Conyers Park Sponsor is party to the Investor Rights Agreement, which provides for certain nomination rights. See “Certain Relationships and Related Person Transactions — The Investor Rights Agreement.” There are five managers of Conyers Park Sponsor’s board of managers, including Messrs. Kilts, West and Ratzan. Each manager has one vote, and the approval of three of the five members of the board of managers is required to approve an action of Conyers Park Sponsor. Under the “rule of three,” if voting and dispositive decisions regarding an entity’s securities are made by three or more individuals, and a voting or dispositive decision requires the approval of a majority of those individuals, then none of the individuals is deemed a beneficial owner of the entity’s securities. Based upon the foregoing analysis, no individual manager of Conyers Park Sponsor exercises voting or dispositive control over any of the securities held by Conyers Park Sponsor, even those in which he directly holds a pecuniary interest. Accordingly, none of them will be deemed to have or share beneficial ownership of such shares.
(3)
Based solely on a Schedule 13G filed with the SEC on February 11, 2020. The address of The Vanguard Group is 100 Vanguard Blvd. Malvern, PA 19355. Of the total number of shares listed above, such person has sole power to vote or direct to vote 80,592 shares, has shared power to vote or direct to vote 20,732 shares and has sole power to dispose of or to direct the disposition of 7,841,866 shares and has shared power to dispose or to direct the disposition of 89,855 shares.
(4)
Based solely on a Schedule 13 filed with the SEC on February 7, 2020.55 East 52nd Street, New York, NY 10055. The shares are beneficially owned by Blackrock,BlackRock, Inc. and its subsidiaries and affiliates. Of the total number of shares listed above, such person has sole power to vote or direct to vote 6,983,50612,744,871 shares, has shared power to vote or direct to vote 0 shares, and has sole power to dispose of or to direct the disposition of 7,229,29312,901,253 shares and has shared power to dispose or to direct the disposition of 0 shares.
(3)
Based solely on a Schedule 13G/A filed with the SEC on February 10, 2022. The address of Blackrock, Inc.The Vanguard Group is 55 East 52100 Vanguard Blvd., Malvern, PA 19355. Of the total number of shares listed above, such person has sole power to vote or direct to vote 0 shares, has shared power to vote or direct to vote 76,397 shares, has sole power to dispose of or to direct the disposition of 9,116,613 shares and has shared power to dispose or to direct the disposition of 152,156 shares.
nd(4)
Street, New York, NY 10055.Based solely on a Schedule 13G/A filed with the SEC on February 11, 2022. The address of Champlain Investment Partners, LLC is 180 Battery St., Burlington, Vermont 05401. Of the total number of shares listed above, such person has sole power to vote or direct to vote 4,170,474 shares, has shared power to vote or direct to vote 0 shares, has sole power to dispose of or to direct the disposition of 5,386,734 shares and has shared power to dispose or to direct the disposition of 0 shares.
(5)
Based solely on a Schedule 13G/A filed with the SEC on February 11, 2022. The address of Capital World Investors is 333 South Hope Street, 55th Floor, Los Angeles, CA 90071. Of the total number of shares listed above, such person has sole power to vote or direct to vote 5,324,500 shares, has shared power to vote or direct to vote 0 shares, has sole power to dispose of or to direct the disposition of 5,324,500 shares and has shared power to dispose or to direct the disposition of 0 shares.
(6)
Includes 1,292,5862,715,513 shares held indirectly by an investment limited partnership of which Mr. Kilts and his spouse are the co-general partners.
(7)
Includes 1,239,064 shares issuable upon the exercise of options that are currently exercisable.
(8)
Includes 3,156 shares issuable upon the exercise of options that are currently exercisable.
(9)
Includes 25,459 shares issuable upon the exercise of options that are currently exercisable.
(10)
Includes 154,098 shares issuable upon the exercise of options that are currently exercisable.
(11)
Includes 91,356 shares issuable upon the exercise of options that are currently exercisable.
(12)
Includes 109,495 shares issuable upon the exercise of options that are currently exercisable.
(13)
Includes 1,788,047 shares issuable upon the exercise of options that are currently exercisable.
Certain Relationships and Related Person Transactions
(7)
Includes 253,140 shares issuable upon the exercise of options that are currently exercisable.
(8)
Includes 89,525 shares issuable upon the exercise of options that are currently exercisable.
(9)
Includes 1,913,276 shares issuable upon the exercise of options that are currently exercisable.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
See “Board of Directors and Corporate Governance — Review of Related Person Transactions” above for information regarding our review and approval process of related person transactions. Except as noted below, the transactions disclosed below were reviewed and approved in accordance with our Related Party Transactions Policy.
Merger Agreement
On April 10, 2017, Conyers Park entered into an Agreement and Plan of Merger (the “Merger Agreement”) to affect the Business Combination. Pursuant to the Merger Agreement, we paid an aggregate amount of $730,125,000 at the consummation of the Business Combination with respect to the shares of common stock, par value $0.01 per share, of Atkins (the “Atkins Common Stock”) (which does not include any shares issuable pursuant to Exercised Option Shares (as defined in the Merger Agreement)), and the Exercised Option Shares, subject to customary purchase price adjustments (the “Merger Consideration”). The Merger Consideration consisted of, and was allocated between, 10,250,000 shares of our common stock (at a reference price of $10.00 per share) and an amount of cash equal to the Merger Consideration minus $102,500,000. The shares of Class A common stock of Conyers Park issued and outstanding at July 7, 2017 (the “Closing”) were canceled and converted automatically into the right to receive one share of our common stock, subject to certain exceptions. Each warrant to purchase shares of Conyers Park common stock issued and outstanding at the Closing were converted into a warrant to purchase our common stock.
Each issued and outstanding share of Atkins Common Stock, excluding certain shares of to be canceled pursuant to the Merger Agreement, Exercised Option Shares and any Company Dissenting Shares
(as defined in the Merger Agreement), was canceled and converted automatically into the right to receive the following: (i) an amount in cash equal to the Cash Amount (as defined in the Merger Agreement) rounded up to the nearest whole cent; (ii) a number of shares of our common stock equal to the Stock Amount (as defined in the Merger Agreement); and (iii) a contingent right to a portion of the Escrow Amount (as defined in the Merger Agreement), Administrative Expense Amount (as defined in the Merger Agreement), any additional consideration received pursuant to the purchase price adjustment in Section 2.12 of the Merger Agreement, any Bonus Repayment Amount (as defined in the Merger Agreement) and any amounts payable pursuant to the Income Tax Receivable Agreement, dated July 7, 2017, by and among us, Atkins Holdings, LLC, solely in its capacity as the stockholders’ representative pursuant to the Merger Agreement, Roark Capital Acquisition, LLC (which was terminated on November 14, 2018), in each case, payable, without interest, to the applicable Company Stockholder (as defined in the Merger Agreement) in accordance with the Merger Agreement.
Prior to the Closing, holders of options to purchase shares of Atkins Common Stock had the opportunity to exercise their vested options. Such exercised vested options were cancelled and terminated at the Closing and the holders of such options were entitled to the Exercised Option Shares Consideration (as defined in the Merger Agreement). All options that were either unvested or unexercised were cancelled at the Closing.
Any outstanding warrants to purchase shares of Atkins Common Stock were sold to Atkins pursuant to the terms of the Warrant Agreement (as defined in the Merger Agreement) and cancelled at the Closing and the holder of the warrant was entitled to receive the consideration set forth in the Warrant Agreement (as defined in the Merger Agreement).
