DEF 14A of Hillman Solutions Corp., Apr 23, 2024

DEF 14A of Hillman Solutions Corp.

Filed Apr 23, 2024 · FY20230001822492-24-000070

Open on EDGAR

  1. QUESTIONS AND ANSWERS

    | | | | | | | Diana Dowling Director | Age: 58 | Director Since: 2021 Committee: Compensation, Nominating and ESG | | | Ms. Dowling has been an innovation and strategy consultant advising corporations on partnerships, M&A activity, and new product initiatives since 2017. Her recent clients include Epiq, where she focused on data privacy products and acquisitions, and Pitney Bowes, where she focused on mobile location data and ecommerce. While consulting at Pitney Bowes, Ms. Dowling led both the business strategy for the Newgistics acquisition, as well as the post-merger integration. She is also the CEO/Founder of Two Hudson Ventures, investing in start-ups and real estate. Earlier in her career, Ms. Dowling was a VP of Business Development at MaMaMedia, a digital media startup, and Director of Business Development at Hearst New Media. In addition, she worked as a market research analyst at Tontine Partners. Ms. Dowling began her career as an analyst and associate at Bankers Trust. She was Executive Director of Harvard Business School Alumni Angels NY, as well as Co-Chair of HBSCNY Entrepreneurship. Ms. Dowling was selected to serve on our board of directors due to her experience in digital marketing, e-commerce, data and analytics, innovation, new business development, and M&A. | |

  2. QUESTIONS AND ANSWERS

    | | | | | | | Teresa Gendron Director | Age: 54 | Director Since: 2021 Committee: Audit | | | Ms. Gendron was Chief Financial Officer of Markel Corporation (NYSE: MKL) from March 2023 to December 2023. Previously, Ms. Gendron had been the Vice President and Chief Financial Officer of Jefferies from 2014 to 2023. From 2011 to 2014, Ms. Gendron was the Vice President and Controller of Gannett Co., Inc., a NYSE listed international media and marketing solutions company, and performed the duties of Chief Accounting Officer. Previously, Ms. Gendron was Vice President and Controller at NII Holdings, Inc., a mobile communication services company, which she joined as its Finance Director in 1998. Ms. Gendron was selected to serve on our board of directors due to her financial and business experience. | |

  3. QUESTIONS AND ANSWERS

    | | | | | | | Daniel O’Leary Director | Age: 68 | Director Since: 2021 Lead Independent Director Committee: Audit, Nominating and ESG | | | Mr. O’Leary is an independent consultant who served as President and CEO of Edgen Murray Corporation from 2003 to 2021. He was appointed Chairman of the board of Edgen Murray in 2006. He began at Edgen Murray, a distributor for energy infrastructure components, specialized oil and gas parts and equipment, and its predecessor companies in 2003, guiding a management buyout that grew the company through a series of acquisitions and growth initiatives. The company went public in May 2012 and was acquired in 2013 by Sumitomo Corporation. Mr. O'Leary has served on the board of Vitesse Energy, Inc. (NYSE: VTS), and has been designated as Lead Director, since 2023 and Custom Ecology, Inc. since 2021. Additionally, he served as an independent director on the board of Sprint Industrial from 2017 to 2019. Mr. O’Leary has a long career in leadership positions in manufacturing and distribution, principally in the oil and gas and energy infrastructure markets. Mr. O’Leary was selected to serve on our board of directors due to his extensive management, operational, investment, and business experience. | |

  4. QUESTIONS AND ANSWERS

    | | | | | | | John Swygert Director | Age: 55 | Director Since: 2021 Committee: Audit | | | Mr. Swygert has been the President, Chief Executive Officer, and a Director of Ollie’s Bargain Outlet Holdings, Inc. (Nasdaq: OLLI) since December 2019. Prior to this appointment, Mr. Swygert was Ollie’s Executive Vice President and Chief Operating Officer since January 2018. Mr. Swygert joined Ollie’s in March 2004 as Chief Financial Officer and was later promoted to Executive Vice President and Chief Financial Officer in 2011. Mr. Swygert has worked in discount retail as a finance professional for over 30 years. Prior to joining Ollie’s, Mr. Swygert was Executive Vice President and Chief Financial Officer at Factory 2-U Stores, Inc. He held several positions while at Factory 2-U Stores from 1992, ranging from Staff Accountant, Assistant Controller, Controller, Director of Financial Planning and Analysis, Vice President of Finance and Planning, and Executive Vice President and Chief Financial Officer. Mr. Swygert also previously worked for PETCO Animal Supplies, Inc. in Business Development and Financial Analysis. Mr. Swygert previously served on the board of Truck Hero Holdings, Inc. from 2018 through January 2021. Mr. Swygert was selected to serve on our board of directors due to his extensive financial, operational and management experience in the retail field. | |

