ($) | Adjustment for Change in Fair Value of Unvested Equity Awards Granted in Prior Years for NEO's ($) | Adjustment for Change in Fair Value of Equity Awards Vested During Fiscal Year for NEO's ($) | Adjustment for Fair Value of Equity Awards Forfeited During Fiscal Year for NEO's ($) | Compensation Actually Paid for NEO's ($) | | 2023 | 1,738,401 | (862,829) | 541,366 | 53,533 | (244,447) | (122,105) | — | 1,103,919 | | 2022 | 1,229,146 | (517,724) | 325,671 | 62,556 | (478,307) | (283,711) | — | 337,631 | | 2021 | 1,438,062 | (411,897) | 505,460 | 41,554 | 386,276 | 254,614 | — | 2,214,069 | | 2020 | 951,877 | (250,649) | 479,037 | 18,135 | 350,728 | (16,690) | (227,734) | 1,304,904 |
Pay versus Performance
The charts below describe the relationship between compensation actually paid to our chief executive officer and to our other named executive officers (as calculated above) and our financial and stock performance for the indicated years. In addition, the first table below compares our cumulative TSR and peer group cumulative TSR for the indicated years. (3) TSR values assume $100 was invested for the cumulative period from December 31, 2019 through December 31, 2023, in either the Company or the peer group, and reinvestment of the pre-tax value of dividends paid. Historical stock performance is not necessarily indicative of future stock performance. The following were the most important financial performance measures (and non-financial performance measures), as determined by the Company, that link compensation actually paid to our NEOs to the Company’s performance for the most recently completed fiscal year. These measures impact both the short-term, and with exception of Client Net Promoter Score, also the long-term incentives of our Officers. We believe the combination of these metrics align with our compensation objectives, and reinforce for our executive leaders the importance of sustainable, profitable, growth while delivering an excellent Coach and Client Experience.
Pay versus Performance
| Important Company Performance Metrics | | Revenue | | Operating Income | | Client Net Promoter Score |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION We use cash and stock-based compensation to attract and retain qualified individuals to serve on our Board. The non-employee directors of Medifast receive an annual restricted stock grant for their service on the Board. In light of business conditions, for the period of June 1, 2023 to May 31, 2024, the Board received no change to the value of their compensation package. In the fiscal year ended December 31, 2023, directors (other than Mr. Xian) were given the option to receive either 1,549 restricted shares and a quarterly cash retainer of $16,250 (and, for the Lead Director, an additional $6,250 quarterly cash retainer), or to receive all compensation in the form of restricted shares with the grant date 20-day average share price used to determine the total number of shares granted. The value of non-employee director compensation did not change year-over-year; however, the number of shares granted did increase due to a lower price per share of the Company's common stock. Each non-employee director also received between $1,250 and $5,000 for attending a quarterly committee meeting (depending on the committee and the position held), which he or she could also elect to receive in the form of shares. Each of our non-employee directors, other than Mr. Xian and Ms. Geary elected to receive all of their compensation in the form of restricted shares. The restricted shares were granted at the June 2023 meeting of the Board and will vest on June 15, 2024. Mr. Xian is a resident of China and, as such, did not receive restricted shares under our director compensation program. Instead, fees to Mr. Xian are cash-settled deferred share units. In 2021, the Board adopted a Deferred Compensation Plan for non-employee Directors, which provides non-employee directors with a means to defer receipt of their vested equity until after they retire, including Mr. Xian who receives cash-settled deferred share units. The purpose of the plan is to enhance the Company’s ability to attract and retain non-employee directors by providing individual financial and tax planning flexibility. Non-employee Directors may choose to defer either 0% or 100% of their cash or equity compensation, or both, and any cash that is deferred is converted to equity. All deferred equity receives a premium equal to 15% of the total compensation that directors elect to defer and is subject to the same vesting period that the underlying equity has. For 2023, all non-employee directors elected to defer 100% of their compensation, aside from Ms. Geary, who elected to defer her equity compensation and receive her quarterly retainer in cash. The following table contains information concerning the compensation of our non-employee directors during 2023.
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Jeffrey J. Brown | — | 263,416 | 263,416 | | Elizabeth A. Geary | 70,000 | 142,640 | 212,640 | | Michael A. Hoer | — | 249,721 | 249,721 | | Scott Schlackman | — | 252,444 | 252,444 | | Andrea B. Thomas | — | 249,721 | 249,721 | | Ming Xian(2) | — | 219,607 | 219,607 |
DIRECTOR COMPENSATION
____________________ (1)Amounts shown represent the aggregate grant date fair value of the stock awards computed in accordance with FASB ASC Topic 718 and include amounts of cash compensation that the director has elected to receive in shares or deferred to the Deferred Compensation Plan. For a discussion of the assumptions made in the valuation reflected in this column, see Note 8 of the Notes to Consolidated Financial Statements included in the 2023 Annual report. These values do not correspond to the actual values that will be recognized by the non-employee directors at the time such awards vest. (2)Mr. Xian is a resident of China and, as such, did not receive restricted shares under our director compensation program. Instead, he received cash-settled restricted stock units (RSUs) in 2023. Each RSU corresponds in value to a single share of Company common stock (“Share”) and represents the right to receive the cash equivalent of a Share for each vested RSU. Mr. Xian was awarded a grant of 2,742 cash-settled RSUs originally valued at $80.09 per share. Our non-employee directors held the following outstanding awards as of December 31, 2023:
DIRECTOR COMPENSATION
| Name | Outstanding Restricted Share Units (#)(1) | Outstanding Stock Option Awards (#) | | Jeffrey J. Brown | 5,784 | — | | Elizabeth A. Geary | 1,781 | — | | Michael A. Hoer | 5,245 | — | | Scott Schlackman | 5,403 | 1,300 | | Andrea B. Thomas | 5,272 | — | | Ming Xian(2) | 4,813 | — |
DIRECTOR COMPENSATION
(1)Represents Restricted Share Units credited to the individual’s account in the Deferred Compensation Plan. (2)Mr. Xian is a resident of China and, as such, did not receive restricted shares under our director compensation program. Instead, he received cash-settled restricted stock units (RSUs) in 2023. As of December 31, 2023, he held 4,812.917 cash-settled RSUs.