The Investor Rights Agreement
On July 7, 2017, in connection with the consummation of the Business Combination, we and Conyers Park Sponsor entered into an Investor Rights Agreement (the “Investor Rights Agreement”). The Investor Rights Agreement provides for, among other things, subject to the terms thereof, customary registration rights, including demand and piggy-back rights subject to cut-back provisions. We filed a shelf registration statement on Form S-1 to register Conyers Park Sponsor’s shares that was declared effective on December 12, 2017, which was replaced by the shelf registration statement on Form S-3 that was declared effective by the SEC on December 19, 2018. Pursuant
In addition, prior to the Investor Rights Agreement, Conyers Park Sponsor agreed not to sell, transfer, pledge or otherwise dispose of the shares of our common stock it received in connection with the Business Combination for 180 days from the Closing, subject to certain exceptions.
In addition,October 13, 2022, pursuant to the Investor Rights Agreement, for so long as Conyers Park Sponsor holdsheld at least 50% of its shares of common stock it held at the Closing,as of July 7, 2017, it will havehad the right to nominate three directors to serve on the Board, and for so long as Conyers Park Sponsor holdsheld at least 25% of its shares of common stock it holds at Closing,held as of July 7, 2017, it will havehad the right to nominate one director to serve on the Board. Effective October 13, 2022, pursuant to and in accordance with the terms of Conyers Park Sponsor’s organizational documents and as was provided to occur on or about the fifth anniversary of the closing of the Business Combination in July 2017, Conyers Park Sponsor made a pro‑rata distribution in kind of shares of our common stock to its members for no consideration. Among the recipients of the shares of our common stock distributed were investment entities controlled by James Kilts, and David West and Brian Ratzan individually. In connection with this distribution, we were informed Conyers Park Sponsor assigned in whole to Messrs. Kilts, West and Ratzan, collectively, its rights, under and in accordance with the Investor Rights Agreement, to designate persons to be nominated by Conyers Park Sponsor for election to our Board.
Indemnity Agreements
We entered into indemnity agreements with each of our directors and executive officers. Each indemnity agreement provides for indemnification and advancements by us of certain expenses and costs relating to claims, suits or proceedings arising from his or hertheir service to us or, at our request, service to other entities, as officers or directors, to the maximum extent permitted by applicable law.
Employment of Andrew Scalzo
Andrew Scalzo, the son of Joseph E. Scalzo, our President and Chief Executive Officer, is employed by us as a Business DevelopmentRegional Sales Manager. The Audit Committee and the independent members of the Board ratified and approved the employment of Andrew Scalzo. Andrew Scalzo’s fiscal year 20202022 compensation was not in excess of $120,000.approximately $128,670.
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| | | | | 2 | | | Ratification of Appointment of Deloitte & Touche LLP as our Independent Public Accounting Firm for Fiscal Year 2023 The Audit Committee and Board recommend that you vote FOR the ratification of the appointment of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for fiscal year 2023. | | | | |
Our stockholders are being asked to ratify the appointment of Deloitte as our independent registered public accounting firm for the fiscal year ending August 26, 2023. Deloitte has served as our independent public accounting firm since 2019. The Audit Committee has responsibility for appointing our independent registered public accounting firm and stockholder ratification is not required; however, as a matter of good corporate governance, the Audit Committee is soliciting your vote on this proposal. If the appointment of Deloitte is not ratified by the stockholders, the Audit Committee may appoint another independent registered public accounting firm or may decide to maintain its appointment of Deloitte. If the stockholders do not ratify this appointment, the Audit Committee will investigate the reasons for the rejection and consider other independent registered public accounting firms. Even if the appointment is ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm.
Representatives of Deloitte will be present at the Annual Meeting and will have the opportunity to make a statement, if they desire to do so, and to respond to appropriate questions.
Audit Fees
In addition to performing the audit of our consolidated financial statements, our independent registered public accounting firm also provides various other services to us. All of the services provided by our independent registered public accounting firm to us in fiscal years 2021 and 2022 were pre-approved by the Audit Committee pursuant to the procedures set forth below under “— Pre-Approval Policies and Procedures.”
The aggregate fees and reimbursable expenses billed to us and our subsidiaries by Deloitte in fiscal years 2021 and 2022 were as follows:
| | | | | 2021 | | | 2022 | |
| | Audit Fees(1) | | | | $ | 1,213,300 | | | | | $ | 1,055,166 | | |
| | Audit Related Fees(2) | | | | | 125,412 | | | | | | 3,972 | | |
| | Tax Fees(3) | | | | | — | | | | | | 12,810 | | |
| | All Other Fees | | | | | — | | | | | | — | | |
| | Total | | | | $ | 1,338,712 | | | | | $ | 1,071,948 | | |
(1)
“Audit Fees” includes fees and expenses billed for the audit of our consolidated financial statements included in our Annual Reports on Form 10-K, review of financial statements included in our Quarterly Reports on Form 10-Q, and services provided in connection with statutory audits.
(2)
“Audit-Related Fees” includes fees billed for services that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under the caption “Audit Fees.” These fees include services for due diligence on acquisitions and divestitures, and fees for services provided in connection with review of registration statements, comfort letters and consents.
(3)
“Tax Fees” includes fees billed for services that are related to tax compliance and advice, including international tax consulting.
Pre-Approval Policies and Procedures
The Audit Committee has sole authority to engage and determine the compensation of our independent registered public accounting firm. The Audit Committee also is directly responsible for evaluating our independent registered public accounting firm, reviewing and evaluating the lead partner of the independent registered public accounting firm and overseeing the
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| | | | | 3 | | | Adoption of the Company’s Third Amended and Restated Certificate of Incorporation The Board recommends that you vote FOR the adoption of the Third Amended and Restated Certificate of Incorporation. | | | | |
In this Proposal 3, the Board is asking stockholders to adopt the Third Amended and Restated Certificate of Incorporation of The Simply Good Foods Company in the form attached as Annex I to this proxy statement (the “Third Amended and Restated Certificate”). The Third Amended and Restated Certificate would amend the existing Second Amended and Restated Certificate of Incorporation of The Simply Good Foods Company, which we refer to as the existing Company certificate, to add a federal forum provision for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended (the “Securities Act”).
The Board approved the Third Amended and Restated Certificate and recommended its adoption by stockholders on October 13, 2022. If adopted by stockholders, the Third Amended and Restated Certificate would become effective upon filing of the Third Amended and Restated Certificate with the Secretary of State of the State of Delaware. We intend to make the filing promptly after the Annual Meeting.
The form of the Third Amended and Restated Certificate is attached as Annex I to this proxy statement and shows all proposed amendments and related textual changes to the provisions of the existing Company certificate. Text that is proposed to be added to the existing Company certificate is underlined in red font and text that is proposed to be deleted from the existing Company certificate, if any, is struck through. The following summary description of the Third Amended and Restated Certificate is qualified by reference to the full text of the Third Amended and Restated Certificate, which we encourage you to review carefully.
Amendment to Add Federal Forum Selection Provision
We are seeking stockholder approval to amend ARTICLE TWELVE of the existing Company certificate to provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. We refer to this provision as the federal forum selection provision and to the proposed amendment as the federal forum selection amendment.
Summary of the Amendment
If the federal forum selection amendment is approved by our stockholders and becomes effective, the federal forum selection provision would be in addition to terms of our existing forum selection provision in ARTICLE TWELVE. The existing provision states that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim against the Company, its directors, officers or employees arising pursuant to any provision of the Delaware General Corporation Law or the existing Company certificate or the Bylaws, or (iv) any action asserting a claim against the Company, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules or regulations thereunder. Accordingly, the existing forum selection provision in ARTICLE TWELVE does not apply to actions arising under the Exchange Act or such rules and regulations.
Set forth below is the text of our existing forum selection provision as it is proposed to be amended by the addition of the federal forum selection provision. Text that is proposed to be added to existing ARTICLE TWELVE is underlined and is noted in red font.
ARTICLE TWELVE
Section 1. Exclusive Forum. (A) Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the DGCL or this Certificate or the Bylaws, or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. (B) Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, against the Corporation or any director or officer or other employee of the Corporation.