  5. QUESTIONS AND ANSWERS

    | | | | | | | Douglas J. Cahill Chairman, President, and Chief Executive Officer Age: 64 | Director Since: 2014 | | | Mr. Cahill has been our Chairman since 2014 and Hillman’s President and Chief Executive Officer since 2019. Prior to joining Hillman, Mr. Cahill was a Managing Director of CCMP from July 2014 to July 2019 and was a member of CCMP’s Investment Committee and previously was an Executive Adviser of CCMP from March 2013. Mr. Cahill served as President and Chief Executive Officer of Oreck, the manufacturer of upright vacuums and cleaning products, from May 2010 until December 2012. Prior to joining Oreck, Mr. Cahill served for eight years as President and Chief Executive Officer of Doane Pet Care Company, a private label manufacturer of pet food and former CCMP portfolio company, through to its sale to MARS Inc. in 2006. From 2006 to 2009, Mr. Cahill served as president of Mars Petcare U.S. Prior to joining Doane in 1997, Mr. Cahill spent 13 years at Olin Corporation, a diversified manufacturer of metal and chemicals, where he served in a variety of managerial and executive roles. Mr. Cahill serves as a Board Member for Junior Achievement of Middle Tennessee and the Visitor Board at Vanderbilt University’s Owen Graduate School of Management. In January 2009, Mr. Cahill was appointed as an Adviser to Mars Incorporated. Mr. Cahill previously served as a director of Banfield Pet Hospital from 2006 to 2016, Ollie’s Bargain Outlet (Nasdaq: OLLI) from 2013 to 2016, Jamieson Laboratories from 2014 to 2017, Founder Sport Group from 2016 to 2019, and Shoes for Crews from 2015 to 2019. Mr. Cahill serves as the Chairman of our board of directors due to his financial, investment, and extensive management experience. | |

  6. QUESTIONS AND ANSWERS

    | | | | | | | Diane Honda Director | Age: 59 | Director Since: 2023 Committee: Compensation | | | Ms. Honda most recently served as the Chief Administrative Officer, General Counsel, & Secretary of Barracuda Networks, a cybersecurity and data protection company, through January 2024. During her 12 years at Barracuda, Ms. Honda built and led the Human Resources, Legal, Compliance, Information Security, and Real Estate functions. Prior to joining Barracuda in 2012, she held leading technical and business operations roles at Fortune 50 and mid-size public companies. She has years of transformational experience in leadership positions on both corporate and non-profit boards, and is currently on the Board of Directors and a member of the Audit Committee of Lucidworks, Inc., a privately held provider of next-generation AI-powered search applications. Ms. Honda was initially selected to serve on our board of directors due to her extensive cybersecurity, human capital, legal and corporate governance experience. | |

  7. QUESTIONS AND ANSWERS

    | | | | | | | Aaron P. Jagdfeld Director | Age: 52 | Director Since: 2014 Committee: Compensation (Chair) | | | Mr. Jagdfeld has been the President and Chief Executive Officer of Generac Power Systems, Inc. since September 2008 and a director of Generac since November 2006 (NYSE: GNRC). Mr. Jagdfeld began his career at Generac in the finance department in 1994 and became Generac’s Chief Financial Officer in 2002. In 2007, he was appointed President and was responsible for sales, marketing, engineering, and product development. Prior to joining Generac, Mr. Jagdfeld worked in the audit practice of the Milwaukee, Wisconsin office of Deloitte & Touche from 1993 to 1994. Mr. Jagdfeld was selected to serve on our board of directors due to his extensive management and financial experience. | |

  8. QUESTIONS AND ANSWERS

    | | | | | | | David A. Owens Director | Age: 61 | Director Since: 2018 Committee: Nominating and ESG (Chair) | | | Dr. Owens has been the executive director of The Wond'ry, Vanderbilt University's center for creativity, innovation, design, and making since 2019. He is also Professor of the Practice of Innovation at the Vanderbilt Graduate School of Management where he has taught since 1998. Dr. Owens has significant industry experience, having served as an independent management consultant for numerous Fortune 100 companies since 1998 and having served as CEO of Griffin Technologies, a consumer products company, from 2017 to 2018. Dr. Owens was selected to serve on our board of directors due to his financial and business experience. | |