Section 2. Consent to Jurisdiction. If any action the subject matter of which is within the scope of Section 1(A) immediately above is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce Section 1(A) immediately above (an “FSC Enforcement Action”) and (ii) having service of process made upon such stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
Purpose and Effect of the Amendment
The Board believes that the Company and its stockholders would benefit from having any causes of action arising under the Securities Act resolved in the federal district courts of the United States. In determining to approve the federal forum selection amendment and recommend its adoption by stockholders, the Board considered that the federal forum selection provision could promote efficiencies in the Company’s management of Securities Act litigation by:
•
limiting forum-shopping in state court by plaintiffs;
•
enabling the Company to avoid litigating actions involving the same matter in state and federal courts, with the associated duplication of litigation expenses and the possibility of inconsistent outcomes, and to obtain consolidation of multi-jurisdictional litigation;
•
more efficiently managing procedural aspects of securities litigation;
•
allowing the Company to focus on the underlying substantive rights or remedies, instead of addressing where a claim may be brought; and
•
facilitating submission of Securities Act claims for resolution by federal courts, which have experience and expertise in adjudicating such claims.
The Board also considered the increasing trend towards adoption of forum selection provisions in response to multi-forum litigation and that the Company would retain the ability to consent to an alternative forum if it wished to do so.
If the federal forum selection amendment becomes effective, it may have several potential effects in addition to the effects discussed above. The federal forum selection provision could discourage claims under the Securities Act or limit stockholders’ ability to bring these claims in a judicial forum that they consider advantageous. The provision could also require stockholders to incur litigation costs in bringing any action to contest the provision’s enforceability, and to incur additional litigation costs in pursuing claims in federal court in accordance with the terms of the provision.
The proposed amendments are shown in the form of the Third Amended and Restated Certificate attached as Annex I to this proxy statement.
The Board has reserved the right to abandon the Third Amended and Restated Certificate before or after stockholder adoption thereof, without further action by the stockholders, at any time before the filing of the Third Amended and Restated Certificate with the Secretary of State of the State of Delaware.
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| | | | | 4 | | | Advisory Vote to Approve the Compensation of our Named Executive Officers The Board recommends that you vote FOR the advisory vote to approve the compensation of our named executive officers. | | | | |
Pursuant to Section 14A of the Exchange Act, our stockholders are entitled to cast an advisory vote at the Annual Meeting to approve the compensation of our named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules, including the section entitled “Compensation Discussion and Analysis,” the compensation tables and accompanying narrative disclosures. While this stockholder vote on executive compensation is an advisory vote that is not binding on our company or the Board, we value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions. The advisory vote to approve the compensation of our named executive officers requires the affirmative vote of the holders of shares of common stock having a majority of the voting power of all of the shares of common stock present or represented by proxy at the Annual Meeting and entitled to vote on the proposal.
As described more fully in the section entitled “Compensation Discussion and Analysis,” our executive compensation program is designed to attract, motivate and retain individuals with the skills required to formulate and drive our strategic direction and achieve the annual and long-term performance necessary to create stockholder value. The program also seeks to align executive compensation with stockholder value on an annual and long-term basis through a combination of base pay, annual incentives and long-term incentives. Our pay-for-performance philosophy is demonstrated by our practice of placing a significant portion of each executive’s compensation at risk. See “Compensation Discussion and Analysis” for more detail about our pay-for-performance philosophy.
At our annual meeting of stockholders in January 2022, we held our annual advisory vote to approve the compensation of our named executive officers (“say-on-pay”). The compensation of our named executive officers reported in our 2022 proxy statement was approved by 79.3% of the votes cast at the 2022 annual meeting of stockholders.
The Compensation Committee believes the vote for our 2022 say-on-pay proposal was largely affected by the “against” recommendation by one of the national proxy advisory firms. In conducting their analysis, the proxy advisory firm evaluated our fiscal year 2021 pay for performance alignment using our reported GAAP financial statements rather than considering accounting changes from the application of recently published SEC guidance. Our fiscal year 2021 GAAP financial performance was negatively affected by having to account for our previously outstanding privately issued warrants to purchase shares of our common stock (our “private warrants”) as a liability on our balance sheet that would be subject to mark-to-market revaluations. This change in GAAP accounting was in accordance with the updated SEC guidance issued in April 2021 regarding accounting and reporting considerations for warrants of special purpose acquisition companies.
As a result of having to treat the private warrants as a liability on our balance sheet in accordance with SEC guidance, we recorded non-cash expenses to reflect the increasing value of our common stock, which reduced our consolidated GAAP net income accordingly and negatively affected the calculation of various financial performance metrics used by the proxy advisory firm to inform the determination of our pay for performance alignment. While the proxy advisory firm noted our stockholder returns outperformed their identified benchmarks over a one- and three-year period, our financial performance was viewed as mixed, with improved revenue and cash flow but declines in net income and earnings per share, the latter two of which were directly and negatively affected by the private warrant accounting change driven by the updated SEC guidance discussed above. The proxy advisory firm and stockholders also noted the pay for performance alignment analysis was further negatively affected by the Compensation Committee’s determination to provide a one-time grant of time-vesting stock options to Mr. Scalzo in connection with the amendment of his employment agreement, as discussed in more detail below.
Prior to the 2022 annual meeting, members of our senior management and members of our Board met with many of our largest stockholders. In connection with this outreach, we contacted 15 of our top 20 largest stockholders representing approximately 55% of our common stock outstanding at that time. Company participants varied from meeting-to-meeting, but included our Vice President of Investor Relations, Chief Legal Officer, Chief Financial Officer, Board Chair and Chair of our Compensation Committee. During these telephonic and videoconference meetings, participants reviewed a variety of topics, with each meeting including a discussion regarding the compensation decisions for fiscal year 2021, which the Compensation Committee believes were well supported by the Company’s performance as demonstrated by strong financial results despite continued COVID-19 challenges (absent the effect of having to account for the private warrants as a liability), strong cash generation, increasing market share in the nutritional snacking category, our supply chain excellence during challenging times, and the completion of the integration of Quest Nutrition, LLC. Discussions also included the context of Mr. Scalzo’s employment agreement approaching the end of its stated five-year term. Given the
General Information about the Annual Meeting and Voting
Information About Attending the Annual Meeting
The 2023 Annual Meeting of Stockholders (the “Annual Meeting”) of The Simply Good Foods Company (the “Company,” “Simply Good Foods,” “we,” “us” or “our”) will be held on Thursday, January 19, 2023, at 9:00 a.m. (ET). In light of the continuing challenges presented by the coronavirus pandemic, and to support the health and well-being of our directors, employees, stockholders, and other stakeholders, we have determined that the Annual Meeting will be held entirely online via audio webcast, with no physical in-person meeting. Stockholders will be able to participate in, vote, view the list of stockholders of record and submit questions from any location via the internet by visiting www.virtualshareholdermeeting.com/SMPL2023 and entering your 16-digit control number included on the proxy card, voting instruction form or Notice (as defined below). Our proxy materials will first be made available to stockholders on or about December 8, 2022.
Only stockholders who owned Simply Good Foods’ common stock as of the close of business on November 23, 2022 (the “Record Date”) will be entitled to attend, vote and submit questions at our Annual Meeting. To log in, stockholders (or their authorized representatives) will need the 16-digit control number provided on their proxy card, voting instruction form or Notice. If you are not a stockholder or do not have a control number you will not be able to participate.
To attend and participate in the virtual Annual Meeting, stockholders of record will need to visit www.virtualshareholdermeeting.com/SMPL2023 (the “Annual Meeting Website”) and use their 16-digit control number found on their proxy card, voting instruction form or Notice. If your shares are held in “street name,” you should contact your broker, bank, trustee, other nominee or custodian, or other holder of record to obtain your 16-digit control number or otherwise vote through the broker, bank, trustee, other nominee or custodian, or other holder of record. The Annual Meeting webcast will begin promptly at 9:00 a.m. (ET). We encourage you to access the Annual Meeting prior to the start time. Online check-in will begin at 8:45 a.m. (ET) and you should allow ample time for the check-in procedures. The virtual meeting platform is fully supported across browsers (Internet Explorer, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Participants should ensure that they have a strong Internet connection wherever they intend to participate in the Annual Meeting.
Participants should also give themselves plenty of time to log in and ensure that they can hear streaming audio prior to the start of the Annual Meeting. Instructions on how to attend and participate via the Internet, including how to demonstrate proof of stock ownership, are posted at the Annual Meeting Website. You may vote during the Annual Meeting by following the instructions available on the Annual Meeting Website during the Annual Meeting. Assistance with questions regarding how to attend and participate via the Internet will be provided at the Annual Meeting Website on the day of the Annual Meeting.
To enable an orderly and efficient meeting, we are encouraging stockholders to submit questions in advance of the Annual Meeting at www.proxyvote.com using the same 16-digit control number. Stockholders as of our record date who participate in our Annual Meeting at www.virtualshareholdermeeting.com/SMPL2023 will also have an opportunity to submit written questions live via the Internet during a designated portion of the Annual Meeting. In order to do so, stockholders must have available their control number provided on their proxy card, voting instruction form or Notice. While management will be available to answer questions, management will not be making a formal presentation on the general state of our business at the Annual Meeting. Questions pertinent to Annual Meeting matters will be answered during the Annual Meeting, subject to time constraints. Questions regarding personal matters, including those related to employment, product issues, or suggestions for product innovations, are not pertinent to Annual Meeting matters and therefore will not be answered. Any questions pertinent to Annual Meeting matters that cannot be answered during the Annual Meeting due to time constraints will be posted online and answered on the Investor section of our corporate website, located at www.thesimplyfoodgoodscompany.com. The questions and answers will be available as soon as practical after the Annual Meeting and will remain available until one week after posting.
We will have technicians ready to assist you with any technical difficulties you may have accessing the Annual Meeting Website. If you experience technical difficulties during the check-in process or during the Annual Meeting, please call the technical support number posted on the Annual Meeting Website.
Information About this Proxy Statement
Why You Received this Proxy Statement. You have received these proxy materials because our Board of Directors (the “Board”) is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement includes information that we are required to provide to you under the rules of the Securities and Exchange Commission (the “SEC”) and is designed to assist you in voting your shares.
Availability of Proxy Statement and Annual Report. Pursuant to SEC rules, we have elected to provide access to this proxy statement and our Annual Report to Stockholders for the fiscal year ended August 27, 2022 (the “Annual Report”) via the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders entitled to notice of, and to vote at, the Annual Meeting and at any postponement or adjournment thereof. The Notice is first being mailed to stockholders beginning on or about December 8, 2022. Stockholders will have the ability to access the proxy materials at www.proxyvote.com or request to receive a printed set of the proxy materials by mail or an electronic set of materials by email. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the Notice. In addition, stockholders may request to receive proxy materials in printed form by mail or electronically by email on an ongoing basis.
Information About Voting
Stockholders can vote at the Annual Meeting via the Annual Meeting Website or by proxy. There are three ways to vote by proxy:
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By Telephone — Stockholders who received a proxy card by mail and are located in the United States can vote by telephone by calling the phone number, and following the instructions, on the proxy card;
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By Internet — Before the Annual Meeting you can vote by going to www.proxyvote.com until 11:59 p.m. Eastern Time on January 18, 2023. During the Annual Meeting you can vote by going to www.virtualshareholdermeeting.com/SMPL2023; or
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By Mail — If you received your proxy materials by mail, you can vote by mail by signing, dating and mailing the enclosed proxy card.
Telephone and Internet voting at www.proxyvote.com for stockholders of record will be available 24 hours a day and will close at 11:59 p.m. Eastern Time on January 18, 2023. We encourage you to submit your proxy as soon as possible (by telephone, Internet or by mail) even if you plan to attend the Annual Meeting.
If your shares are held in the name of a broker, bank, trustee, other nominee or custodian, or other holder of record, you will receive instructions from the holder of record as to how to vote your shares. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting may also be offered to stockholders owning shares through certain banks and brokers. If your shares are held in a brokerage account — meaning they are not registered in your own name — and you plan to vote your shares at the Annual Meeting, you will only be able to vote at the Annual Meeting if you contact your broker or agent to obtain a valid proxy or broker’s proxy card with your 16-digit control number which is required to vote during the Annual Meeting.
Please note that if you hold your shares through a broker, your broker cannot vote your shares on Proposal 1, the election of directors, Proposal 3, the approval of our Third Amended and Restated Certificate, or Proposal 4, the advisory vote to approve the compensation of our named executive officers, unless you have given your broker specific instructions as to how to vote. In order for your vote to be counted, please make sure that you submit your vote to your broker.
If you vote by proxy, the individuals named on the proxy card (your “proxies”) will vote your shares in the manner you indicate. You may specify whether your shares should be voted “FOR,” “AGAINST” or “ABSTAIN” for each proposal. If you sign and return the proxy card without indicating your instructions, your shares will be voted as follows:
•
“FOR” the election of each nominee for director set forth in Proposal One;
•
“FOR” Proposal Two, relating to the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for our fiscal year ending August 26, 2023;
•
“FOR” Proposal Three, relating to the approval of our Third Amended and Restated Certificate of Incorporation in the form attached to this proxy statement as Annex I;
•
“FOR” Proposal Four, relating to the approval, on an advisory basis, of the compensation of our named executive officers; and
•
For or against any other matter properly presented before the Annual Meeting, in the discretion of the proxies.
MiscellaneousMISCELLANEOUS
Stockholder Proposals for the 20222024 Annual Meeting of Stockholders
Any proposal of a stockholder intended to be included in our proxy statement for the 20222024 Annual Meeting of Stockholders pursuant to SEC Rule 14a-8 must be received by us no later than August 12, 2021,10, 2023, unless the date of our 20222024 Annual Meeting of Stockholders is more than 30 days before or after January 21, 2022,19, 2024, in which case the proposal must be received a reasonable time before we begin to print and mail our proxy materials. All proposals should be directed to our Corporate Secretary, The Simply Good Foods Company, 1225 17th17th Street, Suite 1000, Denver, Colorado 80202.
A stockholder nomination of a person for election to our Board or a proposal for consideration at our 20222024 Annual Meeting of Stockholders not intended to be included in our proxy statement pursuant to SEC Rule 14a-8 must be submitted in accordance with the advance notice procedures and other requirements set forth in our Bylaws. Pursuant to our Bylaws, if a stockholder wishes to present a proposal for consideration at an annual meeting, he or shethey must send written notice of the proposal to our Corporate Secretary by no earlier than the 120th120th day prior and no later than the 90th90th day prior to the first anniversary of the date of the preceding year’s annual meeting. For our 20222024 Annual Meeting of Stockholders, this notice must be received no earlier than September 23, 2021,21, 2023, and no later than October 23, 2021.21, 2023. We will include your proposal in our proxy statement for the 20222024 Annual Meeting of Stockholders if it is a proposal that we are required to include in our proxy statement pursuant to the rules of the SEC. You must send your proposal to our principal executive offices to our Corporate Secretary, The Simply Good Foods Company, 1225 17th17th Street, Suite 1000, Denver, Colorado 80202.
In addition to satisfying the requirements under our Bylaws and providing the information required thereunder to the Company, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth any additional information required by Rule 14a-19 under the Exchange Act to comply with the universal proxy rules, which notice must be postmarked or transmitted electronically to us at our principal executive offices at the address above no later than November 20, 2023. However, if the date of the 2024 annual meeting is changed by more than 30 calendar days from the anniversary date of the 2023 Annual Meeting, then notice must be provided by the later of 60 calendar days prior to the date of the 2024 Annual Meeting or the 10th calendar day following the day on which public announcement of the date of the 2024 Annual Meeting is first made.