  9. QUESTIONS AND ANSWERS

    | | | | | | | Philip K. Woodlief Director | Age: 70 | Director Since: 2015 Committee: Audit (Chair) | | | Mr. Woodlief has been an independent financial consultant since 2007 and was an Adjunct Professor of Management at Vanderbilt University’s Owen Graduate School of Business from 2010 to 2020. At Vanderbilt, Mr. Woodlief taught Financial Statement Research and Financial Statement Analysis. Mr. Woodlief also served as a Visiting Instructor of Accounting at Sewanee: The University of the South from 2017 to 2020. Prior to 2008, Mr. Woodlief was Vice President and Chief Financial Officer of Doane Pet Care, a global manufacturer of pet products. Prior to 1998, Mr. Woodlief was Vice President and Corporate Controller of Insilco Corporation, a diversified manufacturer of consumer and industrial products. Mr. Woodlief began his career in 1979 at KPMG Peat Marwick in Houston, Texas, progressing to the Senior Manager level in the firm’s Energy and Natural Resources practice. Mr. Woodlief was a certified public accountant. Mr. Woodlief currently serves as Chairman of the board of trustees of Sewanee St. Andrew’s School, and serves on the Masters of Accounting Advisory Board at Vanderbilt University’s Owen Graduate School of Business. Mr. Woodlief previously served on the board of Founder Sport Group from 2017 to 2020. Mr. Woodlief was selected to serve on our board of directors due to his financial and business experience. | |

  10. DIRECTOR NOMINEE SELECTION PROCESS

    DIRECTOR NOMINEE SELECTION PROCESS The Nominating and ESG Committee is responsible for recommending to the Board a slate of nominees for election at each annual meeting of stockholders. The Nominating and ESG Committee recruits candidates for Board membership through its own efforts and through recommendations from other directors, management, and stockholders. In addition, the Nominating and ESG Committee may retain an independent search firm to assist in identifying and recruiting director candidates who meet the criteria developed by the Nominating and ESG Committee. The Nominating and ESG Committee also considers the specific experience and abilities of director candidates in light of our current business, strategy, structure, and the current or expected needs of the Board in its identification and recruitment of director candidates.

  11. COMPONENTS OF TOTAL COMPENSATION

    | Short-Term Compensation Elements | | | Element | Role and Purpose | | Base Salary | Attract and retain executives and reward their skills and contributions to the day-to-day management of our Company. | | Annual Performance-Based Bonuses | Motivate the attainment of annual Company and division, financial, operational, and strategic goals by paying bonuses determined by the achievement of specified performance targets with a performance period of one year. | | Discretionary Bonuses | From time to time, the Company may award discretionary bonuses to compensate executives for special contributions or extraordinary circumstances or events. |

  12. COMPONENTS OF TOTAL COMPENSATION

    | Long-Term Compensation Elements | | | Element | Role and Purpose | | Stock Options, Restricted Stock Units, other Equity-Based Awards | Motivate the attainment of long-term value creation, align executive interests with the interests of our stockholders, create accountability for executives to enhance stockholder value, and promote long-term retention through the use of multi-year vesting equity awards. | | Change of Control Benefits | Promote long-term retention and align the interests of executives with stockholders by providing for (i) for the pre-2021 time based awards granted prior to the Business Combination, acceleration of equity vesting in the event of a change in control transaction; and (ii) for all performance based awards granted at any time, and all time based awards granted in 2021 or later as a public company or in anticipation of becoming a public company, no mandatory acceleration of equity vesting in the event of a change in control transaction. | | Severance Benefits | We adopted an Executive Severance Plan that provides severance protection in the form of continued base salary, COBRA premiums, and a pro-rated performance bonus in the event of a termination of employment without cause or for good reason for individual NEOs, as described below. The severance benefit is enhanced if the termination is within 24 months following a change in control transaction. |

  13. ASSESSMENT OF MARKET DATA AND ENGAGEMENT OF COMPENSATION CONSULTANTS

    ASSESSMENT OF MARKET DATA AND ENGAGEMENT OF COMPENSATION CONSULTANTS In establishing the compensation for each of our NEOs, our Compensation Committee considers information about the compensation practices of companies both within and outside our industry and geographic region, and considers evolving compensation trends and practices generally. Our Compensation Committee reviews market data provided by our compensation consultant. Our Compensation Committee may review such survey data for market trends and developments, and utilize such data as one factor when making its annual compensation determinations. Pearl Meyer & Partners, LLC (“Pearl Meyer”) has been engaged since 2021 as an independent executive compensation consultant to advise on the executive and director compensation programs of Hillman. We continued to engage Pearl Meyer in 2023 and anticipate that we will continue to use an executive compensation consultant going forward.