Expenses of Soliciting Proxies
Certain of our officers and employees may solicit proxies by mail, telephone, fax, e-mail or in person and will not receive any additional compensation for such efforts. We will pay all other costs associated with this proxy statement and the solicitation of proxies. Upon request, we will reimburse stockbrokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of shares of our common stock. We also have retained Morrow Sodali LLC, 470 West Avenue, Stamford, Connecticut 06902, to assist in the solicitation of proxies for an estimated fee of $12,500, plus reimbursement of reasonable expenses.
Householding
Any stockholder, including both stockholders of record and beneficial holders who own their shares through a broker, bank or other nominee, who share an address with another holder of our common stock areis only being sent one set of proxy materials, unless such holders haveholder has provided contrary instructions. We will deliver promptly upon written or oral request a separate copy of these materials to any holder at a shared address to which a single copy of the proxy materials was delivered. If you wish to opt out of householding and receive a separate copy of these materials in the future or if you are receiving multiple copies and would like to receive a single copy, you may do so at any time prior to thirty (30) days before the mailing of the proxy materials (which typically will be in December of each year) by notifying us in writing at: The Simply Good Foods Company, Attn: Corporate Secretary, 1225 17th17th Street, Suite 1000, Denver, Colorado 80202 or by telephone at 303-633-2840.
Annex I
THIRD AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
THE SIMPLY GOOD FOODS COMPANY
ARTICLE ONE
The name of the corporation is The Simply Good Foods Company (the “Corporation”).
ARTICLE TWO
The address of the Corporation’s registered office in the State of Delaware is 251 Little Falls Drive, Wilmington, Delaware 19808, County of New Castle. The name of its registered agent at such address is Corporation Service Company.
ARTICLE THREE
The nature and purpose of the business of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (“DGCL”).
ARTICLE FOUR
Section 1. Authorized Shares. The total number of shares of all classes of capital stock which the Corporation shall have authority to issue is 700,000,000 shares, consisting of:
1.
100,000,000 shares of Preferred Stock, par value $0.01 per share (the “Preferred Stock”); and
2.
600,000,000 shares of Common Stock, par value $0.01 per share (the “Common Stock”).
The Preferred Stock and the Common Stock shall have the designations, rights, powers and preferences and the qualifications, restrictions and limitations thereof, if any, set forth below.
Section 2. Preferred Stock. The Board of Directors of the Corporation (the “Board of Directors”) is authorized, subject to limitations prescribed by law, to provide, by resolution or resolutions for the issuance of shares of Preferred Stock in one or more series, and with respect to each series, to establish the number of shares to be included in each such series, and to fix the voting powers (if any), designations, powers, preferences, and relative, participating, optional or other special rights, if any, of the shares of each such series, and any qualifications, limitations or restrictions thereof. The powers, preferences, and relative, participating, optional and other special rights of each series of Preferred Stock and the qualifications, limitations or restrictions thereof, if any, may differ from those of any and all other series at any time outstanding. Subject to applicable law and within the limitations or restrictions stated in any resolution or resolutions of the Board of Directors fixing the number of shares constituting a series of Preferred Stock, the Board of Directors may increase or decrease (but not below the number of shares of any such series of Preferred Stock then outstanding and not above the total number of authorized shares of Preferred Stock) by resolution the number of shares of any such series of Preferred Stock. In the event that the number of shares of any series of Preferred Stock shall be so decreased, the shares constituting such decrease shall resume the undesignated status of authorized and unissued shares of Preferred Stock subject to the requirements of applicable law. Subject to the rights of the holders of any series of Preferred Stock, the number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the approval of the Board of Directors and by the affirmative vote of the holders of a majority in voting power of the outstanding shares of capital stock of the Corporation entitled to vote generally in an election of directors, without the separate vote of the holders of the Preferred Stock as a class, irrespective of the provisions of Section 242(b)(2) of the DGCL.
Section 3. Common Stock.
(a)
Except as otherwise provided by the DGCL or this second amended and restated certificate of incorporation (the “Certificate of Incorporation”) and subject to the rights of holders of any series of Preferred Stock, all of the voting power of the stockholders of the Corporation shall be vested in the holders of the Common Stock. Each share of Common Stock shall entitle the holder thereof to one vote for each share held by such holder on all
matters voted upon by the stockholders of the Corporation; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation (including any certificate of designation relating to any series of Preferred Stock) or pursuant to the DGCL.
(b)
Except as otherwise required by law or expressly provided in this Certificate of Incorporation, each share of Common Stock shall have the same powers, rights and privileges and shall rank equally, share ratably and be identical in all respects as to all matters.
(c)
Subject to the rights of the holders of Preferred Stock and to the other provisions of applicable law and this Certificate of Incorporation, holders of Common Stock shall be entitled to receive equally, on a per share basis, such dividends and other distributions in cash, securities or other property of the Corporation if, as and when declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor.
(d)
In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, after payment or provision for payment of the Corporation’s debts and any other payments required by law and amounts payable upon shares of Preferred Stock ranking senior to the shares of Common Stock upon such dissolution, liquidation or winding up, if any, the remaining net assets of the Corporation shall be distributed to the holders of shares of Common Stock and the holders of shares of any other class or series ranking equally with the shares of Common Stock upon such dissolution, liquidation or winding up, equally on a per share basis. A merger or consolidation of the Corporation with or into any other corporation or other entity, or a sale or conveyance of all or any part of the assets of the Corporation (which shall not in fact result in the liquidation of the Corporation and the distribution of assets to its stockholders) shall not be deemed to be a voluntary or involuntary liquidation or dissolution or winding up of the Corporation within the meaning of this Paragraph (d).
ARTICLE FIVE
The Corporation is to have perpetual existence.
ARTICLE SIX
Section 1. Board of Directors. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Certificate of Incorporation or the Bylaws of the Corporation (as amended and restated, the “Bylaws”), the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation except for such powers, acts and things that are by the DGCL, the Certificate of Incorporation, or the Bylaws required to be exercised or done by the stockholders.
Section 2. Number of Directors. Subject to any rights of the holders of any class or series of Preferred Stock to elect additional directors under specified circumstances or otherwise, the number of directors which shall constitute the Board of Directors shall be fixed from time to time exclusively by resolution of the Board.
Section 3. Election and Term of Office. The directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting of the stockholders and entitled to vote in the election of directors; provided that, whenever the holders of any class or series of capital stock of the Corporation are entitled to elect one or more directors pursuant to the provisions of this Certificate of Incorporation (including, but not limited to, any duly authorized certificate of designation), such directors shall be elected by a plurality of the votes of such class or series present in person or represented by proxy at the meeting of the stockholders and entitled to vote in the election of such directors. Subject to the rights of the holders of any series of Preferred Stock then outstanding and notwithstanding any other provision of this Certificate of Incorporation, at each annual meeting of stockholders commencing with the 2021 annual meeting of stockholders, directors of the corporation other than those in the 2022 Class and 2023 Class (each as defined below) shall be elected for a term of one year, expiring at the next succeeding annual meeting of stockholders. Each director of the corporation who was elected at the 2019 annual meeting of stockholders for a three-year term expiring in 2022 (the “2022 Class”), and each director of the corporation who was elected at the 2020 annual meeting of stockholders for a three-year term expiring in 2023 (the “2023 Class”), including any person appointed to fill any vacancy occurring with respect to any director in the 2022 Class or the 2023 Class (each of whom shall be deemed to be a member of the class of directors in which the vacancy occurred), shall continue to hold office until the end of the term for which such director was elected or appointed, as applicable. Commencing with the 2022 annual meeting of stockholders, all directors of the corporation other
than those in the 2023 Class will be elected for a term of one year, and (b) commencing with the 2023 annual meeting of stockholders, all directors of the corporation will be elected for a term of one-year. In all cases, each director shall serve until such director’s successor has been duly elected and qualified or until such director’s earlier death, resignation, or removal. Subject to the rights of the holders of any series of Preferred Stock then outstanding and notwithstanding any other provision of this Certificate of Incorporation, except as otherwise provided by law, each director serving in a class of directors for a term expiring at the third annual meeting of stockholders following the election of such class may be removed only for cause by the affirmative vote of the holders of a majority of the voting power of all then outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors, and all other directors may be removed with or without cause by the affirmative vote of the holders of a majority of the voting power of all then outstanding shares of capital stock of the corporation entitled to vote generally in the election of directors. Any director may resign at any time upon written notice to the Corporation.
Section 4. Newly-Created Directorships and Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding and except as otherwise set forth in the Nomination Agreement, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, disqualification, removal from office or any other cause may be filled only by resolution of a majority of the directors then in office, although less than a quorum, or by a sole remaining director. A director elected or appointed to fill a vacancy shall serve for the unexpired term of his or her predecessor in office and until his or her successor is elected and qualified or until his or her earlier death, resignation or removal. A director elected or appointed to fill a position resulting from an increase in the number of directors shall hold office until the next election of the class for which such director shall have been elected or appointed and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal. No decrease in the authorized number of directors shall shorten the term of any incumbent director.
Section 5. Rights of Holders of Preferred Stock. Notwithstanding the provisions of this ARTICLE SIX, whenever the holders of one or more series of Preferred Stock shall have the right, voting separately or together by series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorship shall be subject to the rights of such series of Preferred Stock.
Section 6. Advance Notice. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws.
ARTICLE SEVEN
Section 1. Limitation of Liability.
(a)
To the fullest extent permitted by the DGCL as it now exists or may hereafter be amended (but, in the case of any such amendment, only to the extent such amendment permits the Corporation to provide broader exculpation than permitted prior thereto), no director of the Corporation shall be liable to the Corporation or its stockholders for monetary damages arising from a breach of fiduciary duty as a director.
(b)
Any amendment, repeal or modification of the foregoing paragraph by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such amendment, repeal or modification with respect to any act, omission or other matter occurring prior to such amendment, repeal or modification.
ARTICLE EIGHT
Section 1. Action by Written Consent. Any action required or permitted to be taken by the Corporation’s stockholders may be taken only at a duly called annual or special meeting of the Corporation’s stockholders and the power of stockholders to consent in writing without a meeting is specifically denied.
Section 2. Special Meetings of Stockholders. Subject to the rights of the holders of any series of Preferred Stock then outstanding and to the requirements of applicable law, special meetings of stockholders of the Corporation may be called only by or at the direction of the Board of Directors or the Chairman of the Board of Directors. Any business transacted at any special meeting of stockholders shall be limited to the purpose or purposes stated in the notice of the meeting.
ARTICLE NINE
Section 1. Certain Acknowledgments.
(a)
To the extent allowed by law, the doctrine of corporate opportunity, or any other analogous doctrine, shall not
apply with respect to the Corporation or any of its officers or directors, and the Corporation renounces any expectancy that any of the directors or officers of the Corporation will offer any such corporate opportunity of which he or she may become aware to the Corporation, except, the doctrine of corporate opportunity shall apply with respect to any of the directors or officers of the Corporation only with respect to a corporate opportunity that was offered in writing to such person solely in his or her capacity as a director or officer of the Corporation and such opportunity is one the Corporation is legally and contractually permitted to undertake and would otherwise be reasonable for the Corporation to pursue. In recognition and anticipation that (i) the directors, officers, employees or representatives of Atkins Holdings LLC (“Atkins Holdings”), Conyers Park Sponsor LLC (“Conyers Park Sponsor”) Centerview Capital Holdings LLC (“Centerview Capital”), and Centerview Partners (and together with Centerview Capital, Conyers Park Sponsor and Atkins Holdings, each a “Sponsor Entity”) and their respective Affiliates may serve as directors and/or officers of the Corporation, (ii) the Sponsor Entities and their respective Affiliates engage and may continue to engage in the same or similar activities or related lines of business as those in which the Corporation, directly or indirectly, may engage and/or other business activities that overlap with or compete with those in which the Corporation, directly or indirectly, may engage, and (iii) that the Corporation may engage in material business transactions with the Sponsor Entities or their respective Affiliates and that the Corporation is expected to benefit therefrom, the provisions of this ARTICLE NINE are set forth to regulate and define the conduct of certain affairs of the Corporation as they may involve the Sponsor Entities or their respective Affiliates, and the powers, rights, duties and liabilities of the Corporation and its officers, directors and stockholders in connection therewith.
(b)
No Sponsor Entity nor any of their respective Affiliates shall have any duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business as the Corporation and no Sponsor Entity nor any officer, director or representative thereof (except as provided in the first sentence of paragraph (a) above) shall be liable to the Corporation or its stockholders for breach of any fiduciary duty solely by reason of any such activities of such Sponsor Entity or any of their respective Affiliates. In the event that a Sponsor Entity or any of their respective Affiliates acquires knowledge of a potential transaction or matter which may be a corporate opportunity for itself and the Corporation, no Sponsor Entity nor any of their respective Affiliates shall have any duty to communicate or offer such corporate opportunity to the Corporation and shall not be liable to the Corporation or its stockholders for breach of any fiduciary duty as a stockholder of the Corporation solely by reason of the fact that a Sponsor Entity or any of their respective Affiliates pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person, or does not communicate information regarding such corporate opportunity to the Corporation.
(c)
In addition to and notwithstanding the foregoing provisions of this ARTICLE NINE, a corporate opportunity shall not be deemed to belong to the Corporation if it is a business opportunity that the Corporation is not financially able or contractually permitted or legally able to undertake, or that is, from its nature, not in the line of the Corporation’s business or is of no practical advantage to it or that is one in which the Corporation has no interest or reasonable expectancy.
(d)
Except as provided in the first sentence of paragraph (a) above, if a director or officer of the Corporation who is also a director, officer, employee or representative of a Sponsor Entity or any of their respective Affiliates acquires knowledge of a potential transaction or matter which may be a corporate opportunity, the Corporation shall have no interest in such corporate opportunity and no expectancy that such corporate opportunity be offered to it, any such interest or expectancy being hereby renounced, so that such person shall have no duty to present such corporate opportunity to the Corporation and shall have the right to hold and exploit any such corporate opportunity for its (and its officers’, employees’, directors’, agents’, stockholders’, members’, partners’, affiliates’ or subsidiaries’) own account or to direct, sell, assign or transfer such corporate opportunity to persons other than the Corporation. Such person shall not breach any fiduciary duty to the Corporation or to its stockholders by reason of the fact that such person does not present such corporate opportunity to the Corporation or pursues, acquires or exploits such corporate opportunity for itself or directs, sells, assigns or transfers such corporate opportunity to another person.
Section 2. Deemed Notice. Any person or entity purchasing or otherwise acquiring or holding any interest in any shares of the Corporation shall be deemed to have notice of and to have consented to the provisions of this ARTICLE NINE.
Section 3. Severability. To the extent that any provision or part of any provision of this ARTICLE NINE is found to be invalid or unenforceable, such invalidity or unenforceability shall not affect the validity or enforceability of any other provision or part of any other provision of this ARTICLE NINE.
ARTICLE TEN
Section 1. Section 203 of the DGCL. The Corporation expressly elects not to be subject to the provisions of Section 203 of the DGCL.
Section 2. Business Combinations with Interested Stockholders. Notwithstanding the foregoing, the Corporation shall not engage in any business combination (as defined below), at any point in time at which the Corporation’s Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act of 1934, as amended (the “Exchange Act”) with any interested stockholder (as defined below) for a period of three (3) years following the time that such stockholder became an interested stockholder, unless:
(a)
prior to such time, the Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder, or
(b)
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least eighty-five percent (85%) of the voting stock outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by (i) persons who are directors and also officers of the Corporation and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer, or
(c)
at or subsequent to that time, the business combination is approved by the Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66-2/3% of the outstanding voting stock that is not owned by the interested stockholder.