  14. ROLE OF COMPENSATION CONSULTANT

    ROLE OF COMPENSATION CONSULTANT Pearl Meyer, our independent compensation consultant, provides research, market data, survey, proxy information, and design expertise in developing executive and director compensation programs. As requested by the Compensation Committee, Pearl Meyer provided the Compensation Committee with market data from proprietary databases and publicly available information to consider when making compensation decisions for the NEOs. Pearl Meyer also provided similar input to support compensation recommendations and decisions made for Company executives who are not NEOs. Pearl Meyer regularly attended Compensation Committee meetings in fiscal 2023 and advised the Compensation Committee on principal aspects of executive compensation, including the competitiveness of individual executive pay levels and short- and long-term incentive designs. Pearl Meyer also provided advice with respect to the non-employee director compensation program. Pearl Meyer is engaged by and reports directly to the Compensation Committee.

  15. ROLE OF COMPENSATION CONSULTANT

    | 30 | 2024 Proxy Statement | |

  16. DEVELOPMENT AND USE OF PEER GROUP

    DEVELOPMENT AND USE OF PEER GROUP Based on Pearl Meyer’s recommendation, the Compensation Committee adopted a peer group of publicly traded industrial and consumer discretionary companies with similar revenues and market cap to determine competitive pay levels for input into the Compensation Committee’s decision-making process. For 2023, we used the following peer group (the “Peer Group”):

  17. DEVELOPMENT AND USE OF PEER GROUP

    | Allegion plc | JELD-WEN Holding, Inc. | Simpson Manufacturing Co., Inc. | | American Woodmark Corporation | Leslie’s, Inc. | SiteOne Landscape Supply, Inc. | | Armstrong World Industries, Inc. | Lumber Liquidators Holdings, Inc. | Spectrum Brands Holdings, Inc. | | Dorman Products, Inc. | Masonite International Corporation | The AZEK Company Inc. | | Floor & Decor Holdings, Inc | PGT Innovations, Inc. | Trex Company, Inc. | | Gibraltar Industries, Inc. | Pool Corporation | YETI Holdings, Inc. | | Griffon Corporation | Richelieu Hardware Ltd. | |

  18. DEVELOPMENT AND USE OF PEER GROUP

    As of the date on which the 2023 Peer Group was evaluated for purposes of providing input with respect to fiscal 2023 compensation, Hillman had the following financial characteristics compared to our 2023 Peer Group: •Our net sales were at the 46th percentile; and •Our market capitalization was at the 28th percentile. The Compensation Committee made no changes to the 2023 Peer Group compared to the 2022 Peer Group. The Compensation Committee has not set a range or percentile relative to its Peer Group for determining the compensation of our NEOs and other executive officers. Rather, the Peer Group is reviewed as one of many factors by our Compensation Committee.

  19. DEVELOPMENT AND USE OF PEER GROUP

    | | 2024 Proxy Statement | 31 |

  20. Short-Term Compensation Elements

    Short-Term Compensation Elements

  21. ANNUAL PERFORMANCE-BASED BONUSES

    ANNUAL PERFORMANCE-BASED BONUSES Each NEO is eligible to receive an annual cash bonus under the terms of a performance-based bonus plan. Each NEOs bonus opportunity specifies an annual target, threshold, and maximum bonus as a percentage of the NEO’s annual base salary, which percentages may be adjusted for any particular year in the discretion of our Board. The specific performance criteria and performance goals are established and approved annually by our Compensation Committee in consultation with our CEO (other than with respect to himself). The performance targets are communicated to the NEOs following formal approval by our Compensation Committee, which normally occurs in the first quarter of our fiscal year.

  22. ANNUAL PERFORMANCE-BASED BONUSES

    | 32 | 2024 Proxy Statement | |

  23. ANNUAL PERFORMANCE-BASED BONUSES

    The table below shows the target bonus and threshold and maximum bonuses as a percentage of base salary for each NEO for 2023. Generally, the higher the level of responsibility of the NEO within the Company, the greater the percentages of base salary applied for that individual’s target and maximum bonus compensation.

  24. ANNUAL PERFORMANCE-BASED BONUSES

    | 2023 Threshold, Target and Maximum Bonus | | | | | Name | 2023 Threshold Bonus as a Percentage of Base Salary (%) | 2023 Target Bonus as Percentage of Base Salary (%) | 2023 Maximum Bonus as Percentage of Base Salary (%) | | Douglas J. Cahill | 50% | 100% | 200% | | Robert O. Kraft | 30% | 60% | 120% | | Jon Michael Adinolfi | 30% | 60% | 120% | | Scott C. Ride | 25% | 50% | 100% | | Randall J. Fagundo | 25% | 50% | 100% |

  25. ANNUAL PERFORMANCE-BASED BONUSES

    Historically, the Company’s achievement of the threshold level of performance would result in a payout factor of 50% of the NEOs target bonus. However, given that the Company did not achieve its performance targets in fiscal 2021 and performance based bonuses were not paid to most employees, our CEO recommended, and the Compensation Committee approved, reducing the payout factor for a threshold level of performance from 50% of the NEOs target bonus to 10% of the NEOs target bonus in 2022. The lower payout factor for NEOs at the threshold level of performance in 2022 resulted in additional funds available to pay higher bonus payout levels for less senior employees. In 2023, our CEO recommended, and the Compensation Committee approved, that the payout factor for a threshold level of performance revert to our historical norm of 50% of the NEOs target bonus.