Certain Definitions. Solely for purposes of this ARTICLE TEN, references to:
(a)
“affiliate” means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another person.
(b)
“associate,” when used to indicate a relationship with any person, means: (i) any corporation, partnership, unincorporated association or other entity of which such person is a director, officer or partner or is, directly or indirectly, the owner of twenty percent (20%) or more of any class of voting stock; (ii) any trust or other estate in which such person has at least a twenty percent (20%) beneficial interest or as to which such person serves as trustee or in a similar fiduciary capacity; and (iii) any relative or spouse of such person, or any relative of such spouse, who has the same residence as such person.
(c)
“business combination,” when used in reference to the Corporation and any interested stockholder of the Corporation, means:
(i).
any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (a) with the interested stockholder, or (b) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation this Section 2 is not applicable to the surviving entity;
(ii).
any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to ten percent (10%) or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation;
(iii).
any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (a) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (b) pursuant to a merger under Section 251(g) of the DGCL; (c) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all stockholders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (d) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all stockholders of said stock; or (e) any issuance or transfer of stock by the Corporation; provided, however, that in no case under items (c)-(e) of this subsection (iii) shall there be an increase in the interested stockholder’s proportionate share of the stock of any class or series of the Corporation or of the voting stock of the Corporation (except as a result of immaterial changes due to fractional share adjustments); or
(iv).
any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of
any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder.
(d)
“control,” including the terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting stock, by contract, or otherwise. A person who is the owner of twenty percent (20%) or more of the voting power of the outstanding voting stock of the Corporation, partnership, unincorporated association or other entity shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the contrary. Notwithstanding the foregoing, a presumption of control shall not apply where such person holds voting stock, in good faith and not for the purpose of circumventing this ARTICLE TEN, as an agent, bank, broker, nominee, custodian or trustee for one or more owners who do not individually or as a group have control of such entity.
(e)
“Exempted Person” means Centerview Capital Holdings LLC, Conyers Park Sponsor LLC and their respective affiliates, any of their respective direct or indirect transferees of at least 15% of the Corporation’s outstanding common stock and any “group” of which any such person is a part under Rule 13d-5 of the Exchange Act, as in effect at the Effective Time.
(f)
“interested stockholder” means any person (other than the Corporation or any direct or indirect majority-owned subsidiary of the Corporation) that (i) is the owner of fifteen percent (15%) or more of the voting stock of the Corporation, or (ii) is an affiliate or associate of the Corporation and was the owner of fifteen percent (15%) or more of the voting stock of the Corporation at any time within the three (3) year period immediately prior to the date on which it is sought to be determined whether such person is an interested stockholder; and the affiliates and associates of such person; but “interested stockholder” shall not include (a) any Exempted Person, or (b) any person whose ownership of shares in excess of the fifteen percent (15%) limitation set forth herein is the result of any action taken solely by the Corporation; provided that with respect to clause (b) such person shall be an interested stockholder if thereafter such person acquires additional shares of voting stock of the Corporation, except as a result of further corporate action not caused, directly or indirectly, by such person. For the purpose of determining whether a person is an interested stockholder, the voting stock of the Corporation deemed to be outstanding shall include stock deemed to be owned by the person through application of the definition of “owner” below but shall not include any other unissued stock of the Corporation which may be issuable pursuant to any agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise.
(g)
“owner,” including the terms “own” and “owned,” when used with respect to any stock, means a person that individually or with or through any of its affiliates or associates:
1.
beneficially owns such stock, directly or indirectly;
2.
has (a) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, that a person shall not be deemed the owner of stock tendered pursuant to a tender or exchange offer made by such person or any of such person’s affiliates or associates until such tendered stock is accepted for purchase or exchange; or (b) the right to vote such stock pursuant to any agreement, arrangement or understanding; provided, however, that a person shall not be deemed the owner of any stock because of such person’s right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to ten (10) or more persons; or
3.
has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (b) of subsection (2) above), or disposing of such stock with any other person that beneficially owns, or whose affiliates or associates beneficially own, directly or indirectly, such stock.
(h)
“person” means any individual, corporation, partnership, unincorporated association or other entity.
(i)
“stock” means, with respect to any corporation, capital stock and, with respect to any other entity, any equity interest.
(j)
“voting stock” means stock of any class or series entitled to vote generally in the election of directors.
ARTICLE ELEVEN
Section 1. Amendments to the Bylaws. Subject to the rights of holders of any series of Preferred Stock then outstanding, in furtherance and not in limitation of the powers conferred by law, the Bylaws may be amended, altered or repealed and
new bylaws made by (i) the Board or (ii) in addition to any other vote otherwise required by law, the affirmative vote of the holders of at least fifty percent (50%) of the voting power of the then outstanding Voting Stock, voting together as a single class.
Section 2. Amendments to this Certificate of Incorporation. Subject to the rights of holders of any series of Preferred Stock then outstanding, notwithstanding any other provision of this Certificate of Incorporation or the Bylaws, and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law or otherwise, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock required by law or otherwise, this Certificate of Incorporation may not be altered, amended or repealed in any respect, nor may any provision of this Certificate of Incorporation or the Bylaws inconsistent therewith be adopted, unless in addition to any other vote required by this Certificate of Incorporation or otherwise required by law, such alteration, amendment, repeal or adoption is approved by the affirmative vote of holders of at least fifty percent (50%) of the voting power of all outstanding shares of Voting Stock, voting together as a single class, at a meeting of the Corporation’s stockholders called for that purpose.
ARTICLE TWELVE
Section 1. Exclusive Forum. (A) Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for any stockholder (including a beneficial owner) to bring (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim against the Corporation, its directors, officers or employees arising pursuant to any provision of the DGCL or this Certificate or the Bylaws, or (iv) any action asserting a claim against the Corporation, its directors, officers or employees governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim as to which the Court of Chancery determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or for which the Court of Chancery does not have subject matter jurisdiction. (B) Unless the Corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States of America shall be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended, against the Corporation or any director or officer or other employee of the Corporation.
Section 2. Consent to Jurisdiction. If any action the subject matter of which is within the scope of Section 1(A) immediately above is filed in a court other than a court located within the State of Delaware (a “Foreign Action”) in the name of any stockholder, such stockholder shall be deemed to have consented to (i) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce Section 1(A) immediately above (an “FSC Enforcement Action”) and (ii) having service of process made upon such stockholder in any such FSC Enforcement Action by service upon such stockholder’s counsel in the Foreign Action as agent for such stockholder.
Section 3. Severability. If any provision or provisions of this Article XII shall be held to be invalid, illegal or unenforceable as applied to any person or entity or circumstance for any reason whatsoever, then, to the fullest extent permitted by law, the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XII (including, without limitation, each portion of any sentence of this Article XII containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) and the application of such provision to other persons or entities and circumstances shall not in any way be affected or impaired thereby. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article XII.
Annex II
Reconciliation of Adjusted EBITDA and Net Debt to Adjusted EBITDA
Adjusted EBITDAEBITDA.. EBITDA and Adjusted EBITDA is aare non-GAAP financial measuremeasures commonly used in our industry and should not be construed as an alternativealternatives to net (loss) income as an indicator of operating performance or as an alternativealternatives to cash flow provided by operating activities as a measure of liquidity (each as determined in accordance with GAAP). Simply Good Foods defines Adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) as net (loss) income or loss before interest income, interest expense, income tax expense, (benefit), depreciation and amortization, withand Adjusted EBITDA as further adjustmentsadjusted to exclude the following items: business transaction costs, stock-based compensation expense, inventory step-up, integration costs, non-core legalrestructuring costs, gain or loss in fair value change of contingent consideration — TRAwarrant liability, gain on settlement of TRA liabilityor loss due to legal settlements, and other non-core expenses. The Company believes that EBITDA and Adjusted EBITDA, when used in conjunction with net income, are useful to provide additional information to investors. Management of the Company uses EBITDA and Adjusted EBITDA to supplement net income because these measures reflect operating results of the on-going operations, eliminate items that are not directly attributable to the Company’s underlying operating performance, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to the key metrics the Company’s management uses in its financial and operational decision making. The Company also believes that Adjusted EBITDA is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Adjusted EBITDA may not be comparable to other similarly titled captions of other companies due to differences in the non-GAAP calculation.