  26. ANNUAL PERFORMANCE-BASED BONUSES

    | | 2024 Proxy Statement | 33 |

  27. ANNUAL PERFORMANCE-BASED BONUSES

    The table below shows the performance criteria for fiscal year 2023 selected for each NEO and the relative weight of total target bonus assigned to each component.

  28. ANNUAL PERFORMANCE-BASED BONUSES

    | 2023 Performance Criteria and Relative Weight | | | | Name | Adjusted EBITDA (%) | Adjusted Leverage Ratio (%) | | Douglas J. Cahill | 70% | 30% | | Robert O. Kraft | 70% | 30% | | Jon Michael Adinolfi | 70% | 30% | | Scott C. Ride | 70% | 30% | | Randall J. Fagundo | 70% | 30% |

  29. ANNUAL PERFORMANCE-BASED BONUSES

    For 2023, the bonus criteria for all NEOs included two Company performance goals measured by (1) our Adjusted EBITDA for the year ended December 30, 2023, which is our consolidated earnings before interest, taxes, depreciation, and amortization, as adjusted for non-recurring charges as shown under the header “Adjusted EBITDA” (“Adjusted EBITDA”), and (2) our adjusted leverage ratio, which is ratio of (a) overall indebtedness less cash as of year ended December 30, 2023; to (b) Adjusted EBITDA during the year ended December 30, 2023 (“Adjusted Leverage Ratio”). For any bonus to be awarded, the Adjusted EBITDA target must meet the threshold. Once the Adjusted EBITDA threshold is met, the final payout is dependent on the achievement of all metrics and their respective targets. Achievement at levels between threshold and maximum will result in payments on a sliding scale. Adjusted EBITDA and Adjusted Leverage Ratio are non-GAAP measures. Please refer to Appendix A for additional information, including our definitions and use of Adjusted EBITDA and Adjusted Leverage Ratio, and for a reconciliation of those measures to the most directly comparable financial measures under GAAP.

  30. ANNUAL PERFORMANCE-BASED BONUSES

    | 34 | 2024 Proxy Statement | |

  31. ANNUAL PERFORMANCE-BASED BONUSES

    The threshold, target, and maximum amounts and payout levels of each of the Adjusted EBITDA and Adjusted Leverage Ratio targets that determine the annual bonus payouts to each of the NEOs are as follows (amounts in thousands):

  32. ANNUAL PERFORMANCE-BASED BONUSES

    | Metric | Threshold | Target | Maximum | | Adjusted EBITDA (1) | $210,200 | $222,600 | $250,000 | | Payout | 50% | 100% | 200% | | Metric | Threshold | Target | Maximum | | Adjusted Leverage Ratio (1) | 4.2 | 3.6 | 2.7 | | Payout | 50% | 100% | 200% |

  33. ANNUAL PERFORMANCE-BASED BONUSES

    (1)Non-GAAP metric, see Appendix A to this proxy statement for additional information, including our definitions, use of, and for a reconciliation of those measures to the most directly comparable financial measures under GAAP. The level of performance actually achieved for the fiscal year ended December 30, 2023 in each of the above categories was as follows (amounts in thousands):

  34. ANNUAL PERFORMANCE-BASED BONUSES

    | Metric | Target ($) | Actual ($) | Achievement to Target | Resulting Payout Factor (%) | | Adjusted EBITDA (1) | 222,600 | 219,360 | 98.5% | 86.6% | | Adjusted Leverage Ratio (1) | 3.6 | 3.3 | 109.3% | 127.8% |

  35. ANNUAL PERFORMANCE-BASED BONUSES

    (1)Non-GAAP metric, see Appendix A to this proxy statement for additional information, including our definitions, use of, and for a reconciliation of those measures to the most directly comparable financial measures under GAAP.