The following unaudited table provides a reconciliation of EBITDA and Adjusted EBITDA to the most directly comparable GAAP measure, which is net income, for the fifty-two weeks ended August 27, 2022 and August 28, 2021.
| | (In thousands) | | | 52-Weeks
Ended
August 27,
2022 | | | 52-Weeks
Ended
August 28,
2021 | |
| | Net income | | | | $ | 108,574 | | | | | $ | 40,880 | | |
| | Interest income | | | | | (15) | | | | | | (84) | | |
| | Interest expense | | | | | 21,881 | | | | | | 31,557 | | |
| | Income tax expense | | | | | 41,995 | | | | | | 39,980 | | |
| | Depreciation and amortization | | | | | 19,299 | | | | | | 18,174 | | |
| | EBITDA | | | | | 191,734 | | | | | | 130,507 | | |
| | Stock-based compensation expense | | | | | 11,697 | | | | | | 8,265 | | |
| | Integration of Quest | | | | | 468 | | | | | | 2,928 | | |
| | Restructuring | | | | | 98 | | | | | | 4,324 | | |
| | Loss in fair value change of warrant liability | | | | | 30,062 | | | | | | 66,197 | | |
| | Gain on legal settlement | | | | | — | | | | | | (5,000) | | |
| | Other* | | | | | (16) | | | | | | 52 | | |
| | Adjusted EBITDA | | | | $ | 234,043 | | | | | $ | 207,273 | | |
*
Other items consist principally of exchange impact of foreign currency transactions and other expenses.
Reconciliation of Adjusted Diluted Earnings Per Share
Adjusted Diluted Earnings per Share. Adjusted Diluted Earnings per Share is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to diluted earnings per share as an indicator of operating performance. Simply Good Foods defines Adjusted Diluted Earnings Per Share as diluted earnings per share before depreciation and amortization, loss in fair value change of warrant liability, stock-based compensation expense, integration costs, and other non-core expenses, on a theoretical tax effected basis of such adjustments. The tax effect of such adjustments to Adjusted Diluted Earnings Per Share is calculated by applying an overall assumed statutory tax rate to each gross adjustment as shown in the reconciliation to Adjusted EBITDA, as previously defined. The assumed statutory tax rate reflects a normalized effective tax rate estimated based on assumptions regarding the Company’s statutory and effective tax rate for each respective reporting period, including the current and deferred tax effects of each adjustment, and is adjusted for the effects of tax reform, if any. The Company consistently applies the overall assumed statutory tax rate to periods throughout each fiscal year and reassesses the overall assumed statutory rate on annual basis. The Company believes that the inclusion of these supplementary adjustments in presenting Adjusted EBITDA,Diluted Earnings per Share, when
used in conjunction with net (loss) income, arediluted earnings per share, is appropriate to provide additional information to investors, reflects more accurately operating results of the on-going operations, enhances the overall understanding of past financial performance and future prospects and allows for greater transparency with respect to the key metrics the Company uses in its financial and operational decision making. The Company also believes that Adjusted EBITDADiluted Earnings per Share is frequently used by securities analysts, investors and other interested parties in the evaluation of companies in its industry.industry. Adjusted EBITDADiluted Earnings per Share may not be comparable to other similarly titled captions of other companies due to differences in the non-GAAP calculation.
The following unaudited tablestable below provideprovides a reconciliation of Adjusted EBITDADiluted Earnings Per Share to itsthe most directly comparable GAAP measure, which is net income,diluted earnings per share, for the fifty-two week periodweeks ended August 29, 2020, and fifty-three week period ended August 31, 2019.27, 2022:
| (In thousands) | | | 52-Weeks
Ended
August 29,
2020 | | | 53-Weeks
Ended
August 31,
2019 | |
| Net income | | | | $ | 34,700 | | | | | $ | 47,536 | | |
| Interest expense | | | | | 32,813 | | | | | | 13,627 | | |
| Interest income | | | | | (1,516) | | | | | | (3,826) | | |
| Income tax expense (benefit) | | | | | 13,326 | | | | | | 16,750 | | |
| Depreciation and amortization | | | | | 16,007 | | | | | | 7,644 | | |
| EBITDA | | | | | 95,330 | | | | | | 81,731 | | |
| Business transaction costs | | | | | 27,125 | | | | | | 7,107 | | |
| Stock-based compensation expense | | | | | 7,636 | | | | | | 5,501 | | |
| Inventory step-up | | | | | 7,522 | | | | | | — | | |
| Integration of Quest | | | | | 10,742 | | | | | | — | | |
| Restructuring | | | | | 5,527 | | | | | | 22 | | |
| Non-core legal costs | | | | | 718 | | | | | | 4,851 | | |
| Loss (gain) in fair value change of contingent consideration — TRA liability | | | | | — | | | | | | 533 | | |
| Gain on settlement of TRA | | | | | — | | | | | | (1,534) | | |
| Frozen licensing media | | | | | — | | | | | | — | | |
Other(1) | | | | | (688) | | | | | | 508 | | |
| Adjusted EBITDA | | | | $ | 153,912 | | | | | $ | 98,719 | | |
| | | | | 52-Weeks Ended
August 27, 2022 | |
| | Diluted earnings per share | | | | $ | 1.08 | | |
| | Depreciation and amortization | | | | | 0.19 | | |
| | Stock-based compensation expense | | | | | 0.12 | | |
| | Integration of Quest | | | | | — | | |
| | Restructuring | | | | | — | | |
| | Tax effects of adjustments(1) | | | | | (0.08) | | |
| | Loss in fair value change of warrant liability(2) | | | | | 0.68 | | |
| | Dilution impact from adjustments(2)(3) | | | | | (0.02) | | |
| | Adjusted diluted earnings per share | | | | $ | 1.59 | | |
(1)
OtherThis line item reflects the aggregate tax effect of all non-tax adjustments reflected in the preceding line items consist principally of exchange impactthe table. The tax effect of foreign currency transactionseach adjustment is computed (i) by dividing the gross amount of the adjustment, as shown in the Adjusted EBITDA reconciliation, by the number of diluted weighted average shares outstanding for the applicable fiscal period and other expenses.(ii) applying an overall assumed statutory tax rate of 25% for the fifty-two weeks ended August 27, 2022.
(2)
Diluted earnings per share includes the fair value loss and related exclusion of anti-dilutive shares related to the private warrants in accordance with GAAP. With respect to the Company’s non-GAAP measure, the non-cash fair value loss is reversed. The fair value adjustments are a permanent tax difference and do not affect tax expense. Note, mark to market gain adjustments are already excluded from the numerator, and dilutive shares are included, in calculating diluted earnings per share in accordance with GAAP.
(3)
As noted above, the Company excludes the non-cash fair value loss related to its private warrant liabilities. The Company subsequently considers the dilutive share count effect of such adjustment such that the shares excluded in accordance with GAAP are included in this non-GAAP measure.
Reconciliation of Net Debt to Adjusted EBITDA
Net Debt to Adjusted EBITDAEBITDA.. Net Debt to Adjusted EBITDA is a non-GAAP financial measure which Simply Good Foods defines as the total debt outstanding under our credit agreement with Barclays
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