  36. ANNUAL PERFORMANCE-BASED BONUSES

    | | 2024 Proxy Statement | 35 |

  37. ANNUAL PERFORMANCE-BASED BONUSES

    The annual bonus paid to each of our NEOs for the year ended December 30, 2023 was as follows:

  38. ANNUAL PERFORMANCE-BASED BONUSES

    | Name | 2023 Target Bonus ($) | Plan Based Bonus Calculation ($) | % of Target Bonus | Discretionary Adjustments | Bonus Actually Paid | % of Target Bonus | | Douglas J. Cahill | 750,000 | 742,201 | 99.0% | — | 742,201 | 99.0% | | Robert O. Kraft | 274,500 | 271,645 | 99.0% | — | 271,645 | 99.0% | | Jon Michael Adinolfi | 270,000 | 267,192 | 99.0% | — | 267,192 | 99.0% | | Scott C. Ride (1) | 153,734 | 152,135 | 99.0% | — | 152,135 | 99.0% | | Randall J. Fagundo | 175,000 | 173,180 | 99.0% | — | 173,180 | 99.0% |

  39. ANNUAL PERFORMANCE-BASED BONUSES

    (1)Mr. Ride is based in Canada and paid in Canadian dollars. His 2023 Target bonus was converted to U.S. dollars for disclosure using 1.3226 exchange rate effective December 30, 2023.

  40. Long-Term Compensation Elements

    Long-Term Compensation Elements

  41. STOCK OPTIONS AND RESTRICTED SHARES

    STOCK OPTIONS AND RESTRICTED SHARES All equity awards granted prior to the Business Combination were granted under the 2014 Equity Incentive Plan (the “2014 Equity Incentive Plan”), pursuant to which we may grant options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards for up to an aggregate of 14,523,510 shares of stock. The 2014 Equity Incentive Plan is administered by the Compensation Committee. No further grants will be made from the 2014 Equity Incentive Plan. Upon the closing of the Business Combination, effective July 14, 2021, the Company established the 2021 Equity Incentive Plan. Under the 2021 Equity Incentive Plan (the “2021 Equity Incentive Plan”), the maximum number of shares of Stock that may be delivered in satisfaction of Awards under the Plan as of the Effective Date is (i) 7,150,814 shares, plus (ii) the number of shares of Stock underlying awards under the 2014 Equity Incentive Plan that on or after the Effective Date expire or become unexercisable, or are forfeited, cancelled, or otherwise terminated, in each case, without delivery of shares or cash therefor, and would have become available again for grant under the 2014 Equity Incentive Plan in accordance with its terms (not to exceed 14,523,510 shares of Stock in the aggregate) (the “Share Pool”). All grants made after the Business Combination and going forward will be made from the 2021 Equity Incentive Plan. Our equity incentive plans are designed to align the interests of our stockholders and executive officers by increasing the proprietary interest of our executive officers in our growth and success to advance our interests by attracting and retaining key employees, and motivating such executives to act in our long-term best interests. We grant equity awards to promote the success and enhance the value of the Company by providing participants with an incentive for outstanding performance. Equity-based awards also provide the Company with the flexibility to motivate, attract, and retain the services of employees upon whose judgment, interest, and special effort the successful conduct of our operation is largely dependent. In the year ended December 30, 2023, we granted 594,324 stock options to NEOs under the 2021 Equity Incentive Plan. See the Grants of Plan-Based Awards in Fiscal Year 2023 table below for details of the grant for each NEO. The options vest in four equal annual installments, subject to the grantee’s continued employment on the vesting dates. Additionally, the Compensation Committee is evaluating other performance based awards in fiscal 2025. In the year ended December 30, 2023, we granted 544,064 RSUs to NEOs under the 2021 Equity Incentive Plan. See the Grants of Plan-Based Awards in Fiscal Year 2023 table below for details of the grant for each NEO. The RSUs vest on the third anniversary of the grant date, subject to the grantee’s continued employment on such vesting date,

  42. STOCK OPTIONS AND RESTRICTED SHARES

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  43. STOCK OPTIONS AND RESTRICTED SHARES

    except that 291,036 of the RSUs granted to Mr. Adinolfi on June 7, 2023 will vest 50% on the third anniversary of the grant date, 25% on the fourth anniversary of the grant date, and 25% on the fifth anniversary of the grant date.

  44. MR. ADINOLFI’S PROMOTION TO CHIEF OPERATING OFFICER

    MR. ADINOLFI’S PROMOTION TO CHIEF OPERATING OFFICER On June 6, 2023, Mr. Adinolfi was promoted to Chief Operating Officer of the Company. As explained in the tables above and below, in connection with Mr. Adinolfi’s promotion, the Compensation Committee increased his base salary to $500,000 and increased his annual target equity award grant to $750,000. The Compensation Committee also approved a one time grant of $75,000 of stock options and $2,575,000 of RSUs to Mr. Adinolfi in connection with his promotion, which is in addition to the Company’s annual equity award grants.

  45. Severance and Change in Control Benefits

    Severance and Change in Control Benefits On November 2, 2023, the Board of Directors of the Company adopted the Hillman Solutions Corp. Executive Severance Plan (the "Severance Plan"). The primary purpose of the Severance Plan is to standardize and clarify the severance arrangements of our named executive officers (other than Mr. Ride) and the related terms and conditions. Each of our named executive officers, other than Mr. Ride, participate in the Plan. As a condition to participating in the Severance Plan, each of our named executive officers (other than Mr. Ride) agreed to terminate their employment agreements, if any, with the Company effective November 2, 2023. Executives covered by the Severance Plan will generally be eligible to receive severance benefits in the event of a termination by the Company without “cause” or by the executive for “good reason” (each as defined in the Severance Plan). The severance benefit is enhanced if the termination is within 24 months following a change in control transaction. Mr. Ride’s employment agreement provides for severance payments and benefits in the event his employment is terminated under specified conditions including death, disability, termination by the Company without “cause,” or Mr. Ride resigns for “good reason” (each as defined in the agreement). In addition, we have provided for certain equity acceleration benefits under our 2014 Plan designed to assure the Company of the continued employment and attention and dedication to duty of these key management employees and to seek to ensure the availability of their continued service, notwithstanding the possibility or occurrence of a change in control of the Company and resultant employment termination. The severance payments and equity vesting benefits payable both in the event of, and independently from, a change in control are in amounts that we have determined are necessary to remain competitive in the marketplace for executive talent. See “Potential Payments Upon Termination or Change in Control” for additional information.

  46. NONQUALIFIED DEFERRED COMPENSATION PLAN

    NONQUALIFIED DEFERRED COMPENSATION PLAN Prior to 2022, our NEOs and certain other employees were eligible to participate in the Hillman Nonqualified Deferred Compensation Plan (the “Deferred Compensation Plan”). The Deferred Compensation Plan was frozen at the end of fiscal 2021 such that the Deferred Compensation Plan does not allow new contributions. The Deferred Compensation Plan allowed eligible employees to defer up to 25% of salary and commissions and up to 100% of bonuses. Prior to 2021, the Company contributed a matching contribution of 25% on the first $10,000 of employee deferrals, subject to a five-year vesting schedule.

  47. NONQUALIFIED DEFERRED COMPENSATION PLAN

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  48. STOCK OWNERSHIP GUIDELINES

    | Summary Compensation Table |

  49. STOCK OWNERSHIP GUIDELINES

    | Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | Compensation - All Other ($)(4) | Total ($) | | Douglas J. Cahill President and CEO | 2023 | 746,154 | — | 1,067,493 | 1,067,500 | 742,201 | 19,537 | 3,642,885 | | | 2022 | 700,000 | — | 899,997 | 899,123 | 102,802 | 17,363 | 2,619,285 | | | 2021 | 698,077 | — | — | 2,637,196 | — | 13,827 | 3,349,100 | | Robert O. Kraft CFO and Treasurer | 2023 | 454,231 | — | 374,996 | 374,999 | 271,645 | 18,826 | 1,494,697 | | | 2022 | 415,000 | — | 299,999 | 299,708 | 36,568 | 17,992 | 1,069,267 | | | 2021 | 415,000 | — | — | 3,130,835 | — | 15,104 | 3,560,939 | | Jon Michael Adinolfi Chief Operating Officer | 2023 | 446,154 | — | 2,874,993 | 374,996 | 267,192 | 43,023 | 4,006,358 | | | 2022 | 400,000 | — | 224,992 | 224,778 | 35,246 | 8,308 | 893,324 | | | 2021 | 400,000 | — | — | 709,318 | — | 8,338 | 1,117,656 | | Scott C. Ride(5) President, Hillman Canada | 2023 | 304,626 | — | 200,000 | 199,999 | 152,135 | 40,326 | 897,086 | | | 2022 | 273,766 | 150,920 | 219,992 | 219,784 | 20,122 | 16,411 | 900,995 | | | 2021 | 289,384 | — | — | 1,839,399 | — | 24,306 | 2,153,089 | | Randall J. Fagundo President, RDS Division | 2023 | 350,000 | — | 200,000 | 199,999 | 173,180 | 9,992 | 933,171 | | | 2022 | 349,231 | — | — | 224,778 | 25,701 | — | 599,710 | | | 2021 | 329,992 | 453,992 | — | 1,038,488 | — | 17,578 | 1,840,050 |

  50. STOCK OWNERSHIP GUIDELINES

    | Grants of Plan-Based Awards in Fiscal Year 2023 |

  51. STOCK OWNERSHIP GUIDELINES

    | Outstanding Equity Awards at 2023 Fiscal Year-End |

  52. Option Exercises and Stock Vested During Fiscal Year 2023

    Option Exercises and Stock Vested During Fiscal Year 2023 No NEO exercised any stock options or had any stock awards vest during the year ended December 30, 2023.

  53. Option Exercises and Stock Vested During Fiscal Year 2023

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized Upon Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Douglas J. Cahill | — | — | — | — | | Robert O. Kraft | — | — | — | — | | Jon Michael Adinolfi | — | — | — | — | | Scott C. Ride | — | — | — | — | | Randall J. Fagundo | — | — | — | — |

  54. Option Exercises and Stock Vested During Fiscal Year 2023

    | 46 | 2024 Proxy Statement | |

  55. Option Exercises and Stock Vested During Fiscal Year 2023

    | Nonqualified Deferred Compensation for Fiscal Year 2023 |

  56. Option Exercises and Stock Vested During Fiscal Year 2023

    The Nonqualified Deferred Compensation Plan was frozen to new contributions starting in fiscal year 2022. As such, No NEO contributed to the Nonqualified Deferred Compensation Plan in fiscal year 2023.

  57. Option Exercises and Stock Vested During Fiscal Year 2023

    | Name | Executive Contributions ($) | Company Matching Contributions ($) | Aggregate Earnings ($)(1) | Aggregate Withdrawal/ Distributions ($) | Aggregate Balance at December 30, 2023 ($)(2) | | Douglas J. Cahill | — | — | — | — | — | | Robert O. Kraft | — | — | 8,049 | — | 55,490 | | Jon Michael Adinolfi | — | — | — | — | — | | Scott C. Ride | — | — | — | — | — | | Randall J. Fagundo | — | — | — | — | — |

  58. Option Exercises and Stock Vested During Fiscal Year 2023

    (1)Earnings in the Deferred Compensation Plan were not required to be included in the Summary Compensation Table because the earnings were neither preferential nor above-market. (2)Amounts reported in this column for each NEO include amounts previously reported in the Company’s Summary Compensation Table in previous years when earned if that officer’s compensation was required to be disclosed in a previous year. Amounts previously reported in such years include previously earned, but deferred, salary and bonus and Company matching contributions. This total reflects the cumulative value of each NEO’s deferrals, matching contributions, and investment experience. The Nonqualified Deferred Compensation Plan was frozen to new contributions starting in fiscal year 2022. The Deferred Compensation Plan allowed eligible employees to defer up to 25% of salary and commissions and up to 100% of bonuses. A separate account is maintained for each participant in the Deferred Compensation Plan, reflecting hypothetical contributions, earnings, expenses, and gains or losses. The plan is “unfunded” for tax purposes — those are notional accounts and not held in trust. Prior to 2021, we contributed a matching contribution of 25% on the first $10,000 of salary and bonus deferrals. Participants in the Deferred Compensation Plan can choose to invest amounts deferred and the matching Company contributions in a variety of mutual fund investments, consisting of bonds, stocks, and short-term investments as well as blended funds. The available investment choices are the same as the primary investment choices available under the Defined Contribution Plan. The account balances are thus subject to investment returns and will change over time depending on market performance. A participant is entitled to receive his or her account balance upon termination of employment or the date or dates selected by the participant on his or her enrollment forms. If a participant dies or experiences a total and permanent disability before terminating employment and before commencement of payments, the entire value of the participant’s account shall be paid at the time selected by the participant in his or her enrollment forms.

  59. Option Exercises and Stock Vested During Fiscal Year 2023

    | | 2024 Proxy Statement | 47 |

  60. Option Exercises and Stock Vested During Fiscal Year 2023

    | Potential Payments Upon Termination or Change in Control |

  61. 2021 Equity Incentive Plan

    | Estimated Payments Upon Termination of Employment or Change in Control |

  62. 2021 Equity Incentive Plan

    | Pay Ratio Disclosure |

  63. 2021 Equity Incentive Plan

    | Pay Versus Performance Disclosure |

  64. Description of Relationship Between Pay and Performance

    | Director Compensation for Fiscal Year 2023 |

  65. Description of Relationship Between Pay and Performance

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Diana Dowling | 75,000 | 120,238 | 195,238 | | Teresa S. Gendron | 75,000 | 120,238 | 195,238 | | Diane C. Honda (2) | 44,093 | 120,238 | 164,331 | | Aaron P. Jagdfeld (3) | 91,176 | 120,238 | 211,414 | | Daniel O'Leary (4) | 79,053 | 120,238 | 199,291 | | David A. Owens (5) | 83,819 | 120,238 | 204,057 | | Joseph M. Scharfenberger, Jr. (6) | — | — | — | | John Swygert | 75,000 | 120,238 | 195,238 | | Philip K. Woodlief (7) | 95,000 | 120,238 | 215,238 | | Richard F. Zannino (6) | — | — | — |